Pacific Premier Bancorp, Inc. Announces Second Quarter 2017 Results (Unaudited)

Second Quarter 2017 Summary

  • Net income of $14.2 million, an increase of $4.7 million, or 49%, over the prior quarter
  • Second quarter results include $10.1 million of merger-related expense
  • Diluted earnings per share of $0.35
  • ROAA and ROATCE of 0.89% and 11.33%, respectively
  • Efficiency ratio of 52%
  • Closed acquisition of Heritage Oaks Bancorp effective April 1, 2017
  • Tangible book value of $13.83, an increase of 16.5% over the second quarter of 2016
  • New loan originations of $492 million, 33% annualized increase
  • Noninterest-bearing deposits account for 37% of total deposits

IRVINE, Calif.--()--Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company”), the holding company of Pacific Premier Bank (the “Bank”), reported net income for the second quarter of 2017 of $14.2 million, or $0.35 per diluted share, compared with net income of $9.5 million, or $0.34 per diluted share, for the first quarter of 2017 and net income of $10.4 million, or $0.37 per diluted share, for the second quarter of 2016. Net income for the second and first quarters of 2017 include $10.1 million and $4.9 million of merger-related expense, respectively, associated with the acquisition of Heritage Oaks Bancorp ("Heritage Oaks"). Net income for the second quarter of 2016 includes $497,000 of merger-related expense associated with the acquisition of Security Bank of California ("Security").

For the three months ended June 30, 2017, the Company’s return on average assets was 0.89% and return on average tangible common equity was 11.33%. For the three months ended March 31, 2017, the Company's return on average assets was 0.94% and the return on average tangible common equity was 11.03%. For the three months ended June 30, 2016, the Company's return on average assets was 1.16% and its return on average tangible common equity was 13.30%. Total assets as of June 30, 2017 were $6.4 billion compared with $4.2 billion at March 31, 2017 and $3.6 billion at June 30, 2016.

Steven R. Gardner, Chairman, President and Chief Executive Officer of the Company, commented on the results, “We executed well in the second quarter, generating strong business volumes while integrating the Heritage Oaks Bancorp acquisition. We had another strong quarter of loan production, generating $492 million in commitments. We continue to have well balanced loan production with contributions from our commercial, commercial real estate, SBA and franchise lending businesses, while also maintaining exceptional credit quality.

“The integration of the Heritage Oaks team has progressed very well throughout the second quarter and we completed the systems conversion last week. We are on track to capture all of the synergies that we had projected for this transaction. At the same time, we continue to strengthen and enhance our infrastructure and personnel as we anticipate eventually surpassing the $10 billion asset threshold. While making these investments in people and systems, we believe we will be able to achieve an operating efficiency ratio in the low 50% range, which we think is appropriate for a bank of our size, growth profile and commercial banking focus.

“Over the second half of the year, we will be focused on leveraging our unique sales culture, larger lending capacity, and broader product offerings to accelerate business development in the Central Coast of California. We also continue to actively explore additional M&A transactions that can provide strategic and economic benefits, and further enhance the value of our franchise,” said Mr. Gardner.

FINANCIAL HIGHLIGHTS

  Three Months Ended
June 30,   March 31,   June 30,
  2017     2017     2016  
Financial Highlights (dollars in thousands, except per share data)
Net income $ 14,176 $ 9,521 $ 10,369
Diluted earnings per share $ 0.35 $ 0.34 $ 0.37
Return on average assets 0.89 % 0.94 % 1.16 %
Return on average tangible common equity (1) 11.33 % 11.03 % 13.30 %
Net interest margin 4.40 % 4.39 % 4.48 %
Cost of deposits 0.25 % 0.27 % 0.28 %
Efficiency ratio (2) 52.3 % 52.3 % 54.4 %
Total assets $ 6,440,631 $ 4,174,428 $ 3,597,666
Tangible book value (1) $ 13.83 $ 12.88 $ 11.87
             
(1)   A reconciliation of the non-GAAP measures of average tangible common equity and tangible book value to the GAAP measures of common stockholders' equity and book value are set forth at the end of this press release.
(2) Represents the ratio of noninterest expense less other real estate owned operations, core deposit intangible amortization and 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 and other-than-temporary impairment recovery/(loss) on investment securities.
 

INCOME STATEMENT HIGHLIGHTS

Net Interest Income and Net Interest Margin

Net interest income totaled $63.3 million in the second quarter of 2017, an increase of $21.6 million, or 52%, from the first quarter of 2017. The increase in net interest income was primarily due to an increase in average interest-earning assets of $1.9 billion, primarily related to the acquisition of Heritage Oaks, which at acquisition added $1.4 billion of loans and $445 million of securities, before purchase accounting adjustments.

