EX-99.1 2 ppbi_exx991xearnings-2022x.htm EX-99.1 Document

Exhibit 99.1

Pacific Premier Bancorp, Inc. Announces First Quarter 2022 Financial Results and a Quarterly Cash Dividend of $0.33 Per Share

First Quarter 2022 Summary
 
•Net income of $66.9 million, or $0.70 per diluted share
•Return on average assets of 1.28%, return on average equity of 9.34%, and return on average tangible common equity of 14.66%(1)
•Diversified loan growth of $438.6 million, or 12.3% annualized
•Deposit growth of $573.6 million, or 13.4% annualized
•Net interest margin of 3.41%, and core net interest margin of 3.33%(1)
•Cost of deposits remained unchanged at 0.04%
•Noninterest-bearing deposits increased to 40.2% of total deposits
•Nonperforming assets to total assets of 0.26%, and classified assets to total assets of 0.57%

Irvine, Calif., April 26, 2022 -- Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company” or “Pacific Premier”), the holding company of Pacific Premier Bank (the “Bank”), reported net income of $66.9 million, or $0.70 per diluted share, for the first quarter of 2022, compared with net income of $84.8 million, or $0.89 per diluted share, for the fourth quarter of 2021, and net income of $68.7 million, or $0.72 per diluted share, for the first quarter of 2021.
    
For the quarter ended March 31, 2022, the Company’s return on average assets (“ROAA”) was 1.28%, return on average equity (“ROAE”) was 9.34%, and return on average tangible common equity (“ROATCE”)(1) was 14.66%, compared to 1.63%, 11.90%, and 18.66%, respectively, for the fourth quarter of 2021, and 1.37%, 9.99%, and 16.21%, respectively, for the first quarter of 2021. Total assets increased to $21.62 billion at March 31, 2022, compared to $21.09 billion at December 31, 2021, and $20.17 billion at March 31, 2021.

Steven R. Gardner, Chairman, President, and Chief Executive Officer of the Company, commented, “We delivered a high level of performance in the first quarter driven by strong loan and deposit production. The first quarter's results reflect the success of our technology-driven growth strategy that enhances our new business development efforts, provides a superior banking experience for clients, and optimizes efficiencies and collaboration throughout the organization.

“We generated $1.46 billion in new loan commitments during the first quarter with well-balanced contributions coming from all of our major areas of lending. We also saw positive trends with commercial lines of credit utilization rates increasing in the first quarter. The combination of our strong loan production, increases in line utilization, and slower prepayments resulted in 12.3% annualized loan growth, which we funded with solid inflows of low-cost deposits, which grew 13.4% annualized.

“As always, we continue to prioritize risk management and maintain appropriate levels of capital, liquidity, and reserves in order to effectively manage through the challenges that may arise in connection with higher interest rates, inflationary pressures, and geopolitical uncertainty. During the quarter, we took a number of actions to position the balance sheet for higher interest rates, including reducing the size and duration of the available-for-sale securities portfolio, increasing our liquidity position, and enhancing our asset sensitivity. The strength of the organization we have built and our proactive approach to risk management has enabled us to capitalize on opportunities that arise in stressed environments. We are well positioned to continue to execute our proven business model by effectively managing risk, while growing the franchise both organically and through accretive acquisitions.”
(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
 March 31,December 31,March 31,
(Dollars in thousands, except per share data)202220212021
Financial highlights (unaudited)
Net income$66,904 $84,831 $68,668 
Diluted earnings per share0.70 0.89 0.72 
Common equity dividend per share paid0.33 0.33 0.30 
Return on average assets1.28 %1.63 %1.37 %
Return on average equity9.34 11.90 9.99 
Return on average tangible common equity (1)
14.66 18.66 16.21 
Pre-provision net revenue on average assets (1)
1.72 1.93 1.86 
Net interest margin3.41 3.53 3.55 
Core net interest margin (1)
3.33 3.38 3.30 
Cost of deposits0.04 0.04 0.11 
Efficiency ratio (1)
50.7 48.0 48.6 
Noninterest expense (excluding merger-related expense) as a percent of average assets (1)
1.86 %1.86 %1.85 %
Total assets$21,622,296 $21,094,429 $20,173,298 
Total deposits17,689,223 17,115,589 16,740,007 
Loan-to-deposit ratio83.4 %83.6 %78.4 %
Non-maturity deposits as a percent of total deposits94.2 93.8 91.8 
Book value per share$29.31 $30.58 $28.56 
Tangible book value per share (1)
19.12 20.29 18.19 
Total capital ratio14.37 %14.62 %16.26 %
______________________________
(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 $161.8 million in the first quarter of 2022, a decrease of $8.9 million, or 5.2%, from the fourth quarter of 2021. The decrease in net interest income was primarily attributable to lower loan related-fees and lower accretion income as a result of slowing prepayment activity, two fewer days of interest, and lower average investment and loan yields, partially offset by an increase in average earning assets and a favorable remix towards higher yielding loans.

The net interest margin for the first quarter of 2022 was 3.41%, compared with 3.53% in the prior quarter. The core net interest margin(1), which excludes the impact of loan accretion income and other adjustments, decreased 5 basis points to 3.33%, compared to 3.38% in the prior quarter, reflecting lower loan prepayment fees and lower average investment and loan yields, partially offset by the favorable shift in average earning-asset mix.

Net interest income for the first quarter of 2022 increased $187,000, or 0.1%, compared to the first quarter of 2021. The increase was attributable to higher average loan and investment balances, lower cost of funds, primarily due to an improved deposit mix from an $894.6 million increase in average noninterest-bearing checking, and redemptions of higher-cost subordinated debentures, partially offset by lower average interest-earning asset yields.
______________________________
(1) Reconciliations of the non-GAAP measures are set forth at the end of this press release.
2


PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
(Unaudited)
 Three Months Ended
 March 31, 2022December 31, 2021March 31, 2021
(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$322,236 $90 0.11 %$334,371 $66 0.08 %$1,309,366 $301 0.09 %
Investment securities4,546,408 17,852 1.57 4,833,251 19,522 1.62 4,087,451 17,468 1.71 
Loans receivable, net (1) (2)
14,371,588 150,604 4.25 14,005,836 157,418 4.46 13,093,609 155,225 4.81 
Total interest-earning assets$19,240,232 $168,546 3.55 $19,173,458 $177,006 3.66 $18,490,426 $172,994 3.79 
Liabilities
Interest-bearing deposits$10,351,434 $1,673 0.07 $10,471,426 $1,694 0.06 $10,420,199 $4,426 0.17 
Borrowings555,879 5,034 3.63 400,014 4,593 4.59 523,565 6,916 5.36 
Total interest-bearing liabilities$10,907,313 $6,707 0.25 $10,871,440 $6,287 0.23 $10,943,764 $11,342 0.42 
Noninterest-bearing deposits$6,928,872 $6,911,702 $6,034,319 
Net interest income$161,839 $170,719 $161,652 
Net interest margin (3)
  3.41 3.53 3.55 
Cost of deposits (4)
0.04 0.04 0.11 
Cost of funds (5)
0.15 0.14 0.27 
Ratio of interest-earning assets to interest-bearing liabilities176.40 176.37 168.96 
____________________________________
(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 $5.9 million, $7.9 million, and $9.9 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 first quarter of 2022, the Company recorded a $448,000 provision expense, compared to a $14.6 million provision recapture for the fourth quarter of 2021, and a $2.0 million provision expense for the first quarter of 2021. The provision expense for the first quarter of 2022 was reflective of higher loans held for investment as well as the impact of growing uncertainties in the macroeconomic environment.

Three Months Ended
March 31,December 31,March 31,
(Dollars in thousands)202220212021
Provision for credit losses
Provision for loan losses$211 $(14,710)$315 
Provision for unfunded commitments218 51 1,659 
Provision for held-to-maturity securities19 11 — 
Total provision for credit losses$448 $(14,648)$1,974 

3

Noninterest Income
 
Noninterest income for the first quarter of 2022 was $25.9 million, a decrease of $1.4 million from the fourth quarter of 2021. The decrease was primarily due to a $1.5 million decrease in net gain from sales of investment securities and a $560,000 decrease in escrow and exchange fees due to lower transaction volume, partially offset by an $814,000 increase in other income, which included $530,000 higher CRA investment income.

During the first quarter of 2022, the Bank sold $17.8 million of Small Business Administration (“SBA”) loans for a net gain of $1.5 million, compared to the sales of $13.3 million of SBA loans for a net gain of $1.3 million in the fourth quarter of 2021.

Additionally, during the first quarter of 2022, the Bank sold $658.5 million of investment securities for a net gain of $2.1 million, compared to the sales of $267.1 million of investment securities for a net gain of $3.6 million in the fourth quarter of 2021.

Noninterest income for the first quarter of 2022 increased $2.2 million, or 9.1%, compared to the first quarter of 2021. The increase was primarily due to a $4.4 million increase in Trust custodial account fees.


Three Months Ended
March 31,December 31,March 31,
(Dollars in thousands)202220212021
Noninterest income
Loan servicing income$419 $505 $458 
Service charges on deposit accounts2,615 2,590 2,032 
Other service fee income367 391 473 
Debit card interchange fee income836 769 787 
Earnings on bank owned life insurance3,221 3,521 2,233 
Net gain from sales of loans1,494 1,334 361 
Net gain from sales of investment securities2,134 3,585 4,046 
Trust custodial account fees
11,579 11,611 7,222 
Escrow and exchange fees1,661 2,221 1,526 
Other income1,568 754 4,602 
Total noninterest income$25,894 $27,281 $23,740 
4

 Noninterest Expense
 
Noninterest expense totaled $97.6 million for the first quarter of 2022, an increase of $396,000 compared to the fourth quarter of 2021, primarily driven by a $990,000 increase in other expense and a $905,000 increase in compensation and benefits.

Noninterest expense increased by $5.2 million compared to the first quarter of 2021. The increase was primarily due to a $4.4 million increase in compensation and benefits.

Three Months Ended
March 31,December 31,March 31,
(Dollars in thousands)202220212021
Noninterest expense
Compensation and benefits$56,981 $56,076 $52,548 
Premises and occupancy11,952 11,403 11,980 
Data processing5,996 5,881 5,828 
FDIC insurance premiums1,396 1,389 1,181 
Legal and professional services4,068 5,870 3,935 
Marketing expense1,809 1,821 1,598 
Office expense1,203 1,463 1,829 
Loan expense1,134 857 1,115 
Deposit expense3,751 3,836 3,859 
Merger-related expense— — 5 
Amortization of intangible assets3,592 3,880 4,143 
Other expense5,766 4,776 4,468 
Total noninterest expense$97,648 $97,252 $92,489 

Income Tax

For the first quarter of 2022, our income tax expense totaled $22.7 million, resulting in an effective tax rate of 25.4%, compared with income tax expense of $30.6 million and an effective tax rate of 26.5% for the fourth quarter of 2021, and income tax expense of $22.3 million and an effective tax rate of 24.5% for the first quarter of 2021. Our estimated effective tax rate for the full year is expected to be in the range of 26% to 27%.


5

BALANCE SHEET HIGHLIGHTS
    
Loans

Loans held for investment totaled $14.73 billion at March 31, 2022, an increase of $437.9 million, or 3.1%, from December 31, 2021, and an increase of $1.62 billion, or 12.3%, from March 31, 2021. The increase from December 31, 2021 was primarily driven by loan fundings, higher commercial line utilization rates, and lower levels of prepayments and maturities. Commercial line utilization rates increased to an average of 39.5% for the first quarter of 2022, compared to an average of 35.2% for the fourth quarter of 2021 and 34.1% for the first quarter of 2021.

During the first quarter of 2022, loan commitments totaled $1.46 billion and new loan fundings totaled $1.06 billion, compared with $1.48 billion in loan commitments and $1.07 billion in new loan fundings for the fourth quarter of 2021, and $1.15 billion in loan commitments and $746.3 million in new loan fundings for the first quarter of 2021. The year-over-year increase in new loan fundings was primarily due to expansion in our multifamily, commercial real estate owner-occupied, and commercial and industrial (“C&I”) loan segments.
 
