PacWest Bancorp Announces Results for the First Quarter of 2021

Los Angeles, California, UNITED STATES


LOS ANGELES, April 20, 2021 (GLOBE NEWSWIRE) --

FIRST QUARTER 2021 RESULTS

$150.4M$1.27$156.0M25.67%
Net EarningsDiluted Earnings
per Share
PPNRROATE

FIRST QUARTER 2021 HIGHLIGHTS

  • Net Earnings of $150.4 Million or $1.27 Per Diluted Share
  • Core Deposits Up $3.3 Billion or 15% in 1Q21; Represents 91% of Total Deposits
  • Provision for Credit Losses Benefit of $48.0 Million in 1Q21 Compared to Provision of $10.0 Million in 4Q20
  • Net Interest Income (TE) of $264.6 Million, Compared With $262.1 Million in 4Q20
  • Noninterest Income of $44.8 Million, Up 12% From 4Q20, With Continued Strength in Warrant Income As Well As a $10.1 Million Gain on an Equity Investment
  • Noninterest Expense of $150.1 Million, Up 11% From 4Q20, Driven By Two Months of Civic Financial Services (“Civic”) Operations, Higher Acquisition Costs, and a Legal Settlement
  • Classified and Special Mention Loans Fell $102.1 Million and $88.3 Million, Respectively, From 4Q20
  • ACL Ratio of 2.02% and ALLL Ratio of 1.54%; Excluding PPP Loans, ACL Ratio of 2.14% and ALLL Ratio of 1.63%
  • Net Charge-offs to Average Loans/Leases of 6 bps
  • Cost of Deposits Decreased 3 bps to 11 bps
  • Loan and Lease Production of $1.6 Billion Up From $1.1 Billion in 4Q20; WAC of 5.39% (Excluding PPP Loans) vs. 4.41% in 4Q20
  • Net Loans and Leases of $19.0 Billion, Down Slightly From 4Q20 As Production Was Offset With Payoffs and Paydowns As Well As Further Reduction in the Security Monitoring Portfolio
  • Originated $381 Million of PPP Loans in 1Q21
  • Strong Capital Position – CET1 Ratio of 10.41%
  • Civic Acquisition Completed on February 1, 2021
  • On March 31, 2021, Signed Agreement to Purchase the Homeowners Association Business from MUFG Union Bank, N.A. With Approximately $4.0 Billion of Deposits With a Cost of 8 bps; Close Expected in 4Q21

CEO COMMENTARY
Matt Wagner, President and CEO, commented, “Our continued focus on growing net interest income produced strong first quarter earnings boosted by continued deposit driven balance sheet growth and improved credit costs as a result of improved economic conditions. Our first quarter results produced a return on assets of 1.94% and a return on tangible equity of 25.67%.”

“We experienced strong deposit growth again in the first quarter driven by outstanding growth from our venture banking clients as well as our commercial bank. This increasing liquidity has expanded our average balance of deposits at the Fed, which grew to $4.8 billion in the first quarter with a yield of 13 basis points. While our focus is on managing net interest income, this excess liquidity continues to be a drag on our net interest margin, which had a negative impact of 61 basis points in the first quarter.”

“Credit quality continued to improve as we experienced decreases in nonaccrual, special mention, and classified loans and leases in the first quarter, while net charge-offs were $2.7 million.”

“We closed the Civic acquisition on February 1, 2021 and in two months Civic originated $231 million of loans. We expect Civic loan production to remain strong and, as their loan portfolio continues to grow, it will help sustain our loan yields and drive loan growth.” 

A chart accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/03fbe6a3-20e1-45c9-905b-ab7513e2ee6b

FINANCIAL HIGHLIGHTS

 At or For the    At or For the   
 Three Months Ended   Three Months Ended  
 March 31, December 31, Increase March 31, Increase
Financial Highlights (1) 2021   2020  (Decrease)  2021   2020  (Decrease)
                        
 (Dollars in thousands, except per share data)
Net earnings (loss)$150,406  $116,830  $33,576  $150,406  $(1,433,111) $1,583,517 
Diluted earnings (loss)           
per share$1.27  $0.99  $0.28  $1.27  $(12.23) $13.50 
Pre-provision, pre-goodwill           
impairment, pre-tax net           
revenue ("PPNR") (2)$155,962  $163,376  $(7,414) $155,962  $160,877  $(4,915)
Return on average assets 1.94%  1.58%  0.36   1.94%  (21.27)%  23.21 
PPNR return on average           
assets (2) 2.01%  2.22%  (0.21)  2.01%  2.39%  (0.38)
Return on average           
tangible equity (2) 25.67%  19.63%  6.04   25.67%  6.88%  18.79 
            
Yield on average loans and           
leases (tax equivalent) 5.20%  5.15%  0.05   5.20%  5.54%  (0.34)
Cost of average total           
deposits 0.11%  0.14%  (0.03)  0.11%  0.59%  (0.48)
Net interest margin ("NIM")           
(tax equivalent) 3.69%  3.83%  (0.14)  3.69%  4.31%  (0.62)
Efficiency ratio 46.4%  43.6%  2.8   46.4%  40.6%  5.8 
            
Total assets$32,856,533  $29,498,442  $3,358,091  $32,856,533  $26,143,267  $6,713,266 
Loans and leases held           
for investment,           
net of deferred fees$18,979,228  $19,083,377  $(104,149) $18,979,228  $19,745,305  $(766,077)
Noninterest-bearing           
demand deposits$11,017,462  $9,193,827  $1,823,635  $11,017,462  $7,510,218  $3,507,244 
Core deposits$25,576,348  $22,264,480  $3,311,868  $25,576,348  $16,050,522  $9,525,826 
Total deposits$28,223,291  $24,940,717  $3,282,574  $28,223,291  $19,575,837  $8,647,454 
            
As percentage of total           
deposits:           
Noninterest-bearing           
demand deposits 39%  37%  2   39%  38%  1 
Core deposits 91%  89%  2   91%  82%  9 
            
Equity to assets ratio 11.12%  12.19%  (1.07)  11.12%  12.97%  (1.85)
Common equity tier 1           
capital ratio 10.41%  10.53%  (0.12)  10.41%  9.22%  1.19 
Total capital ratio 13.63%  13.76%  (0.13)  13.63%  12.07%  1.56 
Tangible common equity           
ratio (2) 7.68%  8.78%  (1.10)  7.68%  9.10%  (1.42)
Book value per share$30.68  $30.36  $0.32  $30.68  $28.75  $1.93 
Tangible book value per           
share (2)$20.39  $21.05  $(0.66) $20.39  $19.31  $1.08 
            
(1) The operations of Civic are included from its February 1, 2021 acquisition date.           
(2) Non-GAAP measure.           



