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Opus Bank Announces Second Quarter 2019 Financial Results

IRVINE, Calif.--(BUSINESS WIRE)--

  • Loans increased 6.0% and deposits increased 2.4% in the second quarter
  • Continued improvements in credit quality; Nonperforming assets to total assets ratio decreased three basis points to 0.27%
  • Executed a cost reduction initiative during the second quarter to improve efficiency

Opus Bank ("Opus") (NASDAQ: “OPB”) announced today net income of $8.7 million, or $0.23 per diluted share, for the second quarter of 2019, compared to net income of $10.9 million, or $0.28 per diluted share, for the first quarter of 2019. Net income during the second quarter of 2019 included $4.9 million of expenses related to our cost reduction initiative and certain other strategic actions, of which $4.3 million was severance expense, as well as an increase in our effective tax rate of approximately seven percentage points that was driven by the cost reduction initiative. Together, these items impacted earnings by $0.12 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 August 22, 2019 to common stockholders of record as of August 8, 2019, and a common-equivalent payment to its Series A Preferred stockholders.

Earnings Summary

 

 

 

(unaudited)

 

 

 

 

For the three months ended

($ in thousands, except per share data)

June 30, 2019

March 31, 2019

June 30, 2018

Net income

$

8,686

 

$

10,861

 

$

15,464

 

Earnings per diluted share

 

0.23

 

 

0.28

 

 

0.40

 

Return on average assets

 

0.45

%

 

0.60

%

 

0.86

%

Return on average stockholders' equity

 

3.29

%

 

4.19

%

 

6.03

%

Return on average tangible common equity1

 

5.28

%

 

6.76

%

 

9.93

%

Efficiency ratio

 

71.32

%

 

70.61

%

 

66.29

%

 

 

 

 

Adjusted Earnings1

 

 

 

Adjusted net income

$

13,308

 

$

12,305

 

$

15,367

 

Adjusted earnings per diluted share

 

0.35

 

 

0.32

 

 

0.40

 

Adjusted return on average assets

 

0.68

%

 

0.68

%

 

0.85

%

Adjusted return on average stockholders' equity

 

5.04

%

 

4.75

%

 

6.00

%

Adjusted return on average tangible common equity

 

8.08

%

 

7.66

%

 

9.87

%

Adjusted efficiency ratio

 

63.55

%

 

67.93

%

 

65.95

%

 

 

 

 

[1] See reconciliation of non-GAAP financial measures to corresponding GAAP measures on pages 16-17.

 

Paul W. Taylor, President and Chief Executive Officer of Opus Bank, stated, "Our earnings performance in the second quarter included earnings per diluted share of $0.23, or adjusted EPS of $0.35, driven by strong loan growth from our multifamily lending division, solid deposit growth, and positive contributions from PENSCO and our Escrow and Exchange divisions. Additionally, credit quality continued to improve, with Enterprise Value loans decreasing 39% from the prior quarter to $64.5 million as of June 30th and nonperforming assets down to just 0.27% of total assets.”

Mr. Taylor continued, “As demonstrated by our lower net interest margin this period, we continue to navigate through a challenging interest rate environment, with a flattening yield curve that is plaguing the banking industry. Yet, we have recognized opportunities to increase interest income and offset the impact of rising funding costs, while also focusing on managing our noninterest expenses. During the second quarter, we restructured our expense base, which resulted in charges for severance and higher income tax expenses during the quarter. We expect these actions to improve our efficiency and result in greater profitability in future quarters.”

Loans

Loans increased $327.5 million, or 6%, to $5.8 billion as of June 30, 2019, from $5.5 billion as of March 31, 2019, and increased $716.6 million, or 14%, from $5.1 billion as of June 30, 2018. The increase in loans during the second quarter of 2019 was driven by new loan fundings of $703.6 million, partially offset by loan payoffs of $238.7 million, which included planned exits of $45.9 million. Additionally, during the second quarter, we transferred $79.1 million of multifamily loans to held-for-sale, which are anticipated to be sold during the third quarter of 2019.

