Market Overview

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

Share:

First Quarter 2019 Summary

  • Net income of $38.7 million, or $0.62 per diluted share
  • Return on average assets of 1.34%, return on
    average equity of 7.78%, and return on average tangible common equity
    of 15.45%
  • Efficiency ratio of 49.3%
  • Net interest margin of 4.37%, core net interest margin of 4.21%
  • Total assets increase to $11.6 billion
  • Noninterest bearing deposits as a percent of total deposits of
    39%
  • Nonperforming assets as a percent of total assets of 0.11%

Pacific Premier Bancorp, Inc. (NASDAQ:PPBI) (the "Company"), the
holding company of Pacific Premier Bank (the "Bank"), reported net
income for the first quarter of 2019 of $38.7 million, or $0.62 per
diluted share, compared with net income of $39.6 million, or $0.63 per
diluted share, for the fourth quarter of 2018 and net income of $28.0
million, or $0.60 per diluted share, for the first quarter of 2018.
Financial results for the first quarter of 2019 include merger-related
expense of $655,000.

For the three months ended March 31, 2019, the Company's return on
average assets ("ROAA") was 1.34%, return on average equity ("ROAE") was
7.78% and return on average tangible common equity ("ROATCE") was
15.45%, compared to 1.37%, 8.15% and 16.65%, respectively, for the three
months ended December 31, 2018 and 1.39%, 8.92% and 16.51%,
respectively, for the three months ended March 31, 2018. Total assets as
of March 31, 2019 were $11.6 billion compared with $11.5 billion at
December 31, 2018 and $8.1 billion at March 31, 2018. A reconciliation
of the non–U.S. GAAP measure of ROATCE to the U.S. GAAP measure of
common stockholders equity is set forth at the end of this press release.

Steven R. Gardner, Chairman, President and Chief Executive Officer of
the Company, commented, "We delivered another solid quarter of operating
results that reflects the strength of the organization that we have
built over the past few years. Our ability to generate high levels of
profitability, including an ROAA of 1.34% and an ROATCE of 15.45% while
also maintaining strong credit metrics is a testament to the talent and
discipline of our employees. Given the strength of our performance, the
Company's board of directors has authorized and declared a $0.22 per
share dividend payable on May 15, 2019.

"We have been focused on continuous improvement throughout the
organization and we are seeing the benefits created from the Grandpoint
acquisition. Further, we have consolidated 5 branches in the past two
quarters while maintaining our high level of service to clients. Our
efficiency ratio was again below 50% during the first quarter of 2019
and we expect operating leverage to further improve in the coming
quarters.

"Our disciplined balance sheet and risk management continue to result in
a relatively stable core net interest margin and solid asset quality.
Looking ahead, we will remain focused on closely matching our loan and
deposit growth, while emphasizing loan production in the areas that
produce attractive risk-adjusted yields. We expect balance sheet growth
to accelerate as we move through the year owing to key investments in
technology around API banking, Salesforce and cash management services,"
said Mr. Gardner.

 

FINANCIAL HIGHLIGHTS

   
Three Months Ended
March 31,     December 31,     March 31,
2019 2018 2018
Financial Highlights (dollars in thousands, except per share data)
Net income $ 38,718 $ 39,643 $ 28,002
Diluted earnings per share 0.62 0.63 0.60
Return on average assets 1.34 % 1.37 % 1.39 %
Return on average equity 7.78 8.15 8.92
Return on average tangible common equity (1) 15.45 16.65 16.51
Net interest margin 4.37 4.49 4.50
Core net interest margin 4.21 4.24 4.26
Cost of deposits 0.63 0.55 0.39
Efficiency ratio (2) 49.3 48.3 52.4
Total assets $ 11,580,495 $ 11,487,387 $ 8,086,816
Total deposits 8,715,175 8,658,351 6,192,273
Core deposits to total deposits (3) 88 % 89 % 88 %
Book value per share $ 31.97 $ 31.52 $ 27.12
Tangible book value per share (1) 17.56 16.97 15.63
Total risk-based capital ratio 12.58 % 12.39 % 12.64 %
                   
(1) A reconciliation of the non-U.S. GAAP measures of
average tangible common equity and tangible book value per share to
the U.S. GAAP measures of common stockholders' equity and book value
are set forth at the end of this press release.
(2) Represents the ratio of noninterest expense less
other real estate owned operations, core deposit intangible
amortization and merger-related expense to the sum of net interest
income before provision for credit losses and total noninterest
income, less gains/(loss) on sale of securities,
other-than-temporary impairment recovery/(loss) on investment
securities and gain/(loss) from other real estate owned.
(3) Core deposits are all transaction accounts and
non-brokered certificates of deposit less than $250,000.
 

INCOME STATEMENT HIGHLIGHTS

Net Interest Income and Net Interest Margin

Net interest income totaled $111.4 million in the first quarter of 2019,
a decrease of $6.1 million, or 5.2%, from the fourth quarter of 2018.
The decrease in net interest income reflected the impact of two fewer
days of interest in the first quarter of 2019 compared to fourth quarter
of 2018, lower accretion income as well as higher funding costs.

Net interest margin for the first quarter was 4.37%, compared with 4.49%
in the prior quarter. The decrease was primarily driven by lower
accretion income of $3.8 million in the first quarter of 2019 compared
to $6.3 million in the fourth quarter of 2018. Our core net interest
margin, which excludes the impact of accretion, decreased 3 basis points
to 4.21%, compared to 4.24% in the prior quarter. The decrease in the
core net interest margin was attributable to higher cost of funds,
partially offset by a higher core yields on interest-earning assets,
which excludes the impact of accretion. Cost of deposits increased 8
basis point to 0.63% during the quarter.

We anticipate our core net interest margin will be in the range of 4.15%
to 4.20% in the second quarter of 2019.

Net interest income for the first quarter of 2019 increased $30.1
million, or 37.1%, compared to the first quarter of 2018. The increase
was primarily related to an increase in average interest-earning assets
of $3.01 billion, which resulted primarily from our acquisition of
Grandpoint in the third quarter of 2018, as well as organic loan growth
since the end of the first quarter of 2018.

