2022 Second Quarter Highlights compared with 2021 Second
Quarter:
- Financial Results:
- Net income of $8.5 million, up $2.1 million, or 33%
- Diluted earnings per share of $0.54, up $0.12, or 29%
- Net interest income of $19.1 million, up $4.5 million, or
31%
- Provision for loan losses of $996 thousand, up $2.1
million
- Noninterest income of $5.4 million, up $3.1 million, or
141%
- Noninterest expense of $11.5 million, up $2.7 million, or
31%
- Pre-provision net revenue (1) of $12.9 million, up $4.9
million, or 61%
- Total assets of $1.93 billion, up $332.4 million, or 21%
- Total loans (2) of $1.55 billion, up $237.7 million, or
18%; Average loans (2) of $1.56 billion, up $318.0 million, or
26%
- Total deposits of $1.74 billion, up $307.5 million, or 21%;
Average deposits of $1.70 billion, up $354.0 million, or
26%
- Noninterest-bearing deposits to total deposits of 47.1%, up
from 46.6%
- Net interest margin of 4.21%, up from 3.98%
- Return on average equity of 20.29%, up from 17.10%
- Return on average assets of 1.79%, up from 1.68%
- Efficiency ratio of 47.07%, an improvement from 52.30%
- Credit Quality:
- Allowance for loan losses to gross loans of 1.19%, compared to
1.18%
- Adjusted allowance to gross loans (1) of 1.25%,
compared to 1.46%
- Net loan recoveries to average gross loans of 0.01%
- Nonperforming loans to gross loans of 0.15%, compared to
0.06%
- Criticized loans (3) to gross loans of 0.20%, down from
0.67%
- Capital Levels:
- Quarterly cash dividend of $0.12 per share, a 20% increase from
$0.10 per share
- Capital position well-capitalized with a Common Equity Tier 1
(“CET1”) ratio of 12.29%.
- Book value per common share of $11.16, up 11%
__________________________________________________________
(1) See reconciliation of GAAP to
non-GAAP financial measures. (2)
Includes loans held for sale. (3) Includes
special mention, substandard, doubtful, and loss categories.
OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company
of Open Bank, today reported its financial results for the second
quarter of 2022. Net income for the second quarter of 2022 was $8.5
million, or $0.54 per diluted common share, compared with $8.2
million, or $0.53 per diluted common share, for the first quarter
of 2022, and $6.4 million, or $0.42 per diluted common share, for
the second quarter of 2021.
Min Kim, President and Chief Executive Officer:
“We are pleased to report another strong quarter of earnings
performance and balance sheet growth. Our net income and diluted
earnings per share increased 33% and 29%, respectively, from a year
ago, while our average loans and deposits grew 26% each during the
same period. These results were accompanied by expanded net
interest margin, improved efficiency, and maintenance of strong
asset quality. We are also pleased to announce that OP Bancorp’s
Board of Directors approved a 20% increase of the quarterly cash
dividend to $0.12 per share, up from $0.10 per share. Despite
external headwinds related to supply chain bottlenecks, inflation,
and market rate increases by the Federal Reserve, we remain
optimistic about our future growth and performance and will
continue to focus on executing our strategic goals while
maintaining appropriate risk and control environment.”
SELECTED FINANCIAL HIGHLIGHTS
($ in thousands, except per share
data)
As of and For the Three Months
Ended
% Change 2Q22 vs.
2Q22
1Q22
2Q21
1Q22
2Q21
Selected Income Statement Data:
Net interest income
$
19,079
$
17,290
$
14,586
10.3
%
30.8
%
Provision for (reversal of) loan
losses
996
341
(1,112
)
192.1
n/a
Noninterest income
5,359
4,216
2,220
27.1
141.4
Noninterest expense
11,503
9,662
8,789
19.1
30.9
Income tax expense
3,459
3,351
2,750
3.2
25.8
Net Income
$
8,480
$
8,152
$
6,379
4.0
%
32.9
%
Diluted earnings per share
$
0.54
$
0.53
$
0.42
1.9
%
28.6
%
Selected Balance Sheet Data:
Total loans (1)
$
1,551,973
$
1,514,653
$
1,314,262
2.5
%
18.1
%
Total deposits
$
1,741,623
$
1,672,003
$
1,434,103
4.2
%
21.4
%
Total assets
$
1,934,242
$
1,863,945
$
1,601,860
3.8
%
20.7
%
Average loans (1)
$
1,560,064
$
1,444,054
$
1,242,058
8.0
%
25.6
%
Average deposits
$
1,702,860
$
1,570,376
$
1,348,910
8.4
%
26.2
%
Credit Quality:
Nonperforming loans
$
2,177
$
2,806
$
757
(22.4
) %
187.6
%
Net (recoveries) charge-offs to average
gross loans (2)
(0.01
) %
(0.00
) %
0.01
%
(0.01
) %
(0.02
) %
Allowance for loan losses to gross
loans
1.19
%
1.17
%
1.18
%
0.02
%
0.01
%
Financial Ratios:
Return on average assets (2)
1.79
%
1.85
%
1.68
%
(0.06
) %
0.11
%
Return on average equity (2)
20.29
%
19.54
%
17.10
%
0.75
%
3.19
%
Net interest margin (2)
4.21
%
4.12
%
3.98
%
0.09
%
0.23
%
Common equity tier 1 capital ratio
12.29
%
12.11
%
12.62
%
0.18
%
(0.33
) %
Leverage ratio
9.48
%
9.80
%
9.96
%
(0.32
) %
(0.48
) %
Efficiency ratio (3)
47.07
%
44.93
%
52.30
%
2.14
%
(5.23
) %
Book value per common share
$
11.16
$
10.97
$
10.04
1.7
%
11.2
%
(1)
Includes loans held for sale.
(2)
Annualized.
(3)
Represents noninterest expense divided by
the sum of net interest income and noninterest income.
INCOME STATEMENT HIGHLIGHTS
Net Interest Income and Net Interest Margin
($ in thousands)
For the Three Months
Ended
% Change 2Q22 vs.
2Q22
1Q22
2Q21
1Q22
2Q21
Interest Income
Interest income
$
20,148
$
17,944
$
15,349
12.3
%
31.3
%
Interest expense
1,069
654
763
63.5
40.1
Net interest income
$
19,079
$
17,290
$
14,586
10.3
%
30.8
%
($ in thousands)
For the Three Months
Ended
2Q22
1Q22
2Q21
Average Balance
Interest
and Fees
Yield/Rate (1)
Average Balance
Interest
and Fees
Yield/Rate (1)
Average Balance
Interest
and Fees
Yield/Rate (1)
Interest-earning Assets
Loans
$
1,560,064
$
19,108
4.91
%
$
1,444,054
$
17,257
4.84
%
$
1,242,058
$
14,971
4.83
%
Total interest-earning assets
$
1,817,157
$
20,148
4.44
%
$
1,698,799
$
17,944
4.28
%
$
1,469,163
$
15,349
4.19
%
Interest-bearing Liabilities
Interest-bearing deposits
$
859,072
$
1,069
0.50
%
$
786,915
$
654
0.34
%
$
733,525
$
763
0.42
%
Total interest-bearing liabilities
$
859,072
$
1,069
0.50
%
$
786,915
$
654
0.34
%
$
736,550
$
763
0.42
%
Ratios
Net interest Income/interest rate
spreads
$
19,079
3.94
%
$
17,290
3.94
%
$
14,586
3.77
%
Net interest margin
4.21
%
4.12
%
3.98
%
Total deposits / cost of deposits
$
1,702,860
$
1,069
0.25
%
$
1,570,376
$
654
0.17
%
$
1,348,910
$
763
0.23
%
Total funding liabilities / cost of
funds
$
1,702,860
$
1,069
0.25
%
$
1,570,376
$
654
0.17
%
$
1,351,935
$
763
0.23
%
(1)
Annualized.
