IRVINE, Calif.--(BUSINESS WIRE)--Opus Bank ("Opus") (NASDAQ: “OPB”) announced today net income of $12.9 million, or $0.34 per diluted share, for the first quarter of 2018 compared to net income of $1.2 million, or $0.03 per diluted share, for the fourth quarter of 2017 and net income of $7.7 million, or $0.21 per diluted share, for the first quarter of 2017. Net income for the first quarter of 2018 included $1.5 million of strategic initiative and severance related expenses, $1.4 million of seasonally higher employer payroll taxes, and a $2.9 million recovery of professional services expense related to the settlement of a legal matter.
Additionally, Opus announced today that its Board of Directors has approved increasing its quarterly cash dividend by 10% to $0.11 per common share payable on May 17, 2018 to common stockholders and to its Series A Preferred stockholders of record as of May 3, 2018.
First Quarter 2018 Highlights
- Pre-tax pre-provision earnings increased 14% from the prior quarter to $20.9 million and increased 13% from the first quarter of 2017.
- Net interest margin increased five basis points to 3.20%, as the yield on Opus' originated loans increased six basis points to 4.22%, while our cost of deposits increased two basis points to 0.47%.
- New loan fundings were $452.3 million, an increase of 106% from the first quarter of 2017.
- Total loans increased $55.8 million, driven by new loan fundings exceeding loan payoffs and sales of $271.4 million, which included planned exits of $52.2 million. Excluding planned exits, total loans would have increased by $108.0 million in the first quarter of 2018.
- Total deposits increased $99.7 million, primarily driven by growth in low- or no-cost commercial business demand deposits.
- Noninterest expense decreased 5% to $44.1 million and the efficiency ratio decreased to 68%, compared to 71% in the prior quarter.
- Enterprise Value loans decreased $81.7 million, or 20%, in the first quarter of 2018 to $336.0 million.
- Provision for loan losses was $3.9 million, compared to $3.0 million for the prior quarter. Net charge-offs were $12.0 million in the first quarter of 2018, of which 95% were Enterprise Value or Technology loans with $8.2 million of specific reserves.
- Opus' effective tax rate was 24% for the first quarter.
Stephen H. Gordon, Chief Executive Officer and President of Opus Bank, stated, “Opus’ first quarter results marked a successful beginning to 2018, demonstrated by our disciplined growth and improving profitability, displaying continued momentum from 2017. We achieved $452 million in new loan fundings during the quarter, more than double the level achieved in the first quarter of 2017. New loan fundings exceeded loan payoffs of $271 million, which included planned exits of $52 million, as we successfully reduced the balances of Enterprise Value loans by 20% in the first quarter. Deposit growth of $100 million was driven by low- or no-cost commercial business demand deposits, which enabled our overall cost of deposits to increase by only two basis points. We also began to realize the benefit of our asset sensitive balance sheet, as our net interest margin expanded by five basis points during the quarter.”
Mr. Gordon continued, “Consistent with past years, we estimate our quarterly loan production will ramp over the course of 2018, driven by our leading multifamily banking division and bolstered by the contributions from numerous commercial bankers hired throughout our footprint over the recent quarters. Deposit and full relationship growth is a high priority across the organization, including and especially among our Commercial and Specialty Banking teams, and is expected to ramp throughout 2018. Our cost of deposits will likely increase in coming quarters, but at a slower rate than our loan yields increase. With our portfolio of Enterprise Value loans that are not eligible for retention continuing to shrink, we anticipate planned exits will have less of a negative impact on our quarterly net loan growth, loan yield, and overall credit expenses. As we entered the second quarter, the weighted average rate of our new loan fundings pipeline was 34-basis-points higher than at the start of the first quarter, which we anticipate will contribute to a higher net interest margin going forward. Our noninterest expense run rate was reduced in the first quarter, and we remain confident in our ability to drive our efficiency ratio below 65%.”
Mr. Gordon concluded, “I thank all of the many Opus team members responsible for our strong start to the year, as we take great pride in their tireless efforts and commitment. Based on our earnings, strong capital levels and overall performance in the first quarter of 2018, I am proud to announce Opus’ Board has authorized a 10% increase in our quarterly cash dividend to $0.11 per diluted share.”
Loans
Total loans held-for-investment increased $55.8 million, or 1%, to $5.2 billion as of March 31, 2018, from $5.2 billion as of December 31, 2017 and decreased $203.1 million, or 4%, from $5.4 billion as of March 31, 2017. The increase in total loans during the first quarter of 2018 was driven by new loan fundings of $452.3 million, partially offset by loan payoffs of $271.4 million, which included planned exits of $52.2 million.
| Loan Balance Roll Forward | |||||||||||||||||||||
| (unaudited) | Three Months Ended | ||||||||||||||||||||
| ($ in millions) |
March 31,
2018 |
December 31, |
September 30, |
June 30,
2017 |
March 31, |
||||||||||||||||
| Beginning loan balance | $ | 5,173.2 | $ | 5,060.6 | $ | 5,218.1 | $ | 5,432.1 | $ | 5,669.1 | |||||||||||
| New loan fundings | 452.3 | 502.3 | 375.4 | 362.2 | 219.1 | ||||||||||||||||
| Loan payoffs | (219.2 | ) | (237.8 | ) | (267.1 | ) | (357.0 | ) | (239.8 | ) | |||||||||||
| Loan sales¹ | -- | -- | (6.0 | ) | (15.8 | ) | (38.6 | ) | |||||||||||||
| Planned exits | (52.2 | ) | (80.6 | ) | (161.2 | ) | (137.2 | ) | (95.3 | ) | |||||||||||
| Other² | (125.1 | ) | (71.3 | ) | (98.6 | ) | (66.2 | ) | (82.4 | ) | |||||||||||
| Ending loan balance | $ | 5,229.0 | $ | 5,173.2 | $ | 5,060.6 | $ | 5,218.1 | $ | 5,432.1 | |||||||||||
| [1] Loan sales that were not planned exits | |||||||||||||||||||||
| [2] Includes normal amortization and charge-offs | |||||||||||||||||||||
New loan fundings in the first quarter of 2018 totaled $452.3 million, a decrease of $50.1 million, or 10%, from the fourth quarter of 2017 and an increase of $233.1 million, or 106%, from the first quarter of 2017. Commercial and Specialty Banking division loans comprised $171.3 million, or 38%, of total new loan fundings, and Commercial Real Estate Banking loans comprised $281.0, or 62%, of total new loan fundings in the first quarter.
Loan commitments originated during the first quarter of 2018 totaled $439.2 million, compared to $454.1 million during the fourth quarter of 2017 and $209.7 million during the first quarter of 2017. As of March 31, 2018, our unfunded commitments on originated loans totaled $413.6 million.
Our acquired loan portfolio totaled $128.6 million as of March 31, 2018, a decrease of 3% from $132.1 million as of December 31, 2017 and 20% from $160.3 million as of March 31, 2017. The acquired loan portfolio had a remaining discount of $2.1 million as of March 31, 2018.
