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(1)	Entire amounts are recognized in "Gain on sale of securities" on the Condensed Consolidated Statements of Earnings (Loss).

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(1)	Impact due to adoption on January 1, 2020 of ASU 2016-13, "Financial Instruments - Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments," and the related amendments, commonly referred to as CECL.

(2)	Impact due to adoption on January 1, 2019 of ASU 2016-02, "Leases (Topic 842)," and the related amendments.

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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, one branch located in Denver, Colorado, and numerous loan production offices across the country. The Bank provides community banking products including lending and comprehensive deposit and treasury management services to small and medium-sized businesses conducted primarily through our California-based branch offices and Denver, Colorado branch office. The Bank offers national lending products including asset-based, equipment, and real estate loans and treasury management services to established middle-market businesses on a national basis. The Bank also offers venture banking products including a comprehensive suite of financial services focused on entrepreneurial and venture-backed businesses and their venture capital and private equity investors, with offices located in key innovative 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 March 31, 2020 with our last acquisition in October 2017. 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, 2019 as filed with the Securities and Exchange Commission ("Form 10-K"). Updates to our significant accounting policies described below reflect the impact of the adoption of ASU 2016-13, “Financial Instruments - Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments” and the related amendments, commonly referred to as CECL.

Investment Securities

Prior to January 1, 2020, debt securities available-for-sale were measured at fair value and declines in the fair value were reviewed to determine whether the impairment was other-than-temporary. If we did not expect to recover the entire amortized cost basis of the security, then an other-than-temporary impairment was considered to have occurred. The cost basis of the security was written down to its estimated fair value and the amount of the write-down was recognized through a charge to earnings. If the amount of the amortized cost basis expected to be recovered increased in a future period, the cost basis of the security was not increased but rather recognized prospectively through interest income.

Effective January 1, 2020, upon the adoption of ASU 2016-13, debt securities available-for-sale are measured at fair value and are subject to impairment testing. A security is impaired if the fair value of the security is less than its amortized cost basis. When an available-for-sale debt security is considered impaired, the Company must determine if the decline in fair value has resulted from a credit-related loss or other factors and then, (1) recognize an allowance for credit losses by a charge to earnings for the credit-related component (if any) of the decline in fair value, and (2) recognize in other comprehensive income (loss) any non-credit related components of the fair value decline (if any). If the amount of the amortized cost basis expected to be recovered increases in a future period, the valuation reserve would be reduced, but not more than the amount of the current existing reserve for that security.

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Purchased Loans with Credit Deterioration

Prior to January 1, 2020, purchased credit impaired loans were accounted for in accordance with ASC Subtopic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality.” At the time of acquisition, these loans were recorded at estimated fair value based upon estimated future cash flows with no related allowance for credit losses.

Effective January 1, 2020, upon the adoption of ASU 2016-13, an entity records purchased financial assets with credit deterioration ("PCD assets") at the purchase price plus the allowance for credit losses expected at the time of acquisition. This allowance is recognized through a gross-up that increases the amortized cost basis of the asset with no effect on net income. Subsequent changes (favorable and unfavorable) in expected cash flows are recognized immediately in net income by adjusting the related allowance.

Allowance for Credit Losses on Loans and Leases Held for Investment

Effective January 1, 2020, upon the adoption of ASU 2016-13, the Company replaced the current incurred loss accounting model with the current expected credit loss ("CECL") approach for financial instruments measured at amortized cost and other commitments to extend credit. CECL requires the immediate recognition of estimated credit losses expected to occur over the estimated remaining life of the asset. The forward-looking concept of CECL requires loss estimates to consider historical experience, current conditions and reasonable and supportable forecasts.

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 the amortized cost basis of loans and leases, while the reserve for unfunded loan commitments is included within "Accrued interest payable and other liabilities" on the condensed consolidated balance sheets. The amortized cost basis of loans and leases does not include interest receivable, which is included in "Other assets" on the condensed consolidated balance sheets. The "Provision for credit losses" on the condensed consolidated statements of earnings (loss) is a combination of the provision for loan and lease losses and the provision for unfunded loan commitments.

Under the CECL methodology, expected credit losses reflect losses over the remaining contractual life of an asset, considering the effect of prepayments and considering available information about the collectability of cash flows, including information about relevant historical experience, current conditions, and reasonable and supportable forecasts of future events and circumstances. Thus, the CECL methodology incorporates a broad range of information in developing credit loss estimates. The resulting allowance for loan and lease losses is deducted from the associated amortized cost basis to reflect the net amount expected to be collected. Subsequent changes in this estimate are recorded through the provision for credit losses and the allowance. The CECL methodology could result in significant changes to both the timing and amounts of provision for credit losses and the allowance as compared to recent historical periods. Loans and leases that are deemed to be uncollectable are charged off and deducted from the allowance. The provision for credit losses and recoveries on loans and leases previously charged off are added to the allowance.

The allowance for loan and lease losses has an individually evaluated component for loans and leases that no longer share similar risk characteristics with other loans and leases and a pooled loans component for loans and leases that share similar risk characteristics.

A loan or lease with an outstanding balance greater than $250,000 is individually evaluated for expected credit loss when it is probable that we will be unable to collect all amounts due according to the original contractual terms of the agreement. We select loans and leases for individual assessment 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 the current expected credit loss 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 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.

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Our CECL methodology for the pooled loans component includes both quantitative and qualitative loss factors which are applied to our population of loans and leases and assessed at a pool level. The loan portfolio is segmented into four loan segments, eight loan classes and 22 loan pools based upon loan type that share similar default risk characteristics to calculate quantitative loss factors for each pool. Six of these loan pools have insignificant current balances and/or insignificant historical losses, thus, estimated losses are calculated using historical loss rates from the first quarter of 2009 to the current period rather than econometric regression modeling. For the remaining 16 loan pools, we estimate the probability of default (“PD”) during the reasonable and supportable period using seven econometric regression models developed to correlate macroeconomic variables to credit performance (including risk rating upgrades/downgrades and defaults). The loans and unfunded commitments are grouped into nine loss given default (“LGD”) pools based on portfolio classes that share similar collateral risk characteristics. LGD rates are computed based on the net charge-offs recognized divided by the exposure at default (“EAD”) of defaulted loans starting with the first quarter of 2009 to the current period. The PD and LGD rates are applied to the EAD at the loan or lease level based on contractual scheduled payments, estimated prepayments, and estimated usage of unfunded commitments to compute the current expected credit loss. We are using our actual historical loan prepayment experience from 2009 - 2018 to estimate future prepayments by loan pool. Prepayment rates during the reasonable and supportable period are based on historical experience from 2017-2018 as it exhibits economic conditions most similar to the single scenario baseline forecast discussed below.

For the reasonable and supportable forecast period, future macroeconomic events and circumstances are estimated over a 4-quarter time horizon using a single scenario baseline forecast that is consistent with management's current expectations for the 16 loan pools. We use economic forecasts from Moody's Analytics in this process. The economic forecast is updated monthly therefore the one used for each quarter-end calculation is generally based on a one-month lag based on the timing of when the forecast becomes available. The key macroeconomic assumptions used in the PD regression models include at least three of the following economic indicators; Real GDP, Unemployment Rates, CRE Price Index and the BBB spread. The quantitative CECL model, utilizing historical portfolio performance, current portfolio composition and performance, estimated prepayments, and the effects of the economic forecast, calculates the expected EAD which is multiplied by the PD and LGD rates to calculate expected losses through the end of the forecast period. We then use a 2-quarter reversion period to revert on a straight-line basis from the PD, LGD, and prepayment rates used during the reasonable and support period to the Company’s historical PD, LGD, and prepayment experience. Subsequent to the reversion period for the remaining contractual life of loans and leases, PD and prepayment rates are based on historical experience from the first quarter of 2009 to the fourth quarter of 2018, which are updated on an annual basis or more frequently if necessary, while LGD rates are based on historical experience from the first quarter of 2009 to the current period.

The PDs and LGDs calculated by the quantitative models are highly correlated to our internal risk ratings assigned to each loan and lease. 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 and leases on a regular basis. The credit risk ratings assigned to every loan and lease are either “high pass,” “pass,” “special mention,” “substandard,” or “doubtful” as defined as follows:

•	High Pass: (Risk ratings 1-2) Loans and leases rated as "high pass" exhibit a favorable credit profile and have minimal risk characteristics. Repayment in full is expected, even in adverse economic conditions.

•	Pass: (Risk ratings 3-4) Loans and leases rated as "pass" are not adversely classified and collection and repayment in full are expected.

•	Special Mention: (Risk rating 5) 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: (Risk rating 6) 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: (Risk rating 7) 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)."

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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.

The qualitative portion of the reserve on pooled loans and leases represents management’s judgment of additional considerations to account for internal and external risk factors that are not adequately measured in the quantitative reserve. The qualitative loss factors consider idiosyncratic risk factors, conditions that may not be reflected in quantitatively derived results, or other relevant factors to ensure the allowance for credit losses reflects our best estimate of current expected credit losses. Current and forecasted economic trends and underlying market values for collateral dependent loans are generally considered to be encompassed within our CECL quantitative methodology and component of the reserve. An incremental qualitative adjustment may be considered when economic forecasts exhibit higher levels of volatility or uncertainty.

