Opus Bank ("Opus") (NASDAQ: “OPB”) announced today net income of
$12.9 million, or $0.34 per diluted share, for the first quarter of
2018 compared to net income of $1.2 million, or $0.03 per diluted
share, for the fourth quarter of 2017 and net income of $7.7
million, or $0.21 per diluted share, for the first quarter of 2017.
Net income for the first quarter of 2018 included $1.5 million of
strategic initiative and severance related expenses, $1.4 million
of seasonally higher employer payroll taxes, and a $2.9 million
recovery of professional services expense related to the settlement
of a legal matter.
Additionally, Opus announced today that its Board of Directors
has approved increasing its quarterly cash dividend by 10% to $0.11
per common share payable on May 17, 2018 to common stockholders and
to its Series A Preferred stockholders of record as of May 3,
2018.
First Quarter 2018 Highlights
- Pre-tax pre-provision earnings
increased 14% from the prior quarter to $20.9 million and
increased 13% from the first quarter of 2017.
- Net interest margin increased five
basis points to 3.20%, as the yield on Opus' originated loans
increased six basis points to 4.22%, while our cost of deposits
increased two basis points to 0.47%.
- New loan fundings were $452.3
million, an increase of 106% from the first quarter of
2017.
- Total loans increased $55.8
million, driven by new loan fundings exceeding loan payoffs and
sales of $271.4 million, which included planned exits of $52.2
million. Excluding planned exits, total loans would have increased
by $108.0 million in the first quarter of 2018.
- Total deposits increased $99.7
million, primarily driven by growth in low- or no-cost
commercial business demand deposits.
- Noninterest expense decreased 5% to
$44.1 million and the efficiency ratio decreased to 68%,
compared to 71% in the prior quarter.
- Enterprise Value loans decreased
$81.7 million, or 20%, in the first quarter of 2018 to $336.0
million.
- Provision for loan losses was $3.9
million, compared to $3.0 million for the prior quarter. Net
charge-offs were $12.0 million in the first quarter of 2018, of
which 95% were Enterprise Value or Technology loans with $8.2
million of specific reserves.
- Opus' effective tax rate was 24% for
the first quarter.
Stephen H. Gordon, Chief Executive Officer and President of Opus
Bank, stated, “Opus’ first quarter results marked a successful
beginning to 2018, demonstrated by our disciplined growth and
improving profitability, displaying continued momentum from 2017.
We achieved $452 million in new loan fundings during the quarter,
more than double the level achieved in the first quarter of 2017.
New loan fundings exceeded loan payoffs of $271 million, which
included planned exits of $52 million, as we successfully reduced
the balances of Enterprise Value loans by 20% in the first quarter.
Deposit growth of $100 million was driven by low- or no-cost
commercial business demand deposits, which enabled our overall cost
of deposits to increase by only two basis points. We also began to
realize the benefit of our asset sensitive balance sheet, as our
net interest margin expanded by five basis points during the
quarter.”
Mr. Gordon continued, “Consistent with past years, we estimate
our quarterly loan production will ramp over the course of 2018,
driven by our leading multifamily banking division and bolstered by
the contributions from numerous commercial bankers hired throughout
our footprint over the recent quarters. Deposit and full
relationship growth is a high priority across the organization,
including and especially among our Commercial and Specialty Banking
teams, and is expected to ramp throughout 2018. Our cost of
deposits will likely increase in coming quarters, but at a slower
rate than our loan yields increase. With our portfolio of
Enterprise Value loans that are not eligible for retention
continuing to shrink, we anticipate planned exits will have less of
a negative impact on our quarterly net loan growth, loan yield, and
overall credit expenses. As we entered the second quarter, the
weighted average rate of our new loan fundings pipeline was
34-basis-points higher than at the start of the first quarter,
which we anticipate will contribute to a higher net interest margin
going forward. Our noninterest expense run rate was reduced in the
first quarter, and we remain confident in our ability to drive our
efficiency ratio below 65%.”
Mr. Gordon concluded, “I thank all of the many Opus team members
responsible for our strong start to the year, as we take great
pride in their tireless efforts and commitment. Based on our
earnings, strong capital levels and overall performance in the
first quarter of 2018, I am proud to announce Opus’ Board has
authorized a 10% increase in our quarterly cash dividend to $0.11
per diluted share.”
Loans
Total loans held-for-investment increased $55.8 million, or 1%,
to $5.2 billion as of March 31, 2018, from $5.2 billion as of
December 31, 2017 and decreased $203.1 million, or 4%, from
$5.4 billion as of March 31, 2017. The increase in total loans
during the first quarter of 2018 was driven by new loan fundings of
$452.3 million, partially offset by loan payoffs of $271.4 million,
which included planned exits of $52.2 million.
Loan Balance Roll Forward (unaudited)
Three Months Ended ($ in millions)
March
31,
2018
December 31,2017
September 30, 2017
June 30,
2017
March 31, 2017
Beginning loan balance $ 5,173.2 $ 5,060.6 $ 5,218.1 $
5,432.1 $ 5,669.1 New loan fundings 452.3 502.3 375.4 362.2 219.1
Loan payoffs (219.2 ) (237.8 ) (267.1 ) (357.0 ) (239.8 ) Loan
sales¹ -- -- (6.0 ) (15.8 ) (38.6 ) Planned exits (52.2 ) (80.6 )
(161.2 ) (137.2 ) (95.3 ) Other² (125.1 ) (71.3 ) (98.6 ) (66.2 )
(82.4 ) Ending loan balance $ 5,229.0 $ 5,173.2 $
5,060.6 $ 5,218.1 $ 5,432.1 [1] Loan
sales that were not planned exits [2] Includes normal amortization
and charge-offs
New loan fundings in the first quarter of 2018 totaled $452.3
million, a decrease of $50.1 million, or 10%, from the fourth
quarter of 2017 and an increase of $233.1 million, or 106%, from
the first quarter of 2017. Commercial and Specialty Banking
division loans comprised $171.3 million, or 38%, of total new loan
fundings, and Commercial Real Estate Banking loans comprised
$281.0, or 62%, of total new loan fundings in the first
quarter.
