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Pacific Premier Bancorp, Inc. Announces First Quarter 2023 Financial Results and a Quarterly Cash Dividend of $0.33 Per Share

First Quarter 2023 Summary

  • Net income of $62.6 million, or $0.66 per diluted share
  • Return on average assets of 1.15%, return on average equity of 8.87%, and return on average tangible common equity(1) of 13.89%
  • Pre-provision net revenue (“PPNR”)(1) to average assets of 1.63%, annualized
  • Net interest margin of 3.44%
  • Cost of deposits of 0.94%, and cost of core deposits(1) of 0.54%; total deposits decreased $144.6 million, or 0.8%, from the prior quarter
  • Nonperforming assets to total assets of 0.14%, and net charge-offs to average loans of 0.02%
  • Total risk-based capital ratio of 16.33% and common equity tier 1 capital ratio of 13.54%
  • Tangible book value per share(1) increased $0.23 to $19.61 compared to the prior quarter; tangible common equity ratio(1) of 9.20%
  • Available liquidity of $10 billion; cash and cash equivalents increased to $1.42 billion and unused borrowing capacity of $8.55 billion at quarter end

Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company” or “Pacific Premier”), the holding company of Pacific Premier Bank (the “Bank”), reported net income of $62.6 million, or $0.66 per diluted share, for the first quarter of 2023, compared with net income of $73.7 million, or $0.77 per diluted share, for the fourth quarter of 2022, and net income of $66.9 million, or $0.70 per diluted share, for the first quarter of 2022.

For the quarter ended March 31, 2023, the Company’s return on average assets (“ROAA”) was 1.15%, return on average equity (“ROAE”) was 8.87%, and return on average tangible common equity (“ROATCE”)(1) was 13.89%, compared to 1.36%, 10.71%, and 16.99%, respectively, for the fourth quarter of 2022, and 1.28%, 9.34%, and 14.66%, respectively, for the first quarter of 2022. Total assets were $21.36 billion at March 31, 2023, compared to $21.69 billion at December 31, 2022, and $21.62 billion at March 31, 2022.

Steven R. Gardner, Chairman, Chief Executive Officer, and President of the Company, commented, “Over the years, we have maintained our commitment to growing a diversified commercial client base predicated on a long-term approach to relationship management. We have consistently operated the institution with a prudent approach to credit risk management along with maintaining ample levels of liquidity and an overall conservative view towards capital management. This longstanding discipline permeates our organization and has enabled us to deliver another quarter of solid profitability and returns in a challenging operating environment.

“The strategic actions we have taken over the past year to proactively address rising interest rates have placed us in a position of strength as we continue to guide our organization through the uncertain economic outlook. Successful execution of our strategy has allowed us to build our capital levels to some of the strongest among our peers, which in turn provides us with significant optionality and flexibility. By employing a disciplined approach to the business, we are well-positioned to meet the needs of our clients while maintaining our focus on generating new profitable customer relationships.

“I am grateful for the extraordinary effort our team put forth during a difficult quarter for the benefit of all of our stakeholders, including our clients, communities, employees, and our stockholders. As we look to the near- and medium-term, we are preparing for the possibility of further dislocations in the credit, funding, and capital markets. We will continue to leverage the strength of our balance sheet, liquidity, and capital positions to navigate these headwinds and will prudently take advantage of future opportunities to expand our business, while continuing to create long-term franchise value.”

_________________________

(1) Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures are set forth at the end of this press release.

FINANCIAL HIGHLIGHTS

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

(Dollars in thousands, except per share data)

 

 

2023

 

 

 

2022

 

 

 

2022

 

Financial highlights (unaudited)

 

 

 

 

 

 

Net income

 

$

62,562

 

 

$

73,673

 

 

$

66,904

 

Net interest income

 

 

168,610

 

 

 

181,396

 

 

 

161,839

 

Diluted earnings per share

 

 

0.66

 

 

 

0.77

 

 

 

0.70

 

Common equity dividend per share paid

 

 

0.33

 

 

 

0.33

 

 

 

0.33

 

Return on average assets

 

 

1.15

%

 

 

1.36

%

 

 

1.28

%

Return on average equity

 

 

8.87

 

 

 

10.71

 

 

 

9.34

 

Return on average tangible common equity (1)

 

 

13.89

 

 

 

16.99

 

 

 

14.66

 

Pre-provision net revenue to average assets (1)

 

 

1.63

 

 

 

1.89

 

 

 

1.72

 

Net interest margin

 

 

3.44

 

 

 

3.61

 

 

 

3.41

 

Cost of deposits

 

 

0.94

 

 

 

0.58

 

 

 

0.04

 

Cost of core deposits (1)

 

 

0.54

 

 

 

0.31

 

 

 

0.03

 

Efficiency ratio (1)

 

 

51.7

 

 

 

47.4

 

 

 

50.7

 

Noninterest expense as a percent of average assets

 

 

1.87

 

 

 

1.83

 

 

 

1.86

 

Total assets

 

$

21,361,564

 

 

$

21,688,017

 

 

$

21,622,296

 

Total deposits

 

 

17,207,810

 

 

 

17,352,401

 

 

 

17,689,223

 

Non-maturity deposits as a percent of total deposits

 

 

82.6

%

 

 

85.6

%

 

 

94.2

%

Noninterest-bearing deposits as a percent of total deposits

 

 

36.1

 

 

 

36.3

 

 

 

40.2

 

Loan-to-deposit ratio

 

 

82.4

 

 

 

84.6

 

 

 

83.4

 

Book value per share

 

$

29.58

 

 

$

29.45

 

 

$

29.31

 

Tangible book value per share (1)

 

 

19.61

 

 

 

19.38

 

 

 

19.12

 

Tangible common equity ratio

 

 

9.20

%

 

 

8.88

%

 

 

8.79

%

Total capital ratio

 

 

16.33

 

 

 

15.53

 

 

 

14.37

 

 

(1)

 

Reconciliations of the non-GAAP measures are set forth at the end of this press release.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income and Net Interest Margin

Net interest income totaled $168.6 million in the first quarter of 2023, a decrease of $12.8 million, or 7.0%, from the fourth quarter of 2022. The decrease in net interest income was primarily attributable to a higher cost of funds reflecting an increase in deposit pricing as a result of the higher interest rate environment, an increase in brokered certificates of deposit as part of our liquidity management strategy, and two fewer days of interest, partially offset by higher yields on average interest-earning assets.

The net interest margin for the first quarter of 2023 decreased 17 basis points to 3.44%, from 3.61% in the prior quarter. The lower net interest margin was due to higher cost of funds and lower loan prepayment fees, partially offset by higher yields on interest-earning assets.

Net interest income for the first quarter of 2023 increased $6.8 million, or 4.2%, compared to the first quarter of 2022. The increase was attributable to higher yields on average interest-earning assets, partially offset by a higher cost of funds, higher average interest-bearing liabilities, and lower loan-related fees and accretion income as a result of decreased prepayment activity.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED AVERAGE BALANCES AND YIELD DATA

(Unaudited)

 

 

Three Months Ended

 

 

March 31, 2023

 

December 31, 2022

 

March 31, 2022

(Dollars in thousands)

 

Average

Balance

 

Interest

Income/

Expense

 

Average

Yield/

Cost

 

Average

Balance

 

Interest

Income/

Expense

 

Average

Yield/

Cost

 

Average

Balance

 

Interest

Income/

Expense

 

Average

Yield/

Cost

Assets

 

 

Cash and cash equivalents

 

$

1,335,611

 

$

13,594

 

4.13

%

 

$

1,015,197

 

$

8,636

 

3.37

%

 

$

322,236

 

$

90

 

0.11

%

Investment securities

 

 

4,165,681

 

 

 

26,791

 

 

2.57

 

 

 

4,130,042

 

 

 

24,688

 

 

2.39

 

 

 

4,546,408

 

 

 

17,852

 

 

1.57

 

Loans receivable, net (1) (2)

 

 

14,394,775

 

 

 

180,958

 

 

5.10

 

 

 

14,799,417

 

 

 

184,457

 

 

4.94

 

 

 

14,371,588

 

 

 

150,604

 

 

4.25

 

Total interest-earning assets

 

$

19,896,067

 

 

$

221,343

 

 

4.51

 

 

$

19,944,656

 

 

$

217,781

 

 

4.33

 

 

$

19,240,232

 

 

$

168,546

 

 

3.55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

11,104,624

 

 

$

40,234

 

 

1.47

%

 

$

11,021,383

 

 

$

25,865

 

 

0.93

%

 

$

10,351,434

 

 

$

1,673

 

 

0.07

%

Borrowings

 

 

1,319,114

 

 

 

12,499

 

 

3.83

 

 

 

1,157,258

 

 

 

10,520

 

 

3.62

 

 

 

555,879

 

 

 

5,034

 

 

3.63

 

Total interest-bearing liabilities

 

$

12,423,738

 

 

$

52,733

 

 

1.72

 

 

$

12,178,641

 

 

$

36,385

 

 

1.19

 

 

$

10,907,313

 

 

$

6,707

 

 

0.25

 

Noninterest-bearing deposits

 

$

6,219,818

 

 

 

 

 

 

$

6,587,400

 

 

 

 

 

 

$

6,928,872

 

 

 

 

 

Net interest income

 

 

 

$

168,610

 

 

 

 

 

 

$

181,396

 

 

 

 

 

 

$

161,839

 

 

 

Net interest margin (3)

 

 

 

 

 

3.44

%

 

 

 

 

 

3.61

%

 

 

 

 

 

3.41

%

Cost of deposits (4)

 

 

 

 

 

0.94

 

 

 

 

 

 

0.58

 

 

 

 

 

 

0.04

 

Cost of funds (5)

 

 

 

 

 

1.15

 

 

 

 

 

 

0.77

 

 

 

 

 

 

0.15

 

Cost of core deposits (6)

 

 

 

 

 

0.54

 

 

 

 

 

 

0.31

 

 

 

 

 

 

0.03

 

Ratio of interest-earning assets to interest-bearing liabilities

 

160.15

 

 

 

 

 

 

163.77

 

 

 

 

 

 

176.40

 

 

(1)

 

Average balance includes loans held for sale and nonperforming loans and is net of deferred loan origination fees/costs, discounts/premiums, and the basis adjustment of certain loans included in fair value hedging relationships.

(2)

 

Interest income includes net discount accretion of $2.5 million, $3.5 million, and $5.9 million for the three months ended March 31, 2023, December 31, 2022, and March 31, 2022, respectively.

(3)

 

Represents annualized net interest income divided by average interest-earning assets.

(4)

 

Represents annualized interest expense on deposits divided by the sum of average interest-bearing deposits and noninterest-bearing deposits.

(5)

 

Represents annualized total interest expense divided by the sum of average total interest-bearing liabilities and noninterest-bearing deposits.

(6)

 

Reconciliations of the non-GAAP measures are set forth at the end of this press release.

Provision for Credit Losses

For the first quarter of 2023, the Company recorded $3.0 million of provision expense, compared to $2.8 million for the fourth quarter of 2022, and $448,000 for the first quarter of 2022. The provision for credit losses was impacted by changes to the overall size, composition, asset quality trends, and unfunded commitments of the loan portfolio, as well as the impact of the weighted macroeconomic forecasts.

