PACIFIC PREMIER BANCORP INC [PPBI] Filings

10-Q 1 ppbi-20240630.htm 10-Q ppbi-20240630

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number 0-22193

(Exact name of registrant as specified in its charter)


Delaware			33-0743196
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

17901 Von Karman Avenue, Suite 1200, Irvine, California 92614

(Address of principal executive offices and zip code)

(949) 864-8000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. (See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act).

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, par value $0.01 per share

PPBI

NASDAQ Global Select Market

The number of shares outstanding of the registrant’s common stock as of July 19, 2024 was 96,424,809.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

FORM 10-Q

INDEX

FOR THE QUARTER ENDED JUNE 30, 2024


PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

Consolidated Statements of Financial Condition (Unaudited)			3

Consolidated Statements of Income (Unaudited)			4

Consolidated Statements of Comprehensive Income (Unaudited)			5

Consolidated Statements of Stockholders’ Equity (Unaudited)			6

Consolidated Statements of Cash Flows (Unaudited)			8

Notes to Consolidated Financial Statements (Unaudited)			9

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations			56

Item 3 - Quantitative and Qualitative Disclosures About Market Risk			105

Item 4 - Controls and Procedures			107

PART II - OTHER INFORMATION			108

Item 1 - Legal Proceedings			108

Item 1A - Risk Factors			108

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds			108

Item 3 - Defaults Upon Senior Securities			108

Item 4 - Mine Safety Disclosures			108

Item 5 - Other Information			108

Item 6 - Exhibits			109

SIGNATURE			110

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)


(Dollars in thousands, except par value and share data)	June 30, 2024		December 31, 2023
ASSETS
Cash and due from banks	$	163,524	$	146,696
Interest-bearing deposits with financial institutions	736,293		789,777
Cash and cash equivalents	899,817		936,473
Interest-bearing time deposits with financial institutions	996		995
Investments securities held-to-maturity, at amortized cost, net of allowance for credit losses of $129 and $126 (fair value of $1,427,324 and $1,485,506) at June 30, 2024 and December 31, 2023, respectively	1,710,141		1,729,541
Investment securities available-for-sale, at fair value	1,320,050		1,140,071
FHLB, FRB, and other stock	97,037		99,225
Loans held for sale, at lower of cost or fair value	140		—
Loans held for investment	12,489,951		13,289,020
Allowance for credit losses	(183,803)		(192,471)
Loans held for investment, net	12,306,148		13,096,549
Accrued interest receivable	69,629		68,516
Other real estate owned	—		248
Premises and equipment, net	52,137		56,676
Deferred income taxes, net	108,607		113,580
Bank owned life insurance	477,694		471,178
Intangible assets	37,686		43,285
Goodwill	901,312		901,312
Other assets	350,931		368,996
Total assets	$	18,332,325	$	19,026,645

LIABILITIES
Deposit accounts:
Noninterest-bearing checking	$	4,616,124	$	4,932,817
Interest-bearing:
Checking	2,776,212		2,899,621
Money market/savings	4,844,585		4,868,442
Retail certificates of deposit	1,906,552		1,684,560
Wholesale/brokered certificates of deposit	484,181		610,186
Total interest-bearing	10,011,530		10,062,809
Total deposits	14,627,654		14,995,626
FHLB advances and other borrowings	200,000		600,000
Subordinated debentures	332,160		331,842

Accrued expenses and other liabilities	248,747		216,596
Total liabilities	15,408,561		16,144,064
STOCKHOLDERS’ EQUITY
Preferred stock, $0.01 par value; 1,000,000 authorized; no shares issued and outstanding	—		—
Common stock, $0.01 par value; 150,000,000 shares authorized at June 30, 2024 and December 31, 2023; 96,434,047 shares and 95,860,092 shares issued and outstanding, respectively	941		938
Additional paid-in capital	2,383,615		2,377,131
Retained earnings	629,341		604,137
Accumulated other comprehensive loss	(90,133)		(99,625)
Total stockholders’ equity	2,923,764		2,882,581
Total liabilities and stockholders’ equity	$	18,332,325	$	19,026,645

