Pacific Premier Bancorp, Inc. Announces Second Quarter 2014 Results (Unaudited)

Second Quarter 2014 Summary

  • Net income of $4.6 million, or $0.27 per fully diluted share
  • Return on average tangible common equity of 11.96%
  • Return on average assets of 1.06%
  • Total assets increase 10% from the end of the prior quarter to $1.9 billion
  • Loan originations increase to $152 million
  • Total loans increase 11% from the end of the prior quarter
  • Net interest margin of 4.26%
  • Efficiency ratio improves to 56.56%
  • Tangible book value per share increases $0.30 to $9.56

IRVINE, Calif.--()--Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company”), the holding company of Pacific Premier Bank, reported net income for the second quarter of 2014 of $4.6 million, or $0.27 per diluted share. This compares with net income of $2.6 million, or $0.15 per diluted share, for the first quarter of 2014 and a net loss of $249,000, or ($0.02) per share, for the second quarter of 2013.

For the first six months of 2014, the Company recorded net income of $7.3 million, or $0.42 per diluted share. This compares with net income of $1.7 million, or $0.11 per diluted share, for the first six months of 2013.

The Company had one-time merger-related expenses totaling $626,000 associated with the acquisition of Infinity Franchise Holdings, LLC (“Infinity Franchise Holdings”) in the first quarter of 2014, $5.0 million associated with the acquisition of San Diego Trust Bank (“San Diego Trust”) in the second quarter of 2013 and $1.7 million associated with the acquisition of First Associations Bank (“First Associations”) in the first quarter of 2013. Excluding one-time merger-related expenses during the reporting periods, the Company’s reported net income for the second quarter of 2014 of $4.6 million, or $0.27 per diluted share, compares to an adjusted net income of $3.0 million, or $0.17 per diluted share, for the first quarter of 2014 and $3.0 million, or $0.19 per diluted share, for the second quarter of 2013. Also excluding one-time merger-related expenses, the Company reported adjusted net income of $7.7 million, or $0.44 per diluted share, for the first six months of 2014, compares to an adjusted net income of $6.1 million, or $0.39 per diluted share, for the first six months of 2013.

For the three months ended June 30, 2014, the Company’s return on average assets was 1.06% and return on average equity was 9.79%, compared with an adjusted 0.73% return on average assets and an adjusted 6.64% return on average equity for the three months ended March 31, 2014, and an adjusted 0.86% return on average assets and an adjusted 7.59% return on average equity for the three months ended June 30, 2013. For the three months ended June 30, 2014, the Company’s return on average tangible common equity was 11.96%, compared with 7.22% for the three months ended March 31, 2014, and a minus 0.41% for the three months ended June 30, 2013.

Steven R. Gardner, President and Chief Executive Officer of the Company, commented on the results, “The second quarter results reflect our employees’ ability to generate solid profitable growth. During the current quarter, we saw strong growth in net interest income and noninterest income while costs remained well contained. Following a number of quarters of elevated expenses related to acquisitions and upgrading our technology platform, we experienced a more normalized level of expenses in the second quarter. As a result, our efficiency ratio improved to 56.6%, which helped drive our return on tangible common equity to 11.96%.

“We had a very strong quarter of business development, resulting in $152 million in loan originations, which was well diversified with each of our major lending areas making significant contributions. Consistent with our focus on small- and middle-market business banking, nearly half of our loan production was in commercial and industrial loans. Our franchise lending group is providing an additional vehicle for C&I loan growth, contributing $28 million in loan originations in the second quarter, and the group continues to build its loan pipeline.

“Our strong loan growth outpaced deposit gathering in the second quarter moving our loan to deposit ratio to above 100%. We are comfortable running the business with an elevated ratio for a period of time. However, we anticipate seeing stronger deposit inflows in the second half of the year, driven by new customer relationships we are developing.

“With the diverse business mix we have developed, we see good opportunities to attract more commercial customers throughout Southern California. We believe that the greater Los Angeles area represents a largely untapped growth opportunity for Pacific Premier, and we are planning to steadily increase our penetration into this market in the coming quarters.”

Net Interest Income and Net Interest Margin

Net interest income totaled $17.7 million in the second quarter of 2014, up $1.1 million or 6.4% from the first quarter of 2014. The increase in net interest income primarily reflected an increase in the average interest-earning assets of $98.4 million, partially offset by a decrease in net interest margin of 4 basis points. The increase in average assets for the second quarter of 2014 included increases in loans of $107.6 million and cash and cash equivalents of $9.3 million, partially offset by a decrease in investment securities of $18.6 million. The net interest margin for the second quarter of 2014 was 4.26%, compared with 4.30% in the first quarter of 2014. The decrease in net interest margin was primarily attributable to a decrease in yield on average interest-earning assets of 2 basis points, primarily from lower yielding loans of 8 basis points, and higher interest-bearing liability costs of 2 basis points, primarily from higher deposit costs of 3 basis points. The weighted average loan portfolio rate at June 30, 2014 was 4.94%, compared to 5.00% at March 31, 2014. The 6 basis point decrease primarily reflected lower rates on loan originations during the second quarter of 2014.

Net interest income for the second quarter of 2014 increased $4.1 million or 30.2%, compared to the second quarter of 2013. The increase in net interest income was primarily related to an increase in interest-earning assets of $306.3 million, primarily related to the acquisition of San Diego Trust, which occurred in the second quarter of 2013, and organic loan growth, and an increase in net interest margin of 25 basis points. The increase in the net interest margin was primarily related to a higher yield on interest-earning assets of 23 basis points, as we deployed liquidity received from our acquisitions of First Associations and San Diego Trust to increase the level of higher yielding loans within interest-earning assets. The margin also benefited from a drop in the cost of interest-bearing liabilities by 4 basis points.

