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 Opus Bank Reports Fourth Quarter and Year End 2016 Results
   Monday, January 30, 2017 7:00:03 AM ET

Opus Bank ("Opus" or the "Bank") (OPB ) announced today a net loss of $19.0 million, or $(0.55) per diluted share, for the fourth quarter of 2016 and net income of $11.5 million, or $0.33 per diluted share, for the year ended December 31, 2016 as compared to a net loss of $3.0 million, or $(0.09) per diluted share, for the third quarter of 2016 and net income of $59.9 million, or $1.79 per diluted share, for the year ended December 31, 2015.

On January 29, 2017, Opus entered into purchase agreements with a limited number of institutional accredited investors, providing for the sale in a private placement of $53 million of its common stock at $18.50 per share, resulting in net proceeds of approximately $50 million. Closing of the transaction is subject to the receipt of a stock permit from the California Department of Business Oversight - Division of Financial Institutions and the satisfaction of customary closing conditions.



Opus’ fourth quarter 2016 earnings were impacted by a provision for loan losses totaling $69.5 million. The fourth quarter provision for loan losses was driven by the addition of $27.2 million for loan risk rating migration, $22.1 million for additional specific reserves on impaired loans and $19.2 million of net charge-offs recorded on impaired loans. The risk rating migration, specific reserve increases and charge-offs were concentrated in our commercial business loan portfolio, primarily in our Technology Banking, Healthcare Banking and Corporate Finance divisions.

Stephen H. Gordon, Founding Chairman, Chief Executive Officer and President of Opus Bank, stated, "We are deeply disappointed with the fourth quarter loss driven by credit deterioration in our commercial business loan portfolio. We take this very seriously and are acutely focused on addressing the related issues and restoring Opus to its historic levels of performance."

Mr. Gordon continued, "We have taken decisive action to bolster our credit infrastructure and to assess our Commercial & Specialty Banking loan portfolios. We enhanced the credit administration leadership team, through the hiring of Brian Fitzmaurice as Opus’ new Senior Executive Vice President and Senior Chief Credit Officer, and we added a number of highly experienced commercial banking senior credit administrators. Further, we enhanced our enterprise risk management team and we promoted two key executives to the newly established roles of Co-Chief Lending Officers for Commercial Real Estate Banking and Commercial & Specialty Banking. We also strengthened underwriting and administration processes and augmented ongoing portfolio management and problem loan resolution. As part of our credit assessment process, our internal credit administration team, led by Mr. Fitzmaurice, performed a thorough review of the commercial business loan portfolio to supplement our comprehensive quarterly portfolio management process. In addition, we retained a nationally recognized third-party loan review firm to conduct an independent review of the same portfolio. The combination of these reviews covered substantially all of the commercial business loan portfolio, including our Commercial & Specialty Banking divisions, and confirmed that further deterioration in certain commercial business loans had occurred during the fourth quarter, which drove risk rating downgrades and resulted in increased specific reserves and charge-offs."

On December 23, 2016, Opus completed the sale of $509.0 million of its multifamily loans through a Freddie Mac sponsored transaction, which resulted in a $14.2 million net gain on the sale of loans and $3.0 million of related noninterest expense. One class of Freddie Mac guaranteed Structured Pass-Through Certificates was issued, which was purchased entirely by Opus.

Mr. Gordon concluded, "The sale of a pool of our multifamily loans through a transaction with Freddie Mac was an important and strategic transaction that provides many benefits to Opus, including enhanced liquidity and reduces our commercial real estate loan concentrations and loan-to-deposit ratio. As we enter 2017, we believe the actions taken in the fourth quarter position Opus with a stronger credit administration and enterprise risk management infrastructure, enhanced credit culture, and a management team with the experience necessary to manage through our challenged credits. Opus possesses a strong core deposit base, a significant cash position, a largely floating-rate loan portfolio, and the ability to redeploy cash flows received from elevated loan prepayments. Opus’ balance sheet has become meaningfully more asset sensitive compared to the year-ago period, and as a result, the bank is better positioned for a potential rising interest rate environment."

Quarter and Year End 2016 Highlights

-- New loan fundings were $429.9 million in the fourth quarter of 2016 compared to $634.1 million in the third quarter of 2016 and $763.1 million in the fourth quarter of 2015. Lower loan fundings in the fourth quarter of 2016 occurred as we assessed our commercial banking loan portfolio and focused on enhancements of our credit risk process. For the full year 2016, new loan fundings totaled $2.3 billion as compared to $2.4 billion during 2015. Loan commitments of $499.9 million were originated during the fourth quarter of 2016 compared to $751.1 million in the third quarter of 2016 and $819.9 million in the fourth quarter of 2015. Loan commitments originated during 2016 totaled $2.6 billion compared to $2.8 billion in 2015.

-- Total loans held-for-investment decreased by $621.0 million, or 10%, during the fourth quarter of 2016 to $5.7 billion as of December 31, 2016, and increased by $173.3 million, or 3.2%, from $5.5 billion as of December 31, 2015. The linked-quarter decrease in total loans was driven by new loan fundings being offset by the sale of $509.0 million of multifamily loans and $73.2 million of other originated and acquired loans, $353.9 million of loan payoffs during the quarter, and net loan charge-offs of $19.2 million.

-- As we discussed in prior quarters, we have de-emphasized our Technology Banking division. Total loan payoffs during the fourth quarter of 2016 included full payoffs of $41.6 million in our Technology Banking portfolio. The remaining balance of Technology Banking loans was $190.5 million as of December 31, 2016. During the fourth quarter of 2016, we also took steps to de-emphasize Healthcare Practice lending.

-- Total assets increased to a record $7.9 billion at December 31, 2016 from $7.7 billion at September 30, 2016 and $6.6 billion at December 31, 2015.

-- Total deposits grew $182.1 million, or 3%, during the fourth quarter to a record $6.7 billion at December 31, 2016, and increased by $1.4 billion, or 26%, from December 31, 2015. Noninterest bearing plus interest bearing demand deposits ("total demand deposits") increased by $288.3 million, or 9%, during the fourth quarter of 2016 to $3.4 billion, and increased by $1.3 billion, or 59%, during the year ended December 31, 2016. Total demand deposits increased to 51% of total deposits as of December 31, 2016, up from 48% as of September 30, 2016 and 40% as of December 31, 2015.

-- Opus’ cost of deposits decreased one basis point to 0.43% for the fourth quarter of 2016 and the cost of funds decreased two basis points to 0.55% compared to the prior quarter. Our cost of deposits decreased four basis points for the year ended December 31, 2016 to 0.45% compared to 0.49% for the year ended December 31, 2015 and our cost of funds remained stable at 0.51% over the same periods.

-- During the fourth quarter of 2016, approximately $279.1 million of ancillary custodial cash balances were transferred to Opus. As of December 31, 2016, total ancillary balances related to our alternative asset IRA custodian subsidiary were $1.2 billion.

-- Net interest income decreased 1% to $60.2 million for the fourth quarter of 2016 compared to $60.7 million for the third quarter of 2016, and increased 6% compared to $56.7 million for the fourth quarter of 2015. The linked-quarter decrease was primarily due to a decline of $1.1 million in interest income from the acquired loan portfolio. Net interest income increased 16% to $242.5 million for the year ended December 31, 2016 from $208.3 million for the year ended December 31, 2015, mainly due to a 34% increase in interest income from originated loans during 2016. Interest income from our originated loan portfolio comprised 92% of loan interest income for the year ended December 31, 2016 as compared to 79% for the year ended December 31, 2015.

-- Net interest margin decreased 16 basis points to 3.36% for the fourth quarter of 2016 compared to 3.52% for the third quarter of 2016 and 3.86% for the fourth quarter of 2015. The linked-quarter decrease in net interest margin was primarily driven by lower income from acquired loans and the impact of loans placed on nonaccrual. Net interest margin decreased 33 basis points to 3.62% for the year ended December 31, 2016 compared to 3.95% for the year ended December 31, 2015, primarily due to lower interest income from acquired loans.

-- Contractual net interest margin for the fourth quarter of 2016 decreased 11 basis points from the prior quarter to 3.32% and decreased 10 basis points from the prior year. The linked-quarter decrease was due to lower average balances of acquired loans and the impact of loans placed on nonaccrual. Contractual net interest margin increased one basis point to 3.45% for the year ended December 31, 2016, primarily due to higher balances of originated loans.

-- Noninterest income increased 67% to $27.1 million during the fourth quarter of 2016 compared to $16.3 million in the third quarter of 2016 and $6.0 million in the fourth quarter of 2015. Noninterest income in the fourth quarter of 2016 included $15.2 million in gains on the sale of loans, $6.6 million in trust administrative fees, $1.7 million in escrow and exchange fees and $362,000 from our Merchant Banking division, including our broker-dealer subsidiary, Opus Financial Partners. Net equity warrant valuation changes reduced total noninterest income by $1.5 million during the fourth quarter of 2016. Noninterest income increased 151% to $61.9 million for the year ended December 31, 2016 from $24.7 million for the year ended December 31, 2015.

-- Noninterest expense during the fourth quarter of 2016 totaled $51.2 million compared to $42.3 million in the third quarter of 2016 and $28.0 million in the fourth quarter of 2015. The increase from the prior quarter was primarily due to a decrease of $3.7 million in origination-related deferred compensation during the quarter, $3.0 million in costs associated with the multifamily loan sale, and higher professional services fees, including legal and consulting-related expenses. Noninterest expense was $162.7 million for the year ended December 31, 2016 compared to $110.2 million for the year ended December 31, 2015. The year-over year increase was primarily due to increases in compensation and benefits and professional expenses related to the acquisition of our alternative asset IRA custodian, as well as merger and strategic initiative related expenses.

-- Our efficiency ratio was 58.6% for the fourth quarter of 2016 compared to 55.0% for the third quarter of 2016 and 44.7% for the fourth quarter of 2015. The efficiency ratio increased to 53.4% for the year ended December 31, 2016 compared to 47.3% for the year ended December 31, 2015.

-- Our total allowance for loan losses was $111.4 million, or 1.97% of total loans, as of December 31, 2016, compared to $61.1 million, or 0.97% of total loans, as of September 30, 2016, and $44.1 million, or 0.80% of total loans, as of December 31, 2015. Our coverage ratio, which includes the remaining discount on the acquired loan portfolio, was 2.03% as of December 31, 2016, compared to 1.04% as of September 30, 2016 and 1.08% as of December 31, 2015.

-- We recorded net charge-offs of $19.2 million during the fourth quarter of 2016, compared to $39.0 million during the third quarter of 2016 and $676,000 during the fourth quarter of 2015. Charge-offs recorded during the fourth quarter of 2016 included $15.9 million for loans that had specific reserves or charge-offs recorded in prior quarters. Technology Banking and Healthcare Practice loans accounted for $12.1 million and $4.8 million of the current quarter charge-offs, respectively.

