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Section 1: 8-K (8-K)

ppbi-20200724
0001028918false00010289182020-07-242020-07-24

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K


CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) July 24, 2020
PACIFIC PREMIER BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware0-2219333-0743196
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
17901 Von Karman Avenue, Suite 1200, Irvine, CA 92614
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (949) 864-8000

Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, par value $0.01 per sharePPBINASDAQ Stock Market




ITEM 2.02          RESULTS OF OPERATIONS AND FINANCIAL CONDITION
 
On July 27, 2020, Pacific Premier Bancorp, Inc. ("PPBI") issued a press release setting forth its (unaudited) financial results for the second quarter of 2020.  A copy of PPBI’s press release is furnished as Exhibit 99.1 and hereby incorporated by reference. A presentation regarding PPBI’s financial results for the three months ended June 30, 2020 is furnished as Exhibit 99.2 and incorporated herein by reference.

Except as specifically provided in Item 8.01 below, the information furnished under Item 2.02 and Item 9.01 of this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2 to this Current Report on Form 8-K, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of PPBI under the Securities Act of 1933, as amended (the "Securities Act"), except as shall be set forth by specific reference in such filing.


ITEM 8.01         OTHER EVENTS

Quarterly Dividend

On July 24, 2020, PPBI’s Board of Directors declared a $0.25 per share dividend, payable on August 14, 2020 to stockholders of record on August 7, 2020.


ITEM 9.01           FINANCIAL STATEMENTS AND EXHIBITS
104Cover Page Interactive Data File (embedded within the Inline XBRL document)


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PACIFIC PREMIER BANCORP, INC.
    
Dated:July 27, 2020By:
/s/ STEVEN R. GARDNER
   Steven R. Gardner
   Chairman, President and Chief Executive Officer

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Section 2: EX-99.1 (EX-99.1)

Document

Exhibit 99.1



Pacific Premier Bancorp, Inc. Announces Second Quarter 2020 Results (Unaudited) and a Quarterly Cash Dividend of $0.25 Per Share
 
Second Quarter 2020 Summary
 
Net loss of $99.1 million, or $1.41 per diluted share
Pre-provision net revenue ("PPNR") of $60.6 million, excluding $39.3 million of merger-related expense
Net interest margin of 3.79% and core net interest margin of 3.59%
Nonperforming assets represent 0.17% of total assets
Allowance for credit losses (“ACL”) to total loans held for investment of 2.02% at June 30, 2020 excluding Small Business Administration’s Paycheck Protection Program (“PPP”) loans totaling $1.12 billion
Loans held for investment include fair value discount of $144.5 million, or 1.03%, as of June 30, 2020
Non-maturity deposits of $15.1 billion, or 89% of total deposits
Noninterest bearing deposits represent 35% of total deposits
Cost of deposits of 0.32% in the second quarter, compared with 0.48% in the prior quarter
Closed the acquisition of Opus Bank (“Opus”) effective June 1, 2020; systems integration scheduled for first week in October 2020
Completed an offering of subordinated notes for gross proceeds of $150 million

        Irvine, Calif., July 27, 2020 -- Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company” or “Pacific Premier”), the holding company of Pacific Premier Bank (the “Bank”), reported a net loss of $99.1 million, or $1.41 per diluted share, for the second quarter of 2020, compared with net income of $25.7 million, or $0.43 per diluted share, for the first quarter of 2020 and net income of $38.5 million, or $0.62 per diluted share, for the second quarter of 2019. Financial results for the second quarter of 2020 reflected a current period provision for credit losses of $160.6 million, of which $84.4 million was a result of the initial establishment of the Day 1 reserves required by the current expected credit losses (“CECL”) methodology in conjunction with the closing of the Opus acquisition, and $76.2 million primarily related to the deteriorating economic forecast utilized by the Company in its CECL model. Additionally, the Company incurred merger related costs of $39.3 million with the closing of the Opus acquisition during the quarter.

The Company completed the acquisition of Opus effective June 1, 2020. The Company's financial statements for the second quarter include 30 days of Opus's operations, post-merger, which impacts the comparability of the current quarter's results to prior periods. At closing, Opus had $8.32 billion in total assets, $5.94 billion in gross loans and $6.91 billion in total deposits.
        For the three months ended June 30, 2020, the Company’s return on average assets (“ROAA”) was (2.61)%, return on average equity (“ROAE”) was (17.76)% and return on average tangible common equity (“ROATCE”) was (29.40)%, compared to 0.89%, 5.05% and 9.96%, respectively, for the first quarter of 2020 and 1.33%, 7.71% and 15.16%, respectively, for the second quarter of 2019. Total assets were $20.5 billion at June 30, 2020, compared with $12.0 billion at March 31, 2020 and $11.8 billion at June 30, 2019. A reconciliation of the non–U.S. GAAP measure of ROATCE to the U.S. GAAP measure of common stockholders' equity is set forth at the end of this press release.

Steven R. Gardner, Chairman, President and Chief Executive Officer of the Company, commented, “Our team is functioning at a high level and driving solid results. Notwithstanding the impact of the merger and COVID-19 related items, we accomplished a great deal during the second quarter.

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“On June 1st, we successfully closed the acquisition of Opus, our 11th acquisition and the largest in our history. As a result, we incurred costs in connection with the new accounting standard under CECL, along with the impacts of fair value accounting. As a result, the Company's loss absorbing capacity, loan loss reserves and loan fair value discounts combined, is in excess of 3% of loans held for investment. Given our strong capital position and our expectations around the future performance of the Company, we are pleased to announce the Board's approval of a $0.25 dividend.

“During the second quarter, we initiated a well structured COVID-19 loan modification program to assist those clients that had been temporarily impacted by the pandemic. At quarter-end, we had approximately $2.25 billion, or 14.9%, of the loan portfolio under some form of temporary modification. As of July 24th, we have contacted 63% of the approximately 1,400 customers with loan modifications, and 87% have stated they intend to resume regularly scheduled payments when the modification period expires. Notably, our asset quality metrics remain strong across the spectrum of our loan portfolio.

