Opus Bank in Irvine, Calif., reported a profit of $17.1 million in the first quarter, up 56% from a year earlier, as strong loan growth more than offset higher expenses and an uptick in problem loans. Its earnings per share climbed 50%, to 51 cents.
The $6.9 billion-asset company attributed the improved profit to high demand for commercial and corporate loans. Originations in the quarter hit $551.7 million, the most ever in the first quarter since the bank was founded nearly six years ago. At quarter's end its loans held for investment totaled $5.7 billion, up 32% year over year. Net interest income increased 31% year over year, to $59.1 million.
Fee income increased by 61% year over year $5.3 million and Opus' recent purchase of Pensco Trust Co. is expected to further boost noninterest income.
Credit quality has weakened, though, as the pace of lending has increased. Opus said that nonperforming assets more than tripled to $42.8 million and that its percentage of nonperforming assets to total assets climbed from 0.23% to 0.62% year over year.
Also, Opus' expenses increased 15% year over year, to $30.9 million, due primarily to higher salary and benefits costs related to its expansion into new areas of lending. Opus said earlier this year that it was cutting 10% of its workforce and renegotiating vendor contracts in an effort to reduce overhead. Its efficiency ratio stood at 47.9% at March 31.