OP Bancorp Reports Second Quarter Result of 2019

2019 Second Quarter Highlights:

  • Net income totaled $3.8 million or $0.23 per diluted common share flat from the second quarter of 2018
  • Net interest margin was 4.26% compared to 4.46% for the second quarter of 2018
  • Return on average assets was 1.39% and return on average equity was 11.50% compared to 1.61% and 12.70%, respectively, for the second quarter of 2018
  • Total assets of $1.13 billion, an increase of 15.1% from $979.4 million at June 30, 2018
  • Net loans receivable of $937.5 million, an increase of 14.8% from $816.3 million at June 30, 2018
  • Total deposits of $974.7 million, an increase of 18.4% from $823.4 million at June 30, 2018
  • Nonperforming assets to total assets was 0.14% compared to 0.10% at June 30, 2018

LOS ANGELES--()--OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company of Open Bank (the “Bank”), today reported unaudited financial results for the second quarter of 2019. Net income for the second quarter of 2019 was $3.8 million, or $0.23 per diluted common share, compared with net income of $4.7 million, or $0.29 per diluted common share for the first quarter of 2019, and net income of $3.8 million, or $0.23 per diluted share for the second quarter of 2018. Excluding one-time gain on company owned life insurance, net income for the first quarter of 2019 was $3.8 million or $0.23 per diluted common share.

“We are pleased to report another strong quarter, with a net income of $3.8 million, or $0.23 per diluted common share for the three months ended June 30, 2019. Our loans and deposits grew 15% and 18%, respectively, from the prior year, while maintaining strong asset quality. We maintained our noninterest bearing deposits at 28.2% of total deposits during this challenging environment,” commented Min Kim, President and Chief Executive Officer of OP Bancorp and Open Bank. Ms. Kim continued, “In April, we have successfully converted our Dallas loan production office to a full service branch with a commercial lending center in Carrollton, Texas. With this expansion, we look forward to continued growth of our franchise not only in California but also in Texas.”

Financial Highlights (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

 

 

As of or for the Three Months Ended

 

 

 

 

June 30,

 

 

 

March 31,

 

 

 

June 30,

 

 

 

 

2019

 

 

 

2019

 

 

 

2018

 

Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

$

14,878

 

 

 

$

14,086

 

 

 

$

12,062

 

Interest expense

 

 

 

3,701

 

 

 

 

3,288

 

 

 

 

2,075

 

Net interest income

 

 

 

11,177

 

 

 

 

10,798

 

 

 

 

9,987

 

Provision for loan losses

 

 

 

401

 

 

 

 

0

 

 

 

 

33

 

Noninterest income

 

 

 

2,647

 

 

 

 

3,533

 

 

 

 

2,783

 

Noninterest expense

 

 

 

8,358

 

 

 

 

8,073

 

 

 

 

7,478

 

Income before taxes

 

 

 

5,065

 

 

 

 

6,258

 

 

 

 

5,259

 

Provision for income taxes

 

 

 

1,229

 

 

 

 

1,518

 

 

 

 

1,468

 

Net Income

 

 

$

3,836

 

 

 

$

4,740

 

 

 

$

3,791

 

Diluted earnings per share

 

 

$

0.23

 

 

 

$

0.29

 

 

 

$

0.23

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

 

$

1,245

 

 

 

$

246

 

 

 

$

8,718

 

Gross loans, net of unearned income

 

 

 

947,006

 

 

 

 

913,064

 

 

 

 

826,040

 

Allowance for loan losses

 

 

 

9,525

 

 

 

 

9,619

 

 

 

 

9,723

 

Total assets

 

 

 

1,127,556

 

 

 

 

1,077,235

 

 

 

 

979,441

 

Deposits

 

 

 

974,672

 

 

 

 

929,402

 

 

 

 

823,373

 

Shareholders’ equity

 

 

 

135,482

 

 

 

 

132,376

 

 

 

 

121,393

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

 

 

1.39

%

 

 

 

1.83

%

 

 

 

1.61

%

Return on average equity (annualized)

 

 

 

11.50

%

 

 

 

14.46

%

 

 

 

12.70

%

Net interest margin (annualized)

 

 

 

4.26

%

 

 

 

4.38

%

 

 

 

4.46

%

Efficiency ratio (1)

 

 

 

60.45

%

 

 

 

56.33

%

 

 

 

58.56

%

Credit Quality:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

 

$

1,556

 

 

 

$

1,580

 

 

 

$

991

 

Nonperforming assets

 

 

 

1,556

 

 

 

 

2,726

 

 

 

 

991

 

Net charge-offs to average gross loans (annualized)

 

 

 

0.21

%

 

 

 

0.01

%

 

 

 

0.01

%

Nonperforming assets to gross loans plus OREO

 

 

 

0.16

%

 

 

 

0.30

%

 

 

 

0.12

%

ALL to nonperforming loans

 

 

 

612

%

 

 

 

609

%

 

 

 

981

%

ALL to gross loans

 

 

 

1.01

%

 

 

 

1.05

%

 

 

 

1.18

%

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

 

 

15.45

%

 

 

 

15.76

%

 

 

 

16.09

%

Tier 1 risk-based capital ratio

 

 

 

14.42

%

 

 

 

14.68

%

 

 

 

14.90

%

Common equity tier 1 ratio

 

 

 

14.42

%

 

 

 

14.68

%

 

 

 

14.90

%

Leverage ratio

 

 

 

12.24

%

 

 

 

12.73

%

 

 

 

12.91

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Represents noninterest expense divided by the sum of net interest income and noninterest income.

Financial Highlights, excluding Gain on COLI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

 

 

As of or for the Three Months Ended

 

 

 

 

June 30,

 

 

 

March 31,

 

 

 

June 30,

 

 

 

 

2019

 

 

 

2019

 

 

 

2018

 

Income before taxes, as reported

 

 

$

5,065

 

 

 

$

6,258

 

 

 

$

5,259

 

Gain on COLI

 

 

 

 

 

 

 

1,228

 

 

 

 

 

Provision for income taxes

 

 

 

1,229

 

 

 

 

1,254

 

 

 

 

1,468

 

Net Income

 

 

$

3,836

 

 

 

$

3,776

 

 

 

$

3,791

 

Diluted earnings per share

 

 

$

0.23

 

 

 

$

0.23

 

 

 

$

0.23

 

Return on average assets (annualized)

 

 

 

1.39

%

 

 

 

1.45

%

 

 

 

1.61

%

Return on average equity (annualized)

 

 

 

11.50

%

 

 

 

11.52

%

 

 

 

12.70

%

Financial Highlights (unaudited)

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

 

 

For the Six Months Ended

 

 

 

 

June 30,

 

 

 

June 30,

 

 

 

 

2019

 

 

 

2018

 

Income Statement Data:

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

$

28,965

 

 

 

$

23,242

 

Interest expense

 

 

 

6,989

 

 

 

 

3,695

 

Net interest income

 

 

 

21,976

 

 

 

 

19,547

 

Provision for loan losses

 

 

 

401

 

 

 

 

609

 

Noninterest income

 

 

 

6,179

 

 

 

 

4,996

 

Noninterest expense

 

 

 

16,431

 

 

 

 

14,290

 

Income before taxes

 

 

 

11,323

 

 

 

 

9,644

 

Provision for income taxes

 

 

 

2,747

 

 

 

 

2,637

 

Net Income

 

 

$

8,576

 

 

 

$

7,007

 

Diluted earnings per share

 

 

$

0.52

 

 

 

$

0.45

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

 

1.60

%

 

 

 

1.52

%

Return on average equity

 

 

 

12.97

%

 

 

 

13.11

%

Net interest margin

 

 

 

4.32

%

 

 

 

4.51

%

Efficiency ratio (1)

 

 

 

58.36

%

 

 

 

58.22

%

 

 

 

 

 

 

 

 

 

 

 

(1) Represents noninterest expense divided by the sum of net interest income and noninterest income.

