PacWest Bancorp Announces Results for the Second Quarter 2017

Highlights

• Net Earnings of $93.6 Million, or $0.77 Per Diluted Share
• New Loan and Lease Production of $1.1 Billion
• Core Deposits Increase of $449 Million and Represent 78% of Total Deposits
• Tax Equivalent Net Interest Margin Increased Five Basis Points to 5.21%
• Classified Loans and Leases Reduced by 20%  

LOS ANGELES, July 18, 2017 (GLOBE NEWSWIRE) — PacWest Bancorp (Nasdaq:PACW) today announced net earnings for the second quarter of 2017 of $93.6 million, or $0.77 per diluted share, compared to net earnings for first quarter of 2017 of $78.7 million, or $0.65 per diluted share. The increase in net earnings from the prior quarter was primarily due to an increase in interest income from higher average balances of interest-earning assets and a lower provision for credit losses.

Matt Wagner, President and CEO, commented, “We delivered outstanding performance in the second quarter and continued to demonstrate our earning power. Our strong second quarter results produced a return on assets of 1.71% and a return on tangible equity of 16.06%. We also continue to proactively manage credit risk. During the second quarter we sold or contracted to sell loans totaling $221.1 million, including $159.4 million of healthcare cash flow loans. All of these sales have since closed. As a result, our healthcare cash flow loan portfolio today includes only one non-pass rated loan.”

Patrick Rusnak, Executive Vice President and CFO stated, “Our second quarter tax equivalent NIM increased five basis points to 5.21%. While the NIM benefitted from the repricing of variable-rate loans, this was partially offset by higher rates on non-core interest-bearing deposits and borrowings.”

Mr. Wagner continued, “We continue to look forward to closing the CU Bancorp acquisition in the fourth quarter of 2017, as we expect regulatory and shareholder approvals to come in the normal course. The date of the CU Bancorp special shareholders meeting has been set and management of both organizations are working on the integration plan.”

FINANCIAL HIGHLIGHTS

	At or For the Three Months Ended												At or For the Six Months Ended
	June 30,				March 31,								June 30,
Financial Highlights		2017				2017			Change					2017				2016			Change
	(Dollars in thousands, except per share data)
Net earnings	$	93,647			$	78,668			$	14,979			$	172,315			$	172,624			$	(309	)
Diluted earnings per share	$	0.77			$	0.65			$	0.12			$	1.42			$	1.42			$	–
Return on average assets		1.71	%			1.47	%			0.24				1.59	%			1.65	%			(0.06	)
Return on average
tangible equity (1)		16.06	%			13.90	%			2.16				15.00	%			15.52	%			(0.52	)
Net interest margin
(tax equivalent)		5.21	%			5.16	%			0.05				5.19	%			5.43	%			(0.24	)
Efficiency ratio		40.3	%			41.4	%			(1.1	)			40.8	%			39.5	%			1.3
Total assets	$	22,246,877			$	21,927,254			$	319,623			$	22,246,877			$	21,147,139			$	1,099,738
Loans and leases held
for investment, net of
deferred fees	$	15,543,457			$	15,556,689			$	(13,232	)		$	15,543,457			$	14,641,460			$	901,997
Noninterest-bearing
deposits	$	6,701,039			$	6,789,808			$	(88,769	)		$	6,701,039			$	6,222,696			$	478,343
Core deposits	$	13,217,574			$	12,769,073			$	448,501			$	13,217,574			$	11,411,992			$	1,805,582
Total deposits	$	16,874,977			$	16,331,008			$	543,969			$	16,874,977			$	15,148,009			$	1,726,968
Noninterest-bearing
deposits as percentage
of total deposits		40	%			42	%			(2	)			40	%			41	%			(1	)
Core deposits as
percentage of total
deposits		78	%			78	%			–				78	%			75	%			3
Equity to assets ratio		20.50	%			20.56	%			(0.06	)			20.50	%			21.34	%			(0.84	)
Tangible common equity
ratio (1)		11.75	%			11.67	%			0.08				11.75	%			12.12	%			(0.37	)
Book value per share	$	37.55			$	37.13			$	0.42			$	37.55			$	37.05			$	0.50
Tangible book value per
share (1)	$	19.40			$	18.95			$	0.45			$	19.40			$	18.83			$	0.57
(1) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income increased by $10.0 million to $242.5 million in the second quarter of 2017 compared to $232.5 million in the first quarter of 2017 due to higher average yields and balances of loans and leases. The loan and lease yield for the second quarter of 2017 was 6.07% compared to 5.94% for the first quarter of 2017. The increase in the loan and lease yield was principally due to the higher yields on average loans and leases as a result of the repricing of variable-rate loans due to the increase in market rates during the first half of 2017.

The tax equivalent NIM for the second quarter of 2017 was 5.21% compared to 5.16% for the first quarter of 2017. The increase in the NIM was mostly due to higher yields on loans and leases due to the upward repricing of variable-rate loans, partially offset by a higher cost of interest-bearing liabilities.

The cost of total deposits increased to 0.25% in the second quarter of 2017 from 0.21% in the first quarter of 2017 due to a higher cost and average balance of non-core deposits.

Noninterest Income

Noninterest income increased by $0.2 million to $35.3 million in the second quarter of 2017 compared to $35.1 million in the first quarter of 2017 due mainly to a $2.2 million increase in leased equipment income due to higher gains on early lease terminations, a $1.8 million increase in gain on sale of securities, and a $0.7 million increase in warrant income, offset by a $4.5 million decrease in other income attributable mainly to a $5.0 million legal settlement with a former borrower recorded in the first quarter of 2017.   

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

	Three Months Ended
	June 30,				March 31,				Increase
Noninterest Income		2017				2017			(Decrease)
	(In thousands)
Service charges on deposit accounts	$	3,510			$	3,758			$	(248	)
Other commissions and fees		10,583				10,390				193
Leased equipment income		11,635				9,475				2,160
Gain on sale of loans and leases		649				712				(63	)
Gain (loss) on sale of securities		1,651				(99	)			1,750
Other income:
Dividends and realized gains on equity investments		1,587				1,345				242
Warrant income		815				155				660
Other		4,852				9,378				(4,526	)
Total noninterest income	$	35,282			$	35,114			$	168

Noninterest Expense

Noninterest expense increased by $1.2 million to $117.7 million in the second quarter of 2017 compared to $116.5 million in the first quarter of 2017 due mostly to a $1.2 million increase in acquisition, integration, and reorganization costs and a $1.1 million charge related to the sale of the unfunded commitments portion of the healthcare loan sale. 