The other qualitative criteria we consider when establishing the loss factors include the following:

•	legal and regulatory matters that could impact our borrowers’ ability to repay our 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 review; and

•	changes in management related to credit administration functions.

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 utilization rates of the unfunded commitments during the contractual life of the commitments based on historical usage of unfunded commitments for the various loan types from the first quarter of 2015 to the second quarter of 2019. The utilization rates are updated on an annual basis.

Management believes the allowance for credit losses is appropriate for the current expected credit losses in our loan and lease portfolio and the credit risk ratings and inherent loss rates currently assigned are reasonable and appropriate as of the reporting date. 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 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. In addition, economic forecasts utilized in the estimation process will change in future periods, which will result in changes to the estimates made for current expected credit losses as of a point in time. However, economic forecasts are just one of many assumptions and components that go into estimating the allowance for credit losses.

The CECL methodology requires a significant amount of management judgment in determining the appropriate allowance for credit losses. Most of the steps in the methodology involve judgment and are subjective in nature including, among other things, selection of the most reliable econometric regression models, segmentation of the loan and lease portfolio, determining the amount of loss history to consider, determining the relevant macroeconomic inputs to the quantitative models, determining the methodology to forecast prepayments, selection of the most appropriate economic forecast scenario, determining the length of the reasonable and supportable forecast and reversion periods, determining expected utilization rates on unfunded loan commitments and determining relevant and appropriate qualitative factors. In addition, the CECL methodology is dependent on economic forecasts which are inherently imprecise and will change from period to period. Although we have established an allowance for credit losses that we consider appropriate, there can be no assurance that the allowance will be sufficient to absorb future losses.

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Accounting Standards Adopted in 2020

Effective January 1, 2020, the Company adopted ASU 2016-13 and the related amendments to ASC Topic 326, “Financial Instruments - Credit Losses,” to replace the current incurred loss accounting model with a current expected credit loss approach for financial instruments measured at amortized cost and other commitments to extend credit. The new standard is generally intended to require earlier recognition of credit losses. While the standard changes the measurement of the allowance for credit losses, it does not change the credit risk of our lending portfolios or the ultimate losses in those portfolios.

Under the CECL approach, the standard requires immediate recognition of estimated credit losses expected to occur over the estimated remaining life of the asset. The forward-looking concept of CECL requires loss estimates to consider historical experience, current conditions and reasonable and supportable forecasts. The standard modifies the other-than-temporary impairment model for available-for-sale debt securities to require entities to record an allowance when recognizing credit losses for available-for-sale securities, rather than reducing the amortized cost of the securities by direct write-offs.

The Company adopted the new standard using the modified retrospective approach and recognized a cumulative effect adjustment to decrease retained earnings by $5.3 million, net of taxes, and increase the allowance for credit losses by $7.3 million without restating prior periods and applied the requirements of the new standard prospectively. There was no cumulative effect adjustment related to available-for-sale securities at adoption. The Company elected to account for interest receivable separately from the amortized cost of loans and leases and investment securities and is included in "Other assets" on the condensed consolidated balance sheets. The Company elected the practical expedient to use the fair value of the collateral at the reporting date when recording the net carrying amount of the asset and determining the allowance for credit losses for a financial asset for which the repayment is expected to be provided substantially through the operation or sale of the collateral when the borrower is experiencing financial difficulty based on the entity’s assessment as of the reporting date (collateral dependent financial asset). Additionally, the Company implemented new business processes, new internal controls, and modified existing and/or implemented new internal models and tools to facilitate the ongoing application of the new guidance. See Note 4. Loans and Leases for further details.

Effective January 1, 2020, the Company adopted ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" which 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. 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.

The Company used this approach to evaluate its goodwill during the first quarter of 2020, as an unprecedented decline in economic conditions triggered by the Coronavirus Disease ("COVID-19") pandemic caused a significant decline in stock market valuations in March 2020, including our stock price. These events indicated that goodwill may be impaired and resulted in us performing a goodwill impairment assessment. As a result, a goodwill impairment charge of $1.47 billion was recorded as the Company's estimated fair value was less than its book value.

Effective January 1, 2020, the Company adopted the provisions of ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework - Changes to Disclosure Requirements for Fair Value Measurements" which 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. Although the guidance modifies our disclosures in 2020, there was no impact to our condensed consolidated financial statements from the adoption of this new standard.

ASU 2020-03, "Codification Improvements to Financial Instruments" ("ASU 2020-03"), revised a wide variety of topics in the Codification with the intent to make the Codification easier to understand and apply by eliminating inconsistencies and providing clarifications. ASU 2020-03 was effective immediately upon its release in March 2020 and did not have a material impact to our condensed consolidated financial statements.

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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 goodwill and other 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

Certain prior period amounts have been reclassified to conform to the current period's presentation format. On the condensed consolidated statements of earnings (loss), a new line is presented for "Customer related expense," as that category exceeded the disclosure materiality threshold in 2019, which previously had been included as part of "Other expense."

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 three months ended March 31, 2020 and the year ended December 31, 2019 were $166.2 million and $131.0 million. As of March 31, 2020 and December 31, 2019, we pledged cash collateral for our derivative contracts of $3.5 million and $3.2 million.

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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:

	March 31, 2020																December 31, 2019
					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 commercial MBS	$	1,068,810			$	57,997			$	(1,375	)		$	1,125,432			$	1,083,182			$	25,579			$	(537	)		$	1,108,224
Agency residential CMOs	1,069,657				40,124				(7,684		)		1,102,097				1,112,573				24,403				(579		)		1,136,397
Municipal securities	687,603				46,310				(29		)		733,884				691,647				43,851				(339		)		735,159
Agency residential MBS	277,213				12,733				(115		)		289,831				294,606				10,593				(1		)		305,198
Asset-backed securities	220,624				41				(9,966		)		210,699				216,133				320				(1,670		)		214,783
Collateralized loan obligations	142,144				—				(12,062		)		130,082				124,134				25				(403		)		123,756
Private label residential CMOs	99,021				1,096				(2,255		)		97,862				96,066				3,430				(13		)		99,483
SBA securities	44,508				998				(65		)		45,441				47,765				506				(13		)		48,258
Corporate debt securities	17,000				—				(43		)		16,957				17,000				3,748				—				20,748
U.S. Treasury securities	4,986				392				—				5,378				4,985				196				—				5,181
Total	$	3,631,566			$	159,691			$	(33,594	)		$	3,757,663			$	3,688,091			$	112,651			$	(3,555	)		$	3,797,187

See Note 12. Fair Value Measurements for information on fair value measurements and methodology.

As of March 31, 2020, securities available-for-sale with a fair value of $2.5 billion were pledged as collateral for FHLB borrowings, public deposits, and other purposes as required by various statutes and agreements.

Realized Gains and Losses on Securities Available-for-Sale

The following table presents the amortized cost of securities sold with related gross realized gains, gross realized losses, and net realized gains for the years indicated:

	Three Months Ended
	March 31,
Sales of Securities Available-for-Sale	2020				2019
	(In thousands)
Amortized cost of securities sold	$	14,766			$	405,765
Gross realized gains	$	182			$	4,059
Gross realized losses	—				(1,898		)
Net realized gains	$	182			$	2,161

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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 as of the dates indicated:

	March 31, 2020
	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 commercial MBS	$	109,101			$	(1,375	)		$	—			$	—			$	109,101			$	(1,375	)
Agency residential CMOs	263,858				(6,921		)		37,560				(763		)		301,418				(7,684		)
Municipal securities	7,521				(29		)		—				—				7,521				(29		)
Agency residential MBS	9,523				(115		)		—				—				9,523				(115		)
Asset-backed securities	171,096				(7,547		)		36,993				(2,419		)		208,089				(9,966		)
Collateralized loan obligations	130,082				(12,062		)		—				—				130,082				(12,062		)
Private label residential CMOs	86,880				(2,247		)		105				(8		)		86,985				(2,255		)
SBA securities	1,958				(65		)		—				—				1,958				(65		)
Corporate debt securities	16,958				(42		)		1				(1		)		16,959				(43		)
Total	$	796,977			$	(30,403	)		$	74,659			$	(3,191	)		$	871,636			$	(33,594	)

	December 31, 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 commercial MBS	$	214,862			$	(537	)		$	—			$	—			$	214,862			$	(537	)
Agency residential CMOs	180,071				(572		)		1,456				(7		)		181,527				(579		)
Municipal securities	38,667				(339		)		—				—				38,667				(339		)
Agency residential MBS	—				—				186				(1		)		186				(1		)
Asset-backed securities	165,575				(1,670		)		—				—				165,575				(1,670		)
Collateralized loan obligations	102,469				(403		)		—				—				102,469				(403		)
Private label residential CMOs	9,872				(11		)		114				(2		)		9,986				(13		)
SBA securities	4,565				(13		)		—				—				4,565				(13		)
Total	$	716,081			$	(3,545	)		$	1,756			$	(10	)		$	717,837			$	(3,555	)

The securities that were in an unrealized loss position at March 31, 2020, were considered impaired and required further review to determine if the unrealized losses were credit-related. We 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. We also considered the seniority of the tranches we owned and third party guarantees, if any, to assess whether an unrealized loss was credit-related. Accordingly, we determined the unrealized losses were not credit-related and, therefore, we recognized such impairment in "other comprehensive income" in stockholders' equity. Although we periodically sell securities for portfolio management purposes, we do not foresee having to sell any impaired securities strictly for liquidity needs and believe that it is more likely than not we would not be required to sell any impaired securities before recovery of their amortized cost.

