UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One) | ||
ý |
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2005
OR
o |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 0-22193
PACIFIC PREMIER BANCORP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE |
| 33-0743196 |
(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
|
|
|
1600 SUNFLOWER AVENUE, 2ND FLOOR, COSTA MESA, CALIFORNIA 92626 | ||
| ||
(714) 431 - 4000 | ||
(Registrant’s telephone number, including area code) | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
ý Yes o No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2) Yes o No ý
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 5,258,738 shares of common stock par value $0.01 per share, were outstanding as of August 15, 2005.
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
FOR THE QUARTER ENDED JUNE 30, 2005
Item 1. Financial Statements.
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
|
| June 30, |
| December 31, |
| ||
|
| (Unaudited) |
|
|
| ||
ASSETS |
|
|
|
|
| ||
Cash and due from banks |
| $ | 3,155 |
| $ | 3,003 |
|
Federal funds sold |
| 18,500 |
| 13,000 |
| ||
Cash and cash equivalents |
| 21,655 |
| 16,003 |
| ||
Investment securities available for sale |
| 36,183 |
| 36,455 |
| ||
Investment securities held to maturity: |
|
|
|
|
| ||
FHLB Stock, at cost |
| 11,230 |
| 8,389 |
| ||
Loans: |
|
|
|
|
| ||
Loans held for sale, net |
| 452 |
| 532 |
| ||
Loans held for investment, net |
| 552,085 |
| 469,822 |
| ||
Accrued interest receivable |
| 2,529 |
| 1,938 |
| ||
Foreclosed real estate |
| 247 |
| 351 |
| ||
Premises and equipment |
| 5,115 |
| 5,244 |
| ||
Income taxes receivable |
| 80 |
| 188 |
| ||
Deferred income taxes |
| 3,894 |
| 3,473 |
| ||
Other assets |
| 999 |
| 729 |
| ||
Total Assets |
| $ | 634,469 |
| $ | 543,124 |
|
|
|
|
|
|
| ||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||
|
|
|
|
|
| ||
LIABILITIES |
|
|
|
|
| ||
Deposit accounts |
|
|
|
|
| ||
Noninterest bearing |
| $ | 16,502 |
| $ | 11,732 |
|
Interest bearing: |
|
|
|
|
| ||
Transaction accounts |
| 62,128 |
| 63,438 |
| ||
Certificates of deposit |
| 219,136 |
| 213,717 |
| ||
Total Deposits |
| 297,766 |
| 288,887 |
| ||
Borrowings |
| 274,426 |
| 196,400 |
| ||
Subordinated debentures |
| 10,310 |
| 10,310 |
| ||
Accrued expenses and other liabilities |
| 4,394 |
| 3,499 |
| ||
Total Liabilities |
| $ | 586,896 |
| $ | 499,096 |
|
|
|
|
|
|
| ||
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
| ||
|
|
|
|
|
| ||
STOCKHOLDERS’ EQUITY |
|
|
|
|
| ||
Common stock, $.01 par value; 15,000,000 shares authorized; 5,258,738 shares issued and outstanding at June 30, 2005 and 5,258,738 shares issued and outstanding at December 31, 2004. |
| $ | 53 |
| $ | 53 |
|
Additional paid-in capital; common stock and warrants |
| 67,553 |
| 67,564 |
| ||
Accumulated deficit |
| (19,592 | ) | (23,280 | ) | ||
Accumulated other comprehensive loss, net of tax of 308 (2005) and $217 (2004) |
| (441 | ) | (309 | ) | ||
Total Stockholders’ Equity |
| $ | 47,573 |
| $ | 44,028 |
|
|
|
|
|
|
| ||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ | 634,469 |
| $ | 543,124 |
|
Accompanying notes are an integral part of these consolidated financial statements.
1
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(UNAUDITED)
|
| For the Three Months Ended |
| For the Six Months Ended |
| ||||
|
| June 30, 2005 |
| June 30, 2004 |
| June 30, 2005 |
| June 30, 2004 |
|
INTEREST INCOME: |
|
|
|
|
|
|
|
|
|
Loans |
| $7,588 |
| $4,643 |
| $14,355 |
| $8,696 |
|
Other interest-earning assets |
| 473 |
| 1,057 |
| 912 |
| 2,269 |
|
Total interest income |
| 8,061 |
| 5,700 |
| 15,267 |
| 10,965 |
|
|
|
|
|
|
|
|
|
|
|
INTEREST EXPENSE: |
|
|
|
|
|
|
|
|
|
Interest-bearing deposits |
| 1,911 |
| 1,290 |
| 3,591 |
| 2,508 |
|
Other borrowings |
| 1,749 |
| 354 |
| 3,015 |
| 586 |
|
Notes Payable |
| — |
| — |
| — |
| — |
|
Subordinated debentures |
| 149 |
| 98 |
| 283 |
| 106 |
|
Total interest expense |
| 3,809 |
| 1,742 |
| 6,889 |
| 3,200 |
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME |
| 4,252 |
| 3,958 |
| 8,378 |
| 7,765 |
|
|
|
|
|
|
|
|
|
|
|
PROVISION FOR LOAN LOSSES |
| 90 |
| 208 |
| 235 |
| 264 |
|
|
|
|
|
|
|
|
|
|
|
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
| 4,162 |
| 3,750 |
| 8,143 |
| 7,501 |
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST INCOME: |
|
|
|
|
|
|
|
|
|
Loan servicing fee income |
| 336 |
| 99 |
| 488 |
| 243 |
|
Bank and other fee income |
| 131 |
| 152 |
| 259 |
| 293 |
|
Net gain from loan sales |
| 25 |
| 58 |
| 94 |
| 58 |
|
Net gain from investment securities |
| — |
| — |
| — |
| 1,573 |
|
Other income |
| 788 |
| 215 |
| 1,065 |
| 316 |
|
Total noninterest income |
| 1,280 |
| 524 |
| 1,906 |
| 2,483 |
|
|
|
|
|
|
|
|
|
|
|
NONINTEREST EXPENSE: |
|
|
|
|
|
|
|
|
|
Compensation and benefits |
| 1,811 |
| 1,641 |
| 3,700 |
| 3,264 |
|
Premises and occupancy |
| 321 |
| 334 |
| 643 |
| 697 |
|
Data processing |
| 80 |
| 74 |
| 163 |
| 153 |
|
Net (gain) loss on foreclosed real estate |
| (16 | ) | 23 |
| (25 | ) | 41 |
|
Other expense |
| 691 |
| 658 |
| 1,222 |
| 1,347 |
|
Total noninterest expense |
| 2,887 |
| 2,730 |
| 5,703 |
| 5,502 |
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES |
| 2,555 |
| 1,544 |
| 4,346 |
| 4,482 |
|
PROVISION FOR INCOME TAXES |
| 502 | �� | 194 |
| 658 |
| 206 |
|
NET INCOME |
| $2,053 |
| $1,350 |
| $3,688 |
| $4,276 |
|
|
|
|
|
|
|
|
|
|
|
INCOME PER SHARE: |
|
|
|
|
|
|
|
|
|
Basic income per share |
| $0.39 |
| $0.26 |
| $0.70 |
| $0.81 |
|
Diluted income per share |
| $0.31 |
| $0.21 |
| $0.56 |
| $0.65 |
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING: |
|
|
|
|
|
|
|
|
|
Basic |
| 5,258,738 |
| 5,255,072 |
| 5,258,738 |
| 5,255,072 |
|
Diluted |
| 6,558,718 |
| 6,559,354 |
| 6,628,863 |
| 6,567,392 |
|
Accompanying notes are an integral part of these consolidated financial statements.
