PacWest Bancorp Announces Results for the Third Quarter 2023


THIRD QUARTER 2023 HIGHLIGHTS

  • Net loss available to common stockholders of $33.3 million, or a loss of $0.28 per diluted share
  • Pending merger with Banc of California, Inc. is on track with all regulatory approvals received and is expected to close on or about November 30, 2023
  • The Bank put in place a large liquidity base to cautiously navigate the end of the first quarter of 2023 through the third quarter of 2023. The excess borrowings, including $1.4 billion of brokered deposits (at a rate of 5.19%) and the $1.3 billion repurchase agreement facility (at a rate of 8.50%), are expected to roll off in the fourth quarter of 2023. We believe this will accelerate the Bank’s return to more normalized funding levels and improved profitability, with significantly lower interest and FDIC insurance expenses
  • We continue to execute on our profitability initiatives by optimizing resources, contracts, facilities, and processes, the benefits of which we anticipate realizing in the quarters ahead. Third quarter noninterest expense had notable movement, with compensation expense down 14% over the prior quarter to $71.6 million, with a higher than usual FDIC insurance expense that we expect will normalize over time, and with $9.9 million of non-recurring merger-related costs
  • Adjusted loss available to common stockholders of $37.3 million and adjusted diluted loss per common share of $0.31, which exclude the effect of $9.9 million of merger-related costs related to the pending merger with Banc of California, Inc. and a $14.5 million credit related to a legal settlement gain (see GAAP to non-GAAP reconciliation financial tables at the end of this press release)
  • Allowance for loan and lease losses ratio increased from 0.98% to 1.01%
  • Third quarter results were marked by enhanced capital and liquidity
    • All capital ratios increased from June 30, 2023, with CET1 increasing from 11.16% to 11.23%
    • Immediately available liquidity (on-balance sheet liquidity and unused borrowing capacity) of $16.7 billion, with $5.9 billion of available cash on hand at September 30, 2023
    • Community Banking deposits grew by 2% in the quarter as a result of strategic efforts to attract and retain customers
    • Brokered deposits continue to mature, with balances decreasing by $1.9 billion in the quarter. $1.4 billion more are scheduled to mature in the fourth quarter of 2023
    • The repurchase agreement facility interest expense was $35 million in the quarter and the facility will be repaid in December 2023

LOS ANGELES, Oct. 24, 2023 (GLOBE NEWSWIRE) --

CEO COMMENTARY

Paul Taylor, President and CEO, commented, “The integration planning for our merger with Banc of California, Inc. continues to progress very well. We expect the closing of the merger to occur on or about November 30, 2023, subject to receipt of stockholder approvals. We all look forward to completing the merger so we can begin to execute on a successful business plan for the combined company that we expect will drive significant value for PacWest’s stockholders, customers, communities, and employees.”

Mr. Taylor concluded, “As we work toward the completion of the merger, our primary strategic focus is adding new deposit customers and continuing to provide outstanding customer service to our existing customers. Our credit quality continues to be stable. Our funding profile improved in the third quarter as we strategically reduced higher-cost brokered deposits and we are pleased to see growth in the Community Bank return. We strategically put in place a high-cost liquidity buffer over the past few quarters to safely navigate the turmoil in the regional banking market. We created this buffer by selling loans and adding customer deposits and wholesale funding. We expect our profitability to improve as we continue to wind down wholesale funding, benefit from lower FDIC insurance expense, and execute on our profitability initiatives.”

FINANCIAL HIGHLIGHTS

            
 At or For the    At or For the   
 Three Months Ended   Nine Months Ended  
 September 30, June 30, Increase September 30, Increase
Financial Highlights  2023   2023  (Decrease)  2023   2022  (Decrease)
 (Dollars in thousands, except per share amounts)
Net (loss) earnings available          
to common stockholders$(33,291) $(207,361) $174,070  $(1,446,023) $364,712  $(1,810,735)
Diluted (loss) earnings per           
common share$(0.28) $(1.75) $1.47  $(12.23) $3.04  $(15.27)
Pre-provision, pre-goodwill           
impairment, pre-tax net           
revenue ("PPNR") (1)$(26,566) $(262,443) $235,877  $(169,613) $514,917  $(684,530)
Return on average assets (0.24)%  (1.84)%  1.60   (4.60)%  1.24%  (5.84)
PPNR return on average           
assets (1) (0.28)%  (2.45)%  2.17   (0.55)%  1.71%  (2.26)
Return on average           
tangible common equity (1) (6.33)%  (37.62)%  31.29   (8.49)%  22.90%  (31.39)
            
Yield on average loans and           
leases (tax equivalent) 5.54%  6.08%  (0.54)  5.95%  4.82%  1.13 
Cost of average total           
deposits 2.98%  2.62%  0.36   2.50%  0.32%  2.18 
Net interest margin ("NIM")           
(tax equivalent) 1.45%  1.82%  (0.37)  2.07%  3.52%  (1.45)
Efficiency ratio 108.5%  527.0%  (418.5)  123.5%  50.2%  73.3 
            
Total assets$36,877,833  $38,337,250  $(1,459,417) $36,877,833  $41,404,592  $(4,526,759)
Loans and leases held           
for investment,           
net of deferred fees$21,920,946  $22,258,210  $(337,264) $21,920,946  $27,660,041  $(5,739,095)
Noninterest-bearing           
demand deposits$5,579,033  $6,055,358  $(476,325) $5,579,033  $12,775,756  $(7,196,723)
Interest-bearing deposits$21,019,648  $21,841,725  $(822,077) $21,019,648  $21,420,116  $(400,468)
Total deposits$26,598,681  $27,897,083  $(1,298,402) $26,598,681  $34,195,872  $(7,597,191)
            
As percentage of total           
deposits:           
Noninterest-bearing           
demand deposits 21%  22%  (1)  21%  37%  (16)
Interest-bearing deposits 79%  78%  1   79%  63%  16 
            
Equity to assets ratio 6.51%  6.61%  (0.10)  6.51%  9.36%  (2.85)
Common equity tier 1           
capital ratio 11.23%  11.16%  0.07   11.23%  8.56%  2.67 
Tier 1 capital ratio 13.84%  13.70%  0.14   13.84%  10.46%  3.38 
Total capital ratio 17.83%  17.61%  0.22   17.83%  13.43%  4.40 
Tangible common equity           
ratio (1) 5.09%  5.24%  (0.15)  5.09%  4.85%  0.24 
Tangible book value per           
common share (1)$15.64  $16.71  $(1.07) $15.64  $16.11  $(0.47)
            
(1) Non-GAAP measure.           
            