INCOME STATEMENT HIGHLIGHTS

NET INTEREST INCOME

Net interest income increased by $2.1 million to $261.3 million for the first quarter of 2021 compared to $259.2 million for the fourth quarter of 2020 due mainly to higher income on investment securities and lower interest expense, partially offset by lower income on loans and leases and the negative impact on net interest income due to the change in the earning assets mix. The tax equivalent yield on average loans and leases was 5.20% for the first quarter of 2021 compared to 5.15% for the fourth quarter of 2020. The increase in the tax equivalent yield on average loans and leases was primarily due to higher loan discount accretion of $1.5 million and higher amortized loan fee income of $2.9 million mainly from higher PPP loan forgiveness in the first quarter of 2021 as compared to the fourth quarter of 2020.

The tax equivalent NIM was 3.69% for the first quarter of 2021 compared to 3.83% for the fourth quarter of 2020. The decrease in the NIM was primarily due to the change in the earning assets mix. The average balance of deposits in financial institutions increased by $1.2 billion, the average balance of investment securities increased by $494.1 million, and the average balance of loans and leases increased by $158.1 million in the first quarter of 2021. This excess liquidity had a negative impact on the first quarter tax equivalent NIM of 61 basis points.          

The cost of average total deposits decreased to 0.11% in the first quarter of 2021 from 0.14% for the fourth quarter of 2020. The lower cost of average total deposits was due primarily to the repricing of maturing brokered time deposits and the increased average balance of noninterest-bearing deposits.

PROVISION FOR CREDIT LOSSES

The following table presents details of the provision for credit losses for the periods indicated:

 Three Months Ended  
 March 31, December 31, Increase
Provision for Credit Losses 2021   2020  (Decrease)
            
   (In thousands)  
(Reduction in) addition to allowance for loan     
and lease losses$(53,000) $21,000  $(74,000)
Addition to (reduction in) reserve for     
unfunded loan commitments 5,000   (11,000)  16,000 
Total provision for credit losses$(48,000) $10,000  $(58,000)

The provision for credit losses decreased by $58.0 million to a benefit of $48.0 million for the first quarter of 2021 compared to a $10.0 million provision for the fourth quarter of 2020. This reduction reflected improvement in certain key macro-economic forecast variables and decreased provisions for individually evaluated loans and leases, partially offset by a higher provision for unfunded commitments which grew by $526.6 million.

NONINTEREST INCOME

The following table presents details of noninterest income for the periods indicated:

 Three Months Ended  
 March 31, December 31, Increase
Noninterest Income 2021  2020 (Decrease)
          
     (In thousands)    
Service charges on deposit accounts$2,934 $3,119 $(185)
Other commissions and fees 9,158  9,974  (816)
Leased equipment income 11,354  9,440  1,914 
Gain on sale of loans and leases 139  1,671  (1,532)
Gain on sale of securities 101  4  97 
Other income:     
Dividends and gains on equity investments 10,904  5,064  5,840 
Warrant income 6,123  7,299  (1,176)
Other 4,116  3,279  837 
Total noninterest income$44,829 $39,850 $4,979 

Noninterest income increased by $5.0 million to $44.8 million for the first quarter of 2021 compared to $39.9 million for the fourth quarter of 2020 due primarily to an increase of $5.8 million in dividends and gains on equity investments and a $1.9 million increase in leased equipment income, offset partially by decreases of $1.5 million in gain on sale of loans and leases and $1.2 million in warrant income. The increase in dividends and gains on equity investments was due primarily to a $10.1 million gain on one equity investment, offset partially by lower net fair value gains on equity investments still held. The increase in leased equipment income was due primarily to a higher average balance of equipment leased to others under operating leases. The decrease in the gain on sale of loans and leases resulted from the sales of $72.6 million of loans for gains of $0.1 million in the first quarter of 2021 compared to sales of $119.9 million for gains of $1.7 million in the fourth quarter of 2020. The decrease in warrant income was primarily attributable to lower gains from exercised warrants after record gains in the fourth quarter of 2020.

NONINTEREST EXPENSE

The following table presents details of noninterest expense for the periods indicated:

 Three Months Ended  
 March 31, December 31, Increase
Noninterest Expense 2021  2020  (Decrease)
           
     (In thousands)     
Compensation$79,882 $73,171  $6,711 
Occupancy 14,054  14,083   (29)
Data processing 6,957  6,718   239 
Other professional services 5,126  6,800   (1,674)
Insurance and assessments 4,903  5,064   (161)
Intangible asset amortization 3,079  3,172   (93)
Leased equipment depreciation 8,969  7,501   1,468 
Foreclosed assets (income) expense, net 1  (272)  273 
Acquisition, integration and reorganization costs 3,425  1,060   2,365 
Customer related expense 4,818  4,430   388 
Loan expense 3,193  3,926   (733)
Other 15,729  10,029   5,700 
Total operating expense 150,136  135,682   14,454 
Goodwill impairment -  -   - 
Total noninterest expense$150,136 $135,682  $14,454 

Noninterest expense increased by $14.5 million to $150.1 million for the first quarter of 2021 compared to $135.7 million for the fourth quarter of 2020 due primarily to increases of $6.7 million in compensation expense, $5.7 million in other expense, $2.4 million in acquisition, integration and reorganization costs, and $1.5 million in leased equipment depreciation, offset partially by a decrease of $1.7 million in other professional expense. The increase in compensation expense was mostly due to compensation expense related to the Civic operations, while, in total, Civic’s noninterest expenses added $10.8 million to total noninterest expense. The increase in other expense was largely due to a legal settlement in excess of amounts previously accrued. The increase in acquisition, integration and reorganization costs was due to advisory services and integration expenses related to the closed Civic acquisition and the pending acquisition of MUFG Union Bank’s Homeowners Association Services Division. The increase in leased equipment depreciation was due primarily to an increase in the average balance of equipment leased to others under operating leases. The decrease in other professional expense was due primarily to lower consulting expense.

INCOME TAXES

The effective income tax rate was 26.3% in the first quarter of 2021 compared to 23.8% for the fourth quarter of 2020. The increase was primarily due to higher pre-tax income in relation to discrete items for the quarter. The effective income tax rate for the full year 2021 is currently estimated to be in the range of 25% to 27%.

