Opus Bank ("Opus") (NASDAQ: “OPB”) announced today net income of
$10.9 million, or $0.28 per diluted share, for the first quarter of
2019 compared to a net loss of $6.9 million, or $(0.20) per diluted
share, for the fourth quarter of 2018 and net income of $12.9
million, or $0.34 per diluted share, for the first quarter of 2018.
Net income during the first quarter of 2019 included a $1.4 million
expense related to the settlement of a longstanding legal matter
that originated in January 2013 and a $489,000 charge related to
the exiting of a line of business included in Other Income.
Together, these items impacted earnings by $0.04 per diluted
share.
Additionally, Opus announced today that its Board of Directors
has approved the payment of a quarterly cash dividend of $0.11 per
common share payable on May 23, 2019 to common stockholders, and a
common-equivalent payment to its Series A Preferred stockholders of
record as of May 9, 2019.
First Quarter 2019
Highlights
- Loans held for investment increased
6%, or $296.3 million, compared to the prior quarter, driven by
strong growth in multifamily loans.
- Deposits increased 2%, or $124.9
million, compared to the prior quarter.
- Net interest income increased 1%
compared to the prior quarter, as higher interest income on loans
and investment securities was partially offset by higher interest
expense on deposits and borrowings.
- Net interest margin expanded eight
basis points to 3.15% compared to the prior quarter due to the
benefit of loan repricing during the first quarter of 2019 and the
repositioning of our securities portfolio in the fourth quarter of
2018. Our cost of deposits increased 13 basis points to 0.92% for
the first quarter of 2019.
- Noninterest expense increased 2%
compared to the prior quarter, excluding a $1.4 million expense
related to a legal settlement during the quarter and $10.5 million
of expenses related to a restructuring charge taken in the fourth
quarter of 2018. The increase was driven by seasonally higher
employer taxes in the first quarter of 2019.
- Nonperforming assets decreased
17% compared to the prior quarter to $23.3 million, or 0.30% of
total assets compared to 0.39% of total assets in the prior
quarter.
- Enterprise Value loans decreased
14% compared to the prior quarter to $105.0 million.
- Provision for loan losses was $2.2
million, largely driven by quarterly loan growth, as Opus
recorded net recoveries of $1.6 million in the first quarter of
2019, compared to net charge-offs of $12.0 million in the prior
quarter.
- Tangible book value per common share
increased $0.19 to $17.96, while our tangible common equity to
tangible assets decreased 53 basis points to 8.88% due to growth in
total assets during the first quarter of 2019.
Paul G. Greig, Chairman of the Board, Interim Chief Executive
Officer and President of Opus Bank, stated, "Our solid core
earnings performance during the first quarter of 2019 included
higher net interest income, expanding net interest margin, and
further improvements in credit quality. Strong quarterly loan
growth was driven by high origination volume of multifamily loans,
as well as unusually low prepayments during the first quarter.
While we were successful in increasing our real estate lending
during the quarter, our focus on disciplined underwriting has not
changed. All of Opus’ team members are to be commended for the
contributions to our first quarter performance.”
Loans
Total loans held-for-investment increased $296.3 million, or 6%,
to $5.5 billion as of March 31, 2019, from $5.2 billion as of
December 31, 2018, and increased $232.5 million, or 4%, from
$5.2 billion as of March 31, 2018. The increase in total loans
during the first quarter of 2019 was driven by new loan fundings of
$538.0 million, partially offset by loan payoffs of $196.2 million,
which included planned exits of $22.5 million.
Loan Balance Roll Forward
(unaudited)
Three Months Ended ($ in millions)
March 31, 2019
December 31, 2018
September 30,2018
June 30, 2018 March 31, 2018 Beginning loan
balance $ 5,165.2 $ 5,159.9 $ 5,072.4 $ 5,229.0 $ 5,173.2 New loan
fundings 538.0 412.3 435.7 295.6 452.3 Loan payoffs (173.7 ) (265.3
) (197.4 ) (299.5 ) (219.2 ) Planned exits (22.5 ) (59.2 ) (60.6 )
(58.5 ) (52.2 ) Other1 (45.5 ) (82.5 ) (90.2 ) (94.2 ) (125.1 )
Ending loan balance $ 5,461.5 $ 5,165.2 $ 5,159.9
$ 5,072.4 $ 5,229.0 [1] Includes normal
amortization, paydowns, charge-offs, and loan sales that were not
planned exits
New loan fundings in the first quarter of 2019 totaled $538.0
million, an increase of $125.7 million, or 30%, from the fourth
quarter of 2018 and an increase of $85.7 million, or 19%, from the
first quarter of 2018. Commercial Business loans comprised $56.9
million, or 11%, of total new loan fundings; and real estate
related loans comprised $480.3 million, or 89%, of total new loan
fundings in the first quarter of 2019. Quarterly loan payoffs were
$173.7 million, excluding planned loan exits, compared to $265.3
million in the fourth quarter of 2018 and $219.2 million in the
first quarter of 2018.
