Opus Bank Announces First Quarter 2015 Results

IRVINE, Calif.--(BUSINESS WIRE)-- Opus Bank ("Opus") (NASDAQ: “OPB”) announced today net income of $11.1 million, or $0.34 per diluted share, for the first quarter of 2015 compared with $12.5 million, or $0.38 per diluted share, for the fourth quarter of 2014 and $13.2 million, or $0.45 per diluted share, for the first quarter of 2014. Total assets increased to a record $5.6 billion at March 31, 2015 due to strong loan and deposit growth. Additionally, Opus announced today that its Board of Directors approved increasing its quarterly cash dividend by 40% to $0.07 per share payable on May 21, 2015 to common and preferred stockholders of record as of May 7, 2015.

First Quarter 2015 Highlights

• Net interest margin increased two basis points to 3.87% for the first quarter of 2015 from 3.85% in the fourth quarter of 2014 and decreased from 4.87% in the first quarter of 2014. Contractual net interest margin, which excludes the impact of accretion and amortization of acquisition discounts and premiums, increased nine basis points to 3.46% from 3.37% in the fourth quarter of 2014 and decreased by one basis point from 3.47% in the first quarter of 2014. Commercial Banking along with Fiduciary, Correspondent, Technology and Healthcare Banking, Structured and Corporate Finance, Institutional Syndications and Commercial Depository Services (our "Specialty Banking Divisions") continue to benefit our net interest margin through the contribution of higher yields on loan originations and low- or no-cost core deposits.
• New loan fundings totaled $468.4 million in the first quarter of 2015, an increase of 4% from $451.0 million in the first quarter of 2014 and a decrease of 18% from $572.7 million in the fourth quarter of 2014. Commercial Banking and Specialty Banking Divisions represented 58% of new loan fundings during the current quarter as compared to 36% during the fourth quarter of 2014. As a result of the continued strategic shift in the mix, the weighted average rate on new loan fundings during the first quarter was 4.55%, an increase of 32 basis points from the prior linked quarter to the highest weighted average rate on new loan fundings since the fourth quarter of 2011. Loan commitments of $526.6 million were originated during the first quarter of 2015 compared to $613.1 million in the fourth quarter of 2014 and $514.0 million in the first quarter of 2014.
• Our originated loan portfolio grew by $312.2 million to $3.9 billion at March 31, 2015, an increase of 8.6% from December 31, 2014 and 51.2% from March 31, 2014. The yield on our originated loan portfolio increased 12 basis points to 4.35% for the first quarter of 2015 compared to 4.23% in the prior quarter and increased 11 basis points from 4.24% for the first quarter of 2014. Total loans held-for-investment, which includes our acquired loan portfolio, grew at a 29.3% compound annual rate to a record $4.4 billion at March 31, 2015.
• Loans from our Commercial Banking and Specialty Banking Divisions increased to 59% of our loan origination pipeline at April 1, 2015 compared to 57% at January 1, 2015.
• On March 31, 2015, Opus closed on the acquisition of Commerce Escrow Company ("CEC"), the premier Los Angeles-based escrow company focused on commercial business and commercial real estate transactions, and RPM Investments Inc. ("RPM"), a leading accommodator for tax-deferred commercial exchanges under Section 1031 of the Internal Revenue Code, in a 45% cash and 55% stock transaction totaling $25 million. CEC and RPM will operate as divisions of Opus Bank and will be reported as part of our Specialty Banking Divisions beginning April 1, 2015.
• Total deposits grew $530.0 million, or 14.0%, to a record $4.3 billion at March 31, 2015. Noninterest bearing plus interest bearing demand deposits ("total demand deposits") increased by $537.2 million, or 63%, to $1.4 billion and comprised 32% of total deposits as of March 31, 2015, up from 22% at December 31, 2014. Business-related deposits increased to 43% of total deposits at March 31, 2015, up from 37% at December 31, 2014. As of March 31, 2015, deposit balances associated with the CEC and RPM divisions totaled $336.4 million and have increased further to $455.0 at April 23, 2015. Deposits related to our Commercial Banking and Specialty Banking Divisions increased by $163.0 million during the first quarter of 2015, up 23% from December 31, 2014. Our cost of deposits declined three basis points from the fourth quarter of 2014 to 0.54% for the first quarter of 2015. The weighted average rate on our deposits declined further to 0.51% as of March 31, 2015, three basis points lower than the first quarter average.
• Our loan-to-deposit ratio declined to 101% at March 31, 2015 from 108% at December 31, 2014 and 107% at March 31, 2014.
• Due to the improved margin, mix and duration in both our loan and deposit portfolios, our interest rate sensitivity improved meaningfully during the quarter showing asset sensitive results under all of our interest rate modeling scenarios.
• Net interest income increased at a 31.8% compound annual rate to $45.2 million during the first quarter of 2015 from $42.2 million for the fourth quarter of 2014 and $39.7 million for the first quarter of 2014. During the first quarter of 2015, interest income from our originated loan portfolio increased by $4.1 million from the fourth quarter of 2014 and $15.5 million from the first quarter of 2014 due to continued originated loan growth and higher yields. Interest income from the acquired loan portfolio declined by $751,000 from the fourth quarter of 2014 and $8.8 million from the first quarter of 2014 due to lower average balances and lower accretion income incurred from closed loans and payoffs.
• Noninterest income during the first quarter of 2015 was $3.3 million, an increase of $88,000 from the fourth quarter of 2014 and $1.3 million from the first quarter of 2014, and included $492,000 of advisory fee income earned by our Merchant Bank and broker-dealer subsidiary, Opus Financial Partners.
• Our efficiency ratio was 55.2% during the first quarter of 2015, an improvement from 57.1% in the fourth quarter of 2014 and an increase from 51.7% during the first quarter of 2014. Our ratio of noninterest expense to average assets remained constant at 2.1% on a linked quarter basis and improved from 2.3% in the first quarter of 2014. Costs associated with the acquisition of CEC and RPM totaling $271,000 and a litigation settlement expense of $250,000 were included in noninterest expense for the first quarter of 2015.
• Return on average tangible equity was 8.06% for the first quarter of 2015 as compared to 8.11% tax adjusted for the fourth quarter of 2014 and 12.66% for the first quarter of 2014. Return on average assets was 0.85% for the first quarter of 2015 as compared to 0.90% tax adjusted for the fourth quarter of 2014 and 1.41% for the first quarter of 2014.
• Asset quality continued to remain strong with nonperforming assets totaling $12.7 million, or 0.23% of total assets, at March 31, 2015. Provision expense during the first quarter of 2015 increased to $3.6 million compared to $1.5 million for the fourth quarter of 2014 and a $198,000 recovery in the first quarter of 2014. The current quarter provision was driven by loan growth, changes in specific reserves and risk rating changes. Our ratio of allowance for loan losses to total loans increased to 0.57% as of March 31, 2015 and was 1.45% when including the $39.0 million remaining discount on the acquired loan portfolio.
• Our tangible book value per as converted share at March 31, 2015 was $17.08 compared to $17.26 at December 31, 2014. The decrease was due to the issuance of 449,273 shares of Opus' common stock as partial consideration for, as well as $23.6 million in goodwill created as a result of the acquisition of CEC and RPM. Excluding the impact of the acquisition, tangible book value per as converted common share was $17.63 at March 31, 2015.

