2021 Third Quarter Results

Earnings Release Presentation October 18, 2021

Key Third Quarter Takeaways

  • Strong earnings - net earnings of $140.0 million; net interest income up $9.5 million or 3.6% compared to 2Q21; PPNR of $167.8 million, up 8.3% or $12.8 million compared to 2Q21
  • Deposit growth continues - core deposits up 4.1% compared to 2Q21 or $1.1 billion
  • Strong loan growth - loans up $1.0 billion or 5.2% compared to 2Q21
  • Civic continues to build - originated $481 million in 3Q up from $423 million in 2Q; total loan balance now $1.0 billion
  • HOA Acquisition - closed on October 8th; adding approximately $4.1 billion in low- cost, stable deposits
  • Operating expenses - up given production/performance; will increase in 4Q with addition of HOA business
  • Credit/Asset Quality - continued improvement; YTD net recoveries of $2.1 million; ACL ratio of 1.38% ex-PPP
  • Liquidity deployment - deployed approximately $3.0 billion in excess cash into the bond portfolio and loans; after HOA acquisition still have over $7.0 billion in excess liquidity
  • Capital Management - total risk-based capital at 14.36%; Tier 1 capital at 10.65%

Third Quarter 2021 | PACW | p. 2

Third Quarter Highlights

Strong Balance Sheet

  • CET1 ratio of 10.15%
  • Total capital ratio of 14.36%
  • ACL ratio of 1.36%; 1.38% excluding PPP loans
  • Classified loans to total loans of 0.69%
  • Net charge-offs of $0.4 million
  • Net charge-offs to average loans and leases of 1bp
  • Classified loans of $141.6mm, a decline of 52% from 2Q20 high
  • Special mention loans of $496.4mm, a decline of 45% from 1Q20 high
  • 92% of deposits are core deposits; 42% are noninterest- bearing
  • Loan to deposit ratio of 67%

Profitability

  • Net earnings of $140.0mm, or $1.17 per diluted share
  • Pre-provision,pre-tax net revenues ("PPNR") of $167.8mm(1)
  • ROAA of 1.55%
  • ROATE of 21.03%(1)
  • Net interest income increased $9.5mm or 14.2% annualized
  • Net interest margin of 3.33%; negative impact from excess liquidity of approximately 57bps
  • Loan and lease yield of 5.01%
  • Cost of deposits of 8 bps
  • Efficiency ratio of 47.2%
  • Provision for credit losses benefit of $20mm

Growth

  • Loan production of $2.4bn at weighted average rate of 4.24%
  • Loan Growth of $1.3 billion or 7.1% compared to 2Q21 (excluding $337 million reduction in PPP loans)
  • Total assets increased $1.0bn or 3% compared to 2Q21
  • Core deposits increased $1.1bn or 4.1% compared to 2Q21
  • Total deposits increased $0.9bn or 3.1% compared to 2Q21
  • Closed the purchase of the Homeowners Association Business from MUFG Union Bank, N.A. on October 8th with approximately $4.1bn of low cost deposits

(1) See "Non-GAAP Measurements" slides starting on page 27.

Third Quarter 2021 | PACW | p. 3

Balance Sheet Highlights

Core and Total Deposits (1)(2)

$28.2bn $29.6bn $30.6bn

$24.0bn $24.9bn

0.17% 0.14% 0.11% 0.10% 0.08%

3Q20

4Q20

1Q21

2Q21

3Q21

Total Investments and Yield (3)

$9.3bn

$7.2bn

$5.2bn

$5.9bn

$4.5bn

2.52%

2.50%

2.44%

2.23%

2.12%

3Q20

4Q20

1Q21

2Q21

3Q21

Loans & Leases HFI, Net (4)

Allowance for Credit Losses (5)

$19.0bn $19.1bn $19.0bn

$20.5bn

$19.5bn

$442.5mm $433.8mm

$383.0mm

1.94% 1.93%

1.63%

1.19%

1.01%

3Q20

4Q20

1Q21

2Q21

3Q21

$300.2mm $279.8mm

2.48% 2.41% 2.14%

1.59% 1.38%

3Q20

4Q20

1Q21

2Q21

3Q21

  1. ■ Core Deposits ■ Non-core Deposits
  2. Line is quarterly cost of average total deposits
  3. Line is quarterly yield on average investment securities

(4)

Line is ALLL as % of loans and leases, excluding PPP loans

Third Quarter 2021 | PACW | p. 4

(5)

Line is ACL as % of loans and leases, excluding PPP loans

Profitability Highlights

Net Earnings & EPS

$180.5mm

$150.4mm

$140.0mm

$116.8mm

$1.52

$1.27

$1.17

$0.99

$45.5mm

$0.38

3Q20

4Q20

1Q21

2Q21

3Q21

Operating Expenses & Efficiency Ratio

$159.4mm

$150.1mm $151.8mm

$133.4mm

$135.7mm

47.9%

47.2%

46.4%

45.1%

43.6%

3Q20

4Q20

1Q21

2Q21

3Q21

PPNR & PPNR ROAA(1)

$167.8mm

$163.4mm

$156.2mm

$156.0mm

$154.9mm

2.22%

2.22%

2.01%

1.81%

1.86%

3Q20

4Q20

1Q21

2Q21

3Q21

ROAA

ROATE(1)

1.94%

2.11%

29.25%

25.67%

1.58%

1.55%

19.63%

21.03%

0.65%

8.20%

3Q20

4Q20

1Q21

2Q21

3Q21

3Q20

4Q20

1Q21

2Q21

3Q21

(1) See "Non-GAAP Measurements" slides starting on page 27.

Third Quarter 2021 | PACW | p. 5

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PacWest Bancorp published this content on 18 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 October 2021 20:41:07 UTC.