Pacific Premier Bancorp, Inc. Announces Second Quarter 2023 Financial Results and a Quarterly Cash Dividend of $0.33 Per Share
Second Quarter 2023 Summary
- Net income of $57.6 million, or $0.60 per diluted share
- Return on average assets of 1.09%, return on average equity of 8.11%, and return on average tangible common equity(1) of 12.66%
- Pre-provision net revenue (“PPNR”)(1) to average assets of 1.52%, annualized
- Net interest margin of 3.33%
- Cost of deposits of 1.27%, and cost of non-maturity deposits(1) of 0.71%
- Nonperforming assets to total assets of 0.08%, and net charge-offs to average loans of 0.03%
- Common equity tier 1 capital ratio of 14.34% and total risk-based capital ratio of 17.24%
- Tangible book value per share(1) of $19.79; tangible common equity ratio(1) of 9.59%
- Available liquidity of $10 billion; cash and cash equivalents increased to $1.46 billion and unused borrowing capacity of $8.53 billion at quarter end
IRVINE, Calif.–(BUSINESS WIRE)–$PPBI #PPBI–Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company” or “Pacific Premier”), the holding company of Pacific Premier Bank (the “Bank”), reported net income of $57.6 million, or $0.60 per diluted share, for the second quarter of 2023, compared with net income of $62.6 million, or $0.66 per diluted share, for the first quarter of 2023, and net income of $69.8 million, or $0.73 per diluted share, for the second quarter of 2022.
For the quarter ended June 30, 2023, the Company’s return on average assets (“ROAA”) was 1.09%, return on average equity (“ROAE”) was 8.11%, and return on average tangible common equity (“ROATCE”)(1) was 12.66%, compared to 1.15%, 8.87%, and 13.89%, respectively, for the first quarter of 2023, and 1.29%, 10.10%, and 16.07%, respectively, for the second quarter of 2022. Total assets were $20.75 billion at June 30, 2023, compared to $21.36 billion at March 31, 2023, and $21.99 billion at June 30, 2022.
Steven R. Gardner, Chairman, Chief Executive Officer, and President of the Company, commented, “We delivered solid results during a challenging second quarter. Our performance reflects our disciplined focus on prudent and proactive risk, liquidity, and capital management, as well as our commitment to expanding our long-term client relationships.
“Our track record of sound enterprise risk management, including the strategic actions we implemented during the first half of last year, has positioned us well in the face of economic uncertainty and turbulence in our industry. We are well-prepared to expand our business when compelling opportunities arise and once risk-adjusted spreads on new loans become more attractive given the dynamics of today’s interest rate environment. As always, our bankers are continuing to provide best-in-class service to our clients.
“I am proud of our team’s exceptional efforts during the quarter, focusing not only on existing clients but also cultivating new banking relationships. We anticipate the ongoing uncertainty and industry challenges to continue until the Federal Reserve completes its cycle of tighter monetary policy. Our organization remains committed to providing stability for our clients, communities, and employees while delivering long-term value for our stockholders.”
