PacWest Bancorp Announces Results for the Second Quarter 2018

Highlights

• Net Earnings of $115.7 Million, or $0.92 Per Diluted Share
• Tax Equivalent Net Interest Margin of 5.18%
• New Loan and Lease Production of $1.3 Billion; $430 Million of Net Loan Growth
• Core Deposits at 87% of Total Deposits

LOS ANGELES, July 17, 2018 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq:PACW) today announced net earnings for the second quarter of 2018 of $115.7 million, or $0.92 per diluted share, compared to net earnings for the first quarter of 2018 of $118.3 million, or $0.93 per diluted share.  The decrease in net earnings from the prior quarter was due primarily to a higher provision for credit losses offset partially by higher net interest income and higher noninterest income. 

The provision for credit losses increased by $13.5 million in the second quarter of 2018 compared to the first quarter of 2018 due mainly to higher net charge-offs.  Net interest income increased by $5.8 million in the second quarter of 2018 due mostly to a higher yield on average loans and leases and one more day in the current quarter, partially offset by an increase in the cost of average total deposits and borrowings.     

Matt Wagner, President and CEO, commented, “While the credit provision was higher than expected, we were pleased with the increase in loan and lease production and net loan growth in the second quarter.  The second quarter efficiency ratio improved to 39.8% as a result of higher revenues combined with lower operating expenses. Our second quarter results produced a return on assets of 1.93% and a return on tangible equity of 20.98%.”

Mr. Wagner continued, “Our second quarter tax equivalent NIM increased by seven basis points to 5.18%. While the NIM benefitted from the repricing of variable-rate loans and higher recapture of nonaccrual interest, this was partially offset by higher rates on deposits and higher balances and rates on borrowings.  The growth in loans outstanding and unfunded commitments during the quarter should be a catalyst for increased interest income in the second half of the year.”

FINANCIAL HIGHLIGHTS

	At or For the												At or For the
	Three Months Ended												Six Months Ended
	June 30,				March 31,				Increase				June 30,								Increase
Financial Highlights	2018				2018				(Decrease)				2018				2017				(Decrease)
	(Dollars in thousands, except per share data)
Net earnings	$	115,735			$	118,276			$	(2,541	)		$	234,011			$	172,315			$	61,696
Diluted earnings per share	$	0.92			$	0.93			$	(0.01	)		$	1.85			$	1.42			$	0.43
Return on average assets		1.93	%			1.99	%			(0.06	)			1.96	%			1.59	%			0.37
Return on average
tangible equity (1)		20.98	%			21.08	%			(0.10	)			21.03	%			15.00	%			6.03
Net interest margin ("NIM")
(tax equivalent)		5.18	%			5.11	%			0.07				5.15	%			5.19	%			(0.04	)
Yield on average loans and
leases (tax equivalent)		6.30	%			6.11	%			0.19				6.21	%			6.01	%			0.20
Cost of average total deposits		0.37	%			0.31	%			0.06				0.34	%			0.23	%			0.11
Efficiency ratio		39.8	%			41.7	%			(1.9	)			40.7	%			40.8	%			(0.1	)
Total assets	$	24,529,557			$	24,149,330			$	380,227			$	24,529,557			$	22,246,877			$	2,282,680
Loans and leases held
for investment,
net of deferred fees	$	16,885,192			$	16,455,285			$	429,907			$	16,885,192			$	15,543,457			$	1,341,735
Noninterest-bearing deposits	$	8,126,153			$	8,232,140			$	(105,987	)		$	8,126,153			$	6,701,039			$	1,425,114
Core deposits	$	15,586,238			$	15,661,529			$	(75,291	)		$	15,586,238			$	13,217,574			$	2,368,664
Total deposits	$	17,929,192			$	18,078,788			$	(149,596	)		$	17,929,192			$	16,874,977			$	1,054,215
Noninterest-bearing
deposits as percentage
of total deposits		45	%			46	%			(1	)			45	%			40	%			5
Core deposits as
percentage of total
deposits		87	%			87	%			-				87	%			78	%			9
Equity to assets ratio		19.48	%			20.16	%			(0.68	)			19.48	%			20.50	%			(1.02	)
Tangible common equity
ratio (1)		9.86	%			10.43	%			(0.57	)			9.86	%			11.75	%			(1.89	)
Book value per share	$	38.36			$	38.47			$	(0.11	)		$	38.36			$	37.55			$	0.81
Tangible book value per
share (1)	$	17.35			$	17.75			$	(0.40	)		$	17.35			$	19.40			$	(2.05	)
(1) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income increased by $5.8 million to $262.3 million for the second quarter of 2018 compared to $256.5 million for the first quarter of 2018 due mainly to a higher yield on average loans and leases and one additional day in the second quarter.  The tax equivalent yield on average loans and leases was 6.30% for the second quarter of 2018 compared to 6.11% for the first quarter of 2018. The increase in the yield on average loans and leases was due principally to higher coupon interest (15 basis points) and higher recapture of nonaccrual interest (four basis points).    

The tax equivalent NIM was 5.18% for the second quarter of 2018 compared to 5.11% for the first quarter of 2018.  The increase in the NIM was due mainly to the higher yield on average loans and leases resulting from higher loan coupon interest and higher recapture of nonaccrual interest, which was partially offset by an increase of six basis points in the cost of average total deposits.          

The cost of average total deposits increased to 0.37% for the second quarter of 2018 from 0.31% for the first quarter of 2018 due to higher rates paid for non-core deposits and pricing adjustments for select customers in light of recent market rate increases and the competitive market environment.  

Provision for Credit Losses

A provision for credit losses of $17.5 million was recorded in the second quarter of 2018 compared to $4.0 million in the first quarter of 2018, which benefitted from higher than normal recoveries of $7.2 million.  The higher provision for the second quarter of 2018 was due mainly to higher net charge-offs. The allowance for credit losses as a percentage of loans and leases held for investment decreased to 0.99% at June 30, 2018 from 1.02% at March 31, 2018.

