PPBI - Earnings call transcript Q2 2021 | Pacific Premier Bancorp, Inc.

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Operator

Good day, and welcome to the Pacific Premier Bancorp's Second Quarter 2021 Conference Call. [Operator Instructions]. I would now like to turn the conference over to Mr. Steven Gardner, Chairman and CEO. Please go ahead, sir.

Steven Gardner

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

morning, As earnings our this quarter you all aware, are we report XXXX. released of earlier for second the

has financial also information have published updated presentation We an on performance. that our investor additional

If copy you Relations' visit encourage we to presentation. the not you download our a done have to already, would so website of Investor

We of and our walk the statement notable all of we'll included terms our CFO, our prepared review the plan questions. have In will harbor some relative presentation. call our the of encourage details, the comments we relatively I of release brief call in I forward-looking safe of we've read through comments, disclosures today, in the a and given up open detail to note few Ron investor presentation, and release investor then would carefully. to and you level our I Nicolas, in financial and keep to will those earnings our to through items. earnings that

have both profitable of in implementing future. development and to will in initiatives our growth productive quarter, that We business multiple drive further the terms enhance second very ability

a well the at throughout executed team we and back is level Our quarter positioned half the of high enter as XXXX.

we of average equity of common assets X.XX% During $XX.X million return income return on average translated quarter, net tangible the or second which of and generated a $X.XX per to share, XX.XX%. on a

value continue share return of to capital our profitability amount X.X% Our tangible allowed and a drove a to us in shareholders. per increase meaningful book to

in strong year production to had material to our reserve contributions most quality improvement us well-controlled of level the which improvement growth incremental by higher in areas, the expenses. contributed remixing release in and we prior built loan of balance our to the asset last a towards start net part ratios, A already quarter. enabled sheet from higher-yielding the incremental increased loan driven relative board that of were fee-generating results assets, levels Our across

synergies organization. success from of larger, the the Our the capable collective financial a reflects diverse our reflects throughout teams and more performance bank. our emanating in effectively strengths leveraging It

development balance level personnel us Our loan in annualized high loans continues clients, areas, and fashion quality new growth. enabling We XX.X% up well growth over billion production resulted balanced prior with and add quarter, to in despite business is to estate while in onboarding in from administration all generate is including had billion in driving markets. sheet. loan of quarter investors, during our diversified $X.X larger, the and This our and in to commitments, quarter. middle-market increased clients, From of are new existing quarter strongest credit be paydowns working frontline sophisticated nearly expand relationships the people which operating $X.X with the mix proficiency we more payoffs last a our history contributions real are in increasing. The our we loan from total the disbursements across which collaborative are new loan coming efficiently with was of XX% to the companies a which seeing growth

market businesses, area real commitments loan had a from loan estate, we level has quarter, real commitment new middle relative Commercial the production. demand remain been up. commercial of reflective ever-improving corporate healthy, capabilities loan first emerge we to construction small pandemic, multifamily As And last and estate-related the and pick clients. attract to higher our to of

sustainable the call quarter, historic end lows portfolio. too trend. it's in During line to an rate our of the compared began drive quarter, second commercial prior helped the C&I a a the seeing early utilization rates higher increase we But level which of at this to growth

before maintain Our reemerging the it a coupled rates. concerns take liquidity commercial the line around And time increase utilization clients the coronavirus, see significant of may chain challenges still and disruptions we with levels. substantive supply in

back towards loan net growth. didn't our higher benefit realize quarter, average we of production the half of million loan the loans full the weighted so Our loans. than The was period $XXX more of end were

our the and loan quarter, increase of In deposits strong reduce higher this deposits. to addition $XXX our helped million to in further total efforts production, basis of level the result in development deposits, our business which to resulted second commercial inflow a in deposit of improved mix cost X points. continue noninterest-bearing In

be the the year, first sustainability to relatively ahead, the the half depending consistent second in we of expect expansion. Looking in of what pace economic upon the the with year saw the we trends of half and

continue We well look that we of things improve. can includes the all assessment and we the execute ongoing our control that as will for to to of parts on opportunities company

at second high-cost beginning the strong quarter, million sources capital $XXX acquisitions. these reduce another our we our going sub interest various During funding debt of we our forward. elimination of given million net that we of expense July, the margin interest support of had liquidity through help redeemed and will levels, sub The And acquired redeemed debt. $XX and

