Fourth Quarter 2023 Summary
- Net loss of $135.4 million, or $1.44 per diluted share; adjusted net income of $48.4 million, or $0.51 per diluted share(1)
- Sold $1.26 billion of available-for-sale securities for a net after-tax loss of $182.3 million, repositioning the balance sheet
- Net interest margin expanded 16 basis points to 3.28%
- Cost of deposits of 1.56%, and cost of non-maturity deposits(1) of 1.02%
- Non-maturity deposits increased to 84.7% of total deposits
- Reduced $617.0 million in higher cost brokered certificates of deposit and $200.0 million in FHLB borrowings during the quarter
- Total delinquency of 0.08% of loans held for investment, nonperforming assets to total assets of 0.13%, and net charge-offs to average loans of 0.03%
- Common equity tier 1 capital ratio of 14.32%, and total risk-based capital ratio of 17.29%
- Tangible book value per share(1) increased $0.33 to $20.22 compared to the prior quarter
- Tangible Common Equity (“TCE”) Ratio(1) increased to 10.72%
- Available liquidity of $9.91 billion; cash and cash equivalents was $936.5 million
IRVINE, Calif.–(BUSINESS WIRE)–$PPBI #PPBI–Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company” or “Pacific Premier”), the holding company of Pacific Premier Bank (the “Bank”), reported net loss of $135.4 million, or $1.44 per diluted share, for the fourth quarter of 2023, compared with net income of $46.0 million, or $0.48 per diluted share, for the third quarter of 2023, and net income of $73.7 million, or $0.77 per diluted share, for the fourth quarter of 2022.
For the fourth quarter of 2023, the Company’s return on average assets (“ROAA”) was (2.76)%, return on average equity (“ROAE”) was (19.01)%, and return on average tangible common equity (“ROATCE”)(1) was (28.01)%, compared to 0.88%, 6.43%, and 10.08%, respectively, for the third quarter of 2023, and 1.36%, 10.71%, and 16.99%, respectively, for the fourth quarter of 2022.
Excluding net loss of $254.1 million from an investment securities repositioning transaction and $2.1 million FDIC special assessment expense(1), the Company’s adjusted net income was $48.4 million, or $0.51 per diluted share, ROAA was 0.99%, ROAE was 7.03%, and ROATCE was 11.19% for the fourth quarter of 2023.
Total assets as of December 31, 2023 were $19.03 billion, compared to $20.28 billion at September 30, 2023, and $21.69 billion at December 31, 2022.
Steven R. Gardner, Chairman, Chief Executive Officer, and President of the Company, commented, “Our team delivered another solid quarter to close out 2023, an extraordinary year for the banking industry. During the fourth quarter, we proactively repositioned our securities portfolio to enhance our future earnings profile and provide additional liquidity as we navigate a challenging operating environment. The repositioning produced immediate results, fueling a 16 basis point net interest margin expansion in the fourth quarter while our capital ratios remain among the strongest in the industry. We generated $0.51 per share in operating earnings when excluding the impact from the securities portfolio repositioning and the FDIC special assessment expense.
“Our financial performance continues to demonstrate the strength of our franchise and our disciplined commitment to prudent capital, liquidity, and credit risk management. Throughout the year, we leveraged our best-in-class service to deepen our relationships with existing clients and attract new clients to the Bank, generating meaningful growth in new deposit account openings while maintaining pricing discipline. The new account opening activity, coupled with our ability to opportunistically deploy liquidity generated from the securities portfolio repositioning, allowed us to reduce higher cost wholesale funding in the fourth quarter by $817 million and to tightly manage our overall cost of funds, which increased only two basis points to 1.69%.
“We enter 2024 on solid footing, with strong capital levels, ready access to significant liquidity, and favorable asset quality measures. Through our relationship-based business model, our bankers consistently communicate with our clients and monitor key trends within their individual businesses and industries. This access provides our organization with valuable information relative to market dynamics, including emerging trends in the commercial real estate markets, which we are closely monitoring. We are committed to responding quickly and proactively to any signs of stress within the loan portfolio. In short, we believe we are well-positioned heading into 2024 to continue to deliver value for our shareholders, clients, employees, and the communities we serve.”
