LOS ANGELES, April 25, 2023 (GLOBE NEWSWIRE) --

FIRST QUARTER 2023 HIGHLIGHTS

Net loss available to common stockholders of $1.21 billion, or a loss of $10.22 per diluted share
Adjusted earnings of $89.4 million, or $0.66 per diluted share, which excludes non-cash goodwill impairment, and severance and contract termination expense (non-GAAP measure)
- Goodwill impairment of $1.38 billion recorded due to decline in our stock price as a result of recent market volatility. Goodwill impairment is a non-cash charge and has no impact on our regulatory capital ratios, cash flows, or liquidity position
- Severance and contract termination expense of $8.5 million accrued related to our efficiency initiative
First quarter results were marked by enhanced liquidity following market volatility
- Total deposits increased $1.1 billion to $28.2 billion at March 31, 2023 compared to Company's most recent update of $27.1 billion as of March 20, 2023. Deposit balances further increased approximately $700 million as of April 24, 2023
- Total insured deposits, including accounts eligible for pass-through insurance, represented approximately 73% of total deposits as of April 24, 2023 up from 48% at December 31, 2022
- Immediately-available liquidity (on-balance sheet liquidity and unused borrowing capacity) of $12.4 billion, which exceeded uninsured deposits of $8.1 billion, with a coverage ratio of 153% at March 31, 2023
All risk-based capital ratios increased from December 31, 2022, with CET1 increasing from 8.70% to 9.22%
Credit metrics remain steady with nonperforming assets ratio declining 3 basis points to 35 basis points
Unrealized losses on the Company's investment portfolio improved, declining from $791 million at December 31, 2022 to $736 million at March 31, 2023

ADJUSTED EARNINGS

Financial results for the first quarter of 2023 were impacted by goodwill impairment of $1.38 billion and reorganization costs of $8.5 million. Excluding these amounts, adjusted earnings were $89.4 million, or $0.66 per diluted share, for the first quarter of 2023. A reconciliation of adjusted earnings to net (loss) earnings according to accounting principles generally accepted in the United States ("GAAP") is provided in the financial tables at the end of this press release.

	Three Months Ended
	March 31,			December 31,			March 31,
	2023			2022			2022
	*(Dollars in thousands, except per share amounts)*
Earnings Summary:
Net (loss) earnings	$	(1,195,424	)	$	49,509		$	120,128
Diluted earnings per common share	$	(10.22	)	$	0.33		$	1.01
Return on average assets		(11.34	)%		0.48	%		1.22	%
Return on average tangible common equity (1)		14.45	%		12.71	%		20.77	%

Adjusted Earnings Summary (1):
Adjusted earnings	$	89,436		$	75,066		$	120,128
Adjusted diluted earnings per common share	$	0.66		$	0.54		$	1.01
Adjusted return on average assets		0.85	%		0.72	%		1.22	%
Adjusted return on average tangible common
equity		15.62	%		13.56	%		20.77	%

(1) Non-GAAP measure.

CEO COMMENTARY

Paul Taylor, President and CEO, commented, "Our strong banking franchise and our loyal, diversified customer base have driven us through one of the most challenging recent periods in the banking industry. Our deposits have stabilized with total insured deposits increasing from 48% of total deposits at year-end to 71% of total deposits at March 31, 2023. Importantly, deposits stabilized in the latter part of March and rebounded nicely in April, increasing approximately $700 million subsequent to quarter-end. Moreover, in light of the recent events, management took immediate steps to maximize liquidity, including the exploration of strategic asset sales, which has led to the transfer of our $2.7 billion Lender Finance loan portfolio to held for sale."

Mr. Taylor continued, "The industry dynamics in the quarter caused a significant decline in regional bank stocks, including ours. As a result, we recorded a goodwill impairment charge. It is important to note that goodwill impairment is a non-cash charge and has no impact on our regulatory capital ratios, cash flows, or liquidity position. We also are continuing the work we started last year to improve the overall efficiency of the Bank, which resulted in severance and contract termination expense of $8.5 million and the consolidation of two branches into nearby branches in the first quarter of 2023. I am proud to say that in the face of this crisis, our business of serving our customers and communities was unrelenting, allowing us to post $89.4 million in adjusted earnings for the quarter. In addition, credit quality remains strong as evidenced by nonperforming assets of 35 basis points and net charge-offs of 13 basis points for the quarter and 5 basis points for the trailing twelve months."

Mr. Taylor concluded, "As we look forward, we continue to execute on our overall strategy, which includes managing the balance sheet around a stable and diversified funding mix, emphasizing our core business, preserving profitability with a strong asset base and reduced costs, and maintaining our capital and liquidity positions while prudently managing risks. We expect that our total assets will be closer to $35 billion within the next few months, after we complete certain asset sales and bring down liquidity to more normal levels. These actions will improve our liquidity position and are expected to increase our CET1 capital ratio to above 10%. We are also expediting our operational efficiency strategy to reduce facilities and vendors, optimize business processes, and execute on other cost savings across the business to improve our profitability. We will continue to prioritize our customer relationships, which have been the bedrock of our success for more than twenty years."

