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Pacific Premier Bancorp, Inc. Announces Third Quarter 2022 Financial Results and a Quarterly Cash Dividend of $0.33 Per Share

Third Quarter 2022 Summary

  • Net income of $73.4 million, or $0.77 per diluted share
  • Return on average assets of 1.35%, return on average equity of 10.57%, and return on average tangible common equity of 16.74%(1)
  • Pre-provision net revenue (“PPNR”) to average assets of 1.85%, annualized, and efficiency ratio of 48.3%(1)
  • Net interest margin of 3.61%, and core net interest margin of 3.44%(1)
  • Cost of deposits of 0.22%, and cost of core deposits of 0.11%(1)
  • Loan-to-deposit ratio of 84.0%, compared with 83.2% in the prior quarter
  • Noninterest-bearing deposits represent 38.2% of total deposits
  • Nonperforming assets to total assets of 0.28%, and net charge-offs to average loans of 0.01%

Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company” or “Pacific Premier”), the holding company of Pacific Premier Bank (the “Bank”), reported net income of $73.4 million, or $0.77 per diluted share, for the third quarter of 2022, compared with net income of $69.8 million, or $0.73 per diluted share, for the second quarter of 2022, and net income of $90.1 million, or $0.95 per diluted share, for the third quarter of 2021.

For the quarter ended September 30, 2022, the Company’s return on average assets (“ROAA”) was 1.35%, return on average equity (“ROAE”) was 10.57%, and return on average tangible common equity (“ROATCE”)(1) was 16.74%, compared to 1.29%, 10.10%, and 16.07%, respectively, for the second quarter of 2022, and 1.73%, 12.67%, and 19.89%, respectively, for the third quarter of 2021. Total assets were $21.62 billion at September 30, 2022, compared to $21.99 billion at June 30, 2022, and $21.01 billion at September 30, 2021.

Steven R. Gardner, Chairman, Chief Executive Officer, and President of the Company, commented, “We produced solid results in the third quarter, increasing earnings per share and pre-provision net revenue(1), while producing higher returns and further enhancing our already strong capital position. These results reflect the Pacific Premier team's commitment to creating and maintaining long-term shareholder value, while proactively managing risk.

“During the quarter, we continued to benefit from the actions we took earlier this year to position our balance sheet for a higher interest rate environment, and when combined with our strategic actions throughout the year, contributed to a 12 basis point increase in our net interest margin and an $8.3 million increase in net interest income as compared to the prior quarter. Our disciplined approach to expense management further enhanced our efficiency ratio, which decreased to 48.3% for the quarter.

“Notwithstanding these positive results, the rising interest rate environment negatively impacted commercial real estate acquisition and refinancing activity, which resulted in overall lower loan production. In addition, the higher interest rate environment has led to deposit outflows in our commercial escrow and exchange business due to a decline in commercial real estate refinance and sales activity. We replaced these deposits with brokered time deposits of varying maturities and held our loan to deposit ratio at 84.0%. While incorporating brokered time deposits into our funding mix will increase our deposit costs in the near term, we believe that locking in this longer-term funding ahead of additional rate increases will reinforce our liquidity and help us control our overall funding costs going forward.

“We believe we are entering this current period of economic uncertainty from a position of strength. We will continue to focus on proactively managing risk across the enterprise, while at the same time growing existing and new client banking relationships.”

FINANCIAL HIGHLIGHTS

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

September 30,

(Dollars in thousands, except per share data)

 

2022

 

2022

 

2021

Financial highlights (unaudited)

 

 

 

 

 

 

Net income

 

$

73,363

 

 

$

69,803

 

 

$

90,088

 

Net interest income

 

 

181,112

 

 

 

172,765

 

 

 

169,069

 

Diluted earnings per share

 

 

0.77

 

 

 

0.73

 

 

 

0.95

 

Common equity dividend per share paid

 

 

0.33

 

 

 

0.33

 

 

 

0.33

 

Return on average assets

 

 

1.35

%

 

 

1.29

%

 

 

1.73

%

Return on average equity

 

 

10.57

 

 

 

10.10

 

 

 

12.67

 

Return on average tangible common equity (1)

 

 

16.74

 

 

 

16.07

 

 

 

19.89

 

Pre-provision net revenue on average assets (1)

 

 

1.85

 

 

 

1.77

 

 

 

1.98

 

Net interest margin

 

 

3.61

 

 

 

3.49

 

 

 

3.51

 

Core net interest margin (1)

 

 

3.44

 

 

 

3.33

 

 

 

3.31

 

Cost of deposits

 

 

0.22

 

 

 

0.06

 

 

 

0.06

 

Cost of core deposits (1)

 

 

0.11

 

 

 

0.04

 

 

 

0.04

 

Efficiency ratio (1)

 

 

48.3

 

 

 

49.0

 

 

 

47.5

 

Noninterest expense as a percent of average assets

 

 

1.86

 

 

 

1.83

 

 

 

1.85

 

Total assets

 

$

21,619,201

 

 

$

21,993,919

 

 

$

21,005,211

 

Total deposits

 

 

17,746,374

 

 

 

18,084,613

 

 

 

17,469,999

 

Loan-to-deposit ratio

 

 

84.0

%

 

 

83.2

%

 

 

80.1

%

Non-maturity deposits as a percent of total deposits

 

 

89.5

 

 

 

92.0

 

 

 

93.6

 

Book value per share

 

$

28.79

 

 

$

29.01

 

 

$

30.08

 

Tangible book value per share (1)

 

 

18.68

 

 

 

18.86

 

 

 

19.75

 

Total capital ratio

 

 

14.83

%

 

 

14.41

%

 

 

14.56

%

______________________________

(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 $181.1 million in the third quarter of 2022, an increase of $8.3 million, or 4.8%, from the second quarter of 2022. The increase in net interest income was primarily attributable to higher yields on average interest-earning assets, as well as a favorable interest impact from fair value hedges on fixed-rate loans of $4.2 million, partially offset by higher cost of funds and lower loan-related fees and accretion income as a result of decreased prepayment activity.

The net interest margin for the third quarter of 2022 increased 12 basis points to 3.61%, from 3.49% in the prior quarter. The core net interest margin(6) increased 11 basis points to 3.44%, compared to 3.33% in the prior quarter, reflecting higher yields on interest-earning assets and a favorable remix of earning-assets towards higher yielding loans, partially offset by higher cost of funds and lower loan prepayment fees.

Net interest income for the third quarter of 2022 increased $12.0 million, or 7.1%, compared to the third quarter of 2021. The increase was attributable to higher yields on average interest-earning assets and higher average loan balances, as well as a favorable impact from fair value hedges on fixed-rate loans, partially offset by higher cost of funds 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

 

 

September 30, 2022

 

June 30, 2022

 

September 30, 2021

(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

 

$

665,510

 

$

2,754

 

1.64

%

 

$

702,663

 

$

1,211

 

0.69

%

 

$

663,076

 

$

195

 

0.12

%

Investment securities

 

 

4,277,444

 

 

22,067

 

2.06

 

 

 

4,254,961

 

 

17,560

 

1.65

 

 

 

4,807,854

 

 

18,827

 

1.57

 

Loans receivable, net (1) (2)

 

 

14,986,682

 

 

174,204

 

4.61

 

 

 

14,919,182

 

 

164,455

 

4.42

 

 

 

13,660,242

 

 

157,025

 

4.56

 

Total interest-earning assets

 

$

19,929,636

 

$

199,025

 

3.96

 

 

$

19,876,806

 

$

183,226

 

3.70

 

 

$

19,131,172

 

$

176,047

 

3.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

10,839,359

 

$

9,873

 

0.36

 

 

$

10,722,522

 

$

2,682

 

0.10

 

 

$

10,536,091

 

$

2,432

 

0.09

 

Borrowings

 

 

966,981

 

 

8,040

 

3.31

 

 

 

933,417

 

 

7,779

 

3.34

 

 

 

332,245

 

 

4,546

 

5.43

 

Total interest-bearing liabilities

 

$

11,806,340

 

$

17,913

 

0.60

 

 

$

11,655,939

 

$

10,461

 

0.36

 

 

$

10,868,336

 

$

6,978

 

0.25

 

Noninterest-bearing deposits

 

$

6,893,463

 

 

 

 

 

$

7,030,205

 

 

 

 

 

$

6,809,211

 

 

 

 

Net interest income

 

 

 

$

181,112

 

 

 

 

 

$

172,765

 

 

 

 

 

$

169,069

 

 

Net interest margin (3)

 

 

 

 

 

3.61

 

 

 

 

 

 

3.49

 

 

 

 

 

 

3.51

 

Cost of deposits (4)

 

 

 

 

 

0.22

 

 

 

 

 

 

0.06

 

 

 

 

 

 

0.06

 

Cost of funds (5)

 

 

 

 

 

0.38

 

 

 

 

 

 

0.22

 

 

 

 

 

 

0.16

 

Cost of core deposits (6)

 

 

 

 

 

0.11

 

 

 

 

 

 

0.04

 

 

 

 

 

 

0.04

 

Ratio of interest-earning assets to interest-bearing liabilities

 

168.80

 

 

 

 

 

 

170.53

 

 

 

 

 

 

176.03

 

________________________________________________________________________

(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 $4.6 million, $7.5 million, and $9.4 million for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, 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 third quarter of 2022, the Company recorded $1.1 million of provision expense, compared to $469,000 of provision expense for the second quarter of 2022, and $19.7 million of provision recapture for the third quarter of 2021. The higher provision for credit losses for the third quarter of 2022 was driven principally by specific reserves on two individually evaluated loans and higher unfunded commitments in the commercial and industrial loan segment.