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

(Dollars in thousands)

 

 

2023

 

 

 

2022

 

 

 

2022

 

Provision for credit losses

 

 

 

 

 

 

Provision for loan losses

 

$

3,021

 

 

$

3,899

 

 

$

211

Provision for unfunded commitments

 

 

(189

)

 

 

(1,013

)

 

 

218

 

Provision for held-to-maturity securities

 

 

184

 

 

 

(48

)

 

 

19

 

Total provision for credit losses

 

$

3,016

 

 

$

2,838

 

 

$

448

 

Noninterest Income

Noninterest income for the first quarter of 2023 was $21.2 million, an increase of $689,000 from the fourth quarter of 2022. The increase was primarily due to a $1.3 million increase in trust custodial account fees driven by seasonal, annual tax fees earned during the first quarter, partially offset by a $344,000 decrease in other income, and a $224,000 decrease in escrow and exchange fees. Additionally, the Bank sold $304.2 million of investment securities for a net gain of $138,000 during the first quarter of 2023.

Noninterest income for the first quarter of 2023 decreased $4.7 million, compared to the first quarter of 2022. The decrease was primarily due to a $2.0 million decrease in net gain from sales of investment securities, a $1.5 million decrease in net gain from loan sales, a $603,000 decrease in escrow and exchange fees attributable to the lower transaction activity in the commercial real estate market, and a $554,000 decrease in trust custodial account fees.

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

(Dollars in thousands)

 

 

2023

 

 

 

2022

 

 

 

2022

 

Noninterest income

 

 

 

 

 

 

Loan servicing income

 

$

573

 

$

346

 

$

419

Service charges on deposit accounts

 

 

2,629

 

 

 

2,689

 

 

 

2,615

 

Other service fee income

 

 

296

 

 

 

295

 

 

 

367

 

Debit card interchange fee income

 

 

803

 

 

 

1,048

 

 

 

836

 

Earnings on bank owned life insurance

 

 

3,374

 

 

 

3,359

 

 

 

3,221

 

Net gain from sales of loans

 

 

29

 

 

 

151

 

 

 

1,494

 

Net gain from sales of investment securities

 

 

138

 

 

 

 

 

 

2,134

 

Trust custodial account fees

 

 

11,025

 

 

 

9,722

 

 

 

11,579

 

Escrow and exchange fees

 

 

1,058

 

 

 

1,282

 

 

 

1,661

 

Other income

 

 

1,261

 

 

 

1,605

 

 

 

1,568

 

Total noninterest income

 

$

21,186

 

 

$

20,497

 

 

$

25,894

 

Noninterest Expense

Noninterest expense totaled $101.4 million for the first quarter of 2023, an increase of $2.2 million compared to the fourth quarter of 2022, primarily due to a $1.7 million increase in deposit expense driven by higher deposit earnings credit rates, as well as a $962,000 increase in FDIC insurance premiums, partially offset by a $622,000 decrease in other expense.

Noninterest expense increased by $3.7 million compared to the first quarter of 2022. The increase was primarily due to a $4.7 million increase in deposit expense driven by higher deposit earnings credit rates, a $1.4 million increase in legal and professional services, a $1.3 million increase in data processing, and a $1.0 million increase in FDIC insurance premiums, partially offset by a $2.7 million decrease in compensation and benefits from decreased staffing levels as well as a $1.1 million decrease in other expense.

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

(Dollars in thousands)

 

 

2023

 

 

 

2022

 

 

 

2022

 

Noninterest expense

 

 

 

 

 

 

Compensation and benefits

 

$

54,293

 

$

54,347

 

$

56,981

Premises and occupancy

 

 

11,742

 

 

 

11,641

 

 

 

11,952

 

Data processing

 

 

7,265

 

 

 

6,991

 

 

 

5,996

 

Other real estate owned operations, net

 

 

108

 

 

 

 

 

 

 

FDIC insurance premiums

 

 

2,425

 

 

 

1,463

 

 

 

1,396

 

Legal and professional services

 

 

5,501

 

 

 

5,175

 

 

 

4,068

 

Marketing expense

 

 

1,838

 

 

 

1,985

 

 

 

1,809

 

Office expense

 

 

1,232

 

 

 

1,310

 

 

 

1,203

 

Loan expense

 

 

646

 

 

 

743

 

 

 

1,134

 

Deposit expense

 

 

8,436

 

 

 

6,770

 

 

 

3,751

 

Amortization of intangible assets

 

 

3,171

 

 

 

3,440

 

 

 

3,592

 

Other expense

 

 

4,695

 

 

 

5,317

 

 

 

5,766

 

Total noninterest expense

 

$

101,352

 

 

$

99,182

 

 

$

97,648

 

Income Tax

For the first quarter of 2023, income tax expense totaled $22.9 million, resulting in an effective tax rate of 26.8%, compared with income tax expense of $26.2 million and an effective tax rate of 26.2% for the fourth quarter of 2022, and income tax expense of $22.7 million and an effective tax rate of 25.4% for the first quarter of 2022.

BALANCE SHEET HIGHLIGHTS

Loans

Loans held for investment totaled $14.17 billion at March 31, 2023, a decrease of $504.5 million, or 3.4%, from December 31, 2022, and a decrease of $562.0 million, or 3.8%, from March 31, 2022. The decrease from December 31, 2022 was a result of lower loan originations due to our disciplined approach around credit risk management and loan pricing along with lower loan demand. The decrease from March 31, 2022 was primarily driven by lower loan fundings as well as loan prepayments and maturities.

During the first quarter of 2023, new loan commitments totaled $116.8 million, and loan fundings totaled $66.9 million, compared with $239.8 million in loan commitments and $149.1 million in new loan fundings for the fourth quarter of 2022, and $1.46 billion in loan commitments and $1.06 billion in new loan fundings for the first quarter of 2022. Loan commitments decreased compared to prior quarters as we strategically maintained a disciplined approach to credit risk management and loan pricing.

At March 31, 2023, the total loan-to-deposit ratio was 82.4%, compared with 84.6% and 83.4% at December 31, 2022 and March 31, 2022, respectively.

The following table presents the primary loan roll-forward activities for total gross loans, including both loans held for investment and loans held for sale, during the quarters indicated:

 

Three Months Ended

 

March 31,

 

December 31,

 

March 31,

(Dollars in thousands)

 

2023

 

 

 

2022

 

 

 

2022

 

Beginning gross loan balance before basis adjustment

$

14,740,867

 

 

$

14,979,098

 

 

$

14,306,766

 

New commitments

 

116,835

 

 

 

239,829

 

 

 

1,461,992

 

Unfunded new commitments

 

(49,891

)

 

 

(90,758

)

 

 

(399,235

)

Net new fundings

 

66,944

 

 

 

149,071

 

 

 

1,062,757

 

Purchased loans

 

 

 

 

 

 

 

 

Amortization/maturities/payoffs

 

(519,986

)

 

 

(481,120

)

 

 

(786,700

)

Net draws on existing lines of credit

 

(53,436

)

 

 

107,560

 

 

 

182,868

 

Loan sales

 

(803

)

 

 

(9,471

)

 

 

(17,991

)

Charge-offs

 

(3,664

)

 

 

(4,271

)

 

 

(2,299

)

Transferred to other real estate owned

 

(6,886

)

 

 

 

 

 

 

Net (decrease) increase

 

(517,831

)

 

 

(238,231

)

 

 

438,635

 

Ending gross loan balance before basis adjustment

$

14,223,036

 

 

$

14,740,867

 

 

$

14,745,401

 

Basis adjustment associated with fair value hedge (1)

 

(50,005

)

 

 

(61,926

)

 

 

 

Ending gross loan balance

$

14,173,031

 

 

$

14,678,941

 

 

$

14,745,401

 

 

(1)

 

Represents the basis adjustment associated with the application of hedge accounting on certain loans.

The following table presents the composition of the loans held for investment as of the dates indicated:

 

 

March 31,

 

December 31,

 

March 31,

(Dollars in thousands)

 

 

2023

 

 

 

2022

 

 

 

2022

 

Investor loans secured by real estate

 

 

 

 

 

 

CRE non-owner-occupied

 

$

2,590,824

 

 

$

2,660,321

 

 

$

2,774,650

 

Multifamily

 

 

5,955,239

 

 

 

6,112,026

 

 

 

6,041,085

 

Construction and land

 

 

420,079

 

 

 

399,034

 

 

 

303,811

 

SBA secured by real estate (1)

 

 

40,669

 

 

 

42,135

 

 

 

42,642

 

Total investor loans secured by real estate

 

 

9,006,811

 

 

 

9,213,516

 

 

 

9,162,188

 

Business loans secured by real estate (2)

 

 

 

 

 

 

CRE owner-occupied

 

 

2,342,175

 

 

 

2,432,163

 

 

 

2,391,984

 

Franchise real estate secured

 

 

371,902

 

 

 

378,057

 

 

 

384,267

 

SBA secured by real estate (3)

 

 

60,527

 

 

 

61,368

 

 

 

68,466

 

Total business loans secured by real estate

 

 

2,774,604

 

 

 

2,871,588

 

 

 

2,844,717

 

Commercial loans (4)

 

 

 

 

 

 

Commercial and industrial

 

 

1,967,128

 

 

 

2,160,948

 

 

 

2,242,632

 

Franchise non-real estate secured

 

 

388,722

 

 

 

404,791

 

 

 

388,322

 

SBA non-real estate secured

 

 

10,437

 

 

 

11,100

 

 

 

10,761

 

Total commercial loans

 

 

2,366,287

 

 

 

2,576,839

 

 

 

2,641,715

 

Retail loans

 

 

 

 

 

 

Single family residential (5)

 

 

70,913

 

 

 

72,997

 

 

 

79,978

 

Consumer

 

 

3,174

 

 

 

3,284

 

 

 

5,157

 

Total retail loans

 

 

74,087

 

 

 

76,281

 

 

 

85,135

 

Loans held for investment before basis adjustment (6)

 

 

14,221,789

 

 

 

14,738,224

 

 

 

14,733,755

 

Basis adjustment associated with fair value hedge (7)

 

 

(50,005

)

 

 

(61,926

)

 

 

 

Loans held for investment

 

 

14,171,784

 

 

 

14,676,298

 

 

 

14,733,755

 

Allowance for credit losses for loans held for investment

 

 

(195,388

)

 

 

(195,651

)

 

 

(197,517

)

Loans held for investment, net

 

$

13,976,396

 

 

$

14,480,647

 

 

$

14,536,238

 

 

 

 

 

 

 

 

Total unfunded loan commitments

 

$

2,413,169

 

 

$

2,489,203

 

 

$

2,940,370

 

Loans held for sale, at lower of cost or fair value

 

$

1,247

 

 

$

2,643

 

 

$

11,646

 

 

(1)

 

SBA loans that are collateralized by hotel/motel real property.

(2)

 

Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.

(3)

 

SBA loans that are collateralized by real property other than hotel/motel real property.

(4)

 

Loans to businesses where the operating cash flow of the business is the primary source of repayment.

(5)

 

Single family residential includes home equity lines of credit, as well as second trust deeds.

