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PacWest Bancorp Announces Results for the Fourth Quarter and Full Year 2016

Fourth Quarter 2016 Highlights

  • Net Earnings of $85.6 Million, or $0.71 Per Diluted Share
  • New Loan and Lease Production of $1.3 Billion; $713 Million of Net Loan Growth
  • Core Deposits Increase of $513 Million and Represent 79% of Total Deposits
  • Tax Equivalent Net Interest Margin of 5.47%; Core Tax Equivalent Net Interest Margin of 5.09%

Full Year 2016 Highlights

  • Net Earnings of $352.2 Million, or $2.90 Per Diluted Share
  • New Loan and Lease Production of $4.1 Billion; $978 Million of Net Loan Growth
  • Core Deposits Increase of $2.0 Billion
  • Tax Equivalent Net Interest Margin of 5.40%; Core Tax Equivalent Net Interest Margin of 5.10%

LOS ANGELES, Jan. 19, 2017 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq:PACW) today announced net earnings for the fourth quarter of 2016 of $85.6 million, or $0.71 per diluted share, compared to net earnings for the third quarter of 2016 of $93.9 million, or $0.77 per diluted share. Net earnings for the full year 2016 were $352.2 million, or $2.90 per diluted share, compared to net earnings for the full year 2015 of $299.6 million, or $2.79 per diluted share. The 18% increase in annual net earnings was due mostly to including the operations of Square 1 Financial, Inc. for all of 2016 compared to including its operations in 2015 from the October 6, 2015 acquisition date.

Matt Wagner, President and CEO, commented, “Our strong fourth quarter results capped a year of profitable growth and continued solid operating performance. Our full year 2016 return on assets of 1.66% and return on tangible equity of 15.52% drove a 4% increase in diluted EPS. These exceptional operating results allowed us to return $271 million to our stockholders in 2016 through stock repurchases and dividends.”

Patrick Rusnak, Executive Vice President and CFO stated, “Our fourth quarter core tax equivalent NIM increased one basis point to 5.09% while our NIM excluding all purchase accounting items increased six basis points to 5.04%. Our NIM has continued to hold up during this sustained period of low interest rates and, with our large concentrations of floating rate loans and core deposits, our balance sheet is well-positioned for a rising rate environment.”

Mr. Rusnak continued, “We are pleased with the 2016 full year loan and lease growth of 7% as it was produced by various business groups, maintaining our favorable loan diversification along our product lines.”

Mr. Wagner continued, “We are very well-positioned for continued growth and superior financial performance in 2017 given our proven and efficient business banking model supported by talented bankers. Even with the prospect of a more favorable outlook for economic growth and the banking sector, we will remain vigilant with respect to prudent risk management. Our financial performance was recently recognized in Forbes magazine’s 2017 List of America’s Best Banks where PacWest was named the best performing of the 100 largest publicly-traded U.S. banks.”

FINANCIAL HIGHLIGHTS

At or For the Three Months Ended At or For the Year Ended
December 31, September 30, December 31,
2016 2016 Change 2016 2015 Change
(Dollars in thousands, except per share data)
Financial Highlights
Net Earnings$ 85,647 $ 93,895 $ (8,248) $ 352,166 $ 299,619 $ 52,547
Diluted Earnings Per Share$ 0.71 $ 0.77 $ (0.06) $ 2.90 $ 2.79 $ 0.11
Return on Average Assets 1.59% 1.77% (0.18) 1.66% 1.70% (0.04)
Return on Average
Tangible Equity (1) 14.88% 16.15% (1.27) 15.52% 15.76% (0.24)
Net Interest Margin
(tax equivalent) 5.47% 5.26% 0.21 5.40% 5.60% (0.20)
Core Net Interest Margin
(tax equivalent) (1) 5.09% 5.08% 0.01 5.10% 5.25% (0.15)
Efficiency Ratio 40.1% 40.1% - 39.8% 38.5% 1.3
Total Assets$ 21,869,767 $ 21,315,291 $ 554,476 $ 21,869,767 $ 21,288,490 $ 581,277
Loans and Leases, Net
of Deferred Fees$ 15,455,954 $ 14,742,846 $ 713,108 $ 15,455,954 $ 14,478,254 $ 977,700
Noninterest-Bearing
Deposits$ 6,659,016 $ 6,521,946 $ 137,070 $ 6,659,016 $ 6,171,455 $ 487,561
Core Deposits$ 12,523,834 $ 12,010,639 $ 513,195 $ 12,523,834 $ 10,571,573 $ 1,952,261
Total Deposits$ 15,870,611 $ 15,645,668 $ 224,943 $ 15,870,611 $ 15,666,182 $ 204,429
Noninterest-Bearing
Deposits as Percentage
of Total Deposits 42% 42% - 42% 39% 3
Core Deposits as
Percentage of Total
Deposits 79% 77% 2 79% 67% 12
Equity to Assets Ratio 20.48% 21.31% (0.83) 20.48% 20.66% (0.18)
Tangible Common Equity
Ratio (1) 11.54% 12.19% (0.65) 11.54% 11.38% 0.16
Book Value Per Share$ 36.93 $ 37.29 $ (0.36) $ 36.93 $ 36.22 $ 0.71
Tangible Book Value Per
Share (1)$ 18.71 $ 19.12 $ (0.41) $ 18.71 $ 17.86 $ 0.85
(1) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income increased by $13.7 million to $248.3 million in the fourth quarter of 2016 compared to $234.6 million in the third quarter of 2016 due to the combination of higher discount accretion on acquired loans and higher average loan and lease balances, offset by lower nonaccrual interest recoveries. Total accretion on acquired loans was $21.2 million in the fourth quarter of 2016 (56 basis points on the loan and lease yield) compared to $14.2 million in the third quarter of 2016 (39 basis points on the loan and lease yield). The increase in accretion was due primarily to higher accelerated accretion from payoffs on acquired loans, including $13.5 million from the payoff of a nonaccrual purchased credit impaired (“PCI”) loan. The loan and lease yield for the fourth quarter of 2016 was 6.31% compared to 6.17% for the third quarter of 2016. The increase in the loan and lease yield was due to the higher accretion on acquired loans offset by a lower yield on new production relative to the current portfolio yield. Excluding accelerated accretion, the core loan and lease yield was 5.85% in the fourth quarter compared to 5.94% in the third quarter.

