2022 Third Quarter Highlights compared with 2021 Third
Quarter:
- Financial Results:
- Net income of $8.7 million, up $400 thousand, or 5%
- Diluted earnings per share of $0.55, up $0.01, or 2%
- Net interest income of $20.3 million, up $3.8 million, or
23%
- Provision for loan losses of $662 thousand, a $1.5 million
increase, compared to reversal of provision for loan losses of $884
thousand
- Noninterest income of $4.8 million, up $1.3 million, or
36%
- Noninterest expense of $12.3 million, up $2.8 million, or
30%
- Pre-provision net revenue (1) of $12.8 million, up $2.2
million, or 21%
- Total assets of $2.03 billion, up $349.7 million, or 21%
- Total loans (2) of $1.65 billion, up $328.4 million, or 25%;
Average loans (2) of $1.61 billion, up $305.7 million, or 23%
- Total deposits of $1.82 billion, up $320.4 million, or 21%;
Average deposits of $1.75 billion, up $305.0 million, or 21%
- Noninterest-bearing deposits of $794.6 million, up $81.5
million, or 11%; noninterest-bearing deposits to total deposits of
43.7%, compared to 47.6%
- Net interest margin of 4.31%, up from 4.21%
- Return on average equity of 19.91%, compared to 21.30%
- Return on average assets of 1.77%, compared to 2.03%
- Efficiency ratio of 49.03%, compared to 47.28%
- Credit Quality:
- Allowance for loan losses to gross loans of 1.14%, compared to
1.15%
- Adjusted allowance to gross loans (1) of 1.18%, compared to
1.34%
- Net loan recoveries to average gross loans of 0.00%
- Nonperforming loans to gross loans of 0.14%, compared to
0.09%
- Criticized loans (3) to gross loans of 0.22%, compared to
0.18%
- Capital Levels:
- Quarterly cash dividend of $0.12 per share, a 20% increase from
$0.10 per share
- Capital position remained well-capitalized with a Common Equity
Tier 1 (“CET1”) ratio of 11.92%.
- Book value per common share of $11.19, up 7%
___________________________________________________________
(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 third
quarter of 2022. Net income for the third quarter of 2022 was $8.7
million, or $0.55 per diluted common share, compared with $8.5
million, or $0.54 per diluted common share, for the second quarter
of 2022, and $8.3 million, or $0.54 per diluted common share, for
the third quarter of 2021.
Min Kim, President and Chief Executive Officer:
“We are pleased to report another strong quarter of balance
sheet growth and earnings performance. Our total assets surpassed
$2 billion for the first time as our average loans and deposits
grew 23% and 21%, respectively, from a year ago. The growth was
accompanied by increased net income and diluted earnings per share,
expanded net interest margin, and maintenance of strong asset
quality. Despite external headwinds related to supply chain
bottlenecks, inflation, and market rate increases by the Federal
Reserve, we remain optimistic about our future growth and
performance and will continue to focus on executing our strategic
goals while maintaining appropriate risk and control
environment.”
SELECTED FINANCIAL HIGHLIGHTS
($ in thousands, except per share
data)
As of and For the Three Months
Ended
% Change 3Q22 vs.
3Q22
2Q22
3Q21
2Q22
3Q21
Selected Income Statement Data:
Net interest income
$
20,344
$
19,079
$
16,589
6.6
%
22.6
%
Provision for (reversal of) loan
losses
662
996
(884
)
(33.5
)
n/m
Noninterest income
4,821
5,359
3,542
(10.0
)
36.1
Noninterest expense
12,338
11,503
9,519
7.3
29.6
Income tax expense
3,515
3,459
3,246
1.6
8.3
Net Income
$
8,650
$
8,480
$
8,250
2.0
%
4.8
%
Diluted earnings per share
$
0.55
$
0.54
$
0.54
1.9
%
1.9
%
Selected Balance Sheet Data:
Total loans (1)
$
1,654,660
$
1,551,973
$
1,326,287
6.6
%
24.8
%
Total deposits
$
1,816,811
$
1,741,623
$
1,496,406
4.3
%
21.4
%
Total assets
$
2,029,575
$
1,934,242
$
1,679,911
4.9
%
20.8
%
Average loans (1)
$
1,614,000
$
1,560,064
$
1,308,338
3.5
%
23.4
%
Average deposits
$
1,753,726
$
1,702,860
$
1,448,771
3.0
%
21.0
%
Credit Quality:
Nonperforming loans
$
2,251
$
2,177
$
1,052
3.4
%
114.0
%
Net (recoveries) charge-offs to average
gross loans (2)
(0.00
)%
(0.01
)%
(0.00
)%
0.01
%
0.00
%
Allowance for loan losses to gross
loans
1.14
%
1.19
%
1.15
%
(0.05
)%
(0.01
)%
Financial Ratios:
Return on average assets (2)
1.77
%
1.79
%
2.03
%
(0.02
) %
(0.26
)%
Return on average equity (2)
19.91
%
20.29
%
21.30
%
(0.38
) %
(1.39
)%
Net interest margin (2)
4.31
%
4.21
%
4.21
%
0.10
%
0.10
%
Common equity tier 1 capital ratio
11.92
%
12.29
%
12.63
%
(0.37
) %
(0.71
)%
Leverage ratio
9.52
%
9.48
%
9.75
%
0.04
%
(0.23
)%
Efficiency ratio (3)
49.03
%
47.07
%
47.28
%
1.96
%
1.75
%
Book value per common share
$
11.19
$
11.16
$
10.48
0.3
%
6.8
%
(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 3Q22 vs.
3Q22
2Q22
3Q21
2Q22
3Q21
Interest Income
Interest income
$
23,234
$
20,148
$
17,355
15.3
%
33.9
%
Interest expense
2,890
1,069
766
170.3
277.3
Net interest income
$
20,344
$
19,079
$
16,589
6.6
%
22.6
%
($ in thousands)
For the Three Months
Ended
3Q22
2Q22
3Q21
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
$
1,614,000
$
21,780
5.36
%
$
1,560,064
$
19,108
4.91
%
$
1,308,338
$
16,922
5.13
%
Total interest-earning assets
$
1,874,516
$
23,234
4.92
%
$
1,817,157
$
20,148
4.44
%
$
1,566,050
$
17,355
4.40
%
Interest-bearing Liabilities
Interest-bearing deposits
$
947,437
$
2,889
1.21
%
$
859,072
$
1,069
0.50
%
$
752,010
$
766
0.40
%
Total interest-bearing liabilities
$
947,567
$
2,890
1.21
%
$
859,072
$
1,069
0.50
%
$
752,010
$
766
0.40
%
Ratios
Net interest Income/interest rate
spreads
$
20,344
3.71
%
$
19,079
3.94
%
$
16,589
4.00
%
Net interest margin
4.31
%
4.21
%
4.21
%
Total deposits / cost of deposits
$
1,753,726
$
2,889
0.65
%
$
1,702,860
$
1,069
0.25
%
$
1,448,771
$
766
0.21
%
Total funding liabilities / cost of
funds
$
1,753,856
$
2,890
0.65
%
$
1,702,860
$
1,069
0.25
%
$
1,448,771
$
766
0.21
%
(1)
Annualized.
