IRVINE, Calif.--(BUSINESS WIRE)--Opus Bank ("Opus") (NASDAQ:OPB) announced today net income of $16.7 million, or $0.50 per diluted share, for the fourth quarter of 2015 and $59.9 million, or $1.79 per diluted share, for the year ended December 31, 2015 as compared to $14.7 million, or $0.44 per diluted share, for the third quarter of 2015 and $43.7 million, or $1.38 per diluted share, for the year ended December 31, 2014. Net income in the fourth quarter included approximately $1.2 million of acquisition and other strategic initiative related non-core expenses, including costs associated with the successful execution of the secondary stock offering by selling shareholders completed on November 23, 2015, and $3.7 million of provision for loan loss related to our record loan fundings and growth during the quarter. Additionally, Opus announced today that its Board of Directors approved increasing its quarterly cash dividend by 25% to $0.15 per common share payable on February 18, 2016 to common and preferred shareholders of record as of February 4, 2016.
Quarter and Year End 2015 Highlights
- New loan fundings were a record $763.1 million in the fourth quarter of 2015, an increase of 20% from $638.3 million in the third quarter of 2015 and an increase of 33% from $572.7 million in the fourth quarter of 2014. For the full year 2015, new loan fundings totaled a record $2.4 billion as compared to $1.8 billion during 2014 and exceeded our forecasted new loan fundings by approximately $200 million, or over 9%. Record loan commitments of $819.9 million were originated during the fourth quarter of 2015 compared to $807.0 million in the third quarter of 2015 and $613.1 million in the fourth quarter of 2014. Loan commitments originated during 2015 totaled $2.8 billion compared to $2.1 billion in 2014, representing additional opportunities for future new loan fundings.
- Commercial and Specialty Banking divisions represented 54% of new loan fundings during the fourth quarter and 52% for the full year 2015, and represented 58% of total new loan commitments during the fourth quarter of 2015 and full year 2015, continuing the strategic shift in the mix of loans that contributed to 6 basis points expansion in the yield on our originated loan portfolio in 2015 compared to the prior year.
- Our originated loan portfolio increased by a record $548.4 million, or 12%, during the fourth quarter of 2015 and $1.6 billion, or 44%, during the full year 2015. At December 31, 2015, our originated loan portfolio totaled $5.2 billion and comprised 95% of our total loan portfolio. Quarterly organic growth in total loans held-for-investment, which includes our acquired loan portfolio, was the highest in Opus' history at $494.2 million, or 10%, during the fourth quarter of 2015. Total loans held-for-investment increased by $1.4 billion, or 35%, from December 31, 2014 to a record $5.5 billion as of December 31, 2015.
- Total assets increased to a record $6.6 billion at December 31, 2015 from $6.2 billion at September 30, 2015 and $5.1 billion at December 31, 2014 due to continued strong loan and deposit growth.
- The loan origination pipeline remains robust entering the first quarter of 2016 and continues to reflect the growth and maturation of our Commercial and Specialty Banking divisions, which comprised 57% of the pipeline of total loan commitments on January 1, 2016, compared to 59% on October 1, 2015.
- Total deposits grew $359.3 million, or 7%, during the fourth quarter to a record $5.3 billion at December 31, 2015, and increased by $1.5 billion, or 40%, from December 31, 2014. Noninterest bearing plus interest bearing demand deposits ("total demand deposits") increased by $323.0 million, or 18%, during the fourth quarter of 2015 to $2.1 billion, and increased by $1.3 billion, or 150%, during the year ended December 31, 2015. Total demand deposits comprised 40% of total deposits as of December 31, 2015, up from 37% as of September 30, 2015 and 22% as of December 31, 2014. As of December 31, 2015, deposit balances associated with our Escrow and Exchange divisions totaled $689.9 million, an increase of $135.1 million from September 30, 2015. Deposits related to our Commercial and Specialty Banking divisions, including Escrow and Exchange, increased by $301.4 million during the fourth quarter and represented 41% of our total deposits at December 31, 2015, compared to 38% at September 30, 2015 and 19% at December 31, 2014. Business deposits increased during the fourth quarter and represented 52% of our total deposits at December 31, 2015, compared to 50% at September 30, 2015 and 37% at December 31, 2014.
- Total revenues increased 6.8% to $62.7 million for the fourth quarter of 2015 compared to $58.7 million for the third quarter of 2015 and increased 38% compared to $45.4 million for the fourth quarter of 2014. Total revenues increased 36% to $233.0 million for the year ended December 31, 2015 compared to $170.8 million for the year ended December 31, 2014.
- Total net interest income increased 10% to $56.7 million for the fourth quarter of 2015 compared to $51.4 million for the third quarter of 2015. Net interest income increased 34% to $208.3 million for the year ended December 31, 2015 from $157.7 million for the year ended December 31, 2014, mainly due to a 51% increase in interest income from originated loans during 2015. During the fourth quarter of 2015 we continued to opportunistically manage the acquired loan portfolio and recognized $5.5 million of accretion income from loans that closed through prepayment, foreclosure and sale, compared to $3.0 million during the third quarter of 2015. Interest income from our originated loan portfolio comprised 80% of loan interest income for the year ended December 31, 2015 as compared to 68% for the year ended December 31, 2014.
- Net interest margin increased 6 basis points to 3.86% for the fourth quarter of 2015 from 3.80% for the third quarter of 2015 and increased one basis point from 3.85% for the fourth quarter of 2014. The increase from the prior quarter was mainly due to higher accretion income from the acquired loan portfolio and a lower cost of deposits, partially offset by lower benefit from prepayments in the originated loan portfolio. The cost of deposits decreased one basis point to 0.47% during the fourth quarter of 2015 and decreased 10 basis points compared to the fourth quarter of 2014. For the year ended December 31, 2015, the cost of deposits decreased 6 basis points to 0.49% compared to 0.55% for the year ended December 31, 2014. Contractual net interest margin, which excludes the impact of accretion and amortization of acquisition discounts and premiums, was 3.42% for the fourth quarter of 2015 compared to 3.49% for the third quarter of 2015 and 3.37% for the fourth quarter of 2014. The decrease in the contractual net interest margin from the prior quarter was mainly due to the lower average balance of acquired loans and lower benefit from prepayments in the originated loan portfolio, offset by a lower cost of deposits. Contractual net interest margin increased 4 basis points to 3.44% for the year ended December 31, 2015 from 3.40% for the year ended December 31, 2014.
- Noninterest income during the fourth quarter of 2015 totaled $6.0 million compared to $7.3 million in the third quarter of 2015 and $3.2 million in the fourth quarter of 2014. Noninterest income during the fourth quarter included $1.8 million in fees generated through our Escrow and Exchange divisions, $561,000 of advisory fee income from our Merchant Banking division, which includes our broker-dealer subsidiary Opus Financial Partners, and a $399,000 gain recognized on the sale of originated loans, offset by a net write down of $515,000 on equity warrant valuation changes. Noninterest income increased 88% to $24.7 million for the year ended December 31, 2015 from $13.1 million for the year ended December 31, 2014.
- Noninterest expense during the fourth quarter of 2015 totaled $28.0 million compared to $26.9 million in the third quarter of 2015 and $25.9 million in the fourth quarter of 2014. The increase from the prior quarter was primarily due to approximately $1.2 million of acquisition and other strategic initiative related non-core expenses, including costs associated with the secondary stock offering by selling shareholders completed on November 23, 2015.