Net interest margin increased to 4.40% from 4.39% in the prior quarter, primarily due to higher loan yields which increased 10 basis points to 5.29% from 5.19% in the prior quarter, as a result of increased accretion income as well as the favorable repricing of our variable rate loan portfolio, resultant from the recent Fed rate increases. Additionally, our average cost of interest-bearing liabilities decreased 4 basis points to 0.61% from 0.65% in the prior quarter with the acquisition of Heritage Oaks. Partially offsetting these benefits was a 16 basis point decrease in the investment portfolio yield to 2.42% from 2.58% in the prior quarter. Included in the net interest margin for the second quarter of 2017 was $4.2 million of accretion income associated with acquired loans, representing 30 basis points of net interest margin, including $3.3 million associated with the Heritage Oaks portfolio, compared to $1.1 million of accretion income representing 12 basis points of net interest margin in the first quarter of 2017.

Net interest income for the second quarter of 2017 increased $25.8 million, or 69%, compared to the second quarter of 2016. The increase was primarily related to an increase in average interest-earning assets of $2.4 billion, which resulted primarily from our organic loan growth since the end of the second quarter of 2016 and our acquisition of Heritage Oaks during the second quarter of 2017.

Provision for Loan Losses

A provision for loan losses of $1.9 million was recorded for the second quarter of 2017, compared with a provision for loan losses of $2.5 million for the quarter ending March 31, 2017. Lower credit losses as evidenced by net loan recoveries of $76,000 contributed to the decrease in our provision for loan losses.

 
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
   
Three Months Ended
June 30, 2017     March 31, 2017     June 30, 2016

Average
Balance

 

Interest
Income/
Expense

 

Average
Yield/
Cost

Average
Balance

 

Interest
Income/
Expense

 

Average
Yield/
Cost

Average
Balance

 

Interest
Income/
Expense

 

Average
Yield/
Cost

Assets (dollars in thousands)
Cash and cash equivalents $ 133,127 $ 160 0.48 % $ 86,849 $ 84 0.39 % $ 177,603 $ 189 0.43 %
Investment securities 829,380 5,019 2.42 450,075 2,907 2.58 299,049 1,650 2.21
Loans receivable, net (1)   4,815,612   63,554 5.29   3,315,792   42,436 5.19   2,892,236   39,035 5.43
Total interest-earning assets $ 5,778,119 $ 68,733 4.77 % $ 3,852,716 $ 45,427 4.78 % $ 3,368,888 $ 40,874 4.88 %
 
Liabilities
Interest-bearing deposits $ 3,107,842 $ 3,081 0.40 % $ 2,006,365 $ 2,135 0.43 % $ 1,864,252 $ 2,010 0.43 %
Borrowings   464,845   2,314 2.00   334,618   1,589 1.93   169,058   1,303 3.10
Total interest-bearing liabilities $ 3,572,687 $ 5,395 0.61 % $ 2,340,983 $ 3,724 0.65 % $ 2,033,310 $ 3,313 0.66 %
Noninterest-bearing deposits $ 1,802,752   $ 1,208,045   $ 1,060,104  
Net interest income $ 63,338 $ 41,703 $ 37,561
Net interest margin (2) 4.40 % 4.39 % 4.48 %
 
(1)   Average balance includes nonperforming loans and is net of deferred loan origination fees/costs and unamortized discounts/premiums.
(2) Represents net interest income divided by average interest-earning assets.
 

Noninterest Income

Noninterest income for the second quarter of 2017 was $8.8 million, an increase of $4.1 million, or 87%, from the first quarter of 2017. The increase from the first quarter of 2017 was primarily related to a $2.1 million increase in net gain from the sale of $213 million of investment securities, a $799,000 increase in deposit fees and a $1.1 million increase in other income all related to the Heritage Oaks acquisition. During the quarter, the Bank sold $29.6 million of Small Business Administration ("SBA") loans for a gain of $2.9 million, compared with $30.5 million of SBA loans sold and a gain of $2.6 million in the prior quarter.

Noninterest income for the second quarter of 2017 increased $4.3 million, or 97%, compared to the second quarter of 2016. The increase from the second quarter of 2016 was primarily related to a $1.6 million increase in net gain from the sale of investment securities, a $829,000 increase in deposit fees, a $763,000 increase in net gain from sales of loans and a $1.2 million increase in other income.

    Three Months Ended
June 30,   March 31,   June 30,
2017 2017 2016
NONINTEREST INCOME (dollars in thousands)
Loan servicing fees $ 143 $ 222 $ 256
Deposit fees 1,646 847 817
Net gain from sales of loans 2,887 2,811 2,124
Net gain from sales of investment securities 2,093 532
Net gain from other real estate owned 94 18
Other income   1,896     803     703
Total noninterest income $ 8,759   $ 4,683   $ 4,450
 

Noninterest Expense

Noninterest expense totaled $48.5 million for the second quarter of 2017, an increase of $18.7 million, or 63%, compared with the first quarter of 2017. The increase was primarily driven by the inclusion of Heritage Oaks operations and merger-related expenses of $10.1 million in the second quarter of 2017 compared with $4.9 million for the first quarter of 2017. Excluding the merger related expense our noninterest expense was $38.4 million. Going forward we expect our quarterly operating expense run rate to be in the range of $38-40 million.