($ in thousands)
For the Three Months
Ended
Yield % Change 2Q22
vs.
2Q22
1Q22
2Q21
Interest
& Fees
Yield (1)
Interest
& Fees
Yield (1)
Interest
& Fees
Yield (1)
1Q22
2Q21
Loan Yield Component
Contractual interest rate
$
17,441
4.48
%
$
15,312
4.29
%
$
13,189
4.26
%
0.19
%
0.22
%
SBA discount accretion
1,151
0.30
1,433
0.40
1,161
0.38
(0.10
)
(0.08
)
Amortization of net deferred fees
493
0.13
500
0.14
618
0.20
(0.01
)
(0.07
)
Amortization of premium
(197
)
(0.05
)
(188
)
(0.05
)
(170
)
-0.06
0.00
0.01
Net interest recognized on nonaccrual
loans
5
0.00
34
0.01
37
0.01
(0.01
)
(0.01
)
Prepayment penalties (2) and other
fees
215
0.05
166
0.05
136
0.04
—
0.01
Yield on loans
$
19,108
4.91
%
$
17,257
4.84
%
$
14,971
4.83
%
0.07
%
0.08
%
Amortization of net deferred fees:
PPP loan forgiveness (3)
$
351
0.09
%
$
483
0.13
%
$
290
0.09
%
(0.04
) %
—
%
Other
142
0.04
17
0.01
328
0.11
0.03
(0.07
)
Total amortization of net deferred
fees
$
493
0.13
%
$
500
0.14
%
$
618
0.20
%
(0.01
) %
(0.07
) %
(1)
Annualized.
(2)
Prepayment penalty income of $118
thousand, $95 thousand and $116 thousand for the three months ended
June 30, 2022, March 31, 2022 and June 30, 2021, respectively, was
from commercial real estate and C&I loans.
(3)
As of June 30, 2022, there were
unamortized net deferred fees of $183 thousand to be recognized
over the estimated life of the loans as a yield adjustment on the
loans.
Impact of Hana Loan Purchase on Average Loan Yield and Net
Interest Margin
During the second quarter of 2021, the Company purchased an SBA
portfolio of 638 loans with an ending balance of $100.0 million,
excluding loan discount of $8.9 million from Hana Small Business
Lending, Inc. (“Hana”). The following table presents impacts of the
Hana loan purchase on average loan yield and net interest
margin:
($ in thousands)
For the Three Months
Ended
2Q22
1Q22
2Q21
Hana Loan Purchase:
Contractual interest rate
$
956
$
976
$
473
Purchased loan discount accretion
592
772
381
Other fees
24
7
6
Total interest income
$
1,572
$
1,755
$
860
Effect on average loan yield (1)
0.19
%
0.26
%
0.13
%
Effect on net interest margin (1)
0.20
%
0.25
%
0.13
%
($ in thousands)
For the Three Months
Ended
2Q22
1Q22
2Q21
Average
Balance
Interest
and Fees
Yield/
Rate
Average
Balance
Interest
and Fees
Yield/
Rate
Average
Balance
Interest
and Fees
Yield/
Rate
Average loan yield (1)
$
1,560,064
$
19,108
4.91
%
$
1,444,054
$
17,257
4.84
%
$
1,242,058
$
14,971
4.83
%
Adjusted average loan yield excluding
purchased loans (1)(2)
$
1,490,884
$
17,536
4.72
%
$
1,369,423
$
15,502
4.58
%
$
1,204,532
$
14,111
4.70
%
Net interest margin (1)
$
1,817,157
$
19,079
4.21
%
$
1,698,799
$
17,290
4.12
%
$
1,469,163
$
14,586
3.98
%
Adjusted interest margin excluding
purchased loans (1)(2)
$
1,747,977
$
17,507
4.01
%
$
1,624,168
$
15,535
3.87
%
$
1,431,097
$
13,726
3.85
%
(1)
Annualized.
(2)
See reconciliation of GAAP to non-GAAP
financial measures.
Second Quarter 2022 vs. First Quarter
2022
Net interest income increased $1.8 million, or 10.3%, primarily
due to higher interest income on loans. Net interest margin was
4.21%, an increase of 9 basis points from 4.12%.
- A $1.9 million increase in interest income on loans was
primarily due to interest income increases of $941 thousand on real
estate loans and $763 thousand on home mortgage loans driven by
average balance increases of $40.6 million on real estate loans and
$77.2 million on home mortgage loans.
- The 9 basis point increase in net interest margin was primarily
due to a 16 basis point increase in average yield on
interest-earning assets.
- Average loan yield was 4.91%, a 7 basis point increase from
4.84%, primarily due to a 19 basis point increase in contractual
loan yield as a result of market rate increases by the Federal
Reserve, partially offset by a 10 basis point decrease from lower
SBA discount accretion income as a result of slower SBA loan
payoffs.
- Average yield on interesting-bearing deposits in other banks
was 0.98%, a 79 basis point increase from 0.19%, primarily due to
the Federal Reserve’s rate increases.
- Average cost of interest-bearing deposits was 0.50%, a 16 basis
point increase from 0.34%. Average cost of deposits was 0.25%, an 8
basis point increase from 0.17%, primarily due to the Federal
Reserve’s rate increases.
Second Quarter 2022 vs. Second Quarter
2021
Net interest income increased $4.5 million, or 30.8%, primarily
due to higher interest income on loans. Net interest margin was
4.21%, an increase of 23 basis points from 3.98%.
- A $4.1 million increase in interest income on loans was
primarily due to higher average loan balance from loan growth in
home loans, real estate loans, and C&I loans.
- The improvement of 23 basis points in net interest margin was
primarily due to a 25 basis point increase in average yield on
interest-earning assets.
- Average loan yield was 4.91%, an 8 basis point increase from
4.83%, primarily due to a 22 basis point increase in contractual
loan yield as a result of market rate increases by the Federal
Reserve, partially offset by an 8 basis point decrease from lower
SBA discount accretion income as a result of lower SBA loan payoffs
and a 7 basis point decrease in amortization of net deferred fees
as a result of lower balance in net deferred fees on SBA PPP
loans.
- Average yield on interesting-bearing deposits in other banks
was 0.98%, an 88 basis point increase from 0.10%, primarily due to
the Federal Reserve’s rate increases. Average yield on
available-for-sale debt securities was 1.70%, a 90 basis point
increase from 0.80%, primarily due to purchases of higher yield
securities in 2022.
- Average cost of interest-bearing deposits was 0.50%, an 8 basis
point increase from 0.42% primarily due to the Federal Reserve’s
rate increases. Average cost of deposits was 0.25%, a 2 basis point
increase from 0.23%, primarily due to the Federal Reserve’s rate
increases, partially offset by higher average balance of
noninterest-bearing deposits.
Provision for loan losses
Second Quarter 2022 vs. First Quarter
2022
The Company recorded $996 thousand provision for loan losses,
compared with a $341 thousand provision for loan losses. The $996
thousand provision for loan losses was primarily due to an increase
of $746 thousand in quantitative reserves from loan growth in real
estate and home mortgage loans and an adjustments of $270 thousand
in qualitative assessments of our loan portfolio.
Second Quarter 2022 vs. Second Quarter
2021
The Company recorded $996 thousand provision for loan losses,
compared with $1.1 million reversal of loan losses.
Noninterest Income
($ in thousands)
For the Three Months
Ended
% Change 2Q22 vs.
2Q22
1Q22
2Q21
1Q22
2Q21
Noninterest income
Service charges on deposits
$
427
$
388
$
393
10.1
%
8.7
%
Loan servicing fees, net of
amortization
654
447
302
46.3
116.6
Gain on sale of loans
3,873
3,238
1,210
19.6
220.1
Other income
405
143
315
183.2
28.6
Total noninterest income
$
5,359
$
4,216
$
2,220
27.1
%
141.4
%
Second Quarter 2022 vs. First Quarter
2022
Noninterest income increased $1.1 million, or 27.1%, primarily
due to higher gains on sale of loans, loan servicing fees and other
income.
