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

Exhibit 99.1

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

First Quarter 2023 Summary
 
•Net income of $62.6 million, or $0.66 per diluted share
•Return on average assets of 1.15%, return on average equity of 8.87%, and return on average tangible common equity(1) of 13.89%
•Pre-provision net revenue (“PPNR”)(1) to average assets of 1.63%, annualized
•Net interest margin of 3.44%
•Cost of deposits of 0.94%, and cost of core deposits(1) of 0.54%; total deposits decreased $144.6 million, or 0.8%, from the prior quarter
•Nonperforming assets to total assets of 0.14%, and net charge-offs to average loans of 0.02%
•Total risk-based capital ratio of 16.33% and common equity tier 1 capital ratio of 13.54%
•Tangible book value per share(1) increased $0.23 to $19.61 compared to the prior quarter; tangible common equity ratio(1) of 9.20%
•Available liquidity of $10 billion; cash and cash equivalents increased to $1.42 billion and unused borrowing capacity of $8.55 billion at quarter end

Irvine, Calif., April 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 $62.6 million, or $0.66 per diluted share, for the first quarter of 2023, compared with net income of $73.7 million, or $0.77 per diluted share, for the fourth quarter of 2022, and net income of $66.9 million, or $0.70 per diluted share, for the first quarter of 2022.
    
For the quarter ended March 31, 2023, the Company’s return on average assets (“ROAA”) was 1.15%, return on average equity (“ROAE”) was 8.87%, and return on average tangible common equity (“ROATCE”)(1) was 13.89%, compared to 1.36%, 10.71%, and 16.99%, respectively, for the fourth quarter of 2022, and 1.28%, 9.34%, and 14.66%, respectively, for the first quarter of 2022. Total assets were $21.36 billion at March 31, 2023, compared to $21.69 billion at December 31, 2022, and $21.62 billion at March 31, 2022.

Steven R. Gardner, Chairman, Chief Executive Officer, and President of the Company, commented, “Over the years, we have maintained our commitment to growing a diversified commercial client base predicated on a long-term approach to relationship management. We have consistently operated the institution with a prudent approach to credit risk management along with maintaining ample levels of liquidity and an overall conservative view towards capital management. This longstanding discipline permeates our organization and has enabled us to deliver another quarter of solid profitability and returns in a challenging operating environment.

“The strategic actions we have taken over the past year to proactively address rising interest rates have placed us in a position of strength as we continue to guide our organization through the uncertain economic outlook. Successful execution of our strategy has allowed us to build our capital levels to some of the strongest among our peers, which in turn provides us with significant optionality and flexibility. By employing a disciplined approach to the business, we are well-positioned to meet the needs of our clients while maintaining our focus on generating new profitable customer relationships.

“I am grateful for the extraordinary effort our team put forth during a difficult quarter for the benefit of all of our stakeholders, including our clients, communities, employees, and our stockholders. As we look to the near- and medium-term, we are preparing for the possibility of further dislocations in the credit, funding, and capital markets. We will continue to leverage the strength of our balance sheet, liquidity, and capital positions to navigate
(1) Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures are set forth at the end of this press release.
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these headwinds and will prudently take advantage of future opportunities to expand our business, while continuing to create long-term franchise value.”
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FINANCIAL HIGHLIGHTS
Three Months Ended
 March 31,December 31,March 31,
(Dollars in thousands, except per share data)202320222022
Financial highlights (unaudited)
Net income$62,562 $73,673 $66,904 
Net interest income168,610 181,396 161,839 
Diluted earnings per share0.66 0.77 0.70 
Common equity dividend per share paid0.33 0.33 0.33 
Return on average assets1.15 %1.36 %1.28 %
Return on average equity8.87 10.71 9.34 
Return on average tangible common equity (1)
13.89 16.99 14.66 
Pre-provision net revenue to average assets (1)
1.63 1.89 1.72 
Net interest margin3.44 3.61 3.41 
Cost of deposits0.94 0.58 0.04 
Cost of core deposits (1)
0.54 0.31 0.03 
Efficiency ratio (1)
51.7 47.4 50.7 
Noninterest expense as a percent of average assets1.87 1.83 1.86 
Total assets$21,361,564 $21,688,017 $21,622,296 
Total deposits17,207,810 17,352,401 17,689,223 
Non-maturity deposits as a percent of total deposits82.6 %85.6 %94.2 %
Noninterest-bearing deposits as a percent of total deposits36.1 36.3 40.2 
Loan-to-deposit ratio82.4 84.6 83.4 
Book value per share$29.58 $29.45 $29.31 
Tangible book value per share (1)
19.61 19.38 19.12 
Tangible common equity ratio9.20 %8.88 %8.79 %
Total capital ratio16.33 15.53 14.37 
______________________________
(1) Reconciliations of the non-GAAP measures are set forth at the end of this press release.

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INCOME STATEMENT HIGHLIGHTS

Net Interest Income and Net Interest Margin
 
Net interest income totaled $168.6 million in the first quarter of 2023, a decrease of $12.8 million, or 7.0%, from the fourth quarter of 2022. The decrease in net interest income was primarily attributable to a higher cost of funds reflecting an increase in deposit pricing as a result of the higher interest rate environment, an increase in brokered certificates of deposit as part of our liquidity management strategy, and two fewer days of interest, partially offset by higher yields on average interest-earning assets.

The net interest margin for the first quarter of 2023 decreased 17 basis points to 3.44%, from 3.61% in the prior quarter. The lower net interest margin was due to higher cost of funds and lower loan prepayment fees, partially offset by higher yields on interest-earning assets.

