ppbi_2009-q1.htm
UNITED
STATES SECURITIES AND EXCHANGE
COMMISSION
|
Washington,
DC 20549
FORM
10-Q
(Mark
One)
|
(X)
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended March 31, 2009
OR
(
) TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
transition period from _______ to _______
Commission
File Number 0-22193
(Exact
name of registrant as specified in its charter)
DELAWARE
|
33-0743196
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S
Employer Identification No.)
|
1600
SUNFLOWER AVENUE, 2ND
FLOOR, COSTA MESA, CALIFORNIA
92626
|
(Address
of principal executive offices and zip
code)
|
(714)
431-4000
|
(Registrant’s
telephone number, including area
code)
|
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [ X ] No [_]
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes [_]
No [_]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definition of “accelerated filer”, “large accelerated
filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange
Act).
Large
accelerated filer
|
[
]
|
Accelerated
filer
|
[
]
|
Non-accelerated
filer
|
[
]
|
Smaller
reporting company
|
[ X
]
|
|
|
|
|
(Do
not check if a smaller reporting company)
|
|
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in Exchange
Act Rule 12b-2). Yes [ ] No [X]
The
number of shares outstanding of the registrant's common stock as of March 31,
2009 was 4,803,451.
PACIFIC
PREMIER BANCORP, INC. AND SUBSIDIARIES
FORM
10-Q
FOR THE
QUARTER ENDED MARCH 31, 2009
INDEX
|
|
CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
March
31, 2009
|
|
|
|
|
|
|
(Unaudited)
|
|
|
December
31, 2008
|
|
ASSETS
|
|
|
|
|
|
|
Cash
and due from banks
|
|
$ |
8,081 |
|
|
$ |
8,181 |
|
Federal
funds sold
|
|
|
28 |
|
|
|
1,526 |
|
Cash
and cash equivalents
|
|
|
8,109 |
|
|
|
9,707 |
|
Investment
securities available for sale
|
|
|
66,199 |
|
|
|
56,606 |
|
FHLB
Stock/Federal Reserve Stock, at cost
|
|
|
14,330 |
|
|
|
14,330 |
|
Loans:
|
|
|
|
|
|
|
|
|
Loans
held for sale, net
|
|
|
652 |
|
|
|
668 |
|
Loans
held for investment, net of allowance for loan losses of $6,396 in 2009
and
$5,881 in 2008
|
|
|
612,940 |
|
|
|
622,470 |
|
Accrued
interest receivable
|
|
|
3,768 |
|
|
|
3,627 |
|
Other
real estate owned
|
|
|
55 |
|
|
|
37 |
|
Premises
and equipment
|
|
|
9,386 |
|
|
|
9,588 |
|
Deferred
income taxes
|
|
|
9,891 |
|
|
|
10,504 |
|
Bank
owned life insurance
|
|
|
11,527 |
|
|
|
11,395 |
|
Other
assets
|
|
|
409 |
|
|
|
1,024 |
|
Total
Assets
|
|
$ |
737,266 |
|
|
$ |
739,956 |
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Deposit
accounts
|
|
|
|
|
|
|
|
|
Noninterest
bearing transaction accounts
|
|
$ |
31,378 |
|
|
$ |
29,435 |
|
Interest
bearing:
|
|
|
|
|
|
|
|
|
Transaction
accounts
|
|
|
66,596 |
|
|
|
58,861 |
|
Retail
certificates of deposit
|
|
|
385,822 |
|
|
|
341,741 |
|
Wholesale/brokered
certificates of deposit
|
|
|
9,554 |
|
|
|
27,091 |
|
Total
Deposits
|
|
|
493,350 |
|
|
|
457,128 |
|
Borrowings
|
|
|
172,000 |
|
|
|
209,900 |
|
Subordinated
debentures
|
|
|
10,310 |
|
|
|
10,310 |
|
Accrued
expenses and other liabilities
|
|
|
3,395 |
|
|
|
5,070 |
|
Total
Liabilities
|
|
$ |
679,055 |
|
|
$ |
682,408 |
|
COMMITMENTS
AND CONTINGENCIES
|
|
|
- |
|
|
|
- |
|
STOCKHOLDERS’
EQUITY
|
|
|
|
|
|
|
|
|
Common
stock, $.01 par value; 15,000,000 shares authorized; 4,803,451 (2009)
and
4,903,451 (2008) shares issued and outstanding
|
|
$ |
47 |
|
|
$ |
48 |
|
Additional
paid-in capital
|
|
|
64,373 |
|
|
|
64,680 |
|
Accumulated
deficit
|
|
|
(3,767 |
) |
|
|
(4,304 |
) |
Accumulated
other comprehensive loss, net of tax of $1,707 (2009) and $2,011
(2008)
|
|
|
(2,442 |
) |
|
|
(2,876 |
) |
Total
Stockholders’ Equity
|
|
$ |
58,211 |
|
|
$ |
57,548 |
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$ |
737,266 |
|
|
$ |
739,956 |
|
Accompanying
notes are an integral part of these consolidated financial
statements.
|
|
CONSOLIDATED
STATEMENTS OF INCOME
|
|
(in
thousands, except per share data)
|
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
For
the Three Months Ended
|
|
|
|
March
31, 2009
|
|
|
March
31, 2008
|
|
INTEREST
INCOME:
|
|
|
|
|
|
|
Loans
|
|
$ |
10,165 |
|
|
$ |
10,938 |
|
Other
interest-earning assets
|
|
|
787 |
|
|
|
1,006 |
|
Total
interest income
|
|
|
10,952 |
|
|
|
11,944 |
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE:
|
|
|
|
|
|
|
|
|
Interest
on transaction accounts
|
|
|
255 |
|
|
|
434 |
|
Interest
on certificates of deposit
|
|
|
3,456 |
|
|
|
3,564 |
|
Total
deposit interest expense
|
|
|
3,711 |
|
|
|
3,998 |
|
Other
borrowings
|
|
|
1,861 |
|
|
|
2,937 |
|
Subordinated
debentures
|
|
|
103 |
|
|
|
180 |
|
Total
interest expense
|
|
|
5,675 |
|
|
|
7,115 |
|
|
|
|
|
|
|
|
|
|
NET
INTEREST INCOME
|
|
|
5,277 |
|
|
|
4,829 |
|
|
|
|
|
|
|
|
|
|
PROVISION
FOR LOAN LOSSES
|
|
|
1,160 |
|
|
|
183 |
|
|
|
|
|
|
|
|
|
|
NET
INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
|
|
|
4,117 |
|
|
|
4,646 |
|
|
|
|
|
|
|
|
|
|
NONINTEREST
INCOME:
|
|
|
|
|
|
|
|
|
Loan
servicing fee income
|
|
|
159 |
|
|
|
105 |
|
Bank
and other fee income
|
|
|
212 |
|
|
|
115 |
|
Net
gain from loan sales
|
|
|
- |
|
|
|
67 |
|
Net
gain from sale of investment securities
|
|
|
2 |
|
|
|
- |
|
Other
income
|
|
|
257 |
|
|
|
392 |
|
Total
noninterest income
|
|
|
630 |
|
|
|
679 |
|
|
|
|
|
|
|
|
|
|
NONINTEREST
EXPENSE:
|
|
|
|
|
|
|
|
|
Compensation
and benefits
|
|
|
2,009 |
|
|
|
2,397 |
|
Premises
and occupancy
|
|
|
658 |
|
|
|
607 |
|
Data
processing
|
|
|
155 |
|
|
|
154 |
|
Net
(gain) loss on other real estate owned
|
|
|
(6 |
) |
|
|
15 |
|
FDIC/SAIF
insurance premiums
|
|
|
286 |
|
|
|
66 |
|
Legal
and audit
|
|
|
132 |
|
|
|
141 |
|
Marketing
expense
|
|
|
189 |
|
|
|
131 |
|
Office
and postage expense
|
|
|
80 |
|
|
|
82 |
|
Other
expense
|
|
|
427 |
|
|
|
422 |
|
Total
noninterest expense
|
|
|
3,930 |
|
|
|
4,015 |
|
|
|
|
|
|
|
|
|
|
INCOME
BEFORE INCOME TAXES
|
|
|
817 |
|
|
|
1,310 |
|
PROVISION
FOR INCOME TAXES
|
|
|
280 |
|
|
|
464 |
|
NET
INCOME
|
|
$ |
537 |
|
|
$ |
846 |
|
|
|
|
|
|
|
|
|
|
INCOME
PER SHARE:
|
|
|
|
|
|
|
|
|
Basic
income per share
|
|
$ |
0.11 |
|
|
$ |
0.17 |
|
Diluted
income per share
|
|
$ |
0.09 |
|
|
$ |
0.13 |
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
4,852,895 |
|
|
|
5,083,243 |
|
Diluted
|
|
|
6,038,129 |
|
|
|
6,390,148 |
|
Accompanying
notes are an integral part of these consolidated financial
statements.
|
|
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE
INCOME
|
|
FOR
THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
|
|
(dollars
in thousands)
|
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
Shares
|
|
|
Amount
|
|
|
Additional
Paid-in
Capital
|
|
|
Accumulated
Deficit
|
|
|
Accumulated
Other Comprehensive Loss
|
|
|
Comprehensive
Income (Loss)
|
|
|
Total
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2007
|
|
|
5,163,488 |
|
|
$ |
53 |
|
|
$ |
66,417 |
|
|
$ |
(5,012 |
) |
|
$ |
(708 |
) |
|
|
|
|
$ |
60,750 |
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
847 |
|
|
|
|
|
|
$ |
847 |
|
|
|
847 |
|
Unrealized
loss on investments,
net
of tax of ($201)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(287 |
) |
|
|
(287 |
) |
|
|
(287 |
) |
Total
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
560 |
|
|
|
|
|
Share-based
compensation expense
|
|
|
|
|
|
|
|
|
|
|
64 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64 |
|
Common
stock repurchased and retired
|
|
|
(259,704 |
) |
|
|
(4 |
) |
|
|
(2,065 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,069 |
) |
Balance
at March 31, 2008
|
|
|
4,903,784 |
|
|
$ |
49 |
|
|
$ |
64,416 |
|
|
$ |
(4,165 |
) |
|
$ |
(995 |
) |
|
|
|
|
|
$ |
59,305 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Stock
Shares
|
|
|
Amount
|
|
|
Additional
Paid-in
Capital
|
|
|
Accumulated
Deficit
|
|
|
Accumulated
Other Comprehensive Loss
|
|
|
Comprehensive
Income (Loss)
|
|
|
Total
Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2008
|
|
|
4,903,451 |
|
|
$ |
48 |
|
|
$ |
64,680 |
|
|
$ |
(4,304 |
) |
|
$ |
(2,876 |
) |
|
|
|
|
|
$ |
57,548 |
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
537 |
|
|
|
|
|
|
|
537 |
|
|
|
537 |
|
Unrealized
gain on investments,
net
of tax of $304
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
434 |
|
|
|
434 |
|
|
|
434 |
|
Total
comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
971 |
|
|
|
|
|
Share-based
compensation expense
|
|
|
|
|
|
|
|
|
|
|
76 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76 |
|
Common
stock repurchased and retired
|
|
|
(100,000 |
) |
|
|
(1 |
) |
|
|
(383 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(384 |
) |
Stock
options exercised
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
Balance
at March 31, 2009
|
|
|
4,803,451 |
|
|
$ |
47 |
|
|
$ |
64,373 |
|
|
$ |
(3,767 |
) |
|
$ |
(2,442 |
) |
|
|
|
|
|
$ |
58,211 |
|
Accompanying
notes are an integral part of these consolidated financial
statements.