-- Total criticized loans, which includes special mention and classified risk rating categories, were $317.3 million as of December 31, 2016 compared to $147.4 million as of September 30, 2016. The quarterly net change in total criticized loans was driven by $205.6 million of downgrades partially offset by $35.6 million of criticized loans that were resolved through either payoffs, loan sales or charge-offs during the quarter. Increases in criticized loans and related specific reserves were driven by deterioration in the underlying financial performance of the individual businesses or changes in financial circumstances during the current quarter.

-- Total nonperforming assets increased to $95.1 million, or 1.21% of total assets, as of December 31, 2016 compared to $44.8 million, or 0.58% of total assets, as of September 30, 2016 and $24.3 million, or 0.37% of total assets as of December 31, 2015. Increases in nonperforming assets during the fourth quarter of 2016 were driven mainly by Corporate Finance, Commercial Banking and Structured Finance division loans.

-- Opus’ capital ratios remain in excess of regulatory thresholds for a well-capitalized institution. Our Tier 1 leverage ratio, Common Equity Tier 1 ratio, and total risk-based capital ratios were 7.54%, 8.78%, and 12.11% as of December 31, 2016, compared to 8.11%, 9.15%, and 12.22% as of September 30, 2016 and 9.59%, 10.81%, and 11.65% as of December 31, 2015, respectively. Pro forma for the private placement of common stock on January 29, 2016, our Tier 1 leverage ratio, Common Equity Tier 1 ratio, and total risk-based capital ratios are 8.16%, 9.57%, and 12.89%.

Net Interest Income

Net interest income decreased 1% to $60.2 million for the fourth quarter of 2016 compared to $60.7 million for the third quarter of 2016 and increased 6% from $56.7 million for the fourth quarter of 2015. Interest income from originated loans increased by $137,000 from the third quarter of 2016 and increased by $11.9 million from the fourth quarter of 2015. Interest income from the acquired loan portfolio decreased by $1.1 million from the prior quarter and decreased by $7.2 million from the fourth quarter of 2015. Accretion income from the acquired loan portfolio totaled $717,000 during the fourth quarter of 2016, compared to $1.5 million during the third quarter of 2016 and $6.2 million during the fourth quarter of 2015. Interest expense was $9.2 million for the fourth quarter of 2016 compared to $9.1 million for the third quarter of 2016 and $6.7 million for the fourth quarter of 2015. The increase in interest expense was driven by the growth of $324.7 million in average interest bearing deposits from the third quarter of 2016 and $1.5 billion from the fourth quarter of 2015, as well as the addition of $132 million of subordinated debt during the second quarter of 2016.

Net interest income increased 16% to $242.5 million for the year ended December 31, 2016 from $208.3 million for the year ended December 31, 2015. Interest income for the year ended December 31, 2016 totaled $274.8 million, an increase of $41.4 million, or 18%, from $233.4 million for the year ended December 31, 2015, due to an increase of $62.4 million in interest income from the originated loan portfolio, offset by a decrease of $23.6 million in interest income from the acquired loan portfolio as the average balance of the acquired loan portfolio continues to decline. Interest expense for the year ended December 31, 2016 totaled $32.3 million, an increase of $7.2 million, or 29%, from $25.1 million for the year ended December 31, 2015. The year-over-year increase in interest expense was primarily due to higher average deposit balances and the interest expense related to subordinated debt issued during the second quarter of 2016.

Net interest margin decreased 16 basis points to 3.36% in the fourth quarter of 2016 from 3.52% in the third quarter of 2016 and decreased from 3.86% in the fourth quarter of 2015. The decrease from the prior quarter was primarily driven by lower income from acquired loans, including lower interest and accretion income, and the impact of loans placed on nonaccrual, partially offset by the net benefit from higher prepayments during the quarter and a lower cost of funds. Total loan yield during the fourth quarter of 2016 decreased to 4.29% from 4.37% in the third quarter of 2016 and 4.80% in the fourth quarter of 2015. Accretion income from the acquired loan portfolio contributed four basis points to the net interest margin during the fourth quarter of 2016 compared to nine basis points in the third quarter of 2016 and 44 basis points in the fourth quarter of 2015. The yield on originated loans decreased two basis points to 4.22% during the fourth quarter of 2016 primarily due to the impact of loans placed on nonaccrual.

Contractual net interest margin, which excludes the impact of accretion and amortization of acquisition discounts and premiums on the acquired loan portfolio, decreased 11 basis points to 3.32% for the fourth quarter of 2016 from 3.43% in the prior quarter and decreased 10 basis points from 3.42% in the fourth quarter of 2015. The linked-quarter change in contractual net interest margin was primarily due to lower average balances of acquired loans and the impact of loans placed on nonaccrual. Our cost of funds decreased two basis points to 0.55% for the fourth quarter of 2016 compared to 0.57% for the third quarter of 2016 and 0.48% for the fourth quarter of 2015. Our cost of deposits decreased one basis point to 0.43% for the fourth quarter of 2016 as compared to 0.44% for the third quarter of 2016 and 0.47% for the fourth quarter of 2015.

Net interest margin decreased 33 basis points to 3.62% for the year ended December 31, 2016 compared to 3.95% for the year ended December 31, 2015. The yield on originated loans decreased to 4.27% for the year ended December 31, 2016 compared to 4.30% for the year ended December 31, 2015. The yield on the acquired loan portfolio decreased to 10.28% for the year ended December 31, 2016 compared to 12.36% for the year ended December 31, 2015, due primarily to lower accretion income from the sales of acquired loans. Accretion income from the acquired loan portfolio contributed 0.17% and 0.51% to net interest margin during the years ended December 31, 2016 and 2015, respectively. Contractual net interest margin increased one basis point to 3.45% for the year ended December 31, 2016 compared to 3.44% for the year ended December 31, 2015. Our cost of funds remained unchanged from 0.51% for the years ended December 31, 2016 and 2015, and our cost of deposits decreased to 0.45% for the year ended December 31, 2016 from 0.49% for the year ended December 31, 2015, primarily due to the addition of $1.2 billion in deposits with an average cost of two basis points from our alternative asset IRA custodian subsidiary, offset by the addition of subordinated debt during the year.

Noninterest Income and Noninterest Expense

Noninterest income increased 67% to $27.1 million in the fourth quarter of 2016 as compared to $16.3 million in the third quarter of 2016 and $6.0 million in the fourth quarter of 2015. Noninterest income increased 151% to $61.9 million for the year ended December 31, 2016 compared to $24.7 million for the year ended December 31, 2015. Noninterest income during the fourth quarter of 2016 included $15.2 million in gains on the sale of loans, including a $14.2 million net gain associated with the multifamily loan sale and approximately $1.0 million in gain on the sales of other originated and acquired loans totaling $73.2 million. Noninterest income in the fourth quarter of 2016 also included $6.6 million of trust administrative fees from our alternative asset IRA custodian subsidiary, $1.7 million in fees generated through our Escrow and Exchange divisions, and $362,000 of advisory fee income from our Merchant Banking division, including our broker-dealer subsidiary, Opus Financial Partners. Net equity warrant valuation changes reduced total noninterest income by $1.5 million during the fourth quarter of 2016.

Noninterest expense totaled $51.2 million in the fourth quarter of 2016 as compared to $42.3 million in the third quarter of 2016 and $28.0 million in the fourth quarter of 2015. The increase in noninterest expense from the prior quarter was primarily due to a decrease of $3.7 million in origination-related deferred compensation during the quarter, $3.0 million of costs associated with the multifamily loan sale, and higher professional services fees, including legal and consulting-related expenses. Noninterest expense for the year ended December 31, 2016 was $162.7 million compared to $110.2 million for the year ended December 31, 2015. The year-over year increase was primarily due to increases in compensation and benefits and professional expenses related to the acquisition of our alternative asset IRA custodian in April 2016, as well as merger and strategic initiative related expenses.

Loans

Total loans held-for-investment, net of the allowance for loan losses, were $5.6 billion at December 31, 2016, a decrease of $671.3 million, or 11%, from $6.2 billion at September 30, 2016 and an increase of $106.0 million, or 2%, from $5.5 billion at December 31, 2015. The decrease in total loans during the fourth quarter of 2016 was driven by new loan fundings of $429.9 million being offset by the sale of $509.0 million of multifamily loans, the sale of $73.2 million of other originated and acquired loans, $353.9 million of loan payoffs during the quarter and net loan charge-offs of $19.2 million.

On December 23, 2016, Opus completed the sale of $509.0 million of its multifamily loans through a Freddie Mac sponsored transaction, which met the requirements for true sale accounting treatment. One class of Freddie Mac guaranteed Structured Pass-Through Certificates were issued, which were purchased by Opus and held as available-for-sale. Additionally, Opus was appointed to be the sub-servicer of the loans. The transaction reduced Opus’ commercial real estate loan concentration and loan to deposit ratio, and increased our liquidity ratio. At December 31, 2016, the total loan portfolio was comprised of 40% originated multifamily loans with the remaining portion comprised primarily of originated commercial business loans.

During the fourth quarter of 2016 we originated $429.9 million of new loan fundings, compared to $634.1 million in the third quarter of 2016 and $763.1 million in the fourth quarter of 2015. New loan fundings during the fourth quarter of 2016 included $187.5 million from Income Property Banking, $59.6 million from Institutional Syndications, $59.2 million from Structured Finance, $58.0 million from Healthcare Banking, $29.1 million from Commercial Banking, $23.3 million from Corporate Finance, $7.4 million from Media & Entertainment Banking, and $5.0 million from Public Finance. Loan commitments originated during the fourth quarter totaled $499.9 million as compared to $751.1 million in the third quarter of 2016 and $819.9 million in the fourth quarter of 2015. At December 31, 2016, our unfunded commitments on originated loans totaled $668.6 million.

Originated loans increased by $264.8 million, or 5%, for the year ended December 31, 2016. New loan fundings totaled $2.3 billion for the year ended December 31, 2016, compared to $2.4 billion for the year ended December 31, 2015. Loan payoffs totaled $1.1 billion during the year ended December 31, 2016, compared to $688.6 million during the year ended December 31, 2015. Commercial and Specialty Banking divisions contributed 57% of total new loan fundings during 2016 compared to 52% during 2015. Loan commitments originated during the year ended December 31, 2016 totaled $2.6 billion as compared to $2.8 billion during the year ended December 31, 2015.

Our acquired loan portfolio totaled $176.9 million as of December 31, 2016, a decrease of 5% from $186.3 million as of September 30, 2016 and 34% from $268.4 million at December 31, 2015. As of December 31, 2016, our total unfunded commitments on acquired loans totaled $19.8 million.

Deposits and Borrowings

Deposits totaled $6.7 billion as of December 31, 2016, an increase of $182.1 million, or 3%, from $6.5 billion as of September 30, 2016 and $1.4 billion, or 26%, from $5.3 billion as of December 31, 2015. The growth in total deposits during the fourth quarter of 2016 was mainly due to the transfer to Opus of $279.1 million of additional ancillary IRA custodial client cash balances held at other banks.

