425

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)		October 7, 2015 (October 3, 2015)
PACIFIC PREMIER BANCORP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE	0-22193			33-0743196
(State or other jurisdiction of incorporation)	(Commission File Number)			(I.R.S. Employer Identification No.)
17901 Von Karman Avenue, Suite 1200, Irvine, CA				92614
(Address of principal executive offices)				(Zip Code)
Registrant’s telephone number, including area code			(949) 864-8000
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[x] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(ii))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 5.02DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS

On October 7, 2015, Pacific Premier Bancorp, Inc. (the “Company”) issued a press release announcing that Ms. Cora M. Tellez was appointed as a member of the boards of directors of the Company and the Company’s subsidiary, Pacific Premier Bank (the “Bank”).  Ms. Tellez has no special arrangements nor any related transaction with the Company or the Bank and qualifies as an “independent director.”

Ms. Tellez, 65, has served as the Chief Executive Officer and President of both Sterling Health Services Administration, Inc. and Sterling Self Insurance Administration since founding the companies in 2003 and 2010, respectively. Ms. Tellez previously served as the President of the health plans division of Health Net, Inc., an insurance provider that operated in seven states. She also has served as President of Prudential`s western healthcare operations, Chief Executive Officer of Blue Shield of California, Bay Region, and Regional Manager for Kaiser Permanente of Hawaii. Ms. Tellez serves on the boards of directors of HMS Holdings, Inc., (NASDAQ:HMSY) (“HMS”) and CorMedix (NYSE:CRMD). For HMS, Ms. Tellez chairs the Nominating and Governance Committee and also serves on the Audit and Compliance Committees. For CorMedix, Ms. Tellez chairs the board of directors as well as the Audit Committee. She also serves on several nonprofit organizations such as the Institute for Medical Quality and UC San Diego’s Ce

nter for Integrative Medicine. Ms. Tellez received her B.A. from Mills College and her M.S. in public administration from California State University, Hayward.

In connection with the appointment of Ms. Tellez, the Company’s and the Bank’s boards of directors were expanded to eight (8) members. Ms. Tellez will be eligible to receive compensation for her services as a director consistent with that provided to our other non-employee directors, as previously disclosed in our definitive proxy statement filed with the Securities and Exchange Commission on April 27, 2015.

A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K. 

ITEM 8.01 OTHER EVENTS

On October 7, 2015, the Company issued a press release announcing the appointment of Ms. Tellez as a director of the Company. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K. In addition, on October 1, 2015, the Company hosted a conference call to discuss its proposed acquisition of Security California Bancorp, a California corporation (“SCB”). A copy of the conference call transcript is attached hereto as Exhibit 99.2. An archived version of the conference call webcast is available on the Investor Relations section of the Company’s website www.ppbi.com.

Information contained in Exhibits 99.1 and 99.2 shall not be deemed filed for the purposes of the Securities Exchange Act of 1934, as amended, nor shall such information and Exhibits be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. The furnishing of the transcript is not intended to constitute a representation that such furnishing is required by Regulation FD or that the transcript includes material investor information that is not otherwise publicly available.

Forward Looking Statements

This Current Report on Form 8-K and the Exhibits hereto may contain forward-looking statements regarding the Company, the Bank, SCB, Security Bank of California, a California-chartered bank and wholly-owned subsidiary of SCB (“Security Bank”), as well as the proposed acquisition of SCB by the Company (the “Proposed Transaction”). These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: the expected cost savings, synergies and other financial benefits from the acquisition might not be realized within the expected time frames or at all; governmental approval of the Proposed Transaction may not be obtained or adverse regulatory conditions may be imposed in connection with governmental approvals of the Proposed Transaction; conditions to the closing of the Proposed Transaction may not be satisfied; the SCB shareholders may fail to approve the consummation of the Proposed Transaction and the shareholders of the Company may not approve the issuance of shares of the Company’s common stock in connection with the Proposed Transaction. Annualized, pro forma, projected and estimated numbers in this press release are used for illustrative purposes only, are not forecasts and may not reflect actual results.