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(in
thousands)
|
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
March
31,
|
|
|
|
2009
|
|
|
2008
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net
income
|
|
$ |
537 |
|
|
$ |
846 |
|
Adjustments
to net income:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization expense
|
|
|
252 |
|
|
|
222 |
|
Provision
for loan losses
|
|
|
1,160 |
|
|
|
183 |
|
Share-based
compensation
|
|
|
76 |
|
|
|
64 |
|
Loss
on sale and disposal of premises and equipment
|
|
|
24 |
|
|
|
- |
|
Gain
on sale, provision, and write-down of foreclosed real
estate
|
|
|
(6 |
) |
|
|
- |
|
Amortization
of premium/discounts on securities held for sale, net
|
|
|
19 |
|
|
|
263 |
|
Gain
on sale of loans held for sale
|
|
|
- |
|
|
|
(67 |
) |
Gain
on sale of investment securities available for sale
|
|
|
(2 |
) |
|
|
- |
|
Purchase
and origination of loans held for sale
|
|
|
- |
|
|
|
(582 |
) |
Proceeds
from the sales of, and principal payments from, loans held for
sale
|
|
|
16 |
|
|
|
461 |
|
(Increase)
decrease in current and deferred income tax receivable
|
|
|
613 |
|
|
|
264 |
|
(Decrease)
increase in accrued expenses and other liabilities
|
|
|
(1,675 |
) |
|
|
8,772 |
|
Income
from bank owned life insurance
|
|
|
(132 |
) |
|
|
(133 |
) |
Decrease
in accrued interest receivable and other assets
|
|
|
474 |
|
|
|
53 |
|
Net
cash provided by operating activities
|
|
|
1,356 |
|
|
|
10,346 |
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds
from sale and principal payments on loans held for
investment
|
|
|
17,372 |
|
|
|
51,138 |
|
Purchase,
origination and advances of loans held for investment
|
|
|
(9,260 |
) |
|
|
(40,194 |
) |
Principal
payments on securities available for sale
|
|
|
1,963 |
|
|
|
1,788 |
|
Proceeds
from sale of foreclosed real estate
|
|
|
45 |
|
|
|
- |
|
Purchase
of securities available for sale
|
|
|
(10,986 |
) |
|
|
(30,961 |
) |
(Increase)
decrease in premises and equipment
|
|
|
(26 |
) |
|
|
(362 |
) |
Net
cash used in investing activities
|
|
|
(892 |
) |
|
|
(18,591 |
) |
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net increase
in deposit accounts
|
|
|
36,222 |
|
|
|
9,894 |
|
(Repayment
of) proceeds from FHLB advances
|
|
|
(37,900 |
) |
|
|
(35,465 |
) |
Proceeds
from (repayment of) other borrowings
|
|
|
- |
|
|
|
25,163 |
|
Repurchase
of common stock
|
|
|
(384 |
) |
|
|
(2,069 |
) |
Net
cash used in financing activities
|
|
|
(2,062 |
) |
|
|
(2,477 |
) |
|
|
|
|
|
|
|
|
|
NET
DECREASE IN CASH AND CASH EQUIVALENTS
|
|
|
(1,598 |
) |
|
|
(10,722 |
) |
CASH
AND CASH EQUIVALENTS, beginning of period
|
|
|
9,707 |
|
|
|
34,021 |
|
CASH
AND CASH EQUIVALENTS, end of period
|
|
$ |
8,109 |
|
|
$ |
23,299 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
CASH FLOW DISCLOSURES
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$ |
5,512 |
|
|
$ |
4,931 |
|
Income
taxes paid
|
|
$ |
475 |
|
|
$ |
- |
|
NONCASH
OPERATING ACTIVITIES DURING THE PERIOD
|
|
|
|
|
|
|
|
|
Restricted
stock vested
|
|
$ |
91 |
|
|
$ |
- |
|
NONCASH
INVESTING ACTIVITIES DURING THE PERIOD
|
|
|
|
|
|
|
|
|
Transfers
from loans to foreclosed real estate
|
|
$ |
55 |
|
|
$ |
- |
|
Accompanying
notes are an integral part of these consolidated financial
statements.
PACIFIC
PREMIER BANCORP, INC. AND SUBSIDIARY
March 31,
2009
(UNAUDITED)
Note 1 - Basis of
Presentation
The
consolidated financial statements include the accounts of Pacific Premier
Bancorp, Inc. (the “Corporation”) and its wholly owned subsidiary, Pacific
Premier Bank (the “Bank”) (collectively, the “Company”). All
significant intercompany accounts and transactions have been eliminated in
consolidation.
In the
opinion of management, the unaudited consolidated financial statements contain
all adjustments (consisting of normal recurring accruals) necessary to present
fairly the Company’s financial position as of March 31, 2009, and the results of
its operations, changes in stockholders’ equity, comprehensive income and cash
flows for the three months ended March 31, 2009 and 2008. Operating
results for the three months ended March 31, 2009 are not necessarily indicative
of the results that may be expected for any other interim period or the full
year ending December 31, 2009.
Certain
information and note disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted pursuant to the rules
and regulations of the Securities and Exchange Commission
(“SEC”). The unaudited consolidated financial statements should be
read in conjunction with the audited consolidated financial statements and notes
thereto included in the Company’s Annual Report on Form 10-K, for the year ended
December 31, 2008.
The
Company accounts for its investments in its wholly owned special purpose entity,
PPBI Trust I, using the equity method under which the subsidiary’s net earnings
are recognized in the Company’s statement of income.
Note 2 – Recently Issued
Accounting Pronouncements
In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative and
Hedging Activities, an amendment of FASB Statement No.
133”. SFAS No. 161 requires enhanced disclosures about a
company’s derivative and hedging activities. These enhanced disclosures will
discuss (a) how and why a company uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under FASB
Statement No. 133 and its related interpretations and (c) how derivative
instruments and related hedged items affect a company’s financial position,
results of operations and cash flows. SFAS No. 161 is effective for fiscal years
beginning on or after November 15, 2008, with earlier adoption allowed. The
Company is currently evaluating the impact of adopting SFAS No.
161.
In May
2008, FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” The new standard is intended to improve financial
reporting by identifying a consistent framework, or hierarchy, for selecting
accounting principles to be used in preparing financial statements that are
presented in conformity with United States generally accepted accounting
principles for nongovernmental entities. SFAS No. 162 is effective 60 days
following the SEC’s approval of the Public Company Accounting Oversight Board
Auditing amendments to AU Section 411, “The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles.” The Company
does not anticipate the adoption of SFAS No. 162 to have a material impact of
its financial position, results of operations or cash flow.
In June
2008, FASB issued EITF Issue No. 07-5 (EITF 07-5), “Determining whether an Instrument
(or Embedded Feature) is indexed to an Entity's Own Stock.” EITF No. 07-5
is effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years. Early
application is not permitted. Paragraph 11(a) of SFAS No. 133 - specifies that a
contract that would otherwise meet the definition of a derivative but is both
(a) indexed to the Company's own stock and (b) classified in stockholders'
equity in the statement of financial position would not be considered a
derivative financial instrument. EITF 07-5 provides a new two-step model to be
applied in determining whether a financial instrument or an embedded feature is
indexed to an issuer's own stock and thus able to qualify for the SFAS No. 133
paragraph 11(a) scope exception. The adoption of EITF 07-5 had no material
impact on our financial statements.
In
October 2008, the FASB issued Financial Accounting Standards Board Staff
Position FSP FAS 157-3, “Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active.” The FSP
clarifies the application of SFAS No. 157, “Fair Value Measurements,” in a
market that is not active and provides an example to illustrate key
considerations in determining the fair value of a financial asset when the
market for that financial asset is not active. The FSP is effective immediately,
and includes prior periods for which financial statements have not been issued,
and therefore the Company is subject to the provisions under the FSP effective
September 30, 2008. The implementation of FSP FAS 157-3 did not affect the
Company’s fair value measurements as of December 31, 2008.
In April
2009, the FASB issued Financial Accounting Standards Board Staff Position FSP
FAS 115-2, “Recognition and Presentation of Other-Than-Temporary Impairments.”
This FSP amends the application of SFAS No. 115, “Accounting for Certain
Investments in Debt and Equity Securities” which makes the other-than-temporary
impairment guidance more operational and improves the presentation of
other-than-temporary impairments in the financial statements. This
FSP applies to other-than-temporary impairments of debt and equity securities
and requires a company to assert that (a) it does not have the intent to sell
the security in question and (b) it is more likely than not have to sell the
security in question before recovery of its cost basis to avoid an impairment
being considered, other-than-temporary. This FSP also changes the
amount of impairment losses recognized in earnings by separating impairments
into two components: (i) the amount of impairments related to credit losses and
(ii) the amount related to other factors. The amount of impairment related to
credit losses is reflected as a charge to earnings, while the amount related to
other factors is reflected as an adjustment to shareholders’ equity through
comprehensive income. The FSP is effective for interim and annual reporting
periods after June 15, 2009, early adoption is permitted for periods ending
after March 15, 2009. The implementation of FSP FAS 115-2 did not
have a material impact in its financial position, results of operations or cash
flow.