 
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
   
Three Months Ended
March 31, 2019     December 31, 2018     March 31, 2018

Average
Balance

   

Interest
Income/E
xpense

   

Average

Yield/

Cost

Average
Balance

   

Interest
Income/E
xpense

   

Average
Yield/
Cost

Average
Balance

   

Interest
Income/E
xpense

   

Average
Yield/
Cost

Assets (dollars in thousands)
Cash and cash equivalents $ 173,613 $ 378 0.88 % $ 230,377 $ 634 1.09 % $ 167,236 $ 313 0.76 %
Investment securities 1,298,476 9,389 2.89 1,243,240 9,046 2.91 919,526 6,341 2.76
Loans receivable, net (1) (2) 8,867,159   121,476   5.56 8,909,407   126,341   5.63 6,237,968   84,173   5.47
Total interest-earning assets $ 10,339,248   $ 131,243   5.15 $ 10,383,024   $ 136,021   5.20 $ 7,324,730   $ 90,827   5.03
 
Liabilities
Interest-bearing deposits $ 5,073,723 $ 13,284 1.06 $ 5,065,505 $ 12,041 0.94 $ 3,852,853 $ 5,914 0.62
Borrowings 880,671   6,553   3.02 905,300   6,434   2.82 613,295   3,632   2.40
Total interest-bearing liabilities $ 5,954,394   $ 19,837   1.35 $ 5,970,805   $ 18,475   1.23 $ 4,466,148   $ 9,546   0.87
Noninterest-bearing deposits $ 3,480,791 $ 3,571,119 $ 2,262,895
Net interest income $ 111,406   $ 117,546   $ 81,281  
Net interest margin (3) 4.37 4.49 4.50
Cost of deposits 0.63 0.55 0.39
Cost of funds (4) 0.85 0.77 0.58
 
(1) Average balance includes loans held for sale and
nonperforming loans and is net of deferred loan origination
fees/costs and discounts/premiums.
(2) Interest income includes net discount accretion of
$3.8 million, $6.3 million and $3.7 million, respectively.
(3) Represents annualized net interest income divided by
average interest-earning assets.
(4) Represents annualized total interest expense divided
by the sum of average total interest-bearing liabilities and
noninterest-bearing deposits.
 

Provision for Credit Losses

A provision for credit losses of $1.5 million was recorded for the first
quarter of 2019, compared with a provision for credit losses of $2.3
million for the fourth quarter of 2018. The first quarter of 2019
provision for credit losses includes a $486,000 reduction in reserve for
unfunded commitments primarily due to lower attributable loan
commitments and loss rates. The prior quarter, comparably, included a
$580,000 reduction in reserve for unfunded commitments. Net charge-offs
were $228,000 in the first quarter of 2019 compared to $138,000 in the
fourth quarter of 2018.

Noninterest Income

Noninterest income for the first quarter of 2019 was $7.7 million, an
increase of $711,000, or 10.2%, from the fourth quarter of 2018. The
increase from the fourth quarter of 2018 was primarily due to a $427,000
increase in net gain from sales of investment securities, a $516,000
increase in other income and a $200,000 decrease in net gain from the
sales of loans. The increase in other income included a favorable mark
of $612,000 in Community Reinvestment Act ("CRA") related equity
investments, compared to a loss of $148,000 in the prior quarter, and
$292,000 in recoveries of pre-acquisition charged-off loans, compared to
recoveries of $176,000 in prior quarter.

During the first quarter of 2019, the Bank sold $25.5 million of Small
Business Administration ("SBA") loans for a net gain of $1.7 million,
compared with the sale of $26.1 million of SBA loans for a net gain of
$1.6 million during the prior quarter. The prior quarter also included
the sale of $163.2 million of non-SBA loans for a net gain of $320,000.

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

Noninterest income for the first quarter of 2019 increased $15,000, or
0.2%, compared to the first quarter of 2018. The increase from the first
quarter of 2018 was primarily related to a $421,000 increase in net gain
from sale of investment securities, a $299,000 increase in earnings on
bank-owned life insurance ("BOLI"), a $210,000 increase in other service
fee income and a $180,000 increase in service charges on deposit
accounts, partially offset by a $1.2 million decrease in net gain from
sales of loans.

   
Three Months Ended
March 31,     December 31,     March 31,
2019 2018 2018
NONINTEREST INCOME (dollars in thousands)
Loan servicing fees $ 398 $ 408 $ 345
Service charges on deposit accounts 1,330 1,351 1,150
Other service fee income 356 270 146
Debit card interchange fee income 1,071 1,139 1,036
Earnings on BOLI 910 929 611
Net gain from sales of loans 1,729 1,929 2,958
Net gain from sales of investment securities 427 6
Other income 1,460   944   1,414
Total noninterest income $ 7,681   $ 6,970   $ 7,666
 

Noninterest Expense

Noninterest expense totaled $63.6 million for the first quarter of 2019,
a decrease of $3.7 million, or 5.4%, compared with the fourth quarter of
2018. The decrease was driven primarily by merger-related expense of
$655,000 in the first quarter of 2019 compared with $2.6 million in the
fourth quarter of 2018. Excluding merger-related expense, noninterest
expense decreased $1.7 million to $62.9 million, primarily due to a full
quarter's realization of cost savings attributable to the acquisition of
Grandpoint. Compensation and benefits were also favorably impacted
overall by lower staffing and incentives.

The Company anticipates that total operating expense will range from
$64.0 million to $65.0 million for the second quarter of 2019.

Noninterest expense grew by $13.8 million, or 27.6% compared to the
first quarter of 2018. The increase was primarily related to the
additional costs from operations, personnel and branches retained from
the acquisition of Grandpoint, core deposit intangible ("CDI")
amortization expense, combined with our continued investment in
personnel to support our organic growth in loans and deposits, partially
offset by the reduction in merger-related expense.