INCOME STATEMENT HIGHLIGHTS

NET INTEREST INCOME

Net interest income decreased by $55.3 million to $130.7 million for the third quarter of 2023 compared to $186.1 million for the second quarter of 2023 due mainly to lower interest income on loans and leases and higher interest expense on deposits, offset partially by lower interest expense on borrowings. Interest income on loans and leases decreased by $98.6 million in the third quarter of 2023 due to a $4.8 billion decrease in the average balance of loans and leases and a 54 basis points decrease in the tax equivalent yield on loans and leases compared to the second quarter of 2023. The tax equivalent yield on loans and leases was 5.54% in the third quarter of 2023 compared to 6.08% in the second quarter of 2023. The decrease in the tax equivalent yield on loans and leases was due primarily to lower levels of higher-yielding Civic and construction loans. Interest expense on deposits increased by $27.2 million in the third quarter of 2023 due mainly to increased market rates that contributed to a 36 basis points increase in the cost of total deposits. Interest expense on borrowings decreased by $66.7 million due mainly to a $5.1 billion decrease in the average balance. Interest expense on the repurchase agreement facility is at 8.50% and totaled $35 million in the third quarter. This interest expense will decrease in the fourth quarter, as we intend to pay off this borrowing in mid-December with existing balance sheet liquidity, and be eliminated by the first quarter of 2024.

The tax equivalent NIM was 1.45% for the third quarter of 2023 compared to 1.82% for the second quarter of 2023. The decrease in the NIM was due mainly to the lower yield on loans and leases and a higher cost of total deposits.

The cost of total deposits was 2.98% for the third quarter of 2023 compared to 2.62% for the second quarter of 2023 due mainly to higher market interest rates.

PROVISION FOR CREDIT LOSSES

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

      
 Three Months Ended  
 September 30, June 30, Increase
Provision for Credit Losses 2023   2023  (Decrease)
 (In thousands)
Addition to allowance for     
loan and lease losses$8,000  $40,000  $(32,000)
Reduction in reserve for     
unfunded loan commitments (8,000)  (38,000)  30,000 
Total loan-related provision -   2,000   (2,000)
Addition to allowance for     
held-to-maturity securities -   -   - 
Total provision for credit losses$-  $2,000  $(2,000)
      

There was no provision for credit losses for the third quarter of 2023 compared to $2.0 million for the second quarter of 2023. The provision for the third quarter of 2023 reflected an addition to the allowance for loan and lease losses, primarily due to an increase in qualitative reserves for loans secured by office properties, which was offset by a reduction in the reserve for unfunded commitments due to lower unfunded commitments. The provision for the second quarter of 2023 reflected the impact of an updated economic forecast, higher net charge-offs and higher reserves for downgraded loans largely offset by lower reserves needed for lower loan and unfunded commitment balances.

NONINTEREST INCOME

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

      
 Three Months Ended  
 September 30, June 30, Increase
Noninterest Income 2023   2023  (Decrease)
 (In thousands)
Service charges on deposit accounts$4,018  $4,315  $(297)
Other commissions and fees 7,641   11,241   (3,600)
Leased equipment income 14,554   22,387   (7,833)
Loss on sale of loans and leases (1,901)  (158,881)  156,980 
Dividends and gains on equity investments 3,837   2,658   1,179 
Warrant loss (88)  (124)  36 
LOCOM HFS adjustment 307   (11,943)  12,250 
Other income 15,440   2,265   13,175 
Total noninterest income (loss)$43,808  $(128,082) $171,890 
      

Noninterest income increased by $171.9 million to an income of $43.8 million for the third quarter of 2023 compared to a loss of $128.1 million for the second quarter of 2023 due primarily to a $157.0 million decrease in the loss on sale of loans and leases, the $12.3 million increase in the lower of cost or market held for sale (“LOCOM HFS”) adjustment and a $13.2 million increase in other income, partially offset by a $7.8 million decrease in leased equipment income and a $3.6 million decrease in other commissions and fees. The decrease in the loss on sale of loans and leases was due to the $158.9 million of losses recorded in the second quarter of 2023 related to the sale of three significant non-core loan portfolios. The increase in the LOCOM HFS adjustment was due to the negative $11.9 million LOCOM adjustment made in the second quarter of 2023 related to the $478.1 million of loans held for sale at June 30, 2023. The increase in other income is primarily due to a $14.5 million recovery of a prior year legal settlement. The decrease in leased equipment income was due primarily to lower early lease termination gains and rental income compared to the second quarter of 2023. The decrease in other commissions and fees was due primarily to lower loan-related fee income and lower customer success fees.

NONINTEREST EXPENSE

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

      
 Three Months Ended  
 September 30, June 30, Increase
Noninterest Expense 2023   2023 (Decrease)
 (In thousands)
Compensation$71,642  $82,881 $(11,239)
Occupancy 15,293   15,383  (90)
Data processing 11,104   10,963  141 
Other professional services 5,597   9,973  (4,376)
Insurance and assessments 38,298   25,635  12,663 
Intangible asset amortization 2,389   2,389  - 
Leased equipment depreciation 8,333   9,088  (755)
Foreclosed assets (income) expense, net (609)  2  (611)
Customer related expense 26,971   27,302  (331)
Loan expense 4,243   5,245  (1,002)
Other 7,917   119,182  (111,265)
Acquisition, integration and reorganization costs 9,925   12,394  (2,469)
Total noninterest expense$201,103  $320,437 $(119,334)
      

Noninterest expense decreased by $119.3 million to $201.1 million in the third quarter of 2023 compared to $320.4 million in the second quarter of 2023 due primarily to a decrease of $111.3 million in other expense and a decrease of $11.2 million in compensation expense, offset partially by a $12.7 million increase in insurance and assessments expense. The decrease in other expense was due mainly to $106.8 million of unfunded commitments fair value loss adjustments in the second quarter of 2023. The decrease in compensation expense was due mostly to lower salary expense, stock compensation, and commissions expense. The increase in insurance and assessments was due primarily to higher FDIC assessment expense attributable to an increased assessment rate due to lower core earnings and lower core deposits.