Cash and Investment Securities
Cash and investment securities totaled $1.4 billion as of March 31, 2018, compared to $1.6 billion as of December 31, 2017 and $1.9 billion as of March 31, 2017. Cash and cash equivalents decreased $208.5 million, or 42%, during the first quarter of 2018 to $292.2 million, and decreased $733.9 million, or 72%, from the first quarter of 2017. The reduction in cash and cash equivalents in the first quarter of 2018 was primarily driven by the payoff of $280.0 million of FHLB advances that were added at the end of the fourth quarter of 2017. Investment securities decreased $29.5 million, or 3%, during the first quarter of 2018 to $1.1 billion, and increased $197.8 million, or 22%, from $900.0 million as of March 31, 2017.
Deposits and Borrowings
Deposits increased $99.7 million, or 2%, to $6.0 billion as of March 31, 2018, from $5.9 billion as of December 31, 2017, and decreased by $676.5 million, or 10%, from $6.7 billion as of March 31, 2017. Deposit growth during the first quarter was primarily driven by our Commercial and Specialty Banking divisions.
Total demand deposits, including both noninterest-bearing and interest-bearing demand deposit accounts, increased to 56% of total deposits as of March 31, 2018, compared to 55% as of December 31, 2017 and 52% as of March 31, 2017. As of March 31, 2018, business deposits represented 63% of total deposits.
Our loan to deposit ratio was 87% as of March 31, 2018, unchanged from the prior quarter and an increase from 81% as of March 31, 2017.
Federal Home Loan Bank advances decreased to $10.0 million as of March 31, 2018 compared to $290.0 million as of December 31, 2017, and were unchanged compared to March 31, 2017. Borrowings from the Federal Home Loan bank during the fourth quarter were paid off early in the first quarter of 2018, reflected in the low first quarter average balance of $16.4 million.
Net Interest Income
Net interest income was $51.7 million for the first quarter of 2018, compared to $52.0 million for the fourth quarter of 2017 and $56.1 million for the first quarter of 2017.
Interest income from loans increased $1.0 million, or 2%, to $54.6 million for the first quarter of 2018, driven by higher average balances of loans and loan rate resets, partially offset by loan payoffs and prepayments, including planned exits during the quarter. While planned exits decrease our potential future credit volatility, they had a negative impact on our loan interest income.
Interest income from cash and investment securities decreased $1.2 million, or 17%, from the prior quarter to $6.0 million for the first quarter of 2018. Interest income from investment securities decreased $881,000, or 15%, during the first quarter to $5.1 million, driven by lower average balances of investment securities compared to the prior quarter and higher prepayments during the first quarter that resulted in higher premium amortization. Interest income from cash decreased $314,000 from the prior quarter to $951,000 for the first quarter of 2018, as the average balance of cash decreased $138.6 million, or 36%.
Interest expense increased 2% to $9.0 million for the first quarter of 2018, compared to $8.8 million for the fourth quarter of 2017, and decreased 2% compared to $9.2 million for the first quarter of 2017. While the average balance of deposits remained relatively flat compared to the fourth quarter of 2017, interest expense on deposits increased 2% as the weighted average rate of deposits increased during the quarter.
Net Interest Margin
Net interest margin on a taxable equivalent basis increased five basis points to 3.20% in the first quarter of 2018 from 3.15% in the fourth quarter of 2017, and increased six basis points from 3.14% in the first quarter of 2017. The linked-quarter change was due to an increase in total loan yield of three basis points to 4.25%, which was positively impacted by loan rate resets, higher balances of originated loans, and two fewer days in the quarter, offset by planned exits, which had a weighted average rate of 7.38%. Net interest margin was negatively impacted by a 21 basis point decrease in the yield on investment securities to 1.87%, driven by higher premium amortization, and a higher cost of deposits, which increased by two basis points to 0.47% for the first quarter of 2018.
Noninterest Income
Noninterest income increased 5% to $13.3 million in the first quarter of 2018 from $12.6 million in the fourth quarter of 2017, and increased 6% from $12.5 million in the first quarter of 2017. Noninterest income during the first quarter of 2018 included $1.7 million of treasury management and deposit account fees, $7.0 million in trust administrative fees from our alternative asset IRA custodian subsidiary, $1.4 million from our Escrow and Exchange divisions, and $838,000 from Opus' Merchant Banking division. Total noninterest income in the first quarter of 2018 included a net increase in equity warrant valuations of $108,000, compared to a net decrease of $554,000 in the prior quarter, as well as net gains on the sale of investment securities and other assets totaling $232,000.
Noninterest income made up 20% of total revenues during the first quarter of 2018, unchanged from the fourth quarter of 2017 and an increase from 18% in the first quarter of 2017.
Noninterest Expense
Noninterest expense decreased 5% to $44.1 million in the first quarter of 2018, compared to $46.2 million in the fourth quarter of 2017, and decreased 12% from $50.1 million in the first quarter of 2017. Noninterest expense during the first quarter of 2018 included $802,000 of strategic initiative related expenses, $735,000 of severance expense, and $1.4 million of seasonally higher compensation and benefits expense related to higher employer taxes paid in the first quarter. Offsetting these expenses was a $2.9 million recovery of previously incurred professional services expenses related to the settlement of a legal matter during the quarter. This legal case had a $750,000 per quarter professional services expense run rate that will not be incurred going forward.
Income Tax Expense
During the fourth quarter of 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into law, which, among other items, reduced the federal corporate tax rate from 35% to 21%, effective January 1, 2018, and resulted in additional income tax expense totaling $9.0 million during the fourth quarter of 2017. As a result, our effective tax rate decreased to 24% in the first quarter of 2018, compared to an adjusted effective tax rate of 34% in the fourth quarter of 2017 and an effective tax rate of 39% in the first quarter of 2017.
Asset Quality
During the first quarter of 2018, we continued to reduce our exposure to previously de-emphasized loan portfolios. Total Enterprise Value loans were reduced by $81.7 million, or 20%, during the first quarter of 2018 and totaled $336.0 million as of March 31, 2018. Planned exits through loan payoffs and sales totaled $52.2 million in the first quarter of 2018, as Opus continued to reduce the balances of loans we previously announced as targeted for planned exits. As a result of the successful exit of previously identified loan relationships, the reserves associated with these loans were released, which reduced the allowance for loan losses as required under our methodology.
Our allowance for loan losses was $67.8 million, or 1.30% of our total loan portfolio, as of March 31, 2018, compared to $75.9 million, or 1.47%, as of December 31, 2017 and $112.2 million, or 2.07%, as of March 31, 2017. The reduction in the allowance for loan losses during the first quarter of 2018 was driven by charge-offs of $14.2 million, partially offset by net recoveries of $2.2 million and a provision for loan losses of $3.9 million.
We recorded a provision expense of $3.9 million in the first quarter of 2018, compared to a provision expense of $3.0 million in the fourth quarter of 2017 and a provision expense of $6.0 million in the first quarter of 2017. The provision expense during the first quarter of 2018 was driven by $12.0 million of net charge-offs, $4.4 million from risk rating migration, and $3.2 million due to higher loss factors used to determine loan loss reserves in accordance with our methodology. These factors were partially offset by a $9.9 million decline in reserves as a result of the changes in portfolio mix, fundings, and planned exits of loan relationships, and a reduction of $5.8 million in specific reserves.
