BUSINESS SEGMENTS

12 Months Ended

Dec. 31, 2013

BUSINESS SEGMENTS

BUSINESS SEGMENTS

NOTE 21—BUSINESS SEGMENTS

        The Company's reportable segments consist of "Banking," "Asset Financing," and "Other." At December 31, 2013, the Other segment consisted of the PacWest Bancorp holding company and other elimination and reconciliation entries.

        The Bank's Asset Financing segment includes the operations of the divisions and subsidiaries that provide asset-based commercial loans and equipment leases. The asset-based lending products are offered primarily through three business units: (1) First Community Financial ("FCF"), a division of the Bank, based in Phoenix, Arizona; (2) BFI Business Finance ("BFI"), a wholly-owned subsidiary of the Bank, based in San Jose, California; and (3) Celtic Capital Corporation ("Celtic"), a wholly-owned subsidiary of the Bank based in Santa Monica, California. The Bank's leasing products are offered through Pacific Western Equipment Finance ("EQF"), a division of the Bank based in Midvale, Utah.

        The accounting policies of the reported segments are the same as those of the Company described in Note 1, "Nature of Operations and Summary of Significant Accounting Policies." Transactions between segments consist primarily of borrowed funds. Intersegment interest expense is allocated to the Asset Financing segment based upon the Bank's total cost of interest-bearing liabilities. The provision for credit losses is allocated based on actual charge-offs for the period as well as assigning a minimum reserve requirement to the Asset Financing segment. Noninterest income and noninterest expense directly attributable to a segment are assigned to it.

        The following tables present information regarding our business segments as of and for the years indicated:

	December 31, 2013
Balance Sheet Data	Banking			Asset Financing			Other			Consolidated Company
	(In thousands)
Loans and leases, net of unearned income	$	3,837,475		$	474,877		$	—		$	4,312,352
Allowance for loan and lease losses		(75,498	)		(6,536	)		—			(82,034	)
Total loans and leases, net	$	3,761,977		$	468,341		$	—		$	4,230,318
Goodwill(1)	$	183,065		$	25,678		$	—		$	208,743
Core deposit and customer relationship intangibles, net		15,331			1,917			—			17,248
Total assets		6,004,067			519,675			9,621			6,533,363
Total deposits(2)		5,302,822			—			(21,835	)		5,280,987

⁽¹⁾

The increase in the Banking segment's goodwill during 2013 was due primarily to $129.1 million from the FCAL acquisition.

⁽²⁾

The negative balance for total deposits in the "Other" segment represents the elimination of holding company cash held in deposit accounts at the Bank.

	December 31, 2012
Balance Sheet Data	Banking			Asset Financing			Other			Consolidated Company
	(In thousands)
Loans and leases, net of unearned income	$	3,175,165		$	415,132		$	—		$	3,590,297
Allowance for loan and lease losses		(87,538	)		(4,430	)		—			(91,968	)
Total loans and leases, net	$	3,087,627		$	410,702		$	—		$	3,498,329
Goodwill	$	54,188		$	25,678		$	—		$	79,866
Core deposit and customer relationship intangibles, net		12,151			2,572			—			14,723
Total assets		4,991,927			451,557			20,174			5,463,658
Total deposits(1)		4,737,593			—			(28,472	)		4,709,121

⁽¹⁾

The negative balance for total deposits in the "Other" segment represents the elimination of holding company cash held in deposit accounts at the Bank.