Loan commitments originated during the first quarter of 2019
totaled $550.3 million, compared to $399.8 million during the
fourth quarter of 2018 and $439.2 million during the first quarter
of 2018. Our unfunded commitments on loans totaled $418.4 million
as of March 31, 2019.
Cash and Investment Securities
Cash and investment securities totaled $1.5 billion as of
March 31, 2019, an increase of $179.3 million, or 13%,
compared to December 31, 2018, and an increase of $125.5 million,
or 9%, compared to March 31, 2018. Cash and cash equivalents
as of March 31, 2019 increased $166.9 million, or 66%, to
$421.5 million compared to December 31, 2018, and increased
$129.3 million, or 44%, compared to March 31, 2018. The
balance of investment securities was relatively unchanged from the
prior period and the first quarter of 2018, increasing by $12.4
million compared to December 31, 2018, and decreasing by $3.8
million compared to March 31, 2018.
Deposits and Borrowings
Deposits increased $124.9 million, or 2%, to $6.1 billion as of
March 31, 2019, from $6.0 billion as of December 31, 2018
and increased $33.2 million, or 1%, from $6.0 billion as of
March 31, 2018. Deposit growth in the first quarter of 2019
was driven by our Retail Banking, Municipal Banking, and Commercial
and Specialty Banking divisions. Noninterest bearing demand
deposits and money market and savings increased 1% and 5%,
respectively, in the first quarter of 2019, while interest checking
account balances decreased 4% from the prior quarter. Time deposits
increased $121.5 million compared to December 31, 2018. The average
balance of deposits in the first quarter of 2019 decreased $84.3
million compared to the prior quarter, as deposit inflows occurred
later in the period.
Our loan to deposit ratio was 90% as of March 31, 2019,
compared to 87% as of December 31, 2018 and 87% as of
March 31, 2018.
Federal Home Loan Bank (FHLB) advances increased to $330.0
million as of March 31, 2019, compared to a zero balance as of
December 31, 2018 and $10.0 million as of March 31, 2018.
The average balance of FHLB advances during the first quarter of
2019 was $122.0 million, compared to $33,000 in the fourth quarter
of 2018 and $16.4 million in the first quarter of 2018.
Net Interest Income
Net interest income increased 1% to $50.8 million for the first
quarter of 2019, compared to $50.4 million for the fourth quarter
of 2018, and decreased 2% from $51.7 million for the first quarter
of 2018.
Interest income from loans increased 2% to $57.0 million for the
first quarter of 2019, driven by a 2% increase in the average
balance of loans, the benefit of repricing of loans, and interest
recaptured on nonaccrual loans, partially offset by fewer days in
the first quarter.
Interest income from cash and investment securities increased
14% from the fourth quarter of 2018 to $9.9 million for the first
quarter of 2019, driven primarily by a higher yield on investment
securities as a result of the securities portfolio repositioning we
executed near the end of the fourth quarter of 2018. The average
balance of cash and cash equivalents decreased $84.9 million, or
27%, compared to the prior quarter, as excess cash was redeployed
into higher yielding loans and investment securities.
Interest expense increased 15% to $16.1 million for the first
quarter of 2019, compared to $14.0 million for the fourth quarter
of 2018, and increased 79% compared to $9.0 million for the first
quarter of 2018. The increase in interest expense during the first
quarter of 2019 was driven by a higher rate on interest-bearing
deposits, a change in the mix of deposits, and the addition of FHLB
borrowings during the quarter.
Net Interest Margin
Net interest margin on a taxable equivalent basis increased
eight basis points to 3.15% in the first quarter of 2019 from 3.07%
in the fourth quarter of 2018, and decreased five basis points from
3.20% in the first quarter of 2018. The linked-quarter change was
primarily driven by an 11 basis point increase in the average yield
on loans due to the benefit of loan repricing, fewer days in the
first quarter of 2019, and interest recaptured on nonaccrual loans,
as well as a 61 basis point increase in the average yield on
securities due to the repositioning of our securities portfolio in
the fourth quarter of 2018 and lower premium amortization compared
to the prior quarter. These were partially offset by a 15 basis
point increase in our cost of funds, driven primarily by the
increase in FHLB advances and lower balances of interest-bearing
demand and money market deposits.
Noninterest Income
Noninterest income increased 228% to $11.1 million in the first
quarter of 2019 from $3.4 million in the fourth quarter of 2018,
and decreased 17% from $13.3 million in the first quarter of 2018.
