false--12-31Q320192019-09-30truefalse00011021120.020.050.0520.600.150.1500.020.0200.030.0320.6000.600.1200.120.020.040.600.140.08770.03750.08770.03750.07580.1110.0931.1760.1820.11100.09201.17600.18200.0000.0250.2410.0290.0000.0250.2410.0290.0180.0630.5850.114P3YP4YP3Y0.500.600.010.012000000002000000001250797051219069490.02950.01690.01550.0160.0310.03050.02750.01950.01950.01950.01950.01950.02050.01950.0195P1Y000.010.01500000050000000000P4YP3Y1889872162349418898722077845 0001102112 2019-01-01 2019-09-30 0001102112 2019-10-30 0001102112 2019-09-30 0001102112 2018-12-31 0001102112 2018-01-01 2018-09-30 0001102112 2018-07-01 2018-09-30 0001102112 2019-04-01 2019-06-30 0001102112 2019-07-01 2019-09-30 0001102112 us-gaap:AdditionalPaidInCapitalMember 2018-06-30 0001102112 2017-12-31 0001102112 2018-01-01 2018-03-31 0001102112 2018-04-01 2018-06-30 0001102112 us-gaap:CommonStockMember 2018-04-01 2018-06-30 0001102112 us-gaap:CommonStockMember 2017-12-31 0001102112 us-gaap:RetainedEarningsMember 2018-04-01 2018-06-30 0001102112 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-01-01 2018-03-31 0001102112 us-gaap:CommonStockMember 2018-06-30 0001102112 us-gaap:CommonStockMember 2018-07-01 2018-09-30 0001102112 us-gaap:TreasuryStockMember 2018-09-30 0001102112 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-04-01 2018-06-30 0001102112 us-gaap:CommonStockMember 2018-03-31 0001102112 us-gaap:AdditionalPaidInCapitalMember 2018-07-01 2018-09-30 0001102112 us-gaap:AdditionalPaidInCapitalMember 2018-01-01 2018-03-31 0001102112 us-gaap:TreasuryStockMember 2017-12-31 0001102112 pacw:SharesOfCommonStockMember 2018-07-01 2018-09-30 0001102112 us-gaap:CommonStockMember 2018-01-01 2018-03-31 0001102112 2018-03-31 0001102112 us-gaap:RetainedEarningsMember 2018-03-31 0001102112 us-gaap:AdditionalPaidInCapitalMember 2017-12-31 0001102112 us-gaap:CommonStockMember 2018-09-30 0001102112 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2017-12-31 0001102112 us-gaap:RetainedEarningsMember 2018-09-30 0001102112 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-07-01 2018-09-30 0001102112 us-gaap:TreasuryStockMember 2018-03-31 0001102112 us-gaap:AdditionalPaidInCapitalMember 2018-03-31 0001102112 us-gaap:TreasuryStockMember 2018-07-01 2018-09-30 0001102112 us-gaap:RetainedEarningsMember 2018-01-01 2018-03-31 0001102112 us-gaap:TreasuryStockMember 2018-06-30 0001102112 us-gaap:RetainedEarningsMember 2018-07-01 2018-09-30 0001102112 us-gaap:RetainedEarningsMember 2017-12-31 0001102112 us-gaap:AdditionalPaidInCapitalMember 2018-04-01 2018-06-30 0001102112 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-09-30 0001102112 us-gaap:RetainedEarningsMember 2018-06-30 0001102112 pacw:SharesOfCommonStockMember 2018-01-01 2018-03-31 0001102112 us-gaap:TreasuryStockMember 2018-01-01 2018-03-31 0001102112 pacw:SharesOfCommonStockMember 2018-04-01 2018-06-30 0001102112 2018-06-30 0001102112 2018-09-30 0001102112 us-gaap:TreasuryStockMember 2018-04-01 2018-06-30 0001102112 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-06-30 0001102112 us-gaap:AdditionalPaidInCapitalMember 2018-09-30 0001102112 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-03-31 0001102112 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0001102112 us-gaap:CommonStockMember 2018-12-31 0001102112 us-gaap:CommonStockMember 2019-03-31 0001102112 us-gaap:RetainedEarningsMember 2019-07-01 2019-09-30 0001102112 us-gaap:TreasuryStockMember 2019-04-01 2019-06-30 0001102112 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001102112 2019-01-01 2019-03-31 0001102112 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0001102112 us-gaap:CommonStockMember 2019-06-30 0001102112 us-gaap:RetainedEarningsMember 2019-09-30 0001102112 us-gaap:RetainedEarningsMember 2018-12-31 0001102112 us-gaap:TreasuryStockMember 2018-12-31 0001102112 us-gaap:TreasuryStockMember 2019-06-30 0001102112 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0001102112 us-gaap:RetainedEarningsMember 2019-01-01 2019-01-01 0001102112 us-gaap:CommonStockMember 2019-09-30 0001102112 us-gaap:TreasuryStockMember 2019-09-30 0001102112 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2019-09-30 0001102112 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001102112 us-gaap:CommonStockMember 2019-07-01 2019-09-30 0001102112 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001102112 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001102112 us-gaap:AdditionalPaidInCapitalMember 2019-09-30 0001102112 2019-06-30 0001102112 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0001102112 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0001102112 us-gaap:CommonStockMember 2019-04-01 2019-06-30 0001102112 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0001102112 us-gaap:TreasuryStockMember 2019-07-01 2019-09-30 0001102112 pacw:SharesOfCommonStockMember 2019-01-01 2019-03-31 0001102112 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0001102112 2019-01-01 2019-01-01 0001102112 us-gaap:TreasuryStockMember 2019-01-01 2019-03-31 0001102112 2019-03-31 0001102112 us-gaap:RetainedEarningsMember 2019-03-31 0001102112 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-07-01 2019-09-30 0001102112 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0001102112 us-gaap:TreasuryStockMember 2019-03-31 0001102112 pacw:SharesOfCommonStockMember 2019-04-01 2019-06-30 0001102112 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-09-30 0001102112 us-gaap:RetainedEarningsMember 2019-06-30 0001102112 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-03-31 0001102112 stpr:NC 2019-01-01 2019-09-30 0001102112 stpr:CA 2019-01-01 2019-09-30 0001102112 pacw:GovernmentagencyandgovernmentsponsoredenterprisecollateralizedmortgageobligationsMember 2019-09-30 0001102112 pacw:PrivateLabelCollateralizedMortgageObligationsMember 2019-09-30 0001102112 us-gaap:CollateralizedLoanObligationsMember 2019-09-30 0001102112 us-gaap:CommercialMortgageBackedSecuritiesMember 2019-09-30 0001102112 us-gaap:AssetBackedSecuritiesMember 2019-09-30 0001102112 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2019-09-30 0001102112 us-gaap:AvailableforsaleSecuritiesMember 2018-07-01 2018-09-30 0001102112 us-gaap:AvailableforsaleSecuritiesMember 2019-07-01 2019-09-30 0001102112 us-gaap:USTreasurySecuritiesMember 2018-12-31 0001102112 us-gaap:CommercialMortgageBackedSecuritiesMember 2018-12-31 0001102112 pacw:SBAassetbackedsecuritiesMember 2018-12-31 0001102112 us-gaap:CorporateDebtSecuritiesMember 2019-09-30 0001102112 pacw:GovernmentagencyandgovernmentsponsoredenterprisecollateralizedmortgageobligationsMember 2018-12-31 0001102112 us-gaap:USTreasurySecuritiesMember 2019-09-30 0001102112 us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-09-30 0001102112 pacw:PrivateLabelCollateralizedMortgageObligationsMember 2018-12-31 0001102112 us-gaap:CorporateDebtSecuritiesMember 2018-12-31 0001102112 us-gaap:USStatesAndPoliticalSubdivisionsMember 2018-12-31 0001102112 pacw:SBAassetbackedsecuritiesMember 2019-09-30 0001102112 us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2018-12-31 0001102112 us-gaap:AssetBackedSecuritiesMember 2018-12-31 0001102112 pacw:ResidentialRealEstateConstructionFinancingReceivableMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 pacw:OtherCommercialMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember 2018-12-31 0001102112 us-gaap:CommercialRealEstateMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:MortgagesMember 2018-12-31 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:ConsumerPortfolioSegmentMember 2018-12-31 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:MortgagesMember 2018-12-31 0001102112 us-gaap:ResidentialRealEstateMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:MortgagesMember 2018-12-31 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 pacw:CommercialRealEstateConstructionLoanReceivableMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 pacw:AssetBasedMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 pacw:VentureCapitalLoansMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:MortgagesMember 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:MortgagesMember 2018-01-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:ConsumerPortfolioSegmentMember 2018-01-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember 2018-01-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:ConsumerPortfolioSegmentMember 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember pacw:RealEstateConstructionMember 2018-01-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember pacw:RealEstateConstructionMember 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember 2018-01-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:MortgagesMember 2017-12-31 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:ConsumerPortfolioSegmentMember 2017-12-31 0001102112 us-gaap:ConsumerPortfolioSegmentMember 2018-01-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2018-01-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2017-12-31 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember pacw:RealEstateConstructionMember 2017-12-31 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember 2017-12-31 0001102112 us-gaap:MortgagesMember 2018-01-01 2018-09-30 0001102112 pacw:RealEstateConstructionMember 2018-01-01 2018-09-30 0001102112 us-gaap:CommercialPortfolioSegmentMember 2018-01-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember 2019-09-30 0001102112 us-gaap:MortgagesMember 2019-01-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:ConsumerPortfolioSegmentMember 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember 2019-01-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 us-gaap:CommercialPortfolioSegmentMember 2019-01-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember pacw:RealEstateConstructionMember 2019-01-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2019-01-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:MortgagesMember 2019-01-01 2019-09-30 0001102112 pacw:RealEstateConstructionMember 2019-01-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:ConsumerPortfolioSegmentMember 2019-01-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:MortgagesMember 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember pacw:RealEstateConstructionMember 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember 2019-01-01 2019-09-30 0001102112 us-gaap:ConsumerPortfolioSegmentMember 2019-01-01 2019-09-30 0001102112 us-gaap:CommercialRealEstateMember us-gaap:MortgagesMember 2019-09-30 0001102112 pacw:VentureCapitalLoansMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 pacw:AssetBasedMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 us-gaap:ResidentialRealEstateMember us-gaap:MortgagesMember 2019-09-30 0001102112 pacw:AssetBasedMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 pacw:OtherCommercialMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 pacw:CommercialRealEstateConstructionLoanReceivableMember pacw:RealEstateConstructionMember 2019-09-30 0001102112 pacw:RealEstateConstructionMember 2019-09-30 0001102112 us-gaap:ConsumerPortfolioSegmentMember 2019-09-30 0001102112 us-gaap:MortgagesMember 2019-09-30 0001102112 us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember pacw:RealEstateConstructionMember 2018-06-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:MortgagesMember 2018-06-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2018-07-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:MortgagesMember 2018-07-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:ConsumerPortfolioSegmentMember 2018-07-01 2018-09-30 0001102112 pacw:RealEstateConstructionMember 2018-07-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember 2018-07-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember 2018-07-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember pacw:RealEstateConstructionMember 2018-07-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2018-06-30 0001102112 us-gaap:ConsumerPortfolioSegmentMember 2018-07-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:ConsumerPortfolioSegmentMember 2018-06-30 0001102112 us-gaap:MortgagesMember 2018-07-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember 2018-06-30 0001102112 us-gaap:CommercialPortfolioSegmentMember 2018-07-01 2018-09-30 0001102112 us-gaap:PassMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 pacw:OtherCommercialMember us-gaap:SpecialMentionMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 pacw:ResidentialRealEstateConstructionFinancingReceivableMember us-gaap:PassMember pacw:RealEstateConstructionMember 2019-09-30 0001102112 us-gaap:CommercialRealEstateMember pacw:ClassifiedMember us-gaap:MortgagesMember 2019-09-30 0001102112 us-gaap:PassMember pacw:RealEstateConstructionMember 2019-09-30 0001102112 pacw:ClassifiedMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 pacw:ResidentialRealEstateConstructionFinancingReceivableMember us-gaap:SpecialMentionMember pacw:RealEstateConstructionMember 2019-09-30 0001102112 us-gaap:CommercialRealEstateMember us-gaap:PassMember us-gaap:MortgagesMember 2019-09-30 0001102112 pacw:OtherCommercialMember us-gaap:PassMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 pacw:ClassifiedMember us-gaap:MortgagesMember 2019-09-30 0001102112 us-gaap:ResidentialRealEstateMember us-gaap:SpecialMentionMember us-gaap:MortgagesMember 2019-09-30 0001102112 pacw:ResidentialRealEstateConstructionFinancingReceivableMember pacw:ClassifiedMember pacw:RealEstateConstructionMember 2019-09-30 0001102112 pacw:ClassifiedMember 2019-09-30 0001102112 pacw:OtherCommercialMember pacw:ClassifiedMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 us-gaap:SpecialMentionMember 2019-09-30 0001102112 pacw:AssetBasedMember us-gaap:PassMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 us-gaap:PassMember us-gaap:ConsumerPortfolioSegmentMember 2019-09-30 0001102112 pacw:VentureCapitalLoansMember us-gaap:SpecialMentionMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 us-gaap:ResidentialRealEstateMember pacw:ClassifiedMember us-gaap:MortgagesMember 2019-09-30 0001102112 pacw:ClassifiedMember us-gaap:ConsumerPortfolioSegmentMember 2019-09-30 0001102112 pacw:AssetBasedMember us-gaap:SpecialMentionMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 us-gaap:SpecialMentionMember us-gaap:ConsumerPortfolioSegmentMember 2019-09-30 0001102112 us-gaap:SpecialMentionMember us-gaap:MortgagesMember 2019-09-30 0001102112 pacw:VentureCapitalLoansMember pacw:ClassifiedMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 us-gaap:CommercialRealEstateMember us-gaap:SpecialMentionMember us-gaap:MortgagesMember 2019-09-30 0001102112 pacw:ClassifiedMember pacw:RealEstateConstructionMember 2019-09-30 0001102112 us-gaap:SpecialMentionMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 us-gaap:PassMember 2019-09-30 0001102112 pacw:VentureCapitalLoansMember us-gaap:PassMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 us-gaap:PassMember us-gaap:MortgagesMember 2019-09-30 0001102112 pacw:AssetBasedMember pacw:ClassifiedMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 us-gaap:ResidentialRealEstateMember us-gaap:PassMember us-gaap:MortgagesMember 2019-09-30 0001102112 us-gaap:SpecialMentionMember pacw:RealEstateConstructionMember 2019-09-30 0001102112 pacw:CommercialRealEstateConstructionLoanReceivableMember us-gaap:PassMember pacw:RealEstateConstructionMember 2019-09-30 0001102112 pacw:CommercialRealEstateConstructionLoanReceivableMember pacw:ClassifiedMember pacw:RealEstateConstructionMember 2019-09-30 0001102112 pacw:CommercialRealEstateConstructionLoanReceivableMember us-gaap:SpecialMentionMember pacw:RealEstateConstructionMember 2019-09-30 0001102112 pacw:ResidentialRealEstateConstructionFinancingReceivableMember pacw:RealEstateConstructionMember 2019-09-30 0001102112 pacw:AssetBasedMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:PerformingFinancingReceivableMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 us-gaap:PerformingFinancingReceivableMember 2019-09-30 0001102112 pacw:CommercialRealEstateConstructionLoanReceivableMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:PerformingFinancingReceivableMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 us-gaap:ResidentialRealEstateMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:PerformingFinancingReceivableMember us-gaap:MortgagesMember 2018-12-31 0001102112 us-gaap:PerformingFinancingReceivableMember us-gaap:MortgagesMember 2019-09-30 0001102112 us-gaap:PerformingFinancingReceivableMember us-gaap:ConsumerPortfolioSegmentMember 2019-09-30 0001102112 us-gaap:ResidentialRealEstateMember us-gaap:PerformingFinancingReceivableMember us-gaap:MortgagesMember 2019-09-30 0001102112 pacw:ResidentialRealEstateConstructionFinancingReceivableMember us-gaap:PerformingFinancingReceivableMember pacw:RealEstateConstructionMember 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:PerformingFinancingReceivableMember 2018-12-31 0001102112 pacw:VentureCapitalLoansMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:PerformingFinancingReceivableMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 pacw:OtherCommercialMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:PerformingFinancingReceivableMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 us-gaap:PerformingFinancingReceivableMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:PerformingFinancingReceivableMember us-gaap:ConsumerPortfolioSegmentMember 2018-12-31 0001102112 us-gaap:CommercialRealEstateMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:PerformingFinancingReceivableMember us-gaap:MortgagesMember 2018-12-31 0001102112 pacw:VentureCapitalLoansMember us-gaap:PerformingFinancingReceivableMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 pacw:OtherCommercialMember us-gaap:PerformingFinancingReceivableMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 pacw:ResidentialRealEstateConstructionFinancingReceivableMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:PerformingFinancingReceivableMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:PerformingFinancingReceivableMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:PerformingFinancingReceivableMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 us-gaap:CommercialRealEstateMember us-gaap:PerformingFinancingReceivableMember us-gaap:MortgagesMember 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:PerformingFinancingReceivableMember us-gaap:MortgagesMember 2018-12-31 0001102112 pacw:CommercialRealEstateConstructionLoanReceivableMember us-gaap:PerformingFinancingReceivableMember pacw:RealEstateConstructionMember 2019-09-30 0001102112 us-gaap:PerformingFinancingReceivableMember pacw:RealEstateConstructionMember 2019-09-30 0001102112 pacw:AssetBasedMember us-gaap:PerformingFinancingReceivableMember us-gaap:CommercialPortfolioSegmentMember 2019-09-30 0001102112 pacw:VentureCapitalLoansMember pacw:EquipmentFinanceCommercialFinancingReceivableMember 2019-01-01 2019-09-30 0001102112 us-gaap:CreditConcentrationRiskMember 2019-01-01 2019-09-30 0001102112 pacw:NonaccrualMember 2019-09-30 0001102112 pacw:OtherCommercialMember us-gaap:CommercialPortfolioSegmentMember 2019-07-01 2019-09-30 0001102112 us-gaap:CreditConcentrationRiskMember 2019-09-30 0001102112 pacw:PurchasedCreditImpairedLoansandLeasesMember 2017-12-31 0001102112 pacw:OtherCommercialMember us-gaap:CommercialPortfolioSegmentMember 2019-01-01 2019-09-30 0001102112 pacw:OtherResidentialMember us-gaap:CommercialPortfolioSegmentMember 2019-07-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:MortgagesMember 2019-07-01 2019-09-30 0001102112 us-gaap:ConsumerPortfolioSegmentMember 2019-07-01 2019-09-30 0001102112 pacw:RealEstateConstructionMember 2019-07-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember 2019-07-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2019-07-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember pacw:RealEstateConstructionMember 2019-07-01 2019-09-30 0001102112 us-gaap:CommercialPortfolioSegmentMember 2019-07-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:ConsumerPortfolioSegmentMember 2019-06-30 0001102112 us-gaap:MortgagesMember 2019-07-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:ConsumerPortfolioSegmentMember 2019-07-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember pacw:RealEstateConstructionMember 2019-06-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:MortgagesMember 2019-06-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember 2019-07-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2019-06-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember 2019-06-30 0001102112 pacw:AssetBasedMember us-gaap:CommercialPortfolioSegmentMember 2018-07-01 2018-09-30 0001102112 pacw:OtherCommercialMember us-gaap:CommercialPortfolioSegmentMember 2019-07-01 2019-09-30 0001102112 pacw:OtherCommercialMember us-gaap:CommercialPortfolioSegmentMember 2018-07-01 2018-09-30 0001102112 pacw:VentureCapitalLoansMember us-gaap:CommercialPortfolioSegmentMember 2019-07-01 2019-09-30 0001102112 pacw:VentureCapitalLoansMember us-gaap:CommercialPortfolioSegmentMember 2018-07-01 2018-09-30 0001102112 us-gaap:ResidentialRealEstateMember us-gaap:MortgagesMember 2019-07-01 2019-09-30 0001102112 us-gaap:CommercialRealEstateMember us-gaap:MortgagesMember 2018-07-01 2018-09-30 0001102112 pacw:AssetBasedMember us-gaap:CommercialPortfolioSegmentMember 2019-07-01 2019-09-30 0001102112 us-gaap:ResidentialRealEstateMember us-gaap:MortgagesMember 2018-07-01 2018-09-30 0001102112 us-gaap:CommercialRealEstateMember us-gaap:MortgagesMember 2019-07-01 2019-09-30 0001102112 pacw:CommercialRealEstateConstructionLoanReceivableMember pacw:RealEstateConstructionMember 2019-01-01 2019-09-30 0001102112 us-gaap:ResidentialRealEstateMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:MortgagesMember 2018-01-01 2018-09-30 0001102112 us-gaap:CommercialRealEstateMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:MortgagesMember 2018-01-01 2018-09-30 0001102112 pacw:CommercialRealEstateConstructionLoanReceivableMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember pacw:RealEstateConstructionMember 2018-01-01 2018-09-30 0001102112 pacw:OtherCommercialMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2018-01-01 2018-09-30 0001102112 pacw:OtherCommercialMember us-gaap:CommercialPortfolioSegmentMember 2019-01-01 2019-09-30 0001102112 pacw:AssetBasedMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2018-01-01 2018-09-30 0001102112 us-gaap:CommercialRealEstateMember us-gaap:MortgagesMember 2019-01-01 2019-09-30 0001102112 pacw:VentureCapitalLoansMember us-gaap:CommercialPortfolioSegmentMember 2019-01-01 2019-09-30 0001102112 us-gaap:ResidentialRealEstateMember us-gaap:MortgagesMember 2019-01-01 2019-09-30 0001102112 pacw:VentureCapitalLoansMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2018-01-01 2018-09-30 0001102112 pacw:AssetBasedMember us-gaap:CommercialPortfolioSegmentMember 2019-01-01 2019-09-30 0001102112 pacw:VentureCapitalLoansMember us-gaap:CommercialPortfolioSegmentMember 2018-01-01 2018-09-30 0001102112 us-gaap:ResidentialRealEstateMember us-gaap:MortgagesMember 2018-01-01 2018-09-30 0001102112 pacw:AssetBasedMember us-gaap:CommercialPortfolioSegmentMember 2018-01-01 2018-09-30 0001102112 us-gaap:CommercialRealEstateMember us-gaap:MortgagesMember 2018-01-01 2018-09-30 0001102112 pacw:OtherCommercialMember us-gaap:CommercialPortfolioSegmentMember 2018-01-01 2018-09-30 0001102112 pacw:ClassifiedMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 us-gaap:SpecialMentionMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 pacw:ResidentialRealEstateConstructionFinancingReceivableMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 us-gaap:MortgagesMember 2018-12-31 0001102112 pacw:AssetBasedMember us-gaap:PassMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 pacw:VentureCapitalLoansMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 pacw:OtherCommercialMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 pacw:CommercialRealEstateConstructionLoanReceivableMember us-gaap:PassMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 us-gaap:SpecialMentionMember us-gaap:MortgagesMember 2018-12-31 0001102112 us-gaap:ResidentialRealEstateMember us-gaap:SpecialMentionMember us-gaap:MortgagesMember 2018-12-31 0001102112 pacw:ClassifiedMember us-gaap:MortgagesMember 2018-12-31 0001102112 pacw:ResidentialRealEstateConstructionFinancingReceivableMember us-gaap:PassMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 pacw:AssetBasedMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 pacw:ClassifiedMember us-gaap:ConsumerPortfolioSegmentMember 2018-12-31 0001102112 us-gaap:SpecialMentionMember 2018-12-31 0001102112 us-gaap:CommercialRealEstateMember pacw:ClassifiedMember us-gaap:MortgagesMember 2018-12-31 0001102112 pacw:AssetBasedMember us-gaap:SpecialMentionMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 pacw:ResidentialRealEstateConstructionFinancingReceivableMember pacw:ClassifiedMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 us-gaap:SpecialMentionMember us-gaap:ConsumerPortfolioSegmentMember 2018-12-31 0001102112 us-gaap:ResidentialRealEstateMember us-gaap:MortgagesMember 2018-12-31 0001102112 us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 us-gaap:CommercialRealEstateMember us-gaap:MortgagesMember 2018-12-31 0001102112 pacw:VentureCapitalLoansMember us-gaap:SpecialMentionMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 pacw:CommercialRealEstateConstructionLoanReceivableMember us-gaap:SpecialMentionMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 us-gaap:ResidentialRealEstateMember pacw:ClassifiedMember us-gaap:MortgagesMember 2018-12-31 0001102112 us-gaap:PassMember us-gaap:MortgagesMember 2018-12-31 0001102112 pacw:AssetBasedMember pacw:ClassifiedMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 pacw:VentureCapitalLoansMember us-gaap:PassMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 us-gaap:CommercialRealEstateMember us-gaap:SpecialMentionMember us-gaap:MortgagesMember 2018-12-31 0001102112 pacw:CommercialRealEstateConstructionLoanReceivableMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 us-gaap:PassMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 pacw:RealEstateConstructionMember 2018-12-31 0001102112 us-gaap:ConsumerPortfolioSegmentMember 2018-12-31 0001102112 pacw:OtherCommercialMember pacw:ClassifiedMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 pacw:OtherCommercialMember us-gaap:PassMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 us-gaap:ResidentialRealEstateMember us-gaap:PassMember us-gaap:MortgagesMember 2018-12-31 0001102112 us-gaap:PassMember 2018-12-31 0001102112 pacw:VentureCapitalLoansMember pacw:ClassifiedMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 pacw:OtherCommercialMember us-gaap:SpecialMentionMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 us-gaap:PassMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 pacw:ResidentialRealEstateConstructionFinancingReceivableMember us-gaap:SpecialMentionMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 us-gaap:SpecialMentionMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 us-gaap:CommercialRealEstateMember us-gaap:PassMember us-gaap:MortgagesMember 2018-12-31 0001102112 pacw:CommercialRealEstateConstructionLoanReceivableMember pacw:ClassifiedMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 pacw:ClassifiedMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 pacw:ClassifiedMember 2018-12-31 0001102112 us-gaap:PassMember us-gaap:ConsumerPortfolioSegmentMember 2018-12-31 0001102112 pacw:OtherCommercialMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2018-07-01 2018-09-30 0001102112 pacw:VentureCapitalLoansMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2018-07-01 2018-09-30 0001102112 us-gaap:CommercialRealEstateMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:MortgagesMember 2018-07-01 2018-09-30 0001102112 us-gaap:ResidentialRealEstateMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:MortgagesMember 2018-07-01 2018-09-30 0001102112 pacw:ResidentialRealEstateConstructionFinancingReceivableMember pacw:RealEstateConstructionMember 2019-07-01 2019-09-30 0001102112 pacw:CommercialRealEstateConstructionLoanReceivableMember pacw:RealEstateConstructionMember 2019-07-01 2019-09-30 0001102112 pacw:AssetBasedMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:CommercialPortfolioSegmentMember 2018-07-01 2018-09-30 0001102112 pacw:CommercialRealEstateConstructionLoanReceivableMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember pacw:RealEstateConstructionMember 2018-07-01 2018-09-30 0001102112 pacw:ResidentialRealEstateConstructionFinancingReceivableMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember pacw:RealEstateConstructionMember 2018-07-01 2018-09-30 0001102112 pacw:NonPCIandPCILoansMember us-gaap:MortgagesMember 2018-12-31 0001102112 pacw:NonPCIandPCILoansMember us-gaap:ConsumerPortfolioSegmentMember 2018-12-31 0001102112 pacw:NonPCIandPCILoansMember pacw:RealEstateConstructionMember 2018-12-31 0001102112 pacw:NonPCIandPCILoansMember us-gaap:CommercialPortfolioSegmentMember 2018-12-31 0001102112 pacw:ConstructionandLandDevelopmentMember 2019-09-30 0001102112 srt:MultifamilyMember 2019-09-30 0001102112 us-gaap:CommercialRealEstateMember 2018-12-31 0001102112 pacw:ConstructionandLandDevelopmentMember 2018-12-31 0001102112 us-gaap:ResidentialMortgageMember 2018-12-31 0001102112 us-gaap:ResidentialMortgageMember 2019-09-30 0001102112 srt:MultifamilyMember 2018-12-31 0001102112 us-gaap:CommercialRealEstateMember 2019-09-30 0001102112 srt:ScenarioForecastMember 2019-01-01 2019-12-31 0001102112 pacw:CDIandCRIMember 2019-07-01 2019-09-30 0001102112 pacw:CDIandCRIMember 2019-04-01 2019-06-30 0001102112 pacw:CDIandCRIMember 2018-01-01 2018-09-30 0001102112 pacw:CDIandCRIMember 2019-01-01 2019-09-30 0001102112 pacw:CDIandCRIMember 2018-07-01 2018-09-30 0001102112 2018-01-01 2019-06-30 0001102112 pacw:CommunityReinvestmentActInvestmentsMember 2019-09-30 0001102112 pacw:CommunityReinvestmentActInvestmentsMember 2018-12-31 0001102112 srt:MaximumMember 2019-01-01 2019-09-30 0001102112 srt:MinimumMember 2019-01-01 2019-09-30 0001102112 srt:MaximumMember 2019-09-30 0001102112 srt:MinimumMember 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandFiveSeriesTwoMember 2019-01-01 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:TwoThousandSixTwoTermDebtSecuritizationMember 2018-12-31 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustVIDueSeptember2033Member 2019-01-01 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustCIIDueSeptember2033Member 2019-01-01 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandSixSeriesThreeMember 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustVDueSeptember2033Member 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:TwoThousandSixOneTermDebtSecuritizationMember 2018-12-31 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustVDueSeptember2033Member 2019-01-01 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustVIIDueApril2034Member 2018-12-31 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustCIIIDueSeptember2035Member 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustVIIDueApril2034Member 2019-01-01 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:TwoThousandSixOneTermDebtSecuritizationMember 2019-01-01 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandSixSeriesFiveMember 2018-12-31 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandFiveSeriesTwoMember 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustCIIDueSeptember2033Member 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustFCBIDueDecember2035Member 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandSixSeriesFourMember 2018-12-31 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustVIIDueApril2034Member 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember 2018-12-31 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustVDueSeptember2033Member 2018-12-31 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustFCBIDueDecember2035Member 2019-01-01 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandSixSeriesThreeMember 2019-01-01 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandFiveSeriesOneMember 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandSixSeriesFourMember 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandFiveSeriesOneMember 2019-01-01 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustFCBIDueDecember2035Member 2018-12-31 0001102112 us-gaap:SubordinatedDebtMember pacw:TwoThousandSixOneTermDebtSecuritizationMember 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustFCCIDueMarch2037Member 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustVIDueSeptember2033Member 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandSixSeriesFiveMember 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustFCCIDueMarch2037Member 2018-12-31 0001102112 us-gaap:SubordinatedDebtMember pacw:TwoThousandSixTwoTermDebtSecuritizationMember 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandFiveSeriesTwoMember 2018-12-31 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandSevenSeriesTwoMember 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandSevenSeriesTwoMember 2019-01-01 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:TwoThousandSixTwoTermDebtSecuritizationMember 2019-01-01 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustCIIIDueSeptember2035Member 2019-01-01 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustCIIDueSeptember2033Member 2018-12-31 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandSixSeriesFourMember 2019-01-01 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustFCCIDueMarch2037Member 2019-01-01 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandSixSeriesThreeMember 2018-12-31 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandSixSeriesFiveMember 2019-01-01 2019-09-30 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustVIDueSeptember2033Member 2018-12-31 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandFiveSeriesOneMember 2018-12-31 0001102112 us-gaap:SubordinatedDebtMember pacw:TrustPreferredSecuritiesTwoThousandSevenSeriesTwoMember 2018-12-31 0001102112 us-gaap:SubordinatedDebtMember pacw:SubordinatedDebtTrustCIIIDueSeptember2035Member 2018-12-31 0001102112 srt:FederalHomeLoanBankOfSanFranciscoMember us-gaap:SecuredDebtMember 2019-09-30 0001102112 pacw:AmericanFinancialExchangeMember 2018-12-31 0001102112 srt:FederalHomeLoanBankOfSanFranciscoMember us-gaap:SecuredDebtMember 2018-12-31 0001102112 pacw:AmericanFinancialExchangeMember 2019-09-30 0001102112 us-gaap:NotesPayableOtherPayablesMember 2019-09-30 0001102112 srt:FederalHomeLoanBankOfSanFranciscoMember us-gaap:UnsecuredDebtMember 2019-09-30 0001102112 srt:FederalHomeLoanBankOfSanFranciscoMember us-gaap:UnsecuredDebtMember 2018-12-31 0001102112 us-gaap:NotesPayableOtherPayablesMember 2018-12-31 0001102112 srt:FederalHomeLoanBankOfSanFranciscoMember us-gaap:UnusedLinesOfCreditMember 2019-09-30 0001102112 us-gaap:NotesPayableOtherPayablesMember 2019-01-01 2019-09-30 0001102112 us-gaap:UnusedLinesOfCreditMember 2019-09-30 0001102112 us-gaap:FederalReserveBankAdvancesMember 2019-09-30 0001102112 us-gaap:MaturityOvernightMember pacw:AmericanFinancialExchangeMember 2019-09-30 0001102112 pacw:TrustPreferredSecuritiesTwoThousandSixSeriesThreeMember 2019-09-30 0001102112 srt:FederalHomeLoanBankOfSanFranciscoMember pacw:TwoMonthBorrowingMember 2019-09-30 0001102112 srt:FederalHomeLoanBankOfSanFranciscoMember 2019-09-30 0001102112 srt:FederalHomeLoanBankOfSanFranciscoMember us-gaap:MaturityOvernightMember 2018-12-31 0001102112 srt:FederalHomeLoanBankOfSanFranciscoMember us-gaap:MaturityOvernightMember 2019-09-30 0001102112 us-gaap:UnusedLinesOfCreditMember 2019-01-01 2019-09-30 0001102112 us-gaap:FederalReserveBankAdvancesMember us-gaap:SecuredDebtMember 2019-09-30 0001102112 us-gaap:FederalReserveBankAdvancesMember 2018-12-31 0001102112 us-gaap:UnusedLinesOfCreditMember 2018-12-31 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember 2018-12-31 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsNonrecurringMember 2018-12-31 0001102112 us-gaap:FairValueMeasurementsNonrecurringMember 2018-12-31 0001102112 pacw:OtherrealestateandforeclosedassetsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsNonrecurringMember 2018-12-31 0001102112 pacw:OtherrealestateandforeclosedassetsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsNonrecurringMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsNonrecurringMember 2018-12-31 0001102112 pacw:OtherrealestateandforeclosedassetsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember pacw:ThirdPartyAppraisalsDomain 2018-12-31 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsNonrecurringMember 2018-12-31 0001102112 pacw:OtherrealestateandforeclosedassetsMember us-gaap:FairValueMeasurementsNonrecurringMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember 2018-12-31 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsNonrecurringMember 2018-12-31 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueMeasurementsNonrecurringMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CollateralizedLoanObligationsMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialMortgageBackedSecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:GovernmentagencyandgovernmentsponsoredenterprisecollateralizedmortgageobligationsMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember pacw:GovernmentagencyandgovernmentsponsoredenterprisecollateralizedmortgageobligationsMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CollateralizedLoanObligationsMember 2019-09-30 0001102112 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CollateralizedLoanObligationsMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueMeasurementsRecurringMember pacw:SBAassetbackedsecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueMeasurementsRecurringMember pacw:GovernmentagencyandgovernmentsponsoredenterprisecollateralizedmortgageobligationsMember 2019-09-30 0001102112 us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2019-09-30 0001102112 us-gaap:FairValueMeasurementsRecurringMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember pacw:GovernmentagencyandgovernmentsponsoredenterprisecollateralizedmortgageobligationsMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2019-09-30 0001102112 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-09-30 0001102112 us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:SBAassetbackedsecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember pacw:SBAassetbackedsecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialMortgageBackedSecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CollateralizedLoanObligationsMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialMortgageBackedSecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember pacw:SBAassetbackedsecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2019-09-30 0001102112 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialMortgageBackedSecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2018-12-31 0001102112 us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001102112 us-gaap:FairValueMeasurementsRecurringMember pacw:SBAassetbackedsecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2018-12-31 0001102112 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember 2018-12-31 0001102112 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialMortgageBackedSecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialMortgageBackedSecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:GovernmentagencyandgovernmentsponsoredenterprisecollateralizedmortgageobligationsMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2018-12-31 0001102112 us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember pacw:SBAassetbackedsecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialMortgageBackedSecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USTreasurySecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2018-12-31 0001102112 us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:MortgageBackedSecuritiesIssuedByUSGovernmentSponsoredEnterprisesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember 2018-12-31 0001102112 us-gaap:FairValueMeasurementsRecurringMember pacw:GovernmentagencyandgovernmentsponsoredenterprisecollateralizedmortgageobligationsMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember pacw:GovernmentagencyandgovernmentsponsoredenterprisecollateralizedmortgageobligationsMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:SBAassetbackedsecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:USStatesAndPoliticalSubdivisionsMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CorporateDebtSecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember pacw:GovernmentagencyandgovernmentsponsoredenterprisecollateralizedmortgageobligationsMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:CommercialMortgageBackedSecuritiesMember 2018-12-31 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember pacw:SBAassetbackedsecuritiesMember 2018-12-31 0001102112 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:WarrantMember 2019-01-01 2019-09-30 0001102112 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:WarrantMember us-gaap:MeasurementInputRiskFreeInterestRateMember 2019-01-01 2019-09-30 0001102112 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:WarrantMember us-gaap:MeasurementInputPriceVolatilityMember 2019-01-01 2019-09-30 0001102112 us-gaap:WarrantMember 2019-01-01 2019-09-30 0001102112 us-gaap:FairValueInputsLevel2Member 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member 2019-09-30 0001102112 pacw:NonPCIandPCILoansMember us-gaap:FairValueInputsLevel2Member 2019-09-30 0001102112 us-gaap:FairValueInputsLevel1Member 2019-09-30 0001102112 pacw:NonPCIandPCILoansMember us-gaap:FairValueInputsLevel1Member 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:CoveredPrivateLabelCollateralizedMortgageObligationsMemberDomain 2019-01-01 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:CoveredPrivateLabelCollateralizedMortgageObligationsMemberDomain 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:OthersecuritiesMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:OthersecuritiesMember 2018-12-31 0001102112 us-gaap:AssetBackedSecuritiesMember 2019-01-01 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member 2019-01-01 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:OthersecuritiesMember 2019-01-01 2019-09-30 0001102112 pacw:PrivateLabelCollateralizedMortgageObligationsMember 2019-01-01 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member 2018-12-31 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:CoveredPrivateLabelCollateralizedMortgageObligationsMemberDomain 2018-12-31 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueMeasurementsNonrecurringMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-09-30 0001102112 us-gaap:FairValueMeasurementsNonrecurringMember 2019-09-30 0001102112 pacw:OtherrealestateandforeclosedassetsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember pacw:ThirdPartyAppraisalsDomain 2019-09-30 0001102112 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-09-30 0001102112 pacw:OtherrealestateandforeclosedassetsMember us-gaap:FairValueMeasurementsNonrecurringMember 2019-09-30 0001102112 pacw:OtherrealestateandforeclosedassetsMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-09-30 0001102112 pacw:OtherrealestateandforeclosedassetsMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsNonrecurringMember 2019-09-30 0001102112 us-gaap:FairValueInputsLevel1Member 2018-12-31 0001102112 us-gaap:FairValueInputsLevel2Member 2018-12-31 0001102112 pacw:NonPCIandPCILoansMember us-gaap:FairValueInputsLevel2Member 2018-12-31 0001102112 pacw:NonPCIandPCILoansMember us-gaap:FairValueInputsLevel1Member 2018-12-31 0001102112 pacw:NonPCIandPCILoansMember 2018-12-31 0001102112 pacw:NonPCIandPCILoansMember us-gaap:FairValueInputsLevel3Member 2018-12-31 0001102112 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember us-gaap:MeasurementInputDefaultRateMember 2019-01-01 2019-09-30 0001102112 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:CoveredPrivateLabelCollateralizedMortgageObligationsMemberDomain us-gaap:MeasurementInputDefaultRateMember 2019-01-01 2019-09-30 0001102112 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:CoveredPrivateLabelCollateralizedMortgageObligationsMemberDomain us-gaap:MeasurementInputPrepaymentRateMember 2019-01-01 2019-09-30 0001102112 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:CoveredPrivateLabelCollateralizedMortgageObligationsMemberDomain us-gaap:MeasurementInputDiscountRateMember 2019-01-01 2019-09-30 0001102112 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:CoveredPrivateLabelCollateralizedMortgageObligationsMemberDomain us-gaap:MeasurementInputLossSeverityMember 2019-01-01 2019-09-30 0001102112 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember us-gaap:MeasurementInputPrepaymentRateMember 2019-01-01 2019-09-30 0001102112 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember us-gaap:MeasurementInputDiscountRateMember 2019-01-01 2019-09-30 0001102112 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember us-gaap:MeasurementInputLossSeverityMember 2019-01-01 2019-09-30 0001102112 pacw:OtherrealestateandforeclosedassetsMember us-gaap:FairValueMeasurementsNonrecurringMember 2019-07-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueMeasurementsNonrecurringMember 2018-01-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueMeasurementsNonrecurringMember 2018-07-01 2018-09-30 0001102112 us-gaap:FairValueMeasurementsNonrecurringMember 2019-01-01 2019-09-30 0001102112 pacw:OtherrealestateandforeclosedassetsMember us-gaap:FairValueMeasurementsNonrecurringMember 2018-07-01 2018-09-30 0001102112 us-gaap:FairValueMeasurementsNonrecurringMember 2018-07-01 2018-09-30 0001102112 pacw:OtherrealestateandforeclosedassetsMember us-gaap:FairValueMeasurementsNonrecurringMember 2019-01-01 2019-09-30 0001102112 us-gaap:FairValueMeasurementsNonrecurringMember 2019-07-01 2019-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueMeasurementsNonrecurringMember 2019-07-01 2019-09-30 0001102112 us-gaap:FairValueMeasurementsNonrecurringMember 2018-01-01 2018-09-30 0001102112 pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueMeasurementsNonrecurringMember 2019-01-01 2019-09-30 0001102112 pacw:OtherrealestateandforeclosedassetsMember us-gaap:FairValueMeasurementsNonrecurringMember 2018-01-01 2018-09-30 0001102112 pacw:DiscountRatesMember srt:WeightedAverageMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember pacw:ThirdPartyAppraisalsDomain 2019-01-01 2019-09-30 0001102112 pacw:DiscountRatesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember pacw:DiscountedCashFlowMember 2019-09-30 0001102112 pacw:NoDiscountsMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember pacw:ThirdPartyAppraisalsDomain 2019-09-30 0001102112 pacw:DiscountRatesMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember pacw:ThirdPartyAppraisalsDomain 2019-09-30 0001102112 pacw:DiscountRatesMember srt:WeightedAverageMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDiscountRateMember pacw:DiscountedCashFlowMember 2019-01-01 2019-09-30 0001102112 pacw:DiscountRatesMember srt:MinimumMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDiscountRateMember pacw:DiscountedCashFlowMember 2019-01-01 2019-09-30 0001102112 pacw:DiscountRatesMember srt:MaximumMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDiscountRateMember pacw:DiscountedCashFlowMember 2019-01-01 2019-09-30 0001102112 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember us-gaap:MeasurementInputPrepaymentRateMember 2019-01-01 2019-09-30 0001102112 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember us-gaap:MeasurementInputDiscountRateMember 2019-01-01 2019-09-30 0001102112 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember us-gaap:MeasurementInputDiscountRateMember 2019-01-01 2019-09-30 0001102112 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:CoveredPrivateLabelCollateralizedMortgageObligationsMemberDomain us-gaap:MeasurementInputPrepaymentRateMember 2019-01-01 2019-09-30 0001102112 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:CoveredPrivateLabelCollateralizedMortgageObligationsMemberDomain us-gaap:MeasurementInputLossSeverityMember 2019-01-01 2019-09-30 0001102112 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:CoveredPrivateLabelCollateralizedMortgageObligationsMemberDomain us-gaap:MeasurementInputDiscountRateMember 2019-01-01 2019-09-30 0001102112 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember us-gaap:MeasurementInputPrepaymentRateMember 2019-01-01 2019-09-30 0001102112 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:CoveredPrivateLabelCollateralizedMortgageObligationsMemberDomain us-gaap:MeasurementInputDiscountRateMember 2019-01-01 2019-09-30 0001102112 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:CoveredPrivateLabelCollateralizedMortgageObligationsMemberDomain us-gaap:MeasurementInputLossSeverityMember 2019-01-01 2019-09-30 0001102112 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember us-gaap:MeasurementInputDefaultRateMember 2019-01-01 2019-09-30 0001102112 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:CoveredPrivateLabelCollateralizedMortgageObligationsMemberDomain us-gaap:MeasurementInputDefaultRateMember 2019-01-01 2019-09-30 0001102112 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:CoveredPrivateLabelCollateralizedMortgageObligationsMemberDomain us-gaap:MeasurementInputPrepaymentRateMember 2019-01-01 2019-09-30 0001102112 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:CoveredPrivateLabelCollateralizedMortgageObligationsMemberDomain us-gaap:MeasurementInputDefaultRateMember 2019-01-01 2019-09-30 0001102112 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember us-gaap:MeasurementInputLossSeverityMember 2019-01-01 2019-09-30 0001102112 2018-01-01 2018-12-31 0001102112 pacw:NoninterestIncomeMember 2018-01-01 2018-09-30 0001102112 pacw:OtherMember 2019-01-01 2019-09-30 0001102112 pacw:GainOnSaleOfLoansMember 2018-01-01 2018-09-30 0001102112 pacw:LeaseEquipmentIncomeMember 2019-01-01 2019-09-30 0001102112 pacw:OtherMember 2018-01-01 2018-09-30 0001102112 pacw:LeaseEquipmentIncomeMember 2018-01-01 2018-09-30 0001102112 pacw:OtherCommissionsAndFeesMember 2018-01-01 2018-09-30 0001102112 pacw:NoninterestIncomeMember 2019-01-01 2019-09-30 0001102112 pacw:GainOnSaleOfSecuritiesMember 2019-01-01 2019-09-30 0001102112 pacw:OtherCommissionsAndFeesMember 2019-01-01 2019-09-30 0001102112 pacw:GainOnSaleOfLoansMember 2019-01-01 2019-09-30 0001102112 pacw:GainOnSaleOfSecuritiesMember 2018-01-01 2018-09-30 0001102112 pacw:ServiceChargesOnDepositAccountsMember 2018-01-01 2018-09-30 0001102112 pacw:ServiceChargesOnDepositAccountsMember 2019-01-01 2019-09-30 0001102112 pacw:InterestMember 2019-01-01 2019-09-30 0001102112 pacw:InterestMember 2018-01-01 2018-09-30 0001102112 pacw:GainOnSaleOfLoansMember 2019-07-01 2019-09-30 0001102112 pacw:GainOnSaleOfSecuritiesMember 2018-07-01 2018-09-30 0001102112 pacw:OtherCommissionsAndFeesMember 2019-07-01 2019-09-30 0001102112 pacw:GainOnSaleOfLoansMember 2018-07-01 2018-09-30 0001102112 pacw:ServiceChargesOnDepositAccountsMember 2018-07-01 2018-09-30 0001102112 pacw:NoninterestIncomeMember 2018-07-01 2018-09-30 0001102112 pacw:InterestMember 2018-07-01 2018-09-30 0001102112 pacw:OtherMember 2018-07-01 2018-09-30 0001102112 pacw:OtherCommissionsAndFeesMember 2018-07-01 2018-09-30 0001102112 pacw:OtherMember 2019-07-01 2019-09-30 0001102112 pacw:LeaseEquipmentIncomeMember 2018-07-01 2018-09-30 0001102112 pacw:NoninterestIncomeMember 2019-07-01 2019-09-30 0001102112 pacw:GainOnSaleOfSecuritiesMember 2019-07-01 2019-09-30 0001102112 pacw:ServiceChargesOnDepositAccountsMember 2019-07-01 2019-09-30 0001102112 pacw:LeaseEquipmentIncomeMember 2019-07-01 2019-09-30 0001102112 pacw:InterestMember 2019-07-01 2019-09-30 0001102112 srt:MaximumMember us-gaap:ShareBasedCompensationAwardTrancheOneMember 2019-01-01 2019-09-30 0001102112 pacw:TimeBasedRestrictedStockAwardsMember pacw:PacWest2003StockIncentivePlanMember 2019-09-30 0001102112 us-gaap:RestrictedStockMember pacw:VestingBasedOnServiceMember 2018-07-01 2018-09-30 0001102112 pacw:PacWest2003StockIncentivePlanMember 2019-09-30 0001102112 us-gaap:RestrictedStockMember pacw:VestingBasedOnServiceMember 2019-04-01 2019-06-30 0001102112 us-gaap:RestrictedStockMember pacw:VestingBasedOnServiceMember 2019-01-01 2019-09-30 0001102112 srt:MaximumMember us-gaap:ShareBasedCompensationAwardTrancheTwoMember 2019-01-01 2019-09-30 0001102112 us-gaap:RestrictedStockMember pacw:VestingBasedOnServiceMember 2018-01-01 2018-09-30 0001102112 us-gaap:RestrictedStockMember pacw:VestingBasedOnServiceMember 2019-07-01 2019-09-30 0001102112 us-gaap:PerformanceSharesMember 2019-09-30 0001102112 pacw:RestrictedStockAwardsAndPerformanceBasedRestrictedStockMember 2019-09-30 0001102112 srt:MaximumMember pacw:TimeBasedRestrictedStockAwardsMember pacw:PacWest2003StockIncentivePlanMember 2019-01-01 2019-09-30 0001102112 srt:MinimumMember pacw:TimeBasedRestrictedStockAwardsMember pacw:PacWest2003StockIncentivePlanMember 2019-01-01 2019-09-30 0001102112 us-gaap:PerformanceSharesMember 2019-01-01 2019-09-30 0001102112 us-gaap:DividendDeclaredMember us-gaap:SubsequentEventMember 2019-11-01 2019-11-01 0001102112 pacw:SubordinatedDebtTrustCIIDueSeptember2033Member us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001102112 pacw:SubordinatedDebtTrustVDueSeptember2033Member us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001102112 pacw:TrustPreferredSecuritiesTwoThousandFiveSeriesOneMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001102112 pacw:TrustPreferredSecuritiesTwoThousandSixSeriesFiveMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001102112 pacw:TrustPreferredSecuritiesTwoThousandFiveSeriesTwoMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001102112 pacw:TwoThousandSixOneTermDebtSecuritizationMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001102112 pacw:SubordinatedDebtTrustCIIIDueSeptember2035Member us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001102112 pacw:SubordinatedDebtTrustVIDueSeptember2033Member us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001102112 pacw:SubordinatedDebtTrustVIIDueApril2034Member us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001102112 pacw:TwoThousandSixTwoTermDebtSecuritizationMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001102112 pacw:SubordinatedDebtTrustFCBIDueDecember2035Member us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001102112 pacw:TrustPreferredSecuritiesTwoThousandSixSeriesThreeMember pacw:EuriborRateMember 2019-01-01 2019-09-30 0001102112 pacw:TrustPreferredSecuritiesTwoThousandSevenSeriesTwoMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001102112 pacw:TrustPreferredSecuritiesTwoThousandSixSeriesFourMember us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001102112 pacw:SubordinatedDebtTrustFCCIDueMarch2037Member us-gaap:LondonInterbankOfferedRateLIBORMember 2019-01-01 2019-09-30 0001102112 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember us-gaap:MeasurementInputPrepaymentRateMember 2019-01-01 2019-09-30 0001102112 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember us-gaap:MeasurementInputPrepaymentRateMember 2019-01-01 2019-09-30 0001102112 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember us-gaap:MeasurementInputLossSeverityMember 2019-01-01 2019-09-30 0001102112 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember us-gaap:MeasurementInputDefaultRateMember 2019-01-01 2019-09-30 0001102112 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember us-gaap:MeasurementInputDiscountRateMember 2019-01-01 2019-09-30 0001102112 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember us-gaap:MeasurementInputLossSeverityMember 2019-01-01 2019-09-30 0001102112 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember us-gaap:MeasurementInputPrepaymentRateMember 2019-01-01 2019-09-30 0001102112 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:AssetBackedSecuritiesMember us-gaap:MeasurementInputDefaultRateMember 2019-01-01 2019-09-30 0001102112 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember us-gaap:MeasurementInputLossSeverityMember 2019-01-01 2019-09-30 0001102112 srt:MinimumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember us-gaap:MeasurementInputDiscountRateMember 2019-01-01 2019-09-30 0001102112 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember us-gaap:MeasurementInputLossSeverityMember 2019-01-01 2019-09-30 0001102112 srt:WeightedAverageMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember us-gaap:MeasurementInputDefaultRateMember 2019-01-01 2019-09-30 0001102112 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember us-gaap:MeasurementInputDefaultRateMember 2019-01-01 2019-09-30 0001102112 srt:MaximumMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember pacw:PrivateLabelCollateralizedMortgageObligationsMember us-gaap:MeasurementInputDiscountRateMember 2019-01-01 2019-09-30 0001102112 srt:WeightedAverageMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDiscountRateMember pacw:DiscountedCashFlowMember 2019-01-01 2019-09-30 0001102112 srt:MinimumMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDiscountRateMember pacw:DiscountedCashFlowMember 2019-01-01 2019-09-30 0001102112 srt:MaximumMember pacw:NonPurchasedCreditImpairedLoansAndLeasesMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsNonrecurringMember us-gaap:MeasurementInputDiscountRateMember pacw:DiscountedCashFlowMember 2019-01-01 2019-09-30 pacw:acquisition iso4217:USD xbrli:shares iso4217:USD xbrli:shares pacw:bank_branch xbrli:pure pacw:contract iso4217:EUR pacw:other_office


