News Details

Pacific Premier Bancorp, Inc. Announces Second Quarter 2021 Financial Results and a Quarterly Cash Dividend of $0.33 Per Share

Company Release - 7/27/2021

Second Quarter 2021 Summary

  • Net income of $96.3 million, or $1.01 per diluted share
  • Return on average assets of 1.90%, return on average equity of 14.02%, and return on average tangible common equity of 22.45%(1)
  • Tangible book value increases to $19.38, compared with $18.19 at March 31, 2021(1)
  • Net interest margin of 3.44% and core net interest margin of 3.22%(1)
  • Cost of deposits of 0.08% in the second quarter compared with 0.11% in the prior quarter
  • Non-maturity deposits of $15.8 billion, or 92.6% of total deposits
  • Noninterest-bearing deposits represent 39.8% of total deposits
  • Nonperforming assets represent 0.17% of total assets

IRVINE, Calif.--(BUSINESS WIRE)-- Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company” or “Pacific Premier”), the holding company of Pacific Premier Bank (the “Bank”), reported net income of $96.3 million, or $1.01 per diluted share, for the second quarter of 2021, compared with net income of $68.7 million, or $0.72 per diluted share, for the first quarter of 2021, and net loss of $99.1 million, or $(1.41) per diluted share, for the second quarter of 2020.

For the quarter ended June 30, 2021, the Company’s return on average assets (“ROAA”) was 1.90%, return on average equity (“ROAE”) was 14.02%, and return on average tangible common equity (“ROATCE”) was 22.45%, compared to 1.37%, 9.99%, and 16.21%, respectively, for the first quarter of 2021 and (2.61)%, (17.76)%, and (29.40)%, respectively, for the second quarter of 2020. Total assets were $20.53 billion at June 30, 2021, compared to $20.17 billion at March 31, 2021, and $20.52 billion at June 30, 2020. A reconciliation of the non-U.S. generally accepted accounting principles (“GAAP”) measure of ROATCE to the GAAP measure of ROAE is set forth at the end of this press release.

Steven R. Gardner, Chairman, President, and Chief Executive Officer of the Company, commented, “We continue to realize the benefits of increased size and scale, which has enabled us to generate a high level of profitability despite the challenging interest rate environment. Our performance has resulted in strong growth in our tangible book value per share from the prior quarter and allowed us to continue to return significant capital to shareholders through our common stock dividend.

“We are leveraging the collective strengths of our larger organization, and our teams are working well together to add new clients and expand existing business relationships. This is resulting in strong inflows of low-cost deposits from all of our banking groups, as well as higher levels of loan production. During the second quarter, we generated $1.58 billion in new loan commitments, an increase of 36.7% compared to the prior quarter, while loan fundings increased 54.5% resulting in annualized total loan growth of 14.5%. The increased loan production allowed us to further remix the balance sheet towards higher yielding assets.

“While we are seeing signs of improving demand, there continue to be uncertainties surrounding the COVID-19 pandemic. However, we believe that we are well positioned to deliver consistent financial performance and to capitalize on stronger credit demand as the economy progresses,” said Mr. Gardner.

______________________________

1

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

 

FINANCIAL HIGHLIGHTS

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands, except per share data)

 

2021

 

2021

 

2020

Financial highlights (unaudited)

 

 

 

 

 

 

Net income (loss)

 

$

96,302

 

 

$

68,668

 

 

$

(99,091

)

Diluted earnings (loss) per share

 

1.01

 

 

0.72

 

 

(1.41

)

Common equity dividend per share paid

 

0.33

 

 

0.30

 

 

0.25

 

Return on average assets

 

1.90

%

 

1.37

%

 

(2.61

)%

Return on average equity

 

14.02

 

 

9.99

 

 

(17.76

)

Return on average tangible common equity (1)

 

22.45

 

 

16.21

 

 

(29.40

)

Pre-provision net revenue on average assets (1)

 

1.84

 

 

1.86

 

 

1.60

 

Net interest margin

 

3.44

 

 

3.55

 

 

3.79

 

Core net interest margin (1)

 

3.22

 

 

3.30

 

 

3.59

 

Cost of deposits

 

0.08

 

 

0.11

 

 

0.32

 

Efficiency ratio (1)

 

49.4

 

 

48.6

 

 

52.9

 

Noninterest expense (excluding merger-related expense) as a percent of average assets (1)

 

1.86

%

 

1.85

%

 

2.02

%

Total assets

 

$

20,529,486

 

 

$

20,173,298

 

 

$

20,517,074

 

Total deposits

 

17,015,097

 

 

16,740,007

 

 

16,976,693

 

Loans to deposit ratio

 

79.9

%

 

78.4

%

 

88.8

%

Non-maturity deposits as a percent of total deposits

 

92.6

 

 

91.8

 

 

88.7

 

Book value per share

 

$

29.72

 

 

$

28.56

 

 

$

28.14

 

Tangible book value per share (1)

 

19.38

 

 

18.19

 

 

17.58

 

Total risk-based capital ratio

 

15.61

%

 

16.26

%

 

15.69

%

______________________________

(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 $160.9 million in the second quarter of 2021, a decrease of $718,000, or 0.4%, from the first quarter of 2021. The decrease in net interest income reflected lower average loan yields and fees, partially offset by one more day of interest and a lower cost of funds.

The net interest margin for the second quarter of 2021 was 3.44%, compared with 3.55% in the prior quarter. Our core net interest margin, which excludes the impact of loan accretion income of $9.5 million, compared to $9.9 million in the prior quarter, certificates of deposit mark-to-market amortization, and other adjustments, decreased 8 basis points to 3.22%, compared to 3.30% in the prior quarter. The decrease was driven by lower average loan yields and fees, partially offset by a lower cost of funds.

Net interest income for the second quarter of 2021 increased $30.6 million, or 23.5%, compared to the second quarter of 2020. The increase was attributable to an increase in average interest-earning assets of $4.95 billion, which primarily resulted from the acquisition of Opus Bank (“Opus”) in the second quarter of 2020.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED AVERAGE BALANCES AND YIELD DATA

(Unaudited)

 

 

 

Three Months Ended

 

 

June 30, 2021

 

March 31, 2021

 

June 30, 2020

(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

$

1,323,186

$

315

0.10

%

$

1,309,366

$

301

0.09

%

$

796,761

$

215

0.11

%

Investment securities

4,243,644

18,012

1.70

 

4,087,451

17,468

1.71

 

1,792,432

10,568

2.36

 

Loans receivable, net (1) (2)

13,216,973

152,365

4.62

 

13,093,609

155,225

4.81

 

11,242,721

133,339

4.77

 

Total interest-earning assets

$

18,783,803

$

170,692

3.64

 

$

18,490,426

$

172,994

3.79

 

$

13,831,914

$

144,122

4.19

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

$

10,395,002

$

3,265

0.13

 

$

10,420,199

$

4,426

0.17

 

$

7,317,675

$

9,655

0.53

 

Borrowings

486,718

6,493

5.35

 

523,565

6,916

5.36

 

431,181

4,175

3.89

 

Total interest-bearing liabilities

$

10,881,720

$

9,758

0.36

 

$

10,943,764

$

11,342

0.42

 

$

7,748,856

$

13,830

0.72

 

Noninterest-bearing deposits

$

6,341,063

 

 

$

6,034,319

 

 

$

4,970,812

 

 

Net interest income

 

$

160,934

 

 

$

161,652

 

 

$

130,292

 

Net interest margin (3)

 

 

3.44

 

 

 

3.55

 

 

 

3.79

 

Cost of deposits

 

 

0.08

 

 

 

0.11

 

 

 

0.32

 

Cost of funds (4)

 

 

0.23

 

 

 

0.27

 

 

 

0.44

 

Ratio of interest-earning assets to interest-bearing liabilities

172.62

 

 

 

168.96

 

 

 

178.50

 

______________________________

(1)

Average balance includes loans held for sale and nonperforming loans and is net of deferred loan origination fees/costs and discounts/premiums.

(2)

Interest income includes net discount accretion of $9.5 million, $9.9 million, and $5.8 million, respectively.

