GlobeNewswire Inc | Jul 16, 2020 07:00AM EDT

July 16, 2020

Significant Items

-- Net Earnings of $33.2 Million, or $0.28 Per Diluted Share -- Strong Pre-Provision, Pre-Tax Net Revenue (PPNR) of $166.2 Million -- Funded $1.2 Billion of Paycheck Protection Program Loans (PPP) in Q2 -- Core Deposits Up $3.5 Billion or 22% in Q2; Represents 85% of Total Deposits -- Tax Equivalent Net Interest Margin of 4.20% Compared to 4.31% in Q1 -- Cost of Average Total Deposits Decreased 34 Basis Points from Q1 to 25 Basis Points -- Quarter Includes $6.6 Million of Prepayment Penalties Related to Early Payoff of FHLB Term Advances and $7.7 Million of Gain on Sale of Securities

LOS ANGELES, July 16, 2020 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq: PACW) today announced net earnings for the second quarter of 2020 of $33.2 million, or $0.28 per diluted share, compared to a net loss for the first quarter of 2020 of $1.43 billion, or $12.23 per diluted share. The increase in net earnings in the second quarter was due primarily to a $1.47 billion goodwill impairment charge in the first quarter.

Matt Wagner, President and CEO, commented, Our focus continues to be the health and safety of our employees while assisting our customers during the COVID-19 pandemic. We assisted our customers by funding over 4,100 PPP loans in the second quarter totaling over $1.2 billion, while granting loan payment modifications on approximately $1.8 billion, or 9% of loans and leases, most during May and June. The ultimate resolution of these modified loans is largely dependent on how long the pandemic impacts consumer demand and business activity.

Mr. Wagner added, We continued enhanced monitoring of our loan portfolios and saw less loan migration to special mention during the second quarter after being proactive in downgrading loans in the first quarter. We recorded another significant provision for credit losses largely due to deterioration in the macro-economic variables used in our CECL forecast.

Mr. Wagner continued, Our operations remain healthy and continue to produce increasing revenues while generating internal capital. PPNR increased by $5.3 million in the second quarter to $166.2 million, which resulted in a PPNR return on average assets of 2.51%. These solid operating earnings highlight the resilience of our business as we continue to navigate the challenging economic conditions.

FINANCIAL HIGHLIGHTS

At or For the At or For the Three Months Ended Six Months Ended June 30, March 31, Increase June 30, IncreaseFinancial Highlights 2020 2020 (Decrease) 2020 2019 (Decrease) (Dollars in thousands, except per share data)Net earnings (loss) $ 33,204 $ (1,433,111 ) $ 1,466,315 $ (1,399,907 ) $ 240,729 $ (1,640,636 )Diluted earnings (loss) per share $ 0.28 $ (12.23 ) $ 12.51 $ (11.98 ) $ 1.99 $ (13.97 )Return on average assets 0.50 % (21.27 )% 21.77 (10.48 )% 1.88 % (12.36 )Pre-provision, pre-goodwillimpairment, pre-tax net revenue ("PPNR") (1) $ 166,172 $ 160,877 $ 5,295 $ 327,049 $ 346,017 $ (18,968 )PPNR return on average assets (1) 2.51 % 2.39 % 0.12 2.45 % 2.70 % (0.25 )Return on average tangible equity (1) 6.39 % 6.88 % (0.49 ) 6.64 % 22.79 % (16.15 ) Net interest margin ("NIM")(tax equivalent) 4.20 % 4.31 % (0.11 ) 4.26 % 4.70 % (0.44 )Yield on average loans andleases (tax equivalent) 5.01 % 5.54 % (0.53 ) 5.27 % 6.21 % (0.94 )Cost of average total deposits 0.25 % 0.59 % (0.34 ) 0.41 % 0.77 % (0.36 )Efficiency ratio 42.9 % 40.6 % 2.3 41.8 % 42.0 % (0.2 ) Total assets $ 27,365,738 $ 26,143,267 $ 1,222,471 $ 27,365,738 $ 26,344,414 $ 1,021,324 Loans and leases held for investment, net of deferred fees $ 19,694,631 $ 19,745,305 $ (50,674 ) $ 19,694,631 $ 18,472,852 $ 1,221,779 Noninterest-bearing demand deposits $ 8,629,543 $ 7,510,218 $ 1,119,325 $ 8,629,543 $ 7,299,213 $ 1,330,330 Core deposits $ 19,535,814 $ 16,050,522 $ 3,485,292 $ 19,535,814 $ 15,617,488 $ 3,918,326 Total deposits $ 22,928,579 $ 19,575,837 $ 3,352,742 $ 22,928,579 $ 18,805,756 $ 4,122,823 As percentage of total deposits: Noninterest-bearing demand deposits 38 % 38 % - 38 % 39 % (1 )Core deposits 85 % 82 % 3 85 % 83 % 2 Equity to assets ratio 12.62 % 12.97 % (0.35 ) 12.62 % 18.42 % (5.80 )Tangible common equity ratio (1) 8.93 % 9.10 % (0.17 ) 8.93 % 9.50 % (0.57 )Book value per share $ 29.17 $ 28.75 $ 0.42 $ 29.17 $ 40.49 $ (11.32 )Tangible book value per share (1) $ 19.80 $ 19.31 $ 0.49 $ 19.80 $ 18.83 $ 0.97 (1) Non-GAAP measure.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income

Net interest income increased by $4.5 million to $254.3 million for the second quarter of 2020 compared to $249.7 million for the first quarter of 2020 due mainly to a lower cost of average interest-bearing liabilities and a higher balance of average loans and leases, partially offset by a lower yield on average loans and leases and securities. The tax equivalent yield on average loans and leases was 5.01% for the second quarter of 2020 compared to 5.54% for the first quarter of 2020. The decrease in the yield on average loans and leases was due principally to lower market rates, a lower rate on loan production from the impact of the PPP loans, and lower loan discount accretion. Excluding the PPP loans, which have a coupon rate of 1%, the tax equivalent yield on average loans and leases was 5.10%.

The tax equivalent NIM was 4.20% for the second quarter of 2020 compared to 4.31% for the first quarter of 2020. The decrease in the NIM was due mainly to lower market rates resulting in lower loan and lease and security yields, a lower rate on loan production from the impact of the PPP loans, and lower loan discount accretion, offset partially by the lower cost of average interest-bearing liabilities. Excluding the PPP loans, the tax equivalent NIM was 4.25%.

