OP Bancorp Reports Fourth Quarter and Year End Financial Result of 2019

2019 Fourth Quarter Highlights:

  • Net income totaled $4.2 million or $0.26 per diluted common share, up 4.5%, compared to $4.0 million or $0.24 per diluted common share for the third quarter of 2019
  • Net interest margin was 3.99% compared to 4.13% for the third quarter of 2019
  • Return on average assets was 1.45% and return on average equity was 12.05% compared to 1.41% and 11.74%, respectively, for the third quarter of 2019
  • Total assets increased 2.4% to $1.18 billion at December 31, 2019, from $1.15 billion at September 30, 2019
  • Net loans receivable increased 2.7% to $980.1 million at December 31, 2019, from $954.7 million at September 30, 2019
  • Total deposits increased 2.5% to $1.02 billion at December 31, 2019, from $996.0 million at September 30, 2019
  • Nonperforming assets to total assets was 0.13% compared to 0.29% at September 30, 2019

2019 Full Year Highlights:

  • Net income totaled $16.8 million or $1.03 per diluted common share, up 17.6%, compared to $14.3 million or $0.89 per diluted common share for the full year of 2018
  • Excluding a one-time gain on company owned life insurance of $1.2 million, net income totaled $15.5 million or $0.95 per diluted common share, up 9.0%, compared to the full year of 2018
  • Net interest margin was 4.19% compared to 4.49% for the full year of 2018
  • Return on average assets was 1.51% and return on average equity was 12.42% compared to 1.49% and 12.27%, respectively, for the full year of 2018
  • Excluding a one-time gain on company owned life insurance of $1.2 million, return on average assets was 1.40% and return on average equity was 11.51%
  • Total assets increased 13.0% to $1.18 billion at December 31, 2019, from $1.04 billion at December 31, 2018
  • Net loans receivable increased 13.2% to $980.1 million at December 31, 2019, from $865.4 billion at December 31, 2018
  • Total deposits increased 12.8% to $1.02 billion at December 31, 2019, from $905.2 million at December 31, 2018
  • Nonperforming assets to total assets was 0.13% compared to 0.18% at December 31, 2018

LOS ANGELES--()--OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company of Open Bank (the “Bank”), today reported unaudited financial results for the fourth quarter of 2019. Net income for the fourth quarter of 2019 was $4.2 million, or $0.26 per diluted common share, compared with net income of $4.0 million, or $0.24 per diluted common share, for the third quarter of 2019, and net income of $3.8 million, or $0.23 per diluted common share, for the fourth quarter of 2018.

“We are pleased to complete the year achieving a record annual net income of $16.8 million or $1.03 per diluted common share, along with another solid quarterly net income of $4.2 million, or $0.26 per diluted common share. Despite a challenging and competitive rate environment, we have continued to grow our loans and deposits this year by 13.2% and 12.8%, respectively, while maintaining strong asset quality and retaining our noninterest bearing deposits at 28.8% of total deposits,” commented Min Kim, President and Chief Executive Officer of OP Bancorp and Open Bank. Ms. Kim continued, “We are also pleased to announce an increase to our quarterly cash dividend to $0.07 per share from $0.05 per share starting from the first quarter of 2020. Additionally, as of January 23, 2020, we have repurchased an aggregate of 278,924 shares of our common stock at an average price of $9.58 per share under our second stock repurchase program.”

Financial Highlights (unaudited)

(Dollars in thousands, except per share data)

 

As of or for the Three Months Ended

 

 

December 31,

 

September 30,

 

December 31,

 

 

2019

 

2019

 

2018

Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

14,703

 

 

$

15,112

 

 

$

13,820

 

Interest expense

 

 

3,625

 

 

 

3,893

 

 

 

2,894

 

Net interest income

 

 

11,078

 

 

 

11,219

 

 

 

10,926

 

Provision for loan losses

 

 

411

 

 

 

290

 

 

 

220

 

Noninterest income

 

 

2,513

 

 

 

2,732

 

 

 

2,050

 

Noninterest expense

 

 

7,665

 

 

 

8,424

 

 

 

7,568

 

Income before taxes

 

 

5,515

 

 

 

5,237

 

 

 

5,188

 

Provision for income taxes

 

 

1,334

 

 

 

1,237

 

 

 

1,423

 

Net Income

 

$

4,181

 

 

$

4,000

 

 

$

3,765

 

Diluted earnings per share

 

$

0.26

 

 

$

0.24

 

 

$

0.23

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

$

2,100

 

 

$

368

 

 

$

752

 

Gross loans, net of unearned income

 

 

990,138

 

 

 

964,370

 

 

 

875,059

 

Allowance for loan losses

 

 

10,050

 

 

 

9,640

 

 

 

9,636

 

Total assets

 

 

1,179,520

 

 

 

1,151,934

 

 

 

1,044,186

 

Deposits

 

 

1,020,711

 

 

 

995,993

 

 

 

905,176

 

Shareholders’ equity

 

 

140,576

 

 

 

137,593

 

 

 

129,787

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

 

1.45

%

 

 

1.41

%

 

 

1.49

%

Return on average equity (annualized)

 

 

12.05

%

 

 

11.74

%

 

 

11.84

%

Net interest margin (annualized)

 

 

3.99

%

 

 

4.13

%

 

 

4.50

%

Efficiency ratio (1)

 

 

56.40

%

 

 

60.39

%

 

 

58.33

%

Credit Quality:

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

$

1,548

 

 

$

1,570

 

 

$

1,914

 

Nonperforming assets

 

 

1,548

 

 

 

3,387

 

 

 

1,914

 

Net charge-offs to average gross loans (annualized)

 

 

0.00

%

 

 

0.07

%

 

 

0.06

%

Nonperforming assets to gross loans plus OREO

 

 

0.16

%

 

 

0.35

%

 

 

0.22

%

ALL to nonperforming loans

 

 

649

%

 

 

614

%

 

 

503

%

ALL to gross loans, net of unearned income

 

 

1.02

%

 

 

1.00

%

 

 

1.10

%

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

 

15.18

%

 

 

15.36

%

 

 

16.26

%

Tier 1 risk-based capital ratio

 

 

14.16

%

 

 

14.35

%

 

 

15.13

%

Common equity tier 1 ratio

 

 

14.16

%

 

 

14.35

%

 

 

15.13

%

Leverage ratio

 

 

12.14

%

 

 

12.11

%

 

 

12.88

%

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Financial Highlights (unaudited)

(Dollars in thousands, except per share data)

 

For the Twelve Months Ended

 

 

December 31,

 

