U.S. Markets closed

PacWest Bancorp Announces Results For the First Quarter 2019

Highlights

  • Net Earnings of $112.6 Million, or $0.92 Per Diluted Share
  • Tax Equivalent Net Interest Margin of 4.69%
  • Loan and Lease Production of $1.2 Billion; $350 Million of Net Loan Growth
  • Net Charge-offs Less Than $200 Thousand
  • Provision for Credit Losses Decreases 67% to $4.0 Million
  • Core Deposits Represent 84% of Total Deposits

LOS ANGELES, April 16, 2019 (GLOBE NEWSWIRE) -- PacWest Bancorp ( PACW ) today announced net earnings for the first quarter of 2019 of $112.6 million, or $0.92 per diluted share, compared to net earnings for the fourth quarter of 2018 of $115.0 million, or $0.93 per diluted share.

Matt Wagner, President and CEO, commented, “We continue to see the results of our credit de-risking strategy with continued downward trends in net charge-offs and credit loss provision and continued improvement in our credit quality metrics. Our first quarter of 2019 results produced a return on assets of 1.77% and a return on tangible equity of 20.64%.”

Mr. Wagner continued, “We had one of our strongest first quarters in terms of loan production and net loan growth and will work to continue that momentum into the rest of 2019 with an emphasis on core deposit generation. We also received approval to open a full-service branch office in Denver, Colorado and will continue to execute our expansion plans in that market.”

FINANCIAL HIGHLIGHTS

At or For the At or For the
Three Months Ended Three Months Ended
March 31, December 31,
Increase March 31, Increase
Financial Highlights 2019 2018
(Decrease) 2019 2018 (Decrease)
(Dollars in thousands, except per share data)
Net earnings $ 112,604 $ 115,041 $ (2,437 ) $ 112,604 $ 118,276 $ (5,672 )
Diluted earnings per share $ 0.92 $ 0.93 $ (0.01 ) $ 0.92 $ 0.93 $ (0.01 )
Return on average assets 1.77 % 1.84 % (0.07 ) 1.77 % 1.99 % (0.22 )
Return on average tangible equity (1) 20.64 % 21.23 % (0.59 ) 20.64 % 21.08 % (0.44 )
Net interest margin ("NIM") (tax equivalent) 4.69 % 4.91 % (0.22 ) 4.69 % 5.11 % (0.42 )
Yield on average loans and leases (tax equivalent) 6.16 % 6.27 % (0.11 ) 6.16 % 6.11 % 0.05
Cost of average total deposits 0.73 % 0.62 % 0.11 0.73 % 0.31 % 0.42
Efficiency ratio 42.4 % 41.7 % 0.7 42.4 % 41.7 % 0.7
Total assets $ 26,324,138 $ 25,731,354 $ 592,784 $ 26,324,138 $ 24,149,330 $ 2,174,808
Loans and leases held for investment, net of deferred fees $ 18,307,697 $ 17,957,713 $ 349,984 $ 18,307,697 $ 16,455,285 $ 1,852,412
Noninterest-bearing demand deposits $ 7,712,409 $ 7,888,915 $ (176,506 ) $ 7,712,409 $ 8,232,140 $ (519,731 )
Core deposits $ 16,127,638 $ 16,346,671 $ (219,033 ) $ 16,127,638 $ 15,661,529 $ 466,109
Total deposits $ 19,285,927 $ 18,870,501 $ 415,426 $ 19,285,927 $ 18,078,788 $ 1,207,139
As percentage of total deposits:
Noninterest-bearing demand deposits 40 % 42 % (2 ) 40 % 46 % (6 )
Core deposits 84 % 87 % (3 ) 84 % 87 % (3 )
Equity to assets ratio 18.20 % 18.75 % (0.55 ) 18.20 % 20.16 % (1.96 )
Tangible common equity ratio (1) 9.23 % 9.60 % (0.37 ) 9.23 % 10.43 % (1.20 )
Book value per share $ 39.86 $ 39.17 $ 0.69 $ 39.86 $ 38.47 $ 1.39
Tangible book value per share (1) $ 18.22 $ 18.02 $ 0.20 $ 18.22 $ 17.75 $ 0.47
(1) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income decreased by $6.9 million to $254.9 million for the first quarter of 2019 compared to $261.8 million for the fourth quarter of 2018 due to interest expense growth exceeding interest income growth and two less days in the first quarter compared to the fourth quarter. Interest expense increased by $8.7 million due mainly to higher deposit costs, offset partially by two less days in the first quarter of 2019. Interest income increased by $1.8 million due primarily to a higher balance of average loans and leases, offset partially by a lower yield on average loans and leases and two less days in the first quarter of 2019.  The tax equivalent yield on average loans and leases was 6.16% for the first quarter of 2019 compared to 6.27% for the fourth quarter of 2018. The decrease in the yield on average loans and leases was due principally to lower discount accretion on acquired loans (seven basis points in the first quarter versus 16 basis points in the fourth quarter).