Opus recorded net charge-offs of $12.0 million in the first quarter of 2018, compared to net charge-offs of $5.2 million in the fourth quarter of 2017 and $5.1 million in the first quarter of 2017. Charge-offs during the first quarter of 2018 were predominantly comprised of one Technology Banking loan relationship, two Commercial Banking division loan relationships, and one Corporate Finance loan relationship, which previously had specific reserves of $8.2 million.
Total nonperforming assets were $63.8 million, or 0.87% of total assets, as of March 31, 2018, compared to $58.3 million, or 0.78% of total assets, as of December 31, 2017, and $87.0 million, or 1.09% of total assets, as of March 31, 2017. The ratio of the allowance for loan losses to total nonaccrual loans was 106% as of March 31, 2018, compared to 130% as of December 31, 2017 and 129% as of March 31, 2017.
Total criticized loans decreased $2.3 million, or 1%, to $247.4 million as of March 31, 2018 compared to $249.8 million as of December 31, 2017, and decreased $112.0 million, or 31%, from $359.4 million as of March 31, 2017. The net decrease in total criticized loans during the first quarter of 2018 was driven by $9.6 million of upgrades and $51.1 million of loan exits, including payoffs, loan sales, charge-offs, and normal amortization during the quarter, partially offset by $58.4 million of downgrades. Classified loans decreased $8.7 million and special mention loans increased $6.4 million in the first quarter of 2018. The decrease in classified loans was driven by upgrades of $1.1 million as well as payoffs, charge-offs, and normal amortization of $47.9 million, partially offset by downgrades of $40.3 million. The increase in special mention loans was driven by $39.5 million of downgrades, partially offset by $8.4 million of upgrades and $24.7 million of loan payoffs, normal amortization, and migration.
The net decrease in total criticized loans consisted primarily of a $16.8 million decrease in commercial business loans and a $14.6 million increase in real estate secured loans. Commercial business loans comprised $5.1 million of loans upgraded out of criticized categories and $49.0 million of loan exits, including loan payoffs, loan sales, charge-offs, and normal amortization, partially offset by $37.3 million of downgrades during the first quarter of 2018. Real estate secured loans comprised $21.0 million of downgrades during the first quarter of 2018, partially offset by $4.4 million of loans upgraded out of criticized categories and $2.0 million of loan payoffs and amortization.
Capital
As of March 31, 2018, our Tier 1 leverage ratio was 9.53%, Common Equity Tier 1 ratio was 10.92% and total risk-based capital ratio was 14.91%, compared to 9.44%, 10.94% and 14.97%, respectively, as of December 31, 2017. As of March 31, 2017, our Tier 1 leverage, Common Equity Tier 1, and total risk-based capital ratios were 8.19%, 10.03% and 13.45%, respectively. Stockholders’ equity totaled over $1.0 billion as of March 31, 2018, unchanged from over $1.0 billion as of December 31, 2017 and an increase of 4% from $985.6 million as of March 31, 2017. Our tangible book value per as converted common share was $17.23 as of March 31, 2018 compared to $17.26 as of December 31, 2017 and $16.23 as of March 31, 2017.
Conference Call and Webcast Details
Date: Monday, April 23, 2018
Time: 8:00 a.m. PT (11:00 a.m. ET)
Phone Number: (855) 265-3237
Conference ID: 1857796
Webcast
URL: http://investor.opusbank.com/event
Analysts, investors, and the general public may listen to the Bank's discussion of its first quarter performance and participate in the question/answer session by using the phone number listed above or through a live webcast of the conference available through a link on the investor relations page of Opus' website at: http://investor.opusbank.com/event. The webcast will include a slide presentation, enabling conference participants to experience the discussion with greater impact. It is recommended that participants dial into the conference call or log into the webcast approximately 10 minutes prior to the call.
Replay Information: For those who are not able to listen to the call, an archived recording will be available beginning approximately two hours following the completion of the call. To listen to the call replay, dial (855) 859-2056, or for international callers dial (404) 537-3406. The access code for either replay number is 1857796. The call replay will be available through May 23, 2018.
About Opus Bank
Opus Bank is an FDIC insured California-chartered commercial bank with $7.3 billion of total assets, $5.2 billion of total loans, and $6.0 billion in total deposits as of March 31, 2018. Opus Bank provides superior ideas and solutions, and banking products to its clients through its Retail Bank, Commercial Bank, and Merchant 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, Member FINRA/SIPC. Opus Bank’s alternative asset IRA custodian subsidiary has over $16 billion of custodial assets and over 50,000 client accounts, which are comprised of self-directed investors, financial institutions, capital raisers and financial advisors. Opus Bank operates 50 banking offices, including 31 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 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, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, including, without limitation, the increase in our quarterly loan production and deposit and full relationship growth; lower negative impact of planned exits on our quarterly net loan growth, loan yield and overall credit expenses; the expected increase in our net interest margin; and our ability to drive our efficiency ratio below 65%. 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 Statements of Income |