December 31,

 

 

2019

 

2018

Income Statement Data:

 

 

 

 

 

 

 

 

Interest income

 

$

58,779

 

 

$

50,068

 

Interest expense

 

 

14,507

 

 

 

9,111

 

Net interest income

 

 

44,272

 

 

 

40,957

 

Provision for loan losses

 

 

1,102

 

 

 

1,267

 

Noninterest income

 

 

11,426

 

 

 

9,329

 

Noninterest expense

 

 

32,520

 

 

 

29,562

 

Income before taxes

 

 

22,076

 

 

 

19,457

 

Provision for income taxes

 

 

5,319

 

 

 

5,204

 

Net Income

 

$

16,757

 

 

$

14,253

 

Diluted earnings per share

 

$

1.03

 

 

$

0.89

 

Performance Ratios:

 

 

 

 

 

 

 

 

Return on average assets

 

 

1.51

%

 

 

1.49

%

Return on average equity

 

 

12.42

%

 

 

12.27

%

Net interest margin

 

 

4.19

%

 

 

4.49

%

Efficiency ratio (1)

 

 

58.39

%

 

 

58.79

%

 

 

 

 

 

 

 

 

 

(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 Twelve Months Ended

 

 

December 31,

 

December 31,

 

 

2019

 

2018

Income before taxes, as reported

 

$

22,076

 

 

$

19,457

 

Gain on COLI

 

 

1,228

 

 

 

 

Provision for income taxes

 

 

5,319

 

 

 

5,204

 

Net Income

 

$

15,529

 

 

$

14,253

 

Diluted earnings per share

 

$

0.95

 

 

$

0.89

 

Return on average assets

 

 

1.40

%

 

 

1.49

%

Return on average equity

 

 

11.51

%

 

 

12.27

%

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

 

December 31,
2019

 

September 30,
2019

 

December 31,
2018

(Dollars in thousands)

Interest
& Fees

 

Yield

 

Interest &
Fees

 

Yield

 

Interest
& Fees

 

Yield

Contractual interest rate

$

13,337

 

 

5.44

%

 

$

13,492

 

 

 

5.66

%

 

$

12,127

 

 

 

5.58

%

SBA discount accretion

 

589

 

 

0.24

%

 

 

717

 

 

 

0.30

%

 

 

967

 

 

 

0.44

%

Amortization of net deferred fees/(costs)

 

41

 

 

0.02

%

 

 

37

 

 

 

0.02

%

 

 

1

 

 

 

0.00

%

Interest recognized on nonaccrual loans

 

-

 

 

0.00

%

 

 

(12

)

 

 

-0.01

%

 

 

(69

)

 

 

-0.03

%

Prepayment penalties and other fees

 

28

 

 

0.01

%

 

 

44

 

 

 

0.02

%

 

 

40

 

 

 

0.02

%

Yield on loans (as reported)

$

13,995

 

 

5.71

%

 

$

14,278

 

 

 

5.99

%

 

$

13,066

 

 

 

6.01

%

 

 

Twelve Months Ended

 

 

December 31, 2019

 

December 31, 2018

(Dollars in thousands)

 

Interest &
Fees

 

Yield

 

Interest &
Fees

 

Yield

Contractual interest rate

 

$

52,622

 

 

 

5.63

%

 

$

45,147

 

 

 

5.41

%

SBA discount accretion

 

 

2,518

 

 

 

0.27

%

 

 

2,626

 

 

 

0.31

%

Amortization of net deferred fees/(costs)

 

 

232

 

 

 

0.02

%

 

 

215

 

 

 

0.03

%

Interest recognized on nonaccrual loans

 

 

(12

)

 

 

0.00

%

 

 

(47

)

 

 

-0.01

%

Prepayment penalties and other fees

 

 

360

 

 

 

0.04

%

 

 

167

 

 

 

0.02

%

Yield on loans (as reported)

 

$

55,720

 

 

 

5.96

%

 

$

48,108

 

 

 

5.76

%

Net interest margin for the fourth quarter of 2019 decreased 14 basis points to 3.99% from 4.13% for the third quarter of 2019 primarily due to a greater decrease in the reported yield on interest-earning assets compared to a decrease in the cost of interest-bearing liabilities as a result of the cumulative market rate decreases by the Federal Reserve in August, September, and October 2019.

Net interest income before the provision for loan losses for the fourth quarter of 2019 was $11.1 million, a decrease of $141,000, or 1.3%, compared to the third quarter of 2019, primarily due to a $409,000 decrease in interest income, partially offset by a $268,000 decrease in interest expense.

Interest income on securities available for sale and other interest income decreased $126,000, or 15.1%, during the fourth quarter of 2019 compared to the third quarter of 2019. The decrease was primarily due to the aforementioned decrease in Fed funds rate and a $128,000 decrease in other interest income as a result of a $6.8 million, or 8.7%, decrease in the average balance of Fed funds sold and other investments, compared to the third quarter of 2019.

Interest income from the contractual interest rates on loans decreased $155,000, or 1.1%, during the fourth quarter of 2019 compared to the third quarter of 2019, reflecting a 22 basis point decrease in the average contractual interest rate, primarily resulting from the cumulative rate cuts by the Federal Reserve in late 2019. The amount of discount accretion on SBA loans decreased $128,000 during the fourth quarter of 2019 due to a decrease in SBA loan payoffs. The reported interest income on loans, net of SBA discount accretions and other components, decreased $283,000 during the fourth quarter of 2019.

Interest expense for the fourth quarter of 2019 decreased $268,000, or 6.9%, compared to the third quarter of 2019, due to a decrease of 17 basis points in the average cost of interest-bearing liabilities, primarily due to the decrease in the Fed funds rate.

Net interest margin for the fourth quarter of 2019 decreased 51 basis points to 3.99% from 4.50% for the fourth quarter of 2018, primarily due to a decrease in the reported yield on interest-earning assets as a result of cumulative market rate decreases of 75 basis points through three rate cuts by the Federal Reserve in late 2019.

Net interest income before provision for loan losses for the fourth quarter of 2019 increased $152,000, or 1.4%, to $11.1 million, compared to $10.9 million for the fourth quarter of 2018, primarily due to a $929,000 increase in interest income, partially offset by a $731,000 increase in interest expense.

Interest income on securities available for sale and other interest income decreased $46,000, or 6.1%, for the fourth quarter of 2019 compared to the fourth quarter of 2018. The decrease was primarily due to a $40,000 decrease in other interest income as a result of a 126 basis point decrease in the yield on the average balance of Fed funds sold and other investments and a $6,000 decrease in interest income on securities available for sale from purchases of lower yielding securities during the fourth quarter of 2019.