The cost of average total deposits decreased to 0.25% for the second quarter of 2020 from 0.59% for the first quarter of 2020. The lower cost of average interest-bearing deposits reflected actions taken to reduce deposit rates in light of the two emergency interest rate cuts by the Federal Reserve in March of 2020. The cost of deposits at June 30, 2020 was 0.19%.

Provision for Credit Losses

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

Three Months Ended June 30, March 31, IncreaseProvision for Credit Losses 2020 2020 (Decrease) (In thousands)Addition to allowance for loan and lease $ 93,000 $ 98,000 $ (5,000 )lossesAddition to reserve for unfunded loan commitments 27,000 14,000 13,000 Total provision for credit losses $ 120,000 $ 112,000 $ 8,000

The provision for credit losses was $120.0 million for the second quarter of 2020, up $8.0 million from the first quarter of 2020, driven by reserve builds that reflected significant deterioration and continued uncertainty in the key macro-economic forecast variables such as unemployment and GDP as a result of the impact of COVID-19.

Noninterest Income

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

Three Months Ended June 30, March 31, IncreaseNoninterest Income 2020 2020 (Decrease) (In thousands)Service charges on deposit accounts $ 2,004 $ 2,658 $ (654 )Other commissions and fees 10,111 9,721 390 Leased equipment income 12,037 12,251 (214 )Gain on sale of loans and leases 346 87 259 Gain on sale of securities 7,715 182 7,533 Other income: Dividends and gains on equity 2,947 28 2,919 investmentsWarrant income 1,973 837 1,136 Other 1,725 3,336 (1,611 )Total noninterest income $ 38,858 $ 29,100 $ 9,758

Noninterest income increased by $9.8 million to $38.9 million for the second quarter of 2020 compared to $29.1 million for the first quarter of 2020 due primarily to a $7.5 million increase in gain on sale of securities and a $2.9 million increase in dividends and gains on equity investments, partially offset by a $1.6 million decrease in other income. The increase in gain on sale of securities resulted from the sale of $122 million of securities in the second quarter. The increase in dividends and gains on equity investments resulted from increases in the fair value of equity investments still held and a $1.5 million gain on the sale of an equity investment. The decrease in other income was primarily due to $1.1 million of bankruptcy proceeds received on a former credit in the first quarter.

Noninterest Expense

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

Three Months Ended June 30, March 31, IncreaseNoninterest Expense 2020 2020 (Decrease) (In thousands)Compensation $ 61,910 $ 61,282 $ 628 Occupancy 14,494 14,207 287 Data processing 7,102 6,454 648 Other professional services 4,146 4,258 (112 )Insurance and assessments 9,373 4,249 5,124 Intangible asset amortization 3,882 3,948 (66 )Leased equipment depreciation 7,102 7,205 (103 )Foreclosed assets (income) (146 ) 66 (212 )expense, netCustomer related expense 4,408 3,932 476 Loan expense 3,379 2,650 729 Other 11,315 9,719 1,596 Total operating expense 126,965 117,970 8,995 Goodwill impairment - 1,470,000 (1,470,000 )Total noninterest expense $ 126,965 $ 1,587,970 $ (1,461,005 )

Noninterest expense decreased by $1.46 billion to $127.0 million for the second quarter of 2020 compared to $1.59 billion for the first quarter of 2020 attributable primarily to a $1.47 billion goodwill impairment charge in the first quarter. Excluding the goodwill impairment charge, noninterest expense increased by $9.0 million to $127.0 million. This increase was mainly due to a $5.1 million increase in insurance and assessments expense, a $1.6 million increase in other expense, a $0.7 million increase in loan expense, and a $0.6 million increase in data processing expense. The increase in insurance and assessments expense was due to an increase in FDIC assessment expense resulting from an increase in our assessment rate due primarily to the first quarter loss from the goodwill impairment charge. The higher assessment rate will continue for one year. The increase in other expense was due to $6.6 million in prepayment penalties incurred from the early payoff of $750 million of FHLB term advances, partially offset by the reversal of a $1.5 million accrual for operational loss contingencies and decreases in various business expenses due to less activity as a result of COVID-19. The FHLB term advances had a weighted average interest rate of 0.96% and the prepayment decision was made after the significant drop in market rates in March and the expectation of continued low rates for an extended time. The increase in loan expense was due primarily to higher loan-related legal and workout expenses. The increase in data processing expense was due to a one-time expense to create systems for the origination and loan documentation submissions necessary for the Paycheck Protection Program.

Income Taxes

The effective income tax rate was 28.1% for the second quarter of 2020 compared to (0.8)% for the first quarter of 2020. Excluding non-deductible goodwill impairment, the effective income tax rate for the first quarter of 2020 was 24.5%. Excluding the non-deductible goodwill impairment, the effective tax rate for the full year 2020 is currently estimated to be in the range of 26-28%. The higher effective tax rate in the second quarter was mainly due to tax expense related to restricted stock vestings combined with benefits recorded in the first quarter related to the filing of amended state returns.

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 Six Months EndedRoll Forward of Loans June 30, March 31, June 30,and Leases Heldfor Investment, Net of 2020 2020 2020 Deferred Fees (1) (Dollars in thousands)Balance, beginning of $ $ $ period 19,745,305 18,846,872 18,846,872Additions: Production 789,746 1,802,956 2,592,702Disbursements 800,458 1,997,080 2,797,538Total production and disbursements 2,603,414 2,786,826 5,390,240Reductions: Payoffs ) ) ) (612,837 (812,707 (1,425,544Paydowns ) ) ) (2,022,376 (1,053,705 (3,076,081Total payoffs and ) ) )paydowns (2,635,213 (1,866,412 (4,501,625Sales (3,089 ) - (3,089 )Transfers to - (1,776 ) (1,776 )foreclosed assetsCharge-offs (15,786 ) (20,205 ) (35,991 )Total reductions ) ) ) (2,654,088 (1,888,393 (4,542,481Net (decrease) (50,674 ) 898,433 847,759 increaseBalance, end of period $ $ $ 19,694,631 19,745,305 19,694,631 Weighted average rate 2.33 % 4.31 % 2.93 %on production (2) (1) Includes direct financing leasesbut excludes equipment leased to others under operating leases.(2) The weighted average rate onproduction presents contractual rates on a tax equivalent basis and excludes amortized fees.Amortized fees added approximately 21 basis points to loan yields in 2020.

