Two Orange County banks said last week that they’re on the lookout for acquisitions, while it appeared a third bank’s stock may be propped up by sale speculation.
Irvine-based Pacific Premier Bancorp (Nasdaq: PPBI) doubled assets last year to $8 billion, thanks to the acquisitions of Paso Robles’ Heritage Oaks Bancorp and Plaza Bancorp in Irvine.
It’s still hungry.
“We will continue to look at other acquisition opportunities that can help us surpass the $10 billion threshold in a meaningful way,” Chief Executive Steven Gardner said in a statement on fourth-quarter results.
First Foundation Inc. (Nasdaq: FFWM) also hinted it’s considering acquisitions.
In its 2018 forecast, it predicted organic deposit growth of 15% to 20%, “excluding any deposits obtained from acquisitions.”
Its 2017 deposits grew an impressive 42% to $3.4 billion, aided by $412 million from its acquisition of Community First Bank in the Sacramento region. The company said in December that it will acquire PBB Bancorp, a transaction that should close in the second quarter.
Two other prominent OC-based banks said in their quarterly reports earlier last month that they intend to expand lending this year. Irvine-based Opus Bank said it will boost lending 33% to $2 billion. Santa Ana-based Banc of California Inc. reported a 7% increase in organic lending and said it plans to “amplify this momentum” this year.
PPBI
Pacific Premier’s year-over-year net income rose from $12 million to $16.2 million. Earnings per share fell from 43 cents to 36 cents as a result of shares being used to fund the acquisitions.
Net interest margin, a key indicator of profitability, was 4.56%, a 22-basis point improvement over the third quarter, Raymond James analyst Donald Worthington wrote in a report to investors.
“Overall, Pacific Premier reported strong 4Q17 results with solid organic loan growth and core margin expansion,” he wrote. “Credit quality remains excellent and capital ratios are sound.”
The bank is projecting loan growth of 10% to 12%.
DA Davidson analyst Gary Tenner boosted his estimates for 2018 and 2019, citing savings from the new tax law. He maintained a buy rating and a $50 target price.
Shares declined 0.5% to $41.35 after the report was released. They’ve climbed about 28% since a 52-week low in September. The company’s $1.88 billion market cap is now the biggest of OC-based banks.
FFWM
First Foundation reported fourth-quarter net income declined from $6.52 million, 19 cents a share, to $2.27 million, or 6 cents, mostly because of a charge due to the new tax law. Excluding the charges, it reported adjusted net income of $9.2 million, or 25 cents a share.
Revenue rose 31% to $42.6 million. First Foundation’s wealth management unit increased assets by $709 million last year to $4.3 billion.
“We are very pleased with the performance of key areas of our business and feel like we are well-positioned for another year of growth in 2018,” Chief Executive Scott F. Kavanaugh said in a statement.
First Foundation “produced strong” results with margin expansion and better-than-expected net interest margin of 2.97%, Worthington wrote in a note.
In the trading session after it issued its report, shares rose 1.5% to $19.47. They’re up about 33% from a year ago, and its market cap is now $743 million.
Pacific Mercantile Bancorp
The Costa Mesa bank (Nasdaq: PMBC) reported net income jumped from 1 cent, or $309,000, to $2.4 million, or 10 cents a share, from a year earlier.
“We anticipate another year of strong commercial loan growth in 2018, although we expect it will be partially offset by the continued runoff of real estate loans,” Chief Executive Tom Vertin said in a statement.
The bank has reduced its nonperforming assets, which were $24.9 million, or 2.18% of total assets, at the end of 2016, to $5.9 million, or 0.45%, as of Dec. 31.
Total assets increased to $1.32 billion, up 16% from a year earlier.
Keefe, Bruyette & Woods analyst Jacquelynne Bohlen said the bank’s profit missed her estimate. She reduced her future profit estimates, though she maintained her target price of $10.50.
“Sale speculation helps provide a floor for the shares,” she wrote.
As a matter of policy, the bank doesn’t comment on market rumors, Vertin said.
Shares fell 0.6% to $8.65 in the trading session after the report was released. They’ve climbed 22% from a year ago, and the bank now has a market cap of $201 million.