Loan commitments originated during the first quarter of 2018
totaled $439.2 million, compared to $454.1 million during the
fourth quarter of 2017 and $209.7 million during the first quarter
of 2017. As of March 31, 2018, our unfunded commitments on
originated loans totaled $413.6 million.
Our acquired loan portfolio totaled $128.6 million as of
March 31, 2018, a decrease of 3% from $132.1 million as of
December 31, 2017 and 20% from $160.3 million as of
March 31, 2017. The acquired loan portfolio had a remaining
discount of $2.1 million as of March 31, 2018.
Cash and Investment Securities
Cash and investment securities totaled $1.4 billion as of
March 31, 2018, compared to $1.6 billion as of
December 31, 2017 and $1.9 billion as of March 31, 2017.
Cash and cash equivalents decreased $208.5 million, or 42%, during
the first quarter of 2018 to $292.2 million, and decreased $733.9
million, or 72%, from the first quarter of 2017. The reduction in
cash and cash equivalents in the first quarter of 2018 was
primarily driven by the payoff of $280.0 million of FHLB advances
that were added at the end of the fourth quarter of 2017.
Investment securities decreased $29.5 million, or 3%, during the
first quarter of 2018 to $1.1 billion, and increased $197.8
million, or 22%, from $900.0 million as of March 31, 2017.
Deposits and Borrowings
Deposits increased $99.7 million, or 2%, to $6.0 billion as of
March 31, 2018, from $5.9 billion as of December 31,
2017, and decreased by $676.5 million, or 10%, from $6.7 billion as
of March 31, 2017. Deposit growth during the first quarter was
primarily driven by our Commercial and Specialty Banking
divisions.
Total demand deposits, including both noninterest-bearing and
interest-bearing demand deposit accounts, increased to 56% of total
deposits as of March 31, 2018, compared to 55% as of
December 31, 2017 and 52% as of March 31, 2017. As of
March 31, 2018, business deposits represented 63% of total
deposits.
Our loan to deposit ratio was 87% as of March 31, 2018,
unchanged from the prior quarter and an increase from 81% as of
March 31, 2017.
Federal Home Loan Bank advances decreased to $10.0 million as of
March 31, 2018 compared to $290.0 million as of
December 31, 2017, and were unchanged compared to
March 31, 2017. Borrowings from the Federal Home Loan bank
during the fourth quarter were paid off early in the first quarter
of 2018, reflected in the low first quarter average balance of
$16.4 million.
Net Interest Income
Net interest income was $51.7 million for the first quarter of
2018, compared to $52.0 million for the fourth quarter of 2017 and
$56.1 million for the first quarter of 2017.
Interest income from loans increased $1.0 million, or 2%, to
$54.6 million for the first quarter of 2018, driven by higher
average balances of loans and loan rate resets, partially offset by
loan payoffs and prepayments, including planned exits during the
quarter. While planned exits decrease our potential future credit
volatility, they had a negative impact on our loan interest
income.
Interest income from cash and investment securities decreased
$1.2 million, or 17%, from the prior quarter to $6.0 million for
the first quarter of 2018. Interest income from investment
securities decreased $881,000, or 15%, during the first quarter to
$5.1 million, driven by lower average balances of investment
securities compared to the prior quarter and higher prepayments
during the first quarter that resulted in higher premium
amortization. Interest income from cash decreased $314,000 from the
prior quarter to $951,000 for the first quarter of 2018, as the
average balance of cash decreased $138.6 million, or 36%.
Interest expense increased 2% to $9.0 million for the first
quarter of 2018, compared to $8.8 million for the fourth quarter of
2017, and decreased 2% compared to $9.2 million for the first
quarter of 2017. While the average balance of deposits remained
relatively flat compared to the fourth quarter of 2017, interest
expense on deposits increased 2% as the weighted average rate of
deposits increased during the quarter.
Net Interest Margin
Net interest margin on a taxable equivalent basis increased five
basis points to 3.20% in the first quarter of 2018 from 3.15% in
the fourth quarter of 2017, and increased six basis points from
3.14% in the first quarter of 2017. The linked-quarter change was
due to an increase in total loan yield of three basis points to
4.25%, which was positively impacted by loan rate resets, higher
balances of originated loans, and two fewer days in the quarter,
offset by planned exits, which had a weighted average rate of
7.38%. Net interest margin was negatively impacted by a 21 basis
point decrease in the yield on investment securities to 1.87%,
driven by higher premium amortization, and a higher cost of
deposits, which increased by two basis points to 0.47% for the
first quarter of 2018.
Noninterest Income
Noninterest income increased 5% to $13.3 million in the first
quarter of 2018 from $12.6 million in the fourth quarter of 2017,
and increased 6% from $12.5 million in the first quarter of 2017.
Noninterest income during the first quarter of 2018 included $1.7
million of treasury management and deposit account fees, $7.0
million in trust administrative fees from our alternative asset IRA
custodian subsidiary, $1.4 million from our Escrow and Exchange
divisions, and $838,000 from Opus' Merchant Banking division. Total
noninterest income in the first quarter of 2018 included a net
increase in equity warrant valuations of $108,000, compared to a
net decrease of $554,000 in the prior quarter, as well as net gains
on the sale of investment securities and other assets totaling
$232,000.
Noninterest income made up 20% of total revenues during the
first quarter of 2018, unchanged from the fourth quarter of 2017
and an increase from 18% in the first quarter of 2017.