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

	Three Months Ended
	June 30,				March 31,				Increase
Noninterest Expense		2017				2017			(Decrease)
	(In thousands)
Compensation	$	65,288			$	64,880			$	408
Occupancy		11,811				11,608				203
Data processing		6,337				7,015				(678	)
Other professional services		3,976				3,378				598
Insurance and assessments		4,856				4,791				65
Intangible asset amortization		3,065				3,064				1
Leased equipment depreciation		5,232				5,625				(393	)
Foreclosed assets (income) expense, net		(157	)			143				(300	)
Acquisition, integration and reorganization costs		1,700				500				1,200
Other expense:
Loan expense		3,884				3,387				497
Other		11,715				12,153				(438	)
Total noninterest expense	$	117,707			$	116,544			$	1,163

Income Taxes

The overall effective income tax rate was 37.0% in the second quarter of 2017 and 37.7% in the first quarter of 2017. The estimated effective tax rate for the full year 2017 is approximately 38%. 

BALANCE SHEET HIGHLIGHTS

Loans and Leases

Total loans and leases held for investment decreased by $13.2 million in the second quarter to $15.5 billion at June 30, 2017. The net decrease was driven by principal repayments of $843.1 million, an increase in loans held for sale of $175.2 million, and loan sales of $46.0 million, partially offset by second quarter new production of $1.1 billion. In the second quarter, we sold $46.0 million of loans consisting primarily of loans from our healthcare portfolios. Additionally, we entered into two agreements to sell loans with balances totaling $175.2 million and the associated unfunded commitments of $19.3 million, primarily from our healthcare portfolios. The $175.2 million of loans were reported as held for sale at June 30, 2017 and the sales were completed in July. As a result of the second quarter loan sales and transfers to loans held for sale, our healthcare cash flow portfolio held for investment decreased from $740.6 million at March 31, 2017 to $514.7 million, including one non-pass rated credit of $19.2 million, at June 30, 2017.

The following table presents a roll forward of loans and leases held for investment for the periods indicated:

	Three Months Ended
	June 30,				March 31,
Loan and Lease Roll Forward (1)		2017				2017
	(Dollars in thousands)
Loans and leases held for investment, start of period	$	15,556,689			$	15,455,954
New production		1,077,929				1,048,841
Existing loans and leases:
Principal repayments, net (2)		(843,115	)			(888,409	)
Loan sales		(45,976	)			(36,461	)
Transfers to foreclosed assets		(502	)			(78	)
Charge-offs		(26,410	)			(23,158	)
Transfers to loans held for sale		(175,158	)			–
Loans and leases held for investment, end of period	$	15,543,457			$	15,556,689
Weighted average rate on new production		4.93	%			4.91	%
(1) Includes direct financing leases but excludes equipment leased to others under operating leases.
(2) Includes principal disbursements/repayments on existing loans, changes in revolving lines of credit (repayments and draws), loan participation sales and other changes within the loan portfolio.

The following table presents the composition of loans and leases held for investment as of the dates indicated: 

	June 30,			March 31,			December 31,			June 30,
Loan and Lease Portfolio		2017			2017			2016			2016
	(In thousands)
Real estate mortgage:
Commercial	$	4,418,463		$	4,420,923		$	4,396,696		$	4,519,209
Residential		1,719,269			1,554,946			1,314,036			1,164,784
Total real estate mortgage		6,137,732			5,975,869			5,710,732			5,683,993
Real estate construction and land:
Commercial		691,828			668,510			581,246			417,144
Residential		473,282			442,051			384,001			281,788
Total real estate construction and land		1,165,110			1,110,561			965,247			698,932
Total real estate loans		7,302,842			7,086,430			6,675,979			6,382,925
Commercial:
Cash flow		2,834,966			3,138,196			3,112,890			3,048,439
Asset-based		2,392,203			2,391,161			2,611,796			2,683,913
Venture capital		2,001,427			1,934,949			1,987,900			1,666,352
Equipment finance		613,550			623,237			691,967			646,940
Total commercial		7,842,146			8,087,543			8,404,553			8,045,644
Consumer		398,469			382,716			375,422			212,891
Total loans and leases held for
investment, net of deferred fees	$	15,543,457		$	15,556,689		$	15,455,954		$	14,641,460
Total unfunded loan commitments	$	4,926,743		$	4,497,373		$	4,166,703		$	3,888,686

Deposits and Client Investment Funds

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

	June 30,				March 31,				December 31,				June 30,
Deposit Category		2017				2017				2016				2016
	(Dollars in thousands)
Noninterest-bearing demand deposits	$	6,701,039			$	6,789,808			$	6,659,016			$	6,222,696
Interest checking deposits		1,762,016				1,509,902				1,448,394				1,035,395
Money market deposits		4,033,471				3,758,962				3,705,385				3,392,811
Savings deposits		721,048				710,401				711,039				761,090
Total core deposits		13,217,574				12,769,073				12,523,834				11,411,992
Non-core non-maturity deposits		1,329,324				1,154,070				1,174,487				972,820
Total non-maturity deposits		14,546,898				13,923,143				13,698,321				12,384,812
Time deposits $250,000 and under		1,940,872				1,998,597				1,758,434				2,226,066
Time deposits over $250,000		387,207				409,268				413,856				537,131
Total time deposits		2,328,079				2,407,865				2,172,290				2,763,197
Total deposits	$	16,874,977			$	16,331,008			$	15,870,611			$	15,148,009
Noninterest-bearing demand deposits
as percentage of total deposits		40	%			42	%			42	%			41	%
Core deposits as percentage of total deposits		78	%			78	%			79	%			75	%

At June 30, 2017, core deposits totaled $13.2 billion, or 78% of total deposits, including $6.7 billion of noninterest-bearing demand deposits, or 40% of total deposits. 

In addition to deposit products, we also offer alternative non-depository cash investment options for select clients; these alternatives include investments managed by Square 1 Asset Management, Inc. (“S1AM”), our registered investment advisor subsidiary, and third-party sweep products. Total off-balance sheet client investment funds at June 30, 2017 were $1.8 billion, of which $1.6 billion was managed by S1AM.

