COSTA MESA, Calif., Oct. 21 /PRNewswire-FirstCall/ -- Pacific Premier Bancorp,
Inc. (Nasdaq: PPBI) (the "Company"), the holding company of Pacific Premier
Bank (the "Bank"), recorded a net loss for the third quarter of 2009 of $7,000
or less than $0.01 per share on a diluted basis, compared with net income of
$1.0 million or $0.16 per share on a diluted basis for the third quarter of
2008.
For the quarter ended September 30, 2009, the Company's pre-tax income/loss
decreased by $1.7 million, compared with the same period in the prior year,
primarily due to:
-- A $1.3 million increase in provision for loan losses;
-- A $0.4 million decline in noninterest income, primarily due to an
other-than-temporary impairment charge taken on private label
securities
in the current period; and
-- A $0.2 million increase in noninterest expense, primarily associated
with higher costs related to Federal Deposit Insurance Corporation
("FDIC") insurance premiums and net operations of other real estate
owned, partially offset by lower compensation and benefits expense.
These unfavorable items were partially offset by an increase in net interest
income of $0.2 million.
For the first nine months of 2009, the Company's net loss totaled $0.2 million
or $0.04 per share on a diluted basis, compared with net income of $0.6
million or $0.10 per share on a diluted basis in the comparable prior period.
At September 30, 2009, the Company's basic book value per share was $11.66,
diluted book value per share was $9.86 and the ratio of tangible common equity
to total assets was 6.88%.
Steven R. Gardner, President and Chief Executive Officer, stated, "We have
conservatively managed the Company over the past several years which has put
us in a position to take advantage of opportunities presenting themselves in
the current environment. We believe the economic dislocations in our markets
have created exceptional opportunities which allow our banking professionals
to attract new business customers and further build the Bank's franchise. Our
deposits grew at an annualized rate of 42% in the third quarter of 2009, while
the average deposit rate fell 41 basis points from 2.56% at June 30, 2009 to
2.15% at September 30, 2009. The excess cash we are carrying at the end of
the current quarter will be utilized to pay down a substantial amount of fixed
rate Federal Home Loan Bank advances that mature in the fourth quarter and
carry a weighted average rate of 4.94%, thus further benefiting our net
interest margin."
Mr. Gardner continued, "The commercial real estate market throughout the
nation, and California in particular, is being negatively affected by the
economy. A large percentage of the Company's loan portfolio is comprised of
loans secured by investor owned multifamily and commercial real estate, such
as, apartment, office, warehouse and retail buildings. We mitigate the risk
in our portfolio through our conservative credit culture, sound underwriting
practices and avoidance of the riskiest segments of the market. Consequently,
over the past several years we rarely made construction, bridge, or
repositioning loans. Consistent with our credit practices, these portfolios
reflected relatively strong ongoing performance of their collateral properties
with an average current debt service coverage ratio for our multifamily
portfolio of 1.20 and for our investor owned commercial real estate portfolio
of 1.42. We believe that our efforts to manage the risks inherent in our
multifamily and commercial real estate portfolios will help mitigate the
impact of the anticipated stress on our portfolios resulting from the current
recessionary conditions."
Mr. Gardner concluded, "Although the economic environment has impacted our
asset quality, overall the loan portfolio continues to perform relatively well
under the current circumstances. At September 30, 2009, our loans delinquent
30 days or more were comprised of 22 loans aggregating $7.9 million or 1.4% of
total loans. We remain in a strong capital position with the Bank's ratios
for Tier 1 leverage capital of 8.03% and total risk-based capital of 11.99% at
quarter end, both of which exceed the levels required to be considered well
capitalized for regulatory purposes."
Net Interest Income
Net interest income totaled $5.8 million in the third quarter of 2009, up $0.2
million or 3.7% from the same period in the prior year, reflecting an 11.2%
increase in average interest-earning assets to $771.4 million, partially
offset by a decline in the net interest margin. The net interest margin was
2.98% in the current quarter, down 22 basis points from the same period in the
prior year and down 32 basis points from the second quarter of 2009. The
decline in the current quarter from a year ago primarily reflected the average
yield on interest-earning assets decreasing more rapidly than the average
costs on our interest-bearing liabilities. Decreasing market interest rates
associated with the economic downturn affected the repricing on our adjustable
rate loan portfolio whereby yields on average loans decreased 29 basis points.
