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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Pacific Premier Bancorp Inc | NASDAQ:PPBI | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.21 | 0.78% | 27.06 | 24.96 | 28.00 | 27.66 | 26.62 | 27.04 | 662,933 | 22:30:00 |
Second Quarter 2024 Summary
Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company” or “Pacific Premier”), the holding company of Pacific Premier Bank (the “Bank”), reported net income of $41.9 million, or $0.43 per diluted share, for the second quarter of 2024, compared with net income of $47.0 million, or $0.49 per diluted share, for the first quarter of 2024, and net income of $57.6 million, or $0.60 per diluted share, for the second quarter of 2023.
For the second quarter of 2024, the Company’s return on average assets (“ROAA”) was 0.90%, return on average equity (“ROAE”) was 5.76%, and return on average tangible common equity (“ROATCE”)(1) was 8.92%, compared to 0.99%, 6.50%, and 10.05%, respectively, for the first quarter of 2024, and 1.09%, 8.11%, and 12.66%, respectively, for the second quarter of 2023. Total assets were $18.33 billion at June 30, 2024, compared to $18.81 billion at March 31, 2024, and $20.75 billion at June 30, 2023.
Steven R. Gardner, Chairman, Chief Executive Officer, and President of the Company, commented, “We delivered solid financial results for the second quarter, producing net income of $41.9 million, or $0.43 per share. Our results reflect our disciplined approach to balance sheet and risk management, as well as our ongoing focus on capital accumulation. Our quarter-end tangible common equity(1) and tier 1 common equity ratios increased to 11.41% and 15.89%, respectively, placing us near the top of our peers for both ratios.
“Second quarter asset quality trends remained solid. Our nonperforming loans decreased to $52.1 million, reflecting our proactive approach to credit risk management. Overall, credit performance was consistent with our expectations as our borrowers are on solid financial footing and borrower cash flows generally do not appear to have deteriorated in any material way. Similar to our capital ratios, our allowance for credit losses ranks among the top of our peers.
“On the business development front, second quarter loan production increased to $150.7 million, as our teams continue to work collaboratively to expand our client base and reinforce existing long-term relationships. Additionally, we saw clients use excess deposits to pay down and pay off loans coupled with seasonal factors associated with tax payments and distributions, as total deposits declined from the prior quarter. Our deposit mix remained favorable, as brokered deposits declined by $87.9 million and noninterest-bearing deposits comprised 31.6% of total deposits.
“We enter the second half of the year from a position of strength and expect stabilization in our loan and deposit balances as we move through the rest of the year. Our strong capital and liquidity levels provide us with significant optionality and positions us well to take advantage of opportunities that may arise to drive future earnings growth as we continue to serve our small- and middle-market businesses and focus on building long-term franchise value. I want to thank all of our employees for their exceptional contributions this quarter and during the first half of 2024, as well as all of our stakeholders for their ongoing support.”
FINANCIAL HIGHLIGHTS
Three Months Ended
June 30,
March 31,
June 30,
(Dollars in thousands, except per share data)
2024
2024
2023
Financial highlights (unaudited)
Net income
$
41,905
$
47,025
$
57,636
Net interest income
136,394
145,127
160,092
Diluted earnings per share
0.43
0.49
0.60
Common equity dividend per share paid
0.33
0.33
0.33
ROAA
0.90
%
0.99
%
1.09
%
ROAE
5.76
6.50
8.11
ROATCE (1)
8.92
10.05
12.66
Pre-provision net revenue to average assets (1)
1.23
1.43
1.52
Net interest margin
3.26
3.39
3.33
Cost of deposits
1.73
1.59
1.27
Cost of non-maturity deposits (1)
1.17
1.06
0.71
Efficiency ratio (1)
61.3
60.2
54.1
Noninterest expense as a percent of average assets
2.10
2.16
1.91
Total assets
$
18,332,325
$
18,813,181
$
20,747,883
Total deposits
14,627,654
15,187,828
16,539,875
Non-maturity deposits (1) as a percent of total deposits
83.7
%
84.4
%
81.4
%
Noninterest-bearing deposits as a percent of total deposits
31.6
32.9
35.6
Loan-to-deposit ratio
85.4
85.7
82.3
Nonperforming assets as a percent of total assets
0.28
0.34
0.08
Delinquency as a percentage of loans held for investment
0.14
0.09
0.23
Allowance for credit losses to loans held for investment (2)
1.47
1.48
1.41
Book value per share
$
30.32
$
30.09
$
29.71
Tangible book value per share (1)
20.58
20.33
19.79
Tangible common equity ratio (1)
11.41
%
10.97
%
9.59
%
Common equity tier 1 capital ratio
15.89
15.02
14.34
Total capital ratio
19.01
18.23
17.24
______________________________
(1)
Reconciliations of the non-GAAP measures are set forth at the end of this press release.
(2)
At June 30, 2024, 25% of loans held for investment include a fair value net discount of $38.6 million, or 0.31% of loans held for investment. At March 31, 2024, 25% of loans held for investment include a fair value net discount of $41.2 million, or 0.32% of loans held for investment. At June 30, 2023, 25% of loans held for investment include a fair value net discount of $48.4 million, or 0.35% of loans held for investment.
INCOME STATEMENT HIGHLIGHTS
Net Interest Income and Net Interest Margin
Net interest income totaled $136.4 million in the second quarter of 2024, a decrease of $8.7 million, or 6.0%, from the first quarter of 2024. The decrease in net interest income was primarily attributable to lower average loan balances and higher cost of deposits.
The net interest margin for the second quarter of 2024 decreased 13 basis points to 3.26%, from 3.39% in the prior quarter. The decrease was primarily due to a higher cost of deposits.
Net interest income for the second quarter of 2024 decreased $23.7 million, or 14.8%, compared to the second quarter of 2023. The decrease was attributable to a higher cost of funds and lower average interest-earning asset balances, partially offset by lower average interest-bearing liabilities and higher yields on average interest-earning assets, all the result of the higher interest rate environment and the Company's balance sheet management strategies to prioritize capital accumulation.
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
(Unaudited)
Three Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
(Dollars in thousands)
Average Balance
Interest Income/ Expense
Average Yield/ Cost
Average Balance
Interest Income/ Expense
Average Yield/ Cost
Average Balance
Interest Income/ Expense
Average Yield/ Cost
Assets
Cash and cash equivalents
$
1,134,736
$
13,666
4.84
%
$
1,140,909
$
13,638
4.81
%
$
1,433,137
$
16,600
4.65
%
Investment securities
2,964,909
26,841
3.62
2,948,170
26,818
3.64
3,926,568
25,936
2.64
Loans receivable, net (1) (2)
12,724,545
167,547
5.30
13,149,038
172,975
5.29
13,927,145
182,852
5.27
Total interest-earning assets
$
16,824,190
$
208,054
4.97
$
17,238,117
$
213,431
4.98
$
19,286,850
$
225,388
4.69
Liabilities
Interest-bearing deposits
$
10,117,571
$
64,229
2.55
%
$
10,058,808
$
59,506
2.38
%
$
10,797,708
$
53,580
1.99
%
Borrowings
532,251
7,431
5.59
850,811
8,798
4.15
1,131,465
11,716
4.15
Total interest-bearing liabilities
$
10,649,822
$
71,660
2.71
$
10,909,619
$
68,304
2.52
$
11,929,173
$
65,296
2.20
Noninterest-bearing deposits
$
4,824,002
$
4,996,939
$
6,078,543
Net interest income
$
136,394
$
145,127
$
160,092
Net interest margin (3)
3.26
%
3.39
%
3.33
%
Cost of deposits (4)
1.73
1.59
1.27
Cost of funds (5)
1.86
1.73
1.45
Cost of non-maturity deposits (6)
1.17
1.06
0.71
Ratio of interest-earning assets to interest-bearing liabilities
157.98
158.01
161.68
_______________________________________
(1)
Average balance includes loans held for sale and nonperforming loans and is net of deferred loan origination fees/costs, discounts/premiums, and the basis adjustment of certain loans included in fair value hedging relationships.
