UK markets closed
  • FTSE 100

    7,122.32
    -6.89 (-0.10%)
     
  • FTSE 250

    22,646.08
    -38.76 (-0.17%)
     
  • AIM

    1,182.30
    -6.44 (-0.54%)
     
  • GBP/EUR

    1.1690
    -0.0076 (-0.65%)
     
  • GBP/USD

    1.3235
    -0.0067 (-0.50%)
     
  • BTC-GBP

    36,790.95
    +366.36 (+1.01%)
     
  • CMC Crypto 200

    1,367.14
    -74.62 (-5.18%)
     
  • S&P 500

    4,538.43
    -38.67 (-0.84%)
     
  • DOW

    34,580.08
    -59.71 (-0.17%)
     
  • CRUDE OIL

    66.22
    -0.28 (-0.42%)
     
  • GOLD FUTURES

    1,782.10
    +21.40 (+1.22%)
     
  • NIKKEI 225

    28,029.57
    +276.20 (+1.00%)
     
  • HANG SENG

    23,766.69
    -22.24 (-0.09%)
     
  • DAX

    15,169.98
    -93.13 (-0.61%)
     
  • CAC 40

    6,765.52
    -30.23 (-0.44%)
     

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

  • Oops!
    Something went wrong.
    Please try again later.
·11-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

Third Quarter 2021 Summary

  • Net income of $90.1 million, or $0.95 per diluted share

  • Total revenue increased to $199.2 million, compared with $187.7 million in the prior quarter

  • Return on average assets of 1.73%, return on average equity of 12.67%, and return on average tangible common equity of 19.89%(1)

  • Pre-provision net revenue ("PPNR") on average assets of 1.98%, annualized, and efficiency ratio of 47.5%(1)

  • Loan and deposit growth of 11.5% and 10.7%, annualized, respectively

  • Net interest margin of 3.51%, compared with 3.44% in the prior quarter

  • Cost of deposits of 0.06% in the third quarter compared with 0.08% in the prior quarter

  • Tangible book value per diluted share increased to $19.75, compared with $19.38 at prior quarter(1)

IRVINE, Calif., October 21, 2021--(BUSINESS WIRE)--Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the "Company" or "Pacific Premier"), the holding company of Pacific Premier Bank (the "Bank"), reported net income of $90.1 million, or $0.95 per diluted share, for the third quarter of 2021, compared with net income of $96.3 million, or $1.01 per diluted share, for the second quarter of 2021, and net income of $66.6 million, or $0.70 per diluted share, for the third quarter of 2020.

For the quarter ended September 30, 2021, the Company’s return on average assets ("ROAA") was 1.73%, return on average equity ("ROAE") was 12.67%, and return on average tangible common equity ("ROATCE") was 19.89%, compared to 1.90%, 14.02%, and 22.45%, respectively, for the second quarter of 2021 and 1.31%, 9.90%, and 16.44%, respectively, for the third quarter of 2020. Total assets were $21.01 billion at September 30, 2021, compared to $20.53 billion at June 30, 2021, and $19.84 billion at September 30, 2020. A reconciliation of the non-U.S. generally accepted accounting principles ("GAAP") measure of ROATCE to the GAAP measure of ROAE is set forth at the end of this press release.

Steven R. Gardner, Chairman, President, and Chief Executive Officer of the Company, commented, "Our teams continue to drive positive results and deliver a high level of profitability, which we have done consistently over time and throughout varying economic cycles. While the resurgence of COVID-19 cases slowed the pace of the economic recovery during the third quarter, our dynamic business development capabilities coupled with our proprietary technology enabled us to generate high quality loan and deposit growth, increase revenue, and achieve higher positive operating leverage. These efforts further improved our core earnings power.

"The experience and expertise we have built across the organization provides consistently strong loan production and inflows of low-cost deposits. During the third quarter, we generated $1.46 billion in new loan commitments, resulting in 11.5% annualized loan growth and a favorable mix shift in earning assets. Combined with the positive impact of eliminating higher cost funding sources, these efforts led to net interest income growth of 20.2%, annualized, and net interest margin expansion during the third quarter.

"Our new business pipelines remain healthy, which we anticipate contributing to solid organic growth and strong financial performance, while also remaining well positioned to take advantage of strategic growth opportunities that create long-term value for our shareholders and further enhance our franchise," said Mr. Gardner.

