LOS ANGELES, Jan. 26, 2023 (GLOBE NEWSWIRE) -- PacWest Bancorp (NASDAQ:PACW) -

FOURTH QUARTER 2022 RESULTS

$39.6M	$0.33		14.39%	8.70%
Net Earnings Available to Common Stockholders	Diluted Earnings per Common Share		ROATCE	CET1

FOURTH QUARTER 2022 HIGHLIGHTS

Announced leadership transition with Paul Taylor as President and CEO and Kevin Thompson as CFO
Strategically sold $1 billion of available-for-sale securities for a loss of $49 million to pay down FHLB borrowings and to improve the capital and liquidity position of the Bank
Recorded goodwill impairment of $29 million related to Civic as part of a strategy to restructure this lending subsidiary
Shut down Premium Finance and Multi-Family lending groups as part of a strategy to focus on relationship-based community banking, which will result in cost savings and improved capital
Recorded early retirement benefits and severance expense of $5.7 million as a first step in operational efficiency initiative
All risk-based capital ratios increased from 3Q22, with CET1 increasing from 8.56% to 8.70%
Credit metrics remain steady with nonperforming assets ratio of 38 basis points

FULL YEAR 2022 RESULTS

$404.3M	$3.37		21.04%	51.0%
Net Earnings Available to Common Stockholders	Diluted Earnings per Common Share		ROATCE	Efficiency Ratio

FULL YEAR 2022 HIGHLIGHTS

Loan growth of $5.7 billion; up 24.7% from 2021
Net interest income (TE) of $1.3 billion in 2022 vs. $1.1 billion in 2021; up 16.6%
Strong earnings allowed us to return $140 million to our stockholders through dividends

CEO COMMENTARY

Paul Taylor, President and CEO, commented, "In the fourth quarter, we initiated a new strategic plan designed to maximize shareholder value by strengthening our community bank focus, exiting non-core products, and improving our operational efficiency. The first strategic step we took was to sell $1 billion of available-for-sale securities, resulting in a loss on sale of $49 million. The proceeds were used to pay down FHLB borrowings and to improve the capital and liquidity position of the Bank going forward. Secondly, we recorded goodwill impairment of $29 million related to Civic as part of a strategy to restructure this lending subsidiary. Goodwill is a non-cash charge and has no impact on our regulatory capital ratios, cash flows, or liquidity position. We believe these actions will result in an improvement in the profitability and risk profile of Civic going forward. Next, we are slowing loan growth to preserve capital and strengthen our balance sheet, including shutting down our operations in our Premium Finance and Multi-Family lending groups. Finally, we are working to improve the overall operational efficiency of the Bank. As a first step in this initiative, we recorded early retirement benefits and severance expense of $5.7 million."

"PacWest is a strong organization with extraordinary clients and has a talented and loyal team. Credit quality remains strong as evidenced by credit metrics such as nonperforming assets of 38 basis points and net charge-offs of four basis points for the quarter and two basis points for the year. As we head into 2023, our priority is to refocus on core relationship-based community banking, which is expected to result in increased core deposits, increased capital ratios, and an improved efficiency ratio, and allow us to maintain our credit quality at the current favorable levels."

FINANCIAL HIGHLIGHTS


	At or For the									At or For the
	Three Months Ended									Year Ended
	December 31,			September 30,			Increase			December 31,						Increase
Financial Highlights (1)		2022			2022		(Decrease)				2022			2021		(Decrease)
	(Dollars in thousands, except per share data)
Net earnings available to
common stockholders	$	39,562		$	122,224		$	(82,662	)	$	404,274		$	606,959		$	(202,685	)
Diluted earnings per
common share	$	0.33		$	1.02		$	(0.69	)	$	3.37		$	5.10		$	(1.73	)
Pre-provision, pre-goodwill
impairment, pre-tax net
revenue ("PPNR") (2)	$	106,151		$	178,182		$	(72,031	)	$	621,068		$	660,334		$	(39,266	)
Return on average assets		0.48	%		1.28	%		(0.80	)		1.05	%		1.71	%		(0.66	)
PPNR return on average
assets (2)		1.02	%		1.73	%		(0.71	)		1.53	%		1.86	%		(0.33	)
Return on average
tangible common equity (2)		14.39	%		24.11	%		(9.72	)		21.04	%		24.41	%		(3.37	)

