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Opus shares tank after reporting quarterly loss, $50M capital raise

Opus Bank recorded another quarterly loss and announced a capital raise as the bank continued to grapple with credit issues, according to a Jan. 30 press release announcing fourth-quarter 2016 earnings.

The Irvine, Calif.-based bank announced a net loss of $19 million during the fourth quarter of 2016, or 55 cents per share, compared to a net loss of $3 million, or 9 cents per share, a quarter prior. Net income for 2016 was $11.5 million, or 33 cents per share, compared to net income of $59.9 million, or $1.79 per share, a year prior.

The loss for the quarter was driven by a loan loss provision that totaled $69.5 million, which included $27.2 million in response to loan-risk rating migration, a $22.1 million increase in specific reserves on impaired loans and $19.2 million of net charge-offs for impaired loans. The actions were concentrated in the commercial business loan portfolio, primarily units dealing with technology, healthcare and corporate finance.

The bank recorded the provisions following assessments of "substantially all" of the commercial business loan portfolio performed internally and by a third-party loan review firms, the release stated. Those reviews determined that the portfolio experienced further deterioration during the quarter, which drove downgrades in the risk ratings as well as specific reserves and charge-offs.

The company is "deeply disappointed" with the loss, President and CEO Stephen Gordon said in the release. "We take this very seriously and are acutely focused on addressing the related issues and restoring Opus to its historic levels of performance," he said.

The bank also announced it raised $50 million from a $53 million private placement of its common stock with institutional accredited investors, at a price of $18.50 a share.

Opus Bank's shares tanked shortly after markets opened on Jan. 30, down 22.57% to $21.10 as of 10:53 a.m. ET.

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