INCOME TAXES

The effective income tax rate was 12.1% for the third quarter of 2023 compared to 25.3% for the second quarter of 2023. The decrease from the second quarter of 2023 was due primarily to higher disallowed FDIC assessment expense in the third quarter of 2023.

BALANCE SHEET HIGHLIGHTS

DEPOSITS AND CLIENT INVESTMENT FUNDS

The following tables present the composition of our deposit portfolio as of the dates indicated:

         
 September 30, 2023 June 30, 2023 September 30, 2022
  % of   % of   % of
Deposits By Account TypeBalanceTotal BalanceTotal BalanceTotal
 (Dollars in thousands)
Noninterest-bearing$5,579,03321% $6,055,35822% $12,775,75637%
Interest-bearing:        
Transaction (NOW) 7,038,80827%  7,112,80726%  7,070,02121%
Money market 5,424,34720%  5,678,32320%  10,440,20230%
Savings 1,441,7005%  897,2773%  640,8752%
Time deposits (1) 7,114,79327%  8,153,31829%  3,269,01810%
Total interest-bearing 21,019,64879%  21,841,72578%  21,420,11663%
Total deposits$26,598,681100% $27,897,083100% $34,195,872100%
         
(1) Includes time deposits over $250,000 of $979.1 million, $853.4 million, and $1.0 billion at September 30, 2023, June 30, 2023, and September 30, 2022, respectively.
        
         
         
 September 30, 2023 June 30, 2023 September 30, 2022
  % of   % of   % of
Deposits By Customer TypeBalanceTotal BalanceTotal BalanceTotal
 (Dollars in thousands)
Noninterest-bearing$5,579,03321% $6,055,35822% $12,775,75637%
Interest-bearing:        
Consumer and commercial:        
Reciprocal 7,839,05230%  7,935,47929%  3,916,76811%
Non-reciprocal 7,442,63527%  6,257,97122%  13,645,11141%
Brokered 5,737,96122%  7,648,27527%  3,858,23711%
Total interest-bearing 21,019,64879%  21,841,72578%  21,420,11663%
Total deposits$26,598,681100% $27,897,083100% $34,195,872100%
         

Total deposits decreased by $1.3 billion or 4.7% in the third quarter of 2023 due primarily to the $1.9 billion strategic reduction of higher-cost brokered deposits, partially offset by growth in customer deposits. At September 30, 2023, noninterest-bearing deposits totaled $5.6 billion or 21% of total deposits and interest-bearing deposits totaled $21.0 billion or 79% of total deposits.

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

 September 30, 2023 June 30, 2023  
  % of   % of  Increase
Deposits By DivisionBalanceTotal BalanceTotal (Decrease)
 (Dollars in thousands)
Community Banking$14,631,09255% $14,353,85151% $277,241 
Venture Banking 5,662,43521%  5,764,22021%  (101,785)
Brokered/Other 6,305,15424%  7,779,01228%  (1,473,858)
Total deposits$26,598,681100% $27,897,083100% $(1,298,402)
        

As of September 30, 2023, FDIC-insured deposits represented approximately 81% of total deposits and FDIC-insured venture-specific deposits accounted for approximately 90% of total venture-specific deposits. The Bank’s spot deposit rate increased from 2.71% at June 30, 2023 to 2.97% at September 30, 2023.

In addition to deposit products, we also offer alternative, non-depository cash investment options for select clients. These alternative options include investments managed by Pacific Western Asset Management Inc. (“PWAM”), our registered investment advisor subsidiary, and third-party sweep products. Total off-balance sheet client investment funds decreased from $0.8 billion as of June 30, 2023 to $0.7 billion at September 30, 2023, of which $0.3 billion was managed by PWAM.

BORROWINGS

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

        
 September 30, 2023 June 30, 2023  
  Weighted  Weighted  
  Average   Average  Increase
Borrowing TypeBalanceRate BalanceRate (Decrease)
 (Dollars in thousands)
FHLB secured advances$--  $--  $- 
Bank Term Funding Program 4,910,0004.38%  4,910,0004.38%  - 
Repurchase agreement (1) 1,260,7438.50%  1,324,2738.50%  (63,530)
Credit-linked notes 123,78216.00%  123,06515.77%  717 
Total borrowings$6,294,5255.43% $6,357,3385.46% $(62,813)
        
(1) Balance is net of unamortized issuance costs of $10.9 million and $4.8 million of accrued exit fees.  
 Rate calculation does not include the effects of issuance costs and exit fees.   
        

The $62.8 million decrease in borrowings in the third quarter of 2023 was due mainly to paydowns of the repurchase agreement facility. Available borrowing capacity was approximately $10.8 billion at September 30, 2023.

LOANS AND LEASES

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

    
 Three Months Ended Nine Months Ended
Roll Forward of Loans and Leases HeldSeptember 30, June 30, September 30,
for Investment, Net of Deferred Fees  2023   2023   2023 
 (Dollars in thousands)
Balance, beginning of period$22,258,210  $25,672,381  $28,609,129 
Additions:     
Production 81,402   189,201   739,274 
Disbursements 1,495,471   1,143,347   4,261,716 
Total production and disbursements 1,576,873   1,332,548   5,000,990 
Reductions:     
Payoffs (1,245,502)  (942,962)  (3,210,116)
Paydowns (663,939)  (817,033)  (2,446,509)
Total payoffs and paydowns (1,909,441)  (1,759,995)  (5,656,625)
Sales (15,617)  (3,038,672)  (3,286,087)
Transfers to foreclosed assets (6,725)  (6,657)  (15,950)
Charge-offs (6,695)  (31,708)  (48,800)
Transfers to loans held for sale -   (280,062)  (3,076,427)
Total reductions (1,938,478)  (5,117,094)  (12,083,889)
Transfers from loans held for sale 24,341   370,375   394,716 
Net (decrease) increase (337,264)  (3,414,171)  (6,688,183)
Balance, end of period$21,920,946  $22,258,210  $21,920,946 
      
Weighted average rate on production (1) 7.48%  7.64%  8.13%
      
(1) The weighted average rate on production presents contractual rates on a tax equivalent basis  
 and excludes amortized fees. Amortized fees added approximately 15 basis points to loan  
 yields in 2023.     
      

