Opus Bank ("Opus") (NASDAQ: OPB) announced today a net loss of
$6.9 million, or $(0.20) per diluted share, for the fourth quarter
of 2018 and net income of $30.9 million, or $0.81 per diluted
share, for the year ended December 31, 2018, compared to net
income of $9.4 million, or $0.25 per diluted share, for the third
quarter of 2018 and net income of $47.6 million, or $1.26 per
diluted share, for the year ended December 31, 2017.
Net loss for the fourth quarter of 2018 included a pre-tax
restructuring charge of $20.4 million related to the previously
announced CEO transition, corporate strategy initiatives and
actions intended to make Opus more profitable and efficient over
time. These actions and initiatives address recent changes in
interest rates and are expected to better enable the company to
contain expense growth and improve operating leverage, helping Opus
continue to remain competitive in today's business environment. The
table below provides detail on the restructuring charge incurred
during the fourth quarter of 2018. These items impacted net income
for the fourth quarter and year ended December 31, 2018 by
$17.2 million, or $0.47 per diluted share.
Type of Cost Amount
(in millions)
Bond Portfolio Repositioning $ 9.9 CEO Transition 7.1 Noninterest
Expense Reduction Initiative 2.0 Professional Services and other
charges 1.4 Total Restructuring Charge $ 20.4
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 February 21, 2019 to common stockholders
and to its Series A Preferred stockholders of record as of February
7, 2019.
Fourth Quarter and Year End 2018 Highlights
- Net interest income increased
3.2% compared to the prior quarter, driven by increases in
interest income on loans and investment securities.
- Net interest margin expanded nine
basis points to 3.07% compared to the prior quarter due to the
benefit of loan repricing during the fourth quarter and lower
premium amortization on investment securities, partially offset by
a higher cost of deposits.
- Loans held for investment grew 5.0%
on an annualized basis, excluding the impact of planned loan
exits during the fourth quarter.
- We repositioned our investment
securities portfolio through the sale of $314.7 million
available-for-sale securities yielding approximately 2.3%,
resulting in the recognition through the income statement of $9.9
million of unrealized losses during the fourth quarter. Proceeds
from the sale were reinvested in investment grade securities having
an approximate yield of 4.0%, while the duration of the portfolio
increased modestly from 3.3 years to 3.5 years. We anticipate a
pre-tax income benefit of approximately $5.5 million in 2019 and a
loss earn-back period of less than two years.
- We implemented a cost reduction
initiative during the fourth quarter of 2018 which is designed
to make Opus more efficient and contain operating expense growth.
As a result of these cost reductions, we expect that year-over-year
expenses will remain relatively flat while continuing to allow us
to fund necessary infrastructure enhancements that will improve our
customer experience.
- Enterprise Value loans decreased
34%, or $62.5 million, compared to the prior quarter to $122.0
million as of December 31, 2018, and decreased 71%, or $295.7
million, compared to December 31, 2017.
- Nonperforming assets decreased 38%,
or $17.1 million, compared to the prior quarter to $28.0
million, and decreased 52%, or $30.3 million, compared to December
31, 2017. NPAs to assets decreased 22 basis points to 0.39% as of
December 31, 2018, and decreased 39 basis points compared to 0.78%
as of December 31, 2017.
- Total criticized loans decreased
19%, or $34.7 million, compared to the prior quarter to $150.3
million as of December 31, 2018, and decreased 40%, or $99.4
million, compared to December 31, 2017.
- Provision for loan losses was $7.7
million for the fourth quarter of 2018, driven primarily by net
charge-offs of $12.0 million. Three Enterprise Value loan
relationships drove 96% of loan charge-offs during the
quarter.
- Tangible book value per share
increased $0.13 to $17.81 and tangible common equity to
tangible assets increased 36 basis points to 9.41%. The
repositioning of our investment securities portfolio during the
fourth quarter of 2018 had a negligible impact to shareholders'
equity.
Paul G. Greig, Chairman of the Board, Interim Chief Executive
Officer and President of Opus Bank, stated, "Our fourth quarter
results included a sizable restructuring charge, much of which was
related to actions intended to make Opus a more profitable
institution and more closely align operations with our long-term
strategic goals. We saw positive core earnings trends during the
quarter, including higher net interest income, an expanding net
interest margin, and improved credit metrics."
Mr. Greig added, “As Interim CEO, I have worked closely with
Opus’ executive management team to insure the day-to-day operations
of the Company continue to function smoothly. The Board of
Directors is making progress in the search for a permanent CEO and
we have already received strong interest from well-qualified
candidates for the position.”
Loans
Total loans held-for-investment were $5.2 billion as of
December 31, 2018, compared to $5.2 billion as of both
September 30, 2018 and December 31, 2017. New loan
fundings during the fourth quarter of 2018 totaled $412.3 million
and were partially offset by originated loan payoffs of $265.3
million and planned exits of $59.2 million, resulting in a $5.3
million increase in loans held-for-investment compared to
September 30, 2018. New loan fundings for the year ended
December 31, 2018 totaled $1.6 billion, which were offset by
originated loan payoffs of $981.4 million and planned exits of
$230.5 million, resulting in an $8.0 million decrease in loans
held-for-investment compared to December 31, 2017.
Loan Balance Roll Forward
(unaudited)
Three Months Ended ($ in millions)
December 31, 2018 September 30, 2018
June 30, 2018
March 31, 2018
December 31,2017
Beginning loan balance $ 5,159.9 $ 5,072.4 $ 5,229.0 $
5,173.2 $ 5,060.6 New loan fundings 412.3 435.7 295.6 452.3 502.3
Loan payoffs (265.3 ) (197.4 ) (299.5 ) (219.2 ) (237.8 ) Planned
exits (59.2 ) (60.6 ) (58.5 ) (52.2 ) (80.6 ) Other1 (82.5 ) (90.2
) (94.2 ) (125.1 ) (71.3 ) Ending loan balance $ 5,165.2 $
5,159.9 $ 5,072.4 $ 5,229.0 $ 5,173.2
[1] Includes normal amortization, paydowns,
charge-offs, and loan sales that were not planned exits
New loan fundings in the fourth quarter of 2018 totaled $412.3
million, a 5% decrease compared to the prior quarter. New loan
fundings for the year ended December 31, 2018 totaled $1.6
billion, compared to $1.5 billion for the year ended
December 31, 2017. Commercial business loans comprised $87.4
million, or 21%, of total new loan fundings in the fourth quarter
of 2018. Loan commitments originated during the fourth quarter of
2018 totaled $399.8 million compared to $438.6 million during the
third quarter of 2018 and $454.1 million during the fourth quarter
of 2017. As of December 31, 2018, our unfunded commitments on
originated loans totaled $378.2 million.