Noninterest Expense
Noninterest expense decreased 5% to $44.1 million in the first
quarter of 2018, compared to $46.2 million in the fourth quarter of
2017, and decreased 12% from $50.1 million in the first quarter of
2017. Noninterest expense during the first quarter of 2018 included
$802,000 of strategic initiative related expenses, $735,000 of
severance expense, and $1.4 million of seasonally higher
compensation and benefits expense related to higher employer taxes
paid in the first quarter. Offsetting these expenses was a $2.9
million recovery of previously incurred professional services
expenses related to the settlement of a legal matter during the
quarter. This legal case had a $750,000 per quarter professional
services expense run rate that will not be incurred going
forward.
Income Tax Expense
During the fourth quarter of 2017, the Tax Cuts and Jobs Act
(the "Tax Act") was signed into law, which, among other items,
reduced the federal corporate tax rate from 35% to 21%, effective
January 1, 2018, and resulted in additional income tax expense
totaling $9.0 million during the fourth quarter of 2017. As a
result, our effective tax rate decreased to 24% in the first
quarter of 2018, compared to an adjusted effective tax rate of 34%
in the fourth quarter of 2017 and an effective tax rate of 39% in
the first quarter of 2017.
Asset Quality
During the first quarter of 2018, we continued to reduce our
exposure to previously de-emphasized loan portfolios. Total
Enterprise Value loans were reduced by $81.7 million, or 20%,
during the first quarter of 2018 and totaled $336.0 million as of
March 31, 2018. Planned exits through loan payoffs and sales
totaled $52.2 million in the first quarter of 2018, as Opus
continued to reduce the balances of loans we previously announced
as targeted for planned exits. As a result of the successful exit
of previously identified loan relationships, the reserves
associated with these loans were released, which reduced the
allowance for loan losses as required under our methodology.
Our allowance for loan losses was $67.8 million, or 1.30% of our
total loan portfolio, as of March 31, 2018, compared to $75.9
million, or 1.47%, as of December 31, 2017 and $112.2 million,
or 2.07%, as of March 31, 2017. The reduction in the allowance
for loan losses during the first quarter of 2018 was driven by
charge-offs of $14.2 million, partially offset by net recoveries of
$2.2 million and a provision for loan losses of $3.9 million.
We recorded a provision expense of $3.9 million in the first
quarter of 2018, compared to a provision expense of $3.0 million in
the fourth quarter of 2017 and a provision expense of $6.0 million
in the first quarter of 2017. The provision expense during the
first quarter of 2018 was driven by $12.0 million of net
charge-offs, $4.4 million from risk rating migration, and $3.2
million due to higher loss factors used to determine loan loss
reserves in accordance with our methodology. These factors were
partially offset by a $9.9 million decline in reserves as a result
of the changes in portfolio mix, fundings, and planned exits of
loan relationships, and a reduction of $5.8 million in specific
reserves.
Opus recorded net charge-offs of $12.0 million in the first
quarter of 2018, compared to net charge-offs of $5.2 million in the
fourth quarter of 2017 and $5.1 million in the first quarter of
2017. Charge-offs during the first quarter of 2018 were
predominantly comprised of one Technology Banking loan
relationship, two Commercial Banking division loan relationships,
and one Corporate Finance loan relationship, which previously had
specific reserves of $8.2 million.
Total nonperforming assets were $63.8 million, or 0.87% of total
assets, as of March 31, 2018, compared to $58.3 million, or
0.78% of total assets, as of December 31, 2017, and $87.0
million, or 1.09% of total assets, as of March 31, 2017. The
ratio of the allowance for loan losses to total nonaccrual loans
was 106% as of March 31, 2018, compared to 130% as of
December 31, 2017 and 129% as of March 31, 2017.
Total criticized loans decreased $2.3 million, or 1%, to $247.4
million as of March 31, 2018 compared to $249.8 million as of
December 31, 2017, and decreased $112.0 million, or
31%, from $359.4 million as of March 31, 2017. The net
decrease in total criticized loans during the first quarter of 2018
was driven by $9.6 million of upgrades and $51.1 million of loan
exits, including payoffs, loan sales, charge-offs, and normal
amortization during the quarter, partially offset by $58.4 million
of downgrades. Classified loans decreased $8.7 million and special
mention loans increased $6.4 million in the first quarter of 2018.
The decrease in classified loans was driven by upgrades of $1.1
million as well as payoffs, charge-offs, and normal amortization of
$47.9 million, partially offset by downgrades of $40.3 million. The
increase in special mention loans was driven by $39.5 million of
downgrades, partially offset by $8.4 million of upgrades and $24.7
million of loan payoffs, normal amortization, and migration.
The net decrease in total criticized loans consisted primarily
of a $16.8 million decrease in commercial business loans and a
$14.6 million increase in real estate secured loans. Commercial
business loans comprised $5.1 million of loans upgraded out of
criticized categories and $49.0 million of loan exits, including
loan payoffs, loan sales, charge-offs, and normal amortization,
partially offset by $37.3 million of downgrades during the first
quarter of 2018. Real estate secured loans comprised $21.0 million
of downgrades during the first quarter of 2018, partially offset by
$4.4 million of loans upgraded out of criticized categories and
$2.0 million of loan payoffs and amortization.
Capital
As of March 31, 2018, our Tier 1 leverage ratio was 9.53%,
Common Equity Tier 1 ratio was 10.92% and total risk-based capital
ratio was 14.91%, compared to 9.44%, 10.94% and 14.97%,
respectively, as of December 31, 2017. As of March 31,
2017, our Tier 1 leverage, Common Equity Tier 1, and total
risk-based capital ratios were 8.19%, 10.03% and 13.45%,
respectively. Stockholders’ equity totaled over $1.0 billion as of
March 31, 2018, unchanged from over $1.0 billion as of
December 31, 2017 and an increase of 4% from $985.6 million as
of March 31, 2017. Our tangible book value per as converted
common share was $17.23 as of March 31, 2018 compared to
$17.26 as of December 31, 2017 and $16.23 as of March 31,
2017.
