PPBI - Earnings call transcript Q3 2017 | Pacific Premier Bancorp, Inc.

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Operator

Good day, and welcome to the Pacific Premier Bancorp Third Quarter 2017 Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Steve Gardner, Chairman and CEO of Pacific Premier Bancorp. ahead. go Please

Steven Gardner

Good today. Bryan. I you appreciate Thank morning, us joining you, everyone.

and As forward-looking we we the going this take also quarter in our -- report of earlier the review the at items. due you're level. Pacific aware, Earlier to all going is We morning, some Heritage were in I able operations solid earnings financial to integration details. the third of that Overall, reflects completed up negotiate and to of Ron those. in the Nicolas a our through to the highest open relative and perform quarter, few for quarter that released XXXX. continual into read we'll continue walk system I'm team look of and comments, Safe to executing a acquire we the call a statement of conversion Plaza notable the Premier. earnings this commitment sign all note Oaks morning, have through to and encourage And Bancorp. then to the a thought Harbor definitive questions. of I'll we I'd the had agreement integrate release to and to their you improvement diligence, our

relationship client and operations. acquisition We continue to technology strengthen our organization by management, and to investing in new enhance talent

quarter, of and strong These average X.XX% growth, expense of our million deposit which balance tangible cost, lines. the and quality. Additionally, results organic average basics, We were we equates common to $XX.X to return diluted income on responsive by across and asset clients net of a pristine a per or return share control prudent well-managed sheet driven driving remain on XX.X%. equity assets all focused the our generated on growth service $X.XX of in business providing

new increased the are historic third example continuous growth, improvement. quarter with of seeing of we levels production. generated third commitments. In another philosophy the of million Consistent company's quarter, The loan in was loan we our $XXX

During markets, receiving the contributions Coast loan saw in demand are Central from we team. of our our we solid consistent quarter, most and

during production as in third in multifamily SBA million loans owner-occupied of million the $XX in franchise annualized $XX investor-owned in to loans, portfolio, majority loan million with million categories. originated C&I new in loan in in in business diversified be we loans, $XX $XXX $XX well commitments, construction growth resulted million the loan million Our XX.X% continued CRE, the loans, quarter $XX in $XX CRE. various the and of growth rate This loan of coming million

manage loan loans. to sales. number sheet of SBA continue such, with lower we yielding $XX a $XX along million including growth strategies, of We of sold through million loans, as And balance single-family our

inflows. had We by growth. deposit driven existing core deposit steadily our nice at growth Looking quarter bankers along our relationships, in is the our a growth The core with deposits in businesses. clients new of being principally adding

on year. cost started As to in industry, some we with deposit the earlier see this pressure many

effectively. fairly So pressure manage far, to able been we've that

the we because with deposits pressure with Those lasting X They are are deposits. costs deposit our are service from on and with developed they we primarily levels we value on significant relationships points pay their middle not bank of everyday. of us on by mitigated. increased We've rates the and trusted of that quarter. deliver banking them, the the bankers. Premier cost businesses, Because Our small with place basis people of somewhat market base, bank nature last client Pacific because us

on X. agreement definitive acquire As August Bancorp to we previously announced, we signed a Plaza

shareholder the the transaction close on November of received required have regulatory and X. to all approvals and We expect

market Angeles allow forward us closing and the looking in a both financial the sense. makes are will it as expand that to way We Los to strategic into

relationship ability number Orange, our acquiring While will clients that a in based Los Angeles, San strengthen Las of bankers and we this Diego enhance significantly Vegas, L.A. will of in grow talented business deal be business market County to a clients our share. quality we number franchise. our have With Plaza, and will

Looking deposit and loan growth and our healthy are pipeline well to our initiatives. execute ahead, remains positioned we on

always to XXXX, have but great accomplished strengthen seeking are ways the a for improvement, We organization. deal room continually during there we and is

Heritage of the will We have we Coast. added Central into with our the scale entry expand through presence Plaza, valuable And Oaks Southern our California. acquisition and throughout

to foundation with drive ability have organic we and synergies fully are from our and the We growth the capture built pleased acquisitions. our

transactions to our sense us, both organic call will more and the third a our make Ron? about results. to and we M&A opportunities turn summary, Ron through we available disciplined over open provide continued I'm have an never In change. going approach With our always on are and towards from little excited bit strategic to for growth financial standpoint We quarter M&A. that, are that shareholders, to detail to the