(6)

 

Includes unaccreted fair value net purchase discounts of $52.2 million, $54.8 million, and $71.2 million as of March 31, 2023, December 31, 2022, and March 31, 2022, respectively.

(7)

 

Represents the basis adjustment associated with the application of hedge accounting on certain loans.

The total end-of-period weighted average interest rate on loans, excluding fees and discounts, at March 31, 2023 was 4.68%, compared to 4.61% at December 31, 2022, and 3.92% at March 31, 2022. The quarter-over-quarter and year-over-year increases reflect higher rates on new originations and the repricing of loans as a result of the increases in benchmark interest rates.

The following table presents the composition of loan commitments originated during the quarters indicated:

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

(Dollars in thousands)

 

 

2023

 

 

 

2022

 

 

 

2022

 

Investor loans secured by real estate

 

 

 

 

 

 

CRE non-owner-occupied

 

$

1,200

)

 

$

34,258

)

 

$

153,845

)

Multifamily

 

 

4,464

 

 

 

28,285

 

 

 

454,652

 

Construction and land

 

 

 

 

 

31,175

 

 

 

213,206

 

SBA secured by real estate (1)

 

 

 

 

 

 

 

 

7,775

 

Total investor loans secured by real estate

 

 

5,664

 

 

 

93,718

 

 

 

829,478

 

Business loans secured by real estate (2)

 

 

 

 

 

 

CRE owner-occupied

 

 

6,562

 

 

 

24,266

 

 

 

246,405

 

Franchise real estate secured

 

 

3,217

 

 

 

840

 

 

 

21,060

 

SBA secured by real estate (3)

 

 

497

 

 

 

4,198

 

 

 

9,378

 

Total business loans secured by real estate

 

 

10,276

 

 

 

29,304

 

 

 

276,843

 

Commercial loans (4)

 

 

 

 

 

 

Commercial and industrial

 

 

93,150

 

 

 

96,566

 

 

 

317,728

 

Franchise non-real estate secured

 

 

1,666

 

 

 

14,130

 

 

 

28,090

 

SBA non-real estate secured

 

 

720

 

 

 

1,058

 

 

 

3,543

 

Total commercial loans

 

 

95,536

 

 

 

111,754

 

 

 

349,361

 

Retail loans

 

 

 

 

 

 

Single family residential (5)

 

 

5,359

 

 

 

5,053

 

 

 

6,310

 

Total retail loans

 

 

5,359

 

 

 

5,053

 

 

 

6,310

 

Total loan commitments

 

$

116,835

 

 

$

239,829

 

 

$

1,461,992

 

 

(1)

 

SBA loans that are collateralized by hotel/motel real property.

(2)

 

Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.

(3)

 

SBA loans that are collateralized by real property other than hotel/motel real property.

(4)

 

Loans to businesses where the operating cash flow of the business is the primary source of repayment.

(5)

 

Single family residential includes home equity lines of credit, as well as second trust deeds.

The weighted average interest rate on new loan commitments increased to 7.43% in the first quarter of 2023, compared to 6.34% in the fourth quarter of 2022, and 3.55% in the first quarter of 2022.

Asset Quality and Allowance for Credit Losses

At March 31, 2023, our allowance for credit losses (“ACL”) on loans held for investment was $195.4 million, a decrease of $263,000 from December 31, 2022, and a decrease of $2.1 million from March 31, 2022. The decline in ACL from December 31, 2022 and March 31, 2022 was reflective primarily of lower loans held for investment.

During the first quarter of 2023, the Company incurred $3.3 million of net charge-offs, compared to $3.8 million during the fourth quarter of 2022, and $446,000 of net charge-offs during the first quarter of 2022, respectively.

The following table provides the allocation of the ACL for loans held for investment as well as the activity in the ACL attributed to various segments in the loan portfolio as of and for the period indicated:

 

Three Months Ended March 31, 2023

(Dollars in thousands)

Beginning

ACL Balance

 

Charge-offs

 

Recoveries

 

Provision for

Credit

Losses

 

Ending

ACL Balance

Investor loans secured by real estate

 

 

 

 

 

 

 

 

 

CRE non-owner-occupied

$

33,692

 

$

(66

)

 

$

15

 

$

(1,926

)

 

$

31,715

Multifamily

 

56,334

 

 

 

(217

)

 

 

 

 

 

1,670

 

 

 

57,787

 

Construction and land

 

7,114

 

 

 

 

 

 

 

 

 

558

 

 

 

7,672

 

SBA secured by real estate (1)

 

2,592

 

 

 

 

 

 

 

 

 

(301

)

 

 

2,291

 

Business loans secured by real estate (2)

 

 

 

 

 

 

 

 

 

CRE owner-occupied

 

32,340

 

 

 

(2,163

)

 

 

12

 

 

 

(855

)

 

 

29,334

 

Franchise real estate secured

 

7,019

 

 

 

 

 

 

 

 

 

771

 

 

 

7,790

 

SBA secured by real estate (3)

 

4,348

 

 

 

 

 

 

 

 

 

67

 

 

 

4,415

 

Commercial loans (4)

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

35,169

 

 

 

(1,123

)

 

 

211

 

 

 

3,402

 

 

 

37,659

 

Franchise non-real estate secured

 

16,029

 

 

 

 

 

 

100

 

 

 

(408

)

 

 

15,721

 

SBA non-real estate secured

 

441

 

 

 

 

 

 

6

 

 

 

(46

)

 

 

401

 

Retail loans

 

 

 

 

 

 

 

 

 

Single family residential (5)

 

352

 

 

 

(90

)

 

 

1

 

 

 

129

 

 

 

392

 

Consumer loans

 

221

 

 

 

(5

)

 

 

35

 

 

 

(40

)

 

 

211

 

Totals

$

195,651

 

 

$

(3,664

)

 

$

380

 

 

$

3,021

 

 

$

195,388

 

 

(1)

 

SBA loans that are collateralized by hotel/motel real property.

(2)

 

Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.

(3)

 

SBA loans that are collateralized by real property other than hotel/motel real property.

(4)

 

Loans to businesses where the operating cash flow of the business is the primary source of repayment.

(5)

 

Single family residential includes home equity lines of credit, as well as second trust deeds.

The ratio of allowance for credit losses to loans held for investment at March 31, 2023 was 1.38%, compared to 1.33% at December 31, 2022, and 1.34% at March 31, 2022. The fair value net discount on loans acquired through total bank acquisitions was $52.2 million, or 0.37% of total loans held for investment, as of March 31, 2023, compared to $54.8 million, or 0.37% of total loans held for investment, as of December 31, 2022, and $71.2 million, or 0.48% of total loans held for investment, as of March 31, 2022.

Nonperforming assets totaled $30.4 million, or 0.14% of total assets, at March 31, 2023, compared with $30.9 million, or 0.14% of total assets, at December 31, 2022, and $55.3 million, or 0.26% of total assets, at March 31, 2022. Loan delinquencies were $20.8 million, or 0.15% of loans held for investment, at March 31, 2023, compared to $43.3 million, or 0.30% of loans held for investment, at December 31, 2022, and $43.7 million, or 0.30% of loans held for investment, at March 31, 2022.

Classified loans totaled $161.1 million, or 1.14% of loans held for investment, at March 31, 2023, compared with $149.3 million, or 1.02% of loans held for investment, at December 31, 2022, and $122.5 million, or 0.83% of loans held for investment, at March 31, 2022.

The following table presents the asset quality metrics of the loan portfolio as of the dates indicated.

 

 

March 31,

 

December 31,

 

March 31,

(Dollars in thousands)

 

 

2023

 

 

 

2022

 

 

 

2022

 

Asset quality

 

 

 

 

 

 

Nonperforming loans

 

$

24,872

 

 

$

30,905

 

 

$

55,309

 

Other real estate owned

 

 

5,499

 

 

 

 

 

 

 

Nonperforming assets

 

$

30,371

 

 

$

30,905

 

 

$

55,309

 

 

 

 

 

 

 

 

Total classified assets (1)

 

$

166,576

 

 

$

149,304

 

 

$

122,528

 

Allowance for credit losses

 

 

195,388

 

 

 

195,651

 

 

 

197,517

 

Allowance for credit losses as a percent of total nonperforming loans

 

 

786

%

 

 

633

%

 

 

357

%

Nonperforming loans as a percent of loans held for investment

 

 

0.18

 

 

 

0.21

 

 

 

0.38

 

Nonperforming assets as a percent of total assets

 

 

0.14

 

 

 

0.14

 

 

 

0.26

 

Classified loans to total loans held for investment

 

 

1.14

 

 

 

1.02

 

 

 

0.83

 

Classified assets to total assets

 

 

0.78

 

 

 

0.69

 

 

 

0.57

 

Net loan charge-offs for the quarter ended

 

$

3,284

 

 

$

3,797

 

 

$

446

 

Net loan charge-offs for the quarter to average total loans

 

 

0.02

%

 

 

0.03

%

 

 

%

Allowance for credit losses to loans held for investment (2)

 

 

1.38

 

 

 

1.33

 

 

 

1.34

 

Delinquent loans

 

 

 

 

 

 

30 - 59 days

 

$

761

 

 

$

20,538

 

 

$

25,332

 

60 - 89 days

 

 

1,198

 

 

 

185

 

 

 

74

 

90+ days

 

 

18,884

 

 

 

22,625

 

 

 

18,245

 

Total delinquency

 

$

20,843

 

 

$

43,348

 

 

$

43,651

 

Delinquency as a percentage of loans held for investment

 

 

0.15

%

 

 

0.30

%

 

 

0.30

%

 

(1)

 

Includes substandard loans and other real estate owned.

(2)

 

At March 31, 2023, 26% of loans held for investment include a fair value net discount of $52.2 million, or 0.37% of loans held for investment. At December 31, 2022, 26% of loans held for investment include a fair value net discount of $54.8 million, or 0.37% of loans held for investment. At March 31, 2022, 32% of loans held for investment include a fair value net discount of $71.2 million, or 0.48% of loans held for investment.

Investment Securities

At March 31, 2023, available-for-sale (“AFS”) and held-to-maturity (“HTM”) investment securities were $2.11 billion and $1.75 billion, respectively, compared to $2.60 billion and $1.39 billion, respectively, at December 31, 2022, and $3.22 billion and $996.4 million, respectively, at March 31, 2022. During the first quarter of 2023, the Company reassessed classification of certain AFS investments and transferred approximately $410.7 million of collateralized mortgage obligations to HTM securities, which the Company intends and has the ability to hold to maturity. The transfer of these securities was accounted for at fair value on the transfer date. These securities had pre-tax unrealized losses of $50.4 million at the time of transfer.

In total, investment securities were $3.86 billion at March 31, 2023, a decrease of $127.2 million from December 31, 2022, and a decrease of $356.6 million from March 31, 2022. The decrease in the first quarter of 2023 compared to the prior quarter was primarily the result of $304.2 million in investment securities sales and $105.9 million in principal payments, discounts from the AFS securities transferred to HTM, amortization, and redemptions, partially offset by $232.3 million in purchases and a mark-to-market fair value loss reduction of $50.7 million.

