Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains information and statements that are considered “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” or words or phrases of similar meaning. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Actual results, performance or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements.
The following factors, among others, could cause our financial performance to differ materially from that expressed in such forward-looking statements:
|
|
•
|
The strength of the U.S. economy in general and the strength of the local economies in which we conduct operations;
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|
|
•
|
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 (the “Federal Reserve”);
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|
|
•
|
Inflation/deflation, 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 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;
|
|
|
•
|
Technological and social media changes;
|
|
|
•
|
The effect of acquisitions we have made or may make, including, without limitation, the failure to achieve the expected revenue growth or expense savings from such acquisitions, or the failure to effectively integrate an acquisition target into our operations;
|
|
|
•
|
Changes in the level of our nonperforming assets and charge-offs;
|
|
|
•
|
The effect of changes in accounting policies and practices, as may be adopted from time-to-time by bank regulatory agencies, the SEC, the Public Company Accounting Oversight Board, the FASB or other accounting standards setters;
|
|
|
•
|
Possible OTTI of securities held by us;
|
|
|
•
|
The impact of current governmental efforts to restructure the U.S. financial regulatory system, including enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank 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;
|
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|
•
|
Ability to attract deposits and other sources of liquidity;
|
|
|
•
|
Changes in the financial performance and/or condition of our borrowers;
|
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|
•
|
Changes in the competitive environment among financial and bank holding companies and other financial service providers;
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•
|
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;
|
|
|
•
|
Unanticipated regulatory or judicial proceedings; and
|
|
|
•
|
Our ability to manage the risks involved in the foregoing.
|
If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this Quarterly Report on Form 10-Q and other reports and registration statements filed by us with the SEC. Therefore, we caution you not to place undue reliance on our forward-looking information and statements. We will not update the forward-looking information and statements to reflect actual results or changes in the factors affecting the forward-looking information and statements. For information on the factors that could cause actual results to differ from the expectations stated in the forward-looking statements, see “Risk Factors” under Part I, Item 1A of our
2016
Annual Report.
Forward-looking information and statements should not be viewed as predictions, and should not be the primary basis upon which investors evaluate us. Any investor in our common stock should consider all risks and uncertainties disclosed in our filings with the SEC, all of which are accessible on the SEC’s website at http://www.sec.gov.
GENERAL
This discussion should be read in conjunction with our Management Discussion and Analysis of Financial Condition and Results of Operations included in our
2016
Annual Report, plus the unaudited consolidated financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. The results for the
three and six
months ended
June 30, 2017
are not necessarily indicative of the results expected for the year ending
December 31, 2017
.
The Corporation is a California-based bank holding company incorporated in the state of Delaware and registered as a bank holding company under the Bank Holding Company Act of 1956, as amended (“BHCA”). Our wholly owned subsidiary, Pacific Premier Bank, is a California state-chartered commercial bank. As a bank holding company, the Corporation is subject to regulation and supervision by the Federal Reserve. We are required to file with the Federal Reserve quarterly and annual reports and such additional information as the Federal Reserve may require pursuant to the BHCA. The Federal Reserve may conduct examinations of bank holding companies, such as the Corporation, and its subsidiaries. The Corporation is also a bank holding company within the meaning of the California Financial Code. As such, the Corporation and its subsidiaries are subject to examination by, and may be required to file reports with, the California Department of Business Oversight-Division of Financial Institutions (“DBO”).
A bank holding company, such as the Corporation, is required to serve as a source of financial strength to its subsidiary depository institutions and to commit resources to support such institutions in circumstances where it might not do so absent such a policy. The Federal Reserve, under the BHCA, has the authority to require a bank holding company to terminate any activity or to relinquish control of a nonbank subsidiary (other than a nonbank subsidiary of a bank) upon the Federal Reserve’s determination that such activity or control constitutes a serious risk to the financial soundness and stability of any bank subsidiary of the bank holding company.
As a California state-chartered commercial bank which is a member of the Federal Reserve, the Bank is subject to supervision, periodic examination and regulation by the DBO and the Federal Reserve. The Bank’s deposits are insured by the FDIC through the Deposit Insurance Fund. In general terms, insurance coverage is up to $250,000 per depositor for all deposit accounts. As a result of this deposit insurance function, the FDIC also has certain supervisory authority and powers over the Bank. If, as a result of an examination of the Bank, the regulators should determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of the Bank’s operations are unsatisfactory or that the Bank or our management is violating or has violated any law or regulation, various remedies are available to the regulators. Such remedies include the power to enjoin unsafe or unsound practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in capital, to restrict growth, to assess civil monetary penalties, to remove officers and directors and ultimately to request the FDIC to terminate the Bank’s deposit insurance. As a California-chartered commercial bank, the Bank is also subject to certain provisions of California law.
We provide banking services within our targeted markets in California to businesses, including the owners and employees of those businesses, professionals, real estate investors and non-profit organizations, as well as consumers in the communities we serve. Additionally, through our HOA Banking and Lending and Franchise Capital units we can provide customized cash management, electronic banking services and credit facilities to HOAs, HOA management companies and quick service restaurant ("QSR") franchise owners nationwide. Our corporate headquarters are located in Irvine, California. At
June 30, 2017
, the Bank operated 26 full-service depository branches in California located in the counties of Orange, Los Angeles, Riverside, San Bernardino, San
Diego, San Luis Obispo and Santa Barbara. Through our branches and our web site at www.ppbi.com, we offer a broad array of deposit products and services for both business and consumer customers, including checking, money market and savings accounts, cash management services, electronic banking, and on-line bill payment. We also offer a variety of loan products, including commercial business loans, lines of credit, commercial real estate loans, SBA loans, residential home loans, and home equity loans. The Bank funds it's lending and investment activities with retail and commercial deposits obtained through its branches, advances from the FHLB, lines of credit, and wholesale and brokered certificates of deposits.
Our principal source of income is the net spread between interest earned on loans and investments and the interest costs associated with deposits and borrowings used to finance the loan and investment portfolios. Additionally, the Bank generates fee income from loan and investment sales and various products and services offered to both depository and loan customers.
CRITICAL ACCOUNTING POLICIES
Management has established various accounting policies that govern the application of U.S. GAAP in the preparation of our financial statements. Our significant accounting policies are described in the Notes to the Consolidated Financial Statements in our
2016
Annual Report. There have been no significant changes to our Critical Accounting Policies as described in our
2016
Annual Report.
Certain accounting policies require management to make estimates and assumptions which have a material impact on the carrying value of certain assets and liabilities; management considers these to be critical accounting policies. The estimates and assumptions management uses are based on historical experience and other factors, which management believes to be reasonable under the circumstances. Actual results could differ significantly from these estimates and assumptions, which could have a material impact on the carrying value of assets and liabilities at balance sheet dates and our results of operations for future reporting periods.
We consider the ALLL to be a critical accounting policy that requires judicious estimates and assumptions in the preparation of our financial statements that is particularly susceptible to significant change. For further information, see “Allowances for Loan Losses” discussed in Note 7 to the Consolidated Financial Statements in this Quarterly Report on Form 10-Q and Note 5 to the Consolidated Financial Statements in our
2016
Annual Report.
HEOP ACQUISITION
Effective April 1, 2017, the Company acquired HEOP, and its wholly-owned bank subsidiary, Heritage Oaks Bank, a Paso Robles, California, based state-chartered bank, pursuant to the terms of a definitive agreement entered into by the Corporation and HEOP on December 12, 2016. As a result of the HEOP acquisition, the Bank acquired and recorded at the acquisition date assets with a fair value of approximately
$2.0 billion
, including:
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|
•
|
$1.4 billion
of gross loans;
|
|
|
•
|
$443 million
in investment securities;
|
|
|
•
|
$268 million
in goodwill;
|
|
|
•
|
$78.7 million
of cash and cash equivalents;
|
|
|
•
|
$45.5 million
of other types of assets;
|
|
|
•
|
$34.9 million
in fixed assets; and
|
|
|
•
|
$28.1 million
of a core deposit intangible.
|
Also as a result of the HEOP acquisition, the Company recorded $465 million of equity in connection with the Corporation’s stock issued to HEOP shareholders as part of the acquisition consideration and assumed at acquisition date liabilities with a fair value of approximately
$1.8 billion
, including:
|
|
•
|
$1.7 billion
in deposit accounts; and
|
|
|
•
|
$147 million in other liabilities.
|
The fair values of the assets acquired and liabilities assumed were determined based on the requirements of FASB ASC Topic 820:
Fair Value Measurements and Disclosures
. Such fair values are preliminary estimates and are subject to adjustment for up to one year after the merger date or when additional information relative to the closing date fair values becomes available and such information is considered final, whichever is earlier.
The acquisition was an opportunity for the Company to further strengthen its competitive position and move into the Central Coast of California. The integration and system conversion of HEOP was completed in July 2017.
SCAF ACQUISITION
Effective January 31, 2016, the Company acquired SCAF, and its wholly-owned bank subsidiary, Security Bank of California, a Riverside, California, based state-chartered bank, pursuant to the terms of a definitive agreement entered into by the Corporation and SCAF on October 2, 2015. As a result of the SCAF acquisition, the Bank acquired and recorded at the acquisition date assets with a fair value of approximately $765 million, including:
|
|
•
|
$456 million
of gross loans;
|
|
|
•
|
$190 million
in investment securities;
|
|
|
•
|
$51.7 million
in goodwill;
|
|
|
•
|
$40.9 million
of cash and cash equivalents;
|
|
|
•
|
$18.1 million of other types of assets;
|
|
|
•
|
$4.2 million
in fixed assets; and
|
|
|
•
|
$4.3 million
of a core deposit intangible.
|
Also as a result of the SCAF acquisition, the Company recorded $119 million of equity in connection with the Corporation’s stock issued to SCAF shareholders as part of the acquisition consideration and assumed at acquisition date liabilities with a fair value of approximately
$645 million
, including:
|
|
•
|
$637 million
in deposit transaction accounts; and
|
|
|
•
|
$8.8 million
other liabilities.
|
The fair values of the assets acquired and liabilities assumed were determined based on the requirements of FASB ASC Topic 820:
Fair Value Measurements and Disclosures
. Such fair values are preliminary estimates and are subject to adjustment for up to one year after the merger date or when additional information relative to the closing date fair values becomes available and such information is considered final, whichever is earlier. In the second quarter of 2016, the Company made a $146,000 adjustment to fixed assets and goodwill. As of March 31, 2017, the Company finalized its fair values with this acquisition.
The acquisition was an opportunity for the Company to further strengthen its competitive position as one of the premier community banks headquartered in Southern California. The integration and system conversion of SCAF was completed in April 2016.
NON-GAAP MEASURES
For periods presented below, return on average tangible common equity is a non-GAAP financial measures derived from U.S. GAAP-based amounts. We calculate these figures by excluding core deposit intangible ("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 U.S. 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.