The increase of $929,000 in interest income on loans in the fourth quarter of 2019 was primarily due to a $110.6 million, or 12.8%, increase in the balance of average loans, including loans held for sale, compared to the fourth quarter of 2018, partially offset by a 30 basis point decrease in the yield on average loans to 5.71% for the fourth quarter of 2019 from 6.01% for the same period of 2018.

The increase of $731,000 in interest expense in the fourth quarter of 2019, compared to the fourth quarter of 2018 was due to a $104.2 million, or 17.3%, increase in the average balance of the total interest-bearing liabilities and a 13 basis point increase in the cost of interest-bearing liabilities.

The following tables show the asset yields, liability costs, spreads and margins for the periods indicated.

 

 

Three Months Ended

 

 

Percentage Change

 

 

December 31,

 

September 30,

 

December 31,

 

 

Q4-19

 

Q4-19

 

 

2019

 

2019

 

2018

 

 

vs. Q3-19

 

vs. Q4-18

Yield on loans

 

 

5.71

%

 

 

5.99

%

 

 

6.01

%

 

 

 

-0.28

%

 

 

-0.30

%

Yield on interest-earning assets

 

 

5.30

%

 

 

5.56

%

 

 

5.69

%

 

 

 

-0.26

%

 

 

-0.39

%

Cost of interest-bearing liabilities

 

 

2.03

%

 

 

2.20

%

 

 

1.90

%

 

 

 

-0.17

%

 

 

0.13

%

Cost of deposits

 

 

1.44

%

 

 

1.58

%

 

 

1.32

%

 

 

 

-0.14

%

 

 

0.12

%

Cost of funds

 

 

1.44

%

 

 

1.58

%

 

 

1.32

%

 

 

 

-0.14

%

 

 

0.12

%

Net interest spread

 

 

3.27

%

 

 

3.36

%

 

 

3.79

%

 

 

 

-0.09

%

 

 

-0.52

%

Net interest margin

 

 

3.99

%

 

 

4.13

%

 

 

4.50

%

 

 

 

-0.14

%

 

 

-0.51

%

 

 

Twelve Months Ended

 

 

Percentage
Change

 

 

December 31,

 

December 31,

 

 

2019 YTD

 

 

2019

 

2018

 

 

vs. 2018 YTD

Yield on loans

 

 

5.96

%

 

 

5.76

%

 

 

 

0.20

%

Yield on interest-earning assets

 

 

5.56

%

 

 

5.49

%

 

 

 

0.07

%

Cost of interest-bearing liabilities

 

 

2.13

%

 

 

1.59

%

 

 

 

0.54

%

Cost of deposits

 

 

1.52

%

 

 

1.09

%

 

 

 

0.43

%

Cost of funds

 

 

1.52

%

 

 

1.09

%

 

 

 

0.43

%

Net interest spread

 

 

3.43

%

 

 

3.90

%

 

 

 

-0.47

%

Net interest margin

 

 

4.19

%

 

 

4.49

%

 

 

 

-0.30

%

The Company recorded the provision for loan losses of $411,000 for the fourth quarter of 2019 compared to $290,000 for the third quarter of 2019 and $220,000 for the fourth quarter of 2018. The increases in the provision for loan losses from the third quarter of 2019, and the fourth quarter of 2018 were primarily due to a greater loan growth during the fourth quarter.

Noninterest income for the fourth quarter of 2019 was $2.5 million, a decrease of $219,000, or 8.0%, from $2.7 million for the third quarter of 2019, primarily due to a decrease of $187,000 in gain on sale of loans and a decrease of $172,000 in other income as result of a loss on sale of other real estate owned (“OREO”), partially offset by an increase of $90,000 in loan servicing fees and an increase of $50,000 in service charges on deposits.

Gain on sale of loans decreased $187,000 to $1.5 million for the fourth quarter of 2019 from $1.7 million for the third quarter of 2019. The Company sold $23.9 million in SBA loans with an average premium of 7.73% in the fourth quarter of 2019, compared to the sale of $22.2 million in SBA loans with an average premium of 8.85% in the third quarter of 2019.

Noninterest income for the fourth quarter of 2019 increased $463,000 to $2.5 million compared to $2.1 million for the fourth quarter of 2018, primarily due to an increase of $499,000 in gain on sale of SBA loans and an increase of $261,000 in loan servicing fees, partially offset by a decrease of $319,000 in other income.

Gain on sale of loans for the fourth quarter of 2018 was $1.0 million from the sale of $24.7 million in SBA loans with an average premium of 5.65%. Loan servicing fees, net of amortization, increased $261,000 to $333,000 for the fourth quarter of 2019 from $72,000 for the fourth quarter of 2018, primarily due to a decrease in the amortization of SBA servicing assets from the decrease in SBA loan payoffs.

Noninterest expense for the fourth quarter of 2019 was $7.7 million, a decrease of $759,000, or 9.0%, compared to the third quarter of 2019. The decrease was primarily due to a decrease of $944,000 in salary and employee benefits, partially offset by an increase of $92,000 in FDIC insurance and regulatory assessments, and an increase of $81,000 in corporate promotion and advertising expenses. The decrease in salary and employee benefits expense was primarily due to adjustments in management incentive accruals that are tied to the Company’s actual financial performance.

Noninterest expense for the fourth quarter of 2019 increased $97,000, or 1.3%, to $7.7 million, compared to $7.6 million for the fourth quarter of 2018. The increase was primarily due to an increase of $161,000 in occupancy and equipment expense and an increase of $137,000 in data processing and communication expense, partially offset by a decrease of $162,000 in salary and employee benefits. The increases in occupancy and equipment expense and data processing and communication expense were primarily attributable to new loan production offices and a new branch opening in 2019.

Income tax provision was $1.3 million for the fourth quarter of 2019, $1.2 million for the third quarter of 2019, and $1.4 million for the fourth quarter of 2018. The effective tax rate for the fourth quarter of 2019 was 24.2%, compared to 23.6% for the third quarter of 2019 and 27.4% for the fourth quarter of 2018. The lower effective tax rates for the third and fourth quarters of 2019 compared to the fourth of 2018 were primarily due to additional tax benefits from an increase in non-qualified stock option exercises in 2019.

Balance Sheet

Total assets at December 31, 2019, were $1.18 billion, an increase of $27.6 million, or 2.4%, compared to $1.15 billion at September 30, 2019, and an increase of $135.3 million, or 13.0%, compared to $1.04 billion at December 31, 2018.