Noninterest income during the first quarter of 2019 included $6.7
million of trust administrative fees, $1.4 million from our Escrow
& Exchange divisions, and $1.4 million of treasury management
and deposit account fees. Noninterest income during the fourth
quarter of 2018 included a $9.9 million loss on the sale of
investment securities related to the repositioning of our
securities portfolio, as well as approximately $1.5 million of
revenues generated by our Merchant Banking division that were not
repeated in the first quarter of 2019. Included in Other Income
during the first quarter of 2019 was a $49,000 net increase in
equity warrant valuations, compared to a net decrease of $354,000
in the prior quarter, and an FHLB dividend of $304,000, compared to
a dividend of $584,000 in the prior quarter. Additionally, Other
Income included an expense of $489,000 primarily related to the
exiting of Opus Financial Partners, the company's broker-dealer, as
a line of business, which triggered an impairment charge on a
sublet property. Opus Bank is discontinuing Opus Financial Partners
as this line of business did not achieve adequate performance
results and was not considered an effective use of capital.
Noninterest Expense
Noninterest expense decreased 15% to $45.4 million in the first
quarter of 2019, compared to $53.7 million in the fourth quarter of
2018, and increased 3% from $44.1 million in the first quarter of
2018. Noninterest expense during the first quarter of 2019 included
a $1.4 million expense related to a legal settlement during the
quarter, while noninterest expense during the fourth quarter of
2018 included $10.5 million of expenses related to the
restructuring charge taken in the fourth quarter. Excluding these
items, noninterest expense increased 2% in the first quarter of
2019, primarily due to seasonally higher employer taxes during the
first quarter.
Our efficiency ratio for the first quarter of 2019 was 70.6%,
compared to 81.5% for the fourth quarter of 2018 and 65.5% for the
first quarter of 2018.
Income Tax Expense
We recorded an income tax expense of $3.4 million in the first
quarter of 2019, compared to an income tax benefit of $654,000 in
the fourth quarter of 2018 as a result of the pre-tax loss we
incurred for the quarter, and an income tax expense of $4.1 million
in the first quarter of 2018. Our effective tax rate for the first
quarter of 2019 was 24.0%.
Asset Quality
Total nonperforming assets decreased 17% to $23.3 million, or
0.30% of total assets, as of March 31, 2019, compared to $28.0
million, or 0.39% of total assets, as of December 31, 2018,
and $63.8 million, or 0.87% of total assets, as of March 31,
2018. Total Enterprise Value loans were reduced by $17.0 million,
or 14%, during the first quarter of 2019 and totaled $105.0 million
as of March 31, 2019.
Total criticized loans increased $2.2 million, or 1%, to $152.5
million as of March 31, 2019, compared to $150.3 million as of
December 31, 2018, and decreased $94.9 million, or 38%, from
$247.4 million as of March 31, 2018. Special mention loans
decreased $13.2 million in the first quarter of 2019, and
classified loans increased $15.4 million. The decrease in special
mention loans was driven by $11.3 million of loans downgraded to
classified loans and payoffs, upgrades, and normal amortization of
$1.9 million. The increase in classified loans was driven by
downgrades of $26.2 million, partially offset by payoffs,
charge-offs, upgrades, and normal amortization of $10.8
million.
Our allowance for loan losses was $58.5 million, or 1.07% of our
total loan portfolio, as of March 31, 2019, compared to $54.7
million, or 1.06%, as of December 31, 2018 and $67.8 million,
or 1.30%, as of March 31, 2018. The increase in the allowance
for loan losses during the first quarter of 2019 compared to the
prior quarter was driven by a provision for loan losses of $2.2
million and recoveries of $2.0 million which were partially offset
by charge-offs of $383,000. The ratio of the allowance for loan
losses to total nonaccrual loans was 251% as of March 31,
2019, compared to 195% as of December 31, 2018 and 106% as of
March 31, 2018.
We recorded a provision expense for loan losses of $2.2 million
in the first quarter of 2019, compared to a provision expense of
$7.7 million in the fourth quarter of 2018 and a provision expense
of $3.9 million in the first quarter of 2018. The provision expense
during the first quarter of 2019 was primarily driven by net loan
growth and risk rating migration, partially offset by net
recoveries and planned loan exits.
Capital
As of March 31, 2019, Opus exceeded all regulatory capital
requirements under Basel III and was considered to be a
"well-capitalized" financial institution, as summarized in the
table below:
Capital Ratios As of
Well-CapitalizedRegulatoryRequirements
(unaudited)
March 31, 2019¹
December 31, 2018
March 31, 2018 Tier 1 leverage ratio
9.86 % 9.69 % 9.53 % 5.00 % Common Equity Tier 1 ratio 11.10 11.40
10.92 6.50 Tier 1 risk-based capital ratio 11.59 11.92 11.42 8.00
Total risk-based capital ratio 14.85 15.29 14.91 10.00 Tangible
equity to tangible assets ratio 9.27 9.84 9.35 NA Tangible common
equity to tangible assets ratio 8.88 9.41 8.93 NA [1]
Regulatory capital ratios are preliminary until filing of our March
31, 2019 FDIC call report.
Stockholders’ equity totaled over $1.0 billion as of
March 31, 2019 and increased $7.3 million from
December 31, 2018 and $25.7 million from March 31, 2018.
