Pacific Premier Bancorp, Inc. Announces Third Quarter 2019 Results (Unaudited) and a Quarterly Cash Dividend of $0.22 Per Share

Third Quarter 2019 Summary

  • Net income of $41.4 million, or $0.69 per diluted share
  • Return on average assets of 1.44%, return on average equity of 8.32% and return on average tangible common equity of 16.27%
  • Net interest margin increased to 4.36%, core net interest margin increased to 4.12%
  • 12% annualized growth for non-maturity deposits, or $214.3 million, since June 30, 2019
  • Noninterest bearing deposits increased to 41% of total deposits, compared to 39% in the prior quarter
  • Nonperforming assets as a percentage of total assets of 0.07%
  • Completed $100 million share repurchase program authorized in October 2018

IRVINE, Calif.--()--Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company”), the holding company of Pacific Premier Bank (the “Bank”), reported net income of $41.4 million, or $0.69 per diluted share for the third quarter of 2019, compared with net income of $38.5 million, or $0.62 per diluted share, for the second quarter of 2019 and net income of $28.4 million, or $0.46 per diluted share, for the third quarter of 2018.

For the three months ended September 30, 2019, the Company’s return on average assets (“ROAA”) was 1.44%, return on average equity (“ROAE”) was 8.32% and return on average tangible common equity (“ROATCE”) was 16.27%, compared to 1.33%, 7.71% and 15.16%, respectively, for the second quarter of 2019 and 1.00%, 5.95% and 12.89%, respectively, for the third quarter of 2018. Total assets were $11.8 billion at September 30, 2019 compared with $11.8 billion at June 30, 2019 and $11.5 billion at September 30, 2018. A reconciliation of the non–U.S. GAAP measure of ROATCE to the U.S. GAAP measure of common stockholders' equity is set forth at the end of this press release.

Steven R. Gardner, Chairman, President and Chief Executive Officer of the Company, commented, “Our third quarter results reflect successful execution on the strategies we are employing to manage risk and enhance franchise value in the current environment of economic uncertainty and slowing growth. During the third quarter, we were able to effectively manage our cost of funds, protect our net interest margin, and realize a high level of efficiencies.

“Our performance continues to produce a superior level of risk-adjusted profitability, as we generated an ROAA of 1.44% and an ROATCE of 16.27% in the third quarter of 2019. Our strong profitability enabled us to return approximately $140 million of capital to our shareholders during the first nine months of the year through our quarterly dividend and stock repurchase program.

“Our focus on core deposit gathering continues to produce positive results. During the third quarter, our noninterest-bearing and money market deposits increased by $233.2 million, which enabled us to reduce higher cost funding, improved our overall deposit mix and helped drive a six basis point reduction in our cost of funds.

“While the markets in our geographic footprint remain healthy, we continue to be disciplined in our approach to loan production given the length of the economic expansion and our commitment to maintaining our conservative underwriting and pricing criteria. In the current environment, our focus will be on enhancing our franchise value through further improving our deposit mix, maintaining disciplined expense control and efficiently managing our capital,” said Mr. Gardner.

FINANCIAL HIGHLIGHTS

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

September 30,

 

 

2019

 

2019

 

2018

Financial Highlights

 

(dollars in thousands, except per share data)

Net income

 

$

41,375

 

 

$

38,527

 

 

$

28,392

 

Diluted earnings per share

 

0.69

 

 

0.62

 

 

0.46

 

Return on average assets

 

1.44

%

 

1.33

%

 

1.00

%

Return on average equity

 

8.32

 

 

7.71

 

 

5.95

 

Return on average tangible common equity (1)

 

16.27

 

 

15.16

 

 

12.89

 

Net interest margin

 

4.36

 

 

4.28

 

 

4.38

 

Core net interest margin (1)

 

4.12

 

 

4.08

 

 

4.19

 

Cost of deposits

 

0.71

 

 

0.73

 

 

0.54

 

Efficiency ratio (2)

 

50.9

 

 

51.1

 

 

53.5

 

Total assets

 

$

11,811,497

 

 

$

11,783,781

 

 

$

11,503,881

 

Total deposits

 

8,859,288

 

 

8,861,922

 

 

8,502,145

 

Non-maturity deposits as a percent of total deposits

 

85

%

 

82

%

 

85

%

Book value per share

 

$

33.50

 

 

$

32.80

 

 

$

30.68

 

Tangible book value per share (1)

 

18.41

 

 

17.92

 

 

16.06

 

Total risk-based capital ratio

 

13.40

%

 

13.54

%

 

12.05

%

(1) A reconciliation of the non-U.S. GAAP measures of average tangible common equity, core net interest margin and tangible book value per share to the U.S. 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 credit losses and total noninterest income, less gains/(loss) on sale of securities, other-than-temporary impairment recovery/(loss) on investment securities, gain/(loss) from other real estate owned and gain/(loss) from debt extinguishment.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income and Net Interest Margin

Net interest income totaled $112.3 million in the third quarter of 2019, an increase of $1.7 million, or 1.5%, from the second quarter of 2019. The increase in net interest income reflected one more day of interest, higher accretion and loan-related fees as well as lower cost of funds driven primarily by lower average balances of Federal Home Loan Bank of San Francisco (“FHLB”) advances and rates, partially offset by lower interest-earning asset yields and average balances.

The net interest margin for the third quarter of 2019 was 4.36%, compared with 4.28% in the prior quarter. The increase was primarily driven by higher accretion income of $6.0 million compared to $5.0 million in the prior quarter. Our core net interest margin, which excludes the impact of accretion, increased four basis points to 4.12%, compared to 4.08% in the prior quarter. The increase in our core net interest margin was primarily attributable to higher loan-related fees and lower cost of funds.

We anticipate our core net interest margin will be in the range of 4.00% to 4.10% in the fourth quarter of 2019.

Net interest income for the third quarter of 2019 decreased $378,000, or 0.3%, compared to the third quarter of 2018. The decrease was primarily related to an increase in our cost of funds since the end of the third quarter of 2018, partially offset by an increase in average interest-earning asset balances, which resulted primarily from investment securities purchases and organic loan growth since the end of the third quarter of 2018.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED AVERAGE BALANCES AND YIELD DATA

 

 

 

 

 

Three Months Ended

 

 

September 30, 2019

 

June 30, 2019

 

September 30, 2018

 

 

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

 

$

188,693

 

 

$

403

 

 

0.85

%

 

$

187,963

 

 

$

435

 

 

0.93

%

 

$

339,064

 

 

$

898

 

 

1.05

%

Investment securities

 

1,311,649

 

 

9,227

 

 

2.81

 

 

1,396,585

 

 

10,119

 

 

2.90

 

 

1,198,362

 

 

8,707

 

 

2.91

 

Loans receivable, net (1) (2)

 

8,728,536

 

 

122,974

 

 

5.59

 

 

8,779,440

 

 

121,860

 

 

5.57

 

 

8,664,796

 

 

119,271

 

 

5.46

 

Total interest-earning assets

 

$

10,228,878

 

 

$

132,604

 

 

5.14

 

 

$

10,363,988

 

 

$

132,414

 

 

5.12

 

 

$

10,202,222

 

 

$

128,876

 

 

5.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

5,343,043

 

 

$

15,878

 

 

1.18

 

 

$

5,345,388

 

 

$

15,991

 

 

1.20

 

 

$

5,316,195

 

 

$

11,942

 

 

0.89

 

Borrowings

 

436,979

 

 

4,391

 

 

3.99

 

 

675,345

 

 

5,782

 

 

3.43

 

 

583,400

 

 

4,221

 

 

2.87

 

Total interest-bearing liabilities

 

$

5,780,022

 

 

$

20,269

 

 

1.39

 

 

$

6,020,733

 

 

$

21,773

 

 

1.45

 

 

$

5,899,595

 

 

$

16,163

 

 

1.09

 

 

Noninterest-bearing deposits

 

$

3,533,797

 

 

 

 

 

 

$

3,426,508

 

 

 

 

 

 

$

3,473,056

 

 

 

 

 

Net interest income

 

 

 

$

112,335

 

 

 

 

 

 

$

110,641

 

 

 

 

 

 

$

112,713

 

 

 

Net interest margin (3)

 

 

 

 

 

4.36

 

 

 

 

 

 

4.28

 

 

 

 

 

 

4.38

 

Cost of deposits

 

 

 

 

 

0.71

 

 

 

 

 

 

0.73

 

 

 

 

 

 

0.54

 

Cost of funds (4)

 

 

 

 

 

0.86

 

 

 

 

 

 

0.92

 

 

 

 

 

 

0.68

 

(1) Average balance includes loans held for sale and nonperforming loans and is net of deferred loan origination fees/costs and discounts/premiums.