For the first six months of 2014, net interest income totaled $34.3 million, up $7.8 million or 29.6% over net interest income for the first six months of 2013. The increase reflected an increase in interest-earning assets of $370.9 million while the net interest margin remained unchanged at 4.28%. The increase in interest-earning assets was primarily related to the acquisitions of First Associations and San Diego Trust in the first and second quarters of 2013, respectively, and our organic loan growth. The net interest margin included a decrease in the yield on interest-earning assets of 7 basis points along with an improved mix in higher yielding loans from leveraging the liquidity received from our acquisitions and a decrease in the cost of interest-bearing liabilities of 10 basis points with an improved mix of lower costing transaction accounts.

Provision for Loan Losses

We recorded a $1.0 million provision for loan losses during the second quarter of 2014, up from $949,000 for the first quarter of 2014 and $322,000 for the second quarter of 2013. The increase in the provision for loan losses in the second quarter of 2014 was attributable to the growth in our loan portfolio. In the second quarter of 2014, we had net loan recoveries of $18,000, compared to net loan charge-offs of $464,000 in the first quarter of 2014 and $322,000 in the second quarter of 2013.

For the first six months of 2014, we recorded a $2.0 million provision for loan losses, up from $618,000 recorded for the first six months of 2013. The $1.4 million increase in the provision for loan losses was primarily attributable to the organic growth in our loan portfolio. Net loan charge-offs amounted to $446,000 for the first six months of 2014, down from $618,000 for the first six months of 2013. Substantially all of the charge-offs in 2014 were attributable to loans that we acquired from our FDIC-assisted transactions.

Noninterest income

Noninterest income for the second quarter of 2014 was $2.5 million, up $419,000 or 20.4% from the first quarter of 2014. The increase from the prior quarter was primarily related to the following:

  • A $750,000 increase in net gain from sale of loans. During the second quarter of 2014, we sold $12.8 million in Small Business Administration (“SBA”) loans at an overall premium of 10% and $276,000 in commercial non-owner occupied loans. That compares with sales of $4.7 million in SBA loans at an overall premium of 11% and $4.8 million in non-owner occupied and multi-family loans in the first quarter of 2014.
  • A $201,000 increase in other income. During the first quarter of 2014, we recorded a non-recurring $180,000 market value loss related to loans held for sale that were moved to loans held for investment.

Partially offsetting these increases was a decrease of $574,000 in loan servicing fees, primarily as the result of the receipt in the first quarter of 2014 of a $500,000 loan fee related to the assumption of an existing loan.

Compared with the second quarter of 2013, noninterest income for the second quarter of 2014 increased by $40,000 or 1.6%. The increase was primarily related to higher net gain from sale of loans of $1.1 million, partially offset by lower net gain from sale of investment securities of $970,000.

For the first six months of 2014, noninterest income totaled $4.5 million, up from $4.2 million for the first six months of 2013. The increase of $368,000 or 8.9% was primarily related to higher net gain from sale of loans of $901,000 and loan servicing fees of $494,000, partially offset by a lower net gain from sale of investment securities of $908,000 and other income of $197,000. The increase in loan servicing fees primarily related to a $500,000 loan fee associated with the assumption of an existing loan and the decrease in other income related to a nonrecurring $180,000 market value loss associated with loans held for sale, both of which occurred in the first half of 2014.

Noninterest Expense

Noninterest expense totaled $11.6 million for the second quarter of 2014, down $1.9 million or 14.0%, compared with the first quarter of 2014. The decrease was primarily related to the following:

  • A $646,000 decrease in data processing and communications expense, primarily related to a nonrecurring $357,000 fee that was paid to terminate services from our payment processing system provider in the first quarter of 2014 and a more cost effective core operating system agreement;
  • A $626,000 decrease in one-time merger-related expenses associated with the first quarter acquisition of Infinity Franchise Holdings;
  • A $406,000 decrease in compensation and benefits costs, primarily related to lower employer payroll taxes in the second quarter, compared to the first quarter; and
  • A $208,000 decrease in legal, audit and professional fees, primarily related to a $192,000 fee paid in the first quarter of 2014 for services related to the upgrade in our core operating system.

Compared to the second quarter of 2013, noninterest expense for the second quarter of 2014 decreased by $4.2 million or 26.6%. The decrease was primarily related to a $5.0 million decrease in one-time merger-related expenses, a $533,000 decrease in expenses related to other real estate owned operations and a $270,000 decrease in data processing and communications expenses. These decreases were partially offset by increases in the second quarter of 2014 in compensation and benefits expense of $798,000, premises and occupancy of $237,000 and deposit expenses of $232,000. These increases were primarily due to our acquisitions, as well as employees added in lending and credit areas to increase our loan production.

For the first six months of 2014, noninterest expense totaled $25.2 million, down $1.9 million or 6.9% from the first six months of 2013. The decrease was primarily related to a $6.1 million decrease in one-time merger-related expenses and a decrease of $557,000 in expenses related to other real estate owned operations, partially offset by increases of $2.6 million in compensation and benefits, $833,000 in deposit expenses, $532,000 in premises and occupancy expense, $297,000 in other expense, $226,000 in data processing and communications expense and $167,000 in FDIC insurance premiums. The increases in expenses were primarily due to costs associated with our acquisitions and expansion of our lending platform to increase loan production.

The Company’s efficiency ratio was 56.56% for the second quarter of 2014, compared to 67.96% for the first quarter of 2014 and 67.79% for the second quarter of 2013. The improvement in the current quarter efficiency ratio was primarily from higher net interest income and gains from sales of loans along with lower data processing and communications expense. For the second quarter of 2014, the Company’s noninterest expense to average asset ratio was 2.66%, compared to 3.27% in the first quarter of 2014, and 2.96% for the second quarter of 2013.

