Second Quarter 2017 Summary
- Net income of $14.2 million, an
increase of $4.7 million, or 49%, over the prior quarter
- Second quarter results include $10.1
million of merger-related expense
- Diluted earnings per share of
$0.35
- ROAA and ROATCE of 0.89% and 11.33%,
respectively
- Efficiency ratio of 52%
- Closed acquisition of Heritage Oaks
Bancorp effective April 1, 2017
- Tangible book value of $13.83, an
increase of 16.5% over the second quarter of 2016
- New loan originations of $492
million, 33% annualized increase
- Noninterest-bearing deposits account
for 37% of total deposits
Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company”),
the holding company of Pacific Premier Bank (the “Bank”), reported
net income for the second quarter of 2017 of $14.2 million, or
$0.35 per diluted share, compared with net income of $9.5 million,
or $0.34 per diluted share, for the first quarter of 2017 and net
income of $10.4 million, or $0.37 per diluted share, for the second
quarter of 2016. Net income for the second and first quarters of
2017 include $10.1 million and $4.9 million of merger-related
expense, respectively, associated with the acquisition of Heritage
Oaks Bancorp ("Heritage Oaks"). Net income for the second quarter
of 2016 includes $497,000 of merger-related expense associated with
the acquisition of Security Bank of California ("Security").
For the three months ended June 30, 2017, the Company’s
return on average assets was 0.89% and return on average tangible
common equity was 11.33%. For the three months ended March 31,
2017, the Company's return on average assets was 0.94% and the
return on average tangible common equity was 11.03%. For the three
months ended June 30, 2016, the Company's return on average
assets was 1.16% and its return on average tangible common equity
was 13.30%. Total assets as of June 30, 2017 were $6.4 billion
compared with $4.2 billion at March 31, 2017 and $3.6 billion
at June 30, 2016.
Steven R. Gardner, Chairman, President and Chief Executive
Officer of the Company, commented on the results, “We executed well
in the second quarter, generating strong business volumes while
integrating the Heritage Oaks Bancorp acquisition. We had another
strong quarter of loan production, generating $492 million in
commitments. We continue to have well balanced loan production with
contributions from our commercial, commercial real estate, SBA and
franchise lending businesses, while also maintaining exceptional
credit quality.
“The integration of the Heritage Oaks team has progressed very
well throughout the second quarter and we completed the systems
conversion last week. We are on track to capture all of the
synergies that we had projected for this transaction. At the same
time, we continue to strengthen and enhance our infrastructure and
personnel as we anticipate eventually surpassing the $10 billion
asset threshold. While making these investments in people and
systems, we believe we will be able to achieve an operating
efficiency ratio in the low 50% range, which we think is
appropriate for a bank of our size, growth profile and commercial
banking focus.
“Over the second half of the year, we will be focused on
leveraging our unique sales culture, larger lending capacity, and
broader product offerings to accelerate business development in the
Central Coast of California. We also continue to actively explore
additional M&A transactions that can provide strategic and
economic benefits, and further enhance the value of our franchise,”
said Mr. Gardner.
FINANCIAL HIGHLIGHTS
Three Months Ended June 30, March
31, June 30, 2017
2017 2016 Financial
Highlights (dollars in thousands, except per share data) Net
income $ 14,176 $ 9,521 $ 10,369 Diluted earnings per share $ 0.35
$ 0.34 $ 0.37 Return on average assets 0.89 % 0.94 % 1.16 % Return
on average tangible common equity (1) 11.33 % 11.03 % 13.30 % Net
interest margin 4.40 % 4.39 % 4.48 % Cost of deposits 0.25 % 0.27 %
0.28 % Efficiency ratio (2) 52.3 % 52.3 % 54.4 % Total assets $
6,440,631 $ 4,174,428 $ 3,597,666 Tangible book value (1) $ 13.83 $
12.88 $ 11.87 (1)
A reconciliation of the non-GAAP measures of average
tangible common equity and tangible book value to the GAAP measures
of common stockholders' equity and book value are set forth at the
end of this press release. (2) Represents the ratio of noninterest
expense less other real estate owned operations, core deposit
intangible amortization and merger-related expense to the sum of
net interest income before provision for loan losses and total
noninterest income, less gains/(loss) on sale of securities and
other-than-temporary impairment recovery/(loss) on investment
securities.
INCOME STATEMENT HIGHLIGHTS
Net Interest Income and Net Interest Margin
Net interest income totaled $63.3 million in the second quarter
of 2017, an increase of $21.6 million, or 52%, from the first
quarter of 2017. The increase in net interest income was primarily
due to an increase in average interest-earning assets of $1.9
billion, primarily related to the acquisition of Heritage Oaks,
which at acquisition added $1.4 billion of loans and $445 million
of securities, before purchase accounting adjustments.
Net interest margin increased to 4.40% from 4.39% in the prior
quarter, primarily due to higher loan yields which increased 10
basis points to 5.29% from 5.19% in the prior quarter, as a result
of increased accretion income as well as the favorable repricing of
our variable rate loan portfolio, resultant from the recent Fed
rate increases. Additionally, our average cost of interest-bearing
liabilities decreased 4 basis points to 0.61% from 0.65% in the
prior quarter with the acquisition of Heritage Oaks. Partially
offsetting these benefits was a 16 basis point decrease in the
investment portfolio yield to 2.42% from 2.58% in the prior
quarter. Included in the net interest margin for the second quarter
of 2017 was $4.2 million of accretion income associated with
acquired loans, representing 30 basis points of net interest
margin, including $3.3 million associated with the Heritage Oaks
portfolio, compared to $1.1 million of accretion income
representing 12 basis points of net interest margin in the first
quarter of 2017.