- Gains on sale of loans were $3.9 million, up $635 thousand from
the first quarter of 2022. The increase was primarily due to higher
loan sales volume partially offset by lower average premium on loan
sales. The Company sold $58.6 million in SBA loans at an average
premium of 7.02%, compared to the sale of $31.8 million at an
average premium of 11.02%.
- Loan service fees, net of amortization, were $654 thousand, up
$207 thousand from first quarter of 2022, primarily due to lower
amortization of loan servicing fees as a result of lower SBA loan
payoffs.
- Other income were $405 thousand, up $262 thousand from first
quarter of 2022, primarily due to increases in credit related fees
and net earnings on Company owned life insurance and a decrease in
unrealized loss on CRA qualified mutual fund.
Second Quarter 2022 vs. Second Quarter
2021
Noninterest income increased $3.1 million, or 141.4%, primarily
due to higher gains on sale of loans and loan service fees.
- Gains on sales of loans were $3.9 million, up $2.7 million from
the second quarter of 2021. The increase was primarily due to
higher sales volume partially offset by lower average premium on
loan sales. The Company sold $58.6 million in SBA loans at an
average premium of 7.02%, compared to the sale of $10.6 million at
an average premium of 11.48%.
- Loan service fees, net of amortization, were $654 thousand, up
$352 thousand from the second quarter of 2021, primarily due to an
increase in loan servicing portfolio and lower amortization of loan
servicing fees as a result of lower SBA loan payoffs.
Noninterest Expense
($ in thousands)
For the Three Months
Ended
% Change 2Q22 vs.
2Q22
1Q22
2Q21
1Q22
2Q21
Noninterest expense
Salaries and employee benefits
$
7,109
$
5,657
$
5,307
25.7
%
34.0
%
Occupancy and equipment
1,489
1,378
1,234
8.1
20.7
Data processing and communication
492
493
467
(0.2
)
5.4
Professional fees
364
324
303
12.3
20.1
FDIC insurance and regulatory
assessments
192
207
123
(7.2
)
56.1
Promotion and advertising
165
189
176
(12.7
)
(6.3
)
Directors’ fees
190
177
128
7.3
48.4
Foundation donation and other
contributions
852
815
640
4.5
33.1
Other expenses
650
422
411
54.0
58.2
Total noninterest expense
$
11,503
$
9,662
$
8,789
19.1
%
30.9
%
Second Quarter 2022 vs. First Quarter
2022
Noninterest expense increased $1.8 million, or 19.1%, primarily
due to higher salaries and employee benefits.
- Salaries and employee benefits were $7.1 million, up $1.5
million from the first quarter of 2022. The increase was primarily
due to a $476 thousand increase in salaries as a result of five
additional employees and annual salary adjustments effective in the
second quarter of 2022, and a $860 thousand increase in employee
incentive accruals.
Second Quarter 2022 vs. Second Quarter
2021
Noninterest expense increased $2.7 million, or 30.9%, primarily
due to higher salaries and employee benefits.
- Salaries and employee benefits were $7.1 million, up $1.8
million from the second quarter of 2021. The increase was primarily
due to a $748 thousand increase in salaries as a result of 20
additional employees to support continued growth of the Company,
and a $767 thousand decrease in deferred loan origination costs
compared to higher origination costs related to SBA PPP loans for
the second quarter of 2021.
- Occupancy and equipment expenses were $1.5 million, up $255
thousand from the second quarter of 2021, primarily due to a new
branch opened in the first quarter of 2022.
- Foundation donation and other contributions were $852 thousand,
up $212 thousand from the second quarter of 2021. The increase was
primarily due to higher donation accruals for Open Stewardship
Foundation as a result of higher net income compared to the second
quarter of 2021.
- Other expenses were $650 thousand, up $239 thousand from the
second quarter of 2021, primarily due to a $172 thousand increase
in business development expenses.
Income Tax Expense
Second Quarter 2022 vs. First Quarter
2022
Income tax expense was $3.5 million, and the effective tax rate
was 29.0%, compared to income tax expense of $3.4 million and the
effective rate of 29.1% for the first quarter of 2022.
Second Quarter 2022 vs. Second Quarter
2021
Income tax expense was $3.5 million and the effective tax rate
was 29.0%, compared to income tax expense of $2.8 million and the
effective rate of 30.1% for the second quarter of 2021.
Balance Sheet Highlights
Loans
($ in thousands)
As of
% Change 2Q22 vs.
2Q22
1Q22
2Q21
1Q22
2Q21
Real estate loans
$
776,785
$
730,841
$
684,082
6.3
%
13.6
%
SBA loans (1)
247,413
253,064
338,751
(2.2
)
(27.0
)
C&I loans
128,620
176,934
102,562
(27.3
)
25.4
Home mortgage loans
331,362
266,465
119,319
24.4
177.7
Consumer & other loans
538
1,106
1,152
(51.4
)
(53.3
)
Gross loans
$
1,484,718
$
1,428,410
$
1,245,866
3.9
%
19.2
%
(1)
Includes PPP loans of $8.1 million, $22.1
million and $103.9 million as of June 30, 2022, March 31, 2022 and
June 30, 2021, respectively.
The following table presents new loan originations based on loan
commitment amounts for the periods indicated:
($ in thousands)
For the Three Months
Ended
% Change 2Q22 vs.
2Q22
1Q22
2Q21
1Q22
2Q21
Real estate loans
$
61,924
$
49,868
$
51,107
24.2
%
21.2
%
SBA loans (1)
55,085
37,400
76,535
47.3
(28.0
)
C&I loans
2,718
11,876
40,771
(77.1
)
(93.3
)
Home mortgage loans
30,345
22,785
13,262
33.2
128.8
Gross loans
$
150,072
$
121,929
$
181,675
23.1
%
(17.4
) %
(1)
Includes PPP loans of $13.9 million for
the three months ended June 30, 2021.
The following table presents changes in gross loans by loan
activity for the periods indicated:
($ in thousands)
For the Three Months
Ended
2Q22
1Q22
2Q21
Loan activities:
Gross loans, beginning
$
1,428,410
$
1,314,019
$
1,155,872
New originations
150,072
121,929
181,675
Net line advances
(46,773
)
17,455
(33,569
)
Purchases
56,455
81,552
99,849
Sales
(57,954
)
(31,819
)
(15,732
)
Paydowns
(16,011
)
(15,972
)
(12,688
)
Payoffs
(33,098
)
(45,391
)
(53,230
)
PPP Payoffs
(14,347
)
(19,079
)
(29,953
)
Other
17,964
5,716
(46,358
)
Total
56,308
114,391
89,994
Gross loans, ending
$
1,484,718
$
1,428,410
$
1,245,866
Second Quarter 2022 vs. First Quarter
2022
Gross loans were $1.48 billion at June 30, 2022, up $56.3
million from March 31, 2022, primarily due to new loan originations
and home mortgage loan purchases.
Home mortgage loans of $56.5 million were purchased from third
party mortgage originators, compared to $81.6 million in the first
quarter of 2022. New loan originations and loan payoffs were $150.1
million and $47.4 million for the second quarter of 2022, compared
with $121.9 million and $64.5 million for the first quarter of
2022, respectively. Of the PPP loans, $14.3 million in principal
amount has been forgiven under the program, compared to a $18.2
million of PPP loans forgiven in the first quarter of 2022.
Second Quarter 2022 vs. Second Quarter
2021
Gross loans were $1.48 billion at June 30, 2022, up $238.9
million from June 30, 2021, primarily due to new loan originations
and home mortgage loan purchases.
