Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - PACIFIC PREMIER BANCORP INC | ex_991-prxmarch2018xinvconf.htm |
| 8-K - 8-K - PACIFIC PREMIER BANCORP INC | a8-k_march2018invconfs.htm |
Investor Presentation
Fourth Quarter 2017
Steve Gardner
Chairman, President & Chief Executive Officer
sgardner@ppbi.com - 949-864-8000
Ron Nicolas
Senior Executive Vice President & Chief Financial Officer
rnicolas@ppbi.com - 949-864-8600
Exhibit 99.1
Filed by Pacific Premier Bancorp, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: GrandPoint Capital, Inc.
SEC Registration Statement No.: 333-
2
Forward-Looking Statements
FORWARD-LOOKING STATEMENTS
The statements contained in this presentation 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 Pacific Premier Bancorp, Inc. (the “Company” or “Pacific Premier”) including, without
limitation, plans, strategies and goals, and statements about the Company’s expectations regarding revenue and asset growth, financial performance and
profitability, loan and deposit growth, yields and returns, loan diversification and credit management, shareholder value creation and the impact of the proposed
acquisition of Grandpoint Capital, Inc. (“Grandpoint”) and its wholly owned subsidiary, Grandpoint Bank, and other acquisitions.
Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. There can
be no assurance that future developments affecting the Company will be the same as those anticipated by management. The Company cautions readers that a
number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements.
These risks and uncertainties include, but are not limited to, the following: the expected cost savings, synergies and other financial benefits from the Grandpoint
acquisition or any other acquisition the Company has made or may make might not be realized within the expected time frames or at all; governmental approval
of the Grandpoint acquisition may not be obtained or adverse regulatory conditions may be imposed in connection with governmental approvals of the
acquisition; conditions to the closing of the Grandpoint acquisition may not be satisfied; Grandpoint’s shareholders may fail to provide the requisite consents to
approve the consummation of the acquisition; Pacific Premier’s shareholders may fail to approve the issuance of Pacific Premier common stock in connection
with the proposed Grandpoint acquisition; the strength of the United States economy in general and the strength of the local economies in which the Company
conducts operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the
Federal Reserve System; inflation, interest rate, market and monetary fluctuations; the timely development of competitive new products and services and the
acceptance of these products and services by new and existing customers; the willingness of users to substitute competitors’ products and services for the
Company’s products and services; the impact of changes in financial services policies, laws and regulations (including the Dodd-Frank Wall Street Reform and
Consumer Protection Act) and of governmental efforts to restructure the U.S. financial regulatory system; technological changes; changes in the level of the
Company’s nonperforming assets and charge offs; any oversupply of inventory and deterioration in values of California real estate, both residential and
commercial; the effect of changes in accounting policies and practices, as may be adopted from time-to-time by bank regulatory agencies, the Securities and
Exchange Commission (“SEC”), the Public Company Accounting Oversight Board, the Financial Accounting Standards Board or other accounting standards setters;
possible other-than-temporary impairment of securities held by us; changes in consumer spending, borrowing and savings habits; the effects of the Company’s
lack of a diversified loan portfolio, including the risks of geographic and industry concentrations; ability to attract deposits and other sources of liquidity; changes
in the financial performance and/or condition of our borrowers; changes in the competitive environment among financial and bank holding companies and other
financial service providers; unanticipated regulatory or judicial proceedings; and the Company’s ability to manage the risks involved in the foregoing. Additional
factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in the 2017 Annual Report on
Form 10-K of Pacific Premier Bancorp, Inc. filed with the SEC and available at the SEC’s Internet site (http://www.sec.gov).
Annualized, pro forma, projected and estimated numbers in this investor presentation are used for illustrative purposes only, are not forecasts and may not
reflect actual results.
Pacific Premier and Grandpoint undertake no obligation to revise or publicly release any revision or update to these forward-looking statements to reflect events
or circumstances that occur after the date on which such statements were made.
3
Where to Find Additional Information
Additional Information About the Proposed Acquisition of Grandpoint
This investor presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In
connection with the proposed acquisition transaction, Pacific Premier will file a registration statement on Form S-4 with the Securities and Exchange Commission
("SEC") that will include a consent solicitation and proxy statement/prospectus to be distributed to the shareholders of Grandpoint and Pacific Premier in
connection with their vote on the acquisition. SHAREHOLDERS OF GRANDPOINT AND PACIFIC PREMIER ARE ENCOURAGED TO READ THE REGISTRATION
STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE CONSENT SOLICITATION AND PROXY STATEMENT/PROSPECTUS
THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED ACQUISITION. The
final consent solicitation and proxy statement/prospectus will be mailed to shareholders of Grandpoint and Pacific Premier. Investors and security holders will be
able to obtain the documents, and any other documents Pacific Premier has filed with the SEC, free of charge at the SEC's website, www.sec.gov. In addition,
documents filed with the SEC by Pacific Premier will be available free of charge by (1) accessing Pacific Premier’s website at www.ppbi.com under the “Investor
Relations” link and then under the heading “SEC Filings”, (2) writing Pacific Premier at 17901 Von Karman Avenue, Suite 1200, Irvine, CA 92614, Attention:
Investor Relations, or (3) writing Grandpoint at 333 South Grand Avenue, Los Angeles, CA 90071, Attention: Corporate Secretary.
