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PacWest Bancorp Announces Results for the First Quarter of 2013

Highlights

  • Net Earnings of $13.5 Million or $0.37 Per Diluted Share
  • Net Interest Margin at 5.40%
  • Credit Loss Reserve at 2.43% of Net Non-Covered Loans and Leases and 172% of Non-Covered Nonaccrual Loans and Leases
  • Noninterest-Bearing Deposits at 43% and Core Deposits at 83% of Total Deposits

LOS ANGELES, April 17, 2013 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq:PACW) today announced net earnings for the first quarter of 2013 of $13.5 million, or $0.37 per diluted share, compared to net earnings for the fourth quarter of 2012 of $19.9 million, or $0.54 per diluted share.

This press release contains certain non-GAAP financial disclosures for tangible common equity, return on average tangible equity, adjusted earnings before income taxes, and adjusted efficiency ratio. The Company uses certain 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. Given that the use of tangible common equity amounts and ratios and return on average tangible equity is prevalent among banking regulators, investors and analysts, we disclose our tangible common equity ratio in addition to equity-to-assets ratio, and our return on average tangible equity in addition to return on average equity. Also, as analysts and investors view adjusted earnings before income taxes as an indicator of the Company's ability to absorb credit losses, we disclose this amount in addition to pre-tax earnings. We disclose the adjusted efficiency ratio as it shows the trend in recurring overhead-related noninterest expense relative to recurring net revenues. Please refer to the tables at the end of this release for a presentation of performance ratios in accordance with GAAP and a reconciliation of the non-GAAP financial measures to the GAAP financial measures.

FIRST QUARTER RESULTS
Three Months Ended
March 31, December 31,
2013 2012
(Dollars in thousands, except per share data)
Financial Highlights:
Net earnings $ 13,494 $ 19,892
Diluted earnings per share $ 0.37 $ 0.54
Adjusted earnings before income taxes (1) $ 27,270 $ 33,865
Annualized return on average assets 1.02% 1.44%
Annualized return on average equity 9.29% 13.51%
Annualized return on average tangible equity (2) 11.05% 16.12%
Net interest margin 5.40% 5.49%
Efficiency ratio 64.5% 60.7%
Adjusted efficiency ratio (3) 61.7% 55.7%
At Quarter End:
Allowance for credit losses to non-covered loans and leases, net of unearned income (4) 2.43% 2.37%
Allowance for credit losses to non-covered nonaccrual loans and leases (4) 172% 184%
Equity to assets ratios:
PacWest Bancorp Consolidated 11.13% 10.78%
Pacific Western Bank 12.32% 11.93%
Tangible common equity ratios:
PacWest Bancorp Consolidated 9.54% 9.21%
Pacific Western Bank 10.74% 10.38%
(1) Represents pre-tax earnings excluding net credit costs, securities gains, and acquisition and integration costs. See GAAP to Non-GAAP Reconciliation table.
(2) Calculation reduces average equity by average intangible assets. See GAAP to Non-GAAP Reconciliation table.
(3) Excludes FDIC loss sharing income, securities gains, OREO expenses, and acquisition and integration costs. See GAAP to Non-GAAP Reconciliation table.
(4) Non-covered loans exclude loans covered by loss sharing agreements with the FDIC.

Quarter-over-quarter net earnings declined $6.4 million due mostly to four items: (a) the $2.6 million after tax decline in interest income on loans and leases; (b) the $2.5 million after tax increase in net credit costs; (c) the $1.1 million after tax decline in gain on asset sales; and (d) the $1.2 million after tax increase in compensation expense.

Adjusted earnings before income taxes declined $6.6 million to $27.3 million for the first quarter from $33.9 million for the fourth quarter. Two items caused the decline: $4.4 million in lower interest income on loans and leases and $2.1 million in higher compensation. The lower interest income was a function of (a) a lower portfolio yield ($1.9 million in interest) as new loans and refinancings are being closed in this low rate environment; (b) two fewer days in the first quarter ($1.3 million in interest); and (c) a lower portfolio average balance ($1.2 million interest) as we are not competing for loans that are unprofitable or that generate undue interest rate risk. The increase in compensation expense quarter-over-quarter was due to (a) $1.2 million in higher payroll taxes attributable to the start of a new year, (b) $794,000 in base salary increases effective March 1 and higher incentive compensation also due to the start of a new year, and (c) $232,000 in lower cost deferrals due to lower new loan originations.

Net credit costs on a pre-tax basis are shown in the following table:

Three Months Ended
March 31, December 31,
2013 2012
(In thousands)
Provision (negative provision) for credit losses on non-covered loans and leases $ -- $ --
Non-covered OREO expense, net 313 316
Total non-covered net credit costs 313 316
Provision (negative provision) for credit losses on covered loans 3,137 (4,333)
Covered OREO income, net (813) (461)
2,324 (4,794)
Less: FDIC loss sharing expense, net (3,137) (6,022)
Total covered net credit costs 5,461 1,228
Total net credit costs $ 5,774 $ 1,544

The $2.5 million after tax increase in net credit costs is due principally to a positive credit loss provision on covered loans in the first quarter compared to a negative provision in the fourth quarter, which lowered net earnings quarter-over-quarter by $4.3 million after tax. This was offset, however, by lower FDIC loss sharing expense of $1.7 million after tax. The covered credit loss provision in the first quarter was due largely to updated appraisals on two collateral-dependent covered loan relationships while the negative provision in the fourth quarter was due to increases in expected cash flows on covered loans generally. Cash flows on covered loans are estimated quarterly and are subject to change based on varying conditions with the underlying borrowers and collateral.

Matt Wagner, Chief Executive Officer, commented, "Our first quarter results continue to demonstrate sustained profits and a strong balance sheet, with adjusted net earnings of $17.0 million and stockholders' equity at 11.1% of assets. Our net interest margin remains at a superior level compared to peers and credit quality continues to be stable. Loan growth is challenging, as we continue to resist competing for term real estate loans having rates substantially below our net interest margin and durations that give rise to unacceptable interest rate risk. Nevertheless, we grew the C&I portfolio by $6.8 million, with our asset financing segment leading the way with a net $49.2 million in new loans and leases. Our loan pipeline for the next three quarters has built-up nicely due to slowly improving economic conditions in our markets, our focus on existing customers for referrals, and service levels that enable us to attract and retain business from the larger banks."

Mr. Wagner continued, "Our main second quarter goal is the completion of the FCAL merger and its integration into our business lines and systems. The FCAL transaction is expected to expand our market presence and enhance our efficiency and profits. We will continue, however, to focus on improving profitability, making and renewing quality and profitable loans with customers and new relationships, and explore growth opportunities as they arise."

Vic Santoro, Chief Financial Officer, stated, "Our first quarter net interest margin remained strong at 5.40%, and, when adjusted for volatility items, stood at 5.28%, which is in line with expectations. The asset financing segment loan and lease portfolio carries double-digit rates and continues to augment our NIM, with a portfolio yield at 11.66% for the first quarter. Our deposit cost declined as expected to 0.23% in the first quarter, with future maturities of higher rate time deposits bringing that rate down further. While our liquidity level continues to be high, it stands ready to absorb new lending as loans pass through the pipelines onto our balance sheet."

