EX-99.1 2 ppbi_exx991xearnings-2023x.htm EX-99.1 Document

Exhibit 99.1

Pacific Premier Bancorp, Inc. Announces Second Quarter 2023 Financial Results and a Quarterly Cash Dividend of $0.33 Per Share

Second Quarter 2023 Summary
 
•Net income of $57.6 million, or $0.60 per diluted share
•Return on average assets of 1.09%, return on average equity of 8.11%, and return on average tangible common equity(1) of 12.66%
•Pre-provision net revenue (“PPNR”)(1) to average assets of 1.52%, annualized
•Net interest margin of 3.33%
•Cost of deposits of 1.27%, and cost of non-maturity deposits(1) of 0.71%
•Nonperforming assets to total assets of 0.08%, and net charge-offs to average loans of 0.03%
•Common equity tier 1 capital ratio of 14.34% and total risk-based capital ratio of 17.24%
•Tangible book value per share(1) of $19.79; tangible common equity ratio(1) of 9.59%
•Available liquidity of $10 billion; cash and cash equivalents increased to $1.46 billion and unused borrowing capacity of $8.53 billion at quarter end

Irvine, Calif., July 27, 2023 -- Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company” or “Pacific Premier”), the holding company of Pacific Premier Bank (the “Bank”), reported net income of $57.6 million, or $0.60 per diluted share, for the second quarter of 2023, compared with net income of $62.6 million, or $0.66 per diluted share, for the first quarter of 2023, and net income of $69.8 million, or $0.73 per diluted share, for the second quarter of 2022.
    
For the quarter ended June 30, 2023, the Company’s return on average assets (“ROAA”) was 1.09%, return on average equity (“ROAE”) was 8.11%, and return on average tangible common equity (“ROATCE”)(1) was 12.66%, compared to 1.15%, 8.87%, and 13.89%, respectively, for the first quarter of 2023, and 1.29%, 10.10%, and 16.07%, respectively, for the second quarter of 2022. Total assets were $20.75 billion at June 30, 2023, compared to $21.36 billion at March 31, 2023, and $21.99 billion at June 30, 2022.

Steven R. Gardner, Chairman, Chief Executive Officer, and President of the Company, commented, “We delivered solid results during a challenging second quarter. Our performance reflects our disciplined focus on prudent and proactive risk, liquidity, and capital management, as well as our commitment to expanding our long-term client relationships.

“Our track record of sound enterprise risk management, including the strategic actions we implemented during the first half of last year, has positioned us well in the face of economic uncertainty and turbulence in our industry. We are well-prepared to expand our business when compelling opportunities arise and once risk-adjusted spreads on new loans become more attractive given the dynamics of today’s interest rate environment. As always, our bankers are continuing to provide best-in-class service to our clients.

“I am proud of our team's exceptional efforts during the quarter, focusing not only on existing clients but also cultivating new banking relationships. We anticipate the ongoing uncertainty and industry challenges to continue until the Federal Reserve completes its cycle of tighter monetary policy. Our organization remains committed to providing stability for our clients, communities, and employees while delivering long-term value for our stockholders.”
(1) Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures are set forth at the end of this press release.
1

FINANCIAL HIGHLIGHTS
Three Months Ended
 June 30,March 31,June 30,
(Dollars in thousands, except per share data)202320232022
Financial highlights (unaudited)
Net income$57,636 $62,562 $69,803 
Net interest income160,092 168,610 172,765 
Diluted earnings per share0.60 0.66 0.73 
Common equity dividend per share paid0.33 0.33 0.33 
Return on average assets1.09 %1.15 %1.29 %
Return on average equity8.11 8.87 10.10 
Return on average tangible common equity (1)
12.66 13.89 16.07 
Pre-provision net revenue to average assets (1)
1.52 1.63 1.77 
Net interest margin3.33 3.44 3.49 
Cost of deposits1.27 0.94 0.06 
Cost of non-maturity deposits (1)
0.71 0.54 0.04 
Efficiency ratio (1)
54.1 51.7 49.0 
Noninterest expense as a percent of average assets1.91 1.87 1.83 
Total assets$20,747,883 $21,361,564 $21,993,919 
Total deposits16,539,875 17,207,810 18,084,613 
Non-maturity deposits as a percent of total deposits81.4 %82.6 %92.0 %
Noninterest-bearing deposits as a percent of total deposits35.6 36.1 38.3 
Loan-to-deposit ratio82.3 82.4 83.2 
Book value per share$29.71 $29.58 $29.01 
Tangible book value per share (1)
19.79 19.61 18.86 
Tangible common equity ratio9.59 %9.20 %8.52 %
Total capital ratio17.24 16.33 14.41 
______________________________
(1) Reconciliations of the non-GAAP measures are set forth at the end of this press release.

2

INCOME STATEMENT HIGHLIGHTS

Net Interest Income and Net Interest Margin
 
Net interest income totaled $160.1 million in the second quarter of 2023, a decrease of $8.5 million, or 5.1%, from the first quarter of 2023. The decrease in net interest income was primarily attributable to a higher cost of funds as a result of the current interest rate environment and lower average loans and investment securities balances, partially offset by higher yields on average interest-earning assets.

The net interest margin for the second quarter of 2023 decreased 11 basis points to 3.33%, from 3.44% in the prior quarter. The lower net interest margin was due to a higher cost of funds, partially offset by higher yields on interest-earning assets and higher loan prepayment fees.

Net interest income for the second quarter of 2023 decreased $12.7 million, or 7.3%, compared to the second quarter of 2022. The decrease was attributable to a higher cost of funds and lower average loans and investment securities balances, partially offset by higher yields on average interest-earning assets.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
(Unaudited)
 Three Months Ended
 June 30, 2023March 31, 2023June 30, 2022
(Dollars in thousands)Average BalanceInterest Income/ExpenseAverage
 Yield/
 Cost		Average BalanceInterest Income/ExpenseAverage
 Yield/
 Cost		Average BalanceInterest Income/ExpenseAverage Yield/ Cost
Assets
Cash and cash equivalents$1,433,137 $16,600 4.65 %$1,335,611 $13,594 4.13 %$702,663 $1,211 0.69 %
Investment securities3,926,568 25,936 2.64 4,165,681 26,791 2.57 4,254,961 17,560 1.65 
Loans receivable, net (1) (2)
13,927,145 182,852 5.27 14,394,775 180,958 5.10 14,919,182 164,455 4.42 
Total interest-earning assets$19,286,850 $225,388 4.69 $19,896,067 $221,343 4.51 $19,876,806 $183,226 3.70 
Liabilities
Interest-bearing deposits$10,797,708 $53,580 1.99 %$11,104,624 $40,234 1.47 %$10,722,522 $2,682 0.10 %
Borrowings1,131,465 11,716 4.15 1,319,114 12,499 3.83 933,417 7,779 3.34 
Total interest-bearing liabilities$11,929,173 $65,296 2.20 $12,423,738 $52,733 1.72 $11,655,939 $10,461 0.36 
Noninterest-bearing deposits$6,078,543 $6,219,818 $7,030,205 
Net interest income$160,092 $168,610 $172,765 
Net interest margin (3)
  3.33 %3.44 %3.49 %
Cost of deposits (4)
1.27 0.94 0.06 
Cost of funds (5)
1.45 1.15 0.22 
Cost of non-maturity deposits (6)
0.71 0.54 0.04 
Ratio of interest-earning assets to interest-bearing liabilities161.68 160.15 170.53 
_______________________________________
(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 $2.9 million, $2.5 million, and $7.5 million for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, 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.
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Provision for Credit Losses

