will pull back its tech-focusedlending after credit costs in the lending segment hit the company's second-quarterearnings.
OpusChairman, President and CEO Stephen Gordon said during the company's second-quarterearnings conference call that volatility in tech markets had driven low returnsin the company's portfolio, and that provisions related to downgrades in its techportfolio had masked positive developments in the rest of the company's results.
"We'vedetermined here at the start of the current third quarter to deemphasize our technologybanking niche-lending for the foreseeable future," Gordon said. The company'sresults were hit by an additional $7.6 million in provisions related to four loans,two of which were in its technology banking portfolio, Gordon added. Warrant valuationsrelated to technology loans further reduced the bank's non-interest income.
Analystsspent much of the call pressing for additional detail on the company's tech lendingcredit quality and decision to step back from the sector.
Gordonsaid that the decision was in part because the company is "not large enoughto be able to absorb the movement that you get," as a result of ratings changesin tech-focused lending. Gordon added that while those movements may be normal fortech lenders, they "are too big to be absorbed without having a meaningfulimpact on our earnings."
He andother company executives said during the call that their move away from tech lendingdid not affect its projection of $2.5 billion in new loan funding for 2016. Muchof that growth will come from its expanding commercial business and its multifamilylending segment, they said.