PacWest Bancorp Announces Results for the Second Quarter 2020

Significant Items

• Net Earnings of $33.2 Million, or $0.28 Per Diluted Share
• Strong Pre-Provision, Pre-Tax Net Revenue (“PPNR”) of $166.2 Million
• Funded $1.2 Billion of Paycheck Protection Program Loans (“PPP”) in Q2
• Core Deposits Up $3.5 Billion or 22% in Q2; Represents 85% of Total Deposits
• Tax Equivalent Net Interest Margin of 4.20% Compared to 4.31% in Q1
• Cost of Average Total Deposits Decreased 34 Basis Points from Q1 to 25 Basis Points
• Quarter Includes $6.6 Million of Prepayment Penalties Related to Early Payoff of FHLB Term Advances and $7.7 Million of Gain on Sale of Securities

LOS ANGELES, July 16, 2020 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq: PACW) today announced net earnings for the second quarter of 2020 of $33.2 million, or $0.28 per diluted share, compared to a net loss for the first quarter of 2020 of $1.43 billion, or $12.23 per diluted share. The increase in net earnings in the second quarter was due primarily to a $1.47 billion goodwill impairment charge in the first quarter.

Matt Wagner, President and CEO, commented, “Our focus continues to be the health and safety of our employees while assisting our customers during the COVID-19 pandemic. We assisted our customers by funding over 4,100 PPP loans in the second quarter totaling over $1.2 billion, while granting loan payment modifications on approximately $1.8 billion, or 9% of loans and leases, most during May and June. The ultimate resolution of these modified loans is largely dependent on how long the pandemic impacts consumer demand and business activity. ”

Mr. Wagner added, “We continued enhanced monitoring of our loan portfolios and saw less loan migration to special mention during the second quarter after being proactive in downgrading loans in the first quarter. We recorded another significant provision for credit losses largely due to deterioration in the macro-economic variables used in our CECL forecast.”  

Mr. Wagner continued, “Our operations remain healthy and continue to produce increasing revenues while generating internal capital. PPNR increased by $5.3 million in the second quarter to $166.2 million, which resulted in a PPNR return on average assets of 2.51%.  These solid operating earnings highlight the resilience of our business as we continue to navigate the challenging economic conditions.”   

FINANCIAL HIGHLIGHTS

	At or For the												At or For the
	Three Months Ended												Six Months Ended
	June 30,				March 31,				Increase				June 30,								Increase
Financial Highlights		2020				2020			(Decrease)					2020				2019			(Decrease)
	(Dollars in thousands, except per share data)
Net earnings (loss)	$	33,204			$	(1,433,111	)		$	1,466,315			$	(1,399,907	)		$	240,729			$	(1,640,636	)
Diluted earnings (loss)
per share	$	0.28			$	(12.23	)		$	12.51			$	(11.98	)		$	1.99			$	(13.97	)
Return on average assets		0.50	%			(21.27	)%			21.77				(10.48	)%			1.88	%			(12.36	)
Pre-provision, pre-goodwill
impairment, pre-tax net
revenue ("PPNR") (1)	$	166,172			$	160,877			$	5,295			$	327,049			$	346,017			$	(18,968	)
PPNR return on average
assets (1)		2.51	%			2.39	%			0.12				2.45	%			2.70	%			(0.25	)
Return on average
tangible equity (1)		6.39	%			6.88	%			(0.49	)			6.64	%			22.79	%			(16.15	)
Net interest margin ("NIM")
(tax equivalent)		4.20	%			4.31	%			(0.11	)			4.26	%			4.70	%			(0.44	)
Yield on average loans and
leases (tax equivalent)		5.01	%			5.54	%			(0.53	)			5.27	%			6.21	%			(0.94	)
Cost of average total
deposits		0.25	%			0.59	%			(0.34	)			0.41	%			0.77	%			(0.36	)
Efficiency ratio		42.9	%			40.6	%			2.3				41.8	%			42.0	%			(0.2	)
Total assets	$	27,365,738			$	26,143,267			$	1,222,471			$	27,365,738			$	26,344,414			$	1,021,324
Loans and leases held
for investment,
net of deferred fees	$	19,694,631			$	19,745,305			$	(50,674	)		$	19,694,631			$	18,472,852			$	1,221,779
Noninterest-bearing
demand deposits	$	8,629,543			$	7,510,218			$	1,119,325			$	8,629,543			$	7,299,213			$	1,330,330
Core deposits	$	19,535,814			$	16,050,522			$	3,485,292			$	19,535,814			$	15,617,488			$	3,918,326
Total deposits	$	22,928,579			$	19,575,837			$	3,352,742			$	22,928,579			$	18,805,756			$	4,122,823
As percentage of total
deposits:
Noninterest-bearing
demand deposits		38	%			38	%			-				38	%			39	%			(1	)
Core deposits		85	%			82	%			3				85	%			83	%			2
Equity to assets ratio		12.62	%			12.97	%			(0.35	)			12.62	%			18.42	%			(5.80	)
Tangible common equity
ratio (1)		8.93	%			9.10	%			(0.17	)			8.93	%			9.50	%			(0.57	)
Book value per share	$	29.17			$	28.75			$	0.42			$	29.17			$	40.49			$	(11.32	)
Tangible book value per
share (1)	$	19.80			$	19.31			$	0.49			$	19.80			$	18.83			$	0.97
(1) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income increased by $4.5 million to $254.3 million for the second quarter of 2020 compared to $249.7 million for the first quarter of 2020 due mainly to a lower cost of average interest-bearing liabilities and a higher balance of average loans and leases, partially offset by a lower yield on average loans and leases and securities. The tax equivalent yield on average loans and leases was 5.01% for the second quarter of 2020 compared to 5.54% for the first quarter of 2020. The decrease in the yield on average loans and leases was due principally to lower market rates, a lower rate on loan production from the impact of the PPP loans, and lower loan discount accretion. Excluding the PPP loans, which have a coupon rate of 1%, the tax equivalent yield on average loans and leases was 5.10%.

The tax equivalent NIM was 4.20% for the second quarter of 2020 compared to 4.31% for the first quarter of 2020. The decrease in the NIM was due mainly to lower market rates resulting in lower loan and lease and security yields, a lower rate on loan production from the impact of the PPP loans, and lower loan discount accretion, offset partially by the lower cost of average interest-bearing liabilities. Excluding the PPP loans, the tax equivalent NIM was 4.25%.

