Investor Presentation
Fourth Quarter 2019
Steve Gardner Chairman, President & Chief Executive Officer sgardner@ppbi.com 949-864-8000
FORWARD LOOKING STATEMENTS AND
WHERE TO FIND MORE INFORMATION
Forward Looking Statements
This investor presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 regarding the financial condition, results of operations, business plans and the future performance of Pacific Premier Bancorp, Inc. ("PPBI"), including its wholly-owned subsidiary Pacific Premier Bank ("Pacific Premier"), Opus Bank ("Opus"), including its wholly-owned subsidiary PENSCO Trust Company ("PENSCO"), and the proposed acquisition. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "could," "may," "should," "will" or other similar words and expressions are intended to identify these forward-looking statements. These forward-looking statements are based on PPBI's and Opus's current expectations and assumptions regarding PPBI's and Opus's businesses, the economy, and other future conditions. Because forward- looking statements relate to future results and occurrences, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Many possible events or factors could affect PPBI's or Opus's future financial results and performance and could cause actual results or performance to differ materially from anticipated results or performance. Such risks and uncertainties include, among others: the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive agreement and plan of reorganization by and among PPBI, Pacific Premier and Opus, the outcome of any legal proceedings that may be instituted against PPBI or Opus, delays in completing the transaction, the failure to obtain necessary regulatory approvals (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the transaction) and shareholder approvals or to satisfy any of the other conditions to the transaction on a timely basis or at all, the possibility that the anticipated benefits of the transaction are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where PPBI and Opus do business, the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events, diversion of management's attention from ongoing business operations and opportunities, potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the transaction, the ability to complete the transaction and integration of Pacific Premier and Opus successfully, and the dilution caused by PPBI's issuance of additional shares of its capital stock in connection with the transaction. Except to the extent required by applicable law or regulation, each of PPBI and Opus disclaims any obligation to update such factors or to publicly announce the results of any revisions to any of the forward-looking statements included herein to reflect future events or developments. Further information regarding PPBI, Opus and factors which could affect the forward-looking statements contained herein can be found in PPBI's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, its Quarterly Reports on Form 10-Q for the periods ended March 31, 2019, June 30, 2019 and September 30, 2019, and its other filings with the SEC, and in Opus's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, its Quarterly Reports on Form 10-Q for the periods ended March 31, 2019, June 30, 2019 and September 30, 2019, and its other filings with the Federal Deposit Insurance Corporation ("FDIC").
Additional Information About the Merger and Where to Find It
In connection with the proposed acquisition transaction, a registration statement on Form S-4 will be filed with the SEC that will include a joint proxy statement/prospectus filed with the SEC and the FDIC to be distributed to the shareholders of Opus and PPBI in connection with their votes on the acquisition. INVESTORS AND SECURITY HOLDERS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS WHEN THEY BECOME AVAILABLE (AND ANY OTHER DOCUMENTS FILED WITH THE SEC OR THE FDIC IN CONNECTION WITH THE TRANSACTION OR INCORPORATED BY REFERENCE INTO THE JOINT PROXY STATEMENT/PROSPECTUS) BECAUSE SUCH DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION REGARDING THE PROPOSED MERGER AND RELATED MATTERS. The final joint proxy statement/prospectus will be mailed to shareholders of Opus and PPBI. Investors and security holders will be able to obtain the documents, and any other documents PPBI has filed with the SEC, free of charge at the SEC's website, www.sec.gov or by accessing PPBI's website at www.ppbi.com under the "Investors" link and then under the heading "SEC Filings". Investors and security holders will be able to obtain the documents, and any other documents Opus has filed with the FDIC, free of charge at Opus's website at www.opusbank.com under the tab "Investor Relations" and then under the heading "Presentations & Filings". In addition, documents filed with the SEC by PPBI or with the FDIC by Opus will be available free of charge by (1) writing PPBI at 17901 Von Karman Avenue, Suite 1200, Irvine, CA 92614, Attention: Investor Relations, or (2) writing Opus at 19900 MacArthur Boulevard, 12th Floor, Irvine, CA 92612, Attention: Investor Relations.
Before making any voting or investment decision, shareholders of PPBI and Opus are urged to read carefully the entire registration statement and joint proxy statement/prospectus when they become available, including any amendments thereto, because they will contain important information about the proposed transaction, PPBI and Opus. Free copies of these documents may be obtained as described above.
The directors, executive officers and certain other members of management and employees of PPBI may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction from the shareholders of PPBI. Information about PPBI's directors and executive officers is included in the proxy statement for its 2019 annual meeting of PPBI's shareholders, which was filed with the SEC on April 9, 2019.
The directors, executive officers and certain other members of management and employees of Opus may also be deemed to be participants in the solicitation of proxies in connection with the proposed transaction from the shareholders of Opus. Information about the directors and executive officers of Opus is included in the proxy statement for its 2019 annual meeting of Opus shareholders, which was filed with the FDIC on March 14, 2019. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the joint proxy statement/prospectus regarding the proposed acquisition when it becomes available. Free copies of this document may be obtained as
described above. | 2 |
CORPORATE OVERVIEW
Headquarters | Irvine, CA |
Exchange/Listing | NASDAQ: PPBI |
Market Cap | $1.81 Billion(1) |
Average Daily Volume | 344,440 Shares(2) |
Outstanding Shares | 59,528,249(1) |
Dividend Yield | 3.29%(1)(3) |
# of Research Analysts | 6 Analysts |
Focus | Small & Mid-Market Businesses |
Total Assets | $11.78 Billion(4) |
Branch Network | 41 Full-Service Branch Locations |
1. | Market data as of February 6, 2020 | |
2. | 3-month average as of February 6, 2020 | |
3. | Annualized | |
4. | As of 12/31/2019 | |
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 3 |
GEOGRAPHIC FOOTPRINT
Premier banking franchise in the Western U.S. - well-positioned for further expansion
36 | branches | 3 | branches | |||
Southern California and | Arizona (Phoenix and | |||||
Central Coast California | Tucson) | |||||
1 | branch | 1 | branch | |||
Las Vegas, Nevada | Vancouver, Washington | |||||
California Footprint
Franchise Footprint
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 4 |
HIGHLIGHTS - Q4 2019
Strong, consistent financial returns and profile
Earnings
- Net income of $41.1 million or $0.69 per diluted share
- ROAA of 1.42%, and ROATCE of 15.89%
- Efficiency ratio of 51.9% (1)
- Net interest margin of 4.33%; core net interest margin of 4.10% (2)
Loans and Asset Quality
- Loan portfolio of $8.7 billion, a decrease of $35.2 million, or 0.4%, from Q3 2019
- New loan commitments of $556.3 million for the quarter at a 4.77% weighted average rate
- Total delinquency as a percent of loans held for investment of 0.22%
- Nonperforming assets as a percent of total assets of 0.08%
- Classified assets to total assets of 0.39%
Deposits
- Total deposits of $8.9 billion, non-maturity deposits equal 88% of total deposits, NIBD represent 43%
- Non-maturitydeposit growth of $335.3 million or 18% annualized
- Cost of funds decreased to 0.71% from 0.86% in Q3 2019
- Cost of deposits decreased to 0.58% from 0.71% in Q3 2019
- Cost of deposits at December 31, 2019 of 0.53%
Capital
- Tangible book value per share of $18.84, 11% increase over 12/31/18
- Increased quarterly cash dividend from $0.22 per share to $0.25 per share, payable in Q1 2020
- Announced a new $100 million buy-back authorization in Q4 2019
- Represents the ratio of noninterest expense less other real estate owned operations, core deposit intangible amortization and merger-related expenses to the sum of net interest income before provision for loan losses and total noninterest income, less gain / (loss) on sales of securities, OTTI impairment, gain / (loss) of other real estate owned, and gain / (loss) from debt extinguishment
- Please refer to non-U.S. GAAP reconciliation in appendix
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 5 |
VALUE CREATION STRATEGY
Increase EPS and TBV by growing scale and operating leverage
Expand our market presence through disciplined organic and acquisitive growth
- Target ROAA of 1.50%
- Target ROATCE of 17% - 18%
Organic Growth
Focus on small and middle market commercial businesses
- Revenues of $5 - $250 million
- Emphasis on full banking relationships
- Full suite of commercial and SMID business products and services
- Complementary business centric nationwide lines of business:
- HOA Management, QSR Franchise, SBA
- Disciplined sales process utilizing our customized Salesforce technology
Acquisitive Growth
Target commercial banks and specialized lines of business
- Complementary geography / relationship focused / product expansion
- Attractive deposit profile with emphasis on non-maturity deposits
- Disciplined acquisition criteria:
- Accretive to EPS 1st full year
- < 2 years TBV dilution payback
- +15% IRR
- Solid track record of delivering value for shareholders
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 6 |
ACQUISITION HISTORY
PPBI acquisitions have consistently enhanced franchise value
- Over the last 6 years, TBVPS has grown 13% compounded annually
- Assets have grown 38% compounded annually since 2013
Acquisition Timeline
Total
Assets
$14,000
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$-
February 2011 | April 2012 | |
Acquired Canyon | Acquired Palm | |
National Bank | Desert National Bank | |
($192MM assets) in | ($103MM assets) in | |
FDIC-assisted deal | FDIC-assisted deal | |
$9.65
$8.19
$961$1,174
March 2013 and June 2013
Acquired First Associations Bank ($424MM assets) and San Diego Trust Bank ($211MM assets)
$9.08
$1,714
April 2017 and | ||||||||||
November 2017 | ||||||||||
Acquired Heritage | ||||||||||
January 2014 | Oaks Bancorp | |||||||||
January 2015 | January 2016 | ($2.0B assets) | ||||||||
Acquired Infinity | and Plaza Bancorp | |||||||||
Franchise Holdings | Acquired | Acquired Security | ($1.3B assets) | |||||||
($80MM assets), | Independence Bank | California Bancorp | ||||||||
a specialty finance | ($422MM assets) | ($715MM assets) | ||||||||
company | ||||||||||
$15.26 | ||||||||||
$12.51 | $8,025 | |||||||||
$11.17 | ||||||||||
$10.12 | $4,036 | |||||||||
$2,038 | $2,790 | |||||||||
July 2018
Acquired Grandpoint$18.84 Capital, Inc.
