News Details

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

Company Release - 7/21/2022

Second Quarter 2022 Summary

  • Net income of $69.8 million, or $0.73 per diluted share
  • Return on average assets of 1.29%, return on average equity of 10.10%, and return on average tangible common equity of 16.07%(1)
  • Pre-provision net revenue (“PPNR”) to average assets of 1.77%, annualized, and efficiency ratio of 49.0%(1)
  • Diversified loan growth of $356.3 million, or 9.7% annualized(2)
  • Net interest margin of 3.49%, and core net interest margin of 3.33%(1)
  • Cost of deposits of 0.06%, and cost of core deposits of 0.04%(1)
  • Noninterest-bearing deposits represent 38.3% of total deposits
  • Nonperforming assets to total assets of 0.20%, and classified assets to total assets of 0.48%

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 $69.8 million, or $0.73 per diluted share, for the second quarter of 2022, compared with net income of $66.9 million, or $0.70 per diluted share, for the first quarter of 2022, and net income of $96.3 million, or $1.01 per diluted share, for the second quarter of 2021.

For the quarter ended June 30, 2022, the Company’s return on average assets (“ROAA”) was 1.29%, return on average equity (“ROAE”) was 10.10%, and return on average tangible common equity (“ROATCE”)(1) was 16.07%, compared to 1.28%, 9.34%, and 14.66%, respectively, for the first quarter of 2022, and 1.90%, 14.02%, and 22.45%, respectively, for the second quarter of 2021. Total assets increased to $21.99 billion at June 30, 2022, compared to $21.62 billion at March 31, 2022, and $20.53 billion at June 30, 2021.

Steven R. Gardner, Chairman, Chief Executive Officer, and President of the Company, commented, “We continued to deliver a high level of performance in the second quarter, while maintaining our conservative approach to managing credit, capital, and liquidity. Our disciplined approach has enabled us to generate higher earnings and returns compared to the prior quarter, despite a challenging operating environment.”

“The second quarter results reflect the strength and durability of our diversified business model resulting in a significant increase in revenue along with tightly controlled operating expenses. We were able to leverage our business development capabilities and deep client relationships to generate $1.5 billion in new loan commitments, which resulted in nearly 10% annualized loan growth. These results also reflect our ability to increase pricing and maintain underwriting discipline on new loan production while our cost of core deposits(1) remained low at 4 basis points.”

“We believe the strength of the franchise we have built, on a foundation of a low-cost, stable deposit base consisting of long-term client relationships, will serve us well throughout the remainder of the year and into 2023. We are well-positioned to effectively navigate through any economic environment and take advantage of the opportunities they may present to drive franchise value higher in future periods.”

______________________________

(1)

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

(2)

Excludes the basis adjustment of $51.1 million to the carrying amount of certain loans included in fair value hedging relationships.

 

FINANCIAL HIGHLIGHTS

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands, except per share data)

 

2022

 

2022

 

2021

Financial highlights (unaudited)

 

 

 

 

 

 

Net income

 

$

69,803

 

 

$

66,904

 

 

$

96,302

 

Diluted earnings per share

 

 

0.73

 

 

 

0.70

 

 

 

1.01

 

Common equity dividend per share paid

 

 

0.33

 

 

 

0.33

 

 

 

0.33

 

Return on average assets

 

 

1.29

%

 

 

1.28

%

 

 

1.90

%

Return on average equity

 

 

10.10

 

 

 

9.34

 

 

 

14.02

 

Return on average tangible common equity (1)

 

 

16.07

 

 

 

14.66

 

 

 

22.45

 

Pre-provision net revenue on average assets (1)

 

 

1.77

 

 

 

1.72

 

 

 

1.84

 

Net interest margin

 

 

3.49

 

 

 

3.41

 

 

 

3.44

 

Core net interest margin (1)

 

 

3.33

 

 

 

3.33

 

 

 

3.22

 

Cost of deposits

 

 

0.06

 

 

 

0.04

 

 

 

0.08

 

Cost of core deposits (1)

 

 

0.04

 

 

 

0.03

 

 

 

0.06

 

Efficiency ratio (1)

 

 

49.0

 

 

 

50.7

 

 

 

49.4

 

Noninterest expense as a percent of average assets

 

 

1.83

%

 

 

1.86

%

 

 

1.86

%

Total assets

 

$

21,993,919

 

 

$

21,622,296

 

 

$

20,529,486

 

Total deposits

 

 

18,084,613

 

 

 

17,689,223

 

 

 

17,015,097

 

Loan-to-deposit ratio

 

 

83.2

%

 

 

83.4

%

 

 

79.9

%

Non-maturity deposits as a percent of total deposits

 

 

92.0

 

 

 

94.2

 

 

 

92.6

 

Book value per share

 

$

29.01

 

 

$

29.31

 

 

$

29.72

 

Tangible book value per share (1)

 

 

18.86

 

 

 

19.12

 

 

 

19.38

 

Total capital ratio

 

 

14.41

%

 

 

14.37

%

 

 

15.61

%

______________________________

(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 $172.8 million in the second quarter of 2022, an increase of $10.9 million, or 6.8%, from the first quarter of 2022. The increase in net interest income was primarily attributable to higher average interest-earning assets and yields, as well as higher loan-related fees and accretion income as a result of increased prepayment activity.

The net interest margin for the second quarter of 2022 was 3.49%, compared with 3.41% in the prior quarter. The core net interest margin(6), which excludes the impact of loan accretion income and other adjustments, was unchanged at 3.33%, compared to the prior quarter, reflecting a favorable remix towards higher yielding loans, higher loan-related fees, and a favorable impact from fair value hedges, partially offset by higher cost of funds.

Net interest income for the second quarter of 2022 increased $11.8 million, or 7.4%, compared to the second quarter of 2021. The increase was attributable to higher average loan balances and lower cost of funds.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED AVERAGE BALANCES AND YIELD DATA

(Unaudited)

 

 

Three Months Ended

 

 

June 30, 2022

 

March 31, 2022

 

June 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

 

$

702,663

 

$

1,211

 

0.69

%

 

$

322,236

 

$

90

 

0.11

%

 

$

1,323,186

 

$

315

 

0.10

%

Investment securities

 

 

4,254,961

 

 

17,560

 

1.65

 

 

 

4,546,408

 

 

17,852

 

1.57

 

 

 

4,243,644

 

 

18,012

 

1.70

 

Loans receivable, net (1) (2)

 

 

14,919,182

 

 

164,455

 

4.42

 

 

 

14,371,588

 

 

150,604

 

4.25

 

 

 

13,216,973

 

 

152,365

 

4.62

 

Total interest-earning assets

 

$

19,876,806

 

$

183,226

 

3.70

 

 

$

19,240,232

 

$

168,546

 

3.55

 

 

$

18,783,803

 

$

170,692

 

3.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

10,722,522

 

$

2,682

 

0.10

 

 

$

10,351,434

 

$

1,673

 

0.07

 

 

$

10,395,002

 

$

3,265

 

0.13

 

Borrowings

 

 

933,417

 

 

7,779

 

3.34

 

 

 

555,879

 

 

5,034

 

3.63

 

 

 