Loan Balance Roll Forward

 

 

 

 

(unaudited)

 

Three Months Ended

($ in millions)

 

June 30,
2019

 

March 31,
2019

 

December 31,
2018

 

September 30,
2018

 

June 30,
2018

 

 

 

 

 

 

 

 

 

 

 

Beginning loan balance

 

$

5,461.5

 

 

$

5,165.2

 

 

$

5,159.9

 

 

$

5,072.4

 

 

$

5,229.0

 

New loan fundings

 

 

703.6

 

 

 

538.0

 

 

 

412.3

 

 

 

435.7

 

 

 

295.6

 

Loan payoffs

 

 

(192.8

)

 

 

(173.7

)

 

 

(265.3

)

 

 

(197.4

)

 

 

(299.5

)

Transfers to HFS

 

 

(79.1

)

 

 

 

 

Planned exits

 

 

(45.9

)

 

 

(22.5

)

 

 

(59.2

)

 

 

(60.6

)

 

 

(58.5

)

Other1

 

 

(58.3

)

 

 

(45.5

)

 

 

(82.5

)

 

 

(90.2

)

 

 

(94.2

)

Ending loan balance

 

$

5,789.0

 

 

$

5,461.5

 

 

$

5,165.2

 

 

$

5,159.9

 

 

$

5,072.4

 

 

 

 

 

 

 

 

 

 

 

 

[1] Includes normal amortization, paydowns, charge-offs, and loan sales that were not planned exits

New loan fundings in the second quarter of 2019 totaled $703.6 million, an increase of $165.6 million, or 31%, from the first quarter of 2019 and an increase of $408.0 million, or 138%, from the second quarter of 2018. The growth in new loan fundings compared to the prior quarter and year-ago period was primarily driven by multifamily loan originations, as favorable market conditions and strong demand from borrowers continued in the second quarter. Quarterly loan payoffs in the second quarter were $192.8 million, excluding planned loan exits, compared to $173.7 million in the first quarter of 2019 and $299.5 million in the second quarter of 2018.

Loan commitments originated during the second quarter of 2019 totaled $763.3 million, compared to $550.3 million during the first quarter of 2019 and $306.5 million during the second quarter of 2018. Unfunded commitments on loans totaled $405.5 million as of June 30, 2019.

Investment Securities

Investment securities totaled $1.1 billion as of June 30, 2019, a decrease of $42.8 million, or 4%, compared to March 31, 2019, and an increase of $27.2 million, or 3%, compared to June 30, 2018. The decrease in investment securities compared to the first quarter was primarily driven by accelerated amortization from pay downs on the underlying loans.

Deposits and Borrowings

Deposits increased $146.6 million, or 2%, to $6.2 billion as of June 30, 2019, from $6.1 billion as of March 31, 2019, and increased $289.2 million, or 5%, from $5.9 billion as of June 30, 2018. Deposit growth during the second quarter of 2019 was primarily driven by interest-bearing demand deposits generated by our Escrow and Exchange, Fiduciary, and Municipal Banking divisions, which increased $180.5 million, or 8%, compared to the prior quarter. Certificates of deposit increased $81.0 million, or 10%, from the prior quarter. Noninterest-bearing demand deposits decreased 6% from the prior quarter and measured 12% of total deposits as of June 30, 2019. The average balance of deposits in the second quarter of 2019 increased $224.9 million compared to the prior quarter, as deposit inflows occurred earlier in the period.

Our loan to deposit ratio was 93% as of June 30, 2019, compared to 90% as of March 31, 2019 and 85% as of June 30, 2018.

Federal Home Loan Bank (FHLB) advances increased to $350.0 million as of June 30, 2019, compared to $330.0 million as of March 31, 2019, and no outstanding balance as of June 30, 2018. The average balance of FHLB advances during the second quarter of 2019 was $351.9 million, compared to $122.0 million in the first quarter of 2019 and $69.1 million in the second quarter of 2018.