(3)

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

(4)

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

 

Provision for Credit Losses

For the second quarter of 2021, the Bank recorded a $38.5 million provision recapture, a decrease of $40.5 million from the $2.0 million provision expense recognized during the first quarter of 2021, and a decrease of $199.1 million from the $160.6 million provision expense recognized during the second quarter of 2020. The decrease from the first quarter of 2021 was comprised of a $33.1 million provision recapture for loan loss and a $5.3 million provision recapture for unfunded commitments. The decrease during the second quarter of 2021 was primarily due to improved economic forecasts used in the Company’s CECL model relative to prior periods and the continued strong asset quality profile of the loan portfolio. The provision expense in the second quarter of 2020 reflected unfavorable changes in economic forecasts related to the onset of the COVID-19 pandemic and the Day 1 provision for credit losses of $84.4 million resulting from the acquisition of Opus.

 

Three Months Ended

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

2021

 

2021

 

2020

Provision for credit losses

 

 

 

Provision for loan losses

$

(33,131

)

$

315

$

150,257

Provision for unfunded commitments

(5,345

)

1,659

10,378

Total provision for credit losses

$

(38,476

)

$

1,974

$

160,635

 

Noninterest Income

Noninterest income for the second quarter of 2021 was $26.7 million, an increase of $3.0 million from the first quarter of 2021. The increase was primarily due to a $1.2 million increase in net gain from loan sales, a $1.0 million increase in net gain from sales of investment securities, and a $675,000 increase in trust custodial account fees, partially offset by a $647,000 decrease in other income.

During the second quarter of 2021, the Bank sold $14.7 million of SBA loans for a net gain of $1.5 million, compared to the sales of $1.3 million of SBA loans for a net gain of $69,000 and fully charged-off loans for a net gain of $292,000 during the first quarter of 2021.

Additionally, during the second quarter of 2021, the Bank sold $280.2 million of investment securities for a net gain of $5.1 million, compared to the sales of $175.3 million of investment securities for a net gain of $4.0 million in the first quarter of 2021.

Noninterest income for the second quarter of 2021 increased $19.8 million, or 287.5%, compared to the second quarter of 2020. The increase was primarily due to a $5.5 million increase in trust custodial account fees and a $1.4 million increase in escrow and exchange fees following the Opus acquisition.

The net gain from sales of loans for the second quarter of 2021 increased from the same period last year primarily due to the sales of $14.7 million of SBA loans for a net gain of $1.5 million, compared with the sales of $15.4 million of other loans for a net loss of $2.0 million during the second quarter of 2020.

 

Three Months Ended

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

2021

 

2021

 

2020

Noninterest income

 

 

 

Loan servicing income

$

622

$

458

$

434

 

Service charges on deposit accounts

2,222

2,032

1,399

 

Other service fee income

352

473

297

 

Debit card interchange fee income

1,099

787

457

 

Earnings on BOLI

2,279

2,233

1,314

 

Net gain (loss) from sales of loans

1,546

361

(2,032

)

Net gain (loss) from sales of investment securities

5,085

4,046

(21

)

Trust custodial account fees

7,897

7,222

2,397

 

Escrow and exchange fees

1,672

1,526

264

 

Other income

3,955

4,602

2,389

 

Total noninterest income

$

26,729

$

23,740

$

6,898

 

 

Noninterest Expense

Noninterest expense totaled $94.5 million for the second quarter of 2021, an increase of $2.0 million compared to the first quarter of 2021, primarily driven by a $926,000 increase in compensation and benefits primarily attributable to higher business incentives associated with higher loan and deposit production, and an $821,000 increase in other expense largely due to a $518,000 increase in community development support.

Noninterest expense decreased by $21.5 million compared to the second quarter of 2020. The decrease was primarily due to $39.3 million of merger-related expense for the second quarter of 2020 relating to the Opus acquisition. Excluding merger-related expense, noninterest expense increased $17.9 million compared to the second quarter of 2020, primarily due to a $10.5 million increase in compensation and benefits, a $2.8 million increase in premises and occupancy expense, all predominately as a result of the additional operations, personnel, branches, and divisions retained with the acquisition of Opus.

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

 

2021

 

2021

 

2020

Noninterest expense

 

 

 

 

 

 

Compensation and benefits

 

$

53,474

 

 

$

52,548

 

 

$

43,011

 

Premises and occupancy

 

12,240

 

 

11,980

 

 

9,487

 

Data processing

 

5,765

 

 

5,828

 

 

4,465

 

Other real estate owned operations, net

 

 

 

 

 

9

 

FDIC insurance premiums

 

1,312

 

 

1,181

 

 

846

 

Legal and professional services

 

4,186

 

 

3,935

 

 

3,094

 

Marketing expense

 

1,490

 

 

1,598

 

 

1,319

 

Office expense

 

1,589

 

 

1,829

 

 

1,533

 

Loan expense

 

1,165

 

 

1,115

 

 

823

 

Deposit expense

 

3,985

 

 

3,859

 

 

4,958

 

Merger-related expense

 

 

 

5

 

 

39,346

 

Amortization of intangible assets

 

4,001

 

 

4,143

 

 

4,066

 

Other expense

 

5,289

 

 

4,468

 

 

3,013

 

Total noninterest expense

 

$

94,496

 

 

$

92,489

 

 

$

115,970

 

Income Tax

For the second quarter of 2021, our income tax expense totaled $35.3 million, resulting in an effective tax rate of 26.8%, compared with income tax expense of $22.3 million and an effective tax rate of 24.5% for the first quarter of 2021, and income tax benefit of $40.3 million and an effective tax rate of 28.9% for the second quarter of 2020. Based on our actual and projected level of earnings for 2021, our estimated effective tax rate for the full year is expected to be in the range of 25 to 27%.

BALANCE SHEET HIGHLIGHTS

Loans

Loans held for investment totaled $13.59 billion at June 30, 2021, an increase of $477.2 million, or 3.6%, from March 31, 2021, and a decrease of $1.49 billion, or 9.9%, from June 30, 2020. The increase from March 31, 2021 was driven by higher loan production, partially offset by loan prepayments, maturities, and sales in the second quarter of 2021. The decrease in loans held for investment from June 30, 2020 was primarily driven by the sale of $1.13 billion of SBA PPP loans in the third quarter of 2020.

During the second quarter of 2021, the Bank generated $1.58 billion of loan commitments and funded $1.15 billion of new loans, compared with $1.15 billion in loan commitments and $746.3 million in funded loans for the first quarter of 2021, and $1.21 billion in loan commitments and $1.19 billion in funded loans for the second quarter of 2020, of which $1.13 billion was SBA PPP loans. Business line commitments totaled $2.59 billion with an average utilization rate of 31.96% for the second quarter of 2021, compared with business line commitments of $2.44 billion with an average utilization rate of 34.06% for the first quarter of 2021, and business line commitments of $2.21 billion with an average utilization rate of 43.98% for the second quarter of 2020.

At June 30, 2021, the ratio of loans held for investment to total deposits was 79.9%, compared with 78.4% and 88.8% at March 31, 2021 and June 30, 2020, respectively.