Conference Call and Webcast Details
Date: Monday, April 23, 2018Time: 8:00 a.m. PT (11:00 a.m.
ET)
Phone Number: (855) 265-3237Conference ID: 1857796Webcast URL:
http://investor.opusbank.com/event
Analysts, investors, and the general public may listen to the
Bank's discussion of its first quarter performance and participate
in the question/answer session by using the phone number listed
above or through a live webcast of the conference available through
a link on the investor relations page of Opus' website at:
http://investor.opusbank.com/event.
The webcast will include a slide presentation, enabling conference
participants to experience the discussion with greater impact. It
is recommended that participants dial into the conference call or
log into the webcast approximately 10 minutes prior to the
call.
Replay Information: For those who are not able to listen to the
call, an archived recording will be available beginning
approximately two hours following the completion of the call. To
listen to the call replay, dial (855) 859-2056, or for
international callers dial (404) 537-3406. The access code for
either replay number is 1857796. The call replay will be available
through May 23, 2018.
About Opus Bank
Opus Bank is an FDIC insured California-chartered commercial
bank with $7.3 billion of total assets, $5.2 billion of total
loans, and $6.0 billion in total deposits as of March 31,
2018. Opus Bank provides superior ideas and solutions, and banking
products to its clients through its Retail Bank, Commercial Bank,
and Merchant Bank. Opus Bank offers a suite of treasury and cash
management and depository solutions and a wide range of loan
products, including commercial, healthcare, media and
entertainment, corporate finance, multifamily residential,
commercial real estate and structured finance, and is an SBA
preferred lender. Opus Bank offers commercial escrow services and
facilitates 1031 Exchange transactions through its Escrow and
Exchange divisions. Opus Bank provides clients with financial and
advisory services related to raising equity capital, targeted
acquisition and divestiture strategies, general mergers and
acquisitions, debt and equity financing, balance sheet
restructuring, valuation, strategy and performance improvement
through its Merchant Banking division and its broker-dealer
subsidiary, Opus Financial Partners, LLC, Member FINRA/SIPC. Opus
Bank’s alternative asset IRA custodian subsidiary has over $16
billion of custodial assets and over 50,000 client accounts, which
are comprised of self-directed investors, financial institutions,
capital raisers and financial advisors. Opus Bank operates 50
banking offices, including 31 in California, 16 in the
Seattle/Puget Sound region in Washington, two in the Phoenix
metropolitan area of Arizona and one in Portland, Oregon. Opus Bank
is an Equal Housing Lender. For additional information about Opus
Bank, please visit our website: www.opusbank.com.
Forward Looking Statements
This release and the aforementioned conference call and webcast
includes forward-looking statements related to Opus’ plans, beliefs
and goals, which involve certain risks and uncertainties that could
cause actual results to differ materially from those in the
forward-looking statements, including, without limitation, the
increase in our quarterly loan production and deposit and full
relationship growth; lower negative impact of planned exits on our
quarterly net loan growth, loan yield and overall credit expenses;
the expected increase in our net interest margin; and our ability
to drive our efficiency ratio below 65%. Such risks and
uncertainties include, but are not limited to, the following
factors: competitive pressure in the banking industry; changes in
the interest rate environment; the health of the economy, either
nationally or regionally; the deterioration of credit quality,
which would cause an increase in the provision for possible loan
and lease losses; changes in the regulatory environment; changes in
business conditions, particularly in California real estate;
volatility of rate sensitive deposits; asset/liability matching
risks and liquidity risks; and changes in the securities markets.
For a discussion of these and other risks and uncertainties, see
Opus' filings with the Federal Deposit Insurance Corporation,
including, but not limited to, the risk factors in Opus' annual
report on Form 10-K. These filings are available on the Investor
Relations page of Opus' website at: investor.opusbank.com.
Opus undertakes no obligation to revise or publicly release any
revision to these forward-looking statements.
Consolidated Statements of
Income
(unaudited)
Three Months Ended
($ in thousands, except per share amounts)
March 31,
2018 December 31, 2017 March 31,
2017 Interest income: Loans $ 54,637 $ 53,592 $ 60,232
Investment securities 5,094 5,975 3,069 Due from banks 951
1,265 1,961 Total interest income 60,682
60,832 65,262 Interest expense: Deposits 7,018 6,855
7,181 Federal Home Loan Bank advances 48 68 67 Subordinated debt
1,923 1,923 1,923 Total interest expense 8,989
8,846 9,171 Net interest income 51,693 51,986
56,091 Provision for loan losses 3,914 2,955 5,968
Net interest income after provision for loan losses 47,779
49,031 50,123 Noninterest income: Fees and
service charges on deposit accounts 1,722 1,822 1,922 Escrow and
exchange fees 1,360 1,568 1,450 Trust administrative fees 6,978
