First Quarter 2014 Summary
- Acquired and fully integrated
specialty lender Infinity Franchise Holdings
- Net income of $2.6 million, or $0.15
per fully diluted share
- Net interest margin of
4.30%
- Total loans increased 7%
- Non-interest bearing deposits
increased 13%
- Nonperforming assets to total assets
at 0.20%
- Tangible book value per share
increased $0.18 to $9.26
Pacific Premier Bancorp, Inc. (NASDAQ: PPBI)(the “Company”), the
holding company of Pacific Premier Bank, reported net income for
the first quarter of 2014 of $2.6 million, or $0.15 per diluted
share, which included merger-related expenses of $626,000
associated with the acquisition of Infinity Franchise Holdings, LLC
(“Infinity Franchise Holdings”).
The Company’s acquisition of Infinity Franchise Holdings was
consummated on January 30, 2014. The value of the total
consideration paid for Infinity Franchise Holdings was $17.4
million, which was based upon their adjusted net asset value at the
closing date. The consideration consisted of 50% cash and 50% of
the Company’s common stock. As a result of the consummation of this
transaction, we acquired $80.2 million in total assets and $78.8
million of total loans outstanding.
For the fourth quarter of 2013, the Company recorded net income
of $4.2 million, or $0.24 per share on a diluted basis, which
included merger-related expenses of $203,000. For the first quarter
of 2013, the Company recorded net income of $2.0 million, or $0.13
per share on a diluted basis, which included merger-related
expenses of $1.7 million associated with the acquisition of First
Associations Bank (“First Associations”).
Excluding merger-related expenses, the Company reported adjusted
net income of $3.0 million, or $0.17 per share on a diluted basis,
for the first quarter of 2014, compared with $4.3 million, or $0.24
per share on a diluted basis, for the fourth quarter of 2013, and
$3.1 million, or $0.20 per share on a diluted basis, for the first
quarter of 2013.
For the three months ended March 31, 2014, the Company’s return
on average assets was 0.64%, compared with 1.05% for the three
months ended December 31, 2013, and 0.67% for the three months
ended March 31, 2013. For the three months ended March 31, 2014,
the Company’s return on average tangible common equity was 7.22%,
compared with 11.69% for the three months ended December 31, 2013,
and 6.06% for the three months ended March 31, 2013.
Steven R. Gardner, President and Chief Executive Officer of the
Company, commented on the results, “During the first quarter of
2014, we completed the integration and system conversion of
Infinity Franchise Holdings. The $78.8 million in loans added
through the acquisition provides us with attractive risk-adjusted
yields. As a result of the loans added from the acquisition and
$46.8 million in new business loan production, our C&I
portfolio increased to 21% of total loans outstanding at March 31,
2014, up from 15% at the end of the prior quarter.
“In the first quarter of 2014, our loan portfolio continued to
experience solid growth, with a 7% increase in total loans.
However, the portfolio was impacted by $78 million in loan payoffs,
which were concentrated in our CRE loan portfolio. With lenders
offering fixed rate pricing in the mid to high three percent range,
we were not willing to assume that level of interest rate risk to
retain the loans. Looking ahead, we anticipate increasing loan
production in the second quarter as our various business lines
continue to attract a variety of lending opportunities, which is
reflected in the growth of our pipeline to $247 million.
“We had a very productive quarter from a deposit gathering
perspective. We experienced significant core deposit inflows from
new commercial customers and our HOA line of business, which
contributed to a $46 million, or 12.6%, increase in our
non-interest bearing deposits during the first quarter of 2014. Our
robust deposit growth during the first quarter of 2014 further
contributed to our already strong liquidity position and further
enhanced our franchise.
“Our operating expenses during the first quarter of 2014 were
higher than our expected run-rate due to $626,000 in merger-related
expenses and $549,000 in expenses related to a change in our
payment processing system provider and an upgrade to our existing
core system. The switch to a new, more cost-effective and robust
payment and core system is expected to result in cost savings over
the coming years. Going forward, we expect to see lower levels of
operating expense which should result in an improvement in our
profitability as we move through 2014,” said Mr. Gardner.
Net Interest Income and Net Interest Margin
Net interest income totaled $16.6 million in the first quarter
of 2014, down $31,000 or 0.2% from the fourth quarter of 2013. The
decrease in net interest income primarily reflected a decrease in
the number of days in the quarter and a decrease in net interest
margin of 2 basis points to 4.30%, partially offset by an increase
in average interest-earning assets of $39.6 million. The decrease
in the net interest margin was impacted by a previously reported
$715,000 discount recognized from a loan payoff during the fourth
quarter of 2013 that equated to 18 basis points of net interest
margin benefit during that quarter. Excluding that recognized
discount, the net interest margin would have increased by an
adjusted 16 basis points reflecting an improved mix of higher
yielding loans, an increase in loan yield by an adjusted 13 basis
points and an increase in interest-earning assets, all of which is
primarily attributable to our acquisition of Infinity Franchise
Holdings. Partially offsetting these favorable items was an
increase in the cost of interest-bearing liabilities of 3 basis
points primarily related to the increase in interest-bearing
deposit costs of 2 basis points. The increase in average
interest-earning assets during the first quarter of 2014 was
primarily related to an increase in our average loan portfolio of
$71.2 million and average cash and cash equivalents of $7.7
million, partially offset by a decrease in investment securities of
$39.5 million.