Loans and leases held for investment, net of deferred fees, decreased by $337.3 million, or 1.5% in the third quarter of 2023 to $21.9 billion at September 30, 2023. The overall decrease in the loans and leases balance for the third quarter of 2023 was due primarily to a decrease in commercial loans led by decreases in venture capital loans and asset-based loans.

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

         
 September 30, 2023 June 30, 2023 September 30, 2022
  % of   % of   % of
Loan and Lease Portfolio BalanceTotal BalanceTotal BalanceTotal
 (Dollars in thousands)
Real estate mortgage:        
Commercial$3,526,30816% $3,610,32016% $3,770,70614%
Multi-family 5,279,65924%  5,304,54424%  5,510,87620%
Other residential 5,228,52424%  5,373,17824%  5,883,18221%
Total real estate mortgage 14,034,49164%  14,288,04264%  15,164,76455%
Real estate construction and land:        
Commercial 465,2662%  415,9972%  843,0863%
Residential 2,272,27110%  2,049,5269%  2,916,41510%
Total real estate construction        
and land 2,737,53712%  2,465,52311%  3,759,50113%
Total real estate 16,772,02876%  16,753,56575%  18,924,26568%
Commercial:        
Asset-based 2,287,89310%  2,357,09811%  5,154,65419%
Venture capital 1,464,1607%  1,723,4768%  2,001,0867%
Other commercial 1,002,3775%  1,014,2124%  1,115,4424%
Total commercial 4,754,43022%  5,094,78623%  8,271,18230%
Consumer 394,4882%  409,8592%  464,5942%
Total loans and leases held for        
investment, net of deferred fees$21,920,946100% $22,258,210100% $27,660,041100%
         
Total unfunded loan commitments$5,289,221  $5,845,375  $11,227,234 
         

ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES

The following tables present roll forwards of the allowance for credit losses on loans and leases for the periods indicated:

      
 Three Months Ended September 30, 2023
Allowance for Credit Allowance for Reserve for  Total
Losses on Loans and Loan and  Unfunded Loan Allowance for
Leases RollforwardLease Losses Commitments Credit Losses
 (In thousands)
Beginning balance$219,234  $37,571  $256,805 
Charge-offs (6,695)  -   (6,695)
Recoveries 1,758   -   1,758 
Net charge-offs (4,937)  -   (4,937)
Provision 8,000   (8,000)  - 
Ending balance$222,297  $29,571  $251,868 
      
      
      
 Three Months Ended June 30, 2023
Allowance for Credit Allowance for Reserve for  Total
Losses on Loans and Loan and  Unfunded Loan Allowance for
Leases RollforwardLease Losses Commitments Credit Losses
 (In thousands)
Beginning balance$210,055  $75,571  $285,626 
Civic loan sale charge-offs (22,446)  -   (22,446)
Other charge-offs (9,262)  -   (9,262)
Total charge-offs (31,708)  -   (31,708)
Recoveries 887   -   887 
Net charge-offs (30,821)  -   (30,821)
Provision 40,000   (38,000)  2,000 
Ending balance$219,234  $37,571  $256,805 
      

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

      
Allowance for Credit LossesSeptember 30, June 30, Increase
on Loans and Leases 2023   2023  (Decrease)
 (Dollars in thousands)
Allowance for loan and lease losses$222,297  $219,234  $3,063 
Reserve for unfunded loan commitments 29,571   37,571   (8,000)
Allowance for credit losses$251,868  $256,805  $(4,937)
      
Provision for credit losses (for the quarter)$-  $2,000  $(2,000)
Net charge-offs (for the quarter)$4,937  $30,821  $(25,884)
Net charge-offs to average loans     
and leases (for the quarter) 0.09%  0.46%  
Allowance for loan and lease losses to loans     
and leases held for investment 1.01%  0.98%  
Allowance for credit losses to loans and leases     
held for investment 1.15%  1.15%  
      

The allowance for credit losses decreased by $4.9 million in the third quarter of 2023 to $251.9 million at September 30, 2023. This decrease was attributable mainly to lower reserves needed due to the decrease in loans and leases held for investment and unfunded loan commitments.

Net charge-offs over the trailing twelve months were $47.5 million, which resulted in net charge-offs to average loans and leases over the trailing twelve months of 0.19%.

CREDIT QUALITY

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

      
 September 30, June 30, Increase
Credit Quality Metrics  2023   2023  (Decrease)
 (Dollars in thousands)
Nonperforming Assets:     
Nonaccrual loans and leases held for investment (1)$125,396  $104,886  $20,510 
Accruing loans contractually past due 90 days or more -   -   - 
Foreclosed assets, net 6,829   8,426   (1,597)
Total nonperforming assets ("NPAs")$132,225  $113,312  $18,913 
      
Nonaccrual loans and leases held for investment     
to loans and leases held for investment 0.57%  0.47%  
Nonperforming assets to loans and leases     
held for investment and foreclosed assets 0.60%  0.51%  
Allowance for credit losses to nonaccrual loans     
and leases held for investment 200.9%  244.8%  
      
Loan and Lease Credit Risk Ratings:     
Pass$21,349,720  $21,679,908  $(330,188)
Special mention 360,131   366,368   (6,237)
Classified 211,095   211,934   (839)
Total loans and leases held for investment,     
net of deferred fees$21,920,946  $22,258,210  $(337,264)
      
Special mention loans and leases held for investment     
to loans and leases held for investment 1.64%  1.65%  
Classified loans and leases held for investment     
to loans and leases held for investment 0.96%  0.95%  
      
(1) Nonaccrual loans include SBA guaranteed amounts of $13.7 million at September 30, 2023 and $14.8 million
 at June 30, 2023.     
      

Nonaccrual loans and leases increased by $20.5 million in the third quarter of 2023 to $125.4 million at September 30, 2023, due primarily to an increase in nonaccrual Civic loans. The increase is primarily due to a sale of non-performing Civic loans in the second quarter which made the balance at June 30, 2023, lower than normal.