The tax equivalent NIM was 4.69% for the first quarter of 2019 compared to 4.91% for the fourth quarter of 2018. The decrease in the NIM was due mainly to higher deposit and borrowing costs and a lower yield on average loans and leases.

The cost of average total deposits increased to 0.73% for the first quarter of 2019 from 0.62% for the fourth quarter of 2018. The increase was driven primarily by a shift in our deposit mix with increases in time and money market deposits and lower noninterest-bearing demand deposits along with higher rates paid on deposits in conjunction with the Federal Reserve December rate move.

Provision for Credit Losses

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

Three Months Ended
March 31, December 31, Increase
Provision for Credit Losses 2019 2018 (Decrease)
(In thousands)
Addition to allowance for loan and lease losses $ 4,000 $ 10,500 $ (6,500 )
Addition to reserve for unfunded loan commitments - 1,500 (1,500 )
Total provision for credit losses $ 4,000 $ 12,000 $ (8,000 )

Noninterest Income

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

Three Months Ended
March 31, December 31, Increase
Noninterest Income 2019 2018 (Decrease)
(In thousands)
Service charges on deposit accounts $ 3,730 $ 4,091 $ (361 )
Other commissions and fees 11,008 11,114 (106 )
Leased equipment income 9,282 9,384 (102 )
Gain on sale of securities 2,161 786 1,375
Other income:
Dividends and gains (losses) on equity investments 296 (1,331 ) 1,627
Warrant income 2,279 2,187 92
Other 2,308 7,295 (4,987 )
Total noninterest income $ 31,064 $ 33,526 $ (2,462 )

Noninterest income decreased by $2.5 million to $31.1 million for the first quarter of 2019 compared to $33.5 million for the fourth quarter of 2018 due mainly to a $5.0 million decrease in other income, offset partially by an increase of $1.6 million in dividends and gains on equity investments and a $1.4 million increase in gain on sale of securities. Other income decreased due primarily to lower miscellaneous income from borrower settlements and lower BOLI income attributable to a death benefit received in the fourth quarter of 2018.  Dividends and gains on equity investments increased mainly due to negative mark-to-market valuation adjustments in the fourth quarter on equity investments arising from exercised warrants. The increase in gain on sale of securities was attributable to a net gain of $2.2 million on sales of $405.8 million of securities in the first quarter of 2019 as part of a partial portfolio repositioning compared to a net gain of $0.8 million on sales of $70.9 million of securities in the fourth quarter of 2018.