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|
|
|
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|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
|
June 30, 2017
|
|
June 30, 2016
|
|
|
|
|
|
|
|
|
(dollars in thousands)
|
Net income
|
|
$
|
14,176
|
|
|
$
|
9,521
|
|
|
$
|
10,369
|
|
|
$
|
23,697
|
|
|
$
|
18,923
|
|
Plus CDI amortization expense
|
|
1,761
|
|
|
511
|
|
|
645
|
|
|
2,272
|
|
|
989
|
|
Less CDI amortization expense tax adjustment (1)
|
|
(610
|
)
|
|
(167
|
)
|
|
(245
|
)
|
|
(770
|
)
|
|
(386
|
)
|
Net income for average tangible common equity
|
|
15,327
|
|
|
9,865
|
|
|
10,769
|
|
|
25,199
|
|
|
19,526
|
|
Average stockholders’ equity
|
|
948,200
|
|
|
469,432
|
|
|
436,612
|
|
|
710,138
|
|
|
408,093
|
|
Less average CDI
|
|
36,445
|
|
|
9,274
|
|
|
10,876
|
|
|
22,934
|
|
|
10,388
|
|
Less average goodwill
|
|
370,564
|
|
|
102,490
|
|
|
101,923
|
|
|
237,802
|
|
|
93,426
|
|
Average tangible common equity
|
|
$
|
541,191
|
|
|
$
|
357,668
|
|
|
$
|
323,813
|
|
|
$
|
449,402
|
|
|
$
|
304,279
|
|
Return on average tangible common equity (2)
|
|
11.33
|
%
|
|
11.03
|
%
|
|
13.30
|
%
|
|
11.21
|
%
|
|
12.83
|
%
|
______________________________
(1) CDI amortization expense adjusted by quarterly effective tax rate.
(2) Ratio is annualized.
RESULTS OF OPERATIONS
In the
second
quarter of
2017
, we reported net income of
$14.2 million
, or
$0.35
per diluted share. This compares with net income of
$9.5 million
, or
$0.34
per diluted share, for the
first
quarter of
2017
. The increase in net income was primarily driven by an increase in net interest income which increased
$21.6 million
, reflecting an increase in earning assets, which was partially offset by an increase in noninterest expense of
$18.7 million
. The increase in noninterest expense were primarily driven by an increase in merger-related expense of
$5.2 million
associated with the HEOP acquisition and an increase of
$6.7 million
in compensation and benefits expense as a result of the acquisition as well as continued investment in personnel.
Net income of
$14.2 million
, or
$0.35
per diluted share, for the
second
quarter of
2017
compares to net income for the
second
quarter of
2016
of
$10.4 million
, or
$0.37
per diluted share. The increase in net income of
$3.8 million
was primarily due to the
$25.8 million
increase in net interest income resulting from average interest-earning asset growth of
$2.4 billion
. The increase in average interest-earning assets was primarily from the acquisition of HEOP and organic loan growth since the end of the second quarter of 2016. These items were partially offset by an
$24.8 million
increase in noninterest expense, including
$9.6 million
in merger-related expenses and
$8.5 million
in compensation and benefits expenses associated with both the acquisition of HEOP and an increase in staffing to support organic growth.
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 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 return on average assets was
1.16%
and the return on average tangible common equity was
13.30%
.
For the first six months of
2017
, the Company recorded net income of
$23.7 million
, or
$0.69
per diluted share. This compares with net income of
$18.9 million
or
$0.70
per diluted share for the first six months of
2016
. The increase in net income of
$4.8 million
was mostly due to the
$33.3 million
increase in net interest income resulting from earning asset growth, primarily from the acquisition of HEOP and organic loan growth, partially offset by growth in non-interest expense of
$30.9 million
, including
$11.4 million
in merger-related expenses and
$11.7 million
in compensation and benefits expenses associated with both the acquisition of HEOP and an increase in staffing to support organic growth. Prior period comparisons for the year-to-date results are impacted by the acquisition of HEOP in the second quarter of 2017 and the acquisition of SCAF in the first quarter of 2016.
For the six months ended
June 30, 2017
, the Company’s return on average assets was
0.91%
and return on
average tangible common equity was
11.21%
, compared with a return on average assets of
1.11%
and a return on average tangible common equity of
12.83%
for the six months ended June 30, 2016.
Net Interest Income
Our primary source of revenue is net interest income, which is the difference between the interest earned on loans, investment securities, and interest earning balances with financial institutions (“interest-earning assets”) and the interest paid on deposits and borrowings (“interest-bearing liabilities”). Net interest margin is net interest income expressed as a percentage of average interest earning assets. Net interest income is affected by changes in both interest rates and the volume of interest-earning assets and interest-bearing liabilities.
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 HEOP, which at acquisition added $1.4 billion of loans and $445 million of securities, before purchase accounting adjustments.
The increase in the net interest margin from
4.39%
to
4.40%
was primarily due to higher loan yields, as a
result of increased accretion income, which increased 10 basis points to 5.29% from 5.19% in the prior quarter, and a decrease in average cost of interest-bearing liabilities, which decreased 4 basis points to 0.61% from 0.65% in the prior quarter, all of which was partially offset by 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 Bank 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 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 HEOP during the second quarter of 2017. Our net interest margin decreased
8
basis points to
4.40%
from the prior year margin of
4.48%
. The decrease was driven by an
11
basis point decrease in the yield on earning assets, partially offset by a
3
basis point decrease in cost of funds.
For the first six months ended
2017
, net interest income increased
$33.3 million
, or
46%
, compared to the first six months ended
2016
. The increase was related to an increase in average interest-earning assets of
$1.6 billion
, which resulted primarily from our organic loan growth since the end of the first six months ended
2016
and our acquisition of HEOP during the second quarter of 2017.
The following tables present for the periods indicated the average dollar amounts from selected balance sheet categories calculated from daily average balances and the total dollar amount, including adjustments to yields and costs, of:
|
|
•
|
Interest income earned from average interest-earning assets and the resultant yields; and
|
|
|
•
|
Interest expense incurred from average interest-bearing liabilities and resultant costs, expressed as rates.
|
The tables below set forth our net interest income, net interest rate spread and net interest rate margin for the periods indicated. The net interest rate margin reflects the relative level of interest-earning assets to interest-bearing liabilities and equals our net interest rate spread divided by average interest-earning assets for the periods indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Balance Sheet
|
|
Three Months Ended
|
|
June 30, 2017
|
|
March 31, 2017
|
|
June 30, 2016
|
|
Average
Balance
|
|
Interest
|
|
Average
Yield/Cost
|
|
Average
Balance
|
|
Interest
|
|
Average
Yield/Cost
|
|
Average
Balance
|
|
Interest
|
|
Average
Yield/Cost
|
Assets
|
(dollars in thousands)
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
133,127
|
|
|
$
|
160
|
|
|
0.48
|
%
|
|
$
|
86,849
|
|
|
$
|
84
|
|
|
0.39
|
%
|
|
$
|
177,603
|
|
|
$
|
189
|
|
|
0.43
|
%
|
Investment securities
|
829,380
|
|
|
5,019
|
|
|
2.42
|
|
|
450,075
|
|
|
2,907
|
|
|
2.58
|
|
|
299,049
|
|
|
1,650
|
|
|
2.21
|
|
Loans receivable, net (1)
|
4,815,612
|
|
|
63,554
|
|
|
5.29
|
|
|
3,315,792
|
|
|
42,436
|
|
|
5.19
|
|
|
2,892,236
|
|
|
39,035
|
|
|
5.43
|
|
Total interest-earning assets
|
5,778,119
|
|
|
68,733
|
|
|
4.77
|
|
|
3,852,716
|
|
|
45,427
|
|
|
4.78
|
|
|
3,368,888
|
|
|
40,874
|
|
|
4.88
|
|
Noninterest-earning assets
|
592,186
|
|
|
|
|
|
|
196,041
|
|
|
|
|
|
|
194,005
|
|
|
|
|
|
Total assets
|
$
|
6,370,305
|
|
|
|
|
|
|
$
|
4,048,757
|
|
|
|
|
|
|
$
|
3,562,893
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest checking
|
$
|
329,450
|
|
|
$
|
90
|
|
|
0.11
|
|
|
$
|
195,258
|
|
|
$
|
53
|
|
|
0.11
|
|
|
$
|
178,258
|
|
|
$
|
50
|
|
|
0.11
|
|
Money market
|
1,779,013
|
|
|
1,582
|
|
|
0.36
|
|
|
1,133,676
|
|
|
972
|
|
|
0.35
|
|
|
980,806
|
|
|
896
|
|
|
0.37
|
|
Savings
|
218,888
|
|
|
68
|
|
|
0.12
|
|
|
103,449
|
|
|
38
|
|
|
0.15
|
|
|
98,419
|
|
|
38
|
|
|
0.16
|
|
Retail certificates of deposit
|
568,367
|
|
|
911
|
|
|
0.64
|
|
|
372,208
|
|
|
685
|
|
|
0.75
|
|
|
451,035
|
|
|
743
|
|
|
0.66
|
|
Wholesale/brokered certificates of deposit
|
212,124
|
|
|
430
|
|
|
0.81
|
|
|
201,774
|
|
|
387
|
|
|
0.78
|
|
|
155,734
|
|
|
283
|
|
|
0.73
|
|
Total interest-bearing deposits
|
3,107,842
|
|
|
3,081
|
|
|
0.40
|
|
|
2,006,365
|
|
|
2,135
|
|
|
0.43
|
|
|
1,864,252
|
|
|
2,010
|
|
|
0.43
|
|
FHLB advances and other borrowings