6,879 6,382 Gain (loss) on sale of loans (69 ) (2 ) (299 ) Gain
(loss) on sale of assets 1 (6 ) (2 ) Gain (loss) from OREO and
other repossessed assets 118 86 (147 ) Gain on sale of investment
securities 182 330 519 Bank-owned life insurance, net 1,053 1,088
890 Other income 1,964 861 1,788 Total
noninterest income 13,309 12,626 12,503
Noninterest expense: Compensation and benefits 26,808 25,273 29,197
Professional services 1,716 5,308 4,540 Occupancy expense 4,006
3,617 3,780 Depreciation and amortization 1,599 1,585 1,884 Deposit
insurance and regulatory assessments 1,131 799 2,062 Insurance
expense 338 341 355 Data processing 440 689 783 Software licenses
and maintenance 1,149 1,148 1,157 Office services 1,880 1,750 2,400
Amortization of other intangible assets 1,479 1,479 1,479
Advertising and marketing 957 1,395 660 Litigation expense
(recovery) (14 ) (2 ) 129 Other expenses 2,588 2,801
1,635 Total noninterest expense 44,077 46,183
50,061 Income before income tax expense 17,011 15,474 12,565
Income tax expense 4,107 14,273 4,908 Net
income $ 12,904 $ 1,201 $ 7,657 Basic earnings
per common share $ 0.34 $ 0.03 $ 0.21 Diluted earnings per common
share 0.34 0.03 0.21 Weighted average shares - basic 35,967,779
35,935,614 35,755,228 Weighted average shares - diluted 38,316,243
38,229,787 36,687,680
Consolidated Balance
Sheets (unaudited)
As of ($
in thousands, except share amounts)
March 31, 2018
December 31, 2017 March 31, 2017
Assets Cash and due from banks $ 43,462 $ 45,828 $ 47,747
Due from banks – interest-bearing 248,763 454,941 978,416
Investment securities available-for-sale, at fair value 1,097,741
1,127,288 899,967 Loans held-for-investment 5,228,994 5,173,193
5,432,108 Less allowance for loan losses (67,842 ) (75,930 )
(112,230 ) Loans held-for-investment, net 5,161,152 5,097,263
5,319,878 OREO and other repossessed assets — — 288 Premises and
equipment, net 26,649 27,644 33,941 Goodwill 331,832 331,832
331,832 Other intangible assets, net 43,321 44,800 49,239 Deferred
tax assets, net 28,740 24,260 56,830 Cash surrender value of bank
owned life insurance, net 150,819 149,744 121,908 Accrued interest
receivable 19,978 19,317 20,098 Federal Home Loan Bank stock 17,250
17,250 17,250 Other assets 128,054 146,642 106,288
Total assets $ 7,297,761 $ 7,486,809 $
7,983,682
Liabilities and Stockholders’ Equity
Deposits: Noninterest-bearing demand $ 855,810 $ 817,330 $
1,023,891 Interest-bearing demand 2,519,955 2,435,293 2,453,251
Money market and savings 2,267,648 2,307,258 2,748,181 Time
deposits 400,203 384,057 494,829 Total
deposits 6,043,616 5,943,938 6,720,152 Federal Home Loan Bank
advances 10,000 290,000 10,000 Subordinated debt, net 132,811
132,745 132,546 Accrued interest payable 2,118 4,086 2,053 Other
liabilities 86,838 92,576 133,303 Total
liabilities 6,275,383 6,463,345 6,998,054
Stockholders’ equity: Preferred stock: Authorized 200,000,000
shares; issued 31,111 and 31,111 and 612 shares, respectively
29,110 29,110 581 Common stock, no par value per share: Authorized
200,000,000 shares; issued 36,460,468 and 36,330,546 and 37,547,040
shares, respectively 700,220 700,220 728,749 Additional paid-in
capital 63,922 63,545 59,041 Retained earnings 254,701 245,006
205,020 Treasury stock, at cost; 458,887 and 415,387 and 328,666
shares, respectively (11,603 ) (10,354 ) (8,344 ) Accumulated other
comprehensive income (loss) (13,972 ) (4,063 ) 581 Total
stockholders’ equity 1,022,378 1,023,464 985,628
Total liabilities and stockholders’ equity $ 7,297,761
$ 7,486,809 $ 7,983,682
Selected Financial Data As of or for the
three months ended (unaudited)
March 31, 2018
December 31, 2017 March 31,
2017 Return on average assets 0.72 % 0.06 % 0.39 % Return on
average assets, tax adjusted (1) 0.72 0.55 0.39 Return on average
stockholders' equity 5.11 0.46 3.23 Return on average stockholders'
equity, tax adjusted (1) 5.11 3.91 3.23 Return on average tangible
equity (2) 8.07 0.73 5.35 Return on average tangible equity, tax
adjusted (1,2) 8.07 6.16 5.35 Efficiency ratio (3) 67.81 71.48
72.98 Noninterest expense to average assets 2.45 2.49 2.58 Yield on
interest-earning assets (4) 3.75 3.68 3.66 Cost of deposits (5)
0.47 0.45 0.44 Cost of funds (6) 0.59 0.56 0.54 Net interest margin
(4) 3.20 3.15 3.14 Loan to deposits 86.52 87.03 80.83 (1)
Tax adjusted for the three months ended December 31,
2017 due to impacts of the Tax Cuts and Jobs Act. See computation
in "Non-GAAP Financial Measures" Section. (2) See computation in
"Non-GAAP Financial Measures" section. (3) The efficiency ratio is
calculated by dividing noninterest expense by the sum of net
interest income before provision for loan losses and noninterest
income. (4) Net interest margin and yield on interest-earning
assets are presented on a tax equivalent basis using the federal
effective tax rate. (5) Calculated as interest expense on deposits
divided by total average deposits. (6) Calculated as total interest
expense divided by average total deposits, FHLB advances and
subordinated debt.
Capital Ratios
As of (unaudited)
March 31, 2018 (1)
December 31, 2017 March 31, 2017 Tier 1
leverage ratio 9.53 % 9.44 % 8.19 % Tier 1 risk-based capital ratio
11.42 11.42 10.03 Total risk-based capital ratio 14.91 14.97 13.45
Common Equity Tier 1 ratio 10.92 10.94 10.03 (1)
Ratios are preliminary until filing of our March 31, 2018 call
report.