 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549  
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
Commission File No. 001-36408
PACWEST BANCORP
(Exact name of registrant as specified in its charter)
Delaware
 
33-0885320
(State of Incorporation)
 
(I.R.S. Employer Identification No.)
9701 Wilshire Blvd., Suite 700
Beverly Hills, CA 90212
(Address of Principal Executive Offices, Including Zip Code)
(310) 887-8500
(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value $0.01 per share
 
PACW
 
The Nasdaq Stock Market, LLC
(Title of Each Class)
 
(Trading Symbol)
 
(Name of Exchange on Which Registered)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☑      No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☑      No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
☑
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
 
 
 
 
 
 
☐
Smaller reporting company
☐
Emerging growth company
 
 
 
 
 
 
 
 
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐      No  ☑
As of October 30, 2019, there were 118,212,594 shares of the registrant's common stock outstanding, excluding 1,613,951 shares of unvested restricted stock.

1


PACWEST BANCORP
SEPTEMBER 30, 2019 QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
 
 
 
Page
 
PART I. FINANCIAL INFORMATION
 
 
 
Item 1.
Condensed Consolidated Financial Statements (Unaudited)
 
 
Condensed Consolidated Balance Sheets (Unaudited)
 
Condensed Consolidated Statements of Earnings (Unaudited)
 
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
 
Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)
 
Condensed Consolidated Statements of Cash Flows (Unaudited)
 
Notes to Condensed Consolidated Financial Statements (Unaudited)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Item 4.
Controls and Procedures
 
PART II. OTHER INFORMATION
 
 
 
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.
Index to Exhibits
Signatures


2

PART I
Glossary of Acronyms, Abbreviations, and Terms
The acronyms, abbreviations, and terms listed below are used in various sections of this Form 10-Q, including "Item 1. Financial Statements" and "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations."
AFX
American Financial Exchange
 
IPO
Initial Public Offering
ALLL
Allowance for Loan and Lease Losses
 
IRR
Interest Rate Risk
ALM
Asset Liability Management
 
LIBOR
London Inter-bank Offered Rate
ASC
Accounting Standards Codification
 
LIHTC
Low Income Housing Tax Credit
ASU
Accounting Standards Update
 
MBS
Mortgage-Backed Securities
Basel III
A comprehensive capital framework and rules for U.S. banking organizations approved by the FRB and the FDIC in 2013
 
MVE
Market Value of Equity
BHCA
Bank Holding Company Act of 1956, as amended
 
NII
Net Interest Income
BOLI
Bank Owned Life Insurance
 
NIM
Net Interest Margin
CDI
Core Deposit Intangible Assets
 
Non-PCI
Non-Purchased Credit Impaired
CECL
Current Expected Credit Loss
 
NSF
Non-Sufficient Funds
CET1
Common Equity Tier 1
 
OREO
Other Real Estate Owned
CMOs
Collateralized Mortgage Obligations
 
PD/LGD
Probability of Default/Loss Given Default
CPI
Consumer Price Index
 
PCI
Purchased Credit Impaired
CRA
Community Reinvestment Act
 
PRSUs
Performance-Based Restricted Stock Units
CRI
Customer Relationship Intangible Assets
 
PWAM
Pacific Western Asset Management Inc.
CUB
CU Bancorp (a company acquired on October 20, 2017)
 
ROU
Right-of-use
CU Bank
California United Bank (a wholly-owned subsidiary of CUB)
 
SBA
Small Business Administration
DBO
California Department of Business Oversight
 
SEC
Securities and Exchange Commission
DTAs
Deferred Tax Assets
 
Square 1
Square 1 Financial, Inc. (a company acquired on October 6, 2015)
Dodd-Frank Act
Dodd-Frank Wall Street Reform and Consumer Protection Act
 
Tax Equivalent Net Interest Income
Net interest income reflecting adjustments related to tax-exempt interest on certain loans and investment securities
Efficiency Ratio
Noninterest expense (less intangible asset amortization, net foreclosed assets income/expense, and acquisition, integration and reorganization costs) divided by net revenues (the sum of tax equivalent net interest income plus noninterest income, less gain/loss on sale of securities and gain/loss on sales of assets other than loans and leases)
 
Tax Equivalent NIM
NIM reflecting adjustments related to tax-exempt interest on certain loans and investment securities
FASB
Financial Accounting Standards Board
 
TCJA
Tax Cuts and Jobs Act
FDIC
Federal Deposit Insurance Corporation
 
TDRs
Troubled Debt Restructurings
FHLB
Federal Home Loan Bank of San Francisco
 
TRSAs
Time-Based Restricted Stock Awards
FRB
Board of Governors of the Federal Reserve System
 
U.S. GAAP
U.S. Generally Accepted Accounting Principles
FRBSF
Federal Reserve Bank of San Francisco
 
VIE
Variable Interest Entity


3


ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
September 30,
 
December 31,
 
2019
 
2018
 
(Unaudited)
 
(Dollars in thousands, except par value amounts)
ASSETS:
 
 
 
Cash and due from banks
$
252,596

 
$
175,830

Interest-earning deposits in financial institutions
483,405

 
209,937

Total cash, cash equivalents, and restricted cash
736,001

 
385,767

Securities available-for-sale, at fair value
3,817,348

 
4,009,431

Federal Home Loan Bank stock, at cost
26,865

 
32,103

Total investment securities
3,844,213

 
4,041,534

Gross loans and leases held for investment
18,796,011

 
18,026,365

Deferred fees, net
(60,468
)
 
(68,652
)
Allowance for loan and lease losses
(138,552
)
 
(132,472
)
Total loans and leases held for investment, net
18,596,991

 
17,825,241

Equipment leased to others under operating leases
295,854

 
292,677

Premises and equipment, net
37,926

 
34,661

Foreclosed assets, net
1,366

 
5,299

Deferred tax asset, net
—

 
17,489

Goodwill
2,548,670

 
2,548,670

Core deposit and customer relationship intangibles, net
42,547

 
57,120

Other assets
621,059

 
522,896

Total assets
$
26,724,627

 
$
25,731,354

 
 
 
 
LIABILITIES:
 
 
 
Noninterest-bearing deposits
$
7,441,185

 
$
7,888,915

Interest-bearing deposits
12,292,018

 
10,981,586

Total deposits
19,733,203

 
18,870,501

Borrowings
1,253,031

 
1,371,114

Subordinated debentures
456,145

 
453,846

Accrued interest payable and other liabilities
362,140

 
210,305

Total liabilities
21,804,519

 
20,905,766

 
 
 
 
Commitments and contingencies


 


 
 
 
 
STOCKHOLDERS' EQUITY:
 
 
 
Preferred stock ($0.01 par value; 5,000,000 shares authorized; none issued and outstanding)
—

 
—

Common stock ($0.01 par value, 200,000,000 shares authorized at September 30, 2019 and
 
 
 
December 31, 2018; 121,911,989 and 125,079,705 shares issued, respectively, includes
 
 
 
1,619,355 and 1,344,656 shares of unvested restricted stock, respectively)
1,219

 
1,251

Additional paid-in capital
3,371,032

 
3,722,723

Retained earnings
1,534,367

 
1,182,674

Treasury stock, at cost (2,080,797 and 1,889,872 shares at September 30, 2019 and
 
 
 
December 31, 2018)
(82,397
)
 
(74,985
)
Accumulated other comprehensive income (loss), net
95,887

 
(6,075
)
Total stockholders' equity
4,920,108

 
4,825,588

Total liabilities and stockholders' equity
$
26,724,627

 
$
25,731,354

See Notes to Condensed Consolidated Financial Statements.

4


PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
2019
 
2019
 
2018
 
2019
 
2018
 
(Unaudited)
 
(Dollars in thousands, except per share amounts)
Interest income:
 
 
 
 
 
 
 
 
 
Loans and leases
$
275,978

 
$
284,236

 
$
264,062

 
$
834,443

 
$
775,447

Investment securities
28,806

 
28,948

 
28,061

 
87,434

 
81,929

Deposits in financial institutions
2,424

 
1,349

 
519

 
4,423

 
1,555

Total interest income
307,208

 
314,533

 
292,642

 
926,300

 
858,931

Interest expense:
 
 
 
 
 
 
 
 
 
Deposits
40,703

 
38,720

 
21,121

 
113,658

 
51,306

Borrowings
6,852

 
7,210

 
3,814

 
21,772

 
7,383

Subordinated debentures
7,417

 
7,705

 
7,390

 
22,860

 
21,093

Total interest expense
54,972

 
53,635

 
32,325

 
158,290

 
79,782

Net interest income
252,236

 
260,898

 
260,317

 
768,010

 
779,149

Provision for credit losses
7,000

 
8,000

 
11,500

 
19,000

 
33,000

Net interest income after provision for credit losses
245,236

 
252,898

 
248,817

 
749,010

 
746,149

Noninterest income:
 
 
 
 
 
 
 
 
 
Other commissions and fees
10,855

 
11,590

 
12,397

 
33,453

 
34,429

Leased equipment income
9,615

 
9,182

 
9,120

 
28,079

 
28,497

Service charges on deposit accounts
3,525

 
3,771

 
3,979

 
11,026

 
12,418

Gain on sale of loans and leases
765

 
326

 
—

 
1,091

 
4,675

Gain on sale of securities
908

 
22,192

 
826

 
25,261

 
7,390

Other income
7,761

 
3,832

 
10,590

 
16,476

 
27,700

Total noninterest income
33,429

 
50,893

 
36,912

 
115,386

 
115,109

Noninterest expense:
 
 
 
 
 
 
 
 
 
Compensation
71,424

 
68,956

 
72,333

 
211,225

 
213,269

Occupancy
14,089

 
14,457

 
13,069

 
42,866

 
39,867

Data processing
7,044

 
6,817

 
6,740

 
20,786

 
20,295

Leased equipment depreciation
5,951

 
5,558

 
5,001

 
17,160

 
15,613

Intangible asset amortization
4,833

 
4,870

 
5,587

 
14,573

 
17,520

Other professional services
4,400

 
4,629

 
6,058

 
13,542

 
15,754

Insurance and assessments
4,100

 
4,098

 
5,446

 
12,236

 
16,503

Loan expense
3,628

 
3,451

 
2,249

 
9,964

 
7,578

Acquisition, integration and reorganization costs
—

 
—

 
800

 
618

 
800

Foreclosed assets expense (income), net
8

 
(146
)
 
(257
)
 
(109
)
 
(440
)
Other expense
11,332

 
12,737

 
11,127

 
35,662

 
35,238

Total noninterest expense
126,809

 
125,427

 
128,153

 
378,523

 
381,997

Earnings before income taxes
151,856

 
178,364

 
157,576

 
485,873

 
479,261

Income tax expense
41,830

 
50,239

 
41,289

 
135,118

 
128,963

Net earnings
$
110,026

 
$
128,125

 
$
116,287

 
$
350,755

 
$
350,298

 
 
 
 
 
 
 
 
 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
Basic
$
0.92

 
$
1.07

 
$
0.94

 
$
2.91

 
$
2.79

Diluted
$
0.92

 
$
1.07

 
$
0.94

 
$
2.91

 
$
2.79

See Notes to Condensed Consolidated Financial Statements.

5


PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
2019
 
2019
 
2018
 
2019
 
2018
 
(Unaudited)
 
(In thousands)
Net earnings
$
110,026

 
$
128,125

 
$
116,287

 
$
350,755

 
$
350,298

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
 
 
Unrealized net holding gains (losses) on securities
 
 
 
 
 
 
 
 
 
available-for-sale arising during the period
32,759

 
72,168

 
(29,267
)
 
167,566

 
(106,261
)
Income tax (expense) benefit related to net unrealized
 
 
 
 
 
 
 
 
 
holding gains (losses) arising during the period
(9,287
)
 
(20,459
)
 
8,344

 
(47,504
)
 
30,377

Unrealized net holding gains (losses) on securities
 
 
 
 
 
 
 
 
 
available-for-sale, net of tax
23,472

 
51,709

 
(20,923
)
 
120,062

 
(75,884
)
Reclassification adjustment for net gains
 
 
 
 
 
 
 
 
 
included in net earnings (1)
(908
)
 
(22,192
)
 
(826
)
 
(25,261
)
 
(7,390
)
Income tax expense related to reclassification
 
 
 
 
 
 
 
 
 
adjustment
257

 
6,291

 
235

 
7,161

 
2,113

Reclassification adjustment for net gains
 
 
 
 
 
 
 
 
 
included in net earnings, net of tax
(651
)
 
(15,901
)
 
(591
)
 
(18,100
)
 
(5,277
)
Other comprehensive income (loss), net of tax
22,821

 
35,808

 
(21,514
)
 
101,962

 
(81,161
)
Comprehensive income
$
132,847

 
$
163,933

 
$
94,773

 
$
452,717

 
$
269,137

___________________________________ 
(1)
Entire amounts are recognized in "Gain on sale of securities" on the Condensed Consolidated Statements of Earnings.
See Notes to Condensed Consolidated Financial Statements.


6


PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
 
Nine Months Ended September 30, 2019
 
Common Stock
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
Additional
 
 
 
 
 
Other
 
 
 
 
 
Par
 
Paid-in
 
Retained
 
Treasury
 
Comprehensive
 
 
 
Shares
 
Value
 
Capital
 
Earnings
 
Stock
 
Income (Loss)
 
Total
 
(Unaudited)
 
(Dollars in thousands)
Balance, December 31, 2018
123,189,833

 
$
1,251

 
$
3,722,723

 
$
1,182,674

 
$
(74,985
)
 
$
(6,075
)
 
$
4,825,588

Cumulative effect of change in
 
 
 
 
 
 
 
 
 
 
 
 
 
accounting principle (1)
—

 
—

 
—

 
938

 
—

 
—

 
938

Net earnings
—

 
—

 
—

 
112,604

 
—

 
—

 
112,604

Other comprehensive income - net
 
 
 
 
 
 
 
 
 
 
 
 
 
unrealized gain on securities
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale, net of tax
—

 
—

 
—

 
—

 
—

 
43,333

 
43,333

Restricted stock awarded and
 
 
 
 
 
 
 
 
 
 
 
 
 
earned stock compensation,
 
 
 
 
 
 
 
 
 
 
 
 
 
net of shares forfeited
195,536

 
2

 
5,806

 
—

 
—

 
—

 
5,808

Restricted stock surrendered
(113,544
)
 
—

 
—

 
—

 
(4,522
)
 
—

 
(4,522
)
Common stock repurchased under
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock Repurchase Program
(3,070,676
)
 
(31
)
 
(119,556
)
 
—

 
—

 
—

 
(119,587
)
Cash dividends paid:
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, $0.60/share
—

 
—

 
(73,180
)
 
—

 
—

 
—

 
(73,180
)
Balance, March 31, 2019
120,201,149

 
$
1,222

 
$
3,535,793

 
$
1,296,216

 
$
(79,507
)
 
$
37,258

 
$
4,790,982

Net earnings
—

 
—

 
—

 
128,125

 
—

 
—

 
128,125

Other comprehensive income - net
 
 
 
 
 
 
 
 
 
 
 
 
 
unrealized gain on securities
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale, net of tax
—

 
—

 
—

 
—

 
—

 
35,808

 
35,808

Restricted stock awarded and
 
 
 
 
 
 
 
 
 
 
 
 
 
earned stock compensation,
 
 
 
 
 
 
 
 
 
 
 
 
 
net of shares forfeited
619,653

 
6

 
6,715

 
—

 
—

 
—

 
6,721

Restricted stock surrendered
(74,429
)
 
—

 
—

 
—

 
(2,788
)
 
—

 
(2,788
)
Common stock repurchased under
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock Repurchase Program
(917,269
)
 
(9
)
 
(34,920
)
 
—

 
—

 
—

 
(34,929
)
Cash dividends paid:
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, $0.60/share
—

 
—

 
(71,909
)
 
—

 
—

 
—

 
(71,909
)
Balance, June 30, 2019
119,829,104

 
$
1,219

 
$
3,435,679

 
$
1,424,341

 
$
(82,295
)
 
$
73,066

 
$
4,852,010

Net earnings
—

 
—

 
—

 
110,026

 
—

 
—

 
110,026

Other comprehensive income - net
 
 
 
 
 
 
 
 
 
 
 
 
 
unrealized gain on securities
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale, net of tax
—

 
—

 
—

 
—

 
—

 
22,821

 
22,821

Restricted stock awarded and
 
 
 
 
 
 
 
 
 
 
 
 
 
earned stock compensation,
 
 
 
 
 
 
 
 
 
 
 
 
 
net of shares forfeited
5,040

 
—

 
7,305

 
—

 
—

 
—

 
7,305

Restricted stock surrendered
(2,952
)
 
—

 
—

 
—

 
(102
)
 
—

 
(102
)
Cash dividends paid:
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, $0.60/share
—

 
—

 
(71,952
)
 
—

 
—

 
—

 
(71,952
)
Balance, September 30, 2019
119,831,192

 
$
1,219

 
$
3,371,032

 
$
1,534,367

 
$
(82,397
)
 
$
95,887

 
$
4,920,108

________________________
(1)
Impact due to adoption on January 1, 2019 of ASU 2016-02, "Leases (Topic 842)," and the related amendments.
See Notes to Condensed Consolidated Financial Statements.