BALANCE SHEET HIGHLIGHTS

DEPOSITS AND CLIENT INVESTMENT FUNDS

The following table presents the composition of our deposit portfolio as of the dates indicated:

 March 31, 2021 December 31, 2020 March 31, 2020
  % of   % of   % of
Deposit CompositionBalanceTotal BalanceTotal BalanceTotal
               
       (Dollars in thousands)       
Noninterest-bearing demand$11,017,46239% $9,193,82737% $7,510,21838%
Interest checking 6,862,39825%  5,974,91024%  3,333,14717%
Money market 7,112,61025%  6,532,91726%  4,712,11824%
Savings 583,8782%  562,8262%  495,0393%
Total core deposits 25,576,34891%  22,264,48089%  16,050,52282%
Non-core non-maturity deposits 1,162,5904%  1,149,4675%  836,1574%
Total non-maturity deposits 26,738,93895%  23,413,94794%  16,886,67986%
Time deposits $250,000 and under 940,3403%  994,1974%  2,086,18811%
Time deposits over $250,000 544,0132%  532,5732%  602,9703%
Total time deposits 1,484,3535%  1,526,7706%  2,689,15814%
Total deposits$28,223,291100% $24,940,717100% $19,575,837100%

At March 31, 2021, core deposits totaled $25.6 billion or 91% of total deposits, including $11.0 billion of noninterest-bearing demand deposits or 39% of total deposits. Core deposits increased by $3.3 billion or 15% in the first quarter of 2021 driven by continued strong deposit growth from our venture banking clients.

In addition to deposit products, we also offer alternative, non-depository cash investment options for select clients. These alternative options include investments managed by Pacific Western Asset Management Inc. (“PWAM”), our registered investment advisor subsidiary, and third-party sweep products. Total off-balance sheet client investment funds at March 31, 2021 were $1.4 billion, of which $0.9 billion was managed by PWAM.

LOANS AND LEASES

The following table presents roll forwards of loans and leases held for investment, net of deferred fees, for the periods indicated:

 Three Months Ended
Roll Forward of Loans and Leases HeldMarch 31, December 31,
for Investment, Net of Deferred Fees (1) 2021   2020 
        
  
  (Dollars in thousands) 
Balance, beginning of period$19,083,377  $19,026,200 
Additions:   
Production 1,612,777   1,131,165 
Disbursements 1,022,986   1,354,038 
Total production and disbursements 2,635,763   2,485,203 
Reductions:   
Payoffs (1,635,264)  (1,330,321)
Paydowns (1,067,418)  (957,075)
Total payoffs and paydowns (2,702,682)  (2,287,396)
Sales (72,641)  (119,931)
Transfers to foreclosed assets (647)  (385)
Charge-offs (3,988)  (20,314)
Transfers to loans held for sale (25,554)  - 
Total reductions (2,805,512)  (2,428,026)
Loans acquired through Civic acquisition 65,600   - 
Net increase (decrease) (104,149)  57,177 
Balance, end of period$18,979,228  $19,083,377 
    
Weighted average rate on production (2) 4.36%  4.41%
    
(1) Includes direct financing leases but excludes equipment leased to others under operating leases.   
(2) The weighted average rate on production presents contractual rates on a tax equivalent basis and excludes amortized fees. Amortized fees added approximately 43 basis points to loan yields in 2021.
    

Loans and leases held for investment, net of deferred fees, decreased by $104.1 million in the first quarter of 2021 to $19.0 billion at March 31, 2021. The decrease in the loans and leases balance for the first quarter of 2021 was primarily due to a $123.5 million decrease in the security monitoring portfolio, for which new originations have been discontinued since the fourth quarter of 2019. The weighted average rate on first quarter of 2021 production decreased to 4.36% due to first quarter production including $381 million of PPP loans at a coupon rate of 1%, while the fourth quarter of 2020 included no PPP loan production. Excluding PPP loans, the weighted average rate on new production for the first quarter of 2021 was 5.39%.

The following table presents the composition of loans and leases held for investment by loan portfolio segment and class, net of deferred fees, as of the dates indicated:

 March 31, 2021 December 31, 2020 March 31, 2020
  % of   % of   % of
Loan and Lease Portfolio BalanceTotal BalanceTotal BalanceTotal
               
    (In thousands)   
Real estate mortgage:        
Commercial$3,941,61021% $4,096,67121% $4,220,64921%
Income producing and other        
residential 4,045,60321%  3,803,26520%  3,788,29519%
Total real estate mortgage 7,987,21342%  7,899,93641%  8,008,94440%
Real estate construction and land:        
Commercial 990,0355%  1,117,1216%  1,087,5056%
Residential 2,575,78814%  2,243,16012%  1,792,7489%
Total real estate construction        
and land 3,565,82319%  3,360,28118%  2,880,25315%
Total real estate 11,553,03661%  11,260,21759%  10,889,19755%
Commercial:        
Asset-based 3,383,40318%  3,429,28318%  3,938,40220%
Venture capital 1,495,7988%  1,698,5089%  2,715,83714%
Other commercial 2,206,63911%  2,375,11412%  1,771,9859%
Total commercial 7,085,84037%  7,502,90539%  8,426,22443%
Consumer 340,3522%  320,2552%  429,8842%
Total loans and leases held for        
investment, net of deferred fees$18,979,228100% $19,083,377100% $19,745,305100%
         
Total unfunded loan commitments$8,127,999  $7,601,390  $7,697,724 

ALLOWANCE FOR CREDIT LOSSES

The following tables present roll forwards of the allowance for credit losses for the periods indicated:

 Three Months Ended March 31, 2021
 Allowance for Reserve for  Total
Allowance for Credit Loan and  Unfunded Loan Allowance for
Losses RollforwardLease Losses Commitments Credit Losses
            
      (In thousands)     
Beginning balance$348,181  $85,571  $433,752 
Charge-offs (3,988)  -   (3,988)
Recoveries 1,252   -   1,252 
Net charge-offs (2,736)  -   (2,736)
Provision (53,000)  5,000   (48,000)
Ending balance$292,445  $90,571  $383,016 
      
 Three Months Ended December 31, 2020
 Allowance for Reserve for  Total
Allowance for Credit Loan and  Unfunded Loan Allowance for
Losses RollforwardLease Losses Commitments Credit Losses
            
      (In thousands)     
Beginning balance$345,966  $96,571  $442,537 
Charge-offs (20,314)  -   (20,314)
Recoveries 1,529   -   1,529 
Net charge-offs (18,785)  -   (18,785)
Provision 21,000   (11,000)  10,000 
Ending balance$348,181  $85,571  $433,752 


The following table presents allowance for credit losses information as of and for the dates and periods indicated:

 March 31, December 31, Increase
Allowance for Credit Losses 2021   2020  (Decrease)
            
      (Dollars in thousands)     
Allowance for loan and lease losses$292,445  $348,181  $(55,736)
Reserve for unfunded loan commitments 90,571   85,571   5,000 
Allowance for credit losses$383,016  $433,752  $(50,736)
      
Provision for credit losses (for the quarter)$(48,000) $10,000  $(58,000)
Net charge-offs (for the quarter)$2,736  $18,785  $(16,049)
Net charge-offs to average loans and leases     
(for the quarter) 0.06%  0.40%  
Allowance for loan and lease losses to loans     
and leases held for investment 1.54%  1.82%  
Allowance for loan and lease losses to loans     
and leases held for investment, excluding PPP loans 1.63%  1.93%  
Allowance for credit losses to loans and leases     
held for investment 2.02%  2.27%  
Allowance for credit losses to loans and leases     
held for investment, excluding PPP loans 2.14%  2.41%  

The allowance for credit losses decreased by $50.7 million in the first quarter of 2021 to $383.0 million at March 31, 2021. The decrease in the allowance for credit losses during the first quarter of 2021 was attributable to a provision for credit losses benefit of $48.0 million and $2.7 million in net charge-offs.  