Loan Fundings (unaudited)
Three Months Ended ($ in thousands)
March 31,
2018 December 31, 2017 March
31, 2017 Loans funded: Real estate mortgage loans:
Single-family residential $ — $ — $ — Multifamily residential
267,301 300,539 111,272 Commercial real estate 29,307 58,103 15,473
Construction and land loans 4,885 8,170 15,556 Commercial business
loans 146,184 131,728 75,661 Small Business Administration loans
4,578 3,768 1,181 Consumer and other loans — — —
Total loan fundings $ 452,255 $ 502,308 $ 219,143
Composition of Loan Portfolio
As of (unaudited)
March 31, 2018
December 31, 2017 March 31, 2017
($ in thousands)
Amount % ofTotal loans
Amount % ofTotal loans Amount
% ofTotal loans Originated loans
held-for-investment Real estate mortgage loans: Single-family
residential $ 56,913 1.1 % $ 59,497 1.2 % $ 69,046 1.3 %
Multifamily residential 2,667,313 51.0 2,495,818 48.3 2,285,039
42.1 Commercial real estate 1,044,276 20.0 1,079,637 20.9 1,251,877
23.0 Construction and land loans 79,080 1.5 94,348 1.8 100,303 1.8
Commercial business loans 1,221,517 23.4 1,284,500 24.8 1,550,120
28.5 Small Business Administration loans 31,278 0.6 27,152 0.5
15,123 0.3 Consumer and other loans 53 0.0 96
0.0 296 0.0 Total originated loans 5,100,430
97.5 5,041,048 97.5 5,271,804 97.0 Acquired loans
held-for-investment Real estate mortgage loans: Single-family
residential 21,653 0.4 22,964 0.4 30,457 0.6 Multifamily
residential 51,611 1.0 52,453 1.0 56,480 1.0 Commercial real estate
27,221 0.5 27,889 0.6 37,205 0.9 Construction and land loans 1,398
0.0 1,418 0.0 1,980 0.0 Commercial business loans 10,869 0.2 10,978
0.2 14,864 0.2 Small Business Administration loans 10,718 0.2
10,957 0.2 12,862 0.2 Consumer and other loans 5,094 0.1
5,486 0.1 6,456 0.1 Total
acquired loans 128,564 2.5 132,145 2.5
160,304 3.0 Total gross loans $ 5,228,994
100.0 % $ 5,173,193 100.0 % $ 5,432,108 100.0 %
Composition of Deposits As
of (unaudited)
March 31, 2018 December
31, 2017 March 31, 2017 ($ in
thousands)
Amount % ofTotal deposits
Amount % ofTotal deposits Amount
% ofTotal deposits Noninterest bearing
$ 855,810 14.2 % $ 817,330 13.8 % $ 1,023,891 15.2 % Interest
bearing demand 2,519,955 41.7 2,435,293 41.0 2,453,251 36.5 Money
market and savings 2,267,648 37.5 2,307,258 38.8 2,748,181 40.9
Time deposits 400,203 6.6 384,057 6.5
494,829 7.4 Total deposits $ 6,043,616 100.0 %
$ 5,943,938 100.1 % $ 6,720,152 100.0 %
Consolidated average balance sheet, interest, yield and
rates
For the three months ended March
31,
For the three months ended
December 31,
For the three months ended March
31,
(unaudited)
2018 2017 2017 ($ in thousands)
AverageBalance Interest (1)
Yields/Rates AverageBalance
Interest (1) Yields/Rates
AverageBalance Interest (1)
Yields/Rates Assets: Interest-earning assets:
Due from banks $ 242,663 $ 951 1.59 % $ 381,265 $ 1,265 1.32 % $
951,235 $ 1,961 0.84 % Investment securities 1,103,477 5,094 1.87
1,141,865 5,975 2.08 719,754 3,069 1.73 Acquired loans 130,918
1,779 5.51 135,977 2,089 6.10 169,511 2,831 6.77 Originated Loans
5,105,690 53,114 4.22 4,947,185 51,916
4.16 5,400,662 57,440 4.31 Total
loans $ 5,236,608 $ 54,893 4.25 $ 5,083,162
$ 54,005 4.22 $ 5,570,173 $
60,271 4.39 Total interest-earning assets $
6,582,748 $ 60,938 3.75 $ 6,606,292 $ 61,245 3.68 $ 7,241,162 $
65,301 3.66 Noninterest-earning assets 726,341 743,798
634,841 Total assets $ 7,309,089 $ 7,350,090
$ 7,876,003 Liabilities and stockholders’
equity: Interest-bearing deposits Interest-bearing demand $
2,531,947 $ 1,277 0.20 % $ 2,456,936 $ 1,137 0.18 % $ 2,495,540 $
1,133 0.18 % Money market and savings 2,289,530 4,699 0.83
2,356,079 4,689 0.79 2,762,146 4,957 0.73 Time deposits 381,647
1,043 1.11 393,755 1,029 1.04
503,673 1,091 0.88 Total interest
bearing deposits $ 5,203,124 $ 7,019 0.55 $ 5,206,770 $ 6,855 0.52
$ 5,761,359 $ 7,181 0.51 Subordinated debt 132,777 1,923 5.87
132,711 1,923 5.75 132,507 1,923 5.89 FHLB advances 16,444
48 1.18 21,989 68 1.23 27,722
67 0.98
Total interest-bearing liabilities
$ 5,352,345 $ 8,990 0.68 $ 5,361,470 $ 8,846 0.65 $ 5,921,588 $
9,171 0.63 Noninterest-bearing deposits 832,888 852,057 921,208
Other liabilities 99,598 103,795 71,180 Total
liabilities $ 6,284,831 $ 6,317,322 $ 6,913,976 Total
stockholders’ equity $ 1,024,258 $ 1,032,768 $
962,027 Total liabilities andstockholders’ equity $
7,309,089 $ 7,350,090 $ 7,876,003 Net
interest spread (2) 3.07 % 3.03 % 3.03 % Net interest income and
margin, tax equivalent (3, 4) $ 51,948 3.20 % $ 52,399
3.15 % $ 56,130 3.14 % Reconciliation of tax
equivalent net interest income to reported net interest income Tax
equivalent adjustment (255 ) (413 ) (39 ) Net interest income, as
reported $ 51,693 $ 51,986 $ 56,091 (1)
Interest income is presented on a taxable equivalent
basis using the federal effective tax rate. (2) Net interest spread
represents the average yield on interest-earning assets less the
average rate on interest-bearing liabilities. (3) Net interest
margin is computed by dividing net interest income by total average
interest-earning assets. (4) Net interest margin, tax equivalent
has been adjusted to a taxable equivalent basis using the federal
effective tax rate.