2
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME
(Dollars in thousands)
(UNAUDITED)
|
| Common Stock |
| Amount |
| Additional |
| Accumulated |
| Accumulated Other |
| Comprehensive |
| Total |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance at December 31, 2003 |
| 5,255,072 |
| $ | 53 |
| $ | 67,546 |
| $ | (30,021 | ) | $ | (246 | ) |
|
| $ | 37,332 |
| |
Net income |
| — |
| — |
| — |
| 4,276 |
| — |
| $ | 4,276 |
| 4,276 |
| |||||
Unrealized loss on investments, net of tax of ($49) |
| — |
| — |
| — |
| — |
| (203 | ) | (203 | ) | (203 | ) | ||||||
Total comprehensive income |
| — |
| — |
| — |
| — |
| — |
| $ | 4,073 |
| — |
| |||||
Balance at June 30, 2004 |
| 5,255,072 |
| $ | 53 |
| $ | 67,546 |
| $ | (25,745 | ) | $ | (449 | ) |
|
| $ | 41,405 |
| |
|
| Common Stock |
| Amount |
| Additional |
| Accumulated |
| Accumulated Other |
| Comprehensive |
| Total |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance at December 31, 2004 |
| 5,258,738 |
| $ | 53 |
| $ | 67,564 |
| $ | (23,280 | ) | $ | (309 | ) |
|
| $ | 44,028 |
| |
Net income |
| — |
| — |
| — |
| 3,688 |
| — |
| $ | 3,688 |
| 3,688 |
| |||||
Unrealized loss on investments, net of tax of ($91) |
| — |
| — |
| — |
| — |
| (132 | ) | (132 | ) | (132 | ) | ||||||
Total comprehensive income |
| — |
| — |
| — |
| — |
| — |
| $ | 3,556 |
| — |
| |||||
Shares repurchased |
| (2,500 | ) | (25 | ) | (26 | ) | — |
| — |
|
|
| (51 | ) | ||||||
Stock options exercised |
| 2,500 |
| 25 |
| 15 |
| — |
| — |
|
|
| 40 |
| ||||||
Balance at June 30, 2005 |
| 5,261,238 |
| $ | 53 |
| $ | 67,553 |
| $ | (19,592 | ) | $ | (441 | ) |
|
| $ | 47,573 |
| |
Accompanying notes are an integral part of these consolidated financial statements.
3
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(UNAUDITED)
|
| Six Months Ended |
| ||||
|
| 2005 |
| 2004 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
| ||
Net Income |
| $ | 3,688 |
| $ | 4,276 |
|
Adjustments to Net Income: |
|
|
|
|
| ||
Depreciation expense |
| 172 |
| 244 |
| ||
Provision for loan losses |
| 235 |
| 264 |
| ||
Loss on sale, provision, and write-down of foreclosed real estate |
| 60 |
| 51 |
| ||
Net unrealized loss and amortization on investment securities |
| 140 |
| 377 |
| ||
Loss on sale of investment securities available for sale |
| — |
| 13 |
| ||
Gain on sale of loans held for investment |
| (94 | ) | (58 | ) | ||
Net accretion on Participation Contract |
| — |
| (1,556 | ) | ||
Proceeds from the sales of and principal payments from loans held for sale |
| (8 | ) | 63 |
| ||
Change in current and deferred income tax receivable |
| (313 | ) | (475 | ) | ||
Increase in accrued expenses and other liabilities |
| 895 |
| 1,172 |
| ||
Federal Home Loan Bank stock dividend |
| (170 | ) | (44 | ) | ||
Increase in other assets |
| (857 | ) | (739 | ) | ||
Net cash provided by operating activities |
| 3,748 |
| 3,588 |
| ||
|
|
|
|
|
| ||
CASH FLOW FROM INVESTING ACTIVITIES: |
|
|
|
|
| ||
Proceeds from sale and principal payments on loans held for investment |
| 38,536 |
| 34,688 |
| ||
Purchase, origination and advances of loans held for investment |
| (120,952 | ) | (138,168 | ) | ||
Principal payments on securities |
| — |
| 840 |
| ||
Proceeds from sale of foreclosed real estate |
| 144 |
| 721 |
| ||
Purchase of securities |
| — |
| (5,284 | ) | ||
Proceeds from sale or maturity of securities |
| — |
| 2,203 |
| ||
Proceeds from Participation Contract |
| — |
| 1,193 |
| ||
Proceeds from sale and termination of residual assets of Participation Contract |
| — |
| 4,714 |
| ||
Decrease (increase) in premises and equipment |
| (47 | ) | (110 | ) | ||
Purchase of FHLB stock |
| (2,671 | ) | (1,854 | ) | ||
Net cash used in investing activities |
| (84,990 | ) | (101,057 | ) | ||
|
|
|
|
|
| ||
CASH FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
| ||
Net increase in deposit accounts |
| 8,879 |
| 47,476 |
| ||
Proceeds from FHLB advances |
| 70,926 |
| 42,900 |
| ||
Proceeds from other borrowings |
| 7,100 |
| 8,400 |
| ||
Issuance of subordinated debentures |
| — |
| 10,310 |
| ||
Proceeds from exercise of stock options |
| (11 | ) | — |
| ||
Net cash provided by financing activities |
| 86,894 |
| 109,086 |
| ||
|
|
|
|
|
| ||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
| 5,652 |
| 11,617 |
| ||
CASH AND CASH EQUIVALENTS, beginning of period |
| 16,003 |
| 2,440 |
| ||
CASH AND CASH EQUIVALENTS, end of period |
| $ | 21,655 |
| $ | 14,057 |
|
|
|
|
|
|
| ||
SUPPLEMENTAL CASH FLOW DISCLOSURES: |
|
|
|
|
| ||
Interest paid |
| $ | 6,784 |
| $ | 3,160 |
|
Income taxes paid |
| $ | 1,021 |
| $ | 2 |
|
|
|
|
|
|
| ||
NONCASH INVESTING ACTIVITIES DURING THE PERIOD: |
|
|
|
|
| ||
Transfers from loans to foreclosed real estate |
| $ | 100 |
| $ | 324 |
|
Accompanying notes are an integral part of these consolidated financial statements.
4
PACIFIC PREMIER BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2005
(UNAUDITED)
The consolidated financial statements include the accounts of Pacific Premier Bancorp, Inc. (the “Corporation”) and its wholly owned subsidiary, Pacific Premier Bank, F.S.B. (the “Bank”) (collectively, the “Company”). All significant intercompany accounts and transactions have been eliminated in consolidation.
In the opinion of management, the unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company’s financial position as of June 30, 2005, the results of its operations for three and six months ended June 30, 2005 and 2004 and its stockholders’ equity, comprehensive income and cash flows for the six months ended June 30, 2005 and 2004. Operating results for the three and six months ended June 30, 2005 are not necessarily indicative of the results that may be expected for any other interim period or the full year ending December 31, 2005.
Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004.
The Company accounts for its investments in its wholly owned special purpose entity, PPBI Trust I, using the equity method under which the subsidiary’s net earnings are recognized in the Company’s statement of income.
The pro forma effects of applying SFAS No. 123 are disclosed below (dollars in thousands, except per share data):
|
| For the Three Months Ended |
| ||||
|
| June 30, 2005 |
| June 30, 2004 |
| ||
|
| (Unaudited) |
| ||||
Net income to common stockholders: |
|
|
|
|
| ||
As reported |
| $ | 2,053 |
| $ | 1,350 |
|
Stock-based compensation that would have been reported using the fair value method of SFAS 123 |
| — |
| 87 |
| ||
Pro forma |
| $ | 2,053 |
| $ | 1,263 |
|
|
|
|
|
|
| ||
Basic earnings per share: |
|
|
|
|
| ||
As reported |
| $ | 0.39 |
| $ | 0.26 |
|
Pro forma |
| $ | 0.39 |
| $ | 0.24 |
|
|
|
|
|
|
| ||
Diluted earnings per share: |
|
|
|
|
| ||
As reported |
| $ | 0.31 |
| $ | 0.21 |
|
Pro forma |
| $ | 0.31 |
| $ | 0.19 |
|
5
In January 2003, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities, an Interpretation of ARB NO. 51” (“FIN 46”) and in December 2003, FASB issued a revision (“FIN 46R”). FIN 46 and FIN 46R address the requirements for consolidation by business enterprises of variable interest entities. Subsidiary business trusts formed by bank holding companies to issue trust preferred securities and lend the proceeds to the parent holding company have been determined to not meet the definition of a variable interest entity and therefore must be deconsolidated for financial reporting purposes. Bank holding companies have previously consolidated these entities and reported the trust preferred securities as liabilities in the consolidated financial statements. The Company adopted this statement at the time of the issuance of the junior subordinated debentures in March 2004, which did not have a material impact on the Company’s financial statements as subordinated debentures are reported as a component of liabilities. See Note 4 – Subordinated Debentures.