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

A provision for credit losses of $11.5 million was recorded in the second quarter of 2017 compared to $24.7 million in the first quarter of 2017. The second quarter provision consisted of $12.5 million for non-purchased credit impaired (“Non-PCI”) loans and leases and a $1.0 negative provision for PCI loans; this compares to provisions of $24.5 million and $0.2 million, respectively, for the first quarter of 2017. The lower provision for the second quarter of 2017 was mainly attributable to lower general reserves being required because of the decreased levels of classified loans and healthcare cash flow loans, both of which carry greater than average general reserve levels due to charge-off experience. In addition, the prior quarter provision was higher due to general provisions from increased general reserve loss factors which were influenced by net charge-off experience. The allowance for Non-PCI credit losses to Non-PCI loans and leases held for investment coverage ratio was 1.02% and 1.08% at June 30, 2017 and March 31, 2017.

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

	Three Months Ended June 30, 2017
	Non-PCI
Allowance for Credit	Loans and				Unfunded			Total				PCI
Losses Rollforward	Leases				Commitments			Non-PCI				Loans				Total
	(In thousands)
Beginning balance	$	149,826			$	17,763		$	167,589			$	11,481			$	179,070
Charge-offs		(22,951	)			–			(22,951	)			(3,459	)			(26,410	)
Recoveries		2,004				–			2,004				58				2,062
Net charge-offs		(20,947	)			–			(20,947	)			(3,401	)			(24,348	)
Provision		10,000				2,500			12,500				(1,001	)			11,499
Ending balance	$	138,879			$	20,263		$	159,142			$	7,079			$	166,221
	Three Months Ended March 31, 2017
	Non-PCI
Allowance for Credit	Loans and				Unfunded			Total				PCI
Losses Rollforward	Leases				Commitments			Non-PCI				Loans				Total
	(In thousands)
Beginning balance	$	143,755			$	17,523		$	161,278			$	13,483			$	174,761
Charge-offs		(20,928	)			–			(20,928	)			(2,230	)			(23,158	)
Recoveries		2,739				–			2,739				–				2,739
Net charge-offs		(18,189	)			–			(18,189	)			(2,230	)			(20,419	)
Provision		24,260				240			24,500				228				24,728
Ending balance	$	149,826			$	17,763		$	167,589			$	11,481			$	179,070

The gross charge-offs for the second quarter of 2017 included approximately $10.9 million for venture capital loans and $7.2 million related to the recording of the healthcare portfolio loans at the lower of cost or market value at the time of transfer to loans held for sale. The transfer of loans to held for sale also decreased reported nonaccrual loans by $5.3 million and classified loans by $44.8 million. The annualized ratio of net charge-offs to total average loans for the quarter ended June 30, 2017 was 0.54%.   

CREDIT QUALITY

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

	June 30,				March 31,
Non-PCI Credit Quality Metrics		2017				2017
	(Dollars in thousands)
Nonaccrual loans and leases (1)	$	172,576			$	173,030
Classified loans and leases (1)		339,977				424,399
Performing troubled debt restructured loans		55,910				56,501
Allowance for credit losses		159,142				167,589
Net charge-offs (for the quarter)		20,947				18,189
Provision for credit losses (for the quarter)		12,500				24,500
Allowance for credit losses to loans and leases
held for investment		1.02	%			1.08	%
Allowance for credit losses to nonaccrual loans
and leases held for investment		92.2	%			96.9	%
Nonaccrual loans and leases held for investment
to loans and leases held for investment		1.11	%			1.11	%
Nonperforming assets to loans and leases
held for investment and foreclosed assets		1.20	%			1.20	%
Classified loans and leases held for investment
to loans and leases held for investment		2.19	%			2.73	%
(1) Includes loans and leases held for investment; excludes loans held for sale carried at lower of cost or fair value.

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

	Non-PCI Nonaccrual Loans and Leases										Non-PCI Accruing and
	June 30, 2017					March 31, 2017					30-89 Days Past Due
			% of					% of			June 30,			March 31,
			Loan					Loan				2017			2017
	Amount		Category			Amount		Category			Amount			Amount
	(Dollars in thousands)
Real estate mortgage:
Commercial	$	65,599	1.5	%		$	66,216	1.5	%		$	3,734		$	7,383
Residential		5,229	0.3	%			5,826	0.4	%			46			640
Total real estate mortgage		70,828	1.2	%			72,042	1.2	%			3,780			8,023
Real estate construction and land:
Commercial		–	0.0	%			–	0.0	%			–			–
Residential		–	0.0	%			362	0.1	%			–			–
Total real estate
construction and land		–	0.0	%			362	0.0	%			–			–
Commercial:
Cash flow		43,169	1.5	%			53,611	1.7	%			201			394
Asset-based		1,718	0.1	%			1,165	0.0	%			–			–
Venture capital		25,278	1.3	%			15,289	0.8	%			23,171			13,265
Equipment finance		31,111	5.1	%			30,388	4.9	%			–			115
Total commercial		101,276	1.3	%			100,453	1.2	%			23,372			13,774
Consumer		472	0.1	%			173	0.0	%			–			49
Total (1)	$	172,576	1.1	%		$	173,030	1.1	%		$	27,152		$	21,846
(1) Includes loans and leases held for investment; excludes loans held for sale carried at lower of cost or fair value.

The following table presents nonperforming assets as of the dates indicated:

	June 30,				March 31,
Nonperforming Assets		2017				2017
	(Dollars in thousands)
Nonaccrual Non-PCI loans and leases (1)	$	172,576			$	173,030
Nonaccrual PCI loans		1,980				2,404
Total nonaccrual loans and leases		174,556				175,434
Foreclosed assets, net		13,278				12,842
Total nonperforming assets	$	187,834			$	188,276
Nonaccrual loans and leases held for investment
to loans and leases held for investment		1.12	%			1.12	%
Nonperforming assets to loans and leases
held for investment and foreclosed assets		1.20	%			1.20	%
(1) Includes loans and leases held for investment; excludes loans held for sale carried at lower of cost or fair value.

CU BANCORP MERGER ANNOUNCEMENT

On April 6, 2017, PacWest announced the signing of a definitive agreement and plan of merger (the “Agreement”) whereby PacWest will acquire CU Bancorp in a transaction valued at approximately $705 million. 

