IRVINE, Calif.--(BUSINESS WIRE)--Opus Bank ("Opus") (Nasdaq: “OPB”) announced today a net loss of $84.8 million, or $(2.34) per diluted share, for the first quarter of 2020, compared to net income of $20.3 million, or $0.53 per diluted share, for the fourth quarter of 2019. Net loss during the first quarter of 2020 included a $96.2 million non-cash impairment charge to write off a portion of the balance of goodwill, as well as $2.9 million of merger related expenses. Together, these items negatively impacted earnings by $2.69 per diluted share for the first quarter of 2020. Pre-provision net revenue on an adjusted basis increased 10% from the prior quarter, primarily driven by higher net interest income.
Additionally, Opus announced today that its Board of Directors has approved the payment of a quarterly cash dividend of $0.11 per common share payable on May 22, 2020 to common stockholders of record as of May 8, 2020, and a common-equivalent payment to its Series A Preferred stockholders.
Earnings Summary |
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(unaudited) |
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For the three months ended |
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($ in thousands, except per share data) |
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March 31, 2020 |
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December 31, 2019 |
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March 31, 2019 |
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Net income (loss) |
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$ |
|
(84,843 |
) |
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$ |
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20,289 |
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$ |
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10,861 |
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Earnings (loss) per diluted share |
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(2.34 |
) |
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0.53 |
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0.28 |
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Pre-provision net revenue ("PPNR") |
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(74,060 |
) |
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23,784 |
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16,494 |
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Return on average assets ("ROAA") |
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(4.26 |
) |
% |
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1.02 |
% |
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0.60 |
% |
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Return on average stockholders' equity |
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(30.79 |
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%) |
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7.37 |
% |
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4.19 |
% |
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Return on average tangible common equity1 ("ROATCE") |
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(47.74 |
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%) |
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11.54 |
% |
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6.76 |
% |
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Efficiency ratio1 |
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210.75 |
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% |
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61.30 |
% |
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70.61 |
% |
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Adjusted Earnings1 |
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Adjusted net income |
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$ |
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13,399 |
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$ |
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19,553 |
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$ |
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12,305 |
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Adjusted pre-provision net revenue |
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25,213 |
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23,014 |
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18,321 |
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Adjusted earnings per diluted share |
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0.35 |
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0.51 |
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0.32 |
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Adjusted return on average assets |
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0.67 |
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% |
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0.98 |
% |
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0.68 |
% |
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Adjusted return on average stockholders' equity |
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4.86 |
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% |
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7.10 |
% |
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4.75 |
% |
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Adjusted return on average tangible common equity |
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7.54 |
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% |
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11.12 |
% |
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7.66 |
% |
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Adjusted efficiency ratio |
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59.21 |
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% |
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61.17 |
% |
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67.93 |
% |
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[1] See reconciliation of non-GAAP financial measures to corresponding GAAP measures on pages 18-19. |
Paul W. Taylor, President and Chief Executive Officer of Opus, stated, "Despite the rapidly evolving COVID-19 pandemic that has affected us all, we were pleased with our first quarter performance, including adjusted EPS of $0.35, which excludes merger-related expenses and the non-cash charge we incurred in the first quarter to write down a portion of our goodwill. The goodwill impairment had no impact on our regulatory ratios, tangible capital, or liquidity in the first quarter of 2020, and predominantly reflected the fact that stock market values of all banks are significantly lower in the current, highly stressed market environment. Adjusted pre-provision net revenue increased 10% from the prior quarter and our adjusted efficiency ratio improved to 59.2% for the first quarter of 2020. Furthermore, our net interest margin expanded from the prior quarter and expenses were contained.”
Mr. Taylor continued, “Major metropolitan areas on the West Coast were some of the earliest to report the spread of COVID-19, but thankfully, so far, have not seen as many cases as other areas in the country. Nevertheless, we took steps very early on to protect the health and safety of our team members and clients, and we continue to monitor the ongoing situation and take additional actions as necessary and appropriate. We have responded to clients' requests for loan payment deferrals through a coordinated and strategic effort and we are assisting where possible.”
Mr. Taylor concluded, “Our pending merger with Pacific Premier Bancorp remains on track to close during the second quarter of 2020, having already received regulatory approval, and shareholder approval is pending. The combination of Opus and Pacific Premier Bancorp will create one of the premier commercial banks in the western United States, provide scale and increased access to banking products and services for our clients, and result in a strong capital position to work through the current challenging environment.”
Response to COVID-19 Pandemic
During the first quarter of 2020, our operations began to be affected by the spread of the COVID-19 virus and the social, economic, and regulatory actions undertaken in response. Beginning in early March, we took steps to address the possible risks to our team members' and clients' health and well-being based on the guidance for businesses and employers provided by the Centers for Disease Control and Prevention. Our executive leadership team meets multiple times per week to ensure we are proactively addressing any COVID-19 related issues.
In mid-March, we instituted a work-from-home policy that applied to all Opus and PENSCO team members at our corporate offices, except for a handful of mission-critical roles, and eliminated all business-related travel. We provided personal protection equipment at all of our locations, including masks, gloves, hand sanitizer, and sneeze guards at our banking offices. We also limited our banking office hours to reduce the exposure time of our team members and to allow them extra time to accommodate changes in their personal lives.
For our clients, in addition to installing sneeze guards at teller stations to add an additional layer of protection between the client and employee when completing face to face transactions, we posted visual markers to encourage social distancing within the banking offices. Our banking offices are under a controlled access protocol, allowing a minimal number of clients to enter at one time to encourage social distancing. We also increased the frequency of cleaning all high-touch areas in our banking offices to help protect customers from infection. Finally, we enacted our previously developed business continuity plan, which includes work-from-home capabilities for employees with robust firewall protections and other cybersecurity measures to protect customers' personal information and sensitive financial data.
While our capital ratios and liquidity levels are healthy, we further bolstered our liquidity during the first quarter of 2020 as a precaution against further deterioration in economic conditions by temporarily increasing our cash position by $250 million through Federal Home Loan Bank (FHLB) advances and brokered funds. Additionally, we have access to over $2 billion of currently unused borrowing capacity with the FHLB.
Loans
Average loans increased $134.0 million, or 2.3%, compared to the prior quarter to $5.9 billion for the first quarter of 2020, and increased $647.3 million, or 12.3%, from $5.3 billion for the first quarter of 2019. On a period-end basis, loans increased $89.7 million, or 1.5%, compared to the prior quarter to $6.0 billion, as of March 31, 2020, and increased $528.7 million, or 9.7%, compared to March 31, 2019. The increase in the average balance of loans compared to the prior quarter was primarily driven by the timing of new loan fundings, which occurred later in the fourth quarter of 2019.
Loan Balance Roll Forward |
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(unaudited) |
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Three Months Ended |
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($ in millions) |
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March 31,
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December 31,
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September 30,
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June 30,
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March 31,
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Beginning loan balance |
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$ |
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5,900.5 |
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$ |
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5,802.0 |
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$ |
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5,789.0 |
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$ |
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5,461.5 |
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$ |
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5,165.2 |
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New loan fundings |
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410.9 |
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409.5 |
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406.1 |
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703.6 |
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538.0 |
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Loan payoffs |
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(237.9 |
) |
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(271.7 |
) |
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(300.0 |
) |
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(192.8 |
) |
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(173.7 |
) |
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Other1 |
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(83.3 |
) |
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(39.3 |
) |
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(93.1 |
) |
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(183.3 |
) |
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(68.0 |
) |
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Ending loan balance |
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$ |
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5,990.2 |
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$ |
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5,900.5 |
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$ |
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5,802.0 |
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$ |
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5,789.0 |
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$ |
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5,461.5 |
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[1] Includes amortization, planned exits, charge-offs, and transfers to held-for-sale |
New loan fundings in the first quarter of 2020 totaled $410.9 million, an increase of $1.5 million, or 0.4%, from the fourth quarter of 2019 and a decrease of $127.0 million, or 23.6%, from the first quarter of 2019. Loan fundings in the first quarter of 2020 were primarily driven by $254.9 million of loans from our Income Property Banking division, while our Commercial Banking division funded $112.2 million of new loans during the first quarter of 2020. Loan growth was also impacted by payoffs, which were $237.9 million in the first quarter of 2020, compared to $271.7 million in the fourth quarter of 2019 and $173.7 million in the first quarter of 2019.
Investment Securities
The average balance of investment securities increased $2.5 million, or 0.2%, during the first quarter of 2020 to $1.0 billion compared to the prior quarter, and decreased $76.1 million, or 6.9%, compared to the first quarter of 2019. On a period-end basis, investment securities decreased $48.3 million, or 4.6%, from the prior quarter to $991.3 million as of March 31, 2020, and decreased $102.7 million, or 9.4%, compared March 31, 2019. The decrease in the period-end balance of investment securities compared to the fourth quarter of 2019 was primarily driven by the timing of purchases during the fourth quarter and fluctuations in market valuations during the first quarter of 2020.