Net Interest Income

Net interest income decreased 1% to $50.5 million for the second quarter of 2019, compared to $50.8 million for the first quarter of 2019, and increased 2.0% compared to $49.5 million for the second quarter of 2018. Interest income from loans increased 7% to $61.2 million for the second quarter of 2019, compared to $57.0 million for the first quarter of 2019, driven primarily by a 9% increase in the average balance of loans, while interest expense increased 27% to $20.4 million for the second quarter of 2019, compared to $16.1 million for the first quarter of 2019. The increase in interest expense during the second quarter of 2019 was driven by increased balances and a higher rate of interest-bearing deposits, a change in the mix of deposits to higher-cost deposit categories, and higher average balances of FHLB advances.

Net Interest Margin

The current interest rate environment and flattening yield curve continue to negatively impact our net interest margin (NIM). Taxable equivalent NIM decreased 27 basis points to 2.88% in the second quarter of 2019 from 3.15% in the first quarter of 2019, and decreased 19 basis points from 3.07% in the second quarter of 2018. The linked-quarter change was primarily driven by an 18 basis point increase in the cost of funds from the prior quarter to 1.23% and a nine basis point decrease in the yield on interest earning assets to 4.04%. Our cost of deposits increased 14 basis points during the second quarter of 2019 to 1.06%, primarily due to higher rates paid on money market and time deposits, as competitive pricing pressure in our western markets remained elevated. Other factors that contributed to the decrease in NIM in the second quarter of 2019 included a six-basis-point decrease in the yield on investment securities and one additional day in the second quarter compared to the first quarter of 2019, which negatively impacted NIM by four basis points.

Noninterest Income

Noninterest income increased 8% to $12.0 million in the second quarter of 2019 from $11.1 million in the first quarter of 2019, and decreased 7% from $12.9 in the second quarter of 2018. The increase in noninterest income compared to the prior quarter was driven by growth in trust administrative fees from PENSCO, our alternative asset IRA custodian subsidiary, escrow and exchange fees, deposit service charges, and other income. Other income in the first quarter of 2019 included an impairment charge on a sublet property of $489,000 primarily related to the exiting of Opus Financial Partners, the company's broker-dealer, as a line of business. Excluding this item, noninterest income increased 4% in the second quarter of 2019 compared to the prior quarter.

Noninterest Expense

Noninterest expense increased 2% to $46.3 million in the second quarter of 2019, compared to $45.4 million in the first quarter of 2019, and increased 7.4% compared to $43.1 million in the second quarter of 2018. On an adjusted basis after giving effect to expenses described in the paragraph below, noninterest expense decreased 6% in the second quarter of 2019, primarily due to lower compensation and benefits expense and a reduction in legal fees from the prior quarter. Our efficiency ratio for the second quarter of 2019 was 71.3%, or 63.5% on an adjusted basis, compared to 70.6% for the first quarter of 2019, or 67.9% on an adjusted basis.

During the second quarter of 2019 we executed a cost reduction initiative that included a reduction in workforce that generated severance expense of $4.3 million. Additionally, other strategic action related expenses totaled $583,000 during the second quarter, which together with severance expense increased total noninterest expense by $4.9 million. Noninterest expense during the first quarter of 2019 included a $1.4 million expense related to a legal settlement.

Income Tax Expense

We recorded an income tax expense of $4.2 million in the second quarter of 2019, compared to an income tax expense of $3.4 million in the first quarter of 2019 and an income tax expense of $4.1 in the second quarter of 2018. Our effective tax rate for the second quarter of 2019 was 32.7%, compared to 24.0% for the first quarter of 2019 and 20.8% for the second quarter of 2018. The increase in our effective tax rate during the second quarter of 2019 was primarily driven by certain severance payments associated with the cost reduction initiative, which resulted in annual compensation that exceeded the deductible threshold under Internal Revenue Code Section 162(m). These actions increased our effective tax rate by approximately seven percentage points.