The decrease in our loan yield was mitigated by the interest rate floors we
have on our loans. At September 30, 2009, 88.7% of our loan portfolio had
adjustable rates of which 90.4% of those loans were at their interest rate
floor. Decreasing market interest rates also lowered the yield on our
short-term investments, which contributed to the decrease in yield on our
investment securities of 163 basis points. During the current quarter, we
began to restructure the securities portfolio to reduce the credit risk
exposure by selling some of the higher credit risk private label securities
and replacing them with lower yielding, lower credit risk government sponsored
enterprises ("GSE") securities. These GSE securities also enhance our
regulatory capital as they have a lower asset risk weighting than the private
label securities.
For the first nine months of 2009, net interest income totaled $17.0 million,
up $1.3 million or 8.5% from the same period in the prior year. The increase
was associated with higher interest-earning assets which grew by $30.1 million
and an increase in the net interest margin of 12 basis points.
Provision for Loan Losses
During the current quarter, the provision for loan losses totaled $2.0
million, up $1.3 million from the same period in the prior year. The increase
in provision was primarily due to two factors. First, we replenished the
allowance for increases in loan charge-offs of $1.0 million, primarily
associated with two industrial loans. Second, we raised the reserve factors
applied to various segments of the Company's loan portfolio. The increased
reserve factors were in response to deteriorating economic conditions and
constraints on the financial markets in which we lend. These conditions
adversely affected our borrowers, their businesses and the collateral securing
our loans. The higher factors accounted for approximately 50% of the current
quarter's provision for loan losses.
For the first nine months of 2009, the provision for loan losses totaled $5.5
million and net loan charge-offs were $3.3 million. This compares with a $1.7
million provision for loan losses and net charge-offs of $0.4 million for the
same period a year ago.
Noninterest income
Noninterest income totaled $0.3 million in the third quarter of 2009, down
$0.4 million or 60.4% from the same period in the prior year. The primary
contributor to the decline between quarters was due to an other-than-temporary
impairment charge of $0.4 million on private label securities recorded in the
current quarter within our net gain (loss) from sale of investment securities
category. As previously disclosed, these securities were received by the
Company when it redeemed its shares in a defunct AMF mutual fund in the second
quarter of 2008.
For the first nine months of 2009, noninterest income totaled $0.6 million,
compared with a loss of $1.4 million from the same period a year ago. The
loss in 2008 was primarily due to the Company's redemption of the
aforementioned AMF mutual fund investment for a loss of $3.6 million,
partially offset by higher loan servicing fee income related to prepayment
fees.
Noninterest Expense
Noninterest expense totaled $4.1 million in the current quarter, up $0.2
million or 4.3% from the same period in the prior year. The increase was
primarily associated with higher costs related to FDIC insurance premiums of
$0.2 million and net operations of other real estate owned of $0.2 million,
partially offset by lower compensation and benefits expense of $0.3 million.
FDIC insurance premiums increased due to a raise in the regular quarterly
assessment from 7.5 basis points in the third quarter of 2008 to 18.0 basis
points for the third quarter of 2009 and the growth in the Company's deposits
of 43.7% from the end of September 2008. Higher costs related to net
operations of other real estate owned were due to an increase in write downs
and, to a lesser extent, an increase in the number of foreclosed properties.
The decrease in compensation and benefits expense for the quarter was
primarily attributable to a reduction in the annual incentive compensation
accrual.
For the first nine months of 2009, noninterest expense totaled $12.6 million,
up $0.7 million or 5.9% from the same period in the prior year. The increase
was due to higher FDIC insurance premiums of $0.9 million along with higher
expenses in all the other expense categories, except for compensation and
benefits expense which decreased $0.8 million.
Assets and Liabilities
At September 30, 2009, assets totaled $847.9 million, up $107.9 million or
14.6% from December 31, 2008. During the current quarter, assets increased
$59.4 million primarily due to increases in cash and cash equivalents of $56.4
million and investment securities available for sale of $19.9 million,
partially offset by a decrease in loans held for investment, net of $18.9
million.
Cash and cash equivalents increased in the current quarter to $115.7 million
at September 30, 2009. The increase was primarily due to growth in business
and consumer deposits as discussed further below. Management expects to
utilize the cash, in part, to pay down $75 million of the Company's fixed rate
Federal Home Loan Bank term advances that mature in the fourth quarter of 2009
and carry a weighted average rate of 4.94%.
Investment securities available for sale increased 24.3% during the current
quarter to $101.7 million at September 30, 2009. The increase was primarily
due to net purchases funded by increased deposits and, to a lesser extent, a
reduction in loans held for investment. At September 30, 2009, 49 of the
private label mortgage backed securities ("MBS") totaling $6.2 million with a
market value of $4.1 million were classified as substandard assets with all
the interest received on these securities being applied to their principal
balances. All of these private label MBS were acquired when the Company
redeemed its shares in the AMF mutual funds in second quarter of 2008.
Net loans, including loans held for sale, decreased $19.6 million in the
current quarter to $576.5 million as of September 30, 2009. Included in the
current quarter were loan originations totaling $2.4 million. The Company's
allowance for loan losses increased $0.9 million to $8.1 million at September
30, 2009, from $7.2 million at June 30, 2009. The increase was primarily from
the provision for loan losses of $2.0 million, offset by net loan charge-offs
of $1.1 million, which were down from the $1.6 million recorded in the quarter
ended June 30, 2009. The allowance for loan losses as a percent of nonaccrual
loans increased to 83% at September 30, 2009 from 58% at June 30, 2009.
Likewise, the ratio for allowance for loan losses to total loans increased to
1.4% at September 30, 2009, up from 1.2% at June 30, 2009.
Deposits totaled $606.4 million at September 30, 2009, up $149.3 million or
32.7% from December 31, 2008. During the current quarter, deposits increased
$57.3 million due to growth in transaction accounts of $38.3 million and in
retail certificates of deposit of $21.2 million. During the current quarter,
within certificates of deposit, we experienced a contraction of $65.0 million
in our less than one year products, while our greater than one year products
grew $88.9 million as we strategically sought to lengthen liabilities in the
current low interest rate environment. At September 30, 2009, the Company had
a minimal amount of wholesale deposits and no brokered deposits. At September
30, 2009, the loan to deposit ratio was 96.4%, compared to 137.5% at December
31, 2008.
At September 30, 2009, total borrowings of the Company amounted to $176.8
million, down $43.4 million or 19.7% from December 31, 2008, but unchanged
from the quarter ended June 30, 2009.
Nonperforming Assets
At September 30, 2009, nonperforming assets totaled $13.4 million, essentially
unchanged from the quarter ended June 30, 2009. During the current quarter,
two commercial real estate loans totaling $1.2 million were placed on
nonaccrual status, which was partially offset by loan charge-offs of $1.1
million and an other real estate owned charge-off of $0.1 million. Other real
estate owned increased $2.6 million during the current quarter, primarily due
to the foreclosure of one land loan of $2.1 million which is currently in
escrow, and one investor-owned commercial real estate property of $0.6
million. Changes in our nonperforming assets continue to reflect the on-going
weakness in the economy where we lend. The composition of nonperforming
assets at September 30, 2009 consisted of $9.8 million of nonaccrual loans and
$3.6 million of other real estate owned.
Regulatory Capital Ratios
At September 30, 2009, the Bank exceeded all regulatory capital requirements
with a ratio for tier 1 leverage capital of 8.03%, tier 1 risked-based capital
of 10.74% and total risk-based capital of 11.99%. These capital ratios exceed
the "well capitalized" standards defined by the federal banking regulators of
5.00% for tier 1 leverage capital, 6.00% for tier 1 risked-based capital and
10.00%, for total risk-based capital. At September 30, 2009, the Company had
a ratio for tier 1 leverage capital of 8.08%, tier 1 risked-based capital of
10.71% and total risk-based capital of 11.96%.
The Company owns all of the capital stock of the Bank. The Bank 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.
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. Such statements involve inherent risks and uncertainties, many of
which are difficult to predict and are generally beyond the control of the
Company. There can be no assurance that future developments affecting the
Company will be the same as those anticipated by management. The Company
cautions readers that a number of important factors could cause actual results
to differ materially from those expressed in, or implied or projected by, such
forward-looking statements. These risks and uncertainties include, but are
not limited to, the following: the strength of the United States economy in
general and the strength of the local economies in which we conduct
operations; the effects of, and changes in, trade, monetary and fiscal
policies and laws, including interest rate policies of the Board of Governors
of the Federal Reserve System; inflation, interest rate, market and monetary
fluctuations; the timely development of competitive new products and services
and the acceptance of these products and services by new and existing
customers; the willingness of users to substitute competitors' products and
services for the Company's products and services; the impact of changes in
financial services policies, laws and regulations; technological changes; the
effect of acquisitions that the Company may make, if any, including, without
limitation, the failure to achieve the expected revenue growth and/or expense
savings from such acquisitions; changes in the level of the Company's
nonperforming assets and charge-offs; oversupply of inventory and continued
deterioration in values of California real estate, both residential and
commercial; the effect of changes in accounting policies and practices, as may
be adopted from time-to-time by bank regulatory agencies, the Securities and
Exchange Commission ("SEC"), the Public Company Accounting Oversight Board,
the Financial Accounting Standards Board or other accounting standards
setters; possible other-than-temporary impairments of securities held by us;
the impact of current governmental efforts to restructure the U.S. financial
regulatory system; changes in consumer spending, borrowing and savings habits;
the effects of the Company's lack of a diversified loan portfolio, including
the risks of geographic and industry concentrations; ability to attract
deposits and other sources of liquidity; changes in the financial performance
and/or condition of our borrowers; changes in the competitive environment
among financial and bank holding companies and other financial service
providers; unanticipated regulatory or judicial proceedings; and the Company's
ability to manage the risks involved in the foregoing.
Additional factors that could cause actual results to differ materially from
those expressed in the forward-looking statements are discussed in the 2008
Annual Report on Form 10-K of Pacific Premier Bancorp, Inc. filed with the SEC
and available at the SEC's Internet site (http://www.sec.gov).
The Company specifically disclaims any obligation to update any factors or to
publicly announce the result of revisions to any of the forward-looking
statements included herein to reflect future events or developments.
Contact:
Pacific Premier Bancorp, Inc.
Steven R. Gardner
President/CEO
714.431.4000
Kent J. Smith
Senior Vice President/CFO
714.431.4000
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(dollars in thousands, except share data)
September 30, December 31,
ASSETS 2009 2008
(Unaudited) (Audited)
Cash and due from banks $115,662 $8,181
Federal funds sold 30 1,526
Cash and cash equivalents 115,692 9,707
Investment securities available for sale 101,686 56,606
FHLB stock/Federal Reserve stock, at cost 14,330 14,330
Loans held for sale, net - 668
Loans held for investment, net of allowance for
loan losses of $8,107 (2009) and $5,881 (2008) 576,507 622,470
Accrued interest receivable 3,346 3,627
Other real estate owned 3,644 37
Premises and equipment 8,928 9,588
Deferred income taxes 10,981 10,504
Bank owned life insurance 11,792 11,395
Other assets 959 1,024
TOTAL ASSETS $847,865 $739,956
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposit accounts:
Noninterest bearing $33,098 $29,435
Interest bearing:
Transaction accounts 128,493 58,861
Retail certificates of deposit 438,545 341,741
Wholesale/brokered certificates of deposit 6,246 27,091
Total deposits 606,382 457,128
FHLB advances and other borrowings 166,500 209,900
Subordinated debentures 10,310 10,310
Accrued expenses and other liabilities 6,357 5,070
TOTAL LIABILITIES 789,549 682,408
STOCKHOLDERS' EQUITY:
Preferred Stock, $.01 par value; 1,000,000
shares authorized; no shares outstanding - -
Common stock, $.01 par value; 15,000,000 shares
authorized; 5,003,451 (2009) and 4,903,451
(2008) shares issued and outstanding 49 48
Additional paid-in capital 64,648 64,680
Accumulated deficit (4,487) (4,304)
Accumulated other comprehensive loss, net of
tax of $1,324 (2009) and $2,011 (2008) (1,894) (2,876)
TOTAL STOCKHOLDERS' EQUITY 58,316 57,548
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $847,865 $739,956
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED (dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
INTEREST INCOME 2009 2008 2009 2008
Loans $9,612 $10,444 $29,832 $31,633
Investment securities
and other
interest-earning assets 1,145 1,126 3,172 3,413
Total interest income 10,757 11,570 33,004 35,046
INTEREST EXPENSE
Interest-bearing deposits:
Interest on transaction
accounts 378 352 943 1,168
Interest on certificates
of deposit 2,667 3,008 9,150 9,676
Total interest-bearing
deposits 3,045 3,360 10,093 10,844
FHLB advances and other
borrowings 1,870 2,517 5,602 8,046
Subordinated debentures 89 143 290 463
Total interest expense 5,004 6,020 15,985 19,353
NET INTEREST INCOME BEFORE
PROVISION FOR LOAN LOSSES 5,753 5,550 17,019 15,693
PROVISION FOR LOAN LOSSES 2,001 664 5,535 1,683
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,752 4,886 11,484 14,010
NONINTEREST INCOME
Loan servicing fees 117 231 402 833
Bank and other fees 215 155 638 424
Net gain from sales
of loans 7 - 7 92
Net (loss) gain from sales
of investment securities (380) 45 (1,278) (3,586)