The provision recaptures for loans and unfunded commitments during the third quarter of 2021 were reflective of favorable changes in the macroeconomic forecasts related to the COVID-19 pandemic relative to prior periods.

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

September 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Provision for credit losses

 

 

 

 

 

 

Provision for loan losses

 

$

546

 

 

$

3,803

 

 

$

(19,543

)

Provision for unfunded commitments

 

 

549

 

 

 

(3,402

)

 

 

(194

)

Provision for held-to-maturity securities

 

 

(18

)

 

 

68

 

 

 

11

 

Total provision for credit losses

 

$

1,077

 

 

$

469

 

 

$

(19,726

)

Noninterest Income

Noninterest income for the third quarter of 2022 was $20.2 million, a decrease of $2.0 million from the second quarter of 2022. The decrease was primarily due to a $679,000 decrease in net gain from sales of loans, a $403,000 decrease in trust custodial account fees resulting primarily from a decrease in the market value of custodial assets, and a $362,000 greater net loss from sales of investment securities.

During the third quarter of 2022, the Bank sold $9.6 million of Small Business Administration (“SBA”) loans for a net gain of $434,000 and $15.0 million of other loans for a net gain of $23,000, compared to the sales of $23.4 million of SBA loans and U.S. Department of Agriculture (“USDA”) loans for a net gain of $1.1 million in the second quarter of 2022.

Additionally, during the third quarter of 2022, the Bank sold $231.1 million of investment securities for a net loss of $393,000, compared to the sales of $45.1 million of investment securities for a net loss of $31,000 in the second quarter of 2022.

Noninterest income for the third quarter of 2022 decreased $9.9 million, or 33.0%, compared to the third quarter of 2021. The decrease was primarily due to a $4.6 million decrease in net gain from sales of investment securities and a $3.0 million decrease in other income.

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

September 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Noninterest income

 

 

 

 

 

 

Loan servicing income

 

$

397

 

 

$

502

 

 

$

536

Service charges on deposit accounts

 

 

2,704

 

 

 

2,690

 

 

 

2,375

Other service fee income

 

 

323

 

 

 

366

 

 

 

350

Debit card interchange fee income

 

 

808

 

 

 

936

 

 

 

834

Earnings on bank owned life insurance

 

 

3,339

 

 

 

3,240

 

 

 

3,266

Net gain from sales of loans

 

 

457

 

 

 

1,136

 

 

 

1,187

Net (loss) gain from sales of investment securities

 

 

(393

)

 

 

(31

)

 

 

4,190

Trust custodial account fees

 

 

9,951

 

 

 

10,354

 

 

 

11,446

Escrow and exchange fees

 

 

1,555

 

 

 

1,827

 

 

 

1,867

Other income

 

 

1,023

 

 

 

1,173

 

 

 

4,049

Total noninterest income

 

$

20,164

 

 

$

22,193

 

 

$

30,100

Noninterest Expense

Noninterest expense totaled $100.9 million for the third quarter of 2022, an increase of $1.9 million compared to the second quarter of 2022, primarily due to a $2.5 million increase in other expense, largely attributable to a client's unauthorized transaction incident for which the Bank provided a $1.9 million provisional credit pending its pursuit of insurance coverage, and a $765,000 increase in deposit expense, partially offset by a $1.2 million decrease in compensation and benefits.

Noninterest expense increased by $4.8 million compared to the third quarter of 2021. The increase was primarily due to a $2.8 million increase in compensation and benefits as well as a $2.3 million increase in other expense.

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

September 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Noninterest expense

 

 

 

 

 

 

Compensation and benefits

 

$

56,355

 

$

57,562

 

$

53,592

Premises and occupancy

 

 

12,011

 

 

11,829

 

 

12,611

Data processing

 

 

7,058

 

 

6,604

 

 

6,296

FDIC insurance premiums

 

 

1,461

 

 

1,452

 

 

1,392

Legal and professional services

 

 

4,075

 

 

4,629

 

 

4,563

Marketing expense

 

 

1,912

 

 

1,926

 

 

2,008

Office expense

 

 

1,338

 

 

1,252

 

 

1,076

Loan expense

 

 

789

 

 

1,144

 

 

1,332

Deposit expense

 

 

4,846

 

 

4,081

 

 

3,974

Amortization of intangible assets

 

 

3,472

 

 

3,479

 

 

3,912

Other expense

 

 

7,549

 

 

5,016

 

 

5,284

Total noninterest expense

 

$

100,866

 

$

98,974

 

$

96,040

Income Tax

For the third quarter of 2022, income tax expense totaled $26.0 million, resulting in an effective tax rate of 26.1%, compared with income tax expense of $25.7 million and an effective tax rate of 26.9% for the second quarter of 2022, and income tax expense of $32.8 million and an effective tax rate of 26.7% for the third quarter of 2021. Our estimated effective tax rate for the full year is expected to be in the range of 26% to 27%.

BALANCE SHEET HIGHLIGHTS

Loans

Loans held for investment totaled $14.91 billion at September 30, 2022, a decrease of $138.8 million, or 0.9%, from June 30, 2022, and an increase of $926.0 million, or 6.6%, from September 30, 2021. The decrease from June 30, 2022 was primarily driven by lower loan fundings and lower commercial line utilization rates. The commercial line average utilization rate was 40.4% for the third quarter of 2022, a decrease from an average of 41.6% for the second quarter of 2022 and an increase from 33.1% for the third quarter of 2021.

During the third quarter of 2022, loan commitments totaled $789.2 million, and new loan fundings totaled $450.7 million, compared with $1.50 billion in loan commitments and $1.12 billion in new loan fundings for the second quarter of 2022, and $1.46 billion in loan commitments and $1.10 billion in new loan fundings for the third quarter of 2021.

At September 30, 2022, the total loan-to-deposit ratio was 84.0%, compared with 83.2% and 80.1% at June 30, 2022 and September 30, 2021, 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

 

September 30,

 

June 30,

 

September 30,

(Dollars in thousands)

2022

 

2022

 

2021

Beginning gross loan balance before basis adjustment

$

15,101,652

 

 

$

14,745,401

 

 

$

13,599,312

 

New commitments

 

789,198

 

 

 

1,504,186

 

 

 

1,459,201

 

Unfunded new commitments

 

(338,534

)

 

 

(382,478

)

 

 

(359,000

)

Net new fundings

 

450,664

 

 

 

1,121,708

 

 

 

1,100,201

 

Purchased loans

 

 

 

 

710

 

 

 

 

Amortization/maturities/payoffs

 

(568,615

)

 

 

(936,893

)

 

 

(762,795

)

Net draws on existing lines of credit

 

21,416

 

 

 

200,255

 

 

 

69,141

 

Loan sales

 

(24,701

)

 

 

(23,698

)

 

 

(12,258

)

Charge-offs

 

(1,318

)

 

 

(5,831

)

 

 

(2,640

)

Net (decrease) increase

 

(122,554

)

 

 

356,251

 

 

 

391,649

 

Ending gross loan balance before basis adjustment

$

14,979,098

 

 

$

15,101,652

 

 

$

13,990,961

 

Basis adjustment associated with fair value hedge (1)

 

(68,124

)

 

 

(51,087

)

 

 

 

Ending gross loan balance

$

14,910,974

 

 

$

15,050,565

 

 

$

13,990,961

 

______________________________

(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:

 

 

September 30,

 

June 30,

 

September 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Investor loans secured by real estate

 

 

 

 

 

 

CRE non-owner-occupied

 

$

2,771,272

 

 

$

2,788,715

 

 

$

2,823,065

 

Multifamily

 

 

6,199,581

 

 

 

6,188,086

 

 

 

5,705,666

 

Construction and land

 

 

373,194

 

 

 

331,734

 

 

 

292,815

 

SBA secured by real estate (1)

 

 

42,998

 

 

 

44,199

 

 

 

49,446

 

Total investor loans secured by real estate

 

 

9,387,045

 

 

 

9,352,734

 

 

 

8,870,992

 

Business loans secured by real estate (2)

 

 

 

 

 

 

CRE owner-occupied

 

 

2,477,530

 

 

 

2,486,747

 

 

 

2,242,164

 

Franchise real estate secured

 

 

383,468

 

 

 

387,683

 

 

 

354,481

 

SBA secured by real estate (3)

 

 

64,002

 

 

 

67,191

 

 

 

69,937

 

Total business loans secured by real estate

 

 

2,925,000

 

 

 

2,941,621

 

 

 

2,666,582

 

Commercial loans (4)

 

 

 

 

 

 

Commercial and industrial

 

 

2,164,623

 

 

 

2,295,421

 

 

 

1,888,870

 

Franchise non-real estate secured

 

 

409,773

 

 

 

415,830

 

 

 

392,950

 

SBA non-real estate secured

 

 

11,557

 

 

 

11,008

 

 

 

12,732

 

Total commercial loans

 

 

2,585,953

 

 

 

2,722,259

 

