Opus Bank sees Q3 EPS with impact of loan charge-offs (5c), consensus 63c
Opus Bank announced that Q3 earnings, which will be announced on October 24 before the market opens, will include a 59c per diluted share impact from loan charge-offs and is expected to result in a net loss of approximately (5c) per diluted share. As part of the credit review process of impaired loans, new developments supported charge-offs being recognized on eight loan relationships through the allowance for loan losses at September 30, 2016. Charge-offs were recorded on these eight loan relationships, which have been impacting the provision for loan losses and earnings for the past eight quarters and include three of the same loan relationships that were discussed during Opus' second quarter 2016 earnings conference call. Charge-offs for the eight loan relationships totaled $38.8M and had specific reserves of $16.7M previously recorded. In addition, these charge-offs increased the reserve levels recorded against the remaining loan portfolio by $13.6M as a result of higher loss factors incorporated into the bank's allowance for loan losses methodology to reflect the charge-offs in the third quarter of 2016. The bank's Tier 1 leverage ratio is expected to be 8.16%, Common Equity Tier 1 ratio is expected to be 9.24% and total risk-based capital ratio is expected to be 12.29% as of September 30, 2016, compared to 8.52%, 9.74% and 12.93%, respectively, as of June 30, 2016.