Noninterest Expense

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

Three Months Ended
March 31, December 31, Increase
Noninterest Expense 2019 2018 (Decrease)
(In thousands)
Compensation $ 70,845 $ 69,299 $ 1,546
Occupancy 14,320 13,356 964
Data processing 6,925 6,930 (5 )
Other professional services 4,513 6,198 (1,685 )
Insurance and assessments 4,038 4,202 (164 )
Intangible asset amortization 4,870 4,986 (116 )
Leased equipment depreciation 5,651 5,758 (107 )
Foreclosed assets expense (income), net 29 (311 ) 340
Acquisition, integration and reorganization costs 618 970 (352 )
Loan expense 2,885 2,991 (106 )
Other 11,593 14,856 (3,263 )
Total noninterest expense $ 126,287 $ 129,235 $ (2,948 )

Noninterest expense decreased by $2.9 million to $126.3 million for the first quarter of 2019 compared to $129.2 million for the fourth quarter of 2018 attributable primarily to a $3.3 million decrease in other expense and a $1.7 million decrease in other professional services, offset partially by a $1.5 million increase in compensation expense. The decrease in other expense was mainly due to the $2.1 million write-off of the Square 1 Bank trademark asset in the fourth quarter of 2018 as a result of our plan to retire the Square 1 Bank name and increased employee expense in the fourth quarter of 2018 due to executive relocation costs.  Other professional services expense decreased due to lower legal and consulting expenses. Compensation expense increased due to normal seasonal increases in payroll tax and other employee benefit expenses and higher bonus expense, offset partially by lower stock compensation expense, due to an increase in forfeitures, and lower commissions expense.

Income Taxes

The overall effective income tax rate was 27.7% for the first quarter of 2019 and 25.3% for the fourth quarter of 2018.  The fourth quarter 2018 effective tax rate was lower due primarily to a change in the state apportionment method applied by the state of Maryland.  The effective tax rate for the full year 2019 is estimated to be in the range of 27-28%.

BALANCE SHEET HIGHLIGHTS

Loans and Leases

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

Three Months Ended
Roll Forward of Loans and Leases Held March 31, December 31,
for Investment, Net of Deferred Fees (1) 2019 2018
(Dollars in thousands)
Balance, beginning of period $ 17,957,713 $ 17,230,146
Additions:
Production 1,174,838 1,571,565
Disbursements 1,192,972 1,186,351
Total production and disbursements 2,367,810 2,757,916
Reductions:
Payoffs (933,300 ) (1,070,691 )
Paydowns (1,038,964 ) (920,633 )
Total payoffs and paydowns (1,972,264 ) (1,991,324 )
Sales (16,936 ) -
Transfers to foreclosed assets (37 ) (13,679 )
Charge-offs (3,465 ) (25,346 )
Transfers to loans held for sale (25,124 ) -
Total reductions (2,017,826 ) (2,030,349 )
Balance, end of period $ 18,307,697 $ 17,957,713
Weighted average rate on production (2) 5.11 % 5.38 %
(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 excludes amortized fees.  Amortized fees added approximately 24 basis points to loan yields in 2019 and 31 basis points to loan yields in 2018.

Loans and leases held for investment, net of deferred fees, increased by $350.0 million, or 8% annualized, in the first quarter of 2019 to $18.3 billion at March 31, 2019.  The net loan growth in the first quarter was primarily from the real estate construction loan class and income producing and other residential loan class, which included $285 million of multi-family loan pool purchases.

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

March 31, 2019 December 31, 2018 March 31, 2018
% of % of % of
Loan and Lease Portfolio (1) Amount Total Amount Total Amount Total
(In thousands)
Real estate mortgage:
Commercial $ 4,640,510 25 % $ 4,824,298 27 % $ 5,033,006 31 %
Income producing and other residential 3,518,948 19 % 3,093,843 17 % 2,521,237 15 %
Total real estate mortgage 8,159,458 44 % 7,918,141 44 % 7,554,243 46 %
Real estate construction and land:
Commercial 943,596 5 % 912,583 5 % 789,892 5 %
Residential 1,408,128 8 % 1,321,073 8 % 887,110 5 %
Total real estate construction and land 2,351,724 13 % 2,233,656 13 % 1,677,002 10 %
Total real estate 10,511,182 57 % 10,151,797 57 % 9,231,245 56 %
Commercial:
Asset-based 3,422,202 19 % 3,305,421 18 % 2,957,890 18 %
Venture capital 2,027,450 11 % 2,038,748 11 % 1,920,643 12 %
Other commercial 1,974,702 11 % 2,060,426 12 % 1,947,590 12 %
Total commercial 7,424,354 41 % 7,404,595 41 % 6,826,123 42 %
Consumer 372,161 2 % 401,321 2 % 397,917 2 %
Total loans and leases held for investment, net of deferred fees $ 18,307,697 100 % $ 17,957,713 100 % $ 16,455,285 100 %
Total unfunded loan commitments $ 7,465,392 $ 7,528,248 $ 6,352,803

