10-Q 1 a03311510-q.htm 10-Q 03.31.15 10-Q



 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549  
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2015
Commission File No. 00-30747
PACWEST BANCORP
(Exact name of registrant as specified in its charter)
Delaware
 
33-0885320
(State of Incorporation)
 
(I.R.S. Employer
Identification No.)
10250 Constellation Blvd., Suite 1640
Los Angeles, CA 90067
(Address of Principal Executive Offices, Including Zip Code)
(310) 286-1144
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
    Yes  þ      No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
    Yes  þ      No  o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
þ Large accelerated filer
 
o Accelerated filer
 
 
 
o Non-accelerated filer
(Do not check if a smaller reporting company)
o Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  o      No  þ
As of April 29, 2015, there were 101,855,519 shares of the registrant's common stock outstanding, excluding 1,129,445 shares of unvested restricted stock.


1



PACWEST BANCORP
TABLE OF CONTENTS
 
 
 
Page
 
PART I. FINANCIAL INFORMATION
Item 1.
Condensed Consolidated Financial Statements (Unaudited)
 
 
Condensed Consolidated Balance Sheets (Unaudited)
 
Condensed Consolidated Statements of Earnings (Unaudited)
 
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
 
Condensed Consolidated Statement Changes in Stockholders' Equity (Unaudited)
 
Condensed Consolidated Statements of Cash Flows (Unaudited)
 
Notes to Condensed Consolidated Financial Statements (Unaudited)
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Item 4.
Controls and Procedures
 
PART II. OTHER INFORMATION
 
 
 
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.
Index to Exhibits
Signatures




2



PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

 
March 31, 2015
 
December 31, 2014
 
(Unaudited)
 
(Dollars in thousands)
ASSETS
 
 
 
Cash and due from banks
$
140,873

 
$
164,757

Interest-earning deposits in financial institutions
250,981

 
148,469

Total cash and cash equivalents
391,854

 
313,226

Securities available-for-sale, at fair value
1,595,409

 
1,567,177

Federal Home Loan Bank stock, at cost
28,905

 
40,609

Total investment securities
1,624,314

 
1,607,786

Gross loans and leases
12,302,292

 
11,904,684

Deferred fees and costs
(30,126
)
 
(22,252
)
Allowance for loan and lease losses
(92,378
)
 
(84,455
)
Total loans and leases, net
12,179,788

 
11,797,977

Equipment leased to others under operating leases
119,959

 
122,506

Premises and equipment, net
36,022

 
36,551

Foreclosed assets, net
35,940

 
43,721

Goodwill
1,728,380

 
1,720,479

Core deposit and customer relationship intangibles, net
15,703

 
17,204

Deferred tax asset, net
236,065

 
284,411

Other assets
275,915

 
290,744

Total assets
$
16,643,940

 
$
16,234,605

 
 
 
 
LIABILITIES:
 
 
 
Noninterest-bearing deposits
$
3,029,463

 
$
2,931,352

Interest-bearing deposits
8,904,712

 
8,823,776

Total deposits
11,934,175

 
11,755,128

Borrowings
618,156

 
383,402

Subordinated debentures
431,448

 
433,583

Accrued interest payable and other liabilities
126,800

 
156,262

Total liabilities
13,110,579

 
12,728,375

Commitments and contingencies (Note 10)

 

STOCKHOLDERS' EQUITY:
 
 
 
Preferred stock ($0.01 par value; 5,000,000 shares authorized; none issued and outstanding)

 

Common stock ($0.01 par value, 200,000,000 shares authorized at March 31, 2015 and December 31, 2014; 104,241,437 and 104,219,197 shares issued, respectively, including 1,129,445 and 1,108,505 shares of unvested restricted stock, respectively)
1,042

 
1,042

Additional paid-in capital
3,758,855

 
3,807,167

Accumulated deficit
(212,633
)
 
(285,712
)
Treasury stock, at cost (1,197,180 shares at March 31, 2015 and December 31, 2014)
(42,647
)
 
(42,647
)
Accumulated other comprehensive income, net
28,744

 
26,380

Total stockholders' equity
3,533,361

 
3,506,230

Total liabilities and stockholders' equity
$
16,643,940

 
$
16,234,605


See Notes to Condensed Consolidated Financial Statements.


3



PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

 
Three Months Ended
 
March 31, 2015
 
December 31, 2014
 
March 31, 2014
 
(Unaudited)
 
(Dollars in thousands, except per share data)
Interest income:
 
 
 
 
 
Loans and leases
$
202,097

 
$
197,472

 
$
77,463

Investment securities
12,195

 
12,205

 
10,823

Deposits in financial institutions
22

 
19

 
74

Total interest income
214,314

 
209,696

 
88,360

Interest expense:
 
 
 
 
 
Deposits
10,479

 
9,972

 
1,225

Borrowings
235

 
144

 
79

Subordinated debentures
4,525

 
4,597

 
1,041

Total interest expense
15,239

 
14,713

 
2,345

Net interest income
199,075

 
194,983

 
86,015

Provision (negative provision) for credit losses
16,434

 
2,063

 
(644
)
Net interest income after provision (negative provision) for credit losses
182,641

 
192,920

 
86,659

Noninterest income:
 
 
 
 
 
Service charges on deposit accounts
2,574

 
2,787

 
3,002

Other commissions and fees
5,396

 
4,556

 
1,932

Leased equipment income
5,382

 
5,382

 

Gain on sale of loans and leases

 
7

 
106

Gain on securities
3,275

 

 
4,752

FDIC loss sharing expense, net
(4,399
)
 
(4,360
)
 
(11,430
)
Other income
8,643

 
4,331

 
6,329

Total noninterest income
20,871

 
12,703

 
4,691

Noninterest expense:
 
 
 