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

            
 September 30, 2023 June 30, 2023 Increase (Decrease)
   Accruing   Accruing   Accruing
   and 30-89   and 30-89   and 30-89
   Days Past   Days Past   Days Past
 Nonaccrual  Due Nonaccrual Due Nonaccrual Due
 (In thousands)
Real estate mortgage:           
Commercial$31,465 $13 $37,191 $- $(5,726) $13 
Multi-family -  -  -  -  -   - 
Other residential 88,329  35,349  63,626  45,805  24,703   (10,456)
Total real estate mortgage 119,794  35,362  100,817  45,805  18,977   (10,443)
Real estate construction and land:           
Commercial -  -  -  -  -   - 
Residential -  -  -  -  -   - 
Total real estate           
construction and land -  -  -  -  -   - 
Commercial:           
Asset-based 363  -  385  -  (22)  - 
Venture capital 2,001  -  -  1,845  2,001   (1,845)
Other commercial 3,031  411  3,479  147  (448)  264 
Total commercial 5,395  411  3,864  1,992  1,531   (1,581)
Consumer 207  2,254  205  2,024  2   230 
Total held for investment$125,396 $38,027 $104,886 $49,821 $20,510  $(11,794)
            

Loans and leases accruing and 30-89 days past due generally fluctuate from period to period. The $11.8 million decrease to $38.0 million in the third quarter of 2023 was due mainly to a decrease in Civic delinquent loans.

CAPITAL

The following table presents capital ratios as of the dates indicated:

      
      
 September 30, June 30, September 30,
  2023   2023   2022 
PacWest Bancorp Consolidated:     
Common equity tier 1 capital ratio (1) 11.23%  11.16%  8.56%
Tier 1 capital ratio (1) 13.84%  13.70%  10.46%
Total capital ratio (1) 17.83%  17.61%  13.43%
Tier 1 leverage capital ratio (1) 8.65%  7.76%  8.63%
Risk-weighted assets (1) (in thousands)$24,127,271  $24,771,837  $33,042,173 
Tangible common equity ratio (2) 5.09%  5.24%  4.85%
(1) Capital information for September 30, 2023 is preliminary.    
(2) Non-GAAP measure.     
      

PACWEST BANCORP

PacWest is a bank holding company headquartered in Los Angeles, California, with an executive office in Denver, Colorado, with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). Pacific Western Bank is a relationship-based community bank focused on providing business banking and treasury management services to small, middle-market, and venture-backed businesses. The Bank offers a broad range of loan and lease and deposit products and services through full-service branches throughout California and in Durham, North Carolina and Denver, Colorado, and loan production offices around the country. For more information about PacWest Bancorp or Pacific Western Bank, visit www.pacwest.com.

FORWARD-LOOKING STATEMENTS

This communication contains certain forward-looking information about PacWest (the “Company”) that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements about future financial and operational results, expectations, or intentions are forward-looking statements. Such statements often use words such as “anticipates,” “targets,” “expects,” “estimates,” “intends,” “plans,” “believes,” “continue” and other similar expressions or future or conditional verbs such as “will,” “may,” “might,” “should,” “would” and “could.” These forward-looking statements include, but are not limited to, statements regarding the proposed transaction between PacWest and Banc of California, Inc. (“Banc of California”) including statements as to the expected timing, completion and effects of the proposed transaction. Such statements are based on information available at the time of the communication and are based on current beliefs and expectations of PacWest’s and Banc of California’s management and are subject to significant risks, uncertainties and contingencies, many of which are beyond the control of PacWest and Banc of California, which may cause actual results, performance, or achievements to differ materially from those expressed in them. Continued deterioration in general business, economic, and political conditions, geopolitical tensions, uncertainty in U.S. fiscal monetary policy, including the interest rate policies of the Federal Reserve Board, and volatility and disruptions in credit and capital markets could lead to a tightening of credit and an increase in credit losses, adversely affect PacWest’s revenues and the values of our assets and liabilities, increase stock price volatility, and adversely impact our ability to raise capital. In addition, PacWest and its results could be adversely affected by changes in interest rates, continued high inflation, and unemployment rates, our ability to attract and retain deposits and other sources of funding and liquidity particularly in a rising or high interest rate environment, the impact of bank failures or other adverse developments at other banks on general investor sentiment regarding the stability and liquidity of banks, the safety of deposits, and depositor behavior, the quality and composition of our deposits, deterioration in the credit quality of our loan portfolio or in the value of the collateral securing those loans, especially the risks associated with concentrations in real estate related loans, deterioration in the value of our investment securities as a result of rising interest rates or otherwise, our ability to successfully execute on our strategic plan and digital and innovation initiatives, the effectiveness of our risk management framework and quantitative models, legal and regulatory developments, the ability to complete, or any delays in completing, the proposed transaction between us and Banc of California, any failure to realize the anticipated benefits of the transaction when expected or at all, certain restrictions during the pendency of the proposed transaction that may impact our ability to pursue certain business opportunities or strategic transactions, the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events, diversion of management’s attention from ongoing business operations and opportunities, and potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the transaction and integration of the companies. We also caution that the amount and timing of any future common stock dividends will depend on the earnings, cash requirements and financial condition of the Company, market conditions, capital requirements, applicable law and regulations (including federal securities laws and federal banking regulations), and other factors deemed relevant by the Company’s Board of Directors, and may be subject to regulatory approval or conditions. Actual results may differ materially from those set forth or implied in the forward-looking statements due to a variety of factors, including the risk factors described in documents filed by PacWest with the U.S. Securities and Exchange Commission (the “SEC”).

All forward-looking statements in this communication are based on information available at the time the statement is made. We are under no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

NO OFFER OR SOLICITATION

This communication is not a proxy statement or solicitation or a proxy, consent or authorization with respect to any securities or in respect of the proposed transaction and shall not constitute an offer to sell or a solicitation of an offer to buy the securities of PacWest, Banc of California, or the combined company, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be deemed to be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act, and otherwise in accordance with applicable law.

ADDITIONAL INFORMATION AND WHERE TO FIND IT

This communication includes information relating to the proposed transaction between PacWest and Banc of California and the proposed investment in Banc of California by Warburg Pincus LLC and Centerbridge Partners, L.P. Banc of California filed a registration statement on Form S-4 with the SEC on August 28, 2023 (as amended on September 29, 2023, and further amended on October 16, 2023, and October 19, 2023) that the SEC declared effective on October 20, 2023, and in connection with PacWest’s and Banc of California’s solicitation of proxies for the vote by PacWest’s stockholders and Banc of California’s stockholders with respect to the proposed transaction, on October 23, 2023, PacWest and Banc of California commenced mailing of a definitive joint proxy statement/prospectus to holders of PacWest’s common stock and Banc of California’s common stock who, as of the applicable record date, are entitled to vote on the matters being considered at the PacWest stockholder meeting and at the Banc of California stockholder meeting, as applicable. PacWest or Banc of California may also file other documents with the SEC regarding the proposed transaction.

BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS AND SECURITY HOLDERS ARE URGED TO CAREFULLY READ THE ENTIRE REGISTRATION STATEMENT AND THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO), AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO SUCH DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

Investors and security holders are able to obtain free copies of the registration statement, the definitive joint proxy statement/prospectus and all other relevant documents filed or that will be filed with the SEC by PacWest or Banc of California through the website maintained by the SEC at www.sec.gov.

The documents filed by PacWest or Banc of California with the SEC also may be obtained free of charge at PacWest’s or Banc of California’s website at www.pacwestbancorp.com, under the heading “SEC Filings,” or https://investors.bancofcal.com, under the heading “Financials and Filings,” respectively, or upon written request to PacWest, Attention: Investor Relations, 9701 Wilshire Boulevard, Suite 700, Beverly Hills, CA 90212 or Banc of California, Attention: Investor Relations, 3 MacArthur Place, Santa Ana, CA 92707, respectively.

PARTICIPANTS IN SOLICITATION

PacWest and Banc of California and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from PacWest’s stockholders or Banc of California’s stockholders in connection with the proposed transaction under the rules of the SEC. PacWest’s stockholders, Banc of California’s stockholders, and other interested persons are able to obtain, without charge, more detailed information regarding the names, affiliations and interests of directors and executive officers of PacWest and Banc of California in Banc of California’s registration statement on Form S-4, as well other documents filed by PacWest or Banc of California from time to time with the SEC. Other information regarding persons who may, under the rules of the SEC, be deemed the participants in the proxy solicitation of PacWest’s or Banc of California’s stockholders in connection with the proposed transaction and a description of their direct and indirect interests, by security holdings or otherwise, is included in the definitive joint proxy statement/prospectus filed with the SEC and may be contained in other relevant materials to be filed with the SEC regarding the proposed transaction. You may obtain free copies of these documents at the SEC’s website at www.sec.gov. Copies of documents filed with the SEC by PacWest or Banc of California will also be available free of charge from PacWest or Banc of California using the contact information above.

 

PACWEST BANCORP AND SUBSIDIARIES     
CONDENSED CONSOLIDATED BALANCE SHEET     
      
 September 30, June 30, September 30,
  2023   2023   2022 
 (Dollars in thousands, except per share amounts)
ASSETS:     
Cash and due from banks$182,261  $208,300  $216,436 
Interest-earning deposits in financial institutions 5,887,406   6,489,847   2,244,272 
Total cash and cash equivalents  6,069,667   6,698,147   2,460,708 
      
Securities available-for-sale, at estimated fair value 4,487,172   4,708,519   5,891,328 
Securities held-to-maturity, at amortized cost,     
net of allowance for credit losses 2,282,586   2,278,202   2,264,601 
Federal Home Loan Bank stock, at cost 17,250   17,250   36,990 
Total investment securities 6,787,008   7,003,971   8,192,919 
      
Loans held for sale 188,866   478,146   15,534 
      
Gross loans and leases held for investment 21,969,789   22,311,292   27,775,962 
Deferred fees, net (48,843)  (53,082)  (115,921)
Total loans and leases held for investment,     
net of deferred fees 21,920,946   22,258,210   27,660,041 
Allowance for loan and lease losses (222,297)  (219,234)  (189,327)
Total loans and leases held for investment, net 21,698,649   22,038,976   27,470,714 
      
Equipment leased to others under operating leases 352,330   380,022   338,691 
Premises and equipment, net 50,236   57,078   50,781 
Foreclosed assets, net 6,829   8,426   2,967 
Goodwill -   -   1,405,736 
Core deposit and customer relationship intangibles, net 24,192   26,581   34,010 
Deferred tax asset, net 506,248   426,304   321,650 
Other assets 1,193,808   1,219,599   1,110,882 
Total assets$36,877,833  $38,337,250  $41,404,592 
      
LIABILITIES:     
Noninterest-bearing deposits$5,579,033  $6,055,358  $12,775,756 
Interest-bearing deposits 21,019,648   21,841,725   21,420,116 
Total deposits 26,598,681   27,897,083   34,195,872 
Borrowings 6,294,525   6,357,338   1,864,815 
Subordinated debt 870,896   870,378   863,379 
Accrued interest payable and other liabilities 714,454   679,256   604,581 
Total liabilities 34,478,556   35,804,055   37,528,647 
STOCKHOLDERS' EQUITY (1) 2,399,277   2,533,195   3,875,945 
Total liabilities and stockholders’ equity$36,877,833  $38,337,250  $41,404,592 
      
Book value per common share$15.84  $16.93  $28.07 
Tangible book value per common share (2)$15.64  $16.71  $16.11 
Common shares outstanding 119,967,984   120,169,012   120,314,023 
      
(1) Includes net unrealized loss on:     
 Securities available-for-sale, net$(691,557) $(583,684) $(637,346)
 Securities held to maturity$(187,275) $(193,058) $(210,868)
(2) Non-GAAP measure.     
      