Ronald Nicolas

Thanks, Steve, morning, and everyone. good

to more some items all, increased the I in the prior our highlighted is comparison. revenue, million $XX.X for total quarter, net diluted million of million earned be and which quarter. as to As will $X.XX Major quarter, significant linked focusing income quarter Over in $XX.X the customary, was we quarter primarily $XX.X items per compared the the reviewing on impacting in share. earnings included, a release,

look million higher total And However, Operating annualized our the tax $XX.X compared tax Taking of filing was $X.X from the the at of provision. which accretion which our basis. driven income million million quarter's favorably increased tax benefited prior up in with with on security closer million excluding a million, a linked revenue quarter. returns, net impacted costs, gains, $XX.X a company impact of statement. and the or income income Total XXXX came true the interest million $X.X included prior by quarter provision with in $X.X at excluding the XX% merger-related expense, quarter. accretion revenue of $XX.X in compared

net the interest average net lower increased and quarter. the income income million included loan the was our $X.X balances of $XXX fees in interest single Excluding prepayment quarter. of this $XXX,XXX million higher increase of accretion, contributor for largest The impact to

Our the to prior net of the income for from accretion points accounting in decreased decrease. with quarter, interest margin basis X.XX% XX X.XX%

to increase in basis accretion, basis. deposit to our our the CDs our combined cost, quarter interest which deposit by June core impact net linked extent, Excluding the lesser wholesale driven basis three costs, increased CD points, X both basis points yields X.XX%. margin basis rate of on principally resale a by X higher driven as grew largely XX basis X.XX%, to with hike were cost a by points The point fed nonmaturity and X.X points rose and increasing loan

pricing recorded prior pressures, for expect we loss previously our remain although of interest The a our the in fairly anticipate loan with quarter, $X growth. further $X.X we As range. driven quarter margin loan net stated, in principally the consistent by million compared provision X.XX% we during to company deposit core X.XX% the have to million

prior for compared loan loss ended the at with the allowance for loans X.XX% Our quarter in investment -- total X.XX% X quarter. of held

quality and Noninterest quarterly $XXX,XXX included from loan down million sale range organic in gain loss We security $X.X asset profile. $XXX,XXX of the quarter, our quarter's in from the gains, million income million our to current $X.X expect of with $X.X per $X.X loan commensurate prior remain prior provision growth quarter million million. fell and $X.X to our the

In addition small mortgage of SFR for our X loan point pool we SBA a approximately to sales, lower-yielding sold a loans gain.

grew staff $XX.X company compared expense of million, million $XXX,XXX system with achieved XXX in million as in XXX costs to June acquisition previously from of merger-related its excluding remaining as at the costs. equivalents include Our quarter, of Staffing excluding to numbers Oaks reductions $XX.X merger-related expected full-time disclosed. $XX.X came XX. cost the the prior noninterest Heritage the conversion with These completion the savings related of

remaining the July. cost completed data processing We conversion also in savings our with achieved

next quarters. As this our acquisition. of in around earnings of new the in there couple operations that in moved were quiet noted expect some, billings typical transition fully a a We down few the to expenses noise of transition initial reflecting release,

rate return. Our effective million included was up $X.X filing with in the and the quarter tax true of tax XXXX XX.X% tax second a our

by the X.X% effective As fell quarter. approximately result, a for the rate

rate effective fourth rise to in our quarter. to approximately tax the XX% to XX% expect We

highlights. $X.X billion, Turning of assets gross came the or an $XXX at Total now in balance sheet a just loans increase growth million with total rate. to of annualized billion, over $X.X XX%

of in while another real our our loan the $XX held-for-sale accounted small status fell table As as by loans a business principally as million well $X estate highlighted of SFR our as for growth, total XX. loan as million, million release, $XXX sale a moving loans September result loan composition to of within

quarterly consecutive originated commitments in quarter, overall. for at loan $XXX increase, yields new million sixth were coming origination X.XX% loan with the the New