Gross loans, net of unearned income, were $990.1 million at December 31, 2019, an increase of $25.8 million, or 2.7%, from $964.4 million at September 30, 2019, and an increase of $115.1 million, or 13.2%, from $875.1 million at December 31, 2018.

New loan originations for the fourth quarter of 2019 totaled $98.4 million, including SBA loan originations of $26.3 million, compared to $100.9 million, including SBA loan originations of $30.9 million, for the third quarter of 2019, and $62.4 million, including SBA loan originations of $23.5 million, for the fourth quarter of 2018. Loan payoffs for the fourth quarter of 2019 were $35.9 million, compared to $38.7 million for the third quarter of 2019, and $13.2 million for the fourth quarter of 2018.

Total deposits were $1.02 billion at December 31, 2019, an increase of $24.7 million, or 2.5%, from $996.0 million at September 30, 2019, and an increase of $115.5 million, or 12.8%, from $905.2 million at December 31, 2018. Noninterest bearing deposits were $294.3 million at December 31, 2019, compared to $296.8 million at September 30, 2019, and $285.1 million at December 31, 2018.

Noninterest bearing deposits accounted for 28.8% of total deposits at December 31, 2019, compared to 29.8% at September 30, 2019, and 31.5% at December 31, 2018. The following table shows the Company’s deposits by type as a percentage of total deposits as of the periods indicated.

 

 

As of

 

 

December 31,

 

September 30,

 

December 31,

 

 

2019

 

2019

 

2018

Noninterest bearing deposits

 

 

28.8

%

 

 

29.8

%

 

 

31.5

%

Interest bearing demand deposits

 

 

28.6

%

 

 

27.6

%

 

 

28.9

%

Savings

 

 

0.5

%

 

 

0.3

%

 

 

0.4

%

Time deposits over $250,000

 

 

20.9

%

 

 

22.1

%

 

 

18.1

%

Other time deposits

 

 

21.2

%

 

 

20.2

%

 

 

21.1

%

Total deposits

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

The Company had no borrowings from the Federal Home Loan Bank (“FHLB”) at December 31, 2019, September 30, 2019, and December 31, 2018.

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 the balance sheet. With the new branch opening, the Company had right-of-use assets and lease liabilities of $8.3 million and $10.1 million, respectively, at December 31, 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 December 31, 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

 

 

15.18

%

 

 

14.96

%

 

 

10.00

%

 

 

10.50

%

Tier 1 risk-based

 

 

14.16

%

 

 

13.93

%

 

 

8.00

%

 

 

8.50

%

Common equity tier 1 Risk-Based

 

 

14.16

%

 

 

13.93

%

 

 

6.50

%

 

 

7.00

%

Leverage

 

 

12.14

%

 

 

11.95

%

 

 

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.

 

 

 

 

 

The Company announced a second stock repurchase program on August 28, 2019, which authorizes the Company to repurchase up to 475,000 shares of its common stock following the completion of the Company’s first stock repurchase program in August 2019. Since the announcement of the second stock repurchase program, the Company has repurchased an aggregate of 278,924 shares of its common stock at an average repurchase price of $9.58 per share through January 23, 2020.

Asset Quality

Nonperforming loans were $1.55 million at December 31, 2019, a decrease of $22,000 from $1.57 million at September 30, 2019, and a decrease of $366,000 from $1.9 million at December 31, 2018.

The company had no OREO at December 31, 2019 and 2018 but had $1.8 million in OREO at September 30, 2019. The Company sold OREO of $1.8 million during the fourth quarter of 2019 with a loss of $145,000.

Nonperforming assets were $1.5 million, or 0.13% of total assets, at December 31, 2019, $3.4 million, or 0.29% of total assets, at September 30, 2019, and $1.9 million, or 0.18% of total assets, at December 31, 2018.

Nonperforming loans to gross loans were 0.16% at December 31, 2019, and September 30, 2019, compared to 0.22% at December 31, 2018. Total classified loans were $3.5 million, or 0.35% of gross loans, at December 31, 2019, compared to $3.2 million, or 0.34% of gross loans, at September 30, 2019, and $3.6 million, or 0.41% of gross loans, at December 31, 2018.

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

 

 

As of

 

 

December 31,

 

 

September 30,

 

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

2019

 

 

2019

 

 

2019

 

 

2019

 

 

2018

Classified loans by loan type

 

(Dollars in thousands)

Commercial real estate

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

SBA loans—real estate

 

 

2,036

 

 

 

2,247

 

 

 

2,264

 

 

 

2,281

 

 

 

2,000

 

SBA loans—non-real estate

 

 

33

 

 

 

36

 

 

 

41

 

 

 

49

 

 

 

57

 

Commercial and industrial

 

 

697

 

 

 

710

 

 

 

1,892

 

 

 

1,906

 

 

 

1,516

 

Home mortgage

 

 

698

 

 

 

256

 

 

 

 

 

 

 

 

 

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total classified loans

 

$

3,464

 

 

$

3,249

 

 

$

4,197

 

 

$

4,236

 

 

$

3,573

 

SBA guarantee balance retained

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SBA loans—real estate

 

 

363

 

 

 

516

 

 

 

524

 

 

 

534

 

 

 

392

 

SBA loans—non-real estate

 

 

33

 

 

 

36

 

 

 

41

 

 

 

49

 

 

 

57

 

Total SBA unsold guarantee portion

 

$

396

 

 

$

552

 

 

$

565

 

 

$

583

 

 

$

449

 

Total classified loans, net of SBA guarantee balance retained

 

$

3,068

 

 

$

2,697

 

 

$

3,632

 

 

$

3,653

 

 

$

3,124

 

The allowance for loan losses was $10.1 million at December 31, 2019, compared to $9.6 million at September 30, 2019, and at December 31, 2018. The allowance for loan losses was 1.02% of gross loans at December 31, 2019, 1.00% at September 30, 2019 and 1.10% at December 31, 2018. The allowance for loan losses was 649% of nonperforming assets at December 31, 2019, 285% at September 30, 2019, and 503% at December 31, 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)

 

 

As of

 

 

 

12/31/2019

 

9/30/2019

 

% change

 

12/31/2018

 

% change

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

86,036

 

 

$

89,107

 

 

 

-3.4

%

 

$

77,726

 

 

 

10.7

%

Securities available for sale, at fair value

 

 

56,549

 

 

 

52,295

 

 

 

8.1

%

 

 

55,336

 

 

 

2.2

%

Other investments

 

 

9,176

 

 

 

9,173

 

 

 

0.0

%

 