Our tangible book value per common share increased $0.19 to $17.96
as of March 31, 2019 compared to $17.77 as of
December 31, 2018, and increased $0.79 compared to $17.17 as
of March 31, 2018.
Conference Call and Webcast Details
Date: Monday, April 29, 2019Time: 8:00 a.m. PT (11:00 a.m.
ET)
Phone Number: (855) 265-3237Conference ID: 5876447Webcast URL:
http://investor.opusbank.com/event
Analysts, investors, and the general public may listen to our
discussion of Opus' first quarter performance and participate in
the question/answer session by using the phone number listed above
or through a live webcast of the conference available through a
link on the investor relations page of Opus' website at:
http://investor.opusbank.com/event.
The webcast will include a slide presentation, enabling conference
participants to experience the discussion with greater impact. It
is recommended that participants dial into the conference call or
log into the webcast approximately 10 minutes prior to the
call.
Replay Information: For those who are not able to listen to the
call, an archived recording will be available beginning
approximately two hours following the completion of the call. To
listen to the call replay, dial (855) 859-2056, or for
international callers dial (404) 537-3406. The access code for
either replay number is 5876447. The call replay will be available
through May 30, 2019.
About Opus Bank
Opus Bank is an FDIC insured California-chartered commercial
bank with $7.7 billion of total assets, $5.5 billion of total
loans, and $6.1 billion in total deposits as of March 31,
2019. Opus Bank provides commercial and retail banking products and
solutions to its clients in western markets from its headquarters
in Irvine, California and through 47 banking offices, including 28
in California, 16 in the Seattle/Puget Sound region in Washington,
two in the Phoenix metropolitan area of Arizona and one in
Portland, Oregon. Opus Bank 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. Additionally, Opus Bank’s wholly-owned
subsidiary, PENSCO Trust Company, has approximately $14 billion of
custodial IRA assets and approximately 47,000 client accounts,
which are comprised of self-directed investors, financial
institutions, capital raisers and financial advisors. Opus Bank is
an Equal Housing Lender. For additional information about Opus
Bank, please visit our website: www.opusbank.com.
Forward Looking Statements
This release and the aforementioned conference call and webcast
includes forward-looking statements related to Opus’ plans, beliefs
and goals. Forward-looking statements are neither historical facts
nor assurances of future performance. Opus generally identifies
forward-looking statements by terminology such as “outlook,”
“believes,” “expects,” “potential,” “continues,” “may,” “will,”
“could,” “should,” “seeks,” “approximately,” “predicts,” “intends,”
“plans,” “estimates,” “anticipates” or the negative version of
those words or other comparable words. Any forward-looking
statements contained in this release and the aforementioned
conference call and webcast are based on the historical performance
of Opus and its subsidiaries or on its current plans, beliefs,
estimates, expectations and goals. Such forward-looking statements
are subject to various risks and uncertainties and assumptions
relating to our operations, financial results, financial condition,
business prospects, growth strategy and liquidity that could cause
actual results to differ materially from those indicated by the
forward-looking statements, including, without limitation: market
and economic conditions, changes in interest rates, our liquidity
position, the management of our growth, the risks associated with
our loan portfolio, local economic conditions affecting retail and
commercial real estate, our geographic concentration in the western
region of the United States, competition within the industry,
dependence on key personnel, government legislation and regulation,
the risks associated with any future acquisitions, the effect of
natural disasters, and risks related to our technology and
information systems. 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 filed with the Federal Deposit
Insurance Corporation on February 28, 2019. If one or more of these
or other risks or uncertainties materialize, or if Opus’ underlying
assumptions prove to be incorrect, Opus’ actual results may vary
materially from those indicated in these statements. These filings
are available on the Investor Relations page of Opus' website at:
investor.opusbank.com.
Opus undertakes no obligation to revise or publicly release any
revision to these forward-looking statements, whether as a result
of new information, future developments or otherwise.