The decrease in investment securities from March 31, 2022 was primarily the result of $580.4 million in sales, $422.8 million in principal payments, discounts from the AFS securities transferred to HTM, amortization, and redemptions, and a mark-to-market fair value loss increase of $80.2 million, partially offset by $720.0 million in purchases.

Deposits

At March 31, 2023, total deposits were $17.21 billion, a decrease of $144.6 million, or 0.8%, from December 31, 2022, and a decrease of $481.4 million, or 2.7%, from March 31, 2022.

At March 31, 2023, core deposits(1) totaled $14.21 billion or 82.6% of total deposits, a decrease of $639.5 million, or 4.3%, from December 31, 2022, and a decrease of $2.44 billion, or 14.7%, from March 31, 2022. The decreases from prior quarters were largely driven by the industry-wide turmoil experienced during the quarter and partially by clients redeploying funds into higher yielding alternatives.

At March 31, 2023, non-core deposits totaled $3.00 billion, an increase of $494.9 million, or 19.8%, from December 31, 2022, and an increase of $1.96 billion, or 189.2%, from March 31, 2022. The increase in the first quarter of 2023 compared to the prior quarter was primarily due to the addition of $324.3 million in brokered certificates of deposit, and an increase of $170.7 million in retail certificates of deposit. The increase from March 31, 2022 was primarily driven by increases in brokered and retail certificates of deposit.

The weighted average cost of total deposits for the first quarter of 2023 was 0.94%, compared to 0.58% for the fourth quarter of 2022, and 0.04% for the first quarter of 2022. The increases in the weighted average cost of

deposits for the first quarter of 2023, compared to the fourth quarter of 2022 and the first quarter of 2022, were principally driven by higher pricing across all deposit categories. The weighted average cost of core deposits(2) for the first quarter of 2023 was 0.54%, compared to 0.31% for the fourth quarter of 2022, and 0.03% for the first quarter of 2022.

At March 31, 2023, the end-of-period weighted average rate of total deposits was 1.15%, compared to 0.79% at December 31, 2022 and 0.04% at March 31, 2022. At March 31, 2023, the end-of-period weighted average rate of core deposits was 0.61%, compared to 0.43% at December 31, 2022, and 0.03% at March 31, 2022.

 

 

March 31,

 

December 31,

 

March 31,

(Dollars in thousands)

 

 

2023

 

 

 

2022

 

 

 

2022

 

Deposit accounts

 

 

 

 

 

 

Noninterest-bearing checking

 

$

6,209,104

 

 

$

6,306,825

 

 

$

7,106,548

 

Interest-bearing:

 

 

 

 

 

 

Checking

 

 

2,871,812

 

 

 

3,119,850

 

 

 

3,679,067

 

Money market/savings

 

 

5,128,827

 

 

 

5,422,577

 

 

 

5,867,044

 

Total core deposits (1)

 

 

14,209,743

 

 

 

14,849,252

 

 

 

16,652,659

 

Brokered money market

 

 

30

 

 

 

30

 

 

 

5,553

 

Retail certificates of deposit

 

 

1,257,146

 

 

 

1,086,423

 

 

 

1,031,011

 

Wholesale/brokered certificates of deposit

 

 

1,740,891

 

 

 

1,416,696

 

 

 

 

Total non-core deposits

 

 

2,998,067

 

 

 

2,503,149

 

 

 

1,036,564

 

Total deposits

 

$

17,207,810

 

 

$

17,352,401

 

 

$

17,689,223

 

 

 

 

 

 

 

 

Cost of deposits

 

 

0.94

%

 

 

0.58

%

 

 

0.04

%

Cost of core deposits (2)

 

 

0.54

 

 

 

0.31

 

 

 

0.03

 

Noninterest-bearing deposits as a percent of total deposits

 

 

36.1

 

 

 

36.3

 

 

 

40.2

 

Core deposits as a percent of total deposits

 

 

82.6

 

 

 

85.6

 

 

 

94.1

 

 

(1)

 

Core deposits are total deposits excluding all certificates of deposits and all brokered deposits.

(2)

 

Reconciliations of the non-GAAP measures are set forth at the end of this press release.

Borrowings

At March 31, 2023, total borrowings amounted to $1.13 billion, a decrease of $199.8 million from December 31, 2022, and an increase of $200.6 million from March 31, 2022. Total borrowings at March 31, 2023 were comprised of $800.0 million of Federal Home Loan Bank of San Francisco (“FHLB”) term advances and $331.4 million of subordinated debt. The decrease in borrowings at March 31, 2023 as compared to December 31, 2022 was due to the maturity of $200.0 million in FHLB term advances during the first quarter of 2023, partially offset by the amortization of the subordinated debt issuance costs. The increase in borrowings at March 31, 2023 as compared to March 31, 2022 was due to $200.0 million higher FHLB term advances to manage interest rate risk and liquidity.

As of March 31, 2023, our unused borrowing capacity was $8.55 billion, which consists of available lines of credit with FHLB and other correspondent banks as well as access through the Federal Reserve Bank's discount window and the new Bank Term Funding Program, neither of which we accessed during the first quarter of 2023.

Capital Ratios

At March 31, 2023, our common stockholder's equity was $2.83 billion, or 13.25% of total assets, compared with $2.80 billion, or 12.90%, at December 31, 2022, and $2.78 billion, or 12.87%, at March 31, 2022, with a book value per share of $29.58, compared with $29.45 at December 31, 2022, and $29.31 at March 31, 2022. At March 31, 2023, the ratio of tangible common equity to tangible assets(1) was 9.20%, compared with 8.88% at December 31, 2022, and 8.79% at March 31, 2022, and tangible book value per share(1) was $19.61, compared with $19.38 at December 31, 2022, and $19.12 at March 31, 2022. The increase in tangible book value per share at March 31, 2023 from the prior quarter was primarily driven by net income, partially offset by the dividends paid.

The Company implemented the current expected credit losses (“CECL”) model on January 1, 2020 and elected to phase in the full effect of CECL on regulatory capital over the five-year transition period. In the first quarter of 2022, the Company began phasing into regulatory capital the cumulative adjustments at the end of the second year of the transition period at 25% per year. At March 31, 2023, the Company and Bank were in compliance with the capital conservation buffer requirement and exceeded the minimum Common Equity Tier 1, Tier 1, and total capital ratios, inclusive of the fully phased-in capital conservation buffer of 7.0%, 8.5%, and 10.5%, respectively, and the Bank qualified as “well capitalized” for purposes of the federal bank regulatory prompt corrective action regulations.

_________________________

(1) Reconciliations of the non-GAAP measures are set forth at the end of this press release.

 

 

March 31,

 

December 31,

 

March 31,

Capital ratios

 

 

2023

 

 

 

2022

 

 

 

2022

 

Pacific Premier Bancorp, Inc. Consolidated

 

 

 

 

 

 

Tier 1 leverage ratio

 

 

10.41

%

 

 

10.29

%

 

 

10.10

%

Common equity tier 1 capital ratio

 

 

13.54

 

 

 

12.99

 

 

 

11.80

 

Tier 1 capital ratio

 

 

13.54

 

 

 

12.99

 

 

 

11.80

 

Total capital ratio

 

 

16.33

 

 

 

15.53

 

 

 

14.37

 

Tangible common equity ratio (1)

 

 

9.20

 

 

 

8.88

 

 

 

8.79

 

 

 

 

 

 

 

 

Pacific Premier Bank

 

 

 

 

 

 

Tier 1 leverage ratio

 

 

11.93

%

 

 

11.80

%

 

 

11.66

%

Common equity tier 1 capital ratio

 

 

15.52

 

 

 

14.89

 

 

 

13.61

 

Tier 1 capital ratio

 

 

15.52

 

 

 

14.89

 

 

 

13.61

 

Total capital ratio

 

 

16.55

 

 

 

15.74

 

 

 

14.47

 

 

 

 

 

 

 

 

Share data

 

 

 

 

 

 

Book value per share

 

$

29.58

 

 

$

29.45

 

 

$

29.31

 

Tangible book value per share (1)

 

 

19.61

 

 

 

19.38

 

 

 

19.12

 

Common equity dividends declared per share

 

 

0.33

 

 

 

0.33

 

 

 

0.33

 

Closing stock price (2)

 

 

24.02

 

 

 

31.56

 

 

 

35.35

 

Shares issued and outstanding

 

 

95,714,777

 

 

 

95,021,760

 

 

 

94,945,849

 

Market capitalization (2)(3)

 

$

2,299,069

 

 

$

2,998,887

 

 

$

3,356,336

 

 

(1)

 

Reconciliations of the non-GAAP measures are set forth at the end of this press release.

(2)

 

As of the last trading day prior to period end.

(3)

 

Dollars in thousands.

Dividend and Stock Repurchase Program

On April 24, 2023, the Company's Board of Directors declared a $0.33 per share dividend, payable on May 15, 2023 to stockholders of record as of May 8, 2023. In January 2021, the Company’s Board of Directors approved a stock repurchase program, which authorized the repurchase of up to 4,725,000 shares of its common stock. During the first quarter of 2023, the Company did not repurchase any shares of common stock.

Conference Call and Webcast

The Company will host a conference call at 9:00 a.m. PT / 12:00 p.m. ET on April 27, 2023 to discuss its financial results. Analysts and investors may participate in the question-and-answer session. A live webcast will be available on the Webcasts page of the Company's investor relations website. An archived version of the webcast will be available in the same location shortly after the live call has ended. The conference call can be accessed by telephone at (866) 290-5977 and asking to be joined to the Pacific Premier Bancorp, Inc. conference call. Additionally, a telephone replay will be made available through May 4, 2023, at (877) 344-7529, conference ID 4228581.

About Pacific Premier Bancorp, Inc.

Pacific Premier Bancorp, Inc. (Nasdaq: PPBI) is the parent company of Pacific Premier Bank, a California-based commercial bank focused on serving small, middle-market, and corporate businesses throughout the western United States in major metropolitan markets in California, Washington, Arizona, and Nevada. Founded in 1983, Pacific Premier Bank has grown to become one of the largest banks headquartered in the western region of the United States, with over $21 billion in total assets. Pacific Premier Bank provides banking products and services, including deposit accounts, digital banking, and treasury management services, to businesses, professionals, entrepreneurs, real estate investors, and nonprofit organizations. Pacific Premier Bank also offers a wide array of loan products, such as commercial business loans, lines of credit, SBA loans, commercial real estate loans, agribusiness loans, franchise lending, home equity lines of credit, and construction loans. Pacific Premier Bank offers commercial escrow services and facilitates 1031 Exchange transactions through its Commerce Escrow division. Pacific Premier Bank offers clients IRA custodial services through its Pacific Premier Trust division, which has approximately $17 billion of assets under custody and 38,000 client accounts comprised of self-directed investors, financial institutions, capital syndicators, and financial advisors. Additionally, Pacific Premier Bank provides nationwide customized banking solutions to Homeowners’ Associations and Property Management companies. Pacific Premier Bank is an Equal Housing Lender and Member FDIC. For additional information about Pacific Premier Bancorp, Inc. and Pacific Premier Bank, visit our website: www.ppbi.com.

FORWARD-LOOKING STATEMENTS

The statements contained herein that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company including, without limitation, plans, strategies and goals, and statements about the Company’s expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, yields and returns, loan diversification and credit management, stockholder value creation, tax rates, and the impact of acquisitions we have made or may make.

Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the strength of the United States economy in general and the strength of the local economies in which we conduct operations; the effects of, and changes in, trade, monetary, and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; interest rate, liquidity, economic, market, credit, operational, and inflation risks associated with our business, including the speed and predictability of changes in these risks; our ability to attract and retain deposits and access to other sources of liquidity; business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic markets, including the tight labor market, ineffective management of the U.S. Federal budget or debt or turbulence or uncertainty in domestic or foreign financial markets; the effect of acquisitions we have made or may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target into our operations; the timely development of competitive new products and services and the acceptance of these products and services by new and existing customers; possible impairment charges to goodwill, including any impairment that may result from increased volatility in our stock price; the impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, and insurance, and the application thereof by regulatory bodies; compliance risks, including the costs of monitoring, testing, and maintaining compliance with complex laws and regulations; the effectiveness of our risk management framework and quantitative models; the transition away from USD LIBOR and related uncertainty as well as the risk and costs related to our adoption of Secured Overnight Financing Rate (“SOFR”); the effect of changes in accounting policies and practices or accounting standards, as may be adopted from time-to-time by bank regulatory agencies, the U.S. Securities and Exchange Commission (“SEC”), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the CECL model, which has changed how we estimate credit losses and may further increase the required level of our allowance for credit losses in future periods; possible credit-related impairments of securities held by us; changes in the level of our nonperforming assets and charge-offs; the impact of governmental efforts to restructure the U.S. financial regulatory system; the impact of recent or future changes in the FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount; changes in consumer spending, borrowing, and savings habits; the effects of our lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; the possibility that we may reduce or discontinue the payments of dividends on our common stock; the possibility that we may discontinue, reduce or otherwise limit the level of repurchases of our common stock we may make from time to time pursuant to our stock repurchase program; changes in the financial performance and/or condition of our borrowers; changes in the competitive environment among financial and bank holding companies and other financial service providers; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism, and/or military conflicts, including the war between Russia and Ukraine, which could impact business and economic conditions in the United States and abroad; public health crises and pandemics, including with respect to COVID-19, and their effects on the economic and business environments in which we operate, including on our credit quality and business operations, as well as the impact on general economic and financial market conditions; cybersecurity threats and the cost of defending against them; climate change, including the enhanced regulatory, compliance, credit, and reputational risks and costs; natural disasters, earthquakes, fires, and severe weather; unanticipated regulatory or legal proceedings; and our ability to manage the risks involved in the foregoing. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company's 2022 Annual Report on Form 10-K filed with the SEC and available at the SEC’s Internet site (http://www.sec.gov).

The Company undertakes no obligation to revise or publicly release any revision or update to these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

(Dollars in thousands)

 

 

2023

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

ASSETS

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,424,896

 

 

$

1,101,249

 

 

$

739,211

 

 

$

972,798

 

 

$

809,259

 

Interest-bearing time deposits with financial institutions

 

 

1,734

 

 

 

1,734

 

 

 

1,733

 

 

 

2,216

 

 

 

2,216

 

Investment securities held-to-maturity, at amortized cost, net of allowance for credit losses

 

 

1,749,030

 

 

 

1,388,103

 

 

 

1,385,502

 

 

 

1,390,682

 

 

 

996,382

 

Investment securities available-for-sale, at fair value

 

 

2,112,852

 

 

 

2,601,013

 

 

 

2,661,079

 

 

 

2,679,070

 

 

 

3,222,095

 

FHLB, FRB, and other stock

 

 

105,479

 

 

 

119,918

 

 

 

118,778

 

 

 

118,636

 

 

 

116,973

 

Loans held for sale, at lower of amortized cost or fair value

 

 

1,247

 

 

 

2,643

 

 

 

2,163

 

 

 

2,957

 

 

 

11,646

 

Loans held for investment

 

 

14,171,784

 

 

 

14,676,298

 

 

 

14,908,811

 

 

 

15,047,608

 

 

 

14,733,755

 

Allowance for credit losses

 

 

(195,388

)

 

 

(195,651

)

 

 

(195,549

)

 

 

(196,075

)

 

 

(197,517

)

Loans held for investment, net

 

 

13,976,396

 

 

 

14,480,647

 

 

 

14,713,262

 

 

 

14,851,533

 

 

 

14,536,238

 

Accrued interest receivable

 

 

69,660

 

 

 

73,784

 

 

 

66,192

 

 

 

66,898

 

 

 

60,922

 

Other real estate owned

 

 

5,499

 

 

 

 

 

 

 

 

 

 

 

 

 

Premises and equipment, net

 

 

63,450

 

 

 

64,543

 

 

 

65,651

 

 

 

68,435

 

 

 

70,453

 

Deferred income taxes, net

 

 

177,778

 

 

 

183,602

 

 

 

190,948

 

 

 

163,767

 

 

 

133,938

 

Bank owned life insurance

 

 

462,732

 

 

 

460,010

 

 

 

457,301

 

 

 

454,593

 

 

 

451,968

 

Intangible assets

 

 

52,417

 

 

 

55,588

 

 

 

59,028

 

 

 

62,500

 

 

 

65,978

 

Goodwill

 

 

901,312

 

 

 

901,312

 

 

 

901,312

 

 

 

901,312

 

 

 

901,312

 

Other assets

 

 

257,082

 

 

 

253,871

 

 

 

257,041

 

 

 

258,522

 

 

 

242,916

 

Total assets

 

$

21,361,564

 

 

$

21,688,017

 

 

$

21,619,201

 

 

$

21,993,919

 

 

$

21,622,296

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

Deposit accounts:

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

 

$

6,209,104

 

 

$

6,306,825

 

 

$

6,775,465

 

 

$

6,934,318

 

 

$

7,106,548

 

Interest-bearing:

 

 

 

 

 

 

 

 

 

 

Checking

 

 

2,871,812

 

 

 

3,119,850

 

 

 

3,605,498

 

 

 

4,149,432

 

 

 

3,679,067

 

Money market/savings

 

 

5,128,857

 

 

 

5,422,607

 

 

 

5,493,988

 

 

 

5,545,230

 

 

 

5,872,597

 

Retail certificates of deposit

 

 

1,257,146

 

 

 

1,086,423

 

 

 

872,421

 

 

 

855,966

 

 

 

1,031,011

 

Wholesale/brokered certificates of deposit

 

 

1,740,891

 

 

 

1,416,696

 

 

 

999,002

 

 

 

599,667

 

 

 

 

Total interest-bearing

 

 

10,998,706

 

 

 

11,045,576

 

 

 

10,970,909

 

 

 

11,150,295

 

 

 

10,582,675

 

Total deposits

 

 

17,207,810

 

 

 

17,352,401

 

 

 

17,746,374

 

 

 

18,084,613

 

 

 

17,689,223

 

FHLB advances and other borrowings

 

 

800,000

 

 

 

1,000,000

 

 

 

600,000

 

 

 

600,000

 

 

 

600,000

 

Subordinated debentures

 

 

331,364

 

 

 

331,204

 

 

 

331,045

 

 

 

330,886

 

 

 

330,726

 

Accrued expenses and other liabilities

 

 

191,229

 

 

 

206,023

 

 

 

206,386

 

 

 

223,201

 

 

 

219,329

 

Total liabilities

 

 

18,530,403

 

 

 

18,889,628

 

 

 

18,883,805

 

 

 

19,238,700

 

 

 

18,839,278

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

937

 

 

 

933

 

 

 

933

 

 

 

933

 

 

 

933

 

Additional paid-in capital

 

 

2,361,830

 

 

 

2,362,663

 

 

 

2,357,731

 

 

 

2,353,361

 

 

 

2,348,727

 

Retained earnings

 

 

731,123

 

 

 

700,040

 

 

 

657,845

 

 

 

615,943

 

 

 

577,591

 

Accumulated other comprehensive loss

 

 

(262,729

)

 

 

(265,247

)

 

 

(281,113

)

 

 

(215,018

)

 

 

(144,233

)

Total stockholders' equity

 

 

2,831,161

 

 

 

2,798,389

 

 

 

2,735,396

 

 

 

2,755,219

 

 

 

2,783,018

 

Total liabilities and stockholders' equity

 

$

21,361,564

 

 

$

21,688,017

 

 

$

21,619,201

 

 

$

21,993,919

 

 

$

21,622,296

 

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

(Dollars in thousands, except per share data)

 

 

2023

 

 

 

2022

 

 

 

2022

 

INTEREST INCOME

 

 

 

 

 

 

Loans

 

$

180,958

 

$

184,457

 

$

150,604

Investment securities and other interest-earning assets

 

 

40,385

 

 

 

33,324

 

 

 

17,942

 

Total interest income

 

 

221,343

 

 

 

217,781

 

 

 

168,546

 

INTEREST EXPENSE

 

 

 

 

 

 

Deposits

 

 

40,234

 

 

 

25,865

 

 

 

1,673

 

FHLB advances and other borrowings

 

 

7,938

 

 

 

5,960

 

 

 

474

 

Subordinated debentures

 

 

4,561

 

 

 

4,560

 

 

 

4,560

 

Total interest expense

 

 

52,733

 

 

 

36,385

 

 

 

6,707

 

Net interest income before provision for credit losses

 

 

168,610

 

 

 

181,396

 

 

 

161,839

 

Provision for credit losses

 

 

3,016

 

 

 

2,838

 

 

 

448

 

Net interest income after provision for credit losses

 

 

165,594

 

 

 

178,558

 

 

 

161,391

 

NONINTEREST INCOME

 

 

 

 

 

 

Loan servicing income

 

 

573

 

 

 

346

 

 

 

419

 

Service charges on deposit accounts

 

 

2,629

 

 

 

2,689

 

 

 

2,615

 

Other service fee income

 

 

296

 

 

 

295

 

 

 

367

 

Debit card interchange fee income

 

 

803

 

 

 

1,048

 

 

 

836

 

Earnings on bank owned life insurance

 

 

3,374

 

 

 

3,359

 

 

 

3,221

 

Net gain from sales of loans

 

 

29

 

 

 

151

 

 

 

1,494

 

Net gain from sales of investment securities

 

 

138

 

 

 

 

 

 

2,134

 

Trust custodial account fees

 

 

11,025

 

 

 

9,722

 

 

 

11,579

 

Escrow and exchange fees

 

 

1,058

 

 

 

1,282

 

 

 

1,661

 

Other income

 

 

1,261

 

 

 

1,605

 

 

 

1,568

 

Total noninterest income

 

 

21,186

 

 

 

20,497

 

 

 

25,894

 

NONINTEREST EXPENSE

 

 

 

 

 

 

Compensation and benefits

 

 

54,293

 

 

 

54,347

 

 

 

56,981

 

Premises and occupancy

 

 

11,742

 

 

 

11,641

 

 

 

11,952

 

Data processing

 

 

7,265

 

 

 

6,991

 

 

 

5,996

 

Other real estate owned operations, net

 

 

108

 

 

 

 

 

 

 

FDIC insurance premiums

 

 

2,425

 

 

 

1,463

 

 

 

1,396

 

Legal and professional services

 

 

5,501

 

 

 

5,175

 