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	2023			2022			(Decrease)			2023			2022			(Decrease)
	*(Dollars in thousands, except per share amounts)*
Net (loss) earnings available
to common stockholders	$	(1,205,371	)	$	39,562		$	(1,244,933	)	$	(1,205,371	)	$	120,128		$	(1,325,499	)
Diluted (loss) earnings per
common share	$	(10.22	)	$	0.33		$	(10.55	)	$	(10.22	)	$	1.01		$	(11.23	)
Pre-provision, pre-goodwill
impairment, pre-tax net
revenue ("PPNR") (1)	$	119,396		$	106,151		$	13,245		$	119,396		$	162,109		$	(42,713	)
Return on average assets		(11.34	)%		0.48	%		(11.82	)		(11.34	)%		1.22	%		(12.56	)
PPNR return on average
assets (1)		1.13	%		1.02	%		0.11			1.13	%		1.65	%		(0.52	)
Return on average
tangible common equity (1)		14.45	%		12.71	%		1.74			14.45	%		20.77	%		(6.32	)

Yield on average loans and
leases (tax equivalent)		6.14	%		5.73	%		0.41			6.14	%		4.66	%		1.48
Cost of average total
deposits		1.98	%		1.37	%		0.61			1.98	%		0.07	%		1.91
Net interest margin ("NIM")
(tax equivalent)		2.89	%		3.41	%		(0.52	)		2.89	%		3.43	%		(0.54	)
Efficiency ratio		58.2	%		53.3	%		4.9			58.2	%		50.1	%		8.1

Total assets	$	44,302,981		$	41,228,936		$	3,074,045		$	44,302,981		$	39,249,639		$	5,053,342
Loans and leases held
for investment,
net of deferred fees	$	25,672,381		$	28,609,129		$	(2,936,748	)	$	25,672,381		$	24,352,072		$	1,320,309
Noninterest-bearing
demand deposits	$	7,030,759		$	11,212,357		$	(4,181,598	)	$	7,030,759		$	14,057,051		$	(7,026,292	)
Retail non-maturity deposits	$	19,230,293		$	26,561,129		$	(7,330,836	)	$	19,230,293		$	31,676,404		$	(12,446,111	)
Total deposits	$	28,187,561		$	33,936,334		$	(5,748,773	)	$	28,187,561		$	33,224,895		$	(5,037,334	)

As percentage of total
deposits:
Noninterest-bearing
demand deposits		25	%		33	%		(8	)		25	%		42	%		(17	)
Retail non-maturity
deposits		68	%		78	%		(10	)		68	%		95	%		(27	)

Equity to assets ratio		6.26	%		9.58	%		(3.32	)		6.26	%		9.30	%		(3.04	)
Common equity tier 1
capital ratio		9.22	%		8.70	%		0.52			9.22	%		8.64	%		0.58
Tier 1 capital ratio		11.16	%		10.61	%		0.55			11.16	%		9.07	%		2.09
Total capital ratio		14.22	%		13.61	%		0.61			14.22	%		12.27	%		1.95
Tangible common equity
ratio (1)		5.07	%		5.13	%		(0.06	)		5.07	%		5.83	%		(0.76	)
Tangible book value per
common share (1)	$	18.66		$	17.00		$	1.66		$	18.66		$	18.42		$	0.24

(1) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

NET INTEREST INCOME

Net interest income decreased by $43.7 million to $279.3 million for the first quarter of 2023 compared to $322.9 million for the fourth quarter of 2022 due mainly to higher interest expense on deposits and borrowings, offset partially by higher interest income on loans and leases and deposits in financial institutions. Interest income on loans and leases increased by $25.7 million in the first quarter of 2023 due to a 41 basis points increase in the tax equivalent yield on loans and leases and a $390.3 million increase in the average balance of loans and leases compared to the fourth quarter of 2022. Interest income on deposits in financial institutions increased by $25.1 million in the first quarter of 2023 due mainly to a $1.8 billion increase in the average balance of deposits in financial institutions and a 98 basis points increase in the yield on deposits in financial institutions. The tax equivalent yield on loans and leases was 6.14% in the first quarter of 2023 compared to 5.73% for the fourth quarter of 2022. The increase in the tax equivalent yield on loans and leases was due primarily to higher coupon interest attributable to increased rates on production and on existing variable rate loans. Interest expense on deposits increased by $38.3 million in the first quarter of 2023 due mainly to increased market rates and an increased use of brokered deposits that contributed to a 61 basis points increase in the cost of total deposits, offset partially by the decrease in the average balance of deposits. Interest expense on borrowings increased by $49.2 million due to a $3.6 billion increase in the average balance and a 57 basis points increase in the cost of borrowings attributable mainly to the impact of increased market rates on our variable rate borrowings and higher market rates on new borrowings.

