IRVINE, Calif.--(BUSINESS WIRE)--
Opus Bank ("Opus") (NASDAQ: “OPB”) announced today a net loss of $3.0 million, or $(0.09) per diluted share, for the third quarter of 2016 compared to net income of $16.1 million, or $0.46 per diluted share, for the second quarter of 2016 and net income of $14.7 million, or $0.44 per diluted share, for the third quarter of 2015. Net income was $30.4 million, or $0.87 per diluted share, for the nine months ended September 30, 2016 compared to $43.3 million, or $1.30 per diluted share, for the nine months ended September 30, 2015. As previously announced on October 17, 2016, earnings for the third quarter of 2016 were negatively impacted by charge-offs recorded on eight loan relationships that reduced the third quarter net income by $0.59 per diluted share. Subsequent to our October 17, 2016 press release that included an estimate of an approximate $(0.05) loss per share, management completed its analysis of the adequacy of the allowance for loan losses and increased specific reserves by $1.7 million, which increased the net loss announced on October 17, 2016 by $0.04 per share. As previously announced, given the net loss, Opus will not be paying a dividend in connection with the third quarter. It is our intention to resume paying a dividend commensurate with our future earnings performance.
In our Question and Answer presentation filed on October 19, 2016, we noted a previously mentioned technology loan had shown improved trends and we had received a third party valuation during the third quarter which supported the release of the specific reserve previously recorded for that loan. As management finalized its assessment process of the adequacy of the allowance for loan losses – work that was not yet completed as of October 19, 2016 – it determined to maintain a specific reserve for this loan in the amount of $1.7 million. This specific reserve increased our net loss for the quarter ended September 30, 2016 to $(0.09) per share from the approximate $(0.05) per share that we had previously estimated and disclosed in our press release on October 17, 2016.
Stephen H. Gordon, Founding Chairman, Chief Executive Officer and President of Opus Bank, stated, “While it was certainly not our expectation to post a loss for the third quarter, and we are extremely disappointed, we have taken immediate and appropriate actions to refine our business processes and adjust exposures to manage the impact of underperforming assets on our future earnings. We posted record quarterly revenue of $76.9 million, an increase of 31% from the third quarter of 2015, pre-tax pre-provision earnings of $34.6 million, an increase of 9% from the year-ago period, strong deposit growth of $319 million, an increase of 5% from the prior quarter, and entered the fourth quarter with a loan pipeline that is consistent with our projections for 2016 new loan fundings.”
Gordon continued, “Having weathered several quarters of headwinds from our technology portfolio, we are aggressively working to decrease our exposure there. While Opus has very talented and experienced banking professionals, we have identified the opportunity to invest in further enhancing our credit team as we have grown in size and complexity, just as we did with the addition of our new Chief Risk Officer in the second quarter. As part of the refinements to our process, the Chief Credit officer role will be bifurcated with one for our Commercial Real Estate Banking divisions and one for our Commercial and Specialty Banking divisions. We could not be more pleased with the talent we are attracting and strongly believe these investments are an excellent use of our capital at this time.”
Gordon concluded, “We continue to focus our efforts on creating long-term value for all of our stake holders, including our clients, communities, employees and shareholders. We remain strongly committed to financially supporting those companies and real estate investors with a vision to expand and grow in our attractive West Coast metro markets.”
Third Quarter 2016 Highlights
- New loan fundings were $634.1 million in the third quarter of 2016 compared to $660.6 million in the second quarter of 2016 and $638.3 million in the third quarter of 2015. Loan commitments of $751.1 million were originated during the third quarter of 2016 compared to $767.2 million in the second quarter of 2016 and $807.0 million during the third quarter of 2015.
- Originated loans increased by $186.0 million, or 3%, during the third quarter of 2016 to $6.1 billion, and increased by $1.4 billion, or 30%, from the third quarter of 2015. Total loans held-for-investment, including acquired loans, increased by $165.0 million, or 3%, during the third quarter of 2016 to $6.3 billion and increased by $1.3 billion, or 26%, from the third quarter of 2015.
- Total assets increased 3% to $7.7 billion at September 30, 2016 from $7.5 billion at June 30, 2016 and increased 25% from $6.2 billion at September 30, 2015.
- Total deposits increased $319.4 million, or 5%, during the third quarter of 2016 and increased $1.6 billion, or 31%, from the third quarter of 2015. The growth of total deposits during the third quarter of 2016 was mainly due to growth within our Fiduciary Banking division, Municipal Banking division, Retail Bank, and the transfer of $74.8 million of additional PENSCO ancillary custodial client cash balances from other banks. As of September 30, 2016, total PENSCO balances were $938.2 million and custodial cash balances at other financial institutions totaled $275.3 million. Subsequent to the close of the third quarter, $50.0 million of the $275.3 million was transferred to Opus.
- The percentage of low-cost core transaction account deposits increased to 92% of total deposits as of September 30, 2016 compared to 91% at June 30, 2016, while the percentage of total demand deposits, including noninterest bearing and interest bearing DDAs, was unchanged at 48%.
- FHLB advances decreased to $65.0 million as of September 30, 2016 compared to $135.0 million as of June 30, 2016 and $340.0 million at September 30, 2015.
- The cost of deposits for the third quarter of 2016 was unchanged from the prior quarter at 0.44%, while the cost of funds increased 12 basis points to 0.57% for the third quarter of 2016 due to the impact of Opus' subordinated debt issued on June 29, 2016.
- The loan to deposit ratio decreased to 97% as of September 30, 2016 from 99% as of June 30, 2016.
- Total revenues increased to a record $76.9 million for the third quarter of 2016, a 2% increase from the prior quarter and 31% from the third quarter of 2015.
- Net interest income decreased 3% to $60.7 million for the third quarter of 2016 from $62.5 million for the second quarter of 2016, primarily due to $1.9 million of interest expense on subordinated debt.
- Interest income from originated loans increased 6% to $64.0 million for the third quarter of 2016 from $60.2 million for the second quarter of 2016 due to higher average balances of originated loans. Interest income from the acquired loan portfolio decreased 48% to $4.2 million for the third quarter of 2016 from $8.0 million for the second quarter of 2016 due to lower accretion income and balances of acquired loans. During the third quarter of 2016, we recognized $1.2 million of accretion income from loans that closed through prepayment, foreclosure or sale, compared to $4.4 million during the second quarter of 2016 and $3.0 million during the third quarter of 2015.
- Noninterest income during the third quarter of 2016 increased to a record $16.3 million, up from $13.2 million in the second quarter of 2016 and $7.3 million in the third quarter of 2015. The increase from the prior quarter was primarily due to a record $2.1 million of advisory fee income generated by our Merchant Bank, including our broker-dealer subsidiary, Opus Financial Partners, a full quarter of trust administrative fees of $7.3 million generated by our PENSCO subsidiary acquired on April 13, 2016, and $1.9 million of fee income from our Escrow and Exchange divisions, which continues to outperform our original expectations.
- Noninterest expense was $42.3 million in the third quarter of 2016, up from $38.4 million in the second quarter of 2016 and $26.9 million in the third quarter of 2015. The increase from the prior quarter was due to merger and strategic initiative related expenses, higher compensation and benefits, including the full-quarter impact of the PENSCO acquisition, and provision for unfunded commitments.