|
385,088
|
|
|
1,175
|
|
|
1.22
|
|
|
265,224
|
|
|
604
|
|
|
0.92
|
|
|
99,754
|
|
|
324
|
|
|
1.31
|
|
Subordinated debentures
|
79,757
|
|
|
1,139
|
|
|
5.71
|
|
|
69,394
|
|
|
985
|
|
|
5.68
|
|
|
69,304
|
|
|
979
|
|
|
5.65
|
|
Total borrowings
|
464,845
|
|
|
2,314
|
|
|
2.00
|
|
|
334,618
|
|
|
1,589
|
|
|
1.93
|
|
|
169,058
|
|
|
1,303
|
|
|
3.10
|
|
Total interest-bearing liabilities
|
3,572,687
|
|
|
5,395
|
|
|
0.61
|
|
|
2,340,983
|
|
|
3,724
|
|
|
0.65
|
|
|
2,033,310
|
|
|
3,313
|
|
|
0.66
|
|
Noninterest-bearing deposits
|
1,802,752
|
|
|
|
|
|
|
1,208,045
|
|
|
|
|
|
|
1,060,104
|
|
|
|
|
|
Other liabilities
|
46,666
|
|
|
|
|
|
|
30,297
|
|
|
|
|
|
|
32,867
|
|
|
|
|
|
Total liabilities
|
5,422,105
|
|
|
|
|
|
|
3,579,325
|
|
|
|
|
|
|
3,126,281
|
|
|
|
|
|
Stockholders’ equity
|
948,200
|
|
|
|
|
|
|
469,432
|
|
|
|
|
|
|
436,612
|
|
|
|
|
|
Total liabilities and equity
|
$
|
6,370,305
|
|
|
|
|
|
|
$
|
4,048,757
|
|
|
|
|
|
|
$
|
3,562,893
|
|
|
|
|
|
Net interest income
|
|
|
$
|
63,338
|
|
|
|
|
|
|
$
|
41,703
|
|
|
|
|
|
|
$
|
37,561
|
|
|
|
Net interest rate spread (2)
|
|
|
|
|
4.16
|
%
|
|
|
|
|
|
4.13
|
%
|
|
|
|
|
|
4.22
|
%
|
Net interest margin (3)
|
|
|
|
|
4.40
|
%
|
|
|
|
|
|
4.39
|
%
|
|
|
|
|
|
4.48
|
%
|
Ratio of interest-earning assets to interest-bearing liabilities
|
|
|
|
|
161.73
|
%
|
|
|
|
|
|
164.58
|
%
|
|
|
|
|
|
165.68
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Balance Sheet
|
|
Six Months Ended
|
|
June 30, 2017
|
|
June 30, 2016
|
|
Average
Balance
|
|
Interest
|
|
Average
Yield/Cost
|
|
Average
Balance
|
|
Interest
|
|
Average
Yield/Cost
|
Assets
|
(dollars in thousands)
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
110,116
|
|
|
$
|
244
|
|
|
0.45
|
%
|
|
$
|
206,682
|
|
|
$
|
427
|
|
|
0.42
|
%
|
Investment securities
|
640,775
|
|
|
7,926
|
|
|
2.47
|
%
|
|
319,742
|
|
|
3,510
|
|
|
2.20
|
%
|
Loans receivable, net (1)
|
4,069,844
|
|
|
105,990
|
|
|
5.25
|
%
|
|
2,710,226
|
|
|
74,442
|
|
|
5.52
|
%
|
Total interest-earning assets
|
4,820,735
|
|
|
114,160
|
|
|
4.78
|
%
|
|
3,236,650
|
|
|
78,379
|
|
|
4.87
|
%
|
Noninterest-earning assets
|
395,209
|
|
|
|
|
|
|
180,510
|
|
|
|
|
|
Total assets
|
$
|
5,215,944
|
|
|
|
|
|
|
$
|
3,417,160
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits:
|
|
|
|
|
|
|
|
|
|
|
|
Interest checking
|
$
|
262,725
|
|
|
$
|
143
|
|
|
0.11
|
%
|
|
$
|
171,396
|
|
|
$
|
97
|
|
|
0.11
|
%
|
Money market
|
1,458,127
|
|
|
2,554
|
|
|
0.35
|
%
|
|
935,958
|
|
|
1,717
|
|
|
0.37
|
%
|
Savings
|
161,487
|
|
|
106
|
|
|
0.13
|
%
|
|
96,596
|
|
|
75
|
|
|
0.16
|
%
|
Retail certificates of deposit
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale/brokered certificates of deposit
|
206,978
|
|
|
817
|
|
|
0.80
|
%
|
|
153,188
|
|
|
547
|
|
|
0.72
|
%
|
Total interest-bearing deposits
|
2,560,146
|
|
|
5,216
|
|
|
0.41
|
%
|
|
1,798,747
|
|
|
4,079
|
|
|
0.46
|
%
|
FHLB advances and other borrowings
|
325,487
|
|
|
1,779
|
|
|
1.10
|
%
|
|
105,544
|
|
|
649
|
|
|
1.24
|
%
|
Subordinated debentures
|
74,604
|
|
|
2,124
|
|
|
5.69
|
%
|
|
69,344
|
|
|
1,889
|
|
|
5.45
|
%
|
Total borrowings
|
400,091
|
|
|
3,903
|
|
|
1.97
|
%
|
|
174,888
|
|
|
2,538
|
|
|
2.92
|
%
|
Total interest-bearing liabilities
|
2,960,237
|
|
|
9,119
|
|
|
0.62
|
%
|
|
1,973,635
|
|
|
6,617
|
|
|
0.67
|
%
|
Noninterest-bearing deposits
|
1,507,041
|
|
|
|
|
|
|
1,005,315
|
|
|
|
|
|
Other liabilities
|
38,528
|
|
|
|
|
|
|
30,117
|
|
|
|
|
|
Total liabilities
|
4,505,806
|
|
|
|
|
|
|
3,009,067
|
|
|
|
|
|
Stockholders' equity
|
710,138
|
|
|
|
|
|
|
408,093
|
|
|
|
|
|
Total liabilities and equity
|
$
|
5,215,944
|
|
|
|
|
|
|
$
|
3,417,160
|
|
|
|
|
|
Net interest income
|
|
|
$
|
105,041
|
|
|
|
|
|
|
$
|
71,762
|
|
|
|
Net interest rate spread (2)
|
|
|
|
|
4.16
|
%
|
|
|
|
|
|
4.20
|
%
|
Net interest margin (3)
|
|
|
|
|
4.39
|
%
|
|
|
|
|
|
4.46
|
%
|
Ratio of interest-earning assets to interest-bearing liabilities
|
|
|
|
|
162.85
|
%
|
|
|
|
|
|
163.99
|
%
|
_____________________________
(1) Average balance includes loans held for sale and nonperforming loans and is net of deferred loan origination fees, unamortized discounts and premiums.
(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.
Changes in our net interest income are a function of changes in volumes, days in a period and rates of interest-earning assets and interest-bearing liabilities. The following table presents the impact the volume, days in a period and rate changes have had on our net interest income for the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, we have provided information on changes to our net interest income with respect to:
|
|
•
|
Changes in volume (changes in volume multiplied by prior rate);
|
|
|
•
|
Changes in days in a period (changes in days in a period multiplied by daily interest);
|
|
|
•
|
Changes in interest rates (changes in interest rates multiplied by prior volume); and
|
|
|
•
|
The net change or the combined impact of volume, days in a period and rate changes allocated proportionately to changes in volume, days in a period and changes in interest rates.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2017
Compared to
Three Months Ended March 31, 2017
Increase (decrease) due to
|
|
Volume
|
|
Days
|
|
Rate
|
|
Net
|
|
(dollars in thousands)
|
Interest-earning assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
52
|
|
|
$
|
2
|
|
|
$
|
22
|
|
|
$
|
76
|
|
Investment securities
|
2,218
|
|
|
—
|
|
|
(106
|
)
|
|
2,112
|
|
Loans receivable, net
|
19,584
|
|
|
698
|
|
|
836
|
|
|
21,118
|
|
Total interest-earning assets
|
21,854
|
|
|
700
|
|
|
752
|
|
|
23,306
|
|
Interest-bearing liabilities
|
|
|
|
|
|
|
|
|
|
|
Interest checking
|
36
|
|
|
1
|
|
|
—
|
|
|
37
|
|
Money market
|
565
|
|
|
17
|
|
|
28
|
|
|
610
|
|
Savings
|
38
|
|
|
1
|
|
|
(9
|
)
|
|
30
|
|
Retail certificates of deposit
|
328
|
|
|
10
|
|
|
(112
|
)
|
|
226
|
|
Wholesale/brokered certificates of deposit
|
22
|
|
|
5
|
|
|
16
|
|
|
43
|
|
FHLB advances and other borrowings
|
326
|
|
|
13
|
|
|
232
|
|
|
571
|
|
Subordinated debentures
|
144
|
|
|
—
|
|
|
10
|
|
|
154
|
|
Total interest-bearing liabilities
|
1,459
|
|
|
47
|
|
|
165
|
|
|
1,671
|
|
Change in net interest income
|
$
|
20,395
|
|
|
$
|
653
|
|
|
$
|
587
|
|
|
$
|
21,635
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2017
Compared to
Three Months Ended June 30, 2016
Increase (decrease) due to
|
|
Volume
|
|
Rate
|
|
Net
|
|
(dollars in thousands)
|
Interest-earning assets
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
(50
|
)
|
|
$
|
21
|
|
|
$
|
(29
|
)
|
Investment securities
|
3,200
|
|
|
169
|
|
|
3,369
|
|
Loans receivable, net
|
25,554
|
|
|
(1,035
|
)
|
|
24,519
|
|
Total interest-earning assets
|
28,704
|
|
|
(845
|
)
|
|
27,859
|
|
Interest-bearing liabilities
|
|
|
|
|
|
|
|
|
Interest checking
|
40
|
|
|
—
|
|
|
40
|
|
Money market
|
711
|
|
|
(25
|
)
|
|
686
|
|
Savings
|
42
|
|
|
(12
|
)
|
|
30
|
|
Retail certificates of deposit
|
190
|
|
|
(22
|
)
|
|
168
|
|
Wholesale/brokered certificates of deposit
|
113
|
|
|
34
|
|
|
147
|
|
FHLB advances and other borrowings
|
873
|
|
|
(22
|
)
|
|
851
|
|
Subordinated debentures
|
150
|
|
|
10
|
|
|
160
|
|
Total interest-bearing liabilities
|
2,119
|
|
|
(37
|
)
|
|
2,082
|
|
Change in net interest income
|
$
|
26,585
|
|
|
$
|
(808
|
)
|
|
$
|
25,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2017
Compared to
Six Months Ended June 30, 2016
Increase (decrease) due to
|
|
Volume
|
|
Days
|
|
Rate
|
|
Net
|
|
(dollars in thousands)
|
Interest-earning assets
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
(211
|
)
|
|
$
|
(1
|
)
|
|
$
|
29
|
|
|
$
|
(183
|
)
|
Investment securities
|
3,939
|
|
|
—
|
|
|
477
|
|
|
4,416
|
|
Loans receivable, net
|
35,898
|
|
|
(586
|
)
|
|
(3,764
|
)
|
|
31,548
|
|
Total interest-earning assets
|
$
|
39,626
|
|
|
$
|
(587
|
)
|
|
$
|
(3,258
|
)
|
|
$
|
35,781
|
|
Interest-bearing liabilities
|
|
|
|
|
|
|
|
|
|
|
Interest checking
|
$
|
47
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
46
|
|
Money market
|
945
|
|
|
(14
|
)
|
|
(94
|
)
|
|
837
|
|
Savings
|
47
|
|
|
(1
|
)
|
|
(15
|
)
|
|
31
|
|
Retail certificates of deposit
|
111
|
|
|
(9
|
)
|
|
(149
|
)
|
|
(47
|
)
|
Wholesale/brokered certificates of deposit
|
208
|
|
|
(5
|
)
|
|
67
|
|
|
270
|
|
FHLB advances and other borrowings
|
1,220
|
|
|
(10
|
)
|
|
(80
|
)
|
|
1,130
|
|
Subordinated debentures
|
130
|
|
|
—
|
|
|
105
|
|
|
235
|
|
Total interest-bearing liabilities
|
$
|
2,708
|
|
|
$
|
(40
|
)
|
|
$
|
(166
|
)
|
|
$
|
2,502
|
|
Change in net interest income
|
$
|
36,918
|
|
|
$
|
(547
|
)
|
|
$
|
(3,092
|
)
|
|
$
|
33,279
|
|
Provision for Loan Losses
A provision for loan losses was recorded for the
second
quarter of
2017
in the amount of
$1.9 million
, compared with a provision for loan losses of
$2.5 million
in the quarter ended
March 31, 2017
. Net loan recoveries were
$76,000
for the recent quarter of 2017, compared with net loan charge-offs of
$723,000
for the quarter ended 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.