Financial Highlights, excluding Gain on COLI

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

 

 

For the Six Months Ended

 

 

 

 

June 30,

 

 

 

June 30,

 

 

 

 

2019

 

 

 

2018

 

Income before taxes, as reported

 

 

$

11,323

 

 

 

$

9,644

 

Gain on COLI

 

 

 

1,228

 

 

 

 

 

Provision for income taxes

 

 

 

2,565

 

 

 

 

2,637

 

Net Income

 

 

$

7,530

 

 

 

$

7,007

 

Diluted earnings per share

 

 

$

0.46

 

 

 

$

0.45

 

Return on average assets

 

 

 

1.41

%

 

 

 

1.52

%

Return on average equity

 

 

 

11.39

%

 

 

 

13.11

%

Results of Operations

The reported interest income and yield on our loan portfolio are impacted by a number of components, including changes in the average contractual interest rate earned on loans and the amount of discount accretion on SBA loans. The following table reconciles the contractual interest income and yield on our loan portfolio to the reported interest income and yield for the periods indicated.

 

 

Three Months Ended

 

 

 

June 30, 2019

 

 

March 31, 2019

 

 

June 30, 2018

 

(Dollars in thousands)

 

Interest

& Fees

 

 

Yield

 

 

Interest

& Fees

 

 

Yield

 

 

Interest

& Fees

 

 

Yield

 

Contractual interest rate

 

$

13,298

 

 

 

5.72

%

 

$

12,480

 

 

 

5.69

%

 

$

11,046

 

 

 

5.34

%

SBA discount accretion

 

 

703

 

 

 

0.30

%

 

 

509

 

 

 

0.23

%

 

 

481

 

 

 

0.23

%

Amortization of net deferred fees/(costs)

 

 

38

 

 

 

0.02

%

 

 

132

 

 

 

0.06

%

 

 

98

 

 

 

0.05

%

Interest recognized on nonaccrual loans

 

 

-

 

 

 

0.00

%

 

 

-

 

 

 

0.00

%

 

 

9

 

 

 

0.00

%

Prepayment penalties and other fees

 

 

54

 

 

 

0.02

%

 

 

233

 

 

 

0.11

%

 

 

36

 

 

 

0.02

%

Yield on loans (as reported)

 

$

14,093

 

 

 

6.06

%

 

$

13,354

 

 

 

6.09

%

 

$

11,670

 

 

 

5.64

%

 

 

Six Months Ended

 

 

 

June 30, 2019

 

 

June 30, 2018

 

(Dollars in thousands)

 

Interest

& Fees

 

 

Yield

 

 

Interest

& Fees

 

 

Yield

 

Contractual interest rate

 

$

25,777

 

 

 

5.71

%

 

$

21,229

 

 

 

5.29

%

SBA discount accretion

 

 

1,212

 

 

 

0.27

%

 

 

1,048

 

 

 

0.26

%

Amortization of net deferred fees/(costs)

 

 

170

 

 

 

0.04

%

 

 

150

 

 

 

0.04

%

Interest recognized on nonaccrual loans

 

 

-

 

 

 

0.00

%

 

 

29

 

 

 

0.01

%

Prepayment penalties and other fees

 

 

288

 

 

 

0.06

%

 

 

61

 

 

 

0.02

%

Yield on loans (as reported)

 

$

27,447

 

 

 

6.08

%

 

$

22,517

 

 

 

5.61

%

Net interest income before provision for loan losses for the second quarter of 2019 was $11.2 million, an increase of $379,000, or 3.5%, compared to $10.8 million for the first quarter of 2019, primarily due to a $792,000 increase in interest income, partially offset by a $413,000 increase in interest expense.

Interest income on securities available for sale and other investments increased $53,000, or 7.3%, during the second quarter of 2019 compared to the prior quarter. The increase was primarily due to a $83,000 increase in other investment income from a $12.7 million, or 27.7%, increase in average balance of Fed Funds.

Interest income from the contractual interest rates on loans increased $818,000, or 6.6%, during the second quarter of 2019 compared to the first quarter of 2019, reflecting a 5.0% increase in average balance of loans, including loans held for sale, and a three basis point increase in contractual yield. The amount of discount accretion on SBA loans increased $194,000 during the second quarter due to an increase in SBA loan payoffs. The reported interest income on loans, net of SBA discount accretions and other components, increased $739,000 during the quarter.

Interest expense for the second quarter of 2019 increased $413,000, or 12.6%, compared to the first quarter of 2019, due to an increase of $39.1 million, or 6.1%, in average balance of interest-bearing liabilities and an increase of 10 basis points in average cost of interest-bearing liabilities, primarily due to a continued repricing of interest-bearing deposits following cumulative market rate increases in 2018.

Net interest margin for the second quarter of 2019 decreased 12 basis points to 4.26% from 4.38% for the first quarter of 2019 because of the increase in the cost of interest-bearing liabilities and the decrease in the reported yield on earning assets.

Net interest income before provision for loan losses for the second quarter of 2019 increased $1.2 million, or 11.9%, to $11.2 million, compared to $10.0 million for the second quarter of 2018, primarily due to a $2.8 million increase in interest income, partially offset by a $1.6 million increase in interest expense.

Interest income on securities available for sale and other investments increased $393,000, or 100.2% compared to the same period of 2018. The increase was primarily due to a $119,000 increase in interest income on securities available for sale from purchases of higher yielding securities during the second and third quarters of 2018 and a $274,000 increase in other investment income from a $39.4 million increase in average Fed funds and a 40 basis point increase in Fed funds rate.

The increase in interest income on loans was primarily due to a 12.3% increase in average loans, including loans held for sale, and a 42 basis point increase in the yield on average loans to 6.06% for the second quarter of 2019 from 5.64% for the same period of 2018.

The increase in interest expense in the second quarter of 2019 compared to the second quarter of 2018 was due to a 20.3% increase in average interest-bearing liabilities and a 72 basis point increase in the cost of interest-bearing liabilities.

The increases in the average yield on loans and average cost of deposits were primarily due to cumulative market rate increases by the Federal Reserve during the second half of 2018.

Net interest margin for the second quarter of 2019 decreased 20 basis points to 4.26% from 4.46% for the second quarter of 2018.

The following table shows the asset yields, liability costs, spreads and margins.