Net charge-offs were $2.7 million for the first quarter of 2021. Gross charge-offs of $4.0 million were reduced by recoveries of $1.3 million.

Net charge-offs were $18.8 million for the fourth quarter of 2020. Gross charge-offs of $20.3 million were reduced by recoveries of $1.5 million. The most significant charge-off was $15.5 million related to a security monitoring loan.

Security monitoring loans decreased by 38% from $329.3 million as of December 31, 2020 to $205.8 million as of March 31, 2021, as the Company continues to actively reduce the remaining loans. As of March 31, 2021, $172.1 million or 84% of these security monitoring loans are performing and pass-rated, while $33.7 million are classified, of which $6.1 million are on nonaccrual.

CREDIT QUALITY  

The following table presents loan and lease credit quality metrics as of the dates indicated:

 March 31, December 31, Increase
Credit Quality Metrics  2021   2020  (Decrease)
            
   (Dollars in thousands)  
NPAs and Performing TDRs:     
Nonaccrual loans and leases held for investment (1)$67,652  $91,163  $(23,511)
Accruing loans contractually past due 90 days or more -   -   - 
Foreclosed assets, net 14,298   14,027   271 
   Total nonperforming assets ("NPAs")$81,950  $105,190  $(23,240)
      
Performing TDRs held for investment$27,999  $14,254  $13,745 
      
Nonaccrual loans and leases held for investment     
to loans and leases held for investment 0.36%  0.48%  
Nonperforming assets to loans and leases     
held for investment and foreclosed assets 0.43%  0.55%  
Allowance for credit losses to nonaccrual loans     
and leases held for investment 566.2%  475.8%  
      
Loan and Lease Credit Risk Ratings:     
Pass$18,183,114  $18,096,830  $86,284 
Special mention 632,997   721,285   (88,288)
Classified 163,117   265,262   (102,145)
Total loans and leases held for investment,     
net of deferred fees$18,979,228  $19,083,377  $(104,149)
      
Classified loans and leases held for investment     
to loans and leases held for investment 0.86%  1.39%  
      
      
(1) Nonaccrual loans include guaranteed amounts of $18.4 million at March 31, 2021 and $13.9 million at December 31, 2020.    

Since pro-actively downgrading certain loans at the onset of the pandemic in the first quarter of 2020, special mention loans and leases have decreased $265.7 million from their peak in the first quarter of 2020, while classified loans and leases have decreased $130.1 million from their peak in the second quarter of 2020, and each have continued their decline in the first quarter of 2021.

The following table presents nonaccrual loans and leases and accruing loans and leases past due between 30 and 89 days by loan portfolio segment and class as of the dates indicated:

 March 31, 2021 December 31, 2020 Increase (Decrease)
   Accruing   Accruing   Accruing
   and 30-89   and 30-89   and 30-89
   Days Past   Days Past   Days Past
 Nonaccrual  Due Nonaccrual Due Nonaccrual Due
                    
   (Dollars in thousands)  
Real estate mortgage:           
Commercial$46,436 $5 $43,731 $3,636 $2,705  $(3,631)
Income producing and other           
residential 2,471  6,339  1,826  600  645   5,739 
Total real estate mortgage 48,907  6,344  45,557  4,236  3,350   2,108 
Real estate construction and land:          
Commercial 302  -  315  -  (13)  - 
Residential 416  1,241  -  759  416   482 
Total real estate           
construction and land 718  1,241  315  759  403   482 
Commercial:           
Asset-based 2,379  -  2,679  -  (300)  - 
Venture capital 2,432  6,750  1,980  540  452   6,210 
Other commercial 12,660  1,251  40,243  2,078  (27,583)  (827)
Total commercial 17,471  8,001  44,902  2,618  (27,431)  5,383 
Consumer 556  954  389  1,260  167   (306)
Total held for investment$67,652 $16,540 $91,163 $8,873 $(23,511) $7,667 

During the first quarter of 2021, nonaccrual loans and leases decreased by $23.5 million due primarily to one security monitoring loan for $25.6 million being moved to held for sale at March 31, 2021. The sale of this loan was completed in early April 2021 and resulted in a gain of $1.4 million.

CAPITAL

The following table presents certain actual capital ratios and ratios excluding PPP loans:

 March 31, 2021  
   Excluding December 31,
   PPP 2020 
 Actual (1)  Loans (1) Actual
PacWest Bancorp Consolidated:     
Tier 1 leverage capital ratio7.95% 8.25%(3)8.55%
Common equity tier 1 capital ratio10.41% 10.41% 10.53%
Total capital ratio13.63% 13.63% 13.76%
Tangible common equity ratio (2)7.68% 7.95%(3)8.78%
      
(1) Capital information for March 31, 2021 is preliminary.     
(2) Non-GAAP measure.     
(3) PPP loans have been excluded from total assets in denominator as they are zero risk-weighted.     

ABOUT PACWEST BANCORP

PacWest Bancorp (“PacWest”) is a bank holding company with over $32 billion in assets headquartered in Los Angeles, California, with an executive office in Denver, Colorado, with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). The Bank has 70 full-service branches located in California, one branch located in Durham, North Carolina, and one branch located in Denver, Colorado. The Bank provides community banking products including lending and comprehensive deposit and treasury management services to small and medium-sized businesses conducted primarily through our California-based branch offices and Denver, Colorado branch office. The Bank offers national lending products including asset-based, equipment, and real estate loans and treasury management services to established middle-market businesses on a national basis. The Bank also offers venture banking products including a comprehensive suite of financial services focused on entrepreneurial and venture-backed businesses and their venture capital and private equity investors, with offices located in key innovative hubs across the United States. For more information about PacWest Bancorp or Pacific Western Bank, visit www.pacwest.com.

FORWARD LOOKING STATEMENTS

This communication contains certain forward-looking information about PacWest that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements about future financial and operational results, expectations, or intentions are forward-looking statements. Such statements are based on information available at the time of the communication and are based on current beliefs and expectations of the Company’s management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control. The COVID-19 pandemic is adversely affecting PacWest, its employees, customers and third-party service providers, and the ultimate extent of the impacts on its business, financial position, results of operations, liquidity and prospects is uncertain. The length of the COVID-19 pandemic and the severity of its impact on key macro-economic indicators such as unemployment and GDP may have a material impact on our allowance for credit losses and related provision for credit losses. Continued deterioration in general business and economic conditions could adversely affect PacWest’s revenues and the values of its assets, including goodwill, and liabilities, lead to a tightening of credit, and increase stock price volatility. In addition, PacWest’s results could be adversely affected by changes in interest rates, sustained high unemployment rates, deterioration in the credit quality of its loan portfolio or in the value of the collateral securing those loans, deterioration in the value of its investment securities, the magnitude of individual loan losses on security monitoring loans, and legal and regulatory developments. Actual results may differ materially from those set forth or implied in the forward-looking statements due to a variety of factors, including the risk factors described in documents filed by PacWest with the U.S. Securities and Exchange Commission.