($3.2B assets)
$16.97
$11,487$11,776
TBV/
Share
$19.00
$16.50
$14.00
$11.50
$9.00
$6.50
2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | |||
Non-Acquired | Acquired | TBV/Share | |||||||||
Note: All dollars in millions, except per share data
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 7 |
ACQUISITION EXECUTION
The company has a well established and successful track record of executing on acquisitions
Organic growth driven by dynamic and disciplined sales culture | |
2008-2012 | Geographic expansion through highly accretive FDIC-assisted acquisitions |
• Canyon National Bank ("CNB") - $192 million in assets, closed on 2/11/2011 (FDIC-Assisted) | |
• Palm Desert National Bank ("PDNB") - $103 million in assets, closed on 4/27/2012 (FDIC-Assisted) |
Build out of commercial banking platform through acquisitions
• First Associations Bank ("FAB") - $424 million in assets, closed on 3/15/2013 (151 days) | ||
• San Diego Trust Bank ("SDTB") - $211 million in assets, closed on 6/25/2013 (110 days) | ||
2013-2019 | • Infinity Franchise Holdings ("IFH") - $80 million in assets, closed on 1/30/2014 (73 days) | |
• | Independence Bank ("IDPK") - $422 million in assets, closed on 1/26/2015 (96 days) | |
• Security California Bancorp ("SCAF") - $715 million in assets, closed 1/31/2016 (120 days) | ||
• Heritage Oaks Bancorp ("HEOP") - $2 billion in assets, closed on 4/1/2017 (109 days) | ||
• Plaza Bancorp ("PLZZ") - $1.3 billion in assets, closed on 11/1/2017 (84 days) | ||
• | Grandpoint Capital, Inc. ("GPNC") - $3.2 billion in assets, closed on 7/1/2018 (139 days) |
2020 and Beyond
- Produce EPS growth from scale, efficiency and balance sheet leverage
- Disciplined organic and acquisitive growth, increasing franchise and shareholder value
- Effective capital management
- Board and management regularly assess strategic direction-Buy, Sell or Hold
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 8 |
STRONG EARNINGS PERFORMANCE
The company has consistently delivered leading earnings growth and shareholder value
Total Revenue and Efficiency Ratio
$600.0 | |||||||
75.0% | |||||||
$500.0 | $482.5 | ||||||
64.7% | $423.7 | ||||||
$400.0 | 65.0% | ||||||
61.3% | |||||||
$300.0 | 55.9% | $278.6 | |||||
53.6% | |||||||
55.0% | |||||||
$200.0 | $172.7 | 51.0% | 51.6% | 50.8% | |||
$120.7 | 45.0% | ||||||
$100.0 | $67.3 | $87.0 | |||||
$0.0 | 35.0% | ||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
Total Revenue | Efficiency Ratio |
Note: All dollars in millions
1. Please refer to non-U.S. GAAP reconciliation in appendix
Net Income and Earnings Per Share
$200.0 | $2.63 | ||||||||||
$180.0 | $2.50 | $2.60 | $2.50 | ||||||||
$160.0 | $2.26 | $160 | $160 | ||||||||
$2.05 | $136 | ||||||||||
$140.0 | $2.00 | ||||||||||
$1.58 | $123 | ||||||||||
Net Income ($MM) | $120.0 | $1.56 | Earnings per Share ($) | ||||||||
$100.0 | $1.34 | $1.50 | |||||||||
$1.46 | |||||||||||
$80.0 | $1.04 | $79 | |||||||||
$1.19 | |||||||||||
$1.00 | |||||||||||
$0.80 | |||||||||||
$60 | |||||||||||
$60.0 | $0.96 | ||||||||||
$40.0 | $40$43 | ||||||||||
$29 | $0.50 | ||||||||||
$0.54 | |||||||||||
$17$18 | $26 | ||||||||||
$20.0 | $9 $13 | ||||||||||
$0.0 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | $0.00 | |||
Reported Net Income | Operating Net Income (1) | ||
Reported Diluted EPS | Operating Diluted EPS (1) | ||
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 9 |
NET INTEREST MARGIN
Strong asset yield and low cost deposits - NIM ranks in the top quartile(3)
• Net interest income has grown 40% compounded annually since 2013
Loan Portfolio Reported Yields, Core Yields(1), and Total Deposit Costs
6.00% | ||||||||||||
5.59% | 5.56% | 5.57% | 5.59% | 5.20% | ||||||||
5.52% | ||||||||||||
5.45% | 5.44% | |||||||||||
5.50% | 5.32% | 5.39% | 5.31% | |||||||||
4.20% | ||||||||||||
Yields | 5.26% | 5.28% | 5.37% | 5.34% | 5.31% | Deposits | ||||||
5.17% | 5.17% | 5.17% | ||||||||||
5.00% | 5.11% | 3.20% | ||||||||||
Loan | 5.02% | Cost of | ||||||||||
2.20% | ||||||||||||
4.50% | ||||||||||||
0.63% | 0.73% | 0.71% | 1.20% | |||||||||
0.34% | 0.34% | 0.32% | 0.28% | 0.28% | 0.51% | 0.58% | ||||||
4.00% | 0.20% | |||||||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 1Q'19 | 2Q'19 | 3Q'19 | 4Q'19 |
Portfolio Core Loan Yields (1) | Portfolio Reported Loan Yields | |
Cost of Total Deposits |
- Core loan yields exclude accretion and other one-time adjustments
- Please refer to non-U.S. GAAP reconciliation in appendix
- Source: SNL Financial - 3Q'19 PPBI ranked 92nd percentile of KRX banks
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved
Reported and Core Net Interest Margin(2)
6.00% | ||||||||||
5.50% | ||||||||||
5.00% | ||||||||||
4.50% | 4.25% | 4.48% | 4.43% | 4.44% | 4.37% | 4.28% | 4.36% | 4.33% | ||
4.18% | 4.21% | |||||||||
4.00% | 4.09% | 4.06% | 4.20% | 4.18% | 4.24% | 4.21% | 4.08% | 4.12% | 4.10% | |
3.93% | ||||||||||
3.50% | ||||||||||
3.00% | ||||||||||
2.50% | ||||||||||
2.00% | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 1Q'19 | 2Q'19 | 3Q'19 | 4Q'19 |
Reported Net Interest Margin | Core Net Interest Margin (2) | |
10
CAPITAL RATIOS & CAPITAL MANAGEMENT
Capital management is a key focus of the Board and Management
- Increased quarterly cash dividend from $0.22 per share to $0.25 per share
- Returned $153 million to shareholders in 2019
- Announced a new $100 million stock repurchase authorization in Q4 2019
Holding Company Capital Ratios
Q4 2019 | Q3 2019 | Q4 2018 | |
Tangible Common Equity Ratio | 10.30% | 10.01% | 10.02% |
Leverage Ratio | 10.54% | 10.34% | 10.38% |
Common Equity Tier 1 Ratio (CET -1) | 11.35% | 10.93% | 10.88% |
Tier 1 Ratio | 11.42% | 11.04% | 11.13% |
Risk Based Capital Ratio | 13.81% | 13.40% | 12.39% |
Bank Level Capital Ratios
Q4 2019 | Q3 2019 | Q4 2018 | ||
Leverage Ratio | 12.39% | 12.20% | 11.06% | |
Common Equity Tier 1 Ratio (CET -1) | 13.43% | 13.01% | 11.87% | |
Tier 1 Ratio | 13.43% | 13.01% | 11.87% | |
Risk Based Capital Ratio | 13.83% | 13.41% | 12.28% | |
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 11 |
ATTRACTIVE DEPOSIT PORTFOLIO
88% non-maturity deposit composition with 43% in non-interest bearing reflects strong client relationship-based business model
Interest-Bearing
Demand
7%
Certificates
of Deposit,
12%
Money Market & | Non-interest Bearing |
Savings | |
38% | Demand |
43% |
As of | Cost of | |||||||||||
(dollars in thousands) | 12/31/2019 | Deposits(1) | ||||||||||
Deposits | $ | 3,857,660 | 0.00% | |||||||||
Non-interest bearing demand | ||||||||||||
Interest-bearing demand | 586,019 | 0.45% | ||||||||||