at quarter. this second quarter over Our million the investment the finished Plaza the the quarters over purchase the Deposits million $XX the at anticipate was the of the investment principally quarter. average enhanced $XXX of FRB We portfolio prior quarter, investment our just assets, additional XX% portfolio $XXX from The stock. at to by growing acquisition. compared inclusive the of next portfolio increasing of couple roughly million of with yield end finished $X of quarter billion,

deposits. deposits, XX% from $XX majority grew the at million finishing increase came to Importantly, that our which transaction billion, nonmaturity total of $X.X of

at XX.X%. Our loan-to-deposit ratio quarter finished the

next anticipate couple respond noted, middle our all the quarters previously on our is for As key costs and of small company recent as the to We commercial pressures. bank. those capitalized the focus competition rate to relationship rising business and the helping across capital to over both ratios mitigate consolidated fed well remain we increases, although continues deposit market

on equity basis value points per a share. quarter and ratio rose basis grew XX% X.XX%, our tangible tangible common to book $XX.XX linked XX to Our

Lastly, a look asset at quality. taking

strong XX-day loans. related We uptick of across We results couple small continue recently PCI in a acquired entire portfolio. our a realize asset to saw to loan the quality delinquency

to and Our allowance ratio the points million, quarter to increased ended coverage loan at $XX.X X basis our loss for allowance X.XX%. loans

loan accounting. fair valued approximately under reminder, As our X/X portfolio a is acquisition of

XX questions. value we of as you call have. would be total With may happy Our please total for open investment. that, held of fair any loans discount $XX.X questions million September to X.XX% was for up answer or the Operator,

Operator

Instructions]. with question Bohlen from Jackie And our comes first KBW. [Operator

Jacquelynne Bohlen

loan to wanted Just touch growth. on

well. had pretty you First, obviously, quarter. that in very geographies strong And the done mentioned

little going do future, us in where the of color quarter? that to think give that see just was future on growth a be could the if you you in you bit the that in portfolio If going kind entered more is

Steven Gardner

third The pipeline, just the quarter. diversified, production our Jackie, during was as is well

business our don't differing overall, But seeing. to have we we significant another, depending change any going in see lines. business production, the that one think be quarter all or stronger lines is they're volumes can upon consistent across there. So of Certainly, loan volume

Jacquelynne Bohlen

with and are done And at that kind the might finding those we prepping and of for or you more that Okay. single-family of pretty in yielding much XXXX? loans -- the see sale, those lower looking are

Steven Gardner

more see times of we'll are of for portion think And It in that XXXX. primary that then wouldn't it and clients over -- personal that HELOCs is That part a I they off will are run portfolio banking -- includes utilize two those relatively portfolio various there's time. will reasons. business small. at

Jacquelynne Bohlen

the sales held-for-sale, loans? quarter, that then into what the And lot was of happened a those were Okay. and acquired put in

Steven Gardner

Generally, Oaks. yes. Predominantly from Heritage

Jacquelynne Bohlen

terms you're X benefits rising mentioned the you that basis the of the yield points Okay. in the yield And from portfolio, on that, and the increased. that rates seeing then

yields going increase potentially loan in cost a deposit like do forward, you see manner? As increasing

Steven Gardner

on seen pricing. loan rise we've we have quickly deposit more Today, than what yields

As X QX. up we over noted, points basis we're

trends back go exactly nice benefit But we'll we've you portfolio two from to we up year, just are points. performs If of forward, of seen going deposit continue. rise. see. those the that our general likely, fed December XXXX, How basis the And some end think through the costs the will

Operator

Matthew from with Clark comes Jaffray. Piper question Next

Matthew Clark

this a I On you margin, range that at deal X.XX%, this spoke has think of quarter. X.XX% obviously, quarter. coming to going I of if margin franchise you core noise the mean, core But some online, X.XX% to exclude around forward, Plaza X.XX% a the

that fully your whether being or considered into just not. to trying guidance So that's or not fit and

Steven Gardner

is or Certainly, once better But visibility the considered. X.XX%, point. range quarter But for think the same that the it's that get some X.XX% through comfortable close have X.XX%. books, into we with and that QX, range get and -- fourth those we right being. time, at time should Once loans being move at we the we're of we X.XX%, on the

Matthew Clark

the Okay. And new in the the on what then that? rate production quarter, weighted was average

Ronald Nicolas

It was X.XX%.