|
FINANCIAL HIGHLIGHTS |
||||||||||||
|
|
Three Months Ended |
|||||||||||
|
|
December 31, |
|
September 30, |
|
December 31, |
|||||||
|
(Dollars in thousands, except per share data) |
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
Financial Highlights |
|
|
|
|||||||||
|
Net (loss) income |
$ |
(135,376 |
) |
$ |
46,030 |
|
$ |
73,673 |
|
|||
|
Net interest income |
|
146,789 |
|
|
149,548 |
|
|
181,396 |
|
|||
|
Diluted earnings per share |
|
(1.44 |
) |
|
0.48 |
|
|
0.77 |
|
|||
|
Common equity dividend per share paid |
|
0.33 |
|
|
0.33 |
|
|
0.33 |
|
|||
|
Return on average assets |
|
(2.76 |
)% |
|
0.88 |
% |
|
1.36 |
% |
|||
|
Return on average equity |
|
(19.01 |
) |
|
6.43 |
|
|
10.71 |
|
|||
|
Return on average tangible common equity (1) |
|
(28.01 |
) |
|
10.08 |
|
|
16.99 |
|
|||
|
Pre-provision net (loss) revenue on average assets (1) |
|
(3.88 |
) |
|
1.27 |
|
|
1.89 |
|
|||
|
Net interest margin |
|
3.28 |
|
|
3.12 |
|
|
3.61 |
|
|||
|
Cost of deposits |
|
1.56 |
|
|
1.50 |
|
|
0.58 |
|
|||
|
Cost of non-maturity deposits (1) |
|
1.02 |
|
|
0.89 |
|
|
0.31 |
|
|||
|
Efficiency ratio (1) |
|
60.1 |
|
|
59.0 |
|
|
47.4 |
|
|||
|
Noninterest expense as a percent of average assets |
|
2.09 |
|
|
1.96 |
|
|
1.83 |
|
|||
|
Total assets |
$ |
19,026,645 |
|
$ |
20,275,720 |
|
$ |
21,688,017 |
|
|||
|
Total deposits |
|
14,995,626 |
|
|
16,007,447 |
|
|
17,352,401 |
|
|||
|
Non-maturity deposits as a percent of total deposits |
|
84.7 |
% |
|
82.8 |
% |
|
85.6 |
% |
|||
|
Noninterest-bearing deposits as a percent of total deposits |
|
32.9 |
|
|
36.1 |
|
|
36.3 |
|
|||
|
Loans-to-deposit ratio |
|
88.6 |
|
|
82.9 |
|
|
84.6 |
|
|||
|
Book value per share |
$ |
30.07 |
|
$ |
29.78 |
|
$ |
29.45 |
|
|||
|
Tangible book value per share (1) |
|
20.22 |
|
|
19.89 |
|
|
19.38 |
|
|||
|
Tangible common equity ratio |
|
10.72 |
% |
|
9.87 |
% |
|
8.88 |
% |
|||
|
Common equity tier 1 capital ratio |
|
14.32 |
|
|
14.87 |
|
|
12.99 |
|
|||
|
Total capital ratio |
|
17.29 |
|
|
17.74 |
|
|
15.53 |
|
|||
|
______________________________ |
||
|
(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 $146.8 million in the fourth quarter of 2023, a decrease of $2.8 million, or 1.8%, from the third quarter of 2023. The decrease in net interest income was primarily attributable to lower average interest-earning asset balances, partially offset by higher yields on interest-earning assets as well as lower average wholesale/brokered CD balances and lower average borrowings, both a direct result of our balance sheet repositioning.
The net interest margin for the fourth quarter of 2023 increased 16 basis points to 3.28% from 3.12% in the third quarter of 2023. The increase was primarily due to higher loan yields as well as higher investment securities yields resulting from the sale of lower-yielding available-for-sale (“AFS”) securities of $1.26 billion at fair value at a weighted average yield of 1.34% and redeploying part of the sale proceeds into higher-yielding AFS securities at a weighted average yield of 5.28% during the fourth quarter of 2023.