(2) Interest income includes net discount accretion of $6.0 million, $5.0 million and $4.1 million, respectively.

(3) Represents annualized net interest income divided by average interest-earning assets.

(4) Represents annualized total interest expense divided by the sum of average total interest-bearing liabilities and noninterest-bearing deposits.

Provision for Credit Losses

Provision for credit losses for the third quarter of 2019 was $1.6 million, an increase of $1.2 million from the second quarter of 2019. The increase was primarily due to the replenishment of $1.4 million of net charge-offs in the third quarter, compared to $360,000 replenishment in the second quarter. Additionally, the provision for unfunded commitments was $197,000 compared with a reduction of $408,000 in the prior quarter. Provision for credit losses for the third quarter of 2019 decreased $419,000 compared to the third quarter of 2018 primarily driven by lower loan balances and commitments, and continued strength in asset quality.

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

September 30,

 

 

2019

 

2019

 

2018

Provision for Credit Losses

 

(dollars in thousands)

Provision for loan losses

 

$

1,365

 

 

$

742

 

 

$

1,646

 

Provision for unfunded commitments

 

197

 

 

(408

)

 

335

 

Total provision for credit losses

 

$

1,562

 

 

$

334

 

 

$

1,981

 

Noninterest Income

Noninterest income for the third quarter of 2019 was $11.4 million, an increase of $5.1 million, or 80.7%, from the second quarter of 2019. The increase was primarily due to a $4.0 million increase in net gain from sales of investment securities and a $1.4 million increase in net gain from the sales of loans, partially offset by a $724,000 decrease in debit card interchange fee income. The decrease in debit card interchange fee income was the result of the Bank becoming a non-exempt institution, effective July 1, 2019, under the Durbin Amendment that regulates debit card interchange fee income.

During the third quarter of 2019, the Bank sold $26.3 million of Small Business Administration (“SBA”) loans for a net gain of $2.3 million, compared with the sale of $24.4 million of SBA loans for a net gain of $2.2 million during the prior quarter. The current quarter also included the sale of $684,000 of non-SBA loans for a net gain of $8,000 compared with sales of $82.5 million of non-SBA loans for a net loss of $1.3 million during the prior quarter.

We anticipate our noninterest income will range from $6.5 million to $7.0 million for the fourth quarter of 2019 based upon current SBA loan sale gain rates and normal, recurring business activities.

Noninterest income for the third quarter of 2019 increased $3.2 million, or 38.7%, compared to the third quarter of 2018. The increase was primarily related to a $3.2 million increase in net gain from sales of investment securities as well as a $698,000 increase in other income, partially offset by a $640,000 decrease in debit card interchange fee income and a $409,000 decrease in earnings on bank-owned life insurance (“BOLI”), primarily the result of a death benefit received in the third quarter of 2018.

The increase in net gain from sales of loans for the third quarter of 2019 compared to the same period last year was primarily due to a higher premium on SBA loans sales of 109%, compared with 107% in the third quarter of 2018. The Bank sold $29.9 million of SBA loans for a net gain of $2.0 million during the third quarter of 2018.

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

September 30,

 

 

2019

 

2019

 

2018

Noninterest Income

 

(dollars in thousands)

Loan servicing fees

 

$

546

 

 

$

409

 

 

$

400

 

Service charges on deposit accounts

 

1,440

 

 

1,441

 

 

1,570

 

Other service fee income

 

360

 

 

363

 

 

317

 

Debit card interchange fee income

 

421

 

 

1,145

 

 

1,061

 

Earnings on BOLI

 

861

 

 

851

 

 

1,270

 

Net gain from sales of loans

 

2,313

 

 

902

 

 

2,029

 

Net gain from sales of investment securities

 

4,261

 

 

212

 

 

1,063

 

Other income

 

1,228

 

 

1,001

 

 

530

 

Total noninterest income

 

$

11,430

 

 

$

6,324

 

 

$

8,240

 

Noninterest Expense

Noninterest expense totaled $65.3 million for the third quarter of 2019, an increase of $1.4 million, or 2.2%, compared to the second quarter of 2019. The increase was driven by a $1.7 million increase in compensation primarily as a result of higher incentive and benefits expense and, to a lesser extent, a $641,000 increase in other expense. These increases were partially offset by a $750,000 decline in FDIC insurance premiums due to small institution assessment credits and a $487,000 decline in legal, audit and professional expense.

The Company anticipates that total operating expense will range from $65.0 million to $66.0 million for the fourth quarter of 2019.

Noninterest expense decreased by $17.4 million, or 21.1%, compared to the third quarter of 2018. The decrease was primarily related to a reduction in merger-related expense and additional cost savings from personnel and operations from the acquisition of Grandpoint Capital, Inc. (“Grandpoint”), partially offset by our continued investment to support our organic growth.

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

September 30,

 

 

2019

 

2019

 

2018

Noninterest Expense

 

(dollars in thousands)

Compensation and benefits

 

$

35,543

 

 

$

33,847

 

 

$

37,901

 

Premises and occupancy

 

7,593

 

 

7,517

 

 

7,214

 

Data processing

 

3,094

 

 

3,036

 

 

4,095

 

Other real estate owned operations, net

 

64

 

 

62

 

 

 

FDIC insurance premiums

 

(10

)

 

740

 

 

1,060

 

Legal, audit and professional expense

 

3,058

 

 

3,545

 

 

3,280

 

Marketing expense

 

1,767

 

 

1,425

 

 

1,569

 

Office, telecommunications and postage expense

 

1,200

 

 

1,311

 

 

1,538

 

Loan expense

 

1,137

 

 

1,005

 

 

1,139

 

Deposit expense

 

3,478

 

 

3,668

 

 

2,833

 

Merger-related expense

 

(4

)

 

5

 

 

13,978

 

CDI amortization

 

4,281

 

 

4,281

 

 

4,693

 

Other expense

 

4,135

 

 

3,494

 

 

3,482

 

Total noninterest expense

 

$

65,336

 

 

$

63,936

 

 

$

82,782

 

Income Tax

For the third quarter of 2019, our effective tax rate was 27.2%, compared with 26.9% for the second quarter of 2019 and 21.5% for the third quarter of 2018. The increase in the effective tax rate from the third quarter of 2018 was the result of a $2.3 million one-time benefit associated with the filing of the 2017 federal and state tax returns, and the remeasurement of deferred tax items realized in the third quarter of 2018.

The Company expects our 2019 annual effective tax rate to be in the range of 27% to 28%.

BALANCE SHEET HIGHLIGHTS

Loans

Loans held for investment totaled $8.76 billion at September 30, 2019, a decrease of $14.5 million, or 0.2%, from June 30, 2019, and a decrease of $1.7 million, or 0.02%, from September 30, 2018. The decreases were primarily driven by higher loan prepayments and payoffs, as well as lower line utilization and fundings when compared to the prior quarter, partially offset by lower loan sales and higher loan purchases. Loan sales during the third quarter of 2019 included $26.3 million of SBA loans and $684,000 of non-SBA loans, compared with $24.4 million of SBA loans and $82.5 million of non-SBA loans sold in the second quarter of 2019.

