Pacific Premier Bancorp (Nasdaq: PPBI), Orange County’s biggest bank by market cap, reported profit increased threefold in the first quarter to $28 million, aided by tax cuts and acquisitions.
“This was a very busy and productive quarter for our team as we managed a number of projects and priorities,” Chief Executive Steve Gardner told analysts on a conference call last week.
Four of the six largest publicly traded banks based in OC reported first-quarter profit rose by more than 25% year-over-year. The other two reported declining profits due to unusual circumstances, such as a fraudulent loan and a tax benefit a year earlier.
The Irvine-based bank’s profit was boosted as it bought Heritage Oaks Bancorp last April and Plaza Bancorp in November. It plans to acquire Grandpoint Capital Inc. in the third quarter.
Pacific Premier’s profit was also aided by a reduced tax rate, 24% compared to 33% a year earlier.
The bank indicated lending isn’t as robust as it would like, echoing comments by executives at Irvine-based rival Opus Bank (Nasdaq: OPB), which called loan growth across the country “anemic.”
Pacific Premier reduced originations in areas such as commercial real estate, where Gardner said increased competition has lowered risk-adjusted yields.
“Despite the increased business optimism following the implementation of corporate tax reform, we did not see that sentiment materialize into higher loan demand,” Gardner told analysts. “Instead, plants that are benefiting from lower tax rates and strong liquidity positions are paying down debt and deleveraging their balance sheets.”
The bank’s adjusted profit of 62 cents a share missed analysts’ consensus of 63 cents, according to Zacks Investment Research.
D.A. Davidson analyst Gary Tenner lowered his 2018 and 2019 profit estimates while maintaining his target price of $50 within 18 months.
“The decline to both years is due to a combination of a moderately lower pace of growth from prior levels and an increased operating expense outlook,” Tenner said in a note to investors.
Shares fell less than 1% to $39.45 in the trading session after the report was issued. They’re down 16% since reaching a 52-week high of $45.55 on March 12. Pacific Premier’s $1.8 billion market cap compares with $1 billion at the second-biggest OC bank, Opus.
