0001028918-19-000095.txt : 20190723 0001028918-19-000095.hdr.sgml : 20190723 20190722215717 ACCESSION NUMBER: 0001028918-19-000095 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20190723 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20190723 DATE AS OF CHANGE: 20190722 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PACIFIC PREMIER BANCORP INC CENTRAL INDEX KEY: 0001028918 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 330743196 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-22193 FILM NUMBER: 19966687 BUSINESS ADDRESS: STREET 1: 17901 VON KARMAN AVE STREET 2: SUITE 1200 CITY: IRVINE STATE: CA ZIP: 92614 BUSINESS PHONE: 949-864-8000 MAIL ADDRESS: STREET 1: 17901 VON KARMAN AVE STREET 2: SUITE 1200 CITY: IRVINE STATE: CA ZIP: 92614 8-K 1 ppbi8-kearningsx2019xq2.htm 8-K Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported)
July 19, 2019
PACIFIC PREMIER BANCORP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
0-22193
33-0743196
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
17901 Von Karman Avenue, Suite 1200, Irvine, CA
92614
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code
(949) 864-8000
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
 
Emerging growth Company [ ]
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
 
Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
 
Trading Symbol
 
Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share
 
PPBI
 
NASDAQ Stock Market






ITEM 2.02                      RESULTS OF OPERATIONS AND FINANCIAL CONDITION
 
On July 23, 2019, Pacific Premier Bancorp, Inc. ("PPBI") issued a press release setting forth its (unaudited) financial results for the second quarter of 2019.  A copy of PPBI’s press release is attached hereto as Exhibit 99.1 and hereby incorporated by reference.

The information furnished under Item 2.02 and Item 9.01 of this Current Report on Form 8-K, including Exhibit 99.1 to this Current Report on Form 8-K, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities under that Section, nor shall it be deemed incorporated by reference in any registration statement or other filings of PPBI under the Securities Act of 1933, as amended, except as shall be set forth by specific reference in such filing.


ITEM 8.01         OTHER EVENTS

On July 19, 2019, PPBI’s Board of Directors declared a $0.22 per share dividend, payable on August 15, 2019 to stockholders of record on August 2, 2019.


ITEM 9.01                      FINANCIAL STATEMENTS AND EXHIBITS




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


 
 
PACIFIC PREMIER BANCORP, INC.
 
 
 
 
Dated:
July 23, 2019
By:
/s/ STEVEN R. GARDNER
 
 
 
Steven R. Gardner
 
 
 
Chairman, President and Chief Executive Officer



 EX-99.1 2 ppbiex991earnings-2019.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1

Pacific Premier Bancorp, Inc. Announces Second Quarter 2019 Results (Unaudited) and a Quarterly Cash Dividend of $0.22 Per Share
 
Second Quarter 2019 Summary
 
•
Net income of $38.5 million, or $0.62 per diluted share
•
Return on average assets of 1.33%, return on average equity of 7.71%, and return on average tangible common equity of 15.16%
•
Repurchased 2.2 million shares of our common stock representing 3.5% of shares outstanding
•
Returned $79.8 million of capital to shareholders through share repurchases and dividends
•
Total assets increased to $11.8 billion
•
10% annualized growth for non-maturity deposits, or $178.1 million, since March 31, 2019
•
Noninterest bearing deposits as a percent of total deposits of 39%
•
Nonperforming assets as a percent of total assets of 0.07%

  
Irvine, Calif., July 23, 2019 -- Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company”), the holding company of Pacific Premier Bank (the “Bank”), reported net income for the second quarter of 2019 of $38.5 million, or $0.62 per diluted share, compared with net income of $38.7 million, or $0.62 per diluted share, for the first quarter of 2019 and net income of $27.3 million, or $0.58 per diluted share, for the second quarter of 2018.
   
For the three months ended June 30, 2019, the Company’s return on average assets (“ROAA”) was 1.33%, return on average equity (“ROAE”) was 7.71% and return on average tangible common equity (“ROATCE”) was 15.16%, compared to 1.34%, 7.78% and 15.45%, respectively, for the three months ended March 31, 2019 and 1.35%, 8.53% and 15.42%, respectively, for the three months ended June 30, 2018. Total assets as of June 30, 2019 were $11.8 billion compared with $11.6 billion at March 31, 2019 and $8.2 billion at June 30, 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, “Our focus on core deposit growth, proactive capital management, disciplined cost controls and strong asset quality
continues to produce a superior level of risk-adjusted profitability. In the second quarter of 2019, we generated a ROAA of 1.33% and a ROATCE of 15.16%. We are making good progress on our core deposit growth initiatives, which resulted in strong inflows in lower-cost, transaction accounts. Organic deposit growth of transaction and non-maturity accounts increased $178.1 million in the current quarter.

“Our high level of profitability and on-going risk management discipline is enabling us to return significant amounts of capital to shareholders. During the second quarter, we took the opportunity to further optimize our capital structure by issuing $125 million in subordinated debt and using a portion of the proceeds to repurchase nearly $66 million of our common stock. We believe that replacing higher cost common equity with lower cost subordinated debt allows us to reduce our overall cost of capital and creates additional value for our shareholders.

“The success we are having in generating lower-cost core deposits provides us the flexibility to prudently increase our loan growth while protecting our net interest margin. Given our improved funding mix and historically consistent ability to originate high-quality loans at attractive yields, we believe we are well-positioned to deliver revenue and earnings growth over the second half of 2019,” said Mr. Gardner.
    

1


FINANCIAL HIGHLIGHTS
 
 
Three Months Ended
 
 
June 30,
 
March 31,
 
June 30,
 
 
2019
 
2019
 
2018
Financial Highlights
 
(dollars in thousands, except per share data)
Net income
 
$
38,527

 
$
38,718

 
$
27,303

Diluted earnings per share
 
0.62

 
0.62

 
0.58

Return on average assets
 
1.33
%
 
1.34
%
 
1.35
%
Return on average equity
 
7.71

 
7.78

 
8.53

Return on average tangible common equity (1)
 
15.16

 
15.45

 
15.42

Net interest margin
 
4.28

 
4.37

 
4.41

Core net interest margin
 
4.08

 
4.21

 
4.29

Cost of deposits
 
0.73

 
0.63

 
0.50

Efficiency ratio (2)
 
51.1

 
49.3

 
53.0

Total assets
 
$
11,783,781

 
$
11,580,495

 
$
8,158,131

Total deposits
 
8,861,922

 
8,715,175

 
6,308,350

Core deposits as a percent of total deposits (3)
 
89
%
 
88
%
 
89
%
Book value per share
 
$
32.80

 
$
31.97

 
$
27.63

Tangible book value per share (1)
 
17.92

 
17.56

 
16.21

Total risk-based capital ratio
 
13.54
%
 
12.58
%
 
12.75
%
 
 
 
 
 
 
 
(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 $110.6 million in the second quarter of 2019, a decrease of $765,000, or 0.7%, from the first quarter of 2019. The decrease in net interest income reflected our higher cost of funds and lower average loan balances as well as the issuance of $125.0 million of subordinated notes in May 2019, partially offset by the impact of one more day of interest and higher accretion income.

