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

Fourth Quarter 2021 Summary

  • Net income of $84.8 million, or $0.89 per diluted share
  • Return on average assets of 1.63%, return on average equity of 11.90%, and return on average tangible common equity of 18.66%(1)
  • Efficiency ratio of 48.0%(1)
  • Loan growth of $315.8 million, or 9.0%, annualized
  • Net interest margin of 3.53%, and core net interest margin of 3.36%(1)
  • Cost of deposits decreased to 0.04%
  • Nonperforming assets represent 0.15% of total assets
  • Tangible book value per diluted share increased $0.54 to $20.29(1)

Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company” or “Pacific Premier”), the holding company of Pacific Premier Bank (the “Bank”), reported net income of $84.8 million, or $0.89 per diluted share, for the fourth quarter of 2021, compared with net income of $90.1 million, or $0.95 per diluted share, for the third quarter of 2021, and net income of $67.1 million, or $0.71 per diluted share, for the fourth quarter of 2020.

For the fourth quarter of 2021, the Company’s return on average assets (“ROAA”) was 1.63%, return on average equity (“ROAE”) was 11.90%, and return on average tangible common equity (“ROATCE”)(1) was 18.66%, compared to 1.73%, 12.67%, and 19.89%, respectively, for the third quarter of 2021 and 1.34%, 9.91%, and 16.32%, respectively, for the fourth quarter of 2020. Total assets as of December 31, 2021 were $21.09 billion, compared to $21.01 billion at September 30, 2021 and $19.74 billion at December 31, 2020.

Steven R. Gardner, Chairman, President, and Chief Executive Officer of the Company, commented, “We delivered another solid quarter of results, reflecting our focus on consistently delivering strong financial performance. Our disciplined approach to business development and client relationship management is driven by effectively leveraging our innovative technology systems, and results in a sound and well diversified balance sheet. Despite the challenging environment throughout the past year, we grew tangible book value by 8.8% during 2021 while returning $140 million of capital to our shareholders.

“During the fourth quarter, we generated $1.48 billion in loan commitments, with the mix of production more heavily weighted toward new business loan activity. Additionally, we saw an improvement in credit demand among both existing and new clients, which resulted in more than a 50% increase in new commercial loan commitments over the prior quarter. Our full year loan production was a record $5.7 billion, and resulted in 8.1% loan growth for 2021, enabling us to redeploy excess liquidity into higher yielding earning assets. Given the increasing probability of higher interest rates, we enhanced our existing interest rate asset sensitivity by adding $900 million pay-fixed, receive-floating rate swaps during the fourth quarter, increasing our notional amount to $1.20 billion at year end.

“As we look ahead, we believe we are well-positioned to deliver another year of solid financial performance. We are focused on achieving our organic growth objectives and are well-positioned to continue our disciplined approach pursuing strategic growth opportunities that can strengthen our franchise and create long-term value for our shareholders.”

______________________________

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

FINANCIAL HIGHLIGHTS

 

 

Three Months Ended

 

 

December 31,

 

September 30,

 

December 31,

(Dollars in thousands, except per share data)

 

 

2021

 

 

 

2021

 

 

 

2020

 

Financial Highlights

 

 

 

 

 

 

Net income

 

$

84,831

 

 

$

90,088

 

 

$

67,136

 

Diluted earnings per share

 

 

0.89

 

 

 

0.95

 

 

 

0.71

 

Common equity dividend per share

 

 

0.33

 

 

 

0.33

 

 

 

0.28

 

Return on average assets

 

 

1.63

%

 

 

1.73

%

 

 

1.34

%

Return on average equity

 

 

11.90

 

 

 

12.67

 

 

 

9.91

 

Return on average tangible common equity (1)

 

 

18.66

 

 

 

19.89

 

 

 

16.32

 

Pre-provision net revenue on average assets (1)

 

 

1.93

 

 

 

1.98

 

 

 

1.92

 

Net interest margin

 

 

3.53

 

 

 

3.51

 

 

 

3.61

 

Core net interest margin (1)

 

 

3.36

 

 

 

3.30

 

 

 

3.32

 

Cost of deposits

 

 

0.04

 

 

 

0.06

 

 

 

0.14

 

Efficiency ratio (1)

 

 

48.0

 

 

 

47.5

 

 

 

48.5

 

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

 

 

1.86

 

 

 

1.85

 

 

 

1.89

 

Total assets

 

$

21,094,429

 

 

$

21,005,211

 

 

$

19,736,544

 

Total deposits

 

 

17,115,589

 

 

 

17,469,999

 

 

 

16,214,177

 

Loans to deposit ratio

 

 

83.6

%

 

 

80.1

%

 

 

81.6

%

Non-maturity deposits as a percent of total deposits

 

 

93.8

 

 

 

93.6

 

 

 

90.0

 

Book value per share

 

$

30.58

 

 

$

30.08

 

 

$

29.07

 

Tangible book value per share (1)

 

 

20.29

 

 

 

19.75

 

 

 

18.65

 

Total risk-based capital ratio

 

 

14.62

%

 

 

14.56

%

 

 

16.31

%

______________________________

(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 $170.7 million in the fourth quarter of 2021, an increase of $1.7 million, or 1.0%, from the third quarter of 2021. The increase in net interest income was driven by higher average loan balances of $345.6 million and higher loan related fees offsetting the impact of lower average loan yields, as well as higher average investment yields and lower deposit costs.

The net interest margin for the fourth quarter of 2021 was 3.53%, compared with 3.51% for the third quarter of 2021. The core net interest margin(1), which excludes the impact of loan accretion and other adjustments, increased 6 basis points to 3.36%, compared to 3.30% in the prior quarter. The core net interest margin expansion was a result of higher loan-related fees driven by elevated prepayment activities in the fourth quarter, higher average investment yields, and lower cost of deposits, partially offset by lower average loan yields.

Net interest income for the fourth quarter of 2021 increased $2.5 million compared to the fourth quarter of 2020. The increase was primarily attributable to higher average loans of $690.0 million, higher average investment securities of $868.7 million, and lower cost of funds. These items were partially offset by lower average loan and investment yields, and higher average interest-bearing deposit balances.

______________________________

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

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED AVERAGE BALANCES AND YIELD DATA

(Unaudited)

 

 

Three Months Ended

 

 

December 31, 2021

 

September 30, 2021

 

December 31, 2020

(Dollars in thousands)

 

Average

Balance

 

Interest

 

Average

Yield/

Cost

 

Average

Balance

 

Interest

 

Average

Yield/

Cost

 

Average

Balance

 

Interest

 

Average Yield/

Cost

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

334,371

 

$

66

 

0.08

%

 

$

663,076

 

$

195

 

0.12

%

 

$

1,239,035

 

$

286

 

0.09

%

Investment securities

 

 

4,833,251

 

 

19,522

 

1.62

 

 

 

4,807,854

 

 

18,827

 

1.57

 

 

 

3,964,592

 

 

17,039

 

1.72

 

Loans receivable, net (1) (2)

 

 

14,005,836

 

 

157,418

 

4.46

 

 

 

13,660,242

 

 

157,025

 

4.56

 

 

 

13,315,810

 

 

163,499

 

4.88

 

Total interest-earning assets

 

$

19,173,458

 

$

177,006

 

3.66

 

 

$

19,131,172

 

$

176,047

 

3.65

 

 

$

18,519,437

 

$

180,824

 

3.88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

10,471,426

 

$

1,694

 

0.06

 

 

$

10,536,091

 

$

2,432

 

0.09

 

 

$

10,384,229

 

$

5,685

 

0.22

 

Borrowings

 

 

400,014

 

 

4,593

 

4.59

 

 

 

332,245

 

 

4,546

 

5.43

 

 

 

539,021

 

 

6,941

 

5.12

 

Total interest-bearing liabilities

 

$

10,871,440

 

$

6,287

 

0.23

 

 

$

10,868,336

 

$

6,978

 

0.25

 

 

$

10,923,250

 

$

12,626

 

0.46

 

Noninterest-bearing deposits

 

$

6,911,702

 

 

 

 

 

$

6,809,211

 

 

 

 

 

$

6,125,171

 

 

 

 

Net interest income

 

 

 

$

170,719

 

 

 

 

 

$

169,069

 

 

 

 

 

$

168,198

 

 

Net interest margin (3)

 

 

 

 

 

3.53

 

 

 

 

 

 

3.51

 

 

 

 

 

 

3.61

 

Cost of deposits (4)

 

 

 

 

 

0.04

 

 

 

 

 

 

0.06

 

 

 

 

 

 

0.14

 

Cost of funds (5)

 

 

 

 

 

0.14

 

 

 

 

 

 

0.16

 

 

 

 

 

 

0.29

 

Ratio of interest-earning assets to interest-bearing liabilities

 

176.37

 

 

 

 

 

 

176.03

 

 

 

 

 

 

169.54

 

______________________________

(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 $7.9 million, $9.4 million, and $11.0 million, 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.

Provision for Credit Losses

For the fourth quarter of 2021, the Company recorded a $14.6 million provision recapture, compared to a $19.7 million provision recapture for the third quarter of 2021, and a $1.5 million provision expense for the fourth quarter of 2020. The provision recapture for the fourth quarter of 2021 was reflective of the current and forecasted economic environment used in the Company’s current expected credit losses (“CECL”) model, partially offset by fourth quarter loan growth and changes in loan mix. The provision expense in the fourth quarter of 2020 was primarily due to an increase in outstanding unfunded commitments in the commercial and industrial loan segment, offset by provision recapture for loans due to lower loans held for investment and favorable changes in asset quality and loan mix.