 

7,260

 

 

 

26.4

%

Loans held for sale

 

 

2,100

 

 

 

368

 

 

 

470.7

%

 

 

752

 

 

 

179.3

%

Real Estate Loans

 

 

630,668

 

 

 

594,447

 

 

 

6.1

%

 

 

503,834

 

 

 

25.2

%

SBA Loans

 

 

132,268

 

 

 

136,232

 

 

 

-2.9

%

 

 

127,375

 

 

 

3.8

%

C & I Loans

 

 

103,852

 

 

 

107,730

 

 

 

-3.6

%

 

 

113,975

 

 

 

-8.9

%

Home Mortgage Loans

 

 

120,686

 

 

 

123,092

 

 

 

-2.0

%

 

 

127,298

 

 

 

-5.2

%

Consumer & Other Loans

 

 

2,664

 

 

 

2,869

 

 

 

-7.1

%

 

 

2,577

 

 

 

3.4

%

Gross loans, net of unearned income

 

 

990,138

 

 

 

964,370

 

 

 

2.7

%

 

 

875,059

 

 

 

13.2

%

Allowance for loan losses

 

 

(10,050

)

 

 

(9,640

)

 

 

4.3

%

 

 

(9,636

)

 

 

4.3

%

Net loans receivable

 

 

980,088

 

 

 

954,730

 

 

 

2.7

%

 

 

865,423

 

 

 

13.2

%

Premises and equipment, net

 

 

5,226

 

 

 

5,367

 

 

 

-2.6

%

 

 

4,633

 

 

 

12.8

%

Accrued interest receivable

 

 

3,166

 

 

 

3,140

 

 

 

0.8

%

 

 

3,068

 

 

 

3.2

%

Servicing assets

 

 

7,024

 

 

 

6,959

 

 

 

0.9

%

 

 

6,987

 

 

 

0.5

%

Company owned life insurance

 

 

10,618

 

 

 

10,551

 

 

 

0.6

%

 

 

11,394

 

 

 

-6.8

%

Deferred tax assets

 

 

3,189

 

 

 

2,358

 

 

 

35.2

%

 

 

3,672

 

 

 

-13.2

%

Other real estate owned (OREO)

 

 

-

 

 

 

1,817

 

 

 

-100.0

%

 

 

-

 

 

 

0.0

%

Operating right-of-use assets (1)

 

 

8,254

 

 

 

8,606

 

 

 

-4.1

%

 

 

-

 

 

 

100.0

%

Other assets

 

 

8,094

 

 

 

7,463

 

 

 

8.5

%

 

 

7,935

 

 

 

2.0

%

Total assets

 

$

1,179,520

 

 

$

1,151,934

 

 

 

2.4

%

 

$

1,044,186

 

 

 

13.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest bearing deposits

 

$

294,281

 

 

$

296,831

 

 

 

-0.9

%

 

$

285,132

 

 

 

3.2

%

Savings

 

 

4,753

 

 

 

3,316

 

 

 

43.3

%

 

 

3,421

 

 

 

38.9

%

Money market and others

 

 

291,865

 

 

 

274,698

 

 

 

6.2

%

 

 

261,349

 

 

 

11.7

%

Time deposits over $250,000

 

 

213,345

 

 

 

219,547

 

 

 

-2.8

%

 

 

164,281

 

 

 

29.9

%

Other time deposits

 

 

216,467

 

 

 

201,601

 

 

 

7.4

%

 

 

190,993

 

 

 

13.3

%

Total deposits

 

 

1,020,711

 

 

 

995,993

 

 

 

2.5

%

 

 

905,176

 

 

 

12.8

%

Accrued interest payable

 

 

2,686

 

 

 

2,541

 

 

 

5.7

%

 

 

1,715

 

 

 

56.6

%

Operating lease liabilities (1)

 

 

10,126

 

 

 

10,335

 

 

 

-2.0

%

 

 

-

 

 

 

100.0

%

Other liabilities

 

 

5,421

 

 

 

5,472

 

 

 

-0.9

%

 

 

7,508

 

 

 

-27.8

%

Total liabilities

 

 

1,038,944

 

 

 

1,014,341

 

 

 

2.4

%

 

 

914,399

 

 

 

13.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

86,381

 

 

 

87,085

 

 

 

-0.8

%

 

 

91,209

 

 

 

-5.3

%

Additional paid-in capital

 

 

7,524

 

 

 

7,154

 

 

 

5.2

%

 

 

6,249

 

 

 

20.4

%

Retained earnings

 

 

46,483

 

 

 

43,086

 

 

 

7.9

%

 

 

32,877

 

 

 

41.4

%

Accumulated other comprehensive income(loss)

 

 

188

 

 

 

268

 

 

 

-29.9

%

 

 

(548

)

 

 

-134.3

%

Total shareholders' equity

 

 

140,576

 

 

 

137,593

 

 

 

2.2

%

 

 

129,787

 

 

 

8.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Shareholders' Equity

 

$

1,179,520

 

 

$

1,151,934

 

 

 

2.4

%

 

$

1,044,186

 

 

 

13.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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

 

 

12/31/2019

 

9/30/2019

 

% change

 

12/31/2018

 

% change

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

13,995

 

 

$

14,278

 

 

 

-2.0

%

 

$

13,066

 

 

 

7.1

%

Interest on securities available for sale

 

 

334

 

 

 

332

 

 

 

0.6

%

 

 

340

 

 

 

-1.8

%

Other interest income

 

 

374

 

 

 

502

 

 

 

-25.5

%

 

 

414

 

 

 

-9.7

%

Total interest income

 

 

14,703

 

 

 

15,112

 

 

 

-2.7

%

 

 

13,820

 

 

 

6.4

%

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

3,625

 

 

 

3,893

 

 

 

-6.9

%

 

 

2,894

 

 

 

25.3

%

Interest on borrowed funds

 

 

-

 

 

 

-

 

 

 

0.0

%

 

 

-

 

 

 

0.0

%

Total interest expense

 

 

3,625

 

 

 

3,893

 

 

 

-6.9

%

 

 

2,894

 

 

 

25.3

%

Net interest income

 

 

11,078

 

 

 

11,219

 

 

 

-1.3

%

 

 

10,926

 

 

 

1.4

%

Provision for loan losses

 

 

411

 

 

 

290

 

 

 

41.7

%

 

 

220

 

 

 

86.8

%

Net interest income after provision for loan losses

 

 

10,667

 

 

 

10,929

 

 

 

-2.4

%

 

 

10,706

 

 

 

-0.4

%

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

 

519

 