| ____________________ | ||
| (1) | Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures are set forth at the end of this press release. | |
| FINANCIAL HIGHLIGHTS | ||||||||||||
|
|
| Three Months Ended | ||||||||||
|
|
| June 30, |
| March 31, |
| June 30, | ||||||
| (Dollars in thousands, except per share data) |
| 2023 |
| 2023 |
| 2022 | ||||||
| Financial highlights (unaudited) |
|
|
|
|
|
| ||||||
| Net income |
| $ | 57,636 |
|
| $ | 62,562 |
|
| $ | 69,803 |
|
| Net interest income |
|
| 160,092 |
|
|
| 168,610 |
|
|
| 172,765 |
|
| Diluted earnings per share |
|
| 0.60 |
|
|
| 0.66 |
|
|
| 0.73 |
|
| Common equity dividend per share paid |
|
| 0.33 |
|
|
| 0.33 |
|
|
| 0.33 |
|
| Return on average assets |
|
| 1.09 | % |
|
| 1.15 | % |
|
| 1.29 | % |
| Return on average equity |
|
| 8.11 |
|
|
| 8.87 |
|
|
| 10.10 |
|
| Return on average tangible common equity (1) |
|
| 12.66 |
|
|
| 13.89 |
|
|
| 16.07 |
|
| Pre-provision net revenue to average assets (1) |
|
| 1.52 |
|
|
| 1.63 |
|
|
| 1.77 |
|
| Net interest margin |
|
| 3.33 |
|
|
| 3.44 |
|
|
| 3.49 |
|
| Cost of deposits |
|
| 1.27 |
|
|
| 0.94 |
|
|
| 0.06 |
|
| Cost of non-maturity deposits (1) |
|
| 0.71 |
|
|
| 0.54 |
|
|
| 0.04 |
|
| Efficiency ratio (1) |
|
| 54.1 |
|
|
| 51.7 |
|
|
| 49.0 |
|
| Noninterest expense as a percent of average assets |
|
| 1.91 |
|
|
| 1.87 |
|
|
| 1.83 |
|
| Total assets |
| $ | 20,747,883 |
|
| $ | 21,361,564 |
|
| $ | 21,993,919 |
|
| Total deposits |
|
| 16,539,875 |
|
|
| 17,207,810 |
|
|
| 18,084,613 |
|
| Non-maturity deposits as a percent of total deposits |
|
| 81.4 | % |
|
| 82.6 | % |
|
| 92.0 | % |
| Noninterest-bearing deposits as a percent of total deposits |
|
| 35.6 |
|
|
| 36.1 |
|
|
| 38.3 |
|
| Loan-to-deposit ratio |
|
| 82.3 |
|
|
| 82.4 |
|
|
| 83.2 |
|
| Book value per share |
| $ | 29.71 |
|
| $ | 29.58 |
|
| $ | 29.01 |
|
| Tangible book value per share (1) |
|
| 19.79 |
|
|
| 19.61 |
|
|
| 18.86 |
|
| Tangible common equity ratio |
|
| 9.59 | % |
|
| 9.20 | % |
|
| 8.52 | % |
| Total capital ratio |
|
| 17.24 |
|
|
| 16.33 |
|
|
| 14.41 |
|
| ____________________ | ||
| (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 $160.1 million in the second quarter of 2023, a decrease of $8.5 million, or 5.1%, from the first quarter of 2023. The decrease in net interest income was primarily attributable to a higher cost of funds as a result of the current interest rate environment and lower average loans and investment securities balances, partially offset by higher yields on average interest-earning assets.
The net interest margin for the second quarter of 2023 decreased 11 basis points to 3.33%, from 3.44% in the prior quarter. The lower net interest margin was due to a higher cost of funds, partially offset by higher yields on interest-earning assets and higher loan prepayment fees.
Net interest income for the second quarter of 2023 decreased $12.7 million, or 7.3%, compared to the second quarter of 2022. The decrease was attributable to a higher cost of funds and lower average loans and investment securities balances, partially offset by higher yields on average interest-earning assets.
| PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||
| CONSOLIDATED AVERAGE BALANCES AND YIELD DATA | |||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||
|
|
| Three Months Ended | |||||||||||||||||||||||||
|
|
| June 30, 2023 |
| March 31, 2023 |
| June 30, 2022 | |||||||||||||||||||||
| (Dollars in thousands) |
| Average |
| Interest |
| Average |
| Average |
| Interest |
| Average |
| Average |
| Interest |
| Average | |||||||||
| Assets |
|
| |||||||||||||||||||||||||
| Cash and cash equivalents |
| $ | 1,433,137 |
| $ | 16,600 |
| 4.65 | % |
| $ | 1,335,611 |
| $ | 13,594 |
| 4.13 | % |
| $ | 702,663 |
| $ | 1,211 |
| 0.69 | % |
| Investment securities |
|
| 3,926,568 |
|
| 25,936 |
| 2.64 |
|
|
| 4,165,681 |
|
| 26,791 |
| 2.57 |
|
|
| 4,254,961 |
|
| 17,560 |
| 1.65 |
|
| Loans receivable, net (1) (2) |
|
| 13,927,145 |
|
| 182,852 |
| 5.27 |
|
|
| 14,394,775 |
|
| 180,958 |
| 5.10 |
|
|
| 14,919,182 |
|
| 164,455 |
| 4.42 |
|
| Total interest-earning assets |
| $ | 19,286,850 |
| $ | 225,388 |
| 4.69 |
|
| $ | 19,896,067 |
| $ | 221,343 |
| 4.51 |
|
| $ | 19,876,806 |
| $ | 183,226 |
| 3.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
| Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
| Interest-bearing deposits |
| $ | 10,797,708 |
| $ | 53,580 |
| 1.99 | % |
| $ | 11,104,624 |
| $ | 40,234 |
| 1.47 | % |
| $ | 10,722,522 |
| $ | 2,682 |
| 0.10 | % |
| Borrowings |
|
| 1,131,465 |
|
| 11,716 |
| 4.15 |
|
|
| 1,319,114 |
|
| 12,499 |
| 3.83 |
|
|
| 933,417 |
|
| 7,779 |
| 3.34 |
|
| Total interest-bearing liabilities |
| $ | 11,929,173 |
| $ | 65,296 |
| 2.20 |
|
| $ | 12,423,738 |
| $ | 52,733 |
| 1.72 |
|
| $ | 11,655,939 |
| $ | 10,461 |
| 0.36 |
|
| Noninterest-bearing deposits |
| $ | 6,078,543 |
|
|
|
|
| $ | 6,219,818 |
|
|
|
|
| $ | 7,030,205 |
|
|
|
| ||||||
| Net interest income |
|
|
| $ | 160,092 |
|
|
|
|
| $ | 168,610 |
|
|
|
|
| $ | 172,765 |
|
| ||||||
| Net interest margin (3) |
|
|
|
|
| 3.33 | % |
|
|
|
|
| 3.44 | % |
|
|
|
|
| 3.49 | % | ||||||
| Cost of deposits (4) |
|
|
|
|
| 1.27 |
|
|
|
|
|
| 0.94 |
|
|
|
|
|
| 0.06 |
| ||||||
| Cost of funds (5) |
|
|
|
|
| 1.45 |
|
|
|
|
|
| 1.15 |
|
|
|
|
|
| 0.22 |
| ||||||
| Cost of non-maturity deposits (6) |
|
|
|
|
| 0.71 |
|
|
|
|
|
| 0.54 |
|
|
|
|
|
| 0.04 |
| ||||||
| Ratio of interest-earning assets to interest-bearing liabilities |
| 161.68 |
|
|
|
|
|
| 160.15 |
|
|
|
|
|
| 170.53 |
| ||||||||||
| ____________________ | ||
| (1) | Average balance includes loans held for sale and nonperforming loans and is net of deferred loan origination fees/costs, discounts/premiums, and the basis adjustment of certain loans included in fair value hedging relationships. | |
| (2) | Interest income includes net discount accretion of $2.9 million, $2.5 million, and $7.5 million for the three months ended June 30, 2023, March 31, 2023, and June 30, 2022, respectively. | |
| (3) | Represents annualized net interest income divided by average interest-earning assets. | |
| (4) | Represents annualized interest expense on deposits divided by the sum of average interest-bearing deposits and noninterest-bearing deposits. | |
| (5) | Represents annualized total interest expense divided by the sum of average total interest-bearing liabilities and noninterest-bearing deposits. | |
| (6) | Reconciliations of the non-GAAP measures are set forth at the end of this press release. | |
Provision for Credit Losses
For the second quarter of 2023, the Company recorded $1.5 million of provision expense, compared to $3.0 million for the first quarter of 2023, and $469,000 for the second quarter of 2022. The provision for credit losses was impacted by changes to the overall size, composition, asset quality trends, and unfunded commitments of the loan portfolio, as well as changes in the Company’s macroeconomic forecasts. The decrease in the provision expense for loan losses in the current quarter was primarily attributable to the decrease in loans held for investment.
|
|
| Three Months Ended | ||||||||||
|
|
| June 30, |
| March 31, |
| June 30, | ||||||
| (Dollars in thousands) |
| 2023 |
| 2023 |
| 2022 | ||||||
| Provision for credit losses |
|
|
|
|
|
| ||||||
| Provision for loan losses |
| $ | 610 |
|
| $ | 3,021 |
|
| $ | 3,803 |
|
| Provision for unfunded commitments |
|
| 1,003 |
|
|
| (189 | ) |
|
| (3,402 | ) |
| Provision for held-to-maturity securities |
|
| (114 | ) |
|
| 184 |
|
|
| 68 |
|
| Total provision for credit losses |
| $ | 1,499 |
|
| $ | 3,016 |
|
| $ | 469 |
|
Noninterest Income
Noninterest income for the second quarter of 2023 was $20.5 million, a decrease of $647,000 from the first quarter of 2023. The decrease was primarily due to a $1.7 million decrease in trust custodial account fees driven by annual tax fees earned during the first quarter, partially offset by a $770,000 increase in other income.
Noninterest income for the second quarter of 2023 decreased $1.7 million, compared to the second quarter of 2022. The decrease was primarily due to a $994,000 decrease in trust custodial account fees, a $903,000 decrease in escrow and exchange fees attributable to the lower transaction activity in the commercial real estate market, and a $791,000 decrease in net gain from loan sales, partially offset by an $858,000 increase in other income.
|
|
| Three Months Ended | ||||||||||
|
|
| June 30, |
| March 31, |
| June 30, | ||||||
| (Dollars in thousands) |
| 2023 |
| 2023 |
| 2022 | ||||||
| Noninterest income |
|
|
|
|
|
| ||||||
| Loan servicing income |
| $ | 493 |
|
| $ | 573 |
|
| $ | 502 |
|
| Service charges on deposit accounts |
|
| 2,670 |
|
|
| 2,629 |
|
|
| 2,690 |
|
| Other service fee income |
|
| 315 |
|
|
| 296 |
|
|
| 366 |
|
| Debit card interchange fee income |
|
| 914 |
|
|
| 803 |
|
|
| 936 |
|
| Earnings on bank owned life insurance |
|
| 3,487 |
|
|
| 3,374 |
|
|
| 3,240 |
|
| Net gain from sales of loans |
|
| 345 |
|
|
| 29 |
|
|
| 1,136 |
|
| Net gain (loss) from sales of investment securities |
|
| — |
|
|
| 138 |
|
|
| (31 | ) |
| Trust custodial account fees |
|
| 9,360 |
|
|
| 11,025 |
|
|
| 10,354 |
|
| Escrow and exchange fees |
|
| 924 |
|
|
| 1,058 |
|
|
| 1,827 |
|
| Other income |
|
| 2,031 |
|
|
| 1,261 |
|
|
| 1,173 |
|
| Total noninterest income |
| $ | 20,539 |
|
| $ | 21,186 |
|
| $ | 22,193 |
|
Noninterest Expense
Noninterest expense totaled $100.6 million for the second quarter of 2023, a decrease of $708,000 compared to the first quarter of 2023, primarily due to an $869,000 decrease in compensation and benefits from reduced staffing levels and payroll taxes, and a $785,000 decrease in legal and professional services expenses, partially offset by a $758,000 increase in deposit expense driven by higher deposit earnings credit rates.
Noninterest expense increased by $1.7 million compared to the second quarter of 2022. The increase was primarily due to a $5.1 million increase in deposit expense driven by higher deposit earnings credit rates, partially offset by a $4.1 million decrease in compensation and benefits from reduced staffing levels.