- Our efficiency ratio was 55.0% for the third quarter of 2016 compared to 50.7% for the second quarter of 2016 and 45.8% for the third quarter of 2015. Excluding the merger and strategic initiative related expenses of $666,000 during the third quarter of 2016 and $3.4 million during the second quarter of 2016, our adjusted efficiency ratio was 54.1% for the third quarter of 2016 and 46.3% for the second quarter of 2016.
- Total nonperforming assets decreased 44% to $44.8 million, or 0.58% of total assets, as of September 30, 2016, compared to $79.4 million, or 1.06% of total assets, as of June 30, 2016. Total delinquencies decreased 55% to $21.7 million as of September 30, 2016, compared to $48.5 million as of June 30, 2016.
- Total criticized loans were $147.4 million as of September 30, 2016 compared to $146.5 million as of June 30, 2016. The net change in total criticized loans was driven by $39.1 million of charge-offs, $20.7 million of upgrades out of total criticized, and $62.0 million of downgrades. Of the $62.0 million of downgrades, 74% migrated to special mention. Of the 26% that migrated to substandard, approximately 74% was attributable to a single Technology Banking relationship.
- Provision expense for the third quarter of 2016 was $40.4 million compared to $10.9 million for the second quarter of 2016 and $7.6 million for the third quarter of 2015. The provision for loan losses during the third quarter of 2016 was driven by net charge-offs of $39.0 million, a decline of $17.2 million in specific reserves, and $13.6 million in higher reserves for increased loss factors. Excluding the portion related to the eight loan charge-offs, the provision for loan losses associated with net loan growth and net risk rating migration in the third quarter totaled $5.2 million.
- We recorded charge-offs of $38.8 million on eight loan relationships that have been impacting the provision for loan losses and Opus' earnings for the past eight quarters. Continued volatility in our future earnings from these eight loan relationships has been significantly diminished as a result of the charge-offs taken this quarter. These include three of the same loan relationships that were previously discussed during Opus' second quarter 2016 earnings conference call. Specific reserves of $16.7 million had been previously recorded on these eight loan relationships.
- Our total allowance for loan losses was $61.1 million, or 0.97% of total loans, as of September 30, 2016, compared to $59.7 million, or 0.97% of total loans, as of June 30, 2016, and our coverage ratio, which includes the remaining discount on the acquired loan portfolio, was 1.04% as of September 30, 2016, compared to 1.07% as of June 30, 2016.
Net Interest Income
Net interest income decreased 3% to $60.7 million in the third quarter of 2016 from $62.5 million in the second quarter of 2016, and increased 18% from $51.4 million in the third quarter of 2015. The linked quarter decrease in net interest income was due to a full quarter of interest expense totaling $1.9 million on subordinated debt issued on June 29, 2016. Interest income from originated loans increased by $3.8 million, or 6%, from the second quarter of 2016 and $15.5 million, or 32%, from the third quarter of 2015 due to our continued loan growth and strategic shift in our loan mix through the growth of our Commercial and Specialty Banking divisions. Interest income from the acquired loan portfolio decreased by $3.8 million from the prior quarter and decreased by $4.2 million from the prior year's third quarter due to lower accretion income from loans that closed through prepayment, foreclosure or sale, and lower balances of acquired loans. Opus did not sell any acquired loans during the third quarter of 2016, compared to $22.9 million of acquired loans sold during the second quarter of 2016 that generated $3.3 million of accretion income, and the sale of $14.5 million of acquired loans that generated $1.4 million of accretion income during the third quarter of 2015. Interest expense increased to $9.1 million for the third quarter of 2016 from $7.0 million for the second quarter of 2016 and $6.3 million for the third quarter of 2015 due to the issuance of subordinated debt at the end of the second quarter 2016 and growth in the deposit portfolio.
Net interest income for the nine months ended September 30, 2016 totaled $182.3 million, an increase of $30.7 million, or 20%, from $151.6 million for the nine months ended September 30, 2015. Interest income for the nine months ended September 30, 2016 totaled $205.5 million, an increase of $35.5 million, or 21%, from $170.0 million during the nine months ended September 30, 2015 due to an increase of $50.5 million in interest income from the originated loan portfolio offset by a decrease of $16.4 million of interest income from the acquired loan portfolio. Interest expense for the nine months ended September 30, 2016 totaled $23.2 million, an increase of $4.8 million, or 26%, from $18.4 million during the nine months ended September 30, 2015 due to increased average deposit balances and the additional interest expense of our subordinated debt issued at the end of the second quarter of 2016.
Net interest margin decreased 28 basis points to 3.52% in the third quarter of 2016 from 3.80% in the second quarter of 2016, primarily due to lower accretion income from acquired loans, day count and a higher cost of funds, the result of a full quarter interest expense for the subordinated debt. Net interest margin also decreased 28 basis points from 3.80% in the third quarter of 2015. Total loan yield during the third quarter of 2016 decreased to 4.37% from 4.66% in the second quarter of 2016 and 4.71% in the third quarter of 2015. The decline from the second quarter of 2016 was primarily due to lower accretion income received from the acquired loan portfolio and day count. Accretion income from the acquired loan portfolio contributed 0.09% to net interest margin during the third quarter of 2016 compared to 0.31% in the second quarter of 2016 and 0.31% in the third quarter of 2015. The yield on originated loans decreased four basis points to 4.24% during the third quarter of 2016 primarily due to one additional day during the third quarter.
Contractual net interest margin, which excludes the impact of accretion of acquisition discounts on the acquired loan portfolio, decreased 6 basis points to 3.43% for the third quarter of 2016 from 3.49% in the prior quarter and third quarter of 2015. The linked-quarter change in contractual net interest margin was due primarily to a higher cost of funds, one additional day during the third quarter and the decrease in average balances of acquired loans. Our cost of funds increased 12 basis points to 0.57% during the third quarter of 2016 from 0.45% during the second quarter of 2016 and increased 8 basis points from 0.49% during the third quarter of 2015, primarily due to interest expense on the subordinated debt. Our cost of deposits remained unchanged at 0.44% for both the second quarter and third quarter of 2016, and decreased from 0.48% for the third quarter of 2015.
Net interest margin decreased 27 basis points to 3.71% for the nine months ended September 30, 2016 from 3.98% for the nine months ended September 30, 2015. The yield on originated loans decreased 3 basis points to 4.29% for the nine months ended September 30, 2016 compared to 4.32% for the nine months ended September 30, 2015. The yield on the acquired loan portfolio decreased 78 basis points to 11.27% for the nine months ended September 30, 2016 compared to 12.05% for the nine months ended September 30, 2015 due primarily to lower accretion income from the sales of acquired loans. Our cost of funds decreased 1 basis point to 0.50% for the nine months ended September 30, 2016 compared to 0.51% for the nine months ended September 30, 2015. Accretion income from the acquired loan portfolio contributed 0.21% and 0.54% to net interest margin during the nine months ended September 30, 2016 and 2015, respectively.
Noninterest Income and Noninterest Expense
Noninterest income increased to $16.3 million in the third quarter of 2016 as compared to $13.2 million in the second quarter of 2016 and $7.3 million in the third quarter of 2015. Noninterest income increased to $34.8 million for the nine months ended September 30, 2016 compared to $18.7 million for the nine months ended September 30, 2015. Noninterest income during the third quarter of 2016 included $7.3 million in trust administrative fees for a full quarter generated by our PENSCO subsidiary; $2.1 million in advisory fee income generated by Opus' Merchant Bank, including its broker-dealer subsidiary, Opus Financial Partners; $1.9 million in fees generated through our Escrow and Exchange divisions; $2.0 million in fees and service charges on deposit accounts; $897,000 in income from bank owned life insurance; and a $336,000 gain on the sale of Opus originated loans. Net equity warrant valuation changes reduced total noninterest income by $377,000 during the third quarter of 2016.
