Pacwest Bancorp 8K Results of Operations and Financial Condition | PACW 17 Oct 12

Exhibit 99.1

PRESS RELEASE

PacWest Bancorp

(NASDAQ: PACW)

Contact:	Matthew P. Wagner Chief Executive Officer 10250 Constellation Boulevard Suite 1640 Los Angeles, CA 90067	Victor R. Santoro Executive Vice President and CFO 10250 Constellation Boulevard Suite 1640 Los Angeles, CA 90067

Phone:	310-728-1020	310-728-1021
Fax:	310-201-0498	310-201-0498

FOR IMMEDIATE RELEASE

October 17, 2012

PACWEST BANCORP ANNOUNCES RESULTS

FOR THE THIRD QUARTER OF 2012

Highlights

· Net Earnings of $16.1 Million or $0.43 Per Diluted Share

· Net Interest Margin at 5.58%; Core Net Interest Margin at 5.32%

· Credit Loss Reserve at 2.46% of Net Non-Covered Loans and Leases and 203% of Non-Covered Nonaccrual Loans and Leases

· Noninterest-Bearing Deposits at 42% and Core Deposits at 82% of Total Deposits

· American Perspective Bank Acquisition Closed on August 1, 2012

· Branch Sale Closed on September 21, 2012

Los Angeles, California . . . PacWest Bancorp (Nasdaq: PACW) today announced net earnings for the third quarter of 2012 of $16.1 million, or $0.43 per diluted share, compared to net earnings for the second quarter of 2012 of $15.6 million, or $0.42 per diluted share.

This press release contains certain non-GAAP financial disclosures for tangible common equity; pre-tax earnings before net credit costs, impairment loss on a covered security, debt termination expense, and acquisition and integration costs, which we refer to as “adjusted earnings before income taxes”; and efficiency ratios adjusted to exclude OREO expenses, FDIC loss sharing income, impairment loss on a covered security, acquisition and integration costs, and debt termination expenses. 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. Given the use of tangible common equity amounts and ratios is prevalent among banking regulators, investors and analysts, we disclose our tangible common equity ratio in addition to equity-to-assets ratio. Also, as analysts and investors view adjusted earnings before income taxes as an indicator of the

Company’s ability to absorb credit losses, we disclose this amount in addition to pre-tax earnings. We disclose the adjusted efficiency ratio as it shows the trend in recurring overhead-related noninterest expense relative to recurring net revenues. Please refer to the tables 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.

The comparability of financial information is affected by our acquisitions. Operating results include the operations of acquired entities from the dates of acquisition. The operations of American Perspective Bank (“APB”), Celtic Capital Corporation (“Celtic”) and Pacific Western Equipment Finance (“EQF”) have been included since their respective acquisition dates of August 1, 2012, April 1, 2012, and January 3, 2012.

THIRD QUARTER RESULTS

	Three Months Ended
	September 30,			June 30,
	2012			2012
	(Dollars in thousands, except per share data)
Financial Highlights:
Net earnings	$	16,088		$	15,557
Diluted earnings per share	$	0.43		$	0.42
Adjusted earnings before income taxes (1)	$	33,437		$	30,047
Annualized return on average assets	1.16		%	1.16		%
Annualized return on average equity	11.16		%	11.23		%
Net interest margin	5.58		%	5.60		%
Efficiency ratio	67.6		%	64.9		%
Adjusted efficiency ratio (2)	56.5		%	59.7		%

At Quarter End:
Allowance for credit losses to non-covered loans and leases, net of unearned income (3)	2.46		%	2.74		%
Allowance for credit losses to non-covered nonaccrual loans and leases (3)	203		%	148		%
Equity to assets ratios:
PacWest Bancorp Consolidated	10.55		%	10.63		%
Pacific Western Bank	11.97		%	12.11		%
Tangible common equity ratios:
PacWest Bancorp Consolidated	8.98		%	9.28		%
Pacific Western Bank	10.42		%	10.78		%

(1)	Represents pre-tax earnings excluding net credit costs, impairment loss on a covered security, debt termination expense, and acquisition and integration costs. See GAAP to Non-GAAP Reconciliation table.
(2)	Excludes OREO expenses, FDIC loss sharing income, impairment loss on a covered security, acquisition and integration costs, and debt termination expense. See GAAP to Non-GAAP Reconciliation table.
(3)	Non-covered loans exclude loans covered by loss sharing agreements with the FDIC.

The $531,000 increase in net earnings for the linked quarters was due primarily to the combination of the following:

· Net interest income increased $2.4 million ($1.4 million after tax), due to the additional interest on loans from the American Perspective Bank (“APB”) acquisition, offset by lower accelerated accretion of purchase discount resulting from covered loan payoffs.

· The provision for credit losses on non-covered loans was a negative $2.0 million for the quarter ($1.2 million after tax) compared to a zero provision in the second quarter.

· Noninterest income increased $811,000 ($470,000 after tax), due mostly to an other-than-temporary impairment (“OTTI”) loss on a covered security of $1.1 million incurred in the second quarter and not repeated in the third quarter; our portion of the OTTI loss was $223,000 ($129,000 after tax) after the 80% loss coverage by the FDIC. Contributing to the increase in noninterest income was a net gain of $297,000 ($172,000 after tax) on the sale of 10 branches to Opus Bank. These items were offset by decreases in gain on sales of leases, FDIC loss sharing income, and service charges on deposit accounts.

· Noninterest expense increased $4.1 million ($2.4 million after tax) due mostly to a $3.9 million ($2.3 million after tax) increase in total OREO expense from higher write-downs based on updated appraisals, a $1.2 million ($713,000 after tax) increase in acquisition and integration costs relating to the acquisition of APB, and $718,000 ($416,000 after tax) increase in overhead costs from the APB operations. Partially offsetting these factors was a decrease in other expense relating to a lawsuit settlement of $595,000 ($345,000 after tax) incurred in the second quarter and not repeated in the third quarter.

Net credit costs on a pre-tax basis are shown in the following table:

	Three Months Ended
	September 30,			June 30,
	2012			2012
	(In thousands)
Negative provision for credit losses on non-covered loans and leases	$	(2,000	)	$	—
Non-covered OREO expense, net	1,883			130
Total non-covered net credit costs	(117		)	130

Negative provision for credit losses on covered loans	(141		)	(271		)
Covered OREO expense, net	4,290			2,130
	4,149			1,859
Less: FDIC loss sharing expense, net, excluding the FDIC share of the OTTI loss	(367		)	(994		)
Total covered net credit costs	4,516			2,853

Total net credit costs	$	4,399		$	2,983

The provision for credit losses for the third quarter had two components: a $2.0 million negative provision for non-covered loans and leases and a $141,000 negative provision for covered loans. The third quarter negative non-covered provision for credit losses was based on our allowance methodology which reflected (a) lower historical net charge-off levels, (b) lower nonaccrual and classified loans and leases and (c) the migration of loans and leases into various risk classifications. During the third quarter, net charge-offs declined by $2.7 million to $1.0 million, nonaccrual loans and leases decreased by $15.8 million to $37.0 million, and classified loans and leases declined by $43.0 million to $96.9 million. The covered loans negative credit loss provision was driven by increases in expected cash flows on covered loan pools compared to those previously estimated and cash recoveries.

Matt Wagner, Chief Executive Officer, commented, “We had a good third quarter and successfully completed two significant transactions. The American Perspective Bank acquisition closed on August 1 and we closed the sale of 10 branches on September 21. The APB acquisition has augmented our earnings and growth potential in the Central Coast market and the branch sale will result in lower overhead of approximately $500,000 per quarter beginning in the fourth quarter.

Mr. Wagner continued, “The economy remains uncertain and loan growth at this point would involve underpricing competitors, in many cases at margins that are not significantly above our securities portfolio yield. We prefer to selectively make or renew quality loans to our good customers at appropriate margins and build relationships rather than focus on attracting customers at low prices. Given our disciplined approach in generating new business, we see short-term loan growth as relatively flat. Nevertheless, the legacy loan portfolio experienced $8.9 million of organic growth during the third quarter. Our core earnings engine remains very strong and we expect to continue generating solid core income while we evaluate the markets and choose the right time to expand lending more aggressively.”

Vic Santoro, Executive Vice President and Chief Financial Officer, stated, “Our third quarter results were very good, with $33.4 million in adjusted pre-tax earnings, a return on average assets of 1.16% and a return on average equity of over 11%. Our net interest margin was 5.58%, being positively impacted by a strong loan yield and increasing DDA balances. Credit quality trends remain positive and core deposit growth continues to be strong, generated both organically and through the APB acquisition. The combination of these factors, along with our continued focus on controlling noninterest expenses, strengthens our balance sheet and allows us to pursue attractive growth and acquisition opportunities as they arise.”