Consolidated Statements of Income (unaudited)
For the three months ended ($ in thousands,
except per share amounts)
March 31, 2019
December 31, 2018
March 31, 2018
Interest income: Loans $ 57,007 $ 55,701 $ 54,637 Investment
securities 8,577 6,931 5,094 Due from banks 1,324 1,758
951 Total interest income 66,908 64,390
60,682 Interest expense: Deposits 13,425 12,038 7,018
Federal Home Loan Bank advances 756 — 48 Subordinated debt 1,923
1,923 1,923 Total interest expense 16,104
13,961 8,989 Net interest income 50,804 50,429
51,693 Provision for loan losses 2,197 7,659 3,914
Net interest income after provision for loan losses 48,607
42,770 47,779 Noninterest income: Fees and
service charges on deposit accounts 1,440 1,615 1,722 Escrow and
exchange fees 1,353 1,422 1,360 Trust administrative fees 6,685
6,800 6,978 Gain (loss) on sale of loans (111 ) 147 (69 ) Gain
(loss) on sale of assets — (137 ) 1 Gain from OREO and other
repossessed assets — — 118 Gain (loss) on sale of investment
securities 113 (9,892 ) 182 Bank-owned life insurance, net 980 958
1,053 Other income 640 2,469 1,964 Total
noninterest income 11,100 3,382 13,309
Noninterest expense: Compensation and benefits 26,875 33,042 26,808
Professional services 2,216 5,045 1,716 Occupancy expense 3,830
4,023 4,006 Depreciation and amortization 1,833 1,700 1,599 Deposit
insurance and regulatory assessments 773 914 1,131 Insurance
expense 344 317 338 Data processing 565 815 440 Software licenses
and maintenance 1,301 1,293 1,149 Office services 1,639 1,821 1,880
Amortization of other intangible assets 1,415 1,437 1,479
Advertising and marketing 723 824 957 Other expenses 3,896
2,436 2,574 Total noninterest expense 45,410
53,667 44,077 Income before income tax (benefit)
expense 14,297 (7,515 ) 17,011 Income tax (benefit) expense 3,436
(654 ) 4,107 Net income (loss) $ 10,861 $
(6,861 ) $ 12,904 Basic earnings per common share $ 0.29 $
(0.20 ) $ 0.34 Diluted earnings per common share 0.28 (0.20 ) 0.34
Weighted average shares - basic 36,187,431 36,059,713 35,967,779
Weighted average shares - diluted 38,133,705 36,059,713 38,316,243
Consolidated Balance Sheets
(unaudited)
As of ($ in thousands, except
share amounts)
March 31, 2019 December 31,
2018 March 31, 2018 Assets Cash
and due from banks $ 42,862 $ 39,860 $ 43,462 Due from banks –
interest-bearing 378,671 214,776 248,763 Investment securities
available-for-sale, at fair value 1,093,915 1,081,546 1,097,741
Loans held-for-investment 5,461,500 5,165,210 5,228,994 Less
allowance for loan losses (58,483 ) (54,664 ) (67,842 ) Loans
held-for-investment, net 5,403,017 5,110,546 5,161,152 Premises and
equipment, net 25,771 23,863 26,649 Goodwill 331,832 331,832
331,832 Other intangible assets, net 37,510 38,926 43,321 Deferred
tax assets, net 15,924 24,171 28,740 Cash surrender value of bank
owned life insurance, net 155,279 154,271 150,819 Accrued interest
receivable 24,292 23,260 19,978 Federal Home Loan Bank stock 17,250
17,250 17,250 Other assets 161,582 120,602 128,054
Total assets $ 7,687,905 $ 7,180,903 $
7,297,761
Liabilities and Stockholders’ Equity
Deposits: Noninterest-bearing demand $ 781,429 $ 771,141 $ 855,810
Interest-bearing demand 2,397,361 2,507,605 2,519,955 Money market
and savings 2,099,058 1,995,684 2,267,648 Time deposits 798,918
677,458 400,203 Total deposits 6,076,766
5,951,888 6,043,616 Federal Home Loan Bank advances 330,000 —
10,000 Subordinated debt, net 133,076 133,010 132,811 Accrued
interest payable 2,702 4,032 2,118 Other liabilities 97,255
51,160 86,838 Total liabilities 6,639,799
6,140,090 6,275,383 Stockholders’ equity: Preferred
stock: Authorized 200,000,000 shares; issued 31,111 and 31,111 and
31,111 shares, respectively 29,110 29,110 29,110 Common stock, no
par value per share: Authorized 200,000,000 shares; issued
37,227,637 and 36,637,870 and 36,460,468 shares, respectively
700,220 700,220 700,220 Additional paid-in capital 80,528 69,954
63,922 Retained earnings 267,021 260,304 254,701 Treasury stock, at
cost; 1,048,657 and 577,495 and 458,887 shares, respectively
(25,403 ) (14,983 ) (11,603 ) Accumulated other comprehensive loss
(3,370 ) (3,792 ) (13,972 ) Total stockholders’ equity 1,048,106
1,040,813 1,022,378 Total liabilities and
stockholders’ equity $ 7,687,905 $ 7,180,903 $
7,297,761
Selected Financial Data
As of or for the three months
ended (unaudited)
March 31, 2019 December
31, 2018 March 31, 2018 Return on average
assets 0.60 % (0.38 )% 0.72 % Return on average stockholders'
equity 4.19 (2.61 ) 5.11 Return on average tangible equity (1) 6.47
(4.06 ) 8.07 Efficiency ratio (2) 70.61 81.49 65.51 Noninterest
expense to average assets 2.51 2.93 2.45 Yield on interest-earning
assets (3) 4.13 3.92 3.75 Cost of deposits (4) 0.92 0.79 0.47 Cost
of funds (5) 1.05 0.90 0.59 Net interest margin (3) 3.15 3.07 3.20
Loan to deposits 89.88 86.78 86.52 (1) See computation in
"Non-GAAP Financial Measures" section. (2) The efficiency ratio is
calculated by dividing noninterest expense less amortization of
other intangible assets by the sum of tax-equivalent net interest
income before provision for loan losses and noninterest income less
gain (loss) on sale of loans, assets, OREO and other repossessed
assets, and investment securities. (3) Net interest margin and
yield on interest-earning assets are presented on a tax equivalent
basis using the federal effective tax rate. (4) Calculated as
interest expense on deposits divided by total average deposits. (5)
Calculated as total interest expense divided by average total
deposits, FHLB advances and subordinated debt.