 
 
Compensation
47,737

 
45,930

 
28,627

Occupancy
10,600

 
10,745

 
7,595

Data processing
4,308

 
4,050

 
2,540

Other professional services
3,221

 
3,181

 
1,523

Insurance and assessments
3,025

 
3,115

 
1,593

Intangible asset amortization
1,501

 
1,619

 
1,364

Leased equipment depreciation
3,103

 
3,103

 

Foreclosed assets expense (income), net
336

 
1,938

 
(1,861
)
Acquisition, integration and reorganization costs
2,000

 
7,381

 
2,200

Other expense
8,529

 
10,243

 
6,583

Total noninterest expense
84,360

 
91,305

 
50,164

Earnings from continuing operations before taxes
119,152

 
114,318

 
41,186

Income tax expense
(46,073
)
 
(43,261
)
 
(15,281
)
Net earnings from continuing operations
73,079

 
71,057

 
25,905

Loss from discontinued operations before taxes

 
(105
)
 
(1,413
)
Income tax benefit

 
47

 
588

Net loss from discontinued operations

 
(58
)
 
(825
)
Net earnings
$
73,079

 
$
70,999

 
$
25,080

Basic earnings per share:
 
 
 
 
 
Net earnings from continuing operations
$
0.71

 
$
0.69

 
$
0.57

Net earnings
$
0.71

 
$
0.69

 
$
0.55

Diluted earnings per share:
 
 
 
 
 
Net earnings from continuing operations
$
0.71

 
$
0.69

 
$
0.57

Net earnings
$
0.71

 
$
0.69

 
$
0.55

Dividends declared per share
$
0.50

 
$
0.50

 
$
0.25


See Notes to Condensed Consolidated Financial Statements.


4



PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 
Three Months Ended
 
March 31, 2015
 
December 31, 2014
 
March 31, 2014
 
(Unaudited)
 
(In thousands)
Net earnings
$
73,079

 
$
70,999

 
$
25,080

Other comprehensive income, net of tax:
 
 
 
 
 
Unrealized holding gains on securities available-for-sale
7,363

 
9,523

 
22,291

Income tax expense related to unrealized holding gains arising during the period
(3,105
)
 
(3,964
)
 
(9,363
)
Unrealized holding gains on securities available-for-sale, net of tax
4,258

 
5,559

 
12,928

Reclassification adjustment for gains included in net earnings (1)
(3,275
)
 

 
(4,752
)
Income tax expense related to reclassification adjustment
1,381

 

 
1,996

Reclassification adjustment for gains included in net earnings, net of tax
(1,894
)
 

 
(2,756
)
Other comprehensive income, net of tax
2,364

 
5,559

 
10,172

Comprehensive income
$
75,443

 
$
76,558

 
$
35,252

___________________________________ 
(1)
Entire amounts are recognized in "Gain on securities" on the Condensed Consolidated Statements of Earnings.

See Notes to Condensed Consolidated Financial Statements.


5



PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

 
Three Months Ended March 31, 2015
 
Common Stock
 
 
 
 
 
 
 
 
 
Shares
 
Par Value
 
Additional Paid-in Capital
 
Accumulated Deficit
 
Treasury Stock
 
Accumulated Other Comprehensive Income
 
Total
 
(Unaudited)
 
(Dollars in thousands, except share data)
Balance, December 31, 2014
103,022,017

 
1,042

 
3,807,167

 
(285,712
)
 
(42,647
)
 
26,380

 
3,506,230

Net earnings

 

 

 
73,079

 

 

 
73,079

Other comprehensive income - net unrealized gain on securities available-for-sale, net of tax

 

 

 

 

 
2,364

 
2,364

Restricted stock awarded and earned stock compensation, net of shares forfeited
20,940

 

 
3,112

 

 

 

 
3,112

Dividend reinvestment
1,300

 

 
58

 

 

 

 
58

Cash dividends paid

 

 
(51,482
)
 

 

 

 
(51,482
)
Balance, March 31, 2015
103,044,257

 
$
1,042

 
$
3,758,855

 
$
(212,633
)
 
$
(42,647
)
 
$
28,744

 
$
3,533,361




See Notes to Condensed Consolidated Financial Statements.



6



PACWEST BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
Three Months Ended March 31,
 
2015
 
2014
 
(Unaudited)
 
(Dollars in thousands)
Cash flows from operating activities:
 
 
 
Net earnings
$
73,079

 
$
25,080

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
Depreciation and amortization
10,648

 
6,653

Provision (negative provision) for credit losses
16,434

 
(644
)
Loss (gain) on sale of foreclosed assets
106

 
(2,323
)
Provision for losses on foreclosed assets
124

 
94

Gain on sale of loans and leases

 
(106
)
Gain on sale of premises and equipment
(3
)
 
(1,571
)
Gain on sale of securities
(3,275
)
 
(4,752
)
Unrealized gain on derivatives and foreign currencies, net
(2,715
)
 

Earned stock compensation
3,112

 
1,611

Tax effect included in stockholders' equity of restricted stock vesting

 
(1,110
)
Increase in accrued and deferred income taxes, net
38,722

 
19,679

Decrease in other assets
19,356

 
4,740

Decrease in accrued interest payable and other liabilities
(29,102
)
 
(20,107
)
   Net cash provided by operating activities
126,486

 
27,244

 
 
 
 
Cash flows from investing activities:
 
 
 
Net (increase) decrease in loan and leases
(403,438
)
 
149,440

Proceeds from sale of loans and leases

 
1,128

Securities available-for-sale:
 
 
 
Proceeds from maturities and paydowns
27,547

 
33,860

Proceeds from sales
144,945

 
142,041

Purchases
(196,568
)
 