Total demand deposits, including both noninterest-bearing and interest-bearing demand deposit accounts, increased $288.3 million, or 9.3%, during the fourth quarter of 2016, and now comprise 51% of total deposits as of December 31, 2016, an increase from 48% as of September 30, 2016 and an increase from 40% as of December 31, 2015. As of December 31, 2016, business deposits represented 53% of total deposits, compared to 52% as of September 30, 2016 and 52% as of December 31, 2015.

Our loan-to-deposit ratio decreased to 85% as of December 31, 2016 compared to 97% as of September 30, 2016 and 104% as of December 31, 2015.

Federal Home Loan Bank advances totaled $65.0 million as of December 31, 2016 and September 30, 2016 compared to $420.0 million as of December 31, 2015. Subordinated debt issued during the second quarter of 2016 totaled $132.5 million as of December 31, 2016, compared to zero outstanding as of December 31, 2015.

Asset Quality

Our allowance for loan losses was $111.4 million, or 1.97% of our total loan portfolio, as of December 31, 2016 compared to $61.1 million, or 0.97%, as of September 30, 2016 and $44.1 million, or 0.80%, as of December 31, 2015. Our acquired loan portfolio had a remaining discount of $3.7 million as of December 31, 2016. The coverage ratio for the total loan portfolio, which includes the remaining discount on the acquired loan portfolio, as of December 31, 2016 was 2.03% compared to 1.04% as of September 30, 2016 and 1.08% as of December 31, 2015. Our allowance for loan losses on originated loans resulted in a coverage ratio of 2.02% as of December 31, 2016, compared to 0.99% as of September 30, 2016 and 0.82% as of December 31, 2015. The increase in our coverage ratio as of December 31, 2016 was primarily driven by specific reserves and risk rating migration within our commercial business loan portfolio, specifically the Technology Banking, Healthcare Practice and Corporate Finance divisions which comprised 40% of our commercial business loan portfolio and 12% of our total loan portfolio at year end.

Net charge-offs recorded during the fourth quarter of 2016 totaled $19.2 million, compared to $39.0 million during the third quarter of 2016 and $676,000 during the fourth quarter of 2015. Net charge-offs during the fourth quarter of 2016 included $15.9 million for loans that had specific reserves or charge-offs recorded in prior quarters. Technology Banking and Healthcare Practice loans accounted for $12.1 million and $4.8 million of the current quarter net charge-offs, respectively. The remaining balance of Opus originated loans for which charge-offs were previously recorded was $21.4 million as of December 31, 2016, $21.2 million of which was comprised of four loan relationships in our Technology and Healthcare Practice portfolios that were on nonaccrual.

We recorded a provision for loan losses of $69.5 million in the fourth quarter of 2016 compared to $40.4 million in the third quarter of 2016 and $8.0 million in the fourth quarter of 2015. The provision for loan losses during the fourth quarter was driven by $27.2 million for risk rating migration, an increase of $22.1 million in specific reserves, net charge-offs of $19.2 million and $5.3 million in higher reserves for increased loss factors, partially offset by a $4.3 million decrease for the quarterly decline in the loan portfolio primarily due to the multifamily loan sale. The provision recapture on the acquired loan portfolio totaled $47,000 in the fourth quarter of 2016, $173,000 in the third quarter of 2016 and $359,000 in the fourth quarter of 2015.

Total criticized loans were $317.3 million as of December 31, 2016 compared to $147.4 million as of September 30, 2016 and $94.9 million as of December 31, 2015. The quarterly net change in total criticized loans was driven by $205.6 million of downgrades offset by $35.6 million of criticized loans that were resolved through either payoffs, loan sales or charge-offs during the quarter. Commercial business loans comprised $171.8 million of loans downgraded into criticized categories during the fourth quarter of 2016.

Total nonperforming assets increased to $95.1 million, or 1.21% of total assets, as of December 31, 2016 compared to $44.8 million, or 0.58% of total assets, as of September 30, 2016, and $24.3 million, or 0.37% of total assets, as of December 31, 2015.

Commercial Business Loans

Commercial business loans accounted for $19.0 million of Opus’ net charge-offs in the fourth quarter of 2016, down from $36.2 million in the third quarter of 2016. Of the net charge-offs recorded on commercial business loans during the fourth quarter of 2016, $12.1 million was related to two Technology Banking division relationships that had either specific reserves or charge-offs recorded in prior quarters and experienced additional deterioration in the underlying businesses or changes in financial circumstances during the quarter. Healthcare Practice loans comprised $4.8 million of the net charge-offs recorded on commercial business loans during the fourth quarter and were related to five loan relationships, including three that had either specific reserves or charge-offs recorded in prior quarters. The remaining amount of net charge-offs on commercial business loans during the fourth quarter consisted of one Corporate Finance relationship for $1.1 million and smaller Business Banking relationships totaling $883,000. As of December 31, 2016, commercial business loan relationships that have experienced charge-offs had a remaining balance of $21.4 million.

Commercial business loans on nonaccrual totaled $82.0 million as of December 31, 2016 and were mainly comprised of three Technology Banking relationships totaling $31.8 million and two Corporate Finance division relationships totaling $27.5 million. Total criticized commercial business loans as of December 31, 2016 were $264.7 million, or 15% of total commercial business loans, compared to $113.3 million, or 6%, as of September 30, 2016. Commercial business loans downgraded to criticized during the fourth quarter were primarily concentrated in the Technology Banking, Corporate Finance and Healthcare Provider divisions. As of December 31, 2016, we had specific reserves of $23.8 million on commercial business loans compared to $1.7 million of specific reserves as of September 30, 2016. Increases in criticized loans and related specific reserves were driven by deterioration during the current quarter in the underlying financial performance of the individual businesses or changes in financial circumstances during the quarter.

As of December 31, 2016, the total allowance recorded for commercial business loans, which includes general and specific reserves, equaled $91.2 million, or 5.2% of total commercial business loans, compared to $41.5 million, or 2.3% of total commercial business loans, as of September 30, 2016. At December 31, 2016, there were specific reserves of $23.8 million for commercial business loans, comprised of $10.1 million for Corporate Finance loans, $6.0 million for Technology Banking loans and $7.7 million for other Commercial and Business Banking loans.

As we discussed in prior quarters, we have de-emphasized our Technology Banking division, as evidenced by the $41.6 million in full loan payoffs in the Technology Banking loan portfolio during the fourth quarter of 2016. During the fourth quarter of 2016, we also took steps to de-emphasize Healthcare Practice lending. Opus continues to originate Healthcare Provider loans to hospitals, skilled nursing facilities, outpatient centers, and other corporate providers of healthcare and the ancillary businesses that support them.

Commercial Real Estate Loans

Net charge-offs in Opus’ $1.4 billion commercial real estate loan portfolio were $189,000 in the fourth quarter of 2016, compared to $2.9 million in the third quarter of 2016. Commercial real estate loans on nonaccrual totaled $12.3 million, or 0.9% of total commercial real estate loans as of December 31, 2016 compared to $7.2 million, or 0.5%, as of September 30, 2016. Total criticized commercial real estate loans were $36.8 million as of December 31, 2016 compared to $26.6 million as of September 30, 2016. The increase in criticized loans was driven by one loan downgrade in the Healthcare Provider portfolio. As of December 31, 2016, commercial real estate loans had no specific reserves and a total allowance of $9.6 million, or 0.7% of total commercial real estate loans, compared to zero specific reserves and a total allowance of $9.0 million, or 0.7% of total commercial real estate loans, as of September 30, 2016.

Multifamily Loans

Opus’ $2.3 billion multifamily loan portfolio has experienced zero charge-offs since our inception in 2010. There were no multifamily loans on nonaccrual status as of December 31, 2016 and no delinquencies. There were no specific reserves for loans within the multifamily portfolio at December 31, 2016 and total criticized multifamily loans were $10.9 million, or 0.5% of total multifamily loans as of December 31, 2016, compared to $2.1 million, or 0.1% of total multifamily loans, as of September 30, 2016. As of December 31, 2016, our multifamily portfolio had a total allowance of $8.9 million, or 0.4% of total multifamily loans, as compared to $9.0 million, or 0.3%, in the prior quarter.

Capital

Our capital ratios continue to exceed bank regulatory requirements for a well-capitalized institution. As of December 31, 2016, our Tier 1 leverage ratio was 7.54%, Common Equity Tier 1 ratio was 8.78%, and total risk-based capital ratio was 12.11%, compared to 8.11%, 9.15%, and 12.22% for the third quarter of 2016, respectively. As of December 31, 2015, our Tier 1 leverage, Common Equity Tier 1 ratio and total risk-based capital ratios were 9.59%, 10.81%, and 11.65%, respectively. Stockholders’ equity totaled $925.9 million as of December 31, 2016, a decrease of 2% from $943.9 million as of September 30, 2016 and an increase of 7% from $867.0 million as of December 31, 2015. Our tangible book value per as converted common share decreased to $15.84 as of December 31, 2016 from $16.42 as of September 30, 2016 and $18.28 as of December 31, 2015. Opus will not be paying a dividend in connection with the fourth quarter.

On January 29, 2017, Opus entered into purchase agreements with a limited number of institutional accredited investors, providing for the sale in a private placement of $53 million of its common stock at $18.50 per share, resulting in net proceeds of approximately $50 million. Closing of the transaction is subject to the receipt of a stock permit from the California Department of Business Oversight - Division of Financial Institutions and the satisfaction of customary closing conditions. Pro forma for the private placement, our December 31, 2016 Tier 1 leverage ratio, Common Equity Tier 1 ratio, and total risk-based capital ratios are 8.16%, 9.57%, and 12.89%, respectively. Pro forma tangible book value per as converted common share is $15.97 as of December 31, 2016.

Conference Call and Webcast Details Date: Monday, January 30, 2017 Time: 8:00 a.m. PT (11:00 a.m. ET)

Phone Number (855) 265-3237 Conference Id: 61960903 Webcast URL: http://investor.opusbank.com/event

Analysts, investors, and the general public may listen to the Bank’s discussion of its fourth quarter and annual performance and participate in the question/answer session by using the phone number listed above or through a live webcast of the conference available through a link on the investor relations page of Opus’ website at: http://investor.opusbank.com/event . The webcast will include a slide presentation, enabling conference participants to experience the discussion with greater impact. It is recommended that participants dial into the conference call or log into the webcast approximately 10 minutes prior to the call.

Replay Information: for those who are unable to participate in the call, an archive of the call will be available beginning approximately 2 hours following the end of the call. To listen to the call replay, dial (855) 859-2056, or for international callers dial (404) 537-3406, the access code for either replay number is 61960903. The call replay will be available until March 1, 2017.

