Opus Bank : Reports Fourth Quarter and Year End 2017 Results

Opus Bank ("Opus") (NASDAQ: OPB) announced today net income of $1.2 million, or $0.03 per diluted share, for the fourth quarter of 2017 and net income of $47.6 million, or $1.26 per diluted share, for the year ended December 31, 2017, as compared to net income of $20.5 million, or $0.54 per diluted share, for the third quarter of 2017 and net income of $11.5 million, or $0.33 per diluted share, for the year ended December 31, 2016. Net income for the fourth quarter of 2017 included $9.0 million of additional income tax expense related to the revaluation of Opus' deferred tax assets and other tax reform impacts, $263,000 of strategic initiative related expenses, primarily comprised of infrastructure enhancements and severance expense, and $408,000 of gains on the sale of investment securities and other assets. These items impacted net income for the fourth quarter and year ended December 31, 2017 by $8.9 million, or $0.23 per diluted share.

Additionally, Opus announced today that its Board of Directors has approved the reinstatement and declaration of a quarterly cash dividend of $0.10 per common share payable on February 15, 2018 to common stockholders and to its Series A Preferred stockholders of record as of February 1, 2018.

Quarter and Year End 2017 Highlights

• New loan fundings increased 34% from the prior quarter to $502.3 million for the fourth quarter of 2017 and totaled $1.5 billion for the year ended December 31, 2017.
• Our pipeline of new loan originations remains robust entering the first quarter of 2018, despite the high level of new loan originations funded during the fourth quarter of 2017.
• Total loans increased $112.6 million in the fourth quarter of 2017, or 9% on an annualized basis, as new loan fundings of $502.3 million exceeded loan payoffs and sales of $318.2 million, including planned exits of $80.4 million. Excluding planned exits, total loans would have increased by $193.0 million in the fourth quarter of 2017, or 15% on an annualized basis.
• Opus' cost of deposits was unchanged from the prior quarter at 0.45% and our cost of funds decreased one basis point to 0.56%.
• Enterprise value loans decreased $61.5 million, or 13%, during the fourth quarter to $417.7 million as of December 31, 2017, and have now decreased by nearly $500 million, or 54%, since the end of 2016.
• Total criticized loans decreased $40.8 million, or 14%, during the fourth quarter to $249.8 million as of December 31, 2017, as a result of decreases in both special mention and classified loans. Total criticized loans decreased $109.7 million, or 31%, since their peak in the first quarter of 2017.
• Nonperforming assets decreased 10% during the fourth quarter to $58.3 million, or 0.78% of total assets, and decreased 39% for the full year 2017.
• Provision for loan losses was $3.0 million for the fourth quarter of 2017, primarily driven by $5.2 million of net charge-offs and $5.8 million for net risk rating migration, partially offset by reserves released due to planned exits of $8.1 million.
• We estimate our effective tax rate will be approximately 25% in 2018, compared to 36% in 2017, due to the tax reform bill passed in December 2017, which resulted in an additional $9.0 million of tax expense in the fourth quarter of 2017.

Stephen H. Gordon, Chief Executive Officer and President of Opus Bank, stated, "The past year was one of significant transition and accomplishments as we successfully executed on the important goals of enhancing our existing credit administration and risk management infrastructure, working through and de-risking our portfolios of challenged credits, redefining and implementing Opus’ commercial banking strategy, and bolstering the depth of our talent. For the full year 2017, we originated $1.5 billion in new loan fundings, including over $500 million in the fourth quarter, achieving our previously stated goal for the year, and we saw our fourth quarter new loan fundings exceed payoffs, despite over $80 million of planned exits during the quarter. Enterprise value loans were reduced by over 50% during 2017 and we now enter 2018 acutely focused on disciplined growth and profitability."

Mr. Gordon continued, "With 90% floating rate loans and 94% low-cost core transaction account deposits, our highly flexible, asset sensitive balance sheet remains an important strategic advantage as we enter 2018, given the expectation the Fed will continue its course of increasing short-term rates. Our recent successes in attracting and hiring numerous additional commercial bankers are anticipated to bring further disciplined traditional C&I growth over the course of 2018 and complement our leading Income Property Banking division. While our cost of deposits was unchanged in the fourth quarter and remained stable year-over-year, we anticipate the current increasing interest rate environment will cause somewhat higher deposit costs, though at a slower pace of increase than our loan yields, as we focus on growing deposit relationships in 2018. During 2017, the positive impact of our new loan fundings and related loan interest income was masked by the rapid pace of our planned loan exits. We expect that headwind to meaningfully lessen in 2018 and for our yields on loans and cash and investment securities to benefit from the anticipated Fed rate increases."

Mr. Gordon concluded, “Opus additionally announced today that its Board of Directors has taken actions to enhance our corporate governance structure and policies to better align the Bank with shareholders. I am confident that our efforts over the past year have laid the foundation for continued improved performance in 2018. Based on our earnings, strong capital levels, and overall performance during 2017, I am proud to announce the Board has authorized the payment of a $0.10 quarterly cash dividend, providing additional return to Opus’ shareholders."

Net Interest Income

Net interest income was $52.0 million for the fourth quarter of 2017, compared to $53.3 million for the third quarter of 2017 and $60.2 million for the fourth quarter of 2016. Net interest income for the year ended December 31, 2017 was $217.4 million, compared to $242.5 million for the year ended December 31, 2016.

Interest income from loans decreased $2.0 million, or 4%, to $53.6 million for the fourth quarter of 2017. Although period-end loan balances increased $112.6 million from the prior quarter, the average balance of loans decreased $51.7 million, or 1%, due to the timing of new loan fundings, loan payoffs and prepayments, including planned exits during the quarter. While planned exits decrease our potential future credit volatility, they had a negative impact on our loan interest income. Interest income from loans decreased 15% to $227.2 million for the year ended December 31, 2017, as loan payoffs and prepayments, including planned exits and loan sales, and continued runoff of the acquired loan portfolio resulted in lower average balances of loans compared to the prior year.

Interest income from cash and investment securities increased $457,000, or 7%, from the prior quarter to $7.2 million for the fourth quarter of 2017, due to lower premium amortization resulting from lower prepayments. Interest income from cash and investment securities increased $20.2 million, or 333%, to $26.3 million for the year ended December 31, 2017, compared to $6.1 million in the prior year, as the average balance of cash and investment securities increased $893.3 million, or 123%, from the prior year to $1.6 billion, and interest earned on cash balances increased due to Federal Reserve rate increases during 2017.

Interest expense decreased $201,000, or 2%, to $8.8 million for the fourth quarter of 2017, compared to $9.0 million for the third quarter of 2017, and decreased $326,000, or 4%, from $9.2 million for the fourth quarter of 2016. Opus' interest expense decreased from the linked-quarter and from the fourth quarter of 2016 as the average balance of interest-bearing liabilities decreased 2% and 9%, respectively. Interest expense increased $3.8 million, or 12%, for the year ended December 31, 2017, as the average balance of interest-bearing deposits increased $342.8 million, or 7%, to $5.5 billion, and a full year of interest expense was realized on Opus' subordinated debt issued on June 29, 2016.

Net Interest Margin

Net interest margin on a fully taxable equivalent basis ("FTE") decreased two basis points to 3.15% in the fourth quarter of 2017 from 3.17% in the third quarter of 2017. The linked-quarter change was primarily due to a reduction in total loan yield of 11 basis points to 4.18% in the fourth quarter of 2017, driven by planned exits that had a weighted average yield of 6.10%, and lower net benefit from prepayments. This was partially offset by a 19 basis point increase in the yield on investment securities, driven by lower prepayments. Net interest margin FTE was 3.17% for the year ended December 31, 2017, compared to 3.62% for the prior year, as Opus intentionally reduced the balances of loan portfolios targeted for planned exits and accretion from acquired loans decreased. Our cost of deposits remained unchanged as we exited certain high-cost, more rate-sensitive deposits.

Noninterest Income

Noninterest income decreased to $12.6 million in the fourth quarter of 2017 from $14.9 million in the third quarter of 2017, and decreased from $27.1 million in the fourth quarter of 2016. Noninterest income during the fourth quarter of 2017 included $1.8 million of treasury management and deposit account fees, $6.9 million in trust administrative fees, $1.6 million from our Escrow and Exchange divisions, and $240,000 from Opus' Merchant Banking division. Total noninterest income in the fourth quarter of 2017 included a net decrease in equity warrant valuations of $554,000, compared to a net increase of $697,000 in the prior quarter.