7


PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
 
Nine Months Ended September 30, 2018
 
Common Stock
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
Additional
 
 
 
 
 
Other
 
 
 
 
 
Par
 
Paid-in
 
Retained
 
Treasury
 
Comprehensive
 
 
 
Shares
 
Value
 
Capital
 
Earnings
 
Stock
 
Income (Loss)
 
Total
 
(Unaudited)
 
(Dollars in thousands)
Balance, December 31, 2017
128,782,878

 
$
1,305

 
$
4,287,487

 
$
723,471

 
$
(65,836
)
 
$
31,171

 
$
4,977,598

Cumulative effect of changes in
 
 
 
 
 
 
 
 
 
 
 
 
 
accounting principles (2)
—

 
—

 
—

 
(6,136
)
 
—

 
6,136

 
—

Net earnings
—

 
—

 
—

 
118,276

 
—

 
—

 
118,276

Other comprehensive loss - net
 
 
 
 
 
 
 
 
 
 
 
 
 
unrealized loss on securities
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale, net of tax
—

 
—

 
—

 
—

 
—

 
(49,243
)
 
(49,243
)
Restricted stock awarded and
 
 
 
 
 
 
 
 
 
 
 
 
 
earned stock compensation,
 
 
 
 
 
 
 
 
 
 
 
 
 
net of shares forfeited
96,034

 
1

 
7,198

 
—

 
—

 
—

 
7,199

Restricted stock surrendered
(55,186
)
 
—

 
—

 
—

 
(2,858
)
 
—

 
(2,858
)
Common stock repurchased under
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock Repurchase Program
(2,285,855
)
 
(23
)
 
(119,770
)
 
—

 
—

 
—

 
(119,793
)
Cash dividends paid:
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, $0.50/share
—

 
—

 
(63,689
)
 
—

 
—

 
—

 
(63,689
)
Balance, March 31, 2018
126,537,871

 
$
1,283

 
$
4,111,226

 
$
835,611

 
$
(68,694
)
 
$
(11,936
)
 
$
4,867,490

Net earnings
—

 
—

 
—

 
115,735

 
—

 
—

 
115,735

Other comprehensive loss - net
 
 
 
 
 
 
 
 
 
 
 
 
 
unrealized loss on securities
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale, net of tax
—

 
—

 
—

 
—

 
—

 
(10,404
)
 
(10,404
)
Restricted stock awarded and
 
 
 
 
 
 
 
 
 
 
 
 
 
earned stock compensation,
 
 
 
 
 
 
 
 
 
 
 
 
 
net of shares forfeited
398,132

 
4

 
7,542

 
—

 
—

 
—

 
7,546

Restricted stock surrendered
(81,172
)
 
—

 
—

 
—

 
(4,332
)
 
—

 
(4,332
)
Common stock repurchased under
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock Repurchase Program
(2,286,881
)
 
(23
)
 
(122,001
)
 
—

 
—

 
—

 
(122,024
)
Cash dividends paid:
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, $0.60/share
—

 
—

 
(76,052
)
 
—

 
—

 
—

 
(76,052
)
Balance, June 30, 2018
124,567,950

 
$
1,264

 
$
3,920,715

 
$
951,346

 
$
(73,026
)
 
$
(22,340
)
 
$
4,777,959

Net earnings
—

 
—

 
—

 
116,287

 
—

 
—

 
116,287

Other comprehensive loss - net
 
 
 
 
 
 
 
 
 
 
 
 
 
unrealized loss on securities
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale, net of tax
—

 
—

 
—

 
—

 
—

 
(21,514
)
 
(21,514
)
Restricted stock awarded and
 
 
 
 
 
 
 
 
 
 
 
 
 
earned stock compensation,
 
 
 
 
 
 
 
 
 
 
 
 
 
net of shares forfeited
(3,803
)
 
—

 
8,137

 
—

 
—

 
—

 
8,137

Restricted stock surrendered
(4,199
)
 
—

 
—

 
—

 
(212
)
 
—

 
(212
)
Common stock repurchased under
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock Repurchase Program
(1,276,498
)
 
(13
)
 
(64,564
)
 
—

 
—

 
—

 
(64,577
)
Cash dividends paid:
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, $0.60/share
—

 
—

 
(74,395
)
 
—

 
—

 
—

 
(74,395
)
Balance, September 30, 2018
123,283,450

 
$
1,251

 
$
3,789,893

 
$
1,067,633

 
$
(73,238
)
 
$
(43,854
)
 
$
4,741,685

________________________
(2)
Impact due to adoption on January 1, 2018 of ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," and ASU 2018-02, "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income."
See Notes to Condensed Consolidated Financial Statements.


8


PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Nine Months Ended
 
September 30,
 
2019
 
2018
 
(Unaudited)
 
(In thousands)
Cash flows from operating activities:
 
 
 
Net earnings
$
350,755

 
$
350,298

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
Depreciation and amortization
28,266

 
25,788

Amortization of net premiums on securities available-for-sale
11,078

 
19,489

Amortization of intangible assets
14,573

 
17,520

Amortization of operating lease ROU assets
22,028

 
—

Provision for credit losses
19,000

 
33,000

(Gain) loss on sale of foreclosed assets
(406
)
 
35

Provision for losses on foreclosed assets
54

 
65

Gain on sale of loans and leases
(1,091
)
 
(4,675
)
Gain on sale of premises and equipment
(34
)
 
(13
)
Gain on sale of securities
(25,261
)
 
(7,390
)
Gain on BOLI death benefit
—

 
(437
)
Unrealized (gain) loss on derivatives and foreign currencies, net
(16
)
 
76

Earned stock compensation
19,834

 
22,882

Decrease (increase) in deferred income taxes, net
14,714

 
(8,790
)
Decrease in other assets
35,631

 
52,275

Decrease in accrued interest payable and other liabilities
(41,530
)
 
(36,303
)
Net cash provided by operating activities
447,595

 
463,820

 
 
 
 
Cash flows from investing activities:
 
 
 
Net increase in loans and leases
(894,624
)
 
(446,880
)
Proceeds from sales of loans and leases
102,507

 
646,587

Proceeds from maturities and paydowns of securities available-for-sale
238,487

 
231,474

Proceeds from sales of securities available-for-sale
1,554,805

 
500,101

Purchases of securities available-for-sale
(1,444,720
)
 
(910,298
)
Net redemptions (purchases) of Federal Home Loan Bank stock
5,238

 
(10,287
)
Proceeds from sales of foreclosed assets
4,322

 
57

Purchases of premises and equipment, net
(10,990
)
 
(9,250
)
Proceeds from sales of premises and equipment
60

 
49

Proceeds from BOLI death benefit
555

 
1,901

Net increase in equipment leased to others under operating leases
(19,981
)
 
(6,000
)
Net cash used in investing activities
(464,341
)
 
(2,546
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Net decrease in noninterest-bearing deposits
(446,400
)
 
(671,016
)
Net increase (decrease) in interest-bearing deposits
1,310,432

 
(312,429
)
Net (decrease) increase in borrowings
(118,083
)
 
1,045,824

Net decrease in subordinated debentures
—

 
(12,372
)
Common stock repurchased and restricted stock surrendered
(161,928
)
 
(313,796
)
Cash dividends paid
(217,041
)
 
(214,136
)
Net cash provided by (used in) financing activities
366,980

 
(477,925
)
 
 
 
 
Net increase (decrease) in cash, cash equivalents, and restricted cash
350,234

 
(16,651
)
Cash, cash equivalents, and restricted cash, beginning of period
385,767

 
398,437

Cash, cash equivalents, and restricted cash, end of period
$
736,001

 
$
381,786

See Notes to Condensed Consolidated Financial Statements.


9


PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
Nine Months Ended
 
September 30,
 
2019
 
2018
 
(Unaudited)
 
(In thousands)
Supplemental disclosures of cash flow information:
 
 
 
Cash paid for interest
$
154,212

 
$
78,884

Cash paid for income taxes
89,505

 
62,525

Loans transferred to foreclosed assets
37

 
3,235

Transfers from loans held for investment to loans held for sale
25,124

 
—

See Notes to Condensed Consolidated Financial Statements.


10


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 1.  ORGANIZATION    
PacWest Bancorp, a Delaware corporation, is a bank holding company registered under the BHCA, with our corporate headquarters located in Beverly Hills, California. Our principal business is to serve as the holding company for our wholly-owned subsidiary, Pacific Western Bank. References to "Pacific Western" or the "Bank" refer to Pacific Western Bank together with its wholly-owned subsidiaries. References to "we," "us," or the "Company" refer to PacWest Bancorp together with its subsidiaries on a consolidated basis. When we refer to "PacWest" or to the "holding company," we are referring to PacWest Bancorp, the parent company, on a stand-alone basis.
We are focused on relationship-based business banking to small, middle-market and venture-backed businesses nationwide. The Bank offers a broad range of loan and lease and deposit products and services through 74 full-service branches located in California, one branch located in Durham, North Carolina, and numerous loan production offices across the country through its Community Banking, National Lending and Venture Banking groups. Community Banking provides real estate loans, commercial loans, and comprehensive deposit and treasury management services to small and medium-sized businesses conducted primarily through our California-based branch offices. National Lending provides asset-based, equipment, and real estate 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 innovation hubs across the United States. In addition, we provide investment advisory and asset management services to select clients through Pacific Western Asset Management Inc., a wholly-owned subsidiary of the Bank and an SEC-registered investment adviser.
We generate our revenue primarily from interest received on loans and leases and, to a lesser extent, from interest received on investment securities, and fees received in connection with deposit services, extending credit and other services offered, including foreign exchange services. Our major operating expenses are interest paid by the Bank on deposits and borrowings, compensation, occupancy, and general operating expenses.
We have completed 29 acquisitions from May 1, 2000 through September 30, 2019. Our acquisitions have been accounted for using the acquisition method of accounting and, accordingly, the operating results of the acquired entities have been included in the consolidated financial statements from their respective acquisition dates.
Significant Accounting Policies
Our accounting policies are described in Note 1. Nature of Operations and Summary of Significant Accounting Policies, of our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018 as filed with the Securities and Exchange Commission ("Form 10-K").
Accounting Standards Adopted in 2019
Effective January 1, 2019, the Company adopted ASU 2016-02, "Leases (Topic 842)," and the related amendments to this new standard issued in 2018. ASU 2016-02 supersedes Topic 840, “Leases,” and is intended to increase transparency and comparability among organizations by requiring the recognition of right-of-use (“ROU”) assets and lease liabilities by lessees for those leases classified as operating leases. Under the standard, disclosures are required to meet the objective of enabling users of the financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.
The Company adopted the new standard using the optional transition method under ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” and recognized a cumulative effect adjustment to increase retained earnings by $938,000, net of taxes, without restating prior periods and applying the requirements of the new standard prospectively. The Company has elected the following practical expedients: (1) to not separate lease and non-lease components for facilities leases; (2) to not reassess whether any expired or existing contracts are or contain leases and to maintain existing lease classifications; (3) to not record short-term leases (initial term less than 12 months) on the balance sheet; and (4) to present sales tax on a net basis for those transactions in which the Company is the lessor.


11


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


The standard had a more significant impact on our condensed consolidated balance sheet than on our condensed consolidated statement of earnings. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while the accounting for leases as a lessor remained substantially unchanged. The ROU asset is included within "Other assets," while the ROU liability is included within "Accrued interest payable and other liabilities". See Note 8. Leases and Note 7. Other Assets for further details.
Effective January 1, 2019, the Company early-adopted any removed or modified disclosures as permitted by ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to Disclosure Requirements for Fair Value Measurements,” but will defer adoption of the additional disclosures until the effective date of January 1, 2020 as permitted in the transition guidance in ASU 2018-13.
Effective January 1, 2019, the Company early-adopted ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (a consensus of the FASB Emerging Issues Task Force)," which aligns the requirements for capitalizing implementation costs in a cloud computing arrangement service contract with the requirements for capitalizing implementation costs incurred for an internal-use software license. The new guidance also prescribes the balance sheet, income statement, and cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures. The Company opted to apply ASU 2018-15 prospectively. The primary effect of the provisions is to capitalize eligible implementation costs during the application development phase and to amortize those costs over the life of the agreement. There was no impact to our condensed consolidated financial statements from the adoption of this new standard.
Basis of Presentation    
Our interim condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, certain disclosures accompanying annual consolidated financial statements are omitted. In the opinion of management, all significant intercompany accounts and transactions have been eliminated and adjustments, consisting solely of normal recurring accruals and considered necessary for the fair presentation of financial statements for the interim periods, have been included. The current period's results of operations are not necessarily indicative of the results that ultimately may be achieved for the year. The interim condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Form 10-K.
Use of Estimates
We have made a number of estimates and assumptions related to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period to prepare these condensed consolidated financial statements in conformity with U.S. GAAP. Actual results could differ from those estimates. Material estimates subject to change in the near term include, among other items, the allowance for credit losses (the combination of the allowance for loan and lease losses and the reserve for unfunded loan commitments), the carrying value of intangible assets, the realization of deferred tax assets, and the fair value estimates of assets acquired and liabilities assumed in acquisitions. These estimates may be adjusted as more current information becomes available, and any adjustment may be significant.
Reclassifications
None.

12


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 2. RESTRICTED CASH BALANCES
The Company is required to maintain reserve balances with the FRBSF. Such reserve requirements are based on a percentage of deposit liabilities and may be satisfied by cash on hand. The average reserves required to be held at the FRBSF for the nine months ended September 30, 2019 and year ended December 31, 2018 were $118.2 million and $77.0 million. As of September 30, 2019 and December 31, 2018, we pledged cash collateral for our derivative contracts of $3.2 million and $2.6 million.
NOTE 3. INVESTMENT SECURITIES     
Securities Available-for-Sale
The following table presents amortized cost, gross unrealized gains and losses, and fair values of securities available-for-sale as of the dates indicated:
 
September 30, 2019
 
December 31, 2018
 
 
 
Gross
 
Gross
 
 
 
 
 
Gross
 
Gross
 
 
 
Amortized
 
Unrealized
 
Unrealized
 
Fair
 
Amortized
 
Unrealized
 
Unrealized
 
Fair
Security Type
Cost
 
Gains
 
Losses
 
Value
 
Cost
 
Gains
 
Losses
 
Value
 
(In thousands)
Agency residential CMOs
$
1,141,332

 
$
31,627

 
$
(404
)
 
$
1,172,555

 
$
634,774

 
$
3,448

 
$
(5,372
)
 
$
632,850

Agency commercial MBS
1,063,659

 
36,539

 
(181
)
 
1,100,017

 
1,133,846

 
383

 
(21,525
)
 
1,112,704

Municipal securities
675,645

 
46,336

 
—

 
721,981

 
1,298,514

 
21,000

 
(7,320
)
 
1,312,194

Agency residential MBS
313,935

 
10,995

 
(1
)
 
324,929

 
281,486

 
1,902

 
(2,300
)
 
281,088

Asset-backed securities
214,153

 
700

 
(702
)
 
214,151

 
81,762

 
104

 
(481
)
 
81,385

Collateralized loan obligations
114,149

 
23

 
(298
)
 
113,874

 
—

 
—

 
—

 
—

Private label residential CMOs
89,859

 
4,011

 
(2
)
 
93,868

 
101,313

 
1,985

 
(2,093
)
 
101,205

SBA securities
48,805

 
941

 
—

 
49,746

 
68,158

 
—

 
(1,111
)
 
67,047

Corporate debt securities
17,000

 
4,024

 
—

 
21,024

 
17,000

 
553

 
—

 
17,553

U.S. Treasury securities
4,984

 
219

 
—

 
5,203

 
401,056

 
2,437

 
(88
)
 
403,405

Total
$
3,683,521

 
$
135,415

 
$
(1,588
)
 
$
3,817,348

 
$
4,017,909

 
$
31,812

 
$
(40,290
)
 
$
4,009,431


See Note 11. Fair Value Measurements for information on fair value measurements and methodology.
As of September 30, 2019, securities available-for-sale with a fair value of $495.0 million were pledged as collateral for borrowings, public deposits, and other purposes as required by various statutes and agreements.
Realized Gains and Losses on Securities Available-for-Sale
During the three months ended September 30, 2019, we sold $143.4 million of securities available-for-sale for a gross realized gain of $1.2 million and a gross realized loss of $0.3 million. During the three months ended September 30, 2018, we sold $130.5 million of securities available-for-sale for a gross realized gain of $1.0 million and a gross realized loss of $0.1 million.
During the nine months ended September 30, 2019, we sold $1.5 billion of securities available-for-sale for a gross realized gain of $29.4 million and a gross realized loss of $4.1 million. During the nine months ended September 30, 2018, we sold $492.7 million of securities available-for-sale for a gross realized gain of $8.1 million and a gross realized loss of $0.7 million.

13


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Unrealized Losses on Securities Available-for-Sale
The following tables present the gross unrealized losses and fair values of securities available-for-sale that were in unrealized loss positions, for which other-than-temporary impairments have not been recognized in earnings, as of the dates indicated:
 
September 30, 2019
 
Less Than 12 Months
 
12 Months or More
 
Total
 
 
 
Gross
 
 
 
Gross
 
 
 
Gross
 
Fair
 
Unrealized
 
Fair
 
Unrealized
 
Fair
 
Unrealized
Security Type
Value
 
Losses
 
Value
 
Losses
 
Value
 
Losses
 
(In thousands)
Agency residential CMOs
$
172,738

 
$
(389
)
 
$
2,127

 
$
(15
)
 
$
174,865

 
$
(404
)
Agency commercial MBS
176,063

 
(181
)
 
—

 
—

 
176,063

 
(181
)
Agency residential MBS
—

 
—

 
435

 
(1
)
 
435

 
(1
)
Asset-backed securities
115,481

 
(702
)
 
—

 
—

 
115,481

 
(702
)
Collateralized loan obligations
82,606

 
(298
)
 
—

 
—

 
82,606

 
(298
)
Private label residential CMOs
—

 
—

 
121

 
(2
)
 
121

 
(2
)
Total
$
546,888

 
$
(1,570
)
 
$
2,683

 
$
(18
)
 
$
549,571

 
$
(1,588
)

 
December 31, 2018
 
Less Than 12 Months
 
12 Months or More
 
Total
 
 
 
Gross
 
 
 
Gross
 
 
 
Gross
 
Fair
 
Unrealized
 
Fair
 
Unrealized
 
Fair
 
Unrealized
Security Type
Value
 
Losses
 
Value
 
Losses
 
Value
 
Losses
 
(In thousands)
Agency residential CMOs
$
69,859

 
$
(326
)
 
$
164,097

 
$
(5,046
)
 
$
233,956

 
$
(5,372
)
Agency commercial MBS
40,641

 
(341
)
 
1,020,684

 
(21,184
)
 
1,061,325

 
(21,525
)
Municipal securities
52,386

 
(238
)
 
284,915

 
(7,082
)
 
337,301

 
(7,320
)
Agency residential MBS
60,164

 
(169
)
 
85,245

 
(2,131
)
 
145,409

 
(2,300
)
Asset-backed securities
11,548

 
(38
)
 
35,859

 
(443
)
 
47,407

 
(481
)
Private label residential CMOs
32,170

 
(831
)
 
49,237

 
(1,262
)
 
81,407

 
(2,093
)
SBA securities
249

 
(1
)
 
66,798

 
(1,110
)
 
67,047

 
(1,111
)
U.S. Treasury securities
49,729

 
(88
)
 
—

 
—

 
49,729

 
(88
)
Total
$
316,746

 
$
(2,032
)
 
$
1,706,835

 
$
(38,258
)
 
$
2,023,581

 
$
(40,290
)

We reviewed the securities that were in an unrealized loss position at September 30, 2019, and concluded their unrealized losses were a result of the level of market interest rates relative to the types of securities and pricing changes caused by shifting supply and demand dynamics and not a result of downgraded credit ratings or other indicators of deterioration of the underlying issuers' ability to repay. Accordingly, we determined the securities were temporarily impaired and we did not recognize such impairment in the condensed consolidated statements of earnings. Although we periodically sell securities for portfolio management purposes, we do not foresee having to sell any temporarily impaired securities strictly for liquidity needs and believe that it is more likely than not we would not be required to sell any temporarily impaired securities before recovery of their amortized cost.

14


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Contractual Maturities of Securities Available-for-Sale
The following table presents the contractual maturities of our securities available-for-sale portfolio based on amortized cost and carrying value as of the date indicated:
 
September 30, 2019
 
Amortized
 
Fair
Maturities
Cost
 
Value
 
(In thousands)
Due in one year or less
$
3,240

 
$
3,248

Due after one year through five years
227,670

 
232,238

Due after five years through ten years
1,020,128

 
1,056,640

Due after ten years
2,432,483

 
2,525,222

Total securities available-for-sale
$
3,683,521

 
$
3,817,348


Mortgage-backed securities have contractual terms to maturity, but require periodic payments to reduce principal. In addition, expected maturities may differ from contractual maturities because obligors and/or issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
Interest Income on Investment Securities
The following table presents the composition of our interest income on investment securities for the periods indicated:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
2019
 
2019
 
2018
 
2019
 
2018
 
(In thousands)
Taxable interest
$
22,829

 
$
20,944

 
$
17,618

 
$
63,515

 
$
49,323

Non-taxable interest
5,565

 
7,547

 
10,127

 
22,705

 
31,510

Dividend income
412

 
457

 
316

 
1,214

 
1,096

Total interest income on investment securities
$
28,806

 
$
28,948

 
$
28,061

 
$
87,434

 
$
81,929



15


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 4.  LOANS AND LEASES
Our loans are carried at the principal amount outstanding, net of deferred fees and costs, and in the case of acquired and purchased loans, net of purchase discounts and premiums. Deferred fees and costs and purchase discounts and premiums on acquired non-impaired loans are recognized as an adjustment to interest income over the contractual life of the loans primarily using the effective interest method or taken into income when the related loans are paid off or included in the carrying amount of loans that are sold.
Loans and Leases Held for Investment
The following table summarizes the composition of our loans and leases held for investment as of the dates indicated:
 
September 30,
 
December 31,
 
2019
 
2018
 
(In thousands)
Real estate mortgage
$
7,908,097

 
$
7,933,859

Real estate construction and land
2,581,317

 
2,262,710

Commercial
7,898,042

 
7,428,500

Consumer
408,555

 
401,296

Total gross loans and leases held for investment
18,796,011

 
18,026,365

Deferred fees, net
(60,468
)
 
(68,652
)
Total loans and leases held for investment, net of deferred fees
18,735,543

 
17,957,713

Allowance for loan and lease losses
(138,552
)
 
(132,472
)
Total loans and leases held for investment, net
$
18,596,991

 
$
17,825,241


The following tables present an aging analysis of our loans and leases held for investment, net of deferred fees, by loan portfolio segment and class as of the dates indicated:
 
September 30, 2019
 
30 - 89
 
90 or More
 
 
 
 
 
 
 
Days
 
Days
 
Total
 
 
 
 
 
Past Due
 
Past Due
 
Past Due
 
Current
 
Total
 
(In thousands)
Real estate mortgage:
 
 
 
 
 
 
 
 
 
Commercial
$
2,867

 
$
7,137

 
$
10,004

 
$
4,290,562

 
$
4,300,566

Income producing and other residential
4,551

 
469

 
5,020

 
3,591,338

 
3,596,358

Total real estate mortgage
7,418

 
7,606

 
15,024

 
7,881,900

 
7,896,924

Real estate construction and land:
 
 
 
 
 
 
 
 
 
Commercial
—

 
—

 
—

 
1,009,362

 
1,009,362

Residential
2,622

 
—

 
2,622

 
1,539,490

 
1,542,112

Total real estate construction and land
2,622

 
—

 
2,622

 
2,548,852

 
2,551,474

Commercial:
 
 
 
 
 
 
 
 
 
Asset-based
48

 
662

 
710

 
3,810,031

 
3,810,741

Venture capital
—

 
—

 
—

 
2,209,649

 
2,209,649

Other commercial
6,742

 
2,241

 
8,983

 
1,849,184

 
1,858,167

Total commercial
6,790

 
2,903

 
9,693

 
7,868,864

 
7,878,557

Consumer
795

 
408

 
1,203

 
407,385

 
408,588

Total
$
17,625

 
$
10,917

 
$
28,542

 
$
18,707,001

 
$
18,735,543




16


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


 
December 31, 2018
 
30 - 89
 
90 or More
 
 
 
 
 
 
 
Days
 
Days
 
Total
 
 
 
 
 
Past Due
 
Past Due
 
Past Due
 
Current
 
Total
 
(In thousands)
Real estate mortgage:
 
 
 
 
 
 
 
 
 
Commercial
$
3,487

 
$
7,541

 
$
11,028

 
$
4,813,270

 
$
4,824,298

Income producing and other residential
1,557

 
476

 
2,033

 
3,091,810

 
3,093,843

Total real estate mortgage
5,044

 
8,017

 
13,061

 
7,905,080

 
7,918,141

Real estate construction and land:
 
 
 
 
 
 
 
 
 
Commercial
—

 
442

 
442

 
912,141

 
912,583

Residential
1,527

 
—

 
1,527

 
1,319,546

 
1,321,073

Total real estate construction and land
1,527

 
442

 
1,969

 
2,231,687

 
2,233,656

Commercial:
 
 
 
 
 
 
 
 
 
Asset-based
47

 
646

 
693

 
3,304,728

 
3,305,421

Venture capital
4,705

 
—

 
4,705

 
2,034,043

 
2,038,748

Other commercial
5,181

 
1,285

 
6,466

 
2,053,960

 
2,060,426

Total commercial
9,933

 
1,931

 
11,864

 
7,392,731

 
7,404,595

Consumer
581

 
333

 
914

 
400,407

 
401,321

Total
$
17,085

 
$
10,723

 
$
27,808

 
$
17,929,905

 
$
17,957,713


It is our policy to discontinue accruing interest when principal or interest payments are past due 90 days or more (unless the loan is both well secured and in the process of collection) or when, in the opinion of management, there is a reasonable doubt as to the collectability of a loan or lease in the normal course of business. Interest income on nonaccrual loans is recognized only to the extent cash is received and the principal balance of the loan is deemed collectable.
The following table presents our nonaccrual and performing loans and leases held for investment, net of deferred fees, by loan portfolio segment and class as of the dates indicated:  
 
September 30, 2019
 
December 31, 2018
 
Nonaccrual
 
Performing
 
Total
 
Nonaccrual
 
Performing
 
Total
 
(In thousands)
Real estate mortgage:
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
19,515

 
$
4,281,051

 
$
4,300,566

 
$
15,321

 
$
4,808,977

 
$
4,824,298

Income producing and other residential
2,868

 
3,593,490

 
3,596,358

 
2,524

 
3,091,319

 
3,093,843

Total real estate mortgage
22,383

 
7,874,541

 
7,896,924

 
17,845

 
7,900,296

 
7,918,141

Real estate construction and land:
 
 
 
 
 
 
 
 
 
 
 
Commercial
377

 
1,008,985

 
1,009,362

 
442

 
912,141

 
912,583

Residential
—

 
1,542,112

 
1,542,112

 
—

 
1,321,073

 
1,321,073

Total real estate construction and land
377

 
2,551,097

 
2,551,474

 
442

 
2,233,214

 
2,233,656

Commercial:
 
 
 
 
 
 
 
 
 
 
 
Asset-based
33,015

 
3,777,726

 
3,810,741

 
32,324

 
3,273,097

 
3,305,421

Venture capital
20,131

 
2,189,518

 
2,209,649

 
20,299

 
2,018,449

 
2,038,748

Other commercial
22,554

 
1,835,613

 
1,858,167

 
7,380

 
2,053,046

 
2,060,426

Total commercial
75,700

 
7,802,857

 
7,878,557

 
60,003

 
7,344,592

 
7,404,595

Consumer
653

 
407,935

 
408,588

 
1,043

 
400,278

 
401,321

Total
$
99,113

 
$
18,636,430

 
$
18,735,543

 
$
79,333

 
$
17,878,380

 
$
17,957,713



17


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


At September 30, 2019, nonaccrual loans and leases totaled $99.1 million and included $10.9 million of loans and leases 90 or more days past due, $6.3 million of loans and leases 30 to 89 days past due, and $81.9 million of loans and leases current with respect to contractual payments that were placed on nonaccrual status based on management’s judgment regarding their collectability. Nonaccrual loans and leases totaled $79.3 million at December 31, 2018, including $10.7 million of loans and leases 90 or more days past due, $6.6 million of loans and leases 30 to 89 days past due, and $62.0 million of current loans and leases that were placed on nonaccrual status based on management’s judgment regarding their collectability.
As of September 30, 2019, our three largest loan relationships on nonaccrual status had an aggregate carrying value of $53.4 million and represented 54% of total nonaccrual loans and leases.
The following tables present the credit risk rating categories for loans and leases held for investment, net of deferred fees, by loan portfolio segment and class as of the dates indicated. Classified loans and leases are those with a credit risk rating of either substandard or doubtful.
 
September 30, 2019
 
Classified
 
Special Mention
 
Pass
 
Total
 
(In thousands)
Real estate mortgage:
 
 
 
 
 
 
 
Commercial
$
34,952

 
$
39,309

 
$
4,226,305

 
$
4,300,566

Income producing and other residential
8,670

 
1,005

 
3,586,683

 
3,596,358

Total real estate mortgage
43,622

 
40,314

 
7,812,988

 
7,896,924

Real estate construction and land:
 
 
 
 
 
 
 
Commercial
377

 
—

 
1,008,985

 
1,009,362

Residential
—

 
837

 
1,541,275

 
1,542,112

Total real estate construction and land
377

 
837

 
2,550,260

 
2,551,474

Commercial:
 
 
 
 
 
 
 
Asset-based
50,634

 
41,974

 
3,718,133

 
3,810,741

Venture capital
34,489

 
66,255

 
2,108,905

 
2,209,649

Other commercial
58,707

 
117,931

 
1,681,529

 
1,858,167

Total commercial
143,830

 
226,160

 
7,508,567

 
7,878,557

Consumer
778

 
614

 
407,196

 
408,588

Total
$
188,607

 
$
267,925

 
$
18,279,011

 
$
18,735,543






18


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


 
December 31, 2018
 
Classified
 
Special Mention
 
Pass
 
Total
 
(In thousands)
Real estate mortgage:
 
 
 
 
 
 
 
Commercial
$
57,734

 
$
74,785

 
$
4,691,779

 
$
4,824,298

Income producing and other residential
10,521

 
968

 
3,082,354

 
3,093,843

Total real estate mortgage
68,255

 
75,753

 
7,774,133

 
7,918,141

Real estate construction and land:
 
 
 
 
 
 
 
Commercial
442

 
7,041

 
905,100

 
912,583

Residential
—

 
1,527

 
1,319,546

 
1,321,073

Total real estate construction and land
442

 
8,568

 
2,224,646

 
2,233,656

Commercial:
 
 
 
 
 
 
 
Asset-based
45,957

 
48,338

 
3,211,126

 
3,305,421

Venture capital
28,731

 
77,588

 
1,932,429

 
2,038,748

Other commercial
92,526

 
50,136

 
1,917,764

 
2,060,426

Total commercial
167,214

 
176,062

 
7,061,319

 
7,404,595

Consumer
1,199

 
1,015

 
399,107

 
401,321

Total
$
237,110

 
$
261,398

 
$
17,459,205

 
$
17,957,713



Nonaccrual loans and leases and performing TDRs are considered impaired for reporting purposes. TDRs are a result of rate reductions, term extensions, fee concessions, and debt forgiveness, or a combination thereof.
The following table presents the composition of our impaired loans and leases held for investment, net of deferred fees, by loan portfolio segment as of the dates indicated:
 
September 30, 2019
 
December 31, 2018
 
 
 
 
 
Total
 
 
 
 
 
Total
 
Nonaccrual
 
 
 
Impaired
 
Nonaccrual
 
 
 
Impaired
 
Loans
 
 
 
Loans
 
Loans
 
 
 
Loans
 
and
 
Performing
 
and
 
and
 
Performing
 
and
 
Leases
 
TDRs
 
Leases
 
Leases
 
TDRs
 
Leases
 
(In thousands)
Real estate mortgage
$
22,383

 
$
10,292

 
$
32,675

 
$
17,845

 
$
11,484

 
$
29,329

Real estate construction and land
377

 
4,980

 
5,357

 
442

 
5,420

 
5,862

Commercial
75,700

 
980

 
76,680

 
60,003

 
692

 
60,695

Consumer
653

 
77

 
730

 
1,043

 
105

 
1,148

Total
$
99,113

 
$
16,329

 
$
115,442

 
$
79,333

 
$
17,701

 
$
97,034





19


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


The following tables present information regarding our impaired loans and leases held for investment, net of deferred fees, by loan portfolio segment and class as of and for the dates indicated:
 
September 30, 2019
 
December 31, 2018
 
 
 
Unpaid
 
 
 
 
 
Unpaid
 
 
 
Recorded
 
Principal
 
Related
 
Recorded
 
Principal
 
Related
Impaired Loans and Leases
Investment
 
Balance
 
Allowance
 
Investment
 
Balance
 
Allowance
 
(In thousands)
With An Allowance Recorded:
 

 
 

 
 

 
 

 
 

 
 

Real estate mortgage:
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
485

 
$
485

 
$
71

 
$
1,736

 
$
1,648

 
$
170

Income producing and other residential
2,032

 
2,030

 
177

 
2,569

 
2,563

 
247

Commercial:
 
 
 
 
 
 
 
 
 
 
 
Asset based
500

 
500

 
500

 
—

 
—

 
—

Venture capital
12,379

 
13,570

 
6,177

 
11,621

 
13,255

 
3,141

Other commercial
16,969

 
18,044

 
2,405

 
473

 
482

 
473

With No Related Allowance Recorded:
 
 
 
 
 
 
 
 
 
 
 
Real estate mortgage:
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
22,503

 
$
37,568

 
 
 
$
17,783

 
$
32,035

 
 
Income producing and other residential
7,655

 
10,058

 
 
 
7,241

 
9,425

 
 
Real estate construction and land:
 
 
 
 
 
 
 
 
 
 
 
Commercial
5,357

 
5,402

 
 
 
5,862

 
5,870

 
 
Commercial:
 
 
 
 
 
 
 
 
 
 
 
Asset-based
32,515

 
50,633

 
 
 
32,324

 
38,100

 
 
Venture capital
7,752

 
39,440

 
 
 
8,678

 
41,335

 
 
Other commercial
6,565

 
24,868

 
 
 
7,599

 
25,740

 
 
Consumer
730

 
896

 
 
 
1,148

 
1,470

 
 
Total Loans and Leases With and
 
 
 
 
 
 
 
 
 
 
 
Without an Allowance Recorded:
 
 
 
 
 
 
 
 
 
 
 
Real estate mortgage
$
32,675

 
$
50,141

 
$
248

 
$
29,329

 
$
45,671

 
$
417

Real estate construction and land
5,357

 
5,402

 
—

 
5,862

 
5,870

 
—

Commercial
76,680

 
147,055

 
9,082

 
60,695

 
118,912

 
3,614

Consumer
730

 
896

 
—

 
1,148

 
1,470

 
—

Total
$
115,442

 
$
203,494

 
$
9,330

 
$
97,034

 
$
171,923

 
$
4,031


























20


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


 
Three Months Ended September 30,
 
2019
 
2018
 
Weighted
 
Interest
 
Weighted
 
Interest
 
Average
 
Income
 
Average
 
Income
Impaired Loans and Leases
Balance(1)
 
Recognized
 
Balance(1)
 
Recognized
 
(In thousands)
With An Allowance Recorded:
 

 
 

 
 

 
 

Real estate mortgage:
 
 
 
 
 
 
 
Commercial
$
485

 
$
8

 
$
1,781

 
$
18

Income producing and other residential
2,031

 
15

 
2,494

 
21

Commercial:
 
 
 
 
 
 
 
Asset-based
163

 
—

 
—

 
—

Venture capital
12,343

 
—

 
28,322

 
—

Other commercial
2,181

 
9

 
1,360

 
—

With No Related Allowance Recorded:
 
 
 
 
 
 
 
Real estate mortgage:
 
 
 
 
 
 
 
Commercial
$
19,745

 
$
56

 
$
34,155

 
$
129

Income producing and other residential
7,615

 
56

 
7,906

 
45

Real estate construction and land:
 
 
 
 
 
 
 
Commercial
5,357

 
98

 
5,533

 
95

Residential
—

 
—

 
—

 
—

Commercial:
 
 
 
 
 
 
 
Asset-based
30,880

 
—

 
34,618

 
—

Venture capital
7,752

 
—

 
1,421

 
—

Other commercial
6,096

 
6

 
8,108

 
25

Consumer
568

 
1

 
383

 
2

Total Loans and Leases With and
 
 
 
 
 
 
 
Without an Allowance Recorded:
 
 
 
 
 
 
 
Real estate mortgage
$
29,876

 
$
135

 
$
46,336

 
$
213

Real estate construction and land
5,357

 
98

 
5,533

 
95

Commercial
59,415

 
15

 
73,829

 
25

Consumer
568

 
1

 
383

 
2

Total
$
95,216

 
$
249

 
$
126,081

 
$
335

_________________________
(1)
For loans and leases reported as impaired at September 30, 2019 and 2018, amounts were calculated based on the period of time such loans and leases were impaired during the reported period.