YEAR TO DATE RESULTS

	Nine Months Ended
	September 30,
	2012			2011
	(Dollars in thousands, except per share data)
Financial Highlights:
Net earnings	$	36,909		$	36,821
Diluted earnings per share	$	1.00		$	0.99
Adjusted earnings before income taxes (1)	$	94,376		$	89,143
Annualized return on average assets	0.90		%	0.90		%
Annualized return on average equity	8.78		%	9.81		%
Net interest margin	5.53		%	5.35		%
Efficiency ratio	76.2		%	61.5		%
Adjusted efficiency ratio (2)	58.2		%	58.9		%

(1)	Represents pre-tax earnings excluding net credit costs, impairment loss on a covered security, debt termination expense, and acquisition and integration costs. See GAAP to Non-GAAP Reconciliation table.
(2)	Excludes OREO expenses, FDIC loss sharing income, impairment loss on a covered security, acquisition and integration costs, and debt termination expense. See GAAP to Non-GAAP Reconciliation table.

The net earnings for the nine months ended September 30, 2012 are relatively flat compared to the same period last year. The 2012 period included $6.1 million of net earnings from our 2012 acquisitions. Highlights are as follows:

· Higher net interest income of $8.0 million ($4.6 million after-tax) attributed mostly to a decrease in interest expense from both lower volume and rate of interest-bearing liabilities.

· Lower provision for credit losses of $30.9 million ($17.9 million after tax); the provision on non-covered loans is lower by $25.3 million ($14.7 million after tax) and the provision on covered loans is lower by $5.6 million ($3.2 million after tax). These declines are due to improving credit quality.

· Other credit related costs and loss sharing contract activities reduced net earnings by $12.6 million ($7.3 million after tax); this amount includes lower FDIC loss sharing income of $9.2 million ($5.3 million after tax), higher net covered OREO expense of $3.8 million ($2.2 million after tax), and higher covered OTTI expense of $1.1 million ($647,000 after tax), offset by lower non-covered OREO expense of $1.5 million ($848,000 after tax).

· Noninterest income includes $1.8 million ($1.1 million after tax) related to gain on sale of leases and the gain on sale of the 10 branches; there were no such items in 2011.

· $22.6 million ($13.1 million after tax) of debt termination expense incurred in the first quarter of 2012 on the repayment of $225 million in fixed-rate term FHLB advances and the early redemption of $18.6 million in trust-preferred securities; there was no such item in 2011.

· $3.0 million ($1.7 million after tax) of acquisition and integration costs in 2012 related to the Company’s acquisition activity; there was no such item in 2011.

· Excluding debt termination costs, OREO costs, and acquisition and integration costs, noninterest expense increased $3.7 million ($2.1 million after tax) attributed mostly to higher compensation and overhead costs for the acquired operations offset by lower insurance assessments, lower CDI amortization expense, and lower other professional services expense.

· Lower tax expense of $1.3 million as the Company’s effective tax rate declined due to higher tax-free interest income and tax credits.

BALANCE SHEET CHANGES

Total assets increased $216.9 million during the third quarter due primarily to the APB acquisition.

At September 30, 2012, gross non-covered loans and leases totaled $3.1 billion and the covered loan portfolio was $567.4 million. The gross non-covered loan and lease portfolio increased $206.2 million, due mainly to the addition of $197.3 million in loans from the APB acquisition. When the acquired loans are excluded, organic non-covered loan and lease growth was $8.9 million. This growth was a combination of new loans and leases and reductions due to (a) a sale of a $17.9 million classified loan at a slight discount and (b) refinancings of existing loans by other lenders. During the third quarter, our regional presidents reported that loans having balances of $1.0 million or more refinanced by other lenders totaled approximately $77.0 million. We observed that the rates on these takeouts ranged from a low of 3.85% to a high of 5.00% and fixed terms ranged from a low of 5 years to a high of 30 years. The pricing in the market for new loans continues to be irrational in our view. The covered loan portfolio declined $41.6 million due to repayments and resolution activities.

Total liabilities increased $198.4 million during the third quarter due to the addition of deposits from the APB acquisition, offset by the deposit decline from the branch sale. Total deposits increased $196.0 million during the third quarter to $4.8 billion at September 30, 2012. Core deposits increased $198.7 million during the third quarter due mostly to increases of $134.5 million in noninterest-bearing demand deposits and $87.5 million in money market deposits. Time deposits decreased $2.7 million during the third quarter to $862.3 million at September 30, 2012. At September 30, 2012, core deposits totaled $3.9 billion, or 82% of total deposits at that date. Noninterest-bearing demand deposits were $2.0 billion at September 30, 2012 and represented 42% of total deposits at that date. A summary of the change in deposits during the third quarter follows:

	Total Deposits			Core Deposits			Time Deposits
	(In thousands)
Balance at June 30, 2012	$	4,591,329		$	3,726,307		$	865,022
APB acquisition	219,564			169,989			49,575
Branch sale	(125,222		)	(103,183		)	(22,039		)
Organic growth (1)	101,677			131,894			(30,217		)
Balance at September 30, 2012	$	4,787,348		$	3,925,007		$	862,341

(1)	Organic growth in core deposits includes a $120 million noninterest-bearing deposit received at quarter-end. Such funds were withdrawn in October 2012.

SECURITIES AVAILABLE-FOR-SALE

The following table presents the components, yields, and durations related to our securities available-for-sale portfolio as of the date indicated:

	September 30, 2012
	Amortized		Carrying		Book		Duration
Security Type	Cost		Value		Yield		(in years)
	(Dollars in thousands)
Residential mortgage-backed securities:
Government and government-sponsored entity pass through securities	$	901,955	$	945,581	2.15	%	3.7
Government and government-sponsored entity collateralized mortgage obligations	89,320		91,275		0.74	%	3.1
Covered private label collateralized mortgage obligations	37,116		45,887		9.48	%	3.8
Municipal securities (1)	236,385		247,280		2.96	%	6.4
Corporate debt securities	17,049		17,255		5.07	%	12.6
Other securities	6,395		9,933		—		—
Total securities available-for-sale (1)	$	1,288,220	$	1,357,211	2.47	%	4.2

(1) The tax equivalent yield was 4.50% and 2.75% for municipal securities and total securities available for sale, respectively.

COVERED ASSETS

As part of the Los Padres and Affinity acquisitions we entered into loss sharing agreements with the FDIC that cover a substantial portion of losses incurred after the acquisition dates on covered loans and other real estate owned, and in the case of the Affinity acquisition, certain investment securities. A summary of covered assets is shown in the following table as of the dates indicated:

	September 30,			June 30,
Covered Assets	2012			2012
	(In thousands)
Loans, net	$	567,396		$	608,949
Investment securities	45,887			44,053
Other real estate owned, net	26,374			31,090
Total covered assets	$	639,657		$	684,092

Percentage of total assets	11.5		%	12.9		%

NET INTEREST INCOME

Net interest income increased by $2.4 million to $70.8 million for the third quarter of 2012 compared to $68.4 million for the second quarter of 2012. This change was due to a $3.4 million increase in interest income on loans and leases, offset by a $1.2 million decrease in interest income on investment securities. Interest income on loans and leases increased due to additional interest income from the APB portfolio, offset by lower accelerated accretion of discount resulting from covered loan payoffs. Interest income on investment securities declined due

mainly to the call of $33.8 million in higher yield corporate debt securities in July 2012 and accelerated premium amortization on our government agency and government-sponsored enterprise pass through securities and collateralized mortgage obligations due to increased prepayment speeds in the third quarter. Interest expense declined $125,000 due mostly to lower time deposit costs despite adding $219.6 million of deposits in the APB acquisition.

Net interest income increased by $8.0 million to $206.9 million during the nine months ended September 30, 2012 compared to $198.9 million for the same period last year. This change was due to a $10.0 million decrease in interest expense and a $1.8 million increase in interest on investment securities, offset by a $3.7 million decrease in loan and lease interest income. Interest expense on deposits decreased $6.3 million due to lower rates on all interest-bearing deposits and lower average time deposits. Interest expense on borrowings declined $2.9 million due to lower average borrowings and a lower average rate on such borrowings; we repaid fixed-rate term FHLB advances at the end of the first quarter of 2012 and replaced a portion of those advances with lower cost overnight FHLB advances that were repaid during the third quarter. Interest expense on subordinated debentures decreased $779,000 due to the March 2012 redemption of $18.6 million in fixed-rate trust preferred securities. Interest income on investment securities increased $1.8 million due to purchases. Interest income on loans and leases declined due to lower average loans and leases from repayments and resolution activities, offset partially by a higher yield. The higher loan and lease yield is attributed to the relatively higher yields earned on the Celtic and EQF loan and lease portfolios which were added in 2012.