The tax equivalent NIM was 2.89% for the first quarter of 2023 compared to 3.41% for the fourth quarter of 2022. The decrease in the NIM was due mainly to a shift in our funding mix in the second half of March 2023 as we responded to the banking crisis to enhance liquidity and protect franchise value. Average borrowings as a percentage of average interest-bearing liabilities was 19% for the first quarter of 2023 compared to 7% for the fourth quarter of 2022. The additional borrowings are largely short term in nature, which will allow us to normalize our funding mix over time as economic conditions stabilize. The tax-equivalent NIM was further impacted by a higher cost of total deposits and borrowings, offset partially by higher yields on loans and leases and deposits in financial institutions.

The cost of total deposits was 1.98% for the first quarter of 2023 compared to 1.37% for the fourth quarter of 2022 due mainly to higher market interest rates and a change in the mix of average deposits, resulting from a decrease in lower cost retail non-maturity deposits and an increase in higher cost retail and brokered time deposits.

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	2023			2022			(Decrease)
	*(In thousands)*
Addition to allowance for
loan and lease losses	$	18,500		$	14,000		$	4,500
Reduction in reserve for
unfunded loan commitments		(15,500	)		(4,000	)		(11,500	)
Total loan-related provision		3,000			10,000			(7,000	)
Addition to allowance for
held-to-maturity securities		-			-			-
Total provision for credit losses	$	3,000		$	10,000		$	(7,000	)

The provision for credit losses was $3.0 million for the first quarter of 2023 compared to $10.0 million for the fourth quarter of 2022. The provision for the fourth quarter of 2022 reflected the impact of net loan growth. During the first quarter of 2023, while loans and leases held for investment and unfunded loan commitments declined, a $3 million provision was recognized due to an increase in qualitative reserves for loans secured by commercial real estate and higher net charge-offs.

NONINTEREST INCOME

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

	Three Months Ended
	March 31,			December 31,			Increase
Noninterest Income	2023			2022			(Decrease)
	*(In thousands)*
Service charges on deposit accounts	$	3,573		$	3,178		$	395
Other commissions and fees		10,344			11,208			(864	)
Leased equipment income		13,857			12,322			1,535
Gain on sale of loans and leases		2,962			388			2,574
Gain (loss) on sale of securities		-			(49,302	)		49,302
Dividends and gains on equity investments		1,098			661			437
Warrant loss		(333	)		(46	)		(287	)
Other income		4,890			2,635			2,255
Total noninterest income (loss)	$	36,391		$	(18,956	)	$	55,347

Noninterest income increased by $55.3 million to income of $36.4 million for the first quarter of 2023 compared to a loss of $19.0 million for the fourth quarter of 2022 due primarily to a decrease of $49.3 million in loss on sale of securities, and increases of $2.6 million in gain on sale of loans and leases, $2.3 million in other income, and $1.5 million in leased equipment income. The decrease in loss on sale of securities resulted from the sales of $1.0 billion of securities for a net loss of $49.3 million in the fourth quarter of 2022 compared to no sales in the first quarter of 2023. The increase in gain on sale of loans and leases resulted from the sale of $287.3 million of loans for a net gain of $3.0 million in the first quarter of 2023 compared to the sale of $11.0 million of loans for a net gain of $0.4 million in the fourth quarter of 2022. The increase in other income was due primarily to a $2.0 million gain from the change in fair value of the credit-linked notes in the first quarter of 2023. The increase in leased equipment income was due mainly to higher rental income compared to the linked quarter.

NONINTEREST EXPENSE

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

	Three Months Ended
	March 31,		December 31,			Increase
Noninterest Expense	2023		2022			(Decrease)
	*(In thousands)*
Compensation	$	88,476	$	106,124		$	(17,648	)
Occupancy		15,067		14,922			145
Data processing		10,938		9,722			1,216
Other professional services		6,073		6,924			(851	)
Insurance and assessments		11,717		7,205			4,512
Intangible asset amortization		2,411		2,629			(218	)
Leased equipment depreciation		9,375		8,627			748
Foreclosed assets expense (income), net		363		(108	)		471
Customer related expense		24,005		18,197			5,808
Loan expense		6,524		6,150			374
Other		12,804		11,737			1,067
Total operating expense		187,753		192,129			(4,376	)
Acquisition, integration and reorganization costs		8,514		5,703			2,811
Goodwill impairment		1,376,736		29,000			1,347,736
Total noninterest expense	$	1,573,003	$	226,832		$	1,346,171

The Company recorded a goodwill impairment charge of $1.38 billion in the first quarter of 2023. It is a standard accounting requirement for companies to periodically assess and determine the carrying value of goodwill as an asset. The severe effects of recent industry events on the market valuation of the Company warranted goodwill impairment testing and, following a comprehensive analysis, it was determined that the total amount of goodwill was impaired. The goodwill impairment charge does not have an impact on the Company's regulatory capital ratios, cash flows, or liquidity position.