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

	Three Months Ended
	June 30,			March 31,				Increase
Provision for Credit Losses	2018			2018				(Decrease)
	(In thousands)
Addition to (reduction in) allowance for loan
and lease losses	$	15,000		$	(226	)		$	15,226
Addition to (reduction in) reserve for unfunded
loan commitments		2,500			4,226				(1,726	)
Total provision for credit losses	$	17,500		$	4,000			$	13,500

Noninterest Income

Noninterest income increased by $1.1 million to $39.6 million for the second quarter of 2018 compared to $38.6 million for the first quarter of 2018 due mainly to increases in all income categories except for the gain on sale of securities and the gain on sale of loans and leases, as sale activities were minimal in the second quarter.  The significant increase in other income was attributable to $7.5 million of gains on early lease terminations.

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

	Three Months Ended
	June 30,			March 31,			Increase
Noninterest Income	2018			2018			(Decrease)
	(In thousands)
Service charges on deposit accounts	$	4,265		$	4,174		$	91
Other commissions and fees		11,767			10,265			1,502
Leased equipment income		9,790			9,587			203
Gain on sale of loans and leases		106			4,569			(4,463	)
Gain on sale of securities		253			6,311			(6,058	)
Other income:
Dividends and gains on equity investments		1,992			251			1,741
Warrant income		1,225			248			977
Other		10,240			3,154			7,086
Total noninterest income	$	39,638		$	38,559		$	1,079

Noninterest Expense

Noninterest expense decreased by $0.9 million to $126.4 million for the second quarter of 2018 compared to $127.4 million for the first quarter of 2018 attributable primarily to a $1.1 million decrease in compensation expense due mainly to lower payroll taxes.

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

	Three Months Ended
	June 30,				March 31,				Increase
Noninterest Expense	2018				2018				(Decrease)
	(In thousands)
Compensation	$	69,913			$	71,023			$	(1,110	)
Occupancy		13,575				13,223				352
Data processing		6,896				6,659				237
Other professional services		5,257				4,439				818
Insurance and assessments		5,330				5,727				(397	)
Intangible asset amortization		5,587				6,346				(759	)
Leased equipment depreciation		5,237				5,375				(138	)
Foreclosed assets income, net		(61	)			(122	)			61
Loan expense		3,058				2,271				787
Other		11,657				12,454				(797	)
Total noninterest expense	$	126,449			$	127,395			$	(946	)

Income Taxes

The overall effective income tax rate was 26.8% for the second quarter of 2018 and 27.7% for the first quarter of 2018.  The effective tax rate for the full year 2018 is estimated to be approximately 28%.

BALANCE SHEET HIGHLIGHTS

Loans and Leases

Loans and leases held for investment, net of deferred fees, increased by $429.9 million in the second quarter of 2018 to $16.9 billion at June 30, 2018.  The net increase was driven mainly by new production of $1.3 billion and disbursements of $1.2 billion, offset partially by payoffs of $1.2 billion, paydowns of $829.1 million, and sales of $27.8 million.

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

	Three Months								Six Months
	Ended								Ended
Loans and Leases	June 30,				March 31,				June 30,
Held for Investment Roll Forward (1)	2018				2018				2018
	(Dollars in thousands)
Balance, beginning of period	$	16,455,285			$	16,972,743			$	16,972,743
New production		1,256,559				744,918				2,001,477
Existing loans and leases:
Payoffs		(1,154,400	)			(930,973	)			(2,085,373	)
Paydowns		(829,119	)			(936,002	)			(1,765,121	)
Disbursements		1,203,940				747,376				1,951,316
Sales		(27,779	)			(130,624	)			(158,403	)
Transfers to foreclosed assets		(1,059	)			-				(1,059	)
Charge-offs		(18,235	)			(12,153	)			(30,388	)
Balance, end of period	$	16,885,192			$	16,455,285			$	16,885,192
Weighted average rate on new production (2)		5.00	%			5.36	%			5.13	%
(1) Includes direct financing leases but excludes equipment leased to others under operating leases.
(2) The weighted average rate on new production presents contractual rates and does not include
amortized fees.  Amortized fees added approximately 31 basis points to loan yields in 2018.

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

	June 30,			March 31,			December 31,			June 30,
Loan and Lease Portfolio	2018			2018			2017			2017
	(In thousands)
Real estate mortgage:
Commercial	$	5,010,680		$	5,033,006		$	5,385,740		$	4,418,463
Residential		2,555,695			2,521,237			2,466,894			1,719,269
Total real estate mortgage		7,566,375			7,554,243			7,852,634			6,137,732
Real estate construction and land:
Commercial		831,462			789,892			769,075			691,828
Residential		1,042,564			887,110			822,154			473,282
Total real estate construction and land		1,874,026			1,677,002			1,591,229			1,165,110
Total real estate		9,440,401			9,231,245			9,443,863			7,302,842
Commercial:
Asset-based		3,184,300			2,957,890			2,924,950			2,655,762
Venture capital		2,008,205			1,920,643			2,122,735			2,001,427
Other commercial		1,873,607			1,947,590			2,071,394			3,184,957
Total commercial		7,066,112			6,826,123			7,119,079			7,842,146
Consumer		378,679			397,917			409,801			398,469
Total loans and leases held for
investment, net of deferred fees (1)	$	16,885,192		$	16,455,285		$	16,972,743		$	15,543,457
Total unfunded loan commitments	$	6,429,587		$	6,352,803		$	6,234,061		$	4,926,743
(1) Excludes loans held for sale carried at lower of cost or fair value at December 31, 2017 and June 30, 2017.