21


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


 
Nine Months Ended September 30,
 
2019
 
2018
 
Weighted
 
Interest
 
Weighted
 
Interest
 
Average
 
Income
 
Average
 
Income
Impaired Loans and Leases
Balance(1)
 
Recognized
 
Balance(1)
 
Recognized
 
(In thousands)
With An Allowance Recorded:
 

 
 

 
 

 
 

Real estate mortgage:
 
 
 
 
 
 
 
Commercial
$
485

 
$
24

 
$
1,781

 
$
55

Income producing and other residential
2,031

 
44

 
2,494

 
62

Commercial:
 
 
 
 
 
 
 
Asset-based
55

 
—

 
—

 
—

Venture capital
9,201

 
—

 
17,459

 
—

Other commercial
1,125

 
26

 
688

 
—

With No Related Allowance Recorded:
 
 
 
 
 
 
 
Real estate mortgage:
 
 
 
 
 
 
 
Commercial
$
16,729

 
$
162

 
$
32,098

 
$
376

Income producing and other residential
7,488

 
163

 
7,845

 
132

Real estate construction and land:
 
 
 
 
 
 
 
Commercial
5,357

 
290

 
5,533

 
283

Commercial:
 
 
 
 
 
 
 
Asset-based
29,989

 
—

 
34,618

 
—

Venture capital
6,173

 
—

 
1,330

 
—

Other commercial
5,606

 
22

 
7,417

 
70

Consumer
493

 
4

 
373

 
6

Total Loans and Leases With and
 
 
 
 
 
 
 
Without an Allowance Recorded:
 
 
 
 
 
 
 
Real estate mortgage
$
26,733

 
$
393

 
$
44,218

 
$
625

Real estate construction and land
5,357

 
290

 
5,533

 
283

Commercial
52,149

 
48

 
61,512

 
70

Consumer
493

 
4

 
373

 
6

Total
$
84,732

 
$
735

 
$
111,636

 
$
984


_________________________
(1)
For loans and leases reported as impaired at September 30, 2019 and 2018, amounts were calculated based on the period of time such loans and leases were impaired during the reported period.








22


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


The following table presents our troubled debt restructurings of loans held for investment by loan portfolio segment and class for the periods indicated:
 
Three Months Ended September 30,
 
2019
 
2018
 
 
 
Pre-
 
Post-
 
 
 
Pre-
 
Post-
 
 
 
Modification
 
Modification
 
 
 
Modification
 
Modification
 
Number
 
Outstanding
 
Outstanding
 
Number
 
Outstanding
 
Outstanding
 
of
 
Recorded
 
Recorded
 
of
 
Recorded
 
Recorded
Troubled Debt Restructurings
Loans
 
Investment
 
Investment
 
Loans
 
Investment
 
Investment
 
(Dollars in thousands)
Real estate mortgage:
 
 
 
 
 
 
 
 
 
 
 
Commercial
—

 
$
—

 
$
—

 
4

 
$
2,889

 
$
712

Income producing and other residential
2

 
495

 
495

 
5

 
912

 
912

Commercial:
 
 
 
 
 
 
 
 
 
 
 
Asset-based
—

 
—

 
—

 
4

 
28,947

 
33,947

Venture capital
1

 
—

 
—

 
5

 
23,501

 
23,501

Other commercial
3

 
99

 
99

 
5

 
1,487

 
1,115

Total
6

 
$
594

 
$
594

 
23

 
$
57,736

 
$
60,187

 
Nine Months Ended September 30,
 
2019
 
2018
 
 
 
Pre-
 
Post-
 
 
 
Pre-
 
Post-
 
 
 
Modification
 
Modification
 
 
 
Modification
 
Modification
 
Number
 
Outstanding
 
Outstanding
 
Number
 
Outstanding
 
Outstanding
 
of
 
Recorded
 
Recorded
 
of
 
Recorded
 
Recorded
Troubled Debt Restructurings
Loans
 
Investment
 
Investment
 
Loans
 
Investment
 
Investment
 
(Dollars in thousands)
Real estate mortgage:
 
 
 
 
 
 
 
 
 
 
 
Commercial
1

 
$
37

 
$
—

 
4

 
$
2,889

 
$
712

Income producing and other residential
7

 
1,280

 
1,280

 
8

 
2,616

 
1,557

Commercial:
 
 
 
 
 
 
 
 
 
 
 
Asset-based
1

 
620

 
620

 
4

 
28,947

 
33,947

Venture capital
11

 
16,076

 
16,214

 
9

 
28,737

 
28,737

Other commercial
14

 
792

 
792

 
9

 
13,301

 
12,929

Consumer
—

 
—

 
—

 
1

 
27

 
27

Total
34

 
$
18,805

 
$
18,906

 
35

 
$
76,517

 
$
77,909



During the three months ended September 30, 2019, there were three other commercial loans totaling $133,000 and one income producing and other residential loan for $254,000 restructured in the preceding 12-month period that subsequently defaulted. During the nine months ended September 30, 2019, there were two venture capital loans totaling $441,000, three other commercial loans totaling $133,000, and one income producing and other residential loan for $254,000 restructured in the preceding 12-month period that subsequently defaulted.
During the three months ended September 30, 2018, there were no loans restructured in the preceding 12-month period that subsequently defaulted. During the nine months ended September 30, 2018, there were no loans restructured in the preceding 12-month period that subsequently defaulted.

23


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Leases Receivable
We provide equipment financing to our customers primarily with operating and direct financing leases. For direct financing leases, lease receivables are recorded on the balance sheet but the leased equipment is not, although we generally retain legal title to the leased equipment until the end of each lease. Direct financing leases are stated at the net amount of minimum lease payments receivable, plus any unguaranteed residual value, less the amount of unearned income and net acquisition discount at the reporting date. Direct lease origination costs are amortized using the effective interest method over the life of the leases. Direct financing leases are subject to our accounting for allowance for loan and lease losses. See Note 8. Leases for information regarding operating leases where we are the lessor.
The following table provides the components of leases receivable income for the period indicated:
 
Three Months Ended
 
Nine Months Ended
 
September 30, 2019
 
September 30, 2019
 
(In thousands)
Component of leases receivable income:
 
 
 
Interest income on net investments in leases
$
2,648

 
$
8,674


The following table presents the components of leases receivable as of the date indicated:
 
September 30, 2019
 
(In thousands)
Net investment in direct financing leases:
 
Lease payments receivable
$
166,692

Unguaranteed residual assets
21,315

Deferred fees and other
747

Aggregate net investment in leases
$
188,754


The following table presents maturities of leases receivable as of the date indicated:
 
September 30, 2019
 
(In thousands)
Period Ending December 31,
 
2019
$
17,353

2020
72,465

2021
51,242

2022
19,819

2023
11,735

Thereafter
9,105

Total undiscounted cash flows
181,719

Less: Unearned income
(15,027
)
Present value of lease payments
$
166,692



24


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Allowance for Loan and Lease Losses
The following tables present a summary of the activity in the allowance for loan and lease losses on loans and leases held for investment by loan portfolio segment for the periods indicated:
 
Three Months Ended September 30, 2019
 
 
 
Real Estate
 
 
 
 
 
 
 
Real Estate
 
Construction
 
 
 
 
 
 
 
Mortgage
 
and Land
 
Commercial
 
Consumer
 
Total
 
(In thousands)
Allowance for Loan and Lease Losses:
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
46,826

 
$
26,378

 
$
59,401

 
$
2,432

 
$
135,037

Charge-offs
(120
)
 
—

 
(6,021
)
 
(360
)
 
(6,501
)
Recoveries
95

 
—

 
1,898

 
23

 
2,016

Net charge-offs
(25
)
 
—

 
(4,123
)
 
(337
)
 
(4,485
)
(Negative provision) provision
(1,655
)
 
683

 
8,907

 
65

 
8,000

Balance, end of period
$
45,146

 
$
27,061

 
$
64,185

 
$
2,160

 
$
138,552

 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2019
 
 
 
Real Estate
 
 
 
 
 
 
 
Real Estate
 
Construction
 
 
 
 
 
 
 
Mortgage
 
and Land
 
Commercial
 
Consumer
 
Total
 
(In thousands)
Allowance for Loan and Lease Losses:
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
46,021

 
$
28,209

 
$
56,360

 
$
1,882

 
$
132,472

Charge-offs
(850
)
 
—

 
(25,951
)
 
(802
)
 
(27,603
)
Recoveries
478

 
—

 
11,084

 
121

 
11,683

Net charge-offs
(372
)
 
—

 
(14,867
)
 
(681
)
 
(15,920
)
(Negative provision) provision
(503
)
 
(1,148
)
 
22,692

 
959

 
22,000

Balance, end of period
$
45,146

 
$
27,061

 
$
64,185

 
$
2,160

 
$
138,552

 
 
 
 
 
 
 
 
 
 
Ending Allowance by
 
 
 
 
 
 
 
 
 
Impairment Methodology:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
248

 
$
—

 
$
9,082

 
$
—

 
$
9,330

Collectively evaluated for impairment
$
44,898

 
$
27,061

 
$
55,103

 
$
2,160

 
$
129,222

 
 
 
 
 
 
 
 
 
 
Ending Loans and Leases by
 
 
 
 
 
 
 
 
 
Impairment Methodology:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
29,808

 
$
5,357

 
$
75,455

 
$
—

 
$
110,620

Collectively evaluated for impairment
7,867,116

 
2,546,117

 
7,803,102

 
408,588

 
18,624,923

Ending balance
$
7,896,924

 
$
2,551,474

 
$
7,878,557

 
$
408,588

 
$
18,735,543








25


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


 
Three Months Ended September 30, 2018
 
 
 
Real Estate
 
 
 
 
 
 
 
Real Estate
 
Construction
 
 
 
 
 
 
 
Mortgage
 
and Land
 
Commercial
 
Consumer
 
Total
 
(In thousands)
Allowance for Loan and Lease Losses:
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
45,467

 
$
26,210

 
$
58,806

 
$
1,656

 
$
132,139

Charge-offs
(726
)
 
—

 
(2,372
)
 
(210
)
 
(3,308
)
Recoveries
222

 
23

 
1,303

 
41

 
1,589

Net (charge-offs) recoveries
(504
)
 
23

 
(1,069
)
 
(169
)
 
(1,719
)
Provision (negative provision)
1,394

 
(47
)
 
9,907

 
246

 
11,500

Balance, end of period
$
46,357

 
$
26,186

 
$
67,644

 
$
1,733

 
$
141,920

 
 
 
 
 
 
 
 
 
 

 
Nine Months Ended September 30, 2018
 
 
 
Real Estate
 
 
 
 
 
 
 
Real Estate
 
Construction
 
 
 
 
 
 
 
Mortgage
 
and Land
 
Commercial
 
Consumer
 
Total
 
(In thousands)
Allowance for Loan and Lease Losses:
 
 
 
 
 
 
 
 
 
Balance, beginning of period (1)
$
40,051

 
$
13,055

 
$
84,022

 
$
2,328

 
$
139,456

Charge-offs
(8,071
)
 
—

 
(25,321
)
 
(304
)
 
(33,696
)
Recoveries
1,999

 
49

 
7,702

 
136

 
9,886

Net (charge-offs) recoveries
(6,072
)
 
49

 
(17,619
)
 
(168
)
 
(23,810
)
Provision (negative provision)
12,378

 
13,082

 
1,241

 
(427
)
 
26,274

Balance, end of period
$
46,357

 
$
26,186

 
$
67,644

 
$
1,733

 
$
141,920

 
 
 
 
 
 
 
 
 
 
Ending Allowance by
 
 
 
 
 
 
 
 
 
Impairment Methodology:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
496

 
$
—

 
$
20,363

 
$
—

 
$
20,859

Collectively evaluated for impairment
$
45,861

 
$
26,186

 
$
47,281

 
$
1,733

 
$
121,061

 
 
 
 
 
 
 
 
 
 
Ending Loans and Leases by
 
 
 
 
 
 
 
 
 
Impairment Methodology:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
44,985

 
$
5,533

 
$
79,493

 
$
—

 
$
130,011

Collectively evaluated for impairment
7,633,675

 
1,995,424

 
7,072,565

 
398,471

 
17,100,135

Ending balance
$
7,678,660

 
$
2,000,957

 
$
7,152,058

 
$
398,471

 
$
17,230,146


_______________________________________ 
(1)
The allowance for loan losses related to PCI loans of $6.4 million as of December 31, 2017 is reflected in the beginning balance of the allowance for loan and lease losses for the nine months ended September 30, 2018.

26


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Allowance for Credit Losses
The allowance for credit losses is the combination of the allowance for loan and lease losses and the reserve for unfunded loan commitments. The reserve for unfunded loan commitments is included within "Accrued interest payable and other liabilities" on the condensed consolidated balance sheets. The following tables present a summary of the activity in the allowance for loan and lease losses and reserve for unfunded loan commitments for the periods indicated:
 
Three Months Ended September 30, 2019
 
Allowance for
 
Reserve for
 
Total
 
Loan and
 
Unfunded Loan
 
Allowance for
 
Lease Losses
 
Commitments
 
Credit Losses
 
(In thousands)
Balance, beginning of period
$
135,037

 
$
34,861

 
$
169,898

Charge-offs
(6,501
)
 
—

 
(6,501
)
Recoveries
2,016

 
—

 
2,016

Net charge-offs
(4,485
)
 
—

 
(4,485
)
Provision (negative provision)
8,000

 
(1,000
)
 
7,000

Balance, end of period
$
138,552

 
$
33,861

 
$
172,413

 
Nine Months Ended September 30, 2019
 
Allowance for
 
Reserve for
 
Total
 
Loan and
 
Unfunded Loan
 
Allowance for
 
Lease Losses
 
Commitments
 
Credit Losses
 
(In thousands)
Balance, beginning of period
$
132,472

 
$
36,861

 
$
169,333

Charge-offs
(27,603
)
 
—

 
(27,603
)
Recoveries
11,683

 
—

 
11,683

Net charge-offs
(15,920
)
 
—

 
(15,920
)
Provision (negative provision)
22,000

 
(3,000
)
 
19,000

Balance, end of period
$
138,552

 
$
33,861

 
$
172,413

 
Three Months Ended September 30, 2018
 
Allowance for
 
Reserve for
 
Total
 
Loan and
 
Unfunded Loan
 
Allowance for
 
Lease Losses
 
Commitments
 
Credit Losses
 
(In thousands)
Balance, beginning of period
$
132,139

 
$
35,361

 
$
167,500

Charge-offs
(3,308
)
 
—

 
(3,308
)
Recoveries
1,589

 
—

 
1,589

Net charge-offs
(1,719
)
 
—

 
(1,719
)
Provision
11,500

 
—

 
11,500

Balance, end of period
$
141,920

 
$
35,361

 
$
177,281





27


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


 
Nine Months Ended September 30, 2018
 
Allowance for
 
Reserve for
 
Total
 
Loan and
 
Unfunded Loan
 
Allowance for
 
Lease Losses
 
Commitments
 
Credit Losses
 
(In thousands)
Balance, beginning of period (1)
$
139,456

 
$
28,635

 
$
168,091

Charge-offs
(33,696
)
 
—

 
(33,696
)
Recoveries
9,886

 
—

 
9,886

Net charge-offs
(23,810
)
 
—

 
(23,810
)
Provision
26,274

 
6,726

 
33,000

Balance, end of period
$
141,920

 
$
35,361

 
$
177,281


_______________________________________ 
(1)
The allowance for loan losses related to PCI loans of $6.4 million as of December 31, 2017 is reflected in the beginning balance of the allowance for loan and lease losses for the nine months ended September 30, 2018.
NOTE 5.  FORECLOSED ASSETS
The following table summarizes foreclosed assets as of the dates indicated:
 
September 30,
 
December 31,
Property Type
2019
 
2018
 
(In thousands)
Commercial real estate
$
199

 
$
2,004

Single-family residence
948

 
953

Construction and land development
219

 
219

Multi‑family
—

 
1,059

Total other real estate owned, net
1,366

 
4,235

Other foreclosed assets
—

 
1,064

Total foreclosed assets, net
$
1,366

 
$
5,299


The following table presents the changes in foreclosed assets, net of the valuation allowance, for the period indicated:
 
Foreclosed
 
Assets
 
(In thousands)
Balance, December 31, 2018
$
5,299

Transfers to foreclosed assets from loans
37

Provision for losses
(54
)
Reductions related to sales
(3,916
)
Balance, September 30, 2019
$
1,366



28


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 6.  GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets arise from the acquisition method of accounting for business combinations. Goodwill and other intangible assets generated from business combinations and deemed to have indefinite lives are not subject to amortization and instead are tested for impairment at least annually. Goodwill represents the excess of the purchase price over the fair value of the net assets and other identifiable intangible assets acquired. Impairment exists when the carrying value of the goodwill exceeds its implied fair value. An impairment loss would be recognized in an amount equal to that excess as a charge to "Noninterest expense" in the condensed consolidated statements of earnings.
Our other intangible assets with definite lives include CDI and CRI. CDI and CRI are amortized over their respective estimated useful lives and reviewed for impairment at least quarterly. The amortization expense represents the estimated decline in the value of the underlying deposits or customer relationships acquired. The aggregate amortization expense is expected to be $18.7 million for 2019. The estimated aggregate amortization expense related to our current intangible assets for each of the next five years is $14.8 million for 2020, $10.8 million for 2021, $7.4 million for 2022, $3.8 million for 2023, and $1.7 million for 2024.
The following table presents the changes in CDI and CRI and the related accumulated amortization for the periods indicated:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
2019
 
2019
 
2018
 
2019
 
2018
 
(In thousands)
Gross Amount of CDI and CRI:
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
119,497

 
$
119,497

 
$
119,497

 
$
119,497

 
$
119,497

Fully amortized portion
(1,924
)
 
—

 
—

 
(1,924
)
 
—

Balance, end of period
117,573

 
119,497

 
119,497

 
117,573

 
119,497

Accumulated Amortization:
 
 
 
 
 
 
 
 
 
Balance, beginning of period
(72,117
)
 
(67,247
)
 
(51,804
)
 
(62,377
)
 
(39,871
)
Amortization
(4,833
)
 
(4,870
)
 
(5,587
)
 
(14,573
)
 
(17,520
)
Fully amortized portion
1,924

 
—

 
—

 
1,924

 
—

Balance, end of period
(75,026
)
 
(72,117
)
 
(57,391
)
 
(75,026
)
 
(57,391
)
Net CDI and CRI, end of period
$
42,547

 
$
47,380

 
$
62,106

 
$
42,547

 
$
62,106



29


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 7.  OTHER ASSETS
The following table presents the detail of our other assets as of the dates indicated:
 
September 30,
 
December 31,
Other Assets
2019
 
2018
 
(In thousands)
Cash surrender value of BOLI
$
197,887

 
$
194,897

Operating lease ROU assets, net
134,122

 
—

Interest receivable
80,955

 
88,754

LIHTC investments
67,367

 
59,507

CRA investments (1)
62,269

 
59,062

Prepaid expenses
18,351

 
18,006

Taxes receivable
17,281

 
39,096

Equity investments without readily determinable fair values
14,828

 
14,758

Equity warrants
3,532

 
4,793

Equity investments with readily determinable fair values
4,715

 
4,891

Other receivables/assets
19,752

 
39,132

Total other assets
$
621,059

 
$
522,896

________________________
(1)
Includes equity investments without readily determinable fair values of $15.7 million and $12.5 million at September 30, 2019 and December 31, 2018.
The increase in the operating lease ROU assets in 2019 was due to the adoption of ASU 2016-02 effective January 1, 2019. See Note 8. Leases for further details.
Regarding our equity investments without readily determinable fair values, there were no impairments and no upward or downward adjustments during the nine months ended September 30, 2019. On a cumulative basis since January 1, 2018 and through September 30, 2019, we recorded impairments of $278,000 and upward adjustments of $286,000 to our equity investments without readily determinable fair values.

30


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 8. LEASES
The Company adopted ASU 2016-02, "Leases (Topic 842)," effective January 1, 2019 and applied the guidance to all leases within the scope of Topic 842 as of that date. We have adopted the guidance using the optional transition method under ASU 2018-11, “Leases (Topic 842): Targeted Improvements,” and recognized a cumulative effect adjustment to retained earnings without prior periods restated, effectively applying the requirements of the new standard prospectively.
We determine if an arrangement is a lease at inception by assessing whether there is an identified asset, and whether the contract conveys the right to control the use of the identified asset for a period of time in exchange for consideration. Topic 842 also requires a lessee to classify a lease as either finance or operating. The Company only had operating leases as of September 30, 2019, related to our leased facilities which consisted of 75 full-service branch offices and 76 other offices.
ROU assets represent a lessee's right to use an underlying asset for the lease term and lease liabilities represent a lessee's obligation to make lease payments arising from the lease. On January 1, 2019, ROU assets and operating lease liabilities were initially recognized based on the present value of future minimum lease payments over the remaining lease terms. We used our incremental borrowing rates on January 1, 2019 to determine the present value of future payments. The ROU assets also include any prepaid lease payments and initial direct costs incurred less any lease incentives received. We amortize the operating lease ROU assets and record interest expense on the operating lease liabilities over the lease terms.
Our leases have remaining terms ranging from 1 to 27 years. Short-term leases (initial term of less than 12 months) are not recorded on the balance sheet and lease expense is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease components, which are accounted for as a single lease component. Most leases include one or more options to renew, with renewal terms that can extend the lease from one to ten years. The exercise of lease renewal options is at our sole discretion. Some of our leases also include termination options. We have determined that we do not meet the reasonably certain threshold to exercise any renewal or termination options, therefore our lease terms do not reflect any optional periods. We rent or sublease certain office space to third parties. Our subleases consist of operating leases for offices that we have fully or partially vacated.
Certain of our lease agreements also include rental payments that adjust periodically based on changes in the CPI. We initially measured our lease payments using the index at the lease commencement date. Subsequent increases in the CPI are treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred. The ROU assets and lease liabilities are not re-measured as a result of changes in the CPI. Our lease agreements do not contain any purchase options, residual value guarantees, or restrictive covenants.
Operating Leases as a Lessee
Our lease expense is a component of "Occupancy expense" on our condensed consolidated statements of earnings. The following table presents the components of lease expense for the period indicated:
 
Three Months Ended
 
Nine Months Ended
 
September 30, 2019
 
September 30, 2019
 
(In thousands)
Operating lease expense:
 
 
 
Fixed costs
$
8,347

 
$
25,183

Variable costs
7

 
77

Short-term lease costs
126

 
849

Sublease income
(1,010
)
 
(3,190
)
Net lease expense
$
7,470

 
$
22,919




31


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


The following table presents supplemental cash flow information related to leases for the period indicated:
 
Nine Months Ended
 
September 30, 2019
 
 
Cash paid for amounts included in the measurement of lease liabilities:
 
Operating cash flows from operating leases
$
24,674

ROU assets obtained in exchange for lease obligations:
 
Operating leases
$
172,189


The following table presents supplemental balance sheet and other information related to operating leases as of the date indicated:
 
September 30, 2019
 
(Dollars in thousands)
Operating leases:
 
Operating lease right-of-use assets, net
$
134,122

Operating lease liabilities
$
149,185

 
 
Weighted average remaining lease term (in years)
4.8

Weighted average discount rate
2.79
%

The following table presents maturities of operating lease liabilities as of the date indicated:
 
September 30, 2019
 
(In thousands)
Period ending December 31,
 
2019
$
8,303

2020
32,345

2021
30,090

2022
24,304

2023
21,472

Thereafter
47,582

Total operating lease liabilities
164,096

Less: Imputed interest
(14,911
)
Present value of operating lease liabilities
$
149,185


Operating Leases as a Lessor
We provide equipment financing through operating leases where we facilitate the purchase of equipment leased to our customers. The equipment is on our balance sheet as "Equipment leased to others under operating leases" and is depreciated to its estimated residual value at the end of the lease term, shown as "Leased equipment depreciation" in the condensed consolidated statements of earnings, according to our fixed asset accounting policy. We receive periodic rental income payments under the leases, which are recorded as "Noninterest Income" in the condensed consolidated statements of earnings.

32


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


The following table presents the rental payments to be received on operating leases as of the date indicated:
 
September 30, 2019
 
(In thousands)
Period Ending December 31,
 
2019
$
8,727

2020
35,447

2021
31,743

2022
25,199

2023
22,096

Thereafter
52,717

Total undiscounted cash flows
$
175,929


NOTE 9.  BORROWINGS AND SUBORDINATED DEBENTURES
Borrowings
The following table summarizes our borrowings as of the dates indicated:
 
September 30, 2019
 
December 31, 2018
 
 
 
Weighted
 
 
 
Weighted
 
 
 
Average
 
 
 
Average
 
Amount
 
Rate
 
Amount
 
Rate
 
(Dollars in thousands)
Non‑recourse debt
$
31

 
7.50
%
 
$
114

 
7.50
%
FHLB secured advances
882,000

 
2.12
%
 
1,040,000

 
2.56
%
FHLB unsecured overnight advance
141,000

 
1.95
%
 
141,000

 
2.53
%
AFX borrowings
230,000

 
1.92
%
 
190,000

 
2.56
%
Total borrowings
$
1,253,031

 
2.06
%
 
$
1,371,114

 
2.56
%

The non‑recourse debt represents the payment stream of certain equipment leases sold to third parties. The debt is secured by the leased equipment and all interest rates are fixed. As of September 30, 2019, this debt had a weighted average remaining maturity of 0.3 years.
The Bank has established secured and unsecured lines of credit under which it may borrow funds from time to time on a term or overnight basis from the FHLB, the FRBSF, and other financial institutions.
FHLB Secured Line of Credit. The Bank had secured financing capacity with the FHLB as of September 30, 2019 of $4.3 billion, collateralized by a blanket lien on $6.1 billion of qualifying loans. As of September 30, 2019, the balance outstanding was $882.0 million, which consisted of a $582.0 million overnight borrowing and a $300.0 million two-month borrowing with a maturity date of October 4, 2019. As of December 31, 2018, the balance outstanding was a $1.0 billion overnight advance.
FRBSF Secured Line of Credit. The Bank has a secured line of credit with the FRBSF. As of September 30, 2019, the Bank had secured borrowing capacity of $2.1 billion collateralized by liens covering $2.8 billion of qualifying loans. As of September 30, 2019 and December 31, 2018, there were no balances outstanding.
FHLB Unsecured Line of Credit. The Bank has a $141.0 million unsecured line of credit with the FHLB for the purchase of overnight funds, of which $141.0 million was outstanding at September 30, 2019. At December 31, 2018, the balance outstanding was $141.0 million.

33


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Federal Funds Arrangements with Commercial Banks. As of September 30, 2019, the Bank had unsecured lines of credit of $180.0 million in the aggregate with several correspondent banks for the purchase of overnight funds, subject to availability of funds. These lines are renewable annually and have no unused commitment fees. As of September 30, 2019 and December 31, 2018, there were no balances outstanding. The Bank is a member of the AFX, through which it may either borrow or lend funds on an overnight or short-term basis with a group of pre-approved commercial banks. The availability of funds changes daily. As of September 30, 2019, the balance outstanding was $230.0 million, which consisted of $230.0 million in overnight borrowings. As of December 31, 2018, there were $190.0 million in overnight borrowings outstanding.
Subordinated Debentures
The following table summarizes the terms of each issuance of subordinated debentures outstanding as of the dates indicated:
 
September 30, 2019
 
December 31, 2018
 
Date
 
Maturity
 
Rate Index
Series
Amount
 
Rate
 
Amount
 
Rate
 
Issued
 
Date
 
(Quarterly Reset)
 
(Dollars in thousands)
 
 
 
 
 
 
Trust V
$
10,310

 
5.24
%
 
$
10,310

 
5.89
%
 
8/15/2003
 
9/17/2033
 
3-month LIBOR + 3.10
Trust VI
10,310

 
5.17
%
 
10,310

 
5.84
%
 
9/3/2003
 
9/15/2033
 
3-month LIBOR + 3.05
Trust CII
5,155

 
5.09
%
 
5,155

 
5.74
%
 
9/17/2003
 
9/17/2033
 
3-month LIBOR + 2.95
Trust VII
61,856

 
5.02
%
 
61,856

 
5.27
%
 
2/5/2004
 
4/23/2034
 
3-month LIBOR + 2.75
Trust CIII
20,619

 
3.81
%
 
20,619

 
4.48
%
 
8/15/2005
 
9/15/2035
 
3-month LIBOR + 1.69
Trust FCCI
16,495

 
3.72
%
 
16,495

 
4.39
%
 
1/25/2007
 
3/15/2037
 
3-month LIBOR + 1.60
Trust FCBI
10,310

 
3.67
%
 
10,310

 
4.34
%
 
9/30/2005
 
12/15/2035
 
3-month LIBOR + 1.55
Trust CS 2005-1
82,475

 
4.07
%
 
82,475

 
4.74
%
 
11/21/2005
 
12/15/2035
 
3-month LIBOR + 1.95
Trust CS 2005-2
128,866

 
4.22
%
 
128,866

 
4.47
%
 
12/14/2005
 
1/30/2036
 
3-month LIBOR + 1.95
Trust CS 2006-1
51,545

 
4.22
%
 
51,545

 
4.47
%
 
2/22/2006
 
4/30/2036
 
3-month LIBOR + 1.95
Trust CS 2006-2
51,550

 
4.22
%
 
51,550

 
4.47
%
 
9/27/2006
 
10/30/2036
 
3-month LIBOR + 1.95
Trust CS 2006-3 (1)
28,092

 
1.68
%
 
29,556

 
1.73
%
 
9/29/2006
 
10/30/2036
 
3-month EURIBOR + 2.05
Trust CS 2006-4
16,470

 
4.22
%
 
16,470

 
4.47
%
 
12/5/2006
 
1/30/2037
 
3-month LIBOR + 1.95
Trust CS 2006-5
6,650

 
4.22
%
 
6,650

 
4.47
%
 
12/19/2006
 
1/30/2037
 
3-month LIBOR + 1.95
Trust CS 2007-2
39,177

 
4.22
%
 
39,177

 
4.47
%
 
6/13/2007
 
7/30/2037
 
3-month LIBOR + 1.95
Gross subordinated debentures
539,880

 
4.16
%
 
541,344

 
4.51
%
 
 
 
 
 
 
Unamortized discount (2)
(83,735
)
 
 
 
(87,498
)
 
 
 
 
 
 
 
 
Net subordinated debentures
$
456,145

 
 
 
$
453,846

 
 
 
 
 
 
 
 
___________________
(1)
Denomination is in Euros with a value of €25.8 million.
(2)
Amount represents the fair value adjustment on trust preferred securities assumed in acquisitions.


34


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 10.  COMMITMENTS AND CONTINGENCIES
The following table presents a summary of commitments described below as of the dates indicated:
 
September 30,
 
December 31,
 
2019
 
2018
 
(In thousands)
Loan commitments to extend credit
$
7,790,796

 
$
7,528,248

Standby letters of credit
367,147

 
364,210

Commitments to contribute capital to low income housing project partnerships
 
 
 
and small business investment companies
116,012

 
101,991

Commitments to contribute capital to private equity funds
50

 
50

Total
$
8,274,005

 
$
7,994,499


The Company is a party to financial instruments with off‑balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the condensed consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of involvement that the Company has in particular classes of financial instruments.
Commitments to extend credit are contractual agreements to lend to our customers when customers are in compliance with their contractual credit agreements and when customers have contractual availability to borrow under such agreements. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. We provide standby letters of credit in conjunction with several of our lending arrangements and property lease obligations. Most guarantees expire within one year from the date of issuance. If a borrower defaults on its commitments subject to any letter of credit issued under these arrangements, we would be required to meet the borrower's financial obligation but would seek repayment of that financial obligation from the borrower. In some cases, borrowers have pledged cash and investment securities as collateral with us under these arrangements.
In addition, the Company invests in low income housing project partnerships, which provide income tax credits, and in small business investment companies that call for capital contributions up to an amount specified in the partnership agreements. As of September 30, 2019 and December 31, 2018, we had commitments to contribute capital to these entities totaling $116.0 million and $102.0 million. We also had commitments to contribute up to an additional $50,000 to private equity funds at September 30, 2019 and December 31, 2018.
Legal Matters
In the ordinary course of our business, the Company is party to various legal actions, which we believe are incidental to the operation of our business. The outcome of such legal actions and the timing of ultimate resolution are inherently difficult to predict. In the opinion of management, based upon currently available information, any resulting liability, in addition to amounts already accrued, and taking into consideration insurance which may be applicable, would not have a material adverse effect on the Company’s financial statements or operations.