Cash and Investment Securities
Cash and investment securities totaled $1.3 billion as of
December 31, 2018, compared to $1.6 billion as of both
September 30, 2018 and December 31, 2017. The decrease
from the prior quarter was driven by a decrease in cash and cash
equivalents of $278.6 million, or 52%, during the fourth quarter of
2018 to $254.6 million as of December 31, 2018, partially
offset by an increase in investment securities of $62.7 million, or
6%, from the prior quarter to $1.1 billion as of December 31,
2018. The decrease in cash and investment securities from the prior
year was driven by a decrease in cash and cash equivalents of
$246.1 million, or 49%, from December 31, 2017, as well as a
decrease in investment securities of $45.7 million, or 4%.
During the fourth quarter of 2018 we repositioned our investment
securities portfolio through the sale of $314.7 million
available-for-sale securities yielding approximately 2.3%,
resulting in a pre-tax loss of $9.9 million. Proceeds from the sale
were reinvested in investment grade securities having an
approximate yield of 4.0%. The duration of the investment
securities portfolio increased modestly from 3.3 years to 3.5
years. The impact on shareholders' equity as a result of the
securities portfolio repositioning was negligible, as the
unrealized loss position of the securities we sold was recognized
through the income statement as a component of noninterest
income.
Deposits and Borrowings
Deposits totaled $6.0 billion as of December 31, 2018, a
decrease of $190.4 million, or 3%, compared to $6.1 billion as of
September 30, 2018, and an increase of $8.0 million, or 0%,
compared to $5.9 billion as of December 31, 2018. The decrease in
deposits from the prior quarter was primarily driven by decreases
in deposits from PENSCO (our alternative asset IRA custodian
subsidiary), our Retail Banking division, and our Fiduciary Banking
division, which were partially offset by an increase in deposits
from our Commercial and Specialty Banking divisions.
Total demand deposits, including both noninterest-bearing and
interest-bearing demand deposit accounts, measured 55% of total
deposits as of December 31, 2018, compared to 56% as of
September 30, 2018 and 55% as of December 31, 2017. As of
December 31, 2018, business deposits represented 62% of total
deposits.
Our loan to deposit ratio measured 87% as of December 31,
2018, compared to 84% as of September 30, 2018 and 87% as of
December 31, 2017.
Net Interest Income
Net interest income increased 3.2% to $50.4 million for the
fourth quarter of 2018, compared to $48.9 million for the third
quarter of 2018, and decreased 3.0% from $52.0 million for the
fourth quarter of 2017. Net interest income for the year ended
December 31, 2018 was $200.5 million, compared to $217.4
million for the year ended December 31, 2017.
Interest income from loans increased 3% to $55.7 million for the
fourth quarter of 2018, driven by a 1.3% increase in the average
balances of loans and a seven basis point increase in loan yield.
Interest income from loans decreased 4% to $218.3 million for the
year ended December 31, 2018, as loan payoffs and prepayments,
including planned exits and loan sales, and continued runoff of the
acquired loan portfolio resulted in lower average balances of loans
compared to the prior year.
Interest income from cash and investment securities increased
$1.3 million, or 18%, to $8.7 million for the fourth quarter of
2018 compared to the prior quarter, driven by a higher yield on
investment securities and lower premium amortization due to lower
prepayment activity. Interest income from cash and investment
securities for the year ended December 31, 2018 increased $2.2
million, or 8%, to $28.5 million compared to the year ended
December 31, 2017, driven by a higher yield and higher average
balances of investment securities.
Interest expense increased $1.3 million, or 11%, to $14.0
million for the fourth quarter of 2018, compared to $12.6 million
for the third quarter of 2018, and increased $5.1 million, or 58%,
compared to $8.8 million for the fourth quarter of 2017. Opus'
interest expense increased compared to each of the linked-quarter
and the fourth quarter of 2017, as the cost of funds increased nine
basis points compared to the prior quarter and 34 basis points
compared to the fourth quarter of 2017. Interest expense increased
$10.1 million, or 28%, for the year ended December 31, 2018
compared to the year ended December 31, 2017, driven by higher
cost of deposits.
Net Interest Margin
Net interest margin on a taxable equivalent basis increased nine
basis points to 3.07% in the fourth quarter of 2018 compared to
2.98% in the third quarter of 2018. The linked-quarter change was
primarily driven by an increase in the yield on loans due to the
Federal Reserve rate increase in September 2018, as well as lower
lost interest on nonaccrual loans and an increase in the yield on
investment securities due to lower premium amortization. These were
partially offset by an eight basis point increase in the cost of
deposits in the fourth quarter of 2018. Net interest margin was
3.08% for the year ended December 31, 2018 compared to 3.17%
for the prior year, as the cost of funds increased 19 basis points
to 0.75% and was partially offset by a 10 basis point increase in
the yield on interest earning assets to 3.79%.