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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:

	March 31, 2020
	Amortized				Fair
Maturities	Cost				Value
	(In thousands)
Due in one year or less	$	9,898			$	10,026
Due after one year through five years	300,638				309,312
Due after five years through ten years	975,907				1,024,183
Due after ten years	2,345,123				2,414,142
Total securities available-for-sale	$	3,631,566			$	3,757,663

Mortgage-backed securities have contractual maturity dates, but require periodic payments based upon scheduled amortization terms. Actual principal collections on mortgage-backed securities usually occur more rapidly than the scheduled amortization terms because of prepayments made by obligors of the underlying loan collateral.

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
	March 31,
	2020				2019
	(In thousands)
Taxable interest	$	21,786			$	19,742
Non-taxable interest	5,229				9,593
Dividend income	431				345
Total interest income on investment securities	$	27,446			$	29,680

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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 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:

	March 31,				December 31,
	2020				2019
	(In thousands)
Real estate mortgage	$	8,018,704			$	7,982,383
Real estate construction and land	2,913,843				2,773,209
Commercial	8,443,966				7,714,358
Consumer	429,881				440,790
Total gross loans and leases held for investment	19,806,394				18,910,740
Deferred fees, net	(61,089		)		(63,868		)
Total loans and leases held for investment, net of deferred fees	19,745,305				18,846,872
Allowance for loan and lease losses	(221,292		)		(138,785		)
Total loans and leases held for investment, net (1)	$	19,524,013			$	18,708,087

____________________

(1)	Excludes accrued interest receivable of $64.4 million and $67.5 million at March 31, 2020 and December 31, 2019, respectively, that is recorded in "Other assets" on the condensed consolidated balance sheets.

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:

	March 31, 2020
	30 - 89				90 or More
	Days				Days				Total
	Past Due				Past Due				Past Due				Current				Total
	(In thousands)
Real estate mortgage:
Commercial	$	4,569			$	6,241			$	10,810			$	4,209,839			$	4,220,649
Income producing and other residential	1,337				682				2,019				3,786,276				3,788,295
Total real estate mortgage	5,906				6,923				12,829				7,996,115				8,008,944
Real estate construction and land:
Commercial	—				—				—				1,087,505				1,087,505
Residential	241				—				241				1,792,507				1,792,748
Total real estate construction and land	241				—				241				2,880,012				2,880,253
Commercial:
Asset-based	—				—				—				3,938,402				3,938,402
Venture capital	3,272				2,989				6,261				2,709,576				2,715,837
Other commercial	4,884				2,022				6,906				1,765,079				1,771,985
Total commercial	8,156				5,011				13,167				8,413,057				8,426,224
Consumer	518				102				620				429,264				429,884
Total	$	14,821			$	12,036			$	26,857			$	19,718,448			$	19,745,305

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	December 31, 2019
	30 - 89				90 or More
	Days				Days				Total
	Past Due				Past Due				Past Due				Current				Total
	(In thousands)
Real estate mortgage:
Commercial	$	2,448			$	5,919			$	8,367			$	4,194,320			$	4,202,687
Income producing and other residential	2,105				802				2,907				3,767,153				3,770,060
Total real estate mortgage	4,553				6,721				11,274				7,961,473				7,972,747
Real estate construction and land:
Commercial	—				—				—				1,082,368				1,082,368
Residential	1,429				—				1,429				1,654,005				1,655,434
Total real estate construction and land	1,429				—				1,429				2,736,373				2,737,802
Commercial:
Asset-based	19				—				19				3,748,388				3,748,407
Venture capital	—				—				—				2,179,422				2,179,422
Other commercial	2,781				4,164				6,945				1,760,722				1,767,667
Total commercial	2,800				4,164				6,964				7,688,532				7,695,496
Consumer	1,006				200				1,206				439,621				440,827
Total	$	9,788			$	11,085			$	20,873			$	18,825,999			$	18,846,872

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:  

	March 31, 2020												December 31, 2019
	Nonaccrual				Performing				Total				Nonaccrual				Performing				Total
	(In thousands)
Real estate mortgage:
Commercial	$	19,088			$	4,201,561			$	4,220,649			$	18,346			$	4,184,341			$	4,202,687
Income producing and other residential	2,308				3,785,987				3,788,295				2,478				3,767,582				3,770,060
Total real estate mortgage	21,396				7,987,548				8,008,944				20,824				7,951,923				7,972,747
Real estate construction and land:
Commercial	351				1,087,154				1,087,505				364				1,082,004				1,082,368
Residential	—				1,792,748				1,792,748				—				1,655,434				1,655,434
Total real estate construction and land	351				2,879,902				2,880,253				364				2,737,438				2,737,802
Commercial:
Asset-based	17,104				3,921,298				3,938,402				30,162				3,718,245				3,748,407
Venture capital	18,612				2,697,225				2,715,837				12,916				2,166,506				2,179,422
Other commercial	37,726				1,734,259				1,771,985				27,594				1,740,073				1,767,667
Total commercial	73,442				8,352,782				8,426,224				70,672				7,624,824				7,695,496
Consumer	413				429,471				429,884				493				440,334				440,827
Total	$	95,602			$	19,649,703			$	19,745,305			$	92,353			$	18,754,519			$	18,846,872

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At March 31, 2020, nonaccrual loans and leases included $12.0 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 $77.0 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. At December 31, 2019, nonaccrual loans and leases included $11.1 million of loans and leases 90 or more days past due, $1.2 million of loans and leases 30 to 89 days past due, and $80.0 million of current loans and leases that were placed on nonaccrual status based on management’s judgment regarding their collectability.

As of March 31, 2020, our three largest loan relationships on nonaccrual status had an aggregate carrying value of $42.9 million and represented 45% 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.

	March 31, 2020
	Classified				Special Mention				Pass				Total
	(In thousands)
Real estate mortgage:
Commercial	$	33,908			$	371,668			$	3,815,073			$	4,220,649
Income producing and other residential	7,083				2,491				3,778,721				3,788,295
Total real estate mortgage	40,991				374,159				7,593,794				8,008,944
Real estate construction and land:
Commercial	351				10,577				1,076,577				1,087,505
Residential	—				—				1,792,748				1,792,748
Total real estate construction and land	351				10,577				2,869,325				2,880,253
Commercial:
Asset-based	23,218				152,136				3,763,048				3,938,402
Venture capital	31,110				173,947				2,510,780				2,715,837
Other commercial	51,498				186,368				1,534,119				1,771,985
Total commercial	105,826				512,451				7,807,947				8,426,224
Consumer	537				1,471				427,876				429,884
Total	$	147,705			$	898,658			$	18,698,942			$	19,745,305

---

	December 31, 2019
	Classified				Special Mention				Pass				Total
	(In thousands)
Real estate mortgage:
Commercial	$	33,535			$	30,070			$	4,139,082			$	4,202,687
Income producing and other residential	8,600				1,711				3,759,749				3,770,060
Total real estate mortgage	42,135				31,781				7,898,831				7,972,747
Real estate construction and land:
Commercial	364				—				1,082,004				1,082,368
Residential	—				1,429				1,654,005				1,655,434
Total real estate construction and land	364				1,429				2,736,009				2,737,802
Commercial:
Asset-based	32,223				38,936				3,677,248				3,748,407
Venture capital	35,316				74,813				2,069,293				2,179,422
Other commercial	65,261				174,785				1,527,621				1,767,667
Total commercial	132,800				288,534				7,274,162				7,695,496
Consumer	613				1,212				439,002				440,827
Total	$	175,912			$	322,956			$	18,348,004			$	18,846,872

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The following table presents our nonaccrual loans and leases by loan portfolio segment and class and by with and without an allowance recorded as of the date indicated and interest income recognized on nonaccrual loans and leases for the period indicated:

	At and For the Three Months Ended
	March 31, 2020
	Nonaccrual				Interest
	Recorded				Income
	Investment				Recognized
	(In thousands)
With An Allowance Recorded:
Real estate mortgage:
Commercial	$	342			$	—
Income producing and other residential	1,534				—
Commercial:
Venture capital	15,524				—
Other commercial	28,782				—
Consumer	413				—
With No Related Allowance Recorded:
Real estate mortgage:
Commercial	$	18,746			$	84
Income producing and other residential	774				—
Real estate construction and land:
Commercial	351				—
Commercial:
Asset based	17,103				—
Venture capital	3,089				—
Other commercial	8,944				24
Total Loans and Leases With and
Without an Allowance Recorded:
Real estate mortgage	$	21,396			$	84
Real estate construction and land	351				—
Commercial	73,442				24
Consumer	413				—
Total	$	95,602			$	108

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The following tables present our loans held for investment by loan portfolio segment and class, by credit quality indicator (internal risk ratings), and by year of origination (vintage year) as of the date indicated:

