EX-99.1 2 ppbi_8k-2008q1prex991.htm PPBI 2008 Q1 EARNINGS RELEASE EXHIBT 99.1 ppbi_8k-2008q1prex991.htm
 


Exhibit 99.1
 
Pacific Premier Bancorp, Inc. Announces First Quarter Results (Unaudited)

Costa Mesa, Calif., May 2, 2008 -- Pacific Premier Bancorp, Inc.  (NASDAQ: PPBI) (the “Company”), the holding company of Pacific Premier Bank (the “Bank”), recorded net income of $846,000, or $0.13 per diluted share, for the first quarter of 2008 compared to $945,000, or $0.14 per diluted share, for the first quarter of 2007, a decrease of 7.1% per diluted share.  All diluted earnings per share amounts have been adjusted to reflect warrants, restricted stock and stock options outstanding.

Return on average assets (ROAA) and return on average equity (ROAE) for the quarter ended March 31, 2008 was 0.45% and 5.57%, respectively, compared to 0.52% and 6.42%, respectively, for the quarter ended March 31, 2007.  The Company’s basic and diluted book value per share increased to $12.09 and $9.81, respectively, at March 31, 2008, reflecting an increase of 7.8% and 5.6%, respectively, from March 31, 2007.

Steven R. Gardner, President and Chief Executive Officer, stated, “Despite the difficult banking environment, we have been able to consistently execute on our business banking strategy.  Our bankers continue to attract new business customers and solidify relationships with existing business banking clients.  We have increased transaction accounts by an annualized rate of 39% from the prior quarter. These lower cost deposits together with higher yielding business loans, in part, led to a 17 basis point increase in our quarterly net interest margin to 2.74%.”

Mr. Gardner, continued, “Our loan portfolio is well positioned and diversified as we do not have any direct exposure to the deteriorating housing market in Southern California.  This fact is directly attributable to the Board’s and management’s determination not to engage in residential construction or subprime lending.  As a result, the Bank’s portfolio is not presently experiencing any significant delinquency or collectability issues.  However, given the current economic conditions, we are closely monitoring and managing the loan portfolio to ensure timely loss mitigation strategies to deal with the few past due loans in the portfolio.”

Mr. Gardner concluded, “During the first quarter, we experienced a substantial reduction in loan volume going from an average in excess of $100 million per quarter in 2007 down to $37 million for the first quarter of 2008. This decrease was anticipated, and we have taken steps in the last two quarters to lower our cost structure by reducing staff and lowering other expenses.  Furthermore, the reduction in loan volume will impact our ability to do sizable loan sales in the near future; however, our cost savings and increased net interest margin should lessen the impact of this lost revenue.”

For the three months ended March 31, 2008, net interest income increased to $4.8 million compared to $4.5 million for the same period a year earlier.  The increase is predominately attributable to a 6.9% decrease in interest expense, from $7.6 million to $7.1 million for the three months ended March 31 2007 and 2008, respectively.  The reduction in interest expense for the quarter was primarily due to a decrease in borrowing costs associated with the Bank’s Federal Home Loan Bank (“FHLB”) and other borrowings of 83 basis points over the prior year period.  Partially offsetting the decrease in interest expense was a decrease in interest income for the three months ended March 31, 2008 of 1.5%, or $180,000.  The decrease in interest income was primarily attributable to the repricing of our adjustable rate loans downward. Our weighted average loan yield for the quarter ended March 31, 2008 was 6.99%, a decrease of 29 basis points from 7.28% for the same period a year earlier.

The net interest margin for the quarter ended March 31, 2008 was 2.74% compared to 2.60% for the same period a year ago.  The increase was primarily a result of decreases in the cost of FHLB advances and other borrowings of 83 basis points, which was partially offset by a decrease in the average loan yield of 29 basis points.  The decreases in both the cost of FHLB advances and loan yield is attributable to the Federal Reserve interest rate cuts.  The Bank has $87.0 million in short-term FHLB advances, $107.5 million of certificate of deposits, and $104.6 million of loans that could reprice in the next quarter.

The Bank’s provision for loan losses was $183,000 for the three months ended March 31, 2008, compared to $299,000 for the same period in 2007.  The decrease in the provision for the three months ended March 31, 2008 is primarily due to the a slight decrease in business loans of $11,000 for the quarter ending March 31, 2008 compared to an increase of $16.3 million for the same period a year ago. Net recoveries in the first quarter of 2008 were $7,000 compared to net recoveries of $21,000 for the same period in 2007. The unallocated allowance increased from $240,000 as of March 31, 2007 to $770,000 as of March 31, 2008. The increase in the unallocated allowance is due to management’s expectation that the weakening economy will eventually affect our borrowers and/or the collateral securing our loans.