486,718

 

 

6,493

 

5.35

 

Total interest-bearing liabilities

 

$

11,655,939

 

$

10,461

 

0.36

 

 

$

10,907,313

 

$

6,707

 

0.25

 

 

$

10,881,720

 

$

9,758

 

0.36

 

Noninterest-bearing deposits

 

$

7,030,205

 

 

 

 

 

$

6,928,872

 

 

 

 

 

$

6,341,063

 

 

 

 

Net interest income

 

 

 

$

172,765

 

 

 

 

 

$

161,839

 

 

 

 

 

$

160,934

 

 

Net interest margin (3)

 

 

 

 

 

3.49

 

 

 

 

 

 

3.41

 

 

 

 

 

 

3.44

 

Cost of deposits (4)

 

 

 

 

 

0.06

 

 

 

 

 

 

0.04

 

 

 

 

 

 

0.08

 

Cost of funds (5)

 

 

 

 

 

0.22

 

 

 

 

 

 

0.15

 

 

 

 

 

 

0.23

 

Cost of core deposits (6)

 

 

 

 

 

0.04

 

 

 

 

 

 

0.03

 

 

 

 

 

 

0.06

 

Ratio of interest-earning assets to interest-bearing liabilities

 

170.53

 

 

 

 

 

 

176.40

 

 

 

 

 

 

172.62

 

________________________________________________________________________

(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 $7.5 million, $5.9 million, and $9.5 million, for the three months ended June 30, 2022, March 31, 2022, and June 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 second quarter of 2022, the Company recorded a $469,000 provision expense, compared to a $448,000 provision expense for the first quarter of 2022, and a $38.5 million provision recapture for the second quarter of 2021. The provision expense for loan losses for the second quarter of 2022 was driven principally by loan growth and the impact of growing macroeconomic uncertainties. The current quarter's provision included a recapture for unfunded commitments largely due to changes in unfunded lending segment mix.

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Provision for credit losses

 

 

 

 

 

 

Provision for loan losses

 

$

3,803

 

 

$

211

 

$

(33,131

)

Provision for unfunded commitments

 

 

(3,402

)

 

 

218

 

 

 

(5,345

)

Provision for held-to-maturity securities

 

 

68

 

 

 

19

 

 

 

 

Total provision for credit losses

 

$

469

 

 

$

448

 

 

$

(38,476

)

 

Noninterest Income

Noninterest income for the second quarter of 2022 was $22.2 million, a decrease of $3.7 million from the first quarter of 2022. The decrease was primarily due to a $2.2 million decrease in net gain from sales of investment securities and a $1.2 million decrease in trust custodial account fees due primarily to the timing of annual tax fees billed in the first quarter of 2022.

During the second quarter of 2022, the Bank sold $45.1 million of investment securities for a net loss of $31,000, compared to the sales of $658.5 million of investment securities for a net gain of $2.1 million in the first quarter of 2022.

Additionally, during the second quarter of 2022, the Bank sold $23.4 million of Small Business Administration (“SBA”) and U.S. Department of Agriculture (“USDA”) loans for a net gain of $1.1 million, compared to the sales of $17.8 million of SBA loans for a net gain of $1.5 million in the first quarter of 2022.

Noninterest income for the second quarter of 2022 decreased $4.5 million, or 17.0%, compared to the second quarter of 2021. The decrease was primarily due to a $5.1 million decrease in net gain from sales of investment securities and a $2.8 million decrease in other income, primarily from higher CRA investment income, partially offset by a $2.5 million increase in trust custodial account fees.

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Noninterest income

 

 

 

 

 

 

Loan servicing income

 

$

502

 

 

$

419

 

 

$

622

 

Service charges on deposit accounts

 

 

2,690

 

 

 

2,615

 

 

 

2,222

 

Other service fee income

 

 

366

 

 

 

367

 

 

 

352

 

Debit card interchange fee income

 

 

936

 

 

 

836

 

 

 

1,099

 

Earnings on bank owned life insurance

 

 

3,240

 

 

 

3,221

 

 

 

2,279

 

Net gain from sales of loans

 

 

1,136

 

 

 

1,494

 

 

 

1,546

 

Net (loss) gain from sales of investment securities

 

 

(31

)

 

 

2,134

 

 

 

5,085

 

Trust custodial account fees

 

 

10,354

 

 

 

11,579

 

 

 

7,897

 

Escrow and exchange fees

 

 

1,827

 

 

 

1,661

 

 

 

1,672

 

Other income

 

 

1,173

 

 

 

1,568

 

 

 

3,955

 

Total noninterest income

 

$

22,193

 

 

$

25,894

 

 

$

26,729

 

 

Noninterest Expense

Noninterest expense totaled $99.0 million for the second quarter of 2022, an increase of $1.3 million compared to the first quarter of 2022, primarily driven by a $608,000 increase in data processing, a $581,000 increase in compensation and benefits, and a $561,000 increase in legal and professional services, partially offset by a $750,000 decrease in other expense.

Noninterest expense increased by $4.5 million compared to the second quarter of 2021. The increase was primarily due to a $4.1 million increase in compensation and benefits.

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Noninterest expense

 

 

 

 

 

 

Compensation and benefits

 

$

57,562

 

 

$

56,981

 

 

$

53,474

 

Premises and occupancy

 

 

11,829

 

 

 

11,952

 

 

 

12,240

 

Data processing

 

 

6,604

 

 

 

5,996

 

 

 

5,765

 

FDIC insurance premiums

 

 

1,452

 

 

 

1,396

 

 

 

1,312

 

Legal and professional services

 

 

4,629

 

 

 

4,068

 

 

 

4,186

 

Marketing expense

 

 

1,926

 

 

 

1,809

 

 

 

1,490

 

Office expense

 

 

1,252

 

 

 

1,203

 

 

 

1,589

 

Loan expense

 

 

1,144

 

 

 

1,134

 

 

 

1,165

 

Deposit expense

 

 

4,081

 

 

 

3,751

 

 

 

3,985

 

Amortization of intangible assets

 

 

3,479

 

 

 

3,592

 

 

 

4,001

 

Other expense

 

 

5,016

 

 

 

5,766

 

 

 

5,289

 

Total noninterest expense

 

$

98,974

 

 

$

97,648

 

 

$

94,496

 

 

Income Tax

For the second quarter of 2022, income tax expense totaled $25.7 million, resulting in an effective tax rate of 26.9%, compared with income tax expense of $22.7 million and an effective tax rate of 25.4% for the first quarter of 2022, and income tax expense of $35.3 million and an effective tax rate of 26.8% for the second 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 $15.05 billion at June 30, 2022, an increase of $313.9 million, or 2.1%, from March 31, 2022, and an increase of $1.45 billion, or 10.7%, from June 30, 2021. The increase from March 31, 2022 was primarily driven by loan fundings and higher commercial line utilization rates, partially offset by higher prepayments and maturities. Commercial line utilization rates increased to an average of 41.6% for the second quarter of 2022, compared to an average of 39.5% for the first quarter of 2022 and 32.0% for the second quarter of 2021.