(140,048
)
Net redemptions of Federal Home Loan Bank stock
11,704

 
2,939

Proceeds from sales of foreclosed assets
7,945

 
7,209

Purchases of premises and equipment, net
(1,490
)
 
(1,115
)
Proceeds from sales of premises and equipment
29

 
3,753

   Net cash (used in) provided by investing activities
(409,326
)
 
199,207

 
 
 
 
Cash flows from financing activities:
 
 
 
Net increase in deposits:
 
 
 
   Noninterest-bearing
97,224

 
73,163

   Interest-bearing
80,914

 
15,258

Net increase (decrease) in borrowings
234,754

 
(107,953
)
Restricted stock surrendered

 
(2,058
)
Tax effect included in stockholders' equity of restricted vesting stock

 
1,110

Cash dividends paid
(51,424
)
 
(11,306
)
   Net cash provided by (used in) financing activities
361,468

 
(31,786
)
Net increase in cash and cash equivalents
78,628

 
194,665

Cash and cash equivalents at beginning of period
313,226

 
147,422

Cash and cash equivalents at end of period
$
391,854

 
$
342,087

 
 
 
 
Supplemental disclosures of cash flow information:
 
 
 
Cash paid for interest
$
12,334

 
$
2,483

Cash received for income taxes
(7,695
)
 
(5,693
)
Loans transferred to foreclosed assets
394

 
13


See Notes to Condensed Consolidated Financial Statements.


7


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Note 1.  Organization    
PacWest Bancorp is a bank holding company registered under the Bank Holding Company Act of 1956, as amended. Our principal business is to serve as the holding company for our Los Angeles‑based wholly owned banking subsidiary, Pacific Western Bank, which we refer to as “Pacific Western” or the “Bank.” When we say “we,” “our,” or the “Company,” we mean PacWest Bancorp together with its subsidiaries on a consolidated basis. When we refer to “PacWest” or to the holding company, we are referring to PacWest Bancorp, the parent company, on a stand‑alone basis. As of March 31, 2015, we had total assets of $16.6 billion, gross loans and leases of $12.3 billion, total deposits of $11.9 billion and total stockholders' equity of $3.5 billion.
Pacific Western is a full-service commercial bank offering a broad range of banking products and services including accepting demand, money market, and time deposits and originating loans and leases, including an array of commercial real estate loans and commercial lending products. The Bank strives to attract locally generated and relationship-based deposits, with 80 full-service branches located primarily in Southern California, extending from San Diego County to California’s Central Coast. The Bank also operates three banking offices in the San Francisco Bay area and four banking offices in the Central Valley. Our targeted collateral for real estate loan offerings includes healthcare properties, office properties, industrial properties, multifamily properties, hospitality properties, and retail properties. Our commercial loan products include equipment loans and leases, asset-based loans, loans to finance companies, and loans secured by borrower future cash flows.
As a result of the CapitalSource Inc. merger, Pacific Western Bank established the CapitalSource Division, which we also refer to as the National Lending segment. The CapitalSource Division lends throughout the United States, providing middle-market businesses asset-secured loans, equipment-secured loans and leases, and cash flow loans and providing real estate loans secured by various property types. The Bank's leasing operation, Pacific Western Equipment Finance, and its group specializing in asset-based lending, CapitalSource Business Finance Group (formerly BFI Business Finance and First Community Financial), are part of the CapitalSource Division. The CapitalSource Division’s loan and lease origination efforts are conducted through offices located in Chevy Chase, Maryland; Los Angeles and San Jose, California; St. Louis, Missouri; Denver, Colorado; Chicago, Illinois; New York, New York; and Midvale, Utah. When we refer to "CapitalSource Inc." we are referring to the company acquired on April 7, 2014 and when we refer to the "CapitalSource Division" we are referring to a division of the Bank that specializes in middle-market lending on a nationwide basis.
We generate our revenue primarily from interest received on loans and leases and, to a lesser extent, from interest received on investment securities, and fees received in connection with deposit services, extending credit and other services offered, including foreign exchange services. Our major operating expenses include interest paid by the Bank on deposits and borrowings, compensation and general operating expenses.
We have completed 27 acquisitions from May 2000 through March 31, 2015, including the acquisition of CapitalSource Inc. Since 2000, our acquisitions have been accounted for using the acquisition method of accounting and, accordingly, the operating results of the acquired entities have been included in the consolidated financial statements from their respective acquisition dates. See Note 3, Acquisitions, for more information about the CapitalSource Inc. merger.
Square 1 Financial, Inc. Merger Announcement
On March 2, 2015, PacWest announced the signing of an agreement and plan of merger (the “Agreement”) whereby PacWest and Square 1 Financial, Inc. (“Square 1”) will merge in a transaction valued at approximately $849 million. The surviving company will be PacWest Bancorp and the surviving subsidiary bank will be Pacific Western Bank. The Square 1 lending operations will continue to do business under the name Square 1 as a division of Pacific Western Bank.
Under the terms of the Agreement, Square 1 stockholders will receive 0.5997 shares of PacWest common stock for each share of Square 1 common stock. The total value of the per share merger consideration is $27.49, based on the $45.84 closing price of PacWest common stock on February 27, 2015, the last trading day before the transaction was announced.
As of December 31, 2014, on a pro forma consolidated basis, after giving effect to the Square 1 merger, the Company would have had approximately $19.8 billion in assets with 80 branches throughout California and one branch in North Carolina.
The transaction, currently expected to close in the fourth quarter of 2015, is subject to customary conditions, including the approval of bank regulatory authorities and the Square 1 stockholders.