Stephen H. Gordon, founding Chairman, Chief Executive Officer and President of Opus Bank, stated, “We’re proud of our first quarter performance which was driven by significant accomplishments throughout Opus. As we continue to execute, scale and mature the business, we’re seeing the impact across the board, including through meaningful growth of our client base in every division.” Gordon concluded, “Given our metrics, where Opus was positioned at quarter end and line of sight into our growth through the remainder of 2015 and into 2016, we are pleased to announce today that the Board of Directors has approved increasing our quarterly cash dividend by 40% to $0.07 per share, which reflects our strong capital position, liquidity, increasing earnings power, continued maturation of our business and confidence in our ability to execute our business strategy and growth plans.”

Net Interest Income

Net interest income increased to $45.2 million in the first quarter of 2015, up 7.1% from $42.2 million in the fourth quarter of 2014 and up 14% from $39.7 million in the first quarter of 2014. Interest income from originated loans increased by $4.1 million, or 12%, from the fourth quarter of 2014 and $15.5 million, or 63%, from the first quarter of 2014 due to our continued loan growth and success in strategically shifting our loan mix. Interest income from the acquired loan portfolio decreased by $751,000 from the prior quarter and $8.8 million from the prior year's first quarter due to lower average balances and less accretion income from loans that closed through sale, foreclosure and prepayment. Interest expense increased to $6.0 million for the first quarter of 2015 from $5.9 million for the fourth quarter of 2014 and $4.1 million for the first quarter of 2014. The increase in interest expense was driven by growth of $309.9 million in average interest bearing deposits from December 31, 2014 and $1.1 billion from March 31, 2014.