|
|
| Three Months Ended | ||||||||||
|
|
| June 30, |
| March 31, |
| June 30, | ||||||
| (Dollars in thousands) |
| 2023 |
| 2023 |
| 2022 | ||||||
| Noninterest expense |
|
|
|
|
|
| ||||||
| Compensation and benefits |
| $ | 53,424 |
|
| $ | 54,293 |
|
| $ | 57,562 |
|
| Premises and occupancy |
|
| 11,615 |
|
|
| 11,742 |
|
|
| 11,829 |
|
| Data processing |
|
| 7,488 |
|
|
| 7,265 |
|
|
| 6,604 |
|
| Other real estate owned operations, net |
|
| 8 |
|
|
| 108 |
|
|
| — |
|
| FDIC insurance premiums |
|
| 2,357 |
|
|
| 2,425 |
|
|
| 1,452 |
|
| Legal and professional services |
|
| 4,716 |
|
|
| 5,501 |
|
|
| 4,629 |
|
| Marketing expense |
|
| 1,879 |
|
|
| 1,838 |
|
|
| 1,926 |
|
| Office expense |
|
| 1,280 |
|
|
| 1,232 |
|
|
| 1,252 |
|
| Loan expense |
|
| 567 |
|
|
| 646 |
|
|
| 1,144 |
|
| Deposit expense |
|
| 9,194 |
|
|
| 8,436 |
|
|
| 4,081 |
|
| Amortization of intangible assets |
|
| 3,055 |
|
|
| 3,171 |
|
|
| 3,479 |
|
| Other expense |
|
| 5,061 |
|
|
| 4,695 |
|
|
| 5,016 |
|
| Total noninterest expense |
| $ | 100,644 |
|
| $ | 101,352 |
|
| $ | 98,974 |
|
Income Tax
For the second quarter of 2023, income tax expense totaled $20.9 million, resulting in an effective tax rate of 26.6%, compared with income tax expense of $22.9 million and an effective tax rate of 26.8% for the first quarter of 2023, and income tax expense of $25.7 million and an effective tax rate of 26.9% for the second quarter of 2022.
BALANCE SHEET HIGHLIGHTS
Loans
Loans held for investment totaled $13.61 billion at June 30, 2023, a decrease of $561.5 million, or 4.0%, from March 31, 2023, and a decrease of $1.44 billion, or 9.6%, from June 30, 2022. The decrease from March 31, 2023 was attributable to higher loan prepayments, maturities, and loan sales. The decrease from June 30, 2022 was primarily driven by lower loan fundings due to our disciplined approach around credit risk management and lower loan demand, as well as loan sales.
During the second quarter of 2023, new loan commitments totaled $148.5 million, and loan fundings totaled $71.6 million, compared with $116.8 million in loan commitments and $66.9 million in new loan fundings for the first quarter of 2023, and $1.50 billion in loan commitments and $1.12 billion in new loan fundings for the second quarter of 2022. During the second quarter of 2023, new origination activity remained muted given the current environment compared to the production levels seen in the second quarter of 2022.
At June 30, 2023, the total loan-to-deposit ratio was 82.3%, consistent with 82.4% and 83.2% at March 31, 2023 and June 30, 2022, respectively.
The following table presents the primary loan roll-forward activities for total gross loans, including both loans held for investment and loans held for sale, during the quarters indicated:
|
| Three Months Ended | |||||||||||
|
| June 30, |
| March 31, |
| June 30, | |||||||
| (Dollars in thousands) | 2023 |
| 2023 |
| 2022 | |||||||
| Beginning gross loan balance before basis adjustment | $ | 14,223,036 |
|
| $ | 14,740,867 |
|
| $ | 14,745,401 |
| |
| New commitments |
| 148,482 |
|
|
| 116,835 |
|
|
| 1,504,186 |
| |
| Unfunded new commitments |
| (76,928 | ) |
|
| (49,891 | ) |
|
| (382,478 | ) | |
| Net new fundings |
| 71,554 |
|
|
| 66,944 |
|
|
| 1,121,708 |
| |
| Purchased loans |
| — |
|
|
| — |
|
|
| 710 |
| |
| Amortization/maturities/payoffs |
| (582,948 | ) |
|
| (519,986 | ) |
|
| (936,893 | ) | |
| Net draws on existing lines of credit |
| 36,393 |
|
|
| (53,436 | ) |
|
| 200,255 |
| |
| Loan sales |
| (78,349 | ) |
|
| (803 | ) |
|
| (23,698 | ) | |
| Charge-offs |
| (3,986 | ) |
|
| (3,664 | ) |
|
| (5,831 | ) | |
| Transferred to other real estate owned |
| (104 | ) |
|
| (6,886 | ) |
|
| — |
| |
| Net (decrease) increase |
| (557,440 | ) |
|
| (517,831 | ) |
|
| 356,251 |
| |
| Ending gross loan balance before basis adjustment | $ | 13,665,596 |
|
| $ | 14,223,036 |
|
| $ | 15,101,652 |
| |