Asset Quality

Total nonperforming assets decreased 9% to $21.2 million as of June 30, 2019, compared to $23.3 million as of March 31, 2019, and decreased 47% compared to $40.0 million as of June 30, 2018. Our ratio of nonperforming assets to total assets measured 0.27% as of June 30, 2019, compared to 0.30% and 0.56% as of March 31, 2019 and June 30, 2018, respectively. Total criticized loans decreased $14.6 million, or 10%, to $137.9 million as of June 30, 2019, compared to $152.5 million as of March 31, 2019. Classified loans decreased $16.1 million in the second quarter of 2019, while special mention loans increased $1.5 million. Total Enterprise Value loans decreased $40.5 million, or 39%, during the second quarter of 2019 and totaled $64.5 million as of June 30, 2019.

Our allowance for loan losses was $57.7 million, or 1.00% of loans, as of June 30, 2019, compared to $58.5 million, or 1.07% of loans, as of March 31, 2019, and $59.2 million, or 1.17% of loans, as of June 30, 2018. Net charge-offs during the second quarter of 2019 were $4.0 million, or 0.28% of average loans annualized, compared to net recoveries of $1.6 million, or (0.12)% of average loans annualized, for the first quarter of 2019, and $8.4 million, or 0.66% of average loans annualized, for the second quarter of 2018. The ratio of the allowance for loan losses to total nonaccrual loans was 273% as of June 30, 2019, compared to 251% as of March 31, 2019 and 148% as of June 30, 2018.

We recorded a provision expense for loan losses of $3.3 million in the second quarter of 2019, compared to a provision expense of $2.2 million in the first quarter of 2019 and a negative provision of $213,000 in the second quarter of 2018. The provision expense during the second quarter of 2019 was primarily driven by net charge-offs, net loan growth, and risk rating migration, partially offset by planned loan exits.

Capital

As of June 30, 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-Capitalized
Regulatory
Requirements

(unaudited)

 

June 30,
2019¹

 

March 31,
2019

 

June 30,
2018

 

Tier 1 leverage ratio

 

9.30

%

 

9.86

%

 

9.85

%

 

5.00

%

Common Equity Tier 1 ratio

 

11.07

 

 

11.10

 

 

11.80

 

 

6.50

 

Tier 1 risk-based capital ratio

 

11.56

 

 

11.59

 

 

12.33

 

 

8.00

 

Total risk-based capital ratio

 

14.77

 

 

14.85

 

 

15.86

 

 

10.00

 

Tangible equity to tangible assets ratio

 

9.26

 

 

9.27

 

 

9.67

 

 

NA

Tangible common equity to tangible assets ratio

 

8.87

 

 

8.88

 

 

9.24

 

 

NA

 

 

 

 

 

 

 

 

 

[1] Regulatory capital ratios are preliminary until filing of our June 30, 2019 FDIC call report.

 

Stockholders’ equity totaled over $1.1 billion as of June 30, 2019 and increased $13.2 million and $28.3 million compared to March 31, 2019 and June 30, 2018, respectively. Our tangible book value per common share increased $0.36 to $18.32 as of June 30, 2019, compared to $17.96 as of March 31, 2019 and increased $0.84 compared to $17.48 as of June 30, 2018.

Conference Call and Webcast Details

Date: Monday, July 29, 2019
Time: 8:00 a.m. PT (11:00 a.m. ET)

Phone Number: (833) 628-4594
Conference ID: 6638938
Webcast URL: http://investor.opusbank.com/event

Analysts, investors, and the general public may listen to our discussion of Opus' second 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. 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 6638938. The call replay will be available through August 29, 2019.

About Opus Bank

Opus Bank is an FDIC insured California-chartered commercial bank with $7.9 billion of total assets, $5.9 billion of total loans, and $6.2 billion in total deposits as of June 30, 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, including without limitation: our expectations regarding improvements to our efficiency and greater profitability in future quarters; and our plans to sell $79.1 million of multifamily loans during the third quarter of 2019. 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, risks that our expected efficiencies and savings from our expense reduction initiatives will be less than anticipated, 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, risks related to our technology and information systems, and the management of our operating expenses, including the effectiveness of certain strategic cost reduction initiatives. 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

 

For the six months ended

($ in thousands, except per share amounts)

 

June 30,
2019

 

March 31,
2019

 

June 30,
2018

 

June 30,
2019

 