During the second quarter of 2022, loan commitments totaled $1.50 billion and new loan fundings totaled $1.12 billion, compared with $1.46 billion in loan commitments and $1.06 billion in new loan fundings for the first quarter of 2022, and $1.58 billion in loan commitments and $1.15 billion in new loan fundings for the second quarter of 2021. The increase in new loan fundings from the prior quarter was primarily due to growth in our multifamily, commercial real estate (“CRE”) non-owner-occupied, CRE owner-occupied, and commercial and industrial (“C&I”) loan segments.

At June 30, 2022, the total loan-to-deposit ratio was 83.2%, compared with 83.4% and 79.9% at March 31, 2022 and June 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

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

2022

 

2022

 

2021

Beginning gross loan balance

$

14,745,401

 

 

$

14,306,766

 

 

$

13,124,703

 

New commitments

 

1,504,186

 

 

 

1,461,992

 

 

 

1,576,884

 

Unfunded new commitments

 

(382,478

)

 

 

(399,235

)

 

 

(423,797

)

Net new fundings

 

1,121,708

 

 

 

1,062,757

 

 

 

1,153,087

 

Purchased loans

 

710

 

 

 

 

 

 

 

Amortization/maturities/payoffs

 

(936,893

)

 

 

(786,700

)

 

 

(821,502

)

Net draws on existing lines of credit

 

200,255

 

 

 

182,868

 

 

 

161,273

 

Loan sales

 

(23,698

)

 

 

(17,991

)

 

 

(14,959

)

Charge-offs

 

(5,831

)

 

 

(2,299

)

 

 

(3,290

)

Net increase

 

356,251

 

 

 

438,635

 

 

 

474,609

 

Ending gross loan balance before basis adjustment

$

15,101,652

 

 

$

14,745,401

 

 

$

13,599,312

 

Basis adjustment associated with fair value hedge (1)

 

(51,087

)

 

 

 

 

 

 

Ending gross loan balance

$

15,050,565

 

 

$

14,745,401

 

 

$

13,599,312

 

______________________________

(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:

 

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Investor loans secured by real estate

 

 

 

 

 

 

CRE non-owner-occupied

 

$

2,788,715

 

 

$

2,774,650

 

 

$

2,810,233

 

Multifamily

 

 

6,188,086

 

 

 

6,041,085

 

 

 

5,539,464

 

Construction and land

 

 

331,734

 

 

 

303,811

 

 

 

297,728

 

SBA secured by real estate (1)

 

 

44,199

 

 

 

42,642

 

 

 

53,003

 

Total investor loans secured by real estate

 

 

9,352,734

 

 

 

9,162,188

 

 

 

8,700,428

 

Business loans secured by real estate (2)

 

 

 

 

 

 

CRE owner-occupied

 

 

2,486,747

 

 

 

2,391,984

 

 

 

2,089,300

 

Franchise real estate secured

 

 

387,683

 

 

 

384,267

 

 

 

358,120

 

SBA secured by real estate (3)

 

 

67,191

 

 

 

68,466

 

 

 

72,923

 

Total business loans secured by real estate

 

 

2,941,621

 

 

 

2,844,717

 

 

 

2,520,343

 

Commercial loans (4)

 

 

 

 

 

 

Commercial and industrial

 

 

2,295,421

 

 

 

2,242,632

 

 

 

1,795,144

 

Franchise non-real estate secured

 

 

415,830

 

 

 

388,322

 

 

 

401,315

 

SBA non-real estate secured

 

 

11,008

 

 

 

10,761

 

 

 

13,900

 

Total commercial loans

 

 

2,722,259

 

 

 

2,641,715

 

 

 

2,210,359

 

Retail loans

 

 

 

 

 

 

Single family residential (5)

 

 

77,951

 

 

 

79,978

 

 

 

157,228

 

Consumer

 

 

4,130

 

 

 

5,157

 

 

 

6,240

 

Total retail loans

 

 

82,081

 

 

 

85,135

 

 

 

163,468

 

Loans held for investment before basis adjustment (6)

 

 

15,098,695

 

 

 

14,733,755

 

 

 

13,594,598

 

Basis adjustment associated with fair value hedge (7)

 

 

(51,087

)

 

 

 

 

 

 

Loans held for investment

 

 

15,047,608

 

 

 

14,733,755

 

 

 

13,594,598

 

Allowance for credit losses for loans held for investment

 

 

(196,075

)

 

 

(197,517

)

 

 

(232,774

)

Loans held for investment, net

 

$

14,851,533

 

 

$

14,536,238

 

 

$

13,361,824

 

 

 

 

 

 

 

 

Total unfunded loan commitments

 

$

2,872,934

 

 

$

2,940,370

 

 

$

2,345,364

 

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

 

$

2,957

 

 

$

11,646

 

 

$

4,714

 

__________________________________________________

(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 $63.6 million, $71.2 million, and $94.4 million as of June 30, 2022, March 31, 2022, and June 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 June 30, 2022 was 4.06%, compared to 3.92% at March 31, 2022, and 4.11% at June 30, 2021. The quarter-over-quarter increase reflects 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 year-over-year decrease reflects the continued impact from the prepayments of higher rate loans.

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

 

 

Three Months Ended

 

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Investor loans secured by real estate

 

 

 

 

 

 

CRE non-owner-occupied

 

$

195,896

 

 

$

153,845

 

 

$

181,995

 

Multifamily

 

 

540,263

 

 

 

454,652

 

 

 

631,360

 

Construction and land

 

 

192,852

 

 

 

213,206

 

 

 

148,422

 

SBA secured by real estate (1)

 

 

4,698

 

 

 

7,775

 

 

 

 

Total investor loans secured by real estate

 

 

933,709

 

 

 

829,478

 

 

 

961,777

 

Business loans secured by real estate (2)

 

 

 

 

 

 

CRE owner-occupied

 

 

220,936

 

 

 

246,405

 

 

 

181,385

 

Franchise real estate secured

 

 

17,500

 

 

 

21,060

 

 

 

39,320

 

SBA secured by real estate (3)

 

 

7,033

 

 

 

9,378

 

 

 

13,445

 

Total business loans secured by real estate

 

 

245,469

 

 

 

276,843

 

 

 

234,150

 

Commercial loans (4)

 

 

 

 

 

 

Commercial and industrial

 

 

255,922

 

 

 

317,728

 

 

 

316,162

 

Franchise non-real estate secured

 

 

49,604

 

 

 

28,090

 

 

 

41,501

 

SBA non-real estate secured

 

 

6,419

 

 

 

3,543

 

 

 

1,000

 

Total commercial loans

 

 

311,945

 

 

 

349,361

 

 

 

358,663

 

Retail loans

 

 

 

 

 

 

Single family residential (5)

 

 

13,063

 

 

 

6,310

 

 

 

14,744

 

Consumer

 

 

 

 

 

 

 

 

7,550

 

Total retail loans

 

 

13,063

 

 

 

6,310

 

 

 

22,294

 

Total loan commitments

 

$

1,504,186

 

 

$

1,461,992

 

 

$

1,576,884

 

_____________________________________________________

(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 was 4.11% in the second quarter of 2022, compared to 3.55% in the first quarter of 2022, and 3.59% in the second quarter of 2021.