Allowance for Credit Losses

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

	Three Months Ended June 30, 2018
	Allowance for				Reserve for			Total
Allowance for Credit	Loan and				Unfunded Loan			Allowance for
Losses Rollforward	Lease Losses				Commitments			Credit Losses
	(In thousands)
Beginning balance	$	134,275			$	32,861		$	167,136
Charge-offs		(18,235	)			-			(18,235	)
Recoveries		1,099				-			1,099
Net charge-offs		(17,136	)			-			(17,136	)
Provision		15,000				2,500			17,500
Ending balance	$	132,139			$	35,361		$	167,500

	Three Months Ended March 31, 2018
	Allowance for				Reserve for			Total
Allowance for Credit	Loan and				Unfunded Loan			Allowance for
Losses Rollforward	Lease Losses				Commitments			Credit Losses
	(In thousands)
Beginning balance	$	139,456			$	28,635		$	168,091
Charge-offs		(12,153	)			-			(12,153	)
Recoveries		7,198				-			7,198
Net charge-offs		(4,955	)			-			(4,955	)
Provision		(226	)			4,226			4,000
Ending balance	$	134,275			$	32,861		$	167,136

Gross charge-offs for the second quarter of 2018 were $18.2 million and included $6.1 million for venture capital loans, $4.7 million for real estate mortgage loans, $4.4 million for other commercial loans and $2.9 million for asset-based loans. Gross charge-offs for the first quarter of 2018 were $12.2 million and included $6.8 million for other commercial loans, $2.6 million for real estate mortgage loans, and $2.3 million for venture capital loans.  Four loans accounted for $14.2 million or 78 percent of the gross charge-offs in the second quarter of 2018. Recoveries in the second quarter of 2018 were $1.1 million and included $0.8 million for other commercial loans. Recoveries for the first quarter of 2018 were $7.2 million and included $4.6 million for venture capital loans.    

The annualized ratio of net charge-offs to average loans was 0.41% for the second quarter of 2018 and 0.12% for the first quarter of 2018.

Deposits and Client Investment Funds

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

	June 30,				March 31,				December 31,				June 30,
Deposit Category	2018				2018				2017				2017
	(Dollars in thousands)
Noninterest-bearing demand deposits	$	8,126,153			$	8,232,140			$	8,508,044			$	6,701,039
Interest checking deposits		2,184,785				2,076,152				2,226,885				1,762,016
Money market deposits		4,631,658				4,676,734				4,511,730				4,033,471
Savings deposits		643,642				676,503				690,353				721,048
Total core deposits		15,586,238				15,661,529				15,937,012				13,217,574
Non-core non-maturity deposits		607,388				585,399				863,202				1,329,324
Total non-maturity deposits		16,193,626				16,246,928				16,800,214				14,546,898
Time deposits $250,000 and under		1,394,117				1,482,118				1,709,980				1,940,872
Time deposits over $250,000		341,449				349,742				355,342				387,207
Total time deposits		1,735,566				1,831,860				2,065,322				2,328,079
Total deposits	$	17,929,192			$	18,078,788			$	18,865,536			$	16,874,977
Noninterest-bearing demand deposits
as percentage of total deposits		45	%			46	%			45	%			40	%
Core deposits as percentage of total deposits		87	%			87	%			85	%			78	%

At June 30, 2018, core deposits totaled $15.6 billion, or 87% of total deposits, including $8.1 billion of noninterest-bearing demand deposits, or 45% of total deposits.    

In addition to deposit products, we also offer alternative non-depository cash investment options for select clients; these alternatives include investments managed by Square 1 Asset Management, Inc. (“S1AM”), our registered investment advisor subsidiary, and third-party sweep products.  Total off-balance sheet client investment funds at June 30, 2018 were $2.5 billion, of which $1.7 billion was managed by S1AM.

CREDIT QUALITY  

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

	June 30,				March 31,				Increase
Credit Quality Metrics	2018				2018				(Decrease)
	(Dollars in thousands)
Nonaccrual loans and leases held for investment (1)	$	113,745			$	103,725			$	10,020
Accruing loan contractually past due
90 days or more		-				500				(500	)
Foreclosed assets, net		2,231				1,236				995
Total nonperforming assets	$	115,976			$	105,461			$	10,515
Nonaccrual loans and leases held for investment (1)	$	113,745			$	103,725			$	10,020
Performing troubled debt restructured loans
held for investment		58,148				60,173				(2,025	)
Total impaired loans and leases	$	171,893			$	163,898			$	7,995
Pass	$	16,142,052			$	15,832,127			$	309,925
Special mention		506,848				415,116				91,732
Classified		236,292				208,042				28,250
Total loans and leases held for investment,
net of deferred fees	$	16,885,192			$	16,455,285			$	429,907
Allowance for credit losses	$	167,500			$	167,136			$	364
Provision for credit losses (for the quarter)	$	17,500			$	4,000			$	13,500
Net charge-offs (for the quarter)	$	17,136			$	4,955			$	12,181
Net charge-offs to average loans and leases
(for the quarter)		0.41	%			0.12	%
Allowance for credit losses to loans and leases
held for investment		0.99	%			1.02	%
Allowance for credit losses to nonaccrual loans
and leases held for investment		147.3	%			161.1	%
Nonaccrual loans and leases held for investment
to loans and leases held for investment		0.67	%			0.63	%
Nonperforming assets to loans and leases
held for investment and foreclosed assets		0.69	%			0.64	%
Classified loans and leases held for investment
to loans and leases held for investment		1.40	%			1.26	%
(1) Nonaccrual loans include guaranteed amounts of $13.5 million and $13.4 million at June 30, 2018
and March 31, 2018.