Noninterest Income
Noninterest income decreased to $3.4 million in the fourth
quarter of 2018 compared to $11.5 million in the third quarter of
2018 and $12.6 million in the fourth quarter of 2017. Noninterest
income during the fourth quarter of 2018 included a $9.9 million
loss on the sale of investment securities related to the
repositioning of our securities portfolio during the fourth
quarter. Noninterest income during the fourth quarter of 2018 also
included $6.8 million of trust administrative fees, $1.6 million of
treasury management and deposit account fees, $1.4 million from our
Escrow and Exchange divisions, and $1.6 million from our Merchant
Banking division. Other noninterest income in the fourth quarter of
2018 included a net decrease in equity warrant valuations of
$354,000, compared to a net decrease of $746,000 in the prior
quarter, and an FHLB dividend of $584,000 compared to a dividend of
$301,000 in the prior quarter. Excluding the aforementioned loss on
the sale of investment securities related to the repositioning of
our securities portfolio during the fourth quarter, noninterest
income increased 16% from the prior quarter.
Noninterest income for the year ended December 31, 2018
decreased to $41.1 million compared to $54.8 million for the year
ended December 31, 2017. The decrease in noninterest income
compared to the prior year was primarily driven by the $9.9 million
loss on the sale of investment securities during the fourth quarter
of 2018.
Noninterest Expense
Noninterest expense increased to $53.7 million for the fourth
quarter of 2018, compared to $43.7 million for the third quarter of
2018 and $46.2 million for the fourth quarter of 2017. Noninterest
expense during the fourth quarter of 2018 included $10.5 million of
expenses related to the restructuring charge taken this quarter.
Excluding these expenses, as well as $525,000 of expenses related
to severance and retention costs and banking office optimization
during the third quarter of 2018, noninterest expense was flat
compared to the prior quarter.
During the fourth quarter of 2018, we implemented a cost
reduction initiative and will be reinvesting much of the
anticipated savings, which will allow us to hold year-over-year
expenses relatively flat while continuing to fund necessary
infrastructure enhancements that will improve our customer
experience.
Income Tax Expense
During the fourth quarter of 2018, we recorded an income tax
benefit of $654,000 as a result of the pre-tax loss we incurred for
the quarter, compared to an income tax benefit of $972,000 recorded
in the third quarter of 2018 that was driven by $2.3 million of net
discrete income tax items relating to the re-measurement of our
initial estimate of deferred tax assets in connection with the Tax
Cuts and Jobs Act in the fourth quarter of 2017.
Asset Quality
Nonaccrual loans decreased $17.1 million, or 37.9%, to $28.0
million, or 0.54% of total loans, as of December 31, 2018, compared
to $45.1 million, or 0.87% of total loans, as of September 30,
2018. Total criticized loans decreased $34.7 million, or 18.8%, to
$150.3 million as of December 31, 2018, compared to $185.1 million
as of September 30, 2018. We also continued to reduce our exposure
to previously de-emphasized loan portfolios during the fourth
quarter of 2018; total Enterprise Value loans were reduced by $62.5
million, or 34%, during the fourth quarter of 2018 and totaled
$122.0 million as of December 31, 2018. Planned exits through
loan payoffs and sales totaled $59.2 million during the fourth
quarter of 2018, as we continued to reduce the balance of loans we
previously announced as targeted for planned exits.
Our allowance for loan losses was $54.7 million, or 1.06% of our
total loan portfolio, as of December 31, 2018, compared to
$59.0 million, or 1.14% of total loans, as of September 30,
2018 and $75.9 million, or 1.47% of total loans, as of
December 31, 2017. The reduction in the allowance for loan
losses during the fourth quarter of 2018 was driven by charge-offs
of $14.6 million that were partially offset by a provision for loan
losses of $7.7 million and recoveries of $2.5 million.
We recorded a provision expense of $7.7 million in the fourth
quarter of 2018, compared to a provision expense of $8.2 million in
the third quarter of 2018 and a provision expense of $3.0 million
in the fourth quarter of 2017. The provision expense during the
fourth quarter of 2018 was driven by net charge-offs of $12.0
million, $2.8 million from risk rating migration, $2.1 million due
to higher loss factors used to determine loan loss reserves in
accordance with our allowance methodology, and $1.9 million due to
changes in portfolio mix and fundings. These factors were partially
offset by a $6.6 million decline in reserves as a result of planned
exits of loan relationships and a $4.5 million decline in specific
reserves.
We recorded net charge-offs of $12.0 million during the fourth
quarter of 2018, compared to net charge-offs of $8.4 million during
the third quarter of 2018, and net charge-offs of $5.2 million
during the fourth quarter of 2017. Charge-offs during the fourth
quarter of 2018 were predominantly comprised of three commercial
business loan relationships that were also categorized as
Enterprise Value loans.
Total nonperforming assets decreased to $28.0 million, or 0.39%
of total assets, as of December 31, 2018, compared to $45.1
million, or 0.61% of total assets, as of September 30, 2018
and $58.3 million, or 0.78% of total assets, as of
December 31, 2017. The decline in nonperforming assets during
the quarter was primarily due to the resolution of five commercial
business loan relationships, 88% of which were Enterprise Value
loans. The ratio of the allowance for loan losses to total
nonperforming assets was 195.1% as of December 31, 2018,
compared to 130.8% as of September 30, 2018 and 130.3% as of
December 31, 2017.
Total criticized loans decreased $34.7 million, or 19%, to
$150.3 million as of December 31, 2018, compared to $185.1
million as of September 30, 2018, and decreased $99.4 million,
or 40%, from $249.8 million as of December 31, 2017. The net
decrease in total criticized loans during the fourth quarter of
2018 was driven by $20.6 million of upgrades and $48.7 million of
loan exits, including payoffs, loan sales, and normal amortization
during the quarter, partially offset by $34.6 million of
downgrades. Special mention loans decreased $29.4 million in the
fourth quarter of 2018 and classified loans decreased $5.3 million.
The decrease in special mention loans was driven by $17.1 million
of upgrades, $19.8 million of loan payoffs, normal amortization,
and migration, and $3.4 million of loans downgraded from special
mention to classified loans, partially offset by $10.9 million of
downgrades. The decrease in classified loans was driven by upgrades
of $3.5 million as well as payoffs, sales, and amortization of
$28.9 million, partially offset by downgrades of $27.1 million.