The Company, the Bank, SCB and Security Bank undertake no obligation to revise or publicly release any revision or update to these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

Notice to Shareholders

This Current Report on Form 8-K does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the Proposed Transaction, a registration statement on Form S-4 will be filed with the SEC by the Company. The registration statement will contain a joint proxy statement/prospectus to be distributed to the shareholders of SCB and the Company in connection with their vote on the acquisition or the issuance of the shares of common stock of the Company, respectively. SHAREHOLDERS OF SCB AND THE COMPANY ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The final joint proxy statement/prospectus will be mailed to shareholders of SCB and the Company. Investors and security holders will be able to obtain the documents free of charge at the SEC’s website, www.sec.gov. In addition, documents filed with the SEC by the Company will be available free of charge by accessing the Company’s website at www.ppbi.comor by writing PPBI at 17901 Von Karman Avenue, Suite 1200, Irvine, CA 92614, Attention: Investor Relations, or by writing SCB at 3403 Tenth Street, Suite 830, Riverside, CA 92501, Attention: Corporate Secretary.

The directors, executive officers and certain other members of management and employees of the Company may be deemed to be participants in the solicitation of proxies in respect of the proposed acquisition. Information about the directors and executive officers of the Company is included in the proxy statement for its 2015 annual meeting of the Company’s shareholders, which was filed with the SEC on April 27, 2015. The directors, executive officers and certain other members of management and employees of SCB may also be deemed to be participants in the solicitation of proxies in favor of the acquisition from the shareholders of SCB. Information about the directors and executive officers of SCB will be included in the joint proxy statement/prospectus for the acquisition of SCB. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the joint proxy statement/prospectus regarding the proposed acquisition of SCB when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.

ITEM 9.01FINANCIAL STATEMENTS AND EXHIBITS

99.1	Press Release, dated October 7, 2015.
99.2	Pacific Premier Bancorp, Inc. Conference Call Transcript

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 hereunto duly authorized.

PACIFIC PREMIER BANCORP, INC.
Dated:	October 7, 2015	By:	/s/ STEVEN GARDNER
	Steven Gardner
	President and Chief Executive Officer

EX-99.1

Exhibit 99.1

Pacific Premier Bancorp, Inc. Announces the Appointment of New Director

Irvine, Calif., October 7, 2015 -- Pacific Premier Bancorp, Inc. (NASDAQ: PPBI) (the “Company”, “Pacific Premier”, “we”, “us” or “our”), the holding company of Pacific Premier Bank (“Pacific Premier Bank”), announced today the expansion of its Board of Directors to eight members and the appointment of Cora Tellez as an independent director to fill the vacancy created as a result of such expansion. Ms. Tellez founded Sterling Health Services Administration in 2003 and Sterling Self Insurance Administration in 2010, and serves as Chief Executive Officer of both. She has over 35 years of management experience in the healthcare industry. Previously, Ms. Tellez was President of the health plans division of Health Net, Inc., an insurance provider that operated in seven states. She also has served as President of Prudential`s western healthcare operations, Chief Executive Officer of Blue Shield of California, Bay Region, and Regional Manager for Kaiser Permanente of Hawaii.

Steven R. Gardner, President and Chief Executive Officer of Pacific Premier stated, “We are delighted to have Cora bring her skills and experience in healthcare, financial services and executive leadership to our Board. Cora has an accomplished track record of achievement in management and operations, both as an entrepreneur and as an executive with large, established institutions. Cora will add a level of diversity and expertise to our Board that we believe will be extremely beneficial not only to Pacific Premier, its management team, and its stockholders, but also to the communities and other stakeholders we serve.”

Ms. Tellez serves on the boards of HMS Holdings, Inc., (NASDAQ:HMSY), and CorMedix (NYSE:CRMD). For HMS, Ms. Tellez chairs the Nominating and Governance Committee and also serves on the Audit and Compliance Committees. For CorMedix, she chairs the board of directors as well as the Audit Committee. She also serves on several nonprofit organizations such as the Institute for Medical Quality and UC San Diego’s Center for Integrative Medicine.

Past affiliations include serving as a director of Crescent Health Care, Bank of Hawaii, Glendale Federal Bank, Cal Fed Bank, Catellus Development Corporation and First Consulting Group. She has served on numerous non-profit boards, including The S.H. Cowell Foundation, Mills College, Holy Names University, and Philippine International Aid. She helped found Asian Community Mental Health Services and Filipinos for Social Justice.

Ms. Tellez earned her master’s degree in public administration from California State University, Hayward. She is a Phi Beta Kappa graduate of Mills College where she received a BA degree. Ms. Tellez is a distinguished member of her community receiving such honors as the Del Beasley Award for Community Leadership; the Heritage Achievement Award, LAFACE; and the Deborah Award from the Los Angeles Anti-Defamation League. Ms. Tellez was the 28^th “Living Example Awardee” for the Bay Area Tumor Institute in 2013, and was also named among the 100 Most Influential Filipino Women in the U.S. in 2007.