We are under no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

      
PACWEST BANCORP AND SUBSIDIARIES     
CONDENSED CONSOLIDATED BALANCE SHEET     
      
 March 31, December 31, March 31,
  2021   2020   2020 
            
 (Dollars in thousands, except per share data)
ASSETS:     
Cash and due from banks$177,199  $150,464  $172,570 
Interest-earning deposits in financial institutions 5,517,667   3,010,197   439,690 
Total cash and cash equivalents  5,694,866   3,160,661   612,260 
      
Securities available-for-sale, at estimated fair value 5,941,690   5,235,591   3,757,663 
Federal Home Loan Bank stock, at cost 17,250   17,250   54,244 
Total investment securities 5,958,940   5,252,841   3,811,907 
      
Loans held for sale 25,554   -   - 
      
Gross loans and leases held for investment 19,055,165   19,153,357   19,806,394 
Deferred fees, net (75,937)  (69,980)  (61,089)
Total loans and leases held for investment,     
net of deferred fees 18,979,228   19,083,377   19,745,305 
Allowance for loan and lease losses (292,445)  (348,181)  (221,292)
Total loans and leases held for investment, net 18,686,783   18,735,196   19,524,013 
      
Equipment leased to others under operating leases 327,413   333,846   306,530 
Premises and equipment, net 39,622   39,234   39,799 
Foreclosed assets, net 14,298   14,027   1,701 
Goodwill 1,204,092   1,078,670   1,078,670 
Core deposit and customer relationship intangibles, net 21,312   23,641   34,446 
Other assets 883,653   860,326   733,941 
Total assets$32,856,533  $29,498,442  $26,143,267 
      
LIABILITIES:     
Noninterest-bearing deposits$11,017,462  $9,193,827  $7,510,218 
Interest-bearing deposits 17,205,829   15,746,890   12,065,619 
Total deposits 28,223,291   24,940,717   19,575,837 
Borrowings 19,750   5,000   2,295,000 
Subordinated debentures 465,814   465,812   458,994 
Accrued interest payable and other liabilities 493,541   491,962   423,047 
Total liabilities 29,202,396   25,903,491   22,752,878 
STOCKHOLDERS' EQUITY (1) 3,654,137   3,594,951   3,390,389 
Total liabilities and stockholders’ equity$32,856,533  $29,498,442  $26,143,267 
      
Book value per share$30.68  $30.36  $28.75 
Tangible book value per share (2)$20.39  $21.05  $19.31 
Shares outstanding 119,105,642   118,414,853   117,916,789 
      
(1) Includes net unrealized gain on securities     
available-for-sale, net$106,381  $172,523  $90,916 
(2) Non-GAAP measure.     



      
PACWEST BANCORP AND SUBSIDIARIES     
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)    
      
 Three Months Ended
 March 31, December 31, March 31,
  2021   2020   2020 
            
 (Dollars in thousands, except per share data)
Interest income:     
Loans and leases$241,544  $242,198  $262,278 
Investment securities 30,265   28,843   27,446 
Deposits in financial institutions 1,528   1,135   1,608 
Total interest income 273,337   272,176   291,332 
      
Interest expense:     
Deposits 7,500   8,454   28,247 
Borrowings 193   37   6,778 
Subordinated debentures 4,375   4,477   6,560 
Total interest expense 12,068   12,968   41,585 
      
Net interest income 261,269   259,208   249,747 
Provision for credit losses (48,000)  10,000   112,000 
Net interest income after provision     
for credit losses 309,269   249,208   137,747 
      
Noninterest income:     
Service charges on deposit accounts 2,934   3,119   2,658 
Other commissions and fees 9,158   9,974   9,721 
Leased equipment income 11,354   9,440   12,251 
Gain on sale of loans and leases 139   1,671   87 
Gain on sale of securities 101   4   182 
Other income 21,143   15,642   4,201 
Total noninterest income 44,829   39,850   29,100 
      
Noninterest expense:     
Compensation 79,882   73,171   61,282 
Occupancy 14,054   14,083   14,207 
Data processing 6,957   6,718   6,454 
Other professional services 5,126   6,800   4,258 
Insurance and assessments 4,903   5,064   4,249 
Intangible asset amortization 3,079   3,172   3,948 
Leased equipment depreciation 8,969   7,501   7,205 
Foreclosed assets (income) expense, net 1   (272)  66 
Acquisition, integration and     
reorganization costs 3,425   1,060   - 
Customer related expense 4,818   4,430   3,932 
Loan expense 3,193   3,926   2,650 
Goodwill impairment -   -   1,470,000 
Other expense 15,729   10,029   9,719 
Total noninterest expense 150,136   135,682   1,587,970 
      
Earnings (loss) before income taxes 203,962   153,376   (1,421,123)
Income tax expense 53,556   36,546   11,988 
Net earnings (loss)$150,406  $116,830  $(1,433,111)
      
Basic and diluted earnings (loss) per share$1.27  $0.99  $(12.23)
Dividends declared and paid per share$0.25  $0.25  $0.60 
            



          
PACWEST BANCORP AND SUBSIDIARIES         
NET EARNINGS (LOSS) PER SHARE CALCULATIONS         
          
 Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
  2021   2020   2020   2020   2020 
                    
 (In thousands, except per share data)
Basic Earnings (Loss) Per Share:         
Net earnings (loss)$150,406  $116,830  $45,503  $33,204  $(1,433,111)
Less: earnings allocated to         
unvested restricted stock (1) (2,355)  (1,398)  (578)  (362)  (939)
Net earnings (loss) allocated to         
common shares$148,051  $115,432  $44,925  $32,842  $(1,434,050)
          
Weighted-average basic shares         
and unvested restricted stock         
outstanding 118,852   118,446   118,438   118,192   118,775 
Less: weighted-average unvested         
restricted stock outstanding (2,003)  (1,652)  (1,684)  (1,606)  (1,495)
Weighted-average basic shares         
outstanding 116,849   116,794   116,754   116,586   117,280 
          
Basic earnings (loss) per share$1.27  $0.99  $0.38  $0.28  $(12.23)
          
Diluted Earnings (Loss) Per Share:         
Net earnings (loss) allocated to         
common shares$148,051  $115,432  $44,925  $32,842  $(1,434,050)
          
Weighted-average diluted shares         
outstanding 116,849   116,794   116,754   116,586   117,280 
          
Diluted earnings (loss) per share$1.27  $0.99  $0.38  $0.28  $(12.23)
          
(1) Represents cash dividends paid to holders of unvested stock, net of forfeitures, plus         
undistributed earnings amounts available to holders of unvested restricted stock, if any.         