The net decrease in total criticized loans consisted primarily
of a $40.8 million decrease in commercial business loans and a $1.1
million decrease in SBA loans, partially offset by a $7.1 million
increase in real estate secured loans. Commercial business loans
comprised $12.0 million of loans upgraded out of criticized
categories and $38.1 million of loan payoffs, charge-offs, and
amortization, partially offset by $9.3 million of downgrades during
the fourth quarter of 2018. Real estate secured loans comprised
$24.9 million of loans downgraded to criticized categories,
partially offset by $8.4 million of loans upgraded from criticized
categories and $9.4 million of loan payoffs and amortization during
the fourth quarter of 2018.
Capital
As of December 31, 2018, Opus exceeded all 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 Regulatory
Requirements
(unaudited)
December 31, 2018 September
30, 2018 December 31, 2017 Tier 1
leverage ratio 9.69 % 9.89 % 9.44 % 5.00 % Common Equity Tier 1
ratio 11.40 % 11.75 % 10.94 % 6.50 % Tier 1 risk-based capital
ratio 11.92 % 12.27 % 11.42 % 8.00 % Total risk-based capital ratio
15.29 % 15.75 % 14.97 % 10.00 % Tangible equity to tangible assets
ratio 9.84 % 9.47 % 9.10 % NA Tangible common equity to tangible
assets ratio 9.41 % 9.05 % 8.69 % NA [1] Regulatory
capital ratios are preliminary until filing of our December 31,
2018 FDIC call report.
Stockholders’ equity totaled over $1.0 billion as of
December 31, 2018, unchanged from both September 30, 2018
and December 31, 2017. Accumulated other comprehensive loss
decreased $13.8 million in the fourth quarter of 2018 to $3.8
million, primarily driven by the repositioning of our investment
securities portfolio during the fourth quarter, which offset an
$11.0 million decrease in retained earnings. Our tangible book
value per as converted common share increased to $17.81 as of
December 31, 2018 from $17.68 as of September 30, 2018
and $17.26 as of December 31, 2017.
Conference Call and Webcast Details
Date: Monday, January 28, 2019Time: 8:00 a.m. PT (11:00 a.m.
ET)
Phone Number: (855) 265-3237Conference ID: 1468516Webcast URL:
http://investor.opusbank.com/event
Analysts, investors, and the general public may listen to a
discussion of Opus’ fourth quarter and annual performance and
participate in the question/answer session by using the phone
number listed below 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 archive of the call 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 1468516. The call replay will be available
through February 28, 2019.
About Opus Bank
Opus Bank is an FDIC insured California-chartered commercial
bank with $7.2 billion of total assets, $5.2 billion of total
loans, and $6.0 billion in total deposits as of December 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 approximately
$14 billion of custodial assets and approximately 48,000 client
accounts, which are comprised of self-directed investors, financial
institutions, capital raisers and financial advisors. Opus Bank
operates 47 banking offices, including 28 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. 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:
our expectations regarding our corporate strategy and cost
reduction initiatives; expectations regarding the repositioning of
our investment securities portfolio; our expectation that the
actions related to the restructuring charge will make Opus a more
profitable institution and more closely align operations with our
long-term strategic goals; and that our belief that our Board of
Directors is making progress in the search for a permanent CEO.
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: market and economic conditions, changes in
interest rates, our liquidity position, the management of our
growth, the risks associated with our loan portfolio, 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, and risks related to our technology and information
systems. 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 filed with the Federal Deposit
Insurance Corporation on March 14, 2018. If one or more of these or
other risks or uncertainties materialize, or if Opus’ underlying
assumptions prove to be incorrect, Opus’ actual results may vary
materially from those indicated in these statements. 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, whether as a result
of new information, future developments or otherwise.
Consolidated Statement of Operations
(unaudited)
Three Months Ended Year
Ended ($ in thousands, except per share amounts)
December
31, 2018 September 30, 2018
December 31, 2017 December 31, 2018
December 31, 2017 Interest income: Loans $ 55,701 $
54,110 $ 53,592 $ 218,255 $ 227,224 Investment securities 6,931
5,280 5,975 22,353 19,411 Due from banks 1,758 2,113
1,265 6,148 6,908 Total interest income 64,390
61,503 60,832 246,756 253,543
Interest expense: Deposits 12,038 10,702 6,855 38,163 28,259
Federal Home Loan Bank advances — (5 ) 68 374 185 Subordinated debt
1,923 1,923 1,923 7,690 7,690
Total interest expense 13,961 12,620 8,846
46,227 36,134 Net interest income 50,429 48,883
51,986 200,529 217,409 Provision (negative provision) for loan