 
    Three Months Ended
March 31,     December 31,     March 31,
2019 2018 2018
NONINTEREST EXPENSE (dollars in thousands)
Compensation and benefits $ 33,388 $ 33,838 $ 28,873
Premises and occupancy 7,535 7,504 4,781
Data processing 2,930 3,868 2,702
Other real estate owned operations, net 3 1 1
FDIC insurance premiums 800 750 611
Legal, audit and professional expense 2,998 3,105 1,839
Marketing expense 1,497 1,700 1,530
Office, telecommunications and postage expense 1,210 1,579 1,080
Loan expense 873 1,046 591
Deposit expense 3,583 3,105 1,676
Merger-related expense 655 2,597 936
CDI amortization 4,436 4,631 2,274
Other expense 3,669   3,515   2,914
Total noninterest expense $ 63,577   $ 67,239   $ 49,808
 

Income Tax

For the first quarter of 2019, our effective tax rate was 28.3%,
compared with 27.9% for the fourth quarter of 2018 and 24.1% for the
first quarter of 2018. The slight increase in the effective tax rate for
the first quarter of 2019 was primarily the result of a reduced tax
benefit from stock-based compensation.

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

The increase in the effective tax rate for the first quarter of 2019,
compared to the first quarter of 2018, was primarily the result of $1.4
million reduced tax benefit from stock-based compensation.

BALANCE SHEET HIGHLIGHTS

Loans

Loans held for investment totaled $8.87 billion at March 31, 2019, an
increase of $29.0 million, or 0.3%, from December 31, 2018, and an
increase of $2.62 billion, or 42.0%, from March 31, 2018. The increase
compared to the fourth quarter of 2018 was impacted by organic loan
growth, partially offset by lower loan repayments and lower line
utilization during the first quarter of 2019. The increase compared to
the first quarter of 2018 was impacted by both organic loan growth and
by the acquisition of Grandpoint, the latter of which added $2.4 billion
of loans before fair value adjustments in the third quarter of 2018.

During the first quarter of 2019, the Bank generated $549.7 million of
new loan commitments and $391.8 million of new loan fundings, compared
with $730.0 million in new loan commitments and $531.5 million in new
loan fundings for the fourth quarter of 2018 and $488.0 million in new
loan commitments and $293.1 million in new loan fundings for the first
quarter of 2018. The Bank experienced lower loan prepayments of $279.2
million in the first quarter of 2019 compared with $407.6 million in the
prior quarter. The Bank also sold $25.5 million in loans in the first
quarter compared with $189.3 million in the prior quarter, which
included $26.1 million of SBA loans.

At March 31, 2019, the ratio of loans held for investment to total
deposits was 101.7%, compared with 102.1% and 100.8% at December 31,
2018 and March 31, 2018, respectively.

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

 
    March 31,     December 31,     March 31,
2019 2018 2018
(dollars in thousands)
Business loans:
Commercial and industrial $ 1,336,520 $ 1,364,423 $ 1,062,385
Franchise 813,057 765,416 692,846
Commercial owner occupied 1,648,762 1,679,122 1,268,869
SBA 188,757 193,882 182,626
Agribusiness 134,603   138,519   149,256  
Total business loans 4,121,699 4,141,362 3,355,982
Real estate loans:
Commercial non-owner occupied 2,124,250 2,003,174 1,227,693
Multi-family 1,511,942 1,535,289 817,963
One-to-four family 279,467 356,264 266,324
Construction 538,197 523,643 319,610
Farmland 167,345 150,502 136,522
Land 46,848   46,628   34,452  
Total real estate loans 4,668,049 4,615,500 2,802,564
Consumer loans:
Consumer loans 85,302   89,424   86,206  
Gross loans held for investment 8,875,050 8,846,286 6,244,752
Deferred loan origination costs/(fees) and premiums/(discounts), net (9,195 ) (9,468 ) (2,911 )
Loans held for investment 8,865,855 8,836,818 6,241,841
Allowance for loan losses (37,856 ) (36,072 ) (30,502 )
Loans held for investment, net $ 8,827,999   $ 8,800,746   $ 6,211,339  
 
Loans held for sale, at lower of cost or fair value $ 11,671 $ 5,719 $ 29,034
 

The total end-of-period weighted average interest rate on loans,
excluding fees and discounts, at March 31, 2019 was 5.13%, compared to
5.13% at December 31, 2018 and 5.04% at March 31, 2018. The
quarter-over- quarter comparison is unchanged, while the year-over-year
increase reflects the impact of higher rates on new loan originations as
well as the favorable repricing of loans as a result of the 2018 Federal
Reserve Bank fed funds rate increases, partially offset by the lower
yields associated with the Grandpoint acquisition.

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

 
    March 31,     December 31,     March 31,
2019 2018 2018
(dollars in thousands)
Business loans:
Commercial and industrial $ 112,074 $ 141,837 $ 126,513
Franchise 86,356 82,013 52,260
Commercial owner occupied 39,049 64,349 46,956
SBA 41,963 26,884 38,972
Agribusiness 13,388   6,525   32,234
Total business loans 292,830 321,608 296,935
Real estate loans:
Commercial non-owner occupied 114,809 196,779 18,217
Multi-family 30,991 73,454 45,225
One-to-four family 14,689 13,029 9,271
Construction 74,203 85,327 111,673
Farmland 17,250 14,588 590
Land 4,050   4,229   5,825
Total real estate loans 255,992 387,406 190,801
Consumer loans:
Consumer loans 840   20,938   271
Total loan commitments $ 549,662   $ 729,952   $ 488,007
 

The weighted average rate on new loan production was 5.67% in the first
quarter of 2019 compared with 5.35% in the fourth quarter of 2018 and
5.27% in the first quarter of 2018.

Asset Quality and Allowance for Loan and Lease Losses

At March 31, 2019, our allowance for loan and lease losses was $37.9
million, an increase of $1.8 million from December 31, 2018. The
provision for loan losses for the first quarter of 2019 was $2.0
million, while net charge-offs were $228,000.