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

 

Three Months Ended

(Dollars in thousands)

June 30,
2021

 

March 31,
2021

Beginning loan balance

$

13,124,703

 

$

13,237,034

 

New commitments

1,576,884

 

1,153,345

 

Unfunded new commitments

(423,797

)

(407,047

)

Net new fundings

1,153,087

 

746,298

 

Amortization/maturities/payoffs

(821,502

)

(773,170

)

Net draws on existing lines of credit

161,273

 

(82,472

)

Loan sales

(14,959

)

(1,035

)

Charge-offs

(3,290

)

(1,952

)

Net increase (decrease)

474,609

 

(112,331

)

Ending loan balance

$

13,599,312

 

$

13,124,703

 

 

The following table presents the composition of the loan portfolio as of the dates indicated:

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

2021

 

2021

 

2020

Investor loans secured by real estate

 

 

 

Commercial real estate (“CRE”) non-owner-occupied

$

2,810,233

 

$

2,729,785

 

$

2,783,692

 

Multifamily

5,539,464

 

5,309,592

 

5,225,557

 

Construction and land

297,728

 

316,458

 

357,426

 

SBA secured by real estate (1)

53,003

 

56,381

 

59,482

 

Total investor loans secured by real estate

8,700,428

 

8,412,216

 

8,426,157

 

Business loans secured by real estate (2)

 

 

 

CRE owner-occupied

2,089,300

 

2,029,984

 

2,170,154

 

Franchise real estate secured

358,120

 

340,805

 

364,647

 

SBA secured by real estate (3)

72,923

 

73,967

 

85,542

 

Total business loans secured by real estate

2,520,343

 

2,444,756

 

2,620,343

 

Commercial loans (4)

 

 

 

Commercial and industrial

1,795,144

 

1,656,098

 

2,051,313

 

Franchise non-real estate secured

401,315

 

399,041

 

523,755

 

SBA non-real estate secured

13,900

 

14,908

 

21,057

 

SBA PPP

 

 

1,128,780

 

Total commercial loans

2,210,359

 

2,070,047

 

3,724,905

 

Retail loans

 

 

 

Single family residential (5)

157,228

 

184,049

 

265,170

 

Consumer

6,240

 

6,324

 

46,309

 

Total retail loans

163,468

 

190,373

 

311,479

 

Gross loans held for investment (6)

13,594,598

 

13,117,392

 

15,082,884

 

Allowance for credit losses for loans held for investment

(232,774

)

(266,999

)

(282,271

)

Loans held for investment, net

$

13,361,824

 

$

12,850,393

 

$

14,800,613

 

 

 

 

 

Total unfunded loan commitments

$

2,345,364

 

$

2,243,650

 

$

1,885,163

 

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

$

4,714

 

$

7,311

 

$

1,007

 

______________________________

(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 $94.4 million, $103.9 million, and $144.5 million as of June 30, 2021, March 31, 2021, and June 30, 2020, respectively.

 

The total end-of-period weighted average interest rate on loans, excluding fees and discounts, at June 30, 2021 was 4.11%, compared to 4.21% at March 31, 2021 and 4.12%, or 4.46% excluding SBA PPP loans, at June 30, 2020. The quarter-over-quarter and year-over-year decreases reflect the impact of lower rates on new originations and the continued impact from prepayments of higher rate loans.

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

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

2021

 

2021

 

2020

Investor loans secured by real estate

 

 

 

CRE non-owner-occupied

$

181,995

$

128,408

$

11,811

Multifamily

631,360

407,156

24,425

Construction and land

148,422

94,124

6,210

Total investor loans secured by real estate

961,777

629,688

42,446

Business loans secured by real estate (1)

 

 

 

CRE owner-occupied

181,385

110,353

17,594

Franchise real estate secured

39,320

24,429

SBA secured by real estate (2)

13,445

4,101

1,204

Total business loans secured by real estate

234,150

138,883

18,798

Commercial loans (3)

 

 

 

Commercial and industrial

316,162

352,530

23,782

Franchise non-real estate secured

41,501

17,647

SBA non-real estate secured

1,000

686

315

SBA PPP

1,124,485

Total commercial loans

358,663

370,863

1,148,582

Retail loans

 

 

 

Single family residential (4)

14,744

13,353

2,137

Consumer

7,550

558

195

Total retail loans

22,294

13,911

2,332

Total loan commitments

$

1,576,884

$

1,153,345

$

1,212,158

______________________________

(1)

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

(2)

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

(3)

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

(4)

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

 

The weighted average interest rate on new loan commitments was 3.59% in the second quarter of 2021, compared with 3.63% in the first quarter of 2021 and 1.21%, or 3.97% excluding SBA PPP loans, in the second quarter of 2020.

Asset Quality and Allowance for Credit Losses

At June 30, 2021, our allowance for credit losses (“ACL”) on loans held for investment was $232.8 million, a decrease of $34.2 million from March 31, 2021, and a decrease of $49.5 million from June 30, 2020. The decrease in ACL is primarily due to the provision for credit loss recapture during the current quarter, reflective of improving economic forecasts employed in the Company's CECL model relative to the prior quarter and the continued strong asset quality profile of the loan portfolio, partially offset by an increase in loans held for investment during the quarter. The decrease from June 30, 2020 was primarily due to changes in economic forecasts employed in the Company's CECL model related to the COVID-19 pandemic and lower loans held for investment.

During the second quarter of 2021, the Company incurred $1.1 million of net charge-offs, compared to $1.3 million and $4.7 million during the first quarter of 2021 and the second quarter of 2020, 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 June 30, 2021

(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

$

45,545

$

 

$

$

1,567

 

$

47,112

Multifamily

79,815

 

(20,756

)

59,059

Construction and land

13,263

 

(3,715

)

9,548

SBA secured by real estate (1)

5,141

 

(460

)

4,681

Business loans secured by real estate (2)

 

 

 

 

 

CRE owner-occupied

41,594

 

15

(5,862

)

35,747

Franchise real estate secured

10,876

 

560

 

11,436

SBA secured by real estate (3)

6,451

 

80

(214

)

6,317

Commercial loans (4)

 

 

 

 

 

Commercial and industrial

43,373

(3,290

)

2,098

(2,302

)

39,879

Franchise non-real estate secured

18,903

 

(1,590

)

17,313

SBA non-real estate secured

890

 

2

(162

)

730

Retail loans

 

 

 

 

 

Single family residential (5)

822

 

1

(153

)

670

Consumer loans

326

 

(44

)

282

Totals

$

266,999

$

(3,290

)

$

2,196

$

(33,131

)

$

232,774

______________________________

(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 June 30, 2021 was 1.71%, compared to 2.04% at March 31, 2021 and 2.02% at June 30, 2020, excluding SBA PPP loans. Under the guidance of ASC 820: Fair Value Measurements and Disclosures, the fair value net discount on loans acquired through total bank acquisitions was $94.4 million, or 0.69% of total loans held for investment, as of June 30, 2021, compared to $103.9 million, or 0.79% of total loans held for investment, as of March 31, 2021, and $144.5 million, or 1.03% of total loans held for investment excluding SBA PPP loans, as of June 30, 2020.

Nonperforming assets totaled $34.4 million, or 0.17% of total assets, at June 30, 2021, compared with $38.9 million, or 0.19% of total assets, at March 31, 2021, and $34.2 million, or 0.17% of total assets, at June 30, 2020. During the second quarter of 2021, nonperforming loans decreased $4.5 million to $34.4 million from March 31, 2021. Total loan delinquencies were $19.3 million, or 0.14% of loans held for investment, at June 30, 2021, compared to $22.6 million, or 0.17% of loans held for investment, at March 31, 2021, and $38.2 million, or 0.25% of loans held for investment, at June 30, 2020.

Classified loans totaled $131.4 million, or 0.97% of loans held for investment, at June 30, 2021, compared with $134.7 million, or 1.03% of loans held for investment, at March 31, 2021, and $89.9 million, or 0.60% of loans held for investment, at June 30, 2020. The year-over-year increase was driven, in part, by the migration to the substandard risk grade of approximately $56.4 million of loans subject to temporary loan modifications relating to COVID-19 under the CARES Act during 2020, as well as the net changes in risk ratings.

Interest is not typically accrued on loans 90 days or more past due or when, in the opinion of management, there is reasonable doubt as to the timely collection of principal or interest. There were no loans 90 days or more past due and still accruing interest at June 30, 2021. There were six troubled debt restructured loans belonging to two borrower relationships totaling $17.8 million at June 30, 2021, compared to no troubled debt restructured loans at March 31, 2021 and $700,000 at June 30, 2020.

At June 30, 2021, there was one residential loan for $819,000 classified as a COVID-19 modification under Section 4013 of the CARES Act. Additionally, as of June 30, 2021, there were no loans in-process for potential modification. At March 31, 2021, there were no loans remaining within their modification period and no loans were in-process for potential modification.

