GlobeNewswire Inc | Oct 14, 2020 05:00PM EDT

October 14, 2020

Significant Items

-- Net Earnings of $45.5 Million, or $0.38 Per Diluted Share -- Strong Pre-Provision, Pre-Tax Net Revenue (PPNR) of $156.2 Million -- Strong Capital Position CET1 Ratio up 49 Basis Points to 10.46% -- Core Deposits Up $1.6 Billion or 10% in Q3; Represents 88% of Total Deposits -- Tax Equivalent Net Interest Margin of 3.90% Compared to 4.20% in Q2 -- Cost of Average Total Deposits Decreased to 17 Basis Points

LOS ANGELES, Oct. 14, 2020 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq: PACW) today announced net earnings for the third quarter of 2020 of $45.5 million, or $0.38 per diluted share, compared to net earnings for the second quarter of 2020 of $33.2 million, or $0.28 per diluted share. The increase in net earnings for the third quarter was due primarily to a $23 million decrease in the provision for credit losses.

Matt Wagner, President and CEO, commented, Our operations continue to produce strong revenues and internal capital as evidenced by $156.2 million in PPNR during the third quarter, which resulted in a PPNR return on average assets of 2.22%. These solid operating earnings highlight the resilience of our business as we navigate the challenging economic conditions.

Mr. Wagner continued, We experienced strong deposit growth again in the third quarter, resulting in a significant increase in liquidity. Our average deposits in financial institutions balance was $2.6 billion in the third quarter with a yield of 10 basis points. While our focus is on managing net interest income, this excess liquidity had a negative impact on our third quarter NIM of 32 basis points.

Mr. Wagner added, Our priority continues to be on mitigating potential credit losses in our portfolios, especially those portfolios impacted most by COVID-19. We were proactive in downgrading loans in the first quarter at the start of the pandemic, and the net loan migration to the special mention and classified categories during the second and third quarters was minimal. As of September 30, 2020, only 3.3% of loans are on deferral with the vast majority of those expiring in November 2020, while only 13% of loans previously granted a deferral received a second modification.

FINANCIAL HIGHLIGHTS

At or For the At or For the Three Months Ended Nine Months Ended September 30, June 30, Increase September 30, IncreaseFinancial Highlights 2020 2020 (Decrease) 2020 2019 (Decrease) (Dollars in thousands, except per share data)Net earnings (loss) $ 45,503 $ 33,204 $ 12,299 $ (1,354,404 ) $ 350,755 $ (1,705,159 )Diluted earnings (loss) per share $ 0.38 $ 0.28 $ 0.10 $ (11.60 ) $ 2.91 $ (14.51 )Return on average assets 0.65 % 0.50 % 0.15 (6.65 )% 1.80 % (8.45 )Pre-provision, pre-goodwillimpairment, pre-tax net revenue ("PPNR") (1) $ 156,174 $ 166,172 $ (9,998 ) $ 483,223 $ 504,873 $ (21,650 )PPNR return on average assets (1) 2.22 % 2.51 % (0.29 ) 2.37 % 2.59 % (0.22 )Return on average tangible equity (1) 8.20 % 6.39 % 1.81 7.16 % 21.77 % (14.61 ) Net interest margin ("NIM")(tax equivalent) 3.90 % 4.20 % (0.30 ) 4.13 % 4.62 % (0.49 )Yield on average loans andleases (tax equivalent) 5.01 % 5.01 % - 5.18 % 6.11 % (0.93 )Cost of average total deposits 0.17 % 0.25 % (0.08 ) 0.32 % 0.79 % (0.47 )Efficiency ratio 45.1 % 42.9 % 2.2 42.9 % 42.1 % 0.8 Total assets $ 28,426,716 $ 27,365,738 $ 1,060,978 $ 28,426,716 $ 26,724,627 $ 1,702,089 Loans and leases held for investment, net of deferred fees $ 19,026,200 $ 19,694,631 $ (668,431 ) $ 19,026,200 $ 18,735,543 $ 290,657 Noninterest-bearing demand deposits $ 9,346,744 $ 8,629,543 $ 717,201 $ 9,346,744 $ 7,441,185 $ 1,905,559 Core deposits $ 21,117,629 $ 19,535,814 $ 1,581,815 $ 21,117,629 $ 16,471,264 $ 4,646,365 Total deposits $ 23,965,695 $ 22,928,579 $ 1,037,116 $ 23,965,695 $ 19,733,203 $ 4,232,492 As percentage of total deposits: Noninterest-bearing demand deposits 39 % 38 % 1 39 % 38 % 1 Core deposits 88 % 85 % 3 88 % 84 % 4 Equity to assets ratio 12.26 % 12.62 % (0.36 ) 12.26 % 18.41 % (6.15 )Tangible common equity ratio (1) 8.71 % 8.93 % (0.22 ) 8.71 % 9.65 % (0.94 )Book value per share $ 29.42 $ 29.17 $ 0.25 $ 29.42 $ 41.06 $ (11.64 )Tangible book value per share (1) $ 20.09 $ 19.80 $ 0.29 $ 20.09 $ 19.43 $ 0.66 (1) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income decreased by $3.0 million to $251.3 million for the third quarter of 2020 compared to $254.3 million for the second quarter of 2020 due mainly to a lower balance of average loans and leases. The tax equivalent yield on average loans and leases was 5.01% for both the third and second quarters of 2020.

The tax equivalent NIM was 3.90% for the third quarter of 2020 compared to 4.20% for the second quarter of 2020. The decrease in the NIM was due mostly to the change in the earning asset mix. Average loans and leases decreased by $756 million, while the average balance of deposits in financial institutions increased by $1.8 billion in the third quarter of 2020. This excess liquidity had a negative impact on the third quarter tax equivalent NIM of 32 basis points, while the PPP loans, which have a coupon rate of 1%, had a negative impact of seven basis points.

The cost of average total deposits decreased to 0.17% for the third quarter of 2020 from 0.25% for the second quarter of 2020. The lower cost of average total deposits was due primarily to the repricing of maturing time deposits. The cost of deposits at September 30, 2020 was 0.13%.

Provision for Credit Losses

The following table presents details of the provision for credit losses for the periods indicated:

Three Months Ended September June 30, Increase 30,Provision for Credit Losses 2020 2020 (Decrease) (In thousands)Addition to allowance for loan $ 81,000 $ 93,000 $ (12,000 )and lease lossesAddition to reserve for unfunded loan commitments 16,000 27,000 (11,000 )Total provision for credit losses $ 97,000 $ 120,000 $ (23,000 )

The provision for credit losses was $97.0 million for the third quarter of 2020, down $23.0 million from the second quarter of 2020. This reduction reflected improvement in certain key macro-economic forecast variables (unemployment and real GDP growth), partially offset by deterioration in other key macro-economic variables, including CRE price index and BBB spreads, and increased provisions for individually evaluated loans and leases.