35


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 11.  FAIR VALUE MEASUREMENTS
ASC Topic 820, “Fair Value Measurement,” defines fair value, establishes a framework for measuring fair value including a three‑level valuation hierarchy, and expands disclosures about fair value measurements. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date reflecting assumptions that a market participant would use when pricing an asset or liability. The hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:
•
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets.
•
Level 2: Observable inputs other than Level 1, including quoted prices for similar assets and liabilities in active markets, quoted prices in less active markets, or other observable inputs that can be corroborated by observable market data, either directly or indirectly, for substantially the full term of the financial instrument. This category generally includes municipal securities, agency residential and commercial MBS, collateralized loan obligations, registered publicly rated private label CMOs, corporate debt securities, SBA securities, and asset-backed securitizations.
•
Level 3: Inputs to a valuation methodology that are unobservable, supported by little or no market activity, and significant to the fair value measurement. These valuation methodologies generally include pricing models, discounted cash flow models, or a determination of fair value that requires significant management judgment or estimation. This category also includes observable inputs from a pricing service not corroborated by observable market data, and includes our non-rated private label CMOs, non-rated private label asset-backed securities, and equity warrants.
The Company uses fair value to measure certain assets and liabilities on a recurring basis, primarily securities available‑for‑sale and derivatives. For assets measured at the lower of cost or fair value, the fair value measurement criteria may or may not be met during a reporting period and such measurements are therefore considered “nonrecurring” for purposes of disclosing our fair value measurements. Fair value is used on a nonrecurring basis to adjust carrying values for impaired loans and other real estate owned and also to record impairment on certain assets, such as goodwill, CDI, and other long‑lived assets.
The following tables present information on the assets and liabilities measured and recorded at fair value on a recurring basis as of the dates indicated:
 
Fair Value Measurements as of
 
September 30, 2019
Measured on a Recurring Basis
Total
 
Level 1
 
Level 2
 
Level 3
 
(In thousands)
Securities available‑for‑sale:
 
 
 
 
 
 
 
Agency residential CMOs
$
1,172,555

 
$
—

 
$
1,172,555

 
$
—

Agency commercial MBS
1,100,017

 
—

 
1,100,017

 
—

Municipal securities
721,981

 
—

 
721,981

 
—

Agency residential MBS
324,929

 
—

 
324,929

 
—

Asset-backed securities
214,151

 
—

 
182,783

 
31,368

Collateralized loan obligations
113,874

 
—

 
113,874

 
—

Private label residential CMOs
93,868

 
—

 
87,273

 
6,595

SBA securities
49,746

 
—

 
49,746

 
—

Corporate debt securities
21,024

 
—

 
21,024

 
—

U.S. Treasury securities
5,203

 
5,203

 
—

 
—

Total securities available-for-sale
3,817,348

 
5,203

 
3,774,182

 
37,963

Equity warrants
3,532

 
—

 
—

 
3,532

Other derivative assets
2,297

 
—

 
2,297

 
—

Equity investments with readily determinable fair values
4,715

 
4,715

 
—

 
—

Total recurring assets
$
3,827,892

 
$
9,918

 
$
3,776,479

 
$
41,495

Derivative liabilities
$
1,446

 
$
—

 
$
1,446

 
$
—


36


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


 
Fair Value Measurements as of
 
December 31, 2018
Measured on a Recurring Basis
Total
 
Level 1
 
Level 2
 
Level 3
 
(In thousands)
Securities available‑for‑sale:
 
 
 
 
 
 
 
Municipal securities
$
1,312,194

 
$
—

 
$
1,312,194

 
$
—

Agency commercial MBS
1,112,704

 
—

 
1,112,704

 
—

Agency residential CMOs
632,850

 
—

 
632,850

 
—

U.S. Treasury securities
403,405

 
403,405

 
—

 
—

Agency residential MBS
281,088

 
—

 
281,088

 
—

Private label residential CMOs
101,205

 
—

 
93,917

 
7,288

Asset-backed securities
81,385

 
—

 
41,440

 
39,945

SBA securities
67,047

 
—

 
67,047

 
—

Corporate debt securities
17,553

 
—

 
17,553

 
—

Total securities available-for-sale
4,009,431

 
403,405

 
3,558,793

 
47,233

Equity warrants
4,793

 
—

 
—

 
4,793

Other derivative assets
3,292

 
—

 
3,292

 
—

Equity investments with readily determinable fair values
4,891

 
4,891

 
—

 
—

Total recurring assets
$
4,022,407

 
$
408,296

 
$
3,562,085

 
$
52,026

Derivative liabilities
$
142

 
$
—

 
$
142

 
$
—


During the nine months ended September 30, 2019, there was a $108,000 transfer from Level 3 equity warrants to Level 1 equity investments with readily determinable fair values measured on a recurring basis.
The following table presents information about quantitative inputs and assumptions used to determine the fair values provided by our third party pricing service for our Level 3 private label CMOs and asset-backed securities available-for-sale measured at fair value on a recurring basis as of the date indicated:
 
September 30, 2019
 
Private Label CMOs
 
Asset-Backed Securities
 
 
 
Weighted
 
Input or
 
Weighted
 
Range
 
Average
 
Range
 
Average
Unobservable Inputs
of Inputs
 
Input
 
of Inputs
 
Input
Voluntary annual prepayment speeds
2.9% - 18.2%
 
11.4%
 
12.0% - 15.0%
 
13.7%
Annual default rates (1)
0.0% - 11.1%
 
1.8%
 
2.0%
 
2.0%
Loss severity rates (1)
24.1% - 117.6%
 
58.5%
 
60.0%
 
60.0%
Discount rates
2.5% - 9.2%
 
6.3%
 
3.2% - 5.2%
 
4.3%

____________________
(1)
The annual default rates and loss severity rates were the same for all of the asset-backed securities.



37


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


The following table presents information about quantitative inputs and assumptions used in the modified Black-Scholes option pricing model to determine the fair value for our Level 3 equity warrants measured at fair value on a recurring basis as of the date indicated:
 
September 30, 2019
 
Equity Warrants
 
Weighted
 
Average
Unobservable Inputs
Input
Volatility
17.0%
Risk-free interest rate
1.6%
Remaining life assumption (in years)
3.27

The following table summarizes activity for our Level 3 private label CMOs available-for-sale, asset-backed securities available-for-sale, and equity warrants measured at fair value on a recurring basis for the period indicated:
 
Private
 
Asset-Backed
 
Equity
 
Label CMOs
 
Securities
 
Warrants
 
(In thousands)
Balance, December 31, 2018
$
7,288

 
$
39,945

 
$
4,793

Total included in earnings
340

 
(66
)
 
7,429

Total included in other comprehensive income
(160
)
 
646

 
—

Issuances
—

 
—

 
226

Sales and dispositions (1)
—

 
—

 
(8,808
)
Net settlements
(873
)
 
(9,157
)
 
—

Transfers to Level 1
—

 
—

 
(108
)
Balance, September 30, 2019
$
6,595

 
$
31,368

 
$
3,532

______________________
(1)
Includes the exercise of warrants that upon exercise become equity securities in public companies. These are often subject to lock-up restrictions that must be met before the equity security can be sold, during which time they are reported as equity investments with readily determinable fair values.
The following tables present assets measured at fair value on a non‑recurring basis as of the dates indicated:
 
Fair Value Measurement as of
 
September 30, 2019
Measured on a Non‑Recurring Basis
Total
 
Level 1
 
Level 2
 
Level 3
 
(In thousands)
Impaired loans
$
29,552

 
$
—

 
$
2,962

 
$
26,590

OREO
128

 
—

 
—

 
128

Total non-recurring
$
29,680

 
$
—

 
$
2,962

 
$
26,718

 
Fair Value Measurement as of
 
December 31, 2018
Measured on a Non‑Recurring Basis
Total
 
Level 1
 
Level 2
 
Level 3
 
(In thousands)
Impaired loans
$
24,432

 
$
—

 
$
1,800

 
$
22,632

OREO
1,136

 
—

 
1,136

 
—

Total non-recurring
$
25,568

 
$
—

 
$
2,936

 
$
22,632



38


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


The following table presents losses recognized on assets measured on a nonrecurring basis for the periods indicated:
 
Three Months Ended
 
Nine Months Ended
Losses on Assets
September 30,
 
September 30,
Measured on a Non‑Recurring Basis
2019
 
2018
 
2019
 
2018
 
(In thousands)
Impaired loans
$
8,339

 
$
14,347

 
$
10,091

 
$
31,351

OREO
54

 
—

 
54

 
65

Total losses
$
8,393

 
$
14,347

 
$
10,145

 
$
31,416


The following table presents the valuation methodology and unobservable inputs for Level 3 assets measured at fair value on a nonrecurring basis as of the date indicated:
 
 
September 30, 2019
 
 
 
 
Valuation
 
Unobservable
 
 
 
Weighted
Asset
 
Fair Value
 
Technique
 
Inputs
 
Range
 
Average
 
 
(In thousands)
 
 
 
 
 
 
 
 
Impaired loans
 
$
21,543

 
Discounted cash flows
 
Discount rates
 
3.75% - 8.77%
 
7.58%
Impaired loans
 
5,047

 
Third party appraisals
 
No discounts
 
 
 
 
OREO
 
128

 
Third party appraisals
 
Discount (1)
 
31.91%
 
31.91%
Total non-recurring Level 3
 
$
26,718

 
 
 
 
 
 
 
 

____________________
(1)
Relates to one OREO property at September 30, 2019.
The following tables present carrying amounts and estimated fair values of certain financial instruments as of the dates indicated:
 
September 30, 2019
 
Carrying
 
Estimated Fair Value
 
Amount
 
Total
 
Level 1
 
Level 2
 
Level 3
 
(In thousands)
Financial Assets:
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
252,596

 
$
252,596

 
$
252,596

 
$
—

 
$
—

Interest‑earning deposits in financial institutions
483,405

 
483,405

 
483,405

 
—

 
—

Securities available‑for‑sale
3,817,348

 
3,817,348

 
5,203

 
3,774,182

 
37,963

Investment in FHLB stock
26,865

 
26,865

 
—

 
26,865

 
—

Loans and leases held for investment, net
18,596,991

 
18,751,105

 
—

 
2,962

 
18,748,143

Equity warrants
3,532

 
3,532

 
—

 
—

 
3,532

Other derivative assets
2,297

 
2,297

 
—

 
2,297

 
—

Equity investments with readily determinable fair values
4,715

 
4,715

 
4,715

 
—

 
—

 
 
 
 
 
 
 
 
 
 
Financial Liabilities:
 
 
 
 
 
 
 
 
 
Core deposits
16,471,264

 
16,471,264

 
—

 
16,471,264

 
—

Non-core non-maturity deposits
479,732

 
479,732

 
—

 
479,732

 
—

Time deposits
2,782,207

 
2,781,713

 
—

 
2,781,713

 
—

Borrowings
1,253,031

 
1,253,031

 
953,000

 
300,031

 
—

Subordinated debentures
456,145

 
439,895

 
—

 
439,895

 
—

Derivative liabilities
1,446

 
1,446

 
—

 
1,446

 
—


39


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)



 
December 31, 2018
 
Carrying
 
Estimated Fair Value
 
Amount
 
Total
 
Level 1
 
Level 2
 
Level 3
 
(In thousands)
Financial Assets:
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
175,830

 
$
175,830

 
$
175,830

 
$
—

 
$
—

Interest‑earning deposits in financial institutions
209,937

 
209,937

 
209,937

 
—

 
—

Securities available‑for‑sale
4,009,431

 
4,009,431

 
403,405

 
3,558,793

 
47,233

Investment in FHLB stock
32,103

 
32,103

 
—

 
32,103

 
—

Loans and leases held for investment, net
17,825,241

 
17,013,860

 
—

 
1,800

 
17,012,060

Equity warrants
4,793

 
4,793

 
—

 
—

 
4,793

Other derivative assets
3,292

 
3,292

 
—

 
3,292

 
—

Equity investments with readily determinable fair values
4,891

 
4,891

 
4,891

 
—

 
—

 
 
 
 
 
 
 
 
 
 
Financial Liabilities:
 
 
 
 
 
 
 
 
 
Core deposits
16,346,671

 
16,346,671

 
—

 
16,346,671

 
—

Non-core non-maturity deposits
518,192

 
518,192

 
—

 
518,192

 
—

Time deposits
2,005,638

 
2,017,137

 
—

 
2,017,137

 
—

Borrowings
1,371,114

 
1,371,114

 
1,371,000

 
114

 
—

Subordinated debentures
453,846

 
435,251

 
—

 
435,251

 
—

Derivative liabilities
142

 
142

 
—

 
142

 
—


For information regarding the valuation methodologies used to measure our assets recorded at fair value (under ASC Topic 820), and for estimating fair value for financial instruments not recorded at fair value (under ASC Topic 825, as amended by ASU 2016-01 and ASU 2018-03), see Note 1. Nature of Operations and Summary of Significant Accounting Policies, and Note 13. Fair Value Measurements, to the Consolidated Financial Statements of the Company's 2018 Annual Report on Form 10-K.
Limitations
Fair value estimates are made at a specific point in time and are based on relevant market information and information about the financial instrument. These estimates do not reflect income taxes or any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a portion of the Company’s financial instruments, fair value estimates are based on what management believes to be reasonable judgments regarding expected future cash flows, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimated fair values are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Since the fair values have been estimated as of September 30, 2019, the amounts that will actually be realized or paid at settlement or maturity of the instruments could be significantly different.

40


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 12.  EARNINGS PER SHARE
The following table presents the computations of basic and diluted net earnings per share for the periods indicated:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
2019
 
2019
 
2018
 
2019
 
2018
 
(Dollars in thousands, except per share data)
Basic Earnings Per Share:
 
 
 
 
 
 
 
 
 
Net earnings
$
110,026

 
$
128,125

 
$
116,287

 
$
350,755

 
$
350,298

Less: Earnings allocated to unvested restricted stock(1)
(1,369
)
 
(1,190
)
 
(1,428
)
 
(3,725
)
 
(3,899
)
Net earnings allocated to common shares
$
108,657

 
$
126,935

 
$
114,859

 
$
347,030

 
$
346,399

 
 
 
 
 
 
 
 
 
 
Weighted-average basic shares and unvested restricted
 
 
 
 
 
 
 
 
 
stock outstanding
119,831

 
120,042

 
123,657

 
120,691

 
125,728

Less: Weighted-average unvested restricted stock
 
 
 
 
 
 
 
 
 
outstanding
(1,622
)
 
(1,462
)
 
(1,537
)
 
(1,480
)
 
(1,473
)
Weighted-average basic shares outstanding
118,209

 
118,580

 
122,120

 
119,211

 
124,255

 
 
 
 
 
 
 
 
 
 
Basic earnings per share
$
0.92

 
$
1.07

 
$
0.94

 
$
2.91

 
$
2.79

 
 
 
 
 
 
 
 
 
 
Diluted Earnings Per Share:
 
 
 
 
 
 
 
 
 
Net earnings allocated to common shares
$
108,657

 
$
126,935

 
$
114,859

 
$
347,030

 
$
346,399

 
 
 
 
 
 
 
 
 
 
Weighted-average diluted shares outstanding
118,209

 
118,580

 
122,120

 
119,211

 
124,255

 
 
 
 
 
 
 
 
 
 
Diluted earnings per share
$
0.92

 
$
1.07

 
$
0.94

 
$
2.91

 
$
2.79


________________________
(1)
Represents cash dividends paid to holders of unvested restricted stock, net of forfeitures, plus undistributed earnings amounts available to holders of unvested restricted stock, if any.

41


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 13. REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue
The following table presents interest income and noninterest income, the components of total revenue, as disclosed in the condensed consolidated statements of earnings and the related amounts which are from contracts with customers within the scope of Topic 606 for the periods indicated. As illustrated here, substantially all of our revenue is specifically excluded from the scope of Topic 606.
 
Three Months Ended September 30, 2019
 
Three Months Ended September 30, 2018
 
Total
 
Revenue from
 
Total
 
Revenue from
 
Recorded
 
Contracts with
 
Recorded
 
Contracts with
 
Revenue
 
Customers
 
Revenue
 
Customers
 
(In thousands)
Total interest income
$
307,208

 
$
—

 
$
292,642

 
$
—

Noninterest income:
 
 
 
 
 
 
 
   Service charges on deposit accounts
3,525

 
3,525

 
3,979

 
3,979

   Other commissions and fees
10,855

 
4,965

 
12,397

 
4,767

   Leased equipment income
9,615

 
—

 
9,120

 
—

   Gain on sale of loans
765

 
—

 
—

 
—

   Gain on sale of securities
908

 
—

 
826

 
—

   Other income
7,761

 
428

 
10,590

 
444

      Total noninterest income
33,429

 
8,918

 
36,912

 
9,190

Total revenue
$
340,637

 
$
8,918

 
$
329,554

 
$
9,190


The following table presents revenue from contracts with customers based on the timing of revenue recognition for the periods indicated:
 
Three Months Ended
 
September 30,
 
2019
 
2018
 
(In thousands)
Products and services transferred at a point in time
$
5,046

 
$
4,604

Products and services transferred over time
3,872

 
4,586

Total revenue from contracts with customers
$
8,918

 
$
9,190



42


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


The following table presents interest income and noninterest income, the components of total revenue, as disclosed in the condensed consolidated statements of earnings and the related amounts which are from contracts with customers within the scope of Topic 606 for the periods indicated:
 
Nine Months Ended September 30, 2019
 
Nine Months Ended September 30, 2018
 
Total
 
Revenue from
 
Total
 
Revenue from
 
Recorded
 
Contracts with
 
Recorded
 
Contracts with
 
Revenue
 
Customers
 
Revenue
 
Customers
 
(In thousands)
Total interest income
$
926,300

 
$
—

 
$
858,931

 
$
—

Noninterest income:
 
 
 
 
 
 
 
   Service charges on deposit accounts
11,026

 
11,026

 
12,418

 
12,418

   Other commissions and fees
33,453

 
14,661

 
34,429

 
14,519

   Leased equipment income
28,079

 
—

 
28,497

 
—

   Gain on sale of loans
1,091

 
—

 
4,675

 
—

   Gain on sale of securities
25,261

 
—

 
7,390

 
—

   Other income
16,476

 
1,253

 
27,700

 
1,341

      Total noninterest income
115,386

 
26,940

 
115,109

 
28,278

Total revenue
$
1,041,686

 
$
26,940

 
$
974,040

 
$
28,278

The following table presents revenue from contracts with customers based on the timing of revenue recognition for the periods indicated:
 
Nine Months Ended
 
September 30,
 
2019
 
2018
 
(In thousands)
Products and services transferred at a point in time
$
14,579

 
$
14,195

Products and services transferred over time
12,361

 
14,083

Total revenue from contracts with customers
$
26,940

 
$
28,278

Contract Balances
The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers:
 
September 30, 2019
 
December 31, 2018
 
(In thousands)
Receivables, which are included in "Other assets"
$
1,494

 
$
1,334

Contract assets, which are included in "Other assets"
$
—

 
$
—

Contract liabilities, which are included in "Accrued interest payable and other liabilities"
$
523

 
$
621


Contract liabilities relate to advance consideration received from customers for which revenue is recognized over the life of the contract. The change in contract liabilities for the nine months ended September 30, 2019 due to revenue recognized that was included in the contract liability balance at the beginning of the period was $98,000.

43


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 14.  STOCK-BASED COMPENSATION
The Company’s 2017 Stock Incentive Plan, or the 2017 Plan, permits stock-based compensation awards to officers, directors, employees, and consultants. The 2017 Plan authorized grants of stock‑based compensation instruments to purchase or issue up to 4,000,000 shares of Company common stock. As of September 30, 2019, there were 2,431,235 shares available for grant under the 2017 Plan. Though frozen for new issuances, certain awards issued under the 2003 Stock Incentive Plan, or the 2003 Plan, remain outstanding.
Restricted Stock
Restricted stock amortization totaled $7.3 million, $6.2 million, and $8.1 million for the three months ended September 30, 2019, June 30, 2019, and September 30, 2018, and $19.3 million and $22.3 million for the nine months ended September 30, 2019 and 2018. Such amounts are included in "Compensation expense" on the condensed consolidated statements of earnings. The amount of unrecognized compensation expense related to unvested TRSAs and PRSUs as of September 30, 2019 totaled $59.3 million.
Time-Based Restricted Stock Awards
At September 30, 2019, there were 1,619,355 shares of unvested TRSAs outstanding pursuant to the Company's 2003 and 2017 Stock Incentive Plans. The TRSAs generally vest ratably over a service period of three or four years from the date of the grant or immediately upon death of an employee. Compensation expense related to TRSAs is based on the fair value of the underlying stock on the award date and is recognized over the vesting period using the straight‑line method.
Performance-Based Restricted Stock Units
At September 30, 2019, there were 276,386 units of unvested PRSUs that have been granted. The PRSUs will vest only if performance goals with respect to certain financial metrics are met over a three-year performance period. The PRSUs are not considered issued and outstanding until they vest. PRSUs are granted and initially expensed based on a target number. The number of shares that will ultimately vest based on actual performance will range from zero to a maximum of either 150% or 200% of target. Compensation expense related to PRSUs is based on the fair value of the underlying stock on the award date and is amortized over the vesting period using the straight-line method unless it is determined that: (1) attainment of the financial metrics is less than probable, in which case a portion of the amortization is suspended, or (2) attainment of the financial metrics is improbable, in which case a portion of the previously recognized amortization is reversed and also suspended. If it is determined that attainment of a financial measure higher than target is probable, the amortization will increase to up to 150% or 200% of the target amortization amount. Annual PRSU expense may vary during the three-year performance period based upon changes in management's estimate of the number of shares that may ultimately vest. In the case where the performance target for the PRSU is based on a market condition (such as total shareholder return), the amortization is neither reversed nor suspended if it is subsequently determined that the attainment of the performance target is less than probable or improbable and the employee continues to meet the service requirement of the award.

44


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE 15.  RECENTLY ISSUED ACCOUNTING STANDARDS
 
 
 
 
Effective
 
Effect on the Financial Statements
Standard
 
Description
 
Date
 
or Other Significant Matters
ASU 2016-13, "Measurement of Credit Losses on Financial Instruments,"
ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses,”
and ASU 2019-05, "Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief"
 
1. This Update changes the accounting and recognition of credit losses and impairment of financial assets recorded at amortized cost. Under the CECL model, the standard requires immediate recognition of estimated credit losses expected to occur over the remaining life of the asset. The forward-looking concept of CECL requires loss estimates for the remaining estimated life of the financial assets using historical experience, current conditions and reasonable and supportable forecasts. 2. The Update modifies the other-than-temporary impairment (OTTI) model for AFS debt securities to require an allowance for credit impairment instead of a direct write-down, which allows for reversal of credit improvements in future periods.
3. In addition, the Update eliminates the existing guidance for PCI loans, but requires an allowance for purchased financial assets with credit deterioration.
4. Receivables arising from operating leases are not within the scope of CECL. 5. The Update must be applied using the modified retrospective method with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption. A prospective transition approach is required for available-for-sale debt securities for which an OTTI had been recognized before the adoption date. Early adoption is permitted.
 
January 1, 2020
 
1. The Company has established a multidisciplinary project team and implementation plan, selected a software solution, reached accounting decisions on various matters, developed a conceptual framework, and developed econometric regression models for the reasonable and supportable ("R&S") forecast period. 2. The Company continues to test and refine the CECL models and has completed four preliminary calculations with one more scheduled before adoption. The Company continues to perform testing and sensitivity analysis on its modeling assumptions and results. 3. Our planned approach for estimating expected life-time credit losses include the following key components for all loan portfolio segments: a. The use of a probability of default/loss given default methodology; b. A single scenario based on the consensus forecast from Moody's to develop an economic forecast for the R&S period; c. An initial R&S forecast period of four quarters for all loan portfolio segments, which reflects management's expectation of losses based on forward-looking economic scenarios over that time; d. A post-R&S reversion period of two quarters using a straight-line approach; e. A historical loss period of at least 40 quarters, which represents a full economic credit cycle; and f. Prepayments rates based on our historical experience. 4. We plan to adopt this new standard on January 1, 2020. Our latest estimate of the impact based on September 30, 2019 loan data and economic forecasts indicates that the allowance for credit losses would increase from 0% to 10% upon adoption. We have also updated our internal controls over financial reporting in preparation of adopting this new standard. 5. The current estimate and future calculations are highly dependent on loan composition, of which the vast majority is comprised of short-duration commercial loans; the macroeconomic conditions and forecasts; and other management assumptions and judgments.

45


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


 
 
 
 
Effective
 
Effect on the Financial Statements
Standard
 
Description
 
Date
 
or Other Significant Matters
ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" 
 
1. This Update simplifies goodwill impairment testing by eliminating the second step of the analysis under which the implied fair value of goodwill is determined as if the reporting unit were being acquired in a business combination. 2. The goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount, and an impairment charge would be recognized for any amount by which the carrying amount exceeds the reporting unit's fair value, to the extent that the loss recognized does not exceed the amount of goodwill allocated to that reporting unit. 3. The Update must be applied prospectively and early adoption is permitted.
 
January 1, 2020
 
The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial position or results of operations and we plan to adopt this standard on January 1, 2020.
 
 
 
 
Effective
 
Effect on the Financial Statements
Standard
 
Description
 
Date
 
or Other Significant Matters
ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to Disclosure Requirements for Fair Value Measurements”
 
1. This Update modified the disclosure requirements in Topic 820 to add disclosures regarding changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty. 2. Certain disclosure requirements in Topic 820 are also removed or modified. Certain disclosures in ASU 2018-13 would need to be applied on a retrospective basis and others on a prospective basis and early adoption is permitted.
 
January 1, 2020
 
The adoption of this guidance will modify disclosures but will not have an impact on the Company’s consolidated financial position or results of operations. The Company has early adopted any removed or modified disclosures effective January 1, 2019 but will defer adoption of the additional disclosures until January 1, 2020 as permitted in the transition guidance of the standard.


46


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


 
 
 
 
Effective
 
Effect on the Financial Statements
Standard
 
Description
 
Date
 
or Other Significant Matters
ASU 2019-04, "Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments"


 
1. This Update made clarifications and amendments to five topics: (i) Topic A: Codification Improvements Resulting from the June and November 2018 Credit Losses Transition Resource Group ("TRG") Meetings, (ii) Topic B: Codification Improvements to ASU 2016-13, (iii) Topic C: Codification Improvements to ASU 2017-12, "Derivatives and Hedging (Topic 815)" and Other Hedging Items, (iv) Topic D: Codification Improvements to ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10)," and (v) Topic E: Codification Improvements Resulting from the November 2018 Credit Losses TRG Meeting. 2. In addition to conforming amendments that correct for errors and oversights, the Update in Topics A, B, and E, which impacts CECL implementation, amends or clarifies guidance for accrued interest; transfers between classifications or categories of loans and debt securities; recoveries; effect of prepayments in determining the effective interest rate; estimated costs to sell when foreclosure is probable; vintage disclosure presentation related to line-of-credit arrangements converted to term loans; contractual extensions or renewals; and others. 3. Transition requirements for the amendments are the same as ASU 2016-13 for the Update in Topics A, B, and E. The Update in Topic C may be applied retrospectively as of the date of initial adoption of ASU 2017-12 or prospectively. The Update in Topic D must be applied on a modified retrospective method with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption and early adoption is permitted.

 
January 1, 2020; except for Topic C - January 1, 2019
 
1. Impacts from the adoption of Topics A, B, and E within this Update will be considered in the Company's overall CECL implementation and we plan to adopt this Update concurrent with the adoption of ASU 2016-13. 2. The adoption of Topic D within this Update is not expected to have a material impact on the Company's consolidated financial position or results of operations and we plan to adopt this standard on January 1, 2020. 3. Topic C within this Update is not applicable to us and therefore there is no impact on the Company's consolidated financial position or results of operations.

NOTE 16.  SUBSEQUENT EVENTS
Common Stock Dividends
On November 1, 2019, the Company announced that the Board of Directors had declared a quarterly cash dividend of $0.60 per common share. The cash dividend is payable on November 29, 2019 to stockholders of record at the close of business on November 20, 2019.
The Company has evaluated events that have occurred subsequent to September 30, 2019 and have concluded there are no other subsequent events that would require recognition in the accompanying consolidated financial statements.


47


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Information
This Form 10-Q contains certain “forward-looking statements” about the Company and its subsidiaries within the meaning of the Private Securities Litigation Reform Act of 1995, including certain plans, strategies, goals, and projections and including statements about our expectations regarding our operating expenses, profitability, allowance for loan and lease losses, net interest margin, net interest income, deposit growth, loan and lease portfolio growth and production, acquisitions, maintaining capital adequacy, liquidity, goodwill, and interest rate risk management. All statements contained in this Form 10-Q that are not clearly historical in nature are forward-looking, and the words “anticipate,” “assume,” “intend,” “believe,” “forecast,” “expect,” “estimate,” “plan,” “continue,” “will,” “should,” “look forward” and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding future financial and operating results and future transactions and their results) involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance or achievements. Actual results could differ materially from those contained or implied by such forward-looking statements for a variety of factors, including without limitation:
•
our ability to complete future acquisitions, and to successfully integrate such acquired entities or achieve expected benefits, synergies and/or operating efficiencies within expected time frames or at all;
•
our ability to compete effectively against other financial service providers in our markets;
•
the impact of changes in interest rates or levels of market activity, especially on the fair value of our loan and investment portfolios;
•
deterioration, weaker than expected improvement, or other changes in the state of the economy or the markets in which we conduct business (including the levels of IPOs and mergers and acquisitions), which may affect the ability of borrowers to repay their loans and the value of real property or other property held as collateral for such loans;
•
changes in credit quality and the effect of credit quality and the new CECL accounting standard on our provision for credit losses and allowance for loan and lease losses;
•
our ability to attract deposits and other sources of funding or liquidity;
•
the need to retain capital for strategic or regulatory reasons;
•
compression of the net interest margin due to changes in the interest rate environment, forward yield curves, loan products offered, spreads on newly originated loans and leases, changes in our asset or liability mix, and/or changes to the cost of deposits and borrowings;
•
reduced demand for our services due to strategic or regulatory reasons or reduced demand for our products due to legislative changes such as new rent control laws;
•
our ability to successfully execute on initiatives relating to enhancements of our technology infrastructure, including client-facing systems and applications;
•
legislative or regulatory requirements or changes, including an increase of capital requirements, and increased political and regulatory uncertainty;
•
the impact on our reputation and business from our interactions with business partners, counterparties, service providers and other third parties;
•
higher than anticipated increases in operating expenses;
•
lower than expected dividends paid from the Bank to the holding company;
•
the amount and exact timing of any common stock repurchases will depend upon market conditions and other factors;
•
a deterioration in the overall macroeconomic conditions or the state of the banking industry that could warrant further analysis of the carrying value of goodwill and could result in an adjustment to its carrying value resulting in a non-cash charge;
•
the effectiveness of our risk management framework and quantitative models;
•
the costs and effects of legal, compliance, and regulatory actions, changes and developments, including the impact of adverse judgments or settlements in litigation, the initiation and resolution of regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations or reviews;

48

•
the impact of changes made to tax laws or regulations affecting our business, including the disallowance of tax benefits by tax authorities and/or changes in tax filing jurisdictions or entity classifications; and
•
our success at managing risks involved in the foregoing items and all other risk factors described in our audited consolidated financial statements, and other risk factors described in this Form 10-Q and other documents filed or furnished by PacWest with the SEC.
All forward-looking statements included in this Form 10-Q are based on information available at the time the statement is made. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise except as required by law.
Overview
PacWest Bancorp, a Delaware corporation, is a bank holding company registered under the BHCA, with our corporate headquarters located in Beverly Hills, California. Our principal business is to serve as the holding company for our wholly-owned subsidiary, Pacific Western Bank. References to "Pacific Western" or the "Bank" refer to Pacific Western Bank together with its wholly-owned subsidiaries. References to "we," "us," or the "Company" refer to PacWest Bancorp together with its subsidiaries on a consolidated basis. When we refer to "PacWest" or to the "holding company," we are referring to PacWest Bancorp, the parent company, on a stand-alone basis.
The Bank is focused on relationship-based business banking to small, middle-market, and venture-backed businesses nationwide. The Bank offers a broad range of loan and lease and deposit products and services through 74 full-service branches located in California, one branch located in Durham, North Carolina, and numerous loan production offices across the country through its Community Banking, National Lending and Venture Banking groups. Community Banking provides real estate loans, commercial loans, and comprehensive deposit and treasury management services to small and medium-sized businesses conducted primarily through our California-based branch offices. National Lending provides asset-based, equipment, and real estate 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 innovation hubs across the United States. In addition, we provide investment advisory and asset management services to select clients through Pacific Western Asset Management Inc., a wholly-owned subsidiary of the Bank and an SEC-registered investment adviser.
Over the last couple of years, one area of focus has been our credit de-risking strategy whereby we made decisions to reduce our exposures in certain lending portfolios while emphasizing growth in loan portfolios with favorable credit performance. These efforts included the following:
•
Exited the healthcare, technology, and general cash flow lending origination businesses by selling $1.5 billion of cash flow loans at year-end 2017 and reducing the portfolio from approximately $2.4 billion at the end of 2016 to approximately $73 million as of September 30, 2019.
•
Reduced our exposure to healthcare real estate by shrinking this portfolio from approximately $955 million at the end of 2016 to approximately $345 million as of September 30, 2019.
•
Shifted our Venture Banking strategy to emphasize growth in equity fund loans which, as a percentage of our Venture Banking loan portfolio, increased from 16% as of the end of 2016 to 56% as of September 30, 2019.
•
Ceased the origination of security monitoring cash flow loans and healthcare real estate loans in our National Lending group effective October 2019.
These efforts have resulted in lower loan yields as reductions in certain loan portfolios were replaced with loans with lower credit risk, such as multi-family and equity fund loans, thereby placing pressure on our net interest margin. However, these efforts have resulted in an improved credit risk profile as evidenced by the following:
•
Classified loans and leases were reduced from 2.67% of loans and leases at December 31, 2016 to 1.01% as of September 30, 2019.
•
Nonaccrual loans and leases were reduced from 1.11% of loans and leases at December 31, 2016 to 0.53% as of September 30, 2019.
•
The provision for credit losses as a percentage of average loans and leases was reduced from 0.42% in 2016 (excluding PCI provision and average loans) to 0.14% annualized for the nine months ended September 30, 2019.