Noninterest income for the year ended December 31, 2017 decreased to $54.8 million from $61.9 million for the year ended December 31, 2016. The decrease in noninterest income compared to the full year 2016 was primarily due to the $15.2 million gain on sale of loans during the fourth quarter of 2016 primarily related to the Freddie Mac transaction. Noninterest income made up 20% of total revenues during the fourth quarter of 2017, compared to 22% during the third quarter of 2017, and made up 20% of total revenues in the years ended December 31, 2016 and 2017.

Noninterest Expense

Noninterest expense increased to $46.2 million for the fourth quarter of 2017, compared to $45.6 million for the third quarter of 2017, and decreased from $51.2 million for the fourth quarter of 2016. Included in noninterest expense during the fourth quarter of 2017 was $263,000 of strategic initiative related expenses, primarily comprised of infrastructure enhancements and severance expense. Higher noninterest expenses for the fourth quarter of 2017 was primarily driven by an increase in professional services expense and advertising and marketing expense compared to the prior quarter.

Income Tax Expense

On December 22, 2017, H.R. 1, known as the Tax Cuts and Jobs Act (the “Tax Act”), was signed into law, which, among other items, reduced the federal corporate tax rate from 35% to 21%, effective January 1, 2018. As a result, the value of our deferred tax assets as of December 31, 2017 was reduced by approximately $8.2 million and we incurred other expenses associated with the Tax Act totaling $819,000. The net impact of these changes resulted in $9.0 million of additional income tax expense for the fourth quarter of 2017. The revaluation of deferred tax assets does not impact the estimated likelihood that they will be utilized in the future. As of December 31, 2017, our deferred tax assets totaled $24.3 million.

Due to the adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), we recognized tax expense of $23,000 during the fourth quarter of 2017, which increased our effective tax rate for the quarter by 0.15%, as well as $1.0 million of tax expense for the year ended December 31, 2017, which increased our annual effective tax rate by 1.13%.

Cash and Investment Securities

Cash and investment securities totaled $1.6 billion as of December 31, 2017, unchanged from $1.6 billion as of September 30, 2017 and December 31, 2016. Cash and cash equivalents increased $30.6 million, or 6%, during the fourth quarter of 2017 to $500.8 million as of December 31, 2017, and decreased $434.4 million, or 46%, from the fourth quarter of 2016. Investment securities increased $37.4 million, or 3%, during the fourth quarter of 2017 to $1.1 billion as of December 31, 2017, and increased $460.7 million, or 69%, from $666.6 million as of December 31, 2016.

Loans

Total loans held-for-investment increased $112.6 million, or 2%, to $5.2 billion as of December 31, 2017, compared to $5.1 billion as of September 30, 2017, and decreased $495.9 million, or 9%, from $5.7 billion as of December 31, 2016. The increase in total loans during the fourth quarter of 2017 was driven by new loan fundings of $502.3 million, partially offset by originated loan payoffs of $230.9 million and planned exits of $80.4 million. The decrease in total loans during the year ended December 31, 2017 was primarily driven by originated loan payoffs and sales of $1.6 billion, including planned exits of $472.6 million.

New loan fundings in the fourth quarter of 2017 increased 34% from the prior quarter to $502.3 million, driven by higher origination volumes across Opus' business lines. New loan fundings for the year ended December 31, 2017 totaled $1.5 billion, compared to $2.3 billion for the year ended December 31, 2016.

Commercial business loans comprised $131.7 million, or 26%, of total new loan fundings in the fourth quarter of 2017. Loan commitments originated during the fourth quarter totaled $454.1 million as compared to $367.0 million during the third quarter of 2017 and $499.9 million during the fourth quarter of 2016. As of December 31, 2017, our unfunded commitments on originated loans totaled $406.2 million.

Deposits and Borrowings

Deposits totaled $5.9 billion as of December 31, 2017, a decrease of $125.9 million, or 2%, from $6.1 billion as of September 30, 2017, and a decrease of $737.8 million, or 11%, from $6.7 billion as of December 31, 2016. During the fourth quarter of 2017, Opus' alternative asset IRA custodian subsidiary contributed $120.1 million of additional ancillary custodial client cash balances as low-cost core deposits with a weighted average rate of two basis points, while outflows consisted of higher-rate retail and municipal deposits. The decrease in deposits during the year ended December 31, 2017 was primarily driven by Opus' previously announced strategy to intentionally reduce the balances of certain higher-cost, more rate sensitive deposits.