Net interest margin increased two basis points to 3.87% in the first quarter of 2015 from 3.85% in the fourth quarter of 2014 and declined 100 basis points from 4.87% in the first quarter of 2014. Accretion income and amortization expense from the acquired loan portfolio contributed 0.41% to the net interest margin during the first quarter of 2015 compared to 0.48% in the fourth quarter of 2014 and 1.40% in the first quarter of 2014. Loan yields during the first quarter increased to 4.90% from 4.85% in the fourth quarter of 2014, driven by a 12 basis point increase in the yield on originated loans to 4.35% for the first quarter of 2015 and a 30 basis point increase in the yield on acquired loans to 9.46% for the first quarter of 2015. The current quarter loan yield decreased by 115 basis points from the first quarter of 2014 due to a decline of 358 basis points in the yield on the acquired loan portfolio offset by an increase of 11 basis points in the yield on the originated loan portfolio. The increase in loan yields on originated loans was driven by increased weighted average rates on new loan fundings from our Commercial Banking and Specialty Banking Divisions. Our cost of funds decreased two basis points to 0.55% for the first quarter of 2015 as compared to 0.57% for the fourth quarter of 2014 and increased one basis point from the first quarter of 2014. Our cost of deposits decreased three basis points to 0.54% for the first quarter of 2015 as compared to 0.57% for the fourth quarter of 2014 and increased two basis points from the first quarter of 2014. The weighted average rate on our deposits declined further to 0.51% as of March 31, 2015 as compared to 0.57% as of December 31, 2014.

Noninterest Income and Noninterest Expense

Noninterest income totaled $3.3 million in the first quarter of 2015 as compared to $3.2 million in the fourth quarter of 2014 and $2.0 million in the first quarter of 2014. During the first quarter of 2015, advisory fee income earned by our Merchant Bank and Opus Financial Partners totaled $492,000. Noninterest income for the first quarter of 2015 included a $550,000 reduction to the fair value of our equity warrant assets at quarter end.

Noninterest expense totaled $26.8 million in the first quarter of 2015 as compared to $25.9 million in the fourth quarter of 2014 and $21.6 million in the first quarter of 2014. Noninterest expense during the first quarter of 2015 included $271,000 of professional services expenses associated with the acquisition of CEC and RPM, lower recoveries of legal fees and a $250,000 litigation settlement expense. The first quarter of 2014 included a $1.7 million litigation recovery that reduced noninterest expense.

During the first quarter of 2015, we adopted ASU 2014-01, Accounting for Investments in Qualified Affordable Housing Projects, and all financial results reflect the retroactive impact of the accounting standard update. The adoption of ASU 2014-01 resulted in a decrease to net income of $53,000 and $16,000 for the three months ended December 31, 2014 and March 31, 2014, respectively, and a decrease of $120,000 and $19,000 for the full year 2014 and 2013, respectively. The impact of this implementation in the first quarter of 2015 resulted in the recognition of $205,000 of amortization on our low income housing investments through income tax expense rather than noninterest expense impacting our effective tax rate by 48 basis points. Including the impact of ASU 2014-01, the effective tax rate for the first quarter of 2015 was 39.0% compared to 38.3% for the fourth quarter, excluding the impact of the $1.4 million adjustment to the deferred tax assets, and 34.8% for the first quarter of 2014.

Loans

Total loans held-for-investment, net of the allowance for loan losses, grew to $4.3 billion at March 31, 2015, an increase of 6.6% from $4.1 billion at December 31, 2014 and an increase of 37.3% from $3.2 billion at March 31, 2014.

Our originated loan portfolio totaled $3.9 billion as of March 31, 2015, an increase of 8.6% from $3.6 billion as of December 31, 2014 and an increase of 51.2% from $2.6 billion at March 31, 2014. Our loan growth during the quarter was a result of $468.4 million of new loan fundings, including $196.1 million from Income Property Banking, $74.8 million from Healthcare Banking, $60.3 million from Corporate Finance, $52.6 from Institutional Syndications, $31.6 million from Commercial Banking, $25.9 million from Technology Banking and $25.0 million from Structured Finance. Our Commercial Banking and Specialty Banking Divisions contributed 58% of new loan fundings during the first quarter of 2015, up from 36% during the fourth quarter of 2014. Loan commitments originated during the first quarter totaled $526.6 million as compared to $613.1 million in the fourth quarter of 2014 and $514.0 million in the first quarter of 2014. At March 31, 2015, our total unfunded commitments on originated loans totaled $342.2 million. Funding levels were affected by normal seasonality, yet exceeded our plan for new loan fundings during the first quarter of 2015.

Our acquired loan portfolio totaled $425.1 million as of March 31, 2015, a decrease of 9% from $466.0 million as of December 31, 2014 and 26% from $572.9 million at March 31, 2014. At March 31, 2015, unfunded commitments on acquired loans totaled $25.6 million.