																													Revolving
																													Converted
Amortized Cost Basis	Term Loans by Origination Year																								Revolving				to Term
March 31, 2020	2020				2019				2018				2017				2016				Prior				Loans				Loans				Total
	(In thousands)
Real Estate Mortgage:
Commercial
Internal risk rating:
1-2 High pass	$	—			$	—			$	15,151			$	10,230			$	8,439			$	54,639			$	—			$	—			$	88,459
3-4 Pass	257,882				535,541				729,459				824,199				372,166				937,158				66,377				3,832				3,726,614
5 Special mention	—				56,577				90,921				18,806				75,754				129,610				—				—				371,668
6-8 Classified	—				—				183				7,516				4,468				21,741				—				—				33,908
Total	$	257,882			$	592,118			$	835,714			$	860,751			$	460,827			$	1,143,148			$	66,377			$	3,832			$	4,220,649
Current YTD period:
Gross charge-offs	$	—			$	—			$	—			$	—			$	—			$	325			$	—			$	—			$	325
Gross recoveries	—				—				—				—				—				(119		)		—				—				(119		)
Net	$	—			$	—			$	—			$	—			$	—			$	206			$	—			$	—			$	206
Real Estate Mortgage:
Income Producing and
Other Residential
Internal risk rating:
1-2 High pass	$	—			$	37,036			$	87,849			$	44,165			$	55,736			$	49,408			$	—			$	—			$	274,194
3-4 Pass	78,326				851,712				1,254,556				703,249				276,705				227,298				111,585				1,096				3,504,527
5 Special mention	—				—				—				—				—				—				2,300				191				2,491
6-8 Classified	—				—				—				—				—				5,588				112				1,383				7,083
Total	$	78,326			$	888,748			$	1,342,405			$	747,414			$	332,441			$	282,294			$	113,997			$	2,670			$	3,788,295
Current YTD period:
Gross charge-offs	$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	175			$	175
Gross recoveries	—				—				—				—				—				(4		)		(1		)		—				(5		)
Net	$	—			$	—			$	—			$	—			$	—			$	(4	)		$	(1	)		$	175			$	170
Real Estate Construction
and Land: Commercial
Internal risk rating:
1-2 High pass	$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
3-4 Pass	15,749				244,344				331,283				210,871				129,186				136,050				5,470				3,624				1,076,577
5 Special mention	—				—				10,577				—				—				—				—				—				10,577
6-8 Classified	—				—				—				—				—				351				—				—				351
Total	$	15,749			$	244,344			$	341,860			$	210,871			$	129,186			$	136,401			$	5,470			$	3,624			$	1,087,505
Current YTD period:
Gross charge-offs	$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Gross recoveries	—				—				—				—				—				—				—				—				—
Net	$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—

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																													Revolving
																													Converted
Amortized Cost Basis	Term Loans by Origination Year																								Revolving				to Term
March 31, 2020	2020				2019				2018				2017				2016				Prior				Loans				Loans				Total
	(In thousands)
Real Estate Construction
and Land: Residential
Internal risk rating:
1-2 High pass	$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
3-4 Pass	23,686				253,764				711,007				634,325				127,324				2,075				8,909				31,658				1,792,748
5 Special mention	—				—				—				—				—				—				—				—				—
6-8 Classified	—				—				—				—				—				—				—				—				—
Total	$	23,686			$	253,764			$	711,007			$	634,325			$	127,324			$	2,075			$	8,909			$	31,658			$	1,792,748
Current YTD period:
Gross charge-offs	$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Gross recoveries	—				—				—				—				—				—				—				—				—
Net	$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—
Commercial: Asset-Based
Internal risk rating:
1-2 High pass	$	10,832			$	164,402			$	188,677			$	74,590			$	150,284			$	97,445			$	701,522			$	—			$	1,387,752
3-4 Pass	44,396				202,867				123,136				39,665				69,392				66,816				1,806,634				22,390				2,375,296
5 Special mention	—				35,967				48,345				19,652				15,461				1,568				31,143				—				152,136
6-8 Classified	—				—				—				—				—				15,872				7,346				—				23,218
Total	$	55,228			$	403,236			$	360,158			$	133,907			$	235,137			$	181,701			$	2,546,645			$	22,390			$	3,938,402
Current YTD period:
Gross charge-offs	$	—			$	—			$	—			$	—			$	—			$	11,550			$	—			$	—			$	11,550
Gross recoveries	—				—				—				—				—				(323		)		(42		)		—				(365		)
Net	$	—			$	—			$	—			$	—			$	—			$	11,227			$	(42	)		$	—			$	11,185
Commercial: Venture
Capital
Internal risk rating:
1-2 High pass	$	—			$	4,798			$	—			$	(8	)		$	(2	)		$	996			$	389,952			$	—			$	395,736
3-4 Pass	84,493				162,533				104,081				14,226				37,176				10,833				1,694,848				6,854				2,115,044
5 Special mention	1,000				39,663				36,436				—				—				—				96,848				—				173,947
6-8 Classified	—				(822		)		11,167				6,868				—				5,967				7,930				—				31,110
Total	$	85,493			$	206,172			$	151,684			$	21,086			$	37,174			$	17,796			$	2,189,578			$	6,854			$	2,715,837
Current YTD period:
Gross charge-offs	$	—			$	—			$	83			$	—			$	(7	)		$	182			$	85			$	—			$	343
Gross recoveries	—				—				—				(46		)		(119		)		(3		)		(17		)		—				(185		)
Net	$	—			$	—			$	83			$	(46	)		$	(126	)		$	179			$	68			$	—			$	158

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																													Revolving
																													Converted
Amortized Cost Basis	Term Loans by Origination Year																								Revolving				to Term
March 31, 2020	2020				2019				2018				2017				2016				Prior				Loans				Loans				Total
	(In thousands)
Commercial: Other
Commercial
Internal risk rating:
1-2 High pass	$	13			$	462			$	8			$	16,915			$	2			$	3,204			$	127,406			$	160			$	148,170
3-4 Pass	11,586				101,273				118,985				102,457				35,130				114,158				884,472				17,888				1,385,949
5 Special mention	—				89				—				694				2,134				42,241				141,173				37				186,368
6-8 Classified	2				4				35				90				4,325				10,324				32,565				4,153				51,498
Total	$	11,601			$	101,828			$	119,028			$	120,156			$	41,591			$	169,927			$	1,185,616			$	22,238			$	1,771,985
Current YTD period:
Gross charge-offs	$	—			$	—			$	—			$	52			$	—			$	190			$	6,375			$	722			$	7,339
Gross recoveries	—				—				(8		)		(12		)		(55		)		(230		)		(100		)		—				(405		)
Net	$	—			$	—			$	(8	)		$	40			$	(55	)		$	(40	)		$	6,275			$	722			$	6,934
Consumer
Internal risk rating:
1-2 High pass	$	16			$	—			$	10			$	27			$	—			$	—			$	651			$	—			$	704
3-4 Pass	27,755				150,949				90,399				59,058				65,145				19,383				14,476				7				427,172
5 Special mention	—				276				564				175				186				270				—				—				1,471
6-8 Classified	—				39				19				—				62				364				11				42				537
Total	$	27,771			$	151,264			$	90,992			$	59,260			$	65,393			$	20,017			$	15,138			$	49			$	429,884
Current YTD period:
Gross charge-offs	$	—			$	—			$	85			$	114			$	263			$	—			$	11			$	—			$	473
Gross recoveries	—				—				—				(2		)		(1		)		(13		)		—				—				(16		)
Net	$	—			$	—			$	85			$	112			$	262			$	(13	)		$	11			$	—			$	457
Total Loans and Leases
Internal risk rating:
1-2 High pass	$	10,861			$	206,698			$	291,695			$	145,919			$	214,459			$	205,692			$	1,219,531			$	160			$	2,295,015
3-4 Pass	543,873				2,502,983				3,462,906				2,588,050				1,112,224				1,513,771				4,592,771				87,349				16,403,927
5 Special mention	1,000				132,572				186,843				39,327				93,535				173,689				271,464				228				898,658
6-8 Classified	2				(779		)		11,404				14,474				8,855				60,207				47,964				5,578				147,705
Total	$	555,736			$	2,841,474			$	3,952,848			$	2,787,770			$	1,429,073			$	1,953,359			$	6,131,730			$	93,315			$	19,745,305
Current YTD period:
Gross charge-offs	$	—			$	—			$	168			$	166			$	256			$	12,247			$	6,471			$	897			$	20,205
Gross recoveries	—				—				(8		)		(60		)		(175		)		(692		)		(160		)		—				(1,095		)
Net	$	—			$	—			$	160			$	106			$	81			$	11,555			$	6,311			$	897			$	19,110

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TDRs are a result of rate reductions, term extensions, fee concessions, and debt forgiveness, or a combination thereof. 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 March 31,
	2020											2019
				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			$	—
Income producing and other residential	—			—				—				3			789				789
Commercial:
Asset-based	4			1,741				1,741				—			—				—
Venture capital	2			2,047				2,047				6			2,105				1,242
Other commercial	15			22,165				20,389				8			585				585
Total	21			$	25,953			$	24,177			18			$	3,516			$	2,616

During the three months ended March 31, 2020, there was one venture capital loan totaling $2.3 million and one other commercial loan totaling $9,000, restructured in the preceding 12-month period that subsequently defaulted. During the three months ended March 31, 2019, there were two other commercial loans totaling $64,000 restructured in the preceding 12-month period that subsequently defaulted.