 

 

Three Months Ended

 

 

December 31,

 

September 30,

 

December 31,

(Dollars in thousands)

 

 

2021

 

 

 

2021

 

 

 

2020

 

Provision for Credit Losses

 

 

 

 

 

 

Provision for loan losses

 

$

(14,710

)

 

$

(19,543

)

 

$

(8,079

)

Provision for unfunded commitments

 

 

51

 

 

 

(194

)

 

 

9,596

 

Provision for held-to-maturity securities

 

 

11

 

 

 

11

 

 

 

 

Total provision for credit losses

 

$

(14,648

)

 

$

(19,726

)

 

$

1,517

 

Noninterest Income

Noninterest income for the fourth quarter of 2021 was $27.3 million, a decrease of $2.8 million from the third quarter of 2021. The decrease was primarily due to a $3.3 million decrease in other income related to $2.5 million lower CRA investment income and the prior quarter's $970,000 gain on debt extinguishment.

During the fourth quarter of 2021, the Bank sold $13.3 million of SBA loans for a net gain of $1.3 million, compared with $12.0 million of SBA loans sold for a net gain of $1.2 million in the third quarter of 2021.

During the fourth quarter of 2021, the Bank sold $267.1 million of investment securities for a net gain of $3.6 million, compared to the sales of $161.6 million of investment securities for a net gain of $4.2 million in the third quarter of 2021.

Noninterest income for the fourth quarter of 2021 increased $4.1 million, compared to the fourth quarter of 2020. The increase was primarily due to a $4.3 million increase in trust custodial account fees, a $1.3 million increase in earnings on BOLI, a $1.0 million increase in net gain from loan sales, a $964,000 increase in escrow and exchange fee income, and a $585,000 increase in services charges on deposit accounts, partially offset by a $2.4 million decrease in other income and a $1.4 million decrease in net gain from sales of investment securities.

 

 

Three Months Ended

 

 

December 31,

 

September 30,

 

December 31,

(Dollars in thousands)

 

2021

 

2021

 

2020

NONINTEREST INCOME

 

 

 

 

 

 

Loan servicing income

 

$

505

 

$

536

 

$

633

Service charges on deposit accounts

 

 

2,590

 

 

2,375

 

 

2,005

Other service fee income

 

 

391

 

 

350

 

 

459

Debit card interchange fee income

 

 

769

 

 

834

 

 

777

Earnings on BOLI

 

 

3,521

 

 

3,266

 

 

2,240

Net gain from sales of loans

 

 

1,334

 

 

1,187

 

 

328

Net gain from sales of investment securities

 

 

3,585

 

 

4,190

 

 

5,002

Trust custodial account fees

 

 

11,611

 

 

11,446

 

 

7,296

Escrow and exchange fees

 

 

2,221

 

 

1,867

 

 

1,257

Other income

 

 

754

 

 

4,049

 

 

3,197

Total noninterest income

 

$

27,281

 

$

30,100

 

$

23,194

Noninterest Expense

Noninterest expense totaled $97.3 million for the fourth quarter of 2021, an increase of $1.2 million compared to the third quarter of 2021, primarily due to a $2.5 million increase in compensation and benefits, and a $1.3 million increase in legal and professional services expense. These increases were partially offset by a $1.2 million decrease in premises and occupancy expense.

Noninterest expense decreased by $2.7 million compared to the fourth quarter of 2020 primarily due to a $5.1 million decrease in merger-related expense related to the Opus acquisition. Excluding merger-related expense, noninterest expense increased $2.4 million, primarily due to a $4.0 million increase in compensation and benefits, and a $1.6 million increase in legal and professional services expense, partially offset by a $1.9 million decrease in premises and occupancy expense and a $1.2 million decrease in deposit expense.

 

 

Three Months Ended

 

 

December 31,

 

September 30,

 

December 31,

(Dollars in thousands)

 

2021

 

2021

 

2020

NONINTEREST EXPENSE

 

 

 

 

 

 

Compensation and benefits

 

$

56,076

 

$

53,592

 

$

52,044

Premises and occupancy

 

 

11,403

 

 

12,611

 

 

13,268

Data processing

 

 

5,881

 

 

6,296

 

 

5,990

FDIC insurance premiums

 

 

1,389

 

 

1,392

 

 

1,213

Legal and professional services

 

 

5,870

 

 

4,563

 

 

4,305

Marketing expense

 

 

1,821

 

 

2,008

 

 

1,442

Office expense

 

 

1,463

 

 

1,076

 

 

2,191

Loan expense

 

 

857

 

 

1,332

 

 

1,084

Deposit expense

 

 

3,836

 

 

3,974

 

 

5,026

Merger-related expense

 

 

 

 

 

 

5,071

Amortization of intangible assets

 

 

3,880

 

 

3,912

 

 

4,505

Other expense

 

 

4,776

 

 

5,284

 

 

3,800

Total noninterest expense

 

$

97,252

 

$

96,040

 

$

99,939

Income Tax

For the fourth quarter of 2021, our income tax expense totaled $30.6 million, resulting in an effective tax rate of 26.5%, compared to income tax expense of $32.8 million and an effective tax rate of 26.7% for the third quarter of 2021, and income tax expense of $22.8 million and an effective tax rate of 25.4% for the fourth quarter of 2020. The lower effective tax rate from the fourth quarter of 2020 was primarily driven by the effect of favorable permanent differences on lower pre-tax income.

For full year 2021, our income tax expense totaled $120.9 million, resulting in an effective tax rate of 26.2%.

BALANCE SHEET HIGHLIGHTS

Loans

Loans held for investment totaled $14.30 billion at December 31, 2021, an increase of $313.0 million, or 2.2% from September 30, 2021, and an increase of $1.06 billion, or 8.0% from December 31, 2020. The increase from September 30, 2021 was driven primarily by new loan fundings and higher commercial line utilization rates, partially offset by higher prepayments. The increase in loans held for investment from December 31, 2020 was due to new loan production, partially offset by loan amortization, prepayments, and maturities, as well as loan sales. Business line utilization increased to an average of 35.2% for the fourth quarter of 2021, compared to an average of 33.1% in the prior quarter.

During the fourth quarter of 2021, the Bank generated $1.48 billion of new loan commitments and funded $1.07 billion of loans, compared with $1.46 billion in new loan commitments and $1.10 billion in funded loans for the third quarter of 2021, and $911.3 million of new loan commitments and $712.5 million in funded loans for the fourth quarter of 2020. The year-over-year increase in loans funded was primarily due to expansion in our multifamily and commercial and industrial loan segments.

At December 31, 2021, the ratio of loans held for investment to total deposits was 83.6%, compared with 80.1% and 81.6%, at September 30, 2021 and December 31, 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

 

December 31,

 

September 30,

(Dollars in thousands)

2021

 

2021

Beginning loan balance

$

13,990,961

 

 

$

13,599,312

 

New commitments

 

1,479,445

 

 

 

1,459,201

 

Unfunded new commitments

 

(408,963

)

 

 

(359,000

)

Net new fundings

 

1,070,482

 

 

 

1,100,201

 

Amortization/maturities/payoffs

 

(935,064

)

 

 

(762,795

)

Net draws on existing lines of credit

 

194,548

 

 

 

69,141

 

Loan sales

 

(13,427

)

 

 

(12,258

)

Charge-offs

 

(734

)

 

 

(2,640

)

Net increase

 

315,805

 

 

 

391,649

 

Ending loan balance

$

14,306,766

 

 

$

13,990,961

 

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

 

 

December 31,

 

September 30,

 

December 31,

(Dollars in thousands)

 

2021

 

2021

 

2020

Investor loans secured by real estate

 

 

 

 

 

 

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

 

$

2,771,137

 

 

$

2,823,065

 

 

$

2,675,085

 

Multifamily

 

 

5,891,934

 

 

 

5,705,666

 

 

 

5,171,356

 

Construction and land

 

 

277,640

 

 

 

292,815

 

 

 

321,993

 

SBA secured by real estate (1)

 

 

46,917

 

 

 

49,446

 

 

 

57,331

 

Total investor loans secured by real estate

 

 

8,987,628

 

 

 

8,870,992

 

 

 

8,225,765

 

Business loans secured by real estate (2)

 

 

 

 

 

 

CRE owner-occupied

 

 

2,251,014

 

 

 

2,242,164

 

 

 

2,114,050

 

Franchise real estate secured

 

 

380,381

 

 

 

354,481

 

 

 

347,932

 

SBA secured by real estate (3)

 

 

69,184

 

 

 

69,937

 

 

 

79,595

 

Total business loans secured by real estate

 

 

2,700,579

 

 

 

2,666,582

 

 

 

2,541,577

 

Commercial loans (4)

 

 

 

 

 

 

Commercial and industrial

 

 

2,103,112

 

 

 

1,888,870

 

 

 

1,768,834

 

Franchise non-real estate secured

 

 

392,576

 

 

 

392,950

 

 

 

444,797

 

SBA non-real estate secured

 

 

11,045

 

 

 

12,732

 

 

 

15,957

 

Total commercial loans

 

 

2,506,733

 

 

 

2,294,552

 

 

 

2,229,588

 

Retail loans

 

 

 

 

 

 

Single family residential (5)

 

 

95,292

 

 

 

144,309

 

 

 

232,574

 

Consumer

 

 

5,665

 

 

 

6,426

 

 

 

6,929

 

Total retail loans

 

 

100,957

 

 

 

150,735

 

 

 

239,503

 

Gross loans held for investment (6)

 

 

14,295,897

 

 

 

13,982,861

 

 

 

13,236,433

 

Allowance for credit losses for loans held for investment

 

 

(197,752

)

 

 

(211,481

)

 

 

(268,018

)

Loans held for investment, net

 

$

14,098,145

 

 

$

13,771,380

 

 

$

12,968,415

 

 

 

 

 

 

 

 

Total unfunded loan commitments

 

 

2,507,911

 

 

 

2,504,188

 

 

 

1,947,250

 

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

 

$

10,869

 

 

$

8,100

 

 

$

601

 

___________________________________________

(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 $77.1 million, $85.0 million, and $113.8 million as of December 31, 2021, September 30, 2021, and December 31, 2020, respectively.

