Earnings momentum for Pacific Premier Bancorp Inc. (PPBI) has been advancing since the regional bank posted robust third quarter 2012 results and announced an acquisition. PPBI attained a Zacks #1 Rank (Strong Buy) and hit its 52 week high on October 18. Its P/B ratio of just 1.2 makes this stock an attractive value pick.
Strong 3Q Results
On October 11, Pacific Premier reported third quarter earnings of 32 cents per share, surpassing the Zacks Consensus Estimate by 28.0% and last year’s earnings by 39.1%. An improved net interest income was partially offset by higher operating expenses and a decline in fee income.
Net interest income was $11.9 million, up 15.9% from the year-ago quarter on the back of the increase in average interest-earning assets. Yet, non-interest income fell 9.5% to $1.9 million due to lower other income, deposit fees and loan servicing fees. Furthermore, non-interest expense rose 13.5% to $8.0 million as a result of rising compensation costs.
Asset quality continued to improve during the quarter. As of September 30, 2012, the ratio of nonperforming assets to total assets was 1.08%, down 23 basis point year over year. Furthermore, allowance for loan losses was $7.7 million, down 10.1% from $8.5 million.
Adding First Associations Bank
On October 15, Pacific Premier announced a deal to acquire Dallas, Texas-based First Associations Bank. The cash and stock deal, valued at about $54 million, is anticipated to close later this quarter or in the first quarter of 2013. The deal would provide a valuable source of low-cost core deposits that are expected to strengthen the company’s existing deposit base and lower the overall funding cost.
Earnings Momentum Advances
All 4 estimates for 2012 have moved higher over the past 30 days, lifting the Zacks Consensus Estimate by 5.3% to $1.38 per share. This implies year-over-year growth of 39.9%. For 2013, the Zacks Consensus Estimate has advanced 8.0% to $1.22 on 4 upward revisions out of 5.
Along with a low P/B ratio, Pacific Premier has a forward P/E multiple as low as 8.2 (a P/E ratio under 15.0 and a P/B ratio below 3.0 generally indicate value). The company has a trailing 12-month ROE of 12.4%, compared with the peer group average of 5.2%. This implies that the company reinvests its earnings more efficiently than its industry peers.
Based in Costa Mesa, California, Pacific Premier Bancorp is the bank holding company for Pacific Premier Bank. The company offers a wide range of banking services to businesses and consumers in southern California. The company was founded in 1997 and conducts business through 10 full-service depository branches. With a market cap of roughly $114.8 million, Pacific Premier competes with Sterling Financial Corp. (STSA) and BankFinancial Corp. (BFIN), among others.
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