NET INTEREST MARGIN

Our net interest margin (“NIM”) for the third quarter of 2012 was 5.58%, a decrease of 2 basis points from the 5.60% reported for the second quarter of 2012.

The NIM is impacted by changes in interest income from accelerated accretion of purchase discounts resulting from covered loan payoffs, nonaccrual loans, early lease payoffs, and amortization of premiums on certain purchased loans. The effects of such items on the NIM and the calculation of our core NIM are shown in the following table:

					Nine
					Months
	Three Months Ended				Ended
	September 30,		June 30,		September 30,
	2012		2012		2012
Net interest margin as reported	5.58	%	5.60	%	5.53	%
Less:
Accelerated accretion of purchase discounts resulting from covered loan payoffs	0.12	%	0.19	%	0.15	%
Nonaccrual loan interest	0.04	%	(0.02	)%	0.01	%
Equipment Finance lease payoffs	0.10	%	0.07	%	0.06	%
Net premium amortization/other	—		(0.12	)%	(0.03	)%
Core net interest margin	5.32	%	5.48	%	5.34	%

The yield on average loans and leases increased 16 basis points to 7.44% for the third quarter of 2012 from 7.28% for the second quarter of 2012. When the effects of accelerated accretion, nonaccrual loan interest, and early lease payoffs and premium amortization are excluded, our core loan and lease yield was 7.07% for the third quarter and 7.12% for the second quarter.

All-in deposit cost declined 2 basis points to 0.27% during the third quarter of 2012 compared to the second quarter of 2012. The cost of interest-bearing deposits declined 3 basis points to 0.46% due to the lower rate on average time deposits. The cost of total interest-bearing liabilities declined 2 basis points to 0.59% for the third quarter of 2012.

The NIM for the first nine months of 2012 was 5.53%, an increase of 18 basis points from 5.35% for the same period last year. The increase was due to lower funding costs and a higher yield on loans and leases, offset by a lower return on the securities portfolio. When the effects of accelerated accretion, nonaccrual loan interest, and early lease payoffs and premium amortization are excluded, our core NIMs were 5.34% and 5.10% for the nine months ended September 30, 2012 and 2011, respectively.

The yield on average loans and leases increased 39 basis points to 7.34% for the nine months ended September 30, 2012 compared to 6.95% for the same period last year, due mainly to the addition of Celtic’s and EQF’s higher-yielding loan and lease portfolios. When the effects of accelerated accretion, nonaccrual loan interest, and early lease payoffs and premium amortization are excluded, our core loan and lease yields were 7.07% and 6.63% for the nine months ended September 30, 2012 and 2011, respectively. All-in deposit cost declined 18 basis points to 0.30% for the first nine months of 2012 compared to the same period last year. The cost of interest-bearing deposits declined 25 basis points to 0.49% due to lower rates on all interest-bearing deposits and a decline in time deposits. The cost of total interest-bearing liabilities declined 34 basis points to 0.69% due to the reduction in the cost of interest-bearing deposits and the first quarter of 2012 repayment of $225.0 million in fixed-rate term FHLB advances and the redemption of $18.6 million in fixed-rate trust preferred securities.

NONINTEREST INCOME

Noninterest income increased by $811,000 to $5.7 million for the third quarter of 2012 compared to $4.9 million for the second quarter of 2012. The change was due to a $1.1 million OTTI loss on one of our covered private label collateralized mortgage obligation (“CMO”) securities incurred in the second quarter and not repeated in the third quarter. After the 80% loss share on the covered private label CMO, our share of the loss was $223,000. Additionally, FDIC loss sharing expense is lower by $627,000 when the loss share income related to the OTTI is excluded. We also recognized in other noninterest income a $297,000 gain on the sale of 10 branches to during the third quarter. These items were offset by lower gains on sales of leases of $271,000 and lower service charges on deposit accounts of $220,000.

The third quarter includes net FDIC loss sharing expense of $367,000 compared to second quarter net FDIC loss sharing expense of $102,000; such change was due mostly to the second quarter OTTI loss on a covered private label CMO security and higher write-offs of the FDIC

loss sharing asset relating to resolution of covered loans at amounts higher than their carrying values, offset by higher covered OREO write-downs during the third quarter. The reduction in service charges on deposit accounts was attributable primarily to lower analysis charges and NSF fees.

The following table presents the details of FDIC loss sharing income (expense), net for the periods indicated:

	Three Months Ended
	September 30,			June 30,			Increase
	2012			2012			(Decrease)
				(In thousands)
FDIC Loss Sharing Income (Expense), Net:
(Loss) gain on FDIC loss sharing asset (1)	$	(593	)	$	575		$	(1,168	)
Net amortization	(2,488		)	(1,917		)	(571		)
Loan recoveries shared with FDIC	(640		)	(1,246		)	606
Net reimbursement from FDIC for covered OREO write-downs and sales	3,350			1,589			1,761
Other-than-temporary impairment loss on covered security	—			892			(892		)
Other	4			5			(1		)
Total FDIC loss sharing income (expense), net	$	(367	)	$	(102	)	$	(265	)

(1) Includes increases related to covered loan loss provisions and decreases for write-offs for covered loans resolved or expected to be resolved at amounts higher than their carrying value.

Noninterest income declined by $9.4 million to $13.8 million for the nine months ended September 30, 2012 compared to $23.2 million for the same period last year. The change was due principally to a decrease in net FDIC loss sharing income of $9.2 million, a $1.1 million OTTI loss on one of our covered private label CMO’s, and a $714,000 reduction in service charges on deposit accounts, offset partially by a $1.5 million gain on sale of leases attributable to EQF. FDIC loss sharing income, net, decreased due mainly to lower provisions for credit losses on covered loans, increased write-offs of the FDIC loss sharing asset relating to resolution of covered loans at amounts higher than their carrying values, and higher amortization of the FDIC loss sharing asset, offset partially by higher covered OREO write-downs.

NONINTEREST EXPENSE

Noninterest expense increased by $4.1 million to $51.7 million during the third quarter of 2012 compared to $47.6 million for the second quarter of 2012. Noninterest expense for APB’s operations totaled $718,000 since the August 1, 2012 acquisition date. Covered OREO expense increased $2.2 million due to higher write-downs of $2.5 million offset by higher gains on sales of $309,000. Non-covered OREO expense increased $1.8 million due to $2.5 million in higher write-downs offset by higher gains on sales of $709,000. Acquisition and integration costs increased $1.2 million due to the APB acquisition. Such costs include severance, systems conversion and professional fees, and accruals for the closures of Pacific Western Bank offices at the time of the APB acquisition. Partially offsetting these items was a decrease in other expense relating to a lawsuit settlement of $595,000 incurred in the second quarter; there was no similar expense in the third quarter.

Noninterest expense includes (a) amortization of time-based restricted stock, which is included in compensation, and (b) intangible asset amortization. Amortization of restricted stock totaled $1.4 million and $1.3 million for the third and second quarters of 2012, respectively. Intangible asset amortization totaled $1.7 million for each of the third and second quarters of 2012.

Noninterest expense increased by $31.6 million to $168.1 million during the nine months ended September 30, 2012 compared to $136.5 million for the same period last year. The increase was due mostly to $22.6 million in debt termination expense incurred in the first quarter of 2012 for the early repayments of FHLB advances and trust preferred securities. No such expense was incurred in the prior year period. Excluding the debt termination expense, noninterest expense increased $9.0 million. Noninterest expense for APB, Celtic and EQF totaled $10.2 million since their acquisition dates, and the increase in acquisition and integration costs totaled $3.0 million. Covered OREO expense increased $3.8 million due mostly to lower gains on sales of $4.9 million offset by lower write-downs of $909,000. The majority of the other expense categories declined. The following items are net of the impact of acquisition activity. Intangible asset amortization declined $1.8 million due to certain intangibles being fully amortized. Insurance and assessments decreased $1.6 million due to the revised deposit insurance assessment formula. Non-covered OREO expense decreased $1.5 million due to higher gains on sales of $1.2 million and lower write-downs of $536,000. Other professional services declined $1.2 million due to lower legal fees for litigation and loans and to lower fees for our outsourced internal audit function.

Amortization of restricted stock totaled $4.3 million and $6.2 million for the nine months ended September 30, 2012 and 2011, respectively. Intangible asset amortization totaled $5.2 million and $6.6 million for the same year-to-date periods, respectively.