Nonaccrual loans and leases increased by $10.0 million in the second quarter primarily due to a $14.0 million increase in nonaccrual commercial real estate loans and a $10.5 million increase in nonaccrual residential construction loans, partially offset by a $15.7 million decrease in nonaccrual other commercial loans. Classified loans and leases increased by $28.3 million in the second quarter primarily due to a $26.4 million increase in classified commercial real estate loans, a $22.9 million increase in classified venture capital loans, and a $10.5 million increase in classified residential construction loans, partially offset by a $16.0 million decrease in classified other commercial loans and a $14.5 million decrease in classified asset-based loans.

The following table presents 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										Accruing and
	June 30, 2018					March 31, 2018					30-89 Days Past Due
			% of					% of			June 30,			March 31,
			Loan					Loan			2018			2018
	Amount		Category			Amount		Category			Amount			Amount
	(Dollars in thousands)
Real estate mortgage:
Commercial	$	33,105	0.7	%		$	19,116	0.4	%		$	2,620		$	23,505
Residential		3,527	0.1	%			5,225	0.2	%			2,983			708
Total real estate mortgage		36,632	0.5	%			24,341	0.3	%			5,603			24,213
Real estate construction and land:
Commercial		-	0.0	%			-	0.0	%			-			-
Residential		10,450	1.0	%			-	0.0	%			5,969			2,605
Total real estate
construction and land		10,450	0.6	%			-	0.0	%			5,969			2,605
Commercial:
Asset-based		29,677	0.9	%			32,838	1.1	%			-			-
Venture capital		27,940	1.4	%			21,861	1.1	%			-			-
Other commercial		8,782	0.5	%			24,434	1.3	%			230			663
Total commercial		66,399	0.9	%			79,133	1.2	%			230			663
Consumer		264	0.1	%			251	0.1	%			75			1,000
Total held for investment	$	113,745	0.7	%		$	103,725	0.6	%		$	11,877		$	28,481

STOCK REPURCHASE PROGRAM

During the second quarter of 2018, we repurchased 2,286,881 shares at an average price of $53.36 and a total cost of $122.0 million.  At June 30, 2018, the remaining amount that could be used to repurchase shares under the $350 million Stock Repurchase Program was $174.7 million.

ABOUT PACWEST BANCORP

PacWest Bancorp (“PacWest”) is a bank holding company with over $24 billion in assets with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). The Bank has 74 full-service branches located throughout the state of California and one branch in Durham, North Carolina. Our Community Banking group provides lending and comprehensive deposit and treasury management services to small and medium-sized businesses conducted primarily through our California-based branch offices. We offer additional products and services through our National Lending and Venture Banking business groups. National Lending provides asset-based, equipment, real estate and security cash flow loans and treasury management services to established middle-market businesses on a national basis. Venture Banking offers a comprehensive suite of financial services focused on entrepreneurial businesses and their venture capital and private equity investors, with offices located in key innovative hubs across the United States.  For more information about PacWest Bancorp, visit www.pacwestbancorp.com, or to learn more about Pacific Western Bank, visit www.pacificwesternbank.com.

FORWARD LOOKING STATEMENTS

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include future financial and operating results, expectations, intentions and other statements that are not historical facts such as our future effective tax rate. Such statements are based on information available at the time of this communication and are based on current beliefs and expectations of the Company’s management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those set forth in the forward-looking statements due to a variety of factors, including the risk factors described in documents filed by the Company with the Securities and Exchange Commission.