The net interest margin for the second quarter was 4.28%, compared with 4.37% in the prior quarter. The decrease was primarily driven by our higher cost of funds and lower average loan balances partially offset by higher accretion income of $5.0 million compared to $3.8 million in the prior quarter. Our core net interest margin, which excludes the impact of accretion, decreased 13 basis points to 4.08%, compared to 4.21% in the prior quarter. The core net interest margin was negatively impacted by 4 basis points due to the issuance of the previously mentioned $125.0 million of subordinated notes at an annual coupon of 4.875% during the second quarter of 2019. The remaining 9 basis-point decrease was primarily attributable to a higher cost of funds and lower average loan balances.

We anticipate our core net interest margin will be in the range of 4.00% to 4.10% in the third quarter of 2019.


2


Net interest income for the second quarter of 2019 increased $29.5 million, or 36.3%, compared to the second quarter of 2018. The increase was primarily related to an increase in average interest-earning assets of $2.98 billion, which resulted primarily from our acquisition of Grandpoint Capital, Inc. (“Grandpoint”) in the third quarter of 2018, as well as organic loan growth since the end of the second quarter of 2018.

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
 
 
 
 
 
Three Months Ended
 
 
June 30, 2019
 
March 31, 2019
 
June 30, 2018
 
 
Average Balance
 
Interest Income/Expense
 
Average
 Yield/
 Cost
 
Average Balance
 
Interest Income/Expense
 
Average
Yield/
Cost
 
Average Balance
 
Interest Income/Expense
 
Average Yield/ Cost
Assets
 
(dollars in thousands)
Cash and cash equivalents
 
$
187,963

 
$
435

 
0.93
%
 
$
173,613

 
$
378

 
0.88
%
 
$
146,279

 
$
277

 
0.76
%
Investment securities
 
1,396,585

 
10,119

 
2.90

 
1,298,476

 
9,389

 
2.89

 
980,334

 
6,797

 
2.77

Loans receivable, net (1) (2)
 
8,779,440

 
121,860

 
5.57

 
8,867,159

 
121,476

 
5.56

 
6,253,987

 
85,625

 
5.49

Total interest-earning assets
 
$
10,363,988

 
$
132,414

 
5.12

 
$
10,339,248

 
$
131,243

 
5.15

 
$
7,380,600

 
$
92,699

 
5.04

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits
 
$
5,345,388

 
$
15,991

 
1.20

 
$
5,073,723

 
$
13,284

 
1.06

 
$
3,888,553

 
$
7,756

 
0.80

Borrowings
 
675,345

 
5,782

 
3.43

 
880,671

 
6,553

 
3.02

 
560,706

 
3,772

 
2.70

Total interest-bearing liabilities
 
$
6,020,733

 
$
21,773

 
1.45

 
$
5,954,394

 
$
19,837

 
1.35

 
$
4,449,259

 
$
11,528

 
1.04

Noninterest-bearing deposits
 
$
3,426,508

 
 
 
 
 
$
3,480,791

 
 
 
 
 
$
2,310,714

 
 
 
 
Net interest income
 
 
 
$
110,641

 
 
 
 
 
$
111,406

 
 
 
 
 
$
81,171

 
 
Net interest margin (3)
 
 

 
 

 
4.28

 
 
 
 
 
4.37

 
 
 
 
 
4.41

Cost of deposits
 
 
 
 
 
0.73

 
 
 
 
 
0.63

 
 
 
 
 
0.50

Cost of funds (4)
 
 
 
 
 
0.92

 
 
 
 
 
0.85

 
 
 
 
 
0.68

 
(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 $5.0 million, $3.8 million and $1.9 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.


3


Provision for Credit Losses

A provision for credit losses of $334,000 was recorded for the second quarter of 2019, compared with a provision for credit losses of $1.5 million for the first quarter of 2019 and $1.8 million for the second quarter of 2018. The decrease in provision for credit losses was primarily driven by lower loan balances, continued strength in asset quality, and a reduction in the reserve for unfunded commitments.

The reduction of provision for unfunded commitments was attributable to lower loan commitments and loss rates as of June 30, 2019.

 
 
Three Months Ended
 
 
June 30,
 
March 31,
 
June 30,
 
 
2019
 
2019
 
2018
Provision for Credit Losses
 
(dollars in thousands)
Provision for loans and leases losses
 
$
742

 
$
2,012

 
$
1,353

Provision for unfunded commitments
 
(408
)
 
(486
)
 
408

Total provision for credit losses
 
$
334

 
$
1,526

 
$
1,761


Noninterest Income
 
Noninterest income for the second quarter of 2019 was $6.3 million, a decrease of $1.4 million, or 17.7%, from the first quarter of 2019. The decrease was primarily due to a $827,000 decrease in net gain from the sales of loans, a $459,000 decrease in other income and a $215,000 decrease in net gain from sales of investment securities. The decrease in other income was primarily due to a positive fair value adjustment of $238,000 in Community Reinvestment Act (“CRA”) related equity investments, compared to a $612,000 positive fair value adjustment in the prior quarter.

During the second quarter of 2019, the Bank sold $24.4 million of Small Business Administration (“SBA”) loans for a net gain of $2.2 million, compared with the sale of $25.5 million of SBA loans for a net gain of $1.7 million during the prior quarter. The current quarter also included the sale of $82.5 million of non-SBA loans for a net loss of $1.3 million.

We anticipate our noninterest income will range from $6.5 million to $7.5 million for the third quarter of 2019 based upon current SBA loan sale gain rates and normal, recurring business activities.

Noninterest income for the second quarter of 2019 decreased $1.8 million, or 22.4%, compared to the second quarter of 2018. The decrease was primarily related to a $2.9 million decrease in net gain from sales of loans and a $118,000 decrease in net gain from sales of investment securities, partially offset by a $384,000 increase in service charges on deposit accounts, a $234,000 increase in earnings on bank-owned life insurance (“BOLI”) as well as increases in loan servicing fees, other service fee income, debit card interchange fee income, and other income, whose increases amounted to $614,000 in the aggregate.

The decrease in net gain from sales of loans for the second quarter of 2019 compared to the same period last year was primarily due to higher SBA loans sales and the gain from sale of commercial real estate loans during the second quarter of 2018. The Bank sold $31.9 million of SBA loans and $20.4 million of commercial real estate loans for a net gain of $2.9 million and $927,000, respectively, during the second quarter of 2018.


