[ad_1]
Fourth Quarter 2021 Summary
- Net income of $84.8 million, or $0.89 per diluted share
- Return on average assets of 1.63%, return on average equity of 11.90%, and return on average tangible common equity of 18.66%(1)
- Efficiency ratio of 48.0%(1)
- Loan growth of $315.8 million, or 9.0%, annualized
- Net interest margin of 3.53%, and core net interest margin of 3.36%(1)
- Cost of deposits decreased to 0.04%
- Nonperforming assets represent 0.15% of total assets
- Tangible book value per diluted share increased $0.54 to $20.29(1)
Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) (the “Company” or “Pacific Premier”), the holding company of Pacific Premier Bank (the “Bank”), reported net income of $84.8 million, or $0.89 per diluted share, for the fourth quarter of 2021, compared with net income of $90.1 million, or $0.95 per diluted share, for the third quarter of 2021, and net income of $67.1 million, or $0.71 per diluted share, for the fourth quarter of 2020.
For the fourth quarter of 2021, the Company's return on average assets (“ROAA”) was 1.63%, return on average equity (“ROAE”) was 11.90%, and return on average tangible common equity (“ROATCE”)(1) was 18.66%, compared to 1.73%, 12.67%, and 19.89%, respectively, for the third quarter of 2021 and 1.34%, 9.91%, and 16.32%, respectively, for the fourth quarter of 2020. Total assets as of December 31, 2021 were $21.09 billion, compared to $21.01 billion at September 30, 2021 and $19.74 billion at December 31, 2020.
Steven R. Gardner, Chairman, President, and Chief Executive Officer of the Company, commented, “We delivered another solid quarter of results, reflecting our focus on consistently delivering strong financial performance. Our disciplined approach to business development and client relationship management is driven by effectively leveraging our innovative technology systems, and results in a sound and well diversified balance sheet. Despite the challenging environment throughout the past year, we grew tangible book value by 8.8% during 2021 while returning $140 million of capital to our shareholders.
“During the fourth quarter, we generated $1.48 billion in loan commitments, with the mix of production more heavily weighted toward new business loan activity. Additionally, we saw an improvement in credit demand among both existing and new clients, which resulted in more than a 50% increase in new commercial loan commitments over the prior quarter. Our full year loan production was a record $5.7 billion, and resulted in 8.1% loan growth for 2021, enabling us to redeploy excess liquidity into higher yielding earning assets. Given the increasing probability of higher interest rates, we enhanced our existing interest rate asset sensitivity by adding $900 million pay-fixed, receive-floating rate swaps during the fourth quarter, increasing our notional amount to $1.20 billion at year end.
“As we look ahead, we believe we are well-positioned to deliver another year of solid financial performance. We are focused on achieving our organic growth objectives and are well-positioned to continue our disciplined approach pursuing strategic growth opportunities that can strengthen our franchise and create long-term value for our shareholders.”
______________________________
(1) Reconciliations of the non–U.S. generally accepted accounting principles (“GAAP”) measures are set forth at the end of this press release.
FINANCIAL HIGHLIGHTS
|
|
|
Three Months Ended |
||||||||||
|
|
|
December 31, |
|
September 30, |
|
December 31, |
||||||
|
(Dollars in thousands, except per share data) |
|
|
2021 |
|
|
|
2021 |
|
|
|
2020 |
|
|
Financial Highlights |
|
|
|
|
|
|
||||||
|
Net income |
|
$ |
84,831 |
|
|
$ |
90,088 |
|
|
$ |
67,136 |
|
|
Diluted earnings per share |
|
|
0.89 |
|
|
|
0.95 |
|
|
|
0.71 |
|
|
Common equity dividend per share |
|
|
0.33 |
|
|
|
0.33 |
|
|
|
0.28 |
|
|
Return on average assets |
|
|
1.63 |
% |
|
|
1.73 |
% |
|
|
1.34 |
% |
|
Return on average equity |
|
|
11.90 |
|
|
|
12.67 |
|
|
|
9.91 |
|
|
Return on average tangible common equity (1) |
|
|
18.66 |
|
|
|
19.89 |
|
|
|
16.32 |
|
|
Pre-provision net revenue on average assets (1) |
|
|
1.93 |
|
|
|
1.98 |
|
|
|
1.92 |
|
|
Net interest margin |
|
|
3.53 |
|
|
|
3.51 |
|
|
|
3.61 |
|
|
Core net interest margin (1) |
|
|
3.36 |
|
|
|
3.30 |
|
|
|
3.32 |
|
|
Cost of deposits |
|
|
0.04 |
|
|
|
0.06 |
|
|
|
0.14 |
|
|
Efficiency ratio (1) |
|
|
48.0 |
|
|
|
47.5 |
|
|
|
48.5 |
|
|
Noninterest expense (excluding merger-related expense) as a percent of average assets (1) |
|
|
1.86 |
|
|
|
1.85 |
|
|
|
1.89 |
|
|
Total assets |
|
$ |
21,094,429 |
|
|
$ |
21,005,211 |
|
|
$ |
19,736,544 |
|
|
Total deposits |
|
|
17,115,589 |
|
|
|
17,469,999 |
|
|
|
16,214,177 |
|
|
Loans to deposit ratio |
|
|
83.6 |
% |
|
|
80.1 |
% |
|
|
81.6 |
% |
|
Non-maturity deposits as a percent of total deposits |
|
|
93.8 |
|
|
|
93.6 |
|
|
|
90.0 |
|
|
Book value per share |
|
$ |
30.58 |
|
|
$ |
30.08 |
|
|
$ |
29.07 |
|
|
Tangible book value per share (1) |
|
|
20.29 |
|
|
|
19.75 |
|
|
|
18.65 |
|
|
Total risk-based capital ratio |
|
|
14.62 |
% |
|
|
14.56 |
% |
|
|
16.31 |
% |
______________________________
(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 $170.7 million in the fourth quarter of 2021, an increase of $1.7 million, or 1.0%, from the third quarter of 2021. The increase in net interest income was driven by higher average loan balances of $345.6 million and higher loan related fees offsetting the impact of lower average loan yields, as well as higher average investment yields and lower deposit costs.
