News Column

Opus Bank Announces First Quarter 2014 Results

April 28, 2014

IRVINE, Calif.--(BUSINESS WIRE)-- Opus Bank (“Opus” or the “Bank”) (NASDAQ:OPB) announced today net income of $13.3 million for the first quarter of 2014, an increase of 85% from $7.2 million for the fourth quarter of 2013 and 68% from $7.9 million for the first quarter of 2013. Diluted earnings per share increased to $0.45 for the first quarter of 2014 from $0.25 for the fourth quarter of 2013 and $0.27 in the first quarter of 2013. Pretax income increased to $20.3 million for the first quarter of 2014 from $6.3 million for the fourth quarter of 2013 and $7.9 million for the first quarter of 2013.

First Quarter 2014 Highlights

  • Total assets increased to over $4.0 billion at March 31, 2014 from $3.7 billion at December 31, 2013 and $3.0 billion at March 31, 2013.
  • Originated a record $451.0 million of new loans in the first quarter of 2014, an increase of $68.5 million or 18% from $382.5 million in the fourth quarter of 2013 and $235.4 million or 109% from $215.6 million in the first quarter of 2013. Commercial Business and our specialty banking divisions represented 30% of loan originations during the first quarter of 2014.
  • Total loans increased to $3.2 billion at March 31, 2014, a record increase of $322.8 million or 11% from December 31, 2013 and $893.6 million or 39% from March 31, 2013.
  • Total deposits grew to $3.0 billion at March 31, 2014, an increase of $231.5 million in the first quarter of 2014, driven by an 11% increase in transaction account deposits. At March 31, 2014, business deposits represented 39.8% of total deposits, up from 38.7% at December 31, 2013 and 35.9% at March 31, 2013.
  • Net interest income totaled $39.7 million in the first quarter of 2014, an increase of $7.1 million or 22% from the fourth quarter of 2013 and $10.4 million or 35% from the first quarter of 2013.
  • Net interest margin for the first quarter of 2014 increased to 4.87% from 4.11% for the fourth quarter of 2013 and 4.69% for first quarter of 2013.
  • Efficiency ratio improved during the first quarter of 2014 to 52% from 85% for the fourth quarter of 2013 and from 78% for the first quarter of 2013. The improvement from the fourth quarter of 2013 was driven by an increase of $6.7 million or 17% in total revenues and a decrease of $8.3 million or 28% in noninterest expense.
  • Return on average assets for the first quarter of 2014 increased to 1.4% from tax adjusted 0.5% for the fourth quarter of 2013 and tax adjusted 0.7% for the first quarter of 2013. Return on average tangible equity increased to 12.7% for the first quarter 2014 from tax adjusted 4.1% for the fourth quarter of 2013 and tax adjusted 5.5% for the first quarter of 2013.
  • Asset quality remains strong as nonaccrual loans decreased to $1.4 million at March 31, 2014 from $3.3 million at December 31, 2013. Nonperforming assets decreased to $11.7 million or 0.29% of total assets at March 31, 2014 from $14.9 million or 0.40% of total assets at December 31, 2013.
  • We launched our Correspondent Bank in February 2014 to provide banking products, services and solutions to financial institutions, including banks, thrifts and credit unions. Our Correspondent Bank is led by the former head of one of the largest correspondent banks in the nation. We define our core disciplines as the Retail Bank, Commercial Bank, Merchant Bank and Correspondent Bank.
  • Fourteen bankers have joined us thus far in 2014 across various banking divisions, including Commercial Business Banking, Structured Finance, Correspondent Banking, Corporate Finance Small Business Banking and Income Property Banking.

    Stephen H. Gordon, Chairman, Chief Executive Officer and President, stated, “Coming off record performance in 2013, Opus is off to a great start in 2014. The investments previously made to enable significant growth are resulting in meaningful contributions and success across all of Opus’ banking divisions.”

    Gordon added, “In addition to the consistently strong performance by our Income Property Banking division, where Opus is one of the leading multifamily lenders on the west coast, Opus’ Commercial Business and specialty banking divisions, comprised of Healthcare Banking, Technology Banking, Structured Finance, Corporate Finance and Institutional Syndications, represented 30% of loan originations during the first quarter of 2014, and today represent almost 50% of our current loan pipeline.”