Net interest income for the first quarter of 2023 increased $6.8 million, or 4.2%, compared to the first quarter of 2022. The increase was attributable to higher yields on average interest-earning assets, partially offset by a higher cost of funds, higher average interest-bearing liabilities, and lower loan-related fees and accretion income as a result of decreased prepayment activity.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
(Unaudited)
 Three Months Ended
 March 31, 2023December 31, 2022March 31, 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$1,335,611 $13,594 4.13 %$1,015,197 $8,636 3.37 %$322,236 $90 0.11 %
Investment securities4,165,681 26,791 2.57 4,130,042 24,688 2.39 4,546,408 17,852 1.57 
Loans receivable, net (1) (2)
14,394,775 180,958 5.10 14,799,417 184,457 4.94 14,371,588 150,604 4.25 
Total interest-earning assets$19,896,067 $221,343 4.51 $19,944,656 $217,781 4.33 $19,240,232 $168,546 3.55 
Liabilities
Interest-bearing deposits$11,104,624 $40,234 1.47 %$11,021,383 $25,865 0.93 %$10,351,434 $1,673 0.07 %
Borrowings1,319,114 12,499 3.83 1,157,258 10,520 3.62 555,879 5,034 3.63 
Total interest-bearing liabilities$12,423,738 $52,733 1.72 $12,178,641 $36,385 1.19 $10,907,313 $6,707 0.25 
Noninterest-bearing deposits$6,219,818 $6,587,400 $6,928,872 
Net interest income$168,610 $181,396 $161,839 
Net interest margin (3)
  3.44 %3.61 %3.41 %
Cost of deposits (4)
0.94 0.58 0.04 
Cost of funds (5)
1.15 0.77 0.15 
Cost of core deposits (6)
0.54 0.31 0.03 
Ratio of interest-earning assets to interest-bearing liabilities160.15 163.77 176.40 
_______________________________________
(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 $2.5 million, $3.5 million, and $5.9 million for the three months ended March 31, 2023, December 31, 2022, and March 31, 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 first quarter of 2023, the Company recorded $3.0 million of provision expense, compared to $2.8 million for the fourth quarter of 2022, and $448,000 for the first 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 the impact of the weighted macroeconomic forecasts.
Three Months Ended
March 31,December 31,March 31,
(Dollars in thousands)202320222022
Provision for credit losses
Provision for loan losses$3,021 $3,899 $211 
Provision for unfunded commitments(189)(1,013)218 
Provision for held-to-maturity securities184 (48)19 
Total provision for credit losses$3,016 $2,838 $448 

Noninterest Income
 
Noninterest income for the first quarter of 2023 was $21.2 million, an increase of $689,000 from the fourth quarter of 2022. The increase was primarily due to a $1.3 million increase in trust custodial account fees driven by seasonal, annual tax fees earned during the first quarter, partially offset by a $344,000 decrease in other income, and a $224,000 decrease in escrow and exchange fees. Additionally, the Bank sold $304.2 million of investment securities for a net gain of $138,000 during the first quarter of 2023.

Noninterest income for the first quarter of 2023 decreased $4.7 million, compared to the first quarter of 2022. The decrease was primarily due to a $2.0 million decrease in net gain from sales of investment securities, a $1.5 million decrease in net gain from loan sales, a $603,000 decrease in escrow and exchange fees attributable to the lower transaction activity in the commercial real estate market, and a $554,000 decrease in trust custodial account fees.

Three Months Ended
March 31,December 31,March 31,
(Dollars in thousands)202320222022
Noninterest income
Loan servicing income$573 $346 $419 
Service charges on deposit accounts2,629 2,689 2,615 
Other service fee income296 295 367 
Debit card interchange fee income803 1,048 836 
Earnings on bank owned life insurance3,374 3,359 3,221 
Net gain from sales of loans29 151 1,494 
Net gain from sales of investment securities138 — 2,134 
Trust custodial account fees
11,025 9,722 11,579 
Escrow and exchange fees1,058 1,282 1,661 
Other income1,261 1,605 1,568 
Total noninterest income$21,186 $20,497 $25,894 

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Noninterest Expense
 
Noninterest expense totaled $101.4 million for the first quarter of 2023, an increase of $2.2 million compared to the fourth quarter of 2022, primarily due to a $1.7 million increase in deposit expense driven by higher deposit earnings credit rates, as well as a $962,000 increase in FDIC insurance premiums, partially offset by a $622,000 decrease in other expense.

Noninterest expense increased by $3.7 million compared to the first quarter of 2022. The increase was primarily due to a $4.7 million increase in deposit expense driven by higher deposit earnings credit rates, a $1.4 million increase in legal and professional services, a $1.3 million increase in data processing, and a $1.0 million increase in FDIC insurance premiums, partially offset by a $2.7 million decrease in compensation and benefits from decreased staffing levels as well as a $1.1 million decrease in other expense.

Three Months Ended
March 31,December 31,March 31,
(Dollars in thousands)202320222022
Noninterest expense
Compensation and benefits$54,293 $54,347 $56,981 
Premises and occupancy11,742 11,641 11,952 
Data processing7,265 6,991 5,996 
Other real estate owned operations, net108 — — 
FDIC insurance premiums2,425 1,463 1,396 
Legal and professional services5,501 5,175 4,068 
Marketing expense1,838 1,985 1,809 
Office expense1,232 1,310 1,203 
Loan expense646 743 1,134 
Deposit expense8,436 6,770 3,751 
Amortization of intangible assets3,171 3,440 3,592 
Other expense4,695 5,317 5,766 
Total noninterest expense$101,352 $99,182 $97,648 


Income Tax

For the first quarter of 2023, income tax expense totaled $22.9 million, resulting in an effective tax rate of 26.8%, compared with income tax expense of $26.2 million and an effective tax rate of 26.2% for the fourth quarter of 2022, and income tax expense of $22.7 million and an effective tax rate of 25.4% for the first quarter of 2022.

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BALANCE SHEET HIGHLIGHTS

Loans

Loans held for investment totaled $14.17 billion at March 31, 2023, a decrease of $504.5 million, or 3.4%, from December 31, 2022, and a decrease of $562.0 million, or 3.8%, from March 31, 2022. The decrease from December 31, 2022 was a result of lower loan originations due to our disciplined approach around credit risk management and loan pricing along with lower loan demand. The decrease from March 31, 2022 was primarily driven by lower loan fundings as well as loan prepayments and maturities.

During the first quarter of 2023, new loan commitments totaled $116.8 million, and loan fundings totaled $66.9 million, compared with $239.8 million in loan commitments and $149.1 million in new loan fundings for the fourth quarter of 2022, and $1.46 billion in loan commitments and $1.06 billion in new loan fundings for the first quarter of 2022. Loan commitments decreased compared to prior quarters as we strategically maintained a disciplined approach to credit risk management and loan pricing.
 