Net interest income for the fourth quarter of 2023 decreased $34.6 million, or 19.1%, compared to the fourth quarter of 2022. The decrease was primarily attributable to a higher cost of funds as a result of the higher interest rate environment.
|
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES |
|||||||||||||||||||||||||||
|
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA |
|||||||||||||||||||||||||||
|
(Unaudited) |
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||
|
|
|
Three Months Ended |
|||||||||||||||||||||||||
|
|
|
December 31, 2023 |
|
September 30, 2023 |
|
December 31, 2022 |
|||||||||||||||||||||
|
(Dollars in thousands) |
Average Balance |
|
Interest |
|
Average
Yield/ |
|
Average Balance |
|
Interest |
|
Average Yield/ Cost |
|
Average Balance |
|
Interest |
|
Average Yield/ |
||||||||||
|
Assets |
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Cash and cash equivalents |
$ |
1,281,793 |
$ |
15,744 |
4.87 |
% |
$ |
1,695,508 |
$ |
21,196 |
4.96 |
% |
$ |
1,015,197 |
$ |
8,636 |
3.37 |
% |
|||||||||
|
Investment securities |
|
3,203,608 |
|
24,675 |
3.08 |
|
|
3,828,766 |
|
25,834 |
2.70 |
|
|
4,130,042 |
|
24,688 |
2.39 |
|
|||||||||
|
Loans receivable, net (1) (2) |
|
13,257,767 |
|
176,773 |
5.29 |
|
|
13,475,194 |
|
177,032 |
5.21 |
|
|
14,799,417 |
|
184,457 |
4.94 |
|
|||||||||
|
Total interest-earning assets |
$ |
17,743,168 |
$ |
217,192 |
4.86 |
|
$ |
18,999,468 |
$ |
224,062 |
4.68 |
|
$ |
19,944,656 |
$ |
217,781 |
4.33 |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Liabilities |
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Interest-bearing deposits |
$ |
10,395,116 |
$ |
60,915 |
2.32 |
% |
$ |
10,542,884 |
$ |
62,718 |
2.36 |
% |
$ |
11,021,383 |
$ |
25,865 |
0.93 |
% |
|||||||||
|
Borrowings |
|
942,689 |
|
9,488 |
4.01 |
|
|
1,131,656 |
|
11,796 |
4.15 |
|
|
1,157,258 |
|
10,520 |
3.62 |
|
|||||||||
|
Total interest-bearing liabilities |
$ |
11,337,805 |
$ |
70,403 |
2.46 |
|
$ |
11,674,540 |
$ |
74,514 |
2.53 |
|
$ |
12,178,641 |
$ |
36,385 |
1.19 |
|
|||||||||
|
Noninterest-bearing deposits |
$ |
5,141,585 |
|
|
$ |
6,001,033 |
|
|
$ |
6,587,400 |
|
|
|||||||||||||||
|
Net interest income |
|
$ |
146,789 |
|
|
$ |
149,548 |
|
|
$ |
181,396 |
|
|||||||||||||||
|
Net interest margin (3) |
|
|
3.28 |
% |
|
|
3.12 |
% |
|
|
3.61 |
% |
|||||||||||||||
|
Cost of deposits (4) |
|
|
1.56 |
|
|
|
1.50 |
|
|
|
0.58 |
|
|||||||||||||||
|
Cost of funds (5) |
|
|
1.69 |
|
|
|
1.67 |
|
|
|
0.77 |
|
|||||||||||||||
|
Cost of non-maturity deposits (6) |
1.02 |
|
|
|
0.89 |
|
|
|
0.31 |
|
|||||||||||||||||
|
Ratio of interest-earning assets to interest-bearing liabilities |
156.50 |
|
|
|
162.74 |
|
|
|
163.77 |
|
|||||||||||||||||
|
______________________________ |
||
|
(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 $2.6 million, $2.2 million, and $3.5 million, for the three months ended December 31, 2023, September 30, 2023, and December 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. |
|
Provision for Credit Losses
For the fourth quarter of 2023, the Company recorded a $1.7 million provision expense, compared to a $3.9 million provision expense for the third quarter of 2023, and a $2.8 million provision expense for the fourth quarter of 2022. The provision for credit losses was impacted by changes to the overall size, composition, and asset quality trends of the loan portfolio, as well as changes in the economic forecasts.