Money market and savings | 3,406,988 | 0.79% | ||||||||||
Total non-maturity deposits | 7,850,667 | 0.38% | ||||||||||
Retail certificates of deposit | 973,465 | 1.70% | ||||||||||
Wholesale brokered certificates of deposit | 74,377 | 2.42% | ||||||||||
Total certificates of deposit | 1,047,842 | 1.83% | ||||||||||
Total deposits | $ | 8,898,509 | 0.58% | |||||||||
1. Quarterly average cost
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 12 |
LOAN PORTFOLIO COMPOSITION
Well diversified, high yielding commercial loan portfolio
Farmland | |||
1-4 Family | 2% | Other | |
3% | 1% | ||
Const. & | |||
Land | Commercial and | ||
5% | Industrial | ||
14% | |||
Multi-family | Commercial Owner | ||
18% | |||
Occupied | |||
19% | |||
Commercial Non- | Franchise | ||
owner Occupied | |||
11% | |||
24% | |||
Agribusiness | SBA | ||
1% | 2% |
1. As of 12/31/19 and excluding the impact of fees, discounts and premiums
As of | Weighted | ||||||||||||||||||
(dollars in thousands) | 12/31/2019 | Average Rates(1) | |||||||||||||||||
Business loans | 5.22% | ||||||||||||||||||
Commercial and industrial | $1,265,185 | ||||||||||||||||||
Franchise | 916,875 | 5.58% | |||||||||||||||||
Commercial owner occupied | 1,674,092 | 4.85% | |||||||||||||||||
SBA | 175,815 | 6.82% | |||||||||||||||||
Agribusiness | 127,834 | 4.92% | |||||||||||||||||
Total business loans | $4,159,801 | 5.21% | |||||||||||||||||
Real estate loans | |||||||||||||||||||
Commercial non-owner occupied | $2,072,374 | 4.61% | |||||||||||||||||
Multi-family | 1,576,870 | 4.30% | |||||||||||||||||
One-to-four family | 254,779 | 4.78% | |||||||||||||||||
Construction | 410,065 | 5.99% | |||||||||||||||||
Farmland | 175,997 | 4.71% | |||||||||||||||||
Land | 31,090 | 5.45% | |||||||||||||||||
Total real estate loans | $4,521,175 | 4.65% | |||||||||||||||||
Consumer loans | $50,922 | 3.97% | |||||||||||||||||
Gross loans held for investment | $8,731,898 | 4.91% | |||||||||||||||||
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 13 |
HIGH QUALITY LOAN PORTFOLIO
Diversified across the spectrum of business types with a high level of granularity
Distribution of C&I Portfolio by Industry (1)
15% | 10% | Construction, 10% | |||
Real Estate, and Rental and Leasing, 10% | |||||
10% | Manufacturing, 11% | ||||
6% | |||||
Health Care and Social Assistance, 10% | |||||
8% | Finance and Insurance, 7% | ||||
10% | Other Services (except Public Administration), 9% | ||||
6% | Retail Trade, 9% | ||||
Professional, Scientific, and Technical Services, 6% | |||||
10% | |||||
Accommodation and Food Services, 8% | |||||
9% | |||||
Wholesale Trade, 6% | |||||
9% | 7% | ||||
All Other, 15% | |||||
CRE Property Type as a Percent of Total CRE
1 Distribution by North American Industry Classification System (NAICS)
Includes C&I, Owner Occupied CRE, SBA and Agribusiness loans. Excludes Franchise loans.
Geographic Distribution of Loan Portfolio
2% | California, 75% | ||
6% | Texas, 2% | ||
2% | Arizona, 6% | ||
4% | 1% | Nevada, 2% | |
75% | 1% | Washington/Oregon, 4% | |
9% | New York, 1% |
New Jersey, 1%
Other, 9%
- California peer group consists of all insured California institutions, from SNL Financial. © 2019 Pacific Premier Bancorp, Inc. | All rights reserved
Distribution of Franchise Concepts
Domino's | Other | ||
Pizza | |||
19% | |||
3% | Burger King | ||
Jack In The | 20% | ||
Box | |||
3% | |||
Denny's | Dunkin | ||
15% | |||
3% | |||
Zaxby's Real | Sonic | ||
Chicken | |||
Wendy's | Drive-In | ||
4% | |||
5% | KFC | 12% | |
Popeyes | 9% | ||
7% |
*Other category includes 19 different concepts, none of which represents more than 3%
14
CREDIT RISK MANAGEMENT
The Company has a long running history of outperforming peers on asset quality
- Loan delinquencies to loans held for investment of 0.22% as of 12/31/2019
- Nonperforming assets to total assets of 0.08% at 12/31/2019
Nonperforming Assets to Total Assets Comparison
PPBI | Peers * |
5.00 | ||||||||||||||||||||||||||||||||||||||||||||||
4.50 | 4.11 | 4.26 4.30 4.24 4.39 4.23 4.29 | ||||||||||||||||||||||||||||||||||||||||||||
3.96 | 4.06 4.04 | |||||||||||||||||||||||||||||||||||||||||||||
4.00 | 3.77 | |||||||||||||||||||||||||||||||||||||||||||||
3.62 | 3.48 3.39 | |||||||||||||||||||||||||||||||||||||||||||||
3.50 | CNB | 3.26 | 3.21 | |||||||||||||||||||||||||||||||||||||||||||
3.00 | 2.93 | Acquisition | 2.96 | |||||||||||||||||||||||||||||||||||||||||||
2/11/11 | PDNB | |||||||||||||||||||||||||||||||||||||||||||||
2.50 | Acquisition | |||||||||||||||||||||||||||||||||||||||||||||
4/27/12 | ||||||||||||||||||||||||||||||||||||||||||||||
2.00 | 1.70 1.58 1.66 | 1.36 | 1.62 | 1. | 1.56 | |||||||||||||||||||||||||||||||||||||||||
1.50 | 1.31 | 1.24 1.10 1.18 | ||||||||||||||||||||||||||||||||||||||||||||
1.08 | ||||||||||||||||||||||||||||||||||||||||||||||
1.04 | 1.05 0.91 0.80 0.74 0.69 | |||||||||||||||||||||||||||||||||||||||||||||
1.00 | 0.76 | 0.74 | ||||||||||||||||||||||||||||||||||||||||||||
0.48 0.58 | 0.38 0.33 0.21 | 0.59 0.58 | 0.53 0.48 0.50 0.49 0.46 0.44 0.42 0.41 0.42 0.41 | 0.36 | 0.38 0.37 0.33 | |||||||||||||||||||||||||||||||||||||||||
0.50 | 0.20 0.20 | 0.21 | 0.19 | |||||||||||||||||||||||||||||||||||||||||||
0.40 | 0.55 | 0.15 | 0.14 | 0.12 0.12 | 0.17 | |||||||||||||||||||||||||||||||||||||||||
0.18 0.18 | 0.13 | 0.17 | 0.04 | 0.02 0.01 0.01 | 0.11 | 0.08 | 0.07 | 0.04 | 0.11 | 0.07 0.07 0.08 | ||||||||||||||||||||||||||||||||||||
- | 0.04 | |||||||||||||||||||||||||||||||||||||||||||||
1Q '09 | 2Q '09 | 3Q '09 | 4Q '09 | 1Q '10 | 2Q '10 | 3Q '10 | 4Q '10 | 1Q '11 | 2Q '11 | 3Q '11 | 4Q '11 | 1Q '12 | 2Q '12 | 3Q '12 | 4Q '12 | 1Q '13 | 2Q '13 | 3Q '13 | 4Q '13 | 1Q '14 | 2Q '14 | 3Q '14 | 4Q '14 | 1Q '15 | 2Q '15 | 3Q '15 | 4Q '15 | 1Q'16 | 2Q'16 | 3Q'16 | 4Q'16 | 1Q'17 | 2Q'17 | 3Q'17 | 4Q'17 | 1Q'18 | 2Q'18 | 3Q'18 | 4Q'18 | 1Q'19 | 2Q'19 | 3Q'19 | 4Q'19 | |||
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 15 |
ASSET QUALITY MEASURES
Highly disciplined credit risk management, proactive loss mitigation strategies
- Well-positionedto absorb the anticipated CECL transitionary impact
- Anticipated ACL will increase $45 to $60 million from year-end 2019 levels in 1Q 2020
Total Delinquent Loans to Loans Held for Investment
1.00%
0.80%
0.60%
0.40% | |||||
0.20% | 0.15% | 0.18% | 0.15% | 0.13% | 0.22% |
0.00% | |||||
4Q'18 | 1Q'19 | 2Q'19 | 3Q'19 | 4Q'19 | |
Annualized Net Charge Offs to Average Loans
1.00%
0.80%
0.60%
0.40% | |||||
0.20% | 0.16% | 0.11% | |||
0.01% | 0.06% | ||||
0.01% | |||||
0.00% | |||||
4Q'18 | 1Q'19 | 2Q'19 | 3Q'19 | 4Q'19 | |