 

 

469

 

 

 

10.7

%

 

 

497

 

 

 

4.4

%

Loan servicing fees, net of amortization

 

 

333

 

 

 

243

 

 

 

37.0

%

 

 

72

 

 

 

362.5

%

Gain on sale of loans

 

 

1,527

 

 

 

1,714

 

 

 

-10.9

%

 

 

1,028

 

 

 

48.5

%

Other income

 

 

134

 

 

 

306

 

 

 

-56.2

%

 

 

453

 

 

 

-70.4

%

Total noninterest income

 

 

2,513

 

 

 

2,732

 

 

 

-8.0

%

 

 

2,050

 

 

 

22.6

%

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

4,405

 

 

 

5,349

 

 

 

-17.6

%

 

 

4,567

 

 

 

-3.5

%

Occupancy and equipment

 

 

1,207

 

 

 

1,232

 

 

 

-2.0

%

 

 

1,046

 

 

 

15.4

%

Data processing and communication

 

 

420

 

 

 

385

 

 

 

9.1

%

 

 

283

 

 

 

48.4

%

Professional fees

 

 

268

 

 

 

261

 

 

 

2.7

%

 

 

308

 

 

 

-13.0

%

FDIC insurance and regulatory assessments

 

 

71

 

 

 

(21

)

 

 

-438.1

%

 

 

99

 

 

 

-28.3

%

Promotion and advertising

 

 

263

 

 

 

182

 

 

 

44.5

%

 

 

215

 

 

 

22.3

%

Directors’ fees

 

 

228

 

 

 

228

 

 

 

0.0

%

 

 

218

 

 

 

4.6

%

Foundation donation and other contributions

 

 

417

 

 

 

402

 

 

 

3.7

%

 

 

356

 

 

 

17.1

%

Other expenses

 

 

386

 

 

 

406

 

 

 

-4.9

%

 

 

476

 

 

 

-18.9

%

Total noninterest expense

 

 

7,665

 

 

 

8,424

 

 

 

-9.0

%

 

 

7,568

 

 

 

1.3

%

Income before income taxes

 

 

5,515

 

 

 

5,237

 

 

 

5.3

%

 

 

5,188

 

 

 

6.3

%

Provision for income taxes

 

 

1,334

 

 

 

1,237

 

 

 

7.8

%

 

 

1,423

 

 

 

-6.3

%

Net income

 

$

4,181

 

 

$

4,000

 

 

 

4.5

%

 

$

3,765

 

 

 

11.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

8.95

 

 

$

8.76

 

 

 

2.2

%

 

$

8.18

 

 

 

9.4

%

Basic EPS

 

$

0.26

 

 

$

0.25

 

 

 

4.0

%

 

$

0.23

 

 

 

13.0

%

Diluted EPS

 

$

0.26

 

 

$

0.24

 

 

 

8.3

%

 

$

0.23

 

 

 

13.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock outstanding

 

 

15,703,276

 

 

 

15,711,580

 

 

 

-0.1

%

 

 

15,860,306

 

 

 

-1.0

%

Weighted Average Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic

 

 

15,697,531

 

 

 

15,768,654

 

 

 

-0.5

%

 

 

15,801,406

 

 

 

-0.7

%

- Diluted

 

 

15,899,419

 

 

 

16,007,486

 

 

 

-0.7

%

 

 

16,201,408

 

 

 

-1.9

%

Key Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except ratios)

 

Three Months Ended

 

 

12/31/2019

 

9/30/2019

 

% change

12/31/2018

% change

Return on average assets (ROA)*

 

 

1.45

%

 

 

1.41

%

 

 

0.04

%

 

 

1.49

%

 

-0.04

%

Return on average equity (ROE) *

 

 

12.05

%

 

 

11.74

%

 

 

0.31

%

 

 

11.84

%

 

0.21

%

Net interest margin *

 

 

3.99

%

 

 

4.13

%

 

 

-0.14

%

 

 

4.50

%

 

-0.51

%

Efficiency ratio

 

 

56.40

%

 

 

60.39

%

 

 

-3.99

%

 

 

58.33

%

 

-1.93

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Risk Based Capital Ratio

 

 

15.18

%

 

 

15.36

%

 

 

-0.18

%

 

 

16.26

%

 

-1.08

%

Tier 1 Capital Ratio

 

 

14.16

%

 

 

14.35

%

 

 

-0.19

%

 

 

15.13

%

 

-0.97

%

Common Equity Tier 1 Ratio

 

 

14.16

%

 

 

14.35

%

 

 

-0.19

%

 

 

15.13

%

 

-0.97

%

Tier 1 Leverage Ratio

 

 

12.14

%

 

 

12.11

%

 

 

0.03

%

 

 

12.88

%

 

-0.74

%

* Annualized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Income (unaudited)

(Dollars in thousands, except per share data)

 

Twelve Months Ended

 

 

12/31/2019

 

 

12/31/2018

 

 

% change

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

55,720

 

 

$

48,108

 

 

 

15.8

%

Interest on securities available for sale

 

 

1,353

 

 

 

985

 

 

 

37.4

%

Other interest income

 

 

1,706

 

 

 

975

 

 

 

75.0

%

Total interest income

 

 

58,779

 

 

 

50,068

 

 

 

17.4

%

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

14,507

 

 

 

8,964

 

 

 

61.8

%

Interest on borrowed funds

 

 

-

 

 

 

147

 

 

 

-100.0

%

Total interest expense

 

 

14,507

 

 

 

9,111

 

 

 

59.2

%

Net interest income

 

 

44,272

 

 

 

40,957

 

 

 

8.1

%

Provision for loan losses

 

 

1,102

 

 

 

1,267

 

 

 

-13.0

%

Net interest income after provision for loan losses

 

 

43,170

 

 

 

39,690

 

 

 

8.8

%

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

 

2,015

 

 

 

1,916

 

 

 

5.2

%

Loan servicing fees, net of amortization

 

 

1,186

 

 

 

1,078

 

 

 

10.0

%

Gain on sale of loans

 

 

5,905

 

 

 

4,880

 

 

 

21.0

%

Other income

 

 

2,320

 

 

 

1,455

 

 

 

59.5

%

Total noninterest income

 

 

11,426

 

 

 

9,329

 

 

 

22.5

%

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

20,267

 

 

 

18,195

 

 

 

11.4

%

Occupancy and equipment

 

 

4,648

 

 

 

4,111

 

 

 

13.1

%

Data processing and communication

 

 

1,530

 

 

 

1,231

 

 

 

24.3

%

Professional fees

 

 