Deposits and Borrowings
Average deposits increased $52.8 million, or 0.8%, during the first quarter of 2020 to $6.5 billion compared to the prior quarter, and increased $522.4 million, or 8.8%, compared to the first quarter of 2019. Period-end deposit balances increased $229.2 million, or 3.5%, during the first quarter of 2020 to $6.7 billion as of March 31, 2020, and increased $626.1 million, or 10.3%, compared to March 31, 2019. The growth in average deposits during the first quarter of 2020 was driven by an increase of $96.5 million, or 4.4%, in average money market and savings balances, and an increase of $14.3 million, or 1.9%, in average noninterest bearing demand deposit balances, partially offset by a decrease of $67.7 million, or 8.0%, in the average balance of certificates of deposits from the prior quarter. Noninterest-bearing demand deposits measured 12.5% of total deposits as of March 31, 2020, as compared to 11.9% of total deposits as of December 31, 2019.
During the first quarter of 2020, we increased the balance of brokered deposits to $207.3 million as of March 31, 2020, compared to $3.9 million as of December 31, 2019, as we bolstered our liquidity ratios in response to the COVID-19 pandemic. Additionally, we borrowed $250 million of additional funds through FHLB advances at attractive rates to increase our liquidity ratios. As a result, the average balance of FHLB advances increased $23.6 million, or 11.8%, from the prior quarter to $223.6 million during the first quarter of 2020, and FHLB advances totaled $450.0 million as of March 31, 2020.
Our loan to deposit ratio was 89.4% as of March 31, 2020, compared to 91.1% as of December 31, 2019 and 89.9% as of March 31, 2019.
Net Interest Income
Taxable equivalent net interest income increased 3.0% to $51.6 million for the first quarter of 2020, compared to $50.1 million for the fourth quarter of 2019, and increased 0.8% compared to $51.2 million for the first quarter of 2019.
Interest income from loans increased 0.8% to $60.7 million for the first quarter of 2020, compared to $60.2 million for the fourth quarter of 2019, driven primarily by higher average loan balances. Interest on cash decreased 35.4% to $1.1 million, primarily driven by a 42 basis point decrease in yield due to the Federal Reserve rate cuts in March 2020 and October, 2019, and a $47.9 million decrease in average balances of interest-earning cash. Interest income on investment securities remained stable at $7.7 million for both the first quarter of 2020 and fourth quarter of 2019.
Interest expense decreased 8.4% to $17.8 million for the first quarter of 2020, compared to $19.5 million for the fourth quarter of 2019, and increased 11% compared to $16.1 million for the first quarter of 2019. The decrease in interest expense from the prior quarter was driven primarily by a 10 basis point decrease in the cost of deposits to 0.91%. Interest expense on FHLB advances was flat compared to the prior quarter at $1.2 million, as higher average balances were offset by lower rates.
Net Interest Margin
Taxable equivalent net interest margin (NIM) increased eight basis points to 2.84% in the first quarter of 2020 from 2.76% in the fourth quarter of 2019, and decreased 32 basis points from 3.15% in the first quarter of 2019. The linked-quarter increase was primarily driven by a nine basis point decrease in the cost of funds to 1.05% and higher average loan balances, partially offset by lower contribution from cash balances. Our cost of deposits decreased 10 basis points to 0.91% during the first quarter of 2020, driven by lower rates and higher average balances of noninterest bearing demand deposits.
Noninterest Income
Noninterest income in the first quarter of 2020 was unchanged from the prior quarter at $13.9 million, and increased 25% from $11.1 million in the first quarter of 2019. Noninterest income from PENSCO increased 1% from the prior quarter to $7.4 million in the first quarter of 2020, and escrow and exchange fees decreased 3% from the prior quarter to $1.5 million. Noninterest income for the first quarter of 2020 included $3,000 in gains on the sale of securities, loans, and other assets, compared to a gain of $851,000 for the fourth quarter of 2019. Additionally, other noninterest income included a $1.4 million net increase in equity warrant valuations and a $74,000 lease impairment charge.
Noninterest Expense
Noninterest expense in the first quarter of 2020 was $139.0 million, compared to $39.7 million in the fourth quarter of 2019 and $45.4 million in the first quarter of 2019. Noninterest expense during the first quarter of 2020 included a $96.2 million goodwill impairment charge that reduced the previously recorded value of goodwill by 29.0%. Additionally, noninterest expense included $2.9 million of professional services expenses related to our previously announced acquisition by Pacific Premier Bancorp. Excluding these items, noninterest expense for the first quarter of 2020 was flat compared to the prior quarter.
On at least an annual basis, we evaluate our goodwill for potential impairment, taking into consideration trends in economic conditions, financial performance, business combinations, and industry-specific market factors. Given the recent volatility in the economy, triggered by the COVID-19 pandemic, we believed it was prudent to perform an evaluation of our goodwill for potential impairment during the quarter ended March 31, 2020. Based upon the results of our analysis, an impairment charge of $96.2 million was recognized during the first quarter of 2020, driven predominantly by the negative impact of COVID-19 on stock market valuations and the price of our common stock, which adversely impacted the valuation of goodwill as of March 31, 2020. The non-cash goodwill impairment charge had no impact to our regulatory ratios, tangible capital, cash flows, or liquidity.
As previously guided, we incurred seasonally higher compensation and benefits expense of approximately $1.5 million due to employer taxes paid in the first quarter of 2020. During the first quarter of 2020, we utilized $443,000 of the FDIC small bank assessment credit, compared to $461,000 in the fourth quarter of 2019.
As a result of our adoption of CECL during the first quarter of 2020, we recognized $1.2 million of provision for credit losses related to unfunded commitments, which is included in Other Expenses.
Our efficiency ratio for the first quarter of 2020 was 210.8%, or 59.2% on an adjusted basis, compared to 61.3% for the fourth quarter of 2020, or 61.2% on an adjusted basis.
Income Tax Expense
We recorded an income tax expense of $3.2 million in the first quarter of 2020, compared to an income tax expense of $6.2 million in the fourth quarter of 2019 and an income tax expense of $3.4 million in the first quarter of 2019. Our effective tax rate for the first quarter of 2020 was (4.0)%, compared to 23.3% for the fourth quarter of 2019 and 24.0% for the first quarter of 2019. The change in our effective tax rate for the first quarter of 2020 was primarily driven by nondeductible goodwill impairment (partially offset by tax benefits associated with tax-exempt earnings and income from bank-owned life insurance), which impacted our tax rate by approximately 28 percentage points.
Asset Quality
Total nonperforming assets decreased 3% to $5.8 million as of March 31, 2020, compared to $6.0 million as of December 31, 2019, and decreased 75% compared to $23.3 million as of March 31, 2019. Our ratio of nonperforming assets to total assets was 0.07% as of March 31, 2020, unchanged from the prior quarter, and a decrease from 0.30% as of March 31, 2019. Total criticized loans increased $7.3 million, or 10%, to $80.7 million as of March 31, 2020, compared to $73.5 million as of December 31, 2019. Classified loans decreased $5.1 million in the first quarter of 2020, while special mention loans increased $12.4 million from the prior quarter.
Opus's commercial loan and real estate portfolios will be impacted by the COVID-19 pandemic. Our commercial loan portfolio is well diversified across industry types and has minimal exposure to industries that have been initially impacted the most severely as a result of the COVID-19 pandemic, such as Restaurants, Hotels, Airlines, Energy, and Retail. A breakdown of C&I loan industry concentrations is shown in the table below.
Commercial & Industrial Loan Concentrations (by NAICS code) |
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(unaudited) |
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As of March 31, 2020 |
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($ in millions) |
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Loan Balance |
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% of C&I Loans |
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Public Administration |
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$ |
205.1 |
|
23.7 |
% |
Manufacturing |
|
|
128.2 |
|
14.8 |
% |
Information |
|
|
117.9 |
|
13.6 |
% |
Health Care and Social Assistance |
|
|
94.7 |
|
10.9 |
% |
Educational Services |
|
|
62.0 |
|
7.2 |
% |
Wholesale Trade |
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|
57.6 |
|
6.6 |
% |
Restaurants and Drinking Places |
|
|
30.0 |
|
3.5 |
% |
Professional, Scientific, and Technical Services |
|
|
30.0 |
|
3.5 |
% |
Arts, Entertainment, and Recreation |
|
|
28.5 |
|
3.3 |
% |
Administrative and Support and Waste Management and Remediation Services |
|
|
27.1 |
|
3.1 |
% |
Other1 |
|
|
86.0 |
|
9.9 |
% |
Total Commercial & Industrial Loans |
|
$ |
867.0 |
|
100.0 |
% |
|
|
|
|
|
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[1] Includes hotels, which comprise less than 0.1% of C&I loans |
Loans collateralized by commercial real estate (CRE) are well diversified by property types, as shown in the table below. Additionally, as of March 31, 2020, 72.5% of our real estate exposure is in multifamily properties, which have an average loan-to-value ratio (LTV) of 62.9%, average debt service coverage ratio (DSCR) of 1.52, and have experienced zero loan losses since the inception of Opus.