BALANCE SHEET CHANGES

Total assets declined $163.8 million during the first quarter of 2013 due to repayments on non-covered and covered loans, and lower balances of interest-earning deposits in financial institutions. At March 31, 2013, gross non-covered loans and leases totaled $3.0 billion and the covered loan portfolio was $483.1 million. The gross non-covered loan and lease portfolio decreased $91.2 million for the first quarter of 2013, including loan pay-offs of approximately $170 million. Our regional presidents reported that loans having balances of $1.0 million or more and refinanced by other lenders totaled approximately $75 million; we purposely have not competed on these refinancings because of the low rates and long durations offered by other lenders. We experienced net increases in leases and commercial loans of $30.4 million and $6.8 million, respectively. The covered loan portfolio declined $34.2 million due to repayments and resolution activities. Interest-earning deposits in financial institutions declined $34.4 million during the first quarter of 2013 to $41.0 million at March 31, 2013.

Total liabilities declined $164.4 million during the first quarter of 2013 due to lower total deposits. Total deposits decreased $155.9 million during the first quarter to $4.6 billion at March 31, 2013. Core deposits declined $92.4 million during the first quarter due mostly to a decrease of $97.5 million in money market deposits, approximately $80 million of which was expected to occur. Time deposits declined $63.5 million during the first quarter to $756.8 million at March 31, 2013. At March 31, 2013, core deposits totaled $3.8 billion, or 83% of total deposits, and noninterest-bearing demand deposits, which held steady at $1.9 billion, were 43% of total deposits at that date.

SECURITIES AVAILABLE-FOR-SALE

The following table presents the components, yields, and durations of our securities available-for-sale as of the date indicated:

March 31, 2013
Amortized Carrying Duration
Security Type Cost Value Yield (1) (in years)
(Dollars in thousands)
Residential mortgage-backed securities:
Government agency and government-sponsored enterprise pass through securities $ 751,011 $ 781,628 1.88% 3.9
Government agency and government-sponsored enterprise collateralized mortgage obligations 97,524 99,105 1.03% 3.6
Covered private label collateralized mortgage obligations 34,933 43,785 9.23% 4.1
Municipal securities (2) 362,212 365,425 2.79% 6.5
Corporate debt securities 60,807 61,204 3.13% 12.4
Other securities 6,385 11,630 -- --
Total securities available-for-sale (2) $ 1,312,872 $ 1,362,777 2.35% 4.9
(1) Represents the yield for the month of March 2013.
(2) The tax equivalent yield was 4.10% and 2.70% for municipal securities and total securities available-for-sale, respectively.

The following table shows the geographic composition of the majority of our municipal securities portfolio as of the date indicated:

March 31, 2013
Carrying % of
Value Total
(In thousands)
Municipal Securities by State:
Texas $ 62,145 17%
Washington 35,395 10%
New York 24,640 7%
Illinois 24,170 6%
Colorado 18,372 5%
Florida 16,089 4%
Ohio 14,831 4%
Connecticut 14,335 4%
Minnesota 14,115 4%
California 14,014 4%
Total of 10 largest states 238,106 65%
All other states 127,319 35%
Total municipal securities $ 365,425 100%

COVERED ASSETS

As part of the Los Padres and Affinity acquisitions we entered into loss sharing agreements with the FDIC that cover a substantial portion of losses incurred after the acquisition dates on covered loans and other real estate owned, and in the case of the Affinity acquisition, certain investment securities. A summary of covered assets is shown in the following table as of the dates indicated:

March 31, December 31,
Covered Assets 2013 2012
(In thousands)
Loans, net $ 483,063 $ 517,258
Investment securities 43,785 44,684
Other real estate owned, net 17,311 22,842
Total covered assets $ 544,159 $ 584,784
Percentage of total assets 10.3% 10.7%

NET INTEREST INCOME

Net interest income declined by $3.9 million to $65.7 million for the first quarter of 2013 compared to $69.6 million for the fourth quarter of 2012 due primarily to lower interest income on loans and leases. The $4.4 million decline in interest income on loans and leases was due to the combination of three factors: (a) a lower portfolio yield ($1.9 million) as we continue to operate in a low interest rate environment where new loans and refinancings are being completed at rates below the current portfolio yield; (b) two fewer days in the current quarter ($1.3 million); and (c) the lower average portfolio balance ($1.2 million) as we have avoided lending at rates substantially below our net interest margin and/or at longer durations that would increase our interest rate risk profile. Interest expense declined by $523,000 due mostly to lower rates and average balances of time and money market deposits.

NET INTEREST MARGIN

Our net interest margin ("NIM") for the first quarter of 2013 was 5.40%, compared to 5.49% reported for the fourth quarter of 2012. The NIM is impacted by several items that cause volatility from period to period. The effects of such items on the NIM are shown in the following table for the periods indicated:

Three Months Ended
March 31, December 31,
Items Impacting NIM Volatility 2013 2012
Increase (Decrease) in NIM
Accelerated accretion of acquisition discounts resulting from covered loan payoffs 0.04% 0.13%
Nonaccrual loan interest 0.01% 0.01%
Unearned income on early repayment of leases 0.08% 0.03%
Celtic loan portfolio premium amortization (0.01)% (0.01)%
Total 0.12% 0.16%
Reported NIM 5.40% 5.49%

The following table presents the loan yields and related average balances for our non-covered loans, covered loans, and total loan portfolio for the periods indicated:

Three Months Ended
March 31, December 31,
2013 2012
(Dollars in thousands)
Yields:
Non-covered loans and leases 6.71% 6.83%
Covered loans 9.23% 9.81%
Total loans and leases 7.07% 7.30%
Average Balances:
Non-covered loans and leases $ 2,999,002 $ 3,026,121
Covered loans 501,893 539,514
Total loans and leases $ 3,500,895 $ 3,565,635

The loan yield is impacted by the same items which cause volatility in the NIM. The following table presents the effects of these items on the total loan yield for the periods indicated:

Three Months Ended
March 31, December 31,
Items Impacting Loan Yield Volatility 2013 2012
Increase (Decrease) in Loan Yield
Accelerated accretion of acquisition discounts resulting from covered loan payoffs 0.08% 0.16%
Nonaccrual loan interest 0.01% 0.02%
Unearned income on early repayment of leases 0.10% 0.05%
Celtic loan portfolio premium amortization (0.02)% (0.01)%
Total 0.17% 0.22%

The yield on average loans and leases decreased 23 basis points to 7.07% for the first quarter of 2013 from 7.30% for the fourth quarter of 2012. This was due mainly to lower accelerated accretion of acquisition discounts from covered loan payoffs. Accelerated accretion of acquisition discounts from covered loan payoffs totaled approximately $677,000 for the first quarter of 2013 and $1.5 million for the fourth quarter of 2012, increasing the loan yields by 8 basis points and 16 basis points, respectively. Such accelerated accretion of acquisition discounts increased the covered loan portfolio yields by 55 basis points for the first quarter of 2013 and 110 basis points for the fourth quarter of 2012. Total income from early lease payoffs was $857,000 in the first quarter of 2013 and $466,000 in the fourth quarter of 2012.

