Shares in Small-Cap Star Pacific Premier Bancorp (TBBK) shot up nearly 8 percent today in early trading after the Southern California-based regional bank released a strong earnings report featuring a 40 percent year-over-year jump in earnings.
TBBK’s Strong Earnings Power Climb
In addition to the 40 percent climb in net income (from $5.2 million in Q4 of 2012 to $7.3 million in Q4 of 2013), Bancorp also boasted a 27 percent year-over-year jump in diluted earnings per share from $0.15 to $0.19, and a whopping 51 percent jump in yearly net income from $16.6 million in 2012 to $25.1 million in 2013.
"Our earnings growth in the fourth quarter reflected increases both in net interest and non-interest income,” said CEO Betsy Z. Cohen. “These drivers resulted in growth of 40% in net income, 21% in adjusted operating earnings and 27% in earnings per diluted share. Our leadership position in the prepaid card industry is a primary vector of growth and related fee income increased 20% to $11.7 million for the quarter, compared to fourth quarter 2012… Book value per share increased 5%, from $9.06 at December 31, 2012 to $9.53 at December 31, 2013."
That last sentence is of note for out Small-Cap Stars system, which indicates that a low ratio of share price to book value per share is often attributed to a higher potential for growth in small-cap financial companies.
DuPont System Could Point to Buying Opportunity for TBBK
If you plug Bancorp’s ticker into Equities.com’s DIY Research section, you can access a look at the DuPont System analysis of the stock. Bancorp features a return on equity (ROE) that’s ahead of industry average, though not by as substantial margin as would be ideal. However, a closer look reveals a significant advantage in net margin for Bancorp over its average competitor and rates of asset turnover and leverage that are close to industry average, which is positive sign in the DuPont System.
What’s more, looking at the way these metrics are trending would also indicate that Bancorp is a stock with some strength. Net margin appears to be trending up since 2011, and ROE is also improving over the same time frame. Meanwhile, while Bancorp’s leverage is above industry average, Bancorp’s equity multiplier is trending down, towards the mean.
One cause for concern, though, could be the rate of asset turnover. Bancorp is currently below the industry average and appears to be trending even lower. Should this reverse, it could be another strong indicator for Bancorp.
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