4


 
 
Three Months Ended
 
 
June 30,
 
March 31,
 
June 30,
 
 
2019
 
2019
 
2018
Noninterest Income
 
(dollars in thousands)
Loan servicing fees
 
$
409

 
$
398

 
$
292

Service charges on deposit accounts
 
1,441

 
1,330

 
1,057

Other service fee income
 
363

 
356

 
169

Debit card interchange fee income
 
1,145

 
1,071

 
1,090

Earnings on BOLI
 
851

 
910

 
617

Net gain from sales of loans
 
902

 
1,729

 
3,843

Net gain from sales of investment securities
 
212

 
427

 
330

Other income
 
1,001

 
1,460

 
753

Total noninterest income
 
$
6,324

 
$
7,681

 
$
8,151


 Noninterest Expense
 
Noninterest expense totaled $63.9 million for the second quarter of 2019, an increase of $359,000, or 0.6%, compared with the first quarter of 2019. The increase was driven by higher compensation and benefits expense of $33.8 million, compared to $33.4 million in the prior quarter, and to a lesser extent, higher legal, audit and professional expense of $3.5 million, $547,000 higher than the prior quarter. These increases were partially offset by a $650,000 decline in merger-related expense.

The Company anticipates that total operating expense will range from $64.5 million to $65.5 million for the third quarter of 2019.

Noninterest expense grew by $13.9 million, or 27.7%, compared to the second 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 a reduction in merger-related expense.

 
 
Three Months Ended
 
 
June 30,
 
March 31,
 
June 30,
 
 
2019
 
2019
 
2018
Noninterest Expense
 
(dollars in thousands)
Compensation and benefits
 
$
33,847

 
$
33,388

 
$
29,274

Premises and occupancy
 
7,517

 
7,535

 
5,045

Data processing
 
3,036

 
2,930

 
2,747

Other real estate owned operations, net
 
62

 
3

 
2

FDIC insurance premiums
 
740

 
800

 
581

Legal, audit and professional expense
 
3,545

 
2,998

 
1,816

Marketing expense
 
1,425

 
1,497

 
1,352

Office, telecommunications and postage expense
 
1,311

 
1,210

 
1,115

Loan expense
 
1,005

 
873

 
594

Deposit expense
 
3,668

 
3,583

 
2,302

Merger-related expense
 
5

 
655

 
943

CDI amortization
 
4,281

 
4,436

 
1,996

Other expense
 
3,494

 
3,669

 
2,309

Total noninterest expense
 
$
63,936

 
$
63,577

 
$
50,076


5



Income Tax

For the second quarter of 2019, our effective tax rate was 26.9%, compared with 28.3% for the first quarter of 2019 and 27.2% for the second quarter of 2018.

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


6


BALANCE SHEET HIGHLIGHTS

Loans

Loans held for investment totaled $8.77 billion at June 30, 2019, a decrease of $93.9 million, or 1.1%, from March 31, 2019, and an increase of $2.49 billion, or 39.7%, from June 30, 2018. The decrease was driven by higher loan prepayments and payoffs, and lower line utilization in the second quarter of 2019, as well as higher loan sales of $106.9 million, which included $82.5 million of non-SBA loans and $24.4 million of SBA loans, compared with $25.5 million of SBA loans sold in the prior quarter. The increase compared to the second 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 second quarter of 2019, the Bank generated $568.2 million of new loan commitments and $394.8 million of new loan fundings, compared with $549.7 million in new loan commitments and $391.8 million in new loan fundings for the first quarter of 2019 and $530.4 million in new loan commitments and $352.5 million in new loan fundings for the second quarter of 2018.
 
At June 30, 2019, the ratio of loans held for investment to total deposits was 99.0%, compared with 101.7% and 99.5% at March 31, 2019 and June 30, 2018, respectively.

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

 
 
June 30,
 
March 31,
 
June 30,
 
 
2019
 
2019
 
2018
 
 
(dollars in thousands)
Business loans:
 
 
 
 
 
 
Commercial and industrial
 
$
1,300,083

 
$
1,336,520

 
$
1,102,586

Franchise
 
860,299

 
813,057

 
708,957

Commercial owner occupied
 
1,667,912

 
1,648,762

 
1,310,722

SBA
 
180,363

 
188,757

 
176,696

Agribusiness
 
126,857

 
134,603

 
136,962

    Total business loans
 
4,135,514

 
4,121,699

 
3,435,923

Real estate loans:
 
 
 
 
 
 
Commercial non-owner occupied
 
2,121,312

 
2,124,250

 
1,219,747

Multi-family
 
1,520,135

 
1,511,942

 
805,494

One-to-four family
 
248,392

 
279,467

 
249,495

Construction
 
505,401

 
538,197

 
321,423

Farmland
 
169,724

 
167,345

 
136,548

Land
 
40,748

 
46,848

 
30,246

    Total real estate loans
 
4,605,712

 
4,668,049

 
2,762,953

Consumer loans:
 
 
 
 
 
 
Consumer loans
 
40,680

 
85,302

 
81,973

Gross loans held for investment
 
8,781,906

 
8,875,050

 
6,280,849

Deferred loan origination costs/(fees) and premiums/(discounts), net
 
(9,968
)
 
(9,195
)
 
(3,263
)
  Loans held for investment
 
8,771,938

 
8,865,855

 
6,277,586

Allowance for loan losses
 
(35,026
)
 
(37,856
)
 
(31,747
)
Loans held for investment, net
 
$
8,736,912

 
$
8,827,999

 
$
6,245,839

Loans held for sale, at lower of cost or fair value
 
$
8,529

 
$
11,671

 
$
13,879



7


The total end-of-period weighted average interest rate on loans, excluding fees and discounts, at June 30, 2019 was 5.11%, compared to 5.13% at March 31, 2019 and 5.12% at June 30, 2018.