The directors, executive officers and certain other members of management and employees of Pacific Premier may be deemed to be participants in the
solicitation of proxies in respect of the proposed acquisition. Information about Pacific Premier’s directors and executive officers is included in the proxy
statement for its 2017 annual meeting of Pacific Premier’s shareholders, which was filed with the SEC on April 27, 2017. The directors, executive officers and
certain other members of management and employees of Grandpoint may also be deemed to be participants in the solicitation of consents in favor of the
acquisition from the shareholders of Grandpoint. Additional information regarding the interests of those participants and other persons who may be deemed
participants in the transaction may be obtained by reading the consent solicitation and proxy statement/prospectus regarding the proposed acquisition when it
becomes available. Free copies of this document may be obtained as described in the preceding paragraph.
4
33 Full-Service
Branch Locations
Company Profile
Exchange / Listing NASDAQ: PPBI
Focus
Small & Mid-Market
Businesses
Total Assets $8.02 Billion
Branch Network
• Market data as of 2/27/2018
(1) 3-month average as of 2/27/2018
Pacific Premier Branch Footprint
Headquarters Irvine, CA
# of Research Analysts 7 Analysts
Market Cap $1.99 Billion*
Avg. Daily Volume 412,115 Shares(1)
5
Strategic Transformation
2008 - 2012
Organic growth driven by dynamic sales culture
Geographic expansion through highly accretive FDIC-assisted acquisitions
Canyon National Bank (“CNB”) - $192 million in assets, closed on 2/11/2011 (FDIC-Assisted)
Palm Desert National Bank (“PDNB”) - $103 million in assets, closed on 4/27/2012 (FDIC-Assisted)
2018 and Beyond
Focus on producing EPS growth from scale, efficiency and balance sheet leverage
Target ROAA and ROATCE of 1.50% and 17%, respectively
Continue disciplined organic and acquisitive growth increasing scarcity value
2013 - 2018
Build out of commercial banking platform through acquisitions
First Associations Bank (“FAB”) - $424 million in assets, closed on 3/15/2013 (151 days)
San Diego Trust Bank (“SDTB”) - $211 million in assets, closed on 6/25/2013 (111 days)
Infinity Franchise Holdings (“IFH”) - $80 million in assets, closed on 1/30/2014 (73 days)
Independence Bank (“IDPK”) - $422 million in assets, closed on 1/26/2015 (96 days)
Security California Bancorp (“SCAF”) - $715 million in assets, closed 1/31/2016 (123 days)
Heritage Oaks Bancorp (“HEOP”) – $2 billion in assets, closed on 4/1/2017 (109 days)
Plaza Bancorp (“PLZZ”) - $1.3 billion in assets, closed on 11/1/2017 (84 days)
Grandpoint Capital, Inc. (“GPNC”) - $3.2 billion in assets, announced on 2/9/2017
A balance of organic and acquisitive growth to create a California centric commercial
bank franchise with $8.02 billion in assets
6
Highlights – Q4 2017
Earnings Net income of $16.2 million, which included $5.4 million in merger-related expense and a $5.6
million deferred tax asset revaluation
Operating net income of $25.2* million or $0.56* per diluted per share
Adjusted ROAA of 1.35%*
Adjusted ROATCE of 15.9%*
Loans/
Asset Quality
New loan commitments of $648 million
Net interest margin of 4.56%, core net interest margin of 4.26% excluding accretion
Nonperforming assets as a percent of total assets of 0.04%
Delinquencies as a percent of total loans of 0.16%
Deposits
Deposits totaled $6.1 billion, an increase of $1.1 billion, or 21%, from prior quarter
Noninterest-bearing deposits represent 37% of total deposits
Non-maturity deposits equal 82% of total deposits
Cost of Deposits of 0.32%
Key Ratios
Increasing operating leverage, with an efficiency ratio of 48.2%
Tangible book value per share of $15.26*, 6% higher than the third quarter of 2017, including
DTA revaluation, and 22% higher than the fourth quarter of 2016
Acquisition
Completed acquisition of Plaza Bancorp on November 1, 2017 (84 days), adding approximately
$1.3 billion in assets
* Please refer to non-GAAP reconciliation
7
History of PPBI
• Total deposits compound annual growth rate of 39% since 2011
• Total loans compound annual growth rate of 43% since 2011
Total Assets – Acquired vs. Non-Acquired
February 2011
Acquired Canyon
National Bank
($192MM assets) in
FDIC-assisted deal
$8,025
$961
$1,174
$1,714
$2,039
$2,791
$4,040 $4,174
$6,440 $6,532
$8.00
$10.50
$13.00
$15.50
$-
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
2011 2012 2013 2014 2015 2016 1Q'17 2Q'17 3Q'17 4Q'17
Non-Acquired Acquired TBV/Share
November 2017
Acquired PLZZ
($1.3B assets)
April 2012
Acquired Palm
Desert National
Bank ($103MM
assets) in FDIC-
assisted deal
March 2013 and June 2013
Acquired First Associations
Bank ($424MM assets) and
San Diego Trust Bank
($211MM assets)
January 2014
Acquired Infinity
Franchise Holdings
($80MM assets), a
specialty finance
company
January 2015
Acquired
Independence
Bank ($422MM
assets)
January 2016
Acquired SCAF
($715MM assets)
Timely and efficient acquisitions have accelerated PPBI’s growth and performance
Total Assets TBV/Share*
April 2017
Acquired HEOP
($2.0B assets)
Note: All dollars in millions
* Please refer to non-GAAP reconciliation
8
Small and middle market business banking focus