Nonperforming Loans to Loans Held for Investment | Allowances for Loan Losses + Discount to Loans Held for Investment | |
0.50%
0.40%
0.30%
0.20%0.15%
0.10% | 0.05% | 0.09% | 0.09% | 0.10% | |
0.00% | |||||
4Q'18 | 1Q'19 | 2Q'19 | 3Q'19 | 4Q'19 | |
1.20% | 1.10% | 1.07% | 0.99% | 0.93% | |||||||
1.00% | 0.88% | ||||||||||
0.80% | |||||||||||
0.60% | 0.41% | 0.43% | 0.40% | 0.41% | |||||||
0.40% | 0.40% | ||||||||||
0.20% | |||||||||||
0.00% | |||||||||||
4Q'18 | 1Q'19 | 2Q'19 | 3Q'19 | 4Q'19 | |||||||
ALLL to LHFI | ALLL + Discount Acquired Loans to LHFI | ||||||||||
Notes: | |
At December 31, 2019, 37% of loans held for investment include a fair value net discount of $40.7 million or 0.47% of loans held for investment. | 16 |
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved |
CRE TO CAPITAL CONCENTRATION RATIO
Experience in managing CRE concentrations well in excess of 300%
• CRE concentrations are well-managed across the organization, and semi annually stress tested
CRE as a Percent of Total Capital
1000%
800%
600%
400%
200%
0%
Annualized Net Charge-Offs(1)
Commercial Real Estate | 0.10% |
Multi-Family | 0.05% |
627% | Decreased | Managed Growth | |||||
499% | |||||||
Grandpoint | |||||||
415% 372% | 310% 349% 316% 336% 362% 352% 365% 376% 389% | Acquisition | |||||
340% 336% | 356% 341% 342% 332% 326% | 306% | |||||
287% 287% 275% |
2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'19 4Q'19 |
1. January 1, 2009 - September 30, 2019
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 17 |
EXPANDING OUR CAPABILITIES
Key business initiatives enhancing products and processes to drive additional revenue and balance sheet growth
Technology Enabled Business Development
Significant investment in customizing the Salesforce platform
- Manage and monitor all facets of client relationship
- Enhanced analytics to consistently drive lead generation and new client acquisition
- Robust monitoring and reporting capabilities
- Productivity tracking and performance management
Product Enhancements
Foreign | • Expanded International Banking Group | |
• Streamlined Foreign Currency Processing | ||
Currency | ||
• | Improved Client Experience | |
• | M&A Transactions | |
• | Capital Investments | |
Third Party | • | Contractor Retention |
• | Disbursement/Fund Control | |
Escrow | ||
• | Qualified Escrow Accounts | |
• | Large Asset Acquisition | |
• | Dissolution of Assets | |
• Enhanced Account Analysis Platform | ||
Treasury | • | Expanded Lockbox Services |
• | Improved ACH Capabilities | |
Management | ||
• | Invoice to Pay | |
• | Check Printing Service |
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 18 |
PACIFIC PREMIER API BANKINGSM & DATAVAULT®
Modernizing the exchange of data between clients and the Bank
- Pacific Premier API Banking allows software developers, corporate clients, and FinTechs to partner with Pacific Premier to create powerful applications and long lasting relationships
Technology Advancements
Industry Accounting Platforms
Pacific Premier Bank | Pacific Premier Bank | Expanded Market | ||||
Data Services | DataVault® API | Opportunities | ||||
• | Core Banking Services | • | HOA Software Partners | |||
• | Check Images | FinTech Application | • | FinTech Partners | ||
• | Statement Images | • | Accounting Software | |||
• | Transaction Details | Partners | ||||
• | Account Transfers | • | Subscription Companies | |||
• | Electronic Payments | • | Healthcare | |||
• | Alternate lending models | |||||
Corporate Clients | ||||||
Data flows through Bank systems to reach the client securely and directly | ||||||
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 19 |
ENVIRONMENTAL, SOCIAL, GOVERNANCE
Corporate giving and responsibility is a pillar of our business culture
2019 Highlights(1):
#1 Rating
ISS Composite QualityScore for
Governance
$2,961,972
Charitable Community Support
5,196
Volunteer Hours
2019 Recycling
465,765 233
Pounds Tons
1. Data from 1/1/2019-12/31/2019
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved
We believe in doing our part to strengthen our communities through responsible employee business practices, robust corporate governance and shareholder friendly policies.
Our employees are leaders working with our 300+ community partners:
Serve on Boards | Provide financial and | Promote community |
and committees | technical expertise | development missions |
By shredding | 3,959 | 466 |
Trees | Barrels of Oil | |
and recycling | 699 | 1,630,176 |
we have saved: | ||
Cubic Yards | Gallons of Water |
of Landfill
20
Acquisition of Opus Bank
TRANSACTION HIGHLIGHTS
Transformative | • | ~$20 billion in pro forma assets - will become the 6th largest bank in Western U.S.1 |
Merger | • Greater operational scale and increased efficiencies | |
Geographic | • Geographic footprint in some of the most attractive metropolitan markets in the Western U.S. | |
Fit and Scale | ||
Complementary | • Diversification of business lines, products and services as well as deposit base and clients | |
Combination | • Specialty lines of business from Opus, including multifamily, trust (PENSCO) and escrow (Commerce Escrow) | |
• Trust and escrow provide $2.0 billion in deposits with a blended deposit cost of 0.10% | ||
Financially | • Double-digit EPS accretion of 14% in 2021 | |
Attractive | • Tangible book value dilution of 2.8%, or $0.53 per share, with an earnback period of 1.8 years | |
• Cost savings estimated at 25% | ||
• Merger consideration is 138.4% Price / Tangible Book Value per share for Opus | ||
• 14.7x price / EPS (2021E), or 8.7x including fully-phased in cost savings | ||
Consideration | • | 100% stock |
• 0.90x shares of PPBI common stock for each share of Opus stock - fixed exchange ratio, no caps or collars | ||
• 34.7 million shares issued to holders of Opus common stock, as-converted preferred stock, and restricted stock awards | ||
Transaction | • | $1.0 billion in aggregate consideration |
Value2 | • | $26.82 per share consideration |
Note: Financial information as of 12/31/2019 and market data as of 1/31/2020
- Rank based on company headquarters and total assets, excluding CCAR and ethnic focused institutions. Western U.S. includes CA, OR, WA, NV and AZ
- Includes consideration for common shareholders, preferred stock holders, stock options, warrants and restricted stock awards
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 22 |
OVERVIEW OF OPUS BANK
Overview | Branch Network |
- Opus is a commercial bank headquartered in Irvine, California with $8.0 billion in assets, $5.9 billion in loans and $6.5 billion in deposits
Business Lines
- Opus is one of the leading multifamily lenders in the Western U.S.