(2)
Interest income includes net discount accretion of $2.3 million, $2.1 million, and $2.9 million for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, 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 2024, the Company recorded a $1.3 million provision expense, compared to $3.9 million for the first quarter of 2024, and $1.5 million for the second quarter of 2023. The decrease in provision for credit losses compared to the first quarter of 2024 was largely attributable to the decrease in loan balances and changes in the loan composition, partially offset by increases associated with economic and market forecasts.
Three Months Ended
June 30,
March 31,
June 30,
(Dollars in thousands)
2024
2024
2023
Provision for credit losses
Provision for loan losses
$
1,756
$
6,288
$
610
Provision for unfunded commitments
(505
)
(2,425
)
1,003
Provision for held-to-maturity securities
14
(11
)
(114
)
Total provision for credit losses
$
1,265
$
3,852
$
1,499
Noninterest Income
Noninterest income for the second quarter of 2024 was $18.2 million, a decrease of $7.6 million from the first quarter of 2024. The decrease was primarily due to the prior quarter's $5.1 million gain on debt extinguishment resulting from an early redemption of a $200.0 million Federal Home Loan Bank of San Francisco (“FHLB”) term advance, a $1.7 million decrease in trust custodial account fees largely driven by annual tax fees earned during the prior quarter, and a $1.3 million decrease in Community Reinvestment Act ("CRA") investment income.
Noninterest income for the second quarter of 2024 decreased $2.3 million compared to the second quarter of 2023. The decrease was primarily due to a $2.2 million decrease in other income.
Three Months Ended
June 30,
March 31,
June 30,
(Dollars in thousands)
2024
2024
2023
Noninterest income
Loan servicing income
$
510
$
529
$
493
Service charges on deposit accounts
2,710
2,688
2,670
Other service fee income
309
336
315
Debit card interchange fee income
925
765
914
Earnings on bank owned life insurance
4,218
4,159
3,487
Net gain from sales of loans
65
—
345
Trust custodial account fees
8,950
10,642
9,360
Escrow and exchange fees
702
696
924
Other (loss) income
(167
)
5,959
2,031
Total noninterest income
$
18,222
$
25,774
$
20,539
Noninterest Expense
Noninterest expense totaled $97.6 million for the second quarter of 2024, a decrease of $5.1 million compared to the first quarter of 2024. The decrease was primarily due to a $3.1 million decrease in legal and professional services, driven by a $4.0 million insurance claim receivable.
Noninterest expense for the second quarter of 2024 decreased by $3.1 million compared to the second quarter of 2023. The decrease was primarily due to a $3.6 million decrease in legal and professional services, driven by a $4.0 million insurance claim receivable, and a $1.1 million decrease in premises and occupancy expense, partially offset by a $3.1 million increase in deposit expense due to higher deposit earnings credit rates.
Three Months Ended
June 30,
March 31,
June 30,
(Dollars in thousands)
2024
2024
2023
Noninterest expense
Compensation and benefits
$
53,140
$
54,130
$
53,424
Premises and occupancy
10,480
10,807
11,615
Data processing
7,754
7,511
7,488
Other real estate owned operations, net
—
46
8
FDIC insurance premiums
1,873
2,629
2,357
Legal and professional services
1,078
4,143
4,716
Marketing expense
1,724
1,558
1,879
Office expense
1,077
1,093
1,280
Loan expense
840
770
567
Deposit expense
12,289
12,665
9,194
Amortization of intangible assets
2,763
2,836
3,055
Other expense
4,549
4,445
5,061
Total noninterest expense
$
97,567
$
102,633
$
100,644
Income Tax
For the second quarter of 2024, income tax expense totaled $13.9 million, resulting in an effective tax rate of 24.9%, compared with income tax expense of $17.4 million and an effective tax rate of 27.0% for the first quarter of 2024, and income tax expense of $20.9 million and an effective tax rate of 26.6% for the second quarter of 2023.
BALANCE SHEET HIGHLIGHTS
Loans
Loans held for investment totaled $12.49 billion at June 30, 2024, a decrease of $522.1 million, or 4.0%, from March 31, 2024, and a decrease of $1.12 billion, or 8.2%, from June 30, 2023. The decrease from March 31, 2024 was primarily due to increased prepayments and maturities, and a decrease in credit line draws, partially offset by higher loan production and fundings.
During the second quarter of 2024, new origination activity increased, yet borrower demand for commercial loans remained muted given the uncertain economic and interest rate outlook. New loan commitments totaled $150.7 million, and new loan fundings totaled $58.6 million, compared with $45.6 million in loan commitments and $14.0 million in new loan fundings for the first quarter of 2024, and $148.5 million in loan commitments and $71.6 million in new loan fundings for the second quarter of 2023.
At June 30, 2024, the total loan-to-deposit ratio was 85.4%, compared to 85.7% and 82.3% at March 31, 2024 and June 30, 2023, 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)
2024
2024
2023
Beginning gross loan balance before basis adjustment
$
13,044,395
$
13,318,571
$
14,223,036
New commitments
150,666
45,563
148,482
Unfunded new commitments
(92,017
)
(31,531
)
(76,928
)
Net new fundings
58,649
14,032
71,554
Amortization/maturities/payoffs
(447,170
)
(358,863
)
(582,948
)
Net draws on existing lines of credit
(100,302
)
109,860
36,393
Loan sales
(23,750
)
(32,676
)
(78,349
)
Charge-offs
(13,530
)
(6,529
)
(3,986
)
Transferred to other real estate owned
—
—
(104
)
Net decrease
(526,103
)
(274,176
)
(557,440
)
Ending gross loan balance before basis adjustment
$
12,518,292
$
13,044,395
$
13,665,596
Basis adjustment associated with fair value hedge (1)
(28,201
)
(32,324
)
(53,130
)
Ending gross loan balance
$
12,490,091
$
13,012,071
$
13,612,466
______________________________
(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)
2024
2024
2023
Investor loans secured by real estate
Commercial real estate (“CRE”) non-owner-occupied
$
2,245,474
$
2,309,252
$
2,571,246
Multifamily
5,473,606
5,558,966
5,788,030
Construction and land
453,799
486,734
428,287
SBA secured by real estate (1)
33,245
35,206
38,876
Total investor loans secured by real estate
8,206,124
8,390,158
8,826,439
Business loans secured by real estate (2)
CRE owner-occupied
2,096,485
2,149,362
2,281,721
Franchise real estate secured
274,645
294,938
318,539
SBA secured by real estate (3)
46,543
48,426
57,084
Total business loans secured by real estate
2,417,673
2,492,726
2,657,344
Commercial loans (4)
Commercial and industrial (“C&I”)
1,554,735
1,774,487
1,744,763
Franchise non-real estate secured
257,516
301,895
351,944
SBA non-real estate secured
10,346
10,946
9,688
Total commercial loans
1,822,597
2,087,328
2,106,395
Retail loans
Single family residential (5)
70,380
72,353
70,993
Consumer
1,378
1,830
2,241
Total retail loans
71,758
74,183
73,234
Loans held for investment before basis adjustment (6)
12,518,152
13,044,395
13,663,412
Basis adjustment associated with fair value hedge (7)
(28,201
)
(32,324
)
(53,130
)
Loans held for investment
12,489,951
13,012,071
13,610,282
Allowance for credit losses for loans held for investment
(183,803
)
(192,340
)
(192,333
)
Loans held for investment, net
$
12,306,148
$
12,819,731
$
13,417,949
Total unfunded loan commitments
$
1,601,870
$
1,459,515
$
2,202,647
Loans held for sale, at lower of cost or fair value
$
140
$
—
$
2,184
______________________________
(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 net deferred origination costs of $1.4 million, $797,000, and $142,000, and unaccreted fair value net purchase discounts of $38.6 million, $41.2 million, and $48.4 million as of June 30, 2024, March 31, 2024, and June 30, 2023, 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, 2024 was 4.88%, compared to 4.91% at March 31, 2024, and 4.73% at June 30, 2023. The decrease was a result of customers paying down and paying off higher-rate loans compared to the prior quarter. The year-over-year increase reflects higher rates on new originations and the repricing of loans as a result of the increases in benchmark interest rates.