49


In managing the top line of our business, we focus on loan growth, loan yield, deposit cost, and net interest margin. Net interest income, on a year-to-date basis in 2019, accounted for 86.9% of net revenue (net interest income plus noninterest income).
At September 30, 2019, we had total assets of $26.7 billion, including $18.7 billion of total loans and leases, net of deferred fees, and $3.82 billion of securities available-for-sale, compared to $25.7 billion of total assets, including $18.0 billion of total loans and leases, net of deferred fees, and $4.01 billion of securities available-for-sale at December 31, 2018. The $993.3 million increase in total assets since year-end was due primarily to increases of $777.8 million in loans and leases, $350.2 million in cash and cash equivalents, and $98.2 million in other assets, offset partially by a $192.1 million decrease in securities available-for-sale. The increase in loans and leases was driven mostly by increased balances on existing loans resulting primarily from disbursements on construction loans and equity fund loans. The increase in other assets was due mainly to an operating lease ROU asset recorded in connection with the adoption of ASU 2016-02, "Leases (Topic 842)," on January 1, 2019.
At September 30, 2019, we had total liabilities of $21.8 billion, including total deposits of $19.7 billion and borrowings of $1.3 billion, compared to $20.9 billion of total liabilities, including $18.9 billion of total deposits and $1.4 billion of borrowings at December 31, 2018. The $898.8 million increase in total liabilities since year-end was due mainly to increases of $776.6 million in time deposits, $124.6 million in core deposits, and $151.8 million in accrued interest payable and other liabilities, offset partially by a $118.1 million decrease in borrowings, primarily short-term FHLB advances, and a $38.5 million decrease in non-core non-maturity deposits. The increase in core deposits was due primarily to an $803.2 million increase in interest checking deposits, offset partially by decreases of $447.7 million in noninterest-bearing demand deposits, $173.5 million in money market deposits, and $57.3 million in savings deposits. The increase in accrued interest payable and other liabilities was due mainly to operating lease liabilities recorded in connection with the adoption of ASU 2016-02. At September 30, 2019, core deposits totaled $16.5 billion, or 84% of total deposits, including $7.4 billion of noninterest-bearing demand deposits, or 38% of total deposits.
At September 30, 2019, we had total stockholders' equity of $4.92 billion compared to $4.83 billion at December 31, 2018. The $94.5 million increase in stockholders' equity since year-end was due mainly to $350.8 million in net earnings and a $102.0 million increase in accumulated other comprehensive income, offset partially by $154.5 million of common stock repurchased under the Stock Repurchase Program and $217.0 million of cash dividends paid. Consolidated capital ratios remained strong with Tier 1 capital and total capital ratios of 9.55% and 12.16% at September 30, 2019.
Recent Events
Security Monitoring Cash Flow Loans
In late October 2019, we made the decision to no longer originate new security monitoring loans. New technology is disrupting the security alarm business causing increased customer acquisition costs and customer attrition thereby adversely impacting business models and valuations. As of September 30, 2019, the security monitoring loan portfolio is comprised of 38 loans, 38% of which are Shared National Credits, with a $618 million outstanding balance, $166 million in unfunded commitments, and a weighted average maturity of 28 months.
Stock Repurchase Program
On February 24, 2019, effective upon the maturity of the previous Stock Repurchase Program on February 28, 2019, PacWest's Board of Directors authorized a new Stock Repurchase Program for an aggregate purchase price not to exceed $225 million until February 29, 2020.
The amount and exact timing of any repurchases depends upon market conditions and other factors. The Stock Repurchase Program may be suspended or discontinued at any time. During the third quarter of 2019, no shares of common stock were repurchased. During the nine months ended September 30, 2019, we repurchased 3,987,945 shares of common stock for a total amount of $154.5 million at an average price of $38.75. All shares repurchased under the Stock Repurchase Program were retired upon settlement. At September 30, 2019, the remaining amount that could be used to repurchase shares under the Stock Repurchase Program was $124.7 million.

50


Colorado Market Expansion
In the second quarter of 2019, we received approval to open a full-service branch office in Denver, Colorado, which opened on November 4, 2019.
Key Performance Indicators
Among other factors, our operating results generally depend on the following key performance indicators:
The Level of Net Interest Income
Net interest income is the excess of interest earned on our interest‑earning assets over the interest paid on our interest‑bearing liabilities. Net interest margin is net interest income (annualized if related to a quarterly period) expressed as a percentage of average interest‑earning assets. Tax equivalent net interest income is net interest income increased by an adjustment for tax-exempt interest on certain loans and investment securities based on a 21% federal statutory tax rate. Tax equivalent net interest margin is calculated as tax equivalent net interest income divided by average interest-earning assets.
Net interest income is affected by changes in both interest rates and the volume of average interest‑earning assets and interest‑bearing liabilities. Our primary interest‑earning assets are loans and investment securities, and our primary interest‑bearing liabilities are deposits. Contributing to our high net interest margin is our high yield on loans and leases and competitive cost of deposits. While our deposit balances will fluctuate depending on deposit holders’ perceptions of alternative yields available in the market, we seek to minimize the impact of these variances by attracting a high percentage of noninterest‑bearing deposits.
Loan and Lease Growth
We actively seek new lending opportunities under an array of lending products. Our lending activities include real estate mortgage loans, real estate construction and land loans, commercial loans and leases, and a small amount of consumer lending. Our commercial real estate loans and real estate construction loans are secured by a range of property types. Our commercial loans are diverse and generally include various asset-secured loans, equipment-secured loans and leases, venture capital loans to support venture capital firms’ operations and the operations of entrepreneurial companies during the various phases of their early life cycles and secured business loans originated through our Community Banking group. Our loan origination process emphasizes credit quality. To augment our internal loan production, we have historically purchased multi-family loans from other banks. We have also purchased single-family mortgage and construction loans and private student loans from third-party lenders. These loan purchases help us manage the concentrations in our portfolio as they diversify the geographic, interest-rate risk, credit risk, and product composition of our loan portfolio. Achieving net loan growth is subject to many factors, including maintaining strict credit standards, competition from other lenders, and borrowers that opt to prepay loans.
The Magnitude of Credit Losses
We emphasize credit quality in originating and monitoring our loans and leases, and we measure our success by the levels of our classified loans and leases, nonaccrual loans and leases, and net charge‑offs. We maintain an allowance for credit losses on loans and leases, which is the sum of the allowance for loan and lease losses and the reserve for unfunded loan commitments. Provisions for credit losses are charged to operations as and when needed for both on and off‑balance sheet credit exposures. Loans and leases which are deemed uncollectable are charged off and deducted from the allowance for loan and lease losses. Recoveries on loans and leases previously charged off are added to the allowance for loan and lease losses. The provision for credit losses on the loan and lease portfolio is based on our allowance methodology which considers various credit performance measures such as historical and current net charge‑offs, the levels and trends of classified loans and leases, the likelihood of loans defaulting based on the historical degree that similar loans defaulted and the resulting loss severity for these defaulted loans, and the overall level of outstanding loans and leases. For originated and acquired non‑impaired loans, a provision for credit losses may be recorded to reflect credit deterioration after the origination date or after the acquisition date, respectively.

51

We regularly review our loans and leases to determine whether there has been any deterioration in credit quality resulting from borrower operations or changes in collateral value or other factors which may affect collectability of our loans and leases. Changes in economic conditions, such as the rate of economic growth, the unemployment rate, rate of inflation, increases in the general level of interest rates, declines in real estate values, changes in commodity prices, and adverse conditions in borrowers’ businesses, could negatively impact our borrowers and cause us to adversely classify loans and leases. An increase in classified loans and leases generally results in increased provisions for credit losses and an increased allowance for credit losses. Any deterioration in the commercial real estate market may lead to increased provisions for credit losses because our loans are concentrated in commercial real estate loans.
The Level of Noninterest Expense
Our noninterest expense includes fixed and controllable overhead, the largest components of which are compensation and occupancy expense. It also includes costs that tend to vary based on the volume of activity, such as loan and lease production and the number and complexity of foreclosed assets. We measure success in controlling both fixed and variable costs through monitoring of the efficiency ratio. We calculate the efficiency ratio by dividing noninterest expense (less intangible asset amortization, net foreclosed assets expense (income), and acquisition, integration and reorganization costs) by net revenues (the sum of tax equivalent net interest income plus noninterest income, less gain (loss) on sale of securities and gain (loss) on sales of assets other than loans and leases).
The following table presents the calculation of our efficiency ratio for the periods indicated:
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
June 30,
 
September 30,
 
September 30,
Efficiency Ratio
2019
 
2019
 
2018
 
2019
 
2018
 
 
(Dollars in thousands)
Noninterest expense
$
126,809

 
$
125,427

 
$
128,153

 
$
378,523

 
$
381,997

Less:
Intangible asset amortization
4,833

 
4,870

 
5,587

 
14,573

 
17,520

 
Foreclosed assets expense (income), net
8

 
(146
)
 
(257
)
 
(109
)
 
(440
)
 
Acquisition, integration and reorganization costs
—

 
—

 
800

 
618

 
800

      Noninterest expense used for efficiency ratio
$
121,968

 
$
120,703

 
$
122,023

 
$
363,441

 
$
364,117

 
 
 
 
 
 
 
 
 
 
 
Net interest income (tax equivalent)
$
255,974

 
$
261,689

 
$
262,276

 
$
773,716

 
$
785,546

Noninterest income
33,429

 
50,893

 
36,912

 
115,386

 
115,109

Net revenues
289,403

 
312,582

 
299,188

 
889,102

 
900,655

Less:
Gain on sale of securities
908

 
22,192

 
826

 
25,261

 
7,390

Net revenues used for efficiency ratio
$
288,495

 
$
290,390

 
$
298,362

 
$
863,841

 
$
893,265

 
 
 
 
 
 
 
 
 
 
 
Efficiency ratio
42.3
%
 
41.6
%
 
40.9
%
 
42.1
%
 
40.8
%
Critical Accounting Policies and Estimates
Our accounting policies are fundamental to understanding management’s discussion and analysis of results of operations and financial condition. We identify critical policies and estimates as those that require management to make particularly difficult, subjective, and/or complex judgments about matters that are inherently uncertain and because of the likelihood that materially different amounts would be reported under different conditions or using different assumptions. These policies and estimates relate to the allowance for credit losses on loans and leases held for investment, accounting for business combinations, and the realization of deferred income tax assets and liabilities. For further information, refer to our Annual Report on Form 10‑K for the year ended December 31, 2018.

52


Non-GAAP Measurements
We use certain non‑GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. The methodology for determining these non-GAAP measures may differ among companies. We used the following non-GAAP measures in this Form 10-Q:
•
Return on average tangible equity, tangible common equity ratio, and tangible book value per share: Given that the use of these measures is prevalent among banking regulators, investors and analysts, we disclose them in addition to the related GAAP measures of return on average equity, equity to assets ratio, and book value per share, respectively. The reconciliations of these non-GAAP measurements to the GAAP measurements are presented in the following tables for and as of the periods presented.
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
 
September 30,
 
June 30,
 
September 30,
 
September 30,
Return on Average Tangible Equity
2019
 
2019
 
2018
 
2019
 
2018
 
 
 
(Dollars in thousands)
Net earnings
 
$
110,026

 
$
128,125

 
$
116,287

 
$
350,755

 
$
350,298

 
 
 
 
 
 
 
 
 
 
 
 
Average stockholders' equity
 
$
4,890,746

 
$
4,818,889

 
$
4,748,819

 
$
4,842,140

 
$
4,826,944

Less:
Average intangible assets
 
2,593,925

 
2,598,762

 
2,614,055

 
2,598,806

 
2,619,624

Average tangible common equity
 
$
2,296,821

 
$
2,220,127

 
$
2,134,764

 
$
2,243,334

 
$
2,207,320

 
 
 
 
 
 
 
 
 
 
 
 
Return on average equity (1)
 
8.93
%
 
10.66
%
 
9.72
%
 
9.68
%
 
9.70
%
Return on average tangible equity (2)
 
19.01
%
 
23.15
%
 
21.61
%
 
20.90
%
 
21.22
%
___________________________________
(1)
Annualized net earnings divided by average stockholders' equity.
(2)
Annualized net earnings divided by average tangible common equity.

Tangible Common Equity Ratio/
September 30,
 
December 31,
Tangible Book Value Per Share
2019
 
2018
 
(Dollars in thousands, except per share data)
Stockholders’ equity
$
4,920,108

 
$
4,825,588

Less: Intangible assets
2,591,217

 
2,605,790

Tangible common equity
$
2,328,891

 
$
2,219,798

 
 
 
 
Total assets
$
26,724,627

 
$
25,731,354

Less: Intangible assets
2,591,217

 
2,605,790

Tangible assets
$
24,133,410

 
$
23,125,564

 
 
 
 
Equity to assets ratio
18.41
%
 
18.75
%
Tangible common equity ratio (1)
9.65
%
 
9.60
%
Book value per share
$
41.06

 
$
39.17

Tangible book value per share (2)
$
19.43

 
$
18.02

Shares outstanding
119,831,192

 
123,189,833

_______________________________________ 
(1)
Tangible common equity divided by tangible assets.
(2)
Tangible common equity divided by shares outstanding.


53

Results of Operations
Earnings Performance
The following table presents performance metrics for the periods indicated:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
2019
 
2019
 
2018
 
2019
 
2018
 
(Dollars in thousands, except per share data)
Earnings Summary:
 
 
 
 
 
 
 
 
 
Net interest income
$
252,236

 
$
260,898

 
$
260,317

 
$
768,010

 
$
779,149

Provision for credit losses
(7,000
)
 
(8,000
)
 
(11,500
)
 
(19,000
)
 
(33,000
)
Noninterest income
33,429

 
50,893

 
36,912

 
115,386

 
115,109

Noninterest expense
(126,809
)
 
(125,427
)
 
(128,153
)
 
(378,523
)
 
(381,997
)
Earnings before income taxes
151,856

 
178,364

 
157,576

 
485,873

 
479,261

Income tax expense
(41,830
)
 
(50,239
)
 
(41,289
)
 
(135,118
)
 
(128,963
)
Net earnings
$
110,026

 
$
128,125

 
$
116,287

 
$
350,755

 
$
350,298

 
 
 
 
 
 
 
 
 
 
Performance Measures:
 
 
 
 
 
 
 
 
 
Diluted earnings per share
$
0.92

 
$
1.07

 
$
0.94

 
$
2.91

 
$
2.79

Annualized return on:
 
 
 
 
 
 
 
 
 
Average assets
1.65
%
 
1.99
%
 
1.89
%
 
1.80
%
 
1.94
%
Average tangible equity (1)(2)
19.01
%
 
23.15
%
 
21.61
%
 
20.90
%
 
21.22
%
Net interest margin (tax equivalent)
4.46
%
 
4.72
%
 
4.99
%
 
4.62
%
 
5.09
%
Yield on average loans and leases (tax equivalent)
5.91
%
 
6.26
%
 
6.20
%
 
6.11
%
 
6.20
%
Cost of average total deposits
0.83
%
 
0.81
%
 
0.46
%
 
0.79
%
 
0.38
%
Efficiency ratio
42.3
%
 
41.6
%
 
40.9
%
 
42.1
%
 
40.8
%
_____________________________
(1)
Calculation reduces average stockholder's equity by average intangible assets.
(2)
See "- Non-GAAP Measurements."
Third Quarter of 2019 Compared to Second Quarter of 2019
Net earnings for the third quarter of 2019 were $110.0 million, or $0.92 per diluted share, compared to net earnings for the second quarter of 2019 of $128.1 million, or $1.07 per diluted share. The $18.1 million decrease in net earnings from the prior quarter was due primarily to lower noninterest income of $17.5 million, lower net interest income of $8.7 million, and higher noninterest expense of $1.4 million, offset partially by lower provision for credit losses of $1.0 million and lower income tax expense of $8.4 million. Noninterest income decreased due mainly to a $21.3 million decrease in the gain on sale of securities. Net interest income decreased due mostly to a lower yield on average loans and leases, offset partially by a higher balance of average loans and leases and one more day in the third quarter of 2019 compared to the second quarter of 2019. Noninterest expense increased due primarily to a $2.5 million increase in compensation expense, offset partially by a $1.4 million decrease in other expense. The provision for credit losses decreased due mainly to the continued positive trend in credit quality metrics.


54

Third Quarter of 2019 Compared to Third Quarter of 2018
Net earnings for the third quarter of 2019 were $110.0 million, or $0.92 per diluted share, compared to net earnings for the third quarter of 2018 of $116.3 million, or $0.94 per diluted share. The $6.3 million decrease in net earnings was due primarily to lower net interest income of $8.1 million and lower noninterest income of $3.5 million, offset partially by a lower provision for credit losses of $4.5 million and lower noninterest expense of $1.3 million. Net interest income decreased due to interest expense growth of $22.6 million exceeding interest income growth of $14.6 million. Noninterest income decreased due mostly to lower dividends and gains on equity investments of $2.9 million and lower other commissions and fees of $1.5 million. The provision for credit losses decreased due primarily to a lower specific provision for impaired loans and a lower provision for the reserve for unfunded loan commitments during the third quarter of 2019. Noninterest expense declined due mainly to lower other professional services expense of $1.7 million.
Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018
Net earnings for the nine months ended September 30, 2019 were $350.8 million, or $2.91 per diluted share, compared to net earnings for the nine months ended September 30, 2018 of $350.3 million, or $2.79 per diluted share. The $0.5 million increase in net earnings was due primarily to a lower provision for credit losses of $14.0 million, lower noninterest expense of $3.5 million, and higher noninterest income of $0.3 million, offset partially by lower net interest income of $11.1 million and higher income tax expense of $6.2 million. The provision for credit losses decreased due primarily to lower provisions for the reserve for unfunded loan commitments during the nine months ended September 30, 2019. Noninterest expense declined due mainly to lower insurance and assessments expense of $4.3 million and lower intangible asset amortization of $2.9 million, offset partially by higher occupancy expense of $3.0 million. Noninterest income increased due mostly to a higher gain on sale of securities of $17.9 million, offset partially by lower other income of $8.5 million, lower dividends and gains on equity investments of $4.9 million, and a lower gain on sale of loans of $3.6 million. Net interest income decreased due to interest expense growth of $78.5 million exceeding interest income growth of $67.4 million.

55

Net Interest Income
The following tables summarize the distribution of average assets, liabilities, and stockholders’ equity, as well as interest income and yields earned on average interest‑earning assets and interest expense and rates paid on average interest‑bearing liabilities, presented on a tax equivalent basis, for the periods indicated:
 
Three Months Ended
 
September 30, 2019
 
June 30, 2019
 
September 30, 2018
 
 
Interest
Yields
 
 
Interest
Yields
 
 
Interest
Yields
 
Average
Income/
and
 
Average
Income/
and
 
Average
Income/
and
 
Balance
Expense
Rates
 
Balance
Expense
Rates
 
Balance
Expense
Rates
 
(Dollars in thousands)
ASSETS:
 
 
 
 
 
 
 
 
 
 
 
Loans and leases (1)(2)(3)
$
18,539,281

$
276,309

5.91
%
 
$
18,239,690

$
284,513

6.26
%
 
$
16,913,792

$
264,371

6.20
%
Investment securities (2)(4)(5)
3,809,243

32,213

3.36
%
 
3,790,436

29,462

3.12
%
 
3,844,201

29,711

3.07
%
Deposits in financial institutions
445,152

2,424

2.16
%
 
228,702

1,349

2.37
%
 
108,485

519

1.90
%
Total interest‑earning assets (2)
22,793,676

310,946

5.41
%
 
22,258,828

315,324

5.68
%
 
20,866,478

294,601

5.60
%
Other assets
3,612,927

 
 
 
3,590,361

 
 
 
3,491,293

 
 
Total assets
$
26,406,603

 
 
 
$
25,849,189

 
 
 
$
24,357,771

 
 
 
 
 
 
 
 
 
 
 
 
 
 
LIABILITIES AND
 
 
 
 
 
 
 
 
 
 
 
STOCKHOLDERS’ EQUITY:
 
 
 
 
 
 
 
 
 
 
 
Interest checking
$
3,598,698

11,942

1.32
%
 
$
3,242,960

10,644

1.32
%
 
$
2,433,837

5,135

0.84
%
Money market
5,121,856

14,807

1.15
%
 
5,046,021

14,604

1.16
%
 
5,270,297

10,689

0.80
%
Savings
515,649

218

0.17
%
 
525,648

227

0.17
%
 
629,241

233

0.15
%
Time
2,795,573

13,736

1.95
%
 
2,731,156

13,245

1.95
%
 
1,778,552

5,064

1.13
%
Total interest‑bearing deposits
12,031,776

40,703

1.34
%
 
11,545,785

38,720

1.35
%
 
10,111,927

21,121

0.83
%
Borrowings
1,181,313

6,852

2.30
%
 
1,142,223

7,210

2.53
%
 
720,449

3,814

2.10
%
Subordinated debentures
456,011

7,417

6.45
%
 
454,901

7,705

6.79
%
 
452,312

7,390

6.48
%
Total interest‑bearing liabilities
13,669,100

54,972

1.60
%
 
13,142,909

53,635

1.64
%
 
11,284,688

32,325

1.14
%
Noninterest‑bearing demand deposits
7,487,555

 
 
 
7,544,027

 
 
 
8,120,306

 
 
Other liabilities
359,202

 
 
 
343,364

 
 
 
203,958

 
 
Total liabilities
21,515,857

 
 
 
21,030,300

 
 
 
19,608,952

 
 
Stockholders’ equity
4,890,746

 
 
 
4,818,889

 
 
 
4,748,819

 
 
Total liabilities and
 
 
 
 
 
 
 
 
 
 
 
stockholders' equity
$
26,406,603

 
 
 
$
25,849,189

 
 
 
$
24,357,771

 
 
Net interest income (2)
 
$
255,974

 
 
 
$
261,689

 
 
 
$
262,276

 
Net interest rate spread (2)
 
 
3.81
%
 
 
 
4.04
%
 
 
 
4.46
%
Net interest margin (2)
 
 
4.46
%
 
 
 
4.72
%
 
 
 
4.99
%
 
 
 
 
 
 
 
 
 
 
 
 
Total deposits (6)
$
19,519,331

$
40,703

0.83
%
 
$
19,089,812

$
38,720

0.81
%
 
$
18,232,233

$
21,121

0.46
%
_____________________
(1)
Includes nonaccrual loans and leases and loan fees. Includes tax-equivalent adjustments related to tax-exempt interest on loans.
(2)
Tax equivalent.
(3)
Includes discount accretion on acquired loans of $2.6 million, $3.5 million, and $6.1 million for the three months ended September 30, 2019, June 30, 2019, and September 30, 2018, respectively.
(4)
Includes tax-equivalent adjustments of $3.4 million, $0.5 million, and $1.7 million for the three months ended September 30, 2019, June 30, 2019, and September 30, 2018, respectively, related to tax-exempt income on investment securities. The federal statutory tax rate utilized was 21%.
(5)
Yield on average investment securities for the three months ended September 30, 2019 would be 3.12% excluding a year-to-date tax-equivalent income adjustment recorded in the three months ended September 30, 2019.
(6)
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.

56

 
Nine Months Ended
 
September 30, 2019
 
September 30, 2018
 
 
Interest
Yields
 
 
Interest
Yields
 
Average
Income/
and
 
Average
Income/
and
 
Balance
Expense
Rates
 
Balance
Expense
Rates
 
(Dollars in thousands)
ASSETS:
 
 
 
 
 
 
 
Loans and leases (1)(2)(3)
$
18,282,807

$
835,335

6.11
%
 
$
16,724,942

$
776,160

6.20
%
Investment securities (2)(4)
3,855,486

92,248

3.20
%
 
3,779,007

87,613

3.10
%
Deposits in financial institutions
263,155

4,423

2.25
%
 
123,622

1,555

1.68
%
Total interest‑earning assets (2)
22,401,448

932,006

5.56
%
 
20,627,571

865,328

5.61
%
Other assets
3,611,442

 
 
 
3,516,331

 
 
Total assets
$
26,012,890

 
 
 
$
24,143,902

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND
 
 
 
 
 
 
 
STOCKHOLDERS’ EQUITY:
 
 
 
 
 
 
 
Interest checking deposits
$
3,296,533

31,907

1.29
%
 
$
2,330,310

12,117

0.70
%
Money market deposits
5,147,060

44,319

1.15
%
 
5,108,029

25,573

0.67
%
Savings deposits
531,306

687

0.17
%
 
656,703

736

0.15
%
Time deposits
2,606,417

36,745

1.88
%
 
1,830,444

12,880

0.94
%
Total interest‑bearing deposits
11,581,316

113,658

1.31
%
 
9,925,486

51,306

0.69
%
Borrowings
1,180,482

21,772

2.47
%
 
504,898

7,383

1.96
%
Subordinated debentures
455,045

22,860

6.72
%
 
455,277

21,093

6.19
%
Total interest‑bearing liabilities
13,216,843

158,290

1.60
%
 
10,885,661

79,782

0.98
%
Noninterest‑bearing demand deposits
7,603,993

 
 
 
8,227,576

 
 
Other liabilities
349,914

 
 
 
203,721

 
 
Total liabilities
21,170,750

 
 
 
19,316,958

 
 
Stockholders’ equity
4,842,140

 
 
 
4,826,944

 
 
Total liabilities and
 
 
 
 
 
 
 
stockholders' equity
$
26,012,890

 
 
 
$
24,143,902

 
 
Net interest income (2)
 
$
773,716

 
 
 
$
785,546

 
Net interest rate spread (2)
 
 
3.96
%
 
 
 
4.63
%
Net interest margin (2)
 
 
4.62
%
 
 
 
5.09
%
 
 
 
 
 
 
 
 
Total deposits (5)
$
19,185,309

$
113,658

0.79
%
 
$
18,153,062

$
51,306

0.38
%
_____________________
(1)
Includes nonaccrual loans and leases and loan fees. Includes tax-equivalent adjustments related to tax-exempt interest on loans.
(2)
Tax equivalent.
(3)
Includes discount accretion on acquired loans of $9.1 million and $22.4 million for the nine months ended September 30, 2019 and 2018, respectively.
(4)
Includes tax-equivalent adjustments of $4.8 million and $5.7 million for the nine months ended September 30, 2019 and 2018, respectively, related to tax-exempt income on investment securities. The federal statutory tax rate utilized was 21%.
(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 total deposits divided by average total deposits.





57

Third Quarter of 2019 Compared to Second Quarter of 2019
Net interest income decreased by $8.7 million to $252.2 million for the third quarter of 2019 compared to $260.9 million for the second quarter of 2019 due mainly to a lower yield on average loans and leases, offset partially by a higher balance of average loans and leases and one more day in the third quarter of 2019. The tax equivalent yield on average loans and leases was 5.91% for the third quarter of 2019 compared to 6.26% for the second quarter of 2019. The decrease in the yield on average loans and leases was due principally to lower coupon interest resulting from the repricing of variable-rate loans in addition to lower loan prepayment fees in the third quarter compared to the second quarter. The prepayment fees added five basis points to the third quarter yield on average loans and leases and 14 basis points to the second quarter yield on average loans and leases.
The tax equivalent NIM was 4.46% for the third quarter of 2019 compared to 4.72% for the second quarter of 2019. The decrease in the tax equivalent NIM was due mainly to lower coupon interest, lower loan prepayment fees, and lower loan fee income. The prepayment fees added four basis points to the third quarter NIM and 11 basis points to the second quarter NIM.
The cost of average total deposits increased to 0.83% for the third quarter of 2019 from 0.81% for the second quarter of 2019 due to a higher average balance of core interest-bearing deposits combined with a lower average balance of noninterest-bearing deposits. The cost of average interest-bearing deposits declined by one basis point in the third quarter and the cost of average total deposits for the month of September was 0.80%, reflecting actions taken to reduce certain deposit rates in light of the federal funds target rate cuts during the third quarter.
Third Quarter of 2019 Compared to Third Quarter of 2018
Net interest income decreased by $8.1 million to $252.2 million for the third quarter of 2019 compared to $260.3 million for the third quarter of 2018 due to interest expense growth exceeding interest income growth. Interest expense increased by $22.6 million due mainly to a higher cost and balance of average total deposits, a lower balance of average noninterest-bearing deposits, and a higher cost and balance of average borrowings. Interest income increased by $14.6 million due primarily to a higher balance of average loans and leases. The tax equivalent yield on average loans and leases was 5.91% for the third quarter of 2019 compared to 6.20% for the same quarter of 2018. The decrease in the yield on average loans and leases was due in part to lower discount accretion on acquired loans (five basis points in the third quarter of 2019 compared to 14 basis points in the third quarter of 2018). The decrease in loan yield was also influenced by the credit de-risking initiatives taken over the last couple of years which has seen the replacement of higher yielding loans, such as cash flow, with lower yielding multi-family and equity fund loans.
The tax equivalent NIM was 4.46% for the third quarter of 2019 compared to 4.99% for the same quarter last year. The decrease in the tax equivalent NIM was due mostly to higher deposit and borrowing costs, as well as the decrease in the yield on average loans and leases as described above. Total discount accretion on acquired loans contributed four basis points to the NIM for the third quarter of 2019 compared to 12 basis points for the third quarter of 2018.
The cost of average total deposits increased to 0.83% for the third quarter of 2019 from 0.46% for the third quarter of 2018 due mainly to higher rates paid on deposits in conjunction with increased market rates, along with a shift in our deposit mix resulting from increases in average interest-bearing deposits and a decrease in average noninterest-bearing demand deposits.

58

Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018
Net interest income decreased by $11.1 million to $768.0 million for the nine months ended September 30, 2019 compared to $779.1 million for the nine months ended September 30, 2018 due to interest expense growth exceeding interest income growth. Interest expense increased by $78.5 million due mainly to a higher cost and balance of average total deposits, a lower balance of average noninterest-bearing deposits, and a higher cost and balance of average borrowings. Interest income increased by $67.4 million due primarily to a higher balance of average loans and leases. The tax equivalent yield on average loans and leases was 6.11% for the nine months ended September 30, 2019 compared to 6.20% for the same period in 2018. The decrease in the yield on average loans and leases was due in part to lower discount accretion on acquired loans (six basis points for the nine months ended September 30, 2019 compared to 18 basis points for the nine months ended September 30, 2018). The decrease in loan yield was also influenced by the credit de-risking initiatives taken over the last couple of years which has seen the replacement of higher yielding loans, such as cash flow, with lower yielding multi-family and equity fund loans. These factors were partially offset by upward repricing of variable-rate loans attributable to four quarter point increases in the fed funds target rate during 2018 and in effect through the first half of 2019, only recently mitigated by two quarter point cuts to the fed funds target rate during the third quarter of 2019.
The tax equivalent NIM for the nine months ended September 30, 2019 was 4.62% compared to 5.09% for the same period last year. The decrease in the tax equivalent NIM was due mostly to higher deposit and borrowing costs, as well as the decrease in the yield on average loans and leases as described above. Total discount accretion on acquired loans contributed six basis points to the NIM for the nine months ended September 30, 2019 compared to 15 basis points for the nine months ended September 30, 2018.
The cost of average total deposits increased to 0.79% for the nine months ended September 30, 2019 from 0.38% for the nine months ended September 30, 2018 due mainly to higher rates paid on deposits in conjunction with increased market rates, along with a shift in our deposit mix resulting from increases in average interest-bearing deposits and a decrease in average noninterest-bearing demand deposits.

59

Provision for Credit Losses
The following table sets forth the details of the provision for credit losses on loans and leases held for investment and information regarding credit quality metrics for the periods indicated:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
2019
 
2019
 
2018
 
2019
 
2018
 
(Dollars in thousands)
Provision For Credit Losses:
 
 
 
 
 
 
 
 
 
Addition to allowance for loan and lease losses
$
8,000

 
$
10,000

 
$
11,500

 
$
22,000

 
$
26,274

(Reduction in) addition to reserve for unfunded
 
 
 
 
 
 
 
 
 
loan commitments
(1,000
)
 
(2,000
)
 
—

 
(3,000
)
 
6,726

Total provision for credit losses
$
7,000

 
$
8,000

 
$
11,500

 
$
19,000

 
$
33,000

 
 
 
 
 
 
 
 
 
 
Credit Quality Metrics:
 
 
 
 
 
 
 
 
 
Net charge‑offs on loans and leases held for
 
 
 
 
 
 
 
 
 
investment (1)
$
4,485

 
$
11,244

 
$
1,719

 
$
15,920

 
$
23,810

Annualized net charge‑offs to average loans and leases
0.10
%
 
0.25
%
 
0.04
%
 
0.12
%
 
0.19
%
At period end:
 
 
 
 
 
 
 
 
 
Allowance for credit losses
$
172,413

 
$
169,898

 
$
177,281

 
 
 
 
Allowance for credit losses to loans and leases
 
 
 
 
 
 
 
 
 
held for investment
0.92
%
 
0.92
%
 
1.03
%
 
 
 
 
Allowance for credit losses to nonaccrual
 
 
 
 
 
 
 
 
 
loans and leases held for investment
174.0
%
 
209.1
%
 
156.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans and leases held for investment
$
99,113

 
$
81,265

 
$
112,972

 
 
 
 
Performing TDRs held for investment
16,329

 
16,464

 
22,106

 
 
 
 
Total impaired loans and leases
$
115,442

 
$
97,729

 
$
135,078

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Classified loans and leases held for investment 
$
188,607

 
$
190,979

 
$
260,459

 
 
 
 
______________________
(1)
See "- Balance Sheet Analysis - Allowance for Credit Losses on Loans and Leases Held for Investment" for detail of charge-offs and recoveries by loan portfolio segment, class, and subclass for the periods presented.
Provisions for credit losses are charged to earnings for both on and off‑balance sheet credit exposures. The provision for credit losses on our loans and leases held for investment is based on our allowance methodology and is an expense that, in our judgment, is required to maintain an adequate allowance for credit losses.
The allowance for loan and lease losses has a general reserve component for loans and leases with no credit impairment and a specific reserve component for impaired loans and leases. Our allowance methodology for the general reserve component includes both quantitative and qualitative loss factors that are applied against the population of unimpaired loans and leases. The quantitative loss factors consider the likelihood of loans defaulting based on the historical degree that similar loans defaulted and the degree of credit losses based on the historical average degree of loss experienced for these similar loans and leases pooled both by loan or lease type and credit risk rating; loans with more adverse credit risk ratings have higher quantitative loss factors. The qualitative loss factors consider, among other things, current economic trends and forecasts, current collateral values and performance trends, credit performance trends, and the loan portfolio's current composition.

60

We recorded a provision for credit losses of $7.0 million in the third quarter of 2019, $8.0 million in the second quarter of 2019, and $11.5 million in the third quarter of 2018. The provision for credit losses was $19.0 million for the nine months ended September 30, 2019 compared to $33.0 million for the nine months ended September 30, 2018.
The $1.0 million decrease in the provision for credit losses for the third quarter of 2019 compared to the second quarter of 2019 was due mainly to higher specific provisions for credit losses on impaired loans during the second quarter of 2019, substantially all of which were charged off during the quarter.
The $4.5 million decrease in the provision for credit losses for the third quarter of 2019 compared to the third quarter of 2018 was due mainly to higher specific provisions for impaired loans in the third quarter of 2018 and a lower provision for the reserve for unfunded loan commitments during the third quarter of 2019.
The $14.0 million decrease in the provision for credit losses for the first nine months of 2019 compared to the same period last year was due primarily to lower provisions for the reserve for unfunded loan commitments during the first nine months of 2019 due to lower expected line utilization by borrowers in 2019 as compared to 2018.
Certain circumstances may lead to increased provisions for credit losses in the future. Examples of such circumstances are an increased amount of classified and/or impaired loans and leases, net loan and lease and unfunded commitment growth, and changes in economic conditions. Changes in economic conditions include the rate of economic growth, the unemployment rate, the rate of inflation, increases in the general level of interest rates, declines in real estate values, and adverse conditions in borrowers’ businesses. See further discussion in “- Balance Sheet Analysis - Allowance for Credit Losses on Loans and Leases Held for Investment” contained herein.
Noninterest Income
The following table summarizes noninterest income by category for the periods indicated:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
Noninterest Income
2019
 
2019
 
2018
 
2019
 
2018
 
(In thousands)
Other commissions and fees
$
10,855

 
$
11,590

 
$
12,397

 
$
33,453

 
$
34,429

Leased equipment income
9,615

 
9,182

 
9,120

 
28,079

 
28,497

Service charges on deposit accounts
3,525

 
3,771

 
3,979

 
11,026

 
12,418

Gain on sale of loans and leases
765

 
326

 
—

 
1,091

 
4,675

Gain on sale of securities
908

 
22,192

 
826

 
25,261

 
7,390

Other income:
 
 
 
 
 
 
 
 
 
Dividends and gains (losses) on equity investments
14

 
(83
)
 
2,895

 
227

 
5,138

Warrant income
3,936

 
1,214

 
3,818

 
7,429

 
5,291

Other
3,811

 
2,701

 
3,877

 
8,820

 
17,271

Total noninterest income
$
33,429

 
$
50,893

 
$
36,912

 
$
115,386

 
$
115,109

Third Quarter of 2019 Compared to Second Quarter of 2019
Noninterest income decreased by $17.5 million to $33.4 million for the third quarter of 2019 compared to $50.9 million for the second quarter of 2019 due mainly to a $21.3 million decrease in the gain on sale of securities attributable to a net gain of $0.9 million on sales of $143.4 million of securities in the third quarter of 2019 compared to a net gain of $22.2 million on sales of $980.4 million of securities in the second quarter of 2019 as we repositioned a portion of our securities portfolio in the second quarter of 2019 to shorten the duration of the portfolio, to enhance liquidity and to take advantage of municipal security price appreciation due to market dynamics from tax law changes. Partially offsetting the decrease in the gain on sale of securities was a $2.7 million increase in warrant income and a $1.1 million increase in other income for the third quarter of 2019. The increase in warrant income was due to higher gains resulting from exercised warrants due to the IPO or sale of the borrowers. The increase in other income was mainly due to higher gains from lease terminations.