Income Tax

For the second quarter of 2014, our effective tax rate was 38.08%, compared with a 37.3% for the first quarter of 2014 and a negative effective tax rate of 57.6% for the second quarter of 2013. Operating results during the second quarter of 2013 included $955,000 of one-time merger-related costs that were treated as non-deductible for tax purposes. These expenses were largely the cause for the negative effective tax rate. For the first half of 2014, our effective tax rate was 37.79%, compared to 42.4% for the first half of 2013. The referenced one-time merger-related costs also impacted the difference between the effective tax rate for the first half of 2014, compared to the first half of 2013.

Assets and Liabilities

At June 30, 2014, assets totaled $1.9 billion, up $176.2 million or 10.0% from March 31, 2014, and up $207.3 million or 12.1% from December 31, 2013. The increase in assets from March 31, 2014 was primarily related to increases in loans held for investment of $141.4 million, investment securities of $33.0 million and investments in stock of $4.4 million, partially offset by a decrease in cash and cash equivalents of $4.1 million. The increase in assets since year-end 2013 was primarily related to loans held for investment of $226.6 million associated with organic loan growth and the acquisition of Infinity Franchise Holdings, which added assets at the acquisition date of $80.2 million. Partially offsetting those increases was a decrease in investment securities available for sale of $21.0 million and cash and cash equivalents of $6.5 million.

Investment securities available for sale totaled $235.1 million at June 30, 2014, up $33.0 million or 16.3% from March 31, 2014, but down $21.0 million or 8.2% from December 31, 2013. The increase in securities available for sale during the second quarter of 2014 was primarily due to purchases of $60.7 million and an increase in market value of $1.8 million, partially offset by sales totaling $21.8 million and principal pay downs of $7.2 million. The decrease in securities from December 31, 2013 was primarily related to sales of $77.8 million and principal pay downs of $13.4 million, partially offset by $66.3 million of investment security purchases and an improvement in unrealized loss on securities of $5.2 million. The purchase of investment securities primarily related to investing excess liquidity from our bank acquisitions, while the sales were made to help fund loan production and to improve our interest-earning asset mix by redeploying investment funds into loans.

Net loans held for investment totaled $1.46 billion at June 30, 2014, an increase of $140.3 million or 10.7% from March 31, 2014, and an increase of $225.1 million or 18.3% from December 31, 2013. The increase in loan balances since March 31, 2014 was primarily related to increases in commercial and industrial (“C&I”) loans of $47.7 million, warehouse facilities loans of $33.0 million, multi-family loans of $28.3 million, commercial non-owner occupied loans of $26.8 million, construction loans of $17.2 million and SBA loans of $4.1 million, partially offset by decreases in one-to-four family loans of $9.4 million and commercial owner occupied loans of $7.1 million. The increase in loans from December 31, 2013 included increases in C&I loans of $132.5 million, primarily from the acquisition of Infinity Franchise Holdings which added $78.8 million of total loans at the acquisition date, as well as increases in real estate loans of $64.0 million, warehouse facility loans of $26.5 million and SBA loans of $4.5 million, partially offset by decreases in one-to-four family loans of $13.2 million and commercial owner occupied loans of $4.3 million.

Loan activity during the second quarter of 2014 included loan originations of $152.2 million, of which $104.8 million were funded at origination, and loan purchases of $54.2 million, partially offset by loan repayments of $45.4 million, loan sales of $13.0 million and an increase in undisbursed loan funds of $7.3 million. During the second quarter of 2014, our loan originations were diversified across loan type and included $70.9 million in C&I loans, which consisted in part of $27.7 million in franchise business loans, $27.4 million in construction loans, $26.5 million in commercial non-owner occupied loans, $16.8 million in SBA loans, and $5.7 million in commercial owner occupied loans. Loan originations for the second quarter of 2014 had a weighted average rate of 5.05%, compared to a weighted average rate of 4.98% in the first quarter of 2014. At June 30, 2014, our loan to deposit ratio was 101.4%, up from 92.4% at March 31, 2014 and 95.2% at December 31, 2013.

At June 30, 2014, total deposits were $1.45 billion, up $10.4 million or 0.7% from March 31, 2014, and up $139.3 million or 10.7% from December 31, 2013. The increase in deposits since March 31, 2014 was primarily related to increases in certificates of deposit of $16.5 million and money market of $5.9 million, partially offset by a decrease in interest-bearing checking of $8.4 million. The increase in deposits since year-end 2013 included increases in certificates of deposit of $57.5 million, noninterest bearing checking of $44.1 million, money market of $31.5 million and interest-bearing checking of $8.0 million.

The total end of period weighted average cost of deposits at June 30, 2014 was 0.36%, up from 0.34% at March 31, 2014 and 0.33% at December 31, 2013.

At June 30, 2014, total borrowings amounted to $265.6 million, up $159.8 million or 151.0% from March 31, 2014 and $51.2 million or 23.9% from December 31, 2013. The change in borrowings primarily related to overnight Federal Home Loan Bank (“FHLB”) advances used to supplement the funding of loans as deposit levels fluctuate. Additionally, during the second quarter of 2014, repurchase agreement debt related to our home owners associations (“HOA”) business decreased $219,000 to $16.8 million. At June 30, 2014, total borrowings represented 13.8% of total assets and had an end of period weighted average cost of 0.61%, compared with 6.1% of total assets at a weighted average cost of 1.22% at March 31, 2014 and 12.5% of total assets at a weighted average cost of 0.63% at December 31, 2013.