 

 

2,294,552

 

Retail loans

 

 

 

 

 

 

Single family residential (5)

 

 

75,176

 

 

 

77,951

 

 

 

144,309

 

Consumer

 

 

3,761

 

 

 

4,130

 

 

 

6,426

 

Total retail loans

 

 

78,937

 

 

 

82,081

 

 

 

150,735

 

Loans held for investment before basis adjustment (6)

 

 

14,976,935

 

 

 

15,098,695

 

 

 

13,982,861

 

Basis adjustment associated with fair value hedge (7)

 

 

(68,124

)

 

 

(51,087

)

 

 

 

Loans held for investment

 

 

14,908,811

 

 

 

15,047,608

 

 

 

13,982,861

 

Allowance for credit losses for loans held for investment

 

 

(195,549

)

 

 

(196,075

)

 

 

(211,481

)

Loans held for investment, net

 

$

14,713,262

 

 

$

14,851,533

 

 

$

13,771,380

 

 

 

 

 

 

 

 

Total unfunded loan commitments

 

$

2,823,555

 

 

$

2,872,934

 

 

$

2,504,188

 

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

 

$

2,163

 

 

$

2,957

 

 

$

8,100

 

__________________________________________________

(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 $59.0 million, $63.6 million, and $85.0 million as of September 30, 2022, June 30, 2022, and September 30, 2021, 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 September 30, 2022 was 4.34%, compared to 4.06% at June 30, 2022, and 4.03% at September 30, 2021. 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 Federal Reserve Bank's interest rate increases since March 2022.

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

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

September 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Investor loans secured by real estate

 

 

 

 

 

 

CRE non-owner-occupied

 

$

88,708

 

$

195,896

 

$

105,792

Multifamily

 

 

151,269

 

 

540,263

 

 

613,640

Construction and land

 

 

123,557

 

 

192,852

 

 

99,943

SBA secured by real estate (1)

 

 

 

 

4,698

 

 

1,410

Total investor loans secured by real estate

 

 

363,534

 

 

933,709

 

 

820,785

Business loans secured by real estate (2)

 

 

 

 

 

 

CRE owner-occupied

 

 

80,676

 

 

220,936

 

 

256,269

Franchise real estate secured

 

 

14,011

 

 

17,500

 

 

19,207

SBA secured by real estate (3)

 

 

6,468

 

 

7,033

 

 

15,065

Total business loans secured by real estate

 

 

101,155

 

 

245,469

 

 

290,541

Commercial loans (4)

 

 

 

 

 

 

Commercial and industrial

 

 

288,857

 

 

255,922

 

 

310,985

Franchise non-real estate secured

 

 

22,413

 

 

49,604

 

 

21,654

SBA non-real estate secured

 

 

4,673

 

 

6,419

 

 

Total commercial loans

 

 

315,943

 

 

311,945

 

 

332,639

Retail loans

 

 

 

 

 

 

Single family residential (5)

 

 

8,566

 

 

13,063

 

 

14,782

Consumer

 

 

 

 

 

 

454

Total retail loans

 

 

8,566

 

 

13,063

 

 

15,236

Total loan commitments

 

$

789,198

 

$

1,504,186

 

$

1,459,201

_____________________________________________________

(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 5.55% in the third quarter of 2022, compared to 4.11% in the second quarter of 2022, and 3.66% in the third quarter of 2021.

Asset Quality and Allowance for Credit Losses

At September 30, 2022, our allowance for credit losses (“ACL”) on loans held for investment was $195.5 million, a decrease of $526,000 from June 30, 2022, and a decrease of $15.9 million from September 30, 2021. The slight decline in ACL from June 30, 2022 was reflective primarily of lower loans held for investment. The decrease in ACL from September 30, 2021 was primarily due to favorable changes in the macroeconomic forecasts related to the COVID-19 pandemic.

During the third quarter of 2022, the Company incurred $1.1 million of net charge-offs, compared to $5.2 million and $1.8 million of net charge-offs during the second quarter of 2022 and the third quarter of 2021, 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 September 30, 2022

(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

$

37,221

 

$

(1,128

)

 

$

 

$

1,011

 

 

$

37,104

Multifamily

 

56,293

 

 

 

 

 

 

 

(207

)

 

 

56,086

Construction and land

 

5,436

 

 

 

 

 

 

 

1,004

 

 

 

6,440

SBA secured by real estate (1)

 

2,865

 

 

 

 

 

 

 

90

 

 

 

2,955

Business loans secured by real estate (2)

 

 

 

 

 

 

 

 

 

CRE owner-occupied

 

31,461

 

 

 

 

 

19

 

 

346

 

 

 

31,826

Franchise real estate secured

 

6,530

 

 

 

 

 

 

 

180

 

 

 

6,710

SBA secured by real estate (3)

 

5,149

 

 

 

 

 

 

 

(364

)

 

 

4,785

Commercial loans (4)

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

37,048

 

 

(190

)

 

 

143

 

 

(1,503

)

 

 

35,498

Franchise non-real estate secured

 

13,124

 

 

 

 

 

 

 

70

 

 

 

13,194

SBA non-real estate secured

 

452

 

 

 

 

 

26

 

 

(38

)

 

 

440

Retail loans

 

 

 

 

 

 

 

 

 

Single family residential (5)

 

278

 

 

 

 

 

58

 

 

(40

)

 

 

296

Consumer loans

 

218

 

 

 

 

 

 

 

(3

)

 

 

215

Totals

$

196,075

 

$

(1,318

)

 

$

246

 

$

546

 

 

$

195,549

____________________________________________________

(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 September 30, 2022 was 1.31%, compared to 1.30% at June 30, 2022 and 1.51% at September 30, 2021. The fair value net discount on loans acquired through total bank acquisitions was $59.0 million, or 0.39% of total loans held for investment, as of September 30, 2022, compared to $63.6 million, or 0.42% of total loans held for investment, as of June 30, 2022, and $85.0 million, or 0.60% of total loans held for investment, as of September 30, 2021.

Nonperforming assets totaled $60.5 million, or 0.28% of total assets, at September 30, 2022, compared with $44.4 million, or 0.20% of total assets, at June 30, 2022, and $35.1 million, or 0.17% of total assets, at September 30, 2021. Loan delinquencies were $41.3 million, or 0.28% of loans held for investment, at September 30, 2022, compared to $36.3 million, or 0.24% of loans held for investment, at June 30, 2022, and $20.2 million, or 0.14% of loans held for investment, at September 30, 2021. All nonaccrual loans were individually evaluated with a total of $4.4 million ACL attributed to such loans as of September 30, 2022, compared with $1.8 million as of June 30, 2022.

Classified loans totaled $110.1 million, or 0.74% of loans held for investment, at September 30, 2022, compared with $106.2 million, or 0.71% of loans held for investment, at June 30, 2022, and $124.5 million, or 0.89% of loans held for investment, at September 30, 2021.

 

 

September 30,

 

June 30,

 

September 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Asset quality

 

 

 

 

 

 

Nonperforming loans

 

$

60,464

 

 

$

44,445

 

 

$

35,090

 

Other real estate owned

 

 

 

 

 

 

 

 

 

Nonperforming assets

 

$

60,464

 

 

$

44,445

 

 

$

35,090

 

 

 

 

 

 

 

 

Total classified assets (1)

 

$

110,143

 

 

$

106,153

 

 

$

124,506

 

Allowance for credit losses

 

 

195,549

 

 

 

196,075

 

 

 

211,481

 

Allowance for credit losses as a percent of total nonperforming loans

 

 

323

%

 

 

441

%

 

 

603

%

Nonperforming loans as a percent of loans held for investment

 

 

0.41

 

 

 

0.30

 

 

 

0.25

 

Nonperforming assets as a percent of total assets

 

 

0.28

 

 

 

0.20

 

 

 

0.17

 

Classified loans to total loans held for investment

 

 

0.74

 

 

 

0.71

 

 

 

0.89

 

Classified assets to total assets

 

 

0.51

 

 

 

0.48

 

 

 

0.59

 

Net loan charge-offs for the quarter ended

 

$

1,072

 

 

$

5,245

 

 

$

1,750

 

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

 

 

0.01

%

 

 

0.04

%

 

 

0.01

%

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

 

 

1.31

 

 

 

1.30

 

 

 

1.51

 

Delinquent loans

 

 

 

 

 

 

30 - 59 days

 

$

1,484

 

 

$

6,915

 

 

$

728

 

60 - 89 days

 

 

6,535

 

 

 

 

 

 

936

 

90+ days

 

 

33,238

 

 

 

29,360

 

 

 

18,514

 

Total delinquency

 

$

41,257

 

 

$

36,275

 

 

$

20,178

 

Delinquency as a percentage of loans held for investment

 

 

0.28

%

 

 

0.24

%

 

 

0.14

%

__________________________________________________

(1)

 

Includes substandard loans and other real estate owned.

(2)

 

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 September 30, 2021, 40% of loans held for investment include a fair value net discount of $85.0 million, or 0.60% of loans held for investment.