Yield on average loans and
leases (tax equivalent)		5.73	%		5.12	%		0.61			5.07	%		5.08	%		(0.01	)
Cost of average total
deposits		1.37	%		0.70	%		0.67			0.59	%		0.09	%		0.50
Net interest margin ("NIM")
(tax equivalent)		3.41	%		3.57	%		(0.16	)		3.49	%		3.40	%		0.09
Efficiency ratio		53.3	%		51.0	%		2.3			51.0	%		46.9	%		4.1

Total assets	$	41,228,936		$	41,404,592		$	(175,656	)	$	41,228,936		$	40,443,344		$	785,592
Loans and leases held
for investment,
net of deferred fees	$	28,609,129		$	27,660,041		$	949,088		$	28,609,129		$	22,941,548		$	5,667,581
Noninterest-bearing
demand deposits	$	11,212,357		$	12,775,756		$	(1,563,399	)	$	11,212,357		$	14,543,133		$	(3,330,776	)
Core deposits	$	26,561,129		$	28,559,310		$	(1,998,181	)	$	26,561,129		$	32,734,949		$	(6,173,820	)
Total deposits	$	33,936,334		$	34,195,872		$	(259,538	)	$	33,936,334		$	34,997,757		$	(1,061,423	)

As percentage of total
deposits:
Noninterest-bearing
demand deposits		33	%		37	%		(4	)		33	%		41	%		(8	)
Core deposits		78	%		83	%		(5	)		78	%		93	%		(15	)

Equity to assets ratio		9.58	%		9.36	%		0.22			9.58	%		9.89	%		(0.31	)
Common equity tier 1
capital ratio		8.70	%		8.56	%		0.14			8.70	%		8.86	%		(0.16	)
Tier 1 capital ratio		10.60	%		10.46	%		0.14			10.60	%		9.32	%		1.28
Total capital ratio		13.61	%		13.43	%		0.18			13.61	%		12.69	%		0.92
Tangible common equity
ratio (2)		5.13	%		4.85	%		0.28			5.13	%		6.54	%		(1.41	)
Tangible book value per
common share (2)	$	17.00		$	16.11		$	0.89		$	17.00		$	21.31		$	(4.31	)

(1) The operations of the HOA Business are included from its October 8, 2021 acquisition date and the operations of Civic are included from its February 1, 2021 acquisition date.
(2) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

NET INTEREST INCOME

Net interest income decreased by $12.2 million to $322.9 million for the fourth quarter of 2022 compared to $335.2 million for the third quarter of 2022 due mainly to higher interest expense on deposits and borrowings, offset partially by higher interest income on loans and leases and deposits in financial institutions. Interest income on loans and leases increased by $58.4 million in the fourth quarter of 2022 due to a 61 basis points increase in the tax equivalent yield on average loans and leases and a $1.2 billion increase in the average balance of loans and leases compared to the third quarter of 2022. Interest income on deposits in financial institutions increased by $7.4 million in the fourth quarter of 2022 due mainly to a 147 basis points increase in the yield on average deposits in financial institutions. The tax equivalent yield on average loans and leases was 5.73% for the fourth quarter of 2022 compared to 5.12% for the third quarter of 2022. The increase in the tax equivalent yield on average loans and leases was due primarily to higher coupon interest attributable to increased rates on production and on existing variable rate loans. Interest expense on deposits increased by $56.3 million in the fourth quarter of 2022 due mainly to increased market rates that contributed to a 67 basis points increase in the cost of average total deposits. Interest expense on borrowings increased by $16.9 million due to a $1.2 billion increase in the average balance and a 231 basis points increase in the cost of average borrowings attributable mainly to having a full quarter of the higher-cost credit-linked notes outstanding.

The tax equivalent NIM was 3.41% for the fourth quarter of 2022 compared to 3.57% for the third quarter of 2022. The decrease in the NIM was due mainly to a higher cost of average interest-bearing liabilities due primarily to a $1.7 billion decrease in the average balance of core deposits and an increase in average time deposits, offset partially by higher yields on average loans and leases and deposits in financial institutions.

The cost of average total deposits was 1.37% for the fourth quarter of 2022 compared to 0.70% for the third quarter of 2022 due mainly to higher market interest rates and an increase in the average balance of time deposits.