Noninterest expense increased by $1.35 billion to $1.57 billion for the first quarter of 2023 compared to $226.8 million for the fourth quarter 2022 due primarily to the $1.38 billion goodwill impairment charge. Excluding the goodwill impairment and acquisition, integration and reorganization costs, operating expense decreased by $4.4 million to $187.8 million. The $4.4 million decrease was due mainly to a decrease of $17.6 million in compensation expense, offset partially by increases of $5.8 million in customer related expense and $4.5 million in insurance and assessments expense. The decrease in compensation expense was due primarily to lower bonus expense and lower stock-based compensation expense. The increase in customer related expense was due mostly to higher third-party payments for deposit customers on account analysis. The increase in insurance and assessments was due mainly to higher FDIC assessment expense attributable to the 2 basis point assessment rate increase effective January 1, 2023, and a higher assessment base as a result of the $1.6 billion increase in average assets in the first quarter of 2023.

INCOME TAXES

The effective income tax rate was 5.2% for the first quarter of 2023 compared to 26.3% for the fourth quarter of 2022. Excluding goodwill impairment, the effective income tax rate for the first quarter of 2023 was 28.4%. The increase from the fourth quarter of 2022 was due primarily to higher disallowed interest expense in the first quarter of 2023. Excluding goodwill impairment, the effective tax rate for the full year 2023 is currently estimated to be in the range of 28% to 30%.

BALANCE SHEET HIGHLIGHTS

DEPOSITS AND CLIENT INVESTMENT FUNDS

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

	March 31, 2023				December 31, 2022				March 31, 2022
			% of				% of				% of
Deposit Composition	Balance		Total		Balance		Total		Balance		Total
	*(Dollars in thousands)*
Noninterest-bearing demand	$	7,030,759	25	%	$	11,212,357	33	%	$	14,057,051	42	%
Interest checking		5,307,413	19	%		6,990,377	20	%		6,673,696	20	%
Money market		6,220,203	22	%		7,780,758	23	%		10,301,996	31	%
Savings		671,918	2	%		577,637	2	%		643,661	2	%
Total retail non-maturity deposits		19,230,293	68	%		26,561,129	78	%		31,676,404	95	%
Wholesale non-maturity deposits		2,028,676	7	%		2,637,362	8	%		322,732	1	%
Total non-maturity deposits		21,258,969	75	%		29,198,491	86	%		31,999,136	96	%
Retail time deposits		2,502,914	9	%		2,434,414	7	%		1,030,124	3	%
Brokered time deposits		4,425,678	16	%		2,303,429	7	%		195,635	1	%
Total time deposits (1)		6,928,592	25	%		4,737,843	14	%		1,225,759	4	%
Total deposits	$	28,187,561	100	%	$	33,936,334	100	%	$	33,224,895	100	%

(1) Includes time deposits over $250,000 of $1.1 billion, $1.5 billion, and $347.4 million at March 31, 2023, December 31, 2022, and March 31, 2022, respectively.

Total deposits decreased by $5.7 billion or 16.9% in the first quarter of 2023 due primarily to a $7.3 billion or 27.6% decrease in retail non-maturity deposits and a $608.7 million decrease in wholesale non-maturity deposits, offset partially by a $2.2 billion increase in time deposits. At March 31, 2023, retail non-maturity deposits totaled $19.2 billion or 68% of total deposits, including $7.0 billion of noninterest-bearing demand deposits or 25% of total deposits.

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

	March 31, 2023				December 31, 2022
			% of				% of		Increase
	Balance		Total		Balance		Total		(Decrease)
	*(Dollars in thousands)*
Community Banking	$	14,917,027	53	%	$	17,466,726	52	%	$	(2,549,699	)
Venture Banking		6,584,554	23	%		11,296,574	33	%		(4,712,020	)
Wholesale Deposits		6,685,980	24	%		5,173,034	15	%		1,512,946
Total deposits	$	28,187,561	100	%	$	33,936,334	100	%	$	(5,748,773	)

As of March 31, 2023, FDIC-insured deposits represented approximately 71% of total deposits, including accounts eligible for pass-through insurance, and FDIC-insured venture-specific deposits accounted for approximately 83% of total venture-specific deposits, including accounts eligible for pass-through insurance. The Bank's spot deposit rates increased from 1.71% at December 31, 2022 to 2.32% at March 31, 2023.