CREDIT QUALITY

	September 30,			June 30,			September 30,
	2012			2012			2011
	(Dollars in thousands)
Non-Covered Credit Quality Metrics:
Allowance for credit losses	$	75,012		$	78,031		$	96,535
Nonaccrual loans and leases	36,985			52,763			59,968
Classified loans and leases (1)	96,898			139,910			177,745
Performing restructured loans	112,834			103,815			86,406
Net charge-offs (for the quarter)	1,019			3,706			6,017
Allowance for credit losses to loans and leases, net of unearned income	2.46		%	2.74		%	3.34		%
Allowance for credit losses to nonaccrual loans and leases	203		%	148		%	161		%
Nonperforming assets to loans and leases, net of unearned income, and other real estate owned	2.41		%	3.27		%	3.68		%

(1) Classified loans and leases are those with a credit risk rating of substandard or doubtful.

Our non-covered loans and leases include $341.2 million in loans and leases acquired in our 2012 acquisitions and that were initially recorded at their estimated fair values. Only $350,000 of our allowance for credit losses applies to such loans and leases because the fair value amounts at which they were initially recorded included an estimate of their credit loss. When these loans and leases are excluded from the total of non-covered loans and leases, the coverage ratio of our allowance for credit losses increases to 2.76% at September 30, 2012. The comparable ratio at June 30, 2012 was 2.91%.

Credit Loss Provisions

The Company recorded a negative provision for credit losses of $2.1 million in the third quarter of 2012 compared to a negative provision for credit losses of $271,000 in the second quarter of 2012. The provision in the third quarter was composed of a $2.0 million negative provision for credit losses on non-covered loans and leases and a $141,000 negative provision for credit losses on covered loans. The negative provision in the second quarter was composed solely of a $271,000 negative provision for credit losses on covered loans.

The provision level on the non-covered portfolio is generated by our allowance methodology and reflects net charge-offs, the levels of nonaccrual and classified loans and leases, the migration of loans and leases into various risk classifications, and the level of outstanding loans and leases. The provision or negative provision for credit losses on the covered loans increases or decreases the covered loan allowance for credit losses and results from decreases or increases in expected cash flows on covered loans compared to those previously estimated.

Non-covered Nonaccrual Loans and Other Real Estate Owned

Non-covered nonperforming assets include non-covered nonaccrual loans and leases and non-covered OREO and totaled $74.3 million at September 30, 2012 compared to $94.5 million at June 30, 2012. The ratio of non-covered nonperforming assets to non-covered loans and leases and non-covered OREO decreased to 2.41% at September 30, 2012 from 3.27% at June 30, 2012.

The following table presents our non-covered 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
	September 30, 2012				June 30, 2012				30 - 89 Days Past Due (1)
			% of				% of		September 30,		June 30,
			Loan				Loan		2012		2012
	Balance		Category		Balance		Category		Balance		Balance
	(Dollars in thousands)
Real estate mortgage:
Hospitality	$	6,993	5.9	%	$	13,279	9.6	%	$	—	$	—
SBA 504	1,330		2.4	%	1,873		3.3	%	2,926		2,948
Other	9,031		0.5	%	14,548		0.9	%	—		2,495
Total real estate mortgage	17,354		0.9	%	29,700		1.6	%	2,926		5,443
Real estate construction:
Residential	1,063		2.5	%	1,069		3.4	%	—		—
Commercial	3,885		3.5	%	4,453		4.6	%	1,301		—
Total real estate construction	4,948		3.2	%	5,522		4.3	%	1,301		—
Commercial:
Collateralized	7,180		1.7	%	7,258		2.0	%	12		310
Unsecured	2,055		2.4	%	2,554		3.4	%	—		—
Asset-based	176		0.1	%	176		0.1	%	—		—
SBA 7(a)	4,433		17.0	%	6,830		26.2	%	210		404
Total commercial	13,844		1.8	%	16,818		2.4	%	222		714
Leases	420		0.3	%	244		0.2	%	—		148
Consumer	419		2.0	%	479		2.8	%	23		216
Total non-covered loans and leases	$	36,985	1.2	%	$	52,763	1.9	%	$	4,472	$	6,521

(1) Excludes covered loans.

The $15.8 million decrease in non-covered nonaccrual loans and leases during the third quarter was attributable to (a) additions of $5.5 million, (b) foreclosures of $1.7 million, (c) other reductions, payoffs and returns to accrual status of $17.7 million, and (d) charge-offs of $1.9 million.

Below is a summary of the ten largest lending relationships on nonaccrual status, excluding SBA-related loans, as of the date indicated:

Nonaccrual
Amount
September 30,
2012		Description
(In thousands)

$	6,993	Two loans, each secured by a hotel in San Diego County, California. The borrower is paying according to the restructured terms of each loan. (1)

3,057		This loan is unsecured. The borrower is paying according to the restructured terms of the loan. (1)

2,388		This loan is secured by a strip retail center in Riverside County, California. The borrower is paying according to the restructured terms of the loan. (1)

2,106		This loan is secured by two industrial buildings in San Diego County, California.

1,811		This loan is unsecured and has a specific reserve for 96% of the balance. The borrower is paying according to the restructured terms of the loan. (1)

1,635		Three loans, two of which are secured by apartment buildings in San Diego County, California; and one of which is secured by an office building in San Diego County, California. One of the loans secured by an apartment building was repaid early in the 4th quarter. The borrrower is paying according to the original terms of the loans.

1,241		This loan is secured by three industrial buildings in Riverside County, California. The borrower is paying according to the original terms of the loan. (1)

1,005		This loan is secured by a multi-tenant industrial building in Riverside County, California. The borrower is not paying currently. (1)

984		This loan is unsecured and has a specific reserve for 100% of the balance. The borrower is not paying currently.(1)

931		This loan is secured by a medical-related office building in Los Angeles County, California. The borrower is paying according to the restructured terms of the loan. (1)

$	22,151	Total

(1) On nonaccrual status at June 30, 2012

The following table presents the details of non-covered and covered OREO as of the dates indicated:

	September 30, 2012				June 30, 2012
	Non-Covered		Covered		Non-Covered		Covered
Property Type	OREO		OREO		OREO		OREO
	(In thousands)
Commercial real estate	$	9,962	$	18,500	$	17,630	$	17,896
Construction and land development	25,633		6,807		24,112		10,011
Multi-family	—		939		—		—
Single family residences	1,738		128		—		3,183
Total OREO, net	$	37,333	$	26,374	$	41,742	$	31,090

The following table presents non-covered and covered OREO activity for the period indicated:

	Three Months Ended
	September 30, 2012
	Non-Covered			Covered			Total
	OREO			OREO			OREO
	(In thousands)
Beginning of period	$	41,742		$	31,090		$	72,832
Addition from the APB acquisition	1,561			—			1,561
Foreclosures	1,700			10,823			12,523
Payments to third parties (1)	176			—			176
Provision for losses	(2,566		)	(5,214		)	(7,780		)
Reductions related to sales	(5,280		)	(10,325		)	(15,605		)
End of period	$	37,333		$	26,374		$	63,707

Net gain on sale	$	1,037		$	1,026		$	2,063

(1) Represents amounts due to participants and for guarantees, property taxes or any other prior lien positions.

REGULATORY CAPITAL MEASURES ARE ABOVE THE WELL-CAPITALIZED MINIMUMS

PacWest and its wholly-owned banking subsidiary, Pacific Western Bank, each remained well capitalized as of the date indicated as shown in the following table:

	September 30, 2012
	Well		Pacific		PacWest
	Capitalized		Western		Bancorp
	Requirement		Bank		Consolidated
Tier 1 leverage capital ratio	5.00	%	9.64	%	10.26	%
Tier 1 risk-based capital ratio	6.00	%	14.25	%	14.91	%
Total risk-based capital ratio	10.00	%	15.52	%	16.18	%
Tangible common equity ratio	N/A		10.42	%	8.98	%

AMERICAN PERSPECTIVE BANK ACQUISITION

On August 1, 2012, Pacific Western Bank completed the acquisition of American Perspective Bank (“APB”) and acquired all of the outstanding common stock and restricted stock of APB for $58.1 million in cash, or $13.00 per share for each share of common stock of American Perspective. APB had two operating branches located in San Luis Obispo and Santa Maria, California, and a loan production office located in Paso Robles, California. Immediately following the completion of the acquisition, APB was merged with and into Pacific Western Bank.