At March 31, 2022, the total loan-to-deposit ratio was 83.4%, compared with 83.6% and 78.4% at December 31, 2021 and March 31, 2021, 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
March 31,December 31,March 31,
(Dollars in thousands)202220212021
Beginning loan balance$14,306,766 $13,990,961 $13,237,034 
New commitments1,461,992 1,479,445 1,153,345 
Unfunded new commitments(399,235)(408,963)(407,047)
Net new fundings1,062,757 1,070,482 746,298 
Amortization/maturities/payoffs(786,700)(935,064)(773,170)
Net draws on existing lines of credit182,868 194,548 (82,472)
Loan sales(17,991)(13,427)(1,035)
Charge-offs(2,299)(734)(1,952)
Net increase (decrease)438,635 315,805 (112,331)
Ending loan balance$14,745,401 $14,306,766 $13,124,703 

6

The following table presents the composition of the loan portfolio as of the dates indicated:
March 31,December 31,March 31,
(Dollars in thousands)202220212021
Investor loans secured by real estate
Commercial real estate (“CRE”) non-owner-occupied$2,774,650 $2,771,137 $2,729,785 
Multifamily6,041,085 5,891,934 5,309,592 
Construction and land303,811 277,640 316,458 
SBA secured by real estate (1)
42,642 46,917 56,381 
Total investor loans secured by real estate9,162,188 8,987,628 8,412,216 
Business loans secured by real estate (2)
CRE owner-occupied2,391,984 2,251,014 2,029,984 
Franchise real estate secured384,267 380,381 340,805 
SBA secured by real estate (3)
68,466 69,184 73,967 
Total business loans secured by real estate2,844,717 2,700,579 2,444,756 
Commercial loans (4)
Commercial and industrial2,242,632 2,103,112 1,656,098 
Franchise non-real estate secured388,322 392,576 399,041 
SBA non-real estate secured10,761 11,045 14,908 
Total commercial loans2,641,715 2,506,733 2,070,047 
Retail loans
Single family residential (5)
79,978 95,292 184,049 
Consumer5,157 5,665 6,324 
Total retail loans85,135 100,957 190,373 
Gross loans held for investment (6)
14,733,755 14,295,897 13,117,392 
Allowance for credit losses for loans held for investment(197,517)(197,752)(266,999)
Loans held for investment, net$14,536,238 $14,098,145 $12,850,393 
Total unfunded loan commitments$2,940,370 $2,507,911 $2,243,650 
Loans held for sale, at lower of cost or fair value$11,646 $10,869 $7,311 
______________________________
(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 $71.2 million, $77.1 million, and $103.9 million as of March 31, 2022, December 31, 2021, and March 31, 2021, respectively.


The total end-of-period weighted average interest rate on loans, excluding fees and discounts, at March 31, 2022 was 3.92%, compared to 3.95% at December 31, 2021, and 4.21% at March 31, 2021. The quarter-over-quarter and year-over-year decreases reflect the continued impact from lower levels of prepayments of higher rate loans and lower rates on new originations.

7

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

Three Months Ended
March 31,December 31,March 31,
(Dollars in thousands)202220212021
Investor loans secured by real estate
CRE non-owner-occupied$153,845 $94,740 $128,408 
Multifamily454,652 552,600 407,156 
Construction and land213,206 94,343 94,124 
SBA secured by real estate (1)
7,775 — — 
Total investor loans secured by real estate829,478 741,683 629,688 
Business loans secured by real estate (2)
CRE owner-occupied246,405 147,322 110,353 
Franchise real estate secured21,060 52,034 24,429 
SBA secured by real estate (3)
9,378 15,631 4,101 
Total business loans secured by real estate276,843 214,987 138,883 
Commercial loans (4)
Commercial and industrial317,728 469,018 352,530 
Franchise non-real estate secured28,090 43,219 17,647 
SBA non-real estate secured3,543 3,500 686 
Total commercial loans349,361 515,737 370,863 
Retail loans
Single family residential (5)
6,310 6,800 13,353 
Consumer— 238 558 
Total retail loans6,310 7,038 13,911 
Total loan commitments$1,461,992 $1,479,445 $1,153,345 
______________________________
(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 3.55% in the first quarter of 2022, compared to 3.55% in the fourth quarter of 2021, and 3.63% in the first quarter of 2021.

Asset Quality and Allowance for Credit Losses
 
At March 31, 2022, our allowance for credit losses (“ACL”) on loans held for investment was $197.5 million, a decrease of $235,000 from December 31, 2021, and a decrease of $69.5 million from March 31, 2021. The ACL as of March 31, 2022 was reflective of higher loans held for investment as well as the impact of growing uncertainties in the macroeconomic environment. The decrease in ACL from March 31, 2021 was primarily due to favorable changes in the macroeconomic forecasts employed in the Company's current expected credit losses (“CECL”) model related to the COVID-19 pandemic.

During the first quarter of 2022, the Company incurred $446,000 of net charge-offs, compared to $1.0 million of net recoveries during the fourth quarter of 2021 and $1.3 million of net charge-offs during the first quarter of 2021.

8

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 March 31, 2022
(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$37,380 $— $— $(1,406)$35,974 
Multifamily55,209 — — (884)54,325 
Construction and land5,211 — — 8 5,219 
SBA secured by real estate (1)
3,201 (70)— (81)3,050 
Business loans secured by real estate (2)
CRE owner-occupied29,575 — 10 2,306 31,891 
Franchise real estate secured7,985 — — (8)7,977 
SBA secured by real estate (3)
4,866 — — 329 5,195 
Commercial loans (4)
Commercial and industrial38,136 (2,179)1,841 800 38,598 
Franchise non-real estate secured15,084 — — (780)14,304 
SBA non-real estate secured565 (50)2 (27)490 
Retail loans
Single family residential (5)
255 — — (22)233 
Consumer loans285 — — (24)261 
Totals$197,752 $(2,299)$1,853 $211 $197,517 
______________________________
(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 March 31, 2022 was 1.34%, compared to 1.38% at December 31, 2021 and 2.04% at March 31, 2021. The fair value net discount on loans acquired through total bank acquisitions was $71.2 million, or 0.48% of total loans held for investment, as of March 31, 2022, compared to $77.1 million, or 0.54% of total loans held for investment, as of December 31, 2021, and $103.9 million, or 0.79% of total loans held for investment, as of March 31, 2021.

Nonperforming assets totaled $55.3 million, or 0.26% of total assets, at March 31, 2022, compared with $31.3 million, or 0.15% of total assets, at December 31, 2021, and $38.9 million, or 0.19% of total assets, at March 31, 2021. Total loan delinquencies were $43.7 million, or 0.30% of loans held for investment, at March 31, 2022, compared to $19.5 million, or 0.14% of loans held for investment, at December 31, 2021, and $22.6 million, or 0.17% of loans held for investment, at March 31, 2021. The quarter-over-quarter and year-over-year increase in nonperforming assets and loan delinquencies was primarily due to the addition of a single C&I relationship totaling $25.3 million at March 31, 2022.