Noninterest expense totaled $42.3 million in the third quarter of 2016 compared to $38.4 million in the second quarter of 2016 and $26.9 million in the third quarter of 2015. Noninterest expense for the nine months ended September 30, 2016 was $111.6 million, an increase of 36% from $82.2 million for the nine months ended September 30, 2015. Noninterest expense during the third quarter of 2016 included $666,000 of merger and strategic initiative related expenses. The increase in noninterest expense from the prior quarter was primarily due to increases in compensation and benefits, professional services, provision for unfunded commitments and the full-quarter impact of PENSCO operations.
Loans
Total loans held-for-investment, net of the allowance for loan losses, grew 3% to $6.2 billion at September 30, 2016 from $6.1 billion at June 30, 2016 and grew 25% from $5.0 billion at September 30, 2015.
Our originated loan portfolio totaled $6.1 billion as of September 30, 2016, an increase of 3% from $5.9 billion as of June 30, 2016 and 30% from $4.7 billion as of September 30, 2015. Growth in the originated portfolio during the quarter was the result of new loan fundings of $634.1 million, including $266.3 million from Income Property Banking, $120.7 million from Corporate Finance, $74.2 million from Healthcare Banking, $70.1 million from Commercial Banking, $47.9 million from Institutional Syndications, $34.9 million from Structured Finance, and $16.1 million from Media and Entertainment. Our Commercial and Specialty Banking divisions contributed 58% of new loan fundings during each of the second and third quarter of 2016 compared to 48% during the third quarter of 2015. Loan commitments originated during the third quarter totaled $751.1 million as compared to $767.2 million during the second quarter of 2016 and $807.0 million during the third quarter of 2015. At September 30, 2016, our unfunded commitments on originated loans totaled $630.2 million.
Our acquired loan portfolio totaled $186.3 million as of September 30, 2016, a decrease of 10% from $207.3 million at June 30, 2016 and 42% from $322.6 million at September 30, 2015. At September 30, 2016, our acquired loan portfolio has a remaining discount of $4.6 million.
Deposits and Borrowings
Total deposits increased $319.4 million, or 5%, to $6.5 billion as of September 30, 2016, from $6.2 billion as of June 30, 2016, and increased 31% from $4.9 billion as of September 30, 2015. The growth of total deposits during the third quarter of 2016 was mainly due to our Fiduciary Banking division, Retail Bank, Municipal Banking division and the transfer of $74.8 million of additional PENSCO ancillary custodial client cash balances from other banks. As of September 30, 2016, total PENSCO deposits were $938.2 million and custodial cash balances at other financial institutions totaled $275.3 million.
Total demand deposits, including both noninterest-bearing and interest-bearing DDAs, increased $119.8 million, or 4%, during the third quarter of 2016, and now comprise 48% of total deposits as of September 30, 2016, unchanged from 48% as of June 30, 2016 and an increase from 37% as of September 30, 2015. As of September 30, 2016, business deposits represented 52% of total deposits, unchanged from June 30, 2016 and an increase from 50% as of September 30, 2015. Our loan to deposit ratio was 97% as of September 30, 2016 compared to 99% as of June 30, 2016 and 101% as of September 30, 2015.
FHLB advances decreased to $65.0 million as of September 30, 2016 compared to $135.0 million as of June 30, 2016 and $340.0 million at September 30, 2015.
Asset Quality
We recorded a provision for loan losses of $40.4 million in the third quarter of 2016 compared to $10.9 million in the second quarter of 2016 and $7.6 million in the third quarter of 2015. The provision for loan losses during the third quarter was driven by net charge-offs of $39.0 million, a decline of $17.2 million in specific reserves, $13.6 million in higher reserves for increased loss factors and $5.2 million for risk rating migration, quarterly growth in the originated loan portfolio and qualitative factors. The provision recapture on the acquired loan portfolio totaled $173,000 in the third quarter of 2016, $145,000 during the second quarter of 2016 and $709,000 in the third quarter of 2015.
Net charge-offs were primarily driven by new developments in eight loan relationships that supported charge-offs being recognized at September 30, 2016. Charge-offs were recorded on these eight loan relationships, which have been impacting the provision for loan losses and earnings for the past eight quarters and include three of the same loan relationships that were discussed during Opus' second quarter 2016 earnings conference call. Charge-offs for the eight loan relationships totaled $38.8 million and had specific reserves of $16.7 million previously recorded. Seven of these eight loan relationships were included in the balance of nonaccrual loans at June 30, 2016.
Two loan relationships originated by our Technology Banking division, which we previously announced would be deemphasized, contributed $22.2 million, or 57%, of the charge-offs and $8.1 million, or 60%, of the increased reserves as a result of higher loss factors. The remaining six loan relationships that had $16.6 million of charge offs were from our Healthcare Banking, Corporate Finance and Commercial Banking divisions. These eight loan relationships had a remaining balance of $19.1 million as of September 30, 2016 and have been charged down to the estimated fair value of each loan's underlying collateral. The loans are all managed by our Special Credits group, which has a formalized discipline and process of performing ongoing reviews of problem loans, financial and collateral detail to develop strategies for resolution. There was recent deterioration in the underlying financial performance of the client for each of these loans that led them to be viewed as collateral dependent, which subsequently resulted in a shortfall between their valuations and the loan balances, triggering the charge-offs recorded in the third quarter of 2016.
Our allowance for loan losses represented 0.97% of our total loan portfolio at September 30, 2016 as compared to 0.97% at June 30, 2016 and 0.74% at September 30, 2015. The coverage ratio for the total loan portfolio, which includes the remaining discount on the acquired loan portfolio, at September 30, 2016 was 1.04% compared to 1.07% at June 30, 2016 and 1.16% at September 30, 2015. The remaining discount on acquired loans was $4.6 million as of September 30, 2016, compared to $6.1 million as of June 30, 2016 and $21.6 million as of September 30, 2015.
Total nonperforming assets decreased 44% to $44.8 million, or 0.58% of total assets, as of September 30, 2016, compared to $79.4 million, or 1.06% of total assets, as of June 30, 2016. Total delinquencies decreased 55% to $21.7 million as of September 30, 2016, compared to $48.5 million as of June 30, 2016. The decrease in nonperforming assets and delinquencies was primarily due to charge-offs of $39.1 million recorded during the third quarter of 2016.
Total criticized loans were $147.4 million as of September 30, 2016 compared to $146.5 million as of June 30, 2016. The net change in total criticized loans was driven by charge-offs, which reduced the balance by $39.1 million, upgrades, which reduced the balance by $20.7 million, and downgrades, which increased the balance by $62.0 million. The downgrades of $62.0 million were primarily comprised of two loan relationships totaling $23.3 million from Technology Banking, two loan relationships totaling $15.1 million from Commercial Banking, one loan relationship totaling $8.5 million from Healthcare Banking and one loan relationship totaling $11.6 million from Structured Finance. Only one loan relationship migrated to substandard, which was a $16.0 million relationship from Technology Banking. Of the total criticized loans at September 30, 2016, there are $76.2 million classified as substandard, which includes the remaining $19.1 million from the eight loan relationships with charge-offs during the third quarter of 2016. We continue to focus meaningful attention on resolving total criticized loans, which resulted in the $20.7 million of upgrades during the quarter.