The following table presents the composition of the organic loan commitments originated during the period indicated:
 
June 30,
 
March 31,
 
June 30,
 
2019
 
2019
 
2018
 
(dollars in thousands)
Business loans:
 
 
 
 
 
Commercial and industrial
$
149,766

 
$
112,074

 
$
130,833

Franchise
92,966

 
86,356

 
89,242

Commercial owner occupied
67,191

 
39,049

 
80,339

SBA
28,023

 
41,963

 
35,881

Agribusiness
9,859

 
13,388

 
11,945

Total business loans
347,805

 
292,830

 
348,240

Real estate loans:
 
 
 
 
 
Commercial non-owner occupied
101,956

 
114,809

 
59,721

Multi-family
35,061

 
30,991

 
31,101

One-to-four family
3,140

 
14,689

 
5,641

Construction
64,059

 
74,203

 
79,033

Farmland
13,044

 
17,250

 
5,250

Land
1,625

 
4,050

 
750

Total real estate loans
218,885

 
255,992

 
181,496

Consumer loans:
 
 
 
 
 
Consumer loans
1,551

 
840

 
690

Total loan commitments
$
568,241

 
$
549,662

 
$
530,426


The weighted average interest rate on new loan production was 5.42% in the second quarter of 2019 compared with 5.67% in the first quarter of 2019 and 5.35% in the second quarter of 2018. During the second quarter of 2019, the Bank also purchased $51.7 million of multi-family loans at a weighted average interest rate of 4.48%.


8


Asset Quality and Allowance for Loan and Lease Losses
 
At June 30, 2019, our allowance for loan and lease losses was $35.0 million, a decrease of $2.8 million from March 31, 2019 and an increase of $3.3 million from June 30, 2018. The provision for loan losses for the second quarter of 2019 was $742,000. During second quarter of 2019, the Company incurred $3.6 million of net charge-offs and released $3.2 million of related specific reserves.

The ratio of allowance for loan losses to loans held for investment at June 30, 2019 amounted to 0.40%, compared to 0.43% and 0.51% at March 31, 2019 and June 30, 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 $52.0 million, or 0.59% of total loans held for investment as of June 30, 2019, compared to $57.2 million, or 0.65% of total loans held for investment as of March 31, 2019 and $22.2 million, or 0.35% of total loans held for investment as of June 30, 2018.

Nonperforming assets totaled $7.7 million, or 0.07% of total assets, at June 30, 2019, a decrease of $5.4 million from March 31, 2019 and an increase of $1.2 million from June 30, 2018. During the second quarter of 2019, nonperforming loans decreased $5.2 million to $7.6 million and other real estate owned decreased $145,000 to $35,000. Total loan delinquencies were $13.5 million, or 0.15% of loans held for investment, at June 30, 2019, compared to $15.8 million, or 0.18% of loans held for investment, at March 31, 2019, and $7.4 million, or 0.12% of loans held for investment, at June 30, 2018.

The decrease in nonperforming assets during the second quarter of 2019 was primarily attributable to the sale of a $4.3 million commercial owner occupied nonperforming loan and the payoff of a $1.1 million nonperforming SBA loan.
 
 
June 30,
 
March 31,
 
June 30,
 
 
2019
 
2019
 
2018
Asset Quality
 
(dollars in thousands)
Nonperforming loans
 
$
7,637

 
$
12,858

 
$
6,039

Other real estate owned
 
35

 
180

 
220

Other assets owned
 
—

 
13

 
183

Nonperforming assets
 
$
7,672

 
$
13,051

 
$
6,442

 
 
 
 
 
 
 
Allowance for loan losses
 
$
35,026

 
$
37,856

 
$
31,747

Allowance for loan losses as a percent of total nonperforming loans
 
459
%
 
294
%
 
526
%
Nonperforming loans as a percent of loans held for investment
 
0.09

 
0.15

 
0.10

Nonperforming assets as a percent of total assets
 
0.07

 
0.11

 
0.08

Net loan charge-offs/(recoveries) for the quarter ended
 
$
3,572

 
$
228

 
$
108

Net loan charge-offs for quarter to average total loans (1)
 
0.04
%
 
—
%
 
—
%
Allowance for loan losses to loans held for investment (2)
 
0.40

 
0.43

 
0.51

Delinquent Loans
 
 

 
 
 
 

30 - 59 days
 
$
3,416

 
$
2,299

 
$
3,583

60 - 89 days
 
801

 
1,982

 
1,290

90+ days
 
9,261

 
11,481

 
2,574

Total delinquency
 
$
13,478

 
$
15,762

 
$
7,447

Delinquency as a percentage of loans held for investment
 
0.15
%
 
0.18
%
 
0.12
%
 
 
 
 
 
 
 
(1) The ratios are less than 0.01% as of March 31, 2019 and December 31, 2018.
(2) At June 30, 2019, 44% of loans held for investment include a fair value net discount of $52.0 million, or 0.59% of loans held for investment. At March, 2019, 47% of loans held for investment include a fair value net discount of $57.2 million, or 0.65% of loans held for investment. At June, 30, 2018, 40% of loans held for investment include a fair value net discount of $22.2 million, or 0.35% of loans held for investment.


9


Investment Securities

Investments securities totaled $1.30 billion at June 30, 2019, an increase of $86.1 million, or 7.1%, from March 31, 2019, and $394.7 million, or 43.5%, from June 30, 2018. The increase in the second quarter of 2019 compared to the prior quarter was primarily the result of $147.9 million in purchases and a $24.4 million increase in mark-to-market fair value adjustment, partially offset by $57.0 million in sales and $29.2 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 June 30, 2019, deposits totaled $8.86 billion, an increase of $146.7 million, or 1.7%, from March 31, 2019 and $2.55 billion, or 40.5%, from June 30, 2018. At June 30, 2019, non-maturity deposits totaled $7.30 billion, or 82% of total deposits, an increase of $178.1 million, or 2.5%, from March 31, 2019 and an increase of $2.16 billion, or 42.1%, from June 30, 2018. During the second quarter of 2019, deposit increases included $133.6 million in money market/savings deposits, $57.6 million in retail certificates of deposits, and $56.4 million in noninterest-bearing deposits, partially offset by decreases of $89.0 million in brokered certificates of deposit and $12.0 million in interest checking, as compared to the first quarter of 2019.
 
The weighted average cost of deposits for the three-month period ending June 30, 2019 was 0.73%, compared to 0.63% for the three-month period ending March 31, 2019, and 0.50% for the three-month period ending June 30, 2018. The increase in the weighted average cost of deposits in the second quarter of 2019 compared to the prior quarter was primarily driven by higher rates and volume in money market and retail and brokered certificates of deposits as well as lower average noninterest-bearing deposit balances.

 
 
June 30,
 
March 31,
 
June 30,
 
 
2019
 
2019
 
2018
Deposit Accounts
 
(dollars in thousands)
Noninterest-bearing checking
 
$
3,480,312

 
$
3,423,893

 
$
2,349,464

Interest-bearing:
 
 
 
 
 
 
Checking
 
548,314

 
560,274

 
342,986

Money market/savings
 
3,272,511

 
3,138,875

 
2,446,849

Retail certificates of deposit
 
1,065,207

 
1,007,559

 
823,425

Wholesale/brokered certificates of deposit
 
495,578

 
584,574

 
345,626

Total interest-bearing
 
5,381,610

 
5,291,282

 
3,958,886

Total deposits
 
$
8,861,922

 
$
8,715,175

 
$
6,308,350

 
 
 
 
 
 
 
Cost of deposits
 
0.73
%
 
0.63
%
 
0.50
%
Noninterest-bearing deposits as a percentage of total deposits
 
39
%
 
39
%
 
37
%
Non-maturity deposits as a percent of total deposits
 
82
%
 
82
%
 
81
%
Core deposits as a percent of total deposits (1)
 
89
%
 
88
%
 
89
%
 
 
 
 
 
 
 
(1) Core deposits are all transaction accounts and non-brokered certificates of deposit less than $250,000.