For the second quarter of 2023, the Company recorded $1.5 million of provision expense, compared to $3.0 million for the first quarter of 2023, and $469,000 for the second quarter of 2022. The provision for credit losses was impacted by changes to the overall size, composition, asset quality trends, and unfunded commitments of the loan portfolio, as well as changes in the Company's macroeconomic forecasts. The decrease in the provision expense for loan losses in the current quarter was primarily attributable to the decrease in loans held for investment.

Three Months Ended
June 30,March 31,June 30,
(Dollars in thousands)202320232022
Provision for credit losses
Provision for loan losses$610 $3,021 $3,803 
Provision for unfunded commitments1,003 (189)(3,402)
Provision for held-to-maturity securities(114)184 68 
Total provision for credit losses$1,499 $3,016 $469 

Noninterest Income
 
Noninterest income for the second quarter of 2023 was $20.5 million, a decrease of $647,000 from the first quarter of 2023. The decrease was primarily due to a $1.7 million decrease in trust custodial account fees driven by annual tax fees earned during the first quarter, partially offset by a $770,000 increase in other income.

Noninterest income for the second quarter of 2023 decreased $1.7 million, compared to the second quarter of 2022. The decrease was primarily due to a $994,000 decrease in trust custodial account fees, a $903,000 decrease in escrow and exchange fees attributable to the lower transaction activity in the commercial real estate market, and a $791,000 decrease in net gain from loan sales, partially offset by an $858,000 increase in other income.

Three Months Ended
June 30,March 31,June 30,
(Dollars in thousands)202320232022
Noninterest income
Loan servicing income$493 $573 $502 
Service charges on deposit accounts2,670 2,629 2,690 
Other service fee income315 296 366 
Debit card interchange fee income914 803 936 
Earnings on bank owned life insurance3,487 3,374 3,240 
Net gain from sales of loans345 29 1,136 
Net gain (loss) from sales of investment securities— 138 (31)
Trust custodial account fees
9,360 11,025 10,354 
Escrow and exchange fees924 1,058 1,827 
Other income2,031 1,261 1,173 
Total noninterest income$20,539 $21,186 $22,193 

4

Noninterest Expense
 
Noninterest expense totaled $100.6 million for the second quarter of 2023, a decrease of $708,000 compared to the first quarter of 2023, primarily due to an $869,000 decrease in compensation and benefits from reduced staffing levels and payroll taxes, and a $785,000 decrease in legal and professional services expenses, partially offset by a $758,000 increase in deposit expense driven by higher deposit earnings credit rates.

Noninterest expense increased by $1.7 million compared to the second quarter of 2022. The increase was primarily due to a $5.1 million increase in deposit expense driven by higher deposit earnings credit rates, partially offset by a $4.1 million decrease in compensation and benefits from reduced staffing levels.

Three Months Ended
June 30,March 31,June 30,
(Dollars in thousands)202320232022
Noninterest expense
Compensation and benefits$53,424 $54,293 $57,562 
Premises and occupancy11,615 11,742 11,829 
Data processing7,488 7,265 6,604 
Other real estate owned operations, net8 108 — 
FDIC insurance premiums2,357 2,425 1,452 
Legal and professional services4,716 5,501 4,629 
Marketing expense1,879 1,838 1,926 
Office expense1,280 1,232 1,252 
Loan expense567 646 1,144 
Deposit expense9,194 8,436 4,081 
Amortization of intangible assets3,055 3,171 3,479 
Other expense5,061 4,695 5,016 
Total noninterest expense$100,644 $101,352 $98,974 


Income Tax

For the second quarter of 2023, income tax expense totaled $20.9 million, resulting in an effective tax rate of 26.6%, compared with income tax expense of $22.9 million and an effective tax rate of 26.8% for the first quarter of 2023, and income tax expense of $25.7 million and an effective tax rate of 26.9% for the second quarter of 2022.

5

BALANCE SHEET HIGHLIGHTS

Loans

Loans held for investment totaled $13.61 billion at June 30, 2023, a decrease of $561.5 million, or 4.0%, from March 31, 2023, and a decrease of $1.44 billion, or 9.6%, from June 30, 2022. The decrease from March 31, 2023 was attributable to higher loan prepayments, maturities, and loan sales. The decrease from June 30, 2022 was primarily driven by lower loan fundings due to our disciplined approach around credit risk management and lower loan demand, as well as loan sales.

During the second quarter of 2023, new loan commitments totaled $148.5 million, and loan fundings totaled $71.6 million, compared with $116.8 million in loan commitments and $66.9 million in new loan fundings for the first quarter of 2023, and $1.50 billion in loan commitments and $1.12 billion in new loan fundings for the second quarter of 2022. During the second quarter of 2023, new origination activity remained muted given the current environment compared to the production levels seen in the second quarter of 2022.
 
At June 30, 2023, the total loan-to-deposit ratio was 82.3%, consistent with 82.4% and 83.2% at March 31, 2023 and June 30, 2022, 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)202320232022
Beginning gross loan balance before basis adjustment$14,223,036 $14,740,867 $14,745,401 
New commitments148,482 116,835 1,504,186 
Unfunded new commitments(76,928)(49,891)(382,478)
Net new fundings71,554 66,944 1,121,708 
Purchased loans— — 710 
Amortization/maturities/payoffs(582,948)(519,986)(936,893)
Net draws on existing lines of credit36,393 (53,436)200,255 
Loan sales(78,349)(803)(23,698)
Charge-offs(3,986)(3,664)(5,831)
Transferred to other real estate owned(104)(6,886)— 
Net (decrease) increase (557,440)(517,831)356,251 
Ending gross loan balance before basis adjustment$13,665,596 $14,223,036 $15,101,652 
Basis adjustment associated with fair value hedge (1)
(53,130)(50,005)(51,087)
Ending gross loan balance $13,612,466 $14,173,031 $15,050,565 
______________________________
(1) Represents the basis adjustment associated with the application of hedge accounting on certain loans.