At March 31, 2023, the total loan-to-deposit ratio was 82.4%, compared with 84.6% and 83.4% at December 31, 2022 and March 31, 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
March 31,December 31,March 31,
(Dollars in thousands)202320222022
Beginning gross loan balance before basis adjustment$14,740,867 $14,979,098 $14,306,766 
New commitments116,835 239,829 1,461,992 
Unfunded new commitments(49,891)(90,758)(399,235)
Net new fundings66,944 149,071 1,062,757 
Purchased loans— — — 
Amortization/maturities/payoffs(519,986)(481,120)(786,700)
Net draws on existing lines of credit(53,436)107,560 182,868 
Loan sales(803)(9,471)(17,991)
Charge-offs(3,664)(4,271)(2,299)
Transferred to other real estate owned(6,886)— — 
Net (decrease) increase (517,831)(238,231)438,635 
Ending gross loan balance before basis adjustment$14,223,036 $14,740,867 $14,745,401 
Basis adjustment associated with fair value hedge (1)
(50,005)(61,926)— 
Ending gross loan balance $14,173,031 $14,678,941 $14,745,401 
______________________________
(1) Represents the basis adjustment associated with the application of hedge accounting on certain loans.

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The following table presents the composition of the loans held for investment as of the dates indicated:

March 31,December 31,March 31,
(Dollars in thousands)202320222022
Investor loans secured by real estate
CRE non-owner-occupied$2,590,824 $2,660,321 $2,774,650 
Multifamily5,955,239 6,112,026 6,041,085 
Construction and land420,079 399,034 303,811 
SBA secured by real estate (1)
40,669 42,135 42,642 
Total investor loans secured by real estate9,006,811 9,213,516 9,162,188 
Business loans secured by real estate (2)
CRE owner-occupied2,342,175 2,432,163 2,391,984 
Franchise real estate secured371,902 378,057 384,267 
SBA secured by real estate (3)
60,527 61,368 68,466 
Total business loans secured by real estate2,774,604 2,871,588 2,844,717 
Commercial loans (4)
Commercial and industrial1,967,128 2,160,948 2,242,632 
Franchise non-real estate secured388,722 404,791 388,322 
SBA non-real estate secured10,437 11,100 10,761 
Total commercial loans2,366,287 2,576,839 2,641,715 
Retail loans
Single family residential (5)
70,913 72,997 79,978 
Consumer3,174 3,284 5,157 
Total retail loans74,087 76,281 85,135 
Loans held for investment before basis adjustment (6)
14,221,789 14,738,224 14,733,755 
Basis adjustment associated with fair value hedge (7)
(50,005)(61,926)— 
Loans held for investment14,171,784 14,676,298 14,733,755 
Allowance for credit losses for loans held for investment(195,388)(195,651)(197,517)
Loans held for investment, net$13,976,396 $14,480,647 $14,536,238 
Total unfunded loan commitments$2,413,169 $2,489,203 $2,940,370 
Loans held for sale, at lower of cost or fair value$1,247 $2,643 $11,646 
______________________________
(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 $52.2 million, $54.8 million, and $71.2 million as of March 31, 2023, December 31, 2022, and March 31, 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 March 31, 2023 was 4.68%, compared to 4.61% at December 31, 2022, and 3.92% at March 31, 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.

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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)202320222022
Investor loans secured by real estate
CRE non-owner-occupied$1,200 $34,258 $153,845 
Multifamily4,464 28,285 454,652 
Construction and land— 31,175 213,206 
SBA secured by real estate (1)
— — 7,775 
Total investor loans secured by real estate5,664 93,718 829,478 
Business loans secured by real estate (2)
CRE owner-occupied6,562 24,266 246,405 
Franchise real estate secured3,217 840 21,060 
SBA secured by real estate (3)
497 4,198 9,378 
Total business loans secured by real estate10,276 29,304 276,843 
Commercial loans (4)
Commercial and industrial93,150 96,566 317,728 
Franchise non-real estate secured1,666 14,130 28,090 
SBA non-real estate secured720 1,058 3,543 
Total commercial loans95,536 111,754 349,361 
Retail loans
Single family residential (5)
5,359 5,053 6,310 
Total retail loans5,359 5,053 6,310 
Total loan commitments$116,835 $239,829 $1,461,992 
______________________________
(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 increased to 7.43% in the first quarter of 2023, compared to 6.34% in the fourth quarter of 2022, and 3.55% in the first quarter of 2022.

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Asset Quality and Allowance for Credit Losses
 
At March 31, 2023, our allowance for credit losses (“ACL”) on loans held for investment was $195.4 million, a decrease of $263,000 from December 31, 2022, and a decrease of $2.1 million from March 31, 2022. The decline in ACL from December 31, 2022 and March 31, 2022 was reflective primarily of lower loans held for investment.

During the first quarter of 2023, the Company incurred $3.3 million of net charge-offs, compared to $3.8 million during the fourth quarter of 2022, and $446,000 of net charge-offs during the first quarter of 2022, respectively.

The following table provides the allocation of the ACL for loans held for investment as well as the activity in the ACL attributed to various segments in the loan portfolio as of and for the period indicated:

Three Months Ended March 31, 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$33,692 $(66)$15 $(1,926)$31,715 
Multifamily56,334 (217)— 1,670 57,787 
Construction and land7,114 — — 558 7,672 
SBA secured by real estate (1)
2,592 — — (301)2,291 
Business loans secured by real estate (2)
CRE owner-occupied32,340 (2,163)12 (855)29,334 
Franchise real estate secured7,019 — — 771 7,790 
SBA secured by real estate (3)
4,348 — — 67 4,415 
Commercial loans (4)
Commercial and industrial35,169 (1,123)211 3,402 37,659 
Franchise non-real estate secured16,029 — 100 (408)15,721 
SBA non-real estate secured441 — 6 (46)401 
Retail loans
Single family residential (5)
352 (90)1 129 392 
Consumer loans221 (5)35 (40)211 
Totals$195,651 $(3,664)$380 $3,021 $195,388 
______________________________
(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, 2023 was 1.38%, compared to 1.33% at December 31, 2022, and 1.34% at March 31, 2022. The fair value net discount on loans acquired through total bank acquisitions was $52.2 million, or 0.37% of total loans held for investment, as of March 31, 2023, compared to $54.8 million, or 0.37% of total loans held for investment, as of December 31, 2022, and $71.2 million, or 0.48% of total loans held for investment, as of March 31, 2022.