Capital
Our capital ratios continue to exceed bank regulatory requirements for a well-capitalized institution. As of September 30, 2016, our Tier 1 leverage ratio was 8.11%, Common Equity Tier 1 ratio was 9.15% and total risk-based capital ratio was 12.22%, compared to 8.52%, 9.74% and 12.93%, respectively, as of June 30, 2016. As of September 30, 2015, our Tier 1 leverage, Common Equity Tier 1 ratio and total risk-based capital ratios were 9.96%, 10.34% and 12.22%, respectively. Stockholders’ equity totaled $943.9 million as of September 30, 2016, a decrease of 1% from $951.2 million as of June 30, 2016 and an increase of 11% from $851.9 million as of September 30, 2015. Our tangible book value per as converted common share decreased to $16.42 as of September 30, 2016 from $16.60 as of June 30, 2016 and $17.89 at September 30, 2015.
Conference Call and Webcast Details
Date: Monday, October
24, 2016
Time: 7:00 a.m. PT (10:00 a.m. ET)
Phone Number: (855) 265-3237
Conference ID: 88807026
Webcast
URL: http://investor.opusbank.com/event
Analysts, investors, and the general public may listen to a discussion of Opus' third quarter earnings and 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 archive of the call will be available beginning approximately 2 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 88807026. The call replay will be available through November 24, 2016.
About Opus Bank
Opus Bank is an FDIC insured California-chartered commercial bank with $7.7 billion of total assets, $6.3 billion of total loans, and $6.5 billion in total deposits as of September 30, 2016. Opus Bank provides superior ideas and solutions, and banking products to its clients through its Retail Bank, Commercial Bank, Merchant Bank, and Correspondent 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. Opus Bank’s subsidiary, PENSCO Trust Company, is a leading tech-enabled alternative asset IRA custodian with over $12 billion of custodial assets and over 48,000 client accounts, which are comprised of self-directed investors, financial institutions, capital raisers, and financial advisors. Opus Bank operates 56 banking offices, including 32 in California, 21 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 may include 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. 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: http://investor.opusbank.com.
Opus undertakes no obligation to revise or publicly release any revision to these forward-looking statements.
| Consolidated Statements of Income (Loss) | ||||||||||||||||||||||
| (unaudited) | For the three months ended | For the nine months ended | ||||||||||||||||||||
| ($ in thousands, except per share amounts) |
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
|||||||||||||||||
| Interest income: | ||||||||||||||||||||||
| Loans | $ | 68,191 | $ | 68,231 | $ | 56,852 | $ | 201,560 | $ | 167,468 | ||||||||||||
| Investment securities | 939 | 599 | 616 | 1,984 | 1,793 | |||||||||||||||||
| Due from banks | 641 | 739 | 228 | 1,955 | 732 | |||||||||||||||||
| Total interest income | 69,771 | 69,569 | 57,696 | 205,499 | 169,993 | |||||||||||||||||
| Interest expense: | ||||||||||||||||||||||
| Deposits | 6,917 | 6,496 | 5,686 | 19,747 | 16,618 | |||||||||||||||||
| Federal Home Loan Bank advances | 232 | 489 | 579 | 1,443 | 1,774 | |||||||||||||||||
| Subordinated debt | 1,923 | 41 | — | 1,964 | — | |||||||||||||||||
| Total interest expense | 9,072 | 7,026 | 6,265 | 23,154 | 18,392 | |||||||||||||||||
| Net interest income | 60,699 | 62,543 | 51,431 | 182,345 | 151,601 | |||||||||||||||||
| Provision for loan losses | 40,446 | 10,930 | 7,595 | 56,319 | 16,953 | |||||||||||||||||
| Net interest income after provision for loan losses | 20,253 | 51,613 | 43,836 | 126,026 | 134,648 | |||||||||||||||||
| Noninterest income: | ||||||||||||||||||||||
| Fees and service charges on deposit accounts | 2,025 | 1,929 | 1,667 | 5,892 | 4,887 | |||||||||||||||||
| Escrow and exchange fees | 1,868 | 1,989 | 1,630 | 5,477 | 3,298 | |||||||||||||||||
| Trust administrative fees | 7,285 | 6,265 | — | 13,550 | — | |||||||||||||||||
| Gain on sale of loans | 336 | 313 | — | 649 | — | |||||||||||||||||
| Gain (loss) on sale of assets | 219 | (16 | ) | — | 197 | 106 | ||||||||||||||||
| Gain (loss) from real estate owned, net | 15 | (28 | ) | 73 | (38 | ) | (125 | ) | ||||||||||||||
| Gain on sale of investment securities | — | — | 438 | — | 800 | |||||||||||||||||
| Bank-owned life insurance, net | 897 | 935 | 870 | 2,643 | 2,273 | |||||||||||||||||
| Other income | 3,605 | 1,819 | 2,617 | 6,408 | 7,422 | |||||||||||||||||
| Total noninterest income | 16,250 | 13,206 | 7,295 | 34,778 | 18,661 | |||||||||||||||||
| Noninterest expense: | ||||||||||||||||||||||
| Compensation and benefits | 23,016 | 22,174 | 14,691 | 62,919 | 45,852 | |||||||||||||||||
| Professional services | 2,937 | 2,603 | 1,580 | 7,834 | 5,320 | |||||||||||||||||
| Occupancy expense | 3,557 | 3,436 | 3,042 | 9,992 | 8,757 | |||||||||||||||||
| Depreciation and amortization | 2,021 | 1,806 | 1,415 | 5,302 | 4,124 | |||||||||||||||||
| Deposit insurance and regulatory assessments | 1,059 | 1,247 | 884 | 3,366 | 2,515 | |||||||||||||||||
| Insurance expense | 354 | 406 | 303 | 1,085 | 912 | |||||||||||||||||
| Data processing | 830 | 799 | 762 | 2,499 | 2,441 | |||||||||||||||||
| Software licenses and maintenance | 1,053 | 803 | 570 | 2,486 | 1,513 | |||||||||||||||||
| Office services | 1,973 | 1,923 | 990 | 4,786 | 3,023 | |||||||||||||||||
| Amortization of other intangible assets | 1,479 | 1,195 | 627 | 3,302 | 1,881 | |||||||||||||||||
| Advertising and marketing | 555 | 366 | 410 | 1,150 | 875 | |||||||||||||||||
| Litigation expense (recovery) | 444 | (270 | ) | — | 124 | 275 | ||||||||||||||||