Noninterest income was $679,000 for the three months ended March 31, 2008 compared to $1.7 million for the same period ended March 31, 2007.  The decrease in the current three-month period compared to the same period in the prior year is primarily due to a decrease in gains from loan sales of $967,000 and a reduction in loan servicing fee income, principally prepayment penalties, of $245,000.

Noninterest expenses were $4.0 million for the three months ended March 31, 2008, compared to $4.4 million for the three months ended March 31, 2007.  The decrease in noninterest expenses for the period was the result of decreases in compensation and benefits, legal and audit, and marketing expenses of $246,000, $211,000 and $63,000, respectively, which was partially offset by increases in premises and occupancy and data processing expense of $40,000 and $39,000, respectively.  The decrease in compensation and benefits for the quarter is attributable to management’s staff reductions, which occurred during the fourth quarter of 2007 and in late February 2008. The number of employees with the Bank at March 31, 2008 was 92 compared to 116 at March 31, 2007.

The Company had a tax provision for the three months ended March 31, 2008 of $464,000.  For the comparable period a year earlier, the Company had a tax provision of $546,000. At March 31, 2008, the Company’s effective tax rate for the most recent three months periods was 35.4% compared to 36.6% for the same periods in the prior year.

Total assets of the Company were $770.3 million as of March 31, 2008, compared to $763.4 million as of December 31, 2007.  The $6.9 million, or 0.9%, increase in total assets is primarily due to a $28.6 million increase in securities held to maturity partially offset by decreases of $10.7 million in cash and cash equivalents and $11.1 million in net loans held for sale.

Net loans, including loans held for sale, decreased $10.9 million to $611.9 million as of March 31, 2008, compared to December 31, 2007.  The decrease is primarily due to loan payoffs of $36.6 million and the sale of $5.9 million of multi-family loans. Partially offsetting the decrease in net loans were loan originations totaling $37.0 million.  From time to time, management utilizes loan sales to manage its liquidity, interest rate risk, loan to deposit ratio, diversification of the loan portfolio, and net balance sheet growth.

The Bank’s allowance for loan losses increased $190,000 to $4.8 million as of March 31, 2008, from $4.6 million as of December 31, 2007.   The increase in the allowance for loan losses was primarily due to an increase in loss factors for SBA loans and an increase in substandard loans.  Net nonaccrual loans and other real estate owned were $5.2 million and $711,000, respectively, at March 31, 2008, compared to $4.2 million and $711,000, respectively, as of December 31, 2007.  The increase in net nonaccrual loans is primarily due to one business loan for $1.0 million.  The allowance for loan losses as a percent of nonaccrual loans decreased to 92% as of March 31, 2008 from 110% at December 31, 2007.  The ratio of nonperforming assets to total assets at March 31, 2008 was 0.77%, compared to 0.64% at December 31, 2007.

Total deposits were $396.6 million as of March 31, 2008, compared to $386.7 million at December 31, 2007, an annualized increase of 10.2%.   The increase in deposits was comprised of increases of $8.7 million and $1.7 million in transaction accounts and brokered certificate of deposits, respectively, which were partially offset by a decrease in retail certificates of deposits of $581,000. The cost of deposits as of March 31, 2008 was 3.75%, compared to 4.30% at December 31, 2007.

At March 31, 2008, total borrowings of the Company amounted to $298.0 million, a $10.3 million, or 3.5%, decrease from December 31, 2007, and were comprised of the Bank's $235.0 million of FHLB term borrowings, $27.0 million of overnight advances, $15.0 million of fed fund purchase, and $10.5 million of reverse repurchase agreements and the Company’s $10.3 million of subordinated debentures which were used to fund the issuance of trust preferred securities.  The total cost of the Company’s borrowings and deposits at March 31, 2008 was 3.85%, compared to 4.52% at December 31, 2007.

Total equity was $59.3 million as of March 31, 2008, compared to $60.7 million at December 31, 2007, a decrease of $1.4 million.   The decrease in equity is primarily due to the repurchase and retirement of 259,704 shares of common stock that cost $2.1 million, or $7.96 per share, which was partially offset by the quarter’s net income of $846,000.
 