The cost of average total deposits decreased to 0.25% for the second quarter of 2020 from 0.59% for the first quarter of 2020. The lower cost of average interest-bearing deposits reflected actions taken to reduce deposit rates in light of the two emergency interest rate cuts by the Federal Reserve in March of 2020. The cost of deposits at June 30, 2020 was 0.19%.

Provision for Credit Losses

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

	Three Months Ended
	June 30,			March 31,			Increase
Provision for Credit Losses	2020			2020			(Decrease)
	(In thousands)
Addition to allowance for loan and lease losses	$	93,000		$	98,000		$	(5,000	)
Addition to reserve for unfunded
loan commitments		27,000			14,000			13,000
Total provision for credit losses	$	120,000		$	112,000		$	8,000

The provision for credit losses was $120.0 million for the second quarter of 2020, up $8.0 million from the first quarter of 2020, driven by reserve builds that reflected significant deterioration and continued uncertainty in the key macro-economic forecast variables such as unemployment and GDP as a result of the impact of COVID-19.

Noninterest Income

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

	Three Months Ended
	June 30,			March 31,			Increase
Noninterest Income	2020			2020			(Decrease)
	(In thousands)
Service charges on deposit accounts	$	2,004		$	2,658		$	(654	)
Other commissions and fees		10,111			9,721			390
Leased equipment income		12,037			12,251			(214	)
Gain on sale of loans and leases		346			87			259
Gain on sale of securities		7,715			182			7,533
Other income:
Dividends and gains on equity investments		2,947			28			2,919
Warrant income		1,973			837			1,136
Other		1,725			3,336			(1,611	)
Total noninterest income	$	38,858		$	29,100		$	9,758

Noninterest income increased by $9.8 million to $38.9 million for the second quarter of 2020 compared to $29.1 million for the first quarter of 2020 due primarily to a $7.5 million increase in gain on sale of securities and a $2.9 million increase in dividends and gains on equity investments, partially offset by a $1.6 million decrease in other income. The increase in gain on sale of securities resulted from the sale of $122 million of securities in the second quarter. The increase in dividends and gains on equity investments resulted from increases in the fair value of equity investments still held and a $1.5 million gain on the sale of an equity investment. The decrease in other income was primarily due to $1.1 million of bankruptcy proceeds received on a former credit in the first quarter.

Noninterest Expense

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

	Three Months Ended
	June 30,				March 31,			Increase
Noninterest Expense	2020				2020			(Decrease)
	(In thousands)
Compensation	$	61,910			$	61,282		$	628
Occupancy		14,494				14,207			287
Data processing		7,102				6,454			648
Other professional services		4,146				4,258			(112	)
Insurance and assessments		9,373				4,249			5,124
Intangible asset amortization		3,882				3,948			(66	)
Leased equipment depreciation		7,102				7,205			(103	)
Foreclosed assets (income) expense, net		(146	)			66			(212	)
Customer related expense		4,408				3,932			476
Loan expense		3,379				2,650			729
Other		11,315				9,719			1,596
Total operating expense		126,965				117,970			8,995
Goodwill impairment		-				1,470,000			(1,470,000	)
Total noninterest expense	$	126,965			$	1,587,970		$	(1,461,005	)

Noninterest expense decreased by $1.46 billion to $127.0 million for the second quarter of 2020 compared to $1.59 billion for the first quarter of 2020 attributable primarily to a $1.47 billion goodwill impairment charge in the first quarter. Excluding the goodwill impairment charge, noninterest expense increased by $9.0 million to $127.0 million. This increase was mainly due to a $5.1 million increase in insurance and assessments expense, a $1.6 million increase in other expense, a $0.7 million increase in loan expense, and a $0.6 million increase in data processing expense. The increase in insurance and assessments expense was due to an increase in FDIC assessment expense resulting from an increase in our assessment rate due primarily to the first quarter loss from the goodwill impairment charge. The higher assessment rate will continue for one year. The increase in other expense was due to $6.6 million in prepayment penalties incurred from the early payoff of $750 million of FHLB term advances, partially offset by the reversal of a $1.5 million accrual for operational loss contingencies and decreases in various business expenses due to less activity as a result of COVID-19. The FHLB term advances had a weighted average interest rate of 0.96% and the prepayment decision was made after the significant drop in market rates in March and the expectation of continued low rates for an extended time. The increase in loan expense was due primarily to higher loan-related legal and workout expenses. The increase in data processing expense was due to a one-time expense to create systems for the origination and loan documentation submissions necessary for the Paycheck Protection Program.

Income Taxes

The effective income tax rate was 28.1% for the second quarter of 2020 compared to (0.8)% for the first quarter of 2020. Excluding non-deductible goodwill impairment, the effective income tax rate for the first quarter of 2020 was 24.5%. Excluding the non-deductible goodwill impairment, the effective tax rate for the full year 2020 is currently estimated to be in the range of 26-28%. The higher effective tax rate in the second quarter was mainly due to tax expense related to restricted stock vestings combined with benefits recorded in the first quarter related to the filing of amended state returns.  

BALANCE SHEET HIGHLIGHTS

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								Six Months Ended
Roll Forward of Loans and Leases Held	June 30,				March 31,				June 30,
for Investment, Net of Deferred Fees (1)		2020				2020				2020
	(Dollars in thousands)
Balance, beginning of period	$	19,745,305			$	18,846,872			$	18,846,872
Additions:
Production		1,802,956				789,746				2,592,702
Disbursements		800,458				1,997,080				2,797,538
Total production and disbursements		2,603,414				2,786,826				5,390,240
Reductions:
Payoffs		(612,837	)			(812,707	)			(1,425,544	)
Paydowns		(2,022,376	)			(1,053,705	)			(3,076,081	)
Total payoffs and paydowns		(2,635,213	)			(1,866,412	)			(4,501,625	)
Sales		(3,089	)			-				(3,089	)
Transfers to foreclosed assets		-				(1,776	)			(1,776	)
Charge-offs		(15,786	)			(20,205	)			(35,991	)
Total reductions		(2,654,088	)			(1,888,393	)			(4,542,481	)
Net (decrease) increase		(50,674	)			898,433				847,759
Balance, end of period	$	19,694,631			$	19,745,305			$	19,694,631
Weighted average rate on production (2)		2.33	%			4.31	%			2.93	%
(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 21 basis points to loan
yields in 2020.