June 30,
2018

Interest income:

 

 

 

 

 

 

 

 

 

 

Loans

 

$

 

61,157

 

 

$

 

57,007

 

 

$

 

53,807

 

 

$

 

118,164

 

 

$

 

108,444

 

Investment securities

 

 

8,359

 

 

 

8,577

 

 

 

5,048

 

 

 

16,936

 

 

 

10,142

 

Due from banks

 

 

1,447

 

 

 

1,324

 

 

 

1,326

 

 

 

2,771

 

 

 

2,277

 

Total interest income

 

 

70,963

 

 

 

66,908

 

 

 

60,181

 

 

 

137,871

 

 

 

120,863

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

16,359

 

 

 

13,425

 

 

 

8,403

 

 

 

29,785

 

 

 

15,423

 

Federal Home Loan Bank advances

 

 

2,165

 

 

 

756

 

 

 

332

 

 

 

2,921

 

 

 

379

 

Subordinated debt

 

 

1,923

 

 

 

1,923

 

 

 

1,923

 

 

 

3,845

 

 

 

3,845

 

Total interest expense

 

 

20,447

 

 

 

16,104

 

 

 

10,658

 

 

 

36,551

 

 

 

19,647

 

Net interest income

 

 

50,516

 

 

 

50,804

 

 

 

49,523

 

 

 

101,320

 

 

 

101,216

 

Provision (negative provision) for loan losses

 

 

3,281

 

 

 

2,197

 

 

 

(213

)

 

 

5,478

 

 

 

3,700

 

Net interest income after provision (negative provision) for loan losses

 

 

47,235

 

 

 

48,607

 

 

 

49,736

 

 

 

95,842

 

 

 

97,516

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

Fees and service charges on deposit accounts

 

 

1,505

 

 

 

1,440

 

 

 

1,783

 

 

 

2,945

 

 

 

3,505

 

Escrow and exchange fees

 

 

1,506

 

 

 

1,353

 

 

 

1,498

 

 

 

2,859

 

 

 

2,858

 

Trust administrative fees

 

 

6,829

 

 

 

6,685

 

 

 

6,841

 

 

 

13,514

 

 

 

13,819

 

Loss on sale of loans

 

 

(56

)

 

 

(111

)

 

 

(100

)

 

 

(166

)

 

 

(169

)

Gain from OREO and other repossessed assets

 

 

 

 

84

 

 

 

 

203

 

Gain on sale of investment securities

 

 

6

 

 

 

113

 

 

 

 

119

 

 

 

182

 

Bank-owned life insurance, net

 

 

994

 

 

 

980

 

 

 

1,045

 

 

 

1,974

 

 

 

2,097

 

Other income

 

 

1,211

 

 

 

640

 

 

 

1,776

 

 

 

1,850

 

 

 

3,741

 

Total noninterest income

 

 

11,995

 

 

 

11,100

 

 

 

12,927

 

 

 

23,095

 

 

 

26,236

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

29,095

 

 

 

26,875

 

 

 

25,472

 

 

 

55,971

 

 

 

52,280

 

Professional services

 

 

1,099

 

 

 

2,216

 

 

 

2,619

 

 

 

3,315

 

 

 

4,336

 

Occupancy expense

 

 

3,581

 

 

 

3,830

 

 

 

3,751

 

 

 

7,411

 

 

 

7,757

 

Depreciation and amortization

 

 

1,704

 

 

 

1,833

 

 

 

1,763

 

 

 

3,536

 

 

 

3,362

 

Deposit insurance and regulatory assessments

 

 

519

 

 

 

773

 

 

 

959

 

 

 

1,292

 

 

 

2,089

 

Insurance expense

 

 

335

 

 

 

344

 

 

 

335

 

 

 

679

 

 

 

673

 

Data processing

 

 

1,058

 

 

 

565

 

 

 

318

 

 

 

1,622

 

 

 

758

 

Software licenses and maintenance

 

 

1,217

 

 

 

1,301

 

 

 

1,126

 

 

 

2,518

 

 

 

2,275

 

Office services

 

 