The following table presents the composition of gross loans by
interest rate type accompanied with the weighted average
contractual rates as of the periods indicated:
($ in thousands)
As of
2Q22
1Q22
2Q21
%
Rate
%
Rate
%
Rate
Fixed rate
34.9
%
4.19
%
33.3
%
4.11
%
34.8
%
3.85
%
Hybrid rate
28.2
4.47
25.6
4.30
20.2
4.74
Variable rate
36.9
5.77
41.1
5.09
45.0
4.91
Gross loans
100.0
%
4.85
%
100.0
%
4.56
%
100.0
%
4.51
%
The following table presents the maturity of gross loans by
interest rate type accompanied with the weighted average
contractual rates for the periods indicated:
($ in thousands)
As of June 30, 2022
Within One Year
One Year Through Five
Years
After Five Years
Total
Amount
Rate
Amount
Rate
Amount
Rate
Amount
Rate
Fixed rate
$
21,542
4.05
%
$
313,372
4.31
%
$
183,646
4.01
%
$
518,560
4.19
%
Hybrid rate
—
—
50,346
5.26
368,276
4.36
418,622
4.47
Variable rate
111,724
5.48
136,586
5.38
299,226
6.06
547,536
5.77
Gross loans
$
133,266
5.25
%
$
500,304
4.70
%
$
851,148
4.88
%
$
1,484,718
4.85
%
Deposits
($ in thousands)
As of
% Change 1Q22 vs.
2Q22
1Q22
2Q21
Amount
%
Amount
%
Amount
%
1Q22
2Q21
Noninterest-bearing deposits
$
820,311
47.1
%
$
848,531
50.8
%
$
668,244
46.6
%
(3.3
) %
22.8
%
Money market deposits and others
519,389
29.8
%
456,890
27.3
386,612
27.0
%
13.7
34.3
Time deposits
401,923
23.1
%
366,582
21.9
379,247
26.4
%
9.6
6.0
Total deposits
$
1,741,623
100.0
%
$
1,672,003
100.0
%
$
1,434,103
100.0
%
4.2
%
21.4
%
Second Quarter 2022 vs. First Quarter
2022
Total deposits were $1.74 billion as of June 30, 2022, up $69.6
million from March 31, 2022, primarily driven by growth in money
market deposits and time deposits, partially offset by a decrease
in noninterest-bearing deposits. Money market deposits and time
deposits grew $62.5 million and $35.3 million, respectively, due to
management’s proactive actions to support loan growth during the
second quarter of 2022 including upward adjustments of interest
rates on customer deposits and increases in wholesale deposits.
Second Quarter 2022 vs. Second Quarter
2021
Total deposits were $1.74 billion as of June 30, 2022, up $307.5
million from June 30, 2021, primarily driven by growth in
noninterest-bearing deposits and money market deposits.
Noninterest-bearing deposits were $820.3 million, up $152.1 million
from $668.2 million as of June 30, 2021. The growth in
noninterest-bearing deposits was primarily due to addition of new
customers from our Specialty Deposit Center. Money market deposits
were $519.4 million, up $132.8 million from $386.6 million at June
30, 2021, due to increases of $46 million in customer deposits and
$87 million in wholesale deposits to support continued growth of
the Company.
The following table sets forth the maturity of time deposits as
of June 30, 2022:
As of June 30, 2022
($ in thousands)
Within Three
Months
Three to
Six Months
Six to Nine Months
Nine to Twelve
Months
After
Twelve Months
Total
Time deposits (more than $250,000)
$
118,765
$
29,487
$
25,222
$
62,522
$
1,638
$
237,634
Time deposits ($250,000 or less)
41,015
29,282
25,821
61,078
7,093
164,289
Total time deposits
$
159,780
$
58,769
$
51,043
$
123,600
$
8,731
$
401,923
Weighted average rate
0.75
%
0.48
%
0.44
%
1.01
%
1.41
%
0.77
%
Capital and Cash Dividend
Basel III
OP Bancorp (1)
Open Bank
Minimum Well
Capitalized
Ratio
Minimum
Capital Ratio+
Conservation
Buffer (2)
Risk-Based Capital Ratios:
Total risk-based capital ratio
13.51
%
13.36
%
10.00
%
10.50
%
Tier 1 risk-based capital ratio
12.29
%
12.14
%
8.00
%
8.50
%
Common equity tier 1 ratio
12.29
%
12.14
%
6.50
%
7.00
%
Leverage ratio
9.48
%
9.36
%
5.00
%
4.00
%
(1)
The capital requirements are only
applicable to the Bank, and the Company's ratios are included for
comparison purpose.
(2)
An additional 2.5% capital conservation
buffer above the minimum capital ratios are required in order to
avoid limitations on distributions, including dividend payments and
certain discretionary bonus to executive officers.
($ in thousands)
Basel III
% Change 2Q22 vs.
2Q22
1Q22
2Q21
1Q22
2Q21
Risk-Based Capital Ratios:
Total risk-based capital ratio
13.51
%
13.29
%
13.87
%
0.22
%
(0.36
) %
Tier 1 risk-based capital ratio
12.29
%
12.11
%
12.62
%
0.18
%
(0.33
) %
Common equity tier 1 ratio
12.29
%
12.11
%
12.62
%
0.18
%
(0.33
) %
Leverage ratio
9.48
%
9.80
%
9.96
%
(0.32
) %
(0.48
) %
Risk-weighted Assets
$
1,465,707
$
1,427,569
$
1,198,373
2.67
%
22.31
%
Capital ratios remained strong during the quarter. Our CET1 and
total risk-based capital ratios were 12.29% and 13.51% as of June
30, 2022, respectively, a decrease from a year ago due to
year-over-year asset growth.
The Company’s Board of Directors has declared a quarterly cash
dividend of $0.12 per share of its common stock. The cash dividend
is payable on or about August 25, 2022 to all shareholders of
record as of the close of business on August 11, 2022.
The Company did not repurchase any shares during the second
quarter of 2022. Since the announcement of the initial stock
repurchase program in January 2019, the Company has repurchased a
total of 1.57 million shares of its common stock at an average
repurchase price of $8.58 per share through June 30, 2022.
Asset Quality
($ in thousands)
As of and For the Three Months
Ended
% Change 2Q22 vs.
2Q22
1Q22
2Q21
1Q22
2Q21
Nonperforming loans (1)
$
2,177
$
2,806
$
757
(22.4
) %
187.6
%
OREO
—
—
—
—
—
Total nonperforming assets
$
2,177
$
2,806
$
757
(22.4
) %
187.6
%
Nonperforming loans to gross loans
0.15
%
0.20
%
0.06
%
(0.05
) %
0.09
%
Nonperforming assets to total assets
0.11
%
0.15
%
0.05
%
(0.04
) %
0.06
%
Criticized (2) Loan:
Special mention loans
$
—
$
—
$
1,790
—
%
(100.0
) %
Classified loans (3)
3,020
3,848
6,553
(21.5
)
(53.9
)
Total criticized loans
$
3,020
$
3,848
$
8,343
(21.5
) %
(63.8
) %
Criticized (2) loans to gross loans
0.20
%
0.27
%
0.67
%
(0.07
) %
(0.47
) %
Classified loans (3) to gross loans
0.20
%
0.27
%
0.53
%
(0.07
) %
(0.33
) %
Allowance for loan losses, beginning
$
16,672
$
16,123
$
15,339
3.4
%
8.7
%
Provision for (reversal of) loan losses
(4)
996
546
(625
)
82.4
n/a
Gross charge-offs
(18
)
(14
)
(27
)
28.6
(33.3
)
Gross recoveries
52
17
—
205.9
—
Allowance for loan losses, ending (5)
$
17,702
$
16,672
$
14,687
6.2
%
20.5
%
Allowance for loan losses ratios:
As a % of gross loans
1.19
%
1.17
%
1.18
%
0.02
%
0.01
%
As an adjusted % of gross loans (6)
1.25
%
1.24
%
1.46
%
0.01
%
(0.21
) %
As a % of nonperforming loans
813
%
594
%
1,940
%
219
%
(1,127
) %
As a % of nonperforming assets
813
%
594
%
1,940
%
219
%
(1,127
) %
Net (recoveries) charge-offs to average
gross loans
(0.01
) %
(0.00
) %
0.01
%
(0.01
) %
(0.02
) %
(1)
Includes the guaranteed portion of SBA
loans totaling $346 thousand and $899 thousand as of June 30, 2022
and March 31, 2022, respectively.