Full suite of business banking services, including: cash
management, payroll and merchant card services
Customized commercial and industrial (“C&I”) and
commercial real estate loans (“CRE”)
C&I and CRE business loans
Originated $201M Q4 2017 vs. $75M Q4 2016
38% of loan portfolio
Commercial Lines of Business
Business Banking SBA Lending
Franchise Lending
Income Property Lending
Small Business Administration (“SBA”) Loans
Nationwide origination capability
California Capital Access Program (“Cal CAP”) Loans
United State Department of Agriculture (“USDA”) Loans
Originated $58M Q4 2017 vs. $36M Q4 2016
Sell guaranteed portion – 75% of loan amount
Gross gain rates 8-12%
National lender for established and experienced owner
operators of Quick Serve Restaurants (“QSR”)
C&I and CRE based lending secured by equipment and
real estate
Originated $66M Q4 2017 vs. $57M Q4 2016
Average originated rate of 5.4% in Q4 2017
11% of loan portfolio
Credit facilities and banking services for CRE investors in
SoCal
Structured CRE and bridge loan flexibility
Originated $79M Q4 2017 and $81M Q4 2016
20% of loan portfolio
Construction Lending
Construction loans for developers and owner users on
properties predominantly in coastal SoCal
New team assembled in first half of 2013
Originated $106M Q4 2017 vs. $90M Q4 2016
Attractive risk adjusted yields
5% of loan portfolio
HOA Banking
Nationwide leader of customized cash management,
electronic banking services and credit facilities for:
Home Owner Association (“HOA”) Companies
HOA Management Companies
Predominately money market and demand deposits
9
Increasing Loan Commitments & Attractive Yields
$251
$299
$322
$385
$455
$492
$558
$648
4.97% 4.93%
4.87%
4.80%
4.88%
4.99% 4.97% 5.00%
3.00%
3.50%
4.00%
4.50%
5.00%
$-
$100
$200
$300
$400
$500
$600
$700
1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17
Business Loans Real Estate Loans Other Loans Weighted Average Coupon
Note: All dollars in millions
Q
ua
rt
er
ly
L
oa
n
Co
mm
itm
en
ts
A
vg
. R
at
e
on
N
ew
C
omm
itm
en
ts
10
Commercial Bank Transformation - Deposit Composition
Deposits – 12/31/2009 Deposits – 12/31/2017
Total Deposits: $618.7 Million
Cost of Deposits: 1.91%
Total Deposits: $6.1 Billion
Cost of Deposits: 0.32%
Non-interest-
Bearing Demand
5%
Interest-Bearing
Demand
4%
Money Market/
Savings
23%
Certificate of
Deposits
68%
• 37% of deposit balances are non-interest-bearing deposits
• 82% of deposits are non-maturity deposits
• 89% of deposits are core deposits*
* Core deposits are all transaction accounts and non-brokered CD accounts below $250,000
Non-interest
Bearing
Demand
37%
Interest-
Bearing
Demand
6%
Money
Market/
Savings
39%
Certificate of
Deposits
18%
11
Commercial Bank Transformation – Loan Composition
Loans – 12/31/2009 Loans – 12/31/2017
• Loan portfolio is high quality and well-diversified
• Business-related loans represent 54% of total loans at 12/31/17*
• Business loan commitments originated for FY 2017 were $1.26 billion, 58% of total commitments
Total Loans: $576.3 Million Total Loans: $6.2 Billion
• Business loans are defined as commercial and industrial, franchise, commercial owner
occupied, agriculture and SBA
Commercial and
Industrial
5% CRE Owner
Occupied
18%
CRE Non-Owner
Occupied
26%
Multi-Family
48%
1-4 Family
2%
Other
1%
CRE Owner
Occupied
21%
CRE Non-
Owner
Occupied
20%
Commercial
and Industrial
18%
Multi-Family
13%
Franchise
11%
Construction &
Land
5%
One-to-Four
family
4%
Farm & Agric.
4%
SBA
3%
Consumer
1%
12
Conservative Credit Culture
Nonperforming Assets to Total Assets (%)
The Company has a history of effective credit risk management and outperforming peers
• Loan delinquencies to loans held for investment of 0.16% as of 12/31/2017
• Nonperforming assets to total assets of 0.04% at 12/31/2017
1.04
1.70
1.58 1.66
1.36
0.48 0.58
0.40
3.26
1.62
1.31
0.76
0.55
1.67
1.08
0.38 0.33
0.21 0.15 0.20 0.20 0.14 0.12 0.12 0.21 0.19 0.18 0.18 0.17
0.13 0.17 0.04
0.02 0.01 0.01 0.04
2.93
3.62
3.96
4.11
4.26 4.30 4.24
4.39
4.23 4.29
4.06 4.04
3.77
3.48 3.39
3.21
2.96
1.56
1.24
1.10 1.18 1.05
0.91
0.80 0.74 0.69 0.59 0.58
0.74
0.53 0.48 0.50 0.49 0.46 0.44
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
PPB Peers *
CNB
Acquisition
2/11/11
PDNB
Acquisition
4/27/12
* California peer group consists of all insured California institutions, from SNL Financial.
13
CRE to Capital Concentration
• CRE concentrations are well managed across the organization
• Our growth across our key businesses has diversified our loan portfolio
Managed Growth
CRE as a Percent of Total Capital
627%
499%
415%
372%
310%
349%
316%
336%
362% 352%
365% 376%
378%
340% 336%
287%
0%
100%
200%
300%
400%
500%
600%
700%
2008 2009 2010 2011 2012 2013 2014 2015 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17
14
Strong Loan Yields - Low Cost of Deposits
Portfolio Core Loan Yields Cost of Total Deposits
0.33%
0.36%
0.32%
0.28% 0.27%
0.25%
0.28%
0.32%
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
2013 2014 2015 2016 1Q'17 2Q'17 3Q'17 4Q'17
Total Deposits Cost of Deposits
Our specialty lines of business have optimized our net interest margin through diversification
and disciplined pricing as well as accelerating organic loan and deposit growth…
Note: All dollars in millions
Note: Core loan yields exclude accretion.