Classified loans totaled $122.5 million, or 0.83% of loans held for investment, at March 31, 2022, compared with $121.8 million, or 0.85% of loans held for investment, at December 31, 2021, and $134.7 million, or 1.03% of loans held for investment, at March 31, 2021.


9

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. At March 31, 2022, there was a CRE owner-occupied loan of $1.8 million in default for more than 90 days and still accruing interest, pending a legal proceeding with repayment reasonably expected. There were $16.9 million of troubled debt restructured loans at March 31, 2022, compared with $17.3 million at December 31, 2021, and no troubled debt restructured loans at March 31, 2021.


 March 31,December 31,March 31,
(Dollars in thousands)202220212021
Asset quality
Nonperforming loans$55,309 $31,273 $38,909 
Other real estate owned— — — 
Nonperforming assets$55,309 $31,273 $38,909 
Total classified assets (1)
$122,528 $121,827 $134,667 
Allowance for credit losses197,517 197,752 266,999 
Allowance for credit losses as a percent of total nonperforming loans357 %632 %686 %
Nonperforming loans as a percent of loans held for investment0.38 0.22 0.30 
Nonperforming assets as a percent of total assets0.26 0.15 0.19 
Classified loans to total loans held for investment0.83 0.85 1.03 
Classified assets to total assets0.57 0.58 0.67 
Net loan charge-offs (recoveries) for the quarter ended$446 $(981)$1,334 
Net loan charge-offs (recoveries) for the quarter to average total loans— %(0.01)%0.01 %
Allowance for credit losses to loans held for investment (2)
1.34 1.38 2.04 
Delinquent loans  
30 - 59 days$25,332 $1,395 $13,116 
60 - 89 days74 — 61 
90+ days18,245 18,100 9,410 
Total delinquency$43,651 $19,495 $22,587 
Delinquency as a percentage of loans held for investment0.30 %0.14 %0.17 %
______________________________
(1) Includes substandard loans and other real estate owned.
(2) At March 31, 2022, 32% of loans held for investment include a fair value net discount of $71.2 million, or 0.48% of loans held for investment. 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 March 31, 2021, 51% of loans held for investment include a fair value net discount of $103.9 million, or 0.79% of loans held for investment.

10

Investment Securities

At March 31, 2022, available-for-sale (“AFS”) and held-to-maturity (“HTM”) investment securities were $3.22 billion and $996.4 million, respectively, compared to $4.27 billion and $381.7 million, respectively, at December 31, 2021. During the first quarter of 2022, the Company reassessed classification of certain investments with longer duration and transferred a total of $386.8 million of municipal bonds and $255.0 million of mortgage-backed securities, both of which the Company intends and has the ability to hold to maturity, from AFS to HTM at fair value.

In total, investment securities were $4.22 billion at March 31, 2022, a decrease of $437.1 million from December 31, 2021, and an increase of $339.2 million from March 31, 2021. The decrease in the first quarter of 2022 compared to the prior quarter was primarily the result of $658.5 million in investment securities sales, $109.3 million in principal payments, discounts from the AFS securities transferred to HTM, amortizations, and redemptions, as well as a $168.1 million decrease in mark-to-market fair value adjustment, partially offset by $498.9 million in investment securities purchases.

The increase in investment securities from March 31, 2021 was primarily the result of $2.40 billion in purchases, partially offset by $1.37 billion in sales, $542.9 million in principal payments, amortization, and redemptions, and a $151.5 million decrease in mark-to-market fair value adjustment.

Deposits

At March 31, 2022, deposits totaled $17.69 billion, an increase of $573.6 million, or 3.4%, from December 31, 2021, and an increase of $949.2 million, or 5.7%, from March 31, 2021. At March 31, 2022, non-maturity deposits totaled $16.66 billion, or 94.2% of total deposits, an increase of $600.9 million, or 3.7%, from December 31, 2021, and an increase of $1.29 billion, or 8.4%, from March 31, 2021. During the first quarter of 2022, deposit increases included $349.3 million in noninterest-bearing checking deposits, $185.7 million in interest-bearing checking deposits, and $65.9 million in money market and savings deposits, partially offset by a planned decrease of $27.3 million in retail certificates of deposits, as compared to the fourth quarter of 2021. The increase in deposits from March 31, 2021 was primarily driven by an increase in business checking deposits, partially offset by decreases in certificates of deposit and money market/savings deposits.

The weighted average cost of deposits for the first quarter of 2022 remained unchanged at 0.04%, compared to the fourth quarter of 2021, and decreased from 0.11% for the first quarter of 2021.

The end of period weighted average rate of deposits at March 31, 2022 was 0.04%.

11

 March 31,December 31,March 31,
(Dollars in thousands)202220212021
Deposit accounts
Noninterest-bearing checking$7,106,548 $6,757,259 $6,302,703 
Interest-bearing:
Checking3,679,067 3,493,331 3,155,071 
Money market/savings5,872,597 5,806,726 5,911,417 
Retail certificates of deposit1,031,011 1,058,273 1,353,431 
Wholesale/brokered certificates of deposit— — 17,385 
Total interest-bearing10,582,675 10,358,330 10,437,304 
Total deposits$17,689,223 $17,115,589 $16,740,007 
Cost of deposits0.04 %0.04 %0.11 %
Noninterest-bearing deposits as a percent of total deposits40.2 39.5 37.7 
Non-maturity deposits as a percent of total deposits94.2 93.8 91.8 
Core deposits as a percent of total deposits (1)
97.3 97.1 96.2 
______________________________
(1) Core deposits are all transaction accounts and non-brokered certificates of deposit less than $250,000.

Borrowings

At March 31, 2022, total borrowings amounted to $930.7 million, an increase of $42.2 million from December 31, 2021, and an increase of $419.1 million from March 31, 2021. Total borrowings at March 31, 2022 were comprised of $600.0 million of Federal Home Loan Bank of San Francisco (“FHLB”) advances and $330.7 million of subordinated debt. The increase in borrowings at March 31, 2022 as compared to December 31, 2021 was primarily due to an increase of $600.0 million in FHLB term advances, offset by repayment of $550.0 million in FHLB overnight advances and $8.0 million in other short-term borrowings. The increase in borrowings at March 31, 2022 as compared to March 31, 2021 was primarily due to an increase of $590.0 million in FHLB advances, partially offset by redemptions of $160.0 million in subordinated notes and $10.4 million junior subordinated debt securities. At March 31, 2022, total borrowings represented 4.3% of total assets, compared to 4.2% and 2.5% as of December 31, 2021 and March 31, 2021, respectively.