The cost of total interest-bearing liabilities declined four basis points to 0.52% for the first quarter of 2013 from 0.56% for the fourth quarter of 2012. All-in deposit cost declined two basis points to 0.23% during the first quarter of 2013 from 0.25% for the fourth quarter of 2012. Such declines are due to lower rates on money market and time deposits. Time deposits maturing over the next 12 months total $607.0 million and bear a weighted-average rate of 1.01%.

NONINTEREST INCOME

Noninterest income increased by $783,000 to $2.8 million for the first quarter of 2013 compared to $2.1 million for the fourth quarter of 2012. The change was due to lower net FDIC loss sharing expense, offset by lower gains on sales of leases and securities.

The first quarter of 2013 included net FDIC loss sharing expense of $3.1 million compared to the fourth quarter of 2012 net FDIC loss sharing expense of $6.0 million; such change was due mostly to a higher provision for credit losses on covered loans and lower covered loan recoveries, offset by higher amortization of the FDIC loss sharing asset. The increase in quarterly amortization relates to lower estimated losses expected to be collected from the FDIC over the life of the loss sharing contracts.

Gain on sale of leases decreased by $1.0 million to a more sustainable $225,000, and gain on sale of securities decreased by $830,000 to $409,000. While we do not rely on asset sales to generate net earnings, our leasing operation periodically sells leases to manage credit risk and portfolio size. In addition, we sold $12.4 million in corporate debt securities in the first quarter of 2013 and $43.9 million in government agency and government-sponsored enterprise pass through securities in the fourth quarter of 2012 to reduce overall portfolio price volatility and extension risk.

The following table presents the details of FDIC loss sharing income (expense), net for the periods indicated:

Three Months Ended
March 31, December 31, Increase
2013 2012 (Decrease)
(In thousands)
FDIC Loss Sharing
Income (Expense), Net:
Gain on FDIC loss sharing asset (1) $ 4,057 $ 303 $ 3,754
FDIC loss sharing asset amortization, net (5,991) (3,740) (2,251)
Loan recoveries shared with FDIC (2) (591) (2,180) 1,589
Net reimbursement (to) from FDIC for covered OREO activity (3) (614) (409) (205)
Other 2 4 (2)
FDIC loss sharing income (expense), net $ (3,137) $ (6,022) $ 2,885
(1) Includes increases related to covered loan loss provisions and decreases for write-offs for covered loans expected to be resolved at amounts higher than their carrying value.
(2) Represents amounts to be reimbursed to the FDIC for covered loans resolved at amounts higher than their carrying values.
(3) Represents amounts to be reimbursed to the FDIC for gains on covered OREO sales and due from the FDIC for covered OREO write-downs.

NONINTEREST EXPENSE

Noninterest expense increased by $658,000 to $44.2 million during the first quarter of 2013 compared to $43.5 million for the fourth quarter of 2012. With the exception of compensation costs and business development expense, overhead expense categories decreased quarter-over-quarter, as management continues to focus on controlling noninterest expenses. Compensation costs increased $2.1 million due mainly to the timing of payroll taxes, higher base salaries and incentive compensation, and lower cost deferral on new loan originations. Payroll taxes are always higher in the first quarter of a calendar year, and this item accounted for $1.2 million of the increase. Base salary increases, effective March 1, and higher incentive compensation costs, also attributable to the start of a new year, accounted for $794,000 of the increase. Lastly, lower new loan volume resulted in lower deferral of direct loan origination compensation costs of $232,000. Acquisition and integration costs, which declined $400,000, will vary from period-to-period due to the timing of such activities. Covered OREO expense decreased $352,000 due mainly to higher gains on sales of $982,000 offset by higher write-downs of $727,000.

Noninterest expense includes (a) amortization of time-based restricted stock, which is included in compensation, and (b) intangible asset amortization. Amortization of restricted stock totaled $1.8 million for the first quarter of 2013 and $1.4 million for the fourth quarter of 2012. Intangible asset amortization totaled $1.2 million for each of the first quarter of 2013 and the fourth quarter of 2012.

CREDIT QUALITY

Credit quality metrics remain stable quarter over quarter, with coverage ratios remaining strong. Economic trends in our markets will cause periodic movements in nonaccrual and classified loan and lease balances. However, losses on such nonaccrual and classified loans and leases are not expected to be material.

March 31, December 31, March 31,
2013 2012 2012
(Dollars in thousands)
Non-Covered Credit Quality Metrics:
Allowance for credit losses $ 71,896 $ 72,119 $ 81,737
Nonaccrual loans and leases 41,893 39,284 48,162
Classified loans and leases (1) 105,201 101,019 145,933
Performing restructured loans 80,501 106,288 110,062
Net charge-offs (for the quarter) 223 2,893 2,046
Provision (negative provision) for credit losses (for the quarter) -- -- (10,000)
Allowance for credit losses to loans and leases, net of unearned income 2.43% 2.37% 2.85%
Allowance for credit losses to nonaccrual loans and leases 171.6% 183.6% 169.7%
Nonperforming assets to loans and leases, net of unearned income, and other real estate owned 2.60% 2.37% 3.24%
(1) Classified loans and leases are those with a credit risk rating of substandard or doubtful.

Our non-covered loans and leases at March 31, 2013, include $279.6 million in loans and leases acquired in our 2012 acquisitions that were initially recorded at their estimated fair values. The fair value amounts at which these loans were initially recorded included an estimate of their credit losses. The allowance calculation takes into consideration those loans and leases whose credit quality has deteriorated since the acquisition. At March 31, 2013, $1.5 million of our allowance for credit losses applies to such loans and leases. When these loans and leases are excluded from the total of non-covered loans and leases, the coverage ratio of our allowance for credit losses increases to 2.63% at March 31, 2013; the comparable ratio at December 31, 2012, was 2.58%.

Credit Loss Provisions

The Company recorded a provision for credit losses of $3.1 million in the first quarter of 2013 compared to a negative provision for credit losses of $4.3 million in the fourth quarter of 2012 as follows:

Three Months Ended
March 31, December 31,
2013 2012
(In thousands)
Provision (Negative Provision) for
Credit Losses on:
Non-covered loans and leases $ -- $ --
Covered loans 3,137 (4,333)
Total provision (negative provision) for credit losses $ 3,137 $ (4,333)

The provision level on the non-covered portfolio is generated by our allowance methodology, which reflects the level and trends of net charge-offs, the levels of nonaccrual and classified loans and leases, the migration of loans and leases into various risk classifications, and the level of outstanding loans and leases. Based on such methodology, there was no provision for credit losses on non-covered loans and leases for the first quarter of 2013 and the fourth quarter of 2012.

The provision, or negative provision, for credit losses on covered loans results from decreases, or increases, in expected cash flows on such loans compared to those previously estimated. Cash flows on covered loans are estimated quarterly and are subject to change based on varying conditions with the underlying borrowers and collateral. The covered loan credit loss provision in the first quarter of 2013 was due largely to updated appraisals on two collateral-dependent covered loan relationships, while the negative provision in the fourth quarter was due to increases in expected cash flows on covered loans generally.

