PacWest Bancorp Announces Results for the Second Quarter of 2009.

-Net Loss of $5.7 Million or $0.18 Per Share- -Net Interest Margin Reaches 4.97% in June- -Total Tangible Capital Ratio at 9.65%- -Credit Loss Reserve at 1.97% of Net Loans- -Average Core Deposits Increased $122.4 Million-

SAN DIEGO, July 21 /PRNewswire-FirstCall/ -- PacWest Bancorp today announced a net loss for the second quarter of 2009 of $5.7 million, or $0.18 per diluted share, compared to net earnings of $1.4 million, or $0.04 per diluted share, for the first quarter of 2009. The decrease in net earnings compared to the first quarter of 2009 resulted mostly from higher credit loss provisions, higher other real estate owned (OREO) expenses and the special FDIC insurance assessment.

This press release contains certain non-GAAP financial disclosures for operating earnings and tangible capital. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance. Operating earnings are determined by eliminating the goodwill write-off; goodwill and any impairment thereof has no effect on the Company's or the Bank's reported regulatory capital ratios. Because the use of tangible capital amounts and ratios is becoming more prevalent among banking regulators, investors and analysts, we disclose our tangible capital ratios in addition to equity to assets ratios. Please refer to the table at the end of this release for a presentation of performance ratios in accordance with GAAP and a reconciliation of the non-GAAP financial measures to the GAAP financial measures.

 
  SECOND QUARTER RESULTS 
 
                                                          Second     First 
                                                         Quarter   Quarter 
  In thousands, except per share data and percentages      2009      2009 
  ---------------------------------------------------    -------   -------- 
 
  Net (loss) earnings                                    $(5,740)    $1,445 
  Diluted (loss) earnings per share                       $(0.18)     $0.04 
  Return on average assets                                 (0.52%)     0.13% 
  Return on average equity                                 (4.88%)     1.27% 
  Efficiency ratio                                          85.5%      71.0% 
  Net interest margin                                       4.92%      4.71% 
 
  At quarter end: 
    Allowance for credit losses to loans, net of 
     unearned income                                        1.97%      1.95% 
    Equity-to-assets: 
      Consolidated Company                                 10.37%     10.43% 
      Pacific Western Bank                                 11.41%     11.29% 
    Tangible common equity (TCE) ratios: 
      Consolidated Company                                  9.65%      9.67% 
      Pacific Western Bank                                 10.71%     10.54% 
 
 
 

The decrease in net earnings of $7.2 million between the second quarter of 2009 and the first quarter of 2009 is due mainly to the combination of a higher provision for credit losses, ($2.3 million after tax), higher OREO costs ($4.8 million after tax) and the special FDIC insurance assessment ($1.2 million after tax). The increase in the efficiency ratio for the linked quarters of 2009 was due mostly to the higher OREO costs and the special FDIC insurance assessment which together added 183 basis points to the second quarter efficiency ratio.

Matt Wagner, Chief Executive Officer, commented, "During the second quarter, we focused on core deposit growth and managing our loan portfolio. Core deposits grew over $10 million for the quarter and over $130 million for the first six months, which has resulted from meaningful inflows from new customers. On the credit side, we continued to review individual credits for early indications of weakness and risk-grade them appropriately. With respect to OREO properties, we are having success in selling them with over $13 million sold during the second quarter and another $13 million either in escrow or under contract which are expected to be sold during the third quarter. We believe that an aggressive, realistic approach to credit will continue to serve us well in this difficult economic cycle."

Mr. Wagner continued, "While we are disappointed to have recorded a small loss for the quarter, we remain vigilant in protecting our credit loss reserve and our capital. Our credit loss provision replenished our allowance for credit losses and we augmented the Bank's capital during the quarter with a cash infusion from the holding company. Our substantial capital base and core operating strengths of low cost deposits and credit management are proving to be our bedrock in this challenging environment."