Opus Bank in Irvine, Calif., reported a larger-than-forecast quarterly loss after deciding to set aside more reserves than it predicted it would a week earlier.
The $7.7 billion-asset company said in a press release Monday that it lost $3 million, or 9 cents a share, in the third quarter. Opus had warned last week that it would likely lose 5 cents a share.
Opus said its credit costs were higher than expected because management decided to maintain a specific reserve for a technology loan that it had intended to reverse. Management had expressed optimism over the credit's status last Wednesday.
The loan-loss provision, as a result, totaled $40 million, representing a major increase from $10.9 million in the second quarter and $7.6 million a year earlier.
Revenue increased 31% from a year earlier, to $77 million. Noninterest expenses rose 57% from a year earlier; the increase included merger-related expenses, higher compensation and benefits and a bigger provision for unfunded commitments.
"While it was certainly not our expectation to post a loss for the third quarter, and we are extremely disappointed, we have taken immediate and appropriate actions to refine our business processes and adjust exposures to manage the impact of underperforming assets on our future earnings," Stephen Gordon, Opus' chairman, president and chief executive, said in the release.
Gordon also addressed concerns from analysts that the company's loan growth might slow in light of increased loan problems and plans to change some credit policies. Opus "entered the fourth quarter with a loan pipeline that is consistent with our projections for 2016 new loan fundings," he said.
Separately, Opus said it had tapped Geoff Anfuso to fill a newly created position as head of commercial and specialty banking. Anfuso, who joined Opus in May 2013, had previously served as the company's senior managing director of institutional syndications. Before joining Opus, Anfuso had been an executive in the commercial banking group at Wells Fargo.