losses
7,659 8,241 2,955 19,601 (8,823 ) Net
interest income after provision
(negative provision) for loan losses
42,770 40,642 49,031 180,928 226,232
Noninterest income:
Fees and service charges on deposit
accounts
1,615 1,735 1,822 6,855 7,592 Escrow and exchange fees 1,422 1,548
1,568 5,829 6,015 Trust administrative fees 6,800 6,884 6,879
27,503 26,939 Gain (loss) on sale of loans 147 — (2 ) (22 ) (211 )
Gain (loss) on sale of assets (137 ) — (6 ) (137 ) 3,773 Gain
(loss) from OREO and other
repossessed assets
— — 86 203 (4,773 ) Gain (loss) on sale of securities (9,892 ) —
330 (9,710 ) 1,505 Bank-owned life insurance, net 958 1,048 1,088
4,104 3,728 Other income 2,469 246 861 6,454
10,212 Total noninterest income 3,382 11,461
12,626 41,079 54,780 Noninterest
expense: Compensation and benefits 33,042 26,004 25,273 111,325
106,738 Professional services 5,045 2,489 5,308 11,869 20,041
Occupancy expense 4,023 3,764 3,617 15,545 15,281 Depreciation and
amortization 1,700 1,652 1,585 6,714 7,014
Deposit insurance and regulatory
assessments
914 977 799 3,981 4,881 Insurance expense 317 337 341 1,327 1,387
Data processing 815 230 689 1,803 3,151 Software licenses and
maintenance 1,293 1,371 1,148 4,939 4,556 Office services 1,821
1,642 1,750 7,189 7,983 Amortization of other intangible assets
1,437 1,479 1,479 5,875 5,918 Advertising and marketing 824 909
1,395 3,533 3,226 Other expenses 2,436 2,809 2,799
10,450 10,419 Total noninterest expense 53,667
43,663 46,183 184,550 190,595
Income (loss) before income tax
expense (benefit)
(7,515 ) 8,440 15,474 37,457 90,417 Income tax expense (benefit)
(654 ) (972 ) 14,273 6,539 42,774 Net income
(loss) $ (6,861 ) $ 9,412 $ 1,201 $ 30,918 $
47,643 Basic earnings (loss) per common share $ (0.20 ) $
0.25 $ 0.03 $ 0.82 $ 1.29 Diluted earnings (loss) per common share
(0.20 ) 0.25 0.03 0.81 1.26 Weighted average shares - basic
36,059,713 36,115,204 35,935,614 36,028,025 36,432,482 Weighted
average shares - diluted 36,059,713 38,362,739 38,229,787
38,270,650 37,770,993
Consolidated Balance
Sheets (unaudited)
As of ($ in
thousands, except share amounts)
December 31, 2018
September 30, 2018 December 31, 2017
Assets Cash and due from banks $ 39,860 $ 57,126 $
45,828 Due from banks – interest-bearing 214,776 476,129 454,941
Investment securities available-for-sale, at fair value 1,081,546
1,018,855 1,127,288 Loans held-for-investment 5,165,210 5,159,881
5,173,193 Less allowance for loan losses (54,664 ) (59,029 )
(75,930 ) Loans held-for-investment, net 5,110,546 5,100,852
5,097,263 Premises and equipment, net 23,863 24,955 27,644 Goodwill
331,832 331,832 331,832 Other intangible assets, net 38,926 40,362
44,800 Deferred tax assets, net 24,171 22,847 24,260 Cash surrender
value of bank owned life insurance, net 154,271 153,289 149,744
Accrued interest receivable 23,260 21,680 19,317 Federal Home Loan
Bank stock 17,250 17,250 17,250 Other assets 120,602 129,897
146,642 Total assets $ 7,180,903 $ 7,395,074
$ 7,486,809
Liabilities and Stockholders’
Equity Deposits: Noninterest-bearing demand $ 771,141 $ 890,925
$ 817,330 Interest-bearing demand 2,507,605 2,564,737 2,435,293
Money market and savings 1,995,684 2,031,468 2,307,258 Time
deposits 677,458 655,172 384,057
Total deposits
5,951,888 6,142,302 5,943,938 Federal Home Loan Bank advances — —
290,000 Subordinated debt, net 133,010 132,944 132,745 Accrued
interest payable 4,032 2,350 4,086 Other liabilities 51,160
80,428 92,576 Total liabilities 6,140,090
6,358,024 6,463,345 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
36,637,870 and 36,635,132 and 36,330,546 shares, respectively
700,220 700,220 700,220 Additional paid-in capital 69,954 68,975
63,545 Retained earnings 260,304 271,304 245,006 Treasury stock, at
cost; 577,495 and 576,547 and 415,387 shares, respectively (14,983
) (14,965 ) (10,354 ) Accumulated other comprehensive income (loss)
(3,792 ) (17,594 ) (4,063 ) Total stockholders’ equity 1,040,813
1,037,050 1,023,464 Total liabilities and
stockholders’ equity $ 7,180,903 $ 7,395,074 $
7,486,809
Selected Financial Data
As of or for the three months ended As of
or for the year ended (unaudited)
December 31,
2018 September 30, 2018
December 31, 2017 December 31, 2018
December 31, 2017 Return on average assets
(0.38 )% 0.51 % 0.06 % 0.43 % 0.63 % Return on average assets, tax
adjusted (1) (0.38 ) 0.51 0.55 0.43 0.74 Return on average
stockholders' equity (2.61 ) 3.59 0.46 2.99 4.76 Return on average
stockholders' equity, tax adjusted (1) (2.61 ) 3.59 3.91 2.99 5.65
Return on average tangible equity (2) (4.06 ) 5.60 0.73 4.68 7.66
Return on average tangible equity, tax adjusted (1) (4.06 ) 5.60
6.16 4.68 9.10 Efficiency ratio (3) 99.73 72.36 71.48 76.38 70.02
Noninterest expense to average assets 2.93 2.39 2.49 2.54 2.51
Yield on interest-earning assets (4) 3.92 3.75 3.68 3.79 3.69 Cost
of deposits (5) 0.79 0.71 0.45 0.64 0.45 Cost of funds (6) 0.90
0.81 0.56 0.75 0.56 Net interest margin (4) 3.07 2.98 3.15 3.08
3.17 Loans to deposits 86.78 84.01 87.03 86.78 87.03 (1)
Tax adjusted for the three months and year ended
December 31, 2017 due to impacts from 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.