- Our efficiency ratio improved to 44.7% in the fourth quarter of 2015 compared to 45.8% for the third quarter of 2015 and 57.1% for the fourth quarter of 2014. For the year ended December 31, 2015, our efficiency ratio improved to 47.3% compared to 57.2% for the year ended December 31, 2014. Noninterest expense to average assets improved to 1.7% in the fourth quarter of 2015 from 1.8% in the third quarter of 2015 and improved from 2.1% in the fourth quarter of 2014. The ratio of noninterest expense to average assets decreased to 1.9% for the year ended December 31, 2015 from 2.2% for the year ended December 31, 2014.
- Return on average tangible equity increased to 11.2% for the fourth quarter of 2015 compared to 10.1% for the third quarter of 2015, and tax adjusted return on average tangible equity of 8.1% for the fourth quarter of 2014. Return on average tangible equity increased to 10.5% for the year ended December 31, 2015 compared to tax adjusted return on average tangible equity of 8.7% for the year ended December 31, 2014. Return on average assets increased to 1.03% for the fourth quarter of 2015 compared to 0.98% for the third quarter of 2015 and tax adjusted return on average assets of 0.90% for the fourth quarter of 2014. Return on average assets increased to 1.03% for the year ended December 31, 2015 compared to tax adjusted return on average assets of 0.97% for the year ended December 31, 2014.
- Asset quality continued to remain strong, with nonperforming assets totaling $24.3 million, or 0.37% of total assets, at December 31, 2015 compared to $16.8 million, or 0.27% of total assets, at September 30, 2015 and $10.5 million, or 0.21% of total assets, at December 31, 2014. The increase in nonperforming assets during the fourth quarter of 2015 was driven by a single loan relationship for which Opus has confirmed it has sufficient collateral to cover expected future inherent loss. Provision expense for the fourth quarter of 2015 was $8.0 million compared to $7.6 million for the third quarter of 2015 and $1.5 million for the fourth quarter of 2014. The fourth quarter provision was driven primarily by record new loan fundings and loan growth, which contributed $3.7 million of provision expense versus $2.3 million in the prior quarter, the continued shift in the mix of the loan portfolio toward commercial business loans that require higher levels of allowance, and changes in specific reserves, risk ratings and loss rates. Our ratio of allowance for loan losses to total loans increased to 0.80% as of December 31, 2015 and our coverage ratio was 1.08%, which includes the $15.4 million remaining discount on the acquired loan portfolio.
- Our balance sheet is well positioned for rising interest rates as it continues to remain asset sensitive as of December 31, 2015. We began to realize the initial benefits to interest income on our Prime rate and LIBOR indexed loans and to our cash investments as a result of the Federal Reserve's rate increase on December 16, 2015. The mix, duration, repricing characteristics, amortization schedules and cash flows generated from our loan and deposit portfolios result in positive outcomes under all our interest rate modeling scenarios.
- During the fourth quarter, Opus successfully completed an underwritten secondary offering of 5,479,452 shares of common stock by existing shareholders. Another 708,084 shares were offered upon execution of the underwriters' option to purchase additional shares. Opus did not receive any proceeds from the offering and the transaction had no material impact on our weighted average diluted shares outstanding. Capital ratios continue to be strong and well in excess of bank regulatory requirements.
- Our tangible book value per as converted common share at December 31, 2015 increased to $18.28 from $17.89 at September 30, 2015 and $17.26 at December 31, 2014.
Stephen H. Gordon, Founding Chairman, Chief Executive Officer and President of Opus Bank, stated, “The full year 2015 was highlighted by strong growth and improving profitability. We achieved record new loan fundings of $763 million in the fourth quarter and $2.4 billion during the year, accelerating beyond our forecasted expectations. We’re pleased this strong year-end loan growth puts us at a higher starting point as we enter 2016. We additionally experienced equally strong growth in deposits, which continue to improve in quality, mix, and cost. As a result, Opus achieved 37% growth in net income during 2015, further enhancing franchise value. As we continue our leading growth into 2016, the maturation of our Commercial and Specialty Banking divisions is resulting in a more diversified mix of loans, which represented 52% of new loan fundings during 2015.” Gordon added, “We continually strive to become more efficient, reaching a mid-40’s efficiency ratio earlier than originally forecasted, driven by our keen focus on growing revenues while managing expenses.” Gordon concluded, “Given where Opus was positioned at year-end and our anticipated growth in 2016, we are pleased to announce today that the Board of Directors has approved increasing our quarterly cash dividend by 25% to $0.15 per share, which reflects our strong capital position, asset quality, liquidity, increasing earnings power and return metrics, and confidence in our ability to execute our business strategy and growth plans.”
Net Interest Income
Net interest income increased 10% to $56.7 million in the fourth quarter of 2015 from $51.4 million in the third quarter of 2015 and 34% from $42.2 million in the fourth quarter of 2014. Interest income from originated loans increased by $3.8 million, or 8%, from the third quarter of 2015 and $16.4 million, or 46%, from the fourth quarter of 2014 due to our continued loan growth and success in strategically shifting our loan mix. Interest income from the acquired loan portfolio increased by $1.9 million from the prior quarter and decreased by $1.1 million from the fourth quarter of 2014. During the fourth quarter of 2015 we sold $8.4 million of acquired loans that generated $4.6 million of accretion income, compared to 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 was $6.7 million for the fourth quarter of 2015 compared to $6.3 million for the third quarter of 2015 and $5.9 million for the fourth quarter of 2014. The increase in interest expense was driven by growth of $336.1 million in average interest bearing deposits from September 30, 2015 and $1.2 billion from December 31, 2014.
Net interest income for the year ended December 31, 2015 increased 32% to $208.3 million from $157.7 million for the year ended December 31, 2014. Interest income for the year ended December 31, 2015 totaled $233.4 million, an increase of $55.7 million, or 31%, from $177.7 million during the year ended December 31, 2014 due to an increase of $62.5 million in interest income from the originated loan portfolio, offset by a decrease of $8.5 million in interest income from the acquired loan portfolio. Interest expense for the year ended December 31, 2015 totaled $25.1 million, an increase of $5.1 million, or 25%, from $20.0 million during the year ended December 31, 2014.
Net interest margin increased to 3.86% in the fourth quarter of 2015 from 3.80% in the third quarter of 2015 and increased one basis point from 3.85% in the fourth quarter of 2014. Total loan yield during the fourth quarter of 2015 increased to 4.80% from 4.71% in the third quarter of 2015 and decreased from 4.85% in the fourth quarter of 2014. The increase in total loan yield from the prior quarter was due to higher accretion income received from the acquired loan portfolio, offset by lower contractual income on acquired loans and lower benefit from prepayments on originated loans. Accretion income from the acquired loan portfolio contributed 0.44% to the net interest margin during the fourth quarter of 2015 compared to 0.31% in the third quarter of 2015 and 0.48% in the fourth quarter of 2014. Contractual net interest margin, which excludes the impact of accretion and amortization of acquisition discounts and premiums on the acquired loan portfolio, decreased 7 basis points to 3.42% in the fourth quarter of 2015 from 3.49% in the prior quarter and increased 5 basis points from 3.37% in the fourth quarter of 2014. The yield on originated loans decreased 7 basis points to 4.26% during the fourth quarter of 2015 primarily due to lower prepayments and higher amortization of deferred costs for loan payoffs. The weighted average rate on new loan fundings during the fourth quarter of 2015 was 4.34% compared to 4.41% during the third quarter of 2015 and 4.23% during the fourth quarter of 2014. The weighted average rate on new loan fundings was 4.40% for the full year 2015 compared to 4.28% for the full year 2014. Our cost of funds decreased to 0.48% for the fourth quarter of 2015 as compared to 0.49% for the third quarter of 2015 and 0.57% for the fourth quarter of 2014. Our cost of deposits decreased one basis point to 0.47% for the fourth quarter of 2015 as compared to 0.48% for the third quarter of 2015 and 0.57% for the fourth quarter of 2014.