The total end of period weighted average interest rate on loans, excluding fees and discounts, at December 31, 2021 was 3.95%, compared with 4.03% at September 30, 2021 and 4.27% at December 31, 2020. The quarter-over-quarter and year-over-year decreases reflect the continued impact from prepayments of higher rate loans and lower rates on new loan originations. During the fourth quarter, the Bank added overnight SOFR-based pay-fixed, receive-floating interest rate swaps with a notional amount of $900 million, bringing the total to $1.20 billion notional position at December 31, 2021.

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

 

 

Three Months Ended

 

 

December 31,

 

September 30,

 

December 31,

(Dollars in thousands)

 

2021

 

2021

 

2020

Investor loans secured by real estate

 

 

 

 

 

 

CRE non-owner-occupied

 

$

94,740

 

$

105,792

 

$

80,298

Multifamily

 

 

552,600

 

 

613,640

 

 

398,651

Construction and land

 

 

94,343

 

 

99,943

 

 

60,336

SBA secured by real estate (1)

 

 

 

 

1,410

 

 

Total investor loans secured by real estate

 

 

741,683

 

 

820,785

 

 

539,285

Business loans secured by real estate (2)

 

 

 

 

 

 

CRE owner-occupied

 

 

147,322

 

 

256,269

 

 

96,779

Franchise real estate secured

 

 

52,034

 

 

19,207

 

 

27,162

SBA secured by real estate (3)

 

 

15,631

 

 

15,065

 

 

1,999

Total business loans secured by real estate

 

 

214,987

 

 

290,541

 

 

125,940

Commercial loans (4)

 

 

 

 

 

 

Commercial and industrial

 

 

469,018

 

 

310,985

 

 

228,076

Franchise non-real estate secured

 

 

43,219

 

 

21,654

 

 

8,005

SBA non-real estate secured

 

 

3,500

 

 

 

 

283

Total commercial loans

 

 

515,737

 

 

332,639

 

 

236,364

Retail loans

 

 

 

 

 

 

Single family residential (5)

 

 

6,800

 

 

14,782

 

 

8,888

Consumer

 

 

238

 

 

454

 

 

786

Total retail loans

 

 

7,038

 

 

15,236

 

 

9,674

Total loan commitments

 

$

1,479,445

 

$

1,459,201

 

$

911,263

______________________________

(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 our new loan production was 3.55% in the fourth quarter of 2021, compared to 3.66% in the third quarter of 2021 and 3.55% in the fourth quarter of 2020.

Asset Quality and Allowance for Credit Losses

At December 31, 2021, our allowance for credit losses (“ACL”) on loans held for investment was $197.8 million, a decrease of $13.7 million from September 30, 2021 and a decrease of $70.3 million from December 31, 2020. The provision for credit loss recapture during the current quarter was reflective of the current and forecasted economic activity used in the Company's CECL model relative to the prior quarter, partially offset by loan growth and changes in loan mix during the quarter. The decrease in ACL from December 31, 2020 was primarily due to favorable changes in economic forecasts used in the Company's CECL model related to the COVID-19 pandemic.

During the fourth quarter of 2021, the Company reported $1.0 million in net recoveries, compared to net charge-offs of $1.8 million and $6.4 million during the third quarter of 2021 and the fourth 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 December 31, 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

$

42,467

 

$

 

 

$

78

 

$

(5,165

)

 

$

37,380

Multifamily

 

52,164

 

 

 

 

 

 

 

3,045

 

 

 

55,209

Construction and land

 

8,017

 

 

 

 

 

 

 

(2,806

)

 

 

5,211

SBA secured by real estate (1)

 

3,879

 

 

(1

)

 

 

3

 

 

(680

)

 

 

3,201

Business loans secured by real estate (2)

 

 

 

 

 

 

 

 

 

CRE owner-occupied

 

33,679

 

 

 

 

 

12

 

 

(4,116

)

 

 

29,575

Franchise real estate secured

 

9,626

 

 

 

 

 

 

 

(1,641

)

 

 

7,985

SBA secured by real estate (3)

 

5,104

 

 

 

 

 

 

 

(238

)

 

 

4,866

Commercial loans (4)

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

37,595

 

 

(731

)

 

 

1,292

 

 

(20

)

 

 

38,136

Franchise non-real estate secured

 

17,518

 

 

 

 

 

325

 

 

(2,759

)

 

 

15,084

SBA non-real estate secured

 

632

 

 

 

 

 

2

 

 

(69

)

 

 

565

Retail loans

 

 

 

 

 

 

 

 

 

Single family residential (5)

 

529

 

 

 

 

 

 

 

(274

)

 

 

255

Consumer loans

 

271

 

 

(2

)

 

 

3

 

 

13

 

 

 

285

Totals

$

211,481

 

$

(734

)

 

$

1,715

 

$

(14,710

)

 

$

197,752

______________________________

(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 loan losses to total loans held for investment at December 31, 2021 was 1.38%, compared to 1.51% and 2.02% at September 30, 2021 and December 31, 2020, respectively. The fair value discount on loans acquired through bank acquisitions was $77.1 million, or 0.54% of total loans held for investment, as of December 31, 2021, compared to $85.0 million, or 0.60% of total loans held for investment, as of September 30, 2021, and $113.8 million, or 0.85% of total loans held for investment, as of December 31, 2020.

Nonperforming assets totaled $31.3 million, or 0.15% of total assets, at December 31, 2021, compared with $35.1 million, or 0.17% of total assets, at September 30, 2021 and $29.2 million, or 0.15% of total assets, at December 31, 2020. Total loan delinquencies were $19.5 million, or 0.14% of loans held for investment, at December 31, 2021, compared to $20.2 million, or 0.14% of loans held for investment, at September 30, 2021, and $13.3 million, or 0.10% of loans held for investment, at December 31, 2020.

Classified loans totaled $121.8 million, or 0.85% of loans held for investment, at December 31, 2021, compared with $124.5 million, or 0.89% of loans held for investment, at September 30, 2021, and $128.3 million, or 0.97% of loans held for investment, at December 31, 2020. The favorable quarter-over-quarter and year-over-year decrease was primarily driven by the net changes in risk ratings.

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. There were no loans 90 days or more past due and still accruing interest at December 31, 2021. There were $17.3 million of troubled debt restructured loans at December 31, 2021, compared with $17.6 million at September 30, 2021, and no troubled debt restructured loans at December 31, 2020.

At December 31, 2021 and September 30, 2021, there were no COVID-19 loan modifications remaining within their modification period and no loans were in-process for potential modification.

 

 

December 31,

 

September 30,

 

December 31,

(Dollars in thousands)

 

2021

 

2021

 

2020

Asset Quality

 

 

 

 

 

 

Nonperforming loans

 

$

31,273

 

 

$

35,090

 

 

$

29,209

 

Other real estate owned

 

 

 

 

 

 

 

 

 

Other assets owned

 

 

 

 

 

 

 

 

 

Nonperforming assets

 

$

31,273

 

 

$

35,090

 

 

$

29,209

 

 

 

 

 

 

 

 

Total classified assets (1)

 

$

121,827

 

 

$

124,506

 

 

$

128,332

 

Allowance for credit losses

 

 

197,752

 

 

 

211,481

 

 

 

268,018

 

Allowance for credit losses as a percent of total nonperforming loans

 

 

632

%

 

 

603

%

 

 

918

%

Nonperforming loans as a percent of loans held for investment

 

 

0.22

 

 

 

0.25

 

 

 

0.22

 

Nonperforming assets as a percent of total assets

 

 

0.15

 

 

 

0.17

 

 

 

0.15

 

Classified loans to total loans held for investment

 

 

0.85

 

 

 

0.89

 

 

 

0.97

 

Classified assets to total assets

 

 

0.58

 

 

 

0.59

 

 

 

0.65

 

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

 

$

(981

)

 

$

1,750

 

 

$

6,406

 

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

 

 

(0.01

) %

 

 

0.01

%

 

 

0.05

%

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

 

 

1.38

 

 

 

1.51

 

 

 

2.02

 

Loans modified under CARES Act

 

$

 

 

$

 

 

$

79,465

 

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

 

 

%

 

 

%

 

 

0.60

%

Delinquent Loans:

 

 

 

 

 

 

30 - 59 days

 

$

1,395

 

 

$

728

 

 

$

1,269

 

60 - 89 days

 

 

 

 

 

936

 

 

 

57

 

90+ days

 

 

18,100

 

 

 

18,514

 

 

 

11,996

 

Total delinquency

 

$

19,495

 

 

$

20,178

 

 

$

13,322

 

Delinquency as a percent of loans held for investment

 

 

0.14

%

 

 

0.14

%

 

 

0.10

%

______________________________

(1) Includes substandard loans and other real estate owned.

(2) At December 31, 2021, 36% of loans held for investment include a fair value net discount of $77.1 million, or 0.54% of loans held for investment. At September 30, 2021, 40% of loans held for investment include a fair value net discount of $85.0 million, or 0.60% of loans held for investment. At December 31, 2020, 55% of loans held for investment include a fair value net discount of $113.8 million, or 0.85% of loans held for investment.

Investment Securities

At December 31, 2021, investment securities available-for-sale and investment securities held-to-maturity were $4.27 billion and $381.7 million, respectively, compared to $4.71 billion and $170.6 million at September 30, 2021, respectively. In total, investment securities were $4.66 billion at December 31, 2021, a decrease of $224.9 million from $4.88 billion at September 30, 2021. The decrease as compared to the third quarter of 2021 was primarily the result of sales of $267.1 million, principal payments, amortization, and redemptions of $147.1 million, and a mark-to-market fair value adjustment decrease of $9.4 million, partially offset by purchases of $198.8 million as the Company deployed its excess liquidity. During the fourth quarter of 2021, the Company transferred $165.5 million of municipal bonds from available-for-sale to held-to-maturity at fair value compared to the $157.6 million of municipal bonds transferred from available-for-sale to held-to-maturity at fair value during the third quarter of 2021.