The provision expense for loan losses for the fourth quarter of 2023 was largely attributable to increases associated with economic forecasts, partially offset by the changes in loan composition. The provision recapture for unfunded commitments was attributable to lower unfunded commitments as well as changes in economic forecasts during the quarter.
|
|
Three Months Ended |
||||||||||
|
|
December 31, |
|
September 30, |
|
December 31, |
||||||
|
(Dollars in thousands) |
|
2023 |
|
|
|
2023 |
|
|
2022 |
|
|
|
Provision for Credit Losses |
|
|
|
||||||||
|
Provision for loan losses |
$ |
8,275 |
|
$ |
2,517 |
$ |
3,899 |
|
|||
|
Provision for unfunded commitments |
|
(6,577 |
) |
|
1,386 |
|
(1,013 |
) |
|||
|
Provision for held-to-maturity securities |
|
(2 |
) |
|
15 |
|
(48 |
) |
|||
|
Total provision for credit losses |
$ |
1,696 |
|
$ |
3,918 |
$ |
2,838 |
|
|||
Noninterest Income
Noninterest loss for the fourth quarter of 2023 was $234.2 million, compared to noninterest income of $18.6 million for the third quarter of 2023. The decrease was related to the investment securities portfolio repositioning during the fourth quarter of 2023 whereby the Bank sold $1.26 billion of its AFS securities portfolio for a loss of $254.1 million. Excluding the loss from sales of AFS securities, noninterest income was $19.9 million, an increase of $1.3 million from the third quarter of 2023.
Noninterest income for the fourth quarter of 2023 decreased $254.7 million, compared to the fourth quarter of 2022. The decrease was primarily due to the $254.1 million net loss from sales of investment securities during the fourth quarter of 2023.
|
|
Three Months Ended |
|||||||||
|
|
December 31, |
|
September 30, |
|
December 31, |
|||||
|
(Dollars in thousands) |
2023 |
|
2023 |
|
2022 |
|||||
|
Noninterest income |
|
|
|
|||||||
|
Loan servicing income |
$ |
359 |
|
$ |
533 |
$ |
346 |
|||
|
Service charges on deposit accounts |
|
2,648 |
|
|
2,673 |
|
2,689 |
|||
|
Other service fee income |
|
322 |
|
|
280 |
|
295 |
|||
|
Debit card interchange fee income |
|
844 |
|
|
924 |
|
1,048 |
|||
|
Earnings on bank owned life insurance |
|
3,678 |
|
|
3,579 |
|
3,359 |
|||
|
Net (loss) gain from sales of loans |
|
(4 |
) |
|
45 |
|
151 |
|||
|
Net (loss) gain from sales of investment securities |
|
(254,065 |
) |
|
— |
|
— |
|||
|
Trust custodial account fees |
|
9,388 |
|
|
9,356 |
|
9,722 |
|||
|
Escrow and exchange fees |
|
1,074 |
|
|
938 |
|
1,282 |
|||
|
Other income |
|
1,562 |
|
|
223 |
|
1,605 |
|||
|
Total noninterest (loss) income |
$ |
(234,194 |
) |
$ |
18,551 |
$ |
20,497 |
|||
Noninterest Expense
Noninterest expense totaled $102.8 million for the fourth quarter of 2023, an increase of $585,000 compared to the third quarter of 2023, primarily as a result of the $2.1 million FDIC special assessment. Excluding the special assessment, noninterest expense decreased $1.5 million from the prior quarter primarily due to a $2.2 million decrease in compensation and benefits, partially offset by a $341,000 increase in deposit expense.
Noninterest expense increased by $3.6 million compared to the fourth quarter of 2022 primarily due to a $4.4 million increase in deposit expense, driven by higher deposit earnings credit rates, and a $2.8 million increase in FDIC insurance premiums, partially offset by a $2.4 million decrease in compensation and benefits, a $512,000 decrease in legal and professional services, and a $458,000 decrease in premises and occupancy.
|
|
Three Months Ended |
|||||||||
|
|
December 31, |
|
September 30, |
|
December 31, |
|||||
|
(Dollars in thousands) |
2023 |
|
2023 |
|
2022 |
|||||
|
Noninterest expense |
|
|
|
|||||||
|
Compensation and benefits |
$ |
51,907 |
$ |
54,068 |
|
$ |
54,347 |
|||
|
Premises and occupancy |
|
11,183 |
|
11,382 |
|
|
11,641 |
|||
|
Data processing |
|
7,409 |
|
7,517 |
|
|
6,991 |
|||
|
Other real estate owned operations, net |
|
103 |
|
(4 |
) |
|
— |
|||
|
FDIC insurance premiums |
|
4,267 |
|
2,324 |
|
|
1,463 |
|||
|
Legal and professional services |
|
4,663 |
|
4,243 |
|
|
5,175 |
|||
|
Marketing expense |
|
1,728 |
|
1,635 |
|
|
1,985 |
|||
|
Office expense |
|
1,367 |
|
1,079 |
|
|
1,310 |
|||
|
Loan expense |
|
437 |
|
476 |
|
|
743 |
|||
|
Deposit expense |
|
11,152 |
|
10,811 |
|
|
6,770 |
|||
|
Amortization of intangible assets |
|
3,022 |
|
3,055 |
|
|
3,440 |
|||
|
Other expense |
|
5,532 |
|
5,599 |
|
|
5,317 |
|||
|
Total noninterest expense |
$ |
102,770 |
$ |
102,185 |
|
$ |
99,182 |
|||
Income Tax
For the fourth quarter of 2023, our income tax benefit totaled $56.5 million, resulting in an effective tax rate of 29.4%, compared to income tax expense of $16.0 million and an effective tax rate of 25.8% for the third quarter of 2023, and income tax expense of $26.2 million and an effective tax rate of 26.2% for the fourth quarter of 2022. The income tax benefit was primarily attributable to the pretax loss recorded for the fourth quarter, driven by the balance sheet repositioning related to the Bank’s investment securities portfolio.