5.28% 5.18% 5.17% 5.13% 5.05%
4.94% 4.98%
5.16%
0.00%
0.75%
1.50%
2.25%
3.00%
3.75%
4.50%
5.25%
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
2013 2014 2015 2016 1Q'17 2Q'17 3Q'17 4Q'17
Loans Portfolio Core Loan Yield
15
Revenue & Net Interest Margin
Annual Operating Revenue(1)
Note: All dollars in millions
(1) Operating revenue = net interest income + noninterest income.
(2) Core net interest margin excludes accretion.
*Annualized
$67
$87
$121
$173
$279
$350
$0
$50
$100
$150
$200
$250
$300
$350
$400
2013 2014 2015 2016 2017 4Q'17*
Core Net Interest Margin(2)
And delivered compounded annual revenue growth rate of 51% as well as strong net
interest margin of over 4%
3.93%
4.09%
4.06%
4.20%
4.27%
4.09%
4.14%
4.26%
3.70%
3.80%
3.90%
4.00%
4.10%
4.20%
4.30%
2013 2014 2015 2016 1Q'17 2Q'17 3Q'17 4Q'17
Acquired
HEOP
4/1/17
16
Noninterest Expense & Efficiency
Adjusted Noninterest Expense / Avg. Assets Efficiency Ratio
In addition to leveraging technology to drive growth, the Company has continually
improved its operational processes to achieve greater operating leverage and
economies of scale
Note: Efficiency Ratio represents the ratio of noninterest expense less other real estate owned operations, core deposit intangible amortization and merger related expense to the sum of net
interest income before provision for loan losses and total noninterest income less gains/(loss) on sale of securities, and other-than-temporary impairment recovery (loss) on investment securities.
Adjusted noninterest expense excludes other real estate owned operations, core deposit intangible amortization and merger related costs.
2.95%
2.87%
2.58% 2.55%
2.40%
2.30% 2.32% 2.27%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
2013 2014 2015 2016 1Q'17 2Q'17 3Q'17 4Q'17
64.7%
61.4%
55.9%
53.6% 52.3% 52.3% 52.1%
48.2%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
2013 2014 2015 2016 1Q'17 2Q'17 3Q'17 4Q'17
17
Pre-Tax, Pre-Provision Income(1) Tangible Book Value per Share
$23
$34
$52
$79
$132
$156
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
2013 2014 2015 2016 2017 Q4'17*
$9.08
$10.12
$11.17
$12.51
$12.88
$13.83
$14.35
$15.26
$7.00
$8.00
$9.00
$10.00
$11.00
$12.00
$13.00
$14.00
$15.00
$16.00
2013 2014 2015 2016 1Q'17 2Q'17 3Q'17 4Q'17
Strong operating income has consistently resulted in shareholder value creation
Operating Income and Tangible Book Value
Note: All dollars in millions, except per share data
Note: Tangible book values are based on basic shares outstanding.
Refer to non-GAAP reconciliation
(1) Excludes merger-related expenses
*Annualized
18
Strategically Focused – Financially Motivated
The Company’s management team operates the bank knowing we are crossing $10.0 billion
• Our business model is always evolving, transforming and improving
• Continue to build a quality banking franchise and leverage our core competencies
• Investments in and the strengthening of the entire team is an on-going process
Continue to Evolve and Strive for Superior Performance
Operational Integrity Leads to Strong Internal Controls and Risk Management
The Company’s operating environment and culture have been built over the years to be scalable
• Disciplined credit underwriting culture remains a fundamental underpinning
• BSA/AML – automated Rule Based Risk Rating and statistical analytics covering entire client base
• CRA – enhanced program to exceed community group requirements and large bank exam standards
Keen Focus on Creating Maximum Shareholder Value
Management consistently communicates and executes on its strategic plan
• Our Board regularly evaluates capital management, strategic direction and the alternatives to maximize shareholder value
• Focused on increasing earnings and building tangible book value through growth strategies and improving efficiencies
• Our goal is to create a fundamentally sound franchise with strong earnings and risk management
19
Superior Market Performance (PPBI)
Source: SNL Financial, market information as of 12/31/2017
Since December 2015, PPBI’s stock price has significantly outperformed its publicly traded
bank peers (SNL Bank Index / NASDAQ Bank Index)
PPBI +88%
NASDAQ
Bank
SNL Bank +40%
+43%
-40.0%
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17
PPBI SNL Bank NASDAQ Bank
20
Pro forma assets of approximately $11.7 billion at close while deepening our Southern California market presence
Compelling
Strategic Rationale
Grandpoint is a business bank headquartered in Los Angeles, CA
Continues to build our Southern CA market presence and expands into attractive AZ and WA markets
A significant transaction to accelerate our growth and strengthen our operating scale and efficiency
Attractive transaction valuation for a sizable opportunity within a top tier market