SALE OF BRANCHES

On September 21, 2012, Pacific Western Bank completed the sale of 10 branches to Opus Bank. The branches are located in Los Angeles, San Bernardino, Riverside, and San Diego Counties. The transaction resulted in the transfer of deposits to Opus Bank in exchange for a blended deposit premium of 2.5% applied to the deposit balances transferred at closing. The deposits of the offices sold totaled $125.2 million. Although certain other immaterial assets related to the branches were included in the transaction, no loans were transferred. The annual cost savings, representing noninterest expense less noninterest income, are estimated to be $2.0 million after tax.

ABOUT PACWEST BANCORP

PacWest Bancorp (“PacWest”) is a bank holding company with $5.5 billion in assets as of September 30, 2012, with one wholly-owned banking subsidiary, Pacific Western Bank (“Pacific Western”). Through 66 full-service community banking branches, Pacific Western provides commercial banking services, including real estate, construction and commercial loans, to small and medium-sized businesses. Pacific Western’s branches are located throughout California in Los Angeles, Orange, Riverside, San Bernardino, Santa Barbara, San Diego, San Francisco, San Luis Obispo, San Mateo and Ventura Counties. Through its subsidiaries, BFI Business Finance and Celtic Capital Corporation, and its divisions First Community Financial and Pacific Western Equipment Finance, Pacific Western also provides working capital financing and equipment leasing to growing companies located throughout the United States, with a focus on the Southwestern U.S., primarily in Arizona, California, Utah and Texas. Additional information regarding PacWest Bancorp is available on the Internet at www.pacwestbancorp.com. Information regarding Pacific Western Bank is also available on the Internet at www.pacificwesternbank.com.

FORWARD-LOOKING STATEMENTS

This press release 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. All statements other than statements of historical fact are forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. We

caution readers that a number of important factors could cause actual results to differ materially from those expressed in, implied or projected by, such forward-looking statements. Risks and uncertainties include, but are not limited to: failure to obtain regulatory or other required approvals; an inability to achieve expected cost savings in the amounts or timeframes discussed if at all, or the costs associated with the transaction or the time needed to complete the transaction being greater than expected; lower than expected revenues; credit quality deterioration or a reduction in real estate values could cause an increase in the allowance for credit losses and a reduction in net earnings; increased competitive pressure among depository institutions; the Company’s ability to complete future acquisitions, successfully integrate such acquired entities, or achieve expected beneficial synergies and/or operating efficiencies within expected time-frames or at all; settlements with the FDIC related to our loss-sharing arrangements from the Los Padres Bank and Affinity Bank acquisitions; the possibility that personnel changes will not proceed as planned; the cost of additional capital is more than expected; a change in the interest rate environment reduces net interest margins; asset/liability repricing risks and liquidity risks; pending legal matters may take longer or cost more to resolve or may be resolved adversely to the Company; general economic conditions, either nationally or in the market areas in which the Company does or anticipates doing business, are less favorable than expected; environmental conditions, including natural disasters, may disrupt our business, impede our operations, negatively impact the values of collateral securing the Company’s loans and leases or impair the ability of our borrowers to support their debt obligations; the economic and regulatory effects of the continuing war on terrorism and other events of war, including the conflicts in the Middle East; legislative or regulatory requirements or changes adversely affecting the Company’s business; changes in the securities markets; regulatory approvals for any capital activities cannot be obtained on the terms expected or on the anticipated schedule; and, other risks that are described in PacWest’s public filings with the U.S. Securities and Exchange Commission (the “SEC”). If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, PacWest’s results could differ materially from those expressed in, implied or projected by such forward-looking statements. PacWest assumes no obligation to update such forward-looking statements.

For a more complete discussion of risks and uncertainties, investors and security holders are urged to read PacWest Bancorp’s annual report on Form 10-K, quarterly reports on Form 10-Q and other reports filed by PacWest with the SEC. The documents filed by PacWest with the SEC may be obtained at PacWest Bancorp’s website at www.pacwestbancorp.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from PacWest by directing a request to: PacWest Bancorp c/o Pacific Western Bank, 275 North Brea Boulevard, Brea, CA 92821. Attention: Investor Relations. Telephone 714-671-6800.

PACWEST BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30,			June 30,			December 31,
	2012			2012			2011
	(In thousands, except per share and share data)
ASSETS
Cash and due from banks	$	89,370		$	97,499		$	92,342
Interest-earning deposits in financial institutions	71,036			25,970			203,275
Total cash and cash equivalents	160,406			123,469			295,617

Non-covered securities available-for-sale	1,311,324			1,307,648			1,281,209
Covered securities available-for-sale	45,887			44,053			45,149
Total securities available-for-sale, at estimated fair value	1,357,211			1,351,701			1,326,358
Federal Home Loan Bank stock, at cost	40,923			41,736			46,106
Total investment securities	1,398,134			1,393,437			1,372,464

Non-covered loans and leases, net of unearned income	3,050,891			2,844,291			2,807,713
Allowance for loan and lease losses	(69,142		)	(72,061		)	(85,313		)
Total non-covered loans and leases, net	2,981,749			2,772,230			2,722,400
Covered loans, net	567,396			608,949			703,023
Total loans and leases, net	3,549,145			3,381,179			3,425,423

Non-covered other real estate owned, net	37,333			41,742			48,412
Covered other real estate owned, net	26,374			31,090			33,506
Total other real estate owned, net	63,707			72,832			81,918

Premises and equipment, net	18,064			21,565			23,068
FDIC loss sharing asset	72,640			76,401			95,187
Cash surrender value of life insurance	67,900			67,595			67,469
Goodwill	79,592			62,008			39,141
Core deposit and customer relationship intangibles	15,899			16,943			17,415
Other assets	113,015			106,193			110,535
Total assets	$	5,538,502		$	5,321,622		$	5,528,237

LIABILITIES
Noninterest-bearing demand deposits	$	2,006,996		$	1,872,459		$	1,685,799
Interest-bearing deposits	2,780,352			2,718,870			2,891,654
Total deposits	4,787,348			4,591,329			4,577,453
Borrowings	17,996			15,546			225,000
Subordinated debentures	108,250			108,250			129,271
Accrued interest payable and other liabilities	40,822			40,849			50,310
Total liabilities	4,954,416			4,755,974			4,982,034
STOCKHOLDERS’ EQUITY (1)	584,086			565,648			546,203
Total liabilities and stockholders’ equity	$	5,538,502		$	5,321,622		$	5,528,237

(1) Includes net unrealized gain on securities available-for-sale, net	$	40,015	$	32,494	$	22,803

Tangible book value per share	$	13.06	$	13.01	$	13.14
Book value per share	$	15.61	$	15.12	$	14.66

Shares outstanding (includes unvested restricted shares of 1,718,019 at September 30, 2012; 1,703,936 at June 30, 2012; and 1,675,730 at December 31, 2011)	37,420,025		37,402,293		37,254,318

PACWEST BANCORP AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
	2012			2012			2011			2012			2011
	(In thousands, except per share data)
Interest income:
Loans and leases	$	66,711		$	63,312		$	63,347		$	194,775		$	198,459
Investment securities	8,346			9,558			9,077			27,484			25,678
Deposits in financial institutions	66			20			94			154			234
Total interest income	75,123			72,890			72,518			222,413			224,371

Interest expense:
Deposits	3,292			3,336			5,072			10,232			16,546
Borrowings	210			293			1,782			2,428			5,289
Subordinated debentures	850			848			1,223			2,889			3,668
Total interest expense	4,352			4,477			8,077			15,549			25,503

Net interest income	70,771			68,413			64,441			206,864			198,868

Provision for credit losses:
Non-covered loans and leases	(2,000		)	—			—			(12,000		)	13,300
Covered loans	(141		)	(271		)	348			3,514			9,148
Total provision for credit losses	(2,141		)	(271		)	348			(8,486		)	22,448

Net interest income after provision for credit losses	72,912			68,684			64,093			215,350			176,420

Noninterest income:
Service charges on deposit accounts	3,108			3,328			3,545			9,789			10,503
Other commissions and fees	2,123			2,095			2,052			6,101			5,752
Gain on sale of leases	132			403			—			1,525			—
Other-than-temporary impairment loss on covered security	—			(1,115		)	—			(1,115		)	—
Increase in cash surrender value of life insurance	304			295			359			964			1,106
FDIC loss sharing income (expense), net	(367		)	(102		)	963			(4,048		)	5,109
Other income	382			(33		)	224			599			702
Total noninterest income	5,682			4,871			7,143			13,815			23,172