980

 

 

 

921

 

 

 

6.4

%

FDIC insurance and regulatory assessments

 

 

259

 

 

 

405

 

 

 

-36.0

%

Promotion and advertising

 

 

806

 

 

 

814

 

 

 

-1.0

%

Directors’ fees

 

 

908

 

 

 

851

 

 

 

6.7

%

Foundation donation and other contributions

 

 

1,586

 

 

 

1,441

 

 

 

10.1

%

Other expenses

 

 

1,536

 

 

 

1,593

 

 

 

-3.6

%

Total noninterest expense

 

 

32,520

 

 

 

29,562

 

 

 

10.0

%

Income before income taxes

 

 

22,076

 

 

 

19,457

 

 

 

13.5

%

Provision for income taxes

 

 

5,319

 

 

 

5,204

 

 

 

2.2

%

Net income

 

$

16,757

 

 

$

14,253

 

 

 

17.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

8.95

 

 

$

8.18

 

 

 

9.4

%

Basic EPS

 

$

1.04

 

 

$

0.92

 

 

 

13.0

%

Diluted EPS

 

$

1.03

 

 

$

0.89

 

 

 

15.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock outstanding

 

 

15,703,276

 

 

 

15,860,306

 

 

 

-1.0

%

Weighted Average Shares:

 

 

 

 

 

 

 

 

 

 

 

 

- Basic

 

 

15,741,926

 

 

 

15,104,939

 

 

 

4.2

%

- Diluted

 

 

15,935,314

 

 

 

15,551,063

 

 

 

2.5

%

Key Ratios

(Dollars in thousands, except ratios)

 

Twelve Months Ended

 

 

12/31/2019

 

12/31/2018

 

% change

Return on average assets (ROA)*

 

 

1.51

%

 

 

1.49

%

 

 

0.02

%

Return on average equity (ROE) *

 

 

12.42

%

 

 

12.27

%

 

 

0.15

%

Net interest margin *

 

 

4.19

%

 

 

4.49

%

 

 

-0.30

%

Efficiency ratio

 

 

58.39

%

 

 

58.79

%

 

 

-0.40

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Risk Based Capital Ratio

 

 

15.18

%

 

 

16.26

%

 

 

-1.08

%

Tier 1 Capital Ratio

 

 

14.16

%

 

 

15.13

%

 

 

-0.97

%

Common Equity Tier 1 Ratio

 

 

14.16

%

 

 

15.13

%

 

 

-0.97

%

Tier 1 Leverage Ratio

 

 

12.14

%

 

 

12.88

%

 

 

-0.74

%

Asset Quality

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except ratios)

 

Three Months Ended

 

 

12/31/2019

 

 

9/30/2019

 

 

6/30/2019

 

 

3/31/2019

 

 

12/31/2018

Nonaccrual Loans

 

$

1,215

 

 

$

1,234

 

 

$

1,218

 

 

$

1,239

 

 

$

1,571

 

Loans 90 days or more past due, accruing

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Accruing restructured loans

 

 

333

 

 

 

336

 

 

 

338

 

 

 

341

 

 

 

343

 

Nonperforming loans

 

 

1,548

 

 

 

1,570

 

 

 

1,556

 

 

 

1,580

 

 

 

1,914

 

Other real estate owned (OREO)

 

 

-

 

 

 

1,817

 

 

 

-

 

 

 

1,146

 

 

 

-

 

Nonperforming assets

 

 

1,548

 

 

 

3,387

 

 

 

1,556

 

 

 

2,726

 

 

 

1,914

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Classified loans

 

 

3,464

 

 

 

3,249

 

 

 

4,197

 

 

 

4,236

 

 

 

3,573

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets/total assets

 

 

0.13

%

 

 

0.29

%

 

 

0.14

%

 

 

0.25

%

 

 

0.18

%

Nonperforming assets/gross loans plus OREO

 

 

0.16

%

 

 

0.35

%

 

 

0.16

%

 

 

0.30

%

 

 

0.22

%

Nonperforming loans/gross loans

 

 

0.16

%

 

 

0.16

%

 

 

0.16

%

 

 

0.17

%

 

 

0.22

%

Allowance for loan losses/nonperforming loans

 

 

649

%

 

 

614

%

 

 

612

%

 

 

609

%

 

 

503

%

Allowance for loan losses/nonperforming assets

 

 

649

%

 

 

285

%

 

 

612

%

 

 

353

%

 

 

503

%

Allowance for loan losses/gross loans

 

 

1.02

%

 

 

1.00

%

 

 

1.01

%

 

 

1.05

%

 

 

1.10

%

Classified loans/gross loans

 

 

0.35

%

 

 

0.34

%

 

 

0.44

%

 

 

0.46

%

 

 

0.41

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs

 

$

(1

)

 

$

175

 

 

$

495

 

 

$

17

 

 

$

135

 

Net charge-offs to average gross loans *

 

 

0.00

%

 

 

0.07

%

 

 

0.21

%

 

 

0.01

%

 

 

0.06

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Annualized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accruing delinquent loans 30-89 days past due

 

12/31/2019

 

9/30/2019

 

6/30/2019

 

3/31/2019

 

12/31/2018

30-59 days

 

$

3,899

 

 

$

2,580

 

 

$

1,065

 

 

$

2,073

 

 

$

449

 

60-89 days

 

 

126

 

 

 

580

 

 

 

2,207

 

 

 

-

 

 

 

-

 

Total

 

 

4,025

 

 

 

3,160

 

 

 

3,272

 

 

 

2,073

 

 

 

449

 

Average Balance Sheet, Interest and Yield/Rate Analysis

 

(Dollars in thousands)

Three Months Ended

 

December 31, 2019

September 30, 2019

December 31, 2018

 

Average
Balance

Interest
and Fees

Yield/
Rate

Average
Balance

Interest
and Fees

Yield/
Rate

Average
Balance

Interest
and Fees

Yield/
Rate

Interest-Earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold and other investments

$

71,426

$

374

2.06

%

$

78,216

$

502

2.52

%

$

49,167

$

414

3.32

%

Securities available for sale

 

57,381

 

334

2.33

 

 

54,472

 

332

2.44

 

 

52,995

 

340

2.56

 

Total investments

 

128,807

 

708

2.18

 

 

132,688

 

834

2.49

 

 

102,162

 

754

2.93

 

Real estate loans

 

607,022

 

8,175

5.34

 

 

573,102

 

7,978

5.52

 

 

494,817

 

6,768

5.43

 

SBA loans

 

142,910

 

2,880

8.00

 

 