In December 2004, the FASB staff issued a revision to SFAS No. 123, “Accounting for Stock-Based Compensation,” SFAS No. 123R, “Share-Based Payment.” SFAS No. 123R focuses primarily on transactions in which the entity exchanges its equity instruments for employee services and generally establishes standards for the accounting for transactions in which an entity obtains goods or services in share-based payment transactions. SFAS No. 123R requires that the cost resulting from all share-based payment transactions be recognized in the financial statements over the period during which an employee is required to provide service in exchange for the award. SFAS No. 123R establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all entities to apply a fair-value based method in accounting for share-based transactions with employees. SFAS No. 123R is effective as of the beginning of the first interim reporting period that begins after June 15, 2005. On April 14, 2005, the effective date was amended by the SEC. As a result, SFAS No. 123R is now effective for most public companies for annual (rather than interim) periods that begin after June 15, 2005. Therefore, we will begin to expense options in the first quarter of 2006, unless further amended by the SEC. Management is currently evaluating the effect of adoption of SFAS No. 123R, but does not expect adoption to have a material effect on the firm’s financial condition or cash flows. However, any future issuance of options will reduce earnings.
The Bank’s capital amounts and ratios are presented in the following table:
|
| Actual |
| To be adequately |
| To be well capitalized |
| |||||||||
|
| Amount |
| Ratio |
| Amount |
| Ratio |
| Amount |
| Ratio |
| |||
|
| (dollars in thousands) |
| |||||||||||||
At June 30, 2005 (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Total Capital (to risk-weighted assets) |
| $ | 54,722 |
| 12.59 | % | $ | 34,761 |
| 8.00 | % | $ | 43,452 |
| 10.00 | % |
Tier 1 Capital (to adjusted tangible assets) |
| 52,232 |
| 8.27 | % | 25,259 |
| 4.00 | % | 31,573 |
| 5.00 | % | |||
Tier 1 Risk-Based Capital (to risk-weighted assets) |
| 54,722 |
| 12.02 | % | 17,381 |
| 4.00 | % | 26,071 |
| 6.00 | % | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
At December 31, 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Total Capital (to risk-weighted assets) |
| $ | 51,316 |
| 13.59 | % | $ | 30,206 |
| 8.00 | % | $ | 37,758 |
| 10.00 | % |
Tier 1 Capital (to adjusted tangible assets) |
| 49,072 |
| 9.09 | % | 21,600 |
| 4.00 | % | 27,001 |
| 5.00 | % | |||
Tier 1 Risk-Based Capital (to risk-weighted assets) |
| 51,316 |
| 13.00 | % | 15,103 |
| 4.00 | % | 22,655 |
| 6.00 | % | |||
Note 3 – Borrowings
At June 30, 2005, the Bank had one advance in the amount of $8.4 million on its $100 million credit facility with Salomon Brothers due September 2005, at a rate of 3.46% per annum, which is secured by $9.1 million in mortgage-backed securities. At June 30, 2005, the Bank also had one advance in the amount of $17.1 million at a rate of 3.75% per annum against its $18.9 million credit facility, secured by
6
mutual funds pledged to Pershing Bank, and Fed Funds purchased in the amount of $10.0 million at a rate of 3.60% per annum. Additionally, the Company had $238.9 million in Federal Home Loan Bank (“FHLB”) advances with a weighted average interest rate of 3.05% and a weighted average maturity of 0.55 years, as of June 30, 2005. Advances from the FHLB are collateralized by pledges of certain real estate loans with an aggregate principal balance of $417.9 million. As of June 30, 2005, the Bank was able to borrow up to 40% of its total assets as of May 31, 2005 under the line, which amounted to $238.9 million, an increase of $11.2 million from the prior quarter. FHLB advances consisted of the following as of June 30, 2005:
|
|
|
|
|
| Weighted |
| |
|
|
|
|
|
| Average Annual |
| |
FHLB Advances Maturing in: |
| Amount |
| % of Total |
| Interest Rate |
| |
|
| (dollars in thousands) |
| |||||
One month or less |
| $ | 18,926 |
| 7.92 | % | 2.97 | % |
Over one month to three months |
| 55,000 |
| 23.02 | % | 3.07 | % | |
Over three months to six months |
| 75,000 |
| 31.39 | % | 3.10 | % | |
Over six months to one year |
| 65,000 |
| 27.21 | % | 2.88 | % | |
Over one year |
| 25,000 |
| 10.46 | % | 3.37 | % | |
|
|
|
|
|
|
|
| |
Total FHLB Advances |
| $ | 238,926 |
| 100.00 | % | 3.05 | % |
Note 4 – Subordinated Debentures
In March 2004, the Corporation issued $10.3 million of Floating Rate Junior Subordinated Deferrable Interest Debentures (the “Subordinated Debentures”) to PPBI Trust I, which fund the payment of $10.0 million of Floating Rate Trust Preferred Securities which were issued by PPBI Trust I in March 2004. The net proceeds from the offering of Trust Preferred Securities were contributed as capital to the Bank to support further growth. Interest is payable quarterly on the Subordinated Debentures at three-month LIBOR plus 2.75% per annum for an effective rate of 5.89% per annum as of June 30, 2005.
Under FIN 46R, “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51,” the Corporation is not allowed to consolidate PPBI Trust I into the Company’s financial statements. The resulting effect on the Company’s consolidated financial statements is to report the Subordinated Debentures as a component of liabilities. Prior to the issuance of FIN 46R, bank holding companies typically consolidated these entities and reported the Trust Preferred Securities as a component of liabilities.
The tables below set forth the Company’s unaudited earnings per share calculations for the three and six months ended June 30, 2005 and 2004.
Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing income available to common stockholders including common stock equivalents, such as outstanding stock options and warrants by the weighted average number of common shares and common stock equivalents outstanding for the period. Stock options totaling 116,997 and 47,372 shares for June 30, 2005 and June 30, 2004, respectively, were excluded from the computation of diluted earnings per share due to their exercise price exceeded the average market price.
The earnings per share reconciliation is as follows (dollars in thousands, except per share data):
7
|
| For the Three Months Ended June 31, |
| ||||||||||||||
|
| 2005 |
| 2004 |
| ||||||||||||
|
| Net |
|
|
| Per Share |
| Net |
|
|
| Per Share |
| ||||
|
| Earnings |
| Shares |
| Amount |
| Earnings |
| Shares |
| Amount |
| ||||
|
| (Unaudited) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Earnings |
| $ | 2,053 |
|
|
|
|
| $ | 1,350 |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic EPS Earnings Available to common stockholders |
| $ | 2,053 |
| 5,258,738 |
| $ | 0.39 |
| $ | 1,350 |
| 5,255,072 |
| $ | 0.26 |
|
Effect of Warrants and Dilutive Stock Options |
| — |
| 1,299,980 |
|
|
| — |
| 1,304,282 |
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Diluted EPS Earnings Available to common stockholders plus assumed conversions |
| $ | 2,053 |
| 6,558,718 |
| $ | 0.31 |
| $ | 1,350 |
| 6,559,354 |
| $ | 0.21 |
|
|
| For the Six Months Ended June 30, |
| ||||||||||||||
|
| 2005 |
| 2004 |
| ||||||||||||
|
| Net |
|
|
| Per Share |
| Net |
|
|
| Per Share |
| ||||
|
| Earnings |
| Shares |
| Amount |
| Earnings |
| Shares |
| Amount |
| ||||
|
| (Unaudited) |
| ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Earnings |
| $ | 3,688 |
|
|
|
|
| $ | 4,276 |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Basic EPS Earnings Available to common stockholders |
| $ | 3,688 |
| 5,258,738 |
| $ | 0.70 |
| $ | 4,276 |
| 5,255,072 |
| $ | 0.81 |
|
Effect of Warrants and Dilutive Stock Options |
| — |
| 1,370,125 |
|
|
| — |
| 1,312,320 |
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Diluted EPS Earnings Available to common stockholders plus assumed conversions |
| $ | 3,688 |
| 6,628,863 |
| $ | 0.56 |
| $ | 4,276 |
| 6,567,392 |
| $ | 0.65 |
|
Note 6 –Sale of portions of the Participation Contract
In March 2004, the Company sold its share of the residual interest in the 1998-1 component of the Participation Contract for $6.3 million. The gain on sale was $1.6 million.