The ratio of allowance for loan losses to loans held for investment at
March 31, 2019 amounted to 0.43%, compared to 0.41% and 0.49% at
December 31, 2018 and March 31, 2018, respectively. Under the guidance
of ASC 820: Fair Value Measurements and Disclosures, the fair
value net discount on loans acquired through total bank acquisitions was
$57.2 million, or 0.65% of total loans held for investment as of
March 31, 2019, compared to $61.0 million, or 0.69% of total loans held
for investment as of December 31, 2018.

Nonperforming assets totaled $13.1 million, or 0.11% of total assets, at
March 31, 2019, an increase of $8.0 million from December 31, 2018.
During the first quarter of 2019, nonperforming loans increased $8.0
million to $12.9 million and other real estate owned increased $33,000
to $180,000, while other assets owned remained unchanged at $13,000.
Loan delinquencies were $15.8 million, or 0.18% of loans held for
investment, at March 31, 2019, compared to $12.9 million, or 0.15% of
loans held for investment, at December 31, 2018.

The increase in nonperforming assets during the first quarter of 2019
was primarily attributable to the downgrade of one franchise loan, for
which the Company has established a $1.6 million specific reserve.

 
    March 31,     December 31,     March 31,
2019 2018 2018
Asset Quality (dollars in thousands)
Nonperforming loans $ 12,858 $ 4,857 $ 8,149
Other real estate owned 180 147 206
Other assets owned 13   13   233  
Nonperforming assets $ 13,051   $ 5,017   $ 8,588  
 
Allowance for loan losses $ 37,856 $ 36,072 $ 30,502
Allowance for loan losses as a percent of total nonperforming loans 294 % 743 % 374 %
Nonperforming loans as a percent of loans held for investment 0.15 0.05 0.13
Nonperforming assets as a percent of total assets 0.11 0.04 0.11
Net loan charge-offs/(recoveries) for the quarter ended $ 228 $ 138 $ 687
Net loan charge-offs for quarter to average total loans (1) % % 0.01 %
Allowance for loan losses to loans held for investment (2) 0.43 0.41 0.49
Delinquent Loans
30 - 59 days $ 2,299 $ 7,047 $ 6,605
60 - 89 days 1,982 1,242 1,084
90+ days 11,481   4,564   5,065  
Total delinquency $ 15,762   $ 12,853   $ 12,754  
Delinquency as a percentage of loans held for investment 0.18 % 0.15 % 0.20 %
                   
(1) The ratios are less than 0.01% as of March 31, 2019
and December 31, 2018.
(2) 47% of loans held for investment include a fair value
net discount of $57.2 million.
 

Investment Securities

Investments securities available-for-sale totaled $1.22 billion at
March 31, 2019, an increase of $66.9 million, or 5.8%, from December 31,
2018, and $327.5 million, or 36.9%, from March 31, 2018. The increase in
the first quarter of 2019 compared to prior quarter was primarily the
result of $252.5 million in purchases and mark-to-market fair value
adjustment increases of $15.0 million, partially offset by $169.5
million in sales and $31.2 million in principal payments, amortization
and redemptions. The increase compared to the same period last year was
primarily the result of $392.9 million of investment securities from the
acquisition of Grandpoint.

Deposits

At March 31, 2019, deposits totaled $8.72 billion, an increase of $56.8
million, or 0.7%, from December 31, 2018 and $2.52 billion, or 40.7%,
from March 31, 2018. At March 31, 2019, non-maturity deposits totaled
$7.12 billion, or 81.7% of total deposits, a decrease of $124.6 million,
or 1.7%, from December 31, 2018 and an increase of $2.05 billion, or
40.4%, from March 31, 2018. During the first quarter of 2019, deposit
increases included $34.2 million in interest checking and $183.0 million
in brokered certificates of deposit, partially offset by decreases of
$87.0 million in money market/savings deposits and $71.8 million in
noninterest-bearing deposits. During the first quarter of 2019, the Bank
added brokered certificates of deposits as rates moved favorably to
these funding sources compared with higher cost, overnight borrowing
rates.

The weighted average cost of deposits for the three-month period ending
March 31, 2019 was 0.63%, compared to 0.55% for the three-month period
ending December 31, 2018, and 0.39% for the three-month period ending
March 31, 2018. The increase in the weighted average cost of deposits in
the first quarter of 2019 compared to the prior quarter was primarily
driven by higher rates in retail and brokered certificates of deposits
and, to a lesser extent, money market accounts.

 
    March 31,     December 31,     March 31,
2019 2018 2018
Deposit Accounts (dollars in thousands)
Noninterest-bearing checking $ 3,423,893 $ 3,495,737 $ 2,312,586
Interest-bearing:
Checking 560,274 526,088 355,895
Money market/savings 3,138,875 3,225,849 2,405,869
Retail certificates of deposit 1,007,559 1,009,066 744,214
Wholesale/brokered certificates of deposit 584,574   401,611   373,709  
Total interest-bearing 5,291,282   5,162,614   3,879,687  
Total deposits $ 8,715,175   $ 8,658,351   $ 6,192,273  
 
Cost of deposits 0.63 % 0.55 % 0.39 %
Noninterest-bearing deposits as a percent of total deposits 39 40 37
Non-maturity deposits as a percent of total deposits 82 84 82
 

Borrowings

At March 31, 2019, total borrowings amounted to $720.0 million, a
decrease of $58.0 million, or 7.5%, from December 31, 2018 and an
increase of $131.3 million, or 22.3%, from March 31, 2018. Total
borrowings for the quarter included $609.6 million of advances from the
Federal Home Loan Bank of San Francisco ("FHLB") and $110.4 million of
subordinated debt. At March 31, 2019, total borrowings represented 6.2%
of total assets, compared to 6.8% and 7.3%, as of December 31, 2018 and
March 31, 2018, respectively.

Capital Ratios

At March 31, 2019, our ratio of tangible common equity to total assets
was 10.32%, compared with 10.02% at December 31, 2018, and 9.63% at
March 31, 2018, with a tangible book value per share of $17.56, compared
with $16.97 at December 31, 2018 and $15.63 at March 31, 2018.