About Opus Bank

Opus Bank is an FDIC insured California-chartered commercial bank with $7.9 billion of total assets, $5.7 billion of total loans, and $6.7 billion in total deposits as of December 31, 2016. Opus Bank provides superior ideas and solutions, and banking products to its clients through its Retail Bank, Commercial Bank, Merchant Bank and Correspondent Bank. Opus Bank offers a suite of treasury and cash management and depository solutions and a wide range of loan products, including commercial, healthcare, media and entertainment, corporate finance, multifamily residential, commercial real estate and structured finance, and is an SBA preferred lender. Opus Bank offers commercial escrow services and facilitates 1031 Exchange transactions through its Escrow and Exchange divisions. Opus Bank provides clients with financial and advisory services related to raising equity capital, targeted acquisition and divestiture strategies, general mergers and acquisitions, debt and equity financing, balance sheet restructuring, valuation, strategy and performance improvement through its Merchant Banking Division and its broker-dealer subsidiary, Opus Financial Partners, LLC. Opus Bank’s subsidiary, PENSCO Trust Company, is a leading tech-enabled alternative asset IRA custodian with over $12 billion of custodial assets and approximately 48,000 client accounts, which are comprised of self-directed investors, financial institutions, capital raisers and financial advisors. Opus Bank operates 56 banking offices, including 32 in California, 21 in the Seattle/Puget Sound region in Washington, two in the Phoenix metropolitan area of Arizona and one in Portland, Oregon. Opus Bank is an Equal Housing Lender. For additional information about Opus Bank, please visit our website at: www.opusbank.com

Forward-Looking Statements

This release and the aforementioned conference call and webcast may include forward-looking statements related to the Opus’ plans, beliefs and goals, which involve certain risks, and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: competitive pressure in the banking industry; changes in the interest rate environment; the health of the economy, either nationally or regionally; the deterioration of credit quality, which would cause an increase in the provision for possible loan and lease losses; changes in the regulatory environment; changes in business conditions, particularly in California real estate; volatility of rate sensitive deposits; asset/liability matching risks and liquidity risks; and changes in the securities markets. For a discussion of these and other risks and uncertainties, see Opus’ filings with the Federal Deposit Insurance Corporation, including, but not limited to, the risk factors in Opus’ annual report on Form 10-K. These filings are available on the Investor Relations page of Opus’ website at: investor.opusbank.com.

Opus undertakes no obligation to revise or publicly release any revision to these forward-looking statements.

 
Consolidated Statement of Operations
(unaudited)                                                                                                                                          Three Months Ended                                                                                                                                             Year Ended
                                                                                 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------------------------------------
($ in thousands, except per share amounts)                                                             December 31,                                               September 30,                                    December 31,                                                       December 31,                                     December 31,
                                                                                                           2016                                                                          2016                                                                2015                                                               2016                                                                2015
  
-----------------------------------------------------------                      ------------------------------------------------------                        ------------------------------------------------------                        ----------------------------------                       ------------------------------------------------------                        ----------------------------------
Interest income:
   Loans                                                                                            $         67,192                                                              $         68,191                                                              $         62,532                                         $        268,752                                                              $        230,000
   Investment securities                                                                                       1,194                                                                           939                                                                           552                                                    3,178                                                                         2,345
   Due from banks                                                                             946                                     641                                     333                                 2,900                                   1,066
                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- --------------                      -------------------- -------------- --------------------                      -------------------- --------------
      Total interest income                                                                69,332                                  69,771                                  63,417                               274,830                                 233,411
                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- --------------                      -------------------- -------------- --------------------                      -------------------- --------------
Interest expense:
   Deposits                                                                                                    7,090                                                                         6,917                                                                         6,136                                                   26,836                                                                        22,755
   Federal Home Loan Bank advances                                                                               160                                                                           232                                                                           557                                                    1,603                                                                         2,331
   Subordinated debt                                                                        1,922                                   1,923                          --                                 3,886                          --
                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- --------------                      -------------------- -------------- --------------------                      -------------------- --------------
      Total interest expense                                                                9,172                                   9,072                                   6,693                                32,325                                  25,086
                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- --------------                      -------------------- -------------- --------------------                      -------------------- --------------
      Net interest income                                                                                     60,160                                                                        60,699                                                                        56,724                                                  242,505                                                                       208,325
   Provision for loan losses                                                               69,459                                  40,446                                   8,014                               125,778                                  24,967
                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- --------------                      -------------------- -------------- --------------------                      -------------------- --------------
                                                                                           (9,299 )                                                   20,253                                  48,710                               116,727                                 183,358
 Net interest income (loss) after provision for loan losses
                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- --------------                      -------------------- -------------- --------------------                      -------------------- --------------
Noninterest income:
                                                                                                               1,951                                                                         2,025                                                                         1,694                                                    7,843                                                                         6,580
   Fees and service charges on deposit accounts
   Escrow and exchange fees                                                                                    1,737                                                                         1,868                                                                         1,777                                                    7,214                                                                         5,074
   Trust administrative fees                                                                                   6,622                                                                         7,285                                                                --                                                   20,171                                                                --
   Gain on sale of loans                                                                                      15,187                                                                           336                                                                           399                                                   15,836                                                                           399
   Gain (loss) on sale of assets                                                                                  (2 )                                                                         219                                                                            14                                                      195                                                                           120
   Gain (loss) from real estate owned, net                                                                       (27 )                                                                          15                                                                           153                                                      (65 )                                                                          28
   Gain (loss) on sale of securities                                                                  --                                                                --                                                                --                                           --                                                                           800
   Bank-owned life insurance, net                                                                                850                                                                           897                                                                           923                                                    3,494                                                                         3,197
   Other income                                                                               765                                   3,605                                   1,048                                 7,173                                   8,471
                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- --------------                      -------------------- -------------- --------------------                      -------------------- --------------
      Total noninterest income                                                             27,083                                  16,250                                   6,008                                61,861                                  24,669
                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- --------------                      -------------------- -------------- --------------------                      -------------------- --------------
Noninterest expense:
   Compensation and benefits                                                                                  26,068                                                                        23,016                                                                        14,979                                                   88,987                                                                        60,831
   Professional services                                                                                       6,982                                                                         2,937                                                                         1,926                                                   14,816                                                                         7,246
   Occupancy expense                                                                                           3,617                                                                         3,557                                                                         3,011                                                   13,609                                                                        11,768
   Depreciation and amortization                                                                               1,867                                                                         2,021                                                                         1,484                                                    7,169                                                                         5,608
                                                                                                               1,799                                                                         1,059                                                                           975                                                    5,165                                                                         3,490
   Deposit insurance and regulatory assessments
   Insurance expense                                                                                             357                                                                           354                                                                           317                                                    1,442                                                                         1,229
   Data processing                                                                                               882                                                                           830                                                                           842                                                    3,381                                                                         3,283
   Software licenses and maintenance                                                                             975                                                                         1,053                                                                           579                                                    3,462                                                                         2,092
   Office services                                                                                             2,114                                                                         1,973                                                                           985                                                    6,900                                                                         4,008
   Amortization of other intangible assets                                                                     1,479                                                                         1,479                                                                           627                                                    4,781                                                                         2,508
   Advertising and marketing                                                                                     727                                                                           555                                                                           291                                                    1,877                                                                         1,166
   Litigation expense (recovery)                                                                                 121                                                                           444                                                                            18                                                      246                                                                           293
   Other expenses                                                                           4,172                                   3,051                                   2,000                                10,912                                   6,727
                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- --------------                      -------------------- -------------- --------------------                      -------------------- --------------
      Total noninterest expense                                                            51,160                                  42,329                                  28,034                               162,747                                 110,249
                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- --------------                      -------------------- -------------- --------------------                      -------------------- --------------
                                                                                                             (33,376 )                                                                      (5,826 )                                                                      26,684                                                   15,841                                                                        97,778
      Income (loss) before income tax expense (benefit)
Income tax expense (benefit)                                                              (14,422 )                                                   (2,805 )                                                   10,012                                 4,387                                  37,835
                                                                                 -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- --------------                      -------------------- -------------- --------------------                      -------------------- --------------
      Net income (loss)                                                                             $        (18,954 )                                                            $         (3,021 )                                                            $         16,672                                         $         11,454                                           $         59,943
                                                                                 ==================== ============== ====================                      ==================== ============== ====================                      ==================== ==============                      ==================== ============== ====================                      ==================== ==============
Basic earnings (loss) per common share                                                              $          (0.55 )                                                            $          (0.09 )                                                            $           0.51                                         $           0.34                                                              $           1.86
Diluted earnings (loss) per common share                                                                       (0.55 )                                                                       (0.09 )                                                                        0.50                                                     0.33                                                                          1.79
Weighted average shares - basic                                                                           34,285,683                                                                    34,274,756                                                                    30,429,049                                               33,781,354                                                                    29,003,588
Weighted average shares - diluted                                                                         34,285,683                                                                    34,274,756                                                                    33,670,728                                               35,103,431                                                                    33,448,090
                                                                                                                                                                                                                                                                                                                                                                                     
 
Consolidated Balance Sheets
(unaudited)                                                                                                                                                                      As of
                                                                                                 -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     December 31,                                          September 30,                                           December 31,
($ in thousands, except share amounts)                                                                                   2016                                                                     2016                                                                       2015
---------------------------------------------------------------------------                      ----------------------------------------------------                     ----------------------------------------------------                     ---------------------------------------------------------
                                                                                                  