|||||||||||||
| (unaudited) | Three Months Ended | ||||||||||||
| ($ in thousands, except per share amounts) |
March 31, 2018 |
December 31, 2017 |
March 31, 2017 |
||||||||||
| Interest income: | |||||||||||||
| Loans | $ | 54,637 | $ | 53,592 | $ | 60,232 | |||||||
| Investment securities | 5,094 | 5,975 | 3,069 | ||||||||||
| Due from banks | 951 | 1,265 | 1,961 | ||||||||||
| Total interest income | 60,682 | 60,832 | 65,262 | ||||||||||
| Interest expense: | |||||||||||||
| Deposits | 7,018 | 6,855 | 7,181 | ||||||||||
| Federal Home Loan Bank advances | 48 | 68 | 67 | ||||||||||
| Subordinated debt | 1,923 | 1,923 | 1,923 | ||||||||||
| Total interest expense | 8,989 | 8,846 | 9,171 | ||||||||||
| Net interest income | 51,693 | 51,986 | 56,091 | ||||||||||
| Provision for loan losses | 3,914 | 2,955 | 5,968 | ||||||||||
| Net interest income after provision for loan losses | 47,779 | 49,031 | 50,123 | ||||||||||
| Noninterest income: | |||||||||||||
| Fees and service charges on deposit accounts | 1,722 | 1,822 | 1,922 | ||||||||||
| Escrow and exchange fees | 1,360 | 1,568 | 1,450 | ||||||||||
| Trust administrative fees | 6,978 | 6,879 | 6,382 | ||||||||||
| Gain (loss) on sale of loans | (69 | ) | (2 | ) | (299 | ) | |||||||
| Gain (loss) on sale of assets | 1 | (6 | ) | (2 | ) | ||||||||
| Gain (loss) from OREO and other repossessed assets | 118 | 86 | (147 | ) | |||||||||
| Gain on sale of investment securities | 182 | 330 | 519 | ||||||||||
| Bank-owned life insurance, net | 1,053 | 1,088 | 890 | ||||||||||
| Other income | 1,964 | 861 | 1,788 | ||||||||||
| Total noninterest income | 13,309 | 12,626 | 12,503 | ||||||||||
| Noninterest expense: | |||||||||||||
| Compensation and benefits | 26,808 | 25,273 | 29,197 | ||||||||||
| Professional services | 1,716 | 5,308 | 4,540 | ||||||||||
| Occupancy expense | 4,006 | 3,617 | 3,780 | ||||||||||
| Depreciation and amortization | 1,599 | 1,585 | 1,884 | ||||||||||
| Deposit insurance and regulatory assessments | 1,131 | 799 | 2,062 | ||||||||||
| Insurance expense | 338 | 341 | 355 | ||||||||||
| Data processing | 440 | 689 | 783 | ||||||||||
| Software licenses and maintenance | 1,149 | 1,148 | 1,157 | ||||||||||
| Office services | 1,880 | 1,750 | 2,400 | ||||||||||
| Amortization of other intangible assets | 1,479 | 1,479 | 1,479 | ||||||||||
| Advertising and marketing | 957 | 1,395 | 660 | ||||||||||
| Litigation expense (recovery) | (14 | ) | (2 | ) | 129 | ||||||||
| Other expenses | 2,588 | 2,801 | 1,635 | ||||||||||
| Total noninterest expense | 44,077 | 46,183 | 50,061 | ||||||||||
| Income before income tax expense | 17,011 | 15,474 | 12,565 | ||||||||||
| Income tax expense | 4,107 | 14,273 | 4,908 | ||||||||||
| Net income | $ | 12,904 | $ | 1,201 | $ | 7,657 | |||||||
| Basic earnings per common share | $ | 0.34 | $ | 0.03 | $ | 0.21 | |||||||
| Diluted earnings per common share | 0.34 | 0.03 | 0.21 | ||||||||||
| Weighted average shares - basic | 35,967,779 | 35,935,614 | 35,755,228 | ||||||||||
| Weighted average shares - diluted | 38,316,243 | 38,229,787 | 36,687,680 | ||||||||||
| Consolidated Balance Sheets | |||||||||||||
| (unaudited) | As of | ||||||||||||
| ($ in thousands, except share amounts) |
March 31, 2018 |
December 31, 2017 |
March 31, 2017 |
||||||||||
| Assets | |||||||||||||
| Cash and due from banks | $ | 43,462 | $ | 45,828 | $ | 47,747 | |||||||
| Due from banks – interest-bearing | 248,763 | 454,941 | 978,416 | ||||||||||
| Investment securities available-for-sale, at fair value | 1,097,741 | 1,127,288 | 899,967 | ||||||||||
| Loans held-for-investment | 5,228,994 | 5,173,193 | 5,432,108 | ||||||||||
| Less allowance for loan losses | (67,842 | ) | (75,930 | ) | (112,230 | ) | |||||||
| Loans held-for-investment, net | 5,161,152 | 5,097,263 | 5,319,878 | ||||||||||
| OREO and other repossessed assets | — | — | 288 | ||||||||||
| Premises and equipment, net | 26,649 | 27,644 | 33,941 | ||||||||||
| Goodwill | 331,832 | 331,832 | 331,832 | ||||||||||
| Other intangible assets, net | 43,321 | 44,800 | 49,239 | ||||||||||
| Deferred tax assets, net | 28,740 | 24,260 | 56,830 | ||||||||||
| Cash surrender value of bank owned life insurance, net | 150,819 | 149,744 | 121,908 | ||||||||||
| Accrued interest receivable | 19,978 | 19,317 | 20,098 | ||||||||||
| Federal Home Loan Bank stock | 17,250 | 17,250 | 17,250 | ||||||||||
| Other assets | 128,054 | 146,642 | 106,288 | ||||||||||
| Total assets | $ | 7,297,761 | $ | 7,486,809 | $ | 7,983,682 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||||
| Deposits: | |||||||||||||
| Noninterest-bearing demand | $ | 855,810 | $ | 817,330 | $ | 1,023,891 | |||||||
| Interest-bearing demand | 2,519,955 | 2,435,293 | 2,453,251 | ||||||||||
| Money market and savings | 2,267,648 | 2,307,258 | 2,748,181 | ||||||||||
| Time deposits | 400,203 | 384,057 | 494,829 | ||||||||||
| Total deposits | 6,043,616 | 5,943,938 | 6,720,152 | ||||||||||
| Federal Home Loan Bank advances | 10,000 | 290,000 | 10,000 | ||||||||||
| Subordinated debt, net | 132,811 | 132,745 | 132,546 | ||||||||||
| Accrued interest payable | 2,118 | 4,086 | 2,053 | ||||||||||
| Other liabilities | 86,838 | 92,576 | 133,303 | ||||||||||
| Total liabilities | 6,275,383 | 6,463,345 | 6,998,054 | ||||||||||
| Stockholders’ equity: | |||||||||||||
| Preferred stock: | |||||||||||||
| Authorized 200,000,000 shares; issued 31,111 and 31,111 and 612 shares, respectively | 29,110 | 29,110 | 581 | ||||||||||
| Common stock, no par value per share: | |||||||||||||
| Authorized 200,000,000 shares; issued 36,460,468 and 36,330,546 and 37,547,040 shares, respectively | 700,220 | 700,220 | 728,749 | ||||||||||
| Additional paid-in capital | 63,922 | 63,545 | 59,041 | ||||||||||