 

PACWEST BANCORP AND SUBSIDIARIES           
AVERAGE BALANCE SHEET AND YIELD ANALYSIS           
            
 Three Months Ended
 March 31, 2021 December 31, 2020 March 31, 2020
  InterestAverage  InterestAverage  InterestAverage
 Average Income/Yield/ Average Income/Yield/ Average Income/Yield/
 BalanceExpenseCost BalanceExpenseCost BalanceExpenseCost
            
  
  (Dollars in thousands) 
Assets:           
Loans and leases (1)(2)$18,927,314$242,8465.20% $18,769,214$243,1885.15% $19,065,035$262,7645.54%
Investment securities (3) 5,383,140 32,3292.44%  4,888,993 30,7572.50%  3,853,217 28,6412.99%
Deposits in financial           
institutions 4,790,231 1,5280.13%  3,576,335 1,1350.13%  537,384 1,6081.20%
Total interest-earning           
assets (1) 29,100,685 276,7033.86%  27,234,542 275,0804.02%  23,455,636 293,0135.02%
Other assets 2,315,197    2,100,247    3,643,404  
Total assets$31,415,882    $29,334,789    $27,099,040   
            
Liabilities and            
Stockholders' Equity:           
Interest checking$6,401,869 2,2320.14% $5,191,435 2,0640.16% $3,466,812 7,1350.83%
Money market 7,975,996 3,2780.17%  7,636,220 3,2250.17%  5,247,866 10,0160.77%
Savings 572,959 350.02%  567,646 350.02%  497,959 1600.13%
Time 1,493,267 1,9550.53%  1,650,150 3,1300.75%  2,684,143 10,9361.64%
Total interest-bearing           
deposits 16,444,091 7,5000.18%  15,045,451 8,4540.22%  11,896,780 28,2470.95%
Borrowings 226,053 1930.35%  237,098 370.06%  2,026,749 6,7781.35%
Subordinated debentures 466,101 4,3753.81%  463,951 4,4773.84%  458,399 6,5605.76%
Total interest-bearing           
liabilities 17,136,245 12,0680.29%  15,746,500 12,9680.33%  14,381,928 41,5851.16%
Noninterest-bearing           
demand deposits 10,173,459    9,589,789    7,357,717  
Discontinued operations -    -    1,583  
Total other liabilities 488,930    462,075    401,034  
Other liabilities 488,930    462,075    402,617  
Total liabilities 27,798,634    25,798,364    22,142,262  
Stockholders' equity 3,617,248    3,536,425    4,956,778  
Total liabilities and           
stockholders' equity$31,415,882    $29,334,789    $27,099,040   
Net interest income (1) $264,635   $262,112   $251,428 
Net interest spread (1)  3.57%   3.69%   3.86%
Net interest margin (1)  3.69%   3.83%   4.31%
            
Total deposits (4)$26,617,550$7,5000.11% $24,635,240$8,4540.14% $19,254,497$28,2470.59%
            
(1) Tax equivalent.           
(2) Includes discount accretion on acquired loans of $5.4 million, $3.8 million, and $4.8 million for the three months ended March 31, 2021,          
December 31, 2020, and March 31, 2020, respectively.           
(3) Includes tax-equivalent adjustments of $2.1 million, $1.9 million, and $1.2 million for the three months ended March 31, 2021,           
December 31, 2020, and March 31, 2020 related to tax-exempt income on investment securities.           
The federal statutory tax rate utilized was 21%.           
(4) Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is           
calculated as annualized interest expense on total deposits divided by average total deposits.           



PACWEST BANCORP AND SUBSIDIARIES        
FIVE QUARTER BALANCE SHEET         
          
 March 31, December 31, September 30, June 30, March 31,
  2021   2020   2020   2020   2020 
                    
 (Dollars in thousands, except per share data)
ASSETS:         
Cash and due from banks$177,199  $150,464  $187,176  $174,059  $172,570 
Interest-earning deposits in financial         
institutions 5,517,667   3,010,197   2,766,020   1,747,077   439,690 
Total cash and cash equivalents  5,694,866   3,160,661   2,953,196   1,921,136   612,260 
          
Securities available-for-sale 5,941,690   5,235,591   4,532,614   3,851,141   3,757,663 
Federal Home Loan Bank stock 17,250   17,250   17,250   17,250   54,244 
   Total investment securities 5,958,940   5,252,841   4,549,864   3,868,391   3,811,907 
          
Loans held for sale 25,554   -   -   -   - 
          
Gross loans and leases held for investment 19,055,165   19,153,357   19,101,680   19,780,476   19,806,394 
Deferred fees, net (75,937)  (69,980)  (75,480)  (85,845)  (61,089)
Total loans and leases held for         
investment, net of deferred fees 18,979,228   19,083,377   19,026,200   19,694,631   19,745,305 
Allowance for loan and lease losses (292,445)  (348,181)  (345,966)  (301,050)  (221,292)
Total loans and leases held for         
investment, net 18,686,783   18,735,196   18,680,234   19,393,581   19,524,013 
          
Equipment leased to others under         
operating leases 327,413   333,846   286,425   295,191 - 306,530 
Premises and equipment, net 39,622   39,234   40,544   42,299   39,799 
Foreclosed assets, net 14,298   14,027   13,747   1,449   1,701 
Goodwill 1,204,092   1,078,670   1,078,670   1,078,670   1,078,670 
Core deposit and customer relationship         
intangibles, net 21,312   23,641   26,813   30,564   34,446 
Other assets 883,653   860,326   797,223   734,457   733,941 
Total assets$32,856,533  $29,498,442  $28,426,716  $27,365,738  $26,143,267 
          
LIABILITIES:         
Noninterest-bearing deposits$11,017,462  $9,193,827  $9,346,744  $8,629,543  $7,510,218 
Interest-bearing deposits 17,205,829   15,746,890   14,618,951   14,299,036   12,065,619 
Total deposits 28,223,291   24,940,717   23,965,695   22,928,579   19,575,837 
Borrowings 19,750   5,000   60,000   60,000   2,295,000 
Subordinated debentures 465,814   465,812   463,282   460,772   458,994 
Accrued interest payable and other         
liabilities 493,541   491,962   451,508   463,489   423,047 
Total liabilities 29,202,396   25,903,491   24,940,485   23,912,840   22,752,878 
STOCKHOLDERS' EQUITY (1) 3,654,137   3,594,951   3,486,231   3,452,898   3,390,389 
Total liabilities and stockholders’          
equity$32,856,533  $29,498,442  $28,426,716  $27,365,738  $26,143,267 
          
Book value per share$30.68  $30.36  $29.42  $29.17  $28.75 
Tangible book value per share (2)$20.39  $21.05  $20.09  $19.80  $19.31 
Shares outstanding 119,105,642   118,414,853   118,489,927   118,374,603   117,916,789 
          
(1) Includes net unrealized gain on         
securities available-for-sale, net$106,381  $172,523  $155,474  $145,038  $90,916 
(2) Non-GAAP measure.         