Asset Quality

At June 30, 2014, nonperforming assets totaled $2.7 million or 0.14% of total assets, down from $3.4 million or 0.20% of total assets at both March 31, 2014 and December 31, 2013. During the second quarter of 2014, nonperforming loans decreased $733,000 to total $1.9 million and other real estate owned remained unchanged at $752,000.

At June 30, 2014, our allowance for loan losses was $9.7 million, up $1.0 million from March 31, 2014 and $1.5 million from December 31, 2013. At June 30, 2014, our allowance for loan losses as a percent of nonaccrual loans was 501.44%, up from 324.8% at March 31, 2014 and 364.3% at December 31, 2013. At June 30, 2014, the ratio of allowance for loan losses to total gross loans was 0.66%, unchanged from the percentage at both March 31, 2014 and December 31, 2013. Including the loan fair market value discounts recorded in connection with our acquisitions, the allowance for loan losses to total gross loans ratio was 0.85% at June 30, 2014, compared with 0.88% at March 31, 2013 and 0.93% at December 31, 2013.

Stock Repurchase Program and Capital Ratios

During the second quarter of 2014, we repurchased 175,543 shares of our Company’s common stock at a weighted average cost of $14.08. The repurchases were made pursuant to a stock repurchase program authorized by the Company’s Board of Directors in June 2012. The current program authorizes the repurchase of up to 1,000,000 shares of the Company’s common stock. Through June 30, 2014, the Company has repurchased 262,897 shares of its common stock at an average cost of $14.13 under the current authorization.

At June 30, 2014, our ratio of tangible common equity to total assets was 8.62%, with a tangible book value of $9.56 per share and a book value per share of $11.26.

At June 30, 2014, Pacific Premier Bank exceeded all regulatory capital requirements with a ratio for tier 1 leverage capital of 9.85%, tier 1 risked-based capital of 10.83% and total risk-based capital of 11.46%. These capital ratios exceeded the “well capitalized” standards defined by the federal banking regulators of 5.00% for tier 1 leverage capital, 6.00% for tier 1 risked-based capital and 10.00% for total risk-based capital. At June 30, 2014, the Company had a ratio for tier 1 leverage capital of 10.04%, tier 1 risked-based capital of 10.99% and total risk-based capital of 11.62%.

Conference Call and Webcast

The Company will host a conference call at 9:00 a.m. PT / 12:00 p.m. ET on July 23, 2014 to discuss its financial results. Analysts and investors may participate in the question-and-answer session. The conference call will be webcast live on the Investor Relations section of the Company’s website www.ppbi.com and an archived version of the webcast will made be available in the same location shortly after the live call has ended. The conference call can be accessed by telephone at 888-317-6016 and ask to join the “Pacific Premier Bancorp” conference call. Additionally a telephone replay will be made available through July 31, 2014 at 877-344-7529, access code 10049444.

About Pacific Premier Bancorp, Inc.

Pacific Premier Bancorp, Inc. is the holding company for Pacific Premier Bank, one of the largest community banks headquartered in Southern California. Pacific Premier Bank is a business bank primarily focused on serving small- and medium-sized businesses in the counties of Los Angeles, Orange, Riverside, San Bernardino and San Diego, California. Pacific Premier Bank offers a diverse range of lending products including commercial, CRE, construction, residential warehouse and SBA loans, as well as specialty banking products for HOAs and franchise lending nationwide. Pacific Premier Bank serves its customers through its 13 full-service depository branches in Southern California located in the cities of Encinitas, Huntington Beach, Irvine, Los Alamitos, Newport Beach, Palm Desert, Palm Springs, San Bernardino, San Diego and Seal Beach.

FORWARD-LOOKING COMMENTS

The statements contained herein that are not historical facts are forward-looking statements based on management's current expectations and beliefs concerning future developments and their potential effects on the Company. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. These risks and uncertainties include, but are not limited to, the following: the strength of the United States economy in general and the strength of the local economies in which we conduct operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; the timely development of competitive new products and services and the acceptance of these products and services by new and existing customers; the willingness of users to substitute competitors’ products and services for the Company’s products and services; the impact of changes in financial services policies, laws and regulations (including the Dodd-Frank Wall Street Reform and Consumer Protection Act) and of governmental efforts to restructure the U.S. financial regulatory system; technological changes; the effect of acquisitions that the Company may make, if any, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from its acquisitions; changes in the level of the Company’s nonperforming assets and charge-offs; oversupply of inventory and continued deterioration in values of California real estate, both residential and commercial; the effect of changes in accounting policies and practices, as may be adopted from time-to-time by bank regulatory agencies, the Securities and Exchange Commission (“SEC”), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters; possible other-than-temporary impairment of securities held by us; changes in consumer spending, borrowing and savings habits; the effects of the Company’s lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; ability to attract deposits and other sources of liquidity; changes in the financial performance and/or condition of our borrowers; changes in the competitive environment among financial and bank holding companies and other financial service providers; unanticipated regulatory or judicial proceedings; and the Company’s ability to manage the risks involved in the foregoing. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the 2013 Annual Report on Form 10-K of Pacific Premier Bancorp, Inc. filed with the SEC and available at the SEC’s Internet site (http://www.sec.gov).

The Company specifically disclaims any obligation to update any factors or to publicly announce the result of revisions to any of the forward-looking statements included herein to reflect future events or developments.