($ in thousands)
For the Three Months
Ended
Yield Change 3Q22 vs.
3Q22
2Q22
3Q21
Interest
& Fees
Yield (1)
Interest
& Fees
Yield (1)
Interest
& Fees
Yield (1)
2Q22
3Q21
Loan Yield Component
Contractual interest rate
$
20,419
5.02
%
$
17,425
4.48
%
$
14,251
4.32
%
0.54
%
0.70
%
SBA discount accretion
1,336
0.33
1,151
0.30
1,584
0.48
0.03
(0.15
)
Amortization of net deferred fees
122
0.03
493
0.13
1,249
0.38
(0.10
)
(0.35
)
Amortization of premium
(250
)
(0.06
)
(197
)
(0.05
)
(188
)
(0.06
)
(0.01
)
—
Net interest recognized on nonaccrual
loans
—
0.00
5
0.00
(15
)
—
0.00
0.00
Prepayment penalties (2) and other
fees
153
0.04
231
0.05
41
0.01
(0.01
)
0.03
Yield on loans
$
21,780
5.36
%
$
19,108
4.91
%
$
16,922
5.13
%
0.45
%
0.23
%
Amortization of net deferred fees:
PPP loan forgiveness (3)
$
146
0.04
%
$
351
0.09
%
$
1,006
0.31
%
(0.05
)%
(0.27
)%
Other
(24
)
-0.01
142
0.04
243
0.07
(0.05
)
(0.08
)
Total amortization of net deferred
fees
$
122
0.03
%
$
493
0.13
%
$
1,249
0.38
%
(0.10
)%
(0.35
)%
(1)
Annualized.
(2)
Prepayment penalty income of $79 thousand,
$118 thousand and $0 for the three months ended September 30, 2022,
June 30, 2022 and September 30, 2021, respectively, was from
commercial real estate and C&I loans.
(3)
As of September 30, 2022, there were
unamortized net deferred fees and unaccredited discounts of $28
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
3Q22
2Q22
3Q21
Hana Loan Purchase:
Contractual interest rate
$
1,114
$
956
$
1,094
Purchased loan discount accretion
594
592
948
Other fees
9
24
15
Total interest income
$
1,717
$
1,572
$
2,057
Effect on average loan yield (1)
0.21
%
0.19
%
0.30
%
Effect on net interest margin (1)
0.22
%
0.20
%
0.30
%
($ in thousands)
For the Three Months
Ended
3Q22
2Q22
3Q21
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)
$
1,614,000
$
21,780
5.36
%
$
1,560,064
$
19,108
4.91
%
$
1,308,338
$
16,922
5.13
%
Adjusted average loan yield excluding
purchased Hana loans (1)(2)
$
1,549,313
$
20,063
5.15
%
$
1,490,884
$
17,536
4.72
%
$
1,222,628
$
14,865
4.83
%
Net interest margin (1)
$
1,874,516
$
20,344
4.31
%
$
1,817,157
$
19,079
4.21
%
$
1,566,050
$
16,589
4.21
%
Adjusted interest margin excluding
purchased Hana loans (1)(2)
$
1,809,829
$
18,627
4.09
%
$
1,747,977
$
17,507
4.01
%
$
1,480,340
$
14,532
3.91
%
(1)
Annualized.
(2)
See reconciliation of GAAP to non-GAAP
financial measures.
Third Quarter 2022 vs. Second Quarter
2022
Net interest income increased $1.3 million, or 6.6%, primarily
due to higher interest income on loans. Net interest margin was
4.31%, an increase of 10 basis points from 4.21%.
- A $2.7 million increase in interest income on loans was
primarily due to interest income increases of $1.4 million on real
estate loans and $983 thousand on home mortgage loans driven by
average balance increases of $58.5 million on real estate loans and
$81.5 million on home mortgage loans.
- The 10 basis point increase in net interest margin was
primarily due to a 48 basis point increase in average yield on
interest-earning assets.
- Average loan yield was 5.36%, a 45 basis point increase from
4.91%, primarily due to a 54 basis point increase in contractual
loan yield as a result of market rate increases by the Federal
Reserve.
- Average cost of interest-bearing deposits was 1.21%, a 71 basis
point increase from 0.50%. Average cost of deposits was 0.65%, a 40
basis point increase from 0.25%, primarily due to the Federal
Reserve’s rate increases.
Third Quarter 2022 vs. Third Quarter
2021
Net interest income increased $3.8 million, or 22.6%, primarily
due to higher interest income on loans. Net interest margin was
4.31%, an increase of 10 basis points from 4.21%.
- A $4.9 million increase in interest income on loans was
primarily due to higher average loan balance from loan growth in
home loans and real estate loans.
- The improvement of 10 basis points in net interest margin was
primarily due to a 52 basis point increase in average yield on
interest-earning assets.
- Average loan yield was 5.36%, a 23 basis point increase from
5.13%, primarily due to a 70 basis point increase in contractual
loan yield as a result of market rate increases by the Federal
Reserve, partially offset by a 15 basis point decrease in SBA
discount accretion income as a result of lower SBA loan payoffs and
a 35 basis point decrease in amortization of net deferred fees as a
result of lower net deferred fees on SBA PPP loans.
- Average yield on interesting-bearing deposits in other banks
was 2.21%, a 208 basis point increase from 0.13%, primarily due to
the Federal Reserve’s rate increases. Average yield on
available-for-sale debt securities was 2.04%, a 105 basis point
increase from 0.99%, primarily due to higher yields on securities
purchased in 2022 as a result of the Federal Reserve’s rate
increases.
- Average cost of interest-bearing deposits was 1.21%, an 81
basis point increase from 0.40% primarily due to the Federal
Reserve’s rate increases. Average cost of deposits was 0.65%, a 44
basis point increase from 0.21%, primarily due to the Federal
Reserve’s rate increases.