Real Estate Property Types |
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(unaudited) |
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As of March 31, 2020 |
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($ in millions) |
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Loan Balance |
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% of Total RE Loans |
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Multifamily Properties |
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$ |
|
|
3,616.7 |
|
72.5 |
% |
Commercial Real Estate: |
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Mixed Use Building |
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|
287.5 |
|
5.8 |
% |
||
Retail Building |
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|
282.6 |
|
5.7 |
% |
||
Industrial Building / Warehouse |
|
|
267.9 |
|
5.4 |
% |
||
Office Building |
|
|
246.5 |
|
4.9 |
% |
||
Other |
|
|
287.5 |
|
5.8 |
% |
||
Total Multifamily and CRE Secured Loans |
|
$ |
|
|
4,988.7 |
|
100.0 |
% |
Real Estate Loan Credit Metrics |
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(unaudited) |
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As of March 31, 2020 |
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($ in millions) |
|
Loan Balance |
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Average Size |
|
LTV |
|
DSCR |
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Multifamily |
|
$ |
|
3,912.3 |
|
$ |
2.3 |
|
62.9 |
% |
|
1.52x |
Commercial Real Estate |
|
|
1,076.5 |
|
2.4 |
|
57.9 |
% |
|
1.68x |
Beginning late in the first quarter of 2020, Opus's Commercial Banking and Income Property Banking customers began to contact us to request modifications of their scheduled loan payments due to the COVID-19 pandemic. As of April 24, 2020, we had processed modifications on 128 lending relationships on a total principal balance of $393.9 million, 94% of which were 90-day deferrals of principal and/or interest. Note that these loan modifications related to COVID-19 were not classified as Troubled Debt Restructured (TDR) loans.
Completed Loan Modifications Related to COVID-191 |
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(unaudited) |
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|
As of April 24, 2020 |
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($ in millions) |
|
# of
|
|
Principal
|
|
Income Property Banking |
|
88 |
|
$ |
330.0 |
Commercial Banking |
|
40 |
|
|
63.9 |
Total Completed Loan Modifications |
|
128 |
|
$ |
393.9 |
|
|
|
|
|
|
[1] Excludes SFR and SBA 7(a) CARES ACT loans |
Allowance for Credit Losses and CECL Adoption
On January 1, 2020, we adopted ASC 326, also known as the Current Expected Credit Losses (CECL) methodology, which affects how we determine our allowance for credit losses. The adoption of CECL increased the opening balance for the allowance for credit losses in the first quarter of 2020. The "Day-1" adjustment to the allowance for credit losses was $2.4 million for loans and $1.4 million for unfunded loan commitments, for a cumulative adjustment of $3.8 million. Our provision for credit losses in the first quarter of 2020 was $7.6 million related to loans and $1.2 million related to unfunded loan commitments, for a total provision of $8.7 million.
Allowance for Credit Losses |
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(unaudited) |
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($ in thousands) |
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Loans |
|
Unfunded Loan
|
|
Total |
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|
|
|
|||||||||||
Balance at 12/31/2019 |
|
$ |
|
40,844 |
|
|
|
$ |
|
1,014 |
|
|
$ |
|
41,858 |
|
|
Cumulative Adjustment |
|
|
2,397 |
|
|
|
|
1,449 |
|
|
|
3,846 |
|
|
|||
Balance at 1/1/2020 |
|
|
43,241 |
|
|
|
|
2,463 |
|
|
|
45,704 |
|
|
|||
Provision for credit losses |
|
|
7,557 |
|
|
|
— |
|
|
|
7,557 |
|
|
||||
Provision for unfunded loan commitments |
|
— |
|
|
|
1,185 |
|
|
|
1,185 |
|
|
|||||
Total provision |
|
|
7,557 |
|
|
|
|
1,185 |
|
|
|
8,742 |
|
|
|||
Charge-offs |
|
|
(202 |
) |
|
|
— |
|
|
|
(202 |
) |
|
||||
Recoveries |
|
|
828 |
|
|
|
— |
|
|
|
828 |
|
|
||||
Balance at 3/31/2020 |
|
$ |
|
51,424 |
|
|
|
$ |
|
3,648 |
|
|
$ |
|
55,072 |
|
|
Although our asset quality remains strong, exhibited by stable credit metrics and net recoveries during the first quarter of 2020, the increase in our provision for credit losses from the prior quarter was primarily driven by the effects of the current economic outlook due to the COVID-19 pandemic. As of March 31, 2020, the allowance for credit losses on loans was $51.4 million and the reserve for unfunded commitments was $3.6 million, included in Other Liabilities on our Consolidated Balance Sheet. The ratio of the allowance for credit losses on loans to total loans was 0.86% as of March 31, 2020, compared to 0.69% as of December 31, 2019 and 1.07% as of March 31, 2019.
Capital
As of March 31, 2020, Opus exceeded all minimum regulatory capital requirements under Basel III and was considered to be a "well-capitalized" financial institution, as summarized in the table below.
Capital Ratios |
|
As of |
|
Well-Capitalized
|
||||||||
(unaudited) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
|||||
Tier 1 leverage ratio |
|
9.64 |
% |
|
9.70 |
% |
|
9.86 |
% |
|
5.00 |
% |
Common Equity Tier 1 ratio |
|
11.66 |
|
|
11.68 |
|
|
11.10 |
|
|
6.50 |
|
Tier 1 risk-based capital ratio |
|
12.14 |
|
|
12.17 |
|
|
11.59 |
|
|
8.00 |
|
Total risk-based capital ratio |
|
15.11 |
|
|
15.08 |
|
|
14.85 |
|
|
10.00 |
|
Tangible equity to tangible assets ratio |
|
9.09 |
|
|
9.62 |
|
|
9.27 |
|
|
NA |
|
Tangible common equity to tangible assets ratio |
|
8.73 |
|
|
9.24 |
|
|
8.88 |
|
|
NA |
|
|
|
|
|
|
|
|
|
|
||||
[1] Regulatory capital ratios are preliminary until filing of our March 31, 2020 FDIC call report. |
||||||||||||
In connection with our adoption of CECL on January 1, 2020, we chose to exercise the option to delay for two years the Day 1 impact to regulatory capital, followed by a three-year transition period, based upon recent inter-agency regulatory guidance. Our regulatory capital ratios as of March 31, 2020 reflect this decision.
Stockholders’ equity decreased $92.8 million during the first quarter of 2020 to $1.0 billion as of March 31, 2020, as retained earnings was reduced by the amount of the goodwill impairment charge incurred during the quarter. Our tangible book value per common share increased $0.10 to $19.48 as of March 31, 2020, compared to $19.38 as of December 31, 2019 and increased $1.52 compared to $17.96 as of March 31, 2019.
About Opus Bank
Opus Bank is an FDIC insured California-chartered commercial bank with $8.4 billion of total assets, $6.0 billion of total loans, and $6.7 billion in total deposits as of March 31, 2020. Opus Bank provides commercial and retail banking products and solutions to its clients in western markets from its headquarters in Irvine, California and through 46 banking offices, including 28 in California, 16 in the Seattle/Puget Sound region in Washington, one in the Phoenix metropolitan area of Arizona and one in Portland, Oregon. Opus Bank offers a suite of treasury and cash management and depository solutions, and a wide range of loan products, including commercial, healthcare, media and entertainment, corporate finance, multifamily residential, commercial real estate and structured finance, and is an SBA preferred lender. Opus Bank offers commercial escrow services and facilitates 1031 Exchange transactions through its Escrow and Exchange divisions. Additionally, Opus Bank’s wholly-owned subsidiary, PENSCO Trust Company, has approximately $14 billion of custodial IRA assets and approximately 45,000 client accounts, which are comprised of self-directed investors, financial institutions, capital raisers and financial advisors. Opus Bank is an Equal Housing Lender. For additional information about Opus Bank, please visit our website: www.opusbank.com.
Forward Looking Statements
This release and the aforementioned conference call and webcast includes forward-looking statements related to Opus’s plans, beliefs and goals. Statements regarding Opus's proposed merger with Pacific Premier Bancorp, including the benefits and effects thereof, are forward-looking statements. Forward-looking statements are neither historical facts nor assurances of future performance. Opus generally identifies forward-looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this release and the aforementioned conference call and webcast are based on the historical performance of Opus and its subsidiaries or on its current plans, beliefs, estimates, expectations and goals, including without limitation: the anticipated timing of our pending merger with Pacific Premier Bancorp; our expectations regarding the scale, increased access to banking products and services for our clients, and future earnings growth as a result of the merger; and the impact of the COVID-19 pandemic on our business, including our commercial loan and real estate portfolios. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity that could cause actual results to differ materially from those indicated by the forward-looking statements, including, without limitation: uncertainties regarding the duration and severity of the COVID-19 pandemic and measures intended to reduce its spread, including their impact on our ability to attract and retain customer deposits and our ability to access sources of liquidity on acceptable terms or at all; uncertainties regarding the ability of us or Pacific Premier Bancorp to satisfy the closing conditions required to consummate the merger, including shareholder approvals; and other factors described under “Risk Factors” in the joint proxy statement/prospectus of Opus and Pacific Premier Bancorp filed with the SEC and the FDIC and which was distributed to the shareholders of Opus on or about April 7, 2020, available at the FDIC’s website, www.fdic.gov, and Opus’s website, www.opusbank.com under the tab “Investor Relations” and then under the heading “Presentations & Filings”; market and economic conditions, changes in interest rates, our liquidity position, the management of our growth, the risks associated with our loan portfolio, risks that our expected efficiencies and savings from our expense reduction initiatives will be less than anticipated, local economic conditions affecting retail and commercial real estate, our geographic concentration in the western region of the United States, competition within the industry, dependence on key personnel, government legislation and regulation, the risks associated with any future acquisitions, the effect of natural disasters, risks related to our technology and information systems, and the management of our operating expenses, including the effectiveness of certain strategic cost reduction initiatives. For a discussion of these and other risks and uncertainties, see Opus's filings with the FDIC, including, but not limited to, the risk factors in Opus's Annual Report on Form 10-K filed with the FDIC on February 28, 2020, as such risk factors may be amended, supplemented or superseded from time to time by other reports Opus files with the FDIC. If one or more of these or other risks or uncertainties materialize, or if Opus’s underlying assumptions prove to be incorrect, Opus’s actual results may vary materially from those indicated in these statements. These filings are available on the Investor Relations page of Opus's website at: investor.opusbank.com.