| Other expenses | 3,051 | 1,918 | 1,609 | 6,742 | 4,726 | |||||||||||||||||
| Total noninterest expense | 42,329 | 38,406 | 26,883 | 111,587 | 82,214 | |||||||||||||||||
|
(Loss) income before income tax (benefit) expense |
(5,826 | ) | 26,413 | 24,248 | 49,217 | 71,095 | ||||||||||||||||
| Income tax (benefit) expense | (2,805 | ) | 10,264 | 9,537 | 18,809 | 27,823 | ||||||||||||||||
| Net income (loss) | $ | (3,021 | ) | $ | 16,149 | $ | 14,711 | $ | 30,408 | $ | 43,272 | |||||||||||
| Basic (loss) earnings per common share | $ | (0.09 | ) | $ | 0.47 | $ | 0.45 | $ | 0.90 | $ | 1.35 | |||||||||||
| Diluted (loss) earnings per common share | (0.09 | ) | 0.46 | 0.44 | 0.87 | 1.30 | ||||||||||||||||
| Weighted average shares - basic | 34,274,756 | 34,032,042 | 28,725,211 | 33,612,018 | 28,523,213 | |||||||||||||||||
| Weighted average shares - diluted | 34,274,756 | 35,453,621 | 33,657,401 | 34,966,856 | 33,365,666 | |||||||||||||||||
| Consolidated Balance Sheets | |||||||||||||||
| (unaudited) | As of | ||||||||||||||
| ($ in thousands, except share amounts) |
September 30, |
June 30, |
September 30, |
||||||||||||
| Assets | |||||||||||||||
| Cash and due from banks | $ | 49,753 | $ | 41,873 | $ | 31,595 | |||||||||
| Due from banks – interest-bearing | 568,714 | 531,239 | 399,822 | ||||||||||||
| Investment securities available-for-sale, at fair value | 156,813 | 150,419 | 220,982 | ||||||||||||
| Loans held-for-sale | — | — | — | ||||||||||||
| Loans held-for-investment | 6,290,107 | 6,125,073 | 5,001,607 | ||||||||||||
| Less allowance for loan losses | (61,103 | ) | (59,694 | ) | (36,809 | ) | |||||||||
| Loans held-for-investment, net | 6,229,004 | 6,065,379 | 4,964,798 | ||||||||||||
| Real estate owned | 558 | 1,415 | 4,235 | ||||||||||||
| Premises and equipment, net | 37,937 | 38,206 | 33,511 | ||||||||||||
| Goodwill | 328,285 | 328,285 | 262,115 | ||||||||||||
| Other intangible assets, net | 52,198 | 53,677 | 10,726 | ||||||||||||
| Deferred tax assets, net | 32,652 | 31,481 | 55,358 | ||||||||||||
| Cash surrender value of bank owned life insurance, net | 120,119 | 119,179 | 115,564 | ||||||||||||
| Accrued interest receivable | 21,848 | 20,341 | 16,871 | ||||||||||||
| Federal Home Loan Bank stock | 17,250 | 17,250 | 17,250 | ||||||||||||
| Other assets | 94,078 | 69,339 | 50,328 | ||||||||||||
| Total assets | $ | 7,709,209 | $ | 7,468,083 | $ | 6,183,155 | |||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||
| Deposits: | |||||||||||||||
| Noninterest-bearing demand | $ | 931,063 | $ | 964,045 | $ | 868,533 | |||||||||
| Interest-bearing demand | 2,185,216 | 2,032,461 | 945,361 | ||||||||||||
| Money market and savings | 2,838,433 | 2,637,804 | 2,549,149 | ||||||||||||
| Time deposits | 544,989 | 546,006 | 584,710 | ||||||||||||
| Total deposits | 6,499,701 | 6,180,316 | 4,947,753 | ||||||||||||
| Federal Home Loan Bank advances | 65,000 | 135,000 | 340,000 | ||||||||||||
| Subordinated debt, net | 132,391 | 132,331 | — | ||||||||||||
| Accrued interest payable | 2,157 | 223 | 352 | ||||||||||||
| Other liabilities | 66,102 | 69,022 | 43,179 | ||||||||||||
| Total liabilities | 6,765,351 | 6,516,892 | 5,331,284 | ||||||||||||
| Stockholders’ equity: | |||||||||||||||
| Preferred stock: | |||||||||||||||
| Authorized 200,000,000 shares; issued 612 and 612 and 72,411 shares, respectively | 581 | 581 | 68,768 | ||||||||||||
| Common stock, no par value per share: | |||||||||||||||
| Authorized 200,000,000 shares; issued 34,551,270 and 34,537,724 and 28,946,023 shares, respectively | 678,291 | 678,291 | 550,248 | ||||||||||||
| Additional paid-in capital | 54,349 | 52,695 | 46,685 | ||||||||||||
| Retained earnings | 216,316 | 226,198 | 191,035 | ||||||||||||
| Treasury stock, at cost; 273,236 and 268,145, and 208,004 shares, respectively | (7,001 | ) | (6,884 | ) | (4,846 | ) | |||||||||
| Accumulated other comprehensive income (loss) | 1,322 | 310 | (19 | ) | |||||||||||
| Total stockholders’ equity | 943,858 | 951,191 | 851,871 | ||||||||||||
| Total liabilities and stockholders’ equity | $ | 7,709,209 | $ | 7,468,083 | $ | 6,183,155 | |||||||||
| Selected Financial Data | ||||||||||||||||
| For the three months ended | For the nine months ended | |||||||||||||||
| (unaudited) |
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
|||||||||||
| Return on average assets | (0.16 | )% | 0.89 | % | 0.98 | % | 0.57 | % | 1.03 | % | ||||||
| Return on average stockholders' equity | (1.25 | ) | 6.90 | 6.87 | 4.38 | 6.97 | ||||||||||
| Return on average tangible equity (1) | (2.07 | ) | 11.14 | 10.12 | 6.89 | 10.25 | ||||||||||
| Efficiency ratio (2) | 55.01 | 50.70 | 45.78 | 51.39 | 48.29 | |||||||||||
| Noninterest expense to average assets | 2.24 | 2.12 | 1.79 | 2.07 | 1.95 | |||||||||||
| Yield on interest-earning assets | 4.04 | 4.22 | 4.26 | 4.18 | 4.47 | |||||||||||
| Cost of deposits (3) | 0.44 | 0.44 | 0.48 | 0.45 | 0.50 | |||||||||||
| Cost of funds (4) | 0.57 | 0.45 | 0.49 | 0.50 | 0.51 | |||||||||||
| Net interest margin | 3.52 | 3.80 | 3.80 | 3.71 | 3.98 | |||||||||||
| Loan to deposits | 96.78 | 99.11 | 101.09 | 96.78 | 101.09 | |||||||||||
| (1) | See computation in "Non-GAAP Financial Measures" section. | |
| (2) | The efficiency ratio is calculated by dividing noninterest expense by the sum of net interest income before provision for loan losses and noninterest income. | |
| (3) | Calculated as interest expense on deposits divided by total average deposits. | |
| (4) | Calculated as total interest expense divided by average total deposits, FHLB advances and subordinated debt. | |
| Capital Ratios | As of | |||||||||
| (unaudited) |
September 30, 2016(1) |
June 30, 2016 | September 30, 2015 | |||||||
| Tier 1 leverage ratio | 8.11 | % | 8.52 | % | 9.96 | % | ||||
| Tier 1 risk-based capital ratio | 9.15 | 9.74 | 11.45 | |||||||