The
$1.9 million
provision for loan losses during the
second
quarter of
2017
increased by
$315,000
from
the second quarter of
2016
. Net loan recoveries were
$76,000
for the recent quarter of 2017, compared with net loan charge-offs of
$1.1 million
from the
second
quarter of 2016.
For the first six months of
2017
, we recorded a
$4.4 million
provision for loan losses, an increase from
$2.7 million
recorded for the first
six
months of
2016
. The increase in the provision for loan losses was primarily due to loan growth. Net loan charge-offs amounted to
$647,000
for the first
six
months of
2017
, a decrease from
$1.1 million
for the first
six
months of
2016
.
For purchased credit impaired loans, charge-offs are recorded when there is a decrease in the estimated cash flows of the credit from original cash flow estimates. Purchased credit impaired loans were recorded at their estimated fair value, which incorporated our estimated expected cash flows until the ultimate resolution of these credits. To the extent actual or projected cash flows are less than originally estimated, additional provisions for loan losses or charge-offs will be recognized into earnings or against the allowance, if applicable. To the extent actual or projected cash flows are more than originally estimated, the increase in cash flows is prospectively recognized in loan interest income. Due to the accounting rules associated with our purchased credit impaired loans, each quarter we are required to re-estimate cash flows which could cause volatility in our reported net interest margin and provision for loan losses. During the
second
quarter of
2017
, no additional allowance was recorded associated with certain purchased credit impaired loans. See “Allowance for Loan Losses” discussed below in this Quarterly Report on Form 10-Q.
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 HEOP acquisition. During the recent quarter of 2017, the Bank sold $29.6 million of Small Business Administration ("SBA") loans for a gain of $2.9 million, compared with $30.4 million of SBA loans sold and a gain of $2.6 million in the quarter ended March 31, 2017.
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.
For the first
six
months of
2017
, noninterest income totaled
$13.4 million
, an increase from
$9.3 million
for the first
six
months of
2016
. The increase was primarily related to higher net gain from sale of loans of
$1.7 million
and higher net gain from sales of investment securities of
$808,000
. In addition, higher deposit fees of $848,000 were received, primarily as a result of the HEOP acquisition in the second quarter of 2017.
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 merger-related expenses of
$10.1 million
for the HEOP acquisition in the
second
quarter of
2017
compared with
$4.9 million
for the
first
quarter of
2017
. In addition, the Company had higher compensation and benefits expenses during the first quarter of 2017 of
$6.7 million
.
In comparison to the
second
quarter of
2016
, noninterest expense grew by
$24.8 million
, or
105%
. The
$24.8 million
increase in noninterest expense includes a
$9.6 million
increase in merger-related expenses and a
$8.5 million
increase in compensation and benefits expenses associated with both the acquisition of HEOP and an increase in staffing to support organic growth.
Noninterest expense totaled
$78.2 million
for the first
six
months of
2017
, an increase of
$30.9 million
, or
65%
, compared with the first
six
months of
2016
. The increase was primarily driven by merger-related expenses of
$15.1 million
for the HEOP acquisition in the first
six
months of
2017
compared with
$3.6 million
for the first
six
months of
2016
for the SCAF acquisition. In addition, the Company had higher compensation and benefits expenses during the first
six
months of 2017 of
$11.7 million
.
The Company’s efficiency ratio was
52.3%
for the
second
quarter of
2017
, compared to
52.3%
for the
first
quarter of
2017
and
54.4%
for the
second
quarter of
2016
. The Company's efficiency ratio was
52.3%
for the first
six
months of
2017
, compared to
53.6%
for the first
six
months of
2016
.
Income Taxes
For the three months ended
June 30, 2017
,
March 31, 2017
and
June 30, 2016
, income tax expense was
$7.5 million
,
$4.6 million
and
$6.4 million
, respectively, and the effective income tax rate was
34.7%
,
32.7%
and
38.0%
, respectively. The decrease in the effective tax rate in 2017 as compared to 2017 was primarily the result of 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 $1.6 million tax benefit to the Company for the six months ended
June 30, 2017
.
The Company did not have unrecognized tax benefits that related to uncertainties associated with federal and state income tax matters as of
June 30, 2017
and
December 31, 2016
.
The Company and its subsidiaries are subject to U.S. federal income tax, as well as state income and franchise taxes in multiple state jurisdictions. The statute of limitations related to the consolidated federal income tax returns is closed for all tax years up to and including 2012. The expiration of the statute of limitations related to the various state income and franchise tax returns varies by state.
The Company accounts for income taxes by recognizing deferred tax assets and liabilities based upon temporary differences between the amounts for financial reporting purposes and tax basis of its assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized. In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the existence of any cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income, applicable tax planning strategies, and assessments of current and future economic and business conditions. This analysis is updated quarterly and adjusted as necessary. Based on this analysis, Management has determined that a valuation allowance for deferred tax assets was not required as of
June 30, 2017
.
FINANCIAL CONDITION
At
June 30, 2017
, assets totaled
$6.4 billion
, an increase of
$2.4 billion
, or
60%
, from
December 31, 2016
. The increase from the prior quarter was primarily due to the acquisition of HEOP, which after purchase accounting adjustments, added
$1.4 billion
in gross loans and
$443 million
in investment securities, of which $213 million were sold subsequent to the acquisition, and goodwill of
$268 million
was recognized in the acquisition.
Loans
Loans held for investment totaled
$4.9 billion
at
June 30, 2017
, an increase of
$1.5 billion
, or
44%
, from
December 31, 2016
. The increase from
December 31, 2016
was primarily due to the acquisition of HEOP, which after purchase accounting adjustments, added
$1.4 billion
in gross loans and organic loan commitments of $947 million during the first six months of 2017.
The total end-of-period weighted average contractual interest rate on loans, excluding fees and discounts, at
June 30, 2017
was
4.79%
, compared to
4.81%
at
December 31, 2016
.
The following table sets forth the composition of our loan portfolio in dollar amounts, as a percentage of the portfolio and gives the weighted average interest rate by loan category at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
At December 31, 2016
|
|
Amount
|
|
Percent
of Total
|
|
Weighted
Average
Interest Rate
|
|
Amount
|
|
Percent
of Total
|
|
Weighted
Average
Interest Rate
|
|
(dollars in thousands)
|
Business loans:
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
$
|
733,852
|
|
|
15.1
|
%
|
|
4.98
|
%
|
|
$
|
563,169
|
|
|
17.4
|
%
|
|
4.82
|
%
|
Franchise
|
565,415
|
|
|
11.6
|
|
|
5.28
|
|
|
459,421
|
|
|
14.1
|
|
|
5.24
|
|
Commercial owner occupied (1)
|
729,476
|
|
|
15.0
|
|
|
4.64
|
|
|
454,918
|
|
|
14.0
|
|
|
4.76
|
|
SBA
|
108,224
|
|
|
2.2
|
|
|
6.05
|
|
|
96,705
|
|
|
3.0
|
|
|
5.63
|
|
Agriculture
|
98,842
|
|
|
2.0
|
|
|
4.87
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
Commercial non-owner occupied
|
1,095,184
|
|
|
22.5
|
|
|
4.54
|
|
|
586,975
|
|
|
18.1
|
|
|
4.63
|
|
Multi-family
|
746,547
|
|
|
15.3
|
|
|
4.30
|
|
|
690,955
|
|
|
21.3
|
|
|
4.28
|
|
One-to-four family (2)
|
322,048
|
|
|
6.6
|
|
|
4.34
|
|
|
100,451
|
|
|
3.1
|
|
|
4.62
|
|
Construction
|
289,600
|
|
|
6.0
|
|
|
6.01
|
|
|
269,159
|
|
|
8.3
|
|
|
5.57
|
|
Farmland
|
136,587
|
|
|
2.8
|
|
|
4.55
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Land
|
31,799
|
|
|
0.7
|
|
|
5.58
|
|
|
19,829
|
|
|
0.6
|
|
|
5.36
|
|
Other loans
|
7,309
|
|
|
0.2
|
|
|
6.25
|
|
|
4,112
|
|
|
0.1
|
|
|
5.60
|
|
Total gross loans (3)
|
4,864,883
|
|
|
100.0
|
%
|
|
4.79
|
%
|
|
3,245,694
|
|
|
100.0
|
%
|
|
4.81
|
%
|
Plus: Deferred loan origination costs/(fees) and premiums/(discounts), net
|
568
|
|
|
|
|
|
|
|
|
3,630
|
|
|
|
|
|
|
|
Total loans
|
4,865,451
|
|
|
|
|
|
|
3,249,324
|
|
|
|
|
|
Less: Loans held for sale, at lower of cost or fair value
|
6,840
|
|
|
|
|
|
|
|
|
7,711
|
|
|
|
|
|
|
|
Loans held for investment
|
4,858,611
|
|
|
|
|
|
|
|
|
3,241,613
|
|
|
|
|
|
|
|
Allowance for loan losses
|
(25,055
|
)
|
|
|
|
|
|
|
|
(21,296
|
)
|
|
|
|
|
|
|
Loans held for investment, net
|
$
|
4,833,556
|
|
|
|
|
|
|
|
|
$
|
3,220,317
|
|
|
|
|
|
|
|
______________________________
(1) Secured by real estate.
(2) Includes second trust deeds.
(3) Total gross loans for
June 30, 2017
are net of the unaccreted fair value purchase discounts of
$25.2 million
.
Delinquent Loans.
When a borrower fails to make required payments on a loan and does not cure the delinquency within 30 days, we normally record a notice of default and, after providing the required notices to the borrower, commence foreclosure proceedings. If the loan is not reinstated within the time permitted by law, we may sell the property at a foreclosure sale. At these foreclosure sales, we generally acquire title to the property. At
June 30, 2017
and
December 31, 2016
, loans delinquent 30 or more days as a percentage of total gross loans was
0.06%
, compared to
0.03%
at
December 31, 2016
.
