Problem technology credits drove down quarterly profits at Opus Bank in Irvine, Calif., which said it will pull back on tech lending even though that had become one of its most important niches.
The $7.5 billion-asset company reported earnings of $16.1 million in the second quarter, or 8% lower than a year earlier. Earnings per share were 46 cents, falling 16 cents short of an estimate of analysts polled by Bloomberg.
The provision for problem loan losses nearly doubled to $10.9 million. Two large technology clients were the culprits, Opus said in a news release Monday.
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A number of bankers used quarterly earnings calls to assure investors that they are carefully monitoring their exposure to commercial real estate at a time when regulators are expressed concern about eroding underwriting standards.
February 4 -
Private-equity investors in Opus Bank in Irvine, Calif., are cashing in some of their chips.
November 18 -
Opus Bank in Irvine, Calif., has hired Jeffrey Zaks, a CIT Group banker, to lead its new media and entertainment lending group.
March 29
Opus plans to scale back lending to the tech sector “for the foreseeable future,” Chairman and Chief Executive Stephen H. Gordon was quoted as saying in the release.
Still, loan growth in other areas helped lift the company’s total portfolio 31% to $6.1 billion. Multifamily and commercial real estate loans account for the bulk of the book.
Net interest income rose 14% to $62.5 million. The net interest margin shrank 29 basis points to 3.8%.
Fee-based income rose 62% from a year earlier to $13.2 million thanks to higher trust fees stemming from its April acquisition of
Expenses jumped 34% to $38.4 million because of higher compensation costs as well as well as costs associated with the acquisition.
Shares closed at $32.13, down 12%, on Monday.