Continues to create scarcity value and enhances our profile within highly desirable banking markets
Attractive
Financial Metrics
Significant
Opportunities for
Continued Growth
Acquiring more than $2 billion of non-maturity deposits
Core funding will support and fuel continued organic loan growth
Established track record of excellent credit quality on both sides
Attractive pro forma deposit portfolio profile with ~40% noninterest bearing demand
Immediately accretive to EPS in 2018 and 8.6% accretive to 2019 EPS(1)
Tangible book value earn-back of 1.2 years
IRR greater than 20%
All-stock consideration generates strong pro forma capital ratios to support growth
Grandpoint Highlights – announced 2/9/18
Financial data as of December 31, 2017
(1) Based on street consensus EPS estimates for 2018 and 2019 for PPBI, excludes non-recurring merger related expenses
21
Overview of Grandpoint Capital
Source: SNL Financial
Note: All dollars in thousands
(1) Southern California is defined as Orange, Los Angeles - Riverside, San Bernardino, and San Diego counties. Excludes administrative branches
(2) Adjusted to reflect the impact of certain non-recurring, one-time charges
(3) Deposits as of June 30, 2017
Deposit by County(3)
Company Highlights Southern California Deposit Footprint(1)
PPBI (20)
Grandpoint (10)
Headquartered in Los Angeles, CA
14 branch locations including three in Arizona and one in
Washington
Business banking focus with:
$3.2 billion of assets and $2.4 billion of loans
$2.4 billion of total deposits (89% non-maturity)
ROAA of 1.03(2) and NPAs / Assets of 0.36%
Significant presence in the highly desirable Los Angeles
marketplace
Non-California Deposit Footprint
Grandpoint (1) Grandpoint (3)
Deposits
PPBI GPNC Pro Forma Branches
Orange $2,514,905 $189,559 $2,704,464 6
Los Angeles 425,710 1,145,692 1,571,402 9
San Diego 197,047 465,276 662,323 7
Pima (AZ) - 293,357 293,357 2
Maricopa (AZ) - 256,939 256,939 1
Clark (WA) - 121,246 121,246 1
Other 2,918,548 - 2,918,548 21
Total $6,056,210 $2,472,069 $8,528,279 47
22
Consideration
Fixed exchange ratio of 0.4750x and 100% stock consideration
Grandpoint shareholders to receive 15,758,089 shares of PPBI
Pro forma ownership at close of approximately 75% for PPBI and 25% for Grandpoint
Aggregate consideration value of $641.2 million (including stock options), or $18.57 per common share(1)
Grandpoint stock options will be cashed-out for in-the-money value of approximately $25.1 million
Additional
Transaction Details
Closing expected in early Q3 2018
Estimated cost savings of 40% of Grandpoint’s non-interest expense fully phased-in by the end of Q4 2018
Aggregate fair value mark of 1.35% of gross loans, or $33.3 million
Pre-tax one-time merger related expenses of approximately $31.9 million
CDI of approximately 2.15% of non-maturity deposits, or $45.2 million
(1) Value of consideration based on PPBI’s closing price of $39.10 on February 9, 2018, consideration to common shareholders valued at $616.1 million
(2) Adjusted to reflect the impact of certain non-recurring one-time charges
(3) Based on street consensus for 2018 and 2019
(4) Based on the cross-over methodology
Transaction Assumptions and Pro Forma Impacts
Price to LTM earnings per share of 18.7x(2)
Price to tangible book value per share of 212%
Immediately accretive to EPS (4.6% in 2018) and 8.6% accretive in 2019(3)
Earn-back period of 1.2 years(4) (2.4% dilutive to tangible book value per share at close)
Valuation and
Impacts
23
Construction
5%1-4 Family
5%
Multi-Family
18%
NOO-CRE
22%
OO-CRE
19% C&I
15%
Farm & Ag.
3%
Franchise
8%
SBA
3%
Consumer and
Other
2%Construction6%
1-4 Family
7%
Multi-Family
30%
NOO-CRE
27%
OO-CRE
13%
C&I
10% SBA
5%
Consumer and
Other
2%
Construction
5%
1-4 Family
4%
Multi-Family
13%
NOO-CRE
20%
OO-CRE
21%
C&I
18%
Farm & Ag.
4%
Franchise
11%
SBA
3%
Consumer and
Other
1%
Noninterest-
Bearing Demand
39.2%
Interest Bearning
Demand
6.0%
Money Mkt. and
Savings
39.0%
Time Deposits
10.1%
Wholesale CDs
5.7%
Noninterest-
Bearing Demand
45.9%
Interest Bearning
Demand
6.1%
Money Mkt. and
Savings
37.4%
Time Deposits
3.7%
Wholesale CDs
6.9%
Noninterest-
Bearing Demand
36.6%
Interest Bearning
Demand
6.0%
Money Mkt. and
Savings
39.6%
Time Deposits
12.6%
Wholesale CDs
5.2%
Pro Forma Loans & Deposits
Grandpoint’s low-cost deposit base is an excellent fit with PPBI’s asset origination strength
As of December 31, 2017
Source: Based on data from management for both PPBI and Grandpoint
Note: All dollars in thousands
PPBI
Diversified
Combined
Loan Portfolio
Strong Core
Deposit Base
Grandpoint Combined
$6.2B Loans
5.48% Yield on Loans
$2.4B Loans
4.69% Yield on Loans
$8.6B Loans
5.26% Yield on Loans
$6.1B Deposits
0.32% Cost of Deposits
$2.4B Deposits
0.34% Cost of Deposits
$8.5B Deposits
0.33% Cost of Deposits
24
Source: Public filings and company projections