Steven Gardner

Matthew, X.XX%.

Matthew Clark

the at that loan the the just the then what And quarter. was pipeline, end size curious of of

Steven Gardner

currently. million $XXX little a It's over

Matthew Clark

now the targeted And just Okay. will of timing of saves? that And any the the your an update over that realized how then -- quarters? adjustments are view cost next closing Plaza you on also, deal, or that closer to be when of

Steven Gardner

saves. change previously We're the No we've provided. in the anticipated with cost comfortable guidance

portion of May saves realized, will the all of half as Most be cost in the half percent. early next conversion that -- a be second the half small most expect we the those of We in of saves in occur will first in fairly realized of XXXX, QX, once fully We'd cost year. I first them a should said, but the or of XXXX. which expect get completed, in systems

Matthew Clark

one for And last Okay. then me.

loan-to-deposit I the runoff. related kind guess, of of your the and Just like the to creep coming balance or sense in -- Pacific just and curious ratio? the it over can at But what's in pro runoff XXX%, XXX%? on of kind XXX% pro for that down based planed legacy above on plans the Looks mark of growth deposits loans Premier. ratio, loan-to-deposit forma under borrowing forma on manage

Steven Gardner

that over of going costs we're the to a higher being time them, continue earlier, loan-to-deposit to deposits think down use of do loan and some the strategies so of Plaza and prudently. variety as sales I manage at ratio, we've in one I manage the will indicated done past, to

them Our year. quarter we see generally, first HOA the in inflows each business, the strongest from of is

our need But We So the investor-owned that at some selling have had plenty of pull. time, if same there's slow, a we've CRE. production we certainly of levers of success be, variety off. that to could

So not it. generally to manage ways loan-to-deposit there's to a expect number of We would XXX%. ratio exceed

Operator

D.A. Next question comes Davidson. Tenner with from Gary

Gary Tenner

on seen in I production questions. a new part first, maybe of this you've of of terms the in of banks production any wondering some that from multifamily loan little if just nice as changes business? couple have bit multifamily I'm yields A that. played quarter, away line other guess, backed a

Steven Gardner

in No. low. those Multifamily loans. a And are multifamily. And we production had of this originate won't of are on. based couple a of is something The unless a multifamily we during loans fairly not that on based Generally it's couple were a still speaking, yields very relationship. were case, relationship couple product relationship very Gary, we -- in that that quarter, we large large the that the focused did drove

Gary Tenner

Okay. And the of rate you yields a reaction then be in the saw pick same about you assuming Plaza loan think quarter or the the do up first think of the we then yield the December, this loan of what expansion yields would hike maybe terms in if inclusive and quarter, this project as loan of it quarter? in 'XX, portfolio, to

Steven Gardner

and here. There's provided see and shake need out into we'll we to I that's quarter It's Gary, at ultimately Boy, as on, do variables the lot a do. of things. through the there, things spot speculating then of that does and what play we'll fed figure the -- see. to out QX we've guidance move is We number margin a think how

Gary Tenner

inclusion to of Okay. few accretion last the then I that do And probably the deal, a the this level million, the quarters, you Plaza? sustainable question of a just of is discount excluding think of $X.X quarter. this for terms sort in is Ex Plaza think, addition down Ron,

Ronald Nicolas

addition Yes, to a drop some legacy of the Gary. in the We saw in HOB.

to exclusive to for teens about So next I the mid-teen say, of number Plaza. would -- X quarters, see to venture X a we'll mid high

point XX this XX, forward. probably basis points here So from

Operator

from Tim The with comes FIG Instructions]. [Operator Partners. Coffey next question

Timothy Coffey

you've been typically. little average excess a than them plan the of on higher couple last had the the you go thinking hold as the kind the of had through in while you've on have kind books, those a borrowings, to Ron, of Is bit quarters the there? for borrowings as Plaza? What's integration or Steve it to of