8


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Significant Accounting Policies
Except as discussed below, our accounting policies are described in Note 1, Nature of Operations and Summary of Significant Accounting Policies, of our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2014 as filed with the Securities and Exchange Commission ("Form 10-K").
Accounting Standard Adopted in 2015
Effective January 1, 2015, the Company adopted new accounting guidance for investments in affordable housing projects that qualify for the low-income housing tax credit. As a result of the adoption of this new guidance, the Company made an accounting policy election to amortize the initial cost of its qualifying investments in proportion to the tax credits and other benefits received and to present the amortization as a component of income tax expense, referred to as the proportional amortization method. Previously, investments in low-income housing tax credits were accounted for under the equity method and such amortization was presented in other expense. The guidance was required to be applied retrospectively and accordingly, prior period amounts for other expense and tax expense have been revised to conform with the current period presentation. The revised amortization amounts for prior periods were not material.
The retrospective application of the adoption of the new accounting guidance for the proportional amortization method resulted in a cumulative effect on retained earnings of a reduction of $195,000.
Basis of Presentation    
Our interim consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, certain disclosures accompanying annual consolidated financial statements are omitted. In the opinion of management, all adjustments and eliminations, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim periods, have been included. The current period's results of operations are not necessarily indicative of the results that ultimately may be achieved for the year. The interim consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Form 10-K.
The accompanying financial statements reflect our consolidated accounts. All significant intercompany accounts and transactions have been eliminated.
Use of Estimates
We have made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period to prepare these condensed consolidated financial statements in conformity with U.S. GAAP. Material estimates subject to change in the near term include, among other items, the allowance for credit losses, the carrying value and useful lives of intangible assets, the carrying value of the FDIC loss sharing asset, the realization of deferred tax assets, and the fair value estimates of assets acquired and liabilities assumed in acquisitions. These estimates may be adjusted as more current information becomes available, and any adjustment may be significant.
As described in Note 3, Acquisitions, the acquired assets and liabilities of CapitalSource Inc. were measured at their estimated fair values. We made significant estimates and exercised significant judgment in estimating fair values and accounting for such acquired assets and assumed liabilities.
Reclassifications
Certain prior period amounts have been reclassified to conform to the current period's presentation format. On the statements of earnings, the "Other expense" category includes loan-related legal expenses which were previously reported within the "Other professional services" category. On the balance sheets, the "Other assets" category includes "FDIC loss sharing asset," which was previously reported as a separate category. These reclassifications did not affect previously reported net earnings.

9


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Note 2.  Discontinued Operations    
Discontinued operations include the income and expense related to Electronic Payment Services ("EPS"), a discontinued division of the Bank acquired in connection with the First California Financial Group, Inc. ("FCAL") acquisition. Liabilities of the EPS division were $20.4 million and $21.3 million at March 31, 2015 and December 31, 2014, and consisted primarily of noninterest‑bearing deposits, and are included in the condensed consolidated balance sheets under the caption “Accrued interest payable and other liabilities.” For segment reporting purposes, the EPS division is included in our Community Banking segment.
Note 3.  Acquisitions    
The following assets acquired and liabilities assumed of CapitalSource Inc. are presented at estimated fair value as of its acquisition date:
 
Acquisition and Date Acquired
 
CapitalSource Inc.
 
April 7, 2014
 
(In thousands)
Assets Acquired:
 
Cash and due from banks
$
768,553

Interest‑earning deposits in financial institutions
60,612

Investment securities available‑for‑sale
382,797

FHLB stock
46,060

Loans and leases
6,877,427

Equipment leased to others under operating leases
160,015

Premises and equipment
12,663

Foreclosed assets
6,382

Income tax assets
304,856

Goodwill
1,526,282

Core deposit and customer relationship intangibles
6,720

Other assets(1)
582,985

Total assets acquired
$
10,735,352

Liabilities Assumed:
 
Noninterest‑bearing deposits
$
4,631

Interest‑bearing deposits
6,236,419

Other borrowings
992,109

Subordinated debentures
300,918

Accrued interest payable and other liabilities
124,087

Total liabilities assumed
$
7,658,164

Total consideration paid
$
3,077,188

Summary of consideration:
 
Cash paid
$
483,118

PacWest common stock issued
2,594,070

Total
$
3,077,188

___________________
(1)
Includes a $484 million receivable for securities sales proceeds.

10


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


CapitalSource Inc. Merger
We acquired CapitalSource Inc. on April 7, 2014. As part of the merger, CapitalSource Bank (“CSB”), a wholly owned subsidiary of CapitalSource Inc., merged with and into Pacific Western Bank. We completed the merger in order to augment our loan and lease generation capabilities and to diversify our loan portfolio.
At closing, we created the CapitalSource Division of the Bank. The CapitalSource Division provides a full spectrum of financing solutions across numerous industries and property types to middle market businesses nationwide. When we refer to "CapitalSource Inc." we are referring to the company acquired on April 7, 2014 and when we refer to the "CapitalSource Division" we are referring to a division of the Bank that lends throughout the United States, providing middle-market businesses asset-secured loans, equipment-secured loans and leases, and cash flow loans and providing real estate loans secured by various property types.
The CapitalSource Inc. merger has been accounted for under the acquisition method of accounting. The assets and liabilities, both tangible and intangible, were recorded at their estimated fair values as of the merger date. We made significant estimates and exercised significant judgment in estimating fair values and accounting for such acquired assets and liabilities. The application of the acquisition method of accounting resulted in goodwill of $1.5 billion. All of the recognized goodwill was non‑deductible for tax purposes.