The following table sets forth delinquencies in the Company’s loan portfolio at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 - 59 Days
|
|
60 - 89 Days
|
|
90 Days or More (1)
|
|
Total
|
|
# of
Loans
|
|
Principal
Balance
of Loans
|
|
# of
Loans
|
|
Principal
Balance
of Loans
|
|
# of
Loans
|
|
Principal
Balance
of Loans
|
|
# of
Loans
|
|
Principal
Balance
of Loans
|
|
(dollars in thousands)
|
At June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
5
|
|
|
$
|
225
|
|
|
6
|
|
|
$
|
280
|
|
|
2
|
|
|
$
|
97
|
|
|
13
|
|
|
$
|
602
|
|
Franchise
|
—
|
|
|
—
|
|
|
1
|
|
|
901
|
|
|
2
|
|
|
172
|
|
|
3
|
|
|
1,073
|
|
Commercial owner occupied
|
1
|
|
|
17
|
|
|
3
|
|
|
18
|
|
|
2
|
|
|
132
|
|
|
6
|
|
|
167
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial non-owner occupied
|
—
|
|
|
—
|
|
|
1
|
|
|
529
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
529
|
|
Multi-family
|
—
|
|
|
—
|
|
|
1
|
|
|
237
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
237
|
|
One-to-four family
|
3
|
|
|
354
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
41
|
|
|
5
|
|
|
395
|
|
Construction/Land/Other
|
3
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
12
|
|
|
4
|
|
|
16
|
|
Total
|
12
|
|
|
$
|
600
|
|
|
12
|
|
|
$
|
1,965
|
|
|
9
|
|
|
$
|
454
|
|
|
33
|
|
|
$
|
3,019
|
|
Delinquent loans to loans held for investment
|
|
|
|
0.01
|
%
|
|
|
|
|
0.04
|
%
|
|
|
|
|
0.01
|
%
|
|
|
|
0.06
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
2
|
|
|
$
|
104
|
|
|
—
|
|
|
$
|
—
|
|
|
2
|
|
|
$
|
260
|
|
|
4
|
|
|
$
|
364
|
|
SBA
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
316
|
|
|
3
|
|
|
316
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-to-four family
|
1
|
|
|
18
|
|
|
1
|
|
|
71
|
|
|
3
|
|
|
48
|
|
|
5
|
|
|
137
|
|
Land
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
15
|
|
|
1
|
|
|
15
|
|
Total
|
3
|
|
|
$
|
122
|
|
|
1
|
|
|
$
|
71
|
|
|
9
|
|
|
$
|
639
|
|
|
13
|
|
|
$
|
832
|
|
Delinquent loans to loans held for investment
|
|
|
—
|
%
|
|
|
|
—
|
%
|
|
|
|
0.02
|
%
|
|
|
|
0.03
|
%
|
______________________________
(1) All loans that are delinquent 90 days or more are on nonaccrual status and reported as part of nonperforming loans.
Allowance for Loan Losses
. The ALLL represents an estimate of probable incurred losses inherent in our loan portfolio and is based on our continual review of credit quality of the loan portfolio. The allowance contains a specific reserve component for loans that are determined to be impaired and a general reserve component for loans without credit impairment. The general reserve is determined by applying a systematically derived loss factor to individual segments of the loan portfolio. The adequacy and appropriateness of the ALLL and the individual loss factors are reviewed each quarter by management.
The loss factor for each segment of our loan portfolio is generally based on our actual historical loss rate experience supplemented by industry data where we lack loss history experience. The loss factor is adjusted by qualitative adjustment factors to arrive at a final loss factor for each loan portfolio segment. For additional information regarding the qualitative adjustments, please see “Allowances for Loan Losses” as discussed in our
2016
Annual Report. The qualitative factors allow management to assess current trends within our loan portfolio and the economic environment to incorporate their effect when calculating the ALLL. The final loss factors are applied to pass graded loans within our loan portfolio. Higher factors are applied to loans graded below pass, including classified and criticized assets.
No assurance can be given that we will not, in any particular period, sustain loan losses that exceed the amount reserved, or that subsequent evaluation of our loan portfolio, in light of the prevailing factors, including economic conditions which may adversely affect our market area or other circumstances, will not require significant increases in the loan loss allowance. In addition, regulatory agencies, as an integral part of their examination process, periodically review our ALLL and may require us to recognize additional provisions to increase the allowance or take charge-offs in anticipation of future losses.
At
June 30, 2017
, our ALLL was
$25.1 million
, an increase of
$3.8 million
from
December 31, 2016
. The increase in the allowance for loan losses at
June 30, 2017
was mainly attributable to loan growth in the loan portfolio and, to a lesser extent, net loan charge-offs of $723,000. At
June 30, 2017
, given the composition of our loan portfolio, as well as the unamortized fair value discount of loans acquired, the ALLL was considered adequate to cover probable incurred losses inherent in the loan portfolio. Should any of the factors considered by management in evaluating the appropriate level of the ALLL change, the Company’s estimate of probable incurred loan losses could also change, which could affect the level of future provisions for loan losses.
The following table sets forth the Company’s ALLL and its corresponding percentage of the loan category balance and the percent of loan balance to total gross loans in each of the loan categories listed for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
Balance at End of Period Applicable to
|
|
Amount
|
|
Allowance as a % of Category Total
|
|
% of Loans in Category to
Total Loans
|
|
Amount
|
|
Allowance as a % of Category Total
|
|
% of Loans in Category to
Total Loans
|
|
|
(dollars in thousands)
|
Business loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
$
|
7,643
|
|
|
1.04
|
%
|
|
15.1
|
%
|
|
$
|
6,362
|
|
|
1.13
|
%
|
|
17.4
|
%
|
Franchise
|
|
5,367
|
|
|
0.95
|
|
|
11.6
|
|
|
3,845
|
|
|
0.84
|
|
|
14.1
|
|
Commercial owner occupied
|
|
673
|
|
|
0.09
|
|
|
15.0
|
|
|
1,193
|
|
|
0.26
|
|
|
14.0
|
|
SBA
|
|
2,519
|
|
|
2.48
|
|
|
2.2
|
|
|
1,039
|
|
|
1.17
|
|
|
3.0
|
|
Agriculture
|
|
206
|
|
|
0.21
|
|
|
2.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Real estate loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial non-owner occupied
|
|
1,204
|
|
|
0.11
|
|
|
22.5
|
|
|
1,715
|
|
|
0.29
|
|
|
18.1
|
|
Multi-family
|
|
611
|
|
|
0.08
|
|
|
15.3
|
|
|
2,927
|
|
|
0.42
|
|
|
21.3
|
|
One-to-four family
|
|
724
|
|
|
0.22
|
|
|
6.6
|
|
|
365
|
|
|
0.36
|
|
|
3.1
|
|
Construction
|
|
5,036
|
|
|
1.74
|
|
|
6.0
|
|
|
3,632
|
|
|
1.35
|
|
|
8.3
|
|
Farmland
|
|
29
|
|
|
0.02
|
|
|
2.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Land
|
|
959
|
|
|
3.02
|
|
|
0.7
|
|
|
198
|
|
|
1.00
|
|
|
0.6
|
|
Other Loans
|
|
84
|
|
|
1.15
|
|
|
0.2
|
|
|
20
|
|
|
0.49
|
|
|
0.1
|
|
Total
|
|
$
|
25,055
|
|
|
0.52
|
%
|
|
100.0
|
%
|
|
$
|
21,296
|
|
|
0.66
|
%
|
|
100.0
|
%
|
At
June 30, 2017
, the ratio of ALLL to loans held for investment was
0.52%
, a decrease from 0.66% at
December 31, 2016
. Our remaining unamortized fair value discount on the loans acquired totaled $25.2 million at
June 30, 2017
, compared to $7.6 million at
December 31, 2016
.
The following table sets forth the activity within the Company’s ALLL in each of the loan categories listed for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
June 30,
|
|
March 31
|
|
June 30,
|
|
June 30,
|
|
June 30,
|
|
2017
|
|
2017
|
|
2016
|
|
2016
|
|
2016
|
|
(dollars in thousands)
|
|
|
|
|
Balance, beginning of period
|
$
|
23,075
|
|
|
$
|
21,296
|
|
|
$
|
18,455
|
|
|
$
|
21,296
|
|
|
$
|
17,317
|
|
Provision for loan losses
|
1,904
|
|
|
2,502
|
|
|
1,589
|
|
|
4,406
|
|
|
2,709
|
|
Charge-offs:
|
|
|
|
|
|
|
|
|
|
|
Business loans:
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
(110
|
)
|
|
(752
|
)
|
|
(710
|
)
|
|
(862
|
)
|
|
(710
|
)
|
Franchise
|
—
|
|
|
—
|
|
|
(169
|
)
|
|
—
|
|
|
(169
|
)
|
Commercial owner occupied
|
—
|
|
|
—
|
|
|
(329
|
)
|
|
—
|
|
|
(329
|
)
|
SBA
|
—
|
|
|
(8
|
)
|
|
(5
|
)
|
|
(8
|
)
|
|
(5
|
)
|
Real estate:
|
|
|
|
|
|
|
|
|
|
|
One-to-four family
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
Total charge-offs
|
(110
|
)
|
|
(760
|
)
|
|
(1,220
|
)
|
|
(870
|
)
|
|
(1,220
|
)
|
Recoveries :
|
|
|
|
|
|
|
|
|
|
|
Business loans:
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
33
|
|
|
22
|
|
|
40
|
|
|
55
|
|
|
54
|
|
Commercial owner occupied
|
70
|
|
|
12
|
|
|
—
|
|
|
82
|
|
|
—
|
|
SBA
|
81
|
|
|
2
|
|
|
82
|
|
|
83
|
|
|
85
|
|
Real estate:
|
|
|
|
|
|
|
|
|
|
One-to-four family
|
1
|
|
|
1
|
|
|
5
|
|
|
2
|
|
|
6
|
|
Other loans
|
1
|
|
|
—
|
|
|
4
|
|
|
1
|
|
|
4
|
|
Total recoveries
|
186
|
|
|
37
|
|
|
131
|
|
|
223
|
|
|
149
|
|
Net loan (charge-offs) recoveries
|
76
|
|
|
(723
|
)
|
|
(1,089
|
)
|
|
(647
|
)
|
|
(1,071
|
)
|
Balance at end of period
|
$
|
25,055
|
|
|
$
|
23,075
|
|
|
$
|
18,955
|
|
|
$
|
25,055
|
|
|
$
|
18,955
|
|
|
|
|
|
|
|
|
|
|
|
Ratios:
|
|
|
|
|
|
|
|
|
|
Net charge-offs (recoveries) to average total loans, net
|
—
|
%
|
|
0.02
|
%
|
|
0.04
|
%
|
|
0.02
|
%
|
|
0.04
|
%
|
Allowance for loan losses to loans held for investment at end of period
|
0.52
|
%
|
|
0.68
|
%
|
|
0.65
|
%
|
|
0.52
|
%
|
|
0.65
|
%
|
Investment Securities
We primarily use our investment portfolio for liquidity purposes and to support our interest rate risk management strategies. Investment securities available-for-sale totaled
$703 million
at
June 30, 2017
, an increase of
$322 million
, or
85%
, from
December 31, 2016
. The increase in investment securities from
December 31, 2016
was primarily the result of the acquisition of HEOP, which at acquisition added $445 million of securities,
before purchase accounting adjustments, and purchases of $121 million, partially offset by approximately $213 million in sales of securities resulting in a gain of $2.1 million.