Net interest income for the second quarter of 2017 increased
$25.8 million, or 69%, compared to the second quarter of 2016. The
increase was primarily related to an increase in average
interest-earning assets of $2.4 billion, which resulted primarily
from our organic loan growth since the end of the second quarter of
2016 and our acquisition of Heritage Oaks during the second quarter
of 2017.
Provision for Loan Losses
A provision for loan losses of $1.9 million was recorded for the
second quarter of 2017, compared with a provision for loan losses
of $2.5 million for the quarter ending March 31, 2017. Lower
credit losses as evidenced by net loan recoveries of $76,000
contributed to the decrease in our provision for loan losses.
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
Three Months Ended June 30, 2017
March 31, 2017 June 30, 2016
AverageBalance
InterestIncome/Expense
AverageYield/Cost
AverageBalance
InterestIncome/Expense
AverageYield/Cost
AverageBalance
InterestIncome/Expense
AverageYield/Cost
Assets (dollars in thousands) Cash and cash equivalents $
133,127 $ 160 0.48 % $ 86,849 $ 84 0.39 % $ 177,603 $ 189 0.43 %
Investment securities 829,380 5,019 2.42 450,075 2,907 2.58 299,049
1,650 2.21 Loans receivable, net (1) 4,815,612 63,554
5.29 3,315,792 42,436 5.19 2,892,236
39,035 5.43 Total interest-earning assets $ 5,778,119 $ 68,733 4.77
% $ 3,852,716 $ 45,427 4.78 % $ 3,368,888 $ 40,874 4.88 %
Liabilities Interest-bearing deposits $ 3,107,842 $ 3,081
0.40 % $ 2,006,365 $ 2,135 0.43 % $ 1,864,252 $ 2,010 0.43 %
Borrowings 464,845 2,314 2.00 334,618
1,589 1.93 169,058 1,303 3.10 Total interest-bearing
liabilities $ 3,572,687 $ 5,395 0.61 % $ 2,340,983 $ 3,724 0.65 % $
2,033,310 $ 3,313 0.66 % Noninterest-bearing deposits $ 1,802,752
$ 1,208,045 $ 1,060,104 Net interest income $
63,338 $ 41,703 $ 37,561 Net interest margin (2) 4.40 % 4.39 % 4.48
% (1) Average balance includes nonperforming loans
and is net of deferred loan origination fees/costs and unamortized
discounts/premiums. (2) Represents net interest income divided by
average interest-earning assets.
Noninterest Income
Noninterest income for the second quarter of 2017 was $8.8
million, an increase of $4.1 million, or 87%, from the first
quarter of 2017. The increase from the first quarter of 2017 was
primarily related to a $2.1 million increase in net gain from the
sale of $213 million of investment securities, a $799,000 increase
in deposit fees and a $1.1 million increase in other income all
related to the Heritage Oaks acquisition. During the quarter, the
Bank sold $29.6 million of Small Business Administration ("SBA")
loans for a gain of $2.9 million, compared with $30.5 million of
SBA loans sold and a gain of $2.6 million in the prior quarter.
Noninterest income for the second quarter of 2017 increased $4.3
million, or 97%, compared to the second quarter of 2016. The
increase from the second quarter of 2016 was primarily related to a
$1.6 million increase in net gain from the sale of investment
securities, a $829,000 increase in deposit fees, a $763,000
increase in net gain from sales of loans and a $1.2 million
increase in other income.
Three Months Ended June 30,
March 31, June 30, 2017 2017
2016 NONINTEREST INCOME (dollars in thousands) Loan
servicing fees $ 143 $ 222 $ 256 Deposit fees 1,646 847 817 Net
gain from sales of loans 2,887 2,811 2,124 Net gain from sales of
investment securities 2,093 — 532 Net gain from other real estate
owned 94 — 18 Other income 1,896 803
703 Total noninterest income $ 8,759 $ 4,683 $
4,450
Noninterest Expense
Noninterest expense totaled $48.5 million for the second quarter
of 2017, an increase of $18.7 million, or 63%, compared with the
first quarter of 2017. The increase was primarily driven by the
inclusion of Heritage Oaks operations and merger-related expenses
of $10.1 million in the second quarter of 2017 compared with $4.9
million for the first quarter of 2017. Excluding the merger related
expense our noninterest expense was $38.4 million. Going forward we
expect our quarterly operating expense run rate to be in the range
of $38-40 million.
In comparison to the second quarter of 2016, noninterest expense
grew by $24.8 million, or 105%. The increase in expense was
primarily related to higher merger-related expense of $9.6 million
and the additional costs from the operations, personnel and
branches retained from the acquisition of Heritage, combined with
our continued investment in personnel to support our organic
growth.