Loans and leases held for investment, net of deferred fees, decreased by $50.7 million in the second quarter of 2020 to $19.7 billion at June 30, 2020. We funded $1.2 billion of PPP loans in the second quarter and continued ongoing fundings in the construction loan class, however, this was more than offset by paydowns on existing credits in the venture capital and asset-based loan portfolio classes. Many borrowers who drew down on their loans in the first quarter to ensure liquidity during the COVID-19 pandemic paid back the funds in the second quarter as the economy began to reopen. In addition, our venture banking equity funds business saw balances decline $662.7 million in the second quarter after growing $203.2 million in the first quarter, as drawdowns by equity funds in late March were repaid during the second quarter. The weighted average rate on production decreased to 2.33% since most of the loan production related to PPP loans at a coupon rate of 1%. Excluding PPP loans, the weighted average rate on production 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:

	June 30, 2020					March 31, 2020					June 30, 2019
			% of					% of					% of
Loan and Lease Portfolio	Balance		Total			Balance		Total			Balance		Total
	(In thousands)
Real estate mortgage:
Commercial	$	4,222,075	22	%		$	4,220,649	21	%		$	4,435,274	24	%
Income producing and other
residential		3,733,659	19	%			3,788,295	19	%			3,640,752	20	%
Total real estate mortgage		7,955,734	41	%			8,008,944	40	%			8,076,026	44	%
Real estate construction and land:
Commercial		1,167,609	6	%			1,087,505	6	%			972,891	5	%
Residential		2,172,919	11	%			1,792,748	9	%			1,403,239	8	%
Total real estate construction
and land		3,340,528	17	%			2,880,253	15	%			2,376,130	13	%
Total real estate		11,296,262	58	%			10,889,197	55	%			10,452,156	57	%
Commercial:
Asset-based		3,412,431	17	%			3,938,402	20	%			3,606,007	19	%
Venture capital		1,814,341	9	%			2,715,837	14	%			2,194,743	12	%
Other commercial		2,760,278	14	%			1,771,985	9	%			1,773,564	10	%
Total commercial		7,987,050	40	%			8,426,224	43	%			7,574,314	41	%
Consumer		411,319	2	%			429,884	2	%			446,382	2	%
Total loans and leases held for
investment, net of deferred fees	$	19,694,631	100	%		$	19,745,305	100	%		$	18,472,852	100	%
Total unfunded loan commitments	$	7,745,921				$	7,697,724				$	7,610,899

Allowance for Credit Losses

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

	Three Months Ended June 30, 2020
	Allowance for				Reserve for			Total
Allowance for Credit	Loan and				Unfunded Loan			Allowance for
Losses Rollforward	Lease Losses				Commitments			Credit Losses
	(In thousands)
Beginning balance	$	221,292			$	53,571		$	274,863
Charge-offs		(15,786	)			-			(15,786	)
Recoveries		2,544				-			2,544
Net charge-offs		(13,242	)			-			(13,242	)
Provision		93,000				27,000			120,000
Ending balance	$	301,050			$	80,571		$	381,621
	Three Months Ended March 31, 2020
	Allowance for				Reserve for			Total
Allowance for Credit	Loan and				Unfunded Loan			Allowance for
Losses Rollforward	Lease Losses				Commitments			Credit Losses
	(In thousands)
Beginning balance	$	138,785			$	35,861		$	174,646
Charge-offs		(20,205	)			-			(20,205	)
Recoveries		1,095				-			1,095
Net charge-offs		(19,110	)			-			(19,110	)
Provision		98,000				14,000			112,000
Cumulative effect of change in
accounting principle - CECL		3,617				3,710			7,327
Ending balance	$	221,292			$	53,571		$	274,863

The allowance for credit losses increased by $106.8 million in the second quarter of 2020 to $381.6 million at June 30, 2020. Substantially all of the increase in the allowance for credit losses during the second quarter was attributable to deterioration in the macro-economic variables used in our CECL forecast. Net charge-offs decreased from $19.1 million in the first quarter to $13.2 million in the second quarter.

The allowance for credit losses as a percentage of loans and leases held for investment was 1.94% at June 30, 2020 and 1.39% at March 31, 2020.  The allowance for loan and lease losses as a percentage of loans and leases held for investment was 1.53% at June 30, 2020 and 1.12% at March 31, 2020. The allowance for credit losses and allowance for loan and lease losses as a percentage of loans and leases held for investment, excluding PPP loans that are fully guaranteed and do not carry any allowance, was 2.06% and 1.63% at June 30, 2020, respectively.

Gross charge-offs for the second quarter of 2020 were $15.8 million and included $6.5 million for venture capital loans, $5.0 million for other commercial loans, and $4.2 million for commercial real estate mortgage loans compared to gross charge-offs for the first quarter of 2020 of $20.2 million that included $11.5 million for an asset-based oil industry loan and $7.3 million for other commercial loans.

Recoveries for the second quarter of 2020 were $2.5 million and included $2.3 million for other commercial loans compared to recoveries for the first quarter of 2020 of $1.1 million that included $0.4 million for other commercial loans and $0.4 million for asset-based loans.

For the second quarter of 2020 and first quarter of 2020, annualized net charge-offs to average loans and leases were 0.27% and 0.40%, respectively.