Net interest income for the first quarter of 2014 increased $3.7
million or 29.0%, compared to the first quarter of 2013. The
increase in net interest income was primarily related to an
increase in interest-earning assets of $436.1 million, primarily
related to the acquisition of First Associations and San Diego
Trust Bank in the first and second quarters of 2013, respectively,
and organic loan growth. The increase was partially offset by a
lower net interest margin, which decreased 32 basis points from the
first quarter of 2013 to the first quarter of 2014. The decrease in
the net interest margin was related to the rate on interest-earning
assets decreasing more rapidly than the cost of interest-bearing
liabilities. The decrease in interest-earning assets of 44 basis
points is mainly attributable to a higher mix of lower yielding
investment securities, which were acquired from First Associations
and San Diego Trust Bank, and a decrease in our weighted average
loan portfolio rate. The weighted average loan portfolio rate at
the end of the first quarter of 2014 was 5.0%, 30 basis points
lower than the weighted average loan portfolio rate at the end of
the first quarter of 2013 and primarily reflected lower rates on
loan originations during the period. Partially offsetting the lower
yield on average interest-earning assets was a decrease in deposit
costs of 13 basis points primarily resulting from an improved mix
of lower cost deposits acquired from First Associations and San
Diego Trust Bank and lower pricing on certificates of deposit.
Provision for Loan Losses
We recorded a $949,000 provision for loan losses during the
first quarter of 2014, up from $596,000 for the fourth quarter of
2013 and up from $296,000 for the first quarter of 2013. The
increase in the provision for loan losses in the first quarter of
2014 was attributable to both the changing profile of our loan
portfolio and the net charge-off of $464,000 of loans primarily
acquired from our FDIC acquisitions. Net loan charge-offs in the
first quarter of 2014 were up $74,000 from the fourth quarter of
2013, and $168,000 from the first quarter of 2013. Substantially
all of the charge-offs in the first quarter of 2014 were
attributable to loans that we acquired from our FDIC-assisted
transactions.
Noninterest income
Noninterest income for the first quarter of 2014 was $2.1
million, down $565,000 or 21.6% from the fourth quarter of 2013.
The decrease from the prior quarter was primarily related to the
following:
- A $753,000 decrease in gains on the
sale of loans. During the first quarter of 2014, we sold $4.7
million in Small Business Administration (“SBA”) loans at an
overall premium of 11% and $4.8 million in commercial non-owner
occupied and multi-family loans. That compares with sales of $10.9
million in SBA loans at a 10% overall premium, and $7.1 million in
commercial real estate loans in the fourth quarter of 2013.
- A $209,000 decrease in other income.
During the first quarter of 2014, we recorded a $180,000 market
value loss related to loans held for sale that were moved to loans
held for investment.
- A $109,000 decrease in net gains from
sale of investment securities.
Partially offsetting these decreases were higher loan servicing
fees of $545,000 primarily associated with the receipt of a
$500,000 fee related to the assumption of an existing loan.
Compared with the first quarter of 2013, noninterest income for
the first quarter of 2014 increased by $328,000 or 19.0%. The
increase was primarily related to higher loan servicing fees of
$530,000, primarily associated with the $500,000 fee related to the
assumption of an existing loan in the first quarter of 2014,
partially offset by lower net gains on sales of loans of $175,000
and other income of $146,000, primarily related to the $180,000
market value loss on loans held for sale.
Noninterest Expense
Noninterest expense totaled $13.5 million for the first quarter
of 2014, up $1.5 million or 12.8%, compared with the fourth quarter
of 2013. The increase was primarily related to the following:
- A $605,000 increase in compensation and
benefits costs, primarily related to increases in beginning of the
year employer payroll taxes, employee compensation and healthcare
cost;
- A $423,000 increase in merger-related
expenses associated with the acquisition of Infinity Franchise
Holdings;
- A $265,000 increase in data processing
and communications expense, primarily related to a $357,000 fee
paid to terminate services from our payment processing system
provider for a new, more cost effective provider;
- A $253,000 increase in legal, audit and
professional fees, primarily associated with $192,000 paid for
services related to the upgrade in our core operating system;
and
- A $115,000 increase in deposit
expenses, primarily related to increase in deposit transaction
accounts.
Partially offsetting these increases were decreases in marketing
expense of $135,000 and loan expenses of $111,000.
Compared to the first quarter of 2013, noninterest expense for
the first quarter of 2014 increased by $2.4 million or 21.1%. The
increase in expense primarily related to the acquisitions of First
Associations during the first quarter of 2013, San Diego Trust Bank
in the second quarter of 2013 and Infinity Franchise Holdings in
the first quarter of 2014, together with our organic growth. On a
year-over-year basis, compensation and benefits expense increased
$1.8 million, due to the addition of employees from the
acquisitions, as well as employees added in lending and credit
areas to increase our loan production of commercial and industrial
(“C&I”) loans, commercial real estate (“CRE”) loans, SBA loans,
homeowner association (“HOA”) loans, warehouse facilities and
construction loans. Additionally, on a year-over-year basis,
one-time merger-related expense declined by $1.1 million.