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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 periods indicated:

	Three Months Ended
	March 31,
	2020				2019
	(In thousands)
Component of leases receivable income:
Interest income on net investments in leases	$	2,252			$	3,140

The following table presents the components of leases receivable as of the dates indicated:

	March 31, 2020				December 31, 2019
	(In thousands)
Net investment in direct financing leases:
Lease payments receivable	$	149,740			$	147,729
Unguaranteed residual assets	20,459				20,806
Deferred costs and other	581				655
Aggregate net investment in leases	$	170,780			$	169,190

The following table presents maturities of leases receivable as of the date indicated:

	March 31, 2020
	(In thousands)
Period ending December 31,
2020	$	53,576
2021	59,334
2022	23,920
2023	13,324
2024	9,691
2025 and thereafter	2,352
Total undiscounted cash flows	162,197
Less: Unearned income	(12,457		)
Present value of lease payments	$	149,740

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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 March 31, 2020
					Real Estate
	Real Estate				Construction
	Mortgage				and Land				Commercial				Consumer				Total
	(In thousands)
Allowance for Loan and Lease Losses:
Balance, beginning of period	$	44,575			$	30,544			$	61,528			$	2,138			$	138,785
Charge-offs	(500		)		—				(19,232		)		(473		)		(20,205		)
Recoveries	124				—				955				16				1,095
Net charge-offs	(376		)		—				(18,277		)		(457		)		(19,110		)
Provision	41,865				18,221				37,459				455				98,000
Cumulative effect of change in accounting
principle - CECL	5,308				(8,592		)		6,860				41				3,617
Balance, end of period	$	91,372			$	40,173			$	87,570			$	2,177			$	221,292
Ending Allowance by
Evaluation Methodology:
Individually evaluated	$	230			$	—			$	6,462			$	—			$	6,692
Collectively evaluated	$	91,142			$	40,173			$	81,108			$	2,177			$	214,600
Ending Loans and Leases by
Evaluation Methodology:
Individually evaluated	$	25,901			$	1,816			$	72,280			$	—			$	99,997
Collectively evaluated	7,983,043				2,878,437				8,353,944				429,884				19,645,308
Ending balance	$	8,008,944			$	2,880,253			$	8,426,224			$	429,884			$	19,745,305

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	Three Months Ended March 31, 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	(196		)		—				(3,003		)		(266		)		(3,465		)
Recoveries	143				—				3,106				25				3,274
Net (charge-offs) recoveries	(53		)		—				103				(241		)		(191		)
Provision (negative provision)	(214		)		(1,001		)		5,033				182				4,000
Balance, end of period	$	45,754			$	27,208			$	61,496			$	1,823			$	136,281
Ending Allowance by
Evaluation Methodology:
Individually evaluated	$	270			$	—			$	5,931			$	—			$	6,201
Collectively evaluated	$	45,484			$	27,208			$	55,565			$	1,823			$	130,080
Ending Loans and Leases by
Evaluation Methodology:
Individually evaluated	$	23,908			$	5,432			$	71,660			$	—			$	101,000
Collectively evaluated	8,135,550				2,346,292				7,352,694				372,161				18,206,697
Ending balance	$	8,159,458			$	2,351,724			$	7,424,354			$	372,161			$	18,307,697

The allowance for loan and lease losses increased by $83 million in the first quarter of 2020 due primarily to a provision for loan and lease losses of $98 million. The higher provision for loan and lease losses in the first quarter of 2020 was a result of the current economic forecast, which reflected a significant deterioration in key macro-economic forecast variables such as unemployment and Real GDP as a result of the COVID-19 pandemic, significant loan downgrades into special mention, and higher provisions on individually evaluated loans.

A loan is considered collateral-dependent, and is individually evaluated for reserve purposes, when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. The following table summarizes collateral-dependent loans held for investment by collateral type as of the following date:

	March 31, 2020
	Real				Business
	Property				Assets				Total
	(In thousands)
Real estate mortgage	$	19,310			$	—			$	19,310
Real estate construction and land	1,816				—				1,816
Commercial	—				22,530				22,530
Total	$	21,126			$	22,530			$	43,656

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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
	March 31, 2020
	Allowance for				Reserve for				Total
	Loan and				Unfunded Loan				Allowance for
	Lease Losses				Commitments				Credit Losses
	(In thousands)
Balance, beginning of period	$	138,785			$	35,861			$	174,646
Charge-offs	(20,205		)		—				(20,205		)
Recoveries	1,095				—				1,095
Net charge-offs	(19,110		)		—				(19,110		)
Provision	98,000				14,000				112,000
Cumulative effect of change in accounting
principle - CECL	3,617				3,710				7,327
Balance, end of period	$	221,292			$	53,571			$	274,863

	Three Months Ended
	March 31, 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	(3,465		)		—				(3,465		)
Recoveries	3,274				—				3,274
Net charge-offs	(191		)		—				(191		)
Provision	4,000				—				4,000
Balance, end of period	$	136,281			$	36,861			$	173,142

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The following table summarizes foreclosed assets as of the dates indicated:

	March 31,				December 31,
Property Type	2020				2019
	(In thousands)
Commercial real estate	$	33			$	221
Construction and land development	219				219
Total other real estate owned, net	252				440
Other foreclosed assets	1,449				—
Total foreclosed assets, net	$	1,701			$	440

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, 2019	$	440
Transfers to foreclosed assets from loans	1,776
Provision for losses	(105		)
Reductions related to sales	(410		)
Balance, March 31, 2020	$	1,701

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 annually unless a triggering event occurs thereby requiring an updated assessment. Our regular annual impairment assessment occurs in the fourth quarter. 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 (loss).

The unprecedented decline in economic conditions triggered by the COVID-19 pandemic caused a significant decline in stock market valuations in March 2020, including our stock price. These events indicated that goodwill may be impaired and resulted in us performing a goodwill impairment assessment. As a result, we recorded a goodwill impairment charge of $1.47 billion as our estimated fair value was less than our book value. This was a non-cash charge to earnings and had no impact on our regulatory capital ratios, cash flows, or liquidity position.

The following table presents the changes in the carrying amount of goodwill for the period indicated:

	Goodwill
	(In thousands)
Balance, December 31, 2019	$	2,548,670
Impairment	(1,470,000		)
Balance, March 31, 2020	$	1,078,670

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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 $14.8 million for 2020. The estimated aggregate amortization expense related to our current intangible assets for each of the next four years is $10.8 million for 2021, $7.4 million for 2022, $3.8 million for 2023, and $1.7 million for 2024. Our current intangible assets are estimated to be fully amortized by the end of 2024.

The following table presents the changes in CDI and CRI and the related accumulated amortization for the periods indicated:

	Three Months Ended
	March 31,
	2020				2019
	(In thousands)
Gross Amount of CDI and CRI:
Balance, beginning of period	$	117,573			$	119,497
Balance, end of period	$	117,573			$	119,497
Accumulated Amortization:
Balance, beginning of period	(79,179		)		(62,377		)
Amortization	(3,948		)		(4,870		)
Balance, end of period	(83,127		)		(67,247		)
Net CDI and CRI, end of period	$	34,446			$	52,250

The following table presents the detail of our other assets as of the dates indicated:

	March 31,				December 31,
Other Assets	2020				2019
	(In thousands)
Cash surrender value of BOLI	$	199,962			$	199,029
LIHTC investments (1)	181,077				75,149
Operating lease ROU assets, net	124,897				129,301
Interest receivable	78,253				81,479
CRA investments (2)	66,713				65,152
Prepaid expenses	20,602				17,099
Taxes receivable	17,656				31,591
Equity investments without readily determinable fair values	14,914				14,890
Equity warrants (3)	4,290				3,434
Equity investments with readily determinable fair values	2,471				2,998
Other receivables/assets	23,106				16,689
Total other assets	$	733,941			$	636,811

____________________

(1)	During the first quarter of 2020, the Company increased the amount of its investment in low income housing project partnerships by $101 million representing the amount of related unfunded commitments, with an offset to a liability included in "Accrued interest payable and other liabilities" on the condensed consolidated balance sheets.

(2)	Includes equity investments without readily determinable fair values of $19.2 million and $17.8 million at March 31, 2020 and December 31, 2019.

(3)	For information regarding equity warrants, see Note 10. Derivatives.

See Note 8. Leases for further details regarding the operating lease ROU assets.