 
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except share data)
(Unaudited)
                             
June 30, March 31, December 31, September 30, June 30,
ASSETS 2014 2014 2013 2013 2013
 
Cash and due from banks $ 120,016 $ 124,143 $ 126,787 $ 61,393 $ 103,946
Federal funds sold   276     276     26     26     26  
Cash and cash equivalents 120,292 124,419 126,813 61,419 103,972
Investment securities available for sale 235,116 202,142 256,089 282,846 313,047
FHLB and other stock, at cost 18,494 14,104 15,450 10,827 11,917
Loans held for sale, net - - 3,147 3,176 3,617
Loans held for investment 1,466,768 1,325,372 1,240,123 1,138,969 1,055,430
Allowance for loan losses   (9,733 )   (8,685 )   (8,200 )   (7,994 )   (7,994 )
Loans held for investment, net 1,457,035 1,316,687 1,231,923 1,130,975 1,047,436
Accrued interest receivable 6,645 5,865 6,254 5,629 5,766
Other real estate owned 752 752 1,186 1,186 1,186
Premises and equipment 9,344 9,643 9,864 9,829 9,997
Deferred income taxes 10,796 9,180 8,477 9,029 8,644
Bank owned life insurance 26,445 26,240 24,051 23,862 23,674
Intangible assets 6,121 6,374 6,628 6,881 7,135
Goodwill 22,950 22,950 17,428 17,428 18,234
Other assets   7,535     6,926     6,877     5,933     3,833  
TOTAL ASSETS $ 1,921,525   $ 1,745,282   $ 1,714,187   $ 1,569,020   $ 1,558,458  
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Deposit accounts:
Noninterest bearing $ 410,843 $ 412,871 $ 366,755 $ 363,606 $ 345,063
Interest bearing   1,034,738     1,022,332     939,531     920,528     969,126  

Total deposits

1,445,581 1,435,203 1,306,286 1,284,134 1,314,189
FHLB advances and other borrowings 255,287 95,506 204,091 86,474 48,082
Subordinated debentures 10,310 10,310 10,310 10,310 10,310
Accrued expenses and other liabilities   18,166     15,403     18,274     16,948     17,066  
TOTAL LIABILITIES   1,729,344     1,556,422     1,538,961     1,397,866     1,389,647  
STOCKHOLDERS’ EQUITY:
Common stock, $.01 par value; 25,000,000 shares authorized; shares issued and outstanding of 17,068,641, 17,224,977, 16,656,279, 16,641,991, and 16,635,786 at June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013, and June 30, 2013, respectively 171 172 166 166 166
Additional paid-in capital 149,942 152,325 143,322 143,014 142,759
Retained earnings 42,090 37,447 34,815 30,611 27,545
Accumulated other comprehensive loss, net of tax benefit of ($16), ($757), ($2,152), ($1,843), and ($1,160) at June 30, 2014, March 31, 2014, December 31, 2013, September 30, 2013, and June 30, 2013, respectively   (22 )   (1,084 )   (3,077 )   (2,637 )   (1,659 )
TOTAL STOCKHOLDERS’ EQUITY   192,181     188,860     175,226     171,154     168,811  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,921,525   $ 1,745,282   $ 1,714,187   $ 1,569,020   $ 1,558,458  
 
 
 
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(Unaudited)
                             
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2014 2014 2013 2014 2013
INTEREST INCOME
Loans $ 17,922 $ 16,585 $ 13,688 $ 34,507 $ 27,084
Investment securities and other interest-earning assets   1,309   1,437   1,248     2,746   2,087  
Total interest income   19,231   18,022   14,936     37,253   29,171  
INTEREST EXPENSE
Deposits 1,203 1,069 1,033 2,272 2,052
FHLB advances and other borrowings 255 243 238 498 478
Subordinated debentures   75   75   76     150   153  
Total interest expense   1,533   1,387   1,347     2,920   2,683  
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 17,698 16,635 13,589 34,333 26,488
PROVISION FOR LOAN LOSSES   1,030   949   322     1,979   618  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   16,668   15,686   13,267     32,354   25,870  
NONINTEREST INCOME
Loan servicing fees 282 856 318 1,138 644
Deposit fees 463 454 457 917 897
Net gain from sales of loans 1,298 548 222 1,846 945
Net gain from sales of investment securities 98 62 1,068 160 1,068
Other-than-temporary impairment recovery (loss) on investment securities, net 10 13 (5 ) 23 (35 )
Other income   320   119   371     439   636  
Total noninterest income   2,471   2,052   2,431     4,523   4,155  
NONINTEREST EXPENSE
Compensation and benefits 6,485 6,891 5,687 13,376 10,784
Premises and occupancy 1,566 1,588 1,329 3,154 2,622
Data processing and communications 485 1,131 755 1,616 1,390
Other real estate owned operations, net 41 13 574 54 611
FDIC insurance premiums 266 237 196 503 336
Legal, audit and professional expense 385 593 249 978 844
Marketing expense 242 176 264 418 470
Office and postage expense 345 369 322 714 585
Loan expense 191 184 184 375 432
Deposit expense 747 761 515 1,508 675
Merger related expense - 626 4,978 626 6,723
Other expense   888   972   803     1,860   1,563  
Total noninterest expense   11,641   13,541   15,856     25,182   27,035  
NET INCOME (LOSS) BEFORE INCOME TAX 7,498 4,197 (158 ) 11,695 2,990
INCOME TAX   2,855   1,565   91     4,420   1,267  
NET INCOME (LOSS) $ 4,643 $ 2,632 $ (249 ) $ 7,275 $ 1,723  
 
EARNINGS (LOSS) PER SHARE
Basic $ 0.28 $ 0.15 $ (0.02 ) $ 0.43 $ 0.12
Diluted $ 0.27 $ 0.15 $ (0.02 ) $ 0.42 $ 0.11
 
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 17,124,337 17,041,594 15,516,537 17,083,194 14,939,179
Diluted 17,476,390 17,376,001 15,516,537 17,422,928 15,721,262
 
 
 
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
STATISTICAL INFORMATION
(dollars in thousands)
                             