10


Borrowings

At June 30, 2019, total borrowings amounted to $804.5 million, an increase of $84.5 million, or 11.7%, from March 31, 2019 and an increase of $320.2 million, or 66.1%, from June 30, 2018. Total borrowings for the quarter included $571.6 million of advances from the Federal Home Loan Bank of San Francisco (“FHLB”) and $232.9 million of subordinated debt. In May 2019, the Company issued $125.0 million aggregate principal amount of its 4.875% Fixed-to-Floating Rate Subordinated Notes (the “Notes”) due May 15, 2029. At June 30, 2019, total borrowings represented 6.8% of total assets, compared to 6.2% and 5.9%, as of March 31, 2019 and June 30, 2018, respectively.

On July 8, 2019, the Company used the proceeds from the issuance of the Notes in May 2019 to redeem all $10,310,000 principal amount of Junior Subordinated Deferrable Interest Debentures (the “Subordinated Debentures”) due 2034 issued by PPBI Trust I, a statutory business trust created under the laws of the State of Delaware. The Subordinated Debentures carried an interest rate of three-month LIBOR plus 2.75% per annum, for an effective rate of 5.35% per annum, as of June 30, 2019 and were scheduled to mature on April 6, 2034. The Subordinated Debentures were called at par, plus accrued and unpaid interest, for an aggregate amount of $10,448,000.

Capital Ratios

At June 30, 2019, our ratio of tangible common equity to total assets was 9.96%, compared with 10.32% at March 31, 2019, and 9.91% at June 30, 2018, with a tangible book value per share of $17.92, compared with $17.56 at March 31, 2019 and $16.21 at June 30, 2018.

At June 30, 2019, the Company had a tier 1 leverage ratio of 10.32%, common equity tier 1 capital ratio of 10.82%, tier 1 capital ratio of 11.07% and total capital ratio of 13.54%.

At June 30, 2019, the Bank exceeded all regulatory capital requirements with a tier 1 leverage ratio of 11.66%, common equity tier 1 capital ratio of 12.51%, tier 1 capital ratio of 12.51% and total capital ratio of 12.90%. 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.

11


 
 
June 30,
 
March 31,
 
June 30,
Capital Ratios
 
2019
 
2019
 
2018
Pacific Premier Bancorp, Inc. Consolidated
 
 

 
 

 
 

Tier 1 leverage ratio
 
10.32
%
 
10.69
%
 
10.41
%
Common equity tier 1 capital ratio
 
10.82

 
11.08

 
10.80

Tier 1 capital ratio
 
11.07

 
11.32

 
11.09

Total capital ratio
 
13.54

 
12.58

 
12.75

Tangible common equity ratio (1)
 
9.96

 
10.32

 
9.91

 
 
 
 
 
 
 
Pacific Premier Bank
 
 
Tier 1 leverage ratio
 
11.66
%
 
11.39
%
 
11.31
%
Common equity tier 1 capital ratio
 
12.51

 
12.07

 
12.05

Tier 1 capital ratio
 
12.51

 
12.07

 
12.05

Total capital ratio
 
12.90

 
12.49

 
12.53

 
 
 
 
 
 
 
Share Data
 
 

 
 

 
 

Book value per share
 
$
32.80

 
$
31.97

 
$
27.63

Tangible book value per share (1)
 
17.92

 
17.56

 
16.21

Dividend per share
 
0.22

 
0.22

 
—

Closing stock price (2)
 
30.88

 
26.53

 
38.15

Shares issued and outstanding
 
60,509,994

 
62,773,299

 
46,629,118

Market Capitalization (2)(3)
 
$
1,868,549

 
$
1,665,376

 
$
1,778,901

 
(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 July 19, 2019, the Company's Board of Directors declared a $0.22 per share dividend, payable on August 15, 2019 to stockholders of record as of August 2, 2019. During the second quarter of 2019, the Company repurchased 2,219,246 shares of common stock at an average price of $29.70 per share with a total market value of $65.9 million under its stock repurchase program, which authorized the repurchase of up to $100 million of the Company's common stock.

12


Conference Call and Webcast
 
The Company will host a conference call at 9:00 a.m. PT / 12:00 p.m. ET on July 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 July 30, 2019 at (877) 344-7529, conference ID 10132936.

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 $11.8 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 are not limited to, the following:  the strength of the United States economy in general and the strength of the local economies in which we conduct operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation/deflation, interest rate, market and monetary fluctuations; the effect of acquisitions we may make, 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

13


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).

The Company 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.




Contact:
 
Pacific Premier Bancorp, Inc.
 
Steven R. Gardner
Chairman, President and Chief Executive Officer
(949) 864-8000

 
Ronald J. Nicolas, Jr.
Senior Executive Vice President and Chief Financial Officer
(949) 864-8000


14


PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands)
(Unaudited)
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
ASSETS
 
2019
 
2019
 
2018
 
2018
 
2018
Cash and due from banks
 
$
139,879

 
$
122,947

 
$
125,036

 
$
151,983

 
$
96,224

Interest-bearing deposits with financial institutions
 
235,505

 
55,435

 
78,370

 
111,229

 
35,244

Cash and cash equivalents
 
375,384

 
178,382

 
203,406

 
263,212

 
131,468

Interest-bearing time deposits with financial institutions
 
2,956

 
5,896

 
6,143

 
6,386

 
6,633

Investments held-to-maturity, at amortized cost
 
42,997

 
43,894

 
45,210

 
46,385

 
31,965

Investment securities available-for-sale, at fair value
 
1,258,379

 
1,171,410

 
1,103,222

 
1,054,877

 
874,700

FHLB, FRB and other stock, at cost
 
92,841

 
94,751

 
94,918

 
98,779

 
69,663

Loans held for sale, at lower of cost or fair value
 
8,529

 
11,671

 
5,719

 
52,880

 
13,879

Loans held for investment
 
8,771,938

 
8,865,855

 
8,836,818

 
8,759,204

 
6,277,586

Allowance for loan losses
 
(35,026
)
 
(37,856
)
 
(36,072
)
 
(33,306
)
 