11


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Note 4.  Goodwill and Other Intangible Assets
Goodwill arises from the acquisition method of accounting for business combinations and represents the excess of the purchase price over the fair value of the net assets and other identifiable intangible assets acquired. Our intangible assets with definite lives are core deposit intangibles ("CDI") and customer relationship intangibles ("CRI"). In the first quarter of 2015, we finalized the estimated fair value of the deferred tax assets acquired in the CapitalSource Inc. merger which resulted in a $7.9 million decrease with a corresponding adjustment to increase goodwill.
Goodwill and other intangible assets deemed to have indefinite lives generated from purchase business combinations are not subject to amortization and are instead tested for impairment no less than annually. Impairment exists when the carrying value of goodwill exceeds its implied fair value. An impairment loss would be recognized in an amount equal to that excess and would be included in “Noninterest expense” in the condensed consolidated statements of earnings.
CDI and CRI are amortized over their respective estimated useful lives and reviewed for impairment at least quarterly. The amortization expense represents the estimated decline in the value of the underlying deposits or loan and lease customers acquired. The weighted average amortization period remaining for all of our CDI and CRI is 4.3 years. The aggregate CDI and CRI amortization expense is expected to be $6.0 million for 2015. The estimated aggregate amortization expense related to these intangible assets for each of the next five years is $4.1 million for 2016, $2.3 million for 2017, $2.0 million for 2018, $1.7 million for 2019, and $953,000 for 2020.
The following table presents the changes in the carrying amount of goodwill for the period indicated:    
 
Goodwill
 
(In thousands)
Balance, December 31, 2014
$
1,720,479

To adjust acquired CapitalSource Inc. deferred tax assets
7,901

Balance, March 31, 2015
$
1,728,380

The following table presents the changes in CDI and CRI and the related accumulated amortization for the periods indicated:
 
Three Months Ended
 
March 31,
 
December 31,
 
March 31,
 
2015
 
2014
 
2014
 
(In thousands)
Gross Amount of CDI and CRI:
 
 
 
 
 
Balance, end of period
$
53,090

 
$
53,090

 
$
48,963

Accumulated Amortization:
 
 
 
 
 
Balance, beginning of period
(35,886
)
 
(34,267
)
 
(31,715
)
Amortization
(1,501
)
 
(1,619
)
 
(1,364
)
Balance, end of period
(37,387
)
 
(35,886
)
 
(33,079
)
Net CDI and CRI, end of period
$
15,703

 
$
17,204

 
$
15,884



12


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Note 5. Investment Securities     
Securities Available-for-Sale
The following table presents amortized cost, gross unrealized gains and losses, and carrying values of securities available-for-sale as of the dates indicated:
 
March 31, 2015
 
December 31, 2014
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
 
(In thousands)
Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
government-sponsored enterprise
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
pass-through securities
$
439,696

 
$
19,327

 
$
(131
)
 
$
458,892

 
$
515,902

 
$
20,142

 
$
(372
)
 
$
535,672

Government agency and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
government-sponsored enterprise
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
collateralized mortgage obligations
269,766

 
6,909

 
(451
)
 
276,224

 
275,513

 
3,513

 
(1,080
)
 
277,946

Covered private label collateralized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
26,496

 
7,014

 
(66
)
 
33,444

 
26,889

 
7,153

 
(95
)
 
33,947

Other private label collateralized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
9,645

 
52

 
(47
)
 
9,650

 
10,961

 
46

 
(93
)
 
10,914

Municipal securities
579,344

 
15,708

 
(2,199
)
 
592,853

 
521,499

 
15,899

 
(1,282
)
 
536,116

Corporate debt securities
47,485

 
683

 
(423
)
 
47,745

 
110,074

 
597

 
(562
)
 
110,109

Collateralized loan obligations
112,883

 
922

 

 
113,805

 

 

 

 

Government-sponsored enterprise debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
36,249

 
1,156

 

 
37,405

 
36,232

 
525

 

 
36,757

Other securities
25,451

 
34

 
(94
)
 
25,391

 
25,801

 
33

 
(118
)
 
25,716

Total
$
1,547,015

 
$
51,805

 
$
(3,411
)
 
$
1,595,409

 
$
1,522,871

 
$
47,908

 
$
(3,602
)
 
$
1,567,177

Other securities consist primarily of asset‑backed securities. See Note 11, Fair Value Measurements, for information on fair value measurements and methodology.
As of March 31, 2015, securities available‑for‑sale with a carrying value of $354.7 million were pledged as collateral for borrowings, public deposits and other purposes as required by various statutes and agreements.
During the three months ended March 31, 2015 and 2014, we purchased $196.6 million and $140.0 million in securities available-for-sale.
During the three months ended March 31, 2015, we sold $13.9 million of Texas municipal securities for an $883,000 gain, $67.5 million in corporate debt securities for a realized loss of $232,000 and $60.3 million in government agency and government-sponsored enterprise ("GSE") pass-through securities for a realized gross gain of $2.6 million. These securities were sold as part of our investment portfolio risk management activities. During the three months ended March 31, 2014, we sold $137.3 million in GSE pass through securities for which we realized a gross gain of $4.8 million. These securities were sold to take advantage of favorable market conditions for premium coupon seasoned GSE pass through securities. We redeployed the proceeds into single-maturity investments that were expected to perform better under the current market conditions. 
Realized gains or losses resulting from the sale of securities are calculated using the specific identification method and included in gain on securities. During the three months ended March 31, 2015 and 2014, we had $4.3 million and $12.9 million of net unrealized after-tax gains as a component of accumulated other comprehensive income.