The net interest margin for the fourth quarter of 2021 was 3.53%, compared with 3.51% for the third quarter of 2021. The core net interest margin(1), which excludes the impact of loan accretion and other adjustments, increased 6 basis points to 3.36%, compared to 3.30% in the prior quarter. The core net interest margin expansion was a result of higher loan-related fees driven by elevated prepayment activities in the fourth quarter, higher average investment yields, and lower cost of deposits, partially offset by lower average loan yields.
Net interest income for the fourth quarter of 2021 increased $2.5 million compared to the fourth quarter of 2020. The increase was primarily attributable to higher average loans of $690.0 million, higher average investment securities of $868.7 million, and lower cost of funds. These items were partially offset by lower average loan and investment yields, and higher average interest-bearing deposit balances.
______________________________
(1) Reconciliations of the non-GAAP measures are set forth at the end of this press release.
|
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES |
|||||||||||||||||||||||||||
|
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA |
|||||||||||||||||||||||||||
|
(Unaudited) |
|||||||||||||||||||||||||||
|
|
|
Three Months Ended |
|||||||||||||||||||||||||
|
|
|
December 31, 2021 |
|
September 30, 2021 |
|
December 31, 2020 |
|||||||||||||||||||||
|
(Dollars in thousands) |
|
Average Balance |
|
Interest |
|
Average Yield/ Cost |
|
Average Balance |
|
Interest |
|
Average Yield/ Cost |
|
Average Balance |
|
Interest |
|
Average Yield/ Cost |
|||||||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Cash and cash equivalents |
|
$ |
334,371 |
|
$ |
66 |
|
0.08 |
% |
|
$ |
663,076 |
|
$ |
195 |
|
0.12 |
% |
|
$ |
1,239,035 |
|
$ |
286 |
|
0.09 |
% |
|
Investment securities |
|
|
4,833,251 |
|
|
19,522 |
|
1.62 |
|
|
|
4,807,854 |
|
|
18,827 |
|
1.57 |
|
|
|
3,964,592 |
|
|
17,039 |
|
1.72 |
|
|
Loans receivable, net (1) (2) |
|
|
14,005,836 |
|
|
157,418 |
|
4.46 |
|
|
|
13,660,242 |
|
|
157,025 |
|
4.56 |
|
|
|
13,315,810 |
|
|
163,499 |
|
4.88 |
|
|
Total interest-earning assets |
|
$ |
19,173,458 |
|
$ |
177,006 |
|
3.66 |
|
|
$ |
19,131,172 |
|
$ |
176,047 |
|
3.65 |
|
|
$ |
18,519,437 |
|
$ |
180,824 |
|
3.88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Interest-bearing deposits |
|
$ |
10,471,426 |
|
$ |
1,694 |
|
0.06 |
|
|
$ |
10,536,091 |
|
$ |
2,432 |
|
0.09 |
|
|
$ |
10,384,229 |
|
$ |
5,685 |
|
0.22 |
|
|
Borrowings |
|
|
400,014 |
|
|
4,593 |
|
4.59 |
|
|
|
332,245 |
|
|
4,546 |
|
5.43 |
|
|
|
539,021 |
|
|
6,941 |
|
5.12 |
|
|
Total interest-bearing liabilities |
|
$ |
10,871,440 |
|
$ |
6,287 |
|
0.23 |
|
|
$ |
10,868,336 |
|
$ |
6,978 |
|
0.25 |
|
|
$ |
10,923,250 |
|
$ |
12,626 |
|
0.46 |
|
|
Noninterest-bearing deposits |
|
$ |
6,911,702 |
|
|
|
|
|
$ |
6,809,211 |
|
|
|
|
|
$ |
6,125,171 |
|
|
|
|
||||||
|
Net interest income |
|
|
|
$ |
170,719 |
|
|
|
|
|
$ |
169,069 |
|
|
|
|
|
$ |
168,198 |
|
|
||||||
|
Net interest margin (3) |
|
|
|
|
|
3.53 |
|
|
|
|
|
|
3.51 |
|
|
|
|
|
|
3.61 |
|
||||||
|
Cost of deposits (4) |
|
|
|
|
|
0.04 |
|
|
|
|
|
|
0.06 |
|
|
|
|
|
|
0.14 |
|
||||||
|
Cost of funds (5) |
|
|
|
|
|
0.14 |
|
|
|
|
|
|
0.16 |
|
|
|
|
|
|
0.29 |
|
||||||
|
Ratio of interest-earning assets to interest-bearing liabilities |
|
176.37 |
|
|
|
|
|
|
176.03 |
|
|
|
|
|
|
169.54 |
|
||||||||||
______________________________
(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 $7.9 million, $9.4 million, and $11.0 million, 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.