The Company benefited from a reduction in its valuation allowance for deferred taxes in the three and six months ended June 30, 2005 and the three and six months ended 2004 of $500,000, $1.0 million, $472,000 and $1.1 million, respectively. The Company’s valuation allowance for deferred taxes was $3.0 million at June 30, 2005. The decrease in the deferred tax valuation allowance is due to management’s updated forecast of taxable earnings for the foreseeable future. As the Company recognizes continuous taxable income and if the earnings projections show that the Company will have the ability to use its net operating loss carry-forwards, then all or part of the remaining valuation allowance for deferred taxes of $3.0 million will be eliminated.
On July 14, 2005 the Bank purchased a building with a ground lease with 18 years remaining plus an option to extend the term for four additional five year periods for $725,000. The building will be depreciated on a straight-line basis over the term of the lease and the monthly rent on the ground lease is $8,800. The Bank will be relocating its Huntington Beach branch to the new location when the branch’s current lease terminates in January 2006.
8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
The following presents management’s discussion and analysis of the consolidated financial condition and operating results of the Company for the three and six months ended June 30, 2005 and 2004. The discussion should be read in conjunction with the Company’s Management Discussion and Analysis included in the 2004 Annual Report on Form 10-K, plus the unaudited consolidated financial statements and the notes thereto appearing elsewhere in this report. The results for the three and six months ended June 30, 2005 are not necessarily indicative of the results expected for the year ending December 31, 2005.
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. There can be no assurance that future developments affecting the Company will be the same as those anticipated by management. Actual results may differ from those projected in the forward-looking statements. These forward-looking statements involve risks and uncertainties. These include, but are not limited to, the following risks: (1) changes in the performance of the financial markets, (2) changes in the demand for and market acceptance of the Company’s products and services, (3) changes in general economic conditions including interest rates, presence of competitors with greater financial resources, and the impact of competitive projects and pricing, (4) the effect of the Company’s policies, (5) the continued availability of adequate funding sources, and (6) various legal, regulatory and litigation risks.
GENERAL
The Corporation, a Delaware corporation organized in 1997, is a unitary savings and loan holding company that owns 100% of the capital stock of the Bank, the Corporation’s principal operating subsidiary. The primary business of the Company is community banking.
The Bank was founded in 1983 as a state chartered savings and loan and became a federally chartered stock savings bank in 1991. The Bank is a member of the FHLB of San Francisco, which is a member bank of the Federal Home Loan Bank System. The Bank’s deposit accounts are insured up to the $100,000 maximum amount currently allowable under federal laws by the Savings Association Insurance Fund (“SAIF”), which is a separate insurance fund administered by the Federal Deposit Insurance Corporation (“FDIC”). The Bank is subject to examination and regulation by the Office of Thrift Supervision (“OTS”), its primary federal regulator, and by the FDIC.
The Company is a financial services organization committed to serving consumers and small businesses in Southern California. The Bank currently operates three full-service branches in Southern California located in the cities of San Bernardino, Seal Beach and Huntington Beach. The Bank offers a variety of products and services for consumers and small businesses, which include checking, savings, money market accounts and certificates of deposit. Additionally, the Bank’s lending activities are focused on generating loans secured by multi-family and commercial real estate properties, as well as, business loans throughout Southern California. The Bank funds its lending and investment activities primarily with retail deposits obtained through its branches, advances from the FHLB of San Francisco, lines of credit, and wholesale and brokered certificates of deposits.
The Company’s principal sources of income are the net spread between interest earned on loans and investments and the interest costs associated with deposits and other borrowings used to finance its loan and investment portfolio. Additionally, the Bank generates fee income from various products and services offered to both depository and loan customers.
Management has established various accounting policies which govern the application of accounting principles generally accepted in the United States of America in the preparation of the Company’s financial statements. The Company’s significant accounting policies are described in the Notes to the Consolidated Financial Statements in our 2004 Annual Report on Form 10-K. Certain accounting policies require management to make estimates and assumptions which have a material impact on the carrying value of certain assets and liabilities; management considers these to be critical accounting policies. The estimates and assumptions management uses are based on historical experience and other factors, which management believes to be reasonable under the circumstances. Actual results could differ significantly from these
9
estimates and assumptions, which could have a material impact on the carrying value of assets and liabilities at balance sheet dates and the Company’s results of operations for future reporting periods.
Management believes that the allowance for loan losses and the valuation allowance on deferred taxes are the critical accounting policies that require estimates and assumptions in the preparation of the Company’s financial statements that are most susceptible to significant change. For further information, see “Allowances for Loan Losses” and “Provision (Benefit) for Income Taxes” discussed later in this document and in our 2004 Annual Report on Form 10-K.
Total assets of the Company were $634.5 million as of June 30, 2005, compared to $543.1 million as of December 31, 2004. The $91.3 million or 16.8% increase in total assets was the result of increases of $82.2 million, or 17.5%, in net loans and $5.5 million in federal funds sold.
A summary of the Company’s securities as of June 30, 2005 and December 31, 2004 is as follows (dollars in thousands):
|
| June 30, 2005 |
| ||||||||||
|
| Amortized |
| Unrealized |
| Unrealized |
| Estimated |
| ||||
|
| Cost |
| Gain |
| Loss |
| Market Value |
| ||||
Securities Available for Sale: |
|
|
|
|
|
|
|
|
| ||||
Mortgage-Backed Securities (1) |
| $ | 9,213 |
| $ | — |
| $ | (85 | ) | $ | 9,128 |
|
Mutual Funds (2) |
| 27,719 |
| — |
| (664 | ) | 27,055 |
| ||||
Total securities available for sale |
| $ | 36,932 |
| $ | — |
| $ | (749 | ) | $ | 36,183 |
|
|
|
|
|
|
|
|
|
|
| ||||
Securities Held to Maturity: |
|
|
|
|
|
|
|
|
| ||||
FHLB Stock |
| $ | 11,230 |
| $ | — |
| $ | — |
| $ | 11,230 |
|
Total securities held to maturity |
| $ | 11,230 |
| $ | — |
| $ | — |
| $ | 11,230 |
|
|
|
|
|
|
|
|
|
|
| ||||
Total securities |
| $ | 48,162 |
| $ | — |
| $ | (749 | ) | $ | 47,413 |
|
|
| December 31, 2004 |
| ||||||||||
|
| Amortized |
| Unrealized |
| Unrealized |
| Estimated |
| ||||
|
| Cost |
| Gain |
| Loss |
| Market Value |
| ||||
Securities Available for Sale: |
|
|
|
|
|
|
|
|
| ||||
Mortgage-Backed Securities |
| $ | 9,262 |
| $ | — |
| $ | (48 | ) | $ | 9,214 |
|
Mutual Funds |
| 27,719 |
| — |
| (478 | ) | 27,241 |
| ||||
Total securities available for sale |
| $ | 36,981 |
| $ | — |
| $ | (526 | ) | $ | 36,455 |
|
|
|
|
|
|
|
|
|
|
| ||||
Securities Held to Maturity: |
|
|
|
|
|
|
|
|
| ||||
FHLB Stock |
| $ | 8,389 |
| $ | — |
| $ | — |
| $ | 8,389 |
|
Total securities held to maturity |
| $ | 8,389 |
| $ | — |
| $ | — |
| $ | 8,389 |
|
|
|
|
|
|
|
|
|
|
| ||||
Total securities |
| $ | 45,370 |
| $ | — |
| $ | (526 | ) | $ | 44,844 |
|
(1) Mortgage-backed securities consists of one collateralized mortgage obligation (“CMO”) secured by the Federal Home Loan Mortgage Corporation “(FHLMC”), with a carrying value of $9.1 million. The CMO has been pledged as collateral for the $8.4 million advance on the Company’s secured line of credit.
(2) The Company’s mutual fund investments are with Shay Assets Management Inc, within their AMF Adjustable Rate Mortgage fund and their AMF Intermediate Mortgage fund. Both of these funds qualified for inclusion in the 20% risk-weighting capital category for the quarter ended June 30, 2005. $24.4 million of the mutual funds have been pledged to Pershing Bank to secure an advance of $17.1 million under its $19.1 million line of credit.