PROVISION FOR CREDIT LOSSES

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


	Three Months Ended
	December 31,			September 30,		Increase
Provision for Credit Losses		2022			2022	(Decrease)





	(In thousands)
Addition to allowance for
loan and lease losses	$	14,000		$	3,000	$	11,000
Reduction in reserve for
unfunded loan commitments		(4,000	)		-		(4,000	)
Total loan-related provision		10,000			3,000		7,000
Addition to allowance for
held-to-maturity securities		-			-		-
Total provision for credit losses	$	10,000		$	3,000	$	7,000

The provision for credit losses was $10.0 million for the fourth quarter of 2022 compared to $3.0 million for the third quarter of 2022. The $7.0 million increase in the loan-related provision was due mainly to net loan growth in portfolios with a higher loss rate, a slight increase in the levels of special mention and classified loans and leases, and an updated economic forecast reflecting management's expectation of a mild recession ahead.

NONINTEREST INCOME

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


	Three Months Ended
	December 31,			September 30,		Increase
Noninterest Income		2022			2022	(Decrease)





	(In thousands)
Service charges on deposit accounts	$	3,178		$	3,608	$	(430	)
Other commissions and fees		11,208			10,034		1,174
Leased equipment income		12,322			12,835		(513	)
Gain on sale of loans and leases		388			58		330
(Loss) gain on sale of securities		(49,302	)		86		(49,388	)
Dividends and gains on equity investments		661			3,228		(2,567	)
Warrant (loss) income		(46	)		292		(338	)
Other income		2,635			8,478		(5,843	)
Total noninterest (loss) income	$	(18,956	)	$	38,619	$	(57,575	)

Noninterest income decreased by $57.6 million to a loss of $19.0 million for the fourth quarter of 2022 compared to income of $38.6 million for the third quarter of 2022 due primarily to decreases of $49.4 million in gain on sale of securities, $5.8 million in other income, and $2.6 million in dividends and gains on equity investments. The decrease in gain on sale of securities resulted from the sales of $1.0 billion of securities for a net loss of $49.3 million compared to sales of $440.4 million of securities for a net gain of $86,000 for the third quarter of 2022. The decrease in other income was due primarily to the receipt of a $5.5 million legal settlement, net of current year legal fees, in the third quarter of 2022. The decrease in dividends and gains on equity investments was due mainly to lower fair value gains on SBIC investments and income distributions on equity investments.

NONINTEREST EXPENSE

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


	Three Months Ended
	December 31,			September 30,			Increase
Noninterest Expense		2022			2022		(Decrease)




	(In thousands)
Compensation	$	106,124		$	105,933		$	191
Occupancy		14,922			15,574			(652	)
Data processing		9,722			9,568			154
Other professional services		6,924			10,674			(3,750	)
Insurance and assessments		7,205			7,159			46
Intangible asset amortization		2,629			3,649			(1,020	)
Leased equipment depreciation		8,627			8,908			(281	)
Foreclosed assets (income) expense, net		(108	)		(248	)		140
Acquisition, integration and reorganization costs		5,703			-			5,703
Customer related expense		18,197			12,673			5,524
Loan expense		6,150			6,228			(78	)
Other		11,737			15,500			(3,763	)
Total operating expense		197,832			195,618			2,214
Goodwill impairment		29,000			-			29,000
Total noninterest expense	$	226,832		$	195,618		$	31,214

Noninterest expense increased by $31.2 million to $226.8 million for the fourth quarter 2022 compared to $195.6 million for the third quarter of 2022 due primarily to a $29.0 million goodwill impairment charge related to Civic. Excluding the goodwill impairment, noninterest expense increased by $2.2 million to $197.8 million. The $2.2 million increase was due mainly to increases of $5.7 million in acquisition, integration and reorganization costs and $5.5 million in customer related expense, offset partially by decreases of $3.8 million in other expense, $3.8 million in other professional services, and $1.0 million in intangible asset amortization. The increase in acquisition, integration and reorganization costs was due to early retirement benefits and severance expense in the fourth quarter. The increase in customer related expense was due mostly to higher third-party payments for deposit customers on account analysis. The decrease in other expense was due primarily to a non-recurring legal settlement accrual in the third quarter of 2022. The decrease in other professional services was due mostly to non-recurring issuance costs of the credit-linked notes transaction in the third quarter of 2022. The decrease in intangible asset amortization was due primarily to declining amortization expense on the intangible assets added from acquisitions prior to 2021.