 

 

Three Months Ended

 

 

 

Percentage Change

 

 

 

June 30,

 

 

March 31,

 

 

June 30,

 

 

 

Q2-19

 

 

Q2-19

 

 

 

2019

 

 

2019

 

 

2018

 

 

 

vs. Q1-19

 

 

vs. Q2-18

 

Yield on loans

 

 

6.06

%

 

 

6.09

%

 

 

5.64

%

 

 

 

-0.03

%

 

 

0.42

%

Yield on interest-earning assets

 

 

5.67

%

 

 

5.72

%

 

 

5.39

%

 

 

 

-0.05

%

 

 

0.28

%

Cost of interest-bearing liabilities

 

 

2.20

%

 

 

2.10

%

 

 

1.48

%

 

 

 

0.10

%

 

 

0.72

%

Cost of deposits

 

 

1.56

%

 

 

1.48

%

 

 

1.02

%

 

 

 

0.08

%

 

 

0.54

%

Cost of funds

 

 

1.56

%

 

 

1.48

%

 

 

1.02

%

 

 

 

0.08

%

 

 

0.54

%

Net interest spread

 

 

3.47

%

 

 

3.62

%

 

 

3.91

%

 

 

 

-0.15

%

 

 

-0.44

%

Net interest margin

 

 

4.26

%

 

 

4.38

%

 

 

4.46

%

 

 

 

-0.12

%

 

 

-0.20

%

 

 

Six Months Ended

 

 

 

Percentage Change

 

 

 

June 30,

 

 

June 30,

 

 

 

2019 YTD

 

 

 

2019

 

 

2018

 

 

 

vs. 2018 YTD

 

Yield on loans

 

 

6.08

%

 

 

5.61

%

 

 

 

0.47

%

Yield on interest-earning assets

 

 

5.70

%

 

 

5.36

%

 

 

 

0.34

%

Cost of interest-bearing liabilities

 

 

2.15

%

 

 

1.36

%

 

 

 

0.79

%

Cost of deposits

 

 

1.52

%

 

 

0.91

%

 

 

 

0.61

%

Cost of funds

 

 

1.52

%

 

 

0.92

%

 

 

 

0.60

%

Net interest spread

 

 

3.55

%

 

 

4.00

%

 

 

 

-0.45

%

Net interest margin

 

 

4.32

%

 

 

4.51

%

 

 

 

-0.19

%

The provision for loan losses for the second quarter of 2019 was $401,000 compared to $33,000 for the second quarter of 2018. A provision for loan losses was not required for the first quarter of 2019. The second quarter provision for loan losses was primarily due to a $33.9 million increase in loan balances during the quarter.

Noninterest income for the second quarter of 2019 was $2.6 million, a decrease of $886,000, or 25.1%, from $3.5 million for the first quarter of 2019, primarily due to the gain on company owned life insurance of $1.2 million received in the first quarter and a decrease of $156,000 in loan servicing fees, partially offset by an increase of $511,000 in gain on sale of SBA loans.

Loan servicing fees decreased $156,000 to $227,000 for the second quarter of 2019 from $383,000 for the prior quarter. The decrease in loan servicing fees was primarily due to an increase in the amortization of SBA servicing assets from the increase in SBA loan payoffs.

Gain on sale of SBA loans increased $511,000 to $1.6 million for the second quarter of 2019 from $1.1 million for the first quarter of 2019. We sold $21.2 million in SBA loans with an average premium of 8.99% in the second quarter of 2019, compared to the sale of $17.7 million in SBA loans with an average premium of 8.19% in the first quarter of 2019.

Noninterest income for the second quarter of 2019 decreased $136,000 compared to $2.8 million for the second quarter of 2018, primarily due to a decrease of $145,000 in loan servicing fees, a decrease of $140,000 in gain on sale of SBA loans, partially offset by an increase of $101,000 in service charges on deposits. Gain on sale of SBA loans for the second quarter of 2018 was $1.7 million from the sale of $24.8 million in SBA loans with an average premium of 8.60%. An $85,000 of other operation fee income was reclassified to service charges on deposits for the second quarter of 2019.

Noninterest expense for the second quarter of 2019 was $8.4 million, an increase of $285,000, or 3.5%, compared to $8.1 million for the first quarter of 2019. The increase was primarily due to an increase of $176,000 in salary and employee benefits and an increase of $55,000 in occupancy and equipment. The increases in salary and employee benefits were primarily driven by supporting continued growth of the company, and the increase in occupancy and equipment was primarily attributable to a branch opening in Carrollton, Texas in the second quarter of 2019.

Noninterest expense for the second quarter of 2019 increased $880,000, or 11.8%, to $8.4 million, compared to $7.5 million for the second quarter of 2018. The increase was primarily due to an increase of $729,000 in salary and employee benefits from an increase in employee headcount to 168 at June 30, 2019 from 138 at June 30, 2018. Occupancy and equipment expense increased $68,000 primarily attributable to the new loan production offices and a new branch opening in 2019. Professional fees increased $81,000 primarily due to an increase in financial reporting and auditing costs as additional regulatory reporting requirements became applicable in 2019.

Income tax provision for the second quarter of 2019 was $1.2 million, compared to $1.5 million for the first quarter of 2019 and the second quarter of 2018. The effective tax rates for the second quarter of 2019 and the first quarter of 2019 were 24.3%, compared to 27.9% for the second quarter of 2018. The decrease in the effective tax rate in the second quarter of 2019 compared to the second quarter of 2018 was primarily due to additional tax benefits from an increase in non-qualified stock option exercises during the second quarter of 2019.

Balance Sheet

Total assets at June 30, 2019 were $1.13 billion, an increase of $50.3 million, or 4.7%, compared to $1.08 billion at March 31, 2019, and an increase of $148.1 million, or 15.1%, compared to $979.4 million at June 30, 2018. Gross loans, net of unearned income, were $947.0 million at June 30, 2019, an increase of $33.9 million, or 3.7%, from $913.1 million at March 31, 2019, and an increase of $121.0 million, or 14.6%, from $826.0 million at June 30, 2018.

New loan originations for the second quarter of 2019 totaled $93.8 million, including SBA loan originations of $27.9 million, compared to $92.8 million, including SBA loan originations of $24.3 million, for the first quarter of 2019. New loan originations for the second quarter of 2018 were $92.0 million, including SBA loan originations of $29.3 million. Loan payoffs for the second quarter of 2019 were $33.5 million, compared to $22.5 million for the first quarter of 2019, and $30.1 million for the second quarter of 2018.

Total deposits were $974.7 million at June 30, 2019, an increase of $45.3 million, or 4.9%, from $929.4 million at March 31, 2019, and an increase of $151.3 million, or 18.4%, from $823.4 million at June 30, 2018. Noninterest bearing deposits were $275.0 million at June 30, 2019, compared to $272.5 million at March 31, 2019, and $270.1 million at June 30, 2018.

Noninterest bearing deposits accounted for 28.2% of total deposits at June 30, 2019, compared to 29.3% at March 31, 2019 and 32.8% at June 30, 2018.

