Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) Q3 2024 Earnings Call Transcript October 24, 2024 12:00 PM ET

Company Participants

Steve Gardner - Chairman & Chief Executive Officer
Ron Nicolas - Chief Financial Officer

Conference Call Participants

David Feaster - Raymond James
Matthew Clark - Piper Sandler
Gary Tenner - D.A. Davidson
Andrew Terrell - Stephens
Chris McGratty - KBW

Operator

Good day, and welcome to the Pacific Premier Bancorp Third Quarter 2024 Conference Call. [Operator Instructions] Please note, today’s event is being recorded.

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

Steve Gardner

Very good. Thank you, Rocco. Good morning, everyone. I appreciate you joining us today. As you are all aware, we released our earnings report for the third quarter of 2024 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 third quarter performance. Ron Nicolas, our CFO, will also review a few of the details surrounding our financial results, and then we will open up the call to questions.

We delivered solid results in the third quarter, as we generated earnings of $36 million $0.37 per share. As a result of our business development team's consistent efforts to generate new business, while deepening existing client relationships. Non-interest-bearing deposits increased during the quarter and comprised 32% of total deposits at quarter end. We leverage these positive core deposit trends to further reduce higher cost wholesale funding sources by decreasing brokered deposits by $184 million and repaying a $200 million FHLB term advance.

The prolonged higher interest rate environment impacted our average cost of deposits, which increased to 1.84%. However, our spot deposit cost at quarter end were 1.80%. Overall, our funding costs remain low on a relative basis compared to our peers and we are confident in our ability to reprice deposits downward, assuming further decreases in interest rates. Our loan portfolio contracted during the quarter, as we saw elevated loan payoffs in particular in the C&I portfolio, as our clients utilized excess liquidity to reduce debt. This factor reflects in part, the high-quality nature of the businesses we attract to the franchise. This dynamic has impacted both sides of the balance sheet for the past few quarters. However, we expect this pressure to diminish as we move through the rest of 2024 and into next year.