As of December 31, 2017
(1) At close
(2) Non-GAAP, please see GAAP reconciliation on page 33
Holding Company Capital Ratios
PPBI GPNC Pro Forma
(1)
Tangible Common Equity Ratio (2) 9.4% 9.3% 9.3%
Leverage Ratio 10.7% 9.4% 9.8%
Common Equity Tier-1 Ratio (CET-1) 10.6% 10.6% 10.7%
Tier-1 Ratio 10.9% 10.8% 10.9%
Risk Based Capital Ratio 12.6% 11.5% 12.1%
Bank Level Capital Ratios
PPBI GPNC Pro Forma
(1)
Leverage Ratio 11.7% 9.2% 10.5%
Common Equity Tier-1 Ratio (CET-1) 11.9% 10.6% 11.8%
Tier-1 Ratio 11.9% 10.6% 11.8%
Risk Based Capital Ratio 12.3% 11.3% 12.2%
Capital Ratios
The consolidated Company will remain well capitalized post closing with strong
earnings capacity to sustain growth strategy and well-capitalized levels
25
Listed below are the fifteen largest banks and thrifts headquartered in Southern California(1)
Market data as of February 9, 2018
Source: SNL Financial for the most recent quarter
(1) Defined as banks with shares listed on the NYSE, NASDAQ or OTC exchanges, excluding ethnic focused banking institutions, sorted by total assets
(2) Total assets shown as of pro forma at close and are inclusive of merger adjustments
Enhanced Scarcity Value in Southern California
The combination of PPBI and Grandpoint would become the 2nd largest publicly-traded bank
headquartered in Southern California (1)
(2) (2)
Deposit Mix
Total Market Loans / Non-Int. Non-
Assets Cap. Deposits Bearing Maturity
Company Name Ticker Exchange ($M) ($M) (%) (%) (%)
1 PacWest Bancorp PACW NASDAQ 24,995 6,645 90.0 45.1 89.1
2 Pro Forma PPBI+Grandpoint (2) PPBI -- 11,703 -- 101.2 39.2 84.2
2 Banc of California, Inc. BANC NYSE 10,328 966 91.3 14.7 99.0
3 BofI Holding, Inc. BOFI NASDAQ 8,916 2,181 107.1 12.2 88.3
4 CVB Financial Corp. CVBF NASDAQ 8,271 2,478 73.8 58.8 94.1
5 Pacific Premier Bancorp, Inc. PPBI NASDAQ 8,025 1,808 101.8 36.6 82.2
6 Opus Bank OPB NASDAQ 7,487 972 87.0 13.8 93.5
7 Farmers & Merchants Bank of Long Beach FMBL OTCQB 6,992 1,046 72.2 37.6 85.2
8 First Foundation Inc. FFWM NASDAQ 4,541 694 106.4 31.9 73.8
9 Community Bank CYHT OTC Pink 3,747 587 95.8 41.2 82.7
10 Grandpoint Capital, Inc. GPNC OTC Pink 3,194 663 99.4 45.9 89.4
11 American Business Bank AMBZ OTC Pink 1,874 309 56.1 52.7 97.4
12 Pacific Mercantile Bancorp PMBC NASDAQ 1,323 200 93.7 29.7 68.3
13 Provident Financial Holdings, Inc. PROV NASDAQ 1,162 136 98.5 8.5 72.8
14 Malaga Financial Corporation MLGF OTC Pink 1,041 193 126.6 15.6 65.1
15 Seacoast Commerce Banc Holdings SCBH OTC Pink 939 183 57.8 41.0 93.6
Median 5,766 694 94.7 37.1 86.8
26
Summary
Create a franchise with assets of $11.7 billion and attractive upside potential
Operational scale and efficiencies as a larger organization
Combined company better positioned for growth – ability to attract talent and customers
Increases non-maturity deposits by $2.0 billion, non-maturity deposits will total 84% of all deposits pro forma
More diversified balance sheet – geography and customers
Logical geographic fit
Further builds on our existing Southern California market presence
Expands PPBI into the attractive Phoenix and Tucson, Arizona markets and Vancouver, Washington
Prepared to cross $10 billion
Preparing to transition for two years – compliance with DFAST, ERM, Audit, Model Risk Management, Cybersecurity,
BSA/AML, Compliance, and Third-Party Risk Management substantially complete
Continue to strengthen and deepen the management team across the organization
On-going enhancements of internal controls and process to keep pace with our growth
Due to the combined client base, limitations on interchange fees expected to have an immaterial impact on results
Stronger position to evaluate alternatives on a combined basis
Enhanced scarcity value for combined company
Strategically Attractive Transaction, Compelling Financial Metrics, Track Record of Successful M&A
27
• Proven track record of executing on acquisitions and organic growth
• Well positioned to evaluate attractive acquisition opportunities
• Continue to drive economies of scale and operating leverage
• Positioned to deliver growth and strong profitability
• Ability to integrate business lines that generate higher risk adjusted returns
• Create scarcity value among banks in Southern California
Pacific Premier Outlook
Building Long-term Franchise Value
28
Appendix Materials
29
Consolidated Financial Highlights
(1) Represents the ratio of noninterest expense less OREO operations, core deposit intangible amortization and merger related expense to the sum of net interest
income before provision for loan losses and total noninterest income less gains/(loss) on sale of securities.
(2) Nonperforming assets excludes nonperforming investment securities.
(3) Classified assets includes substandard loans, doubtful, substandard investment securities, and OREO.