In comparison to the second quarter of 2016, noninterest expense grew by $24.8 million, or 105%. The increase in expense was primarily related to higher merger-related expense of $9.6 million and the additional costs from the operations, personnel and branches retained from the acquisition of Heritage, combined with our continued investment in personnel to support our organic growth.

    Three Months Ended
June 30,   March 31,   June 30,
  2017   2017   2016  
NONINTEREST EXPENSE (dollars in thousands)
Compensation and benefits $ 21,623 $ 14,887 $ 13,098
Premises and occupancy 3,733 2,453 2,447
Data processing 2,439 1,187 887
Other real estate owned operations, net 44 12 (15 )
FDIC insurance premiums 818 455 401
Legal, audit and professional expense 1,178 857 446
Marketing expense 1,006 818 803
Office, telecommunications and postage expense 922 433 573
Loan expense 1,068 468 540
Deposit expense 1,669 1,444 1,196
Merger-related expense 10,117 4,946 497
CDI amortization 1,761 511 645
Other expense   2,118   1,276   2,177  
Total noninterest expense $ 48,496 $ 29,747 $ 23,695  
 

Income Tax

For the second quarter of 2017, our effective tax rate was 34.7%, compared with 32.7% for the first quarter of 2017 and 38.0% for the second quarter of 2016. The increase in the effective tax rate when compared to the first quarter of 2017 was primarily the result of lower tax deductible equity stock expense related to the adoption of ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Accounting, which went into effect for the Company on January 1, 2017. As a result of the adoption of ASU 2016-09, the Company began recognizing the tax effects of exercised or vested awards as discrete items in the reporting period in which they occur, resulting in a $461,000 tax benefit to the Company for the second quarter of 2017 compared with $1.1 million in the first quarter of 2017.

BALANCE SHEET HIGHLIGHTS

Loans

Loans held for investment totaled $4.9 billion at June 30, 2017, an increase of $1.5 billion, or 44%, from March 31, 2017, and an increase of $1.9 billion, or 66%, from June 30, 2016. The increases were impacted by the acquisition of Heritage Oaks, as well as organic loan growth. The total end of period weighted average interest rate on loans, excluding fees and discounts, at June 30, 2017 was 4.79%, compared to 4.87% at March 31, 2017 and 4.84% at June 30, 2016.

Loan activity during the second quarter of 2017 included new organic loan commitments of $492 million, compared with $455 million in the first quarter of 2017 and $299 million in the second quarter of 2016. At June 30, 2017, our ratio of loans held for investment to total deposits was 98.2%, compared with 102.7% and 99.6% at March 31, 2017 and June 30, 2016, respectively.

    June 30,   March 31,   June 30,
  2017     2017     2016  
Loan Portfolio (dollars in thousands)
Business loans:
Commercial and industrial $ 733,852 $ 593,457 $ 508,141
Franchise 565,415 493,158 403,855
Commercial owner occupied 729,476 482,295 443,060
SBA 108,224 107,233 86,076
Agriculture 98,842
Real estate loans:
Commercial non-owner occupied 1,095,184 612,787 526,362
Multi-family 746,547 682,237 613,573
One-to-four family 322,048 100,423 106,538
Construction 289,600 298,279 215,786
Farmland 136,587
Land 31,799 19,738 18,341
Other loans   7,309     3,930     5,822  
Total gross loans 4,864,883 3,393,537 2,927,554
Plus: Deferred loan origination costs/(fees) and premiums/(discounts), net   568     3,250       3,181  
Total loans 4,865,451 3,396,787 2,930,735
Less: Loans held for sale, at lower of cost or fair value   6,840     11,090     10,116  
Loans held for investment 4,858,611 3,385,697 2,920,619
Allowance for loan losses   (25,055 )   (23,075 )   (18,955 )
Loans held for investment, net $ 4,833,556   $ 3,362,622   $ 2,901,664  
 

Asset Quality and Allowance for Loan Losses

At June 30, 2017, our allowance for loan losses was $25.1 million, an increase of $2.0 million from March 31, 2017. Loan loss provision for the quarter was $1.9 million while net recoveries were $76,000.

The ratio of allowance for loan losses to loans held for investment at June 30, 2017 was 0.52%, compared to 0.68% and 0.65% at March 31, 2017 and June 30, 2016, respectively. Under the guidance of ASC 820: Fair Value Measurements and Disclosures, the fair value discount on loans acquired through total bank acquisition was $25.5 million, or 0.53%, of total loans held for investment as of June 30, 2017.

Nonperforming assets totaled $767,000, or 0.01% of total assets, at June 30, 2017, a decrease from $973,000, or 0.02% of total assets, at March 31, 2017. During the second quarter of 2017, nonperforming loans decreased $118,000 to $395,000, and other real estate owned decreased to $372,000. Loan delinquencies increased to $3.0 million, or 0.06%, of loans held for investment compared to $477,000, or 0.01% of loans held for investment at March 31, 2017.

    June 30,   March 31,   June 30,
  2017     2017     2016  
Asset Quality (dollars in thousands)
Nonaccrual loans $ 395 $ 513 $ 4,062
Other real estate owned   372     460     711  
Nonperforming assets $ 767   $ 973   $ 4,773  
 
Allowance for loan losses $ 25,055 $ 23,075 $ 18,955
Allowance for loan losses as a percent of total nonperforming loans 6,343 % 4,498 % 467 %
Nonperforming loans as a percent of loans held for investment 0.01 % 0.02 % 0.14 %
Nonperforming assets as a percent of total assets 0.01 % 0.02 % 0.13 %
Net loan (recoveries) charge-offs for the quarter ended $ (76 ) $ 723 $ 1,089
Net loan (recoveries) charge-offs for quarter to average total loans % 0.02 % 0.04 %
Allowance for loan losses to loans held for investment (1) 0.52 % 0.68 % 0.65 %
Delinquent Loans:
30 - 59 days $ 600 $ 117 $ 1,144
60 - 89 days 1,965 2,487
90+ days   454     360     1,797  
Total delinquency $ 3,019   $ 477   $ 5,428  
Delinquency as a % of loans held for investment 0.06 % 0.01 % 0.19 %
               
(1)   38% of loans held for investment include a fair value discount of $25.2 million.
 

Investment Securities

Investment securities available for sale totaled $703 million at June 30, 2017, an increase of $268 million from March 31, 2017, and $458 million from June 30, 2016. The increase in the second quarter of 2017 was primarily the result of the acquisition of Heritage Oaks, which at acquisition added $445 million of securities, before purchase accounting adjustments, partially offset by approximately $213 million in sales of securities resulting in a gain of $2.1 million.

Deposits

At June 30, 2017, deposits totaled $4.9 billion, an increase of $1.6 billion, or 50%, from March 31, 2017 and $2.0 billion, or 69%, from June 30, 2016. At June 30, 2017, non-maturity deposits totaled $4.1 billion, 84% of total deposits, an increase of $1.4 billion, or 53%, from March 31, 2017 and an increase of $1.8 billion, or 79%, from June 30, 2016. During the second quarter of 2017, deposit increases included $732 million in money market/savings deposits, $577 million in noninterest-bearing deposits, $191 million in retail certificate deposits, $132 million in interest checking and $16 million in wholesale/brokered certificates of deposits, primarily as a result of the acquisition of Heritage Oaks.

The weighted average cost of deposits for the three month period ending June 30, 2017 was 0.25%, compared to 0.27% for the three month period ending March 31, 2017 and 0.28% for the three month period ending June 30, 2016.

    June 30,   March 31,   June 30,
  2017     2017     2016  
Deposit Accounts (dollars in thousands)
Noninterest-bearing checking $ 1,810,047 $ 1,232,578 $ 1,043,361
Interest-bearing:
Checking 323,818 191,399 181,859
Money market/Savings 2,006,131 1,273,917 1,086,255
Retail certificates of deposit 572,523 381,738 420,673
Wholesale/brokered certificates of deposit   233,912     217,441     198,853  
Total interest-bearing   3,136,384     2,064,495     1,887,640  
Total deposits $ 4,946,431   $ 3,297,073   $ 2,931,001  
 
Cost of deposits 0.25 % 0.27 % 0.28 %
Noninterest-bearing deposits as a percent of total deposits 37 % 37 % 36 %
Non-maturity deposits as a percent of total deposits 84 % 82 % 79 %
 

Borrowings

At June 30, 2017, total borrowings amounted to $477 million, an increase of $96.3 million, or 25%, from March 31, 2017 and an increase of $287 million, or 152%, from June 30, 2016. Total borrowings for the quarter included $397 million of advances from the Federal Home Loan Bank of San Francisco and $80 million of subordinated debt. At June 30, 2017, total borrowings represented 7.4% of total assets, compared to 9.1% and 5.3%, as of March 31, 2017 and June 30, 2016, respectively.

Capital Ratios

At June 30, 2017, our ratio of tangible common equity to total assets was 9.18%, with book value per share of $23.96 and tangible book value of $13.83 per share, compared with a tangible book value of $12.88 at March 31, 2017 and tangible book value of $11.87 at June 30, 2016.

At June 30, 2017, the Bank exceeded all regulatory capital requirements with a ratio for tier 1 leverage capital of 10.54%, common equity tier 1 risk-based capital of 11.85%, tier 1 risk-based capital of 11.85% and total risk-based capital of 12.35%. These capital ratios exceeded the “well capitalized” standards defined by the federal banking regulators of 5.00% for tier 1 leverage capital, 6.5% for common equity tier 1 risk-based capital, 8.00% for tier 1 risk-based capital and 10.00% for total risk-based capital.

At June 30, 2017, the Company had a ratio for tier 1 leverage capital of 9.85%, common equity tier 1 risk-based capital of 10.71%, tier 1 risk-based capital of 11.09% and total risk-based capital of 12.70%.

    June 30,   March 31,   June 30,
Capital Ratios   2017     2017     2016  
Pacific Premier Bancorp, Inc. Consolidated
Tier 1 leverage ratio 9.85 % 9.54 % 9.88 %
Common equity tier 1 risk-based capital ratio 10.71 % 9.84 % 10.53 %
Tier 1 risk-based capital ratio 11.09 % 10.11 % 10.84 %
Total risk-based capital ratio 12.70 % 12.34 % 13.37 %
Tangible common equity ratio (1) 9.18 % 8.85 % 9.42 %
 
Pacific Premier Bank
Tier 1 leverage ratio 10.54 % 10.71 % 11.17 %
Common equity tier 1 risk-based capital ratio 11.85 % 11.37 % 12.25 %
Tier 1 risk-based capital ratio 11.85 % 11.37 % 12.25 %
Total risk-based capital ratio 12.35 % 12.01 % 12.88 %
 
Share Data
Book value per share $ 23.96 $ 16.88 $ 15.94
Shares issued and outstanding 40,048,758 27,908,816 27,650,533
Tangible book value per share (1) $ 13.83 $ 12.88 $ 11.87
Closing stock price $ 36.90 $ 38.55 $ 24.00
 
(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.
 

Conference Call and Webcast

The Company will host a conference call at 9:00 a.m. PT / 12:00 p.m. ET on July 25, 2017 to discuss its financial results. Analysts and investors may participate in the question-and-answer session. A live webcast will be available on the Webcasts page of the Company's investor relations website. An archived version of the webcast will be available in the same location shortly after the live call has ended. The conference call can be accessed by telephone at (866) 290-5977 and asking to be joined to the Pacific Premier Bancorp conference call. Additionally, a telephone replay will be made available through August 1, 2017 at (877) 344-7529, conference ID 10110048.

About Pacific Premier Bancorp, Inc.

Pacific Premier Bancorp, Inc. is the holding company for Pacific Premier Bank, one of the largest banks headquartered in Southern California with approximately $6.4 billion in assets. Pacific Premier Bank is a business bank primarily focused on serving small and middle market businesses in the counties of Orange, Los Angeles, Riverside, San Bernardino, San Diego, San Luis Obispo and Santa Barbara, California. Through its more than 25 depository branches, Pacific Premier Bank offers a diverse range of lending products including commercial, commercial real estate, construction, and SBA loans, as well as specialty banking products for homeowners associations and franchise lending nationwide.

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 including, without limitation, statements regarding the Company's growth and the impact of acquisitions. 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; any oversupply of inventory and 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 2016 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)
(Unaudited)
           