The following tables set forth the amortized cost, unrealized gains and losses, and estimated fair value of our investment securities portfolio at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
|
Amortized
Cost
|
|
Unrealized
Gain
|
|
Unrealized
Loss
|
|
Estimated
Fair Value
|
|
|
(dollars in thousands)
|
Investment securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
Agency
|
|
$
|
54,388
|
|
|
$
|
707
|
|
|
$
|
(24
|
)
|
|
$
|
55,071
|
|
Corporate
|
|
53,498
|
|
|
1,001
|
|
|
(150
|
)
|
|
54,349
|
|
Municipal bonds
|
|
247,242
|
|
|
5,194
|
|
|
(358
|
)
|
|
252,078
|
|
Collateralized mortgage obligation: residential
|
|
46,095
|
|
|
312
|
|
|
(86
|
)
|
|
46,321
|
|
Mortgage-backed securities: residential
|
|
296,324
|
|
|
893
|
|
|
(1,953
|
)
|
|
295,264
|
|
Total investment securities available-for-sale
|
|
697,547
|
|
|
8,107
|
|
|
(2,571
|
)
|
|
703,083
|
|
Investment securities held-to-maturity:
|
|
|
|
|
|
|
|
|
Mortgage-backed securities: residential
|
|
6,586
|
|
|
—
|
|
|
(47
|
)
|
|
6,539
|
|
Other
|
|
1,164
|
|
|
—
|
|
|
—
|
|
|
1,164
|
|
Total securities held-to-maturity
|
|
7,750
|
|
|
—
|
|
|
(47
|
)
|
|
7,703
|
|
Total investment securities
|
|
$
|
705,297
|
|
|
$
|
8,107
|
|
|
$
|
(2,618
|
)
|
|
$
|
710,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
Amortized
Cost
|
|
Unrealized
Gain
|
|
Unrealized
Loss
|
|
Estimated
Fair Value
|
|
|
(dollars in thousands)
|
Investment securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
Corporate
|
|
$
|
37,475
|
|
|
$
|
372
|
|
|
$
|
(205
|
)
|
|
$
|
37,642
|
|
Municipal bonds
|
|
120,155
|
|
|
338
|
|
|
(1,690
|
)
|
|
118,803
|
|
Collateralized mortgage obligation: residential
|
|
31,536
|
|
|
25
|
|
|
(173
|
)
|
|
31,388
|
|
Mortgage-backed securities: residential
|
|
196,496
|
|
|
69
|
|
|
(3,435
|
)
|
|
193,130
|
|
Total investment securities available-for-sale
|
|
385,662
|
|
|
804
|
|
|
(5,503
|
)
|
|
380,963
|
|
Investment securities held-to-maturity:
|
|
|
|
|
|
|
|
|
Mortgage-backed securities: residential
|
|
7,375
|
|
|
—
|
|
|
(104
|
)
|
|
7,271
|
|
Other
|
|
1,190
|
|
|
—
|
|
|
—
|
|
|
1,190
|
|
Total investment securities held-to-maturity
|
|
8,565
|
|
|
—
|
|
|
(104
|
)
|
|
8,461
|
|
Total investment securities
|
|
$
|
394,227
|
|
|
$
|
804
|
|
|
$
|
(5,607
|
)
|
|
$
|
389,424
|
|
The following table sets forth the fair values and weighted average yields on our investment securities available-for-sale portfolio by contractual maturity at the date indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
|
One Year
or Less
|
|
More than One
to Five Years
|
|
More than Five Years
to Ten Years
|
|
More than
Ten Years
|
|
Total
|
|
|
Fair
Value
|
|
Weighted
Average
Yield
|
|
Fair
Value
|
|
Weighted
Average
Yield
|
|
Fair
Value
|
|
Weighted
Average
Yield
|
|
Fair
Value
|
|
Weighted
Average
Yield
|
|
Fair
Value
|
|
Weighted
Average
Yield
|
|
|
(dollars in thousands)
|
Investment securities available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
—
|
|
|
—
|
%
|
|
$
|
15,247
|
|
|
2.32
|
%
|
|
$
|
39,824
|
|
|
2.19
|
%
|
|
$
|
55,071
|
|
|
2.23
|
%
|
Corporate
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54,349
|
|
|
5.23
|
|
|
—
|
|
|
—
|
|
|
54,349
|
|
|
5.23
|
|
Municipal bonds
|
|
3,107
|
|
|
1.04
|
|
|
36,012
|
|
|
1.73
|
|
|
77,010
|
|
|
2.10
|
|
|
135,949
|
|
|
2.55
|
|
|
252,078
|
|
|
2.28
|
|
Collateralized mortgage obligation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,660
|
|
|
2.23
|
|
|
42,661
|
|
|
2.44
|
|
|
46,321
|
|
|
2.42
|
|
Mortgage-backed securities
|
|
2,630
|
|
|
2.30
|
|
|
6,348
|
|
|
0.77
|
|
|
49,839
|
|
|
2.26
|
|
|
236,447
|
|
|
1.89
|
|
|
295,264
|
|
|
1.93
|
|
Total securities available-for-sale
|
|
5,737
|
|
|
1.62
|
|
|
42,360
|
|
|
1.59
|
|
|
200,105
|
|
|
3.01
|
|
|
454,881
|
|
|
2.17
|
|
|
703,083
|
|
|
2.36
|
|
Investment securities held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-backed securities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,539
|
|
|
2.18
|
|
|
6,539
|
|
|
2.18
|
|
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,164
|
|
|
0.93
|
|
|
1,164
|
|
|
0.93
|
|
Total securities held-to-maturity
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,703
|
|
|
2.00
|
|
|
7,703
|
|
|
2.00
|
|
Total securities
|
|
$
|
5,737
|
|
|
1.62
|
%
|
|
$
|
42,360
|
|
|
1.59
|
%
|
|
$
|
200,105
|
|
|
3.01
|
%
|
|
$
|
462,584
|
|
|
2.16
|
%
|
|
$
|
710,786
|
|
|
2.36
|
%
|
Each quarter, we review individual securities classified as available-for-sale to determine whether a decline in fair value below the amortized cost basis is other-than-temporary. If it is probable that we will be unable to collect all amounts due according to the contractual terms of the debt security, an OTTI write-down is recorded against the security and a loss recognized.
In determining if a security has an OTTI loss, we consider the 1) length of time and the extent to which the fair value has been less then amortized cost; 2) financial condition and near term prospects of the issuer; 3) impact of changes in market interest rates; and 4) intent and ability of the Company to retain its investment for a period of time sufficient to allow any anticipated recovery in fair value and whether it is not more likely than not the Company would be required to sell the security. We estimate OTTI losses on a security primarily through:
|
|
•
|
An evaluation of the present value of estimated cash flows from the security using the current yield to accrete beneficial interest and including assumptions in the prepayment rate, default rate, delinquencies, loss severity and percentage of nonperforming assets;
|
|
|
•
|
An evaluation of the estimated payback period to recover principal;
|
|
|
•
|
An analysis of the credit support available in the underlying security to absorb losses; and
|
|
|
•
|
A review of the financial condition and near term prospects of the issuer.
|
The Company realized no OTTI recovery for the quarter ended
June 30, 2017
,
December 31, 2016
and
June 30, 2016
. The Company realized OTTI recovery of $1,000 for the quarter ended March 31, 2017. We recorded no impairment credit losses on available-for-sale securities in our consolidated statement of operations for the three months ended
June 30, 2017
,
December 31, 2016
and
June 30, 2016
. A $207,000 OTTI was taken during the quarter ended March 31, 2016, related to a CRA investment purchased in June of 2014 with a par value of $50, and a book value of $500,000.
Nonperforming Assets
Nonperforming assets consist of loans on which we have ceased accruing interest (nonaccrual loans), restructured loans and OREO. It is our general policy to account for a loan as nonaccrual when the loan becomes 90 days delinquent or when collection of interest appears doubtful.
Nonperforming assets totaled
$767,000
, or
0.01%
of total assets at
June 30, 2017
, a decrease from
$1.6 million
, or
0.04%
of total assets at
December 31, 2016
. At
June 30, 2017
, nonperforming loans totaled
$395,000
, or
0.01%
of loans held for investment, a decrease from
$1.1 million
, or
0.04%
of loans held for investment at
December 31, 2016
. Other real estate owned decreased to
$372,000
.
The following table sets forth our composition of nonperforming assets at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
|
|
(dollars in thousands)
|
Nonperforming assets
|
|
|
|
|
Business loans:
|
|
|
|
|
Commercial and industrial
|
|
$
|
—
|
|
|
$
|
250
|
|
Commercial owner occupied
|
|
206
|
|
|
436
|
|
SBA
|
|
73
|
|
|
316
|
|
Real estate:
|
|
|
|
|
|
|
One-to-four family
|
|
104
|
|
|
124
|
|
Land
|
|
12
|
|
|
15
|
|
Total nonperforming loans
|
|
395
|
|
|
1,141
|
|
Other real estate owned
|
|
372
|
|
|
460
|
|
Total nonperforming assets
|
|
$
|
767
|
|
|
$
|
1,601
|
|
|
|
|
|
|
Allowance for loan losses
|
|
$
|
25,055
|
|
|
$
|
21,296
|
|
Allowance for loan losses as a percent of total nonperforming loans
|
|
6,343
|
%
|
|
1,866
|
%
|
Nonperforming loans as a percent of loans held for investment
|
|
0.01
|
|
|
0.04
|
|
Nonperforming assets as a percent of total assets
|
|
0.01
|
|
|
0.04
|
|
Liabilities and Stockholders’ Equity
Total liabilities were
$5.48 billion
at
June 30, 2017
, compared to
$3.58 billion
at
December 31, 2016
. The increase of
$1.9 billion
, or
53%
, from
December 31, 2016
was primarily related to a
$1.8 billion
, or
57%
, increase to deposits from
December 31, 2016
.