Asset Quality and Allowance for Credit Losses

At June 30, 2022, our allowance for credit losses (“ACL”) on loans held for investment was $196.1 million, a decrease of $1.4 million from March 31, 2022, and a decrease of $36.7 million from June 30, 2021. The ACL as of June 30, 2022 was reflective of the improvement in asset quality, offset by higher loans held for investment as well as the impact of growing macroeconomic uncertainties. The decrease in ACL from June 30, 2021 was primarily due to favorable changes in the macroeconomic forecasts related to the COVID-19 pandemic.

During the second quarter of 2022, the Company incurred $5.2 million of net charge-offs, largely attributable to one C&I lending relationship, compared to $446,000 of net charge-offs during the first quarter of 2022 and $1.1 million of net charge-offs during the second quarter of 2021.

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, 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

$

35,974

 

$

 

 

$

 

$

1,247

 

 

$

37,221

Multifamily

 

54,325

 

 

 

 

 

 

 

1,968

 

 

 

56,293

Construction and land

 

5,219

 

 

 

 

 

 

 

217

 

 

 

5,436

SBA secured by real estate (1)

 

3,050

 

 

 

 

 

 

 

(185

)

 

 

2,865

Business loans secured by real estate (2)

 

 

 

 

 

 

 

 

 

CRE owner-occupied

 

31,891

 

 

 

 

 

4

 

 

(434

)

 

 

31,461

Franchise real estate secured

 

7,977

 

 

 

 

 

 

 

(1,447

)

 

 

6,530

SBA secured by real estate (3)

 

5,195

 

 

 

 

 

 

 

(46

)

 

 

5,149

Commercial loans (4)

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

38,598

 

 

(5,381

)

 

 

533

 

 

3,298

 

 

 

37,048

Franchise non-real estate secured

 

14,304

 

 

(448

)

 

 

 

 

(732

)

 

 

13,124

SBA non-real estate secured

 

490

 

 

 

 

 

16

 

 

(54

)

 

 

452

Retail loans

 

 

 

 

 

 

 

 

 

Single family residential (5)

 

233

 

 

 

 

 

33

 

 

12

 

 

 

278

Consumer loans

 

261

 

 

(2

)

 

 

 

 

(41

)

 

 

218

Totals

$

197,517

 

$

(5,831

)

 

$

586

 

$

3,803

 

 

$

196,075

____________________________________________________

(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, 2022 was 1.30%, compared to 1.34% at March 31, 2022 and 1.71% at June 30, 2021. The fair value net discount on loans acquired through total bank acquisitions was $63.6 million, or 0.42% of total loans held for investment, as of June 30, 2022, compared to $71.2 million, or 0.48% of total loans held for investment, as of March 31, 2022, and $94.4 million, or 0.69% of total loans held for investment, as of June 30, 2021.

Nonperforming assets totaled $44.4 million, or 0.20% of total assets, at June 30, 2022, compared with $55.3 million, or 0.26% of total assets, at March 31, 2022, and $34.4 million, or 0.17% of total assets, at June 30, 2021. Total loan delinquencies were $36.3 million, or 0.24% of loans held for investment, at June 30, 2022, compared to $43.7 million, or 0.30% of loans held for investment, at March 31, 2022, and $19.3 million, or 0.14% of loans held for investment, at June 30, 2021.

Classified loans totaled $106.2 million, or 0.71% of loans held for investment, at June 30, 2022, compared with $122.5 million, or 0.83% of loans held for investment, at March 31, 2022, and $131.4 million, or 0.97% of loans held for investment, at June 30, 2021.

Interest typically is not 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. At June 30, 2022, there were no loans 90 days or more past due and still accruing interest, compared with one CRE owner-occupied loan of $1.8 million in default for more than 90 days and still accruing interest as of March 31, 2022. There were $16.6 million of troubled debt restructured loans at June 30, 2022, compared with $16.9 million at March 31, 2022, and $17.8 million at June 30, 2021.

 

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Asset quality

 

 

 

 

 

 

Nonperforming loans

 

$

44,445

 

 

$

55,309

 

 

$

34,387

 

Other real estate owned

 

 

 

 

 

 

 

 

 

Nonperforming assets

 

$

44,445

 

 

$

55,309

 

 

$

34,387

 

 

 

 

 

 

 

 

Total classified assets (1)

 

$

106,153

 

 

$

122,528

 

 

$

131,350

 

Allowance for credit losses

 

 

196,075

 

 

 

197,517

 

 

 

232,774

 

Allowance for credit losses as a percent of total nonperforming loans

 

 

441

%

 

 

357

%

 

 

677

%

Nonperforming loans as a percent of loans held for investment

 

 

0.30

 

 

 

0.38

 

 

 

0.25

 

Nonperforming assets as a percent of total assets

 

 

0.20

 

 

 

0.26

 

 

 

0.17

 

Classified loans to total loans held for investment

 

 

0.71

 

 

 

0.83

 

 

 

0.97

 

Classified assets to total assets

 

 

0.48

 

 

 

0.57

 

 

 

0.64

 

Net loan charge-offs for the quarter ended

 

$

5,245

 

 

$

446

 

 

$

1,094

 

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

 

 

0.04

%

 

 

%

 

 

0.01

%

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

 

 

1.30

 

 

 

1.34

 

 

 

1.71

 

Delinquent loans

 

 

 

 

 

 

30 - 59 days

 

$

6,915

 

 

$

25,332

 

 

$

207

 

60 - 89 days

 

 

 

 

 

74

 

 

 

83

 

90+ days

 

 

29,360

 

 

 

18,245

 

 

 

19,045

 

Total delinquency

 

$

36,275

 

 

$

43,651

 

 

$

19,335

 

Delinquency as a percentage of loans held for investment

 

 

0.24

%

 

 

0.30

%

 

 

0.14

%

____________________________________________________

(1)

Includes substandard loans and other real estate owned.

(2)

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 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.

 

Investment Securities

At June 30, 2022, available-for-sale (“AFS”) and held-to-maturity (“HTM”) investment securities were $2.68 billion and $1.39 billion, respectively, compared to $3.22 billion and $996.4 million, respectively, at March 31, 2022. During the second quarter of 2022, the Company reassessed classification of certain investments and transferred to HTM, at fair value, the remaining AFS municipal bond portfolio totaling $444.6 million, which the Company intends to hold to maturity.

In total, investment securities were $4.07 billion at June 30, 2022, a decrease of $148.7 million from March 31, 2022, and a decrease of $436.6 million from June 30, 2021. The decrease in the second quarter of 2022 compared to the prior quarter was primarily the result of $161.0 million in principal payments, discounts from the AFS securities transferred from HTM, amortization, and redemptions, a $56.6 million decrease resulting from mark-to-market fair value adjustments, and $45.1 million in investment securities sales, partially offset by $114.0 million in investment securities purchases.

The decrease in investment securities from June 30, 2021 was primarily the result of $1.13 billion in sales, $584.7 million in principal payments, discounts from the AFS securities transferred from HTM, amortization, and redemptions, and a $266.5 million decrease resulting from mark-to-market fair value adjustments, partially offset by $1.55 billion in purchases.