Deposits and Borrowings

Deposits totaled $4.3 billion as of March 31, 2015, an increase of 14% from $3.8 billion as of December 31, 2014 and 45% from $3.0 billion as of March 31, 2014. The $530.0 million increase included $336.4 million in total demand deposits from CEC and RPM, which had a weighted average cost of 0.02%. Deposit growth during the first quarter also included $30.6 million from our Retail Bank and $163.0 million from our Commercial and Specialty Banking Divisions. Noninterest-bearing deposits increased by 32% during the first quarter of 2015 to a record $825.1 million, which outpaced the 14% growth of total deposits during the current quarter. Total demand deposits and money market accounts increased to 86% of total deposits at March 31, 2015 from 83% at December 31, 2014 and 78% at March 31, 2014. At March 31, 2015, business deposits represented 43% of total deposits as compared to 37% at December 31, 2014. Our loan-to-deposit ratio declined to 101% at March 31, 2015 from 108% at December 31, 2014 and 107% at March 31, 2014.

Federal Home Loan Bank advances were $365.0 million as of March 31, 2015, a decrease from $470.0 million as of December 31, 2014 and an increase from $355.0 million at March 31, 2014.

Asset Quality

We recorded a provision for loan losses of $3.6 million in the first quarter of 2015 compared to provision expense of $1.5 million in the fourth quarter of 2014 and a $198,000 recovery in the first quarter of 2014. Provision recapture on the acquired loan portfolio totaled $202,000 in the first quarter of 2015, $111,000 during the fourth quarter of 2014, and $1.5 million in the first quarter of 2014, due to continued improvement in expected cash flows and credit performance. A provision for loan losses of $3.8 million was recorded on the originated loan portfolio during the first quarter of 2015 compared to $1.6 million in the fourth quarter of 2014 and $1.3 million in the first quarter of 2014. The provision for loan losses during the current quarter was comprised of $1.9 million for portfolio growth and $1.9 million for changes in specific reserves, risk ratings and loss factors. We continue to experience strong asset quality as our loan portfolio continues to season evidenced by the low balance of nonperforming assets and stable ratio of nonperforming assets to total assets of 0.23% as of March 31, 2015, compared to 0.21% at December 31, 2014 and 0.29% at March 31, 2014.

Our allowance for loan losses represented 0.57% of our total loan portfolio at March 31, 2015, as compared to 0.56% at December 31, 2014 and 0.54% at March 31, 2014. Our acquired loan portfolio has a remaining discount of $39.0 million at March 31, 2015. The coverage ratio for the total loan portfolio, which includes the remaining discount on the acquired loan portfolio, at March 31, 2015 was 1.45%, a decrease from 1.61% at December 31, 2014 and 2.28% at March 31, 2014, declining as the originated loan portfolio continues to increase as a percentage of the total loan portfolio. Our allowance for loan losses on originated loans resulted in a coverage ratio of 0.57% at March 31, 2015, an increase from 0.56% at December 31, 2014 and 0.48% at March 31, 2014.

Capital

Our capital ratios continue to be strong and well in excess of the bank regulatory requirements. Beginning in the first quarter of 2015, we calculated our capital ratios under the FDIC Regulatory Capital Interim Final Rule (Basel III). As of March 31, 2015 our Tier 1 leverage ratio was 10.40%, Common Equity Tier 1 ratio was 11.79%, and total risk-based capital ratio was 13.55%. As of December 31, 2014 under the Basel I rules, our Tier 1 leverage, Tier 1 risk-based and total risk-based capital ratios were 11.29%, 13.26% and 13.87%, respectively. As of March 31, 2014 under Basel I rules, our Tier 1 leverage, Tier 1 risk-based and total risk-based capital ratios were 10.58%, 12.78% and 13.38%, respectively. Stockholders’ equity totaled $824.5 million as of March 31, 2015, an increase of 3% from $799.6 million as of December 31, 2014 driven primarily by our quarterly net income and the common stock issued as part of the CEC and RPM acquisitions. Stockholders' equity increased by $141.4 million from March 31, 2014 due to net income and the proceeds from our initial public offering completed in the second quarter of 2014. Our tangible book value per as converted common share was $17.08 as of March 31, 2015 compared to $17.26 as of December 31, 2014 and $14.97 as of March 31, 2014. During the first quarter of 2015 Opus issued 449,273 shares and recorded goodwill of $23.6 million as a result of the acquisition of CEC and RPM, which reduced tangible book value per as converted share by $0.55. Excluding the impact of the transaction, our tangible book value per as converted share was $17.63 as of March 31, 2015.

