IRVINE, Calif.--(BUSINESS WIRE)--Opus Bank (“Opus” or the “Bank”) (NASDAQ: OPB) announced today a net loss of $19.0 million, or $(0.55) per diluted share, for the fourth quarter of 2016 and net income of $11.5 million, or $0.33 per diluted share, for the year ended December 31, 2016 as compared to a net loss of $3.0 million, or $(0.09) per diluted share, for the third quarter of 2016 and net income of $59.9 million, or $1.79 per diluted share, for the year ended December 31, 2015.
On January 29, 2017, Opus entered into purchase agreements with a limited number of institutional accredited investors, providing for the sale in a private placement of $53 million of its common stock at $18.50 per share, resulting in net proceeds of approximately $50 million. Closing of the transaction is subject to the receipt of a stock permit from the California Department of Business Oversight - Division of Financial Institutions and the satisfaction of customary closing conditions.
Opus’ fourth quarter 2016 earnings were impacted by a provision for loan losses totaling $69.5 million. The fourth quarter provision for loan losses was driven by the addition of $27.2 million for loan risk rating migration, $22.1 million for additional specific reserves on impaired loans and $19.2 million of net charge-offs recorded on impaired loans. The risk rating migration, specific reserve increases and charge-offs were concentrated in our commercial business loan portfolio, primarily in our Technology Banking, Healthcare Banking and Corporate Finance divisions.
Stephen H. Gordon, Founding Chairman, Chief Executive Officer and President of Opus Bank, stated, “We are deeply disappointed with the fourth quarter loss driven by credit deterioration in our commercial business loan portfolio. We take this very seriously and are acutely focused on addressing the related issues and restoring Opus to its historic levels of performance.”
Mr. Gordon continued, “We have taken decisive action to bolster our credit infrastructure and to assess our Commercial & Specialty Banking loan portfolios. We enhanced the credit administration leadership team, through the hiring of Brian Fitzmaurice as Opus’ new Senior Executive Vice President and Senior Chief Credit Officer, and we added a number of highly experienced commercial banking senior credit administrators. Further, we enhanced our enterprise risk management team and we promoted two key executives to the newly established roles of Co-Chief Lending Officers for Commercial Real Estate Banking and Commercial & Specialty Banking. We also strengthened underwriting and administration processes and augmented ongoing portfolio management and problem loan resolution. As part of our credit assessment process, our internal credit administration team, led by Mr. Fitzmaurice, performed a thorough review of the commercial business loan portfolio to supplement our comprehensive quarterly portfolio management process. In addition, we retained a nationally recognized third-party loan review firm to conduct an independent review of the same portfolio. The combination of these reviews covered substantially all of the commercial business loan portfolio, including our Commercial & Specialty Banking divisions, and confirmed that further deterioration in certain commercial business loans had occurred during the fourth quarter, which drove risk rating downgrades and resulted in increased specific reserves and charge-offs.”
On December 23, 2016, Opus completed the sale of $509.0 million of its multifamily loans through a Freddie Mac sponsored transaction, which resulted in a $14.2 million net gain on the sale of loans and $3.0 million of related noninterest expense. One class of Freddie Mac guaranteed Structured Pass-Through Certificates was issued, which was purchased entirely by Opus.
Mr. Gordon concluded, “The sale of a pool of our multifamily loans through a transaction with Freddie Mac was an important and strategic transaction that provides many benefits to Opus, including enhanced liquidity and reduces our commercial real estate loan concentrations and loan-to-deposit ratio. As we enter 2017, we believe the actions taken in the fourth quarter position Opus with a stronger credit administration and enterprise risk management infrastructure, enhanced credit culture, and a management team with the experience necessary to manage through our challenged credits. Opus possesses a strong core deposit base, a significant cash position, a largely floating-rate loan portfolio, and the ability to redeploy cash flows received from elevated loan prepayments. Opus’ balance sheet has become meaningfully more asset sensitive compared to the year-ago period, and as a result, the bank is better positioned for a potential rising interest rate environment.”
Quarter and Year End 2016 Highlights
- New loan fundings were $429.9 million in the fourth quarter of 2016 compared to $634.1 million in the third quarter of 2016 and $763.1 million in the fourth quarter of 2015. Lower loan fundings in the fourth quarter of 2016 occurred as we assessed our commercial banking loan portfolio and focused on enhancements of our credit risk process. For the full year 2016, new loan fundings totaled $2.3 billion as compared to $2.4 billion during 2015. Loan commitments of $499.9 million were originated during the fourth quarter of 2016 compared to $751.1 million in the third quarter of 2016 and $819.9 million in the fourth quarter of 2015. Loan commitments originated during 2016 totaled $2.6 billion compared to $2.8 billion in 2015.
- Total loans held-for-investment decreased by $621.0 million, or 10%, during the fourth quarter of 2016 to $5.7 billion as of December 31, 2016, and increased by $173.3 million, or 3.2%, from $5.5 billion as of December 31, 2015. The linked-quarter decrease in total loans was driven by new loan fundings being offset by the sale of $509.0 million of multifamily loans and $73.2 million of other originated and acquired loans, $353.9 million of loan payoffs during the quarter, and net loan charge-offs of $19.2 million.
- As we discussed in prior quarters, we have de-emphasized our Technology Banking division. Total loan payoffs during the fourth quarter of 2016 included full payoffs of $41.6 million in our Technology Banking portfolio. The remaining balance of Technology Banking loans was $190.5 million as of December 31, 2016. During the fourth quarter of 2016, we also took steps to de-emphasize Healthcare Practice lending.
- Total assets increased to a record $7.9 billion at December 31, 2016 from $7.7 billion at September 30, 2016 and $6.6 billion at December 31, 2015.
- Total deposits grew $182.1 million, or 3%, during the fourth quarter to a record $6.7 billion at December 31, 2016, and increased by $1.4 billion, or 26%, from December 31, 2015. Noninterest bearing plus interest bearing demand deposits (“total demand deposits”) increased by $288.3 million, or 9%, during the fourth quarter of 2016 to $3.4 billion, and increased by $1.3 billion, or 59%, during the year ended December 31, 2016. Total demand deposits increased to 51% of total deposits as of December 31, 2016, up from 48% as of September 30, 2016 and 40% as of December 31, 2015.
- Opus’ cost of deposits decreased one basis point to 0.43% for the fourth quarter of 2016 and the cost of funds decreased two basis points to 0.55% compared to the prior quarter. Our cost of deposits decreased four basis points for the year ended December 31, 2016 to 0.45% compared to 0.49% for the year ended December 31, 2015 and our cost of funds remained stable at 0.51% over the same periods.
- During the fourth quarter of 2016, approximately $279.1 million of ancillary custodial cash balances were transferred to Opus. As of December 31, 2016, total ancillary balances related to our alternative asset IRA custodian subsidiary were $1.2 billion.
- Net interest income decreased 1% to $60.2 million for the fourth quarter of 2016 compared to $60.7 million for the third quarter of 2016, and increased 6% compared to $56.7 million for the fourth quarter of 2015. The linked-quarter decrease was primarily due to a decline of $1.1 million in interest income from the acquired loan portfolio. Net interest income increased 16% to $242.5 million for the year ended December 31, 2016 from $208.3 million for the year ended December 31, 2015, mainly due to a 34% increase in interest income from originated loans during 2016. Interest income from our originated loan portfolio comprised 92% of loan interest income for the year ended December 31, 2016 as compared to 79% for the year ended December 31, 2015.
- Net interest margin decreased 16 basis points to 3.36% for the fourth quarter of 2016 compared to 3.52% for the third quarter of 2016 and 3.86% for the fourth quarter of 2015. The linked-quarter decrease in net interest margin was primarily driven by lower income from acquired loans and the impact of loans placed on nonaccrual. Net interest margin decreased 33 basis points to 3.62% for the year ended December 31, 2016 compared to 3.95% for the year ended December 31, 2015, primarily due to lower interest income from acquired loans.
- Contractual net interest margin for the fourth quarter of 2016 decreased 11 basis points from the prior quarter to 3.32% and decreased 10 basis points from the prior year. The linked-quarter decrease was due to lower average balances of acquired loans and the impact of loans placed on nonaccrual. Contractual net interest margin increased one basis point to 3.45% for the year ended December 31, 2016, primarily due to higher balances of originated loans.
- Noninterest income increased 67% to $27.1 million during the fourth quarter of 2016 compared to $16.3 million in the third quarter of 2016 and $6.0 million in the fourth quarter of 2015. Noninterest income in the fourth quarter of 2016 included $15.2 million in gains on the sale of loans, $6.6 million in trust administrative fees, $1.7 million in escrow and exchange fees and $362,000 from our Merchant Banking division, including our broker-dealer subsidiary, Opus Financial Partners. Net equity warrant valuation changes reduced total noninterest income by $1.5 million during the fourth quarter of 2016. Noninterest income increased 151% to $61.9 million for the year ended December 31, 2016 from $24.7 million for the year ended December 31, 2015.