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Operating Leases as a Lessee

Our lease expense is a component of "Occupancy expense" on our condensed consolidated statements of earnings (loss). The following table presents the components of lease expense for the periods indicated:

	Three Months Ended
	March 31,
	2020				2019
	(In thousands)
Operating lease expense:
Fixed costs	$	8,245			$	8,302
Variable costs	13				24
Short-term lease costs	92				520
Sublease income	(1,016		)		(1,126		)
Net lease expense	$	7,334			$	7,720

The following table presents supplemental cash flow information related to leases for the periods indicated:

	Three Months Ended
	March 31,
	2020				2019
	(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	8,236			$	8,242
ROU assets obtained in exchange for lease obligations:
Operating leases	$	4,560			$	147,972

The following table presents supplemental balance sheet and other information related to operating leases as of the dates indicated:

	March 31, 2020				December 31, 2019
	(Dollars in thousands)
Operating leases:
Operating lease right-of-use assets, net	$	124,897			$	129,301
Operating lease liabilities	$	142,654			$	145,354
Weighted average remaining lease term (in years)	5.9				6.1
Weighted average discount rate	2.77		%		2.82		%

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The following table presents the maturities of operating lease liabilities as of the date indicated:

	March 31, 2020
	(In thousands)
Period ending December 31,
2020	$	25,163
2021	31,675
2022	25,859
2023	22,992
2024	15,729
2025 and thereafter	34,522
Total operating lease liabilities	155,940
Less: Imputed interest	(13,286		)
Present value of operating lease liabilities	$	142,654

Operating Leases as a Lessor

We provide equipment financing to our customers through operating leases where we facilitate the purchase of equipment leased to our customers. The equipment is shown on the condensed consolidated balance sheets 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 (loss), 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 (loss).

The following table presents the rental payments to be received on operating leases as of the date indicated:

	March 31, 2020
	(In thousands)
Period ending December 31,
2020	$	31,434
2021	39,086
2022	33,046
2023	25,554
2024	20,903
2025 and thereafter	37,283
Total undiscounted cash flows	$	187,306

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Borrowings

The following table summarizes our borrowings as of the dates indicated:

	March 31, 2020							December 31, 2019
					Weighted							Weighted
					Average							Average
	Balance				Rate			Balance				Rate
	(Dollars in thousands)
FHLB secured advances	$	1,904,000			0.51	%		$	1,318,000			1.66	%
FHLB unsecured overnight advance	141,000				0.11	%		141,000				1.56	%
AFX short-term borrowings	250,000				0.18	%		300,000				1.61	%
Non‑recourse debt	—				—	%		8				7.50	%
Total borrowings	$	2,295,000			0.45	%		$	1,759,008			1.64	%

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 March 31, 2020 of $6.0 billion, collateralized by a blanket lien on $6.3 billion of qualifying loans and $2.0 billion of securities.

The following table presents the interest rates and maturity dates of FHLB secured advances as of the dates indicated:

	March 31, 2020									December 31, 2019
								Maturity									Maturity
	Balance				Rate			Date		Balance				Rate			Date
	(Dollars in thousands)
Overnight advance	$	1,154,000			0.21	%		4/1/2020		$	1,318,000			1.66	%		1/2/2020
Term advance	250,000				0.98	%		3/2/2021		—				—	%		—
Term advance	250,000				0.96	%		9/2/2021		—				—	%		—
Term advance	250,000				0.94	%		3/2/2022		—				—	%		—
Total FHLB secured advances	$	1,904,000			0.51	%				$	1,318,000			1.66	%

FRBSF Secured Line of Credit. The Bank has a secured line of credit with the FRBSF. As of March 31, 2020, the Bank had secured borrowing capacity of $1.9 billion collateralized by liens covering $2.6 billion of qualifying loans. As of March 31, 2020 and December 31, 2019, 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 March 31, 2020. At December 31, 2019, the balance outstanding was $141.0 million.

Federal Funds Arrangements with Commercial Banks. As of March 31, 2020, 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 March 31, 2020 and December 31, 2019, 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 March 31, 2020, the balance outstanding was $250.0 million, which consisted of $250.0 million in overnight borrowings. As of December 31, 2019, there were $300.0 million in overnight borrowings outstanding.

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Subordinated Debentures

The following table summarizes the terms of each issuance of subordinated debentures outstanding as of the dates indicated:

	March 31, 2020							December 31, 2019							Date		Maturity		Rate Index
Series	Balance				Rate			Balance				Rate			Issued		Date		(Quarterly Reset)
	(Dollars in thousands)
Trust V	$	10,310			3.94	%		$	10,310			5.00	%		8/15/2003		9/17/2033		3-month LIBOR + 3.10
Trust VI	10,310				3.79	%		10,310				4.94	%		9/3/2003		9/15/2033		3-month LIBOR + 3.05
Trust CII	5,155				3.79	%		5,155				4.85	%		9/17/2003		9/17/2033		3-month LIBOR + 2.95
Trust VII	61,856				4.52	%		61,856				4.69	%		2/5/2004		4/23/2034		3-month LIBOR + 2.75
Trust CIII	20,619				2.43	%		20,619				3.58	%		8/15/2005		9/15/2035		3-month LIBOR + 1.69
Trust FCCI	16,495				2.34	%		16,495				3.49	%		1/25/2007		3/15/2037		3-month LIBOR + 1.60
Trust FCBI	10,310				2.29	%		10,310				3.44	%		9/30/2005		12/15/2035		3-month LIBOR + 1.55
Trust CS 2005-1	82,475				2.69	%		82,475				3.85	%		11/21/2005		12/15/2035		3-month LIBOR + 1.95
Trust CS 2005-2	128,866				3.72	%		128,866				3.89	%		12/14/2005		1/30/2036		3-month LIBOR + 1.95
Trust CS 2006-1	51,545				3.72	%		51,545				3.89	%		2/22/2006		4/30/2036		3-month LIBOR + 1.95
Trust CS 2006-2	51,550				3.72	%		51,550				3.89	%		9/27/2006		10/30/2036		3-month LIBOR + 1.95
Trust CS 2006-3 (1)	28,432				1.65	%		28,902				1.64	%		9/29/2006		10/30/2036		3-month EURIBOR + 2.05
Trust CS 2006-4	16,470				3.72	%		16,470				3.89	%		12/5/2006		1/30/2037		3-month LIBOR + 1.95
Trust CS 2006-5	6,650				3.72	%		6,650				3.89	%		12/19/2006		1/30/2037		3-month LIBOR + 1.95
Trust CS 2007-2	39,177				3.72	%		39,177				3.89	%		6/13/2007		7/30/2037		3-month LIBOR + 1.95
Gross subordinated debentures	540,220				3.43	%		540,690				3.87	%
Unamortized discount (2)	(81,226		)					(82,481		)
Net subordinated debentures	$	458,994						$	458,209

___________________

(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.

NOTE 10.  DERIVATIVES

The Company uses derivatives to manage exposure to market risk, primarily foreign currency risk and interest rate risk, and to assist customers with their risk management objectives. The Company uses foreign exchange contracts to manage the foreign exchange rate risk associated with certain foreign currency-denominated assets and liabilities. As of March 31, 2020, all of our derivatives were held for risk management purposes and none were designated as accounting hedges. The objective is to manage the uncertainty of future foreign exchange rate fluctuations. These derivatives provide for a fixed exchange rate which has the effect of reducing or eliminating changes to anticipated cash flows to be received on assets and liabilities denominated in foreign currencies as the result of changes to exchange rates. Our derivatives are carried at fair value and recorded in other assets or other liabilities, as appropriate. The changes in fair value of our derivatives and the related interest are recognized in "Noninterest income - other" in the condensed consolidated statements of earnings (loss). For the three months ended March 31, 2020, changes in fair value recorded through noninterest income in the condensed consolidated statements of earnings (loss) were immaterial.

In connection with negotiated credit facilities and certain other services, we may obtain equity warrant assets giving us the right to acquire stock in primarily private, venture-backed companies. We hold these assets for prospective investment gains. We do not use them to hedge any economic risks nor do we use other derivative instruments to hedge economic risks stemming from equity warrant assets. We account for equity warrant assets as derivatives when they contain net settlement terms and other qualifying criteria under ASC 815. These equity warrant assets are recorded at estimated fair value and are classified as "Other assets" on our condensed consolidated balance sheets at the time they are obtained. See Note 7. Other Assets.

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Derivative instruments expose us to credit risk in the event of nonperformance by counterparties. This risk exposure consists primarily of the termination value of agreements where we are in a favorable position. We manage the credit risk associated with various derivative agreements through counterparty credit review and monitoring procedures.

The following table presents the U.S. dollar notional amounts and fair values of our derivative instruments included in the condensed consolidated balance sheets as of the dates indicated:

	March 31, 2020								December 31, 2019
	Notional				Fair				Notional				Fair
Derivatives Not Designated As Hedging Instruments	Amount				Value				Amount				Value
	(In thousands)
Derivative Assets:
Interest rate contracts	$	10,932			$	120			$	15,159			$	71
Foreign exchange contracts	90,122				4,826				91,144				1,163
Other derivative assets	101,054				4,946				106,303				1,234
Equity warrant assets	26,469				4,290				26,079				3,434
Total	$	127,523			$	9,236			$	132,382			$	4,668
Derivative Liabilities:
Interest rate contracts	$	10,932			$	120			$	15,159			$	71
Foreign exchange contracts	90,122				1,032				91,144				684
Total	$	101,054			$	1,152			$	106,303			$	755

The following table presents a summary of commitments described below as of the dates indicated:

	March 31,				December 31,
	2020				2019
	(In thousands)
Loan commitments to extend credit	$	7,697,724			$	8,183,158
Standby letters of credit	368,979				355,503
Commitments to contribute capital to small business
investment companies and CRA-related loan pools	50,518				40,698
Commitments to contribute capital to low income housing
project partnerships (1)	—				88,515
Commitments to contribute capital to private equity funds	50				50
Total	$	8,117,271			$	8,667,924

____________________

(1)	During the first quarter of 2020, the Company increased the amount of its investment in low income housing project partnerships by $101 million representing the amount of related unfunded commitments, with an offset to a liability included in "Accrued interest payable and other liabilities" on the condensed consolidated balance sheets.

