Opus Bank (NASDAQ:OPB) Q3 2018 Earnings Conference Call - Final Transcript

Oct 22, 2018 • 11:00 am ET


Opus Bank (NASDAQ:OPB) Q3 2018 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the Opus Bank Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to introduce your host for today's conference, Brett Villaume, Director of Investor Relations. Sir, please proceed.

Brett Villaume

Thank you. Good morning and welcome to Opus Bank's investor webcast and conference call. Today, I'm joined by Stephen Gordon, Opus Bank's Chief Executive Officer and President; Brian Fitzmaurice, Senior Executive Vice President and Senior Chief Credit Officer; and Kevin Thompson, Executive Vice President and Chief Financial Officer. Our discussion today will cover the company's performance during the third quarter of 2018 and information contained in the earnings press release issued earlier this morning. A slideshow presentation that accompanies today's call is available on the Opus Bank investor webpage at investor.opusbank.com.

(Forward-Looking Cautionary Statements) Today's call will include a question-and-answer session following the discussion. For listeners who are participating via WebEx, should you have any questions, you may submit those using the Q&A feature located on the right-hand side of your WebEx window. The white triangle just to the left of the question mark and letters Q&A should be pointing down. Clicking on that triangle opens and closes the Q&A dialog box.

Now I will turn the call over to Stephen Gordon, CEO and President.

Stephen Gordon

Thank you, Brett. I will now provide an overview of our results for the third quarter and then Kevin Thompson, Chief Financial Officer; and Brian Fitzmaurice, Senior Chief Credit Officer will go into more detail on our financial performance and credit metrics. We will address questions at the end of our prepared remarks. For the third quarter of 2018, Opus recorded net income of $9.4 million or $0.25 per diluted share compared to $15.5 million or $0.40 per diluted share in the prior quarter. Net income for the nine months ended September 30, 2018 was $37.8 million or $0.99 per diluted share compared to $46.4 million or $1.23 per diluted share for the first nine months of 2017. Included in net income in the third quarter of 2018 were severance and retention costs and strategic initiative-related expenses totaling $525,000 or approximately $0.01 of earnings per share, which were related to the build-out of our Commercial Banking team and the further optimization of our banking office locations.

Also, we had an income tax benefit item of $2.3 million in the third quarter, which resulted in negative income tax expense of $972,000. Kevin will explain this in greater detail later in the call. Our reported earnings per share for the third quarter was also impacted by a provision for loan losses of $8.2 million, which was primarily driven by charge-offs related to two Enterprise Value loans as part of our workout strategies for these previously identified lending relationships. Enterprise Value loans have decreased 80% since the fourth quarter