Net interest margin decreased 14 basis points to 3.95% for the year ended December 31, 2015 compared to 4.09% for the year ended December 31, 2014. The yield on originated loans increased to 4.30% for the year ended December 31, 2015 compared to 4.24% for the year ended December 31, 2014. The yield on the acquired loan portfolio increased 225 basis points to 12.36% for the year ended December 31, 2015 compared to 10.11% for the year ended December 31, 2014. Accretion income from the acquired loan portfolio contributed 0.51% and 0.69% to net interest margin during the years ended December 31, 2015 and 2014, respectively. Contractual net interest margin increased 4 basis points to 3.44% for the year ended December 31, 2015 compared to 3.40% for the year ended December 31, 2014. Our cost of funds decreased to 0.51% for the year ended December 31, 2015 from 0.56% for the year ended December 31, 2014, and our cost of deposits decreased to 0.49% for the year ended December 31, 2015 from 0.55% for the year ended December 31, 2014.
Noninterest Income and Noninterest Expense
Noninterest income totaled $6.0 million in the fourth quarter of 2015 as compared to $7.3 million in the third quarter of 2015 and $3.2 million in the fourth quarter of 2014. Noninterest income totaled $24.7 million for the year ended December 31, 2015 compared to $13.1 million for the year ended December 31, 2014. Noninterest income during the fourth quarter of 2015 included $1.8 million in fees generated through our Escrow and Exchange divisions, $561,000 of advisory fee income from our Merchant Banking division, including our broker-dealer subsidiary Opus Financial Partners, and a $399,000 gain on the sale of originated loans, offset by a net write down of $515,000 on equity warrant valuation changes.
Noninterest expense totaled $28.0 million in the fourth quarter of 2015 as compared to $26.9 million in the third quarter of 2015 and $25.9 million in the fourth quarter of 2014. Noninterest expense for the year ended December 31, 2015 was $110.2 million compared to $97.7 million for the year ended December 31, 2014. The increase in noninterest expense compared to the third quarter of 2015 was primarily driven by approximately $1.2 million of acquisition and strategic initiative related non-core expenses, including the secondary stock offering completed on November 23, 2015.
Loans
Total loans held-for-investment, net of the allowance for loan losses, grew to $5.5 billion at December 31, 2015, an increase of 10% from $5.0 billion at September 30, 2015 and 34% from $4.1 billion at December 31, 2014.
Our originated loan portfolio totaled $5.2 billion as of December 31, 2015, an increase of 12% from $4.7 billion as of September 30, 2015 and 44% from $3.6 billion as of December 31, 2014. Our loan growth during the quarter was a result of a record $763.1 million of new loan fundings, including $350.0 million from Income Property Banking, $85.0 million from Corporate Finance, $74.2 million from Technology Banking, $68.5 million from Structured Finance, $63.6 million from Healthcare Banking, $60.0 million from Commercial Banking and $56.5 million from Institutional Syndications. Our Commercial and Specialty Banking divisions contributed 54% of new loan fundings during the fourth quarter of 2015 compared to 48% during the third quarter of 2015 and 36% during the fourth quarter of 2014. Loan commitments originated during the fourth quarter totaled $819.9 million as compared to $807.0 million in the third quarter of 2015 and $613.1 million in the fourth quarter of 2014. At December 31, 2015, our unfunded commitments on originated loans totaled $554.0 million.
Originated loans increased by 44% during the year ended December 31, 2015, driven by higher than forecasted new loan fundings of $2.4 billion compared to $1.8 billion for the year ended December 31, 2014. Commercial and Specialty Banking divisions contributed 52% of total new loan fundings during 2015 compared to 38% during 2014. Loan commitments originated during the year ended December 31, 2015 totaled $2.8 billion as compared to $2.1 billion during the year ended December 31, 2014.
Our acquired loan portfolio totaled $268.4 million as of December 31, 2015, a decrease of 17% from $322.6 million as of September 30, 2015 and 42% from $466.0 million at December 31, 2014. At December 31, 2015, our total unfunded commitments on acquired loans totaled $23.2 million.
Deposits and Borrowings
Deposits totaled $5.3 billion as of December 31, 2015, an increase of 7% from $4.9 billion as of September 30, 2015 and 40% from $3.8 billion as of December 31, 2014. Total demand deposits increased to 40% of total deposits at December 31, 2015 from 37% at September 30, 2015 and 22% at December 31, 2014. During the fourth quarter of 2015, demand deposits from our Escrow and Exchange divisions increased by $135.1 million, which brought the total deposit balances from these divisions to $689.9 million at a weighted average cost of 0.06%. Deposits related to our Commercial and Specialty Banking divisions, including Escrow and Exchange, increased by $301.4 million to $2.2 billion during the fourth quarter of 2015, an increase of 16% from September 30, 2015 and 206% from December 31, 2014. At December 31, 2015, business deposits represented 52% of total deposits, as compared to 50% at September 30, 2015 and 37% at December 31, 2014. Our loan-to-deposit ratio was 104% as of December 31, 2015 compared to 101% as of September 30, 2015 and 108% as of December 31, 2014.
Federal Home Loan Bank advances totaled $420.0 million as of December 31, 2015 compared to $340.0 million as of September 30, 2015 and $470.0 million as of December 31, 2014.
Asset Quality
We continue to experience strong asset quality as our loan portfolio seasons, evidenced by the low balance of nonperforming assets and low ratio of nonperforming assets to total assets of 0.37% as of December 31, 2015 compared to 0.27% as of September 30, 2015 and 0.21% as of December 31, 2014. The increase in nonperforming assets during the fourth quarter of 2015 was driven by a single loan relationship for which Opus has confirmed it has sufficient collateral to cover expected future inherent loss. We recorded a total provision for loan losses of $8.0 million in the fourth quarter of 2015 compared to $7.6 million in the third quarter of 2015 and $1.5 million in the fourth quarter of 2014. A provision for loan losses of $8.4 million was recorded on the originated loan portfolio during the fourth quarter of 2015 compared to $8.3 million in the third quarter of 2015 and $1.6 million in the fourth quarter of 2014. The provision for loan losses during the fourth quarter of 2015 on the originated portfolio was comprised of $3.7 million for portfolio growth and $4.7 million for changes in specific reserves, individual risk ratings and loss factors, compared to $2.3 million for portfolio growth and $6.0 million for changes in specific reserves, individual risk ratings and loss factors in the third quarter of 2015, and $2.1 million for portfolio growth and a recapture of $557,000 for changes in specific reserves, individual risk ratings and loss factors in the fourth quarter of 2014. The provision for changes in specific reserves and risk ratings during the fourth quarter of 2015 was predominantly additional amounts on existing problem assets for activity in the fourth quarter of 2015 and not related to newly identified problem assets during the quarter. We had net charge-offs of $676,000 for the fourth quarter of 2015, or 0.05% of average loans annualized, compared to $1.4 million in the third quarter of 2015, or 0.12% of average loans annualized, and zero in the fourth quarter of 2014. The provision recapture on the acquired loan portfolio totaled $359,000 in the fourth quarter of 2015, $709,000 in the third quarter of 2015 and $111,000 in the fourth quarter of 2014.
Our allowance for loan losses represented 0.80% of our total loan portfolio at December 31, 2015 compared to 0.74% at September 30, 2015 and 0.56% at December 31, 2014. We have continued to see the allowance as a percentage of total loans increase due to our strategic shift in the mix of our loan portfolio toward more commercial business loans, which require a higher allowance relative to our multifamily loans. At December 31, 2015, the total loan portfolio was comprised of 47% originated multifamily loans with the remaining portion comprised primarily of commercial business loans. Our acquired loan portfolio had a remaining discount of $15.4 million as of December 31, 2015. The coverage ratio for the total loan portfolio, which includes the remaining discount on the acquired loan portfolio, at December 31, 2015 was 1.08% compared to 1.16% at September 30, 2015 and 1.61% at December 31, 2014, declining as the acquired loan portfolio continues to decrease as a percentage of the total loan portfolio. Our allowance for loan losses on originated loans resulted in a coverage ratio of 0.82% as of December 31, 2015, compared to 0.76% as of September 30, 2015 and 0.56% as of December 31, 2014.