In addition to deposit products, we also offer alternative, non-depository cash investment options for select clients. These alternative options include investments managed by Pacific Western Asset Management Inc. ("PWAM"), our registered investment advisor subsidiary, and third-party sweep products. Total off-balance sheet client investment funds decreased from $1.4 billion as of December 31, 2022 to $1.2 billion as of March 31, 2023, of which $0.8 billion was managed by PWAM.

BORROWINGS

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

	March 31, 2023					December 31, 2022
			Weighted					Weighted
			Avarage					Avarage			Increase
Borrowing Type	Balance		Rate			Balance		Rate			(Decrease)
	*(Dollars in thousands)*
FHLB secured advances	$	5,450,000		5.07	%	$	1,270,000		4.62	%	$	4,180,000
Bank Term Funding Program		4,910,000		4.38	%		-		-			4,910,000
Repurchase agreement (1)		1,393,337		8.50	%		-		-			1,393,337
Credit-linked notes		128,375		15.24	%		132,030		14.56	%		(3,655	)
AFX borrowings		-		-			250,000		4.68	%		(250,000	)
FHLB unsecured overnight advance		-		-			112,000		4.37	%		(112,000	)
Total borrowings	$	11,881,712		5.30	%	$	1,764,030		5.36	%	$	10,117,682

(1) Balance is net of unamortized issuance costs of $17.9 million and $0.4 million of accrued exit fees.
Rate calculation does not include the effects of issuance costs and exit fees.

The $10.1 billion increase in borrowings in the first quarter of 2023 is the result of the Company's proactive effort to bolster its on-balance sheet liquidity in response to the elevated net deposit outflows caused by the banking crisis. The increase is comprised of borrowings under the new Bank Term Funding Program of $4.9 billion, an increase in FHLB secured advances of $4.2 billion, and borrowing under a new repurchase agreement facility of $1.4 billion. Available borrowing capacity was approximately $5.8 billion at March 31, 2023.

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	2023			2022
	*(Dollars in thousands)*
Balance, beginning of period	$	28,609,129		$	27,660,041
Additions:
Production		468,671			1,287,248
Disbursements		1,622,898			1,919,979
Total production and disbursements		2,091,569			3,207,227
Reductions:
Payoffs		(1,021,652	)		(1,136,016	)
Paydowns		(965,537	)		(1,050,727	)
Total payoffs and paydowns		(1,987,189	)		(2,186,743	)
Sales		(231,798	)		(2,611	)
Transfers to foreclosed assets		(2,568	)		(4,714	)
Charge-offs		(10,397	)		(3,352	)
Transfers to loans held for sale		(2,796,365	)		(60,719	)
Total reductions		(5,028,317	)		(2,258,139	)
Net (decrease) increase		(2,936,748	)		949,088
Balance, end of period	$	25,672,381		$	28,609,129

Weighted average rate on production (1)		8.44	%		7.55	%

(1) The weighted average rate on production presents contractual rates on a tax equivalent basis and excludes amortized fees.
Amortized fees added approximately 17 basis points to loan yields in 2023.

Loans and leases held for investment, net of deferred fees, decreased by $2.9 billion, or 10.3% in the first quarter of 2023 to $25.7 billion at March 31, 2023. The overall decrease in the loans and leases balance for the first quarter of 2023 was due primarily to a $2.7 billion transfer to loans held for sale of Lender Finance loans included in the asset-based commercial loan portfolio.

The weighted average rate on the $469 million of production for the first quarter of 2023 increased to 8.44% from 7.55% for the fourth quarter of 2022 due primarily to the loan mix (lower percentage of multi-family production and a higher percentage of Civic production) and the increase in market interest rates.

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

	March 31, 2023				December 31, 2022				March 31, 2022
			% of				% of				% of
Loan and Lease Portfolio	Balance		Total		Balance		Total		Balance		Total
	*(Dollars in thousands)*
Real estate mortgage:
Commercial	$	3,808,751	15	%	$	3,846,831	13	%	$	3,669,741	15	%
Multi-family		5,523,320	21	%		5,607,865	20	%		4,080,257	17	%
Other residential		6,075,540	24	%		6,275,628	22	%		4,759,066	20	%
Total real estate mortgage		15,407,611	60	%		15,730,324	55	%		12,509,064	52	%
Real estate construction and land:
Commercial		910,327	4	%		898,592	3	%		802,022	3	%
Residential		3,698,113	14	%		3,253,580	11	%		2,421,694	10	%
Total real estate construction
and land		4,608,440	18	%		4,152,172	14	%		3,223,716	13	%
Total real estate		20,016,051	78	%		19,882,496	69	%		15,732,780	65	%
Commercial:
Asset-based		2,068,327	8	%		5,140,209	18	%		4,739,220	19	%
Venture capital		2,058,237	8	%		2,033,302	7	%		2,077,339	9	%
Other commercial		1,102,543	4	%		1,108,451	4	%		1,298,136	5	%
Total commercial		5,229,107	20	%		8,281,962	29	%		8,114,695	33	%
Consumer		427,223	2	%		444,671	2	%		504,597	2	%
Total loans and leases held for
investment, net of deferred fees	$	25,672,381	100	%	$	28,609,129	100	%	$	24,352,072	100	%