10
Investment Securities by Contractual Maturity
As of June 30, 2005
(dollars in thousands)
|
| One Year |
| More than One |
| More than Five |
| More than |
| Total |
| |||||||||||||||
|
| Carrying |
|
|
| Carrying |
|
|
| Carrying |
|
|
| Carrying |
|
|
| Carrying |
|
|
| |||||
|
| Value |
| Yield |
| Value |
| Yield |
| Value |
| Yield |
| Value |
| Yield |
| Value |
| Yield |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Mortgage-Backed Securities |
| $ | — |
| 0.00 | % | $ | — |
| 0.00 | % | $ | — |
| 0.00 | % | $ | 9,128 |
| 4.34 | % | $ | 9,128 |
| 4.34 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Mutual Fund |
| 27,055 |
| 3.46 | % | — |
| 0.00 | % | — |
| 0.00 | % | — |
| 0.00 | % | 27,055 |
| 3.46 | % | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total securities available for sale |
| 27,055 |
| 3.46 | % | — |
| 0.00 | % | — |
| 0.00 | % | 9,128 |
| 4.34 | % | 36,183 |
| 3.68 | % | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
FHLB Stock |
| 11,230 |
| 4.33 | % | — |
| 0.00 | % | — |
| 0.00 | % | — |
| 0.00 | % | 11,230 |
| 4.33 | % | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total securities held to maturity |
| 11,230 |
| 4.33 | % | — |
| 0.00 | % | — |
| 0.00 | % | — |
| 0.00 | % | 11,230 |
| 4.33 | % | |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total securities |
| $ | 38,285 |
| 3.72 | % | $ | — |
| 0.00 | % | $ | — |
| 0.00 | % | $ | 9,128 |
| 4.34 | % | $ | 47,413 |
| 3.84 | % |
Gross loans outstanding totaled $553.8 million at June 30, 2005 compared to $471.6 million at December 31, 2004, which represents a 34.9% annualized growth rate. The Company’s multi-family loans and commercial real estate secured loans grew during the second quarter of 2005 at an annualized rate of 18.8% and 68.3%, respectively.
The Bank originated $34.8 million, $16.2 million, and $554,000, respectively, of adjustable-rate multi-family loans, commercial real estate secured loans, and commercial business loans for the three months ended June 30, 2005 and $84.5 million, $35.1 million, and $1.4 million, respectively, for the six months ended June 30, 2005. Principal repayments and loan sales for the three and six months ending June 30, 2005 totaled $17.9 million, $2.2 million, $28.3 million, and $10.3 million, respectively,
A summary of the Company’s loan originations and principal repayments for the six months ended June 30, 2005 and 2004 are as follows (dollars in thousands):
11
|
| For the Six Months ended |
| ||||
|
| June 30, 2005 |
| June 30, 2004 |
| ||
|
|
|
|
|
| ||
Beginning balance, gross |
| $ | 471,609 |
| $ | 250,117 |
|
Loans originated: |
|
|
|
|
| ||
Multi-family |
| 84,469 |
| 119,858 |
| ||
Commercial real estate |
| 35,083 |
| 17,758 |
| ||
Commercial business loans |
| 1,398 |
| — |
| ||
Other |
| 1 |
| 8 |
| ||
Total loans originated |
| 120,951 |
| 137,624 |
| ||
Total |
| 592,560 |
| 387,741 |
| ||
Less: |
|
|
|
|
| ||
Principal repayments |
| 28,279 |
| 30,012 |
| ||
Net Charge-offs |
| 82 |
| 53 |
| ||
Sales of loans |
| 10,297 |
| 5,195 |
| ||
Transfers to REO |
| 100 |
| 324 |
| ||
Total Gross loans |
| 553,802 |
| 352,157 |
| ||
Ending balance loans held for sale (gross) |
| 491 |
| 702 |
| ||
Ending balance loans held for investment (gross) |
| $ | 553,311 |
| $ | 351,455 |
|
The following table sets forth the composition of our loan portfolio in dollar amounts and as a percentage of the portfolio at the dates indicated (dollars in thousands):
|
| June 30, 2005 |
| December 31, 2004 |
| ||||||||||
|
|
|
|
|
| Weighted |
|
|
|
|
| Weighted |
| ||
|
|
|
| % of |
| Average |
|
|
| % of |
| Average |
| ||
|
| Amount |
| Total |
| Interest Rate |
| Amount |
| Total |
| Interest Rate |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Real Estate Loans: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Multi-family |
| $ | 446,818 |
| 80.69 | % | 5.54 | % | $ | 394,582 |
| 83.66 | % | 5.12 | % |
Commercial |
| 87,833 |
| 15.86 | % | 6.28 | % | 54,502 |
| 11.56 | % | 5.54 | % | ||
One-to-four family (1) |
| 17,780 |
| 3.21 | % | 9.89 | % | 22,347 |
| 4.74 | % | 9.67 | % | ||
Commercial business |
| 1,346 |
| 0.24 | % | 7.14 | % | 103 |
| 0.02 | % | 5.25 | % | ||
Other Loans |
| 25 |
| 0.00 | % | 11.85 | % | 75 |
| 0.02 | % | 4.54 | % | ||
Total Gross loans |
| $ | 553,802 |
| 100.00 | % | 5.80 | % | $ | 471,609 |
| 100.00 | % | 5.38 | % |
(1) Includes second trust deeds.
Allowance for Loan Losses
The allowance for loan losses totaled $2.8 million as of June 30, 2005 and $2.6 million as of December 31, 2004. The allowance for loan losses as a percent of nonperforming loans was 194.6% and 110.8% as of June 30, 2005 and December 31, 2004, respectively. Net nonperforming loans totaled $1.3 million at June 30, 2005 and $2.1 million as of December 31, 2004, or 0.23% and 0.45% of total assets, respectively.
The Company’s determination of the level of the allowance for loan losses and correspondingly, the provision for loan losses, rests upon various judgments and assumptions. The allowance for the one-to-four residential loan portfolio is primarily based upon the Bank’s historical loss experience from charge-offs and real estate owned for the last 32 quarters, and a historical delinquency migration analysis. For the multi-family and commercial real estate loan portfolio, the Bank analyzes and uses the 10 year historical loan loss experience for multi-family and commercial real estate secured loans compiled by the OTS to determine its loss factors, since the Bank has not experienced any losses or delinquency on its own loans within the income property portfolio. Given the composition of the Company’s loan portfolio, the $2.8 million allowance for loan losses was considered adequate to cover losses inherent in the Company’s
12
loan portfolio at June 30, 2005. However, no assurance can be given that the Company will not, in any particular period, sustain loan losses that exceed the amount reserved, or that subsequent evaluation of the loan portfolio, in light of the prevailing factors, including economic conditions which may adversely affect the Company’s market area or other circumstances, will not require significant increases in the loan loss allowance. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowance for loan losses. Such agencies may require the Bank to recognize additional provisions to increase the allowance or take charge-offs in anticipation of future losses.
The table below summarizes the activity of the Company’s allowance for loan losses for the three and six months ended June 30, 2005 and 2004 (in thousands):
|
| Three Months Ended |
| Six Months Ended |
| |||||||||
|
| 2005 |
| 2004 |
| 2005 |
| 2004 |
| |||||
|
|
|
|
|
|
|
|
|
| |||||
Balance, beginning of period |
| $ | 2,767 |
| $ | 2,060 |
| $ | 2,626 |
| $ | 1,984 |
| |
|
|
|
|
|
|
|
|
|
| |||||
Provision for loan losses |
| 90 |
| 201 |
| 225 |
| 264 |
| |||||
|
|
|
|
|
|
|
|
|
| |||||
Charge-offs |
|
|
|
|
|
|
|
|
| |||||
Real estate: |
|
|
|
|
|
|
|
|
| |||||
One-to-four family |
| (121 | ) | (51 | ) | (158 | ) | (119 | ) | |||||
Multi-family |
| — |
| — |
| — |
| — |
| |||||
Commercial |
| — |
| — |
| — |
| — |
| |||||
Construction and land |
| — |
| — |
| — |
| — |
| |||||
Commercial Business |
| — |
| — |
| — |
| — |
| |||||
Other loans |
| (2 | ) | (68 | ) | (5 | ) | (77 | ) | |||||
Total Charge-offs |
| (123 | ) | (119 | ) | (163 | ) | (196 | ) | |||||
Recoveries |
|
|
|
|
|
|
|
|
| |||||
Real estate: |
|
|
|
|
|
|
|
|
| |||||
One-to-four family |
| 42 |
| 22 |
| 72 |
| 43 |
| |||||
Multi-family |
| — |
| — |
| — |
| — |
| |||||
Commercial |
| — |
| — |
| — |
| — |
| |||||
Construction and land |
| — |
| — |
| — |
| — |
| |||||
Commercial Business |
| — |
| — |
| — |
| — |
| |||||
Other loans |
| 3 |
| 31 |
| 19 |
| 100 |
| |||||
Total Recoveries |
| 45 |
| 53 |
| 91 |
| 143 |
| |||||
Net (charge-offs) recoveries |
| (78 | ) | (66 | ) | (72 | ) | (53 | ) | |||||
|
|
|
|
|
|
|
|
|
| |||||
Balance, end of period |
| $ | 2,779 |
| $ | 2,195 |
| $ | 2,779 |
| $ | 2,195 |
| |
Composition of Nonperforming Assets
The table below summarizes the Company’s composition of nonperforming assets as of the dates indicated. The decrease in the total nonperforming assets is primarily due to decreases in nonperforming one-to-four family loans and real estate owned of $943,000 and $104,000, respectively. All nonperforming loans consist of one-to-four family loans.