| Retained earnings | 254,701 | 245,006 | 205,020 | ||||||||||
| Treasury stock, at cost; 458,887 and 415,387 and 328,666 shares, respectively | (11,603 | ) | (10,354 | ) | (8,344 | ) | |||||||
| Accumulated other comprehensive income (loss) | (13,972 | ) | (4,063 | ) | 581 | ||||||||
| Total stockholders’ equity | 1,022,378 | 1,023,464 | 985,628 | ||||||||||
| Total liabilities and stockholders’ equity | $ | 7,297,761 | $ | 7,486,809 | $ | 7,983,682 | |||||||
| Selected Financial Data | ||||||||||
| As of or for the three months ended | ||||||||||
| (unaudited) |
March 31, 2018 |
December 31, 2017 |
March 31, 2017 |
|||||||
| Return on average assets | 0.72 | % | 0.06 | % | 0.39 | % | ||||
| Return on average assets, tax adjusted (1) | 0.72 | 0.55 | 0.39 | |||||||
| Return on average stockholders' equity | 5.11 | 0.46 | 3.23 | |||||||
| Return on average stockholders' equity, tax adjusted (1) | 5.11 | 3.91 | 3.23 | |||||||
| Return on average tangible equity (2) | 8.07 | 0.73 | 5.35 | |||||||
| Return on average tangible equity, tax adjusted (1,2) | 8.07 | 6.16 | 5.35 | |||||||
| Efficiency ratio (3) | 67.81 | 71.48 | 72.98 | |||||||
| Noninterest expense to average assets | 2.45 | 2.49 | 2.58 | |||||||
| Yield on interest-earning assets (4) | 3.75 | 3.68 | 3.66 | |||||||
| Cost of deposits (5) | 0.47 | 0.45 | 0.44 | |||||||
| Cost of funds (6) | 0.59 | 0.56 | 0.54 | |||||||
| Net interest margin (4) | 3.20 | 3.15 | 3.14 | |||||||
| Loan to deposits | 86.52 | 87.03 | 80.83 | |||||||
| (1) | Tax adjusted for the three months ended December 31, 2017 due to impacts of the Tax Cuts and Jobs Act. See computation in "Non-GAAP Financial Measures" Section. | ||
| (2) | See computation in "Non-GAAP Financial Measures" section. | ||
| (3) | The efficiency ratio is calculated by dividing noninterest expense by the sum of net interest income before provision for loan losses and noninterest income. | ||
| (4) | Net interest margin and yield on interest-earning assets are presented on a tax equivalent basis using the federal effective tax rate. | ||
| (5) | Calculated as interest expense on deposits divided by total average deposits. | ||
| (6) | Calculated as total interest expense divided by average total deposits, FHLB advances and subordinated debt. | ||
| Capital Ratios | As of | |||||||||
| (unaudited) | March 31, 2018 (1) | December 31, 2017 | March 31, 2017 | |||||||
| Tier 1 leverage ratio | 9.53 | % | 9.44 | % | 8.19 | % | ||||
| Tier 1 risk-based capital ratio | 11.42 | 11.42 | 10.03 | |||||||
| Total risk-based capital ratio | 14.91 | 14.97 | 13.45 | |||||||
| Common Equity Tier 1 ratio | 10.92 | 10.94 | 10.03 | |||||||
| (1) | Ratios are preliminary until filing of our March 31, 2018 call report. | |
| Loan Fundings | ||||||||||||
| (unaudited) | Three Months Ended | |||||||||||
| ($ in thousands) |
March 31, 2018 |
December 31, 2017 |
March 31, 2017 |
|||||||||
| Loans funded: | ||||||||||||
| Real estate mortgage loans: | ||||||||||||
| Single-family residential | $ | — | $ | — | $ | — | ||||||
| Multifamily residential | 267,301 | 300,539 | 111,272 | |||||||||
| Commercial real estate | 29,307 | 58,103 | 15,473 | |||||||||
| Construction and land loans | 4,885 | 8,170 | 15,556 | |||||||||
| Commercial business loans | 146,184 | 131,728 | 75,661 | |||||||||
| Small Business Administration loans | 4,578 | 3,768 | 1,181 | |||||||||
| Consumer and other loans | — | — | — | |||||||||
| Total loan fundings | $ | 452,255 | $ | 502,308 | $ | 219,143 | ||||||
| Composition of Loan Portfolio | As of | |||||||||||||||||||||
| (unaudited) |
March 31, 2018 |
December 31, 2017 |
March 31, 2017 |
|||||||||||||||||||
| ($ in thousands) | Amount |
% of Total loans |
Amount |
% of Total loans |
Amount |
% of Total loans |
||||||||||||||||
| Originated loans held-for-investment | ||||||||||||||||||||||
| Real estate mortgage loans: | ||||||||||||||||||||||
| Single-family residential | $ | 56,913 | 1.1 | % | $ | 59,497 | 1.2 | % | $ | 69,046 | 1.3 | % | ||||||||||
| Multifamily residential | 2,667,313 | 51.0 | 2,495,818 | 48.3 | 2,285,039 | 42.1 | ||||||||||||||||
| Commercial real estate | 1,044,276 | 20.0 | 1,079,637 | 20.9 | 1,251,877 | 23.0 | ||||||||||||||||
| Construction and land loans | 79,080 | 1.5 | 94,348 | 1.8 | 100,303 | 1.8 | ||||||||||||||||
| Commercial business loans | 1,221,517 | 23.4 | 1,284,500 | 24.8 | 1,550,120 | 28.5 | ||||||||||||||||
| Small Business Administration loans | 31,278 | 0.6 | 27,152 | 0.5 | 15,123 | 0.3 | ||||||||||||||||
| Consumer and other loans | 53 | 0.0 | 96 | 0.0 | 296 | 0.0 | ||||||||||||||||
| Total originated loans | 5,100,430 | 97.5 | 5,041,048 | 97.5 | 5,271,804 | 97.0 | ||||||||||||||||
| Acquired loans held-for-investment | ||||||||||||||||||||||
| Real estate mortgage loans: | ||||||||||||||||||||||
| Single-family residential | 21,653 | 0.4 | 22,964 | 0.4 | 30,457 | 0.6 | ||||||||||||||||
| Multifamily residential | 51,611 | 1.0 | 52,453 | 1.0 | 56,480 | 1.0 | ||||||||||||||||
| Commercial real estate | 27,221 | 0.5 | 27,889 | 0.6 | 37,205 | 0.9 | ||||||||||||||||
| Construction and land loans | 1,398 | 0.0 | 1,418 | 0.0 | 1,980 | 0.0 | ||||||||||||||||
| Commercial business loans | 10,869 | 0.2 | 10,978 | 0.2 | 14,864 | 0.2 | ||||||||||||||||
| Small Business Administration loans | 10,718 | 0.2 | 10,957 | 0.2 | 12,862 | 0.2 | ||||||||||||||||
| Consumer and other loans | 5,094 | 0.1 | 5,486 | 0.1 | 6,456 | 0.1 | ||||||||||||||||
| Total acquired loans | 128,564 | 2.5 | 132,145 | 2.5 | 160,304 | 3.0 | ||||||||||||||||
| Total gross loans | $ | 5,228,994 | 100.0 | % | $ | 5,173,193 | 100.0 | % | $ | 5,432,108 | 100.0 | % | ||||||||||
| Composition of Deposits | As of | |||||||||||||||||||||
| (unaudited) |