“Despite the challenges created by the pandemic, the integration of the Pacific Premier and Opus teams is progressing well. The systems conversion will occur in early October at which time we will consolidate 20 branch offices to further drive our overall efficiencies. We are currently on pace to recognize greater cost savings from the acquisition than previously anticipated and, with the addition of key Opus personnel, our team has never been more capable."

Mr. Gardner concluded, “As we enter the second half of 2020, there remains a high level of economic uncertainty, but we are well positioned from a capital, earnings and risk perspective to take advantage of opportunities as they arise.”


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FINANCIAL HIGHLIGHTS
Three Months Ended
 June 30,March 31,June 30,
 202020202019
Financial Highlights(Dollars in thousands, except per share data)
Net (loss) income$(99,091) $25,740  $38,527  
Diluted (loss) earnings per share(1.41) 0.43  0.62  
Pre-provision net revenue (1)
$60,566  $58,743  $53,034  
Return on average assets(2.61)%0.89 %1.33 %
Return on average equity(17.76) 5.05  7.71  
Return on average tangible common equity (1)
(29.40) 9.96  15.16  
Pre-provision net revenue on average assets (1)
1.60  2.03  1.83  
Net interest margin3.79  4.24  4.28  
Core net interest margin (1)
3.59  4.08  4.08  
Cost of deposits0.32  0.48  0.73  
Efficiency ratio (2)
52.9  52.6  51.1  
Total assets$20,517,074  $11,976,209  $11,783,781  
Total deposits16,976,693  9,093,072  8,861,922  
Non-maturity deposits as a percent of total deposits89 %88 %82 %
Book value per share$28.14  $33.40  $32.80  
Tangible book value per share (1)
17.58  18.60  17.92  
Total risk-based capital ratio15.69 %14.23 %13.54 %
______________________________
(1) A reconciliation of the non-U.S. GAAP measures of pre-provision net revenue, return on average tangible common equity, pre-provision net revenue on average assets, core net interest margin and tangible book value per share to the U.S. GAAP measures of net income, common stockholders' equity and book value are set forth at the end of this press release.
(2) Represents the ratio of noninterest expense less other real estate owned operations, core deposit intangible amortization and merger-related expense to the sum of net interest income before provision for credit losses and total noninterest income, less gains/(loss) on sale of securities, gain/(loss) from other real estate owned and gain/(loss) from debt extinguishment.

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INCOME STATEMENT HIGHLIGHTS

Net Interest Income and Net Interest Margin
 
Net interest income totaled $130.3 million in the second quarter of 2020, an increase of $21.1 million, or 19.3%, from the first quarter of 2020. The increase in net interest income reflected higher average interest-earning assets of $3.47 billion, primarily related to the acquisition of Opus, which added $5.94 billion in gross loans, or $5.81 billion of loans after purchase accounting adjustments, higher accretion income, and a lower cost of funds driven by a lower cost of deposits and an increase in noninterest-bearing deposits, all of which was offset by lower average loan and investment yields.

The net interest margin for the second quarter of 2020 was 3.79%, compared with 4.24% in the prior quarter. Our core net interest margin, which excludes the impact of loan accretion income of $5.8 million, compared to $4.1 million in the prior quarter, certificates of deposit mark-to-market amortization and one-time adjustments, decreased 48 basis points to 3.59%, compared to 4.08% in the prior quarter, primarily attributable to lower loan and investment yields, partially offset by a lower cost of deposits. The lower loan yields were driven primarily by the addition of the Opus loan portfolio, the origination and retention of the Small Business Administration (“SBA”) PPP loans, which have a coupon rate of 1%, as well as the impact of loan repricing as a result of the Federal Reserve Board's federal funds rate decreases in March 2020. The lower cost of funds was driven principally by lower rates paid on deposits and increased noninterest-bearing deposits, partially offset by the higher rates paid on Opus's deposits.

Net interest income for the second quarter of 2020 increased $19.7 million, or 17.8%, compared to the second quarter of 2019. The increase was attributable to an increase in average interest-earning assets of $3.47 billion, which primarily resulted from the acquisition of Opus in the second quarter of 2020, as well as organic loan growth (including SBA PPP loans) and a lower cost of funds, partially offset by lower loan and investment yields.

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PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
 
 Three Months Ended
 June 30, 2020March 31, 2020June 30, 2019
 Average BalanceInterest Income/ExpenseAverage
Yield/
Cost
Average BalanceInterest Income/ExpenseAverage
Yield/
Cost
Average BalanceInterest Income/ExpenseAverage Yield/ Cost
Assets(Dollars in thousands)
Cash and cash equivalents$796,761  $215  0.11 %$215,746  $216  0.40 %$187,963  $435  0.93 %
Investment securities1,792,432  10,568  2.36  1,502,572  10,308  2.74  1,396,585  10,119  2.90  
Loans receivable, net (1) (2)
11,242,721  133,339  4.77  8,645,252  113,265  5.27  8,779,440  121,860  5.57  
Total interest-earning assets$13,831,914  $144,122  4.19  $10,363,570  $123,789  4.80  $10,363,988  $132,414  5.12  
Liabilities
Interest-bearing deposits$7,317,675  $9,655  0.53  $4,956,839  $10,487  0.85  $5,345,388  $15,991  1.20  
Borrowings431,181  4,175  3.89  552,741  4,127  3.00  675,345  5,782  3.43  
Total interest-bearing liabilities$7,748,856  $13,830  0.72  $5,509,580  $14,614  1.07  $6,020,733  $21,773  1.45  
Noninterest-bearing deposits$4,970,812  $3,898,399  $3,426,508  
Net interest income$130,292  $109,175  $110,641  
Net interest margin (3)
  3.79  4.24  4.28  
Cost of deposits0.32  0.48  0.73  
Cost of funds (4)
0.44  0.62  0.92  
Ratio of interest-earning assets to interest-bearing liabilities178.50  188.10  172.14  
______________________________
(1) Average balance includes loans held for sale and nonperforming loans and is net of deferred loan origination fees/costs and discounts/premiums.
(2) Interest income includes net discount accretion of $5.8 million, $4.1 million and $5.0 million, respectively.
(3) Represents annualized net interest income divided by average interest-earning assets.
(4) Represents annualized total interest expense divided by the sum of average total interest-bearing liabilities and noninterest-bearing deposits.

Provision for Credit Losses

        Provision for credit losses for the second quarter of 2020 was $160.6 million, an increase of $135.2 million from the first quarter of 2020 and an increase of $160.3 million from the second quarter of 2019. The increase, which included a $150.3 million provision for loan losses and a $10.4 million provision for unfunded commitments, was primarily driven by unfavorable changes in economic forecasts employed in the Bank's CECL model and the Day 1 provision for credit losses of $84.4 million resulting from the acquisition of Opus. The Opus acquisition Day 1 provision of credit losses does not include $21.2 million of reserves established for the purchased credit deteriorated (“PCD”) loans. The provision for unfunded commitments in the second quarter of 2020 was $10.4 million, $8.6 million of which represent the provision related to the unfunded commitments from the Opus acquisition, compared with a provision of $72,000 in the first quarter of 2020 and a reduction of $408,000 in the second quarter of 2019.
Three Months Ended
June 30,March 31,June 30,
202020202019
Provision for Credit Losses(Dollars in thousands)
Provision for loan losses$150,257  $25,382  $742  
Provision for unfunded commitments10,378  72  (408) 
Total provision for credit losses$160,635  $25,454  $334  
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Noninterest Income
 
Noninterest income for the second quarter of 2020 was $6.9 million, a decrease of $7.6 million, or 52.3%, from the first quarter of 2020. The decrease was primarily due to a $7.8 million decrease in net gain from sales of investment securities, and a $2.8 million decrease in net gain from the sales of loans, partially offset by $2.4 million of trust administrative fees from Pacific Premier Trust, the IRA custodian trust company division of Pacific Premier Bank that was acquired with the Opus Bank acquisition, and a $899,000 increase in other income, primarily due to $658,000 of recoveries from previously charged-off Opus loans.

During the second quarter of 2020, the Bank sold $15.4 million of other loans for a net loss of $2.0 million, compared with sales of $15.9 million of SBA and U.S. Department of Agriculture (“USDA”) loans for a net gain of $1.2 million and $23.0 million of other loans for a net loss of $404,000 during the prior quarter.

Noninterest income for the second quarter of 2020 increased $574,000, or 9.1%, compared to the second quarter of 2019. The increase was primarily related to $2.4 million of trust administrative fees, a $1.7 million increase in other income and a $463,000 increase in earnings on bank owned life insurance (“BOLI”) primarily due to the addition of BOLI from Opus, partially offset by a $2.9 million decrease in net gain from the sales of loans and a $688,000 decrease in debit card interchange fee income, primarily the result of the Bank becoming a non-exempt institution, effective July 1, 2019, under the Durbin Amendment that regulates debit card interchange fee income due to the Bank exceeding $10 billion in total assets.

The decrease in net gain from sales of loans for the second quarter of 2020 compared to the same period last year was primarily due to the realization of a $2.0 million loss on the sales of other loans in the second quarter of 2020 compared with a loss of $1.3 million in the second quarter of 2019, and lower net gain from sales of SBA and USDA loans in the second quarter of 2020 compared to the second quarter of 2019. The Bank sold $24.4 million of SBA loans for a net gain of $2.2 million during the second quarter of 2019.
Three Months Ended
June 30,March 31,June 30,
202020202019
Noninterest Income(Dollars in thousands)
Loan servicing fees$434  $480  $409  
Service charges on deposit accounts1,399  1,715  1,441  
Other service fee income297  311  363  
Debit card interchange fee income457  348  1,145  
Earnings on BOLI1,314  1,336  851  
Net (loss) gain from sales of loans(2,032) 771  902  
Net (loss) gain from sales of investment securities(21) 7,760  212  
Trust administrative fees2,397  —  —  
Other income2,653  1,754  1,001  
Total noninterest income$6,898  $14,475  $6,324  
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 Noninterest Expense
 
Noninterest expense totaled $116.0 million for the second quarter of 2020, an increase of $49.3 million, or 74.0%, compared to the first quarter of 2020. The increase was primarily due to merger-related expense of $39.3 million for the second quarter of 2020 relating to the Opus acquisition. Excluding merger-related expense, noninterest expense totaled $76.6 million, an increase of $11.7 million, or 18.1%, compared to the first quarter of 2020 driven primarily by a $8.6 million increase in compensation and benefits, a $1.3 million increase in premises and occupancy, and a $1.2 million increase in data processing, all of which was primarily the result of the addition of operations, personnel and branches retained from the acquisition of Opus.

Noninterest expense increased by $52.0 million, or 81.4%, compared to the second quarter of 2019. The increase was primarily due to a $39.3 million merger-related expense related to the Opus acquisition, a $9.2 million increase in compensation and benefits, a $2.0 million increase in premises and occupancy, a $1.4 million increase in data processing and a $1.3 million increase in deposit expense as a result of the addition of operations, personnel and branches retained from the acquisition of Opus.
Three Months Ended
June 30,March 31,June 30,
202020202019
Noninterest Expense(Dollars in thousands)
Compensation and benefits$43,011  $34,376  $33,847  
Premises and occupancy9,487  8,168  7,517  
Data processing4,465  3,253  3,036  
Other real estate owned operations, net 14  62  
FDIC insurance premiums846  367  740  
Legal, audit and professional expense3,094  3,126  3,545  
Marketing expense1,319  1,412  1,425  
Office, telecommunications and postage expense1,533  1,103  1,311  
Loan expense823  822  1,005  
Deposit expense4,958  4,988  3,668  
Merger-related expense39,346  1,724   
CDI amortization4,040  3,965  4,281  
Other expense3,039  3,313  3,494  
Total noninterest expense$115,970  $66,631  $63,936  
Income Tax

For the second quarter of 2020, our income tax benefit totaled $40.3 million, resulting in an effective tax rate of (28.9%), compared with income tax expense of $5.8 million and an effective tax rate 18.5% for the first quarter of 2020, and income tax expense of $14.2 million and an effective tax rate of 26.9% for the second quarter of 2019. The income tax benefit was impacted by the significant pre-tax loss recorded for the second quarter, driven by the provision for credit losses and our merger-related costs associated with the acquisition of Opus.


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BALANCE SHEET HIGHLIGHTS
        
Loans

Loans held for investment totaled $15.08 billion at June 30, 2020, an increase of $6.33 billion, or 72.3%, from March 31, 2020, and an increase of $6.31 billion, or 71.9%, from June 30, 2019. The increases were primarily impacted by the acquisition of Opus, which added $5.94 billion in gross loans, or $5.81 billion of loans held for investment after purchase accounting adjustments, as well as higher new loan commitments and fundings, partially offset by higher loan prepayments and payoffs, and lower line utilization in the second quarter of 2020 when compared to the prior quarter. Business line utilization rates decreased to 37.9% at the end of the second quarter of 2020, compared with 50.6% at the end of the first quarter of 2020 and 42.4% at the end of second quarter of 2019.

During the second quarter of 2020, the Bank generated $1.21 billion of new loan commitments and $1.19 billion of new loan fundings, primarily consisting of SBA PPP loans of $1.13 billion, compared with $443.7 million in new loan commitments and $353.9 million in new loan fundings for the first quarter of 2020, and $568.2 million in new loan commitments and $394.8 million in new loan fundings for the second quarter of 2019.
 
At June 30, 2020, the ratio of loans held for investment to total deposits was 88.8%, compared with 96.3% and 99.0% at March 31, 2020 and June 30, 2019, respectively.

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The following table presents the composition of the loan portfolio as of the dates indicated:
June 30,March 31,June 30,
202020202019
(Dollars in thousands)
Investor loans secured by real estate
Commercial real estate (“CRE”) non-owner-occupied$2,783,692  $2,040,198  $2,118,829  
Multifamily5,225,557  1,625,682  1,519,110  
Construction and land357,426  377,525  543,683  
SBA secured by real estate (1)
59,482  61,665  65,773  
Total investor loans secured by real estate8,426,157  4,105,070  4,247,395  
Business loans secured by real estate (2)
CRE owner-occupied2,170,154  1,887,632  1,835,411  
Franchise real estate secured364,647  371,428  323,445  
SBA secured by real estate (3)
85,542  83,640  93,257  
Total business loans secured by real estate2,620,343  2,342,700  2,252,113  
Commercial loans (4)
Commercial and industrial2,051,313  1,458,969  1,426,274  
Franchise non-real estate secured523,755  547,793  537,490  
SBA non-real estate secured21,057  16,265  19,282  
SBA PPP1,128,780  —  —  
Total commercial loans3,724,905  2,023,027  1,983,046  
Retail loans
Single family residential (5)
265,170  237,180  248,611  
Consumer46,309  46,892  40,773  
Total retail loans311,479  284,072  289,384  
Gross loans held for investment (6)
15,082,884  8,754,869  8,771,938  
Allowance for credit losses for loans held for investment (7)
(282,271) (115,422) (35,026) 
Loans held for investment, net$14,800,613  $8,639,447  $8,736,912  
Loans held for sale, at lower of cost or fair value$1,007  $111  $8,529  
______________________________
(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 $144.5 million, $35.9 million and $52.0 million as of June 30, 2020, March 31, 2020 and June 30, 2019, respectively.
(7) The allowance for credit losses as of December 31, 2019 was accounted for under ASC 450 and ASC 310, which is reflective of probable incurred losses as of the balance sheet date. Effective January 1, 2020, the allowance for credit losses is accounted for under ASC 326, which is reflective of estimated expected lifetime credit losses.

The total end-of-period weighted average interest rate on loans, excluding fees and discounts, at June 30, 2020 was 4.12%, compared to 4.76% at March 31, 2020 and 5.11% at June 30, 2019. The quarter-over-quarter and year-over-year decreases reflect the impact of lower rates on new originations as well as the repricing of loans as a result of the Federal Reserve Board's federal funds rate decreases and the impact of the 1% SBA PPP loans. Excluding the SBA PPP loans, the end of period weighted average interest rate on loans, excluding fees and discounts, at June 30, 2020 was 4.46%.

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The following table presents the composition of new organic loan commitments originated during the quarters indicated:
June 30,March 31,June 30,
202020202019
(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner-occupied$11,811  $111,980  $115,357  
Multifamily24,425  39,831  35,061  
Construction and land6,210  26,525  65,684  
SBA secured by real estate (1)
—  2,131  2,350  
Total investor loans secured by real estate42,446  180,467  218,452  
Business loans secured by real estate (2)
CRE owner-occupied17,594  115,774  80,235  
Franchise real estate secured—  21,577  24,614  
SBA secured by real estate (3)
1,204  7,119  3,669  
Total business loans secured by real estate18,798  144,470  108,518  
Commercial loans (4)
Commercial and industrial23,782  97,381  159,626  
Franchise non-real estate secured—  12,414  68,352  
SBA non-real estate secured315  1,263  8,602  
SBA PPP1,124,485  —  —  
Total commercial loans1,148,582  111,058  236,580  
Retail loans
Single family residential (5)
2,137  6,052  3,140  
Consumer195  1,635  1,551  
Total retail loans2,332  7,687  4,691  
Total loan commitments$1,212,158  $443,682  $568,241  
______________________________
(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 production was 1.21% in the second quarter of 2020 compared with 4.59% in the first quarter of 2020 and 5.42% in the second quarter of 2019. The decrease in weighted average interest rate during the second quarter of 2020 was primarily due to the origination of $1.12 billion in SBA PPP loans with a 1% interest rate. Excluding the SBA PPP loans, the weighted average interest rate on new loan production at June 30, 2020 was 3.97%.