For the full year 2023, our income tax expense totaled $3.2 million, resulting in an effective tax rate of 9.4%, compared to income tax expense of $100.6 million and an effective tax rate of 26.18% for the full year 2022. The decrease in effective tax rate was primarily attributable to the decrease in pretax income.
BALANCE SHEET HIGHLIGHTS
Loans
Loans held for investment totaled $13.29 billion at December 31, 2023, an increase of $18.9 million, or 0.1%, from September 30, 2023, and a decrease of $1.39 billion, or (9.5)%, from December 31, 2022. The increase from September 30, 2023 was driven primarily by increased net draws on existing lines of credits, partially offset by higher loan prepayments and maturities.
During the fourth quarter of 2023, new loan commitments totaled $128.1 million, and new loan fundings totaled $103.7 million, compared with $67.8 million in loan commitments and $25.6 million in new loan fundings for the third quarter of 2023, and $239.8 million in loan commitments and $149.1 million in new loan fundings for the fourth quarter of 2022.
At December 31, 2023, the total loan-to-deposit ratio was 88.6%, compared with 82.9% and 84.6% at September 30, 2023 and December 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 |
|||||||||||
|
|
December 31, |
|
September 30, |
|
December 31, |
|||||||
|
(Dollars in thousands) |
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
Beginning loan balance |
$ |
13,319,591 |
|
$ |
13,665,596 |
|
$ |
14,979,098 |
|
|||
|
New commitments |
|
128,102 |
|
|
67,811 |
|
|
239,829 |
|
|||
|
Unfunded new commitments |
|
(24,429 |
) |
|
(42,185 |
) |
|
(90,758 |
) |
|||
|
Net new fundings |
|
103,673 |
|
|
25,626 |
|
|
149,071 |
|
|||
|
Amortization/maturities/payoffs |
|
(422,607 |
) |
|
(370,044 |
) |
|
(481,120 |
) |
|||
|
Net draws on existing lines of credit |
|
354,711 |
|
|
7,180 |
|
|
107,560 |
|
|||
|
Loan sales |
|
(32,464 |
) |
|
(1,206 |
) |
|
(9,471 |
) |
|||
|
Charge-offs |
|
(4,138 |
) |
|
(7,561 |
) |
|
(4,271 |
) |
|||
|
Transferred to other real estate owned |
|
(195 |
) |
|
— |
|
|
— |
|
|||
|
Net decrease |
|
(1,020 |
) |
|
(346,005 |
) |
|
(238,231 |
) |
|||
|
Ending gross loan balance before basis adjustment |
|
13,318,571 |
|
|
13,319,591 |
|
|
14,740,867 |
|
|||
|
Basis adjustment associated with fair value hedge (1) |
|
(29,551 |
) |
|
(48,830 |
) |
|
(61,926 |
) |
|||
|
Ending gross loan balance |
$ |
13,289,020 |
|
$ |
13,270,761 |
|
$ |
14,678,941 |
|
|||
|
______________________________ |
||
|
(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:
|
|
December 31, |
|
September 30, |
|
December 31, |
|||||||
|
(Dollars in thousands) |
|
2023 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
Investor loans secured by real estate |
|
|
|
|||||||||
|
Commercial real estate (“CRE”) non-owner-occupied |
$ |
2,421,772 |
|
$ |
2,514,056 |
|
$ |
2,660,321 |
|
|||
|
Multifamily |
|
5,645,310 |
|
|
5,719,210 |
|
|
6,112,026 |
|
|||
|
Construction and land |
|
472,544 |
|
|
444,576 |
|
|
399,034 |
|
|||
|
SBA secured by real estate (1) |
|
36,400 |
|
|
37,754 |
|
|
42,135 |
|
|||
|
Total investor loans secured by real estate |
|
8,576,026 |
|
|