June 30, March 31, December 31, September 30, June 30,
ASSETS   2017     2017     2016     2016     2016  
Cash and due from banks $ 35,686 $ 13,425 $ 14,706 $ 18,543 $ 15,444
Interest-bearing deposits with financial institutions   193,595     87,088     142,151     85,361     169,855  
Cash and cash equivalents 229,281 100,513 156,857 103,904 185,299
Interest-bearing time deposits with financial institutions 3,944 3,944 3,944 3,944 3,944
Investments held-to-maturity, at amortized cost 7,750 8,272 8,565 8,900 9,292
Investment securities available-for-sale, at fair value 703,083 435,408 380,963 313,200 245,471
FHLB, FRB and other stock, at cost 56,612 37,811 37,304 29,966 26,984
Loans held for sale, at lower of cost or fair value 6,840 11,090 7,711 9,009 10,116
Loans held for investment 4,858,611 3,385,697 3,241,613 3,090,839 2,920,619
Allowance for loan losses   (25,055 )   (23,075 )   (21,296 )   (21,843 )   (18,955 )
Loans held for investment, net 4,833,556 3,362,622 3,220,317 3,068,996 2,901,664
Accrued interest receivable 20,607 13,366 13,145 11,642 12,143
Other real estate owned 372 460 460 711 711
Premises and equipment 45,342 11,799 12,014 11,314 11,014
Deferred income taxes, net 22,201 12,744 16,807 20,001 16,552
Bank owned life insurance 74,982 40,696 40,409 40,116 39,824
Intangible assets 35,305 8,942 9,451 9,976 10,500
Goodwill 370,564 102,490 102,490 101,939 101,939
Other assets   30,192     24,271     25,874     21,213     22,213  
Total Assets $ 6,440,631   $ 4,174,428   $ 4,036,311   $ 3,754,831   $ 3,597,666  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Deposit accounts:
Noninterest-bearing checking $ 1,810,047 $ 1,232,578 $ 1,185,768 $ 1,160,394 $ 1,043,361
Interest-bearing:
Checking 323,818 191,399 182,893 181,534 181,859
Money market/savings 2,006,131 1,273,917 1,202,361 1,145,609 1,086,255
Retail certificates of deposit 572,523 381,738 375,203 384,083 420,673
Wholesale/brokered certificates of deposit   233,912     217,441     199,356     188,132     198,853  
Total interest-bearing   3,136,384     2,064,495     1,959,813     1,899,358     1,887,640  
Total deposits 4,946,431 3,297,073 3,145,581 3,059,752 2,931,001
FHLB advances and other borrowings 397,267 311,363 327,971 136,213 120,252
Subordinated debentures 79,800 69,413 69,383 69,353 69,323
Accrued expenses and other liabilities   57,402     25,554     33,636     39,548     36,460  
Total Liabilities   5,480,900     3,703,403     3,576,571     3,304,866     3,157,036  
STOCKHOLDERS’ EQUITY:
Common stock 396 275 274 273 273
Additional paid-in capital 815,327 345,888 345,138 343,231 342,388
Retained earnings 140,748 126,570 117,049 105,098 95,869
Accumulated other comprehensive income (loss), net of tax (benefit)   3,260     (1,708 )   (2,721 )   1,363     2,100  
Total Stockholders' Equity   959,731     471,025     459,740     449,965     440,630  
Total Liabilities and Stockholders' Equity $ 6,440,631   $ 4,174,428   $ 4,036,311   $ 3,754,831   $ 3,597,666  
 
 
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,
  2017   2017   2016     2017   2016  
INTEREST INCOME
Loans $ 63,554 $ 42,436 $ 39,035 $ 105,990 $ 74,442
Investment securities and other interest-earning assets   5,179   2,991   1,839     8,170   3,937  
Total interest income   68,733   45,427   40,874     114,160   78,379  
 
INTEREST EXPENSE
Deposits 3,081 2,135 2,010 5,216 4,079
FHLB advances and other borrowings 1,175 604 324 1,779 649
Subordinated debentures   1,139   985   979     2,124   1,889  
Total interest expense   5,395   3,724   3,313     9,119   6,617  
Net interest income before provision for loan losses 63,338 41,703 37,561 105,041 71,762
Provision for loan losses   1,904   2,502   1,589     4,406   2,709  
Net interest income after provision for loan losses   61,434   39,201   35,972     100,635   69,053  
 
NONINTEREST INCOME
Loan servicing fees 143 222 256 365 481
Deposit fees 1,646 847 817 2,493 1,645
Net gain from sales of loans 2,887 2,811 2,124 5,698 4,030
Net gain from sales of investment securities 2,093 532 2,093 1,285
Net gain from other real estate owned 94 18 94 18
Other income   1,896   803   703     2,699   1,839  
Total noninterest income   8,759   4,683   4,450     13,442   9,298  
 
NONINTEREST EXPENSE
Compensation and benefits 21,623 14,887 13,098 36,510 24,837
Premises and occupancy 3,733 2,453 2,447 6,186 4,730
Data processing 2,439 1,187 887 3,626 1,798
Other real estate owned operations, net 44 12 (15 ) 56 (7 )
FDIC insurance premiums 818 455 401 1,273 783
Legal, audit and professional expense 1,178 857 446 2,035 1,311
Marketing expense 1,006 818 803 1,824 1,433
Office, telecommunications and postage expense 922 433 573 1,355 1,054
Loan expense 1,068 468 540 1,536 943
Deposit expense 1,669 1,444 1,196 3,113 2,201
Merger-related expense 10,117 4,946 497 15,063 3,616
CDI amortization 1,761 511 645 2,272 989
Other expense   2,118   1,276   2,177     3,394   3,640  
Total noninterest expense   48,496   29,747   23,695     78,243   47,328  
Net income before income taxes 21,697 14,137 16,727 35,834 31,023
Income tax   7,521   4,616   6,358     12,137   12,100  
Net income $ 14,176 $ 9,521 $ 10,369   $ 23,697 $ 18,923  
 
EARNINGS PER SHARE
Basic $ 0.36 $ 0.35 $ 0.38 $ 0.71 $ 0.72
Diluted $ 0.35 $ 0.34 $ 0.37 $ 0.69 $ 0.70
 
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 39,586,524 27,528,940 27,378,930 33,591,040 26,467,292
Diluted 40,267,220 28,197,220 27,845,490 34,267,215 26,901,627
 

SELECTED FINANCIAL DATA

 
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
   
Three Months Ended
June 30, 2017     March 31, 2017     June 30, 2016

Average
Balance

 

Interest
Income/
Expense

 

Average
Yield/
Cost

Average
Balance

 

Interest
Income/
Expense

 

Average
Yield/
Cost

Average
Balance

 

Interest
Income/
Expense

 

Average
Yield/
Cost

Assets (dollars in thousands)
Interest-earning assets:
Cash and cash equivalents $ 133,127 $ 160 0.48 % $ 86,849 $ 84 0.39 % $ 177,603 $ 189 0.43 %
Investment securities 829,380 5,019 2.42 450,075 2,907 2.58 299,049 1,650 2.21
Loans receivable, net (1)   4,815,612   63,554 5.29   3,315,792   42,436 5.19   2,892,236   39,035 5.43
Total interest-earning assets 5,778,119 68,733 4.77 3,852,716 45,427 4.78 3,368,888 40,874 4.88
Noninterest-earning assets   592,186   196,041   194,005
Total assets $ 6,370,305 $ 4,048,757 $ 3,562,893
Liabilities and Equity
Interest-bearing deposits:
Interest checking $ 329,450 $ 90 0.11 $ 195,258 $ 53 0.11 $ 178,258 $ 50 0.11
Money market 1,779,013 1,582 0.36 1,133,676 972 0.35 980,806 896 0.37
Savings 218,888 68 0.12 103,449 38 0.15 98,419 38 0.16
Retail certificates of deposit 568,367 911 0.64 372,208 685 0.75 451,035 743 0.66
Wholesale/brokered certificates of deposit   212,124   430 0.81   201,774   387 0.78   155,734   283 0.73
Total interest-bearing deposits 3,107,842 3,081 0.40 2,006,365 2,135 0.43 1,864,252 2,010 0.43
FHLB advances and other borrowings 385,088 1,175 1.22 265,224 604 0.92 99,754 324 1.31
Subordinated debentures   79,757   1,139 5.71   69,394   985 5.68   69,304   979 5.65
Total borrowings   464,845   2,314 2.00   334,618   1,589 1.93   169,058   1,303 3.10
Total interest-bearing liabilities 3,572,687 5,395 0.61 2,340,983 3,724 0.65 2,033,310 3,313 0.66
Noninterest-bearing deposits 1,802,752 1,208,045 1,060,104
Other liabilities   46,666   30,297   32,867
Total liabilities 5,422,105 3,579,325 3,126,281
Stockholders' equity   948,200   469,432   436,612
Total liabilities and equity $ 6,370,305   $ 4,048,757   $ 3,562,893  
Net interest income $ 63,338 $ 41,703 $ 37,561
Net interest margin (2) 4.40 % 4.39 % 4.48 %
Ratio of interest-earning assets to interest-bearing liabilities 161.73 % 164.58 % 165.68 %
 
(1)   Average balance includes nonperforming loans and is net of deferred loan origination fees/costs and unamortized discounts/premiums.
(2) Represents net interest income divided by average interest-earning assets.
 
 
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
LOAN PORTFOLIO COMPOSITION
(dollars in thousands)
           
June 30, March 31, December 31, September 30, June 30,
  2017     2017     2016     2016     2016  
Loan Portfolio
Business loans:
Commercial and industrial $ 733,852 $ 593,457 $ 563,169 $ 537,809 $ 508,141
Franchise 565,415 493,158 459,421 431,618 403,855
Commercial owner occupied 729,476 482,295 454,918 460,068 443,060
SBA 108,224 107,233 96,705 92,195 86,076
Agriculture 98,842
Real estate loans:
Commercial non-owner occupied 1,095,184 612,787 586,975 527,412 526,362
Multi-family 746,547 682,237 690,955 689,813 613,573
One-to-four family 322,048 100,423 100,451 101,377 106,538
Construction 289,600 298,279 269,159 231,098 215,786
Farmland 136,587
Land 31,799 19,738 19,829 18,472 18,341
Other loans   7,309     3,930     4,112     5,678     5,822  
Total gross loans 4,864,883 3,393,537 3,245,694 3,095,540 2,927,554
Plus: Deferred loan origination costs/(fees) and premiums/(discounts), net   568     3,250     3,630     4,308     3,181  
Total loans 4,865,451 3,396,787 3,249,324 3,099,848 2,930,735
Less: Loans held for sale, at lower of cost or fair value   6,840     11,090     7,711     9,009     10,116  
Loans held for investment 4,858,611 3,385,697 3,241,613 3,090,839 2,920,619
Allowance for loan losses   (25,055 )   (23,075 )   (21,296 )   (21,843 )   (18,955 )
Loans held for investment, net $ 4,833,556   $ 3,362,622   $ 3,220,317   $ 3,068,996   $ 2,901,664  
 