The Company’s efficiency ratio was 67.96%, 60.45% and 63.50% for
the quarters ended March 31, 2014, December 31, 2013 and March 31,
2013, respectively. The increase in first quarter efficiency ratio
was negatively impacted by combined costs associated with the
termination of our payment processing system provider and an
upgrade to our existing core system of $549,000 and a market value
loss recognized of $180,000 on loans held for sale recorded in our
noninterest income. These items were partially offset by the
positive impact from the $500,000 fee paid on the assumption an
existing loan.
Income Tax
For the first quarter of 2014, our effective tax rate was 37.3%,
compared with a 37.1% for the fourth quarter of 2013 and 37.4% for
the first quarter of 2013.
Assets and Liabilities
At March 31, 2014, assets totaled $1.7 billion, up $31.1 million
or 1.8% from December 31, 2013, and up $338.6 million or 24.1% from
March 31, 2013. The increase in assets during the first quarter of
2014 was primarily related to the acquisition of Infinity Franchise
Holdings, which added assets at the acquisition date of $81.0
million and $5.5 million in goodwill, partially offset by a
decrease in investment securities available for sale of $53.9
million. The increase in assets from March 31, 2013 was primarily
related to the acquisition of San Diego Trust Bank, which added
assets at the acquisition date of $211.2 million, and Infinity
Franchise Holdings, as well as organic loan growth. In addition,
during the period, loans increased $379.9 million inclusive of
loans acquired; cash and cash equivalents increased $25.0 million
and goodwill from acquisitions increased $11.1 million. These
increases were partially offset by a decrease in investment
securities available for sale of $99.0 million.
Investment securities available for sale totaled $202.1 million
at March 31, 2014, down $53.9 million or 21.1% from December 31,
2013 and $99.0 million or 32.9% from March 31, 2013. The decrease
in securities available for sale during the first quarter of 2014
was primarily due to sales totaling $56.0 million and principal pay
downs of $6.2 million, partially offset by purchases of $5.5
million and increase in market value of $3.4 million. The decrease
in securities from March 31, 2013 was primarily related to sales of
$288.5 million and principal pay downs of $34.1 million, partially
offset by $124.8 million added from the acquisition of San Diego
Trust Bank and $106.8 million of investment security purchases. The
purchase of investment securities primarily related to investing
excess liquidity from our bank acquisitions, while the sales were
made to help fund loan production and to improve our
interest-earning asset mix by redeploying investment funds into
loans.
Net loans held for investment totaled $1.3 billion at March 31,
2014, an increase of $84.8 million or 6.9% from December 31, 2013,
and an increase of $382.9 million or 41.0% from March 31, 2013. The
increase in loan balances for the first quarter of 2014 was
primarily related to increases in C&I loans of $84.8 million,
primarily from the acquisition of Infinity Franchise Holdings,
construction loans of $16.8 million and commercial owner occupied
loans of $2.8 million, partially offset by decreases in
multi-family loans of $10.5 million, warehouse facilities loans of
$6.5 million and one-to-four family loans of $3.8 million. The
increase in loans from March 31, 2013 included $42.7 million in
loans from the San Diego Trust Bank acquisition, and was primarily
associated with increases in real estate loans of $244.1 million,
commercial and industrial loans of $131.3 million and commercial
owner occupied loans of $57.3 million, partially offset by a
decrease in warehouse facility loans of $57.9 million.
Loan activity during the first quarter of 2014 included loan
originations of $106.2 million, of which $69.5 million were funded
at origination, loans acquired from Infinity Franchise Holdings of
$78.8 million and loan purchases of $1.8 million, partially offset
by loan repayments of $77.6 million, an increase in undisbursed
loan funds of $17.7 million and loan sales of $9.5 million. During
the first quarter of 2014, our loan originations were diversified
across loan type and included $46.8 million in C&I loans which
contained $8.1 million in HOA loans and $6.8 million in franchise
business loans, $22.8 million in commercial non-owner occupied
loans, $20.4 million in construction loans, $7.6 million in
multifamily loans and $5.2 million in SBA loans. Loan originations
for the first quarter of 2014 had a weighted average rate of 4.98%,
compared to a weighted average rate of 4.92% in the previous
quarter. At March 31, 2014, our loan to deposit ratio was 92.4%,
down from 95.2% at December 31, 2013, but up from 79.8% at March
31, 2013.
March 31, 2014 deposits totaled $1.4 billion, up $128.9 million
or 9.9% from December 31, 2013 and up $249.5 million or 21.0% from
March 31, 2013. During the first quarter of 2014, we had deposit
increases in noninterest bearing checking of $46.1 million,
certificates of deposit of $41.0 million, money market of $25.7
million and checking of $16.4 million. Within the first quarter of
2014, transaction account increases of approximately $27 million to
$30 million were related to seasonal increases in existing HOA
management accounts attributed to annual billings and the receipt
of homeowner’s dues. The increase in deposits since March 31, 2013
was primarily related to the San Diego Trust Bank acquisition,
which added deposits of $183.9 million at a cost of 23 basis points
at the acquisition date, partially offset by declines in deposit
levels in the second through fourth quarters in 2013 of $63.3
million, mainly related to purposeful runoff of certificates of
deposit, and the deposit activity in first quarter of 2014.
The total end of period weighted average cost of deposits at
March 31, 2014 was 0.34%, up from 0.33% at December 31, 2013, but
down from 0.37% at March 31, 2013.