Three Months Ended June 30,
March 31, June 30, 2017
2017 2016 NONINTEREST EXPENSE
(dollars in thousands) Compensation and benefits $ 21,623 $ 14,887
$ 13,098 Premises and occupancy 3,733 2,453 2,447 Data processing
2,439 1,187 887 Other real estate owned operations, net 44 12 (15 )
FDIC insurance premiums 818 455 401 Legal, audit and professional
expense 1,178 857 446 Marketing expense 1,006 818 803 Office,
telecommunications and postage expense 922 433 573 Loan expense
1,068 468 540 Deposit expense 1,669 1,444 1,196 Merger-related
expense 10,117 4,946 497 CDI amortization 1,761 511 645 Other
expense 2,118 1,276 2,177 Total
noninterest expense $ 48,496 $ 29,747 $ 23,695
Income Tax
For the second quarter of 2017, our effective tax rate was
34.7%, compared with 32.7% for the first quarter of 2017 and 38.0%
for the second quarter of 2016. The increase in the effective tax
rate when compared to the first quarter of 2017 was primarily the
result of lower tax deductible equity stock expense related to the
adoption of ASU 2016-09, Compensation-Stock Compensation (Topic
718): Improvements to Employee Share-Based Accounting, which went
into effect for the Company on January 1, 2017. As a result of the
adoption of ASU 2016-09, the Company began recognizing the tax
effects of exercised or vested awards as discrete items in the
reporting period in which they occur, resulting in a $461,000 tax
benefit to the Company for the second quarter of 2017 compared with
$1.1 million in the first quarter of 2017.
BALANCE SHEET HIGHLIGHTS
Loans
Loans held for investment totaled $4.9 billion at June 30,
2017, an increase of $1.5 billion, or 44%, from March 31,
2017, and an increase of $1.9 billion, or 66%, from June 30,
2016. The increases were impacted by the acquisition of Heritage
Oaks, as well as organic loan growth. The total end of period
weighted average interest rate on loans, excluding fees and
discounts, at June 30, 2017 was 4.79%, compared to 4.87% at
March 31, 2017 and 4.84% at June 30, 2016.
Loan activity during the second quarter of 2017 included new
organic loan commitments of $492 million, compared with $455
million in the first quarter of 2017 and $299 million in the second
quarter of 2016. At June 30, 2017, our ratio of loans held for
investment to total deposits was 98.2%, compared with 102.7% and
99.6% at March 31, 2017 and June 30, 2016,
respectively.
June 30, March 31,
June 30, 2017 2017
2016 Loan Portfolio (dollars in
thousands) Business loans: Commercial and industrial $ 733,852 $
593,457 $ 508,141 Franchise 565,415 493,158 403,855 Commercial
owner occupied 729,476 482,295 443,060 SBA 108,224 107,233 86,076
Agriculture 98,842 — — Real estate loans: Commercial non-owner
occupied 1,095,184 612,787 526,362 Multi-family 746,547 682,237
613,573 One-to-four family 322,048 100,423 106,538 Construction
289,600 298,279 215,786 Farmland 136,587 — — Land 31,799 19,738
18,341 Other loans 7,309 3,930
5,822 Total gross loans 4,864,883 3,393,537 2,927,554 Plus:
Deferred loan origination costs/(fees) and premiums/(discounts),
net 568 3,250 3,181
Total loans 4,865,451 3,396,787 2,930,735 Less: Loans held
for sale, at lower of cost or fair value 6,840
11,090 10,116 Loans held for investment
4,858,611 3,385,697 2,920,619 Allowance for loan losses
(25,055 ) (23,075 ) (18,955 ) Loans held for
investment, net $ 4,833,556 $ 3,362,622 $ 2,901,664
Asset Quality and Allowance for Loan Losses
At June 30, 2017, our allowance for loan losses was $25.1
million, an increase of $2.0 million from March 31, 2017. Loan
loss provision for the quarter was $1.9 million while net
recoveries were $76,000.
The ratio of allowance for loan losses to loans held for
investment at June 30, 2017 was 0.52%, compared to 0.68% and
0.65% at March 31, 2017 and June 30, 2016, respectively.
Under the guidance of ASC 820: Fair Value Measurements and
Disclosures, the fair value discount on loans acquired through
total bank acquisition was $25.5 million, or 0.53%, of total loans
held for investment as of June 30, 2017.
Nonperforming assets totaled $767,000, or 0.01% of total assets,
at June 30, 2017, a decrease from $973,000, or 0.02% of total
assets, at March 31, 2017. During the second quarter of 2017,
nonperforming loans decreased $118,000 to $395,000, and other real
estate owned decreased to $372,000. Loan delinquencies increased to
$3.0 million, or 0.06%, of loans held for investment compared to
$477,000, or 0.01% of loans held for investment at March 31,
2017.
June 30, March 31,
June 30, 2017 2017
2016 Asset Quality (dollars in
thousands) Nonaccrual loans $ 395 $ 513 $ 4,062 Other real estate
owned 372 460 711
Nonperforming assets $ 767 $ 973 $ 4,773
Allowance for loan losses $ 25,055 $ 23,075 $ 18,955
Allowance for loan losses as a percent of total nonperforming loans
6,343 % 4,498 % 467 % Nonperforming loans as a percent of loans
held for investment 0.01 % 0.02 % 0.14 % Nonperforming assets as a
percent of total assets 0.01 % 0.02 % 0.13 % Net loan (recoveries)
charge-offs for the quarter ended $ (76 ) $ 723 $ 1,089 Net loan
(recoveries) charge-offs for quarter to average total loans — %
0.02 % 0.04 % Allowance for loan losses to loans held for
investment (1) 0.52 % 0.68 % 0.65 %
Delinquent Loans: 30 -
59 days $ 600 $ 117 $ 1,144 60 - 89 days 1,965 — 2,487 90+ days
454 360 1,797 Total
delinquency $ 3,019 $ 477 $ 5,428 Delinquency
as a % of loans held for investment 0.06 % 0.01 % 0.19 %
(1) 38% of
loans held for investment include a fair value discount of $25.2
million.