Note 3 – Regulatory
Matters
It is our
goal to maintain capital levels within the regulatory “well capitalized”
category. The Company’s (on a consolidated basis) and the Bank’s
capital amounts and ratios are presented in the following tables:
|
|
|
|
|
|
|
|
To
be adequately
|
|
|
To
be well
|
|
|
|
Actual
|
|
|
capitalized
|
|
|
capitalized
|
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
Amount
|
|
|
Ratio
|
|
|
|
(dollars
in thousands)
|
|
At March 31, 2009
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Capital (to risk-weighted assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank
|
|
$ |
71,822 |
|
|
|
12.01 |
% |
|
$ |
47,834 |
|
|
|
8.00 |
% |
|
$ |
59,793 |
|
|
|
10.00 |
% |
Consolidated
|
|
|
72,888 |
|
|
|
12.09 |
% |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier
1 Capital (to adjusted tangible assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank
|
|
|
65,426 |
|
|
|
8.89 |
% |
|
|
29,427 |
|
|
|
4.00 |
% |
|
|
36,784 |
|
|
|
5.00 |
% |
Consolidated
|
|
|
66,492 |
|
|
|
9.04 |
% |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier
1 Risk-Based Capital (to risk-weighted assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank
|
|
|
65,426 |
|
|
|
10.94 |
% |
|
|
23,917 |
|
|
|
4.00 |
% |
|
|
35,876 |
|
|
|
6.00 |
% |
Consolidated
|
|
|
66,492 |
|
|
|
11.03 |
% |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Capital (to risk-weighted assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank
|
|
$ |
70,761 |
|
|
|
11.68 |
% |
|
$ |
48,457 |
|
|
|
8.00 |
% |
|
$ |
60,571 |
|
|
|
10.00 |
% |
Consolidated
|
|
|
73,741 |
|
|
|
12.07 |
% |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier
1 Capital (to adjusted tangible assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank
|
|
|
64,880 |
|
|
|
8.71 |
% |
|
|
29,808 |
|
|
|
4.00 |
% |
|
|
37,261 |
|
|
|
5.00 |
% |
Consolidated
|
|
|
67,859 |
|
|
|
8.99 |
% |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier
1 Risk-Based Capital (to risk-weighted assets)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank
|
|
|
64,880 |
|
|
|
10.71 |
% |
|
|
24,229 |
|
|
|
4.00 |
% |
|
|
36,343 |
|
|
|
6.00 |
% |
Consolidated
|
|
|
67,859 |
|
|
|
11.11 |
% |
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Note 4 – Borrowings
At March
31, 2009, total borrowings of the Company amounted to $182.3 million. The
borrowings were comprised of Federal Home Loan Bank (“FHLB”) term
and overnight borrowings of $138.0 million and $5.5 million, respectively, $10.3
million Trust Preferred Securities at 3.84%, and three inverse putable reverse
repurchase agreements totaling $28.5 million at an average rate of 2.43% secured
by approximately $32.2 million of mortgage backed securities issued by the
Federal Home Loan Mortgage Corporation, Government National Mortgage
Association, and Federal National Mortgage Association. The Bank’s
$143.5 million in FHLB advances had a weighted average interest rate of 4.74%
and the term advances had a weighted average maturity of 0.89 year as of March
31, 2009. As of such date, advances from the FHLB were collateralized
by pledges of certain real estate loans with an aggregate principal balance of
$538.0 million and FHLB stock totaling $12.7 million. As of March 31,
2009, the Bank was able to borrow up to 45% of its total assets as of December
31, 2008 under the line, which amounted to $332.9 million, a decrease of $6.3
million from the year ended December 31, 2008. FHLB advances
consisted of the following as of March 31, 2009:
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Percent
|
|
|
Average
Annual
|
|
FHLB
Advances Maturing in:
|
|
Amount
|
|
|
of
Total
|
|
|
Interest
Rate
|
|
|
|
(dollars
in thousands)
|
|
One
month or less
|
|
$ |
5,500 |
|
|
|
3.83 |
% |
|
|
0.21 |
% |
Over
six months to one year
|
|
|
100,000 |
|
|
|
69.69 |
% |
|
|
4.92 |
% |
Over
one year
|
|
|
38,000 |
|
|
|
26.48 |
% |
|
|
4.92 |
% |
Total
FHLB advances
|
|
$ |
143,500 |
|
|
|
100.00 |
% |
|
|
4.74 |
% |
Note 5 – Subordinated
Debentures
In March
2004, the Corporation issued $10.3 million of Floating Rate Junior Subordinated
Deferrable Interest Debentures (the “Subordinated Debentures”) to PPBI Trust I,
which funded the payment of $10.0 million of Floating Rate Trust Preferred
Securities issued by PPBI Trust I in March 2004. The net proceeds from the
offering of Trust Preferred Securities were contributed as capital to the Bank
to support further growth. Interest is payable quarterly on the
Subordinated Debentures at three-month LIBOR plus 2.75% per annum, for an
effective rate of 3.84% per annum as of March 31, 2009.
Under FIN
46R, “Consolidation of Variable Interest Entities, an interpretation of ARB No.
51,” the Corporation is not allowed to consolidate PPBI Trust I into the
Company’s financial statements. The resulting effect on the Company’s
consolidated financial statements is to report the Subordinated Debentures as a
component of liabilities. Prior to the issuance of FIN 46R, bank
holding companies typically consolidated these entities and reported the Trust
Preferred Securities as a component of liabilities.
Note 6 – Earnings Per
Share
Basic
earnings per share is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted earnings per share is computed by dividing income
available to common stockholders including common stock equivalents, such as
outstanding stock options and warrants, by the weighted average number of common
shares and common stock equivalents outstanding for the period. Stock options
totaling 602,550 shares for the three months ended March 31, 2009, and 317,925
shares for the three months ended March 31, 2008, respectively, were excluded
from the computations of diluted earnings per share due to their exercise price
exceeding the average market price for their respective periods.
The table
below set forth the Company’s unaudited earnings per share calculations for the
three months ended March 31, 2009 and 2008.
|
|
For
the Three Months Ended March 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
Net
|
|
|
|
|
|
Per
Share
|
|
|
Net
|
|
|
|
|
|
Per
Share
|
|
|
|
Earnings
|
|
|
Shares
|
|
|
Amount
|
|
|
Earnings
|
|
|
Shares
|
|
|
Amount
|
|
|
|
(in
thousands, except per share data)
|
|
Net
Earnings
|
|
$ |
537 |
|
|
|
|
|
|
|
|
$ |
846 |
|
|
|
|
|
|
|
Basic
Earnings available to common stockholders
|
|
|
537 |
|
|
|
4,852,895 |
|
|
$ |
0.11 |
|
|
|
846 |
|
|
|
5,083,243 |
|
|
$ |
0.17 |
|
Effect
of warrants and dilutive stock options
|
|
|
- |
|
|
|
1,185,234 |
|
|
|
|
|
|
|
- |
|
|
|
1,306,905 |
|
|
|
|
|
Diluted
Earnings available to common
stockholders
plus assumed conversions
|
|
$ |
537 |
|
|
|
6,038,129 |
|
|
$ |
0.09 |
|
|
$ |
846 |
|
|
|
6,390,148 |
|
|
$ |
0.13 |
|
Note 7 – Fair Value of
Financial Instruments
In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurement” (“SFAS
157”). This statement defines fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements. The
statement establishes a fair value hierarchy about the assumptions used to
measure fair value and clarifies assumptions about risk and the effect of a
restriction on the sale or use of an asset. The standard is effective
for fiscal years beginning after November 15, 2007. In February 2008, the FASB
issued FASB Staff Position (FSP) No. FAS 157-2, “Effective Date of FASB
Statement No. 157.” This FSP delays the effective date of SFAS 157 for all
nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value on a recurring basis (at least annually)
to fiscal years beginning after November 15, 2008, and interim periods within
those fiscal years. Adoption of SFAS 157 did not have a material
impact on the Company.
SFAS 157
defines fair value as the exchange price that would be received for an asset or
paid to transfer a liability (an exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. SFAS 157 establishes a three-tiered
value hierarchy that prioritizes inputs to valuation techniques used in fair
value calculations. The three levels of inputs are defined as
follows:
Level 1 –
unadjusted quoted prices for identical assets or liabilities in active markets
accessible by the Company
Level 2 – inputs that are observable in
the marketplace other than those inputs classified as Level 1
Level 3 – inputs that are unobservable
in the marketplace and significant to the valuation
SFAS 157 requires the Company to
maximize the use of observable inputs and minimize the use of unobservable
inputs. If a financial instrument uses inputs that fall in different
levels of the hierarchy, the instrument will be categorized based upon the
lowest level of input that is significant to the fair value
calculation.
The
Company’s financial assets and liabilities measured at fair value on a recurring
basis include securities available for sale, loans held for sale, and impaired
loans. Securities available for sale include mortgage-backed
securities and equity securities. Loans held for sale include the
guarantee portion of our saleable Small Business Association (“SBA”) loans.
Impaired loans include loans that are in a non-accrual status and where the Bank
has reduced the principal to the value of the underlying collateral less the
anticipated selling cost.
Marketable
Securities. Where possible, the Company utilizes quoted market
prices to measure debt and equity securities; such items are classified as Level
1 in the hierarchy and include equity securities, US government bonds and
securities issued by federally sponsored agencies. When quoted market
prices for identical assets are unavailable or the market for the asset is not
sufficiently active, varying valuation techniques are used. Common
inputs in valuing these assets include, among others, benchmark yields, issuer
spreads, forward mortgage-backed securities trade prices and recently reported
trades. Such assets are classified as Level 2 in the hierarchy and
typically include private label mortgage-backed securities and corporate bonds.
Pricing on these securities are provided to the Company by a pricing service
vendor. In the Level 3 category, the Company is classifying all the
securities that its pricing service vendor cannot price due to lack of trade
activity in these securities.
Loans
held for sale. The fair value of loans held for sale is determined, when
possible, using quoted secondary-market prices. If no such quoted price exists,
the fair value of a loan is determined using quoted prices for a similar asset
or assets, adjusted for the specific attributes of that loan.
A loan is
considered impaired when it is probable that payment of interest and principal
will not be made in accordance with the contractual terms of the loan agreement.
Impairment is measured based on the fair value of the underlying collateral or
the discounted expected future cash flows. The Company measures impairment on
all non-accrual loans for which it has reduced the principal balance to the
value of the underlying collateral less the anticipated selling cost. As such,
the Company records impaired loans as non-recurring Level 2 when the fair value
of the underlying collateral is based on an observable market price or current
appraised value. When current market prices are not available or the Company
determines that the fair value of the underlying collateral is further impaired
below appraised values, the Company records impaired loans as Level 3. At March
31, 2009, substantially all the Company’s impaired loans were evaluated based on
the fair value of their underlying collateral based upon the most recent
appraisal available to management.
The
Company’s valuation methodologies may produce a fair value calculation that may
not be indicative of net realizable value or reflective of future fair
values. While management believes the Company’s valuation
methodologies are appropriate and consistent with other market participants, the
use of different methodologies or assumptions to determine the fair value of
certain financial instruments could result in a different estimate of fair value
at the reporting date.
The
following fair value hierarchy tables present information about the Company’s
assets measured at fair value on a recurring basis:
|
|
Fair
Value Measurement Using
|
|
|
|
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Assets
at
Fair
Value
|
|
|
|
(in
thousands)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable
securities
|
|
$ |
39,420 |
|
|
$ |
25,640 |
|
|
$ |
1,139 |
|
|
$ |
66,199 |
|
Total
assets
|
|
$ |
39,420 |
|
|
$ |
25,640 |
|
|
$ |
1,139 |
|
|
$ |
66,199 |
|
|
|
Fair
Value Measurement Using
|
|
|
|
Significant
Other Unobservable Inputs
|
|
|
|
(Level
3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
Govt.
