Opus Bank (NASDAQ:OPB) Q3 2019 Earnings Conference Call - Final Transcript
Oct 28, 2019 • 11:00 am ET
Good day, everyone. And welcome to the Opus Bank Third Quarter 2019 Earnings Conference Call. My name is Tiffany, and I will be your conference call coordinator today. At this time, all participants are in a listen-only mode. Speaking on today's call will be Paul Taylor, President and Chief Executive Officer; Kevin Thompson, Executive Vice President and Chief Financial Officer; and Brian Fitzmaurice, Vice Chairman and Senior Credit Officer.
Today's discussion will cover the company's performance during the third quarter of 2019 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/presentations. The call will be recorded and made available for replay after 2 Eastern Time on October 28th, 2019 through November 28, 2019, at 11:59 PM Eastern Time, by dialing 1855-859-056, passcode 2222128. The discussion during the call today may entail forward-looking statements, which are intended to be covered by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. You will find a discussion of these forward-looking statements in our recent FDIC filings and in the earnings press release issued earlier this morning. Today's call will include a question-and-answer session following management's prepared remarks.
Now, I will turn the call over to Paul Taylor, President and CEO for opening remarks. Sir, you may begin.
Paul W. Taylor
Thank you, Tiffany. Good morning to everybody listening to our third quarter earnings call. I am Paul Taylor, I'm CEO of Opus Bank today. Today I will provide a brief overview of our performance in the third quarter of 2019. I will then hand it over to Kevin Thompson, EVP and Chief Financial Officer; and Brian Fitzmaurice, Vice Chairman, and Senior Chief Credit Officer, who will go through the details of our financial and credit performance.
We had a strong third quarter, including improvements and credit quality, which led to a $7.7 million negative provision for loan losses. Higher levels of non-interest income from both PENSCO and our Escrow and Exchange division and lower operating expenses. These accomplishments were the direct result of the efforts and determination of Opus team members, who worked very hard to improve our profitability and strengthen our balance sheet.
As you recall, we undertook an expense reduction initiative in the second quarter, and we saw an immediate benefit in our overhead expense run rate. Our efficiency ratio for the third quarter was 61.8%, which was compared to 71.32% in the second quarter. We also began to see the trend in our cost of deposits moderate in the third quarter, which helped cushion the decline in our net interest margins.
For the third quarter of 2019, Opus recorded net income of $22 million or $0.57 per diluted share compared to net income of $8.7 million or $0.23 per diluted share in the second quarter. Return on average assets was 1.13% and return on average tangible common equity was 12.88%, helped by the negative provision expense.
Credit quality improved with