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2014 2014 2013 2014 2013
 
Profitability and Productivity
Net interest margin 4.26 % 4.30 % 4.01 % 4.28 % 4.28 %
Noninterest expense to average total assets 2.66 3.27 4.51 2.96 4.19
Efficiency ratio (1) 56.56 67.96 67.79 62.04 65.67
Return on average assets 1.06 0.64 (0.07 ) 0.85 0.27
Return on average equity 9.79 5.77 (0.63 ) 7.82 2.30
Return on average tangible common equity (2) 11.96 7.22 (0.41 ) 9.63 2.70
Full-time equivalents, at period end 253.0 240.0 215.0 253.0 215.0
 
Asset and liability activity
Loans originated and purchased $ 206,409 $ 186,853 $ 189,443 $ 393,262 $ 305,701
Repayments (45,449 ) (77,555 ) (33,375 ) (123,004 ) (78,619 )
Loans sold (13,045 ) (9,508 ) (2,172 ) (22,553 ) (7,220 )
Increase in loans, net 140,348 81,617 113,576 221,965 73,159
Increase in assets 176,243 31,095 151,803 207,338 384,666
Increase in deposits 10,378 128,917 128,470 139,295 409,421
Increase (decrease) in borrowings 159,781 (108,585 ) 3,891 51,196 (67,418 )

(1) Represents the ratio of noninterest expense less other real estate owned operations, core deposit intangible amortization and non-recurring merger-related expense to the sum of net interest income before provision for loan losses and total noninterest income less gains/(loss) on sale of securities, other-than-temporary impairment recovery (loss) on investment securities, and gain on FDIC-assisted transactions.

(2) A reconciliation of the non-GAAP measures of average tangible common equity to the GAAP measures of common stockholders' equity is set forth below.
 
 
 
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
STATISTICAL INFORMATION
                         
Average Balance Sheet
Three Months Ended Three Months Ended Three Months Ended
June 30, 2014 March 31, 2014 June 30, 2013
Average Average Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost Balance Interest Yield/Cost
Assets (dollars in thousands)
Interest-earning assets:
Cash and cash equivalents $ 79,600 $ 37 0.19 % $ 70,341 $ 27 0.16 % $ 98,451 $ 60 0.24 %
Federal funds sold 276 - - 192 - - 26 - -
Investment securities 225,294 1,272 2.26 243,847 1,410 2.31 297,912 1,188 1.60
Loans receivable, net (1)   1,362,030   17,922 5.28     1,254,407   16,585 5.36     964,486   13,688 5.69  
Total interest-earning assets 1,667,200 19,231 4.63 % 1,568,787 18,022 4.65 % 1,360,875 14,936 4.40 %
Noninterest-earning assets   84,845   87,095   44,064
Total assets $ 1,752,045 $ 1,655,882 $ 1,404,939
Liabilities and Equity
Interest-bearing deposits:
Interest checking $ 134,051 $ 39 0.12 % $ 137,658 $ 38 0.11 % $ 114,626 $ 28 0.10 %
Money market 456,466 343 0.30 435,188 314 0.29 329,008 223 0.27
Savings 74,406 27 0.15 75,904 28 0.15 78,150 29 0.15
Time   359,446   794 0.89     329,026   689 0.85     340,855   753 0.89  
Total interest-bearing deposits 1,024,369 1,203 0.47 977,776 1,069 0.44 862,639 1,033 0.48
FHLB advances and other borrowings 103,813 255 0.99 85,019 243 1.16 53,891 238 1.77
Subordinated debentures   10,310   75 2.92     10,310   75 2.95     10,310   76 2.96  
Total borrowings   114,123   330 1.16     95,329   318 1.35     64,201   314 1.96  
Total interest-bearing liabilities 1,138,492 1,533 0.54 % 1,073,105 1,387 0.52 % 926,840 1,347 0.58 %
Noninterest-bearing deposits 408,318 389,513 309,311
Other liabilities   15,562   10,951   9,645
Total liabilities 1,562,372 1,473,569 1,245,796
Stockholders' equity   189,673   182,313   159,143
Total liabilities and equity $ 1,752,045 $ 1,655,882 $ 1,404,939
Net interest income $ 17,698 $ 16,635 $ 13,589
Net interest rate spread (2) 4.09 % 4.13 % 3.82 %
Net interest margin (3) 4.26 % 4.30 % 4.01 %
Ratio of interest-earning assets to interest-bearing liabilities 146.44 % 146.19 % 146.83 %
 
(1) Average balance includes loans held for sale and nonperforming loans and is net of deferred loan origination fees, unamortized discounts and premiums, and allowance for loan losses.
(2) Represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(3) Represents net interest income divided by average interest-earning assets.
 
 
 
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
STATISTICAL INFORMATION
                 
Average Balance Sheet
Six Months Ended Six Months Ended
June 30, 2014 June 30, 2013
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
Assets (dollars in thousands)
Interest-earning assets:
Cash and cash equivalents $ 74,996 $ 64 0.17 % $ 83,879 $ 98 0.24 %
Federal funds sold 234 - - 27 - -
Investment securities 234,519 2,682 2.29 216,854 1,989 1.83
Loans receivable, net (1)   1,308,514   34,507 5.32     946,631   27,084 5.77  
Total interest-earning assets 1,618,263 37,253 4.64 % 1,247,391 29,171 4.71 %
Noninterest-earning assets   85,967   41,789
Total assets $ 1,704,230 $ 1,289,180
Liabilities and Equity
Interest-bearing deposits:
Interest checking $ 135,845 $ 77 0.11 % $ 74,914 $ 37 0.10 %
Money market 445,886 657 0.30 296,504 397 0.27
Savings 75,151 55 0.15 79,686 64 0.16
Time   344,320   1,483 0.87     345,554   1,554 0.91  
Total interest-bearing deposits 1,001,202 2,272 0.46 796,658 2,052 0.52
FHLB advances and other borrowings 94,468 498 1.06 49,355 478 1.95
Subordinated debentures   10,310   150 2.93     10,310   153 2.99  
Total borrowings   104,778   648 1.25     59,665   631 2.13  
Total interest-bearing liabilities 1,105,980 2,920 0.53 % 856,323 2,683 0.63 %
Noninterest-bearing deposits 398,967 273,440
Other liabilities   13,260   9,685
Total liabilities 1,518,207 1,139,448
Stockholders' equity   186,023   149,732
Total liabilities and equity $ 1,704,230 $ 1,289,180
Net interest income $ 34,333 $ 26,488
Net interest rate spread (2) 4.11 % 4.08 %
Net interest margin (3) 4.28 % 4.28 %
Ratio of interest-earning assets to interest-bearing liabilities 146.32 % 145.67 %
 