Investment Securities

At September 30, 2022, available-for-sale (“AFS”) and held-to-maturity (“HTM”) investment securities were $2.66 billion and $1.39 billion, respectively, compared to $2.68 billion and $1.39 billion, respectively, at June 30, 2022, and $4.71 billion and $170.6 million, respectively, at September 30, 2021. In total, investment securities were $4.05 billion at September 30, 2022, a decrease of $23.2 million from June 30, 2022, and a decrease of $833.8 million from September 30, 2021. The decrease in the third quarter of 2022 compared to the prior quarter was primarily the result of $231.1 million in investment securities sales, a $94.9 million decrease resulting from mark-to-market fair value adjustments, and $70.9 million in principal payments, amortization, and redemptions, partially offset by $373.6 million in purchases.

The decrease in investment securities from September 30, 2021 was primarily the result of $1.20 billion in sales, $488.3 million in principal payments, discounts from the AFS securities transferred from HTM, amortization, and redemptions, and a $329.0 million decrease resulting from mark-to-market fair value adjustments, partially offset by $1.19 billion in purchases.

Deposits

At September 30, 2022, total deposits were $17.75 billion, a decrease of $338.2 million, or 1.9%, from June 30, 2022, and an increase of $276.4 million, or 1.6%, from September 30, 2021.

At September 30, 2022, core deposits(1) totaled $15.87 billion, or 89.5% of total deposits, a decrease of $751.1 million, or 4.5%, from June 30, 2022, and a decrease of $476.5 million, or 2.9%, from September 30, 2021. The decrease was primarily driven by a $531.8 million decrease in deposits from the Bank's escrow and exchange business and a $127.4 million decrease in municipal deposits. The decrease from September 30, 2021 was primarily driven by decreases in money market/savings deposits and noninterest-bearing checking deposits, partially offset by an increase in business interest-bearing checking deposits.

At September 30, 2022, non-core deposits totaled $1.87 billion, an increase of $412.8 million, or 28.3%, from June 30, 2022, and an increase of $752.8 million, or 67.3%, from September 30, 2021. The increase in the third quarter of 2022 compared to the prior quarter was primarily due to the addition of $400.0 million in brokered certificates of deposit and an increase of $16.5 million in retail certificates of deposit. The increase from September 30, 2021 was primarily driven by an increase in brokered certificates of deposit, partially offset by decreases in retail certificates of deposit and brokered money market deposits.

The weighted average cost of total deposits for the third quarter of 2022 was 0.22%, compared to 0.06% for the second quarter of 2022, and 0.06% for the third quarter of 2021. The weighted average cost of core deposits(2) for the third quarter was 0.11%, compared to 0.04% for the second quarter of 2022, and 0.04% for the third quarter of 2021.

At September 30, 2022, the end-of-period weighted average rate of total deposits was 0.37%, compared to 0.13% at June 30, 2022 and 0.04% at September 30, 2021. At September 30, 2022, the end-of-period weighted average rate of core deposits was 0.20%, compared to 0.06% at June 30, 2022 and 0.04% at September 30, 2021, respectively.

 

 

September 30,

 

June 30,

 

September 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Deposit accounts

 

 

 

 

 

 

Noninterest-bearing checking

 

$

6,775,465

 

 

$

6,934,318

 

 

$

6,841,495

 

Interest-bearing:

 

 

 

 

 

 

Checking

 

 

3,605,498

 

 

 

4,149,432

 

 

 

3,477,902

 

Money market/savings

 

 

5,493,958

 

 

 

5,542,230

 

 

 

6,031,980

 

Total core deposits (1)

 

 

15,874,921

 

 

 

16,625,980

 

 

 

16,351,377

 

Brokered money market

 

 

30

 

 

 

3,000

 

 

 

5,552

 

Retail certificates of deposit

 

 

872,421

 

 

 

855,966

 

 

 

1,113,070

 

Wholesale/brokered certificates of deposit

 

 

999,002

 

 

 

599,667

 

 

 

 

Total non-core deposits

 

 

1,871,453

 

 

 

1,458,633

 

 

 

1,118,622

 

Total deposits

 

$

17,746,374

 

 

$

18,084,613

 

 

$

17,469,999

 

 

 

 

 

 

 

 

Cost of deposits

 

 

0.22

%

 

 

0.06

%

 

 

0.06

%

Cost of core deposits (2)

 

 

0.11

 

 

 

0.04

 

 

 

0.04

 

Noninterest-bearing deposits as a percent of total deposits

 

 

38.2

 

 

 

38.3

 

 

 

39.2

 

Non-maturity deposits as a percent of total deposits

 

 

89.5

 

 

 

92.0

 

 

 

93.6

 

Core deposits as a percent of total deposits

 

 

89.5

 

 

 

91.9

 

 

 

93.6

 

______________________________________________________

(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 September 30, 2022, total borrowings amounted to $931.0 million, an increase of $159,000 from June 30, 2022, and an increase of $450.6 million from September 30, 2021. Total borrowings at September 30, 2022 were comprised of $600.0 million of Federal Home Loan Bank of San Francisco (“FHLB”) term advances and $331.0 million of subordinated debt. The increase in borrowings at September 30, 2022 as compared to June 30, 2022 was primarily due to the amortization of the subordinated debt issuance costs. The increase in borrowings at September 30, 2022 as compared to September 30, 2021 was primarily due to an increase of $450.0 million in FHLB term advances to bolster liquidity and reduce our interest rate risk.

Capital Ratios

At September 30, 2022, our common stockholder's equity was $2.74 billion, or 12.65% of total assets, compared with $2.76 billion, or 12.53%, at June 30, 2022, and $2.84 billion, or 13.51%, at September 30, 2021, with a book value per share of $28.79, compared with $29.01 at June 30, 2022, and $30.08 at September 30, 2021. At September 30, 2022, the ratio of tangible common equity to tangible assets(1) was 8.59%, compared with 8.52% at June 30, 2022, and 9.30% at September 30, 2021, and tangible book value per share(1) was $18.68, compared with $18.86 at June 30, 2022, and $19.75 at September 30, 2021. The decrease in tangible book value per share at September 30, 2022 from the prior quarter was primarily driven by the other comprehensive loss from the impact of higher interest rates on our AFS securities portfolio.

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 September 30, 2022, 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.

 

 

September 30,

 

June 30,

 

September 30,

Capital ratios

 

2022

 

2022

 

2021

Pacific Premier Bancorp, Inc. Consolidated

 

 

 

 

 

 

Tier 1 leverage ratio

 

 

10.12

%

 

 

9.90

%

 

 

9.85

%

Common equity tier 1 capital ratio

 

 

12.36

 

 

 

11.91

 

 

 

11.96

 

Tier 1 capital ratio

 

 

12.36

 

 

 

11.91

 

 

 

11.96

 

Total capital ratio

 

 

14.83

 

 

 

14.41

 

 

 

14.56

 

Tangible common equity ratio (1)

 

 

8.59

 

 

 

8.52

 

 

 

9.30

 

 

 

 

 

 

 

 

Pacific Premier Bank

 

 

 

 

 

 

Tier 1 leverage ratio

 

 

11.64

%

 

 

11.41

%

 

 

11.38

%

Common equity tier 1 capital ratio

 

 

14.23

 

 

 

13.72

 

 

 

13.81

 

Tier 1 capital ratio

 

 

14.23

 

 

 

13.72

 

 

 

13.81

 

Total capital ratio

 

 

15.05

 

 

 

14.54

 

 

 

14.61

 

 

 

 

 

 

 

 

Share data

 

 

 

 

 

 

Book value per share

 

$

28.79

 

 

$

29.01

 

 

$

30.08

 

Tangible book value per share (1)

 

 

18.68

 

 

 

18.86

 

 

 

19.75

 

Common equity dividends declared per share

 

 

0.33

 

 

 

0.33

 

 

 

0.33

 

Closing stock price (2)

 

 

30.96

 

 

 

29.24

 

 

 

41.44

 

Shares issued and outstanding

 

 

95,016,767

 

 

 

94,976,605

 

 

 

94,354,211

 

Market capitalization (2)(3)

 

$

2,941,719

 

 

$

2,777,116

 

 

$

3,910,039

 

______________________________

(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 October 19, 2022, the Company's Board of Directors declared a $0.33 per share dividend, payable on November 10, 2022 to stockholders of record as of October 31, 2022. 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 third quarter of 2022, 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 October 20, 2022 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 conference call. Additionally, a telephone replay will be made available through October 27, 2022, at (877) 344-7529, conference ID 1207116.