We are and edges of also branch trimming consolidated July. more our X branches the around network in

is without footprint can regularly service. our negatively branch expense of gain locations part to we client on basis. synergies approach we review and consolidate see disciplined to impacting a something regular This our do we As where management,

ahead over our investment revenue, the few provide enables grow to to Our our on in continuous turn every a improve quarter that areas organization Ron call optimizing increase and go details area client help more service. second I'm us that, to With results. efficiencies of and to our enhance focus on going

Ronald Nicolas

directed $XXX.X good quarter on The in of majority noninterest and million basis. by revenue higher be the a $XXX.X quarter, my income. Thanks, will comments morning. with compared Steve, the for was prior linked-quarter driven Total million

the was of increased for ratio pre-provision net XX.X% benefit highlighting operating quarter of our a revenue X.XX%, efficiency the percent scale. Our was our and as assets

actions, quarter, these I our including guidance. on more high-cost benefit the balance increasing by approximately the During a a our QX with portfolio bit investment actions additional million, touch of and million $XXX investment $XXX of will by we growing took my BOLI sub sheet number redeeming debt.

net from the basis margin came quarter, the impacted partially margin by at prior a loan X core X.XX%, cost offset the lower points for and funds. decrease fees the of in of came Our negatively quarter interest X.XX% in and at as yields lowered margin, a

of the actions our As net quarter as will QX. balance noted, sheet we and in and income margin in impact well loans the the the deposits as believe growth favorably second taken interest

production range. million on compared with included quarter income prior fees the additional related drove deposit as quarter. was core $XXX of to as the to million compensation Noninterest in employees. a million as the with quarter million $XX.X and SBA $X escrow higher the the of related increasing well excluding at increase result Noninterest Key primarily BOLI result, in investment will loans, the incentive we came higher a in level in NIM of the gain increased SBA expense the of merger-related higher see add As the activity. prior as latter headcount at QX. income million prior in saw $XX.X increase $XX.X quarter. X,XXX trust to the in sale increased X.XX% Also, X.XX% of costs transaction a drivers to little loan production million flat $XX.X $X noninterest compared more the and starting per Higher than costs million

$X costs Our activity noninterest as in to related levels as million our continue quality The business recapture in should improving a quarter. of $XX.X higher of to recapture profile. of strong and asset and $XX technology in QX expense modeling million to as the well well approximate Provision an key as million both by was expense million driven experience we macroeconomic variables continued principally compared growth. was expense with $XX staff forecast invest prior the as

$XX.X assets billion quarter the the equity balance billion $XXX with just million. deposits now $XXX compared in Total as Turning prior sheet. and $XX.X to million to grew over grew

excess we As billion loan primary included by table which earlier, quarter. investments, portfolio greater redeployed combined, provide results forward loan and a period-end prior In the drivers. and approximately our roll million to loans into highlighted higher-yielding of the liquidity release, earnings transparency grew we $X.X from to $XXX the

X.X%. to from million We strong by over which into total billion saw $XX $XXX inflows we our deposits, approximately billion. investment weighted As increased debt Year-to-date, an the grew prior end. $XXX cost to $X.X that a million redeemed just fueling deposit quarter, of our noted, at over of quarter noninterest-bearing growth have had average in securities total total sub

totaled at quarter to million basis continued nonperforming of well of Net total compared perform prior quality loans investment. quarter. for in assets at $X.X and $X.X held XX the total basis XX million delinquency assets with for Asset points the with charge-offs points

fair and quarter or totaled at X.XX% quarter of credit allowance acquired loss discount value losses capacity loans investment. on allowance end of the Our the for remaining comprised at million the absorbing finished held for and loans total the X.XX% $XXX