Additionally, on April 23, 2015 the Board of Directors approved increasing its quarterly cash dividend by 40% to $0.07 per share payable on May 21, 2015 to common and preferred shareholders of record as of May 7, 2015.

Conference Call and Webcast DetailsDate: Monday, April 27, 2015Time: 8:00 a.m. PT (11:00 a.m. ET)

Phone Number: (855) 265-3237Conference Id: 17023894Webcast URL: http://investor.opusbank.com/events.cfm

Analysts, investors, and the general public may listen to Opus' discussion of its first quarter earnings and 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/events.cfm. 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 17023894. The call replay will be available until May 26, 2015.

About Opus Bank

Opus Bank is an FDIC insured California-chartered commercial bank with $5.6 billion of total assets, $4.3 billion of total loans, and $4.3 billion in total deposits as of March 31, 2015. Opus Bank provides high-value, relationship-based banking products, services, and solutions 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 business, healthcare, technology, 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 Commerce Escrow Company and RPM Investments 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 broker-dealer subsidiary, Opus Financial Partners. Opus Bank is an Equal Housing Lender. Opus Bank operates 58 banking offices, including two in the Phoenix metropolitan area of Arizona, 32 in California and 24 in the Seattle/Puget Sound region in Washington. 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: www.opusbank.com.

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

Consolidated Statements of Income
(unaudited)			For the three months ended
($ in thousands, except per share amounts)			March 31, 2015					December 31, 2014					March 31, 2014
Interest income:
Loans			$	50,518				$	47,142				$	43,898
Investment securities			492					706					(120		)
Due from banks			225					198					92
Total interest income			51,235					48,046					43,870
Interest expense:
Deposits			5,447					5,252					3,649
Federal Home Loan Bank advances			597					614					480
Total interest expense			6,044					5,866					4,129
Net interest income			45,191					42,180					39,741
Provision (recapture) for loan losses			3,560					1,475					(198		)
Net interest income after provision (recapture) for loan losses			41,631					40,705					39,939
Noninterest income:
Service charges on deposit accounts			1,536					1,626					1,515
Gain on sale of loans			—					180					—
Gain (loss) on sale or disposition of assets			134					(104		)			(35		)
Gain (loss) from real estate owned, net			63					(17		)			(1,236		)
Bank-owned life insurance, net			715					513					220
Other income			842					1,004					1,494
Total noninterest income			3,290					3,202					1,958
Noninterest expense:
Compensation and benefits			14,694					14,138					13,995
Professional services			1,966					1,304					27
Occupancy expense			2,766					2,978					2,832
Depreciation and amortization			1,325					1,337					1,333
Deposit insurance and regulatory assessments			772					741					632
Insurance expense			307					317					231
Data processing			817					856					758
Software licenses and maintenance			453					408					529
Office services			1,008					873					883
Amortization of core deposit intangibles			627					627					627
Advertising and marketing			238					843					298
Litigation expense (recovery)			250					(2		)			(1,783		)
Other expenses			1,530					1,486					1,204
Total noninterest expense			26,753					25,906					21,566
Income before income tax expense			18,168					18,001					20,331
Income tax expense			7,092					5,485					7,084
Net income			$	11,076				$	12,516				$	13,247
Basic earnings per common share			$	0.35				$	0.40				$	0.46
Diluted earnings per common share			0.34					0.38					0.45
Weighted average shares - basic			28,154,150					28,119,830					23,104,332
Weighted average shares - diluted			32,857,377					32,704,482					29,248,972