Assets
Cash and due from banks                                                                                             $    47,986                                                              $    49,753                                                              $         33,419
Due from banks - interest-bearing                                                                          887,137                                                                  568,714                                                                       451,458
Investment securities available-for-sale, at fair value                                                                 666,589                                                                  156,813                                                                       151,761
Loans held-for-investment                                                                                             5,669,067                                                                6,290,107                                                                     5,495,804
   Less allowance for loan losses                                                                   (111,410 )                                             (61,103 )                                                  (44,147 )
                                                                                                 -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- -------------- --------------------
      Loans held-for-investment, net                                                                                  5,557,657                                                                6,229,004                                                                     5,451,657
Real estate owned                                                                                                           428                                                                      558                                                                         1,251
Premises and equipment, net                                                                                              33,978                                                                   37,937                                                                        31,008
Goodwill                                                                                                                331,832                                                                  328,285                                                                       262,115
Other intangible assets, net                                                                                             50,718                                                                   52,198                                                                        10,099
Deferred tax assets, net                                                                                                 55,954                                                                   32,652                                                                        48,813
Cash surrender value of bank owned life insurance, net                                                                  120,969                                                                  120,119                                                                       116,760
Accrued interest receivable                                                                                              20,814                                                                   21,848                                                                        18,056
Federal Home Loan Bank stock                                                                                             17,250                                                                   17,250                                                                        17,250
Other assets                                                                                          91,251                             94,078                                  56,186  
                                                                                                 -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- -------------- --------------------
      Total assets                                                                                                  $ 7,882,563                                           $ 7,709,209                                           $      6,649,833  
                                                                                                 ==================== ========= ====================                      ==================== ========= ====================                      ==================== ============== ====================
Liabilities and Stockholders’ Equity
Deposits:
   Noninterest-bearing demand                                                                                       $   899,159                                                              $   931,063                                                              $        975,588
   Interest-bearing demand                                                                                            2,505,468                                                                2,185,216                                                                     1,161,272
   Money market and savings                                                                                           2,761,808                                                                2,838,433                                                                     2,598,852
   Time deposits                                                                                     515,326                            544,989                                 571,336  
                                                                                                 -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- -------------- --------------------
      Total deposits                                                                                                  6,681,761                                                                6,499,701                                                                     5,307,048
Federal Home Loan Bank advances                                                                                          65,000                                                                   65,000                                                                       420,000
Subordinated debt, net                                                                                                  132,479                                                                  132,391                                                                --
Accrued interest payable                                                                                                  4,108                                                                    2,157                                                                           332
Other liabilities                                                                                     73,280                             66,102                                  55,415  
                                                                                                 -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- -------------- --------------------
      Total liabilities                                                                            6,956,628                          6,765,351                               5,782,795  
                                                                                                 -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- -------------- --------------------
Stockholders’ equity:
   Preferred stock:
      Authorized 200,000,000 shares; issued 612 and 612 and 612 shares,                                                     581                                                                      581                                                                           581
      respectively
   Common stock, no par value per share:
      Authorized 200,000,000 shares; issued 34,565,063 and 34,551,270 and                                               678,291                                                                  678,291                                                                       621,677
      32,717,359 shares, respectively
   Additional paid-in capital                                                                                            56,582                                                                   54,349                                                                        46,371
   Retained earnings                                                                                                    197,363                                                                  216,316                                                                       203,823
   Treasury stock, at cost; 287,942 and 273,236 and 217,168 shares,                                                      (7,509 )                                                                 (7,001 )                                                                      (5,189 )
   respectively
   Accumulated other comprehensive income (loss)                                                         627                              1,322                                    (225 )
                                                                                                 -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- -------------- --------------------
      Total stockholders’ equity                                          925,935                            943,858                                 867,038  
                                                                                                 -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- -------------- --------------------
      Total liabilities and stockholders’ equity                                         $ 7,882,563                                           $ 7,709,209                                           $      6,649,833  
                                                                                                 ==================== ========= ====================                      ==================== ========= ====================                      ==================== ============== ====================
                                                                                                                                                                                                                                                                                        
Selected Financial Data
                                                                 As of or for the three months ended                                        As of or for the year ended
                                                            -----------------------------------------------------------------------------------                     -------------------------------------------------------
                                                             December 31,    September 30,  December 31,                      December 31,       December 31,
(unaudited)                                                      2016                               2016                              2015                              2016                                  2015
--------------------------------------                      --------------                     --------------                     -------------                     -------------                     ---------------------
Return on average assets                                     (0.97 )%                           (0.16 )%                            1.03 %                            0.16 %                                1.03 %
Return on average stockholders’ equity                       (7.87 )                            (1.25 )                             7.66                              1.22                                  7.15
Return on average tangible equity (1)                       (13.03 )                            (2.07 )                            11.19                              1.95                                 10.50
Efficiency ratio (2)                                         58.64                              55.01                              44.69                             53.37                                 47.32
Noninterest expense to average assets                         2.61                               2.24                               1.74                              2.22                                  1.89
Yield on interest-earning assets                              3.87                               4.04                               4.31                              4.10                                  4.42
Cost of deposits (3)                                          0.43                               0.44                               0.47                              0.45                                  0.49
Cost of funds (4)                                             0.55                               0.57                               0.48                              0.51                                  0.51
Net interest margin                                           3.36                               3.52                               3.86                              3.62                                  3.95
Loans to deposits                                            84.84 %                            96.78 %                           103.56 %                           84.84 %                              103.56 %
                                                                                                                                                                                                       

(1) See computation in "Non-GAAP Financial Measures" section.

(2) The efficiency ratio is calculated by dividing noninterest expense by the sum of net interest income before provision for loan losses and noninterest income.

(3) Calculated as interest expense on deposits divided by total average deposits.

(4) Calculated as total interest expense divided by average total deposits and FHLB advances.

                                 
Capital Ratios                                                                                  As of
                                                     ------------------------------------------------------------------------------------------
                                                     December 31,    September 30,      December 31,
(unaudited)                                              2016                               2016                                  2015
-------------------------------                      -------------                     --------------                     ---------------------
Tier 1 leverage ratio                                  7.54 %                            8.11 %                                 9.59 %
Tier 1 risk-based capital ratio                        8.78                              9.15                                  10.81
Total risk-based capital ratio                        12.11                             12.22                                  11.65
Common Equity Tier 1 ratio                             8.78                              9.15                                  10.81
                                                                                                                           
 
Loan Fundings
(unaudited)                                                                                             Three Months Ended                                                                                                             Year Ended
                                                         ------------------------------------------------------------------------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------------
                                                                     December 31,                          September 30,                         December 31,                                             December 31,                          December 31,
($ in thousands)                                                         2016                                                     2016                                                     2015                                                     2016                                                     2015
-----------------------------------                      ------------------------------------                     ------------------------------------                     ------------------------------------                     ------------------------------------                     ------------------------------------
Loans funded:
Real estate mortgage loans:
   Single-family residential                                                $ --                                         $ --                                         $ --                                         $ --                                         $ --
   Multifamily residential                                                           185,244                                                  238,363                                                  279,088                                                  928,687                                                  906,255
   Commercial real estate                                                             83,813                                                   76,833                                                  146,371                                                  343,888                                                  430,945
Construction and land loans                                                           17,069                                                   15,482                                                   16,684                                                   59,443                                                   40,826
Commercial business loans                                                            143,742                                                  301,669                                                  318,927                                                  938,314                                                1,031,180
Small Business Administration loans                                           --                                                    1,783                                                    1,980                                                    5,997                                                    4,413
Consumer and other loans                                   --                        --                        --                        --                        --
                                                         -------------------- --------------                      -------------------- --------------                      -------------------- --------------                      -------------------- --------------                      -------------------- --------------
      Total loan fundings                                                   $        429,868                                         $        634,130                                         $        763,050                                         $      2,276,329                                         $      2,413,619
                                                         ==================== ==============                      ==================== ==============                      ==================== ==============                      ==================== ==============                      ==================== ==============
                                                                                                                                                                                                                                                                                              
                                      
Composition of Loan Portfolio                                                                                                                                                                         As of
                                                          ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           December 31,                                                                     September 30,                                                                       December 31,
(unaudited)                                                                                    2016                                                                                                2016                                                                                                   2015
                                                          -------------------------------------------------------------------------------                     -------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------
                                                                                                      % of                                                                             % of                                                                                % of
                                                                                                                         Total                                                                                               Total                                                                                                  Total
($ in thousands)                                                      Amount                                             loans                                            Amount                                             loans                                            Amount                                                loans
------------------------------------                      -------------------------------                     ---------------------------                     -------------------------------                     ---------------------------                     -------------------------------                     --------------------------------
Originated loans held-for-investment
Real estate mortgage loans:
   Single-family residential                                                 $    79,065                        1.4 %                                                            $    85,970                        1.4 %                                                            $   100,988                             1.8 %
   Multifamily residential                                                     2,241,095                       39.5                                                                2,780,139                       44.2                                                                2,584,667                            47.0
   Commercial real estate                                                      1,311,064                       23.1                                                                1,301,001                       20.7                                                                1,113,250                            20.3
Construction and land loans                                                      110,005                        1.9                                                                   93,070                        1.5                                                                   56,095                             1.0
Commercial business loans                                                      1,732,348                       30.6                                                                1,824,645                       29.0                                                                1,348,666                            24.5
Small Business Administration loans                                               18,257                        0.3                                                                   18,609                        0.3                                                                   23,347                             0.5
Consumer and other loans                                          338                        0.0                                352                        0.0                                397                             0.0  
                                                          -------------------- ---------                      ----- --------------------                      -------------------- ---------                      ----- --------------------                      -------------------- ---------                      ---------- --------------------
      Total originated loans                                                   5,492,172                       96.9                                                                6,103,786                       97.0                                                                5,227,410                            95.1
                                                                                                                                                                                                                                                                                                                       
Acquired loans held-for-investment
Real estate mortgage loans:
   Single-family residential                                                      34,713                        0.6                                                                   37,583                        0.6                                                                   50,016                             0.9
   Multifamily residential                                                        61,882                        1.1                                                                   64,439                        1.0                                                                   76,498                             1.4
   Commercial real estate                                                         42,579                        0.8                                                                   46,365                        0.7                                                                   63,520                             1.2
Construction and land loans                                                        2,001                        0.0                                                                    2,017                        0.0                                                                    2,061                             0.0
Commercial business loans                                                         15,821                        0.3                                                                   14,991                        0.2                                                                   19,898                             0.4
Small Business Administration loans                                               13,159                        0.2                                                                   13,616                        0.2                                                                   48,781                             0.9
Consumer and other loans                                        6,740                        0.1                              7,310                        0.1                              7,620                             0.1  
                                                          -------------------- ---------                      ----- --------------------                      -------------------- ---------                      ----- --------------------                      -------------------- ---------                      ---------- --------------------
      Total acquired loans                                    176,895                        3.1                            186,321                        3.0                            268,394                             4.9  
                                                          -------------------- ---------                      ----- --------------------                      -------------------- ---------                      ----- --------------------                      -------------------- ---------                      ---------- --------------------
Total gross loans                                                            $ 5,669,067                      100.0 %                                                            $ 6,290,107                      100.0 %                                                            $ 5,495,804                           100.0 %
                                                          ==================== =========                      ===== ====================                      ==================== =========                      ===== ====================                      ==================== =========                      ========== ====================
                                                                                                                                                                                                                                                                                                                       
                          
Composition of Deposits                                                                                                                                                                   As of
                                              ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               December 31,                                                                     September 30,                                                                       December 31,
(unaudited)                                                                        2016                                                                                                2016                                                                                                   2015
                                              -------------------------------------------------------------------------------                     -------------------------------------------------------------------------------                     ------------------------------------------------------------------------------------
                                                                                          % of                                                                             % of                                                                                % of
                                                                                                             Total                                                                                               Total                                                                                                  Total
($ in thousands)                                          Amount                                           deposits                                           Amount                                           deposits                                           Amount                                              deposits
------------------------                      -------------------------------                     ---------------------------                     -------------------------------                     ---------------------------                     -------------------------------                     --------------------------------
                                                                                                                                                                                                                                                                                                           