______________________________

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

FINANCIAL HIGHLIGHTS

Three Months Ended

September 30,

June 30,

September 30,

(Dollars in thousands, except per share data)

2021

2021

2020

Financial highlights (unaudited)

Net income

$

90,088

$

96,302

$

66,566

Diluted earnings per share

0.95

1.01

0.70

Common equity dividend per share paid

0.33

0.33

0.25

Return on average assets

1.73

%

1.90

%

1.31

%

Return on average equity

12.67

14.02

9.90

Return on average tangible common equity (1)

19.89

22.45

16.44

Pre-provision net revenue on average assets (1)

1.98

1.84

1.92

Net interest margin

3.51

3.44

3.54

Core net interest margin (1)

3.30

3.22

3.23

Cost of deposits

0.06

0.08

0.20

Efficiency ratio (1)

47.5

49.4

47.4

Noninterest expense (excluding merger-related expense) as a percent of average assets (1)

1.85

%

1.86

%

1.88

%

Total assets

$

21,005,211

$

20,529,486

$

19,844,240

Total deposits

17,469,999

17,015,097

16,330,807

Loans to deposit ratio

80.0

%

79.9

%

82.4

%

Non-maturity deposits as a percent of total deposits

93.6

92.6

89.5

Book value per share

$

30.08

$

29.72

$

28.48

Tangible book value per share (1)

19.75

19.38

18.01

Total risk-based capital ratio

14.56

%

15.61

%

16.11

%

______________________________

(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 $169.1 million in the third quarter of 2021, an increase of $8.1 million, or 5.1%, from the second quarter of 2021. The increase in net interest income reflected higher average interest-earning assets, higher loan fees, one more day of interest, and a lower cost of funds as compared to the prior quarter, partially offset by lower average investment and loan yields.

The net interest margin for the third quarter of 2021 was 3.51%, compared with 3.44% in the prior quarter. Our core net interest margin, which excludes the impact of $9.4 million loan accretion income, compared to $9.5 million in the prior quarter, certificates of deposit mark-to-market amortization, and other adjustments, increased 8 basis points to 3.30%, reflecting lower cost of funds and higher loan fees, partially offset by lower average investment and loan yields.

Net interest income for the third quarter of 2021 increased $2.5 million, or 1.5%, compared to the third quarter of 2020. The increase was attributable to lower cost of funds, a $1.52 billion increase in average investment securities, and a $377.5 million decrease in average interest-bearing liabilities, which primarily resulted from the redemptions of subordinated debentures, partially offset by lower average interest-earning assets yields and lower average loan balances.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED AVERAGE BALANCES AND YIELD DATA

(Unaudited)

Three Months Ended

September 30, 2021

June 30, 2021

September 30, 2020

(Dollars in thousands)

Average Balance

Interest Income/Expense

Average

Yield/

Cost

Average Balance

Interest Income/Expense

Average

Yield/

Cost

Average Balance

Interest Income/Expense

Average Yield/ Cost

Assets

Cash and cash equivalents

$

663,076

$

195

0.12

%

$

1,323,186

$

315

0.10

%

$

1,388,897

$

305

0.09

%

Investment securities

4,807,854

18,827

1.57

4,243,644

18,012

1.70

3,283,840

14,231

1.73

Loans receivable, net (1) (2)

13,660,242

157,025

4.56

13,216,973

152,365

4.62

14,034,868

167,455

4.75

Total interest-earning assets

$

19,131,172

$

176,047

3.65

$

18,783,803

$

170,692

3.64

$

18,707,605

$

181,991

3.87

Liabilities

Interest-bearing deposits

$

10,536,091

$

2,432

0.09

$

10,395,002

$

3,265

0.13

$

10,703,431

$

8,509

0.32

Borrowings

332,245

4,546

5.43

486,718

6,493

5.35

542,437

6,936

5.09

Total interest-bearing liabilities

$

10,868,336

$

6,978

0.25

$

10,881,720

$

9,758

0.36

$

11,245,868

$

15,445

0.55

Noninterest-bearing deposits

$

6,809,211

$

6,341,063

$

5,877,619

Net interest income

$

169,069

$

160,934

$

166,546

Net interest margin (3)

3.51

3.44

3.54

Cost of deposits (4)

0.06

0.08

0.20

Cost of funds (5)

0.16

0.23

0.36

Ratio of interest-earning assets to interest-bearing liabilities

176.03

172.62

166.35

____________________________________

(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 $9.4 million, $9.5 million, and $12.2 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 third quarter of 2021, the Company recorded a $19.7 million provision recapture, compared to a $38.5 million provision recapture for the second quarter of 2021, and a $4.2 million provision expense for the third quarter of 2020. The provision recapture for the third quarter of 2021 was comprised of a $19.5 million provision recapture for loan losses, a $194,000 provision recapture for unfunded commitments, and $11,000 provision expense for held-to-maturity securities that were transferred from available-for-sale during the third quarter. The provision recaptures for loans and unfunded commitments during the third quarter of 2021 were reflective of improving economic forecasts employed in the Company’s current expected credit losses ("CECL") model relative to prior periods and the favorable asset quality profile of the loan portfolio, partially offset by an increase in loans held for investment. The provision expense in the third quarter of 2020 reflected the impact of changes in economic forecasts related to the COVID-19 pandemic.