10


Asset Quality and Allowance for Credit Losses
 
Effective January 1, 2020, the Company adopted the new CECL accounting standard, which replaces the incurred loss methodology, and recorded a cumulative-effect “Day 1” adjustment of $55.7 million for funded loans to the beginning balance as of January 1, 2020. At June 30, 2020, our allowance for credit losses (“ACL”) on loans held for investment was $282.3 million, an increase of $166.8 million, or 144.6%, from March 31, 2020 and an increase of $247.2 million, or 705.9%, from June 30, 2019. The increase was primarily due to the provision for loan losses of $150.3 million and an initial ACL of $21.2 million with respect to PCD loans from the acquisition of Opus. The provision increase was principally the result of the Opus acquisition and the unfavorable changes in economic forecasts employed in the Bank's CECL model. No ACL was allocated to SBA PPP loans as they are fully guaranteed.

The CECL accounting standard requires the Company to provide for an allowance for credit losses for non-purchased credit deteriorated loans at the time of acquisition. The Company recorded approximately $84.4 million in provision for credit losses for loans acquired and off-balance sheet commitments assumed in the Opus acquisition. Of this amount, approximately $75.9 million related to loans held for investment and $8.6 million related to off-balance sheet commitments. The initial ACL for PCD loans is not established through a charge to the provision for credit losses, but rather through an initial adjustment to the loan’s amortized cost.

During the second quarter of 2020, the Company incurred $4.7 million of net charge-offs, compared to $1.3 million and $3.6 million during the first quarter of 2020 and the second quarter of 2020, 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 June 30, 2020
 Beginning ACL Balance  Initial ACL Recorded for PCD Loans  Charge-offs  Recoveries Provision for Credit Losses  Ending
ACL Balance
(Dollars in thousands)
Investor loans secured by real estate
CRE non-owner occupied$15,896  $3,025  $—  $—  $44,086  $63,007  
Multifamily14,722  8,710  —  —  40,079  63,511  
Construction and land9,222  2,051  —  —  7,531  18,804  
SBA secured by real estate (1)
935  —  (554) —  1,629  2,010  
Business loans secured by real estate (2)
CRE owner-occupied26,793  3,766  —  11  17,643  48,213  
Franchise real estate secured7,503  —  —  —  5,557  13,060  
SBA secured by real estate (3)
4,044  235  —   86  4,368  
Commercial loans (4)
Commercial and industrial15,742  2,325  (2,286) 21  26,165  41,967  
Franchise non-real estate secured16,616  —  (1,227) —  6,287  21,676  
SBA non-real estate secured516  924  (556) (2) (282) 600  
Retail loans
Single family residential (5)
1,137  —  (62)  403  1,479  
Consumer loans2,296  206  —   1,073  3,576  
Totals$115,422  $21,242  $(4,685) $35  $150,257  $282,271  
______________________________
(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.


11


The ratio of allowance for credit losses to loans held for investment at June 30, 2020 was 2.02%, excluding SBA PPP loans, compared to 1.32% and 0.40%, at March 31, 2020 and June 30, 2019, respectively. Under the guidance of ASC 820: Fair Value Measurements and Disclosures, the fair value net discount on loans acquired through total bank acquisitions was $144.5 million, or 1.03% of total loans held for investment excluding SBA PPP loans, as of June 30, 2020, compared to $35.9 million, or 0.41% of total loans held for investment, as of March 31, 2020, and $52.0 million, or 0.59% of total loans held for investment, as of June 30, 2019.

Nonperforming assets totaled $34.2 million, or 0.17% of total assets, at June 30, 2020, compared with $21.1 million, or 0.18% of total assets at March 31, 2020 and $7.7 million, or 0.07% of total assets, at June 30, 2019. During the second quarter of 2020, nonperforming loans increased $13.2 million to $33.8 million and other real estate owned decreased to $386,000. Total loan delinquencies were $38.2 million, or 0.25% of loans held for investment, at June 30, 2020, compared to $28.9 million, or 0.33% of loans held for investment, at March 31, 2020, and $13.5 million, or 0.15% of loans held for investment, at June 30, 2019. The increase in nonperforming loans was primarily due to the addition of six loans totaling $11.3 million, primarily CRE owner-occupied and CRE non-owner occupied, that were 90 days or more past due, as well as the addition of eight loans totaling $3.5 million consisting of commercial real estate and single family residential loans acquired in connection with the Opus acquisition.

Interest is not typically accrued on loans 90 days or more past due or when, in the opinion of management, there is reasonable doubt as to the timely collection of principal or interest. There were no loans 90 days or more past due and still accruing interest at June 30, 2020. Troubled debt restructured loans totaled $700,000 at June 30, 2020, $2.3 million at March 31, 2020 and none at June 30, 2019. At June 30, 2020, 1,461 loans with a total of $2.24 billion were modified due to COVID-19 hardship under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

12



 June 30,March 31,June 30,
 202020202019
Asset Quality(Dollars in thousands)
Nonperforming loans$33,825  $20,610  $7,659  
Other real estate owned386  441  35  
Nonperforming assets$34,211  $21,051  $7,694  
Total classified assets (1)
$90,334  $54,586  $38,492  
Allowance for credit losses282,271  115,422  35,026  
Allowance for credit losses as a percent of total nonperforming loans835 %560 %457 %
Nonperforming loans as a percent of loans held for investment0.22  0.24  0.09  
Nonperforming assets as a percent of total assets0.17  0.18  0.07  
Classified loans to total loans held for investment0.60  0.62  0.44  
Classified assets to total assets0.44  0.46  0.33  
Net loan charge-offs for the quarter ended$4,650  $1,344  $3,572  
Net loan charge-offs for quarter to average total loans0.04 %0.02 %0.04 %
Allowance for credit losses to loans held for investment, excluding SBA PPP loans (2)
2.02  1.32  0.40  
Delinquent Loans  
30 - 59 days$6,248  $8,285  $3,407  
60 - 89 days4,133  1,502  801  
90+ days27,807  19,084  9,284  
Total delinquency$38,188  $28,871  $13,492  
Delinquency as a percentage of loans held for investment0.25 %0.33 %0.15 %
______________________________
(1) Includes substandard loans and other real estate owned
(2) At June 30, 2020, 56% of loans held for investment include an aggregate fair value net discount of $144.5 million, or 1.03% of loans held for investment excluding SBA PPP loans. At March 31, 2020, 34% of loans held for investment include an aggregate fair value net discount of $35.9 million, or 0.41% of loans held for investment. At June 30, 2019, 44% of loans held for investment include an aggregate fair value net discount of $52.0 million, or 0.59% of loans held for investment.