Capital
Our capital ratios continue to be strong and well in excess of bank regulatory requirements. Beginning in the first quarter of 2015, we calculated our capital ratios under the FDIC Regulatory Capital Interim Final Rule (Basel III). As of December 31, 2015, our Tier 1 leverage ratio was 9.59%, Tier 1 risk-based ratio was 10.81%, Common Equity Tier 1 ratio was 10.81% and total risk-based capital ratio was 11.65%, compared to 9.96%, 11.45%, 10.34% and 12.22% for the third quarter of 2015, respectively. As of December 31, 2014 under Basel I rules, our Tier 1 leverage, Tier 1 risk-based and total risk-based capital ratios were 11.29%, 13.26% and 13.87%, respectively. Stockholders’ equity totaled $867.0 million as of December 31, 2015, an increase of 2% from $851.9 million as of September 30, 2015 and an increase of 8% from $799.6 million as of December 31, 2014, primarily driven by strong net income. Our tangible book value per as converted common share increased $0.39 to $18.28 as of December 31, 2015 from $17.89 as of September 30, 2015 and $1.02 from $17.26 as of December 31, 2014.
Additionally, the Board of Directors approved increasing the quarterly cash dividend by 25% to $0.15 per share payable on February 18, 2016 to common and preferred shareholders of record as of February 4, 2016.
Conference Call and Webcast Details
Date: Monday, January
25, 2016
Time: 8:00 a.m. PT (11:00 a.m. ET)
Phone Number: (855) 265-3237
Conference Id: 12996069
Webcast
URL: http://investor.opusbank.com/events.cfm
Analysts, investors, and the general public may listen to the Bank's discussion of its fourth quarter and annual 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/events.cfm. 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 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 12996069. The call replay will be available until February 25, 2016.
About Opus Bank
Opus Bank is an FDIC insured California-chartered commercial bank with $6.6 billion of total assets, $5.5 billion of total loans, and $5.3 billion in total deposits as of December 31, 2015. 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 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. Opus Bank operates 58 client experience centers, including 33 in California, 22 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 at: 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: investor.opusbank.com.
Opus undertakes no obligation to revise or publicly release any revision to these forward-looking statements.
| Consolidated Statement of Operations | ||||||||||||||||||||||||||||||
| (unaudited) | Three Months Ended | Year Ended | ||||||||||||||||||||||||||||
| ($ in thousands, except per share amounts) |
December 31, 2015 |
September 30, 2015 |
December 31, 2014 |
December 31, 2015 |
December 31, 2014 |
|||||||||||||||||||||||||
| Interest income: | ||||||||||||||||||||||||||||||
| Loans | $ | 62,532 | $ | 56,852 | $ | 47,142 | $ | 230,000 | $ | 176,044 | ||||||||||||||||||||
| Investment securities | 552 | 616 | 706 | 2,345 | 1,056 | |||||||||||||||||||||||||
| Due from banks | 333 | 228 | 198 | 1,066 | 631 | |||||||||||||||||||||||||
| Total interest income | 63,417 | 57,696 | 48,046 | 233,411 | 177,731 | |||||||||||||||||||||||||
| Interest expense: | ||||||||||||||||||||||||||||||
| Deposits | 6,136 | 5,686 | 5,252 | 22,755 | 17,732 | |||||||||||||||||||||||||
| Federal Home Loan Bank advances | 557 | 579 | 614 | 2,331 | 2,304 | |||||||||||||||||||||||||
| Total interest expense | 6,693 | 6,265 | 5,866 | 25,086 | 20,036 | |||||||||||||||||||||||||
| Net interest income | 56,724 | 51,431 | 42,180 | 208,325 | 157,695 | |||||||||||||||||||||||||
| Provision for loan losses | 8,014 | 7,595 | 1,475 | 24,967 | 5,809 | |||||||||||||||||||||||||
|
Net interest income after provision for loan losses |
48,710 | 43,836 | 40,705 | 183,358 | 151,886 | |||||||||||||||||||||||||
| Noninterest income: | ||||||||||||||||||||||||||||||
| Service charges on deposit accounts | 1,694 | 1,667 | 1,626 | 6,580 | 6,196 | |||||||||||||||||||||||||
| Escrow and exchange fees | 1,777 | 1,630 | — | 5,074 | — | |||||||||||||||||||||||||
| Gain on sale of loans | 399 | — | 180 | 399 | 180 | |||||||||||||||||||||||||
|
Gain (loss) on sale or disposition of assets |
14 | — | (104 | ) | 120 | 391 | ||||||||||||||||||||||||
| Gain (loss) from real estate owned, net | 153 | 73 | (17 | ) | 28 | 550 | ||||||||||||||||||||||||
| Gain (loss) on sale of securities | — | 438 | — | 800 | (301 | ) | ||||||||||||||||||||||||
| Bank-owned life insurance, net | 923 | 870 | 513 | 3,197 | 1,398 | |||||||||||||||||||||||||
| Other income | 1,048 | 2,617 | 1,004 | 8,471 | 4,685 | |||||||||||||||||||||||||
| Total noninterest income | 6,008 | 7,295 | 3,202 | 24,669 | 13,099 | |||||||||||||||||||||||||
| Noninterest expense: | ||||||||||||||||||||||||||||||
| Compensation and benefits | 14,979 | 14,691 | 14,138 | 60,831 | 54,846 | |||||||||||||||||||||||||
| Professional services | 1,926 | 1,580 | 1,304 | 7,246 | 4,430 | |||||||||||||||||||||||||
| Occupancy expense | 3,011 | 3,042 | 2,978 | 11,768 | 11,451 | |||||||||||||||||||||||||
| Depreciation and amortization | 1,484 | 1,415 | 1,337 | 5,608 | 5,344 | |||||||||||||||||||||||||
|
Deposit insurance and regulatory assessments |
975 | 884 | 741 | 3,490 | 2,693 | |||||||||||||||||||||||||
| Insurance expense | 317 | 303 | 317 | 1,229 | 1,144 | |||||||||||||||||||||||||
| Data processing | 842 | 762 | 856 | 3,283 | 3,098 | |||||||||||||||||||||||||
| Software licenses and maintenance | 579 | 570 | 408 | 2,092 | 1,737 | |||||||||||||||||||||||||
| Office services | 985 | 990 | 873 | 4,008 | 3,525 | |||||||||||||||||||||||||
| Amortization of core deposit intangibles | 627 | 627 | 627 | 2,508 | 2,508 | |||||||||||||||||||||||||
| Advertising and marketing | 291 | 410 | 843 | 1,166 | 2,248 | |||||||||||||||||||||||||
| Litigation expense (recovery) | 18 | — | (2 | ) | 293 | (2,127 | ) | |||||||||||||||||||||||
| Other expenses | 2,000 | 1,609 | 1,486 | 6,727 | 6,851 | |||||||||||||||||||||||||