Three Months Ended

September 30,

June 30,

September 30,

(Dollars in thousands)

2021

2021

2020

Provision for credit losses

Provision for loan losses

$

(19,543)

$

(33,131)

$

4,702

Provision for unfunded commitments

(194)

(5,345)

(492)

Provision for held-to-maturity securities

11

Total provision for credit losses

$

(19,726)

$

(38,476)

$

4,210

Noninterest Income

Noninterest income for the third quarter of 2021 was $30.1 million, an increase of $3.4 million from the second quarter of 2021. The increase was primarily due to a $3.5 million increase in trust custodial account fees and a $987,000 increase in earnings on bank-owned life insurance ("BOLI"), partially offset by a $895,000 decrease in net gain from sales of investment securities. Also, other income included a $970,000 net gain on debt extinguishment compared to a $647,000 loss in the prior quarter, partially offset by $1.1 million lower CRA investment income and $483,000 lower Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loan referral fees.

During the third quarter of 2021, the Bank sold $12.0 million of SBA loans for a net gain of $1.2 million, compared to the sales of $14.7 million of SBA loans for a net gain of $1.5 million in the second quarter of 2021.

Additionally, during the third quarter of 2021, the Bank sold $161.6 million of investment securities for a net gain of $4.2 million, compared to the sales of $280.2 million of investment securities for a net gain of $5.1 million in the second quarter of 2021.

Noninterest income for the third quarter of 2021 increased $3.3 million, or 12.5%, compared to the third quarter of 2020. The increase was primarily due to a $4.5 million increase in trust custodial account fees, a $3.0 million increase in net gain from sales of investment securities, a $1.9 million increase in other income, and a $996,000 increase in earnings on BOLI, partially offset by a $8.4 million decrease in net gain from sales of loans.

The net gain from sales of loans for the third quarter of 2021 decreased from the same period last year reflecting lower net gain from the sales of $12.0 million of SBA loans for a net gain of $1.2 million, compared with the sales of $1.16 billion SBA PPP loans for a net gain of $19.0 million in the third quarter of 2020, offset by sales of $96.2 million of other loans for a net loss of $9.4 million during the third quarter of 2020.

Three Months Ended

September 30,

June 30,

September 30,

(Dollars in thousands)

2021

2021

2020

Noninterest income

Loan servicing income

$

536

$

622

$

481

Service charges on deposit accounts

2,375

2,222

1,593

Other service fee income

350

352

487

Debit card interchange fee income

834

1,099

944

Earnings on BOLI

3,266

2,279

2,270

Net gain from sales of loans

1,187

1,546

9,542

Net gain from sales of investment securities

4,190

5,085

1,141

Trust custodial account fees

11,446

7,897

6,960

Escrow and exchange fees

1,867

1,672

1,142

Other income

4,049

3,955

2,198

Total noninterest income

$

30,100

$

26,729

$

26,758

Noninterest Expense

Noninterest expense totaled $96.0 million for the third quarter of 2021, an increase of $1.5 million compared to the second quarter of 2021, primarily driven by a $531,000 increase in data processing expense and a $518,000 increase in marketing expense.

Noninterest expense decreased by $2.5 million compared to the third quarter of 2020. The decrease was primarily due to $3.0 million of merger-related expense for the third quarter of 2020 relating to the Opus Bank acquisition. Excluding merger-related expense, noninterest expense increased $449,000 compared to the third quarter of 2020, primarily due to a $2.6 million increase in compensation and benefits, offset by a $1.3 million decrease in office expense.

Three Months Ended

September 30,

June 30,

September 30,

(Dollars in thousands)

2021

2021

2020

Noninterest expense

Compensation and benefits

$

53,592

$

53,474

$

51,021

Premises and occupancy

12,611

12,240

12,373

Data processing

6,296

5,765

6,783

Other real estate owned operations, net

(17)

FDIC insurance premiums

1,392

1,312

1,145

Legal and professional services

4,563

4,186

5,108

Marketing expense

2,008

...

1,718

Office expense

1,076

1,589

2,389

Loan expense

1,332

1,165

802

Deposit expense

3,974

3,985

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting