Pacific Premier Bancorp (PPBI) Misses Q1 EPS by 4c

Pacific Premier Bancorp (NASDAQ: PPBI) reported Q1 EPS of $0.43, $0.04 worse than the analyst estimate of $0.47.

First Quarter 2020 Summary

• Net income of $25.7 million, or $0.43 per diluted share
• Return on average assets of 0.89%, return on average equity of 5.05% and return on average tangible common equity of 9.96%
• Net interest margin of 4.24% and core net interest margin of 4.08%
• Non-maturity deposit growth of $169.9 million, or 9% annualized
• Noninterest bearing deposits represent 43% of total deposits and non-maturity deposits represent 88% of total deposits
• Nonperforming assets represent 0.18% of total assets
• Adopted new Current Expected Credit Losses (“CECL”) accounting standard effective January 1, 2020, resulting in a cumulative effect adjustment to the allowance for credit losses (“ACL”) of $64.0 million
• ACL to total loans held for investment at 1.32% at March 31, 2020 compared to 0.41% at December 31, 2019
• Loans held for investment include fair value discount of $35.9 million, or 0.41%, as of March 31, 2020
• Announced acquisition of Opus Bank on February 3, 2020, targeting June 1st effective date

Steven R. Gardner, Chairman, President and Chief Executive Officer of the Company, commented, “I am incredibly proud of the way our organization has responded to the challenges presented by the COVID-19 pandemic. Understanding the urgent nature of this crisis, our team was able to quickly execute on multiple initiatives designed to adjust our operations to protect the health and safety of our employees and clients. Currently, we have 737 employees, 74% of our workforce, who are able to work remotely without impacting our productivity while continuing to provide a superior level of customer service.

“Since the beginning of the crisis, we have been in close contact with our clients, assessing the level of impact on their businesses, and putting a process in place to evaluate each client’s specific situation and provide relief programs where appropriate. We were able to quickly establish our process for participating in the Small Business Administration’s Paycheck Protection Program (“PPP”) that enabled our clients to utilize this valuable resource. Our team was able to process initially 2,090 PPP loans for approximately $809 million in the first round of the program, which has allowed us to further strengthen and deepen our client relationships, while positively impacting thousands of individuals.

“We have continued to steadily move forward on the completion of our acquisition of Opus Bank, which we believe will further strengthen the Pacific Premier franchise and create long-term value for the shareholders of the combined institution. We received regulatory approvals earlier this month and are targeting a June 1, 2020 effective closing date, subject to the receipt of Opus Bank and Pacific Premier shareholder approval and the satisfaction of other customary closing conditions.

“Our disciplined risk management framework and long standing credit culture has prepared us well to navigate the current crisis. We are well positioned from capital, liquidity and earnings standpoints to support our clients and communities throughout the duration of this crisis. This overall strength supports our Board\'s decision to declare a $0.25 per share dividend and to continue to deliver value for our shareholders,” said Mr. Gardner.

Mr. Gardner concluded, “Although we are pleased with our first quarter results and our institution’s response to the COVID-19 pandemic, as we look forward the level of uncertainty is significant. The path to reopening our economy, and the speed with which reopening will lead to increased hiring and economic activity and the resultant risks are uncertain. In this environment, we believe that it is prudent to prepare for and operate the institution with the expectation that we are entering a potentially deep recession, the duration of which is unknowable and the level and magnitude of the economic recovery is equally uncertain. We all hope for a quick and strong recovery, but as effective risk managers, the level of uncertainty will inform our decision making in the short-term. We believe this approach will position us to further enhance franchise value over the medium and long-term and will position us well to capitalize on opportunities as they arise.”

For earnings history and earnings-related data on Pacific Premier Bancorp (PPBI) click here.

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