PACWEST BANCORP AND SUBSIDIARIES         
FIVE QUARTER STATEMENT OF EARNINGS (LOSS)        
          
 Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
  2021   2020   2020  2020   2020 
                   
 (Dollars in thousands, except per share data)
Interest income:         
Loans and leases$241,544  $242,198  $240,811 $247,851  $262,278 
Investment securities 30,265   28,843   24,443  26,038   27,446 
Deposits in financial institutions 1,528   1,135   654  186   1,608 
Total interest income 273,337   272,176   265,908  274,075   291,332 
          
Interest expense:         
Deposits 7,500   8,454   9,887  13,075   28,247 
Borrowings 193   37   27  1,319   6,778 
Subordinated debentures 4,375   4,477   4,670  5,402   6,560 
Total interest expense 12,068   12,968   14,584  19,796   41,585 
          
Net interest income 261,269   259,208   251,324  254,279   249,747 
Provision for credit losses (48,000)  10,000   97,000  120,000   112,000 
Net interest income after provision         
for credit losses 309,269   249,208   154,324  134,279   137,747 
          
Noninterest income:         
Service charges on deposit accounts 2,934   3,119   2,570  2,004   2,658 
Other commissions and fees 9,158   9,974   10,541  10,111   9,721 
Leased equipment income 11,354   9,440   9,900  12,037   12,251 
Gain on sale of loans and leases 139   1,671   35  346   87 
Gain on sale of securities 101   4   5,270  7,715   182 
Other income 21,143   15,642   9,936  6,645   4,201 
Total noninterest income 44,829   39,850   38,252  38,858   29,100 
          
Noninterest expense:         
Compensation 79,882   73,171   75,131  61,910   61,282 
Occupancy 14,054   14,083   14,771  14,494   14,207 
Data processing 6,957   6,718   6,505  7,102   6,454 
Other professional services 5,126   6,800   4,713  4,146   4,258 
Insurance and assessments 4,903   5,064   3,939  9,373   4,249 
Intangible asset amortization 3,079   3,172   3,751  3,882   3,948 
Leased equipment depreciation 8,969   7,501   7,057  7,102   7,205 
Foreclosed assets (income) expense, net 1   (272)  335  (146)  66 
Acquisition, integration and         
reorganization costs 3,425   1,060   -  -   - 
Customer related expense 4,818   4,430   4,762  4,408   3,932 
Loan expense 3,193   3,926   3,499  3,379   2,650 
Goodwill impairment -   -   -  -   1,470,000 
Other expense 15,729   10,029   8,939  11,315   9,719 
Total noninterest expense 150,136   135,682   133,402  126,965   1,587,970 
          
Earnings (loss) before income taxes 203,962   153,376   59,174  46,172   (1,421,123)
Income tax expense 53,556   36,546   13,671  12,968   11,988 
Net earnings (loss) $150,406  $116,830  $45,503 $33,204  $(1,433,111)
          
Basic and diluted earnings (loss) per share$1.27  $0.99  $0.38 $0.28  $(12.23)
Dividends declared and paid per share$0.25  $0.25  $0.25 $0.25  $0.60 



PACWEST BANCORP AND SUBSIDIARIES         
FIVE QUARTER SELECTED FINANCIAL DATA        
          
 At or For the Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
  2021   2020   2020   2020   2020 
                    
     (Dollars in thousands)    
Performance Ratios:         
Return on average assets (1) 1.94%  1.58%  0.65%  0.50%  (21.27)%
Pre-provision, pre-goodwill impairment,         
pre-tax net revenue ("PPNR")         
return on average assets (1)(2) 2.01%  2.22%  2.22%  2.51%  2.39%
Return on average equity (1) 16.86%  13.14%  5.18%  3.87%  (116.28)%
Return on average tangible equity (1)(2) 25.67%  19.63%  8.20%  6.39%  6.88%
Efficiency ratio 46.4%  43.6%  45.1%  42.9%  40.6%
Noninterest expense as a percentage         
of average assets (1) 1.94%  1.84%  1.90%  1.92%  23.57%
          
Average Yields/Costs (1):         
Yield on:         
Average loans and leases (3) 5.20%  5.15%  5.01%  5.01%  5.54%
Average interest-earning assets (3) 3.86%  4.02%  4.13%  4.53%  5.02%
Cost of:         
Average interest-bearing deposits 0.18%  0.22%  0.27%  0.40%  0.95%
Average total deposits 0.11%  0.14%  0.17%  0.25%  0.59%
Average interest-bearing liabilities 0.29%  0.33%  0.38%  0.55%  1.16%
Net interest spread (3) 3.57%  3.69%  3.75%  3.98%  3.86%
Net interest margin (3) 3.69%  3.83%  3.90%  4.20%  4.31%
          
Average Balances:         
Assets:         
Loans and leases, net of deferred fees$18,927,314  $18,769,214  $19,195,737  $19,951,603  $19,065,035 
Interest-earning assets 29,100,685   27,234,542   25,858,001   24,531,204   23,455,636 
Total assets 31,415,882   29,334,789   27,935,193   26,621,227   27,099,040 
Liabilities:         
Noninterest-bearing deposits 10,173,459   9,589,789   8,812,391   8,292,151   7,357,717 
Interest-bearing deposits 16,444,091   15,045,451   14,516,923   13,116,297   11,896,780 
Total deposits 26,617,550   24,635,240   23,329,314   21,408,448   19,254,497 
Borrowings 226,053   237,098   181,315   871,110   2,026,749 
Subordinated debentures 466,101   463,951   462,375   459,466   458,399 
Interest-bearing liabilities 17,136,245   15,746,500   15,160,613   14,446,873   14,381,928 
Stockholders' equity 3,617,248   3,536,425   3,497,869   3,446,850   4,956,778 
          
(1) Annualized.         
(2) Non-GAAP measure.         
(3) Tax equivalent.         