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.

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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, we invest in small business investment companies that call for capital contributions up to an amount specified in the partnership agreements, and in CRA-related loan pools. As of March 31, 2020 and December 31, 2019, we had commitments to contribute capital to these entities totaling $50.5 million and $40.7 million. We also had commitments to contribute up to an additional $50,000 to private equity funds at March 31, 2020 and December 31, 2019.

The following table presents the years in which commitments are expected to be paid for our commitments to contribute capital to small business investment companies and CRA-related loan pools as of the date indicated:

	March 31, 2020
	(In thousands)
Period ending December 31,
2020	$	31,698
2021	18,820
Total	$	50,518

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. The range of any reasonably possible liabilities is also not significant.

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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 agency residential CMOs, agency commercial and residential MBS, municipal securities, 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 individually evaluated loans and leases 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
	March 31, 2020
Measured on a Recurring Basis	Total				Level 1				Level 2				Level 3
	(In thousands)
Securities available‑for‑sale:
Agency commercial MBS	$	1,125,432			$	—			$	1,125,432			$	—
Agency residential CMOs	1,102,097				—				1,102,097				—
Municipal securities	733,884				—				733,884				—
Agency residential MBS	289,831				—				289,831				—
Asset-backed securities	210,699				—				196,080				14,619
Collateralized loan obligations	130,082				—				130,082				—
Private label residential CMOs	97,862				—				92,920				4,942
SBA securities	45,441				—				45,441				—
Corporate debt securities	16,957				—				16,957				—
U.S. Treasury securities	5,378				5,378				—				—
Total securities available-for-sale	$	3,757,663			$	5,378			$	3,732,724			$	19,561
Equity investments with readily determinable fair values	$	2,471			$	2,471			$	—			$	—
Derivatives (1):
Equity warrants	4,290				—				—				4,290
Other derivative assets	4,946				—				4,946				—
Derivative liabilities	1,152				—				1,152				—

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	Fair Value Measurements as of
	December 31, 2019
Measured on a Recurring Basis	Total				Level 1				Level 2				Level 3
	(In thousands)
Securities available‑for‑sale:
Agency commercial MBS	$	1,108,224			$	—			$	1,108,224			$	—
Agency residential CMOs	1,136,397				—				1,136,397				—
Municipal securities	735,159				—				735,159				—
Agency residential MBS	305,198				—				305,198				—
Asset-backed securities	214,783				—				198,348				16,435
Collateralized loan obligations	123,756				—				123,756				—
Private label residential CMOs	99,483				—				93,219				6,264
SBA securities	48,258				—				48,258				—
Corporate debt securities	20,748				—				20,748				—
U.S. Treasury securities	5,181				5,181				—				—
Total securities available-for-sale	$	3,797,187			$	5,181			$	3,769,307			$	22,699
Equity investments with readily determinable fair values	$	2,998			$	2,998			$	—			$	—
Derivatives (1):
Equity warrants	3,434				—				—				3,434
Other derivative assets	1,234				—				1,234				—
Derivative liabilities	755				—				755				—

____________________

(1)	For information regarding derivative instruments, see Note 10. Derivatives.

During the three months ended March 31, 2020, there were no transfers from or to Level 3 assets 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 residential CMOs and asset-backed securities available-for-sale measured at fair value on a recurring basis as of the date indicated:

	March 31, 2020
	Private Label Residential CMOs				Asset-Backed Securities
			Weighted		Input or		Weighted
	Range		Average		Range		Average
Unobservable Inputs	of Inputs		Input (1)		of Inputs		Input (2)
Voluntary annual prepayment speeds (3)	2.1% - 19.1%		11.8%		15.0%		15.0%
Annual default rates (3)	0.3% - 35.7%		1.6%		2.0%		2.0%
Loss severity rates (3)	1.6% - 183.7%		57.0%		60.0%		60.0%
Discount rates	2.3% - 14.6%		8.1%		5.5% - 5.6%		5.5%

____________________

(1)	Unobservable inputs for private label residential CMOs were weighted by the relative fair values of the instruments.

(2)	Discount rates for asset-backed securities were weighted by the relative fair values of the instruments.

(3)	The voluntary annual prepayment speeds, annual default rates, and loss severity rates were the same for all of the asset-backed securities.

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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:

	March 31, 2020
	Equity Warrants
			Weighted
	Range		Average
Unobservable Inputs	of Inputs		Input (1)
Volatility	21.2% - 251.5%		24.9%
Risk-free interest rate	0.1% - 0.4%		0.3%
Remaining life assumption (in years)	0.08 - 4.99		3.06

____________________

(1)	Unobservable inputs for equity warrants were weighted by the relative fair values of the instruments.

The following table summarizes activity for our Level 3 private label residential 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 Label				Asset-Backed				Equity
	Residential CMOs				Securities				Warrants
	(In thousands)
Balance, December 31, 2019	$	6,264			$	16,435			$	3,434
Total included in earnings	118				(11		)		837
Total included in other comprehensive income	(959		)		(687		)		—
Issuances	—				—				120
Sales	—				—				(101		)
Net settlements	(481		)		(1,118		)		—
Balance, March 31, 2020	$	4,942			$	14,619			$	4,290
Unrealized net gains (losses) for the period included in other
comprehensive income for securities held at quarter-end	$	726			$	(490	)

The following tables present assets measured at fair value on a non‑recurring basis as of the dates indicated:

	Fair Value Measurement as of
	March 31, 2020
Measured on a Non‑Recurring Basis	Total				Level 1				Level 2				Level 3
	(In thousands)
Individually evaluated loans and leases (1)	$	59,440			$	—			$	4,456			$	54,984
Total non-recurring	$	59,440			$	—			$	4,456			$	54,984

______________________

(1)	Includes nonaccrual loans and leases and performing TDRs with balances greater than $250,000.

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	Fair Value Measurement as of
	December 31, 2019
Measured on a Non‑Recurring Basis	Total				Level 1				Level 2				Level 3
	(In thousands)
Impaired loans and leases (1)	$	28,706			$	—			$	1,083			$	27,623
OREO	105				—				—				105
Total non-recurring	$	28,811			$	—			$	1,083			$	27,728

_____________________

(1)    Includes all nonaccrual loans and leases and performing TDRs.

The following table presents losses recognized on assets measured on a nonrecurring basis for the periods indicated:

	Three Months Ended
Losses on Assets	March 31,
Measured on a Non‑Recurring Basis	2020				2019
	(In thousands)
Individually evaluated loans and leases (1)	$	18,907			$	3,756
Loans held for sale	—				1,707
OREO	105				—
Total losses	$	19,012			$	5,463

_____________________

(1)    For 2019, losses are based on impaired loans and leases.

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:

March 31, 2020

Valuation

Unobservable

Input or

Weighted

Asset

Fair Value

Technique

Inputs

Range

Average

(In thousands)

Individually evaluated

loans and leases

$

39,262

Discounted cash flows

Discount rates

3.50% - 10.46%

8.03%

Individually evaluated

Discount from

loans and leases

15,267

Third party appraisal

appraisal (1)

54.06%

54.06%

Individually evaluated

loans and leases

455

Third party appraisals

No discounts

Total non-recurring Level 3

$

54,984

____________________

(1)    Relates to one loan at March 31, 2020.

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The following tables present carrying amounts and estimated fair values of certain financial instruments as of the dates indicated:

	March 31, 2020
	Carrying				Estimated Fair Value
	Amount				Total				Level 1				Level 2				Level 3
	(In thousands)
Financial Assets:
Cash and due from banks	$	172,570			$	172,570			$	172,570			$	—			$	—
Interest‑earning deposits in financial institutions	439,690				439,690				439,690				—				—
Securities available‑for‑sale	3,757,663				3,757,663				5,378				3,732,724				19,561
Investment in FHLB stock	54,244				54,244				—				54,244				—
Loans and leases held for investment, net	19,524,013				19,072,790				—				4,456				19,068,334
Equity warrants	4,290				4,290				—				—				4,290
Other derivative assets	4,946				4,946				—				4,946				—
Equity investments with readily determinable fair values	2,471				2,471				2,471				—				—
Financial Liabilities:
Core deposits	16,050,522				16,050,522				—				16,050,522				—
Non-core non-maturity deposits	836,157				836,157				—				836,157				—
Time deposits	2,689,158				2,701,350				—				2,701,350				—
Borrowings	2,295,000				2,299,563				1,545,000				754,563				—
Subordinated debentures	458,994				442,418				—				442,418				—
Derivative liabilities	1,152				1,152				—				1,152				—

	December 31, 2019
	Carrying				Estimated Fair Value
	Amount				Total				Level 1				Level 2				Level 3
	(In thousands)
Financial Assets:
Cash and due from banks	$	172,585			$	172,585			$	172,585			$	—			$	—
Interest‑earning deposits in financial institutions	465,039				465,039				465,039				—				—
Securities available‑for‑sale	3,797,187				3,797,187				5,181				3,769,307				22,699
Investment in FHLB stock	40,924				40,924				—				40,924				—
Loans and leases held for investment, net	18,708,087				19,055,004				—				1,083				19,053,921
Equity warrants	3,434				3,434				—				—				3,434
Other derivative assets	1,234				1,234				—				1,234				—
Equity investments with readily determinable fair values	2,998				2,998				2,998				—				—
Financial Liabilities:
Core deposits	16,187,287				16,187,287				—				16,187,287				—
Non-core non-maturity deposits	496,407				496,407				—				496,407				—
Time deposits	2,549,342				2,549,260				—				2,549,260				—
Borrowings	1,759,008				1,759,008				1,759,000				8				—
Subordinated debentures	458,209				441,617				—				441,617				—
Derivative liabilities	755				755				—				755				—

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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 14. Fair Value Measurements, to the Consolidated Financial Statements of the Company's 2019 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 March 31, 2020, the amounts that will actually be realized or paid at settlement or maturity of the instruments could be significantly different.

