Regulatory Capital Requirements and Other Regulatory Matters

12 Months Ended

Dec. 31, 2019

Banking and Thrift [Abstract]

Regulatory Capital Requirements and Other Regulatory Matters

Regulatory Capital Requirements and Other Regulatory Matters

The Corporation and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Corporation’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Corporation and the Bank must meet specific capital guidelines that involve quantitative measures of the Corporation’s and the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Corporation’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain capital in order to meet certain capital ratios to be considered adequately capitalized or well capitalized under the regulatory framework for prompt corrective action. As of the most recent formal notification from the Federal Reserve, the Bank was categorized as “well capitalized.” There are no conditions or events since that notification that management believes have changed the Bank’s categorization.

Final comprehensive regulatory capital rules for U.S. banking organizations pursuant to the capital framework of the Basel Committee on Banking Supervision, generally referred to as “Basel III”, became effective for the Company and the Bank on January 1, 2015, subject to phase-in periods for certain of their components and other provisions. The most significant of the provisions of the new capital rules, which apply to the Company and the Bank are as follows: the phase-out of trust preferred securities from Tier 1 capital, the higher risk-weighting of high volatility and past due real estate loans and the capital treatment of deferred tax assets and liabilities above certain thresholds.

The most significant of the provisions of the Final Capital Rules, which applied to the Company and the Bank were as follows: the phase-out of trust preferred securities from Tier 1 capital issued by 2013, the higher risk-weighting of high volatility and past due real estate loans and the capital treatment of deferred tax assets and liabilities above certain thresholds. Beginning January 1, 2016, Basel III implemented a requirement for all banking organizations to maintain a capital conservation buffer above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer is exclusively comprised of common equity tier 1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio. The capital conservation buffer increased by 0.625% each year beginning on January 1, 2016, with additional 0.625% increments annually, until fully phased in at 2.50% by January 1, 2019. The net unrealized gain or loss on available-for-sale securities is not included in computing regulatory capital. At December 31, 2019, the Company and Bank are in compliance with the capital conservation buffer requirement and exceeded the minimum common equity Tier 1, Tier 1 and total capital ratio, inclusive of the fully phased-in capital conservation buffer, of 7.0%, 8.5% and 10.5%, respectively.

As defined in applicable regulations and set forth in the table below, the Corporation and the Bank continue to exceed the regulatory capital minimum requirements and the Bank continues to exceed the “well capitalized” standards and the required conservation buffer at the dates indicated:

	Actual				Minimum Required for Capital Adequacy Purposes				Minimum Required Plus Capital Conservation Buffer Fully Phased-In(1)			Required to be Well Capitalized Under Prompt Corrective Action Regulations
	Amount		Ratio		Amount		Ratio		Amount	Ratio		Amount		Ratio
	(dollars in thousands)
December 31, 2019
Pacific Premier Bancorp, Inc. Consolidated
Tier 1 Leverage Ratio	$	1,123,740	10.54	%	$	426,597	4.00	%	426,597	4.00	%	N/A		N/A
Common Equity Tier 1 Capital Ratio	1,116,185		11.35	%	442,612		4.50	%	688,508	7.00	%	N/A		N/A
Tier 1 Capital to Ratio	1,123,740		11.42	%	590,149		6.00	%	836,045	8.50	%	N/A		N/A
Total Capital Ratio	1,357,904		13.81	%	786,866		8.00	%	1,032,762	10.50	%	N/A		N/A
Pacific Premier Bank
Tier 1 Leverage Ratio	$	1,321,494	12.39	%	$	426,592	4.00	%	426,592	4.00	%	$	533,240	5.00	%
Common Equity Tier 1 Capital Ratio	1,321,494		13.43	%	442,704		4.50	%	688,650	7.00	%	639,461		6.50	%
Tier 1 Capital to Ratio	1,321,494		13.43	%	590,272		6.00	%	836,218	8.50	%	787,029		8.00	%
Total Capital Ratio	1,360,471		13.83	%	787,029		8.00	%	1,032,975	10.50	%	983,786		10.00	%
December 31, 2018
Pacific Premier Bancorp, Inc. Consolidated
Tier 1 Leverage Ratio	$	1,112,132	10.38	%	$	428,751	4.00	%	428,751	4.00	%	N/A		N/A
Common Equity Tier 1 Capital Ratio	1,087,164		10.88	%	449,505		4.50	%	699,230	7.00	%	N/A		N/A
Tier 1 Capital to Ratio	1,112,132		11.13	%	599,340		6.00	%	849,065	8.50	%	N/A		N/A
Total Capital Ratio	1,237,315		12.39	%	799,120		8.00	%	1,048,845	10.50	%	N/A		N/A
Pacific Premier Bank
Tier 1 Leverage Ratio	$	1,185,544	11.06	%	$	428,703	4.00	%	428,703	4.00	%	$	535,879	5.00	%
Common Equity Tier 1 Capital Ratio	1,185,544		11.87	%	449,481		4.50	%	699,193	7.00	%	649,251		6.50	%
Tier 1 Capital to Ratio	1,185,544		11.87	%	599,308		6.00	%	849,020	8.50	%	799,078		8.00	%
Total Capital Ratio	1,226,258		12.28	%	799,078		8.00	%	1,048,790	10.50	%	998,847		10.00	%
(1) For comparative purpose, fully phased-in capital conservation buffer is presented as of December 31, 2019 and 2018.