Loan Fundings (unaudited)
For
the three months ended ($ in thousands)
March 31,
2019 December 31, 2018 March 31,
2018 Loans funded: Real estate mortgage loans: Multifamily
residential $ 426,916 $ 252,315 $ 267,301 Commercial real estate
47,127 66,931 29,307 Construction and land loans 6,212 5,622 4,885
Commercial business loans 56,879 87,390 146,184 Small Business
Administration loans 836 43 4,578 Total loan fundings
$ 537,970 $ 412,301 $ 452,255
Composition of Deposits As of (unaudited)
March 31, 2019 December 31, 2018
March 31, 2018 ($ in thousands)
Amount
% ofTotaldeposits
Amount
% ofTotaldeposits
Amount
% ofTotaldeposits
Noninterest bearing $ 781,429 12.9 % $ 771,141 13.0 % $
855,810 14.2 % Interest bearing demand 2,397,361 39.5 2,507,605
42.1 2,519,955 41.7 Money market and savings 2,099,058 34.5
1,995,684 33.5 2,267,648 37.5 Time deposits 798,918 13.1
677,458 11.4 400,203 6.6 Total
deposits $ 6,076,766 100.0 % $ 5,951,888 100.0 % $
6,043,616 100.0 %
Consolidated average
balance sheet, interest, yield and rates
For the three months endedMarch
31,
For the three months
endedDecember 31,
For the three months endedMarch
31,
(unaudited)
2019 2018 2018 ($ in thousands)
AverageBalance
Interest (1)
Yields/Rates
AverageBalance
Interest (1)
Yields/Rates
AverageBalance
Interest (1)
Yields/Rates
Assets: Interest-earning assets: Due from banks $ 234,590 $ 1,324
2.29 % $ 319,456 $ 1,758 2.18 % $ 242,663 $ 951 1.59 % Investment
securities 1,101,044 8,577 3.16 1,080,262 6,931 2.55 1,103,477
5,094 1.87 Loans 5,266,475 57,411 4.42
5,159,541 56,102 4.31 5,236,608 54,893
4.25 Total interest-earning assets $ 6,602,109 $
67,312 4.13 $ 6,559,259 $ 64,791 3.92 $ 6,582,748 $ 60,938 3.75
Noninterest-earning assets 726,313 699,059 726,341
Total assets $ 7,328,422 $ 7,258,318 $
7,309,089 Liabilities and stockholders’ equity:
Interest-bearing deposits Interest-bearing demand $ 2,465,245 $
2,811 0.46 % $ 2,509,049 $ 2,520 0.40 % $ 2,531,947 $ 1,277 0.20 %
Money market and savings 1,996,557 6,957 1.41 2,030,476 6,232 1.22
2,289,530 4,699 0.83 Time deposits 712,240 3,657 2.08
668,984 3,286 1.95 381,647 1,043
1.11 Total interest bearing deposits $ 5,174,042 $
13,425 1.05 $ 5,208,509 $ 12,038 0.92 $ 5,203,124 $ 7,019 0.55
Subordinated debt 133,042 1,923 5.86 132,976 1,923 5.74 132,777
1,923 5.87 FHLB advances 122,000 756 2.51 33
— 2.62 16,444 48 1.18
Total interest-bearing liabilities
$ 5,429,084 $ 16,104 1.20 $ 5,341,517 $ 13,961 1.04 $ 5,352,345 $
8,990 0.68 Noninterest-bearing deposits 766,716 816,516 832,888
Other liabilities 81,655 57,731 99,598 Total
liabilities $ 6,277,455 $ 6,215,764 $ 6,284,831 Total
stockholders’ equity $ 1,050,967 $ 1,042,554 $
1,024,258
Total liabilities and stockholders’
equity
$ 7,328,422 $ 7,258,318 $ 7,309,089 Net
interest spread (2) 2.93 % 2.88 % 3.07 % Net interest income and
margin, tax equivalent (3, 4) $ 51,208 3.15 % $ 50,830
3.07 % $ 51,948 3.20 % Reconciliation of tax
equivalent net interest income to reported net interest income Tax
equivalent adjustment (404 ) (401 ) (255 ) Net interest income, as
reported $ 50,804 $ 50,429 $ 51,693 (1)
Interest income is presented on a taxable equivalent basis using
the federal effective tax rate. (2) Net interest spread represents
the average yield on interest-earning assets less the average rate
on interest-bearing liabilities. (3) Net interest margin is
computed by dividing net interest income by total average
interest-earning assets. (4) Net interest margin, tax equivalent
has been adjusted to a taxable equivalent basis using the federal
effective tax rate.