- Noninterest expense during the fourth quarter of 2016 totaled $51.2 million compared to $42.3 million in the third quarter of 2016 and $28.0 million in the fourth quarter of 2015. The increase from the prior quarter was primarily due to a decrease of $3.7 million in origination-related deferred compensation during the quarter, $3.0 million in costs associated with the multifamily loan sale, and higher professional services fees, including legal and consulting-related expenses. Noninterest expense was $162.7 million for the year ended December 31, 2016 compared to $110.2 million for the year ended December 31, 2015. The year-over year increase was primarily due to increases in compensation and benefits and professional expenses related to the acquisition of our alternative asset IRA custodian, as well as merger and strategic initiative related expenses.
- Our efficiency ratio was 58.6% for the fourth quarter of 2016 compared to 55.0% for the third quarter of 2016 and 44.7% for the fourth quarter of 2015. The efficiency ratio increased to 53.4% for the year ended December 31, 2016 compared to 47.3% for the year ended December 31, 2015.
- Our total allowance for loan losses was $111.4 million, or 1.97% of total loans, as of December 31, 2016, compared to $61.1 million, or 0.97% of total loans, as of September 30, 2016, and $44.1 million, or 0.80% of total loans, as of December 31, 2015. Our coverage ratio, which includes the remaining discount on the acquired loan portfolio, was 2.03% as of December 31, 2016, compared to 1.04% as of September 30, 2016 and 1.08% as of December 31, 2015.
- We recorded net charge-offs of $19.2 million during the fourth quarter of 2016, compared to $39.0 million during the third quarter of 2016 and $676,000 during the fourth quarter of 2015. Charge-offs recorded during the fourth quarter of 2016 included $15.9 million for loans that had specific reserves or charge-offs recorded in prior quarters. Technology Banking and Healthcare Practice loans accounted for $12.1 million and $4.8 million of the current quarter charge-offs, respectively.
- Total criticized loans, which includes special mention and classified risk rating categories, were $317.3 million as of December 31, 2016 compared to $147.4 million as of September 30, 2016. The quarterly net change in total criticized loans was driven by $205.6 million of downgrades partially offset by $35.6 million of criticized loans that were resolved through either payoffs, loan sales or charge-offs during the quarter. Increases in criticized loans and related specific reserves were driven by deterioration in the underlying financial performance of the individual businesses or changes in financial circumstances during the current quarter.
- Total nonperforming assets increased to $95.1 million, or 1.21% of total assets, as of December 31, 2016 compared to $44.8 million, or 0.58% of total assets, as of September 30, 2016 and $24.3 million, or 0.37% of total assets as of December 31, 2015. Increases in nonperforming assets during the fourth quarter of 2016 were driven mainly by Corporate Finance, Commercial Banking and Structured Finance division loans.
- Opus’ capital ratios remain in excess of regulatory thresholds for a well-capitalized institution. Our Tier 1 leverage ratio, Common Equity Tier 1 ratio, and total risk-based capital ratios were 7.54%, 8.78%, and 12.11% as of December 31, 2016, compared to 8.11%, 9.15%, and 12.22% as of September 30, 2016 and 9.59%, 10.81%, and 11.65% as of December 31, 2015, respectively. Pro forma for the private placement of common stock on January 29, 2016, our Tier 1 leverage ratio, Common Equity Tier 1 ratio, and total risk-based capital ratios are 8.16%, 9.57%, and 12.89%.
Net Interest Income
Net interest income decreased 1% to $60.2 million for the fourth quarter of 2016 compared to $60.7 million for the third quarter of 2016 and increased 6% from $56.7 million for the fourth quarter of 2015. Interest income from originated loans increased by $137,000 from the third quarter of 2016 and increased by $11.9 million from the fourth quarter of 2015. Interest income from the acquired loan portfolio decreased by $1.1 million from the prior quarter and decreased by $7.2 million from the fourth quarter of 2015. Accretion income from the acquired loan portfolio totaled $717,000 during the fourth quarter of 2016, compared to $1.5 million during the third quarter of 2016 and $6.2 million during the fourth quarter of 2015. Interest expense was $9.2 million for the fourth quarter of 2016 compared to $9.1 million for the third quarter of 2016 and $6.7 million for the fourth quarter of 2015. The increase in interest expense was driven by the growth of $324.7 million in average interest bearing deposits from the third quarter of 2016 and $1.5 billion from the fourth quarter of 2015, as well as the addition of $132 million of subordinated debt during the second quarter of 2016.
Net interest income increased 16% to $242.5 million for the year ended December 31, 2016 from $208.3 million for the year ended December 31, 2015. Interest income for the year ended December 31, 2016 totaled $274.8 million, an increase of $41.4 million, or 18%, from $233.4 million for the year ended December 31, 2015, due to an increase of $62.4 million in interest income from the originated loan portfolio, offset by a decrease of $23.6 million in interest income from the acquired loan portfolio as the average balance of the acquired loan portfolio continues to decline. Interest expense for the year ended December 31, 2016 totaled $32.3 million, an increase of $7.2 million, or 29%, from $25.1 million for the year ended December 31, 2015. The year-over-year increase in interest expense was primarily due to higher average deposit balances and the interest expense related to subordinated debt issued during the second quarter of 2016.
Net interest margin decreased 16 basis points to 3.36% in the fourth quarter of 2016 from 3.52% in the third quarter of 2016 and decreased from 3.86% in the fourth quarter of 2015. The decrease from the prior quarter was primarily driven by lower income from acquired loans, including lower interest and accretion income, and the impact of loans placed on nonaccrual, partially offset by the net benefit from higher prepayments during the quarter and a lower cost of funds. Total loan yield during the fourth quarter of 2016 decreased to 4.29% from 4.37% in the third quarter of 2016 and 4.80% in the fourth quarter of 2015. Accretion income from the acquired loan portfolio contributed four basis points to the net interest margin during the fourth quarter of 2016 compared to nine basis points in the third quarter of 2016 and 44 basis points in the fourth quarter of 2015. The yield on originated loans decreased two basis points to 4.22% during the fourth quarter of 2016 primarily due to the impact of loans placed on nonaccrual.
Contractual net interest margin, which excludes the impact of accretion and amortization of acquisition discounts and premiums on the acquired loan portfolio, decreased 11 basis points to 3.32% for the fourth quarter of 2016 from 3.43% in the prior quarter and decreased 10 basis points from 3.42% in the fourth quarter of 2015. The linked-quarter change in contractual net interest margin was primarily due to lower average balances of acquired loans and the impact of loans placed on nonaccrual. Our cost of funds decreased two basis points to 0.55% for the fourth quarter of 2016 compared to 0.57% for the third quarter of 2016 and 0.48% for the fourth quarter of 2015. Our cost of deposits decreased one basis point to 0.43% for the fourth quarter of 2016 as compared to 0.44% for the third quarter of 2016 and 0.47% for the fourth quarter of 2015.
Net interest margin decreased 33 basis points to 3.62% for the year ended December 31, 2016 compared to 3.95% for the year ended December 31, 2015. The yield on originated loans decreased to 4.27% for the year ended December 31, 2016 compared to 4.30% for the year ended December 31, 2015. The yield on the acquired loan portfolio decreased to 10.28% for the year ended December 31, 2016 compared to 12.36% for the year ended December 31, 2015, due primarily to lower accretion income from the sales of acquired loans. Accretion income from the acquired loan portfolio contributed 0.17% and 0.51% to net interest margin during the years ended December 31, 2016 and 2015, respectively. Contractual net interest margin increased one basis point to 3.45% for the year ended December 31, 2016 compared to 3.44% for the year ended December 31, 2015. Our cost of funds remained unchanged from 0.51% for the years ended December 31, 2016 and 2015, and our cost of deposits decreased to 0.45% for the year ended December 31, 2016 from 0.49% for the year ended December 31, 2015, primarily due to the addition of $1.2 billion in deposits with an average cost of two basis points from our alternative asset IRA custodian subsidiary, offset by the addition of subordinated debt during the year.
Noninterest Income and Noninterest Expense
Noninterest income increased 67% to $27.1 million in the fourth quarter of 2016 as compared to $16.3 million in the third quarter of 2016 and $6.0 million in the fourth quarter of 2015. Noninterest income increased 151% to $61.9 million for the year ended December 31, 2016 compared to $24.7 million for the year ended December 31, 2015. Noninterest income during the fourth quarter of 2016 included $15.2 million in gains on the sale of loans, including a $14.2 million net gain associated with the multifamily loan sale and approximately $1.0 million in gain on the sales of other originated and acquired loans totaling $73.2 million. Noninterest income in the fourth quarter of 2016 also included $6.6 million of trust administrative fees from our alternative asset IRA custodian subsidiary, $1.7 million in fees generated through our Escrow and Exchange divisions, and $362,000 of advisory fee income from our Merchant Banking division, including our broker-dealer subsidiary, Opus Financial Partners. Net equity warrant valuation changes reduced total noninterest income by $1.5 million during the fourth quarter of 2016.
Noninterest expense totaled $51.2 million in the fourth quarter of 2016 as compared to $42.3 million in the third quarter of 2016 and $28.0 million in the fourth quarter of 2015. The increase in noninterest expense from the prior quarter was primarily due to a decrease of $3.7 million in origination-related deferred compensation during the quarter, $3.0 million of costs associated with the multifamily loan sale, and higher professional services fees, including legal and consulting-related expenses. Noninterest expense for the year ended December 31, 2016 was $162.7 million compared to $110.2 million for the year ended December 31, 2015. The year-over year increase was primarily due to increases in compensation and benefits and professional expenses related to the acquisition of our alternative asset IRA custodian in April 2016, as well as merger and strategic initiative related expenses.