Loan Fundings (unaudited)
Three Months Ended Year Ended ($ in thousands)
December 31, 2018 September 30, 2018
December 31, 2017 December 31, 2018
December 31, 2017 Loans funded: Real estate mortgage
loans: Single-family residential $ — $ — $ — $ — $ — Multifamily
residential 252,315 257,775 300,539 924,629 790,275 Commercial real
estate 66,931 55,807 58,103 203,017 109,052 Construction and land
loans 5,622 5,674 8,170 28,538 48,312 Commercial business loans
87,390 112,791 131,728 427,636 497,487 Small Business
Administration loans 43 3,644 3,768 12,040 13,837 Consumer and
other loans — — — — — Total loan
fundings $ 412,301 $ 435,691 $ 502,308 $
1,595,860 $ 1,458,963
Composition of Loan
Portfolio As of (unaudited)
December 31,
2018 September 30, 2018
December 31, 2017 ($ in thousands)
Amount
% ofTotal loans
Amount
% ofTotal loans
Amount
% ofTotal loans
Originated loans held-for-investment Real estate mortgage loans:
Single-family residential $ 43,042 0.8 % $ 44,001 0.9 % $ 59,497
1.2 % Multifamily residential 2,884,636 55.8 2,808,463 54.4
2,495,818 48.3 Commercial real estate 1,043,060 20.2 1,058,389 20.5
1,079,637 20.9 Construction and land loans 70,271 1.4 73,668 1.4
94,348 1.8 Commercial business loans 986,363 19.1 1,030,793 20.0
1,284,500 24.8 Small Business Administration loans 31,512 0.6
33,263 0.6 27,152 0.5 Consumer and other loans 18 0.0
34 0.0 96 0.0 Total originated loans
5,058,902 97.9 5,048,611 97.8 5,041,048 97.5 Acquired loans
held-for-investment Real estate mortgage loans: Single-family
residential 18,871 0.4 19,697 0.4 22,964 0.4 Multifamily
residential 46,761 0.9 48,209 0.9 52,453 1.0 Commercial real estate
21,303 0.4 23,413 0.5 27,889 0.6 Construction and land loans 286
0.0 288 0.0 1,418 0.0 Commercial business loans 6,380 0.1 6,039 0.1
10,978 0.2 Small Business Administration loans 8,299 0.2 8,907 0.2
10,957 0.2 Consumer and other loans 4,408 0.1 4,717
0.1 5,486 0.1 Total acquired loans
106,308 2.1 111,270 2.2 132,145
2.5 Total gross loans $ 5,165,210 100.0 % $ 5,159,881
100.0 % $ 5,173,193 100.0 %
Composition of
Deposits As of (unaudited)
December 31,
2018 September 30, 2018
December 31, 2017 ($ in thousands)
Amount
% ofTotal deposits Amount %
ofTotal deposits Amount %
ofTotal deposits Noninterest bearing $ 771,141
13.0 % $ 890,925 14.5 % $ 817,330 13.7 % Interest bearing demand
2,507,605 42.1 2,564,737 41.8 2,435,293 41.0 Money market and
savings 1,995,684 33.5 2,031,468 33.0 2,307,258 38.8 Time deposits
677,458 11.4 655,172 10.7 384,057
6.5 Total deposits $ 5,951,888 100.0 % $
6,142,302 100.0 % $ 5,943,938 100.0 %
Consolidated average balance sheet, interest, yield and
rates
For the three months ended
December 31, For the three months ended September
30, For the three months ended December 31, (unaudited)
2018 2018 2017 ($ in thousands)
AverageBalance Interest (1)
Yields/Rates AverageBalance
Interest (1) Yields/Rates
AverageBalance Interest (1)
Yields/Rates Assets: Interest-earning assets: Due
from banks $ 319,456 $ 1,758 2.18 % $ 430,991 $ 2,113 1.95 % $
381,265 $ 1,265 1.32 % Investment securities 1,080,262 6,931 2.55
1,027,950 5,280 2.04 1,141,865 5,975 2.08 Acquired loans 109,265
1,857 6.74 116,050 1,807 6.18 135,977 2,089 6.10 Originated Loans
5,050,276 54,245 4.26 4,975,101 52,665
4.20 4,947,185 51,916 4.16 Total
loans $ 5,159,541 $ 56,102 4.31 $ 5,091,151
$ 54,472 4.24 $ 5,083,162 $
54,005 4.22 Total interest-earning assets 6,559,259 $
64,791 3.92 6,550,092 $ 61,865 3.75 6,606,292 $ 61,245 3.68
Noninterest-earning assets 699,059 704,117 743,798
Total assets $ 7,258,318 $ 7,254,209 $
7,350,090 Liabilities and stockholders’ equity:
Interest-bearing deposits Interest-bearing demand $ 2,509,049 $
2,520 0.40 % $ 2,546,443 $ 2,279 0.36 % $ 2,456,936 $ 1,137 0.18 %
Money market and savings 2,030,476 6,232 1.22 2,015,781 5,753 1.13
2,356,079 4,689 0.79 Time deposits 668,984 3,286 1.95
594,089 2,670 1.78 393,755 1,029
1.04 Total interest-bearing
deposits
$ 5,208,509 $ 12,038 0.92 $ 5,156,313 $ 10,702 0.82 $ 5,206,770 $
6,855 0.52 Subordinated debt 132,976 1,923 5.74 132,909 1,923 5.74
132,711 1,923 5.75 FHLB advances 33 — 2.62 —
(5 ) 0.00 21,989 68 1.23 Total
interest-bearing
liabilities
$ 5,341,517 $ 13,961 1.04 $ 5,289,222 $ 12,620 0.95 $ 5,361,470 $
8,846 0.65 Noninterest-bearing deposits 816,516 855,036 852,057
Other liabilities 57,731 70,443 103,795 Total
liabilities $ 6,215,764 $ 6,214,701 $ 6,317,322 Total
stockholders’ equity $ 1,042,554 $ 1,039,508 $
1,032,768 Total liabilities andstockholders’ equity $
7,258,318 $ 7,254,209 $ 7,350,090 Net
interest spread (2) 2.88 % 2.80 % 3.03 % Net interest income and
margin, tax equivalent (3,4) $ 50,830 3.07 % $ 49,245
2.98 % $ 52,399 3.15 % Reconciliation of tax
equivalent net interest income to reported net interest income Tax
equivalent adjustment (401 ) (362 ) (413 ) Net interest income, as
reported $ 50,429 $ 48,883 $ 51,986 (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.