At March 31, 2014, total borrowings amounted to $105.8 million,
down $108.6 million or 50.6% from December 31, 2013, but up $51.3
million or 94.2% from March 31, 2013. The change in borrowings
primarily related to overnight FHLB advances used to supplement the
funding of loans as deposit levels fluctuate. Additionally, during
the first quarter of 2014, repurchase agreement debt related to our
HOA business decreased $1.6 million to $17.0 million. At March 31,
2014, total borrowings represented 6.1% of total assets and had an
end of period weighted average cost of 1.22%, compared with 12.5%
of total assets at a weighted average cost of 0.63% at December 31,
2013, and 3.9% of total assets at a weighted average cost of 2.29%
at March 31, 2013.
Asset Quality
At March 31, 2014, nonperforming assets totaled $3.4 million or
0.20% of total assets, essentially equal to the total and
percentage at December 31, 2013, but down from $4.7 million or
0.33% of total assets at March 31, 2013. During the first quarter
of 2014, nonperforming loans increased $423,000 to total $2.7
million and other real estate owned decreased $434,000, related to
the sale of a property, to $752,000.
At March 31, 2014, our allowance for loan losses was $8.7
million, up $485,000 from December 31, 2013 and $691,000 from March
31, 2013. At March 31, 2014, our allowance for loan losses as a
percent of nonaccrual loans was 324.8%, down from 364.3% at
December 31, 2013, but up from 257.7% at March 31, 2013. At March
31, 2014, the ratio of allowance for loan losses to total gross
loans was 0.66%, equal to the percentage at December 31, 2013, but
down from 0.85% at March 31, 2013. Including the loan fair market
value discounts recorded in connection with our acquisitions, the
allowance for loan losses to total gross loans ratio was 0.88% at
March 31, 2014, compared with 0.93% at December 31, 2013 and 1.33%
at March 31, 2013.
Capital Ratios
At March 31, 2014, our ratio of tangible common equity to total
assets was 9.30%, with a tangible book value of $9.26 per share and
a book value per share of $10.96.
At March 31, 2014, the Pacific Premier Bank exceeded all
regulatory capital requirements with a ratio for tier 1 leverage
capital of 10.26%, tier 1 risked-based capital of 12.06% and total
risk-based capital of 12.71%. These capital ratios exceeded the
“well capitalized” standards defined by the federal banking
regulators of 5.00% for tier 1 leverage capital, 6.00% for tier 1
risked-based capital and 10.00% for total risk-based capital. At
March 31, 2014, the Company had a ratio for tier 1 leverage capital
of 10.45%, tier 1 risked-based capital of 12.23% and total
risk-based capital of 12.88%.
Conference Call and Webcast
The Company will host a conference call at 9:00 a.m. PT / 12:00
p.m. ET on April 23, 2014 to discuss its financial results.
Analysts and investors may participate in the question-and-answer
session. The conference call will be webcast live on the Investor
Relations section of the Company’s website www.ppbi.com and an
archived version of the webcast will made be available in the same
location shortly after the live call has ended. The conference call
can be accessed by telephone at (866) 225-8754, conference ID
4678800 or “Pacific Premier Bancorp.” Additionally a telephone
replay will be made available through April 30, 2014 at (800)
406-7325, conference ID 4678800.
About Pacific Premier Bancorp, Inc.
Pacific Premier Bancorp, Inc. is the holding company for Pacific
Premier Bank, one of the largest community banks headquartered in
Southern California. Pacific Premier Bank is a business bank
primarily focused on serving small- and medium-sized businesses in
the counties of Los Angeles, Orange, Riverside, San Bernardino and
San Diego, California. Pacific Premier Bank offers a diverse range
of lending products including commercial, CRE, construction,
residential warehouse and SBA loans, as well as specialty banking
products for HOAs and franchise lending nationwide. Pacific Premier
Bank serves its customers through its 13 full-service depository
branches in Southern California located in the cities of Encinitas,
Huntington Beach, Irvine, Los Alamitos, Newport Beach, Palm Desert,
Palm Springs, San Bernardino, San Diego and Seal Beach.