Sponsored
|
|
|
Private
|
|
|
|
|
|
|
Treasuries
|
|
|
Agencies
|
|
|
Label
|
|
|
Total
|
|
|
|
(in
thousands)
|
|
Beginning
Balance, January 1, 2009
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,614 |
|
|
$ |
1,614 |
|
Total
gains or losses (realized/unrealized):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included
in earnings (or changes in net assets)
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Included
in other comprehensive income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Purchases,
issuances, and settlements
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Transfer
in and/or out of Level 3
|
|
|
- |
|
|
|
- |
|
|
|
(475 |
) |
|
|
(475 |
) |
Ending
Balance, March 31, 2009
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,139 |
|
|
$ |
1,139 |
|
The following
fair value hierarchy table presents information about the Company’s assets
measured at fair value on a nonrecurring basis:
|
|
Fair
Value Measurement Using
|
|
|
|
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
Assets
at
Fair
Value
|
|
|
|
(in
thousands)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired
Loans
|
|
$ |
- |
|
|
$ |
7,593 |
|
|
$ |
- |
|
|
$ |
7,593 |
|
Loans
held for sale
|
|
|
|
|
|
|
652 |
|
|
|
|
|
|
|
652 |
|
Other
real estate owned
|
|
|
- |
|
|
|
55 |
|
|
|
- |
|
|
|
55 |
|
Total
assets
|
|
$ |
- |
|
|
$ |
8,300 |
|
|
$ |
- |
|
|
$ |
8,300 |
|
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities—Including an amendment of FASB Statement No.
115” (“SFAS 159”). The standard provides companies with an option to
report selected financial assets and liabilities at fair value and establishes
presentation and disclosure requirements designed to facilitate comparisons
between companies that choose different measurement attributes for similar types
of assets and liabilities. The new standard is effective for the Company on
January 1, 2008. The Company did not elect the fair value option for any
financial assets or liabilities as of January 1, 2008. Adoption of
SFAS 159 did not have a material impact on the Company.
Note 8 – Subsequent
Events
On May 5,
2009, the Company filed a registration statement on Form S-3 with the
SEC. The registration statement relates to
the resale of shares of common stock issuable upon exercise of the
warrants to purchase 1,166,400 shares of our common stock that
were issued by the Company in January 2002.
FORWARD-LOOKING
STATEMENTS
The
statements contained herein 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 the Company. There
can be no assurance that future developments affecting the Company will be the
same as those anticipated by management. Actual results may differ
from those projected in the forward-looking statements. These
forward-looking statements include, among others, statements with respect to the
Company’s beliefs, plans, objectives, goals, guidelines, expectations,
anticipations, estimates and intentions that are subject to significant risks
and uncertainties and are subject to change based on various factors (many of
which are beyond the Company’s control). The words “may”, “could”, “should”,
“would”, “believe”, “anticipate”, “estimate”, “expect”, “intend”, “plan” and
similar expressions are intended to identify forward-looking
statements. These forward-looking statements involve risks and
uncertainties. These include, but are not limited to, the following
risks: (1) changes in the performance of the financial
markets, (2) changes in the demand for and market acceptance of the
Company’s products and services, (3) changes in general economic
conditions including interest rates, presence of competitors with greater
financial resources, and the impact of competitive products and
pricing, (4) the effect of the Company’s policies, (5) the
continued availability of adequate funding
sources, and (6) various legal, regulatory and litigation
risks.
GENERAL
The
following presents management’s discussion and analysis of the consolidated
financial condition and operating results of the Company for the three months
ended March 31, 2009 and 2008. The discussion should be read in
conjunction with the Company’s Management Discussion and Analysis included in
the 2008 Annual Report on Form 10-K, plus the unaudited consolidated financial
statements and the notes thereto appearing elsewhere in this
report. The results for the three months ended March 31, 2009 are not
necessarily indicative of the results expected for the year ending December 31,
2009.
We are a
California-based bank holding company incorporated in the state of Delaware and
registered as a banking holding company under the Bank Holding
Company Act of 1956, as amended ("BHCA”), for Pacific Premier Bank, a California
state chartered commercial bank. The Bank is subject to examination
and regulation by the California Department of Financial Institutions (“DFI”),
the Board of Governors of the Federal Reserve System (the “Federal Reserve”),
and by the Federal Deposit Insurance Corporation
(“FDIC”). Additionally, the Corporation is subject to regulation and
supervision by the Federal Reserve. The primary business of the Company is
community banking.
The Bank
was founded in 1983 as a state chartered savings and loan, became a federally
chartered stock savings bank in 1991 and in March 2007, converted to a
California state chartered commercial bank. The Bank is a member of
the FHLB of San Francisco, which is a member bank of the Federal Home Loan Bank
System, and the Federal Reserve. As of March 31, 2009, the Bank’s
deposit accounts were insured under federal laws by the Deposit Insurance Fund,
which is an insurance fund administered by the FDIC. The maximum
deposit insurance coverage allowable under federal law increased in October 2008
from $100,000 to $250,000 per account, which expires at the end of 2009, unless
extended or made permanent.
We
provide banking services within our targeted markets in Southern California to
businesses, including the owners and employees of those businesses,
professionals, real estate investors and non-profit organizations, as well as
consumers in the communities we serve. The Bank operates six depository branches
in Southern California located in the cities of Costa Mesa, Huntington Beach,
Los Alamitos, Newport Beach, San Bernardino, and Seal Beach. The
Company’s corporate headquarters are located in Costa Mesa,
California. Through our branches and our web site at www.PPBI.net on
the Internet, we offer a broad array of deposit products and services for both
businesses, and consumer customers including checking, money market and savings
accounts, cash management services, electronic banking, and on-line bill
payment. We offer a wide array of loan products, such as commercial
business loans, lines of credit, commercial real estate loans, U.S. Small
Business Administration (“SBA”) loans, residential home loans, and home equity
loans. The Bank funds its lending and investment activities with
retail deposits obtained through its branches, advances from the FHLB of San
Francisco, lines of credit, and wholesale and brokered certificates of
deposits.
The
Company’s principal sources of income are the net spread between interest earned
on loans and investments and the interest costs associated with deposits and
other borrowings used to finance its loan and investment
portfolio. Additionally, the Bank generates fee income from loan
sales and various products and services offered to both depository and loan
customers.
Recent
Developments
The
global and U.S. economies, and the economies of the local communities in which
we operate, have continued to experience a rapid decline in the first quarter of
2009. The financial markets, and the financial services industry in particular,
suffered significant disruption in 2008, resulting in many institutions failing
or requiring, government intervention to avoid failure. These conditions were
brought about primarily by dislocations in the U.S. and global credit markets,
including a significant and rapid deterioration of the mortgage lending and
related real estate markets.
The
United States, state and foreign governments have taken or are considering
extraordinary actions in an attempt to deal with the global financial crisis and
the severe decline in the economy. In the United States, the federal government
has adopted Emergency Economic Stabilization Act of 2008 (enacted on
October 3, 2008) and the American Recovery and Reinvestment Act of 2009
(enacted on February 17, 2009). Among other matters, these
laws:
·
|
provide
for the government to invest additional capital into banks and otherwise
facilitate bank capital formation (commonly referred to as the Troubled
Asset Relief Program or “TARP”);
|
·
|
increase
the limits on federal deposit insurance;
and
|
·
|
provide
for various forms of economic stimulus, including to assist homeowners in
restructuring and lowering mortgage payments on qualifying
loans.
|
Other
laws, regulations, and programs at the federal, state and even local levels are
under consideration that seek to address the economic climate and/or the
financial institutions industry. The effect of these initiatives cannot be
predicted at this time.
CRITICAL ACCOUNTING
POLICIES
Management
has established various accounting policies which govern the application of
accounting principles generally accepted in the United States of America in the
preparation of the Company’s financial statements. The Company’s
significant accounting policies are described in the Notes to the Consolidated
Financial Statements in our 2008 Annual Report on Form 10-K. Certain
accounting policies require management to make estimates and assumptions which
have a material impact on the carrying value of certain assets and liabilities;
management considers these to be critical accounting policies. The
estimates and assumptions management uses are based on historical experience and
other factors, which management believes to be reasonable under the
circumstances. Actual results could differ significantly from these
estimates and assumptions, which could have a material impact on the carrying
value of assets and liabilities at balance sheet dates and the Company’s results
of operations for future reporting periods.
Management
believes that the allowance for loan losses is the critical accounting policy
that requires estimates and assumptions in the preparation of the Company’s
financial statements that is most susceptible to significant change. For further
information, see “Allowances for Loan Losses” discussed later in this report and
in our 2008 Annual Report on Form 10-K.
FINANCIAL
CONDITION
Total
assets of the Company were $737.3 million as of March 31, 2009, compared to
$740.0 million as of December 31, 2008. The $2.7 million, or 0.36%,
decrease in total assets was primarily due to a $9.5 million and $1.6 million
decrease in net loans held for investment and cash and cash equivalents,
respectively, which was partially offset by an increase of $9.6 million in
securities available for sale.
Investment
Securities
Available for Sale
Investment
securities available for sale totaled $66.2 million at March 31, 2009 compared
to $56.6 million at December 31, 2008. The increase was primarily due
to the purchase of securities totaling $11.1 million which was partially offset
by investment principal received of approximately $2.0 million. The
investment securities consist of $163,000 in US Treasuries, $39.3 million in
government sponsored entities (“GSE”) mortgage backed securities, and $26.7
million of private label mortgage backed securities. Thirty five of the private
label mortgage-backed securities totaling $1.6 million are rated below
investment grade, which is any rating below “BBB”. In addition, $32.2 million of
the GSE securities have been pledged as collateral for the Bank’s $28.5 million
of reverse repurchase agreements.