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 approximately $22 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 over $17 billion of assets under custody and approximately 40,000 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; inflation/deflation, interest rate, market, and monetary fluctuations; our ability to attract and retain deposits and access to other sources of liquidity; 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; the effectiveness of our risk management framework and quantitative models; changes in the level of our nonperforming assets and charge-offs; the transition away from USD LIBOR and related uncertainty as well as the risk and costs related to our adoption of 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; the impact of governmental efforts to restructure the U.S. financial regulatory system; the impact of any change 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 the COVID-19 pandemic, 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 2021 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)

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

(Dollars in thousands)

 

2022

 

2022

 

2022

 

2021

 

2021

ASSETS

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

739,211

 

 

$

972,798

 

 

$

809,259

 

 

$

304,703

 

 

$

322,320

 

Interest-bearing time deposits with financial institutions

 

 

1,733

 

 

 

2,216

 

 

 

2,216

 

 

 

2,216

 

 

 

2,708

 

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

 

 

1,385,502

 

 

 

1,390,682

 

 

 

996,382

 

 

 

381,674

 

 

 

170,576

 

Investment securities available-for-sale, at fair value

 

 

2,661,079

 

 

 

2,679,070

 

 

 

3,222,095

 

 

 

4,273,864

 

 

 

4,709,815

 

FHLB, FRB, and other stock, at cost

 

 

118,778

 

 

 

118,636

 

 

 

116,973

 

 

 

117,538

 

 

 

118,399

 

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

 

 

2,163

 

 

 

2,957

 

 

 

11,646

 

 

 

10,869

 

 

 

8,100

 

Loans held for investment

 

 

14,908,811

 

 

 

15,047,608

 

 

 

14,733,755

 

 

 

14,295,897

 

 

 

13,982,861

 

Allowance for credit losses

 

 

(195,549

)

 

 

(196,075

)

 

 

(197,517

)

 

 

(197,752

)

 

 

(211,481

)

Loans held for investment, net

 

 

14,713,262

 

 

 

14,851,533

 

 

 

14,536,238

 

 

 

14,098,145

 

 

 

13,771,380

 

Accrued interest receivable

 

 

66,192

 

 

 

66,898

 

 

 

60,922

 

 

 

65,728

 

 

 

63,228

 

Premises and equipment

 

 

65,651

 

 

 

68,435

 

 

 

70,453

 

 

 

71,908

 

 

 

72,850

 

Deferred income taxes, net

 

 

190,948

 

 

 

163,767

 

 

 

133,938

 

 

 

87,344

 

 

 

83,432

 

Bank owned life insurance

 

 

457,301

 

 

 

454,593

 

 

 

451,968

 

 

 

449,353

 

 

 

447,135

 

Intangible assets

 

 

59,028

 

 

 

62,500

 

 

 

65,978

 

 

 

69,571

 

 

 

73,451

 

Goodwill

 

 

901,312

 

 

 

901,312

 

 

 

901,312

 

 

 

901,312

 

 

 

901,312

 

Other assets

 

 

257,041

 

 

 

258,522

 

 

 

242,916

 

 

 

260,204

 

 

 

260,505

 

Total assets

 

$

21,619,201

 

 

$

21,993,919

 

 

$

21,622,296

 

 

$

21,094,429

 

 

$

21,005,211

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

Deposit accounts:

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

 

$

6,775,465

 

 

$

6,934,318

 

 

$

7,106,548

 

 

$

6,757,259

 

 

$

6,841,495

 

Interest-bearing:

 

 

 

 

 

 

 

 

 

 

Checking

 

 

3,605,498

 

 

 

4,149,432

 

 

 

3,679,067

 

 

 

3,493,331

 

 

 

3,477,902

 

Money market/savings

 

 

5,493,988

 

 

 

5,545,230

 

 

 

5,872,597

 

 

 

5,806,726

 

 

 

6,037,532

 

Retail certificates of deposit

 

 

872,421

 

 

 

855,966

 

 

 

1,031,011

 

 

 

1,058,273

 

 

 

1,113,070

 

Wholesale/brokered certificates of deposit

 

 

999,002

 

 

 

599,667

 

 

 

 

 

 

 

 

 

 

Total interest-bearing

 

 

10,970,909

 

 

 

11,150,295

 

 

 

10,582,675

 

 

 

10,358,330

 

 

 

10,628,504

 

Total deposits

 

 

17,746,374

 

 

 

18,084,613

 

 

 

17,689,223

 

 

 

17,115,589

 

 

 

17,469,999

 

FHLB advances and other borrowings

 

 

600,000

 

 

 

600,000

 

 

 

600,000

 

 

 

558,000

 

 

 

150,000

 

Subordinated debentures

 

 

331,045

 

 

 

330,886

 

 

 

330,726

 

 

 

330,567

 

 

 

330,408

 

Accrued expenses and other liabilities

 

 

206,386

 

 

 

223,201

 

 

 

219,329

 

 

 

203,962

 

 

 

216,688

 

Total liabilities

 

 

18,883,805

 

 

 

19,238,700

 

 

 

18,839,278

 

 

 

18,208,118

 

 

 

18,167,095

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

933

 

 

 

933

 

 

 

933

 

 

 

929

 

 

 

929

 

Additional paid-in capital

 

 

2,357,731

 

 

 

2,353,361

 

 

 

2,348,727

 

 

 

2,351,294

 

 

 

2,347,626

 

Retained earnings

 

 

657,845

 

 

 

615,943

 

 

 

577,591

 

 

 

541,950

 

 

 

488,385

 

Accumulated other comprehensive (loss) income

 

 

(281,113

)

 

 

(215,018

)

 

 

(144,233

)

 

 

(7,862

)

 

 

1,176

 

Total stockholders' equity

 

 

2,735,396

 

 

 

2,755,219

 

 

 

2,783,018

 

 

 

2,886,311

 

 

 

2,838,116

 

Total liabilities and stockholders' equity

 

$

21,619,201

 

 

$

21,993,919

 

 

$

21,622,296

 

 

$

21,094,429

 

 

$

21,005,211

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

September 30,

(Dollars in thousands, except per share data)

 

2022

 

2022

 

2021

 

2022

 

2021

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

Loans

 

$

174,204

 

 

$

164,455

 

 

$

157,025

 

 

$

489,263

 

$

464,615

 

Investment securities and other interest-earning assets

 

 

24,821

 

 

 

18,771

 

 

 

19,022

 

 

 

61,534

 

 

55,118

 

Total interest income

 

 

199,025

 

 

 

183,226

 

 

 

176,047

 

 

 

550,797

 

 

519,733

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

9,873

 

 

 

2,682

 

 

 

2,432

 

 

 

14,228

 

 

10,123

 

FHLB advances and other borrowings

 

 

3,480

 

 

 

3,217

 

 

 

1

 

 

 

7,171

 

 

66

 

Subordinated debentures

 

 

4,560

 

 

 

4,562

 

 

 

4,545

 

 

 

13,682

 

 

17,889

 

Total interest expense

 

 

17,913

 

 

 

10,461

 

 

 

6,978

 

 

 

35,081

 

 

28,078

 

Net interest income before provision for credit losses

 

 

181,112

 

 

 

172,765

 

 

 

169,069

 

 

 

515,716

 

 

491,655

 

Provision for credit losses

 

 

1,077

 

 

 

469

 

 

 

(19,726

)

 

 

1,994

 

 

(56,228

)

Net interest income after provision for credit losses

 

 

180,035

 

 

 

172,296

 

 

 

188,795

 

 

 

513,722

 

 

547,883

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

Loan servicing income

 

 

397

 

 

 

502

 

 

 

536

 

 

 

1,318

 

 

1,616

 

Service charges on deposit accounts

 

 

2,704

 

 

 

2,690

 

 

 

2,375

 

 

 

8,009

 

 

6,629

 

Other service fee income

 

 

323

 

 

 

366

 

 

 

350

 

 

 

1,056

 

 

1,175

 

Debit card interchange fee income

 

 

808

 

 

 

936

 

 

 

834

 

 

 

2,580

 

 

2,720

 

Earnings on bank owned life insurance

 

 

3,339

 

 

 

3,240

 

 

 

3,266

 

 

 

9,800

 

 

7,778

 

Net gain from sales of loans

 

 

457

 

 

 

1,136

 

 

 

1,187

 

 

 

3,087

 

 

3,094

 

Net (loss) gain from sales of investment securities

 

 

(393

)

 

 

(31

)

 

 

4,190

 

 

 

1,710

 

 

13,321

 

Trust custodial account fees

 

 

9,951

 

 

 

10,354

 

 

 

11,446

 

 

 

31,884

 

 

26,565

 

Escrow and exchange fees

 

 

1,555

 

 

 

1,827

 

 

 

1,867

 

 

 

5,043

 

 

5,065

 

Other income

 

 

1,023

 

 

 

1,173

 

 

 

4,049

 

 

 

3,764

 

 

12,606

 

Total noninterest income

 

 

20,164

 

 

 

22,193

 

 

 

30,100

 

 

 

68,251

 

 

80,569

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

56,355

 

 

 

57,562

 

 

 

53,592

 

 

 

170,898

 

 

159,614

 

Premises and occupancy

 

 

12,011

 

 

 

11,829

 

 

 

12,611

 

 

 

35,792

 

 

36,831

 

Data processing

 

 

7,058

 

 

 

6,604

 

 

 

6,296

 

 

 

19,658

 

 

17,889

 

FDIC insurance premiums

 

 

1,461

 

 

 

1,452

 

 

 

1,392

 

 

 

4,309

 

 

3,885

 

Legal and professional services

 

 

4,075

 

 

 

4,629

 

 

 

4,563

 

 

 

12,772

 

 

12,684

 

Marketing expense

 

 

1,912

 

 

 

1,926

 

 

 

2,008

 

 

 

5,647

 

 

5,096

 

Office expense

 

 

1,338

 

 

 

1,252

 

 

 

1,076

 

 

 

3,793

 

 

4,494

 

Loan expense

 

 

789

 

 

 

1,144

 

 

 

1,332

 

 

 

3,067

 

 

3,612

 

Deposit expense

 

 

4,846

 

 

 

4,081

 

 

 

3,974

 

 

 

12,678

 

 

11,818

 

Merger-related expense

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

Amortization of intangible assets

 