Accompanying notes are an integral part of these consolidated financial statements.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended		Six Months Ended
	June 30,		June 30,		June 30,		June 30,
(Dollars in thousands, except share data)	2024		2023		2024		2023
INTEREST INCOME
Loans	$	167,547	$	182,852	$	340,522	$	363,810
Investment securities and other interest-earning assets	40,507		42,536		80,963		82,921
Total interest income	208,054		225,388		421,485		446,731
INTEREST EXPENSE
Deposits	64,229		53,580		123,735		93,814
FHLB advances and other borrowings	2,330		7,155		6,567		15,093
Subordinated debentures	5,101		4,561		9,662		9,122
Total interest expense	71,660		65,296		139,964		118,029
Net interest income before provision for credit losses	136,394		160,092		281,521		328,702
Provision for credit losses	1,265		1,499		5,117		4,515
Net interest income after provision for credit losses	135,129		158,593		276,404		324,187
NONINTEREST INCOME
Loan servicing income	510		493		1,039		1,066
Service charges on deposit accounts	2,710		2,670		5,398		5,299
Other service fee income	309		315		645		611
Debit card interchange fee income	925		914		1,690		1,717
Earnings on bank owned life insurance	4,218		3,487		8,377		6,861
Net gain from sales of loans	65		345		65		374
Net gain from sales of investment securities	—		—		—		138



Trust custodial account fees	8,950		9,360		19,592		20,385
Escrow and exchange fees	702		924		1,398		1,982
Other (loss) income	(167)		2,031		5,792		3,292
Total noninterest income	18,222		20,539		43,996		41,725
NONINTEREST EXPENSE
Compensation and benefits	53,140		53,424		107,270		107,717
Premises and occupancy	10,480		11,615		21,287		23,357
Data processing	7,754		7,488		15,265		14,753
Other real estate owned operations, net	—		8		46		116
FDIC insurance premiums	1,873		2,357		4,502		4,782
Legal and professional services	1,078		4,716		5,221		10,217
Marketing expense	1,724		1,879		3,282		3,717
Office expense	1,077		1,280		2,170		2,512
Loan expense	840		567		1,610		1,213
Deposit expense	12,289		9,194		24,954		17,630

Amortization of intangible assets	2,763		3,055		5,599		6,226
Other expense	4,549		5,061		8,994		9,756
Total noninterest expense	97,567		100,644		200,200		201,996
Net income before income taxes	55,784		78,488		120,200		163,916
Income tax expense	13,879		20,852		31,270		43,718
Net income	$	41,905	$	57,636	$	88,930	$	120,198
EARNINGS PER SHARE
Basic	$	0.43	$	0.60	$	0.92	$	1.26
Diluted	0.43		0.60		0.92		1.26
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic	94,628,201		94,166,083		94,489,230		94,012,799
Diluted	94,716,205		94,215,967		94,597,559		94,192,341

Accompanying notes are an integral part of these consolidated financial statements.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended		Six Months Ended
	June 30,		June 30,		June 30,		June 30,
(Dollars in thousands)	2024		2023		2024		2023
Net income	$	41,905	$	57,636	$	88,930	$	120,198
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities available-for-sale, net of income taxes (1)	2,983		(15,550)		4,373		20,850
Reclassification adjustment for net gain on sales of securities included in net income, net of income taxes (2)	—		—		—		(99)
Net unrealized loss on securities transferred from available-for-sale to held-to-maturity, net of income taxes (3)	—		—		—		(36,076)
Amortization of unrealized loss on securities transferred from available-for-sale to held-to-maturity, net of income taxes (4)	2,600		2,812		5,119		5,105
Other comprehensive income (loss), net of tax	5,583		(12,738)		9,492		(10,220)
Comprehensive income, net of tax	$	47,488	$	44,898	$	98,422	$	109,978

______________________________

(1) Income tax expense (benefit) of the unrealized gain (loss) on securities was $1.2 million and $(6.2) million for the three months ended June 30, 2024 and 2023, respectively, and $1.7 million and $8.3 million for the six months ended June 30, 2024 and 2023, respectively.

(2) Income tax expense on the reclassification adjustment for net gain on sales of securities included in net income was zero and zero for the three months ended June 30, 2024 and 2023, respectively, and zero and $39,000 for the six months ended June 30, 2024 and 2023, respectively.

(3) Income tax (benefit) expense on the unrealized loss on securities transferred from available-for-sale to held-to-maturity was zero for each of the three months ended June 30, 2024 and 2023, respectively, and zero and $(14.3) million for the six months ended June 30, 2024 and 2023, respectively.