Opus undertakes no obligation to revise or publicly release any revision to these forward-looking statements, whether as a result of new information, future developments or otherwise.
Important Information About the Merger and Where to Find It
This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed acquisition transaction, a registration statement on Form S-4 was filed with and declared effective by the SEC, which registration statement included a joint proxy statement/prospectus filed with the SEC and the FDIC and which was distributed to the shareholders of Opus and Pacific Premier Bancorp in connection with their votes on the acquisition.
INVESTORS AND SECURITY HOLDERS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS (AND ANY OTHER DOCUMENTS FILED WITH THE SEC OR THE FDIC IN CONNECTION WITH THE TRANSACTION OR INCORPORATED BY REFERENCE INTO THE JOINT PROXY STATEMENT/PROSPECTUS) BECAUSE SUCH DOCUMENTS CONTAIN IMPORTANT INFORMATION REGARDING THE PROPOSED MERGER AND RELATED MATTERS. The final joint proxy statement/prospectus was mailed to shareholders of Opus and Pacific Premier Bancorp on or about April 7, 2020. Investors and security holders are able to obtain the documents, and any other documents Pacific Premier Bancorp has filed with the SEC, free of charge at the SEC’s website, www.sec.gov or by accessing Pacific Premier Bancorp’s website at www.ppbi.com under the tab “Investors” and then under the heading “SEC Filings”. Investors and security holders are able to obtain the documents, and any other documents Opus has filed with the FDIC, free of charge at Opus’s website at www.opusbank.com under the tab “Investor Relations” and then under the heading “Presentations & Filings”. In addition, documents filed with the SEC by Pacific Premier Bancorp or with the FDIC by Opus will be available free of charge by (1) writing Pacific Premier Bancorp at 17901 Von Karman Avenue, Suite 1200, Irvine, CA 92614, Attention: Investor Relations, or (2) writing Opus at 19900 MacArthur Boulevard, 12th Floor, Irvine, CA 92612, Attention: Investor Relations.
Before making any voting or investment decision, shareholders of Pacific Premier Bancorp and Opus are urged to read carefully the entire registration statement and joint proxy statement/prospectus, including any amendments thereto, because they contain important information about the proposed transaction, Pacific Premier Bancorp and Opus. Free copies of these documents may be obtained as described above.
Participants in Solicitation
The directors, executive officers and certain other members of management and employees of Pacific Premier Bancorp may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction from the shareholders of Pacific Premier Bancorp. Information about Pacific Premier Bancorp’s directors and executive officers is included in the proxy statement for its 2020 annual meeting of Pacific Premier Bancorp’s shareholders, which was filed with the SEC on April 8, 2020. The directors, executive officers and certain other members of management and employees of Opus may also be deemed to be participants in the solicitation of proxies in connection with the proposed transaction from the shareholders of Opus. Information about the directors and executive officers of Opus is included in the Amendment No. 1 to the Annual Report on Form 10-K, which was filed with the FDIC on March 24, 2020. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the joint proxy statement/prospectus regarding the proposed acquisition when it becomes available. Free copies of this document may be obtained as described above.
Consolidated Statements of Income |
|
|
|
|
|||||||||||||||||
(unaudited) |
|
For the three months ended |
|||||||||||||||||||
($ in thousands, except per share amounts) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
|||||||||||||||
Interest income: |
|
|
|
|
|
|
|||||||||||||||
Loans |
|
$ |
|
|
60,148 |
|
|
|
$ |
|
|
59,694 |
|
|
|
$ |
|
|
57,007 |
|
|
Investment securities |
|
|
7,694 |
|
|
|
|
7,726 |
|
|
|
|
8,577 |
|
|
||||||
Due from banks |
|
|
1,057 |
|
|
|
|
1,637 |
|
|
|
|
1,324 |
|
|
||||||
Total interest income |
|
|
68,899 |
|
|
|
|
69,057 |
|
|
|
|
66,908 |
|
|
||||||
Interest expense: |
|
|
|
|
|
|
|||||||||||||||
Deposits |
|
|
14,696 |
|
|
|
|
16,334 |
|
|
|
|
13,425 |
|
|
||||||
Federal Home Loan Bank advances |
|
|
1,204 |
|
|
|
|
1,200 |
|
|
|
|
756 |
|
|
||||||
Subordinated debt |
|
|
1,923 |
|
|
|
|
1,923 |
|
|
|
|
1,923 |
|
|
||||||
Total interest expense |
|
|
17,823 |
|
|
|
|
19,457 |
|
|
|
|
16,104 |
|
|
||||||
Net interest income |
|
|
51,076 |
|
|
|
|
49,600 |
|
|
|
|
50,804 |
|
|
||||||
Provision (negative provision) for credit losses |
|
|
7,557 |
|
|
|
|
(2,685 |
) |
|
|
|
2,197 |
|
|
||||||
Net interest income after provision (negative provision) for credit losses |
|
|
43,519 |
|
|
|
|
52,285 |
|
|
|
|
48,607 |
|
|
||||||
Noninterest income: |
|
|
|
|
|
|
|||||||||||||||
Fees and service charges on deposit accounts |
|
|
1,328 |
|
|
|
|
1,441 |
|
|
|
|
1,440 |
|
|
||||||
Escrow and exchange fees |
|
|
1,502 |
|
|
|
|
1,545 |
|
|
|
|
1,353 |
|
|
||||||
Trust administrative fees |
|
|
7,366 |
|
|
|
|
7,308 |
|
|
|
|
6,685 |
|
|
||||||
Loss on sale of loans |
|
— |
|
|
— |
|
|
|
(111 |
) |
|
||||||||||
Gain on sale of assets |
|
|
3 |
|
|
|
|
851 |
|
|
|
— |
|
||||||||
Gain on sale of investment securities |
|
— |
|
|
— |
|
|
|
113 |
|
|
||||||||||
Bank-owned life insurance, net |
|
|
1,046 |
|
|
|
|
1,252 |
|
|
|
|
980 |
|
|
||||||
Other income |
|
|
2,655 |
|
|
|
|
1,465 |
|
|
|
|
640 |
|
|
||||||
Total noninterest income |
|
|
13,900 |
|
|
|
|
13,862 |
|
|
|
|
11,100 |
|
|
||||||
Noninterest expense: |
|
|
|
|
|
|
|||||||||||||||
Compensation and benefits |
|
|
22,803 |
|
|
|
|
23,557 |
|
|
|
|
26,875 |
|
|
||||||
Professional services |
|
|
4,325 |
|
|
|
|
2,048 |
|
|
|
|
2,216 |
|
|
||||||
Occupancy expense |
|
|
3,814 |
|
|
|
|
3,917 |
|
|
|
|
3,830 |
|
|
||||||
Depreciation and amortization |
|
|
1,599 |
|
|
|
|
1,712 |
|
|
|
|
1,833 |
|
|
||||||
Deposit insurance and regulatory assessments |
|
|
28 |
|
|
|
|
60 |
|
|
|
|
773 |
|
|
||||||
Insurance expense |
|
|
335 |
|
|
|
|
341 |
|
|
|
|
344 |
|
|
||||||
Data processing |
|
|
1,010 |
|
|
|
|