Deposits.
At
June 30, 2017
, deposits totaled
$4.9 billion
, an increase of
$1.8 billion
, or
57%
, from
December 31, 2016
, primarily as a result of the acquisition of HEOP. Non-maturity deposits totaled
$4.1 billion
,
84%
of total deposits, an increase of
$1.6 billion
, or
61%
from
December 31, 2016
, highlighted by an increase in money market and savings accounts of
$804 million
, noninterest-bearing checking of
$624 million
and demand deposit of
$141 million
. Time deposits increased
$232 million
, or
40%
from
December 31, 2016
, which included
an increase of
$34.6 million
and
$197 million
to wholesale/brokered certificate of deposits and retail certificate of deposits, respectively.
The total end of period weighted average rate of deposits at
June 30, 2017
was
0.28%
, a decrease from
0.32%
December 31, 2016
.
Our ratio of loans held for investment to deposits was
98.2%
and
103.1%
at
June 30, 2017
and
December 31, 2016
, respectively.
The following table sets forth the distribution of the Company’s deposit accounts at the dates indicated and the weighted average interest rates on each category of deposits presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
|
Balance
|
|
% of Total Deposits
|
|
Weighted Average Rate
|
|
Balance
|
|
% of Total Deposits
|
|
Weighted Average Rate
|
|
(dollars in thousands)
|
Noninterest-bearing checking
|
$
|
1,810,047
|
|
|
36.6
|
%
|
|
—
|
%
|
|
$
|
1,185,768
|
|
|
37.7
|
%
|
|
—
|
%
|
Interest-bearing deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Checking
|
323,818
|
|
|
6.5
|
|
|
0.11
|
|
|
182,893
|
|
|
5.8
|
|
|
0.11
|
|
Money market
|
1,796,678
|
|
|
36.3
|
|
|
0.36
|
|
|
1,100,787
|
|
|
35.1
|
|
|
0.34
|
|
Savings
|
212,453
|
|
|
4.3
|
|
|
0.15
|
|
|
101,574
|
|
|
3.2
|
|
|
0.14
|
|
Time deposit accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 1.00%
|
489,375
|
|
|
9.9
|
|
|
0.62
|
|
|
416,649
|
|
|
13.2
|
|
|
0.61
|
|
1.00 - 1.99
|
310,700
|
|
|
6.3
|
|
|
1.16
|
|
|
153,012
|
|
|
4.9
|
|
|
1.14
|
|
2.00 - 2.99
|
5,969
|
|
|
0.1
|
|
|
2.18
|
|
|
4,413
|
|
|
0.1
|
|
|
2.25
|
|
3.00 - 3.99
|
51
|
|
|
—
|
|
|
3.87
|
|
|
37
|
|
|
—
|
|
|
3.85
|
|
4.00 - 4.99
|
50
|
|
|
—
|
|
|
4.33
|
|
|
3
|
|
|
—
|
|
|
4.93
|
|
5.00 and greater
|
290
|
|
|
—
|
|
|
5.07
|
|
|
445
|
|
|
—
|
|
|
5.07
|
|
Total time deposit accounts
|
806,435
|
|
|
16.3
|
|
|
0.84
|
|
|
574,559
|
|
|
18.2
|
|
|
0.80
|
|
Total interest-bearing deposits
|
3,139,384
|
|
|
63.4
|
|
|
0.44
|
|
|
1,959,813
|
|
|
62.3
|
|
|
0.48
|
|
Total deposits
|
$
|
4,949,431
|
|
|
100.0
|
%
|
|
0.28
|
%
|
|
$
|
3,145,581
|
|
|
100.0
|
%
|
|
0.32
|
%
|
Borrowings.
At
June 30, 2017
, total borrowings amounted to
$477 million
, a decrease of
$79.7 million
, or
20%
, from
December 31, 2016
. At
June 30, 2017
, total borrowings represented
7.4%
of total assets and had an end of period weighted average rate of
2.0%
, compared with
9.8%
of total assets at a weighted average rate of
1.6%
at
December 31, 2016
.
At
June 30, 2017
, total borrowings were comprised of the following:
|
|
•
|
FHLB advances of
$346 million
at
1.28%
;
|
|
|
•
|
Subordinated notes of $60 million at 5.75% due September 3, 2024. For additional information about the subordinated notes, see Note 8 to the Consolidated Financial Statements in this report;
|
|
|
•
|
Three reverse repurchase agreements totaling $28.5 million at a weighted average rate of 3.26% with $10 million due in February 2018 and $18.5 million due in September 2018. These agreements are secured by government sponsored entity MBS securities with a par value of
$31.7 million
and a fair value of
$32.9 million
;
|
|
|
•
|
HOA reverse repurchase agreements totaling
$20.9 million
at a weighted average rate of .02% and secured by government sponsored entity MBS securities with a par value of
$24.5 million
and a fair value of
$25.2 million
; and
|
|
|
•
|
Subordinated debentures used to fund the issuance of trust preferred securities in 2004 of $10.3 million at
3.91%
due April 7, 2034. For additional information about the subordinated debentures and trust preferred securities, see Note 8 to the Consolidated Financial Statements in this report.
|
|
|
•
|
$5.2 million of floating rate junior subordinated debt securities to Heritage Oaks Capital Trust II. Interest is payable quarterly at three-month LIBOR plus
1.72%
per annum, for an effective rate of
2.87%
per annum as of
June 30, 2017
. At June 30, 2017, the carrying value of these debentures was $3.9 million, which reflects purchase accounting fair value adjustments of 1.4 million.
|
|
|
•
|
$3.1 million of floating rate junior subordinated debt associated with Mission Community Capital Trust I. The carrying value of Mission Community Capital Trust I was $2.8 million which reflects purchase accounting fair value adjustments of $342,000. Interest is payable quarterly at three-month LIBOR plus
2.95%
per annum, for an effective rate of
4.10844%
per annum as of
June 30, 2017
.
|
|
|
•
|
$5.2 million of floating rate junior subordinated debt associated Santa Lucia Bancorp (CA) Capital Trust. The carrying value of Santa Lucia Bancorp (CA) Capital Trust was $3.7 million, which reflects purchase accounting fair value adjustments $1.5 million. Interest is payable quarterly at three-month LIBOR plus
1.48%
per annum, for an effective rate of
2.63844%
per annum as of
June 30, 2017
.
|
The following table sets forth certain information regarding the Company’s borrowed funds at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
|
Balance
|
|
Weighted
Average Rate
|
|
Balance
|
|
Weighted
Average Rate
|
|
(dollars in thousands)
|
FHLB advances
|
$
|
346,202
|
|
|
1.28
|
%
|
|
$
|
278,000
|
|
|
0.55
|
%
|
Reverse repurchase agreements
|
51,065
|
|
|
1.82
|
|
|
49,971
|
|
|
1.87
|
|
Subordinated debentures
|
79,800
|
|
|
5.09
|
|
|
69,383
|
|
|
5.35
|
|
Total borrowings
|
$
|
477,067
|
|
|
1.98
|
%
|
|
$
|
397,354
|
|
|
1.55
|
%
|
|
|
|
|
|
|
|
|
Weighted average cost of
borrowings during the quarter
|
2.00
|
%
|
|
|
|
|
2.75
|
%
|
|
|
|
Borrowings as a percent of total assets
|
7.4
|
|
|
|
|
|
9.8
|
|
|
|
|
Stockholders’ Equity.
Total stockholders’ equity was
$960 million
as of
June 30, 2017
, an increase from
$460 million
at
December 31, 2016
. The current year increase of
$500 million
in stockholders’ equity was primarily related to the issuance of $465 million of stock in the acquisition of HEOP as well as net income for the first
six
months of
2017
of
$23.7 million
.
Our book value per share increased to
$23.96
at
June 30, 2017
from
$16.54
at
December 31, 2016
. At
June 30, 2017
, the Company’s tangible common equity to tangible assets ratio was
9.18%
, an increase from
8.86%
at
December 31, 2016
.
Tangible common equity to tangible assets (the “tangible common equity ratio”) is a non-GAAP financial measure derived from GAAP-based amounts. We calculate the tangible common equity ratio by deducting the balance of intangible assets from common shareholders’ equity and dividing by period end tangible assets which also deducts intangible assets. We believe that this information is important to shareholders as tangible equity is a measure that is consistent with the calculation of capital for bank regulatory purposes, which excludes intangible assets from the calculation of risk-based ratios.
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
GAAP Reconciliation
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
2017
|
|
2016
|
Total stockholders’ equity
|
$
|
959,731
|
|
|
$
|
459,740
|
|
Less: Intangible assets
|
(405,869
|
)
|
|
(111,941
|
)
|
Tangible common equity
|
$
|
553,862
|
|
|
$
|
347,799
|
|
|
|
|
|
Total assets
|
$
|
6,440,631
|
|
|
$
|
4,036,311
|
|
Less: Intangible assets
|
(405,869
|
)
|
|
(111,941
|
)
|
Tangible assets
|
$
|
6,034,762
|
|
|
$
|
3,924,370
|
|
|
|
|
|
Tangible common equity ratio
|
9.18
|
%
|
|
8.86
|
%
|
CAPITAL RESOURCES AND LIQUIDITY
Our primary sources of funds are deposits, advances from the FHLB and other borrowings, principal and interest payments on loans, and income from investments. While maturities and scheduled amortization of loans are a predictable source of funds, deposit inflows and outflows as well as loan prepayments are greatly influenced by general interest rates, economic conditions, and competition.
Our primary sources of funds generated during the first
six
months of
2017
were from:
|
|
•
|
Proceeds of
$217 million
from the sale or maturity of securities available-for-sale;
|
|
|
•
|
Net increase of
$131 million
in deposit accounts;
|
|
|
•
|
Cash of
$77.1 million
acquired in the acquisition;
|
|
|
•
|
Proceeds of
$65.5 million
from the sale and principal payments on loans held for sale; and
|
|
|
•
|
Principal payments on securities available-for-sale of
$34.5 million
.
|
We used these funds to:
|
|
•
|
Originate loans of $492 million;
|
|
|
•
|
Purchase of securities available-for-sale of
$110 million
;
|
|
|
•
|
Originate loans held for sale of
$61.4 million
; and
|
|
|
•
|
Reduce borrowings by
$59.3 million
.
|
Our most liquid assets are unrestricted cash and short-term investments. The levels of these assets are dependent on our operating, lending and investing activities during any given period. Our liquidity position is
continuously monitored and adjustments are made to the balance between sources and uses of funds as deemed appropriate. At
June 30, 2017
, cash and cash equivalents totaled
$229 million
and the market value of our investment securities available-for-sale totaled
$703 million
. If additional funds are needed, we have additional sources of liquidity that can be accessed, including FHLB advances, federal fund lines, the Federal Reserve’s lending programs and loan sales. As of
June 30, 2017
, the maximum amount we could borrow through the FHLB was $1.88 billion, of which $951 million was available for borrowing based on collateral pledged of $1.1 billion in real estate loans. At
June 30, 2017
, we had
$346 million
in FHLB borrowings against that available balance. At
June 30, 2017
, we also had unsecured lines of credit aggregating $221 million, which consisted of $168 million with other financial institutions from which to draw funds and $3.3 million with the FRB and one reverse repo line with a correspondent bank of $50 million. For the quarter ended
June 30, 2017
, our average liquidity ratio was
11.52%
, which is above the Company's policy of 10.0%. The Company regularly models liquidity stress scenarios to ensure that adequate liquidity is available and has contingency funding plans in place which are reviewed and tested on a regular basis.