FORWARD-LOOKING COMMENTS
The statements contained herein that are not historical facts
are forward-looking statements based on management’s current
expectations and beliefs concerning future developments and their
potential effects on the Company. Such statements involve inherent
risks and uncertainties, many of which are difficult to predict and
are generally beyond the control of the Company. There can be no
assurance that future developments affecting the Company will be
the same as those anticipated by management. The Company cautions
readers that a number of important factors could cause actual
results to differ materially from those expressed in, or implied or
projected by, such forward-looking statements. These risks and
uncertainties include, but are not limited to, the following: the
strength of the United States economy in general and the strength
of the local economies in which we conduct operations; the effects
of, and changes in, trade, monetary and fiscal policies and laws,
including interest rate policies of the Board of Governors of the
Federal Reserve System; inflation, interest rate, market and
monetary fluctuations; the timely development of competitive new
products and services and the acceptance of these products and
services by new and existing customers; the willingness of users to
substitute competitors’ products and services for the Company’s
products and services; the impact of changes in financial services
policies, laws and regulations (including the Dodd-Frank Wall
Street Reform and Consumer Protection Act) and of governmental
efforts to restructure the U.S. financial regulatory system;
technological changes; the effect of acquisitions that the Company
may make, if any, including, without limitation, the failure to
achieve the expected revenue growth and/or expense savings from its
acquisitions; changes in the level of the Company’s nonperforming
assets and charge-offs; oversupply of inventory and continued
deterioration in values of California real estate, both residential
and commercial; the effect of changes in accounting policies and
practices, as may be adopted from time-to-time by bank regulatory
agencies, the Securities and Exchange Commission (“SEC”), the
Public Company Accounting Oversight Board, the Financial Accounting
Standards Board or other accounting standards setters; possible
other-than-temporary impairment of securities held by us; changes
in consumer spending, borrowing and savings habits; the effects of
the Company’s lack of a diversified loan portfolio, including the
risks of geographic and industry concentrations; ability to attract
deposits and other sources of liquidity; changes in the financial
performance and/or condition of our borrowers; changes in the
competitive environment among financial and bank holding companies
and other financial service providers; unanticipated regulatory or
judicial proceedings; and the Company’s ability to manage the risks
involved in the foregoing. Additional factors that could cause
actual results to differ materially from those expressed in the
forward-looking statements are discussed in the 2013 Annual Report
on Form 10-K of Pacific Premier Bancorp, Inc. filed with the SEC
and available at the SEC’s Internet site (http://www.sec.gov).
The Company specifically disclaims any obligation to update any
factors or to publicly announce the result of revisions to any of
the forward-looking statements included herein to reflect future
events or developments.
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (dollars in
thousands, except share data)
March 31, December 31, September 30,
June 30, March 31, ASSETS 2014
2013 2013 2013 2013 (Unaudited)
(Audited) (Unaudited) (Unaudited) (Unaudited) Cash and due from
banks $ 124,143 $ 126,787 $ 61,393 $ 103,946 $ 99,431 Federal funds
sold 276 26 26 26
27 Cash and cash equivalents 124,419 126,813
61,419 103,972 99,458 Investment securities available for sale
202,142 256,089 282,846 313,047 301,160 FHLB/Federal Reserve
Bank/TIB stock, at cost 14,104 15,450 10,827 11,917 10,974 Loans
held for sale, net - 3,147 3,176 3,617 3,643 Loans held for
investment 1,325,372 1,240,123 1,138,969 1,055,430 941,828
Allowance for loan losses (8,685 ) (8,200 )
(7,994 ) (7,994 ) (7,994 ) Loans held for investment,
net 1,316,687 1,231,923 1,130,975 1,047,436 933,834 Accrued
interest receivable 5,865 6,254 5,629 5,766 4,898 Other real estate
owned 752 1,186 1,186 1,186 1,561 Premises and equipment 9,643
9,864 9,829 9,997 8,862 Deferred income taxes 9,180 8,477 9,029
8,644 2,646 Bank owned life insurance 26,240 24,051 23,862 23,674
17,701 Intangible assets 6,374 6,628 6,881 7,135 4,463 Goodwill
22,950 17,428 17,428 18,234 11,854 Other assets 6,926
6,877 5,933 3,833
5,601 TOTAL ASSETS $ 1,745,282 $ 1,714,187 $
1,569,020 $ 1,558,458 $ 1,406,655
LIABILITIES AND STOCKHOLDERS’ EQUITY LIABILITIES: Deposit
accounts: Noninterest bearing $ 412,871 $ 366,755 $ 363,606 $
345,063 $ 316,536 Interest bearing 1,022,332
939,531 920,528 969,126
869,183 Total deposits 1,435,203 1,306,286 1,284,134
1,314,189 1,185,719 FHLB advances and other borrowings 95,506
204,091 86,474 48,082 44,191 Subordinated debentures 10,310 10,310
10,310 10,310 10,310 Accrued expenses and other liabilities
15,403 18,274 16,948
17,066 8,846 TOTAL LIABILITIES
1,556,422 1,538,961 1,397,866
1,389,647 1,249,066 STOCKHOLDERS’
EQUITY: Common stock, $.01 par value; 25,000,000 shares authorized;
shares issued and outstanding of 17,224,977, 16,656,279,
16,641,991, 16,635,786 and 15,437,531 at March 31, 2014, December
31, 2013, September 30, 2013, June 30, 2013 and March 31, 2013,
respectively 172 166 166 166 154 Additional paid-in capital 152,325
143,322 143,014 142,759 128,075 Retained earnings 37,447 34,815
30,611 27,545 27,794 Accumulated other comprehensive income (loss),
net of tax (benefit) of ($757), ($2,152), ($1,843), ($1,160) and
