Pacific Premier Lagging On Weaker Core Banking

Smaller banks have had a so-so year as a group, and Pacific Premier Bancorp (PPBI) has done worse than average, and particularly since second quarter earnings. Not only has this growing Southern California bank disappointed the Street, but the combination of weaker loan growth and weaker spreads has hit expectations. Adding to that, Pacific Premier management has made it clear that they intend to remain active in M&A at a time when it seems that many investors would prefer that banks return surplus capital to shareholders rather than expand their businesses through M&A.

I do have some near-term concerns about the commercial real estate market, where Pacific Premier does around 40% of its lending, and while the California multifamily housing market doesn’t have the same challenges as the New York area, Pacific Premier’s higher than average exposure here is a potential risk. Pacific Premier still has a higher short interest than peers, but I do believe the valuation has become much more reasonable for a very profitable, fast-growing SoCal bank.

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Pacific Premier Lagging On Weaker Core Banking