Provision for Credit Losses
For the fourth quarter of 2021, the Company recorded a $14.6 million provision recapture, compared to a $19.7 million provision recapture for the third quarter of 2021, and a $1.5 million provision expense for the fourth quarter of 2020. The provision recapture for the fourth quarter of 2021 was reflective of the current and forecasted economic environment used in the Company's current expected credit losses (“CECL”) model, partially offset by fourth quarter loan growth and changes in loan mix. The provision expense in the fourth quarter of 2020 was primarily due to an increase in outstanding unfunded commitments in the commercial and industrial loan segment, offset by provision recapture for loans due to lower loans held for investment and favorable changes in asset quality and loan mix.
|
|
|
Three Months Ended |
||||||||||
|
|
|
December 31, |
|
September 30, |
|
December 31, |
||||||
|
(Dollars in thousands) |
|
|
2021 |
|
|
|
2021 |
|
|
|
2020 |
|
|
Provision for Credit Losses |
|
|
|
|
|
|
||||||
|
Provision for loan losses |
|
$ |
(14,710 |
) |
|
$ |
(19,543 |
) |
|
$ |
(8,079 |
) |
|
Provision for unfunded commitments |
|
|
51 |
|
|
|
(194 |
) |
|
|
9,596 |
|
|
Provision for held-to-maturity securities |
|
|
11 |
|
|
|
11 |
|
|
|
— |
|
|
Total provision for credit losses |
|
$ |
(14,648 |
) |
|
$ |
(19,726 |
) |
|
$ |
1,517 |
|
Noninterest Income
Noninterest income for the fourth quarter of 2021 was $27.3 million, a decrease of $2.8 million from the third quarter of 2021. The decrease was primarily due to a $3.3 million decrease in other income related to $2.5 million lower CRA investment income and the prior quarter's $970,000 gain on debt extinguishment.
During the fourth quarter of 2021, the Bank sold $13.3 million of SBA loans for a net gain of $1.3 million, compared with $12.0 million of SBA loans sold for a net gain of $1.2 million in the third quarter of 2021.
During the fourth quarter of 2021, the Bank sold $267.1 million of investment securities for a net gain of $3.6 million, compared to the sales of $161.6 million of investment securities for a net gain of $4.2 million in the third quarter of 2021.
Noninterest income for the fourth quarter of 2021 increased $4.1 million, compared to the fourth quarter of 2020. The increase was primarily due to a $4.3 million increase in trust custodial account fees, a $1.3 million increase in earnings on BOLI, a $1.0 million increase in net gain from loan sales, a $964,000 increase in escrow and exchange fee income, and a $585,000 increase in services charges on deposit accounts, partially offset by a $2.4 million decrease in other income and a $1.4 million decrease in net gain from sales of investment securities.
|
|
|
Three Months Ended |
|||||||
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|||
|
(Dollars in thousands) |
|
2021 |
|
2021 |
|
2020 |
|||
|
NONINTEREST INCOME |
|
|
|
|
|
|
|||
|
Loan servicing income |
|
$ |
505 |
|
$ |
536 |
|
$ |
633 |
|
Service charges on deposit accounts |
|
|
2,590 |
|
|
2,375 |
|
|
2,005 |
|
Other service fee income |
|
|
391 |
|
|
350 |
|
|
459 |
|
Debit card interchange fee income |
|
|
769 |
|
|
834 |
|
|
777 |
|
Earnings on BOLI |
|
|
3,521 |
|
|
3,266 |
|
|
2,240 |
|
Net gain from sales of loans |
|
|
1,334 |
|
|
1,187 |
|
|
328 |
|
Net gain from sales of investment securities |
|
|
3,585 |
|
|
4,190 |
|
|
5,002 |
|
Trust custodial account fees |
|
|
11,611 |
|
|
11,446 |
|
|
7,296 |
|
Escrow and exchange fees |
|
|
2,221 |
|
|
1,867 |
|
|
1,257 |
|
Other income |
|
|
754 |
|
|
4,049 |
|
|
3,197 |
|
Total noninterest income |
|
$ |
27,281 |
|
$ |
30,100 |
|
$ |
23,194 |
Noninterest Expense
Noninterest expense totaled $97.3 million for the fourth quarter of 2021, an increase of $1.2 million compared to the third quarter of 2021, primarily due to a $2.5 million increase in compensation and benefits, and a $1.3 million increase in legal and professional services expense. These increases were partially offset by a $1.2 million decrease in premises and occupancy expense.