Provision for loan losses
Third Quarter 2022 vs. Second Quarter
2022
The Company recorded $662 thousand provision for loan losses, a
decrease of $334 thousand, compared with a $996 thousand provision
for loan losses. The $662 thousand provision for loan losses was
primarily due to an increase of $2.3 million in quantitative
reserves from loan growth in real estate and home mortgage loans,
partially offset by a decrease of $1.6 million in qualitative
assessments of our loan portfolio.
Third Quarter 2022 vs. Third Quarter
2021
The Company recorded $662 thousand provision for loan losses, an
increase of $1.5 million, compared with $884 thousand reversal of
provision for loan losses.
Noninterest Income
($ in thousands)
For the Three Months
Ended
% Change 3Q22 vs.
3Q22
2Q22
3Q21
2Q22
3Q21
Noninterest income
Service charges on deposits
$
454
$
427
$
409
6.3
%
11.0
%
Loan servicing fees, net of
amortization
610
654
599
(6.7
)
1.8
Gain on sale of loans
3,490
3,873
2,188
(9.9
)
59.5
Other income
267
405
346
(34.1
)
(22.8
)
Total noninterest income
$
4,821
$
5,359
$
3,542
(10.0
)%
36.1
%
Third Quarter 2022 vs. Second Quarter
2022
Noninterest income decreased $538 thousand, or 10.0%, primarily
due to lower gains on sale of loans and other income.
- Gains on sale of loans were $3.5 million, down $383 thousand
from the second quarter of 2022, primarily due to lower average
premium on loan sales. The Company sold $59.3 million in SBA loans
at an average premium of 6.67%, compared to the sale of $58.6
million at an average premium of 7.02%.
- Other income were $267 thousand, down $138 thousand from second
quarter of 2022, primarily due to a decreases in credit related
fees and an increase in unrealized loss on CRA qualified mutual
fund.
Third Quarter 2022 vs. Third Quarter
2021
Noninterest income increased $1.3 million, or 36.1%, primarily
due to higher gains on sale of loans.
- Gains on sales of loans were $3.5 million, up $1.3 million from
the third quarter of 2021. The increase was primarily due to higher
sales volume partially offset by lower average premium on loan
sales. The Company sold $59.3 million in SBA loans at an average
premium of 6.67%, compared to the sale of $10.6 million at an
average premium of 11.48%.
Noninterest Expense
($ in thousands)
For the Three Months
Ended
% Change 3Q22 vs.
3Q22
2Q22
3Q21
2Q22
3Q21
Noninterest expense
Salaries and employee benefits
$
7,343
$
7,109
$
5,724
3.3
%
28.3
%
Occupancy and equipment
1,537
1,489
1,326
3.2
15.9
Data processing and communication
586
492
448
19.1
30.8
Professional fees
602
364
308
65.4
95.5
FDIC insurance and regulatory
assessments
238
192
146
24.0
63.0
Promotion and advertising
177
165
175
7.3
1.1
Directors’ fees
170
190
183
(10.5
)
(7.1
)
Foundation donation and other
contributions
875
852
842
2.7
3.9
Other expenses
810
650
367
24.6
120.7
Total noninterest expense
$
12,338
$
11,503
$
9,519
7.3
%
29.6
%
Third Quarter 2022 vs. Second Quarter
2022
Noninterest expense increased $835 thousand, or 7.3%, primarily
due to higher salaries and employee benefits, professional fees and
other expenses.
- Salaries and employee benefits were $7.3 million, up $234
thousand from the second quarter of 2022. The increase was
primarily due to an increase in employee incentive accruals and
salaries as a result of 13 additional employees.
- Professional fees were $602 thousand, up $238 thousand from the
second of 2022, primarily due to increases in other consulting
fees.
- Other expenses were $810 thousand, up $160 thousand from the
second of 2022, primarily due to an increase in business
development expense.
Third Quarter 2022 vs. Third Quarter
2021
Noninterest expense increased $2.8 million, or 29.6%, primarily
due to higher salaries and employee benefits and other
expenses.
- Salaries and employee benefits were $7.3 million, up $1.6
million from the third quarter of 2021. The increase was primarily
due to an increase in employee incentive accruals and salaries as a
result of 30 additional employees to support continued growth of
the Company.
- Occupancy and equipment expenses were $1.5 million, up $211
thousand from the third quarter of 2021, primarily due to a new
branch opened in the first quarter of 2022.
- Professional fees were $602 thousand, up $294 thousand from the
third of 2021, primarily due to increases in other consulting
fees.
- Other expenses were $810 thousand, up $443 thousand from the
third quarter of 2021, primarily due to an increase in business
development expense.
Income Tax Expense
Third Quarter 2022 vs. Second Quarter
2022
Income tax expense was $3.5 million, and the effective tax rate
was 28.9%, compared to income tax expense of $3.5 million and the
effective rate of 29.0% for the second quarter of 2022.
Third Quarter 2022 vs. Third Quarter
2021
Income tax expense was $3.5 million and the effective tax rate
was 28.9%, compared to income tax expense of $3.2 million and the
effective rate of 28.2% for the third quarter of 2021.
Balance Sheet Highlights
Loans
($ in thousands)
As of
% Change 3Q22 vs.
3Q22
2Q22
3Q21
2Q22
3Q21
Real estate loans
$
830,125
$
776,785
$
688,430
6.9
%
20.6
%
SBA loans (1)
232,569
247,413
303,625
(6.0
)
(23.4
)
C&I loans
133,855
128,620
123,422
4.1
8.5
Home mortgage loans
419,469
331,362
115,255
26.6
263.9
Consumer & other loans
2,000
538
1,089
271.7
83.7
Gross loans
$
1,618,018
$
1,484,718
$
1,231,821
9.0
%
31.4
%
(1)
Includes PPP loans of $1.1 million, $8.1
million and $69.3 million as of September 30, 2022, June 30, 2022
and September 30, 2021, respectively.
The following table presents new loan originations based on loan
commitment amounts for the periods indicated:
($ in thousands)
For the Three Months
Ended
% Change 3Q22 vs.
3Q22
2Q22
3Q21
2Q22
3Q21
Real estate loans
$
43,929
$
61,924
$
27,671
(29.1
)%
58.8
%
SBA loans (1)
43,984
55,085
57,541
(20.2
)
(23.6
)
C&I loans
9,720
2,718
35,279
257.6
(72.4
)
Home mortgage loans
68,842
30,345
13,437
126.9
412.3
Consumer & other loans
2,500
—
—
—
—
Gross loans
$
168,975
$
150,072
$
133,928
12.6
%
26.2
%
(1)
There were no new PPP originations for the
periods indicated.