	Year Ended December 31, 2013
Results of Operations	Banking			Asset Financing			Other			Consolidated Company
	(In thousands)
Interest income	$	261,492		$	48,422		$	—		$	309,914
Intersegment interest income (expense)		1,525			(1,525	)		—			—
Other interest expense		(7,873	)		(532	)		(3,796	)		(12,201	)
Net interest income		255,144			46,365			(3,796	)		297,713
Negative provision (provision) for credit losses		8,079			(3,869	)		—			4,210
FDIC loss sharing expense		(26,172	)		—			—			(26,172	)
Acquisition-related securities gain		—			—			5,222			5,222
Other noninterest income		21,532			3,558			104			25,194
Total noninterest income		(4,640	)		3,558			5,326			4,244
Accelerated vesting of restricted stock		(12,420	)		—			—			(12,420	)
OREO income (expense)		1,503			—			—			1,503
Intangible asset amortization		(4,748	)		(654	)		—			(5,402	)
Acquisition and integration costs		(28,132	)		—			(260	)		(28,392	)
Other noninterest expense		(156,600	)		(23,575	)		(5,801	)		(185,976	)
Total noninterest expense		(200,397	)		(24,229	)		(6,061	)		(230,687	)
Earnings (loss) from continuing operations before income taxes		58,186			21,825			(4,531	)		75,480
Income tax (expense) benefit		(24,940	)		(9,101	)		4,038			(30,003	)
Net earnings (loss) from continuing operations		33,246			12,724			(493	)		45,477
Loss from discontinued operations before income taxes		(620	)		—			—			(620	)
Income tax benefit		258			—			—			258
Net loss from discontinued operations		(362	)		—			—			(362	)
Net earnings (loss)	$	32,884		$	12,724		$	(493	)	$	45,115

	Year Ended December 31, 2012
Results of Operations	Banking			Asset Financing			Other			Consolidated Company
	(In thousands)
Interest income	$	251,720		$	44,395		$	—		$	296,115
Intersegment interest income (expense)		2,055			(2,055	)		—			—
Other interest expense		(15,043	)		(884	)		(3,721	)		(19,648	)
Net interest income		238,732			41,456			(3,721	)		276,467
Negative provision (provision) for credit losses		14,585			(1,766	)		—			12,819
FDIC loss sharing expense		(10,070	)		—			—			(10,070	)
Other noninterest income		21,811			4,017			114			25,942
Total noninterest income		11,741			4,017			114			15,872
OREO expense		(10,931	)		—			—			(10,931	)
Intangible asset amortization		(5,898	)		(428	)		—			(6,326	)
Acquisition and integration costs		(4,089	)		—			—			(4,089	)
Debt termination expense		(24,195	)		—			1,597			(22,598	)
Other noninterest expense		(138,640	)		(23,502	)		(5,576	)		(167,718	)
Total noninterest expense		(183,753	)		(23,930	)		(3,979	)		(211,662	)
Earnings (loss) before income taxes		81,305			19,777			(7,586	)		93,496
Income tax (expense) benefit		(31,542	)		(8,327	)		3,174			(36,695	)
Net earnings (loss)	$	49,763		$	11,450		$	(4,412	)	$	56,801

	Year Ended December 31, 2011
Results of Operations	Banking			Asset Financing			Other			Consolidated Company
	(In thousands)
Interest income	$	276,734		$	18,550		$	—		$	295,284
Intersegment interest income (expense)		1,226			(1,226	)		—			—
Other interest expense		(27,720	)		—			(4,923	)		(32,643	)
Net interest income		250,240			17,324			(4,923	)		262,641
Provision for credit losses		(26,520	)		(50	)		—			(26,570	)
FDIC loss sharing income		7,776			—			—			7,776
Other noninterest income		22,833			660			157			23,650
Total noninterest income		30,609			660			157			31,426
OREO expense		(10,676	)		—			—			(10,676	)
Intangible asset amortization		(8,264	)		(164	)		—			(8,428	)
Acquisition and integration costs		(600	)		—			—			(600	)
Other noninterest expense		(141,188	)		(10,846	)		(8,255	)		(160,289	)
Total noninterest expense		(160,728	)		(11,010	)		(8,255	)		(179,993	)
Earnings (loss) before income taxes		93,601			6,924			(13,021	)		87,504
Income tax (expense) benefit		(39,554	)		(2,917	)		5,671			(36,800	)
Net earnings (loss)	$	54,047		$	4,007		$	(7,350	)	$	50,704