 

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

 

2021

 

2021

 

2020

Asset quality

 

 

 

 

 

 

Nonperforming loans

 

$

34,387

 

 

$

38,909

 

 

$

33,825

 

Other real estate owned

 

 

 

 

 

386

 

Nonperforming assets

 

$

34,387

 

 

$

38,909

 

 

$

34,211

 

 

 

 

 

 

 

 

Total classified assets (1)

 

$

131,350

 

 

$

134,667

 

 

$

90,334

 

Allowance for credit losses

 

232,774

 

 

266,999

 

 

282,271

 

Allowance for credit losses as a percent of total nonperforming loans

 

677

%

 

686

%

 

835

%

Nonperforming loans as a percent of loans held for investment

 

0.25

 

 

0.30

 

 

0.22

 

Nonperforming assets as a percent of total assets

 

0.17

 

 

0.19

 

 

0.17

 

Classified loans to total loans held for investment

 

0.97

 

 

1.03

 

 

0.60

 

Classified assets to total assets

 

0.64

 

 

0.67

 

 

0.44

 

Net loan charge-offs for the quarter ended

 

$

1,094

 

 

$

1,334

 

 

$

4,650

 

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

 

0.01

%

 

0.01

%

 

0.04

%

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

 

1.71

 

 

2.04

 

 

1.87

 

Loans modified under the CARES Act

 

$

819

 

 

$

 

 

$

2,244,974

 

Loans modified under the CARES Act as a percent of loans held for investment

 

0.01

%

 

%

 

14.88

%

Delinquent loans

 

 

 

 

 

 

30 - 59 days

 

$

207

 

 

$

13,116

 

 

$

6,248

 

60 - 89 days

 

83

 

 

61

 

 

4,133

 

90+ days

 

19,045

 

 

9,410

 

 

27,807

 

Total delinquency

 

$

19,335

 

 

$

22,587

 

 

$

38,188

 

Delinquency as a percentage of loans held for investment

 

0.14

%

 

0.17

%

 

0.25

%

______________________________

(1)

Includes substandard loans and other real estate owned.

(2)

At June 30, 2021, 45% of loans held for investment include a fair value net discount of $94.4 million, or 0.69% of loans held for investment. At March 31, 2021, 51% of loans held for investment include a fair value net discount of $103.9 million, or 0.79% of loans held for investment. At June 30, 2020, 56% of loans held for investment include a fair value net discount of $144.5 million, or 1.03% of loans held for investment excluding SBA PPP loans.

 

Investment Securities

Investment securities totaled $4.51 billion at June 30, 2021, an increase of $627.1 million from March 31, 2021, and an increase of $2.14 billion from June 30, 2020. The increase in the second quarter of 2021 compared to the prior quarter was primarily the result of $968.1 million in purchases and a $58.4 million increase in mark-to-market fair value adjustment, partially offset by $280.2 million in sales and $119.2 million in principal payments, amortization, and redemptions. The increase in investment securities from June 30, 2020 was primarily the result of $3.57 billion in purchases, partially offset by $869.5 million in sales, $515.0 million in principal payments, amortization, and redemptions, and a $44.5 million decrease in mark-to-market fair value adjustment. The Company’s assessment of held-to-maturity and available-for-sale investment securities indicated that no ACL was required with respect to investment securities as of June 30, 2021.

Deposits

At June 30, 2021, deposits totaled $17.02 billion, an increase of $275.1 million, or 1.6%, from March 31, 2021, and an increase of $38.4 million, or 0.2%, from June 30, 2020. At June 30, 2021, non-maturity deposits totaled $15.76 billion, or 92.6% of total deposits, an increase of $386.2 million, or 2.5%, from March 31, 2021, and an increase of $697.5 million, or 4.6%, from June 30, 2020. During the second quarter of 2021, deposit increases included $465.7 million in noninterest-bearing deposits, primarily driven by an increase in business deposit account balances, partially offset by decreases of $93.7 million in retail certificates of deposits, $51.7 million in interest-bearing checking deposits, $27.7 million in money market and savings deposits, and $17.4 million in brokered certificates of deposit as compared to the first quarter of 2021.

The weighted average cost of deposits for the second quarter of 2021 was 0.08%, compared to 0.11% for the first quarter of 2021, and 0.32% for the second quarter of 2020, including the favorable impact of the acquired certificates of deposit mark-to-market amortization of 0.02%, 0.04%, and 0.03%, respectively. The decrease in the weighted average cost of deposits in the second quarter of 2021 compared to the prior quarters was principally driven by lower pricing as well as deposit mix.

The end of period weighted average rate of deposits at June 30, 2021 was 0.08%.

 

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

 

2021

 

2021

 

2020

Deposit accounts

 

 

 

 

 

 

Noninterest-bearing checking

 

$

6,768,384

 

 

$

6,302,703

 

 

$

5,899,442

 

Interest-bearing:

 

 

 

 

 

 

Checking

 

3,103,343

 

 

3,155,071

 

 

3,098,454

 

Money market/savings

 

5,883,672

 

 

5,911,417

 

 

6,060,031

 

Retail certificates of deposit

 

1,259,698

 

 

1,353,431

 

 

1,651,976

 

Wholesale/brokered certificates of deposit

 

 

 

17,385

 

 

266,790

 

Total interest-bearing

 

10,246,713

 

 

10,437,304

 

 

11,077,251

 

Total deposits

 

$

17,015,097

 

 

$

16,740,007

 

 

$

16,976,693

 

 

 

 

 

 

 

 

Cost of deposits

 

0.08

%

 

0.11

%

 

0.32

%

Noninterest-bearing deposits as a percentage of total deposits

 

39.8

 

 

37.7

 

 

34.8

 

Non-maturity deposits as a percent of total deposits

 

92.6

 

 

91.8

 

 

88.7

 

Core deposits as a percent of total deposits (1)

 

96.5

 

 

96.2

 

 

94.9

 

______________________________

(1)

Core deposits are all transaction accounts and non-brokered certificates of deposit less than $250,000.

 

Borrowings

At June 30, 2021, total borrowings amounted to $476.6 million, a decrease of $35.0 million from March 31, 2021, and a decrease of $65.8 million from June 30, 2020. Total borrowings at June 30, 2021 is comprised of $476.6 million of subordinated debt. The decrease in borrowings at June 30, 2021 as compared to March 31, 2021 was primarily due to the redemption of $25 million in subordinated notes in April 2021 and the maturity of the remaining $10.0 million Federal Home Loan Bank of San Francisco ("FHLB") advances. The decrease in borrowings at June 30, 2021 as compared to June 30, 2020 was primarily due to the redemption of $25 million in subordinated notes and the redemption of $41.0 million in FHLB advances.

Capital Ratios

At June 30, 2021, our common stockholders' equity was $2.81 billion, or 13.70% of total assets, compared with $2.70 billion, or 13.40%, at March 31, 2021, and $2.65 billion, or 12.94%, at June 30, 2020, with a book value per share of $29.72, compared with $28.56 at March 31, 2021, and $28.14 at June 30, 2020. At June 30, 2021, our ratio of tangible common equity to total assets was 9.38%, compared with 8.97% at March 31, 2021, and 8.50% at June 30, 2020, with a tangible book value per share of $19.38, compared with $18.19 at March 31, 2021, and $17.58 at June 30, 2020. Reconciliations of the non-GAAP measures of tangible common equity ratio and tangible book value per share to the GAAP measures of common stockholders' equity and book value per share, respectively, are set forth at the end of this press release.

The Company implemented the 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. At June 30, 2021, the Company had a tier 1 leverage ratio of 9.83%, common equity tier 1 capital ratio of 11.89%, tier 1 capital ratio of 11.89%, and total capital ratio of 15.61%. At June 30, 2021, the Bank had a tier 1 leverage ratio of 11.31%, common equity tier 1 capital ratio of 13.67%, tier 1 capital ratio of 13.67%, and total capital ratio of 15.44%. The capital ratios of the Company and the Bank exceeded the “well capitalized” standards defined by the federal banking regulators of 5.00% for tier 1 leverage ratio, 6.50% for common equity tier 1 capital ratio, 8.00% for tier 1 capital ratio, and 10.00% for total capital ratio and exceeded the minimum capital ratio levels inclusive of the fully phased-in capital conservation buffer of 4.00%, 7.00%, 8.50%, and 10.50%, respectively.