Noninterest expense decreased by $2.7 million compared to the fourth quarter of 2020 primarily due to a $5.1 million decrease in merger-related expense related to the Opus acquisition. Excluding merger-related expense, noninterest expense increased $2.4 million, primarily due to a $4.0 million increase in compensation and benefits, and a $1.6 million increase in legal and professional services expense, partially offset by a $1.9 million decrease in premises and occupancy expense and a $1.2 million decrease in deposit expense.
|
|
|
Three Months Ended |
|||||||
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|||
|
(Dollars in thousands) |
|
2021 |
|
2021 |
|
2020 |
|||
|
NONINTEREST EXPENSE |
|
|
|
|
|
|
|||
|
Compensation and benefits |
|
$ |
56,076 |
|
$ |
53,592 |
|
$ |
52,044 |
|
Premises and occupancy |
|
|
11,403 |
|
|
12,611 |
|
|
13,268 |
|
Data processing |
|
|
5,881 |
|
|
6,296 |
|
|
5,990 |
|
FDIC insurance premiums |
|
|
1,389 |
|
|
1,392 |
|
|
1,213 |
|
Legal and professional services |
|
|
5,870 |
|
|
4,563 |
|
|
4,305 |
|
Marketing expense |
|
|
1,821 |
|
|
2,008 |
|
|
1,442 |
|
Office expense |
|
|
1,463 |
|
|
1,076 |
|
|
2,191 |
|
Loan expense |
|
|
857 |
|
|
1,332 |
|
|
1,084 |
|
Deposit expense |
|
|
3,836 |
|
|
3,974 |
|
|
5,026 |
|
Merger-related expense |
|
|
— |
|
|
— |
|
|
5,071 |
|
Amortization of intangible assets |
|
|
3,880 |
|
|
3,912 |
|
|
4,505 |
|
Other expense |
|
|
4,776 |
|
|
5,284 |
|
|
3,800 |
|
Total noninterest expense |
|
$ |
97,252 |
|
$ |
96,040 |
|
$ |
99,939 |
Income Tax
For the fourth quarter of 2021, our income tax expense totaled $30.6 million, resulting in an effective tax rate of 26.5%, compared to income tax expense of $32.8 million and an effective tax rate of 26.7% for the third quarter of 2021, and income tax expense of $22.8 million and an effective tax rate of 25.4% for the fourth quarter of 2020. The lower effective tax rate from the fourth quarter of 2020 was primarily driven by the effect of favorable permanent differences on lower pre-tax income.
For full year 2021, our income tax expense totaled $120.9 million, resulting in an effective tax rate of 26.2%.
BALANCE SHEET HIGHLIGHTS
Loans
Loans held for investment totaled $14.30 billion at December 31, 2021, an increase of $313.0 million, or 2.2% from September 30, 2021, and an increase of $1.06 billion, or 8.0% from December 31, 2020. The increase from September 30, 2021 was driven primarily by new loan fundings and higher commercial line utilization rates, partially offset by higher prepayments. The increase in loans held for investment from December 31, 2020 was due to new loan production, partially offset by loan amortization, prepayments, and maturities, as well as loan sales. Business line utilization increased to an average of 35.2% for the fourth quarter of 2021, compared to an average of 33.1% in the prior quarter.
During the fourth quarter of 2021, the Bank generated $1.48 billion of new loan commitments and funded $1.07 billion of loans, compared with $1.46 billion in new loan commitments and $1.10 billion in funded loans for the third quarter of 2021, and $911.3 million of new loan commitments and $712.5 million in funded loans for the fourth quarter of 2020. The year-over-year increase in loans funded was primarily due to expansion in our multifamily and commercial and industrial loan segments.
At December 31, 2021, the ratio of loans held for investment to total deposits was 83.6%, compared with 80.1% and 81.6%, at September 30, 2021 and December 31, 2020, respectively.