Given With Steve. quarters. hand are asset economies that, on back the I'll continued the model, coming to and our strong we impact likely quality CECL releases our reserve improving in it to see

Steven Gardner

and Ron. into remain to executing at growth. our are strength, Great. well high summary, attractive to scenarios a profile seeing In Thanks, teams the this develop profitable ability positioned conservative are efforts level, acquisitive are growth. our capitalize risk organic strong support of highly of number development capital in organization's in We economic the With translating confident year. any business half our second that earnings both levels, and may we and on we

to merger out add seek and scale meaningful partners throughout that our earnings to U.S. Western and franchise. accretion continue can acquisitions We the

for deliver transformative remarks, be Our concludes questions. our shareholders. call will and open pursuing transactions the please board questions. for management to are would and we to answer Chuck, any up open all our happy that prepared That of

Operator

first with And D.A. Instructions]. Davidson. come Tenner [Operator from Gary the question will

Gary Tenner

of to liquidity the for ask wanted about I deployment. kind outlook

little the repayments. You bond cash as incremental loan debt as and I a with in through have investment July the in second in well a bit the the worked quarter balance more down portfolio here sub guess your growth quite

just right you're the Or just going growth talk if rely need of the expectations any for book? So deploying you're now the into the on back of cash thinking how half about about to investment additional loan year? if you of could excess

Steven Gardner

but to higher depending the way that goes second into going we're securities. we I see to upon that if assets similar see -- what to liquidity continue into to includes, there, with earning as it, excess loans, that along redeploy during us have net course, Gary, Ideally, here. which we quarter growth liquidity think, manage of going the you're

Gary Tenner

on that And early quarter, Could slowdown at on kind this activity of the visibility there's have talk topic of terms of you activity of down third kind outlook. point of of into growth you kind about kind been the or activity? net that loan pay then in any payoff any

Steven Gardner

remains remained have we're like comments, rates the stable. utilization that and line The growth as liquidity. increasing QX. We'd mentioned see from we I will as seen, But there. my change the certainly are relatively hopeful And material lot clients it move any our sitting seen that, here through haven't just on to We of into summer to a in be prepared occur fall.

Operator

come The next with question will from Clark Sandler. Matthew Piper

Matthew Clark

the on first pipeline. Maybe

you I $X of last think coming was mentioned quarter, it over billion. had out that

out get want a sense the coming of XQ? to where Just for pipeline stood

Steven Gardner

Today, team latter still Yes. areas. little that accomplish pretty was from loan just $X.X we to quarter. second in the the at that's down over strong all where see sitting we're demand part, about of in to very in were. We billion, a strong owing the able But part got closings

to net So loans we're and loans we through efficiently will we continue that forward. the pull encouraged going grow pipeline in that have the

Matthew Clark

then some it like going sounds And more releases we're see to the forward. reserve, just Okay. on going

you was dip late feel as feel beginning CECL XXXX... that level on X.XX%. maybe X kind where reserve how longer sheet think do the that like about based day of relative do -- today might I of to might to year? stabilize you Is into be balance next you sheet term? Your the Or that you balance Is get that we able the you at below guess,

Steven Gardner

rather of factors number play obviously, here. CECL proven volatile And a times. and be there's designed at think I was has that to Yes,

see portfolio that over that the add changes where our at certainly that's to run given Also, think book, those to historic to, to benign be alluded discounts we have performance the have come models relatively quality And expect will of hard up. Certainly, portfolio, asset the and as loan in really credit charge-offs it's where out. the or would quarters as it's in So end now, down. the it going we'll see time a time, the Ron what factor. future but to we one it shapes ultimately at the on

Matthew Clark

sale, do on the more on how think gain forward? that going SBA healthy given premiums the how much start think on that Is case? are. I you some And to basis then a might you doing And Okay. sell still the had where planned quarterly you of

Steven Gardner

that that down. will Demand sold there. quarter has the or Historically, either And we program in seeing SBA loans current as the in we've most of came quarter, the we and that opportunities done on production we're be wound up had picked the prior has plan. the our like early PPP

So where in we'll the see up ends coming production quarters.