Investment Securities
Investment securities available for sale totaled $703 million at
June 30, 2017, an increase of $268 million from March 31,
2017, and $458 million from June 30, 2016. The increase in the
second quarter of 2017 was primarily the result of the acquisition
of Heritage Oaks, which at acquisition added $445 million of
securities, before purchase accounting adjustments, partially
offset by approximately $213 million in sales of securities
resulting in a gain of $2.1 million.
Deposits
At June 30, 2017, deposits totaled $4.9 billion, an
increase of $1.6 billion, or 50%, from March 31, 2017 and $2.0
billion, or 69%, from June 30, 2016. At June 30, 2017,
non-maturity deposits totaled $4.1 billion, 84% of total deposits,
an increase of $1.4 billion, or 53%, from March 31, 2017 and
an increase of $1.8 billion, or 79%, from June 30, 2016.
During the second quarter of 2017, deposit increases included $732
million in money market/savings deposits, $577 million in
noninterest-bearing deposits, $191 million in retail certificate
deposits, $132 million in interest checking and $16 million in
wholesale/brokered certificates of deposits, primarily as a result
of the acquisition of Heritage Oaks.
The weighted average cost of deposits for the three month period
ending June 30, 2017 was 0.25%, compared to 0.27% for the
three month period ending March 31, 2017 and 0.28% for the
three month period ending June 30, 2016.
June 30, March 31,
June 30, 2017 2017
2016 Deposit Accounts (dollars in
thousands) Noninterest-bearing checking $ 1,810,047 $ 1,232,578 $
1,043,361 Interest-bearing: Checking 323,818 191,399 181,859 Money
market/Savings 2,006,131 1,273,917 1,086,255 Retail certificates of
deposit 572,523 381,738 420,673 Wholesale/brokered certificates of
deposit 233,912 217,441 198,853
Total interest-bearing 3,136,384
2,064,495 1,887,640 Total deposits $ 4,946,431
$ 3,297,073 $ 2,931,001 Cost of
deposits 0.25 % 0.27 % 0.28 % Noninterest-bearing deposits as a
percent of total deposits 37 % 37 % 36 % Non-maturity deposits as a
percent of total deposits 84 % 82 % 79 %
Borrowings
At June 30, 2017, total borrowings amounted to $477
million, an increase of $96.3 million, or 25%, from March 31,
2017 and an increase of $287 million, or 152%, from June 30,
2016. Total borrowings for the quarter included $397 million of
advances from the Federal Home Loan Bank of San Francisco and $80
million of subordinated debt. At June 30, 2017, total
borrowings represented 7.4% of total assets, compared to 9.1% and
5.3%, as of March 31, 2017 and June 30, 2016,
respectively.
Capital Ratios
At June 30, 2017, our ratio of tangible common equity to
total assets was 9.18%, with book value per share of $23.96 and
tangible book value of $13.83 per share, compared with a tangible
book value of $12.88 at March 31, 2017 and tangible book value
of $11.87 at June 30, 2016.
At June 30, 2017, the Bank exceeded all regulatory capital
requirements with a ratio for tier 1 leverage capital of 10.54%,
common equity tier 1 risk-based capital of 11.85%, tier 1
risk-based capital of 11.85% and total risk-based capital of
12.35%. These capital ratios exceeded the “well capitalized”
standards defined by the federal banking regulators of 5.00% for
tier 1 leverage capital, 6.5% for common equity tier 1 risk-based
capital, 8.00% for tier 1 risk-based capital and 10.00% for total
risk-based capital.
At June 30, 2017, the Company had a ratio for tier 1
leverage capital of 9.85%, common equity tier 1 risk-based capital
of 10.71%, tier 1 risk-based capital of 11.09% and total risk-based
capital of 12.70%.
June 30, March 31,
June 30, Capital Ratios 2017
2017 2016 Pacific
Premier Bancorp, Inc. Consolidated Tier 1 leverage ratio 9.85 %
9.54 % 9.88 % Common equity tier 1 risk-based capital ratio 10.71 %
9.84 % 10.53 % Tier 1 risk-based capital ratio 11.09 % 10.11 %
10.84 % Total risk-based capital ratio 12.70 % 12.34 % 13.37 %
Tangible common equity ratio (1) 9.18 % 8.85 % 9.42 %
Pacific Premier Bank Tier 1 leverage ratio 10.54 % 10.71 %
11.17 % Common equity tier 1 risk-based capital ratio 11.85 % 11.37
% 12.25 % Tier 1 risk-based capital ratio 11.85 % 11.37 % 12.25 %
Total risk-based capital ratio 12.35 % 12.01 % 12.88 %
Share Data Book value per share $ 23.96 $ 16.88 $ 15.94
Shares issued and outstanding 40,048,758 27,908,816 27,650,533
Tangible book value per share (1) $ 13.83 $ 12.88 $ 11.87 Closing
stock price $ 36.90 $ 38.55 $ 24.00 (1) A
reconciliation of the non-GAAP measures of tangible common equity
and tangible book value per share to the GAAP measures of common
stockholders' equity and book value per share is set forth below.