    Gordon concluded, “Opus’ relationship-based approach to financially backing the execution of its clients’ vision continued to drive substantial growth in total revenues and, when coupled with the decline in noninterest expense, fueled steep improvement in our efficiency and overall return metrics.”

    Net Interest Income

    Net interest income totaled $39.7 million in the first quarter of 2014, an increase of 22% from $32.6 million in the fourth quarter of 2013 and 35% from $29.4 million in the first quarter of 2013. Interest income increased to $43.9 million for the first quarter of 2014 from $36.6 million in the fourth quarter of 2013 and $32.2 million in the first quarter of 2013. The increase in interest income was driven by higher average balances in the originated loan portfolio and continued strong accretion income from the acquired loan portfolio. The acquired loan portfolio contributed $10.9 million of accretion income during the first quarter of 2014 compared to $4.8 million during the fourth quarter of 2014 and $5.5 million during the first quarter of 2013. The increase in accretion income during the first quarter of 2014 was driven by the sale of $16.2 million of acquired loans and resolution of one acquired problem loan relationship that together generated $5.1 million of additional accretion income as we recaptured the remaining discount on these loans. Interest expense increased to $4.1 million for the first quarter of 2014 from $3.9 million for the fourth quarter of 2013 and $2.8 million for the first quarter of 2013. The increase in interest expense was driven by growth of $231.4 million in deposits from December 31, 2013 and $870.6 million from March 31, 2013.

    Net interest margin increased to 4.87% in the first quarter of 2014, an increase from 4.11% in the fourth quarter of 2013 and 4.69% in the first quarter of 2013. Loan yield during the first quarter of 2014 increased to 6.05% from 5.23% in the fourth quarter of 2013 and 5.82% for the first quarter of 2013. Cost of deposits remained stable at 0.52% for the first quarter of 2014 as compared to 0.51% for the fourth quarter of 2013 and 0.47% for the first quarter of 2013. Accretion income and amortization expense from the acquired loan and deposit portfolios contributed 1.40% to the net interest margin during the first quarter of 2014 compared to 0.68% in the fourth quarter of 2013 and 1.03% in the first quarter of 2013.

    Provision for Loan Losses

    We recorded a recapture of provision for loan losses of $198,000 in the first quarter of 2014, a decrease of 80% from a recapture of $998,000 in the fourth quarter of 2013 and 80% from a recapture of $1.0 million in the first quarter of 2013. Provision recapture of $1.5 million of allowance for loan losses on the acquired loan portfolio was recorded during the first quarter of 2014 primarily driven by the sale of $16.2 million in acquired loans. A provision for loan losses of $1.3 million was recorded on the originated loan portfolio during the first quarter of 2014 as a result of loan growth.

    Noninterest Income and Noninterest Expense

    Noninterest income totaled $2.0 million in the first quarter of 2014, a decrease of 24% from $2.6 million in the fourth quarter of 2013 and 19% from $2.4 million in the first quarter of 2013. The decrease is primarily due to $1.2 million of valuation write-downs recorded during the quarter on three real estate owned properties from prior bank acquisitions, partially offset by the continued increase in service charges on deposit accounts as a result of growth in our deposit portfolio.

    Noninterest expense totaled $21.6 million in the first quarter of 2014, a decrease of 28% from $29.9 million in the fourth quarter of 2013 and 13% from $24.9 million in the first quarter of 2013. The decrease from the prior quarter was primarily due to a $1.8 million recovery of litigation expense for an accrual established during the fourth quarter of 2013 due to a favorable court ruling during the first quarter of 2014. Professional services expense in the first quarter of 2014 declined due to insurance reimbursements of $1.4 million in legal fees related to various settled matters.

    Loans

    Loans held-for-investment, net, totaled $3.2 billion at March 31, 2014, an increase of 11% from $2.8 billion at December 31, 2013 and 39% from $2.3 billion at March 31, 2013.

