Opus Bank Announces Loan Charge-Offs Will Impact Third Quarter Earnings

IRVINE, Calif.--()--Opus Bank (“Opus”) (NASDAQ: OPB) announced today that earnings for the third quarter 2016, which will be announced on October 24, 2016 before the market opens, will include a $0.59 per diluted share impact from loan charge-offs and is expected to result in a net loss of approximately $0.05 per diluted share for the third quarter of 2016.

As part of the credit review process of impaired loans, new developments supported charge-offs being recognized on eight loan relationships through the allowance for loan losses at September 30, 2016. Charge-offs were recorded on these eight loan relationships, which have been impacting the provision for loan losses and earnings for the past eight quarters and include three of the same loan relationships that were discussed during Opus' second quarter 2016 earnings conference call. Charge-offs for the eight loan relationships totaled $38.8 million and had specific reserves of $16.7 million previously recorded. In addition, these charge-offs increased the reserve levels recorded against the remaining loan portfolio by $13.6 million as a result of higher loss factors incorporated into our allowance for loan losses methodology to reflect the charge-offs in the third quarter of 2016.

Two loan relationships originated by our Technology Banking division, which we previously announced would be deemphasized, contributed $22.2 million, or 57%, of the charge-offs and $8.1 million, or 60%, of the increased reserves as a result of higher loss factors. The remaining six loan relationships that had $16.6 million of charge-offs were from across our Commercial and Specialty Banking divisions. These eight loan relationships had a remaining balance of $19.1 million as of September 30, 2016 and have been charged off to the estimated fair value of each loan's underlying collateral.

Total nonperforming assets decreased 44% to $44.8 million, or 0.58% of total assets, as of September 30, 2016 compared to $79.4 million, or 1.06% of total assets, as of June 30, 2016. Total delinquencies decreased 55% to $21.7 million as of September 30, 2016 compared to $48.5 million as of June 30, 2016, and total criticized loans were $147.4 million as of September 30, 2016 compared to $146.5 million as of June 30, 2016. The ratio of our allowance for loan losses to total loans was 0.94% as of September 30, 2016 compared to 0.97% as of June 30, 2016. Our coverage ratio, which includes the remaining discount on the acquired loan portfolio, was 1.01% as of September 30, 2016 compared to 1.07% as of June 30, 2016.

Our Tier 1 leverage ratio is expected to be 8.16%, Common Equity Tier 1 ratio is expected to be 9.24% and total risk-based capital ratio is expected to be 12.29% as of September 30, 2016, compared to 8.52%, 9.74% and 12.93%, respectively, as of June 30, 2016.

Management will discuss in full detail these charge-offs, the provision for loan losses and Opus’ credit quality during the third quarter 2016 earnings conference call scheduled for Monday, October 24, 2016 at 7:00 AM Pacific Time.

Conference Call Details:

Date: Monday, October 24, 2016
Time: 7:00 a.m. PT (10:00 a.m. ET)
Phone Number: (855) 265-3237
Conference Id: 88807026
Webcast URL: http://investor.opusbank.com/event

Replay Information: For those who are not able to listen to the call, an archive of the call will be available beginning approximately 2 hours following the completion of the call. To listen to the call replay, dial (855) 859-2056, or for international callers dial (404) 537-3406. The access code for either replay number is 88807026. The call replay will be available through November 24, 2016.

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About Opus Bank

Opus Bank, the Official Bank of the Pac-12 Conference, is an FDIC-insured California-chartered commercial bank with $7.5 billion of total assets, $6.1 billion of total loans and $6.2 billion in total deposits, as of June 30, 2016. Opus Bank provides superior ideas and solutions, and banking products to its clients through its Retail Bank, Commercial Bank, Merchant Bank, and Correspondent Bank. Opus Bank offers a suite of treasury and cash management and depository solutions and a wide range of loan products, including commercial, healthcare, media and entertainment, corporate finance, multifamily residential, commercial real estate, and structured finance, and is an SBA preferred lender. Opus Bank offers commercial escrow services and facilitates 1031 Exchange transactions through its Escrow and Exchange divisions. Opus Bank provides clients with financial and advisory services related to raising equity capital, targeted acquisition and divestiture strategies, general mergers and acquisitions, debt and equity financing, balance sheet restructuring, valuation, strategy, and performance improvement through its Merchant Banking Division and its broker-dealer subsidiary, Opus Financial Partners, LLC. Opus Bank’s subsidiary, PENSCO Trust Company, is a leading tech-enabled alternative asset IRA custodian with over $12 billion of custodial assets and over 48,000 client accounts, which are comprised of self-directed investors, financial institutions, capital raisers, and financial advisors. Opus Bank operates 56 banking offices, including 32 in California, 21 in the Seattle/Puget Sound region in Washington, two in the Phoenix metropolitan area of Arizona, and one in Portland, Oregon. Opus Bank is an Equal Housing Lender. For additional information about Opus Bank, please visit our website: www.opusbank.com.

Forward-Looking Statements

This release 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. The forward-looking information presented in this press release is not a guarantee of future events, and actual events may differ materially from those made in or suggested by the forward-looking information contained in this press release. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “intend” or “expect” or variations thereon or similar terminology. All such statements speak only as of the date made, and Opus undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Contacts

Opus Bank
Ms. Nicole M. Carrillo, 949-251-8133
EVP, Chief Financial Officer
or
Mr. Brett G. Villaume, 949-224-8866
SVP, Director of Investor Relations

Contacts

Opus Bank
Ms. Nicole M. Carrillo, 949-251-8133
EVP, Chief Financial Officer
or
Mr. Brett G. Villaume, 949-224-8866
SVP, Director of Investor Relations