The following table presents changes in gross loans by loan
activity for the periods indicated:
($ in thousands)
For the Three Months
Ended
3Q22
2Q22
3Q21
Gross loans, beginning
$
1,484,718
$
1,428,410
$
1,245,866
New originations
168,975
150,072
152,913
Net line advances
18,642
(46,773
)
(24,018
)
Purchases
37,146
56,455
—
Sales
(60,307
)
(57,954
)
(22,506
)
Paydowns
(19,084
)
(16,011
)
(14,675
)
Payoffs
(37,817
)
(33,098
)
(46,409
)
PPP Payoffs
(7,206
)
(14,347
)
(36,108
)
Other
32,951
17,964
(23,242
)
Total
133,300
56,308
(14,045
)
Gross loans, ending
$
1,618,018
$
1,484,718
$
1,231,821
As of September 30, 2022 vs. June 30,
2022
Gross loans were $1.62 billion at September 30, 2022, up $133.3
million from June 30, 2022, primarily due to new loan originations
and home mortgage loan purchases.
Home mortgage loans of $37.1 million were purchased from third
party mortgage originators, compared to $56.5 million in the second
quarter of 2022. New loan originations and loan payoffs were $169.0
million and $45.0 million for the third quarter of 2022, compared
with $150.1 million and $47.4 million for the second quarter of
2022, respectively. Of the PPP loans, $7.2 million in principal
amount has been forgiven under the program, compared to a $14.3
million of PPP loans forgiven in the second quarter of 2022.
As of September 30, 2022 vs. September
30, 2021
Gross loans were $1.62 billion at September 30, 2022, up $386.2
million from September 30, 2021, primarily due to new loan
originations of $609.2 million and home mortgage loan purchases of
$224.1 million, partially offset by loan sales of $211.0 million
and loan payoffs of $233.6 million.
The following table presents the composition of gross loans by
interest rate type accompanied with the weighted average
contractual rates as of the periods indicated:
($ in thousands)
As of
3Q22
2Q22
3Q21
%
Rate
%
Rate
%
Rate
Fixed rate
35.2
%
4.39
%
34.9
%
4.19
%
32.2
%
4.05
%
Hybrid rate
34.1
4.59
28.2
4.47
22.4
4.55
Variable rate
30.7
6.97
36.9
5.77
45.4
5.08
Gross loans
100.0
%
5.25
%
100.0
%
4.85
%
100.0
%
4.63
%
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 September 30,
2022
Within One Year
One Year Through Five
Years
After Five Years
Total
Amount
Rate
Amount
Rate
Amount
Rate
Amount
Rate
Fixed rate
$
33,014
4.32
%
$
325,509
4.47
%
$
211,033
4.29
%
$
569,556
4.39
%
Hybrid rate
28,577
4.35
52,341
5.12
470,087
4.54
551,005
4.59
Variable rate
76,193
6.83
132,162
6.84
289,102
7.08
497,457
6.97
Gross loans
$
137,784
5.71
%
$
510,012
5.15
%
$
970,222
5.24
%
$
1,618,018
5.25
%
Deposits
($ in thousands)
As of
% Change 3Q22 vs.
3Q22
2Q22
3Q21
Amount
%
Amount
%
Amount
%
2Q22
3Q21
Noninterest-bearing deposits
$
794,631
43.7
%
$
820,311
47.1
%
$
713,141
47.6
%
(3.1
)%
11.4
%
Money market deposits and others
524,911
28.9
%
519,389
29.8
351,186
23.5
%
1.1
49.5
Time deposits
497,269
27.4
%
401,923
23.1
432,079
28.9
%
23.7
15.1
Total deposits
$
1,816,811
100.0
%
$
1,741,623
100.0
%
$
1,496,406
100.0
%
4.3
%
21.4
%
As of September 30, 2022 vs. June 30,
2022
Total deposits were $1.82 billion as of September 30, 2022, up
$75.2 million from June 30, 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 $5.5 million and $95.3 million, respectively,
due to management’s actions to support loan growth during the third
quarter of 2022 including upward adjustments of interest rates on
customer deposits and increases in wholesale deposits.
Noninterest-bearing deposits decreased $25.7 million, primarily due
to decreases from Special Deposit Center as a result of lower
transaction volumes, specifically escrow and 1031 exchange
accounts.
As of September 30, 2022 vs. September
30, 2021
Total deposits were $1.82 billion as of September 30, 2022, up
$320.4 million from September 30, 2021, primarily driven by growth
in money market and noninterest-bearing deposits. Money market
deposits were $524.9 million, up $173.7 million from $351.2 million
at September 30, 2021. Noninterest-bearing deposits were $794.6
million, up $81.5 million from $713.1 million as of September 30,
2021. The growth in noninterest-bearing deposits was primarily due
to addition of new customers from our Specialty Deposit Center.
The following table sets forth the maturity of time deposits as
of September 30, 2022:
As of September 30,
2022
($ 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)
$
76,174
$
15,362
$
33,682
$
149,265
$
3,302
$
277,785
Time deposits ($250,000 or less)
51,818
39,287
37,942
84,080
6,357
219,484
Total time deposits
$
127,992
$
54,649
$
71,624
$
233,345
$
9,659
$
497,269
Weighted average rate
1.65
%
1.29
%
1.07
%
1.95
%
1.68
%
1.63
%
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
13.10 %
12.97 %
10.00 %
10.50 %
Tier 1 risk-based capital ratio
11.92 %
11.79 %
8.00 %
8.50 %
Common equity tier 1 ratio
11.92 %
11.79 %
6.50 %
7.00 %
Leverage ratio
9.52 %
9.41 %
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 3Q22 vs.
3Q22
2Q22
3Q21
2Q22
3Q21
Risk-Based Capital Ratios:
Total risk-based capital ratio
13.10
%
13.51
%
13.81
%
(0.41
)%
(0.71
)%
Tier 1 risk-based capital ratio
11.92
%
12.29
%
12.63
%
(0.37
)%
(0.71
)%
Common equity tier 1 ratio
11.92
%
12.29
%
12.63
%
(0.37
)%
(0.71
)%
Leverage ratio
9.52
%
9.48
%
9.75
%
0.04
%
(0.23
)%
Risk-weighted Assets
$
1,571,593
$
1,465,707
$
1,251,867
7.22
%
25.54
%
Capital ratios remained strong during the quarter. Our CET1 and
total risk-based capital ratios were 11.92% and 13.10% as of
September 30, 2022, down 71 basis points and 71 basis points from a
year ago, respectively. The decreases in capital ratios were
primarily 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 November 24, 2022 to all shareholders of
record as of the close of business on November 10, 2022.
The Company did not repurchase any shares during the third
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 $8.58 per share through September 30, 2022.
Asset Quality
($ in thousands)
As of and For the Three Months
Ended
% Change 3Q22 vs.