We are under no obligation (and expressly disclaim any such obligation) to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
	June 30,				March 31,				December 31,
	2018				2018				2017
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	245,998			$	235,061			$	233,215
Interest-earning deposits in financial institutions		205,567				312,735				165,222
Total cash and cash equivalents		451,565				547,796				398,437
Securities available-for-sale, at estimated fair value		3,857,788				3,801,986				3,774,431
Federal Home Loan Bank stock, at cost		26,271				17,250				20,790
Total investment securities		3,884,059				3,819,236				3,795,221
Loans held for sale		-				-				481,100
Gross loans and leases held for investment		16,947,502				16,516,627				17,032,221
Deferred fees, net		(62,310	)			(61,342	)			(59,478	)
Loans and leases held for investment,
net of deferred fees		16,885,192				16,455,285				16,972,743
Allowance for loan and lease losses		(132,139	)			(134,275	)			(139,456	)
Total loans and leases held for investment, net		16,753,053				16,321,010				16,833,287
Equipment leased to others under operating leases		266,576				280,648				284,631
Premises and equipment, net		34,513				33,686				31,852
Foreclosed assets, net		2,231				1,236				1,329
Deferred tax asset, net		25,551				12,584				-
Goodwill		2,548,670				2,548,670				2,548,670
Core deposit and customer relationship intangibles, net		67,693				73,280				79,626
Other assets		495,646				511,184				540,723
Total assets	$	24,529,557			$	24,149,330			$	24,994,876
LIABILITIES:
Noninterest-bearing deposits	$	8,126,153			$	8,232,140			$	8,508,044
Interest-bearing deposits		9,803,039				9,846,648				10,357,492
Total deposits		17,929,192				18,078,788				18,865,536
Borrowings		1,187,226				575,284				467,342
Subordinated debentures		451,878				452,223				462,437
Accrued interest payable and other liabilities		183,302				175,545				221,963
Total liabilities		19,751,598				19,281,840				20,017,278
STOCKHOLDERS' EQUITY (1)		4,777,959				4,867,490				4,977,598
Total liabilities and stockholders’ equity	$	24,529,557			$	24,149,330			$	24,994,876
Book value per share	$	38.36			$	38.47			$	38.65
Tangible book value per share (2)	$	17.35			$	17.75			$	18.24
Shares outstanding		124,567,950				126,537,871				128,782,878
(1) Includes net unrealized (loss) gain on securities
available-for-sale, net	$	(22,340	)		$	(11,936	)		$	31,171
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
	Three Months Ended												Six Months Ended
	June 30,				March 31,				June 30,				June 30,
	2018				2018				2017				2018				2017
	(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	260,300			$	251,085			$	234,618			$	511,385			$	458,796
Investment securities		27,730				26,138				24,689				53,868				47,728
Deposits in financial institutions		484				552				237				1,036				429
Total interest income		288,514				277,775				259,544				566,289				506,953
Interest expense:
Deposits		16,367				13,818				10,205				30,185				18,582
Borrowings		2,649				920				1,066				3,569				2,084
Subordinated debentures		7,166				6,537				5,800				13,703				11,362
Total interest expense		26,182				21,275				17,071				47,457				32,028
Net interest income		262,332				256,500				242,473				518,832				474,925
Provision for credit losses		17,500				4,000				11,499				21,500				36,227
Net interest income after provision
for credit losses		244,832				252,500				230,974				497,332				438,698
Noninterest income:
Service charges on deposit accounts		4,265				4,174				3,510				8,439				7,268
Other commissions and fees		11,767				10,265				10,583				22,032				20,973
Leased equipment income		9,790				9,587				11,635				19,377				21,110
Gain on sale of loans and leases		106				4,569				649				4,675				1,361
Gain on sale of securities		253				6,311				1,651				6,564				1,552
Other income		13,457				3,653				7,254				17,110				18,132
Total noninterest income		39,638				38,559				35,282				78,197				70,396
Noninterest expense:
Compensation		69,913				71,023				65,288				140,936				130,168
Occupancy		13,575				13,223				11,811				26,798				23,419
Data processing		6,896				6,659				6,337				13,555				13,352
Other professional services		5,257				4,439				3,976				9,696				7,354
Insurance and assessments		5,330				5,727				4,856				11,057				9,647
Intangible asset amortization		5,587				6,346				3,065				11,933				6,129
Leased equipment depreciation		5,237				5,375				5,232				10,612				10,857
Foreclosed assets income, net		(61	)			(122	)			(157	)			(183	)			(14	)
Acquisition, integration and
reorganization costs		-				-				1,700				-				2,200
Loan expense		3,058				2,271				3,884				5,329				7,271
Other expense		11,657				12,454				11,715				24,111				23,868
Total noninterest expense		126,449				127,395				117,707				253,844				234,251
Earnings before income taxes		158,021				163,664				148,549				321,685				274,843
Income tax expense		(42,286	)			(45,388	)			(54,902	)			(87,674	)			(102,528	)
Net earnings	$	115,735			$	118,276			$	93,647			$	234,011			$	172,315
Basic and diluted earnings per share	$	0.92			$	0.93			$	0.77			$	1.85			$	1.42

PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS PER SHARE CALCULATIONS
	Three Months Ended												Six Months Ended
	June 30,				March 31,				June 30,				June 30,
	2018				2018				2017				2018				2017
	(In thousands, except per share data)
Basic Earnings Per Share:
Net earnings	$	115,735			$	118,276			$	93,647			$	234,011			$	172,315
Less: earnings allocated to unvested
restricted stock (1)		(1,348	)			(1,115	)			(1,080	)			(2,469	)			(2,082	)
Net earnings allocated to common
shares	$	114,387			$	117,161			$	92,567			$	231,542			$	170,233
Weighted-average basic shares and
unvested restricted stock outstanding		126,082				127,487				121,422				126,780				121,384
Less: weighted-average unvested
restricted stock outstanding		(1,466	)			(1,413	)			(1,455	)			(1,439	)			(1,479	)
Weighted-average basic shares
outstanding		124,616				126,074				119,967				125,341				119,905
Basic earnings per share	$	0.92			$	0.93			$	0.77			$	1.85			$	1.42
Diluted Earnings Per Share:
Net earnings allocated to common
shares	$	114,387			$	117,161			$	92,567			$	231,542			$	170,233
Weighted-average basic shares
outstanding		124,616				126,074				119,967				125,341				119,905
Diluted earnings per share	$	0.92			$	0.93			$	0.77			$	1.85			$	1.42
(1) Represents cash dividends paid to holders of unvested stock, net of forfeitures, plus
undistributed earnings amounts available to holders of unvested restricted stock, if any.