(2)
Includes special mention, substandard,
doubtful and loss categories.
(3)
Includes substandard, doubtful and loss
categories.
(4)
Excludes reversal of uncollectible accrued
interest receivable of $205 thousand and $487 thousand for the
three months ended March 31, 2022 and June 30, 2021,
respectively.
(5)
Excludes allowance for uncollectible
accrued interest receivable of $792 thousand as of June 30,
2021.
(6)
See the Reconciliation of GAAP to NON-GAAP
Financial Measures.
Overall, the Company continued to maintain solid asset quality
with low levels of nonperforming loans and net charge-offs.
Nonperforming assets and criticized loans remained below our
historical norms, a reflection of our conservative credit culture
and expertise in the industries we serve. Our allowance remained
strong with an adjusted allowance to gross loans ratio of 1.25%. We
expect economic metrics to remain relatively strong over the next
year, which bodes well for growth; however, we remain vigilant
given potential impacts on our customers from continued supply
chain and labor constraints as well as increases in inflation and
market rates by the Federal Reserve.
- Allowance for loan losses increased $3.0 million to $17.7
million from a year ago. Excluding the impacts of the purchased
Hana loans, PPP loans, adjusted allowance to gross loans ratio was
1.25% as of June 30, 2022.
- Criticized loans decreased by $5.3 million or 63.8% from a year
ago, and the criticized loans to gross loans ratio improved by 47
basis points, primarily due to a $3.8 million payoff in one C&I
relationship as well as improvements in credit risk ratings for SBA
loans. Criticized loans are generally consistent with the Special
Mention, Substandard, Doubtful and Loss categories defined by
regulatory authorities.
- Nonperforming assets increased $1.4 million to $2.2 million, or
0.11% of total assets from a year ago. The increase in
nonperforming assets was primarily due to home mortgage and SBA
loans that were placed on nonaccrual in 2021. As of June 30, 2022,
$346 thousand of nonaccrual loans was the guaranteed portion of SBA
loans that are in liquidation. The Company did not have OREO as of
June 30, 2022 or 2021.
- Net recoveries were $34 thousand or 0.01% of average loans in
the second quarter of 2022, compared to net charge-offs of $27
thousand in the second quarter of 2021.
COVID-19 Pandemic Update
As of June 30, 2022, one C&I loan with outstanding balance
of $454 thousand was under COVID-19 loan payment modification,
which has ended on July 19, 2022.
Since the PPP’s inception through June 30, 2022, we have funded
$154.5 million, and $151.3 million of principal forgiveness has
been provided on qualifying PPP loans.
Reconciliation of GAAP to Non-GAAP Financial Measures
In addition to GAAP measures, management uses certain non-GAAP
financial measures to provide supplemental information regarding
the Company’s performance.
Pre-provision net revenue removes provision for loan losses and
income tax expense. Management believes that this non-GAAP measure,
when taken together with the corresponding GAAP financial measures
(as applicable), provides meaningful supplemental information
regarding our performance. This non-GAAP financial measure also
facilitates a comparison of our performance to prior periods.
($ in thousands)
For the Three Months
Ended
2Q22
1Q22
2Q21
Interest income
$
20,148
$
17,944
$
15,349
Interest expense
1,069
654
763
Net interest income
19,079
17,290
14,586
Noninterest income
5,359
4,216
2,220
Noninterest expense
11,503
9,662
8,789
Pre-provision net revenue
(a)
$
12,935
$
11,844
$
8,017
Reconciliation to net income:
Provision for (reversal of) loan
losses
(b)
$
996
$
341
$
(1,112
)
Income tax expense
(c)
3,459
3,351
2,750
Net income
(a)+(b) +(c)
$
8,480
$
8,152
$
6,379
During the second quarter of 2021, the Company purchased 638
loans from Hana for a total purchase price of $97.6 million. The
Company evaluated $100.0 million of the loans purchased in
accordance with the provisions of ASC 310-20, Nonrefundable Fees
and Other Costs, which were recorded with a $8.9 million discount.
As a result, the fair value discount on these loans is being
accreted into interest income over the expected life of the loans
using the effective yield method. Adjusted loan yield and net
interest margin for the three months ended June 30, 2022, March 31,
2022 and June 30, 2021 excluded the impacts of contractual interest
and discount accretion of the purchased loans as management does
not consider purchasing loan portfolios to be normal or recurring
transactions. Management believes that presenting the adjusted
average loan yield and net interest margin provide comparability to
prior periods and these non-GAAP financial measures provide
supplemental information regarding the Company’s performance.
($ in thousands)
For the Three Months
Ended
2Q22
1Q22
2Q21
Yield on Average Loans
Interest income on loans
$
19,108
$
17,257
$
14,971
Less: interest income on purchased
loans
1,571
1,755
860
Adjusted interest income on loans
(a)
$
17,537
$
15,502
$
14,111
Average loans
$
1,560,064
$
1,444,054
$
1,242,058
Less: Average purchased loans
69,180
74,631
37,526
Adjusted average loans
(b)
$
1,490,884
$
1,369,423
$
1,204,532
Average loan yield (1)
4.91
%
4.84
%
4.83
%
Effect on average loan yield (1)
0.19
%
0.26
%
0.13
%
Adjusted average loan yield (1)
(a)/(b)
4.72
%
4.58
%
4.70
%
Net Interest Margin
Net interest income
$
19,079
$
17,290
$
14,586
Less: interest income on purchased
loans
1,571
1,755
860
Adjusted net interest income
(c)
$
17,508
$
15,535
$
13,726
Average interest-earning assets
$
1,817,157
$
1,698,799
$
1,468,623
Less: Average purchased loans
69,180
74,631
37,526
Adjusted average interest-earning
assets
(d)
$
1,747,977
$
1,624,168
$
1,431,097
Net interest margin (1)
4.21
%
4.12
%
3.98
%
Effect on net interest margin (1)
0.20
%
0.25
%
0.13
%
Adjusted net interest margin (1)
(c)/(d)
4.01
%
3.87
%
3.85
%
(1)
Annualized.
Adjusted allowance to gross loans ratio removes the impacts of
purchased loans, PPP loans and allowance on accrued interest
receivable. Management believes that this ratio provides greater
consistency and comparability between the Company’s results and
those of its peer banks.
($ in thousands)
For the Three Months
Ended
2Q22
1Q22
2Q21
Gross loans
$
1,484,718
$
1,428,410
$
1,245,866
Less: Purchased loans
(66,946
)
(71,377
)
(88,438
)
PPP loans (1)
(7,151
)
(21.016
)
(97,673
)
Adjusted gross loans
(a)
1,410,621
$
1,336,017
$
1,059,755
Accrued interest receivable on loans
$
4,602
$
4,494
$
3,179
Less: Accrued interest receivable on
purchased loans
(290
)
(295
)
(290
)
Accrued interest receivable on PPP loans
(2)
(93
)
(229
)
(461
)
Add: Allowance on accrued interest
receivable
—
—
792
Adjusted accrued interest receivable on
loans
(b)
$
4,219
$
3,970
$
3,220
Adjusted gross loans and accrued interest
receivable
(a)+(b) =(c)
$
1,414,840
$
1,339,987
$
1,062,975
Allowance for loan losses
$
17,702
$
16,672
$
14,687
Add: Allowance on accrued interest
receivable
—
—
792
Adjusted Allowance
(d)
$
17,702
$
16,672
$
15,479
Adjusted allowance to gross loans
ratio
(d)/(c)
1.25
%
1.24
%
1.46
%
(1)
Excludes purchased PPP loans of $942
thousand, $1.0 million and $6.3 million as of June 30, 2022, March
31, 2022 and June 30, 2021, respectively.