Non-covered Nonperforming Assets

Non-covered nonperforming assets include non-covered nonaccrual loans and leases and non-covered OREO and totaled $77.9 million at March 31, 2013 compared to $72.9 million at December 31, 2012. The ratio of non-covered nonperforming assets to non-covered loans and leases and non-covered OREO increased to 2.60% at March 31, 2013 from 2.37% at December 31, 2012.

The following table presents our non-covered 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:

Nonaccrual Loans and Leases (1) Accruing and
March 31, 2013 December 31, 2012 30 - 89 Days Past Due (1)
% of % of March 31, December 31,
Loan Loan 2013 2012
Balance Category Balance Category Balance Balance
(Dollars in thousands)
Real estate mortgage:
Hospitality $ 6,823 4.0% $ 6,908 3.8% $ -- $ --
SBA 504 2,936 5.3% 2,982 5.5% 1,066 955
Other (2) 20,045 1.3% 15,929 0.9% 26,077 1,408
Total real estate mortgage 29,804 1.7% 25,819 1.3% 27,143 2,363
Real estate construction:
Residential 1,046 2.4% 1,057 2.2% -- --
Commercial (2) 1,447 1.7% 2,715 3.3% 7,290 --
Total real estate construction 2,493 2.0% 3,772 2.9% 7,290 --
Commercial:
Collateralized 3,306 0.8% 2,648 0.6% 542 166
Unsecured 1,471 1.9% 2,019 2.9% 132 138
Asset-based 281 0.1% 176 0.1% -- --
SBA 7(a) 3,867 15.4% 4,181 16.5% 118 313
Total commercial 8,925 1.1% 9,024 1.1% 792 617
Leases 244 0.1% 244 0.1% 44 357
Consumer 427 2.3% 425 1.9% 26 15
Total non-covered loans and leases $ 41,893 1.4% $ 39,284 1.3% $ 35,295 $ 3,352
(1) Excludes covered loans.
(2) Included in the 30-89 days past due amount at March 31, 2013, are two loans to the same borrower totaling $32.3 million. These loans, which were 32 days past due at quarter-end, are now current.

The $2.6 million increase in non-covered nonaccrual loans and leases during the first quarter of 2013 was attributable to (a) additions of $6.4 million, (b) charge-offs of $1.1 million and (c) other reductions, payoffs and returns to accrual status of $2.7 million.

Below is a summary of the ten largest lending relationships on nonaccrual status, excluding SBA-related loans, as of the date indicated:

Nonaccrual
Amount
March 31,
2013 Description
(In thousands)
$ 6,823 Two loans, each secured by a hotel in San Diego County, California. The borrower is paying according to the restructured terms of each loan. (1)
3,472
Two loans, one of which is secured by an office building in Clark County, Nevada, and the other is secured by an office building in Maricopa County, Arizona. (1)
2,692 This loan is secured by an office building in San Diego County, California. (2)
2,358 This loan is secured by a strip retail center in Riverside County, California. (1)
1,877 This loan is secured by a strip retail center in Clark County, Nevada. (1)
1,425 This loan is secured by two industrial buildings in San Diego County, California. (1)
1,298 This loan is secured by an industrial building in San Bernardino County, California (2).
1,250 This loan is unsecured and has a specific reserve for 100% of the balance. (1)
1,173
Two loans, one of which is secured by an apartment building in San Diego County, California, and the other is secured by an office building in San Diego County, California. (1)
1,147 This loan is secured by three industrial buildings in Riverside County, California. (1)
$ 23,515 Total
(1) On nonaccrual status at December 31, 2012.
(2) New nonaccrual in first quarter of 2013.

The following table presents the details of non-covered and covered OREO as of the dates indicated:

March 31, 2013 December 31, 2012
Non- Non-
Covered Covered Covered Covered
Property Type OREO OREO OREO OREO
(In thousands)
Commercial real estate $ 791 $ 7,292 $ 1,684 $ 11,635
Construction and land development 31,670 6,475 31,888 6,708
Multi-family -- 3,301 -- 4,239
Single family residence 3,500 243 -- 260
Total OREO, net $ 35,961 $ 17,311 $ 33,572 $ 22,842

The following table presents non-covered and covered OREO activity for the period indicated:

Three Months Ended
March 31, 2013
Non-Covered Covered Total
OREO OREO OREO
(In thousands)
Beginning of period $ 33,572 $ 22,842 $ 56,414
Foreclosures 3,500 1,480 4,980
Provision for losses (92) (1,093) (1,185)
Reductions related to sales (1,019) (5,918) (6,937)
End of period $ 35,961 $ 17,311 $ 53,272
Net gain on sale $ 49 $ 1,861 $ 1,910

REGULATORY CAPITAL MEASURES ARE ABOVE THE WELL-CAPITALIZED MINIMUMS

PacWest and its wholly-owned banking subsidiary, Pacific Western Bank, each remained well capitalized as of the date indicated as shown in the following table:

March 31, 2013
Well Pacific PacWest
Capitalized Western Bancorp
Requirement Bank Consolidated
Tier 1 leverage capital ratio 5.00% 10.15% 10.89%
Tier 1 risk-based capital ratio 6.00% 14.51% 15.58%
Total risk-based capital ratio 10.00% 15.78% 16.85%
Tangible common equity ratio N/A 10.74% 9.54%

FIRST CALIFORNIA FINANCIAL GROUP ACQUISITION

PacWest Bancorp expects to close the acquisition of First California Financial Group, Inc. ("FCAL") in the second quarter of 2013, subject to receipt of remaining regulatory approvals. Under the terms of the merger, PacWest will acquire FCAL for $8.00 per FCAL common share, or an estimated $231 million in aggregate consideration, payable in PacWest Bancorp common stock.

FCAL is the holding company for First California Bank ("FCB"), a full-service commercial bank headquartered in Westlake Village, California. FCB provides a full range of banking services, including revolving lines of credit, term loans, commercial real estate loans, construction loans, consumer loans and home equity loans to individuals, professionals, and small to mid-sized businesses. FCB operates throughout Southern California in the Los Angeles, Orange, Riverside, San Bernardino, San Diego, Ventura, and San Luis Obispo Counties.

ABOUT PACWEST BANCORP

PacWest Bancorp ("PacWest") is a bank holding company with $5.3 billion in assets as of March 31, 2013, with one wholly-owned banking subsidiary, Pacific Western Bank ("Pacific Western"). Through 67 full-service community banking branches, Pacific Western provides commercial banking services, including real estate, construction and commercial loans, to small and medium-sized businesses. Pacific Western's branches are located throughout California in Los Angeles, Orange, Riverside, San Bernardino, Santa Barbara, San Diego, San Francisco, San Luis Obispo, San Mateo and Ventura Counties. Through its subsidiaries, BFI Business Finance and Celtic Capital Corporation, and its divisions First Community Financial and Pacific Western Equipment Finance, Pacific Western also provides working capital financing and equipment leasing to growing companies located throughout the United States, with a focus on the Southwestern U.S., primarily in Arizona, California, Utah and Texas. Additional information regarding PacWest Bancorp is available on the Internet at www.pacwestbancorp.com. Information regarding Pacific Western Bank is also available on the Internet at www.pacificwesternbank.com.

FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking information about PacWest that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. We caution readers that a number of important factors could cause actual results to differ materially from those expressed in, implied or projected by, such forward-looking statements. Risks and uncertainties include, but are not limited to: failure to obtain regulatory or other required approvals; an inability to achieve expected cost savings in the amounts or timeframes discussed if at all, or the costs associated with transactions or the time needed to complete transactions being greater than expected; lower than expected revenues; credit quality deterioration or a reduction in real estate values could cause an increase in the allowance for credit losses and a reduction in net earnings; increased competitive pressure among depository institutions; the Company's ability to complete future acquisitions, successfully integrate such acquired entities, or achieve expected beneficial synergies and/or operating efficiencies within expected time-frames or at all; settlements with the FDIC related to our loss-sharing arrangements from the Los Padres Bank and Affinity Bank acquisitions; the possibility that personnel changes will not proceed as planned; the cost of additional capital is more than expected; a change in the interest rate environment reduces net interest margins; asset/liability repricing risks and liquidity risks; pending legal matters may take longer or cost more to resolve or may be resolved adversely to the Company; general economic conditions, either nationally or in the market areas in which the Company does or anticipates doing business, are less favorable than expected; environmental conditions, including natural disasters, may disrupt our business, impede our operations, negatively impact the values of collateral securing the Company's loans and leases or impair the ability of our borrowers to support their debt obligations; the economic and regulatory effects of the continuing war on terrorism and other events of war, including the conflicts in the Middle East; legislative or regulatory requirements or changes adversely affecting the Company's business; changes in the securities markets; regulatory approvals for any capital activities cannot be obtained on the terms expected or on the anticipated schedule; and, other risks that are described in PacWest's public filings with the U.S. Securities and Exchange Commission (the "SEC"). If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, PacWest's results could differ materially from those expressed in, implied or projected by such forward-looking statements. PacWest assumes no obligation to update such forward-looking statements.

For a more complete discussion of risks and uncertainties, investors and security holders are urged to read PacWest Bancorp's annual report on Form 10-K, quarterly reports on Form 10-Q and other reports filed by PacWest with the SEC. The documents filed by PacWest with the SEC may be obtained at PacWest Bancorp's website at www.pacwestbancorp.com or at the SEC's website at www.sec.gov. These documents may also be obtained free of charge from PacWest by directing a request to: PacWest Bancorp c/o Pacific Western Bank, 275 North Brea Boulevard, Brea, CA 92821. Attention: Investor Relations. Telephone 714-671-6800.