(4) Annualized
* Please refer to non-GAAP reconciliation
Note: All dollars in thousands, except per share data
December 31, March 31, June 30, September 30, December 31,
2016 2017 2017 2017 2017
Summary Balance Sheet
Total Assets $4,036,311 $4,174,428 $6,440,631 $6,532,334 $8,024,501
Loans Held for Investment 3,241,613 3,385,697 4,858,611 5,009,317 6,196,468
Total Deposits 3,145,581 3,297,073 4,946,431 5,018,153 6,085,868
Loans Held for Investment / Total Deposits 103.1% 102.7% 98.2% 99.8% 101.8%
Summary Income Statement
Total Revenue $46,622 $46,386 $72,097 $72,512 $87,621
Total Noninterest Expense 25,377 29,747 48,496 39,612 49,895
Provision for Loan Losses 2,054 2,502 1,904 2,049 2,185
Net Income 11,953 9,521 14,176 20,232 16,171
Diluted EPS $0.43 $0.34 $0.35 $0.50 $0.36
Performance Ratios
Return on Average Assets* (4) 1.24% 0.94% 0.89% 1.26% 0.87%
Return on Average Tangible Common Equity* (4) 14.2% 11.0% 11.3% 15.0% 10.5%
Efficiency Ratio (1) 50.9% 52.3% 52.3% 52.1% 48.2%
Net Interest Margin 4.59% 4.39% 4.40% 4.34% 4.56%
Asset Quality
Delinquent Loans to Loans Held for Investment 0.03% 0.01% 0.06% 0.07% 0.16%
Allowance for Loan Losses to Loans Held for Investment 0.66% 0.68% 0.52% 0.54% 0.47%
Nonperforming Loans to Loans Held for Investment 0.04% 0.02% 0.01% 0.01% 0.05%
Nonperforming Assets to Total Assets (2) 0.04% 0.02% 0.01% 0.01% 0.04%
Classified Assets to Total Risk-Based Capital (3) 3.00% 2.54% 5.00% 6.15% 5.68%
Classified Assets to Total Assets (3) 0.33% 0.28% 0.52% 0.66% 0.61%
Capital Ratios
Tangible Common Equity/ Tangible Assets * 8.86% 8.85% 9.18% 9.41% 9.42%
Tangible Book Value Per Share * $12.51 $12.88 $13.83 $14.35 $15.26
Common Equity Tier 1 Risk-based Capital Ratio 10.12% 9.84% 10.71% 10.59% 10.59%
Tier 1 Risk-based Ratio 10.41% 10.11% 11.08% 10.94% 10.88%
Risk-based Capital Ratio 12.72% 12.34% 12.69% 12.51% 12.57%
`
30
Non-GAAP Financial Measures
Tangible common equity to tangible assets (the "tangible common equity ratio") and tangible book value per share are a non-GAAP financial measures derived from GAAP-based
amounts. We calculate the tangible common equity ratio by excluding the balance of intangible assets from common stockholders' equity and dividing by tangible assets. We
calculate tangible book value per share by dividing tangible common equity by common shares outstanding, as compared to book value per common share, which we calculate by
dividing common stockholders’ equity by common shares outstanding. We believe that this information is consistent with the treatment by bank regulatory agencies, which exclude
intangible assets from the calculation of risk-based capital ratios. Accordingly, we believe that these non-GAAP financial measures provide information that is important to investors
and that is useful in understanding our capital position and ratios. However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on
GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by
other companies. A reconciliation of the non-GAAP measure of tangible common equity ratio to the GAAP measure of common equity ratio and tangible book value per share to the
GAAP measure of book value per share are set forth below.
Note: All dollars in thousands, except per share data
December 31, December 31, December 31, December 31, December 31, December 31, March 31, June 30, September 30, December 31,
2011 2012 2013 2014 2015 2016 2017 2017 2017 2017
Total stockholders' equity 86,777$ 134,517$ 175,226$ 199,592$ 298,980$ 459,740$ 471,025$ 959,731$ 981,660$ 1,241,996$
Less: Intangible assets (2,069) (2,626) (24,056) (28,564) (58,002) (111,941) (111,432) (405,869) (405,222) (536,343)
Tangible common equity 84,708$ 131,891$ 151,170$ 171,028$ 240,978$ 347,799$ 359,593$ 553,862$ 576,438$ 705,653$
Total assets 961,128$ 1,173,792$ 1,714,187$ 2,037,731$ 2,789,599$ 4,036,311$ 4,174,428$ 6,440,631$ 6,532,334$ 8,024,501$
Less: Intangible assets (2,069) (2,626) (24,056) (28,564) (58,002) (111,670) (111,432) (405,869) (405,222) (536,343)
Tangible assets 959,059$ 1,171,166$ 1,690,131$ 2,009,167$ 2,731,597$ 3,924,641$ 4,062,996$ 6,034,762$ 6,127,112$ 7,488,158$
Common Equity ratio 9.03% 11.46% 10.22% 9.79% 10.72% 11.39% 11.28% 14.90% 15.03% 15.48%
Less: Intangible equity ratio (0.20%) (0.20%) (1.28%) (1.28%) (1.90%) (2.53%) (2.43%) (5.72%) (5.62%) (6.06%)
Tangible common equity ratio 8.83% 11.26% 8.94% 8.51% 8.82% 8.86% 8.85% 9.18% 9.41% 9.42%
Basic shares outstanding 10,337,626 13,661,648 16,656,279 16,903,884 21,570,746 27,798,283 27,908,816 40,047,682 40,162,026 46,245,050
Book value per share 8.39$ 9.85$ 10.52$ 11.81$ 13.86$ 16.54$ 16.88$ 23.96$ 24.44$ 26.86$
Less: Intangible book value per share (0.20) (0.20) (1.44) (1.69) (2.69) (4.03) (4.00) (10.13) (10.09) (11.60)
Tangible book value per share 8.19$ 9.65$ 9.08$ 10.12$ 11.17$ 12.51$ 12.88$ 13.83$ 14.35$ 15.26$
31
Non-GAAP Financial Measures
Pre-tax, pre-provision income, excluding merger-related expense, is a non-GAAP financial measure derived from GAAP-based amounts. We calculate it by excluding income taxes,
the provision for loan losses and merger-related expenses. We believe that this non-GAAP financial measure provides information that is important to investors. However, this non-
GAAP financial measure is a supplement and is not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for this measure, this
presentation may not be comparable to other similarly titled measures reported by other companies. A reconciliation of pre-tax, pre-provision income, excluding merger-related
expenses is set forth below.
Note: All dollars in thousands
Annualized
Three Months Ended
December 31, December 31, December 31, December 31, December 31, December 31,
2013 2014 2015 2016 2017 2017
Net income 8,993$ 16,616$ 25,515$ 40,103$ 60,100$ 64,684$
Add: Income tax 5,587 10,719 15,209 25,215 42,126 77,480
Add: Provision for loan losses 1,860 4,684 6,425 8,776 8,640 8,740
Add: Merger-related expense 6,926 1,490 4,799 4,388 21,002 5,436
Pre-tax, pre-provision income
(excluding merger-related expense) 23,366$ 33,509$ 51,948$ 78,482$ 131,868$ 156,340$
For the Years Ended
32
Non-GAAP Financial Measures
For quarter period presented below, adjusted net income and adjusted diluted earnings per share are non-GAAP financial measures derived from GAAP-based amounts. We
calculate these figures by excluding merger related expenses and DTA revaluations in the period results. Management believes that the exclusion of such items from these financial
measures provides useful information to an understanding of the operating results of our core business. However, these non-GAAP financial measures are supplemental and are not
a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these adjusted measures, this presentation may not be comparable to
other similarly titled adjusted measures reported by other companies.
(1) Annualized
Note: All dollars in thousands
December 31,
2017
Net income 16,171$
Add: Merger-related expense 5,436
Add: DTA revaluation 3,545
Adjusted net income 25,152$
Diluted earnings per share 0.36$
Add: Merger-related and litigation expense, net of tax 0.20
Adjusted diluted earnings per share 0.56$
Return on average assets 0.87%
Add: Merger-related and litigation expense, net of tax 0.48%
Adjusted return on average assets(1) 1.35%
33
Non-GAAP Financial Measures
For the quarter period presented below, adjusted net income for return on average tangible common equity and average tangible common equity are non-GAAP financial measures
derived from GAAP-based amounts. We calculate return on average tangible common equity by adjusting net income for the effect of CDI amortization and exclude the average CDI
and average goodwill from the average stockholders' equity during the period. We calculate adjusted return on average tangible common equity by adjusting net income for the
effect of CDI amortization and merger related expense and exclude the average CDI and average goodwill from the average stockholders' equity during the period. We believe that
this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. Accordingly, we believe that these
non-GAAP financial measures provide information that is important to investors and that is useful in understanding our capital position and ratios. However, these non-GAAP
financial measures are supplemental and are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these adjusted
measures, this presentation may not be comparable to other similarly titled adjusted measures reported by other companies. A reconciliation of the non-GAAP measures of return
on average tangible common equity and adjusted return on average tangible common equity to the GAAP measure of return on common stockholders’ equity is set forth below.
• Please refer to non-GAAP reconciliation
(1) Annualized
Note: All dollars in thousands
December 31,
2017
Adjusted net income* 25,152$
Plus: Tax effected CDI amortization 2,111
Less: CDI amortization expense tax adjustment 815
Adjusted net income for return on average tangible
common equity 26,448$
Average stockholders' equity 1,161,174$
Less: Average core deposit intangible 40,274
Less: Average goodwill 454,362
Average tangible common equity 666,538$
Adjusted return on average tangible common equity(1) 15.9%
34
Source: SNL Financial, company projections
Note: All dollars in thousands
(1) At close
PPBI - 12/31/17 Pro Forma
(1)
Common Stockholders' Equity 1,241,996$ 1,892,358$
Less: Intangible Assets 536,343 882,352
Tangible Common Equity 705,653$ 1,010,006$
Common Shares Outstanding 46,245,050 62,674,089
Book Value Per Share 26.86$ 30.19$
Less: Intangible Assets Per Share 11.60 14.08
Tangible Book Value Per Share 15.26$ 16.12$
Total Assets 8,024,501$ 11,702,651$
Less: Intangible Assets 536,343 882,352
Tangible Assets 7,488,158$ 10,820,299$
Tangible Common Equity Ratio 9.4% 9.3%
Tangible common equity to tangible assets (the “tangible common equity ratio”) and tangible book value per share are a non-GAAP financial measures derived from GAAP-based amounts. We calculate the
tangible common equity ratio by excluding the balance of intangible assets from common stockholders’ equity and dividing by tangible assts. We calculate tangible book value per share by dividing tangible
common equity by common shares outstanding, as compared to book value per common share, which we calculate by dividing common stockholders’ equity by common shares outstanding. We believe that
this information is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. Accordingly, we believe that these non-GAAP
financial measures provide information that is important to investors and that is useful in understanding our capital position and ratios. However, these non-GAAP financial measures are supplemental and
are not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled
measures reported by other companies. A reconciliation of the on-GAAP measure of tangible common equity ratio to the GAAP measure of common equity ratio and tangible book value per share to the
GAAP measure of book value per share are set forth below.
Non-GAAP Financial Measures