The tax equivalent NIM for the fourth quarter of 2016 was 5.47% compared to 5.26% for the third quarter of 2016. The increase in the NIM was mostly due to higher accretion on acquired loans. Such accretion contributed 46 basis points to the NIM in the fourth quarter of 2016 and 31 basis points to the NIM in the third quarter of 2016. Excluding accelerated accretion, the core tax equivalent NIM was 5.09% in the fourth quarter compared to 5.08% for the third quarter.

Included in net interest income for the third quarter of 2016 was $3.0 million of interest resulting from the full payoff of a nonperforming loan. This recovery contributed seven basis points to the NIM and eight basis points of loan and lease yield for the third quarter of 2016.

The cost of total deposits was 0.19% in the fourth quarter, unchanged from the third quarter.

The tax equivalent NIM and loan and lease yield are impacted by volatility in accretion of acquisition discounts on acquired loans and leases. The effects of this item are shown in the following table for the periods indicated:

Three Months Ended Three Months Ended
December 31, 2016 September 30, 2016
Loan and Loan and
NIMLease Yield NIMLease Yield
Reported 5.47%6.31% 5.26%6.17%
Less:Accelerated accretion of acquisition
discounts from early payoffs of
acquired loans (0.38)%(0.46)% (0.18)%(0.23)%
Core 5.09%5.85% 5.08%5.94%
Less:Remaining accretion of Non-PCI loan
acquisition discounts(0.08)%(0.10)% (0.13)%(0.16)%
Excluding total accretion of loan acquisition
discounts5.01%5.75% 4.95%5.78%
Total accretion of loan acquisition discounts(0.46)%(0.56)% (0.31)%(0.39)%

The impact on the tax equivalent net interest income and NIM from all purchase accounting items is set forth in the table below for the periods indicated:

Three Months Ended Three Months Ended
December 31, 2016 September 30, 2016
Impact on Impact on
AmountNIM AmountNIM
(Dollars in thousands)
Net interest income/NIM $ 253,131 5.47% $ 239,473 5.26%
Less: Accelerated accretion of acquisition
discounts from early payoffs of
acquired loans (17,454)(0.38)% (8,226)(0.18)%
Remaining accretion of Non-PCI loan
acquisition discounts (3,726)(0.08)% (5,997)(0.13)%
Total accretion of loan acquisition
discounts (21,180)(0.46)% (14,223)(0.31)%
Amortization of TruPS discount 1,388 0.03% 1,391 0.03%
Accretion of time deposits premium (94)0.00% (121)0.00%
(19,886)(0.43)% (12,953)(0.28)%
Net interest income/NIM - excluding purchase
accounting$ 233,245 5.04% $ 226,520 4.98%

Noninterest Income

Noninterest income increased by $2.0 million to $28.9 million in the fourth quarter of 2016 compared to $26.9 million for the third quarter of 2016 due mostly to a $1.1 million increase in dividends and gains on equity investments and a $1.1 million increase in other income attributable mainly to higher warrant income.

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

Three Months Ended
December 31, September 30, Increase
Noninterest Income 2016 2016 (Decrease)
(In thousands)
Service charges on deposit accounts$ 3,557 $ 3,488 $ 69
Other commissions and fees 12,036 12,528 (492)
Leased equipment income 8,614 8,538 76
Gain on sale of loans and leases 119 157 (38)
Gain on securities 515 382 133
Other income:
Dividends and realized gains on equity investments 1,453 377 1,076
Foreign currency translation net (losses) gains (171) (224) 53
Other 2,772 1,674 1,098
Total noninterest income $ 28,895 $ 26,920 $ 1,975

Noninterest Expense

Noninterest expense increased by $7.9 million to $118.6 million for the fourth quarter of 2016 compared to $110.7 million for the third quarter of 2016. The increase was due mostly to higher compensation expense of $3.4 million, higher foreclosed assets expense of $2.9 million, higher loan expense of $1.2 million, and higher other expense of $1.0 million, offset by lower intangible asset amortization of $1.0 million. Compensation expense increased due mainly to higher severance, bonus, and commissions expense. Foreclosed assets expense increased due primarily to a $2.6 million write-down on an existing property. Loan expense increased primarily due to a $0.9 million recovery of work-out expenses for a single credit in the third quarter. Intangible asset amortization decreased due to declining amortization on the Square 1 customer deposit and customer relationship intangible assets.

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

Three Months Ended
December 31, September 30, Increase
Noninterest Expense 2016 2016 (Decrease)
(In thousands)
Compensation$ 66,013 $ 62,661 $ 3,352
Occupancy 12,076 12,010 66
Data processing 6,574 6,234 340
Other professional services 4,880 4,625 255
Insurance and assessments 4,124 4,324 (200)
Intangible asset amortization 3,176 4,224 (1,048)
Leased equipment depreciation 5,291 5,298 (7)
Foreclosed assets expense (income), net 2,693 (248) 2,941
Other expense:
Loan expense 3,140 1,931 1,209
Other 10,655 9,651 1,004
Total noninterest expense$ 118,622 $ 110,710 $ 7,912

Income Taxes

The overall effective income tax rate was 36.7% in the fourth quarter of 2016 and 34.1% in the third quarter of 2016. The effective rate for the third quarter was lower due to certain discrete items associated with completion of the 2015 tax returns. The effective tax rate for the full year 2016 was 36.9%. The estimated effective tax rate for the full year 2017 is approximately 38.5%.

BALANCE SHEET HIGHLIGHTS

Loans and Leases

Total loans and leases increased by $713.1 million in the fourth quarter to $15.5 billion at December 31, 2016. The net increase was driven by fourth quarter originations and purchases of $1.3 billion, offset partially by principal repayments of $526.2 million. For the year ended December 31, 2016, total loans and leases increased by $977.7 million, or approximately 7%.