(31,747
)
Loans held for investment, net
 
8,736,912

 
8,827,999

 
8,800,746

 
8,725,898

 
6,245,839

Accrued interest receivable
 
40,420

 
40,302

 
37,837

 
37,683

 
27,420

Other real estate owned
 
35

 
180

 
147

 
356

 
220

Premises and equipment
 
54,218

 
61,523

 
64,691

 
66,103

 
54,049

Deferred income taxes, net
 
2,266

 
9,275

 
15,627

 
26,848

 
17,183

Bank owned life insurance
 
112,054

 
111,400

 
110,871

 
110,354

 
76,937

Intangible assets
 
91,840

 
96,120

 
100,556

 
105,187

 
37,938

Goodwill
 
808,322

 
808,726

 
808,726

 
807,892

 
494,672

Other assets
 
156,628

 
118,966

 
89,568

 
101,041

 
75,565

Total assets
 
$
11,783,781

 
$
11,580,495

 
$
11,487,387

 
$
11,503,881

 
$
8,158,131

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 

 
 
 
 

 
 
 
 
LIABILITIES:
 
 

 
 
 
 

 
 
 
 
Deposit accounts:
 
 

 
 
 
 

 
 
 
 
Noninterest-bearing checking
 
$
3,480,312

 
$
3,423,893

 
$
3,495,737

 
$
3,434,674

 
$
2,349,464

Interest-bearing:
 
 
 
 
 
 
 
 
 
 
Checking
 
548,314

 
560,274

 
526,088

 
495,483

 
342,986

Money market/savings
 
3,272,511

 
3,138,875

 
3,225,849

 
3,261,544

 
2,446,849

Retail certificates of deposit
 
1,065,207

 
1,007,559

 
1,009,066

 
1,045,334

 
823,425

Wholesale/brokered certificates of deposit
 
495,578

 
584,574

 
401,611

 
265,110

 
345,626

Total interest-bearing
 
5,381,610

 
5,291,282

 
5,162,614

 
5,067,471

 
3,958,886

Total deposits
 
8,861,922

 
8,715,175

 
8,658,351

 
8,502,145

 
6,308,350

FHLB advances and other borrowings
 
571,575

 
609,591

 
667,681

 
861,972

 
379,100

Subordinated debentures
 
232,944

 
110,381

 
110,313

 
110,244

 
105,253

Accrued expenses and other liabilities
 
132,884

 
138,284

 
81,345

 
113,143

 
76,903

Total liabilities
 
9,799,325

 
9,573,431

 
9,517,690

 
9,587,504

 
6,869,606

STOCKHOLDERS’ EQUITY:
 
 

 
 

 
 

 
 

 
 

Common stock
 
595

 
617

 
617

 
617

 
459

Additional paid-in capital
 
1,618,137

 
1,676,024

 
1,674,274

 
1,671,673

 
1,067,907

Retained earnings
 
343,366

 
325,363

 
300,407

 
260,764

 
232,372

Accumulated other comprehensive (loss) income
 
22,358

 
5,060

 
(5,601
)
 
(16,677
)
 
(12,213
)
Total stockholders' equity
 
1,984,456

 
2,007,064

 
1,969,697

 
1,916,377

 
1,288,525

Total liabilities and stockholders' equity
 
$
11,783,781

 
$
11,580,495

 
$
11,487,387

 
$
11,503,881

 
$
8,158,131


15


PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)
(Unaudited)
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
 
March 31,
 
June 30,
 
June 30,
 
June 30,
 
 
2019
 
2019
 
2018
 
2019
 
2018
INTEREST INCOME
 
 

 
 

 
 

 
 
 
 
Loans
 
$
121,860

 
$
121,476

 
$
85,625

 
$
243,336

 
$
169,798

Investment securities and other interest-earning assets
 
10,554

 
9,767

 
7,074

 
20,321

 
13,728

Total interest income
 
132,414

 
131,243

 
92,699

 
263,657

 
183,526

INTEREST EXPENSE
 
 
 
 
 
 
 
 

 
 

Deposits
 
15,991

 
13,284

 
7,756

 
29,275

 
13,670

FHLB advances and other borrowings
 
3,083

 
4,802

 
2,125

 
7,885

 
4,148

Subordinated debentures
 
2,699

 
1,751

 
1,647

 
4,450

 
3,256

Total interest expense
 
21,773

 
19,837

 
11,528

 
41,610

 
21,074

Net interest income before provision for credit losses
 
110,641

 
111,406

 
81,171

 
222,047

 
162,452

Provision for credit losses
 
334

 
1,526

 
1,761

 
1,860

 
4,014

Net interest income after provision for credit losses
 
110,307

 
109,880

 
79,410

 
220,187

 
158,438

NONINTEREST INCOME
 
 
 
 
 
 
 
 

 
 

Loan servicing fees
 
409

 
398

 
292

 
807

 
637

Service charges on deposit accounts
 
1,441

 
1,330

 
1,057

 
2,771

 
2,207

Other service fee income
 
363

 
356

 
169

 
719

 
315

Debit card interchange fee income
 
1,145

 
1,071

 
1,090

 
2,216

 
2,126

Earnings on BOLI
 
851

 
910

 
617

 
1,761

 
1,228

Net gain from sales of loans
 
902

 
1,729

 
3,843

 
2,631

 
6,801

Net gain from sales of investment securities
 
212

 
427

 
330

 
639

 
336

Other income
 
1,001

 
1,460

 
753

 
2,461

 
2,167

Total noninterest income
 
6,324

 
7,681

 
8,151

 
14,005

 
15,817

NONINTEREST EXPENSE
 
 
 
 
 
 
 
 

 
 

Compensation and benefits
 
33,847

 
33,388

 
29,274

 
67,235

 
58,147

Premises and occupancy
 
7,517

 
7,535

 
5,045

 
15,052

 
9,826

Data processing
 
3,036

 
2,930

 
2,747

 
5,966

 
5,449

Other real estate owned operations, net
 
62

 
3

 
2

 
65

 
3

FDIC insurance premiums
 
740

 
800

 
581

 
1,540

 
1,192

Legal, audit and professional expense
 
3,545

 
2,998

 
1,816

 
6,543

 
3,655

Marketing expense
 
1,425

 
1,497

 
1,352

 
2,922

 
2,882

Office, telecommunications and postage expense
 
1,311

 
1,210

 
1,115

 
2,521

 
2,195

Loan expense
 
1,005

 
873

 
594

 
1,878

 
1,185

Deposit expense
 
3,668

 
3,583

 
2,302

 
7,251

 
3,978

Merger-related expense
 
5

 
655

 
943

 
660

 
1,879

CDI amortization
 
4,281

 
4,436

 
1,996

 
8,717

 
4,270

Other expense
 
3,494

 
3,669

 
2,309

 
7,163

 
5,223

Total noninterest expense
 
63,936

 
63,577

 
50,076

 
127,513

 
99,884

Net income before income taxes
 
52,695

 
53,984

 
37,485

 
106,679

 
74,371

Income tax
 
14,168

 
15,266

 
10,182

 
29,434

 
19,066

Net income
 
$
38,527

 
$
38,718

 
$
27,303

 
$
77,245

 
$
55,305

EARNINGS PER SHARE
 
 
 