(2)
Excludes purchased accrued interest
receivable on PPP loans of $13 thousand, $11 thousand and $26
thousand as of June 30, 2022, March 31, 2022 and June 30, 2021
respectively.
About OP Bancorp
OP Bancorp, the holding company for Open Bank (the “Bank”), is a
California corporation whose common stock is quoted on the Nasdaq
Global Market under the ticker symbol, “OPBK.” The Bank is engaged
in the general commercial banking business in Los Angeles, Orange,
and Santa Clara Counties, California, and Carrollton, Texas and is
focused on serving the banking needs of small- and medium-sized
businesses, professionals, and residents with a particular emphasis
on Korean and other ethnic minority communities. The Bank currently
operates with ten full service branch offices in Downtown Los
Angeles, Los Angeles Fashion District, Los Angeles Koreatown,
Cerritos, Gardena, Buena Park, and Santa Clara, California and
Carrollton, Texas. The Bank also has four loan production offices
in Atlanta, Georgia, Aurora, Colorado, and Lynnwood and Seattle,
Washington. The Bank commenced its operations on June 10, 2005 as
First Standard Bank and changed its name to Open Bank in October
2010. Its headquarters is located at 1000 Wilshire Blvd., Suite
500, Los Angeles, California 90017. Phone 213.892.9999;
www.myopenbank.com Member FDIC, Equal
Housing Lender.
Cautionary Note Regarding Forward-Looking Statements
Certain matters set forth herein constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, including forward-looking statements relating
to the Company’s current business plans and expectations regarding
future operating results. These forward-looking statements are
subject to risks and uncertainties that could cause actual results,
performance or achievements to differ materially from those
projected. These risks and uncertainties, some of which are beyond
our control, include, but are not limited to: the uncertainties
related to the coronavirus pandemic including, but not limited to,
the potential adverse effect of the pandemic on the economy, our
employees and customers, and our financial performance; the impact
of the federal CARES Act and the significant additional lending
activities undertaken by the Company in connection with the Small
Business Administration’s Paycheck Protection Program enacted
thereunder, including risks to the Company with respect to the
uncertain application by the Small Business Administration of new
borrower and loan eligibility, forgiveness and audit criteria;
business and economic conditions, particularly those affecting the
financial services industry and our primary market areas; our
ability to successfully manage our credit risk and the sufficiency
of our allowance for loan losses; factors that can impact the
performance of our loan portfolio, including real estate values and
liquidity in our primary market areas, the financial health of our
commercial borrowers, the success of construction projects that we
finance, including any loans acquired in acquisition transactions;
our ability to effectively execute our strategic plan and manage
our growth; interest rate fluctuations, which could have an adverse
effect on our profitability; liquidity issues, including
fluctuations in the fair value and liquidity of the securities we
hold for sale and our ability to raise additional capital, if
necessary; external economic and/or market factors, such as changes
in monetary and fiscal policies and laws, including the interest
rate policies of the Federal Reserve, inflation or deflation,
changes in the demand for loans, and fluctuations in consumer
spending, borrowing and savings habits, which may have an adverse
impact on our financial condition; continued or increasing
competition from other financial institutions, credit unions, and
non-bank financial services companies, many of which are subject to
different regulations than we are; challenges arising from
unsuccessful attempts to expand into new geographic markets,
products, or services; restraints on the ability of Open Bank to
pay dividends to us, which could limit our liquidity; increased
capital requirements imposed by banking regulators, which may
require us to raise capital at a time when capital is not available
on favorable terms or at all; a failure in the internal controls we
have implemented to address the risks inherent to the business of
banking; inaccuracies in our assumptions about future events, which
could result in material differences between our financial
projections and actual financial performance; changes in our
management personnel or our inability to retain motivate and hire
qualified management personnel; disruptions, security breaches, or
other adverse events, failures or interruptions in, or attacks on,
our information technology systems; disruptions, security breaches,
or other adverse events affecting the third-party vendors who
perform several of our critical processing functions; an inability
to keep pace with the rate of technological advances due to a lack
of resources to invest in new technologies; risks related to
potential acquisitions; political developments, uncertainties or
instability, catastrophic events, acts of war or terrorism, or
natural disasters, such as earthquakes, fires, drought, pandemic
diseases (such as the coronavirus) or extreme weather events, any
of which may affect services we use or affect our customers,
employees or third parties with which we conduct business;
incremental costs and obligations associated with operating as a
public company; the impact of any claims or legal actions to which
we may be subject, including any effect on our reputation;
compliance with governmental and regulatory requirements, including
the Dodd-Frank Act and others relating to banking, consumer
protection, securities and tax matters, and our ability to maintain
licenses required in connection with commercial mortgage
origination, sale and servicing operations; changes in federal tax
law or policy; and our ability the manage the foregoing and other
factors set forth in the Company’s public reports. We describe
these and other risks that could affect our results in Item 1A.
“Risk Factors,” of our latest Annual Report on Form 10-K for the
year ended December 31, 2021 and in our other subsequent filings
with the Securities and Exchange Commission.
Consolidated Balance Sheets (unaudited)
($ in thousands)
As of
% Change 2Q22 vs.
2Q22
1Q22
2Q21
1Q22
2Q21
Assets
Cash and due from banks
$
14,937
$
18,206
$
15,964
(18.0
) %
(6.4
) %
Interest-bearing deposits in other
banks
117,760
111,770
112,723
5.4
4.5
Cash and cash equivalents
132,697
129,976
128,687
2.1
3.1
Securities available for sale, at fair
value
174,814
161,182
111,832
8.5
56.3
Other investments
12,205
10,836
11,028
12.6
10.7
Loans held for sale
67,255
86,243
68,396
(22.0
)
(1.7
)
Real estate loans
776,785
730,841
684,082
6.3
13.6
SBA loans (1)
247,413
253,064
338,751
(2.2
)
(27.0
)
C&I loans
128,620
176,934
102,562
(27.3
)
25.4
Home mortgage loans
331,362
266,465
119,319
24.4
177.7
Consumer & other loans
538
1,106
1,152
(51.4
)
(53.3
)
Gross loans, net of unearned income
1,484,718
1,428,410
1,245,866
3.9
19.2
Allowance for loan losses
(17,702
)
(16,672
)
(14,687
)
6.2
20.5
Net loans receivable
1,467,016
1,411,738
1,231,179
3.9
19.2
Premises and equipment, net
4,493
4,570
4,271
(1.7
)
5.2
Accrued interest receivable, net
5,112
4,893
3,469
4.5
47.4
Servicing assets
12,708
12,341
12,903
3.0
(1.5
)
Company owned life insurance
21,317
11,197
11,005
90.4
93.7
Deferred tax assets
13,371
10,882
4,861
22.9
175.1
Operating right-of-use assets
8,036
8,471
6,065
(5.1
)
32.5
Other assets
15,218
11,616
8,164
31.0
86.4
Total assets
$
1,934,242
$
1,863,945
$
1,601,860
3.8
%
20.7
%
Liabilities and Shareholders'
Equity
Liabilities
Noninterest bearing
$
820,311
$
848,531
$
668,244
(3.3
) %
22.8
%
Money market and others
519,389
456,890
386,612
13.7
34.3
Time deposits greater than $250,000
237,634
192,849
193,704
23.2
22.7
Other time deposits
164,289
173,733
185,543
(5.4
)
(11.5
)
Total deposits
1,741,623
1,672,003
1,434,103
4.2
21.4
Accrued interest payable
612
548
608
11.7
0.7
Operating lease liabilities
9,335
9,839
7,567
(5.1
)
23.4
Other liabilities
13,180
15,564
7,620
(15.3
)
73.0
Total liabilities
1,764,750
1,697,954
1,449,898
3.9
21.7
Shareholders’ equity
Common stock
78,718
78,718
78,718
—
—
Additional paid-in capital
9,089
8,860
8,324
2.6
9.2
Retained earnings
92,659
85,694
64,700
8.1
43.2
Accumulated other comprehensive (loss)
income
(10,974
)
(7,281
)
220
50.7
(5088.2
)
Total shareholders’ equity
169,492
165,991
151,962
2.1
11.5
Total liabilities and shareholders'
equity
$
1,934,242
$
1,863,945
$
1,601,860
3.8
%
20.7
%
(1)
Includes SBA Paycheck Protection Program
(“PPP”) loans of $8.1 million, $22.1 million and $103.9 million as
of June 30, 2022, March 31, 2022 and June 30, 2021,
respectively.