Loans and leases held for investment, net of deferred fees, decreased by $50.7 million in the second quarter of 2020 to $19.7 billion at June 30, 2020. We funded $1.2 billion of PPP loans in the second quarter and continued ongoing fundings in the construction loan class, however, this was more than offset by paydowns on existing credits in the venture capital and asset-based loan portfolio classes. Many borrowers who drew down on their loans in the first quarter to ensure liquidity during the COVID-19 pandemic paid back the funds in the second quarter as the economy began to reopen. In addition, our venture banking equity funds business saw balances decline $662.7 million in the second quarter after growing $203.2 million in the first quarter, as drawdowns by equity funds in late March were repaid during the second quarter. The weighted average rate on production decreased to 2.33% since most of the loan production related to PPP loans at a coupon rate of 1%. Excluding PPP loans, the weighted average rate on 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:

June 30, 2020 March 31, 2020 June 30, 2019 % of % of % ofLoan andLease Balance Total Balance Total Balance TotalPortfolio (In thousands)Real estate mortgage:Commercial $ 4,222,075 22 % $ 4,220,649 21 % $ 4,435,274 24 %Incomeproducing and otherresidential 3,733,659 19 % 3,788,295 19 % 3,640,752 20 %Total realestate 7,955,734 41 % 8,008,944 40 % 8,076,026 44 %mortgageReal estateconstruction and land:Commercial 1,167,609 6 % 1,087,505 6 % 972,891 5 %Residential 2,172,919 11 % 1,792,748 9 % 1,403,239 8 %Total realestate construction and land 3,340,528 17 % 2,880,253 15 % 2,376,130 13 % Total real 11,296,262 58 % 10,889,197 55 % 10,452,156 57 %estateCommercial: Asset-based 3,412,431 17 % 3,938,402 20 % 3,606,007 19 %Venture 1,814,341 9 % 2,715,837 14 % 2,194,743 12 %capitalOther 2,760,278 14 % 1,771,985 9 % 1,773,564 10 %commercialTotal 7,987,050 40 % 8,426,224 43 % 7,574,314 41 %commercialConsumer 411,319 2 % 429,884 2 % 446,382 2 %Total loansand leases held forinvestment,net of $ 19,694,631 100 % $ 19,745,305 100 % $ 18,472,852 100 %deferred fees Totalunfunded loan $ 7,745,921 $ 7,697,724 $ 7,610,899 commitments

Allowance for Credit Losses

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

Three Months Ended June 30, 2020 Allowance for Reserve for TotalAllowance for Credit Loan and Unfunded Loan Allowance forLosses Rollforward Lease Losses Commitments Credit 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 Three Months Ended March 31, 2020 Allowance for Reserve for TotalAllowance for Credit Loan and Unfunded Loan Allowance forLosses Rollforward Lease Losses Commitments Credit Losses (In thousands)Beginning balance $ 138,785 $ 35,861 $ 174,646 Charge-offs (20,205 ) - (20,205 )Recoveries 1,095 - 1,095 Net charge-offs (19,110 ) - (19,110 )Provision 98,000 14,000 112,000 Cumulative effect of change in accounting principle - CECL 3,617 3,710 7,327 Ending balance $ 221,292 $ 53,571 $ 274,863

The allowance for credit losses increased by $106.8 million in the second quarter of 2020 to $381.6 million at June 30, 2020. Substantially all of the increase in the allowance for credit losses during the second quarter was attributable to deterioration in the macro-economic variables used in our CECL forecast. Net charge-offs decreased from $19.1 million in the first quarter to $13.2 million in the second quarter.

The allowance for credit losses as a percentage of loans and leases held for investment was 1.94% at June 30, 2020 and 1.39% at March 31, 2020. The allowance for loan and lease losses as a percentage of loans and leases held for investment was 1.53% at June 30, 2020 and 1.12% at March 31, 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 2.06% and 1.63% at June 30, 2020, respectively.

Gross charge-offs for the second quarter of 2020 were $15.8 million and 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 compared to gross charge-offs for the first quarter of 2020 of $20.2 million that included $11.5 million for an asset-based oil industry loan and $7.3 million for other commercial loans.

Recoveries for the second quarter of 2020 were $2.5 million and included $2.3 million for other commercial loans compared to recoveries for the first quarter of 2020 of $1.1 million that included $0.4 million for other commercial loans and $0.4 million for asset-based loans.

For the second quarter of 2020 and first quarter of 2020, annualized net charge-offs to average loans and leases were 0.27% and 0.40%, respectively.

Deposits and Client Investment Funds

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

June 30, 2020 March 31, 2020 June 30, 2019 % of % of % ofDeposit Composition Balance Total Balance Total Balance Total (Dollars in thousands)Noninterest-bearing $ 8,629,543 38 % $ 7,510,218 38 % $ 7,299,213 39 %demandInterest checking 4,858,168 21 % 3,333,147 17 % 3,220,353 17 %Money market 5,498,150 24 % 4,712,118 24 % 4,578,083 24 %Savings 549,953 2 % 495,039 3 % 519,839 3 %Total core deposits 19,535,814 85 % 16,050,522 82 % 15,617,488 83 %Non-corenon-maturity 1,217,266 5 % 836,157 4 % 436,833 2 %depositsTotal non-maturity 20,753,080 90 % 16,886,679 86 % 16,054,321 85 %depositsTime deposits 1,522,928 7 % 2,086,188 11 % 2,284,023 12 %$250,000 and underTime deposits over 652,571 3 % 602,970 3 % 467,412 3 %$250,000Total time deposits 2,175,499 10 % 2,689,158 14 % 2,751,435 15 %Total deposits $ 22,928,579 100 % $ 19,575,837 100 % $ 18,805,756 100 %

At June 30, 2020, core deposits totaled $19.5 billion, or 85% of total deposits, including $8.6 billion of noninterest-bearing demand deposits, or 38% of total deposits. Core deposits increased by $3.5 billion in the second quarter driven by PPP loan proceeds being deposited into customers accounts and venture banking which saw deposits increase by $2.0 billion to a record $8.7 billion as of June 30, 2020.

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 June 30, 2020 were $1.4 billion, of which $1.1 billion was managed by PWAM.