Noninterest expense:
Compensation	23,812			23,699			21,557			71,698			65,203
Occupancy	6,964			7,088			7,423			21,340			21,548
Data processing	2,310			2,258			2,228			6,848			6,832
Other professional services	2,019			2,378			2,239			6,167			7,040
Business development	635			581			548			1,854			1,712
Communications	652			626			678			1,886			2,371
Insurance and assessments	1,398			1,323			1,641			4,014			5,581
Non-covered other real estate owned, net	1,883			130			2,293			3,834			5,296
Covered other real estate owned, net	4,290			2,130			4,813			7,242			3,440
Intangible asset amortization	1,678			1,737			1,977			5,150			6,592
Acquisition and integration costs	2,101			871			—			2,997			—
Debt termination	—			—			—			22,598			—
Other expenses	3,915			4,764			3,190			12,509			10,909
Total noninterest expense	51,657			47,585			48,587			168,137			136,524

Earnings before income taxes	26,937			25,970			22,649			61,028			63,068
Income tax expense	(10,849		)	(10,413		)	(9,345		)	(24,119		)	(26,247		)
Net earnings	$	16,088		$	15,557		$	13,304		$	36,909		$	36,821

Basic and diluted earnings per share	$	0.43		$	0.42		$	0.36		$	1.00		$	0.99

PACWEST BANCORP AND SUBSIDIARIES

AVERAGE BALANCE SHEETS AND YIELD ANALYSIS

(Unaudited)

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
	2012			2012			2011			2012			2011
	(Dollars in Thousands)
Average Assets:
Loans and leases, net of unearned income	$	3,565,637		$	3,499,056		$	3,656,184		$	3,542,571		$	3,820,036
Investment securities	1,377,016			1,390,080			1,168,822			1,376,722			1,030,416
Interest-earning deposits in financial institutions	101,491			28,478			142,691			77,928			119,698
Federal funds sold	—			10			—			3			—
Average interest-earning assets	5,044,144			4,917,624			4,967,697			4,997,224			4,970,150
Other assets	478,428			463,962			486,276			471,216			502,435
Average total assets	$	5,522,572		$	5,381,586		$	5,453,973		$	5,468,440		$	5,472,585

Average liabilities:
Interest checking deposits	$	522,551		$	514,969		$	489,988		$	516,924		$	491,942
Money market deposits	1,248,723			1,172,050			1,222,787			1,206,820			1,226,840
Savings deposits	160,843			160,937			154,922			160,912			148,552
Time deposits	885,181			889,705			1,049,805			905,721			1,102,865
Average interest-bearing deposits	2,817,298			2,737,661			2,917,502			2,790,377			2,970,199
Borrowings	22,700			113,233			225,022			124,863			225,722
Subordinated debentures	108,250			108,250			129,395			113,279			129,469
Average interest-bearing liabilities	2,948,248			2,959,144			3,271,919			3,028,519			3,325,390
Noninterest-bearing demand deposits	1,956,929			1,824,278			1,616,012			1,833,855			1,602,518
Other liabilities	43,786			40,984			43,983			44,829			43,057
Average total liabilities	4,948,963			4,824,406			4,931,914			4,907,203			4,970,965
Average stockholders’ equity	573,609			557,180			522,059			561,237			501,620
Average liabilities and stockholders’ equity	$	5,522,572		$	5,381,586		$	5,453,973		$	5,468,440		$	5,472,585

Average deposits	$	4,774,227		$	4,561,939		$	4,533,514		$	4,624,232		$	4,572,717

Yield on:
Average loans and leases	7.44		%	7.28		%	6.87		%	7.34		%	6.95		%
Average investment securities	2.41		%	2.77		%	3.08		%	2.67		%	3.33		%
Average interest-earning deposits	0.26		%	0.28		%	0.26		%	0.26		%	0.26		%
Average interest-earning assets	5.92		%	5.96		%	5.79		%	5.95		%	6.04		%

Cost of:
Average deposits/all-in deposit cost (1)	0.27		%	0.29		%	0.44		%	0.30		%	0.48		%
Average interest-bearing deposits	0.46		%	0.49		%	0.69		%	0.49		%	0.74		%
Average borrowings	3.68		%	1.04		%	3.14		%	2.60		%	3.13		%
Average subordinated debentures	3.12		%	3.15		%	3.75		%	3.41		%	3.79		%
Average interest-bearing liabilities	0.59		%	0.61		%	0.98		%	0.69		%	1.03		%

Net interest rate spread (2)	5.33		%	5.35		%	4.81		%	5.26		%	5.01		%
Net interest margin (3)	5.58		%	5.60		%	5.15		%	5.53		%	5.35		%

(1) Cost of average deposits/all-in deposit cost is calculated as annualized interest expense on deposits divided by average deposits.

(2) Net interest rate spread is calculated as the yield on average interest-earning assets less the cost of average interest-bearing liabilities.

(3) Net interest margin is calculated as annualized net interest income divided by average interest-earning assets.

PACWEST BANCORP AND SUBSIDIARIES

LOAN CONCENTRATION

(Unaudited)

	September 30, 2012
	Total Loans				Non-Covered Loans					Covered Loans
			% of					% of					% of
	Amount		Total		Amount			Total		Amount			Total
	(Dollars in thousands)
Real estate mortgage:
Hospitality	$	121,092	3	%	$	118,189		4	%	$	2,903		0	%
SBA 504	55,083		1	%	55,083			2	%	—			—
Other	2,359,139		64	%	1,755,618			57	%	603,521			93	%
Total real estate mortgage	2,535,314		68	%	1,928,890			63	%	606,424			93	%
Real estate construction:
Residential	49,844		1	%	42,752			1	%	7,092			1	%
Commercial	129,499		4	%	109,996			4	%	19,503			3	%
Total real estate construction	179,343		5	%	152,748			5	%	26,595			4	%

Total real estate loans	2,714,657		73	%	2,081,638			68	%	633,019			97	%

Commercial:
Collateralized	449,245		12	%	433,030			14	%	16,215			3	%
Unsecured	88,020		2	%	87,335			3	%	685			0	%
Asset-based	226,401		6	%	226,401			7	%	—			—
SBA 7(a)	26,002		1	%	26,002			1	%	—			—
Total commercial	789,668		21	%	772,768			25	%	16,900			3	%
Leases (1)	161,934		4	%	161,934			5	%	—			—
Consumer	21,233		1	%	20,615			1	%	618			0	%
Foreign	16,126		1	%	16,126			1	%	—			—
Total gross loans	$	3,703,618	100	%	3,053,081			100	%	650,537			100	%
Less:
Unearned income					(2,190		)			—
Discount					—					(52,437		)
Allowance					(69,142		)			(30,704		)
Total net loans					$	2,981,749				$	567,396

(1) Excludes leases in process of $15.1 million.

PACWEST BANCORP AND SUBSIDIARIES

NON-COVERED LOAN CONCENTRATION

REAL ESTATE MORTGAGE LOANS

(Unaudited)

	September 30, 2012				June 30, 2012				December 31, 2011
			% of				% of				% of
Loan Category	Amount		Total		Amount		Total		Amount		Total
	(Dollars in thousands)
Commercial real estate mortgage:
Industrial/warehouse	$	329,287	17.1	%	$	344,380	18.8	%	$	367,494	18.5	%
Retail	255,669		13.3	%	253,201		13.8	%	286,691		14.5	%
Office buildings	284,920		14.8	%	257,703		14.1	%	290,074		14.6	%
Owner-occupied	196,812		10.2	%	204,179		11.2	%	226,307		11.4	%
Hotel	118,189		6.1	%	137,621		7.5	%	144,402		7.3	%
Healthcare	113,827		5.9	%	117,418		6.4	%	131,625		6.7	%
Mixed use	47,404		2.5	%	48,915		2.7	%	53,855		2.7	%
Gas station	28,563		1.5	%	30,328		1.7	%	33,715		1.7	%
Self storage	19,489		1.0	%	19,602		1.1	%	23,148		1.2	%
Restaurant	16,651		0.9	%	16,795		0.9	%	22,549		1.1	%
Land acquisition/development	21,988		1.1	%	22,051		1.2	%	14,015		0.7	%
Unimproved land	11,089		0.6	%	11,516		0.6	%	1,369		0.1	%
Other	278,475		14.3	%	190,761		10.4	%	206,504		10.4	%
Total commercial real estate mortgage	1,722,363		89.3	%	1,654,470		90.4	%	1,801,748		90.9	%

Residential real estate mortgage:
Multi-family	86,190		4.5	%	93,586		5.1	%	93,866		4.7	%
Single family owner-occupied	37,700		2.0	%	39,483		2.2	%	32,209		1.6	%
Single family nonowner-occupied	7,165		0.4	%	8,862		0.5	%	19,341		1.0	%
HELOCs	47,966		2.5	%	32,376		1.8	%	35,300		1.8	%
Other	27,506		1.3	%	—		—		—		—
Total residential real estate mortgage	206,527		10.7	%	174,307		9.6	%	180,716		9.1	%