INCOME TAXES

The effective income tax rate was 26.3% for the fourth quarter of 2022 compared to 24.9% for the third quarter of 2022. The increase from the third quarter of 2022 was primarily due to a tax benefit recorded in the third quarter resulting from a lapsed statute. The effective tax rate for the full year 2022 was 25.4%. The effective tax rate for the full year 2023 is currently estimated to be in the range of 26% to 28%.

BALANCE SHEET HIGHLIGHTS

DEPOSITS AND CLIENT INVESTMENT FUNDS

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


	December 31, 2022				September 30, 2022				December 31, 2021
			% of				% of				% of
Deposit Composition	Balance		Total		Balance		Total		Balance		Total
	(Dollars in thousands)
Noninterest-bearing demand	$	11,212,357	33	%	$	12,775,756	37	%	$	14,543,133	41	%
Interest checking		6,990,377	20	%		6,780,900	20	%		7,319,898	21	%
Money market		7,780,758	23	%		8,361,779	24	%		10,241,265	29	%
Savings		577,637	2	%		640,875	2	%		630,653	2	%
Total core deposits		26,561,129	78	%		28,559,310	83	%		32,734,949	93	%
Wholesale non-maturity deposits		2,637,362	8	%		2,367,544	7	%		889,976	3	%
Total non-maturity deposits		29,198,491	86	%		30,926,854	90	%		33,624,925	96	%
Retail time deposits		2,434,414	7	%		1,778,325	5	%		1,177,147	3	%
Brokered time deposits		2,303,429	7	%		1,490,693	5	%		195,685	1	%
Total time deposits (1)		4,737,843	14	%		3,269,018	10	%		1,372,832	4	%
Total deposits	$	33,936,334	100	%	$	34,195,872	100	%	$	34,997,757	100	%

(1) Includes time deposits over $250,000 of $1.5 billion, $1.0 billion, and $486.9 million at December 31, 2022, September 30, 2022, and December 31, 2021, respectively.

Total deposits decreased by $259.5 million or 0.8% in the fourth quarter of 2022 due primarily to a $2.0 billion or 7.0% decrease in core deposits, offset partially by a $1.5 billion increase in time deposits and a $269.8 million increase in wholesale non-maturity deposits. At December 31, 2022, core deposits totaled $26.6 billion or 78% of total deposits, including $11.2 billion of noninterest-bearing demand deposits or 33% of total deposits.

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 $1.8 billion as of September 30, 2022 to $1.4 billion as of December 31, 2022, of which $0.9 billion was managed by PWAM.

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						Year Ended
Roll Forward of Loans and Leases Held	December 31,			September 30,			December 31,
for Investment, Net of Deferred Fees		2022			2022			2022
	(Dollars in thousands)
Balance, beginning of period	$	27,660,041		$	26,501,137		$	22,941,548
Additions:
Production		1,287,248			1,758,107			8,435,396
Disbursements		1,919,979			1,677,795			7,058,553
Total production and disbursements		3,207,227			3,435,902			15,493,949
Reductions:
Payoffs		(1,136,016	)		(977,654	)		(4,909,797	)
Paydowns		(1,050,727	)		(1,256,557	)		(4,755,033	)
Total payoffs and paydowns		(2,186,743	)		(2,234,211	)		(9,664,830	)
Sales		(2,611	)		(19,635	)		(63,263	)
Transfers to foreclosed assets		(4,714	)		(2,966	)		(7,985	)
Charge-offs		(3,352	)		(4,652	)		(14,037	)
Transfers to loans held for sale		(60,719	)		(15,534	)		(76,253	)
Total reductions		(2,258,139	)		(2,276,998	)		(9,826,368	)
Net increase		949,088			1,158,904			5,667,581
Balance, end of period	$	28,609,129		$	27,660,041		$	28,609,129

Weighted average rate on production (1)		7.55	%		5.92	%		5.24	%

(1) The weighted average rate on production presents contractual rates on a tax equivalent basis and excludes amortized fees. Amortized fees added approximately 21 basis points to loan yields in 2022.

Loans and leases held for investment, net of deferred fees, increased by $949.1 million or 3.4% in the fourth quarter of 2022 to $28.6 billion at December 31, 2022. The overall increase in the loans and leases balance for the fourth quarter of 2022 was due primarily to increases in the residential real estate mortgage and residential real estate construction portfolios.