Conference Call and Webcast
The Company will host a conference call at 9:00 a.m. PT / 12:00
p.m. ET on July 25, 2017 to discuss its financial results.
Analysts and investors may participate in the question-and-answer
session. A live webcast will be available on the Webcasts page of the Company's investor relations
website. An archived version of the webcast will be available in
the same location shortly after the live call has ended. The
conference call can be accessed by telephone at (866) 290-5977 and
asking to be joined to the Pacific Premier Bancorp conference call.
Additionally, a telephone replay will be made available through
August 1, 2017 at (877) 344-7529, conference ID 10110048.
About Pacific Premier Bancorp, Inc.
Pacific Premier Bancorp, Inc. is the holding company for Pacific
Premier Bank, one of the largest banks headquartered in Southern
California with approximately $6.4 billion in assets. Pacific
Premier Bank is a business bank primarily focused on serving small
and middle market businesses in the counties of Orange, Los
Angeles, Riverside, San Bernardino, San Diego, San Luis Obispo and
Santa Barbara, California. Through its more than 25 depository
branches, Pacific Premier Bank offers a diverse range of lending
products including commercial, commercial real estate,
construction, and SBA loans, as well as specialty banking products
for homeowners associations and franchise lending nationwide.
FORWARD-LOOKING COMMENTS
The statements contained herein that are not historical facts
are forward-looking statements based on management's current
expectations and beliefs concerning future developments and their
potential effects on the Company including, without limitation,
statements regarding the Company's growth and the impact of
acquisitions. Such statements involve inherent risks and
uncertainties, many of which are difficult to predict and are
generally beyond the control of the Company. There can be no
assurance that future developments affecting the Company will be
the same as those anticipated by management. The Company cautions
readers that a number of important factors could cause actual
results to differ materially from those expressed in, or implied or
projected by, such forward-looking statements. These risks and
uncertainties include, but are not limited to, the following: the
strength of the United States economy in general and the strength
of the local economies in which we conduct operations; the effects
of, and changes in, trade, monetary and fiscal policies and laws,
including interest rate policies of the Board of Governors of the
Federal Reserve System; inflation, interest rate, market and
monetary fluctuations; the timely development of competitive new
products and services and the acceptance of these products and
services by new and existing customers; the willingness of users to
substitute competitors’ products and services for the Company’s
products and services; the impact of changes in financial services
policies, laws and regulations (including the Dodd-Frank Wall
Street Reform and Consumer Protection Act) and of governmental
efforts to restructure the U.S. financial regulatory system;
technological changes; the effect of acquisitions that the Company
may make, if any, including, without limitation, the failure to
achieve the expected revenue growth and/or expense savings from its
acquisitions; changes in the level of the Company’s nonperforming
assets and charge-offs; any oversupply of inventory and
deterioration in values of California real estate, both residential
and commercial; the effect of changes in accounting policies and
practices, as may be adopted from time-to-time by bank regulatory
agencies, the Securities and Exchange Commission (“SEC”), the
Public Company Accounting Oversight Board, the Financial Accounting
Standards Board or other accounting standards setters; possible
other-than-temporary impairment of securities held by us; changes
in consumer spending, borrowing and savings habits; the effects of
the Company’s lack of a diversified loan portfolio, including the
risks of geographic and industry concentrations; ability to attract
deposits and other sources of liquidity; changes in the financial
performance and/or condition of our borrowers; changes in the
competitive environment among financial and bank holding companies
and other financial service providers; unanticipated regulatory or
judicial proceedings; and the Company’s ability to manage the risks
involved in the foregoing. Additional factors that could cause
actual results to differ materially from those expressed in the
forward-looking statements are discussed in the 2016 Annual Report
on Form 10-K of Pacific Premier Bancorp, Inc. filed with the SEC
and available at the SEC’s Internet site (http://www.sec.gov).
The Company specifically disclaims any obligation to update any
factors or to publicly announce the result of revisions to any of
the forward-looking statements included herein to reflect future
events or developments.