A summary
of the Company’s investment securities held for sale as of March 31, 2009 and
December 31, 2008 is as follows:
|
|
March
31, 2009
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
|
Cost
|
|
|
Gain
|
|
|
Loss
|
|
|
Fair
Value
|
|
|
|
(in
thousands)
|
|
Securities
available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Treasury Notes
|
|
$ |
148 |
|
|
$ |
15 |
|
|
$ |
- |
|
|
$ |
163 |
|
Government
Sponsored Entity Mortgage-backed securities
|
|
|
37,809 |
|
|
|
1,457 |
|
|
|
(9 |
) |
|
|
39,257 |
|
Private
Label Mortgage-backed securities - investment grade
|
|
|
29,340 |
|
|
|
511 |
|
|
|
(4,664 |
) |
|
|
25,187 |
|
Private
Label Mortgage-backed securities - non-investment grade
|
|
|
3,050 |
|
|
|
- |
|
|
|
(1,458 |
) |
|
|
1,592 |
|
Total
securities available for sale
|
|
$ |
70,347 |
|
|
$ |
1,983 |
|
|
$ |
(6,131 |
) |
|
$ |
66,199 |
|
FHLB
stock
|
|
$ |
12,731 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
12,731 |
|
Federal
Reserve Bank stock
|
|
|
1,599 |
|
|
|
- |
|
|
|
- |
|
|
|
1,599 |
|
Total
equities held at cost
|
|
$ |
14,330 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
14,330 |
|
Total
securities
|
|
$ |
84,677 |
|
|
$ |
1,983 |
|
|
$ |
(6,131 |
) |
|
$ |
80,529 |
|
|
|
December 31,
2008
|
|
|
|
Amortized
|
|
|
Unrealized
|
|
|
Unrealized
|
|
|
Estimated
|
|
|
|
Cost
|
|
|
Gain
|
|
|
Loss
|
|
|
Fair
Value
|
|
|
|
(in
thousands)
|
|
Securities
available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Treasury Notes
|
|
$ |
148 |
|
|
$ |
19 |
|
|
$ |
- |
|
|
$ |
167 |
|
Government
Sponsored Entity Mortgage-backed securities
|
|
|
37,887 |
|
|
|
996 |
|
|
|
(30 |
) |
|
|
38,853 |
|
Private
Label Mortgage-backed securities - investment grade
|
|
|
20,536 |
|
|
|
1 |
|
|
|
(4,573 |
) |
|
|
15,964 |
|
Private
Label Mortgage-backed securities - non-investment grade
|
|
|
2,922 |
|
|
|
- |
|
|
|
(1,300 |
) |
|
|
1,622 |
|
Total
securities available for sale
|
|
$ |
61,493 |
|
|
$ |
1,016 |
|
|
$ |
(5,903 |
) |
|
$ |
56,606 |
|
FHLB
stock
|
|
$ |
12,731 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
12,731 |
|
Federal
Reserve Bank stock
|
|
|
1,599 |
|
|
|
- |
|
|
|
- |
|
|
|
1,599 |
|
Total
equities held at cost
|
|
$ |
14,330 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
14,330 |
|
Total
securities
|
|
$ |
75,823 |
|
|
$ |
1,016 |
|
|
$ |
(5,903 |
) |
|
$ |
70,936 |
|
Investment
Securities Held for Sale by Contractual Maturity
|
|
As
of March 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Year or Less
|
|
|
More
than One
to
Five Years
|
|
|
More
than Five
to
Ten Years
|
|
|
More
than
TenYears
|
|
|
Total
|
|
|
|
Carrying
|
|
|
|
|
|
Carrying
|
|
|
|
|
|
Carrying
|
|
|
|
|
|
Carrying
|
|
|
|
|
|
Carrying
|
|
|
|
|
|
|
Value
|
|
|
Yield
|
|
|
Value
|
|
|
Yield
|
|
|
Value
|
|
|
Yield
|
|
|
Value
|
|
|
Yield
|
|
|
Value
|
|
|
Yield
|
|
|
|
(dollars
in thousands)
|
|
US
Treasury Notes
|
|
$ |
- |
|
|
|
0.00 |
% |
|
$ |
80 |
|
|
|
3.53 |
% |
|
$ |
83 |
|
|
|
4.15 |
% |
|
$ |
- |
|
|
|
0.00 |
% |
|
$ |
163 |
|
|
|
3.84 |
% |
Government
Sponsored Entity Mortgage-backed securities
|
|
$ |
2 |
|
|
|
6.63 |
% |
|
$ |
- |
|
|
|
0.00 |
% |
|
$ |
283 |
|
|
|
5.27 |
% |
|
$ |
38,972 |
|
|
|
5.77 |
% |
|
|
39,257 |
|
|
|
5.77 |
% |
Private
Label Mortgage-backed securities - investment grade
|
|
$ |
- |
|
|
|
0.00 |
% |
|
$ |
340 |
|
|
|
1.24 |
% |
|
$ |
14,281 |
|
|
|
6.07 |
% |
|
$ |
10,566 |
|
|
|
7.77 |
% |
|
|
25,187 |
|
|
|
6.72 |
% |
Private
Label Mortgage-backed securities - non-investment grade
|
|
$ |
- |
|
|
|
0.00 |
% |
|
$ |
- |
|
|
|
0.00 |
% |
|
$ |
- |
|
|
|
0.00 |
% |
|
$ |
1,592 |
|
|
|
9.11 |
% |
|
|
1,592 |
|
|
|
9.11 |
% |
Total
securities available for sale
|
|
$ |
2 |
|
|
|
6.63 |
% |
|
$ |
420 |
|
|
|
1.68 |
% |
|
$ |
14,647 |
|
|
|
6.04 |
% |
|
$ |
51,130 |
|
|
|
6.29 |
% |
|
$ |
66,199 |
|
|
|
6.20 |
% |
The Company
reviewed individual securities classified as available for sale to determine
whether a decline in fair value below the amortized cost basis is
other-than-temporary. If it is probable that the Company will be
unable to collect all amounts due according to contractual terms of the debt
security not impaired at acquisition, an other-than-temporary impairment shall
be considered to have occurred. If an other-than-temporary impairment
occurs, the cost basis of the security would have been written down to its fair
value as the new cost basis and the write down accounted for as a realized
loss. During 2008, the Company took a $1.3 million
other-than-temporary impairment charge after management determined that 19
securities were impaired. No additional securities were deemed
other-than-temporary impaired during the quarter-ended March 31,
2009.
Loans
Gross
loans outstanding totaled $620.0 million at March 31, 2009 compared to $628.8
million at December 31, 2008. The decrease was primarily due to loan
payoffs of $9.7 million, which was partially offset by the purchase of $4.0
million of performing multi-family loans and the origination of commercial and
industrial business loans.
From time
to time, management utilizes loan purchases or sales to manage its liquidity,
interest rate risk, loan to deposit ratio, diversification of the loan
portfolio, and net balance sheet growth.
A summary of the Company’s loan
originations, loan purchases, loan sales and principal repayments for the three
months ended March 31, 2009 and 2008 are as follows:
|
|
For
the Three Months Ended
|
|
|
|
March
31, 2009
|
|
|
March
31, 2008
|
|
|
|
(in
thousands)
|
|
Beginning
balance, gross
|
|
$ |
628,099 |
|
|
$ |
626,692 |
|
Loans
originated and purchased:
|
|
|
|
|
|
|
|
|
Real
Estate:
|
|
|
|
|
|
|
|
|
Multi-family
|
|
|
4,051 |
|
|
|
7,090 |
|
Commercial
real estate
|
|
|
- |
|
|
|
17,315 |
|
Business
Loans:
|
|
|
|
|
|
|
|
|
Commercial
Owner Occupied (1)
|
|
|
- |
|
|
|
4,430 |
|
Commercial
and Industrial (1)
|
|
|
2,100 |
|
|
|
7,101 |
|
SBA
(1)
|
|
|
- |
|
|
|
582 |
|
Other
|
|
|
850 |
|
|
|
532 |
|
Total
loans originated and purchased
|
|
|
7,001 |
|
|
|
37,050 |
|
Total
|
|
|
635,100 |
|
|
|
663,742 |
|
Less:
|
|
|
|
|
|
|
|
|
Principal
repayments
|
|
|
16,671 |
|
|
|
45,506 |
|
Change
in undisbursed loan funds
|
|
|
(2,259 |
) |
|
|
(3,726 |
) |
Charge-offs
|
|
|
645 |
|
|
|
- |
|
Loan
Sales
|
|
|
- |
|
|
|
5,878 |
|
Transfers
to Real Estate Owned
|
|
|
55 |
|
|
|
- |
|
Total
Gross loans
|
|
|
619,988 |
|
|
|
616,084 |
|
Less
ending balance loans held for sale (gross)
|
|
|
(652 |
) |
|
|
(870 |
) |
Ending
balance loans held for investment (gross)
|
|
$ |
619,336 |
|
|
$ |
615,214 |
|
|
|
|
|
|
|
|
|
|
(1)
Includes lines of credit
|
|
|
|
|
|
|
|
|
The following
table sets forth the composition of the Company’s loan portfolio in dollar
amounts and as a percentage of the portfolio at the dates
indicated:
|
|
March
31, 2009
|
|
|
December
31, 2008
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Percent
|
|
|
Average
|
|
|
|
|
|
Percent
|
|
|
Average
|
|
|
|
Amount
|
|
|
of
Total
|
|
|
Interest
Rate
|
|
|
Amount
|
|
|
of
Total
|
|
|
Interest
Rate
|
|
|
|
(dollars
in thousands)
|
|
Real
Estate Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-family
|
|
$ |
289,803 |
|
|
|
46.74 |
% |
|
|
6.30 |
% |
|
$ |
287,592 |
|
|
|
45.74 |
% |
|
|
6.30 |
% |
Commercial
|
|
|
161,409 |
|
|
|
26.03 |
% |
|
|
6.99 |
% |
|
|
165,978 |
|
|
|
26.40 |
% |
|
|
6.94 |
% |
Construction
|
|
|
- |
|
|
|
0.00 |
% |
|
|
0.00 |
% |
|
|
- |
|
|
|
0.00 |
% |
|
|
0.00 |
% |
Land
|
|
|
2,550 |
|
|
|
0.41 |
% |
|
|
0.00 |
% |
|
|
- |
|
|
|
0.00 |
% |
|
|
0.00 |
% |
One-to-four
family (1)
|
|
|
8,922 |
|
|
|
1.44 |
% |
|
|
8.67 |
% |
|
|
9,925 |
|
|
|
1.58 |
% |
|
|
8.78 |
% |
Business
Loans:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Owner Occupied
|
|
|
107,714 |
|
|
|
17.37 |
% |
|
|
7.05 |
% |
|
|
112,406 |
|
|
|
17.88 |
% |
|
|
7.13 |
% |
Commercial
and Industrial
|
|
|
43,604 |
|
|
|
7.03 |
% |
|
|
7.19 |
% |
|
|
43,235 |
|
|
|
6.88 |
% |
|
|
6.75 |
% |
SBA
|
|
|
4,620 |
|
|
|
0.74 |
% |
|
|
5.67 |
% |
|
|
4,942 |
|
|
|
0.79 |
% |
|
|
6.35 |
% |
Other
Loans
|
|
|
1,366 |
|
|
|
0.22 |
% |
|
|
2.13 |
% |
|
|
4,689 |
|
|
|
0.75 |
% |
|
|
5.63 |
% |
Total
Gross loans
|
|
$ |
619,988 |
|
|
|
100.00 |
% |
|
|
6.66 |
% |
|
$ |
628,767 |
|
|
|
100.00 |
% |
|
|
6.68 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes second trust deeds.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following
table sets forth the repricing characteristics of the Company’s multi-family,
commercial real estate and commercial owner occupied loan portfolio in dollar
amounts as of March 31, 2009:
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Number
|
|
|
|
|
|
Average
|
|
|
Months
to
|
|
|
|
of
Loans
|
|
|
Amount
|
|
|
Interest
Rate
|
|
|
Reprice
|
|
|
|
(dollars
in thousands)
|
|
1
Year and less (1)
|
|
|
197 |
|
|
$ |
156,595 |
|
|
|
6.107 |
% |
|
|
3.21 |
|
Over
1 Year to 3 Years
|
|
|
112 |
|
|
|
160,510 |
|
|
|
6.815 |
% |
|
|
22.89 |
|
Over
3 Years to 5 Years
|
|
|
122 |
|
|
|
137,699 |
|
|
|
6.708 |
% |
|
|
45.22 |
|
Over
5 Years to 7 Years
|
|
|
11 |
|
|
|
21,042 |
|
|
|
6.685 |
% |
|
|
70.52 |
|
Over
7 Years to 10 Years
|
|
|
24 |
|
|
|
24,544 |
|
|
|
6.944 |
% |
|
|
99.02 |
|
Fixed
|
|
|
51 |
|
|
|
61,085 |
|
|
|
7.021 |
% |
|
|
- |
|
Total
|
|
|
517 |
|
|
$ |
561,475 |
|
|
|
6.615 |
% |
|
|
216.33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes three and five year hybrid loans that have reached their initial
repricing date.