The following table presents a roll forward of the loan and lease portfolio for the periods indicated:

Three Months Ended Year Ended
December 31, September 30, December 31,
Loan and Lease Roll Forward (1) 2016 2016 2016
(Dollars in thousands)
Beginning balance$ 14,742,846 $ 14,641,460 $ 14,478,254
New production 1,272,900 1,071,943 4,118,330
Existing loans and leases:
Principal repayments, net (2) (526,232) (933,037) (2,844,553)
Loan and lease sales (14,825) (27,065) (120,144)
Transfers to foreclosed assets (652) - (781)
Charge-offs (18,083) (10,455) (35,954)
Sale of PWEF - - (139,198)
Ending balance$ 15,455,954 $ 14,742,846 $ 15,455,954
Weighted average rate on new production 4.83% 5.11% 4.92%
(1) Includes direct financing leases but excludes equipment leased to others under operating leases.
(2) Includes principal 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 our loan and lease portfolio as of the dates indicated:

December 31, September 30, June 30, December 31,
Loan and Lease Portfolio 2016 2016 2016 2015
(In thousands)
Real estate mortgage:
Commercial$ 4,396,696 $ 4,327,565 $ 4,519,209 $ 4,645,533
Residential 1,314,036 1,242,254 1,164,784 1,211,209
Total real estate mortgage 5,710,732 5,569,819 5,683,993 5,856,742
Real estate construction and land:
Commercial 581,246 510,831 417,144 345,991
Residential 384,001 323,104 281,788 184,382
Total real estate construction and land 965,247 833,935 698,932 530,373
Total real estate loans 6,675,979 6,403,754 6,382,925 6,387,115
Commercial:
Cash flow 3,112,890 3,071,606 3,048,439 3,073,965
Asset-based 2,611,796 2,573,437 2,683,913 2,547,665
Venture capital 1,987,900 1,766,509 1,666,352 1,458,013
Equipment finance 691,967 670,783 646,940 890,349
Total commercial 8,404,553 8,082,335 8,045,644 7,969,992
Consumer 375,422 256,757 212,891 121,147
Total loans and leases, net of
deferred fees$ 15,455,954 $ 14,742,846 $ 14,641,460 $ 14,478,254
Total unfunded loan commitments$ 4,166,703 $ 4,156,147 $ 3,888,686 $ 3,580,655

Loan growth in the fourth quarter came primarily from the venture capital, construction, and consumer portfolios.

Deposits and Client Investment Funds

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

December 31, September 30, June 30, December 31,
Deposit Category 2016 2016 2016 2015
(Dollars in thousands)
Noninterest-bearing demand deposits$ 6,659,016 $ 6,521,946 $ 6,222,696 $ 6,171,455
Interest checking deposits 1,448,394 1,184,350 1,035,395 874,349
Money market deposits 3,705,385 3,532,050 3,392,811 2,782,974
Savings deposits 711,039 772,293 761,090 742,795
Total core deposits 12,523,834 12,010,639 11,411,992 10,571,573
Brokered non-maturity deposits 1,174,487 1,082,114 972,820 942,253
Total non-maturity deposits 13,698,321 13,092,753 12,384,812 11,513,826
Time deposits under $100,000 1,018,849 1,180,428 1,114,074 1,656,227
Time deposits of $100,000 and over 1,153,441 1,372,487 1,649,123 2,496,129
Total time deposits 2,172,290 2,552,915 2,763,197 4,152,356
Total deposits$ 15,870,611 $ 15,645,668 $ 15,148,009 $ 15,666,182
Noninterest-bearing demand deposits
as percentage of total deposits 42% 42% 41% 39%
Core deposits as percentage of total deposits 79% 77% 75% 67%

At December 31, 2016, core deposits totaled $12.5 billion, or 79% of total deposits, including $6.7 billion of noninterest-bearing demand deposits, or 42% 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 client investment funds at December 31, 2016 were $1.3 billion, of which $1.1 billion was managed by S1AM.

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

A provision for credit losses of $23.2 million was recorded in the fourth quarter of 2016 compared to $8.5 million in the third quarter of 2016. The fourth quarter provision consisted of $21.0 million for non-purchased credit impaired (“Non-PCI”) loans and leases and $2.2 million for PCI loans; this compares to $8.0 million and $0.5 million for the third quarter. The higher fourth quarter 2016 provision was due to significant loan and lease portfolio growth and lower recoveries. The allowance for Non-PCI credit losses to Non-PCI loans and leases coverage ratio was 1.05% at December 31, 2016 and September 30, 2016.

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

Three Months Ended December 31, 2016
Non-PCI
Allowance for Credit Loans and Unfunded Total PCI
Losses RollforwardLeases Commitments Non-PCI Loans Total
(In thousands)
Beginning balance$136,747 $17,323 $154,070 $11,229 $165,299
Charge-offs (18,083) - (18,083) - (18,083)
Recoveries 4,291 - 4,291 39 4,330
Net (charge-offs) recoveries (13,792) - (13,792) 39 (13,753)
Provision 20,800 200 21,000 2,215 23,215
Ending balance$143,755 $17,523 $161,278 $13,483 $174,761
Three Months Ended September 30, 2016
Non-PCI
Allowance for Credit Loans and Unfunded Total PCI
Losses RollforwardLeases Commitments Non-PCI Loans Total
(In thousands)
Beginning balance$132,000 $17,944 $149,944 $11,289 $161,233
Charge-offs (9,924) - (9,924) (531) (10,455)
Recoveries 6,050 - 6,050 - 6,050
Net charge-offs (3,874) - (3,874) (531) (4,405)
Provision 8,621 (621) 8,000 471 8,471
Ending balance$136,747 $17,323 $154,070 $11,229 $165,299

The higher fourth quarter 2016 charge-offs were principally due to the charge-off of $15.7 million of specific reserves that were established in previous quarters compared to $9.7 million in the third quarter.