1,043 |
|
|
|
|
565 |
|
|
||||||
Software licenses and maintenance |
|
|
1,277 |
|
|
|
|
1,253 |
|
|
|
|
1,301 |
|
|
||||||
Office services |
|
|
1,630 |
|
|
|
|
1,641 |
|
|
|
|
1,639 |
|
|
||||||
Amortization of other intangible assets |
|
|
1,009 |
|
|
|
|
1,009 |
|
|
|
|
1,415 |
|
|
||||||
Advertising and marketing |
|
|
952 |
|
|
|
|
897 |
|
|
|
|
723 |
|
|
||||||
Goodwill impairment loss |
|
|
96,229 |
|
|
|
— |
|
|
— |
|
||||||||||
Other expenses |
|
|
4,025 |
|
|
|
|
2,200 |
|
|
|
|
3,896 |
|
|
||||||
Total noninterest expense |
|
|
139,036 |
|
|
|
|
39,678 |
|
|
|
|
45,410 |
|
|
||||||
Income (loss) before income tax expense |
|
|
(81,617 |
) |
|
|
|
26,469 |
|
|
|
|
14,297 |
|
|
||||||
Income tax expense |
|
|
3,226 |
|
|
|
|
6,180 |
|
|
|
|
3,436 |
|
|
||||||
Net income (loss) |
|
$ |
|
|
(84,843 |
) |
|
|
$ |
|
|
20,289 |
|
|
|
$ |
|
|
10,861 |
|
|
Basic earnings (loss) per common share |
|
$ |
|
|
(2.34 |
) |
|
|
$ |
|
|
0.54 |
|
|
|
$ |
|
|
0.29 |
|
|
Diluted earnings (loss) per common share |
|
|
(2.34 |
) |
|
|
|
0.53 |
|
|
|
|
0.28 |
|
|
||||||
Weighted average shares - basic |
|
|
36,373,280 |
|
|
|
|
36,324,267 |
|
|
|
|
36,187,431 |
|
|
||||||
Weighted average shares - diluted |
|
|
36,373,280 |
|
|
|
|
38,299,878 |
|
|
|
|
38,133,705 |
|
|
Consolidated Balance Sheets |
|
|
|
|
|
|
||||||||||||
(unaudited) |
|
As of |
||||||||||||||||
($ in thousands, except share amounts) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
||||||||||||
|
|
|
||||||||||||||||
Assets |
|
|
|
|
|
|
||||||||||||
Cash and due from banks |
|
$ |
|
30,808 |
|
|
|
$ |
|
30,451 |
|
|
|
$ |
|
42,862 |
|
|
Due from banks – interest-bearing |
|
|
768,107 |
|
|
|
|
317,190 |
|
|
|
|
378,671 |
|
|
|||
Investment securities available-for-sale, at fair value |
|
|
991,261 |
|
|
|
|
1,039,596 |
|
|
|
|
1,093,915 |
|
|
|||
Loans |
|
|
5,990,190 |
|
|
|
|
5,900,520 |
|
|
|
|
5,461,500 |
|
|
|||
Less allowance for credit losses (1) |
|
|
(51,424 |
) |
|
|
|
(40,844 |
) |
|
|
|
(58,483 |
) |
|
|||
Loans, net |
|
|
5,938,766 |
|
|
|
|
5,859,676 |
|
|
|
|
5,403,017 |
|
|
|||
Premises and equipment, net |
|
|
20,803 |
|
|
|
|
21,339 |
|
|
|
|
25,771 |
|
|
|||
Goodwill |
|
|
235,603 |
|
|
|
|
331,832 |
|
|
|
|
331,832 |
|
|
|||
Other intangible assets, net |
|
|
32,866 |
|
|
|
|
33,875 |
|
|
|
|
37,510 |
|
|
|||
Deferred tax assets, net |
|
|
21,958 |
|
|
|
|
8,107 |
|
|
|
|
15,924 |
|
|
|||
Cash surrender value of bank owned life insurance, net |
|
|
188,808 |
|
|
|
|
190,435 |
|
|
|
|
155,279 |
|
|
|||
Accrued interest receivable |
|
|
26,163 |
|
|
|
|
25,690 |
|
|
|
|
24,292 |
|
|
|||
Federal Home Loan Bank stock |
|
|
17,250 |
|
|
|
|
17,250 |
|
|
|
|
17,250 |
|
|
|||
Other assets |
|
|
110,801 |
|
|
|
|
116,959 |
|
|
|
|
161,582 |
|
|
|||
Total assets |
|
$ |
|
8,383,194 |
|
|
|
$ |
|
7,992,400 |
|
|
|
$ |
|
7,687,905 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
||||||||||||
Deposits: |
|
|
|
|
|
|
||||||||||||
Noninterest-bearing demand |
|
$ |
|
836,301 |
|
|
|
$ |
|
768,936 |
|
|
|
$ |
|
781,429 |
|
|
Interest-bearing demand |
|
|
2,686,803 |
|
|
|
|
2,680,793 |
|
|
|
|
2,397,361 |
|
|
|||
Money market and savings |
|
|
2,332,912 |
|
|
|
|
2,196,603 |
|
|
|
|
2,099,058 |
|
|
|||
Time deposits |
|
|
846,805 |
|
|
|
|
827,261 |
|
|
|
|
798,918 |
|
|
|||
Total deposits |
|
|
6,702,821 |
|
|
|
|
6,473,593 |
|
|
|
|
6,076,766 |
|
|
|||
Federal Home Loan Bank advances |
|
|
450,000 |
|
|
|
|
200,000 |
|
|
|
|
330,000 |
|
|
|||
Subordinated debt, net |
|
|
133,342 |
|
|
|
|
133,275 |
|
|
|
|
133,076 |
|
|
|||
Accrued interest payable |
|
|
2,299 |
|
|
|
|
4,175 |
|
|
|
|
2,702 |
|
|
|||
Other liabilities |
|
|
88,432 |
|
|
|
|
82,210 |
|
|
|
|
97,255 |
|
|
|||
Total liabilities |
|
|
7,376,894 |
|
|
|
|
6,893,253 |
|
|
|
|
6,639,799 |
|
|
|||
Stockholders’ equity: |
|
|
|
|
|
|
||||||||||||
Preferred stock: |
|
|
|
|
|
|
||||||||||||
Authorized 200,000,000 shares; issued 31,111 and 31,111 and 31,111 shares, respectively |
|
|
29,110 |
|
|
|
|
29,110 |
|
|
|
|
29,110 |
|
|
|||
Common stock, no par value per share: |
|
|
|
|
|
|
||||||||||||
Authorized 200,000,000 shares; issued 37,640,279 and 37,571,545 and 37,227,637 shares, respectively |
|
|
700,220 |
|
|
|
|
700,220 |
|
|
|
|
700,220 |
|
|
|||
Additional paid-in capital |
|
|
90,241 |
|
|
|
|
87,702 |
|
|
|
|
80,528 |
|
|
|||
Retained earnings |
|
|
213,588 |
|
|
|
|
305,399 |
|
|
|
|
267,021 |
|
|
|||
Treasury stock, at cost; 1,265,361 and 1,223,930 and 1,048,657 shares, respectively |
|
|
(30,721 |
) |
|
|
|
(29,611 |
) |
|
|
|
(25,403 |
) |
|
|||
Accumulated other comprehensive income (loss) |
|
|
3,862 |
|
|
|
|
6,327 |
|
|
|
|
(3,370 |
) |
|
|||
Total stockholders’ equity |
|
|
1,006,300 |
|
|
|
|
1,099,147 |
|
|
|
|
1,048,106 |
|
|
|||
Total liabilities and stockholders’ equity |
|
$ |
|
8,383,194 |
|
|
|
$ |
|
7,992,400 |
|
|
|
$ |
|
7,687,905 |
|
|
(1) The bank adopted CECL in the first quarter of 2020. Prior periods reflect results under the incurred loss methodology. |
Selected Financial Data |
|
|
|
|
|
|
|||
(unaudited) |
|
As of or for the three months ended |
|||||||
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
|||
Yield on interest-earning assets1 |
|
3.83 |
% |
|
3.83 |
% |
|
4.13 |
% |
Net interest margin1 |
|
2.84 |
|
|
2.76 |
|
|
3.15 |
|
Cost of deposits2 |
|
0.91 |
|
|
1.01 |
|
|
0.92 |
|
Cost of funds3 |
|
1.05 |
|
|
1.14 |
|
|
1.05 |
|
Noninterest expense to average assets |
|
6.98 |
|
|
1.99 |
|
|
2.51 |
|
Loan to deposits |
|
89.37 |
|
|
91.15 |
|
|
89.88 |
|
(1) Yield on interest-earning assets and net interest margin are presented on a tax equivalent basis using the federal effective tax rate. |
(2) Calculated as interest expense on deposits divided by total average deposits. |
(3) Calculated as total interest expense divided by average total deposits, FHLB advances and subordinated debt. |
Loan Fundings |
|
|
|
|
|
|
|||||||||
(unaudited) |
|
For the three months ended |
|||||||||||||
($ in thousands) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
|||||||||
Real estate mortgage loans: |
|
|
|
|
|
|
|||||||||
Multifamily residential |
|
$ |
|
259,560 |
|
|
$ |
|
216,651 |
|
|
$ |
|
426,916 |
|
Commercial real estate |
|
|
70,050 |
|
|
|
88,139 |
|
|
|