(4) Income tax expense on the amortization of unrealized loss on securities transferred from available-for-sale to held-to-maturity included in net income was $1.0 million and $1.1 million for the three months ended June 30, 2024 and 2023, respectively, and $2.0 million and $2.0 million for the six months ended June 30, 2024 and 2023, respectively.

Accompanying notes are an integral part of these consolidated financial statements.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 2024

(Unaudited)


(Dollars in thousands, except share data)	Common Stock Shares	Common Stock		Additional Paid-in Capital		Accumulated Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
Balance at December 31, 2023	95,860,092	$	938	$	2,377,131	$	604,137	$	(99,625)	$	2,882,581
Net income	—	—		—		88,930		—		88,930
Other comprehensive income	—	—		—		—		9,492		9,492
Cash dividends declared ($0.66 per common share)	—	—		—		(63,458)		—		(63,458)
Dividend equivalents declared ($0.66 per restricted stock unit)	—	—		268		(268)		—		—
Share-based compensation expense	—	—		10,884		—		—		10,884
Issuance of restricted stock, net	806,001	3		(3)		—		—		—
Restricted stock surrendered and canceled	(243,472)	—		(4,852)		—		—		(4,852)
Exercise of stock options	11,426	—		187		—		—		187
Balance at June 30, 2024	96,434,047	$	941	$	2,383,615	$	629,341	$	(90,133)	$	2,923,764


Balance at March 31, 2024	96,459,966	$	941	$	2,378,171	$	619,405	$	(95,716)	$	2,902,801
Net income	—	—		—		41,905		—		41,905
Other comprehensive income	—	—		—		—		5,583		5,583
Cash dividends declared ($0.33 per common share)	—	—		—		(31,823)		—		(31,823)
Dividend equivalents declared ($0.33 per restricted stock unit)	—	—		146		(146)		—		—
Share-based compensation expense	—	—		5,434		—		—		5,434
Issuance of restricted stock, net	19,500	—		—		—		—		—
Restricted stock surrendered and canceled	(46,585)	—		(161)		—		—		(161)
Exercise of stock options	1,166	—		25		—		—		25
Balance at June 30, 2024	96,434,047	$	941	$	2,383,615	$	629,341	$	(90,133)	$	2,923,764

Accompanying notes are an integral part of these consolidated financial statements.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS AND THREE MONTHS ENDED JUNE 30, 2023

(Unaudited)


(Dollars in thousands, except share data)	Common Stock Shares	Common Stock		Additional Paid-in Capital		Accumulated Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
Balance at December 31, 2022	95,021,760	$	933	$	2,362,663	$	700,040	$	(265,247)	$	2,798,389
Net income	—	—		—		120,198		—		120,198
Other comprehensive loss	—	—		—		—		(10,220)		(10,220)

Cash dividends declared ($0.66 per common share)	—	—		—		(62,969)		—		(62,969)
Dividend equivalents declared ($0.66 per restricted stock unit)	—	—		244		(244)		—		—
Share-based compensation expense	—	—		9,272		—		—		9,272
Issuance of restricted stock, net	1,074,073	4		(4)		—		—		—
Restricted stock surrendered and canceled	(205,086)	—		(5,782)		—		—		(5,782)
Exercise of stock options	15,470	—		246		—		—		246
Balance at June 30, 2023	95,906,217	$	937	$	2,366,639	$	757,025	$	(275,467)	$	2,849,134



Balance at March 31, 2023	95,714,777	$	937	$	2,361,830	$	731,123	$	(262,729)	$	2,831,161
Net income	—	—		—		57,636		—		57,636
Other comprehensive loss	—	—		—		—		(12,738)		(12,738)

Cash dividends declared ($0.33 per common share)	—	—		—		(31,612)		—		(31,612)
Dividend equivalents declared ($0.33 per restricted stock unit)	—	—		122		(122)		—		—
Share-based compensation expense	—	—		4,543		—		—		4,543
Issuance of restricted stock, net	239,349	—		—		—		—		—
Restricted stock surrendered and canceled	(62,911)	—		(91)		—		—		(91)
Exercise of stock options	15,002	—		235		—		—		235
Balance at June 30, 2023	95,906,217	$	937	$	2,366,639	$	757,025	$	(275,467)	$	2,849,134