    Our originated loan portfolio totaled $2.6 billion as of March 31, 2014, an increase of 17% from $2.2 billion as of December 31, 2013 and 81% from $1.4 billion as of March 31, 2013. Our loan growth during the quarter was a result of $451.0 million of loan originations primarily comprised of $291.2 million from our Income Property Banking division, $31.7 million from our Structured Finance division, $60.5 million from our Healthcare Banking division, $14.0 million from our Technology Banking division, $13.5 million from our Commercial Business Banking division and $16.9 million from Institutional Syndications. As of March 31, 2014, originated loans made up 82% of our total loan portfolio as compared to 78% as of December 31, 2013 and 63% as of March 31, 2013.

    Our acquired loan portfolio totaled $572.9 million as of March 31, 2014, a decrease of 9% from $626.9 million as of December 31, 2013 and 32% from $842.5 million at March 31, 2013. The decrease in the current quarter was predominantly driven by the sale of $12.5 million in single-family residential loans and $3.7 million in commercial business loans, as well as normal payoffs and scheduled amortization. As of March 31, 2014, acquired loans made up 18% of our total loan portfolio as compared to 22% as of December 31, 2013 and 37% as of March 31, 2013.

    Our allowance for loan losses represented 0.54% of our total loan portfolio at March 31, 2014 as compared to 0.61% at December 31, 2013 and 0.73% at March 31, 2013. Our acquired loan portfolio has a remaining discount of $56.6 million at March 31, 2014, which when added to the allowance for loan losses on the acquired loan portfolio, results in a coverage ratio of 9.74% to total acquired loans. Our allowance for loan losses on originated loans had a coverage ratio of 0.48% at March 31, 2014.

    Deposits and Borrowings

    Deposits totaled $3.0 billion as of March 31, 2014, an increase of 8% from $2.7 billion as of December 31, 2013 and 41% from $2.1 billion as of March 31, 2013. The increase was primarily driven by growth of $125.6 million in our Retail Bank and $105.9 million in our Commercial and Correspondent Banks in the first quarter of 2014. This growth was concentrated in our noninterest bearing demand deposit accounts, which increased by $35.7 million or 7% from the prior quarter, and interest-bearing transaction accounts, which increased by $203.7 million or 13% from the prior quarter. Transaction accounts increased to 78% of total deposits at March 31, 2014 from 76% at December 31, 2013 and 70% at March 31, 2013.

    Federal Home Loan Bank advances totaled $355.0 million as of March 31, 2014, an increase of 18% from $300.0 million as of December 31, 2013 and 4% from $340.0 million at March 31, 2013, as we opportunistically extended our duration on borrowings at low interest rates.

    Capital

    Capital ratios continue to be strong and well in excess of bank regulatory requirements. Our Tier 1 leverage and total risk-based capital ratios were 10.58% and 13.38% for the first quarter of 2014, compared to 10.31% and 13.82% for the fourth quarter of 2013, respectively. Stockholders’ equity totaled $683.1 million as of March 31, 2014, an increase of 2% from $668.8 million as of December 31, 2013. Our tangible book value per as converted common share increased to $14.97 as of March 31, 2014 from $14.45 as of December 31, 2013.

    Conference Call and Webcast Information

    Date: Monday, April 28, 2014
    Time: 8:00 a.m. PT (11:00 a.m. ET)
     
    Phone Number (855) 265-3237
    Conference Id: 32207461

    Webcast URL: http://investor.opusbank.com/events.cfm

     


    Analysts, investors, and the general public may listen to the Bank's discussion of its first quarter's 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 the Bank's website at: http://investor.opusbank.com/events.cfm. The webcast will include a slide presentation, enabling conference participants to experience the conference with greater impact. The webcast also allows participants to interact with the speakers through a live web-based question and answer session. 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 unable to participate in the call, an archive of the call will be available beginning approximately 2 hours following the end 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 32207461. The call replay will be available until May 27, 2014.