The Bank’s tier 1 leverage capital and total risk-based capital ratios at March 31, 2008 were 8.64% and 11.23%, respectively.  The well capitalized ratios for banks are 5.00% and 10.00% for tier 1 leverage capital and total risk-based capital, respectively.

The Company owns all of the capital stock of the Bank.  The Company provides business and consumer banking products to its customers through our six full-service depository branches in Southern California located in the cities of San Bernardino, Seal Beach, Huntington Beach, Los Alamitos, Costa Mesa and Newport Beach.  At March 31, 2008, the Bank had total assets of $765.4 million, net loans of $611.9 million, total deposits of $397.2 million, and total stockholder’s equity of $64.4 million.

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.  There can be no assurance that future developments affecting the Company will be the same as those anticipated by management.  Actual results may differ from those projected in the forward-looking statements.  These forward-looking statements involve risks and uncertainties.  These include, but are not limited to, the following risks:  changes in the performance of the financial markets; changes in the demand for and market acceptance of the Company's products and services; changes in general economic conditions including interest rates, presence of competitors with greater financial resources, and the impact of competitive projects and pricing; the effect of the Company's policies; the continued availability of adequate funding sources; and  various legal, regulatory and litigation risks.

Contact:

Pacific Premier Bancorp, Inc.

Steven R.  Gardner
President/CEO
714.431.4000

John Shindler
Executive Vice President/CFO
714.431.4000
 
 



 
PACIFIC PREMIER BANCORP AND SUBSIDIARY
 
CONSOLIDATED BALANCE SHEET
 
(In thousands)
 
             
   
March 31,
   
December 31,
 
ASSETS
 
2008
   
2007
 
   
(Unaudited)
   
(Audited)
 
Cash and due from banks
  $ 8,283     $ 8,307  
Federal funds sold
    15,017       25,714  
   Cash and cash equivalents
    23,300       34,021  
Investment securities available for sale
    84,861       56,238  
Federal Reserve and Federal Home Loan Bank stock, at cost
    16,804       16,804  
Loans held for sale
    870       749  
Loans held for investment, net of allowance for loan losses of $4,788 in 2008 and $4,598 in 2007, respectively
    611,054       622,114  
Accrued interest receivable
    4,148       3,995  
Other real estate owned
    711       711  
Premises and equipment
    9,610       9,470  
Income taxes receivable
    519       524  
Deferred income taxes
    6,495       6,754  
Bank owned life insurance
    11,002       10,869  
Other assets
    965       1,171  
Total assets
  $ 770,339     $ 763,420  
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
LIABILITIES:
               
Deposit accounts
               
   Transaction accounts
  $ 98,048     $ 89,311  
   Retail certificates of deposit
    256,934       257,515  
   Wholesale/brokered certificates of deposit
    41,647       39,909  
Total deposits
    396,629       386,735  
Other borrowings
    287,663       297,965  
Subordinated debentures
    10,310       10,310  
Accrued expenses and other liabilities
    16,432       7,660  
Total liabilities
    711,034       702,670  
STOCKHOLDERS’ EQUITY:
               
Common stock, $.01 par value
    49       53  
Additional paid-in capital
    64,416       66,417  
Accumulated deficit
    (995 )     (5,012 )
Accumulated other comprehensive loss, net of tax
    (4,165 )     (708 )
Total stockholders’ equity
    59,305       60,750  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 770,339     $ 763,420  
 



 
PACIFIC PREMIER BANCORP AND SUBSIDIARY
 
CONSOLIDATED INCOME STATEMENT
 
UNAUDITED (In thousands, except per share data)
 
             
   
Three Months Ended
 
             
   
March 31,
   
March 31,
 
INTEREST INCOME:
 
2008
   
2007
 
Loans
  $ 10,938     $ 11,079  
Other interest-earning assets
    1,006       1,045  
Total interest income
    11,944       12,124  
INTEREST EXPENSE:
               
Interest on transaction accounts
    434       426  
Interest on retail certificates of deposit
    3,072       2,762  
Interest on wholesale/brokered certificates of deposit
    492       283  
   Total deposit interest expense
    3,998       3,471  
Other borrowings
    2,937       3,970  
Subordinated debentures
    180       203  
Total interest expense
    7,115       7,644  
NET INTEREST INCOME
    4,829       4,480  
PROVISION FOR LOAN LOSSES
    183       299  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
    4,646       4,181  
NONINTEREST INCOME:
               