Deposits

At June 30, 2022, total deposits were $18.08 billion, an increase of $395.4 million, or 2.2%, from March 31, 2022, and an increase of $1.07 billion, or 6.3%, from June 30, 2021.

At June 30, 2022, core deposits(1) totaled $16.63 billion, or 91.9% of total deposits, a decrease of $26.7 million, or 0.2%, from March 31, 2022, and an increase of $876.1 million, or 5.56%, from June 30, 2021. The decrease in the second quarter of 2022 compared to the prior quarter was primarily due to the decreases of $324.8 million in money market and savings deposits, and $172.2 million in noninterest-bearing checking deposits, offset by an increase of $470.4 million in interest-bearing checking deposits. The increase from June 30, 2021 was primarily driven by an increase in business checking deposits, partially offset by the decreases in money market/savings deposits.

At June 30, 2022, non-core deposits totaled $1.46 billion, an increase of $422.1 million, or 40.7%, from March 31, 2022, and an increase of $193.4 million, or 15.3%, from June 30, 2021. The increase in the second quarter of 2022 compared to the prior quarter was primarily due to the addition of $599.7 million in brokered certificates of deposit, partially offset by the decreases of $175.0 million in retail certificates of deposit and $2.6 million in brokered money market deposits. The increase from June 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 second quarter of 2022 was 0.06%, compared to 0.04% for the first quarter of 2022, and 0.08% for the second quarter of 2021. The weighted average cost of core deposits(2) for the second quarter was 0.04%, compared to 0.03% for the first quarter of 2022, and 0.06% for the second quarter of 2021.

At June 30, 2022, the end of period weighted average rate of total deposits was 0.13% and the end of period weighted average rate of core deposits was 0.06%, compared to 0.04% and 0.03%, respectively at March 31, 2022.

______________________________

(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.

 

 

 

June 30,

 

March 31,

 

June 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

Deposit accounts

 

 

 

 

 

 

Noninterest-bearing checking

 

$

6,934,318

 

 

$

7,106,548

 

 

$

6,768,384

 

Interest-bearing:

 

 

 

 

 

 

Checking

 

 

4,149,432

 

 

 

3,679,067

 

 

 

3,103,343

 

Money market/savings

 

 

5,542,230

 

 

 

5,867,044

 

 

 

5,878,122

 

Total core deposits

 

 

16,625,980

 

 

 

16,652,659

 

 

 

15,749,849

 

Brokered money market

 

 

3,000

 

 

 

5,553

 

 

 

5,550

 

Retail certificates of deposit

 

 

855,966

 

 

 

1,031,011

 

 

 

1,259,698

 

Wholesale/brokered certificates of deposit

 

 

599,667

 

 

 

 

 

 

 

Total non-core deposits

 

 

1,458,633

 

 

 

1,036,564

 

 

 

1,265,248

 

Total deposits

 

$

18,084,613

 

 

$

17,689,223

 

 

$

17,015,097

 

 

 

 

 

 

 

 

Cost of deposits

 

 

0.06

%

 

 

0.04

%

 

 

0.08

%

Cost of core deposits (1)

 

 

0.04

 

 

 

0.03

 

 

 

0.06

 

Noninterest-bearing deposits as a percent of total deposits

 

 

38.3

 

 

 

40.2

 

 

 

39.8

 

Non-maturity deposits as a percent of total deposits

 

 

92.0

 

 

 

94.2

 

 

 

92.6

 

Core deposits as a percent of total deposits

 

 

91.9

 

 

 

94.1

 

 

 

92.6

 

______________________________________________________

(1)

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

 

Borrowings

At June 30, 2022, total borrowings amounted to $930.9 million, an increase of $160,000 from March 31, 2022, and an increase of $454.3 million from June 30, 2021. Total borrowings at June 30, 2022 were comprised of $600.0 million of Federal Home Loan Bank of San Francisco (“FHLB”) term advances and $330.9 million of subordinated debt. The increase in borrowings at June 30, 2022 as compared to March 31, 2022 was primarily due to the amortization of the subordinated debt issuance costs. The increase in borrowings at June 30, 2022 as compared to June 30, 2021 was primarily due to an increase of $600.0 million in FHLB term advances, partially offset by redemptions of $135.0 million in subordinated notes and $10.4 million junior subordinated debt securities. At June 30, 2022, total borrowings represented 4.2% of total assets, compared to 4.3% and 2.3% as of March 31, 2022 and June 30, 2021, respectively.

Capital Ratios

At June 30, 2022, our common stockholder's equity was $2.76 billion, or 12.53% of total assets, compared with $2.78 billion, or 12.87%, at March 31, 2022, and $2.81 billion, or 13.70%, at June 30, 2021, with a book value per share of $29.01, compared with $29.31 at March 31, 2022, and $29.72 at June 30, 2021. At June 30, 2022, our ratio of tangible common equity to tangible assets(1) was 8.52%, compared with 8.79% at March 31, 2022, and 9.38% at June 30, 2021, and our tangible book value per share(1) was $18.86, compared with $19.12 at March 31, 2022, and $19.38 at June 30, 2021. The decreases in the ratio of tangible common equity to tangible assets and tangible book value per share at June 30, 2022 from the prior quarter were primarily driven by the other comprehensive loss from the impact of higher interest rates on our AFS securities portfolio.

______________________________

(1)

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

 

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 June 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.

 

 

June 30,

 

March 31,

 

June 30,

Capital ratios

 

2022

 

2022

 

2021

Pacific Premier Bancorp, Inc. Consolidated

 

 

 

 

 

 

Tier 1 leverage ratio

 

 

9.90

%

 

 

10.10

%

 

 

9.83

%

Common equity tier 1 capital ratio

 

 

11.91

 

 

 

11.80

 

 

 

11.89

 

Tier 1 capital ratio

 

 

11.91

 

 

 

11.80

 

 

 

11.89

 

Total capital ratio

 

 

14.41

 

 

 

14.37

 

 

 

15.61

 

Tangible common equity ratio (1)

 

 

8.52

 

 

 

8.79

 

 

 

9.38

 

 

 

 

 

 

 

 

Pacific Premier Bank

 

 

 

 

 

 

Tier 1 leverage ratio

 

 

11.41

%

 

 

11.66

%

 

 

11.31

%

Common equity tier 1 capital ratio

 

 

13.72

 

 

 

13.61

 

 

 

13.67

 

Tier 1 capital ratio

 

 

13.72

 

 

 

13.61

 

 

 

13.67

 

Total capital ratio

 

 

14.54

 

 

 

14.47

 

 

 

15.44

 

 

 

 

 

 

 

 

Share data

 

 

 

 

 

 

Book value per share

 

$

29.01

 

 

$

29.31

 

 

$

29.72

 

Tangible book value per share (1)

 

 

18.86

 

 

 

19.12

 

 

 

19.38

 

Common equity dividends declared per share

 

 

0.33

 

 

 

0.33

 

 

 

0.33

 

Closing stock price (2)

 

 

29.24

 

 

 

35.35

 

 

 

42.29

 

Shares issued and outstanding

 

 

94,976,605

 

 

 

94,945,849

 

 

 

94,656,575

 

Market capitalization (2)(3)

 

$

2,777,116

 

 

$

3,356,336

 

 

$

4,003,027

 

______________________________

(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 July 19, 2022, the Company's Board of Directors declared a $0.33 per share dividend, payable on August 12, 2022 to stockholders of record as of August 1, 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 second quarter of 2022, the Company did not repurchase any shares of common stock.