Consolidated Statements of Income (unaudited)
($ in thousands, except share and per
share data)
For the Three Months
Ended
% Change 1Q22 vs.
2Q22
1Q22
2Q21
1Q22
2Q21
Interest income
Interest and fees on loans
$
19,108
$
17,257
$
14,971
10.7
%
27.6
%
Interest on securities available for
sale
703
530
218
32.6
222.5
Other interest income
337
157
160
114.6
110.6
Total interest income
20,148
17,944
15,349
12.3
31.3
Interest expense
Interest on deposits
1,069
654
763
63.5
40.1
Total interest expense
1,069
654
763
63.5
40.1
Net interest income
19,079
17,290
14,586
10.3
30.8
Provision for (reversal of) loan
losses
996
341
(1,112
)
192.1
n/a
Net interest income after provision for
loan losses
18,083
16,949
15,698
6.7
15.2
Noninterest income
Service charges on deposits
427
388
393
10.1
8.7
Loan servicing fees, net of
amortization
654
447
302
46.3
116.6
Gain on sale of loans
3,873
3,238
1,210
19.6
220.1
Other income
405
143
315
183.2
28.6
Total noninterest income
5,359
4,216
2,220
27.1
141.4
Noninterest expense
Salaries and employee benefits
7,109
5,657
5,307
25.7
34.0
Occupancy and equipment
1,489
1,378
1,234
8.1
20.7
Data processing and communication
492
493
467
(0.2
)
5.4
Professional fees
364
324
303
12.3
20.1
FDIC insurance and regulatory
assessments
192
207
123
(7.2
)
56.1
Promotion and advertising
165
189
176
(12.7
)
(6.3
)
Directors’ fees
190
177
128
7.3
48.4
Foundation donation and other
contributions
852
815
640
4.5
33.1
Other expenses
650
422
411
54.0
58.2
Total noninterest expense
11,503
9,662
8,789
19.1
30.9
Income before income tax expense
11,939
11,503
9,129
3.8
30.8
Income tax expense
3,459
3,351
2,750
3.2
25.8
Net income
$
8,480
$
8,152
$
6,379
4.0
%
32.9
%
Book value per share
$
11.16
$
10.97
$
10.04
1.7
%
11.2
%
Earnings per share - Basic
$
0.55
$
0.53
$
0.42
3.8
%
31.0
%
Earnings per share - Diluted
$
0.54
$
0.53
$
0.42
1.9
%
28.6
%
Shares of common stock outstanding
15,189,203
15,137,808
15,133,407
0.3
%
0.4
%
Weighted Average Shares:
- Basic
15,141,975
15,137,808
15,056,484
—
%
0.6
%
- Diluted
15,234,577
15,242,214
15,129,451
(0.1
) %
0.7
%
Key Ratios
For the Three Months
Ended
% Change 1Q22 vs.
2Q22
1Q22
2Q21
1Q22
2Q21
Return on average assets (ROA) (1)
1.79
%
1.85
%
1.68
%
(0.1
) %
0.1
%
Return on average equity (ROE) (1)
20.29
%
19.54
%
17.10
%
0.8
%
3.2
%
Net interest margin (1)
4.21
%
4.12
%
3.98
%
0.1
%
0.2
%
Efficiency ratio
47.07
%
44.93
%
52.30
%
2.1
%
(5.2
) %
Total risk-based capital ratio
13.51
%
13.29
%
13.87
%
0.2
%
(0.4
) %
Tier 1 risk-based capital ratio
12.29
%
12.11
%
12.62
%
0.2
%
(0.3
) %
Common equity tier 1 ratio
12.29
%
12.11
%
12.62
%
0.2
%
(0.3
) %
Leverage ratio
9.48
%
9.80
%
9.96
%
(0.3
) %
(0.5
) %
(1)
Annualized.
Consolidated Statements of Income (unaudited)
($ in thousands, except share and per
share data)
For the Six Months
Ended
2Q22
2Q21
% Change
Interest income
Interest and fees on loans
$
36,365
$
28,255
28.7
%
Interest on securities available for
sale
1,233
454
171.6
%
Other interest income
494
272
81.6
%
Total interest income
38,092
28,981
31.4
%
Interest expense
Interest on deposits
1,723
1,640
5.1
%
Total interest expense
1,723
1,640
5.1
%
Net interest income
36,369
27,341
33.0
%
Provision for (reversal of) loan
losses
1,337
(492
)
n/a
Net interest income after provision for
loan losses
35,032
27,833
25.9
%
Noninterest income
Service charges on deposits
815
748
9.0
%
Loan servicing fees, net of
amortization
1,101
833
32.2
%
Gain on sale of loans
7,111
3,092
130.0
%
Other income
548
513
6.8
%
Total noninterest income
9,575
5,186
84.6
%
Noninterest expense
Salaries and employee benefits
12,766
9,969
28.1
%
Occupancy and equipment
2,867
2,469
16.1
%
Data processing and communication
985
915
7.7
%
Professional fees
688
617
11.5
%
FDIC insurance and regulatory
assessments
399
255
56.5
%
Promotion and advertising
354
353
0.3
%
Directors’ fees
367
244
50.4
%
Foundation donation and other
contributions
1,667
1,147
45.3
%
Other expenses
1,072
786
36.4
%
Total noninterest expense
21,165
16,755
26.3
%
Income before income tax expense
23,442
16,264
44.1
%
Income tax expense
6,810
4,808
41.6
%
Net income
$
16,632
$
11,456
45.2
%
Book value per share
$
11.16
$
10.04
11.2
%
Earnings per share - Basic
$
1.08
$
0.75
44.0
%
Earnings per share - Diluted
$
1.07
$
0.75
42.7
%
Shares of common stock outstanding
15,189,203
15,133,407
0.4
%
Weighted Average Shares:
- Basic
15,139,903
15,039,773
0.7
%
- Diluted
15,238,113
15,099,403
0.9
%
Key Ratios
For the Six Months
Ended
2Q22
2Q21
% Change
Return on average assets (ROA) (1)
1.82
%
1.56
%
0.3
%
Return on average equity (ROE) (1)
19.92
%
15.58
%
4.3
%
Net interest margin (1)
4.16
%
3.90
%
0.3
%
Efficiency ratio
46.07
%
51.51
%
(5.4
) %
Total risk-based capital ratio
13.51
%
13.87
%
(0.4
) %
Tier 1 risk-based capital ratio
12.29
%
12.62
%
(0.3
) %
Common equity tier 1 ratio
12.29
%
12.62
%
(0.3
) %
Leverage ratio
9.48
%
9.96
%
(0.5
) %
(1)
Annualized.