    About Opus Bank

    Opus Bank is an FDIC insured California-chartered commercial bank with over $4.0 billion of total assets, $3.2 billion of total loans, and $3.0 billion in total deposits as of March 31, 2014. Opus Bank provides high-value, relationship-based banking products, services, and solutions 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 business, healthcare, technology, multifamily residential, commercial real estate, and structured finance, and is an SBA preferred lender. Opus Bank is an Equal Housing Lender. Opus Bank operates 60 banking offices, including two in the Phoenix metropolitan area of Arizona, 34 in California and 24 in the Seattle/Puget Sound region in Washington. For additional information about Opus Bank, please visit our website: www.opusbank.com. To learn more about how Opus Bank is backing businesses, please visit: www.opusbank.com/spotlight.

    Forward Looking Statements

    This release and the aforementioned conference call and webcast may include forward-looking statements related to the Bank’s 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. The Bank undertakes no obligation to revise or publicly release any revision to these forward-looking statements.

     
    Consolidated Statement of Operations
    (unaudited)       Three Months Ended
    ($ in thousands, except per share amounts) March 31, 2014       December 31, 2013         March 31, 2013
    Interest income:
    Loans $ 43,898 $ 35,707 $ 31,745
    Investment securities (120 ) 709 374
    Due from banks 92   136   106  
    Total interest income 43,870   36,552   32,225  
    Interest expense:
    Deposits 3,649 3,414 2,350
    Federal Home Loan Bank advances 480   494   488  
    Total interest expense 4,129   3,908   2,838  
    Net interest income 39,741 32,644 29,387
    Recapture for loan losses (198 ) (998 ) (1,012 )
    Net interest income after (recapture) for loan losses 39,939   33,642   30,399  
    Noninterest income:
    Service charges on deposit accounts 1,515 1,313 1,074
    (Loss) gain on sale of assets (35 ) 612 1
    Loss from real estate owned, net (1,236 ) (269 ) (452 )
    Bank-owned life insurance, net 220 229 240
    Gain on sale of loans - - 228
    Other income 1,494   689   1,337  
    Total noninterest income 1,958   2,574   2,428  
    Noninterest expense:
    Compensation and benefits 13,995 14,364 14,630
    Occupancy expense 2,832 3,185 2,522
    Depreciation and amortization 1,333 1,225 1,475
    Professional services 27 2,123 1,797
    Deposit insurance and regulatory assessments 632 556 619
    Insurance expense 231 231 205
    Data processing 758 840 632
    Software licenses and maintenance 529 714 443
    Office services 884 1,305 920
    Amortization of core deposit intangibles 627 627 537
    Litigation (recovery) expense (1,783 ) 3,441 50
    Other expenses 1,551   1,286   1,092  
    Total noninterest expense 21,616   29,897   24,922  
    Income before income tax expense 20,281 6,319 7,905
    Income tax expense (benefit) 7,018   (835 ) 17  
    Net income $ 13,263 $ 7,154 $ 7,888
     
    Basic earnings per common share $ 0.46 $ 0.25 $ 0.28
    Diluted earnings per common share $ 0.45 $ 0.25 $ 0.27
     
    Weighted average shares - basic 23,104,332 23,107,172 23,028,408
    Weighted average shares - diluted 29,248,972 29,109,154 28,862,902
     
     
     
    Consolidated Balance Sheets
    (unaudited)       As of
    ($ in thousands) March 31, 2014       December 31, 2013         March 31, 2013
    Assets
    Cash and due from banks $ 39,724 $ 27,907 $ 25,495
    Due from banks – interest-bearing 143,646 159,394 137,683
    Investment securities available-for-sale, at fair value 205,911 221,296 181,307
    Loans held-for-investment 3,173,551 2,850,752 2,279,911
    Less allowance for loan losses (17,210 ) (17,437 ) (16,569 )
    Loans held-for-investment, net 3,156,341 2,833,315 2,263,342
    Real estate owned 10,258 11,560 5,161
    Premises and equipment, net 36,574 37,125 44,724
    Goodwill 238,528 238,528 237,412
    Core deposit intangible, net 14,489 15,116 14,329
    Deferred tax assets, net 94,699 101,804 -
    Cash surrender value of bank owned life insurance, net 34,867 34,647 33,934
    Accrued interest receivable 11,517 11,256 10,417
    Federal Home Loan Bank stock 27,863 26,501 29,274
    Other assets 21,109   20,438   14,167  
    Total assets $ 4,035,526   $ 3,738,887   $ 2,997,245  
     