 

 

June 30,

 

March 31,

 

June 30,

Capital ratios

 

2021

 

2021

 

2020

Pacific Premier Bancorp, Inc. Consolidated

 

 

 

 

 

 

Tier 1 leverage ratio

 

9.83

%

 

9.66

%

 

12.00

%

Common equity tier 1 risk-based capital ratio

 

11.89

 

 

12.05

 

 

11.32

 

Tier 1 capital ratio

 

11.89

 

 

12.05

 

 

11.32

 

Total capital ratio

 

15.61

 

 

16.26

 

 

15.69

 

Tangible common equity ratio (1)

 

9.38

 

 

8.97

 

 

8.50

 

 

 

 

 

 

 

 

Pacific Premier Bank

 

 

 

 

 

 

Tier 1 leverage ratio

 

11.31

%

 

11.13

%

 

13.49

%

Common equity tier 1 risk-based capital ratio

 

13.67

 

 

13.90

 

 

12.73

 

Tier 1 capital ratio

 

13.67

 

 

13.90

 

 

12.73

 

Total capital ratio

 

15.44

 

 

15.92

 

 

14.81

 

 

 

 

 

 

 

 

Share data

 

 

 

 

 

 

Book value per share

 

$

29.72

 

 

$

28.56

 

 

$

28.14

 

Tangible book value per share (1)

 

19.38

 

 

18.19

 

 

17.58

 

Common equity dividends declared per share

 

0.33

 

 

0.30

 

 

0.25

 

Closing stock price (2)

 

42.29

 

 

43.44

 

 

21.68

 

Shares issued and outstanding

 

94,656,575

 

 

94,644,415

 

 

94,350,902

 

Market capitalization (2)(3)

 

$

4,003,027

 

 

$

4,111,353

 

 

$

2,045,528

 

______________________________

(1)

A reconciliation of the GAAP measures of tangible common equity and tangible book value per share to the GAAP measures of common stockholders' equity and book value per share, respectively, is 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 July 23, 2021, the Company's Board of Directors declared a $0.33 per share dividend, payable on August 13, 2021 to stockholders of record as of August 6, 2021. In January 2021, the Company’s Board of Directors approved a new stock repurchase program, which authorized the repurchase of up to 4,725,000 shares of its common stock. During the first quarter of 2021, the Company repurchased 199,674 shares of common stock at an average price of $34.51 per share with a total market value of $6.9 million under its stock repurchase program. The Company did not repurchase additional shares during the second quarter ended June 30, 2021.

Subsequent Events

On July 1, 2021, the Company redeemed $135.0 million subordinated notes acquired from Opus and $5.2 million junior subordinated debt associated with Heritage Oaks Capital Trust II. On July 7, 2021, the Company redeemed $5.2 million junior subordinated debt associated with Santa Lucia Bancorp (CA) Capital Trust. The subordinated notes and junior subordinated debt were redeemed at par, plus accrued and unpaid interest, for an aggregate amount of $149.2 million. The Company recorded a net gain on early debt extinguishment of $970,000 related to purchase accounting adjustments.

On July 16, 2021, the Bank consolidated two branch offices in San Luis Obispo County of California into nearby branch offices with minimal disruption to clients and daily operations. The consolidated branches were identified largely based on the proximity of neighboring branches, deposit base, historic growth, and market opportunity to improve further the overall efficiency of operations, as well as the Bank's goals related to Fair Lending and the Community Reinvestment Act. After the branch consolidations, the Bank operates 63 branches in major metropolitan markets in California, Washington, Oregon, Arizona, and Nevada.

Conference Call and Webcast

The Company will host a conference call at 9:00 a.m. PT / 12:00 p.m. ET on July 27, 2021 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 August 3, 2021 at (877) 344-7529, conference ID 10157972.

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, Oregon, 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 $20 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 44,000 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. Given the ongoing and dynamic nature of the COVID-19 pandemic, the ultimate extent of the impacts on our business, financial position, results of operations, liquidity and prospects remain uncertain. Continued deterioration in general business and economic conditions, including further increases in unemployment rates, or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and further increase stock price volatility, which could result in impairment to our goodwill in future periods. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to the COVID-19 pandemic, could affect us in substantial and unpredictable ways, including the potential adverse impact of loan modifications and payment deferrals implemented consistent with recent regulatory guidance. Other 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; 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; 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 uncertainty regarding potential alternative reference rates, including 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; possible impairment charges to goodwill; the impact of governmental efforts to restructure the U.S. financial regulatory system; 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; our ability to attract deposits and other sources of liquidity; the possibility that we may reduce or discontinue the payments of dividends on our common stock; the possibility that we may discontinue our stock repurchase program or reduce or otherwise limit the level of repurchases of our common stock we may make from time to time pursuant to such 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, which could impact business and economic conditions in the United States and abroad; public health crisis 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, including the costs of compliance with potential legislation to combat cybersecurity at a state, national, or global level; 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 2020 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)

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

(Dollars in thousands)

2021

 

2021

 

2020

 

2020

 

2020

ASSETS

 

 

 

 

 

Cash and cash equivalents

$

631,888

 

$

1,554,668

 

$

880,766

 

$

1,103,077

 

$

1,341,730

 

Interest-bearing time deposits with financial institutions

2,708

 

2,708

 

2,845

 

2,845

 

2,845

 

Investments held-to-maturity, at amortized cost

18,933

 

21,931

 

23,732

 

27,980

 

32,557

 

Investment securities available-for-sale, at fair value

4,487,447

 

3,857,337

 

3,931,115

 

3,600,731

 

2,336,066

 

FHLB, FRB, and other stock, at cost

117,738

 

117,843

 

117,055

 

116,819

 

94,658

 

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

4,714

 

7,311

 

601

 

1,032

 

1,007

 

Loans held for investment

13,594,598

 

13,117,392

 

13,236,433

 

13,450,840

 

15,082,884

 

Allowance for credit losses

(232,774

)

(266,999

)

(268,018

)

(282,503

)

(282,271

)

Loans held for investment, net

13,361,824

 

12,850,393

 

12,968,415

 

13,168,337

 

14,800,613

 

Accrued interest receivable

67,529

 

65,098

 

74,574

 

73,112

 

78,408

 

Other real estate owned

 

 

 

334

 

386

 

Premises and equipment

73,821

 

76,329

 

78,884

 

80,326

 

76,542

 

Deferred income taxes, net

81,741

 

104,450

 

89,056

 

108,050

 

105,859

 

Bank owned life insurance

444,645

 

292,932

 

292,564

 

290,875

 

305,901

 

Intangible assets

77,363

 

81,364

 

85,507

 

90,012

 

94,550

 

Goodwill

901,312

 

900,204

 

898,569

 

898,434

 

901,166

 

Other assets

257,823

 

240,730

 

292,861

 

282,276

 

344,786

 

Total assets

$

20,529,486

 

$

20,173,298

 

$

19,736,544

 

$

19,844,240

 

$

20,517,074

 

LIABILITIES

 

 

 

 

 

Deposit accounts:

 

 

 

 

 

Noninterest-bearing checking

$

6,768,384

 

$

6,302,703

 

$

6,011,106

 

$

5,895,744

 

$

5,899,442

 

Interest-bearing:

 

 

 

 

 

Checking

3,103,343

 

3,155,071

 

2,913,260

 

2,937,910

 

3,098,454

 

Money market/savings

5,883,672

 

5,911,417

 

5,662,969

 

5,778,688

 

6,060,031

 

Retail certificates of deposit

1,259,698

 

1,353,431

 

1,471,512

 

1,542,029

 

1,651,976

 

Wholesale/brokered certificates of deposit

 

17,385

 

155,330

 

176,436

 

266,790

 

Total interest-bearing

10,246,713

 

10,437,304

 

10,203,071

 

10,435,063

 

11,077,251

 

Total deposits

17,015,097

 

16,740,007

 

16,214,177

 

16,330,807

 

16,976,693

 

FHLB advances and other borrowings

 

10,000

 

31,000

 

41,000

 

41,006

 

Subordinated debentures

476,622

 

501,611

 

501,511

 

501,443

 

501,375

 

Accrued expenses and other liabilities

224,348

 

218,582

 

243,207

 

282,905

 

343,353

 

Total liabilities

17,716,067

 

17,470,200

 

16,989,895

 

17,156,155

 

17,862,427

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

Common stock

931

 

931

 

931

 

930

 

930

 

Additional paid-in capital

2,352,112

 

2,348,445

 

2,354,871

 