Consolidated Balance Sheets
(unaudited)			As of
($ in thousands, except share amounts)			March 31, 2015					December 31, 2014					March 31, 2014
Assets
Cash and due from banks			$	32,963				$	31,115				$	39,724
Due from banks – interest-bearing			382,318					285,268					143,646
Investment securities available-for-sale, at fair value			254,104					174,739					205,911
Loans held-for-investment			4,356,843					4,085,501					3,173,551
Less allowance for loan losses			(24,878		)			(23,043		)			(17,210		)
Loans held-for-investment, net			4,331,965					4,062,458					3,156,341
Real estate owned			4,277					4,277					10,258
Premises and equipment, net			34,180					34,333					36,574
Goodwill			262,115					238,528					238,528
Core deposit intangible, net			11,981					12,608					14,489
Deferred tax assets, net			71,963					78,538					94,699
Cash surrender value of bank owned life insurance, net			92,760					91,808					34,867
Accrued interest receivable			15,552					14,260					11,517
Federal Home Loan Bank stock			30,414					32,935					27,863
Other assets			36,982					27,447					21,780
Total assets			$	5,561,574				$	5,088,314				$	4,036,197
Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing			$	825,094				$	625,024				$	535,471
Interest-bearing demand			565,669					228,565					236,354
Money market and savings			2,322,850					2,310,868					1,562,600
Time deposits – under $100,000			191,416					198,280					217,033
Time deposits – $100,000 and over			420,847					433,138					424,923
Total deposits			4,325,876					3,795,875					2,976,381
Federal Home Loan Bank advances			365,000					470,000					355,000
Accrued interest payable			345					364					312
Other liabilities			45,842					22,492					21,428
Total liabilities			4,737,063					4,288,731					3,353,121
Stockholders’ equity:
Preferred stock:
Authorized 200,000,000 shares; issued 72,411 and 72,411 and 112,572 shares, respectively			68,768					68,768					106,908
Common stock, no par value per share:
Authorized 200,000,000 shares; issued 28,743,456 and 28,291,656 and 23,240,951 shares, respectively			550,248					536,498					418,043
Additional paid-in capital			43,659					42,291					37,188
Retained earnings			164,337					154,850					124,390
Treasury stock, at cost; 144,127 and 143,140 and 135,248 shares, respectively			(2,839		)			(2,811		)			(2,574		)
Accumulated other comprehensive income (loss)			338					(13		)			(879		)
Total stockholders’ equity			824,511					799,583					683,076
Total liabilities and stockholders’ equity			$	5,561,574				$	5,088,314				$	4,036,197

Selected Financial Data
			For the three months ended
(unaudited)			March 31, 2015				December 31, 2014				March 31, 2014
Return on average assets			0.85	%			1.02	%			1.41	%
Return on average assets, tax adjusted (1)			0.85				0.90				1.41
Return on average stockholders' equity			5.56				6.25				7.93
Return on average stockholders' equity, tax adjusted (1)			5.56				5.54				7.93
Return on average tangible equity			8.06				9.15				12.66
Return on average tangible equity, tax adjusted (1)			8.06				8.11				12.66
Efficiency ratio (2)			55.18				57.08				51.72
Noninterest expense to average assets			2.06				2.11				2.29
Yield on interest-earning assets			4.39				4.38				5.38
Cost of deposits (3)			0.54				0.57				0.52
Cost of funds (4)			0.55				0.57				0.54
Net interest margin			3.87				3.85				4.87

(1) Tax adjusted for the three months ended December 31, 2014 for an adjustment to deferred tax assets.(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
(unaudited)			March 31, 2015				December 31, 2014				March 31, 2014
			(Under Basel III) (1)				(Under Basel I) (1)
Tier 1 leverage ratio			10.40	%			11.29	%			10.58	%
Tier 1 risk-based capital ratio			12.92				13.26				12.78
Total risk-based capital ratio			13.55				13.87				13.38
Common Equity Tier 1 ratio (2)			11.79				n/a				n/a

(1) The preliminary capital ratios as of March 31, 2015 reflect the adoption of Basel III in effect beginning January 1, 2015 while ratios for the prior periods represent the previous capital rules under Basel I.(2) The Common Equity Tier 1 ratio is a new ratio required under Basel III and represents common equity, less goodwill and intangible assets net of any deferred tax liabilities, divided by risk-weighted assets.

Loan Fundings
(unaudited)			For the three months ended
($ in thousands)			March 31, 2015					December 31, 2014					March 31, 2014
Loans funded:
Real estate mortgage loans:
Single-family residential			$	—				$	—				$	25,254
Multifamily residential			145,831					294,985					229,198
Commercial real estate			73,495					113,581					83,846
Construction and land loans			2,245					1,620					1,054
Commercial business loans			246,046					157,701					109,443
Small Business Administration loans			826					3,801					2,156
Consumer and other loans			—					980					—
Total loan fundings			$	468,443				$	572,668				$	450,951

Composition of Loan Portfolio		As of
(unaudited)		March 31, 2015							December 31, 2014							March 31, 2014
($ in thousands)		Amount				% ofTotal loans			Amount				% ofTotal loans			Amount				% ofTotal loans
Originated loans held-for-investment
Real estate mortgage loans:
Single-family residential		$	119,610			2.7	%		$	122,897			3.0	%		$	148,234			4.7	%
Multifamily residential		2,264,517				52.0			2,190,633				53.6			1,779,282				56.1
Commercial real estate		795,634				18.3			728,908				17.9			345,910				10.9
Construction and land loans		10,102				0.2			7,689				0.2			5,578				0.2
Commercial business loans		712,658				16.4			540,820				13.2			298,155				9.4
Small Business Administration loans		26,682				0.6			28,086				0.7			22,695				0.7
Consumer and other loans		2,561				0.1			490				0.0			776				0.0
Total originated loans		3,931,764				90.2			3,619,523				88.6			2,600,630				81.9
Acquired loans held-for-investment
Real estate mortgage loans:
Single-family residential		122,693				2.8			130,861				3.2			160,298				5.1
Multifamily residential		95,435				2.2			100,598				2.5			118,000				3.7
Commercial real estate		100,794				2.3			108,247				2.6			141,801				4.5
Construction and land loans		2,789				0.1			3,279				0.1			4,765				0.2
Commercial business loans		25,908				0.6			28,860				0.7			33,634				1.1
Small Business Administration loans		58,867				1.4			61,010				1.5			76,596				2.4
Consumer and other loans		18,593				0.4			33,123				0.8			37,827				1.2
Total acquired loans		425,079				9.8			465,978				11.4			572,921				18.1
Total gross loans		$	4,356,843			100.0	%		$	4,085,501			100.0	%		$	3,173,551			100.0	%