The following table presents the composition of loan commitments originated during the quarters indicated:
Three Months Ended
June 30,
March 31,
June 30,
(Dollars in thousands)
2024
2024
2023
Investor loans secured by real estate
CRE non-owner-occupied
$
3,818
$
850
$
1,470
Multifamily
6,026
480
53,522
Construction and land
16,820
—
24,525
Total investor loans secured by real estate
26,664
1,330
79,517
Business loans secured by real estate (1)
CRE owner-occupied
2,623
6,745
3,062
Total business loans secured by real estate
2,623
6,745
3,062
Commercial loans (2)
Commercial and industrial
109,679
32,477
58,730
Franchise non-real estate secured
—
—
1,853
SBA non-real estate secured
1,281
—
1,612
Total commercial loans
110,960
32,477
62,195
Retail loans
Single family residential (3)
7,698
4,936
3,708
Consumer
2,721
75
—
Total retail loans
10,419
5,011
3,708
Total loan commitments
$
150,666
$
45,563
$
148,482
______________________________
(1)
Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.
(2)
Loans to businesses where the operating cash flow of the business is the primary source of repayment.
(3)
Single family residential includes home equity lines of credit, as well as second trust deeds.
The weighted average interest rate on new loan commitments of 8.58% in the second quarter of 2024 was relatively consistent with 8.62% in the first quarter of 2024, and increased from 6.72% in the second quarter of 2023.
Allowance for Credit Losses
At June 30, 2024, our allowance for credit losses (“ACL”) on loans held for investment was $183.8 million, a decrease of $8.5 million from March 31, 2024 and June 30, 2023. The decrease in the ACL from March 31, 2024 and June 30, 2023 reflects the relative changes in size and composition in our loans held for investment, partially offset by changes in economic and market forecasts.
During the second quarter of 2024, the Company incurred $10.3 million of net charge-offs, primarily related to the sale of substandard non-owner-occupied CRE and multifamily loans during the quarter.
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, 2024
(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
$
30,781
$
(4,196
)
$
1,500
$
1,653
$
29,738
Multifamily
58,411
(7,372
)
—
6,259
57,298
Construction and land
8,171
—
—
2,633
10,804
SBA secured by real estate (1)
2,184
(153
)
86
25
2,142
Business loans secured by real estate (2)
CRE owner-occupied
28,760
—
121
(350
)
28,531
Franchise real estate secured
7,258
—
—
(464
)
6,794
SBA secured by real estate (3)
4,288
—
1
(155
)
4,134
Commercial loans (4)
Commercial and industrial
37,107
(968
)
148
(4,030
)
32,257
Franchise non-real estate secured
14,320
—
1,375
(4,565
)
11,130
SBA non-real estate secured
495
(6
)
3
(10
)
482
Retail loans
Single family residential (5)
442
—
3
(46
)
399
Consumer loans
123
(835
)
—
806
94
Totals
$
192,340
$
(13,530
)
$
3,237
$
1,756
$
183,803
______________________________
(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 ACL to loans held for investment at June 30, 2024 was 1.47%, which was relatively consistent with 1.48% at March 31, 2024, and increased from 1.41% at June 30, 2023. The fair value net discount on loans acquired through acquisitions was $38.6 million, or 0.31% of total loans held for investment, as of June 30, 2024, compared to $41.2 million, or 0.32% of total loans held for investment, as of March 31, 2024, and $48.4 million, or 0.35% of total loans held for investment, as of June 30, 2023.
Asset Quality
Nonperforming assets totaled $52.1 million, or 0.28% of total assets, at June 30, 2024, compared with $64.1 million, or 0.34% of total assets, at March 31, 2024, and $17.4 million, or 0.08% of total assets, at June 30, 2023. Loan delinquencies were $17.9 million, or 0.14% of loans held for investment, at June 30, 2024, compared to $12.2 million, or 0.09% of loans held for investment, at March 31, 2024, and $31.0 million, or 0.23% of loans held for investment, at June 30, 2023.
Classified loans totaled $183.8 million, or 1.47% of loans held for investment, at June 30, 2024, compared with $204.7 million, or 1.57% of loans held for investment, at March 31, 2024, and $119.9 million, or 0.88% of loans held for investment, at June 30, 2023.
The following table presents the asset quality metrics of the loan portfolio as of the dates indicated.
June 30,
March 31,
June 30,
(Dollars in thousands)
2024
2024
2023
Asset quality
Nonperforming loans
$
52,119
$
63,806
$
17,151
Other real estate owned
—
248
270
Nonperforming assets
$
52,119
$
64,054
$
17,421
Total classified assets (1)
$
183,833
$
204,937
$
120,216
Allowance for credit losses
183,803
192,340
192,333
Allowance for credit losses as a percent of total nonperforming loans
353
%
301
%
1,121
%
Nonperforming loans as a percent of loans held for investment
0.42
0.49
0.13
Nonperforming assets as a percent of total assets
0.28
0.34
0.08
Classified loans to total loans held for investment
1.47
1.57
0.88
Classified assets to total assets
1.00
1.09
0.58
Net loan charge-offs for the quarter ended
$
10,293
$
6,419
$
3,665
Net loan charge-offs for the quarter to average total loans
0.08
%
0.05
%
0.03
%
Allowance for credit losses to loans held for investment (2)
1.47
1.48
1.41
Delinquent loans (3)
30 - 59 days
$
4,985
$
1,983
$
649
60 - 89 days
3,289
974
31
90+ days
9,649
9,221
30,271
Total delinquency
$
17,923
$
12,178
$
30,951
Delinquency as a percentage of loans held for investment
0.14
%
0.09
%
0.23
%
______________________________
(1)
Includes substandard and doubtful loans, and other real estate owned.
(2)
At June 30, 2024, 25% of loans held for investment include a fair value net discount of $38.6 million, or 0.31% of loans held for investment. At March 31, 2024, 25% of loans held for investment include a fair value net discount of $41.2 million, or 0.32% of loans held for investment. At June 30, 2023, 25% of loans held for investment include a fair value net discount of $48.4 million, or 0.35% of loans held for investment.
(3)
Nonaccrual loans are included in this aging analysis based on the loan's past due status.
Investment Securities
At June 30, 2024, available-for-sale (“AFS”) and held-to-maturity (“HTM”) investment securities were $1.32 billion and $1.71 billion, respectively, compared to $1.15 billion and $1.72 billion, respectively, at March 31, 2024, and $2.01 billion and $1.74 billion, respectively, at June 30, 2023.
In total, investment securities were $3.03 billion at June 30, 2024, an increase of $155.7 million from March 31, 2024, and a decrease of $719.2 million from June 30, 2023. The increase in the second quarter of 2024 compared to the prior quarter was primarily the result of $443.1 million in purchases of AFS U.S. Treasury securities and a decrease of $4.2 million in AFS investment securities mark-to-market unrealized loss, partially offset by $291.5 million in principal payments, amortization and accretion, and redemptions.
The decrease in investment securities from June 30, 2023 was the result of $1.52 billion in sales of AFS investment securities, primarily related to the investment securities portfolio repositioning during the fourth quarter of 2023, and $611.5 million in principal payments, amortization and accretion, and redemptions, partially offset by $1.17 billion in purchases of AFS and HTM investment securities and a decrease of $244.9 million in AFS securities mark-to-market unrealized loss.
Deposits
At June 30, 2024, total deposits were $14.63 billion, a decrease of $560.2 million, or 3.7%, from March 31, 2024, and a decrease of $1.91 billion, or 11.6%, from June 30, 2023. The decrease from the prior quarter was largely driven by reductions of $381.5 million in noninterest-bearing checking, $193.1 million in money market and savings, $87.9 million in brokered certificates of deposit, and $9.4 million in interest-bearing checking, partially offset by an increase of $111.7 million in retail certificates of deposit. The decrease from June 30, 2023 was attributable to decreases of $1.28 billion in noninterest-bearing checking and $1.23 billion in brokered certificates of deposit, partially offset by an increase of $540.5 million in retail certificates of deposit.
At June 30, 2024, non-maturity deposits(1) totaled $12.24 billion, or 83.7% of total deposits, a decrease of $584.0 million, or 4.6%, from March 31, 2024, and a decrease of $1.22 billion, or 9.1%, from June 30, 2023. The decrease from the prior quarters was attributable to clients utilizing their deposit balances to prepay or pay down loans, seasonal tax payments and distributions, as well as redeploying funds into higher yielding alternatives.
At June 30, 2024, maturity deposits totaled $2.39 billion, an increase of $23.8 million, or 1.0%, from March 31, 2024, and a decrease of $692.0 million, or 22.4%, from June 30, 2023. The increase in the second quarter of 2024 compared to the prior quarter was primarily driven by an increase of $111.7 million in retail certificates of deposit, partially offset by the reduction of $87.9 million in brokered certificates of deposit. The decrease from June 30, 2023 was primarily driven by decreases in brokered certificates of deposit.
The weighted average cost of total deposits for the second quarter of 2024 was 1.73%, compared to 1.59% for the first quarter of 2024, and 1.27% for the second quarter of 2023, both increases principally driven by higher pricing across deposit categories. The weighted average cost of non-maturity deposits(1) for the second quarter of 2024 was 1.17%, compared to 1.06% for the first quarter of 2024, and 0.71% for the second quarter of 2023.
At June 30, 2024, the end-of-period weighted average rate of total deposits was 1.81%, compared to 1.66% at March 31, 2024, and 1.40% at June 30, 2023. At June 30, 2024, the end-of-period weighted average rate of non-maturity deposits was 1.25%, compared to 1.12% at March 31, 2024, and 0.78% at June 30, 2023.
At June 30, 2024, the Company’s FDIC-insured deposits as a percentage of total deposits was 61%. Insured and collateralized deposits comprised 67% of total deposits at June 30, 2024, which was the same level at March 31, 2024 and June 30, 2023.
______________________________
(1)
Reconciliations of the non-GAAP measures are set forth at the end of this press release.
The following table presents the composition of deposits as of the dates indicated.
June 30,
March 31,
June 30,
(Dollars in thousands)
2024
2024
2023
Deposit accounts
Noninterest-bearing checking
$
4,616,124
$
4,997,636
$
5,895,975
Interest-bearing:
Checking
2,776,212
2,785,626
2,759,855
Money market/savings
4,844,585
5,037,636
4,801,288
Total non-maturity deposits (1)
12,236,921
12,820,898
13,457,118
Retail certificates of deposit
1,906,552
1,794,813
1,366,071
Wholesale/brokered certificates of deposit
484,181
572,117
1,716,686
Total maturity deposits
2,390,733
2,366,930
3,082,757
Total deposits
$
14,627,654
$
15,187,828
$
16,539,875
Cost of deposits
1.73
%
1.59
%
1.27
%
Cost of non-maturity deposits (1)
1.17
1.06
0.71
Noninterest-bearing deposits as a percent of total deposits
31.6
32.9
35.6
Non-maturity deposits (1) as a percent of total deposits
83.7
84.4
81.4
______________________________
(1)
Reconciliations of the non-GAAP measures are set forth at the end of this press release.
Borrowings
At June 30, 2024, total borrowings amounted to $532.2 million, remaining flat from March 31, 2024, and a decrease of $599.4 million from June 30, 2023. Total borrowings at June 30, 2024 were comprised of $200.0 million of FHLB term advances and $332.2 million of subordinated debt. The decrease in borrowings at June 30, 2024 as compared to June 30, 2023 was due to a decrease of $600.0 million in FHLB term advances.
As of June 30, 2024, our unused borrowing capacity was $8.65 billion, which consists of available lines of credit with FHLB and other correspondent banks, as well as access through the Federal Reserve Bank's discount window, which was not utilized during the second quarter of 2024.
Capital Ratios
At June 30, 2024, our common stockholders' equity was $2.92 billion, or 15.95% of total assets, compared with $2.90 billion, or 15.43%, at March 31, 2024, and $2.85 billion, or 13.73%, at June 30, 2023, with a book value per share of $30.32, compared with $30.09 at March 31, 2024, and $29.71 at June 30, 2023. At June 30, 2024, the ratio of tangible common equity to tangible assets(1) increased 44 and 182 basis points to 11.41%, compared with 10.97% at March 31, 2024, and 9.59% at June 30, 2023, respectively. Tangible book value per share(1) increased $0.25 and $0.79 to $20.58, compared with $20.33 at March 31, 2024, and $19.79 at June 30, 2023, respectively.
______________________________
(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, 2024, 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
2024
2024
2023
Pacific Premier Bancorp, Inc. Consolidated
Tangible common equity ratio (1)
11.41
%
10.97
%
9.59
%
Tier 1 leverage ratio
11.87
11.48
10.90
Common equity tier 1 capital ratio
15.89
15.02
14.34
Tier 1 capital ratio
15.89
15.02
14.34
Total capital ratio
19.01
18.23
17.24
Pacific Premier Bank
Tier 1 leverage ratio
13.42
%
12.97
%
12.15
%
Common equity tier 1 capital ratio
17.97
16.96
15.99
Tier 1 capital ratio
17.97
16.96
15.99
Total capital ratio
19.22
18.21
17.05
Share data
Book value per share
$
30.32
$
30.09
$
29.71
Tangible book value per share (1)
20.58
20.33
19.79
Common equity dividends declared per share
0.33
0.33
0.33
Closing stock price (2)
22.97
24.00
20.68
Shares issued and outstanding
96,434,047
96,459,966
95,906,217
Market capitalization (2)(3)
$
2,215,090
$
2,315,039
$
1,983,341
______________________________
(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 22, 2024, the Company's Board of Directors declared a $0.33 per share dividend, payable on August 12, 2024 to stockholders of record as of August 5, 2024. 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 2024, 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 July 24, 2024 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. Participants should ask to be joined to the Pacific Premier Bancorp, Inc. call. Additionally, a telephone replay will be made available through July 31, 2024, at (877) 344-7529, replay code 4208818.
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 $18 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 32,000 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, liquidity, and the impact of acquisitions we have made or may make.
Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the strength of the United States ("U.S.") economy in general and the strength of the local economies in which we conduct operations; adverse developments in the banking industry and the potential impact of such developments on customer confidence, liquidity, and regulatory responses to these developments; the effects of, and changes in, trade, monetary, and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; interest rate, liquidity, economic, market, credit, operational, and inflation risks associated with our business, including the speed and predictability of changes in these risks; our ability to attract and retain deposits and access to other sources of liquidity, particularly in a rising or high interest rate environment, and the quality and composition of our deposits; business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic markets, including the tight labor market, ineffective management of the U.S. Federal budget or debt, or turbulence or uncertainty in domestic or foreign financial markets; the effect of acquisitions we have made or may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target into our operations; the timely development of competitive new products and services and the acceptance of these products and services by new and existing customers; possible impairment charges to goodwill, including any impairment that may result from increased volatility in our stock price; the impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, and insurance, and the application thereof by regulatory bodies; compliance risks, including any increased costs of monitoring, testing, and maintaining compliance with complex laws and regulations; the effectiveness of our risk management framework and quantitative models; 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; possible credit-related impairments of securities held by us; changes in the level of our nonperforming assets and charge-offs; the impact of governmental efforts to restructure the U.S. financial regulatory system; the impact of recent or future changes in the FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount, including any special assessments; changes in consumer spending, borrowing, and savings habits; the effects of concentrations in our loan portfolio, including commercial real estate and the risks of geographic and industry concentrations; the possibility that we may reduce or discontinue the payments of dividends on our common stock; the possibility that we may discontinue, reduce or otherwise limit the level of repurchases of our common stock we may make from time to time pursuant to our stock repurchase program; changes in the financial performance and/or condition of our borrowers; changes in the competitive environment among financial and bank holding companies and other financial service providers; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism, and/or military conflicts, including the war between Russia and Ukraine, Israel and Hamas, and overall tension in the Middle East, and trade tensions, all of which could impact business and economic conditions in the United States and abroad; public health crises and pandemics and their effects on the economic and business environments in which we operate, including on our credit quality and business operations, as well as the impact on general economic and financial market conditions; cybersecurity threats and the cost of defending against them; climate change, including the enhanced regulatory, compliance, credit, and reputational risks and costs; natural disasters, earthquakes, fires, and severe weather; unanticipated regulatory or legal proceedings; and our ability to manage the risks involved in the foregoing. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company's 2023 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)
2024
2024
2023
2023
2023
ASSETS
Cash and cash equivalents
$
899,817
$
1,028,818
$
936,473
$
1,400,276
$
1,463,677
Interest-bearing time deposits with financial institutions
996
995
995
1,242
1,487
Investment securities held-to-maturity, at amortized cost, net of allowance for credit losses
1,710,141
1,720,481
1,729,541
1,737,866
1,737,604
Investment securities available-for-sale, at fair value
1,320,050
1,154,021
1,140,071
1,914,599
2,011,791
FHLB, FRB, and other stock
97,037
97,063
99,225
105,505
105,369
Loans held for sale, at lower of amortized cost or fair value
140
—
—
641
2,184
Loans held for investment
12,489,951
13,012,071
13,289,020
13,270,120
13,610,282
Allowance for credit losses
(183,803
)
(192,340
)
(192,471
)
(188,098
)
(192,333
)
Loans held for investment, net
12,306,148
12,819,731
13,096,549
13,082,022
13,417,949
Accrued interest receivable
69,629
67,642
68,516
68,131
70,093
Other real estate owned
—
248
248
450
270
Premises and equipment, net
52,137
54,789
56,676
59,396
61,527
Deferred income taxes, net
108,607
111,390
113,580
192,208
184,857
Bank owned life insurance
477,694
474,404
471,178
468,191
465,288
Intangible assets
37,686
40,449
43,285
46,307
49,362
Goodwill
901,312
901,312
901,312
901,312
901,312
Other assets
350,931
341,838
368,996
297,574
275,113
Total assets
$
18,332,325
$
18,813,181
$
19,026,645
$
20,275,720
$
20,747,883
LIABILITIES
Deposit accounts:
Noninterest-bearing checking
$
4,616,124
$
4,997,636
$
4,932,817
$
5,782,305
$
5,895,975
Interest-bearing:
Checking
2,776,212
2,785,626
2,899,621
2,598,449
2,759,855
Money market/savings
4,844,585
5,037,636
4,868,442
4,873,582
4,801,288
Retail certificates of deposit
1,906,552
1,794,813
1,684,560
1,525,919
1,366,071
Wholesale/brokered certificates of deposit
484,181
572,117
610,186
1,227,192
1,716,686
Total interest-bearing
10,011,530
10,190,192
10,062,809
10,225,142
10,643,900
Total deposits
14,627,654
15,187,828
14,995,626
16,007,447
16,539,875
FHLB advances and other borrowings
200,000
200,000
600,000
800,000
800,000
Subordinated debentures
332,160
332,001
331,842
331,682
331,523
Accrued expenses and other liabilities
248,747
190,551
216,596
281,057
227,351
Total liabilities
15,408,561
15,910,380
16,144,064
17,420,186
17,898,749
STOCKHOLDERS’ EQUITY
Common stock
941
941
938
937
937
Additional paid-in capital
2,383,615
2,378,171
2,377,131
2,371,941
2,366,639
Retained earnings
629,341
619,405
604,137
771,285
757,025
Accumulated other comprehensive loss
(90,133
)
(95,716
)
(99,625
)
(288,629
)
(275,467
)
Total stockholders' equity
2,923,764
2,902,801
2,882,581
2,855,534
2,849,134
Total liabilities and stockholders' equity
$
18,332,325
$
18,813,181
$
19,026,645
$
20,275,720
$
20,747,883
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)
2024
2024
2023
2024
2023
INTEREST INCOME
Loans
$
167,547
$
172,975
$
182,852
$
340,522
$
363,810
Investment securities and other interest-earning assets
40,507
40,456
42,536
80,963
82,921
Total interest income
208,054
213,431
225,388
421,485
446,731
INTEREST EXPENSE
Deposits
64,229
59,506
53,580
123,735
93,814
FHLB advances and other borrowings
2,330
4,237
7,155
6,567
15,093
Subordinated debentures
5,101
4,561
4,561
9,662
9,122
Total interest expense
71,660
68,304
65,296
139,964
118,029
Net interest income before provision for credit losses
136,394
145,127
160,092
281,521
328,702
Provision for credit losses
1,265
3,852
1,499
5,117
4,515
Net interest income after provision for credit losses
135,129
141,275
158,593
276,404
324,187
NONINTEREST INCOME
Loan servicing income
510
529
493
1,039
1,066
Service charges on deposit accounts
2,710
2,688
2,670
5,398
5,299
Other service fee income
309
336
315
645
611
Debit card interchange fee income
925
765
914
1,690
1,717
Earnings on bank owned life insurance
4,218
4,159
3,487
8,377
6,861
Net gain from sales of loans
65
—
345
65
374
Net gain from sales of investment securities
—
—
—
—
138
Trust custodial account fees
8,950
10,642
9,360
19,592
20,385
Escrow and exchange fees
702
696
924
1,398
