—Stephen Gordon, Chief Executive, Opus Bank
Opus Bank has made its first acquisition outside Southern California as it seeks to become a big regional player along the West Coast.
Opus, which maintains its executive headquarters in Irvine, is set to acquire Washington’s Cascade Financial and Cascade Bank in a $21.7 million deal that includes 22 branches in the Seattle area and $1.5 billion in assets.
“It’s very consistent with the expansion plan,” Opus Chief Executive Stephen Gordon said. “We’re building a super regional bank in all metro areas up and down the West Coast.”
The deal calls for Opus to pay $16.2 million to retire Cascade’s $39 million in preferred stock and associated warrants under the Treasury Department’s Capital Purchase Program. Opus also will pay $5.5 million in cash to Cascade’s common stock holders.
Opus will get Cascade Bank’s $1.1 billion in deposits and $1 billion in loans.
The deal, expected to close around June, is subject to customary conditions, including the approval of Cascade’s shareholders and bank regulators.
Opus made a splash last year when Gordon, a veteran local banker, led a $460 million recapitalization of what had been known as Bay Cities National Bank.
Gordon laid out his plan to grow Opus, which has its on-the-books headquarters in Redondo Beach, to 75 branches across California and dozens of locations in Washington and Oregon.
Into Seattle
The deal for Cascade begins to make good on that ambition, providing Opus with entry into the Seattle area.
Small businesses—Opus’ target—account for about half of all employment in the area, Gordon said.
“There’s a need for capital funding to support small to midsize business,” he said. “I think the opportunities are tremendous.”
Cascade’s operations will take on the Opus brand. They will continue to cater to small businesses and commercial real estate lending.
The 95-year-old bank was considered troubled, Gordon said. About 5% of loans will be worked through or marked down, he said.
“Not insurmountable, not unmanageable,” he said. “They got caught up in the cycle of the last few years.”
The acquisition means an increase in Opus branches by more than five-fold to 27. It also brings the first offices outside the South Bay area of Los Angeles County.
Staff Retained
Cascade’s entire management team will be retained as well as the bank’s employees. Opus will have about 360 employees after the deal is completed.
Opus’ expansion eventually could extend to Arizona and Nevada, said Gordon, adding that acquisition targets will be banks with $250 million to more than $2.5 billion in assets.
Gordon said he’s looking to finalizing leases for another 15 branches in the coming weeks, eyeing key markets in the Bay Area and Southern California.
“We’re going to dramatically expand our footprint in Orange, Los Angeles and San Diego counties,” he said.
Locally, Opus is looking at expanding in Newport Beach, Newport Coast, Irvine and Rancho Santa Margarita.
“We’re clearly working on more acquisitions in addition to making loans and growing the deposit base organically,” Gordon said.
Opus funded its first loans in February and expects to build upon that in the coming months. The bank retains much of the money that went toward its recapitalization.
Gordon said the money will soon go toward some pending deals.
“We’re clearly putting our capital funding back into communities,” Gordon said. “This infusion of capital will be a driving force for creating new jobs and rebuilding healthy and vibrant communities. My intention is to lead the change and make a difference in the Western region.”