CU Bancorp, headquartered in Los Angeles, California, is the parent of California United Bank, a California state-chartered non-member bank, with approximately $3.1 billion in assets and nine branches located in Los Angeles, Orange, Ventura, and San Bernardino counties at March 31, 2017. In connection with the transaction, California United Bank will be merged into Pacific Western Bank, the principal operating subsidiary of PacWest Bancorp.

The transaction, which was approved by the PacWest and CU Bancorp boards of directors, is expected to close in the fourth quarter of 2017 and is subject to customary closing conditions, including obtaining approval by CU Bancorp’s shareholders and bank regulatory authorities.

ABOUT PACWEST BANCORP

PacWest Bancorp (“PacWest”) is a bank holding company with over $22 billion in assets with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). The Bank has 74 full-service branches located throughout the state of California and one branch in Durham, North Carolina. We provide commercial banking services, including real estate, construction, and commercial loans, and comprehensive deposit and treasury management services to small and medium-sized businesses. We offer additional products and services through our CapitalSource and Square 1 Bank divisions. Our CapitalSource Division provides cash flow, asset-based, equipment and real estate loans and treasury management services to established middle market businesses on a national basis. Our Square 1 Bank Division offers a comprehensive suite of financial services focused on entrepreneurial businesses and their venture capital and private equity investors, with offices located in key innovation hubs across the United States. For more information about PacWest Bancorp, visit www.pacwestbancorp.com, or to learn more about Pacific Western Bank, visit www.pacificwesternbank.com.

FORWARD LOOKING STATEMENTS

This release contains certain “forward-looking statements” about the Company and its subsidiaries within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company’s current business plans and expectations regarding future operating results and metrics and including statements about our expectations regarding our pending merger between the Company and CU Bancorp. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “assume,” “intend,” “believe,” “forecast,” “expect,” “estimate,” “plan,” “continue,” “will,” “should,” “look forward” and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding future financial and operating results and future transactions and their results) involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance or achievements. These risks and uncertainties include, but are not limited to, our ability to compete effectively against other financial institutions in our banking markets; the impact of changes in interest rates or levels of market activity, especially on our loan and investment portfolios; deterioration, weaker than expected improvement, or other changes in the state of the economy or the markets in which we conduct business (including the levels of IPOs and M&A activities); changes in credit quality and the effect of credit quality on our provision for loan and lease losses and allowance for loan and leases losses; our ability to attract deposits and other sources of funding or liquidity; our capital requirements and our ability to generate capital internally or raise capital on favorable terms; the costs and effects of legal, compliance and regulatory actions, changes and developments, including the impact of adverse judgments or settlements in litigation, the initiation and resolution of regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations or reviews; the Company’s ability to complete the proposed CU Bancorp transaction, including by obtaining regulatory approvals and approval by the shareholders of CU Bancorp, or any future transaction, successfully integrate such acquired entities, or achieve expected beneficial synergies and/or operating efficiencies, in each case within expected timeframes or at all; changes in the Company’s stock price before completion of the CU Bancorp merger, including as a result of the financial performance of the Company or CU Bancorp before closing; and our success at managing the risks involved in the foregoing items and all other factors set forth in the Company’s public reports, including the Annual Report on Form 10-K for the year ended December 31, 2016, and particularly the discussion of risk factors within that document.

All forward-looking statements included in this release are based on information available at the time of the release. We are under no obligation to (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.

ADDITIONAL INFORMATION ABOUT THE PROPOSED TRANSACTION AND WHERE TO FIND IT

Investors and security holders are urged to carefully review and consider each of PacWest’s and CU Bancorp’s public filings with the SEC, including but not limited to their Annual Reports on Form 10-K, their proxy statements, their Current Reports on Form 8-K and their Quarterly Reports on Form 10-Q. The documents filed by PacWest with the SEC may be obtained free of charge at PacWest’s website at www.pacwestbancorp.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from PacWest by requesting them in writing to PacWest Bancorp, 9701 Wilshire Boulevard, Suite 700, Beverly Hills, CA 90212; Attention: Investor Relations, by submitting an email request to [email protected] or by telephone at (310) 887-8521.

The documents filed by CU Bancorp with the SEC may be obtained free of charge at CU Bancorp’s website at www.cubancorp.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from CU Bancorp by requesting them in writing to CU Bancorp, 818 W. 7th Street, Suite 220, Los Angeles, CA 90017; Attention: Investor Relations, or by telephone at 818-257-7700.

PacWest has filed a registration statement with the SEC which includes a proxy statement of CU Bancorp and a prospectus of PacWest, and each party will file other documents regarding the proposed transaction with the SEC. Before making any voting or investment decision, investors and security holders of CU Bancorp are urged to carefully read the entire registration statement and proxy statement/prospectus, as well as any amendments or supplements to these documents, because they will contain important information about the proposed transaction. A definitive proxy statement/prospectus will be sent to the shareholders of CU Bancorp seeking any required shareholder approvals. Investors and security holders are able to obtain the registration statement and the proxy statement/prospectus free of charge from the SEC’s website or from PacWest or CU Bancorp by writing to the addresses provided for each company set forth in the paragraphs above.

PacWest, CU Bancorp, their directors, executive officers and certain other persons may be deemed to be participants in the solicitation of proxies from CU Bancorp shareholders in favor of the approval of the transaction. Information about the directors and executive officers of PacWest and their ownership of PacWest common stock is set forth in the proxy statement for PacWest’s 2017 annual meeting of stockholders, as previously filed with the SEC. Information about the directors and executive officers of CU Bancorp and their ownership of CU Bancorp common shares is set forth in the proxy statement for CU Bancorp’s 2016 annual meeting of shareholders, as previously filed with the SEC. Shareholders may obtain additional information regarding the interests of such participants by reading the registration statement and the proxy statement/prospectus.