All acquired loans are recorded initially at their estimated fair value including an estimate of credit losses. The table below presents two alternative views of credit risk coverage ratios for Non-PCI loans reflecting adjustments for acquired loans and leases and associated purchase accounting discounts:

December 31, 2016 September 30, 2016
Non-PCI Adjusted Non-PCI Non-PCI
Allowance for Credit LossesLoans andAllowance/Coverage Loans andAllowance/Coverage
to Loans and LeasesLeasesDiscountRatio LeasesDiscountRatio
(Dollars in thousands)
Adjustment for -
Acquired loans and leases
and related allowance:
Ending balance$15,412,092 $161,278 1.05% $14,686,206 $154,070 1.05%
Acquired loans and allowance (4,413,176) (44,352)(1) (4,612,787) (46,039)(1)
Adjusted balance$10,998,916 $116,926 1.06% $10,073,419 $108,031 1.07%
Adjustment for -
Unamortized net discount on
acquired loans and leases:
Ending balance$15,412,092 $161,278 1.05% $14,686,206 $154,070 1.05%
Unamortized net discount 45,639 45,639 (2) 53,041 53,041 (2)
Adjusted balance$15,457,731 $206,917 1.34% $14,739,247 $207,111 1.41%
(1) Allowance attributed to $4.4 billion and $4.6 billion of acquired Non-PCI loans at December 31, 2016 and September 30, 2016, based on the allowance calculation that includes an amount for credit deterioration on acquired loans and leases since their acquisition dates.
(2) Unamortized net discount relates to $4.4 billion and $4.6 billion of acquired Non-PCI loans at December 31, 2016 and September 30, 2016, and is assigned specifically to those loans only. Such discount represents the acquisition date fair value adjustment based on market, liquidity, interest rate risk and credit risk and is being accreted to interest income over the remaining life of the respective loans using the interest method. Use of the interest method results in steadily declining amounts being taken into income in each reporting period. The remaining discount of $45.6 million at December 31, 2016, is expected to be substantially accreted to income by the end of 2018.

CREDIT QUALITY

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

December 31, September 30,
Non-PCI Credit Quality Metrics 2016 2016
(Dollars in thousands)
Nonaccrual loans and leases $ 170,599 $ 171,085
Classified loans and leases 409,645 417,541
Performing troubled debt restructured loans 64,952 70,348
Allowance for credit losses 161,278 154,070
Net charge-offs (for the quarter) 13,792 3,874
Provision for credit losses (for the quarter) 21,000 8,000
Allowance for credit losses to loans and leases 1.05% 1.05%
Allowance for credit losses to nonaccrual loans
and leases 94.5% 90.1%
Nonaccrual loans and leases to loans and leases 1.11% 1.16%
Nonperforming assets to loans and leases and
foreclosed assets 1.19% 1.27%
Classified loans and leases to loans and leases 2.66% 2.84%

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
December 31, 2016 September 30, 2016 30-89 Days Past Due
% of % of December 31, September 30,
Loan Loan 2016 2016
AmountCategory AmountCategory Amount Amount
(Dollars in thousands)
Real estate mortgage:
Commercial$ 62,4541.4% $ 74,6061.7% $ 7,691 $ 2,146
Residential 6,8810.5% 5,0890.4% 5,524 -
Total real estate mortgage 69,3351.2% 79,6951.5% 13,215 2,146
Real estate construction and land:
Commercial -0.0% 1,2450.2% - -
Residential 3640.1% 3660.1% - -
Total real estate
construction and land 3640.0% 1,6110.2% - -
Commercial:
Cash flow 53,9081.7% 27,8310.9% 153 21
Asset-based 2,1180.1% 4,0440.2% 1,500 6,644
Venture capital 11,6870.6% 10,7820.6% 13,295 -
Equipment finance 32,8484.7% 46,9167.0% 218 -
Total commercial 100,5611.2% 89,5731.1% 15,166 6,665
Consumer 3390.1% 2060.1% 224 -
Total Non-PCI loans and
leases $ 170,5991.1% $ 171,0851.2% $ 28,605 $ 8,811

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

December 31, September 30,
Nonperforming Assets 2016 2016
(Dollars in thousands)
Nonaccrual Non-PCI loans and leases$ 170,599 $ 171,085
Nonaccrual PCI loans 2,928 3,478
Total nonaccrual loans and leases 173,527 174,563
Foreclosed assets, net 12,976 15,113
Total nonperforming assets$ 186,503 $ 189,676
Nonaccrual loans and leases to loans and leases 1.12% 1.18%
Nonperforming assets to loans and leases
and foreclosed assets 1.20% 1.28%

STOCK REPURCHASE PROGRAM

In the fourth quarter of 2016, the Company repurchased 652,835 shares of common stock for a total amount of $27.9 million under its previously announced $400 million stock repurchase program. The repurchased shares were retired by the Company.

SALE AND CLOSURE OF BRANCHES

In December 2016, Pacific Western Bank completed the sale of two branches to First Foundation Bank (the “Transaction”). The branches were located in Laguna Hills and Seal Beach, California (the “Branches”). The deposits of the Branches totaled approximately $180 million, principally comprised of time deposits. No loans were sold in connection with the Transaction. In addition, Pacific Western Bank will close its three branches located in the San Francisco Bay Area in the first quarter of 2017. At December 31, 2016, the deposits of these branches totaled approximately $100 million. No significant one-time charges are expected to be incurred related to the closure of these branches.

ABOUT PACWEST BANCORP

PacWest Bancorp (“PacWest”) is a bank holding company with over $21 billion in assets with one wholly-owned banking subsidiary, Pacific Western Bank (“Pacific Western”). The Bank has 77 full-service branches located throughout the state of California and one branch in Durham, North Carolina. Pacific Western provides commercial banking services, including real estate, construction, and commercial loans, and comprehensive deposit and treasury management services to small and medium-sized businesses. Pacific Western offers additional products and services under the brands of its business groups, CapitalSource and Square 1 Bank. CapitalSource provides cash flow, asset-based, equipment and real estate loans and treasury management services to established middle market businesses on a national basis. Square 1 Bank 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. 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; 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, 2015, 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.