During the third quarter of 2019, the Bank generated $536.9 million of new loan commitments and $356.6 million of new loan fundings, compared with $568.2 million in new loan commitments and $394.8 million in new loan fundings for the second quarter of 2019, and $604.8 million in new loan commitments and $439.8 million in new loan fundings for the third quarter of 2018.

At September 30, 2019, the ratio of loans held for investment to total deposits was 98.9%, compared with 99.0% and 103.0% at June 30, 2019 and September 30, 2018, respectively.

The following table presents the composition of the loan portfolio for the period indicated:

 

 

September 30,

 

June 30,

 

September 30,

 

 

2019

 

2019

 

2018

 

 

(dollars in thousands)

Business loans:

 

 

 

 

 

 

Commercial and industrial

 

$

1,233,938

 

 

$

1,300,083

 

 

$

1,359,841

 

Franchise

 

894,023

 

 

860,299

 

 

735,366

 

Commercial owner occupied

 

1,678,888

 

 

1,667,912

 

 

1,675,528

 

SBA

 

179,965

 

 

180,363

 

 

193,487

 

Agribusiness

 

119,633

 

 

126,857

 

 

133,241

 

Total business loans

 

4,106,447

 

 

4,135,514

 

 

4,097,463

 

Real estate loans:

 

 

 

 

 

 

Commercial non-owner occupied

 

2,053,590

 

 

2,121,312

 

 

1,931,165

 

Multi-family

 

1,611,904

 

 

1,520,135

 

 

1,554,692

 

One-to-four family

 

273,182

 

 

248,392

 

 

376,617

 

Construction

 

478,961

 

 

505,401

 

 

504,708

 

Farmland

 

171,667

 

 

169,724

 

 

138,479

 

Land

 

30,717

 

 

40,748

 

 

49,992

 

Total real estate loans

 

4,620,021

 

 

4,605,712

 

 

4,555,653

 

Consumer loans:

 

 

 

 

 

 

Consumer loans

 

40,548

 

 

40,680

 

 

114,736

 

Gross loans held for investment

 

8,767,016

 

 

8,781,906

 

 

8,767,852

 

Deferred loan origination costs/(fees) and premiums/(discounts), net

 

(9,540

)

 

(9,968

)

 

(8,648

)

Loans held for investment

 

8,757,476

 

 

8,771,938

 

 

8,759,204

 

Allowance for loan losses

 

(35,000

)

 

(35,026

)

 

(33,306

)

Loans held for investment, net

 

$

8,722,476

 

 

$

8,736,912

 

 

$

8,725,898

 

Loans held for sale, at lower of cost or fair value

 

$

7,092

 

 

$

8,529

 

 

$

52,880

 

The total end-of-period weighted average interest rate on loans, excluding fees and discounts, at September 30, 2019 was 5.00%, compared to 5.11% at June 30, 2019 and 5.08% at September 30, 2018.

The following table presents the composition of the organic loan commitments originated during the period indicated:

 

September 30,

 

June 30,

 

September 30,

 

2019

 

2019

 

2018

 

(dollars in thousands)

Business loans:

 

 

 

 

 

Commercial and industrial

$

130,494

 

 

$

149,766

 

 

$

133,938

 

Franchise

91,018

 

 

92,966

 

 

60,179

 

Commercial owner occupied

64,080

 

 

67,191

 

 

123,785

 

SBA

35,516

 

 

28,023

 

 

38,103

 

Agribusiness

6,241

 

 

9,859

 

 

9,016

 

Total business loans

327,349

 

 

347,805

 

 

365,021

 

Real estate loans:

 

 

 

 

 

Commercial non-owner occupied

90,464

 

 

101,956

 

 

97,585

 

Multi-family

41,289

 

 

35,061

 

 

70,683

 

One-to-four family

6,110

 

 

3,140

 

 

18,056

 

Construction

59,639

 

 

64,059

 

 

50,182

 

Farmland

9,350

 

 

13,044

 

 

 

Land

1,285

 

 

1,625

 

 

1,175

 

Total real estate loans

208,137

 

 

218,885

 

 

237,681

 

Consumer loans:

 

 

 

 

 

Consumer loans

1,463

 

 

1,551

 

 

2,080

 

Total loan commitments

$

536,949

 

 

$

568,241

 

 

$

604,782

 

The weighted average interest rate on new loan production was 5.28% in the third quarter of 2019 compared with 5.42% in the second quarter of 2019 and 5.21% in the third quarter of 2018. During the third quarter of 2019, the Bank also purchased $94.9 million of multi-family loans at a weighted average interest rate of 4.27% and $35.5 million of commercial non-owner occupied loans at a weighted average interest rate of 4.52%.

Asset Quality and Allowance for Loan Losses

At September 30, 2019, our allowance for loan losses was $35.0 million, a decrease of $26,000, or 0.1%, from June 30, 2019 and an increase of $1.7 million, or 5.1%, from September 30, 2018. The provision for loan losses for the third quarter of 2019 was $1.4 million, compared to $742,000 and $1.6 million, for the second quarter of 2019 and the third quarter of 2018, respectively. During the third quarter of 2019, the Company incurred $1.4 million of net charge-offs, compared to $3.6 million and $87,000, at June 30, 2019 and September 30, 2018, respectively.

The ratio of allowance for loan losses to loans held for investment at September 30, 2019 amounted to 0.40%, compared to 0.40% and 0.38%, at June 30, 2019 and September 30, 2018, respectively. Under the guidance of ASC 820: Fair Value Measurements and Disclosures, the fair value net discount on loans acquired through total bank acquisitions was $46.8 million, or 0.53% of total loans held for investment as of September 30, 2019, compared to $52.0 million, or 0.59% of total loans held for investment as of June 30, 2019, and $71.7 million, or 0.82% of total loans held for investment as of September 30, 2018.

Nonperforming assets totaled $8.2 million, or 0.07% of total assets, at September 30, 2019, an increase of $559,000 from June 30, 2019 and an increase of $478,000 from September 30, 2018. During the third quarter of 2019, nonperforming loans increased $468,000 to $8.1 million and other real estate owned increased $91,000 to $126,000. Total loan delinquencies were $11.2 million, or 0.13% of loans held for investment, at September 30, 2019, compared to $13.5 million, or 0.15% of loans held for investment, at June 30, 2019, and $7.7 million, or 0.09% of loans held for investment, at September 30, 2018.

 

 

September 30,

 

June 30,

 

September 30,

 

 

2019

 

2019

 

2018

Asset Quality

 

(dollars in thousands)

Nonperforming loans

 

$

8,105

 

 

$

7,637

 

 

$

7,268

 

Other real estate owned

 

126

 

 

35

 

 

356

 

Other assets owned

 

 

 

 

 

129

 

Nonperforming assets

 

$

8,231

 

 

$

7,672

 

 

$

7,753

 

 

 

 

 

 

 

 

Allowance for loan losses

 

$

35,000

 

 

$

35,026

 

 

$

33,306

 

Allowance for loan losses as a percent of total nonperforming loans

 

432

%

 

459

%

 

458

%

Nonperforming loans as a percent of loans held for investment

 

0.09

 

 

0.09

 

 

0.08

 

Nonperforming assets as a percent of total assets

 

0.07

 

 

0.07

 

 

0.07

 

Net loan charge-offs/(recoveries) for the quarter ended

 

$

1,391

 

 

$

3,572

 

 

$

87

 

Net loan charge-offs for quarter to average total loans (1)

 

0.02

%

 

0.04

%

 

%

Allowance for loan losses to loans held for investment (2)

 

0.40

 

 

0.40

 

 

0.38

 

Delinquent Loans

 

 

 

 

 

 

30 - 59 days

 

$

1,725

 

 

$

3,416

 

 

$

1,977

 

60 - 89 days

 

3,212

 

 

801

 

 

720

 

90+ days

 

6,293

 

 

9,261

 

 

5,048

 

Total delinquency

 

$

11,230

 

 

$

13,478

 

 

$

7,745

 

Delinquency as a percentage of loans held for investment

 

0.13

%

 

0.15

%

 

0.09

%

(1) The ratio is less than 0.01% as of September 30, 2018.