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (dollars in
thousands) (Unaudited)
June 30, March 31, December 31, September
30, June 30, ASSETS 2017
2017 2016
2016 2016 Cash and due from
banks $ 35,686 $ 13,425 $ 14,706 $ 18,543 $ 15,444 Interest-bearing
deposits with financial institutions 193,595
87,088 142,151 85,361
169,855 Cash and cash equivalents 229,281 100,513 156,857
103,904 185,299 Interest-bearing time deposits with financial
institutions 3,944 3,944 3,944 3,944 3,944 Investments
held-to-maturity, at amortized cost 7,750 8,272 8,565 8,900 9,292
Investment securities available-for-sale, at fair value 703,083
435,408 380,963 313,200 245,471 FHLB, FRB and other stock, at cost
56,612 37,811 37,304 29,966 26,984 Loans held for sale, at lower of
cost or fair value 6,840 11,090 7,711 9,009 10,116 Loans held for
investment 4,858,611 3,385,697 3,241,613 3,090,839 2,920,619
Allowance for loan losses (25,055 ) (23,075 )
(21,296 ) (21,843 ) (18,955 ) Loans held for
investment, net 4,833,556 3,362,622 3,220,317 3,068,996 2,901,664
Accrued interest receivable 20,607 13,366 13,145 11,642 12,143
Other real estate owned 372 460 460 711 711 Premises and equipment
45,342 11,799 12,014 11,314 11,014 Deferred income taxes, net
22,201 12,744 16,807 20,001 16,552 Bank owned life insurance 74,982
40,696 40,409 40,116 39,824 Intangible assets 35,305 8,942 9,451
9,976 10,500 Goodwill 370,564 102,490 102,490 101,939 101,939 Other
assets 30,192 24,271 25,874
21,213 22,213 Total Assets $
6,440,631 $ 4,174,428 $ 4,036,311 $ 3,754,831
$ 3,597,666
LIABILITIES AND STOCKHOLDERS’
EQUITY LIABILITIES: Deposit accounts: Noninterest-bearing
checking $ 1,810,047 $ 1,232,578 $ 1,185,768 $ 1,160,394 $
1,043,361 Interest-bearing: Checking 323,818 191,399 182,893
181,534 181,859 Money market/savings 2,006,131 1,273,917 1,202,361
1,145,609 1,086,255 Retail certificates of deposit 572,523 381,738
375,203 384,083 420,673 Wholesale/brokered certificates of deposit
233,912 217,441 199,356
188,132 198,853 Total interest-bearing
3,136,384 2,064,495 1,959,813
1,899,358 1,887,640 Total
deposits 4,946,431 3,297,073 3,145,581 3,059,752 2,931,001 FHLB
advances and other borrowings 397,267 311,363 327,971 136,213
120,252 Subordinated debentures 79,800 69,413 69,383 69,353 69,323
Accrued expenses and other liabilities 57,402
25,554 33,636 39,548
36,460 Total Liabilities 5,480,900
3,703,403 3,576,571 3,304,866
3,157,036 STOCKHOLDERS’ EQUITY: Common stock 396 275
274 273 273 Additional paid-in capital 815,327 345,888 345,138
343,231 342,388 Retained earnings 140,748 126,570 117,049 105,098
95,869 Accumulated other comprehensive income (loss), net of tax
(benefit) 3,260 (1,708 ) (2,721 )
1,363 2,100 Total Stockholders' Equity
959,731 471,025 459,740
449,965 440,630 Total Liabilities and
Stockholders' Equity $ 6,440,631 $ 4,174,428 $
4,036,311 $ 3,754,831 $ 3,597,666
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands,
except per share data) (Unaudited)
Three Months Ended Six Months
Ended June 30, March 31, June
30, June 30, June 30, 2017
2017 2016 2017
2016 INTEREST INCOME Loans $ 63,554 $
42,436 $ 39,035 $ 105,990 $ 74,442 Investment securities and other
interest-earning assets 5,179 2,991 1,839
8,170 3,937 Total interest income
68,733 45,427 40,874 114,160
78,379
INTEREST EXPENSE Deposits 3,081
2,135 2,010 5,216 4,079 FHLB advances and other borrowings 1,175
604 324 1,779 649 Subordinated debentures 1,139 985
979 2,124 1,889 Total interest
expense 5,395 3,724 3,313 9,119
6,617 Net interest income before provision for loan
losses 63,338 41,703 37,561 105,041 71,762 Provision for loan
losses 1,904 2,502 1,589 4,406
2,709 Net interest income after provision for loan
losses 61,434 39,201 35,972
100,635 69,053
NONINTEREST INCOME Loan
servicing fees 143 222 256 365 481 Deposit fees 1,646 847 817 2,493
1,645 Net gain from sales of loans 2,887 2,811 2,124 5,698 4,030
Net gain from sales of investment securities 2,093 — 532 2,093
1,285 Net gain from other real estate owned 94 — 18 94 18 Other
income 1,896 803 703 2,699
1,839 Total noninterest income 8,759
4,683 4,450 13,442 9,298
NONINTEREST EXPENSE Compensation and benefits 21,623 14,887
13,098 36,510 24,837 Premises and occupancy 3,733 2,453 2,447 6,186
4,730 Data processing 2,439 1,187 887 3,626 1,798 Other real estate
owned operations, net 44 12 (15 ) 56 (7 ) FDIC insurance premiums
818 455 401 1,273 783 Legal, audit and professional expense 1,178
857 446 2,035 1,311 Marketing expense 1,006 818 803 1,824 1,433
Office, telecommunications and postage expense 922 433 573 1,355
1,054 Loan expense 1,068 468 540 1,536 943 Deposit expense 1,669
1,444 1,196 3,113 2,201 Merger-related expense 10,117 4,946 497