Loans
Total loans held-for-investment, net of the allowance for loan losses, were $5.6 billion at December 31, 2016, a decrease of $671.3 million, or 11%, from $6.2 billion at September 30, 2016 and an increase of $106.0 million, or 2%, from $5.5 billion at December 31, 2015. The decrease in total loans during the fourth quarter of 2016 was driven by new loan fundings of $429.9 million being offset by the sale of $509.0 million of multifamily loans, the sale of $73.2 million of other originated and acquired loans, $353.9 million of loan payoffs during the quarter and net loan charge-offs of $19.2 million.
On December 23, 2016, Opus completed the sale of $509.0 million of its multifamily loans through a Freddie Mac sponsored transaction, which met the requirements for true sale accounting treatment. One class of Freddie Mac guaranteed Structured Pass-Through Certificates were issued, which were purchased by Opus and held as available-for-sale. Additionally, Opus was appointed to be the sub-servicer of the loans. The transaction reduced Opus’ commercial real estate loan concentration and loan to deposit ratio, and increased our liquidity ratio. At December 31, 2016, the total loan portfolio was comprised of 40% originated multifamily loans with the remaining portion comprised primarily of originated commercial business loans.
During the fourth quarter of 2016 we originated $429.9 million of new loan fundings, compared to $634.1 million in the third quarter of 2016 and $763.1 million in the fourth quarter of 2015. New loan fundings during the fourth quarter of 2016 included $187.5 million from Income Property Banking, $59.6 million from Institutional Syndications, $59.2 million from Structured Finance, $58.0 million from Healthcare Banking, $29.1 million from Commercial Banking, $23.3 million from Corporate Finance, $7.4 million from Media & Entertainment Banking, and $5.0 million from Public Finance. Loan commitments originated during the fourth quarter totaled $499.9 million as compared to $751.1 million in the third quarter of 2016 and $819.9 million in the fourth quarter of 2015. At December 31, 2016, our unfunded commitments on originated loans totaled $668.6 million.
Originated loans increased by $264.8 million, or 5%, for the year ended December 31, 2016. New loan fundings totaled $2.3 billion for the year ended December 31, 2016, compared to $2.4 billion for the year ended December 31, 2015. Loan payoffs totaled $1.1 billion during the year ended December 31, 2016, compared to $688.6 million during the year ended December 31, 2015. Commercial and Specialty Banking divisions contributed 57% of total new loan fundings during 2016 compared to 52% during 2015. Loan commitments originated during the year ended December 31, 2016 totaled $2.6 billion as compared to $2.8 billion during the year ended December 31, 2015.
Our acquired loan portfolio totaled $176.9 million as of December 31, 2016, a decrease of 5% from $186.3 million as of September 30, 2016 and 34% from $268.4 million at December 31, 2015. As of December 31, 2016, our total unfunded commitments on acquired loans totaled $19.8 million.
Deposits and Borrowings
Deposits totaled $6.7 billion as of December 31, 2016, an increase of $182.1 million, or 3%, from $6.5 billion as of September 30, 2016 and $1.4 billion, or 26%, from $5.3 billion as of December 31, 2015. The growth in total deposits during the fourth quarter of 2016 was mainly due to the transfer to Opus of $279.1 million of additional ancillary IRA custodial client cash balances held at other banks.
Total demand deposits, including both noninterest-bearing and interest-bearing demand deposit accounts, increased $288.3 million, or 9.3%, during the fourth quarter of 2016, and now comprise 51% of total deposits as of December 31, 2016, an increase from 48% as of September 30, 2016 and an increase from 40% as of December 31, 2015. As of December 31, 2016, business deposits represented 53% of total deposits, compared to 52% as of September 30, 2016 and 52% as of December 31, 2015.
Our loan-to-deposit ratio decreased to 85% as of December 31, 2016 compared to 97% as of September 30, 2016 and 104% as of December 31, 2015.
Federal Home Loan Bank advances totaled $65.0 million as of December 31, 2016 and September 30, 2016 compared to $420.0 million as of December 31, 2015. Subordinated debt issued during the second quarter of 2016 totaled $132.5 million as of December 31, 2016, compared to zero outstanding as of December 31, 2015.
Asset Quality
Our allowance for loan losses was $111.4 million, or 1.97% of our total loan portfolio, as of December 31, 2016 compared to $61.1 million, or 0.97%, as of September 30, 2016 and $44.1 million, or 0.80%, as of December 31, 2015. Our acquired loan portfolio had a remaining discount of $3.7 million as of December 31, 2016. The coverage ratio for the total loan portfolio, which includes the remaining discount on the acquired loan portfolio, as of December 31, 2016 was 2.03% compared to 1.04% as of September 30, 2016 and 1.08% as of December 31, 2015. Our allowance for loan losses on originated loans resulted in a coverage ratio of 2.02% as of December 31, 2016, compared to 0.99% as of September 30, 2016 and 0.82% as of December 31, 2015. The increase in our coverage ratio as of December 31, 2016 was primarily driven by specific reserves and risk rating migration within our commercial business loan portfolio, specifically the Technology Banking, Healthcare Practice and Corporate Finance divisions which comprised 40% of our commercial business loan portfolio and 12% of our total loan portfolio at year end.
Net charge-offs recorded during the fourth quarter of 2016 totaled $19.2 million, compared to $39.0 million during the third quarter of 2016 and $676,000 during the fourth quarter of 2015. Net charge-offs during the fourth quarter of 2016 included $15.9 million for loans that had specific reserves or charge-offs recorded in prior quarters. Technology Banking and Healthcare Practice loans accounted for $12.1 million and $4.8 million of the current quarter net charge-offs, respectively. The remaining balance of Opus originated loans for which charge-offs were previously recorded was $21.4 million as of December 31, 2016, $21.2 million of which was comprised of four loan relationships in our Technology and Healthcare Practice portfolios that were on nonaccrual.
We recorded a provision for loan losses of $69.5 million in the fourth quarter of 2016 compared to $40.4 million in the third quarter of 2016 and $8.0 million in the fourth quarter of 2015. The provision for loan losses during the fourth quarter was driven by $27.2 million for risk rating migration, an increase of $22.1 million in specific reserves, net charge-offs of $19.2 million and $5.3 million in higher reserves for increased loss factors, partially offset by a $4.3 million decrease for the quarterly decline in the loan portfolio primarily due to the multifamily loan sale. The provision recapture on the acquired loan portfolio totaled $47,000 in the fourth quarter of 2016, $173,000 in the third quarter of 2016 and $359,000 in the fourth quarter of 2015.
Total criticized loans were $317.3 million as of December 31, 2016 compared to $147.4 million as of September 30, 2016 and $94.9 million as of December 31, 2015. The quarterly net change in total criticized loans was driven by $205.6 million of downgrades offset by $35.6 million of criticized loans that were resolved through either payoffs, loan sales or charge-offs during the quarter. Commercial business loans comprised $171.8 million of loans downgraded into criticized categories during the fourth quarter of 2016.
Total nonperforming assets increased to $95.1 million, or 1.21% of total assets, as of December 31, 2016 compared to $44.8 million, or 0.58% of total assets, as of September 30, 2016, and $24.3 million, or 0.37% of total assets, as of December 31, 2015.
Commercial Business Loans
Commercial business loans accounted for $19.0 million of Opus’ net charge-offs in the fourth quarter of 2016, down from $36.2 million in the third quarter of 2016. Of the net charge-offs recorded on commercial business loans during the fourth quarter of 2016, $12.1 million was related to two Technology Banking division relationships that had either specific reserves or charge-offs recorded in prior quarters and experienced additional deterioration in the underlying businesses or changes in financial circumstances during the quarter. Healthcare Practice loans comprised $4.8 million of the net charge-offs recorded on commercial business loans during the fourth quarter and were related to five loan relationships, including three that had either specific reserves or charge-offs recorded in prior quarters. The remaining amount of net charge-offs on commercial business loans during the fourth quarter consisted of one Corporate Finance relationship for $1.1 million and smaller Business Banking relationships totaling $883,000. As of December 31, 2016, commercial business loan relationships that have experienced charge-offs had a remaining balance of $21.4 million.
Commercial business loans on nonaccrual totaled $82.0 million as of December 31, 2016 and were mainly comprised of three Technology Banking relationships totaling $31.8 million and two Corporate Finance division relationships totaling $27.5 million. Total criticized commercial business loans as of December 31, 2016 were $264.7 million, or 15% of total commercial business loans, compared to $113.3 million, or 6%, as of September 30, 2016. Commercial business loans downgraded to criticized during the fourth quarter were primarily concentrated in the Technology Banking, Corporate Finance and Healthcare Provider divisions. As of December 31, 2016, we had specific reserves of $23.8 million on commercial business loans compared to $1.7 million of specific reserves as of September 30, 2016. Increases in criticized loans and related specific reserves were driven by deterioration during the current quarter in the underlying financial performance of the individual businesses or changes in financial circumstances during the quarter.