Restructuring

During July 2022, the Company completed a staff restructuring by eliminating 53 positions, or approximately 3% of the workforce. As a result, the Company will incur one-time severance and other employee-related costs totaling $1.1 million in the third quarter of 2022. The workforce reduction will not have a material impact to the Company's financial position or results of operations.

Conference Call and Webcast

The Company will host a conference call at 9:00 a.m. PT / 12:00 p.m. ET on July 21, 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 July 28, 2022, at (877) 344-7529, conference ID 3670384.

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 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 approximately $17 billion of assets under custody and over 41,000 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 the tight labor market, supply chain disruptions, inflationary pressures, or turbulence in domestic or global financial markets could adversely affect our revenues, 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 or other intangible assets in future periods. 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 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 current and possible future 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, 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; 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)

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

 

2021

 

2021

ASSETS

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

972,798

 

 

$

809,259

 

 

$

304,703

 

 

$

322,320

 

 

$

631,888

 

Interest-bearing time deposits with financial institutions

 

 

2,216

 

 

 

2,216

 

 

 

2,216

 

 

 

2,708

 

 

 

2,708

 

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

 

 

1,390,682

 

 

 

996,382

 

 

 

381,674

 

 

 

170,576

 

 

 

18,933

 

Investment securities available-for-sale, at fair value

 

 

2,679,070

 

 

 

3,222,095

 

 

 

4,273,864

 

 

 

4,709,815

 

 

 

4,487,447

 

FHLB, FRB, and other stock, at cost

 

 

118,636

 

 

 

116,973

 

 

 

117,538

 

 

 

118,399

 

 

 

117,738

 

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

 

 

2,957

 

 

 

11,646

 

 

 

10,869

 

 

 

8,100

 

 

 

4,714

 

Loans held for investment

 

 

15,047,608

 

 

 

14,733,755

 

 

 

14,295,897

 

 

 

13,982,861

 

 

 

13,594,598

 

Allowance for credit losses

 

 

(196,075

)

 

 

(197,517

)

 

 

(197,752

)

 

 

(211,481

)

 

 

(232,774

)

Loans held for investment, net

 

 

14,851,533

 

 

 

14,536,238

 

 

 

14,098,145

 

 

 

13,771,380

 

 

 

13,361,824

 

Accrued interest receivable

 

 

66,898

 

 

 

60,922

 

 

 

65,728

 

 

 

63,228

 

 

 

67,529

 

Premises and equipment

 

 

68,435

 

 

 

70,453

 

 

 

71,908

 

 

 

72,850

 

 

 

73,821

 

Deferred income taxes, net

 

 

163,767

 

 

 

133,938

 

 

 

87,344

 

 

 

83,432

 

 

 

81,741

 

Bank owned life insurance

 

 

454,593

 

 

 

451,968

 

 

 

449,353

 

 

 

447,135

 

 

 

444,645

 

Intangible assets

 

 

62,500

 

 

 

65,978

 

 

 

69,571

 

 

 

73,451

 

 

 

77,363

 

Goodwill

 

 

901,312

 

 

 

901,312

 

 

 

901,312

 

 

 

901,312

 

 

 

901,312

 

Other assets

 

 

258,522

 

 

 

242,916

 

 

 

260,204

 

 

 

260,505

 

 

 

257,823

 

Total assets

 

$

21,993,919

 

 

$

21,622,296

 

 

$

21,094,429

 

 

$

21,005,211

 

 

$

20,529,486

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

Deposit accounts:

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

 

$

6,934,318

 

 

$

7,106,548

 

 

$

6,757,259

 

 

$

6,841,495

 

 

$

6,768,384

 

Interest-bearing:

 

 

 

 

 

 

 

 

 

 

Checking

 

 

4,149,432

 

 

 

3,679,067

 

 

 

3,493,331

 

 

 

3,477,902

 

 

 

3,103,343

 

Money market/savings

 

 

5,545,230

 

 

 

5,872,597

 

 

 

5,806,726

 

 

 

6,037,532

 

 

 

5,883,672

 

Retail certificates of deposit

 

 

855,966

 

 

 

1,031,011

 

 

 

1,058,273

 

 

 

1,113,070

 

 

 

1,259,698

 

Wholesale/brokered certificates of deposit

 

 

599,667

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest-bearing

 

 

11,150,295

 

 

 

10,582,675

 

 

 

10,358,330

 

 

 

10,628,504

 

 

 

10,246,713

 

Total deposits

 

 

18,084,613

 

 

 

17,689,223

 

 

 

17,115,589

 

 

 

17,469,999

 

 

 

17,015,097

 

FHLB advances and other borrowings

 

 

600,000

 

 

 

600,000

 

 

 

558,000

 

 

 

150,000

 

 

 

 

Subordinated debentures

 

 

330,886

 

 

 

330,726

 

 

 

330,567

 

 

 

330,408

 

 

 

476,622

 

Accrued expenses and other liabilities

 

 

223,201

 

 

 

219,329

 

 

 

203,962

 

 

 

216,688

 

 

 

224,348

 

Total liabilities

 

 

19,238,700

 

 

 

18,839,278

 

 

 

18,208,118

 

 

 

18,167,095

 

 

 

17,716,067

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

933

 

 

 

933

 

 

 

929

 

 

 

929

 

 

 

931

 

Additional paid-in capital

 

 

2,353,361

 

 

 

2,348,727

 

 

 

2,351,294

 

 

 

2,347,626

 

 

 

2,352,112

 

Retained earnings

 

 

615,943

 

 

 

577,591

 

 

 

541,950

 

 

 

488,385

 

 

 

433,852

 

Accumulated other comprehensive (loss) income

 

 

(215,018

)

 

 

(144,233

)

 

 

(7,862

)

 

 

1,176

 

 

 

26,524

 

Total stockholders' equity

 

 

2,755,219

 

 

 

2,783,018

 

 

 

2,886,311

 

 

 

2,838,116

 

 

 

2,813,419

 

Total liabilities and stockholders' equity

 

$

21,993,919

 

 

$

21,622,296

 

 

$

21,094,429

 

 

$

21,005,211

 

 

$

20,529,486

 

 

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)

 

2022

 

2022

 

2021

 

2022

 

2021

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

Loans

 

$

164,455

 

 

$

150,604

 

 

$

152,365

 

 

$

315,059

 

 

$

307,590

 

Investment securities and other interest-earning assets

 

 

18,771

 

 

 

17,942

 

 

 

18,327

 

 

 

36,713

 

 

 

36,096

 

Total interest income

 

 

183,226

 

 

 

168,546

 

 

 

170,692

 

 

 

351,772

 

 

 

343,686

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

2,682

 

 

 

1,673

 

 

 

3,265

 

 

 

4,355

 

 

 

7,691

 

FHLB advances and other borrowings

 

 

3,217

 

 

 

474

 

 

 

 

 

 

3,691

 

 

 

65

 

Subordinated debentures

 

 

4,562

 

 

 

4,560

 

 

 

6,493

 

 

 

9,122

 

 

 

13,344

 

Total interest expense

 

 

10,461

 

 

 

6,707

 

 

 

9,758

 

 

 

17,168

 

 

 

21,100

 

Net interest income before provision for credit losses

 

 

172,765

 

 

 

161,839

 

 

 

160,934

 

 

 

334,604

 

 

 

322,586

 

Provision for credit losses

 

 

469

 

 

 

448

 

 

 

(38,476

)

 

 

917

 

 

 

(36,502

)

Net interest income after provision for credit losses

 

 

172,296

 

 

 

161,391

 

 

 

199,410

 

 

 

333,687

 

 

 

359,088

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

Loan servicing income

 

 

502

 

 

 

419

 

 

 

622

 

 

 

921

 

 

 

1,080

 

Service charges on deposit accounts

 

 

2,690

 

 

 

2,615

 

 

 

2,222

 

 

 

5,305

 

 

 

4,254

 

Other service fee income

 

 

366

 

 

 

367

 

 

 

352

 

 

 

733

 

 

 

825

 

Debit card interchange fee income

 

 

936

 

 

 

836

 

 

 

1,099

 

 

 

1,772

 

 

 

1,886

 

Earnings on bank owned life insurance

 

 

3,240

 

 

 

3,221

 

 

 

2,279

 

 

 

6,461

 

 

 

4,512

 

Net gain from sales of loans

 

 

1,136

 

 

 

1,494

 

 

 

1,546

 

 

 

2,630

 

 

 

1,907

 

Net (loss) gain from sales of investment securities

 

 

(31

)

 

 

2,134

 

 

 

5,085

 

 

 

2,103

 

 

 

9,131

 

Trust custodial account fees

 

 

10,354

 

 

 

11,579

 

 

 

7,897

 

 

 

21,933

 

 

 

15,119

 

Escrow and exchange fees

 

 

1,827

 

 

 

1,661

 

 

 

1,672

 

 

 

3,488

 

 

 

3,198

 

Other income

 

 

1,173

 

 

 

1,568

 

 

 

3,955

 

 

 

2,741

 

 

 

8,557

 

Total noninterest income

 

 

22,193

 

 

 

25,894

 

 

 

26,729

 

 

 

48,087

 

 

 

50,469

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

57,562

 

 

 

56,981

 

 

 

53,474

 

 

 

114,543

 

 

 

106,022

 

Premises and occupancy

 

 

11,829

 

 

 

11,952

 

 

 

12,240

 

 

 

23,781

 

 

 

24,220

 

Data processing

 

 

6,604

 

 

 

5,996

 

 

 

5,765

 

 

 

12,600

 

 

 

11,593

 

FDIC insurance premiums

 

 

1,452

 

 

 

1,396

 

 

 

1,312

 

 

 

2,848

 

 

 

2,493

 

Legal and professional services

 

 

4,629

 

 

 

4,068

 

 

 

4,186

 

 

 

8,697

 

 

 

8,121

 

Marketing expense

 

 

1,926

 

 

 

1,809

 

 

 

1,490

 

 

 

3,735

 

 

 

3,088

 

Office expense

 

 

1,252

 

 

 

1,203

 

 

 

1,589

 

 

 

2,455

 

 

 

3,418

 

Loan expense

 

 

1,144

 

 

 

1,134

 

 

 

1,165

 

 

 

2,278

 

 

 

2,280

 

Deposit expense

 

 

4,081

 

 

 

3,751

 

 

 

3,985

 

 

 

7,832

 

 

 

7,844

 

Merger-related expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

Amortization of intangible assets

 

 

3,479

 

 

 

3,592

 

 

 

4,001

 

 

 

7,071

 

 

 

8,144

 

Other expense

 

 

5,016

 

 

 

5,766

 

 

 

5,289

 

 

 

10,782

 

 

 

9,757

 

Total noninterest expense

 

 

98,974

 

 

 

97,648

 

 

 

94,496

 

 

 

196,622

 

 

 

186,985

 

Net income before income taxes

 

 

95,515

 

 

 

89,637

 

 

 

131,643

 

 

 

185,152

 

 

 

222,572

 

Income tax

 

 

25,712

 

 

 

22,733

 

 

 

35,341

 

 

 

48,445

 

 

 

57,602

 

Net income

 

$

69,803

 

 

$

66,904

 

 

$

96,302

 

 

$

136,707

 

 

$

164,970

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.74

 

 

$

0.71

 

 

$

1.02

 

 

$

1.44

 

 

$

1.74

 

Diluted

 

$

0.73

 

 

$

0.70

 

 

$

1.01

 

 

$

1.44

 

 

$

1.73

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

Basic

 

 

93,765,264

 

 

 

93,499,695

 

 

 

93,635,392

 

 

 

93,633,213

 

 

 

93,582,563

 

Diluted

 

 

94,040,691

 

 

 

93,946,074

 

 

 

94,218,028

 

 

 

93,983,057

 

 

 

94,155,740

 

 

SELECTED FINANCIAL DATA

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED AVERAGE BALANCES AND YIELD DATA

(Unaudited)

 

 

 

 

 

Three Months Ended

 

 

June 30, 2022

 

March 31, 2022

 

June 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

 

$

702,663

 

$

1,211

 

0.69

%

 

$

322,236

 

$

90

 

0.11

%

 

$

1,323,186

 

$

315

 

0.10

%

Investment securities

 

 

4,254,961

 

 

17,560

 

1.65

 

 

 

4,546,408

 

 

17,852

 

1.57

 

 

 

4,243,644

 

 

18,012

 

1.70

 

Loans receivable, net (1)(2)

 

 

14,919,182

 

 

164,455

 

4.42

 

 

 

14,371,588

 

 

150,604

 

4.25

 

 

 

13,216,973

 

 

152,365

 

4.62

 

Total interest-earning assets

 

 

19,876,806

 

 

183,226

 

3.70

 

 

 

19,240,232

 

 

168,546

 

3.55

 

 

 

18,783,803

 

 

170,692

 

3.64

 

Noninterest-earning assets

 

 

1,793,347

 

 

 

 

 

 

1,716,559

 

 

 

 

 

 

1,506,612

 

 

 

 

Total assets

 

$

21,670,153

 

 

 

 

 

$

20,956,791

 

 

 

 

 

$

20,290,415

 

 

 

 

Liabilities and equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking

 

$

4,055,506

 

$

712

 

0.07

%

 

$

3,537,824

 

$

229

 

0.03

%

 

$

3,155,935

 

$

336

 

0.04

%

Money market

 

 

5,231,464

 

 

1,010

 

0.08

 

 

 

5,343,973

 

 

888

 

0.07

 

 

 

5,558,790

 

 

2,002

 

0.14

 

Savings

 

 

432,586

 

 

27

 

0.03

 

 

 

422,186

 

 

26

 

0.02

 

 

 

384,376

 

 

84

 

0.09

 

Retail certificates of deposit

 

 

922,784

 

 