- Full suite of commercial banking products focused on small to middle market businesses, including C&I, owner-occupied CRE, and SBA loans
- PENSCO is a wholly-owned subsidiary of Opus and IRA custodian for alternative assets offering attractive, low-cost deposit funding and fee income
- Commerce Escrow division is a Los Angeles-based escrow company and 1031 exchange accommodator - increasing specialty deposit capability and fee income
Branch Footprint
• 7 of 9 geographic regions will rank in top-10 for deposit market share1
16 Washington
Primarily in Seattle MSA (15)
1 Oregon
Portland
3 | Northern California |
San Francisco (3) | |
25 | Southern California |
Los Angeles-Orange (20) | |
San Diego (3) | |
Riverside-San Bernardino (2) | |
1 | Arizona |
Scottsdale |
Mitigated Risk
- Simplified business model over the last few years - de-risked balance sheet
- Management exited Enterprise Value Loans, Healthcare Practice Loans, and Technology Banking
Note: All dollars in millions. Financial information as of 12/31/2019
1. Rank excludes CCAR designated banks and foreign owned subsidiaries
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved
Pro Forma Deposits by Region
Top-10 | % of | |||
Region | Branches | Rank1 | Deposits ($B) | Total |
Los Angeles-Orange MSA | 32 | $9.1 | 60% | |
Central Coast California3 | 11 | $1.8 | 12% | |
Riverside-San Bernardino MSA | 11 | $1.3 | 8% | |
Seattle MSA3 | 16 | $1.2 | 8% | |
San Diego MSA | 8 | $0.8 | 5% | |
Arizona | 4 | $0.6 | 4% | |
Portland MSA | 2 | $0.2 | 1% | |
Las Vegas MSA | 1 | $0.1 | 1% | |
San Francisco MSA | 3 | $0.1 | 1% | |
Total | 88 | $15.2 | 100% |
23
DIVERSIFYING PPBI'S REVENUE STREAM
Non-Interest Income ($MM)
$100 | 0.41% | 0.45% | ||||||||
$90 | 0.40% | |||||||||
$80 | ||||||||||
$79 | 0.35% | |||||||||
$70 | ||||||||||
$60 | 0.26% | 0.30% | ||||||||
$50 | ||||||||||
$50 | 0.25% | |||||||||
$40 | ||||||||||
$30 | $30 | 0.20% | ||||||||
$20 | 0.15% | |||||||||
$10 | ||||||||||
$- | 0.10% | |||||||||
PPBI | OPB | Pro Forma (1) | ||||||||
Non-Interest Income | Non-Interest Income / Avg. Assets | |||||||||
- 2.6x increase in PPBI's pro forma non-interest income to ~$79 million
- 12% of pro forma operating revenue from non-interest income
- $2.0 billion in deposits with a blended deposit cost of 0.10% from PENSCO and Commerce Escrow divisions
- Meaningful opportunities to expand both lines of business over time
Specialized Lines of Business
Pro Forma Operating Revenue | Opus Non-Interest Income Mix | |||||||||
(% of Total) | (% of Total) | |||||||||
30.0% | PENSCO | Gain on | ||||||||
24% | Fees | |||||||||
25.0% | 56% | Sale | ||||||||
2% | ||||||||||
20.0% | $50MM | |||||||||
15.0% | 12% | BOLI | ||||||||
10.0% | 7% | 8% | ||||||||
5.0% | Escrow & | Other | ||||||||
Exchange | Deposit Fees | |||||||||
0.0% | 10% | |||||||||
PPBI | OPB | Pro | 12% | 12% | ||||||
Forma (1) | ||||||||||
Note: All dollars in millions. Financial information for twelve months ended 12/31/2019
PENSCO Trust
A division of Opus Bank
- IRA custodian for alternative assets, such as private equity or real estate held in retirement accounts
- $14 billion in assets under custody
- 46,000 customer accounts
- Stable source of low-cost core deposits
- $28 million in fee income for 2019
- Acquired by Opus in 2016
Commerce Escrow
A division of Opus Bank
- Escrow company with 1031 exchange practice
- Synergies with PPBI's existing escrow deposit business
- Provides the bank with $650 million in deposits at 0.25% cost of funds
- $6 million in fee income for 2019
- Acquired by Opus in 2015
1. Pro forma includes $1.0 million reduction in interchange fees due to Durbin Amendment © 2019 Pacific Premier Bancorp, Inc. | All rights reserved
24
ATTRACTIVE FUNDING PROFILE
IB Demand 7%
IB | |||||||
MMDA & | Demand | MMDA & | |||||
41% | |||||||
NIB | Savings | ||||||
Savings | |||||||
34% | |||||||
Demand | 38% | ||||||
43% | |||||||
Time Deposits | NIB | Time Deposits | |||||
Demand | |||||||
13% | |||||||
12% | 12% | ||||||
Total Deposits: $8.9 Billion | Total Deposits: $6.5 Billion | ||||||
Cost of Deposits: 0.58% | Cost of Deposits: 1.01% |
Pro Forma
IB
Demand
21%
MMDA &
Savings
NIB36% Demand
30%
Time Deposits
12%
Total Deposits: $15.4 Billion
Cost of Deposits: 0.76%
• | $2.0 billion in deposits with a blended deposit cost of | • | Greater deposit diversification |
0.10% from PENSCO and Commerce Escrow divisions | |||
• | Ability to run-off and replace Opus' higher-cost funding | • | Strong pro forma core deposit franchise |
with core deposits at PPBI | |||
Note: S&P Global Market Intelligence, financial information as of 12/31/2019 | |
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 25 |
DIVERSIFIED LOAN PORTFOLIO
NOO-CRE | OO-CRE | ||||||||||
19% | |||||||||||
24% | Multifamily | ||||||||||
NOO-CRE | |||||||||||
64% | |||||||||||
C&I + | 13% | ||||||||||
Multifamily | Franchise | ||||||||||
25% | OO-CRE | ||||||||||
18% | C&I | ||||||||||
5% | |||||||||||
Farm & Ag. | 15% | ||||||||||
1-4 Family | |||||||||||
3% | 3% | 1-4 Family | |||||||||
Construction & Land | Consumer & | 1% | Consumer & | ||||||||
5% | Other | ||||||||||
SBA | Construction & Land | ||||||||||
Other | |||||||||||
2% | 1% | 1% | SBA | 0% | |||||||
1% | |||||||||||
Gross Loans: $8.7 Billion | Gross Loans: $5.9 Billion | ||||||||||
Loan Yield: 5.44% | Loan Yield: 4.13% | ||||||||||
NPAs/Assets: 0.08% | NPAs/Assets: 0.07% |
Pro Forma
NOO-CRE
20%
OO-CRE
13%
Multifamily
37%C&I + Franchise
21%
1-4 Family | Farm & Ag. | |
2% | ||
Construction & Land | 2% | |
SBA | Consumer & Other | |
3% | ||
1% | 0% | |
Gross Loans: $14.6 Billion
Loan Yield: 4.92%
NPAs/Assets: 0.08%
- Attractive credit quality and risk adjusted returns on loan portfolio
- Diversifies portfolio concentrations across type, geography and industry
- Differentiated specialty lending verticals and expertise
- Continuing momentum to grow middle-market banking practice - will benefit from larger pro forma balance sheet
- Multifamily loans are geographically diversified in West Coast metropolitan areas
- Right-sizeconcentration in multifamily; PPBI has 20+ year history in multifamily lending
Note: S&P Global Market Intelligence, financial information as of 12/31/2019 | |
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 26 |
INSTITUTIONAL OWNERSHIP
OPB Ownership, | PPBI Ownership, | PPBI Ownership, | |||||||
Pre-Deal | PPBI Shares | Pre-Deal | Pro Forma | ||||||