Steven Gardner

did. we the to total directly Tim, billion increase acquisition is $X added Well, assets. related Oaks the that in Heritage

that of a bit little borrowings. So came with

So continue XX% generally to assets. to in have of range of they X% total we'd borrowings expect the kind historically,

Ronald Nicolas

quarter, we We Prior the the were consistent, to X% X% HOB Tim, X% there. to point, of fairly They quarter-to-quarter on last in coming Yes. range. quarter, with spot were line. acquisition Steve's that, this X% to

Timothy Coffey

there you're the of that anything fair out marketplace perspective value Steve, trying absolute marks from figure new sounds reserves, Right. is you've credit the But just in new then the is and plenty is. a relative like credit this out, level to that right, of seeing you it of I'm concerns quality on And from loans? I a NPAs. mean, normal, plenty it there you've got perspective, got to

Steven Gardner

pretty overall, of Generally at somebody's category are at quality low portfolio these credit out some speaking, going real any that or focused certainly again, don't can there for consistent business another, concerns our point the we're expect continue in levels. standpoint. loan seeing into don't run we market, that to know from in a issues. very one lines But the asset performance. We'd in I on, see that we that

course, worried we're the time, Of about at everything. same

Operator

from with Next Raymond Worthington question James. Don comes

Donald Worthington

ag terms the portfolio, down are over this Heritage I What of thoughts of they ag kind about know this current million, were looking Oaks but sorry, lending? for loans, was -- a quarter. terms your In little just $XX in of there your thoughts XX% there.

Steven Gardner

through We're very Central a relationships lot business. continue we business. of Heritage Coast. as of and decline going the The Oaks that line principally, of line in nature. have, we mentioned, the was good like much seasonal very We that along Sure. to in There's you saw

grow business to over expect time. we so prudently And that

Donald Worthington

on yield Great. right. portfolio? that that what on then Xs actual the the was X And sold, to All Okay. were

Steven Gardner

the the yielding Low exact, portfolio. lowest it's our in loan get of X% you range. but We could

Operator

from Stephens. Next Stafford Tyler with comes question

Tyler Stafford

$XX by just 'XX nearing crossing out assets you I've you in $XX build billion? a between around question, end then. about do where and you investment in don't growth crossing got Just the if assuming or the are acquisition standpoint, in expenses. an you billion now just organically, guess, first terms I talk from Can of another expense

Steven Gardner

But be. incurred We that the investment. have say been has have eventually, are billion, we amount make substantial we'll of additional of we point. cross that and the -- bulk as there made I'd might a to whenever expense $XX this approach, still need that at But investments

Tyler Stafford

about the close talk ahead to going left Steven, you And where your of from open kind most in Plaza probably then, here. M&A for expected. Okay. Obviously, is of did remarks, closing -- of additional us door

and Just now, curious, are on to move geographically, outside you your M&A perhaps thoughts particularly, looking just if of now California.

Steven Gardner

are in shareholder California opportunities a beyond would have We and and and remain We weigh and that there is something standpoint, are been value. from folks. assess as our to with we that. M&A building both to franchise we'll enhancing our conversations if are the that we be But to consider state those M&A, we open as to operations long as grow with open lines, against take look where and continue and we continue integration they and and team expand, an consistent

Tyler Stafford

a in you're Okay. think of or last for so. one that business, million Plaza rate and/or add more to expect basis? producing or you And terms maybe much the be to quarter, good to run me, quarterly in terms selling $XX of just to this a less on what around going this about? Is production Would SBA

Steven Gardner

production the the or think on Plaza not to either gain going would sale. to add is the We materially

Operator

to This back question-and-answer I turn closing over any now like would session. remarks. the concludes to Gardner our for Mr. conference

Steven Gardner

and us Bryan, joining Thank again morning. you, this thanks for

additional any great have myself you. feel with a be and or please to talk we call, happy free a give questions, would Ron day. to you If Have

Operator

presentation. Thank The conference today's attending for you concluded. has now

disconnect. You may now

Pacific Premier Bancorp (PPBI) 24 Oct 172017 Q3 Earnings call transcript