| Total noninterest expense | 28,034 | 26,883 | 25,906 | 110,249 | 97,748 | |||||||||||||||||||||||||
| Income before income tax expense | 26,684 | 24,248 | 18,001 | 97,778 | 67,237 | |||||||||||||||||||||||||
| Income tax expense | 10,012 | 9,537 | 5,485 | 37,835 | 23,530 | |||||||||||||||||||||||||
| Net income | $ | 16,672 | $ | 14,711 | $ | 12,516 | $ | 59,943 | $ | 43,707 | ||||||||||||||||||||
| Basic earnings per common share | $ | 0.51 | $ | 0.45 | $ | 0.40 | $ | 1.86 | $ | 1.42 | ||||||||||||||||||||
| Diluted earnings per common share | 0.50 | 0.44 | 0.38 | 1.79 | 1.38 | |||||||||||||||||||||||||
| Weighted average shares - basic | 30,429,049 | 28,725,211 | 28,119,830 | 29,003,588 | 26,569,422 | |||||||||||||||||||||||||
| Weighted average shares - diluted | 33,670,728 | 33,657,401 | 32,704,482 | 33,448,090 | 31,659,431 | |||||||||||||||||||||||||
| Consolidated Balance Sheets | ||||||||||||||||||
| (unaudited) | As of | |||||||||||||||||
| ($ in thousands, except share amounts) |
December 31, 2015 |
September 30, 2015 |
December 31, 2014 |
|||||||||||||||
| Assets | ||||||||||||||||||
| Cash and due from banks | $ | 33,419 | $ | 31,595 | $ | 31,115 | ||||||||||||
| Due from banks – interest-bearing | 451,458 | 399,822 | 285,268 | |||||||||||||||
| Investment securities available-for-sale, at fair value | 151,761 | 220,982 | 174,739 | |||||||||||||||
| Loans held-for-investment | 5,495,804 | 5,001,607 | 4,085,501 | |||||||||||||||
| Less allowance for loan losses | (44,147 | ) | (36,809 | ) | (23,043 | ) | ||||||||||||
| Loans held-for-investment, net | 5,451,657 | 4,964,798 | 4,062,458 | |||||||||||||||
| Real estate owned | 1,251 | 4,235 | 4,277 | |||||||||||||||
| Premises and equipment, net | 31,008 | 33,511 | 34,333 | |||||||||||||||
| Goodwill | 262,115 | 262,115 | 238,528 | |||||||||||||||
| Core deposit intangible, net | 10,099 | 10,726 | 12,608 | |||||||||||||||
| Deferred tax assets, net | 48,813 | 55,358 | 78,538 | |||||||||||||||
| Cash surrender value of bank owned life insurance, net | 116,760 | 115,564 | 91,808 | |||||||||||||||
| Accrued interest receivable | 18,056 | 16,871 | 14,260 | |||||||||||||||
| Federal Home Loan Bank stock | 17,250 | 17,250 | 32,935 | |||||||||||||||
| Other assets | 56,186 | 50,328 | 27,447 | |||||||||||||||
| Total assets | $ | 6,649,833 | $ | 6,183,155 | $ | 5,088,314 | ||||||||||||
| Liabilities and Stockholders’ Equity | ||||||||||||||||||
| Deposits: | ||||||||||||||||||
| Noninterest-bearing demand | $ | 975,588 | $ | 868,533 | $ | 625,024 | ||||||||||||
| Interest-bearing demand | 1,161,272 | 945,361 | 228,565 | |||||||||||||||
| Money market and savings | 2,598,852 | 2,549,149 | 2,310,868 | |||||||||||||||
| Time deposits | 571,336 | 584,710 | 631,418 | |||||||||||||||
| Total deposits | 5,307,048 | 4,947,753 | 3,795,875 | |||||||||||||||
| Federal Home Loan Bank advances | 420,000 | 340,000 | 470,000 | |||||||||||||||
| Accrued interest payable | 332 | 352 | 364 | |||||||||||||||
| Other liabilities | 55,415 | 43,179 | 22,492 | |||||||||||||||
| Total liabilities | 5,782,795 | 5,331,284 | 4,288,731 | |||||||||||||||
| Stockholders’ equity: | ||||||||||||||||||
| Preferred stock: | ||||||||||||||||||
| Authorized 200,000,000 shares; issued 612 and 72,411 and 72,411 shares, respectively | 581 | 68,768 | 68,768 | |||||||||||||||
| Common stock, no par value per share: | ||||||||||||||||||
| Authorized 200,000,000 shares; issued 32,717,359 and 28,946,023 and 28,291,656 shares, respectively | 621,677 | 550,248 | 536,498 | |||||||||||||||
| Additional paid-in capital | 46,371 | 46,685 | 42,291 | |||||||||||||||
| Retained earnings | 203,823 | 191,035 | 154,850 | |||||||||||||||
| Treasury stock, at cost; 217,168 and 208,004 and 143,140 shares, respectively | (5,189 | ) | (4,846 | ) | (2,811 | ) | ||||||||||||
| Accumulated other comprehensive loss | (225 | ) | (19 | ) | (13 | ) | ||||||||||||
| Total stockholders’ equity | 867,038 | 851,871 | 799,583 | |||||||||||||||
| Total liabilities and stockholders’ equity | $ | 6,649,833 | $ | 6,183,155 | $ | 5,088,314 | ||||||||||||
| Selected Financial Data | |||||||||||||||||||||||||
| As of or for the three months ended | As of or for the year ended | ||||||||||||||||||||||||
| (unaudited) |
December 31, 2015 |
September 30, 2015 |
December 31, 2014 |
December 31, 2015 |
December 31, 2014 |
||||||||||||||||||||
| Return on average assets | 1.03 | % | 0.98 | % | 1.02 | % | 1.03 | % | 1.00 | % | |||||||||||||||
|
Return on average assets, tax adjusted(1) |
1.03 | 0.98 | 0.90 | 1.03 | 0.97 | ||||||||||||||||||||
| Return on average stockholders' equity | 7.66 | 6.87 | 6.25 | 7.15 | 5.81 | ||||||||||||||||||||
|
Return on average stockholders' equity, tax adjusted(1) |
7.66 | 6.87 | 5.54 | 7.15 | 5.62 | ||||||||||||||||||||
| Return on average tangible equity | 11.19 | 10.12 | 9.15 | 10.50 | 8.74 | ||||||||||||||||||||
|
Return on average tangible equity, tax adjusted(1) |
11.19 | 10.12 | 8.11 | 10.50 | 8.45 | ||||||||||||||||||||
|
Efficiency ratio(2) |
44.69 | 45.78 | 57.08 | 47.32 | 57.23 | ||||||||||||||||||||
| Noninterest expense to average assets | 1.74 | 1.79 | 2.11 | 1.89 | 2.24 | ||||||||||||||||||||
| Yield on interest-earning assets | 4.31 | 4.26 | 4.38 | 4.42 | 4.62 | ||||||||||||||||||||
|
Cost of deposits(3) |
0.47 | 0.48 | 0.57 | 0.49 | 0.55 | ||||||||||||||||||||
|
Cost of funds(4) |
0.48 | 0.49 | 0.57 | 0.51 | 0.56 | ||||||||||||||||||||
| Net interest margin | 3.86 | 3.80 | 3.85 | 3.95 | 4.09 | ||||||||||||||||||||
| Loans to deposits | 103.56 | 101.09 | 107.63 | 103.56 | 107.63 | ||||||||||||||||||||
| (1) | Tax adjusted for the three and twelve months ended December 31, 2014 for an adjustment to deferred tax assets. 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 and FHLB advances. | ||
| Capital Ratios | As of | ||||||||||||||
| (unaudited) |
December 31, |
September 30, |
December 31, 2014 |
||||||||||||
|
(Under Basel III)(1) |
(Under Basel I)(1) |
||||||||||||||
| Tier 1 leverage ratio | 9.59 | % | 9.96 | % | 11.29 | % | |||||||||
| Tier 1 risk-based capital ratio | 10.81 | 11.45 | 13.26 | ||||||||||||