PACWEST BANCORP AND SUBSIDIARIES
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
	Three Months Ended
	June 30, 2018							March 31, 2018							June 30, 2017
			Interest		Average					Interest		Average					Interest		Average
	Average		Income/		Yield/			Average		Income/		Yield/			Average		Income/		Yield/
	Balance		Expense		Cost			Balance		Expense		Cost			Balance		Expense		Cost
	(Dollars in thousands)
Assets:
Loans and leases (1)(2)	$	16,576,361	$	260,529	6.30	%		$	16,682,124	$	251,260	6.11	%		$	15,497,921	$	234,618	6.07	%
Investment securities (3)		3,803,590		29,967	3.16	%			3,682,138		27,935	3.08	%			3,436,785		29,538	3.45	%
Deposits in financial
institutions		112,170		484	1.73	%			150,674		552	1.49	%			96,087		237	0.99	%
Total interest-earning
assets (4)		20,492,121		290,980	5.70	%			20,514,936		279,747	5.53	%			19,030,793		264,393	5.57	%
Other assets		3,507,516							3,556,212							2,905,809
Total assets	$	23,999,637						$	24,071,148						$	21,936,602
Liabilities and
Stockholders' Equity:
Interest checking	$	2,243,767		3,932	0.70	%		$	2,311,988		3,050	0.54	%		$	1,709,699		1,697	0.40	%
Money market		5,013,119		8,072	0.65	%			5,038,119		6,812	0.55	%			4,907,865		4,993	0.41	%
Savings		656,310		245	0.15	%			685,173		258	0.15	%			708,389		296	0.17	%
Time		1,790,415		4,118	0.92	%			1,923,963		3,698	0.78	%			2,366,399		3,219	0.55	%
Total interest-bearing
deposits		9,703,611		16,367	0.68	%			9,959,243		13,818	0.56	%			9,692,352		10,205	0.42	%
Borrowings		549,665		2,649	1.93	%			239,293		920	1.56	%			457,774		1,066	0.93	%
Subordinated debentures		451,973		7,166	6.36	%			461,648		6,537	5.74	%			443,756		5,800	5.24	%
Total interest-bearing
liabilities		10,705,249		26,182	0.98	%			10,660,184		21,275	0.81	%			10,593,882		17,071	0.65	%
Noninterest-bearing
demand deposits		8,253,413							8,311,104							6,646,349
Other liabilities		208,495							198,653							151,095
Total liabilities		19,167,157							19,169,941							17,391,326
Stockholders' equity		4,832,480							4,901,207							4,545,276
Total liabilities and
stockholders' equity	$	23,999,637						$	24,071,148						$	21,936,602
Net interest income (4)			$	264,798						$	258,472						$	247,322
Net interest spread (4)					4.72	%						4.72	%						4.92	%
Net interest margin (4)					5.18	%						5.11	%						5.21	%
Total deposits (5)	$	17,957,024	$	16,367	0.37	%		$	18,270,347	$	13,818	0.31	%		$	16,338,701	$	10,205	0.25	%
Funding sources (6)	$	18,958,662	$	26,182	0.55	%		$	18,971,288	$	21,275	0.45	%		$	17,240,231	$	17,071	0.40	%
(1) Starting with the third quarter of 2017, includes tax-equivalent adjustments related to tax-exempt interest on loans.
(2) Includes discount accretion on acquired loans of $8.7 million, $7.6 million, and $7.5 million for the three months ended June 30, 2018,
March 31, 2018, and June 30, 2017, respectively.
(3) Includes tax-equivalent adjustments of $2.1 million, $1.8 million, and $4.9 million for the three months ended June 30, 2018,
March 31, 2018, and June 30, 2017 related to tax-exempt income on municipal securities.  The federal statutory tax-rate utilized
was 21% for the 2018 periods and 35% for the 2017 period.
(4) Tax equivalent.
(5) Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits.  The cost of total deposits is calculated
as annualized interest expense on deposits divided by average total deposits.
(6) Funding sources is the sum of total interest-bearing liabilities and noninterest-bearing demand deposits. The cost of funding sources is
calculated as annualized total interest expense divided by average funding sources.

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER BALANCE SHEET
	June 30,				March 31,				December 31,				September 30,				June 30,
	2018				2018				2017				2017				2017
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	245,998			$	235,061			$	233,215			$	147,579			$	180,330
Interest-earning deposits in financial
institutions		205,567				312,735				165,222				122,439				107,150
Total cash and cash equivalents		451,565				547,796				398,437				270,018				287,480
Securities available-for-sale		3,857,788				3,801,986				3,774,431				3,532,230				3,474,560
Federal Home Loan Bank stock		26,271				17,250				20,790				17,250				22,059
Total investment securities		3,884,059				3,819,236				3,795,221				3,549,480				3,496,619
Loans held for sale		-				-				481,100				-				175,158
Gross loans and leases held for
investment		16,947,502				16,516,627				17,032,221				15,756,285				15,609,180
Deferred fees, net		(62,310	)			(61,342	)			(59,478	)			(65,768	)			(65,723	)
Loans and leases held for
investment, net of deferred fees		16,885,192				16,455,285				16,972,743				15,690,517				15,543,457
Allowance for loan and lease losses		(132,139	)			(134,275	)			(139,456	)			(159,606	)			(145,958	)
Total loans and leases held for
investment, net		16,753,053				16,321,010				16,833,287				15,530,911				15,397,499
Equipment leased to others under
operating leases		266,576				280,648				284,631				233,866				203,212
Premises and equipment, net		34,513				33,686				31,852				28,910				29,108
Foreclosed assets, net		2,231				1,236				1,329				11,630				13,278
Deferred tax asset, net		25,551				12,584				-				65,321				70,354
Goodwill		2,548,670				2,548,670				2,548,670				2,173,949				2,173,949
Core deposit and customer
relationship intangibles, net		67,693				73,280				79,626				27,188				30,237
Other assets		495,646				511,184				540,723				351,659				369,983
Total assets	$	24,529,557			$	24,149,330			$	24,994,876			$	22,242,932			$	22,246,877
LIABILITIES:
Noninterest-bearing deposits	$	8,126,153			$	8,232,140			$	8,508,044			$	6,911,874			$	6,701,039
Interest-bearing deposits		9,803,039				9,846,648				10,357,492				9,861,371				10,173,938
Total deposits		17,929,192				18,078,788				18,865,536				16,773,245				16,874,977
Borrowings		1,187,226				575,284				467,342				250,399				217,454
Subordinated debentures		451,878				452,223				462,437				448,126				445,743
Accrued interest payable and other
liabilities		183,302				175,545				221,963				160,494				148,798
Total liabilities		19,751,598				19,281,840				20,017,278				17,632,264				17,686,972
STOCKHOLDERS' EQUITY (1)		4,777,959				4,867,490				4,977,598				4,610,668				4,559,905
Total liabilities and stockholders’
equity	$	24,529,557			$	24,149,330			$	24,994,876			$	22,242,932			$	22,246,877
Book value per share	$	38.36			$	38.47			$	38.65			$	37.96			$	37.55
Tangible book value per share (2)	$	17.35			$	17.75			$	18.24			$	19.84			$	19.40
Shares outstanding		124,567,950				126,537,871				128,782,878				121,449,794				121,448,321
(1) Includes net unrealized (loss) gain on
securities available-for-sale, net	$	(22,340	)		$	(11,936	)		$	31,171			$	33,613			$	29,729
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER STATEMENT OF EARNINGS
	Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
	2018				2018				2017				2017				2017
	(Dollars in thousands, except per share data)
Interest income:
Loans and leases	$	260,300			$	251,085			$	258,309			$	235,666			$	234,618
Investment securities		27,730				26,138				25,712				24,762				24,689
Deposits in financial institutions		484				552				576				538				237
Total interest income		288,514				277,775				284,597				260,966				259,544
Interest expense:
Deposits		16,367				13,818				14,041				13,071				10,205
Borrowings		2,649				920				1,366				188				1,066
Subordinated debentures		7,166				6,537				6,234				6,017				5,800
Total interest expense		26,182				21,275				21,641				19,276				17,071
Net interest income		262,332				256,500				262,956				241,690				242,473
Provision for credit losses		17,500				4,000				6,406				15,119				11,499
Net interest income after provision
for credit losses		244,832				252,500				256,550				226,571				230,974
Noninterest income:
Service charges on deposit accounts		4,265				4,174				4,574				3,465				3,510
Other commissions and fees		11,767				10,265				10,505				9,944				10,583
Leased equipment income		9,790				9,587				8,258				8,332				11,635
Gain on sale of loans and leases		106				4,569				1,988				2,848				649
Gain (loss) on sale of securities		253				6,311				(3,329	)			1,236				1,651
Other income		13,457				3,653				4,799				5,557				7,254
Total noninterest income		39,638				38,559				26,795				31,382				35,282
Noninterest expense:
Compensation		69,913				71,023				71,986				64,413				65,288
Occupancy		13,575				13,223				12,715				12,729				11,811
Data processing		6,896				6,659				6,764				6,459				6,337
Other professional services		5,257				4,439				5,786				4,213				3,976
Insurance and assessments		5,330				5,727				5,384				4,702				4,856
Intangible asset amortization		5,587				6,346				5,062				3,049				3,065
Leased equipment depreciation		5,237				5,375				5,048				4,862				5,232
Foreclosed assets (income) expense, net		(61	)			(122	)			(475	)			2,191				(157	)
Acquisition, integration and
reorganization costs		-				-				16,085				1,450				1,700
Loan expense		3,058				2,271				3,140				3,421				3,884
Other expense		11,657				12,454				11,373				11,053				11,715
Total noninterest expense		126,449				127,395				142,868				118,542				117,707
Earnings before income taxes		158,021				163,664				140,477				139,411				148,549
Income tax expense		(42,286	)			(45,388	)			(56,440	)			(37,945	)			(54,902	)
Net earnings	$	115,735			$	118,276			$	84,037			$	101,466			$	93,647
Basic and diluted earnings per share	$	0.92			$	0.93			$	0.66			$	0.84			$	0.77