|
|
Allowance for Loan
Losses
The allowance for loan losses totaled
$6.4 million as of March 31, 2009 and $5.9 million as of December 31,
2008. The increase in the allowance for loan losses was
primarily due to loans classified as “special mention” and “substandard” of $9.1
million and $6.1 million, respectively. Net nonaccrual loans and
other real estate owned were $7.6 million and $55,000, respectively, at March
31, 2009, compared to $5.2 million and $37,000, respectively, as of December 31,
2008. The increase in net nonaccrual loans was primarily due to two commercial
real estate loans totaling $2.4 million consisting of a loan for $1.0 million
which was current as of quarter-end, but the property securing the loan was in
foreclosure earlier in the quarter. The other loan totaling $1.4 million was 90
days past due at March 31, 2009, is in escrow for $2.0 million and is schedule
to close sometime in the second quarter. The allowance for loan
losses as a percent of nonperforming loans decreased to 84% as of March 31, 2009
from 113% at December 31, 2008. The ratio of nonperforming assets to
total assets at March 31, 2009 was 1.04%, compared to 0.71% at
December 31, 2008.
The
Bank’s methodology for assessing the appropriateness of the allowance consists
of several key elements, including the formula allowance. The formula
allowance is calculated by applying loss factors to all loans held for
investment.
The loss
factors for each segment of the loan portfolio, except for loans secured by
single family residences originated prior to 2002, are derived by using the
average of the last 10 years and 15 years historical charge-off rates by loan
types for commercial banks and savings institutions headquartered in California
as collected by the FDIC as the base rate. Then the following
internal and external risk factors are added to the average:
Internal
Factors
-
|
Changes
in lending policies and procedures, including underwriting standards and
collection, charge-off, and recovery
practices;
|
-
|
Changes
in the nature and volume of the loan portfolio and in the terms of loans,
as well as new types of lending;
|
-
|
Changes
in the experience, ability, and depth of lending management and other
relevant staff that may have an impact on the Bank’s loan
portfolio;
|
-
|
Changes
in volume and severity of past due and classified loans, and in volumes of
non-accruals, troubled debt restructurings, and other loan
modifications;
|
-
|
Changes
in the quality of the Bank’s loan review system and the degree of
oversight by the Board; and
|
-
|
The
existence and effect of any concentrations of credit, and changes in the
level of such concentrations.
|
External
Factors
-
|
Changes
in national, state and local economic and business conditions and
developments that affect the collectability of the portfolio, including
the condition of various market segments (includes trends in real estate
values and the interest rate
environment);
|
-
|
Changes
in the value of the underlying collateral for collateral-dependent loans;
and
|
-
|
The
effect of external factors, such as competition, legal, regulatory
requirements on the level of estimated credit losses in the Bank’s current
loan portfolio.
|
The factor
amount for each of the nine above-described risk factors are determined by the
Chief Credit Officer and approved by the Credit and Investment Review Committee
on a quarterly basis.
For the
homogeneous single-family residential loan portfolio, the allowance for loan and
lease loss factors for pre-2002 originations of first and second deeds of trust
loans are based upon the Bank’s 10 year historical loss experience from
charge-offs and real estate owned and the migration history
analysis. For loans secured by single family residences
made after 2001, the factor is calculated using the average of the FDIC
charge-off for 10 and 15 years plus the nine credit risk factors mentioned
above.
Given the
composition of the Company’s loan portfolio, the $6.4 million allowance for loan
losses was considered adequate to cover losses inherent in the Company’s loan
portfolio at March 31, 2009. However, no assurance can be given that
the Company will not, in any particular period, sustain loan losses that exceed
the amount reserved, or that subsequent evaluation of the loan portfolio, in
light of the prevailing factors, including economic conditions which may
adversely affect the Company’s market area or other circumstances, will not
require significant increases in the loan loss allowance. In
addition, regulatory agencies, as an integral part of their examination process,
periodically review the Bank’s allowance for loan losses. Such
agencies may require the Bank to recognize additional provisions to increase the
allowance or take charge-offs in anticipation of future losses.
The table
below summarizes the activity of the Company’s allowance for loan losses for the
three months ended March 31, 2009 and 2008:
|
|
Three
Months Ended March 31,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(in
thousands)
|
|
Balance,
beginning of period
|
|
$ |
5,881 |
|
|
$ |
4,598 |
|
Provision
for loan losses
|
|
|
1,160 |
|
|
|
183 |
|
Charge-offs
|
|
|
|
|
|
|
|
|
Real
estate:
|
|
|
|
|
|
|
|
|
One-to-four
family
|
|
|
(99 |
) |
|
|
- |
|
Business
Loans:
|
|
|
|
|
|
|
|
|
Commercial
and Industrial
|
|
|
(356 |
) |
|
|
- |
|
SBA
loans
|
|
|
(227 |
) |
|
|
- |
|
Total
charge-offs
|
|
|
(682 |
) |
|
|
- |
|
Recoveries
|
|
|
|
|
|
|
|
|
Real
estate:
|
|
|
|
|
|
|
|
|
One-to-four
family
|
|
|
21 |
|
|
|
4 |
|
Business
Loans:
|
|
|
|
|
|
|
|
|
SBA
loans
|
|
|
12 |
|
|
|
- |
|
Other
loans
|
|
|
4 |
|
|
|
3 |
|
Total
recoveries
|
|
|
37 |
|
|
|
7 |
|
Net
charge-offs
|
|
|
(645 |
) |
|
|
7 |
|
Balance,
end of period
|
|
$ |
6,396 |
|
|
$ |
4,788 |
|
Composition of
Nonperforming Assets
The table
below summarizes the Company’s composition of nonperforming assets as of the
dates indicated. Net nonperforming assets totaled $7.6 million at March 31, 2009
and $5.2 million as of December 31, 2008, or 1.04% and 0.71% of total assets,
respectively. The increase in nonperforming assets was primarily due
to an increase in nonperforming commercial real estate loans during the period
ended March 31, 2009.
|
|
At
March 31,
|
|
|
At
December 31,
|
|
|
|
2009
|
|
|
2008
|
|
Nonperforming
assets:
|
|
(dollars
in thousands)
|
|
Real
Estate:
|
|
|
|
|
|
|
One-to-four
family
|
|
$ |
333 |
|
|
$ |
637 |
|
Multi-family
|
|
|
- |
|
|
|
350 |
|
Commercial
|
|
|
5,627 |
|
|
|
3,188 |
|
Business
loans:
|
|
|
|
|
|
|
|
|
Commercial
owner occupied
|
|
|
317 |
|
|
|
- |
|
Commercial
and industrial
|
|
|
15 |
|
|
|
- |
|
SBA
|
|
|
1,300 |
|
|
|
1,025 |
|
Other
loans
|
|
|
- |
|
|
|
- |
|
Total
nonaccrual loans
|
|
|
7,592 |
|
|
|
5,200 |
|
Foreclosed
real estate owned ("OREO")
|
|
|
55 |
|
|
|
37 |
|
Total
nonperforming assets (1)
|
|
$ |
7,647 |
|
|
$ |
5,237 |
|
|
|
|
|
|
|
|
|
|
Restructured
Loans
|
|
$ |
827 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Allowance
for loan losses as a percent of
|
|
|
|
|
|
|
|
|
gross
loans receivable (2)
|
|
|
1.03 |
% |
|
|
0.94 |
% |
|
|
|
|
|
|
|
|
|
Allowance
for loan losses as a percent of
|
|
|
|
|
|
|
|
|
total
nonperforming loans, gross
|
|
|
84.25 |
% |
|
|
113.10 |
% |
|
|
|
|
|
|
|
|
|
Nonperforming
loans as a
|
|
|
|
|
|
|
|
|
percent
of gross loans receivable
|
|
|
1.22 |
% |
|
|
0.83 |
% |
|
|
|
|
|
|
|
|
|
Nonperforming
assets as a
|
|
|
|
|
|
|
|
|
percent
of total assets
|
|
|
1.04 |
% |
|
|
0.71 |
% |
(1)
|
Nonperforming
assets consist of nonperforming loans and OREO. Nonperforming
loans include all loans 90 days or more past due and loans that are less
than 90 days and, in
the opinion of management, there is reasonable doubt as to the
collectability are classified as
non-accruing.
|
(2)
|
Gross
loans include loans receivable that are held for investment and held for
sale.
|
Liabilities and
Stockholders’ Equity
Total
liabilities of the Company decreased from $682.4 million at December
31, 2008 to $679.1 million at March 31, 2009. The decrease was
primarily due to a decrease in borrowings of $37.9 million which was partially
offset by an increase in total deposits of $36.2 million during the three months
ended March 31, 2009.
The Company had $172.0 million in
borrowings as of March 31, 2009, compared to $209.9 million in such borrowings
at December 31, 2008. Borrowings consist primarily of advances from
the FHLB which are collateralized by pledges of certain real estate loans with
an aggregate principal balance of $538.0 million and FHLB stock totaling $12.7
million at March 31, 2009. See “Note 4 –Borrowings” above. The Bank may borrow
up to 45% of its assets under the FHLB line. As of March 31, 2009,
the maximum amount that the Bank may borrow through the FHLB was $330.8 million,
based on the Bank’s assets as of December 31, 2008. The total cost of
the Company’s borrowings for the three months period ended March 31, 2009 was
4.07%, a decrease of 33 basis points compared to the same period in
2008.
The Corporation had $10.3 million of
subordinated debentures as of March 31, 2009 which were used to fund the
issuance of trust preferred securities in 2004. The total cost of the
subordinated debentures for the three months ended March 31, 2009 was 4.00%,
compared to 6.98% for the same period in 2008.
Total
deposits were $493.4 million as of March 31, 2009, compared to $457.1 million at
December 31, 2008, an annualized increase of 31.7%. The
increase in deposits was comprised of increases in retail certificate of
deposits and transaction accounts of $44.1 million and $7.7 million,
respectively, which were partially offset by a decrease in brokered certificates
of deposits of $17.5 million. The total average annualized cost of deposits for
the three months ended March 31, 2009 was 3.09%, compared to 4.08% for the same
period in 2008.