1,982
Other (loss) income
(167
)
5,959
2,031
5,792
3,292
Total noninterest income
18,222
25,774
20,539
43,996
41,725
NONINTEREST EXPENSE
Compensation and benefits
53,140
54,130
53,424
107,270
107,717
Premises and occupancy
10,480
10,807
11,615
21,287
23,357
Data processing
7,754
7,511
7,488
15,265
14,753
Other real estate owned operations, net
—
46
8
46
116
FDIC insurance premiums
1,873
2,629
2,357
4,502
4,782
Legal and professional services
1,078
4,143
4,716
5,221
10,217
Marketing expense
1,724
1,558
1,879
3,282
3,717
Office expense
1,077
1,093
1,280
2,170
2,512
Loan expense
840
770
567
1,610
1,213
Deposit expense
12,289
12,665
9,194
24,954
17,630
Amortization of intangible assets
2,763
2,836
3,055
5,599
6,226
Other expense
4,549
4,445
5,061
8,994
9,756
Total noninterest expense
97,567
102,633
100,644
200,200
201,996
Net income before income taxes
55,784
64,416
78,488
120,200
163,916
Income tax expense
13,879
17,391
20,852
31,270
43,718
Net income
$
41,905
$
47,025
$
57,636
$
88,930
$
120,198
EARNINGS (LOSS) PER SHARE
Basic
$
0.43
$
0.49
$
0.60
$
0.92
$
1.26
Diluted
$
0.43
$
0.49
$
0.60
$
0.92
$
1.26
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic
94,628,201
94,350,259
94,166,083
94,489,230
94,012,799
Diluted
94,716,205
94,477,355
94,215,967
94,597,559
94,192,341
SELECTED FINANCIAL DATA
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
(Unaudited)
Three Months Ended
June 30, 2024
March 31, 2024
June 30, 2023
(Dollars in thousands)
Average Balance
Interest Income/ Expense
Average Yield/ Cost
Average Balance
Interest Income/ Expense
Average Yield/ Cost
Average Balance
Interest Income/ Expense
Average Yield/ Cost
Assets
Interest-earning assets:
Cash and cash equivalents
$
1,134,736
$
13,666
4.84
%
$
1,140,909
$
13,638
4.81
%
$
1,433,137
$
16,600
4.65
%
Investment securities
2,964,909
26,841
3.62
2,948,170
26,818
3.64
3,926,568
25,936
2.64
Loans receivable, net (1)(2)
12,724,545
167,547
5.30
13,149,038
172,975
5.29
13,927,145
182,852
5.27
Total interest-earning assets
16,824,190
208,054
4.97
17,238,117
213,431
4.98
19,286,850
225,388
4.69
Noninterest-earning assets
1,771,493
1,796,279
1,771,156
Total assets
$
18,595,683
$
19,034,396
$
21,058,006
Liabilities and equity
Interest-bearing deposits:
Interest checking
$
2,747,972
$
10,177
1.49
%
$
2,838,332
$
9,903
1.40
%
$
2,746,578
$
8,659
1.26
%
Money market
4,724,572
26,207
2.23
4,636,141
23,632
2.05
4,644,623
15,644
1.35
Savings
271,812
224
0.33
287,735
227
0.32
352,377
102
0.12
Retail certificates of deposit
1,830,516
21,115
4.64
1,727,728
19,075
4.44
1,286,160
10,306
3.21
Wholesale/brokered certificates of deposit
542,699
6,506
4.82
568,872
6,669
4.72
1,767,970
18,869
4.28
Total interest-bearing deposits
10,117,571
64,229
2.55
10,058,808
59,506
2.38
10,797,708
53,580
1.99
FHLB advances and other borrowings
200,154
2,330
4.68
518,879
4,237
3.28
800,016
7,155
3.59
Subordinated debentures
332,097
5,101
6.14
331,932
4,561
5.50
331,449
4,561
5.50
Total borrowings
532,251
7,431
5.59
850,811
8,798
4.15
1,131,465
11,716
4.15
Total interest-bearing liabilities
10,649,822
71,660
2.71
10,909,619
68,304
2.52
11,929,173
65,296
2.20
Noninterest-bearing deposits
4,824,002
4,996,939
6,078,543
Other liabilities
213,844
231,889
206,929
Total liabilities
15,687,668
16,138,447
18,214,645
Stockholders' equity
2,908,015
2,895,949
2,843,361
Total liabilities and equity
$
18,595,683
$
19,034,396
$
21,058,006
Net interest income
$
136,394
$
145,127
$
160,092
Net interest margin (3)
3.26
%
3.39
%
3.33
%
Cost of deposits (4)
1.73
1.59
1.27
Cost of funds (5)
1.86
1.73
1.45
Cost of non-maturity deposits (6)
1.17
1.06
0.71
Ratio of interest-earning assets to interest-bearing liabilities
157.98
158.01
161.68
______________________________
(1)
Average balance includes loans held for sale and nonperforming loans and is net of deferred loan origination fees/costs, discounts/premiums, and the basis adjustment of certain loans included in fair value hedging relationships.
(2)
Interest income includes net discount accretion of $2.3 million, $2.1 million, and $2.9 million for the three months ended June 30, 2024, March 31, 2024, and June 30, 2023, 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)
2024
2024
2023
2023
2023
Investor loans secured by real estate
CRE non-owner-occupied
$
2,245,474
$
2,309,252
$
2,421,772
$
2,514,056
$
2,571,246
Multifamily
5,473,606
5,558,966
5,645,310
5,719,210
5,788,030
Construction and land
453,799
486,734
472,544
444,576
428,287
SBA secured by real estate (1)
33,245
35,206
36,400
37,754
38,876
Total investor loans secured by real estate
8,206,124
8,390,158
8,576,026
8,715,596
8,826,439
Business loans secured by real estate (2)
CRE owner-occupied
2,096,485
2,149,362
2,191,334
2,228,802
2,281,721
Franchise real estate secured
274,645
294,938
304,514
313,451
318,539
SBA secured by real estate (3)
46,543
48,426
50,741
53,668
57,084
Total business loans secured by real estate
2,417,673
2,492,726
2,546,589
2,595,921
2,657,344
Commercial loans (4)
Commercial and industrial
1,554,735
1,774,487
1,790,608
1,588,771
1,744,763
Franchise non-real estate secured
257,516
301,895
319,721
335,053
351,944
SBA non-real estate secured
10,346
10,946
10,926
10,667
9,688
Total commercial loans
1,822,597
2,087,328
2,121,255
1,934,491
2,106,395
Retail loans
Single family residential (5)
70,380
72,353
72,752
70,984
70,993
Consumer
1,378
1,830
1,949
1,958
2,241
Total retail loans
71,758
74,183
74,701
72,942
73,234
Loans held for investment before basis adjustment (6)
12,518,152
13,044,395
13,318,571
13,318,950
13,663,412
Basis adjustment associated with fair value hedge (7)
(28,201
)
(32,324
)
(29,551
)
(48,830
)
(53,130
)
Loans held for investment
12,489,951
13,012,071
13,289,020
13,270,120
13,610,282
Allowance for credit losses for loans held for investment
(183,803
)
(192,340
)
(192,471
)
(188,098
)
(192,333
)
Loans held for investment, net
$
12,306,148
$
12,819,731
$
13,096,549
$
13,082,022
$
13,417,949
Loans held for sale, at lower of cost or fair value
$
140
$
—
$
—
$
641
$
2,184
______________________________
(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 net deferred origination costs (fees) of $1.4 million, $797,000, $(74,000), $451,000, and $142,000, and unaccreted fair value net purchase discounts of $38.6 million, $41.2 million, $43.3 million, $46.2 million, and $48.4 million as of June 30, 2024, March 31, 2024, December 31, 2023, September 30, 2023, and June 30, 2023, 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)
2024
2024
2023
2023
2023
Asset quality
Nonperforming loans
$
52,119
$
63,806
$
24,817
$
25,458
$
17,151
Other real estate owned
—
248
248
450
270
Nonperforming assets
$
52,119
$
64,054
$
25,065
$
25,908
$
17,421
Total classified assets (1)
$
183,833
$
204,937
$
142,210
$
149,708
$
120,216
Allowance for credit losses
183,803
192,340
192,471
188,098
192,333
Allowance for credit losses as a percent of total nonperforming loans
353
%
301
%
776
%
739
%
1,121
%
Nonperforming loans as a percent of loans held for investment
0.42
0.49
0.19
0.19
0.13
Nonperforming assets as a percent of total assets
0.28
0.34
0.13
0.13
0.08
Classified loans to total loans held for investment
1.47
1.57
1.07
1.12
0.88
Classified assets to total assets
1.00
1.09
0.75
0.74
0.58
Net loan charge-offs for the quarter ended
$
10,293
$
6,419
$
3,902
$
6,752
$
3,665
Net loan charge-offs for the quarter to average total loans
0.08
%
0.05
%
0.03
%
0.05
%
0.03
%
Allowance for credit losses to loans held for investment (2)
1.47
1.48
1.45
1.42
1.41
Delinquent loans (3)
30 - 59 days
$
4,985
$
1,983
$
2,484
$
2,967
$
649
60 - 89 days
3,289
974
1,294
475
31
90+ days
9,649
9,221
6,276
7,484
30,271
Total delinquency
$
17,923
$
12,178
$
10,054
$
10,926
$
30,951
Delinquency as a percent of loans held for investment
0.14
%
0.09
%
0.08
%
0.08
%
0.23
%
______________________________
(1)
Includes substandard and doubtful loans, and other real estate owned.