| Total risk-based capital ratio | 12.22 | 12.93 | 12.22 | |||||||
| Common Equity Tier 1 ratio | 9.15 | 9.74 | 10.34 | |||||||
| (1) | Ratios are preliminary until filing of our September 30, 2016 call report. | |
| Loan Fundings | |||||||||||||||||||||
| (unaudited) | For the three months ended | For the nine months ended | |||||||||||||||||||
| ($ in thousands) |
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
||||||||||||||||
| Loans funded: | |||||||||||||||||||||
| Real estate mortgage loans: | |||||||||||||||||||||
| Single-family residential | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
| Multifamily residential | 238,363 | 285,563 | 261,349 | 743,444 | 627,168 | ||||||||||||||||
| Commercial real estate | 76,833 | 71,622 | 76,346 | 260,076 | 284,575 | ||||||||||||||||
| Construction and land loans | 15,482 | 12,504 | 19,291 | 42,373 | 24,140 | ||||||||||||||||
| Commercial business loans | 301,669 | 290,947 | 279,760 | 794,572 | 712,254 | ||||||||||||||||
| Small Business Administration loans | 1,783 | — | 1,547 | 5,997 | 2,433 | ||||||||||||||||
| Consumer and other loans | — | — | — | — | — | ||||||||||||||||
| Total loan fundings | $ | 634,130 | $ | 660,636 | $ | 638,293 | $ | 1,846,462 | $ | 1,650,570 | |||||||||||
| Composition of Loan Portfolio | As of | |||||||||||||||||||||
| (unaudited) |
September 30, |
June 30, |
September 30, |
|||||||||||||||||||
| ($ in thousands) | Amount |
% of |
Amount |
% of |
Amount |
% of |
||||||||||||||||
| Originated loans held-for-investment | ||||||||||||||||||||||
| Real estate mortgage loans: | ||||||||||||||||||||||
| Single-family residential | $ | 85,970 | 1.4 | % | $ | 93,550 | 1.5 | % | $ | 108,749 | 2.2 | % | ||||||||||
| Multifamily residential | 2,780,139 | 44.2 | 2,773,243 | 45.3 | 2,452,731 | 49.0 | ||||||||||||||||
| Commercial real estate | 1,301,001 | 20.7 | 1,241,827 | 20.3 | 959,682 | 19.2 | ||||||||||||||||
| Construction and land loans | 93,070 | 1.5 | 82,959 | 1.3 | 39,431 | 0.8 | ||||||||||||||||
| Commercial business loans | 1,824,645 | 29.0 | 1,700,713 | 27.8 | 1,089,040 | 21.8 | ||||||||||||||||
| Small Business Administration loans | 18,609 | 0.3 | 25,082 | 0.4 | 26,538 | 0.5 | ||||||||||||||||
| Consumer and other loans | 352 | 0.0 | 376 | 0.0 | 2,853 | 0.1 | ||||||||||||||||
| Total originated loans | 6,103,786 | 97.0 | 5,917,750 | 96.6 | 4,679,024 | 93.6 | ||||||||||||||||
| Acquired loans held-for-investment | ||||||||||||||||||||||
| Real estate mortgage loans: | ||||||||||||||||||||||
| Single-family residential | 37,583 | 0.6 | 43,317 | 0.7 | 66,559 | 1.3 | ||||||||||||||||
| Multifamily residential | 64,439 | 1.0 | 71,330 | 1.2 | 88,102 | 1.8 | ||||||||||||||||
| Commercial real estate | 46,365 | 0.8 | 50,927 | 0.9 | 80,684 | 1.6 | ||||||||||||||||
| Construction and land loans | 2,017 | 0.0 | 2,032 | 0.0 | 2,118 | 0.0 | ||||||||||||||||
| Commercial business loans | 14,991 | 0.1 | 16,850 | 0.2 | 24,424 | 0.5 | ||||||||||||||||
| Small Business Administration loans | 13,616 | 0.2 | 15,324 | 0.3 | 52,292 | 1.0 | ||||||||||||||||
| Consumer and other loans | 7,310 | 0.1 | 7,543 | 0.1 | 8,404 | 0.2 | ||||||||||||||||
| Total acquired loans | 186,321 | 3.0 | 207,323 | 3.4 | 322,583 | 6.4 | ||||||||||||||||
| Total gross loans | $ | 6,290,107 | 100.0 | % | $ | 6,125,073 | 100.0 | % | $ | 5,001,607 | 100.0 | % | ||||||||||
| Composition of Deposits | As of | |||||||||||||||||||||
| (unaudited) |
September 30, 2016 |
June 30, 2016 |
September 30, 2015 |
|||||||||||||||||||
| ($ in thousands) | Amount |
% of Total deposits |
Amount |
% of Total deposits |
Amount |
% of Total deposits |
||||||||||||||||
| Noninterest bearing | $ | 931,063 | 14.32 | % | $ | 964,045 | 15.60 | % | $ | 868,533 | 17.55 | % | ||||||||||
| Interest bearing demand | 2,185,216 | 33.62 | 2,032,461 | 32.89 | 945,361 | 19.11 | ||||||||||||||||
| Money market and savings | 2,838,433 | 43.67 | 2,637,804 | 42.68 | 2,549,149 | 51.52 | ||||||||||||||||
| Time deposits | 544,989 | 8.39 | 546,006 | 8.83 | 584,710 | 11.82 | ||||||||||||||||
| Total deposits | $ | 6,499,701 | 100.00 | % | $ | 6,180,316 | 100.00 | % | $ | 4,947,753 | 100.00 | % | ||||||||||
| Consolidated average balance sheet, interest, yield and rates | |||||||||||||||||||||||||||||||||
|
For the three months ended |
For the three months ended |
For the three months ended |
|||||||||||||||||||||||||||||||
| (unaudited) | 2016 | 2015 | 2015 | ||||||||||||||||||||||||||||||
| ($ in thousands) |
Average |
Interest |
Yields/ |
Average Balance |
Interest |
Yields/ |
Average Balance |
Interest |
Yields/ Rates |
||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||
| Due from banks | $ | 498,881 | $ | 641 | 0.51 | % | $ | 586,542 | $ | 739 | 0.51 | % | $ | 360,817 | $ | 228 | 0.25 | % | |||||||||||||||
| Investment securities | 157,334 | 939 | 2.37 | 148,945 | 599 | 1.62 | 229,937 | 616 | 1.06 | ||||||||||||||||||||||||
| Acquired loans | 197,904 | 4,155 | 8.35 | 232,857 | 7,993 | 13.81 | 340,331 | 8,340 | 9.72 | ||||||||||||||||||||||||
| Originated Loans | 6,014,394 | 64,036 | 4.24 | 5,659,767 | 60,238 | 4.28 | 4,443,460 | 48,512 | 4.33 | ||||||||||||||||||||||||
| Total loans | $ | 6,212,298 | $ | 68,191 | 4.37 | $ | 5,892,624 | $ | 68,231 | 4.66 | $ | 4,783,791 | $ | 56,852 | 4.71 | ||||||||||||||||||
| Total interest-earning assets | $ | 6,868,513 | $ | 69,771 | 4.04 | $ | 6,628,111 | $ | 69,569 | 4.22 | $ | 5,374,545 | $ | 57,696 | 4.26 | ||||||||||||||||||
| Noninterest-earning assets | 661,332 | 649,774 | 568,521 | ||||||||||||||||||||||||||||||
| Total assets | $ | 7,529,845 | $ | 7,277,885 | $ | 5,943,066 | |||||||||||||||||||||||||||
| Liabilities and stockholders’ equity: | |||||||||||||||||||||||||||||||||
| Interest-bearing deposits | |||||||||||||||||||||||||||||||||