Consolidated average balance
sheet, interest, yield and rates
For the year ended December 31, (unaudited)
2018
2017 ($ In thousands)
AverageBalance
Interest (1) Yields/Rates
AverageBalance Interest (1)
Yields/Rates Assets: Interest-earning assets Due from
banks $ 323,780 $ 6,148 1.90 % $ 651,012 $ 6,908 1.06 % Investment
securities 1,066,317 22,353 2.10 965,874 19,411 2.01 Acquired loans
120,129 7,239 6.03 151,478 9,376 6.19 Originated Loans 5,040,400
212,410 4.21 5,125,692 218,997
4.27 Total loans $ 5,160,529 $ 219,649 4.26
$ 5,277,170 $ 228,373 4.33 Total
interest-earning assets $ 6,550,626 $ 248,150 3.79 $ 6,894,056 $
254,692 3.69 Noninterest-earning assets 707,658 708,590
Total assets $ 7,258,284 $ 7,602,646
Liabilities and stockholders’ equity: Interest-bearing deposits
Interest-bearing demand $ 2,521,073 $ 7,877 0.31 % $ 2,426,716 $
4,513 0.19 % Money market and savings 2,114,774 21,713 1.03
2,576,338 19,420 0.75 Time deposits 523,511 8,573
1.64 448,770 4,326 0.96 Total interest
bearing deposits $ 5,159,358 $ 38,163 0.74 $ 5,451,824 $ 28,259
0.52 Subordinated debt 132,877 7,690 5.79 132,609 7,690 5.80 FHLB
advances 21,296 374 1.76 17,392 185
1.06 Total interest-bearing liabilities $ 5,313,531 $
46,227 0.87 $ 5,601,825 $ 36,134 0.65 Noninterest-bearing deposits
837,869 897,262 Other liabilities 73,204 101,704
Total liabilities $ 6,224,604 $ 6,600,791 Total
stockholders’ equity 1,033,680 1,001,855 Total
liabilities and stockholders’ equity $ 7,258,284 $ 7,602,646
Net interest spread (2) 2.92 % 3.04 % Net interest
income and margin, tax equivalent (3,4) $ 201,923 3.08 % $
218,558 3.17 % Reconciliation of tax equivalent net
interest income to reported net interest income Tax equivalent
adjustment (1,394 ) (1,149 ) Net interest income, as reported $
200,529 $ 217,409 (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 Year
Ended ($ in thousands)
December 31,
2018
September 30, 2018
December 31,2017
December 31,2018
December 31,2017
Allowance for loan losses - balance at beginning of period $ 59,029
$ 59,197 $ 78,176 $ 75,930 $ 111,410 (Recapture) Provision for loan
losses: Acquired loans 12 (179 ) (27 ) 267 (6 ) Originated loans
7,647 8,420 2,982 19,334 (8,817 ) Total
provision for loan losses 7,659 8,241 2,955 19,601 (8,823 )
Charge-offs: Acquired loans — — — — — Originated loans (14,565 )
(10,023 ) (5,821 ) (51,251 ) (29,808 ) Total charge-offs (14,565 )
(10,023 ) (5,821 ) (51,251 ) (29,808 ) Recoveries: Acquired loans —
— — — — Originated loans 2,541 1,614 620
10,384 3,151 Total recoveries 2,541 1,614
620 10,384 3,151 Total net charge-offs
(12,024 ) (8,409 ) (5,201 ) (40,867 ) (26,657 ) Allowance for loan
losses - balance at end of period $ 54,664 $ 59,029 $
75,930 $ 54,664 $ 75,930
Asset Quality Information
(unaudited)
As of and for the quarter ended ($ in thousands)
December 31, 2018 September 30, 2018
December 31, 2017 Nonperforming assets Nonaccrual
loans $ 28,016 $ 45,136 $ 58,274 OREO and other repossessed assets
— — —
Total nonperforming assets
28,016 45,136 58,274 Loans 30 - 89 days past due 2,634 9,856
12,805 Accruing loans 90 days or more past due 485 390 299 Accruing
troubled debt restructured loans — 138 139 Nonperforming
loans to total loans 0.54 % 0.87 % 1.13 % Nonperforming assets to
total assets 0.39 0.61 0.78 Loans 30-89 days past due to total
loans 0.05 0.19 0.25 Allowance for loan losses to total loans 1.06
1.14 1.47 Allowance for loan losses to non-accrual loans 195.12
130.78 130.30 Net charge-offs to average loans (annualized) 0.92
0.66 0.41
Risk Rating by Loan Product (Unaudited) ($
in thousands) Pass
Special Mention
Classified Total Loans Nonaccrual loans
Total allowance As of December 31, 2018 Real estate mortgage loans:
Single-family residential $ 61,471 $ 76 $ 366 $ 61,913 $ — $ 178
Multifamily residential 2,929,173 120 2,104 2,931,397 — 10,236
Commercial real estate 1,007,274 9,904 47,185 1,064,363 2,462
10,663 Construction and land loans 57,100 13,457 — 70,557 — 698
Commercial business loans 927,437 17,455 47,851 992,743 18,039
32,545 Small Business Administration loans 28,727 161 10,923 39,811
6,973 336 Consumer and other loans 3,696 58
672 4,426 542 8 Total loans $ 5,014,878 $
41,231 $ 109,101 $ 5,165,210 $ 28,016 $ 54,664 As of
September 30, 2018 Real estate mortgage loans: Single-family
residential $ 63,199 $ 77 $ 422 $ 63,698 $ — $ 171 Multifamily
residential 2,852,490 2,066 2,116 2,856,672 — 9,677 Commercial real
estate 1,033,707 17,848 30,247 1,081,802 2,512 9,009 Construction
and land loans 60,644 13,313 — 73,957 — 904 Commercial business
loans 930,748 36,105 69,979 1,036,832 35,085 38,966 Small Business
Administration loans 30,028 1,162 10,979 42,169 6,973 295 Consumer
and other loans 3,992 59 700 4,751
566 7 Total loans $ 4,974,808 $ 70,630 $ 114,443 $
5,159,881 $ 45,136 $ 59,029 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
Risk Rating by Lending Division (Unaudited) ($ in thousands)
Pass Special Mention Classified Total Loans
Nonaccrual loans As of December 31, 2018 Income Property
Banking $ 3,460,915 $ 1,752 $ 11,874 $ 3,474,541 $ 2,462 Commercial
Banking 381,901 6,837 39,782 428,520 16,034 Structured Finance
295,715 13,457 — 309,172 — Healthcare Provider 149,274 9,352 43,176