Asset Quality
($ in thousands)
As of and For the Three Months
Ended
2Q22
1Q22
2Q21
Nonaccrual Loans (1)
$
2,172
$
2,806
$
757
Loans 90 days or more past due,
accruing
5
—
—
Accruing restructured loans
—
—
—
Nonperforming loans
2,177
2,806
757
Other real estate owned ("OREO")
—
—
—
Nonperforming assets
$
2,177
$
2,806
$
757
Criticized loans (2) by loan type:
SBA loans
$
1,738
$
2,543
$
3,681
C&I loans
297
305
4,662
Home mortgage loans
985
1,000
—
Total criticized loans (2)
$
3,020
$
3,848
$
8,343
Nonperforming assets/total assets
0.11
%
0.15
%
0.05
%
Nonperforming assets / gross loans plus
OREO
0.15
%
0.20
%
0.06
%
Nonperforming loans / gross loans
0.15
%
0.20
%
0.06
%
Allowance for loan losses / nonperforming
loans
813
%
594
%
1940
%
Allowance for loan losses / nonperforming
assets
813
%
594
%
1940
%
Allowance for loan losses / gross
loans
1.19
%
1.17
%
1.18
%
Criticized loans (2) / gross loans
0.20
%
0.27
%
0.67
%
Classified loans / gross loans
0.20
%
0.27
%
0.53
%
Net (recoveries) charge-offs
$
(34
)
$
(3
)
$
27
Net (recoveries) charge-offs to average
gross loans (3)
(0.01
) %
(0.00
) %
0.01
%
(1)
Includes the guaranteed portion of SBA
loans that are in liquidation totaling $346 thousand and $899
thousand as of June 30, 2022 and March 31, 2022, respectively.
(2)
Consists of special mention, substandard,
doubtful and loss categories.
(3)
Annualized.
($ in thousands)
2Q22
1Q22
2Q21
Accruing delinquent loans 30-89 days past
due
30-59 days
$
447
$
201
$
41
60-89 days
—
—
—
Total (1)
$
447
$
201
$
41
(1)
Includes the guaranteed portion of PPP
loans totaling $9 thousand as of March 31, 2022.
Average Balance Sheet, Interest and Yield/Rate
Analysis
For the Three Months
Ended
2Q22
1Q2022
2Q21
($ in thousands)
Average
Balance
Interest
and Fees
Yield/
Rate (1)
Average
Balance
Interest
and Fees
Yield/
Rate (1)
Average
Balance
Interest
and Fees
Yield/
Rate (1)
Interest-earning assets:
Interest-bearing deposits in other
banks
$
79,628
$
197
0.98
%
$
86,875
$
42
0.19
%
$
107,280
$
28
0.10
%
Federal funds sold and other
investments
11,966
140
4.70
10,957
115
4.19
10,865
132
4.85
Available-for-sale debt securities, at
fair value
165,499
703
1.70
156,913
530
1.35
108,960
218
0.80
Real estate loans
751,610
8,743
4.67
710,993
7,802
4.45
670,224
7,725
4.62
SBA loans
353,138
5,707
6.48
358,725
5,834
6.60
346,702
4,816
5.57
C&I loans
160,291
1,811
4.53
156,355
1,536
3.98
101,362
983
3.89
Home mortgage loans
294,341
2,837
3.86
217,103
2,074
3.82
122,588
1,431
4.67
Consumer & other loans
684
10
5.49
878
11
4.88
1,182
16
5.30
Loans (2)
1,560,064
19,108
4.91
1,444,054
17,257
4.84
1,242,058
14,971
4.83
Total interest-earning assets
1,817,157
20,148
4.44
1,698,799
17,944
4.28
1,469,163
15,349
4.19
Noninterest-earning assets
73,594
63,016
49,151
Total assets
$
1,890,751
$
1,761,815
$
1,518,314
Interest-bearing liabilities:
Money market deposits and others
$
470,013
$
503
0.43
%
$
412,295
$
251
0.25
%
$
366,922
$
281
0.31
%
Time deposits
389,059
566
0.58
374,620
403
0.44
366,603
482
0.53
Total interest-bearing deposits
859,072
1,069
0.50
786,915
654
0.34
733,525
763
0.42
Borrowings
—
—
—
—
—
—
3,025
—
—
Total interest-bearing liabilities
859,072
1,069
0.50
786,915
654
0.34
736,550
763
0.42
Noninterest-bearing liabilities:
Noninterest-bearing deposits
843,788
783,461
615,385
Other noninterest-bearing liabilities
20,720
24,599
17,119
Total noninterest-bearing liabilities
864,508
808,060
632,504
Shareholders’ equity
167,171
166,840
149,260
Total liabilities and shareholders’
equity
$
1,890,751
$
1,761,815
$
1,518,314
Net interest income / interest rate
spreads
$
19,079
3.94
%
$
17,290
3.94
%
$
14,586
3.77
%
Net interest margin
4.21
%
4.12
%
3.98
%
Cost of deposits & cost of funds:
Total deposits / cost of deposits
$
1,702,860
$
1,069
0.25
%
$
1,570,376
$
654
0.17
%
1,348,910
$
763
0.23
%
Total funding liabilities / cost of
funds
$
1,702,860
$
1,069
0.25
%
$
1,570,376
$
654
0.17
%
1,351,935
$
763
0.23
%
(1)
Annualized.
(2)
Includes loans held for sale.
Average Balance Sheet, Interest and Yield/Rate
Analysis
For the Six Months
Ended
2Q22
2Q21
($ in thousands)
Average
Balance
Interest
and Fees
Yield/
Rate (1)
Average
Balance
Interest
and Fees
Yield/
Rate (1)
Interest-earning assets:
Interest-bearing deposits in other
banks
$
83,231
$
238
0.57
%
$
98,654
$
51
0.10
%
Federal funds sold and other
investments
11,465
256
4.45
10,478
221
4.21
Available-for-sale debt securities, at
fair value
161,230
1,233
1.53
101,000
454
0.90
Real estate loans
731,413
16,545
4.56
661,907
15,191
4.63
SBA loans
355,916
11,542
6.54
307,787
8,096
5.30
C&I loans
158,334
3,348
4.26
108,803
2,055
3.81
Home mortgage loans
255,936
4,911
3.84
124,135
2,882
4.64
Consumer & other loans
780
19
5.15
1,184
31
5.24
Loans (2)
1,502,379
36,365
4.88
1,203,816
28,255
4.73
Total interest-earning assets
1,758,305
38,092
4.36
1,413,948
28,981
4.13
Noninterest-earning assets
68,334
50,422
Total assets
$
1,826,639
$
1,464,370
Interest-bearing liabilities:
Money market deposits and others
$
441,314
$
754
0.34
%
$
351,943
$
551
0.32
%
Time deposits
381,879
969
0.51
364,216
1,089
0.60
Total interest-bearing deposits
823,193
1,723
0.42
716,159
1,640
0.46
Borrowings
—
—
—
4,007
—
—
Total interest-bearing liabilities
823,193
1,723
0.42
720,166
1,640
0.46
Noninterest-bearing liabilities:
Noninterest-bearing deposits
813,791
580,134
Other noninterest-bearing liabilities
22,649
16,993
Total noninterest-bearing liabilities
836,440
597,127
Shareholders’ equity
167,006
147,077
Total liabilities and shareholders’
equity
$
1,826,639
1,464,370
Net interest income / interest rate
spreads
$
36,369
3.94
%
$
27,341
3.67
%
Net interest margin
4.16
%
3.90
%
Cost of deposits & cost of funds:
Total deposits / cost of deposits
$
1,636,984
$
1,723
0.21
%
1,296,293
$
1,640
0.26
%
Total funding liabilities / cost of
funds
$
1,636,984
$
1,723
0.21
%
1,300,300
$
1,640
0.25
%
(1)
Annualized.
(2)
Includes loans held for sale.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220728005983/en/
Investor Relations OP Bancorp Christine Oh EVP & CFO
213.892.1192 Christine.oh@myopenbank.com
Grafico Azioni OP Bancorp (NASDAQ:OPBK)
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