Pacific Premier Bancorp, Inc. Announces First Quarter 2025 Financial Results and a Quarterly Cash Dividend of $0.33 Per Share

Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company” or “Pacific Premier”), the holding company of Pacific Premier Bank (the “Bank”), reported net income of $36.0 million, or $0.37 per diluted share, for the first quarter of 2025, compared with net income of $33.9 million, or $0.35 per diluted share, for the fourth quarter of 2024, and net income of $47.0 million, or $0.49 per diluted share, for the first quarter of 2024.

For the first quarter of 2025, the Company’s return on average assets (“ROAA”) was 0.80%, return on average equity (“ROAE”) was 4.87%, and return on average tangible common equity (“ROATCE”)⁽¹⁾ was 7.48%, compared to 0.75%, 4.61%, and 7.15%, respectively, for the fourth quarter of 2024, and 0.99%, 6.50%, and 10.05%, respectively, for the first quarter of 2024. Total assets were $18.09 billion at March 31, 2025, compared to $17.90 billion at December 31, 2024, and $18.81 billion at March 31, 2024.

Steven R. Gardner, Chairman, Chief Executive Officer, and President of the Company, commented, “We delivered strong financial results in the first quarter, generating net income of $36.0 million, or $0.37 per share. These results demonstrate our ability to build on the momentum established in the second half of 2024, reflecting non-interest income growth and lower operating expenses. Notably, the cost of funds decreased 14 bps from the prior quarter to 1.74%, driving a four-basis point expansion in our net interest margin to 3.06%. Additionally, we maintained our strong capital levels, with our tier 1 common equity ratio at 16.99% and our total risk-based capital ratio at 20.23%, placing us among the top of our peers.

“We further strengthened our balance sheet with stable loan balances, higher new loan commitments, and strong non-maturity deposit growth. New loan commitments increased to $319.3 million, and non-maturity deposits increased by $247.0 million, or 8% annualized. Our deposit mix improved as noninterest-bearing deposits increased by $210.0 million, or 18% annualized, with noninterest-bearing deposits increasing to 33% of total deposits. These favorable trends translated to a 14 bps decrease in the cost of deposits to 1.65%, and our non-maturity cost of deposits improved 8 bps to 1.20%.

“The asset quality results for the first quarter remained strong across the board, reflecting the high credit quality of our client base. During the quarter, we had a provision reversal of $3.7 million and net recoveries of $343,000. Total delinquency decreased to $2.1 million, or just 0.02% of total loans. Our allowance for credit losses ratio, which stands at 1.46% of loans held for investment, remains at a healthy level and ranks in the top quartile relative to peers.

“In recent years, we prioritized risk management while building strong levels of capital, liquidity, and reserves. This proactive approach has us well-positioned with significant optionality. I am incredibly proud of our team’s commitment to our clients and organization, I want to thank my colleagues for all their contributions, collectively and individually.”

FINANCIAL HIGHLIGHTS

INCOME STATEMENT HIGHLIGHTS

Net Interest Income and Net Interest Margin

Net interest income totaled $123.4 million in the first quarter of 2025, a decrease of $1.2 million, or 0.9%, from the fourth quarter of 2024. The decrease in net interest income was primarily attributable to lower average interest-earning cash and investment securities balances and yields and two fewer days of interest. The decrease was partially offset by a favorable earning asset remix with $243.4 million of average loan growth.

The net interest margin for the first quarter of 2025 increased 4 basis points to 3.06%, from 3.02% in the prior quarter. The increase was primarily due to lower cost of funds.

Net interest income for the first quarter of 2025 decreased $21.8 million, or 15.0%, compared to the first quarter of 2024. The decrease was attributable to lower average interest-earning asset balances and yields, partially offset by lower average interest-bearing liabilities balances.

Provision for Credit Losses

For the first quarter of 2025, the Company recorded a $3.7 million provision reversal, compared to $814,000 provision reversal for the fourth quarter of 2024, and $3.9 million provision expense for the first quarter of 2024. The reversal of provision for credit losses for the current quarter was largely attributable to lower loan balances compared to the prior quarter, changes in the overall loan portfolio composition, and changes in economic forecasts.