201,802 — Healthcare Practice 18,690 — 1,194 19,884 — Corporate
Finance 36,260 9,699 6,088 52,047 3,671 Institutional Syndication
319,877 — — 319,877 — Public Finance 221,995 — — 221,995 —
Technology Banking — — — — — Other divisions (2) 130,251
134 6,987 137,372 5,849 Total
loans $ 5,014,878 $ 41,231 $ 109,101 $ 5,165,210 $ 28,016
As of September 30, 2018 Income Property Banking $ 3,368,520
$ 9,808 $ 10,855 $ 3,389,183 $ 2,512 Commercial Banking 348,436
15,424 48,849 412,709 19,431 Structured Finance 312,703 22,483 —
335,186 — Healthcare Provider 195,977 — 40,734 236,711 13,359
Healthcare Practice 19,124 — 1,226 20,350 — Corporate Finance
53,162 22,658 4,654 80,474 3,959 Institutional Syndication 329,804
— — 329,804 — Public Finance 225,143 — — 225,143 — Technology
Banking — — 899 899 — Other divisions (2) 121,939 257
7,226 129,422 5,875 Total loans $
4,974,808 $ 70,630 $ 114,443 $ 5,159,881 $ 45,136 As
of 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 (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 MeasuresOur accounting and reporting
policies conform to generally accepted accounting principles in the
United States ("GAAP"). We believe that the presentation of certain
non-GAAP financial measures assists investors in assessing our
financial results. These non-GAAP measures include our tax adjusted
return on average assets, tax adjusted return on average equity,
tax adjusted return on average tangible equity, 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 ratios and should not be considered
a substitute of the GAAP measures and ratios.
The following tables present a reconciliation of the most
comparable GAAP financial measures and ratios to the non-GAAP
financial measures and ratios:
Non-GAAP tax adjusted return on average assets (unaudited)
Three Months Ended
Year Ended ($ in thousands)
December 31, 2018
September 30, 2018 December 31,
2017 December 31, 2018 December
31, 2017 Average assets $ 7,258,318 $ 7,254,209 $
7,350,090 $ 7,258,284 $ 7,602,646 Tax adjusted net income Net
income $ (6,861 ) 9,412 $ 1,201 $ 30,918 $ 47,643 Less: Adjustments
due to the Tax
Cuts and Jobs Act
— — 8,968 —
8,968 Tax adjusted net income (6,861 ) 9,412 10,169
30,918 56,611 Return on average assets (0.38 )% 0.51 % 0.06 % 0.43
% 0.63 % Non-GAAP tax adjusted return on average assets (1) (0.38
)% 0.51 % 0.55 % 0.43 % 0.74 % (1) Tax adjusted for the
three months and year 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
Year Ended ($ in thousands)
December 31,
2018 September 30, 2018
December 31, 2017 December 31, 2018
December 31, 2017 Average tangible equity:
Average stockholders' equity $ 1,042,554 $ 1,039,508 $ 1,032,768 $
1,033,680 $ 1,001,855 Less: Average goodwill 331,832 331,832
331,832 331,832 331,832 Average other intangible assets
39,663 41,139 45,551
41,859 47,823 Average tangible equity 671,059
666,537 655,385 659,989 622,200 Tax adjusted net income: Net income
(6,861 ) 9,412 1,201 30,918 47,643 Less: Adjustments due to the Tax
Cutsand Jobs Act — — 8,968
— 8,968 Tax adjusted net income
(6,861 ) 9,412 10,169 30,918 56,611 Return on average
stockholders' equity (2.61 )% 3.59 % 0.46 % 2.99 % 4.76 % Non-GAAP
Return on average tangible equity (4.06 ) 5.60 0.73 4.68 7.66
Non-GAAP tax adjusted return on average stockholders' equity
(1) (2.61 )% 3.59 % 3.91 % 2.99 % 5.65 % Non-GAAP tax adjusted
return on average tangible equity (1) (4.06 ) 5.60 6.16 4.68 9.10
(1) Tax adjusted for the three months and year 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)
December 31, 2018 September
30, 2018 December 31, 2017 Tangible
equity: Total stockholders' equity $ 1,040,813 $ 1,037,050 $
1,023,464 Less: Goodwill 331,832 331,832 331,832 Other intangible
assets, net 38,926 40,362 44,800 Tangible
equity 670,055 664,856 646,832 Shares of common stock outstanding
36,060,375 36,058,585 35,915,159
Shares of common stock to be issued upon
conversion of preferred stock
1,555,550 1,555,550 1,555,550
Total as converted shares of common stock
outstanding (1)
37,615,925 37,614,135 37,470,709 Book value
per as converted common share $ 27.67 $ 27.57 $ 27.31 Tangible book
value per as converted common share 17.81 17.68 17.26 (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.
Non-GAAP tangible
common equity ratio (unaudited)
As of ($ In
thousands)
December 31, 2018 September
30, 2018 December 31, 2017 Total
assets $ 7,180,903 $ 7,395,074 $ 7,486,809 Less: Goodwill 331,832
331,832 331,832 Other intangible assets, net 38,926
40,362 44,800 Tangible assets 6,810,145
7,022,880 7,110,177 Total stockholders' equity 1,040,813
1,037,050 1,023,464 Less: Goodwill 331,832 331,832 331,832 Other
intangible assets, net 38,926 40,362
44,800 Tangible equity 670,055 664,856 646,832 Less:
preferred stock 29,110 29,110
29,110 Tangible common equity 640,945 635,746 617,722
Tangible equity to tangible assets ratio 9.84 % 9.47 % 9.10 %
Tangible common equity to tangible assets ratio 9.41 % 9.05 % 8.69
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190128005129/en/
Kevin L. ThompsonEVP, Chief Financial Officer949-251-8196
Brett G. VillaumeSVP, Director of Investor
Relations949-224-8866
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