Accompanying notes are an integral part of these consolidated financial statements.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended
	June 30,		June 30,
(Dollars in thousands)	2024		2023
Cash flows from operating activities:
Net income	$	88,930	$	120,198
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	6,097		7,111
Provision for credit losses	5,117		4,515
Share-based compensation expense	10,884		9,272
Loss on sales and disposals of premises and equipment	6		35
Loss (gain) on sale or write down of other real estate owned	28		(106)
Net (accretion) amortization of discounts/premium on securities	(6,403)		7,289
Net (accretion) of discounts/premiums for acquired loans and deferred loan fees/costs	(6,411)		(8,369)
(Gain) on sale of investment securities available-for-sale	—		(138)
(Gain) on debt extinguishment	(5,067)		—
(Gain) on sales of loans	(65)		(374)
Deferred income tax expense	1,234		2,802
Income from bank owned life insurance, net	(6,977)		(5,550)
Amortization of intangible assets	5,599		6,226
Origination of loans held for sale, net of principal payments received	(1,006)		(766)
Proceeds from the sales of loans held for sale	1,280		833
Net change in accrued expenses and other liabilities	(16,502)		21,752
Net change in accrued interest receivable and other assets	46,745		11,679
Net cash provided by operating activities	123,489		176,409
Cash flows from investing activities:
Net (increase) decrease in interest-bearing time deposits with financial institutions	(1)		247
Proceeds from sales of other real estate owned	209		3,307
Loan (originations) and payments, net	734,144		989,184
Proceeds from sales of loans classified as loans held for investment	55,625		84,472

Purchase of securities held-to-maturity	—		(8,000)
Proceeds from prepayments and maturities of securities held-to-maturity	22,032		21,454
Purchase of securities available-for-sale	(564,079)		(224,347)
Proceeds from prepayments and maturities of securities available-for-sale	425,294		124,796
Proceeds from sales of securities available-for-sale	—		304,320
Proceeds from the sales of premises and equipment	2		3
Proceeds from surrender of bank owned life insurance	352		—
Purchase of premises and equipment	(1,566)		(4,133)
Net change in FHLB, FRB, and other stock	2,017		1,911
Funding of Community Reinvestment Act (“CRA”) investments, net	(3,146)		(26,164)
Net cash provided by investing activities	670,883		1,267,050
Cash flows from financing activities:
Net change in deposit accounts	$	(367,972)	$	(812,526)
Net change in short-term borrowings	—		(200,000)

Repayments of long-term borrowings	(394,933)		—


Cash dividends paid	(63,458)		(62,969)

Proceeds from exercise of stock options	187		246
Restricted stock surrendered and canceled	(4,852)		(5,782)
Net cash used in financing activities	(831,028)		(1,081,031)
Net (decrease) increase in cash and cash equivalents	(36,656)		362,428
Cash and cash equivalents, beginning of period	936,473		1,101,249
Cash and cash equivalents, end of period	$	899,817	$	1,463,677

Supplemental cash flow disclosures:
Interest paid	$	141,280	$	105,459
Income taxes (refunded) paid, net	(3,470)		1,071
Noncash investing activities during the period:
Transfers from loans held for investment to loans held for sale	55,974		84,993
Loans held for sale transfer to loans held for investment	—		1,287
Other real estate owned transferred from loans held for investment	—		7,156
Transfers of investment securities from available-for-sale to held-to-maturity	—		360,347
Transfers of CRA investment securities from FHLB, FRB, and other stock to other assets	—		12,601
Recognition of operating lease right-of-use assets	(4,357)		(1,804)
Recognition of operating lease liabilities	4,131		1,949
Receivable on unsettled security maturity	25,000		—
Due on unsettled security purchases	(49,513)		—

Accompanying notes are an integral part of these consolidated financial statements.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

(Unaudited)

Note 1 – Basis of Presentation

The consolidated financial statements include the accounts of Pacific Premier Bancorp, Inc. (the “Corporation”) and its wholly owned subsidiaries, including Pacific Premier Bank (the “Bank”) (collectively, the “Company,” “we,” “our,” or “us”). All significant intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, the unaudited consolidated financial statements reflect all normal recurring adjustments and accruals that are necessary for a fair presentation of the statement of financial position and the results of operations for the interim periods presented. The results of operations for the six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for any other interim period or the full year ending December 31, 2024.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”).