____________________
(1) Excludes loans held for sale carried at lower of cost or fair value at March 31, 2019.

Allowance for Credit Losses

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

Three Months Ended March 31, 2019
Allowance for Reserve for Total
Allowance for Credit Loan and Unfunded Loan Allowance for
Losses Rollforward Lease Losses Commitments Credit Losses
(In thousands)
Beginning balance $ 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
Ending balance $ 136,281 $ 36,861 $ 173,142
Three Months Ended December 31, 2018
Allowance for Reserve for Total
Allowance for Credit Loan and Unfunded Loan Allowance for
Losses Rollforward Lease Losses Commitments Credit Losses
(In thousands)
Beginning balance $ 141,920 $ 35,361 $ 177,281
Charge-offs (25,346 ) - (25,346 )
Recoveries 5,398 - 5,398
Net charge-offs (19,948 ) - (19,948 )
Provision 10,500 1,500 12,000
Ending balance $ 132,472 $ 36,861 $ 169,333

The allowance for credit losses as a percentage of loans and leases held for investment increased to 0.95% at March 31, 2019 from 0.94% at December 31, 2018.

Gross charge-offs for the first quarter of 2019 were $3.5 million and were primarily for other commercial loans.  Gross charge-offs for the fourth quarter of 2018 were $25.3 million and included $23.4 million for venture capital loans, of which $20.0 million related to two loans, and $1.7 million for other commercial loans.  Recoveries for the first quarter of 2019 were $3.3 million and included $2.3 million for venture capital loans and $0.8 million for other commercial loans. Recoveries for the fourth quarter of 2018 were $5.4 million and included $3.1 million for venture capital loans and $1.7 million for other commercial loans.

For the first quarter of 2019 and fourth quarter of 2018, annualized net charge-offs to average loans and leases were 0.00% and 0.46%.

Deposits and Client Investment Funds

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

March 31, 2019 December 31, 2018 March 31, 2018
% of % of % of
Deposit Composition Amount Total Amount Total Amount Total
(Dollars in thousands)
Noninterest-bearing demand $ 7,712,409 40 % $ 7,888,915 42 % $ 8,232,140 46 %
Interest checking 3,163,228 16 % 2,842,463 15 % 2,076,152 11 %
Money market 4,714,078 25 % 5,043,871 27 % 4,676,734 26 %
Savings 537,923 3 % 571,422 3 % 676,503 4 %
Total core deposits 16,127,638 84 % 16,346,671 87 % 15,661,529 87 %
Non-core non-maturity deposits 454,277 2 % 518,192 3 % 585,399 3 %
Total non-maturity deposits 16,581,915 86 % 16,864,863 90 % 16,246,928 90 %
Time deposits $250,000 and under 2,258,989 12 % 1,593,453 8 % 1,482,118 8 %
Time deposits over $250,000 445,023 2 % 412,185 2 % 349,742 2 %
Total time deposits 2,704,012 14 % 2,005,638 10 % 1,831,860 10 %
Total deposits $ 19,285,927 100 % $ 18,870,501 100 % $ 18,078,788 100 %

At March 31, 2019, core deposits totaled $16.1 billion, or 84% of total deposits, including $7.7 billion of noninterest-bearing demand deposits, or 40% of total deposits.