8,715,596 |
|
|
9,213,516 |
|
|||
|
Business loans secured by real estate (2) |
|
|
|
|||||||||
|
CRE owner-occupied |
|
2,191,334 |
|
|
2,228,802 |
|
|
2,432,163 |
|
|||
|
Franchise real estate secured |
|
304,514 |
|
|
313,451 |
|
|
378,057 |
|
|||
|
SBA secured by real estate (3) |
|
50,741 |
|
|
53,668 |
|
|
61,368 |
|
|||
|
Total business loans secured by real estate |
|
2,546,589 |
|
|
2,595,921 |
|
|
2,871,588 |
|
|||
|
Commercial loans (4) |
|
|
|
|||||||||
|
Commercial and industrial |
|
1,790,608 |
|
|
1,588,771 |
|
|
2,160,948 |
|
|||
|
Franchise non-real estate secured |
|
319,721 |
|
|
335,053 |
|
|
404,791 |
|
|||
|
SBA non-real estate secured |
|
10,926 |
|
|
10,667 |
|
|
11,100 |
|
|||
|
Total commercial loans |
|
2,121,255 |
|
|
1,934,491 |
|
|
2,576,839 |
|
|||
|
Retail loans |
|
|
|
|||||||||
|
Single family residential (5) |
|
72,752 |
|
|
70,984 |
|
|
72,997 |
|
|||
|
Consumer |
|
1,949 |
|
|
1,958 |
|
|
3,284 |
|
|||
|
Total retail loans |
|
74,701 |
|
|
72,942 |
|
|
76,281 |
|
|||
|
Loans held for investment before basis adjustment (6) |
|
13,318,571 |
|
|
13,318,950 |
|
|
14,738,224 |
|
|||
|
Basis adjustment associated with fair value hedge (7) |
|
(29,551 |
) |
|
(48,830 |
) |
|
(61,926 |
) |
|||
|
Loans held for investment |
|
13,289,020 |
|
|
13,270,120 |
|
|
14,676,298 |
|
|||
|
Allowance for credit losses for loans held for investment |
|
(192,471 |
) |
|
(188,098 |
) |
|
(195,651 |
) |
|||
|
Loans held for investment, net |
$ |
13,096,549 |
|
$ |
13,082,022 |
|
$ |
14,480,647 |
|
|||
|
|
|
|
|
|||||||||
|
Total unfunded loan commitments |
$ |
1,703,470 |
|
$ |
2,110,565 |
|
$ |
2,489,203 |
|
|||
|
Loans held for sale, at lower of cost or fair value |
$ |
— |
|
$ |
641 |
|
$ |
2,643 |
|
|||
|
______________________________ |
||
|
(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 net deferred origination (fees) costs of $(74,000), $451,000, and $(1.9) million, and unaccreted fair value net purchase discounts of $43.3 million, $46.2 million, and $54.8 million as of December 31, 2023, September 30, 2023, and December 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 December 31, 2023 was 4.87%, compared with 4.76% at September 30, 2023 and 4.61% at December 31, 2022. The quarter-over-quarter and year-over-year increases reflect higher rates on new loan 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 |
||||||||
|
|
December 31, |
|
September 30, |
|
December 31, |
||||
|
(Dollars in thousands) |
2023 |
|
2023 |
|
2022 |
||||
|
Investor loans secured by real estate |
|
|
|
||||||
|
CRE non-owner-occupied |
$ |
1,450 |
$ |
2,900 |
$ |
34,258 |
|||
|
Multifamily |
|
94,462 |
|
3,687 |
|
28,285 |
|||
|
Construction and land |
|
— |
|
17,400 |
|
31,175 |
|||
|
Total investor loans secured by real estate |
|
95,912 |
|
23,987 |
|
93,718 |
|||
|
Business loans secured by real estate (1) |
|
|
|
||||||
|
CRE owner-occupied |
|
3,870 |
|
— |
|
24,266 |
|||
|
Franchise real estate secured |
|
— |
|
— |
|
840 |
|||
|
SBA secured by real estate (2) |
|
— |
|
— |
|
4,198 |
|||
|
Total business loans secured by real estate |
|
3,870 |
|
— |
|
29,304 |
|||
|
Commercial loans (3) |
|
|
|
||||||
|