6

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)202320232022
Investor loans secured by real estate
Commercial real estate (“CRE”) non-owner-occupied$2,571,246 $2,590,824 $2,788,715 
Multifamily5,788,030 5,955,239 6,188,086 
Construction and land428,287 420,079 331,734 
SBA secured by real estate (1)
38,876 40,669 44,199 
Total investor loans secured by real estate8,826,439 9,006,811 9,352,734 
Business loans secured by real estate (2)
CRE owner-occupied2,281,721 2,342,175 2,486,747 
Franchise real estate secured318,539 371,902 387,683 
SBA secured by real estate (3)
57,084 60,527 67,191 
Total business loans secured by real estate2,657,344 2,774,604 2,941,621 
Commercial loans (4)
Commercial and industrial1,744,763 1,967,128 2,295,421 
Franchise non-real estate secured351,944 388,722 415,830 
SBA non-real estate secured9,688 10,437 11,008 
Total commercial loans2,106,395 2,366,287 2,722,259 
Retail loans
Single family residential (5)
70,993 70,913 77,951 
Consumer2,241 3,174 4,130 
Total retail loans73,234 74,087 82,081 
Loans held for investment before basis adjustment (6)
13,663,412 14,221,789 15,098,695 
Basis adjustment associated with fair value hedge (7)
(53,130)(50,005)(51,087)
Loans held for investment13,610,282 14,171,784 15,047,608 
Allowance for credit losses for loans held for investment(192,333)(195,388)(196,075)
Loans held for investment, net$13,417,949 $13,976,396 $14,851,533 
Total unfunded loan commitments$2,202,647 $2,413,169 $2,872,934 
Loans held for sale, at lower of cost or fair value$2,184 $1,247 $2,957 
______________________________
(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 $48.4 million, $52.2 million, and $63.6 million as of June 30, 2023, March 31, 2023, and June 30, 2022, 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, 2023 was 4.73%, compared to 4.68% at March 31, 2023, and 4.06% at June 30, 2022. The quarter-over-quarter and year-over-year increases reflect higher rates on new originations and the repricing of loans as a result of the increases in benchmark interest rates.

7

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)202320232022
Investor loans secured by real estate
CRE non-owner-occupied$1,470 $1,200 $195,896 
Multifamily53,522 4,464 540,263 
Construction and land24,525 — 192,852 
SBA secured by real estate (1)
— — 4,698 
Total investor loans secured by real estate79,517 5,664 933,709 
Business loans secured by real estate (2)
CRE owner-occupied3,062 6,562 220,936 
Franchise real estate secured— 3,217 17,500 
SBA secured by real estate (3)
— 497 7,033 
Total business loans secured by real estate3,062 10,276 245,469 
Commercial loans (4)
Commercial and industrial58,730 93,150 255,922 
Franchise non-real estate secured1,853 1,666 49,604 
SBA non-real estate secured1,612 720 6,419 
Total commercial loans62,195 95,536 311,945 
Retail loans
Single family residential (5)
3,708 5,359 13,063 
Total retail loans3,708 5,359 13,063 
Total loan commitments$148,482 $116,835 $1,504,186 
______________________________
(1) SBA loans that are collateralized by hotel/motel real property.
(2) Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.
(3) SBA loans that are collateralized by real property other than hotel/motel real property.
(4) Loans to businesses where the operating cash flow of the business is the primary source of repayment.
(5) Single family residential includes home equity lines of credit, as well as second trust deeds.

The weighted average interest rate on new loan commitments was 6.72% in the second quarter of 2023, compared to 7.43% in the first quarter of 2023, and 4.11% in the second quarter of 2022. The decrease in weighted average interest rate on new loan commitments from the linked quarter was largely driven by the change in the loan commitment mix.

8

Asset Quality and Allowance for Credit Losses
 
At June 30, 2023, our allowance for credit losses (“ACL”) on loans held for investment was $192.3 million, a decrease of $3.1 million from March 31, 2023, and a decrease of $3.7 million from June 30, 2022. The slight decline in the ACL from March 31, 2023 and June 30, 2022 was commensurate with the relative decreases in loans held for investment balances.

During the second quarter of 2023, the Company incurred $3.7 million of net charge-offs, compared to $3.3 million during the first quarter of 2023, and $5.2 million during the second quarter of 2022.

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, 2023
(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$31,715 $(2,591)$— $2,421 $31,545 
Multifamily57,787 (73)1 (2,067)55,648 
Construction and land7,672 — — 35 7,707 
SBA secured by real estate (1)
2,291 — — 40 2,331 
Business loans secured by real estate (2)
CRE owner-occupied29,334 (207)12 (624)28,515 
Franchise real estate secured7,790 — — (935)6,855 
SBA secured by real estate (3)
4,415 — 80 16 4,511 
Commercial loans (4)
Commercial and industrial37,659 (225)169 1,983 39,586 
Franchise non-real estate secured15,721 — — (1,079)14,642 
SBA non-real estate secured401 — 59 (61)399 
Retail loans
Single family residential (5)
392 — — 63 455 
Consumer loans211 (890)— 818 139 
Totals$195,388 $(3,986)$321 $610 $192,333 
______________________________
(1) SBA loans that are collateralized by hotel/motel real property.
(2) Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.
(3) SBA loans that are collateralized by real property other than hotel/motel real property.
(4) Loans to businesses where the operating cash flow of the business is the primary source of repayment.
(5) Single family residential includes home equity lines of credit, as well as second trust deeds.

The ratio of allowance for credit losses to loans held for investment at June 30, 2023 increased to 1.41%, compared to 1.38% at March 31, 2023, and 1.30% at June 30, 2022. The fair value net discount on loans acquired through total bank acquisitions was $48.4 million, or 0.35% of total loans held for investment, as of June 30, 2023, compared to $52.2 million, or 0.37% of total loans held for investment, as of March 31, 2023, and $63.6 million, or 0.42% of total loans held for investment, as of June 30, 2022.

9

Nonperforming assets totaled $17.4 million, or 0.08% of total assets, at June 30, 2023, compared with $30.4 million, or 0.14% of total assets, at March 31, 2023, and $44.4 million, or 0.20% of total assets, at June 30, 2022. Loan delinquencies were $31.0 million, or 0.23% of loans held for investment, at June 30, 2023, compared to $20.8 million, or 0.15% of loans held for investment, at March 31, 2023, and $36.3 million, or 0.24% of loans held for investment, at June 30, 2022.

Classified loans totaled $119.9 million, or 0.88% of loans held for investment, at June 30, 2023, compared with $161.1 million, or 1.14% of loans held for investment, at March 31, 2023, and $106.2 million, or 0.71% of loans held for investment, at June 30, 2022.

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)202320232022
Asset quality
Nonperforming loans$17,151 $24,872 $44,445 
Other real estate owned270 5,499 — 
Nonperforming assets$17,421 $30,371 $44,445 
Total classified assets (1)
$120,216 $166,576 $106,153 
Allowance for credit losses192,333 195,388 196,075 
Allowance for credit losses as a percent of total nonperforming loans1,121 %786 %441 %
Nonperforming loans as a percent of loans held for investment0.13 0.18 0.30 
Nonperforming assets as a percent of total assets0.08 0.14 0.20 
Classified loans to total loans held for investment0.88 1.14 0.71 
Classified assets to total assets0.58 0.78 0.48 
Net loan charge-offs for the quarter ended$3,665 $3,284 $5,245 
Net loan charge-offs for the quarter to average total loans0.03 %0.02 %0.04 %
Allowance for credit losses to loans held for investment (2)
1.41 1.38 1.30 
Delinquent loans  
30 - 59 days$649 $761 $6,915 
60 - 89 days31 1,198 — 
90+ days30,271 18,884 29,360 
Total delinquency$30,951 $20,843 $36,275 
Delinquency as a percentage of loans held for investment0.23 %0.15 %0.24 %
______________________________
(1) Includes substandard loans and other real estate owned.
(2) 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. At March 31, 2023, 26% of loans held for investment include a fair value net discount of $52.2 million, or 0.37% of loans held for investment. At June 30, 2022, 29% of loans held for investment include a fair value net discount of $63.6 million, or 0.42% of loans held for investment.

10

Investment Securities

At June 30, 2023, available-for-sale (“AFS”) and held-to-maturity (“HTM”) investment securities were $2.01 billion and $1.74 billion, respectively, compared to $2.11 billion and $1.75 billion, respectively, at March 31, 2023, and $2.68 billion and $1.39 billion, respectively, at June 30, 2022.

In total, investment securities were $3.75 billion at June 30, 2023, a decrease of $112.5 million from March 31, 2023, and a decrease of $320.4 million from June 30, 2022. The decrease in the second quarter of 2023 compared to the prior quarter was primarily the result of $90.9 million in principal payments, amortization, and redemptions, and an increase of $21.7 million in AFS securities mark-to-market unrealized loss.

The decrease in investment securities from June 30, 2022 was primarily the result of $535.3 million in sales, $352.7 million in principal payments, discounts from the AFS securities transferred to HTM, amortization, and redemptions, and an increase of $45.3 million in AFS securities mark-to-market unrealized loss, partially offset by $606.0 million in purchases.

Deposits

At June 30, 2023, total deposits were $16.54 billion, a decrease of $667.9 million, or 3.9%, from March 31, 2023, and a decrease of $1.54 billion, or 8.5%, from June 30, 2022.

At June 30, 2023, non-maturity deposits(1) totaled $13.46 billion, or 81.4% of total deposits, a decrease of $752.7 million, or 5.3%, from March 31, 2023, and a decrease of $3.17 billion, or 19.1%, from June 30, 2022. The decreases from prior quarters were largely driven by the industry-wide turmoil experienced in March and May 2023 and partially by clients redeploying funds into higher yielding alternatives.

At June 30, 2023, maturity deposits totaled $3.08 billion, an increase of $84.7 million, or 2.8%, from March 31, 2023, and an increase of $1.63 billion, or 111.8%, from June 30, 2022. The increase in the second quarter of 2023 compared to the prior quarter was primarily due to an increase of $108.9 million in retail certificates of deposit, partially offset by a $24.5 million decrease in brokered certificates of deposit. The increase from June 30, 2022 was primarily driven by increases in brokered and retail certificates of deposit.

The weighted average cost of total deposits for the second quarter of 2023 was 1.27%, compared to 0.94% for the first quarter of 2023, and 0.06% for the second quarter of 2022. The increases in the weighted average cost of deposits for the second quarter of 2023, compared to the first quarter of 2023 and the second quarter of 2022, were principally driven by higher pricing across deposit categories and a greater mix of maturity deposits. The weighted average cost of non-maturity deposits(1) for the second quarter of 2023 was 0.71%, compared to 0.54% for the first quarter of 2023, and 0.04% for the second quarter of 2022.

At June 30, 2023, the end-of-period weighted average rate of total deposits was 1.40%, compared to 1.15% at March 31, 2023, and 0.13% at June 30, 2022. At June 30, 2023, the end-of-period weighted average rate of non-maturity deposits was 0.78%, compared to 0.61% at March 31, 2023, and 0.06% at June 30, 2022.









______________________________
(1) Reconciliations of the non-GAAP measures are set forth at the end of this press release.
11

The following table presents the composition of deposits as of the dates indicated.

 June 30,March 31,June 30,
(Dollars in thousands)202320232022
Deposit accounts
Noninterest-bearing checking$5,895,975 $6,209,104 $6,934,318 
Interest-bearing:
Checking2,759,855 2,871,812 4,149,432 
Money market/savings4,801,288 5,128,857 5,545,230 
Total non-maturity deposits13,457,118 14,209,773 16,628,980 
Retail certificates of deposit1,366,071 1,257,146 855,966 
Wholesale/brokered certificates of deposit1,716,686 1,740,891 599,667 
Total maturity deposits3,082,757 2,998,037 1,455,633 
Total deposits$16,539,875 $17,207,810 $18,084,613 
Cost of deposits1.27 %0.94 %0.06 %
Cost of non-maturity deposits (1)
0.71 0.54 0.04 
Noninterest-bearing deposits as a percent of total deposits35.6 36.1 38.3 
Non-maturity deposits as a percent of total deposits 81.4 82.6 92.0 
.

Borrowings

At June 30, 2023, total borrowings amounted to $1.13 billion, remaining flat from March 31, 2023, and an increase of $200.6 million from June 30, 2022. Total borrowings at June 30, 2023 were comprised of $800.0 million of Federal Home Loan Bank of San Francisco (“FHLB”) term advances and $331.5 million of subordinated debt. The increase in borrowings at June 30, 2023 as compared to June 30, 2022 was due to a $200.0 million increase in FHLB term advances that were utilized to manage interest rate risk and liquidity.

As of June 30, 2023, our unused borrowing capacity was $8.53 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 and the Bank Term Funding Program, neither of which were accessed during the second quarter of 2023.

Capital Ratios

At June 30, 2023, our common stockholder's equity was $2.85 billion, or 13.73% of total assets, compared with $2.83 billion, or 13.25%, at March 31, 2023, and $2.76 billion, or 12.53%, at June 30, 2022, with a book value per share of $29.71, compared with $29.58 at March 31, 2023, and $29.01 at June 30, 2022. At June 30, 2023, the ratio of tangible common equity to tangible assets(1) was 9.59%, compared with 9.20% at March 31, 2023, and 8.52% at June 30, 2022, and tangible book value per share(1) was $19.79, compared with $19.61 at March 31, 2023, and $18.86 at June 30, 2022.








______________________________
(1) Reconciliations of the non-GAAP measures are set forth at the end of this press release.
12

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, 2023, 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 ratios202320232022
Pacific Premier Bancorp, Inc. Consolidated   
Tier 1 leverage ratio10.90 %10.41 %9.90 %
Common equity tier 1 capital ratio14.34 13.54 11.91 
Tier 1 capital ratio14.34 13.54 11.91 
Total capital ratio17.24 16.33 14.41 
Tangible common equity ratio (1)
9.59 9.20 8.52 
Pacific Premier Bank
Tier 1 leverage ratio12.15 %11.93 %11.41 %
Common equity tier 1 capital ratio15.99 15.52 13.72 
Tier 1 capital ratio15.99 15.52 13.72 
Total capital ratio17.05 16.55 14.54 
Share data   
Book value per share$29.71 $29.58 $29.01 
Tangible book value per share (1)
19.79 19.61 18.86 
Common equity dividends declared per share0.33 0.33 0.33 
Closing stock price (2)
20.68 24.02 29.24 
Shares issued and outstanding95,906,217 95,714,777 94,976,605 
Market capitalization (2)(3)
$1,983,341 $2,299,069 $2,777,116 
______________________________
(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.

13

Dividend and Stock Repurchase Program

On July 25, 2023, the Company's Board of Directors declared a $0.33 per share dividend, payable on August 14, 2023 to stockholders of record as of August 7, 2023. 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 2023, the Company did not repurchase any shares of common stock.

Subsequent Events

On July 12, 2023, as part of its interest rate sensitivity management, the Company entered into two $150.0 million in notional amount, $300.0 million in aggregate, of pay-fixed and receive-floating interest rate swaps associated with certain fixed rate loans, primarily multifamily and commercial real estate loans, to manage its exposure to changes in fair value on these instruments attributable to changes in the designated SOFR benchmark interest rate. These two interest rate swaps are structured as 15-month and 18-month terms, respectively, and designated as fair value hedges using the portfolio layer method. Under the swap agreement, the Company receives variable-rate interest payments in exchange for making fixed-rate payments over the lives of the contracts without exchanging the notional amounts.
14

Conference Call and Webcast

The Company will host a conference call at 9:00 a.m. PT / 12:00 p.m. ET on July 27, 2023 to discuss its financial results. Analysts and investors may participate in the question-and-answer session. A live webcast will be available on the Webcasts page of the Company's investor relations website. An archived version of the webcast will be available in the same location shortly after the live call has ended. The conference call can be accessed by telephone at (866) 290-5977 and asking to be joined to the Pacific Premier Bancorp, Inc. conference call. Additionally, a telephone replay will be made available through August 3, 2023, at (877) 344-7529, conference ID 2138296.

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, 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 $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 approximately $17 billion of assets under custody and 37,000 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. These 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; 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; 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
15

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 the costs of monitoring, testing, and maintaining compliance with complex laws and regulations; the effectiveness of our risk management framework and quantitative models; the transition away from USD LIBOR and related uncertainty as well as the risk and costs related to our adoption of Secured Overnight Financing Rate (“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; 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 our lack of a diversified loan portfolio, including 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, which could impact business and economic conditions in the United States and abroad; public health crises and pandemics, including with respect to COVID-19, 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 incidents, and related potential costs and risks, including reputation, financial and litigation risks; 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 2022 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.

Contacts:
 
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, Director of Investor Relations
(949) 243-1082

16

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)20232023202220222022
ASSETS
Cash and cash equivalents$1,463,677 $1,424,896 $1,101,249 $739,211 $972,798 
Interest-bearing time deposits with financial institutions1,487 1,734 1,734 1,733 2,216 
Investment securities held-to-maturity, at amortized cost, net of allowance for credit losses 1,737,604 1,749,030 1,388,103 1,385,502 1,390,682 
Investment securities available-for-sale, at fair value2,011,791 2,112,852 2,601,013 2,661,079 2,679,070 
FHLB, FRB, and other stock105,369 105,479 119,918 118,778 118,636 
Loans held for sale, at lower of amortized cost or fair value2,184 1,247 2,643 2,163 2,957 
Loans held for investment13,610,282 14,171,784 14,676,298 14,908,811 15,047,608 
Allowance for credit losses(192,333)(195,388)(195,651)(195,549)(196,075)
Loans held for investment, net13,417,949 13,976,396 14,480,647 14,713,262 14,851,533 
Accrued interest receivable70,093 69,660 73,784 66,192 66,898 
Other real estate owned270 5,499 — — — 
Premises and equipment, net61,527 63,450 64,543 65,651 68,435 
Deferred income taxes, net184,857 177,778 183,602 190,948 163,767 
Bank owned life insurance465,288 462,732 460,010 457,301 454,593 
Intangible assets49,362 52,417 55,588 59,028 62,500 
Goodwill901,312 901,312 901,312 901,312 901,312 
Other assets275,113 257,082 253,871 257,041 258,522 
Total assets$20,747,883 $21,361,564 $21,688,017 $21,619,201 $21,993,919 
LIABILITIES  
Deposit accounts:  
Noninterest-bearing checking$5,895,975 $6,209,104 $6,306,825 $6,775,465 $6,934,318 
Interest-bearing:
Checking2,759,855 2,871,812 3,119,850 3,605,498 4,149,432 
Money market/savings4,801,288 5,128,857 5,422,607 5,493,988 5,545,230 
Retail certificates of deposit1,366,071 1,257,146 1,086,423 872,421 855,966 
Wholesale/brokered certificates of deposit1,716,686 1,740,891 1,416,696 999,002 599,667 
Total interest-bearing10,643,900 10,998,706 11,045,576 10,970,909 11,150,295 
Total deposits16,539,875 17,207,810 17,352,401 17,746,374 18,084,613 
FHLB advances and other borrowings800,000 800,000 1,000,000 600,000 600,000 
Subordinated debentures331,523 331,364 331,204 331,045 330,886 
Accrued expenses and other liabilities227,351 191,229 206,023 206,386 223,201 
Total liabilities17,898,749 18,530,403 18,889,628 18,883,805 19,238,700 
STOCKHOLDERS’ EQUITY     
Common stock937 937 933 933 933 
Additional paid-in capital2,366,639 2,361,830 2,362,663 2,357,731 2,353,361 
Retained earnings757,025 731,123 700,040 657,845 615,943 
Accumulated other comprehensive loss(275,467)(262,729)(265,247)(281,113)(215,018)
Total stockholders' equity2,849,134 2,831,161 2,798,389 2,735,396 2,755,219 
Total liabilities and stockholders' equity$20,747,883 $21,361,564 $21,688,017 $21,619,201 $21,993,919 








