In This Issue

October 2021 Vol. 6 Issue 8

Our Portfolio Continues to Outperform

On September 30, we closed out another

calendar quarter with the Monthly Dividend

Multiplier portfolio beating the broader stock

market indices. Q3 saw stock prices increasing

for the first two months and then tumbling in

September. For the month, the S&P 500

dropped by 4.76%. The SPDR S&P 500 ETF (SPY)

generated a small 0.58% total return for the

full quarter.

In This Issue

Pacific Premier Bancorp ...................... 3

Something Fun..................................... 7

What Will Q4 Bring? ............................ 8

Third Quarter 2021 Highlights ............. 11

Portfolio Update .................................. 12

Portfolio ............................................... 15

According to my tracking spreadsheet, the

Monthly Dividend Multiplier portfolio posted a

return of 3.86% for the quarter. My personal

brokerage account tracking the Monthly Dividend Multiplier service produced the same

3.85% return for the quarter.

Through the first nine months of 2021, the model portfolio is up 30.7%, close to double

the 15.87% total return from the SPY ETF. I also looked at the Nasdaq 100 tracking ETF

returns, the Invesco QQQ ETF (QQQ), which underperformed SPY.

Later in this issue, I discuss the top performers of the third quarter, as well as the laggards

of the portfolio.

In a few weeks, 2021 third-quarter earnings reports will start to show up in my inbox.

Coming out of the pandemic has created a whole new list of business challenges. Shutting

down a large portion of the economy last year led to unforeseen problems as we continue

to work to get back to some sort of normalcy.

For the rest of the year, the most crucial story will probably be the new energy crisis that

could leave millions in the dark and cold this winter. The emphasis on removing fossil fuel

energy sources and replacing them with less reliable renewable energy sources may turn

out to be a giant mistake¡ªat least for those on a limited income who will see energy

prices soar and the politicians who will at some point need their votes.

1

October 2021 Vol. 6 Issue 8

If you haven¡¯t yet heard me talk about this, the Monthly Dividend Multiplier publication

schedule has changed. This monthly newsletter will continue to publish the second

Tuesday of every month. Two weeks later, the mid-month update will now be a live

webinar. For the in-between weeks, I will send you a Mailbag Video as I do for my

Dividend Hunter service. Also, as with Dividend Hunter, you can find a link to send

questions right below the video in our Member Area on .

2

October 2021 Vol. 6 Issue 8

Pacific Premier Bancorp (PPBI)

Banking sector stocks should do very

well as interest rates increase over the

coming months. This year, many

regional bank companies grew

dividends by 10% or more so it makes

sense that Pacific Premier Bancorp

(PPBI) is the newest addition to the

Monthly Dividend Multiplier portfolio.

I¡¯m starting it out in the portfolio with

a 3% weighting.

has 63 full-service bank locations: 48 in

California, 11 in Washington, three in

Arizona, two in Oregon, and one in

Nevada. The company has assets of

$20 billion.

Pacific Premier¡¯s recent history of

growth through acquisition is the

factor that makes the stock appeal to

me over other regional banks. Over the

last eight years, the company grew

from assets of $2 billion to $20 billion.

Here is the acquisition and growth

timeline.

Corporate Overview

Pacific Premier Bancorp is the parent

company of Pacific Premier Bank.

Based in Southern California, the bank

3

October 2021 Vol. 6 Issue 8

? Net interest spread between the

interest charged on loans and the rates

paid on deposits

? The bank¡¯s operating expenses¡ªlower

expenses let more of the net interest

income fall to the bottom line

? Minimizing loan losses due to

defaulting borrowers

In June of last year, Pacific Premier

completed its most recent and

transformative acquisition. In February

2020, before the pandemic crash,

Pacific Premier agreed to acquire Opus

Bank in an all-stock transaction valued

at $1 billion. When the deal closed that

June, the transaction was valued at

$744 million, due to the lower share

values in effect.

Let¡¯s look at each factor for Pacific

Premier Bank. Fortunately, the

company provided some excellent

charts in a September 2021

presentation that visually depict these

metrics.

With the Opus purchase, Pacific

Premier added $8 billion in assets and

44 bank branches. The merger

immediately increased Pacific

Premier¡¯s asset and loan base and its

branch footprint, and represented a

projected 14% increase in earnings per

share and a 25% decrease of noninterest expense.

Starting with net interest margin,

Pacific Premier historically slightly

outperforms its western regional bank

peers. And as interest rates increase,

the margin should expand.

The Opus Bank acquisition transformed

Pacific Premier and

turned the company

into a top-six bank in

the Western U.S.

Financial Results

Three primary factors

(allowing for nuance

within each) affect

the profitability of any

commercial bank.

They are:

4

October 2021 Vol. 6 Issue 8

To quantify expenses, banks report an

efficiency ratio, which is operating

expenses divided by revenue. A ratio

under 50% is considered optimal; we

can see the Opus Bank purchase

helped Pacific Premier push its ratio

below that target.

backs 83% of the portfolio. California

real estate is a pretty secure collateral

base.

Investment Potential

Following the Opus Bank acquisition,

Pacific Premier reported earnings of

$0.70 per share for the 2020 third

quarter, $0.71 for the 2020 fourth

quarter, $0.72 for the 2021 first

quarter, and $1.01 for the 2021 second

quarter. Benefits from the merger

really started to kick in during the

second quarter of 2021.

Bad loans and loan losses get reported

as a nonperforming assets percentage.

Pacific Premier has a stellar record on

this metric. The 2021 second quarter

nonperforming asset number is 57.5%

lower than its peers.

The loan portfolio mix has a lot to do

with the low loss ratio. Either investorowned or business-owned real estate

5

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download