Other income 297 216 789 810
Total noninterest
income (loss) 256 647 558 (1,427)
NONINTEREST EXPENSE
Compensation and benefits 1,954 2,223 6,040 6,862
Premises and occupancy 628 632 1,942 1,832
Data processing and
communications 143 114 471 405
Other real estate owned
operations, net 198 54 197 73
FDIC insurance premiums 274 66 1,118 198
Legal and audit 165 144 645 465
Marketing expense 164 221 508 494
Office and postage expense 78 53 247 247
Other expense 515 444 1,473 1,360
Total noninterest expense 4,119 3,951 12,641 11,936
NET (LOSS) INCOME BEFORE
INCOME TAX (BENEFIT)
PROVISION (111) 1,582 (599) 647
INCOME TAX (BENEFIT)
PROVISION (104) 581 (416) 45
NET (LOSS) INCOME $(7) $1,001 $(183) $602
EARNINGS PER SHARE
Basic $- $0.20 $(0.04) $0.12
Diluted $- $0.16 $(0.04) $0.10
WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic 5,003,451 4,903,784 4,919,385 4,963,385
Diluted 5,003,451 6,143,646 4,919,385 6,248,787
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
STATISTICAL INFORMATION
UNAUDITED (dollars in thousands, except per share data)
September 30, December 31, September 30,
2009 2008 2008
Asset Quality (end of period)
Nonaccrual loans $9,751 $5,200 $4,537
Other real estate owned 3,644 37 26
Nonperforming assets 13,395 5,237 4,563
Net loan charge-offs for the
quarter ended 1,067 544 64
Allowance for loan losses 8,107 5,881 5,867
Net loan charge-offs for quarter,
annualized to average total loans 0.73% 0.34% 0.04%
Nonaccrual loans to total loans 1.67 0.83 0.70
Nonaccrual loans to total assets 1.15 0.70 0.60
Nonperforming assets to total assets 1.58 0.71 0.60
Allowance for loan losses to total
loans 1.39 0.94 0.91
Allowance for loan losses to
nonaccrual loans 83.14 113.10 129.31
Average Balance Sheet
(for the quarter ended)
Total assets $808,385 $749,776 $725,734
Loans receivable, net 584,625 635,228 608,169
Deposits 567,789 436,303 411,414
FHLB advances and other borrowings 166,543 237,946 239,367
Subordinated debentures 10,310 10,310 10,310
Share Data (end of period)
Book value per share $11.66 $11.74 $11.83
Diluted book value per share 9.86 9.60 9.58
Closing stock price 4.30 4.00 5.10
Pacific Premier Bank Capital
Ratios (end of period)
Tier 1 leverage ratio 8.03% 8.71% 8.96%
Tier 1 risk-based capital ratio 10.74 10.71 10.40
Total risk-based capital ratio 11.99 11.68 11.34
Pacific Premier Bancorp, Inc.
Capital Ratios (end of period)
Tier 1 leverage ratio 8.08% 8.99% 9.02%
Tier 1 risk-based capital ratio 10.71 11.11 10.45
Total risk-based capital ratio 11.96 12.07 11.38
Loan Portfolio (end of period)
Real estate loans:
Multi-family $284,116 $287,592 $301,247
Commercial 153,406 163,428 169,317
One-to-four family 8,591 9,925 10,071
Construction - Multi-family - 2,733 2,661
Land - 2,550 3,125
Business loans:
Commercial owner occupied 105,060 112,406 112,280
Commercial and industrial 28,820 43,235 38,169
SBA 3,521 4,942 5,135
Other loans 1,100 1,956 4,005
Total gross loans $584,614 $628,767 $646,010
Nine Months Twelve Months Nine Months
Ended Ended Ended
September 30, December 31, September 30,
2009 2008 2008
Profitability and Productivity
Return on average assets (0.03)% 0.09% 0.11%
Return on average equity (0.42) 1.20 1.35
Net interest margin 3.09 2.99 2.97
Noninterest expense
(annualized) to total assets 1.99 2.16 2.10
Efficiency ratio 70.80 83.66 83.16
SOURCE Pacific Premier Bancorp, Inc.
Steven R. Gardner, President/CEO, or Kent J. Smith, Senior Vice
President/CFO, both of Pacific Premier Bancorp, Inc., +1-714-431-4000