    Liabilities & Stockholders' Equity
    Deposits:
    Noninterest-bearing $ 535,471 $ 499,740 $ 362,383
    Interest-bearing 1,798,954 1,595,213 1,119,894
    Time deposits – under $100,000 217,033 226,599 246,680
    Time deposits – $100,000 and over 424,923   423,380   376,792  
    Total deposits 2,976,381 2,744,932 2,105,749
    Federal Home Loan Bank advances 355,000 300,000 340,000
    Accrued interest payable 312 313 317
    Other liabilities 20,722   24,811   14,863  
    Total liabilities 3,352,415   3,070,056   2,460,929  
    Stockholders' Equity
    Preferred stock:
    Authorized 200,000,000 shares; 112,572 and 112,572 and
    112,572 issued, respectively 106,908 106,908 106,908
    Common stock, no par value per share:
    Authorized 200,000,000 shares; 23,240,951 and 23,236,976

    and 23,120,265 issued, respectively

    418,043 418,043 418,043
    Additional paid-in capital 37,188 36,737 36,464
    Retained earnings (accumulated deficit) 124,425 111,162 (24,063 )
    Treasury stock, at cost; 135,248 and 134,148 and
    85,516 shares, respectively (2,574 ) (2,547 ) (1,484 )
    Accumulated other comprehensive (loss) income (879 ) (1,472 ) 448  
    Total stockholders’ equity 683,111   668,831   536,316  
    Total liabilities and stockholders’ equity $ 4,035,526   $ 3,738,887   $ 2,997,245  
     
     
     
    Selected Financial Data       Three Months Ended
    (unaudited) March 31, 2014       December 31, 2013         March 31, 2013
    Return on average assets (1) 1.4 % 0.5 % 0.7 %
    Return on average stockholders' equity (1) 7.9 % 2.6 % 3.3 %
    Return on average tangible equity (1) 12.7 % 4.1 % 5.5 %
    Efficiency ratio (2) 51.8 % 84.9 % 78.3 %
    Noninterest expense to average assets 2.3 % 3.2 % 3.4 %
    Yield on interest-earning assets 5.38 % 4.61 % 5.15 %
    Cost of deposits (3) 0.52 % 0.51 % 0.47 %
    Cost of funds (4) 0.54 % 0.52 % 0.48 %
    Net interest margin 4.87 % 4.11 % 4.69 %
     

    (1) Return on average assets, average shareholders' equity and average tangible equity are tax adjusted for the three months ended December 31, 2013 and March 31, 2013 for the release of the valuation allowance on deferred tax assets during 2013. See computation in "Non-GAAP Financial Measures" section.

     

    (2) The efficiency ratio is calculated by dividing non-interest expense by the sum of net interest income before provision for loan losses and non-interest income.

     

    (3) Calculated as interest expense on deposits divided by total average deposits.

     

    (4) Calculated as total interest expense divided by average total deposits and FHLB advances.

         
     
     
    Capital Ratios As of
    (unaudited) March 31, 2014December 31, 2013   March 31, 2013
     
    Tier 1 leverage ratio 10.58 % 10.31 % 10.57 %
    Tier 1 risk-based capital ratio 12.78 % 13.14 % 14.12 %
    Total risk-based capital ratio 13.38 % 13.82 % 14.94 %
     
     
     
    Loan Originations
    (unaudited) Three Months Ended
    ($ in thousands) March 31, 2014December 31, 2013   March 31, 2013
    Real estate mortgage loans:
    Single-family residential $ 25,254 $ 15,362 $ 16,564
    Multifamily residential 229,198 165,271 147,635
    Commercial 83,846 86,313 19,504
    Construction and land loans 1,054 1,721
    Commercial business loans 109,443 112,200 14,085
    Small Business Administration loans 2,156 1,634 2,467
    Consumer and other loans     15,302  

    Total loan originations

    $ 450,951   $ 382,501   $ 215,557  
     
     
    Composition of Loan Portfolio
    (unaudited)       As of

     