3Q22
2Q22
3Q21
2Q22
3Q21
Nonperforming loans (1)
$
2,251
$
2,177
$
1,052
3.4
%
114.0
%
OREO
—
—
—
—
—
Total nonperforming assets
$
2,251
$
2,177
$
1,052
3.4
%
114.0
%
Nonperforming loans to gross loans
0.14
%
0.15
%
0.09
%
(0.01
) %
0.05
%
Nonperforming assets to total assets
0.11
%
0.11
%
0.06
%
0.00
%
0.05
%
Criticized (2) Loan:
Special mention loans
$
—
$
—
$
—
—
%
—
%
Classified loans (3)
3,542
3,020
2,201
17.3
60.9
Total criticized loans
$
3,542
$
3,020
$
2,201
17.3
%
60.9
%
Criticized (2) loans to gross loans
0.22
%
0.27
%
0.18
%
(0.05
)%
0.04
%
Classified loans (3) to gross loans
0.22
%
0.27
%
0.18
%
(0.05
)%
0.04
%
Allowance for loan losses, beginning
$
17,702
$
16,672
$
14,687
6.2
%
20.5
%
Provision for (reversal of) loan losses
(4)
662
996
(557
)
(33.5
)
n/m
Gross charge-offs
—
(18
)
—
(100.0
)
—
Gross recoveries
5
52
4
(90.4
)
25.0
Allowance for loan losses, ending (5)
$
18,369
$
17,702
$
14,134
3.8
%
30.0
%
Allowance for loan losses ratios:
As a % of gross loans
1.14
%
1.19
%
1.15
%
(0.05
)%
(0.01
)%
As an adjusted % of gross loans (6)
1.18
%
1.25
%
1.34
%
(0.07
)%
(0.16
)%
As a % of nonperforming loans
816
%
813
%
1,344
%
3
%
(528
)%
As a % of nonperforming assets
816
%
813
%
1,344
%
3
%
(528
)%
Net (recoveries) charge-offs to average
gross loans
(0.00
)%
(0.01
)%
0.00
%
0.01
%
0.00
%
(1)
Includes the guaranteed portion of SBA
loans totaling $442 thousand and $346 thousand as of September 30,
2022 and June 30, 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 $327 thousand for the three months ended
September 30, 2021.
(5)
Excludes allowance for uncollectible
accrued interest receivable of $465 thousand as of September 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
1.18%.
- Allowance for loan losses increased $4.2 million to $18.4
million from a year ago. Excluding the impacts of the purchased
Hana loans, PPP loans, adjusted allowance to gross loans ratio was
1.18% as of September 30, 2022.
- Criticized loans increased by $1.3 million or 60.9% from a year
ago, and the criticized loans to gross loans ratio increased by 4
basis points, primarily due to home mortgage loans that were
categorized as Substandard in the fourth quarter of 2021.
Criticized loans are generally consistent with the Special Mention,
Substandard, Doubtful and Loss categories defined by regulatory
authorities.
- Nonperforming assets increased $1.2 million to $2.3 million, or
0.11% of total assets from a year ago. The increase in
nonperforming assets was primarily due to home mortgage loans that
were placed on nonaccrual in the fourth quarter of 2021. As of
September 30, 2022, $442 thousand of nonaccrual loans was the
guaranteed portion of SBA loans that are in liquidation. The
Company did not have OREO as of September 30, 2022 or 2021.
- Net recoveries were $5 thousand or 0.00% of average loans in
the third quarter of 2022, compared to net recoveries of $4
thousand in the third quarter of 2021.
COVID-19 Pandemic Update
As of September 30, 2022, no loan was under COVID-19 loan
payment modification.
Since the PPP’s inception through September 30, 2022, we have
funded $154.5 million, and $153.4 million of principal forgiveness
has been provided on qualifying PPP loans.
Reconciliation of GAAP to Non-GAAP Financial Measures
In addition to GAAP measures, management uses certain non-GAAP
financial measures to provide supplemental information regarding
the Company’s performance.
Pre-provision net revenue removes provision for loan losses and
income tax expense. Management believes that this non-GAAP measure,
when taken together with the corresponding GAAP financial measures
(as applicable), provides meaningful supplemental information
regarding our performance. This non-GAAP financial measure also
facilitates a comparison of our performance to prior periods.
($ in thousands)
For the Three Months
Ended
3Q22
2Q22
3Q21
Interest income
$
23,234
$
20,148
$
17,355
Interest expense
2,890
1,069
766
Net interest income
20,344
19,079
16,589
Noninterest income
4,821
5,359
3,542
Noninterest expense
12,338
11,503
9,519
Pre-provision net revenue
(a)
$
12,827
$
12,935
$
10,612
Reconciliation to net income:
Provision for (reversal of) loan
losses
(b)
$
662
$
996
$
(884
)
Income tax expense
(c)
3,515
3,459
3,246
Net income
(a)+(b) +(c)
$
8,650
$
8,480
$
8,250
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 $8.9 million discount.
As a result, the fair value discount on these loans is being
accreted into interest income over the expected life of the loans
using the effective yield method. Adjusted loan yield and net
interest margin for the three months ended September 30, 2022, June
30, 2022 and September 30, 2021 excluded the impacts of contractual
interest and discount accretion of the purchased Hana loans as
management does not consider purchasing loan portfolios to be
normal or recurring transactions. Management believes that
presenting the adjusted average loan yield and net interest margin
provide comparability to prior periods and these non-GAAP financial
measures provide supplemental information regarding the Company’s
performance.
($ in thousands)
For the Three Months
Ended
3Q22
2Q22
3Q21
Yield on Average Loans
Interest income on loans
$
21,780
$
19,108
$
16,922
Less: interest income on purchased Hana
loans
1,717
1,572
2,057
Adjusted interest income on loans
(a)
$
20,063
$
17,536
$
14,865
Average loans
$
1,614,000
$
1,560,064
$
1,308,338
Less: Average purchased Hana loans
64,687
69,180
85,710
Adjusted average loans
(b)
$
1,549,313
$
1,490,884
$
1,222,628
Average loan yield (1)
5.36
%
4.91
%
5.13
%
Effect on average loan yield (1)
0.21
%
0.19
%
0.30
%
Adjusted average loan yield (1)
(a)/(b)
5.15
%
4.72
%
4.83
%
Net Interest Margin
Net interest income
$
20,344
$
19,079
$
16,589
Less: interest income on purchased Hana
loans
1,717
1,572
2,057
Adjusted net interest income
(c)
$
18,627
$
17,507
$
14,532
Average interest-earning assets
$
1,874,516
$
1,817,157
$
1,566,050
Less: Average purchased Hana loans
64,687
69,180
85,710
Adjusted average interest-earning
assets
(d)
$
1,809,829
$
1,747,977
$
1,480,340
Net interest margin (1)
4.31
%
4.21
%
4.21
%
Effect on net interest margin (1)
0.22
%
0.20
%
0.30
%
Adjusted net interest margin (1)
(c)/(d)
4.09
%
4.01
%
3.91
%
(1)
Annualized.