At March 31, 2019, the Company had a tier 1 leverage ratio of 10.69%,
common equity tier 1 capital ratio of 11.08%, tier 1 capital ratio of
11.32% and total capital ratio of 12.58%.

At March 31, 2019, the Bank exceeded all regulatory capital requirements
with a tier 1 leverage ratio of 11.39%, common equity tier 1 capital
ratio of 12.07%, tier 1 capital ratio of 12.07% and total capital ratio
of 12.49%. These capital ratios each exceeded the "well capitalized"
standards defined by the federal banking regulators of 5.00% for tier 1
leverage ratio, 6.5% for common equity tier 1 capital ratio, 8.00% for
tier 1 capital ratio and 10.00% for total capital ratio.

           
March 31, December 31, March 31,
Capital Ratios 2019 2018 2018
Pacific Premier Bancorp, Inc. Consolidated
Tier 1 leverage ratio 10.69 % 10.38 % 10.10 %
Common equity tier 1 capital ratio 11.08 10.88 10.67
Tier 1 capital ratio 11.32 11.13 10.96
Total capital ratio 12.58 12.39 12.64
Tangible common equity ratio (1) 10.32 10.02 9.63
 
Pacific Premier Bank
Tier 1 leverage ratio 11.39 % 11.06 % 11.00 %
Common equity tier 1 capital ratio 12.07 11.87 11.93
Tier 1 capital ratio 12.07 11.87 11.93
Total capital ratio 12.49 12.28 12.39
 
Share Data
Book value per share $ 31.97 $ 31.52 $ 27.12
Tangible book value per share (1) 17.56 16.97 15.63
Closing stock price (2) 26.53 25.52 40.20
Shares issued and outstanding 62,773,299 62,480,755 46,527,566
Market Capitalization (3) $ 1,665,376 $ 1,594,509 $ 1,870,408
 
(1) A reconciliation of the non-U.S. GAAP measures of
tangible common equity and tangible book value per share to the U.S.
GAAP measures of common stockholders' equity and book value per
share is set forth below.
(2) As of the last trading day prior to period end.
(3) Dollars in thousands.

Dividend and Stock Repurchase Program

On April 19, 2019, the Company's Board of Directors declared a $0.22 per
share dividend, payable on May 15, 2019 to stockholders of record on May
1, 2019. The Company did not repurchase any shares under the recently
approved stock repurchase program, which authorized the repurchase of up
to $100 million of its common stock.

Conference Call and Webcast

The Company will host a conference call at 9:00 a.m. PT / 12:00 p.m. ET
on April 23, 2019 to discuss its financial results. Analysts and
investors may participate in the question-and-answer session. A live
webcast will be available on the Webcasts
page of the Company's investor relations website. An archived version of
the webcast will be available in the same location shortly after the
live call has ended. The conference call can be accessed by telephone at
(866) 290-5977 and asking to be joined to the Pacific Premier Bancorp
conference call. Additionally, a telephone replay will be made available
through April 30, 2019 at (877) 344-7529, conference ID 10130038.

About Pacific Premier Bancorp, Inc.

Pacific Premier Bancorp, Inc. is the holding company for Pacific Premier
Bank, one of the largest banks headquartered in Southern California with
approximately $11.6 billion in assets. Pacific Premier Bank is a
business bank primarily focused on serving small and middle market
businesses in the counties of Orange, Los Angeles, Riverside, San
Bernardino, San Diego, San Luis Obispo and Santa Barbara, California, as
well as markets in the states of Arizona, Nevada and Washington. Through
its more than 40 depository branches, Pacific Premier Bank offers a
diverse range of lending products including commercial, commercial real
estate, construction, and SBA loans, as well as specialty banking
products for homeowners associations and franchise lending nationwide.

FORWARD-LOOKING COMMENTS

The statements contained herein that are not historical facts are
forward-looking statements based on management's current expectations
and beliefs concerning future developments and their potential effects
on the Company including, without limitation, plans, strategies and
goals, and statements about the Company's expectations regarding revenue
and asset growth, financial performance and profitability, loan and
deposit growth, yields and returns, loan diversification and credit
management, stockholder value creation, tax rates and the impact of the
acquisition of Grandpoint and other acquisitions.

Such statements involve inherent risks and uncertainties, many of which
are difficult to predict and are generally beyond the control of the
Company. There can be no assurance that future developments affecting
the Company will be the same as those anticipated by management. The
Company cautions readers that a number of important factors could cause
actual results to differ materially from those expressed in, or implied
or projected by, such forward-looking statements. These risks and
uncertainties include, but re not limited to, the following: the
strength of the United States economy in general and the strength of the
local economies in which we conduct operations; the effects of, and
changes in, trade, monetary and fiscal policies and laws, including
interest rate policies of the Board of Governors of the Federal Reserve
System; inflation/deflation, interest rate, market and monetary
fluctuations; the effect of acquisitions we may make, such as our recent
acquisition of Grandpoint Capital Inc., including, without limitation,
the failure to achieve the expected revenue growth and/or expense
savings from such acquisitions, and/or the failure to effectively
integrate an acquisition target into our operations; the timely
development of competitive new products and services and the acceptance
of these products and services by new and existing customers; the impact
of changes in financial services policies, laws and regulations,
including those concerning taxes, banking, securities and insurance, and
the application thereof by regulatory bodies; the effectiveness of our
risk management framework and quantitative models; changes in the level
of our nonperforming assets and charge-offs; The effect of changes in
accounting policies and practices, as may be adopted from time-to-time
by bank regulatory agencies, the U.S. Securities and Exchange Commission
("SEC"), the Public Company Accounting Oversight Board, the Financial
Accounting Standards Board or other accounting standards setters;
possible other-than-temporary impairments of securities held by us; the
impact of current governmental efforts to restructure the U.S. financial
regulatory system, including any amendments to the Dodd-Frank Wall
Street Reform and Consumer Protection Act; changes in consumer spending,
borrowing and savings habits; the effects of our lack of a diversified
loan portfolio, including the risks of geographic and industry
concentrations; our ability to attract deposits and other sources of
liquidity; the possibility that we may reduce or discontinue the
payments of dividends on common stock; changes in the financial
performance and/or condition of our borrowers; changes in the
competitive environment among financial and bank holding companies and
other financial service providers; geopolitical conditions, including
acts or threats of terrorism, actions taken by the United States or
other governments in response to acts or threats of terrorism and/or
military conflicts, which could impact business and economic conditions
in the United States and abroad; cybersecurity threats and the cost of
defending against them, including the costs of compliance with potential
legislation to combat cybersecurity at a state, national or global
level; unanticipated regulatory or legal proceedings; and our ability to
manage the risks involved in the foregoing. Additional factors that
could cause actual results to differ materially from those expressed in
the forward-looking statements are discussed in the 2018 Annual Report
on Form 10-K of Pacific Premier Bancorp, Inc. filed with the SEC and
available at the SEC's Internet site (http://www.sec.gov).