Noninterest Income

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

Three Months Ended September June 30, Increase 30,Noninterest Income 2020 2020 (Decrease) (In thousands)Service charges on deposit accounts $ 2,570 $ 2,004 $ 566 Other commissions and fees 10,541 10,111 430 Leased equipment income 9,900 12,037 (2,137 )Gain on sale of loans and leases 35 346 (311 )Gain on sale of securities 5,270 7,715 (2,445 )Other income: Dividends and gains on equity 6,945 2,947 3,998 investmentsWarrant income 500 1,973 (1,473 )Other 2,491 1,725 766 Total noninterest income $ 38,252 $ 38,858 $ (606 )

Noninterest income decreased by $0.6 million to $38.3 million for the third quarter of 2020 compared to $38.9 million for the second quarter of 2020 due primarily to decreases of $2.4 million in gain on sale of securities, $2.1 million in leased equipment income, and $1.5 million in warrant income, offset partially by a $4.0 million increase in dividends and gains on equity investments. The decrease in gain on sale of securities resulted from the sale of $17 million of securities for a gain of $5.3 million in the third quarter compared to sales of $122 million of securities for a gain of $7.7 million in the second quarter. The decrease in leased equipment income was due to lower gains from early lease terminations and lower rental income due to an operating lease placed on nonaccrual status in the third quarter. The decrease in warrant income was due to lower gains from exercised warrants. The increase in dividends and gains on equity investments resulted primarily from net fair value gains of $5.9 million on equity investments still held.

Noninterest Expense

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

Three Months Ended September 30, June 30, IncreaseNoninterest Expense 2020 2020 (Decrease) (In thousands)Compensation $ 75,131 $ 61,910 $ 13,221 Occupancy 14,771 14,494 277 Data processing 6,505 7,102 (597 )Other professional services 4,713 4,146 567 Insurance and assessments 3,939 9,373 (5,434 )Intangible asset amortization 3,751 3,882 (131 )Leased equipment depreciation 7,057 7,102 (45 )Foreclosed assets expense 335 (146 ) 481 (income), netCustomer related expense 4,762 4,408 354 Loan expense 3,499 3,379 120 Other 8,939 11,315 (2,376 )Total noninterest expense 133,402 126,965 6,437

Noninterest expense increased by $6.4 million to $133.4 million for the third quarter of 2020 compared to $127.0 million for the second quarter of 2020 attributable primarily to a $13.2 million increase in compensation expense, offset partially by decreases of $5.4 million in insurance and assessments expense and $2.4 million in other expense. The increase in compensation expense was due mainly to higher bonus accruals of $12.4 million and stock compensation expense of $1.4 million. The decrease in insurance and assessments expense was due to a decrease in the FDIC assessment expense due primarily to increases in liquidity and uninsured deposits during the last two quarters. The decrease in other expense was due primarily to $6.6 million in prepayment penalties incurred in the second quarter from the early payoff of $750 million of FHLB term advances, which was offset partially by higher legal accruals in the third quarter.

Income Taxes

The effective income tax rate was 23.1% for the third quarter compared to 28.1% for the second quarter of 2020. Excluding non-deductible goodwill impairment, the effective tax rate for the full year 2020 is currently estimated to be in the range of 25-27%. The lower effective tax rate in the third quarter was due mainly to higher shortfall amounts from restricted stock vestings in the second quarter that elevated the second quarter effective tax rate.

BALANCE SHEET HIGHLIGHTS

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 Nine Months EndedRoll Forward of Loans September 30, June 30, September 30,and Leases Heldfor Investment, Net of 2020 2020 2020Deferred Fees (1) (Dollars in thousands)Balance, beginning of $ 19,694,631 $ 19,745,305 $ 18,846,872 periodAdditions: Production 519,671 1,802,956 3,112,373 Disbursements 1,008,336 800,458 3,805,874 Total production and 1,528,007 2,603,414 6,918,247 disbursementsReductions: Payoffs (982,889 ) (612,837 ) (2,408,433 )Paydowns (1,160,692 ) (2,022,376 ) (4,236,773 )Total payoffs and (2,143,581 ) (2,635,213 ) (6,645,206 )paydownsSales (2,979 ) (3,089 ) (6,068 )Transfers to (12,594 ) - (14,370 )foreclosed assetsCharge-offs (37,284 ) (15,786 ) (73,275 )Total reductions (2,196,438 ) (2,654,088 ) (6,738,919 )Net (decrease) (668,431 ) (50,674 ) 179,328 increaseBalance, end of period $ 19,026,200 $ 19,694,631 $ 19,026,200 Weighted average rate 4.95 % 2.33 % 3.27 %on production (2) (1) Includes direct financing leases but excludes equipment leased to others under operating leases.(2) The weighted average rate on production presents contractual rates on a tax equivalent basisand excludes amortized fees. Amortized fees added approximately 23 basis points to loanyields in 2020.

Loans and leases held for investment, net of deferred fees, decreased by $668.4 million in the third quarter of 2020 to $19.0 billion at September 30, 2020. The majority of the decrease in the loans and leases balance in the third quarter of 2020 was in the commercial category as business lending demand has decreased during the COVID-19 pandemic. Total revolving balances declined by approximately $350 million in the third quarter due to a lower line utilization rate. The largest decreases were in the lender finance, equipment finance, venture capital, and security monitoring portfolios. The weighted average rate on third quarter production increased to 4.95%. The increase was due to the unusually low rate on second quarter production since $1.2 billion, or 69%, of second quarter loan production related to PPP loans at a coupon rate of 1%. Excluding PPP loans, the weighted average rate on second quarter production was 5.39%.

