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

Rhea-AI Summary

Pacific Premier Bancorp (PPBI) reported a net income of $84.8 million or $0.89 per diluted share for Q4 2021, down from $90.1 million in Q3 2021. Return on average assets was 1.63% and return on average equity was 11.90%. Total assets grew to $21.09 billion, with loan commitments reaching $1.48 billion. The efficiency ratio improved to 48.0%, while nonperforming assets decreased to 0.15% of total assets. The company also enhanced its interest rate sensitivity with $900 million in interest rate swaps.

Positive

• Net income of $84.8 million for Q4 2021, an increase from $67.1 million in Q4 2020.
• Loan growth of $315.8 million, or 9.0%, annualized.
• Tangible book value per diluted share increased by $0.54 to $20.29.
• Improved efficiency ratio at 48.0%.

Negative

• Net income decreased from $90.1 million in Q3 2021 to $84.8 million in Q4 2021.
• Return on average equity declined from 12.67% in Q3 2021 to 11.90% in Q4 2021.
• Noninterest income decreased by $2.8 million from Q3 2021.

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⁾

IRVINE, Calif.--(BUSINESS WIRE)-- Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company” or “Pacific Premier”), the holding company of Pacific Premier Bank (the “Bank”), reported net income of $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.”

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⁽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	%

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⁽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.

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⁽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

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⁽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

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⁽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

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⁽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	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220120005397/en/

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

Source: Pacific Premier Bancorp, Inc.

FAQ

What was Pacific Premier Bancorp's net income for Q4 2021?

Pacific Premier Bancorp reported a net income of $84.8 million for Q4 2021.

How did the return on average assets change in Q4 2021 for PPBI?

The return on average assets for PPBI in Q4 2021 was 1.63%.

What was the loan growth percentage for PPBI in Q4 2021?

Pacific Premier Bancorp experienced a loan growth of 9.0%, annualized, in Q4 2021.

What is the efficiency ratio for Pacific Premier Bancorp in Q4 2021?

The efficiency ratio for PPBI in Q4 2021 was 48.0%.

What are the total assets of Pacific Premier Bancorp as of December 31, 2021?

As of December 31, 2021, PPBI's total assets were $21.09 billion.