 

 

As of

 

 

 

June 30,

 

 

March 31,

 

 

June 30,

 

 

 

2019

 

 

2019

 

 

2018

 

Noninterest bearing deposits

 

 

28.2

%

 

 

29.3

%

 

 

32.8

%

Interest bearing demand deposits

 

 

28.7

%

 

 

27.7

%

 

 

29.7

%

Savings

 

 

0.4

%

 

 

0.4

%

 

 

0.4

%

Time deposits over $250,000

 

 

21.7

%

 

 

20.3

%

 

 

17.2

%

Other time deposits

 

 

21.0

%

 

 

22.3

%

 

 

19.9

%

Total deposits

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

The Company had no borrowings from the Federal Home Loan Bank (“FHLB”) at June 30, 2019 and March 31, 2019, compared to the advances from the FHLB of $25 million at June 30, 2018. The payoff of advances from the FHLB were funded by the increase in total deposits.

The adoption of the new lease accounting standard ASU 2016-02, Leases (Topic 842) effective January 1, 2019 resulted in the recognition of $7.7 million and $9.6 million in right-of-use assets and lease liabilities, respectively, on balance sheet. With the new branch opening, the Company had right-of-use assets and lease liabilities of $9.0 million and $10.7 million, respectively, at June 30, 2019. The Company’s consolidated regulatory capital ratios exceeded regulatory guidelines and the Bank’s capital ratios exceeded the regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements at June 30, 2019, as summarized in the following table.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory

 

 

 

 

 

 

 

 

 

 

 

Well-capitalized

 

 

Capital Ratio

 

 

 

 

 

 

 

 

 

 

 

Financial

 

 

Requirements (1),

 

 

 

 

 

 

 

 

 

 

 

Institution

 

 

Including

 

 

 

 

 

 

 

 

 

 

 

Basel III

 

 

Fully Phased-in

 

 

 

 

 

 

 

 

 

 

 

Regulatory

 

 

Capital Conservation

 

Capital Ratios

 

OP Bancorp

 

 

Open Bank

 

 

Guidelines

 

 

Buffer

 

Total risk-based

 

 

15.45

%

 

 

15.37

%

 

 

10.00

%

 

 

10.50

%

Tier 1 risk-based

 

 

14.42

%

 

 

14.35

%

 

 

8.00

%

 

 

8.50

%

Common equity tier 1 Risk-Based

 

 

14.42

%

 

 

14.35

%

 

 

6.50

%

 

 

7.00

%

Leverage

 

 

12.24

%

 

 

12.18

%

 

 

5.00

%

 

 

4.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Fully phased in Basel III requirement for both OP Bancorp and Open Bank. Includes a 2.5% capital conservation buffer, except the leverage ratio.

Since the announcement of a share repurchase program to buy back up to 400,000 shares of its common stock on January 25, 2019, the Company has repurchased 333,270 shares of its common stock at an average repurchase price of $9.11 through July 25, 2019.

Asset Quality

Nonperforming loans were $1.56 million at June 30, 2019, a decrease of $24,000 from $1.58 million at March 31, 2019 and an increase of $566,000 from $990,000 at June 30, 2018.

The company had no other real estate owned (“OREO”) at June 30, 2019 and 2018 but had $1.1 million in OREO at March 31, 2019. The Company sold OREO of $1.1 million during the second quarter and no loss was recorded on the sale.

Nonperforming assets were $1.6 million, or 0.14% of total assets, at June 30, 2019, $2.7 million, or 0.25% of total assets, at March 31, 2019 and $990,000, or 0.10% of total assets, at June 30, 2018.

Nonperforming loans to gross loans were 0.16% at June 30, 2019, compared to 0.17% at March 31, 2019 and 0.12% at June 30, 2018. Total classified loans were $4.2 million, or 0.44% of gross loans, at June 30, 2019, compared to $4.2 million, or 0.46% of gross loans, at March 31, 2019, and $3.7 million, or 0.45% of gross loans, at June 30, 2018.

The following tables shows the trend of classified loans by loan type.

 

 

6/30/2019

 

 

3/31/2019

 

 

12/31/2018

 

 

9/30/2018

 

 

6/30/2018

 

Classified loans by loan type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

SBA loans—real estate

 

 

2,264

 

 

 

2,281

 

 

 

2,000

 

 

 

1,859

 

 

 

1,892

 

SBA loans—non-real estate

 

 

41

 

 

 

49

 

 

 

57

 

 

 

354

 

 

 

141

 

Commercial and industrial

 

 

1,892

 

 

 

1,906

 

 

 

1,516

 

 

 

1,587

 

 

 

1,688

 

Home mortgage

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total classified loans

 

$

4,197

 

 

$

4,236

 

 

$

3,573

 

 

$

3,800

 

 

$

3,721

 

SBA guarantee balance retained

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SBA loans—real estate

 

 

524

 

 

 

534

 

 

 

544

 

 

 

553

 

 

 

572

 

SBA loans—non-real estate

 

 

41

 

 

 

49

 

 

 

57

 

 

 

282

 

 

 

84

 

Total SBA unsold guarantee portion

 

$

565

 

 

$

583

 

 

$

601

 

 

$

835

 

 

$

656

 

Total classified loans, net of SBA guarantee balance retained

 

$

3,632

 

 

$

3,653

 

 

$

2,972

 

 

$

2,965

 

 

$

3,065

 

The allowance for loan losses was $9.5 million at June 30, 2019, compared to $9.6 at March 31, 2019, and $9.7 million at June 30, 2018. The allowance for loan losses was 1.01% of gross loans at June 30, 2019, 1.05% at March 31, 2019 and 1.18% at June 30, 2018. The allowance for loan losses was 612% of nonperforming assets at June 30, 2019, 353% at March 31, 2019 and 982% at June 30, 2018.

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 nine full branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, 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 (including any exhibits hereto) 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. Forward-looking statements may include, but are not limited to, the use of forward-looking language, such as “likely result in,” “expects,” “anticipates,” “estimates,” “forecasts,” “projects,” “intends to,” or may include other similar words or phrases, such as “believes,” “plans,” “trend,” “objective,” “continues,” “remains,” or similar expressions, or future or conditional verbs, such as “will,” “would,” “should,” “could,” “may,” “might,” “can,” or similar verbs. 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 loss; 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 and the success of construction projects that we finance; 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; 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 the Bank to pay dividends to the holding company; 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; 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; the affect if any of the recent federal government shutdown on our SBA loan program; 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, 2018 and in our other subsequent filings with the Securities and Exchange Commission. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, our results could differ materially from those expressed in, implied or projected by such forward-looking statements. We assume no obligation to update such forward-looking statements. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, except as required by law.