(2) At September 30, 2019, 41% of loans held for investment include a fair value net discount of $46.8 million or 0.53% of loans held for investment. At June 30, 2019, 44% of loans held for investment include a fair value net discount of $52.0 million, or 0.59% of loans held for investment. At September 30, 2018, 53% of loans held for investment include a fair value net discount of $71.7 million or 0.82% of loans held for investment.

Investment Securities

Investments securities totaled $1.30 billion at September 30, 2019, a decrease of $4.3 million, or 0.3%, from June 30, 2019, and an increase of $195.8 million, or 17.8%, from September 30, 2018. The small decrease in the third quarter of 2019 compared to the prior quarter was primarily the result of $187.1 million in sales and $33.3 million in principal payments, amortization and redemptions, offset by $205.1 million in purchases and an $11.0 million increase in mark-to-market fair value adjustment. The increase compared to the same period last year was primarily the result of $667.3 million in purchases and a $66.1 million increase in mark-to-market fair value adjustment, partially offset by $413.6 million in sales and $124.0 million in principal payments, amortization and redemptions.

Deposits

At September 30, 2019, deposits totaled $8.86 billion, a decrease of $2.6 million, or 0.03%, from June 30, 2019 and an increase of $357.1 million, or 4.2%, from September 30, 2018. At September 30, 2019, non-maturity deposits totaled $7.52 billion, or 85% of total deposits, an increase of $214.3 million, or 2.9%, from June 30, 2019 and an increase of $323.7 million, or 4.5%, from September 30, 2018. During the third quarter of 2019, deposit decreases included $171.1 million in brokered certificates of deposit, $45.8 million in retail certificates of deposits and $18.9 million in interest checking, offset by increases of $143.2 million in noninterest-bearing deposits and $89.9 million in money market/savings deposits, as compared to the second quarter of 2019.

The weighted average cost of deposits for the three-month period ending September 30, 2019 was 0.71%, compared to 0.73% for the three-month period ending June 30, 2019, and 0.54% for the three-month period ending September 30, 2018. The decrease in the weighted average cost of deposits in the third quarter of 2019 compared to the prior quarter was primarily driven by lower volume in brokered certificates of deposits as well as higher average noninterest-bearing and money market deposit balances.

 

 

September 30,

 

June 30,

 

September 30,

 

 

2019

 

2019

 

2018

Deposit Accounts

 

(dollars in thousands)

Noninterest-bearing checking

 

$

3,623,546

 

 

$

3,480,312

 

 

$

3,434,674

 

Interest-bearing:

 

 

 

 

 

 

Checking

 

529,401

 

 

548,314

 

 

495,483

 

Money market/savings

 

3,362,453

 

 

3,272,511

 

 

3,261,544

 

Retail certificates of deposit

 

1,019,433

 

 

1,065,207

 

 

1,045,334

 

Wholesale/brokered certificates of deposit

 

324,455

 

 

495,578

 

 

265,110

 

Total interest-bearing

 

5,235,742

 

 

5,381,610

 

 

5,067,471

 

Total deposits

 

$

8,859,288

 

 

$

8,861,922

 

 

$

8,502,145

 

 

 

 

 

 

 

 

Cost of deposits

 

0.71

%

 

0.73

%

 

0.54

%

Noninterest-bearing deposits as a percentage of total deposits

 

41

%

 

39

%

 

40

%

Non-maturity deposits as a percent of total deposits

 

85

%

 

82

%

 

85

%

Core deposits as a percent of total deposits (1)

 

91

%

 

89

%

 

91

%

(1) Core deposits are all transaction accounts and non-brokered certificates of deposit less than $250,000.

Borrowings

At September 30, 2019, total borrowings amounted to $822.4 million, an increase of $17.9 million, or 2.2%, from June 30, 2019 and a decrease of $149.8 million, or 15.4%, from September 30, 2018. Total borrowings at September 30, 2019 included $604.6 million of FHLB advances and $217.8 million of subordinated debt. In May 2019, the Company issued $125.0 million aggregate principal amount of its 4.875% Fixed-to-Floating Rate Subordinated Notes (the “Notes”) due May 15, 2029. At September 30, 2019, total borrowings represented 7.0% of total assets, compared to 6.8% and 8.5%, as of June 30, 2019 and September 30, 2018, respectively.

On July 8, 2019, the Company used partial proceeds from the issuance of the Notes in May 2019 to redeem all $10.3 million principal amount of Junior Subordinated Deferrable Interest Debentures (the “Subordinated Debentures”) due 2034 issued by PPBI Trust I, a statutory business trust created under the laws of the State of Delaware. Prior to redemption, the Subordinated Debentures carried an interest rate of three-month LIBOR plus 2.75% per annum, for an effective rate of 5.35% per annum, and were scheduled to mature on April 6, 2034. The Subordinated Debentures were called at par, plus accrued and unpaid interest, for an aggregate amount of $10.4 million.

On September 17, 2019, the Company used partial proceeds from the issuance of the Notes in May 2019 to redeem all $5.2 million outstanding principal amount of floating rate junior subordinated debt securities associated with First Commerce Bancorp Statutory Trust I, a statutory business trust created under the laws of the State of Connecticut, acquired as part of the Grandpoint acquisition. Prior to redemption, the junior subordinated debt securities carried an interest rate of three-month LIBOR plus 2.95% per annum, for an effective rate of 5.36% per annum, and were scheduled to mature on September 17, 2033. The junior subordinated debt securities were called at par, plus accrued and unpaid interest, for an aggregate amount of $5.2 million.

On October 7, 2019, the Company used partial proceeds from the issuance of the Notes in May 2019 to redeem all $3.1 million outstanding principal amount of floating rate junior subordinated debt securities associated with Mission Community Capital Trust I, a statutory business trust created under the laws of the State of Delaware, acquired as part of the Heritage Oaks Bancorp acquisition. The junior subordinated debt securities carried an interest rate of three-month LIBOR plus 2.95% per annum, for an effective rate of 5.25% per annum, as of September 30, 2019 and were scheduled to mature on October 7, 2033. The junior subordinated debt securities were called at par, plus accrued and unpaid interest, for an aggregate amount of $3.1 million.

Capital Ratios

At September 30, 2019, our ratio of tangible common equity to total assets was 10.01%, compared with 9.96% at June 30, 2019 and 9.47% at September 30, 2018, with a tangible book value per share of $18.41, compared with $17.92 at June 30, 2019 and $16.06 at September 30, 2018.

At September 30, 2019, the Company had a tier 1 leverage ratio of 10.34%, common equity tier 1 capital ratio of 10.93%, tier 1 capital ratio of 11.04% and total capital ratio of 13.40%.

At September 30, 2019, the Bank exceeded all regulatory capital requirements with a tier 1 leverage ratio of 12.20%, common equity tier 1 capital ratio of 13.01%, tier 1 capital ratio of 13.01% and total capital ratio of 13.41%. These capital ratios each exceeded the “well capitalized” standards defined by the federal banking regulators of 5.00% for tier 1 leverage ratio, 6.5% for common equity tier 1 capital ratio, 8.00% for tier 1 capital ratio and 10.00% for total capital ratio and exceeded the minimum common equity Tier 1, Tier 1 and total capital ratio inclusive of the fully phased-in capital conservation buffer for 7.0%, 8.5% and 10.5%, respectively.