Allowance for Loan Losses
(unaudited)
Three Months Ended ($ in
thousands)
March 31, 2018 December 31,
2017 March 31, 2017 Allowance for loan
losses-balance at beginning of period $ 75,930 $ 78,176 $ 111,410
(Recapture) Provision for loan losses: Acquired loans — (27 ) (94 )
Originated loans 3,914 2,982 6,062 Total
provision for loan losses 3,914 2,955 5,968 Charge-offs: Acquired
loans — — — Originated loans (14,155 ) (5,821 ) (5,716 ) Total
charge-offs (14,155 ) (5,821 ) (5,716 ) Recoveries: Acquired loans
— — — Originated loans 2,153 620 568 Total
recoveries 2,153 620 568 Total net recoveries
(charge-offs) (12,002 ) (5,201 ) (5,148 ) Allowance for loan
losses-balance at end of period $ 67,842 $ 75,930 $
112,230
Asset Quality Information
(unaudited)
As of or for the three months
ended ($ in thousands)
March 31, 2018
December 31, 2017 March 31, 2017
Nonperforming assets Nonaccrual loans $ 63,813 $ 58,274 $ 86,740
OREO and other repossessed assets — — 288
Total nonperforming assets 63,813 58,274 87,028 Loans 30 -
89 days past due 13,304 12,805 11,381 Accruing loans 90 days or
more past due 299 299 296 Accruing troubled debt restructured loans
139 139 160 Non performing loans to total loans 1.22 % 1.13
% 1.60 % Non performing assets to total assets 0.87 % 0.78 % 1.09 %
Loans 30 - 89 days past due to total loans 0.25 % 0.25 % 0.21 %
Allowance for loan losses to total loans 1.30 % 1.47 % 2.07 %
Allowance for loan losses to non-accrual loans 106.31 % 130.30 %
129.39 % Net charge-offs to average loans (annualized) 0.93 % 0.41
% 0.37 %
Risk Rating by Loan Product
(Unaudited) ($ in thousands)
Pass
Special Mention
Classified Total Loans
Nonaccrual loans
Total allowance
As of March 31, 2018 Real estate mortgage loans:
Single-family residential $ 77,789 $ 79 $ 697 $ 78,565 $ — $ 224
Multifamily residential 2,709,851 1,942 7,131 2,718,924 1,209
10,286 Commercial real estate 1,016,147 41,447 13,904 1,071,498
2,512 8,859 Construction and land loans 70,767 9,711 — 80,478 —
1,083 Commercial business loans 1,064,187 44,987 123,212 1,232,386
59,496 47,032 Small Business Administration loans 38,468 1,562
1,966 41,996 — 347 Consumer and other loans 4,351 61
735 5,147 596 11 Total loans $ 4,981,560
$ 99,789 $ 147,645 $ 5,228,994 $ 63,813
$ 67,842 As of December 31, 2017 Real estate mortgage
loans: Single-family residential $ 81,681 $ 80 $ 700 $ 82,461 $ — $
254 Multifamily residential 2,539,405 5,657 3,209 2,548,271 — 9,097
Commercial real estate 1,056,889 44,759 5,878 1,107,526 — 8,908
Construction and land loans 95,766 — — 95,766 — 961 Commercial
business loans 1,110,445 41,251 143,782 1,295,478 57,618 56,334
Small Business Administration loans 34,527 1,597 1,985 38,109 — 363
Consumer and other loans 4,723 62 797 5,582
656 13 Total loans $ 4,923,436 $ 93,406
$ 156,351 $ 5,173,193 $ 58,274 $ 75,930
As of March 31, 2017 Real estate mortgage loans: Single-family
residential $ 98,684 $ 83 $ 736 $ 99,503 $ — $ 254 Multifamily
residential 2,322,418 8,318 10,783 2,341,519 — 9,631 Commercial
real estate 1,237,392 34,514 17,176 1,289,082 12,276 10,087
Construction and land loans 94,931 7,352 — 102,283 — 1,469
Commercial business loans 1,288,371 32,210 244,403 1,564,984 73,708
90,569 Small Business Administration loans 25,152 983 1,850 27,985
— 191 Consumer and other loans 5,736 65 951
6,752 756 29 Total loans $ 5,072,684 $ 83,525
$ 275,899 $ 5,432,108 $ 86,740 $
112,230
Risk Rating by Lending Division
(Unaudited) ($ in thousands)
Pass
Special Mention
Classified Total Loans
Nonaccrual loans
As of March 31, 2018 Income Property Banking $ 3,230,456 $ 6,938 $
15,358 $ 3,252,752 $ 3,721 Commercial Banking 401,996 27,478 52,107
481,581 18,882 Structured Finance 304,420 15,487 — 319,907 —
Healthcare Provider 209,912 33,489 33,771 277,172 — Healthcare
Practice 21,174 — 973 22,147 — Corporate Finance 132,250 14,916
22,443 169,609 21,675 Institutional Syndication 339,451 — (145 ) (1
) 339,306 — Public Finance 178,539 — — 178,539 — Technology Banking
19,232 — 9,944 29,176 7,649 Other divisions (2) 144,130
1,481 13,194 158,805 11,886 Total loans $
4,981,560 $ 99,789 $ 147,645 $ 5,228,994
$ 63,813 December 31, 2017 Income Property Banking $
3,140,183 $ 18,811 $ 2,250 $ 3,161,244 $ — Commercial Banking
414,183 22,903 47,742 484,828 11,477 Structured Finance 339,410 —
1,084 340,494 — Healthcare Provider 220,329 33,648 23,792 277,769 —
Healthcare Practice 22,673 — 2,640 25,313 1,638 Corporate Finance
184,058 11,866 44,162 240,086 25,655 Institutional Syndication
289,397 — (177 ) (1 ) 289,220 — Public Finance 148,454 — — 148,454
— Technology Banking 21,238 — 25,009 46,247 18,677 Other divisions