| Basis adjustment associated with fair value hedge (1) |
| (53,130 | ) |
|
| (50,005 | ) |
|
| (51,087 | ) | |
| Ending gross loan balance | $ | 13,612,466 |
|
| $ | 14,173,031 |
|
| $ | 15,050,565 |
| |
| ____________________ | ||
| (1) | Represents the basis adjustment associated with the application of hedge accounting on certain loans. | |
The following table presents the composition of the loans held for investment as of the dates indicated:
|
|
| June 30, |
| March 31, |
| June 30, | ||||||
| (Dollars in thousands) |
| 2023 |
| 2023 |
| 2022 | ||||||
| Investor loans secured by real estate |
|
|
|
|
|
| ||||||
| Commercial real estate (“CRE”) non-owner-occupied |
| $ | 2,571,246 |
|
| $ | 2,590,824 |
|
| $ | 2,788,715 |
|
| Multifamily |
|
| 5,788,030 |
|
|
| 5,955,239 |
|
|
| 6,188,086 |
|
| Construction and land |
|
| 428,287 |
|
|
| 420,079 |
|
|
| 331,734 |
|
| SBA secured by real estate (1) |
|
| 38,876 |
|
|
| 40,669 |
|
|
| 44,199 |
|
| Total investor loans secured by real estate |
|
| 8,826,439 |
|
|
| 9,006,811 |
|
|
| 9,352,734 |
|
| Business loans secured by real estate (2) |
|
|
|
|
|
| ||||||
| CRE owner-occupied |
|
| 2,281,721 |
|
|
| 2,342,175 |
|
|
| 2,486,747 |
|
| Franchise real estate secured |
|
| 318,539 |
|
|
| 371,902 |
|
|
| 387,683 |
|
| SBA secured by real estate (3) |
|
| 57,084 |
|
|
| 60,527 |
|
|
| 67,191 |
|
| Total business loans secured by real estate |
|
| 2,657,344 |
|
|
| 2,774,604 |
|
|
| 2,941,621 |
|
| Commercial loans (4) |
|
|
|
|
|
| ||||||
| Commercial and industrial |
|
| 1,744,763 |
|
|
| 1,967,128 |
|
|
| 2,295,421 |
|
| Franchise non-real estate secured |
|
| 351,944 |
|
|
| 388,722 |
|
|
| 415,830 |
|
| SBA non-real estate secured |
|
| 9,688 |
|
|
| 10,437 |
|
|
| 11,008 |
|
| Total commercial loans |
|
| 2,106,395 |
|
|
| 2,366,287 |
|
|
| 2,722,259 |
|
| Retail loans |
|
|
|
|
|
| ||||||
| Single family residential (5) |
|
| 70,993 |
|
|
| 70,913 |
|
|
| 77,951 |
|
| Consumer |
|
| 2,241 |
|
|
| 3,174 |
|
|
| 4,130 |
|
| Total retail loans |
|
| 73,234 |
|
|
| 74,087 |
|
|
| 82,081 |
|
| Loans held for investment before basis adjustment (6) |
|
| 13,663,412 |
|
|
| 14,221,789 |
|
|
| 15,098,695 |
|
| Basis adjustment associated with fair value hedge (7) |
|
| (53,130 | ) |
|
| (50,005 | ) |
|
| (51,087 | ) |
| Loans held for investment |
|
| 13,610,282 |
|
|
| 14,171,784 |
|
|
| 15,047,608 |
|
| Allowance for credit losses for loans held for investment |
|
| (192,333 | ) |
|
| (195,388 | ) |
|
| (196,075 | ) |
| Loans held for investment, net |
| $ | 13,417,949 |
|
| $ | 13,976,396 |
|
| $ | 14,851,533 |
|
|
|
|
|
|
|
|
| ||||||
| Total unfunded loan commitments |
| $ | 2,202,647 |
|
| $ | 2,413,169 |
|
| $ | 2,872,934 |
|
| Loans held for sale, at lower of cost or fair value |
| $ | 2,184 |
|
| $ | 1,247 |
|
| $ | 2,957 |
|
| ____________________ | ||
| (1) | SBA loans that are collateralized by hotel/motel real property. | |
| (2) | Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment. | |
| (3) | SBA loans that are collateralized by real property other than hotel/motel real property. | |
| (4) | Loans to businesses where the operating cash flow of the business is the primary source of repayment. | |
| (5) | Single family residential includes home equity lines of credit, as well as second trust deeds. | |
| (6) | Includes unaccreted fair value net purchase discounts of $48.4 million, $52.2 million, and $63.6 million as of June 30, 2023, March 31, 2023, and June 30, 2022, respectively. | |
| (7) | Represents the basis adjustment associated with the application of hedge accounting on certain loans. | |
The total end-of-period weighted average interest rate on loans, excluding fees and discounts, at June 30, 2023 was 4.73%, compared to 4.68% at March 31, 2023, and 4.06% at June 30, 2022. The quarter-over-quarter and year-over-year increases reflect higher rates on new originations and the repricing of loans as a result of the increases in benchmark interest rates.