17

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months EndedSix Months Ended
 June 30,March 31,June 30,June 30,June 30,
(Dollars in thousands, except per share data)20232023202220232022
INTEREST INCOME   
Loans$182,852 $180,958 $164,455 $363,810 $315,059 
Investment securities and other interest-earning assets42,536 40,385 18,771 82,921 36,713 
Total interest income225,388 221,343 183,226 446,731 351,772 
INTEREST EXPENSE  
Deposits53,580 40,234 2,682 93,814 4,355 
FHLB advances and other borrowings7,155 7,938 3,217 15,093 3,691 
Subordinated debentures4,561 4,561 4,562 9,122 9,122 
Total interest expense65,296 52,733 10,461 118,029 17,168 
Net interest income before provision for credit losses160,092 168,610 172,765 328,702 334,604 
Provision for credit losses1,499 3,016 469 4,515 917 
Net interest income after provision for credit losses158,593 165,594 172,296 324,187 333,687 
NONINTEREST INCOME  
Loan servicing income493 573 502 1,066 921 
Service charges on deposit accounts2,670 2,629 2,690 5,299 5,305 
Other service fee income315 296 366 611 733 
Debit card interchange fee income914 803 936 1,717 1,772 
Earnings on bank owned life insurance3,487 3,374 3,240 6,861 6,461 
Net gain from sales of loans345 29 1,136 374 2,630 
Net gain (loss) from sales of investment securities— 138 (31)138 2,103 
Trust custodial account fees
9,360 11,025 10,354 20,385 21,933 
Escrow and exchange fees924 1,058 1,827 1,982 3,488 
Other income2,031 1,261 1,173 3,292 2,741 
Total noninterest income20,539 21,186 22,193 41,725 48,087 
NONINTEREST EXPENSE  
Compensation and benefits53,424 54,293 57,562 107,717 114,543 
Premises and occupancy11,615 11,742 11,829 23,357 23,781 
Data processing7,488 7,265 6,604 14,753 12,600 
Other real estate owned operations, net8 108 — 116 — 
FDIC insurance premiums2,357 2,425 1,452 4,782 2,848 
Legal and professional services4,716 5,501 4,629 10,217 8,697 
Marketing expense1,879 1,838 1,926 3,717 3,735 
Office expense1,280 1,232 1,252 2,512 2,455 
Loan expense567 646 1,144 1,213 2,278 
Deposit expense9,194 8,436 4,081 17,630 7,832 
Amortization of intangible assets3,055 3,171 3,479 6,226 7,071 
Other expense5,061 4,695 5,016 9,756 10,782 
Total noninterest expense100,644 101,352 98,974 201,996 196,622 
Net income before income taxes78,488 85,428 95,515 163,916 185,152 
Income tax expense20,852 22,866 25,712 43,718 48,445 
Net income$57,636 $62,562 $69,803 $120,198 $136,707 
EARNINGS PER SHARE  
Basic$0.60 $0.66 $0.74 $1.26 $1.44 
Diluted$0.60 $0.66 $0.73 $1.26 $1.44 
WEIGHTED AVERAGE SHARES OUTSTANDING  
Basic94,166,083 93,857,812 93,765,264 94,012,799 93,633,213 
Diluted94,215,967 94,182,522 94,040,691 94,192,341 93,983,057 
18

SELECTED FINANCIAL DATA

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
(Unaudited)
 
 Three Months Ended
 June 30, 2023March 31, 2023June 30, 2022
(Dollars in thousands)Average BalanceInterest Income/ExpenseAverage Yield/CostAverage BalanceInterest Income/ExpenseAverage Yield/CostAverage BalanceInterest Income/ExpenseAverage Yield/Cost
Assets
Interest-earning assets:         
Cash and cash equivalents$1,433,137 $16,600 4.65 %$1,335,611 $13,594 4.13 %$702,663 $1,211 0.69 %
Investment securities3,926,568 25,936 2.64 4,165,681 26,791 2.57 4,254,961 17,560 1.65 
Loans receivable, net (1)(2)
13,927,145 182,852 5.27 14,394,775 180,958 5.10 14,919,182 164,455 4.42 
Total interest-earning assets19,286,850 225,388 4.69 19,896,067 221,343 4.51 19,876,806 183,226 3.70 
Noninterest-earning assets1,771,156 1,788,806 1,793,347 
Total assets$21,058,006 $21,684,873 $21,670,153 
Liabilities and equity
Interest-bearing deposits:
Interest checking$2,746,578 $8,659 1.26 %$3,008,712 $5,842 0.79 %$4,055,506 $712 0.07 %
Money market4,644,623 15,644 1.35 4,992,084 13,053 1.06 5,231,464 1,010 0.08 
Savings352,377 102 0.12 453,079 508 0.45 432,586 27 0.03 
Retail certificates of deposit1,286,160 10,306 3.21 1,206,966 7,775 2.61 922,784 607 0.26 
Wholesale/brokered certificates of deposit1,767,970 18,869 4.28 1,443,783 13,056 3.67 80,182 326 1.63 
Total interest-bearing deposits10,797,708 53,580 1.99 11,104,624 40,234 1.47 10,722,522 2,682 0.10 
FHLB advances and other borrowings800,016 7,155 3.59 987,817 7,938 3.26 602,621 3,217 2.14 
Subordinated debentures331,449 4,561 5.50 331,297 4,561 5.51 330,796 4,562 5.52 
Total borrowings1,131,465 11,716 4.15 1,319,114 12,499 3.83 933,417 7,779 3.34 
Total interest-bearing liabilities11,929,173 65,296 2.20 12,423,738 52,733 1.72 11,655,939 10,461 0.36 
Noninterest-bearing deposits6,078,543 6,219,818 7,030,205 
Other liabilities206,929 218,925 219,116 
Total liabilities18,214,645 18,862,481 18,905,260 
Stockholders' equity2,843,361 2,822,392 2,764,893 
Total liabilities and equity$21,058,006 $21,684,873 $21,670,153 
Net interest income$160,092 $168,610 $172,765 
Net interest margin (3)
3.33 %3.44 %3.49 %
Cost of deposits (4)
1.27 0.94 0.06 
Cost of funds (5)
1.45 1.15 0.22 
Cost of non-maturity deposits (6)
0.71 0.54 0.04 
Ratio of interest-earning assets to interest-bearing liabilities161.68 160.15 170.53 
______________________________
(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 $2.9 million, $2.5 million, and $7.5 million for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, 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.
19