Deposits and Client Investment Funds

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

	June 30, 2020					March 31, 2020					June 30, 2019
			% of					% of					% of
Deposit Composition	Balance		Total			Balance		Total			Balance		Total
	(Dollars in thousands)
Noninterest-bearing demand	$	8,629,543	38	%		$	7,510,218	38	%		$	7,299,213	39	%
Interest checking		4,858,168	21	%			3,333,147	17	%			3,220,353	17	%
Money market		5,498,150	24	%			4,712,118	24	%			4,578,083	24	%
Savings		549,953	2	%			495,039	3	%			519,839	3	%
Total core deposits		19,535,814	85	%			16,050,522	82	%			15,617,488	83	%
Non-core non-maturity deposits		1,217,266	5	%			836,157	4	%			436,833	2	%
Total non-maturity deposits		20,753,080	90	%			16,886,679	86	%			16,054,321	85	%
Time deposits $250,000 and under		1,522,928	7	%			2,086,188	11	%			2,284,023	12	%
Time deposits over $250,000		652,571	3	%			602,970	3	%			467,412	3	%
Total time deposits		2,175,499	10	%			2,689,158	14	%			2,751,435	15	%
Total deposits	$	22,928,579	100	%		$	19,575,837	100	%		$	18,805,756	100	%

At June 30, 2020, core deposits totaled $19.5 billion, or 85% of total deposits, including $8.6 billion of noninterest-bearing demand deposits, or 38% of total deposits. Core deposits increased by $3.5 billion in the second quarter driven by PPP loan proceeds being deposited into customers’ accounts and venture banking which saw deposits increase by $2.0 billion to a record $8.7 billion as of June 30, 2020.

In addition to deposit products, we also offer alternative non-depository cash investment options for select clients; these alternatives 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 June 30, 2020 were $1.4 billion, of which $1.1 billion was managed by PWAM.

CREDIT QUALITY  

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

	June 30,				March 31,				Increase
Credit Quality Metrics		2020				2020			(Decrease)
	(Dollars in thousands)
NPAs and Performing TDRs:
Nonaccrual loans and leases held for investment (1)	$	166,113			$	95,602			$	70,511
Accruing loans contractually past due 90 days or more		-				-				-
Foreclosed assets, net		1,449				1,701				(252	)
Total nonperforming assets ("NPAs")	$	167,562			$	97,303			$	70,259
Performing TDRs held for investment	$	15,037			$	8,978			$	6,059
Nonaccrual loans and leases held for investment
to loans and leases held for investment		0.84	%			0.48	%
Nonperforming assets to loans and leases
held for investment and foreclosed assets		0.85	%			0.49	%
Loan and Lease Credit Risk Ratings:
Pass	$	18,635,004			$	18,698,942			$	(63,938	)
Special mention		766,397				898,658				(132,261	)
Classified		293,230				147,705				145,525
Total loans and leases held for investment,
net of deferred fees	$	19,694,631			$	19,745,305			$	(50,674	)
Classified loans and leases held for investment
to loans and leases held for investment		1.49	%			0.75	%
Allowance for Credit Losses:
Allowance for credit losses	$	381,621			$	274,863			$	106,758
Provision for credit losses (for the quarter)	$	120,000			$	112,000			$	8,000
Net charge-offs (for the quarter)	$	13,242			$	19,110			$	(5,868	)
Net charge-offs to average loans and leases
(for the quarter)		0.27	%			0.40	%
Allowance for credit losses to loans and leases
held for investment		1.94	%			1.39	%
Allowance for credit losses to nonaccrual loans
and leases held for investment		229.7	%			287.5	%
(1) Nonaccrual loans include guaranteed amounts of $16.2 million at June 30, 2020 and $16.0 million
at March 31, 2020.

Nonaccrual, classified, and special mention loans and leases fluctuate from period to period as a result of loan repayments and our ongoing active portfolio monitoring, including loan downgrades.

During the second quarter of 2020, classified loans and leases increased by $145.5 million, while special mention loans and leases decreased by $132.3 million. The increase in classified loans and leases and the decrease in special mention loans and leases was due primarily to three security monitoring loans totaling $119.2 million and two retail real estate loans totaling $42.0 million migrating out of special mention and into the classified category. 

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:

	June 30, 2020						March 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	$	61,771		$	-		$	19,088		$	1,807		$	42,683			$	(1,807	)
Income producing and other
residential		2,207			-			2,308			1,064			(101	)			(1,064	)
Total real estate mortgage		63,978			-			21,396			2,871			42,582				(2,871	)
Real estate construction and land:
Commercial		337			-			351			-			(14	)			-
Residential		-			1,021			-			241			-				780
Total real estate
construction and land		337			1,021			351			241			(14	)			780
Commercial:
Asset-based		19,013			3,697			17,104			-			1,909				3,697
Venture capital		8,270			1,924			18,612			183			(10,342	)			1,741
Other commercial		73,995			191			37,726			4,393			36,269				(4,202	)
Total commercial		101,278			5,812			73,442			4,576			27,836				1,236
Consumer		520			1,067			413			518			107				549
Total held for investment	$	166,113		$	7,900		$	95,602		$	8,206		$	70,511			$	(306	)

During the second quarter of 2020, nonaccrual loans and leases increased by $70.5 million due primarily to two retail real estate loans and one security monitoring loan.

CAPITAL

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

	June 30, 2020
				Excluding				March 31,
				PPP				2020
	Actual (1)			Loans (1)				Actual
PacWest Bancorp Consolidated:
Tier 1 leverage capital ratio	8.93	%		9.22	%	(3)		8.63	%
Common equity tier 1 capital ratio	9.97	%		9.97	%			9.22	%
Total capital ratio	13.18	%		13.18	%			12.07	%
Tangible common equity ratio (2)	8.93	%		9.36	%	(3)		9.10	%
(1) Capital information for June 30, 2020 is preliminary.
(2) Non-GAAP measure.
(3) PPP loans have been excluded from total assets in denominator as they are zero risk-weighted.

STOCK REPURCHASE PROGRAM

During the second quarter of 2020, there were no stock repurchases. On April 21, 2020, we announced that stock repurchases were suspended indefinitely.