Total gross non-covered real estate mortgage loans	$	1,928,890	100.0	%	$	1,828,777	100.0	%	$	1,982,464	100.0	%

PACWEST BANCORP AND SUBSIDIARIES

COVERED LOAN CONCENTRATION

REAL ESTATE MORTGAGE LOANS

(Unaudited)

	September 30, 2012				June 30, 2012				December 31, 2011
			% of				% of				% of
Loan Category	Amount		Total		Amount		Total		Amount		Total
	(Dollars in thousands)
Commercial real estate mortgage:
Industrial/warehouse	$	26,510	4.4	%	$	27,580	4.2	%	$	33,755	4.6	%
Retail	94,437		15.5	%	99,947		15.4	%	113,289		15.4	%
Office buildings	66,657		11.0	%	68,781		10.6	%	77,767		10.6	%
Owner-occupied	20,164		3.3	%	20,323		3.1	%	24,837		3.4	%
Hotel	2,903		0.5	%	2,916		0.4	%	2,944		0.4	%
Healthcare	14,350		2.4	%	14,546		2.2	%	16,851		2.3	%
Mixed use	5,728		0.9	%	6,951		1.1	%	7,733		1.1	%
Gas station	5,141		0.8	%	5,941		0.9	%	6,001		0.8	%
Self storage	50,110		8.3	%	53,187		8.2	%	52,793		7.2	%
Restaurant	1,723		0.3	%	1,764		0.3	%	2,532		0.3	%
Unimproved land	966		0.2	%	1,734		0.3	%	1,752		0.2	%
Other	13,803		2.3	%	13,886		2.1	%	14,887		2.0	%
Total commercial real estate mortgage	302,492		49.9	%	317,556		48.8	%	355,141		48.3	%

Residential real estate mortgage:
Multi-family	191,736		31.6	%	215,759		33.1	%	250,633		34.0	%
Single family owner-occupied	80,360		13.3	%	85,212		13.1	%	95,248		12.9	%
Single family nonowner-occupied	23,266		3.8	%	23,911		3.7	%	25,624		3.5	%
Mixed use	2,858		0.5	%	2,879		0.4	%	2,918		0.4	%
HELOCs	5,712		0.9	%	5,680		0.9	%	6,794		0.9	%
Total residential real estate mortgage	303,932		50.1	%	333,441		51.2	%	381,217		51.7	%

Total gross covered real estate mortgage loans	$	606,424	100.0	%	$	650,997	100.0	%	$	736,358	100.0	%

PACWEST BANCORP AND SUBSIDIARIES

NON-COVERED LOAN CONCENTRATION TREND

(Unaudited)

	September 30,		June 30,		March 31,		December 31,		September 30,
Loan Segment	2012		2012		2012		2011		2011
	(In thousands)
Real estate mortgage	$	1,928,890	$	1,828,777	$	1,896,052	$	1,982,464	$	2,031,893
Real estate construction	152,748		129,107		118,304		113,059		152,411
Commercial	772,768		701,044		665,441		671,939		671,963
Leases (1)	161,934		153,793		153,845		—		—
Consumer	20,615		17,151		15,826		23,711		20,621
Foreign:
Commercial	14,679		15,507		16,747		19,531		19,532
Other, including real estate	1,447		1,510		2,005		1,401		1,400
Total gross non-covered loans and leases	$	3,053,081	$	2,846,889	$	2,868,220	$	2,812,105	$	2,897,820

(1) Does not include leases in process of $15.1 million, $12.3 million and $13.8 million at September 30, 2012, June 30, 2012 and March 31, 2012.

PACWEST BANCORP AND SUBSIDIARIES

COVERED LOAN CONCENTRATION TREND

(Unaudited)

	September 30,			June 30,			March 31,			December 31,			September 30,
	2012			2012			2012			2011			2011
	(In thousands)
Real estate mortgage	$	606,424		$	650,997		$	699,653		$	736,358		$	788,253
Real estate construction	26,595			32,125			41,191			46,918			55,464
Commercial	16,900			18,954			20,889			25,610			26,729
Consumer	618			659			686			735			824
Total gross covered loans	650,537			702,735			762,419			809,621			871,270
Less: discount	(52,437		)	(62,323		)	(66,312		)	(75,323		)	(80,920		)
Less: allowance for loan losses	(30,704		)	(31,463		)	(35,810		)	(31,275		)	(29,291		)
Total covered loans, net	$	567,396		$	608,949		$	660,297		$	703,023		$	761,059

PACWEST BANCORP AND SUBSIDIARIES

NON-COVERED NONCLASSIFIED AND CLASSIFIED LOANS AND LEASES

(Unaudited)

	September 30, 2012
	Nonclassified		Classified		Total
	(In thousands)
Real estate mortgage:
Hospitality	$	105,417	$	12,772	$	118,189
SBA 504	48,971		6,112		55,083
Other	1,715,968		39,650		1,755,618
Total real estate mortgage	1,870,356		58,534		1,928,890
Real estate construction:
Residential	39,774		2,978		42,752
Commercial	102,098		7,898		109,996
Total real estate construction	141,872		10,876		152,748
Commercial:
Collateralized	417,379		15,651		433,030
Unsecured	84,374		2,961		87,335
Asset-based	225,700		701		226,401
SBA 7(a)	19,117		6,885		26,002
Total commercial	746,570		26,198		772,768
Leases	161,514		420		161,934
Consumer	19,745		870		20,615
Foreign	16,126		—		16,126
Total non-covered loans and leases	$	2,956,183	$	96,898	$	3,053,081

	June 30, 2012
	Nonclassified		Classified		Total
	(In thousands)
Real estate mortgage:
Hospitality	$	118,534	$	19,087	$	137,621
SBA 504	50,041		6,684		56,725
Other	1,577,843		56,588		1,634,431
Total real estate mortgage	1,746,418		82,359		1,828,777
Real estate construction:
Residential	28,365		2,888		31,253
Commercial	78,869		18,985		97,854
Total real estate construction	107,234		21,873		129,107
Commercial:
Collateralized	354,370		16,487		370,857
Unsecured	73,142		2,902		76,044
Asset-based	226,278		1,801		228,079
SBA 7(a)	16,175		9,889		26,064
Total commercial	669,965		31,079		701,044
Leases	150,124		3,669		153,793
Consumer	16,221		930		17,151
Foreign	17,017		—		17,017
Total non-covered loans	$	2,706,979	$	139,910	$	2,846,889

Note: Nonclassified loans and leases are those with a credit risk rating of either pass or special mention, while classified loans and leases are those with a credit risk rating of either substandard or doubtful.

PACWEST BANCORP AND SUBSIDIARIES

ALLOWANCE FOR CREDIT LOSSES ROLLFORWARD

AND NET CHARGE-OFF RATIOS FOR

NON-COVERED LOANS AND LEASES (1)

(Unaudited)

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
	2012			2012			2011			2012			2011
	(Dollars in thousands)
Allowance for credit losses, beginning of period	$	78,031		$	81,737		$	102,552		$	93,783		$	104,328
Loans charged-off:
Real estate mortgage	(1,118		)	(2,583		)	(4,293		)	(5,891		)	(9,859		)
Real estate construction	(492		)	—			—			(492		)	(5,838		)
Commercial	(492		)	(1,352		)	(2,237		)	(2,715		)	(7,967		)
Consumer	(25		)	(34		)	(54		)	(258		)	(1,379		)
Total loans charged off	(2,127		)	(3,969		)	(6,584		)	(9,356		)	(25,043		)
Recoveries on loans charged-off:
Real estate mortgage	845			43			225			1,217			349
Real estate construction	11			14			33			35			1,021
Commercial	218			190			235			1,232			1,160
Consumer	32			16			74			79			1,375
Foreign	2			—			—			22			45
Total recoveries on loans charged off	1,108			263			567			2,585			3,950
Net charge-offs	(1,019		)	(3,706		)	(6,017		)	(6,771		)	(21,093		)
Provision for credit losses	(2,000		)	—			—			(12,000		)	13,300
Allowance for credit losses, end of period	$	75,012		$	78,031		$	96,535		$	75,012		$	96,535

Annualized net charge-offs to average loans and leases	0.14		%	0.52		%	0.83		%	0.31		%	0.94		%

(1) Applies only to non-covered loans and leases.