 
 
 
 
 

 
 

Basic
 
$
0.62

 
$
0.62

 
$
0.59

 
$
1.24

 
$
1.20

Diluted
 
$
0.62

 
$
0.62

 
$
0.58

 
$
1.23

 
$
1.18

WEIGHTED AVERAGE SHARES OUTSTANDING
 
 
 
 
 
 
 
 

 
 

Basic
 
61,308,046

 
61,987,605

 
46,053,077

 
61,645,940

 
45,973,727

Diluted
 
61,661,773

 
62,285,783

 
46,702,968

 
61,980,133

 
46,678,123


16


SELECTED FINANCIAL DATA

PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCES AND YIELD DATA
 
 
 
 
 
Three Months Ended
 
 
June 30, 2019
 
March 31, 2019
 
June 30, 2018
 
 
Average Balance
 
Interest Income/Expense
 
Average Yield/Cost
 
Average Balance
 
Interest Income/Expense
 
Average Yield/Cost
 
Average Balance
 
Interest Income/Expense
 
Average Yield/Cost
Assets
 
(dollars in thousands)
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
187,963

 
$
435

 
0.93
%
 
$
173,613

 
$
378

 
0.88
%
 
$
146,279

 
$
277

 
0.76
%
Investment securities
 
1,396,585

 
10,119

 
2.90

 
1,298,476

 
9,389

 
2.89

 
980,334

 
6,797

 
2.77

Loans receivable, net (1)(2)
 
8,779,440

 
121,860

 
5.57

 
8,867,159

 
121,476

 
5.56

 
6,253,987

 
85,625

 
5.49

Total interest-earning assets
 
10,363,988

 
132,414

 
5.12

 
10,339,248

 
131,243

 
5.15

 
7,380,600

 
92,699

 
5.04

Noninterest-earning assets
 
1,221,985

 
 
 
 
 
1,224,281

 
 
 
 
 
726,922

 
 
 
 
Total assets
 
$
11,585,973

 
 
 
 
 
$
11,563,529

 
 
 
 
 
$
8,107,522

 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest checking
 
$
543,473

 
$
535

 
0.39
%
 
$
536,117

 
$
474

 
0.36
%
 
$
349,721

 
$
117

 
0.13
%
Money market
 
2,978,065

 
7,305

 
0.98

 
2,912,819

 
6,534

 
0.91

 
2,185,310

 
3,943

 
0.72

Savings
 
242,483

 
92

 
0.15

 
249,621

 
86

 
0.14

 
219,035

 
83

 
0.15

Retail certificates of deposit
 
1,025,404

 
4,610

 
1.80

 
1,001,344

 
4,058

 
1.64

 
784,902

 
2,290

 
1.17

Wholesale/brokered certificates of deposit
 
555,963

 
3,449

 
2.49

 
373,822

 
2,132

 
2.31

 
349,585

 
1,323

 
1.52

Total interest-bearing deposits
 
5,345,388

 
15,991

 
1.20

 
5,073,723

 
13,284

 
1.06

 
3,888,553

 
7,756

 
0.80

FHLB advances and other borrowings
 
491,706

 
3,083

 
2.51

 
770,331

 
4,802

 
2.53

 
455,488

 
2,125

 
1.87

Subordinated debentures
 
183,639

 
2,699

 
5.88

 
110,340

 
1,751

 
6.35

 
105,218

 
1,647

 
6.26

Total borrowings
 
675,345

 
5,782

 
3.43

 
880,671

 
6,553

 
3.02

 
560,706

 
3,772

 
2.70

Total interest-bearing liabilities
 
6,020,733

 
21,773

 
1.45

 
5,954,394

 
19,837

 
1.35

 
4,449,259

 
11,528

 
1.04

Noninterest-bearing deposits
 
3,426,508

 
 
 
 
 
3,480,791

 
 
 
 
 
2,310,714

 
 
 
 
Other liabilities
 
138,746

 
 
 
 
 
136,483

 
 
 
 
 
67,617

 
 
 
 
Total liabilities
 
9,585,987

 
 
 
 
 
9,571,668

 
 
 
 
 
6,827,590

 
 
 
 
Stockholders' equity
 
1,999,986

 
 
 
 
 
1,991,861

 
 
 
 
 
1,279,932

 
 
 
 
Total liabilities and equity
 
$
11,585,973

 
 
 
 
 
$
11,563,529

 
 
 
 
 
$
8,107,522

 
 
 
 
Net interest income
 
 
 
$
110,641

 
 
 
 
 
$
111,406

 
 
 
 
 
$
81,171

 
 
Net interest margin (3)
 
 
 
 
 
4.28
%
 
 
 
 
 
4.37
%
 
 
 
 
 
4.41
%
Cost of deposits
 
 
 
 
 
0.73

 
 
 
 
 
0.63

 
 
 
 
 
0.50

Cost of funds (4)
 
 
 
 
 
0.92

 
 
 
 
 
0.85

 
 
 
 
 
0.68

Ratio of interest-earning assets to interest-bearing liabilities
 
172.14

 
 
 
 
 
173.64

 
 
 
 
 
165.88

 
(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 $5.0 million, $3.8 million and $1.9 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.