The following table presents the computations of basic and diluted net earnings (loss) per share for the periods indicated:

	Three Months Ended
	March 31,				December 31,				March 31,
	2020				2019				2019
	(Dollars in thousands, except per share data)
Basic Earnings (Loss) Per Share:
Net earnings (loss)	$	(1,433,111	)		$	117,881			$	112,604
Less: Earnings allocated to unvested restricted stock(1)	(939		)		(1,458		)		(1,163		)
Net earnings (loss) allocated to common shares	$	(1,434,050	)		$	116,423			$	111,441
Weighted-average basic shares and unvested restricted
stock outstanding	118,775				119,804				122,227
Less: Weighted-average unvested restricted stock
outstanding	(1,495		)		(1,566		)		(1,352		)
Weighted-average basic shares outstanding	117,280				118,238				120,875
Basic earnings (loss) per share	$	(12.23	)		$	0.98			$	0.92
Diluted Earnings (Loss) Per Share:
Net earnings (loss) allocated to common shares	$	(1,434,050	)		$	116,423			$	111,441
Weighted-average diluted shares outstanding	117,280				118,238				120,875
Diluted earnings (loss) per share	$	(12.23	)		$	0.98			$	0.92

________________________

(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.

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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 (loss) and the related amounts which are from contracts with customers within the scope of ASC Topic 606, "Revenue from Contracts with Customers," for the periods indicated. As illustrated here, substantially all of our revenue is specifically excluded from the scope of ASC Topic 606.

	Three Months Ended March 31,
	2020								2019
	Total				Revenue from				Total				Revenue from
	Recorded				Contracts with				Recorded				Contracts with
	Revenue				Customers				Revenue				Customers
	(In thousands)
Total interest income	$	291,332			$	—			$	304,559			$	—
Noninterest income:
Service charges on deposit accounts	2,658				2,658				3,730				3,730
Other commissions and fees	9,721				4,154				11,008				4,538
Leased equipment income	12,251				—				9,282				—
Gain on sale of loans	87				—				—				—
Gain on sale of securities	182				—				2,161				—
Other income	4,201				336				4,883				371
Total noninterest income	29,100				7,148				31,064				8,639
Total revenue	$	320,432			$	7,148			$	335,623			$	8,639

The following table presents revenue from contracts with customers based on the timing of revenue recognition for the periods indicated:

	Three Months Ended
	March 31,
	2020				2019
	(In thousands)
Products and services transferred at a point in time	$	4,236			$	4,546
Products and services transferred over time	2,912				4,093
Total revenue from contracts with customers	$	7,148			$	8,639

Contract Balances

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers as of the dates indicated:

	March 31, 2020				December 31, 2019
	(In thousands)
Receivables, which are included in "Other assets"	$	447			$	1,094
Contract assets, which are included in "Other assets"	$	—			$	—
Contract liabilities, which are included in "Accrued interest payable and other liabilities"	$	457			$	490

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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 March 31, 2020, there were 2,343,255 shares available for grant under the 2017 Plan. Though frozen for new issuances, certain awards issued under the 2003 Stock Incentive Plan remain outstanding, but are due to vest no later than February 2021.

Restricted Stock

Restricted stock amortization totaled $6.5 million and $5.8 million for the three months ended March 31, 2020 and 2019. Such amounts are included in "Compensation expense" on the condensed consolidated statements of earnings (loss). The amount of unrecognized compensation expense related to unvested TRSAs and PRSUs as of March 31, 2020 totaled $54.3 million.

Time-Based Restricted Stock Awards

At March 31, 2020, there were 1,436,957 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 to 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 March 31, 2020, there were 338,836 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.

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				Effective		Effect on the Financial Statements
Standard		Description		Date		or Other Significant Matters
ASU 2020-01, "Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)"		This Update clarifies the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815.		January 1, 2021		The adoption of this guidance is not expected to have a material impact on the Company's condensed consolidated financial statements.

				Effective		Effect on the Financial Statements
Standard		Description		Date		or Other Significant Matters
ASU 2020-04, "Reference Rate Reform (Topic 848)"		This Update provides optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other agreements affected by the anticipated transition away from LIBOR toward new interest reference rates. For agreements that are modified because of reference rate reform and that meet certain scope guidance (i) modifications of loan agreements should be accounted for by prospectively adjusting the effective interest rate and the modification will be considered “minor” so that any existing unamortized origination fees/costs would carry forward and continue to be amortized and (ii) modifications of lease agreements should be accounted for as a continuation of the existing agreement with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required for modifications not accounted for as separate contracts. This Update also provides numerous optional expedients for derivative accounting. An entity may elect to apply this Update for contract modifications as of January 1, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. We anticipate that ASU 2020-04 will simplify any modifications we execute between the selected start date (not yet determined) and December 31, 2022 that are directly related to LIBOR transition.		March 12, 2020 through December 31, 2022		The adoption of this guidance is not expected to have a material impact on the Company’s condensed consolidated financial statements.

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Common Stock Dividends

On May 1, 2020, the Company announced that the Board of Directors had declared a quarterly cash dividend of $0.25 per common share. The cash dividend is payable on May 29, 2020 to stockholders of record at the close of business on May 20, 2020.

The Company has evaluated events that have occurred subsequent to March 31, 2020 and have concluded there are no other subsequent events that would require recognition in the accompanying condensed consolidated financial statements.

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•

the COVID-19 pandemic is adversely affecting the Company, its employees, customers and third-party service providers, and the ultimate extent of the impacts of the pandemic and related government stimulus programs on its business, financial position, results of operations, liquidity and prospects is uncertain. Continued deterioration in general business and economic conditions could adversely affect the Company’s revenues and the values of its assets and liabilities, lead to a tightening of credit and increase stock price volatility;

•	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 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;

•	uncertainty regarding the future of LIBOR and the potential transition away from LIBOR toward new reference rates;

•	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;

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•	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;

•	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.

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•

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.

(1)	Annualized net earnings (loss) divided by average stockholders' equity.

(2)	Annualized adjusted net earnings divided by average tangible common equity.

(1)	Tangible common equity divided by tangible assets.

(2)	Tangible common equity divided by shares outstanding.

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•	Adjusted net earnings and adjusted earnings per share: These non-GAAP measurements are presented in the following tables for the periods presented. See Note 13. Earnings (Loss) Per Share for the GAAP calculation of earnings per share.

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(1)	Calculation reduces average stockholder's equity by average intangible assets.

(2)	See "- Non-GAAP Measurements."

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(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 $4.8 million, $3.0 million, and $3.0 million for the three months ended March 31, 2020, December 31, 2019, and March 31, 2019, respectively.

(4)	Includes tax-equivalent adjustments of $1.2 million, $1.4 million, and $0.9 million for the three months ended March 31, 2020, December 31, 2019, and March 31, 2019, 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.

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(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.

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(1)	Includes $169.4 million and $173.4 million at March 31, 2020 and December 31, 2019 of land, acquisition and development loans.

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(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 20 basis points to loan yields for the three months ended March 31, 2020.

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•	High Pass: (Risk ratings 1-2) Loans and leases rated as "high pass" exhibit a favorable credit profile and have minimal risk characteristics. Repayment in full is expected, even in adverse economic conditions.

•	Pass: (Risk ratings 3-4) Loans and leases rated as "pass" are not adversely classified and collection and repayment in full are expected.

•	Special Mention: (Risk rating 5) 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: (Risk rating 6) 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: (Risk rating 7) 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.

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•	legal and regulatory matters that could impact our borrowers’ ability to repay our 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 review; and

•	changes in management related to credit administration functions.

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(1)	Excludes purchase accounting fair value adjustments.

(2)	Excludes interest on subordinated debentures as these instruments are variable rate.

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(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 12, 2020, 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 $200 million until February 28, 2021. On April 21, 2020, stock repurchases under the current Stock Repurchase Program were suspended indefinitely. All shares repurchased under the various Stock Repurchase Programs were retired upon settlement.

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