CREDIT QUALITY

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

June 30, March 31, Increase Credit Quality Metrics 2020 2020 (Decrease) (Dollars in thousands)NPAs and Performing TDRs:Nonaccrual loans andleases held for $ 166,113 $ 95,602 $ 70,511 investment (1)Accruing loanscontractually past due - - - 90 days or moreForeclosed assets, net 1,449 1,701 (252 )Total nonperforming $ 167,562 $ 97,303 $ 70,259 assets ("NPAs") Performing TDRs held for $ 15,037 $ 8,978 $ 6,059 investment Nonaccrual loans andleases held for investmentto loans and leases held 0.84 % 0.48 % for investmentNonperforming assets to loans and leasesheld for investment and 0.85 % 0.49 % foreclosed assets Loan and Lease Credit Risk Ratings:Pass $ 18,635,004 $ 18,698,942 $ (63,938 )Special mention 766,397 898,658 (132,261 )Classified 293,230 147,705 145,525 Total loans and leases held for investment,net of deferred fees $ 19,694,631 $ 19,745,305 $ (50,674 ) Classified loans andleases held for investmentto loans and leases held 1.49 % 0.75 % for investment Allowance for Credit Losses:Allowance for credit $ 381,621 $ 274,863 $ 106,758 lossesProvision for credit $ 120,000 $ 112,000 $ 8,000 losses (for the quarter)Net charge-offs (for the $ 13,242 $ 19,110 $ (5,868 )quarter)Net charge-offs to average loans and leases(for the quarter) 0.27 % 0.40 % Allowance for creditlosses to loans and leasesheld for investment 1.94 % 1.39 % Allowance for creditlosses to nonaccrual loansand leases held for 229.7 % 287.5 % investment (1) Nonaccrual loans include guaranteedamounts of $16.2 million at June 30, 2020 and $16.0 millionat March 31, 2020.

Nonaccrual, classified, and special mention loans and leases fluctuate from period to period as a result of loan repayments and our ongoing active portfolio monitoring, including loan downgrades.

During the second quarter of 2020, classified loans and leases increased by $145.5 million, while special mention loans and leases decreased by $132.3 million. The increase in classified loans and leases and the decrease in special mention loans and leases was due primarily to three security monitoring loans totaling $119.2 million and two retail real estate loans totaling $42.0 million migrating out of special mention and into the classified category.

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:

June 30, 2020 March 31, 2020 Increase (Decrease) Accruing Accruing Accruing and and and 30-89 30-89 30-89 Days Days Days Past Past Past Nonaccrual Due Nonaccrual Due Nonaccrual Due (Dollars in thousands)Real estate mortgage:Commercial $ 61,771 $ - $ 19,088 $ 1,807 $ 42,683 $ (1,807 )Incomeproducing and otherresidential 2,207 - 2,308 1,064 (101 ) (1,064 ) Totalreal estate 63,978 - 21,396 2,871 42,582 (2,871 )mortgageReal estateconstruction and land:Commercial 337 - 351 - (14 ) - Residential - 1,021 - 241 - 780 Total real estate

construction 337 1,021 351 241 (14 ) 780 and landCommercial: Asset-based 19,013 3,697 17,104 - 1,909 3,697 Venture 8,270 1,924 18,612 183 (10,342 ) 1,741 capitalOther 73,995 191 37,726 4,393 36,269 (4,202 )commercialTotal 101,278 5,812 73,442 4,576 27,836 1,236 commercialConsumer 520 1,067 413 518 107 549 Total heldfor $ 166,113 $ 7,900 $ 95,602 $ 8,206 $ 70,511 $ (306 )investment

During the second quarter of 2020, nonaccrual loans and leases increased by $70.5 million due primarily to two retail real estate loans and one security monitoring loan.

CAPITAL

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

June 30, 2020 Excluding March 31, PPP 2020 Actual Loans Actual (1) (1)PacWest Bancorp Consolidated: Tier 1 leverage capital ratio 8.93 % 9.22 % (3) 8.63 %Common equity tier 1 capital ratio 9.97 % 9.97 % 9.22 %Total capital ratio 13.18 % 13.18 % 12.07 %Tangible common equity ratio (2) 8.93 % 9.36 % (3) 9.10 % (1) Capital information for June 30, 2020 is preliminary.(2) Non-GAAP measure. (3) PPP loans have been excluded from total assets in denominator as they are zero risk-weighted.

STOCK REPURCHASE PROGRAM

During the second 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 $27 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 74 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, 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 June 30, March 31, June 30, 2020 2020 2019 (Dollars in thousands, except per share data)ASSETS: Cash and due from banks $ 174,059 $ 172,570 $ 185,075 Interest-earning deposits 1,747,077 439,690 422,663 in financial institutionsTotal cash and cash 1,921,136 612,260 607,738 equivalents Securitiesavailable-for-sale, at 3,851,141 3,757,663 3,807,244 estimated fair valueFederal Home Loan Bank 17,250 54,244 43,146 stock, at costTotal investment securities 3,868,391 3,811,907 3,850,390 Gross loans and leases held 19,780,476 19,806,394 18,532,740 for investmentDeferred fees, net (85,845 ) (61,089 ) (59,888 )Total loans and leases held for investment,net of deferred fees 19,694,631 19,745,305 18,472,852 Allowance for loan and (301,050 ) (221,292 ) (135,037 )lease lossesTotal loans and leases held 19,393,581 19,524,013 18,337,815 for investment, net Equipment leased to others 295,191 306,530 300,668 under operating leasesPremises and equipment, net 42,299 39,799 38,162 Foreclosed assets, net 1,449 1,701 1,472 Goodwill 1,078,670 1,078,670 2,548,670 Core deposit and customerrelationship intangibles, 30,564 34,446 47,380 netOther assets 734,457 733,941 612,119 Total assets $ 27,365,738 $ 26,143,267 $ 26,344,414 LIABILITIES: Noninterest-bearing $ 8,629,543 $ 7,510,218 $ 7,299,213 depositsInterest-bearing deposits 14,299,036 12,065,619 11,506,543 Total deposits 22,928,579 19,575,837 18,805,756 Borrowings 60,000 2,295,000 1,913,059 Subordinated debentures 460,772 458,994 456,112 Accrued interest payable 463,489 423,047 317,477 and other liabilitiesTotal liabilities 23,912,840 22,752,878 21,492,404 STOCKHOLDERS' EQUITY (1) 3,452,898 3,390,389 4,852,010 Total liabilities and $ 27,365,738 $ 26,143,267 $ 26,344,414 stockholders? equity Book value per share $ 29.17 $ 28.75 $ 40.49 Tangible book value per $ 19.80 $ 19.31 $ 18.83 share (2)Shares outstanding 118,374,603 117,916,789 119,829,104 (1) Includes net unrealized gain on securities available-for-sale, $ 145,038 $ 90,916 $ 73,066 net(2) Non-GAAP measure.