13
(dollars in thousands) |
| At June 30, |
| At December 31, |
| ||
Nonperforming loans: |
|
|
|
|
| ||
Real Estate: |
|
|
|
|
| ||
One-to-four family |
| $ | 1,428 |
| $ | 2,371 |
|
Multi-family |
| — |
| — |
| ||
Commercial real estate |
| — |
| — |
| ||
Construction |
| — |
| — |
| ||
Commercial Business |
| — |
| — |
| ||
Other loans |
| — |
| — |
| ||
Total nonaccrual loans |
| 1,428 |
| 2,371 |
| ||
Foreclosures in process |
| — |
| — |
| ||
Specific Allowance |
| (172 | ) | (244 | ) | ||
Total nonperforming loans, net |
| 1,256 |
| 2,127 |
| ||
Foreclosed Real Estate Owned |
| 247 |
| 351 |
| ||
Total nonperforming assets, net (1) |
| $ | 1,503 |
| $ | 2,478 |
|
|
|
|
|
|
| ||
Restructured Loans |
| $ | — |
| $ | — |
|
|
|
|
|
|
| ||
Allowance for loan losses as a percent of gross loans receivable (2) |
| 0.50 | % | 0.56 | % | ||
|
|
|
|
|
| ||
Allowance for loan losses as a percent of total nonperforming loans, gross |
| 194.61 | % | 110.77 | % | ||
|
|
|
|
|
| ||
Nonperforming loans, net of specific allowances, as a percent of gross loans receivable |
| 0.23 | % | 0.45 | % | ||
|
|
|
|
|
| ||
Nonperforming assets, net of specific allowances, as a percent of total assets |
| 0.24 | % | 0.46 | % | ||
(1) Nonperforming assets consist of nonperforming loans and REO. Nonperforming loans consisted of all loans 90 days or more past due and foreclosures in process less than 90 days and still accruing interest.
(2) Gross loans include loans receivable that are held for investment and are held for sale.
Liabilities and Stockholders’ Equity
Total liabilities of the Company increased from $499.1 million at December 31, 2004 to $586.9 million at June 30, 2005. The increase is primarily due to increases in FHLB advances of $60.9 million, deposits of $8.9 million, and other borrowings of $17.1 million.
The Company had $274.4 million in FHLB advances and other borrowings as of June 30, 2005, compared to $196.4 million in such borrowings at December 31, 2004. Advances from the FHLB are collateralized by pledges of certain real estate loans with an aggregate principal balance of $417.9 million. The Bank may borrow up to 40% of its assets under the line. As of June 30, 2005, the maximum the Bank may borrow was $238.9 million, based on the Bank’s assets as of May 31, 2005. The total cost of the Company’s borrowings at June 30, 2005 was 2.93%, an increase of 98 basis points compared to the same period in 2004.
Deposits increased by $8.9 million to $297.8 million at June 30, 2005, compared to $288.9 million of deposits at December 31, 2004. The increase in deposits was primarily comprised of increases of $3.5 million in transaction accounts and $6.0 million in broker certificates of deposits. During the three months ended June 30, 2005, the cost of deposits increased 53 basis points to 2.64% compared to the same period in 2004.
14
Total stockholder’s equity increased $3.5 million to $47.6 million at June 30, 2005, compared to $44.0 million at December 31, 2004, primarily due to net income during this period.
Highlights for the three and six months ended June 30, 2005 and 2004:
The Company recorded second quarter net income of $2.1 million, or $0.31 per diluted share, compared to net income of $1.4 million, or $0.21 per diluted share for the second quarter of 2004, an increase of 52.1% in net income. Net income for the six months ended June 30, 2005 was $3.7 million, or $0.56 per diluted share, compared to net income of $4.3 million, or $0.65 per diluted share for the six months ended June 30, 2004. The results for the first six months of 2004 included a total of $3.1 million of interest income and gain on sale income generated from the Company’s Participation Contract compared to $847,000 in other income that the Company has received during the six months ended June 30, 2005. All diluted earnings per share amounts have been adjusted to reflect the dilutive effect of all warrants and stock options outstanding. See Note 5 – Earnings Per Share.
Return on average assets (ROAA) for the three and six months ended June 30, 2005 was 1.38% and 1.28%, respectively, compared to 1.35% and 2.31%, respectively, for the same periods in 2004. The Company’s return on average equity (ROAE) for the three and six months ended June 30, 2005 was 17.54% and 16.09%, respectively, compared to 13.22% and 19.58%, respectively, for the three and six months ended June 30, 2004. The Company’s basic and diluted book value per share increased to $9.05 and $7.60, respectively, at June 30, 2005, reflecting an annualized increase of 16.2% and 14.7% from December 31, 2004. Options whose exercise price exceeds the closing market price as of June 30, 2005 are excluded from the diluted book value calculation.
Net Interest Income
For the three and six months ended June 30, 2005, net interest income increased to $4.3 million and $8.4 million, respectively, from $4.0 million and $7.8 million for the same periods a year earlier. The increase for the six month period is predominately attributable to a 70.1% increase in the average loans outstanding, or $211.5 million, over the prior year period, which was partially offset by increases in the average borrowings and deposits outstanding of $153.6 million and $47.3 million, respectively. Additionally, the Company received no interest income from the Participation Contract in 2005 compared to $1.6 million in the first six months of 2004.
The net interest margin for the quarter ended June 30, 2005 was 2.93% compared to 4.10% for the same period a year ago. The elimination of interest income from the Participation Contract represents 58.1% of the decrease in the net interest margin. The remaining decrease was primarily attributable to increases in the average cost of deposits and borrowings of 56 and 127 basis points, respectively. The increase in the cost of funds is attributable to the overall rising interest rate environment and strong competitor deposit pricing within the Bank’s primary markets.
The following tables set forth the Company’s average balance sheets (unaudited), and the related weighted average yields and costs on average interest-earning assets and interest-bearing liabilities, for the three and six months ended June 30, 2005 and 2004.
The yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods shown. Average balances are measured on a daily basis. The yields and costs include fees that are considered adjustments to yields.
