Pacific Premier Bancorp (PPBI) Misses Q2 EPS by 80c

Pacific Premier Bancorp (NASDAQ: PPBI) reported Q2 EPS of ($1.41), $0.80 worse than the analyst estimate of ($0.61).

Second Quarter 2020 Summary

• Net loss of $99.1 million, or $1.41 per diluted share
• Pre-provision net revenue ("PPNR") of $60.6 million, excluding $39.3 million of merger-related expense
• Net interest margin of 3.79% and core net interest margin of 3.59%
• Nonperforming assets represent 0.17% of total assets
• Allowance for credit losses (“ACL”) to total loans held for investment of 2.02% at June 30, 2020 excluding Small Business Administration’s Paycheck Protection Program (“PPP”) loans totaling $1.12 billion
• Loans held for investment include fair value discount of $144.5 million, or 1.03%, as of June 30, 2020
• Non-maturity deposits of $15.1 billion, or 89% of total deposits
• Noninterest bearing deposits represent 35% of total deposits
• Cost of deposits of 0.32% in the second quarter, compared with 0.48% in the prior quarter
• Closed the acquisition of Opus Bank (“Opus”) effective June 1, 2020; systems integration scheduled for first week in October 2020
• Completed an offering of subordinated notes for gross proceeds of $150 million

Steven R. Gardner, Chairman, President and Chief Executive Officer of the Company, commented, “Our team is functioning at a high level and driving solid results. Notwithstanding the impact of the merger and COVID-19 related items, we accomplished a great deal during the second quarter.

“On June 1st, we successfully closed the acquisition of Opus, our 11th acquisition and the largest in our history. As a result, we incurred costs in connection with the new accounting standard under CECL, along with the impacts of fair value accounting. As a result, the Company's loss absorbing capacity, loan loss reserves and loan fair value discounts combined, is in excess of 3% of loans held for investment. Given our strong capital position and our expectations around the future performance of the Company, we are pleased to announce the Board's approval of a $0.25 dividend.

“During the second quarter, we initiated a well structured COVID-19 loan modification program to assist those clients that had been temporarily impacted by the pandemic. At quarter-end, we had approximately $2.25 billion, or 14.9%, of the loan portfolio under some form of temporary modification. As of July 24th, we have contacted 63% of the approximately 1,400 customers with loan modifications, and 87% have stated they intend to resume regularly scheduled payments when the modification period expires. Notably, our asset quality metrics remain strong across the spectrum of our loan portfolio.

“Despite the challenges created by the pandemic, the integration of the Pacific Premier and Opus teams is progressing well. The systems conversion will occur in early October at which time we will consolidate 20 branch offices to further drive our overall efficiencies. We are currently on pace to recognize greater cost savings from the acquisition than previously anticipated and, with the addition of key Opus personnel, our team has never been more capable."

Mr. Gardner concluded, “As we enter the second half of 2020, there remains a high level of economic uncertainty, but we are well positioned from a capital, earnings and risk perspective to take advantage of opportunities as they arise.”

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

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