Civic loan production was $713 million for the fourth quarter of 2022 compared to $831 million for the third quarter of 2022. The Civic loan portfolio as of December 31, 2022 totaled $3.3 billion.

The weighted average rate on the $1.3 billion of production for the fourth quarter of 2022 increased to 7.55% from 5.92% for the third quarter of 2022 due primarily to the loan mix (lower percentage of multi-family production and a higher percentage of Civic production) and the increase in market interest rates.

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:


	December 31, 2022				September 30, 2022				December 31, 2021
			% of				% of				% of
Loan and Lease Portfolio	Balance		Total		Balance		Total		Balance		Total
	(Dollars in thousands)
Real estate mortgage:
Commercial	$	3,846,831	13	%	$	3,770,706	14	%	$	3,762,299	17	%
Residential		11,396,781	40	%		10,860,043	39	%		7,416,421	32	%
Total real estate mortgage		15,243,612	53	%		14,630,749	53	%		11,178,720	49	%
Real estate construction and land:
Commercial		898,592	3	%		843,086	3	%		832,591	4	%
Residential		3,740,292	13	%		3,450,430	12	%		2,604,536	11	%
Total real estate construction
and land		4,638,884	16	%		4,293,516	15	%		3,437,127	15	%
Total real estate		19,882,496	69	%		18,924,265	68	%		14,615,847	64	%
Commercial:
Asset-based		5,140,209	18	%		5,154,654	19	%		4,075,477	18	%
Venture capital		2,033,302	7	%		2,001,086	7	%		2,320,593	10	%
Other commercial		1,108,451	4	%		1,115,442	4	%		1,471,981	6	%
Total commercial		8,281,962	29	%		8,271,182	30	%		7,868,051	34	%
Consumer		444,671	2	%		464,594	2	%		457,650	2	%
Total loans and leases held for
investment, net of deferred fees	$	28,609,129	100	%	$	27,660,041	100	%	$	22,941,548	100	%

Total unfunded loan commitments	$	11,110,264			$	11,227,234			$	9,006,350

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 December 31, 2022
Allowance for Credit	Allowance for			Reserve for			Total
Losses on Loans and	Loan and			Unfunded Loan			Allowance for
Leases Rollforward	Lease Losses			Commitments			Credit Losses
	(In thousands)
Beginning balance	$	189,327		$	95,071		$	284,398
Charge-offs		(3,352	)		-			(3,352	)
Recoveries		757			-			757
Net charge-offs		(2,595	)		-			(2,595	)
Provision		14,000			(4,000	)		10,000
Ending balance	$	200,732		$	91,071		$	291,803



	Three Months Ended September 30, 2022
Allowance for Credit	Allowance for			Reserve for			Total
Losses on Loans and	Loan and			Unfunded Loan			Allowance for
Leases Rollforward	Lease Losses			Commitments			Credit Losses
	(In thousands)
Beginning balance	$	188,705		$	95,071		$	283,776
Charge-offs		(4,652	)		-			(4,652	)
Recoveries		2,274			-			2,274
Net charge-offs		(2,378	)		-			(2,378	)
Provision		3,000			-			3,000
Ending balance	$	189,327		$	95,071		$	284,398


Allowance for Credit
Losses on Loans and	Year Ended December 31,
Leases Rollforward		2022			2021
	(In thousands)
Beginning balance	$	273,635		$	433,752
Charge-offs		(14,037	)		(10,715	)
Recoveries		9,205			12,598
Net (charge-offs) recoveries		(4,832	)		1,883
Provision		23,000			(162,000	)
Ending balance	$	291,803		$	273,635

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 Losses	December 31,			September 30,			Increase
on Loans and Leases		2022			2022		(Decrease)
	(Dollars in thousands)
Allowance for loan and lease losses	$	200,732		$	189,327		$	11,405
Reserve for unfunded loan commitments		91,071			95,071			(4,000	)
Allowance for credit losses	$	291,803		$	284,398		$	7,405

Provision for credit losses (for the quarter)	$	10,000		$	3,000		$	7,000
Net charge-offs (for the quarter)	$	2,595		$	2,378		$	217
Net charge-offs to average loans
and leases (for the quarter)		0.04	%		0.03	%
Allowance for loan and lease losses to loans
and leases held for investment		0.70	%		0.68	%
Allowance for credit losses to loans and leases
held for investment		1.02	%		1.03	%

The allowance for credit losses increased by $7.4 million in the fourth quarter of 2022 to $291.8 million at December 31, 2022. This increase was attributable mainly to a $10.0 million provision for credit losses, offset partially by $2.6 million in net charge-offs.