PACWEST BANCORP AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENT OF EARNINGS (LOSS) Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, 2020 2020 2019 2020 2019 (Dollars in thousands, except per share data)Interest income: Loans and leases $ $ 262,278 $ $ 510,129 $ 247,851 284,236 558,465Investment 27,446 28,948 53,484 securities 26,038 58,628Deposits in financial 186 1,608 1,349 1,794 1,999 institutionsTotal interest 291,332 565,407 income 274,075 314,533 619,092 Interest expense:Deposits 28,247 38,720 41,322 13,075 72,955Borrowings 6,778 7,210 8,097 1,319 14,920Subordinated 6,560 7,705 11,962 debentures 5,402 15,443Total interest 41,585 53,635 61,381 expense 19,796 103,318 Net interest 249,747 504,026 income 254,279 260,898 515,774Provision for 112,000 8,000 232,000 credit losses 120,000 12,000Net interest income afterprovision for 137,747 272,026 credit losses 134,279 252,898 503,774 Noninterest income:Service charges on deposit 2,004 2,658 3,771 4,662 7,501 accountsOther commissions and 10,111 9,721 11,590 19,832 22,598 feesLeased equipment 12,251 9,182 24,288 income 12,037 18,464Gain on sale of 346 87 326 433 326 loans and leasesGain on sale of 182 22,192 7,897 securities 7,715 24,353Other income 4,201 3,832 10,846 6,645 8,715Total noninterest 38,858 29,100 50,893 67,958 81,957 income Noninterest expense:Compensation 61,282 68,956 123,192 61,910 139,801Occupancy 14,207 14,457 28,701 14,494 28,777Data processing 6,454 6,817 13,556 7,102 13,742Other professional 4,146 4,258 4,629 8,404 9,142 servicesInsurance and 4,249 4,098 13,622 assessments 9,373 8,136Intangible asset 3,948 4,870 7,830 amortization 3,882 9,740Leased equipment 7,205 5,558 14,307 depreciation 7,102 11,209Foreclosedassets (income) (146 ) 66 (146 ) (80 ) (117 )expense, netAcquisition, integration andreorganization - - - - 618 costsCustomer related 3,932 3,405 8,340 expense 4,408 6,348Loan expense 2,650 3,451 6,029 3,379 6,336Goodwill - - - impairment 1,470,000 1,470,000Other expense 9,719 9,332 21,034 11,315 17,982Total noninterest 126,965 1,587,970 125,427 1,714,935 251,714 expense Earnings (loss) before income 46,172 (1,421,123 ) 178,364 (1,374,951 ) 334,017 taxesIncome tax 11,988 50,239 24,956 expense 12,968 93,288Net earnings $ $ ) $ $ ) $ (loss) 33,204 (1,433,111 128,125 (1,399,907 240,729 Basic anddiluted earnings $ 0.28 $ (12.23 ) $ 1.07 $ (11.98 ) $ 1.99 (loss) per shareDividendsdeclared and $ 0.25 $ 0.60 $ 0.60 $ 0.85 $ 1.20 paid per share

PACWEST BANCORP AND SUBSIDIARIESNET EARNINGS(LOSS) PER SHARE CALCULATIONS Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, 2020 2020 2019 2020 2019 (In thousands, except per share data)Basic Earnings(Loss) Per Share:Net earnings $ 33,204 $ (1,433,111 ) $ 128,125 $ (1,399,907 ) $ 240,729 (loss)Less: earningsallocated to unvestedrestricted stock (362 ) (939 ) (1,190 ) (1,251 ) (2,343 )(1)Net earnings(loss) allocated tocommon shares $ 32,842 $ (1,434,050 ) $ 126,935 $ (1,401,158 ) $ 238,386 Weighted-average basic shares andunvestedrestricted stock 118,192 118,775 120,042 118,484 121,128 outstandingLess:weighted-average unvestedrestricted stock (1,606 ) (1,495 ) (1,462 ) (1,551 ) (1,407 )outstandingWeighted-average basic sharesoutstanding 116,586 117,280 118,580 116,933 119,721 Basic earnings $ 0.28 $ (12.23 ) $ 1.07 $ (11.98 ) $ 1.99 (loss) per share Diluted Earnings(Loss) Per Share:Net earnings(loss) allocated tocommon shares $ 32,842 $ (1,434,050 ) $ 126,935 $ (1,401,158 ) $ 238,386 Weighted-average diluted sharesoutstanding 116,586 117,280 118,580 116,933 119,721 Diluted earnings $ 0.28 $ (12.23 ) $ 1.07 $ (11.98 ) $ 1.99 (loss) per share (1) Represents cash dividendspaid to holders of unvested stock, net of forfeitures,plus undistributed earnings amounts available to holders of unvested restricted stock, if any.