| Interest-bearing demand | $ | 2,067,238 | $ | 810 | 0.16 | % | $ | 1,839,069 | $ | 748 | 0.16 | % | $ | 839,105 | $ | 393 | 0.19 | % | |||||||||||||||
| Money market and savings | 2,739,540 | 4,936 | 0.72 | 2,648,183 | 4,618 | 0.70 | 2,457,731 | 4,071 | 0.66 | ||||||||||||||||||||||||
| Time deposits | 547,603 | 1,171 | 0.85 | 550,381 | 1,130 | 0.83 | 592,281 | 1,222 | 0.82 | ||||||||||||||||||||||||
| Total interest bearing deposits | $ | 5,354,381 | $ | 6,917 | 0.51 | $ | 5,037,633 | $ | 6,496 | 0.52 | $ | 3,889,117 | $ | 5,686 | 0.58 | ||||||||||||||||||
| Subordinated debt | 132,350 | 1,923 | 5.78 | 2,907 | 41 | 5.67 | — | — | — | ||||||||||||||||||||||||
| FHLB advances | 127,011 | 232 | 0.73 | 351,648 | 489 | 0.56 | 349,674 | 579 | 0.66 | ||||||||||||||||||||||||
|
Total interest-bearing liabilities |
$ | 5,613,742 | $ | 9,072 | 0.64 | $ | 5,392,188 | $ | 7,026 | 0.52 | $ | 4,238,791 | $ | 6,265 | 0.59 | ||||||||||||||||||
| Noninterest-bearing deposits | 889,051 | 883,769 | 809,179 | ||||||||||||||||||||||||||||||
| Other liabilities | 65,238 | 61,105 | 45,319 | ||||||||||||||||||||||||||||||
| Total liabilities | $ | 6,568,031 | $ | 6,337,062 | $ | 5,093,289 | |||||||||||||||||||||||||||
| Total stockholders’ equity | $ | 961,814 | $ | 940,823 | $ | 849,777 | |||||||||||||||||||||||||||
|
Total liabilities and stockholders’ equity |
$ | 7,529,845 | $ | 7,277,885 | $ | 5,943,066 | |||||||||||||||||||||||||||
| Net interest income | $ | 60,699 | $ | 62,543 | $ | 51,431 | |||||||||||||||||||||||||||
| Net interest spread (1) | 3.40 | % | 3.70 | % | 3.67 | % | |||||||||||||||||||||||||||
| Net interest margin (2) | 3.52 | % | 3.80 | % | 3.80 | % | |||||||||||||||||||||||||||
| (1) | Net interest spread represents the average yield on interest-earning assets less the average rate on interest-bearing liabilities. | |
| (2) | Net interest margin is computed by dividing net interest income by total average interest-earning assets. | |
| Consolidated average balance sheet, interest, yield and rates | ||||||||||||||||||||||
| For the nine months ended September 30, | ||||||||||||||||||||||
| 2016 | 2015 | |||||||||||||||||||||
| ($ in thousands) |
Average Balance |
Interest |
Yields/ Rates |
Average Balance |
Interest |
Yields/ Rates |
||||||||||||||||
| Assets: | ||||||||||||||||||||||
| Interest-earning assets | ||||||||||||||||||||||
| Due from banks | $ | 514,607 | $ | 1,955 | 0.51 | % | $ | 390,113 | $ | 732 | 0.25 | % | ||||||||||
| Investment securities | 151,855 | 1,984 | 1.75 | 226,201 | 1,793 | 1.06 | ||||||||||||||||
| Acquired loans | 230,216 | 19,426 | 11.27 | 397,423 | 35,826 | 12.05 | ||||||||||||||||
| Originated Loans | 5,668,443 | 182,134 | 4.29 | 4,073,160 | 131,642 | 4.32 | ||||||||||||||||
| Total loans | $ | 5,898,659 | $ | 201,560 | 4.56 | $ | 4,470,583 | $ | 167,468 | 5.01 | ||||||||||||
| Total interest-earning assets | $ | 6,565,121 | $ | 205,499 | 4.18 | $ | 5,086,897 | $ | 169,993 | 4.47 | ||||||||||||
| Noninterest-earning assets | 621,784 | 557,172 | ||||||||||||||||||||
| Total assets | $ | 7,186,905 | $ | 5,644,069 | ||||||||||||||||||
| Liabilities and stockholders’ equity: | ||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||
| Interest-bearing deposits | $ | 1,705,134 | $ | 2,245 | 0.18 | % | $ | 681,053 | $ | 1,018 | 0.20 | % | ||||||||||
| Money market and savings | 2,658,903 | 14,059 | 0.71 | 2,364,937 | 11,869 | 0.67 | ||||||||||||||||
| Time deposits | 553,581 | 3,443 | 0.83 | 607,357 | 3,731 | 0.82 | ||||||||||||||||
| Total interest bearing deposits | $ | 4,917,618 | $ | 19,747 | 0.54 | $ | 3,653,347 | $ | 16,618 | 0.61 | ||||||||||||
| Subordinated debt | 45,404 | 1,964 | 5.78 | — | — | — | ||||||||||||||||
| FHLB advances | 338,650 | 1,443 | 0.57 | 363,249 | 1,774 | 0.65 | ||||||||||||||||
| Total interest-bearing liabilities | $ | 5,301,672 | $ | 23,154 | 0.58 | $ | 4,016,596 | $ | 18,392 | 0.61 | ||||||||||||
| Noninterest-bearing deposits | 896,089 | 762,363 | ||||||||||||||||||||
| Other liabilities | 62,228 | 34,536 | ||||||||||||||||||||
| Total liabilities | $ | 6,259,989 | $ | 4,813,495 | ||||||||||||||||||
| Total stockholders’ equity | $ | 926,916 | $ | 830,574 | ||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 7,186,905 | $ | 5,644,069 | ||||||||||||||||||
| Net interest income | $ | 182,345 | $ | 151,601 | ||||||||||||||||||
| Net interest spread (1) | 3.60 | % | 3.86 | % | ||||||||||||||||||
| Net interest margin (2) | 3.71 | % | 3.98 | % | ||||||||||||||||||
| (1) | Net interest spread represents the average yield on interest-earning assets less the average rate on interest-bearing liabilities. | |
| (2) | Net interest margin is computed by dividing net interest income by total average interest-earning assets. | |
| Allowance for Loan Losses | |||||||||||||||
| (unaudited) | For the three months ended | For the nine months ended | |||||||||||||
| ($ in thousands) |
September 30, 2016 |
June 30, 2016 |
September 30, 2015 |
September 30, 2016 |
September 30, 2015 |
||||||||||
| Allowance for loan losses-balance at beginning of period | 59,694 | 48,788 | 30,660 | 44,147 | 23,043 | ||||||||||
| (Recapture) Provision for loan losses: | |||||||||||||||
| Acquired loans | (173 | ) | (145 | ) | (709 | ) | (469 | ) | (1,297 | ) | |||||
| Originated loans | 40,619 | 11,075 | 8,304 | 56,788 | 18,250 | ||||||||||
| Total provision for loan losses | 40,446 | 10,930 | 7,595 | 56,319 | 16,953 | ||||||||||
| Charge-offs: | |||||||||||||||
| Acquired loans | — | — | — | — | — | ||||||||||
| Originated loans | (39,075 | ) | (32 | ) | (1,447 | ) | (39,440 | ) | (3,188 | ) | |||||
| Total charge-offs | (39,075 | ) | (32 | ) | (1,447 | ) | (39,440 | ) | (3,188 | ) | |||||
| Recoveries: | |||||||||||||||
| Acquired loans | — | — | — | — | — | ||||||||||
| Originated loans | 38 | 8 | 1 | 77 | 1 | ||||||||||