 
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
ASSET QUALITY INFORMATION
(dollars in thousands)
           
June 30, March 31, December 31, September 30 June 30,
  2017     2017     2016     2016     2016  
Asset Quality
Nonaccrual loans $ 395 $ 513 $ 1,141 $ 5,734 $ 4,062
Other real estate owned   372     460     460     711     711  
Nonperforming assets $ 767   $ 973   $ 1,601   $ 6,445   $ 4,773  
 
Allowance for loan losses $ 25,055 $ 23,075 $ 21,296 $ 21,843 $ 18,955
Allowance for loan losses as a percent of total nonperforming loans 6,343 % 4,498 % 1,866 % 381 % 467 %
Nonperforming loans as a percent of loans held for investment 0.01 % 0.02 % 0.04 % 0.19 % 0.14 %
Nonperforming assets as a percent of total assets 0.01 % 0.02 % 0.04 % 0.17 % 0.13 %
Net loan (recoveries) charge-offs for the quarter ended $ (76 ) $ 723 $ 2,601 $ 1,125 $ 1,089
Net loan (recoveries) charge-offs for quarter to average total loans % 0.02 % 0.08 % 0.04 % 0.04 %
Allowance for loan losses to loans held for investment 0.52 % 0.68 % 0.66 % 0.71 % 0.65 %
 
Delinquent Loans:
30 - 59 days $ 600 $ 117 $ 122 $ 1,042 $ 1,144
60 - 89 days 1,965 71 1,990 2,487
90+ days   454     360     639     2,646     1,797  
Total delinquency $ 3,019   $ 477   $ 832   $ 5,678   $ 5,428  
Delinquency as a percent of loans held for investment 0.06 % 0.01 % 0.03 % 0.18 % 0.19 %
 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
GAAP RECONCILIATIONS

(dollars in thousands, except per share data)

For periods presented below, return on average tangible common equity is a non-GAAP financial measures derived from GAAP-based amounts. We calculate these figures by excluding CDI amortization expense 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
June 30,   March 31,   June 30,
  2017     2017     2016  
Net income $ 14,176 $ 9,521 $ 10,369
Plus CDI amortization expense 1,761 511 645
Less CDI amortization expense tax adjustment   (610 )   (167 )   (245 )
Net income for average tangible common equity $ 15,327   $ 9,865   $ 10,769  
 
Average stockholders' equity $ 948,200 $ 469,432 $ 436,612
Less average CDI 36,445 9,274 10,876
Less average goodwill   370,564     102,490     101,923  
Average tangible common equity $ 541,191   $ 357,668   $ 323,813  
 
Return on average equity 5.98 % 8.11 % 9.50 %
Return on average tangible common equity 11.33 % 11.03 % 13.30 %
 

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,
  2017     2017     2016     2016     2016  
Total stockholders' equity $ 959,731 $ 471,025 $ 459,740 $ 449,965 $ 440,630
Less intangible assets   (405,869 )   (111,432 )   (111,941 )   (111,915 )   (112,439 )
Tangible common equity $ 553,862   $ 359,593   $ 347,799   $ 338,050   $ 328,191  
 
Book value per share $ 23.96 $ 16.88 $ 16.54 $ 16.27 $ 15.94
Less intangible book value per share   (10.13 )   (4.00 )   (4.03 )   (4.05 )   (4.07 )
Tangible book value per share $ 13.83   $ 12.88   $ 12.51   $ 12.22   $ 11.87  
 
Total assets $ 6,440,631 $ 4,174,428 $ 4,036,311 $ 3,754,831 $ 3,597,666
Less intangible assets   (405,869 )   (111,432 )   (111,941 )   (111,915 )   (112,439 )
Tangible assets $ 6,034,762   $ 4,062,996   $ 3,924,370   $ 3,642,916   $ 3,485,227  
 
Tangible common equity ratio 9.18 % 8.85 % 8.86 % 9.28 % 9.42 %
 

Contacts

Pacific Premier Bancorp, Inc.
Steven R. Gardner
Chairman, President and Chief Executive Officer
949.864.8000
or
Ronald J. Nicolas, Jr.
Senior Executive Vice President & CFO
949.864.8000

Release Summary

Pacific Premier Bancorp, Inc. Announces Second Quarter 2017 Results (Unaudited)

Contacts

Pacific Premier Bancorp, Inc.
Steven R. Gardner
Chairman, President and Chief Executive Officer
949.864.8000
or
Ronald J. Nicolas, Jr.
Senior Executive Vice President & CFO
949.864.8000