1,679

 

 

 

1,639

 

 

 

1,847

 

 

 

3,318

 

 

 

3,726

 

Amortization of other intangible assets

 

 

1,415

 

 

 

1,415

 

 

 

1,479

 

 

 

2,830

 

 

 

2,959

 

Advertising and marketing

 

 

833

 

 

 

723

 

 

 

843

 

 

 

1,557

 

 

 

1,800

 

Other expenses

 

 

3,784

 

 

 

3,896

 

 

 

2,629

 

 

 

7,680

 

 

 

5,205

 

Total noninterest expense

 

 

46,319

 

 

 

45,410

 

 

 

43,141

 

 

 

91,729

 

 

 

87,220

 

Income before income tax expense

 

 

12,911

 

 

 

14,297

 

 

 

19,522

 

 

 

27,208

 

 

 

36,532

 

Income tax expense

 

 

4,225

 

 

 

3,436

 

 

 

4,058

 

 

 

7,661

 

 

 

8,165

 

Net income

 

$

 

8,686

 

 

$

 

10,861

 

 

$

 

15,464

 

 

$

 

19,547

 

 

$

 

28,367

 

Basic earnings per common share

 

$

 

0.23

 

 

$

 

0.29

 

 

$

 

0.41

 

 

$

 

0.52

 

 

$

 

0.76

 

Diluted earnings per common share

 

 

0.23

 

 

 

0.28

 

 

 

0.40

 

 

 

0.51

 

 

 

0.74

 

Weighted average shares - basic

 

 

36,254,474

 

 

 

36,187,431

 

 

 

36,027,569

 

 

 

36,221,048

 

 

 

35,997,839

 

Weighted average shares - diluted

 

 

38,238,324

 

 

 

38,133,705

 

 

 

38,316,721

 

 

 

38,192,357

 

 

 

38,317,160

 

Consolidated Balance Sheets

 

 

 

 

 

 

(unaudited)

 

As of

($ in thousands, except share amounts)

 

June 30,
2019

 

March 31,
2019

 

June 30,
2018

 

 

 

Assets

 

 

 

 

 

 

Cash and due from banks

 

$

40,358

 

 

$

42,862

 

 

$

58,516

 

Due from banks – interest-bearing

 

 

219,329

 

 

 

378,671

 

 

 

342,483

 

Investment securities available-for-sale, at fair value

 

 

1,051,067

 

 

 

1,093,915

 

 

 

1,023,882

 

Loans

 

 

5,788,986

 

 

 

5,461,500

 

 

 

5,072,366

 

Less allowance for loan losses

 

 

(57,724

)

 

 

(58,483

)

 

 

(59,197

)

Loans, net

 

 

5,731,262

 

 

 

5,403,017

 

 

 

5,013,169

 

Loans held-for-sale

 

 

79,103

 

 

 

OREO and other repossessed assets

 

 

 

Premises and equipment, net

 

 

24,656

 

 

 

25,771

 

 

 

25,718

 

Goodwill

 

 

331,832

 

 

 

331,832

 

 

 

331,832

 

Other intangible assets, net

 

 

36,095

 

 

 

37,510

 

 

 

41,842

 

Deferred tax assets, net

 

 

14,237

 

 

 

15,924

 

 

 

26,450

 

Cash surrender value of bank owned life insurance, net

 

 

156,369

 

 

 

155,279

 

 

 

152,215

 

Accrued interest receivable

 

 

26,510

 

 

 

24,292

 

 

 

19,915

 

Federal Home Loan Bank stock

 

 

17,250

 

 

 

17,250

 

 

 

17,250

 

Other assets

 

 

128,893

 

 

 

161,582

 

 

 

140,054

 

Total assets

 

$

7,856,961

 

 

$

7,687,905

 

 

$

7,193,326

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing demand

 

$

738,235

 

 

$

781,429

 

 

$

844,905

 

Interest-bearing demand

 

 

2,577,873

 

 

 

2,397,361

 

 

 

2,523,488

 

Money market and savings

 

 

2,027,341

 

 

 

2,099,058

 