47,127 |
|
|||
Construction and land loans |
|
|
11,056 |
|
|
|
4,154 |
|
|
|
6,212 |
|
|||
Commercial business loans |
|
|
66,883 |
|
|
|
93,939 |
|
|
|
56,879 |
|
|||
Small Business Administration loans |
|
|
3,294 |
|
|
|
6,594 |
|
|
|
836 |
|
|||
Consumer and other loans |
|
|
100 |
|
|
— |
|
|
— |
|
|||||
Total loan fundings |
|
$ |
|
410,943 |
|
|
$ |
|
409,477 |
|
|
$ |
|
537,970 |
|
Composition of Loan Portfolio |
|
As of |
||||||||||||||||||||||
(unaudited) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
||||||||||||||||||
($ in thousands) |
|
Amount |
|
% of
|
|
Amount |
|
% of
|
|
Amount |
|
% of
|
||||||||||||
Real estate mortgage loans: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Single-family residential |
|
$ |
|
47,908 |
|
|
0.8 |
% |
|
$ |
|
49,949 |
|
|
0.9 |
% |
|
$ |
|
60,255 |
|
|
1.1 |
% |
Multifamily residential |
|
|
3,912,287 |
|
|
65.3 |
|
|
|
3,784,461 |
|
|
64.1 |
|
|
|
3,255,025 |
|
|
59.6 |
|
|||
Commercial real estate: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Owner occupied |
|
|
313,421 |
|
|
5.2 |
|
|
|
279,744 |
|
|
4.7 |
|
|
|
187,631 |
|
|
3.4 |
|
|||
Non-owner occupied |
|
|
763,061 |
|
|
12.7 |
|
|
|
792,824 |
|
|
13.4 |
|
|
|
887,852 |
|
|
16.3 |
|
|||
Construction and land loans |
|
|
49,253 |
|
|
0.8 |
|
|
|
55,739 |
|
|
0.9 |
|
|
|
57,223 |
|
|
1.0 |
|
|||
Commercial business loans |
|
|
867,038 |
|
|
14.5 |
|
|
|
901,006 |
|
|
15.3 |
|
|
|
969,916 |
|
|
17.8 |
|
|||
Small Business Administration loans |
|
|
34,038 |
|
|
0.6 |
|
|
|
33,641 |
|
|
0.6 |
|
|
|
39,253 |
|
|
0.7 |
|
|||
Consumer and other loans |
|
|
3,184 |
|
|
0.1 |
|
|
|
3,156 |
|
|
0.1 |
|
|
|
4,345 |
|
|
0.1 |
|
|||
Total loans |
|
$ |
|
5,990,190 |
|
|
100.0 |
% |
|
$ |
|
5,900,520 |
|
|
100.0 |
% |
|
$ |
|
5,461,500 |
|
|
100.0 |
% |
Consolidated average balance sheet, interest, yield and rates |
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
(unaudited) |
|
For the three months ended
|
|
For the three months ended
|
|
For the three months ended
|
|||||||||||||||||||||||||||||||||||
|
|
2020 |
|
2019 |
|
2019 |
|||||||||||||||||||||||||||||||||||
($ in thousands) |
|
Average
|
|
Interest(1) |
|
Yields/
|
|
Average
|
|
Interest(1) |
|
Yields/
|
|
Average
|
|
Interest(1) |
|
Yields/
|
|||||||||||||||||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Due from banks |
|
$ |
|
358,825 |
|
|
$ |
|
1,057 |
|
|
|
1.18 |
% |
|
$ |
|
406,763 |
|
$ |
|
1,637 |
|
|
|
1.60 |
% |
|
$ |
|
234,590 |
|
|
$ |
|
1,324 |
|
|
|
2.29 |
% |
Investment securities |
|
|
1,024,899 |
|
|
|
7,694 |
|
|
|
3.02 |
|
|
1,022,444 |
|
|
7,726 |
|
|
|
3.00 |
|
|
|
1,101,044 |
|
|
|
8,577 |
|
|
|
3.16 |
|
|||||||
Loans |
|
|
5,913,798 |
|
|
|
60,670 |
|
|
|
4.13 |
|
|
|
5,779,765 |
|
|
60,167 |
|
|
|
4.13 |
|
|
|
5,266,475 |
|
|
|
57,411 |
|
|
|
4.42 |
|
||||||
Total interest-earning assets |
|
|
7,297,522 |
|
|
|
69,421 |
|
|
|
3.83 |
|
|
|
7,208,972 |
|
|
69,530 |
|
|
|
3.83 |
|
|
|
6,602,109 |
|
|
|
67,312 |
|
|
|
4.13 |
|
||||||
Noninterest-earning assets |
|
|
710,283 |
|
|
|
|
|
|
|
711,169 |
|
|
|
|
|
|
726,313 |
|
|
|
|
|
||||||||||||||||||
Total assets |
|
$ |
|
8,007,805 |
|
|
|
|
|
|
$ |
|
7,920,141 |
|
|
|
|
|
$ |
|
7,328,422 |
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Liabilities and stockholders’ equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Interest-bearing demand |
|
$ |
|
2,640,077 |
|
|
$ |
|
2,577 |
|
|
|
0.39 |
% |
|
$ |
|
2,630,401 |
|
$ |
|
3,005 |
|
|
|
0.45 |
% |
|
$ |
|
2,465,245 |
|
|
$ |
|
2,811 |
|
|
|
0.46 |
% |
Money market and savings |
|
|
2,273,879 |
|
|
|
8,053 |
|
|
|
1.42 |
|
|
|
2,177,402 |
|
|
8,540 |
|
|
|
1.56 |
|
|
|
1,996,557 |
|
|
|
6,957 |
|
|
|
1.41 |
|
||||||
Time deposits |
|
|
774,491 |
|
|
|
4,066 |
|
|
|
2.11 |
|
|
|
842,160 |
|
|
4,789 |
|
|
|
2.26 |
|
|
|
712,240 |
|
|
|
3,657 |
|
|
|
2.08 |
|
||||||
Total interest bearing deposits |
|
|
5,688,447 |
|
|
|
14,696 |
|
|
|
1.04 |
|
|
|
5,649,963 |
|
|
16,334 |
|
|
|
1.15 |
|
|
|
5,174,042 |
|
|
|
13,425 |
|
|
|
1.05 |
|
||||||
Subordinated debt |
|
|
133,300 |
|
|
|
1,923 |
|
|
|
5.80 |
|
|
|
133,236 |
|
|
1,923 |
|
|
|
5.72 |
|
|
|
133,042 |
|
|
|
1,923 |
|
|
|
5.86 |
|
||||||
FHLB advances |
|
|
223,626 |
|
|
|
1,204 |
|
|
|
2.17 |
|
|
|
200,033 |
|
|
1,200 |
|
|
|
2.38 |
|
|
|
122,000 |
|
|
|
756 |
|
|
|
2.51 |
|
||||||
Total interest-bearing
|
|
|
6,045,373 |
|
|
|
17,823 |
|
|
|
1.19 |
|
|
|
5,983,232 |
|
|
19,457 |
|
|
|
1.29 |
|
|
|
5,429,084 |
|
|
|
16,104 |
|
|
|
1.20 |
|
||||||
Noninterest-bearing deposits |
|
|
774,700 |
|
|
|
|
|
|
760,361 |
|
|
|
|
|
|
766,716 |
|
|
|
|
|
|||||||||||||||||||
Other liabilities |
|
|
79,609 |
|
|
|
|
|
|
|
83,688 |
|
|
|
|
|
|
81,655 |
|
|
|
|
|
||||||||||||||||||
Total liabilities |
|
|
6,899,682 |
|
|
|
|
|
|
|
6,827,281 |
|
|
|
|
|
|
6,277,455 |
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Total stockholders’ equity |
|
|
1,108,123 |
|
|
|
|
|
|
|
1,092,860 |
|
|
|
|
|
|
1,050,967 |
|
|
|
|
|
||||||||||||||||||
Total liabilities and
|
|
$ |
|
8,007,805 |
|
|
|
|
|
|
$ |
|
7,920,141 |
|
|
|
|
|
$ |
|
7,328,422 |
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Net interest spread (2) |
|
|
|
|
|
2.64 |
% |
|
|
|
|
|
2.54 |
% |
|
|
|
|
|
2.93 |
% |
||||||||||||||||||||
Net interest income and margin, tax equivalent (3, 4) |
|
|
|
$ |
|
51,598 |
|
|
|
2.84 |
% |
|
|
|
$ |
|
50,073 |
|
|
|
2.76 |
% |
|
|
|
$ |
|
51,208 |
|
|
|
3.15 |
% |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Reconciliation of tax equivalent net interest income to reported net interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Tax equivalent adjustment |
|
|
|
|
(522 |
) |
|
|
|
|
|
|
|
(473 |
) |
|
|
|
|
|
|
|
(404 |
) |
|
|
|
||||||||||||||
Net interest income, as reported |
|
|
|
$ |
|
51,076 |
|
|
|
|
|
|
|
$ |
|
49,600 |
|
|
|
|
|
|
|
$ |
|
50,804 |
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 Credit Losses on Loans |
||||||||||||||||||
(unaudited) |
|
For the three months ended |
||||||||||||||||
($ in thousands) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
||||||||||||
|
|
|
||||||||||||||||
Allowance for credit losses-balance at beginning of period (1) |
|
$ |
|
43,241 |
|
|
|
$ |
|
45,156 |
|
|
|
$ |
|
54,664 |
|
|
Provision (negative provision) for credit losses |