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
December 31, September 30, December 31,
2016 2016 2015
(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks$ 337,965 $ 286,371 $ 161,020
Interest-earning deposits in financial institutions 81,705 253,994 235,466
Total cash and cash equivalents 419,670 540,365 396,486
Securities available-for-sale, at estimated fair value 3,223,830 3,341,335 3,559,437
Federal Home Loan Bank stock, at cost 21,870 19,386 19,710
Total investment securities 3,245,700 3,360,721 3,579,147
Non-PCI loans and leases 15,412,092 14,686,206 14,339,070
PCI loans 108,445 120,221 189,095
Total gross loans and leases 15,520,537 14,806,427 14,528,165
Deferred fees, net (64,583) (63,581) (49,911)
Total loans and leases, net of deferred fees 15,455,954 14,742,846 14,478,254
Allowance for loan and lease losses (157,238) (147,976) (115,111)
Total loans and leases, net 15,298,716 14,594,870 14,363,143
Equipment leased to others under operating leases 229,905 198,931 197,452
Premises and equipment, net 38,594 38,977 39,197
Foreclosed assets, net 12,976 15,113 22,120
Deferred tax asset, net 94,112 27,073 126,389
Goodwill 2,173,949 2,173,949 2,176,291
Core deposit and customer
relationship intangibles, net 36,366 39,542 53,220
Other assets 319,779 325,750 335,045
Total assets$ 21,869,767 $ 21,315,291 $ 21,288,490
LIABILITIES:
Noninterest-bearing deposits$ 6,659,016 $ 6,521,946 $ 6,171,455
Interest-bearing deposits 9,211,595 9,123,722 9,494,727
Total deposits 15,870,611 15,645,668 15,666,182
Borrowings 905,812 541,011 621,914
Subordinated debentures 440,744 441,112 436,000
Accrued interest payable and other liabilities 173,545 144,905 166,703
Total liabilities 17,390,712 16,772,696 16,890,799
STOCKHOLDERS' EQUITY (1) 4,479,055 4,542,595 4,397,691
Total liabilities and stockholders’ equity$ 21,869,767 $ 21,315,291 $ 21,288,490
Book value per share$ 36.93 $ 37.29 $ 36.22
Tangible book value per share (2)$ 18.71 $ 19.12 $ 17.86
Shares outstanding 121,283,669 121,817,524 121,413,727
(1) Includes net unrealized gain on securities
available-for-sale, net
$ 5,982 $ 72,073 $ 27,828
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Three Months Ended Year Ended
December 31, September 30, December 31, December 31,
2016 2016 2015 2016 2015
(Dollars in thousands, except per share data)
Interest income:
Loans and leases$ 238,223 $ 225,370 $ 219,677 $ 924,294 $ 819,094
Investment securities 23,403 22,187 23,648 90,557 64,368
Deposits in financial institutions 147 298 172 1,061 476
Total interest income 261,773 247,855 243,497 1,015,912 883,938
Interest expense:
Deposits 7,369 7,247 9,391 31,512 41,503
Borrowings 631 695 159 2,259 554
Subordinated debentures 5,468 5,278 4,748 20,850 18,535
Total interest expense 13,468 13,220 14,298 54,621 60,592
Net interest income 248,305 234,635 229,199 961,291 823,346
Provision for credit losses 23,215 8,471 13,772 65,729 45,481
Net interest income after provision
for credit losses 225,090 226,164 215,427 895,562 777,865
Noninterest income:
Service charges on deposit accounts 3,557 3,488 3,901 14,534 11,688
Other commissions and fees 12,036 12,528 12,691 47,126 31,586
Leased equipment income 8,614 8,538 7,791 33,919 24,023
Gain on sale of loans and leases 119 157 183 909 373
Gain on securities 515 382 - 9,485 3,744
FDIC loss sharing expense, net - - (4,291) (8,917) (18,246)
Other income 4,054 1,827 7,783 15,419 31,142
Total noninterest income 28,895 26,920 28,058 112,475 84,310
Noninterest expense:
Compensation 66,013 62,661 58,992 251,913 203,914
Occupancy 12,076 12,010 12,194 48,911 44,144
Data processing 6,574 6,234 5,585 24,356 18,617
Other professional services 4,880 4,625 3,811 16,478 13,760
Insurance and assessments 4,124 4,324 5,450 18,364 16,996
Intangible asset amortization 3,176 4,224 4,910 16,517 9,410
Leased equipment depreciation 5,291 5,298 4,235 20,899 13,603
Foreclosed assets expense (income), net 2,693 (248) (3,185) 1,881 (668)
Acquisition, integration and
reorganization costs - - 17,600 200 21,247
Other expense 13,795 11,582 12,672 50,582 41,016
Total noninterest expense 118,622 110,710 122,264 450,101 382,039
Earnings before income taxes 135,363 142,374 121,221 557,936 480,136
Income tax expense (49,716) (48,479) (49,380) (205,770) (180,517)
Net earnings $ 85,647 $ 93,895 $ 71,841 $ 352,166 $ 299,619
Basic and diluted earnings per share$ 0.71 $ 0.77 $ 0.60 $ 2.90 $ 2.79

PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS PER SHARE CALCULATIONS
Three Months EndedYear Ended
December 31, September 30, December 31,
December 31,
2016 2016 2015 2016 2015
(Dollars in thousands, except per share data)
Basic Earnings Per Share:
Net earnings$85,647 $93,895 $71,841
$352,166 $299,619
Less: earnings allocated to unvested
restricted stock (1) (1,004) (1,048) (690) (3,988) (2,892)
Net earnings allocated to common
shares$84,643 $92,847 $71,151 $348,178 $296,727
Weighted-average basic shares and
unvested restricted stock outstanding 121,464 121,818 120,385 121,670 107,401
Less: weighted-average unvested
restricted stock outstanding (1,450) (1,401) (1,133) (1,431) (1,074)
Weighted-average basic shares
outstanding 120,014 120,417 119,252
120,239 106,327
Basic earnings per share$0.71 $0.77 $0.60 $2.90 $2.79
Diluted Earnings Per Share:
Net earnings allocated to common
shares$84,643 $92,847 $71,151
$348,178 $296,727
Weighted-average basic shares
outstanding 120,014 120,417 119,252
120,239 106,327
Diluted earnings per share$0.71 $0.77 $0.60 $2.90 $2.79
(1) Represents cash dividends paid to holders of unvested stock, net of estimated 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
December 31, 2016 September 30, 2016 December 31, 2015
InterestAverage InterestAverage InterestAverage
Average Income/Yield/ Average Income/Yield/ Average Income/Yield/
BalanceExpenseCost BalanceExpenseCost BalanceExpenseCost
(Dollars in thousands)
Assets:
PCI loans$ 104,234 $ 17,481 66.72% $ 117,781 $ 5,868 19.82% $ 169,772 $ 6,345 14.83%
Non-PCI loans and leases 14,904,034 220,742 5.89% 14,417,170 219,502 6.06% 13,861,330 213,332 6.11%
Total loans and leases 15,008,268 238,223 6.31% 14,534,951 225,370 6.17% 14,031,102 219,677 6.21%
Investment securities (1) 3,293,003 28,229 3.41% 3,338,209 27,025 3.22% 3,492,124 28,408 3.23%
Deposits in financial
institutions 111,918 147 0.52% 238,425 298 0.50% 254,308 172 0.27%
Total interest-earning
assets 18,413,189 266,599 5.76% 18,111,585 252,693 5.55% 17,777,534 248,257 5.54%
Other assets 3,014,761 2,960,468 3,047,714
Total assets$ 21,427,950 $ 21,072,053 $ 20,825,248
Liabilities and
Stockholders' Equity:
Interest checking$ 1,449,346 951 0.26% $ 1,161,931 604 0.21% $ 889,035 345 0.15%
Money market 4,740,944 3,672 0.31% 4,514,525 3,303 0.29% 3,557,364 1,543 0.17%
Savings 751,817 331 0.18% 764,415 341 0.18% 747,054 445 0.24%
Time 2,384,973 2,415 0.40% 2,666,434 2,999 0.45% 4,439,940 7,058 0.63%
Total interest-bearing
deposits 9,327,080 7,369 0.31% 9,107,305 7,247 0.32% 9,633,393 9,391 0.39%
Borrowings 505,567 631 0.50% 583,982 695 0.47% 206,236 159 0.31%
Subordinated debentures 440,907 5,468 4.93% 439,970 5,278 4.77% 435,293 4,748 4.33%
Total interest-bearing
liabilities 10,273,554 13,468 0.52% 10,131,257 13,220 0.52% 10,274,922 14,298 0.55%
Noninterest-bearing
demand deposits 6,496,221 6,274,294 6,043,900
Other liabilities 156,227 135,801 160,264
Total liabilities 16,926,002 16,541,352 16,479,086
Stockholders' equity 4,501,948 4,530,701 4,346,162
Total liabilities and
stockholders' equity$ 21,427,950 $ 21,072,053 $ 20,825,248
Net interest income (2)$ 253,131 $ 239,473 $ 233,959
Net interest spread (2) 5.24% 5.03% 4.99%
Net interest margin (2) 5.47% 5.26% 5.22%
Total deposits (3)$ 15,823,301 $ 7,369 0.19% $ 15,381,599 $ 7,247 0.19% $ 15,677,293 $ 9,391 0.24%
Funding sources (4)$ 16,769,775 $ 13,468 0.32% $ 16,405,551 $ 13,220 0.32% $ 16,318,822 $ 14,298 0.35%
(1) Includes tax equivalent adjustments of $4.8 million, $4.8 million, and $4.8 million for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015 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 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
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks$ 337,965 $ 286,371 $ 226,471 $ 161,977 $ 161,020
Interest-earning deposits in financial
institutions 81,705 253,994 218,882 357,541 235,466
Total cash and cash equivalents 419,670 540,365 445,353 519,518 396,486
Securities available-for-sale 3,223,830 3,341,335 3,347,546 3,240,586 3,559,437
Federal Home Loan Bank stock 21,870 19,386 24,214 17,250 19,710
Total investment securities 3,245,700 3,360,721 3,371,760 3,257,836 3,579,147
Non-PCI loans and leases 15,412,092 14,686,206 14,566,425 14,365,915 14,339,070
PCI loans 108,445 120,221 136,901 176,607 189,095
Total gross loans and leases 15,520,537 14,806,427 14,703,326 14,542,522 14,528,165
Deferred fees, net (64,583) (63,581) (61,866) (59,005) (49,911)
Total loans and leases, net of
deferred fees 15,455,954 14,742,846 14,641,460 14,483,517 14,478,254
Allowance for loan and lease losses (157,238) (147,976) (143,289) (130,361) (115,111)
Total loans and leases, net 15,298,716 14,594,870 14,498,171 14,353,156 14,363,143
Equipment leased to others under
operating leases 229,905 198,931 204,062 205,163 - 197,452
Premises and equipment, net 38,594 38,977 38,718 39,713 39,197
Foreclosed assets, net 12,976 15,113 16,181 18,310 22,120
Deferred tax asset, net 94,112 27,073 24,413 91,126 126,389
Goodwill 2,173,949 2,173,949 2,175,791 2,175,791 2,176,291
Core deposit and customer
relationship intangibles, net 36,366 39,542 43,766 48,137 53,220
Other assets 319,779 325,750 328,924 322,259 335,045
Total assets$ 21,869,767 $ 21,315,291 $ 21,147,139 $ 21,031,009 $ 21,288,490
LIABILITIES:
Noninterest-bearing deposits$ 6,659,016 $ 6,521,946 $ 6,222,696 $ 6,139,963 $ 6,171,455
Interest-bearing deposits 9,211,595 9,123,722 8,925,313 9,301,412 9,494,727
Total deposits 15,870,611 15,645,668 15,148,009 15,441,375 15,666,182
Borrowings 905,812 541,011 918,208 551,401 621,914
Subordinated debentures 440,744 441,112 439,322 438,723 436,000
Accrued interest payable and other
liabilities 173,545 144,905 128,296 142,918 166,703
Total liabilities 17,390,712 16,772,696 16,633,835 16,574,417 16,890,799
STOCKHOLDERS' EQUITY (1) 4,479,055 4,542,595 4,513,304 4,456,592 4,397,691
Total liabilities and stockholders’
equity$ 21,869,767 $ 21,315,291 $ 21,147,139 $ 21,031,009 $ 21,288,490
Book value per share$ 36.93 $ 37.29 $ 37.05 $ 36.60 $ 36.22
Tangible book value per share (2)$ 18.71 $ 19.12 $ 18.83 $ 18.33 $ 17.86
Shares outstanding 121,283,669 121,817,524 121,819,849 121,771,252 121,413,727
(1) Includes net unrealized gain on
securities available-for-sale, net
$ 5,982 $ 72,073 $ 81,744 $ 48,479 $ 27,828
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS
Three Months Ended
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
(Dollars in thousands, except per share data)
Interest income:
Loans and leases$ 238,223 $ 225,370 $ 224,326 $ 236,375 $ 219,677
Investment securities 23,403 22,187 22,420 22,547 23,648
Deposits in financial institutions 147 298 308 308 172
Total interest income 261,773 247,855 247,054 259,230 243,497
Interest expense:
Deposits 7,369 7,247 7,823 9,073 9,391
Borrowings 631 695 352 581 159
Subordinated debentures 5,468 5,278 5,122 4,982 4,748
Total interest expense 13,468 13,220 13,297 14,636 14,298
Net interest income 248,305 234,635 233,757 244,594 229,199
Provision for credit losses 23,215 8,471 13,903 20,140 13,772
Net interest income after provision
for credit losses 225,090 226,164 219,854 224,454 215,427
Noninterest income:
Service charges on deposit accounts 3,557 3,488 3,633 3,856 3,901
Other commissions and fees 12,036 12,528 11,073 11,489 12,691
Leased equipment income 8,614 8,538 8,523 8,244 7,791
Gain on sale of loans and leases 119 157 388 245 183
Gain on securities 515 382 478 8,110 -
FDIC loss sharing expense, net - - (6,502) (2,415) (4,291)
Other income 4,054 1,827 4,528 5,010 7,783
Total noninterest income 28,895 26,920 22,121 34,539 28,058
Noninterest expense:
Compensation 66,013 62,661 62,174 61,065 58,992
Occupancy 12,076 12,010 12,193 12,632 12,194
Data processing 6,574 6,234 5,644 5,904 5,585
Other professional services 4,880 4,625 3,401 3,572 3,811
Insurance and assessments 4,124 4,324 4,951 4,965 5,450
Intangible asset amortization 3,176 4,224 4,371 4,746 4,910
Leased equipment depreciation 5,291 5,298 5,286 5,024 4,235
Foreclosed assets expense (income), net 2,693 (248) (3) (561) (3,185)
Acquisition, integration and
reorganization costs - - - 200 17,600
Other expense 13,795 11,582 12,064 13,141 12,672
Total noninterest expense 118,622 110,710 110,081 110,688 122,264
Earnings before income taxes 135,363 142,374 131,894 148,305 121,221
Income tax expense (49,716) (48,479) (49,726) (57,849) (49,380)
Net earnings $ 85,647 $ 93,895 $ 82,168 $ 90,456 $ 71,841
Basic and diluted earnings per share$ 0.71 $ 0.77 $ 0.68 $ 0.74 $ 0.60