| Total risk-based capital ratio | 11.65 | 12.22 | 13.87 | ||||||||||||
|
Common Equity Tier 1 ratio(3) |
10.81 | 10.34 | N/A | ||||||||||||
| (1) | The capital ratios beginning March 31, 2015 reflect the adoption of Basel III in effect beginning January 1, 2015 while ratios for the prior period represents the previous capital rules under Basel I. | ||
| (2) | Ratios are preliminary until filing of our December 31, 2015 call report. | ||
| (3) | The Common Equity Tier 1 ratio is a new ratio required under Basel III and represents common equity, less goodwill and intangible assets net of any deferred tax liabilities, divided by risk-weighted assets. | ||
| Loan Fundings | |||||||||||||||||||||||||||||
| (unaudited) | Three Months Ended | Year Ended | |||||||||||||||||||||||||||
| ($ in thousands) |
December 31, 2015 |
September 30, 2015 |
December 31, 2014 |
December 31, 2015 |
December 31, 2014 |
||||||||||||||||||||||||
| Loans funded: | |||||||||||||||||||||||||||||
| Real estate mortgage loans: | |||||||||||||||||||||||||||||
| Single-family residential | $ | — | $ | — | $ | — | $ | — | $ | 29,092 | |||||||||||||||||||
| Multifamily residential | 279,088 | 261,349 | 294,985 | 906,255 | 889,074 | ||||||||||||||||||||||||
| Commercial real estate | 146,371 | 76,346 | 113,581 | 430,945 | 389,718 | ||||||||||||||||||||||||
| Construction and land loans | 16,684 | 19,291 | 1,620 | 40,826 | 3,213 | ||||||||||||||||||||||||
| Commercial business loans | 318,927 | 279,760 | 157,701 | 1,031,180 | 497,713 | ||||||||||||||||||||||||
| Small Business Administration loans | 1,980 | 1,547 | 3,801 | 4,413 | 7,438 | ||||||||||||||||||||||||
| Consumer and other loans | — | — | 980 | — | 1,660 | ||||||||||||||||||||||||
| Total loan fundings | $ | 763,050 | $ | 638,293 | $ | 572,668 | $ | 2,413,619 | $ | 1,817,908 | |||||||||||||||||||
| Composition of Loan Portfolio | As of | ||||||||||||||||||||||||||||||||
| (unaudited) |
December 31, 2015 |
September 30, 2015 |
December 31, 2014 |
||||||||||||||||||||||||||||||
| ($ in thousands) | Amount |
% of Total loans |
Amount |
% of Total loans |
Amount |
% of Total loans |
|||||||||||||||||||||||||||
| Originated loans held-for-investment | |||||||||||||||||||||||||||||||||
| Real estate mortgage loans: | |||||||||||||||||||||||||||||||||
| Single-family residential | $ | 100,988 | 1.8 | % | $ | 108,749 | 2.2 | % | $ | 122,897 | 3.0 | % | |||||||||||||||||||||
| Multifamily residential | 2,584,667 | 47.0 | 2,452,731 | 49.0 | 2,190,633 | 53.6 | |||||||||||||||||||||||||||
| Commercial real estate | 1,113,250 | 20.3 | 959,682 | 19.2 | 728,908 | 17.8 | |||||||||||||||||||||||||||
| Construction and land loans | 56,095 | 1.0 | 39,431 | 0.8 | 7,689 | 0.2 | |||||||||||||||||||||||||||
| Commercial business loans | 1,348,666 | 24.5 | 1,089,040 | 21.8 | 540,820 | 13.2 | |||||||||||||||||||||||||||
| Small Business Administration loans | 23,347 | 0.4 | 26,538 | 0.5 | 28,086 | 0.8 | |||||||||||||||||||||||||||
| Consumer and other loans | 397 | 0.0 | 2,853 | 0.1 | 490 | 0.0 | |||||||||||||||||||||||||||
| Total originated loans | 5,227,410 | 95.1 | 4,679,024 | 93.6 | 3,619,523 | 88.6 | |||||||||||||||||||||||||||
| Acquired loans held-for-investment | |||||||||||||||||||||||||||||||||
| Real estate mortgage loans: | |||||||||||||||||||||||||||||||||
| Single-family residential | 50,016 | 0.9 | 66,559 | 1.3 | 130,861 | 3.2 | |||||||||||||||||||||||||||
| Multifamily residential | 76,498 | 1.4 | 88,102 | 1.8 | 100,598 | 2.5 | |||||||||||||||||||||||||||
| Commercial real estate | 63,520 | 1.2 | 80,684 | 1.6 | 108,247 | 2.6 | |||||||||||||||||||||||||||
| Construction and land loans | 2,061 | 0.0 | 2,118 | 0.0 | 3,279 | 0.1 | |||||||||||||||||||||||||||
| Commercial business loans | 19,898 | 0.4 | 24,424 | 0.5 | 28,860 | 0.7 | |||||||||||||||||||||||||||
| Small Business Administration loans | 48,781 | 0.9 | 52,292 | 1.0 | 61,010 | 1.5 | |||||||||||||||||||||||||||
| Consumer and other loans | 7,620 | 0.1 | 8,404 | 0.2 | 33,123 | 0.8 | |||||||||||||||||||||||||||
| Total acquired loans | 268,394 | 4.9 | 322,583 | 6.4 | 465,978 | 11.4 | |||||||||||||||||||||||||||
| Total gross loans | $ | 5,495,804 | 100.0 | % | $ | 5,001,607 | 100.0 | % | $ | 4,085,501 | 100.0 | % | |||||||||||||||||||||
| Composition of Deposits | As of | ||||||||||||||||||||||||||||||||
| (unaudited) |
December 31, 2015 |
September 30, 2015 |
December 31, 2014 |
||||||||||||||||||||||||||||||
| ($ in thousands) | Amount |
% of Total deposits |
Amount |
% of Total deposits |
Amount |
% of Total deposits |
|||||||||||||||||||||||||||
| Noninterest bearing | $ | 975,588 | 18.38 | % | $ | 868,533 | 17.55 | % | $ | 625,024 | 16.47 | % | |||||||||||||||||||||
| Interest bearing demand | 1,161,272 | 21.88 | 945,361 | 19.11 | 228,565 | 6.02 | |||||||||||||||||||||||||||
| Money market and savings | 2,598,852 | 48.97 | 2,549,149 | 51.52 | 2,310,868 | 60.88 | |||||||||||||||||||||||||||
| Time deposits | 571,336 | 10.77 | 584,710 | 11.82 | 631,418 | 16.63 | |||||||||||||||||||||||||||
| Total deposits | $ | 5,307,048 | 100.00 | % | $ | 4,947,753 | 100.00 | % | $ | 3,795,875 | 100.00 | % | |||||||||||||||||||||
| Consolidated average balance sheet, interest, yield and rates | |||||||||||||||||||||||||||||||||||||||||||
|
For the three months ended December 31, |
For the three months ended September 30, |
For the three months ended December 31, |
|||||||||||||||||||||||||||||||||||||||||
| (unaudited) | 2015 | 2015 | 2014 | ||||||||||||||||||||||||||||||||||||||||
| ($ in thousands) |
Average Balance |
Interest |
Yields/ Rates |
Average Balance |
Interest |
Yields/ Rates |
Average Balance |
Interest |
Yields/ Rates |
||||||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||||||||||||
| Due from banks | $ | 458,586 | $ | 333 | 0.29 | % | $ | 360,817 | $ | 228 | 0.25 | % | $ | 311,607 | $ | 198 | 0.25 | % | |||||||||||||||||||||||||
| Investment securities | 202,828 | 552 | 1.08 | 229,937 | 616 | 1.06 | 187,017 | 706 | 1.50 | ||||||||||||||||||||||||||||||||||