| Total recoveries | 38 | 8 | 1 | 77 | 1 | ||||||||||
| Total net charge-offs | (39,037 | ) | (24 | ) | (1,446 | ) | (39,363 | ) | (3,187 | ) | |||||
| Allowance for loan losses-balance at end of period | 61,103 | 59,694 | 36,809 | 61,103 | 36,809 | ||||||||||
| Asset Quality Information | |||||||||||||||
| (unaudited) | As of | ||||||||||||||
| ($ in thousands) |
September 30, |
June 30, |
September 30, |
||||||||||||
| Nonperforming assets | |||||||||||||||
| Nonaccrual loans | $ | 44,244 | $ | 77,964 | $ | 12,541 | |||||||||
| Real estate owned | 558 | 1,415 | 4,235 | ||||||||||||
| Total nonperforming assets | 44,802 | 79,379 | 16,776 | ||||||||||||
| Nonperforming assets to total assets | 0.58 | % | 1.06 | % | 0.27 | % | |||||||||
| Accruing loans 90 days or more past due | $ | 720 | $ | 1,244 | $ | 546 | |||||||||
| Accruing troubled debt restructured loans | 170 | 373 | 286 | ||||||||||||
| Allowance for loan losses - Originated loans | 60,492 | 58,909 | 35,369 | ||||||||||||
| Allowance for loan losses - Acquired loans | 611 | 785 | 1,440 | ||||||||||||
| Total allowance for loan losses | 61,103 | 59,694 | 36,809 | ||||||||||||
| Remaining acquisition discount on acquired loans | $ | 4,630 | $ | 6,140 | $ | 21,603 | |||||||||
| Allowance for loan losses to non-accrual loans | 138.1 | % | 76.6 | % | 293.5 | % | |||||||||
| Allowance for loan losses acquired loans to acquired loans | 0.33 | 0.38 | 0.45 | ||||||||||||
| Allowance for loan losses originated loans to originated loans | 0.99 | 1.00 | 0.76 | ||||||||||||
| Total allowance for loan losses to total loans | 0.97 | 0.97 | 0.74 | ||||||||||||
|
Allowance for loan losses and remaining acquisition discount on acquired loans to gross acquired loans (1) |
2.74 | 3.24 | 6.69 | ||||||||||||
|
Allowance for loan losses and remaining acquisition discount to total gross loans (1) |
1.04 | 1.07 | 1.16 | ||||||||||||
| (1) | Remaining acquisition discount is added back to acquired loans held for investment to calculate gross loans and added to allowance for loan losses to calculate the coverage ratios. | |
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, net interest income excluding acquisition accounting 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 return on average tangible equity | ||||||||||||||||||||
| (unaudited) | For the three months ended | For the nine months ended | ||||||||||||||||||
| ($ in thousands) |
September 30, 2016 |
June 30, 2016 |
September 30, 2015 |
September 30, 2016 |
September 30, |
|||||||||||||||
| Average tangible equity: | ||||||||||||||||||||
| Average stockholders' equity | $ | 961,814 | $ | 940,823 | $ | 849,777 | $ | 926,916 | $ | 830,574 | ||||||||||
| Less: | ||||||||||||||||||||
| Average goodwill |
|
328,285 |
|
335,135 |
|
262,115 |
|
308,584 |
|
254,425 | ||||||||||
| Average other intangible assets |
|
52,996 |
|
22,643 |
|
11,058 |
|
28,570 |
|
11,686 | ||||||||||
| Average tangible equity |
|
580,533 |
|
583,045 |
|
576,604 |
|
589,762 |
|
564,463 | ||||||||||
| Net income | $ | (3,021 | ) | $ | 16,149 | $ | 14,711 | $ | 30,408 | $ | 43,272 | |||||||||
|
Return on average stockholders' equity |
|
(1.25 | )% |
|
6.90 | % |
|
6.87 | % |
|
4.38 | % |
|
6.97 | % | |||||
| Non-GAAP return on average tangible equity |
|
(2.07 | ) |
|
11.14 |
|
10.12 |
|
6.89 |
|
10.25 | |||||||||
| Non-GAAP net interest margin | ||||||||||||||||||||
| (unaudited) |
For the three months ended |
For the nine months ended |
||||||||||||||||||
| ($ in thousands) |
September 30, |
June 30, |
September 30, |
September 30, |
September 30, |
|||||||||||||||
| Net interest income | $ | 60,699 | $ | 62,543 | $ | 51,431 | $ | 182,345 | $ | 151,601 | ||||||||||
| Less: Accretion/amortization of acquisition discount/premium (1) |
|
(1,504 | ) |
|
(4,943 | ) |
|
(3,873 | ) |
|
(10,170 | ) |
|
(19,681 | ) | |||||
| Non-GAAP net interest income |
|
59,195 |
|
57,600 |
|
47,558 |
|
172,175 |
|
131,920 | ||||||||||
| Average interest earning assets | $ | 6,868,513 | $ | 6,628,111 | $ | 5,374,545 | $ | 6,565,121 | $ | 5,086,897 | ||||||||||
| Add: Average unamortized acquisition discounts |
|
5,831 |
|
9,575 |
|
25,407 |
|
9,913 |
|
35,854 | ||||||||||
| Non-GAAP average interest-earning assets |
|
6,874,344 |
|
6,637,686 |
|
5,399,952 |
|
6,575,034 |
|
5,122,751 | ||||||||||
| Net interest margin impact |
|
0.09 | % |
|
0.31 | % |
|
0.31 | % |
|
0.21 | % |
|
0.54 | % | |||||
| (1) | Accretion income on acquired loans only includes interest income recognized in excess of what would be accrued under the contractual terms as a result of acquisition accounting and loan exits through full payoff or charge-off, foreclosure or sale. | |
| Non-GAAP tangible book value per as converted common share | ||||||||||||||
| (unaudited) | As of | |||||||||||||
| ($ In thousands, except share amounts) |
September 30, |
June 30, |
September 30, |
|||||||||||
| Tangible equity: | ||||||||||||||
| Total stockholders' equity | $ | 943,858 | $ | 951,191 | $ | 851,871 | ||||||||
| Less: | ||||||||||||||
| Goodwill | 328,285 | 328,285 | 262,115 | |||||||||||
| Other intangible assets, net | 52,198 | 53,677 | 10,726 | |||||||||||
| Tangible equity | 563,375 | 569,229 | 579,030 | |||||||||||
| Shares of common stock outstanding | 34,278,034 | 34,269,579 | 28,738,019 | |||||||||||
| Shares of common stock to be issued upon conversion of preferred stock | 30,600 | 30,600 | 3,620,550 | |||||||||||
| Total as converted shares of common stock outstanding (1) | 34,308,634 | 34,300,179 | 32,358,569 | |||||||||||
| Book value per as converted common share | 27.51 | 27.73 | 26.33 | |||||||||||
| Tangible book value per as converted common share | 16.42 | 16.60 | 17.89 | |||||||||||
| (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: http://www.businesswire.com/news/home/20161024005600/en/