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
At or For the Three Months Ended
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
(Dollars in thousands)
Performance Ratios:
Return on average assets (1) 1.59% 1.77% 1.57% 1.72% 1.37%
Return on average equity (1) 7.57% 8.24% 7.37% 8.20% 6.56%
Return on average tangible equity (1)(2) 14.88% 16.15% 14.61% 16.45% 13.14%
Yield on average loans and leases (1) 6.31% 6.17% 6.24% 6.57% 6.21%
Yield on average interest-earning
assets (1)(3) 5.76% 5.55% 5.63% 5.85% 5.54%
Cost of average total deposits (1) 0.19% 0.19% 0.20% 0.23% 0.24%
Cost of average time deposits (1) 0.40% 0.45% 0.52% 0.61% 0.63%
Cost of average interest-bearing
liabilities (1) 0.52% 0.52% 0.54% 0.57% 0.55%
Cost of average funding sources (1) 0.32% 0.32% 0.33% 0.35% 0.35%
Net interest rate spread (1)(3) 5.24% 5.03% 5.09% 5.28% 4.99%
Net interest margin (1)(3) 5.47% 5.26% 5.33% 5.53% 5.22%
Core net interest margin (1)(2)(3) 5.09% 5.08% 5.11% 5.10% 5.10%
Efficiency ratio 40.1% 40.1% 40.6% 38.5% 39.3%
Noninterest expense as a percentage
of average assets (1) 2.20% 2.09% 2.11% 2.10% 2.33%
Average Balances:
Loans and leases$ 15,008,268 $ 14,534,951 $ 14,468,590 $ 14,471,165 $ 14,031,102
Interest-earning assets 18,413,189 18,111,585 18,003,075 18,161,751 17,777,534
Total assets 21,427,950 21,072,053 20,999,942 21,198,594 20,825,248
Noninterest-bearing deposits 6,496,221 6,274,294 6,437,720 6,273,249 6,043,900
Interest-bearing deposits 9,327,080 9,107,305 9,199,097 9,388,652 9,633,393
Total deposits 15,823,301 15,381,599 15,636,817 15,661,901 15,677,293
Borrowings and subordinated
debentures 946,474 1,023,952 739,509 931,260 641,529
Interest-bearing liabilities 10,273,554 10,131,257 9,938,606 10,319,912 10,274,922
Funding sources 16,769,775 16,405,551 16,376,326 16,593,161 16,318,822
Stockholders' equity 4,501,948 4,530,701 4,483,593 4,438,602 4,346,162
(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
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
(Dollars in thousands)
Non-PCI Credit Quality:
Allowance for credit losses to loans
and leases 1.05% 1.05% 1.03% 0.96% 0.85%
Allowance for credit losses to
nonaccrual loans and leases 95% 90% 118% 106% 95%
Nonaccrual loans and leases to loans
and leases 1.11% 1.16% 0.88% 0.91% 0.90%
Nonperforming assets to loans and
leases and foreclosed assets 1.19% 1.27% 0.99% 1.05% 1.06%
Nonperforming assets to total assets 0.84% 0.87% 0.68% 0.72% 0.71%
Trailing twelve month net charge-offs
to average loans and leases 0.15% 0.04% 0.04% 0.03% 0.06%
PacWest Bancorp Consolidated
Capital:
Tier 1 leverage ratio (1) 11.91% 12.13% 11.92% 11.51% 11.67%
Common equity tier 1 capital ratio (1) 12.31% 12.83% 12.72% 12.63% 12.58%
Tier 1 capital ratio (1) 12.31% 12.83% 12.72% 12.63% 12.60%
Total capital ratio (1) 15.56% 16.18% 16.08% 15.96% 15.65%
Risk-weighted assets (1)$ 18,568,724 $ 17,713,506 $ 17,520,609 $ 17,226,658 $ 17,170,292
Equity to assets ratio 20.48% 21.31% 21.34% 21.19% 20.66%
Tangible common equity ratio (2) 11.54% 12.19% 12.12% 11.87% 11.38%
Book value per share$ 36.93 $ 37.29 $ 37.05 $ 36.60 $ 36.22
Tangible book value per share (2)$ 18.71 $ 19.12 $ 18.83 $ 18.33 $ 17.86
Pacific Western Bank Capital:
Tier 1 leverage ratio (1) 11.40% 11.54% 11.38% 11.10% 11.40%
Common equity tier 1 capital ratio (1) 11.78% 12.21% 12.13% 12.18% 12.03%
Tier 1 capital ratio (1) 11.78% 12.21% 12.13% 12.18% 12.03%
Total capital ratio (1) 12.72% 13.15% 13.06% 13.05% 12.80%
Equity to assets ratio 20.02% 20.77% 20.82% 20.70% 20.19%
Tangible common equity ratio (2) 11.02% 11.56% 11.51% 11.27% 10.80%
(1) Capital information for December 31, 2016 is preliminary.
(2) Non-GAAP measure.