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
2013 2012
(In thousands, except per share and share data)
ASSETS
Cash and due from banks $ 90,659 $ 89,011
Interest-earning deposits in financial institutions 41,019 75,393
Total cash and cash equivalents 131,678 164,404
Non-covered securities available-for-sale 1,318,992 1,310,701
Covered securities available-for-sale 43,785 44,684
Total securities available-for-sale, at estimated fair value 1,362,777 1,355,385
Federal Home Loan Bank stock, at cost 33,400 37,126
Total investment securities 1,396,177 1,392,511
Non-covered loans and leases, net of unearned income 2,956,897 3,046,970
Allowance for loan and lease losses (65,216) (65,899)
Total non-covered loans and leases, net 2,891,681 2,981,071
Covered loans, net 483,063 517,258
Total loans and leases, net 3,374,744 3,498,329
Non-covered other real estate owned, net 35,961 33,572
Covered other real estate owned, net 17,311 22,842
Total other real estate owned, net 53,272 56,414
Premises and equipment, net 18,950 19,503
FDIC loss sharing asset 55,840 57,475
Cash surrender value of life insurance 68,587 68,326
Goodwill 79,673 79,866
Core deposit and customer relationship intangibles, net 13,547 14,723
Other assets 107,437 112,107
Total assets $ 5,299,905 $ 5,463,658
LIABILITIES
Noninterest-bearing demand deposits $ 1,941,234 $ 1,939,212
Interest-bearing deposits 2,611,996 2,769,909
Total deposits 4,553,230 4,709,121
Borrowings 11,196 12,591
Subordinated debentures 108,250 108,250
Accrued interest payable and other liabilities 37,433 44,575
Total liabilities 4,710,109 4,874,537
STOCKHOLDERS' EQUITY (1) 589,796 589,121
Total liabilities and stockholders' equity $ 5,299,905 $ 5,463,658
(1) Includes net unrealized gain on securities available-for-sale, net $ 28,945 $ 32,900
Book value per share $ 15.91 $ 15.74
Tangible book value per share $ 13.40 $ 13.22
Shares outstanding (includes unvested restricted shares of
1,203,495 at March 31, 2013; 1,698,281 at December 31, 2012) 37,071,357 37,420,909
PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months Ended
March 31, December 31, March 31,
2013 2012 2012
(In thousands, except per share data)
Interest income:
Loans and leases $ 61,010 $ 65,455 $ 64,752
Investment securities 8,216 8,173 9,580
Deposits in financial institutions 43 74 68
Total interest income 69,269 73,702 74,400
Interest expense:
Deposits 2,649 3,039 3,604
Borrowings 144 228 1,925
Subordinated debentures 783 832 1,191
Total interest expense 3,576 4,099 6,720
Net interest income 65,693 69,603 67,680
Provision (negative provision) for credit losses:
Non-covered loans and leases -- -- (10,000)
Covered loans 3,137 (4,333) 3,926
Total provision (negative provision) for credit losses 3,137 (4,333) (6,074)
Net interest income after provision for credit losses 62,556 73,936 73,754
Noninterest income:
Service charges on deposit accounts 2,863 3,063 3,353
Other commissions and fees 1,933 2,025 1,883
Gain on sale of leases 225 1,242 990
Gain on sale of securities 409 1,239 --
Increase in cash surrender value of life insurance 433 300 365
FDIC loss sharing expense, net (3,137) (6,022) (3,579)
Other income 114 210 250
Total noninterest income 2,840 2,057 3,262
Noninterest expense:
Compensation 25,350 23,269 24,187
Occupancy 6,598 6,773 7,288
Data processing 2,233 2,272 2,280
Other professional services 2,097 2,200 1,770
Business development 736 684 638
Communications 613 637 608
Insurance and assessments 1,261 1,270 1,293
Non-covered other real estate owned, net 313 316 1,821
Covered other real estate owned (income) expense, net (813) (461) 822
Intangible asset amortization 1,176 1,176 1,735
Acquisition and integration 692 1,092 25
Debt termination -- -- 22,598
Other expenses 3,927 4,297 3,830
Total noninterest expense 44,183 43,525 68,895
Earnings before income taxes 21,213 32,468 8,121
Income tax expense (7,719) (12,576) (2,857)
Net earnings $ 13,494 $ 19,892 $ 5,264
Basic and diluted earnings per share $ 0.37 $ 0.54 $ 0.14
PACWEST BANCORP AND SUBSIDIARIES
AVERAGE BALANCE SHEETS AND YIELD ANALYSIS
(Unaudited)
Three Months Ended
March 31, December 31, March 31,
2013 2012 2012
(Dollars in thousands)
Average Assets:
Loans and leases, net of unearned income $ 3,500,895 $ 3,565,635 $ 3,562,766
Investment securities 1,365,210 1,364,457 1,363,067
Interest-earning deposits in financial institutions 69,056 116,406 103,557
Average interest-earning assets 4,935,161 5,046,498 5,029,390
Other assets 440,990 458,520 471,177
Average total assets $ 5,376,151 $ 5,505,018 $ 5,500,567
Average liabilities:
Interest checking deposits $ 523,503 $ 512,322 $ 513,190
Money market deposits 1,207,332 1,257,094 1,199,226
Savings deposits 155,687 156,838 160,958
Time deposits 796,644 839,783 942,501
Average interest-bearing deposits 2,683,166 2,766,037 2,815,875
Borrowings 12,561 21,126 239,779
Subordinated debentures 108,250 108,250 123,393
Average interest-bearing liabilities 2,803,977 2,895,413 3,179,047
Noninterest-bearing demand deposits 1,940,435 1,977,999 1,719,003
Other liabilities 42,532 46,081 49,731
Average total liabilities 4,786,944 4,919,493 4,947,781
Average stockholders' equity 589,207 585,525 552,786
Average liabilities and stockholders' equity $ 5,376,151 $ 5,505,018 $ 5,500,567
Average deposits $ 4,623,601 $ 4,744,036 $ 4,534,878
Yield on:
Average loans and leases 7.07% 7.30% 7.31%
Average investment securities 2.44% 2.38% 2.83%
Average interest-earning deposits 0.25% 0.25% 0.26%
Average interest-earning assets 5.69% 5.81% 5.95%
Cost of:
Average deposits/all-in deposit cost (1) 0.23% 0.25% 0.32%
Average interest-bearing deposits 0.40% 0.44% 0.51%
Average borrowings 4.65% 4.29% 3.23%
Average subordinated debentures 2.93% 3.06% 3.88%
Average interest-bearing liabilities 0.52% 0.56% 0.85%
Net interest rate spread (2) 5.17% 5.25% 5.10%
Net interest margin (3) 5.40% 5.49% 5.41%
(1) Cost of average deposits/all-in deposit cost is calculated as annualized interest expense on deposits divided by average deposits.
(2) Net interest rate spread is calculated as the yield on average interest-earning assets less the cost of average interest-bearing liabilities.
(3) Net interest margin is calculated as annualized net interest income divided by average interest-earning assets.
PACWEST BANCORP AND SUBSIDIARIES
LOAN CONCENTRATION
(Unaudited)
March 31, 2013
Total Loans Non-Covered Loans
and Leases and Leases Covered Loans
% of % of % of
Amount Total Amount Total Amount Total
(Dollars in thousands)
Real estate mortgage:
Hospitality $ 173,676 5% $ 172,472 6% $ 1,204 --
SBA 504 55,403 2% 55,403 2% -- --
Other 2,097,837 59% 1,568,609 53% 529,228 95%
Total real estate mortgage 2,326,916 66% 1,796,484 61% 530,432 95%
Real estate construction:
Residential 46,122 1% 43,073 1% 3,049 1%
Commercial 92,934 3% 83,634 3% 9,300 2%
Total real estate construction 139,056 4% 126,707 4% 12,349 3%
Total real estate loans 2,465,972 70% 1,923,191 65% 542,781 98%
Commercial:
Collateralized 444,207 13% 432,652 14% 11,555 2%