Matthew Clark

Okay. activity just last not? or not to on conversations color picked Can we the M&A. spoke give some at that And your then the whether time or on just last you earnings one all relative on have up call, how tracked has us

Steven Gardner

to are regularly in it much we make we has. boards out chat can that consolidation to them to say sense. And and makes to are We because as today. very with. organizations think hard pursue think other continues number continued it other environment might sense in continue what for we're and the partner attractive active we a And second that's with and Well, that M&A are about going this of it what that general quarter, CEOs reaching to as so in with ever us

Operator

The Jackie will come with Bohlen next question KBW. from

Jackie Bohlen

$X Steve, look for talked Matthew's at. billion on question, about take to a in floor you rough past, what the Lingering you a as

below able If the level? coming would don't if to you a align take you something look aren't quarters, in just things announce that

Steven Gardner

in makes we're is But somewhat as right to we're we hard to quarters, couple if larger think level along point do Board -- be where reassessing in of makes I in going makes time all this put didn't you we things it together know, or our pursuing change -- for come markets so. to pressed continue will, lot think that's adjust also. we more and would we'll next of be MOE a like But all if at sense the At we always we'd what the time, we our way and and think transactions, over sense to the efforts. what stakeholders.

Jackie Bohlen

then wonder the if an with Trust? could Okay. Premier update systems on how quarter provide conversion That's helpful. Pacific And you I this went

Steven Gardner

We conversion we half and and there. we're the put completed behind the here year. working new a later working be with end through clients team on new system will of start to May. that is that us transition the the well The It of at as the aspect second systems, to process the with offense nice progressing and move to in

Jackie Bohlen

administrative bump the that related a the was in separate And item? was quarter, the conversion? Or that to up the Trust fees in

Steven Gardner

the and of part amount of small related in we've In some seen. growth

Jackie Bohlen

update not to. like be question excited might an are But a this fair? give it still that opportunities on where the for that you're for could And quarter's sounds but next that there, maybe Okay. grow call. Is item ready just line to quite

Steven Gardner

on usually give to Nicolas' willing never I'm line Mr. that a That's much where wick. know grow of item think could don't to. I I Yes, daily a guidance

So Ron, venture you thoughts? to out know, and give your don't want us I there do

Ronald Nicolas

you, quarter, I agree that's I a Steve. think question Jackie. next for with

Operator

Instructions]. [Operator

Our Terrell next question come Stephens. will with from Andrew

Robert Terrell

the Is So debt I sub-debt balance there about sheet. X kind like the redemption of around the quarters? sub It for near to color on appreciate post is over so quarter. term? room or you post next million on the of this more still of $XXX it tranches, the Or those redeem have the looks of kind any couple

Steven Gardner

want you to? Ron, do

Ronald Nicolas

a think I couple I front near years. yet in of the it it. that's don't that's have yes. another term, redeemable we have Yes, me, of for issue don't Andrew, on but about exactly

could So short that much on what the front, in we we've at do run here. least done pretty

Robert Terrell

Is to Okay. quarter? And of make pickup. BOLI then, on annual I $X Ron, on or income correctly basis that investment just the quarter. Is per made sure heard you million anticipated past this fee an the

Ronald Nicolas

quarterly on a be Andrew. That will basis,

Steven Gardner

income, interest an be side. not will fee the that And Andrew,

Operator

I remarks. the questions, management ahead. over to for I turn Please closing like show call to back would no go further any and

Steven Gardner

it. forward you talking us. Thank look joining release. next you all to appreciate at to our good. We We earnings for Very

Operator

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

now You may disconnect.

Pacific Premier Bancorp (PPBI) 28 Jul 212021 Q2 Earnings call transcript