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Nonperforming assets totaled $30.4 million, or 0.14% of total assets, at March 31, 2023, compared with $30.9 million, or 0.14% of total assets, at December 31, 2022, and $55.3 million, or 0.26% of total assets, at March 31, 2022. Loan delinquencies were $20.8 million, or 0.15% of loans held for investment, at March 31, 2023, compared to $43.3 million, or 0.30% of loans held for investment, at December 31, 2022, and $43.7 million, or 0.30% of loans held for investment, at March 31, 2022.

Classified loans totaled $161.1 million, or 1.14% of loans held for investment, at March 31, 2023, compared with $149.3 million, or 1.02% of loans held for investment, at December 31, 2022, and $122.5 million, or 0.83% of loans held for investment, at March 31, 2022.

The following table presents the asset quality metrics of the loan portfolio as of the dates indicated.
 March 31,December 31,March 31,
(Dollars in thousands)202320222022
Asset quality
Nonperforming loans$24,872 $30,905 $55,309 
Other real estate owned5,499 — — 
Nonperforming assets$30,371 $30,905 $55,309 
Total classified assets (1)
$166,576 $149,304 $122,528 
Allowance for credit losses195,388 195,651 197,517 
Allowance for credit losses as a percent of total nonperforming loans786 %633 %357 %
Nonperforming loans as a percent of loans held for investment0.18 0.21 0.38 
Nonperforming assets as a percent of total assets0.14 0.14 0.26 
Classified loans to total loans held for investment1.14 1.02 0.83 
Classified assets to total assets0.78 0.69 0.57 
Net loan charge-offs for the quarter ended$3,284 $3,797 $446 
Net loan charge-offs for the quarter to average total loans0.02 %0.03 %— %
Allowance for credit losses to loans held for investment (2)
1.38 1.33 1.34 
Delinquent loans  
30 - 59 days$761 $20,538 $25,332 
60 - 89 days1,198 185 74 
90+ days18,884 22,625 18,245 
Total delinquency$20,843 $43,348 $43,651 
Delinquency as a percentage of loans held for investment0.15 %0.30 %0.30 %
______________________________
(1) Includes substandard loans and other real estate owned.
(2) 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 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.

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Investment Securities

At March 31, 2023, available-for-sale (“AFS”) and held-to-maturity (“HTM”) investment securities were $2.11 billion and $1.75 billion, respectively, compared to $2.60 billion and $1.39 billion, respectively, at December 31, 2022, and $3.22 billion and $996.4 million, respectively, at March 31, 2022. During the first quarter of 2023, the Company reassessed classification of certain AFS investments and transferred approximately $410.7 million of collateralized mortgage obligations to HTM securities, which the Company intends and has the ability to hold to maturity. The transfer of these securities was accounted for at fair value on the transfer date. These securities had pre-tax unrealized losses of $50.4 million at the time of transfer.

In total, investment securities were $3.86 billion at March 31, 2023, a decrease of $127.2 million from December 31, 2022, and a decrease of $356.6 million from March 31, 2022. The decrease in the first quarter of 2023 compared to the prior quarter was primarily the result of $304.2 million in investment securities sales and $105.9 million in principal payments, discounts from the AFS securities transferred to HTM, amortization, and redemptions, partially offset by $232.3 million in purchases and a mark-to-market fair value loss reduction of $50.7 million.

The decrease in investment securities from March 31, 2022 was primarily the result of $580.4 million in sales, $422.8 million in principal payments, discounts from the AFS securities transferred to HTM, amortization, and redemptions, and a mark-to-market fair value loss increase of $80.2 million, partially offset by $720.0 million in purchases.

12

Deposits

At March 31, 2023, total deposits were $17.21 billion, a decrease of $144.6 million, or 0.8%, from December 31, 2022, and a decrease of $481.4 million, or 2.7%, from March 31, 2022.

At March 31, 2023, core deposits(1) totaled $14.21 billion or 82.6% of total deposits, a decrease of $639.5 million, or 4.3%, from December 31, 2022, and a decrease of $2.44 billion, or 14.7%, from March 31, 2022. The decreases from prior quarters were largely driven by the industry-wide turmoil experienced during the quarter and partially by clients redeploying funds into higher yielding alternatives.

At March 31, 2023, non-core deposits totaled $3.00 billion, an increase of $494.9 million, or 19.8%, from December 31, 2022, and an increase of $1.96 billion, or 189.2%, from March 31, 2022. The increase in the first quarter of 2023 compared to the prior quarter was primarily due to the addition of $324.3 million in brokered certificates of deposit, and an increase of $170.7 million in retail certificates of deposit. The increase from March 31, 2022 was primarily driven by increases in brokered and retail certificates of deposit.

The weighted average cost of total deposits for the first quarter of 2023 was 0.94%, compared to 0.58% for the fourth quarter of 2022, and 0.04% for the first quarter of 2022. The increases in the weighted average cost of
deposits for the first quarter of 2023, compared to the fourth quarter of 2022 and the first quarter of 2022, were principally driven by higher pricing across all deposit categories. The weighted average cost of core deposits(2) for the first quarter of 2023 was 0.54%, compared to 0.31% for the fourth quarter of 2022, and 0.03% for the first quarter of 2022.

At March 31, 2023, the end-of-period weighted average rate of total deposits was 1.15%, compared to 0.79% at December 31, 2022 and 0.04% at March 31, 2022. At March 31, 2023, the end-of-period weighted average rate of core deposits was 0.61%, compared to 0.43% at December 31, 2022, and 0.03% at March 31, 2022.

 March 31,December 31,March 31,
(Dollars in thousands)202320222022
Deposit accounts
Noninterest-bearing checking$6,209,104 $6,306,825 $7,106,548 
Interest-bearing:
Checking2,871,812 3,119,850 3,679,067 
Money market/savings5,128,827 5,422,577 5,867,044 
Total core deposits (1)
14,209,743 14,849,252 16,652,659 
Brokered money market30 30 5,553 
Retail certificates of deposit1,257,146 1,086,423 1,031,011 
Wholesale/brokered certificates of deposit1,740,891 1,416,696 — 
Total non-core deposits2,998,067 2,503,149 1,036,564 
Total deposits$17,207,810 $17,352,401 $17,689,223 
Cost of deposits0.94 %0.58 %0.04 %
Cost of core deposits (2)
0.54 0.31 0.03 
Noninterest-bearing deposits as a percent of total deposits36.1 36.3 40.2 
Core deposits as a percent of total deposits 82.6 85.6 94.1 
______________________________
(1) Core deposits are total deposits excluding all certificates of deposits and all brokered deposits.
(2) Reconciliations of the non-GAAP measures are set forth at the end of this press release.