(1) Average balance includes loans held for sale and nonperforming loans and is net of deferred loan origination fees, unamortized discounts and premiums, and allowance for loan losses.
(2) Represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(3) Represents net interest income divided by average interest-earning assets.
 
 
     
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
STATISTICAL INFORMATION
(dollars in thousands)
                       
June 30, March 31, December 31, September 30, June 30,
2014 2014 2013 2013 2013

Loan Portfolio

Business loans:
Commercial and industrial $ 319,541 $ 271,877 $ 187,035 $ 173,720 $ 146,240
Commercial owner occupied (1) 216,784 223,848 221,089 222,162 201,802
SBA 15,115 11,045 10,659 6,455 5,820
Warehouse facilities 114,032 81,033 87,517 49,104 135,317
Real estate loans:
Commercial non-owner occupied 360,288 333,490 333,544 304,979 295,767
Multi-family 251,512 223,200 233,689 218,929 172,797
One-to-four family (2) 132,020 141,469 145,235 152,667 84,672
Construction 47,034 29,857 13,040 2,835 2,135
Land 6,271 6,170 7,605 7,371 10,438
Other loans   3,753     3,480     3,839     3,793     4,969  
Total gross loans (3) 1,466,350 1,325,469 1,243,252 1,142,015 1,059,957
Less loans held for sale, net   -     -     (3,147 )   (3,176 )   (3,617 )
Total gross loans held for investment 1,466,350 1,325,469 1,240,105 1,138,839 1,056,340
Less:
Deferred loan origination costs/(fees) and premiums/(discounts) 418 (97 ) 18 130 (910 )
Allowance for loan losses   (9,733 )   (8,685 )   (8,200 )   (7,994 )   (7,994 )
Loans held for investment, net $ 1,457,035   $ 1,316,687   $ 1,231,923   $ 1,130,975   $ 1,047,436  
 

Asset Quality

Nonaccrual loans $ 1,941 $ 2,674 $ 2,251 $ 1,153 $ 2,032
Other real estate owned   752     752     1,186     1,186     1,186  
Nonperforming assets $ 2,693   $ 3,426   $ 3,437   $ 2,339   $ 3,218  
Allowance for loan losses 9,733 8,685 8,200 7,994 7,994
Allowance for loan losses as a percent of total nonperforming loans 501.44 % 324.79 % 364.28 % 693.32 % 393.41 %
Nonperforming loans as a percent of gross loans 0.13 0.20 0.18 0.10 0.19
Nonperforming assets as a percent of total assets 0.14 0.20 0.20 0.15 0.21
Net loan charge-offs (recoveries) for the quarter ended ($18 ) $ 464 $ 390 $ 646 $ 322
Net loan charge-offs (recoveries) for quarter to average total loans, net (0.01 %) 0.15 % 0.13 % 0.25 % 0.13 %
Allowance for loan losses to gross loans 0.66 0.66 0.66 0.70 0.75
 

Delinquent Loans:

30 - 59 days $ 236 $ 118 $ 969 $ 724 $ 669
60 - 89 days 994 32 - 214 580
90+ days (4)   72     1,427     1,143     111     1,073  
Total delinquency $ 1,302   $ 1,577   $ 2,112   $ 1,049   $ 2,322  
Delinquency as a % of total gross loans 0.09 % 0.12 % 0.17 % 0.09 % 0.22 %
 
(1) Majority secured by real estate.
(2) Includes second trust deeds.
(3) Total gross loans for June 30, 2014 are net of the unaccreted mark-to-market discounts on Canyon National loans of $1.6 million, on Palm Desert National loans of $2.0 million, and on San Diego Trust loans of $143,000 and of the mark-to-market premium on First Associations loans of $41,000.
(4) All 90 day or greater delinquencies are on nonaccrual status and reported as part of nonperforming assets.
 
 
 
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
STATISTICAL INFORMATION
(dollars in thousands, except per share data)
                             
 
June 30, March 31, December 31, September 30, June 30,
2014 2014 2013 2013 2013

Deposit Accounts

Noninterest-bearing checking $ 410,843 $ 412,871 $ 366,755 $ 363,606 $ 345,063
Interest-bearing:
Checking 128,911 137,285 120,886 106,740 124,790
Money market 459,118 453,261 427,577 446,885 425,884
Savings 74,554 76,087 76,412 80,867 81,277
Time   372,155     355,699     314,656     286,036     337,175  
Total interest-bearing   1,034,738     1,022,332     939,531     920,528     969,126  
Total deposits $ 1,445,581   $ 1,435,203   $ 1,306,286   $ 1,284,134   $ 1,314,189  
 