Allowance for Loan Losses
(unaudited)
For the three months ended ($ in
thousands)
March 31, 2019 December 31,
2018 March 31, 2018 Allowance
for loan losses-balance at beginning of period $ 54,664 $ 59,029 $
75,930 Provision for loan losses 2,197 7,659 3,914 Charge-offs (383
) (14,565 ) (14,155 ) Recoveries 2,005 2,541 2,153
Total net recoveries (charge-offs) 1,622 (12,024 )
(12,002 ) Allowance for loan losses-balance at end of period $
58,483 $ 54,664 $ 67,842
Asset Quality Information
(unaudited)
As of ($ in thousands)
March 31,
2019 December 31, 2018 March 31,
2018 Nonperforming assets Nonaccrual loans $ 23,330 $ 28,016
$ 63,813 OREO and other repossessed assets — — —
Total nonperforming assets 23,330 28,016 63,813 Loans
30 - 89 days past due 4,652 2,634 13,304 Accruing loans 90 days or
more past due — 485 299 Accruing troubled debt restructured loans —
— 139 Non performing loans to total loans 0.43 % 0.54 % 1.22
% Non performing assets to total assets 0.30 0.39 0.87 Loans 30 -
89 days past due to total loans 0.09 0.05 0.25 Allowance for loan
losses to total loans 1.07 1.06 1.30 Allowance for loan losses to
non-accrual loans 250.68 195.12 106.31 Net charge-offs to average
loans (annualized) (0.12 ) 0.92 0.93
Risk Rating
by Loan Product (Unaudited) ($ in thousands)
Pass
SpecialMention
Classified Total Loans
Nonaccrualloans
Totalallowance
As of March 31, 2019 Real estate mortgage loans: Single-family
residential $ 59,696 $ 74 $ 485 $ 60,255 $ 254 $ 144 Multifamily
residential 3,251,009 117 3,899 3,255,025 — 11,603 Commercial real
estate 1,020,851 8,273 46,359 1,075,483 2,449 10,581 Construction
and land loans 42,760 14,463 — 57,223 — 599 Commercial business
loans 904,471 4,896 60,549 969,916 12,420 35,158 Small Business
Administration loans 26,552 159 12,542 39,253 7,672 390 Consumer
and other loans 3,639 57 649 4,345 535
8 Total loans $ 5,308,978 $ 28,039 $ 124,483
$ 5,461,500 $ 23,330 $ 58,483 As of
December 31, 2018 Real estate mortgage loans: Single-family
residential $ 61,471 $ 76 $ 366 $ 61,913 $ — $ 178 Multifamily
residential 2,929,173 120 2,104 2,931,397 — 10,236 Commercial real
estate 1,007,274 9,904 47,185 1,064,363 2,462 10,663 Construction
and land loans 57,100 13,457 — 70,557 — 698 Commercial business
loans 927,437 17,455 47,851 992,743 18,039 32,545 Small Business
Administration loans 28,727 161 10,923 39,811 6,973 336 Consumer
and other loans 3,696 58 672 4,426 542
8 Total loans $ 5,014,878 $ 41,231 $ 109,101
$ 5,165,210 $ 28,016 $ 54,664 As of
March 31, 2018 Real estate mortgage loans: Single-family
residential $ 77,789 $ 79 $ 697 $ 78,565 $ — $ 224 Multifamily
residential 2,709,851 1,942 7,131 2,718,924 1,209 10,286 Commercial
real estate 1,016,147 41,447 13,904 1,071,498 2,512 8,859
Construction and land loans 70,767 9,711 — 80,478 — 1,083
Commercial business loans 1,064,187 44,987 123,212 1,232,386 59,496
47,032 Small Business Administration loans 38,468 1,562 1,966
41,996 — 347 Consumer and other loans 4,351 61 735
5,147 596 11 Total loans $ 4,981,560 $
99,789 $ 147,645 $ 5,228,994 $ 63,813 $
67,842
Risk Rating by Lending Division
(Unaudited) ($ in thousands)
Pass
SpecialMention
Classified Total Loans
Nonaccrualloans
As of March 31, 2019 Income Property Banking $ 3,743,221 $ 117 $
13,555 $ 3,756,893 $ 2,449 Commercial Banking 390,985 4,366 49,297
444,648 16,401 Structured Finance 315,583 14,464 — 330,047 —
Healthcare Banking 150,537 8,961 44,851 204,349 — Corporate Finance
34,926 — 15,279 50,205 3,691 Institutional Syndication 313,332 — —
313,332 — Public Finance 223,584 — — 223,584 — Other divisions (2)
136,810 131 1,501 138,442 789 Total
loans $ 5,308,978 $ 28,039 $ 124,483 $
5,461,500 $ 23,330 As of December 31, 2018 Income
Property Banking $ 3,460,915 $ 1,752 $ 11,874 $ 3,474,541 $ 2,462
Commercial Banking 381,901 6,837 39,782 428,520 16,034 Structured