Pacific Premier undertakes no obligation to revise or publicly release
any revision or update to these forward-looking statements to reflect
events or circumstances that occur after the date on which such
statements were made.

 
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
    March 31,     December 31,     September 30,     June 30,     March 31,
ASSETS 2019 2018 2018 2018 2018
Cash and due from banks $ 122,947 $ 125,036 $ 151,983 $ 96,224 $ 110,480
Interest-bearing deposits with financial institutions 55,435   78,370   111,229   35,244   15,576  
Cash and cash equivalents 178,382 203,406 263,212 131,468 126,056
Interest-bearing time deposits with financial institutions 5,896 6,143 6,386 6,633 6,633
Investments held-to-maturity, at amortized cost 43,894 45,210 46,385 31,965 24,559
Investment securities available-for-sale, at fair value 1,171,410 1,103,222 1,054,877 874,700 863,243
FHLB, FRB and other stock, at cost 94,751 94,918 98,779 69,663 69,567
Loans held for sale, at lower of cost or fair value 11,671 5,719 52,880 13,879 29,034
Loans held for investment 8,865,855 8,836,818 8,759,204 6,277,586 6,241,841
Allowance for loan losses (37,856 ) (36,072 ) (33,306 ) (31,747 ) (30,502 )
Loans held for investment, net 8,827,999 8,800,746 8,725,898 6,245,839 6,211,339
Accrued interest receivable 40,302 37,837 37,683 27,420 27,073
Other real estate owned 180 147 356 220 206
Premises and equipment 61,523 64,691 66,103 54,049 53,146
Deferred income taxes, net 9,275 15,627 26,848 17,183 13,941
Bank owned life insurance 111,400 110,871 110,354 76,937 76,454
Intangible assets 96,120 100,556 105,187 37,938 40,740
Goodwill 808,726 808,726 807,892 494,672 493,785
Other assets 118,966   89,568   101,041   75,565   51,040  
Total assets $ 11,580,495   $ 11,487,387   $ 11,503,881   $ 8,158,131   $ 8,086,816  
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposit accounts:
Noninterest-bearing checking $ 3,423,893 $ 3,495,737 $ 3,434,674 $ 2,349,464 $ 2,312,586
Interest-bearing:
Checking 560,274 526,088 495,483 342,986 355,895
Money market/savings 3,138,875 3,225,849 3,261,544 2,446,849 2,405,869
Retail certificates of deposit 1,007,559 1,009,066 1,045,334 823,425 744,214
Wholesale/brokered certificates of deposit 584,574   401,611   265,110   345,626   373,709  
Total interest-bearing 5,291,282   5,162,614   5,067,471   3,958,886   3,879,687  
Total deposits 8,715,175 8,658,351 8,502,145 6,308,350 6,192,273
FHLB advances and other borrowings 609,591 667,681 861,972 379,100 483,525
Subordinated debentures 110,381 110,313 110,244 105,253 105,188
Accrued expenses and other liabilities 138,284   81,345   113,143   76,903   43,922  
Total liabilities 9,573,431   9,517,690   9,587,504   6,869,606   6,824,908  
STOCKHOLDERS' EQUITY:
Common stock 617 617 617 459 472
Additional paid-in capital 1,676,024 1,674,274 1,671,673 1,067,907 1,065,218
Retained earnings 325,363 300,407 260,764 232,372 205,069
Accumulated other comprehensive (loss) income 5,060   (5,601 ) (16,677 ) (12,213 ) (8,851 )
Total stockholders' equity 2,007,064   1,969,697   1,916,377   1,288,525   1,261,908  
Total liabilities and stockholders' equity $ 11,580,495   $ 11,487,387   $ 11,503,881   $ 8,158,131   $ 8,086,816  
 
 
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(Unaudited)
    Three Months Ended
March 31,     December 31,     March 31,
2019 2018 2018
INTEREST INCOME
Loans $ 121,476 $ 126,341 $ 84,173
Investment securities and other interest-earning assets 9,767   9,680   6,654