The following table presents the primary loan roll-forward activities for total loans, including both loans held for investment and loans held for sale, during the quarters indicated:
|
|
Three Months Ended |
||||||
|
|
December 31, |
|
September 30, |
||||
|
(Dollars in thousands) |
2021 |
|
2021 |
||||
|
Beginning loan balance |
$ |
13,990,961 |
|
|
$ |
13,599,312 |
|
|
New commitments |
|
1,479,445 |
|
|
|
1,459,201 |
|
|
Unfunded new commitments |
|
(408,963 |
) |
|
|
(359,000 |
) |
|
Net new fundings |
|
1,070,482 |
|
|
|
1,100,201 |
|
|
Amortization/maturities/payoffs |
|
(935,064 |
) |
|
|
(762,795 |
) |
|
Net draws on existing lines of credit |
|
194,548 |
|
|
|
69,141 |
|
|
Loan sales |
|
(13,427 |
) |
|
|
(12,258 |
) |
|
Charge-offs |
|
(734 |
) |
|
|
(2,640 |
) |
|
Net increase |
|
315,805 |
|
|
|
391,649 |
|
|
Ending loan balance |
$ |
14,306,766 |
|
|
$ |
13,990,961 |
|
The following table presents the composition of the loan portfolio as of the dates indicated:
|
|
|
December 31, |
|
September 30, |
|
December 31, |
||||||
|
(Dollars in thousands) |
|
2021 |
|
2021 |
|
2020 |
||||||
|
Investor loans secured by real estate |
|
|
|
|
|
|
||||||
|
Commercial real estate (“CRE”) non-owner-occupied |
|
$ |
2,771,137 |
|
|
$ |
2,823,065 |
|
|
$ |
2,675,085 |
|
|
Multifamily |
|
|
5,891,934 |
|
|
|
5,705,666 |
|
|
|
5,171,356 |
|
|
Construction and land |
|
|
277,640 |
|
|
|
292,815 |
|
|
|
321,993 |
|
|
SBA secured by real estate (1) |
|
|
46,917 |
|
|
|
49,446 |
|
|
|
57,331 |
|
|
Total investor loans secured by real estate |
|
|
8,987,628 |
|
|
|
8,870,992 |
|
|
|
8,225,765 |
|
|
Business loans secured by real estate (2) |
|
|
|
|
|
|
||||||
|
CRE owner-occupied |
|
|
2,251,014 |
|
|
|
2,242,164 |
|
|
|
2,114,050 |
|
|
Franchise real estate secured |
|
|
380,381 |
|
|
|
354,481 |
|
|
|
347,932 |
|
|
SBA secured by real estate (3) |
|
|
69,184 |
|
|
|
69,937 |
|
|
|
79,595 |
|
|
Total business loans secured by real estate |
|
|
2,700,579 |
|
|
|
2,666,582 |
|
|
|
2,541,577 |
|
|
Commercial loans (4) |
|
|
|
|
|
|
||||||
|
Commercial and industrial |
|
|
2,103,112 |
|
|
|
1,888,870 |
|
|
|
1,768,834 |
|
|
Franchise non-real estate secured |
|
|
392,576 |
|
|
|
392,950 |
|
|
|
444,797 |
|
|
SBA non-real estate secured |
|
|
11,045 |
|
|
|
12,732 |
|
|
|
15,957 |
|
|
Total commercial loans |
|
|
2,506,733 |
|
|
|
2,294,552 |
|
|
|
2,229,588 |
|
|
Retail loans |
|
|
|
|
|
|
||||||
|
Single family residential (5) |
|
|
95,292 |
|
|
|
144,309 |
|
|
|
232,574 |
|
|
Consumer |
|
|
5,665 |
|
|
|
6,426 |
|
|
|
6,929 |
|
|
Total retail loans |
|
|
100,957 |
|
|
|
150,735 |
|
|
|
239,503 |
|
|
Gross loans held for investment (6) |
|
|
14,295,897 |
|
|
|
13,982,861 |
|
|
|
13,236,433 |
|
|
Allowance for credit losses for loans held for investment |
|
|
(197,752 |
) |
|
|
(211,481 |
) |
|
|
(268,018 |
) |
|
Loans held for investment, net |
|
$ |
14,098,145 |
|
|
$ |
13,771,380 |
|
|
$ |
12,968,415 |
|
|
|
|
|
|
|
|
|
||||||
|
Total unfunded loan commitments |
|
|
2,507,911 |
|
|
|
2,504,188 |
|
|
|
1,947,250 |
|
|
Loans held for sale, at lower of cost or fair value |
|
$ |
10,869 |
|
|
$ |
8,100 |
|
|
$ |
601 |
|
___________________________________________
(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 $77.1 million, $85.0 million, and $113.8 million as of December 31, 2021, September 30, 2021, and December 31, 2020, respectively.