Consolidated Balance Sheet (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/30/2019

 

3/31/2019

 

% change

 

6/30/2018

 

% change

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

$

83,111

 

$

65,796

 

26.3

%

$

61,252

 

35.7

%

Securities available for sale, at fair value

 

51,829

 

 

54,116

 

-4.2

%

 

45,006

 

15.2

%

Other investments

 

8,134

 

 

7,306

 

11.3

%

 

7,226

 

12.6

%

Loans held for sale

 

1,245

 

 

246

 

406.1

%

 

8,718

 

-85.7

%

Real Estate Loans

 

583,634

 

 

545,481

 

7.0

%

 

465,125

 

25.5

%

SBA Loans

 

130,957

 

 

130,478

 

0.4

%

 

125,378

 

4.4

%

C & I Loans

 

105,133

 

 

106,796

 

-1.6

%

 

117,353

 

-10.4

%

Home Mortgage Loans

 

123,951

 

 

127,851

 

-3.1

%

 

114,710

 

8.1

%

Consumer & Other Loans

 

3,331

 

 

2,458

 

35.5

%

 

3,474

 

-4.1

%

Gross loans, net of unearned income

 

947,006

 

 

913,064

 

3.7

%

 

826,040

 

14.6

%

Allowance for loan losses

 

(9,525

)

 

(9,619

)

-1.0

%

 

(9,723

)

-2.0

%

Net loans receivable

 

937,481

 

 

903,445

 

3.8

%

 

816,317

 

14.8

%

Premises and equipment, net

 

5,341

 

 

5,083

 

5.1

%

 

4,818

 

10.9

%

Accrued interest receivable

 

3,301

 

 

3,368

 

-2.0

%

 

2,598

 

27.1

%

Servicing assets

 

6,996

 

 

7,046

 

-0.7

%

 

6,994

 

0.0

%

Company owned life insurance

 

10,482

 

 

10,414

 

0.7

%

 

11,243

 

-6.8

%

Deferred tax assets

 

2,858

 

 

3,665

 

-22.0

%

 

4,239

 

-32.6

%

OREO

 

-

 

 

1,146

 

-100.0

%

 

-

 

0.0

%

Operating right-of-use assets (1)

 

8,959

 

 

7,738

 

15.8

%

 

-

 

100.0

%

Other assets

 

7,819

 

 

7,866

 

-0.6

%

 

11,030

 

-29.1

%

Total assets

$

1,127,556

 

$

1,077,235

 

4.7

%

$

979,441

 

15.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest bearing deposits

$

274,976

 

$

272,482

 

0.9

%

$

270,144

 

1.8

%

Savings

 

3,527

 

 

3,527

 

0.0

%

 

3,097

 

13.9

%

Money market and others

 

279,748

 

 

257,694

 

8.6

%

 

244,620

 

14.4

%

Time deposits over $250,000

 

211,305

 

 

188,162

 

12.3

%

 

141,823

 

49.0

%

Other time deposits

 

205,116

 

 

207,537

 

-1.2

%

 

163,689

 

25.3

%

Total deposits

 

974,672

 

 

929,402

 

4.9

%

 

823,373

 

18.4

%

Other borrowings

 

-

 

 

-

 

0.0

%

 

25,000

 

-100.0

%

Accrued interest payable

 

2,287

 

 

2,178

 

5.0

%

 

873

 

162.0

%

Operating lease liabilities (1)

 

10,737

 

 

9,566

 

12.2

%

 

-

 

100.0

%

Other liabilities

 

4,378

 

 

3,713

 

17.9

%

 

8,802

 

-50.3

%

Total liabilities

 

992,074

 

 

944,859

 

5.0

%

 

858,048

 

15.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

88,455

 

 

89,120

 

-0.7

%

 

90,894

 

-2.7

%

Additional paid-in capital

 

6,965

 

 

6,626

 

5.1

%

 

5,720

 

21.8

%

Retained earnings

 

39,878

 

 

36,824

 

8.3

%

 

25,631

 

55.6

%

Accumulated other comprehensive income(loss)

 

184

 

 

(194

)

-194.8

%

 

(852

)

-121.6

%

Total shareholders' equity

 

135,482

 

 

132,376

 

2.3

%

 

121,393

 

11.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Shareholders' Equity

$

1,127,556

 

$

1,077,235

 

4.7

%

$

979,441

 

15.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) The adoption of ASU 2016-02, Leases (Topic 842) in the first quarter of 2019 resulted in the recognition of right-of-use assets and lease liabilities on balance sheet.

Consolidated Statements of Income (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

 

Three Months Ended

 

 

 

6/30/2019

 

 

3/31/2019

 

 

% change

 

 

6/30/2018

 

 

% change

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

14,093

 

 

$

13,354

 

 

 

5.5

%

 

$

11,670

 

 

 

20.8

%

Interest on securities available for sale

 

 

327

 

 

 

360

 

 

 

-9.2

%

 

 

208

 

 

 

57.2

%

Other interest income

 

 

458

 

 

 

372

 

 

 

23.1

%

 

 

184

 

 

 

148.9

%

Total interest income

 

 

14,878

 

 

 

14,086

 

 

 

5.6

%

 

 

12,062

 

 

 

23.3

%

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

3,701

 

 

 

3,288

 

 

 

12.6

%

 

 

2,060

 

 

 

79.7

%

Interest on borrowed funds

 

 

-

 

 

 

-

 

 

 

0.0

%

 

 

15

 

 

 

-100.0

%

Total interest expense

 

 

3,701

 

 

 

3,288

 

 

 

12.6

%

 

 

2,075

 

 

 

78.4

%

Net interest income

 

 

11,177

 

 

 

10,798

 

 

 

3.5

%

 

 

9,987

 

 

 

11.9

%

Provision for loan losses

 

 

401

 

 

 

-

 

 

 

100.0

%

 

 

33

 

 

 

1115.2

%

Net interest income after provision for loan losses

 

 

10,776

 

 

 

10,798

 

 

 

-0.2

%

 

 

9,954

 

 

 

8.3

%

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

 

499

 

 

 

448

 

 

 

11.4

%

 

 

398

 

 

 

25.4

%

Loan servicing fees, net of amortization

 

 

227

 

 

 

383

 

 

 

-40.7

%

 

 

372

 

 

 

-39.0

%

Gain on sale of loans

 

 

1,588

 

 

 

1,077

 

 

 

47.4

%

 

 

1,728

 

 

 

-8.1

%

Other income

 

 

333

 

 

 

1,625

 

 

 

-79.5

%

 

 

285

 

 

 

16.8

%

Total noninterest income

 

 

2,647

 

 

 

3,533

 

 

 

-25.1

%

 

 

2,783

 

 

 

-4.9

%

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

5,344

 

 

 

5,168

 

 

 

3.4

%

 

 

4,615

 

 

 

15.8

%

Occupancy and equipment

 

 

1,132

 

 

 

1,077

 

 

 

5.1

%

 

 

1,064

 

 

 

6.4

%

Data processing and communication

 

 

367

 

 

 

359

 

 

 

2.2

%

 

 

297

 

 

 

23.6

%

Professional fees

 

 

247

 

 

 

203

 

 

 

21.7

%

 

 

166

 

 

 

48.8

%

FDIC insurance and regulatory assessments

 

 

105

 

 

 

104

 

 

 

1.0

%

 

 

104

 

 

 

1.0

%

Promotion and advertising

 

 

183

 

 

 

178

 

 

 

2.8

%

 

 

231

 

 

 

-20.8

%

Directors’ fees

 

 

223

 

 

 

229

 

 

 

-2.6

%

 

 

209

 

 

 

6.7

%

Foundation donation and other contributions

 

 

379

 

 

 

388

 

 

 

-2.3

%

 

 

386

 

 

 

-1.8

%

Other expenses

 