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:

September 30, 2020 June 30, 2020 September 30, 2019 % of % of % ofLoan andLease Balance Total Balance Total Balance TotalPortfolio (In thousands) Real estate mortgage: Commercial $ 4,192,466 22 % $ 4,222,075 22 % $ 4,300,566 23 %Income producing and other residential 3,684,579 19 % 3,733,659 19 % 3,596,358 19 %Total realestate 7,877,045 41 % 7,955,734 41 % 7,896,924 42 %mortgageReal estate construction and land: Commercial 1,241,647 7 % 1,167,609 6 % 1,009,362 6 %Residential 2,182,100 11 % 2,172,919 11 % 1,542,112 8 %Total real estate construction and land 3,423,747 18 % 3,340,528 17 % 2,551,474 14 %Total real 11,300,792 59 % 11,296,262 58 % 10,448,398 56 %estateCommercial: Asset-based 3,153,048 17 % 3,412,431 17 % 3,810,741 20 %Venture 1,637,132 9 % 1,814,341 9 % 2,209,649 12 %capitalOther 2,572,994 13 % 2,760,278 14 % 1,858,167 10 %commercialTotal 7,363,174 39 % 7,987,050 40 % 7,878,557 42 %commercialConsumer 362,234 2 % 411,319 2 % 408,588 2 %Total loans and leases held for investment,net of $ 19,026,200 100 % $ 19,694,631 100 % $ 18,735,543 100 %deferred fees Totalunfunded loan $ 7,178,506 $ 7,745,921 $ 7,790,796 commitments

Allowance for Credit Losses

The following tables present roll forwards of the allowance for credit losses for the periods indicated:

Three Months Ended September 30, 2020 Allowance Reserve for Total forAllowance for Loan and Unfunded Allowance Credit Loan forLosses Rollforward Lease Commitments Credit Losses Losses (In thousands)Beginning balance $ 301,050 $ 80,571 $ 381,621 Charge-offs (37,284 ) - (37,284 )Recoveries 1,200 - 1,200 Net charge-offs (36,084 ) - (36,084 )Provision 81,000 16,000 97,000 Ending balance $ 345,966 $ 96,571 $ 442,537 Three Months Ended June 30, 2020 Allowance Reserve for Total forAllowance for Loan and Unfunded Allowance Credit Loan forLosses Rollforward Lease Commitments Credit Losses Losses (In thousands)Beginning balance $ 221,292 $ 53,571 $ 274,863 Charge-offs (15,786 ) - (15,786 )Recoveries 2,544 - 2,544 Net charge-offs (13,242 ) - (13,242 )Provision 93,000 27,000 120,000 Ending balance $ 301,050 $ 80,571 $ 381,621

The allowance for credit losses increased by $60.9 million in the third quarter of 2020 to $442.5 million. The increase in the allowance for credit losses during the third quarter was attributable to changes in the economic forecast and changes to modeling assumptions. Net charge-offs increased from $13.2 million in the second quarter to $36.1 million in the third quarter due primarily to one security monitoring loan with a charge-off of $32.8 million. This loan was the only junior lien exposure in the security monitoring portfolio and, accordingly, additional losses of this magnitude are not expected.

Gross charge-offs for the third quarter of 2020 were $37.3 million and included $35.4 million for other commercial loans and $1.5 million for commercial real estate mortgage loans compared to gross charge-offs for the second quarter of 2020 of $15.8 million that included $6.5 million for venture capital loans, $5.0 million for other commercial loans, and $4.2 million for commercial real estate mortgage loans.

Recoveries for the third quarter of 2020 were $1.2 million and included $0.6 million for venture capital loans and $0.3 million for other commercial loans compared to recoveries for the second quarter of 2020 of $2.5 million that included $2.3 million for other commercial loans.

For the three and nine months ended September 30, 2020, annualized net charge-offs to average loans and leases were 0.75% and 0.47%, respectively.

The allowance for credit losses as a percentage of loans and leases held for investment was 2.33% at September 30, 2020 and 1.94% at June 30, 2020. The allowance for loan and lease losses as a percentage of loans and leases held for investment was 1.82% at September 30, 2020 and 1.53% at June 30, 2020. The allowance for credit losses and allowance for loan and lease losses as a percentage of loans and leases held for investment, excluding PPP loans that are fully guaranteed and do not carry any allowance, was 2.48% and 1.94% at September 30, 2020, respectively, compared to 2.06% and 1.63% at June 30, 2020, respectively.

Deposits and Client Investment Funds

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

September 30, 2020 June 30, 2020 September 30, 2019 % of % of % ofDeposit Composition Balance Total Balance Total Balance Total (Dollars in thousands)Noninterest-bearing $ 9,346,744 39 % $ 8,629,543 38 % $ 7,441,185 38 %demandInterest checking 4,657,511 20 % 4,858,168 21 % 3,645,660 18 %Money market 6,539,313 27 % 5,498,150 24 % 4,870,344 25 %Savings 574,061 2 % 549,953 2 % 514,075 3 %Total core deposits 21,117,629 88 % 19,535,814 85 % 16,471,264 84 %Non-corenon-maturity 1,123,909 5 % 1,217,266 5 % 479,732 2 %depositsTotal non-maturity 22,241,538 93 % 20,753,080 90 % 16,950,996 86 %depositsTime deposits 1,047,621 4 % 1,522,928 7 % 2,282,976 12 %$250,000 and underTime deposits over 676,536 3 % 652,571 3 % 499,231 2 %$250,000Total time deposits 1,724,157 7 % 2,175,499 10 % 2,782,207 14 %Total deposits $ 23,965,695 100 % $ 22,928,579 100 % $ 19,733,203 100 %

At September 30, 2020, core deposits totaled $21.1 billion, or 88% of total deposits, including $9.3 billion of noninterest-bearing demand deposits, or 39% of total deposits. Core deposits increased by $1.6 billion in the third quarter driven by continued strong deposit growth from our venture banking clients.

In addition to deposit products, we also offer alternative non-depository cash investment options for select clients; these alternatives 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 at September 30, 2020 were $1.2 billion, of which $1.0 billion was managed by PWAM.

CREDIT QUALITY

The following table presents loan and lease credit quality metrics as of the dates indicated:

September 30, June 30, IncreaseCredit Quality Metrics 2020 2020 (Decrease) (Dollars in thousands)NPAs and Performing TDRs:Nonaccrual loans andleases held for $ 85,615 $ 166,113 $ (80,498 )investment (1)Accruing loanscontractually past due - - - 90 days or moreForeclosed assets, net 13,747 1,449 12,298 Totalnonperforming assets $ 99,362 $ 167,562 $ (68,200 )("NPAs") Performing TDRs held for $ 13,679 $ 15,037 $ (1,358 )investment Nonaccrual loans and leases held for investment to loans and leases held 0.45 % 0.84 % for investmentNonperforming assets to loans and leases held for investment and 0.52 % 0.85 % foreclosed assets Loan and Lease Credit Risk Ratings: Pass $ 17,967,872 $ 18,635,004 $ (667,132 )Special mention 783,756 766,397 17,359 Classified 274,572 293,230 (18,658 )Total loans and leases held for investment, net of deferred fees $ 19,026,200 $ 19,694,631 $ (668,431 ) Classified loans and leases held for investment to loans and leases held 1.44 % 1.49 % for investment Allowance for Credit Losses: Allowance for loan and $ 345,966 $ 301,050 $ 44,916 lease lossesReserve for unfunded 96,571 80,571 16,000 loan commitmentsAllowance for credit $ 442,537 $ 381,621 $ 60,916 lossesProvision for credit $ 97,000 $ 120,000 $ (23,000 )losses (for the quarter)Net charge-offs (for the $ 36,084 $ 13,242 $ 22,842 quarter)Net charge-offs to average loans and leases (for the quarter) 0.75 % 0.27 % Allowance for loan and lease losses to loans and leases held for 1.82 % 1.53 % investmentAllowance for credit losses to loans and leases held for investment 2.33 % 1.94 % Allowance for credit losses to nonaccrual loans and leases held for 516.9 % 229.7 % investment (1) Nonaccrual loans include guaranteed amounts of $13.8 million at September30, 2020 and $16.2 millionat June 30, 2020.