Total demand deposits, including both noninterest-bearing and interest-bearing demand deposit accounts, increased to 55% of total deposits as of December 31, 2017 from 53% as of September 30, 2017 and 51% as of December 31, 2016. As of December 31, 2017, business deposits represented 61% of total deposits.

Our loan to deposit ratio increased to 87% as of December 31, 2017 from 83% as of September 30, 2017 and 85% as of December 31, 2016.

Federal Home Loan Bank advances increased to $290.0 million as of December 31, 2017 from $10.0 million as of September 30, 2017 and $65.0 million as of December 31, 2016. Borrowings from the Federal Home Loan Bank occurred late in the fourth quarter of 2017, reflected by the low fourth quarter average balance of $22.0 million.

Asset Quality

During the fourth quarter of 2017, we continued to reduce our exposure to previously de-emphasized loan portfolios. Total enterprise value loans were reduced by $61.5 million, or 13%, during the fourth quarter of 2017 and totaled $417.7 million as of December 31, 2017. Technology Banking loans were reduced by $2.9 million, or 6%, during the fourth quarter of 2017 and totaled $46.2 million as of December 31, 2017. Healthcare Practice loans were reduced by $3.2 million, or 11%, during the fourth quarter of 2017 and totaled $25.3 million as of December 31, 2017. As of December 31, 2017, $20.4 million of Technology Banking loans and $2.5 million of Healthcare Practice loans were also included in enterprise value loan balances. Planned exits through loan payoffs and sales totaled $80.4 million in the fourth quarter of 2017, as Opus continued to reduce the balances of loans we previously announced as targeted for planned exits. As a result of the successful exit of previously identified loan relationships, the reserves associated with these loans were released, which reduced the allowance for loan losses as required under our methodology.

Our allowance for loan losses totaled $75.9 million, or 1.47% of our total loan portfolio, as of December 31, 2017, compared to $78.2 million, or 1.54%, as of September 30, 2017 and $111.4 million, or 1.97%, as of December 31, 2016. The reduction in the allowance for loan losses during the fourth quarter of 2017 was driven by loan charge-offs of $5.8 million, partially offset by recoveries of $620,000 and provision for loan losses of $3.0 million. Our acquired loan portfolio had a remaining discount of $2.3 million as of December 31, 2017.

We recorded a provision expense of $3.0 million in the fourth quarter of 2017, compared to a negative provision of $10.6 million in the third quarter of 2017 and a provision expense of $69.5 million in the fourth quarter of 2016. The provision expense during the fourth quarter of 2017 was driven by $5.8 million from risk rating migration, net charge-offs of $5.2 million, and $1.8 million due to higher loss factors used to determine loan loss reserves in accordance with our allowance methodology. These factors were partially offset by a $9.0 million decline in reserves as a result of the changes in portfolio mix and decline in portfolio balances, including planned exits of loan relationships, and a reduction of $863,000 in specific reserves.

Opus recorded net charge-offs during the fourth quarter of 2017 of $5.2 million, compared to net recoveries of $1.1 million during the third quarter of 2017, and net charge-offs of $19.2 million during the fourth quarter of 2016. Charge-offs during the fourth quarter of 2017 were predominantly comprised of one commercial business loan relationship and one commercial real estate loan relationship.

Total nonperforming assets decreased to $58.3 million, or 0.78% of total assets, as of December 31, 2017, compared to $65.1 million, or 0.89% of total assets, as of September 30, 2017 and $95.1 million, or 1.21% of total assets, as of December 31, 2016. The decline in nonperforming assets during the quarter was primarily due to the resolution of one commercial real estate loan relationship previously identified as a planned exit. The ratio of the allowance for loan losses to total nonperforming assets was 130.3% as of December 31, 2017, compared to 120.1% as of September 30, 2017 and 117.2% as of December 31, 2016.