March 31, 2018 |
December 31, 2017 |
March 31, 2017 |
|||||||||||||||||||
| ($ in thousands) | Amount |
% of Total deposits |
Amount |
% of Total deposits |
Amount |
% of Total deposits |
||||||||||||||||
| Noninterest bearing | $ | 855,810 | 14.2 | % | $ | 817,330 | 13.8 | % | $ | 1,023,891 | 15.2 | % | ||||||||||
| Interest bearing demand | 2,519,955 | 41.7 | 2,435,293 | 41.0 | 2,453,251 | 36.5 | ||||||||||||||||
| Money market and savings | 2,267,648 | 37.5 | 2,307,258 | 38.8 | 2,748,181 | 40.9 | ||||||||||||||||
| Time deposits | 400,203 | 6.6 | 384,057 | 6.5 | 494,829 | 7.4 | ||||||||||||||||
| Total deposits | $ | 6,043,616 | 100.0 | % | $ | 5,943,938 | 100.1 | % | $ | 6,720,152 | 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 |
||||||||||||||||||||||||||||||||
| (unaudited) | 2018 | 2017 | 2017 | |||||||||||||||||||||||||||||||
| ($ 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 | $ | 242,663 | $ | 951 | 1.59 | % | $ | 381,265 | $ | 1,265 | 1.32 | % | $ | 951,235 | $ | 1,961 | 0.84 | % | ||||||||||||||||
| Investment securities | 1,103,477 | 5,094 | 1.87 | 1,141,865 | 5,975 | 2.08 | 719,754 | 3,069 | 1.73 | |||||||||||||||||||||||||
| Acquired loans | 130,918 | 1,779 | 5.51 | 135,977 | 2,089 | 6.10 | 169,511 | 2,831 | 6.77 | |||||||||||||||||||||||||
| Originated Loans | 5,105,690 | 53,114 | 4.22 | 4,947,185 | 51,916 | 4.16 | 5,400,662 | 57,440 | 4.31 | |||||||||||||||||||||||||
| Total loans | $ | 5,236,608 | $ | 54,893 | 4.25 | $ | 5,083,162 | $ | 54,005 | 4.22 | $ | 5,570,173 | $ | 60,271 | 4.39 | |||||||||||||||||||
| Total interest-earning assets | $ | 6,582,748 | $ | 60,938 | 3.75 | $ | 6,606,292 | $ | 61,245 | 3.68 | $ | 7,241,162 | $ | 65,301 | 3.66 | |||||||||||||||||||
| Noninterest-earning assets | 726,341 | 743,798 | 634,841 | |||||||||||||||||||||||||||||||
| Total assets | $ | 7,309,089 | $ | 7,350,090 | $ | 7,876,003 | ||||||||||||||||||||||||||||
| Liabilities and stockholders’ equity: | ||||||||||||||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||||||||||||||
| Interest-bearing demand | $ | 2,531,947 | $ | 1,277 | 0.20 | % | $ | 2,456,936 | $ | 1,137 | 0.18 | % | $ | 2,495,540 | $ | 1,133 | 0.18 | % | ||||||||||||||||
| Money market and savings | 2,289,530 | 4,699 | 0.83 | 2,356,079 | 4,689 | 0.79 | 2,762,146 | 4,957 | 0.73 | |||||||||||||||||||||||||
| Time deposits | 381,647 | 1,043 | 1.11 | 393,755 | 1,029 | 1.04 | 503,673 | 1,091 | 0.88 | |||||||||||||||||||||||||
| Total interest bearing deposits | $ | 5,203,124 | $ | 7,019 | 0.55 | $ | 5,206,770 | $ | 6,855 | 0.52 | $ | 5,761,359 | $ | 7,181 | 0.51 | |||||||||||||||||||
| Subordinated debt | 132,777 | 1,923 | 5.87 | 132,711 | 1,923 | 5.75 | 132,507 | 1,923 | 5.89 | |||||||||||||||||||||||||
| FHLB advances | 16,444 | 48 | 1.18 | 21,989 | 68 | 1.23 | 27,722 | 67 | 0.98 | |||||||||||||||||||||||||
|
Total interest-bearing liabilities
|
$ | 5,352,345 | $ | 8,990 | 0.68 | $ | 5,361,470 | $ | 8,846 | 0.65 | $ | 5,921,588 | $ | 9,171 | 0.63 | |||||||||||||||||||
| Noninterest-bearing deposits | 832,888 | 852,057 | 921,208 | |||||||||||||||||||||||||||||||
| Other liabilities | 99,598 | 103,795 | 71,180 | |||||||||||||||||||||||||||||||
| Total liabilities | $ | 6,284,831 | $ | 6,317,322 | $ | 6,913,976 | ||||||||||||||||||||||||||||
| Total stockholders’ equity | $ | 1,024,258 | $ | 1,032,768 | $ | 962,027 | ||||||||||||||||||||||||||||
|
Total liabilities and stockholders’ equity |
$ | 7,309,089 | $ | 7,350,090 | $ | 7,876,003 | ||||||||||||||||||||||||||||
| Net interest spread (2) | 3.07 | % | 3.03 | % | 3.03 | % | ||||||||||||||||||||||||||||
| Net interest income and margin, tax equivalent (3, 4) | $ | 51,948 | 3.20 | % | $ | 52,399 | 3.15 | % | $ | 56,130 | 3.14 | % | ||||||||||||||||||||||
| Reconciliation of tax equivalent net interest income to reported net interest income | ||||||||||||||||||||||||||||||||||
| Tax equivalent adjustment | (255 | ) | (413 | ) | (39 | ) | ||||||||||||||||||||||||||||
| Net interest income, as reported | $ | 51,693 | $ | 51,986 | $ | 56,091 | ||||||||||||||||||||||||||||
| (1) | Interest income is presented on a taxable equivalent basis using the federal effective tax rate. | ||
| (2) | Net interest spread represents the average yield on interest-earning assets less the average rate on interest-bearing liabilities. | ||
| (3) | Net interest margin is computed by dividing net interest income by total average interest-earning assets. | ||
| (4) | Net interest margin, tax equivalent has been adjusted to a taxable equivalent basis using the federal effective tax rate. | ||
| Allowance for Loan Losses | |||||||||||||
| (unaudited) | Three Months Ended | ||||||||||||
| ($ in thousands) |
March 31, 2018 |
December 31, 2017 |
March 31, 2017 |
||||||||||
| Allowance for loan losses-balance at beginning of period | $ | 75,930 | $ | 78,176 | $ | 111,410 | |||||||
| (Recapture) Provision for loan losses: | |||||||||||||
| Acquired loans | — | (27 | ) | (94 | ) | ||||||||
| Originated loans | 3,914 | 2,982 | 6,062 | ||||||||||
| Total provision for loan losses | 3,914 | 2,955 | 5,968 | ||||||||||
| Charge-offs: | |||||||||||||
| Acquired loans | — | — | — | ||||||||||
| Originated loans | (14,155 | ) | (5,821 | ) | (5,716 | ) | |||||||
| Total charge-offs | (14,155 | ) | (5,821 | ) | (5,716 | ) | |||||||
| Recoveries: | |||||||||||||
| Acquired loans | — | — | — | ||||||||||
| Originated loans | 2,153 | 620 | 568 | ||||||||||
| Total recoveries | 2,153 | 620 | 568 | ||||||||||
| Total net recoveries (charge-offs) | (12,002 | ) | (5,201 | ) | (5,148 | ) | |||||||
| Allowance for loan losses-balance at end of period | $ | 67,842 | $ | 75,930 | $ | 112,230 | |||||||
| Asset Quality Information | |||||||||||||
| (unaudited) | As of or for the three months ended | ||||||||||||