As of December 31, 2016, the total allowance recorded for commercial business loans, which includes general and specific reserves, equaled $91.2 million, or 5.2% of total commercial business loans, compared to $41.5 million, or 2.3% of total commercial business loans, as of September 30, 2016. At December 31, 2016, there were specific reserves of $23.8 million for commercial business loans, comprised of $10.1 million for Corporate Finance loans, $6.0 million for Technology Banking loans and $7.7 million for other Commercial and Business Banking loans.
As we discussed in prior quarters, we have de-emphasized our Technology Banking division, as evidenced by the $41.6 million in full loan payoffs in the Technology Banking loan portfolio during the fourth quarter of 2016. During the fourth quarter of 2016, we also took steps to de-emphasize Healthcare Practice lending. Opus continues to originate Healthcare Provider loans to hospitals, skilled nursing facilities, outpatient centers, and other corporate providers of healthcare and the ancillary businesses that support them.
Commercial Real Estate Loans
Net charge-offs in Opus’ $1.4 billion commercial real estate loan portfolio were $189,000 in the fourth quarter of 2016, compared to $2.9 million in the third quarter of 2016. Commercial real estate loans on nonaccrual totaled $12.3 million, or 0.9% of total commercial real estate loans as of December 31, 2016 compared to $7.2 million, or 0.5%, as of September 30, 2016. Total criticized commercial real estate loans were $36.8 million as of December 31, 2016 compared to $26.6 million as of September 30, 2016. The increase in criticized loans was driven by one loan downgrade in the Healthcare Provider portfolio. As of December 31, 2016, commercial real estate loans had no specific reserves and a total allowance of $9.6 million, or 0.7% of total commercial real estate loans, compared to zero specific reserves and a total allowance of $9.0 million, or 0.7% of total commercial real estate loans, as of September 30, 2016.
Multifamily Loans
Opus’ $2.3 billion multifamily loan portfolio has experienced zero charge-offs since our inception in 2010. There were no multifamily loans on nonaccrual status as of December 31, 2016 and no delinquencies. There were no specific reserves for loans within the multifamily portfolio at December 31, 2016 and total criticized multifamily loans were $10.9 million, or 0.5% of total multifamily loans as of December 31, 2016, compared to $2.1 million, or 0.1% of total multifamily loans, as of September 30, 2016. As of December 31, 2016, our multifamily portfolio had a total allowance of $8.9 million, or 0.4% of total multifamily loans, as compared to $9.0 million, or 0.3%, in the prior quarter.
Capital
Our capital ratios continue to exceed bank regulatory requirements for a well-capitalized institution. As of December 31, 2016, our Tier 1 leverage ratio was 7.54%, Common Equity Tier 1 ratio was 8.78%, and total risk-based capital ratio was 12.11%, compared to 8.11%, 9.15%, and 12.22% for the third quarter of 2016, respectively. As of December 31, 2015, our Tier 1 leverage, Common Equity Tier 1 ratio and total risk-based capital ratios were 9.59%, 10.81%, and 11.65%, respectively. Stockholders’ equity totaled $925.9 million as of December 31, 2016, a decrease of 2% from $943.9 million as of September 30, 2016 and an increase of 7% from $867.0 million as of December 31, 2015. Our tangible book value per as converted common share decreased to $15.84 as of December 31, 2016 from $16.42 as of September 30, 2016 and $18.28 as of December 31, 2015. Opus will not be paying a dividend in connection with the fourth quarter.
On January 29, 2017, Opus entered into purchase agreements with a limited number of institutional accredited investors, providing for the sale in a private placement of $53 million of its common stock at $18.50 per share, resulting in net proceeds of approximately $50 million. Closing of the transaction is subject to the receipt of a stock permit from the California Department of Business Oversight - Division of Financial Institutions and the satisfaction of customary closing conditions. Pro forma for the private placement, our December 31, 2016 Tier 1 leverage ratio, Common Equity Tier 1 ratio, and total risk-based capital ratios are 8.16%, 9.57%, and 12.89%, respectively. Pro forma tangible book value per as converted common share is $15.97 as of December 31, 2016.
Conference Call and Webcast Details
Date: Monday, January
30, 2017
Time: 8:00 a.m. PT (11:00 a.m. ET)
Phone Number (855) 265-3237
Conference Id: 61960903
Webcast
URL: http://investor.opusbank.com/event
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/event. The webcast will include a slide presentation, enabling conference participants to experience the discussion with greater impact. It is recommended that participants dial into the conference call or log into the webcast approximately 10 minutes prior to the call.
Replay Information: for those who are 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 61960903. The call replay will be available until March 1, 2017.
About Opus Bank
Opus Bank is an FDIC insured California-chartered commercial bank with $7.9 billion of total assets, $5.7 billion of total loans, and $6.7 billion in total deposits as of December 31, 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 $12 billion of custodial assets and approximately 48,000 client accounts, which are comprised of self-directed investors, financial institutions, capital raisers and financial advisors. Opus Bank operates 56 banking offices, including 32 in California, 21 in the Seattle/Puget Sound region in Washington, two in the Phoenix metropolitan area of Arizona and one in Portland, Oregon. Opus Bank is an Equal Housing Lender. For additional information about Opus Bank, please visit our website at: www.opusbank.com
Forward-Looking Statements
This release and the aforementioned conference call and webcast may include forward-looking statements related to the Opus’ plans, beliefs and goals, which involve certain risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: competitive pressure in the banking industry; changes in the interest rate environment; the health of the economy, either nationally or regionally; the deterioration of credit quality, which would cause an increase in the provision for possible loan and lease losses; changes in the regulatory environment; changes in business conditions, particularly in California real estate; volatility of rate sensitive deposits; asset/liability matching risks and liquidity risks; and changes in the securities markets. For a discussion of these and other risks and uncertainties, see Opus’ filings with the Federal Deposit Insurance Corporation, including, but not limited to, the risk factors in Opus’ annual report on Form 10-K. These filings are available on the Investor Relations page of Opus’ website at: investor.opusbank.com.
Opus undertakes no obligation to revise or publicly release any revision to these forward-looking statements.
| Consolidated Statement of Operations | ||||||||||||||||||
| (unaudited) | Three Months Ended | Year Ended | ||||||||||||||||
|
($ in thousands, except per share amounts) |
December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||||
|
|
2016 | 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Interest income: | ||||||||||||||||||
| Loans | $ | 67,192 | $ | 68,191 | $ | 62,532 | $ | 268,752 | $ | 230,000 | ||||||||
| Investment securities | 1,194 | 939 | 552 | 3,178 | 2,345 | |||||||||||||
| Due from banks | 946 | 641 | 333 | 2,900 | 1,066 | |||||||||||||
| Total interest income | 69,332 | 69,771 | 63,417 | 274,830 | 233,411 | |||||||||||||
| Interest expense: | ||||||||||||||||||
| Deposits | 7,090 | 6,917 | 6,136 | 26,836 | 22,755 | |||||||||||||
| Federal Home Loan Bank advances | 160 | 232 | 557 | 1,603 | 2,331 | |||||||||||||
| Subordinated debt | 1,922 | 1,923 | — | 3,886 | — | |||||||||||||
| Total interest expense | 9,172 | 9,072 | 6,693 | 32,325 | 25,086 | |||||||||||||
| Net interest income | 60,160 | 60,699 | 56,724 | 242,505 | 208,325 | |||||||||||||
| Provision for loan losses | 69,459 | 40,446 | 8,014 | 125,778 | 24,967 | |||||||||||||
|
Net interest income (loss) after provision for loan losses |
(9,299 | ) | 20,253 | 48,710 | 116,727 | 183,358 | ||||||||||||
| Noninterest income: | ||||||||||||||||||
|
Fees and service charges on deposit accounts |