 

378

 

 

 

367

 

 

 

3.0

%

 

 

406

 

 

 

-6.9

%

Total noninterest expense

 

 

8,358

 

 

 

8,073

 

 

 

3.5

%

 

 

7,478

 

 

 

11.8

%

Income before income taxes

 

 

5,065

 

 

 

6,258

 

 

 

-19.1

%

 

 

5,259

 

 

 

-3.7

%

Provision for income taxes

 

 

1,229

 

 

 

1,518

 

 

 

-19.0

%

 

 

1,468

 

 

 

-16.3

%

Net income

 

$

3,836

 

 

$

4,740

 

 

 

-19.1

%

 

$

3,791

 

 

 

1.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

8.62

 

 

$

8.42

 

 

 

2.4

%

 

$

7.77

 

 

 

10.9

%

Basic EPS

 

$

0.24

 

 

$

0.29

 

 

 

-17.2

%

 

$

0.24

 

 

 

0.0

%

Diluted EPS

 

$

0.23

 

 

$

0.29

 

 

 

-20.7

%

 

$

0.23

 

 

 

0.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock outstanding

 

 

15,723,007

 

 

 

15,719,583

 

 

 

0.0

%

 

 

15,629,215

 

 

 

0.6

%

Weighted Average Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic

 

 

15,685,478

 

 

 

15,817,060

 

 

 

-0.8

%

 

 

15,577,775

 

 

 

0.7

%

- Diluted

 

 

15,951,598

 

 

 

16,112,725

 

 

 

-1.0

%

 

 

16,110,460

 

 

 

-1.0

%

Key Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except ratios)

 

Three Months Ended

 

 

 

6/30/2019

 

 

3/31/2019

 

 

% change

 

 

6/30/2018

 

 

% change

 

Return on average assets (ROA)*

 

 

1.39

%

 

 

1.83

%

 

 

-0.44

%

 

 

1.61

%

 

 

-0.22

%

Return on average equity (ROE) *

 

 

11.50

%

 

 

14.46

%

 

 

-2.96

%

 

 

12.70

%

 

 

-1.20

%

Net interest margin *

 

 

4.26

%

 

 

4.38

%

 

 

-0.12

%

 

 

4.46

%

 

 

-0.20

%

Efficiency ratio

 

 

60.45

%

 

 

56.33

%

 

 

4.12

%

 

 

58.56

%

 

 

1.89

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Risk Based Capital Ratio

 

 

15.45

%

 

 

15.76

%

 

 

-0.31

%

 

 

16.09

%

 

 

-0.64

%

Tier 1 Capital Ratio

 

 

14.42

%

 

 

14.68

%

 

 

-0.26

%

 

 

14.90

%

 

 

-0.48

%

Common Equity Tier 1 Ratio

 

 

14.42

%

 

 

14.68

%

 

 

-0.26

%

 

 

14.90

%

 

 

-0.48

%

Tier 1 Leverage Ratio

 

 

12.24

%

 

 

12.73

%

 

 

-0.49

%

 

 

12.91

%

 

 

-0.67

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Annualized

Consolidated Statements of Income (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

 

Six Months Ended

 

 

 

6/30/2019

 

 

6/30/2018

 

 

% change

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

27,447

 

 

$

22,517

 

 

 

21.9

%

Interest on securities available for sale

 

 

687

 

 

 

396

 

 

 

73.5

%

Other interest income

 

 

831

 

 

 

329

 

 

 

152.6

%

Total interest income

 

 

28,965

 

 

 

23,242

 

 

 

24.6

%

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

6,989

 

 

 

3,593

 

 

 

94.5

%

Interest on borrowed funds

 

 

-

 

 

 

102

 

 

 

-100.0

%

Total interest expense

 

 

6,989

 

 

 

3,695

 

 

 

89.1

%

Net interest income

 

 

21,976

 

 

 

19,547

 

 

 

12.4

%

Provision for loan losses

 

 

401

 

 

 

609

 

 

 

-34.2

%

Net interest income after provision for loan losses

 

 

21,575

 

 

 

18,938

 

 

 

13.9

%

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

 

1,026

 

 

 

935

 

 

 

9.7

%

Loan servicing fees, net of amortization

 

 

610

 

 

 

696

 

 

 

-12.4

%

Gain on sale of loans

 

 

2,665

 

 

 

2,717

 

 

 

-1.9

%

Other income

 

 

1,878

 

 

 

648

 

 

 

189.8

%

Total noninterest income

 

 

6,179

 

 

 

4,996

 

 

 

23.7

%

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

10,513

 

 

 

8,826

 

 

 

19.1

%

Occupancy and equipment

 

 

2,209

 

 

 

2,089

 

 

 

5.7

%

Data processing and communication

 

 

725

 

 

 

627

 

 

 

15.6

%

Professional fees

 

 

451

 

 

 

318

 

 

 

41.8

%

FDIC insurance and regulatory assessments

 

 

210

 

 

 

200

 

 

 

5.0

%

Promotion and advertising

 

 

360

 

 

 

377

 

 

 

-4.5

%

Directors’ fees

 

 

452

 

 

 

418

 

 

 

8.1

%

Foundation donation and other contributions

 

 

767

 

 

 

715

 

 

 

7.3

%

Other expenses

 

 

744

 

 

 

720

 

 

 

3.3

%

Total noninterest expense

 

 

16,431

 

 

 

14,290

 

 

 

15.0

%

Income before income taxes

 

 

11,323

 

 

 

9,644

 

 

 

17.4

%

Provision for income taxes

 

 

2,747

 

 

 

2,637

 

 

 

4.2

%

Net income (loss)

 

$

8,576

 

 

$

7,007

 

 

 

22.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

8.62

 

 

$

7.77

 

 

 

11.0

%

Basic EPS

 

$

0.53

 

 

$

0.47

 

 

 

12.8

%

Diluted EPS

 

$

0.52

 

 

$

0.45

 

 

 

15.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock outstanding

 

 

15,723,007

 

 

 

15,629,215

 

 

 

0.6

%

Weighted Average Shares:

 

 

 

 

 

 

 

 

 

 

 

 

- Basic

 

 

15,750,905

 

 

 

14,441,241

 

 

 

9.1

%

- Diluted

 

 

16,006,499

 

 

 

14,951,581

 

 

 

7.1

%

Key Ratios

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except ratios)

 

Six Months Ended

 

 

 

6/30/2019

 

 

6/30/2018

 

 

% change

 

Return on average assets (ROA)*

 

 

1.60

%

 

 

1.52

%

 

 

0.08

%

Return on average equity (ROE) *

 

 

12.97

%

 

 

13.11

%

 

 

-0.14

%

Net interest margin *

 

 

4.32

%

 

 

4.51

%

 

 

-0.19

%

Efficiency ratio

 

 

58.36

%

 

 

58.22

%

 

 

0.14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Risk Based Capital Ratio

 

 

15.45

%

 

 

16.09

%

 

 

-0.64

%

Tier 1 Capital Ratio

 

 

14.42

%

 

 

14.90

%

 

 

-0.48

%

Common Equity Tier 1 Ratio

 

 

14.42

%

 

 