13


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Unrealized Losses on Securities Available-for-Sale
The following tables present the gross unrealized losses and fair values of securities available-for-sale that were in unrealized loss positions, for which other-than-temporary impairments have not been recognized in earnings, as of the dates indicated:
 
March 31, 2015
 
Less Than 12 Months
 
12 Months or More
 
Total
 
Fair Value
 
Gross Unrealized Losses
 
Fair Value
 
Gross Unrealized Losses
 
Fair Value
 
Gross Unrealized Losses
 
(In thousands)
Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
Government agency and government-
 
 
 
 
 
 
 
 
 
 
 
sponsored enterprise pass-through
 
 
 
 
 
 
 
 
 
 
 
securities
$
5,031

 
$
(42
)
 
$
10,085

 
$
(89
)
 
$
15,116

 
$
(131
)
Government agency and government-
 
 
 
 
 
 
 
 
 
 
 
sponsored enterprise collateralized
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations

 

 
14,403

 
(451
)
 
14,403

 
(451
)
Covered private label collateralized
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
726

 
(6
)
 
643

 
(60
)
 
1,369

 
(66
)
Other private label collateralized
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
1,206

 
(46
)
 
360

 
(1
)
 
1,566

 
(47
)
Municipal securities
112,361

 
(1,277
)
 
38,687

 
(922
)
 
151,048

 
(2,199
)
Corporate debt securities
25,104

 
(423
)
 

 

 
25,104

 
(423
)
Other securities
6,453

 
(72
)
 
10,020

 
(22
)
 
16,473

 
(94
)
     Total
$
150,881

 
$
(1,866
)
 
$
74,198

 
$
(1,545
)
 
$
225,079

 
$
(3,411
)
 
December 31, 2014
 
Less Than 12 Months
 
12 Months or More
 
Total
 
Fair Value
 
Gross Unrealized Losses
 
Fair Value
 
Gross Unrealized Losses
 
Fair Value
 
Gross Unrealized Losses
 
(In thousands)
Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Government agency and government-
 
 
 
 
 
 
 
 
 
 
 
sponsored enterprise pass-through
 
 
 
 
 
 
 
 
 
 
 
securities
$
10,711

 
$
(13
)
 
$
27,100

 
$
(359
)
 
$
37,811

 
$
(372
)
Government agency and government-
 
 
 
 
 
 
 
 
 
 
 
sponsored enterprise collateralized
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
23,908

 
(73
)
 
40,652

 
(1,007
)
 
64,560

 
(1,080
)
Covered private label collateralized
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations

 

 
1,000

 
(95
)
 
1,000

 
(95
)
Other private label collateralized
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
1,618

 
(93
)
 

 

 
1,618

 
(93
)
Municipal securities
11,854

 
(66
)
 
84,822

 
(1,216
)
 
96,676

 
(1,282
)
Corporate debt securities
52,071

 
(547
)
 
10,131

 
(15
)
 
62,202

 
(562
)
Other securities
6,440

 
(90
)
 
10,019

 
(28
)
 
16,459

 
(118
)
Total
$
106,602

 
$
(882
)
 
$
173,724

 
$
(2,720
)
 
$
280,326

 
$
(3,602
)

14


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


We reviewed the securities that were in a loss position at March 31, 2015, and concluded their losses were a result of the level of market interest rates relative to the types of securities and pricing changes caused by shifting supply and demand dynamics and not a result of downgraded credit ratings or other indicators of deterioration of the underlying issuers' ability to repay. Accordingly, we determined the securities were temporarily impaired and we did not recognize such impairment in the condensed consolidated statements of earnings. We occasionally sell securities for risk management purposes to reduce risks related to price volatility and duration. We do not foresee having to sell these securities strictly for liquidity needs and believe that it is more likely than not we would not be required to sell these securities before recovery of their amortized cost.
Contractual Maturities
The following table presents the contractual maturities of our available-for-sale securities portfolio based on amortized cost and carrying value as of the date indicated:
 
March 31, 2015
 
Amortized Cost
 
Estimated Fair Value
 
(In thousands)
Due in one year or less
$
18,358

 
$
18,538

Due after one year through five years
76,173

 
76,515

Due after five years through ten years
276,933

 
287,023

Due after ten years
1,175,551

 
1,213,333

Total securities available-for-sale
$
1,547,015

 
$
1,595,409

Mortgage-backed securities have contractual terms to maturity, but require periodic payments to reduce principal. In addition, expected maturities may differ from contractual maturities because obligors and/or issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
FHLB Stock
At March 31, 2015, we had a $28.9 million investment in Federal Home Loan Bank of San Francisco ("FHLB") stock carried at cost. During the three months ended March 31, 2015, FHLB stock declined $11.7 million due primarily to $15.6 million in redemptions, offset partially by $3.9 million in purchases. We evaluated the carrying value of our FHLB stock investment at March 31, 2015, and determined that it was not impaired. Our evaluation considered the long-term nature of the investment, the current financial and liquidity position of the FHLB, repurchase activity of excess stock by the FHLB at its carrying value, the return on the investment, and our intent and ability to hold this investment for a period of time sufficient to recover our recorded investment.
Interest Income on Investment Securities
The following table presents the composition of our interest income on investment securities for the periods indicated:
 