2,351,532

 

2,348,415

 

Retained earnings

433,852

 

368,911

 

330,555

 

289,960

 

247,078

 

Accumulated other comprehensive income (loss)

26,524

 

(15,189

)

60,292

 

45,663

 

58,224

 

Total stockholders' equity

2,813,419

 

2,703,098

 

2,746,649

 

2,688,085

 

2,654,647

 

Total liabilities and stockholders' equity

$

20,529,486

 

$

20,173,298

 

$

19,736,544

 

$

19,844,240

 

$

20,517,074

 

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

March 31,

 

June 30,

 

June 30,

 

June 30,

(Dollars in thousands, except per share data)

2021

 

2021

 

2020

 

2021

 

2020

INTEREST INCOME

 

 

 

 

 

Loans

$

152,365

 

$

155,225

$

133,339

 

$

307,590

 

$

246,604

 

Investment securities and other interest-earning assets

18,327

 

17,769

10,783

 

36,096

 

21,307

 

Total interest income

170,692

 

172,994

144,122

 

343,686

 

267,911

 

INTEREST EXPENSE

 

 

 

 

 

Deposits

3,265

 

4,426

9,655

 

7,691

 

20,142

 

FHLB advances and other borrowings

 

65

217

 

65

 

1,298

 

Subordinated debentures

6,493

 

6,851

3,958

 

13,344

 

7,004

 

Total interest expense

9,758

 

11,342

13,830

 

21,100

 

28,444

 

Net interest income before provision for credit losses

160,934

 

161,652

130,292

 

322,586

 

239,467

 

Provision for credit losses

(38,476

)

1,974

160,635

 

(36,502

)

186,089

 

Net interest income (loss) after provision for credit losses

199,410

 

159,678

(30,343

)

359,088

 

53,378

 

NONINTEREST INCOME

 

 

 

 

 

Loan servicing income

622

 

458

434

 

1,080

 

914

 

Service charges on deposit accounts

2,222

 

2,032

1,399

 

4,254

 

3,114

 

Other service fee income

352

 

473

297

 

825

 

608

 

Debit card interchange fee income

1,099

 

787

457

 

1,886

 

805

 

Earnings on BOLI

2,279

 

2,233

1,314

 

4,512

 

2,650

 

Net gain (loss) from sales of loans

1,546

 

361

(2,032

)

1,907

 

(1,261

)

Net gain (loss) from sales of investment securities

5,085

 

4,046

(21

)

9,131

 

7,739

 

Trust custodial account fees

7,897

 

7,222

2,397

 

15,119

 

2,397

 

Escrow and exchange fees

1,672

 

1,526

264

 

3,198

 

264

 

Other income

3,955

 

4,602

2,389

 

8,557

 

4,143

 

Total noninterest income

26,729

 

23,740

6,898

 

50,469

 

21,373

 

NONINTEREST EXPENSE

 

 

 

 

 

Compensation and benefits

53,474

 

52,548

43,011

 

106,022

 

77,387

 

Premises and occupancy

12,240

 

11,980

9,487

 

24,220

 

17,655

 

Data processing

5,765

 

5,828

4,465

 

11,593

 

7,718

 

Other real estate owned operations, net

 

9

 

 

23

 

FDIC insurance premiums

1,312

 

1,181

846

 

2,493

 

1,213

 

Legal and professional services

4,186

 

3,935

3,094

 

8,121

 

6,220

 

Marketing expense

1,490

 

1,598

1,319

 

3,088

 

2,731

 

Office expense

1,589

 

1,829

1,533

 

3,418

 

2,636

 

Loan expense

1,165

 

1,115

823

 

2,280

 

1,645

 

Deposit expense

3,985

 

3,859

4,958

 

7,844

 

9,946

 

Merger-related expense

 

5

39,346

 

5

 

41,070

 

Amortization of intangible assets

4,001

 

4,143

4,066

 

8,144

 

8,029

 

Other expense

5,289

 

4,468

3,013

 

9,757

 

6,328

 

Total noninterest expense

94,496

 

92,489

115,970

 

186,985

 

182,601

 

Net income (loss) before income taxes

131,643

 

90,929

(139,415

)

222,572

 

(107,850

)

Income tax expense (benefit)

35,341

 

22,261

(40,324

)

57,602

 

(34,499

)

Net income (loss)

$

96,302

 

$

68,668

$

(99,091

)

$

164,970

 

$

(73,351

)

EARNINGS (LOSS) PER SHARE

 

 

 

 

 

Basic

$

1.02

 

$

0.73

$

(1.41

)

$

1.74

 

$

(1.14

)

Diluted

$

1.01

 

$

0.72

$

(1.41

)

$

1.73

 

$

(1.14

)

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

Basic

93,635,392

 

93,529,147

70,425,027

 

93,582,563

 

64,716,109

 

Diluted

94,218,028

 

94,093,644

70,425,027

 

94,155,740

 

64,716,109

 

 

SELECTED FINANCIAL DATA

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED AVERAGE BALANCES AND YIELD DATA

(Unaudited)

 

 

 

 

 

Three Months Ended

 

 

June 30, 2021

 

March 31, 2021

 

June 30, 2020

(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

$

1,323,186

$

315

0.10

%

$

1,309,366

$

301

0.09

%

$

796,761

$

215

0.11

%

Investment securities

4,243,644

18,012

1.70

 

4,087,451

17,468

1.71

 

1,792,432

10,568

2.36

 

Loans receivable, net (1)(2)

13,216,973

152,365

4.62

 

13,093,609

155,225

4.81

 

11,242,721

133,339

4.77

 

Total interest-earning assets

18,783,803

170,692

3.64

 

18,490,426

172,994

3.79

 

13,831,914

144,122

4.19

 

Noninterest-earning assets

1,506,612

 

 

1,503,834

 

 

1,343,396

 

 

Total assets

$

20,290,415

 

 

$

19,994,260

 

 

$

15,175,310

 

 

Liabilities and equity

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

Interest checking

$

3,155,935

$

336

0.04

%

$

3,060,055

$

419

0.06

%

$

1,417,846

$

844

0.24

%

Money market

5,558,790

2,002

0.14

 

5,447,909

2,588

0.19

 

4,242,990

5,680

0.54

 

Savings

384,376

84

0.09

 

368,288

82

0.09

 

283,632

101

0.14

 

Retail certificates of deposit

1,294,544

839

0.26

 

1,425,093

1,201

0.34

 

1,148,874

2,251

0.79

 

Wholesale/brokered certificates of deposit

1,357

4

1.18

 

118,854

136

0.46

 

224,333

779

1.40

 

Total interest-bearing deposits

10,395,002

3,265

0.13

 

10,420,199

4,426

0.17

 

7,317,675

9,655

0.53

 

FHLB advances and other borrowings

6,303

 

22,012

65

1.20

 

143,813

217

0.61

 

Subordinated debentures

480,415

6,493

5.41

 

501,553

6,851

5.46

 

287,368

3,958

5.51

 

Total borrowings

486,718

6,493

5.35

 

523,565

6,916

5.36

 

431,181

4,175

3.89

 

Total interest-bearing liabilities

10,881,720

9,758

0.36

 

10,943,764

11,342

0.42

 

7,748,856

13,830

0.72

 

Noninterest-bearing deposits

6,341,063

 

 

6,034,319

 

 

4,970,812

 

 

Other liabilities

320,324

 

 

266,536

 

 

223,920

 

 

Total liabilities

17,543,107

 

 

17,244,619

 

 

12,943,588

 

 

Stockholders' equity

2,747,308

 

 

2,749,641

 

 

2,231,722

 

 

Total liabilities and equity

$

20,290,415

 

 

$

19,994,260

 

 

$

15,175,310

 

 

Net interest income

 

$

160,934

 

 

$

161,652

 

 

$

130,292

 

Net interest margin (3)

 

 

3.44

%

 

 

3.55

%

 

 

3.79

%

Cost of deposits

 

 

0.08

 

 

 

0.11

 

 

 

0.32

 

Cost of funds (4)

 

 

0.23

 

 

 

0.27

 

 

 

0.44

 

Ratio of interest-earning assets to interest-bearing liabilities

172.62

 

 

 

168.96

 

 

 

178.50

 

______________________________

(1)

Average balance includes loans held for sale and nonperforming loans and is net of deferred loan origination fees/costs and discounts/premiums.