Pacific Premier Bank Capital Ratios

Tier 1 leverage ratio 9.85 % 10.26 % 10.03 % 10.02 % 10.97 %
Tier 1 risk-based capital ratio 10.83 % 12.06 % 12.34 % 13.28 % 13.34 %
Total risk-based capital ratio 11.46 % 12.71 % 12.97 % 13.96 % 14.07 %
 

Pacific Premier Bancorp, Inc. Capital Ratios

Tier 1 leverage ratio 10.04 % 10.45 % 10.29 % 10.19 % 11.15 %
Tier 1 risk-based capital ratio 10.99 % 12.23 % 12.54 % 13.48 % 13.54 %
Total risk-based capital ratio 11.62 % 12.88 % 13.17 % 14.16 % 14.27 %
Tangible common equity ratio (1) 8.62 % 9.30 % 8.94 % 9.51 % 9.36 %
 

Share Data

Book value per share $ 11.26 $ 10.96 $ 10.52 $ 10.28 $ 10.15
Tangible book value per share (1) 9.56 9.26 9.08 8.82 8.62
Closing stock price 14.09 16.14 15.74 13.42 12.22
 
(1) A reconciliation of the non-GAAP measures of tangible common equity and tangible book value per share to the GAAP measures of common stockholders' equity and book value per share is set forth below.
 
 
 
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
STATISTICAL INFORMATION
(dollars in thousands, except per share data)
                             
GAAP Reconciliations
 

For periods presented below, adjusted net income and adjusted diluted earnings per share are non-GAAP financial measures derived from GAAP-based amounts. We calculate these figures by excluding merger-related expenses in period results. Management believes that the exclusion of such items from these financial measures provides useful information to an understanding of the operating results of our core business. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these adjusted measures, this presentation may not be comparable to other similarly titled adjusted measures reported by other companies.

Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2014 2014 2013 2014 2013
 
Net income $ 4,643 $ 2,632 ($249 ) $ 7,275 $ 1,723

Plus merger-related expenses, net of tax

  0     393     3,268     393     4,361  
Adjusted net income $ 4,643   $ 3,025   $ 3,019   $ 7,668   $ 6,084  
 
Diluted earnings per share $ 0.27 $ 0.15 ($0.02 ) $ 0.42 $ 0.11
Plus merger related expenses, net of tax   0.00     0.02     0.21     0.02     0.28  
Adjusted diluted earnings per share $ 0.27   $ 0.17   $ 0.19   $ 0.44   $ 0.39  
 
 
For periods presented below, adjusted net income and adjusted average tangible common equity are non-GAAP financial measures derived from GAAP-based amounts. We calculate these figures by adjusting net income for the effect of CDI amortization and exclude the average CDI and average goodwill from the average stockholders' equity during the period. Management believes that the exclusion of such items from these financial measures provides useful information to an understanding of the operating results of our core business. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these adjusted measures, this presentation may not be comparable to other similarly titled adjusted measures reported by other companies.
 
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2014 2014 2013 2014 2013
 
Net income $ 4,643 $ 2,632 ($249 ) $ 7,275 $ 1,723
Plus: Tax effected CDI amortization   157     159     103     316     148  
Adjusted net income $ 4,800   $ 2,791     ($146 ) $ 7,591   $ 1,871  
 
Average stockholders' equity $ 189,673 $ 182,313 $ 159,143 $ 186,023 $ 149,732
Less: Average core deposit intangible 6,248 6,501 4,536 6,375 3,760
Less: Average goodwill   22,950     21,109     12,205     22,030     7,156  
Average tangible common equity $ 160,475   $ 154,703   $ 142,402   $ 157,618   $ 138,816  
 
Return on average tangible common equity 11.96 % 7.22 % (0.41 %) 9.63 % 2.70 %
 
 
Tangible common equity to tangible assets (the "tangible common equity ratio") and tangible book value per share are non-GAAP financial measures derived from GAAP-based amounts. We calculate the tangible common equity ratio by excluding the balance of intangible assets from common stockholders' equity and dividing by tangible assets. We calculate tangible book value per share by dividing tangible common equity by common shares outstanding, as compared to book value per share, which we calculate by dividing common stockholders' equity by shares outstanding. We believe that this information is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. Accordingly, we believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our capital position and ratios. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other companies.
 
June 30, March 31, December 31, September 30, June 30,
2014 2014 2013 2013 2013
 
Total stockholders' equity $ 192,181 $ 188,860 $ 175,226 $ 171,154 $ 168,811
Less: Intangible assets   (29,071 )   (29,324 )   (24,056 )   (24,309 )   (25,369 )
Tangible common equity $ 163,110   $ 159,536   $ 151,170   $ 146,845   $ 143,442  
 
Book value per share $ 11.26 $ 10.96 $ 10.52 $ 10.28 $ 10.15
Less: Intangible book value per share   (1.70 )   (1.70 )   (1.44 )   (1.46 )   (1.53 )
Tangible book value per share $ 9.56   $ 9.26   $ 9.08   $ 8.82   $ 8.62  
 
Total assets $ 1,921,525 $ 1,745,282 $ 1,714,187 $ 1,569,020 $ 1,558,458
Less: Intangible assets   (29,071 )   (29,324 )   (24,056 )   (24,309 )   (25,369 )
Tangible assets $ 1,892,454   $ 1,715,958   $ 1,690,131   $ 1,544,711   $ 1,533,089  
 
Tangible common equity ratio 8.62 % 9.30 % 8.94 % 9.51 % 9.36 %
 

Contacts

Pacific Premier Bancorp, Inc.
Steve Gardner
President/CEO
949-864-8000
or
Kent J. Smith
Executive Vice President/CFO
949-864-8000

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Contacts

Pacific Premier Bancorp, Inc.
Steve Gardner
President/CEO
949-864-8000
or
Kent J. Smith
Executive Vice President/CFO
949-864-8000