Stockholder Letter

2021 marked a record year for Pacific Premier Bancorp, Inc., despite the impact of the ongoing pandemic, supply chain disruptions, and labor shortages. Our success over the past year reflects the effectiveness of our diversified commercial banking model and approach to technology-driven growth. We generated record revenue and net income for the year by leveraging the expanded capabilities of our larger and more diverse organization.

Net income for the full year was $340 million, or $3.58 per diluted share, while our pre-provision net revenue, which we consider our core earnings, increased 24% to $390 million.1 The combination of strong revenue growth and prudent expense management also resulted in the following positive trends across key metrics:

  • Total revenue increased 19% year-over-year
  • Noninterest income increased 51% in 2021
  • Total cost of deposits declined to 0.04% in 4Q21
  • Total loans held for investment increased 8% year-over-year
  • Non-maturity deposits increased 10% year-over-year
  • Asset quality remained excellent, with net charge-offs representing just 0.02% of average loans for the year
  • Our efficiency ratio improved to 48.4%

Our consistently strong financial performance during the year resulted in tangible book value per share increasing 9%, while we returned $140 million in capital to stockholders through our quarterly cash dividend and stock repurchase program. In short, we delivered significant value for our stockholders in 2021.

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"Our scalable technology and culture of continuous improvement will continue to allow us to add new clients and expand existing relationships."

Record Loan Production and Strong Inflows of Low-Cost Deposits

Our scalable technology infrastructure and disciplined approach to business development have enhanced our ability to attract new clients and expand existing relationships. This past year’s results included $5.7 billion in new loan commitments and a significant increase in low-cost non-maturity deposits, which grew over 10% year-over-year and accounted for 94% of our total deposits at year-end. The addition of larger, more sophisticated middle-market companies and strong credit sponsors of commercial real estate projects helped make 2021 our most productive year ever. We entered 2022 with the highest level of commercial loan commitments in our history, and are well-positioned to take advantage of continued loan growth opportunities going forward.

Executing on Our Technology-Driven Growth Strategy

For many years, we have prioritized investing in technology to support and drive growth. At the center of our technology-driven growth strategy is Premier360SM, our innovative technology platform that enhances the ability of our cross-functional teams to collaborate and work together seamlessly to deliver superior client services and solutions. In 2021, we introduced additional new products and features to our suite of treasury management services designed to enhance the client experience, leverage efficiencies, and deepen client relationships. Our new features include, among others, a more modernized online business banking platform, new credit card offerings, and a refined mobile banking experience. These efforts have enabled us to expand our coverage area and the number of clients served, while improving their experience and strengthening our relationships.

Reinforcing the Pacific Premier Culture

Our five Success Attributes embody our culture: Achieve, Communicate, Improve, Integrity, and Urgency. Over the past decade, our Success Attributes have been key to building a high-performing institution focused on continuous improvement throughout our organization.

Throughout 2021—a year in which we focused on organic growth—we continued to draw upon our Success Attributes to expand our approach to Environmental, Social, and Governance (ESG) initiatives. We continued to make meaningful investments in our employees, clients, and communities, and we are excited to share our inaugural Corporate Social Responsibility Report highlighting these investments and efforts, which we released this spring.

“Net income for the full year was $340 million, or $3.58 per diluted share, while our pre-provision net revenue, which we consider our core earnings, increased 24% to $390 million.1”

A Strong Foundation for Generating Profitable Growth and Enhancing Franchise Value

As we look ahead, we expect the dynamic economic environment to present both new growth opportunities and challenges from inflation and the ongoing pandemic. Our scalable technology and culture of continuous improvement will continue to allow us to add new clients and expand existing relationships. We believe we are well positioned to take advantage of compelling acquisition opportunities that complement our disciplined approach to organic growth. We have an established track record of successfully identifying, structuring, and integrating acquisitions that create value for our stockholders. Our experienced management team is prepared to leverage the infrastructure we have built to capitalize on compelling opportunities if, and when, they arise.

We are committed to operating the Company in a balanced approach while delivering value to stockholders in varying economic environments. Our performance over the past year is a testament to this approach. On behalf of the Board of Directors, I want to thank our stockholders for your continued support of our vision, strategy, and execution.


Steven R. Gardner
Chairman, President and Chief Executive Officer

 

1 Pre-provision net revenue is calculated by adding to our 2021 net income of $50 million, amount attributable to income tax ($121 million), provision recapture for credit losses ($71 million), and merger-related expenses ($5,000).

“Our scalable technology and culture of continuous improvement will continue to allow us to add new clients and expand existing relationships.”