| Acquired loans | 299,382 | 10,247 | 13.58 | 340,331 | 8,340 | 9.72 | 489,873 | 11,306 | 9.16 | ||||||||||||||||||||||||||||||||||
| Originated Loans | 4,874,189 | 52,285 | 4.26 | 4,443,460 | 48,512 | 4.33 | 3,363,398 | 35,836 | 4.23 | ||||||||||||||||||||||||||||||||||
| Total loans | $ | 5,173,571 | $ | 62,532 | 4.80 | $ | 4,783,791 | $ | 56,852 | 4.71 | $ | 3,853,271 | $ | 47,142 | 4.85 | ||||||||||||||||||||||||||||
| Total interest-earning assets | 5,834,985 | $ | 63,417 | 4.31 | 5,374,545 | $ | 57,696 | 4.26 | 4,351,895 | $ | 48,046 | 4.38 | |||||||||||||||||||||||||||||||
| Noninterest-earning assets | 556,088 | 568,521 | 520,643 | ||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 6,391,073 | $ | 5,943,066 | $ | 4,872,538 | |||||||||||||||||||||||||||||||||||||
| Liabilities and stockholders’ equity: | |||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | |||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing demand | $ | 1,042,901 | $ | 602 | 0.23 | % | $ | 839,105 | $ | 393 | 0.19 | % | $ | 222,969 | $ | 64 | 0.11 | % | |||||||||||||||||||||||||
| Money market and savings | 2,600,594 | 4,346 | 0.66 | 2,457,731 | 4,071 | 0.66 | 2,217,783 | 3,905 | 0.70 | ||||||||||||||||||||||||||||||||||
| Time deposits | 581,747 | 1,188 | 0.81 | 592,281 | 1,222 | 0.82 | 625,614 | 1,283 | 0.81 | ||||||||||||||||||||||||||||||||||
|
Total interest-bearing deposits |
$ | 4,225,242 | $ | 6,136 | 0.58 | $ | 3,889,117 | $ | 5,686 | 0.58 | $ | 3,066,366 | $ | 5,252 | 0.68 | ||||||||||||||||||||||||||||
| FHLB advances | 337,772 | 557 | 0.65 | 349,674 | 579 | 0.66 | 372,935 | 614 | 0.65 | ||||||||||||||||||||||||||||||||||
|
Total interest-bearing liabilities |
$ | 4,563,014 | $ | 6,693 | 0.58 | $ | 4,238,791 | $ | 6,265 | 0.59 | $ | 3,439,301 | $ | 5,866 | 0.68 | ||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 915,233 | 809,179 | 619,660 | ||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 49,294 | 45,319 | 19,511 | ||||||||||||||||||||||||||||||||||||||||
| Total liabilities | $ | 5,527,541 | $ | 5,093,289 | $ | 4,078,472 | |||||||||||||||||||||||||||||||||||||
| Total stockholders’ equity | $ | 863,532 | $ | 849,777 | $ | 794,066 | |||||||||||||||||||||||||||||||||||||
|
Total liabilities and stockholders’ equity |
$ | 6,391,073 | $ | 5,943,066 | $ | 4,872,538 | |||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 56,724 | $ | 51,431 | $ | 42,180 | |||||||||||||||||||||||||||||||||||||
|
Net interest spread(1) |
3.73 | % | 3.67 | % | 3.70 | % | |||||||||||||||||||||||||||||||||||||
|
Net interest margin(2) |
3.86 | % | 3.80 | % | 3.85 | % | |||||||||||||||||||||||||||||||||||||
| (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 year ended December 31, | ||||||||||||||||||||||||||||||||||
| (unaudited) | 2015 | 2014 | ||||||||||||||||||||||||||||||||
| ($ In thousands) |
Average Balance |
Interest |
Yields/ Rates |
Average Balance |
Interest |
Yields/ Rates |
||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||
| Interest-earning assets | ||||||||||||||||||||||||||||||||||
| Due from banks | $ | 407,372 | $ | 1,066 | 0.26 | % | $ | 249,264 | $ | 631 | 0.25 | % | ||||||||||||||||||||||
| Investment securities | 220,310 | 2,345 | 1.06 | 196,032 | 1,056 | 0.54 | ||||||||||||||||||||||||||||
| Acquired loans | 372,711 | 46,073 | 12.36 | 539,877 | 54,601 | 10.11 | ||||||||||||||||||||||||||||
| Originated Loans | 4,275,063 | 183,927 | 4.30 | 2,865,916 | 121,443 | 4.24 | ||||||||||||||||||||||||||||
| Total loans | $ | 4,647,774 | $ | 230,000 | 4.95 | $ | 3,405,793 | $ | 176,044 | 5.17 | ||||||||||||||||||||||||
| Total interest-earning assets | $ | 5,275,456 | $ | 233,411 | 4.42 | $ | 3,851,089 | $ | 177,731 | 4.62 | ||||||||||||||||||||||||
| Noninterest-earning assets | 556,899 | 517,544 | ||||||||||||||||||||||||||||||||
| Total assets | $ | 5,832,355 | $ | 4,368,633 | ||||||||||||||||||||||||||||||
| Liabilities and stockholders’ equity: | ||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||||||||||||||
| Interest-bearing demand | $ | 772,258 | $ | 1,620 | 0.21 | % | $ | 228,338 | $ | 258 | 0.11 | % | ||||||||||||||||||||||
| Money market and savings | 2,424,336 | 16,216 | 0.67 | 1,819,886 | 12,346 | 0.68 | ||||||||||||||||||||||||||||
| Time deposits | 600,902 | 4,919 | 0.82 | 630,363 | 5,128 | 0.81 | ||||||||||||||||||||||||||||
|
Total interest-bearing deposits |
$ | 3,797,496 | $ | 22,755 | 0.60 | $ | 2,678,587 | $ | 17,732 | 0.66 | ||||||||||||||||||||||||
| FHLB advances | 356,827 | 2,331 | 0.65 | 351,487 | 2,304 | 0.66 | ||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 4,154,323 | $ | 25,086 | 0.60 | $ | 3,030,074 | $ | 20,036 | 0.66 | ||||||||||||||||||||||||
| Noninterest-bearing deposits | 800,895 | 566,010 | ||||||||||||||||||||||||||||||||
| Other liabilities | 38,256 | 19,833 | ||||||||||||||||||||||||||||||||
| Total liabilities | $ | 4,993,474 | $ | 3,615,917 | ||||||||||||||||||||||||||||||
| Total stockholders’ equity | 838,881 | 752,716 | ||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 5,832,355 | $ | 4,368,633 | ||||||||||||||||||||||||||||||
| Net interest income | $ | 208,325 | $ | 157,695 | ||||||||||||||||||||||||||||||
|
Net interest spread(1) |
3.82 | % | 3.96 | % | ||||||||||||||||||||||||||||||
|
Net interest margin(2) |
3.95 | % | 4.09 | % | ||||||||||||||||||||||||||||||
| (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) |
December 31, 2015 |
September 30, 2015 |
December 31, 2014 |
|||||||||||||||
| Nonperforming assets | ||||||||||||||||||
| Nonaccrual loans | $ | 23,050 | $ | 12,541 | $ | 6,215 | ||||||||||||
| Real estate owned | 1,251 | 4,235 | 4,277 | |||||||||||||||
| Total nonperforming assets | 24,301 | 16,776 | 10,492 | |||||||||||||||
| Nonperforming assets to total assets | 0.37 | % | 0.27 | % | 0.21 | % | ||||||||||||
| Accruing loans 90 days or more past due | $ | 324 | $ | 546 | $ | 2,255 | ||||||||||||
| Accruing troubled debt restructured loans | 281 | 286 | 300 | |||||||||||||||
| Allowance for loan losses - Originated loans | 43,066 | 35,369 | 20,305 | |||||||||||||||