ABOUT PACWEST BANCORP

PacWest Bancorp (“PacWest”) is a bank holding company with over $27 billion in assets headquartered in Los Angeles, California, with executive offices in Denver, Colorado, with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). The Bank has 74 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 Bancorp 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 Bancorp, 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 Bancorp’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 Bancorp’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, 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 the Company 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
	June 30,				March 31,				June 30,
		2020				2020				2019
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	174,059			$	172,570			$	185,075
Interest-earning deposits in financial institutions		1,747,077				439,690				422,663
Total cash and cash equivalents		1,921,136				612,260				607,738
Securities available-for-sale, at estimated fair value		3,851,141				3,757,663				3,807,244
Federal Home Loan Bank stock, at cost		17,250				54,244				43,146
Total investment securities		3,868,391				3,811,907				3,850,390
Gross loans and leases held for investment		19,780,476				19,806,394				18,532,740
Deferred fees, net		(85,845	)			(61,089	)			(59,888	)
Total loans and leases held for investment,
net of deferred fees		19,694,631				19,745,305				18,472,852
Allowance for loan and lease losses		(301,050	)			(221,292	)			(135,037	)
Total loans and leases held for investment, net		19,393,581				19,524,013				18,337,815
Equipment leased to others under operating leases		295,191				306,530				300,668
Premises and equipment, net		42,299				39,799				38,162
Foreclosed assets, net		1,449				1,701				1,472
Goodwill		1,078,670				1,078,670				2,548,670
Core deposit and customer relationship intangibles, net		30,564				34,446				47,380
Other assets		734,457				733,941				612,119
Total assets	$	27,365,738			$	26,143,267			$	26,344,414
LIABILITIES:
Noninterest-bearing deposits	$	8,629,543			$	7,510,218			$	7,299,213
Interest-bearing deposits		14,299,036				12,065,619				11,506,543
Total deposits		22,928,579				19,575,837				18,805,756
Borrowings		60,000				2,295,000				1,913,059
Subordinated debentures		460,772				458,994				456,112
Accrued interest payable and other liabilities		463,489				423,047				317,477
Total liabilities		23,912,840				22,752,878				21,492,404
STOCKHOLDERS' EQUITY (1)		3,452,898				3,390,389				4,852,010
Total liabilities and stockholders’ equity	$	27,365,738			$	26,143,267			$	26,344,414
Book value per share	$	29.17			$	28.75			$	40.49
Tangible book value per share (2)	$	19.80			$	19.31			$	18.83
Shares outstanding		118,374,603				117,916,789				119,829,104
(1) Includes net unrealized gain on securities
available-for-sale, net	$	145,038			$	90,916			$	73,066
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
	Three Months Ended												Six Months Ended
	June 30,				March 31,				June 30,				June 30,
		2020				2020				2019				2020				2019
	(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	247,851			$	262,278			$	284,236			$	510,129			$	558,465
Investment securities		26,038				27,446				28,948				53,484				58,628
Deposits in financial institutions		186				1,608				1,349				1,794				1,999
Total interest income		274,075				291,332				314,533				565,407				619,092
Interest expense:
Deposits		13,075				28,247				38,720				41,322				72,955
Borrowings		1,319				6,778				7,210				8,097				14,920
Subordinated debentures		5,402				6,560				7,705				11,962				15,443
Total interest expense		19,796				41,585				53,635				61,381				103,318
Net interest income		254,279				249,747				260,898				504,026				515,774
Provision for credit losses		120,000				112,000				8,000				232,000				12,000
Net interest income after
provision for credit losses		134,279				137,747				252,898				272,026				503,774
Noninterest income:
Service charges on deposit accounts		2,004				2,658				3,771				4,662				7,501
Other commissions and fees		10,111				9,721				11,590				19,832				22,598
Leased equipment income		12,037				12,251				9,182				24,288				18,464
Gain on sale of loans and leases		346				87				326				433				326
Gain on sale of securities		7,715				182				22,192				7,897				24,353
Other income		6,645				4,201				3,832				10,846				8,715
Total noninterest income		38,858				29,100				50,893				67,958				81,957
Noninterest expense:
Compensation		61,910				61,282				68,956				123,192				139,801
Occupancy		14,494				14,207				14,457				28,701				28,777
Data processing		7,102				6,454				6,817				13,556				13,742
Other professional services		4,146				4,258				4,629				8,404				9,142
Insurance and assessments		9,373				4,249				4,098				13,622				8,136
Intangible asset amortization		3,882				3,948				4,870				7,830				9,740
Leased equipment depreciation		7,102				7,205				5,558				14,307				11,209
Foreclosed assets (income) expense, net		(146	)			66				(146	)			(80	)			(117	)
Acquisition, integration and
reorganization costs		-				-				-				-				618
Customer related expense		4,408				3,932				3,405				8,340				6,348
Loan expense		3,379				2,650				3,451				6,029				6,336
Goodwill impairment		-				1,470,000				-				1,470,000				-
Other expense		11,315				9,719				9,332				21,034				17,982
Total noninterest expense		126,965				1,587,970				125,427				1,714,935				251,714
Earnings (loss) before income taxes		46,172				(1,421,123	)			178,364				(1,374,951	)			334,017
Income tax expense		12,968				11,988				50,239				24,956				93,288
Net earnings (loss)	$	33,204			$	(1,433,111	)		$	128,125			$	(1,399,907	)		$	240,729
Basic and diluted earnings (loss) per share	$	0.28			$	(12.23	)		$	1.07			$	(11.98	)		$	1.99
Dividends declared and paid per share	$	0.25			$	0.60			$	0.60			$	0.85			$	1.20

PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS (LOSS) PER SHARE CALCULATIONS
	Three Months Ended												Six Months Ended
	June 30,				March 31,				June 30,				June 30,
		2020				2020				2019				2020				2019
	(In thousands, except per share data)
Basic Earnings (Loss) Per Share:
Net earnings (loss)	$	33,204			$	(1,433,111	)		$	128,125			$	(1,399,907	)		$	240,729
Less: earnings allocated to unvested
restricted stock (1)		(362	)			(939	)			(1,190	)			(1,251	)			(2,343	)
Net earnings (loss) allocated to
common shares	$	32,842			$	(1,434,050	)		$	126,935			$	(1,401,158	)		$	238,386
Weighted-average basic shares and
unvested restricted stock outstanding		118,192				118,775				120,042				118,484				121,128
Less: weighted-average unvested
restricted stock outstanding		(1,606	)			(1,495	)			(1,462	)			(1,551	)			(1,407	)
Weighted-average basic shares
outstanding		116,586				117,280				118,580				116,933				119,721
Basic earnings (loss) per share	$	0.28			$	(12.23	)		$	1.07			$	(11.98	)		$	1.99
Diluted Earnings (Loss) Per Share:
Net earnings (loss) allocated to
common shares	$	32,842			$	(1,434,050	)		$	126,935			$	(1,401,158	)		$	238,386
Weighted-average diluted shares
outstanding		116,586				117,280				118,580				116,933				119,721
Diluted earnings (loss) per share	$	0.28			$	(12.23	)		$	1.07			$	(11.98	)		$	1.99
(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, 2020							March 31, 2020							June 30, 2019
			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:
Loans and leases (1)(2)	$	19,951,603	$	248,474	5.01	%		$	19,065,035	$	262,764	5.54	%		$	18,239,690	$	284,513	6.26	%
Investment securities (3)		3,846,459		27,430	2.87	%			3,853,217		28,641	2.99	%			3,790,436		29,462	3.12	%
Deposits in financial
institutions		733,142		186	0.10	%			537,384		1,608	1.20	%			228,702		1,349	2.37	%
Total interest-earning
assets (1)		24,531,204		276,090	4.53	%			23,455,636		293,013	5.02	%			22,258,828		315,324	5.68	%
Other assets		2,090,023							3,643,404							3,590,361
Total assets	$	26,621,227						$	27,099,040						$	25,849,189
Liabilities and
Stockholders' Equity:
Interest checking	$	4,001,750		1,573	0.16	%		$	3,466,812		7,135	0.83	%		$	3,242,960		10,644	1.32	%
Money market		6,114,354		2,856	0.19	%			5,247,866		10,016	0.77	%			5,046,021		14,604	1.16	%
Savings		524,335		33	0.03	%			497,959		160	0.13	%			525,648		227	0.17	%
Time		2,475,858		8,613	1.40	%			2,684,143		10,936	1.64	%			2,731,156		13,245	1.95	%
Total interest-bearing
deposits		13,116,297		13,075	0.40	%			11,896,780		28,247	0.95	%			11,545,785		38,720	1.35	%
Borrowings		871,110		1,319	0.61	%			2,026,749		6,778	1.35	%			1,142,223		7,210	2.53	%
Subordinated debentures		459,466		5,402	4.73	%			458,399		6,560	5.76	%			454,901		7,705	6.79	%
Total interest-bearing
liabilities		14,446,873		19,796	0.55	%			14,381,928		41,585	1.16	%			13,142,909		53,635	1.64	%
Noninterest-bearing
demand deposits		8,292,151							7,357,717							7,544,027
Other liabilities		435,353							402,617							343,364
Total liabilities		23,174,377							22,142,262							21,030,300
Stockholders' equity		3,446,850							4,956,778							4,818,889
Total liabilities and
stockholders' equity	$	26,621,227						$	27,099,040						$	25,849,189
Net interest income (1)			$	256,294						$	251,428						$	261,689
Net interest spread (1)					3.98	%						3.86	%						4.04	%
Net interest margin (1)					4.20	%						4.31	%						4.72	%
Total deposits (4)	$	21,408,448	$	13,075	0.25	%		$	19,254,497	$	28,247	0.59	%		$	19,089,812	$	38,720	0.81	%
(1) Tax equivalent.
(2) Includes discount accretion on acquired loans of $2.5 million, $4.8 million, and $3.5 million for the three months ended June 30, 2020, March 31, 2020, and June 30, 2019, respectively.
(3) Includes tax-equivalent adjustments of $1.4 million, $1.2 million, and $0.5 million for the three months ended June 30, 2020, March 31, 2020, and June 30, 2019 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
	June 30,				March 31,				December 31,				September 30,				June 30,
		2020				2020				2019				2019				2019
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	174,059			$	172,570			$	172,585			$	252,596			$	185,075
Interest-earning deposits in financial
institutions		1,747,077				439,690				465,039				483,405				422,663
Total cash and cash equivalents		1,921,136				612,260				637,624				736,001				607,738
Securities available-for-sale		3,851,141				3,757,663				3,797,187				3,817,348				3,807,244
Federal Home Loan Bank stock		17,250				54,244				40,924				26,865				43,146
Total investment securities		3,868,391				3,811,907				3,838,111				3,844,213				3,850,390
Gross loans and leases held for investment		19,780,476				19,806,394				18,910,740				18,796,011				18,532,740
Deferred fees, net		(85,845	)			(61,089	)			(63,868	)			(60,468	)			(59,888	)
Total loans and leases held for
investment, net of deferred fees		19,694,631				19,745,305				18,846,872				18,735,543				18,472,852
Allowance for loan and lease losses		(301,050	)			(221,292	)			(138,785	)			(138,552	)			(135,037	)
Total loans and leases held for
investment, net		19,393,581				19,524,013				18,708,087				18,596,991				18,337,815
Equipment leased to others under
operating leases		295,191				306,530				324,084				295,854				300,668
Premises and equipment, net		42,299				39,799				38,585				37,926				38,162
Foreclosed assets, net		1,449				1,701				440				1,366				1,472
Goodwill		1,078,670				1,078,670				2,548,670				2,548,670				2,548,670
Core deposit and customer relationship
intangibles, net		30,564				34,446				38,394				42,547				47,380
Other assets		734,457				733,941				636,811				621,059				612,119
Total assets	$	27,365,738			$	26,143,267			$	26,770,806			$	26,724,627			$	26,344,414
LIABILITIES:
Noninterest-bearing deposits	$	8,629,543			$	7,510,218			$	7,243,298			$	7,441,185			$	7,299,213
Interest-bearing deposits		14,299,036				12,065,619				11,989,738				12,292,018				11,506,543
Total deposits		22,928,579				19,575,837				19,233,036				19,733,203				18,805,756
Borrowings		60,000				2,295,000				1,759,008				1,253,031				1,913,059
Subordinated debentures		460,772				458,994				458,209				456,145				456,112
Accrued interest payable and other
liabilities		463,489				423,047				365,856				362,140				317,477
Total liabilities		23,912,840				22,752,878				21,816,109				21,804,519				21,492,404
STOCKHOLDERS' EQUITY (1)		3,452,898				3,390,389				4,954,697				4,920,108				4,852,010
Total liabilities and stockholders’
equity	$	27,365,738			$	26,143,267			$	26,770,806			$	26,724,627			$	26,344,414
Book value per share	$	29.17			$	28.75			$	41.36			$	41.06			$	40.49
Tangible book value per share (2)	$	19.80			$	19.31			$	19.77			$	19.43			$	18.83
Shares outstanding		118,374,603				117,916,789				119,781,605				119,831,192				119,829,104
(1) Includes net unrealized gain on
securities available-for-sale, net	$	145,038			$	90,916			$	78,658			$	95,887			$	73,066
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS (LOSS)
	Three Months Ended
	June 30,				March 31,				December 31,				September 30,			June 30,
		2020				2020				2019				2019			2019
	(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	247,851			$	262,278			$	263,402			$	275,978		$	284,236
Investment securities		26,038				27,446				28,135				28,806			28,948
Deposits in financial institutions		186				1,608				2,056				2,424			1,349
Total interest income		274,075				291,332				293,593				307,208			314,533
Interest expense:
Deposits		13,075				28,247				34,802				40,703			38,720
Borrowings		1,319				6,778				5,189				6,852			7,210
Subordinated debentures		5,402				6,560				6,983				7,417			7,705
Total interest expense		19,796				41,585				46,974				54,972			53,635
Net interest income		254,279				249,747				246,619				252,236			260,898
Provision for credit losses		120,000				112,000				3,000				7,000			8,000
Net interest income after
provision for credit losses		134,279				137,747				243,619				245,236			252,898
Noninterest income:
Service charges on deposit accounts		2,004				2,658				3,611				3,525			3,771
Other commissions and fees		10,111				9,721				10,170				10,855			11,590
Leased equipment income		12,037				12,251				10,648				9,615			9,182
Gain on sale of loans and leases		346				87				23				765			326
Gain on sale of securities		7,715				182				184				908			22,192
Other income		6,645				4,201				2,540				7,761			3,832
Total noninterest income		38,858				29,100				27,176				33,429			50,893
Noninterest expense:
Compensation		61,910				61,282				74,637				71,424			68,956
Occupancy		14,494				14,207				14,541				14,089			14,457
Data processing		7,102				6,454				6,770				7,044			6,817
Other professional services		4,146				4,258				4,261				4,400			4,629
Insurance and assessments		9,373				4,249				4,168				4,100			4,098
Intangible asset amortization		3,882				3,948				4,153				4,833			4,870
Leased equipment depreciation		7,102				7,205				6,856				5,951			5,558
Foreclosed assets (income) expense, net		(146	)			66				(3,446	)			8			(146	)
Acquisition, integration and
reorganization costs		-				-				(269	)			-			-
Customer related expense		4,408				3,932				3,952				3,539			3,405
Loan expense		3,379				2,650				2,967				3,628			3,451
Goodwill impairment		-				1,470,000				-				-			-
Other expense		11,315				9,719				5,138				7,793			9,332
Total noninterest expense		126,965				1,587,970				123,728				126,809			125,427
Earnings (loss) before income taxes		46,172				(1,421,123	)			147,067				151,856			178,364
Income tax expense		12,968				11,988				29,186				41,830			50,239
Net earnings (loss)	$	33,204			$	(1,433,111	)		$	117,881			$	110,026		$	128,125
Basic and diluted earnings (loss) per share	$	0.28			$	(12.23	)		$	0.98			$	0.92		$	1.07
Dividends declared and paid per share	$	0.25			$	0.60			$	0.60			$	0.60		$	0.60

