Pacific Premier Bancorp Reports Strong Q4 Earnings Amid Optimistic Economic Outlook
Pacific Premier Bancorp, a leading regional bank, has reported strong fourth-quarter earnings, highlighting the company's resilience and success in navigating a challenging economic environment. In a conference call on January 23rd, Chairman and CEO Steve Gardner outlined the key highlights from the quarter.
Gardner began by expressing his sympathy for those affected by the devastating California wildfires, which have had a significant impact on the community. Pacific Premier has pledged to support its clients and neighbors in the Los Angeles area through various initiatives, including consumer and commercial lending programs. These efforts aim to provide an efficient and streamlined process for those affected, with the goal of offering necessary financial support as soon as possible.
The company's financial performance was equally impressive, with earnings per share reaching $0.35, a return on average assets (ROAA) of 75 basis points, and a return on tangible common equity (ROTCE) of 7.2%. Gardner attributed this success to the outstanding business development efforts of the entire team, which has driven new small business and middle market clients, deepened existing relationships, and attracted new customers to the bank.
Pacific Premier also announced that it had received approval from the Office of the Comptroller of the Currency (OCC) to convert from a California chartered bank to a National Banking Association. This change in charter better aligns the company's West Coast business banking model with its complementary national lines of business.
One of the key drivers behind Pacific Premier's strong performance was an improvement in borrower sentiment, which led to a positive shift in funding mix. The company reduced higher-cost deposits by $163 million while increasing lower-cost transaction deposits by $146 million, allowing it to reinvest excess liquidity into loans and short-term U.S. treasuries.
As a result, Pacific Premier was able to lower its cost of funds by 9 basis points to 1.88%, with the spot deposit cost at year-end declining by 8 basis points to 1.72%. The company's cost of deposits remains low relative to its peers, and it plans to take a balanced approach toward funding loan growth while driving pricing down further.
The Federal Reserve's recent interest rate cuts have created a more favorable economic outlook, which has driven growing optimism among Pacific Premier's clients about the future. This positive trend provides the company with renewed confidence for stronger organic originations in commercial and business loans, as well as high-quality opportunities in construction, multifamily, and CRE.