PACWEST BANCORP AND SUBSIDIARIES         
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)      
          
 Three Months Ended Nine Months Ended
 September 30, June 30, September 30, September 30,
  2023   2023   2022   2023   2022 
 (In thousands, except per share amounts)
Interest income:         
Loans and leases$310,392  $408,972  $346,550  $1,150,049  $907,595 
Investment securities 45,326   44,153   53,135   133,716   159,459 
Deposits in financial institutions 90,366   86,763   10,359   219,995   16,412 
Total interest income 446,084   539,888   410,044   1,503,760   1,083,466 
          
Interest expense:         
Deposits 205,982   178,789   61,288   540,663   82,858 
Borrowings 94,234   160,914   3,081   324,270   5,683 
Subordinated debt 15,139   14,109   10,494   42,750   27,102 
Total interest expense 315,355   353,812   74,863   907,683   115,643 
          
Net interest income 130,729   186,076   335,181   596,077   967,823 
Provision for credit losses -   2,000   3,000   5,000   14,500 
Net interest income after provision         
for credit losses 130,729   184,076   332,181   591,077   953,323 
          
Noninterest income:         
Service charges on deposit accounts 4,018   4,315   3,608   11,906   10,813 
Other commissions and fees 7,641   11,241   10,034   29,226   32,427 
Leased equipment income 14,554   22,387   12,835   50,798   38,264 
(Loss) gain on sale of loans and leases (1,901)  (158,881)  58   (157,820)  130 
Gain (loss) on sale of securities -   -   86   -   (1,019)
Dividends and gains (losses) on equity investments 3,837   2,658   3,228   7,593   (4,050)
Warrant (loss) income (88)  (124)  292   (545)  2,536 
LOCOM HFS adjustment 307   (11,943)  -   (11,636)  - 
Other income 15,440   2,265   8,478   22,595   14,682 
Total noninterest income (loss) 43,808   (128,082)  38,619   (47,883)  93,783 
          
Noninterest expense:         
Compensation 71,642   82,881   105,933   242,999   300,715 
Occupancy 15,293   15,383   15,574   45,743   46,042 
Data processing 11,104   10,963   9,568   33,005   28,455 
Other professional services 5,597   9,973   10,674   21,643   23,354 
Insurance and assessments 38,298   25,635   7,159   75,650   18,281 
Intangible asset amortization 2,389   2,389   3,649   7,189   10,947 
Leased equipment depreciation 8,333   9,088   8,908   26,796   27,031 
Foreclosed assets (income) expense, net (609)  2   (248)  (244)  (3,629)
Acquisition, integration and reorganization costs 9,925   12,394   -   30,833   - 
Customer related expense 26,971   27,302   12,673   78,278   37,076 
Loan expense 4,243   5,245   6,228   16,012   18,422 
Goodwill impairment -   -   -   1,376,736   - 
Other expense 7,917   119,182   15,500   139,903   39,995 
Total noninterest expense 201,103   320,437   195,618   2,094,543   546,689 
          
(Loss) earnings before income taxes (26,566)  (264,443)  175,182   (1,551,349)  500,417 
Income tax (benefit) expense (3,222)  (67,029)  43,566   (135,167)  126,313 
Net (loss) earnings  (23,344)  (197,414)  131,616   (1,416,182)  374,104 
Preferred stock dividends 9,947   9,947   9,392   29,841   9,392 
Net (loss) earnings available to          
common stockholders$(33,291) $(207,361) $122,224  $(1,446,023) $364,712 
          
Basic and diluted (loss) earnings per         
common share$(0.28) $(1.75) $1.02  $(12.23) $3.04 
Dividends declared and paid per common share$0.01  $0.01  $0.25  $0.27  $0.75 
          

 

PACWEST BANCORP AND SUBSIDIARIES         
AVERAGE BALANCE SHEET AND YIELD ANALYSIS        
            
 Three Months Ended
 September 30, 2023 June 30, 2023 September 30, 2022
  InterestAverage InterestAverage InterestAverage
 Average Income/Yield/ Average Income/Yield/ Average Income/Yield/
 BalanceExpenseCost BalanceExpenseCost BalanceExpenseCost
 (Dollars in thousands)
Assets:           
Loans and           
leases (1)(2)(3)$22,226,390$310,3925.54% $26,992,283$408,9726.08% $27,038,873$348,6395.12%
Investment securities (3) 6,919,948 45,3262.60%  7,183,986 44,1532.47%  8,803,349 54,4232.45%
Deposits in financial           
institutions 6,645,335 90,3665.40%  6,835,075 86,7635.09%  1,809,809 10,3592.27%
Total interest-earning           
assets (1) 35,791,673 446,0844.94%  41,011,344 539,8885.28%  37,652,031 413,4214.36%
Other assets 2,016,085    2,028,985    3,189,241  
Total assets$37,807,758   $43,040,329   $40,841,272  
            
Liabilities and            
Stockholders' Equity:          
Interest checking$6,983,013 57,2373.25% $6,601,034 46,7982.84% $6,650,477 19,4751.16%
Money market 5,662,980 42,5162.98%  6,590,615 47,0082.86%  10,914,027 31,7801.16%
Savings 1,163,827 10,2553.50%  733,818 3,6782.01%  649,574 420.03%
Time 7,801,880 95,9744.88%  7,492,094 81,3054.35%  3,000,187 9,9911.32%
Total interest-bearing           
deposits 21,611,700 205,9823.78%  21,417,561 178,7893.35%  21,214,265 61,2881.15%
Borrowings 6,325,537 94,2345.91%  11,439,742 160,9145.64%  505,482 3,0812.42%
Subordinated debt 870,968 15,1396.90%  869,419 14,1096.51%  863,719 10,4944.82%
Total interest-bearing           
liabilities 28,808,205 315,3554.34%  33,726,722 353,8124.21%  22,583,466 74,8631.32%
Noninterest-bearing           
demand deposits 5,817,488    5,968,625    13,653,177  
Other liabilities 701,355    625,610    593,450  
Total liabilities 35,327,048    40,320,957    36,830,093  
Stockholders' equity 2,480,710    2,719,372    4,011,179  
Total liabilities and           
stockholders' equity$37,807,758   $43,040,329   $40,841,272  
Net interest income (1) $130,729   $186,076   $338,558 
Net interest spread (1)  0.60%   1.07%   3.04%
Net interest margin (1)  1.45%   1.82%   3.57%
            
Total deposits (4)$27,429,188$205,9822.98% $27,386,186$178,7892.62% $34,867,442$61,2880.70%
            
(1) Tax equivalent.           
(2) Includes net loan premium amortization of $1.7 million, $1.6 million, and $3.8 million for the three months ended September 30, 2023,
 June 30, 2023, and September 30, 2022, respectively.        
(3) Includes tax-equivalent adjustments of $0.0 million, $0.0 million, and $2.1 million for the three months ended September 30, 2023,
 June 30, 2023, and September 30, 2022 related to tax-exempt income on loans.     
 Includes tax-equivalent adjustments of $0.0 million, $0.0 million, and $1.3 million for the three months ended September 30, 2023,
 June 30, 2023, and September 30, 2022 related to tax-exempt income on investment securities.  
 The federal statutory tax rate utilized was 21%.         
(4) Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is
 calculated as annualized interest expense on total deposits divided by average total deposits.    
            