$1,095 at March 31, 2014, December 31, 2013, September 30, 2013,
June 30, 2013 and March 31, 2013, respectively (1,084 )
(3,077 ) (2,637 ) (1,659 ) 1,566
TOTAL STOCKHOLDERS’ EQUITY 188,860 175,226
171,154 168,811 157,589
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,745,282
$ 1,714,187 $ 1,569,020 $ 1,558,458 $
1,406,655
PACIFIC PREMIER BANCORP, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
Three Months Ended March 31, December
31, March 31, 2014 2013 2013
INTEREST INCOME
(Unaudited)
(Unaudited)
(Unaudited)
Loans $ 16,585 $ 16,303 $ 13,396 Investment securities and other
interest-earning assets 1,437 1,670 839
Total interest income 18,022 17,973 14,235
INTEREST EXPENSE Deposits 1,069 968 1,019 FHLB
advances and other borrowings 243 262 240 Subordinated debentures
75 77 77 Total interest expense
1,387 1,307 1,336 NET INTEREST INCOME BEFORE
PROVISION FOR LOAN LOSSES 16,635 16,666 12,899 PROVISION FOR LOAN
LOSSES 949 596 296 NET INTEREST INCOME
AFTER PROVISION FOR LOAN LOSSES 15,686 16,070
12,603
NONINTEREST INCOME Loan servicing fees 856 311
326 Deposit fees 454 491 440 Net gain from sales of loans 548 1,301
723 Net gain from sales of investment securities 62 171 -
Other-than-temporary impairment recovery (loss) on investment
securities, net 13 15 (30 ) Gain on FDIC transaction - - - Other
income 119 328 265 Total noninterest
income 2,052 2,617 1,724
NONINTEREST
EXPENSE Compensation and benefits 6,891 6,286 5,097 Premises
and occupancy 1,588 1,575 1,293 Data processing and communications
1,131 866 635 Other real estate owned operations, net 13 8 37 FDIC
insurance premiums 237 212 140 Legal, audit and professional
expense 593 340 595 Marketing expense 176 311 206 Office and
postage expense 369 353 263 Loan expense 184 295 248 Deposit
expense 761 646 160 Merger related expense 626 203 1,745 Other
expense 972 914 760 Total noninterest
expense 13,541 12,009 11,179 NET INCOME
BEFORE INCOME TAX 4,197 6,678 3,148 INCOME TAX 1,565
2,474 1,176 NET INCOME $ 2,632 $ 4,204 $ 1,972
EARNINGS PER SHARE Basic $ 0.15 $ 0.26 $ 0.14 Diluted
$ 0.15 $ 0.24 $ 0.13
WEIGHTED AVERAGE SHARES
OUTSTANDING Basic 17,041,594 16,648,676 14,355,407 Diluted
17,376,001 17,486,083 15,117,216
PACIFIC PREMIER
BANCORP, INC. AND SUBSIDIARIES STATISTICAL INFORMATION
(dollars in thousands)
Three Months
Ended March 31, December 31, March 31,
2014 2013 2013 Profitability
and Productivity Net interest margin 4.30 % 4.32 % 4.62
% Noninterest expense to average total assets 3.27 2.99 3.82
Efficiency ratio (1) 67.96 60.45 63.50 Return on average assets
0.64 1.05 0.67 Return on average equity 5.77 9.69 5.65
Asset and liability activity Loans originated
and purchased $ 186,853 $ 201,633 $ 116,258 Repayments (77,555 )
(69,389 ) (45,244 ) Loans sold (9,508 ) (17,995 ) (5,048 ) Increase
(decrease) in loans, net 81,617 100,919 (40,417 ) Increase in
assets 31,095 145,167 232,863 Increase in deposits 128,917 22,152
280,951 Increase (decrease) in borrowings (108,585 ) 117,617
(71,309 ) (1) Represents the ratio of noninterest expense
less other real estate owned operations, core deposit intangible
amortization and non-recurring merger related expense to the sum of
net interest income before provision for loan losses and total
noninterest income less gains/(loss) on sale of securities,
other-than-temporary impairment recovery (loss) on investment
securities, and gain on FDIC-assisted transactions.
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
STATISTICAL INFORMATION
Average Balance
Sheet Three Months Ended Three Months Ended
Three Months Ended March 31, 2014 December 31,
2013 March 31, 2013 Average Average
Average Average Average Average
Balance Interest Yield/Cost
Balance Interest Yield/Cost
Balance Interest Yield/Cost Assets
(dollars in thousands) Interest-earning assets: Cash and cash
equivalents $ 70,341 $ 27 0.16 % $ 62,647 $ 24 0.15 % $ 69,143 $ 37
0.22 % Federal funds sold 192 - - 26 - - 27 - - Investment
securities 243,847 1,410 2.31 283,334 1,646 2.32 134,895 802 2.38
Loans receivable, net (1) 1,254,407 16,585 5.36
1,183,209 16,303 5.47 928,577
13,396 5.85 Total interest-earning assets 1,568,787
18,022 4.65 % 1,529,216 17,973 4.67 % 1,132,642 14,235 5.09 %
Noninterest-earning assets 87,095 78,684
38,911 Total assets $ 1,655,882 $ 1,607,900 $ 1,171,553
Liabilities and Equity Interest-bearing deposits: Interest
checking $ 137,658 $ 38 0.11 % $ 119,092 $ 41 0.14 % $ 34,761 $ 8
0.09 % Money market 435,188 314 0.29 428,363 307 0.28 263,923 175
0.27 Savings 75,904 28 0.15 76,980 28 0.14 80,954 35 0.18 Time
329,026 689 0.85 294,292 592
0.80 350,304 801 0.93 Total
interest-bearing deposits 977,776 1,069 0.44 918,727 968 0.42
729,942 1,019 0.57 FHLB advances and other borrowings 85,019 243
1.16 122,786 262 0.85 44,769 240 2.17 Subordinated debentures
10,310 75 2.95 10,310 77 2.96
10,310 77 3.03 Total borrowings
95,329 318 1.35 133,096 339 1.01
55,079 317 2.33 Total interest-bearing
liabilities 1,073,105 1,387 0.52 % 1,051,823 1,307 0.49 % 785,021
1,336 0.69 % Noninterest-bearing deposits 389,513 364,735 237,081
Other liabilities 10,951 17,887 9,766 Total
liabilities 1,473,569 1,434,445 1,031,868 Stockholders' equity
182,313 173,455 139,685 Total liabilities and
equity $ 1,655,882 $ 1,607,900 $ 1,171,553 Net interest income $
16,635 $ 16,666 $ 12,899 Net interest rate spread (2) 4.13 % 4.18 %
4.40 % Net interest margin (3) 4.30 % 4.32 % 4.62 % Ratio of
interest-earning assets to interest-bearing liabilities 146.19 %
145.39 % 144.28 % (1) Average balance includes
loans held for sale and nonperforming loans and is net of deferred
loan origination fees, unamortized discounts and premiums, and
allowance for loan losses. (2) Represents the difference between
the yield on interest-earning assets and the cost of
interest-bearing liabilities. (3) Represents net interest income
divided by average interest-earning assets.