 

 

4,068

 

Marketing expense

 

 

1,838

 

 

 

1,985

 

 

 

1,809

 

Office expense

 

 

1,232

 

 

 

1,310

 

 

 

1,203

 

Loan expense

 

 

646

 

 

 

743

 

 

 

1,134

 

Deposit expense

 

 

8,436

 

 

 

6,770

 

 

 

3,751

 

Amortization of intangible assets

 

 

3,171

 

 

 

3,440

 

 

 

3,592

 

Other expense

 

 

4,695

 

 

 

5,317

 

 

 

5,766

 

Total noninterest expense

 

 

101,352

 

 

 

99,182

 

 

 

97,648

 

Net income before income taxes

 

 

85,428

 

 

 

99,873

 

 

 

89,637

 

Income tax expense

 

 

22,866

 

 

 

26,200

 

 

 

22,733

 

Net income

 

$

62,562

 

 

$

73,673

 

 

$

66,904

 

EARNINGS PER SHARE

 

 

 

 

 

 

Basic

 

$

0.66

 

 

$

0.78

 

 

$

0.71

 

Diluted

 

$

0.66

 

 

$

0.77

 

 

$

0.70

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

Basic

 

 

93,857,812

 

 

 

93,810,468

 

 

 

93,499,695

 

Diluted

 

 

94,182,522

 

 

 

94,176,633

 

 

 

93,946,074

 

 

SELECTED FINANCIAL DATA

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED AVERAGE BALANCES AND YIELD DATA

(Unaudited)

 

 

 

 

 

Three Months Ended

 

 

March 31, 2023

 

December 31, 2022

 

March 31, 2022

(Dollars in thousands)

 

Average

Balance

 

Interest

Income/

Expense

 

Average

Yield/

Cost

 

Average

Balance

 

Interest

Income/

Expense

 

Average

Yield/

Cost

 

Average

Balance

 

Interest

Income/

Expense

 

Average

Yield/

Cost

Assets

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,335,611

 

$

13,594

 

4.13

%

 

$

1,015,197

 

$

8,636

 

3.37

%

 

$

322,236

 

$

90

 

0.11

%

Investment securities

 

 

4,165,681

 

 

 

26,791

 

 

2.57

 

 

 

4,130,042

 

 

 

24,688

 

 

2.39

 

 

 

4,546,408

 

 

 

17,852

 

 

1.57

 

Loans receivable, net (1)(2)

 

 

14,394,775

 

 

 

180,958

 

 

5.10

 

 

 

14,799,417

 

 

 

184,457

 

 

4.94

 

 

 

14,371,588

 

 

 

150,604

 

 

4.25

 

Total interest-earning assets

 

 

19,896,067

 

 

 

221,343

 

 

4.51

 

 

 

19,944,656

 

 

 

217,781

 

 

4.33

 

 

 

19,240,232

 

 

 

168,546

 

 

3.55

 

Noninterest-earning assets

 

 

1,788,806

 

 

 

 

 

 

 

1,784,277

 

 

 

 

 

 

 

1,716,559

 

 

 

 

 

Total assets

 

$

21,684,873

 

 

 

 

 

 

$

21,728,933

 

 

 

 

 

 

$

20,956,791

 

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking

 

$

3,008,712

 

 

$

5,842

 

 

0.79

%

 

$

3,320,146

 

 

$

3,752

 

 

0.45

%

 

$

3,537,824

 

 

$

229

 

 

0.03

%

Money market

 

 

4,992,084

 

 

 

13,053

 

 

1.06

 

 

 

4,998,726

 

 

 

7,897

 

 

0.63

 

 

 

5,343,973

 

 

 

888

 

 

0.07

 

Savings

 

 

453,079

 

 

 

508

 

 

0.45

 

 

 

443,016

 

 

 

310

 

 

0.28

 

 

 

422,186

 

 

 

26

 

 

0.02

 

Retail certificates of deposit

 

 

1,206,966

 

 

 

7,775

 

 

2.61

 

 

 

975,958

 

 

 

3,941

 

 

1.60

 

 

 

1,047,451

 

 

 

530

 

 

0.21

 

Wholesale/brokered certificates of deposit

 

 

1,443,783

 

 

 

13,056

 

 

3.67

 

 

 

1,283,537

 

 

 

9,965

 

 

3.08

 

 

 

 

 

 

 

 

 

Total interest-bearing deposits

 

 

11,104,624

 

 

 

40,234

 

 

1.47

 

 

 

11,021,383

 

 

 

25,865

 

 

0.93

 

 

 

10,351,434

 

 

 

1,673

 

 

0.07

 

FHLB advances and other borrowings

 

 

987,817

 

 

 

7,938

 

 

3.26

 

 

 

826,125

 

 

 

5,960

 

 

2.86

 

 

 

225,250

 

 

 

474

 

 

0.85

 

Subordinated debentures

 

 

331,297

 

 

 

4,561

 

 

5.51

 

 

 

331,133

 

 

 

4,560

 

 

5.51

 

 

 

330,629

 

 

 

4,560

 

 

5.52

 

Total borrowings

 

 

1,319,114

 

 

 

12,499

 

 

3.83

 

 

 

1,157,258

 

 

 

10,520

 

 

3.62

 

 

 

555,879

 

 

 

5,034

 

 

3.63

 

Total interest-bearing liabilities

 

 

12,423,738

 

 

 

52,733

 

 

1.72

 

 

 

12,178,641

 

 

 

36,385

 

 

1.19

 

 

 

10,907,313

 

 

 

6,707

 

 

0.25

 

Noninterest-bearing deposits

 

 

6,219,818

 

 

 

 

 

 

 

6,587,400

 

 

 

 

 

 

 

6,928,872

 

 

 

 

 

Other liabilities

 

 

218,925

 

 

 

 

 

 

 

211,731

 

 

 

 

 

 

 

256,219

 

 

 

 

 

Total liabilities

 

 

18,862,481

 

 

 

 

 

 

 

18,977,772

 

 

 

 

 

 

 

18,092,404

 

 

 

 

 

Stockholders' equity

 

 

2,822,392

 

 

 

 

 

 

 

2,751,161

 

 

 

 

 

 

 

2,864,387

 

 

 

 

 

Total liabilities and equity

 

$

21,684,873

 

 

 

 

 

 

$

21,728,933

 

 

 

 

 

 

$

20,956,791

 

 

 

 

 

Net interest income

 

 

 

$

168,610

 

 

 

 

 

 

$

181,396

 

 

 

 

 

 

$

161,839

 

 

 

Net interest margin (3)

 

 

 

 

 

3.44

%

 

 

 

 

 

3.61

%

 

 

 

 

 

3.41

%

Cost of deposits (4)

 

 

 

 

 

0.94

 

 

 

 

 

 

0.58

 

 

 

 

 

 

0.04

 

Cost of funds (5)

 

 

 

 

 

1.15

 

 

 

 

 

 

0.77

 

 

 

 

 

 

0.15

 

Cost of core deposits (6)

 

 

 

 

 

0.54

 

 

 

 

 

 

0.31

 

 

 

 

 

 

0.03

 

Ratio of interest-earning assets to interest-bearing liabilities

 

160.15

 

 

 

 

 

 

163.77

 

 

 

 

 

 

176.40

 

 

(1)

 

Average balance includes loans held for sale and nonperforming loans and is net of deferred loan origination fees/costs, discounts/premiums, and the basis adjustment of certain loans included in fair value hedging relationships.

(2)

 

Interest income includes net discount accretion of $2.5 million, $3.5 million, and $5.9 million for the three months ended March 31, 2023, December 31, 2022, and March 31, 2022, respectively.

(3)

 

Represents annualized net interest income divided by average interest-earning assets.

(4)

 

Represents annualized interest expense on deposits divided by the sum of average interest-bearing deposits and noninterest-bearing deposits.

(5)

 

Represents annualized total interest expense divided by the sum of average total interest-bearing liabilities and noninterest-bearing deposits.

(6)

 

Reconciliations of the non-GAAP measures are set forth at the end of this press release.

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

LOAN PORTFOLIO COMPOSITION

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

September 30

 

June 30,

 

March 31,

(Dollars in thousands)

 

 

2023

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

Investor loans secured by real estate

 

 

 

 

 

 

 

 

 

 

CRE non-owner-occupied

 

$

2,590,824

 

 

$

2,660,321

 

 

$

2,771,272

 

 

$

2,788,715

 

 

$

2,774,650

 

Multifamily

 

 

5,955,239

 

 

 

6,112,026

 

 

 

6,199,581

 

 

 

6,188,086

 

 

 

6,041,085

 

Construction and land

 

 

420,079

 

 

 

399,034

 

 

 

373,194

 

 

 

331,734

 

 

 

303,811

 

SBA secured by real estate (1)

 

 

40,669

 

 

 

42,135

 

 

 

42,998

 

 

 

44,199

 

 

 

42,642

 

Total investor loans secured by real estate

 

 

9,006,811

 

 

 

9,213,516

 

 

 

9,387,045

 

 

 

9,352,734

 

 

 

9,162,188

 

Business loans secured by real estate (2)

 

 

 

 

 

 

 

 

 

 

CRE owner-occupied

 

 

2,342,175

 

 

 

2,432,163

 

 

 

2,477,530

 

 

 

2,486,747

 

 

 

2,391,984

 

Franchise real estate secured

 

 

371,902

 

 

 

378,057

 

 

 

383,468

 

 

 

387,683

 

 

 

384,267

 

SBA secured by real estate (3)

 

 

60,527

 

 

 

61,368

 

 

 

64,002

 

 

 

67,191

 

 

 

68,466

 

Total business loans secured by real estate

 

 

2,774,604

 

 

 

2,871,588

 

 

 

2,925,000

 

 

 

2,941,621

 

 

 

2,844,717

 

Commercial loans (4)

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

1,967,128

 

 

 

2,160,948

 

 

 

2,164,623

 

 

 

2,295,421

 

 

 

2,242,632

 

Franchise non-real estate secured

 

 

388,722

 

 

 

404,791

 

 

 

409,773

 

 

 

415,830

 

 

 

388,322

 

SBA non-real estate secured

 

 

10,437

 

 

 

11,100

 

 

 

11,557

 

 

 

11,008

 

 

 

10,761

 

Total commercial loans

 

 

2,366,287

 

 

 

2,576,839

 

 

 

2,585,953

 

 

 

2,722,259

 

 

 

2,641,715

 

Retail loans

 

 

 

 

 

 

 

 

 

 

Single family residential (5)

 

 

70,913

 

 

 

72,997

 

 

 

75,176

 

 

 

77,951

 

 

 

79,978

 

Consumer

 

 

3,174

 

 

 

3,284

 

 

 

3,761

 

 

 

4,130

 

 

 

5,157

 

Total retail loans

 

 

74,087

 

 

 

76,281

 

 

 

78,937

 

 

 

82,081

 

 

 

85,135

 

Loans held for investment before basis adjustment (6)

 

 

14,221,789

 

 

 

14,738,224

 

 

 

14,976,935

 

 

 

15,098,695

 

 

 

14,733,755

 

Basis adjustment associated with fair value hedge (7)

 

 

(50,005

)

 

 

(61,926

)

 

 

(68,124

)

 

 

(51,087

)

 

 

 

Loans held for investment

 

 

14,171,784

 

 

 

14,676,298

 

 

 

14,908,811

 

 

 

15,047,608

 

 

 

14,733,755

 

Allowance for credit losses for loans held for investment

 

 

(195,388

)

 

 

(195,651

)

 

 

(195,549

)

 

 

(196,075

)

 

 

(197,517

)

Loans held for investment, net

 

$

13,976,396

 

 

$

14,480,647

 

 

$

14,713,262

 

 

$

14,851,533

 

 

$

14,536,238

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale, at lower of cost or fair value

 

$

1,247

 

 

$

2,643

 

 

$

2,163

 

 

$

2,957

 

 

$

11,646

 

 

(1)

 

SBA loans that are collateralized by hotel/motel real property.