The following table presents the composition of loan commitments originated during the quarters indicated:
|
|
| Three Months Ended | ||||||||||
|
|
| June 30, |
| March 31, |
| June 30, | ||||||
| (Dollars in thousands) |
| 2023 |
| 2023 |
| 2022 | ||||||
| Investor loans secured by real estate |
|
|
|
|
|
| ||||||
| CRE non-owner-occupied |
| $ | 1,470 |
|
| $ | 1,200 |
|
| $ | 195,896 |
|
| Multifamily |
|
| 53,522 |
|
|
| 4,464 |
|
|
| 540,263 |
|
| Construction and land |
|
| 24,525 |
|
|
| — |
|
|
| 192,852 |
|
| SBA secured by real estate (1) |
|
| — |
|
|
| — |
|
|
| 4,698 |
|
| Total investor loans secured by real estate |
|
| 79,517 |
|
|
| 5,664 |
|
|
| 933,709 |
|
| Business loans secured by real estate (2) |
|
|
|
|
|
| ||||||
| CRE owner-occupied |
|
| 3,062 |
|
|
| 6,562 |
|
|
| 220,936 |
|
| Franchise real estate secured |
|
| — |
|
|
| 3,217 |
|
|
| 17,500 |
|
| SBA secured by real estate (3) |
|
| — |
|
|
| 497 |
|
|
| 7,033 |
|
| Total business loans secured by real estate |
|
| 3,062 |
|
|
| 10,276 |
|
|
| 245,469 |
|
| Commercial loans (4) |
|
|
|
|
|
| ||||||
| Commercial and industrial |
|
| 58,730 |
|
|
| 93,150 |
|
|
| 255,922 |
|
| Franchise non-real estate secured |
|
| 1,853 |
|
|
| 1,666 |
|
|
| 49,604 |
|
| SBA non-real estate secured |
|
| 1,612 |
|
|
| 720 |
|
|
| 6,419 |
|
| Total commercial loans |
|
| 62,195 |
|
|
| 95,536 |
|
|
| 311,945 |
|
| Retail loans |
|
|
|
|
|
| ||||||
| Single family residential (5) |
|
| 3,708 |
|
|
| 5,359 |
|
|
| 13,063 |
|
| Total retail loans |
|
| 3,708 |
|
|
| 5,359 |
|
|
| 13,063 |
|
| Total loan commitments |
| $ | 148,482 |
|
| $ | 116,835 |
|
| $ | 1,504,186 |
|
| ____________________ | ||
| (1) | SBA loans that are collateralized by hotel/motel real property. | |
| (2) | Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment. | |
| (3) | SBA loans that are collateralized by real property other than hotel/motel real property. | |
| (4) | Loans to businesses where the operating cash flow of the business is the primary source of repayment. | |
| (5) | Single family residential includes home equity lines of credit, as well as second trust deeds. | |
The weighted average interest rate on new loan commitments was 6.72% in the second quarter of 2023, compared to 7.43% in the first quarter of 2023, and 4.11% in the second quarter of 2022. The decrease in weighted average interest rate on new loan commitments from the linked quarter was largely driven by the change in the loan commitment mix.