Total unfunded loan commitments	$	9,776,789			$	11,110,264			$	9,899,345

ALLOWANCE FOR CREDIT LOSSES ON LOANS AND LEASES

The following tables present roll forwards of the allowance for credit losses on loans and leases for the periods indicated:

	Three Months Ended March 31, 2023
Allowance for Credit	Allowance for			Reserve for			Total
Losses on Loans and	Loan and			Unfunded Loan			Allowance for
Leases Rollforward	Lease Losses			Commitments			Credit Losses
	*(In thousands)*
Beginning balance	$	200,732		$	91,071		$	291,803
Charge-offs		(10,397	)		-			(10,397	)
Recoveries		1,220			-			1,220
Net charge-offs		(9,177	)		-			(9,177	)
Provision		18,500			(15,500	)		3,000
Ending balance	$	210,055		$	75,571		$	285,626

	Three Months Ended December 31, 2022
Allowance for Credit	Allowance for			Reserve for			Total
Losses on Loans and	Loan and			Unfunded Loan			Allowance for
Leases Rollforward	Lease Losses			Commitments			Credit Losses
	*(In thousands)*
Beginning balance	$	189,327		$	95,071		$	284,398
Charge-offs		(3,352	)		-			(3,352	)
Recoveries		757			-			757
Net charge-offs		(2,595	)		-			(2,595	)
Provision		14,000			(4,000	)		10,000
Ending balance	$	200,732		$	91,071		$	291,803

The following table presents allowance for credit losses information on loans and leases as of and for the dates and periods indicated:

Allowance for Credit Losses	March 31,			December 31,			Increase
on Loans and Leases		2023			2022		(Decrease)
	*(Dollars in thousands)*
Allowance for loan and lease losses	$	210,055		$	200,732		$	9,323
Reserve for unfunded loan commitments		75,571			91,071			(15,500	)
Allowance for credit losses	$	285,626		$	291,803		$	(6,177	)

Provision for credit losses (for the quarter)	$	3,000		$	10,000		$	(7,000	)
Net charge-offs (for the quarter)	$	9,177		$	2,595		$	6,582
Net charge-offs to average loans
and leases (for the quarter)		0.13	%		0.04	%
Allowance for loan and lease losses to loans
and leases held for investment		0.82	%		0.70	%
Allowance for credit losses to loans and leases
held for investment		1.11	%		1.02	%

The allowance for credit losses decreased by $6.2 million in the first quarter of 2023 to $285.6 million at March 31, 2023. This decrease was attributable mainly to the decrease in loans and leases held for investment and unfunded loan commitments and $9.2 million in net charge-offs, offset partially by an increase in qualitative reserves for loans secured by commercial real estate.

Net charge-offs over the trailing twelve months were $12.8 million, which resulted in net charge-offs to average loans and leases over the trailing twelve months of 0.5%.

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	2023			2022			(Decrease)
	*(Dollars in thousands)*
Nonperforming Assets:
Nonaccrual loans and leases held for investment (1)	$	87,124		$	103,778		$	(16,654	)
Accruing loans contractually past due 90 days or more		-			-			-
Foreclosed assets, net		2,135			5,022			(2,887	)
Total nonperforming assets ("NPAs")	$	89,259		$	108,800		$	(19,541	)

Nonaccrual loans and leases held for investment
to loans and leases held for investment		0.34	%		0.36	%
Nonperforming assets to loans and leases
held for investment and foreclosed assets		0.35	%		0.38	%
Allowance for credit losses to nonaccrual loans
and leases held for investment		327.8	%		281.2	%

Loan and Lease Credit Risk Ratings:
Pass	$	24,959,805		$	27,924,599		$	(2,964,794	)
Special mention		580,153			566,259			13,894
Classified		132,423			118,271			14,152
Total loans and leases held for investment,
net of deferred fees	$	25,672,381		$	28,609,129		$	(2,936,748	)

Special mention loans and leases held for investment
to loans and leases held for investment		2.26	%		1.98	%
Classified loans and leases held for investment
to loans and leases held for investment		0.52	%		0.41	%

(1) Nonaccrual loans include SBA guaranteed amounts of $11.8 million at March 31, 2023 and $14.3 million at December 31, 2022.

Nonaccrual loans and leases decreased by $16.7 million to $87.1 million in the first quarter of 2023 due primarily to a decrease in nonaccrual commercial real estate loans and, to a lesser extent, Civic loans.

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

	March 31, 2023				December 31, 2022				Increase (Decrease)
			Accruing				Accruing					Accruing
			and 30-89				and 30-89					and 30-89
			Days Past				Days Past					Days Past
	Nonaccrual		Due		Nonaccrual		Due		Nonaccrual			Due
	*(In thousands)*
Real estate mortgage:
Commercial	$	32,996	$	1,650	$	42,509	$	1,047	$	(9,513	)	$	603
Multi-family		-		-		-		-		-			-
Other residential		50,060		125,458		55,893		95,654		(5,833	)		29,804
Total real estate mortgage		83,056		127,108		98,402		96,701		(15,346	)		30,407
Real estate construction and land:
Commercial		-		-		-		-		-			-
Residential		-		-		-		-		-			-
Total real estate
construction and land		-		-		-		-		-			-
Commercial:
Asset-based		420		-		865		-		(445	)		-
Venture capital		-		-		-		-		-			-
Other commercial		3,123		618		4,345		385		(1,222	)		233
Total commercial		3,543		618		5,210		385		(1,667	)		233
Consumer		525		1,593		166		1,935		359			(342	)
Total held for investment	$	87,124	$	129,319	$	103,778	$	99,021	$	(16,654	)	$	30,298

Loans and leases accruing and 30-89 days past due generally fluctuate from period to period. The $30.3 million increase to $129.3 million in the first quarter of 2023 was due mainly to an increase in Civic delinquent loans of $22.7 million.

CAPITAL

The following table presents capital ratios as of the dates indicated:

	March 31,			December 31,			March 31,
		2023			2022			2022
PacWest Bancorp Consolidated:
Common equity tier 1 capital ratio (1)		9.22	%		8.70	%		8.64	%
Tier 1 capital ratio (1)		11.16	%		10.61	%		9.07	%
Total capital ratio (1)		14.22	%		13.61	%		12.27	%
Tier 1 leverage capital ratio (1)		8.33	%		8.61	%		7.11	%
Risk-weighted assets (1) (in thousands)	$	32,488,956		$	33,030,960		$	30,297,312
Tangible common equity ratio (2)		5.07	%		5.13	%		5.83	%
Tangible common equity ratio excluding
the impact of AOCI for securities (2)		6.73	%		7.12	%		6.82	%

(1) Capital information for March 31, 2023 is preliminary.
(2) Non-GAAP measure.

CONFERENCE CALL

PacWest Bancorp ("PacWest") will host a conference call at 8:00 AM PT/ 11:00 AM ET on Wednesday, April 26, 2023, to discuss the Company's performance for the first quarter of 2023.

Participants may access the conference call/webcast at:

Participant Dial-in: (888) 256-1007

Participant Webcast Link: https://event.webcasts.com/starthere.jsp?ei=1606712&tp_key=2960dca832

Confirmation Code: 9773012

The call will be recorded and made available for replay on April 26, 2023, after 12:00 PM PT. The recording may be accessed through the link above or at https://www.pacwestbancorp.com/news-market-data/presentations/default.aspx.

ABOUT PACWEST BANCORP

PacWest is a bank holding company headquartered in Los Angeles, California, with an executive office in Denver, Colorado, with one wholly-owned banking subsidiary, Pacific Western Bank (the "Bank"). Pacific Western Bank is a relationship-based community bank focused on providing business banking and treasury management services to small, middle-market, and venture-backed businesses. The Bank offers a broad range of loan and lease and deposit products and services through full-service branches throughout California and in Durham, North Carolina and Denver, Colorado, and loan production offices around the country. For more information about PacWest Bancorp or Pacific Western Bank, visit www.pacwest.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. Statements that are not historical or current facts, including statements about future financial and operational results, expectations, or intentions are forward-looking statements. Such statements often use words such as "anticipates," "targets," "expects," "estimates," "intends," "plans," "believes," "continue" and other similar expressions or future or conditional verbs such as "will," "may," "might," "should," "would" and "could." Such statements are based on information available at the time of the communication and are based on current beliefs and expectations of PacWest's management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from those expressed in them. Continued deterioration in general business, economic, and political conditions, geopolitical tensions, uncertainty in U.S. fiscal monetary policy, including the interest rate policies of the Federal Reserve Board, and volatility and disruptions in credit and capital markets could lead to a tightening of credit and an increase of credit losses, adversely affect PacWest's revenues and the values of our assets and liabilities, increase stock price volatility, and adversely impact our ability to raise capital. In addition, PacWest and its results could be adversely affected by changes in interest rates, continued high inflation, and unemployment rates, our ability to attract and retain deposits and other sources of funding and liquidity particularly in a rising or high interest rate environment, the impact of bank failures or other adverse developments at other banks on general investor sentiment regarding the stability and liquidity of banks, the safety of deposits, and depositor behavior, the quality and composition of our deposits, deterioration in the credit quality of our loan portfolio or in the value of the collateral securing those loans, especially the risks associated with concentrations in real estate related loans, deterioration in the value of our investment securities as a result of rising interest rates or otherwise, our ability to successfully execute on our planned asset sales, strategic plan, and digital and innovation initiatives, the effectiveness of our risk management framework and quantitative models, and legal and regulatory developments. Actual results may differ materially from those set forth or implied in the forward-looking statements due to a variety of factors, including the risk factors described in documents filed by PacWest with the U.S. Securities and Exchange Commission.

All forward-looking statements in this communication are based on information available at the time the statement is made. 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,			March 31,
	2023			2022			2022
	*(Dollars in thousands, except per share amounts)*
ASSETS:
Cash and due from banks	$	218,830		$	212,273		$	205,446
Interest-earning deposits in financial institutions		6,461,306			2,027,949			1,865,235
Total cash and cash equivalents		6,680,136			2,240,222			2,070,681

Securities available-for-sale, at estimated fair value		4,848,607			4,843,487			9,975,109
Securities held-to-maturity, at amortized cost,
net of allowance for credit losses		2,273,650			2,269,135			-
Federal Home Loan Bank stock, at cost		147,150			34,290			17,250
Total investment securities		7,269,407			7,146,912			9,992,359

Loans held for sale		2,796,208			65,076			-

Gross loans and leases held for investment		25,770,912			28,726,016			24,439,749
Deferred fees, net		(98,531	)		(116,887	)		(87,677	)
Total loans and leases held for investment,
net of deferred fees		25,672,381			28,609,129			24,352,072
Allowance for loan and lease losses		(210,055	)		(200,732	)		(197,398	)
Total loans and leases held for investment, net		25,462,326			28,408,397			24,154,674

Equipment leased to others under operating leases		399,972			404,245			325,305
Premises and equipment, net		60,358			54,315			51,011
Foreclosed assets, net		2,135			5,022			304
Goodwill		-			1,376,736			1,405,736
Core deposit and customer relationship intangibles, net		28,970			31,381			41,308
Other assets		1,603,469			1,496,630			1,208,261
Total assets	$	44,302,981		$	41,228,936		$	39,249,639

LIABILITIES:
Noninterest-bearing deposits	$	7,030,759		$	11,212,357		$	14,057,051
Interest-bearing deposits		21,156,802			22,723,977			19,167,844
Total deposits		28,187,561			33,936,334			33,224,895
Borrowings		11,881,712			1,764,030			991,000
Subordinated debt		868,815			867,087			863,880
Accrued interest payable and other liabilities		593,416			710,954			519,269
Total liabilities		41,531,504			37,278,405			35,599,044
STOCKHOLDERS' EQUITY (1)		2,771,477			3,950,531			3,650,595
Total liabilities and stockholders' equity	$	44,302,981		$	41,228,936		$	39,249,639

Book value per common share	$	18.90		$	28.71		$	30.52
Tangible book value per common share (2)	$	18.66		$	17.00		$	18.42
Common shares outstanding		120,244,214			120,222,057			119,601,766

(1) Includes net unrealized loss on:
Securities available-for-sale, net	$	(537,307	)	$	(586,450	)	$	(376,475	)
Securities held to maturity		(198,753	)		(204,453	)		-
Total	$	(736,060	)	$	(790,903	)	$	(376,475	)
(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS)

	Three Months Ended
	March 31,			December 31,			March 31,
		2023			2022			2022
	*(In thousands, except per share amounts)*
Interest income:
Loans and leases	$	430,685		$	404,985		$	267,759
Investment securities		44,237			50,292			53,422
Deposits in financial institutions		42,866			17,746			1,723
Total interest income		517,788			473,023			322,904

Interest expense:
Deposits		155,892			117,591			6,208
Borrowings		69,122			19,962			161
Subordinated debt		13,502			12,531			7,818
Total interest expense		238,516			150,084			14,187

Net interest income		279,272			322,939			308,717
Provision for credit losses		3,000			10,000			-
Net interest income after provision
for credit losses		276,272			312,939			308,717

Noninterest income:
Service charges on deposit accounts		3,573			3,178			3,571
Other commissions and fees		10,344			11,208			11,580
Leased equipment income		13,857			12,322			13,094
Gain on sale of loans and leases		2,962			388			60
Gain (loss) on sale of securities		-			(49,302	)		104
Dividends and gains (losses) on equity investments		1,098			661			(11,375	)
Warrant (loss) income		(333	)		(46	)		629
Other income		4,890			2,635			3,155
Total noninterest income (loss)		36,391			(18,956	)		20,818

Noninterest expense:
Compensation		88,476			106,124			92,240
Occupancy		15,067			14,922			15,200
Data processing		10,938			9,722			9,629
Other professional services		6,073			6,924			5,954
Insurance and assessments		11,717			7,205			5,490
Intangible asset amortization		2,411			2,629			3,649
Leas

PacWest Bancorp Announces Results for the First Quarter 2023