1,951 | 2,025 | 1,694 | 7,843 | 6,580 | |||||||||||||
| Escrow and exchange fees | 1,737 | 1,868 | 1,777 | 7,214 | 5,074 | |||||||||||||
| Trust administrative fees | 6,622 | 7,285 | — | 20,171 | — | |||||||||||||
| Gain on sale of loans | 15,187 | 336 | 399 | 15,836 | 399 | |||||||||||||
| Gain (loss) on sale of assets | (2 | ) | 219 | 14 | 195 | 120 | ||||||||||||
| Gain (loss) from real estate owned, net | (27 | ) | 15 | 153 | (65 | ) | 28 | |||||||||||
| Gain (loss) on sale of securities | — | — | — | — | 800 | |||||||||||||
| Bank-owned life insurance, net | 850 | 897 | 923 | 3,494 | 3,197 | |||||||||||||
| Other income | 765 | 3,605 | 1,048 | 7,173 | 8,471 | |||||||||||||
| Total noninterest income | 27,083 | 16,250 | 6,008 | 61,861 | 24,669 | |||||||||||||
| Noninterest expense: | ||||||||||||||||||
| Compensation and benefits | 26,068 | 23,016 | 14,979 | 88,987 | 60,831 | |||||||||||||
| Professional services | 6,982 | 2,937 | 1,926 | 14,816 | 7,246 | |||||||||||||
| Occupancy expense | 3,617 | 3,557 | 3,011 | 13,609 | 11,768 | |||||||||||||
| Depreciation and amortization | 1,867 | 2,021 | 1,484 | 7,169 | 5,608 | |||||||||||||
|
Deposit insurance and regulatory assessments |
1,799 | 1,059 | 975 | 5,165 | 3,490 | |||||||||||||
| Insurance expense | 357 | 354 | 317 | 1,442 | 1,229 | |||||||||||||
| Data processing | 882 | 830 | 842 | 3,381 | 3,283 | |||||||||||||
| Software licenses and maintenance | 975 | 1,053 | 579 | 3,462 | 2,092 | |||||||||||||
| Office services | 2,114 | 1,973 | 985 | 6,900 | 4,008 | |||||||||||||
| Amortization of other intangible assets | 1,479 | 1,479 | 627 | 4,781 | 2,508 | |||||||||||||
| Advertising and marketing | 727 | 555 | 291 | 1,877 | 1,166 | |||||||||||||
| Litigation expense (recovery) | 121 | 444 | 18 | 246 | 293 | |||||||||||||
| Other expenses | 4,172 | 3,051 | 2,000 | 10,912 | 6,727 | |||||||||||||
| Total noninterest expense | 51,160 | 42,329 | 28,034 | 162,747 | 110,249 | |||||||||||||
|
Income (loss) before income tax expense (benefit) |
(33,376 | ) | (5,826 | ) | 26,684 | 15,841 | 97,778 | |||||||||||
| Income tax expense (benefit) | (14,422 | ) | (2,805 | ) | 10,012 | 4,387 | 37,835 | |||||||||||
| Net income (loss) | $ | (18,954 | ) | $ | (3,021 | ) | $ | 16,672 | $ | 11,454 | $ | 59,943 | ||||||
| Basic earnings (loss) per common share | $ | (0.55 | ) | $ | (0.09 | ) | $ | 0.51 | $ | 0.34 | $ | 1.86 | ||||||
| Diluted earnings (loss) per common share | (0.55 | ) | (0.09 | ) | 0.50 | 0.33 | 1.79 | |||||||||||
| Weighted average shares - basic | 34,285,683 | 34,274,756 | 30,429,049 | 33,781,354 | 29,003,588 | |||||||||||||
| Weighted average shares - diluted | 34,285,683 | 34,274,756 | 33,670,728 | 35,103,431 | 33,448,090 | |||||||||||||
| Consolidated Balance Sheets | ||||||||||||
| (unaudited) | As of | |||||||||||
| December 31, | September 30, | December 31, | ||||||||||
| ($ in thousands, except share amounts) | 2016 | 2016 | 2015 | |||||||||
| Assets | ||||||||||||
| Cash and due from banks | $ | 47,986 | $ | 49,753 | $ | 33,419 | ||||||
| Due from banks – interest-bearing | 887,137 | 568,714 | 451,458 | |||||||||
| Investment securities available-for-sale, at fair value | 666,589 | 156,813 | 151,761 | |||||||||
| Loans held-for-investment | 5,669,067 | 6,290,107 | 5,495,804 | |||||||||
| Less allowance for loan losses | (111,410 | ) | (61,103 | ) | (44,147 | ) | ||||||
| Loans held-for-investment, net | 5,557,657 | 6,229,004 | 5,451,657 | |||||||||
| Real estate owned | 428 | 558 | 1,251 | |||||||||
| Premises and equipment, net | 33,978 | 37,937 | 31,008 | |||||||||
| Goodwill | 331,832 | 328,285 | 262,115 | |||||||||
| Other intangible assets, net | 50,718 | 52,198 | 10,099 | |||||||||
| Deferred tax assets, net | 55,954 | 32,652 | 48,813 | |||||||||
| Cash surrender value of bank owned life insurance, net | 120,969 | 120,119 | 116,760 | |||||||||
| Accrued interest receivable | 20,814 | 21,848 | 18,056 | |||||||||
| Federal Home Loan Bank stock | 17,250 | 17,250 | 17,250 | |||||||||
| Other assets | 91,251 | 94,078 | 56,186 | |||||||||
| Total assets | $ | 7,882,563 | $ | 7,709,209 | $ | 6,649,833 | ||||||
| Liabilities and Stockholders’ Equity | ||||||||||||
| Deposits: | ||||||||||||
| Noninterest-bearing demand | $ | 899,159 | $ | 931,063 | $ | 975,588 | ||||||
| Interest-bearing demand | 2,505,468 | 2,185,216 | 1,161,272 | |||||||||
| Money market and savings | 2,761,808 | 2,838,433 | 2,598,852 | |||||||||
| Time deposits | 515,326 | 544,989 | 571,336 | |||||||||
| Total deposits | 6,681,761 | 6,499,701 | 5,307,048 | |||||||||
| Federal Home Loan Bank advances | 65,000 | 65,000 | 420,000 | |||||||||
| Subordinated debt, net | 132,479 | 132,391 | — | |||||||||
| Accrued interest payable | 4,108 | 2,157 | 332 | |||||||||
| Other liabilities | 73,280 | 66,102 | 55,415 | |||||||||
| Total liabilities | 6,956,628 | 6,765,351 | 5,782,795 | |||||||||
| Stockholders’ equity: | ||||||||||||
| Preferred stock: | ||||||||||||
| Authorized 200,000,000 shares; issued 612 and 612 and 612 shares, respectively | 581 | 581 | 581 | |||||||||
| Common stock, no par value per share: | ||||||||||||
| Authorized 200,000,000 shares; issued 34,565,063 and 34,551,270 and 32,717,359 shares, respectively | 678,291 | 678,291 | 621,677 | |||||||||
| Additional paid-in capital | 56,582 | 54,349 | 46,371 | |||||||||
| Retained earnings | 197,363 | 216,316 | 203,823 | |||||||||
| Treasury stock, at cost; 287,942 and 273,236 and 217,168 shares, respectively | (7,509 | ) | (7,001 | ) | (5,189 | ) | ||||||
| Accumulated other comprehensive income (loss) | 627 | 1,322 | (225 | ) | ||||||||
| Total stockholders’ equity | 925,935 | 943,858 | 867,038 | |||||||||
| Total liabilities and stockholders’ equity | $ | 7,882,563 | $ | 7,709,209 | $ | 6,649,833 | ||||||
| Selected Financial Data | |||||||||||||||
| As of or for the three months ended | As of or for the year ended | ||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||
| (unaudited) | 2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||
| Return on average assets | (0.97 | )% | (0.16 | )% | 1.03 | % | 0.16 | % | 1.03 | % | |||||
| Return on average stockholders' equity | (7.87 | ) | (1.25 | ) | 7.66 | 1.22 | 7.15 | ||||||||
| Return on average tangible equity (1) | (13.03 | ) | (2.07 | ) | 11.19 | 1.95 | 10.50 | ||||||||
| Efficiency ratio (2) | 58.64 | 55.01 | 44.69 | 53.37 | 47.32 | ||||||||||
| Noninterest expense to average assets | 2.61 | 2.24 | 1.74 | 2.22 | 1.89 | ||||||||||
| Yield on interest-earning assets | 3.87 | 4.04 | 4.31 | 4.10 | 4.42 | ||||||||||
| Cost of deposits (3) | 0.43 | 0.44 | 0.47 | 0.45 | 0.49 | ||||||||||
| Cost of funds (4) | 0.55 | 0.57 | 0.48 | 0.51 | 0.51 | ||||||||||
| Net interest margin | 3.36 | 3.52 | 3.86 | 3.62 | 3.95 | ||||||||||
| Loans to deposits | 84.84 | % | 96.78 | % | 103.56 | % | 84.84 | % | 103.56 | % | |||||
(1) 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 | ||||||||
| December 31, | September 30, | December 31, | |||||||
| (unaudited) | 2016 | 2016 | 2015 | ||||||
| Tier 1 leverage ratio | 7.54 | % | 8.11 | % | 9.59 | % | |||
| Tier 1 risk-based capital ratio | 8.78 | 9.15 | 10.81 | ||||||
| Total risk-based capital ratio | 12.11 | 12.22 | 11.65 | ||||||
| Common Equity Tier 1 ratio | 8.78 | 9.15 | 10.81 | ||||||
| Loan Fundings | |||||||||||||||
| (unaudited) | Three Months Ended | Year Ended | |||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | |||||||||||
| ($ in thousands) | 2016 | 2016 | 2015 | 2016 | 2015 | ||||||||||
| Loans funded: | |||||||||||||||
| Real estate mortgage loans: | |||||||||||||||
| Single-family residential | $ | — | $ | — | $ | — | $ | — | $ | — | |||||
| Multifamily residential | 185,244 | 238,363 | 279,088 | 928,687 | 906,255 | ||||||||||
| Commercial real estate | 83,813 | 76,833 | 146,371 | 343,888 | 430,945 | ||||||||||
| Construction and land loans | 17,069 | 15,482 | 16,684 | 59,443 | 40,826 | ||||||||||
| Commercial business loans | 143,742 | 301,669 | 318,927 | 938,314 | 1,031,180 | ||||||||||
| Small Business Administration loans | — | 1,783 | 1,980 | 5,997 | 4,413 | ||||||||||
| Consumer and other loans | — | — | — | — | — | ||||||||||
| Total loan fundings | $ | 429,868 | $ | 634,130 | $ | 763,050 | $ | 2,276,329 | $ | 2,413,619 | |||||
| Composition of Loan Portfolio | As of | |||||||||||||||||
| December 31, | September 30, | December 31, | ||||||||||||||||
| (unaudited) | 2016 | 2016 | 2015 | |||||||||||||||
| % of | % of | % of | ||||||||||||||||