About Pacific Premier Bancorp, Inc.

Pacific Premier Bancorp, Inc. is the holding company for Pacific Premier Bank, one of the largest community banks headquartered in Southern California. Pacific Premier Bank is a business bank primarily focused on serving small and middle market business in the counties of Los Angeles, Orange, Riverside, San Bernardino and San Diego, California. Pacific Premier Bank offers a diverse range of lending products including commercial, commercial real estate, construction, residential warehouse and SBA loans, as well as specialty banking products for homeowners associations and franchise lending nationwide. Pacific Premier

Bank serves its customers through its 16 full-service depository branches in Southern California located in the cities of Corona, Encinitas, Huntington Beach, Irvine, Los Alamitos, Newport Beach, Palm Desert, Palm Springs, Riverside, San Bernardino, San Diego, Seal Beach and Tustin.

Notice to Security California Bancorp and Pacific Premier Shareholders

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed acquisition of Security California Bancorp (“Security”) by the Company, a registration statement on Form S-4 will be filed with the U.S. Securities and Exchange Commission (“SEC”) by the Company. The registration statement will contain a joint proxy statement/prospectus to be distributed to the shareholders of Security and the Company in connection with their vote on the acquisition. SHAREHOLDERS OF SECURITY AND THE COMPANY ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED ACQUISITION. The final joint proxy statement/prospectus will be mailed to shareholders of Security and the Company. Investors and security holders will be able to obtain the documents free of charge at the SEC’s website, www.sec.gov. In addition, documents filed with the SEC by the Company will be available free of charge by (1) accessing the Company’s website at www.ppbi.com under the “Investor Relations” link and then under the heading “SEC Filings,” (2) writing the Company at 17901 Von Karman Avenue, Suite 1200, Irvine, CA 92614, Attention: Investor Relations or (3) writing Security at 3403 Tenth Street, Suite 830, Riverside, CA 92501, Attention: Corporate Secretary.

The directors, executive officers and certain other members of management and employees of the Company may be deemed to be participants in the solicitation of proxies in respect of the proposed acquisition. Information about the directors and executive officers of the Company is included in the proxy statement for its 2015 annual meeting of the Company shareholders, which was filed with the SEC on April 27, 2015. The directors, executive officers and certain other members of management and employees of Security may also be deemed to be participants in the solicitation of proxies in favor of the acquisition from the shareholders of Security. Information about the directors and executive officers of Security will be included in the joint proxy statement/prospectus for the acquisition. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the joint proxy statement/prospectus regarding the proposed acquisition when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.

Pacific Premier Bancorp, Inc. and Pacific Premier Bank

Steve Gardner

President & Chief Executive Officer

(949) 864-8000

EX-99.2

Filed by Pacific Premier Bancorp, Inc.

Pursuant to Rule 425 under the

Securities Act of 1933

Subject Company: Security California Bancorp

SEC Registration Statement No.: 333-

This filing relates to a conference call held on October 1, 2015 held by Pacific Premier Bancorp, Inc. The following is a transcript of the conference call.

--------------------------------------------------------------------------------------------------------------------------------

Exhibit 99.1

Pacific Premier Bancorp

October 1, 2015 at 11:00 a.m. Eastern

Pacific Premier Bancorp

Pacific Premier Bancorp Conference Call

October 1, 2015 at 11:00 a.m. Eastern

CORPORATE PARTICIPANTS

Steven Gardner - President and CEO

Allen Nicholson - EVP and CFO

PRESENTATION

Operator

Good morning, and welcome to the Pacific Premier Bancorp Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded.

I would now like to turn the conference over to Steven Gardner, President and CEO. Please, go ahead.

Steven Gardner

Thank you, Gary. Good morning, everyone. I appreciate you joining us today. As you are all aware, earlier this morning we announced the signing of a merger agreement with Security California Bancorp. I’m going to walk through the details of the merger, and then Allen Nicholson and I will open up the call to questions. There is a slide presentation that summarizes the merger that I will be speaking to and you can find that on the front page of our investor relations website at www.ppbi.com if you haven’t downloaded it already.

We have our customary cautionary statement regarding forward-looking remarks. And so, I’m going to start off on slide 3 of the deck. As we’ve stated many times over the past few years, acquisitions are a core part of our growth strategy. We have a well-honed process in place for identifying targets that can enhance the value of our franchise. We maintain pricing and structured discipline, and we have a proven integration process that allows us to fully capitalize on all of the synergies that we project. We’ve done six acquisitions over the past four years, and they’ve all resulted in contributing to our earnings power in creating a more

diversified and valuable commercial banking franchise.