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
	June 30,				March 31,				December 31,
		2017				2017				2016
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	180,330			$	184,608			$	337,965
Interest-earning deposits in financial institutions		107,150				111,892				81,705
Total cash and cash equivalents		287,480				296,500				419,670
Securities available-for-sale, at estimated fair value		3,474,560				3,336,992				3,223,830
Federal Home Loan Bank stock, at cost		22,059				17,901				21,870
Total investment securities		3,496,619				3,354,893				3,245,700
Loans held for sale		175,158				–				–
Non-PCI loans and leases		15,536,735				15,526,518				15,412,092
PCI loans		72,445				96,353				108,445
Total gross loans and leases held for investment		15,609,180				15,622,871				15,520,537
Deferred fees, net		(65,723	)			(66,182	)			(64,583	)
Total loans and leases held for investment,
net of deferred fees		15,543,457				15,556,689				15,455,954
Allowance for loan and lease losses		(145,958	)			(161,307	)			(157,238	)
Total loans and leases held for investment, net		15,397,499				15,395,382				15,298,716
Equipment leased to others under operating leases		203,212				224,580				229,905
Premises and equipment, net		29,108				28,908				38,594
Foreclosed assets, net		13,278				12,842				12,976
Deferred tax asset, net		70,354				88,765				94,112
Goodwill		2,173,949				2,173,949				2,173,949
Core deposit and customer
relationship intangibles, net		30,237				33,302				36,366
Other assets		369,983				318,133				319,779
Total assets	$	22,246,877			$	21,927,254			$	21,869,767
LIABILITIES:
Noninterest-bearing deposits	$	6,701,039			$	6,789,808			$	6,659,016
Interest-bearing deposits		10,173,938				9,541,200				9,211,595
Total deposits		16,874,977				16,331,008				15,870,611
Borrowings		217,454				460,609				905,812
Subordinated debentures		445,743				442,516				440,744
Accrued interest payable and other liabilities		148,798				185,015				173,545
Total liabilities		17,686,972				17,419,148				17,390,712
STOCKHOLDERS’ EQUITY (1)		4,559,905				4,508,106				4,479,055
Total liabilities and stockholders’ equity	$	22,246,877			$	21,927,254			$	21,869,767
Book value per share	$	37.55			$	37.13			$	36.93
Tangible book value per share (2)	$	19.40			$	18.95			$	18.71
Shares outstanding		121,448,321				121,408,133				121,283,669
(1) Includes net unrealized gain on securities
available-for-sale, net	$	29,729			$	12,718			$	5,982
(2) Non-GAAP measure.

 

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
	Three Months Ended												Six Months Ended
	June 30,				March 31,				June 30,				June 30,
		2017				2017				2016				2017				2016
	(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	234,618			$	224,178			$	224,326			$	458,796			$	460,701
Investment securities		24,689				23,039				22,420				47,728				44,967
Deposits in financial institutions		237				192				308				429				616
Total interest income		259,544				247,409				247,054				506,953				506,284
Interest expense:
Deposits		10,205				8,377				7,823				18,582				16,896
Borrowings		1,066				1,018				352				2,084				933
Subordinated debentures		5,800				5,562				5,122				11,362				10,104
Total interest expense		17,071				14,957				13,297				32,028				27,933
Net interest income		242,473				232,452				233,757				474,925				478,351
Provision for credit losses		11,499				24,728				13,903				36,227				34,043
Net interest income after provision
for credit losses		230,974				207,724				219,854				438,698				444,308
Noninterest income:
Service charges on deposit accounts		3,510				3,758				3,633				7,268				7,489
Other commissions and fees		10,583				10,390				11,073				20,973				22,562
Leased equipment income		11,635				9,475				8,523				21,110				16,767
Gain on sale of loans and leases		649				712				388				1,361				633
Gain (loss) on sale of securities		1,651				(99	)			478				1,552				8,588
FDIC loss sharing expense, net		–				–				(6,502	)			–				(8,917	)
Other income		7,254				10,878				4,528				18,132				9,538
Total noninterest income		35,282				35,114				22,121				70,396				56,660
Noninterest expense:
Compensation		65,288				64,880				62,174				130,168				123,239
Occupancy		11,811				11,608				12,193				23,419				24,825
Data processing		6,337				7,015				5,644				13,352				11,548
Other professional services		3,976				3,378				3,401				7,354				6,973
Insurance and assessments		4,856				4,791				4,951				9,647				9,916
Intangible asset amortization		3,065				3,064				4,371				6,129				9,117
Leased equipment depreciation		5,232				5,625				5,286				10,857				10,310
Foreclosed assets (income) expense, net		(157	)			143				(3	)			(14	)			(564	)
Acquisition, integration and
reorganization costs		1,700				500				–				2,200				200
Other expense		15,599				15,540				12,064				31,139				25,205
Total noninterest expense		117,707				116,544				110,081				234,251				220,769
Earnings before income taxes		148,549				126,294				131,894				274,843				280,199
Income tax expense		(54,902	)			(47,626	)			(49,726	)			(102,528	)			(107,575	)
Net earnings	$	93,647			$	78,668			$	82,168			$	172,315			$	172,624
Basic and diluted earnings per share	$	0.77			$	0.65			$	0.68			$	1.42			$	1.42

PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS PER SHARE CALCULATIONS
	Three Months Ended												Six Months Ended
	June 30,				March 31,				June 30,				June 30,
		2017				2017				2016				2017				2016
	(In thousands, except per share data)
Basic Earnings Per Share:
Net earnings	$	93,647			$	78,668			$	82,168			$	172,315			$	172,624
Less: earnings allocated to unvested
restricted stock (1)		(1,080	)			(999	)			(863	)			(2,082	)			(1,933	)
Net earnings allocated to common
shares	$	92,567			$	77,669			$	81,305			$	170,233			$	170,691
Weighted-average basic shares and
unvested restricted stock outstanding		121,422				121,346				121,799				121,384				121,698
Less: weighted-average unvested
restricted stock outstanding		(1,455	)			(1,503	)			(1,481	)			(1,479	)			(1,436	)
Weighted-average basic shares
outstanding		119,967				119,843				120,318				119,905				120,262
Basic earnings per share	$	0.77			$	0.65			$	0.68			$	1.42			$	1.42
Diluted Earnings Per Share:
Net earnings allocated to common
shares	$	92,567			$	77,669			$	81,305			$	170,233			$	170,691
Weighted-average basic shares
outstanding		119,967				119,843				120,318				119,905				120,262
Diluted earnings per share	$	0.77			$	0.65			$	0.68			$	1.42			$	1.42
(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
	June 30, 2017									March 31, 2017									June 30, 2016
				Interest			Average						Interest			Average						Interest			Average
	Average			Income/			Yield/			Average			Income/			Yield/			Average			Income/			Yield/
	Balance			Expense			Cost			Balance			Expense			Cost			Balance			Expense			Cost
	(Dollars in thousands)
Assets:
PCI loans	$	68,759		$	4,643		27.08	%		$	89,335		$	4,250		19.29	%		$	147,270		$	8,484		23.17	%
Non-PCI loans and leases		15,429,162			229,975		5.98	%			15,207,709			219,928		5.86	%			14,321,320			215,842		6.06	%
Total loans and leases		15,497,921			234,618		6.07	%			15,297,044			224,178		5.94	%			14,468,590			224,326		6.24	%
Investment securities (1)		3,436,785			29,538		3.45	%			3,257,448			27,822		3.46	%			3,288,819			27,330		3.34	%
Deposits in financial
institutions		96,087			237		0.99	%			100,751			192		0.77	%			245,666			308		0.50	%
Total interest-earning
assets		19,030,793			264,393		5.57	%			18,655,243			252,192		5.48	%			18,003,075			251,964		5.63	%
Other assets		2,905,809									2,990,291									2,996,867
Total assets	$	21,936,602								$	21,645,534								$	20,999,942
Liabilities and
Stockholders’ Equity:
Interest checking	$	1,709,699			1,697		0.40	%		$	1,505,439			1,167		0.31	%		$	1,024,763			501		0.20	%
Money market		4,907,865			4,993		0.41	%			4,866,720			4,410		0.37	%			4,321,533			2,886		0.27	%
Savings		708,389			296		0.17	%			711,529			298		0.17	%			766,309			412		0.22	%
Time		2,366,399			3,219		0.55	%			2,246,547			2,502		0.45	%			3,086,492			4,024		0.52	%
Total interest-bearing
deposits		9,692,352			10,205		0.42	%			9,330,235			8,377		0.36	%			9,199,097			7,823		0.34	%
Borrowings		457,774			1,066		0.93	%			596,903			1,018		0.69	%			300,428			352		0.47	%
Subordinated debentures		443,756			5,800		5.24	%			441,521			5,562		5.11	%			439,081			5,122		4.69	%
Total interest-bearing
liabilities		10,593,882			17,071		0.65	%			10,368,659			14,957		0.59	%			9,938,606			13,297		0.54	%
Noninterest-bearing
demand deposits		6,646,349									6,595,346									6,437,720
Other liabilities		151,095									177,854									140,023
Total liabilities		17,391,326									17,141,859									16,516,349
Stockholders’ equity		4,545,276									4,503,675									4,483,593
Total liabilities and
stockholders’ equity	$	21,936,602								$	21,645,534								$	20,999,942
Net interest income (2)				$	247,322								$	237,235								$	238,667
Net interest spread (2)							4.92	%								4.89	%								5.09	%
Net interest margin (2)							5.21	%								5.16	%								5.33	%
Total deposits (3)	$	16,338,701		$	10,205		0.25	%		$	15,925,581		$	8,377		0.21	%		$	15,636,817		$	7,823		0.20	%
Funding sources (4)	$	17,240,231		$	17,071		0.40	%		$	16,964,005		$	14,957		0.36	%		$	16,376,326		$	13,297		0.33	%
(1) Includes tax equivalent adjustments of $4.9 million, $4.8 million, and $4.9 million for the three months ended June 30, 2017, March 31, 2017, and June 30, 2016 related to tax exempt income on municipal securities.  The federal statutory tax rate utilized was 35% for the periods.
(2) Tax equivalent.
(3) 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 deposits divided by average total deposits.
(4) Funding sources is the sum of total interest-bearing liabilities and noninterest-bearing demand deposits. The cost of funding sources is calculated as annualized total interest expense divided by average funding sources.

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER BALANCE SHEET
	June 30,				March 31,				December 31,				September 30,				June 30,
		2017				2017				2016				2016				2016
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	180,330			$	184,608			$	337,965			$	286,371			$	226,471
Interest-earning deposits in financial
institutions		107,150				111,892				81,705				253,994				218,882
Total cash and cash equivalents		287,480				296,500				419,670				540,365				445,353
Securities available-for-sale		3,474,560				3,336,992				3,223,830				3,341,335				3,347,546
Federal Home Loan Bank stock		22,059				17,901				21,870				19,386				24,214
Total investment securities		3,496,619				3,354,893				3,245,700				3,360,721				3,371,760
Loans held for sale		175,158				–				–				–				–
Non-PCI loans and leases		15,536,735				15,526,518				15,412,092				14,686,206				14,566,425
PCI loans		72,445				96,353				108,445				120,221				136,901
Total gross loans and leases
held for investment		15,609,180				15,622,871				15,520,537				14,806,427				14,703,326
Deferred fees, net		(65,723	)			(66,182	)			(64,583	)			(63,581	)			(61,866	)
Total loans and leases held for
investment, net of deferred fees		15,543,457				15,556,689				15,455,954				14,742,846				14,641,460
Allowance for loan and lease losses		(145,958	)			(161,307	)			(157,238	)			(147,976	)			(143,289	)
Total loans and leases held for
investment, net		15,397,499				15,395,382				15,298,716				14,594,870				14,498,171
Equipment leased to others under
operating leases		203,212				224,580				229,905				198,931				204,062
Premises and equipment, net		29,108				28,908				38,594				38,977				38,718
Foreclosed assets, net		13,278				12,842				12,976				15,113				16,181
Deferred tax asset, net		70,354				88,765				94,112				27,073				24,413
Goodwill		2,173,949				2,173,949				2,173,949				2,173,949				2,175,791
Core deposit and customer
relationship intangibles, net		30,237				33,302				36,366				39,542				43,766
Other assets		369,983				318,133				319,779				325,750				328,924
Total assets	$	22,246,877			$	21,927,254			$	21,869,767			$	21,315,291			$	21,147,139
LIABILITIES:
Noninterest-bearing deposits	$	6,701,039			$	6,789,808			$	6,659,016			$	6,521,946			$	6,222,696
Interest-bearing deposits		10,173,938				9,541,200				9,211,595				9,123,722				8,925,313
Total deposits		16,874,977				16,331,008				15,870,611				15,645,668				15,148,009
Borrowings		217,454				460,609				905,812				541,011				918,208
Subordinated debentures		445,743				442,516				440,744				441,112				439,322
Accrued interest payable and other
liabilities		148,798				185,015				173,545				144,905				128,296
Total liabilities		17,686,972				17,419,148				17,390,712				16,772,696				16,633,835
STOCKHOLDERS’ EQUITY (1)		4,559,905				4,508,106				4,479,055				4,542,595				4,513,304
Total liabilities and stockholders’
equity	$	22,246,877			$	21,927,254			$	21,869,767			$	21,315,291			$	21,147,139
Book value per share	$	37.55			$	37.13			$	36.93			$	37.29			$	37.05
Tangible book value per share (2)	$	19.40			$	18.95			$	18.71			$	19.12			$	18.83
Shares outstanding		121,448,321				121,408,133				121,283,669				121,817,524				121,819,849
(1) Includes net unrealized gain on
securities available-for-sale, net	$	29,729			$	12,718			$	5,982			$	72,073			$	81,744
(2) Non-GAAP measure.