(2)

Interest income includes net discount accretion of $9.5 million, $9.9 million, and $5.8 million, respectively.

(3)

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

(4)

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

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

LOAN PORTFOLIO COMPOSITION

(Unaudited)

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

(Dollars in thousands)

2021

 

2021

 

2020

 

2020

 

2020

Investor loans secured by real estate

 

 

 

 

 

CRE non-owner-occupied

$

2,810,233

 

$

2,729,785

 

$

2,675,085

 

$

2,707,930

 

$

2,783,692

 

Multifamily

5,539,464

 

5,309,592

 

5,171,356

 

5,142,069

 

5,225,557

 

Construction and land

297,728

 

316,458

 

321,993

 

337,872

 

357,426

 

SBA secured by real estate (1)

53,003

 

56,381

 

57,331

 

57,610

 

59,482

 

Total investor loans secured by real estate

8,700,428

 

8,412,216

 

8,225,765

 

8,245,481

 

8,426,157

 

Business loans secured by real estate (2)

 

 

 

 

 

CRE owner-occupied

2,089,300

 

2,029,984

 

2,114,050

 

2,119,788

 

2,170,154

 

Franchise real estate secured

358,120

 

340,805

 

347,932

 

359,329

 

364,647

 

SBA secured by real estate (3)

72,923

 

73,967

 

79,595

 

84,126

 

85,542

 

Total business loans secured by real estate

2,520,343

 

2,444,756

 

2,541,577

 

2,563,243

 

2,620,343

 

Commercial loans (4)

 

 

 

 

 

Commercial and industrial

1,795,144

 

1,656,098

 

1,768,834

 

1,820,995

 

2,051,313

 

Franchise non-real estate secured

401,315

 

399,041

 

444,797

 

515,980

 

523,755

 

SBA non-real estate secured

13,900

 

14,908

 

15,957

 

16,748

 

21,057

 

SBA PPP

 

 

 

 

1,128,780

 

Total commercial loans

2,210,359

 

2,070,047

 

2,229,588

 

2,353,723

 

3,724,905

 

Retail loans

 

 

 

 

 

Single family residential (5)

157,228

 

184,049

 

232,574

 

243,359

 

265,170

 

Consumer

6,240

 

6,324

 

6,929

 

45,034

 

46,309

 

Total retail loans

163,468

 

190,373

 

239,503

 

288,393

 

311,479

 

Gross loans held for investment (6)

13,594,598

 

13,117,392

 

13,236,433

 

13,450,840

 

15,082,884

 

Allowance for credit losses for loans held for investment

(232,774

)

(266,999

)

(268,018

)

(282,503

)

(282,271

)

Loans held for investment, net

$

13,361,824

 

$

12,850,393

 

$

12,968,415

 

$

13,168,337

 

$

14,800,613

 

 

 

 

 

 

 

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

$

4,714

 

$

7,311

 

$

601

 

$

1,032

 

$

1,007

 

______________________________

(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 $94.4 million, $103.9 million, $113.8 million, $126.3 million, and $144.5 million as of June 30, 2021, March 31, 2021, December 31, 2020, September 30,2020, and June 30, 2020, respectively.

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

ASSET QUALITY INFORMATION

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

(Dollars in thousands)

 

2021

 

2021

 

2020

 

2020

 

2020

Asset quality

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

$

34,387

 

 

$

38,909

 

 

$

29,209

 

 

$

27,214

 

 

$

33,825

 

Other real estate owned

 

 

 

 

 

 

 

334

 

 

386

 

Nonperforming assets

 

$

34,387

 

 

$

38,909

 

 

$

29,209

 

 

$

27,548

 

 

$

34,211

 

 

 

 

 

 

 

 

 

 

 

 

Total classified assets (1)

 

$

131,350

 

 

$

134,667

 

 

$

128,332

 

 

$

137,042

 

 

$

90,334

 

Allowance for credit losses

 

232,774

 

 

266,999

 

 

268,018

 

 

282,503

 

 

282,271

 

Allowance for credit losses as a percent of total nonperforming loans

 

677

%

 

686

%

 

918

%

 

1,038

%

 

835

%

Nonperforming loans as a percent of loans held for investment

 

0.25

 

 

0.30

 

 

0.22

 

 

0.20

 

 

0.22

 

Nonperforming assets as a percent of total assets

 

0.17

 

 

0.19

 

 

0.15

 

 

0.14

 

 

0.17

 

Classified loans to total loans held for investment

 

0.97

 

 

1.03

 

 

0.97

 

 

1.02

 

 

0.60

 

Classified assets to total assets

 

0.64

 

 

0.67

 

 

0.65

 

 

0.69

 

 

0.44

 

Net loan charge-offs for the quarter ended

 

$

1,094

 

 

$

1,334

 

 

$

6,406

 

 

$

4,470

 

 

$

4,650

 

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

 

0.01

%

 

0.01

%

 

0.05

%

 

0.03

%

 

0.04

%

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

 

1.71

 

 

2.04

 

 

2.02

 

 

2.10

 

 

1.87

 

Allowance for credit losses to loans held for investment, excluding SBA PPP loans (2)

 

1.71

 

 

2.04

 

 

2.02

 

 

2.10

 

 

2.02

 

Loans modified under the CARES Act

 

$

819

 

 

$

 

 

$

79,465

 

 

$

118,298

 

 

$

2,244,974

 

Loans modified under the CARES Act as a percent of loans held for investment

 

0.01

%

 

%

 

0.60

%

 

0.88

%

 

14.88

%

Delinquent loans

 

 

 

 

 

 

 

 

 

 

30 - 59 days

 

$

207

 

 

$

13,116

 

 

$

1,269

 

 

$

7,084

 

 

$

6,248

 

60 - 89 days

 

83

 

 

61

 

 

57

 

 

1,086

 

 

4,133

 

90+ days

 

19,045

 

 

9,410

 

 

11,996

 

 

21,206

 

 

27,807

 

Total delinquency

 

$

19,335

 

 

$

22,587

 

 

$

13,322

 

 

$

29,376

 

 

$

38,188

 

Delinquency as a percent of loans held for investment

 

0.14

%

 

0.17

%

 

0.10

%

 

0.22

%

 

0.25

%

______________________________

(1)

Includes substandard loans and other real estate owned.

(2)

At June 30, 2021, 45% of loans held for investment include a fair value net discount of $94.4 million, or 0.69% of loans held for investment. At March 31, 2021, 51% of loans held for investment include a fair value net discount of $103.9 million, or 0.79% of loans held for investment. At June 30, 2020, 56% of loans held for investment include a fair value net discount of $144.5 million, or 1.03% of loans held for investment excluding SBA PPP loans.

 

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

June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Investor loans secured by real estate

 

 

 

 

 

 

 

 

 

 

 

 

CRE non-owner-occupied

 

$

12,296

 

 

$

 

 

$

 

 

$

 

 

$

12,296

 

 

$

12,296

 

SBA secured by real estate (2)

 

440

 

 

 

 

 

 

 

 

440

 

 

440

 

Total investor loans secured by real estate

 

12,736

 

 

 

 

 

 

 

 

12,736

 

 

12,736

 

Business loans secured by real estate (3)

 

 

 

 

 

 

 

 

 

 

 

 

CRE owner-occupied

 

5,016

 

 

 

 

 

 

 

 

5,016

 

 

5,016

 

SBA secured by real estate (4)

 

692

 

 

 

 

 

 

 

 

692

 

 

692

 

Total business loans secured by real estate

 

5,708

 

 

 

 

 

 

 

 

5,708

 

 

5,708

 

Commercial loans (5)

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

2,118

 

 

 

 

552

 

 

 

 

2,670

 

 

2,670

 

Franchise non-real estate secured

 

 

 

 

 

12,584

 

 

 

 

12,584

 

 

12,584

 

SBA not secured by real estate

 

677

 

 

 

 

 

 

 

 

677

 

 

677

 

Total commercial loans

 

2,795

 

 

 

 

13,136

 

 

 

 

15,931

 

 

15,931

 

Retail loans

 

 

 

 

 

 

 

 

 

 

 

 

Single family residential (6)

 

12

 

 

 

 

 

 

 

 

12

 

 

12

 

Total retail loans

 

12

 

 

 

 

 

 

 

 

12

 

 

12

 

Totals nonaccrual loans

 

$

21,251

 

 

$

 

 

$

13,136

 

 

$

 

 

$

34,387

 

 

$

34,387

 

______________________________

(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.