During
the three months ended March 31, 2009, our average annualized cost of funds was
3.37%, a decrease of 85 basis points compared to the same period in
2008.
Total
equity was $58.2 million as of March 31, 2009, compared to $57.5 million at
December 31, 2008, an increase of $663,000. The increase in
equity was primarily due to the net income of $537,000 and an increase in the
accumulated adjustment to stockholders’ equity of $434,000 due to an increase in
value of the Company’s investment portfolio. This increase was partially offset
by the repurchase and retirement of 100,000 shares of common stock at a cost of
$384,000, or at an average cost of $3.84 per share.
RESULTS OF
OPERATIONS
Highlights for the
three months
ended March 31, 2009 and 2008
The
Company recorded a first quarter net income of $537,000 or $0.09 per diluted
share, compared to net income of $846,000, or $0.13 per diluted share, for the
first quarter of 2008. All diluted earnings per share amounts have
been adjusted to reflect the dilutive effect of all warrants and stock options,
except for options whose exercise price exceeds the closing market price as of
March 31, 2009, outstanding. See “Item 1. Financial
Statements-Note 6 – Earnings Per Share”.
Return on
average assets (ROAA) for the three months ended March 31, 2009 was 0.29%
compared to 0.45% for the same period in 2008. The Company's return
on average equity (ROAE) for the three months ended March 31, 2009 was 3.73%
compared to 5.57% for the three months ended December 31, 2008. The
Company’s basic book value per share increased to $12.15, at March 31, 2009,
reflecting an annualized increase of 13.97% from December 31,
2008. The increase was primarily due to the decrease in total equity
related to the repurchase and retirement of the Company stock at a cost below
our book value during the first quarter of 2009, and an increase in accumulated
adjustment to stockholders’ equity of $434,000 due to an increase in value of
the Company’s investment portfolio. The Company’s diluted book value per share
increased to $9.89, at March 31, 2009, reflecting an annualized increase of
12.08% from December 31, 2008. Options whose exercise price
exceeds the closing market price as of March 31, 2009 are excluded from the
diluted book value calculation.
Net Interest
Income
The
Company’s earnings are derived predominately from net interest income, which is
the difference between the interest income earned on interest-earning assets,
primarily loans and securities, and the interest expense incurred on
interest-bearing liabilities, primarily deposits and borrowings. The
net interest margin is the net interest income divided by the average
interest-earning assets.
For the
three months ended March 31, 2009, net interest income was $5.3 million compared
to $4.8 million for the same period a year earlier. The increase was
predominately attributable to a 20.2% decrease in interest expense for the three
months ended March 31, 2009, compared to the same period in 2008. For the three
months ended March 31, 2009, interest expense totaled $5.7 million compared to
$7.1 million for the same period in 2008. The reduction in interest
expense for the 2009 period was primarily due to decreases in deposit expense
and borrowing costs associated with the Bank’s FHLB and other borrowings of 99
basis points and 33 basis points, respectively, over the prior year
period. Partially offsetting the decrease in interest expense was a
decrease in interest income for the three months ended March 31, 2009 of
$992,000 compared to the same period in the prior year. The decrease
in interest income was primarily attributable to the repricing of our adjustable
rate loans downward. Our weighted average loan yield for the quarter ended March
31, 2009 was 6.60%, a decrease of 39 basis points from 6.99% for the same period
a year earlier.
The net
interest margin for the three months ended March 31, 2009 was 3.00% compared to
2.74% for the same period a year ago. The increase was primarily
attributable to decreases in the average cost of liabilities of 84 basis points
for the three months ended March 31, 2009, compared to the same period in 2008,
which was partially offset by a decrease in the average loan yield of 56 basis
points for the three months ended March 31, 2009. The changes in the
cost of funds and loan yields are primarily attributable to the Federal Reserve
Board’s reduction of the Fed Fund Rate over a 15 month period by 500 basis
points starting in September of 2007 in response to the economic downturn and
their affects on the repricing of the Bank’s adjustable loan portfolio, maturing
deposits, and short-term borrowings. As of March 31, 2009, the Bank
had $5.5 million in short-term FHLB advances, $201.6 million of certificate of
deposits, and $45.8 million of loans that could reprice in the next
quarter.
The
following table sets forth the Company’s average balance sheets and the related
weighted average yields and costs on average interest-earning assets and
interest-bearing liabilities, for the three months ended March 31, 2009 and
2008. The yields and costs are derived by dividing income or expense
by the average balance of assets or liabilities, respectively, for the periods
shown. Average balances are measured on a daily basis. The
yields and costs include fees that are considered adjustments to
yields.
|
|
Three
Months Ended
|
|
|
Three
Months Ended
|
|
|
|
March
31, 2009
|
|
|
March
31, 2008
|
|
|
|
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
Average
|
|
|
|
|
|
Annualized
|
|
|
Average
|
|
|
|
|
|
Annualized
|
|
Assets
|
|
Balance
|
|
|
Interest
|
|
|
Yield/Cost
|
|
|
Balance
|
|
|
Interest
|
|
|
Yield/Cost
|
|
Interest-earning
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
9,390 |
|
|
$ |
4 |
|
|
|
0.17 |
% |
|
$ |
274 |
|
|
$ |
10 |
|
|
|
14.60 |
% |
Federal
funds sold
|
|
|
5,743 |
|
|
|
4 |
|
|
|
0.28 |
% |
|
|
937 |
|
|
|
7 |
|
|
|
2.99 |
% |
Investment
securities
|
|
|
71,780 |
|
|
|
778 |
|
|
|
4.34 |
% |
|
|
76,413 |
|
|
|
989 |
|
|
|
5.18 |
% |
Loans
receivable
|
|
|
616,182 |
|
|
|
10,165 |
|
|
|
6.60 |
% |
|
|
626,078 |
|
|
|
10,938 |
|
|
|
6.99 |
% |
Total
interest-earning assets
|
|
|
703,095 |
|
|
|
10,951 |
|
|
|
6.23 |
% |
|
|
703,702 |
|
|
|
11,944 |
|
|
|
6.79 |
% |
Non-interest-earning
assets
|
|
|
34,803 |
|
|
|
|
|
|
|
|
|
|
|
40,304 |
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
737,898 |
|
|
|
|
|
|
|
|
|
|
$ |
744,006 |
|
|
|
|
|
|
|
|
|
Liabilities
and Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
accounts
|
|
$ |
93,340 |
|
|
$ |
255 |
|
|
|
1.09 |
% |
|
$ |
96,947 |
|
|
$ |
434 |
|
|
|
1.79 |
% |
Retail
certificates of deposit
|
|
|
367,470 |
|
|
$ |
3,304 |
|
|
|
3.60 |
% |
|
|
256,493 |
|
|
|
3,072 |
|
|
|
4.79 |
% |
Wholesale/brokered
certificates of deposit
|
|
|
20,210 |
|
|
|
152 |
|
|
|
3.01 |
% |
|
|
38,301 |
|
|
|
492 |
|
|
|
5.14 |
% |
Total
interest-bearing deposits
|
|
|
481,020 |
|
|
|
3,711 |
|
|
|
3.09 |
% |
|
|
391,741 |
|
|
|
3,998 |
|
|
|
4.08 |
% |
Borrowings
|
|
|
182,693 |
|
|
|
1,861 |
|
|
|
4.07 |
% |
|
|
272,908 |
|
|
|
2,937 |
|
|
|
4.30 |
% |
Subordinated
debentures
|
|
|
10,310 |
|
|
|
103 |
|
|
|
4.00 |
% |
|
|
10,310 |
|
|
|
180 |
|
|
|
6.98 |
% |
Total
borrowings
|
|
|
193,003 |
|
|
|
1,964 |
|
|
|
4.07 |
% |
|
|
283,218 |
|
|
|
3,117 |
|
|
|
4.40 |
% |
Total
interest-bearing liabilities
|
|
|
674,023 |
|
|
|
5,675 |
|
|
|
3.37 |
% |
|
|
674,959 |
|
|
|
7,115 |
|
|
|
4.22 |
% |
Non-interest-bearing
liabilities
|
|
|
6,285 |
|
|
|
|
|
|
|
|
|
|
|
8,335 |
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
680,308 |
|
|
|
|
|
|
|
|
|
|
|
683,294 |
|
|
|
|
|
|
|
|
|
Equity
|
|
|
57,590 |
|
|
|
|
|
|
|
|
|
|
|
60,712 |
|
|
|
|
|
|
|
|
|
Total
liabilities and equity
|
|
$ |
737,898 |
|
|
|
|
|
|
|
|
|
|
$ |
744,006 |
|
|
|
|
|
|
|
|
|
Net
interest income
|
|
|
|
|
|
$ |
5,276 |
|
|
|
|
|
|
|
|
|
|
$ |
4,829 |
|
|
|
|
|
Net
interest rate spread
|
|
|
|
|
|
|
|
|
|
|
2.86 |
% |
|
|
|
|
|
|
|
|
|
|
2.57 |
% |
Net
interest margin
|
|
|
|
|
|
|
|
|
|
|
3.00 |
% |
|
|
|
|
|
|
|
|
|
|
2.74 |
% |
Ratio
of interest-earning assets to interest-bearing liabilities
|
|
|
|
|
|
|
|
104.31 |
% |
|
|
|
|
|
|
|
|
|
|
104.26 |
% |
The
following table sets forth the effects of changing rates and volumes (changes in
the average balances) on the Company’s net interest income. Information is
provided with respect to (i) effects on interest income attributable to changes
in rate (changes in rate multiplied by prior volume); (ii) effects on interest
income attributable to changes in volume (changes in volume multiplied by prior
rate); and (iii) the net change.
|
|
Three
Months Ended March 31, 2009
|
|
|
|
Compared
to
|
|
|
|
Three
Months Ended March 31, 2008
|
|
|
|
Increase
(decrease) due to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate
|
|
|
Volume
|
|
|
Net
|
|
|
|
(in
thousands)
|
|
Interest-earning
assets:
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
71 |
|
|
$ |
(77 |
) |
|
$ |
(6 |
) |
Federal
funds sold
|
|
|
41 |
|
|
|
(44 |
) |
|
|
(3 |
) |
Investment
securities
|
|
|
(57 |
) |
|
|
(154 |
) |
|
|
(211 |
) |
Loans
receivable, net
|
|
|
(170 |
) |
|
|
(602 |
) |
|
|
(772 |
) |
Total
interest-earning assets
|
|
$ |
(115 |
) |
|
$ |
(877 |
) |
|
$ |
(992 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction
accounts
|
|
$ |
(16 |
) |
|
$ |
(163 |
) |
|
$ |
(179 |
) |
Retail
certificates of deposit
|
|
|
4,034 |
|
|
|
(3,802 |
) |
|
|
232 |
|
Wholesale/brokered
certificates of deposit
|
|
|
(181 |
) |
|
|
(159 |
) |
|
|
(340 |
) |
Borrowings
|
|
|
(926 |
) |
|
|
(150 |
) |
|
|
(1,076 |
) |
Subordinated
debentures
|
|
|
- |
|
|
|
(77 |
) |
|
|
(77 |
) |
Total
interest-bearing liabilities
|
|
$ |
2,911 |
|
|
$ |
(4,351 |
) |
|
$ |
(1,440 |
) |
Change
in net interest income
|
|
$ |
(3,026 |
) |
|
$ |
3,474 |
|
|
$ |
448 |
|
Provision for Loan
Losses
The
Bank’s provision for loan losses was $1.2 million for the three months ended
March 31, 2009, compared to $183,000 for the same period in 2008. The
increase in the provision for the three months ended March 31, 2009 was
primarily due to increases in the Bank’s loss reserve factors due to the
unfavorable business climate and an increase in the Bank’s charge-offs compared
to the same period in 2008. Net charge-offs in the three months ended March 31,
2009 were $645,000 compared to net recoveries of $7,000 for the same period in
2008. The increase in the Bank’s loss reserve factors is due to management’s
expectation that, with the weakening economy, our borrowers and/or the
collateral securing our loans could be adversely impacted. The Bank’s
Loss Mitigation Department continues collection efforts on loans previously
written-down and/or charged-off to maximize potential recoveries. See
“Allowance for Loan Losses.”