 

3,472

 

 

 

3,479

 

 

 

3,912

 

 

 

10,543

 

 

12,056

 

Other expense

 

 

7,549

 

 

 

5,016

 

 

 

5,284

 

 

 

18,331

 

 

15,041

 

Total noninterest expense

 

 

100,866

 

 

 

98,974

 

 

 

96,040

 

 

 

297,488

 

 

283,025

 

Net income before income taxes

 

 

99,333

 

 

 

95,515

 

 

 

122,855

 

 

 

284,485

 

 

345,427

 

Income tax

 

 

25,970

 

 

 

25,712

 

 

 

32,767

 

 

 

74,415

 

 

90,369

 

Net income

 

$

73,363

 

 

$

69,803

 

 

$

90,088

 

 

$

210,070

 

$

255,058

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.77

 

 

$

0.74

 

 

$

0.95

 

 

$

2.22

 

$

2.70

 

Diluted

 

$

0.77

 

 

$

0.73

 

 

$

0.95

 

 

$

2.21

 

$

2.68

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

Basic

 

 

93,793,502

 

 

 

93,765,264

 

 

 

93,549,639

 

 

 

93,687,230

 

 

93,571,468

 

Diluted

 

 

94,120,637

 

 

 

94,040,691

 

 

 

94,060,724

 

 

 

94,055,116

 

 

94,090,407

 

SELECTED FINANCIAL DATA

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED AVERAGE BALANCES AND YIELD DATA

(Unaudited)

 

 

 

 

 

Three Months Ended

 

 

September 30, 2022

 

June 30, 2022

 

September 30, 2021

(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

 

$

665,510

 

$

2,754

 

1.64

%

 

$

702,663

 

$

1,211

 

0.69

%

 

$

663,076

 

$

195

 

0.12

%

Investment securities

 

 

4,277,444

 

 

22,067

 

2.06

 

 

 

4,254,961

 

 

17,560

 

1.65

 

 

 

4,807,854

 

 

18,827

 

1.57

 

Loans receivable, net (1)(2)

 

 

14,986,682

 

 

174,204

 

4.61

 

 

 

14,919,182

 

 

164,455

 

4.42

 

 

 

13,660,242

 

 

157,025

 

4.56

 

Total interest-earning assets

 

 

19,929,636

 

 

199,025

 

3.96

 

 

 

19,876,806

 

 

183,226

 

3.70

 

 

 

19,131,172

 

 

176,047

 

3.65

 

Noninterest-earning assets

 

 

1,757,800

 

 

 

 

 

 

1,793,347

 

 

 

 

 

 

1,673,731

 

 

 

 

Total assets

 

$

21,687,436

 

 

 

 

 

$

21,670,153

 

 

 

 

 

$

20,804,903

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking

 

$

3,812,448

 

$

1,658

 

0.17

%

 

$

4,055,506

 

$

712

 

0.07

%

 

$

3,383,219

 

$

290

 

0.03

%

Money market

 

 

5,053,890

 

 

2,940

 

0.23

 

 

 

5,231,464

 

 

1,010

 

0.08

 

 

 

5,554,881

 

 

1,309

 

0.09

 

Savings

 

 

434,591

 

 

28

 

0.03

 

 

 

432,586

 

 

27

 

0.03

 

 

 

401,804

 

 

58

 

0.06

 

Retail certificates of deposit

 

 

835,645

 

 

1,420

 

0.67

 

 

 

922,784

 

 

607

 

0.26

 

 

 

1,196,187

 

 

775

 

0.26

 

Wholesale/brokered certificates of deposit

 

 

702,785

 

 

3,827

 

2.16

 

 

 

80,182

 

 

326

 

1.63

 

 

 

 

 

 

 

Total interest-bearing deposits

 

 

10,839,359

 

 

9,873

 

0.36

 

 

 

10,722,522

 

 

2,682

 

0.10

 

 

 

10,536,091

 

 

2,432

 

0.09

 

FHLB advances and other borrowings

 

 

636,006

 

 

3,480

 

2.17

 

 

 

602,621

 

 

3,217

 

2.14

 

 

 

1,670

 

 

1

 

0.24

 

Subordinated debentures

 

 

330,975

 

 

4,560

 

5.51

 

 

 

330,796

 

 

4,562

 

5.52

 

 

 

330,575

 

 

4,545

 

5.50

 

Total borrowings

 

 

966,981

 

 

8,040

 

3.31

 

 

 

933,417

 

 

7,779

 

3.34

 

 

 

332,245

 

 

4,546

 

5.43

 

Total interest-bearing liabilities

 

 

11,806,340

 

 

17,913

 

0.60

 

 

 

11,655,939

 

 

10,461

 

0.36

 

 

 

10,868,336

 

 

6,978

 

0.25

 

Noninterest-bearing deposits

 

 

6,893,463

 

 

 

 

 

 

7,030,205

 

 

 

 

 

 

6,809,211

 

 

 

 

Other liabilities

 

 

212,509

 

 

 

 

 

 

219,116

 

 

 

 

 

 

282,556

 

 

 

 

Total liabilities

 

 

18,912,312

 

 

 

 

 

 

18,905,260

 

 

 

 

 

 

17,960,103

 

 

 

 

Stockholders' equity

 

 

2,775,124

 

 

 

 

 

 

2,764,893

 

 

 

 

 

 

2,844,800

 

 

 

 

Total liabilities and equity

 

$

21,687,436

 

 

 

 

 

$

21,670,153

 

 

 

 

 

$

20,804,903

 

 

 

 

Net interest income

 

 

 

$

181,112

 

 

 

 

 

$

172,765

 

 

 

 

 

$

169,069

 

 

Net interest margin (3)

 

 

 

 

 

3.61

%

 

 

 

 

 

3.49

%

 

 

 

 

 

3.51

%

Cost of deposits (4)

 

 

 

 

 

0.22

 

 

 

 

 

 

0.06

 

 

 

 

 

 

0.06

 

Cost of funds (5)

 

 

 

 

 

0.38

 

 

 

 

 

 

0.22

 

 

 

 

 

 

0.16

 

Cost of core deposits (6)

 

 

 

 

 

0.11

 

 

 

 

 

 

0.04

 

 

 

 

 

 

0.04

 

Ratio of interest-earning assets to interest-bearing liabilities

 

168.80

 

 

 

 

 

 

170.53

 

 

 

 

 

 

176.03

 

______________________________________________

(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 $4.6 million, $7.5 million, and $9.4 million for the three months ended September 30, 2022, June 30, 2022, and September 30, 2021, 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)

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30

 

June 30,

 

March 31,

 

December 31,

 

September 30

(Dollars in thousands)

 

2022

 

2022

 

2022

 

2021

 

2021

Investor loans secured by real estate

 

 

 

 

 

 

 

 

 

 

CRE non-owner-occupied

 

$

2,771,272

 

 

$

2,788,715

 

 

$

2,774,650

 

 

$

2,771,137

 

 

$

2,823,065

 

Multifamily

 

 

6,199,581

 

 

 

6,188,086

 

 

 

6,041,085

 

 

 

5,891,934

 

 

 

5,705,666

 

Construction and land

 

 

373,194

 

 

 

331,734

 

 

 

303,811

 

 

 

277,640

 

 

 

292,815

 

SBA secured by real estate (1)

 

 

42,998

 

 

 

44,199

 

 

 

42,642

 

 

 

46,917

 

 

 

49,446

 

Total investor loans secured by real estate

 

 

9,387,045

 

 

 

9,352,734

 

 

 

9,162,188

 

 

 

8,987,628

 

 

 

8,870,992

 

Business loans secured by real estate (2)

 

 

 

 

 

 

 

 

 

 

CRE owner-occupied

 

 

2,477,530

 

 

 

2,486,747

 

 

 

2,391,984

 

 

 

2,251,014

 

 

 

2,242,164

 

Franchise real estate secured

 

 

383,468

 

 

 

387,683

 

 

 

384,267

 

 

 

380,381

 

 

 

354,481

 

SBA secured by real estate (3)

 

 

64,002

 

 

 

67,191

 

 

 

68,466

 

 

 

69,184

 

 

 

69,937

 

Total business loans secured by real estate

 

 

2,925,000

 

 

 

2,941,621

 

 

 

2,844,717

 

 

 

2,700,579

 

 

 

2,666,582

 

Commercial loans (4)

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

2,164,623

 

 

 

2,295,421

 

 

 

2,242,632

 

 

 

2,103,112

 

 

 

1,888,870

 

Franchise non-real estate secured

 

 

409,773

 

 

 

415,830

 

 

 

388,322

 

 

 

392,576

 

 

 

392,950

 

SBA non-real estate secured

 

 

11,557

 

 

 

11,008

 

 

 

10,761

 

 

 

11,045

 

 

 

12,732

 

Total commercial loans

 

 

2,585,953

 

 

 

2,722,259

 

 

 

2,641,715

 

 

 

2,506,733

 

 

 

2,294,552

 

Retail loans

 

 

 

 

 

 

 

 

 

 

Single family residential (5)

 

 

75,176

 

 

 

77,951

 

 

 

79,978

 

 

 

95,292

 

 

 

144,309

 

Consumer

 

 

3,761

 

 

 

4,130

 

 

 

5,157

 

 

 

5,665

 