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
LOAN PORTFOLIO COMPOSITION
(Unaudited)
June 30,March 31,December 31,September 30,June 30,
(Dollars in thousands)20232023202220222022
Investor loans secured by real estate
CRE non-owner-occupied$2,571,246 $2,590,824 $2,660,321 $2,771,272 $2,788,715 
Multifamily5,788,030 5,955,239 6,112,026 6,199,581 6,188,086 
Construction and land428,287 420,079 399,034 373,194 331,734 
SBA secured by real estate (1)
38,876 40,669 42,135 42,998 44,199 
Total investor loans secured by real estate8,826,439 9,006,811 9,213,516 9,387,045 9,352,734 
Business loans secured by real estate (2)
CRE owner-occupied2,281,721 2,342,175 2,432,163 2,477,530 2,486,747 
Franchise real estate secured318,539 371,902 378,057 383,468 387,683 
SBA secured by real estate (3)
57,084 60,527 61,368 64,002 67,191 
Total business loans secured by real estate2,657,344 2,774,604 2,871,588 2,925,000 2,941,621 
Commercial loans (4)
Commercial and industrial1,744,763 1,967,128 2,160,948 2,164,623 2,295,421 
Franchise non-real estate secured351,944 388,722 404,791 409,773 415,830 
SBA non-real estate secured9,688 10,437 11,100 11,557 11,008 
Total commercial loans2,106,395 2,366,287 2,576,839 2,585,953 2,722,259 
Retail loans
Single family residential (5)
70,993 70,913 72,997 75,176 77,951 
Consumer2,241 3,174 3,284 3,761 4,130 
Total retail loans73,234 74,087 76,281 78,937 82,081 
Loans held for investment before basis adjustment (6)
13,663,412 14,221,789 14,738,224 14,976,935 15,098,695 
Basis adjustment associated with fair value hedge (7)
(53,130)(50,005)(61,926)(68,124)(51,087)
Loans held for investment13,610,282 14,171,784 14,676,298 14,908,811 15,047,608 
Allowance for credit losses for loans held for investment(192,333)(195,388)(195,651)(195,549)(196,075)
Loans held for investment, net$13,417,949 $13,976,396 $14,480,647 $14,713,262 $14,851,533 
Loans held for sale, at lower of cost or fair value$2,184 $1,247 $2,643 $2,163 $2,957 
______________________________
(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 $48.4 million, $52.2 million, $54.8 million, $59.0 million, and $63.6 million as of June 30, 2023, March 31, 2023, December 31, 2022, September 30, 2022, and June 30, 2022, respectively.
(7) Represents the basis adjustment associated with the application of hedge accounting on certain loans.




20

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
ASSET QUALITY INFORMATION
(Unaudited)
 June 30,March 31,December 31,September 30,June 30,
(Dollars in thousands)20232023202220222022
Asset quality
Nonperforming loans$17,151 $24,872 $30,905 $60,464 $44,445 
Other real estate owned270 5,499 — — — 
Nonperforming assets$17,421 $30,371 $30,905 $60,464 $44,445 
Total classified assets (1)
$120,216 $166,576 $149,304 $110,143 $106,153 
Allowance for credit losses192,333 195,388 195,651 195,549 196,075 
Allowance for credit losses as a percent of total nonperforming loans1,121 %786 %633 %323 %441 %
Nonperforming loans as a percent of loans held for investment0.13 0.18 0.21 0.41 0.30 
Nonperforming assets as a percent of total assets0.08 0.14 0.14 0.28 0.20 
Classified loans to total loans held for investment0.88 1.14 1.02 0.74 0.71 
Classified assets to total assets0.58 0.78 0.69 0.51 0.48 
Net loan charge-offs for the quarter ended$3,665 $3,284 $3,797 $1,072 $5,245 
Net loan charge-offs for the quarter to average total loans 0.03 %0.02 %0.03 %0.01 %0.04 %
Allowance for credit losses to loans held for investment (2)
1.41 1.38 1.33 1.31 1.30 
Delinquent loans   
30 - 59 days$649 $761 $20,538 $1,484 $6,915 
60 - 89 days31 1,198 185 6,535 — 
90+ days30,271 18,884 22,625 33,238 29,360 
Total delinquency$30,951 $20,843 $43,348 $41,257 $36,275 
Delinquency as a percent of loans held for investment0.23 %0.15 %0.30 %0.28 %0.24 %
______________________________
(1) Includes substandard loans and other real estate owned.
(2) 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. At March 31, 2023, 26% of loans held for investment include a fair value net discount of $52.2 million, or 0.37% of loans held for investment. At December 31, 2022, 26% of loans held for investment include a fair value net discount of $54.8 million, or 0.37% of loans held for investment. At September 30, 2022, 27% of loans held for investment include a fair value net discount of $59.0 million, or 0.39% of loans held for investment. At June 30, 2022, 29% of loans held for investment include a fair value net discount of $63.6 million, or 0.42% of loans held for investment.

21

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
NONACCRUAL LOANS (1)
(Unaudited)
(Dollars in thousands)Collateral Dependent LoansACLNon-Collateral Dependent LoansACLTotal Nonaccrual LoansNonaccrual Loans With No ACL
June 30, 2023
Investor loans secured by real estate
CRE non-owner-occupied$1,566 $— $— $— $1,566 $1,566 
SBA secured by real estate (2)
505 — — — 505 505 
Total investor loans secured by real estate2,071 — — — 2,071 2,071 
Business loans secured by real estate (3)
CRE owner-occupied8,984 — — — 8,984 8,984 
SBA secured by real estate (4)
1,306 — — — 1,306 1,306 
Total business loans secured by real estate10,290 — — — 10,290 10,290 
Commercial loans (5)
Commercial and industrial4,235 4,000 — — 4,235 235 
SBA not secured by real estate555 — — — 555 555 
Total commercial loans4,790 4,000 — — 4,790 790 
Totals nonaccrual loans$17,151 $4,000 $— $— $17,151 $13,151 
______________________________
(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.