In addition to deposit products, we also offer alternative non-depository cash investment options for select clients; these alternatives include investments managed by Square 1 Asset Management, Inc. (“S1AM”), our registered investment advisor subsidiary, and third-party sweep products.  Total off-balance sheet client investment funds at March 31, 2019 were $2.2 billion, of which $1.6 billion was managed by S1AM.

CREDIT QUALITY

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

March 31, December 31, Increase
Credit Quality Metrics 2019 2018 (Decrease)
(Dollars in thousands)
NPAs and Performing TDRs:
Nonaccrual loans and leases held for investment (1)(2) $ 88,527 $ 79,333 $ 9,194
Accruing loans contractually past due 90 days or more - - -
Foreclosed assets, net 3,291 5,299 (2,008 )
Total nonperforming assets ("NPAs") $ 91,818 $ 84,632 $ 7,186
Nonaccrual loans and leases held for investment to loans and leases held for investment 0.48 % 0.44 %
Nonperforming assets to loans and leases held for investment and foreclosed assets 0.50 % 0.47 %
Nonaccrual loans and leases held for investment (1)(2) $ 88,527 $ 79,333 $ 9,194
Performing TDRs held for investment 17,027 17,701 (674 )
Total impaired loans and leases $ 105,554 $ 97,034 $ 8,520
Loan and Lease Credit Risk Ratings:
Pass $ 17,824,612 $ 17,459,205 $ 365,407
Special mention 292,780 261,398 31,382
Classified (1) 190,305 237,110 (46,805 )
Total loans and leases held for investment, net of deferred fees $ 18,307,697 $ 17,957,713 $ 349,984
Classified loans and leases held for investment to loans and leases held for investment 1.04 % 1.32 %
Allowance for Credit Losses:
Allowance for credit losses $ 173,142 $ 169,333 $ 3,809
Provision for credit losses (for the quarter) $ 4,000 $ 12,000 $ (8,000 )
Net charge-offs (for the quarter) $ 191 $ 19,948 $ (19,757 )
Net charge-offs to average loans and leases (for the quarter) 0.00 % 0.46 %
Allowance for credit losses to loans and leases held for investment 0.95 % 0.94 %
Allowance for credit losses to nonaccrual loans and leases held for investment 195.6 % 213.5 %
(1) Excludes loans held for sale carried at lower of cost or fair value at March 31, 2019.
(2) Nonaccrual loans include guaranteed amounts of $10.2 million at March 31, 2019 and $11.2 million at December 31, 2018.

Nonaccrual, classified, and special mention loans and leases fluctuate from period to period as a result of loan repayments and our ongoing active portfolio monitoring.

During the first quarter of 2019, nonaccrual loans and leases increased $9.2 million from what was a five-year low as of December 31, 2018, while classified loans and leases decreased by $46.8 million driven primarily by the payoff of a $30 million commercial real estate mortgage loan.

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

Nonaccrual Loans and Leases (1) Accruing and
March 31, 2019 December 31, 2018 30-89 Days Past Due
% of % of March 31, December 31,
Loan Loan 2019 2018
Amount Category Amount Category Amount Amount
(Dollars in thousands)
Real estate mortgage:
Commercial $ 12,750 0.3 % $ 15,321 0.3 % $ 6,863 $ 3,276
Income producing and other residential 2,444 0.1 % 2,524 0.1 % 1,853 1,557
Total real estate mortgage 15,194 0.2 % 17,845 0.2 % 8,716 4,833
Real estate construction and land:
Commercial 430 0.0 % 442 0.0 % - -
Residential - 0.0 % - 0.0 % 8,949 1,527
Total real estate construction and land 430 0.0 % 442 0.0 % 8,949 1,527
Commercial:
Asset-based 43,406 1.3 % 32,324 1.0 % 3,750 47
Venture capital 20,437 1.0 % 20,299 1.0 % 4,500 1,028
Other commercial 8,633 0.4 % 7,380 0.4 % 1,694 2,467
Total commercial 72,476 1.0 % 60,003 0.8 % 9,944 3,542
Consumer 427 0.1 % 1,043 0.3 % 614 581
Total held for investment $ 88,527 0.5 % $ 79,333 0.4 % $ 28,223 $ 10,483