GAAP TO NON-GAAP RECONCILIATION

This press release contains certain non-GAAP financial disclosures for return on average tangible equity, tangible common equity ratio, tangible book value per share, core net interest margin, core loan and lease yield, and adjusted allowance for credit losses to loans and leases. 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 return on average equity, equity to assets ratio, book value per share, net interest margin, loan and lease yield, and allowance for credit losses to loans and leases, respectively.

The reconciliations for the following GAAP financial measures to the non-GAAP financial measures are presented earlier in this press release: (1) net interest margin to core net interest margin, (2) loan and lease yield to core loan and lease yield, and (3) allowance for credit losses to loans and leases to adjusted allowance for credit losses to loans and leases.

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 Year Ended
December 31, September 30, December 31, December 31,
Return on Average Tangible Equity 2016 2016 2015 2016 2015
(Dollars in thousands)
Net earnings$ 85,647 $ 93,895 $ 71,841 $ 352,166 $ 299,619
Average stockholders' equity$ 4,501,948 $ 4,530,701 $ 4,346,162 $ 4,488,862 $ 3,751,995
Less: Average intangible assets 2,212,042 2,217,564 2,177,631 2,219,756 1,850,988
Average tangible common equity$ 2,289,906 $ 2,313,137 $ 2,168,531 $ 2,269,106 $ 1,901,007
Return on average equity (1) 7.57% 8.24% 6.56% 7.85% 7.99%
Return on average tangible equity (2) 14.88% 16.15% 13.14% 15.52% 15.76%
(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/December 31, September 30, June 30, March 31, December 31,
Tangible Book Value Per Share 2016 2016 2016 2016 2015
(Dollars in thousands, except per share data)
PacWest Bancorp Consolidated:
Stockholders' equity$ 4,479,055 $ 4,542,595 $ 4,513,304 $4,456,592 $ 4,397,691
Less: Intangible assets 2,210,315 2,213,491 2,219,557 2,223,928 2,229,511
Tangible common equity$ 2,268,740 $ 2,329,104 $ 2,293,747 $2,232,664 $ 2,168,180
Total assets$ 21,869,767 $ 21,315,291 $ 21,147,139 $21,031,009 $ 21,288,490
Less: Intangible assets 2,210,315 2,213,491 2,219,557 2,223,928 2,229,511
Tangible assets$ 19,659,452 $ 19,101,800 $ 18,927,582 $18,807,081 $ 19,058,979
Equity to assets ratio 20.48% 21.31% 21.34% 21.19% 20.66%
Tangible common equity ratio (1) 11.54% 12.19% 12.12% 11.87% 11.38%
Book value per share$ 36.93 $ 37.29 $ 37.05 $36.60 $ 36.22
Tangible book value per share (2)$ 18.71 $ 19.12 $ 18.83 $18.33 $ 17.86
Shares outstanding 121,283,669 121,817,524 121,819,849 121,8771,252 121,413,727
Pacific Western Bank:
Stockholder's equity$ 4,374,478 $ 4,416,623 $ 4,390,928 $4,331,841 $ 4,276,279
Less: Intangible assets 2,210,315 2,213,491 2,219,557 2,223,928 2,229,511
Tangible common equity$ 2,164,163 $ 2,203,132 $ 2,171,371 $2,107,913 $ 2,046,768
Total assets$ 21,848,644 $ 21,266,705 $ 21,084,950 $20,928,105 $ 21,180,689
Less: Intangible assets 2,210,315 2,213,491 2,219,557 2,223,928 2,229,511
Tangible assets$ 19,638,329 $ 19,053,214 $ 18,865,393 $18,704,177 $ 18,951,178
Equity to assets ratio 20.02% 20.77% 20.82% 20.70% 20.19%
Tangible common equity ratio (1) 11.02% 11.56% 11.51% 11.27% 10.80%
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.

Contact: Donald D. Destino Executive Vice President Corporate Development and Investor Relations Phone: 310-887-8521

Source:PacWest Bancorp