15
|
| Three Months Ended |
| Three Months Ended |
| ||||||||||||
|
| (dollars in thousands, unaudited) |
| ||||||||||||||
|
|
|
|
|
| Average |
|
|
|
|
| Average |
| ||||
|
| Average |
|
|
| Annualized |
| Average |
|
|
| Annualized |
| ||||
|
| Balance |
| Interest |
| Yield/Cost |
| Balance |
| Interest |
| Yield/Cost |
| ||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents |
| $ | 405 |
| $ | 10 |
| 9.88 | % | $ | 13,606 |
| $ | 34 |
| 1.00 | % |
Federal funds sold |
| 216 |
| 2 |
| 3.06 | % | 478 |
| 1 |
| 0.84 | % | ||||
Investment securities |
| 47,189 |
| 461 |
| 3.91 | % | 44,623 |
| 368 |
| 3.30 | % | ||||
Participation Contract |
| — |
| — |
| — |
| 1,614 |
| 654 |
| 162.08 | % | ||||
Loans receivable |
| 533,084 |
| 7,588 |
| 5.69 | % | 325,895 |
| 4,643 |
| 5.70 | % | ||||
Total interest-earning assets |
| 580,894 |
| 8,061 |
| 5.55 | % | 386,216 |
| 5,700 |
| 5.90 | % | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Non-interest-earning assets |
| 15,083 |
|
|
|
|
| 15,114 |
|
|
|
|
| ||||
Total assets |
| $ | 595,977 |
|
|
|
|
| $ | 401,330 |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Passbook accounts, money market, and checking |
| $ | 79,739 |
| $ | 278 |
| 1.39 | % | $ | 73,804 |
| $ | 194 |
| 1.05 | % |
Certificate accounts |
| 217,145 |
| 1,633 |
| 3.01 | % | 182,891 |
| 1,096 |
| 2.40 | % | ||||
Total interest-bearing deposits |
| 296,884 |
| 1,911 |
| 2.57 | % | 256,695 |
| 1,290 |
| 2.01 | % | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Borrowings |
| 238,018 |
| 1,749 |
| 2.94 | % | 90,810 |
| 354 |
| 1.56 | % | ||||
Subordinated debentures |
| 10,310 |
| 149 |
| 5.78 | % | 10,310 |
| 98 |
| 3.80 | % | ||||
Total interest-bearing liabilities |
| 545,212 |
| 3,809 |
| 2.79 | % | 357,815 |
| 1,742 |
| 1.95 | % | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Non-interest-bearing liabilities |
| 3,953 |
|
|
|
|
| 2,672 |
|
|
|
|
| ||||
Total liabilities |
| 549,165 |
|
|
|
|
| 360,487 |
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Equity |
| 46,812 |
|
|
|
|
| 40,843 |
|
|
|
|
| ||||
Total liabilities and equity |
| $ | 595,977 |
|
|
|
|
| $ | 401,330 |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net interest income |
|
|
| $ | 4,252 |
|
|
|
|
| $ | 3,958 |
|
|
| ||
Net interest rate spread |
|
|
|
|
| 2.76 | % |
|
|
|
| 3.95 | % | ||||
Net interest margin |
|
|
|
|
| 2.93 | % |
|
|
|
| 4.10 | % | ||||
Ratio of interest-earning assets to interest-bearing liabilities |
|
|
|
|
| 106.54 | % |
|
|
|
| 107.94 | % | ||||
16
|
| Six Months Ended |
| Six Months Ended |
| ||||||||||||
|
| (dollars in thousands, unaudited) |
| ||||||||||||||
|
|
|
|
|
| Average |
|
|
|
|
| Average |
| ||||
|
| Average |
|
|
| Annualized |
| Average |
|
|
| Annualized |
| ||||
|
| Balance |
| Interest |
| Yield/Cost |
| Balance |
| Interest |
| Yield/Cost |
| ||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents |
| $ | 377 |
| $ | 21 |
| 11.14 | % | $ | 7,375 |
| $ | 40 |
| 1.08 | % |
Federal funds sold |
| 290 |
| 3 |
| 2.37 | % | 318 |
| 1 |
| 0.63 | % | ||||
Investment securities |
| 46,419 |
| 888 |
| 3.83 | % | 42,545 |
| 672 |
| 3.16 | % | ||||
Participation Contract |
| — |
| — |
| — |
| 3,854 |
| 1,556 |
| 80.75 | % | ||||
Loans receivable |
| 513,014 |
| 14,355 |
| 5.60 | % | 301,554 |
| 8,696 |
| 5.77 | % | ||||
Total interest-earning assets |
| 560,100 |
| 15,267 |
| 5.45 | % | 355,646 |
| 10,965 |
| 6.17 | % | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Non-interest-earning assets |
| 15,035 |
|
|
|
|
| 14,815 |
|
|
|
|
| ||||
Total assets |
| $ | 575,135 |
|
|
|
|
| $ | 370,461 |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Passbook accounts, money market, and checking |
| $ | 77,978 |
| $ | 536 |
| 1.37 | % | $ | 72,708 |
| $ | 399 |
| 1.10 | % |
Certificate accounts |
| 215,722 |
| 3,055 |
| 2.83 | % | 173,644 |
| 2,109 |
| 2.43 | % | ||||
Total interest-bearing deposits |
| 293,700 |
| 3,591 |
| 2.45 | % | 246,352 |
| 2,508 |
| 2.04 | % | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Borrowings |
| 221,227 |
| 3,015 |
| 2.73 | % | 72,409 |
| 586 |
| 1.62 | % | ||||
Subordinated debentures |
| 10,310 |
| 283 |
| 5.49 | % | 5,541 |
| 106 |
| 3.83 | % | ||||
Total interest-bearing liabilities |
| 525,237 |
| 6,889 |
| 2.62 | % | 324,302 |
| 3,200 |
| 1.97 | % | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Non-interest-bearing liabilities |
| 4,065 |
|
|
|
|
| 2,479 |
|
|
|
|
| ||||
Total liabilities |
| 529,302 |
|
|
|
|
| 326,781 |
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Equity |
| 45,833 |
|
|
|
|
| 43,680 |
|
|
|
|
| ||||
Total liabilities and equity |
| $ | 575,135 |
|
|
|
|
| $ | 370,461 |
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net interest income |
|
|
| $ | 8,378 |
|
|
|
|
| $ | 7,765 |
|
|
| ||
Net interest rate spread |
|
|
|
|
| 2.82 | % |
|
|
|
| 4.19 | % | ||||
Net interest margin |
|
|
|
|
| 2.99 | % |
|
|
|
| 4.37 | % | ||||
Ratio of interest-earning assets to interest-bearing liabilities |
|
|
|
|
| 106.64 | % |
|
|
|
| 109.67 | % | ||||
17
The following table sets forth the effects of changing rates and volumes (changes in the average balances) on the Company’s net interest income. Information is provided with respect to (i) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume); (ii) effects on interest income attributable to changes in volume (changes in volume multiplied by prior rate); and (iii) changes in rate/volume (change in rate multiplied by change in volume).
|
| Three Months Ended June 30, 2005 |
| Six Months Ended June 30, 2005 |
| ||||||||||||||||||||
|
|
|
|
|
| Rate/ |
|
|
|
|
|
|
| Rate/ |
|
|
| ||||||||
|
| Rate |
| Volume |
| Volume |
| Net |
| Rate |
| Volume |
| Volume |
| Net |
| ||||||||
|
| (dollars in thousands) |
|
|
|
|
|
|
|
|
| ||||||||||||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Cash and cash equivalents |
| $ | 1,208 |
| $ | (132 | ) | $ | (1,100 | ) | $ | (24 | ) | $ | 742 |
| $ | (76 | ) | $ | (685 | ) | $ | (19 | ) |
Federal Funds |
| 15 |
| (2 | ) | (12 | ) | 1 |
| 7 |
| — |
| (5 | ) | 2 |
| ||||||||
Investment securities |
| 272 |
| 85 |
| (264 | ) | 93 |
| 284 |
| 122 |
| (190 | ) | 216 |
| ||||||||
Participation Contract |
| — |
| (2,616 | ) | 1,962 |
| (654 | ) | — |
| (3,112 | ) | 1,556 |
| (1,556 | ) | ||||||||
Loans receivable, net (1) |
| (17 | ) | 11,807 |
| (8,845 | ) | 2,945 |
| (516 | ) | 12,196 |
| (6,021 | ) | 5,659 |
| ||||||||
Total interest-earning assets |
| 1,478 |
| 9,142 |
| (8,259 | ) | 2,361 |
| 517 |
| 9,130 |
| (5,345 | ) | 4,302 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Interest-bearing liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Passbook accounts, money market, and checking |
| 252 |
| 63 |
| (231 | ) | 84 |
| 201 |
| 58 |
| (122 | ) | 137 |
| ||||||||
Certificate accounts |
| 1,118 |
| 821 |
| (1,402 | ) | 537 |
| 700 |
| 1,022 |
| (776 | ) | 946 |
| ||||||||
Borrowings |
| 1,253 |
| 2,295 |
| (2,153 | ) | 1,395 |
| 802 |
| 2,409 |
| (782 | ) | 2,429 |
| ||||||||
Subordinated debentures |
| 204 |
| — |
| (153 | ) | 51 |
| 92 |
| 182 |
| (97 | ) | 177 |
| ||||||||
Total interest-bearing deposits |
| 2,827 |
| 3,179 |
| (3,939 | ) | 2,067 |
| 1,795 |
| 3,671 |
| (1,777 | ) | 3,689 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Change in net interest income |
| $ | (1,349 | ) | $ | 5,963 |
| $ | (4,320 | ) | $ | 294 |
| $ | (1,278 | ) | $ | 5,459 |
| $ | (3,568 | ) | $ | 613 |
|
Provision for Loan Losses
The provision for loan losses was $90,000 and $235,000 for the three and six months ended June 30, 2005, compared to $208,000 and $264,000 for the same periods in 2004. The decrease in the provision for the three months ended June 30, 2005 compared to the same period in 2004 is primarily due to a smaller increase in loan growth during the second quarter of 2005 by $24.0 million compared to the same period in 2004.