Capital Ratios

At March 31, 2022, our common stockholder's equity was $2.78 billion, or 12.87% of total assets, compared with $2.89 billion, or 13.68%, at December 31, 2021, and $2.70 billion, or 13.40%, at March 31, 2021, with a book value per share of $29.31, compared with $30.58 at December 31, 2021, and $28.56 at March 31, 2021. At March 31, 2022, our ratio of tangible common equity to tangible assets(1) was 8.79%, compared with 9.52% at December 31, 2021, and 8.97% at March 31, 2021, and our tangible book value per share(1) was $19.12, compared with $20.29 at December 31, 2021, and $18.19 at March 31, 2021. The decreases in the ratio of tangible common equity to tangible assets and tangible book value per share at March 31, 2022 from the prior quarter were primarily driven by the other comprehensive loss from the impact of higher interest rates on our AFS securities portfolio.






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

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. Beginning the first quarter of March 31, 2022, the Company phases into regulatory capital the cumulative adjustments at the end of the second year of the transition period at 25% per year. At March 31, 2022, 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 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.

March 31,December 31,March 31,
Capital ratios202220212021
Pacific Premier Bancorp, Inc. Consolidated   
Tier 1 leverage ratio10.10 %10.08 %9.66 %
Common equity tier 1 capital ratio11.80 12.11 12.05 
Tier 1 capital ratio11.80 12.11 12.05 
Total capital ratio14.37 14.62 16.26 
Tangible common equity ratio (1)
8.79 9.52 8.97 
Pacific Premier Bank
Tier 1 leverage ratio11.66 %11.62 %11.13 %
Common equity tier 1 capital ratio13.61 13.96 13.90 
Tier 1 capital ratio13.61 13.96 13.90 
Total capital ratio14.47 14.70 15.92 
Share data   
Book value per share$29.31 $30.58 $28.56 
Tangible book value per share (1)
19.12 20.29 18.19 
Common equity dividends declared per share0.33 0.33 0.30 
Closing stock price (2)
35.35 40.03 43.44 
Shares issued and outstanding94,945,849 94,389,543 94,644,415 
Market capitalization (2)(3)
$3,356,336 $3,778,413 $4,111,353 
______________________________
(1) Reconciliations of the non-GAAP measures are set forth at the end of this press release.
(2) As of the last trading day prior to period end.
(3) Dollars in thousands.

Dividend and Stock Repurchase Program

On April 22, 2022, the Company's Board of Directors declared a $0.33 per share dividend, payable on May 13, 2022 to stockholders of record as of May 6, 2022. 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 first quarter of 2022, the Company did not repurchase any shares of common stock.





13

Conference Call and Webcast

The Company will host a conference call at 9:00 a.m. PT / 12:00 p.m. ET on April 26, 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 (866) 290-5977 and asking to be joined to the Pacific Premier Bancorp conference call. Additionally, a telephone replay will be made available through May 3, 2022, at (877) 344-7529, conference ID 5702244.

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 over $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 $18 billion of assets under custody and over 42,000 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
14

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 related uncertainty as well as the risk and costs related to our adoption of 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, including the war between Russia and Ukraine, 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; 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 2021 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, 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

15

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
 March 31,December 31,September 30,June 30,March 31,
(Dollars in thousands)20222021202120212021
ASSETS
Cash and cash equivalents$809,259 $304,703 $322,320 $631,888 $1,554,668 
Interest-bearing time deposits with financial institutions2,216 2,216 2,708 2,708 2,708 
Investments held-to-maturity, at amortized cost, net of allowance for credit losses 996,382 381,674 170,576 18,933 21,931 
Investment securities available-for-sale, at fair value3,222,095 4,273,864 4,709,815 4,487,447 3,857,337 
FHLB, FRB, and other stock, at cost116,973 117,538 118,399 117,738 117,843 
Loans held for sale, at lower of amortized cost or fair value11,646 10,869 8,100 4,714 7,311 
Loans held for investment14,733,755 14,295,897 13,982,861 13,594,598 13,117,392 
Allowance for credit losses(197,517)(197,752)(211,481)(232,774)(266,999)
Loans held for investment, net14,536,238 14,098,145 13,771,380 13,361,824 12,850,393 
Accrued interest receivable60,922 65,728 63,228 67,529 65,098 
Premises and equipment70,453 71,908 72,850 73,821 76,329 
Deferred income taxes, net133,938 87,344 83,432 81,741 104,450 
Bank owned life insurance451,968 449,353 447,135 444,645 292,932 
Intangible assets65,978 69,571 73,451 77,363 81,364 
Goodwill901,312 901,312 901,312 901,312 900,204 
Other assets242,916 260,204 260,505 257,823 240,730 
Total assets$21,622,296 $21,094,429 $21,005,211 $20,529,486 $20,173,298 
LIABILITIES  
Deposit accounts:  
Noninterest-bearing checking$7,106,548 $6,757,259 $6,841,495 $6,768,384 $6,302,703 
Interest-bearing:
Checking3,679,067 3,493,331 3,477,902 3,103,343 3,155,071 
Money market/savings5,872,597 5,806,726 6,037,532 5,883,672 5,911,417 
Retail certificates of deposit1,031,011 1,058,273 1,113,070 1,259,698 1,353,431 
Wholesale/brokered certificates of deposit— — — — 17,385 
Total interest-bearing10,582,675 10,358,330 10,628,504 10,246,713 10,437,304 
Total deposits17,689,223 17,115,589 17,469,999 17,015,097 16,740,007 
FHLB advances and other borrowings600,000 558,000 150,000 — 10,000 
Subordinated debentures330,726 330,567 330,408 476,622 501,611 
Accrued expenses and other liabilities219,329 203,962 216,688 224,348 218,582 
Total liabilities18,839,278 18,208,118 18,167,095 17,716,067 17,470,200 
STOCKHOLDERS’ EQUITY     
Common stock933 929 929 931 931 
Additional paid-in capital2,348,727 2,351,294 2,347,626 2,352,112 2,348,445 
Retained earnings577,591 541,950 488,385 433,852 368,911 
Accumulated other comprehensive (loss) income(144,233)(7,862)1,176 26,524 (15,189)
Total stockholders' equity2,783,018 2,886,311 2,838,116 2,813,419 2,703,098 
Total liabilities and stockholders' equity$21,622,296 $21,094,429 $21,005,211 $20,529,486 $20,173,298 
16