PACWEST BANCORP AND SUBSIDIARIES        
FIVE QUARTER BALANCE SHEET         
          
 September 30, June 30, March 31, December 31, September 30,
  2023   2023   2023   2022   2022 
 (Dollars in thousands, except per share amounts)
ASSETS:         
Cash and due from banks$182,261  $208,300  $218,830  $212,273  $216,436 
Interest-earning deposits in financial         
institutions 5,887,406   6,489,847   6,461,306   2,027,949   2,244,272 
Total cash and cash equivalents  6,069,667   6,698,147   6,680,136   2,240,222   2,460,708 
          
Securities available-for-sale 4,487,172   4,708,519   4,848,607   4,843,487   5,891,328 
Securities held-to-maturity 2,282,586   2,278,202   2,273,650   2,269,135   2,264,601 
Federal Home Loan Bank stock 17,250   17,250   147,150   34,290   36,990 
   Total investment securities 6,787,008   7,003,971   7,269,407   7,146,912   8,192,919 
          
Loans held for sale 188,866   478,146   2,796,208   65,076   15,534 
          
Gross loans and leases held for investment 21,969,789   22,311,292   25,770,912   28,726,016   27,775,962 
Deferred fees, net (48,843)  (53,082)  (98,531)  (116,887)  (115,921)
Total loans and leases held for         
investment, net of deferred fees 21,920,946   22,258,210   25,672,381   28,609,129   27,660,041 
Allowance for loan and lease losses (222,297)  (219,234)  (210,055)  (200,732)  (189,327)
Total loans and leases held for         
investment, net 21,698,649   22,038,976   25,462,326   28,408,397   27,470,714 
          
Equipment leased to others under         
operating leases 352,330   380,022   399,972   404,245 - 338,691 
Premises and equipment, net 50,236   57,078   60,358   54,315   50,781 
Foreclosed assets, net 6,829   8,426   2,135   5,022   2,967 
Goodwill -   -   -   1,376,736   1,405,736 
Core deposit and customer relationship         
intangibles, net 24,192   26,581   28,970   31,381   34,010 
Deferred tax asset, net 506,248   426,304   342,557   281,848   321,650 
Other assets 1,193,808   1,219,599   1,260,912   1,214,782   1,110,882 
Total assets$36,877,833  $38,337,250  $44,302,981  $41,228,936  $41,404,592 
          
LIABILITIES:         
Noninterest-bearing deposits$5,579,033  $6,055,358  $7,030,759  $11,212,357  $12,775,756 
Interest-bearing deposits 21,019,648   21,841,725   21,156,802   22,723,977   21,420,116 
Total deposits 26,598,681   27,897,083   28,187,561   33,936,334   34,195,872 
Borrowings 6,294,525   6,357,338   11,881,712   1,764,030   1,864,815 
Subordinated debt 870,896   870,378   868,815   867,087   863,379 
Accrued interest payable and other         
liabilities 714,454   679,256   593,416   710,954   604,581 
Total liabilities 34,478,556   35,804,055   41,531,504   37,278,405   37,528,647 
STOCKHOLDERS' EQUITY (1) 2,399,277   2,533,195   2,771,477   3,950,531   3,875,945 
Total liabilities and stockholders’          
equity$36,877,833  $38,337,250  $44,302,981  $41,228,936  $41,404,592 
          
Book value per common share$15.84  $16.93  $18.90  $28.71  $28.07 
Tangible book value per common share (2)$15.64  $16.71  $18.66  $17.00  $16.11 
Common shares outstanding 119,967,984   120,169,012   120,244,214   120,222,057   120,314,023 
          
(1) Includes net unrealized loss on:         
 Securities available-for-sale, net$(691,557) $(583,684) $(537,307) $(586,450) $(637,346)
 Securities held to maturity$(187,275) $(193,058) $(198,753) $(204,453) $(210,868)
(2) Non-GAAP measure.         
          



PACWEST BANCORP AND SUBSIDIARIES         
FIVE QUARTER STATEMENT OF EARNINGS (LOSS)        
          
 Three Months Ended
 September 30, June 30, March 31, December 31, September 30,
  2023   2023   2023   2022   2022 
 (In thousands, except per share amounts)
Interest income:         
Loans and leases$310,392  $408,972  $430,685  $404,985  $346,550 
Investment securities 45,326   44,153   44,237   50,292   53,135 
Deposits in financial institutions 90,366   86,763   42,866   17,746   10,359 
Total interest income 446,084   539,888   517,788   473,023   410,044 
          
Interest expense:         
Deposits 205,982   178,789   155,892   117,591   61,288 
Borrowings 94,234   160,914   69,122   19,962   3,081 
Subordinated debt 15,139   14,109   13,502   12,531   10,494 
Total interest expense 315,355   353,812   238,516   150,084   74,863 
          
Net interest income 130,729   186,076   279,272   322,939   335,181 
Provision for credit losses -   2,000   3,000   10,000   3,000 
Net interest income after provision         
for credit losses 130,729   184,076   276,272   312,939   332,181 
          
Noninterest income:         
Service charges on deposit accounts 4,018   4,315   3,573   3,178   3,608 
Other commissions and fees 7,641   11,241   10,344   11,208   10,034 
Leased equipment income 14,554   22,387   13,857   12,322   12,835 
(Loss) gain on sale of loans and leases (1,901)  (158,881)  2,962   388   58 
(Loss) gain on sale of securities -   -   -   (49,302)  86 
Dividends and gains on equity investments 3,837   2,658   1,098   661   3,228 
Warrant (loss) income (88)  (124)  (333)  (46)  292 
LOCOM HFS adjustment 307   (11,943)  -   -   - 
Other income 15,440   2,265   4,890   2,635   8,478 
Total noninterest income (loss) 43,808   (128,082)  36,391   (18,956)  38,619 
          
Noninterest expense:         
Compensation 71,642   82,881   88,476   106,124   105,933 
Occupancy 15,293   15,383   15,067   14,922   15,574 
Data processing 11,104   10,963   10,938   9,722   9,568 
Other professional services 5,597   9,973   6,073   6,924   10,674 
Insurance and assessments 38,298