Three Months Ended
 
March 31, 2015
 
December 31, 2014
 
March 31, 2014
 
(In thousands)
Taxable interest
$
7,473

 
$
7,697

 
$
6,920

Non-taxable interest
3,894

 
3,593

 
3,328

Dividend income
828

 
915

 
575

Total interest income on investment securities
$
12,195

 
$
12,205

 
$
10,823



15


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Note 6.  Loans and Leases
The Company’s loan and lease portfolio includes originated and purchased loans and leases. Originated loans and leases and purchased loans and leases for which there was no evidence of credit deterioration at their acquisition date and for which it was probable that we would be able to collect all contractually required payments, are referred to collectively as non-purchased credit impaired loans, or "Non-PCI loans." Purchased loans for which there was, at the acquisition date, evidence of credit deterioration since their origination and it was probable that we would be unable to collect all contractually required payments are referred to as purchased credit impaired loans, or "PCI loans".
Non-PCI loans are carried at the principal amount outstanding, net of deferred fees and costs, and in the case of acquired loans, net of purchase discounts and premiums. Deferred fees and costs and purchase discounts and premiums on acquired non-impaired loans are recognized as an adjustment to interest income over the contractual life of the loans using the effective interest method or taken into income when the related loans are paid off or sold.
PCI loans are accounted for in accordance with ASC Subtopic 310‑30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality". For PCI loans, at the time of acquisition we (i) calculate the contractual amount and timing of undiscounted principal and interest payments (the "undiscounted contractual cash flows") and (ii) estimate the amount and timing of undiscounted expected principal and interest payments (the "undiscounted expected cash flows"). The difference between the undiscounted contractual cash flows and the undiscounted expected cash flows is the nonaccretable difference. The difference between the undiscounted cash flows expected to be collected and the estimated fair value of the acquired loans is the accretable yield. The nonaccretable difference represents an estimate of the loss exposure of principal and interest related to the PCI loan portfolio; such amount is subject to change over time based on the performance of such loans. The carrying value of PCI loans is reduced by payments received, both principal and interest, and increased by the portion of the accretable yield recognized as interest income.
The following table summarizes the composition of our loan and lease portfolio as of the dates indicated:
 
March 31, 2015
 
December 31, 2014
 
Non-PCI
 
 
 
 
 
Non-PCI
 
 
 
 
 
Loans
 
PCI
 
 
 
Loans
 
PCI
 
 
 
and Leases
 
Loans
 
Total
 
and Leases
 
Loans
 
Total
 
(In thousands)
Real estate mortgage
$
5,601,937

 
$
226,502

 
$
5,828,439

 
$
5,350,827

 
$
256,489

 
$
5,607,316

Real estate construction
331,108

 
1,897

 
333,005

 
309,162

 
6,924

 
316,086

Commercial
6,021,282

 
25,664

 
6,046,946

 
5,852,420

 
27,155

 
5,879,575

Consumer
93,619

 
283

 
93,902

 
101,423

 
284

 
101,707

Total gross loans and leases
12,047,946

 
254,346

 
12,302,292

 
11,613,832

 
290,852

 
11,904,684

Deferred fees and costs
(30,065
)
 
(61
)
 
(30,126
)
 
(22,191
)
 
(61
)
 
(22,252
)
Total loans and leases, net of deferred fees
12,017,881

 
254,285

 
12,272,166

 
11,591,641

 
290,791

 
11,882,432

Allowance for loan and lease losses
(79,680
)
 
(12,698
)
 
(92,378
)
 
(70,456
)
 
(13,999
)
 
(84,455
)
Total net loans and leases
$
11,938,201

 
$
241,587

 
$
12,179,788

 
$
11,521,185

 
$
276,792

 
$
11,797,977


16


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


The following tables present a summary of the activity in the allowance for loan and lease losses on Non‑PCI loans and leases by portfolio segment and PCI loans for the periods indicated:
 
Three Months Ended March 31, 2015
 
Real Estate Mortgage
 
Real Estate Construction
 
Commercial
 
Consumer
 
Total Non-PCI
 
Total PCI
 
Total
 
(In thousands)
Allowance for Loan and Lease Losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
25,097

 
$
4,248

 
$
39,858

 
$
1,253

 
$
70,456

 
$
13,999

 
$
84,455

Charge-offs
(1,453
)
 

 
(8,395
)
 
(63
)
 
(9,911
)
 
(579
)
 
(10,490
)
Recoveries
1,295

 
632

 
410

 
194

 
2,531

 
11

 
2,542

Provision (negative provision)
5,972

 
(2,707
)
 
13,921

 
(582
)
 
16,604

 
(733
)
 
15,871

Balance, end of period
$
30,911

 
$
2,173

 
$
45,794

 
$
802

 
$
79,680

 
$
12,698

 
$
92,378

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount of the allowance applicable to loans and leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
1,500

 
$
55

 
$
10,493

 
$
178

 
$
12,226

 
 
 
 
Collectively evaluated for impairment
$
29,411

 
$
2,118

 
$
35,301

 
$
624

 
$
67,454

 
 
 
 
Acquired loans with deteriorated credit quality
 
 
 
 
 
 
 
 
 
 
$
12,698

 
 
Loan and Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance
$
5,588,430

 
$
328,709

 
$
6,007,067

 
$
93,675

 
$
12,017,881

 
$
254,285

 
$
12,272,166

The ending balance of the loan and lease portfolio is composed of loans and leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
59,733

 
$
8,639

 
$
103,208

 
$
3,729

 
$
175,309

 
 
 
 
Collectively evaluated for impairment
$
5,528,697

 
$
320,070

 
$
5,903,859

 
$
89,946

 
$
11,842,572

 
 
 
 
Acquired loans with deteriorated credit quality
 
 
 
 
 
 
 
 
 
 
$
254,285

 
 



17


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


 
Three Months Ended March 31, 2014
 
Real Estate Mortgage
 
Real Estate Construction
 
Commercial
 
Consumer
 
Total Non-PCI
 
Total PCI
 
Total
 
(In thousands)
Allowance for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, beginning of period
$
26,078

 
$
4,298

 
$
26,921

 
$
2,944

 
$
60,241

 
$
21,793

 
$
82,034

Charge-offs
(94
)
 

 
(1,441
)
 
(15
)
 
(1,550
)
 

 
(1,550
)
Recoveries
261

 
24

 
377

 
27

 
689

 
51

 
740

Provision (negative provision)
(1,893
)
 
(219
)
 
1,883

 
829

 
600

 
(644
)
 
(44
)
Balance, end of period
$
24,352

 
$
4,103

 
$
27,740

 
$
3,785

 
$
59,980

 
$
21,200

 
$
81,180

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount of the allowance applicable to loans and leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
2,690

 
$
251

 
$
5,337

 
$
387

 
$
8,665

 
 