Noninterest bearing                                              $   899,159                       13.5 %                                                            $   931,063                       14.3 %                                                            $   975,588                            18.4 %
Interest bearing demand                                            2,505,468                       37.5                                                                2,185,216                       33.6                                                                1,161,272                            21.9
Money market and savings                                           2,761,808                       41.3                                                                2,838,433                       43.7                                                                2,598,852                            49.0
Time deposits                                     515,326                        7.7                            544,989                        8.4                            571,336                            10.7  
                                              -------------------- ---------                      ----- --------------------                      -------------------- ---------                      ----- --------------------                      -------------------- ---------                      ---------- --------------------
      Total deposits                                             $ 6,681,761                      100.0 %                                                            $ 6,499,701                      100.0 %                                                            $ 5,307,048                           100.0 %
                                              -------------------- ---------                      ----- --------------------                      -------------------- ---------                      ----- --------------------                      -------------------- ---------                      ---------- --------------------
                                                                                                                                                                                                                                                                                                                      
 
Consolidated average balance sheet, interest, yield and rates
                                                                                                                                                                                                                                                                                                                                      
                                                                                      --------------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------                     -------------------------------------------------------- -------------------------------------------------------- --------------------------------
                                                                                                                                        For the three months ended                                                                                                       For the three months ended                                                                                                                                    For the three months ended
                                                                                                                                               December 31,                                                                                                                     September 30,                                                                                                                                                 December 31,
                                                                                      --------------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------                     --------------------------------------------------------------------------------------------------------------------------------------------------
(unaudited)                                                                                                                                        2016                                                                                                                                                2016                                                                                                                                                          2015
                                                                                      -------------------------------------------------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------------------------------------------                     --------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Average                                                      Yields/                                          Average                                                      Yields/                                             Average                                                                   Yields/
($ in thousands)                                                                                  Balance                                           Interest                                          Rates                                           Balance                                           Interest                                          Rates                                              Balance                                                 Interest                                                 Rates
----------------------------------------------------------------                      -------------------------------                     ----------------------------                     --------------------------                     -------------------------------                     ----------------------------                     --------------------------                     ------------------------------------                     ------------------------------------                     --------------------------------
Assets:
Interest-earning assets:
   Due from banks                                                                                        $   690,414                                         $    946                      0.55 %                                                            $   498,881                                         $    641                      0.51 %                                                            $        458,586                                         $            333                            0.29 %
   Investment securities                                                                                     203,139                                            1,194                      2.34                                                                  157,334                                              939                      2.37                                                                       202,828                                                      552                            1.08
   Acquired loans                                                                                            182,925                                            3,019                      6.57                                                                  197,904                                            4,155                      8.35                                                                       299,382                                                   10,247                           13.58
   Originated Loans                                                                     6,051,628                        64,173                      4.22                          6,014,394                        64,036                      4.24                               4,874,189                                52,285                            4.26  
                                                                                      -------------------- ---------                      -------------------- ------                      ---- --------------------                      -------------------- ---------                      -------------------- ------                      ---- --------------------                      -------------------- --------------                      -------------------- --------------                      ---------- --------------------
      Total loans                                                                                        $ 6,234,553                                         $ 67,192                      4.29                                           $ 6,212,298                                         $ 68,191   4.37                                           $      5,173,571                                         $         62,532         4.80  
                                                                                      -------------------- ---------                      -------------------- ------                      ---- --------------------                      -------------------- ---------                      -------------------- ------ -------------------- ---- --------------------                      -------------------- --------------                      -------------------- -------------- -------------------- ---------- --------------------
      Total interest-earning assets                                                                        7,128,106                                         $ 69,332                      3.87                                                                6,868,513                                         $ 69,771                      4.04                                                                     5,834,985                                         $         63,417                            4.31
Noninterest-earning assets                                                                681,694                                                                                                                          661,332                                                                                                                               556,088
                                                                                      -------------------- ---------                                                                                                                      -------------------- ---------                                                                                                                      -------------------- --------------
      Total assets                                                                                       $ 7,809,800                                                                                                                                         $ 7,529,845                                                                                                                                         $      6,391,073
                                                                                      ==================== =========                                                                                                                      ==================== =========                                                                                                                      ==================== ==============
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
Liabilities and stockholders’ equity:
Interest-bearing deposits
   Interest-bearing demand                                                                               $ 2,380,363                                         $  1,010                      0.17 %                                                            $ 2,067,238                                         $    810                      0.16 %                                                            $      1,042,901                                         $            602                            0.23 %
   Money market and savings                                                                                2,773,442                                            4,963                      0.71                                                                2,739,540                                            4,936                      0.72                                                                     2,600,594                                                    4,346                            0.66
   Time deposits                                                                          525,230                         1,117                      0.85                            547,603                         1,171                      0.85                                 581,747                                 1,188                            0.81  
                                                                                      -------------------- ---------                      -------------------- ------                      ---- --------------------                      -------------------- ---------                      -------------------- ------                      ---- --------------------                      -------------------- --------------                      -------------------- --------------                      ---------- --------------------
      Total interest-bearing                                                                             $ 5,679,035                                         $  7,090                      0.50                                                              $ 5,354,381                                         $  6,917                      0.51                                                              $      4,225,242                                         $          6,136                            0.58
      deposits
Subordinated debt                                                                                            132,437                                            1,922                      5.77                                                                  132,350                                            1,923                      5.78                                                                --                                           --                            0.00
FHLB advances                                                                              65,033                           160                      0.98                            127,011                           232                      0.73                                 337,772                                   557                            0.65  
                                                                                      -------------------- ---------                      -------------------- ------                      ---- --------------------                      -------------------- ---------                      -------------------- ------                      ---- --------------------                      -------------------- --------------                      -------------------- --------------                      ---------- --------------------
      Total interest-bearing                                                                             $ 5,876,505                                         $  9,172                      0.62                                                              $ 5,613,742                                         $  9,072                      0.64                                                              $      4,563,014                                         $          6,693                            0.58
      liabilities
Noninterest-bearing deposits                                                                                 910,158                                                                                                                                             889,051                                                                                                                                                  915,233
Other liabilities                                                                          64,441                                                                                                                           65,238                                                                                                                                49,294
                                                                                      -------------------- ---------                                                                                                                      -------------------- ---------                                                                                                                      -------------------- --------------
      Total liabilities                                                                                  $ 6,851,104                                                                                                                                         $ 6,568,031                                                                                                                                         $      5,527,541
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
Total stockholders’ equity                                                    $   958,696                                                                                                                                         $   961,814                                                                                                                                         $        863,532
                                                                                      -------------------- ---------                                                                                                                      -------------------- ---------                                                                                                                      -------------------- --------------
   Total liabilities and                                                                                 $ 7,809,800                                                                                                                                         $ 7,529,845                                                                                                                                         $      6,391,073
   stockholders’ equity
                                                                                      ==================== =========                                                                                                                      ==================== =========                                                                                                                      ==================== ==============
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
Net interest income                                                                                                                                          $ 60,160                                                                                                                                            $ 60,699                                                                                                                                                 $         56,724
                                                                                                                                          ==================== ======                                                                                                                         ==================== ======                                                                                                                              ==================== ==============
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
Net interest spread (1)                                                                                                                                                                    3.25 %                                                                                                                                              3.40 %                                                                                                                                                                 3.73 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
Net interest margin (2)                                                                                                                                                                    3.36 %                                                                                                                                              3.52 %                                                                                                                                                                 3.86 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

(1) Net interest spread represents the average yield on interest-earning assets less the average rate on interest-bearing liabilities.

(2) Net interest margin is computed by dividing net interest income by total average interest-earning assets.

 
Consolidated average balance sheet, interest, yield and rates
                                                                            
                                                                                              ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                   For the year ended December 31,
                                                                                              ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(unaudited)                                                                                                                                                 2016                                                                                                                                        2015
                                                                                              ---------------------------------------------------------------------------------------------------------------------------------                     --------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                          Average                                                       Yields/                                              Average                                                                   Yields/
($ In thousands)                                                                                          Balance                                           Interest                                           Rates                                               Balance                                                 Interest                                                 Rates
------------------------------------------------------------------------                      -------------------------------                     -----------------------------                     ---------------------------                     ------------------------------------                     ------------------------------------                     --------------------------------
Assets:
Interest-earning assets
   Due from banks                                                                                                $   558,798                                         $   2,900                       0.52 %                                                            $        407,372                                         $          1,066                            0.26 %
   Investment securities                                                                                             164,748                                             3,178                       1.93                                                                       220,310                                                    2,345                            1.06
   Acquired loans                                                                                                    218,328                                            22,445                      10.28                                                                       372,711                                                   46,073                           12.36
   Originated Loans                                                                             5,764,763                        246,307                       4.27                               4,275,063                               183,927                            4.30  
                                                                                              -------------------- ---------                      -------------------- -------                      ----- --------------------                      -------------------- --------------                      -------------------- --------------                      ---------- --------------------
      Total loans                                                                                                $ 5,983,091                                         $ 268,752                       4.49                                           $      4,647,774                                         $        230,000         4.95  
                                                                                              -------------------- ---------                      -------------------- -------                      ----- --------------------                      -------------------- --------------                      -------------------- -------------- -------------------- ---------- --------------------
      Total interest-earning assets                                                                              $ 6,706,637                                         $ 274,830                       4.10                                                              $      5,275,456                                         $        233,411                            4.42
Noninterest-earning assets                                                                        635,215                                                                                                                                 556,899
                                                                                              -------------------- ---------                                                                                                                        -------------------- --------------
      Total assets                                                                                               $ 7,341,852                                                                                                                                           $      5,832,355
                                                                                              ==================== =========                                                                                                                        ==================== ==============
                                                                                                                                                                                                                                                                                                                                                                       
Liabilities and stockholders’ equity:
Interest-bearing deposits
   Interest-bearing demand                                                                                       $ 1,874,864                                         $   3,254                       0.17 %                                                            $        772,258                                         $          1,620                            0.21 %
   Money market and savings                                                                                        2,687,695                                            19,022                       0.71                                                                     2,424,336                                                   16,216                            0.67
   Time deposits                                                                                  546,454                          4,560                       0.83                                 600,902                                 4,919                            0.82  
                                                                                              -------------------- ---------                      -------------------- -------                      ----- --------------------                      -------------------- --------------                      -------------------- --------------                      ---------- --------------------
      Total interest bearing deposits                                                                            $ 5,109,013                                         $  26,836                       0.53                                                              $      3,797,496                                         $         22,755                            0.60
Subordinated debt                                                                                                     67,281                                             3,886                       5.78                                                                --                                           --                            0.00
FHLB advances                                                                                     269,872                          1,603                       0.59                                 356,827                                 2,331                            0.65  
                                                                                              -------------------- ---------                      -------------------- -------                      ----- --------------------                      -------------------- --------------                      -------------------- --------------                      ---------- --------------------
      Total interest-bearing liabilities                                                                         $ 5,446,166                                         $  32,325                       0.59                                                              $      4,154,323                                         $         25,086                            0.60
Noninterest-bearing deposits                                                                                         899,625                                                                                                                                                    800,895
Other liabilities                                                                                  61,020                                                                                                                                  38,256
                                                                                              -------------------- ---------                                                                                                                        -------------------- --------------
      Total liabilities                                                                                          $ 6,406,811                                                                                                                                           $      4,993,474
                                                                                                                                                                                                                                                                                                                                                                       
Total stockholders’ equity                                             935,041                                                                                                                                 838,881
                                                                                              -------------------- ---------                                                                                                                        -------------------- --------------
   Total liabilities and stockholders’ equity                                         $ 7,341,852                                                                                                                                           $      5,832,355
                                                                                              ==================== =========                                                                                                                        ==================== ==============
                                                                                                                                                                                                                                                                                                                                                                       
Net interest income                                                                                                                                                  $ 242,505                                                                                                                                                  $        208,325
                                                                                                                                                  ==================== =======                                                                                                                               ==================== ==============
                                                                                                                                                                                                                                                                                                                                                                       
Net interest spread (1)                                                                                                                                                                              3.51 %                                                                                                                                                                 3.82 %
                                                                                                                                                                                                                                                                                                                                                                       
Net interest margin (2)                                                                                                                                                                              3.62 %                                                                                                                                                                 3.95 %
                                                                                                                                                                                                                                                                                                                                                                       

(1) Net interest spread represents the average yield on interest-earning assets less the average rate on interest-bearing liabilities.