 

 

September 30,

 

June 30,

 

September 30,

Capital Ratios

 

2019

 

2019

 

2018

Pacific Premier Bancorp, Inc. Consolidated

 

 

 

 

 

 

Tier 1 leverage ratio

 

10.34

%

 

10.32

%

 

10.15

%

Common equity tier 1 capital ratio

 

10.93

 

 

10.82

 

 

10.55

 

Tier 1 capital ratio

 

11.04

 

 

11.07

 

 

10.81

 

Total capital ratio

 

13.40

 

 

13.54

 

 

12.05

 

Tangible common equity ratio (1)

 

10.01

 

 

9.96

 

 

9.47

 

 

 

 

 

 

 

 

Pacific Premier Bank

 

 

Tier 1 leverage ratio

 

12.20

%

 

11.66

%

 

10.83

%

Common equity tier 1 capital ratio

 

13.01

 

 

12.51

 

 

11.53

 

Tier 1 capital ratio

 

13.01

 

 

12.51

 

 

11.53

 

Total capital ratio

 

13.41

 

 

12.90

 

 

11.92

 

 

 

 

 

 

 

 

Share Data

 

 

 

 

 

 

Book value per share

 

$

33.50

 

 

$

32.80

 

 

$

30.68

 

Tangible book value per share (1)

 

18.41

 

 

17.92

 

 

16.06

 

Dividend per share

 

0.22

 

 

0.22

 

 

 

Closing stock price (2)

 

31.19

 

 

30.88

 

 

37.20

 

Shares issued and outstanding

 

59,364,340

 

 

60,509,994

 

 

62,472,721

 

Market capitalization (2)(3)

 

$

1,851,574

 

 

$

1,868,549

 

 

$

2,323,985

 

(1) A reconciliation of the non-U.S. GAAP measures of tangible common equity and tangible book value per share to the U.S. GAAP measures of common stockholders' equity and book value per share is set forth below.

(2) As of the last trading day prior to period end.

(3) Dollars in thousands.

Dividend and Stock Repurchase Program

On October 18, 2019, the Company's Board of Directors declared a $0.22 per share dividend, payable on November 15, 2019 to stockholders of record as of November 1, 2019. During the third quarter of 2019, the Company repurchased 1,145,515 shares of common stock at an average price of $29.68 per share with a total market value of $34.0 million under its stock repurchase program. The total number of common stock shares repurchased during the second and third quarter of 2019 under the program was 3,364,761 shares for a total of $100 million, or $29.69 per share, the maximum dollar value of shares approved by the Board of Directors. The Company's third stock repurchase program has been completed.

Conference Call and Webcast

The Company will host a conference call at 9:00 a.m. PT / 12:00 p.m. ET on October 22, 2019 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 October 29, 2019 at (877) 344-7529, conference ID 10135275.

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 $11.8 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, as well as markets in the states of Arizona, Nevada and Washington. Through its more than 40 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, plans, strategies and goals, and statements about the Company’s expectations regarding revenue and asset growth, financial performance and profitability, loan and deposit growth, yields and returns, loan diversification and credit management, stockholder value creation, tax rates and the impact of the acquisition of Grandpoint and other 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/deflation, interest rate, market and monetary fluctuations; the effect of acquisitions we may make, including, without limitation, the failure to achieve the expected revenue growth and/or expense savings from such acquisitions, and/or the failure to effectively integrate an acquisition target into our operations; the timely development of competitive new products and services and the acceptance of these products and services by new and existing customers; the impact of changes in financial services policies, laws and regulations, including those concerning taxes, banking, securities and insurance, and the application thereof by regulatory bodies; the effectiveness of our risk management framework and quantitative models; changes in the level of our nonperforming assets and charge-offs; uncertainty regarding the future of LIBOR; the effect of changes in accounting policies and practices or accounting standards, as may be adopted from time-to-time by bank regulatory agencies, the U.S. Securities and Exchange Commission (“SEC”), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters, including ASU 2016-13 (Topic 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the Current Expected Credit Loss (“CECL”) model, which will change how we estimate credit losses and may increase the required level of our allowance for credit losses after adoption on January 1, 2020; possible other-than-temporary impairments of securities held by us; the impact of current governmental efforts to restructure the U.S. financial regulatory system, including any amendments to the Dodd-Frank Wall Street Reform and Consumer Protection Act; changes in consumer spending, borrowing and savings habits; the effects of our lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; our ability to attract deposits and other sources of liquidity; the possibility that we may reduce or discontinue the payments of dividends on common stock; 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; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism and/or military conflicts, which could impact business and economic conditions in the United States and abroad; cybersecurity threats and the cost of defending against them, including the costs of compliance with potential legislation to combat cybersecurity at a state, national or global level; unanticipated regulatory or legal proceedings; and our 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 2018 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 undertakes no obligation to revise or publicly release any revision or update to these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(dollars in thousands)

(Unaudited)

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

ASSETS

 

2019

 

2019

 

2019

 

2018

 

2018

Cash and due from banks

 

$

166,238

 

 

$

139,879

 

 

$

122,947

 

 

$

125,036

 

 

$

151,983

 

Interest-bearing deposits with financial institutions

 

261,477

 

 

235,505

 

 

55,435

 

 

78,370

 

 

111,229

 

Cash and cash equivalents

 

427,715

 

 

375,384

 

 

178,382

 

 

203,406

 

 

263,212

 

Interest-bearing time deposits with financial institutions

 

2,711

 

 

2,956

 

 

5,896

 

 

6,143

 

 

6,386

 

Investments held-to-maturity, at amortized cost

 

40,433

 

 

42,997

 

 

43,894

 

 

45,210

 

 

46,385

 

Investment securities available-for-sale, at fair value

 

1,256,655

 

 

1,258,379

 

 

1,171,410

 

 

1,103,222

 

 

1,054,877

 

FHLB, FRB and other stock, at cost

 

92,986

 

 

92,841

 

 

94,751

 

 

94,918

 

 

98,779

 

Loans held for sale, at lower of cost or fair value

 

7,092

 

 

8,529

 

 

11,671

 

 

5,719

 

 

52,880

 

Loans held for investment

 

8,757,476

 

 

8,771,938

 

 

8,865,855

 

 

8,836,818

 

 

8,759,204

 

Allowance for loan losses

 

(35,000

)

 

(35,026

)

 

(37,856

)

 

(36,072

)

 

(33,306

)

Loans held for investment, net

 

8,722,476

 

 

8,736,912

 

 

8,827,999

 

 

8,800,746

 

 

8,725,898

 

Accrued interest receivable

 

38,603

 

 

40,420

 

 

40,302

 

 

37,837

 

 

37,683

 

Other real estate owned

 

126

 

 

35

 

 

180

 

 

147

 

 

356

 

Premises and equipment

 

62,851

 

 

54,218

 

 

61,523

 

 

64,691

 

 

66,103

 

Deferred income taxes, net

 

 

 

2,266

 

 

9,275

 

 

15,627

 

 

26,848

 

Bank owned life insurance

 

112,716

 

 

112,054

 

 

111,400

 

 

110,871

 

 

110,354

 

Intangible assets

 

87,560

 

 

91,840

 

 

96,120

 

 

100,556

 

 

105,187

 

Goodwill

 

808,322

 

 

808,322

 

 

808,726

 

 

808,726

 

 

807,892

 

Other assets

 

151,251

 

 

156,628

 

 

118,966

 

 

89,568

 

 

101,041

 

Total assets

 

$

11,811,497

 

 

$

11,783,781

 

 

$

11,580,495

 

 

$

11,487,387

 

 

$

11,503,881

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

 

 

 

 

 

Deposit accounts:

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing checking

 

$

3,623,546

 

 

$

3,480,312

 

 

$

3,423,893

 

 

$

3,495,737

 

 

$

3,434,674

 

Interest-bearing:

 

 

 

 

 

 

 

 

 

 

Checking

 

529,401

 

 

548,314

 

 

560,274

 

 

526,088

 

 

495,483

 

Money market/savings

 

3,362,453

 

 

3,272,511

 

 

3,138,875

 

 

3,225,849

 

 

3,261,544

 

Retail certificates of deposit

 

1,019,433

 

 

1,065,207

 

 

1,007,559

 

 

1,009,066

 

 

1,045,334

 

Wholesale/brokered certificates of deposit

 

324,455

 

 

495,578

 

 

584,574

 

 

401,611

 

 

265,110

 

Total interest-bearing

 

5,235,742

 

 

5,381,610

 