(2)
At June 30, 2024, 25% of loans held for investment include a fair value net discount of $38.6 million, or 0.31% of loans held for investment. At March 31, 2024, 25% of loans held for investment include a fair value net discount of $41.2 million, or 0.32% of loans held for investment. At December 31, 2023, 24% of loans held for investment include a fair value net discount of $43.3 million, or 0.33% of loans held for investment. At September 30, 2023, 24% of loans held for investment include a fair value net discount of $46.2 million, or 0.35% of loans held for investment. At June 30, 2023, 25% of loans held for investment include a fair value net discount of $48.4 million, or 0.35% of loans held for investment.
(3)
Nonaccrual loans are included in this aging analysis based on the loan's past due status.
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
NONACCRUAL LOANS (1)
(Unaudited)
(Dollars in thousands)
Collateral Dependent Loans
ACL
Non- Collateral Dependent Loans
ACL
Total Nonaccrual Loans
Nonaccrual Loans With No ACL
June 30, 2024
Investor loans secured by real estate
CRE non-owner-occupied
$
19,381
$
—
$
—
$
—
$
19,381
$
19,381
SBA secured by real estate (2)
934
—
—
—
934
934
Total investor loans secured by real estate
20,315
—
—
—
20,315
20,315
Business loans secured by real estate (3)
CRE owner-occupied
8,439
—
—
—
8,439
8,439
Franchise real estate secured
—
—
292
37
292
—
Total business loans secured by real estate
8,439
—
292
37
8,731
8,439
Commercial loans (4)
Commercial and industrial
9,252
—
11,727
—
20,979
20,979
Franchise non-real estate secured
—
—
1,559
200
1,559
—
SBA not secured by real estate
535
—
—
—
535
535
Total commercial loans
9,787
—
13,286
200
23,073
21,514
Totals nonaccrual loans
$
38,541
$
—
$
13,578
$
237
$
52,119
$
50,268
______________________________
(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)
Loans to businesses where the operating cash flow of the business is the primary source of repayment.
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
PAST DUE STATUS
(Unaudited)
Days Past Due (7)
(Dollars in thousands)
Current
30-59
60-89
90+
Total
June 30, 2024
Investor loans secured by real estate
CRE non-owner-occupied
$
2,244,424
$
—
$
—
$
1,050
$
2,245,474
Multifamily
5,473,606
—
—
—
5,473,606
Construction and land
453,799
—
—
—
453,799
SBA secured by real estate (1)
32,748
—
—
497
33,245
Total investor loans secured by real estate
8,204,577
—
—
1,547
8,206,124
Business loans secured by real estate (2)
CRE owner-occupied
2,088,046
3,852
—
4,587
2,096,485
Franchise real estate secured
274,353
—
—
292
274,645
SBA secured by real estate (3)
46,543
—
—
—
46,543
Total business loans secured by real estate
2,408,942
3,852
—
4,879
2,417,673
Commercial loans (4)
Commercial and industrial
1,552,024
1,133
449
1,129
1,554,735
Franchise non-real estate secured
253,117
—
2,840
1,559
257,516
SBA not secured by real estate
9,811
—
—
535
10,346
Total commercial loans
1,814,952
1,133
3,289
3,223
1,822,597
Retail loans
Single family residential (5)
70,380
—
—
—
70,380
Consumer loans
1,378
—
—
—
1,378
Total retail loans
71,758
—
—
—
71,758
Loans held for investment before basis adjustment (6)
$
12,500,229
$
4,985
$
3,289
$
9,649
$
12,518,152
______________________________
(1)
SBA loans that are collateralized by hotel/motel real property.
(2)
Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.
(3)
SBA loans that are collateralized by real property other than hotel/motel real property.
(4)
Loans to businesses where the operating cash flow of the business is the primary source of repayment.
(5)
Single family residential includes home equity lines of credit, as well as second trust deeds.
(6)
Excludes the basis adjustment of $28.2 million to the carrying amount of certain loans included in fair value hedging relationships.
(7)
Nonaccrual loans are included in this aging analysis based on the loan's past due status.
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CREDIT RISK GRADES
(Unaudited)
(Dollars in thousands)
Pass
Special Mention
Substandard
Doubtful
Total Gross Loans
June 30, 2024
Investor loans secured by real estate
CRE non-owner-occupied
$
2,204,871
$
3,585
$
37,018
$
—
$
2,245,474
Multifamily
5,455,303
18,303
—
—
5,473,606
Construction and land
453,375
424
—
—
453,799
SBA secured by real estate (1)
25,026
1,130
7,089
—
33,245
Total investor loans secured by real estate
8,138,575
23,442
44,107
—
8,206,124
Business loans secured by real estate (2)
CRE owner-occupied
2,014,813
32,938
48,734
—
2,096,485
Franchise real estate secured
271,264
1,579
1,802
—
274,645
SBA secured by real estate (3)
42,673
82
3,788
—
46,543
Total business loans secured by real estate
2,328,750
34,599
54,324
—
2,417,673
Commercial loans (4)
Commercial and industrial
1,456,169
29,183
65,708
3,675
1,554,735
Franchise non-real estate secured
241,664
602
15,250
—
257,516
SBA not secured by real estate
9,577
—
769
—
10,346
Total commercial loans
1,707,410
29,785
81,727
3,675
1,822,597
Retail loans
Single family residential (5)
70,380
—
—
—
70,380
Consumer loans
1,378
—
—
—
1,378
Total retail loans
71,758
—
—
—
71,758
Loans held for investment before basis adjustment (6)
$
12,246,493
$
87,826
$
180,158
$
3,675
$
12,518,152
______________________________
(1)
SBA loans that are collateralized by hotel/motel real property.
(2)
Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.
(3)
SBA loans that are collateralized by real property other than hotel/motel real property.
(4)
Loans to businesses where the operating cash flow of the business is the primary source of repayment.
(5)
Single family residential includes home equity lines of credit, as well as second trust deeds.
(6)
Excludes the basis adjustment of $28.2 million to the carrying amount of certain loans included in fair value hedging relationships.
GAAP TO NON-GAAP RECONCILIATIONS
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
(Unaudited)
The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these adjusted measures, this presentation may not be comparable to other similarly titled adjusted measures reported by other companies.
For periods presented below, return on average assets excluding the FDIC special assessment is a non-GAAP financial measure derived from GAAP based amounts. We calculate this figure by excluding the FDIC special assessment and the related tax impact from net income. Management believes that the exclusion of such nonrecurring items from this financial measure provides useful information to gain an understanding of the operating results of our core business and a better comparison of financial performance.
Three Months Ended
June 30,
March 31,
June 30,
(Dollars in thousands)
2024
2024
2023
Net income
$
41,905
$
47,025
$
57,636
Add: FDIC special assessment
(161
)
523
—
Less: tax adjustment (1)
(45
)
148
—
Adjusted net income for average assets
$
41,789
$
47,400
$
57,636
Average assets
$
18,595,683
$
19,034,396
$
21,058,006
ROAA (annualized)
0.90
%
0.99
%
1.09
%
Adjusted ROAA (annualized)
0.90
%
1.00
%
1.09
%
______________________________
(1)
Adjusted by statutory tax rate
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. The adjusted net income, adjusted return on average equity, and adjusted return on average tangible common equity further exclude the nonrecurring items to provide a better comparison to the financial results of prior periods.
