IPO Preview: Opus Bank

Apr.15.14 | About: Opus Bank (OPB)


Community bank formed from bankruptcy a little over three years ago.

High P/E ratio, in-range price-to-tangible book value ratio.

51% of the IPO is going to selling shareholders.

Based in Irvine, CA, Opus Bank (NASDAQ:OPB) scheduled a $187 million IPO on the Nasdaq with a market capitalization of $907 million at a price range midpoint of $32.50 for Wednesday, April 16, 2014.

The full IPO calendar is available at IPOpremium.

OPUS registration statement, filed with FDIC

Manager, Joint managers: J.P. Morgan, Credit Suisse, Sandler O'Neill, Keefe Bruyette Woods

Co-Managers: None

End of lockup (180 days): Monday, October 13, 2014

End of 25-day quiet period: Monday, May 12, 2014

Community bank formed from bankruptcy a little over three years ago. New loans haven't been 'seasoned' yet. Funded by private equity firms.



Pre-IPO grade-score summary

Valuation Ratios


Price /

Price /

Price /

Price /

% offered

Cap (MM)

net int inc




in IPO

Opus Bank













Wilshire Bancorp (WIBC)






PacWest Bancorp (NASDAQ:PACW)*






Cathay General Bancorp (NASDAQ:CATY)






*recently merged with CapitalSource (NYSE:CSE)

Click to enlarge

High P/E ratio, in-range price-to-tangible book value ratio.

Regional bank with 51% of the IPO is going to selling shareholders. 51% is a relatively high percentage and is a negative.

High P/E ratio, in-range price-to-tangible book value ratio.

The rating is neutral.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.


OPB is a California-chartered commercial bank headquartered in Irvine, California.

Loan Portfolio

OPB's loan portfolio includes multifamily residential and commercial real estate loans, which are secured by mixed-use, shopping/retail centers, office buildings, industrial properties and other types of commercial properties.

As of December 31, 2013, multifamily residential loans totaled $1.7 billion, or 60% of the loan portfolio, and commercial real estate loans totaled $420.9 million, or 15% of our loan portfolio. Nonperforming multifamily residential and commercial real estate loans as of December 31, 2013 amounted to $0 and $1.0 million, respectively, all of which was acquired in the acquisitions OPB have completed, including those acquired in the Bay Cities Reorganization.

Multifamily residential and commercial real estate loans carry more risk as compared to residential mortgage lending.

Seasoning Risk

As a result of organic growth in the loan portfolio over the past three years since OPB completed the Bay Cities Reorganization, a large portion of loans and lending relationships are of relatively recent origin.

In general, loans do not begin to show signs of credit deterioration or default until they have been outstanding for some period of time, a process referred to as "seasoning."

Goals & mission

OPB's goal is to build a premier regional bank in the western United States providing high-value, relationship-based banking products, services and solutions to its clients, which include small and mid-sized companies, entrepreneurs, real estate investors, professionals and high net worth individuals to help them expand and grow.

OPB's mission is to partner with its clients and, through a consultative solution-based approach, help them achieve their business objectives by providing the high-touch, relationship-based and personalized service of a small community bank while delivering the sophisticated banking products, services and solutions often associated with large national financial institutions.

OPB serves its clients through its headquarters in Irvine, California and 60 banking offices located in major metropolitan markets within California, Washington and Arizona.

As of December 31, 2013, OPB had total assets of $3.7 billion, total loans of $2.9 billion, total deposits of $2.7 billion and $668.8 million of stockholders' equity.

Dividend Policy

No dividends are planned.


The primary markets OPB serves are in Southern California, the San Francisco Bay Area of California, the Seattle/Puget Sound region of Washington, Portland, Oregon and the Phoenix metropolitan area of Arizona.

These markets are highly competitive and contain not only a large number of community and regional banks, but also a significant presence of the country's largest commercial banks.

OPB competes with other state and national financial institutions located in California, Washington, Oregon, Arizona and adjoining states, as well as savings associations, savings banks and credit unions for deposits and loans.

In addition, OPB competes with financial intermediaries, such as commercial and consumer finance companies, mortgage banking companies, insurance companies, securities firms, mutual funds and several government agencies as well as major retailers, all actively engaged in providing various types of loans and other financial services.

5% stockholders

Elliott Associates, L.P. , 6.52%

Elliott Opus Holdings LLC, 11.52%

Fortress Investment Group LLC, 23.21%

Starwood Capital Group Global, L.P., 16.52%

Abrams Capital Management, L.L.C., 9.68%

Mount Kellett Master Fund II, L.P., 9.24%

PMG Ventures Holdings, L.P., 10.86%

Use of proceeds

51% of the IPO is going to selling shareholders. OPB expects to net $83 million from its IPO. Proceeds are allocated as follows:

to support growth in the western U.S. region, as well as for general corporate purposes and a contribution to the Opus Community Foundation.

OPB will not receive any proceeds from the sale of common stock by the selling shareholders.

Disclaimer: This OPB IPO report is based on a reading and analysis of OPB's FDIC registration statement, which can be found at OPUS registration statement, filed with FDIC, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.