 

 

2,047,309

 

Time deposits

 

 

879,910

 

 

 

798,918

 

 

 

518,481

 

Total deposits

 

 

6,223,359

 

 

 

6,076,766

 

 

 

5,934,183

 

Federal Home Loan Bank advances

 

 

350,000

 

 

 

330,000

 

 

Subordinated debt, net

 

 

133,143

 

 

 

133,076

 

 

 

132,877

 

Accrued interest payable

 

 

4,980

 

 

 

2,702

 

 

 

4,008

 

Other liabilities

 

 

84,151

 

 

 

97,255

 

 

 

89,201

 

Total liabilities

 

 

6,795,633

 

 

 

6,639,799

 

 

 

6,160,269

 

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 37,338,920
and 37,227,637 and 36,618,447 shares, respectively

 

 

700,220

 

 

 

700,220

 

 

 

700,220

 

Additional paid-in capital

 

 

82,755

 

 

 

80,528

 

 

 

67,980

 

Retained earnings

 

 

271,495

 

 

 

267,021

 

 

 

266,033

 

Treasury stock, at cost; 1,087,701 and 1,048,657 and 568,794 shares, respectively

 

 

(26,217

)

 

 

(25,403

)

 

 

(14,666

)

Accumulated other comprehensive income (loss)

 

 

3,965

 

 

 

(3,370

)

 

 

(15,620

)

Total stockholders’ equity

 

 

1,061,328

 

 

 

1,048,106

 

 

 

1,033,057

 

Total liabilities and stockholders’ equity

 

$

7,856,961

 

 

$

7,687,905

 

 

$

7,193,326

 

Selected Financial Data

 

 

 

 

 

(unaudited)

As of or for the three months ended

As of or for the six months ended

 

June 30,
2019

March 31,
2019

June 30,
2018

June 30,
2019

June 30,
2018

Yield on interest-earning assets1

4.04

%

4.13

%

3.73

%

4.09

%

3.74

%

Net interest margin1

2.88

 

3.15

 

3.07

 

3.01

 

3.14

 

Cost of deposits2

1.06

 

0.92

 

0.57

 

0.99

 

0.52

 

Cost of funds3

1.23

 

1.05

 

0.70

 

1.15

 

0.64

 

Noninterest expense to average assets

2.38

 

2.51

 

2.40

 

2.45

 

2.42

 

Loan to deposits

93.02

 

89.88

 

85.48

 

93.02

 

85.48

 

(1) Yield on interest-earning assets and net interest margin are presented on a tax equivalent basis using the federal effective tax rate.
(2) Calculated as interest expense on deposits divided by total average deposits.
(3) Calculated as total interest expense divided by average total deposits, FHLB advances and subordinated debt.

Loan Fundings

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

For the three months ended

 

For the six months ended

($ in thousands)

 

June 30,
2019

 

March 31,
2019

 

June 30,
2018

 

June 30,
2019

 

June 30,
2018

Real estate mortgage loans:

 

 

 

 

 

 

 

 

 

 

Multifamily residential

 

$

569,719

 

$

426,916

 

$

147,238

 

 

996,635

 

 

414,539

Commercial real estate

 

 

75,185

 

 

47,127

 

 

48,946

 

 

122,312

 

 

78,253

Construction and land loans

 

 

7,331

 

 

6,212

 

 

14,856

 

 

13,543

 

 

19,741

Commercial business loans

 

 

48,725

 

 

56,879

 

 

80,797

 

 

105,604

 

 

226,981

Small Business Administration loans

 

 

2,642

 

 

836

 

 

3,775

 

 

3,478

 

 

8,353

Total loan fundings

 

$

703,602

 

$

537,970

 

$

295,612

 

$

1,241,572

 

$

747,867

 

Composition of Loan Portfolio

 

As of

(unaudited)

 

June 30,
2019

 

March 31,
2019

 

June 30,
2018

($ in thousands)

 

Amount

 

% of
Total loans

 

Amount

 

% of
Total loans

 

Amount

 

% of
Total loans

Real estate mortgage loans:

 

 

 

 

 

 

 

 

 

 

 

 

Single-family residential

 

$

 

58,829

 

1.0

%

 

$

 

60,255

 

1.1

%

 

$

 

67,573

 

1.3

%

Multifamily residential

 

 

3,608,683

 

62.3

 

 

 

3,255,025

 

59.6

 

 

 

2,691,352

 

53.1

 

Commercial real estate loans:

 

 

 

 

 

 

 

 

 

 

 

 

Owner occupied

 

 

296,772

 

5.1

 

 

 

187,631

 

3.4

 

 

 

172,069

 

3.4

 

Non-owner occupied

 

 

823,647

 

14.2

 

 

 

887,852

 

16.3

 

 

 

912,811

 

18.0

 

Construction and land loans

 

 

45,100

 

0.8

 

 

 

57,223

 

1.0

 

 

 

95,077

 

1.9

 

Commercial business loans

 

 

918,428

 

15.9

 

 

 

969,916

 

17.8

 

 

 

1,085,496

 

21.4

 

Small Business Administration loans

 

 

33,658

 

0.6

 

 

 

39,253

 

0.7

 

 

 

43,224

 

0.9

 

Consumer and other loans

 

 

3,869

 

0.1

 

 

 

4,345

 

0.1

 

 

 

4,764

 

0.1

 

Total loans

 

$

 

5,788,986

 

100.0

%

 

$

 

5,461,500

 

100.0

%

 

$

 

5,072,366

 

100.0

%

Composition of Deposits

 

 

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

As of

 

 

June 30,
2019

 

March 31,
2019

 

June 30,
2018

($ in thousands)

 

Amount

 

% of
Total
deposits

 

Amount

 

% of
Total
deposits

 

Amount

 

% of
Total
deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest bearing

 

$

 

738,235

 

11.9

%

 

$

 

781,429

 

12.9

%

 

$

 

844,905

 

14.3

%

Interest bearing demand

 

 

2,577,873

 

41.4

 

 

 

2,397,361

 

39.5

 

 

 

2,523,488

 

42.5

 

Money market and savings

 

 

2,027,341

 

32.6

 

 

 

2,099,058

 

34.5

 

 

 

2,047,309

 

34.5

 

Time deposits

 

 

879,910

 

14.1

 

 

 

798,918

 

13.1

 

 

 

518,481

 

8.7

 

Total deposits

 

$

 

6,223,359

 

100.0

%

 

$

 

6,076,766

 

100.0

%

 

$

 

5,934,183

 

100.0

%

Consolidated average balance sheet, interest, yield and rates

 

 

 

 

 

 

 

 

(unaudited)

 

For the three months ended
June 30,

 

For the three months ended
March 31,

 

For the three months ended
June 30,

 

 

2019

 

2019

 

2018

($ in thousands)

 

Average
Balance

 

Interest (1)

 

Yields/
Rates

 

Average
Balance

 

Interest (1)

 

Yields/
Rates

 

Average
Balance

 

Interest (1)

 

Yields/
Rates

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Due from banks

 

$

254,059

 

$

1,447

 

 

2.28

%

 

$

234,590

 

$

1,324

 

 

2.29

%

 

$

299,987

 

$

1,326

 

 

1.77

%

Investment securities

 

 

1,081,031

 

 

8,359

 

 

3.10

 

 

 

1,101,044

 

 

8,577

 

 

3.16

 

 

 

1,054,258

 

 

5,048

 

 

1.92

 

Loans

 

 

5,744,728

 

 

61,561

 

 

4.30

 

 

 

5,266,475

 

 

57,411

 

 

4.42

 

 

 

5,156,424

 

 

54,184

 

 

4.21

 

Total interest-earning assets

 

 

7,079,818

 

 

71,367

 

 

4.04

 

 

 

6,602,109

 

 

67,312

 

 

4.13

 

 

 

6,510,669

 

 

60,558

 

 

3.73

 

Noninterest-earning assets

 

 

713,721

 

 

 

 

 

 

726,313

 

 

 

 

 

 

701,454

 

 

 

 

...