Rank | Name | Shares | % Own* | Issued | Shares | % Own | Shares | % Own | |
1 | BlackRock Inc. | 3,512,229 | 9.1% | 3,161,006 | 8,740,229 | 14.7% | 11,901,235 | 12.6% | |
2 | Vanguard Group Inc. | 1,587,721 | 4.1% | 1,428,949 | 6,222,334 | 10.5% | 7,651,283 | 8.1% | |
3 | Dimensional Fund Advisors LP | 2,765,538 | 7.2% | 2,488,984 | 3,277,962 | 5.5% | 5,766,946 | 6.1% | |
4 | Janus Henderson Group PLC | - | - | - | 4,623,366 | 7.8% | 4,623,366 | 4.9% | |
5 | Fortress Investment Group LLC* | 5,121,275 | 13.3% | 4,609,148 | - | - | 4,609,148 | 4.9% | |
6 | T. Rowe Price Group Inc. | - | - | - | 3,614,106 | 6.1% | 3,614,106 | 3.8% | |
7 | Elliott Management Corp. | 3,620,950 | 9.4% | 3,258,855 | - | - | 3,258,855 | 3.5% | |
8 | Starwood Capital Operations LLC | 3,390,250 | 8.8% | 3,051,225 | - | - | 3,051,225 | 3.2% | |
9 | State Street Global Advisors Inc. | 834,351 | 2.2% | 750,916 | 2,054,630 | 3.5% | 2,805,546 | 3.0% | |
10 | FJ Capital Management LLC | 1,618,354 | 4.2% | 1,456,519 | 937,000 | 1.6% | 2,393,519 | 2.5% | |
11 | Aristotle Capital Boston LLC | 2,179,867 | 5.7% | 1,961,880 | - | - | 1,961,880 | 2.1% | |
12 | Columbia Management Investment Advisers LLC | 919,801 | 2.4% | 827,821 | 1,004,430 | 1.7% | 1,832,251 | 1.9% | |
13 | Emerald Advisers LLC | - | - | - | 1,680,381 | 2.8% | 1,680,381 | 1.8% | |
14 | Goldman Sachs Asset Management LP | 112,160 | 0.3% | 100,944 | 1,190,699 | 2.0% | 1,291,643 | 1.4% | |
15 | Manulife Asset Management | - | - | - | 1,212,353 | 2.0% | 1,212,353 | 1.3% | |
16 | Cardinal Capital Management L.L.C. | - | - | - | 1,180,244 | 2.0% | 1,180,244 | 1.3% | |
17 | RBC Global Asset Management Inc. | 471,927 | 1.2% | 424,734 | 713,721 | 1.2% | 1,138,455 | 1.2% | |
18 | Northern Trust Global Investments | 294,247 | 0.8% | 264,822 | 862,296 | 1.4% | 1,127,118 | 1.2% | |
19 | Geode Capital Management LLC | 313,151 | 0.8% | 281,836 | 790,036 | 1.3% | 1,071,872 | 1.1% | |
20 | BNY Asset Management | 324,748 | 0.8% | 292,273 | 758,349 | 1.3% | 1,050,622 | 1.1% | |
21 | Brown Advisory Inc. | - | - | - | 1,033,703 | 1.7% | 1,033,703 | 1.1% | |
22 | Endeavour Capital Advisors Inc. | 1,028,268 | 2.7% | 925,441 | - | - | 925,441 | 1.0% | |
23 | GW&K Investment Management LLC | - | - | - | 881,010 | 1.5% | 881,010 | 0.9% | |
24 | Stieven Capital Advisors LP | 396,579 | 1.0% | 356,921 | 521,042 | 0.9% | 877,963 | 0.9% | |
25 | Principal Global Investors LLC | 170,684 | 0.4% | 153,616 | 503,648 | 0.8% | 657,264 | 0.7% | |
Source: S&P Global Market Intelligence. Ownership data as of 9/30/2019 company filings. *Includes conversion of preferred stock and vesting of restricted stock
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 27 |
SCARCITY VALUE IN SOUTHERN CALIFORNIA
PPBI is the 3rd largest publicly traded bank headquartered in Southern California(1)
Total | Market | Price to | Price to | ||||||||
Assets | Cap. | Earnings | TBV | ||||||||
Company Name | State | Ticker | Exchange | ($M) | ($M) | (x) | (%) | ||||
1 | PacWest Bancorp | CA | PACW | NASDAQ | $26,771 | $4,311 | 9.4 | 185 | |||
2 | Pro Forma PPBI+Opus Bank (2) | CA | PPBI | NASDAQ | 19,682 | -- | -- | -- | |||
2 | Axos Financial Inc. | NV | AX | NYSE | 12,269 | 1,758 | 10.9 | 171 | |||
3 | Pacific Premier Bancorp, Inc. | CA | PPBI | NASDAQ | 11,776 | 1,810 | 11.0 | 161 | |||
4 | CVB Financial Corp. | CA | CVBF | NASDAQ | 11,282 | 3,061 | 14.8 | 238 | |||
5 | Opus Bank | CA | OPB | NASDAQ | 7,992 | 1,001 | 17.0 | 142 | |||
6 | Banc of California, Inc. | CA | BANC | NYSE | 7,828 | 852 | NM | 129 | |||
7 | Farmers & Merchants Bank of Long Beach | CA | FMBL | OTCQB | 7,606 | 999 | 11.9 | 92 | |||
8 | First Foundation Inc. | CA | FFWM | NASDAQ | 6,314 | 766 | 13.7 | 148 | |||
9 | American Business Bank | CA | AMBZ | OTCQX | 2,402 | 283 | 13.2 | 137 | |||
10 | Pacific Mercantile Bancorp | CA | PMBC | NASDAQ | 1,416 | 166 | 29.4 | - | |||
11 | Malaga Financial Corporation | CA | MLGF | OTC Pink | 1,248 | 168 | 11.0 | - | |||
12 | Provident Financial Holdings, Inc. | CA | PROV | NASDAQ | 1,107 | 167 | 30.9 | 135 | |||
Median | $7,828 | $925 | 13.2 | 145 | |||||||
Market data as of February 6, 2020. Financial data for the most recently reported quarter. Peer P/E ratio uses LTM EPS. | |||||||||||
Source: SNL Financial | |||||||||||
1. | Defined as banks with shares listed on the NYSE, NASDAQ or OTC exchanges, excludes ethnically focused banking institutions sorted by total assets | ||||||||||
2. | Total assets shown as of pro forma December 31, 2019 and are inclusive of merger adjustments | 28 | |||||||||
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved |
SCARCITY VALUE IN THE WESTERN U.S.
Listed below are banks headquartered in the West with assets between $5B and $25B(1)
- PPBI ranks 3rd when measured by total assets for banks headquartered in Southern California… and 9th more broadly across the continental Western U.S.
Total | Market | Price to | Price to | |||||
Assets | Cap. | Earnings | TBV | |||||
Company Name | State | Ticker | Exchange | ($M) | ($M) | (x) | (%) | |
1 | Western Alliance Bancorporation | AZ | WAL | NYSE | $26,822 | $5,906 | 12.0 | 219 |
2 | PacWest Bancorp | CA | PACW | NASDAQ | 26,771 | 4,311 | 9.4 | 185 |
3 | Pro Forma PPBI+Opus Bank (2) | CA | PPBI | NASDAQ | 19,682 | -- | -- | -- |
3 | Washington Federal, Inc. | WA | WAFD | NASDAQ | 16,423 | 2,728 | 12.5 | 157 |
4 | First Interstate BancSystem, Inc. | MT | FIBK | NASDAQ | 14,644 | 1,713 | 14.1 | 199 |
5 | Columbia Banking System, Inc. | WA | COLB | NASDAQ | 14,080 | 2,877 | 15.1 | 214 |
6 | Glacier Bancorp, Inc. | MT | GBCI | NASDAQ | 13,684 | 4,123 | 18.8 | 286 |
7 | Banner Corporation | WA | BANR | NASDAQ | 12,604 | 1,963 | 13.2 | 165 |
8 | Axos Financial Inc. | NV | AX | NYSE | 12,269 | 1,758 | 10.9 | 171 |
9 | Pacific Premier Bancorp, Inc. | CA | PPBI | NASDAQ | 11,776 | 1,810 | 11.0 | 161 |
10 | CVB Financial Corp. | CA | CVBF | NASDAQ | 11,282 | 3,061 | 14.8 | 238 |
11 | Opus Bank | CA | OPB | NASDAQ | 7,992 | 1,001 | 17.0 | 142 |
12 | Banc of California, Inc. | CA | BANC | NYSE | 7,828 | 852 | NM | 129 |
13 | HomeStreet, Inc. | WA | HMST | NASDAQ | 6,812 | 768 | 49.4 | 119 |
14 | Westamerica Bancorporation | CA | WABC | NASDAQ | 5,620 | 1,808 | 22.4 | 297 |
Median | $12,604 | $1,887 | 14.1 | 178 | ||||
Market data as of February 6, 2020. Financial data for the most recently reported quarter. Peer P/E ratio uses LTM EPS.