The Company’s assessment of investment securities available-for-sale indicated that no ACL was required as of December 31, 2021.

Investment securities increased $700.7 million from the same period last year, the result of $2.28 billion in purchases, partially offset by $884.2 million in sales, $603.9 million in principal payments, amortization, and redemptions, and an $89.1 million decrease in mark-to-market fair value adjustments.

Deposits

At December 31, 2021, deposits totaled $17.12 billion, a decrease of $354.4 million, or 2.0%, from September 30, 2021, and an increase of $901.4 million, or 5.56%, from December 31, 2020. At December 31, 2021, non-maturity deposits totaled $16.06 billion, a decrease of $299.6 million, or 1.8%, from September 30, 2021, and an increase of $1.47 billion, or 10.1%, from December 31, 2020. During the fourth quarter of 2021, money market/savings deposits decreased $230.8 million, noninterest-bearing deposits decreased $84.2 million, and retail certificates of deposits decreased $54.8 million, partially offset by an increase of $15.4 million in interest checking, as compared to the third quarter of 2021. The increase in deposits from December 31, 2020 was primarily driven by an increase in business checking and money market/savings deposits, partially offset by decreases in retail and brokered certificates of deposit.

The weighted average cost of deposits for the fourth quarter of 2021 was 0.04%, compared with 0.06% for the third quarter of 2021 and 0.14% for the fourth quarter of 2020. The decrease in the weighted average cost of deposits for the fourth quarter of 2021 compared to the third quarter of 2021 was principally driven by lower pricing across all deposit categories, and higher average noninterest-bearing deposits.

The end of period weighted average rate of deposits at December 31, 2021 was 0.04%.

 

 

December 31,

 

September 30,

 

December 31,

(Dollars in thousands)

 

2021

 

2021

 

2020

Deposit Accounts

 

 

 

 

 

 

Noninterest-bearing checking

 

$

6,757,259

 

 

$

6,841,495

 

 

$

6,011,106

 

Interest-bearing:

 

 

 

 

 

 

Checking

 

 

3,493,331

 

 

 

3,477,902

 

 

 

2,913,260

 

Money market/savings

 

 

5,806,726

 

 

 

6,037,532

 

 

 

5,662,969

 

Retail certificates of deposit

 

 

1,058,273

 

 

 

1,113,070

 

 

 

1,471,512

 

Wholesale/brokered certificates of deposit

 

 

 

 

 

 

 

 

155,330

 

Total interest-bearing

 

 

10,358,330

 

 

 

10,628,504

 

 

 

10,203,071

 

Total deposits

 

$

17,115,589

 

 

$

17,469,999

 

 

$

16,214,177

 

 

 

 

 

 

 

 

Cost of deposits

 

 

0.04

%

 

 

0.06

%

 

 

0.14

%

Noninterest-bearing deposits as a percent of total deposits

 

 

39.5

 

 

 

39.2

 

 

 

37.1

 

Non-maturity deposits as a percent of total deposits

 

 

93.8

 

 

 

93.6

 

 

 

90.0

 

Core deposits to total deposits (1)

 

 

97.1

 

 

 

97.0

 

 

 

94.9

 

______________________________

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

Borrowings

At December 31, 2021, total borrowings amounted to $888.6 million, an increase of $408.2 million from September 30, 2021 and an increase of $356.1 million from December 31, 2020. Total borrowings at December 31, 2020 included $550.0 million of Federal Home Loan Bank of San Francisco (“FHLB”) overnight advances, $330.6 million of subordinated debt, and $8.0 million other short-term borrowing. The increase in borrowings at December 31, 2021 as compared to September 30, 2021 was primarily due to an increase of $400.0 million in FHLB advances. The increase in borrowings at December 31, 2021 as compared to December 31, 2020 was primarily due to an increase of $519.0 million in FHLB overnight advances, partially offset by the redemptions of $160.0 million in subordinated notes and $10.4 million junior subordinated debt securities. At December 31, 2021, total borrowings represented 4.2% of total assets, compared to 2.3% and 2.7% as of September 30, 2021 and December 31, 2020, respectively.

Capital Ratios

At December 31, 2021, our common stockholder's equity was $2.89 billion, or 13.68% of total assets, compared with $2.84 billion, or 13.51% of total assets, at September 30, 2021, and $2.75 billion, or 13.92% of total assets, at December 31, 2020, with a book value per share of $30.58, compared with $30.08 at September 30, 2021, and $29.07 at December 31, 2020. At December 31, 2021, our ratio of tangible common equity to total assets(1) was 9.52%, compared with 9.30% at September 30, 2021 and 9.40% at December 31, 2020, and our tangible book value per share(1) increased to $20.29, compared to $19.75 at September 30, 2021 and $18.65 at December 31, 2020.

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 December 31, 2021, the Company had a tier 1 leverage capital ratio of 10.08%, common equity tier 1 risk-based capital ratio of 12.11%, tier 1 risk-based capital ratio of 12.11%, and total risk-based capital ratio of 14.62%. At December 31, 2021, the Bank had a tier 1 leverage capital ratio of 11.62%, common equity tier 1 risk-based capital ratio of 13.96%, tier 1 risk-based capital ratio of 13.96%, and total risk-based capital of 14.70%.

______________________________

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

These 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, 6.5% for common equity tier 1 risk-based capital ratio, 8.00% for tier 1 risk-based capital ratio, and 10.00% for total risk-based capital ratio, and exceeded the minimum capital ratio levels inclusive of the fully phased-in capital conservation buffer of 4.0%, 7.0%, 8.5%, and 10.5%, respectively.

 

 

December 31,

 

September 30,

 

December 31,

Capital Ratios

 

2021

 

2021

 

2020

Pacific Premier Bancorp, Inc. Consolidated

 

 

Tier 1 leverage ratio

 

 

10.08

%

 

 

9.85

%

 

 

9.47

%

Common equity tier 1 risk-based capital ratio

 

 

12.11

 

 

 

11.96

 

 

 

12.04

 

Tier 1 risk-based capital ratio

 

 

12.11

 

 

 

11.96

 

 

 

12.04

 

Total risk-based capital ratio

 

 

14.62

 

 

 

14.56

 

 

 

16.31

 

Tangible common equity ratio (1)

 

 

9.52

 

 

 

9.30

 

 

 

9.40

 

 

 

 

 

 

 

 

Pacific Premier Bank

 

 

 

 

 

 

Tier 1 leverage ratio

 

 

11.62

%

 

 

11.38

%

 

 

10.89

%

Common equity tier 1 risk-based capital ratio

 

 

13.96

 

 

 

13.81

 

 

 

13.84

 

Tier 1 risk-based capital ratio

 

 

13.96

 

 

 

13.81

 

 

 

13.84

 

Total risk-based capital ratio

 

 

14.70

 

 

 

14.61

 

 

 

15.89

 

 

 

 

 

 

 

 

Share Data

 

 

 

 

 

 

Book value per share

 

$

30.58

 

 

$

30.08

 

 

$

29.07

 

Tangible book value per share (1)

 

 

20.29

 

 

 

19.75

 

 

 

18.65

 

Common equity dividends declared per share

 

 

0.33

 

 

 

0.33

 

 

 

0.28

 

Closing stock price (2)

 

 

40.03

 

 

 

41.44

 

 

 

31.33

 

Shares issued and outstanding

 

 

94,389,543

 

 

 

94,354,211

 

 

 

94,483,136

 

Market Capitalization (2)(3)

 

$

3,778,413

 

 

$

3,910,039

 

 

$

2,960,157

 

______________________________

(1) A reconciliation of the non-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 is set forth below.

(2) As of the last trading day prior to period end.

(3) Dollars in thousands.

Dividend and Stock Repurchase Program

On January 18, 2022, the Company's Board of Directors declared a $0.33 per share dividend, payable on February 11, 2022 to stockholders of record on February 4, 2022. In January 2021, the Company’s Board of Directors approved a stock repurchase program, which authorized the repurchase up to 4,725,000 shares of its common stock. During the fourth quarter of 2021, the Company did not repurchase any shares of common stock.

Conference Call and Webcast

The Company will host a conference call at 9:00 a.m. PT / 12:00 p.m. ET on January 20, 2022 to discuss its financial results. Analysts and investors may participate in the question-and-answer session. A live webcast will be available on the Webcasts page of the Company's investor relations website. An archived version of the webcast will be available in the same location shortly after the live call has ended. The conference call can be accessed by telephone at (844) 200-6205, access code 905653. Additionally, a telephone replay will be made available through January 27, 2022 at (866) 813-9403, access code 181120.