 

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS
	Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
		2017				2017				2016				2016				2016
	(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	234,618			$	224,178			$	238,223			$	225,370			$	224,326
Investment securities		24,689				23,039				23,403				22,187				22,420
Deposits in financial institutions		237				192				147				298				308
Total interest income		259,544				247,409				261,773				247,855				247,054
Interest expense:
Deposits		10,205				8,377				7,369				7,247				7,823
Borrowings		1,066				1,018				631				695				352
Subordinated debentures		5,800				5,562				5,468				5,278				5,122
Total interest expense		17,071				14,957				13,468				13,220				13,297
Net interest income		242,473				232,452				248,305				234,635				233,757
Provision for credit losses		11,499				24,728				23,215				8,471				13,903
Net interest income after provision
for credit losses		230,974				207,724				225,090				226,164				219,854
Noninterest income:
Service charges on deposit accounts		3,510				3,758				3,557				3,488				3,633
Other commissions and fees		10,583				10,390				12,036				12,528				11,073
Leased equipment income		11,635				9,475				8,614				8,538				8,523
Gain on sale of loans and leases		649				712				119				157				388
Gain (loss) on sale of securities		1,651				(99	)			515				382				478
FDIC loss sharing expense, net		–				–				–				–				(6,502	)
Other income		7,254				10,878				4,054				1,827				4,528
Total noninterest income		35,282				35,114				28,895				26,920				22,121
Noninterest expense:
Compensation		65,288				64,880				66,013				62,661				62,174
Occupancy		11,811				11,608				12,076				12,010				12,193
Data processing		6,337				7,015				6,574				6,234				5,644
Other professional services		3,976				3,378				4,880				4,625				3,401
Insurance and assessments		4,856				4,791				4,124				4,324				4,951
Intangible asset amortization		3,065				3,064				3,176				4,224				4,371
Leased equipment depreciation		5,232				5,625				5,291				5,298				5,286
Foreclosed assets (income) expense, net		(157	)			143				2,693				(248	)			(3	)
Acquisition, integration and
reorganization costs		1,700				500				–				–				–
Other expense		15,599				15,540				13,795				11,582				12,064
Total noninterest expense		117,707				116,544				118,622				110,710				110,081
Earnings before income taxes		148,549				126,294				135,363				142,374				131,894
Income tax expense		(54,902	)			(47,626	)			(49,716	)			(48,479	)			(49,726	)
Net earnings	$	93,647			$	78,668			$	85,647			$	93,895			$	82,168
Basic and diluted earnings per share	$	0.77			$	0.65			$	0.71			$	0.77			$	0.68

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
	At or For the Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
		2017				2017				2016				2016				2016
	(Dollars in thousands)
Performance Ratios:
Return on average assets (1)		1.71	%			1.47	%			1.59	%			1.77	%			1.57	%
Return on average equity (1)		8.26	%			7.08	%			7.57	%			8.24	%			7.37	%
Return on average tangible equity (1)(2)		16.06	%			13.90	%			14.88	%			16.15	%			14.61	%
Yield on average loans and leases (1)		6.07	%			5.94	%			6.31	%			6.17	%			6.24	%
Yield on average interest-earning
assets (1)(3)		5.57	%			5.48	%			5.76	%			5.55	%			5.63	%
Cost of average total deposits (1)		0.25	%			0.21	%			0.19	%			0.19	%			0.20	%
Cost of average time deposits (1)		0.55	%			0.45	%			0.40	%			0.45	%			0.52	%
Cost of average interest-bearing
liabilities (1)		0.65	%			0.59	%			0.52	%			0.52	%			0.54	%
Cost of average funding sources (1)		0.40	%			0.36	%			0.32	%			0.32	%			0.33	%
Net interest rate spread (1)(3)		4.92	%			4.89	%			5.24	%			5.03	%			5.09	%
Net interest margin (1)(3)		5.21	%			5.16	%			5.47	%			5.26	%			5.33	%
Efficiency ratio		40.3	%			41.4	%			40.1	%			40.1	%			40.6	%
Noninterest expense as a percentage
of average assets (1)		2.15	%			2.18	%			2.20	%			2.09	%			2.11	%
Average Balances:
Loans and leases	$	15,497,921			$	15,297,044			$	15,008,268			$	14,534,951			$	14,468,590
Interest-earning assets		19,030,793				18,655,243				18,413,189				18,111,585				18,003,075
Total assets		21,936,602				21,645,534				21,427,950				21,072,053				20,999,942
Noninterest-bearing deposits		6,646,349				6,595,346				6,496,221				6,274,294				6,437,720
Interest-bearing deposits		9,692,352				9,330,235				9,327,080				9,107,305				9,199,097
Total deposits		16,338,701				15,925,581				15,823,301				15,381,599				15,636,817
Borrowings and subordinated
debentures		901,530				1,038,424				946,474				1,023,952				739,509
Interest-bearing liabilities		10,593,882				10,368,659				10,273,554				10,131,257				9,938,606
Funding sources		17,240,231				16,964,005				16,769,775				16,405,551				16,376,326
Stockholders’ equity		4,545,276				4,503,675				4,501,948				4,530,701				4,483,593
(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
	June 30,				March 31,				December 31,				September 30,				June 30,
		2017				2017				2016				2016				2016
	(Dollars in thousands)
Non-PCI Credit Quality:
Allowance for credit losses to loans
and leases held for investment		1.02	%			1.08	%			1.05	%			1.05	%			1.03	%
Allowance for credit losses to
nonaccrual loans and leases held
for investment		92.2	%			96.9	%			94.5	%			90.1	%			117.5	%
Nonaccrual loans and leases held for
investment to loans and leases held
for investment		1.11	%			1.11	%			1.11	%			1.16	%			0.88	%
Nonperforming assets to loans and
leases held for investment and
foreclosed assets		1.20	%			1.20	%			1.19	%			1.27	%			0.99	%
Nonperforming assets to total assets		0.84	%			0.85	%			0.84	%			0.87	%			0.68	%
Trailing twelve month net charge-offs
to average loans and leases
held for investment		0.37	%			0.24	%			0.15	%			0.04	%			0.04	%
PacWest Bancorp Consolidated
Capital:
Tier 1 leverage ratio (1)		11.90	%			11.87	%			11.91	%			12.13	%			11.92	%
Common equity tier 1 capital ratio (1)		12.28	%			12.31	%			12.31	%			12.83	%			12.72	%
Tier 1 capital ratio (1)		12.28	%			12.31	%			12.31	%			12.83	%			12.72	%
Total capital ratio (1)		15.42	%			15.56	%			15.56	%			16.18	%			16.08	%
Risk-weighted assets (1)	$	19,084,824			$	18,732,723			$	18,568,622			$	17,713,506			$	17,520,609
Equity to assets ratio		20.50	%			20.56	%			20.48	%			21.31	%			21.34	%
Tangible common equity ratio (2)		11.75	%			11.67	%			11.54	%			12.19	%			12.12	%
Book value per share	$	37.55			$	37.13			$	36.93			$	37.29			$	37.05
Tangible book value per share (2)	$	19.40			$	18.95			$	18.71			$	19.12			$	18.83
Pacific Western Bank Capital:
Tier 1 leverage ratio (1)		11.41	%			11.36	%			11.40	%			11.54	%			11.38	%
Common equity tier 1 capital ratio (1)		11.79	%			11.79	%			11.78	%			12.21	%			12.13	%
Tier 1 capital ratio (1)		11.79	%			11.79	%			11.78	%			12.21	%			12.13	%
Total capital ratio (1)		12.66	%			12.74	%			12.72	%			13.15	%			13.06	%
Equity to assets ratio		20.07	%			20.11	%			20.02	%			20.77	%			20.82	%
Tangible common equity ratio (2)		11.27	%			11.16	%			11.02	%			11.56	%			11.51	%
(1) Capital information for June 30, 2017 is preliminary.
(2) Non-GAAP measure.