Loan servicing fee income
    105       350  
Bank and other fee income
    115       141  
Net gain from loan sales
    67       1,034  
Other income
    392       215  
Total noninterest income
    679       1,740  
NONINTEREST EXPENSE:
               
Compensation and benefits
    2,397       2,643  
Premises and occupancy
    607       567  
Data processing
    154       115  
Net loss on foreclosed real estate
    15       2  
Legal and audit expense
    141       352  
Marketing expense
    131       194  
Office and postage expense
    82       94  
Other expense
    488       463  
Total noninterest expense
    4,015       4,430  
NET INCOME BEFORE TAXES
    1,310       1,491  
PROVISION FOR INCOME TAXES
    464       546  
NET INCOME
  $ 846     $ 945  
                 
Basic Average Shares Outstanding
    5,083,243       5,252,932  
Basic Earnings per Share
  $ 0.17     $ 0.18  
                 
Diluted Average Shares Outstanding
    6,390,148       6,693,646  
Diluted Earnings per Share
  $ 0.13     $ 0.14  
 
 


 

 
PACIFIC PREMIER BANCORP AND SUBSIDIARY
 
Statistical Information
 
UNAUDITED (In thousands)
 
   
As of
   
As of
   
As of
 
   
March 31, 2008
   
December 31, 2007
   
March 31, 2007
 
Asset Quality:
                 
Non-accrual loans
  $ 5,187     $ 4,193     $ 808  
Other Real Estate Owned
  $ 711     $ 711     $ 113  
Nonperforming assets
  $ 5,898     $ 4,904     $ 906  
Net charge-offs (recoveries) for the quarter ended
  $ (7 )   $ 583     $ (21 )
Allowance for loan losses
  $ 4,788     $ 4,598     $ 3,863  
Net charge-offs (recoveries) for quarter to average loans, annualized
    (0.00 %)     0.37 %     (0.01 %)
Net non-accrual loans to total loans
    0.84 %     0.67 %     0.13 %
Net non-accrual loans to total assets
    0.67 %     0.55 %     0.11 %
Net non-performing assets to total assets
    0.77 %     0.64 %     0.12 %
Allowance for loan losses to total loans
    0.78 %     0.73 %     0.65 %
Allowance for loan losses to non-accrual loans
    92.31 %     109.66 %     478.09 %
Average Balance Sheet: for the Quarter ended
                       
Total assets
  $ 744,006     $ 746,424     $ 727,402  
Loans
  $ 626,078     $ 631,229     $ 608,469  
Deposits
  $ 391,741     $ 389,339     $ 341,424  
Borrowings
  $ 272,908     $ 277,653     $ 309,683  
Subordinated debentures
  $ 10,310     $ 10,310     $ 10,310  
Share Data:
                       
Basic book value
  $ 12.09     $ 11.77     $ 11.22  
Diluted book value
  $ 9.81     $ 9.69     $ 9.29  
Closing stock price
  $ 7.63     $ 6.91     $ 10.80  
Pacific Premier Bank Capital:
                       
Tier 1 leverage capital
  $ 63,811     $ 65,275     $ 62,267  
Tier 1 leverage capital ratio
    8.64 %     8.81 %     8.62 %
Total risk-based capital ratio
    11.23 %     11.44 %     12.13 %
Loan Portfolio
                       
Real estate loans:
                       
Multi-family
  $ 317,859     $ 341,263     $ 334,735  
Commercial
    163,137       147,523       161,770  
Construction - Multi-family
    2,346       2,048       822  
One-to-four family
    9,952       13,080       14,659  
Business loans:
                       
Commercial Owner Occupied
    58,876       57,614       47,294  
Commercial and Industrial
    49,570       50,993       26,169  
SBA loans
    14,145       13,995       6,825  
Other loans
    199       176       41  
Total gross loans
  $ 616,084     $ 626,692     $ 592,315  
                         
   
Three Months Ended
   
Three Months Ended
   
Three Months Ended
 
   
March 31, 2008
   
December 31, 2007
   
March 31, 2007
 
Profitability and Productivity:
                       
Return on average assets
    0.45 %     0.35 %     0.52 %
Return on average equity
    5.57 %     4.33 %     6.42 %
Net interest margin
    2.74 %     2.57 %     2.60 %
Non-interest expense to total assets
    2.08 %     2.15 %     2.42 %
Efficiency ratio
    72.62 %     71.19 %     71.19 %