Source: SNL Financial
- Defined as banks headquartered in AZ, CA, ID, OR, MT, WA and WY with shares listed on the NYSE or NASDAQ exchanges, excludes ethnically focused banking institutions, sorted by total assets
- Total assets shown as of pro forma December 31, 2019 and are inclusive of merger adjustments
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 29 |
KEY INVESTMENT HIGHLIGHTS
Building Long-term Franchise Value
- Proven track record of executing on acquisitions and organic growth
- Continuous improvement to drive economies of scale and operating leverage
- Strong profitability and returns drive capital return to shareholders
- Accelerating capital generation and growing dividend - enhancing shareholder value
- ~$20 billion asset franchise with meaningful presence in desirable Western U.S. metropolitan markets
- Expanded strategic flexibility for technology investment, organic growth and acquisition opportunities
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 30 |
Appendix Material
CONSOLIDATED QUARTERLY FINANCIAL HIGHLIGHTS
December 31, | March 31, | June 30, | September 30, | December 31, | ||||
2018 | 2019 | 2019 | 2019 | 2019 | ||||
Summary Balance Sheet | ||||||||
Total Assets | $11,487,387 | $11,580,495 | $11,783,781 | $11,811,497 | $11,776,012 | |||
Loans Held for Investment | 8,836,818 | 8,865,855 | 8,771,938 | 8,757,476 | 8,722,311 | |||
Total Deposits | 8,658,351 | 8,715,175 | 8,861,922 | 8,859,288 | 8,898,509 | |||
Loans Held for Investment/Total Deposits | 102.1% | 101.7% | 99.0% | 98.9% | 98.0% | |||
Summary Income Statement | ||||||||
Total Revenue | $124,516 | $119,087 | $116,965 | $123,765 | $122,720 | |||
Total Noninterest Expense | 67,239 | 63,577 | 63,936 | 65,336 | 66,216 | |||
Provision for Credit Losses | 2,258 | 1,526 | 334 | 1,562 | 2,297 | |||
Net Income | 39,643 | 38,718 | 38,527 | 41,375 | 41,098 | |||
Diluted EPS | $0.63 | $0.62 | $0.62 | $0.69 | $0.69 | |||
Performance Ratios | ||||||||
Return on Average Assets (4) | 1.37% | 1.34% | 1.33% | 1.44% | 1.42% | |||
Return on Average Tangible Common Equity (4) | 16.7% | 15.5% | 15.2% | 16.3% | 15.9% | |||
Efficiency Ratio (1)* | 48.3% | 49.3% | 51.1% | 50.9% | 51.9% | |||
Net Interest Margin | 4.49% | 4.37% | 4.28% | 4.36% | 4.33% | |||
Asset Quality | ||||||||
Delinquent Loans to Loans Held for Investment | 0.15% | 0.18% | 0.15% | 0.13% | 0.22% | |||
Allowance for Loan Losses to Loans Held for Investment | 0.41% | 0.43% | 0.40% | 0.40% | 0.41% | |||
Nonperforming Loans to Loans Held for Investment | 0.05% | 0.15% | 0.09% | 0.09% | 0.10% | |||
Nonperforming Assets to Total Assets (2) | 0.04% | 0.11% | 0.07% | 0.07% | 0.08% | |||
Classified Assets to Total Risk-Based Capital (3) | 4.98% | 4.03% | 2.81% | 2.96% | 3.34% | |||
Classified Assets to Total Assets (3) | 0.54% | 0.44% | 0.32% | 0.33% | 0.39% | |||
Capital Ratios | ||||||||
Tangible Common Equity/Tangible Assets * | 10.02% | 10.32% | 9.96% | 10.01% | 10.30% | |||
Tangible Book Value Per Share * | $16.97 | $17.56 | $17.92 | $18.41 | $18.84 | |||
Common Equity Tier 1 Risk-based Capital Ratio | 10.88% | 11.08% | 10.82% | 10.93% | 11.35% | |||
Tier 1 Risk-based Ratio | 11.13% | 11.32% | 11.07% | 11.04% | 11.42% | |||
Risk-based Capital Ratio | 12.39% | 12.58% | 13.54% | 13.40% | 13.81% | |||
- Represents the ratio of noninterest expense less other real estate owned operations, core deposit intangible amortization and merger-related expenses to the sum of net interest income before provision for loan losses and total noninterest income, less gain / (loss) on sales of securities, OTTI impairment, gain / (loss) of other real estate owned, and gain / (loss) from debt extinguishment
- Nonperforming assets excludes nonperforming investment securities.
- Classified assets includes substandard loans, doubtful, substandard investment securities, and OREO.
- Annualized
*Please refer to non-U.S. GAAP reconciliation in appendix Note: All dollars in thousands, except per share data
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 32 |
NON-U.S. GAAP
FINANCIAL MEASURES
Tangible common equity to tangible assets (the "tangible common equity ratio") and tangible book value per share are a non-U.S. GAAP financial measures derived from U.S. GAAP-based amounts. We calculate the tangible common equity ratio by excluding the balance of intangible assets from common stockholders' equity and dividing by tangible assets. We calculate tangible book value per share by dividing tangible common equity by common shares outstanding, as compared to book value per common share, which we calculate by dividing common stockholders' equity by common shares outstanding. 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. A reconciliation of the non-U.S. GAAP measure of tangible common equity ratio to the U.S. GAAP measure of common equity ratio and tangible book value per share to the U.S. GAAP measure of book value per share are set forth below.
December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | March 31, | June 30, | September 30, | December 31, |
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2019 | 2019 | 2019 |
Total stockholders' equity Less: Intangible assets
Tangible common equity
Total assets
Less: Intangible assets
Tangible assets
$ | 175,226 | $ | 199,592 | $ | 298,980 | $ | 459,740 | $ | 1,241,996 | $ | 1,969,697 | $ | 2,007,064 | $ | 1,984,456 | $ | 1,988,998 | $ | 2,012,594 |
(24,056) | (28,564) | (58,002) | (111,941) | (536,343) | (909,282) | (904,846) | (900,162) | (895,882) | (891,634) | ||||||||||
$ | 151,170 | $ | 171,028 | $ | 240,978 | $ | 347,799 | $ | 705,653 | $ | 1,060,415 | $ | 1,102,218 | $ | 1,084,294 | $ | 1,093,116 | $ | 1,120,960 |
$ | 1,714,187 | $ | 2,037,731 | $ | 2,789,599 | $ 4,036,311 | $ 8,024,501 | $ 11,487,387 | $ 11,580,495 | $ 11,783,781 | $ 11,811,497 | $ 11,776,012 |
(24,056) | (28,564) | (58,002) | (111,941) | (536,343) | (909,282) | (904,846) | (900,162) | (895,882) | (891,634) | |||
$ | 1,690,131 | $ | 2,009,167 | $ | 2,731,597 | $ 3,924,370 | $ 7,488,158 | $ 10,578,105 | $ 10,675,649 | $ 10,883,619 | $ 10,915,615 | $ 10,884,378 |
Common Equity ratio | 10.22% | 9.79% | 10.72% | 11.39% | 15.48% | 17.15% | 17.33% | 16.84% | 16.84% | 17.09% | |||||||||||||||||||||||||||||
Less: Intangible equity ratio | (1.28%) | (1.28%) | (1.90%) | (2.53%) | (6.06%) | (7.13%) | (7.01%) | (6.88%) | (6.83%) | (6.79%) | |||||||||||||||||||||||||||||
Tangible common equity ratio | 8.86% | 9.42% | 10.02% | 10.32% | 9.96% | 10.01% | 10.30% | ||||||||||||||||||||||||||||||||
8.94% | 8.51% | 8.82% | |||||||||||||||||||||||||||||||||||||
Basic shares outstanding | 16,656,279 | 16,903,884 | 21,570,746 | 27,798,283 | 46,245,050 | 62,480,755 | 62,773,147 | 60,509,994 | 59,364,340 | 59,506,057 | |||||||||||||||||||||||||||||
Book value per share | $ | 10.52 | $ | 11.81 | $ | 13.86 | $ | 16.54 | $ | 26.86 | $ | 31.52 | $ | 31.97 | $ | 32.80 | $ | 33.50 | $ | 33.82 | |||||||||||||||||||
Less: Intangible book value per share | (1.44) | (1.69) | (2.69) | (4.03) | (11.60) | (14.55) | (14.41) | (14.88) | (15.09) | (14.98) | |||||||||||||||||||||||||||||
Tangible book value per share | $ | 17.92 | $ | 18.41 | $ | 18.84 | |||||||||||||||||||||||||||||||||
$ | 9.08 | $ | 10.12 | $ | 11.17 | $ | 12.51 | $ | 15.26 | $ | 16.97 | $ | 17.56 |
Note: All dollars in thousands, except per share data
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 33 |
NON-U.S. GAAP
FINANCIAL MEASURES
For quarter period presented below, adjusted net income and adjusted diluted earnings per share are non-U.S. GAAP financial measures derived from U.S. GAAP-based amounts. We calculate these figures by excluding merger related expenses and DTA revaluations in the period results. Management believes that the exclusion of such items from these financial measures provides useful information to an understanding of the operating results of our core business. For the quarter period presented below, adjusted net income for return on average tangible common equity and average tangible common equity are non-U.S. GAAP financial measures derived from U.S. GAAP-based amounts. We calculate return on average tangible common equity by adjusting net income for the effect of CDI amortization and exclude the average CDI and average goodwill from the average stockholders' equity during the period. We calculate adjusted return on average tangible common equity by adjusting net income for the effect of CDI amortization and merger related expense and exclude the average CDI and average goodwill from the average stockholders' equity during the period. We believe that this 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 adjusted measures, this presentation may not be comparable to other similarly titled adjusted measures reported by other companies. A reconciliation of the non-U.S. GAAP measures of return on average tangible common equity and adjusted return on average tangible common equity to the U.S. GAAP measure of return on common stockholders' equity is set forth below.