GAAP TO NON-GAAP RECONCILIATION

This press release contains certain non-GAAP financial disclosures for: (1) return on average tangible equity, (2) tangible common equity ratio, and (3) 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, and tangible book value per share is prevalent among banking regulators, investors and analysts.  Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures of: (1) return on average equity, (2) equity to assets ratio, and (3) book value per share.   

The reconciliations for the following GAAP financial measures to the non-GAAP financial measures are presented below: (1) return on average equity to return on average tangible equity, (2) equity to assets ratio to tangible common equity ratio, and (3) book value per share to tangible book value per share.

PACWEST BANCORP AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
		Three Months Ended												Six Months Ended
		June 30,				March 31,				June 30,				June 30,
Return on Average Tangible Equity			2017				2017				2016				2017				2016
		(Dollars in thousands)
Net earnings		$	93,647			$	78,668			$	82,168			$	172,315			$	172,624
Average stockholders’ equity		$	4,545,276			$	4,503,675			$	4,483,593			$	4,524,591			$	4,461,097
Less:	Average intangible assets		2,205,814				2,209,112				2,222,007				2,207,454				2,224,764
Average tangible common equity		$	2,339,462			$	2,294,563			$	2,261,586			$	2,317,137			$	2,236,333
Return on average equity (1)			8.26	%			7.08	%			7.37	%			7.68	%			7.78	%
Return on average tangible equity (2)			16.06	%			13.90	%			14.61	%			15.00	%			15.52	%
(1) Annualized net earnings divided by average stockholders’ equity.
(2) Annualized net earnings divided by average tangible common equity.

PACWEST BANCORP AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
Tangible Common Equity Ratio/	June 30,				March 31,				December 31,				September 30,				June 30,
Tangible Book Value Per Share		2017				2017				2016				2016				2016
	(Dollars in thousands, except per share data)
PacWest Bancorp Consolidated:
Stockholders’ equity	$	4,559,905			$	4,508,106			$	4,479,055			$	4,542,595			$	4,513,304
Less: Intangible assets		2,204,186				2,207,251				2,210,315				2,213,491				2,219,557
Tangible common equity	$	2,355,719			$	2,300,855			$	2,268,740			$	2,329,104			$	2,293,747
Total assets	$	22,246,877			$	21,927,254			$	21,869,767			$	21,315,291			$	21,147,139
Less: Intangible assets		2,204,186				2,207,251				2,210,315				2,213,491				2,219,557
Tangible assets	$	20,042,691			$	19,720,003			$	19,659,452			$	19,101,800			$	18,927,582
Equity to assets ratio		20.50	%			20.56	%			20.48	%			21.31	%			21.34	%
Tangible common equity ratio (1)		11.75	%			11.67	%			11.54	%			12.19	%			12.12	%
Book value per share	$	37.55			$	37.13			$	36.93			$	37.29			$	37.05
Tangible book value per share (2)	$	19.40			$	18.95			$	18.71			$	19.12			$	18.83
Shares outstanding		121,448,321				121,408,133				121,283,669				121,817,524				121,819,849
Pacific Western Bank:
Stockholder’s equity	$	4,460,911			$	4,405,770			$	4,374,478			$	4,416,623			$	4,390,928
Less: Intangible assets		2,204,186				2,207,251				2,210,315				2,213,491				2,219,557
Tangible common equity	$	2,256,725			$	2,198,519			$	2,164,163			$	2,203,132			$	2,171,371
Total assets	$	22,223,320			$	21,910,720			$	21,848,644			$	21,266,705			$	21,084,950
Less: Intangible assets		2,204,186				2,207,251				2,210,315				2,213,491				2,219,557
Tangible assets	$	20,019,134			$	19,703,469			$	19,638,329			$	19,053,214			$	18,865,393
Equity to assets ratio		20.07	%			20.11	%			20.02	%			20.77	%			20.82	%
Tangible common equity ratio (1)		11.27	%			11.16	%			11.02	%			11.56	%			11.51	%
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.

CONTACT: Contact:
Donald D. Destino
Executive Vice President
Corporate Development and Investor Relations

Phone:
310-887-8521