 

5,291,282

 

 

5,162,614

 

 

5,067,471

 

Total deposits

 

8,859,288

 

 

8,861,922

 

 

8,715,175

 

 

8,658,351

 

 

8,502,145

 

FHLB advances and other borrowings

 

604,558

 

 

571,575

 

 

609,591

 

 

667,681

 

 

861,972

 

Subordinated debentures

 

217,825

 

 

232,944

 

 

110,381

 

 

110,313

 

 

110,244

 

Deferred income taxes, net

 

301

 

 

 

 

 

 

 

 

 

Accrued expenses and other liabilities

 

140,527

 

 

132,884

 

 

138,284

 

 

81,345

 

 

113,143

 

Total liabilities

 

9,822,499

 

 

9,799,325

 

 

9,573,431

 

 

9,517,690

 

 

9,587,504

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

 

 

Common stock

 

584

 

 

595

 

 

617

 

 

617

 

 

617

 

Additional paid-in capital

 

1,590,168

 

 

1,618,137

 

 

1,676,024

 

 

1,674,274

 

 

1,671,673

 

Retained earnings

 

368,051

 

 

343,366

 

 

325,363

 

 

300,407

 

 

260,764

 

Accumulated other comprehensive (loss) income

 

30,195

 

 

22,358

 

 

5,060

 

 

(5,601

)

 

(16,677

)

Total stockholders' equity

 

1,988,998

 

 

1,984,456

 

 

2,007,064

 

 

1,969,697

 

 

1,916,377

 

Total liabilities and stockholders' equity

 

$

11,811,497

 

 

$

11,783,781

 

 

$

11,580,495

 

 

$

11,487,387

 

 

$

11,503,881

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars in thousands, except per share data)

(Unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

June 30,

 

September 30,

 

September 30,

 

September 30,

 

 

2019

 

2019

 

2018

 

2019

 

2018

INTEREST INCOME

 

 

 

 

 

 

 

 

 

 

Loans

 

$

122,974

 

 

$

121,860

 

 

$

119,271

 

 

$

366,310

 

 

$

289,069

 

Investment securities and other interest-earning assets

 

9,630

 

 

10,554

 

 

9,605

 

 

29,951

 

 

23,333

 

Total interest income

 

132,604

 

 

132,414

 

 

128,876

 

 

396,261

 

 

312,402

 

INTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

Deposits

 

15,878

 

 

15,991

 

 

11,942

 

 

45,153

 

 

25,612

 

FHLB advances and other borrowings

 

1,214

 

 

3,083

 

 

2,494

 

 

9,099

 

 

6,642

 

Subordinated debentures

 

3,177

 

 

2,699

 

 

1,727

 

 

7,627

 

 

4,983

 

Total interest expense

 

20,269

 

 

21,773

 

 

16,163

 

 

61,879

 

 

37,237

 

Net interest income before provision for credit losses

 

112,335

 

 

110,641

 

 

112,713

 

 

334,382

 

 

275,165

 

Provision for credit losses

 

1,562

 

 

334

 

 

1,981

 

 

3,422

 

 

5,995

 

Net interest income after provision for credit losses

 

110,773

 

 

110,307

 

 

110,732

 

 

330,960

 

 

269,170

 

NONINTEREST INCOME

 

 

 

 

 

 

 

 

 

 

Loan servicing fees

 

546

 

 

409

 

 

400

 

 

1,353

 

 

1,037

 

Service charges on deposit accounts

 

1,440

 

 

1,441

 

 

1,570

 

 

4,211

 

 

3,777

 

Other service fee income

 

360

 

 

363

 

 

317

 

 

1,079

 

 

632

 

Debit card interchange fee income

 

421

 

 

1,145

 

 

1,061

 

 

2,637

 

 

3,187

 

Earnings on BOLI

 

861

 

 

851

 

 

1,270

 

 

2,622

 

 

2,498

 

Net gain from sales of loans

 

2,313

 

 

902

 

 

2,029

 

 

4,944

 

 

8,830

 

Net gain from sales of investment securities

 

4,261

 

 

212

 

 

1,063

 

 

4,900

 

 

1,399

 

Other income

 

1,228

 

 

1,001

 

 

530

 

 

3,689

 

 

2,697

 

Total noninterest income

 

11,430

 

 

6,324

 

 

8,240

 

 

25,435

 

 

24,057

 

NONINTEREST EXPENSE

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

35,543

 

 

33,847

 

 

37,901

 

 

102,778

 

 

96,048

 

Premises and occupancy

 

7,593

 

 

7,517

 

 

7,214

 

 

22,645

 

 

17,040

 

Data processing

 

3,094

 

 

3,036

 

 

4,095

 

 

9,060

 

 

9,544

 

Other real estate owned operations, net

 

64

 

 

62

 

 

 

 

129

 

 

3

 

FDIC insurance premiums

 

(10

)

 

740

 

 

1,060

 

 

1,530

 

 

2,252

 

Legal, audit and professional expense

 

3,058

 

 

3,545

 

 

3,280

 

 

9,601

 

 

6,935

 

Marketing expense

 

1,767

 

 

1,425

 

 

1,569

 

 

4,689

 

 

4,451

 

Office, telecommunications and postage expense

 

1,200

 

 

1,311

 

 

1,538

 

 

3,721

 

 

3,733

 

Loan expense

 

1,137

 

 

1,005

 

 

1,139

 

 

3,015

 

 

2,324

 

Deposit expense

 

3,478

 

 

3,668

 

 

2,833

 

 

10,729

 

 

6,811

 

Merger-related expense

 

(4

)

 

5

 

 

13,978

 

 

656

 

 

15,857

 

CDI amortization

 

4,281

 

 

4,281

 

 

4,693

 

 

12,998

 

 

8,963

 

Other expense

 

4,135

 

 

3,494

 

 

3,482

 

 

11,298

 

 

8,705

 

Total noninterest expense

 

65,336

 

 

63,936

 

 

82,782

 

 

192,849

 

 

182,666

 

Net income before income taxes

 

56,867

 

 

52,695

 

 

36,190

 

 

163,546

 

 

110,561

 

Income tax

 

15,492

 

 

14,168

 

 

7,798

 

 

44,926

 

 

26,864

 

Net income

 

$

41,375

 

 

$

38,527

 

 

$

28,392

 

 

$

118,620

 

 

$

83,697

 

EARNINGS PER SHARE

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.69

 

 

$

0.62

 

 

$

0.46

 

 

$

1.93

 

 

$

1.63

 

Diluted

 

$

0.69

 

 

$

0.62

 

 

$

0.46

 

 

$

1.92

 

 

$

1.61

 

WEIGHTED AVERAGE SHARES OUTSTANDING

 

 

 

 

 

 

 

 

 

 

Basic

 

59,293,218

 

 

61,308,046

 

 

61,727,030

 

 

60,853,081

 

 

51,282,533

 

Diluted

 

59,670,855

 

 

61,661,773

 

 

62,361,804

 

 

61,201,858

 

 

51,965,647

 

SELECTED FINANCIAL DATA

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED AVERAGE BALANCES AND YIELD DATA

 

 

 

 

 

Three Months Ended

 

 

September 30, 2019

 

June 30, 2019

 

September 30, 2018

 

 

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

 

$

188,693

 

 

$

403

 

 

0.85

%

 

$

187,963

 

 

$

435

 

 

0.93

%

 

$

339,064

 

 

$

898

 

 

1.05

%

Investment securities

 

1,311,649

 

 

9,227

 

 

2.81

 

 

1,396,585

 

 

10,119

 

 

2.90

 

 

1,198,362

 

 

8,707

 

 

2.91

 

Loans receivable, net (1)(2)

 

8,728,536

 

 

122,974

 

 

5.59

 

 

8,779,440

 

 

121,860

 

 

5.57

 

 

8,664,796

 

 

119,271

 

 

5.46

 

Total interest-earning assets

 

10,228,878

 

 

132,604

 

 

5.14

 

 