| ($ in thousands) |
March 31, 2018 |
December 31, 2017 |
March 31, 2017 |
||||||||||
| Nonperforming assets | |||||||||||||
| Nonaccrual loans | $ | 63,813 | $ | 58,274 | $ | 86,740 | |||||||
| OREO and other repossessed assets | — | — | 288 | ||||||||||
| Total nonperforming assets | 63,813 | 58,274 | 87,028 | ||||||||||
| Loans 30 - 89 days past due | 13,304 | 12,805 | 11,381 | ||||||||||
| Accruing loans 90 days or more past due | 299 | 299 | 296 | ||||||||||
| Accruing troubled debt restructured loans | 139 | 139 | 160 | ||||||||||
| Non performing loans to total loans | 1.22 | % | 1.13 | % | 1.60 | % | |||||||
| Non performing assets to total assets | 0.87 | % | 0.78 | % | 1.09 | % | |||||||
| Loans 30 - 89 days past due to total loans | 0.25 | % | 0.25 | % | 0.21 | % | |||||||
| Allowance for loan losses to total loans | 1.30 | % | 1.47 | % | 2.07 | % | |||||||
| Allowance for loan losses to non-accrual loans | 106.31 | % | 130.30 | % | 129.39 | % | |||||||
| Net charge-offs to average loans (annualized) | 0.93 | % | 0.41 | % | 0.37 | % | |||||||
| Risk Rating by Loan Product | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| ($ in thousands) | Pass |
Special |
Classified | Total Loans |
Nonaccrual |
Total |
||||||||||||||||||
| As of March 31, 2018 | ||||||||||||||||||||||||
| Real estate mortgage loans: | ||||||||||||||||||||||||
| Single-family residential | $ | 77,789 | $ | 79 | $ | 697 | $ | 78,565 | $ | — | $ | 224 | ||||||||||||
| Multifamily residential | 2,709,851 | 1,942 | 7,131 | 2,718,924 | 1,209 | 10,286 | ||||||||||||||||||
| Commercial real estate | 1,016,147 | 41,447 | 13,904 | 1,071,498 | 2,512 | 8,859 | ||||||||||||||||||
| Construction and land loans | 70,767 | 9,711 | — | 80,478 | — | 1,083 | ||||||||||||||||||
| Commercial business loans | 1,064,187 | 44,987 | 123,212 | 1,232,386 | 59,496 | 47,032 | ||||||||||||||||||
| Small Business Administration loans | 38,468 | 1,562 | 1,966 | 41,996 | — | 347 | ||||||||||||||||||
| Consumer and other loans | 4,351 | 61 | 735 | 5,147 | 596 | 11 | ||||||||||||||||||
| Total loans | $ | 4,981,560 | $ | 99,789 | $ | 147,645 | $ | 5,228,994 | $ | 63,813 | $ | 67,842 | ||||||||||||
| As of December 31, 2017 | ||||||||||||||||||||||||
| Real estate mortgage loans: | ||||||||||||||||||||||||
| Single-family residential | $ | 81,681 | $ | 80 | $ | 700 | $ | 82,461 | $ | — | $ | 254 | ||||||||||||
| Multifamily residential | 2,539,405 | 5,657 | 3,209 | 2,548,271 | — | 9,097 | ||||||||||||||||||
| Commercial real estate | 1,056,889 | 44,759 | 5,878 | 1,107,526 | — | 8,908 | ||||||||||||||||||
| Construction and land loans | 95,766 | — | — | 95,766 | — | 961 | ||||||||||||||||||
| Commercial business loans | 1,110,445 | 41,251 | 143,782 | 1,295,478 | 57,618 | 56,334 | ||||||||||||||||||
| Small Business Administration loans | 34,527 | 1,597 | 1,985 | 38,109 | — | 363 | ||||||||||||||||||
| Consumer and other loans | 4,723 | 62 | 797 | 5,582 | 656 | 13 | ||||||||||||||||||
| Total loans | $ | 4,923,436 | $ | 93,406 | $ | 156,351 | $ | 5,173,193 | $ | 58,274 | $ | 75,930 | ||||||||||||
| As of March 31, 2017 | ||||||||||||||||||||||||
| Real estate mortgage loans: | ||||||||||||||||||||||||
| Single-family residential | $ | 98,684 | $ | 83 | $ | 736 | $ | 99,503 | $ | — | $ | 254 | ||||||||||||
| Multifamily residential | 2,322,418 | 8,318 | 10,783 | 2,341,519 | — | 9,631 | ||||||||||||||||||
| Commercial real estate | 1,237,392 | 34,514 | 17,176 | 1,289,082 | 12,276 | 10,087 | ||||||||||||||||||
| Construction and land loans | 94,931 | 7,352 | — | 102,283 | — | 1,469 | ||||||||||||||||||
| Commercial business loans | 1,288,371 | 32,210 | 244,403 | 1,564,984 | 73,708 | 90,569 | ||||||||||||||||||
| Small Business Administration loans | 25,152 | 983 | 1,850 | 27,985 | — | 191 | ||||||||||||||||||
| Consumer and other loans | 5,736 | 65 | 951 | 6,752 | 756 | 29 | ||||||||||||||||||
| Total loans | $ | 5,072,684 | $ | 83,525 | $ | 275,899 | $ | 5,432,108 | $ | 86,740 | $ | 112,230 | ||||||||||||
| Risk Rating by Lending Division | ||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||
| ($ in thousands) | Pass |
Special |
Classified | Total Loans |
Nonaccrual |
|||||||||||||||||
| As of March 31, 2018 | ||||||||||||||||||||||
| Income Property Banking | $ | 3,230,456 | $ | 6,938 | $ | 15,358 | $ | 3,252,752 | $ | 3,721 | ||||||||||||
| Commercial Banking | 401,996 | 27,478 | 52,107 | 481,581 | 18,882 | |||||||||||||||||
| Structured Finance | 304,420 | 15,487 | — | 319,907 | — | |||||||||||||||||
| Healthcare Provider | 209,912 | 33,489 | 33,771 | 277,172 | — | |||||||||||||||||
| Healthcare Practice | 21,174 | — | 973 | 22,147 | — | |||||||||||||||||
| Corporate Finance | 132,250 | 14,916 | 22,443 | 169,609 | 21,675 | |||||||||||||||||
| Institutional Syndication | 339,451 | — | (145 | ) | (1 | ) | 339,306 | — | ||||||||||||||
| Public Finance | 178,539 | — | — | 178,539 | — | |||||||||||||||||
| Technology Banking | 19,232 | — | 9,944 | 29,176 | 7,649 | |||||||||||||||||
| Other divisions (2) | 144,130 | 1,481 | 13,194 | 158,805 | 11,886 | |||||||||||||||||
| Total loans | $ | 4,981,560 | $ | 99,789 | $ | 147,645 | $ | 5,228,994 | $ | 63,813 | ||||||||||||
| December 31, 2017 | ||||||||||||||||||||||
| Income Property Banking | $ | 3,140,183 | $ | 18,811 | $ | 2,250 | $ | 3,161,244 | $ | — | ||||||||||||
| Commercial Banking | 414,183 | 22,903 | 47,742 | 484,828 | 11,477 | |||||||||||||||||
| Structured Finance | 339,410 | — | 1,084 | 340,494 | — | |||||||||||||||||
| Healthcare Provider | 220,329 | 33,648 | 23,792 | 277,769 | — | |||||||||||||||||
| Healthcare Practice | 22,673 | — | 2,640 | 25,313 | 1,638 | |||||||||||||||||
| Corporate Finance | 184,058 | 11,866 | 44,162 | 240,086 | 25,655 | |||||||||||||||||