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,
		2020				2020				2019				2019				2019
	(Dollars in thousands)
Performance Ratios:
Return on average assets (1)		0.50	%			(21.27	)%			1.77	%			1.65	%			1.99	%
Return on average equity (1)		3.87	%			(116.28	)%			9.49	%			8.93	%			10.66	%
Return on average tangible equity (1)(2)		6.39	%			6.88	%			20.68	%			19.84	%			24.03	%
Efficiency ratio		42.9	%			40.6	%			44.8	%			42.3	%			41.6	%
Noninterest expense as a percentage
of average assets (1)		1.92	%			23.57	%			1.86	%			1.91	%			1.95	%
Average Yields/Costs (1):
Yield on:
Average loans and leases (3)		5.01	%			5.54	%			5.67	%			5.91	%			6.26	%
Average interest-earning assets (3)		4.53	%			5.02	%			5.14	%			5.41	%			5.68	%
Cost of:
Average interest-bearing deposits		0.40	%			0.95	%			1.14	%			1.34	%			1.35	%
Average total deposits		0.25	%			0.59	%			0.71	%			0.83	%			0.81	%
Average interest-bearing liabilities		0.55	%			1.16	%			1.36	%			1.60	%			1.64	%
Net interest spread (3)		3.98	%			3.86	%			3.78	%			3.81	%			4.04	%
Net interest margin (3)		4.20	%			4.31	%			4.33	%			4.46	%			4.72	%
Average Balances:
Assets:
Loans and leases, net of deferred fees	$	19,951,603			$	19,065,035			$	18,470,583			$	18,539,281			$	18,239,690
Interest-earning assets		24,531,204				23,455,636				22,779,867				22,793,676				22,258,828
Total assets		26,621,227				27,099,040				26,380,739				26,406,603				25,849,189
Liabilities:
Noninterest-bearing deposits		8,292,151				7,357,717				7,338,888				7,487,555				7,544,027
Interest-bearing deposits		13,116,297				11,896,780				12,102,902				12,031,776				11,545,785
Total deposits		21,408,448				19,254,497				19,441,790				19,519,331				19,089,812
Borrowings		871,110				2,026,749				1,179,220				1,181,313				1,142,223
Subordinated debentures		459,466				458,399				456,997				456,011				454,901
Interest-bearing liabilities		14,446,873				14,381,928				13,739,119				13,669,100				13,142,909
Stockholders' equity		3,446,850				4,956,778				4,930,182				4,890,746				4,818,889
(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,
		2020				2020				2019				2019				2019
	(Dollars in thousands)
Credit Quality Ratios:
Nonaccrual loans and leases held for
investment to loans and leases
held for investment		0.84	%			0.48	%			0.49	%			0.53	%			0.44	%
Nonperforming assets to loans and
leases held for investment and
foreclosed assets		0.85	%			0.49	%			0.49	%			0.54	%			0.45	%
Classified loans and leases held for
investment to loans and leases
held for investment		1.49	%			0.75	%			0.93	%			1.01	%			1.03	%
Provision for credit losses (for the
quarter) to average loans and leases
held for investment (annualized)		2.42	%			2.36	%			0.06	%			0.15	%			0.18	%
Net charge-offs (for the quarter) to
average loans and leases held
for investment (annualized)		0.27	%			0.40	%			0.02	%			0.10	%			0.25	%
Trailing 12 months net charge-offs
to average loans and leases
held for investment		0.20	%			0.19	%			0.09	%			0.20	%			0.18	%
Allowance for credit losses to loans
and leases held for investment		1.94	%			1.39	%			0.93	%			0.92	%			0.92	%
Allowance for credit losses to
nonaccrual loans and leases
held for investment		229.7	%			287.5	%			189.1	%			174.0	%			209.1	%
PacWest Bancorp Consolidated:
Tier 1 leverage capital ratio (1)		8.93	%			8.63	%			9.74	%			9.50	%			9.49	%
Common equity tier 1 capital ratio (1)		9.97	%			9.22	%			9.78	%			9.55	%			9.53	%
Tier 1 capital ratio (1)		9.97	%			9.22	%			9.78	%			9.55	%			9.53	%
Total capital ratio (1)		13.18	%			12.07	%			12.41	%			12.16	%			12.18	%
Risk-weighted assets (1)	$	22,781,405			$	24,214,209			$	23,582,495			$	23,579,614			$	23,117,199
Equity to assets ratio		12.62	%			12.97	%			18.51	%			18.41	%			18.42	%
Tangible common equity ratio (2)		8.93	%			9.10	%			9.79	%			9.65	%			9.50	%
Book value per share	$	29.17			$	28.75			$	41.36			$	41.06			$	40.49
Tangible book value per share (2)	$	19.80			$	19.31			$	19.77			$	19.43			$	18.83
Pacific Western Bank:
Tier 1 leverage capital ratio (1)		10.03	%			9.71	%			10.95	%			10.72	%			10.76	%
Common equity tier 1 capital ratio (1)		11.18	%			10.38	%			11.00	%			10.79	%			10.80	%
Tier 1 capital ratio (1)		11.18	%			10.38	%			11.00	%			10.79	%			10.80	%
Total capital ratio (1)		12.44	%			11.39	%			11.74	%			11.52	%			11.53	%
(1) Capital information for June 30, 2020 is preliminary.
(2) Non-GAAP measure.