|
|
7,557 |
|
|
|
|
(2,685 |
) |
|
|
|
2,197 |
|
|
|||
Charge-offs |
|
|
(202 |
) |
|
|
|
(1,772 |
) |
|
|
|
(383 |
) |
|
|||
Recoveries |
|
|
828 |
|
|
|
|
145 |
|
|
|
|
2,005 |
|
|
|||
Total net (charge-offs) recoveries |
|
|
626 |
|
|
|
|
(1,627 |
) |
|
|
|
1,622 |
|
|
|||
Allowance for credit losses-balance at end of period |
|
$ |
|
51,424 |
|
|
|
$ |
|
40,844 |
|
|
|
$ |
|
58,483 |
|
|
(1) The beginning balance of the allowance for credit losses for the first quarter of 2020 includes a $2,397 adjustment from the adoption of CECL in January 2020. |
Asset Quality Information |
|
|
|
|
|
|
||||||||||||
(unaudited) |
|
As of |
||||||||||||||||
($ in thousands) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
||||||||||||
Nonperforming assets |
|
|
|
|
|
|
||||||||||||
Nonaccrual loans |
|
$ |
|
|
5,767 |
|
|
$ |
|
|
5,974 |
|
|
$ |
|
|
23,330 |
|
OREO and other repossessed assets |
|
— |
|
— |
|
|
— |
|||||||||||
Total nonperforming assets |
|
$ |
|
|
5,767 |
|
|
$ |
|
|
5,974 |
|
|
$ |
|
|
23,330 |
|
|
|
|
|
|
|
|
||||||||||||
Loans 30 - 89 days past due |
|
$ |
|
|
846 |
|
|
$ |
|
|
4,490 |
|
|
$ |
|
|
4,652 |
|
Accruing loans 90 days or more past due |
|
— |
|
— |
|
|
— |
|||||||||||
|
|
|
|
|
|
|
||||||||||||
Non performing loans to total loans |
|
|
0.10 |
% |
|
|
0.10 |
% |
|
|
0.43 |
% |
||||||
Non performing assets to total assets |
|
|
0.07 |
|
|
|
0.07 |
|
|
|
0.30 |
|
||||||
Loans 30 - 89 days past due to total loans |
|
|
0.01 |
|
|
|
0.08 |
|
|
|
0.09 |
|
||||||
Allowance for credit losses on loans to total loans |
|
|
0.86 |
|
|
|
0.69 |
|
|
|
1.07 |
|
||||||
Allowance for credit losses on loans to nonaccrual loans |
|
|
891.69 |
|
|
|
683.70 |
|
|
|
250.68 |
|
||||||
Net charge-offs to average loans (annualized) |
|
|
(0.04 |
) |
|
|
0.11 |
|
|
|
(0.12 |
) |
Risk Rating by Loan Product |
||||||||||||||||||||||||||||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||||||||||||||||||||||||||||
($ in thousands) |
|
Pass |
|
Special
|
|
Classified |
|
Total Loans |
|
Nonaccrual
|
|
Allowance for
|
||||||||||||||||||||||||||||||||||||
As of March 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Real estate mortgage loans: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Single-family residential |
|
$ |
|
|
|
|
47,551 |
|
|
$ |
|
|
|
|
67 |
|
|
$ |
|
|
|
|
290 |
|
|
$ |
|
|
|
|
47,908 |
|
|
$ |
|
|
|
|
75 |
|
|
$ |
|
|
|
|
564 |
|
Multifamily residential |
|
|
3,909,785 |
|
|
— |
|
|
|
2,502 |
|
|
|
3,912,287 |
|
|
|
1,636 |
|
|
|
17,508 |
|
|||||||||||||||||||||||||
Commercial real estate |
|
|
1,047,435 |
|
|
|
25,165 |
|
|
|
3,882 |
|
|
|
1,076,482 |
|
|
|
2,396 |
|
|
|
11,184 |
|
||||||||||||||||||||||||
Construction and land loans |
|
|
29,956 |
|
|
|
19,297 |
|
|
— |
|
|
|
49,253 |
|
|
— |
|
|
|
2,285 |
|
||||||||||||||||||||||||||
Commercial business loans |
|
|
844,230 |
|
|
|
6,106 |
|
|
|
16,702 |
|
|
|
867,038 |
|
|
— |
|
|
|
19,083 |
|
|||||||||||||||||||||||||
Small Business Administration loans |
|
|
27,975 |
|
|
|
1,970 |
|
|
|
4,093 |
|
|
|
34,038 |
|
|
|
1,177 |
|
|
|
778 |
|
||||||||||||||||||||||||
Consumer and other loans |
|
|
2,546 |
|
|
|
52 |
|
|
|
586 |
|
|
|
3,184 |
|
|
|
483 |
|
|
|
22 |
|
||||||||||||||||||||||||
Total loans |
|
$ |
|
|
|
|
5,909,478 |
|
|
$ |
|
|
|
|
52,657 |
|
|
$ |
|
|
|
|
28,055 |
|
|
$ |
|
|
|
|
5,990,190 |
|
|
$ |
|
|
|
|
5,767 |
|
|
$ |
|
|
|
|
51,424 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
As of December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Real estate mortgage loans: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Single-family residential |
|
$ |
|
|
|
|
49,442 |
|
|
$ |
|
|
|
|
69 |
|
|
$ |
|
|
|
|
438 |
|
|
$ |
|
|
|
|
49,949 |
|
|
$ |
|
|
|
|
215 |
|
|
$ |
|
|
|
|
114 |
|
Multifamily residential |
|
|
3,783,589 |
|
|
— |
|
|
|
872 |
|
|
|
3,784,461 |
|
|
— |
|
|
|
14,191 |
|
||||||||||||||||||||||||||
Commercial real estate |
|
|
1,052,918 |
|
|
|
12,753 |
|
|
|
6,897 |
|
|
|
1,072,568 |
|
|
|
2,409 |
|
|
|
6,598 |
|
||||||||||||||||||||||||
Construction and land loans |
|
|
36,983 |
|
|
|
18,756 |
|
|
— |
|
|
|
55,739 |
|
|
— |
|
|
|
602 |
|
||||||||||||||||||||||||||
Commercial business loans |
|
|
874,118 |
|
|
|
8,471 |
|
|
|
18,417 |
|
|
|
901,006 |
|
|
— |
|
|
|
18,799 |
|
|||||||||||||||||||||||||
Small Business Administration loans |
|
|
27,525 |
|
|
|
154 |
|
|
|
5,962 |
|
|
|
33,641 |
|
|
|
2,842 |
|
|
|
538 |
|
||||||||||||||||||||||||
Consumer and other loans |
|
|
2,489 |
|
|
|
53 |
|
|
|
614 |
|
|
|
3,156 |
|
|
|
508 |
|
|
|
2 |
|
||||||||||||||||||||||||
Total loans |
|
$ |
|
|
|
|
5,827,064 |
|
|
$ |
|
|
|
|
40,256 |
|
|
$ |
|
|
|
|
33,200 |
|
|
$ |
|
|
|
|
5,900,520 |
|
|
$ |
|
|
|
|
5,974 |
|
|
$ |
|
|
|
|
40,844 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
As of March 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Real estate mortgage loans: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||||||||
Single-family residential |
|
$ |
|
|
|
|
59,696 |
|
|
$ |
|
|
|
|
74 |
|
|
$ |
|
|
|
|
485 |
|
|
$ |
|
|
|
|
60,255 |
|
|
$ |
|
|
|
|
254 |
|
|
$ |
|
|
|
|
144 |
|
Multifamily residential |
|
|
3,251,009 |
|
|
|
117 |
|
|
|
3,899 |
|
|
|
3,255,025 |
|
|
— |
|
|
|
11,603 |
|
|||||||||||||||||||||||||
Commercial real estate |
|
|
1,020,851 |
|
|
|
8,273 |
|
|
|
46,359 |
|
|
|
1,075,483 |
|
|
|
2,449 |
|
|
|
10,581 |
|
||||||||||||||||||||||||
Construction and land loans |
|
|
42,760 |
|
|
|
14,463 |
|
|
— |
|
|
|
57,223 |
|
|
— |
|
|
|
599 |
|
||||||||||||||||||||||||||
Commercial business loans |
|
|
904,471 |
|
|
|
4,896 |
|
|
|
60,549 |
|
|
|
969,916 |
|
|
|
12,420 |
|
|
|
35,158 |
|
||||||||||||||||||||||||
Small Business Administration loans |
|
|
26,552 |
|
|
|
159 |
|
|
|
12,542 |
|
|
|
39,253 |
|
|
|
7,672 |
|
|
|
390 |
|
||||||||||||||||||||||||
Consumer and other loans |
|
|
3,639 |
|
|
|
57 |
|
|
|
649 |
|
|
|
4,345 |
|
|
|
535 |
|
|
|
8 |
|
||||||||||||||||||||||||
Total loans |
|
$ |
|
|
|
|
5,308,978 |
|
|
$ |
|
|
|
|
28,039 |
|
|
$ |
|
|
|
|
124,483 |
|
|
$ |
|
|
|
|
5,461,500 |
|
|
$ |
|
|
|
|
23,330 |
|
|
$ |
|
|
|
|
58,483 |
|
