Opus Bank and Banc of California Inc., which experienced turmoil last year, said they’re boosting lending this year.
Irvine-based Opus (Nasdaq: OPB) plans to increase new lending to $2 billion, up 33%, according to its fourth-quarter report. It got a head start with a 34% jump in loan funding in the fourth quarter to $502.3 million, about a third of the bank’s $1.5 billion in new loans last year.
In another indication that Opus has recuperated from problematic loans last year, the bank reinstated its quarterly dividend of 10 cents a share. The dividend was suspended last year in a move to preserve capital. Opus’ criticized loans, those with potential weakness and a metric closely watched by investors, fell 14% to $249.8 million.
“2017 was the year of significant transition and accomplishments for Opus Bank as we successfully executed on the important goals of enhancing our existing credit administration and risk management infrastructure and discipline,” Chief Executive Stephen Gordon told analysts on a conference call to discuss its latest results.
Opus, the third-largest Orange County-based bank by assets, reported fourth-quarter net income of $1.2 million, or 3 cents a share, compared with a loss of $19 million, or 55 cents, a year earlier.
Due to the new federal tax law, the bank had $9 million in additional income tax expense related to the revaluation of deferred tax assets, and other tax reform impacts. The tax law will benefit the bank in future reports, as its estimated tax rate will fall from 36% last year to 25% this year.
Opus’ adjusted profit was 26 cents a share, missing the 38-cent estimate of JMP Securities LLC analyst Christopher York.
“We believe a below-peer valuation is appropriate while the bank makes progress to improve profitability,” York wrote in a note to investors.
Shares rose 0.7% in the trading session after the fourth-quarter results were announced. They’ve climbed about 50% since its 52-week low last March.
Banc
Santa Ana-based Banc of California (BANC), the largest OC-based bank by assets, reported “strong organic loan growth” of 7% in the fourth quarter, or $433 million.
“Going into 2018, our goal is to amplify this momentum to generate additional high quality loans,” Chief Executive Doug Bowers told analysts on a conference call. “We’re seeing good pipelines and a good outlook as we come into the year.”
He said the bank plans to issue a 2018 update in early February.
Fourth-quarter net income declined from 54 cents a year ago to 12 cents. The bank’s adjusted profit missed the estimates of at least three analysts.
The bank has been dumping more volatile assets and finished the year at $10.3 billion in assets, down from $11 billion a year earlier. Deposits declined to $7.29 billion, a 20% year-over-year drop. Net interest margin, a key indicator of profitability, fell from 3.15% in the third quarter to 3.01%.
“Loans expanded nicely as deposits contracted,” Keefe, Bruyette & Woods analyst Jacquelynne Bohlen wrote in a note to investors.
Shares fell about 2.9% after the report was issued and are flat since Bowers became chief executive in May.
In a separate filing, the bank revealed it agreed to pay $3.75 million and issue 38,601 shares to resolve a lawsuit filed by former Vice Chairman Jeffrey T. Seabold, who left in September. He was involved in a controversial transaction while at the bank, where he was a close associate of prior Chief Executive Steven Sugarman, who resigned a year ago. Seabold’s lawsuit accused the bank of breach of contract, wrongful termination, retaliation and unfair business practices.
The agreement also called for Seabold and his affiliates to refrain from acquiring more than 4.99% of shares.
Pacific Premier Bancorp (Nasdaq: PPBI) and First Foundation Inc. (Nasdaq: FFWM), both based in Irvine, are scheduled to report fourth-quarter results this week. Pacific Mercantile Bancorp (Nasdaq: PMBC) hasn’t said when it will release its earnings; a message left with the company wasn’t returned by press time.