61

Third Quarter of 2019 Compared to Third Quarter of 2018
Noninterest income decreased by $3.5 million to $33.4 million for the third quarter of 2019 compared to $36.9 million for the third quarter of 2018 due mainly to a $2.9 million decrease in dividends and gains on equity investments and a $1.5 million decrease in other commissions and fees. Dividends and gains on equity investments decreased due primarily to lower gains on the sale of equity investments. Other commissions and fees decreased due primarily to lower prepayment penalty fees of $1.8 million, offset partially by higher credit card fee income of $0.4 million.
Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018
Noninterest income increased by $0.3 million to $115.4 million for the nine months ended September 30, 2019 compared to $115.1 million for the nine months ended September 30, 2018 due mostly to a higher gain on sale of securities of $17.9 million, offset partially by decreases of $8.5 million in other income, $4.9 million in dividends and gains on equity investments, and $3.6 million in gain on sale of loans and leases. The increase in gain on sale of securities was attributable to a net gain of $25.3 million on sales of $1.5 billion of securities during the nine months ended September 30, 2019 compared to a net gain of $7.4 million on sales of $492.7 million of securities during the nine months ended September 30, 2018. The higher gain on sale of securities in 2019 is primarily due to the repositioning of a portion of our securities portfolio in the second quarter of 2019 to shorten the duration of the portfolio, to enhance liquidity and to take advantage of municipal security price appreciation due to market dynamics from tax law changes. Dividends and gains on equity investments decreased due primarily to lower gains on the sale of equity investments and lower dividends received in the first nine months of 2019 as compared to the same period in 2018. The decrease in gain on sale of loans was attributable to a net gain of $1.1 million on sales of $101.4 million of loans and leases during the nine months ended September 30, 2019 compared to a net gain of $4.7 million on sales of $641.9 million of loans and leases during the nine months ended September 30, 2018. The loans and leases sold during the first nine months of 2018 include the sale of a large nonaccrual loan for a $2.4 million gain and the settlement of our December 31, 2017 loans held for sale of $481.1 million for a $1.3 million gain.
Noninterest Expense
The following table summarizes noninterest expense by category for the periods indicated:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
Noninterest Expense
2019
 
2019
 
2018
 
2019
 
2018
 
(In thousands)
Compensation
$
71,424

 
$
68,956

 
$
72,333

 
$
211,225

 
$
213,269

Occupancy
14,089

 
14,457

 
13,069

 
42,866

 
39,867

Data processing
7,044

 
6,817

 
6,740

 
20,786

 
20,295

Leased equipment depreciation
5,951

 
5,558

 
5,001

 
17,160

 
15,613

Intangible asset amortization
4,833

 
4,870

 
5,587

 
14,573

 
17,520

Other professional services
4,400

 
4,629

 
6,058

 
13,542

 
15,754

Insurance and assessments
4,100

 
4,098

 
5,446

 
12,236

 
16,503

Loan expense
3,628

 
3,451

 
2,249

 
9,964

 
7,578

Acquisition, integration and reorganization costs
—

 
—

 
800

 
618

 
800

Foreclosed assets expense (income), net
8

 
(146
)
 
(257
)
 
(109
)
 
(440
)
Other
11,332

 
12,737

 
11,127

 
35,662

 
35,238

Total noninterest expense
$
126,809

 
$
125,427

 
$
128,153

 
$
378,523

 
$
381,997


62

Third Quarter of 2019 Compared to Second Quarter of 2019
Noninterest expense increased by $1.4 million to $126.8 million for the third quarter of 2019 compared to $125.4 million for the second quarter of 2019 attributable primarily to a $2.5 million increase in compensation expense, offset partially by a $1.4 million decrease in other expense. Compensation expense increased due mainly to higher incentives expense and higher stock compensation expense, partially offset by lower payroll taxes and benefits expense. Other expense decreased primarily due to lower business development expense and a loss on the early termination of an office lease in the second quarter.
Third Quarter of 2019 Compared to Third Quarter of 2018
Noninterest expense decreased by $1.3 million to $126.8 million for the third quarter of 2019 compared to $128.2 million for the third quarter of 2018 due mainly to decreases of $1.7 million in other professional services expense and $1.3 million in insurance and assessments expense, offset partially by a $1.4 million increase in loan expense. Other professional services expense declined due mainly to lower legal fees and lower professional fees for implementing new accounting standards. Insurance and assessments expense decreased due primarily to the ending in the fourth quarter of 2018 of a 4.5 basis point surcharge on the FDIC insurance assessments of depository institutions with more than $10 billion in total consolidated assets. Loan expense increased due mainly to higher loan servicing and workout expense.
Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018
Noninterest expense decreased by $3.5 million to $378.5 million for the nine months ended September 30, 2019 compared to $382.0 million for the nine months ended September 30, 2018 due mainly to decreases of $4.3 million in insurance and assessments expense and $2.9 million in intangible asset amortization, offset partially by an increase of $3.0 million in occupancy expense. Insurance and assessments expense decreased due primarily to the ending in the fourth quarter of 2018 of a 4.5 basis point surcharge on the FDIC insurance assessments of depository institutions with more than $10 billion in total consolidated assets. Intangible asset amortization declined due mostly to lower amortization on the Square 1 and CUB intangible assets. Occupancy expense increased due mainly to a greater number of properties leased in 2019 as compared to 2018 and due to operating lease ROU asset impairments recorded in 2019.
Income Taxes
The effective tax rate for the third quarter of 2019 was 27.5% compared to 28.2% for the second quarter of 2019 and 26.2% for the third quarter of 2018. The effective tax rate was 27.8% and 26.9% for the nine months ended September 30, 2019 and 2018. The Company’s blended statutory tax rate for federal and state is 28.3% and the effective tax rate for the full year 2019 is estimated to be in the range of 27-28%.





63


Balance Sheet Analysis
Securities Available-for-Sale
The following table presents the composition and durations of our securities available-for-sale as of the dates indicated:
 
September 30, 2019
 
June 30, 2019
 
December 31, 2018
 
Fair
 
% of
 
Duration
 
Fair
 
% of
 
Duration
 
Fair
 
% of
 
Duration
Security Type
Value
 
Total
 
(in years)
 
Value
 
Total
 
(in years)
 
Value
 
Total
 
(in years)
 
(Dollars in thousands)
Agency residential CMOs
$
1,172,555

 
31
%
 
3.6

 
$
1,150,474

 
30
%
 
3.5

 
$
632,850

 
16
%
 
4.3

Agency commercial MBS
1,100,017

 
29
%
 
4.7

 
1,058,846

 
28
%
 
5.0

 
1,112,704

 
28
%
 
4.9

Municipal securities
721,981

 
19
%
 
7.5

 
736,570

 
19
%
 
7.3

 
1,312,194

 
33
%
 
7.3

Agency residential MBS
324,929

 
8
%
 
3.3

 
351,360

 
9
%
 
3.4

 
281,088

 
7
%
 
3.7

Asset-backed securities
214,151

 
6
%
 
0.9

 
227,121

 
6
%
 
0.9

 
81,385

 
2
%
 
2.4

Collateralized loan obligations
113,874

 
3
%
 
0.2

 
93,802

 
3
%
 
0.1

 
—

 
—
%
 
—

Private label residential CMOs
93,868

 
2
%
 
4.1

 
112,037

 
3
%
 
4.6

 
101,205

 
2
%
 
4.2

SBA securities
49,746

 
1
%
 
4.1

 
51,812

 
1
%
 
4.0

 
67,047

 
2
%
 
3.5

Corporate debt securities
21,024

 
1
%
 
11.3

 
20,034

 
1
%
 
11.4

 
17,553

 
—
%
 
11.0

U.S. Treasury securities
5,203

 
—
%
 
3.4

 
5,188

 
—
%
 
3.6

 
403,405

 
10
%
 
3.0

Total securities available-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
for-sale
$
3,817,348

 
100
%
 
4.4

 
$
3,807,244

 
100
%
 
4.5

 
$
4,009,431

 
100
%
 
5.2

The following table shows the geographic composition of the majority of our municipal securities portfolio as of the date indicated:
 
September 30, 2019
 
Fair
 
% of
Municipal Securities by State
Value
 
Total
 
(Dollars in thousands)
California
$
192,704

 
27
%
Washington
115,579

 
16
%
Utah
56,603

 
8
%
New York
52,512

 
7
%
Texas
40,865

 
6
%
Florida
30,003

 
4
%
Idaho
28,182

 
4
%
Oregon
26,674

 
4
%
Illinois
25,046

 
3
%
Ohio
19,152

 
2
%
Total of ten largest states
587,320

 
81
%
 All other states
134,661

 
19
%
Total municipal securities
$
721,981

 
100
%

64


Loans and Leases Held for Investment
The following table presents the composition of our loans and leases held for investment, net of deferred fees, by loan portfolio segment, class, and subclass as of the dates indicated:
 
September 30, 2019
 
June 30, 2019
 
December 31, 2018
 
 
 
% of
 
 
 
% of
 
 
 
% of
Loan and Lease Portfolio 
Amount
 
Total
 
Amount
 
Total
 
Amount
 
Total
 
(Dollars in thousands)
Real estate mortgage:
 
 
 
 
 
 
 
 
 
 
 
Healthcare real estate
$
344,576

 
2
%
 
$
328,089

 
2
%
 
$
451,776

 
3
%
Hospitality
542,041

 
3
%
 
534,765

 
3
%
 
575,516

 
3
%
SBA program
556,160

 
3
%
 
557,070

 
3
%
 
559,113

 
3
%
Other commercial real estate
2,857,789

 
15
%
 
3,015,350

 
16
%
 
3,237,893

 
18
%
Total commercial real estate mortgage
4,300,566

 
23
%
 
4,435,274

 
24
%
 
4,824,298

 
27
%
Income producing and other residential
3,490,175

 
19
%
 
3,534,999

 
19
%
 
2,971,213

 
16
%
Other residential real estate
106,183

 
—
%
 
105,753

 
1
%
 
122,630

 
1
%
Total income producing and other
 
 
 
 
 
 
 
 
 
 
 
residential real estate mortgage
3,596,358

 
19
%
 
3,640,752

 
20
%
 
3,093,843

 
17
%
Total real estate mortgage
7,896,924

 
42
%
 
8,076,026

 
44
%
 
7,918,141

 
44
%
Real estate construction and land:
 
 
 
 
 
 
 
 
 
 
 
Commercial
1,009,362

 
6
%
 
972,891

 
5
%
 
912,583

 
5
%
Residential
1,542,112

 
8
%
 
1,403,239

 
8
%
 
1,321,073

 
8
%
Total real estate construction and land
2,551,474

 
14
%
 
2,376,130

 
13
%
 
2,233,656

 
13
%
Total real estate
10,448,398

 
56
%
 
10,452,156

 
57
%
 
10,151,797

 
57
%
Commercial:
 
 
 
 
 
 
 
 
 
 
 
Lender finance & timeshare
2,234,305

 
12
%
 
2,021,989

 
11
%
 
1,780,731

 
10
%
Equipment finance
784,944

 
4
%
 
764,662

 
4
%
 
734,331

 
4
%
Other asset-based
355,372

 
2
%
 
407,923

 
2
%
 
434,005

 
2
%
Premium finance
436,120

 
2
%
 
411,433

 
2
%
 
356,354

 
2
%
Total asset-based
3,810,741

 
20
%
 
3,606,007

 
19
%
 
3,305,421

 
18
%
Equity fund loans
1,246,695

 
7
%
 
1,115,677

 
6
%
 
797,500

 
4
%
Early stage
202,868

 
1
%
 
221,274

 
1
%
 
225,566

 
1
%
Expansion stage
674,751

 
4
%
 
785,003

 
4
%
 
908,047

 
5
%
Late stage
85,335

 
—
%
 
72,789

 
1
%
 
107,635

 
1
%
Total venture capital
2,209,649

 
12
%
 
2,194,743

 
12
%
 
2,038,748

 
11
%
Secured business loans
549,644

 
3
%
 
557,111

 
3
%
 
788,012

 
4
%
Security monitoring
618,404

 
3
%
 
630,210

 
3
%
 
643,369

 
4
%
Other lending
617,302

 
3
%
 
498,561

 
3
%
 
514,947

 
3
%
Cash flow
72,817

 
1
%
 
87,682

 
1
%
 
114,098

 
1
%
Total other commercial
1,858,167

 
10
%
 
1,773,564

 
10
%
 
2,060,426

 
12
%
Total commercial
7,878,557

 
42
%
 
7,574,314

 
41
%
 
7,404,595

 
41
%
Consumer
408,588

 
2
%
 
446,382

 
2
%
 
401,321

 
2
%
Total loans and leases held for investment,
 
 
 
 
 
 
 
 
 
 
 
net of deferred fees
$
18,735,543

 
100
%
 
$
18,472,852

 
100
%
 
$
17,957,713

 
100
%
 



  

65


The following table presents the geographic composition of our real estate loans held for investment, net of deferred fees, by the top 10 states and all other states combined (in the order presented for the current quarter-end) as of the dates indicated:
 
September 30, 2019
 
December 31, 2018
 
 
 
% of
 
 
 
% of
Real Estate Loans by State
Amount
 
Total
 
Amount
 
Total
 
(Dollars in thousands)
California
$
6,416,436

 
61
%
 
$
5,798,045

 
57
%
New York
583,996

 
6
%
 
855,644

 
8
%
Florida
497,658

 
5
%
 
547,054

 
5
%
Washington
310,612

 
3
%
 
253,545

 
3
%
Texas
301,840

 
3
%
 
378,834

 
4
%
Oregon
269,159

 
3
%
 
227,067

 
2
%
Arizona
176,562

 
2
%
 
235,425

 
2
%
Virginia
175,208

 
2
%
 
206,920

 
2
%
New Jersey
152,016

 
1
%
 
179,045

 
2
%
District of Columbia
148,307

 
1
%
 
81,174

 
1
%
Total of 10 largest states
9,031,794

 
87
%
 
8,762,753

 
86
%
All other states
1,416,604

 
13
%
 
1,389,044

 
14
%
Total real estate loans held for investment, net of deferred fees
$
10,448,398

 
100
%
 
$
10,151,797

 
100
%
The following table presents a roll forward 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 Held for Investment, Net of Deferred Fees (1)
September 30, 2019
 
September 30, 2019
 
(Dollars in thousands)
Balance, beginning of period
$
18,472,852

 
$
17,957,713

Additions:
 
 
 
Production
1,230,817

 
3,841,954

Disbursements
1,288,111

 
3,774,830

Total production and disbursements
2,518,928

 
7,616,784

Reductions:
 
 
 
Payoffs
(1,390,883
)
 
(3,853,396
)
Paydowns
(837,551
)
 
(2,856,502
)
Total payoffs and paydowns
(2,228,434
)
 
(6,709,898
)
Sales
(21,302
)
 
(76,292
)
Transfers to foreclosed assets
—

 
(37
)
Charge-offs
(6,501
)
 
(27,603
)
Transfers to loans held for sale
—

 
(25,124
)
Total reductions
(2,256,237
)
 
(6,838,954
)
Net increase
262,691

 
777,830

Balance, end of period
$
18,735,543

 
$
18,735,543

 
 
 
 
Weighted average rate on production (2)
5.45
%
 
5.21
%
_______________________________________ 
(1)
Includes direct financing leases but excludes equipment leased to others under operating leases.
(2)
The weighted average rate on production presents contractual rates on a tax equivalent basis and does not include amortized fees. Amortized fees added approximately 30 basis points to loan yields for the nine months ended September 30, 2019.



66


Allowance for Credit Losses on Loans and Leases Held for Investment
The allowance for credit losses on loans and leases held for investment is the combination of the allowance for loan and lease losses and the reserve for unfunded loan commitments. The allowance for loan and lease losses is reported as a reduction of outstanding loan and lease balances and the reserve for unfunded loan commitments is included within "Accrued interest payable and other liabilities" on the condensed consolidated balance sheets. For loans and leases acquired and measured at fair value and deemed non-impaired on the acquisition date, our allowance methodology measures deterioration in credit quality or other inherent risks related to these acquired assets that may occur after the acquisition date.
The allowance for credit losses is maintained at a level deemed appropriate by management to adequately provide for known and inherent risks in the loan and lease portfolio and other extensions of credit at the balance sheet date. The allowance is based upon our review of the credit quality of the loan and lease portfolio, which includes loan and lease payment trends, borrowers' compliance with loan agreements, borrowers' current and budgeted financial performance, collateral valuation trends, and current economic factors and external conditions that may affect our borrowers' ability to make payments to us in accordance with contractual terms. Loans and leases that are deemed to be uncollectable are charged off and deducted from the allowance. The provision for loan and lease losses and recoveries on loans and leases previously charged off are added to the allowance.
The allowance for loan and lease losses has a general reserve component for unimpaired loans and leases and a specific reserve component for impaired loans and leases.
A loan or lease is considered impaired when it is probable that we will be unable to collect all amounts due according to the original contractual terms of the agreement. We assess our loans and leases for impairment on an ongoing basis using certain criteria such as payment performance, borrower reported financial results and budgets, and other external factors when appropriate. We measure impairment of a loan or lease based upon the fair value of the underlying collateral if the loan or lease is collateral-dependent or the present value of cash flows, discounted at the effective interest rate, if the loan or lease is not collateral-dependent. To the extent a loan or lease balance exceeds the estimated collectable value, a specific reserve or charge-off is recorded depending upon either the certainty of the estimate of loss or the fair value of the loan’s collateral if the loan is collateral-dependent. Impaired loans and leases with outstanding balances less than or equal to $250,000 may not be individually assessed for impairment but would be assessed with reserves based on the average loss severity on historical impaired loans with similar risk characteristics.
Our allowance methodology for the general reserve component includes both quantitative and qualitative loss factors which are applied to our population of unimpaired loans and leases to estimate our general reserves. The quantitative loss factors consider the likelihood of loans defaulting based on the historical degree that similar loans defaulted and the degree of credit losses based on the historical average degree of loss experienced for these similar loans and leases pooled both by loan or lease type and credit risk rating; loans with more adverse credit risk ratings have higher quantitative loss factors. The qualitative loss factors consider, among other things, current economic trends and forecasts, current collateral values and performance trends, credit performance trends, and the loan portfolio's current composition.
The qualitative criteria we consider when establishing the loss factors include the following:
•
current economic trends and forecasts;
•
current collateral values, performance trends, and overall outlook in the markets where we lend;
•
legal and regulatory matters that could impact our borrowers’ ability to repay loans and leases;
•
loan and lease portfolio composition and any loan concentrations;
•
current lending policies and the effects of any new policies or policy amendments;
•
loan and lease production volume and mix;
•
loan and lease portfolio credit performance trends;
•
results of independent credit reviews; and
•
changes in management related to credit administration functions.

67


We estimate the reserve for unfunded loan commitments using the same loss factors as used for the allowance for loan and lease losses. The reserve for unfunded loan commitments is computed using expected future usage of the unfunded commitments based on historical usage of unfunded commitments for the various loan types.
The allowance for credit losses is directly correlated to the credit risk ratings of our loans. To ensure the accuracy of our credit risk ratings, an independent credit review function assesses the appropriateness of the credit risk ratings assigned to loans on a regular basis. The credit risk ratings assigned to every loan and lease are either “pass,” “special mention,” “substandard,” or “doubtful” and defined as follows:
•
Pass: Loans and leases rated as "pass" are not adversely classified and collection and repayment in full are expected.
•
Special Mention: Loans and leases rated as "special mention" have a potential weakness that requires management's attention. If not addressed, these potential weaknesses may result in further deterioration in the borrower's ability to repay the loan or lease.
•
Substandard: Loans and leases rated as "substandard" have a well-defined weakness or weaknesses that jeopardize the collection of the debt. They are characterized by the possibility that we will sustain some loss if the weaknesses are not corrected.
•
Doubtful: Loans and leases rated as "doubtful" have all the weaknesses of those rated as "substandard," with the additional trait that the weaknesses make collection or repayment in full highly questionable and improbable.
In addition, we may refer to the loans and leases with assigned credit risk ratings of "substandard" and "doubtful" together as "classified" loans and leases. For further information on classified loans and leases, see Note 4. Loans and Leases, of the Notes to Condensed Consolidated Financial Statements (Unaudited) contained in "Item 1. Condensed Consolidated Financial Statements (Unaudited)."
In addition to our internal risk rating process, our federal and state banking regulators, as an integral part of their examination process, periodically review the Company’s loan and lease risk rating classifications. Our regulators may require the Company to recognize rating downgrades based on their judgments related to information available to them at the time of their examinations. Risk rating downgrades generally result in increases in the provisions for credit losses and the allowance for credit losses.
Management believes the allowance for credit losses is appropriate for the known and inherent risks in our loan and lease portfolio and the credit risk ratings and inherent loss rates currently assigned are appropriate. It is possible that others, given the same information, may at any point in time reach different conclusions that could result in a significant impact to the Company's financial statements. In addition, current credit risk ratings are subject to change as we continue to monitor our loans and leases. To the extent we experience, for example, increased levels of borrower loan defaults, borrowers’ noncompliance with our loan agreements, adverse changes in collateral values, or changes in economic and business conditions that adversely affect our borrowers, our classified loans and leases may increase. Higher levels of classified loans and leases generally result in increased provisions for credit losses and an increased allowance for credit losses. Although we have established an allowance for credit losses that we consider appropriate, there can be no assurance that the established allowance will be sufficient to absorb future losses.
The following table presents information regarding the allowance for credit losses on loans and leases held for investment as of the dates indicated:
 
September 30,
 
June 30,
 
December 31,
 
September 30,
Allowance for Credit Losses Data 
2019
 
2019
 
2018
 
2018
 
(Dollars in thousands)
Allowance for loan and lease losses
$
138,552

 
$
135,037

 
$
132,472

 
$
141,920

Reserve for unfunded loan commitments
33,861

 
34,861

 
36,861

 
35,361

Total allowance for credit losses
$
172,413

 
$
169,898

 
$
169,333

 
$
177,281

 
 
 
 
 
 
 
 
Allowance for credit losses to loans and leases held for investment
0.92
%
 
0.92
%
 
0.94
%
 
1.03
%
Allowance for credit losses to nonaccrual loans and leases held for investment
174.0
%
 
209.1
%
 
213.5
%
 
156.9
%





68


The following table presents the changes in our allowance for credit losses on loans and leases held for investment for the periods indicated:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
Allowance for Credit Losses Roll Forward 
2019
 
2019
 
2018
 
2019
 
2018
 
(Dollars in thousands)
Balance, beginning of period (1)
$
169,898

 
$
173,142

 
$
167,500

 
$
169,333

 
$
168,091

Provision for credit losses:
 
 
 
 
 
 
 
 
 
Addition to allowance for loan and lease losses
8,000

 
10,000

 
11,500

 
22,000

 
26,274

(Reduction in) addition to reserve for unfunded
 
 
 
 
 
 
 
 
 
loan commitments
(1,000
)
 
(2,000
)
 
—

 
(3,000
)
 
6,726

Total provision for credit losses
7,000

 
8,000

 
11,500

 
19,000

 
33,000

Loans and leases charged off:
 
 
 
 
 
 
 
 
 
Real estate mortgage
(120
)
 
(534
)
 
(726
)
 
(850
)
 
(8,071
)
Real estate construction and land
—

 
—

 
—

 
—

 
—

Commercial
(6,021
)
 
(16,927
)
 
(2,373
)
 
(25,951
)
 
(25,321
)
Consumer
(360
)
 
(176
)
 
(209
)
 
(802
)
 
(304
)
Total loans and leases charged off
(6,501
)
 
(17,637
)
 
(3,308
)
 
(27,603
)
 
(33,696
)
Recoveries on loans charged off:
 
 
 
 
 
 
 
 
 
Real estate mortgage
95

 
240

 
223

 
478

 
1,999

Real estate construction and land
—

 
—

 
22

 
—

 
49

Commercial
1,898

 
6,080

 
1,303

 
11,084

 
7,702

Consumer
23

 
73

 
41

 
121

 
136

Total recoveries on loans charged off
2,016

 
6,393

 
1,589

 
11,683

 
9,886

Net charge-offs
(4,485
)
 
(11,244
)
 
(1,719
)
 
(15,920
)
 
(23,810
)
Balance, end of period
$
172,413

 
$
169,898

 
$
177,281

 
$
172,413

 
$
177,281

 
 
 
 
 
 
 
 
 
 
Annualized net charge-offs to average loans and leases
0.10
%
 
0.25
%
 
0.04
%
 
0.12
%
 
0.19
%
_________________________________________
(1)
The allowance for credit losses related to PCI loans of $6.4 million as of December 31, 2017 is reflected in the beginning balance for the nine months ended September 30, 2018.




69


The following table presents charge-offs by loan portfolio segment, class, and subclass for the periods indicated:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
Allowance for Credit Losses Charge-offs 
2019
 
2019
 
2018
 
2019
 
2018
 
(In thousands)
Real estate mortgage:
 
 
 
 
 
 
 
 
 
Healthcare real estate
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Hospitality
—

 
—

 
—

 
—

 
—

SBA program
120

 
534

 
468

 
750

 
2,594

Other commercial real estate
—

 
—

 
258

 
9

 
5,271

Total commercial real estate mortgage
120

 
534

 
726

 
759

 
7,865

Income producing and other residential
—

 
—

 
—

 
—

 
145

Other residential real estate
—

 
—

 
—

 
91

 
61

Total income producing and other residential
 
 
 
 
 
 
 
 
 
real estate mortgage
—

 
—

 
—

 
91

 
206

Total real estate mortgage
120

 
534

 
726

 
850

 
8,071

Real estate construction and land:
 
 
 
 
 
 
 
 
 
Commercial
—

 
—

 
—

 
—

 
—

Residential
—

 
—

 
—

 
—

 
—

Total real estate construction and land
—

 
—

 
—

 
—

 
—

Commercial:
 
 
 
 
 
 
 
 
 
Lender finance & timeshare
—

 
—

 
—

 
—

 
8

Equipment finance
—

 
—

 
—

 
—

 
2,934

Other asset-based
—

 
11,800

 
673

 
11,800

 
1,033

Premium finance
—

 
—

 
—

 
—

 
—

Total asset-based
—

 
11,800

 
673

 
11,800

 
3,975

Expansion stage
2,919

 
1,463

 
1,142

 
4,586

 
5,811

Early stage
1,448

 
—

 
—

 
1,544

 
3,721

Equity fund loans
—

 
—

 
—

 
—

 
—

Late stage
—

 
—

 
—

 
—

 
—

Total venture capital
4,367

 
1,463

 
1,142

 
6,130

 
9,532

Security monitoring
—

 
—

 
—

 
1,707

 
—

Secured business loans
1,111

 
100

 
71

 
1,220

 
624

Other lending
437

 
1,182

 
487

 
2,133

 
1,251

Cash flow
106

 
2,382

 
—

 
2,961

 
9,939

Total other commercial
1,654

 
3,664

 
558

 
8,021

 
11,814

Total commercial
6,021

 
16,927

 
2,373

 
25,951

 
25,321

Consumer
360

 
176

 
209

 
802

 
304

Total charge-offs
$
6,501

 
$
17,637

 
$
3,308

 
$
27,603

 
$
33,696




70


The following table presents recoveries by portfolio segment, class, and subclass for the periods indicated:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
Allowance for Credit Losses Recoveries
2019
 
2019
 
2018
 
2019
 
2018
 
(In thousands)
Real estate mortgage:
 
 
 
 
 
 
 
 
 
Healthcare real estate
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Hospitality
—

 
—

 
—

 
—

 
—

SBA program
77

 
88

 
18

 
198

 
294

Other commercial real estate
12

 
59

 
198

 
143

 
360

Total commercial real estate mortgage
89

 
147

 
216

 
341

 
654

Income producing and other residential
—

 
—

 
—

 
—

 
1,208

Other residential real estate
6

 
93

 
7

 
137

 
137

Total income producing and other residential
 
 
 
 
 
 
 
 
 
real estate mortgage
6

 
93

 
7

 
137

 
1,345

Total real estate mortgage
95

 
240

 
223

 
478

 
1,999

Real estate construction and land:
 
 
 
 
 
 
 
 
 
Commercial
—

 
—

 
22

 
—

 
42

Residential
—

 
—

 
—

 
—

 
7

Total real estate construction and land
—

 
—

 
22

 
—

 
49

Commercial:
 
 
 
 
 
 
 
 
 
Lender finance & timeshare
3

 
1

 
1

 
5

 
2

Equipment finance
—

 
—

 
—

 
11

 
90

Other asset-based
227

 
239

 
68

 
545

 
187

Premium finance
—

 
—

 
—

 
—

 
—

Total asset-based
230

 
240

 
69

 
561

 
279

Expansion stage
75

 
1,961

 
704

 
2,133

 
5,115

Early stage
353

 
2,862

 
281

 
5,370

 
563

Equity fund loans
—

 
—

 
—

 
—

 
—

Late stage
—

 
—

 
—

 
—

 
—

Total venture capital
428

 
4,823

 
985

 
7,503

 
5,678

Security monitoring
181

 
—

 
—

 
181

 
—

Secured business loans
731

 
818

 
160

 
2,176

 
553

Other lending
297

 
190

 
80

 
612

 
1,183

Cash flow
31

 
9

 
9

 
51

 
9

Total other commercial
1,240

 
1,017

 
249

 
3,020

 
1,745

Total commercial
1,898

 
6,080

 
1,303

 
11,084

 
7,702

Consumer
23

 
73

 
41

 
121

 
136

Total recoveries
$
2,016

 
$
6,393

 
$
1,589

 
$
11,683

 
$
9,886


71


Deposits
The following table presents the balance of each major category of deposits as of the dates indicated:
 
September 30, 2019
 
June 30, 2019
 
December 31, 2018
 
 
 
% of
 
 
 
% of
 
 
 
% of
Deposit Composition
Amount
 
Total
 
Amount
 
Total
 
Amount
 
Total
 
(Dollars in thousands)
Noninterest-bearing demand
$
7,441,185

 
38
%
 
$
7,299,213

 
39
%
 
$
7,888,915

 
42
%
Interest checking
3,645,660

 
18
%
 
3,220,353

 
17
%
 
2,842,463

 
15
%
Money market
4,870,344

 
25
%
 
4,578,083

 
24
%
 
5,043,871

 
27
%
Savings
514,075

 
3
%
 
519,839

 
3
%
 
571,422

 
3
%
Total core deposits
16,471,264

 
84
%
 
15,617,488

 
83
%
 
16,346,671

 
87
%
Non-core non-maturity deposits
479,732

 
2
%
 
436,833

 
2
%
 
518,192

 
3
%
Total non-maturity deposits
16,950,996

 
86
%
 
16,054,321

 
85
%
 
16,864,863

 
90
%
Time deposits $250,000 and under
2,282,976

 
12
%
 
2,284,023

 
12
%
 
1,593,453

 
8
%
Time deposits over $250,000
499,231

 
2
%
 
467,412

 
3
%
 
412,185

 
2
%
Total time deposits
2,782,207

 
14
%
 
2,751,435

 
15
%
 
2,005,638

 
10
%
Total deposits
$
19,733,203

 
100
%
 
$
18,805,756

 
100
%
 
$
18,870,501

 
100
%
During the third quarter of 2019, total deposits increased by $927.4 million to $19.7 billion, due mainly to increases of $853.8 million in core deposits, $42.9 million in non-core non-maturity deposits, and $30.8 million in time deposits. The increase in core deposits was due primarily to increases of $425.3 million in interest checking deposits, $292.3 million in money market deposits, and $142.0 million in noninterest-bearing demand deposits. At September 30, 2019, core deposits totaled $16.5 billion, or 84% of total deposits, including $7.4 billion of noninterest-bearing demand deposits, or 38% of total deposits.
The following table summarizes the maturities of time deposits as of the date indicated:
 
Time Deposits
 
$250,000
 
Over
 
 
September 30, 2019
and Under
 
$250,000
 
Total
 
(In thousands)
Maturities:
 
 
 
 
 
Due in three months or less
$
1,003,747

 
$
223,291

 
$
1,227,038

Due in over three months through six months
680,369

 
143,599

 
823,968

Due in over six months through twelve months
502,349

 
109,600

 
611,949

Total due within twelve months
2,186,465

 
476,490

 
2,662,955

Due in over 12 months through 24 months
77,660

 
20,060

 
97,720

Due in over 24 months
18,851

 
2,681

 
21,532

Total
$
2,282,976

 
$
499,231

 
$
2,782,207

Client Investment Funds
In addition to deposit products, we also offer select clients non-depository cash investment options through PWAM, our registered investment adviser subsidiary, and third-party money market sweep products. PWAM provides customized investment advisory and asset management solutions. At September 30, 2019, total off-balance sheet client investment funds were $1.8 billion, of which $1.5 billion was managed by PWAM. At December 31, 2018, total off-balance sheet client investment funds were $1.9 billion, of which $1.5 billion was managed by PWAM.

