Pacific Premier Bancorp (PPBI) Q3 Earnings call transcript Oct 24, 2024

Pacific Premier Bancorp, a leading financial institution, recently held its third quarter 2024 earnings call, where it shared its financial performance and strategic initiatives for the future. The call, led by CEO Steve Gardner and CFO Ronald Nicolas, provided insights into the company's financial health, market position, and growth opportunities.

Financial Highlights

Pacific Premier Bancorp reported a strong third quarter performance, with earnings of $36 million, or $0.37 per share. This solid result was attributed to the bank's consistent efforts to generate new business and deepen existing relationships, resulting in increased noninterest-bearing deposits, which now comprise 32% of total deposits.

The bank also demonstrated resilience in managing its funding costs, despite the prolonged higher interest rate environment. The average cost of deposits increased to 1.84%, but the spot deposit cost at the end of the quarter was 1.80%. The bank's funding costs remain low on a relative basis compared to its peers, and it is confident in its ability to reprice deposits downward assuming further decreases in interest rates.

Strategic Initiatives and Growth Opportunities

The bank's capital ratios increased significantly in the third quarter, with the tangible common equity ratio increasing by 42 basis points to 11.83%. This strengthened capital position has positioned the bank to take a more aggressive approach in pursuing opportunities to gain market share and drive new business.

The bank expects deposit trends to improve, with optimism that it has reached an inflection point where balances can grow from a year. This confidence is based on a decrease in pressure from clients seeking higher returns for excess liquidity. The loan-to-deposit ratio stood at 83.1%, and the bank has significant capacity to bring new credits onto the balance sheet.

In terms of loan growth, the bank is focusing on the C&I space, where it has seen substantial demand. It is also expanding in the SBA and construction sectors, signaling a broad-based growth strategy. The bank is optimistic about the outlook for 2025, with a focus on driving loan production capabilities and deploying excess liquidity into more loans to drive earnings and tangible book value growth.

Credit Risk Management and Asset Quality

Pacific Premier Bancorp's proactive approach to credit risk management was evident in its asset quality measures, which are among the strongest in the industry. Nonperforming loans decreased by $13 million, and delinquencies fell to 0.08% of loans. The bank's focus on maintaining open lines of communication with clients regarding their financial status and market dynamics has been instrumental in managing individual credits effectively.

Conclusion

Pacific Premier Bancorp's third quarter earnings call highlighted its strong financial performance and strategic initiatives for future growth. The bank's focus on deep client relationships, coupled with its proactive approach to credit risk management and asset quality, positions it well for the future. With a solid capital position and a clear growth strategy, Pacific Premier Bancorp is poised to capitalize on opportunities in the evolving financial landscape.