10,363,988

 

 

132,414

 

 

5.12

 

 

10,202,222

 

 

128,876

 

 

5.01

 

Noninterest-earning assets

 

1,232,963

 

 

 

 

 

 

1,221,985

 

 

 

 

 

 

1,185,882

 

 

 

 

 

Total assets

 

$

11,461,841

 

 

 

 

 

 

$

11,585,973

 

 

 

 

 

 

$

11,388,104

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest checking

 

$

553,588

 

 

$

688

 

 

0.49

%

 

$

543,473

 

 

$

535

 

 

0.39

%

 

$

532,246

 

 

$

480

 

 

0.36

%

Money market

 

3,107,570

 

 

7,736

 

 

0.99

 

 

2,978,065

 

 

7,305

 

 

0.98

 

 

3,143,556

 

 

6,391

 

 

0.81

 

Savings

 

239,601

 

 

103

 

 

0.17

 

 

242,483

 

 

92

 

 

0.15

 

 

264,453

 

 

97

 

 

0.15

 

Retail certificates of deposit

 

1,044,174

 

 

4,867

 

 

1.85

 

 

1,025,404

 

 

4,610

 

 

1.80

 

 

1,059,416

 

 

3,417

 

 

1.28

 

Wholesale/brokered certificates of deposit

 

398,110

 

 

2,484

 

 

2.48

 

 

555,963

 

 

3,449

 

 

2.49

 

 

316,524

 

 

1,557

 

 

1.95

 

Total interest-bearing deposits

 

5,343,043

 

 

15,878

 

 

1.18

 

 

5,345,388

 

 

15,991

 

 

1.20

 

 

5,316,195

 

 

11,942

 

 

0.89

 

FHLB advances and other borrowings

 

214,264

 

 

1,214

 

 

2.25

 

 

491,706

 

 

3,083

 

 

2.51

 

 

473,197

 

 

2,494

 

 

2.09

 

Subordinated debentures

 

222,715

 

 

3,177

 

 

5.71

 

 

183,639

 

 

2,699

 

 

5.88

 

 

110,203

 

 

1,727

 

 

6.27

 

Total borrowings

 

436,979

 

 

4,391

 

 

3.99

 

 

675,345

 

 

5,782

 

 

3.43

 

 

583,400

 

 

4,221

 

 

2.87

 

Total interest-bearing liabilities

 

5,780,022

 

 

20,269

 

 

1.39

 

 

6,020,733

 

 

21,773

 

 

1.45

 

 

5,899,595

 

 

16,163

 

 

1.09

 

Noninterest-bearing deposits

 

3,533,797

 

 

 

 

 

 

3,426,508

 

 

 

 

 

 

3,473,056

 

 

 

 

 

Other liabilities

 

157,711

 

 

 

 

 

 

138,746

 

 

 

 

 

 

107,055

 

 

 

 

 

Total liabilities

 

9,471,530

 

 

 

 

 

 

9,585,987

 

 

 

 

 

 

9,479,706

 

 

 

 

 

Stockholders' equity

 

1,990,311

 

 

 

 

 

 

1,999,986

 

 

 

 

 

 

1,908,398

 

 

 

 

 

Total liabilities and equity

 

$

11,461,841

 

 

 

 

 

 

$

11,585,973

 

 

 

 

 

 

$

11,388,104

 

 

 

 

 

Net interest income

 

 

 

$

112,335

 

 

 

 

 

 

$

110,641

 

 

 

 

 

 

$

112,713

 

 

 

Net interest margin (3)

 

 

 

 

 

4.36

%

 

 

 

 

 

4.28

%

 

 

 

 

 

4.38

%

Cost of deposits

 

 

 

 

 

0.71

 

 

 

 

 

 

0.73

 

 

 

 

 

 

0.54

 

Cost of funds (4)

 

 

 

 

 

0.86

 

 

 

 

 

 

0.92

 

 

 

 

 

 

0.68

 

Ratio of interest-earning assets to interest-bearing liabilities

 

176.97

 

 

 

 

 

 

172.14

 

 

 

 

 

 

172.93

 

(1) Average balance includes loans held for sale and nonperforming loans and is net of deferred loan origination fees/costs and discounts/premiums.

(2) Interest income includes net discount accretion of $6.0 million, $5.0 million and $4.1 million, respectively.

(3) Represents annualized net interest income divided by average interest-earning assets.

(4) Represents annualized total interest expense divided by the sum of average total interest-bearing liabilities and noninterest-bearing deposits.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

LOAN PORTFOLIO COMPOSITION

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

 

2019

 

2019

 

2019

 

2018

 

2018

 

 

(dollars in thousands)

Business loans

 

 

 

 

 

 

 

 

 

 

Commercial and industrial

 

$

1,233,938

 

 

$

1,300,083

 

 

$

1,336,520

 

 

$

1,364,423

 

 

$

1,359,841

 

Franchise

 

894,023

 

 

860,299

 

 

813,057

 

 

765,416

 

 

735,366

 

Commercial owner occupied

 

1,678,888

 

 

1,667,912

 

 

1,648,762

 

 

1,679,122

 

 

1,675,528

 

SBA

 

179,965

 

 

180,363

 

 

188,757

 

 

193,882

 

 

193,487

 

Agribusiness

 

119,633

 

 

126,857

 

 

134,603

 

 

138,519

 

 

133,241

 

Total business loans

 

4,106,447

 

 

4,135,514

 

 

4,121,699

 

 

4,141,362

 

 

4,097,463

 

Real estate loans

 

 

 

 

 

 

 

 

 

 

Commercial non-owner occupied

 

2,053,590

 

 

2,121,312

 

 

2,124,250

 

 

2,003,174

 

 

1,931,165

 

Multi-family

 

1,611,904

 

 

1,520,135

 

 

1,511,942

 

 

1,535,289

 

 

1,554,692

 

One-to-four family

 

273,182

 

 

248,392

 

 

279,467

 

 

356,264

 

 

376,617

 

Construction

 

478,961

 

 

505,401

 

 

538,197

 

 

523,643

 

 

504,708

 

Farmland

 

171,667

 

 

169,724

 

 

167,345

 

 

150,502

 

 

138,479

 

Land

 

30,717

 

 

40,748

 

 

46,848

 

 

46,628

 

 

49,992

 

Total real estate loans

 

4,620,021

 

 

4,605,712

 

 

4,668,049

 

 

4,615,500

 

 

4,555,653

 

Consumer loans

 

 

 

 

 

 

 

 

 

 

Consumer loans

 

40,548

 

 

40,680

 

 

85,302

 

 

89,424

 

 

114,736

 

Gross loans held for investment

 

8,767,016

 

 

8,781,906

 

 

8,875,050

 

 

8,846,286

 

 

8,767,852

 

Deferred loan origination costs/(fees) and premiums/(discounts), net

 

(9,540

)

 

(9,968

)

 

(9,195

)

 

(9,468

)

 

(8,648

)

Loans held for investment

 

8,757,476

 

 

8,771,938

 

 

8,865,855

 

 

8,836,818

 

 

8,759,204

 

Allowance for loan losses

 

(35,000

)

 

(35,026

)

 

(37,856

)

 

(36,072

)

 

(33,306

)

Loans held for investment, net

 

$

8,722,476

 

 

$

8,736,912

 

 

$

8,827,999

 

 

$

8,800,746

 

 

$

8,725,898

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale, at lower of cost or fair value

 

$

7,092

 

 

$

8,529

 

 

$

11,671

 

 

$

5,719

 

 

$

52,880

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

ASSET QUALITY INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

 

2019

 

2019

 

2019

 

2018

 

2018

Asset Quality

 

(dollars in thousands)

Nonperforming loans

 

$

8,105

 

 

$

7,637

 

 

$

12,858

 

 

$

4,857

 

 

$

7,268

 

Other real estate owned

 

126

 

 

35

 

 

180

 

 

147

 

 

356

 

Other assets owned

 

 

 

 

 

13

 

 