13


Investment Securities

Investment securities totaled $2.37 billion at June 30, 2020, an increase of $996.3 million, or 72.6%, from March 31, 2020, and an increase of $1.07 billion, or 82.0%, from June 30, 2019. The increase in the second quarter of 2020 compared to the prior quarter was primarily the result of $829.9 million of investment securities acquired in connection with the acquisition from Opus, $387.9 million in purchases and a $19.4 million increase in mark-to-market fair value adjustment, partially offset by $191.1 million in sales and $49.7 million in principal payments, amortization and redemptions. The Company’s assessment of held-to-maturity and available-for-sale investment securities indicated that no ACL was required as of January 1, 2020 and June 30, 2020. The increase compared to the same period last year was primarily the result of $981.7 million in purchases, $829.9 million acquired from Opus and a $50.2 million increase in mark-to-market fair value adjustment, partially offset by $655.4 million in sales and $139.2 million in principal payments, amortization and redemptions.

Deposits

At June 30, 2020, deposits totaled $16.98 billion, an increase of $7.88 billion, or 86.7%, from March 31, 2020 and an increase of $8.11 billion, or 91.6%, from June 30, 2019. At June 30, 2020, non-maturity deposits totaled $15.06 billion, or 88.7% of total deposits, an increase of $7.04 billion, or 87.7%, from March 31, 2020 and an increase $7.76 billion, or 106.2%, from June 30, 2019. During the second quarter of 2020, deposit increases included $2.56 billion in money market and savings deposits, $2.52 billion in interest-checking, $1.96 billion in noninterest-bearing deposits, $754.3 million in retail certificates of deposits and $91.9 million in broker certificate of deposits as compared to the first quarter of 2020. The increases during the second quarter of 2020 were primarily due to the acquisition of Opus, which contributed $6.92 billion of deposits after purchasing accounting adjustments, and an increase of $942.8 million noninterest-bearing deposits, reflecting SBA PPP loans funded in the Bank's clients' demand deposit accounts, and liquidity maintained by customers due to the economic impact of the pandemic.
 
The weighted average cost of deposits for the three-month period ending June 30, 2020 was 0.32%, compared to 0.48% for the three-month period ending March 31, 2020, and 0.73% for the three-month period ending June 30, 2019. The decrease in the weighted average cost of deposits in the second quarter of 2020 compared to the prior quarter was principally driven by lower pricing across all deposit product categories, favorably impacted by Federal Reserve Board's federal funds rate decreases, as well as higher average noninterest-bearing deposit balances.

14


The end of period weighted average rate of deposits at June 30, 2020 was 0.34%.
 June 30,March 31,June 30,
 202020202019
Deposit Accounts(Dollars in thousands)
Noninterest-bearing checking$5,899,442  $3,943,260  $3,480,312  
Interest-bearing:
Checking3,098,454  577,966  548,314  
Money market/savings6,060,031  3,499,305  3,272,511  
Retail certificates of deposit1,651,976  897,680  1,065,207  
Wholesale/brokered certificates of deposit266,790  174,861  495,578  
Total interest-bearing11,077,251  5,149,812  5,381,610  
Total deposits$16,976,693  $9,093,072  $8,861,922  
Cost of deposits0.32 %0.48 %0.73 %
Noninterest-bearing deposits as a percentage of total deposits34.8  43.4  39.3  
Non-maturity deposits as a percent of total deposits88.7  88.2  82.4  
Core deposits as a percent of total deposits (1)
94.9  93.0  88.5  
______________________________
(1) Core deposits are all transaction accounts and non-brokered certificates of deposit less than $250,000.

Borrowings

At June 30, 2020, total borrowings amounted to $542.4 million, a decrease of $193.9 million, or 26.3%, from March 31, 2020 and a decrease of $262.1 million, or 32.6%, from June 30, 2019. Total borrowings at June 30, 2020 included $41.0 million of Federal Home Loan Bank of San Francisco (“FHLB”) advances and $501.4 million of subordinated debt. At June 30, 2020, total borrowings represented 2.6% of total assets, compared to 6.2% and 6.8%, as of March 31, 2020 and June 30, 2019, respectively. The decrease in borrowings at June 30, 2020 as compared to March 31, 2020 and June 30, 2019 was primarily due to lower FHLB advances, partially offset by the issuance in June 2020 of $150 million in aggregate principal amount of the Company's 5.375% Fixed-to-Floating Rate Subordinated Notes (the “Notes”) due June 30, 2030, as well as the $135 million aggregate principal amount of subordinated notes assumed by the Bank in connection with the acquisition of Opus in the second quarter of 2020.

Capital Ratios

At June 30, 2020, our ratio of tangible common equity to total assets was 8.50%, compared with 10.06% at March 31, 2020 and 9.96% at June 30, 2019, with a tangible book value per share of $17.58, compared with $18.60 at March 31, 2020 and $17.92 at June 30, 2019.