The Company consolidates voting entities in which the Company has control through voting interests or entities through which the Company has a controlling financial interest in a variable interest entity (“VIE”). The Company evaluates its interests in these entities to determine whether they meet the definition of a VIE and whether the Company is required to consolidate these entities. A VIE is consolidated by its primary beneficiary, which is the party that has both (i) the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) a variable interest that could potentially be significant to the VIE. To determine whether or not a variable interest the Company holds could potentially be significant to the VIE, the Company considers both qualitative and quantitative factors regarding the nature, size, and form of the Company's involvement with the VIE. See Note 13 – Variable Interest Entities for additional information.

Note 2 – Recently Issued Accounting Pronouncements

Accounting Standards Adopted in 2024

In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU” or “Update”) 2023-02, Investments - Equity Method and Joint Ventures (Topic 323), Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, a consensus of the Emerging Issues Task Force. The amendments in this Update allow the option for an entity to apply the proportional amortization method of accounting to other equity investments that are made for the primary purpose of receiving income tax credits or other income tax benefits, if certain conditions are met. Prior to this Update, the application of the proportional amortization method of accounting was limited to investments in low income housing tax credit structures. The proportional amortization method of accounting results in the amortization of applicable investments, as well as the related income tax credits or other income tax benefits received, being presented on a single line in the statements of income, that is income tax expense. Under this Update, an entity has the option to apply the proportional amortization method of accounting to applicable investments on a tax-credit-program-by-tax-credit-program basis. In addition, the amendments in this Update require that all tax equity investments accounted for using the proportional amortization method use the delayed equity contribution guidance in paragraph 323-740-25-3, requiring a liability be recognized for delayed equity contributions that are unconditional and legally binding or for equity contributions that are contingent upon a future event when that contingent event becomes probable. Under this Update, low income housing tax credit investments for which the proportional amortization method is not applied can no longer be accounted for using the delayed equity contribution guidance. Further, this Update specifies that tax equity investments accounted for using the equity method must apply the impairment guidance in Subtopic 323-10 - Investments - Equity Method and Joint Ventures - Overall. This Update also clarifies that for low income housing tax credit investments not accounted for under the proportional amortization method or the equity method, an entity shall account for them under Topic 321 - Investments - Equity Securities. The amendments in this Update also require additional disclosures in interim and annual periods concerning investments for which the proportional amortization method is applied, including (i) the nature of tax equity investments, and (ii) the effect of tax equity investments and related income tax credits and other income tax benefits on the financial position and results of operations. The provisions of this Update became effective for the Company for interim and annual periods beginning January 1, 2024. Refer to Note 14 – Tax Equity Investments for additional information. The adoption of this Update did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Guidance Not Yet Effective

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. The FASB issued this Update to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this Update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid. The amendments in this Update are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this Update on its consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segments. The amendments in this Update improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis. Amendments in this Update include: a requirement that a public entity provide all annual disclosures about a reportable segment’s profit or loss in its interim period disclosures, disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), disclosure of amounts for other segment items by reportable segment and a description of its composition, clarification that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit or loss, requires that a public entity disclose the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss, and requires that a public entity that has a single reportable segment provide all the disclosures required by this Update as well as all existing disclosures required in Topic 280. The amendments in this Update are effective for the Company beginning with its 2024 annual financial statement disclosures for the year ended December 31, 2024, and for all interim and annual periods thereafter. Early adoption is permitted. The Company is currently evaluating the impact of this Update.

Note 3 – Significant Accounting Policies

Our accounting policies are described in Note 1 - Description of Business and Summary of Significant Accounting Policies, of our audited consolidated financial statements included in our 2023 Form 10-K. As of June 30, 2024, there were no significant changes to accounting policies from those disclosed in our audited consolidated financial statements included in our 2023 Form 10-K.

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods presented. Actual results could differ from those estimates.

Note 4 – Investment Securities

The amortized cost and estimated fair value of available-for-sale (“AFS”) investment securities were as follows:



(Dollars in thousands)	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Estimated Fair Value
AFS investment securities:
June 30, 2024
U.S. Treasury	$	763,352	$	171	$	(412)	$	763,111
Agency	1,583		—		(57)		1,526
Corporate	441,365		207		(28,910)		412,662

Collateralized mortgage obligations	143,625		8		(882)		142,751