PACWEST BANCORP AND SUBSIDIARIES         
FIVE QUARTER SELECTED FINANCIAL DATA         
          
 At or For the Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
  2021   2020   2020   2020   2020 
                    
     (Dollars in thousands)    
Credit Quality Ratios:         
Nonaccrual loans and leases held for         
investment to loans and leases         
held for investment 0.36%  0.48%  0.45%  0.84%  0.48%
Nonperforming assets to loans and         
leases held for investment and         
foreclosed assets 0.43%  0.55%  0.52%  0.85%  0.49%
Classified loans and leases held for         
investment to loans and leases         
held for investment 0.86%  1.39%  1.44%  1.49%  0.75%
Provision for credit losses (for the         
quarter) to average loans and leases         
held for investment (annualized) (1.03)%  0.21%  2.01%  2.42%  2.36%
Net charge-offs (for the quarter) to         
average loans and leases held         
for investment (annualized) 0.06%  0.40%  0.75%  0.27%  0.40%
Trailing 12 months net charge-offs         
to average loans and leases         
held for investment 0.37%  0.45%  0.36%  0.20%  0.19%
Allowance for loan and lease losses to         
loans and leases held for investment 1.54%  1.82%  1.82%  1.53%  1.12%
Allowance for credit losses to loans         
and leases held for investment 2.02%  2.27%  2.33%  1.94%  1.39%
Allowance for credit losses to         
nonaccrual loans and leases         
held for investment 566.2%  475.8%  516.9%  229.7%  287.5%
          
PacWest Bancorp Consolidated:         
Tier 1 leverage capital ratio (1) 7.95%  8.55%  8.66%  8.93%  8.63%
Common equity tier 1 capital ratio (1) 10.41%  10.53%  10.45%  9.97%  9.22%
Tier 1 capital ratio (1) 10.41%  10.53%  10.45%  9.97%  9.22%
Total capital ratio (1) 13.63%  13.76%  13.74%  13.18%  12.07%
Risk-weighted assets (1)$22,968,958  $22,837,693  $22,114,040  $22,781,836  $24,214,209 
          
Equity to assets ratio 11.12%  12.19%  12.26%  12.62%  12.97%
Tangible common equity ratio (2) 7.68%  8.78%  8.71%  8.93%  9.10%
Book value per share$30.68  $30.36  $29.42  $29.17  $28.75 
Tangible book value per share (2)$20.39  $21.05  $20.09  $19.80  $19.31 
          
Pacific Western Bank:         
Tier 1 leverage capital ratio (1) 8.83%  9.53%  9.70%  10.03%  9.71%
Common equity tier 1 capital ratio (1) 11.57%  11.73%  11.70%  11.18%  10.38%
Tier 1 capital ratio (1) 11.57%  11.73%  11.70%  11.18%  10.38%
Total capital ratio (1) 12.82%  12.99%  12.95%  12.44%  11.39%
          
(1) Capital information for March 31, 2021 is preliminary.         
(2) Non-GAAP measure.         


GAAP TO NON-GAAP RECONCILIATIONS

This press release contains certain non-GAAP financial disclosures for: (1) Pre-provision, pre-goodwill impairment, pre-tax net revenue (“PPNR”), (2) PPNR return on average assets (3) return on average tangible equity, (4) tangible common equity ratio, and (5) tangible book value per share. The Company uses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. In particular, the use of return on average tangible equity, tangible common equity ratio, tangible book value per share, and PPNR is prevalent among banking regulators, investors, and analysts. Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures of: (1) net earnings, (2) return on average assets, (3) return on average equity, (4) equity to assets ratio, and (5) book value per share.  

The tables below present the reconciliations of these GAAP financial measures to the related non-GAAP financial measures:

 Three Months Ended
PPNR and PPNR Return March 31, December 31, September 30, June 30, March 31,
on Average Assets 2021   2020   2020   2020   2020 
                    
          (Dollars in thousands)         
Net earnings (loss)$150,406  $116,830  $45,503  $33,204  $(1,433,111)
Add: Provision for credit losses (48,000)  10,000   97,000   120,000   112,000 
Add: Goodwill impairment -   -   -   -   1,470,000 
Add: Income tax expense 53,556   36,546   13,671   12,968   11,988 
Pre-provision, pre-goodwill impairment,         
pre-tax net revenue ("PPNR")$155,962  $163,376  $156,174  $166,172  $160,877 
          
Average assets$31,415,882  $29,334,789  $27,935,193  $26,621,227  $27,099,040 
          
Return on average assets (1) 1.94%  1.58%  0.65%  0.50%  (21.27)%
PPNR return on average assets (2) 2.01%  2.22%  2.22%  2.51%  2.39%
          
(1) Annualized net earnings (loss) divided by average assets.         
(2) Annualized PPNR divided by average assets.         
          



 Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
Return on Average Tangible Equity 2021   2020   2020   2020   2020 
                    
          (Dollars in thousands)         
Net earnings (loss)$150,406  $116,830  $45,503  $33,204  $(1,433,111)
Add: Intangible asset amortization 3,079   3,172   3,751   3,882   3,948 
Add: Goodwill impairment -   -   -   -   1,470,000 
Adjusted net earnings$153,485  $120,002  $49,254  $37,086  $40,837 
          
Average stockholders' equity$3,617,248  $3,536,425  $3,497,869  $3,446,850  $4,956,778 
Less: Average intangible assets 1,192,780   1,103,945   1,107,548   1,111,302   2,569,189 
Average tangible common equity$2,424,468  $2,432,480  $2,390,321  $2,335,548  $2,387,589 
          
Return on average equity (1) 16.86%  13.14%  5.18%  3.87%  (116.28)%
Return on average tangible equity (2) 25.67%  19.63%  8.20%  6.39%  6.88%
          
(1) Annualized net earnings divided by average stockholders' equity.         
(2) Annualized adjusted net earnings divided by average tangible common equity.         
          



          
Tangible Common Equity Ratio/March 31, December 31, September 30, June 30, March 31,
                    
Tangible Book Value Per Share 2021   2020   2020   2020   2020 
                    
  (Dollars in thousands, except per share data)
    
    
Stockholders' equity$3,654,137  $3,594,951  $3,486,231  $3,452,898  $3,390,389 
Less: Intangible assets 1,225,404   1,102,311   1,105,483   1,109,234   1,113,116 
Tangible common equity$2,428,733  $2,492,640  $2,380,748  $2,343,664  $2,277,273 
          
Total assets$32,856,533  $29,498,442  $28,426,716  $27,365,738  $26,143,267 
Less: Intangible assets 1,225,404   1,102,311   1,105,483   1,109,234   1,113,116 
Tangible assets$31,631,129  $28,396,131  $27,321,233  $26,256,504  $25,030,151 
          
Equity to assets ratio 11.12%  12.19%  12.26%  12.62%  12.97%
Tangible common equity ratio (1) 7.68%  8.78%  8.71%  8.93%  9.10%
          
Book value per share$30.68  $30.36  $29.42  $29.17  $28.75 
Tangible book value per share (2)$20.39  $21.05  $20.09  $19.80  $19.31 
Shares outstanding 119,105,642   118,414,853   118,489,927   118,374,603   117,916,789 
          
(1) Tangible common equity divided by tangible assets.         
(2) Tangible common equity divided by shares outstanding.         
          


CONTACTS

Matthew P. Wagner
President and CEO
303.802.8900
Bart R. Olson
EVP and CFO
714.989.4149
William J. Black
EVP Strategy and Corporate Development
919.597.7466

Figure 1