(2) Net interest margin is computed by dividing net interest income by total average interest-earning assets.

 
Allowance for Loan Losses
(unaudited)
                                                                                                                                                              Three Months Ended                                                                                                                                                                  Year Ended
                                                                                ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      December 31,                                               September 30,                                              December 31,                                                                  December 31,                                               December 31,
($ in thousands)                                                                                          2016                                                                          2016                                                                          2015                                                                          2016                                                                          2015
----------------------------------------------------------                      ---------------------------------------------------------                     ---------------------------------------------------------                     ---------------------------------------------------------                     ---------------------------------------------------------                     ---------------------------------------------------------
Allowance for loan losses - balance at beginning of period                                         $         61,103                                                              $         59,694                                                              $         36,809                                                              $         44,147                                                              $         23,043
   (Recapture) Provision for loan losses:
      Acquired loans                                                                                            (47 )                                                                        (173 )                                                                        (359 )                                                                        (517 )                                                                      (1,657 )
      Originated loans                                                                    69,506                                  40,619                                   8,373                                 126,295                                  26,624  
                                                                                -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
         Total provision for loan losses                                                                     69,459                                                                        40,446                                                                         8,014                                                                       125,778                                                                        24,967
   Charge-offs:
      Acquired loans                                                                                 --                                                                --                                                                                                                                              --                                                                --
      Originated loans                                                                   (19,770 )                                                  (39,075 )                                                     (756 )                                                  (59,209 )                                                   (3,943 )
                                                                                -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
        Total charge-offs                                                                                   (19,770 )                                                                     (39,075 )                                                                        (756 )                                                                     (59,209 )                                                                      (3,943 )
   Recoveries
      Acquired loans                                                                                 --                                                                --                                                                --                                                                --                                                                --
      Originated loans                                                                       618                                      38                                      80                                     694                                      80  
                                                                                -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
         Total recoveries                                                                    618                                      38                                      80                                     694                                      80  
                                                                                -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
      Total net charge-offs                                                              (19,152 )                                                  (39,037 )                                                     (676 )                                                  (58,515 )                                                   (3,863 )
                                                                                -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Allowance for loan losses - balance at end of period                                               $        111,410                                           $         61,103                                           $         44,147                                           $        111,410                                           $         44,147  
                                                                                ==================== ============== ====================                      ==================== ============== ====================                      ==================== ============== ====================                      ==================== ============== ====================                      ==================== ============== ====================
                                                                                                                                                                                                                                                                                                                                                                                                         
 
Asset Quality Information
(unaudited)                                                                                                                                                       As of
                                                                                        ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                           December 31,                                       September 30,                                      December 31,
($ in thousands)                                                                                               2016                                                                  2016                                                                  2015
------------------------------------------------------------------                      --------------------------------------------------                     -------------------------------------------------                     -------------------------------------------------
   Nonperforming assets
      Nonaccrual loans                                                                                     $  94,667                                                              $ 44,244                                                              $ 23,050
      Real estate owned                                                                       428                             558                           1,251  
                                                                                        -------------------- ------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------
         Total nonperforming assets                                                                           95,095                                                                44,802                                                                24,301
   Nonperforming assets to total assets                                                                         1.21 %                                                                0.58 %                                                                0.37 %
                                                                                                                                                                                                                                      
   Accruing loans 90 days or more past due                                                                 $     596                                                              $    720                                                              $    324
                                                                                                                                                                                                                                      
   Accruing troubled debt restructured loans                                                                     165                                                                   170                                                                   281
                                                                                                                                                                                                                                      
   Allowance for loan losses - Originated loans                                                              110,846                                                                60,492                                                              $ 43,066
   Allowance for loan losses - Acquired loans                                                 564                             611                           1,081  
                                                                                        -------------------- ------- --------------------                      -------------------- ------ --------------------                      -------------------- ------ --------------------
   Total allowance for loan losses                                                                           111,410                                                                61,103                                                                44,147
   Remaining acquisition discount on acquired loans                                                        $   3,728                                                              $  4,630                                                              $ 15,409
   Allowance for loan losses to non-accrual loans                                                              117.7 %                                                               138.1 %                                                               191.5 %
   Allowance for loan losses acquired loans to acquired loans                                                   0.32                                                                  0.33                                                                  0.40
   Allowance for loan losses originated loans to originated loans                                               2.02                                                                  0.99                                                                  0.82
   Total allowance for loan losses to total loans                                                               1.97                                                                  0.97                                                                  0.80
                                                                                                                2.38                                                                  2.74                                                                  5.81
   Allowance for loan losses and remaining acquisition discount on
   acquired loans to gross acquired loans (1)
                                                                                                                2.03                                                                  1.04                                                                  1.08
   Allowance for loan losses and remaining acquisition discount to
   total gross loans (1)
                                                                                                                                                                                                                                      

(1) Remaining acquisition discount is added back to acquired loans held for investment to calculate gross loans and added to allowance for loan losses to calculate the coverage ratios.

 
Risk Rating by Loan Product
(Unaudited)                                                                                                                                                                                                      
                                                                                                                        Special                                                                                                                                                         Nonaccrual                                                Total
($ in thousands)                                                      Pass                                              Mention                                            Classified                                            Total Loans                                               loans                                                allowance
                                                         -------------------------------                     ----------------------------                     ------------------------------------                     -------------------------------                     ------------------------------------                     --------------------------------
As of December 31, 2016
Real estate mortgage loans:
   Single-family residential                                                $   112,298                                         $  1,125                                         $            355                                         $   113,778                                         $ --                                         $        308
   Multifamily residential                                                    2,292,041                                              244                                                   10,692                                           2,302,977                                           --                                                8,881
   Commercial real estate                                                     1,316,879                                           18,580                                                   18,184                                           1,353,643                                                   12,284                                                9,643
Construction and land loans                                                     111,997                                                9                                           --                                             112,006                                           --                                                1,161
Commercial business loans                                                     1,483,510                                           63,205                                                  201,454                                           1,748,169                                                   81,964                                               91,188
Small Business Administration loans                                              28,692                                            1,168                                                    1,556                                              31,416                                           --                                                  200
Consumer and other loans                                       6,369                            40                                   669                            7,078                                   419                                29
                                                         -------------------- ---------                      -------------------- ------                      -------------------- --------------                      -------------------- ---------                      -------------------- --------------                      -------------------- ----------
      Total loans                                                           $ 5,351,786                                         $ 84,371                                         $        232,910                                         $ 5,669,067                                         $         94,667                                         $    111,410
                                                         ==================== =========                      ==================== ======                      ==================== ==============                      ==================== =========                      ==================== ==============                      ==================== ==========
                                                                                                                                                                                                                                                                                                                                     
As of September 30, 2016
Real estate mortgage loans:
   Single-family residential                                                $   121,795                                         $  1,128                                         $            630                                         $   123,553                                         $ --                                         $        333
   Multifamily residential                                                    2,842,445                                            2,133                                           --                                           2,844,578                                           --                                                9,025
   Commercial real estate                                                     1,320,721                                           15,690                                                   10,955                                           1,347,366                                                    7,175                                                9,043
Construction and land loans                                                      95,069                                               18                                           --                                              95,087                                           --                                                  944
Commercial business loans                                                     1,726,305                                           51,168                                                   62,163                                           1,839,636                                                   36,628                                               41,535
Small Business Administration loans                                              29,423                                            1,045                                                    1,757                                              32,225                                           --                                                  188
Consumer and other loans                                       6,930                            41                                   691                            7,662                                   441                                35
                                                         -------------------- ---------                      -------------------- ------                      -------------------- --------------                      -------------------- ---------                      -------------------- --------------                      -------------------- ----------
      Total loans                                                           $ 6,142,688                                         $ 71,223                                         $         76,196                                         $ 6,290,107                                         $         44,244                                         $     61,103
                                                         ==================== =========                      ==================== ======                      ==================== ==============                      ==================== =========                      ==================== ==============                      ==================== ==========
                                                                                                                                                                                                                                                                                                                                     
As of December 31, 2015
Real estate mortgage loans:
   Single-family residential                                                $   146,985                                         $  2,559                                         $          1,460                                         $   151,004                                         $ --                                         $        621
   Multifamily residential                                                    2,658,955                                            2,210                                           --                                           2,661,165                                           --                                                8,931
   Commercial real estate                                                     1,163,644                                            1,216                                                   11,910                                           1,176,770                                                   11,910                                                5,757
Construction and land loans                                                      58,112                                               44                                           --                                              58,156                                           --                                                  505
Commercial business loans                                                     1,304,686                                           14,203                                                   49,675                                           1,368,564                                                   10,487                                               28,060
Small Business Administration loans                                              61,912                                            3,144                                                    7,072                                              72,128                                           --                                                  171
Consumer and other loans                                       6,657                           207                                 1,153                            8,017                                   653                               102
                                                         -------------------- ---------                      -------------------- ------                      -------------------- --------------                      -------------------- ---------                      -------------------- --------------                      -------------------- ----------
      Total loans                                                           $ 5,400,951                                         $ 23,583                                         $         71,270                                         $ 5,495,804                                         $         23,050                                         $     44,147
                                                         ==================== =========                      ==================== ======                      ==================== ==============                      ==================== =========                      ==================== ==============                      ==================== ==========
                                                                                                                                                                                                                                                                                                                                     