 

 

6,426

 

Total retail loans

 

 

78,937

 

 

 

82,081

 

 

 

85,135

 

 

 

100,957

 

 

 

150,735

 

Loans held for investment before basis adjustment (6)

 

 

14,976,935

 

 

 

15,098,695

 

 

 

14,733,755

 

 

 

14,295,897

 

 

 

13,982,861

 

Basis adjustment associated with fair value hedge (7)

 

 

(68,124

)

 

 

(51,087

)

 

 

 

 

 

 

 

 

 

Loans held for investment

 

 

14,908,811

 

 

 

15,047,608

 

 

 

14,733,755

 

 

 

14,295,897

 

 

 

13,982,861

 

Allowance for credit losses for loans held for investment

 

 

(195,549

)

 

 

(196,075

)

 

 

(197,517

)

 

 

(197,752

)

 

 

(211,481

)

Loans held for investment, net

 

$

14,713,262

 

 

$

14,851,533

 

 

$

14,536,238

 

 

$

14,098,145

 

 

$

13,771,380

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

2,163

 

 

$

2,957

 

 

$

11,646

 

 

$

10,869

 

 

$

8,100

 

______________________________

(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 $59.0 million, $63.6 million, $71.2 million, $77.1 million, and $85.0 million as of September 30, 2022, June 30, 2022, March 31, 2022, December 31, 2021, and September 30, 2021, 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)

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

(Dollars in thousands)

 

2022

 

2022

 

2022

 

2021

 

2021

Asset quality

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

$

60,464

 

 

$

44,445

 

 

$

55,309

 

 

$

31,273

 

 

$

35,090

 

Other real estate owned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets

 

$

60,464

 

 

$

44,445

 

 

$

55,309

 

 

$

31,273

 

 

$

35,090

 

 

 

 

 

 

 

 

 

 

 

 

Total classified assets (1)

 

$

110,143

 

 

$

106,153

 

 

$

122,528

 

 

$

121,827

 

 

$

124,506

 

Allowance for credit losses

 

 

195,549

 

 

 

196,075

 

 

 

197,517

 

 

 

197,752

 

 

 

211,481

 

Allowance for credit losses as a percent of total nonperforming loans

 

 

323

%

 

 

441

%

 

 

357

%

 

 

632

%

 

 

603

%

Nonperforming loans as a percent of loans held for investment

 

 

0.41

 

 

 

0.30

 

 

 

0.38

 

 

 

0.22

 

 

 

0.25

 

Nonperforming assets as a percent of total assets

 

 

0.28

 

 

 

0.20

 

 

 

0.26

 

 

 

0.15

 

 

 

0.17

 

Classified loans to total loans held for investment

 

 

0.74

 

 

 

0.71

 

 

 

0.83

 

 

 

0.85

 

 

 

0.89

 

Classified assets to total assets

 

 

0.51

 

 

 

0.48

 

 

 

0.57

 

 

 

0.58

 

 

 

0.59

 

Net loan charge-offs (recoveries) for the quarter ended

 

$

1,072

 

 

$

5,245

 

 

$

446

 

 

$

(981

)

 

$

1,750

 

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

 

 

0.01

%

 

 

0.04

%

 

 

%

 

 

(0.01

) %

 

 

0.01

%

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

 

 

1.31

 

 

 

1.30

 

 

 

1.34

 

 

 

1.38

 

 

 

1.51

 

Delinquent loans

 

 

 

 

 

 

 

 

 

 

30 - 59 days

 

$

1,484

 

 

$

6,915

 

 

$

25,332

 

 

$

1,395

 

 

$

728

 

60 - 89 days

 

 

6,535

 

 

 

 

 

 

74

 

 

 

 

 

 

936

 

90+ days

 

 

33,238

 

 

 

29,360

 

 

 

18,245

 

 

 

18,100

 

 

 

18,514

 

Total delinquency

 

$

41,257

 

 

$

36,275

 

 

$

43,651

 

 

$

19,495

 

 

$

20,178

 

Delinquency as a percent of loans held for investment

 

 

0.28

%

 

 

0.24

%

 

 

0.30

%

 

 

0.14

%

 

 

0.14

%

______________________________

(1)

 

Includes substandard loans and other real estate owned.

(2)

 

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. At December 31, 2021, 36% of loans held for investment include a fair value net discount of $77.1 million, or 0.54% of loans held for investment. At September 30, 2021, 40% of loans held for investment include a fair value net discount of $85.0 million, or 0.60% 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

September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Investor loans secured by real estate

 

 

 

 

 

 

 

 

 

 

 

 

CRE non-owner-occupied

 

$

23,050

 

$

2,640

 

$

 

$

 

$

23,050

 

$

6,656

Multifamily

 

 

8,806

 

 

 

 

 

 

 

 

8,806

 

 

8,806

SBA secured by real estate (2)

 

 

547

 

 

 

 

 

 

 

 

547

 

 

547

Total investor loans secured by real estate

 

 

32,403

 

 

2,640

 

 

 

 

 

 

32,403

 

 

16,009

Business loans secured by real estate (3)

 

 

 

 

 

 

 

 

 

 

 

 

CRE owner-occupied

 

 

11,249

 

 

1,742

 

 

 

 

 

 

11,249

 

 

9,507

SBA secured by real estate (4)

 

 

197

 

 

 

 

 

 

 

 

197

 

 

197

Total business loans secured by real estate

 

 

11,446

 

 

1,742

 

 

 

 

 

 

11,446

 

 

9,704

Commercial loans (5)

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

4,754

 

 

 

 

 

 

 

 

4,754

 

 

4,754

Franchise non-real estate secured

 

 

 

 

 

 

11,254

 

 

 

 

11,254

 

 

11,254

SBA not secured by real estate

 

 

607

 

 

 

 

 

 

 

 

607

 

 

607

Total commercial loans

 

 

5,361

 

 

 

 

11,254

 

 

 

 

16,615

 

 

16,615

Totals nonaccrual loans

 

$

49,210

 

$

4,382

 

$

11,254

 

$

 

$

60,464

 

$

42,328

______________________________

(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

September 30, 2022

 

 

 

 

 

 

 

 

 

 

Investor loans secured by real estate

 

 

 

 

 

 

 

 

 

 

CRE non-owner-occupied

 

$

2,754,403

 

$

 

$

 

$

16,869

 

$

2,771,272

Multifamily

 

 

6,193,507

 

 

 

 

 

 

6,074

 

 

6,199,581

Construction and land

 

 

373,194

 

 

 

 

 

 

 

 

373,194

SBA secured by real estate (1)

 

 

42,998

 

 

 

 

 

 

 

 

42,998

Total investor loans secured by real estate

 

 

9,364,102

 

 

 

 

 

 

22,943

 

 

9,387,045

Business loans secured by real estate (2)

 

 

 

 

 

 

 

 

 

 

CRE owner-occupied

 

 

2,466,281

 

 

 

 

6,398

 

 

4,851

 

 

2,477,530

Franchise real estate secured

 

 

383,468

 

 

 

 

 

 

 

 

383,468

SBA secured by real estate (3)

 

 

62,675

 

 

1,244

 

 

 

 

83

 

 

64,002

Total business loans secured by real estate

 

 

2,912,424

 

 

1,244

 

 

6,398

 

 

4,934

 

 

2,925,000

Commercial loans (4)

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

2,159,494

 

 

240

 

 

135

 

 

4,754

 

 

2,164,623

Franchise non-real estate secured

 

 

409,773

 

 

 

 

 

 

 

 

409,773

SBA not secured by real estate

 

 

10,950

 

 

 

 

 

 

607

 

 

11,557

Total commercial loans

 

 

2,580,217

 

 

240

 

 

135

 

 

5,361

 

 

2,585,953

Retail loans

 

 

 

 

 

 

 

 

 

 

Single family residential (5)

 

 

75,176

 

 

 

 

 

 

 

 

75,176

Consumer loans

 

 

3,759

 

 

 

 

2

 

 

 

 

3,761

Total retail loans

 

 

78,935

 

 

 

 

2

 

 

 

 

78,937

Loans held for investment before basis adjustment (6)

 

$

14,935,678

 

$

1,484

 

$

6,535

 

$

33,238

 

$

14,976,935

______________________________

(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 $68.1 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

September 30, 2022

 

 

 

 

 

 

 

 

Investor loans secured by real estate

 

 

 

 

 

 

 

 

CRE non-owner-occupied

 

$

2,736,526

 

$

11,502

 

$

23,244

 

$

2,771,272

Multifamily

 

 

6,190,027

 

 

 

 

9,554

 

 

6,199,581

Construction and land

 

 

373,194

 

 

 

 

 

 

373,194

SBA secured by real estate (1)

 

 

35,094

 

 

 

 

7,904

 

 

42,998

Total investor loans secured by real estate

 

 

9,334,841

 

 

11,502

 

 

40,702

 

 

9,387,045

Business loans secured by real estate (2)

 

 

 

 

 

 

 

 

CRE owner-occupied

 

 

2,445,551

 

 

9,897

 

 

22,082

 

 

2,477,530

Franchise real estate secured

 

 

376,395

 

 

 

 

7,073

 

 

383,468

SBA secured by real estate (3)

 

 

57,915

 

 

 

 

6,087

 

 