Asset Quality and Allowance for Credit Losses
At June 30, 2023, our allowance for credit losses (“ACL”) on loans held for investment was $192.3 million, a decrease of $3.1 million from March 31, 2023, and a decrease of $3.7 million from June 30, 2022. The slight decline in the ACL from March 31, 2023 and June 30, 2022 was commensurate with the relative decreases in loans held for investment balances.
During the second quarter of 2023, the Company incurred $3.7 million of net charge-offs, compared to $3.3 million during the first quarter of 2023, and $5.2 million during the second quarter of 2022.
The following table provides the allocation of the ACL for loans held for investment as well as the activity in the ACL attributed to various segments in the loan portfolio as of and for the period indicated:
|
| Three Months Ended June 30, 2023 | ||||||||||||||||
| (Dollars in thousands) | Beginning |
| Charge-offs |
| Recoveries |
| Provision for |
| Ending | ||||||||
| Investor loans secured by real estate |
|
|
|
|
|
|
|
|
| ||||||||
| CRE non-owner-occupied | $ | 31,715 |
| $ | (2,591 | ) |
| $ | — |
| $ | 2,421 |
|
| $ | 31,545 | |
| Multifamily |
| 57,787 |
|
| (73 | ) |
|
| 1 |
|
| (2,067 | ) |
|
| 55,648 | |
| Construction and land |
| 7,672 |
|
| — |
|
|
| — |
|
| 35 |
|
|
| 7,707 | |
| SBA secured by real estate (1) |
| 2,291 |
|
| — |
|
|
| — |
|
| 40 |
|
|
| 2,331 | |
| Business loans secured by real estate (2) |
|
|
|
|
|
|
|
|
| ||||||||
| CRE owner-occupied |
| 29,334 |
|
| (207 | ) |
|
| 12 |
|
| (624 | ) |
|
| 28,515 | |
| Franchise real estate secured |
| 7,790 |
|
| — |
|
|
| — |
|
| (935 | ) |
|
| 6,855 | |
| SBA secured by real estate (3) |
| 4,415 |
|
| — |
|
|
| 80 |
|
| 16 |
|
|
| 4,511 | |
| Commercial loans (4) |
|
|
|
|
|
|
|
|
| ||||||||
| Commercial and industrial |
| 37,659 |
|
| (225 | ) |
|
| 169 |
|
| 1,983 |
|
|
| 39,586 | |
| Franchise non-real estate secured |
| 15,721 |
|
| — |
|
|
| — |
|
| (1,079 | ) |
|
| 14,642 | |
| SBA non-real estate secured |
| 401 |
|
| — |
|
|
| 59 |
|
| (61 | ) |
|
| 399 | |
| Retail loans |
|
|
|
|
|
|
|
|
| ||||||||
| Single family residential (5) |
| 392 |
|
| — |
|
|
| — |
|
| 63 |
|
|
| 455 | |
| Consumer loans |
| 211 |
|
| (890 | ) |
|
| — |
|
| 818 |
|
|
| 139 | |
| Totals | $ | 195,388 |
| $ | (3,986 | ) |
| $ | 321 |
| $ | 610 |
|
| $ | 192,333 | |
| ____________________ | ||
| (1) | SBA loans that are collateralized by hotel/motel real property. | |
| (2) | Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment. | |
| (3) | SBA loans that are collateralized by real property other than hotel/motel real property. | |
| (4) | Loans to businesses where the operating cash flow of the business is the primary source of repayment. | |
| (5) | Single family residential includes home equity lines of credit, as well as second trust deeds. | |
The ratio of allowance for credit losses to loans held for investment at June 30, 2023 increased to 1.41%, compared to 1.38% at March 31, 2023, and 1.30% at June 30, 2022. The fair value net discount on loans acquired through total bank acquisitions was $48.4 million, or 0.35% of total loans held for investment, as of June 30, 2023, compared to $52.2 million, or 0.37% of total loans held for investment, as of March 31, 2023, and $63.
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