13

Borrowings

At March 31, 2023, total borrowings amounted to $1.13 billion, a decrease of $199.8 million from December 31, 2022, and an increase of $200.6 million from March 31, 2022. Total borrowings at March 31, 2023 were comprised of $800.0 million of Federal Home Loan Bank of San Francisco (“FHLB”) term advances and $331.4 million of subordinated debt. The decrease in borrowings at March 31, 2023 as compared to December 31, 2022 was due to the maturity of $200.0 million in FHLB term advances during the first quarter of 2023, partially offset by the amortization of the subordinated debt issuance costs. The increase in borrowings at March 31, 2023 as compared to March 31, 2022 was due to $200.0 million higher FHLB term advances to manage interest rate risk and liquidity.

As of March 31, 2023, our unused borrowing capacity was $8.55 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 new Bank Term Funding Program, neither of which we accessed during the first quarter of 2023.

Capital Ratios

At March 31, 2023, our common stockholder's equity was $2.83 billion, or 13.25% of total assets, compared with $2.80 billion, or 12.90%, at December 31, 2022, and $2.78 billion, or 12.87%, at March 31, 2022, with a book value per share of $29.58, compared with $29.45 at December 31, 2022, and $29.31 at March 31, 2022. At March 31, 2023, the ratio of tangible common equity to tangible assets(1) was 9.20%, compared with 8.88% at December 31, 2022, and 8.79% at March 31, 2022, and tangible book value per share(1) was $19.61, compared with $19.38 at December 31, 2022, and $19.12 at March 31, 2022. The increase in tangible book value per share at March 31, 2023 from the prior quarter was primarily driven by net income, partially offset by the dividends paid.


























______________________________
(1) Reconciliations of the non-GAAP measures are set forth at the end of this press release.
14

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 March 31, 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.

March 31,December 31,March 31,
Capital ratios202320222022
Pacific Premier Bancorp, Inc. Consolidated   
Tier 1 leverage ratio10.41 %10.29 %10.10 %
Common equity tier 1 capital ratio13.54 12.99 11.80 
Tier 1 capital ratio13.54 12.99 11.80 
Total capital ratio16.33 15.53 14.37 
Tangible common equity ratio (1)
9.20 8.88 8.79 
Pacific Premier Bank
Tier 1 leverage ratio11.93 %11.80 %11.66 %
Common equity tier 1 capital ratio15.52 14.89 13.61 
Tier 1 capital ratio15.52 14.89 13.61 
Total capital ratio16.55 15.74 14.47 
Share data   
Book value per share$29.58 $29.45 $29.31 
Tangible book value per share (1)
19.61 19.38 19.12 
Common equity dividends declared per share0.33 0.33 0.33 
Closing stock price (2)
24.02 31.56 35.35 
Shares issued and outstanding95,714,777 95,021,760 94,945,849 
Market capitalization (2)(3)
$2,299,069 $2,998,887 $3,356,336 
______________________________
(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 24, 2023, the Company's Board of Directors declared a $0.33 per share dividend, payable on May 15, 2023 to stockholders of record as of May 8, 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 first quarter of 2023, the Company did not repurchase any shares of common stock.


15

Conference Call and Webcast

The Company will host a conference call at 9:00 a.m. PT / 12:00 p.m. ET on April 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 May 4, 2023, at (877) 344-7529, conference ID 4228581.

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 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 $17 billion of assets under custody and 38,000 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
16

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, 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; 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; 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 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 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

17

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)20232022202220222022
ASSETS
Cash and cash equivalents$1,424,896 $1,101,249 $739,211 $972,798 $809,259 
Interest-bearing time deposits with financial institutions1,734 1,734 1,733 2,216 2,216 
Investment securities held-to-maturity, at amortized cost, net of allowance for credit losses 1,749,030 1,388,103 1,385,502 1,390,682 996,382 
Investment securities available-for-sale, at fair value2,112,852 2,601,013 2,661,079 2,679,070 3,222,095 
FHLB, FRB, and other stock105,479 119,918 118,778 118,636 116,973 
Loans held for sale, at lower of amortized cost or fair value1,247 2,643 2,163 2,957 11,646 
Loans held for investment14,171,784 14,676,298 14,908,811 15,047,608 14,733,755 
Allowance for credit losses(195,388)(195,651)(195,549)(196,075)(197,517)
Loans held for investment, net13,976,396 14,480,647 14,713,262 14,851,533 14,536,238 
Accrued interest receivable69,660 73,784 66,192 66,898 60,922 
Other real estate owned5,499 — — — — 
Premises and equipment, net63,450 64,543 65,651 68,435 70,453 
Deferred income taxes, net177,778 183,602 190,948 163,767 133,938 
Bank owned life insurance462,732 460,010 457,301 454,593 451,968 
Intangible assets52,417 55,588 59,028 62,500 65,978 
Goodwill901,312 901,312 901,312 901,312 901,312 
Other assets257,082 253,871 257,041 258,522 242,916 
Total assets$21,361,564 $21,688,017 $21,619,201 $21,993,919 $21,622,296 
LIABILITIES  
Deposit accounts:  
Noninterest-bearing checking$6,209,104 $6,306,825 $6,775,465 $6,934,318 $7,106,548 
Interest-bearing:
Checking2,871,812 3,119,850 3,605,498 4,149,432 3,679,067 
Money market/savings5,128,857 5,422,607 5,493,988 5,545,230 5,872,597 
Retail certificates of deposit1,257,146 1,086,423 872,421 855,966 1,031,011 
Wholesale/brokered certificates of deposit1,740,891 1,416,696 999,002 599,667 — 
Total interest-bearing10,998,706 11,045,576 10,970,909 11,150,295 10,582,675 
Total deposits17,207,810 17,352,401 17,746,374 18,084,613 17,689,223 
FHLB advances and other borrowings800,000 1,000,000 600,000 600,000 600,000 
Subordinated debentures331,364 331,204 331,045 330,886 330,726 
Accrued expenses and other liabilities191,229 206,023 206,386 223,201 219,329 
Total liabilities18,530,403 18,889,628 18,883,805 19,238,700 18,839,278 
STOCKHOLDERS’ EQUITY     
Common stock937 933 933 933 933 
Additional paid-in capital2,361,830 2,362,663 2,357,731 2,353,361 2,348,727 
Retained earnings731,123 700,040 657,845 615,943 577,591 
Accumulated other comprehensive loss(262,729)(265,247)(281,113)(215,018)(144,233)
Total stockholders' equity2,831,161 2,798,389 2,735,396 2,755,219 2,783,018 
Total liabilities and stockholders' equity$21,361,564 $21,688,017 $21,619,201 $21,993,919 $21,622,296 








18

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)202320222022
INTEREST INCOME   
Loans$180,958 $184,457 $150,604 
Investment securities and other interest-earning assets40,385 33,324 17,942 
Total interest income221,343 217,781 168,546 
INTEREST EXPENSE
Deposits40,234 25,865 1,673 
FHLB advances and other borrowings7,938 5,960 474 
Subordinated debentures4,561 4,560 4,560 
Total interest expense52,733 36,385 6,707 
Net interest income before provision for credit losses168,610 181,396 161,839 
Provision for credit losses3,016 2,838 448 
Net interest income after provision for credit losses165,594 178,558 161,391 
NONINTEREST INCOME
Loan servicing income573 346 419 
Service charges on deposit accounts2,629 2,689 2,615 
Other service fee income296 295 367 
Debit card interchange fee income803 1,048 836 
Earnings on bank owned life insurance3,374 3,359 3,221 
Net gain from sales of loans29 151 1,494 
Net gain from sales of investment securities138 — 2,134 
Trust custodial account fees
11,025 9,722 11,579 
Escrow and exchange fees1,058 1,282 1,661 
Other income1,261 1,605 1,568 
Total noninterest income21,186 20,497 25,894 
NONINTEREST EXPENSE
Compensation and benefits54,293 54,347 56,981 
Premises and occupancy11,742 11,641 11,952 
Data processing7,265 6,991 5,996 
Other real estate owned operations, net108 — — 
FDIC insurance premiums2,425 1,463 1,396 
Legal and professional services5,501 5,175 4,068 
Marketing expense1,838 1,985 1,809 
Office expense1,232 1,310 1,203 
Loan expense646 743 1,134 
Deposit expense8,436 6,770 3,751 
Amortization of intangible assets3,171 3,440 3,592 
Other expense4,695 5,317 5,766 
Total noninterest expense101,352 99,182 97,648 
Net income before income taxes85,428 99,873 89,637 
Income tax expense22,866 26,200 22,733 
Net income$62,562 $73,673 $66,904 
EARNINGS PER SHARE
Basic$0.66 $0.78 $0.71 
Diluted$0.66 $0.77 $0.70 
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic93,857,812 93,810,468 93,499,695 
Diluted94,182,522 94,176,633 93,946,074 
19

SELECTED FINANCIAL DATA

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
(Unaudited)
 
 Three Months Ended
 March 31, 2023December 31, 2022March 31, 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$1,335,611 $13,594 4.13 %$1,015,197 $8,636 3.37 %$322,236 $90 0.11 %
Investment securities4,165,681 26,791 2.57 4,130,042 24,688 2.39 4,546,408 17,852 1.57 
Loans receivable, net (1)(2)
14,394,775 180,958 5.10 14,799,417 184,457 4.94 14,371,588 150,604 4.25 
Total interest-earning assets19,896,067 221,343 4.51 19,944,656 217,781 4.33 19,240,232 168,546 3.55 
Noninterest-earning assets1,788,806 1,784,277 1,716,559 
Total assets$21,684,873 $21,728,933 $20,956,791 
Liabilities and equity
Interest-bearing deposits:
Interest checking$3,008,712 $5,842 0.79 %$3,320,146 $3,752 0.45 %$3,537,824 $229 0.03 %
Money market4,992,084 13,053 1.06 4,998,726 7,897 0.63 5,343,973 888 0.07 
Savings453,079 508 0.45 443,016 310 0.28 422,186 26 0.02 
Retail certificates of deposit1,206,966 7,775 2.61 975,958 3,941 1.60 1,047,451 530 0.21 
Wholesale/brokered certificates of deposit1,443,783 13,056 3.67 1,283,537 9,965 3.08 — — — 
Total interest-bearing deposits11,104,624 40,234 1.47 11,021,383 25,865 0.93 10,351,434 1,673 0.07 
FHLB advances and other borrowings987,817 7,938 3.26 826,125 5,960 2.86 225,250 474 0.85 
Subordinated debentures331,297 4,561 5.51 331,133 4,560 5.51 330,629 4,560 5.52 
Total borrowings1,319,114 12,499 3.83 1,157,258 10,520 3.62 555,879 5,034 3.63 
Total interest-bearing liabilities12,423,738 52,733 1.72 12,178,641 36,385 1.19 10,907,313 6,707 0.25 
Noninterest-bearing deposits6,219,818 6,587,400 6,928,872 
Other liabilities218,925 211,731 256,219 
Total liabilities18,862,481 18,977,772 18,092,404 
Stockholders' equity2,822,392 2,751,161 2,864,387 
Total liabilities and equity$21,684,873 $21,728,933 $20,956,791 
Net interest income$168,610 $181,396 $161,839 
Net interest margin (3)
3.44 %3.61 %3.41 %
Cost of deposits (4)
0.94 0.58 0.04 
Cost of funds (5)
1.15 0.77 0.15 
Cost of core deposits (6)
0.54 0.31 0.03 
Ratio of interest-earning assets to interest-bearing liabilities160.15 163.77 176.40 
______________________________
(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 $2.5 million, $3.5 million, and $5.9 million for the three months ended March 31, 2023, December 31, 2022, and March 31, 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.
20

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
LOAN PORTFOLIO COMPOSITION
(Unaudited)
March 31,December 31,September 30June 30,March 31,
(Dollars in thousands)20232022202220222022
Investor loans secured by real estate
CRE non-owner-occupied$2,590,824 $2,660,321 $2,771,272 $2,788,715 $2,774,650 
Multifamily5,955,239 6,112,026 6,199,581 6,188,086 6,041,085 
Construction and land420,079 399,034 373,194 331,734 303,811 
SBA secured by real estate (1)
40,669 42,135 42,998 44,199 42,642 
Total investor loans secured by real estate9,006,811 9,213,516 9,387,045 9,352,734 9,162,188 
Business loans secured by real estate (2)
CRE owner-occupied2,342,175 2,432,163 2,477,530 2,486,747 2,391,984 
Franchise real estate secured371,902 378,057 383,468 387,683 384,267 
SBA secured by real estate (3)
60,527 61,368 64,002 67,191 68,466 
Total business loans secured by real estate2,774,604 2,871,588 2,925,000 2,941,621 2,844,717 
Commercial loans (4)
Commercial and industrial1,967,128 2,160,948 2,164,623 2,295,421 2,242,632 
Franchise non-real estate secured388,722 404,791 409,773 415,830 388,322 
SBA non-real estate secured10,437 11,100 11,557 11,008 10,761 
Total commercial loans2,366,287 2,576,839 2,585,953 2,722,259 2,641,715 
Retail loans
Single family residential (5)
70,913 72,997 75,176 77,951 79,978 
Consumer3,174 3,284 3,761 4,130 5,157 
Total retail loans74,087 76,281 78,937 82,081 85,135 
Loans held for investment before basis adjustment (6)
14,221,789 14,738,224 14,976,935 15,098,695 14,733,755 
Basis adjustment associated with fair value hedge (7)
(50,005)(61,926)(68,124)(51,087)— 
Loans held for investment14,171,784 14,676,298 14,908,811 15,047,608 14,733,755 
Allowance for credit losses for loans held for investment(195,388)(195,651)(195,549)(196,075)(197,517)
Loans held for investment, net$13,976,396 $14,480,647 $14,713,262 $14,851,533 $14,536,238 
Loans held for sale, at lower of cost or fair value$1,247 $2,643 $2,163 $2,957 $11,646 
______________________________
(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 $52.2 million, $54.8 million, $59.0 million, $63.6 million, and $71.2 million as of March 31, 2023, December 31, 2022, September 30, 2022, June 30, 2022, and March 31, 2022, respectively.
(7) Represents the basis adjustment associated with the application of hedge accounting on certain loans.




21

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
ASSET QUALITY INFORMATION
(Unaudited)
 March 31,December 31,September 30,June 30,March 31,
(Dollars in thousands)20232022202220222022
Asset quality
Nonperforming loans$24,872 $30,905 $60,464 $44,445 $55,309 
Other real estate owned5,499 — — — — 
Nonperforming assets$30,371 $30,905 $60,464 $44,445 $55,309 
Total classified assets (1)
$166,576 $149,304 $110,143 $106,153 $122,528 
Allowance for credit losses195,388 195,651 195,549 196,075 197,517 
Allowance for credit losses as a percent of total nonperforming loans786 %633 %323 %441 %357 %
Nonperforming loans as a percent of loans held for investment0.18 0.21 0.41 0.30 0.38 
Nonperforming assets as a percent of total assets0.14 0.14 0.28 0.20 0.26 
Classified loans to total loans held for investment1.14 1.02 0.74 0.71 0.83 
Classified assets to total assets0.78 0.69 0.51 0.48 0.57 
Net loan charge-offs for the quarter ended$3,284 $3,797 $1,072 $5,245 $446 
Net loan charge-offs for the quarter to average total loans 0.02 %0.03 %0.01 %0.04 %— %
Allowance for credit losses to loans held for investment (2)
1.38 1.33 1.31 1.30 1.34 
Delinquent loans   
30 - 59 days$761 $20,538 $1,484 $6,915 $25,332 
60 - 89 days1,198 185 6,535 — 74 
90+ days18,884 22,625 33,238 29,360 18,245 
Total delinquency$20,843 $43,348 $41,257 $36,275 $43,651 
Delinquency as a percent of loans held for investment0.15 %0.30 %0.28 %0.24 %0.30 %
______________________________
(1) Includes substandard loans and other real estate owned.
(2) 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. 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.

22

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, 2023
Investor loans secured by real estate
CRE non-owner-occupied$5,545 $— $— $— $5,545 $5,545 
Multifamily3,708 — — — 3,708 3,708 
SBA secured by real estate (2)
519 — — — 519 519 
Total investor loans secured by real estate9,772 — — — 9,772 9,772 
Business loans secured by real estate (3)
CRE owner-occupied9,102 — — — 9,102 9,102 
SBA secured by real estate (4)
1,190 — — — 1,190 1,190 
Total business loans secured by real estate10,292 — — — 10,292 10,292 
Commercial loans (5)
Commercial and industrial4,236 3,999 — — 4,236 237 
SBA not secured by real estate572 — — — 572 572 
Total commercial loans4,808 3,999 — — 4,808 809 
Totals nonaccrual loans$24,872 $3,999 $— $— $24,872 $20,873 
______________________________
(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.

23

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
PAST DUE STATUS
(Unaudited)
Days Past Due
(Dollars in thousands)Current30-5960-8990+Total
March 31, 2023
Investor loans secured by real estate
CRE non-owner-occupied$2,585,273 $6 $1,129 $4,416 $2,590,824 
Multifamily5,951,531 — — 3,708 5,955,239 
Construction and land420,079 — — — 420,079 
SBA secured by real estate (1)
40,669 — — — 40,669 
Total investor loans secured by real estate8,997,552 6 1,129 8,124 9,006,811 
Business loans secured by real estate (2)
CRE owner-occupied2,337,413 — — 4,762 2,342,175 
Franchise real estate secured371,902 — — — 371,902 
SBA secured by real estate (3)
59,029 308 — 1,190 60,527 
Total business loans secured by real estate2,768,344 308 — 5,952 2,774,604 
Commercial loans (4)
Commercial and industrial1,962,376 447 69 4,236 1,967,128 
Franchise non-real estate secured388,722 — — — 388,722 
SBA not secured by real estate9,865 — — 572 10,437 
Total commercial loans2,360,963 447 69 4,808 2,366,287 
Retail loans
Single family residential (5)
70,913 — — — 70,913 
Consumer loans3,174 — — — 3,174 
Total retail loans74,087 — — — 74,087 
Loans held for investment before basis adjustment (6)
$14,200,946 $761 $1,198 $18,884 $14,221,789 
______________________________
(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 $50.0 million to the carrying amount of certain loans included in fair value hedging relationships.



24

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CREDIT RISK GRADES
(Unaudited)
 
(Dollars in thousands)PassSpecial
Mention		SubstandardTotal Gross
Loans
March 31, 2023
Investor loans secured by real estate    
CRE non-owner-occupied$2,572,545 $5,104 $13,175 $2,590,824 
Multifamily5,938,189 12,604 4,446 5,955,239 
Construction and land420,079 — — 420,079 
SBA secured by real estate (1)
31,743 — 8,926 40,669 
Total investor loans secured by real estate8,962,556 17,708 26,547 9,006,811 
Business loans secured by real estate (2)
CRE owner-occupied2,263,811 18,379 59,985 2,342,175 
Franchise real estate secured338,357 26,346 7,199 371,902 
SBA secured by real estate (3)
55,072 195 5,260 60,527 
Total business loans secured by real estate2,657,240 44,920 72,444 2,774,604 
Commercial loans (4)
   
Commercial and industrial1,885,615 29,666 51,847 1,967,128 
Franchise non-real estate secured349,238 30,717 8,767 388,722 
SBA not secured by real estate8,969 — 1,468 10,437 
Total commercial loans2,243,822 60,383 62,082 2,366,287 
Retail loans
Single family residential (5)
70,909 — 4 70,913 
Consumer loans3,174 — — 3,174 
Total retail loans74,083 — 4 74,087 
Loans held for investment before basis adjustment (6)
$13,937,701 $123,011 $161,077 $14,221,789 
______________________________
(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 $50.0 million to the carrying amount of certain loans included in fair value hedging relationships.

25

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
 March 31,December 31,March 31,
(Dollars in thousands)202320222022
Net income$62,562 $73,673 $66,904 
Plus: amortization of intangible assets expense3,171 3,440 3,592 
Less: amortization of intangible assets expense tax adjustment (1)
901 978 1,025 
Net income for average tangible common equity$64,832 $76,135 $69,471 
Average stockholders' equity$2,822,392 $2,751,161 $2,864,387 
Less: average intangible assets54,310 57,624 68,157 
Less: average goodwill901,312 901,312 901,312 
Average tangible common equity$1,866,770 $1,792,225 $1,894,918 
Return on average equity (annualized)8.87 %10.71 %9.34 %
Return on average tangible common equity (annualized)13.89 %16.99 %14.66 %
______________________________
(1) Adjusted by statutory tax rate



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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
March 31,December 31,March 31,
(Dollars in thousands)202320222022
Interest income$221,343 $217,781 $168,546 
Interest expense52,733 36,385 6,707 
Net interest income168,610 181,396 161,839 
Noninterest income21,186 20,497 25,894 
Revenue189,796 201,893 187,733 
Noninterest expense101,352 99,182 97,648 
Pre-provision net revenue88,444 102,711 90,085 
Pre-provision net revenue (annualized)$353,776 $410,844 $360,340 
Average assets$21,684,873 $21,728,933 $20,956,791 
Pre-provision net revenue to average assets0.41 %0.47 %0.43 %
Pre-provision net revenue to average assets (annualized)1.63 %1.89 %1.72 %


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)20232022202220222022
Total stockholders' equity$2,831,161 $2,798,389 $2,735,396 $2,755,219 $2,783,018 
Less: intangible assets953,729 956,900 960,340 963,812 967,290 
Tangible common equity$1,877,432 $1,841,489 $1,775,056 $1,791,407 $1,815,728 
Total assets$21,361,564 $21,688,017 $21,619,201 $21,993,919 $21,622,296 
Less: intangible assets953,729 956,900 960,340 963,812 967,290 
Tangible assets$20,407,835 $20,731,117 $20,658,861 $21,030,107 $20,655,006 
Tangible common equity ratio9.20 %8.88 %8.59 %8.52 %8.79 %
Common shares issued and outstanding95,714,77795,021,76095,016,76794,976,60594,945,849
Book value per share$29.58 $29.45 $28.79 $29.01 $29.31 
Less: intangible book value per share9.96 10.07 10.11 10.15 10.19 
Tangible book value per share$19.61 $19.38 $18.68 $18.86 $19.12 

27

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 from sales of investment securities. 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)202320222022
Total noninterest expense$101,352 $99,182 $97,648 
Less: amortization of intangible assets3,171 3,440 3,592 
Less: other real estate owned operations, net108 — — 
Noninterest expense, adjusted$98,073 $95,742 $94,056 
Net interest income before provision for credit losses$168,610 $181,396 $161,839 
Add: total noninterest income21,186 20,497 25,894 
Less: net gain from sales of investment securities138 — 2,134 
Revenue, adjusted$189,658 $201,893 $185,599 
Efficiency ratio51.7 %47.4 %50.7 %



Cost of core deposits is a non-GAAP financial measure derived from GAAP-based amounts. Cost of core deposits is calculated as the ratio of core deposit interest expense to average core deposits. We calculate core deposit interest expense by excluding interest expense for certificates of deposit and brokered deposits from total deposit expense, and we calculate average core deposits by excluding certificates of deposit and brokered deposits from total deposits. Management believes cost of core deposits is a useful measure to assess the Company's deposit base, including its potential volatility.
Three Months Ended
March 31,December 31,March 31,
(Dollars in thousands)202320222022
Total deposits interest expense$40,234 $25,865 $1,673 
Less: certificates of deposit interest expense7,775 3,941 530 
Less: brokered deposits interest expense13,056 9,965 1 
Core deposits expense$19,403 $11,959 $1,142 
Total average deposits$17,324,442 $17,608,783 $17,280,306 
Less: average certificates of deposit1,206,966 975,958 1,047,451 
Less: average brokered deposits1,443,827 1,283,567 5,553 
Average core deposits$14,673,649 $15,349,258 $16,227,302 
Cost of core deposits0.54 %0.31 %0.03 %
28