Commercial and industrial |
|
24,766 |
|
40,399 |
|
96,566 |
|||
|
Franchise non-real estate secured |
|
— |
|
— |
|
14,130 |
|||
|
SBA non-real estate secured |
|
— |
|
406 |
|
1,058 |
|||
|
Total commercial loans |
|
24,766 |
|
40,805 |
|
111,754 |
|||
|
Retail loans |
|
|
|
||||||
|
Single family residential (4) |
|
3,554 |
|
3,019 |
|
5,053 |
|||
|
Total retail loans |
|
3,554 |
|
3,019 |
|
5,053 |
|||
|
Total loan commitments |
$ |
128,102 |
$ |
67,811 |
$ |
239,829 |
|||
|
______________________________ |
||
|
(1) |
Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment. |
|
|
(2) |
SBA loans that are collateralized by real property other than hotel/motel real property. |
|
|
(3) |
Loans to businesses where the operating cash flow of the business is the primary source of repayment. |
|
|
(4) |
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 6.34% in the fourth quarter of 2023, compared to 8.01% in the third quarter of 2023, and 6.34% in the fourth quarter of 2022.
Asset Quality and Allowance for Credit Losses
At December 31, 2023, our allowance for credit losses (“ACL”) on loans held for investment was $192.5 million, an increase of $4.4 million from September 30, 2023, and a decrease of $3.2 million from December 31, 2022. The change in ACL from September 30, 2023 was largely impacted by changes in economic forecasts and, to a lesser extent, loan composition.
During the fourth quarter of 2023, the Company incurred $3.9 million of net charge-offs, compared with $6.8 million of net charge-offs during the third quarter of 2023, and $3.8 million of net charge-offs during the fourth 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 December 31, 2023 |
||||||||||||||||
|
(Dollars in thousands) |
Beginning |
|
Charge-offs |
|
Recoveries |
|
Provision for Credit |
|
Ending |
||||||||
|
Investor loans secured by real estate |
|
|
|
|
|
||||||||||||
|
CRE non-owner occupied |
$ |
31,583 |
$ |
(815 |
) |
$ |
93 |
$ |
169 |
|
$ |
31,030 |
|||||
|
Multifamily |
|
55,221 |
|
(1,582 |
) |
|
— |
|
2,673 |
|
|
56,312 |
|||||
|
Construction and land |
|
8,506 |
|
— |
|
|
— |
|
808 |
|
|
9,314 |
|||||
|
SBA secured by real estate (1) |
|
2,199 |
|
— |
|
|
— |
|
(17 |
) |
|
2,182 |
|||||
|
Business loans secured by real estate (2) |
|
|
|
|
|
||||||||||||
|
CRE owner-occupied |
|
29,086 |
|
— |
|
|
4 |
|
(303 |
) |
|
28,787 |
|||||
|
Franchise real estate secured |
|
7,566 |
|
— |
|
|
— |
|
(67 |
) |
|
7,499 |
|||||
|
SBA secured by real estate (3) |
|
4,562 |
|
— |
|
|
40 |
|
(175 |
) |
|
4,427 |
|||||
|
Commercial loans (4) |
|
|
|
|
|
||||||||||||
|
Commercial and industrial |
|
32,497 |
|
(1,740 |
) |
|
96 |
|
5,839 |
|
|
36,692 |
|||||
|
Franchise non-real estate secured |
|
15,779 |
|
— |
|
|
— |
|
(648 |
) |
|
15,131 |
|||||
|
SBA non-real estate secured |
|
472 |
|
— |
|
|
3 |
|
(17 |
) |
|
458 |
|||||
|
Retail loans |
|
|
|
|
|
||||||||||||
|
Single family residential (5) |
|
491 |
|
— |
|
|
— |
|
14 |
|
|
505 |
|||||
|
Consumer loans |
|
136 |
|
(1 |
) |
|
— |
|
(1 |
) |
|
134 |
|||||
|
Totals |
$ |
188,098 |
$ |
(4,138 |
) |
$ |
236 |
$ |
8,275 |
|
$ |
192,471 |
|||||
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