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 $21 billion in total assets. Pacific Premier Bank provides banking products and services, including deposit accounts, digital banking, and treasury management services, to businesses, professionals, entrepreneurs, real estate investors, and nonprofit organizations. Pacific Premier Bank also offers a wide array of loan products, such as commercial business loans, lines of credit, SBA loans, commercial real estate loans, agribusiness loans, franchise lending, home equity lines of credit, and construction loans. Pacific Premier Bank offers commercial escrow services and facilitates 1031 Exchange transactions through its Commerce Escrow division. Pacific Premier Bank offers clients IRA custodial services through its Pacific Premier Trust division, which has over $18 billion of assets under custody and approximately 45,000 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)

 

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

(Dollars in thousands)

 

2021

 

2021

 

2021

 

2021

 

2020

ASSETS

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

304,703

 

 

$

322,320

 

 

$

631,888

 

 

$

1,554,668

 

 

$

880,766

 

Interest-bearing time deposits with financial institutions

 

 

2,216

 

 

 

2,708

 

 

 

2,708

 

 

 

2,708

 

 

 

2,845

 

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

 

 

381,674

 

 

 

170,576

 

 

 

18,933

 

 

 

21,931

 

 

 

23,732

 

Investment securities available for sale, at fair value

 

 

4,273,864

 

 

 

4,709,815

 

 

 

4,487,447

 

 

 

3,857,337

 

 

 

3,931,115

 

FHLB, FRB and other stock, at cost

 

 

117,538

 

 

 

118,399

 

 

 

117,738

 

 

 

117,843

 

 

 

117,055

 

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

 

 

10,869

 

 

 

8,100

 

 

 

4,714

 

 

 

7,311

 

 

 

601

 

Loans held for investment

 

 

14,295,897

 

 

 

13,982,861

 

 

 

13,594,598

 

 

 

13,117,392

 

 

 

13,236,433

 

Allowance for credit losses

 

 

(197,752

)

 

 

(211,481

)

 

 

(232,774

)

 

 

(266,999

)

 

 

(268,018

)

Loans held for investment, net

 

 

14,098,145

 

 

 

13,771,380

 

 

 

13,361,824

 

 

 

12,850,393

 

 

 

12,968,415

 

Accrued interest receivable

 

 

65,728

 

 

 

63,228

 

 

 

67,529

 

 

 

65,098

 

 

 

74,574

 

Premises and equipment

 

 

71,908

 

 

 

72,850

 

 

 

73,821

 

 

 

76,329

 

 

 

78,884

 

Deferred income taxes, net

 

 

87,344

 

 

 

83,432

 

 

 

81,741

 

 

 

104,450

 

 

 

89,056

 

Bank owned life insurance

 

 

449,353

 

 

 

447,135

 

 

 

444,645

 

 

 

292,932

 

 

 

292,564

 

Intangible assets

 

 

69,571

 

 

 

73,451

 

 

 

77,363

 

 

 

81,364

 

 

 

85,507

 

Goodwill

 

 

901,312

 

 

 

901,312

 

 

 

901,312

 

 

 

900,204

 

 

 

898,569

 

Other assets

 

 

260,204

 

 

 

260,505

 

 

 

257,823

 

 

 

240,730

 

 

 

292,861

 

Total assets

 

$

21,094,429

 

 

$

21,005,211

 

 

$

20,529,486

 

 

$

20,173,298

 

 

$

19,736,544

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

Deposit accounts:

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

 

$

6,757,259

 

 

$

6,841,495

 

 

$

6,768,384

 

 

$

6,302,703

 

 

$

6,011,106

 

Interest-bearing:

 

 

 

 

 

 

 

 

 

 

Checking

 

 

3,493,331

 

 

 

3,477,902

 

 

 

3,103,343

 

 

 

3,155,071

 

 

 

2,913,260

 

Money market/savings

 

 

5,806,726

 

 

 

6,037,532

 

 

 

5,883,672

 

 

 

5,911,417

 

 

 

5,662,969

 

Retail certificates of deposit

 

 

1,058,273

 

 

 

1,113,070

 

 

 

1,259,698

 

 

 

1,353,431

 

 

 

1,471,512

 

Wholesale/brokered certificates of deposit

 

 

 

 

 

 

 

 

 

 

 

17,385

 

 

 

155,330

 

Total interest-bearing

 

 

10,358,330

 

 

 

10,628,504

 

 

 

10,246,713

 

 

 

10,437,304

 

 

 

10,203,071

 

Total deposits

 

 

17,115,589

 

 

 

17,469,999

 

 

 

17,015,097

 

 

 

16,740,007

 

 

 

16,214,177

 

FHLB advances and other borrowings

 

 

558,000

 

 

 

150,000

 

 

 

 

 

 

10,000

 

 

 

31,000

 

Subordinated debentures

 

 

330,567

 

 

 

330,408

 

 

 

476,622

 

 

 

501,611

 

 

 

501,511

 

Accrued expenses and other liabilities

 

 

203,962

 

 

 

216,688

 

 

 

224,348

 

 

 

218,582

 

 

 

243,207

 

Total liabilities

 

 

18,208,118

 

 

 

18,167,095

 

 

 

17,716,067

 

 

 

17,470,200

 

 

 

16,989,895

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

929

 

 

 

929

 

 

 

931

 

 

 

931

 

 

 

931

 

Additional paid-in capital

 

 

2,351,294

 

 

 

2,347,626

 

 

 

2,352,112

 

 

 

2,348,445

 

 

 

2,354,871

 

Retained earnings

 

 

541,950

 

 

 

488,385

 

 

 

433,852

 

 

 

368,911

 

 

 

330,555

 

Accumulated other comprehensive (loss) income

 

 

(7,862

)

 

 

1,176

 

 

 

26,524

 

 

 

(15,189

)

 

 

60,292

 

Total stockholders' equity

 

 

2,886,311

 

 

 

2,838,116

 

 

 

2,813,419

 

 

 

2,703,098

 

 

 

2,746,649

 

Total liabilities and stockholders' equity

 

$

21,094,429

 

 

$

21,005,211

 

 

$

20,529,486

 

 

$

20,173,298

 

 

$

19,736,544

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

December 31,

 

September 30,

 

December 31,

 

December 31,

 

December 31,

(Dollars in thousands, except per share data)

 

2021

 

2021

 

2020

 

2021

 

2020

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

Loans

 

$

157,418

 

 

$

157,025

 

 

$

163,499

 

$

622,033

 

 

$

577,558

Investment securities and other interest-earning assets

 

 

19,588

 

 

 

19,022

 

 

 

17,325

 

 

74,706

 

 

 

53,168

Total interest income

 

 

177,006

 

 

 

176,047

 

 

 

180,824

 

 

696,739

 

 

 

630,726

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

1,694

 

 

 

2,432

 

 

 

5,685

 

 

11,817

 

 

 

34,336

FHLB advances and other borrowings

 

 

33

 

 

 

1

 

 

 

121

 

 

99

 

 

 

1,532

Subordinated debentures

 

 

4,560

 

 

 

4,545

 

 

 

6,820

 

 

22,449

 

 

 

20,647

Total interest expense

 

 

6,287

 

 

 

6,978

 

 

 

12,626

 

 

34,365

 

 

 

56,515

Net interest income before provision for credit losses

 

 

170,719

 

 

 

169,069

 

 

 

168,198

 

 

662,374

 

 

 

574,211

Provision for credit losses

 

 

(14,648

)

 

 

(19,726

)

 

 

1,517

 

 

(70,876

)

 

 

191,816

Net interest income after provision for credit losses

 

 

185,367

 

 

 

188,795

 

 

 

166,681

 

 

733,250

 

 

 

382,395

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

Loan servicing income

 

 

505

 

 

 

536

 

 

 

633

 

 

2,121

 

 

 

2,028

Service charges on deposit accounts

 

 

2,590

 

 

 

2,375

 

 

 

2,005

 

 

9,219

 

 

 

6,712

Other service fee income

 

 

391

 

 

 

350

 

 

 

459

 

 

1,566

 

 

 

1,554

Debit card interchange fee income

 

 

769

 

 

 

834

 

 

 

777

 

 

3,489

 

 

 

2,526

Earnings on BOLI

 

 

3,521

 

 

 

3,266

 

 

 

2,240

 

 

11,299

 

 

 

7,160

Net gain from sales of loans

 

 

1,334

 

 

 

1,187

 

 

 

328

 

 

4,428

 

 

 

8,609

Net gain from sales of investment securities

 

 

3,585

 

 

 

4,190

 

 

 

5,002

 

 

16,906

 

 

 

13,882

Trust custodial account fees

 

 

11,611

 

 

 

11,446

 

 

 

7,296

 

 

38,176

 

 

 

16,653

Escrow and exchange fees

 

 

2,221

 

 

 

1,867

 

 

 

1,257

 

 

7,286

 

 

 

2,663

Other income

 

 

754

 

 

 

4,049

 

 

 

3,197

 

 

13,360

 

 

 

9,538

Total noninterest income

 

 

27,281

 

 

 

30,100

 

 

 

23,194

 

 

107,850

 

 

 

71,325

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

56,076

 

 

 

53,592

 

 

 

52,044

 

 

215,690

 

 

 

180,452

Premises and occupancy

 

 

11,403

 

 

 

12,611

 

 

 

13,268

 

 

48,234

 

 

 

43,296

Data processing

 

 

5,881

 

 

 

6,296

 

 

 

5,990

 

 

23,770

 

 

 

20,491

FDIC insurance premiums

 

 

1,389

 

 

 

1,392

 

 

 

1,213

 

 

5,274

 

 

 

3,571

Legal and professional services

 

 

5,870

 

 

 

4,563

 

 

 

4,305

 

 

18,554

 

 

 

15,633

Marketing expense

 

 

1,821

 

 

 

2,008

 

 

 

1,442

 

 

6,917

 

 

 

5,891

Office expense

 

 

1,463

 

 

 

1,076

 

 

 

2,191

 

 

5,957

 

 

 

7,216

Loan expense

 

 

857

 

 

 

1,332

 

 

 

1,084

 

 

4,469

 

 

 

3,531

Deposit expense

 

 

3,836

 

 

 

3,974

 

 

 

5,026

 

 

15,654

 

 

 

19,700

Merger-related expense

 

 

 

 

 

 

 

 

5,071

 

 

5

 

 

 

49,129

Amortization of intangible assets

 

 

3,880

 

 

 

3,912

 

 

 

4,505

 

 

15,936

 

 

 

17,072

Other expense

 

 

4,776

 

 

 