Total interest income

131,243 136,021 90,827
INTEREST EXPENSE
Deposits 13,284 12,041 5,914
FHLB advances and other borrowings 4,802 4,701 2,023
Subordinated debentures 1,751   1,733   1,609
Total interest expense 19,837   18,475   9,546
Net interest income before provision for credit losses 111,406 117,546 81,281
Provision for credit losses 1,526   2,258   2,253
Net interest income after provision for credit losses 109,880 115,288 79,028
NONINTEREST INCOME
Loan servicing fees 398 408 345
Service charges on deposit accounts 1,330 1,351 1,150
Other service fee income 356 270 146
Debit card interchange fee income 1,071 1,139 1,036
Earnings on BOLI 910 929 611
Net gain from sales of loans 1,729 1,929 2,958
Net gain from sales of investment securities 427 6
Other income 1,460   944   1,414
Total noninterest income 7,681 6,970 7,666
NONINTEREST EXPENSE
Compensation and benefits 33,388 33,838 28,873
Premises and occupancy 7,535 7,504 4,781
Data processing 2,930 3,868 2,702
Other real estate owned operations, net 3 1 1
FDIC insurance premiums 800 750 611
Legal, audit and professional expense 2,998 3,105 1,839
Marketing expense 1,497 1,700 1,530
Office, telecommunications and postage expense 1,210 1,579 1,080
Loan expense 873 1,046 591
Deposit expense 3,583 3,105 1,676
Merger-related expense 655 2,597 936
CDI amortization 4,436 4,631 2,274
Other expense 3,669   3,515   2,914
Total noninterest expense 63,577   67,239   49,808
Net income before income taxes 53,984 55,019 36,886
Income tax 15,266   15,376   8,884
Net income $ 38,718   $ 39,643   $ 28,002
EARNINGS PER SHARE
Basic $ 0.62 $ 0.64 $ 0.61
Diluted $ 0.62 $ 0.63 $ 0.60
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 61,987,605 61,917,184 45,893,496
Diluted 62,285,783 62,457,100 46,652,059
 

SELECTED FINANCIAL DATA

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
   
Three Months Ended
March 31, 2019   December 31, 2018   March 31, 2018

Average
Balance

 

Interest
Income/
Expense

 

Average
Yield/Co
st

Average
Balance

 

Interest
Income/
Expense

 

Average
Yield/Co
st

Average
Balance

 

Interest
Income/
Expense

 

Average
Yield/Co
st

Assets (dollars in thousands)
Interest-earning assets:
Cash and cash equivalents $ 173,613 $ 378 0.88 % $ 230,377 $ 634 1.09 % $ 167,236 $ 313 0.76 %
Investment securities 1,298,476 9,389 2.89 1,243,240 9,046 2.91 919,526 6,341 2.76
Loans receivable, net (1)(2) 8,867,159   121,476   5.56 8,909,407   126,341   5.63 6,237,968   84,173   5.47
Total interest-earning assets 10,339,248 131,243 5.15 10,383,024 136,021 5.20 7,324,730 90,827 5.03
Noninterest-earning assets 1,224,281   1,199,343   720,569  
Total assets $ 11,563,529   $ 11,582,367   $ 8,045,299  
Liabilities and Equity
Interest-bearing deposits:
Interest checking $ 536,117 $ 474 0.36 % $ 521,778 $ 456 0.35 % $ 348,110 $ 114 0.13 %
Money market 2,912,819 6,534 0.91 2,963,437 6,074 0.81 2,189,912 3,159 0.59
Savings 249,621 86 0.14 258,634 98 0.15 223,992 79 0.14
Retail certificates of deposit 1,001,344 4,058 1.64 1,025,311 3,842 1.49 713,290 1,388 0.79
Wholesale/brokered certificates of deposit 373,822   2,132   2.31 296,345   1,571   2.10 377,549   1,174   1.26
Total interest-bearing deposits 5,073,723 13,284 1.06 5,065,505 12,041 0.94 3,852,853 5,914 0.62
FHLB advances and other borrowings 770,331 4,802 2.53 795,029 4,701 2.35 508,142 2,023 1.61
Subordinated debentures 110,340   1,751   6.35 110,271   1,733   6.29 105,153   1,609   6.12
Total borrowings 880,671   6,553   3.02 905,300   6,434   2.82 613,295   3,632   2.40
Total interest-bearing liabilities 5,954,394 19,837 1.35 5,970,805 18,475 1.23 4,466,148 9,546 0.87
Noninterest-bearing deposits 3,480,791 3,571,119 2,262,895
Other liabilities 136,483   95,820   60,627  
Total liabilities 9,571,668 9,637,744 6,789,670
Stockholders' equity 1,991,861   1,944,623   1,255,629  
Total liabilities and equity $ 11,563,529     $ 11,582,367     $ 8,045,299    
Net interest income $ 111,406   $ 117,546   $ 81,281  
Net interest margin (3) 4.37 % 4.49 % 4.50 %
Cost of deposits 0.63 0.55 0.39
Cost of funds (4) 0.85 0.77 0.58
Ratio of interest-earning assets to interest-bearing liabilities 173.64 173.90 164.01
 
(1) Average balance includes loans held for sale and
nonperforming loans and is net of deferred loan origination
fees/costs and discounts/premiums.
(2) Interest income includes net discount accretion of
$3.8 million, $6.3 million and $3.7 million, respectively.
(3) Represents annualized net interest income divided by
average interest-earning assets.
(4) Represents annualized total interest expense divided
by the sum of average total interest-bearing liabilities and
noninterest-bearing deposits.
 
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
LOAN PORTFOLIO COMPOSITION
 
    March 31,     December 31,     September 30,     June 30,     March 31,
2019 2018 2018 2018 2018
(dollars in thousands)
Business loans
Commercial and industrial $ 1,336,520 $ 1,364,423 $ 1,359,841 $ 1,102,586 $ 1,062,385
Franchise 813,057 765,416 735,366 708,957 692,846
Commercial owner occupied 1,648,762 1,679,122 1,675,528 1,310,722 1,268,869
SBA 188,757 193,882 193,487 176,696 182,626
Agribusiness 134,603   138,519   133,241   136,962   149,256  
Total business loans 4,121,699 4,141,362 4,097,463 3,435,923 3,355,982
Real estate loans
Commercial non-owner occupied 2,124,250 2,003,174 1,931,165 1,219,747 1,227,693
Multi-family 1,511,942 1,535,289 1,554,692 805,494 817,963
One-to-four family 279,467 356,264 376,617 249,495 266,324
Construction 538,197 523,643 504,708 321,423 319,610
Farmland 167,345 150,502 138,479 136,548 136,522
Land 46,848   46,628   49,992   30,246   34,452  
Total real estate loans 4,668,049 4,615,500 4,555,653 2,762,953 2,802,564
Consumer loans
Consumer loans 85,302   89,424   114,736   81,973   86,206  
Gross loans held for investment 8,875,050 8,846,286 8,767,852 6,280,849 6,244,752
Deferred loan origination costs/(fees) and premiums/(discounts), net (9,195 ) (9,468 ) (8,648 ) (3,263 ) (2,911 )
Loans held for investment 8,865,855 8,836,818 8,759,204 6,277,586 6,241,841
Allowance for loan losses (37,856 ) (36,072 ) (33,306 ) (31,747 ) (30,502 )
Loans held for investment, net $ 8,827,999   $ 8,800,746   $ 8,725,898   $ 6,245,839   $ 6,211,339  
 