____________________
(1) Excludes loans held for sale carried at lower of cost or fair value at March 31, 2019.

STOCK REPURCHASE PROGRAM

In February 2019, the Company announced a new stock repurchase program with an authorized repurchase amount not to exceed $225 million and with a program maturity of February 29, 2020.  During the first quarter of 2019, we repurchased 3,070,676 shares at an average price of $38.94 and a total cost of $119.6 million, of which $65.4 million was under the new plan, leaving $159.6 million remaining under the plan as of March 31, 2019.

ABOUT PACWEST BANCORP

PacWest Bancorp (“PacWest”) is a bank holding company with over $26 billion in assets with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). The Bank has 74 full-service branches located throughout the state of California and one branch in Durham, North Carolina. Our Community Banking group provides lending and comprehensive deposit and treasury management services to small and medium-sized businesses conducted primarily through our California-based branch offices. We offer additional products and services through our National Lending and Venture Banking groups. National Lending provides asset-based, equipment, real estate and security cash flow loans and treasury management services to established middle-market businesses on a national basis. Venture Banking offers a comprehensive suite of financial services focused on entrepreneurial businesses and their venture capital and private equity investors, with offices located in key innovative hubs across the United States.  For more information about PacWest Bancorp, visit www.pacwestbancorp.com , or to learn more about Pacific Western Bank, visit www.pacificwesternbank.com .

FORWARD LOOKING STATEMENTS

This communication contains certain forward-looking information about PacWest that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Such statements include future financial and operating results, expectations, intentions and other statements that are not historical facts. Such statements are based on information available at the time of this communication and are based on current beliefs and expectations of the Company’s management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control. Actual results may differ materially from those set forth in the forward-looking statements due to a variety of factors, including the risk factors described in documents filed by the Company with the Securities and Exchange Commission.

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

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
March 31, December 31,
2019 2018
(Dollars in thousands, except per share data)
ASSETS:
Cash and due from banks $ 224,758 $ 175,830
Interest-earning deposits in financial institutions 332,124 209,937
Total cash and cash equivalents 556,882 385,767
Securities available-for-sale, at estimated fair value 3,994,708 4,009,431
Federal Home Loan Bank stock, at cost 29,430 32,103
Total investment securities 4,024,138 4,041,534
Loans held for sale 25,124 -
Gross loans and leases held for investment 18,371,295 18,026,365
Deferred fees, net (63,598 ) (68,652 )
Total loans and leases held for investment, net of deferred fees 18,307,697 17,957,713
Allowance for loan and lease losses (136,281 ) (132,472 )
Total loans and leases held for investment, net 18,171,416 17,825,241
Equipment leased to others under operating leases 293,853 292,677
Premises and equipment, net 37,783 34,661
Foreclosed assets, net 3,291 5,299
Deferred tax asset, net - 17,489
Goodwill 2,548,670 2,548,670
Core deposit and customer relationship intangibles, net 52,250 57,120
Other assets 610,731 522,896
Total assets $ 26,324,138 $ 25,731,354
LIABILITIES:
Noninterest-bearing deposits $ 7,712,409 $ 7,888,915
Interest-bearing deposits 11,573,518 10,981,586
Total deposits 19,285,927 18,870,501
Borrowings 1,481,087 1,371,114
Subordinated debentures 454,458 453,846
Accrued interest payable and other liabilities 311,684 210,305
Total liabilities 21,533,156 20,905,766
STOCKHOLDERS' EQUITY (1) 4,790,982 4,825,588
Total liabilities and stockholders’ equity $ 26,324,138 $ 25,731,354
Book value per share $ 39.86 $ 39.17
Tangible book value per share (2) $ 18.22 $ 18.02
Shares outstanding 120,201,149 123,189,833
(1) Includes net unrealized gain (loss) on securities available-for-sale, net $ 37,258 $ (6,075 )
(2) Non-GAAP measure.


PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
Three Months Ended
March 31, December 31, March 31,
2019 2018 2018
(Dollars in thousands, except per share data)
Interest income:
Loans and leases $ 274,229 $ 272,522 $ 251,085
Investment securities 29,680 29,690 26,138
Deposits in financial institutions 650 527 552
Total interest income 304,559 302,739 277,775
Interest expense:
Deposits 34,235 28,834 13,818
Borrowings 7,710 4,602 920
Subordinated debentures 7,738 7,538 6,537
Total interest expense 49,683 40,974 21,275
Net interest income 254,876 261,765 256,500
Provision for credit losses 4,000 12,000 4,000
Net interest income after provision for credit losses 250,876 249,765 252,500
Noninterest income:
Service charges on deposit accounts 3,730 4,091 4,174
Other commissions and fees 11,008 11,114 10,265
Leased equipment income 9,282 9,384 9,587
Gain on sale of loans and leases - - 4,569
Gain on sale of securities 2,161 786 6,311
Other income 4,883 8,151 3,653
Total noninterest income 31,064 33,526 38,559
Noninterest expense:
Compensation 70,845 69,299 71,023
Occupancy 14,320 13,356 13,223
Data processing 6,925 6,930 6,659
Other professional services 4,513 6,198 4,439
Insurance and assessments 4,038 4,202 5,727
Intangible asset amortization 4,870 4,986 6,346
Leased equipment depreciation 5,651 5,758 5,375
Foreclosed assets expense (income), net 29 (311 ) (122 )
Acquisition, integration and reorganization costs 618 970 -
Loan expense 2,885 2,991 2,271
Other expense 11,593 14,856 12,454
Total noninterest expense 126,287 129,235 127,395
Earnings before income taxes 155,653 154,056 163,664
Income tax expense 43,049 39,015 45,388
Net earnings $ 112,604 $ 115,041 $ 118,276
Basic and diluted earnings per share $ 0.92 $ 0.93 $ 0.93
Dividends declared and paid per share $ 0.60 $ 0.60 $ 0.50


PACWEST BANCORP AND SUBSIDIARIES
NET EARNINGS PER SHARE CALCULATIONS
Three Months Ended
March 31, December 31, March 31,
2019 2018 2018
(In thousands, except per share data)
Basic Earnings Per Share:
Net earnings $ 112,604 $ 115,041 $ 118,276
Less: earnings allocated to unvested restricted stock (1) (1,163 ) (1,219 ) (1,115 )
Net earnings allocated to common shares $ 111,441 $ 113,822 $ 117,161
Weighted-average basic shares and unvested restricted stock outstanding 122,227 123,238 127,487
Less: weighted-average unvested restricted stock outstanding (1,352 ) (1,426 ) (1,413 )
Weighted-average basic shares outstanding 120,875 121,812 126,074
Basic earnings per share $ 0.92 $ 0.93 $ 0.93
Diluted Earnings Per Share:
Net earnings allocated to common shares $ 111,441 $ 113,822 $ 117,161
Weighted-average basic shares outstanding 120,875 121,812 126,074
Diluted earnings per share $ 0.92 $ 0.93 $ 0.93
(1) Represents cash dividends paid to holders of unvested stock, net of forfeitures, plus undistributed earnings amounts available to holders of unvested restricted stock, if any.


...
PACWEST BANCORP AND SUBSIDIARIES
AVERAGE BALANCE SHEET AND YIELD ANALYSIS
Three Months Ended
March 31, 2019 December 31, 2018 March 31, 2018
Interest Average Interest Average Interest Average
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Cost Balance Expense Cost Balance Expense Cost
(Dollars in thousands)
Assets:
Loans and leases (1)(2) $ 18,064,230 $ 274,513 6.16 % $ 17,275,343 $ 272,824 6.27 % $ 16,682,124 $