5,284

 

 

 

3,800

 

 

19,817

 

 

 

15,137

Total noninterest expense

 

 

97,252

 

 

 

96,040

 

 

 

99,939

 

 

380,277

 

 

 

381,119

Net income before income taxes

 

 

115,396

 

 

 

122,855

 

 

 

89,936

 

 

460,823

 

 

 

72,601

Income tax

 

 

30,565

 

 

 

32,767

 

 

 

22,800

 

 

120,934

 

 

 

12,250

Net income

 

$

84,831

 

 

$

90,088

 

 

$

67,136

 

$

339,889

 

 

$

60,351

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.90

 

 

$

0.95

 

 

$

0.71

 

$

3.60

 

 

$

0.75

Diluted

 

 

0.89

 

 

 

0.95

 

 

 

0.71

 

 

3.58

 

 

 

0.75

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

Basic

 

 

93,415,304

 

 

 

93,549,639

 

 

 

93,568,994

 

 

93,532,109

 

 

 

79,209,560

Diluted

 

 

93,906,491

 

 

 

94,060,724

 

 

 

93,969,188

 

 

94,012,137

 

 

 

79,506,274

SELECTED FINANCIAL DATA

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED AVERAGE BALANCES AND YIELD DATA

(Unaudited)

 

 

 

Three Months Ended

 

 

December 31, 2021

 

September 30, 2021

 

December 31, 2020

(Dollars in thousands)

 

Average

Balance

 

Interest

 

Average

Yield/

Cost

 

Average

Balance

 

Interest

 

Average

Yield/

Cost

 

Average

Balance

 

Interest

 

Average

Yield/

Cost

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

334,371

 

$

66

 

0.08

%

 

$

663,076

 

$

195

 

0.12

%

 

$

1,239,035

 

$

286

 

0.09

%

Investment securities

 

 

4,833,251

 

 

19,522

 

1.62

 

 

 

4,807,854

 

 

18,827

 

1.57

 

 

 

3,964,592

 

 

17,039

 

1.72

 

Loans receivable, net (1) (2)

 

 

14,005,836

 

 

157,418

 

4.46

 

 

 

13,660,242

 

 

157,025

 

4.56

 

 

 

13,315,810

 

 

163,499

 

4.88

 

Total interest-earning assets

 

 

19,173,458

 

 

177,006

 

3.66

 

 

 

19,131,172

 

 

176,047

 

3.65

 

 

 

18,519,437

 

 

180,824

 

3.88

 

Noninterest-earning assets

 

 

1,693,547

 

 

 

 

 

 

1,673,731

 

 

 

 

 

 

1,540,456

 

 

 

 

Total assets

 

$

20,867,005

 

 

 

 

 

$

20,804,903

 

 

 

 

 

$

20,059,893

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking

 

$

3,501,323

 

$

225

 

0.03

%

 

$

3,383,219

 

$

290

 

0.03

%

 

$

2,971,983

 

$

652

 

0.09

%

Money market

 

 

5,467,559

 

 

925

 

0.07

 

 

 

5,554,881

 

 

1,309

 

0.09

 

 

 

5,368,054

 

 

3,296

 

0.24

 

Savings

 

 

418,218

 

 

27

 

0.03

 

 

 

401,804

 

 

58

 

0.06

 

 

 

360,148

 

 

86

 

0.09

 

Retail certificates of deposit

 

 

1,084,326

 

 

517

 

0.19

 

 

 

1,196,187

 

 

775

 

0.26

 

 

 

1,507,959

 

 

1,413

 

0.37

 

Wholesale/brokered certificates of deposit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

176,085

 

 

238

 

0.54

 

Total interest-bearing deposits

 

 

10,471,426

 

 

1,694

 

0.06

 

 

 

10,536,091

 

 

2,432

 

0.09

 

 

 

10,384,229

 

 

5,685

 

0.22

 

FHLB advances and other borrowings

 

 

69,538

 

 

33

 

0.19

 

 

 

1,670

 

 

1

 

0.24

 

 

 

37,560

 

 

121

 

1.28

 

Subordinated debentures

 

 

330,476

 

 

4,560

 

5.52

 

 

 

330,575

 

 

4,545

 

5.50

 

 

 

501,461

 

 

6,820

 

5.44

 

Total borrowings

 

 

400,014

 

 

4,593

 

4.59

 

 

 

332,245

 

 

4,546

 

5.43

 

 

 

539,021

 

 

6,941

 

5.12

 

Total interest-bearing liabilities

 

 

10,871,440

 

 

6,287

 

0.23

 

 

 

10,868,336

 

 

6,978

 

0.25

 

 

 

10,923,250

 

 

12,626

 

0.46

 

Noninterest-bearing deposits

 

 

6,911,702

 

 

 

 

 

 

6,809,211

 

 

 

 

 

 

6,125,171

 

 

 

 

Other liabilities

 

 

232,863

 

 

 

 

 

 

282,556

 

 

 

 

 

 

300,963

 

 

 

 

Total liabilities

 

 

18,016,005

 

 

 

 

 

 

17,960,103

 

 

 

 

 

 

17,349,384

 

 

 

 

Stockholders' equity

 

 

2,851,000

 

 

 

 

 

 

2,844,800

 

 

 

 

 

 

2,710,509

 

 

 

 

Total liabilities and equity

 

$

20,867,005

 

 

 

 

 

$

20,804,903

 

 

 

 

 

$

20,059,893

 

 

 

 

Net interest income

 

 

 

$

170,719

 

 

 

 

 

$

169,069

 

 

 

 

 

$

168,198

 

 

Net interest margin (3)

 

 

 

 

 

3.53

%

 

 

 

 

 

3.51

%

 

 

 

 

 

3.61

%

Cost of deposits (4)

 

 

 

 

 

0.04

 

 

 

 

 

 

0.06

 

 

 

 

 

 

0.14

 

Cost of funds (5)

 

 

 

 

 

0.14

 

 

 

 

 

 

0.16

 

 

 

 

 

 

0.29

 

Ratio of interest-earning assets to interest-bearing liabilities

 

176.37

 

 

 

 

 

 

176.03

 

 

 

 

 

 

169.54

 

____________________________________________

(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 $7.9 million, $9.4 million, and $11.0 million, 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.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

LOAN PORTFOLIO COMPOSITION

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

(Dollars in thousands)

 

2021

 

2021

 

2021

 

2021

 

2020

Investor loans secured by real estate

 

 

 

 

 

 

 

 

 

 

CRE non-owner-occupied

 

$

2,771,137

 

 

$

2,823,065

 

 

$

2,810,233

 

 

$

2,729,785

 

 

$

2,675,085

 

Multifamily

 

 

5,891,934

 

 

 

5,705,666

 

 

 

5,539,464

 

 

 

5,309,592

 

 

 

5,171,356

 

Construction and land

 

 

277,640

 

 

 

292,815

 

 

 

297,728

 

 

 

316,458

 

 

 

321,993

 

SBA secured by real estate (1)

 

 

46,917

 

 

 

49,446

 

 

 

53,003

 

 

 

56,381

 

 

 

57,331

 

Total investor loans secured by real estate

 

 

8,987,628

 

 

 

8,870,992

 

 

 

8,700,428

 

 

 

8,412,216

 

 

 

8,225,765

 

Business loans secured by real estate (2)

 

 

 

 

 

 

 

 

 

 

CRE owner-occupied

 

 

2,251,014

 

 

 

2,242,164

 

 

 

2,089,300

 

 

 

2,029,984

 

 

 

2,114,050

 

Franchise real estate secured

 

 

380,381

 

 

 

354,481

 

 

 

358,120

 

 

 

340,805

 

 

 

347,932

 

SBA secured by real estate (3)

 

 

69,184

 

 

 

69,937

 

 

 

72,923

 

 

 

73,967

 

 

 

79,595

 

Total business loans secured by real estate

 

 

2,700,579

 

 

 

2,666,582

 

 

 

2,520,343

 

 

 

2,444,756

 

 

 

2,541,577

 

Commercial loans (4)

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

 

2,103,112

 

 

 

1,888,870

 

 

 

1,795,144

 

 

 

1,656,098

 

 

 

1,768,834

 

Franchise non-real estate secured

 

 

392,576

 

 

 

392,950

 

 

 

401,315

 

 

 

399,041

 

 

 

444,797

 

SBA non-real estate secured

 

 

11,045

 

 

 

12,732

 

 

 

13,900

 

 

 

14,908

 

 

 

15,957

 

SBA PPP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total commercial loans

 

 

2,506,733

 

 

 

2,294,552

 

 

 

2,210,359

 

 

 

2,070,047

 

 

 

2,229,588

 

Retail loans

 

 

 

 

 

 

 

 

 

 

Single family residential (5)

 

 

95,292

 

 

 

144,309

 

 

 

157,228

 

 

 

184,049

 

 

 

232,574

 

Consumer

 

 

5,665

 

 

 

6,426

 

 

 

6,240

 

 

 

6,324

 

 

 

6,929

 

Total retail loans

 

 

100,957

 

 

 

150,735

 

 

 

163,468

 

 

 

190,373

 

 

 

239,503

 

Gross loans held for investment (6)

 

 

14,295,897

 

 

 

13,982,861

 

 

 

13,594,598

 

 

 

13,117,392

 

 

 

13,236,433

 

Allowance for credit losses for loans held for investment

 

 

(197,752

)

 

 

(211,481

)

 

 

(232,774

)

 

 

(266,999

)

 

 

(268,018

)

Loans held for investment, net

 

$

14,098,145

 

 

$

13,771,380

 

 

$

13,361,824

 

 

$

12,850,393

 

 

$

12,968,415

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

10,869

 

 

$

8,100

 

 

$

4,714

 

 

$

7,311

 

 

$

601

 