607

 

0.26

 

 

 

1,047,451

 

 

530

 

0.21

 

 

 

1,294,544

 

 

839

 

0.26

 

Wholesale/brokered certificates of deposit

 

 

80,182

 

 

326

 

1.63

 

 

 

 

 

 

 

 

 

1,357

 

 

4

 

1.18

 

Total interest-bearing deposits

 

 

10,722,522

 

 

2,682

 

0.10

 

 

 

10,351,434

 

 

1,673

 

0.07

 

 

 

10,395,002

 

 

3,265

 

0.13

 

FHLB advances and other borrowings

 

 

602,621

 

 

3,217

 

2.14

 

 

 

225,250

 

 

474

 

0.85

 

 

 

6,303

 

 

 

 

Subordinated debentures

 

 

330,796

 

 

4,562

 

5.52

 

 

 

330,629

 

 

4,560

 

5.52

 

 

 

480,415

 

 

6,493

 

5.41

 

Total borrowings

 

 

933,417

 

 

7,779

 

3.34

 

 

 

555,879

 

 

5,034

 

3.63

 

 

 

486,718

 

 

6,493

 

5.35

 

Total interest-bearing liabilities

 

 

11,655,939

 

 

10,461

 

0.36

 

 

 

10,907,313

 

 

6,707

 

0.25

 

 

 

10,881,720

 

 

9,758

 

0.36

 

Noninterest-bearing deposits

 

 

7,030,205

 

 

 

 

 

 

6,928,872

 

 

 

 

 

 

6,341,063

 

 

 

 

Other liabilities

 

 

219,116

 

 

 

 

 

 

256,219

 

 

 

 

 

 

320,324

 

 

 

 

Total liabilities

 

 

18,905,260

 

 

 

 

 

 

18,092,404

 

 

 

 

 

 

17,543,107

 

 

 

 

Stockholders' equity

 

 

2,764,893

 

 

 

 

 

 

2,864,387

 

 

 

 

 

 

2,747,308

 

 

 

 

Total liabilities and equity

 

$

21,670,153

 

 

 

 

 

$

20,956,791

 

 

 

 

 

$

20,290,415

 

 

 

 

Net interest income

 

 

 

$

172,765

 

 

 

 

 

$

161,839

 

 

 

 

 

$

160,934

 

 

Net interest margin (3)

 

 

 

 

 

3.49

%

 

 

 

 

 

3.41

%

 

 

 

 

 

3.44

%

Cost of deposits (4)

 

 

 

 

 

0.06

 

 

 

 

 

 

0.04

 

 

 

 

 

 

0.08

 

Cost of funds (5)

 

 

 

 

 

0.22

 

 

 

 

 

 

0.15

 

 

 

 

 

 

0.23

 

Cost of core deposits (6)

 

 

 

 

 

0.04

 

 

 

 

 

 

0.03

 

 

 

 

 

 

0.06

 

Ratio of interest-earning assets to interest-bearing liabilities

 

170.53

 

 

 

 

 

 

176.40

 

 

 

 

 

 

172.62

 

______________________________________________

(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 $7.5 million, $5.9 million, and $9.5 million, for the three months ended June 30, 2022, March 31, 2022, and June 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)

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30

 

June 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

 

2021

 

2021

Investor loans secured by real estate

 

 

 

 

 

 

 

 

 

 

CRE non-owner-occupied

 

$

2,788,715

 

 

$

2,774,650

 

 

$

2,771,137

 

 

$

2,823,065

 

 

$

2,810,233

 

Multifamily

 

 

6,188,086

 

 

 

6,041,085

 

 

 

5,891,934

 

 

 

5,705,666

 

 

 

5,539,464

 

Construction and land

 

 

331,734

 

 

 

303,811

 

 

 

277,640

 

 

 

292,815

 

 

 

297,728

 

SBA secured by real estate (1)

 

 

44,199

 

 

 

42,642

 

 

 

46,917

 

 

 

49,446

 

 

 

53,003

 

Total investor loans secured by real estate

 

 

9,352,734

 

 

 

9,162,188

 

 

 

8,987,628

 

 

 

8,870,992

 

 

 

8,700,428

 

Business loans secured by real estate (2)

 

 

 

 

 

 

 

 

 

 

CRE owner-occupied

 

 

2,486,747

 

 

 

2,391,984

 

 

 

2,251,014

 

 

 

2,242,164

 

 

 

2,089,300

 

Franchise real estate secured

 

 

387,683

 

 

 

384,267

 

 

 

380,381

 

 

 

354,481

 

 

 

358,120

 

SBA secured by real estate (3)

 

 

67,191

 

 

 

68,466

 

 

 

69,184

 

 

 

69,937

 

 

 

72,923

 

Total business loans secured by real estate

 

 

2,941,621

 

 

 

2,844,717

 

 

 

2,700,579

 

 

 

2,666,582

 

 

 

2,520,343

 

Commercial loans (4)

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

2,295,421

 

 

 

2,242,632

 

 

 

2,103,112

 

 

 

1,888,870

 

 

 

1,795,144

 

Franchise non-real estate secured

 

 

415,830

 

 

 

388,322

 

 

 

392,576

 

 

 

392,950

 

 

 

401,315

 

SBA non-real estate secured

 

 

11,008

 

 

 

10,761

 

 

 

11,045

 

 

 

12,732

 

 

 

13,900

 

Total commercial loans

 

 

2,722,259

 

 

 

2,641,715

 

 

 

2,506,733

 

 

 

2,294,552

 

 

 

2,210,359

 

Retail loans

 

 

 

 

 

 

 

 

 

 

Single family residential (5)

 

 

77,951

 

 

 

79,978

 

 

 

95,292

 

 

 

144,309

 

 

 

157,228

 

Consumer

 

 

4,130

 

 

 

5,157

 

 

 

5,665

 

 

 

6,426

 

 

 

6,240

 

Total retail loans

 

 

82,081

 

 

 

85,135

 

 

 

100,957

 

 

 

150,735

 

 

 

163,468

 

Loans held for investment before basis adjustment (6)

 

 

15,098,695

 

 

 

14,733,755

 

 

 

14,295,897

 

 

 

13,982,861

 

 

 

13,594,598

 

Basis adjustment associated with fair value hedge (7)

 

 

(51,087

)

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for investment

 

 

15,047,608

 

 

 

14,733,755

 

 

 

14,295,897

 

 

 

13,982,861

 

 

 

13,594,598

 

Allowance for credit losses for loans held for investment

 

 

(196,075

)

 

 

(197,517

)

 

 

(197,752

)

 

 

(211,481

)

 

 

(232,774

)

Loans held for investment, net

 

$

14,851,533

 

 

$

14,536,238

 

 

$

14,098,145

 

 

$

13,771,380

 

 

$

13,361,824

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

2,957

 

 

$

11,646

 

 

$

10,869

 

 

$

8,100

 

 

$

4,714

 

______________________________

(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 $63.6 million, $71.2 million, $77.1 million, $85.0 million, and $94.4 million as of June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021, and June 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)

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

(Dollars in thousands)

 

2022

 

2022

 

2021

 

2021

 

2021

Asset quality

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

$