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
STATISTICAL INFORMATION (dollars in thousands)
March 31, December 31,
September 30, June 30, March 31, 2014
2013 2013 2013 2013
Loan Portfolio Business loans: Commercial and
industrial $ 271,877 $ 187,035 $ 173,720 $ 146,240 $ 140,592
Commercial owner occupied (1) 223,848 221,089 222,162 201,802
166,571 SBA 11,045 10,659 6,455 5,820 5,116 Warehouse facilities
81,033 87,517 49,104 135,317 138,935 Real estate loans: Commercial
non-owner occupied 333,490 333,544 304,979 295,767 256,015
Multi-family 223,200 233,689 218,929 172,797 139,100 One-to-four
family (2) 141,469 145,235 152,667 84,672 87,109 Construction
29,857 13,040 2,835 2,135 - Land 6,170 7,605 7,371 10,438 7,863
Other loans 3,480 3,839 3,793
4,969 4,690 Total gross loans
(3) 1,325,469 1,243,252 1,142,015 1,059,957 945,991 Less loans held
for sale, net - (3,147 ) (3,176 )
(3,617 ) (3,643 ) Total gross loans held for
investment 1,325,469 1,240,105 1,138,839 1,056,340 942,348 Less:
Deferred loan origination costs/(fees) and
premiums/(discounts)
(97 ) 18 130 (910 ) (520 ) Allowance for loan losses (8,685
) (8,200 ) (7,994 ) (7,994 ) (7,994 )
Loans held for investment, net $ 1,316,687 $ 1,231,923
$ 1,130,975 $ 1,047,436 $ 933,834
Asset Quality Nonaccrual loans $ 2,674 $
2,251 $ 1,153 $ 2,032 $ 3,102 Other real estate owned 752
1,186 1,186 1,186
1,561 Nonperforming assets $ 3,426 $ 3,437
$ 2,339 $ 3,218 $ 4,663 Allowance for
loan losses 8,685 8,200 7,994 7,994 7,994 Allowance for loan losses
as a percent of total nonperforming loans 324.79 % 364.28 % 693.32
% 393.41 % 257.70 % Nonperforming loans as a percent of gross loans
0.20 0.18 0.10 0.19 0.33 Nonperforming assets as a percent of total
assets 0.20 0.20 0.15 0.21 0.33 Net loan charge-offs for the
quarter ended $ 464 $ 390 $ 646 $ 322 $ 296 Net loan charge-offs
for quarter to average total loans, net 0.15 % 0.13 % 0.25 % 0.13 %
0.13 % Allowance for loan losses to gross loans 0.66 0.66 0.70 0.75
0.85
Delinquent Loans: 30 - 59 days $ 118 $ 969
$ 724 $ 669 $ 58 60 - 89 days 32 - 214 580 1,077 90+ days (4)
1,427 1,143 111
1,073 1,881 Total delinquency $ 1,577 $
2,112 $ 1,049 $ 2,322 $ 3,016
Delinquency as a % of total gross loans 0.12 % 0.17 % 0.09 % 0.22 %
0.32 % (1) Majority secured by real estate. (2) Includes
second trust deeds. (3) Total gross loans for March 31, 2014 are
net of the unaccreted mark-to-market discounts on Canyon National
loans of $1.8 million, on Palm Desert National loans of $2.2
million, and on San Diego Trust loans of $115,000 and of the
mark-to-market premium on First Associations loans of $53,000. (4)
All 90 day or greater delinquencies are on nonaccrual status and
reported as part of nonperforming assets.