____________________________________________

(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 $77.1 million, $85.0 million, $94.4 million, $103.9 million, and $113.8 million as of December 31, 2021, September 30, 2021, June 30, 2021, March 31, 2021, and December 31, 2020 respectively.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

ASSET QUALITY INFORMATION

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

(Dollars in thousands)

 

2021

 

2021

 

2021

 

2021

 

2020

Asset Quality

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

$

31,273

 

 

$

35,090

 

 

$

34,387

 

 

$

38,909

 

 

$

29,209

 

Other real estate owned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets

 

$

31,273

 

 

$

35,090

 

 

$

34,387

 

 

$

38,909

 

 

$

29,209

 

 

 

 

 

 

 

 

 

 

 

 

Total classified assets (1)

 

$

121,827

 

 

$

124,506

 

 

$

131,350

 

 

$

134,667

 

 

$

128,332

 

Allowance for credit losses

 

 

197,752

 

 

 

211,481

 

 

 

232,774

 

 

 

266,999

 

 

 

268,018

 

Allowance for credit losses as a percent of total nonperforming loans

 

 

632

%

 

 

603

%

 

 

677

%

 

 

686

%

 

 

918

%

Nonperforming loans as a percent of loans held for investment

 

 

0.22

 

 

 

0.25

 

 

 

0.25

 

 

 

0.30

 

 

 

0.22

 

Nonperforming assets as a percent of total assets

 

 

0.15

 

 

 

0.17

 

 

 

0.17

 

 

 

0.19

 

 

 

0.15

 

Classified loans to total loans held for investment

 

 

0.85

 

 

 

0.89

 

 

 

0.97

 

 

 

1.03

 

 

 

0.97

 

Classified assets to total assets

 

 

0.58

 

 

 

0.59

 

 

 

0.64

 

 

 

0.67

 

 

 

0.65

 

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

 

$

(981

)

 

$

1,750

 

 

$

1,094

 

 

$

1,334

 

 

$

6,406

 

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

 

 

(0.01

) %

 

 

0.01

%

 

 

0.01

%

 

 

0.01

%

 

 

0.05

%

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

 

 

1.38

 

 

 

1.51

 

 

 

1.71

 

 

 

2.04

 

 

 

2.02

 

Loans modified under CARES Act

 

$

 

 

$

 

 

$

819

 

 

$

 

 

$

79,465

 

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

 

 

%

 

 

%

 

 

0.01

%

 

 

%

 

 

0.60

%

Delinquent Loans:

 

 

 

 

 

 

 

 

 

 

30 - 59 days

 

$

1,395

 

 

$

728

 

 

$

207

 

 

$

13,116

 

 

$

1,269

 

60 - 89 days

 

 

 

 

 

936

 

 

 

83

 

 

 

61

 

 

 

57

 

90+ days

 

 

18,100

 

 

 

18,514

 

 

 

19,045

 

 

 

9,410

 

 

 

11,996

 

Total delinquency

 

$

19,495

 

 

$

20,178

 

 

$

19,335

 

 

$

22,587

 

 

$

13,322

 

Delinquency as a percent of loans held for investment

 

 

0.14

%

 

 

0.14

%

 

 

0.14

%

 

 

0.17

%

 

 

0.10

%

____________________________________________

(1) Includes substandard loans and other real estate owned.

(2) At December 31, 2021, 36% of loans held for investment include a fair value net discount of $77.1 million, or 0.54% of loans held for investment. At September 30, 2021, 40% of loans held for investment include a fair value net discount of $85.0 million, or 0.60% of loans held for investment. 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 $103.9 million, or 0.79% of loans held for investment. At December 31, 2020, 55% of loans held for investment include a fair value net discount of $113.8 million, or 0.85% of loans held for investment.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

NONACCRUAL LOANS (1)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

Collateral

Dependent

Loans

 

ACL

 

Non-

Collateral

Dependent

Loans

 

ACL

 

Total

Nonaccrual

Loans

 

Nonaccrual

Loans With

No ACL

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Investor loans secured by real estate

 

 

 

 

 

 

 

 

 

 

 

 

CRE non-owner-occupied

 

$ 10,255

 

$ 1,455

 

$ —

 

$ —

 

$ 10,255

 

$ 2,640

SBA secured by real estate (2)

 

937

 

 

 

 

937

 

937

Total investor loans secured by real estate

 

11,192

 

1,455

 

 

 

11,192

 

3,577

Business loans secured by real estate (3)

 

 

 

 

 

 

 

 

 

 

 

 

CRE owner-occupied

 

4,952

 

 

 

 

4,952

 

4,952

SBA secured by real estate (4)

 

589

 

 

 

 

589

 

589

Total business loans secured by real estate

 

5,541

 

 

 

 

5,541

 

5,541

Commercial loans (5)

 

 

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

1,462

 

 

336

 

 

1,798

 

1,797

Franchise non-real estate secured

 

 

 

12,079

 

 

12,079

 

12,079

SBA not secured by real estate

 

653

 

 

 

 

653

 

653

Total commercial loans

 

2,115

 

 

12,415

 

 

14,530

 

14,529

Retail Loans

 

 

 

 

 

 

 

 

 

 

 

 

Single family residential (6)

 

10

 

 

 

 

10

 

10

Total retail loans

 

10

 

 

 

 

10

 

10

Totals nonaccrual loans

 

$ 18,858

 

$ 1,455

 

$ 12,415

 

$ —

 

$ 31,273

 

$ 23,657

____________________________________________

(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

December 31, 2021

 

 

 

 

 

 

 

 

 

 

Investor loans secured by real estate

 

 

 

 

 

 

 

 

 

 

CRE non-owner-occupied

 

$ 2,760,882

 

$ —

 

$ —

 

$ 10,255

 

$ 2,771,137

Multifamily

 

5,890,704

 

1,230

 

 

 

5,891,934

Construction and land

 

277,640

 

 

 

 

277,640

SBA secured by real estate (1)

 

46,580

 

 

 

337

 

46,917

Total investor loans secured by real estate

 

8,975,806

 

1,230

 

 

10,592

 

8,987,628

Business loans secured by real estate (2)

 

 

 

 

 

 

 

 

 

 

CRE owner-occupied

 

2,246,062

 

 

 

4,952

 

2,251,014

Franchise real estate secured

 

380,381

 

 

 

 

380,381

SBA secured by real estate (3)

 

68,743

 

 

 

441

 

69,184

Total business loans secured by real estate

 

2,695,186

 

 

 

5,393

 

2,700,579

Commercial loans (4)

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

2,101,558

 

92

 

 

1,462

 

2,103,112

Franchise non-real estate secured

 

392,576

 

 

 

 

392,576

SBA not secured by real estate

 

10,319

 

73

 

 

653

 

11,045

Total commercial loans

 

2,504,453

 

165

 

 

2,115

 

2,506,733

Retail loans

 

 

 

 

 

 

 

 

 

 

Single family residential (5)

 

95,292

 

 

 

 

95,292

Consumer loans

 

5,665

 

 

 

 

5,665

Total retail loans

 

100,957

 

 

 

 

100,957

Total loans

 

$ 14,276,402

 

$ 1,395

 

$ —

 

$ 18,100

 

$ 14,295,897

____________________________________________

(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

December 31, 2021

 

 

 

 

 

 

 

 

Investor loans secured by real estate

 

 

 

 

 

 

 

 

CRE non-owner-occupied

 

$ 2,718,001

 

$ 23,848

 

$ 29,288

 

$ 2,771,137

Multifamily

 

5,890,626

 

 

1,308

 

5,891,934

Construction and land

 

277,640

 

 

 

277,640

SBA secured by real estate (1)

 

37,228

 

1,501

 

8,188

 

46,917

Total investor loans secured by real estate

 

8,923,495

 

25,349

 

38,784

 

8,987,628

Business loans secured by real estate (2)

 

 

 

 

 

 

 

 

CRE owner-occupied

 

2,233,829

 

 

17,185

 

2,251,014

Franchise real estate secured

 

380,381

 

 

 

380,381

SBA secured by real estate (3)

 

60,560

 

62

 

8,562

 

69,184

Total business loans secured by real estate

 

2,674,770

 

62

 

25,747

 

2,700,579

Commercial loans (4)

 

 

 

 

 

 

 

 

Commercial and industrial

 

2,052,581

 

15,290

 

35,241

 

2,103,112

Franchise non-real estate secured

 

372,910

 

 

19,666

 

392,576

SBA not secured by real estate

 

7,950

 

795

 

2,300

 

11,045

Total commercial loans

 

2,433,441

 

16,085

 

57,207

 

2,506,733

Retail loans

 

 

 

 

 

 

 

 

Single family residential (5)

 

95,243

 

 

49

 

95,292

Consumer loans

 

5,625

 

 

40

 

5,665

Total retail loans

 

100,868

 

 

89

 

100,957

Total loans

 

$ 14,132,574

 

$ 41,496

 

$ 121,827

 

$ 14,295,897

____________________________________________

(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

 

 

December 31,

 

September 30,

 

December 31,

(Dollars in thousands)

 

2021

 

2021

 

2020

Net income

 

$

84,831

 

 

$

90,088

 

 

$

67,136

 

Plus: amortization of intangible assets expense

 

 

3,880

 

 

 

3,912

 

 

 

4,505

 

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

 

 

1,107

 

 

 

1,119

 

 

 

1,288

 

Net income for average tangible common equity

 

 

87,604

 

 

 

92,881

 

 

 

70,353

 

Plus: merger-related expense

 

 

 

 

 

 

 

 

5,071

 

Less: merger-related expense tax adjustment (1)

 

 

 

 

 

 

 

 

1,450

 

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

 

$

87,604

 

 

$

92,881

 

 

$

73,974

 

 

 

 

 

 

 

 

Average stockholders' equity

 