17


PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
LOAN PORTFOLIO COMPOSITION
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
 
2019
 
2019
 
2018
 
2018
 
2018
 
 
(dollars in thousands)
Business loans
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
1,300,083

 
$
1,336,520

 
$
1,364,423

 
$
1,359,841

 
$
1,102,586

Franchise
 
860,299

 
813,057

 
765,416

 
735,366

 
708,957

Commercial owner occupied
 
1,667,912

 
1,648,762

 
1,679,122

 
1,675,528

 
1,310,722

SBA
 
180,363

 
188,757

 
193,882

 
193,487

 
176,696

Agribusiness
 
126,857

 
134,603

 
138,519

 
133,241

 
136,962

    Total business loans
 
4,135,514

 
4,121,699

 
4,141,362

 
4,097,463

 
3,435,923

Real estate loans
 
 
 
 
 
 
 
 
 
 
Commercial non-owner occupied
 
2,121,312

 
2,124,250

 
2,003,174

 
1,931,165

 
1,219,747

Multi-family
 
1,520,135

 
1,511,942

 
1,535,289

 
1,554,692

 
805,494

One-to-four family
 
248,392

 
279,467

 
356,264

 
376,617

 
249,495

Construction
 
505,401

 
538,197

 
523,643

 
504,708

 
321,423

Farmland
 
169,724

 
167,345

 
150,502

 
138,479

 
136,548

Land
 
40,748

 
46,848

 
46,628

 
49,992

 
30,246

    Total real estate loans
 
4,605,712

 
4,668,049

 
4,615,500

 
4,555,653

 
2,762,953

Consumer loans
 
 
 
 
 
 
 
 
 
 
Consumer loans
 
40,680

 
85,302

 
89,424

 
114,736

 
81,973

  Gross loans held for investment
 
8,781,906

 
8,875,050

 
8,846,286

 
8,767,852

 
6,280,849

Deferred loan origination costs/(fees) and premiums/(discounts), net
 
(9,968
)
 
(9,195
)
 
(9,468
)
 
(8,648
)
 
(3,263
)
   Loans held for investment
 
8,771,938

 
8,865,855

 
8,836,818

 
8,759,204

 
6,277,586

Allowance for loan losses
 
(35,026
)
 
(37,856
)
 
(36,072
)
 
(33,306
)
 
(31,747
)
   Loans held for investment, net
 
$
8,736,912

 
$
8,827,999

 
$
8,800,746

 
$
8,725,898

 
$
6,245,839

 
 
 
 
 
 
 
 
 
 
 
Loans held for sale, at lower of cost or fair value
 
$
8,529

 
$
11,671

 
$
5,719

 
$
52,880

 
$
13,879



18


PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
ASSET QUALITY INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
 
2019
 
2019
 
2018
 
2018
 
2018
Asset Quality
 
(dollars in thousands)
Nonperforming loans
 
$
7,637

 
$
12,858

 
$
4,857

 
$
7,268

 
$
6,039

Other real estate owned
 
35

 
180

 
147

 
356

 
220

Other assets owned
 
—

 
13

 
13

 
129

 
183

Nonperforming assets
 
$
7,672

 
$
13,051

 
$
5,017

 
$
7,753

 
$
6,442

 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses
 
$
35,026

 
$
37,856

 
$
36,072

 
$
33,306

 
$
31,747

Allowance for loan losses as a percent of total nonperforming loans
 
459
%
 
294
%
 
743
%
 
458
%
 
526
%
Nonperforming loans as a percent of loans held for investment
 
0.09

 
0.15

 
0.05

 
0.08

 
0.10

Nonperforming assets as a percent of total assets
 
0.07

 
0.11

 
0.04

 
0.07

 
0.08

Net loan charge-offs for the quarter ended
 
$
3,572

 
$
228

 
$
138

 
$
87

 
$
108

Net loan charge-offs for the quarter to average total loans(1)
 
0.04
%
 
—
%
 
—
%
 
—
%
 
—
%
Allowance for loan losses to loans held for investment (2)
 
0.40
%
 
0.43
%
 
0.41
%
 
0.38
%
 
0.51
%
Delinquent Loans
 
 

 
 
 
 

 
 

 
 
30 - 59 days
 
$
3,416

 
$
2,299

 
$
7,046

 
$
1,977

 
$
3,583

60 - 89 days
 
801

 
1,982

 
1,242

 
720

 
1,290

90+ days
 
9,261

 
11,481

 
4,565

 
5,048

 
2,574

Total delinquency
 
$
13,478

 
$
15,762

 
$
12,853

 
$
7,745

 
$
7,447

Delinquency as a percent of loans held for investment
 
0.15
%
 
0.18
%
 
0.15
%
 
0.09
%
 
0.12
%
 
 
 
 
 
 
 
 
 
 
 
(1) The ratios are less than 0.01% as of March 31, 2019, December 31, 2018, September 30, 2018 and June 30, 2018.
(2) At June 30, 2019, 44% of loans held for investment include a fair value net discount of $52.0 million, or 0.59% of loans held for investment. At March, 2019, 47% of loans held for investment include a fair value net discount of $57.2 million, or 0.65% of loans held for investment. At June, 30, 2018, 40% of loans held for investment include a fair value net discount of $22.2 million, or 0.35% of loans held for investment.



19


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 measure 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 measure 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
 
 
June 30,
 
March 31,
 
June 30,
 
 
2019
 
2019
 
2018
Net income
 
$
38,527

 
$
38,718

 
$
27,303

Plus CDI amortization expense
 
4,281

 
4,436

 
1,996

Less CDI amortization expense tax adjustment
 
1,240

 
1,288

 
542

Net income for average tangible common equity
 
$
41,568

 
$
41,866

 
$
28,757

 
 
 
 
 
 
 
Average stockholders' equity
 
$
1,999,986

 
$
1,991,861

 
$
1,279,932

Less average CDI
 
94,460

 
98,984

 
39,766

Less average goodwill
 
808,778

 
808,726

 
494,070

Average tangible common equity
 
$
1,096,748

 
$
1,084,151

 
$
746,096

 
 
 
 
 
 
 
Return on average equity
 
7.71
%
 
7.78
%
 
8.53
%
Return on average tangible common equity
 
15.16
%
 
15.45
%
 
15.42
%

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.
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
 
2019
 
2019
 
2018
 
2018
 
2018
Total stockholders' equity
 
$
1,984,456

 
$
2,007,064

 
$
1,969,697

 
$
1,916,377

 
$
1,288,525

Less intangible assets
 
900,162

 
904,846

 
909,282

 
913,079

 
532,610

Tangible common equity
 
$
1,084,294

 
$
1,102,218

 
$
1,060,415

 
$
1,003,298

 
$
755,915

 
 
 
 
 
 
 
 
 
 
 
Book value per share
 
$
32.80

 
$
31.97

 
$
31.52

 
$
30.68

 
$
27.63

Less intangible book value per share
 
14.88

 
14.41

 
14.55

 
14.62

 
11.42

Tangible book value per share
 
$
17.92

 
$
17.56

 
$
16.97

 
$
16.06

 
$
16.21

 
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
11,783,781

 
$
11,580,495

 
$
11,487,387

 
$
11,503,881

 
$
8,158,131

Less intangible assets
 
900,162

 
904,846

 
909,282

 
913,079

 
532,610

Tangible assets
 
$
10,883,619

 
$
10,675,649

 
$
10,578,105

 
$
10,590,802

 
$
7,625,521

 
 
 
 
 
 
 
 
 
 
 
Tangible common equity ratio
 
9.96
%
 
10.32
%
 
10.02
%
 
9.47
%
 
9.91
%

20