64,002

Total business loans secured by real estate

 

 

2,879,861

 

 

9,897

 

 

35,242

 

 

2,925,000

Commercial loans (4)

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

2,131,335

 

 

19,139

 

 

14,149

 

 

2,164,623

Franchise non-real estate secured

 

 

391,085

 

 

 

 

18,688

 

 

409,773

SBA not secured by real estate

 

 

10,237

 

 

 

 

1,320

 

 

11,557

Total commercial loans

 

 

2,532,657

 

 

19,139

 

 

34,157

 

 

2,585,953

Retail loans

 

 

 

 

 

 

 

 

Single family residential (5)

 

 

75,134

 

 

 

 

42

 

 

75,176

Consumer loans

 

 

3,761

 

 

 

 

 

 

3,761

Total retail loans

 

 

78,895

 

 

 

 

42

 

 

78,937

Loans held for investment before basis adjustment (6)

 

$

14,826,254

 

$

40,538

 

$

110,143

 

$

14,976,935

______________________________

(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 $68.1 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

 

 

September 30,

 

June 30,

 

September 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Net income

 

$

73,363

 

 

$

69,803

 

 

$

90,088

 

Plus: amortization of intangible assets expense

 

 

3,472

 

 

 

3,479

 

 

 

3,912

 

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

 

 

991

 

 

 

993

 

 

 

1,119

 

Net income for average tangible common equity

 

 

75,844

 

 

 

72,289

 

 

 

92,881

 

 

 

 

 

 

 

 

Average stockholders' equity

 

$

2,775,124

 

 

$

2,764,893

 

 

$

2,844,800

 

Less: average intangible assets

 

 

61,101

 

 

 

64,583

 

 

 

75,795

 

Less: average goodwill

 

 

901,312

 

 

 

901,312

 

 

 

901,312

 

Average tangible common equity

 

$

1,812,711

 

 

$

1,798,998

 

 

$

1,867,693

 

 

 

 

 

 

 

 

Return on average equity (annualized)

 

 

10.57

%

 

 

10.10

%

 

 

12.67

%

Return on average tangible common equity (annualized)

 

 

16.74

%

 

 

16.07

%

 

 

19.89

%

___________________________________________________

(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, provision for credit losses, and merger-related expenses, where applicable, 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

 

 

September 30,

 

June 30,

 

September 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Interest income

 

$

199,025

 

 

$

183,226

 

 

$

176,047

 

Interest expense

 

 

17,913

 

 

 

10,461

 

 

 

6,978

 

Net interest income

 

 

181,112

 

 

 

172,765

 

 

 

169,069

 

Noninterest income

 

 

20,164

 

 

 

22,193

 

 

 

30,100

 

Revenue

 

 

201,276

 

 

 

194,958

 

 

 

199,169

 

Noninterest expense

 

 

100,866

 

 

 

98,974

 

 

 

96,040

 

Pre-provision net revenue

 

 

100,410

 

 

 

95,984

 

 

 

103,129

 

Pre-provision net revenue (annualized)

 

$

401,640

 

 

$

383,936

 

 

$

412,516

 

 

 

 

 

 

 

 

Average assets

 

$

21,687,436

 

 

$

21,670,153

 

 

$

20,804,903

 

 

 

 

 

 

 

 

Pre-provision net revenue to average assets

 

 

0.46

%

 

 

0.44

%

 

 

0.50

%

Pre-provision net revenue to average assets (annualized)

 

 

1.85

%

 

 

1.77

%

 

 

1.98

%

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.

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

(Dollars in thousands, except per share data)

 

2022

 

2022

 

2022

 

2021

 

2021

Total stockholders' equity

 

$

2,735,396

 

 

$

2,755,219

 

 

$

2,783,018

 

 

$

2,886,311

 

 

$

2,838,116

 

Less: intangible assets

 

 

960,340

 

 

 

963,812

 

 

 

967,290

 

 

 

970,883

 

 

 

974,763

 

Tangible common equity

 

$

1,775,056

 

 

$

1,791,407

 

 

$

1,815,728

 

 

$

1,915,428

 

 

$

1,863,353

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

21,619,201

 

 

$

21,993,919

 

 

$

21,622,296

 

 

$

21,094,429

 

 

$

21,005,211

 

Less: intangible assets

 

 

960,340

 

 

 

963,812

 

 

 

967,290

 

 

 

970,883

 

 

 

974,763

 

Tangible assets

 

$

20,658,861

 

 

$

21,030,107

 

 

$

20,655,006

 

 

$

20,123,546

 

 

$

20,030,448

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity ratio

 

 

8.59

%

 

 

8.52

%

 

 

8.79

%

 

 

9.52

%

 

 

9.30

%

 

 

 

 

 

 

 

 

 

 

 

Common shares issued and outstanding

 

 

95,016,767

 

 

 

94,976,605

 

 

 

94,945,849

 

 

 

94,389,543

 

 

 

94,354,211

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

28.79

 

 

$

29.01

 

 

$

29.31

 

 

$

30.58

 

 

$

30.08

 

Less: intangible book value per share

 

 

10.11

 

 

 

10.15

 

 

 

10.19

 

 

 

10.29

 

 

 

10.33

 

Tangible book value per share

 

$

18.68

 

 

$

18.86

 

 

$

19.12

 

 

$

20.29

 

 

$

19.75

 

Core net interest income and core net interest margin are non-GAAP financial measures derived from GAAP-based amounts. We calculate core net interest income by excluding scheduled accretion income, accelerated accretion income, premium amortization on CDs, nonrecurring nonaccrual interest paid, and gain (loss) on interest rate contract in fair value hedging relationships from net interest income. The core net interest margin is calculated as the ratio of core net interest income to average interest-earning assets. 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

 

 

September 30,

 

June 30,

 

September 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Net interest income

 

$

181,112

 

 

$

172,765

 

 

$

169,069

 

Less: scheduled accretion income

 

 

2,377

 

 

 

2,626

 

 

 

3,339

 

Less: accelerated accretion income

 

 

2,269

 

 

 

4,918

 

 

 

6,107

 

Less: premium amortization on CD

 

 

39

 

 

 

60

 

 

 

390

 

Less: nonrecurring nonaccrual interest paid

 

 

(848

)

 

 

48

 

 

 

(74

)

Less: gain (loss) on fair value hedging relationships

 

 

4,240

 

 

 

128

 

 

 

(95

)

Core net interest income

 

$

173,035

 

 

$

164,985

 

 

$

159,402

 

 

 

 

 

 

 

 

Average interest-earning assets

 

$

19,929,636

 

 

$

19,876,806

 

 

$

19,131,172

 

 

 

 

 

 

 

 

Net interest margin

 

 

3.61

%

 

 

3.49

%

 

 

3.51

%

Core net interest margin

 

 

3.44

%

 

 

3.33

%

 

 

3.31

%

Efficiency ratio is a non-GAAP financial measure derived from GAAP-based amounts. This figure represents the ratio of noninterest expense, less amortization of intangible assets and merger-related expense, where applicable, to the sum of net interest income before provision for credit losses and total noninterest income, less gain (loss) on sale of securities, other income - security recoveries, and gain (loss) from debt extinguishment. 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

 

 

September 30,

 

June 30,

 

September 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Total noninterest expense

 

$

100,866

 

 

$

98,974

 

 

$

96,040

 

Less: amortization of intangible assets

 

 

3,472

 

 

 

3,479

 

 

 

3,912

 

Noninterest expense, adjusted

 

$

97,394

 

 

$

95,495

 

 

$

92,128

 

 

 

 

 

 

 

 

Net interest income before provision for credit losses

 

$

181,112

 

 

$

172,765

 

 

$

169,069

 

Add: total noninterest income

 

 

20,164

 

 

 

22,193

 

 

 

30,100

 

Less: net (loss) gain from investment securities

 

 

(393

)

 

 

(31

)

 

 

4,190

 

Less: other income - security recoveries

 

 

 

 

 

 

 

 

1

 

Less: net loss from debt extinguishment

 

 

 

 

 

 

 

 

970

 

Revenue, adjusted

 

$

201,669

 

 

$

194,989

 

 

$

194,008

 

 

 

 

 

 

 

 

Efficiency ratio

 

 

48.3

%

 

 

49.0

%

 

 

47.5

%

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

 

 

September 30,

 

June 30,

 

September 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Total deposits interest expense

 

$

9,873

 

 

$

2,682

 

 

$

2,432

 

Less: certificates of deposit interest expense

 

 

1,420

 

 

 

607

 

 

 

775

 

Less: brokered deposits interest expense

 

 

3,827

 

 

 

327

 

 

 

2

 

Core deposits expense

 

$

4,626

 

 

$

1,748

 

 

$

1,655

 

 

 

 

 

 

 

 

Total average deposits

 

$

17,732,822

 

 

$

17,752,727

 

 

$

17,345,302

 

Less: average certificates of deposit

 

 

835,645

 

 

 

922,784

 

 

 

1,196,187

 

Less: average brokered deposits

 

 

703,848

 

 

 

85,131

 

 

 

5,551

 

Average core deposits

 

$

16,193,329

 

 

$

16,744,812

 

 

$

16,143,564

 

 

 

 

 

 

 

 

Cost of core deposits

 

 

0.11

%

 

 

0.04

%

 

 

0.04

%

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

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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