Loans held for sale, at lower of cost or fair value $ 11,671 $ 5,719 $ 52,880 $ 13,879 $ 29,034
 
 
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
ASSET QUALITY INFORMATION
 
    March 31,     December 31,     September 30,     June 30,     March 31,
2019 2018 2018 2018 2018
Asset Quality (dollars in thousands)
Nonperforming loans $ 12,858 $ 4,857 $ 7,268 $ 6,039 $ 8,149
Other real estate owned 180 147 356 220 206
Other assets owned 13   13   129   183   233  
Nonperforming assets $ 13,051   $ 5,017   $ 7,753   $ 6,442   $ 8,588  
 
Allowance for loan losses $ 37,856 $ 36,072 $ 33,306 $ 31,747 $ 30,502
Allowance for loan losses as a percent of total nonperforming loans 294 % 743 % 458 % 526 % 374 %
Nonperforming loans as a percent of loans held for investment 0.15 0.05 0.08 0.10 0.13
Nonperforming assets as a percent of total assets 0.11 0.04 0.07 0.08 0.11
Net loan charge-offs for the quarter ended $ 228 $ 138 $ 87 $ 108 $ 687
Net loan charge-offs for quarter to average total loans(1) % % % % 0.01 %
Allowance for loan losses to loans held for investment 0.43 % 0.41 % 0.38 % 0.51 % 0.49 %
Delinquent Loans
30 - 59 days $ 2,299 $ 7,047 $ 1,977 $ 3,583 $ 6,605
60 - 89 days 1,982 1,242 720 1,290 1,084
90+ days 11,481   4,564   5,048   2,574   5,065  
Total delinquency $ 15,762   $ 12,853   $ 7,745   $ 7,447   $ 12,754  
Delinquency as a percent of loans held for investment 0.18 % 0.15 % 0.09 % 0.12 % 0.20 %
                     

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

 

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
GAAP
RECONCILIATIONS

(dollars in thousands, except per share data)

For periods presented below, return on average tangible common equity is
a non-U.S. GAAP financial measures derived from U.S. GAAP-based amounts.
We calculate this figure by excluding CDI amortization expense from net
income and excluding the average CDI and average goodwill from the
average stockholders' equity during the periods indicated. Management
believes that the exclusion of such items from this financial measures
provides useful information to gain an understanding of the operating
results of our core business. However, this non-GAAP financial measure
is supplemental and is not a substitute for an analysis based on GAAP
measures. As other companies may use different calculations for this
adjusted measure, this presentation may not be comparable to other
similarly titled adjusted measures reported by other companies.

    Three Months Ended
March 31,   December 31,   March 31,
2019 2018 2018
Net income $ 38,718 $ 39,643 $ 28,002
Plus CDI amortization expense 4,436 4,631 2,274
Less CDI amortization expense tax adjustment 1,288   1,294   548  
Net income for average tangible common equity $ 41,866   $ 42,980   $ 29,728  
 
Average stockholders' equity $ 1,991,861 $ 1,944,623 $ 1,255,629
Less average CDI 98,984 103,434 42,220
Less average goodwill 808,726   808,516   493,357  
Average tangible common equity $ 1,084,151   $ 1,032,673   $ 720,052  
 
Return on average equity 7.78 % 8.15 % 8.92 %
Return on average tangible common equity 15.45 % 16.65 % 16.51 %
 

Tangible book value per share and tangible common equity to tangible
assets (the "tangible common equity ratio") are non-U.S. GAAP financial
measures derived from U.S. GAAP-based amounts. We calculate tangible
book value per share by dividing tangible common equity by common shares
outstanding, as compared to book value per share, which we calculate by
dividing common stockholders' equity by shares outstanding. We calculate
the tangible common equity ratio by excluding the balance of intangible
assets from common stockholders' equity and dividing by tangible assets.
We believe that this information is consistent with the treatment by
bank regulatory agencies, which exclude intangible assets from the
calculation of risk-based capital ratios. Accordingly, we believe that
these non-U.S. GAAP financial measures provide information that is
important to investors and that is useful in understanding our capital
position and ratios. However, these non-U.S. 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
measures, this presentation may not be comparable to other similarly
titled measures reported by other companies.

    March 31,     December 31,     September 30,     June 30,     March 31,
2019 2018 2018 2018 2018
Total stockholders' equity $ 2,007,064 $ 1,969,697 $ 1,916,377 $ 1,288,525 $ 1,261,908
Less intangible assets 904,846   909,282   913,079   532,610   534,525  
Tangible common equity $ 1,102,218   $ 1,060,415   $ 1,003,298   $ 755,915   $ 727,383  
 
Book value per share $ 31.97 $ 31.52 $ 30.68 $ 27.63 $ 27.12
Less intangible book value per share 14.41   14.55   14.62   11.42   11.49  
Tangible book value per share $ 17.56   $ 16.97   $ 16.06   $ 16.21   $ 15.63  
 
Total assets $ 11,580,495 $ 11,487,387 $ 11,503,881 $ 8,158,131 $ 8,086,816
Less intangible assets 904,846   909,282   913,079   532,610   534,525  
Tangible assets $ 10,675,649   $ 10,578,105   $ 10,590,802   $ 7,625,521   $ 7,552,291  
 
Tangible common equity ratio 10.32 % 10.02 % 9.47 % 9.91 % 9.63 %
 

View Comments and Join the Discussion!