For the six months ended June 30, 2005 and 2004, net charge-offs were $73,000 and $53,000, respectively. The Bank’s Loss Mitigation Department continues collection efforts on loans previously written-down and/or charged-off to maximize potential recoveries. See “Provision for Loan Losses.”
Noninterest income was $1.3 million and $1.9 million for the three and six months ended June 30, 2005, compared to $524,000 and $2.5 million for the same periods ended June 30, 2004. The increase in noninterest income for the three month period is primarily due to the sale of charged-off loans associated with the Participation Contract that generated a nonrecurring gain of $716,000 as well as $307,000 in prepayment penalty income received from the early pay-off of $13.2 million of loans. The decrease in noninterest income over the six month period is due to a $1.6 million gain from the sale of the 1998-1 residual interest component of the Participation Contract in March 2004.
Noninterest expenses were $2.9 million and $5.7 million for the three and six months ended June 30, 2005,
18
respectively, compared to $2.7 million and $5.5 million for the same periods ended June 30, 2004. The increase in noninterest expense for the three and six months were the result of an increase in compensation and benefits of $170,000 and $436,000, respectively, which was partially offset by decreases in nearly all other noninterest expense categories.
At June 30, 2005, the Company had 83 full-time equivalent employees compared to 77 at June 30, 2004.
Provision for Income Taxes
The Company’s tax provision for the three and six months ended June 30, 2005 was $502,000 and $658,000, respectively. For the same periods a year earlier, the tax provision was $194,000 and $206,000, respectively. The Company benefited from a reduction in its valuation allowance for deferred taxes in the three and six months ended June 30, 2005 and for the three and six months ended June 30, 2004 of $500,000, $1.0 million, $472,000, and $1.1 million, respectively. The Company’s valuation allowance for deferred taxes was $3.0 million at June 30, 2005. The decrease in the deferred tax valuation allowance is due to management’s updated forecast of taxable earnings for the foreseeable future and because we believe that it is more likely than not that we will realize these tax assets. As the Company recognizes continuous taxable income and if the earning projections show that the Company will have the ability to use its net operating loss carry-forwards, then all or part of the remaining valuation allowance for deferred taxes of $3.0 million will be eliminated.
The Bank’s primary sources of funds are principal and interest payments on loans, deposits and borrowings. While maturities and scheduled amortization of loans are a predictable source of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions, and competition. However, the Bank has continued to maintain the required minimum levels of liquid assets as defined by OTS regulations. This requirement, which may be varied at the direction of the OTS depending upon economic conditions and deposit flows, is based upon a percentage of deposits and short-term borrowings. The Bank’s average liquidity ratios were 6.05% and 18.64% for the quarters ended June 30, 2005 and 2004, respectively.
The Company’s cash flows are comprised of three primary classifications: cash flows from operating activities, investing activities and financing activities. Cash flows provided by operating activities was $3.7 million for the six months ended June 30, 2005, compared to $3.6 million for the six months ended June 30, 2004. Net cash (used in) investing activities was ($85.0) million for the six months ended June 30, 2005, compared to ($101.1) million for the six months ended June 30, 2004. Net cash provided by financing activities was $86.9 million for the six months ended June 30, 2005, compared to $109.1 million for the six months ended June 30, 2004.
The Company’s most liquid assets are unrestricted cash and short-term investments. The levels of these assets are dependent on the Company’s operating, lending and investing activities during any given period. At June 30, 2005, cash and cash equivalents totaled $21.7 million and short-term investments totaled $27.1 million. The Company has other sources of liquidity if a need for additional funds arises, including the utilization of FHLB advances.
As of June 30, 2005, the Bank had outstanding commitments for loan originations and unused lines of credit of $374,000 and $2.1 million, respectively, compared to December 31, 2004 which had $8.1 million and $600,000, respectively. There were no material changes to the Company’s commitments or contingent liabilities as of June 30, 2005 compared to the period ended December 31, 2004 as discussed in the notes to the audited consolidated financial statements of Pacific Premier Bancorp, Inc., for the year ended December 31, 2004 included in the Company’s Annual Report on Form 10-K.
The OTS capital regulations require savings institutions to meet three minimum capital requirements: a 1.5% tangible capital ratio, a 3.0% Tier 1 leverage capital ratio and an 8.0% risk-based capital ratio. The Tier 1 leverage capital requirement has been effectively increased to 4.0% because the prompt corrective action legislation provides that institutions with less than 4.0% Tier 1 leverage capital will be deemed “undercapitalized.” In addition, the OTS, under the
19
prompt corrective action regulation, can impose various constraints on institutions depending on their level of capitalization ranging from “well capitalized” to “critically undercapitalized.”
The table in “Item 1. Financial Statements - Note 2 - “Regulatory Matters” reflects the Bank’s capital ratios based on the end of the period covered by this report and the related OTS requirements to be adequately capitalized and well capitalized. As of June 30, 2005, the Bank met the capital ratios required to be considered well capitalized.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Management believes that there have been no material changes in the Company’s quantitative and qualitative information about market risk since December 31, 2004. For a complete discussion of the Company’s quantitative and qualitative market risk, see “Item 7A. Quantitative and Qualitative Disclosure About Market Risk” in the Company’s Form 10-K.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
The Company’s Chief Executive Officer and its Chief Financial Officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures as defined in Rules 13a-15(c) and 15-d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report (the “Evaluation Date”) have concluded that as of the Evaluation Date, the Company’s disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company and its consolidated subsidiaries would be made known to them by others within those entities, particularly during the period in which this quarterly report was being prepared. Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in Internal Controls
There were no significant changes in the Company’s internal controls or in other factors that could significantly affect the Company’s internal controls subsequent to the Evaluation Date, nor any significant deficiencies or material weaknesses in such controls requiring corrective actions. As a result, no corrective actions were taken.
The Company is not involved in any legal proceedings other than those occurring in the ordinary course of business, except for the “James Baker v. Century Financial, et al” which was discussed in the Company’s March 31, 2005 Form 10-Q. Management believes that none of these legal proceedings, individually or in the aggregate, will have a material adverse impact on the results of operations or financial condition of the Company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
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Item 4. Submission of Matters to a Vote of Security Holders
On May 25, 2005, the Company held its Annual Meeting of Shareholders. The matters voted on at the meeting and the results of these votes are as follows:
1. Election of the following directors to terms expiring in 2008:
|
| Affirmative |
| Votes |
|
|
|
|
|
|
|
Ronald G. Skipper |
| 4,688,281 |
| 351,637 |
|
Roy A. Henderson |
| 4,821,558 |
| 218,360 |
|
Michael L. McKennon |
| 4,821,558 |
| 218,360 |
|
2. Ratification of the appointment of Vavrinek, Trine, Day & Co., LLP as Independent Auditors for the fiscal year ending December 31, 2005:
Affirmative |
| Votes |
| Votes |
|
|
|
|
|
|
|
5,038,198 |
| 800 |
| 920 |
|
None
Exhibit 31.1 |
| Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
Exhibit 31.2 |
| Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
Exhibit 32 |
| Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act. |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
| PACIFIC PREMIER BANCORP, INC., | |||
|
|
| |||
August 15, 2005 |
| By: | /s/ Steven R. Gardner |
| |
Date |
| Steven R. Gardner | |||
|
| President and Chief Executive Officer | |||
|
| (principal executive officer) | |||
|
|
| |||
|
|
| |||
August 15, 2005 |
|
| /s/ John Shindler |
| |
Date |
| John Shindler | |||
|
| Executive Vice President and Chief Financial Officer | |||
|
| (principal financial and accounting officer) | |||
22
Index to Exhibits
Exhibit No. |
| Description of Exhibit |
|
|
|
31.1 |
| Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
31.2 |
| Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
32 |
| Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act. |
23