(2)

 

Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.

(3)

 

SBA loans that are collateralized by real property other than hotel/motel real property.

(4)

 

Loans to businesses where the operating cash flow of the business is the primary source of repayment.

(5)

 

Single family residential includes home equity lines of credit, as well as second trust deeds.

(6)

 

Includes unaccreted fair value net purchase discounts of $52.2 million, $54.8 million, $59.0 million, $63.6 million, and $71.2 million as of March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, and March 31, 2022, respectively.

(7)

 

Represents the basis adjustment associated with the application of hedge accounting on certain loans.

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

ASSET QUALITY INFORMATION

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

(Dollars in thousands)

 

 

2023

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

Asset quality

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

$

24,872

 

 

$

30,905

 

 

$

60,464

 

 

$

44,445

 

 

$

55,309

 

Other real estate owned

 

 

5,499

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets

 

$

30,371

 

 

$

30,905

 

 

$

60,464

 

 

$

44,445

 

 

$

55,309

 

 

 

 

 

 

 

 

 

 

 

 

Total classified assets (1)

 

$

166,576

 

 

$

149,304

 

 

$

110,143

 

 

$

106,153

 

 

$

122,528

 

Allowance for credit losses

 

 

195,388

 

 

 

195,651

 

 

 

195,549

 

 

 

196,075

 

 

 

197,517

 

Allowance for credit losses as a percent of total nonperforming loans

 

 

786

%

 

 

633

%

 

 

323

%

 

 

441

%

 

 

357

%

Nonperforming loans as a percent of loans held for investment

 

 

0.18

 

 

 

0.21

 

 

 

0.41

 

 

 

0.30

 

 

 

0.38

 

Nonperforming assets as a percent of total assets

 

 

0.14

 

 

 

0.14

 

 

 

0.28

 

 

 

0.20

 

 

 

0.26

 

Classified loans to total loans held for investment

 

 

1.14

 

 

 

1.02

 

 

 

0.74

 

 

 

0.71

 

 

 

0.83

 

Classified assets to total assets

 

 

0.78

 

 

 

0.69

 

 

 

0.51

 

 

 

0.48

 

 

 

0.57

 

Net loan charge-offs for the quarter ended

 

$

3,284

 

 

$

3,797

 

 

$

1,072

 

 

$

5,245

 

 

$

446

 

Net loan charge-offs for the quarter to average total loans

 

 

0.02

%

 

 

0.03

%

 

 

0.01

%

 

 

0.04

%

 

 

%

Allowance for credit losses to loans held for investment (2)

 

 

1.38

 

 

 

1.33

 

 

 

1.31

 

 

 

1.30

 

 

 

1.34

 

Delinquent loans

 

 

 

 

 

 

 

 

 

 

30 - 59 days

 

$

761

 

 

$

20,538

 

 

$

1,484

 

 

$

6,915

 

 

$

25,332

 

60 - 89 days

 

 

1,198

 

 

 

185

 

 

 

6,535

 

 

 

 

 

 

74

 

90+ days

 

 

18,884

 

 

 

22,625

 

 

 

33,238

 

 

 

29,360

 

 

 

18,245

 

Total delinquency

 

$

20,843

 

 

$

43,348

 

 

$

41,257

 

 

$

36,275

 

 

$

43,651

 

Delinquency as a percent of loans held for investment

 

 

0.15

%

 

 

0.30

%

 

 

0.28

%

 

 

0.24

%

 

 

0.30

%

 

(1)

 

Includes substandard loans and other real estate owned.

(2)

 

At March 31, 2023, 26% of loans held for investment include a fair value net discount of $52.2 million, or 0.37% of loans held for investment. At December 31, 2022, 26% of loans held for investment include a fair value net discount of $54.8 million, or 0.37% of loans held for investment. At September 30, 2022, 27% of loans held for investment include a fair value net discount of $59.0 million, or 0.39% of loans held for investment. At June 30, 2022, 29% of loans held for investment include a fair value net discount of $63.6 million, or 0.42% of loans held for investment. At March 31, 2022, 32% of loans held for investment include a fair value net discount of $71.2 million, or 0.48% of loans held for investment.

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

NONACCRUAL LOANS (1)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Collateral

Dependent

Loans

 

ACL

 

Non-

Collateral

Dependent

Loans

 

ACL

 

Total

Nonaccrual

Loans

 

Nonaccrual

Loans With

No ACL

March 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Investor loans secured by real estate

 

 

 

 

 

 

 

 

 

 

 

 

CRE non-owner-occupied

 

$

5,545

 

$

 

$

 

$

 

$

5,545

 

$

5,545

Multifamily

 

 

3,708

 

 

 

 

 

 

 

 

 

 

 

 

3,708

 

 

 

3,708

 

SBA secured by real estate (2)

 

 

519

 

 

 

 

 

 

 

 

 

 

 

 

519

 

 

 

519

 

Total investor loans secured by real estate

 

 

9,772

 

 

 

 

 

 

 

 

 

 

 

 

9,772

 

 

 

9,772

 

Business loans secured by real estate (3)

 

 

 

 

 

 

 

 

 

 

 

 

CRE owner-occupied

 

 

9,102

 

 

 

 

 

 

 

 

 

 

 

 

9,102

 

 

 

9,102

 

SBA secured by real estate (4)

 

 

1,190

 

 

 

 

 

 

 

 

 

 

 

 

1,190

 

 

 

1,190

 

Total business loans secured by real estate

 

 

10,292

 

 

 

 

 

 

 

 

 

 

 

 

10,292

 

 

 

10,292

 

Commercial loans (5)

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

4,236

 

 

 

3,999

 

 

 

 

 

 

 

 

 

4,236

 

 

 

237

 

SBA not secured by real estate

 

 

572

 

 

 

 

 

 

 

 

 

 

 

 

572

 

 

 

572

 

Total commercial loans

 

 

4,808

 

 

 

3,999

 

 

 

 

 

 

 

 

 

4,808

 

 

 

809

 

Totals nonaccrual loans

 

$

24,872

 

 

$

3,999

 

 

$

 

 

$

 

 

$

24,872

 

 

$

20,873

 

 

(1)

 

The ACL for nonaccrual loans is determined based on a discounted cash flow methodology unless the loan is considered collateral dependent. The ACL for collateral dependent loans is determined based on the estimated fair value of the underlying collateral.

(2)

 

SBA loans that are collateralized by hotel/motel real property.

(3)

 

Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.

(4)

 

SBA loans that are collateralized by real property other than hotel/motel real property.

(5)

 

Loans to businesses where the operating cash flow of the business is the primary source of repayment.

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

PAST DUE STATUS

(Unaudited)

 

 

 

 

 

Days Past Due

 

 

(Dollars in thousands)

 

Current

 

 

30-59

 

 

 

60-89

 

 

90+

 

Total

March 31, 2023

 

 

 

 

 

 

 

 

 

 

Investor loans secured by real estate

 

 

 

 

 

 

 

 

 

 

CRE non-owner-occupied

 

$

2,585,273

 

$

6

 

$

1,129

 

$

4,416

 

$

2,590,824

Multifamily

 

 

5,951,531

 

 

 

 

 

 

 

 

 

3,708

 

 

 

5,955,239

 

Construction and land

 

 

420,079

 

 

 

 

 

 

 

 

 

 

 

 

420,079

 

SBA secured by real estate (1)

 

 

40,669

 

 

 

 

 

 

 

 

 

 

 

 

40,669

 

Total investor loans secured by real estate

 

 

8,997,552

 

 

 

6

 

 

 

1,129

 

 

 

8,124

 

 

 

9,006,811

 

Business loans secured by real estate (2)

 

 

 

 

 

 

 

 

 

 

CRE owner-occupied

 

 

2,337,413

 

 

 

 

 

 

 

 

 

4,762

 

 

 

2,342,175

 

Franchise real estate secured

 

 

371,902

 

 

 

 

 

 

 

 

 

 

 

 

371,902

 

SBA secured by real estate (3)

 

 

59,029

 

 

 

308

 

 

 

 

 

 

1,190

 

 

 

60,527

 

Total business loans secured by real estate

 

 

2,768,344

 

 

 

308

 

 

 

 

 

 

5,952

 

 

 

2,774,604

 

Commercial loans (4)

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

1,962,376

 

 

 

447

 

 

 

69

 

 

 

4,236

 

 

 

1,967,128

 

Franchise non-real estate secured

 

 

388,722

 

 

 

 

 

 

 

 

 

 

 

 

388,722

 

SBA not secured by real estate

 

 

9,865

 

 

 

 

 

 

 

 

 

572

 

 

 

10,437

 

Total commercial loans

 

 

2,360,963

 

 

 

447

 

 

 

69

 

 

 

4,808

 

 

 

2,366,287

 

Retail loans

 

 

 

 

 

 

 

 

 

 

Single family residential (5)

 

 

70,913

 

 

 

 

 

 

 

 

 

 

 

 

70,913

 

Consumer loans

 

 

3,174

 

 

 

 

 

 

 

 

 

 

 

 

3,174

 

Total retail loans

 

 

74,087

 

 

 

 

 

 

 

 

 

 

 

 

74,087

 

Loans held for investment before basis adjustment (6)

 

$

14,200,946

 

 

$

761

 

 

$

1,198

 

 

$

18,884

 

 

$

14,221,789

 

 

(1)

 

SBA loans that are collateralized by hotel/motel real property.

(2)

 

Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.

(3)

 

SBA loans that are collateralized by real property other than hotel/motel real property.

(4)

 

Loans to businesses where the operating cash flow of the business is the primary source of repayment.

(5)

 

Single family residential includes home equity lines of credit, as well as second trust deeds.

(6)

 

Excludes the basis adjustment of $50.0 million to the carrying amount of certain loans included in fair value hedging relationships.