    March 31,       % of       December 31,       % of       March 31,       % of

    ($ in thousands)

    2014 Total Loans   2013 Total Loans   2013 Total Loans
    Originated Loan Portfolio
    Real estate mortgage loans:
    Single-family residential $   148,234 4.7 % $   144,910 5.1 % $   117,114 5.1 %
    Multifamily residential 1,779,282 56.1 % 1,574,721 55.2 % 1,090,663 47.8 %
    Commercial real estate 345,910 10.9 % 263,066 9.2 % 123,337 5.4 %
    Construction and land loans 5,578 0.2 % 4,518 0.2 % - 0.0 %
    Commercial business loans 298,155 9.4 % 214,964 7.5 % 76,236 3.3 %
    Small Business Administration loans 22,695 0.7 % 21,062 0.7 % 19,754 0.9 %
    Consumer and other loans   776 0.0 %     630 0.0 %   10,335 0.5 %
    Total Originated Loans 2,600,630 81.9 % 2,223,871 78.0 % 1,437,439 63.0 %
     
    Acquired Loan Portfolio
    Real estate mortgage loans:
    Single-family residential 160,298 5.1 % 181,600 6.4 % 234,419 10.3 %
    Multifamily residential 118,000 3.7 % 123,752 4.3 % 157,231 6.9 %
    Commercial real estate 141,801 4.5 % 157,801 5.5 % 248,757 10.9 %
    Construction and land loans 4,765 0.2 % 4,747 0.2 % 13,099 0.6 %
    Commercial business loans 33,634 1.1 % 39,959 1.4 % 53,555 2.3 %
    Small Business Administration loans 76,596 2.4 % 79,004 2.8 % 89,993 3.9 %
    Consumer and other loans   37,827 1.2 %     40,018 1.4 %   45,418 2.0 %
    Total Acquired Loans 572,921 18.1 % 626,881 22.0 % 842,472 37.0 %
               
    Total Loans Held for Investment $   3,173,551 100.0 % $   2,850,752 100.0 % $   2,279,911 100.0 %
     
     
     
    Composition of Deposits
    (unaudited) As of

     

    March 31, % of December 31, % of March 31, % of

    ($ in thousands)

    2014 Total Deposits   2013 Total Deposits   2013 Total Deposits
     
    Noninterest bearing $

     

    535,471 18.0 % $

     

    499,740 18.2 % $

     

    362,383 17.2 %
    Interest bearing 1,798,954 60.4 % 1,595,213 58.1 % 1,119,894 53.2 %
    Time deposits - under $100,000 217,033 7.3 % 226,599 8.3 % 246,680 11.7 %
    Time deposits - $100,000 and over   424,923 14.3 %   423,380 15.4 %   376,792 17.9 %
    Total deposits $   2,976,381 100.0 % $   2,744,932 100.0 % $   2,105,749 100.0 %
     
     
     
     
    Consolidated average balance sheet, interest, yield, and rates
            Three Months Ended
    (unaudited) March 31, 2014     December 31, 2013     March 31, 2013

     

    Average    

     

     

     

    Yields/

    Average  

     

     

     

     

    Yields/

    Average  

     

     

     

     

    Yields/

    ($ in thousands)

    Balance

    Interest

    Rates Balance

    Interest

    Rates Balance

    Interest

    Rates
    Assets:
    Interest-earning assets
    Due from banks $ 146,959 $ 92 0.25 % $ 212,429 $ 136 0.25 % $ 163,041 $ 106 0.26 %
    Investment securities 214,838 (120 ) -0.23 % 228,595 709 1.23 % 163,440 374 0.93 %
    Acquired loans 603,264 19,398 13.04 % 654,969 13,779 8.35 % 875,329 17,558 8.14 %
    Originated loans   2,341,586   24,500   4.24 %   2,052,693   21,927 4.24 %   1,337,099   14,186 4.30 %
    Total loans $ 2,944,850 $ 43,898   6.05 % $ 2,707,662 $ 35,707 5.23 % $ 2,212,428 $ 31,745 5.82 %
    Total interest-earning assets $ 3,306,647 $ 43,870 5.38 % $ 3,148,686 $ 36,552 4.61 % $ 2,538,909 $ 32,225 5.15 %
    Noninterest-earning assets   514,713   510,700   401,945
    Total assets $ 3,821,360 $ 3,659,386 $ 2,940,854
     