March 31, | June 30, | September 30, | December 31, | ||||
2019 | 2019 | 2019 | 2019 | ||||
Net income | $38,718 | $38,527 | $41,375 | $41,098 | |||
Add: Merger-related expense | 655 | 5 | (4) | - | |||
Less: Merger-related expense tax adjustment | 190 | 1 | (1) | - | |||
Operating net income | $39,183 | $38,531 | $41,372 | $41,098 | |||
Less: Net income allocated to participating securities | 347 | 444 | 432 | 426 | |||
Operating net income for earnings per share(2) | $38,836 | $38,087 | $40,940 | $40,672 | |||
Weighted average shares outstanding - diluted | 62,285,783 | 61,661,773 | 59,670,855 | 59,182,054 | |||
Diluted earnings per share | $0.62 | $0.62 | $0.69 | $0.69 | |||
Average assets | $11,563,529 | $11,585,973 | $11,461,841 | $11,577,092 | |||
Operating return on average assets(1) | 1.36% | 1.33% | 1.44% | 1.42% | |||
Operating net income | $39,183 | $38,531 | $41,372 | $41,098 | |||
Add: CDI amortization | 4,436 | 4,281 | 4,281 | 4,247 | |||
Less: CDI amortization expense tax adjustment | 1,288 | 1,240 | 1,240 | 1,218 | |||
Operating net income for return on average tangible common | $42,331 | $41,572 | $44,413 | $44,127 | |||
equity | |||||||
Average stockholders' equity | $1,991,861 | $1,999,986 | $1,990,311 | $2,004,815 | |||
Less: Average core deposit intangible | 98,984 | 94,460 | 90,178 | 85,901 | |||
Less: Average goodwill | 808,726 | 808,778 | 808,322 | 808,322 | |||
Average tangible common equity | $1,084,151 | $1,096,748 | $1,091,811 | $1,110,592 | |||
Operating return on average tangible common equity(1) | 15.62% | 15.16% | 16.27% | 15.89% | |||
Note: All dollars in thousands, except per share data
- Annualized
- EPS presented using the two-class method beginning Q1 2019
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 34 |
NON-U.S. GAAP
FINANCIAL MEASURES
For periods presented below, efficiency ratio is a non-U.S. GAAP financial measure derived from U.S. GAAP-based amounts. This figure 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 loan losses and total noninterest income, less gains/(loss) on sale of securities, OTTI impairment - securities, gain/(loss) on sale of other real estate owned, and gain / (loss) from debt extinguishment. Management believes that the exclusion of such items from this financial measures provides useful information to gain an understanding of the operating results of our core business.
FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 | |||||||||||||||||||||||
Total noninterest expense | $ | 50,815 | $ | 54,993 | $ | 73,538 | $ | 98,583 | $ | 167,958 | $ | 249,905 | $ | 259,065 | |||||||||||||||
Less: CDI amortization | 764 | 75 | 1,350 | 2,039 | 6,144 | 13,594 | 17,245 | ||||||||||||||||||||||
Less: Merger-related expense | 6,926 | 1,014 | 4,799 | 4,388 | 21,002 | 18,454 | 656 | ||||||||||||||||||||||
Less: Other real estate owned operations, net | 618 | 1,490 | 121 | 385 | 72 | 4 | 160 | ||||||||||||||||||||||
Noninterest expense, adjusted | $ | 42,507 | $ | 52,414 | $ | 67,268 | $ | 91,771 | $ | 140,740 | $ | 217,853 | $ | 241,004 | |||||||||||||||
Net interest income | $ | 58,444 | $ | 73,635 | $ | 106,299 | $ | 153,075 | $ | 247,502 | $ | 392,711 | $ | 447,301 | |||||||||||||||
Add: Total noninterest income (loss) | 8,811 | 13,377 | 14,388 | 19,602 | 31,114 | 31,027 | 35,236 | ||||||||||||||||||||||
Less: Net gain (loss) from investment securities | 1,544 | 1,547 | 290 | 1,797 | 2,737 | 1,399 | 8,571 | ||||||||||||||||||||||
Less: OTTI impairment - securities | (4) | (29) | - | (205) | 1 | 4 | 2 | ||||||||||||||||||||||
Less: Net gain (loss) from other real estate owned | - | - | - | - | 46 | 281 | 52 | ||||||||||||||||||||||
Less: Net gain (loss) from debt extinguishment | - | - | - | - | - | - | (612) | ||||||||||||||||||||||
Revenue, adjusted | $ | 65,715 | $ | 85,494 | $ | 120,397 | $ | 171,085 | $ | 275,832 | $ | 422,054 | $ | 474,524 | |||||||||||||||
Efficiency Ratio | 64.7% | 61.3% | 55.9% | 53.6% | 51.0% | 51.6% | 50.8% | ||||||||||||||||||||||
September 30, December 31, | March 31, | June 30, | September 30, December 31, | ||||||||||||||||||||||||||
2018 | 2018 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||||||||||
Total noninterest expense | $ | 82,782 | $ | 67,239 | $ | 63,577 | $ | 63,936 | $ | 65,336 | $ | 66,216 | |||||||||||||||||
Less: CDI amortization | 4,693 | 4,631 | 4,436 | 4,281 | 4,281 | 4,247 | |||||||||||||||||||||||
Less: Merger-related expense | 13,978 | 2,597 | 655 | 5 | (4) | - | |||||||||||||||||||||||
Less: Other real estate owned operations, net | - | 1 | 3 | 62 | 64 | 31 | |||||||||||||||||||||||
Noninterest expense, adjusted | $ | 64,111 | $ | 60,010 | $ | 58,483 | $ | 59,588 | $ | 60,995 | $ | 61,938 | |||||||||||||||||
Net interest income | $ | 112,713 | $ | 117,546 | $ | 111,406 | $ | 110,641 | $ | 112,335 | $ | 112,919 | |||||||||||||||||
Add: Total noninterest income (loss) | 8,240 | 6,970 | 7,681 | 6,324 | 11,430 | 9,801 | |||||||||||||||||||||||
Less: Net gain (loss) from investment securities | 1,063 | - | 427 | 212 | 4,261 | 3,671 | |||||||||||||||||||||||
Less: OTTI impairment - securities | - | - | - | - | 2 | - | |||||||||||||||||||||||
Less: Net gain (loss) from other real estate owned | (6) | 305 | - | 72 | (20) | - | |||||||||||||||||||||||
Less: Net gain (loss) from debt extinguishment | - | - | - | - | (214) | (398) | |||||||||||||||||||||||
Revenue, adjusted | $ | 119,896 | $ | 124,211 | $ | 118,660 | $ | 116,681 | $ | 119,736 | $ | 119,447 | |||||||||||||||||
Efficiency Ratio | 53.5% | 48.3% | 49.3% | 51.1% | 50.9% | 51.9% | |||||||||||||||||||||||
Note: All dollars in thousands | |||||||||||||||||||||||||||||
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 35 |
NON-U.S. GAAP
FINANCIAL MEASURES
Core net interest income and core net interest margin are non-GAAP financial measures derived from GAAP-based amounts. We calculate core net interest income by excluding scheduled accretion income, accelerated accretion income, CD mark-to market amortization and nonrecurring nonaccrual interest paid from net interest income. The core net interest margin is calculated as the ratio of core net interest income to average interest-earning assets. 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.
March 31, | June 30, | September 30, | December 31, | |||||||
2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2019 | 2019 | 2019 | |
Net interest income | $58,444 | $73,635 | $106,299 | $153,075 | $247,502 | $392,711 | $111,406 | $110,641 | $112,335 | $112,919 |
Less accretion income | 3,241 | 1,927 | 4,387 | 9,178 | 12,901 | 16,082 | 3,805 | 4,950 | 6,026 | 5,828 |
Less CD mark-to-market | 139 | 143 | 200 | 411 | 969 | 1,551 | 201 | 124 | 124 | 72 |
Less nonrecurring nonaccrual interest paid | - | - | - | - | - | - | 161 | 107 | 37 | 168 |
Core net interest income | $55,064 | $71,565 | $101,712 | $143,486 | $233,632 | $375,078 | $107,239 | $105,460 | $106,148 | $106,851 |
Average interest-earning assets | $1,399,806 | $1,750,871 | $2,503,009 | $3,414,847 | $5,583,774 | $8,836,075 | $10,339,248 | $10,363,988 | $10,228,878 | $10,347,009 |
Net interest margin | 4.18% | 4.21% | 4.25% | 4.48% | 4.43% | 4.44% | 4.37% | 4.28% | 4.36% | 4.33% |
Core net interest margin | 3.93% | 4.09% | 4.06% | 4.20% | 4.18% | 4.24% | 4.21% | 4.08% | 4.12% | 4.10% |
Note: All dollars in thousands
© 2019 Pacific Premier Bancorp, Inc. | All rights reserved | 36 |
Attachments
- Original document
- Permalink
Disclaimer
Pacific Premier Bancorp Inc. published this content on 12 February 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 February 2020 23:05:03 UTC