The total end of period weighted average interest rate on loans, excluding fees and discounts, at December 31, 2021 was 3.95%, compared with 4.03% at September 30, 2021 and 4.27% at December 31, 2020. The quarter-over-quarter and year-over-year decreases reflect the continued impact from prepayments of higher rate loans and lower rates on new loan originations. During the fourth quarter, the Bank added overnight SOFR-based pay-fixed, receive-floating interest rate swaps with a notional amount of $900 million, bringing the total to $1.20 billion notional position at December 31, 2021.
The following table presents the composition of new loan commitments originated during the quarters indicated:
|
|
|
Three Months Ended |
|||||||
|
|
|
December 31, |
|
September 30, |
|
December 31, |
|||
|
(Dollars in thousands) |
|
2021 |
|
2021 |
|
2020 |
|||
|
Investor loans secured by real estate |
|
|
|
|
|
|
|||
|
CRE non-owner-occupied |
|
$ |
94,740 |
|
$ |
105,792 |
|
$ |
80,298 |
|
Multifamily |
|
|
552,600 |
|
|
613,640 |
|
|
398,651 |
|
Construction and land |
|
|
94,343 |
|
|
99,943 |
|
|
60,336 |
|
SBA secured by real estate (1) |
|
|
— |
|
|
1,410 |
|
|
— |
|
Total investor loans secured by real estate |
|
|
741,683 |
|
|
820,785 |
|
|
539,285 |
|
Business loans secured by real estate (2) |
|
|
|
|
|
|
|||
|
CRE owner-occupied |
|
|
147,322 |
|
|
256,269 |
|
|
96,779 |
|
Franchise real estate secured |
|
|
52,034 |
|
|
19,207 |
|
|
27,162 |
|
SBA secured by real estate (3) |
|
|
15,631 |
|
|
15,065 |
|
|
1,999 |
|
Total business loans secured by real estate |
|
|
214,987 |
|
|
290,541 |
|
|
125,940 |
|
Commercial loans (4) |
|
|
|
|
|
|
|||
|
Commercial and industrial |
|
|
469,018 |
|
|
310,985 |
|
|
228,076 |
|
Franchise non-real estate secured |
|
|
43,219 |
|
|
21,654 |
|
|
8,005 |
|
SBA non-real estate secured |
|
|
3,500 |
|
|
— |
|
|
283 |
|
Total commercial loans |
|
|
515,737 |
|
|
332,639 |
|
|
236,364 |
|
Retail loans |
|
|
|
|
|
|
|||
|
Single family residential (5) |
|
|
6,800 |
|
|
14,782 |
|
|
8,888 |
|
Consumer |
|
|
238 |
|
|
454 |
|
|
786 |
|
Total retail loans |
|
|
7,038 |
|
|
15,236 |
|
|
9,674 |
|
Total loan commitments |
|
$ |
1,479,445 |
|
$ |
1,459,201 |
|
$ |
911,263 |
______________________________
(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 our new loan production was 3.55% in the fourth quarter of 2021, compared to 3.66% in the third quarter of 2021 and 3.55% in the fourth quarter of 2020.
Asset Quality and Allowance for Credit Losses
At December 31, 2021, our allowance for credit losses (“ACL”) on loans held for investment was $197.8 million, a decrease of $13.7 million from September 30, 2021 and a decrease of $70.3 million from December 31, 2020. The provision for credit loss recapture during the current quarter was reflective of the current and forecasted economic activity used in the Company's CECL model relative to the prior quarter, partially offset by loan growth and changes in loan mix during the quarter. The decrease in ACL from December 31, 2020 was primarily due to favorable changes in economic forecasts used in the Company's CECL model related to the COVID-19 pandemic.