Unsecured 78,964 2% 78,428 3% 536 --
Asset-based 258,264 7% 258,264 8% -- --
SBA 7(a) 25,075 1% 25,075 1% -- --
Total commercial 806,510 23% 794,419 26% 12,091 2%
Leases 204,766 6% 204,766 7% -- --
Consumer 19,221 1% 18,677 1% 544 --
Foreign 17,268 -- 17,268 1% -- --
Total gross loans and leases $ 3,513,737 100% 2,958,321 100% 555,416 100%
Less:
Unearned income (1,424) --
Discount -- (43,050)
Allowance for loan and lease losses (65,216) (29,303)
Total net loans and leases $ 2,891,681 $ 483,063
PACWEST BANCORP AND SUBSIDIARIES
NON-COVERED LOAN CONCENTRATION
REAL ESTATE MORTGAGE LOANS
(Unaudited)
March 31, 2013 December 31, 2012
% of % of
Loan Category Amount Total Amount Total
(Dollars in thousands)
Commercial real estate mortgage:
Industrial/warehouse $ 286,911 16.0% $ 315,096 16.4%
Retail 228,665 12.7% 271,412 14.2%
Office buildings 290,399 16.2% 304,096 15.9%
Owner-occupied 179,827 10.0% 195,170 10.2%
Hotel 172,472 9.6% 181,144 9.4%
Healthcare 108,693 6.1% 102,816 5.4%
Mixed use 50,243 2.8% 51,294 2.7%
Gas station 28,558 1.6% 29,632 1.5%
Self storage 32,662 1.8% 29,688 1.5%
Restaurant 16,480 0.9% 16,755 0.9%
Land acquisition/development 21,851 1.2% 21,922 1.1%
Unimproved land 11,778 0.7% 13,173 0.7%
Other 165,809 9.2% 172,273 9.0%
Total commercial real estate mortgage 1,594,348 88.8% 1,704,471 88.9%
Residential real estate mortgage:
Multi-family 100,666 5.6% 103,742 5.4%
Single family owner-occupied 40,014 2.2% 46,125 2.4%
Single family nonowner-occupied 11,896 0.6% 12,789 0.7%
HELOCs 49,560 2.8% 50,543 2.6%
Total residential real estate mortgage 202,136 11.2% 213,199 11.1%
Total gross non-covered real estate mortgage loans $ 1,796,484 100.0% $ 1,917,670 100.0%
PACWEST BANCORP AND SUBSIDIARIES
COVERED LOAN CONCENTRATION
REAL ESTATE MORTGAGE LOANS
(Unaudited)
March 31, 2013 December 31, 2012
% of % of
Loan Category Amount Total Amount Total
(Dollars in thousands)
Commercial real estate mortgage:
Industrial/warehouse $ 25,861 4.9% $ 26,205 4.7%
Retail 93,201 17.6% 96,659 17.4%
Office buildings 46,859 8.8% 53,674 9.7%
Owner-occupied 17,232 3.3% 17,301 3.1%
Hotel 1,204 0.2% 2,888 0.5%
Healthcare 8,039 1.5% 8,568 1.5%
Mixed use 2,907 0.5% 2,919 0.5%
Gas station 5,121 1.0% 5,131 0.9%
Self storage 49,895 9.4% 48,937 8.8%
Restaurant 1,640 0.3% 1,686 0.3%
Unimproved land 469 0.1% 493 0.1%
Other 14,542 2.7% 14,141 2.6%
Total commercial real estate mortgage 266,970 50.3% 278,602 50.1%
Residential real estate mortgage:
Multi-family 158,997 30.0% 169,601 30.6%
Single family owner-occupied 76,636 14.4% 78,960 14.2%
Single family nonowner-occupied 20,068 3.8% 20,309 3.7%
Mixed use 2,460 0.5% 2,474 0.4%
HELOCs 5,301 1.0% 5,275 1.0%
Total residential real estate mortgage 263,462 49.7% 276,619 49.9%
Total gross covered real estate mortgage loans $ 530,432 100.0% $ 555,221 100.0%
PACWEST BANCORP AND SUBSIDIARIES
NON-COVERED LOAN CONCENTRATION TREND
(Unaudited)
March 31, December 31, September 30, June 30, March 31,
2013 2012 2012 2012 2012
(In thousands)
Real estate mortgage $ 1,796,484 $ 1,917,670 $ 1,928,890 $ 1,828,777 $ 1,896,052
Real estate construction 126,707 129,959 152,748 129,107 118,304
Commercial 794,419 787,775 772,768 701,044 665,441
Leases 204,766 174,373 161,934 153,793 153,845
Consumer 18,677 22,487 20,615 17,151 15,826
Foreign:
Commercial 15,712 15,567 14,679 15,507 16,747
Other, including real estate 1,556 1,674 1,447 1,510 2,005
Total gross non-covered loans and leases $ 2,958,321 $ 3,049,505 $ 3,053,081 $ 2,846,889 $ 2,868,220
PACWEST BANCORP AND SUBSIDIARIES
COVERED LOAN CONCENTRATION TREND
(Unaudited)
March 31, December 31, September 30, June 30, March 31,
2013 2012 2012 2012 2012
(In thousands)
Real estate mortgage $ 530,432 $ 555,221 $ 606,424 $ 650,997 $ 699,653
Real estate construction 12,349 23,220 26,595 32,125 41,191
Commercial 12,091 15,243 16,900 18,954 20,889
Consumer 544 594 618 659 686
Total gross covered loans 555,416 594,278 650,537 702,735 762,419
Less: discount (43,050) (50,951) (52,437) (62,323) (66,312)
Less: allowance for loan losses (29,303) (26,069) (30,704) (31,463) (35,810)
Total covered loans, net $ 483,063 $ 517,258 $ 567,396 $ 608,949 $ 660,297
PACWEST BANCORP AND SUBSIDIARIES
NON-COVERED NONCLASSIFIED AND CLASSIFIED LOANS AND LEASES
(Unaudited)
March 31, 2013
Nonclassified Classified Total
(In thousands)
Real estate mortgage:
Hospitality $ 158,812 $ 13,660 $ 172,472
SBA 504 49,678 5,725 55,403
Other 1,516,137 52,472 1,568,609
Total real estate mortgage 1,724,627 71,857 1,796,484
Real estate construction:
Residential 41,055 2,018 43,073
Commercial 79,852 3,782 83,634
Total real estate construction 120,907 5,800 126,707
Commercial:
Collateralized 418,425 14,227 432,652
Unsecured 75,880 2,548 78,428
Asset-based 254,633 3,631 258,264
SBA 7(a) 19,048 6,027 25,075
Total commercial 767,986 26,433 794,419
Leases 204,522 244 204,766
Consumer 17,810 867 18,677
Foreign 17,268 -- 17,268
Total non-covered loans and leases $ 2,853,120 $ 105,201 $ 2,958,321
December 31, 2012
Nonclassified Classified Total
(In thousands)
Real estate mortgage:
Hospitality $ 168,489 $ 12,655 $ 181,144
SBA 504 48,372 5,786 54,158
Other 1,633,448 48,920 1,682,368
Total real estate mortgage 1,850,309 67,361 1,917,670
Real estate construction:
Residential 46,591 2,038 48,629
Commercial 77,503 3,827 81,330
Total real estate construction 124,094 5,865 129,959
Commercial:
Collateralized 440,187 12,989 453,176
Unsecured 66,947 2,897 69,844
Asset-based 235,075 4,355 239,430
SBA 7(a) 18,888 6,437 25,325
Total commercial 761,097 26,678 787,775
Leases 174,129 244 174,373
Consumer 21,616 871 22,487
Foreign 17,241 -- 17,241
Total non-covered loans and leases $ 2,948,486 $ 101,019 $ 3,049,505
Note: Nonclassified loans and leases are those with a credit risk rating of either pass or special mention, while classified loans and leases are those with a credit risk rating of either substandard or doubtful.
PACWEST BANCORP AND SUBSIDIARIES
ALLOWANCE FOR CREDIT LOSSES ROLLFORWARD
AND NET CHARGE-OFF RATIOS FOR
NON-COVERED LOANS AND LEASES (1)
(Unaudited)
Three Months Ended
March 31, December 31, March 31,
2013 2012 2012
(Dollars in thousands)
Allowance for credit losses, beginning of period $ 72,119 $ 75,012 $ 93,783
Loans and leases charged-off:
Real estate mortgage (322) (1,789) (2,190)
Commercial (708) (1,865) (871)
Leases (114) (28) --
Consumer (9) (32) (199)
Total loans and leases charged off (1,153) (3,714) (3,260)
Recoveries on loans charged-off:
Real estate mortgage 177 381 329
Real estate construction 323 14 10
Commercial 407 368 824
Consumer 23 58 31
Foreign -- -- 20
Total recoveries on loans charged off 930 821 1,214
Net charge-offs (223) (2,893) (2,046)
Provision (negative provision) for credit losses -- -- (10,000)
Allowance for credit losses, end of period $ 71,896 $ 72,119 $ 81,737
Annualized net charge-offs to average loans and leases 0.03% 0.38% 0.29%
(1) Applies only to non-covered loans and leases.
PACWEST BANCORP AND SUBSIDIARIES
ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING
ASSETS AND CREDIT QUALITY RATIOS FOR
NON-COVERED LOANS AND LEASES
(Unaudited)
March 31, December 31,
2013 2012
(Dollars in thousands)
Allowance for loan and lease losses (1) $ 65,216 $ 65,899
Reserve for unfunded loan commitments (1) 6,680 6,220
Total allowance for credit losses $ 71,896 $ 72,119
Nonaccrual loans and leases (2) $ 41,893 $ 39,284
Other real estate owned (2) 35,961 33,572
Total nonperforming assets $ 77,854 $ 72,856
Performing restructured loans (1) $ 80,501 $ 106,288
Allowance for credit losses to loans and leases, net of unearned income 2.43% 2.37%
Allowance for credit losses to nonaccrual loans and leases 171.6% 183.6%
Nonperforming assets to loans and leases, net of unearned income, and other real estate owned 2.60% 2.37%
Nonperforming assets to total assets 1.47% 1.33%
Nonaccrual loans and leases to loans and leases, net of unearned income 1.42% 1.29%
(1) Applies only to non-covered loans and leases.
(2) Excludes covered nonperforming assets.
PACWEST BANCORP AND SUBSIDIARIES
DEPOSITS
(Unaudited)
March 31, December 31,
Deposit Category 2013 2012
(Dollars in thousands)
Noninterest-bearing demand deposits $ 1,941,234 $ 1,939,212
Interest checking deposits 512,645 513,389
Money market deposits 1,184,987 1,282,513
Savings deposits 157,572 153,680
Total core deposits 3,796,438 3,888,794
Time deposits under $100,000 252,605 274,622
Time deposits of $100,000 and over 504,187 545,705
Total time deposits 756,792 820,327
Total deposits $ 4,553,230 $ 4,709,121
Noninterest-bearing demand deposits as a percentage of total deposits 43% 41%
Core deposits as a percentage of total deposits 83% 83%
PACWEST BANCORP AND SUBSIDIARIES
TIME DEPOSITS
(Unaudited)
March 31, 2013
Time Time
Deposits Deposits Total
Under $100,000 Time
Maturity $100,000 or More Deposits Rate
(Dollars in thousands)
Due in three months or less $ 90,542 $ 184,361 $ 274,903 1.26%
Due in over three months through six months 46,877 107,703 154,580 0.83%
Due in over six months through twelve months 62,221 115,282 177,503 0.78%
Due in over 12 months through 24 months 32,946 52,540 85,486 0.74%
Due in over 24 months 20,019 44,301 64,320 0.98%
Total $ 252,605 $ 504,187 $ 756,792 0.98%
PACWEST BANCORP AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATIONS
(Unaudited)
Three Months Ended
March 31, December 31, March 31,
Adjusted Earnings Before Income Taxes 2013 2012 2012
(In thousands)
Earnings before income taxes $ 21,213 $ 32,468 $ 8,121
Plus: Provision (negative provision) for credit losses 3,137 (4,333) (6,074)
Non-covered OREO expense, net 313 316 1,821
Covered OREO (income) expense, net (813) (461) 822
Acquisition and integration costs 692 1,092 25
Debt termination expense -- -- 22,598
Less: FDIC loss sharing income (expense), net (3,137) (6,022) (3,579)
Gain on sale of securities 409 1,239 --
Adjusted earnings before income taxes $ 27,270 $ 33,865 $ 30,892
Three Months Ended
March 31, December 31, March 31,
Adjusted Efficiency Ratio 2013 2012 2012
(Dollars in thousands)
Noninterest expense $ 44,183 $ 43,525 $ 68,895
Less: Non-covered OREO expense, net 313 316 1,821
Covered OREO (income) expense, net (813) (461) 822
Acquisition and integration costs 692 1,092 25
Debt termination expense -- -- 22,598
Adjusted noninterest expense $ 43,991 $ 42,578 $ 43,629
Net interest income $ 65,693 $ 69,603 $ 67,680
Noninterest income 2,840 2,057 3,262
Net revenues 68,533 71,660 70,942
Less: FDIC loss sharing income (expense), net (3,137) (6,022) (3,579)
Gain on sale of securities 409 1,239 --
Adjusted net revenues $ 71,261 $ 76,443 $ 74,521
Base efficiency ratio (1) 64.5% 60.7% 97.1%
Adjusted efficiency ratio (2) 61.7% 55.7% 58.5%
(1) Noninterest expense divided by net revenues.
(2) Adjusted noninterest expense divided by adjusted net revenues.
PACWEST BANCORP AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATIONS
(Unaudited)
Three Months Ended
March 31, December 31, March 31,
Return on Average Tangible Equity 2013 2012 2012
(Dollars in thousands)
PacWest Bancorp Consolidated:
Net earnings $ 13,494 $ 19,892 $ 5,264
Average stockholders' equity $ 589,207 $ 585,525 $ 552,786
Less: Average intangible assets 93,786 94,604 73,983
Average tangible common equity $ 495,421 $ 490,921 $ 478,803
Annualized return on average equity (1) 9.29% 13.51% 3.83%
Annualized return on average tangible equity (2) 11.05% 16.12% 4.42%
(1) Calculated as annualized net earnings divided by average stockholders' equity.
(2) Calculated as annualized net earnings divided by average tangible common equity.
March 31, December 31,
Tangible Common Equity 2013 2012
(Dollars in thousands)
PacWest Bancorp Consolidated:
Stockholders' equity $ 589,796 $ 589,121
Less: Intangible assets 93,220 94,589
Tangible common equity $ 496,576 $ 494,532
Total assets $ 5,299,905 $ 5,463,658
Less: Intangible assets 93,220 94,589
Tangible assets $ 5,206,685 $ 5,369,069
Equity to assets ratio 11.13% 10.78%
Tangible common equity ratio (1) 9.54% 9.21%
Book value per share $ 15.91 $ 15.74
Tangible book value per share (2) $ 13.40 $ 13.22
Shares outstanding 37,071,357 37,420,909
Pacific Western Bank:
Stockholders' equity $ 650,258 $ 649,656
Less: Intangible assets 93,220 94,589
Tangible common equity $ 557,038 $ 555,067
Total assets $ 5,278,470 $ 5,443,484
Less: Intangible assets 93,220 94,589
Tangible assets $ 5,185,250 $ 5,348,895
Equity to assets ratio 12.32% 11.93%
Tangible common equity ratio (1) 10.74% 10.38%
(1) Calculated as tangible common equity divided by tangible assets.
(2) Calculated as tangible common equity divided by shares outstanding.
PACWEST BANCORP AND SUBSIDIARIES
EARNINGS PER SHARE CALCULATIONS
(Unaudited)
Three Months Ended
March 31, December 31, March 31,
2013 2012 2012
(In thousands, except per share data)
Basic Earnings Per Share:
Net earnings $ 13,494 $ 19,892 $ 5,264
Less: earnings allocated to unvested restricted stock (1) (326) (678) (122)
Net earnings allocated to common shares $ 13,168 $ 19,214 $ 5,142
Weighted-average basic shares and unvested restricted stock outstanding 37,391.1 37,420.3 37,284.0
Less: weighted-average unvested restricted stock outstanding (1,594.1) (1,704.8) (1,654.0)
Weighted-average basic shares outstanding 35,797.0 35,715.5 35,630.0
Basic earnings per share $ 0.37 $ 0.54 $ 0.14
Diluted Earnings Per Share:
Net earnings allocated to common shares $ 13,168 $ 19,214 $ 5,142
Weighted-average basic shares outstanding 35,797.0 35,715.5 35,630.0
Diluted earnings per share $ 0.37 $ 0.54 $ 0.14
(1) Represents cash dividends paid to holders of unvested restricted stock, net of estimated forfeitures, plus undistributed earnings amounts available to holders of unvested restricted stock, if any.

CONTACT: Matthew P. Wagner Chief Executive Officer 10250 Constellation Boulevard Suite 1640 Los Angeles, CA 90067 Phone: 310-728-1020 Fax: 310-201-0498 Victor R. Santoro Executive Vice President and CFO 10250 Constellation Boulevard Suite 1640 Los Angeles, CA 90067 Phone: 310-728-1021 Fax: 310-201-0498Source:PacWest Bancorp