GAAP TO NON-GAAP RECONCILIATIONS

This press release contains certain non-GAAP financial disclosures for: (1) 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												Six Months Ended
PPNR and PPNR Return	June 30,				March 31,				June 30,				June 30,
on Average Assets		2020				2020				2019				2020				2019
	(Dollars in thousands)
Net earnings (loss)	$	33,204			$	(1,433,111	)		$	128,125			$	(1,399,907	)		$	240,729
Add: Provision for credit losses		120,000				112,000				8,000				232,000				12,000
Add: Goodwill impairment		-				1,470,000				-				1,470,000				-
Add: Income tax expense		12,968				11,988				50,239				24,956				93,288
Pre-provision, pre-goodwill impairment,
pre-tax net revenue ("PPNR")	$	166,172			$	160,877			$	186,364			$	327,049			$	346,017
Average assets	$	26,621,227			$	27,099,040			$	25,849,189			$	26,860,133			$	25,812,771
Return on average assets (1)		0.50	%			(21.27	)%			1.99	%			(10.48	)%			1.88	%
PPNR return on average assets (2)		2.51	%			2.39	%			2.89	%			2.45	%			2.70	%
(1) Annualized net earnings (loss) divided by average assets.
(2) Annualized PPNR divided by average assets.

	Three Months Ended												Six Months Ended
	June 30,				March 31,				June 30,				June 30,
Return on Average Tangible Equity		2020				2020				2019				2020				2019
	(Dollars in thousands)
Net earnings (loss)	$	33,204			$	(1,433,111	)		$	128,125			$	(1,399,907	)		$	240,729
Add: Intangible asset amortization		3,882				3,948				4,870				7,830				9,740
Add: Goodwill impairment		-				1,470,000				-				1,470,000				-
Adjusted net earnings	$	37,086			$	40,837			$	132,995			$	77,923			$	250,469
Average stockholders' equity	$	3,446,850			$	4,956,778			$	4,818,889			$	4,201,814			$	4,817,435
Less: Average intangible assets		1,111,302				2,569,189				2,598,762				1,840,246				2,601,288
Average tangible common equity	$	2,335,548			$	2,387,589			$	2,220,127			$	2,361,568			$	2,216,147
Return on average equity (1)		3.87	%			(116.28	)%			10.66	%			(67.00	)%			10.08	%
Return on average tangible equity (2)		6.39	%			6.88	%			24.03	%			6.64	%			22.79	%
(1) Annualized net earnings divided by average stockholders' equity.
(2) Annualized adjusted net earnings divided by average tangible common equity.

Tangible Common Equity Ratio/	June 30,				March 31,				December 31,				September 30,				June 30,
Tangible Book Value Per Share		2020				2020				2019				2019				2019
	(Dollars in thousands, except per share data)
Stockholders' equity	$	3,452,898			$	3,390,389			$	4,954,697			$	4,920,108			$	4,852,010
Less: Intangible assets		1,109,234				1,113,116				2,587,064				2,591,217				2,596,050
Tangible common equity	$	2,343,664			$	2,277,273			$	2,367,633			$	2,328,891			$	2,255,960
Total assets	$	27,365,738			$	26,143,267			$	26,770,806			$	26,724,627			$	26,344,414
Less: Intangible assets		1,109,234				1,113,116				2,587,064				2,591,217				2,596,050
Tangible assets	$	26,256,504			$	25,030,151			$	24,183,742			$	24,133,410			$	23,748,364
Equity to assets ratio		12.62	%			12.97	%			18.51	%			18.41	%			18.42	%
Tangible common equity ratio (1)		8.93	%			9.10	%			9.79	%			9.65	%			9.50	%
Book value per share	$	29.17			$	28.75			$	41.36			$	41.06			$	40.49
Tangible book value per share (2)	$	19.80			$	19.31			$	19.77			$	19.43			$	18.83
Shares outstanding		118,374,603				117,916,789				119,781,605				119,831,192				119,829,104
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.

Contact:		Matthew P. Wagner President and CEO		Patrick J. Rusnak Executive Vice President and CFO
Phone:		303-802-8900		714-989-4705
Contact:		William Black Executive Vice President Strategy and Corporate Development
Phone:		919-597-7466