Total criticized loans decreased $40.8 million, or 14%, to $249.8 million as of December 31, 2017 compared to $290.6 million as of September 30, 2017, and decreased $67.5 million, or 21%, from $317.3 million as of December 31, 2016. The net decrease in total criticized loans during the fourth quarter of 2017 was driven by $11.7 million of upgrades and $75.2 million of loan exits, including payoffs, loan sales, and normal amortization during the quarter, partially offset by $46.1 million of downgrades. The decrease in total criticized loans during the fourth quarter of 2017 was comprised of a net decrease in special mention loans of $27.7 million and a net decrease in classified loans of $13.1 million. The decrease in special mention loans was driven by $9.2 million of upgrades and $44.6 million of loan payoffs, normal amortization, and migration, partially offset by $26.1 million of downgrades. The decrease in classified loans was driven by upgrades of $2.5 million as well as payoffs, sales, and amortization of $48.7 million, partially offset by downgrades of $38.1 million. The net decrease in total criticized loans consisted of a $31.8 million decrease in real estate secured loans and a $2.5 million decrease in commercial business loans. Commercial business loans comprised $4.5 million of loans upgraded out of criticized categories and $34.5 million of loan payoffs and amortization, partially offset by $40.4 million of downgrades during the fourth quarter of 2017. Real estate secured loans comprised $6.9 million of loans upgraded out of criticized categories and $37.5 million of loan payoffs, sales, and amortization, partially offset by $5.7 million of downgrades during the fourth quarter of 2017.

Commercial Business Loans

Commercial business loans on nonaccrual increased to $57.6 million as of December 31, 2017 from $52.9 million as of September 30, 2017 and were mainly comprised of three Corporate Finance relationships totaling $25.7 million, two Technology Banking relationships totaling $18.7 million, four Commercial Banking relationships totaling $11.5 million, and one Healthcare Practice relationship totaling $1.6 million. Total criticized commercial business loans as of December 31, 2017 were $185.0 million, or 14% of total commercial business loans, compared to $187.5 million, or 14%, as of September 30, 2017. As of December 31, 2017, we had specific reserves of $17.7 million on $49.2 million of criticized commercial business loans, compared to $18.6 million of specific reserves on $51.0 million of criticized commercial business loans as of September 30, 2017. As of December 31, 2017, the total allowance recorded for commercial business loans, which includes general and specific reserves, equaled $56.3 million, or 4.3% of total commercial business loans, compared to $56.4 million, or 4.3% of total commercial business loans, as of September 30, 2017. As of December 31, 2017, the $17.7 million of specific reserves for commercial business loans were comprised of $7.6 million for Corporate Finance loans, $7.2 million for Technology Banking loans, and $3.0 million for Commercial Banking loans.

Commercial Real Estate Loans

During the fourth quarter of 2017, we recorded $2.0 million in charge-offs on commercial real estate loans, compared to no charge-offs in the third quarter of 2017, and charge-offs of $189,000 in the fourth quarter of 2016. There were no commercial real estate loans on nonaccrual as of December 31, 2017, compared to $11.5 million, or 1.0%, as of September 30, 2017. Total criticized commercial real estate loans were $50.6 million as of December 31, 2017, compared to $82.5 million as of September 30, 2017. The decrease in total criticized commercial real estate was primarily driven by loan payoffs, sales and amortization of $28.1 million as well as $6.9 million in upgrades, partially offset by $3.2 million in downgrades. As of December 31, 2017, commercial real estate loans had no specific reserves and a total allowance of $8.9 million, or 0.8% of total commercial real estate loans, compared to no specific reserves and a total allowance of $11.1 million, or 1.0% of total commercial real estate loans, as of September 30, 2017.

Multifamily Loans

Opus’ $2.5 billion multifamily loan portfolio has experienced no charge-offs since our inception in 2010. There were no multifamily loans on nonaccrual status as of December 31, 2017. There were no specific reserves for loans within the multifamily portfolio as of December 31, 2017 and total criticized multifamily loans were $8.9 million, or 0.3% of total multifamily loans, compared to $15.7 million, or 0.7% of total multifamily loans, as of September 30, 2017. The decrease in multifamily criticized loans was primarily driven by loan payoffs and amortization of $9.3 million, partially offset by $2.5 million in downgrades. As of December 31, 2017, our multifamily portfolio had a total allowance of $9.1 million, or 0.4% of total multifamily loans, as compared to $9.0 million, or 0.4%, in the prior quarter.