Finance 295,715 13,457 — 309,172 — Healthcare Banking 167,964 9,352
44,370 221,686 — Corporate Finance 36,260 9,699 6,088 52,047 3,671
Institutional Syndication 319,877 — — 319,877 — Public Finance
221,995 — — 221,995 — Other divisions (2) 130,251 134
6,987 137,372 5,849 Total loans $ 5,014,878 $
41,231 $ 109,101 $ 5,165,210 $ 28,016
As of March 31, 2018 Income Property Banking $ 3,230,456 $ 6,938 $
15,358 $ 3,252,752 $ 3,721 Commercial Banking 401,996 27,478 52,107
481,581 18,882 Structured Finance 304,420 15,487 — 319,907 —
Healthcare Banking 231,086 33,489 34,744 299,319 — Corporate
Finance 132,250 14,916 22,443 169,609 21,675 Institutional
Syndication 339,451 — (145 ) (1 ) 339,306 — Public Finance 178,539
— — 178,539 — Technology Banking 19,232 — 9,944 29,176 7,649 Other
divisions (2) 144,130 1,481 13,194 158,805
11,886 Total loans $ 4,981,560 $ 99,789 $
147,645 $ 5,228,994 $ 63,813 (1) Represents
unamortized net deferred loan origination fees on syndicated lines
of credit that have no outstanding principal balances at period
end. (2) Other divisions is comprised of single family residential
loans, consumer and other loans, and specialty banking divisions
including Business Banking and Media and Entertainment Banking.
Non-GAAP Financial Measures
Our accounting and reporting policies conform to generally
accepted accounting principles in the United States ("GAAP"). We
believe that the presentation of certain non-GAAP financial
measures assists investors in evaluating our financial results.
These non-GAAP measures include our return on average tangible
equity, tangible book value per common share, and tangible common
equity ratio. 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 ($ in thousands)
March 31, 2019 December 31, 2018
March 31, 2018 Average tangible equity:
Average stockholders' equity $ 1,050,967 $ 1,042,554 $ 1,024,258
Less: Average goodwill 331,832 331,832 331,832 Average other
intangible assets 38,234 39,663 44,083 Average
tangible equity $ 680,901 $ 671,059 $ 648,343 Net income (loss) $
10,861 $ (6,861 ) $ 12,904 Return on average stockholders' equity
4.19 % (2.61 )% 5.11 % Non-GAAP return on average tangible equity
6.47 % (4.06 )% 8.07 %
Non-GAAP tangible book
value per common share (unaudited)
As of
($ In thousands, except share amounts)
March 31, 2019
December 31, 2018 March 31,
2018 Tangible equity: Total stockholders' equity $ 1,048,106
$ 1,040,813 $ 1,022,378 Less: Preferred stock 29,110 29,110
29,110 Common equity 1,018,996 1,011,703 993,268 Less:
Goodwill 331,832 331,832 331,832 Other intangible assets, net
37,510 38,926 43,321 Tangible common equity 649,654
640,945 618,115 Shares of common stock outstanding 36,178,980
36,060,375 36,001,581 Book value per common share $ 28.17 $
28.06 $ 27.59 Tangible book value per common share 17.96 17.77
17.17
Non-GAAP tangible common equity ratio
(unaudited)
As of ($ In thousands)
March
31, 2019 December 31, 2018
March 31, 2018 Total assets $ 7,687,905 $ 7,180,903 $
7,297,761 Less: Goodwill 331,832 331,832 331,832 Other intangible
assets, net 37,510 38,926 43,321 Tangible
assets 7,318,563 6,810,145 6,922,608 Total stockholders'
equity 1,048,106 1,040,813 1,022,378 Less: Goodwill 331,832 331,832
331,832 Other intangible assets, net 37,510 38,926
43,321 Tangible equity 678,764 670,055 647,225 Less:
preferred stock 29,110 29,110 29,110 Tangible
common equity 649,654 640,945 618,115 Total stockholders'
equity to total assets 13.63 % 14.49 % 14.01 % Tangible equity to
tangible assets ratio 9.27 % 9.84 % 9.35 % Total common
equity to total assets 13.25 % 14.09 % 13.61 % Tangible common
equity to tangible assets ratio 8.88 % 9.41 % 8.93 %
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190429005121/en/
Kevin L. ThompsonEVP, Chief Financial Officer949-251-8196
Brett G. VillaumeSVP, Director of Investor
Relations949-224-8866
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