We’re very excited to come to an agreement with Security California Bancorp, which we believe is one of the best, pure business banks in Southern California. Security has $734 million in total assets, and on a pro forma basis, this acquisition will bring us to $3.4 billion and further strengthen our competitive position as one of the premier commercial banks in California.

Security’s customer base is primarily small and middle-market businesses, which is evidenced by the high levels of C&I and owner-occupied CRE loans as well as a highly attractive deposit base comprised of more than 43% non-interest bearing deposits and approximately 82% in non-maturing deposits. This deal has some unique benefits for us from a geographic perspective in that it allows us to both expand and consolidate our presence in the Inland Empire, which as many of you know, is a dynamic and growing area in the region. The relationship bankers and the senior team at Security Bank have spent most of their careers together and are well established in their markets. As a group, they will add depth and breadth to our commercial banking team and further strengthen Pacific Premier senior and executive management leadership.

From a financial perspective, this merger is also very attractive. We expect to close the transaction in the first quarter of 2016 and to convert the systems and customer accounts in the early part of the second quarter of 2016. We expect modest EPS accretion in 2016 and 5% EPS accretion in 2017, the first full year of the combined operations. We’re forecasting an IRR in excess of 15% and a relatively short tangible book value payback period of approximately 2.7 years. The cost savings are estimated to be 40%.

Just a note, as we move through the presentation, we are using the August 31, 2015 financials for Security. We are doing this because there were two significant events that occurred in July. First, the company stock option plan was set to expire in 2015, so there were a number of stock options that were exercised, which contributed approximately $3.6 million to capital. Second, Security purchased a branch in Murrieta, California from Rabobank that added approximately $40 million in deposits. And for purposes of the TCE calculations, we’re using Security’s August 31^st balance of $70.3 million or $11.64 a share.

Taking a look at the branch map on slide 4, you can see how this acquisition is a nice geographic fit. Security Bank has five branches in the Inland Empire, one in Orange County and a loan production office in Los Angeles County. We like the location of their branches, and as such, we plan to consolidate three Pacific Premier branches into nearby Security Bank branches. After those three branches are consolidated, we’ll have 19 branches in Southern California with very strong positioning in Orange County, the Inland Empire, the Coachella Valley, and San Diego County.

Turning to slide 5; we structured the transaction as 100% stock, with an aggregate transaction value of approximately $119 million. The security shareholders are, in effect, reinvesting in the combined company. As I mentioned earlier, we expect to close the transaction during the first quarter of 2016 subject to customary regulatory and shareholder approvals from both sides. Two directors from Security will be joining our Board, and we plan to redeem Security’s outstanding SBLF preferred equity at the time of the closing of the transaction.

On slide 6, we include some more details on the financial impact and the assumptions we are modeling. The purchase price values Security Bank, at 169.2% of tangible book with a trailing 12-month PE of 24.8. If you use the mean analyst estimates as a baseline, we’re expecting the deal to be modestly accretive in 2016 to EPS estimates and 5% accretive to EPS in 2017, the first full year of combined operations. We’ll have 2.3% tangible book value dilution at closing. With the branch consolidation and other redundant back office expenses that we’ll eliminate, we’re expecting cost savings to be approximately 40% of Security’s non-interest expense. We anticipate that 80% of the cost savings will be phased in during 2016 and 100% by 2017.

Security has excellent credit quality, and we’ve modeled a fairly conservative fair value mark on their loan portfolio of just 2.7% at closing. We expect the pre-tax, onetime merger related expenses to be approximately

$10.9 million. Lastly, we are not modeling revenue synergies, but we historically have been able to redeploy excess liquidity fairly quickly and to extract value from the targets we acquire.

Slide 7, will give you a quick overview of Security Bank’s recent performance. Over the past year, they’ve generated strong organic growth with total deposits increasing 23%, non-CD deposits increasing 26%, and total loans increasing 20%. For the last several quarters, they’ve generated nice growth in net income. Earlier this summer, they acquired a branch that added $40 million in deposits and it enabled them to enter the Murrieta and Temecula markets.