Noninterest Income

Noninterest income for the first quarter of 2025 was $21.5 million, an increase of $1.5 million from the fourth quarter of 2024. The increase was primarily due to a $1.6 million increase in trust custodial account fees related to annual tax fees and a non-recurring $1.4 million increase in earnings on bank owned life insurance, partially offset by $1.0 million lower Community Reinvestment Act investment income.

Noninterest income for the first quarter of 2025 decreased $4.3 million compared to the first quarter of 2024. The decrease was primarily due to a $5.1 million gain on debt extinguishment resulting from an early redemption of a $200.0 million FHLB term advance during the first quarter of 2024, partially offset by a $1.6 million increase in earnings on bank owned life insurance.

Noninterest Expense

Noninterest expense totaled $100.3 million for the first quarter of 2025, a decrease of $394,000 compared to the fourth quarter of 2024. The decrease was primarily due to a $4.2 million decrease in legal and professional services, driven by the prior quarter’s $3.5 million insurance claim receivable reversal, partially offset by a $2.4 million increase in compensation and benefits expenses, primarily related to higher payroll taxes and employee benefits.

Noninterest expense for the first quarter of 2025 decreased by $2.3 million compared to the first quarter of 2024. The decrease was primarily due to a $1.3 million decrease in compensation and benefits and a $1.1 million decrease in premises and occupancy.

Income Tax

For the first quarter of 2025, income tax expense totaled $12.2 million, resulting in an effective tax rate of 25.4%, compared with income tax expense of $10.7 million and an effective tax rate of 24.1% for the fourth quarter of 2024, and income tax expense of $17.4 million and an effective tax rate of 27.0% for the first quarter of 2024.

BALANCE SHEET HIGHLIGHTS

Loans

Loans held for investment totaled $12.02 billion at March 31, 2025, a decrease of $16.8 million, or 0.1% from December 31, 2024, and a decrease of $989.1 million, or 7.6%, from March 31, 2024. The decrease from December 31, 2024 was primarily due to lower loan purchases, and a decrease in credit line draws, partially offset by slower prepayments and maturities and higher new loan production and fundings.

New origination activity during the first quarter of 2025 increased slightly compared to the fourth quarter of 2024, and increased compared to the first quarter of 2024. New loan commitments totaled $319.3 million, and new loan fundings totaled $207.3 million, compared to $316.0 million in loan commitments and $193.8 million in new loan fundings for the fourth quarter of 2024, and $45.6 million in loan commitments and $14.0 million in new loan fundings for the first quarter of 2024.

At March 31, 2025, the total loan-to-deposit ratio was 82.0%, compared to 83.3% and 85.7% at December 31, 2024 and March 31, 2024, 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:

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

The total end-of-period weighted average interest rate on loans, excluding fees and discounts and impact from interest rate swaps designated as fair value hedges, at March 31, 2025 increased two basis points to 4.80%, compared to 4.78% at December 31, 2024, and 4.91% at March 31, 2024. The quarter-over-quarter increase was primarily attributable to higher-yielding new loan fundings and loan purchases, which exceeded the rates of loan prepayments and payoffs. Conversely, the year-over-year decrease was primarily due to changes in loan portfolio composition and the repricing of variable-rate loans in response to decreases in benchmark interest rates in the fourth quarter of 2024, as well as customers paying down and paying off higher-rate loans.

The following table presents the composition of loan commitments originated during the quarters indicated:

The weighted average interest rate on new loan commitments was 6.95% in the first quarter of 2025, compared to 6.92% in the fourth quarter of 2024, and 8.62% in the first quarter of 2024.

Allowance for Credit Losses

At March 31, 2025, our allowance for credit losses (“ACL”) on loans held for investment was $175.0 million, a decrease of $3.2 million from December 31, 2024 and a decrease of $17.4 million from March 31, 2024. The decreases in the ACL from December 31, 2024 and March 31, 2024 primarily reflects the relative changes in the size and composition of our loan portfolio and updates to the economic forecasts.

During the first quarter of 2025, the Company had $343,000 of net recoveries, compared to $1.4 million of net charge-offs during the fourth quarter of 2024, and $6.4 million of net charge-offs during the first quarter of 2024.