Capital

As of December 31, 2017, our Tier 1 leverage ratio was 9.45%, Common Equity Tier 1 ratio was 10.94% and total risk-based capital ratio was 14.97%, compared to 9.28%, 11.14% and 15.16%, respectively, as of September 30, 2017. As of December 31, 2016, our Tier 1 leverage, Common Equity Tier 1, and total risk-based capital ratios were 7.54%, 8.95% and 12.32%, respectively. Stockholders’ equity totaled over $1.0 billion as of December 31, 2017, unchanged from September 30, 2017 and an increase of 11% from $925.9 million as of December 31, 2016. Our tangible book value per as converted common share increased to $17.26 as of December 31, 2017 from $17.22 as of September 30, 2017 and $15.84 as of December 31, 2016.

Corporate Governance Actions

As evidence of its continued commitment to strong corporate governance principles, Opus’ Board of Directors recently took a series of actions to further enhance Opus’ corporate governance structure and policies, including:

• Approving the separation of the roles of Chairman of the Board and Chief Executive Officer and appointing Paul G. Greig, Opus’ current lead independent director, non-executive Chairman;
• Committing to submit for shareholder approval, within the next three years, an amendment to the Bank's Articles of Incorporation to declassify the Board of Directors;
• Approving a requirement that Opus’ Chief Executive Officer own, within a period of not more than five years, and continue to hold during his or her term of employment, an amount of Opus stock valued at not less than six times the Chief Executive Officer’s annual base salary;
• Approving a requirement that each Opus non-employee director own, within a period of not more than five years, and continue to hold during the director’s term on the Board, an amount of Opus stock valued at not less than three times the director’s annual cash retainer;
• Approving a requirement that at least 50% of the target economic value of each equity incentive award granted to executive officers in the future be subject to the achievement of at least one relative performance-based metric;
• Approving a requirement that all future equity incentive awards have a minimum vesting period of twelve months from the date of grant;
• Adopting a formal clawback policy, which allows for the recoupment of certain executive incentive compensation in certain circumstances in the event of an accounting restatement due to material error, omission, or fraud;
• Approving a prohibition against excise tax gross-up arrangements in future employment agreements;
• Approving a requirement that the shareholders must approve the repricing, replacement, or exchange of any underwater stock options or stock appreciation rights for other equity awards or cash;
• Expanding on Opus’ commitment to diversity by specifically considering gender diversity when identifying candidates for election to the Board; and
• Approving an annual Board evaluation process to assess the effectiveness and contributions of the Board, its committees, and individual directors.

Conference Call and Webcast Details

Date: Monday, January 22, 2018
Time: 8:00 a.m. PT (11:00 a.m. ET)

Phone Number (855) 265-3237
Conference ID: 3999908
Webcast URL: http://investor.opusbank.com/event

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

Replay Information: For those who are not able to listen to the call, an archive of the call will be available beginning approximately two hours following the completion of the call. To listen to the call replay, dial (855) 859-2056, or for international callers dial (404) 537-3406. The access code for either replay number is 3999908. The call replay will be available through February 22, 2018.

About Opus Bank

Opus Bank is an FDIC insured California-chartered commercial bank with $7.5 billion of total assets, $5.2 billion of total loans, and $5.9 billion in total deposits as of December 31, 2017. Opus Bank provides superior ideas and solutions, and banking products to its clients through its Retail Bank, Commercial Bank, and Merchant Bank. Opus Bank offers a suite of treasury and cash management and depository solutions and a wide range of loan products, including commercial, healthcare, media and entertainment, corporate finance, multifamily residential, commercial real estate and structured finance, and is an SBA preferred lender. Opus Bank offers commercial escrow services and facilitates 1031 Exchange transactions through its Escrow and Exchange divisions. Opus Bank provides clients with financial and advisory services related to raising equity capital, targeted acquisition and divestiture strategies, general mergers and acquisitions, debt and equity financing, balance sheet restructuring, valuation, strategy and performance improvement through its Merchant Banking division and its broker-dealer subsidiary, Opus Financial Partners, LLC, Member FINRA/SIPC. Opus Bank’s alternative asset IRA custodian subsidiary has over $16 billion of custodial assets and over 50,000 client accounts, which are comprised of self-directed investors, financial institutions, capital raisers and financial advisors. Opus Bank operates 50 banking offices, including 31 in California, 16 in the Seattle/Puget Sound region in Washington, two in the Phoenix metropolitan area of Arizona and one in Portland, Oregon. Opus Bank is an Equal Housing Lender. For additional information about Opus Bank, please visit our website: www.opusbank.com.

Forward-Looking Statements

This release and the aforementioned conference call and webcast may include forward-looking statements related to 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: http://investor.opusbank.com.

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