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CREDIT RISK GRADES

(Unaudited)

 

(Dollars in thousands)

 

Pass

 

Special

Mention

 

Substandard

 

Total Gross

Loans

March 31, 2023

 

 

 

 

 

 

 

 

Investor loans secured by real estate

 

 

 

 

 

 

 

 

CRE non-owner-occupied

 

$

2,572,545

 

$

5,104

 

$

13,175

 

$

2,590,824

Multifamily

 

 

5,938,189

 

 

 

12,604

 

 

 

4,446

 

 

 

5,955,239

 

Construction and land

 

 

420,079

 

 

 

 

 

 

 

 

 

420,079

 

SBA secured by real estate (1)

 

 

31,743

 

 

 

 

 

 

8,926

 

 

 

40,669

 

Total investor loans secured by real estate

 

 

8,962,556

 

 

 

17,708

 

 

 

26,547

 

 

 

9,006,811

 

Business loans secured by real estate (2)

 

 

 

 

 

 

 

 

CRE owner-occupied

 

 

2,263,811

 

 

 

18,379

 

 

 

59,985

 

 

 

2,342,175

 

Franchise real estate secured

 

 

338,357

 

 

 

26,346

 

 

 

7,199

 

 

 

371,902

 

SBA secured by real estate (3)

 

 

55,072

 

 

 

195

 

 

 

5,260

 

 

 

60,527

 

Total business loans secured by real estate

 

 

2,657,240

 

 

 

44,920

 

 

 

72,444

 

 

 

2,774,604

 

Commercial loans (4)

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

1,885,615

 

 

 

29,666

 

 

 

51,847

 

 

 

1,967,128

 

Franchise non-real estate secured

 

 

349,238

 

 

 

30,717

 

 

 

8,767

 

 

 

388,722

 

SBA not secured by real estate

 

 

8,969

 

 

 

 

 

 

1,468

 

 

 

10,437

 

Total commercial loans

 

 

2,243,822

 

 

 

60,383

 

 

 

62,082

 

 

 

2,366,287

 

Retail loans

 

 

 

 

 

 

 

 

Single family residential (5)

 

 

70,909

 

 

 

 

 

 

4

 

 

 

70,913

 

Consumer loans

 

 

3,174

 

 

 

 

 

 

 

 

 

3,174

 

Total retail loans

 

 

74,083

 

 

 

 

 

 

4

 

 

 

74,087

 

Loans held for investment before basis adjustment (6)

 

$

13,937,701

 

 

$

123,011

 

 

$

161,077

 

 

$

14,221,789

 

 

(1)

 

SBA loans that are collateralized by hotel/motel real property.

(2)

 

Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.

(3)

 

SBA loans that are collateralized by real property other than hotel/motel real property.

(4)

 

Loans to businesses where the operating cash flow of the business is the primary source of repayment.

(5)

 

Single family residential includes home equity lines of credit, as well as second trust deeds.

(6)

 

Excludes the basis adjustment of $50.0 million to the carrying amount of certain loans included in fair value hedging relationships.

 

GAAP to NON-GAAP RECONCILIATIONS

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

(Unaudited)

 

 

 

 

 

 

 

The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these adjusted measures, this presentation may not be comparable to other similarly titled adjusted measures reported by other companies.

 

 

 

For periods presented below, return on average tangible common equity is a non-GAAP financial measure derived from GAAP-based amounts. We calculate this figure by excluding amortization of intangible assets expense from net income and excluding the average intangible assets and average goodwill from the average stockholders' equity during the periods indicated. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business.

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

(Dollars in thousands)

 

 

2023

 

 

 

2022

 

 

 

2022

 

Net income

 

$

62,562

 

 

$

73,673

 

 

$

66,904

 

Plus: amortization of intangible assets expense

 

 

3,171

 

 

 

3,440

 

 

 

3,592

 

Less: amortization of intangible assets expense tax adjustment (1)

 

 

901

 

 

 

978

 

 

 

1,025

 

Net income for average tangible common equity

 

$

64,832

 

 

$

76,135

 

 

$

69,471

 

 

 

 

 

 

 

 

Average stockholders' equity

 

$

2,822,392

 

 

$

2,751,161

 

 

$

2,864,387

 

Less: average intangible assets

 

 

54,310

 

 

 

57,624

 

 

 

68,157

 

Less: average goodwill

 

 

901,312

 

 

 

901,312

 

 

 

901,312

 

Average tangible common equity

 

$

1,866,770

 

 

$

1,792,225

 

 

$

1,894,918

 

 

 

 

 

 

 

 

Return on average equity (annualized)

 

 

8.87

%

 

 

10.71

%

 

 

9.34

%

Return on average tangible common equity (annualized)

 

 

13.89

%

 

 

16.99

%

 

 

14.66

%

 

(1)

 

Adjusted by statutory tax rate

Pre-provision net revenue is a non-GAAP financial measure derived from GAAP-based amounts. We calculate the pre-provision net revenue by excluding income tax and provision for credit losses from net income. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business and a better comparison to the financial results of prior periods.

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

(Dollars in thousands)

 

 

2023

 

 

 

2022

 

 

 

2022

 

Interest income

 

$

221,343

 

 

$

217,781

 

 

$

168,546

 

Interest expense

 

 

52,733

 

 

 

36,385

 

 

 

6,707

 

Net interest income

 

 

168,610

 

 

 

181,396

 

 

 

161,839

 

Noninterest income

 

 

21,186

 

 

 

20,497

 

 

 

25,894

 

Revenue

 

 

189,796

 

 

 

201,893

 

 

 

187,733

 

Noninterest expense

 

 

101,352

 

 

 

99,182

 

 

 

97,648

 

Pre-provision net revenue

 

 

88,444

 

 

 

102,711

 

 

 

90,085

 

Pre-provision net revenue (annualized)

 

$

353,776

 

 

$

410,844

 

 

$

360,340

 

 

 

 

 

 

 

 

Average assets

 

$

21,684,873

 

 

$

21,728,933

 

 

$

20,956,791

 

 

 

 

 

 

 

 

Pre-provision net revenue to average assets

 

 

0.41

%

 

 

0.47

%

 

 

0.43

%

Pre-provision net revenue to average assets (annualized)

 

 

1.63

%

 

 

1.89

%

 

 

1.72

%

Tangible book value per share and tangible common equity to tangible assets (the “tangible common equity ratio”) are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible book value per share by dividing tangible common equity by common shares outstanding, as compared to book value per share, which we calculate by dividing common stockholders' equity by shares outstanding. We calculate the tangible common equity ratio by excluding the balance of intangible assets from common stockholders' equity and dividing by tangible assets. We believe that this information is consistent with the treatment by bank regulatory agencies, which excludes intangible assets from the calculation of risk-based capital ratios. Accordingly, we believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our capital position and ratios.

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

March 31,

(Dollars in thousands, except per share data)

 

 

2023

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

Total stockholders' equity

 

$

2,831,161

 

 

$

2,798,389

 

 

$

2,735,396

 

 

$

2,755,219

 

 

$

2,783,018

 

Less: intangible assets

 

 

953,729

 

 

 

956,900

 

 

 

960,340

 

 

 

963,812

 

 

 

967,290

 

Tangible common equity

 

$

1,877,432

 

 

$

1,841,489

 

 

$

1,775,056

 

 

$

1,791,407

 

 

$

1,815,728

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

21,361,564

 

 

$

21,688,017

 

 

$

21,619,201

 

 

$

21,993,919

 

 

$

21,622,296

 

Less: intangible assets

 

 

953,729

 

 

 

956,900

 

 

 

960,340

 

 

 

963,812

 

 

 

967,290

 

Tangible assets

 

$

20,407,835

 

 

$

20,731,117

 

 

$

20,658,861

 

 

$

21,030,107

 

 

$

20,655,006

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity ratio

 

 

9.20

%

 

 

8.88

%

 

 

8.59

%

 

 

8.52

%

 

 

8.79

%

 

 

 

 

 

 

 

 

 

 

 

Common shares issued and outstanding

 

 

95,714,777

 

 

 

95,021,760

 

 

 

95,016,767

 

 

 

94,976,605

 

 

 

94,945,849

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

29.58

 

 

$

29.45

 

 

$

28.79

 

 

$

29.01

 

 

$

29.31

 

Less: intangible book value per share

 

 

9.96

 

 

 

10.07

 

 

 

10.11

 

 

 

10.15

 

 

 

10.19

 

Tangible book value per share

 

$

19.61

 

 

$

19.38

 

 

$

18.68

 

 

$

18.86

 

 

$

19.12

 

Efficiency ratio is a non-GAAP financial measure derived from GAAP-based amounts. This figure represents the ratio of noninterest expense, less other real estate owned operations and amortization of intangible assets, where applicable, to the sum of net interest income before provision for credit losses and total noninterest income, less net gain from sales of investment securities. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business.

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

(Dollars in thousands)

 

 

2023

 

 

 

2022

 

 

 

2022

 

Total noninterest expense

 

$

101,352

 

 

$

99,182

 

 

$

97,648

 

Less: amortization of intangible assets

 

 

3,171

 

 

 

3,440

 

 

 

3,592

 

Less: other real estate owned operations, net

 

 

108

 

 

 

 

 

 

 

Noninterest expense, adjusted

 

$

98,073

 

 

$

95,742

 

 

$

94,056

 

 

 

 

 

 

 

 

Net interest income before provision for credit losses

 

$

168,610

 

 

$

181,396

 

 

$

161,839

 

Add: total noninterest income

 

 

21,186

 

 

 

20,497

 

 

 

25,894

 

Less: net gain from sales of investment securities

 

 

138

 

 

 

 

 

 

2,134

 

Revenue, adjusted

 

$

189,658

 

 

$

201,893

 

 

$

185,599

 

 

 

 

 

 

 

 

Efficiency ratio

 

 

51.7

%

 

 

47.4

%

 

 

50.7

%

Cost of core deposits is a non-GAAP financial measure derived from GAAP-based amounts. Cost of core deposits is calculated as the ratio of core deposit interest expense to average core deposits. We calculate core deposit interest expense by excluding interest expense for certificates of deposit and brokered deposits from total deposit expense, and we calculate average core deposits by excluding certificates of deposit and brokered deposits from total deposits. Management believes cost of core deposits is a useful measure to assess the Company's deposit base, including its potential volatility.

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

March 31,

 

December 31,

 

March 31,

(Dollars in thousands)

 

 

2023

 

 

 

2022

 

 

 

2022

 

Total deposits interest expense

 

$

40,234

 

 

$

25,865

 

 

$

1,673

 

Less: certificates of deposit interest expense

 

 

7,775

 

 

 

3,941

 

 

 

530

 

Less: brokered deposits interest expense

 

 

13,056

 

 

 

9,965

 

 

 

1

 

Core deposits expense

 

$

19,403

 

 

$

11,959

 

 

$

1,142

 

 

 

 

 

 

 

 

Total average deposits

 

$

17,324,442

 

 

$

17,608,783

 

 

$

17,280,306

 

Less: average certificates of deposit

 

 

1,206,966

 

 

 

975,958

 

 

 

1,047,451

 

Less: average brokered deposits

 

 

1,443,827

 

 

 

1,283,567

 

 

 

5,553

 

Average core deposits

 

$

14,673,649

 

 

$

15,349,258

 

 

$

16,227,302

 

 

 

 

 

 

 

 

Cost of core deposits

 

 

0.54

%

 

 

0.31

%

 

 

0.03

%

 

Contacts

Pacific Premier Bancorp, Inc.

Steven R. Gardner

Chairman, Chief Executive Officer, and President

(949) 864-8000

Ronald J. Nicolas, Jr.

Senior Executive Vice President and Chief Financial Officer

(949) 864-8000

Matthew J. Lazzaro

Senior Vice President, Director of Investor Relations

(949) 243-1082

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