PACWEST BANCORP AND SUBSIDIARIES AVERAGE BALANCE SHEET AND YIELD ANALYSIS Three Months Ended June 30, 2020 March 31, 2020 June 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)(2) $ 19,951,603 $ 248,474 5.01 % $ 19,065,035 $ 262,764 5.54 % $ 18,239,690 $ 284,513 6.26 %Investment securities 3,846,459 27,430 2.87 % 3,853,217 28,641 2.99 % 3,790,436 29,462 3.12 %(3)Deposits in financial institutions 733,142 186 0.10 % 537,384 1,608 1.20 % 228,702 1,349 2.37 %Total interest-earning assets (1) 24,531,204 276,090 4.53 % 23,455,636 293,013 5.02 % 22,258,828 315,324 5.68 %Other assets 2,090,023 3,643,404 3,590,361 Total assets $ 26,621,227 $ 27,099,040 $ 25,849,189 Liabilities and Stockholders' Equity: Interest checking $ 4,001,750 1,573 0.16 % $ 3,466,812 7,135 0.83 % $ 3,242,960 10,644 1.32 %Money market 6,114,354 2,856 0.19 % 5,247,866 10,016 0.77 % 5,046,021 14,604 1.16 %Savings 524,335 33 0.03 % 497,959 160 0.13 % 525,648 227 0.17 %Time 2,475,858 8,613 1.40 % 2,684,143 10,936 1.64 % 2,731,156 13,245 1.95 %Total interest-bearing deposits 13,116,297 13,075 0.40 % 11,896,780 28,247 0.95 % 11,545,785 38,720 1.35 %Borrowings 871,110 1,319 0.61 % 2,026,749 6,778 1.35 % 1,142,223 7,210 2.53 %Subordinated debentures 459,466 5,402 4.73 % 458,399 6,560 5.76 % 454,901 7,705 6.79 %Total interest-bearing liabilities 14,446,873 19,796 0.55 % 14,381,928 41,585 1.16 % 13,142,909 53,635 1.64 %Noninterest-bearing demand deposits 8,292,151 7,357,717 7,544,027 Other liabilities 435,353 402,617 343,364 Total liabilities 23,174,377 22,142,262 21,030,300 Stockholders' equity 3,446,850 4,956,778 4,818,889 Total liabilities and stockholders' equity $ 26,621,227 $ 27,099,040 $ 25,849,189 Net interest income (1) $ 256,294 $ 251,428 $ 261,689 Net interest spread (1) 3.98 % 3.86 % 4.04 %Net interest margin (1) 4.20 % 4.31 % 4.72 % Total deposits (4) $ 21,408,448 $ 13,075 0.25 % $ 19,254,497 $ 28,247 0.59 % $ 19,089,812 $ 38,720 0.81 % (1) Tax equivalent. (2) Includes discount accretion on acquired loans of $2.5 million, $4.8million, and $3.5 million for the three months ended June 30, 2020,March 31,2020, and June 30, 2019, respectively.(3) Includes tax-equivalent adjustments of $1.4 million, $1.2 million, and $0.5million for the three months ended June 30, 2020,March 31, 2020, and June 30,2019 related to tax-exempt income on investment securities. The federalstatutory tax rate utilized was 21%.(4) Total deposits is the sum of total interest-bearing deposits andnoninterest-bearing demand deposits. The cost of total deposits iscalculatedas annualized interest expense on total deposits divided by averagetotal deposits.

PACWEST BANCORP AND SUBSIDIARIESFIVE QUARTER BALANCE SHEET June 30, March 31, December 31, September 30, June 30, 2020 2020 2019 2019 2019 (Dollars in thousands, except per share data)ASSETS: Cash and due from banks $ 174,059 $ 172,570 $ 172,585 $ 252,596 $ 185,075 Interest-earning deposits in financialinstitutions 1,747,077 439,690 465,039 483,405 422,663 Total cash and cash 1,921,136 612,260 637,624 736,001 607,738 equivalents Securities 3,851,141 3,757,663 3,797,187 3,817,348 3,807,244 available-for-saleFederal Home Loan Bank stock 17,250 54,244 40,924 26,865 43,146 Total investment securities 3,868,391 3,811,907 3,838,111 3,844,213 3,850,390 Gross loans and leases held 19,780,476 19,806,394 18,910,740 18,796,011 18,532,740 for investmentDeferred fees, net (85,845 ) (61,089 ) (63,868 ) (60,468 ) (59,888 )Total loans and leases held forinvestment, net of deferred 19,694,631 19,745,305 18,846,872 18,735,543 18,472,852 feesAllowance for loan and lease (301,050 ) (221,292 ) (138,785 ) (138,552 ) (135,037 )lossesTotal loans and leases held forinvestment, net 19,393,581 19,524,013 18,708,087 18,596,991 18,337,815 Equipment leased to others underoperating leases 295,191 306,530 324,084 295,854 300,668 Premises and equipment, net 42,299 39,799 38,585 37,926 38,162 Foreclosed assets, net 1,449 1,701 440 1,366 1,472 Goodwill 1,078,670 1,078,670 2,548,670 2,548,670 2,548,670 Core deposit and customer relationshipintangibles, net 30,564 34,446 38,394 42,547 47,380 Other assets 734,457 733,941 636,811 621,059 612,119 Total assets $ 27,365,738 $ 26,143,267 $ 26,770,806 $ 26,724,627 $ 26,344,414 LIABILITIES: Noninterest-bearing deposits $ 8,629,543 $ 7,510,218 $ 7,243,298 $ 7,441,185 $ 7,299,213 Interest-bearing deposits 14,299,036 12,065,619 11,989,738 12,292,018 11,506,543 Total deposits 22,928,579 19,575,837 19,233,036 19,733,203 18,805,756 Borrowings 60,000 2,295,000 1,759,008 1,253,031 1,913,059 Subordinated debentures 460,772 458,994 458,209 456,145 456,112 Accrued interest payable and otherliabilities 463,489 423,047 365,856 362,140 317,477 Total liabilities 23,912,840 22,752,878 21,816,109 21,804,519 21,492,404 STOCKHOLDERS' EQUITY (1) 3,452,898 3,390,389 4,954,697 4,920,108 4,852,010 Total liabilities and stockholders?equity $ 27,365,738 $ 26,143,267 $ 26,770,806 $ 26,724,627 $ 26,344,414 Book value per share $ 29.17 $ 28.75 $ 41.36 $ 41.06 $ 40.49 Tangible book value per $ 19.80 $ 19.31 $ 19.77 $ 19.43 $ 18.83 share (2)Shares outstanding 118,374,603 117,916,789 119,781,605 119,831,192 119,829,104 (1) Includes net unrealized gain on securities $ 145,038 $ 90,916 $ 78,658 $ 95,887 $ 73,066 available-for-sale, net(2) Non-GAAP measure.