15,063 3,616 CDI amortization 1,761 511 645 2,272 989 Other expense
2,118 1,276 2,177 3,394
3,640 Total noninterest expense 48,496 29,747
23,695 78,243 47,328 Net income
before income taxes 21,697 14,137 16,727 35,834 31,023 Income tax
7,521 4,616 6,358 12,137
12,100 Net income $ 14,176 $ 9,521 $ 10,369 $ 23,697
$ 18,923
EARNINGS PER SHARE Basic $ 0.36 $
0.35 $ 0.38 $ 0.71 $ 0.72 Diluted $ 0.35 $ 0.34 $ 0.37 $ 0.69 $
0.70
WEIGHTED AVERAGE SHARES OUTSTANDING Basic
39,586,524 27,528,940 27,378,930 33,591,040 26,467,292 Diluted
40,267,220 28,197,220 27,845,490 34,267,215 26,901,627
SELECTED FINANCIAL DATA
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
Three Months Ended June 30, 2017
March 31, 2017 June 30, 2016
AverageBalance
InterestIncome/Expense
AverageYield/Cost
AverageBalance
InterestIncome/Expense
AverageYield/Cost
AverageBalance
InterestIncome/Expense
AverageYield/Cost
Assets (dollars in thousands) Interest-earning assets: Cash
and cash equivalents $ 133,127 $ 160 0.48 % $ 86,849 $ 84 0.39 % $
177,603 $ 189 0.43 % Investment securities 829,380 5,019 2.42
450,075 2,907 2.58 299,049 1,650 2.21 Loans receivable, net (1)
4,815,612 63,554 5.29 3,315,792 42,436
5.19 2,892,236 39,035 5.43 Total interest-earning
assets 5,778,119 68,733 4.77 3,852,716 45,427 4.78 3,368,888 40,874
4.88 Noninterest-earning assets 592,186 196,041
194,005 Total assets $ 6,370,305 $ 4,048,757 $ 3,562,893
Liabilities and Equity Interest-bearing deposits: Interest
checking $ 329,450 $ 90 0.11 $ 195,258 $ 53 0.11 $ 178,258 $ 50
0.11 Money market 1,779,013 1,582 0.36 1,133,676 972 0.35 980,806
896 0.37 Savings 218,888 68 0.12 103,449 38 0.15 98,419 38 0.16
Retail certificates of deposit 568,367 911 0.64 372,208 685 0.75
451,035 743 0.66 Wholesale/brokered certificates of deposit
212,124 430 0.81 201,774 387 0.78
155,734 283 0.73 Total interest-bearing deposits 3,107,842
3,081 0.40 2,006,365 2,135 0.43 1,864,252 2,010 0.43 FHLB advances
and other borrowings 385,088 1,175 1.22 265,224 604 0.92 99,754 324
1.31 Subordinated debentures 79,757 1,139 5.71
69,394 985 5.68 69,304 979 5.65 Total
borrowings 464,845 2,314 2.00 334,618
1,589 1.93 169,058 1,303 3.10 Total interest-bearing
liabilities 3,572,687 5,395 0.61 2,340,983 3,724 0.65 2,033,310
3,313 0.66 Noninterest-bearing deposits 1,802,752 1,208,045
1,060,104 Other liabilities 46,666 30,297
32,867 Total liabilities 5,422,105 3,579,325 3,126,281
Stockholders' equity 948,200 469,432 436,612
Total liabilities and equity $ 6,370,305 $ 4,048,757
$ 3,562,893 Net interest income $ 63,338 $ 41,703 $ 37,561
Net interest margin (2) 4.40 % 4.39 % 4.48 % Ratio of
interest-earning assets to interest-bearing liabilities 161.73 %
164.58 % 165.68 % (1) Average balance includes
nonperforming loans and is net of deferred loan origination
fees/costs and unamortized discounts/premiums. (2) Represents net
interest income divided by average interest-earning assets.
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
LOAN PORTFOLIO COMPOSITION (dollars in thousands)
June 30, March 31,
December 31, September 30, June 30,
2017 2017 2016
2016 2016 Loan
Portfolio Business loans: Commercial and industrial $ 733,852 $
593,457 $ 563,169 $ 537,809 $ 508,141 Franchise 565,415 493,158
459,421 431,618 403,855 Commercial owner occupied 729,476 482,295
454,918 460,068 443,060 SBA 108,224 107,233 96,705 92,195 86,076
Agriculture 98,842 — — — — Real estate loans: Commercial non-owner
occupied 1,095,184 612,787 586,975 527,412 526,362 Multi-family
746,547 682,237 690,955 689,813 613,573 One-to-four family 322,048
100,423 100,451 101,377 106,538 Construction 289,600 298,279
269,159 231,098 215,786 Farmland 136,587 — — — — Land 31,799 19,738
19,829 18,472 18,341 Other loans 7,309 3,930
4,112 5,678 5,822
Total gross loans 4,864,883 3,393,537 3,245,694 3,095,540 2,927,554
Plus: Deferred loan origination costs/(fees) and
premiums/(discounts), net 568 3,250
3,630 4,308 3,181 Total
loans 4,865,451 3,396,787 3,249,324 3,099,848 2,930,735 Less: Loans
held for sale, at lower of cost or fair value 6,840
11,090 7,711 9,009
10,116 Loans held for investment 4,858,611 3,385,697
3,241,613 3,090,839 2,920,619 Allowance for loan losses
(25,055 ) (23,075 ) (21,296 ) (21,843 )
(18,955 ) Loans held for investment, net $ 4,833,556 $
3,362,622 $ 3,220,317 $ 3,068,996 $ 2,901,664
PACIFIC PREMIER BANCORP, INC. AND
SUBSIDIARIES ASSET QUALITY INFORMATION (dollars in
thousands)
June
30, March 31, December 31, September 30
June 30, 2017 2017
2016 2016
2016 Asset Quality Nonaccrual loans $ 395 $
513 $ 1,141 $ 5,734 $ 4,062 Other real estate owned 372
460 460 711
711 Nonperforming assets $ 767 $ 973 $ 1,601
$ 6,445 $ 4,773 Allowance for loan