14.90

%

 

 

-0.48

%

Tier 1 Leverage Ratio

 

 

12.24

%

 

 

12.91

%

 

 

-0.67

%

 

 

 

 

 

 

 

 

 

 

 

 

 

* Annualized

Asset Quality

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except ratios)

 

Three Months Ended

 

 

 

6/30/2019

 

 

3/31/2019

 

 

12/31/2018

 

 

9/30/2018

 

 

6/30/2018

 

Nonaccrual Loans

 

$

1,218

 

 

$

1,239

 

 

$

1,571

 

 

$

888

 

 

$

642

 

Loans 90 days or more past due, accruing

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Accruing restructured loans

 

 

338

 

 

 

341

 

 

 

343

 

 

 

345

 

 

 

348

 

Nonperforming loans

 

 

1,556

 

 

 

1,580

 

 

 

1,914

 

 

 

1,233

 

 

 

990

 

Other real estate loans (OREO)

 

 

-

 

 

 

1,146

 

 

 

-

 

 

 

-

 

 

 

-

 

Nonperforming assets

 

 

1,556

 

 

 

2,726

 

 

 

1,914

 

 

 

1,233

 

 

 

990

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Classified loans

 

 

4,197

 

 

 

4,236

 

 

 

3,573

 

 

 

3,800

 

 

 

3,721

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets/total assets

 

 

0.14

%

 

 

0.25

%

 

 

0.18

%

 

 

0.12

%

 

 

0.10

%

Nonperforming assets/gross loans plus OREO

 

 

0.16

%

 

 

0.30

%

 

 

0.22

%

 

 

0.15

%

 

 

0.12

%

Nonperforming loans/gross loans

 

 

0.16

%

 

 

0.17

%

 

 

0.22

%

 

 

0.15

%

 

 

0.12

%

Allowance for loan losses/nonperforming loans

 

 

612

%

 

 

609

%

 

 

503

%

 

 

775

%

 

 

982

%

Allowance for loan losses/nonperforming assets

 

 

612

%

 

 

353

%

 

 

503

%

 

 

775

%

 

 

982

%

Allowance for loan losses/gross loans

 

 

1.01

%

 

 

1.05

%

 

 

1.10

%

 

 

1.12

%

 

 

1.18

%

Classified loans/gross loans

 

 

0.44

%

 

 

0.46

%

 

 

0.41

%

 

 

0.45

%

 

 

0.45

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs

 

$

495

 

 

$

17

 

 

$

135

 

 

$

611

 

 

$

26

 

Net charge-offs to average gross loans *

 

 

0.21

%

 

 

0.01

%

 

 

0.06

%

 

 

0.29

%

 

 

0.01

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Annualized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accruing delinquent loans 30-89 days past due

 

6/30/2019

 

 

3/31/2019

 

 

12/31/2018

 

 

9/30/2018

 

 

6/30/2018

 

30-59 days

 

$

1,065

 

 

$

2,073

 

 

$

449

 

 

$

1,007

 

 

$

577

 

60-89 days

 

 

2,207

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

57

 

Total

 

 

3,272

 

 

 

2,073

 

 

 

449

 

 

 

1,007

 

 

 

634

 

Average Balance Sheet, Interest and Yield/Rate Analysis

 

(Dollars in thousands)

 

Three Months Ended

 

 

 

June 30, 2019

 

 

March 31, 2019

 

 

June 30, 2018

 

 

 

Average

Balance

 

 

Interest

and Fees

 

 

Yield/ Rate

 

 

Average

Balance

 

 

Interest

and Fees

 

 

Yield/ Rate

 

 

Average

Balance

 

 

Interest

and Fees

 

 

Yield/ Rate

 

Earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold and other investments

 

$

66,277

 

 

$

458

 

 

 

2.74

%

 

$

52,963

 

 

$

372

 

 

 

2.81

%

 

$

26,857

 

 

$

184

 

 

 

2.72

%

Securities available for sale

 

 

53,329

 

 

 

327

 

 

 

2.45

 

 

 

54,771

 

 

 

360

 

 

 

2.63

 

 

 

40,372

 

 

 

208

 

 

 

2.06

 

Total investments

 

 

119,606

 

 

 

785

 

 

 

2.61

 

 

 

107,734

 

 

 

732

 

 

 

2.72

 

 

 

67,229

 

 

 

392

 

 

 

2.33

 

Real estate

 

 

562,256

 

 

 

7,837

 

 

 

5.59

 

 

 

519,037

 

 

 

7,149

 

 

 

5.59

 

 

 

464,899

 

 

 

6,008

 

 

 

5.18

 

SBA

 

 

137,133

 

 

 

3,063

 

 

 

8.96

 

 

 

131,272

 

 

 

2,933

 

 

 

9.06

 

 

 

143,604

 

 

 

2,714

 

 

 

7.58

 

C & I

 

 

104,273

 

 

 

1,558

 

 

 

5.99

 

 

 

106,680

 

 

 

1,594

 

 

 

6.06

 

 

 

107,546

 

 

 

1,473

 

 

 

5.49

 

Home Mortgage

 

 

125,577

 

 

 

1,588

 

 

 

5.06

 

 

 

128,507

 

 

 

1,636

 

 

 

5.09

 

 

 

110,476

 

 

 

1,425

 

 

 

5.16

 

Consumer

 

 

2,814

 

 

 

47

 

 

 

6.70

 

 

 

2,532

 

 

 

42

 

 

 

6.68

 

 

 

3,608

 

 

 

50

 

 

 

5.56

 

Loans (1)

 

 

932,053

 

 

 

14,093

 

 

 

6.06

 

 

 

888,028

 

 

 

13,354

 

 

 

6.09

 

 

 

830,133

 

 

 

11,670

 

 

 

5.64

 

Total earning assets

 

 

1,051,659

 

 

 

14,878

 

 

 

5.67

 

 

 

995,762

 

 

 

14,086

 

 

 

5.72

 

 

 

897,362

 

 

 

12,062

 

 

 

5.39

 

Noninterest-earning assets

 

 

50,387

 

 

 

 

 

 

 

 

 

 

 

42,476

 

 

 

 

 

 

 

 

 

 

 

46,970

 

 

 

 

 

 

 

 

 

Total assets

 

$

1,102,046

 

 

 

 

 

 

 

 

 

 

$

1,038,238

 

 

 

 

 

 

 

 

 

 

$

944,332

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW and savings deposits

 

$

4,725

 

 

 

3

 

 

 

0.25

%

 

$

5,176

 

 

 

3

 

 

 

0.25

%

 

$

6,615

 

 

 

4

 

 

 

0.24

%

Money market deposits

 

 

281,239

 

 

 

1,335

 

 

 

1.90

 

 

 

251,583

 

 

 

1,121

 

 

 

1.81

 

 

 

253,162

 

 

 

804

 

 

 

1.27

 

Time deposits

 

 

389,294

 

 

 

2,363

 

 

 

2.43

 

 

 

379,430

 

 

 

2,164

 

 

 

2.31

 

 

 

298,535

 

 

 

1,252

 

 

 

1.68

 

Total interest-bearing deposits

 

 

675,258

 

 

 