| Institutional Syndication | 289,397 | — | (177 | ) | (1 | ) | 289,220 | — | ||||||||||||||
| Public Finance | 148,454 | — | — | 148,454 | — | |||||||||||||||||
| Technology Banking | 21,238 | — | 25,009 | 46,247 | 18,677 | |||||||||||||||||
| Other divisions (2) | 143,511 | 6,178 | 9,849 | 159,538 | 827 | |||||||||||||||||
| Total loans | $ | 4,923,436 | $ | 93,406 | $ | 156,351 | $ | 5,173,193 | $ | 58,274 | ||||||||||||
| As of March 31, 2017 | ||||||||||||||||||||||
| Income Property Banking | $ | 2,910,884 | $ | 20,132 | $ | 7,803 | $ | 2,938,819 | $ | 696 | ||||||||||||
| Commercial Banking | 476,078 | 24,301 | 69,900 | 570,279 | 15,946 | |||||||||||||||||
| Structured Finance | 441,257 | 10,945 | 15,322 | 467,524 | 11,580 | |||||||||||||||||
| Healthcare Provider | 354,611 | 13,480 | 55,057 | 423,148 | — | |||||||||||||||||
| Healthcare Practice | 35,260 | 539 | 8,358 | 44,157 | 5,624 | |||||||||||||||||
| Corporate Finance | 346,405 | 2,389 | 52,668 | 401,462 | 24,932 | |||||||||||||||||
| Institutional Syndication | 289,162 | (322 | ) | (1 | ) | (274 | ) | (1 | ) | 288,566 | — | |||||||||||
| Public Finance | 24,798 | — | — | 24,798 | — | |||||||||||||||||
| Technology Banking | 47,296 | 10,818 | 64,108 | 122,222 | 26,968 | |||||||||||||||||
| Other divisions (2) | 146,933 | 1,243 | 2,957 | 151,133 | 994 | |||||||||||||||||
| Total loans | $ | 5,072,684 | $ | 83,525 | $ | 275,899 | $ | 5,432,108 | $ | 86,740 | ||||||||||||
| (1) | Represents unamortized net deferred loan origination fees on syndicated lines of credit that have no outstanding principal balances at period end. | ||
| (2) | Other divisions is comprised of single family residential loans, consumer and other loans, and specialty banking divisions including Business Banking and Media and Entertainment Banking. | ||
Non-GAAP Financial Measures
Our accounting and reporting policies conform to generally accepted accounting principles in the United States ("GAAP"). We believe that the presentation of certain non-GAAP financial measures assists investors in evaluating our financial results. These non-GAAP measures include our return on average tangible equity and tangible book value per as converted common share. These non-GAAP measures should be taken together with the corresponding GAAP measures and should not be considered a substitute of the GAAP measures.
The following tables present a reconciliation of the most comparable GAAP financial measures and ratios to the non-GAAP financial measures and ratios:
| Non-GAAP tax adjusted return on average assets | |||||||||||||
| (unaudited) | Three Months Ended | ||||||||||||
| ($ in thousands) |
March 31, 2018 |
December 31, 2017 |
March 31, 2017 |
||||||||||
| Average assets | $ | 7,309,089 | $ | 7,350,090 | $ | 7,876,003 | |||||||
| Tax adjusted net income | |||||||||||||
| Net income | $ | 12,904 | $ | 1,201 | $ | 7,657 | |||||||
| Less: Adjustments due to the Tax Cuts and Jobs Act | — | 8,968 | — | ||||||||||
| Tax adjusted net income | 12,904 | 10,169 | 7,657 | ||||||||||
| Return on average assets | 0.72 | % | 0.06 | % | 0.39 | % | |||||||
| Non-GAAP tax adjusted return on average assets (1) | 0.72 | % | 0.55 | % | 0.39 | % | |||||||
| (1) | Tax adjusted for the three months ended December 31, 2017 due to impacts of the Tax Cuts and Jobs Act. | ||
| Non-GAAP return on average tangible equity | ||||||||||||||
| (unaudited) | Three Months Ended | |||||||||||||
| ($ in thousands) |
March 31, 2018 |
December 31, 2017 |
March 31, 2017 |
|||||||||||
| Average tangible equity: | ||||||||||||||
| Average stockholders' equity | $ | 1,024,258 | $ | 1,032,768 | $ | 962,027 | ||||||||
| Less: | ||||||||||||||
| Average goodwill | 331,832 | — | 331,832 | 331,832 | ||||||||||
| Average other intangible assets | 44,083 | 45,551 | 50,112 | |||||||||||
| Average tangible equity | $ | 648,343 | $ | 655,385 | $ | 580,083 | ||||||||
| Tax adjusted net income: | ||||||||||||||
| Net income | $ | 12,904 | $ | 1,201 | $ | 7,657 | ||||||||
| Less: Adjustments for revaluation of deferred tax assets | — | 8,968 | — | |||||||||||
| Tax adjusted net income | $ | 12,904 | $ | 10,169 | $ | 7,657 | ||||||||
| Return on average stockholders' equity | 5.11 | % | 0.46 | % | 3.23 | % | ||||||||
| Non-GAAP return on average tangible equity | 8.07 | % | 0.73 | % | 5.35 | % | ||||||||
| Non-GAAP tax adjusted return on average stockholders' equity (1) | 5.11 | % | 3.91 | % | 3.23 | % | ||||||||
| Non-GAAP tax adjusted return on average tangible equity (1) | 8.07 | % | 6.16 | % | 5.35 | % | ||||||||
| (1) | Tax adjusted for the three months ended December 31, 2017 due to impacts of the Tax Cuts and Jobs Act. | ||
| Non-GAAP tangible book value per as converted common share | ||||||||||||
| (unaudited) | As of | |||||||||||
| ($ In thousands, except share amounts) |
March 31, 2018 |
December 31, 2017 |
March 31, 2017 |
|||||||||
| Tangible equity: | ||||||||||||
| Total stockholders' equity | $ | 1,022,378 | $ | 1,023,464 | $ | 985,628 | ||||||
| Less: | ||||||||||||
| Goodwill | 331,832 | 331,832 | 331,832 | |||||||||
| Other intangible assets, net | 43,321 | 44,800 | 49,239 | |||||||||
| Tangible equity | 647,225 | 646,832 | 604,557 | |||||||||
| Shares of common stock outstanding | 36,001,581 | 35,915,159 | 37,218,374 | |||||||||
| Shares of common stock to be issued upon conversion of preferred stock | 1,555,550 | 1,555,550 | 30,600 | |||||||||
| Total as converted shares of common stock outstanding (1) | 37,557,131 | 37,470,709 | 37,248,974 | |||||||||
| Book value per as converted common share | 27.22 | 27.31 | 26.46 | |||||||||
| Tangible book value per as converted common share | 17.23 | 17.26 | 16.23 | |||||||||
| (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. | ||