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
	At or For the Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
	2018				2018				2017				2017				2017
	(Dollars in thousands)
Performance Ratios:
Return on average assets (1)		1.93	%			1.99	%			1.34	%			1.82	%			1.71	%
Return on average equity (1)		9.61	%			9.79	%			6.78	%			8.77	%			8.26	%
Return on average tangible equity (1)(2)		20.98	%			21.08	%			13.75	%			16.85	%			16.06	%
Yield on average loans and leases (1)(3)		6.30	%			6.11	%			5.89	%			6.01	%			6.07	%
Yield on average interest-earning
assets (1)(4)		5.70	%			5.53	%			5.37	%			5.48	%			5.57	%
Cost of average total deposits (1)		0.37	%			0.31	%			0.30	%			0.31	%			0.25	%
Cost of average time deposits (1)		0.92	%			0.78	%			0.68	%			0.62	%			0.55	%
Cost of average interest-bearing
liabilities (1)		0.98	%			0.81	%			0.75	%			0.73	%			0.65	%
Cost of average funding sources (1)		0.55	%			0.45	%			0.44	%			0.44	%			0.40	%
Net interest spread (1)(4)		4.72	%			4.72	%			4.62	%			4.75	%			4.92	%
Net interest margin (1)(4)		5.18	%			5.11	%			4.97	%			5.08	%			5.21	%
Efficiency ratio		39.8	%			41.7	%			41.0	%			40.4	%			40.3	%
Noninterest expense as a percentage
of average assets (1)		2.11	%			2.15	%			2.29	%			2.12	%			2.15	%
Average Balances:
Loans and leases, net of deferred fees	$	16,576,361			$	16,682,124			$	17,426,873			$	15,575,030			$	15,497,921
Interest-earning assets		20,492,121				20,514,936				21,414,180				19,257,441				19,030,793
Total assets		23,999,637				24,071,148				24,789,836				22,137,874				21,936,602
Noninterest-bearing deposits		8,253,413				8,311,104				8,190,134				6,858,816				6,646,349
Interest-bearing deposits		9,703,611				9,959,243				10,578,568				10,024,554				9,692,352
Total deposits		17,957,024				18,270,347				18,768,702				16,883,370				16,338,701
Borrowings and subordinated
debentures		1,001,638				700,941				903,375				508,083				901,530
Interest-bearing liabilities		10,705,249				10,660,184				11,481,943				10,532,637				10,593,882
Funding sources		18,958,662				18,971,288				19,672,077				17,391,453				17,240,231
Stockholders' equity		4,832,480				4,901,207				4,920,498				4,592,489				4,545,276
(1) Annualized.
(2) Non-GAAP measure.
(3) Tax equivalent starting with the third quarter of 2017.
(4) Tax equivalent.