72


Credit Quality
Nonperforming Assets, Performing TDRs, and Classified Loans and Leases
The following table presents information on our nonperforming assets, performing TDRs, and classified loans and leases as of the dates indicated:
 
September 30,
 
June 30,
 
December 31,
 
September 30,
 
2019
 
2019
 
2018
 
2018
 
(Dollars in thousands)
Nonaccrual loans and leases held for investment
$
99,113

 
$
81,265

 
$
79,333

 
$
112,972

Accruing loans contractually past due 90 days or more
—

 
—

 
—

 
—

Foreclosed assets, net
1,366

 
1,472

 
5,299

 
4,407

Total nonperforming assets
$
100,479

 
$
82,737

 
$
84,632

 
$
117,379

 
 
 
 
 
 
 
 
Performing TDRs held for investment
$
16,329

 
$
16,464

 
$
17,701

 
$
22,106

Classified loans and leases held for investment
$
188,607

 
$
190,979

 
$
237,110

 
$
260,459

Nonaccrual loans and leases held for investment to
 
 
 
 
 
 
 
loans and leases held for investment
0.53
%
 
0.44
%
 
0.44
%
 
0.66
%
Nonperforming assets to loans and leases held for investment
 
 
 
 
 
 
 
and foreclosed assets, net
0.54
%
 
0.45
%
 
0.47
%
 
0.68
%
Classified loans and leases held for investment
 
 
 
 
 
 
 
to loans and leases held for investment
1.01
%
 
1.03
%
 
1.32
%
 
1.51
%
Nonaccrual Loans and Leases Held for Investment
The following table presents our nonaccrual loans and leases held for investment and accruing loans and leases past due between 30 and 89 days by loan portfolio segment and class as of the dates indicated:
 
Nonaccrual Loans and Leases
 
Accruing and
 
September 30, 2019
 
June 30, 2019
 
30 - 89 Days Past Due
 
 
 
% of
 
 
 
% of
 
September 30,
 
June 30,
 
 
 
Loan
 
 
 
Loan
 
2019
 
2019
 
Amount
 
Category
 
Amount
 
Category
 
Amount
 
Amount
 
(Dollars in thousands)
Real estate mortgage:
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
19,515

 
0.5
%
 
$
17,012

 
0.4
%
 
$
—

 
$
3,948

Income producing and other residential
2,868

 
0.1
%
 
2,883

 
0.1
%
 
3,750

 
3,262

Total real estate mortgage
22,383

 
0.3
%
 
19,895

 
0.2
%
 
3,750

 
7,210

Real estate construction and land:
 
 
 
 
 
 
 
 
 
 
 
Commercial
377

 
—
%
 
390

 
—
%
 
—

 
—

Residential
—

 
—
%
 
—

 
—
%
 
2,622

 
4,672

Total real estate construction and land
377

 
—
%
 
390

 
—
%
 
2,622

 
4,672

Commercial:
 
 
 
 
 
 
 
 
 
 
 
Asset-based
33,015

 
0.9
%
 
32,236

 
0.9
%
 
48

 
12,382

Venture capital
20,131

 
0.9
%
 
22,501

 
1.0
%
 
—

 
—

Other commercial
22,554

 
1.2
%
 
5,799

 
0.3
%
 
4,068

 
439

Total commercial
75,700

 
1.0
%
 
60,536

 
0.8
%
 
4,116

 
12,821

Consumer
653

 
0.2
%
 
444

 
0.1
%
 
795

 
964

Total held for investment
$
99,113

 
0.5
%
 
$
81,265

 
0.4
%
 
$
11,283

 
$
25,667


73


During the third quarter of 2019, nonaccrual loan and leases held for investment increased by $17.8 million to $99.1 million at September 30, 2019 due mainly to one previously classified $14.9 million security monitoring commercial loan moving to nonaccrual status. As of September 30, 2019, the Company's three largest loan relationships on nonaccrual status had an aggregate carrying value of $53.4 million and represented 54% of total nonaccrual loans and leases.
Foreclosed Assets
The following table presents foreclosed assets (primarily OREO) by property type as of the dates indicated:
 
September 30,
 
June 30,
 
December 31,
 
September 30,
Property Type
2019
 
2019
 
2018
 
2018
 
(In thousands)
Commercial real estate
$
199

 
$
253

 
$
2,004

 
$
2,176

Single-family residence
948

 
953

 
953

 
953

Construction and land development
219

 
219

 
219

 
219

Multi-family
—

 
—

 
1,059

 
1,059

Total OREO, net
1,366

 
1,425

 
4,235

 
4,407

Other foreclosed assets
—

 
47

 
1,064

 
—

Total foreclosed assets
$
1,366

 
$
1,472

 
$
5,299

 
$
4,407

During the third quarter of 2019, foreclosed assets decreased by $106,000 to $1.4 million at September 30, 2019 due mainly to increased reserves of $54,000 and sales of $52,000.
Performing TDRs Held for Investment
The following table presents our performing TDRs held for investment by loan portfolio segment as of the dates indicated:
 
September 30, 2019
 
June 30, 2019
 
December 31, 2018
 
 
 
Number
 
 
 
Number
 
 
 
Number
 
 
 
of
 
 
 
of
 
 
 
of
Performing TDRs 
Amount
 
Loans
 
Amount
 
Loans
 
Amount
 
Loans
 
(Dollars in thousands)
Real estate mortgage
$
10,292

 
23

 
$
10,457

 
25

 
$
11,484

 
27

Real estate construction and land
4,980

 
2

 
4,986

 
2

 
5,420

 
2

Commercial
980

 
10

 
931

 
8

 
692

 
6

Consumer
77

 
2

 
90

 
3

 
105

 
3

Total performing TDRs held for investment
$
16,329

 
37

 
$
16,464

 
38

 
$
17,701

 
38

During the third quarter of 2019, performing TDRs held for investment decreased by $135,000 to $16.3 million at September 30, 2019 attributable primarily to $235,000 in payoffs and other reductions, offset partially by $100,000 in additions. The majority of the number of performing TDRs were on accrual status prior to the restructurings and have remained on accrual status after the restructurings due to the borrowers making payments before and after the restructurings.

74


Classified and Special Mention Loans and Leases Held for Investment
The following table presents the credit risk ratings of our loans and leases held for investment, net of deferred fees, as of the dates indicated:
 
September 30,
 
June 30,
 
December 31,
 
September 30,
Loan and Lease Credit Risk Ratings 
2019
 
2019
 
2018
 
2018
 
(Dollars in thousands)
Pass
$
18,279,011

 
$
18,042,569

 
$
17,459,205

 
$
16,609,629

Special mention
267,925

 
239,304

 
261,398

 
360,058

Classified
188,607

 
190,979

 
237,110

 
260,459

Total loans and leases held for investment,
 
 
 
 
 
 
 
net of deferred fees
$
18,735,543

 
$
18,472,852

 
$
17,957,713

 
$
17,230,146

Classified and special mention loans and leases fluctuate from period to period as a result of loan repayments and downgrades or upgrades from our ongoing active portfolio monitoring.
During the third quarter of 2019, classified loans and leases decreased by $2.4 million to $188.6 million at September 30, 2019.
During the third quarter of 2019, special mention loans and leases increased by $28.6 million to $267.9 million at September 30, 2019. The increase in special mention loans and leases was due primarily to the downgrade of two security monitoring commercial loans totaling $49 million, offset partially by a net decrease from other activity.
Regulatory Matters
Capital
Bank regulatory agencies measure capital adequacy through standardized risk-based capital guidelines that compare different levels of capital (as defined by such guidelines) to risk-weighted assets and off-balance sheet obligations. At September 30, 2019, banks considered to be “well capitalized” must maintain a minimum Tier 1 leverage ratio of 5.00%, a minimum common equity Tier 1 risk-based capital ratio of 6.50%, a minimum Tier 1 risk-based capital ratio of 8.00%, and a minimum total risk-based capital ratio of 10.00%. Regulatory capital requirements limit the amount of deferred tax assets that may be included when determining the amount of regulatory capital. Deferred tax asset amounts in excess of the calculated limit are disallowed from regulatory capital. At September 30, 2019, such disallowed amounts were $319,000 for the Company and $32,000 for the Bank. No assurance can be given that the regulatory capital deferred tax asset limitation will not increase in the future or that the Company or Bank will not have increased deferred tax assets that are disallowed.
Basel III currently requires all banking organizations to maintain a 2.50% capital conservation buffer above the minimum risk-based capital requirements to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer is exclusively comprised of common equity tier 1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio. At September 30, 2019, the Company and Bank were in compliance with the capital conservation buffer requirement. Effective January 1, 2019, the common equity tier 1, tier 1, and total capital ratio minimums inclusive of the capital conservation buffer were 7.00%, 8.50%, and 10.50%.

75


The following tables present a comparison of our actual capital ratios to the minimum required ratios and well capitalized ratios as of the dates indicated:
 
 
 
Minimum Required
 
 
 
 
 
Plus Capital
 
 
 
 
 
For Capital
 
Conservation
 
For Well
 
 
 
Adequacy
 
Buffer Fully
 
Capitalized
 
Actual
 
Purposes
 
Phased-In
 
Requirement
September 30, 2019
 
 
 
 
 
 
 
PacWest Bancorp Consolidated
 
 
 
 
 
 
 
Tier 1 capital (to average assets)
9.50%
 
4.00%
 
4.000%
 
N/A
CET1 capital (to risk weighted assets)
9.55%
 
4.50%
 
7.000%
 
N/A
Tier 1 capital (to risk weighted assets)
9.55%
 
6.00%
 
8.500%
 
N/A
Total capital (to risk weighted assets)
12.16%
 
8.00%
 
10.500%
 
N/A
 
 
 
 
 
 
 
 
Pacific Western Bank
 
 
 
 
 
 
 
Tier 1 capital (to average assets)
10.72%
 
4.00%
 
4.000%
 
5.00%
CET1 capital (to risk weighted assets)
10.79%
 
4.50%
 
7.000%
 
6.50%
Tier 1 capital (to risk weighted assets)
10.79%
 
6.00%
 
8.500%
 
8.00%
Total capital (to risk weighted assets)
11.52%
 
8.00%
 
10.500%
 
10.00%
 
 
 
Minimum Required
 
 
 
 
 
Plus Capital
 
 
 
Plus Capital
 
 
 
For Capital
 
Conservation
 
For Well
 
Conservation
 
 
 
Adequacy
 
Buffer
 
Capitalized
 
Buffer Fully
 
Actual
 
Purposes
 
Phase-In (1)
 
Requirement
 
Phased-In
December 31, 2018
 
 
 
 
 
 
 
 
 
PacWest Bancorp Consolidated
 
 
 
 
 
 
 
 
 
Tier 1 capital (to average assets)
10.13%
 
4.00%
 
4.000%
 
N/A
 
4.00%
CET1 capital (to risk weighted assets)
10.01%
 
4.50%
 
6.375%
 
N/A
 
7.00%
Tier 1 capital (to risk weighted assets)
10.01%
 
6.00%
 
7.875%
 
N/A
 
8.50%
Total capital (to risk weighted assets)
12.72%
 
8.00%
 
9.875%
 
N/A
 
10.50%
 
 
 
 
 
 
 
 
 
 
Pacific Western Bank
 
 
 
 
 
 
 
 
 
Tier 1 capital (to average assets)
10.80%
 
4.00%
 
4.000%
 
5.00%
 
4.00%
CET1 capital (to risk weighted assets)
10.68%
 
4.50%
 
6.375%
 
6.50%
 
7.00%
Tier 1 capital (to risk weighted assets)
10.68%
 
6.00%
 
7.875%
 
8.00%
 
8.50%
Total capital (to risk weighted assets)
11.44%
 
8.00%
 
9.875%
 
10.00%
 
10.50%
_______________________________________ 
(1)
Ratios for September 30, 2019 reflect the minimum required plus the fully phased-in capital conservation buffer of 2.50%; ratios for December 31, 2018 reflect the minimum required plus capital conservation buffer phase-in for 2018 of 1.875%.
Subordinated Debentures
We issued or assumed through mergers subordinated debentures to trusts that were established by us or entities we previously acquired, which, in turn, issued trust preferred securities. The carrying value of subordinated debentures totaled $456.1 million at September 30, 2019. At September 30, 2019, none of the trust preferred securities were included in the Company's Tier I capital under the phase-out limitations of Basel III, and $442.5 million were included in Tier II capital.

76


Dividends on Common Stock and Interest on Subordinated Debentures
As a bank holding company, PacWest is required to notify the FRB prior to declaring and paying a dividend to stockholders during any period in which quarterly and/or cumulative twelve-month net earnings are insufficient to fund the dividend amount, among other requirements. Interest payments made by us on subordinated debentures are considered dividend payments under FRB regulations.
Liquidity
Liquidity Management
The goals of our liquidity management are to ensure the ability of the Company to meet its financial commitments when contractually due and to respond to other demands for funds such as the ability to meet the cash flow requirements of customers who may be either depositors wanting to withdraw funds or borrowers who have unfunded commitments. We have an Executive Management Asset/Liability Management Committee ("Executive ALM Committee") that is comprised of members of senior management and is responsible for managing commitments to meet the needs of customers while achieving our financial objectives. Our Executive ALM Committee meets regularly to review funding capacities, current and forecasted loan demand, and investment opportunities.
We manage our liquidity by maintaining pools of liquid assets on-balance sheet, consisting of cash and due from banks, interest-earning deposits in other financial institutions, and unpledged securities available-for-sale, which we refer to as our primary liquidity. We also maintain available borrowing capacity under secured borrowing lines with the FHLB and the FRBSF, which we refer to as our secondary liquidity.
As a member of the FHLB, the Bank had secured borrowing capacity with the FHLB of $4.3 billion at September 30, 2019, of which $3.4 billion was available on that date. The FHLB secured credit line was collateralized by a blanket lien on $6.1 billion of certain qualifying loans. The Bank also had secured borrowing capacity with the FRBSF of $2.1 billion at September 30, 2019, all of which was available on that date. The FRBSF secured credit line was collateralized by liens on $2.8 billion of qualifying loans.
In addition to its secured lines of credit, the Bank also maintains unsecured lines of credit for the purpose of borrowing overnight funds, subject to availability, of $141.0 million with the FHLB and $180.0 million in the aggregate with several correspondent banks. As of September 30, 2019, there was a $141.0 million balance outstanding related to the FHLB unsecured line of credit. The Bank is a member of the AFX, through which it may either borrow or lend funds on an overnight or short-term basis with a group of pre-approved commercial banks. The availability of funds changes daily. As of September 30, 2019, the Bank had $230.0 million of borrowings outstanding through the AFX.
The following tables provide a summary of the Bank’s primary and secondary liquidity levels at the dates indicated:
 
September 30,
 
June 30,
 
December 31,
Primary Liquidity - On-Balance Sheet
2019
 
2019
 
2018
 
(Dollars in thousands)
Cash and due from banks
$
252,596

 
$
185,075

 
$
175,830

Interest-earning deposits in financial institutions
483,405

 
422,663

 
209,937

Securities available-for-sale
3,817,348

 
3,807,244

 
4,009,431

Less: pledged securities
(494,984
)
 
(493,795
)
 
(458,143
)
Total primary liquidity
$
4,058,365

 
$
3,921,187

 
$
3,937,055

 
 
 
 
 
 
Ratio of primary liquidity to total deposits
20.6
%
 
20.9
%
 
20.9
%


77


Secondary Liquidity - Off-Balance Sheet
September 30,
 
June 30,
 
December 31,
Available Secured Borrowing Capacity
2019
 
2019
 
2018
 
(In thousands)
Secured borrowing capacity with the FHLB
$
4,279,424

 
$
4,236,046

 
$
3,746,970

Less: secured advances outstanding
(882,000
)
 
(1,522,000
)
 
(1,040,000
)
Available secured borrowing capacity with the FHLB
3,397,424

 
2,714,046

 
2,706,970

Available secured borrowing capacity with the FRBSF
2,108,982

 
1,991,861

 
2,003,269

Total secondary liquidity
$
5,506,406

 
$
4,705,907

 
$
4,710,239

During the three months ended September 30, 2019, the Company's primary liquidity increased by $137.2 million due mainly to increases of $67.5 million in cash and due from banks, $60.7 million in interest-earning deposits in financial institutions, and $10.1 million in securities available-for-sale. The Company's secondary liquidity increased by $800.5 million during the third quarter of 2019 due to a $640.0 million decrease in the amount borrowed from the secured borrowing line with the FHLB, a $117.1 million increase in the borrowing capacity on the secured credit line with the FRBSF, and a $43.4 million increase in the borrowing capacity on the secured borrowing line with the FHLB. The increases in the borrowing capacities with the FRBSF and FHLB in the third quarter were due primarily to increases in loan collateral pledged for the facilities.
In addition to our primary liquidity, we generate liquidity from cash flows from our loan and securities portfolios and from our large base of core deposits, defined as noninterest-bearing demand, interest checking, savings, and non-brokered money market accounts. At September 30, 2019, core deposits totaled $16.5 billion and represented 84% of the Company's total deposits. Core deposits are normally less volatile, often with customer relationships tied to other products offered by the Bank promoting long-standing relationships and stable funding sources. See "- Balance Sheet Analysis - Deposits" for additional information and detail of our core deposits.
Our deposit balances may decrease if interest rates increase significantly or if customers withdraw funds from the Bank. In order to address the Bank’s liquidity risk as deposit balances may fluctuate, the Bank maintains adequate levels of available liquidity on and off the balance sheet.
We use brokered deposits, the availability of which is uncertain and subject to competitive market forces and regulation, for liquidity management purposes. At September 30, 2019, brokered deposits totaled $1.8 billion, consisting primarily of $1.3 billion of brokered time deposits and $479.7 million of non-maturity brokered accounts. At December 31, 2018, brokered deposits totaled $1.3 billion, consisting mainly of $729.4 million of brokered time deposits and $518.2 million of non-maturity brokered accounts.
Our liquidity policy includes guidelines for On-Balance Sheet Liquidity (a measurement of primary liquidity to total deposits plus borrowings), Liquidity Buffer Coverage Ratio (the ratio of cash and unpledged securities to the estimated 30 day cash outflow in a defined stress scenario), Liquidity Stress Test Survival Horizon (the number of days that the Bank’s liquidity buffer plus available secured borrowing capacity is sufficient to offset cumulative cash outflow in a defined stress scenario), Loan to Funding Ratio (measurement of gross loans net of fees divided by deposits plus borrowings), Wholesale Funding Ratio (measurement of wholesale funding divided by interest-earning assets), and other guidelines developed for measuring and maintaining liquidity. As of September 30, 2019, we were in compliance with all of our established liquidity guidelines.
Holding Company Liquidity
PacWest acts a source of financial strength for the Bank which can also include being a source of liquidity. The primary sources of liquidity for the holding company include dividends from the Bank, intercompany tax payments from the Bank, and PacWest's ability to raise capital, issue subordinated debt, and secure outside borrowings. Our ability to obtain funds for the payment of dividends to our stockholders, the repurchase of shares of common stock, and other cash requirements is largely dependent upon the Bank’s earnings. The Bank is subject to restrictions under certain federal and state laws and regulations that limit its ability to transfer funds to the holding company through intercompany loans, advances, or cash dividends.

78


Dividends paid by California state-chartered banks are regulated by the FDIC and the DBO under their general supervisory authority as it relates to a bank’s capital requirements. The Bank may declare a dividend without the approval of the DBO and FDIC as long as the total dividends declared in a calendar year do not exceed either the retained earnings or the total of net earnings for the three previous fiscal years less any dividends paid during such period. Dividends paid by the Bank during the three previous fiscal years exceeded the Bank's net earnings during that same period by $28.5 million. During the three and nine months ended September 30, 2019, PacWest received $79.0 million and $258.0 million in dividends from the Bank. Since the Bank had an accumulated deficit of $531.7 million at September 30, 2019, for the foreseeable future any dividends from the Bank to the holding company will continue to require DBO and FDIC approval.
At September 30, 2019, PacWest had $103.7 million in cash and due from banks, of which substantially all is on deposit at the Bank. We believe this amount of cash, along with anticipated future dividends from the Bank, will be sufficient to fund the holding company’s cash flow needs over the next 12 months, including any stock repurchases pursuant to the Company's Stock Repurchase Program, which terminates on February 29, 2020. See "- Recent Events - Stock Repurchase Program" for additional information.
Contractual Obligations
The following table summarizes the known contractual obligations of the Company as of the date indicated:
 
September 30, 2019
 
 
 
Due After
 
Due After
 
 
 
 
 
Due
 
One Year
 
Three Years
 
Due
 
 
 
Within
 
Through
 
Through
 
After
 
 
 
One Year
 
Three Years
 
Five Years
 
Five Years
 
Total
 
(In thousands)
Time deposits
$
2,662,955

 
$
115,024

 
$
4,228

 
$
—

 
$
2,782,207

Short-term borrowings
1,253,000

 
—

 
—

 
—

 
1,253,000

Long-term debt obligations (1)
31

 
—

 
—

 
539,880

 
539,911

Contractual interest (2)
17,919

 
2,391

 
135

 
—

 
20,445

Operating lease obligations
32,654

 
56,534

 
38,817

 
35,302

 
163,307

Other contractual obligations
64,522

 
58,426

 
14,347

 
24,856

 
162,151

Total
$
4,031,081

 
$
232,375

 
$
57,527

 
$
600,038

 
$
4,921,021

_______________________________________ 
(1)
Excludes purchase accounting fair value adjustments.
(2)
Excludes interest on subordinated debentures as these instruments are variable rate.
Long-term debt obligations include subordinated debentures. Debt obligations are also discussed in Note 9. Borrowings and Subordinated Debentures, in the Notes to Condensed Consolidated Financial Statements (Unaudited) contained in “Item 1. Condensed Consolidated Financial Statements (Unaudited).” Operating lease obligations are discussed in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2018. The other contractual obligations relate to our minimum liability associated with our data and item processing contract with a third-party provider, commitments to contribute capital to investments in low income housing project partnerships and private equity funds, and commitments under deferred compensation arrangements.
We believe that we will be able to meet our contractual obligations as they come due through the maintenance of adequate liquidity levels. We expect to maintain adequate liquidity levels through profitability, loan and lease payoffs, securities repayments and maturities, and continued deposit gathering activities. We also have in place various borrowing mechanisms for both short-term and long-term liquidity needs.

79


Off-Balance Sheet Arrangements
Our obligations also include off-balance sheet arrangements consisting of loan commitments, of which only a portion is expected to be funded, and standby letters of credit. At September 30, 2019, our loan commitments and standby letters of credit were $7.8 billion and $367.1 million. The loan commitments, a portion of which result in funded loans, increase our profitability through net interest income when drawn and unused commitment fees prior to being drawn. We manage our overall liquidity taking into consideration funded and unfunded commitments as a percentage of our liquidity sources. Our liquidity sources, as described in "- Liquidity - Liquidity Management," have been and are expected to be sufficient to meet the cash requirements of our lending activities. For further information on loan commitments, see Note 10. Commitments and Contingencies, of the Notes to Condensed Consolidated Financial Statements (Unaudited) contained in "Item 1. Condensed Consolidated Financial Statements (Unaudited)."
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This analysis should be read in conjunction with text under the caption "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the year ended December 31, 2018, which text is incorporated herein by reference. Our analysis of market risk and market-sensitive financial information contains forward-looking statements and is subject to the disclosure at the beginning of Item 2 regarding such forward-looking information.
Market Risk - Foreign Currency Exchange
We enter into foreign exchange contracts with our clients and counterparty banks primarily for the purpose of offsetting or hedging clients' foreign currency exposures arising out of commercial transactions, and we enter into cross currency swaps and foreign exchange forward contracts to hedge exposures to loans and debt instruments denominated in foreign currencies. We have experienced and will continue to experience fluctuations in our net earnings as a result of transaction gains or losses related to revaluing certain asset and liability balances that are denominated in currencies other than the U.S. Dollar, and the derivatives that hedge those exposures. As of September 30, 2019, the U.S. Dollar notional amounts of loans receivable and subordinated debentures payable denominated in foreign currencies were $52.7 million and $28.1 million, and the U.S. Dollar notional amounts of derivatives outstanding to hedge these foreign currency exposures were $55.5 million and $29.2 million. We recognized a foreign currency translation net gain of $8,000 for the nine months ended September 30, 2019 and a foreign currency translation net loss of $53,000 for the nine months ended September 30, 2018.
Asset/Liability Management and Interest Rate Sensitivity
Interest Rate Risk
We measure our IRR position on a monthly basis using two methods: (i) NII simulation analysis; and (ii) MVE modeling. The Executive ALM Committee and the Board Asset/Liability Management Committee review the results of these analyses quarterly. If hypothetical changes to interest rates cause changes to our simulated net present value of equity and/or net interest income outside our pre‑established limits, we may adjust our asset and liability mix in an effort to bring our interest rate risk exposure within our established limits.
We evaluated the results of our NII simulation model and MVE model prepared as of September 30, 2019, the results of which are presented below. Our NII simulation and MVE model indicate that our balance sheet is asset-sensitive. An asset-sensitive profile would suggest that a sudden sustained increase in rates would result in an increase in our estimated NII and MVE, while a liability-sensitive profile would suggest that these amounts would decrease.

80


Net Interest Income Simulation
We used a NII simulation model to measure the estimated changes in NII that would result over the next 12 months from immediate and sustained changes in interest rates as of September 30, 2019. This model is an interest rate risk management tool and the results are not necessarily an indication of our future net interest income. This model has inherent limitations and these results are based on a given set of rate changes and assumptions at one point in time. We have assumed no growth or changes in the product mix of either our total interest‑sensitive assets or liabilities over the next 12 months, therefore the results reflect an interest rate shock to a static balance sheet.
This analysis calculates the difference between NII forecasted using both increasing and decreasing interest rate scenarios using the forward yield curve at September 30, 2019. In order to arrive at the base case, we extend our balance sheet at September 30, 2019 one year and reprice any assets and liabilities that would contractually reprice or mature during that period using the products’ pricing as of September 30, 2019. Based on such repricing, we calculate an estimated NII and NIM for each rate scenario.
The NII simulation model is dependent upon numerous assumptions. For example, the majority of our loans are variable rate, which are assumed to reprice in accordance with their contractual terms. Some loans and investment securities include the opportunity of prepayment (embedded options) and the simulation model uses prepayment assumptions to estimate these prepayments and reinvest these proceeds at current simulated yields. Our interest-bearing deposits reprice at our discretion and are assumed to reprice at a rate less than the change in market rates. The 12-month NII simulation model as of September 30, 2019 assumes interest-bearing deposits reprice at 32% of the change in market rates (this is commonly referred to as the "deposit beta"). The effects of certain balance sheet attributes, such as fixed‑rate loans, variable‑rate loans that have reached their floors, and the volume of noninterest‑bearing deposits as a percentage of earning assets, impact our assumptions and consequently the results of our NII simulation model. Changes that could vary significantly from our assumptions include loan and deposit growth or contraction, loan and deposit pricing, changes in the mix of earning assets or funding sources, and future asset/liability management decisions, all of which may have significant effects on our net interest income.
The following table presents forecasted net interest income and net interest margin for the next 12 months using the static balance sheet and forward yield curve as the base scenario, with immediate and sustained parallel upward and downward movements in interest rates of 100, 200 and 300 basis points as of the date indicated:
 
Forecasted
 
 
 
Forecasted
 
Forecasted
 
Net Interest
 
Percentage
 
Net Interest
 
Net Interest
 
Income
 
Change
 
Margin
 
Margin Change
September 30, 2019
(Tax Equivalent)
 
From Base
 
(Tax Equivalent)
 
From Base
 
(Dollars in millions)
 
 
 
 
 
 
Interest Rate Scenario:
 
 
 
 
 
 
 
Up 300 basis points
$
1,153.0

 
17.6%
 
5.00%
 
0.75%
Up 200 basis points
$
1,094.0

 
11.5%
 
4.74%
 
0.49%
Up 100 basis points
$
1,033.3

 
5.4%
 
4.48%
 
0.23%
BASE CASE
$
980.8

 
—
 
4.25%
 
—
Down 25 basis points
$
967.1

 
(1.4)%
 
4.19%
 
(0.06)%
Down 50 basis points
$
957.1

 
(2.4)%
 
4.15%
 
(0.10)%
Down 100 basis points
$
937.1

 
(4.5)%
 
4.06%
 
(0.19)%
During the third quarter of 2019, total base case year 1 tax equivalent NII decreased by $9.7 million to $980.8 million at September 30, 2019 from $990.5 million at June 30, 2019. This decrease was attributable to a decline in short-term interest rates leading to lower loan yields.
In addition to parallel interest rate shock scenarios, we also model various alternative rate vectors that are viewed as more likely to occur in a typical monetary policy tightening cycle. The most favorable alternate rate vector that we model is the “Bear Flattener” scenario, when short-term rates increase faster than long-term rates, and the least favorable alternate rate vector that we model is the “Bull Steepener,” when short-term rates fall faster than long-term rates. In the “Bear Flattener” scenario, Year 1 tax equivalent NII increases by 6.7%, and in the “Bull Steepener” scenario, Year 1 tax equivalent NII decreases by 1.5%.

81


Of the $18.8 billion of total loans at September 30, 2019, $11.3 billion have variable interest rate terms (excluding hybrid loans discussed below). Approximately $7.9 billion, or 70%, of the variable interest rate loans as of September 30, 2019 contained interest rate floor provisions, of which approximately $2.0 billion were "in-the-money," meaning the loan coupon will not adjust down if there are future decreases to the index interest rate. The cumulative amount of loans with "in-the-money" floors for assumed additional market rate decreases are as follows:
September 30, 2019
 
 
Total Amount of
 
 
Loans With
Basis Points of
 
"In-the-Money"
Rate Decreases
 
Loan Floors
(Dollars in millions)
50 bps
 
$3,354
100 bps
 
$4,949
150 bps
 
$6,751
200 bps
 
$7,679
250 bps
 
$7,878
Additionally, approximately $3.7 billion of variable-rate hybrid loans do not immediately reprice because the loans contain an initial fixed-rate period before they become variable. The cumulative amounts of hybrid loans that would switch from being fixed-rate to variable-rate because the initial fixed-rate term would expire were approximately $970 million, $1.3 billion, and $1.7 billion in the next one, two, and three years.
LIBOR is expected to be phased out after 2021, as such the Company is assessing the impacts of this transition and exploring alternatives to use in place of LIBOR.  The business processes impacted relate primarily to our variable-rate loans and our subordinated debentures, both of which are indexed to LIBOR.
Market Value of Equity
We measure the impact of market interest rate changes on the net present value of estimated cash flows from our assets, liabilities, and off‑balance sheet items, defined as the market value of equity, using our MVE model. This simulation model assesses the changes in the market value of our interest‑sensitive financial instruments that would occur in response to an instantaneous and sustained increase or decrease in market interest rates of 100, 200, and 300 basis points. This analysis assigns significant value to our noninterest-bearing deposit balances. The projections include various assumptions regarding cash flows and interest rates and are by their nature forward‑looking and inherently uncertain.
The MVE model is an interest rate risk management tool and the results are not necessarily an indication of our actual future results. Actual results may vary significantly from the results suggested by the market value of equity table. Loan prepayments and deposit attrition, changes in the mix of our earning assets or funding sources, and future asset/liability management decisions, among others, may vary significantly from our assumptions. The base case is determined by applying various current market discount rates to the estimated cash flows from the different types of assets, liabilities, and off‑balance sheet items existing at September 30, 2019.

82


The following table shows the projected change in the market value of equity for the set of rate scenarios presented as of the date indicated:
 
 
 
 
 
 
 
 
 
Ratio of
 
Projected
 
Dollar
 
Percentage
 
Percentage
 
Projected
 
Market Value
 
Change
 
Change
 
of Total
 
Market Value
September 30, 2019
of Equity
 
From Base
 
From Base
 
Assets
 
to Book Value
 
(Dollars in millions)
 
 
 
 
 
 
Interest Rate Scenario:
 
 
 
 
 
 
 
 
 
Up 300 basis points
$
7,791.4

 
$
694.7

 
9.8
 %
 
29.2
%
 
158.4
%
Up 200 basis points
$
7,587.2

 
$
490.6

 
6.9
 %
 
28.4
%
 
154.2
%
Up 100 basis points
$
7,350.4

 
$
253.8

 
3.6
 %
 
27.5
%
 
149.4
%
BASE CASE
$
7,096.7

 
$
—

 
—
 %
 
26.6
%
 
144.2
%
Down 100 basis points
$
6,754.2

 
$
(342.5
)
 
(4.8
)%
 
25.3
%
 
137.3
%
Down 200 basis points
$
6,132.2

 
$
(964.4
)
 
(13.6
)%
 
22.9
%
 
124.6
%
Down 300 basis points
$
5,792.1

 
$
(1,304.5
)
 
(18.4
)%
 
21.7
%
 
117.7
%
During the third quarter of 2019, total base case projected market value of equity increased by $1.5 billion to $7.1 billion. The overall MVE sensitivity reflects a more asset-sensitive profile. The increase in asset sensitivity of MVE is due to revised deposit attrition and pricing models implemented during the third quarter, which reflect longer deposit account average life and lower deposit pricing betas than the models used previously. The $1.5 billion increase in base case projected MVE was due primarily to: (1) a $765 million decrease in the mark-to-market adjustment for total deposits due to the longer average life and lower pricing beta assumed in the new deposit models, (2) a $623 million increase in the mark-to-market adjustment for loans and leases due to decreased credit spreads used for loan valuation and price appreciation from the decrease in market interest rates, and (3) a $68 million increase in the book value of stockholders' equity due mainly to $110.0 million of net earnings and a $22.8 million increase in accumulated other comprehensive income, offset partially by $72.0 million of cash dividends paid.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, an evaluation was carried out by the Company's management, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, these disclosure controls and procedures were effective.
There have been no changes in the Company's internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

83


PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information set forth in Note 10. Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements (Unaudited) is incorporated herein by reference.
In addition, in the ordinary course of our business, we are party to various legal actions, which we believe are incidental to the operation of our business. The outcome of such legal actions and the timing of ultimate resolution are inherently difficult to predict. In the opinion of management, based upon information currently available to us, any resulting liability, in addition to amounts already accrued, and taking into consideration insurance which may be applicable, would not have a material adverse effect on the Company’s financial statements or operations.
ITEM 1A. RISK FACTORS
For information regarding factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors disclosed in the "Risk Factors" section of our Annual Report on Form 10-K for the year ended December 31, 2018. See also "Forward-Looking Information" disclosed in Part I, Item 2 of this quarterly report on Form 10-Q.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table presents stock purchases made during the third quarter of 2019:
 
 
 
 
 
Total Number of
 
Maximum Dollar
 
 
 
 
 
Shares Purchased
 
Value of Shares
 
Total
 
 
 
as Part of
 
That May Yet
 
Number of
 
Average
 
Publicly
 
Be Purchased
 
Shares
 
Price Paid
 
Announced
 
Under the
Purchase Dates
Purchased (1)
 
Per Share
 
Program (2)
 
Program (2)
 
 
 
 
 
 
 
(In thousands)

July 1 – July 31, 2019
—

 
$
—

 
—

 
$
124,707

August 1 – August 31, 2019
2,952

 
$
34.59

 
—

 
$
124,707

September 1 – September 30, 2019
—

 
$
—

 
—

 
$
124,707

Total
2,952

 
$
34.59

 
—

 
 
__________________________
(1)
Includes shares repurchased pursuant to net settlement by employees in satisfaction of income tax withholding obligations incurred through the vesting of Company stock awards, and shares repurchased pursuant to the Company's publicly announced Stock Repurchase Program, described in (2) below.
(2)
On February 24, 2019, effective upon the maturity of the current Stock Repurchase Program on February 28, 2019, PacWest's Board of Directors authorized a new Stock Repurchase Program to purchase shares of its common stock for an aggregate purchase price not to exceed $225 million until February 29, 2020. All shares repurchased under the Stock Repurchase Program were retired upon settlement.

84


ITEM 6. INDEX TO EXHIBITS
Exhibit Number
Description
2.4
3.1
3.2
3.5
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
31.1
31.2
32.1
32.2
101
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018, (ii) the Condensed Consolidated Statements of Earnings for the three months ended September 30, 2019, June 30, 2019, and September 30, 2018, and nine months ended September 30, 2019 and 2018, (iii) the Condensed Consolidated Statements of Comprehensive Income for the three months ended September 30, 2019, June 30, 2019, and September 30, 2018, and nine months ended September 30, 2019 and 2018, (iv) the Condensed Consolidated Statements of Changes in Stockholders' Equity for the nine months ended September 30, 2019 and 2018, (v) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018, and (vi) the Notes to Condensed Consolidated Financial Statements (Filed herewith).



85


Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 
 
PACWEST BANCORP
 
 
 
Date:
November 6, 2019
/s/ Bart R. Olson
 
 
Bart R. Olson
 
 
Executive Vice President and Chief Accounting Officer

86