| Total | Total | Total | ||||||||||||||||
| ($ in thousands) | Amount | loans | Amount | loans | Amount | loans | ||||||||||||
| Originated loans held-for-investment | ||||||||||||||||||
| Real estate mortgage loans: | ||||||||||||||||||
| Single-family residential | $ | 79,065 | 1.4 | % | $ | 85,970 | 1.4 | % | $ | 100,988 | 1.8 | % | ||||||
| Multifamily residential | 2,241,095 | 39.5 | 2,780,139 | 44.2 | 2,584,667 | 47.0 | ||||||||||||
| Commercial real estate | 1,311,064 | 23.1 | 1,301,001 | 20.7 | 1,113,250 | 20.3 | ||||||||||||
| Construction and land loans | 110,005 | 1.9 | 93,070 | 1.5 | 56,095 | 1.0 | ||||||||||||
| Commercial business loans | 1,732,348 | 30.6 | 1,824,645 | 29.0 | 1,348,666 | 24.5 | ||||||||||||
| Small Business Administration loans | 18,257 | 0.3 | 18,609 | 0.3 | 23,347 | 0.5 | ||||||||||||
| Consumer and other loans | 338 | 0.0 | 352 | 0.0 | 397 | 0.0 | ||||||||||||
| Total originated loans | 5,492,172 | 96.9 | 6,103,786 | 97.0 | 5,227,410 | 95.1 | ||||||||||||
| Acquired loans held-for-investment | ||||||||||||||||||
| Real estate mortgage loans: | ||||||||||||||||||
| Single-family residential | 34,713 | 0.6 | 37,583 | 0.6 | 50,016 | 0.9 | ||||||||||||
| Multifamily residential | 61,882 | 1.1 | 64,439 | 1.0 | 76,498 | 1.4 | ||||||||||||
| Commercial real estate | 42,579 | 0.8 | 46,365 | 0.7 | 63,520 | 1.2 | ||||||||||||
| Construction and land loans | 2,001 | 0.0 | 2,017 | 0.0 | 2,061 | 0.0 | ||||||||||||
| Commercial business loans | 15,821 | 0.3 | 14,991 | 0.2 | 19,898 | 0.4 | ||||||||||||
| Small Business Administration loans | 13,159 | 0.2 | 13,616 | 0.2 | 48,781 | 0.9 | ||||||||||||
| Consumer and other loans | 6,740 | 0.1 | 7,310 | 0.1 | 7,620 | 0.1 | ||||||||||||
| Total acquired loans | 176,895 | 3.1 | 186,321 | 3.0 | 268,394 | 4.9 | ||||||||||||
| Total gross loans | $ | 5,669,067 | 100.0 | % | $ | 6,290,107 | 100.0 | % | $ | 5,495,804 | 100.0 | % | ||||||
| Composition of Deposits | As of | |||||||||||||||||
| December 31, | September 30, | December 31, | ||||||||||||||||
| (unaudited) | 2016 | 2016 | 2015 | |||||||||||||||
| % of | % of | % of | ||||||||||||||||
| Total | Total | Total | ||||||||||||||||
| ($ in thousands) | Amount | deposits | Amount | deposits | Amount | deposits | ||||||||||||
| Noninterest bearing | $ | 899,159 | 13.5 | % | $ | 931,063 | 14.3 | % | $ | 975,588 | 18.4 | % | ||||||
| Interest bearing demand | 2,505,468 | 37.5 | 2,185,216 | 33.6 | 1,161,272 | 21.9 | ||||||||||||
| Money market and savings | 2,761,808 | 41.3 | 2,838,433 | 43.7 | 2,598,852 | 49.0 | ||||||||||||
| Time deposits | 515,326 | 7.7 | 544,989 | 8.4 | 571,336 | 10.7 | ||||||||||||
| Total deposits | $ | 6,681,761 | 100.0 | % | $ | 6,499,701 | 100.0 | % | $ | 5,307,048 | 100.0 | % | ||||||
| Consolidated average balance sheet, interest, yield and rates | |||||||||||||||||||||||||||
| For the three months ended | For the three months ended | For the three months ended | |||||||||||||||||||||||||
| December 31, | September 30, | December 31, | |||||||||||||||||||||||||
| (unaudited) | 2016 | 2016 | 2015 | ||||||||||||||||||||||||
| Average | Yields/ | Average | Yields/ | Average | Yields/ | ||||||||||||||||||||||
| ($ in thousands) | Balance | Interest | Rates | Balance | Interest | Rates | Balance | Interest | Rates | ||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||
| Due from banks | $ | 690,414 | $ | 946 | 0.55 | % | $ | 498,881 | $ | 641 | 0.51 | % | $ | 458,586 | $ | 333 | 0.29 | % | |||||||||
| Investment securities | 203,139 | 1,194 | 2.34 | 157,334 | 939 | 2.37 | 202,828 | 552 | 1.08 | ||||||||||||||||||
| Acquired loans | 182,925 | 3,019 | 6.57 | 197,904 | 4,155 | 8.35 | 299,382 | 10,247 | 13.58 | ||||||||||||||||||
| Originated Loans | 6,051,628 | 64,173 | 4.22 | 6,014,394 | 64,036 | 4.24 | 4,874,189 | 52,285 | 4.26 | ||||||||||||||||||
| Total loans | $ | 6,234,553 | $ | 67,192 | 4.29 | $ | 6,212,298 | $ | 68,191 | 4.37 | $ | 5,173,571 | $ | 62,532 | 4.80 | ||||||||||||
| Total interest-earning assets | 7,128,106 | $ | 69,332 | 3.87 | 6,868,513 | $ | 69,771 | 4.04 | 5,834,985 | $ | 63,417 | 4.31 | |||||||||||||||
| Noninterest-earning assets | 681,694 | 661,332 | 556,088 | ||||||||||||||||||||||||
| Total assets | $ | 7,809,800 | $ | 7,529,845 | $ | 6,391,073 | |||||||||||||||||||||
| Liabilities and stockholders’ equity: | |||||||||||||||||||||||||||
| Interest-bearing deposits | |||||||||||||||||||||||||||
| Interest-bearing demand | $ | 2,380,363 | $ | 1,010 | 0.17 | % | $ | 2,067,238 | $ | 810 | 0.16 | % | $ | 1,042,901 | $ | 602 | 0.23 | % | |||||||||
| Money market and savings | 2,773,442 | 4,963 | 0.71 | 2,739,540 | 4,936 | 0.72 | 2,600,594 | 4,346 | 0.66 | ||||||||||||||||||
| Time deposits | 525,230 | 1,117 | 0.85 | 547,603 | 1,171 | 0.85 | 581,747 | 1,188 | 0.81 | ||||||||||||||||||
|
Total interest-bearing
deposits |
$ | 5,679,035 | $ | 7,090 | 0.50 | $ | 5,354,381 | $ | 6,917 | 0.51 | $ | 4,225,242 | $ | 6,136 | 0.58 | ||||||||||||
| Subordinated debt | 132,437 | 1,922 | 5.77 | 132,350 | 1,923 | 5.78 | — | — | 0.00 | ||||||||||||||||||
| FHLB advances | 65,033 | 160 | 0.98 | 127,011 | 232 | 0.73 | 337,772 | 557 | 0.65 | ||||||||||||||||||
|
Total interest-bearing
liabilities |
$ | 5,876,505 | $ | 9,172 | 0.62 | $ | 5,613,742 | $ | 9,072 | 0.64 | $ | 4,563,014 | $ | 6,693 | 0.58 | ||||||||||||
| Noninterest-bearing deposits | 910,158 | 889,051 | 915,233 | ||||||||||||||||||||||||
| Other liabilities | 64,441 | 65,238 | 49,294 | ||||||||||||||||||||||||
| Total liabilities | $ | 6,851,104 | $ | 6,568,031 | $ | 5,527,541 | |||||||||||||||||||||
| Total stockholders’ equity | $ | 958,696 | $ | 961,814 | $ | 863,532 | |||||||||||||||||||||
|
Total liabilities and stockholders’ equity |
$ | 7,809,800 | $ | 7,529,845 | $ | 6,391,073 | |||||||||||||||||||||
| Net interest income | $ | 60,160 | $ | 60,699 | $ | 56,724 | |||||||||||||||||||||
|
Net interest spread (1) |
3.25 | % | 3.40 | % | 3.73 | % | |||||||||||||||||||||
|
Net interest margin (2) |
3.36 | % | 3.52 | % | 3.86 | % | |||||||||||||||||||||
(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) | 2016 | 2015 | ||||||||||||||||
| Average | Yields/ | Average | Yields/ | |||||||||||||||
| ($ In thousands) | Balance | Interest | Rates | Balance | Interest | Rates | ||||||||||||
| Assets: | ||||||||||||||||||
| Interest-earning assets | ||||||||||||||||||
| Due from banks | $ | 558,798 | $ | 2,900 | 0.52 | % | $ | 407,372 | $ | 1,066 | 0.26 | % | ||||||
| Investment securities | 164,748 | 3,178 | 1.93 | 220,310 | 2,345 | 1.06 | ||||||||||||
| Acquired loans | 218,328 | 22,445 | 10.28 | 372,711 | 46,073 | 12.36 | ||||||||||||
| Originated Loans | 5,764,763 | 246,307 | 4.27 | 4,275,063 | 183,927 | 4.30 | ||||||||||||
| Total loans | $ | 5,983,091 | $ | 268,752 | 4.49 | $ | 4,647,774 | $ | 230,000 | 4.95 | ||||||||
| Total interest-earning assets | $ | 6,706,637 | $ | 274,830 | 4.10 | $ | 5,275,456 | $ | 233,411 | 4.42 | ||||||||
| Noninterest-earning assets | 635,215 | 556,899 | ||||||||||||||||
| Total assets | $ | 7,341,852 | $ | 5,832,355 | ||||||||||||||
| Liabilities and stockholders’ equity: | ||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||
| Interest-bearing demand | $ | 1,874,864 | $ | 3,254 | 0.17 | % | $ | 772,258 | $ | 1,620 | 0.21 | % | ||||||
| Money market and savings | 2,687,695 | 19,022 | 0.71 | 2,424,336 | 16,216 | 0.67 | ||||||||||||
| Time deposits | 546,454 | 4,560 | 0.83 | 600,902 | 4,919 | 0.82 | ||||||||||||
| Total interest bearing deposits | $ | 5,109,013 | $ | 26,836 | 0.53 | $ | 3,797,496 | $ | 22,755 | 0.60 | ||||||||
| Subordinated debt | 67,281 | 3,886 | 5.78 | — | — | 0.00 | ||||||||||||
| FHLB advances | 269,872 | 1,603 | 0.59 | 356,827 | 2,331 | 0.65 | ||||||||||||
| Total interest-bearing liabilities | $ | 5,446,166 | $ | 32,325 | 0.59 | $ | 4,154,323 | $ | 25,086 | 0.60 | ||||||||
| Noninterest-bearing deposits | 899,625 | 800,895 | ||||||||||||||||
| Other liabilities | 61,020 | 38,256 | ||||||||||||||||
| Total liabilities | $ | 6,406,811 | $ | 4,993,474 | ||||||||||||||
| Total stockholders’ equity | 935,041 | 838,881 | ||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 7,341,852 | $ | 5,832,355 | ||||||||||||||
| Net interest income | $ | 242,505 | $ | 208,325 | ||||||||||||||
|
Net interest spread (1) |
3.51 | % | 3.82 | % | ||||||||||||||
|
Net interest margin (2) |
3.62 | % | 3.95 | % | ||||||||||||||
(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.