PACWEST BANCORP AND SUBSIDIARIES
FIVE QUARTER SELECTED FINANCIAL DATA
	At or For the Three Months Ended
	June 30,				March 31,				December 31,				September 30,				June 30,
	2018				2018				2017				2017				2017
	(Dollars in thousands)
Credit Quality Ratios (1):
Allowance for credit losses to loans
and leases held for investment		0.99	%			1.02	%			0.96	%			1.11	%			1.03	%
Allowance for credit losses to
nonaccrual loans and leases held
for investment		147.3	%			161.1	%			103.8	%			110.1	%			92.2	%
Nonaccrual loans and leases held for
investment to loans and leases held
for investment		0.67	%			0.63	%			0.92	%			1.01	%			1.12	%
Nonperforming assets to loans and
leases held for investment and
foreclosed assets		0.69	%			0.64	%			0.93	%			1.08	%			1.20	%
Nonperforming assets to total assets		0.47	%			0.44	%			0.63	%			0.76	%			0.84	%
Trailing 12 months net charge-offs
to average loans and leases
held for investment		0.28	%			0.31	%			0.40	%			0.35	%			0.37	%
PacWest Bancorp Consolidated
Capital:
Tier 1 leverage ratio (2)		10.33	%			10.66	%			10.66	%			12.02	%			11.90	%
Common equity tier 1 capital ratio (2)		10.61	%			11.16	%			10.91	%			12.52	%			12.28	%
Tier 1 capital ratio (2)		10.61	%			11.16	%			10.91	%			12.52	%			12.28	%
Total capital ratio (2)		13.51	%			14.11	%			13.75	%			15.74	%			15.42	%
Risk-weighted assets (2)	$	20,887,678			$	20,523,487			$	21,657,591			$	19,086,798			$	19,084,823
Equity to assets ratio		19.48	%			20.16	%			19.91	%			20.73	%			20.50	%
Tangible common equity ratio (3)		9.86	%			10.43	%			10.50	%			12.02	%			11.75	%
Book value per share	$	38.36			$	38.47			$	38.65			$	37.96			$	37.55
Tangible book value per share (3)	$	17.35			$	17.75			$	18.24			$	19.84			$	19.40
Pacific Western Bank Capital:
Tier 1 leverage ratio (2)		11.11	%			11.33	%			11.75	%			11.46	%			11.41	%
Common equity tier 1 capital ratio (2)		11.40	%			11.86	%			11.91	%			11.95	%			11.79	%
Tier 1 capital ratio (2)		11.40	%			11.86	%			11.91	%			11.95	%			11.79	%
Total capital ratio (2)		12.21	%			12.67	%			12.69	%			12.89	%			12.66	%
(1) Ratios related to 2018 periods are for total loans and leases.  Ratios related to 2017 periods are for Non-PCI loans and leases.
(2) Capital information for June 30, 2018 is preliminary.
(3) Non-GAAP measure.

GAAP TO NON-GAAP RECONCILIATIONS

This press release contains certain non-GAAP financial disclosures for: (1) return on average tangible equity, (2) tangible common equity ratio, and (3) tangible book value per share. The Company uses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance.  In particular, the use of return on average tangible equity, tangible common equity ratio, and tangible book value per share is prevalent among banking regulators, investors and analysts.  Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures of: (1) return on average equity, (2) equity to assets ratio, and (3) book value per share.   

The tables below present the reconciliations of these GAAP financial measures to the related non-GAAP financial measures:

	Three Months Ended												Six Months Ended
	June 30,				March 31,				June 30,				June 30,
Return on Average Tangible Equity	2018				2018				2017				2018				2017
	(Dollars in thousands)
Net earnings	$	115,735			$	118,276			$	93,647			$	234,011			$	172,315
Average stockholders' equity	$	4,832,480			$	4,901,207			$	4,545,276			$	4,866,654			$	4,524,591
Less: Average intangible assets		2,619,351				2,625,593				2,205,814				2,622,455				2,207,454
Average tangible common equity	$	2,213,129			$	2,275,614			$	2,339,462			$	2,244,199			$	2,317,137
Return on average equity (1)		9.61	%			9.79	%			8.26	%			9.70	%			7.68	%
Return on average tangible equity (2)		20.98	%			21.08	%			16.06	%			21.03	%			15.00	%
(1) Annualized net earnings divided by average stockholders' equity.
(2) Annualized net earnings divided by average tangible common equity.

Tangible Common Equity Ratio/	June 30,				March 31,				December 31,				September 30,				June 30,
Tangible Book Value Per Share	2018				2018				2017				2017				2017
	(Dollars in thousands, except per share data)
Stockholders' equity	$	4,777,959			$	4,867,490			$	4,977,598			$	4,610,668			$	4,559,905
Less: Intangible assets		2,616,363				2,621,950				2,628,296				2,201,137				2,204,186
Tangible common equity	$	2,161,596			$	2,245,540			$	2,349,302			$	2,409,531			$	2,355,719
Total assets	$	24,529,557			$	24,149,330			$	24,994,876			$	22,242,932			$	22,246,877
Less: Intangible assets		2,616,363				2,621,950				2,628,296				2,201,137				2,204,186
Tangible assets	$	21,913,194			$	21,527,380			$	22,366,580			$	20,041,795			$	20,042,691
Equity to assets ratio		19.48	%			20.16	%			19.91	%			20.73	%			20.50	%
Tangible common equity ratio (1)		9.86	%			10.43	%			10.50	%			12.02	%			11.75	%
Book value per share	$	38.36			$	38.47			$	38.65			$	37.96			$	37.55
Tangible book value per share (2)	$	17.35			$	17.75			$	18.24			$	19.84			$	19.40
Shares outstanding		124,567,950				126,537,871				128,782,878				121,449,794				121,448,321
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by shares outstanding.

Contact:	Matthew P. Wagner	Patrick J. Rusnak
	President and CEO	Executive Vice President and CFO
Phone:	310-887-8520	714-989-4705
Contact:	Donald D. Destino
	Executive Vice President
	Corporate Development and Investor Relations
	Relations
Phone:	310-887-8521