Moving to slide 8, we highlight the loan and deposit portfolios and then the pro forma mix. Security Bank has $470 million in total loans with an average yield of 4.92% with C&I and owner-occupied CRE comprising 61% of the loan portfolio. On a pro forma basis, we’ll have $2.6 billion in total loans with an average yield of 5.20%. The deposit base is very attractive with more than 43% in non-interest bearing with a total cost of 32 basis points. Combined on a pro forma basis, our net interest-bearing demand deposits will increase to more than 33% while our cost of deposits are expected to remain at 31 basis points.

On slide 9, we provide some of the background on the senior management team’s extensive commercial banking experience. We have retention plans in place for key employees, and we intend to retain most all of the relationship bankers, the customer-facing employees, and many of the executive and senior management team.

Turning to slide 10, we summarize the similarities and strengths of both organizations. Security Bank has a significant book of business in healthcare and medical banking, and their expertise that they bring will help us to tap into this growing area throughout our footprint. Both organizations get significant contributions from specialty finance and SBA lending. Security Bank is highly liquid, and the addition of their balance sheet will bring our loan-to-deposit ratio down to approximately 94%.

Both companies have very strong credit quality. During 2014, Security Bank had zero net charge offs, and they’ve had net recoveries in the first half of 2015. Finally, this acquisition will significantly improve our scale and operational efficiencies and allow us to better leverage our capital and infrastructure.

Slide 11 highlights the value that we continue to build in Southern California. On a pro forma basis, we’ll have $3.4 billion in total assets and become the 8^th largest bank headquartered in Southern California when you exclude the ethnic-focused banks.

When we think of the franchise value we are creating, and as investors look to invest in quality mainstream commercial banking organizations in the California market, we believe we are creating significant scarcity value for those investors.

Slide 12, we provide some concluding thoughts. The transaction will significantly strengthen our positioning in Southern California. We’re adding a very attractive low-cost deposit base. It’s a great fit and helps improve our ability to grow in the Inland Empire from a geographic standpoint. There are significant cost saves and synergies for both companies. It’s an effective use of capital, driving enhancements in our level of profitability, and creating shareholder value. This transaction is another significant step in the strategic plan that we’ve developed to build Pacific Premier into one of the leading commercial banking franchises in Southern California.

We have some additional financial details in the appendix, but with that, we’d be happy to answer any questions you may have. Gary, can you please open up the call and explain to folks how to get into the queue?

QUESTIONS AND ANSWERS

Operator

We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.

Our first question comes from Brian Zabora with KBW. Please go ahead.

Brian Zabora

Thanks, good morning.

Steven Gardner

Hi, Brian.

Brian Zabora

This is a question on the deposit side. You talked about in the past, about wanting to keep a loan to deposit ratio above 100%, for some time. You’ve moved nicely below that now. Looking forward, does that provide you a little bit more flexibility in keeping loans on balance sheet, and is there a new maximum that you’d like to keep as far as a loan deposit ratio?

Steven Gardner

There is no new maximum as we’ve talked about. We’re comfortable running the balance sheet above 100%. We generally would not take it above 105%. And, yes, this does give us additional flexibility. We’d look to redeploy that liquidity into good quality loans.

Brian Zabora

Great. And then just a second question on the slide page 10 on the profitability, your ROA potential in ‘17 of, potentially above 125 and ROTC above 14%, is that considered really just organic growth and the cost savings here or does that consider any additional, maybe, interest rate increases by the Fed to reach that kind of profitability?

Steven Gardner

No, I think that everybody has sort of given up on trying to figure in increases from the Fed. No, this is our organic growth as well as the cost savings that we’ve modeled, and this is what we would expect to be generating in 2017 on a pro forma basis.

Brian Zabora

Great. Well, thanks for taking my questions and congratulations on the deal.

Steven Gardner

Thank you, Brian.

Operator

The next question comes from Andrew Liesch with Sandler O’Neill. Please, go ahead.

Alex Morris

Hey, good morning, everybody, this Alex Morris on for Andrew.

Steven Gardner

Hi, Alex.

Alex Morris

Congratulations on the deal; just a couple of quick questions for me. Could you give just a little background on how long the due diligence process was going on? Kind of, such as, how long the conversations were

going on, how you really gained your confidence in the deal?

Steven Gardner

Sure. I’ve known Ernie and Jim Robinson for a number of years, and as I do with many of the CEOs in institutions throughout Southern California, I reach out to them frequently and sit down and chat about what’s going on at their bank and what’s going on at Pacific Premier and talk about how, if at any point in their future they might consider partnering with someone. I explain why I think it would be very advantageous to their shareholders if we came together. So, those conversations have been going on for a number of years.