(6)

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

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

PAST DUE STATUS

(Unaudited)

 

 

 

 

 

Days Past Due

 

 

(Dollars in thousands)

 

Current

 

30-59

 

60-89

 

90+

 

Total

June 30, 2021

 

 

 

 

 

 

 

 

 

 

Investor loans secured by real estate

 

 

 

 

 

 

 

 

 

 

CRE non-owner-occupied

 

$

2,799,890

 

 

$

 

 

$

 

 

$

10,343

 

 

$

2,810,233

 

Multifamily

 

5,539,464

 

 

 

 

 

 

 

 

5,539,464

 

Construction and land

 

297,728

 

 

 

 

 

 

 

 

297,728

 

SBA secured by real estate (1)

 

52,563

 

 

 

 

 

 

440

 

 

53,003

 

Total investor loans secured by real estate

 

8,689,645

 

 

 

 

 

 

10,783

 

 

8,700,428

 

Business loans secured by real estate (2)

 

 

 

 

 

 

 

 

 

 

CRE owner-occupied

 

2,084,284

 

 

 

 

 

 

5,016

 

 

2,089,300

 

Franchise real estate secured

 

358,120

 

 

 

 

 

 

 

 

358,120

 

SBA secured by real estate (3)

 

72,473

 

 

 

 

 

 

450

 

 

72,923

 

Total business loans secured by real estate

 

2,514,877

 

 

 

 

 

 

5,466

 

 

2,520,343

 

Commercial loans (4)

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

1,792,913

 

 

29

 

 

83

 

 

2,119

 

 

1,795,144

 

Franchise non-real estate secured

 

401,315

 

 

 

 

 

 

 

 

401,315

 

SBA not secured by real estate

 

13,223

 

 

 

 

 

 

677

 

 

13,900

 

Total commercial loans

 

2,207,451

 

 

29

 

 

83

 

 

2,796

 

 

2,210,359

 

Retail loans

 

 

 

 

 

 

 

 

 

 

Single family residential (5)

 

157,050

 

 

178

 

 

 

 

 

 

157,228

 

Consumer loans

 

6,240

 

 

 

 

 

 

 

 

6,240

 

Total retail loans

 

163,290

 

 

178

 

 

 

 

 

 

163,468

 

Total loans

 

$

13,575,263

 

 

$

207

 

 

$

83

 

 

$

19,045

 

 

$

13,594,598

 

______________________________

(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.

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CREDIT RISK GRADES

(Unaudited)

 

(Dollars in thousands)

 

Pass

 

Special
Mention

 

Substandard

 

Total Gross
Loans

June 30, 2021

 

 

 

 

 

 

 

 

Investor loans secured by real estate

 

 

 

 

 

 

 

 

CRE non-owner-occupied

 

$

2,741,106

 

 

$

37,332

 

 

$

31,795

 

 

$

2,810,233

 

Multifamily

 

5,533,772

 

 

3,818

 

 

1,874

 

 

5,539,464

 

Construction and land

 

297,728

 

 

 

 

 

 

297,728

 

SBA secured by real estate (1)

 

41,278

 

 

3,788

 

 

7,937

 

 

53,003

 

Total investor loans secured by real estate

 

8,613,884

 

 

44,938

 

 

41,606

 

 

8,700,428

 

Business loans secured by real estate (2)

 

 

 

 

 

 

 

 

CRE owner-occupied

 

2,060,588

 

 

10,870

 

 

17,842

 

 

2,089,300

 

Franchise real estate secured

 

357,242

 

 

878

 

 

 

 

358,120

 

SBA secured by real estate (3)

 

64,851

 

 

150

 

 

7,922

 

 

72,923

 

Total business loans secured by real estate

 

2,482,681

 

 

11,898

 

 

25,764

 

 

2,520,343

 

Commercial loans (4)

 

 

 

 

 

 

 

 

Commercial and industrial

 

1,745,403

 

 

13,789

 

 

35,952

 

 

1,795,144

 

Franchise non-real estate secured

 

375,466

 

 

 

 

25,849

 

 

401,315

 

SBA not secured by real estate

 

11,819

 

 

 

 

2,081

 

 

13,900

 

Total commercial loans

 

2,132,688

 

 

13,789

 

 

63,882

 

 

2,210,359

 

Retail loans

 

 

 

 

 

 

 

 

Single family residential (5)

 

157,174

 

 

 

 

54

 

 

157,228

 

Consumer loans

 

6,196

 

 

 

 

44

 

 

6,240

 

Total retail loans

 

163,370

 

 

 

 

98

 

 

163,468

 

Total loans

 

$

13,392,623

 

 

$

70,625

 

 

$

131,350

 

 

$

13,594,598

 

______________________________

(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.

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
GAAP to Non-GAAP RECONCILIATIONS
(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

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

2021

 

2021

 

2020

Net income

$

96,302

 

$

68,668

 

$

(99,091

)

Plus: amortization of intangible assets expense

4,001

 

4,143

 

4,066

 

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

1,145

 

1,185

 

1,166

 

Net income for average tangible common equity

99,158

 

71,626

 

(96,191

)

Plus: merger-related expense

 

5

 

39,346

 

Less: merger-related expense tax adjustment (1)

 

1

 

11,284

 

Net income for average tangible common equity excluding merger-related expense

$

99,158

 

$

71,630

 

$

(68,129

)

 

 

 

 

Average stockholders' equity

$

2,747,308

 

$

2,749,641

 

$

2,231,722

 

Less: average intangible assets

79,784

 

83,946

 

84,148

 

Less: average goodwill

900,582

 

898,587

 

838,725

 

Average tangible common equity

$

1,766,942

 

$

1,767,108

 

$

1,308,849

 

 

 

 

 

Return on average equity (annualized)

14.02

%

9.99

%

(17.76

)%

Return on average tangible common equity (annualized)

22.45

%

16.21

%

(29.40

)%

Return on average tangible common equity excluding merger-related expense (annualized)

22.45

%

16.21

%

(20.82

)%

______________________________

(1)

Adjusted by statutory tax rate

 

For periods presented below, return on average assets excluding merger-related expense is a non-GAAP financial measure derived from GAAP based amounts. We calculate this figure by excluding merger-related expense and the related tax impact 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.

 

Three Months Ended

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

2021

 

2021

 

2020

Net income (loss)

$

96,302

 

$

68,668

 

$

(99,091

)

Plus: merger-related expense

 

5

 

39,346

 

Less: merger-related expense tax adjustment (1)

 

1

 

11,284

 

Net income (loss) for average assets excluding merger-related expense

$

96,302

 

$

68,672

 

$

(71,029

)

 

 

 

 

Average assets

$

20,290,415

 

$

19,994,260

 

$

15,175,310

 

 

 

 

 

Return on average assets (annualized)

1.90

%

1.37

%

(2.61

)%

Return on average assets excluding merger-related expense (annualized)

1.90

%

1.37

%

(1.87

)%

______________________________

(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 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

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

2021

 

2021

 

2020

Interest income

$

170,692

 

$

172,994

 

$

144,122

 

Interest expense

9,758

 

11,342

 

13,830

 

Net interest income

160,934

 

161,652

 

130,292

 

Noninterest income

26,729

 

23,740

 

6,898

 

Revenue

187,663

 

185,392

 

137,190

 

Noninterest expense

94,496

 

92,489

 

115,970

 

Add: merger-related expense

 

5

 

39,346

 

Pre-provision net revenue

93,167

 

92,908

 

60,566

 

Pre-provision net revenue (annualized)

$

372,668

 

$

371,632

 

$

242,264

 

 

 

 

 

Average assets

$

20,290,415

 

$

19,994,260

 

$

15,175,310

 

 

 

 

 

Pre-provision net revenue on average assets

0.46

%

0.46