PACIFIC
PREMIER BANCORP, INC. AND SUBSIDIARIES STATISTICAL
INFORMATION (dollars in thousands, except per share data)
March 31,
December 31, September 30, June 30, March
31, 2014 2013 2013 2013 2013
Deposit
Accounts
Noninterest-bearing $ 412,871 $ 366,755 $ 363,606 $ 345,063 $
316,536 Interest-bearing: Checking 137,285 120,886 106,740 124,790
115,541 Money market 453,261 427,577 446,885 425,884 323,709
Savings 76,087 76,412 80,867 81,277 80,578 Time 355,699
314,656 286,036 337,175
349,355 Total interest-bearing
1,022,332 939,531 920,528
969,126 869,183 Total deposits $ 1,435,203
$ 1,306,286 $ 1,284,134 $ 1,314,189 $
1,185,719
Pacific Premier
Bank Capital Ratios
Tier 1 leverage ratio 10.26 % 10.03 % 10.02 % 10.97 % 12.55 % Tier
1 risk-based capital ratio 12.06 % 12.34 % 13.28 % 13.34 % 14.43 %
Total risk-based capital ratio 12.71 % 12.97 % 13.96 % 14.07 %
15.23 %
Pacific Premier
Bancorp, Inc. Capital Ratios
Tier 1 leverage ratio 10.45 % 10.29 % 10.19 % 11.15 % 12.84 % Tier
1 risk-based capital ratio 12.23 % 12.54 % 13.48 % 13.54 % 14.61 %
Total risk-based capital ratio 12.88 % 13.17 % 14.16 % 14.27 %
15.40 % Tangible common equity ratio (1) 9.30 % 8.94 % 9.51 % 9.36
% 10.16 %
Share
Data
Book value per share $ 10.96 $ 10.52 $ 10.28 $ 10.15 $ 10.21
Tangible book value per share (1) 9.26 9.08 8.82 8.62 9.15 Closing
stock price 16.14 15.74 13.42 12.22 13.15 (1) A
reconciliation of the non-GAAP measures of tangible common equity
and tangible book value per share to the GAAP measures of common
stockholders' equity and book value per share is set forth below.
PACIFIC PREMIER BANCORP, INC. AND
SUBSIDIARIESSTATISTICAL INFORMATION(dollars in
thousands, except per share data)
GAAP Reconciliations
For periods presented below, adjusted net income and adjusted
diluted earnings per share are non-GAAP financial measures derived
from GAAP-based amounts. We calculate these figures by excluding
merger related expenses in period results. Management believes that
the exclusion of such items from these financial measures provides
useful information to an understanding of the operating results of
our core business. However, these non-GAAP financial measures are
supplemental and are not a substitute for an analysis based on GAAP
measures. As other companies may use different calculations for
these adjusted measures, this presentation may not be comparable to
other similarly titled adjusted measures reported by other
companies.
March 31, December 31,
March 31, 2014 2013 2013 Net
income $ 2,632 $ 4,204 $ 1,972 Plus merger related expenses, net of
tax 393 128 1,093
Adjusted net income $
3,025 $ 4,332 $ 3,065 Diluted earnings per share $ 0.15 $
0.24 $ 0.13 Plus merger related expenses, net of tax 0.02
0.00 0.07
Adjusted diluted earnings per share
$ 0.17 $ 0.24 $ 0.20
For periods presented below, adjusted net income and adjusted
average tangible common equity are non-GAAP financial measures
derived from GAAP-based amounts. We calculate these figures by
adjusting net income for the effect of CDI amortization and exclude
the average CDI and average goodwill from the average stockholders’
equity during the period. Management believes that the exclusion of
such items from these financial measures provides useful
information to an understanding of the operating results of our
core business. However, these non-GAAP financial measures are
supplemental and are not a substitute for an analysis based on GAAP
measures. As other companies may use different calculations for
these adjusted measures, this presentation may not be comparable to
other similarly titled adjusted measures reported by other
companies.
March 31, December 31,
March 31, 2014 2013 2013 Net
income $ 2,632 $ 4,204 $ 1,972 Less: Tax effected CDI amortization
159 159 58
Adjusted
net income $ 2,791 $ 4,363 $ 2,030
Average stockholders' equity $ 182,313 $ 173,455 $ 139,685 Less:
Average core deposit intangible 6,501 6,755 2,923 Less: Average
goodwill 21,109 17,428 2,107
Average tangible common equity $ 154,703 $
149,272 $ 134,655
Return on average
tangible common equity 7.22 % 11.69 % 6.03 %
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.
March 31, December 31,
September 30, June 30, March 31,
2014 2013 2013 2013 2013
Total stockholders' equity $ 188,860 $ 175,226 $ 171,154 $ 168,811
$ 157,589 Less: Intangible assets (29,324 ) (24,056 )
(24,309 ) (25,369 ) (16,317 )
Tangible
common equity $ 159,536 $ 151,170 $ 146,845
$ 143,442 $ 141,272 Book value per
share $ 10.96 $ 10.52 $ 10.28 $ 10.15 $ 10.21 Less: Intangible book
value per share (1.70 ) (1.44 ) (1.46 )
(1.53 ) (1.06 )
Tangible book value per share $ 9.26
$ 9.08 $ 8.82 $ 8.62 $ 9.15
Total assets $ 1,745,282 $ 1,714,187 $ 1,569,020 $ 1,558,458
$ 1,406,655 Less: Intangible assets (29,324 ) (24,056
) (24,309 ) (25,369 ) (16,317 )
Tangible
assets $ 1,715,958 $ 1,690,131 $ 1,544,711
$ 1,533,089 $ 1,390,338
Tangible common
equity ratio 9.30 % 8.94 % 9.51 % 9.36 % 10.16 %
Pacific Premier Bancorp, Inc.Steve
GardnerPresident/CEO949-864-8000orKent J. SmithExecutive Vice
President/CFO949-864-8000
Pacific Premier Bancorp (NASDAQ:PPBI)
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