The Company implemented the CECL model commencing January 1, 2020 and elected to phase in the full effect of CECL on regulatory capital over the five-year transition period. At June 30, 2020, the Company exceeded all regulatory minimum capital adequacy requirements, inclusive of the fully-phased in capital conservation buffer, with a tier 1 leverage ratio of 12.00%, common equity tier 1 capital ratio of 11.32%, tier 1 capital ratio of 11.32% and total capital ratio of 15.69%.

At June 30, 2020, the Bank had a tier 1 leverage ratio of 13.49%, common equity tier 1 capital ratio of 12.73%, tier 1 capital ratio of 12.73% and total capital ratio of 14.81%. These capital ratios each exceeded the “well capitalized” standards defined by the federal banking regulators of 7.00% for tier 1 leverage ratio, 6.5% for common equity tier 1 capital ratio, 8.50% for tier 1 capital ratio and 10.50% for total capital ratio inclusive of the fully phased-in capital conservation buffer.
15


June 30,March 31,June 30,
Capital Ratios202020202019
Pacific Premier Bancorp, Inc. Consolidated   
Tier 1 leverage ratio12.00 %10.68 %10.32 %
Common equity tier 1 capital ratio11.32  11.59  10.82  
Tier 1 capital ratio11.32  11.66  11.07  
Total capital ratio15.69  14.23  13.54  
Tangible common equity ratio (1)
8.50  10.06  9.96  
Pacific Premier Bank
Tier 1 leverage ratio13.49 %12.54 %11.66 %
Common equity tier 1 capital ratio12.73  13.70  12.51  
Tier 1 capital ratio12.73  13.70  12.51  
Total capital ratio14.81  14.28  12.90  
Share Data   
Book value per share$28.14  $33.40  $32.80  
Tangible book value per share (1)
17.58  18.60  17.92  
Dividend per share0.25  0.25  0.22  
Closing stock price (2)
21.68  18.84  30.88  
Shares issued and outstanding94,350,902  59,975,281  60,509,994  
Market capitalization (2)(3)
$2,045,528  $1,129,934  $1,868,549  
______________________________
(1) A reconciliation of the non-U.S. GAAP measures of tangible common equity and tangible book value per share to the U.S. GAAP measures of common stockholders' equity and book value per share is set forth below.
(2) As of the last trading day prior to period end.
(3) Dollars in thousands.

Dividend and Stock Repurchase Program

On July 24, 2020, the Company's Board of Directors declared a $0.25 per share dividend, payable on August 14, 2020 to stockholders of record as of August 7, 2020. In December 2019, the Company’s Board of Directors approved a new stock repurchase program, which authorized the repurchase up to $100 million of its common stock. To date, the Company had not repurchased any shares under the new stock repurchase program and has suspended the stock repurchase program indefinitely.

Subsequent events

On July 21, 2020, the Company entered into a contract to sell its entire $1.13 billion SBA PPP loan portfolio to a non-bank, seasoned and experienced lender and servicer of SBA loans. The sale is anticipated to close by July 31, 2020.

16


Conference Call and Webcast

        The Company will host a conference call at 9:00 a.m. PT / 12:00 p.m. ET on July 27, 2020 to discuss its financial results. Analysts and investors may participate in the question-and-answer session. A live webcast will be available on the Webcasts page of the Company's investor relations website. An archived version of the webcast will be available in the same location shortly after the live call has ended. The conference call can be accessed by telephone at (866) 290-5977 and asking to be joined to the Pacific Premier Bancorp conference call. Additionally, a telephone replay will be made available through August 3, 2020 at (877) 344-7529, conference ID 10145590.

About Pacific Premier Bancorp, Inc.

        Pacific Premier Bancorp, Inc. (Nasdaq: PPBI) is the parent company of Pacific Premier Bank, a California-based commercial bank focused on serving small, middle-market, and corporate businesses throughout the western United States in major metropolitan markets in California, Washington, Oregon, Arizona, and Nevada. Founded in 1983, Pacific Premier Bank has grown to become one of the largest banks in the western region of the United States, with approximately $20.5 billion in 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 through its Commerce Escrow division and facilitates 1031 Exchange transactions through its RPM Exchange division. Pacific Premier Bank offers clients IRA custodial services through its Pacific Premier Trust division, which has approximately $14 billion of assets under custody and approximately 44,000 client accounts comprised of self-directed investors, financial institutions, capital syndicators, and financial advisors. Additionally, Pacific Premier Bank provides nationwide customized banking solutions to Home Owners' 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 COMMENTS
 
        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 the acquisition of Opus and other acquisitions.

        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. The COVID-19 pandemic is adversely affecting us, our customers, counterparties, employees and third-party service providers, and given its ongoing and dynamic nature, the ultimate extent of the impacts on our business, financial position, results of operations, liquidity and prospects is uncertain. Continued deterioration in general business and economic conditions, including further increases in unemployment rates, or turbulence in domestic or global financial markets could adversely affect our revenues and the values of our assets and liabilities, reduce the availability of funding, lead to a tightening of credit, and further increase stock price volatility, which could result in impairment to our goodwill in future periods. In addition, changes to statutes, regulations, or regulatory policies or practices as a result of, or in response to COVID-19, could affect us in substantial and unpredictable ways, including the potential adverse impact of loan modifications and payment deferrals implemented consistent with recent regulatory guidance. Other risks and uncertainties include, but are not limited to, the following: the strength of the United States economy in general and the strength of the local economies in which we conduct operations; the effects of, and changes in, trade, monetary and fiscal policies and
17


laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market and monetary fluctuations; the effect of acquisitions we have made or may make, such as our recent acquisition of Opus, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target into our operations; the timely development of competitive new products and services and the acceptance of these products and services by new and existing customers; the impact of changes in financial services policies, laws and regulations, including those concerning taxes, banking, securities and insurance, and the application thereof by regulatory bodies; the effectiveness of our risk management framework and quantitative models; changes in the level of our nonperforming assets and charge-offs; the expected discontinuation of LIBOR and uncertainty regarding potential alternative reference rates, including SOFR; the effect of changes in accounting policies and practices or accounting standards, as may be adopted from time-to-time by bank regulatory agencies, the U.S. Securities and Exchange Commission (“SEC”), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the CECL model, which has changed how we estimate credit losses and may further increase the required level of our allowance for credit losses in future periods; possible credit related impairments of securities held by us; possible impairment charges to goodwill; the impact of current governmental efforts to restructure the U.S. financial regulatory system, including any amendments to the Dodd-Frank Wall Street Reform and Consumer Protection Act; changes in consumer spending, borrowing and savings habits; the effects of our lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; our ability to attract deposits and other sources of liquidity; the possibility that we may reduce or discontinue the payments of dividends on our common stock; 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, which could impact business and economic conditions in the United States and abroad; public health crisis and pandemics, including the COVID-19 pandemic, and their effects on the economic and business environments in which we operate, including on our credit quality and business operations, as well as the impact on general economic and financial market conditions; cybersecurity threats and the cost of defending against them, including the costs of compliance with potential legislation to combat cybersecurity at a state, national or global level; 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 2019 Annual Report on Form 10-K and quarterly report on Form 10-Q for the period ended March 31, 2020 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.

Contact:
 
Pacific Premier Bancorp, Inc.
 
Steven R. Gardner
Chairman, President and Chief Executive Officer
(949) 864-8000

Ronald J. Nicolas, Jr.
Senior Executive Vice President and Chief Financial Officer
(949) 864-8000

Brett Villaume
Senior Vice President and Director of Investor Relations
(404) 644-2990
18


PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
(Unaudited)
 June 30,March 31December 31,September 30,June 30,
20202020201920192019
ASSETS
Cash and due from banks$158,784  $108,285  $135,847  $166,238  $139,879  
Interest-bearing deposits with financial institutions1,182,946  425,747  191,003  261,477  235,505  
Cash and cash equivalents1,341,730  534,032  326,850  427,715  375,384  
Interest-bearing time deposits with financial institutions2,845  2,708  2,708  2,711  2,956  
Investments held-to-maturity, at amortized cost32,557  34,553  37,838  40,433  42,997  
Investment securities available-for-sale, at fair value2,336,066  1,337,761  1,368,384  1,256,655  1,258,379  
FHLB, FRB and other stock, at cost94,658  92,858  93,061  92,986  92,841  
Loans held for sale, at lower of amortized cost or fair value1,007  111  1,672  7,092  8,529  
Loans held for investment15,082,884  8,754,869  8,722,311  8,757,476  8,771,938  
Allowance for credit losses(282,271) (115,422) (35,698) (35,000) (35,026) 
Loans held for investment, net14,800,613  8,639,447  8,686,613  8,722,476  8,736,912  
Accrued interest receivable78,408  38,294  39,442  38,603  40,420  
Other real estate owned386  441  441  126  35  
Premises and equipment76,542  61,615  59,001  62,851  54,218  
Deferred income taxes, net105,859  15,249  —  —  2,266  
Bank owned life insurance305,901  113,461  113,376  112,716  112,054  
Intangible assets94,550  79,349  83,312  87,560  91,840  
Goodwill901,166  808,322  808,322  808,322  808,322  
Other assets344,786  218,008  154,992  151,251  156,628  
Total assets$20,517,074  $11,976,209  $11,776,012  $11,811,497  $11,783,781  
LIABILITIES AND STOCKHOLDERS’ EQUITY  
LIABILITIES:  
Deposit accounts:  
Noninterest-bearing checking$5,899,442  $3,943,260  $3,857,660  $3,623,546  $3,480,312  
Interest-bearing:
Checking3,098,454  577,966  586,019  529,401  548,314  
Money market/savings6,060,031  3,499,305  3,406,988  3,362,453  3,272,511  
Retail certificates of deposit1,651,976  897,680  973,465  1,019,433  1,065,207  
Wholesale/brokered certificates of deposit266,790  174,861  74,377  324,455  495,578  
Total interest-bearing11,077,251  5,149,812  5,040,849  5,235,742  5,381,610  
Total deposits16,976,693  9,093,072  8,898,509  8,859,288  8,861,922  
FHLB advances and other borrowings41,006  521,017  517,026  604,558  571,575  
Subordinated debentures501,375  215,269  215,145  217,825  232,944  
Deferred income taxes, net—  —  1,371  301  —  
Accrued expenses and other liabilities343,353  143,934  131,367  140,527  132,884  
Total liabilities17,862,427  9,973,292  9,763,418  9,822,499  9,799,325  
STOCKHOLDERS’ EQUITY:     
Common stock930  586  586  584  595  
Additional paid-in capital2,348,415  1,596,680  1,594,434  1,590,168  1,618,137  
Retained earnings247,078  361,242  396,051  368,051  343,366  
Accumulated other comprehensive income58,224  44,409  21,523  30,195  22,358  
Total stockholders' equity2,654,647  2,002,917  2,012,594  1,988,998  1,984,456  
Total liabilities and stockholders' equity$20,517,074  $11,976,209  $11,776,012  $11,811,497  $11,783,781  
19


PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
 Three Months EndedSix Months Ended
 June 30,March 31,June 30,June 30,June 30,
 20202020201920202019
INTEREST INCOME   
Loans$133,339  $113,265  $121,860  $246,604  $243,336  
Investment securities and other interest-earning assets10,783  10,524  10,554  21,307  20,321  
Total interest income144,122  123,789  132,414  267,911  263,657  
INTEREST EXPENSE  
Deposits9,655  10,487  15,991  20,142  29,275  
FHLB advances and other borrowings217  1,081  3,083  1,298  7,885  
Subordinated debentures3,958  3,046  2,699  7,004  4,450  
Total interest expense13,830  14,614  21,773  28,444  41,610  
Net interest income before provision for credit losses130,292  109,175  110,641  239,467  222,047  
Provision for credit losses160,635  25,454  334  186,089  1,860  
Net interest (loss) income after provision for credit losses(30,343) 83,721  110,307  53,378  220,187  
NONINTEREST INCOME