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:

The ratio of ACL to loans held for investment at March 31, 2025 decreased to 1.46%, compared to 1.48% at December 31, 2024 and 1.48% at March 31, 2024. The fair value net discount on loans acquired through bank acquisitions was $31.3 million, or 0.26% of total loans held for investment, as of March 31, 2025, compared to $33.2 million, or 0.28% of total loans held for investment, as of December 31, 2024, and $41.2 million, or 0.32% of total loans held for investment, as of March 31, 2024.

Asset Quality

Nonperforming assets totaled $27.7 million, or 0.15% of total assets, at March 31, 2025, compared to $28.9 million, or 0.16% of total assets, at December 31, 2024, and $64.1 million, or 0.34% of total assets, at March 31, 2024. Loan delinquencies were $2.1 million, or 0.02% of loans held for investment, at March 31, 2025, compared to $2.6 million, or 0.02% of loans held for investment, at December 31, 2024, and $12.2 million, or 0.09% of loans held for investment, at March 31, 2024.

Classified loans totaled $89.2 million, or 0.74% of loans held for investment, at March 31, 2025, compared to $106.2 million, or 0.88% of loans held for investment, at December 31, 2024, and $204.7 million, or 1.57% of loans held for investment, at March 31, 2024.

The following table presents the asset quality metrics of the loan portfolio as of the dates indicated.

Investment Securities

At March 31, 2025, available-for-sale (“AFS”) and held-to-maturity (“HTM”) investment securities were $1.76 billion and $1.70 billion, respectively, compared to $1.68 billion and $1.71 billion, respectively, at December 31, 2024, and $1.15 billion and $1.72 billion, respectively, at March 31, 2024.

In total, investment securities were $3.46 billion at March 31, 2025, an increase of $63.4 million from December 31, 2024, and an increase of $584.0 million from March 31, 2024. The increase in the first quarter of 2025 compared to the prior quarter was primarily due to purchases of $220.9 million in shorter-term AFS U.S. Treasury securities and an improvement of $7.4 million in AFS investment securities mark-to-market unrealized loss, partially offset by principal payments, amortization and accretion, and redemptions totaling $164.9 million.

The increase in investment securities from March 31, 2024 was the result of $1.48 billion in purchases of AFS and HTM investment securities and an improvement of $24.3 million in AFS securities mark-to-market unrealized loss, partially offset by principal payments, amortization and accretion, and redemptions totaling $922.2 million.

Deposits

At March 31, 2025, total deposits were $14.67 billion, an increase of $202.5 million, or 1.4%, from December 31, 2024, and a decrease of $521.6 million, or 3.4%, from March 31, 2024. The increase from the prior quarter was primarily driven by increases of $210.1 million in noninterest-bearing checking and $76.3 million in money market and savings, partially offset by decreases of $44.6 million in retail certificates of deposit and $39.4 million in interest-bearing checking.

The decrease from March 31, 2024 was attributable to decreases of $271.9 million in brokered certificates of deposit, $170.5 million in noninterest-bearing checking, $123.4 million in money market and savings, and $29.6 million in retail certificates of deposit, partially offset by an increase of $73.8 million in interest-bearing checking.

At March 31, 2025, non-maturity deposits⁽¹⁾ totaled $12.60 billion, or 85.9% of total deposits, an increase of $247.0 million, or 2.0%, from December 31, 2024, and a decrease of $220.1 million, or 1.7%, from March 31, 2024.

At March 31, 2025, maturity deposits totaled $2.07 billion, a decrease of $44.5 million, or 2.1%, from December 31, 2024, and a decrease of $301.5 million, or 12.7%, from March 31, 2024.

The weighted average cost of total deposits for the first quarter of 2025 was 1.65%, compared to 1.79% for the fourth quarter of 2024, and 1.59% for the first quarter of 2024. The weighted average cost of non-maturity deposits⁽¹⁾ for the first quarter of 2025 was 1.20%, compared to 1.28% for the fourth quarter of 2024, and 1.06% for the first quarter of 2024.

At March 31, 2025, the end-of-period weighted average rate of total deposits was 1.61%, compared to 1.72% at December 31, 2024, and 1.66% at March 31, 2024. At March 31, 2025, the end-of-period weighted average rate of non-maturity deposits was 1.19%, compared to 1.24% at December 31, 2024, and 1.12% at March 31, 2024.

The following table presents the composition of deposits as of the dates indicated.

Borrowings

At March 31, 2025, total borrowings amounted to $272.6 million, an increase of $130,000 from December 31, 2024, and a decrease of $259.4 million from March 31, 2024. Total borrowings at March 31, 2025 were comprised of $272.6 million of subordinated debt. The slight increase in borrowings at March 31, 2025 as compared to December 31, 2024 was due to the amortization of debt issuance costs. The decrease in borrowings at March 31, 2025 as compared to March 31, 2024 was due to a decrease of $200.0 million in FHLB term advances and the maturity of $60.0 million in subordinated debentures.

As of March 31, 2025, our unused borrowing capacity was $9.20 billion, which consists of available lines of credit with FHLB and other correspondent banks, as well as access through the Federal Reserve Bank’s discount window, none of which were utilized during the first quarter of 2025.

Capital Ratios

At March 31, 2025, our common stockholders’ equity was $2.97 billion, or 16.41% of total assets, compared with $2.96 billion, or 16.51%, at December 31, 2024, and $2.90 billion, or 15.43%, at March 31, 2024. At March 31, 2025, the ratio of tangible common equity to tangible assets⁽¹⁾ decreased 5 basis points and increased 90 basis points to 11.87%, compared with 11.92% at December 31, 2024, and 10.97% at March 31, 2024, respectively. Tangible book value per share⁽¹⁾ increased $0.01 and $0.65 to $20.98, compared with $20.97 at December 31, 2024, and $20.33 at March 31, 2024, respectively.

Effective January 1, 2025, the full effect of current expected credit losses (“CECL”) on regulatory capital over the five-year transition period fully phased in. At March 31, 2025, the Company and Bank were in compliance with the capital conservation buffer requirement and exceeded the minimum Common Equity Tier 1, Tier 1, and total capital ratios, inclusive of the fully phased-in capital conservation buffer of 7.0%, 8.5%, and 10.5%, respectively, and the Bank qualified as “well capitalized” for purposes of the federal bank regulatory prompt corrective action regulations.

Dividend and Stock Repurchase Program

On April 22, 2025, the Company’s Board of Directors declared a $0.33 per share dividend, payable on May 12, 2025 to stockholders of record as of May 5, 2025. In January 2021, the Company’s Board of Directors approved a stock repurchase program, which authorized the repurchase of up to 4,725,000 shares of its common stock. During the first quarter of 2025, the Company did not repurchase any shares of common stock.

Conference Call and Webcast

As a result of today’s announcement that Pacific Premier has entered into a merger agreement with Columbia Banking System, Inc. ("Columbia"), Pacific Premier has cancelled the previously announced conference call scheduled for 9:00 a.m. PT on Thursday, April 24, 2025.

Columbia and Pacific Premier will hold a joint conference call to discuss the definitive merger agreement on April 23, 2025 at 3:00 p.m. PT (6:00 p.m. ET).

Participants may join the webcast or register for the call using the link below to receive dial-in details and their own unique PINs. It is recommended you join 10 minutes prior to the start time.

Join the webcast: https://edge.media-server.com/mmc/p/ruitqcd6/

Register for the call: https://register-conf.media-server.com/register/BIf5345fce534d4cddaaa08c0ab8dc548b

About Pacific Premier Bancorp, Inc.

Pacific Premier Bancorp, Inc. (Nasdaq: PPBI) is the parent company of Pacific Premier Bank, National Association, a nationally chartered 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 headquartered in the western region of the United States, with approximately $18 billion in total assets. Pacific Premier Bank provides banking products and services, including deposit accounts, digital banking, and treasury management services, to businesses, professionals, entrepreneurs, real estate investors, and nonprofit organizations. Pacific Premier Bank also offers a wide array of loan products, such as commercial business loans, lines of credit, SBA loans, commercial real estate loans, agribusiness loans, franchise lending, home equity lines of credit, and construction loans. Pacific Premier Bank offers commercial escrow services and facilitates 1031 Exchange transactions through its Commerce Escrow division. Pacific Premier Bank offers clients IRA custodial services through its Pacific Premier Trust division, which has over $18 billion of assets under custody and close to 31,000 client accounts comprised of self-directed investors, financial institutions, capital syndicators, and financial advisors. Additionally, Pacific Premier Bank provides nationwide customized banking solutions to Homeowners’ Associations and Property Management companies. Pacific Premier Bank is an Equal Housing Lender and Member FDIC. For additional information about Pacific Premier Bancorp, Inc. and Pacific Premier Bank, visit our website: www.ppbi.com.

FORWARD-LOOKING STATEMENTS

The statements contained herein that are not historical facts are forward-looking statements based on management’s current expectations and beliefs concerning future developments and their potential effects on the Company including, without limitation, plans, strategies and goals, and statements about the Company’s expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, yields and returns, loan diversification and credit management, stockholder value creation, tax rates, liquidity, and the impact of acquisitions we have made or may make.

Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the strength of the United States (“U.S.”) economy in general and the strength of the local economies in which we conduct operations; adverse developments in the banking industry and the potential impact of such developments on customer confidence, liquidity, and regulatory responses to these developments; the effects of, and changes in, trade, monetary, and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; interest rate, liquidity, economic, market, credit, operational, and inflation risks associated with our business, including the speed and predictability of changes in these risks; our ability to attract and retain deposits and access to other sources of liquidity, particularly in a rising or high interest rate environment, and the quality and composition of our deposits; business and economic conditions generally and in the financial services industry, nationally and within our current and future geographic markets, including the labor market, ineffective management of the U.S. Federal budget or debt, fluctuations in the real estate market, or turbulence or uncertainty in domestic or foreign financial markets; the effect of acquisitions we have made or may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target into our operations; the timely development of competitive new products and services and the acceptance of these products and services by new and existing customers; possible impairment charges to goodwill, including any impairment that may result from increased volatility in our stock price; the impact of changes in financial services policies, laws, and regulations, including those concerning taxes, banking, securities, and insurance, and the application thereof by regulatory bodies; compliance risks, including any increased costs of monitoring, testing, and maintaining compliance with complex laws and regulations; the effectiveness of our risk management framework and quantitative models; 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; possible credit-related impairments of securities held by us; changes in the level of our nonperforming assets and charge-offs; the impact of governmental efforts to restructure or adjust the U.S. financial regulatory system; the impact of recent or future changes in the FDIC insurance assessment rate or the rules and regulations related to the calculation of the FDIC insurance assessment amount, including any special assessments; changes in consumer spending, borrowing, and savings habits; the effects of concentrations in our loan portfolio, including commercial real estate and the risks of geographic and industry concentrations; the possibility that we may reduce or discontinue the payments of dividends on our common stock; the possibility that we may discontinue, reduce or otherwise limit the level of repurchases of our common stock we may make from time to time pursuant to our stock repurchase program; changes in the financial performance and/or condition of our borrowers; changes in the competitive environment among financial and bank holding companies and other financial service providers; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism, and/or military conflicts, including the war between Russia and Ukraine and conflict in the Middle East, all of which could impact business and economic conditions in the United States and abroad; tariffs, trade policies, and related tensions, which could impact our clients, specific industry sectors and/or broader economic conditions and financial market; public health crises and pandemics and their effects on the economic and business environments in which we operate, including on our credit quality and business operations, as well as the impact on general economic and financial market conditions; cybersecurity threats and the cost of defending against them; climate change, including the enhanced regulatory, compliance, credit, and reputational risks and costs; natural disasters, earthquakes, fires, and severe weather; unanticipated regulatory or legal proceedings; and our ability to manage the risks involved in the foregoing. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the Company’s 2024 Annual Report on Form 10-K filed with the SEC and available at the SEC’s Internet site (http://www.sec.gov).

The Company undertakes no obligation to revise or publicly release any revision or update to these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

SELECTED FINANCIAL DATA