    Liabilities and stockholders’ equity:
    Interest-bearing deposits
    Interest-bearing deposits $ 1,674,498 $ 2,328 0.56 % $ 1,521,709 $ 2,064 0.54 % $ 1,066,508 $ 1,087 0.41 %
    Time deposits   647,919   1,321   0.83 %   651,513   1,350 0.82 %   609,772   1,263 0.84 %
    Total interest bearing deposits $ 2,322,417 $ 3,649 0.64 % $ 2,173,222 $ 3,414 0.62 % $ 1,676,280 $ 2,350 0.57 %
    FHLB advances   296,778   480   0.66 %   300,000   494 0.65 %   355,800   488 0.56 %
    Total interest-bearing liabilities $ 2,619,195 $ 4,129 0.64 % $ 2,473,222 $ 3,908 0.63 % $ 2,032,080 $ 2,838 0.57 %
    Noninterest-bearing deposits 503,005 497,642 360,229
    Other liabilities   21,324   19,269   16,278
    Total liabilities $ 3,143,524 $ 2,990,133 $ 2,408,587
     
    Total stockholders’ equity   677,836   669,253   532,267
     
    Total liabilities and stockholders’ equity $ 3,821,360 $ 3,659,386 $ 2,940,854
     
    Net interest income $ 39,741   $ 32,644 $ 29,387
     
    Net interest spread (1) 4.74 % 3.98 % 4.58 %
     
    Net interest margin (2) 4.87 % 4.11 % 4.69 %
     

    (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.

     
     
     
    Asset Quality Information
    (unaudited)         As of
    ($ in thousands)   March 31, 2014         December 31, 2013             March 31, 2013  
    Nonperforming assets:  
    Nonaccrual loans $ 1,407   $ 3,327   $ 5,455  
    Real estate owned 10,258     11,560        

    5,161

         
    Total nonperforming assets 11,665     14,887         10,616      
     
    Nonperforming assets to total assets 0.29 % 0.40 % 0.35 %
     
    Accruing loans 90 days or more past due $ 4,703 $ 6,485 $ 32,143
     
    Accruing troubled debt restructured loans $ 103 $ 863 $ 399
     
    Allowance for loan - Originated loans $ 12,454 $ 11,177 $ 5,410
    Allowance for loan and losses - Acquired loans 4,756     6,260         11,159      
    Allowance for loan losses 17,210 17,437 16,569
    Remaining acquisition discount on acquired loans $ 56,554 $ 69,678 $ 95,039
    Allowance for loan losses to non-accrual loans 1223.2 % 524.1 % 303.7 %
    Allowance for loan losses for acquired loans to acquired loans 0.83 % 1.00 % 1.32 %
    Allowance for loan losses for originated loans to originated loans 0.48 % 0.50 % 0.38 %
    Total allowance for loan losses to total loans 0.54 % 0.61 % 0.73 %
    Allowance for loan losses and remaining acquisition discount on acquired
    to gross acquired loans (1) 9.74 % 10.90 % 11.33 %
    Allowance for loan losses and remaining acquisition discount
    to total gross loans (1) 2.28 % 2.98 % 4.70 %
         

    (1) Remaining acquisition discount is added back to acquired loans held for investment to calculate gross loans.

     
     
    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 assessing our financial results. These non-GAAP measures include our tax adjusted return on average assets, tax adjusted return on average stockholders' equity, tax adjusted 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 ratios and should not be considered a substitute of the GAAP measures and ratios.