3,701

 

 

 

2.20

 

 

 

636,189

 

 

 

3,288

 

 

 

2.10

 

 

 

558,312

 

 

 

2,060

 

 

 

1.48

 

Borrowings

 

 

2

 

 

 

-

 

 

 

2.76

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,132

 

 

 

15

 

 

 

1.92

 

Total interest-bearing liabilities

 

 

675,260

 

 

 

3,701

 

 

 

2.20

 

 

 

636,189

 

 

 

3,288

 

 

 

2.10

 

 

 

561,444

 

 

 

2,075

 

 

 

1.48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

276,569

 

 

 

 

 

 

 

 

 

 

 

262,524

 

 

 

 

 

 

 

 

 

 

 

254,700

 

 

 

 

 

 

 

 

 

Other noninterest-bearing liabilities

 

 

16,778

 

 

 

 

 

 

 

 

 

 

 

8,444

 

 

 

 

 

 

 

 

 

 

 

8,814

 

 

 

 

 

 

 

 

 

Total noninterest-bearing liabilities

 

 

293,347

 

 

 

 

 

 

 

 

 

 

 

270,968

 

 

 

 

 

 

 

 

 

 

 

263,514

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

133,439

 

 

 

 

 

 

 

 

 

 

 

131,081

 

 

 

 

 

 

 

 

 

 

 

119,374

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

1,102,046

 

 

 

 

 

 

 

 

 

 

$

1,038,238

 

 

 

 

 

 

 

 

 

 

$

899,412

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / interest rate spreads

 

 

 

 

 

$

11,177

 

 

 

3.47

%

 

 

 

 

 

$

10,798

 

 

 

3.62

%

 

 

 

 

 

$

9,987

 

 

 

3.91

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

 

 

 

 

 

 

 

 

 

4.26

%

 

 

 

 

 

 

 

 

 

 

4.38

%

 

 

 

 

 

 

 

 

 

 

4.46

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of deposits & cost of funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits / cost of deposits

 

$

951,827

 

 

$

3,701

 

 

 

1.56

%

 

$

898,713

 

 

$

3,288

 

 

 

1.48

%

 

$

813,012

 

 

$

2,060

 

 

 

1.02

%

Total funding liabilities / cost of funds

 

$

951,829

 

 

$

3,701

 

 

 

1.56

%

 

$

898,713

 

 

$

3,288

 

 

 

1.48

%

 

$

816,144

 

 

$

2,075

 

 

 

1.02

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes loans held for sale.

Average Balance Sheet, Interest and Yield/Rate Analysis

(Dollars in thousands)

 

Six Months Ended

 

 

June 30, 2019

 

 

June 30, 2018

 

 

Average

Balance

 

 

Interest

and Fees

 

 

Yield/ Rate

 

 

Average

Balance

 

 

Interest

and Fees

 

 

Yield/ Rate

Earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold and other investments

 

$

59,657

 

 

$

831

 

 

 

2.77

%

 

$

24,386

 

 

$

327

 

 

 

2.67

Securities available for sale

 

 

54,046

 

 

 

687

 

 

 

2.54

 

 

 

39,297

 

 

 

397

 

 

 

2.02

Total investments

 

 

113,703

 

 

 

1,518

 

 

 

2.66

 

 

 

63,683

 

 

 

724

 

 

 

2.26

Real estate

 

 

540,766

 

 

 

14,986

 

 

 

5.59

 

 

 

454,619

 

 

 

11,543

 

 

 

5.12

SBA

 

 

134,219

 

 

 

5,996

 

 

 

9.01

 

 

 

139,293

 

 

 

5,264

 

 

 

7.62

C & I

 

 

105,469

 

 

 

3,152

 

 

 

6.03

 

 

 

103,887

 

 

 

2,839

 

 

 

5.51

Home Mortgage

 

 

127,034

 

 

 

3,224

 

 

 

5.08

 

 

 

107,382

 

 

 

2,770

 

 

 

5.16

Consumer

 

 

2,674

 

 

 

89

 

 

 

6.71

 

 

 

3,619

 

 

 

101

 

 

 

5.63

Loans (1)

 

 

910,162

 

 

 

27,447

 

 

 

6.08

 

 

 

808,800

 

 

 

22,517

 

 

 

5.61

Total earning assets

 

 

1,023,865

 

 

 

28,965

 

 

 

5.70

 

 

 

872,483

 

 

 

23,241

 

 

 

5.36

Noninterest-earning assets

 

 

46,453

 

 

 

 

 

 

 

 

 

 

 

49,512

 

 

 

 

 

 

 

 

Total assets

 

$

1,070,318

 

 

 

 

 

 

 

 

 

 

$

921,995

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW and savings deposits

 

$

4,949

 

 

 

6

 

 

 

0.25

%

 

$

6,511

 

 

 

7

 

 

 

0.22

Money market deposits

 

 

266,493

 

 

 

2,456

 

 

 

1.86

 

 

 

257,015

 

 

 

1,512

 

 

 

1.19

Time deposits

 

 

384,389

 

 

 

4,527

 

 

 

2.38

 

 

 

271,218

 

 

 

2,074

 

 

 

1.54

Total interest-bearing deposits

 

 

655,831

 

 

 

6,989

 

 

 

2.15

 

 

 

534,744

 

 

 

3,593

 

 

 

1.35

Borrowings

 

 

1

 

 

 

-

 

 

 

2.76

 

 

 

13,398

 

 

 

102

 

 

 

1.54

Total interest-bearing liabilities

 

 

655,832

 

 

 

6,989

 

 

 

2.15

 

 

 

548,142

 

 

 

3,695

 

 

 

1.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

269,585

 

 

 

 

 

 

 

 

 

 

 

257,445

 

 

 

 

 

 

 

 

Other noninterest-bearing liabilities

 

 

12,634

 

 

 

 

 

 

 

 

 

 

 

9,493

 

 

 

 

 

 

 

 

Total noninterest-bearing liabilities

 

 

282,219

 

 

 

 

 

 

 

 

 

 

 

266,938

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

132,267

 

 

 

 

 

 

 

 

 

 

 

106,915

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

1,070,318

 

 

 

 

 

 

 

 

 

 

$

921,995

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / interest rate spreads

 

 

 

 

 

$

21,976

 

 

 

3.55

%

 

 

 

 

 

$

19,546

 

 

 

4.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

 

 

 

 

 

 

 

 

 

4.32

%

 

 

 

 

 

 

 

 

 

 

4.51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of deposits & cost of funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits / cost of deposits

 

$

925,416

 

 

$

6,989

 

 

 

1.52

%

 

$

792,189

 

 

$

3,593

 

 

 

0.91

Total funding liabilities / cost of funds

 

$

925,417

 

 

$

6,989

 

 

 

1.52

%

 

$

805,587

 

 

$

3,695

 

 

 

0.92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes loans held for sale.

 

Contacts

Investor Relations
OP Bancorp
Christine Oh
EVP & CFO
213.892.1192
Christine.oh@myopenbank.com

Contacts

Investor Relations
OP Bancorp
Christine Oh
EVP & CFO
213.892.1192
Christine.oh@myopenbank.com