PACWEST BANCORP AND SUBSIDIARIES

ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING

ASSETS AND CREDIT QUALITY RATIOS FOR

NON-COVERED LOANS AND LEASES

(Unaudited)

	September 30,			June 30,			December 31,
	2012			2012			2011
	(Dollars in thousands)
Allowance for loan and lease losses (1)	$	69,142		$	72,061		$	85,313
Reserve for unfunded loan commitments (1)	5,870			5,970			8,470
Total allowance for credit losses	$	75,012		$	78,031		$	93,783

Nonaccrual loans and leases (2)	$	36,985		$	52,763		$	58,260
Other real estate owned (2)	37,333			41,742			48,412
Total nonperforming assets	$	74,318		$	94,505		$	106,672

Performing restructured loans (1)	$	112,834		$	103,815		$	116,791

Allowance for credit losses to loans and leases, net of unearned income	2.46		%	2.74		%	3.34		%
Allowance for credit losses to nonaccrual loans and leases	202.8		%	147.9		%	161.0		%
Nonperforming assets to loans and leases, net of unearned income, and other real estate owned	2.41		%	3.27		%	3.73		%
Nonperforming assets to total assets	1.34		%	1.78		%	1.93		%
Nonaccrual loans and leases to loans and leases, net of unearned income	1.21		%	1.86		%	2.07		%

(1) Applies to non-covered loans.

(2) Excludes covered nonperforming assets.

PACWEST BANCORP AND SUBSIDIARIES

DEPOSITS

(Unaudited)

	September 30,			June 30,			December 31,
Deposit Category	2012			2012			2011
	(Dollars in thousands)
Noninterest-bearing demand deposits (1)	$	2,006,996		$	1,872,459		$	1,685,799
Interest checking deposits	499,734			518,330			500,998
Money market deposits	1,262,406			1,174,915			1,265,282
Savings deposits	155,871			160,603			157,480
Total core deposits	3,925,007			3,726,307			3,609,559
Time deposits under $100,000	291,450			298,980			324,521
Time deposits of $100,000 and over	570,891			566,042			643,373
Total time deposits	862,341			865,022			967,894
Total deposits	$	4,787,348		$	4,591,329		$	4,577,453

Noninterest-bearing demand deposits as a percentage of total deposits	42		%	41		%	37		%
Core deposits as a percentage of total deposits	82		%	81		%	79		%

(1) The September 30, 2012 balance includes a $120 million deposit received at quarter-end. Such funds were withdrawn in October 2012.

PACWEST BANCORP AND SUBSIDIARIES

TIME DEPOSITS

(Unaudited)

	September 30, 2012
	Time		Time
	Deposits		Deposits		Total
	Under		$100,000		Time
Maturity	$100,000		or More		Deposits		Rate
	(Dollars in thousands)
Due in three months or less	$	61,420	$	104,417	$	165,837	0.33	%
Due in over three months through six months	58,504		110,600		169,104		1.42	%
Due in over six months through twelve months	100,075		198,550		298,625		1.57	%
Due in over 12 months through 24 months	58,026		122,405		180,431		1.07	%
Due in over 24 months	13,425		34,919		48,344		1.09	%
Total	$	291,450	$	570,891	$	862,341	1.17	%

PACWEST BANCORP AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATIONS

(Unaudited)

	Three Months Ended								Nine Months Ended
	September 30,			June 30,			September 30,		September 30,
Adjusted Earnings Before Income Taxes	2012			2012			2011		2012			2011
	(In thousands)
Earnings before income taxes	$	26,937		$	25,970		$	22,649	$	61,028		$	63,068
Plus: Total provision for credit losses	(2,141		)	(271		)	348		(8,486		)	22,448
Non-covered OREO expense, net	1,883			130			2,293		3,834			5,296
Covered OREO expense, net	4,290			2,130			4,813		7,242			3,440
Other-than-temporary impairment loss on covered security	—			1,115			—		1,115			—
Acquisition and integration costs	2,101			871			—		2,997			—
Debt termination expense	—			—			—		22,598			—
Less: FDIC loss sharing income (expense), net	(367		)	(102		)	963		(4,048		)	5,109
Adjusted earnings before income taxes	$	33,437		$	30,047		$	29,140	$	94,376		$	89,143

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
Adjusted Efficiency Ratio	2012			2012			2011			2012			2011
	(Dollars in thousands)
Noninterest expense	$	51,657		$	47,585		$	48,587		$	168,137		$	136,524
Less: Non-covered OREO expense, net	1,883			130			2,293			3,834			5,296
Covered OREO expense, net	4,290			2,130			4,813			7,242			3,440
Acquisition and integration costs	2,101			871			—			2,997			—
Debt termination expense	—			—			—			22,598			—
Adjusted noninterest expense	$	43,383		$	44,454		$	41,481		$	131,466		$	127,788

Net interest income	$	70,771		$	68,413		$	64,441		$	206,864		$	198,868
Noninterest income	5,682			4,871			7,143			13,815			23,172
Net revenues	76,453			73,284			71,584			220,679			222,040
Less: FDIC loss sharing income (expense), net	(367		)	(102		)	963			(4,048		)	5,109
Other-than-temporary impairment loss on covered security	—			(1,115		)	—			(1,115		)	—
Adjusted net revenues	$	76,820		$	74,501		$	70,621		$	225,842		$	216,931

Base efficiency ratio (1)	67.6		%	64.9		%	67.9		%	76.2		%	61.5		%
Adjusted efficiency ratio (2)	56.5		%	59.7		%	58.7		%	58.2		%	58.9		%

(1) Noninterest expense divided by net revenues.

(2) Adjusted noninterest expense divided by adjusted net revenues.

PACWEST BANCORP AND SUBSIDIARIES

GAAP TO NON-GAAP RECONCILIATIONS

(Unaudited)

	September 30,			June 30,			December 31,
Tangible Common Equity	2012			2012			2011
	(Dollars in thousands)
PacWest Bancorp Consolidated:
Stockholders’ equity	$	584,086		$	565,648		$	546,203
Less: Intangible assets	95,491			78,951			56,556
Tangible common equity	$	488,595		$	486,697		$	489,647

Total assets	$	5,538,502		$	5,321,622		$	5,528,237
Less: Intangible assets	95,491			78,951			56,556
Tangible assets	$	5,443,011		$	5,242,671		$	5,471,681

Equity to assets ratio	10.55		%	10.63		%	9.88		%
Tangible common equity ratio (1)	8.98		%	9.28		%	8.95		%

Pacific Western Bank:
Stockholders’ equity	$	660,693		$	642,553		$	625,494
Less: Intangible assets	95,491			78,951			56,556
Tangible common equity	$	565,202		$	563,602		$	568,938

Total assets	$	5,520,998		$	5,305,170		$	5,512,025
Less: Intangible assets	95,491			78,951			56,556
Tangible assets	$	5,425,507		$	5,226,219		$	5,455,469

Equity to assets ratio	11.97		%	12.11		%	11.35		%
Tangible common equity ratio (1)	10.42		%	10.78		%	10.43		%

(1) Calculated as tangible common equity divided by tangible assets.

PACWEST BANCORP AND SUBSIDIARIES

EARNINGS PER SHARE CALCULATIONS

(Unaudited)

	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,
	2012			2012			2011			2012			2011
	(In thousands, except per share data)
Basic Earnings Per Share:
Net earnings	$	16,088		$	15,557		$	13,304		$	36,909		$	36,821
Less: earnings allocated to unvested restricted stock (1)	(574		)	(538		)	(622		)	(1,170		)	(1,595		)
Net earnings allocated to common shares	$	15,514		$	15,019		$	12,682		$	35,739		$	35,226

Weighted-average basic shares and unvested restricted stock outstanding	37,413.2			37,359.2			37,257.4			37,352.4			37,101.3
Less: weighted-average unvested restricted stock outstanding	(1,712.8		)	(1,669.2		)	(1,768.9		)	(1,678.8		)	(1,629.8		)
Weighted-average basic shares outstanding	35,700.4			35,690.0			35,488.5			35,673.6			35,471.5

Basic earnings per share	$	0.43		$	0.42		$	0.36		$	1.00		$	0.99

Diluted Earnings Per Share:
Net earnings allocated to common shares	$	15,514		$	15,019		$	12,682		$	35,739		$	35,226

Weighted-average diluted shares outstanding	35,700.4			35,690.0			35,488.5			35,673.6			35,471.5

Diluted earnings per share	$	0.43		$	0.42		$	0.36		$	1.00		$	0.99

(1) Represents cash dividends paid to holders of unvested restricted stock, net of estimated forfeitures, plus undistributed earnings amounts available to holders of unvested restricted stock, if any.

Contact information:

Matt Wagner, Chief Executive Officer, (310) 728-1020

Vic Santoro, Executive Vice President and CFO, (310) 728-1021

Pacwest Bancorp (PACW) 8-KResults of Operations and Financial Condition