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 net income, earnings per diluted share, pre-provision net revenue, return on average assets, return on average stockholders' equity, return on average tangible common equity, efficiency ratio, tangible book value per common share, and tangible common equity ratio. 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 tangible book value per common share |
||||||||||||
(unaudited) |
|
As of |
||||||||||
($ In thousands, except share amounts) |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
||||||
Tangible equity: |
|
|
|
|
|
|
||||||
Total stockholders' equity |
|
$ |
1,006,300 |
|
|
$ |
1,099,147 |
|
|
$ |
1,048,106 |
|
Less: |
|
|
|
|
|
|
||||||
Preferred stock |
|
29,110 |
|
|
29,110 |
|
|
29,110 |
|
|||
Common equity |
|
977,190 |
|
|
1,070,037 |
|
|
1,018,996 |
|
|||
Less: |
|
|
|
|
|
|
||||||
Goodwill |
|
235,603 |
|
|
331,832 |
|
|
331,832 |
|
|||
Other intangible assets, net |
|
32,866 |
|
|
33,875 |
|
|
37,510 |
|
|||
Tangible common equity |
|
708,721 |
|
|
704,330 |
|
|
649,654 |
|
|||
Shares of common stock outstanding |
|
36,374,918 |
|
|
36,347,615 |
|
|
36,178,980 |
|
|||
|
|
|
|
|
|
|
||||||
Book value per common share |
|
$ |
26.86 |
|
|
$ |
29.44 |
|
|
$ |
28.17 |
|
Tangible book value per common share |
|
19.48 |
|
|
19.38 |
|
|
17.96 |
|
Non-GAAP tangible common equity ratio |
|||||||||||||||
(unaudited) |
|
As of |
|||||||||||||
($ In thousands) |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|||||||||
Total assets |
|
$ |
|
8,383,194 |
|
|
$ |
|
7,992,400 |
|
|
$ |
|
7,687,905 |
|
Less: |
|
|
|
|
|
|
|||||||||
Goodwill |
|
|
235,603 |
|
|
|
331,832 |
|
|
|
331,832 |
|
|||
Other intangible assets, net |
|
|
32,866 |
|
|
|
33,875 |
|
|
|
37,510 |
|
|||
Tangible assets |
|
|
8,114,725 |
|
|
|
7,626,693 |
|
|
|
7,318,563 |
|
|||
|
|
|
|
|
|
|
|||||||||
Total stockholders' equity |
|
|
1,006,300 |
|
|
|
1,099,147 |
|
|
|
1,048,106 |
|
|||
Less: |
|
|
|
|
|
|
|||||||||
Goodwill |
|
|
235,603 |
|
|
|
331,832 |
|
|
|
331,832 |
|
|||
Other intangible assets, net |
|
|
32,866 |
|
|
|
33,875 |
|
|
|
37,510 |
|
|||
Tangible equity |
|
|
737,831 |
|
|
|
733,440 |
|
|
|
678,764 |
|
|||
Less: preferred stock |
|
|
29,110 |
|
|
|
29,110 |
|
|
|
29,110 |
|
|||
Tangible common equity |
|
|
708,721 |
|
|
|
704,330 |
|
|
|
649,654 |
|
|||
|
|
|
|
|
|
|
|||||||||
Total stockholders' equity to total assets |
|
|
12.00 |
% |
|
|
13.75 |
% |
|
|
13.63 |
% |
|||
Tangible equity to tangible assets ratio |
|
|
9.09 |
% |
|
|
9.62 |
% |
|
|
9.27 |
% |
|||
|
|
|
|
|
|
|
|||||||||
Total common equity to total assets |
|
|
11.66 |
% |
|
|
13.39 |
% |
|
|
13.25 |
% |
|||
Tangible common equity to tangible assets ratio |
|
|
8.73 |
% |
|
|
9.24 |
% |
|
|
8.88 |
% |
Non-GAAP Financial Measures |
||||||||||||||||||
(unaudited) |
|
For the three months ended |
||||||||||||||||
($ in thousands) |
|
March 31,
|
|
December 31,
|
|
March 31,
|
||||||||||||
Net income (loss) |
|
$ |
|
|
(84,843 |
) |
|
$ |
|
|
20,289 |
|
|
$ |
|
|
10,861 |
|
Adjustments to noninterest income: |
|
|
|
|
|
|
||||||||||||
Impairment |
|
|
74 |
|
|
— |
|
|
489 |
|
||||||||
(Gains) and losses on sales of securities, loans, and other repossessed assets |
|
|
(3 |
) |
|
|
(851 |
) |
|
|
(2 |
) |
||||||
Adjustments to noninterest expense: |
|
|
|
|
|
|
||||||||||||
Goodwill Impairment |
|
|
96,229 |
|
|
— |
|
— |
||||||||||
Strategic actions |
|
|
2,973 |
|
|
|
81 |
|
|
|
(91 |
) |
||||||
Litigation (recovery) |
|
— |
|
— |
|
|
1,431 |
|
||||||||||
Pre-tax adjustments |
|
|
99,273 |
|
|
|
(770 |
) |
|
|
1,827 |
|
||||||
Tax effect |
|
|
(1,031 |
) |
|
|
34 |
|
|
|
(383 |
) |
||||||
Tax-effected adjustments (1) |
|
|
98,242 |
|
|
|
(736 |
) |
|
|
1,444 |
|
||||||
Adjusted net income |
|
$ |
|
|
13,399 |
|
|
$ |
|
|
19,553 |
|
|
$ |
|
|
12,305 |
|
|
|
|
|
|
|
|
||||||||||||
Average assets |
|
$ |
|
|
8,007,805 |
|
|
$ |
|
|
7,920,141 |
|
|
$ |
|
|
7,328,422 |
|
Average stockholders' equity |
|
|
1,108,123 |
|
|
|
1,092,860 |
|
|
|
1,050,967 |
|
||||||
Less: |
|
|
|
|
|
|
||||||||||||
Average preferred stock |
|
|
29,110 |
|
|
|
29,110 |
|
|
|
29,110 |
|
||||||
Average goodwill |
|
|
330,775 |
|
|
|
331,832 |
|
|
|
331,832 |
|
||||||
Average other intangible assets |
|
|
33,506 |
|
|
|
34,467 |
|
|
|
38,234 |
|
||||||
Average tangible common equity |
|
$ |
|
|
714,732 |
|
|
$ |
|
|
697,451 |
|
|
$ |
|
|
651,791 |
|
|
|
|
|
|
|
|
||||||||||||
Earnings (loss) per diluted share |
|
$ |
|
|
(2.34 |
) |
|
$ |
|
|
0.53 |
|
|
$ |
|
|
0.28 |
|
Adjusted earnings per diluted share |
|
|
0.35 |
|
|
|
0.51 |
|
|
|
0.32 |
|
||||||
|
|
|
|
|
|
|
||||||||||||
Return on average assets |
|
|
(4.26 |
%) |
|
|
1.02 |
% |
|
|
0.60 |
% |
||||||
Adjusted return on average assets |
|
|
0.67 |
|
|
|
0.98 |
|
|
|
0.68 |
|
||||||
|
|
|
|
|
|
|
||||||||||||
Return on average stockholders' equity |
|
|
(30.79 |
) |
|
|
7.37 |
|
|
|
4.19 |
|
||||||
Adjusted return on average stockholders' equity |
|
|
4.86 |
|
|
|
7.10 |
|
|
|
4.75 |
|
||||||
|
|
|
|
|
|
|
||||||||||||
Return on average tangible common equity |
|
|
(47.74 |
) |
|
|
11.54 |
|
|
|
6.76 |
|
||||||
Adjusted return on average tangible common equity |
|
|
7.54 |
|
|
|
11.12 |
|
|
|
7.66 |
|
||||||
|
|
|
|
|
|
|
||||||||||||
Efficiency ratio (2) |
|
|
210.75 |
|
|
|
61.30 |
|
|
|
70.61 |
|
||||||
Adjusted efficiency ratio |
|
|
59.21 |
|
|
|
61.17 |
|
|
|
67.93 |
|
||||||
|
|
|
|
|
|
|
||||||||||||
Pre-provision net revenue(3) |
|
|
(74,060 |
) |
|
|
23,784 |
|
|
|
16,494 |
|
||||||
Adjusted pre-provision net revenue |
|
|
25,213 |
|
|
|
23,014 |
|
|
|
18,321 |
|
(1) The tax effect of adjustments was computed using the combined federal and state marginal tax rate of 24.1%, 23.9%, and 23.7% for the three months ended March 31, 2020, December 31, 2019, and March 31, 2019, respectively, adjusted for the tax effect of nondeductible strategic action expenses. |
(2) The efficiency ratio equals noninterest expense adjusted to exclude the amortization of other intangible assets divided by the sum of tax-equivalent net interest income and noninterest income adjusted to exclude the gains and losses on the sale of investment securities, loans, and other repossessed assets. |
(3) Pre-provision net revenue equals income or loss before income tax expense adjusted to exclude the provision (negative provision) for loan losses. |