22

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
PAST DUE STATUS
(Unaudited)
Days Past Due
(Dollars in thousands)Current30-5960-8990+Total
June 30, 2023
Investor loans secured by real estate
CRE non-owner-occupied$2,569,680 $— $— $1,566 $2,571,246 
Multifamily5,788,030 — — — 5,788,030 
Construction and land428,287 — — — 428,287 
SBA secured by real estate (1)
38,349 527 — — 38,876 
Total investor loans secured by real estate8,824,346 527 — 1,566 8,826,439 
Business loans secured by real estate (2)
CRE owner-occupied2,276,988 — — 4,733 2,281,721 
Franchise real estate secured318,539 — — — 318,539 
SBA secured by real estate (3)
55,778 — — 1,306 57,084 
Total business loans secured by real estate2,651,305 — — 6,039 2,657,344 
Commercial loans (4)
Commercial and industrial1,722,499 122 31 22,111 1,744,763 
Franchise non-real estate secured351,944 — — — 351,944 
SBA not secured by real estate9,133 — — 555 9,688 
Total commercial loans2,083,576 122 31 22,666 2,106,395 
Retail loans
Single family residential (5)
70,993 — — — 70,993 
Consumer loans2,241 — — — 2,241 
Total retail loans73,234 — — — 73,234 
Loans held for investment before basis adjustment (6)
$13,632,461 $649 $31 $30,271 $13,663,412 
______________________________
(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 $53.1 million to the carrying amount of certain loans included in fair value hedging relationships.



23

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CREDIT RISK GRADES
(Unaudited)
 
(Dollars in thousands)PassSpecial
Mention		SubstandardTotal Gross
Loans
June 30, 2023
Investor loans secured by real estate    
CRE non-owner-occupied$2,555,682 $6,417 $9,147 $2,571,246 
Multifamily5,775,486 12,544 — 5,788,030 
Construction and land428,287 — — 428,287 
SBA secured by real estate (1)
30,318 — 8,558 38,876 
Total investor loans secured by real estate8,789,773 18,961 17,705 8,826,439 
Business loans secured by real estate (2)
CRE owner-occupied2,239,451 18,045 24,225 2,281,721 
Franchise real estate secured300,986 12,403 5,150 318,539 
SBA secured by real estate (3)
51,427 — 5,657 57,084 
Total business loans secured by real estate2,591,864 30,448 35,032 2,657,344 
Commercial loans (4)
   
Commercial and industrial1,656,391 39,756 48,616 1,744,763 
Franchise non-real estate secured330,632 3,787 17,525 351,944 
SBA not secured by real estate8,622 — 1,066 9,688 
Total commercial loans1,995,645 43,543 67,207 2,106,395 
Retail loans
Single family residential (5)
70,991 — 2 70,993 
Consumer loans2,241 — — 2,241 
Total retail loans73,232 — 2 73,234 
Loans held for investment before basis adjustment (6)
$13,450,514 $92,952 $119,946 $13,663,412 
______________________________
(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 $53.1 million to the carrying amount of certain loans included in fair value hedging relationships.

24

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 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
 June 30,March 31,June 30,
(Dollars in thousands)202320232022
Net income$57,636 $62,562 $69,803 
Plus: amortization of intangible assets expense3,055 3,171 3,479 
Less: amortization of intangible assets expense tax adjustment (1)
868 901 993 
Net income for average tangible common equity$59,823 $64,832 $72,289 
Average stockholders' equity$2,843,361 $2,822,392 $2,764,893 
Less: average intangible assets51,180 54,310 64,583 
Less: average goodwill901,312 901,312 901,312 
Average tangible common equity$1,890,869 $1,866,770 $1,798,998 
Return on average equity (annualized)8.11 %8.87 %10.10 %
Return on average tangible common equity (annualized)12.66 %13.89 %16.07 %
_____________________________________
(1) Adjusted by statutory tax rate



25

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. 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)202320232022
Interest income$225,388 $221,343 $183,226 
Interest expense65,296 52,733 10,461 
Net interest income160,092 168,610 172,765 
Noninterest income20,539 21,186 22,193 
Revenue180,631 189,796 194,958 
Noninterest expense100,644 101,352 98,974 
Pre-provision net revenue79,987 88,444 95,984 
Pre-provision net revenue (annualized)$319,948 $353,776 $383,936 
Average assets$21,058,006 $21,684,873 $21,670,153 
Pre-provision net revenue to average assets0.38 %0.41 %0.44 %
Pre-provision net revenue to average assets (annualized)1.52 %1.63 %1.77 %


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)20232023202220222022
Total stockholders' equity$2,849,134 $2,831,161 $2,798,389 $2,735,396 $2,755,219 
Less: intangible assets950,674 953,729 956,900 960,340 963,812 
Tangible common equity$1,898,460 $1,877,432 $1,841,489 $1,775,056 $1,791,407 
Total assets$20,747,883 $21,361,564 $21,688,017 $21,619,201 $21,993,919 
Less: intangible assets950,674 953,729 956,900 960,340 963,812 
Tangible assets$19,797,209 $20,407,835 $20,731,117 $20,658,861 $21,030,107 
Tangible common equity ratio9.59 %9.20 %8.88 %8.59 %8.52 %
Common shares issued and outstanding95,906,21795,714,77795,021,76095,016,76794,976,605
Book value per share$29.71 $29.58 $29.45 $28.79 $29.01 
Less: intangible book value per share9.91 9.96 10.07 10.11 10.15 
Tangible book value per share$19.79 $19.61 $19.38 $18.68 $18.86 

26

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 and amortization of intangible assets, where applicable, to the sum of net interest income before provision for credit losses and total noninterest income, less net gain (loss) from sales of investment securities and net gain from other real estate owned. 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)202320232022
Total noninterest expense$100,644 $101,352 $98,974 
Less: amortization of intangible assets3,055 3,171 3,479 
Less: other real estate owned operations, net8 108 — 
Noninterest expense, adjusted$97,581 $98,073 $95,495 
Net interest income before provision for credit losses$160,092 $168,610 $172,765 
Add: total noninterest income20,539 21,186 22,193 
Less: net gain (loss) from sales of investment securities— 138 (31)
Less: net gain from other real estate owned106 — — 
Revenue, adjusted$180,525 $189,658 $194,989 
Efficiency ratio54.1 %51.7 %49.0 %



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)202320232022
Total deposits interest expense$53,580 $40,234 $2,682 
Less: certificates of deposit interest expense10,306 7,775 607 
Less: brokered certificates of deposit interest expense18,869 13,056 326 
Non-maturity deposit expense$24,405 $19,403 $1,749 
Total average deposits$16,876,251 $17,324,442 $17,752,727 
Less: average certificates of deposit1,286,160 1,206,966 922,784 
Less: average brokered certificates of deposit1,767,970 1,443,783 80,182 
Average non-maturity deposits$13,822,121 $14,673,693 $16,749,761 
Cost of non-maturity deposits0.71 %0.54 %0.04 %
27