During the fourth quarter of 2021, the Company reported $1.0 million in net recoveries, compared to net charge-offs of $1.8 million and $6.4 million during the third quarter of 2021 and the fourth 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 December 31, 2021 |
|||||||||||||||
|
(Dollars in thousands) |
Beginning ACL Balance |
|
Charge-offs |
|
Recoveries |
|
Provision for Credit Losses |
|
Ending ACL Balance |
|||||||
|
Investor loans secured by real estate |
|
|
|
|
|
|
|
|
|
|||||||
|
CRE non-owner occupied |
$ |
42,467 |
|
$ |
— |
|
|
$ |
78 |
|
$ |
(5,165 |
) |
|
$ |
37,380 |
|
Multifamily |
|
52,164 |
|
|
— |
|
|
|
— |
|
|
3,045 |
|
|
|
55,209 |
|
Construction and land |
|
8,017 |
|
|
— |
|
|
|
— |
|
|
(2,806 |
) |
|
|
5,211 |
|
SBA secured by real estate (1) |
|
3,879 |
|
|
(1 |
) |
|
|
3 |
|
|
(680 |
) |
|
|
3,201 |
|
Business loans secured by real estate (2) |
|
|
|
|
|
|
|
|
|
|||||||
|
CRE owner-occupied |
|
33,679 |
|
|
— |
|
|
|
12 |
|
|
(4,116 |
) |
|
|
29,575 |
|
Franchise real estate secured |
|
9,626 |
|
|
— |
|
|
|
— |
|
|
(1,641 |
) |
|
|
7,985 |
|
SBA secured by real estate (3) |
|
5,104 |
|
|
— |
|
|
|
— |
|
|
(238 |
) |
|
|
4,866 |
|
Commercial loans (4) |
|
|
|
|
|
|
|
|
|
|||||||
|
Commercial and industrial |
|
37,595 |
|
|
(731 |
) |
|
|
1,292 |
|
|
(20 |
) |
|
|
38,136 |
|
Franchise non-real estate secured |
|
17,518 |
|
|
— |
|
|
|
325 |
|
|
(2,759 |
) |
|
|
15,084 |
|
SBA non-real estate secured |
|
632 |
|
|
— |
|
|
|
2 |
|
|
(69 |
) |
|
|
565 |
|
Retail loans |
|
|
|
|
|
|
|
|
|
|||||||
|
Single family residential (5) |
|
529 |
|
|
— |
|
|
|
— |
|
|
(274 |
) |
|
|
255 |
|
Consumer loans |
|
271 |
|
|
(2 |
) |
|
|
3 |
|
|
13 |
|
|
|
285 |
|
Totals |
$ |
211,481 |
|
$ |
(734 |
) |
|
$ |
1,715 |
|
$ |
(14,710 |
) |
|
$ |
197,752 |
______________________________
(1) SBA loans that are collateralized by hotel/motel real property.
(2) Loans to businesses that are collateralized by real estate where the operating cash flow of the business is the primary source of repayment.
(3) SBA loans that are collateralized by real property other than hotel/motel real property.
(4) Loans to businesses where the operating cash flow of the business is the primary source of repayment.
(5) Single family residential includes home equity lines of credit, as well as second trust deeds.
The ratio of allowance for loan losses to total loans held for investment at December 31, 2021 was 1.38%, compared to 1.51% and 2.02% at September 30, 2021 and December 31, 2020, respectively. The fair value discount on loans acquired through bank acquisitions was $77.1 million, or 0.54% of total loans held for investment, as of December 31, 2021, compared to $85.0 million, or 0.60% of total loans held for investment, as of September 30, 2021, and $113.8 million, or 0.85% of total loans held for investment, as of December 31, 2020.
Nonperforming assets totaled $31.3 million, or 0.15% of total assets, at December 31, 2021, compared with $35.1 million, or 0.17% of total assets, at September 30, 2021 and $29.2 million, or 0.15% of total assets, at December 31, 2020. Total loan delinquencies were $19.5 million, or 0.14% of loans held for investment, at December 31, 2021, compared to $20.2 million, or 0.14% of loans held for investment, at September 30, 2021, and $13.3 million, or 0.10% of loans held for investment, at December 31, 2020.
Classified loans totaled $121.8 million, or 0.85% of loans held for investment, at December 31, 2021, compared with $124.5 million, or 0.89% of loans held for investment, at September 30, 2021, and $128.3 million, or 0.97% of loans held for investment, at December 31, 2020. The favorable quarter-over-quarter and year-over-year decrease was primarily driven by the net changes in risk ratings.
Interest typically is not 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 December 31, 2021. There were $17.3 million of troubled debt restructured loans at December 31, 2021, compared with $17.6 million at September 30, 2021, and no troubled debt restructured loans at December 31, 2020.
At December 31, 2021 and September 30, 2021, there were no COVID-19 loan modifications remaining within their modification period and no loans were in-process for potential modification.
|
|
|
December 31, |
|
September 30, |
|
December 31, |
||||||
|
(Dollars in thousands) |
|
2021 |
|
2021 |
|
2020 |
||||||
|
Asset Quality |
|
|
|
|
|
|
||||||
|
Nonperforming loans |
|
$ |
31,273 |
|
|
$ |
35,090 |
|
|
$ |
29,209 |
|
|
Other real estate owned |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Other assets owned |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Nonperforming assets |
|
$ |
31,273 |
|
|
$ |
35,090 |
|
|
$ |
29,209 |
|
|
|
|
|
|
|
|
|
||||||
|
Total classified assets (1) |
|
$ |
121,827 |
|
|
$ |
124,506 |
|
|
$ |
128,332 |
|
|
Allowance for credit losses |
|
|
197,752 |
|
|
|
211,481 |
|
|
|
268,018 |
|
|
Allowance for credit losses as a percent of total nonperforming loans |
|
|
632 |
% |
|
|
603 |
% |
|
|
918 |
% |
|
Nonperforming loans as a percent of loans held for investment |
|
|
0.22 |
|
|
|
0.25 |
|
|
|
0.22 |
|
|
Nonperforming assets as a percent of total assets |
|
|
0.15 |
|
|
|
0.17 |
|
|
|
0.15 |
|
|
Classified loans to total loans held for investment |
|
|
0.85 |
|
|
|
0.89 |
|
|
|
0.97 |
|
|
Classified assets to total assets |
|
|
0.58 |
|
|
|
0.59 |
|
|
|
0.65 |
|
|
Net loan (recoveries) charge-offs for the quarter ended |
|
$ |
(981 |
) |
|
$ |
1,750 |
|
|
$ |
6,406 |
|
|
Net loan (recoveries) charge-offs for the quarter to average total loans, net |
|
|
(0.01 |
) % |
|
|
0.01 |
% |
|
|
0.05 |
% |
|
Allowance for credit losses to loans held for investment (2) |
|
|
1.38 |
|
|
|
1.51 |
|
|
|
2.02 |
|
|
Loans modified under CARES Act |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
79,465 |
|
|
Loans modified under CARES Act as a percent of loans held for investment |
|
|
— |
% |
|
|
— |
% |
|
|
0.60 |
% |
|
Delinquent Loans: |
|
|
|
|
|
|
||||||
|
30 – 59 days |
|
$ |
1,395 |
|
|
$ |
728 |
|
|
$ |
1,269 |
|
|
60 – 89 days |
|
|
— |
|
|
|
936 |
|
|
|
57 |
|
|
90+ days |
|
|
18,100 |
|
|
|
18,514 |
|
|
|
11,996 |
|
|
Total delinquency |
|
$ |
19,495 |
|
|
$ |
20,178 |
|
|
$ |
13,322 |
|
|
Delinquency as a percent of loans held for investment |
|
|
0.14 |
% |
|
|
0.14 |
% |
|
|
0.10 |
% |
______________________________
(1) Includes substandard loans and other real estate owned.
(2) At December 31, 2021, 36% of loans held for investment include a fair value net discount of $77.1 million, or 0.54% of loans held for investment. At September 30, 2021, 40% of loans held for investment include a fair value net discount of $85.0 million, or 0.60% of loans held for investment. At December 31, 2020, 55% of loans held for investment include a fair value net discount of $113.8 million, or 0.85% of loans held for investment.
Investment Securities
At December 31, 2021, investment securities available-for-sale and investment securities held-to-maturity were $4.27 billion and $381.7 million, respectively, compared to $4.71 billion and $170.6 million at September 30, 2021, respectively. In total, investment securities were $4.66 billion at December 31, 2021, a decrease of $224.9 million from $4.88 billion at September 30, 2021. The decrease as compared to the third quarter of 2021 was primarily the result of sales of $267.1 million, principal payments, amortization, and redemptions of $147.1 million, and a mark-to-market fair value adjustment decrease of $9.4 million, partially offset by purchases of $198.8 million as the Company deployed its excess liquidity. During the fourth quarter of 2021, the Company transferred $165.5 million of municipal bonds from available-for-sale to held-to-maturity at fair value compared to the $157.6 million of municipal bonds transferred from available-for-sale to held-to-maturity at fair value during the third quarter of 2021.
The Company's assessment of investment securities available-for-sale indicated that no ACL was required as of December 31, 2021.
Investment securities increased $700.7 million from the same period last year, the result of $2.28 billion in purchases, partially offset by $884.2 million in sales, $603.9 million in principal payments, amortization, and redemptions, and an $89.1 million decrease in mark-to-market fair value adjustments.
Deposits
At December 31, 2021, deposits totaled $17.12 billion, a decrease of $354.4 million, or 2.0%, from September 30, 2021, and an increase of $901.4 million, or 5.56%, from December 31, 2020. At December 31, 2021, non-maturity deposits totaled $16.06 billion, a decrease of $299.6 million, or 1.8%, from September 30, 2021, and an increase of $1.47 billion, or 10.1%, from December 31, 2020. During the fourth quarter of 2021, money market/savings deposits decreased $230.8 million, noninterest-bearing deposits decreased $84.2 million, and retail certificates of deposits decreased $54.8 million, partially offset by an increase of $15.4 million in interest checking, as compared to the third quarter of 2021. The increase in deposits from December 31, 2020 was primarily driven by an increase in business checking and money market/savings deposits, partially offset by decreases in retail and brokered certificates of deposit.
The weighted average cost of deposits for the fourth quarter of 2021 was 0.04%, compared with 0.06% for the third quarter of 2021 and 0.14% for the fourth quarter of 2020. The decrease in the weighted average cost of deposits for the fourth quarter of 2021 compared to the third quarter of 2021 was principally driven by lower pricing across all deposit categories, and higher average noninterest-bearing deposits.
The end of period weighted average rate of deposits at December 31, 2021 was 0.04%.
|
|
|
December 31, |
|
September 30, |
|
December 31, |
||||||
|
(Dollars in thousands) |
|
2021 |
|
2021 |
|
2020 |
||||||
|
Deposit Accounts |
|
|
|
|
||||||||
Full story available on Benzinga.com
[ad_2]
Source link