During the third quarter of 2020, classified loans and leases decreased by $18.7 million driven mostly by payoffs, paydowns, and other reductions of $55.0 million, charge-offs of $35.7 million, and the transfer to other real estate owned of $12.6 million, offset partially by the migration of $66.0 million in loans and leases from special mention and downgrades from pass of $19.4 million. Special mention loans and leases increased by $17.4 million driven mainly by downgrades from pass of $167.3 million, offset partially by upgrades to pass of $39.4 million, payoffs, paydowns, and other reductions of $44.5 million, and the migration of $66.0 million in loans and leases to classified.

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:

September 30, 2020 June 30, 2020 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 (Dollars in thousands) Real estate mortgage: Commercial $ 45,120 $ - $ 61,771 $ - $ (16,651 ) $ - Income producing and other residential 2,008 1,761 2,207 - (199 ) 1,761 Total realestate 47,128 1,761 63,978 - (16,850 ) 1,761 mortgageReal estate construction and land: Commercial 324 - 337 - (13 ) - Residential - 3,108 - 1,021 - 2,087 Total real estate construction 324 3,108 337 1,021 (13 ) 2,087 and landCommercial: Asset-based 2,817 - 19,013 3,697 (16,196 ) (3,697 )Venture 2,001 2,319 8,270 1,924 (6,269 ) 395 capitalOther 32,941 185 73,995 191 (41,054 ) (6 )commercialTotal 37,759 2,504 101,278 5,812 (63,519 ) (3,308 )commercialConsumer 404 791 520 1,067 (116 ) (276 )Total heldfor $ 85,615 $ 8,164 $ 166,113 $ 7,900 $ (80,498 ) $ 264 investment

During the third quarter of 2020, nonaccrual loans and leases decreased by $80.5 million due primarily to charge-offs of $35 million, payoffs of $29 million, and transfers to foreclosed assets of $12.6 million.

CAPITAL

The following table presents certain actual capital ratios and ratios excluding PPP loans:

September 30, 2020 Excluding June 30, PPP 2020 Actual Loans Actual (1) (1)PacWest Bancorp Consolidated: Tier 1 leverage capital ratio 8.66 % 9.07 % (3) 8.93 %Common equity tier 1 capital ratio 10.46 % 10.46 % 9.97 %Total capital ratio 13.74 % 13.74 % 13.18 %Tangible common equity ratio (2) 8.71 % 9.12 % (3) 8.93 % (1) Capital information for September 30, 2020 is preliminary.(2) Non-GAAP measure. (3) PPP loans have been excluded from totalassets in denominator as they are zero risk-weighted.

STOCK REPURCHASE PROGRAM

During the third quarter of 2020, there were no stock repurchases. On April 21, 2020, we announced that stock repurchases were suspended indefinitely.

ABOUT PACWEST BANCORP

PacWest Bancorp (PacWest) is a bank holding company with over $28 billion in assets headquartered in Los Angeles, California, with executive offices in Denver, Colorado, with one wholly-owned banking subsidiary, Pacific Western Bank (the Bank). The Bank has 72 full-service branches located in California, one branch located in Durham, North Carolina, and one branch located in Denver, Colorado. The Bank provides community banking products including lending and comprehensive deposit and treasury management services to small and medium-sized businesses conducted primarily through our California-based branch offices and Denver, Colorado branch office. The Bank offers national lending products including asset-based, equipment, and real estate loans and treasury management services to established middle-market businesses on a national basis. The Bank also offers venture banking products including a comprehensive suite of financial services focused on entrepreneurial and venture-backed businesses and their venture capital and private equity investors, with offices located in key innovative hubs across the United States. 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 Bancorp 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 are based on information available at the time of the communication and are based on current beliefs and expectations of the Companys management and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control. The COVID-19 pandemic is adversely affecting PacWest Bancorp, its employees, customers and third-party service providers, and the ultimate extent of the impacts on its business, financial position, results of operations, liquidity and prospects is uncertain. The length of the COVID-19 pandemic and the severity of its impact on key macro-economic indicators such as unemployment and GDP may have a material impact on our allowance for credit losses and related provision for credit losses. Continued deterioration in general business and economic conditions could adversely affect PacWest Bancorps revenues and the values of its assets, including goodwill, and liabilities, lead to a tightening of credit, and increase stock price volatility. In addition, PacWest Bancorps results could be adversely affected by changes in interest rates, sustained high unemployment rates, deterioration in the credit quality of its loan portfolio or in the value of the collateral securing those loans, deterioration in the value of its investment securities, the magnitude of individual loan losses on security monitoring loans, 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 the Company with the U.S. Securities and Exchange Commission.

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 SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEET September 30, June 30, September 30, 2020 2020 2019 (Dollars in thousands, except per share data)ASSETS: Cash and due from banks $ 187,176 $ 174,059 $ 252,596 Interest-earning deposits 2,766,020 1,747,077 483,405 in financial institutionsTotal cash and cash 2,953,196 1,921,136 736,001 equivalents Securitiesavailable-for-sale, at 4,532,614 3,851,141 3,817,348 estimated fair valueFederal Home Loan Bank 17,250 17,250 26,865 stock, at costTotal investment securities 4,549,864 3,868,391 3,844,213 Gross loans and leases held 19,101,680 19,780,476 18,796,011 for investmentDeferred fees, net (75,480 ) (85,845 ) (60,468 )Total loans and leases held for investment, net of deferred fees 19,026,200 19,694,631 18,735,543 Allowance for loan and (345,966 ) (301,050 ) (138,552 )lease lossesTotal loans and leases held 18,680,234 19,393,581 18,596,991 for investment, net Equipment leased to others 286,425 295,191 295,854 under operating leasesPremises and equipment, net 40,544 42,299 37,926 Foreclosed assets, net 13,747 1,449 1,366 Goodwill 1,078,670 1,078,670 2,548,670 Core deposit and customerrelationship intangibles, 26,813 30,564 42,547 netOther assets 797,223 734,457 621,059 Total assets $ 28,426,716 $ 27,365,738 $ 26,724,627 LIABILITIES: Noninterest-bearing $ 9,346,744 $ 8,629,543 $ 7,441,185 depositsInterest-bearing deposits 14,618,951 14,299,036 12,292,018 Total deposits 23,965,695 22,928,579 19,733,203 Borrowings 60,000 60,000 1,253,031 Subordinated debentures 463,282 460,772 456,145 Accrued interest payable 451,508 463,489 362,140 and other liabilitiesTotal liabilities 24,940,485 23,912,840 21,804,519 STOCKHOLDERS' EQUITY (1) 3,486,231 3,452,898 4,920,108 Total liabilities and $ 28,426,716 $ 27,365,738 $ 26,724,627 stockholders? equity Book value per share $ 29.42 $ 29.17 $ 41.06 Tangible book value per $ 20.09 $ 19.80 $ 19.43 share (2)Shares outstanding 118,489,927 118,374,603 119,831,192 (1) Includes net unrealized gain on securitiesavailable-for-sale, net $ 155,474 $ 145,038 $ 95,887 (2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS) Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, 2020 2020 2019 2020 2019 (Dollars in thousands, except per share data)Interest income: Loans and $ 240,811 $ 247,851 $ 275,978 $ 750,940 $ 834,443 leasesInvestment 24,443 26,038 28,806 77,927 87,434 securitiesDeposits infinancial 654 186 2,424 2,448 4,423 institutionsTotal interest 265,908 274,075 307,208 831,315 926,300 income Interest expense: Deposits 9,887 13,075 40,703 51,209 113,658 Borrowings 27 1,319 6,852 8,124 21,772 Subordinated 4,670 5,402 7,417 16,632 22,860 debenturesTotal interest 14,584 19,796 54,972 75,965 158,290 expense Net interest 251,324 254,279 252,236 755,350 768,010 incomeProvision for 97,000 120,000 7,000 329,000 19,000 credit lossesNet interest income after provision for 154,324 134,279 245,236 426,350 749,010 credit losses Noninterest income: Servicecharges on 2,570 2,004 3,525 7,232 11,026 depositaccountsOthercommissions 10,541 10,111 10,855 30,373 33,453 and feesLeasedequipment 9,900 12,037 9,615 34,188 28,079 incomeGain on saleof loans and 35 346 765 468 1,091 leasesGain on sale 5,270 7,715 908 13,167 25,261 of securitiesOther income 9,936 6,645 7,761 20,782 16,476 Totalnoninterest 38,252 38,858 33,429 106,210 115,386 income Noninterest expense: Compensation 75,131 61,910 71,424 198,323 211,225 Occupancy 14,771 14,494 14,089 43,472 42,866 Data 6,505 7,102 7,044 20,061 20,786 processingOtherprofessional 4,713 4,146 4,400 13,117 13,542 servicesInsurance and 3,939 9,373 4,100 17,561 12,236 assessmentsIntangibleasset 3,751 3,882 4,833 11,581 14,573 amortizationLeasedequipment 7,057 7,102 5,951 21,364 17,160 depreciationForeclosedassets expense 335 (146 ) 8 255 (109 )(income), netAcquisition, integration and reorganization - - - - 618 costsCustomerrelated 4,762 4,408 3,539 13,102 9,887 expenseLoan expense 3,499 3,379 3,628 9,528 9,964 Goodwill - - - 1,470,000 - impairmentOther expense 8,939 11,315 7,793 29,973 25,775 Totalnoninterest 133,402 126,965 126,809 1,848,337 378,523 expense Earnings(loss) before 59,174 46,172 151,856 (1,315,777 ) 485,873 income taxesIncome tax 13,671 12,968 41,830 38,627 135,118 expenseNet earnings $ 45,503 $ 33,204 $ 110,026 $ (1,354,404 ) $ 350,755 (loss) Basic anddilutedearnings $ 0.38 $ 0.28 $ 0.92 $ (11.60 ) $ 2.91 (loss) pershareDividendsdeclared and $ 0.25 $ 0.25 $ 0.60 $ 1.10 $ 1.80 paid per share

PACWEST BANCORP AND SUBSIDIARIES NET EARNINGS (LOSS) PER SHARE CALCULATIONS Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, 2020 2020 2019 2020 2019 (In thousands, except per share data)Basic Earnings (Loss) Per Share: Netearnings $ 45,503 $ 33,204 $ 110,026 $ (1,354,404 ) $ 350,755 (loss)Less: earnings allocated to unvested restricted (578 ) (362 ) (1,369 ) (1,603 ) (3,725 )stock (1)Net earnings (loss) allocated tocommon $ 44,925 $ 32,842 $ 108,657 $ (1,356,007 ) $ 347,030 shares Weighted-average basic shares and unvestedrestricted 118,438 118,192 119,831 118,469 120,691 stockoutstandingLess: weighted-average unvested restrictedstock (1,684 ) (1,606 ) (1,622 ) (1,596 ) (1,480 )outstandingWeighted-average basic sharesoutstanding 116,754 116,586 118,209 116,873 119,211 Basicearnings $ 0.38 $ 0.28 $ 0.92 $ (11.60 ) $ 2.91 (loss) pershare Diluted Earnings (Loss) Per Share: Net earnings (loss) allocated tocommon $ 44,925 $ 32,842 $ 108,657 $ (1,356,007 ) $ 347,030 shares Weighted-average diluted shares outstanding 116,754 116,586 118,209 116,873 119,211 Dilutedearnings $ 0.38 $ 0.28 $ 0.92 $ (11.60 ) $ 2.91 (loss) pershare (1) Represents cash dividends paid to holders of unvested stock, net of forfeitures, plusundistributed earnings amounts available to holders of unvested restricted stock, if any.

PACWEST BANCORP AND SUBSIDIARIES AVERAGE BALANCE SHEET AND YIELD ANALYSIS Three Months Ended September 30, 2020 June 30, 2020 September 30, 2019 Interest Average Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Balance Expense Cost Balance Expense Cost Balance Expense Cost (Dollars in thousands) Assets: Loans and leases (1) $ 19,195,737 $ 241,547 5.01 % $ 19,951,603 $ 248,474 5.01 % $ 18,539,281 $ 276,309 5.91 %(2)Investment securities 4,107,915 26,015 2.52 % 3,846,459 27,430 2.87 % 3,809,243 32,213 3.36 %(3)Deposits in financial institutions 2,554,349 654 0.10 % 733,142 186 0.10 % 445,152 2,424 2.16 %Total interest-earning assets (1) 25,858,001 268,216 4.13 % 24,531,204 276,090 4.53 % 22,793,676 310,946 5.41 %Other assets 2,077,192 2,090,023 3,612,927 Total assets $ 27,935,193 $ 26,621,227 $ 26,406,603 Liabilities and Stockholders' Equity: Interest checking $ 4,904,614 2,019 0.16 % $ 4,001,750 1,573 0.16 % $ 3,598,698 11,942 1.32 %Money market 7,170,842 3,081 0.17 % 6,114,354 2,856 0.19 % 5,121,856 14,807 1.15 %Savings 565,395 35 0.02 % 524,335 33 0.03 % 515,649 218 0.17 %Time 1,876,072 4,752 1.01 % 2,475,858 8,613 1.40 % 2,795,573 13,736 1.95 %Total interest-bearing deposits 14,516,923 9,887 0.27 % 13,116,297 13,075 0.40 % 12,031,776 40,703 1.34 %Borrowings 181,315 27 0.06 % 871,110 1,319 0.61 % 1,181,313 6,852 2.30 %Subordinated 462,375 4,670 4.02 % 459,466 5,402 4.73 % 456,011 7,417 6.45 %debenturesTotal interest-bearing liabilities 15,160,613 14,584 0.38 % 14,446,873 19,796 0.55 % 13,669,100 54,972 1.60 %Noninterest-bearing demand deposits 8,812,391 8,292,151 7,487,555 Other liabilities 464,320 435,353 359,202 Total liabilities 24,437,324 23,174,377 21,515,857 Stockholders' equity 3,497,869 3,446,850 4,890,746 Total liabilities and stockholders' equity $ 27,935,193 $ 26,621,227 $ 26,406,603 Net interest income $ 253,632 $ 256,294 $ 255,974 (1)Net interest spread (1) 3.75 % 3.98 % 3.81 %Net interest margin (1) 3.90 % 4.20 % 4.46 % Total deposits (4) $ 23,329,314 $ 9,887 0.17 % $ 21,408,448 $ 13,075 0.25 % $ 19,519,331 $ 40,703 0.83 % (1) Tax equivalent. (2) Includes discount accretion on acquired loans of $2.0 million, $2.5 million, and $2.6 million for the three months ended September 30, 2020,June 30, 2020, and September 30, 2019, respectively. (3) Includes tax-equivalent adjustments of $1.6 million, $1.4 million, and $3.4 million for the three months ended September 30, 2020,June 30, 2020, and September 30, 2019 related to tax-exempt income on investment securities.The federal statutory tax rate utilized was 21%. (4) Total deposits is the sum of total interest-bearing deposits and noninterest-bearing demand deposits. The cost of total deposits is calculatedas annualized interest expense on total deposits divided by average total deposits.

PACWEST BANCORP AND SUBSIDIARIES FIVE QUARTER BALANCE SHEET September 30, June 30, March 31, December 31, September 30, 2020 2020 2020 2019 2019 (Dollars in thousands, except per share data) ASSETS: Cash and due from $ 187,176 $ 174,059 $ 172,570 $ 172,585 $ 252,596 banksInterest-earning deposits in financial institutions 2,766,020 1,747,077 439,690 465,039 483,405 Total cash and cash 2,953,196 1,921,136 612,260 637,624 736,001 equivalents Securities 4,532,614 3,851,141 3,757,663 3,797,187 3,817,348 available-for-saleFederal Home Loan 17,250 17,250 54,244 40,924 26,865 Bank stockTotal investment 4,549,864 3,868,391 3,811,907 3,838,111 3,844,213 securities Gross loans andleases held for 19,101,680 19,780,476 19,806,394 18,910,740 18,796,011 investmentDeferred fees, net (75,480 ) (85,845 ) (61,089 ) (63,868 ) (60,468 )Total loans and leases held for investment, net of 19,026,200 19,694,631 19,745,305 18,846,872 18,735,543 deferred feesAllowance for loan (345,966 ) (301,050 ) (221,292 ) (138,785 ) (138,552 )and lease lossesTotal loans and leases held for investment, net 18,680,234 19,393,581 19,524,013 18,708,087 18,596,991 Equipment leased to others under operating leases 286,425 295,191 306,530 324,084 295,854 Premises and 40,544 42,299 39,799 38,585 37,926 equipment, netForeclosed assets, 13,747 1,449 1,701 440 1,366 netGoodwill 1,078,670 1,078,670 1,078,670 2,548,670 2,548,670 Core deposit and customer relationship intangibles, net 26,813 30,564 34,446 38,394 42,547 Other assets 797,223 734,457 733,941 636,811 621,059 Total assets $ 28,426,716 $ 27,365,738 $ 26,143,267 $ 26,770,806 $ 26,724,627 LIABILITIES: Noninterest-bearing 9,346,744 8,629,543 7,510,218 7,243,298 7,441,185 depositsInterest-bearing 14,618,951 14,299,036 12,065,619 11,989,738 12,292,018 depositsTotal deposits 23,965,695 22,928,579 19,575,837 19,233,036 19,733,203 Borrowings 60,000 60,000 2,295,000 1,759,008 1,253,031 Subordinated 463,282 460,772 458,994 458,209 456,145 debenturesAccrued interest payable and other liabilities 451,508 463,489 423,047 365,856 362,140 Total liabilities 24,940,485 23,912,840 22,752,878 21,816,109 21,804,519 STOCKHOLDERS' EQUITY 3,486,231 3,452,898 3,390,389 4,954,697 4,920,108 (1)Total liabilities and stockholders? equity $ 28,426,716 $ 27,365,738 $ 26,143,267 $ 26,770,806 $ 26,724,627 Book value per share $ 29.42 $ 29.17 $ 28.75 $ 41.36 $ 41.06 Tangible book value $ 20.09 $ 19.80 $ 19.31 $ 19.77 $ 19.43 per share (2)Shares outstanding 118,489,927 118,374,603 117,916,789 119,781,605 119,831,192 (1) Includes net unrealized gain on securitiesavailable-for-sale, $ 155,474 $ 145,038 $ 90,916 $ 78,658 $ 95,887 net(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIES FIVE QUARTER STATEMENT OF EARNINGS (LOSS) Three Months Ended September 30, June 30, March 31, December 31, September 30, 2020 2020 2020 2019 2019 (Dollars in thousands, except per share data)Interest income: Loans and $ 240,811 $ 247,851 $ 262,278 $ 263,402 $ 275,978 leasesInvestment 24,443 26,038 27,446 28,135 28,806 securitiesDeposits infinancial 654 186 1,608 2,056 2,424 institutionsTotal interest 265,908 274,075 291,332 293,593 307,208 income Interest expense: Deposits 9,887 13,075 28,247 34,802 40,703 Borrowings 27 1,319 6,778 5,189 6,852 Subordinated 4,670 5,402 6,560 6,983 7,417 debenturesTotal interest 14,584 19,796 41,585 46,974 54,972 expense Net interest 251,324 254,279 249,747 246,619 252,236 incomeProvision for 97,000 120,000 112,000 3,000 7,000 credit lossesNet interest income after provision for 154,324 134,279 137,747 243,619 245,236 credit losses Noninterest income: Servicecharges on 2,570 2,004 2,658 3,611 3,525 depositaccountsOthercommissions 10,541 10,111 9,721 10,170 10,855 and feesLeasedequipment 9,900 12,037 12,251 10,648 9,615 incomeGain on saleof loans and 35 346 87 23 765 leasesGain on sale 5,270 7,715 182 184 908 of securitiesOther income 9,936 6,645 4,201 2,540 7,761 Totalnoninterest 38,252 38,858 29,100 27,176 33,429 income Noninterest expense: Compensation 75,131 61,910 61,282 74,637 71,424 Occupancy 14,771 14,494 14,207 14,541 14,089 Data 6,505 7,102 6,454 6,770 7,044 processingOtherprofessional 4,713 4,146 4,258 4,261 4,400 servicesInsurance and 3,939 9,373 4,249 4,168 4,100 assessmentsIntangibleasset 3,751 3,882 3,948 4,153 4,833 amortizationLeasedequipment 7,057 7,102 7,205 6,856 5,951 depreciationForeclosedassets expense 335 (146 ) 66 (3,446 ) 8 (income), netAcquisition, integration and reorganization - - - (269 ) - costsCustomerrelated 4,762 4,408 3,932 3,952 3,539 expenseLoan expense 3,499 3,379 2,650 2,967 3,628 Goodwill - - 1,470,000 - - impairmentOther expense 8,939 11,315 9,719 5,138 7,793 Totalnoninterest 133,402 126,965 1,587,970 123,728 126,809 expense Earnings(loss) before 59,174 46,172 (1,421,123 ) 147,067 151,856 income taxesIncome tax 13,671 12,968 11,988 29,186 41,830 expenseNet earnings $ 45,503 $ 33,204 $ (1,433,111 ) $ 117,881 $ 110,026 (loss) Basic anddilutedearnings $ 0.38 $ 0.28 $ (12.23 ) $ 0.98 $ 0.92 (loss) pershareDividendsdeclared and $ 0.25 $ 0.25 $ 0.60 $ 0.60 $ 0.60 paid per share

PACWEST BANCORP AND SUBSIDIARIES FIVE QUARTER SELECTED FINANCIAL DATA At or For the Three Months Ended September 30, June 30, March 31, December 31, September 30, 2020 2020 2020 2019 2019 (Dollars in thousands)Performance Ratios: Return on average 0.65 % 0.50 % (21.27 )% 1.77 % 1.65 %assets (1)Pre-provision, pre-goodwill impairment, pre-tax net revenue ("PPNR") return on average 2.22 % 2.51 % 2.39 % 2.26 % 2.39 %assets (1)(2)Return on average 5.18 % 3.87 % (116.28 )% 9.49 % 8.93 %equity (1)Return on averagetangible equity (1) 8.20 % 6.39 % 6.88 % 20.68 % 19.84 %(2)Efficiency ratio 45.1 % 42.9 % 40.6 % 44.8 % 42.3 %Noninterest expense as a percentage of average assets (1) 1.90 % 1.92 % 23.57 % 1.86 % 1.91 % Average Yields/Costs (1): Yield on: Average loans and 5.01 % 5.01 % 5.54 % 5.67 % 5.91 %leases (3)Averageinterest-earning 4.13 % 4.53 % 5.02 % 5.14 % 5.41 %assets (3)Cost of: Averageinterest-bearing 0.27 % 0.40 % 0.95 % 1.14 % 1.34 %depositsAverage total 0.17 % 0.25 % 0.59 % 0.71 % 0.83 %depositsAverageinterest-bearing 0.38 % 0.55 % 1.16 % 1.36 % 1.60 %liabilitiesNet interest spread 3.75 % 3.98 % 3.86 % 3.78 % 3.81 %(3)Net interest margin 3.90 % 4.20 % 4.31 % 4.33 % 4.46 %(3) Average Balances: Assets: Loans and leases, net $ 19,195,737 $ 19,951,603 $ 19,065,035 $ 18,470,583 $ 18,539,281 of deferred feesInterest-earning 25,858,001 24,531,204 23,455,636 22,779,867 22,793,676 assetsTotal assets 27,935,193 26,621,227 27,099,040 26,380,739 26,406,603 Liabilities: Noninterest-bearing 8,812,391 8,292,151 7,357,717 7,338,888 7,487,555 depositsInterest-bearing 14,516,923 13,116,297 11,896,780 12,102,902 12,031,776 depositsTotal deposits 23,329,314 21,408,448 19,254,497 19,441,790 19,519,331 Borrowings 181,315 871,110 2,026,749 1,179,220 1,181,313 Subordinated 462,375 459,466 458,399 456,997 456,011 debenturesInterest-bearing 15,160,613 14,446,873 14,381,928 13,739,119 13,669,100 liabilitiesStockholders' equity 3,497,869 3,446,850 4,956,778 4,930,182 4,890,746 (1) Annualized. (2) Non-GAAP measure. (3) Tax equivalent.

PACWEST BANCORP AND SUBSIDIARIES FIVE QUARTER SELECTED FINANCIAL DATA At or For the Three Months Ended September 30, June 30, March 31, December 31, September 30, 2020 2020 2020 2019 2019 (Dollars in thousands)Credit Quality Ratios: Nonaccrual loans and leases held for investment to loans and leases held for 0.45 % 0.84 % 0.48 % 0.49 % 0.53 %investmentNonperforming assets to loans and leases held for investment and foreclosed 0.52 % 0.85 % 0.49 % 0.49 % 0.54 %assetsClassified loans and leases held for investment to loans and leases held for 1.44 % 1.49 % 0.75 % 0.93 % 1.01 %investmentProvision for credit losses (for the quarter) to average loans and leases held forinvestment 2.01 % 2.42 % 2.36 % 0.06 % 0.15 %(annualized)Net charge-offs (for the quarter) to average loans and leases held for investment 0.75 % 0.27 % 0.40 % 0.02 % 0.10 %(annualized)Trailing 12 months net charge-offs to average loans and leases held for 0.36 % 0.20 % 0.19 % 0.09 % 0.20 %investmentAllowance for loan and lease losses to loans andleases held for 1.82 % 1.53 % 1.12 % 0.74 % 0.74 %investmentAllowance for credit losses to loans and leases held 2.33 % 1.94 % 1.39 % 0.93 % 0.92 %for investmentAllowance for credit losses to nonaccrual loans and leases held for 516.9 % 229.7 % 287.5 % 189.1 % 174.0 %investment PacWest Bancorp Consolidated: Tier 1 leveragecapital ratio 8.66 % 8.93 % 8.63 % 9.74 % 9.50 %(1)Common equitytier 1 capital 10.46 % 9.97 % 9.22 % 9.78 % 9.55 %ratio (1)Tier 1 capital 10.46 % 9.97 % 9.22 % 9.78 % 9.55 %ratio (1)Total capital 13.74 % 13.18 % 12.07 % 12.41 % 12.16 %ratio (1)Risk-weighted $ 22,109,592 $ 22,781,836 $ 24,214,209 $ 23,582,495 $ 23,579,614 assets (1) Equity to 12.26 % 12.62 % 12.97 % 18.51 % 18.41 %assets ratioTangible commonequity ratio 8.71 % 8.93 % 9.10 % 9.79 % 9.65 %(2)Book value per $ 29.42 $ 29.17 $ 28.75 $ 41.36 $ 41.06 shareTangible bookvalue per share $ 20.09 $ 19.80 $ 19.31 $ 19.77 $ 19.43 (2) Pacific Western Bank: Tier 1 leveragecapital ratio 9.70 % 10.03 % 9.71 % 10.95 % 10.72 %(1)Common equitytier 1 capital 11.71 % 11.18 % 10.38 % 11.00 % 10.79 %ratio (1)Tier 1 capital 11.71 % 11.18 % 10.38 % 11.00 % 10.79 %ratio (1)Total capital 12.97 % 12.44 % 11.39 % 11.74 % 11.52 %ratio (1) (1) Capital information for September 30, 2020 is preliminary. (2) Non-GAAP measure.

GAAP TO NON-GAAP RECONCILIATIONS

This press release contains certain non-GAAP financial disclosures for: (1) PPNR, (2) PPNR return on average assets (3) return on average tangible equity, (4) tangible common equity ratio, and (5) tangible book value per share. The Company uses these non-GAAP financial measures to provide meaningful supplemental information regarding the Companys operational performance and to enhance investors overall understanding of such financial performance. In particular, the use of return on average tangible equity, tangible common equity ratio, tangible book value per share, and PPNR is prevalent among banking regulators, investors, and analysts. Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures of: (1) net earnings, (2) return on average assets, (3) return on average equity, (4) equity to assets ratio, and (5) book value per share.

The tables below present the reconciliations of these GAAP financial measures to the related non-GAAP financial measures:

Three Months Ended Nine Months EndedPPNR and September 30, June 30, September 30, September 30,PPNR Returnon Average 2020 2020 2019 2020 2019Assets (Dollars in thousands)Net earnings $ 45,503 $ 33,204 $ 110,026 $ (1,354,404 ) $ 350,755 (loss)Add:Provision 97,000 120,000 7,000 329,000 19,000 for creditlossesAdd:Goodwill - - - 1,470,000 - impairmentAdd: Income 13,671 12,968 41,830 38,627 135,118 tax expensePre-provision, pre-goodwill impairment, pre-tax netrevenue $ 156,174 $ 166,172 $ 158,856 $ 483,223 $ 504,873 ("PPNR") Average $ 27,935,193 $ 26,621,227 $ 26,406,603 $ 27,221,102 $ 26,012,890 assets Return onaverage 0.65 % 0.50 % 1.65 % (6.65 )% 1.80 %assets (1)PPNR returnon average 2.22 % 2.51 % 2.39 % 2.37 % 2.59 %assets (2) (1) Annualized net earnings (loss) divided by average assets.(2) Annualized PPNR divided by average assets.

Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30,Return onAverage 2020 2020 2019 2020 2019TangibleEquity (Dollars in thousands)Net earnings $ 45,503 $ 33,204 $ 110,026 $ (1,354,404 ) $ 350,755 (loss)Add:Intangible 3,751 3,882 4,833 11,581 14,573 assetamortizationAdd: Goodwill - - - 1,470,000 - impairmentAdjusted net $ 49,254 $ 37,086 $ 114,859 $ 127,177 $ 365,328 earnings Averagestockholders' $ 3,497,869 $ 3,446,850 $ 4,890,746 $ 3,965,453 $ 4,842,140 equityLess: Averageintangible 1,107,548 1,111,302 2,593,925 1,594,231 2,598,806 assetsAveragetangible $ 2,390,321 $ 2,335,548 $ 2,296,821 $ 2,371,222 $ 2,243,334 common equity Return onaverage 5.18 % 3.87 % 8.93 % (45.62 )% 9.68 %equity (1)Return onaverage 8.20 % 6.39 % 19.84 % 7.16 % 21.77 %tangibleequity (2) (1) Annualized net earnings divided by average stockholders' equity.(2) Annualized adjusted net earnings divided by average tangible common equity.

Tangible Common September 30, June 30, March 31, December 31, September 30,Equity Ratio/Tangible Book 2020 2020 2020 2019 2019Value Per Share (Dollars in thousands, except per share data)Stockholders' $ 3,486,231 $ 3,452,898 $ 3,390,389 $ 4,954,697 $ 4,920,108 equityLess:Intangible 1,105,483 1,109,234 1,113,116 2,587,064 2,591,217 assetsTangible common $ 2,380,748 $ 2,343,664 $ 2,277,273 $ 2,367,633 $ 2,328,891 equity Total assets $ 28,426,716 $ 27,365,738 $ 26,143,267 $ 26,770,806 $ 26,724,627 Less:Intangible 1,105,483 1,109,234 1,113,116 2,587,064 2,591,217 assetsTangible assets $ 27,321,233 $ 26,256,504 $ 25,030,151 $ 24,183,742 $ 24,133,410 Equity to 12.26 % 12.62 % 12.97 % 18.51 % 18.41 %assets ratioTangible commonequity ratio 8.71 % 8.93 % 9.10 % 9.79 % 9.65 %(1) Book value per $ 29.42 $ 29.17 $ 28.75 $ 41.36 $ 41.06 shareTangible bookvalue per share $ 20.09 $ 19.80 $ 19.31 $ 19.77 $ 19.43 (2)Shares 118,489,927 118,374,603 117,916,789 119,781,605 119,831,192 outstanding (1) Tangible common equity divided by tangible assets. (2) Tangible common equity divided by shares outstanding.

Contact: Matthew P. Wagner Patrick J. Rusnak President and CEO Executive Vice President and CFOPhone: 303-802-8900 714-989-4705 Contact: William J. Black Executive Vice President Strategy and Corporate Development Phone: 919-597-7466