We worked on the transaction during the second quarter and had done a decent amount of work at that point; and then things were quiet for a period of time, and then they ramped back up here in the latter part of the third quarter. As with every acquisition, we have a pretty sizeable team that has done due diligence on a number of targets stemming back from the days when we were acquiring FDIC failed banks, and so, we have a team that’s able to go in and assess all aspects of an institution from the credit side to the deposit side, relationships, and then through compliance BSA, AML, fair lending, accounting, finance, systems, and the like; and that process is very disciplined and well defined and that’s what occurred in this case.

Alex Morris

That’s great color. Thank you very much for that. And then, just one more followup, is there anything, kind of, unique or particular about Security that you guys found attractive, maybe more specifically, any color you could give behind their specialty lending, especially finance lending niches that you included in the release?

Steven Gardner

Yes, they had recently started an asset-based lending program, but they had been a little bit slow to ramp that up, as they were looking at strategic alternatives; and we intend to grow that business. We’re very intrigued by it. Also the healthcare and medical banking business that they do was very attractive. But the core of it, and this is how we look at every acquisition, we always start with the right-hand side of the balance sheet and really look at what is the liability composition. And here you have just a fantastic deposit base with 43% in non-interest bearing deposits. And then couple that with the CNI and owner occupied CRE, it just shows what an excellent true business bank that Security is. And, that is the most attractive aspect to us as well as the management team and the relationship bankers that we think are just going to fit in very nicely to our organization.

Alex Morris

That’s great. Thanks for the color and congratulations once again.

Steven Gardner

Thanks, Alex.

Operator

Again, if you have a question, please press star then one. The next question comes from Tim Coffey from FIG Partners. Please go ahead.

Tim Coffey

Thank you. Good morning, Steve.

Steven Gardner

Hi, Tim.

Tim Coffey

As far as the branch consolidations that you’ve identified, are those included in the M&A expenses at $10.9 million?

Steven Gardner

Allen, do you want to address that?

Allen Nicholson

Yes, they are. We have included the cost savings as well as the transaction termination costs for those.

Tim Coffey

Okay, great. And, off the top, do you know what percentage of those costs are the comprehensive consolidation expenses?

Allen Nicholson

I would tell you it’s about 13%, 14%.

Tim Coffey

Okay, great. And, of the deposits that Security acquired from Rabobank in the branch acquisition, how much of those were core?

Steven Gardner

I don’t have the exact number off the top of my head, Tim. We can get that to you, but it was a very attractive deposit base similar to what Security has developed over the years.

Tim Coffey

Right, and that seems to be kind of one of the real strong points on this acquisition for you. Let’s see, what other marks to assets do you plan to make, securities or fixed assets?

Steven Gardner

Go ahead, go ahead, Allen.

Allen Nicholson

Okay, sure. Besides the loan mark, we think there’ll be modest, at best, marks on the fixed assets. Obviously the investment side is mark-to-market as is. We don’t really anticipate any adjustments there. You saw, probably in the deck, there’s a very small premium on the time deposits and then a fairly small CDI as well.

Tim Coffey

Okay, great, [indiscernible], thanks. And then Steve, this kind of big picture, this is a relatively small deal for Pacific Premier with a complementary loan portfolio and deposit portfolio. Does doing this deal prohibit you from - will you find yourself having to slow down your M&A activity or do you expect it to keep going at the same pace it’s been going more or less?

Steven Gardner

I expect it to keep going at the same pace, and there’s a couple of reasons here. This is a very clean bank that is managed by very talented people that, as I said, I think is going to integrate very smoothly into Pacific Premier. Two, we’re both on the same operating system through FIS, and so the conversion is going to be very straightforward and not overly taxing.

With that, with our capital with the, everything else we have going on, I see no reason why not to continue to pursue acquisitions. I will always check in with our executive team regularly and ask them where are they at the point of integration, conversion, how much is on their plate, and just gauge their ability to go in and effectively do due diligence potentially on another target. And so, there again, I see no reason why not to continue the process from here.

Tim Coffey

Okay, very good. Those are my questions. Thank you.

Steven Gardner

Thanks, Tim.

Operator

As there are no further questions, this concludes our question and answer session. I would like to turn the conference back over to Steven Gardner for any closing remarks.

CONCLUSION

Steven Gardner

Thanks again, Gary. And, thank you all for joining us this morning. If you have any further questions, please feel free to give Allen or myself a call, and we’d be happy to chat with you. Have a great day.

Operator

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.