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three Months Ended
 March 31,December 31,March 31,
(Dollars in thousands, except per share data)202220212021
INTEREST INCOME   
Loans$150,604 $157,418 $155,225 
Investment securities and other interest-earning assets17,942 19,588 17,769 
Total interest income168,546 177,006 172,994 
INTEREST EXPENSE
Deposits1,673 1,694 4,426 
FHLB advances and other borrowings474 33 65 
Subordinated debentures4,560 4,560 6,851 
Total interest expense6,707 6,287 11,342 
Net interest income before provision for credit losses161,839 170,719 161,652 
Provision for credit losses448 (14,648)1,974 
Net interest income after provision for credit losses161,391 185,367 159,678 
NONINTEREST INCOME
Loan servicing income419 505 458 
Service charges on deposit accounts2,615 2,590 2,032 
Other service fee income367 391 473 
Debit card interchange fee income836 769 787 
Earnings on bank owned life insurance3,221 3,521 2,233 
Net gain from sales of loans1,494 1,334 361 
Net gain from sales of investment securities2,134 3,585 4,046 
Trust custodial account fees
11,579 11,611 7,222 
Escrow and exchange fees1,661 2,221 1,526 
Other income1,568 754 4,602 
Total noninterest income25,894 27,281 23,740 
NONINTEREST EXPENSE
Compensation and benefits56,981 56,076 52,548 
Premises and occupancy11,952 11,403 11,980 
Data processing5,996 5,881 5,828 
FDIC insurance premiums1,396 1,389 1,181 
Legal and professional services4,068 5,870 3,935 
Marketing expense1,809 1,821 1,598 
Office expense1,203 1,463 1,829 
Loan expense1,134 857 1,115 
Deposit expense3,751 3,836 3,859 
Merger-related expense— — 5 
Amortization of intangible assets3,592 3,880 4,143 
Other expense5,766 4,776 4,468 
Total noninterest expense97,648 97,252 92,489 
Net income before income taxes89,637 115,396 90,929 
Income tax22,733 30,565 22,261 
Net income$66,904 $84,831 $68,668 
EARNINGS PER SHARE
Basic$0.71 $0.90 $0.73 
Diluted$0.70 $0.89 $0.72 
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic93,499,695 93,415,304 93,529,147 
Diluted93,946,074 93,906,491 94,093,644 
17

SELECTED FINANCIAL DATA

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
(Unaudited)
 
 Three Months Ended
 March 31, 2022December 31, 2021March 31, 2021
(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$322,236 $90 0.11 %$334,371 $66 0.08 %$1,309,366 $301 0.09 %
Investment securities4,546,408 17,852 1.57 4,833,251 19,522 1.62 4,087,451 17,468 1.71 
Loans receivable, net (1)(2)
14,371,588 150,604 4.25 14,005,836 157,418 4.46 13,093,609 155,225 4.81 
Total interest-earning assets19,240,232 168,546 3.55 19,173,458 177,006 3.66 18,490,426 172,994 3.79 
Noninterest-earning assets1,716,559 1,693,547 1,503,834 
Total assets$20,956,791 $20,867,005 $19,994,260 
Liabilities and equity
Interest-bearing deposits:
Interest checking$3,537,824 $229 0.03 %$3,501,323 $225 0.03 %$3,060,055 $419 0.06 %
Money market5,343,973 888 0.07 5,467,559 925 0.07 5,447,909 2,588 0.19 
Savings422,186 26 0.02 418,218 27 0.03 368,288 82 0.09 
Retail certificates of deposit1,047,451 530 0.21 1,084,326 517 0.19 1,425,093 1,201 0.34 
Wholesale/brokered certificates of deposit— — — — — — 118,854 136 0.46 
Total interest-bearing deposits10,351,434 1,673 0.07 10,471,426 1,694 0.06 10,420,199 4,426 0.17 
FHLB advances and other borrowings225,250 474 0.85 69,538 33 0.19 22,012 65 1.20 
Subordinated debentures330,629 4,560 5.52 330,476 4,560 5.52 501,553 6,851 5.46 
Total borrowings555,879 5,034 3.63 400,014 4,593 4.59 523,565 6,916 5.36 
Total interest-bearing liabilities10,907,313 6,707 0.25 10,871,440 6,287 0.23 10,943,764 11,342 0.42 
Noninterest-bearing deposits6,928,872 6,911,702 6,034,319 
Other liabilities256,219 232,863 266,536 
Total liabilities18,092,404 18,016,005 17,244,619 
Stockholders' equity2,864,387 2,851,000 2,749,641 
Total liabilities and equity$20,956,791 $20,867,005 $19,994,260 
Net interest income$161,839 $170,719 $161,652 
Net interest margin (3)
3.41 %3.53 %3.55 %
Cost of deposits (4)
0.04 0.04 0.11 
Cost of funds (5)
0.15 0.14 0.27 
Ratio of interest-earning assets to interest-bearing liabilities176.40 176.37 168.96 
______________________________
(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 $5.9 million, $7.9 million, and $9.9 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.
18