PACWESTBANCORP AND SUBSIDIARIESFIVE QUARTERSTATEMENT OF EARNINGS(LOSS) Three Months Ended June 30, March 31, December 31, September June 30, 30, 2020 2020 2019 2019 2019 (Dollars in thousands, except per share data)Interest income:Loans and $ 247,851 $ 262,278 $ 263,402 $ 275,978 $ 284,236 leasesInvestment 26,038 27,446 28,135 28,806 28,948 securitiesDeposits infinancial 186 1,608 2,056 2,424 1,349 institutionsTotal interest 274,075 291,332 293,593 307,208 314,533 income Interest expense:Deposits 13,075 28,247 34,802 40,703 38,720 Borrowings 1,319 6,778 5,189 6,852 7,210 Subordinated 5,402 6,560 6,983 7,417 7,705 debenturesTotal interest 19,796 41,585 46,974 54,972 53,635 expense Net interest 254,279 249,747 246,619 252,236 260,898 incomeProvision for 120,000 112,000 3,000 7,000 8,000 credit lossesNet interest income afterprovision for 134,279 137,747 243,619 245,236 252,898 credit losses Noninterest income:Servicecharges on 2,004 2,658 3,611 3,525 3,771 depositaccountsOthercommissions 10,111 9,721 10,170 10,855 11,590 and feesLeasedequipment 12,037 12,251 10,648 9,615 9,182 incomeGain on saleof loans and 346 87 23 765 326 leasesGain on sale 7,715 182 184 908 22,192 of securitiesOther income 6,645 4,201 2,540 7,761 3,832 Totalnoninterest 38,858 29,100 27,176 33,429 50,893 income Noninterest expense:Compensation 61,910 61,282 74,637 71,424 68,956 Occupancy 14,494 14,207 14,541 14,089 14,457 Data 7,102 6,454 6,770 7,044 6,817 processingOtherprofessional 4,146 4,258 4,261 4,400 4,629 servicesInsurance and 9,373 4,249 4,168 4,100 4,098 assessmentsIntangibleasset 3,882 3,948 4,153 4,833 4,870 amortizationLeasedequipment 7,102 7,205 6,856 5,951 5,558 depreciationForeclosedassets (146 ) 66 (3,446 ) 8 (146 )(income)expense, netAcquisition,integration andreorganization - - (269 ) - - costsCustomerrelated 4,408 3,932 3,952 3,539 3,405 expenseLoan expense 3,379 2,650 2,967 3,628 3,451 Goodwill - 1,470,000 - - - impairmentOther expense 11,315 9,719 5,138 7,793 9,332 Totalnoninterest 126,965 1,587,970 123,728 126,809 125,427 expense Earnings(loss) before 46,172 (1,421,123 ) 147,067 151,856 178,364 income taxesIncome tax 12,968 11,988 29,186 41,830 50,239 expenseNet earnings $ 33,204 $ (1,433,111 ) $ 117,881 $ 110,026 $ 128,125 (loss) Basic anddilutedearnings $ 0.28 $ (12.23 ) $ 0.98 $ 0.92 $ 1.07 (loss) pershareDividendsdeclared and $ 0.25 $ 0.60 $ 0.60 $ 0.60 $ 0.60 paid per share

PACWEST BANCORP AND SUBSIDIARIESFIVE QUARTERSELECTED FINANCIAL DATA At or For the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2020 2020 2019 2019 2019 (Dollars in thousands)Performance Ratios: Return on average 0.50 % (21.27 )% 1.77 % 1.65 % 1.99 %assets (1)Return on average 3.87 % (116.28 )% 9.49 % 8.93 % 10.66 %equity (1)Return on averagetangible equity (1) 6.39 % 6.88 % 20.68 % 19.84 % 24.03 %(2)Efficiency ratio 42.9 % 40.6 % 44.8 % 42.3 % 41.6 %Noninterest expense as a percentageof average assets 1.92 % 23.57 % 1.86 % 1.91 % 1.95 %(1) Average Yields/ Costs (1):Yield on: Average loans and 5.01 % 5.54 % 5.67 % 5.91 % 6.26 %leases (3)Averageinterest-earning 4.53 % 5.02 % 5.14 % 5.41 % 5.68 %assets (3)Cost of: Averageinterest-bearing 0.40 % 0.95 % 1.14 % 1.34 % 1.35 %depositsAverage total 0.25 % 0.59 % 0.71 % 0.83 % 0.81 %depositsAverageinterest-bearing 0.55 % 1.16 % 1.36 % 1.60 % 1.64 %liabilitiesNet interest spread 3.98 % 3.86 % 3.78 % 3.81 % 4.04 %(3)Net interest margin 4.20 % 4.31 % 4.33 % 4.46 % 4.72 %(3) Average Balances: Assets: Loans and leases,net of deferred $ 19,951,603 $ 19,065,035 $ 18,470,583 $ 18,539,281 $ 18,239,690 feesInterest-earning 24,531,204 23,455,636 22,779,867 22,793,676 22,258,828 assetsTotal assets 26,621,227 27,099,040 26,380,739 26,406,603 25,849,189 Liabilities: Noninterest-bearing 8,292,151 7,357,717 7,338,888 7,487,555 7,544,027 depositsInterest-bearing 13,116,297 11,896,780 12,102,902 12,031,776 11,545,785 depositsTotal deposits 21,408,448 19,254,497 19,441,790 19,519,331 19,089,812 Borrowings 871,110 2,026,749 1,179,220 1,181,313 1,142,223 Subordinated 459,466 458,399 456,997 456,011 454,901 debenturesInterest-bearing 14,446,873 14,381,928 13,739,119 13,669,100 13,142,909 liabilitiesStockholders' 3,446,850 4,956,778 4,930,182 4,890,746 4,818,889 equity (1) Annualized. (2) Non-GAAP measure.(3) Tax equivalent.

