Fourth Quarter 2018 Summary

• Net income of $39.6 million, or $0.63 per diluted share, which includes $2.6 million of merger-related expense
• Return on average assets of 1.37%, return on average equity of 8.15%, and return on average tangible common equity of 16.65%
• Efficiency ratio of 48.3%
• Net interest margin of 4.49%, core net interest margin of 4.24%
• Cost of deposits of 0.55% in the current quarter compared with 0.54% in the prior quarter
• Nonperforming assets as a percent of total assets of 0.04%
• Completed the client account and system conversion of Grandpoint Capital, Inc.

IRVINE, Calif.--(BUSINESS WIRE)-- Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company”), the holding company of Pacific Premier Bank (the “Bank”), reported net income for the fourth quarter of 2018 of $39.6 million, or $0.63 per diluted share, compared with net income of $28.4 million, or $0.46 per diluted share, for the third quarter of 2018 and net income of $16.2 million, or $0.36 per diluted share, for the fourth quarter of 2017. Net income for the fourth quarter of 2018 includes $2.6 million of merger-related expense associated with the acquisition of Grandpoint Capital, Inc (“Grandpoint”), which was effective as of July 1, 2018.

For the three months ended December 31, 2018, the Company’s return on average assets (“ROAA”) was 1.37%, return on average equity (“ROAE”) was 8.15%, and return on average tangible common equity (“ROATCE”) was 16.65% as compared to 1.00%, 5.95%, and 12.89%, respectively, for the three months ended September 30, 2018 and 0.87%, 5.57%, and 10.48%, respectively, for the three months ended December 31, 2017. Total assets as of December 31, 2018 were $11.5 billion compared with $11.5 billion at September 30, 2018 and $8.0 billion at December 31, 2017. A reconciliation of the non-U.S. GAAP measure of ROATCE to the U.S. GAAP measure of common stockholders' equity is set forth at the end of this press release.

Steven R. Gardner, Chairman, President and Chief Executive Officer of the Company, commented, “We delivered the highest level of quarterly earnings in our history, driven by the successful integration of Grandpoint and the synergies we anticipated from the transaction. The fourth quarter performance reflects our commitment to earnings growth, expanding client relationships, and effective expense and balance sheet management.

“In the fourth quarter, excluding $2.6 million in merger-related expense, we generated an operating ROAA of 1.43% and an operating ROATCE of 17.4%. These strong risk-adjusted returns resulted in strong capital generation that provides us the flexibility to return capital to shareholders while continuing to support our organic and acquisitive growth. Accordingly, we are pleased to announce the initiation of a quarterly cash dividend with an initial targeted payout ratio of 35%, or $0.22 per share based on fourth quarter of 2018 performance.

“Our near-term focus will be on driving earnings growth through the further expansion of our commercial client base and capitalizing on the investments in our infrastructure to realize additional operating leverage. Combined with our ability to return capital to shareholders while simultaneously growing and strengthening the franchise, we believe that we are well-positioned to create increased shareholder value going forward,” said Mr. Gardner.

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