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
LOAN PORTFOLIO COMPOSITION
(Unaudited)
March 31,December 31,SeptemberJune 30,March 31,
(Dollars in thousands)20222021202120212021
Investor loans secured by real estate
CRE non-owner-occupied$2,774,650 $2,771,137 $2,823,065 $2,810,233 $2,729,785 
Multifamily6,041,085 5,891,934 5,705,666 5,539,464 5,309,592 
Construction and land303,811 277,640 292,815 297,728 316,458 
SBA secured by real estate (1)
42,642 46,917 49,446 53,003 56,381 
Total investor loans secured by real estate9,162,188 8,987,628 8,870,992 8,700,428 8,412,216 
Business loans secured by real estate (2)
CRE owner-occupied2,391,984 2,251,014 2,242,164 2,089,300 2,029,984 
Franchise real estate secured384,267 380,381 354,481 358,120 340,805 
SBA secured by real estate (3)
68,466 69,184 69,937 72,923 73,967 
Total business loans secured by real estate2,844,717 2,700,579 2,666,582 2,520,343 2,444,756 
Commercial loans (4)
Commercial and industrial2,242,632 2,103,112 1,888,870 1,795,144 1,656,098 
Franchise non-real estate secured388,322 392,576 392,950 401,315 399,041 
SBA non-real estate secured10,761 11,045 12,732 13,900 14,908 
Total commercial loans2,641,715 2,506,733 2,294,552 2,210,359 2,070,047 
Retail loans
Single family residential (5)
79,978 95,292 144,309 157,228 184,049 
Consumer5,157 5,665 6,426 6,240 6,324 
Total retail loans85,135 100,957 150,735 163,468 190,373 
Gross loans held for investment (6)
14,733,755 14,295,897 13,982,861 13,594,598 13,117,392 
Allowance for credit losses for loans held for investment(197,517)(197,752)(211,481)(232,774)(266,999)
Loans held for investment, net$14,536,238 $14,098,145 $13,771,380 $13,361,824 $12,850,393 
Loans held for sale, at lower of cost or fair value$11,646 $10,869 $8,100 $4,714 $7,311 
______________________________
(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 $71.2 million, $77.1 million, $85.0 million, $94.4 million, and $103.9 million as of March 31, 2022, December 31, 2021, September 30, 2021, June 30, 2021, and March 31, 2021, respectively.



19

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
ASSET QUALITY INFORMATION
(Unaudited)
 March 31,December 31,September 30,June 30,March 31,
(Dollars in thousands)20222021202120212021
Asset quality
Nonperforming loans$55,309 $31,273 $35,090 $34,387 $38,909 
Other real estate owned— — — — — 
Nonperforming assets$55,309 $31,273 $35,090 $34,387 $38,909 
Total classified assets (1)
$122,528 $121,827 $124,506 $131,350 $134,667 
Allowance for credit losses197,517 197,752 211,481 232,774 266,999 
Allowance for credit losses as a percent of total nonperforming loans357 %632 %603 %677 %686 %
Nonperforming loans as a percent of loans held for investment0.38 0.22 0.25 0.25 0.30 
Nonperforming assets as a percent of total assets0.26 0.15 0.17 0.17 0.19 
Classified loans to total loans held for investment0.83 0.85 0.89 0.97 1.03 
Classified assets to total assets0.57 0.58 0.59 0.64 0.67 
Net loan charge-offs (recoveries) for the quarter ended$446 $(981)$1,750 $1,094 $1,334 
Net loan charge-offs (recoveries) for the quarter to average total loans — %(0.01)%0.01 %0.01 %0.01 %
Allowance for credit losses to loans held for investment (2)
1.34 1.38 1.51 1.71 2.04 
Loans modified under the CARES Act$— $— $— $819 $— 
Loans modified under the CARES Act as a percent of loans held for investment— %— %— %0.01 %— %
Delinquent loans   
30 - 59 days$25,332 $1,395 $728 $207 $13,116 
60 - 89 days74 — 936 83 61 
90+ days18,245 18,100 18,514 19,045 9,410 
Total delinquency$43,651 $19,495 $20,178 $19,335 $22,587 
Delinquency as a percent of loans held for investment0.30 %0.14 %0.14 %0.14 %0.17 %
______________________________
(1) Includes substandard loans and other real estate owned.
(2) At March 31, 2022, 32% of loans held for investment include a fair value net discount of $71.2 million, or 0.48% of loans held for investment. 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 of $103.9 million, or 0.79% of loans held for investment.
20

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
March 31, 2022
Investor loans secured by real estate
CRE non-owner-occupied$10,243 $1,152 $— $— $10,243 $2,627 
SBA secured by real estate (2)
573 — — — 573 573 
Total investor loans secured by real estate10,816 1,152 — — 10,816 3,200 
Business loans secured by real estate (3)
CRE owner-occupied4,901 — — — 4,901 4,901 
SBA secured by real estate (4)
575 — — — 575 575 
Total business loans secured by real estate5,476 — — — 5,476 5,476 
Commercial loans (5)
Commercial and industrial26,588 — — — 26,588 26,588 
Franchise non-real estate secured— — 11,779 — 11,779 11,779 
SBA not secured by real estate642 — — — 642 642 
Total commercial loans27,230 — 11,779 — 39,009 39,009 
Retail loans
Single family residential (6)
8 — — — 8 8 
Total retail loans8 — — — 8 8 
Totals nonaccrual loans$43,530 $1,152 $11,779 $— $55,309 $47,693 
______________________________
(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.



21

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
PAST DUE STATUS
(Unaudited)
Days Past Due
(Dollars in thousands)Current30-5960-8990+Total
March 31, 2022
Investor loans secured by real estate
CRE non-owner-occupied$2,762,632 $— $— $12,018 $2,774,650 
Multifamily6,041,085 — — — 6,041,085 
Construction and land303,811 — — — 303,811 
SBA secured by real estate (1)
42,642 — — — 42,642 
Total investor loans secured by real estate9,150,170 — — 12,018 9,162,188 
Business loans secured by real estate (2)
CRE owner-occupied2,387,083 — — 4,901 2,391,984 
Franchise real estate secured384,267 — — — 384,267 
SBA secured by real estate (3)
68,025 — — 441 68,466 
Total business loans secured by real estate2,839,375 — — 5,342 2,844,717 
Commercial loans (4)
Commercial and industrial2,216,983 25,332 74 243 2,242,632 
Franchise non-real estate secured388,322 — — — 388,322 
SBA not secured by real estate10,119 — — 642 10,761 
Total commercial loans2,615,424 25,332 74 885 2,641,715 
Retail loans
Single family residential (5)
79,978 — — — 79,978 
Consumer loans5,157 — — — 5,157 
Total retail loans85,135 — — — 85,135 
Total loans$14,690,104 $25,332 $74 $18,245 $14,733,755 
______________________________
(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.