 
Risk Rating by Lending Division
(Unaudited)                                                                                                                                                                                                               
                                                                                                                               Special                                                                                                                                                           Nonaccrual
($ in thousands)                                               Pass                                                            Mention                                                    Classified                                      Total Loans                                               loans
                                                  -------------------------------                     ---------------------------------------------------------    ---------------------------------------------------------    -------------------------------                     ------------------------------------
As of December 31, 2016
   Income Property Banking                                           $ 2,912,605                                         $            245                                             $          6,883                                             $ 2,919,733                                         $            704
   Commercial Banking                                                    585,985                                                   20,658                                                       37,474                                                 644,117                                                   15,993
   Structured Finance                                                    493,126                                                    3,603                                                       16,160                                                 512,889                                                   11,580
   Healthcare Provider                                                   389,722                                                   23,821                                                       41,034                                                 454,577                                           --
   Healthcare Practice                                                    54,856                                                      550                                                       12,375                                                  67,781                                                    6,191
   Corporate Finance                                                     377,312                                                    2,484                                                       56,349                                                 436,144                                                   27,492
   Institutional Syndication                                             273,901                                                     (374 )                    (1)                                (306 )                    (1)                        273,221                                           --
   Technology Banking                                                     99,341                                                   29,809                                                       61,319                                                 190,470                                                   31,781
   Other divisions (2)                                164,938                                 3,575                  1,622           170,135                                   926
                                                  -------------------- ---------                      -------------------- -------------- --------------------     -------------------- -------------- --------------------     -------------------- ---------                      -------------------- --------------
      Total loans                                                    $ 5,351,786                                         $         84,371                          $        232,910                          $ 5,669,067                                         $         94,667
                                                  ==================== =========                      ==================== ============== ====================     ==================== ============== ====================     ==================== =========                      ==================== ==============
                                                                                                                                                                                                                                                                                     
As of September 30, 2016
   Income Property Banking                                           $ 3,453,124                                         $          4,239                                             $ --                                             $ 3,457,363                                         $ --
   Commercial Banking                                                    628,858                                                   18,620                                                       10,047                                                 657,525                                                      770
   Structured Finance                                                    499,460                                                   11,602                                               --                                                 511,062                                           --
   Healthcare Provider                                                   362,980                                                    8,532                                               --                                                 371,512                                           --
   Healthcare Practice                                                   111,943                                                    4,320                                                       20,315                                                 136,578                                                   14,221
   Corporate Finance                                                     431,637                                                   12,616                                                        1,119                                                 445,372                                                    1,119
   Institutional Syndication                                             287,480                                                     (427 )                    (1)                                (338 )                    (1)                        286,715                                           --
   Technology Banking                                                    203,035                                                    7,325                                                       43,374                                                 253,734                                                   27,420
                                                      164,171                                 4,396                  1,679           170,246                                   714
   Other divisions (2)
                                                  -------------------- ---------                      -------------------- -------------- --------------------     -------------------- -------------- --------------------     -------------------- ---------                      -------------------- --------------
      Total loans                                                    $ 6,142,688                                         $         71,223                          $         76,196                          $ 6,290,107                                         $         44,244
                                                  ==================== =========                      ==================== ============== ====================     ==================== ============== ====================     ==================== =========                      ==================== ==============
                                                                                                                                                                                                                                                                                     
As of December 31, 2015
   Income Property Banking                                           $ 3,212,795                                         $          2,723                                             $ --                                             $ 3,215,518                                         $ --
   Commercial Banking                                                    494,759                                                   10,996                                                       23,198                                                 528,953                                                    8,210
   Structured Finance                                                    429,819                                                       44                                               --                                                 429,863                                           --
   Healthcare Provider                                                   284,607                                           --                                               --                                                 284,607                                           --
   Healthcare Practice                                                    57,281                                                    2,337                                                       15,598                                                  75,216                                                   11,850
                                                                         266,764                                                    3,703                                                        7,603                                                 278,070                                           --
   Corporate Finance
   Institutional Syndication                                             221,419                                           --                                               --                                                 221,419                                           --
   Technology Banking                                                    255,530                                           --                                                       21,742                                                 277,272                                                    1,901
   Other divisions (2)                                177,977                                 3,780                  3,129           184,886                                 1,089
                                                  -------------------- ---------                      -------------------- -------------- --------------------     -------------------- -------------- --------------------     -------------------- ---------                      -------------------- --------------
      Total loans                                                    $ 5,400,951                                         $         23,583                          $         71,270                          $ 5,495,804                                         $         23,050
                                                  ==================== =========                      ==================== ============== ====================     ==================== ============== ====================     ==================== =========                      ==================== ==============
                                                                                                                                                                                                                                                                                     
 

(1) Represents unamortized net deferred loan origination fees on syndicated lines of credit that have no outstanding principal balances at period end.

(2) Other divisions is comprised of single family residential loans, consumer and other loans, and specialty banking divisions with portfolio balances under $50 million, which includes Business Banking, Media and Entertainment Banking and Public Finance.

Non-GAAP Financial Measures

Our accounting and reporting policies conform to generally accepted accounting principles in the United States ("GAAP"). We believe that the presentation of certain non-GAAP financial measures assists investors in assessing our financial results. These non-GAAP measures include our return on average tangible equity, net interest income excluding acquisition accounting and tangible book value per as converted common share. These non-GAAP measures should be taken together with the corresponding GAAP measures and ratios and should not be considered a substitute of the GAAP measures and ratios.

The following tables present a reconciliation of the most comparable GAAP financial measures and ratios to the non-GAAP financial measures and ratios:

 
Non-GAAP return on average tangible equity
(unaudited)                                                                                                                         Three Months Ended                                                                                                                                                Year Ended
                                                                ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------------------------------------
                                                                                   December 31,                                        September 30,                                       December 31,                                                           December 31,                                        December 31,
($ in thousands)                                                                       2016                                                                   2016                                                                   2015                                                                   2016                                                                   2015
------------------------------------------                      --------------------------------------------------                     --------------------------------------------------                     --------------------------------------------------                     --------------------------------------------------                     --------------------------------------------------
Average tangible equity:
   Average stockholders’ equity                                                    $ 958,696                                                              $ 961,814                                                              $ 863,532                                                              $ 935,041                                                              $ 838,881
   Less:
      Average goodwill                                                               328,324                                                                328,285                                                                262,115                                                                313,546                                                                256,363
      Average other intangible assets                              51,463                           52,996                           10,401                           34,325                           11,362  
                                                                -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      -------------------- ------- --------------------
         Average tangible equity                                                     578,909                                                                580,533                                                                591,016                                                                587,170                                                                571,156
Net income (loss)                                                                    (18,954 )                                                               (3,021 )                                                               16,672                                                                 11,454                                                                 59,943
Return on average stockholders’ equity                                                 (7.87 )%                                                               (1.25 )%                                                                7.66 %                                                                 1.22 %                                                                 7.15 %
Non-GAAP return on average tangible equity                                            (13.03 )                                                                (2.07 )                                                                11.19                                                                   1.95                                                                  10.50
                                                                                                                                                                                                                                                                                                                                                             
 
Non-GAAP net interest margin
(unaudited)                                                                                                                                Three Months Ended                                                                                                                                                     Year Ended
                                                                    -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- -----------------------------------------------------------------------------------------------------------------------------
                                                                                        December 31,                                          September 30,                                         December 31,                                          December 31,                                          December 31,
($ in thousands)                                                                            2016                                                                     2016                                                                     2015                                                                     2016                                                                     2015
----------------------------------------------                      ----------------------------------------------------                     ----------------------------------------------------                     ----------------------------------------------------                     ----------------------------------------------------                     ----------------------------------------------------
Net interest income                                                                    $    60,160                                                              $    60,699                                                              $    56,724                                                              $   242,505                                                              $   208,325
Less: Accretion/amortization of                                            (717 )                                              (1,504 )                                              (6,225 )                                             (10,887 )                                             (25,906 )
acquisition discount/premium (1)
                                                                    -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
Non-GAAP net interest income                                                                59,443                                                                   59,195                                                                   50,499                                                                  231,618                                                                  182,419
                                                                                                                                                                                                                                                                                                                                                                         
Average interest earning assets                                                        $ 7,128,106                                                              $ 6,868,513                                                              $ 5,834,985                                                              $ 6,706,637                                                              $ 5,275,456
Add: Average unamortized acquisition discounts                            4,382                              5,831                             24,559                              8,522                             35,002  
                                                                    -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------                      -------------------- --------- --------------------
Non-GAAP average interest-earning assets                                                 7,132,488                                                                6,874,344                                                                5,859,544                                                                6,715,159                                                                5,310,458
                                                                                                                                                                                                                                                                                                                                                                         
Net interest margin impact                                                                    0.04 %                                                                   0.09 %                                                                   0.44 %                                                                   0.17 %                                                                   0.51 %
                                                                                                                                                                                                                                                                                                                                                                         

(1) Accretion income on acquired loans only includes interest income recognized in excess of what would be accrued under the contractual terms as a result of acquisition accounting and loan exits through full payoff or charge-off, foreclosure or sale.

 
Non-GAAP tangible book value per as converted common share
(unaudited)                                                                                                                              As of
                                                                                         ------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   December 31,                      September 30,                     December 31,
($ in thousands, except share amounts)                                                                 2016                                                 2016                                                 2015
-------------------------------------------------------------------                      --------------------------------                     --------------------------------                     --------------------------------
Tangible equity:
   Total stockholders’ equity                                                                               $    925,935                                         $    943,858                                         $    867,038
   Less:
      Goodwill                                                                                                   331,832                                              328,285                                              262,115
      Other intangible assets, net                                                             50,718                            52,198                            10,099
                                                                                         -------------------- ----------                      -------------------- ----------                      -------------------- ----------
      Tangible equity                                                                                            543,385                                              563,375                                              594,824
   Shares of common stock outstanding                                                                         34,277,121                                           34,278,034                                           32,500,191
                                                                                               30,600                            30,600                            30,600
   Shares of common stock to be issued upon conversion of preferred
   stock
                                                                                         -------------------- ----------                      -------------------- ----------                      -------------------- ----------
                                                                                           34,307,721                        34,308,634                        32,530,791
   Total as converted shares of common stock outstanding (1)
                                                                                         -------------------- ----------                      -------------------- ----------                      -------------------- ----------
   Book value per as converted common share                                                                        26.99                                                27.51                                                26.65
   Tangible book value per as converted common share                                                               15.84                                                16.42                                                18.28
                                                                                                                                                                                                    

(1) Common stock outstanding includes additional shares of common stock that would be issued upon conversion of all outstanding shares of preferred stock to common stock and excludes shares issuable upon exercise of warrants and options.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170130005378r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170130005378/en/

SOURCE: Opus Bank"> <Property FormalName="PrimaryTwitterHandle" Value="@OpusBank

Opus Bank 
Nicole M. Carrillo 
EVP, Chief Financial Officer 
949-251-8133 
or 
Mr. Brett G. Villaume 
SVP, Director of Investor Relations 
949-224-8866


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