Composition of Deposits		As of
(unaudited)		March 31, 2015							December 31, 2014							March 31, 2014
($ in thousands)		Amount				% ofTotal deposits			Amount				% ofTotal deposits			Amount				% ofTotal deposits
Noninterest bearing		$	825,094			19.1	%		$	625,024			16.5	%		$	535,471			18.0	%
Interest bearing demand		565,669				13.1			228,565				6.0			236,354				7.9
Money market and savings		2,322,850				53.7			2,310,868				60.9			1,562,600				52.5
Time deposits - under $100,000		191,416				4.4			198,280				5.2			217,033				7.3
Time deposits - $100,000 and over		420,847				9.7			433,138				11.4			424,923				14.3
Total deposits		$	4,325,876			100.0	%		$	3,795,875			100.0	%		$	2,976,381			100.0	%

Consolidated average balance sheet, interest, yield and rates
		For the three months ended March 31,											For the three months endedDecember 31,											For the three months ended March 31,
(unaudited)		2015											2014											2014
($ in thousands)		AverageBalance				Interest				Yields/Rates			AverageBalance				Interest				Yields/Rates			AverageBalance				Interest				Yields/Rates
Assets:
Interest-earning assets:
Due from banks		$	363,796			$	225			0.25	%		$	311,607			$	198			0.25	%		$	146,959			$	92			0.25	%
Investment securities		193,651				492				1.03			187,017				706				1.50			214,838				(120		)		(0.23	)
Acquired loans		452,620				10,555				9.46			489,873				11,306				9.16			603,264				19,398				13.04
Originated Loans		3,725,252				39,963				4.35			3,363,398				35,836				4.23			2,341,586				24,500				4.24
Total loans		$	4,177,872			$	50,518			4.90			$	3,853,271			$	47,142			4.85			$	2,944,850			$	43,898			6.05
Total interest-earning assets		4,735,319				$	51,235			4.39			4,351,895				$	48,046			4.38			3,306,647				$	43,870			5.38
Noninterest-earning assets		537,460											520,643											514,713
Total assets		$	5,272,779										$	4,872,538										$	3,821,360
Liabilities and stockholders’ equity:
Interest-bearing deposits
Interest-bearing demand		$	453,894			$	282			0.25	%		$	222,969			$	64			0.11	%		$	232,865			$	65			0.11	%
Money market and savings		2,301,946				3,903				0.69			2,217,783				3,905				0.70	%		1,441,633				2,263				0.64	%
Time deposits		620,438				1,262				0.82			625,614				1,283				0.81			647,919				1,321				0.83
Total interest-bearing deposits		$	3,376,278			$	5,447			0.65			$	3,066,366			$	5,252			0.68			$	2,322,417			$	3,649			0.64
FHLB advances		375,333				597				0.65			372,935				614				0.65			296,778				480				0.66
Total interest-bearing liabilities		$	3,751,611			$	6,044			0.65			$	3,439,301			$	5,866			0.68			$	2,619,195			$	4,129			0.64
Noninterest-bearing deposits		691,095											619,660											503,005
Other liabilities		21,497											19,511											21,324
Total liabilities		$	4,464,203										$	4,078,472										$	3,143,524
Total stockholders’ equity		$	808,576										$	794,066										$	677,836
Total liabilities andstockholders’ equity		$	5,272,779										$	4,872,538										$	3,821,360
Net interest income						$	45,191										$	42,180										$	39,741
Net interest spread (1)										3.74	%										3.70	%										4.74	%
Net interest margin (2)										3.87	%										3.85	%										4.87	%

(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.