| Allowance for loan losses - Acquired loans | 1,081 | 1,440 | 2,738 | |||||||||||||||
| Total allowance for loan losses | 44,147 | 36,809 | 23,043 | |||||||||||||||
| Remaining acquisition discount on acquired loans | $ | 15,409 | $ | 21,603 | $ | 43,460 | ||||||||||||
| Allowance for loan losses to non-accrual loans | 191.53 | % | 293.51 | % | 370.76 | % | ||||||||||||
| Allowance for loan losses acquired loans to acquired loans | 0.40 | 0.45 | 0.59 | |||||||||||||||
| Allowance for loan losses originated loans to originated loans | 0.82 | 0.76 | 0.56 | |||||||||||||||
| Total allowance for loan losses to total loans | 0.80 | 0.74 | 0.56 | |||||||||||||||
|
Allowance for loan losses and remaining acquisition discount on acquired loans to gross acquired loans(1) |
5.81 | 6.69 | 9.07 | |||||||||||||||
|
Allowance for loan losses and remaining acquisition discount to total gross loans(1) |
1.08 | 1.16 | 1.61 | |||||||||||||||
| (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 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 | Year Ended | ||||||||||||||||||||||||||||
| ($ in thousands) |
December 31, 2015 |
September 30, 2015 |
December 31, 2014 |
December 31, 2015 |
December 31, 2014 |
|||||||||||||||||||||||||
| Average assets | $ | 6,391,073 | $ | 5,943,066 | $ | 4,872,538 | $ | 5,832,355 | $ | 4,368,633 | ||||||||||||||||||||
| Tax adjusted net income | ||||||||||||||||||||||||||||||
| Net income | $ | 16,672 | $ | 14,711 | $ | 12,516 | $ | 59,943 | $ | 43,707 | ||||||||||||||||||||
| Less: Adjustments to deferred tax assets | — | — | (1,422 | ) | — | (1,422 | ) | |||||||||||||||||||||||
| Tax adjusted net income | 16,672 | 14,711 | 11,094 | 59,943 | 42,285 | |||||||||||||||||||||||||
| Return on average assets | 1.03 | % | 0.98 | % | 1.02 | % | 1.03 | % | 1.00 | % | ||||||||||||||||||||
|
Non-GAAP tax adjusted return on average assets(1) |
1.03 | 0.98 | 0.90 | 1.03 | 0.97 | |||||||||||||||||||||||||
| (1) | Return on average assets is tax adjusted for the three and twelve months ended December 31, 2014 for an adjustment to deferred tax assets. | ||
| Non-GAAP tax adjusted return on average tangible equity | ||||||||||||||||||||||||||||||
| (unaudited) | Three Months Ended | Year Ended | ||||||||||||||||||||||||||||
| ($ in thousands) |
December 31, 2015 |
September 30, 2015 |
December 31, 2014 |
December 31, 2015 |
December 31, 2014 |
|||||||||||||||||||||||||
| Tax adjusted average tangible equity: | ||||||||||||||||||||||||||||||
| Average stockholders' equity | $ | 863,532 | $ | 849,777 | $ | 794,066 | $ | 838,881 | $ | 752,716 | ||||||||||||||||||||
| Less: | ||||||||||||||||||||||||||||||
| Average goodwill | 262,115 | 262,115 | 238,528 | 256,363 | 238,528 | |||||||||||||||||||||||||
| Average core deposit intangibles | 10,401 | 11,058 | 12,960 | 11,362 | 13,918 | |||||||||||||||||||||||||
| Tax adjusted average tangible equity | 591,016 | 576,604 | 542,578 | 571,156 | 500,270 | |||||||||||||||||||||||||
| Tax adjusted net income: | ||||||||||||||||||||||||||||||
| Net income | 16,672 | 14,711 | 12,516 | 59,943 | 43,707 | |||||||||||||||||||||||||
| Less: Adjustments to deferred tax assets | — | — | (1,422 | ) | — | (1,422 | ) | |||||||||||||||||||||||
| Tax adjusted net income | 16,672 | 14,711 | 11,094 | 59,943 | 42,285 | |||||||||||||||||||||||||
| Return on average stockholders' equity | 7.7 | % | 6.9 | % | 6.3 | % | 7.1 | % | 5.8 | % | ||||||||||||||||||||
|
Non-GAAP tax adjusted return on average stockholders' equity(1) |
7.7 | 6.9 | 5.5 | 7.1 | 5.6 | |||||||||||||||||||||||||
|
Non-GAAP tax adjusted return on average tangible equity(1) |
11.2 | 10.1 | 8.1 | 10.5 | 8.5 | |||||||||||||||||||||||||
| (1) | Return on average stockholders' equity and average tangible equity are tax adjusted for the three and twelve months ended December 31, 2014 for an adjustment to deferred tax assets. | ||
| Non-GAAP net interest margin | ||||||||||||||||||||||||||||||||
| (unaudited) | Three Months Ended | Year Ended | ||||||||||||||||||||||||||||||
| ($ in thousands) |
December 31, 2015 |
September 30, 2015 |
December 31, 2014 |
December 31, 2015 |
December 31, 2014 |
|||||||||||||||||||||||||||
| Net interest income | $ | 56,724 | $ | 51,431 | $ | 42,180 | $ | 208,325 | $ | 157,695 | ||||||||||||||||||||||
|
Less: |
Accretion/amortization of acquisition discount/premium(1) |
(6,225 | ) | (3,873 | ) | (4,862 | ) | (25,906 | ) | (24,878 | ) | |||||||||||||||||||||
| Non-GAAP net interest income | 50,499 | 47,558 | 37,318 | 182,419 | 132,817 | |||||||||||||||||||||||||||
| Average interest earning assets | $ | 5,834,985 | $ | 5,374,545 | $ | 4,351,895 | $ | 5,275,456 | $ | 3,851,089 | ||||||||||||||||||||||
|
Add: |
Average unamortized acquisition discounts |
24,559 | 25,407 | 44,976 | 35,002 | 53,183 | ||||||||||||||||||||||||||
| Non-GAAP average interest-earning assets | 5,859,544 | 5,399,952 | 4,396,871 | 5,310,458 | 3,904,272 | |||||||||||||||||||||||||||
| Net interest margin impact | 0.44 | % | 0.31 | % | 0.48 | % | 0.51 | % | 0.69 | % | ||||||||||||||||||||||
| (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) |
December 31, 2015 |
September 30, 2015 |
December 31, 2014 |
||||||||||||
| Tangible equity: | |||||||||||||||
| Total stockholders' equity | $ | 867,038 | $ | 851,871 | $ | 799,583 | |||||||||
| Less: | |||||||||||||||
| Goodwill | 262,115 | 262,115 | 238,528 | ||||||||||||
| Core deposit intangibles | 10,099 | 10,726 | 12,608 | ||||||||||||
| Tangible equity | 594,824 | 579,030 | 548,447 | ||||||||||||
| Shares of common stock outstanding | 32,500,191 | 28,738,019 | 28,148,516 | ||||||||||||
|
Shares of common stock to be issued upon conversion of preferred stock |
30,600 | 3,620,550 | 3,620,550 | ||||||||||||
|
Total as converted shares of common stock outstanding(1) |
32,530,791 | 32,358,569 | 31,769,066 | ||||||||||||
| Book value per as converted common share | 26.65 | 26.33 | 25.17 | ||||||||||||
| Tangible book value per as converted common share | 18.28 | 17.89 | 17.26 | ||||||||||||
| (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. | ||
