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Opus Bank in Irvine, which raised $460 million of equity late last year, said it would acquire the $1.5 billion-asset Cascade Financial in Everett, Wash., for $21.75 million in cash.
March 4 -
Striking its second deal in three months, Opus Bank in Irvine, Calif., said it is buying the $682 million-asset RMG Capital of Fullerton, Calif., for $50 million in cash.
June 7
Opus Bank in Irvine, Calif., is poised to reap the benefits of its recent hiring spree.
The $5.1 billion-asset company has recruited several executives in the last year from much bigger banks Bank of America, Regions Financial and Zions Bancorp. in an effort to make more commercial loans.
That's positioned Opus for a rapid growth spurt that is expected to outpace the organic growth at most other small and midcap banks, industry experts said.
Opus offers an illustration of a community bank that's grown quickly by punching above its weight. Opus isn't a small bank; it's a "high-growth" company, its executives insist. It isn't recruiting lenders; it's looking for entrepreneurs.
"We think we're very fortunate that we're not a B of A," said Stephen Gordon, the company's chairman, president and chief executive. "We're more nimble."
The company's hiring efforts have come amid a broader surge in lending along the West Coast. Over the last two years, a handful of regional players such as City National and East West Bancorp have expanded their loan books ahead of industry averages, Stern Agee & Leach's research team
West Coast banks are starting to attract more attention from investors, particularly as high-growth lenders in energy-producing states face pressure from low and unstable oil prices.
"If you think back six to nine months ago, Texas is where a lot of the growth was coming from," said Matthew Clark, an analyst at Sterne Agee who co-wrote the group's report. "From the extent that expenditures and other energy-related services are being held back... the West Coast is going to stand out that much more."
Opus is expected to distinguish itself from the pack in the coming year, Sterne Agee's researchers wrote. The company is on track to post average organic loan growth of 40% each quarter or nearly double the rate of the closest bank in its peer group, the $27 billion-asset Signature Bank in New York.
That's important, given Opus' efforts to withstanding net interest margin pressure. The company's margin expanded by 6 basis points in the fourth quarter compared to a quarter earlier, to 3.85%. In comparison, banks with $5 billion to $10 billion in assets suffered 9 basis points of margin compression over the same period, based on data from the Federal Deposit Insurance Corp.
Sterne Agree noted in its report that Opus has room to expand in its core markets, while it benefits from higher yields from specialty commercial lending.
Opus, meanwhile, is still turning the pages on a larger comeback story. The company was
Since then, Opus has made many of the splashy moves expected of a bank with big ambitions. It bought two banks and
Still, the company's aggressive recruiting efforts are getting the attention of industry observers.
"The secret sauce of the strong organic loan growth potential at Opus is that a large number of lenders have already been assembled to a still relatively small originated loan portfolio," Steven Alexopoulos, an analyst at JPMorgan Securities, wrote in a recent equity research report.
Many of the newest hires have joined the company's specialty finance divisions, such health care, technology and small business banking.
The company has expanded its workforce by 5% in the past year, to 585 employees, a spokesman said. Resumes of some of its top hires include marquee brands along the Pacific Coast, such as Wells Fargo and Bank of the West.
"Bankers here come out of much larger institutions, and when they come here, they have a chance to be part of a high-growth, entrepreneurial environment," Gordon said.
Opus' small size has been advantage in recruiting top talent. Compared to larger institutions, the company offers new hires more workplace autonomy, executives said. It also has more capital at its disposal than a typical bank of its size.
"We give [lenders] the opportunity to build their own platform," said Michael Allison, co-president and head of Opus' commercial bank. "So when we speak about entrepreneurialism at the bank, they get to come here, and they get to design the credit approach, the marketing materials and the organizational structure that supports how we go to market."
Opus faces some risks in bringing so many new people on board.
"While we believe newer lenders represent an opportunity for outsized growth... these newer lenders Alexopoulos noted. "In addition to the risk of the expected growth from new lenders not materializing, it should take some time to assess the ultimate credit quality of the loans being added."
In addition to recent hiring efforts, Opus should benefit from the region's relatively strong economic recovery. Post-recession credit quality for small-business loans has been better in Western states that in other parts of the country, Experian and Moody's Analytics noted in a recent report.
"The West is home to a lot of service industries, like technology and health care, that are doing well... but also attract a higher-salaried type of individual," said Dan Meder, vice president of business information services at Experian.
Opus also appears to be making moves to step into the industry spotlight, particularly as bankers in states such as Louisiana, Oklahoma and Texas get peppered with questions about earnings sustainability and reliability.
"The darlings of Texas have suddenly come to be the financial institutions that have to explain risk," Gordon said. West Coast banks "don't have the same concentrated exposure that Texas has by any means."