Three Months Ended
June 30,
March 31,
June 30,
(Dollars in thousands)
2024
2024
2023
Net income
$
41,905
$
47,025
$
57,636
Plus: amortization of intangible assets expense
2,763
2,836
3,055
Less: tax adjustment (1)
781
801
868
Net income for average tangible common equity
$
43,887
$
49,060
$
59,823
Add: FDIC special assessment
(161
)
523
—
Less: tax adjustment (1)
(45
)
148
—
Adjusted net income for average tangible common equity
$
43,771
$
49,435
$
59,823
Average stockholders' equity
$
2,908,015
$
2,895,949
$
2,843,361
Less: average intangible assets
39,338
42,134
51,180
Less: average goodwill
901,312
901,312
901,312
Adjusted average tangible common equity
$
1,967,365
$
1,952,503
$
1,890,869
ROAE (annualized)
5.76
%
6.50
%
8.11
%
Adjusted ROAE (annualized)
5.75
%
6.55
%
8.11
%
ROATCE (annualized)
8.92
%
10.05
%
12.66
%
Adjusted ROATCE (annualized)
8.90
%
10.13
%
12.66
%
_____________________________________
(1)
Adjusted by statutory tax rate.
Pre-provision net revenue is a non-GAAP financial measure derived from GAAP-based amounts. We calculate the pre-provision net revenue by excluding income tax and provision for credit losses from net income. The adjusted pre-provision net income further excludes the FDIC special assessment to provide a better comparison of financial performance. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business and a better comparison to the financial results of prior periods.
Three Months Ended
June 30,
March 31,
June 30,
(Dollars in thousands)
2024
2024
2023
Interest income
$
208,054
$
213,431
$
225,388
Interest expense
71,660
68,304
65,296
Net interest income
136,394
145,127
160,092
Noninterest income
18,222
25,774
20,539
Revenue
154,616
170,901
180,631
Noninterest expense
97,567
102,633
100,644
Pre-provision net revenue
57,049
68,268
79,987
Add: FDIC special assessment
(161
)
523
—
Adjusted pre-provision net revenue
$
56,888
$
68,791
$
79,987
Pre-provision net revenue (annualized)
$
228,196
$
273,072
$
319,948
Adjusted pre-provision net revenue (annualized)
$
227,552
$
275,164
$
319,948
Average assets
$
18,595,683
$
19,034,396
$
21,058,006
Pre-provision net revenue to average assets
0.31
%
0.36
%
0.38
%
Pre-provision net revenue to average assets (annualized)
1.23
%
1.43
%
1.52
%
Adjusted pre-provision net revenue on average assets
0.31
%
0.36
%
0.38
%
Adjusted pre-provision net revenue on average assets (annualized)
1.22
%
1.45
%
1.52
%
Efficiency ratio is a non-GAAP financial measure derived from GAAP-based amounts. This figure represents the ratio of noninterest expense, less amortization of intangible assets and other real estate owned operations, where applicable, to the sum of net interest income before provision for credit losses and total noninterest income less (loss) gain from other real estate owned and gain from debt extinguishment. The adjusted efficiency ratio further excludes the FDIC special assessment to provide a better comparison to the financial results of prior periods. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business.
Three Months Ended
June 30,
March 31,
June 30,
(Dollars in thousands)
2024
2024
2023
Total noninterest expense
$
97,567
$
102,633
$
100,644
Less: amortization of intangible assets
2,763
2,836
3,055
Less: other real estate owned operations, net
—
46
8
Adjusted noninterest expense
94,804
99,751
97,581
Less: FDIC special assessment
(161
)
523
—
Adjusted noninterest expense excluding FDIC special assessment
$
94,965
$
99,228
$
97,581
Net interest income before provision for credit losses
$
136,394
$
145,127
$
160,092
Add: total noninterest income
18,222
25,774
20,539
Less: net (loss) gain from other real estate owned
(28
)
—
106
Less: net gain from debt extinguishment
—
5,067
—
Adjusted revenue
$
154,644
$
165,834
$
180,525
Efficiency ratio
61.3
%
60.2
%
54.1
%
Adjusted efficiency ratio excluding FDIC special assessment
61.4
%
59.8
%
54.1
%
Tangible book value per share and tangible common equity to tangible assets (the “tangible common equity ratio”) are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible book value per share by dividing tangible common equity by common shares outstanding, as compared to book value per share, which we calculate by dividing common stockholders' equity by shares outstanding. We calculate the tangible common equity ratio by excluding the balance of intangible assets from common stockholders' equity and dividing by tangible assets. We believe that this information is consistent with the treatment by bank regulatory agencies, which excludes intangible assets from the calculation of risk-based capital ratios. Accordingly, we believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our capital position and ratios.
June 30,
March 31,
December 31,
September 30,
June 30,
(Dollars in thousands, except per share data)
2024
2024
2023
2023
2023
Total stockholders' equity
$
2,923,764
$
2,902,801
$
2,882,581
$
2,855,534
$
2,849,134
Less: intangible assets
938,998
941,761
944,597
947,619
950,674
Tangible common equity
$
1,984,766
$
1,961,040
$
1,937,984
$
1,907,915
$
1,898,460
Total assets
$
18,332,325
$
18,813,181
$
19,026,645
$
20,275,720
$
20,747,883
Less: intangible assets
938,998
941,761
944,597
947,619
950,674
Tangible assets
$
17,393,327
$
17,871,420
$
18,082,048
$
19,328,101
$
19,797,209
Tangible common equity ratio
11.41
%
10.97
%
10.72
%
9.87
%
9.59
%
Common shares issued and outstanding
96,434,047
96,459,966
95,860,092
95,900,847
95,906,217
Book value per share
$
30.32
$
30.09
$
30.07
$
29.78
$
29.71
Less: intangible book value per share
9.74
9.76
9.85
9.88
9.91
Tangible book value per share
$
20.58
$
20.33
$
20.22
$
19.89
$
19.79
Cost of non-maturity deposits is a non-GAAP financial measure derived from GAAP-based amounts. Cost of non-maturity deposits is calculated as the ratio of non-maturity deposit interest expense to average non-maturity deposits. We calculate non-maturity deposit interest expense by excluding interest expense for all certificates of deposit from total deposit expense, and we calculate average non-maturity deposits by excluding all certificates of deposit from total deposits. Management believes cost of non-maturity deposits is a useful measure to assess the Company's deposit base, including its potential volatility.
Three Months Ended
June 30,
March 31,
June 30,
(Dollars in thousands)
2024
2024
2023
Total deposits interest expense
$
64,229
$
59,506
$
53,580
Less: certificates of deposit interest expense
21,115
19,075
10,306
Less: brokered certificates of deposit interest expense
6,506
6,669
18,869
Non-maturity deposit expense
$
36,608
$
33,762
$
24,405
Total average deposits
$
14,941,573
$
15,055,747
$
16,876,251
Less: average certificates of deposit
1,830,516
1,727,728
1,286,160
Less: average brokered certificates of deposit
542,699
568,872
1,767,970
Average non-maturity deposits
$
12,568,358
$
12,759,147
$
13,822,121
Cost of non-maturity deposits
1.17
%
1.06
%
0.71
%
View source version on businesswire.com: https://www.businesswire.com/news/home/20240724355821/en/
Pacific Premier Bancorp, Inc.
Steven R. Gardner Chairman, Chief Executive Officer, and President (949) 864-8000
Ronald J. Nicolas, Jr. Senior Executive Vice President and Chief Financial Officer (949) 864-8000
Matthew J. Lazzaro Senior Vice President and Director of Investor Relations (949) 243-1082
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