Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) Q4 2023 Results Conference Call January 29, 2024 12:00 PM ET

Company Participants

Steve Gardner - Chairman and CEO

Ron Nicolas - CFO

Conference Call Participants

David Feaster - Raymond James

Chris McGratty - KBW

Gary Tenner - D.A. Davidson

Andrew Terrell - Stephens

Adam Butler - Piper Sandler

Operator

Good morning. And welcome to the Pacific Premier Bancorp Fourth Quarter 2023 Conference Call. All participants will be in listen only mode [Operator Instructions]. Please note, this event is being recorded.

I would now like to turn the conference over to Steve Gardner, Chairman and CEO. Please go ahead.

Steve Gardner

Thank you, Gary. And good morning, everyone. I appreciate you joining us today. As you're all aware, we released our earnings report for the fourth quarter of 2023 earlier this morning. We have also published an updated investor presentation with additional information and disclosures on our financial results. If you have not done so already, we encourage you to visit our Investor Relations website to download a copy of the presentation and related materials. I note that our earnings release and investor presentation include a safe harbor statement relative to the forward-looking comments. I encourage each of you to carefully read that statement. On today's call, I'll walk through some of the notable items related to our fourth quarter performance. Ron Nicolas, our CFO, will also review a few of the details surrounding our financial results, and then we'll open up the call to questions. Our team delivered another solid quarter to close out 2023, which was an extraordinary year for the banking industry. Rapidly rising interest rates, high profile bank failures and rapid succession and heightened regulatory expectations brought challenging dynamics to the market. Throughout it all, we maintained our focus on prudent and proactive capital liquidity and credit risk management. We have built our organization to be dynamic and adaptable to various operating environments. This served us and our stakeholders extremely well in 2023. For example, our bankers responded quickly to the industry challenges throughout the year, collaborating across business lines to meet clients' needs and to reinforce the strength of our franchise. This responsiveness and engagement deepened existing relationships and led to new business development opportunities for our teams.

During the fourth quarter, we leveraged the strength of our balance sheet and strong capital levels to proactively reposition our securities portfolio. This transaction enhanced our future earnings profile, provided additional liquidity and is reflective of the optionality we have created within the franchise. The securities repositioning produced immediate results, expanding our net interest margin by 16 basis points. I'd like to highlight a few key areas as many of the trends were similar to what we observed in the third quarter. Although we reported a quarterly net loss of $1.44 per share, excluding the one-time effects of the FDIC special assessment and our securities portfolio repositioning, our operating earnings per share was $0.51. We saw some nice lift from our fee-based businesses as well as a reduction in noninterest expense compared to the third quarter excluding the FDIC special assessment. Our commitment to capital accumulation in the current environment continues to drive our strong capital ratios, which remain top tier among our peers, even after layering in the impact of the loss on the securities portfolio sale. In the fourth quarter, our TCE ratio increased 85 basis points to 10.72% and our tangible book value per share increased $0.33 to $20.22. Our CET1 ratio came in at 14.32% and our total risk-based capital ratio was a healthy 17.29%. Our ability to deepen our relationships with existing customers and attract new clients to the bank generated meaningful growth in new deposit account openings while maintaining pricing discipline.