$

2,851,000

 

 

$

2,844,800

 

 

$

2,710,509

 

Less: average intangible assets

 

 

71,897

 

 

 

75,795

 

 

 

88,216

 

Less: average goodwill

 

 

901,312

 

 

 

901,312

 

 

 

898,436

 

Average tangible common equity

 

$

1,877,791

 

 

$

1,867,693

 

 

$

1,723,857

 

 

 

 

 

 

 

 

Return on average equity

 

 

11.90

%

 

 

12.67

%

 

 

9.91

%

Return on average tangible common equity

 

 

18.66

%

 

 

19.89

%

 

 

16.32

%

Return on average tangible common equity excluding merger-related expense

 

 

18.66

%

 

 

19.89

%

 

 

17.16

%

____________________________________________

(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

 

 

December 31,

 

September 30,

 

December 31,

(Dollars in thousands)

 

2021

 

2021

 

2020

Net income

 

$

84,831

 

 

$

90,088

 

 

$

67,136

 

Plus: merger-related expense

 

 

 

 

 

 

 

 

5,071

 

Less: merger-related expense tax adjustment (1)

 

 

 

 

 

 

 

 

1,450

 

Net income for average assets excluding merger-related expense

 

$

84,831

 

 

$

90,088

 

 

$

70,757

 

 

 

 

 

 

 

 

Average assets

 

$

20,867,005

 

 

$

20,804,903

 

 

$

20,059,893

 

 

 

 

 

 

 

 

Return on average assets

 

 

1.63

%

 

 

1.73

%

 

 

1.34

%

Return on average assets excluding merger-related expense

 

 

1.63

%

 

 

1.73

%

 

 

1.41

%

____________________________________________

(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 the 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

 

 

December 31,

 

September 30,

 

December 31,

(Dollars in thousands)

 

2021

 

2021

 

2020

Interest income

 

$

177,006

 

 

$

176,047

 

 

$

180,824

 

Interest expense

 

 

6,287

 

 

 

6,978

 

 

 

12,626

 

Net interest income

 

 

170,719

 

 

 

169,069

 

 

 

168,198

 

Noninterest income

 

 

27,281

 

 

 

30,100

 

 

 

23,194

 

Revenue

 

 

198,000

 

 

 

199,169

 

 

 

191,392

 

Noninterest expense

 

 

97,252

 

 

 

96,040

 

 

 

99,939

 

Plus: merger-related expense

 

 

 

 

 

 

 

 

5,071

 

Pre-provision net revenue

 

 

100,748

 

 

 

103,129

 

 

 

96,524

 

Pre-provision net revenue (annualized)

 

$

402,992

 

 

$

412,516

 

 

$

386,096

 

 

 

 

 

 

 

 

Average assets

 

$

20,867,005

 

 

$

20,804,903

 

 

$

20,059,893

 

 

 

 

 

 

 

 

Pre-provision net revenue on average assets

 

 

0.48

%

 

 

0.50

%

 

 

0.48

%

Pre-provision net revenue on average assets (annualized)

 

 

1.93

%

 

 

1.98

%

 

 

1.92

%

Noninterest expense (excluding merger-related expense) as a percent of average assets is a non-GAAP financial measure derived from GAAP-based amounts. We calculate the noninterest expense (excluding merger-related expense) as a percent of average assets by excluding merger-related expenses from the noninterest expense and dividing by average assets. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business and a better comparison to the financial results of prior periods.

 

 

Three Months Ended

 

 

December 31,

 

September 30,

 

December 31,

(Dollars in thousands)

 

2021

 

2021

 

2020

Noninterest expense

 

$

97,252

 

 

$

96,040

 

 

$

99,939

 

Less: merger-related expense

 

 

 

 

 

 

 

 

5,071

 

Noninterest expense excluding merger-related expense

 

 

97,252

 

 

 

96,040

 

 

 

94,868

 

 

 

 

 

 

 

 

Average assets

 

$

20,867,005

 

 

$

20,804,903

 

 

$

20,059,893

 

 

 

 

 

 

 

 

Noninterest expense as a percent of average assets (annualized)

 

 

1.86

%

 

 

1.85

%

 

 

1.99

%

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

 

 

1.86

%

 

 

1.85

%

 

 

1.89

%

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

 

 

December 31,

 

September 30,

 

June 30,

 

March 31,

 

December 31,

(Dollars in thousands, except per share data)

 

2021

 

2021

 

2021

 

2021

 

2020

Total stockholders' equity

 

$

2,886,311

 

 

$

2,838,116

 

 

$

2,813,419

 

 

$

2,703,098

 

 

$

2,746,649

 

Less: intangible assets

 

 

970,883

 

 

 

974,763

 

 

 

978,675

 

 

 

981,568

 

 

 

984,076

 

Tangible common equity

 

$

1,915,428

 

 

$

1,863,353

 

 

$

1,834,744

 

 

$

1,721,530

 

 

$

1,762,573

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

21,094,429

 

 

$

21,005,211

 

 

$

20,529,486

 

 

$

20,173,298

 

 

$

19,736,544

 

Less: intangible assets

 

 

970,883

 

 

 

974,763

 

 

 

978,675

 

 

 

981,568

 

 

 

984,076

 

Tangible assets

 

$

20,123,546

 

 

$

20,030,448

 

 

$

19,550,811

 

 

$

19,191,730

 

 

$

18,752,468

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity ratio

 

 

9.52

%

 

 

9.30

%

 

 

9.38

%

 

 

8.97

%

 

 

9.40

%

 

 

 

 

 

 

 

 

 

 

 

Common shares issued and outstanding

 

 

94,389,543

 

 

 

94,354,211

 

 

 

94,656,575

 

 

 

94,644,415

 

 

 

94,483,136

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

30.58

 

 

$

30.08

 

 

$

29.72

 

 

$

28.56

 

 

$

29.07

 

Less: intangible book value per share

 

 

10.29

 

 

 

10.33

 

 

 

10.34

 

 

 

10.37

 

 

 

10.42

 

Tangible book value per share

 

$

20.29

 

 

$

19.75

 

 

$

19.38

 

 

$

18.19

 

 

$

18.65

 

Core net interest income and core net interest margin are non-GAAP financial measures derived from GAAP-based amounts. We calculate core net interest income by excluding scheduled accretion income, accelerated accretion income, premium amortization on CDs, nonrecurring nonaccrual interest paid from net interest income. The core net interest margin is calculated as the ratio of core net interest income to average interest-earning assets. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business.

 

 

Three Months Ended

 

 

December 31,

 

September 30,

 

December 31,

(Dollars in thousands)

 

2021

 

2021

 

2020

Net interest income

 

$

170,719

 

 

$

169,069

 

 

$

168,198

 

Less: scheduled accretion income

 

 

3,097

 

 

 

3,339

 

 

 

4,911

 

Less: accelerated accretion income

 

 

4,770

 

 

 

6,107

 

 

 

6,120

 

Less: premium amortization on CD

 

 

183

 

 

 

390

 

 

 

2,358

 

Less: nonrecurring nonaccrual interest paid

 

 

349

 

 

 

(74

)

 

 

322

 

Core net interest income

 

 

162,320

 

 

 

159,307

 

 

 

154,487

 

 

 

 

 

 

 

 

Average interest-earning assets

 

$

19,173,458

 

 

$

19,131,172

 

 

$

18,519,437

 

 

 

 

 

 

 

 

Net interest margin

 

 

3.53

%

 

 

3.51

%

 

 

3.61

%

Core net interest margin

 

 

3.36

%

 

 

3.30

%

 

 

3.32

%

Efficiency ratio is a non-GAAP financial measure derived from GAAP-based amounts. This figure represents the ratio of noninterest expense less other real estate owned operations, core deposit intangible amortization, and merger-related expense to the sum of net interest income before provision for credit losses and total noninterest income, less gain (loss) on sale of securities, other income - security recoveries, gain/(loss) on sale of other real estate owned, and gain (loss) from debt extinguishment. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business.

 

 

Three Months Ended

 

 

December 31,

 

September 30,

 

December 31,

(Dollars in thousands)

 

2021

 

2021

 

2020

Total noninterest expense

 

 

97,252

 

 

 

96,040

 

 

 

99,939

 

Less: amortization of intangible assets

 

 

3,880

 

 

 

3,912

 

 

 

4,505

 

Less: merger-related expense

 

 

 

 

 

 

 

 

5,071

 

Less: other real estate owned operations, net

 

 

 

 

 

 

 

 

(5

)

Noninterest expense, adjusted

 

$

93,372

 

 

$

92,128

 

 

$

90,368

 

 

 

 

 

 

 

 

Net interest income before provision for credit losses

 

$

170,719

 

 

$

169,069

 

 

$

168,198

 

Add: total noninterest income

 

 

27,281

 

 

 

30,100

 

 

 

23,194

 

Less: net gain from investment securities

 

 

3,585

 

 

 

4,190

 

 

 

5,002

 

Less: other income - security recoveries

 

 

1

 

 

 

1

 

 

 

1

 

Less: net gain from other real estate owned

 

 

 

 

 

 

 

 

(70

)

Less: net gain from debt extinguishment

 

 

 

 

 

970

 

 

 

 

Revenue, adjusted

 

$

194,414

 

 

$

194,008

 

 

$

186,459

 

 

 

 

 

 

 

 

Efficiency ratio

 

 

48.0

%

 

 

47.5

%

 

 

48.5

%

 

Contacts

Pacific Premier Bancorp, Inc..

Steven R. Gardner

Chairman, President, and Chief Executive Officer

(949) 864-8000

Ronald J. Nicolas, Jr.

Senior Executive Vice President and Chief Financial Officer

(949) 864-8000

Matthew J. Lazzaro

Senior Vice President, Director of Investor Relations

(949) 243-1082

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