losses $ 25,055 $ 23,075 $ 21,296 $ 21,843 $ 18,955 Allowance for
loan losses as a percent of total nonperforming loans 6,343 % 4,498
% 1,866 % 381 % 467 % Nonperforming loans as a percent of loans
held for investment 0.01 % 0.02 % 0.04 % 0.19 % 0.14 %
Nonperforming assets as a percent of total assets 0.01 % 0.02 %
0.04 % 0.17 % 0.13 % Net loan (recoveries) charge-offs for the
quarter ended $ (76 ) $ 723 $ 2,601 $ 1,125 $ 1,089 Net loan
(recoveries) charge-offs for quarter to average total loans — %
0.02 % 0.08 % 0.04 % 0.04 % Allowance for loan losses to loans held
for investment 0.52 % 0.68 % 0.66 % 0.71 % 0.65 %
Delinquent Loans: 30 - 59 days $ 600 $ 117 $ 122 $ 1,042 $
1,144 60 - 89 days 1,965 — 71 1,990 2,487 90+ days 454
360 639 2,646
1,797 Total delinquency $ 3,019 $ 477 $
832 $ 5,678 $ 5,428 Delinquency as a percent
of loans held for investment 0.06 % 0.01 % 0.03 % 0.18 % 0.19 %
PACIFIC PREMIER BANCORP, INC. AND
SUBSIDIARIESGAAP RECONCILIATIONS
(dollars in thousands, except per share
data)
For periods presented below, return on average tangible common
equity is a non-GAAP financial measures derived from GAAP-based
amounts. We calculate these figures by excluding CDI amortization
expense and exclude the average CDI and average goodwill from the
average stockholders' equity during the period. Management believes
that the exclusion of such items from these financial measures
provides useful information to an understanding of the operating
results of our core business. However, these non-GAAP financial
measures are supplemental and are not a substitute for an analysis
based on GAAP measures. As other companies may use different
calculations for these adjusted measures, this presentation may not
be comparable to other similarly titled adjusted measures reported
by other companies.
Three Months Ended June 30,
March 31, June 30, 2017
2017 2016 Net income $
14,176 $ 9,521 $ 10,369 Plus CDI amortization expense 1,761 511 645
Less CDI amortization expense tax adjustment (610 )
(167 ) (245 )
Net income for average tangible common
equity $ 15,327 $ 9,865 $ 10,769
Average stockholders' equity $ 948,200 $ 469,432 $ 436,612 Less
average CDI 36,445 9,274 10,876 Less average goodwill
370,564 102,490 101,923
Average tangible common equity $ 541,191 $ 357,668
$ 323,813
Return on average equity 5.98
% 8.11 % 9.50 %
Return on average tangible common equity
11.33 % 11.03 % 13.30 %
Tangible common equity to tangible assets (the "tangible common
equity ratio") and tangible book value per share are non-GAAP
financial measures derived from GAAP-based amounts. We calculate
the tangible common equity ratio by excluding the balance of
intangible assets from common stockholders' equity and dividing by
tangible assets. We calculate tangible book value per share by
dividing tangible common equity by common shares outstanding, as
compared to book value per share, which we calculate by dividing
common stockholders' equity by shares outstanding. We believe that
this information is consistent with the treatment by bank
regulatory agencies, which exclude intangible assets from the
calculation of risk-based capital ratios. Accordingly, we believe
that these non-GAAP financial measures provide information that is
important to investors and that is useful in understanding our
capital position and ratios. However, these non-GAAP financial
measures are supplemental and are not a substitute for an analysis
based on GAAP measures. As other companies may use different
calculations for these measures, this presentation may not be
comparable to other similarly titled measures reported by other
companies.
June 30, March 31,
December 31, September 30, June
30, 2017 2017
2016 2016 2016
Total stockholders' equity $ 959,731 $ 471,025 $ 459,740 $
449,965 $ 440,630 Less intangible assets (405,869 )
(111,432 ) (111,941 ) (111,915 ) (112,439 )
Tangible common equity $ 553,862 $ 359,593 $
347,799 $ 338,050 $ 328,191 Book value
per share $ 23.96 $ 16.88 $ 16.54 $ 16.27 $ 15.94 Less intangible
book value per share (10.13 ) (4.00 ) (4.03 )
(4.05 ) (4.07 )
Tangible book value per share
$ 13.83 $ 12.88 $ 12.51 $ 12.22 $ 11.87
Total assets $ 6,440,631 $ 4,174,428 $ 4,036,311 $
3,754,831 $ 3,597,666 Less intangible assets (405,869 )
(111,432 ) (111,941 ) (111,915 )
(112,439 )
Tangible assets $ 6,034,762 $ 4,062,996
$ 3,924,370 $ 3,642,916 $ 3,485,227
Tangible common equity ratio 9.18 % 8.85 % 8.86 %
9.28 % 9.42 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170725005522/en/
Pacific Premier Bancorp, Inc.Steven R. GardnerChairman,
President and Chief Executive Officer949.864.8000orRonald J.
Nicolas, Jr.Senior Executive Vice President &
CFO949.864.8000
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