Adjusted allowance to gross loans ratio removes the impacts of
purchased Hana 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
3Q22
2Q22
3Q21
Gross loans
$
1,618,018
$
1,484,718
$
1,231,821
Less: Purchased Hana loans
(61,899
)
(66,946
)
(83,025
)
PPP loans (1)
(1,022
)
(7,151
)
(64,574
)
Adjusted gross loans
(a)
1,555,097
$
1,410,621
$
1,084,222
Accrued interest receivable on loans
$
5,203
$
4,602
$
3,659
Less: Accrued interest receivable on
purchased Hana loans
(323
)
(290
)
(375
)
Accrued interest receivable on PPP loans
(2)
(16
)
(93
)
(416
)
Add: Allowance on accrued interest
receivable
—
—
465
Adjusted accrued interest receivable on
loans
(b)
$
4,864
$
4,219
$
3,333
Adjusted gross loans and accrued interest
receivable
(a)+(b) =(c)
$
1,559,961
$
1,414,840
$
1,087,555
Allowance for loan losses
$
18,369
$
17,702
$
14,134
Add: Allowance on accrued interest
receivable
—
—
465
Adjusted Allowance
(d)
$
18,369
$
17,702
$
14,599
Adjusted allowance to gross loans
ratio
(d)/(c)
1.18
%
1.25
%
1.34
%
(1)
Excludes purchased PPP loans of $57
thousand, $942 thousand and $4.7 million as of September 30, 2022,
June 30, 2022 and September 30, 2021, respectively.
(2)
Excludes purchased accrued interest
receivable on PPP loans of $1 thousand, $13 thousand and $30
thousand as of September 30, 2022, June 30, 2022 and September 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 Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, and
Lynnwood, 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: 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 3Q22 vs.
3Q22
2Q22
3Q21
2Q22
3Q21
Assets
Cash and due from banks
$
25,516
$
14,937
$
17,617
70.8
%
44.8
%
Interest-bearing deposits in other
banks
81,765
117,760
170,528
(30.6
)
(52.1
)
Cash and cash equivalents
107,281
132,697
188,145
(19.2
)
(43.0
)
Securities available for sale, at fair
value
186,438
174,814
102,535
6.6
81.8
Other investments
12,074
12,205
11,025
(1.1
)
9.5
Loans held for sale
36,642
67,255
94,466
(45.5
)
(61.2
)
Real estate loans
830,125
776,785
688,430
6.9
20.6
SBA loans (1)
232,569
247,413
303,625
(6.0
)
(23.4
)
C&I loans
133,855
128,620
123,422
4.1
8.5
Home mortgage loans
419,469
331,362
115,255
26.6
263.9
Consumer & other loans
2,000
538
1,089
271.7
83.7
Gross loans, net of unearned income
1,618,018
1,484,718
1,231,821
9.0
31.4
Allowance for loan losses
(18,369
)
(17,702
)
(14,134
)
3.8
30.0
Net loans receivable
1,599,649
1,467,016
1,217,687
9.0
31.4
Premises and equipment, net
4,383
4,493
4,199
(2.4
)
4.4
Accrued interest receivable, net
5,856
5,112
3,931
14.6
49.0
Servicing assets
12,889
12,708
12,389
1.4
4.0
Company owned life insurance
21,464
21,317
11,070
0.7
93.9
Deferred tax assets
17,296
13,371
5,247
29.4
229.6
Operating right-of-use assets
8,265
8,036
9,270
2.8
(10.8
)
Other assets
17,338
15,218
19,947
13.9
(13.1
)
Total assets
$
2,029,575
$
1,934,242
$
1,679,911
4.9
%
20.8
%
Liabilities and Shareholders'
Equity
Liabilities
Noninterest bearing
$
794,631
$
820,311
$
713,141
(3.1
)%
11.4
%
Money market and others
524,911
519,389
351,186
1.1
49.5
Time deposits greater than $250,000
277,785
237,634
209,091
16.9
32.9
Other time deposits
219,484
164,289
222,988
33.6
(1.6
)
Total deposits
1,816,811
1,741,623
1,496,406
4.3
21.4
Federal Home Loan Bank advances
10,000
—
—
—
—
Accrued interest payable
1,099
612
575
79.6
91.1
Operating lease liabilities
9,485
9,335
10,703
1.6
(11.4
)
Other liabilities
22,085
13,180
13,603
67.6
62.4
Total liabilities
1,859,480
1,764,750
1,521,287
5.4
22.2
Shareholders’ equity
Common stock
78,782
78,718
78,718
0.1
0.1
Additional paid-in capital
9,424
9,089
8,491
3.7
11.0
Retained earnings
99,487
92,659
71,436
7.4
39.3
Accumulated other comprehensive (loss)
income
(17,598
)
(10,974
)
(21
)
60.4
n/m
Total shareholders’ equity
170,095
169,492
158,624
0.4
7.2
Total liabilities and shareholders'
equity
$
2,029,575
$
1,934,242
$
1,679,911
4.9
%
20.8
%
(1)
Includes SBA Paycheck Protection Program
(“PPP”) loans of $1.1 million, $8.1 million and $69.3 million as of
September 30, 2022, June 30, 2022 and September 30, 2021,
respectively.
Consolidated Statements of Income (unaudited)
($ in thousands, except share and per
share data)
For the Three Months
Ended
% Change 3Q22 vs.
