2021 Third Quarter Results
Earnings Release Presentation October 18, 2021
Key Third Quarter Takeaways
- Strong earnings - net earnings of $140.0 million; net interest income up $9.5 million or 3.6% compared to 2Q21; PPNR of $167.8 million, up 8.3% or $12.8 million compared to 2Q21
- Deposit growth continues - core deposits up 4.1% compared to 2Q21 or $1.1 billion
- Strong loan growth - loans up $1.0 billion or 5.2% compared to 2Q21
- Civic continues to build - originated $481 million in 3Q up from $423 million in 2Q; total loan balance now $1.0 billion
- HOA Acquisition - closed on October 8th; adding approximately $4.1 billion in low- cost, stable deposits
- Operating expenses - up given production/performance; will increase in 4Q with addition of HOA business
- Credit/Asset Quality - continued improvement; YTD net recoveries of $2.1 million; ACL ratio of 1.38% ex-PPP
- Liquidity deployment - deployed approximately $3.0 billion in excess cash into the bond portfolio and loans; after HOA acquisition still have over $7.0 billion in excess liquidity
- Capital Management - total risk-based capital at 14.36%; Tier 1 capital at 10.65%
Third Quarter 2021 | PACW | p. 2
Third Quarter Highlights
Strong Balance Sheet
- CET1 ratio of 10.15%
- Total capital ratio of 14.36%
- ACL ratio of 1.36%; 1.38% excluding PPP loans
- Classified loans to total loans of 0.69%
- Net charge-offs of $0.4 million
- Net charge-offs to average loans and leases of 1bp
- Classified loans of $141.6mm, a decline of 52% from 2Q20 high
- Special mention loans of $496.4mm, a decline of 45% from 1Q20 high
- 92% of deposits are core deposits; 42% are noninterest- bearing
- Loan to deposit ratio of 67%
Profitability
- Net earnings of $140.0mm, or $1.17 per diluted share
- Pre-provision,pre-tax net revenues ("PPNR") of $167.8mm(1)
- ROAA of 1.55%
- ROATE of 21.03%(1)
- Net interest income increased $9.5mm or 14.2% annualized
- Net interest margin of 3.33%; negative impact from excess liquidity of approximately 57bps
- Loan and lease yield of 5.01%
- Cost of deposits of 8 bps
- Efficiency ratio of 47.2%
- Provision for credit losses benefit of $20mm
Growth
- Loan production of $2.4bn at weighted average rate of 4.24%
- Loan Growth of $1.3 billion or 7.1% compared to 2Q21 (excluding $337 million reduction in PPP loans)
- Total assets increased $1.0bn or 3% compared to 2Q21
- Core deposits increased $1.1bn or 4.1% compared to 2Q21
- Total deposits increased $0.9bn or 3.1% compared to 2Q21
- Closed the purchase of the Homeowners Association Business from MUFG Union Bank, N.A. on October 8th with approximately $4.1bn of low cost deposits
(1) See "Non-GAAP Measurements" slides starting on page 27.
Third Quarter 2021 | PACW | p. 3
Balance Sheet Highlights
Core and Total Deposits (1)(2)
$28.2bn $29.6bn $30.6bn
$24.0bn $24.9bn
0.17% 0.14% 0.11% 0.10% 0.08%
3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 |
Total Investments and Yield (3)
$9.3bn | ||||||||||
$7.2bn | ||||||||||
$5.2bn | $5.9bn | |||||||||
$4.5bn | ||||||||||
2.52% | 2.50% | 2.44% | 2.23% | 2.12% | ||||||
3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 |
Loans & Leases HFI, Net (4)
Allowance for Credit Losses (5)
$19.0bn $19.1bn $19.0bn
$20.5bn
$19.5bn
$442.5mm $433.8mm
$383.0mm
1.94% 1.93%
1.63%
1.19%
1.01%
3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 |
$300.2mm $279.8mm
2.48% 2.41% 2.14%
1.59% 1.38%
3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 |
- ■ Core Deposits ■ Non-core Deposits
- Line is quarterly cost of average total deposits
- Line is quarterly yield on average investment securities
(4) | Line is ALLL as % of loans and leases, excluding PPP loans | Third Quarter 2021 | PACW | p. 4 |
(5) | Line is ACL as % of loans and leases, excluding PPP loans |
Profitability Highlights
Net Earnings & EPS
$180.5mm | ||||||||||||
$150.4mm | $140.0mm | |||||||||||
$116.8mm | $1.52 | |||||||||||
$1.27 | $1.17 | |||||||||||
$0.99 | ||||||||||||
$45.5mm | ||||||||||||
$0.38 | ||||||||||||
3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 |
Operating Expenses & Efficiency Ratio
$159.4mm
$150.1mm $151.8mm | ||
$133.4mm | $135.7mm | |
47.9% | ||
47.2% | ||
46.4% | ||
45.1% | ||
43.6% |
3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 |
PPNR & PPNR ROAA(1) | ||||||||||
$167.8mm | ||||||||||
$163.4mm | ||||||||||
$156.2mm | $156.0mm | $154.9mm | ||||||||
2.22% | 2.22% | 2.01% | ||||||||
1.81% | 1.86% | |||||||||
3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 | ||||||
ROAA | ROATE(1) | |||||||||
1.94% | 2.11% | 29.25% | ||||||||
25.67% | ||||||||||
1.58% | 1.55% | 19.63% | 21.03% | |||||||
0.65% | 8.20% | |||||||||
3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 | 3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 |
(1) See "Non-GAAP Measurements" slides starting on page 27.
Third Quarter 2021 | PACW | p. 5
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PacWest Bancorp published this content on 18 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 October 2021 20:41:07 UTC.