22

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CREDIT RISK GRADES
(Unaudited)
 
(Dollars in thousands)PassSpecial
Mention		SubstandardTotal Gross
Loans
March 31, 2022
Investor loans secured by real estate    
CRE non-owner-occupied$2,735,537 $9,878 $29,235 $2,774,650 
Multifamily6,040,325 — 760 6,041,085 
Construction and land303,811 — — 303,811 
SBA secured by real estate (1)
33,789 — 8,853 42,642 
Total investor loans secured by real estate9,113,462 9,878 38,848 9,162,188 
Business loans secured by real estate (2)
CRE owner-occupied2,368,845 764 22,375 2,391,984 
Franchise real estate secured384,267 — — 384,267 
SBA secured by real estate (3)
59,998 — 8,468 68,466 
Total business loans secured by real estate2,813,110 764 30,843 2,844,717 
Commercial loans (4)
   
Commercial and industrial2,209,517 1,011 32,104 2,242,632 
Franchise non-real estate secured369,292 — 19,030 388,322 
SBA not secured by real estate9,042 66 1,653 10,761 
Total commercial loans2,587,851 1,077 52,787 2,641,715 
Retail loans
Single family residential (5)
79,932 — 46 79,978 
Consumer loans5,153 — 4 5,157 
Total retail loans85,085 — 50 85,135 
Total loans$14,599,508 $11,719 $122,528 $14,733,755 
______________________________
(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.


23

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
 March 31,December 31,March 31,
(Dollars in thousands)202220212021
Net income$66,904 $84,831 $68,668 
Plus: amortization of intangible assets expense3,592 3,880 4,143 
Less: amortization of intangible assets expense tax adjustment (1)
1,025 1,107 1,185 
Net income for average tangible common equity69,471 87,604 71,626 
Plus: merger-related expense— — 5 
Less: merger-related expense tax adjustment (1)
— — 1 
Net income for average tangible common equity excluding merger-related expense$69,471 $87,604 $71,630 
Average stockholders' equity$2,864,387 $2,851,000 $2,749,641 
Less: average intangible assets68,157 71,897 83,946 
Less: average goodwill901,312 901,312 898,587 
Average tangible common equity$1,894,918 $1,877,791 $1,767,108 
Return on average equity (annualized)9.34 %11.90 %9.99 %
Return on average tangible common equity (annualized)14.66 %18.66 %16.21 %
Return on average tangible common equity excluding merger-related expense (annualized)14.66 %18.66 %16.21 %
___________________________________________________
(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
 March 31,December 31,March 31,
(Dollars in thousands)202220212021
Net income$66,904 $84,831 $68,668 
Plus: merger-related expense— — 5 
Less: merger-related expense tax adjustment (1)
— — 1 
Net income for average assets excluding merger-related expense$66,904 $84,831 $68,672 
Average assets$20,956,791 $20,867,005 $19,994,260 
Return on average assets (annualized)1.28 %1.63 %1.37 %
Return on average assets excluding merger-related expense (annualized)1.28 %1.63 %1.37 %
____________________________________________
(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 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
March 31,December 31,March 31,
(Dollars in thousands)202220212021
Interest income$168,546 $177,006 $172,994 
Interest expense6,707 6,287 11,342 
Net interest income161,839 170,719 161,652 
Noninterest income25,894 27,281 23,740 
Revenue187,733 198,000 185,392 
Noninterest expense97,648 97,252 92,489 
Add: merger-related expense— — 5 
Pre-provision net revenue90,085 100,748 92,908 
Pre-provision net revenue (annualized)$360,340 $402,992 $371,632 
Average assets$20,956,791 $20,867,005 $19,994,260 
Pre-provision net revenue on average assets0.43 %0.48 %0.46 %
Pre-provision net revenue on average assets (annualized)1.72 %1.93 %1.86 %


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
March 31,December 31,March 31,
(Dollars in thousands)202220212021
Noninterest expense$97,648 $97,252 $92,489 
Less: merger-related expense— — 5 
Noninterest expense excluding merger-related expense$97,648 $97,252 $92,484 
Average assets$20,956,791 $20,867,005 $19,994,260 
Noninterest expense as a percent of average assets (annualized)1.86 %1.86 %1.85 %
Noninterest expense excluding merger-related expense as a percent of average assets (annualized)1.86 %1.86 %1.85 %

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.
 March 31,December 31,September 30,June 30,March 31,
(Dollars in thousands, except per share data)20222021202120212021
Total stockholders' equity$2,783,018 $2,886,311 $2,838,116 $2,813,419 $2,703,098 
Less: intangible assets967,290 970,883 974,763 978,675 981,568 
Tangible common equity$1,815,728 $1,915,428 $1,863,353 $1,834,744 $1,721,530 
Total assets$21,622,296 $21,094,429 $21,005,211 $20,529,486 $20,173,298 
Less: intangible assets967,290 970,883 974,763 978,675 981,568 
Tangible assets$20,655,006 $20,123,546 $20,030,448 $19,550,811 $19,191,730 
Tangible common equity ratio8.79 %9.52 %9.30 %9.38 %8.97 %
Common shares issued and outstanding94,945,84994,389,54394,354,21194,656,57594,644,415
Book value per share$29.31 $30.58 $30.08 $29.72 $28.56 
Less: intangible book value per share10.19 10.29 10.33 10.34 10.37 
Tangible book value per share$19.12 $20.29 $19.75 $19.38 $18.19 
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, and gain (loss) on interest rate contract in fair value hedging relationships 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
March 31,December 31,March 31,
(Dollars in thousands)202220212021
Net interest income$161,839 $170,719 $161,652 
Less: scheduled accretion income2,857 3,097 3,878 
Less: accelerated accretion income3,083 4,770 5,988 
Less: premium amortization on CD96 183 1,751 
Less: nonrecurring nonaccrual interest paid(356)349 (603)
Less: loss on fair value hedging relationships$(1,667)$(819)$— 
Core net interest income$157,826 $163,139 $150,638 
Average interest-earning assets$19,240,232 $19,173,458 $18,490,426 
Net interest margin3.41 %3.53 %3.55 %
Core net interest margin3.33 %3.38 %3.30 %

Efficiency ratio is a non-GAAP financial measure derived from GAAP-based amounts. This figure represents the ratio of noninterest expense, less amortization of intangible assets and 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, 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
March 31,December 31,March 31,
(Dollars in thousands)202220212021
Total noninterest expense$97,648 $97,252 $92,489 
Less: amortization of intangible assets3,592 3,880 4,143 
Less: merger-related expense— — 5 
Noninterest expense, adjusted$94,056 $93,372 $88,341 
Net interest income before provision for credit losses$161,839 $170,719 $161,652 
Add: total noninterest income25,894 27,281 23,740 
Less: net gain from investment securities2,134 3,585 4,046 
Less: other income - security recoveries— 1 2 
Less: net loss from debt extinguishment— — (503)
Revenue, adjusted$185,599 $194,414 $181,847 
Efficiency ratio50.7 %48.0 %48.6 %
24