To the extent that
2017
deposit growth is not sufficient to satisfy our ongoing commitments to fund maturing and withdrawable deposits, repay maturing borrowings, fund existing and future loans, or make investments, we may access funds through our FHLB borrowing arrangement, unsecured lines of credit or other sources.
The Bank has a policy in place that permits the purchase of brokered funds, in an amount not to exceed 15% of total deposits, as a secondary source for funding. At
June 30, 2017
, we had
$234 million
in brokered time deposits, which constituted
4.7%
of total deposits at that date.
The Corporation is a corporate entity separate and apart from the Bank that must provide for its own liquidity. The Corporation's primary sources of liquidity are dividends from the Bank. In addition, the Corporation acquired a line of credit with Wells Fargo, with availability of $15 million. There are statutory and regulatory provisions that limit the ability of the Bank to pay dividends to the Corporation. Management believes that such restrictions will not have a material impact on the ability of the Corporation to meet its ongoing cash obligations.
The Corporation has never declared or paid dividends on its common stock and, at this time, does not anticipate declaring or paying any cash dividends in the foreseeable future. The Corporation’s board of directors authorized in June 2012 a stock repurchase plan, which allows the Corporation to proactively manage its capital position and return excess capital to its stockholders. The repurchase plan authorizes the repurchase of up to 1,000,000 shares of the Company’s common stock. Shares purchased under such plans also provide the Corporation with shares of common stock necessary to satisfy obligations related to stock compensation awards. Also, please see Part II, Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds for additional information.
Contractual Obligations and Off-Balance Sheet Commitments
Contractual Obligations
.
The Company enters into contractual obligations in the normal course of business primarily as a source of funds for its asset growth and to meet required capital needs.
The following schedule summarizes maturities and payments due on our obligations and commitments, excluding accrued interest, as of the date indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
Less than 1 year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than 5 years
|
|
Total
|
|
(dollars in thousands)
|
Contractual obligations
|
|
|
|
|
|
|
|
|
|
|
|
FHLB advances
|
$
|
284,500
|
|
|
$
|
20,500
|
|
|
$
|
41,000
|
|
|
$
|
—
|
|
|
$
|
346,000
|
|
Other borrowings
|
10,000
|
|
|
18,500
|
|
|
—
|
|
|
—
|
|
|
28,500
|
|
Subordinated debentures
|
—
|
|
|
—
|
|
|
—
|
|
|
79,800
|
|
|
79,800
|
|
Certificates of deposit
|
624,096
|
|
|
155,923
|
|
|
21,830
|
|
|
4,586
|
|
|
806,435
|
|
Operating leases
|
5,028
|
|
|
7,619
|
|
|
3,012
|
|
|
3,550
|
|
|
19,209
|
|
Total contractual cash obligations
|
$
|
923,624
|
|
|
$
|
202,542
|
|
|
$
|
65,842
|
|
|
$
|
87,936
|
|
|
$
|
1,279,944
|
|
Off-Balance Sheet Commitments
.
We utilize off-balance sheet commitments in the normal course of business to meet the financing needs of our customers and to reduce our own exposure to fluctuations in interest rates. These financial instruments include commitments to originate real estate, business and other loans held for investment, undisbursed loan funds, lines and letters of credit, and commitments to purchase loans and investment securities for portfolio. The contract or notional amounts of those instruments reflect the extent of involvement we have in particular classes of financial instruments.
Commitments to originate loans held for investment are agreements to lend to a customer as long as there is no violation of any condition established in the commitment. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some commitments expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Undisbursed loan funds and unused lines of credit on home equity and commercial loans include committed funds not disbursed. Letters of credit are conditional commitments we issue to guarantee the performance of a customer to a third party.
As of
June 30, 2017
, we had commitments to extend credit on existing lines and letters of credit of
$1.0 billion
, compared to $581 million at
December 31, 2016
and $625 million at
June 30, 2016
.
The following table summarizes our contractual commitments with off-balance sheet risk by expiration period at the date indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
Less than 1 year
|
|
1 - 5 years
|
|
3 - 5 years
|
|
More than 5 years
|
|
Total
|
|
(dollars in thousands)
|
Other commitments
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
$
|
413,908
|
|
|
$
|
107,837
|
|
|
$
|
7,059
|
|
|
$
|
31,889
|
|
|
$
|
560,693
|
|
Construction
|
127,322
|
|
|
129,986
|
|
|
5,000
|
|
|
1,012
|
|
|
263,320
|
|
Agriculture and Farmland
|
33,220
|
|
|
6,552
|
|
|
2,528
|
|
|
1,318
|
|
|
43,618
|
|
Home equity lines of credit
|
856
|
|
|
6,148
|
|
|
2,013
|
|
|
50,396
|
|
|
59,413
|
|
Standby letters of credit
|
19,442
|
|
|
107
|
|
|
10,162
|
|
|
—
|
|
|
29,711
|
|
All other
|
16,952
|
|
|
3,853
|
|
|
8,893
|
|
|
14,828
|
|
|
44,526
|
|
Total other commitments
|
$
|
611,700
|
|
|
$
|
254,483
|
|
|
$
|
35,655
|
|
|
$
|
99,443
|
|
|
$
|
1,001,281
|
|
Regulatory Capital Compliance
The Company and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain capital in order to meet certain capital ratios to be considered adequately capitalized or well capitalized under the regulatory framework for prompt corrective action. As of the most recent formal notification from the Federal Reserve, the Company and the Bank was categorized as “well capitalized.” There are no conditions or events since that notification that management believes have changed the Bank’s categorization.
New comprehensive regulatory capital rules for U.S. banking organizations pursuant to the capital framework of the Basel Committee on Banking Supervision, generally referred to as “Basel III”, became effective for the Company and the Bank on January 1, 2015, subject to phase-in periods for certain of their components and other provisions. The most significant of the provisions of the new capital rules which apply to the Company and the Bank are as follows: the phase-out of trust preferred securities from Tier 1 capital, the higher risk-weighting of high volatility and past due real estate loans and the capital treatment of deferred tax assets and liabilities above certain thresholds.
Beginning January 1, 2016, Basel III implemented a requirement for all banking organizations to maintain a capital conservation buffer above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer is exclusively comprised of common equity tier 1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio. At
June 30, 2017
, the Company and Bank are in compliance with the capital conservation buffer requirement. The capital conservation buffer will increase by 0.625% each year starting in 2016 through 2019, at which point, the common equity tier 1, tier 1 and total capital ratio minimums inclusive of the capital conservation buffer will be 7.0%, 8.5% and 10.5%, respectively.
As defined in applicable regulations and set forth in the table below, the Company and the Bank continue to exceed the regulatory capital minimum requirements and the Bank continues to exceed the “well capitalized” standards at the dates indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
Minimum Required
For Capital Adequacy Purposes
|
|
Minimum Required Plus Capital Conservation Buffer
Phase-In
for 2017
|
|
Minimum Required Plus Capital Conservation Buffer
Fully
Phased-In
|
|
Minimum Required
For Well Capitalized Requirement
|
At June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
Pacific Premier Bancorp, Inc. Consolidated
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Leverage Ratio
|
|
9.85%
|
|
4.00%
|
|
4.00%
|
|
4.00%
|
|
N/A
|
Common Equity Tier 1 to Risk-Weighted Assets
|
|
10.71%
|
|
4.50%
|
|
5.75%
|
|
7.00%
|
|
N/A
|
Tier 1 Capital to Risk-Weighted Assets
|
|
11.09%
|
|
6.00%
|
|
7.25%
|
|
8.50%
|
|
N/A
|
Total Capital to Risk-Weighted Assets
|
|
12.70%
|
|
8.00%
|
|
9.25%
|
|
10.50%
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
Pacific Premier Bank
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Leverage Ratio
|
|
10.54%
|
|
4.00%
|
|
4.00%
|
|
4.00%
|
|
5.00%
|
Common Equity Tier 1 to Risk-Weighted Assets
|
|
11.85%
|
|
4.50%
|
|
5.75%
|
|
7.00%
|
|
6.50%
|
Tier 1 Capital to Risk-Weighted Assets
|
|
11.85%
|
|
6.00%
|
|
7.25%
|
|
8.50%
|
|
8.00%
|
Total Capital to Risk-Weighted Assets
|
|
12.35%
|
|
8.00%
|
|
9.25%
|
|
10.50%
|
|
10.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
|
|
Minimum Required
For Capital Adequacy Purposes
|
|
Minimum Required Plus Capital Conservation Buffer
Phase-In
for 2017
|
|
Minimum Required Plus Capital Conservation Buffer
Fully
Phased-In
|
|
Minimum Required
For Well Capitalized Requirement
|
At December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
Pacific Premier Bancorp, Inc. Consolidated
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Leverage Ratio
|
|
9.78%
|
|
4.00%
|
|
4.00%
|
|
4.00%
|
|
N/A
|
Common Equity Tier 1 to Risk-Weighted Assets
|
|
10.12%
|
|
4.50%
|
|
5.125%
|
|
7.00%
|
|
N/A
|
Tier 1 Capital to Risk-Weighted Assets
|
|
10.41%
|
|
6.00%
|
|
6.625%
|
|
8.50%
|
|
N/A
|
Total Capital to Risk-Weighted Assets
|
|
12.72%
|
|
8.00%
|
|
8.625%
|
|
10.50%
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
Pacific Premier Bank
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Leverage Ratio
|
|
10.94%
|
|
4.00%
|
|
4.00%
|
|
4.00%
|
|
5.00%
|
Common Equity Tier 1 to Risk-Weighted Assets
|
|
11.65%
|
|
4.50%
|
|
5.125%
|
|
7.00%
|
|
6.50%
|
Tier 1 Capital to Risk-Weighted Assets
|
|
11.65%
|
|
6.00%
|
|
6.625%
|
|
8.50%
|
|
8.00%
|
Total Capital to Risk-Weighted Assets
|
|
12.29%
|
|
8.00%
|
|
8.625%
|
|
10.50%
|
|
10.00%
|