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To Our Shareholders:

Those who have followed Pacific Premier over the years are aware that our culture is embodied in our Success Attributes: Achieve, Communicate, Improve, Integrity, and Urgency. These principles have been the drivers of our performance and have helped us build one of the strongest commercial banks in the United States. We drew upon these principles regularly in 2020 to help us navigate the COVID-19 pandemic and the social unrest experienced across much of our nation. The Pacific Premier team consistently found ways to deliver for our clients, communities, employees, and shareholders throughout 2020.

As the pandemic began to unfold, we implemented strategies to protect our clients, employees, and our franchise. Our Board of Directors played an active role in planning and deploying the organization’s pandemic response. As described in greater detail below, our timely actions enabled us to effectively serve the interests of all our stakeholders, while maintaining a distinct focus on prudent credit administration, disciplined capital management, and sustainable long-term shareholder value.

We Were There for Our Clients.

We were there for our clients during prior periods of economic uncertainty, and we were there again for our clients throughout the pandemic. Despite the challenges we faced during 2020, we continued to provide exceptional client service with minimal disruption. Our team worked quickly and tirelessly to develop and implement a robust loan modification program that enabled our clients to manage through the challenges posed by the pandemic, while balancing our commitment to prudent credit administration. As of June 30, 2020, we had over $2.2 billion in loans modified through this program. Over the ensuing months, our team worked with our clients to significantly reduce the amount of modified loans to $79.5 million, as of December 31, 2020. In addition, we helped approximately 3,800 clients access over $1.1 billion in funding through the Paycheck Protection Program (PPP). In July 2020, we sold our PPP loan portfolio to a third party, well-suited to service these types of loans and help our clients navigate the PPP loan forgiveness program. Through these initiatives, we learned a lot about the resiliency of the businesses we serve and our institution’s ability to adapt to a rapidly changing environment while maintaining an unwavering commitment to our clients.

We Were There for Our Team.

In the early days of the pandemic, we quickly activated our Business Continuity Program and Pandemic Preparedness Plan. We modified our operations so our branches could remain open while keeping our employees and clients safe, including implementation of the CDC’s recommended safety protocols. We also transitioned approximately 75% of our employees to work remotely in a matter of days. As we plan and prepare to return our employees to the office, we have invested in our work environment and modified our processes to help mitigate the risk of exposure and transmission. We worked with our team leaders to develop plans and accommodations for employees who needed to care for sick family members, who had children at home, or who otherwise were dealing with significant personal disruptions as a result of the pandemic. We paid for and made available rapid COVID-19 tests for all employees and their partners, and offered up to 80 hours of pay to employees with COVID-19-related health issues. At the end of the year, we paid a special bonus to all of our employees, other than senior executive managers, in the amount of $2.4 million in recognition of the significant challenges they faced and overcame during 2020.

We Were There for the Diverse Communities We Serve.

The social unrest our nation experienced throughout much of 2020 reinforced and deepened our commitment to the diverse communities we serve. We have a long-standing record of investing our time and capital to help strengthen our communities and support organizations and initiatives that foster diversity and economic inclusion. In addition to enhancing our support for these organizations and initiatives, we have also reviewed our organization’s approach and processes to help identify our strengths and shortcomings in terms of diversity, equity, and inclusion. This has led us to refine and enhance how we invest in developing and maintaining an equitable and diverse workforce. We are also making additional investments in organizations and initiatives that support inclusion in our communities.

We Delivered for Our Shareholders.

When I prepared last year’s letter to our shareholders, the COVID-19 pandemic was just beginning. Like the rest of the world, at that time we had no idea how disruptive this public health crisis would be. However, we felt confident that our consistent, long-term emphasis on prudent risk management—and the strong capital, liquidity, and asset quality that results from our conservative operating approach—would position us well to manage through the pandemic. Through the thoughtful execution of these practices, we delivered for our clients, employees, and shareholders throughout the year.

Despite the significant external challenges we faced, our strong performance in 2020 allowed us to continue generating returns consistent with our track record as a high-performing institution while maintaining exceptional asset quality and low credit losses. As a result, we were able to return $80 million of capital to our shareholders in 2020 through our quarterly cash dividend.

Notwithstanding the challenges described above, last year we also successfully completed our acquisition of Opus Bank—the largest transaction in our history—and efficiently executed on our integration plans. In a little over four months, we completed the system conversion, branch consolidations, and staffing adjustments that allowed us to begin realizing the synergies from this transaction. To date, we have exceeded our projections for expense savings, which has made this combination even more additive to our earnings power than initially anticipated.

The Opus Bank acquisition deepened our presence throughout the West Coast and enabled us to enter the Seattle, Washington market in a meaningful way with more than $1 billion in deposits, while also expanding our footprint in Arizona and Oregon. All of these markets are some of the most dynamic economies in the United States. The Opus acquisition and the resulting additions of our Pacific Premier Trust and Commerce Escrow divisions added operational scale, increased our efficiencies, and further diversified our revenue and low-cost funding sources. We believe this acquisition has positioned us well to take advantage of growth opportunities in the years ahead.

We Are Focused on Continuous Improvement and Corporate Responsibility.

One of our Success Attributes is our focus on continuous improvement. We constantly seek opportunities to bolster our organization’s capabilities by enhancing our banking talent and leadership team, improving our processes and controls, and continuing to leverage technology as a key differentiator to meet the complex needs of our commercial banking clients.

Our commitment to continuous improvement extends to our conviction that responsible corporate stewardship is critical to the long-term health and success of our franchise. We strive to conduct business in a manner that promotes the fair and just treatment of all individuals, and to help reduce our potential impact on the environment. With each passing year, we have devoted more resources to environmental, social, and governance (ESG) initiatives. This year, we took another step forward by creating and filling a position for our first ever Director of ESG and Corporate Responsibility, who is responsible for coordinating the development and execution of our ESG strategic initiatives. We are proud of our accomplishments in 2020 and look forward to 2021 being another meaningful year of growth and improvement.

Over the past three years, we have nearly tripled in size. Yet Pacific Premier’s foundation has not changed. We believe our culture of risk management and disciplined growth, led by a talented management team allows us to execute at the highest level. We remain committed to building long-term, sustainable value for our shareholders while further improving every aspect of our organization to positively impact all of our stakeholders.

In closing, on behalf of our Board of Directors, I want to express our deep appreciation for the extraordinary efforts of our entire team through an unprecedented time. Your hard work, commitment, and talent are truly what makes Pacific Premier one of the strongest and best-performing commercial banks in the United States. I also want to express our deep appreciation for our clients, our shareholders, and the communities we serve. Without your support, we would not have been able to navigate 2020 as successfully as we did. We were there for our stakeholders in 2020, and our stakeholders were there for us. Thank you.

Steve R. Gardner
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