Opus Bank (OPB) Misses Q1 EPS by 6c

Opus Bank (NASDAQ: OPB) reported Q1 EPS of $0.21, $0.06 worse than the analyst estimate of $0.27.

Net income for the first quarter of 2017 included strategic initiative related expenses of $1.8 million, comprised primarily of severance and other expenses associated with the implementation of an overhead reduction strategy to right size and reduce Opus' noninterest expense forward run-rate. Additionally, the adoption of a new accounting standard for the tax impact associated with stock-based compensation that went into effect in 2017 resulted in $248,000 of additional tax expense in the first quarter of 2017 and increased our effective tax rate by 1.97%. Excluding these two items, net income for the first quarter of 2017 was $9.0 million, or $0.24 per diluted share.

Stephen H. Gordon, Founding Chairman, Chief Executive Officer and President of Opus Bank, stated, “We are proud to announce our results for the first quarter of 2017, as they are the culmination of a collaborative and proactive effort by the entire Opus team and represent another step forward in the process of restoring consistently strong financial performance metrics. During the fourth quarter of 2016, we took decisive action to bolster our credit infrastructure and to assess our loan portfolios. Additionally, during the first quarter, we initiated an expense reduction strategy that we expect to reduce our noninterest expense forward run-rate. As 2017 is progressing, we have already begun to realize positive results from these efforts, including a reduction of the portfolio loan balances we previously announced as targeted for planned exits. Technology Banking, Healthcare Practice, and other loan relationships we have identified as enterprise value, were reduced significantly during the first quarter. During the fourth quarter of 2016, we articulated and our bankers embraced our credit culture going forward and we began rebuilding the new loan funding pipeline. Our bankers remain keenly focused on Opus’ core value proposition to be a partner and trusted advisor to our clients in major metro markets up and down the West Coast.”

Gordon continued, “Our balance sheet remains strong. We entered the first quarter having completed the Freddie Mac transaction in the fourth quarter of 2016 and increased cash through continued strong core deposit growth and loan payoffs during the quarter, resulting in a balance sheet with a tremendous amount of liquidity and flexibility. With over $1 billion in cash and nearly $900 million in investment securities at the end of the first quarter, we now enter the second quarter with a larger loan pipeline than at the start of the year and are proactively managing our balance sheet and prudently making loans with appropriate risk-adjusted return metrics, which we anticipate will benefit net interest margin and earnings in coming quarters. Additionally during the quarter, we completed a private placement of common stock, further bolstering our capital ratios."

Gordon concluded, “We still have much work ahead of us, but we believe that the significant actions taken thus far and our positive results in the first quarter have us on the path toward delivering the type of performance we are accustomed to achieving and that shareholders have historically expected from us.”

For earnings history and earnings-related data on Opus Bank (OPB) click here.

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