13

 

 

129

 

Nonperforming assets

 

$

8,231

 

 

$

7,672

 

 

$

13,051

 

 

$

5,017

 

 

$

7,753

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

$

35,000

 

 

$

35,026

 

 

$

37,856

 

 

$

36,072

 

 

$

33,306

 

Allowance for loan losses as a percent of total nonperforming loans

 

432

%

 

459

%

 

294

%

 

743

%

 

458

%

Nonperforming loans as a percent of loans held for investment

 

0.09

 

 

0.09

 

 

0.15

 

 

0.05

 

 

0.08

 

Nonperforming assets as a percent of total assets

 

0.07

 

 

0.07

 

 

0.11

 

 

0.04

 

 

0.07

 

Net loan charge-offs for the quarter ended

 

$

1,391

 

 

$

3,572

 

 

$

228

 

 

$

138

 

 

$

87

 

Net loan charge-offs for the quarter to average total loans(1)

 

0.02

%

 

0.04

%

 

%

 

%

 

%

Allowance for loan losses to loans held for investment (2)

 

0.40

%

 

0.40

%

 

0.43

%

 

0.41

%

 

0.38

%

Delinquent Loans

 

 

 

 

 

 

 

 

 

 

30 - 59 days

 

$

1,725

 

 

$

3,416

 

 

$

2,299

 

 

$

7,046

 

 

$

1,977

 

60 - 89 days

 

3,212

 

 

801

 

 

1,982

 

 

1,242

 

 

720

 

90+ days

 

6,293

 

 

9,261

 

 

11,481

 

 

4,565

 

 

5,048

 

Total delinquency

 

$

11,230

 

 

$

13,478

 

 

$

15,762

 

 

$

12,853

 

 

$

7,745

 

Delinquency as a percent of loans held for investment

 

0.13

%

 

0.15

%

 

0.18

%

 

0.15

%

 

0.09

%

(1) The ratios are less than 0.01% as of March 31, 2019, December 31, 2018, and September 30, 2018.

(2) At September 30, 2019, 41% of loans held for investment include a fair value net discount of $46.8 million or 0.53% of loans held for investment. At June 30, 2019, 44% of loans held for investment include a fair value net discount of $52.0 million, or 0.59% of loans held for investment. At September 30, 2018, 53% of loans held for investment include a fair value net discount of $71.7 million or 0.82% of loans held for investment.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES

GAAP RECONCILIATIONS

(dollars in thousands, except per share data)

 

 

 

 

 

 

 

The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. However, this non-GAAP financial measure is supplemental and is not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for this adjusted measure, this presentation may not be comparable to other similarly titled adjusted measures reported by other companies.

 

For periods presented below, return on average tangible common equity is a non-U.S. GAAP financial measure derived from U.S. GAAP-based amounts. We calculate this figure by excluding CDI amortization expense from net income and excluding the average CDI and average goodwill from the average stockholders' equity during the periods indicated. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business.

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

September 30,

 

 

2019

 

2019

 

2018

Net income

 

$

41,375

 

 

$

38,527

 

 

$

28,392

 

Plus CDI amortization expense

 

4,281

 

 

4,281

 

 

4,693

 

Less CDI amortization expense tax adjustment

 

1,240

 

 

1,240

 

 

1,011

 

Net income for average tangible common equity

 

$

44,416

 

 

$

41,568

 

 

$

32,074

 

 

 

 

 

 

 

 

Average stockholders' equity

 

$

1,990,311

 

 

$

1,999,986

 

 

$

1,908,398

 

Less average CDI

 

90,178

 

 

94,460

 

 

108,258

 

Less average goodwill

 

808,322

 

 

808,778

 

 

805,116

 

Average tangible common equity

 

$

1,091,811

 

 

$

1,096,748

 

 

$

995,024

 

 

 

 

 

 

 

 

Return on average equity

 

8.32

%

 

7.71

%

 

5.95

%

Return on average tangible common equity

 

16.27

%

 

15.16

%

 

12.89

%

Tangible book value per share and tangible common equity to tangible assets (the “tangible common equity ratio”) are non-U.S. GAAP financial measures derived from U.S. GAAP-based amounts. 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 calculate the tangible common equity ratio by excluding the balance of intangible assets from common stockholders' equity and dividing by tangible assets. 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-U.S. GAAP financial measures provide information that is important to investors and that is useful in understanding our capital position and ratios.

 

 

September 30,

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

 

2019

 

2019

 

2019

 

2018

 

2018

Total stockholders' equity

 

$

1,988,998

 

 

$

1,984,456

 

 

$

2,007,064

 

 

$

1,969,697

 

 

$

1,916,377

 

Less intangible assets

 

895,882

 

 

900,162

 

 

904,846

 

 

909,282

 

 

913,079

 

Tangible common equity

 

$

1,093,116

 

 

$

1,084,294

 

 

$

1,102,218

 

 

$

1,060,415

 

 

$

1,003,298

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

33.50

 

 

$

32.80

 

 

$

31.97

 

 

$

31.52

 

 

$

30.68

 

Less intangible book value per share

 

15.09

 

 

14.88

 

 

14.41

 

 

14.55

 

 

14.62

 

Tangible book value per share

 

$

18.41

 

 

$

17.92

 

 

$

17.56

 

 

$

16.97

 

 

$

16.06

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

11,811,497

 

 

$

11,783,781

 

 

$

11,580,495

 

 

$

11,487,387

 

 

$

11,503,881

 

Less intangible assets

 

895,882

 

 

900,162

 

 

904,846

 

 

909,282

 

 

913,079

 

Tangible assets

 

$

10,915,615

 

 

$

10,883,619

 

 

$

10,675,649

 

 

$

10,578,105

 

 

$

10,590,802

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity ratio

 

10.01

%

 

9.96

%

 

10.32

%

 

10.02

%

 

9.47

%

Core net interest income and core net interest margin are non-U.S. GAAP financial measures derived from U.S. GAAP-based amounts. We calculate core net interest income by excluding scheduled accretion income, accelerated accretion income, CD mark-to-market and nonrecurring nonaccrual interest paid from net interest income. The core net interest margin is calculated as the ratio of core net interest income to average interest-earning assets. Management believes that the exclusion of such items from this financial measure provides useful information to gain an understanding of the operating results of our core business.

 

 

Three Months Ended

 

 

September 30,

 

June 30,

 

September 30,

 

 

2019

 

2019

 

2018

Net interest income

 

$

112,335

 

 

$

110,641

 

 

$

112,713

 

Less scheduled accretion income

 

2,161

 

 

2,387

 

 

2,837

 

Less accelerated accretion income

 

3,865

 

 

2,563

 

 

1,302

 

Less CD mark-to-market

 

124

 

 

124

 

 

491

 

Less nonrecurring nonaccrual interest paid

 

37

 

 

107

 

 

380

 

Core net interest income

 

$

106,148

 

 

$

105,460

 

 

$

107,703

 

 

 

 

 

 

 

 

Average interest-earning assets

 

$

10,228,878

 

 

$

10,363,988

 

 

$

10,202,222

 

 

 

 

 

 

 

 

Net interest margin

 

4.36

%

 

4.28

%

 

4.38

%

Core net interest margin

 

4.12

%

 

4.08

%

 

4.19

%

 

Contacts

Pacific Premier Bancorp, Inc.

Steven R. Gardner
Chairman, President and Chief Executive Officer
(949) 864-8000

Ronald J. Nicolas, Jr.
Senior Executive Vice President and Chief Financial Officer
(949) 864-8000

Release Summary

Pacific Premier Bancorp, Inc. Announces Third Quarter 2019 Results (Unaudited) and a Quarterly Cash Dividend of $0.22 Per Share

$Cashtags

Contacts

Pacific Premier Bancorp, Inc.

Steven R. Gardner
Chairman, President and Chief Executive Officer
(949) 864-8000

Ronald J. Nicolas, Jr.
Senior Executive Vice President and Chief Financial Officer
(949) 864-8000