3Q22
2Q22
3Q21
2Q22
3Q21
Interest income
Interest and fees on loans
$
21,780
$
19,108
$
16,922
14.0
%
28.7
%
Interest on securities available for
sale
881
703
269
25.3
227.5
Other interest income
573
337
164
70.0
249.4
Total interest income
23,234
20,148
17,355
15.3
33.9
Interest expense
Interest on deposits
2,890
1,069
766
170.3
277.3
Total interest expense
2,890
1,069
766
170.3
277.3
Net interest income
20,344
19,079
16,589
6.6
22.6
Provision for (reversal of) loan
losses
662
996
(884
)
(33.5
)
(174.9
)
Net interest income after provision for
loan losses
19,682
18,083
17,473
8.8
12.6
Noninterest income
Service charges on deposits
454
427
409
6.3
11.0
Loan servicing fees, net of
amortization
610
654
599
(6.7
)
1.8
Gain on sale of loans
3,490
3,873
2,188
(9.9
)
59.5
Other income
267
405
346
(34.1
)
(22.8
)
Total noninterest income
4,821
5,359
3,542
(10.0
)
36.1
Noninterest expense
Salaries and employee benefits
7,343
7,109
5,724
3.3
28.3
Occupancy and equipment
1,537
1,489
1,326
3.2
15.9
Data processing and communication
586
492
448
19.1
30.8
Professional fees
602
364
308
65.4
95.5
FDIC insurance and regulatory
assessments
238
192
146
24.0
63.0
Promotion and advertising
177
165
175
7.3
1.1
Directors’ fees
170
190
183
(10.5
)
(7.1
)
Foundation donation and other
contributions
875
852
842
2.7
3.9
Other expenses
810
650
367
24.6
120.7
Total noninterest expense
12,338
11,503
9,519
7.3
29.6
Income before income tax expense
12,165
11,939
11,496
1.9
5.8
Income tax expense
3,515
3,459
3,246
1.6
8.3
Net income
$
8,650
$
8,480
$
8,250
2.0
%
4.8
%
Book value per share
$
11.19
$
11.16
$
10.48
0.3
%
6.8
%
Earnings per share - Basic
$
0.56
$
0.55
$
0.54
1.8
%
3.7
%
Earnings per share - Diluted
$
0.55
$
0.54
$
0.54
1.9
%
1.9
%
Shares of common stock outstanding
15,199,840
15,189,203
15,133,407
0.1
%
0.4
%
Weighted Average Shares:
- Basic
15,195,826
15,141,975
15,133,407
0.4
%
0.4
%
- Diluted
15,275,156
15,234,577
15,200,613
0.3
%
0.5
%
Key Ratios
For the Three Months
Ended
Change 3Q22 vs.
3Q22
2Q22
3Q21
2Q22
3Q21
Return on average assets (ROA) (1)
1.77
%
1.79
%
2.03
%
—
%
(0.3
)%
Return on average equity (ROE) (1)
19.91
%
20.29
%
21.30
%
(0.4
)%
(1.4
)%
Net interest margin (1)
4.31
%
4.21
%
4.21
%
0.1
%
0.1
%
Efficiency ratio
49.03
%
47.07
%
47.28
%
2.0
%
1.8
%
Total risk-based capital ratio
13.10
%
13.51
%
13.81
%
(0.4
)%
(0.7
)%
Tier 1 risk-based capital ratio
11.92
%
12.29
%
12.63
%
(0.4
)%
(0.7
)%
Common equity tier 1 ratio
11.92
%
12.29
%
12.63
%
(0.4
)%
(0.7
)%
Leverage ratio
9.52
%
9.48
%
9.75
%
—
%
(0.2
)%
(1)
Annualized.
Consolidated Statements of Income (unaudited)
($ in thousands, except share and per
share data)
For the Nine Months
Ended
3Q22
3Q21
% Change
Interest income
Interest and fees on loans
$
58,145
$
45,177
28.7
%
Interest on securities available for
sale
2,114
723
192.4
%
Other interest income
1,067
436
144.7
%
Total interest income
61,326
46,336
32.4
%
Interest expense
Interest on deposits
4,613
2,406
91.7
%
Total interest expense
4,613
2,406
91.7
%
Net interest income
56,713
43,930
29.1
%
Provision for (reversal of) loan
losses
1,999
(1,376
)
(245.3
)%
Net interest income after provision for
loan losses
54,714
45,306
20.8
%
Noninterest income
Service charges on deposits
1,269
1,157
9.7
%
Loan servicing fees, net of
amortization
1,711
1,432
19.5
%
Gain on sale of loans
10,601
5,280
100.8
%
Other income
815
859
(5.1
)%
Total noninterest income
14,396
8,728
64.9
%
Noninterest expense
Salaries and employee benefits
20,109
15,693
28.1
%
Occupancy and equipment
4,404
3,795
16.0
%
Data processing and communication
1,571
1,363
15.3
%
Professional fees
1,290
925
39.5
%
FDIC insurance and regulatory
assessments
637
401
58.9
%
Promotion and advertising
531
528
0.6
%
Directors’ fees
537
427
25.8
%
Foundation donation and other
contributions
2,542
1,989
27.8
%
Other expenses
1,882
1,153
63.2
%
Total noninterest expense
33,503
26,274
27.5
%
Income before income tax expense
35,607
27,760
28.3
%
Income tax expense
10,325
8,054
28.2
%
Net income
$
25,282
$
19,706
28.3
%
Book value per share
$
11.19
$
10.48
6.8
%
Earnings per share - Basic
$
1.63
$
1.29
26.4
%
Earnings per share - Diluted
$
1.62
$
1.29
25.6
%
Shares of common stock outstanding
15,199,840
15,133,407
0.4
%
Weighted Average Shares:
- Basic
15,158,749
15,071,327
0.6
%
- Diluted
15,246,345
15,133,573
0.7
%
Key Ratios
For the Nine Months
Ended
3Q22
3Q21
Change
Return on average assets (ROA) (1)
1.80
%
1.73
%
0.1
%
Return on average equity (ROE) (1)
19.91
%
17.55
%
2.4
%
Net interest margin (1)
4.22
%
4.01
%
0.2
%
Efficiency ratio
47.11
%
49.90
%
(2.8
)%
Total risk-based capital ratio
13.10
%
13.81
%
(0.7
)%
Tier 1 risk-based capital ratio
11.92
%
12.63
%
(0.7
)%
Common equity tier 1 ratio
11.92
%
12.63
%
(0.7
)%
Leverage ratio
9.52
%
9.75
%
(0.2
)%
(1)
Annualized.
Asset Quality
($ in thousands)
As of and For the Three Months
Ended
3Q22
2Q22
3Q21
Nonaccrual Loans (1)
$
2,251
$
2,172
$
1,052
Loans 90 days or more past due,
accruing
—
5
—
Accruing restructured loans
—
—
—
Nonperforming loans
2,251
2,177
1,052
Other real estate owned ("OREO")
—
—
—
Nonperforming assets
$
2,251
$
2,177
$
1,052
Criticized loans (2) by loan type:
SBA loans
$
1,817
$
1,738
$
1,881
C&I loans
742
297
320
Home mortgage loans
983
985
—
Total criticized loans (2)
$
3,542
$
3,020
$
2,201
Nonperforming assets/total assets
0.11
%
0.11
%
0.06
%
Nonperforming assets / gross loans plus
OREO
0.14
%
0.15
%
0.09
%
Nonperforming loans / gross loans
0.14
%
0.15
%
0.09
%
Allowance for loan losses / nonperforming
loans
816
%
813
%
1344
%
Allowance for loan losses / nonperforming
assets
816
%
813
%
1344
%
Allowance for loan losses / gross
loans
1.14
%
1.19
%
1.15
%
Criticized loans (2) / gross loans
0.22
%
0.20
%
0.18
%
Classified loans / gross loans
0.22
%
0.20
%
0.18
%
Net (recoveries) charge-offs
$
(5
)
$
(34
)
$
(4
)
Net (recoveries) charge-offs to average
gross loans (3)
(0.00
)%
(0.01
)%
(0.00
)%
(1)
Includes the guaranteed portion of SBA
loans that are in liquidation totaling $442 thousand and $346
thousand as of September 30, 2022 and June 30, 2022,
respectively.
(2)
Consists of special mention, substandard,
doubtful and loss categories.
(3)
Annualized.
($ in thousands)
3Q22
2Q22
3Q21
Accruing delinquent loans 30-89 days past
due
30-59 days
$
360
$
447
$
263
60-89 days
845
—
1,064
Total (1)
$
1,205
$
447
$
1,327
(1)
Includes the guaranteed portion of PPP
loans totaling $756 thousand as of September 30, 2022.
Average Balance Sheet, Interest and Yield/Rate
Analysis
For the Three Months
Ended
3Q22
2Q2022
3Q21
($ 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
$
75,599
$
427
2.21
%
$
79,628
$
197
0.98
%
$
137,662
$
47
0.13
%
Federal funds sold and other
investments
12,221
146
4.78
11,966
140
4.70
11,041
117
4.25
Available-for-sale debt securities, at
fair value
172,696
881
2.04
165,499
703
1.70
109,009
269
0.99
Real estate loans
810,158
10,144
4.97
751,610
8,743
4.67
678,642
7,680
4.49
SBA loans
286,903
5,850
8.09
353,138
5,707
6.48
403,279
6,835
6.72
C&I loans
140,098
1,952
5.53
160,291
1,811
4.53
107,614
1,074
3.96
Home mortgage loans
375,804
3,820
4.07
294,341
2,837
3.86
117,825
1,317
4.47
Consumer & other loans
1,037
14
4.88
684
10
5.49
978
16
6.49
Loans (2)
1,614,000
21,780
5.36
1,560,064
19,108
4.91
1,308,338
16,922
5.13
Total interest-earning assets
1,874,516
23,234
4.92
1,817,157
20,148
4.44
1,566,050
17,355
4.40
Noninterest-earning assets
83,398
73,594
56,807
Total assets
$
1,957,914
$
1,890,751
$
1,622,857
Interest-bearing liabilities:
Money market deposits and others
$
502,166
$
1,506
1.19
%
$
470,013
$
503
0.43
%
$
368,507
$
299
0.32
%
Time deposits
445,271
1,383
1.23
389,059
566
0.58
383,503
467
0.48
Total interest-bearing deposits
947,437
2,889
1.21
859,072
1,069
0.50
752,010
766
0.40
Borrowings
130
1
3.00
—
—
—
—
—
—
Total interest-bearing liabilities
947,567
2,890
1.21
859,072
1,069
0.50
752,010
766
0.40
Noninterest-bearing liabilities:
Noninterest-bearing deposits
806,289
843,788
696,761
Other noninterest-bearing liabilities
30,258
20,720
19,169
Total noninterest-bearing liabilities
836,547
864,508
715,930
Shareholders’ equity
173,800
167,171
154,917
Total liabilities and shareholders’
equity
$
1,957,914
$
1,890,751
$
1,622,857
Net interest income / interest rate
spreads
$
20,344
3.71
%
$
19,079
3.94
%
$
16,589
4.00
%
Net interest margin
4.31
%
4.21
%
4.21
%
Cost of deposits & cost of funds:
Total deposits / cost of deposits
$
1,753,726
$
2,889
0.65
%
$
1,702,860
$
1,069
0.25
%
1,448,771
$
766
0.21
%
Total funding liabilities / cost of
funds
$
1,753,856
$
2,890
0.65
%
$
1,702,860
$
1,069
0.25
%
1,448,771
$
766
0.21
%
(1)
Annualized.
(2)
Includes loans held for sale.
Average Balance Sheet, Interest and Yield/Rate
Analysis
For the Nine Months
Ended
3Q22
3Q21
($ 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
$
80,659
$
665
1.09
%
$
111,799
$
97
0.11
%
Federal funds sold and other
investments
11,720
402
4.59
10,668
339
4.22
Available-for-sale debt securities, at
fair value
165,094
2,114
1.71
103,699
723
0.93
Real estate loans
757,950
26,689
4.71
667,547
22,870
4.58
SBA loans
332,659
17,392
6.99
339,968
14,931
5.87
C&I loans
152,189
5,300
4.66
108,402
3,129
3.86
Home mortgage loans
296,331
8,731
3.93
122,008
4,200
4.59
Consumer & other loans
866
33
5.04
1,115
47
5.61
Loans (2)
1,539,995
58,145
5.05
1,239,040
45,177
4.87
Total interest-earning assets
1,797,468
61,326
4.56
1,465,206
46,336
4.23
Noninterest-earning assets
73,410
52,573
Total assets
$
1,870,878
$
1,517,779
Interest-bearing liabilities:
Money market deposits and others
$
461,821
$
2,260
0.65
%
$
357,525
$
851
0.32
%
Time deposits
403,242
2,352
0.78
370,715
1,555
0.56
Total interest-bearing deposits
865,063
4,612
0.71
728,240
2,406
0.44
Borrowings
44
1
3.00
2,657
—
—
Total interest-bearing liabilities
865,107
4,613
0.71
730,897
2,406
0.44
Noninterest-bearing liabilities:
Noninterest-bearing deposits
811,263
619,437
Other noninterest-bearing liabilities
25,213
17,726
Total noninterest-bearing liabilities
836,476
637,163
Shareholders’ equity
169,295
149,719
Total liabilities and shareholders’
equity
$
1,870,878
1,517,779
Net interest income / interest rate
spreads
$
56,713
3.85
%
$
43,930
3.79
%
Net interest margin
4.22
%
4.01
%
Cost of deposits & cost of funds:
Total deposits / cost of deposits
$
1,676,326
$
4,612
0.37
%
1,347,677
$
2,406
0.24
%
Total funding liabilities / cost of
funds
$
1,676,370
$
4,613
0.37
%
1,350,334
$
2,406
0.24
%
(1)
Annualized.
(2)
Includes loans held for sale.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221027005963/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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