Noninterest
Income
Noninterest
income for the three months ended March 31, 2009 was $630,000 compared to
$679,000 for the same period in 2008. The decrease in the noninterest
income for the three months ended March 31, 2009 was primarily due to decreases
in gain on the Company’s sale of loans of $67,000 and other income of $135,000
compared to the same period in 2008, which was partially offset by gains in loan
servicing fee income and bank fee income of $54,000 and $97,000, respectively,
compared to the same period in 2008.
Noninterest
Expense
Noninterest
expenses were $3.9 million for the three months ended March 31, 2009 compared to
$4.0 million for the same period in 2008. The decrease in
noninterest expense for the three months was the result of a decrease in
compensation and benefits expense of $388,000 which was partially offset by an
increase in FDIC insurance premiums of $220,000. The decrease in compensation
and benefits for the quarter was attributable to management’s staff reductions,
which occurred in late February 2008, and a reduction in the annual incentive
bonus accrual. The number of employees with the Bank at March 31, 2009 was 90
compared to 92 at March 31, 2008.
Provision for Income
Taxes
The
Company had a tax provision for the three months ended March 31, 2009 of
$280,000. For the same period in 2008, the Company had a tax
provision of $464,000. The decrease in the tax provision for the three months
ended March 31, 2009 was primarily due to a reduction in income before taxes of
$493,000. The Company’s valuation allowance for deferred taxes was zero at March
31, 2009, as the deferred tax assets based on management’s analysis were
determined, more likely than not, to be realized.
LIQUIDITY
The
Bank’s primary sources of funds are principal and interest payments on loans,
deposits and borrowings. While maturities and scheduled amortization of loans
are a predictable source of funds, deposit flows and loan prepayments are
greatly influenced by general interest rates, economic conditions, and
competition. The Bank’s average liquidity ratios were 9.40% and
10.12% for the quarters ended March 31, 2009 and 2008,
respectively.
The
Company’s cash flows are comprised of three primary classifications: operating
activities, investing activities and financing activities. Net cash
provided by operating activities were $1.4 million for the three months ended
March 31, 2009, compared to net cash provided by operating activities of $10.3
million for the three months ended March 31, 2008. Net cash used in
investing activities was $1.0 million for the three months ended March 31, 2009,
compared to net cash used in investing activities of $18.6 million for the three
months ended March 31, 2008. Net cash used in financing activities
was $2.1 million for the three months ended March 31, 2009, compared to net cash
used in financing activities of $2.5 million for the three months ended March
31, 2008.
The
Company’s most liquid assets are unrestricted cash and short-term
investments. The levels of these assets are dependent on the
Company’s operating, lending and investing activities during any given
period. At March 31, 2009, cash and cash equivalents totaled $8.1
million and the market-value of the Bank’s investments in mortgage-backed
securities totaled $66.2 million. The Company has other sources of
liquidity, if a need for additional funds arises, including the utilization of
FHLB advances, Federal Funds lines, Federal Reserve Bank’s lending programs, and
loan sales.
As of
March 31, 2009, the Bank had commitments to extend credit of $15.3 million as
compared to $14.4 million at December 31, 2008. There were no
material changes to the Company’s commitments or contingent liabilities as of
March 31, 2009 compared to the period ended December 31, 2008 as discussed in
the notes to the audited consolidated financial statements of Pacific Premier
Bancorp, Inc. for the year ended December 31, 2008 included in the Company’s
Annual Report on Form 10-K, for such year.
CAPITAL
RESOURCES
The
regulatory agencies require a minimum ratio of qualifying total capital to
risk-adjusted assets of 8.0 percent and a minimum ratio of Tier 1 capital
to risk-adjusted assets of 4.0 percent. In addition to the risk-based
guidelines, regulators require banking organizations to maintain a minimum
amount of Tier 1 capital to total assets, referred to as the leverage ratio, of
4.0 percent. For a bank rated in the highest of the five categories used by
regulators to rate banks, the minimum leverage ratio is 3.0 percent. In
addition to these uniform risk-based capital guidelines that apply across the
industry, the regulators have the discretion to set individual minimum capital
requirements for specific institutions at rates significantly above the minimum
guidelines and ratios.
The table
in “Item 1. Financial Statements - Note 3 - Regulatory Matters” reflects the
Company’s and Bank’s capital ratios based on the end of the period covered by
this report and the regulatory requirements to be adequately capitalized and
well capitalized. As of March 31, 2009, the Bank met the capital
ratios required to be considered well capitalized.
Management
believes that there have been no material changes in the Company’s quantitative
and qualitative information about market risk since December 31, 2008. For a
complete discussion of the Company’s quantitative and qualitative market risk,
see “Item 7A. Quantitative and Qualitative Disclosure About Market Risk” in the
Company’s 2008 Annual Report on Form 10-K.
(a) Evaluation
of Disclosure Controls and Procedures
The
Company's Chief Executive Officer and its Chief Financial Officer, after
evaluating the effectiveness of the Company's disclosure controls and procedures
as defined in Rules 13a-15(c) and 15-d-15(e) under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), as of the end of the period covered by
this report (the "Evaluation Date") have concluded that as of the Evaluation
Date, the Company's disclosure controls and procedures were adequate and
effective to ensure that material information relating to the Company and its
consolidated subsidiaries would be made known to them by others within those
entities, particularly during the period in which this quarterly report was
being prepared. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files under the Exchange
Act is accumulated and communicated to its Management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding required disclosure.
(b) Changes
in Internal Controls
There
have not been any changes in the Company’s internal control over financial
reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the
Exchange Act) during the fiscal quarter to which this report relates that have
materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.
The
Company was not involved in any legal proceedings other than those occurring in
the ordinary course of business, except for the “James Baker v. Century
Financial, et al” which was discussed in the Company’s Annual Report on Form
10-K for the year ended December 31, 2008. Management believes that
none of these legal proceedings, individually or in the aggregate, will have a
material adverse impact on the results of operations or financial condition of
the Company.
There are no material changes from the
risk factors set forth under Part 1A. “Risk Factors” in the Company’s 2008
Annual Report on Form 10-K, other than the addition of the following risk
factors:
Difficult
market conditions may adversely affect our industry, business, results of
operations and access to capital.
Dramatic
declines in the housing market over the past year, with falling home prices and
increasing foreclosures, unemployment and under-employment, have negatively
impacted the credit performance of mortgage loans and resulted in significant
write-downs of asset values by financial institutions, including
government-sponsored entities as well as major commercial and investment banks.
These write-downs, initially of mortgage-backed securities but spreading to
credit default swaps and other derivative and cash securities, in turn, have
caused many financial institutions to seek additional capital, to merge with
larger and stronger institutions and, in some cases, to fail. Reflecting concern
about the stability of the financial markets generally and the strength of
counterparties, many lenders and institutional investors have reduced or ceased
providing funding to borrowers, including to other financial institutions. This
market turmoil and tightening of credit have led to an increased level of
commercial and consumer delinquencies, lack of consumer confidence, increased
market volatility and widespread reduction of business activity
generally. The resulting lack of available credit and lack of
confidence in the financial markets could materially and adversely affect our
financial condition and results of operations and our access to
capital. In particular, we may face the following risks in connection
with these events:
·
|
Market
developments may affect consumer confidence levels and may cause adverse
changes in payment patterns, causing increases in delinquencies and
default rates on loans and other credit
facilities.
|
·
|
The
processes we use to estimate allowance for loan losses and reserves may no
longer be reliable because they rely on complex judgments, including
forecasts of economic conditions, which may no longer be capable of
accurate estimation.
|
·
|
Our
ability to borrow from other financial institutions or raise additional
capital on favorable terms or at all could be adversely affected by
further disruptions in the capital markets or other
events.
|
·
|
We
may be required to pay significantly higher FDIC premiums because market
developments have significantly depleted the insurance fund of the FDIC
and reduced the ratio of reserves to insured
deposits.
|
·
|
We
expect to face increased regulation of our industry. Compliance with such
regulation may increase our costs, limit our ability to pursue business
opportunities, and increase compliance
challenges.
|
|
|
Total
Number
|
|
|
|
|
|
Total
number of
|
|
|
Maximum
number
|
|
|
|
of
shares
|
|
|
Average
|
|
|
shares
repurchased
|
|
|
of
shares that may
|
|
Month of
|
|
purchased/
|
|
|
price
paid
|
|
|
as
part of the publicly
|
|
|
yet
be purchased
|
|
Purchase
|
|
returned
|
|
|
per
share
|
|
|
announced
program
|
|
|
under
the program
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jan-09
|
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
|
267,163 |
|
Feb-09
|
|
|
100,000 |
|
|
|
3.84 |
|
|
|
100,000 |
|
|
|
167,163 |
|
Mar-09
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
167,163 |
|
Total/Average
|
|
|
100,000 |
|
|
$ |
3.84 |
|
|
|
100,000 |
|
|
|
167,163 |
|
None
None
None
Exhibit
31.1 Certification of Chief
Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit
31.2 Certification of Chief
Financial Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32 Certification of
Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
PACIFIC
PREMIER BANCORP, INC.,
May 14,
2009
|
By:
|
/s/ Steven R.
Gardner
|
Date Steven R.
Gardner
President
and Chief Executive Officer
(principal
executive officer)
May 14,
2009
|
/s/ John
Shindler
|
Date John Shindler
Executive
Vice President and Chief Financial Officer
(principal
financial and accounting officer)
Exhibit
No. Description of
Exhibit
|
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
32
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of
2002
|