| Allowance for Loan Losses | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
| ($ in thousands) | 2016 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||
| Allowance for loan losses - balance at beginning of period | $ | 61,103 | $ | 59,694 | $ | 36,809 | $ | 44,147 | $ | 23,043 | ||||||||||
| (Recapture) Provision for loan losses: | ||||||||||||||||||||
| Acquired loans | (47 | ) | (173 | ) | (359 | ) | (517 | ) | (1,657 | ) | ||||||||||
| Originated loans | 69,506 | 40,619 | 8,373 | 126,295 | 26,624 | |||||||||||||||
| Total provision for loan losses | 69,459 | 40,446 | 8,014 | 125,778 | 24,967 | |||||||||||||||
| Charge-offs: | ||||||||||||||||||||
| Acquired loans | — | — | — | — | ||||||||||||||||
| Originated loans | (19,770 | ) | (39,075 | ) | (756 | ) | (59,209 | ) | (3,943 | ) | ||||||||||
| Total charge-offs | (19,770 | ) | (39,075 | ) | (756 | ) | (59,209 | ) | (3,943 | ) | ||||||||||
| Recoveries | ||||||||||||||||||||
| Acquired loans | — | — | — | — | — | |||||||||||||||
| Originated loans | 618 | 38 | 80 | 694 | 80 | |||||||||||||||
| Total recoveries | 618 | 38 | 80 | 694 | 80 | |||||||||||||||
| Total net charge-offs | (19,152 | ) | (39,037 | ) | (676 | ) | (58,515 | ) | (3,863 | ) | ||||||||||
| Allowance for loan losses - balance at end of period | $ | 111,410 | $ | 61,103 | $ | 44,147 | $ | 111,410 | $ | 44,147 | ||||||||||
| Asset Quality Information | ||||||||||||
| (unaudited) | As of | |||||||||||
| December 31, | September 30, | December 31, | ||||||||||
| ($ in thousands) | 2016 | 2016 | 2015 | |||||||||
| Nonperforming assets | ||||||||||||
| Nonaccrual loans | $ | 94,667 | $ | 44,244 | $ | 23,050 | ||||||
| Real estate owned | 428 | 558 | 1,251 | |||||||||
| Total nonperforming assets | 95,095 | 44,802 | 24,301 | |||||||||
| Nonperforming assets to total assets | 1.21 | % | 0.58 | % | 0.37 | % | ||||||
| Accruing loans 90 days or more past due | $ | 596 | $ | 720 | $ | 324 | ||||||
| Accruing troubled debt restructured loans | 165 | 170 | 281 | |||||||||
| Allowance for loan losses - Originated loans | 110,846 | 60,492 | $ | 43,066 | ||||||||
| Allowance for loan losses - Acquired loans | 564 | 611 | 1,081 | |||||||||
| Total allowance for loan losses | 111,410 | 61,103 | 44,147 | |||||||||
| Remaining acquisition discount on acquired loans | $ | 3,728 | $ | 4,630 | $ | 15,409 | ||||||
| Allowance for loan losses to non-accrual loans | 117.7 | % | 138.1 | % | 191.5 | % | ||||||
| Allowance for loan losses acquired loans to acquired loans | 0.32 | 0.33 | 0.40 | |||||||||
| Allowance for loan losses originated loans to originated loans | 2.02 | 0.99 | 0.82 | |||||||||
| Total allowance for loan losses to total loans | 1.97 | 0.97 | 0.80 | |||||||||
|
Allowance for loan losses and remaining acquisition discount on acquired loans to gross acquired loans (1) |
2.38 | 2.74 | 5.81 | |||||||||
|
Allowance for loan losses and remaining acquisition discount to total gross loans (1) |
2.03 | 1.04 | 1.08 | |||||||||
(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.
| Risk Rating by Loan Product | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| Special | Nonaccrual | Total | ||||||||||||||||
| ($ in thousands) | Pass | Mention | Classified | Total Loans | loans | allowance | ||||||||||||
| As of December 31, 2016 | ||||||||||||||||||
| Real estate mortgage loans: | ||||||||||||||||||
| Single-family residential | $ | 112,298 | $ | 1,125 | $ | 355 | $ | 113,778 | $ | — | $ | 308 | ||||||
| Multifamily residential | 2,292,041 | 244 | 10,692 | 2,302,977 | — | 8,881 | ||||||||||||
| Commercial real estate | 1,316,879 | 18,580 | 18,184 | 1,353,643 | 12,284 | 9,643 | ||||||||||||
| Construction and land loans | 111,997 | 9 | — | 112,006 | — | 1,161 | ||||||||||||
| Commercial business loans | 1,483,510 | 63,205 | 201,454 | 1,748,169 | 81,964 | 91,188 | ||||||||||||
| Small Business Administration loans | 28,692 | 1,168 | 1,556 | 31,416 | — | 200 | ||||||||||||
| Consumer and other loans | 6,369 | 40 | 669 | 7,078 | 419 | 29 | ||||||||||||
| Total loans | $ | 5,351,786 | $ | 84,371 | $ | 232,910 | $ | 5,669,067 | $ | 94,667 | $ | 111,410 | ||||||
| As of September 30, 2016 | ||||||||||||||||||
| Real estate mortgage loans: | ||||||||||||||||||
| Single-family residential | $ | 121,795 | $ | 1,128 | $ | 630 | $ | 123,553 | $ | — | $ | 333 | ||||||
| Multifamily residential | 2,842,445 | 2,133 | — | 2,844,578 | — | 9,025 | ||||||||||||
| Commercial real estate | 1,320,721 | 15,690 | 10,955 | 1,347,366 | 7,175 | 9,043 | ||||||||||||
| Construction and land loans | 95,069 | 18 | — | 95,087 | — | 944 | ||||||||||||
| Commercial business loans | 1,726,305 | 51,168 | 62,163 | 1,839,636 | 36,628 | 41,535 | ||||||||||||
| Small Business Administration loans | 29,423 | 1,045 | 1,757 | 32,225 | — | 188 | ||||||||||||
| Consumer and other loans | 6,930 | 41 | 691 | 7,662 | 441 | 35 | ||||||||||||
| Total loans | $ | 6,142,688 | $ | 71,223 | $ | 76,196 | $ | 6,290,107 | $ | 44,244 | $ | 61,103 | ||||||
| As of December 31, 2015 | ||||||||||||||||||
| Real estate mortgage loans: | ||||||||||||||||||
| Single-family residential | $ | 146,985 | $ | 2,559 | $ | 1,460 | $ | 151,004 | $ | — | $ | 621 | ||||||
| Multifamily residential | 2,658,955 | 2,210 | — | 2,661,165 | — | 8,931 | ||||||||||||
| Commercial real estate | 1,163,644 | 1,216 | 11,910 | 1,176,770 | 11,910 | 5,757 | ||||||||||||
| Construction and land loans | 58,112 | 44 | — | 58,156 | — | 505 | ||||||||||||
| Commercial business loans | 1,304,686 | 14,203 | 49,675 | 1,368,564 | 10,487 | 28,060 | ||||||||||||
| Small Business Administration loans | 61,912 | 3,144 | 7,072 | 72,128 | — | 171 | ||||||||||||
| Consumer and other loans | 6,657 | 207 | 1,153 | 8,017 | 653 | 102 | ||||||||||||
| Total loans | $ | 5,400,951 | $ | 23,583 | $ | 71,270 | $ | 5,495,804 | $ | 23,050 | $ | 44,147 | ||||||
| Risk Rating by Lending Division | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Special | Nonaccrual | ||||||||||||||||
| ($ in thousands) | Pass | Mention | Classified | Total Loans | loans | ||||||||||||
| As of December 31, 2016 | |||||||||||||||||
| Income Property Banking | $ | 2,912,605 | $ | 245 | $ | 6,883 | $ | 2,919,733 | $ | 704 | |||||||
| Commercial Banking | 585,985 | 20,658 | 37,474 | 644,117 | 15,993 | ||||||||||||
| Structured Finance | 493,126 | 3,603 | 16,160 | 512,889 | 11,580 | ||||||||||||
| Healthcare Provider | 389,722 | 23,821 | 41,034 | 454,577 | — | ||||||||||||
| Healthcare Practice | 54,856 | 550 | 12,375 | 67,781 | 6,191 | ||||||||||||