(2) 143,511 6,178 9,849 159,538 827
Total loans $ 4,923,436 $ 93,406 $ 156,351 $
5,173,193 $ 58,274 As of March 31, 2017 Income
Property Banking $ 2,910,884 $ 20,132 $ 7,803 $ 2,938,819 $ 696
Commercial Banking 476,078 24,301 69,900 570,279 15,946 Structured
Finance 441,257 10,945 15,322 467,524 11,580 Healthcare Provider
354,611 13,480 55,057 423,148 — Healthcare Practice 35,260 539
8,358 44,157 5,624 Corporate Finance 346,405 2,389 52,668 401,462
24,932 Institutional Syndication 289,162 (322 ) (1 ) (274 ) (1 )
288,566 — Public Finance 24,798 — — 24,798 — Technology Banking
47,296 10,818 64,108 122,222 26,968 Other divisions (2) 146,933
1,243 2,957 151,133 994 Total loans $
5,072,684 $ 83,525 $ 275,899 $ 5,432,108
$ 86,740 (1) Represents unamortized net
deferred loan origination fees on syndicated lines of credit that
have no outstanding principal balances at period end. (2) Other
divisions is comprised of single family residential loans, consumer
and other loans, and specialty banking divisions including Business
Banking and Media and Entertainment Banking.
Non-GAAP Financial Measures
Our accounting and reporting policies conform to generally
accepted accounting principles in the United States ("GAAP"). We
believe that the presentation of certain non-GAAP financial
measures assists investors in evaluating our financial results.
These non-GAAP measures include our return on average tangible
equity and tangible book value per as converted common share. These
non-GAAP measures should be taken together with the corresponding
GAAP measures and should not be considered a substitute of the GAAP
measures.
The following tables present a reconciliation of the most
comparable GAAP financial measures and ratios to the non-GAAP
financial measures and ratios:
Non-GAAP tax adjusted return on average assets
(unaudited)
Three Months Ended ($ in
thousands)
March 31, 2018 December 31,
2017 March 31, 2017 Average assets $
7,309,089 $ 7,350,090 $ 7,876,003 Tax adjusted net
income Net income $ 12,904 $ 1,201 $ 7,657 Less: Adjustments due to
the Tax Cuts and Jobs Act — 8,968 — Tax
adjusted net income 12,904 10,169 7,657 Return on average assets
0.72 % 0.06 % 0.39 % Non-GAAP tax adjusted return on average assets
(1) 0.72 % 0.55 % 0.39 % (1) Tax adjusted for
the three months ended December 31, 2017 due to impacts of the Tax
Cuts and Jobs Act.
Non-GAAP return on average
tangible equity (unaudited)
Three Months
Ended ($ in thousands)
March 31, 2018
December 31, 2017 March 31, 2017
Average tangible equity: Average stockholders' equity $ 1,024,258 $
1,032,768 $ 962,027 Less: Average goodwill 331,832 — 331,832
331,832 Average other intangible assets 44,083 45,551
50,112 Average tangible equity $ 648,343 $ 655,385 $ 580,083
Tax adjusted net income: Net income $ 12,904 $ 1,201 $ 7,657 Less:
Adjustments for revaluation of deferred tax assets — 8,968
— Tax adjusted net income $ 12,904 $ 10,169 $ 7,657
Return on average stockholders' equity 5.11 % 0.46 % 3.23 %
Non-GAAP return on average tangible equity 8.07 % 0.73 % 5.35 %
Non-GAAP tax adjusted return on average stockholders' equity
(1) 5.11 % 3.91 % 3.23 % Non-GAAP tax adjusted return on average
tangible equity (1) 8.07 % 6.16 % 5.35 % (1)
Tax adjusted for the three months ended December 31, 2017 due to
impacts of the Tax Cuts and Jobs Act.
Non-GAAP
tangible book value per as converted common share (unaudited)
As of ($ In thousands, except share amounts)
March 31, 2018 December 31, 2017
March 31, 2017 Tangible equity: Total
stockholders' equity $ 1,022,378 $ 1,023,464 $ 985,628 Less:
Goodwill 331,832 331,832 331,832 Other intangible assets, net
43,321 44,800 49,239 Tangible equity 647,225 646,832
604,557 Shares of common stock outstanding 36,001,581 35,915,159
37,218,374 Shares of common stock to be issued upon conversion of
preferred stock 1,555,550 1,555,550 30,600 Total as
converted shares of common stock outstanding (1) 37,557,131
37,470,709 37,248,974 Book value per as converted common
share 27.22 27.31 26.46 Tangible book value per as converted common
share 17.23 17.26 16.23 (1) Common stock
outstanding includes additional shares of common stock that would
be issued upon conversion of all outstanding shares of preferred
stock to common stock and excludes shares issuable upon exercise of
warrants and options.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180423005259/en/
Opus BankKevin L. Thompson, 949-251-8196EVP, Chief Financial
OfficerorBrett G. Villaume, 949-224-8866SVP, Director of Investor
Relations
Opus Bank (NASDAQ:OPB)
Historical Stock Chart
From Aug 2024 to Sep 2024
Opus Bank (NASDAQ:OPB)
Historical Stock Chart
From Sep 2023 to Sep 2024