Net charge-offs over the trailing twelve months were $4.8 million, which results in net charge-offs to average loans and leases over the trailing twelve months of 0.2%.

CREDIT QUALITY

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


	December 31,			September 30,			Increase
Credit Quality Metrics		2022			2022		(Decrease)
	(Dollars in thousands)
NPAs and Performing TDRs:
Nonaccrual loans and leases held for investment (1)	$	103,778		$	89,742		$	14,036
Accruing loans contractually past due 90 days or more		-			-			-
Foreclosed assets, net		5,022			2,967			2,055
Total nonperforming assets ("NPAs")	$	108,800		$	92,709		$	16,091

Performing TDRs held for investment	$	7,141		$	8,106		$	(965	)

Nonaccrual loans and leases held for investment
to loans and leases held for investment		0.36	%		0.32	%
Nonperforming assets to loans and leases
held for investment and foreclosed assets		0.38	%		0.34	%
Allowance for credit losses to nonaccrual loans
and leases held for investment		281.2	%		316.9	%

Loan and Lease Credit Risk Ratings:
Pass	$	27,924,599		$	27,099,362		$	825,237
Special mention		566,259			463,994			102,265
Classified		118,271			96,685			21,586
Total loans and leases held for investment,
net of deferred fees	$	28,609,129		$	27,660,041		$	949,088

Special mention loans and leases held for investment
to loans and leases held for investment		1.98	%		1.68	%
Classified loans and leases held for investment
to loans and leases held for investment		0.41	%		0.35	%

(1) Nonaccrual loans include SBA guaranteed amounts of $14.3 million at December 31, 2022 and $17.2 million at September 30, 2022.

Nonaccrual loans and leases increased by $14.0 million to $103.8 million in the fourth quarter of 2022 due primarily to an increase in nonaccrual Civic loans.

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:


	December 31, 2022				September 30, 2022				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	$	42,509	$	1,047	$	42,772	$	14	$	(263	)	$	1,033
Residential		45,272		69,397		25,950		21,700		19,322			47,697
Total real estate mortgage		87,781		70,444		68,722		21,714		19,059			48,730
Real estate construction and land:
Commercial		-		-		-		-		-			-
Residential		10,621		26,257		7,101		3,051		3,520			23,206
Total real estate
construction and land		10,621		26,257		7,101		3,051		3,520			23,206
Commercial:
Asset-based		865		-		2,127		-		(1,262	)		-
Venture capital		-		-		3,809		-		(3,809	)		-
Other commercial		4,345		385		7,616		265		(3,271	)		120
Total commercial		5,210		385		13,552		265		(8,342	)		120
Consumer		166		1,935		367		1,996		(201	)		(61	)
Total held for investment	$	103,778	$	99,021	$	89,742	$	27,026	$	14,036		$	71,995

Loans and leases accruing and 30-89 days past due generally fluctuate from period to period. The $72.0 million increase to $99.0 million in the fourth quarter of 2022 was due mainly to an increase in Civic delinquent loans. This was due primarily to an increase in matured loans and an increase in the dollar amount of delinquent loans which correlates with the continued growth in the Civic loan portfolio balance.

CAPITAL

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

	December 31,			September 30,			December 31,
		2022			2022			2021
PacWest Bancorp Consolidated:
Common equity tier 1 capital ratio (1)		8.70	%		8.56	%		8.86	%
Tier 1 capital ratio (1)		10.60	%		10.46	%		9.32	%
Total capital ratio (1)		13.61	%		13.43	%		12.69	%
Tier 1 leverage capital ratio (1)		8.61	%		8.63	%		6.84	%
Risk-weighted assets (1) (in thousands)	$	33,033,597		$	33,042,173		$	28,508,808
Tangible common equity ratio (2)		5.13	%		4.85	%		6.54	%
Tangible common equity ratio excluding
the impact of AOCI for securities (2)		7.12	%		6.97	%		6.37	%

(1) Capital information for December 31, 2022 is preliminary.
(2) Non-GAAP measure.

CONFERENCE CALL

PacWest Bancorp ("PacWest") will host a conference call at 8:00 AM PT/ 11:00 AM ET on Friday, January 27, 2023, to discuss the Company's performance for the fourth quarter of 2022.