PACWESTBANCORP AND SUBSIDIARIESFIVE QUARTERSELECTED FINANCIALDATA At or For the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2020 2020 2019 2019 2019 (Dollars in thousands)CreditQuality Ratios:Nonaccrualloans and leases heldforinvestment toloans and leasesheld for 0.84 % 0.48 % 0.49 % 0.53 % 0.44 %investmentNonperformingassets to loans andleases heldfor investmentandforeclosed 0.85 % 0.49 % 0.49 % 0.54 % 0.45 %assetsClassifiedloans and leases heldforinvestment toloans and leasesheld for 1.49 % 0.75 % 0.93 % 1.01 % 1.03 %investmentProvision forcredit losses (for thequarter) toaverage loans and leasesheld forinvestment 2.42 % 2.36 % 0.06 % 0.15 % 0.18 %(annualized)Netcharge-offs (for thequarter) toaverage loansand leases heldforinvestment 0.27 % 0.40 % 0.02 % 0.10 % 0.25 %(annualized)Trailing 12months net charge-offsto averageloans and leasesheld for 0.20 % 0.19 % 0.09 % 0.20 % 0.18 %investmentAllowance forcredit losses to loansand leasesheld for 1.94 % 1.39 % 0.93 % 0.92 % 0.92 %investmentAllowance forcredit losses tononaccrualloans and leasesheld for 229.7 % 287.5 % 189.1 % 174.0 % 209.1 %investment PacWestBancorp Consolidated:Tier 1leverage 8.93 % 8.63 % 9.74 % 9.50 % 9.49 %capital ratio(1)Common equitytier 1 9.97 % 9.22 % 9.78 % 9.55 % 9.53 %capital ratio(1)Tier 1capital ratio 9.97 % 9.22 % 9.78 % 9.55 % 9.53 %(1)Total capital 13.18 % 12.07 % 12.41 % 12.16 % 12.18 %ratio (1)Risk-weighted $ 22,781,405 $ 24,214,209 $ 23,582,495 $ 23,579,614 $ 23,117,199 assets (1) Equity to 12.62 % 12.97 % 18.51 % 18.41 % 18.42 %assets ratioTangiblecommon equity 8.93 % 9.10 % 9.79 % 9.65 % 9.50 %ratio (2)Book value $ 29.17 $ 28.75 $ 41.36 $ 41.06 $ 40.49 per shareTangible bookvalue per $ 19.80 $ 19.31 $ 19.77 $ 19.43 $ 18.83 share (2) Pacific Western Bank:Tier 1leverage 10.03 % 9.71 % 10.95 % 10.72 % 10.76 %capital ratio(1)Common equitytier 1 11.18 % 10.38 % 11.00 % 10.79 % 10.80 %capital ratio(1)Tier 1capital ratio 11.18 % 10.38 % 11.00 % 10.79 % 10.80 %(1)Total capital 12.44 % 11.39 % 11.74 % 11.52 % 11.53 %ratio (1) (1) Capitalinformationfor June 30, 2020 ispreliminary.(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 Six Months EndedPPNR and PPNR June 30, March 31, June 30, June 30,Returnon Average Assets 2020 2020 2019 2020 2019 (Dollars in thousands)Net earnings $ 33,204 $ (1,433,111 ) $ 128,125 $ (1,399,907 ) $ 240,729 (loss)Add: Provision for 120,000 112,000 8,000 232,000 12,000 credit lossesAdd: Goodwill - 1,470,000 - 1,470,000 - impairmentAdd: Income tax 12,968 11,988 50,239 24,956 93,288 expensePre-provision,pre-goodwill impairment,pre-tax net $ 166,172 $ 160,877 $ 186,364 $ 327,049 $ 346,017 revenue ("PPNR") Average assets $ 26,621,227 $ 27,099,040 $ 25,849,189 $ 26,860,133 $ 25,812,771 Return on average 0.50 % (21.27 )% 1.99 % (10.48 )% 1.88 %assets (1)PPNR return on 2.51 % 2.39 % 2.89 % 2.45 % 2.70 %average assets (2) (1) Annualized netearnings (loss) divided by averageassets.(2) AnnualizedPPNR divided by average assets.

Three Months Ended Six Months Ended June 30, March 31, June 30, June 30,Return onAverage 2020 2020 2019 2020 2019 TangibleEquity (Dollars in thousands)Net earnings $ 33,204 $ (1,433,111 ) $ 128,125 $ (1,399,907 ) $ 240,729 (loss)Add:Intangible 3,882 3,948 4,870 7,830 9,740 assetamortizationAdd: Goodwill - 1,470,000 - 1,470,000 - impairmentAdjusted net $ 37,086 $ 40,837 $ 132,995 $ 77,923 $ 250,469 earnings Averagestockholders' $ 3,446,850 $ 4,956,778 $ 4,818,889 $ 4,201,814 $ 4,817,435 equityLess: Averageintangible 1,111,302 2,569,189 2,598,762 1,840,246 2,601,288 assetsAveragetangible $ 2,335,548 $ 2,387,589 $ 2,220,127 $ 2,361,568 $ 2,216,147 common equity Return onaverage 3.87 % (116.28 )% 10.66 % (67.00 )% 10.08 %equity (1)Return onaverage 6.39 % 6.88 % 24.03 % 6.64 % 22.79 %tangibleequity (2) (1) Annualized net earningsdivided by average stockholders' equity.(2) Annualized adjusted netearnings divided by average tangible common equity.

TangibleCommon Equity June 30, March 31, December 31, September 30, June 30,Ratio/Tangible BookValue Per 2020 2020 2019 2019 2019 Share (Dollars in thousands, except per share data)Stockholders' $ 3,452,898 $ 3,390,389 $ 4,954,697 $ 4,920,108 $ 4,852,010 equityLess:Intangible 1,109,234 1,113,116 2,587,064 2,591,217 2,596,050 assetsTangible $ 2,343,664 $ 2,277,273 $ 2,367,633 $ 2,328,891 $ 2,255,960 common equity Total assets $ 27,365,738 $ 26,143,267 $ 26,770,806 $ 26,724,627 $ 26,344,414 Less:Intangible 1,109,234 1,113,116 2,587,064 2,591,217 2,596,050 assetsTangible $ 26,256,504 $ 25,030,151 $ 24,183,742 $ 24,133,410 $ 23,748,364 assets Equity to 12.62 % 12.97 % 18.51 % 18.41 % 18.42 %assets ratioTangiblecommon equity 8.93 % 9.10 % 9.79 % 9.65 % 9.50 %ratio (1) Book value $ 29.17 $ 28.75 $ 41.36 $ 41.06 $ 40.49 per shareTangible bookvalue per $ 19.80 $ 19.31 $ 19.77 $ 19.43 $ 18.83 share (2)Shares 118,374,603 117,916,789 119,781,605 119,831,192 119,829,104 outstanding (1) Tangiblecommon equitydivided by tangibleassets.(2) Tangiblecommon equitydivided by sharesoutstanding.

Matthew P. Wagner Patrick J. RusnakContact: President and CEO Executive Vice President and CFOPhone: 303-802-8900 714-989-4705 William BlackContact: Executive Vice President Strategy and Corporate DevelopmentPhone: 919-597-7466