144,439

 

3,213

8.83

 

 

136,644

 

3,163

9.18

 

C & I loans

 

99,215

 

1,379

5.51

 

 

102,311

 

1,489

5.77

 

 

104,371

 

1,513

5.75

 

Home Mortgage loans

 

121,485

 

1,520

5.00

 

 

123,336

 

1,546

5.01

 

 

124,172

 

1,578

5.08

 

Consumer & other loans

 

2,778

 

41

5.86

 

 

3,239

 

52

6.39

 

 

2,829

 

44

6.21

 

Loans (1)

 

973,410

 

13,995

5.71

 

 

946,427

 

14,278

5.99

 

 

862,833

 

13,066

6.01

 

Total interest-earning assets

 

1,102,217

 

14,703

5.30

 

 

1,079,115

 

15,112

5.56

 

 

964,995

 

13,820

5.69

 

Noninterest-earning assets

 

51,026

 

 

 

 

 

51,680

 

 

 

 

 

44,175

 

 

 

 

Total assets

$

1,153,243

 

 

 

 

$

1,130,795

 

 

 

 

$

1,009,170

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW and savings deposits

$

6,032

 

4

0.20

%

$

5,321

 

3

0.25

%

$

5,383

 

3

0.25

%

Money market deposits

 

283,814

 

1,144

1.60

 

 

275,259

 

1,295

1.87

 

 

246,801

 

1,048

1.68

 

Time deposits

 

417,092

 

2,477

2.36

 

 

420,922

 

2,595

2.45

 

 

350,597

 

1,843

2.08

 

Total interest-bearing deposits

 

706,938

 

3,625

2.03

 

 

701,502

 

3,893

2.20

 

 

602,781

 

2,894

1.90

 

Borrowings

 

4

 

-

1.55

 

 

120

 

-

0.00

 

 

1

 

-

2.24

 

Total interest-bearing liabilities

 

706,942

 

3,625

2.03

 

 

701,622

 

3,893

2.20

 

 

602,782

 

2,894

1.90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

289,592

 

 

 

 

 

275,316

 

 

 

 

 

269,538

 

 

 

 

Other noninterest-bearing liabilities

 

17,902

 

 

 

 

 

17,628

 

 

 

 

 

9,681

 

 

 

 

Total noninterest-bearing liabilities

 

307,494

 

 

 

 

 

292,944

 

 

 

 

 

279,219

 

 

 

 

Shareholders’ equity

 

138,807

 

 

 

 

 

136,229

 

 

 

 

 

127,169

 

 

 

 

Total liabilities and shareholders’ equity

$

1,153,243

 

 

 

 

$

1,130,795

 

 

 

 

$

1,009,170

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / interest rate spreads

 

 

$

11,078

3.27

%

 

 

$

11,219

3.36

%

 

 

$

10,926

3.79

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

 

 

 

3.99

%

 

 

 

 

4.13

%

 

 

 

 

4.50

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of deposits & cost of funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits / cost of deposits

$

996,530

$

3,625

1.44

%

$

976,818

$

3,893

1.58

%

$

872,319

$

2,894

1.32

%

Total funding liabilities / cost of funds

$

996,534

$

3,625

1.44

%

$

976,938

$

3,893

1.58

%

$

872,320

$

2,894

1.32

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) The average loan balance includes loans held for sale.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Balance Sheet, Interest and Yield/Rate Analysis

 

(Dollars in thousands)

Twelve Months Ended

 

December 31, 2019

December 31, 2018

 

Average
Balance

Interest
and Fees

Yield/
Rate

Average
Balance

Interest
and Fees

Yield/
Rate

Interest-Earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold and other investments

$

67,301

$

1,706

2.54

%

$

33,110

$

975

2.95

%

Securities available for sale

 

54,994

 

1,353

2.46

 

 

44,046

 

985

2.24

 

Total investments

 

122,295

 

3,059

2.50

 

 

77,156

 

1,960

2.54

 

Real estate loans

 

565,617

 

31,139

5.51

 

 

472,062

 

24,784

5.25

 

SBA loans

 

138,985

 

12,089

8.70

 

 

140,381

 

11,404

8.12

 

C & I loans

 

103,097

 

6,020

5.84

 

 

104,706

 

5,862

5.60

 

Home Mortgage loans

 

124,703

 

6,290

5.04

 

 

114,630

 

5,864

5.12

 

Consumer & other loans

 

2,843

 

182

6.40

 

 

3,358

 

194

5.78

 

Loans (1)

 

935,245

 

55,720

5.96

 

 

835,137

 

48,108

5.76

 

Total interest-earning assets

 

1,057,540

 

58,779

5.56

 

 

912,293

 

50,068

5.49

 

Noninterest-earning assets

 

48,924

 

 

 

 

 

47,260

 

 

 

 

Total assets

$

1,106,464

 

 

 

 

$

959,553

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

NOW and savings deposits

$

5,316

 

13

0.24

%

$

6,080

 

15

0.25

%

Money market deposits

 

273,068

 

4,895

1.79

 

 

253,809

 

3,508

1.38

 

Time deposits

 

401,840

 

9,599

2.39

 

 

304,407

 

5,441

1.79

 

Total interest-bearing deposits

 

680,224

 

14,507

2.13

 

 

564,296

 

8,964

1.59

 

Borrowings

 

32

 

-

0.09

 

 

8,736

 

147

1.67

 

Total interest-bearing liabilities

 

680,256

 

14,507

2.13

 

 

573,032

 

9,111

1.59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

276,073

 

 

 

 

 

260,697

 

 

 

 

Other noninterest-bearing liabilities

 

15,221

 

 

 

 

 

9,622

 

 

 

 

Total noninterest-bearing liabilities

 

291,294

 

 

 

 

 

270,319

 

 

 

 

Shareholders’ equity

 

134,914

 

 

 

 

 

116,202

 

 

 

 

Total liabilities and shareholders’ equity

$

1,106,464

 

 

 

 

$

959,553

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / interest rate spreads

 

 

$

44,272

3.43

%

 

 

$

40,957

3.90

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

 

 

 

4.19

%

 

 

 

 

4.49

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of deposits & cost of funds:

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits / cost of deposits

$

956,297

$

14,507

1.52

%

$

824,993

$

8,964

1.09

%

Total funding liabilities / cost of funds

$

956,329

$

14,507

1.52

%

$

833,729

$

9,111

1.09

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) The average loan balance includes loans held for sale.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contacts

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

Release Summary

OP Bancorp Reports Fourth Quarter and Year End Financial Result of 2019

Contacts

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