Participants may access the conference call/webcast at:

Participant Dial-in: (888) 204-4368

Participant Webcast Link: https://event.webcasts.com/starthere.jsp?ei=1590835&tp key=aedee87ee7

Confirmation Code: 2205611

The call will be recorded and made available for replay on January 27, 2023, after 12:00 PM PT. The recording may be accessed through the link above or at https://www.pacwestbancorp.com/news-market-data/presentations/default.aspx.

ABOUT PACWEST BANCORP

PacWest is a bank holding company with over $41 billion in assets 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 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." Such statements are based on information available at the time of the communication and are based on current beliefs and expectations of PacWest's management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control, 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 of credit losses, adversely affect PacWest's revenues and the values of our assets, including goodwill, and liabilities, and increase stock price volatility. The risks and impacts of the COVID-19 pandemic appear to have largely subsided, however, new variants may continue to impact key macro-economic indicators such as unemployment and GDP and may have a material impact on our business, financial position, and results of operations. In addition, PacWest's results could be adversely affected by changes in interest rates, inflation, and unemployment rates, our ability to attract deposits and other sources of funding and liquidity, deterioration in the credit quality of our loan portfolio or in the value of the collateral securing those loans, deterioration in the value of our investment securities, our ability to successfully execute on our digital and innovation initiatives, the effectiveness of our risk management framework and quantitative models, and legal and regulatory developments. Actual results may differ materially from those set forth or implied in the forward-looking statements due to a variety of factors, including the risk factors described in documents filed by PacWest with the U.S. Securities and Exchange Commission.

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.

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET

	December 31,			September 30,			December 31,
		2022			2022			2021
	(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks	$	212,273		$	216,436		$	112,548
Interest-earning deposits in financial institutions		2,027,949			2,244,272			3,944,686
Total cash and cash equivalents		2,240,222			2,460,708			4,057,234

Securities available-for-sale, at estimated fair value		4,843,487			5,891,328			10,694,458
Securities held-to-maturity, at amortized cost,
net of allowance for credit losses		2,269,135			2,264,601			-
Federal Home Loan Bank stock, at cost		34,290			36,990			17,250
Total investment securities		7,146,912			8,192,919			10,711,708

Loans held for sale		65,076			15,534			-

Gross loans and leases held for investment		28,726,016			27,775,962			23,026,308
Deferred fees, net		(116,887	)		(115,921	)		(84,760	)
Total loans and leases held for investment,
net of deferred fees		28,609,129			27,660,041			22,941,548
Allowance for loan and lease losses		(200,732	)		(189,327	)		(200,564	)
Total loans and leases held for investment, net		28,408,397			27,470,714			22,740,984

Equipment leased to others under operating leases		404,245			338,691			339,150
Premises and equipment, net		54,315			50,781			46,740
Foreclosed assets, net		5,022			2,967			12,843
Goodwill		1,376,736			1,405,736			1,405,736
Core deposit and customer relationship intangibles, net		31,381			34,010			44,957
Other assets		1,496,630			1,432,532			1,083,992
Total assets	$	41,228,936		$	41,404,592		$	40,443,344

LIABILITIES:
Noninterest-bearing deposits	$	11,212,357		$	12,775,756		$	14,543,133
Interest-bearing deposits		22,723,977			21,420,116			20,454,624
Total deposits		33,936,334			34,195,872			34,997,757
Borrowings		1,764,030			1,864,815			-
Subordinated debt		867,087			863,379			863,283
Accrued interest payable and other liabilities		710,954			604,581			582,674
Total liabilities		37,278,405			37,528,647			36,443,714
STOCKHOLDERS' EQUITY (1)		3,950,531			3,875,945			3,999,630
Total liabilities and stockholders' equity	$	41,228,936		$	41,404,592		$	40,443,344

Book value per common share	$	28.71		$	28.07		$	33.45
Tangible book value per common share (2)	$	17.00		$	16.11		$	21.31
Common shares outstanding		120,222,057			120,314,023			119,584,854

(1) Includes net unrealized (loss) gain on:
Securities available-for-sale, net	$	(586,450	)	$	(637,346	)	$	65,968
Securities held to maturity		(204,453	)		(210,868	)		-
Total	$	(790,903	)	$	(848,214	)	$	65,968
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS

	Three Months Ended									Year Ended
	December 31,			September 30,			December 31,			December 31,
		2022			2022			2021			2022			2021
	(In thousands, except per share data)
Interest income:
Loans and leases	$	404,985		$	346,550		$	263,662		$	1,312,580		$	996,457
Investment securities		50,292			53,135			48,469			209,751			153,468
Deposits in financial institutions		17,746			10,359			2,674			34,158			8,804
Total interest income		473,023			410,044			314,805			1,556,489			1,158,729

Interest expense:
Deposits		117,591			61,288			6,622			200,449			27,808
Borrowings		19,962			3,081			64			25,645			623
Subordinated debt		12,531			10,494			7,714			39,633			26,474
Total interest expense		150,084			74,863			14,400			265,727			54,905

Net interest income		322,939			335,181			300,405			1,290,762			1,103,824
Provision for credit losses		10,000			3,000			(6,000	)		24,500			(162,000	)
Net interest income after provision
for credit losses		312,939			332,181			306,405			1,266,262			1,265,824

Noninterest income:
Service charges on deposit accounts		3,178			3,608			3,476			13,991			13,269
Other commissions and fees		11,208			10,034			10,633			43,635			42,287
Leased equipment income		12,322			12,835			12,602			50,586			45,746
Gain on sale of loans and leases		388			58			172			518			1,733
(Loss) gain on sale of securities		(49,302	)		86			999			(50,321	)		1,615
Dividends and gains (losses) on equity investments		661			3,228			(1,570	)		(3,389	)		23,115
Warrant (loss) income		(46	)		292			23,990			2,490			49,341
Other income		2,635			8,478			7,080			17,317			16,821
Total noninterest (loss) income		(18,956	)		38,619			57,382			74,827			193,927

Noninterest expense:
Compensation		106,124			105,933			99,700			406,839			368,450
Occupancy		14,922			15,574			14,656			60,964			58,422
Data processing		9,722			9,568			8,171			38,177			30,277
Other professional services		6,924			10,674			5,946			30,278			21,492
Insurance and assessments		7,205			7,159			5,032			25,486			17,365
Intangible asset amortization		2,629			3,649			3,876			13,576			12,734
Leased equipment depreciation		8,627			8,908			9,569			35,658			35,755
Foreclosed assets (income) expense, net		(108	)		(248	)		(260	)		(3,737	)		(213	)
Acquisition, integration and reorganization costs		5,703			-			5,590			5,703			9,415
Customer related expense		18,197			12,673			6,175			55,273			20,504
Loan expense		6,150			6,228			5,627			24,572			17,031
Goodwill impairment		29,000			-			-			29,000			-
Other expense		11,737			15,500			12,028			51,732			46,185
Total noninterest expense		226,832			195,618			176,110			773,521			637,417

Earnings before income taxes		67,151			175,182			187,677			567,568			822,334
Income tax expense		17,642			43,566			51,632			143,955			215,375
Net earnings		49,509			131,616			136,045			423,613			606,959
Preferred stock dividends		9,947			9,392			-			19,339			-
Net earnings available to
common stockholders	$	39,562		$	122,224		$	136,045		$	404,274		$	606,959

Basic and diluted earnings per common share	$	0.33		$	1.02		$	1.14		$	3.37		$	5.10
Dividends declared and paid per common share	$	0.25		$	0.25		$	0.25		$	1.00		$	1.00

PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS PER COMMON SHARE

	Three Months Ended									Year Ended
	December 31,			September 30,			December 31,			December 31,
		2022			2022			2021			2022			2021
	(Dollars in thousands, except per share data)
Basic Earnings Per Common Share:
Net earnings	$	49,509		$	131,616		$	136,045		$	423,613		$	606,959
Less: Preferred stock dividends		(9,947	)		(9,392	)		-			(19,339	)		-
Net earnings available to
common stockholders		39,562			122,224			136,045			404,274			606,959
Less: Earnings allocated to
unvested restricted stock (1)		(714	)		(2,331	)		(2,311	)		(7,474	)		(10,248	)
Net earnings allocated to
common shares	$	38,848		$	119,893		$	133,734		$	396,800		$	596,711

Weighted average basic shares
and unvested restricted stock
outstanding		120,314			120,342			119,577			120,071			119,349
Less: weighted average unvested
restricted stock outstanding		(2,503	)		(2,556	)		(2,314	)		(2,442	)

PacWest Bancorp Announces Results for the Fourth Quarter and Full Year 2022