     

     

    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, 2014December 31, 2013     March 31, 2013  
    Average assets $ 3,821,360 $ 3,659,386 $ 2,940,854
    Tax adjusted net income:
    Net income $ 13,263 $ 7,154 $ 7,888
    Less: Reversal of valuation allowance on deferred tax assets -     2,817         -      
    Net income before reversal of valuation allowance on deferred tax assets 13,263 4,337 7,888
    Less: Tax-effect at 35% for three months ended March 31, 2013 -     -         2,761      
    Tax adjusted net income 13,263 4,337 5,127
    Return on average assets 1.41 % 0.78 % 1.09 %
    Non-GAAP tax adjusted return on average assets (1) 1.41 % 0.47 % 0.71 %
     

    (1) Return on average assets are tax adjusted for the three months ended December 31, 2013 and March 31, 2013 for the release of the valuation allowance on deferred tax assets during 2013.

     
     
     
     
    Non-GAAP tax adjusted return on average tangible equity
    (unaudited)       Three Months Ended
    ($ in thousands) March 31, 2014       December 31, 2013         March 31, 2013
    Tax adjusted average tangible equity:
    Average stockholders’ equity $ 677,836 $ 669,253 $ 532,267
    Add: Average deferred tax assets   -     2,817     101,100  
    Tax adjusted average stockholders' equity 677,836 672,070 633,367
    Less:
    Average goodwill 238,528 # 238,528 # 237,412
    Average core deposit intangibles   14,900   #   15,518   #   14,682  

    Tax adjusted average tangible equity

    424,408 418,024 381,273
    Tax adjusted net income:
    Net income $ 13,263 $ 7,154 $ 7,888
    Less: Reversal of valuation allowance on deferred tax assets   -     2,817     -  
    Net income before reversal of valuation allowance on deferred tax assets 13,263 4,337 7,888
    Less: Tax-effect at 35% for three months ended March 31, 2013   -     -     2,761  
    Tax adjusted net income 13,263 4,337 5,127
    Return on average stockholders’ equity 7.94 % 4.24 % 6.01 %
    Non-GAAP tax adjusted return on average stockholders' equity (1) 7.94 % 2.56 % 3.28 %
    Non-GAAP tax adjusted return on average tangible equity (1) 12.67 % 4.12 % 5.45 %
         

    (1) Return on average stockholders' equity and average tangible equity are tax adjusted for the three months ended December 31, 2013 and March 31, 2013 for the release of the valuation allowance on deferred tax assets during 2013.

     
     
    Non-GAAP net interest margin
    (unaudited) Three Months Ended
    ($ in thousands) March 31, 2014December 31, 2013   March 31, 2013
    Net interest income $ 39,741 $ 32,644 $ 29,387
    Less: Accretion/amortization of acquisition discount/premium (1)   (10,863 )   (4,756 )   (5,521 )
    Non-GAAP net interest income 28,878 27,888 23,866
     
    Average interest earning assets $ 3,306,647 $ 3,148,686 $ 2,538,909
    Add: Average unamortized acquisition discounts   65,093     72,877     99,722  
    Non-GAAP average interest-earning assets $ 3,371,740 $ 3,221,563 $ 2,638,631
     
    Net interest margin impact 1.40 % 0.68 % 1.03 %
     

    (1) Accretion income on acquired loans only includes interest income recognized in excess of what would be accrued under the contractual terms as as 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 per share amounts) March 31, 2014December 31, 2013   March 31, 2013
    Tangible equity:
    Total stockholders’ equity $ 683,111 $ 668,831 $ 536,316
    Less:
    Goodwill 238,528 238,528 237,412
    Core deposit intangibles   14,489     15,116     14,329  
    Tangible equity 430,094 415,187 284,575
    Shares of common stock outstanding 23,105,703 23,102,828 23,034,749
    Shares of common stock to be issued upon conversion 5,628,600 5,628,600 5,628,600
    of preferred stock      
    Total as converted shares of common stock outstanding (1) $   28,734,303   $   28,731,428   $   28,663,349  
    Book value per as converted common share $ 23.77 $ 23.28 $ 18.71
    Tangible book value per as converted common share $ 14.97 $ 14.45 $ 9.93
     

    (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.






    Opus Bank

    Mr. Jeff L. Leonard

    SVP, Dir. of Corporate Strategy/Communications

    Telephone: 949-251-8146

    Source: Opus Bank


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