| Corporate Finance | 377,312 | 2,484 | 56,349 | 436,144 | 27,492 | ||||||||||||
| Institutional Syndication | 273,901 | (374 | ) |
1 |
(306 | ) |
1 |
273,221 | — | ||||||||
| Technology Banking | 99,341 | 29,809 | 61,319 | 190,470 | 31,781 | ||||||||||||
| Other divisions (2) | 164,938 | 3,575 | 1,622 | 170,135 | 926 | ||||||||||||
| Total loans | $ | 5,351,786 | $ | 84,371 | $ | 232,910 | $ | 5,669,067 | $ | 94,667 | |||||||
| As of September 30, 2016 | |||||||||||||||||
| Income Property Banking | $ | 3,453,124 | $ | 4,239 | $ | — | $ | 3,457,363 | $ | — | |||||||
| Commercial Banking | 628,858 | 18,620 | 10,047 | 657,525 | 770 | ||||||||||||
| Structured Finance | 499,460 | 11,602 | — | 511,062 | — | ||||||||||||
| Healthcare Provider | 362,980 | 8,532 | — | 371,512 | — | ||||||||||||
| Healthcare Practice | 111,943 | 4,320 | 20,315 | 136,578 | 14,221 | ||||||||||||
| Corporate Finance | 431,637 | 12,616 | 1,119 | 445,372 | 1,119 | ||||||||||||
| Institutional Syndication | 287,480 | (427 | ) |
1 |
(338 | ) |
1 |
286,715 | — | ||||||||
| Technology Banking | 203,035 | 7,325 | 43,374 | 253,734 | 27,420 | ||||||||||||
|
Other divisions (2) |
164,171 | 4,396 | 1,679 | 170,246 | 714 | ||||||||||||
| Total loans | $ | 6,142,688 | $ | 71,223 | $ | 76,196 | $ | 6,290,107 | $ | 44,244 | |||||||
| As of December 31, 2015 | |||||||||||||||||
| Income Property Banking | $ | 3,212,795 | $ | 2,723 | $ | — | $ | 3,215,518 | $ | — | |||||||
| Commercial Banking | 494,759 | 10,996 | 23,198 | 528,953 | 8,210 | ||||||||||||
| Structured Finance | 429,819 | 44 | — | 429,863 | — | ||||||||||||
| Healthcare Provider | 284,607 | — | — | 284,607 | — | ||||||||||||
| Healthcare Practice | 57,281 | 2,337 | 15,598 | 75,216 | 11,850 | ||||||||||||
|
Corporate Finance |
266,764 | 3,703 | 7,603 | 278,070 | — | ||||||||||||
| Institutional Syndication | 221,419 | — | — | 221,419 | — | ||||||||||||
| Technology Banking | 255,530 | — | 21,742 | 277,272 | 1,901 | ||||||||||||
| Other divisions (2) | 177,977 | 3,780 | 3,129 | 184,886 | 1,089 | ||||||||||||
| Total loans | $ | 5,400,951 | $ | 23,583 | $ | 71,270 | $ | 5,495,804 | $ | 23,050 | |||||||
|
|
|||||||||||||||||
(1) Represents unamortized net deferred loan origination fees on syndicated lines of credit that have no outstanding principal balances at period end.
(2) Other divisions is comprised of single family residential loans, consumer and other loans, and specialty banking divisions with portfolio balances under $50 million, which includes Business Banking, Media and Entertainment Banking and Public Finance.
Non-GAAP Financial Measures
Our accounting and reporting policies conform to generally accepted accounting principles in the United States (“GAAP”). We believe that the presentation of certain non-GAAP financial measures assists investors in assessing our financial results. These non-GAAP measures include our return on average tangible equity, net interest income excluding acquisition accounting and tangible book value per as converted common share. These non-GAAP measures should be taken together with the corresponding GAAP measures and ratios and should not be considered a substitute of the GAAP measures and ratios.
The following tables present a reconciliation of the most comparable GAAP financial measures and ratios to the non-GAAP financial measures and ratios:
| Non-GAAP return on average tangible equity | ||||||||||||||||||||
| (unaudited) | Three Months Ended | Year Ended | ||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
| ($ in thousands) | 2016 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||
| Average tangible equity: | ||||||||||||||||||||
| Average stockholders' equity | $ | 958,696 | $ | 961,814 | $ | 863,532 | $ | 935,041 | $ | 838,881 | ||||||||||
| Less: | ||||||||||||||||||||
| Average goodwill | 328,324 | 328,285 | 262,115 | 313,546 | 256,363 | |||||||||||||||
| Average other intangible assets | 51,463 | 52,996 | 10,401 | 34,325 | 11,362 | |||||||||||||||
| Average tangible equity | 578,909 | 580,533 | 591,016 | 587,170 | 571,156 | |||||||||||||||
| Net income (loss) | (18,954 | ) | (3,021 | ) | 16,672 | 11,454 | 59,943 | |||||||||||||
| Return on average stockholders' equity | (7.87 | )% | (1.25 | )% | 7.66 | % | 1.22 | % | 7.15 | % | ||||||||||
| Non-GAAP return on average tangible equity | (13.03 | ) | (2.07 | ) | 11.19 | 1.95 | 10.50 | |||||||||||||
| Non-GAAP net interest margin | ||||||||||||||||||||
| (unaudited) | Three Months Ended | Year Ended | ||||||||||||||||||
| December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
| ($ in thousands) | 2016 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||
| Net interest income | $ | 60,160 | $ | 60,699 | $ | 56,724 | $ | 242,505 | $ | 208,325 | ||||||||||
|
Less: Accretion/amortization of acquisition discount/premium (1) |
(717 | ) | (1,504 | ) | (6,225 | ) | (10,887 | ) | (25,906 | ) | ||||||||||
| Non-GAAP net interest income | 59,443 | 59,195 | 50,499 | 231,618 | 182,419 | |||||||||||||||
| Average interest earning assets | $ | 7,128,106 | $ | 6,868,513 | $ | 5,834,985 | $ | 6,706,637 | $ | 5,275,456 | ||||||||||
|
Add: Average unamortized acquisition discounts |
4,382 | 5,831 | 24,559 | 8,522 | 35,002 | |||||||||||||||
| Non-GAAP average interest-earning assets | 7,132,488 | 6,874,344 | 5,859,544 | 6,715,159 | 5,310,458 | |||||||||||||||
| Net interest margin impact | 0.04 | % | 0.09 | % | 0.44 | % | 0.17 | % | 0.51 | % | ||||||||||
(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 | ||||||||
| December 31, | September 30, | December 31, | |||||||
| ($ in thousands, except share amounts) | 2016 | 2016 | 2015 | ||||||
| Tangible equity: | |||||||||
| Total stockholders' equity | $ | 925,935 | $ | 943,858 | $ | 867,038 | |||
| Less: | |||||||||
| Goodwill | 331,832 | 328,285 | 262,115 | ||||||
| Other intangible assets, net | 50,718 | 52,198 | 10,099 | ||||||
| Tangible equity | 543,385 | 563,375 | 594,824 | ||||||
| Shares of common stock outstanding | 34,277,121 | 34,278,034 | 32,500,191 | ||||||
|
Shares of common stock to be issued upon conversion of preferred stock |
30,600 | 30,600 | 30,600 | ||||||
|
Total as converted shares of common stock outstanding (1) |
34,307,721 | 34,308,634 | 32,530,791 | ||||||
| Book value per as converted common share | 26.99 | 27.51 | 26.65 | ||||||
| Tangible book value per as converted common share | 15.84 | 16.42 | 18.28 | ||||||
(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.
