PacWest Bancorp Announces the Sale of $323.6 Million of Non-Covered Adversely Classified Loans, Including $107.6 Million of Nonaccrual Loans
CAPITAL POSITION ALLOWS PACWEST TO CLEAR BALANCE SHEET FOR FUTURE GROWTH
SAN DIEGO, Feb. 24 /PRNewswire-FirstCall/ -- PacWest Bancorp (Nasdaq: PACW) today announced that on Tuesday, February 23, 2010, its wholly-owned bank subsidiary, Pacific Western Bank, completed the sale of 61 non-covered adversely classified loans totaling $323.6 million, which includes $107.6 million of nonaccrual loans, to an institutional buyer for $200.6 million in cash. The sale was on a servicing-released basis and without recourse to Pacific Western Bank. The loans sold represent over one-half of the Bank's non-covered adversely classified loans. All loans sold were legacy Pacific Western Bank loans and none were "covered loans" acquired in the Affinity Bank acquisition.
Matt Wagner, Chief Executive Officer commented, "Removing almost $324 million of problem loans from our portfolio in a single transaction creates tremendous opportunity for the Company."
Mr. Wagner continued, "We remain cautious and vigilant with respect to credit, and our existing loan portfolio is subject to uncertainty and volatility given the fragile economic environment. Without these problem loans, however, and given the significant earnings power of our Company, we believe PacWest is well-positioned to grow, both organically and through acquisition."
Vic Santoro, Executive Vice President and Chief Financial Officer, stated, "The expected after tax loss from the disposition of these classified and non-accrual loans is estimated to be $41 million. Our significant capital base gives us the flexibility to not only absorb this loss now, but also to remain above the well-capitalized regulatory capital requirements."
Actual and pro forma unaudited credit-related financial information as of December 31, 2009 is shown below. The pro forma amounts reflect the sale of the adversely classified loans as of year-end 2009. The amounts shown in the columns headed "Loans Sold" represent the balances of the loans on December 31, 2009; the balances of such loans on the date sold totaled $323.6 million.
The following table shows our non-covered loan portfolio concentration and credit quality data as of December 31, 2009 and on a pro forma basis giving effect to the loan sale.
At December 31, 2009
--------------------
Actual Loans Sold Pro Forma
------ ---------- ---------
(Dollars in thousands)
Commercial $815,527 $(9,948) $805,579
Real estate - construction 440,286 (143,955) 296,331
Commercial real estate - mortgage 2,425,328 (171,931) 2,253,397
Consumer 32,241 - 32,241
------ --- ------
Total non-covered loans 3,713,382 (325,834) 3,387,548
Unearned income, net (5,999) (825) (5,174)
------ ---- ------
Total non-covered loans, net
of unearned income, net $3,707,383 $(325,009) $3,382,374
========== ========= ==========
Non-covered nonaccrual loans $240,167 $(110,536) $129,631
======== ========= ========
Non-covered nonaccrual loans
to total non-covered loans,
net of unearned income 6.48% 3.83%
==== ====
The details of the construction loan portfolio as of December 31, 2009 and on a pro forma basis giving effect to the loan sale follow:
At December 31, 2009
--------------------
Actual Loans Sold Pro Forma
------ ---------- ---------
(Dollars in thousands)
Commercial construction:
100% owner occupied $20,086 $(6,756) $13,330
Industrial/warehouse 67,915 (8,436) 59,479
Office building 37,300 (32,706) 4,594
Retail 49,573 (24,140) 25,433
Land acquisition 38,905 (6,775) 32,130
Unimproved commercial land 25,709 - 25,709
Other 28,860 (4,459) 24,401
------ ------ ------
Total commercial construction 268,348 (83,272) 185,076
Residential construction:
Land acquisition and development $52,458 $(26,950) $25,508
Nonowner-occupied single family 30,103 (9,925) 20,178
Unimproved residential land 39,003 - 39,003
Multifamily 38,825 (20,690) 18,135
Owner occupied 11,549 (3,118) 8,431
------ ------ -----
Total residential construction 171,938 (60,683) 111,255
------- ------- -------
Total construction $440,286 $(143,955) $296,331
Our largest non-covered loan portfolio concentration is the real estate mortgage category, which includes loans secured by commercial and residential real estate. The loans sold reduce our non-covered real estate mortgage loan portfolio as indicated in the following table.
At December 31, 2009
--------------------
Actual Loans Sold Pro Forma
------ ---------- ---------
(Dollars in thousands)
Commercial real estate mortgage:
Owner-occupied $377,057 $(12,392) $364,665
Retail 479,370 (32,088) 447,282
Office buildings 343,746 - 343,746
Industrial/warehouse 356,227 - 356,227
Hotels and other hospitality 257,489 (57,986) 199,503
Other 381,167 (14,593) 366,574
------- ------- -------
Total commercial real estate
mortgage 2,195,056 (117,059) 2,077,997
--------- -------- ---------
Residential real estate mortgage:
Multi-family 105,276 (25,216) 80,060
Single family owner-occupied 84,591 (9,667) 74,924
Single family nonowner-occupied 40,405 (19,989) 20,416
------ ------- ------
Total residential real estate
mortgage 230,272 (54,872) 175,400
------- ------- -------
Total real estate mortgage $2,425,328 $(171,931) $2,253,397
========== ========= ==========
ABOUT PACWEST BANCORP
PacWest Bancorp is a bank holding company with $5.3 billion in assets as of December 31, 2009, with one wholly-owned banking subsidiary, Pacific Western Bank. Through 68 full-service community banking branches, Pacific Western provides commercial banking services, including real estate, construction and commercial loans, to small and medium-sized businesses. Pacific Western's branches are located in Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Francisco, San Mateo and Ventura Counties. Through its subsidiary BFI Business Finance and its division First Community Financial, Pacific Western also provides working capital financing to growing companies located throughout the Southwest, primarily in the states of Arizona, California and Texas. Additional information regarding PacWest Bancorp is available on the Internet at www.pacwestbancorp.com. Information regarding Pacific Western Bank is also available on the Internet at www.pacificwesternbank.com.
Contact information: |
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Matt Wagner, Chief Executive Officer, (310) 728-1020 |
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Vic Santoro, Executive Vice President and CFO, (310) 728-1021 |
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SOURCE PacWest Bancorp
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