Asset Quality Information
(unaudited)		As of
($ in thousands)		March 31, 2015				December 31, 2014				March 31, 2014
Nonperforming assets
Nonaccrual loans		$	8,411			$	6,215			$	1,408
Real estate owned		4,277				4,277				10,258
Total nonperforming assets		12,688				10,492				11,666
Nonperforming assets to total assets		0.23		%		0.21		%		0.29		%
Accruing loans 90 days or more past due		$	1,188			$	2,255			$	4,703
Accruing troubled debt restructured loans		296				300				103
Allowance for loan losses - Originated loans		22,342				20,305				12,454
Allowance for loan losses - Acquired loans		2,536				2,738				4,756
Total allowance for loan losses		24,878				23,043				17,210
Remaining acquisition discount on acquired loans		$	39,031			$	43,460			$	56,554
Allowance for loan losses to non-accrual loans		295.78		%		370.76		%		1,222.30		%
Allowance for loan losses acquired loans to acquired loans		0.60				0.59				0.83
Allowance for loan losses originated loans to originated loans		0.57				0.56				0.48
Total allowance for loan losses to total loans		0.57				0.56				0.54
Allowance for loan losses and remaining acquisition discount on acquired loans to gross acquired loans (1)		8.96				9.07				9.74
Allowance for loan losses and remaining acquisition discount to total gross loans (1)		1.45				1.61				2.28

(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.

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 tax adjusted return on average assets, tax adjusted return on average stockholders' equity, tax adjusted 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 tax adjusted return on average assets
(unaudited)		For the three months ended
($ in thousands)		March 31, 2015				December 31, 2014				March 31, 2014
Average assets		$	5,272,779			$	4,872,538			$	3,821,360
Tax adjusted net income
Net income		$	11,076			12,516				$	13,247
Less: Adjustments to deferred tax assets		—				(1,422		)		—
Tax adjusted net income		11,076				11,094				13,247
Return on average assets		0.85		%		1.02		%		1.41		%
Non-GAAP tax adjusted return on average assets (1)		0.85				0.90				1.41

(1) Return on average assets are tax adjusted for the three months December 31, 2014 for an adjustment to deferred tax assets.

Non-GAAP tax adjusted return on average tangible equity
(unaudited)		For the three months ended
($ in thousands)		March 31, 2015					December 31, 2014				March 31, 2014
Tax adjusted average tangible equity:
Average stockholders' equity		$	808,576				$	794,066			$	677,836
Add: Average deferred tax assets		—					—				—
Tax adjusted average stockholders' equity		808,576					794,066				677,836
Less:
Average goodwill		238,790					238,528				238,528
Average core deposit intangibles		12,334					12,960				14,900
Tax adjusted average tangible equity		557,452					542,578				424,408
Tax adjusted net income:
Net income		11,076					12,516				13,247
Less: Adjustments to deferred tax assets		—					(1,422		)		—
Tax adjusted net income		11,076					11,094				13,247
Return on average stockholders' equity		5.56		%			6.25		%		7.93		%
Non-GAAP tax adjusted return on average stockholders' equity (1)		5.56					5.54				7.93
Non-GAAP tax adjusted return on average tangible equity (1)		8.06					8.11				12.66

(1) Return on average stockholders' equity and average tangible equity are tax adjusted for the three months December 31, 2014 for an adjustment to deferred tax assets.

Non-GAAP net interest margin
(unaudited)		For the three months ended
($ in thousands)		March 31, 2015				December 31, 2014				March 31, 2014
Net interest income		$	45,191			$	42,180			$	39,741
Less: Accretion/amortization of acquisition discount/premium (1)		(4,452		)		(4,862		)		(10,863		)
Non-GAAP net interest income		40,739				37,318				28,878
Average interest earning assets		$	4,735,319			$	4,351,895			$	3,306,647
Add: Average unamortized acquisition discounts		42,453				44,976				65,093
Non-GAAP average interest-earning assets		4,777,772				4,396,871				3,371,740
Net interest margin impact		0.41		%		0.48		%		1.40		%

(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
($ in thousands, except share amounts)		March 31, 2015				December 31, 2014				March 31, 2014
Tangible equity:
Total stockholders' equity		$	824,511			$	799,583			$	683,076
Less:
Goodwill		262,115				238,528				238,528
Core deposit intangibles		11,981				12,608				14,489
Tangible equity		550,415				548,447				430,059
Shares of common stock outstanding		28,599,329				28,148,516				23,105,703
Shares of common stock to be issued upon conversion of preferred stock		3,620,550				3,620,550				5,628,600
Total as converted shares of common stock outstanding (1)		32,219,879				31,769,066				28,734,303
Book value per as converted common share		25.59				25.17				23.77
Tangible book value per as converted common share		17.08				17.26				14.97

(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.

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

Source: Opus Bank

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