 
 
Collectively evaluated for impairment
$
21,662

 
$
3,852

 
$
22,403

 
$
3,398

 
$
51,315

 
 
 
 
Acquired loans with deteriorated credit quality
 
 
 
 
 
 
 
 
 
 
$
21,200

 
 
Loan and Leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance
$
2,320,554

 
$
240,073

 
$
1,201,142

 
$
66,782

 
$
3,828,551

 
$
332,516

 
$
4,161,067

The ending balance of the loan and lease portfolio is composed of loans and leases:
 
 
 
 
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
58,532

 
$
12,926

 
$
17,792

 
$
3,972

 
$
93,222

 
 
 
 
Collectively evaluated for impairment
$
2,262,022

 
$
227,147

 
$
1,183,350

 
$
62,810

 
$
3,735,329

 
 
 
 
Acquired loans with deteriorated credit quality
 
 
 
 
 
 
 
 
 
 
$
332,516

 
 

18


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


Non‑Purchased Credit Impaired (Non‑PCI) Loans and Leases
The following table presents the credit risk rating categories for Non‑PCI loans and leases by portfolio segment and class as of the dates indicated. Nonclassified loans and leases are those with a credit risk rating of either pass or special mention, while classified loans and leases are those with a credit risk rating of either substandard or doubtful.
 
March 31, 2015
 
December 31, 2014
 
Classified
 
Nonclassified
 
Total
 
Classified
 
Nonclassified
 
Total
 
(In thousands)
Real estate mortgage:
 
 
 
 
 
 
 
 
 
 
 
Hospitality
$
16,928

 
$
595,161

 
$
612,089

 
$
17,761

 
$
542,458

 
$
560,219

SBA
10,919

 
377,857

 
388,776

 
11,141

 
364,786

 
375,927

Other
69,859

 
4,517,706

 
4,587,565

 
68,084

 
4,336,330

 
4,404,414

Total real estate mortgage
97,706

 
5,490,724

 
5,588,430

 
96,986

 
5,243,574

 
5,340,560

Real estate construction:
 
 
 
 
 
 
 
 
 
 
 
Residential
398

 
121,918

 
122,316

 
402

 
96,326

 
96,728

Commercial
1,456

 
204,937

 
206,393

 
3,346

 
207,061

 
210,407

Total real estate construction
1,854

 
326,855

 
328,709

 
3,748

 
303,387

 
307,135

Commercial:
 
 
 
 
 
 
 
 
 
 
 
Collateralized
21,265

 
373,123

 
394,388

 
22,433

 
416,754

 
439,187

Unsecured
1,267

 
142,047

 
143,314

 
1,323

 
130,501

 
131,824

Asset-based
11,304

 
1,708,473

 
1,719,777

 
11,547

 
1,783,304

 
1,794,851

Cash flow
105,763

 
2,687,421

 
2,793,184

 
83,321

 
2,376,530

 
2,459,851

Equipment finance
86,938

 
827,078

 
914,016

 
15,973

 
953,516

 
969,489

SBA
3,128

 
39,260

 
42,388

 
3,207

 
44,054

 
47,261

Total commercial
229,665

 
5,777,402

 
6,007,067

 
137,804

 
5,704,659

 
5,842,463

Consumer
3,957

 
89,718

 
93,675

 
4,073

 
97,410

 
101,483

Total Non-PCI loans and leases
$
333,182

 
$
11,684,699

 
$
12,017,881

 
$
242,611

 
$
11,349,030

 
$
11,591,641

In addition to our internal risk rating process, our federal and state banking regulators, as an integral part of their examination process, periodically review the Company’s loan and lease risk rating classifications. Our regulators may require the Company to recognize rating downgrades based on their judgments related to information available to them at the time of their examinations. Risk rating downgrades generally result in higher allowances for credit losses.

19


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


The following tables present an aging analysis of our Non‑PCI loans and leases by portfolio segment and class as of the dates indicated:
 
March 31, 2015
 
30-89 Days Past Due
 
90 or More
 Days Past Due
 
Total Past Due
 
Current
 
Total
 
(In thousands)
Real estate mortgage:
 
 
 
 
 
 
 
 
 
Hospitality
$

 
$

 
$

 
$
612,089

 
$
612,089

SBA
5,582

 
5,487

 
11,069

 
377,707

 
388,776

Other
6,234

 
5,319

 
11,553

 
4,576,012

 
4,587,565

Total real estate mortgage
11,816

 
10,806

 
22,622

 
5,565,808

 
5,588,430

Real estate construction:
 
 
 
 
 
 
 
 
 
Residential

 

 

 
122,316

 
122,316

Commercial

 

 

 
206,393

 
206,393

Total real estate construction

 

 

 
328,709

 
328,709

Commercial:
 
 
 
 
 
 
 
 
 
Collateralized
1,782

 
424

 
2,206

 
392,182

 
394,388

Unsecured

 
16

 
16

 
143,298

 
143,314

Asset-based

 

 

 
1,719,777

 
1,719,777

Cash flow

 

 

 
2,793,184

 
2,793,184

Equipment finance
23,409

 

 
23,409

 
890,607

 
914,016

SBA
788

 
1,362

 
2,150

 
40,238

 
42,388

Total commercial
25,979

 
1,802

 
27,781

 
5,979,286

 
6,007,067

Consumer
9

 
3,196

 
3,205

 
90,470

 
93,675

Total Non-PCI loans and leases
$
37,804

 
$
15,804

 
$
53,608

 
$
11,964,273

 
$
12,017,881



20


PACWEST BANCORP AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)


 
December 31, 2014
 
30-89 Days Past Due
 
90 or More
Days Past Due
 
Total Past Due
 
Current
 
Total
 
(In thousands)
Real estate mortgage: