OP Bancorp Reports Net Income for Third Quarter 2021 of $8.3 Million and Diluted Earnings Per Share of $0.54

2021 Third Quarter Highlights compared with 2020 Third Quarter:

  • Financial Results:
    • Net income of $8.3 million, up $4.7 million, or 129%
    • Diluted earnings per share of $0.54, up $0.31, or 135%
    • Net interest income of $16.6 million, up $5.2 million, or 45%
    • Reversal of provision for loan losses of $884 thousand, a $2.3 million decrease in provision for loan losses
    • Noninterest income of $3.5 million, up $521 thousand, or 17%
    • Noninterest expense of $9.5 million, up $1.5 million, or 19%
    • Pre-provision net revenue (1) of $10.6 million, up $4.2 million, or 64%
    • Total assets of $1.68 billion, up $340.1 million, or 25%
    • Total loans (2) of $1.33 billion, up $212.1 million, or 19%; Average loans (2) of $1.31 billion, up $246.2 million, or 23%
    • Total deposits of $1.50 billion, up $326.2 million, or 28%; Average deposits of $1.45 billion, up $323.9 million, or 29%
    • Noninterest-bearing deposits to total deposits of 48%, up from 42%
    • Net interest margin of 4.21%, up from 3.66%
    • Return on average equity of 21.30%, up from 10.22%
    • Return on average assets of 2.03%, up from 1.11%
    • Efficiency ratio of 47.28%, an improvement from 55.31%
  • Credit Quality:
    • Allowance for loan losses to gross loans of 1.15%, compared to 1.32%
    • Adjusted allowance to gross loans (1) of 1.34%, compared to 1.40%
    • Net loan (recoveries) charge-offs to average gross loans remained minimal at zero percent.
    • Nonperforming loans to gross loans of 0.09%, compared to 0.03%
    • Criticized loans (3) to gross loans of 0.18%, down from 0.63%
  • Capital Levels:
    • Quarterly cash dividend of $0.10 per share, a 43% increase from $0.07 per share
    • Capital position remained well-capitalized with a Common Equity Tier 1 (“CET1”) ratio of 12.63%.
    • Book value per common share of $10.48, up 12%
    • Returned $1.5 million of capital to shareholders through cash dividend

___________________________________________________________
(1) See reconciliation of GAAP to non-GAAP financial measures.
(2) Includes loans held for sale.
(3) Includes special mention, substandard, doubtful, and loss categories.

LOS ANGELES--()--OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company of Open Bank, today reported its financial results for the third quarter of 2021. Net income for the third quarter of 2021 was $8.3 million, or $0.54 per diluted common share, compared with $6.4 million, or $0.42 per diluted common share, for the second quarter of 2021, and $3.6 million, or $0.23 per diluted common share, for the third quarter of 2020.

Min Kim, President and Chief Executive Officer:

“We demonstrated solid performance in the quarter with net income available to common shareholders of $8.3 million reflecting the benefit of improving overall economic conditions and credit quality. We continued to focus on executing our strategic goals despite the challenging environment across the banking industry. We are pleased with continued strong performance in the growth of our deposits, with a record level of noninterest bearing deposits at 48% of total deposits at quarter end. We are seeing encouraging signs of economic recovery, and customer activities are starting to normalize. We will continue to make investments in technologies to improve our operations. We remain focused on managing risks, especially in cybersecurity, while maintaining safe and sound banking operations.”

SELECTED FINANCIAL HIGHLIGHTS

 

 

 

 

 

 

 

 

 

 

 

($ in thousands, except per share data)

 

As of and For the Three Months Ended

 

% Change 3Q21 vs.

 

3Q21

 

2Q21

 

3Q20

 

2Q21

 

3Q20

Selected Income Statement Data:

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

16,589

 

 

$

14,586

 

 

$

11,419

 

 

13.7

%

 

45.3

%

(Reversal of) provision for loan losses

 

(884

)

 

(1,112

)

 

1,399

 

 

(20.5

)

 

(163.2

)

Noninterest income

 

3,542

 

 

2,220

 

 

3,021

 

 

59.5

 

 

17.2

 

Noninterest expense

 

9,519

 

 

8,789

 

 

7,987

 

 

8.3

 

 

19.2

 

Income tax expense

 

3,246

 

 

2,750

 

 

1,459

 

 

18.0

 

 

122.5

 

Net Income

 

$

8,250

 

 

$

6,379

 

 

$

3,595

 

 

29.3

%

 

129.5

%

Diluted earnings per share

 

$

0.54

 

 

$

0.42

 

 

$

0.23

 

 

28.6

%

 

134.8

%

Selected Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

Total loans (1)

 

$

1,326,287

 

 

$

1,314,262

 

 

$

1,114,220

 

 

0.9

%

 

19.0

%

Total deposits

 

$

1,496,406

 

 

$

1,434,103

 

 

$

1,170,164

 

 

4.3

%

 

27.9

%

Total assets

 

$

1,679,911

 

 

$

1,601,860

 

 

$

1,339,821

 

 

4.9

%

 

25.4

%

Average loans (1)

 

$

1,308,338

 

 

$

1,242,058

 

 

$

1,062,175

 

 

5.3

%

 

23.2

%

Average deposits

 

$

1,448,771

 

 

$

1,348,910

 

 

$

1,124,835

 

 

7.4

%

 

28.8

%

Credit Quality:

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

$

1,052

 

 

$

757

 

 

$

330

 

 

39.0

%

 

218.8

%

Net (recoveries) charge-offs to average gross loans (2)

 

(0.00

)%

 

0.01

%

 

(0.00

)%

 

(0.01

)%

 

0.00

%

Allowance for loan losses to gross loans

 

1.15

%

 

1.18

%

 

1.32

%

 

(0.03

)%

 

(0.17

)%

Financial Ratios:

 

 

 

 

 

 

 

 

 

 

Return on average assets (2)

 

2.03

%

 

1.68

%

 

1.11

%

 

0.35

%

 

0.92

%

Return on average equity (2)

 

21.30

%

 

17.10

%

 

10.22

%

 

4.20

%

 

11.08

%

Net interest margin (2)

 

4.21

%

 

3.98

%

 

3.66

%

 

0.23

%

 

0.55

%

Common equity tier 1 capital ratio

 

12.63

%

 

12.62

%

 

13.67

%

 

0.01

%

 

(1.04

)%

Leverage ratio

 

9.75

%

 

9.96

%

 

10.85

%

 

(0.21

)%

 

(1.10

)%

Efficiency ratio (3)

 

47.28

%

 

52.30

%

 

55.31

%

 

(5.02

)%

 

(8.03

)%

Book value per common share

 

$

10.48

 

 

$

10.04

 

 

$

9.36

 

 

4.4

%

 

12.0

%

 

 

 

 

 

 

 

 

 

 

 

(1) Includes loans held for sale.
(2) Annualized.
(3) Represents noninterest expense divided by the sum of net interest income and noninterest income.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income and Net Interest Margin

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 3Q21 vs.

 

3Q21

 

2Q21

 

3Q20

 

2Q21

 

3Q20

Interest Income

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

17,355

 

 

$

15,349

 

 

$

13,016

 

 

13.1

%

 

33.3

%

Interest expense

 

766

 

 

763

 

 

1,597

 

 

0.4

 

 

(52.0)

 

Net interest income

 

$

16,589

 

 

$

14,586

 

 

$

11,419

 

 

13.7

%

 

45.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

3Q21

 

2Q21

 

3Q20

 

Average

Balance

 

Interest

 

Yield/Rate (1)

 

Average

Balance

 

Interest

and Fees

 

Yield/Rate (1)

 

Average

Balance

 

Interest

and Fees

 

Yield/Rate (1)

Interest-earning Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

1,308,338

 

 

$

16,922

 

 

5.13

%

 

$

1,242,058

 

 

$

14,971

 

 

4.83

%

 

$

1,062,175

 

 

$

12,581

 

 

4.72

%

Total interest-earning assets

 

$

1,565,697

 

 

$

17,355

 

 

4.40

%

 

$

1,468,623

 

 

$

15,349

 

 

4.19

%

 

$

1,240,871

 

 

$

13,016

 

 

4.18

%

Interest-bearing Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

752,010

 

 

$

766

 

 

0.40

%

 

$

733,525

 

 

$

763

 

 

0.42

%

 

$

663,870

 

 

$

1,597

 

 

0.96

%

Total interest-bearing liabilities

 

$

752,010

 

 

$

766

 

 

0.40

%

 

$

736,550

 

 

$

763

 

 

0.42

%

 

$

673,871

 

 

$

1,597

 

 

0.94

%

Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest Income/interest rate spreads

 

 

 

$

16,589

 

 

4.00

%

 

 

 

$

14,586

 

 

3.77

%

 

 

 

$

11,419

 

 

3.24

%

Net interest margin

 

 

 

 

 

4.21

%

 

 

 

 

 

3.98

%

 

 

 

 

 

3.66

%

Total deposits / cost of deposits

 

$

1,448,771

 

 

$

766

 

 

0.21

%

 

$

1,348,910

 

 

$

763

 

 

0.23

%

 

$

1,124,835

 

 

$

1,597

 

 

0.56

%

Total funding liabilities / cost of funds

 

$

1,448,771

 

 

$

766

 

 

0.21

%

 

$

1,351,935

 

 

$

763

 

 

0.23

%

 

$

1,134,836

 

 

$

1,597

 

 

0.56

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

Yield % Change 3Q21 vs.

 

3Q21

 

2Q21

 

3Q20

 

 

Interest

& Fees

 

Yield (1)

 

Interest

& Fees

 

Yield (1)

 

Interest

& Fees

 

Yield (1)

 

2Q21

 

3Q20

Loan Yield Component

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractual interest rate

 

$

14,251

 

 

4.32

%

 

$

13,189

 

 

4.26

%

 

$

11,715

 

4.39

%

 

0.06

%

 

(0.07

)%

SBA discount accretion

 

1,584

 

 

0.48

 

 

1,161

 

 

0.38

 

 

389

 

0.15

 

 

0.10

 

 

0.33

 

Amortization of net deferred fees

 

1,249

 

 

0.38

 

 

618

 

 

0.20

 

 

393

 

0.15

 

 

0.18

 

 

0.23

 

Amortization of premium

 

(188

)

 

(0.06

)

 

(170

)

 

(0.06

)

 

 

 

 

0.00

 

 

(0.06

)

Net interest recognized on nonaccrual loans

 

(15

)

 

0.00

 

 

37

 

 

0.01

 

 

48

 

0.02

 

 

(0.01

)

 

(0.02

)

Prepayment penalties (2) and other fees

 

41

 

 

0.01

 

 

136

 

 

0.04

 

 

36

 

0.01

 

 

(0.03

)

 

 

Yield on loans

 

$

16,922

 

 

5.13

%

 

$

14,971

 

 

4.83

%

 

$

12,581

 

4.72

%

 

0.30

%

 

0.41

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of net deferred fees:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PPP forgiveness (3)

 

$

1,006

 

 

0.31

%

 

$

290

 

 

0.09

%

 

$

175

 

0.07

%

 

0.22

%

 

0.24

%

Other

 

243

 

 

0.07

 

 

328

 

 

0.11

 

 

218

 

0.08

 

 

(0.04

)

 

(0.01

)

Total amortization of net deferred fees

 

$

1,249

 

 

0.38

%

 

$

618

 

 

0.20

%

 

$

393

 

0.15

%

 

0.18

%

 

0.23

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized.

(2) For the three months ended September 30, 2021, there was no prepayment penalty income. In comparison, prepayment penalty income of $116 thousand and $27 thousand for the three months ended June 30, 2021 and September 30, 2020, respectively, are from commercial real estate loans.

(3) As of September 30, 2021, there were unamortized net deferred fees of $2.2 million to be recognized over the estimated life of the loans as a yield adjustment on the loans.

Impact of Loan Purchase on Average Loan Yield and Net Interest Margin

During the second quarter of 2021, the Company purchased an SBA portfolio of 638 loans with an ending balance of $100.0 million, excluding loan discount of $8.9 million from Hana Small Business Lending, Inc. (“Hana”). The following table presents impacts of the Hana loan purchase on average loan yield and net interest margin:

 

($ in thousands)

 

For the Three Months Ended

 

3Q21

 

2Q21

Hana Loan Purchase:

 

 

 

 

Contractual interest rate

 

$

1,094

 

 

$

473

 

Purchased loan discount accretion

 

948

 

 

381

 

Other fees

 

15

 

 

6

 

Total interest income

 

$

2,057

 

 

$

860

 

 

 

 

 

 

Effect on average loan yield (1)

 

0.30

%

 

0.13

%

Effect on net interest margin (1)

 

0.30

%

 

0.13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

3Q21

 

2Q21

 

3Q20

 

Average

Balance

 

Interest

 

Yield/

Rate

 

Average

Balance

 

Interest

and Fees

 

Yield/

Rate

 

Average

Balance

 

Interest

and Fees

 

Yield/

Rate

Average loan yield (1)

 

$

1,308,338

 

 

$

16,922

 

 

5.13

%

 

$

1,242,058

 

 

$

14,971

 

 

4.83

%

 

$

1,062,175

 

 

$

12,581

 

 

4.72

%

Adjusted average loan yield excluding purchased loans (1)(2)

 

$

1,222,628

 

 

$

14,865

 

 

4.83

%

 

$

1,204,532

 

 

$

14,111

 

 

4.70

%

 

$

1,062,175

 

 

$

12,581

 

 

4.72

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (1)

 

$

1,565,697

 

 

$

16,589

 

 

4.21

%

 

$

1,468,623

 

 

$

14,586

 

 

3.98

%

 

$

1,240,871

 

 

$

11,419

 

 

3.66

%

Adjusted interest margin excluding purchased loans (1)(2)

 

$

1,479,987

 

 

$

14,532

 

 

3.91

%

 

$

1,431,097

 

 

$

13,726

 

 

3.85

%

 

$

1,240,871

 

 

$

11,419

 

 

3.66

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized.

(2) See reconciliation of GAAP to non-GAAP financial measures.

Third Quarter 2021 vs. Second Quarter 2021

Net interest income increased $2.0 million, or 14%, primarily due to higher average loan balance and SBA discount accretion largely resulting from the Hana loan purchase, as well as higher loan fees from PPP forgiveness. Net interest margin was 4.21%, an increase of 23 basis points from 3.98%.

  • An increase of $2.0 million in interest income from loans was primarily due to higher average loan balances and loan yields mainly driven by higher accretion of discounts from the Hana loan purchase, and loan fees from PPP forgiveness.
  • An increase of 23 basis points in net interest margin was primarily driven by a 21 basis point increase in the yield on average interest-earning assets.
  • Average loan yield was 5.13%, an increase of 30 basis points from 4.83%, reflecting higher loan fees from PPP forgiveness and the impact of SBA discount accretion from the Hana loan purchase.
  • Average cost of deposits was 0.21%, a decrease of two basis points from 0.23%.

Third Quarter 2021 vs. Third Quarter 2020

Net interest income increased $5.2 million, or 45%, primarily due to higher average loan balance and lower average cost of deposits. Net interest margin was 4.21%, an increase of 55 basis points from 3.66%.

  • An increase of $4.3 million in interest income from loans was primarily due to average loan growth. Higher discount accretion from the Hana loan purchase and higher loan fees from PPP forgiveness have also contributed to the increase.
  • A decrease of $831 thousand in interest expense from interest-bearing deposits was primarily due to continued downward adjustments in deposit rates.
  • The improvement of 55 basis points in net interest margin was primarily driven by a 54 basis point decrease in the cost of interest-bearing liabilities and a 22 basis point increase in the yield on average interest-earning assets.
  • Average loan yield was 5.13%, an increase of 41 basis points from 4.72%, reflecting higher SBA discount accretions from an increase in loan payoffs and the Hana loan purchase, and higher loan fees from PPP forgiveness, partially offset by the impact of lower interest rates.
  • Average cost of deposits was 0.21%, a decrease of 35 basis points from 0.56%. The decrease in the cost of deposits primarily reflects the impact of lower interest rates and an increase of noninterest bearing deposits in deposit mix.

     

Provision for loan losses

Third Quarter 2021 vs. Second Quarter 2021

The Company recorded a negative $884 thousand provision for loan losses, compared with a negative $1.1 million provision for loan losses. The change was primarily due to a specific reserve on one SBA loan during the third quarter of 2021, and, to a lesser extent, qualitative factor adjustments compared with second quarter 2021.

Third Quarter 2021 vs. Third Quarter 2020

The Company recorded a negative $884 thousand provision for loan losses, compared with a positive $1.4 million provision for loan losses. The change was primarily due to a continued improvement in the economic outlook.

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 3Q21 vs.

 

3Q21

 

2Q21

 

3Q20

 

2Q21

 

3Q20

Noninterest income

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

$

409

 

 

$

393

 

 

$

334

 

 

4.1

%

 

22.5

%

Loan servicing fees, net of amortization

 

599

 

 

302

 

 

583

 

 

98.3

 

 

2.7

 

Gain on sale of loans

 

2,188

 

 

1,210

 

 

1,813

 

 

80.8

 

 

20.7

 

Other income

 

346

 

 

315

 

 

291

 

 

9.8

 

 

18.9

 

Total noninterest income

 

$

3,542

 

 

$

2,220

 

 

$

3,021

 

 

59.5

%

 

17.2

%

 

 

 

 

 

 

 

 

 

 

 

Third Quarter 2021 vs. Second Quarter 2021

Noninterest income increased $1.3 million, or 60%, primarily due to higher gains on sale of loans and loan servicing fees, net of amortization.

  • Gains on sale of loans were $2.2 million, up $978 thousand from second quarter 2021. The increase was primarily due to higher gain on sale of SBA loans from increased SBA loan sale activity. The Company sold $20.6 million in SBA loans at an average premium of 11.59%, compared with the sale of $10.6 million at an average premium of 11.48%.
  • Loan servicing fees, net of amortization, were $599 thousand, up $297 thousand from second quarter 2021. The increase was primarily due to higher net servicing fee income resulting from purchased loans in the second quarter of 2021 and lower amortization of servicing assets associated with loan payoffs.

Third Quarter 2021 vs. Third Quarter 2020

Noninterest income increased $521 thousand, or 17%, primarily due to higher gains on sale of loans.

  • Gains on sales of loans were $2.2 million, up $375 thousand from third quarter 2020. The increase was mainly driven by higher sales premiums on SBA loans. The Company sold $20.6 million in SBA loans at an average premium of 11.59%, compared with the sale of $24.0 million at an average premium of 9.66%.

     

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 3Q21 vs.

 

3Q21

 

2Q21

 

3Q20

 

2Q21

 

3Q20

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

5,724

 

 

$

5,307

 

 

$

5,086

 

 

7.9

%

 

12.5

%

Occupancy and equipment

 

1,326

 

 

1,234

 

 

1,266

 

 

7.5

 

 

4.7

 

Data processing and communication

 

448

 

 

467

 

 

424

 

 

(4.1

)

 

5.7

 

Professional fees

 

308

 

 

303

 

 

287

 

 

1.7

 

 

7.3

 

FDIC insurance and regulatory assessments

 

146

 

 

123

 

 

112

 

 

18.7

 

 

30.4

 

Promotion and advertising

 

175

 

 

176

 

 

81

 

 

(0.6

)

 

116.0

 

Directors’ fees

 

183

 

 

128

 

 

147

 

 

43.0

 

 

24.5

 

Foundation donation and other contributions

 

842

 

 

640

 

 

360

 

 

31.6

 

 

133.9

 

Other expenses

 

367

 

 

411

 

 

224

 

 

(10.7

)

 

63.8

 

Total noninterest expense

 

$

9,519

 

 

$

8,789

 

 

$

7,987

 

 

8.3

%

 

19.2

%

 

 

 

 

 

 

 

 

 

 

 

Third Quarter 2021 vs. Second Quarter 2021

Noninterest expense increased $730 thousand, or 8%, primarily due to higher salaries and employee benefits, and foundation donation and other contributions.

  • Salaries and employee benefits were $5.7 million, up $417 thousand from second quarter 2021. The increase was primarily due to lower deferred loan origination costs, partially offset by lower incentive and vacation accruals. Deferred loan origination costs were $473 thousand compared with $1.3 million.
  • Foundation donation and other contributions were $842 thousand, up $202 thousand from second quarter 2021. The increase was primarily due to higher donation accruals for Open Stewardship Foundation as a result of higher net income compared to second quarter 2021.

Third Quarter 2021 vs. Third Quarter 2020

Noninterest expense increased $1.5 million, or 19%, primarily due to higher salaries and employee benefits, and foundation donation and other contributions.

  • Salaries and employee benefits were $5.7 million, up $638 thousand from third quarter 2020. The increase was primarily due to an increase in the number of employees to support continued growth of the Company and higher SBA incentive expense, partially offset by lower incentive accruals.
  • Foundation donation and other contributions were $842 thousand, up $482 thousand from third quarter 2020. The increase was primarily due to higher donation accruals for Open Stewardship Foundation as a result of higher net income compared to third quarter 2020.

     

Income Tax Expense

Third Quarter 2021 vs. Second Quarter 2021

Income tax expense was $3.2 million, and the effective tax rate was 28%, compared to income tax expense of $2.8 million and the effective rate of 30% for second quarter 2021.

Third Quarter 2021 vs. Third Quarter 2020

Income tax expense was $3.2 million, and the effective tax rate was 28%, compared to income tax expense of $1.5 million and the effective rate of 29% for third quarter 2020.

BALANCE SHEET HIGHLIGHTS

Loans

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of

 

% Change 3Q21 vs.

 

3Q21

 

2Q21

 

3Q20

 

2Q21

 

3Q20

Real estate loans

 

$

688,430

 

 

$

684,082

 

 

$

640,281

 

 

0.6

%

 

7.5

%

SBA loans (1)

 

303,625

 

 

338,751

 

 

213,678

 

 

(10.4

)

 

42.1

 

C & I loans

 

123,422

 

 

102,562

 

 

91,814

 

 

20.3

 

 

34.4

 

Home mortgage loans

 

115,255

 

 

119,319

 

 

125,656

 

 

(3.4

)

 

(8.3

)

Consumer & other loans

 

1,089

 

 

1,152

 

 

1,361

 

 

(5.5

)

 

(20.0

)

Total gross loans

 

$

1,231,821

 

 

$

1,245,866

 

 

$

1,072,790

 

 

(1.1

)%

 

14.8

%

 

 

 

 

 

 

 

 

 

 

 

(1) Includes PPP loans of $69.3 million, $103.9 million and $64.6 million as of September 30, 2021, June 30, 2021 and September 30, 2020, respectively.

The following table presents new loan originations based on loan commitment amounts for the periods indicated:

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 3Q21 vs.

 

3Q21

 

2Q21

 

3Q20

 

2Q21

 

3Q20

Real estate loans

 

$

27,671

 

 

$

51,107

 

 

$

39,476

 

 

(45.9

)%

 

(29.9

)%

SBA loans (1)

 

57,541

 

 

76,535

 

 

77,479

 

 

(24.8

)

 

(25.7

)

C & I loans

 

35,279

 

 

40,771

 

 

10,458

 

 

(13.5

)

 

237.3

 

Home mortgage loans

 

13,437

 

 

13,262

 

 

12,835

 

 

1.3

 

 

4.7

 

Total gross loans

 

$

133,928

 

 

$

181,675

 

 

$

140,248

 

 

(26.3

)%

 

(4.5

)%

 

 

 

 

 

 

 

 

 

 

 

(1) For the three months ended September 30, 2021, there were no new PPP originations. In comparison, it includes PPP loans of $13.9 million and $1.3 million for the three months ended June 30, 2021 and September 30, 2020, respectively.

Third Quarter 2021 vs. Second Quarter 2021

Gross loan balances were $1.23 billion at September 30, 2021, down $14.0 million from June 30, 2021, primarily due to PPP forgiveness, partially offset by an increase in C&I Loans. During third quarter 2021, $36.1 million of PPP loans outstanding were forgiven by the Small Business Administration. Excluding PPP loans, gross loans grew by $20.6 million, or 2%. New loan originations and loan payoffs were $133.9 million and $84.8 million for third quarter 2021, compared with $181.7 million and $83.2 million for second quarter 2021, respectively.

Third Quarter 2021 vs. Third Quarter 2020

Gross loan balances were $1.23 billion at September 30, 2021, up $159.0 million from September 30, 2020, primarily due to the Hana loan purchase during second quarter 2021 and broad-based growth in real estate and C&I loans. For the nine months ended September 30, 2021, $88.8 million of PPP loans outstanding were forgiven by the Small Business Administration. New loan originations and loan payoffs were $133.9 million and $84.8 million for third quarter 2021, compared with $140.2 million and $47.1 million for third quarter 2020, respectively.

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of

 

% Change 3Q21 vs.

 

3Q21

 

2Q21

 

3Q20

 

 

Amount

 

%

 

Amount

 

%

 

Amount

 

%

 

2Q21

 

3Q20

Noninterest-bearing deposits

 

$

713,141

 

 

47.6

%

 

$

668,244

 

 

46.6

%

 

$

488,815

 

 

41.7

%

 

6.7

%

 

45.9

%

Money market deposits and others

 

351,186

 

 

23.5

 

 

386,612

 

 

27.0

 

 

339,981

 

 

29.1

 

 

(9.2

 

3.3

 

Time deposits

 

432,079

 

 

28.9

 

 

379,247

 

 

26.4

 

 

341,368

 

 

29.2

 

 

13.9

 

 

26.6

 

Total deposits

 

$

1,496,406

 

 

100.0

%

 

$

1,434,103

 

 

100.0

%

 

$

1,170,164

 

 

100.0

%

 

4.3

%

 

27.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarter 2021 vs. Second Quarter 2021

Deposit balances were $1.50 billion at September 30, 2021, up $62.3 million from June 30, 2021, primarily driven by growth in time and noninterest-bearing deposits, partially offset by a decrease in money market. Noninterest-bearing deposits reached a record $713.1 million or 48% of total deposits as of September 30, 2021, up from $668.2 million or 47% as of June 30, 2021. Deposit growth was primarily due to continued addition of new customers and increased balances of existing customer accounts reflecting excess liquidity in the sustained low rate environment.

Third Quarter 2021 vs. Third Quarter 2020

Deposit balances were $1.50 billion at September 30, 2021, up $326.2 million from September 30, 2020, primarily driven by growth in noninterest-bearing and time deposits. Noninterest-bearing deposits were $713.1 million or 48% of total deposits, up from $488.8 million or 42% of total deposits as of September 30, 2020. Deposit growth was primarily driven by continued customer preferences for liquidity given the sustained economic uncertainty associated with the COVID-19 pandemic.

Capital and Cash Dividend

 

 

 

 

 

 

 

 

 

 

 

Basel III

 

OP Bancorp

 

Open Bank

 

Well

Capitalized

Ratio

 

Minimum

Capital Ratio+

Conservation

Buffer (1)

Risk-Based Capital Ratios:

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

13.81

%

 

13.60

%

 

10.00

%

 

10.50

%

Tier 1 risk-based capital ratio

 

12.63

%

 

12.42

%

 

8.00

%

 

8.50

%

Common equity tier 1 ratio

 

12.63

%

 

12.42

%

 

6.50

%

 

7.00

%

Leverage ratio

 

9.75

%

 

9.58

%

 

5.00

%

 

4.00

%

 

 

 

 

 

 

 

 

 

(1) An additional 2.5% capital conservation buffer above the minimum capital ratios are required in order to avoid limitations on distributions, including dividend payments and certain discretionary bonus to executive officers.

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

Basel III

 

% Change 3Q21 vs.

 

3Q21

 

2Q21

 

3Q20

 

2Q21

 

3Q20

Risk-Based Capital Ratios:

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

13.81

%

 

13.87

%

 

14.93

%

 

(0.06

)%

 

(1.12

)%

Tier 1 risk-based capital ratio

 

12.63

%

 

12.62

%

 

13.67

%

 

0.01

%

 

(1.04

)%

Common equity tier 1 ratio

 

12.63

%

 

12.62

%

 

13.67

%

 

0.01

%

 

(1.04

)%

Leverage ratio

 

9.75

%

 

9.96

%

 

10.85

%

 

(0.21

)%

 

(1.10

)%

Risk-weighted Assets

 

$

1,251,867

 

 

$

1,198,373

 

 

$

1,025,241

 

 

4.46

%

 

22.10

%

 

 

 

 

 

 

 

 

 

 

 

Capital ratios remained strong during the quarter. Our CET1 and total risk-based capital ratios were 12.63% and 13.81% as of September 30, 2021, respectively, down from a year ago due to year-over-year asset growth.

The Company’s Board of Directors has declared a quarterly cash dividend of $0.10 per share of its common stock. The cash dividend is payable on or about November 25, 2021 to all shareholders of record as of the close of business on November 11, 2021.

The Company did not repurchase any shares during third quarter 2021. Since the announcement of the initial stock repurchase program in January 2019, the Company has repurchased a total of 1.57 million shares of its common stock at an average repurchase price of $8.58 per share through September 30, 2021.

Asset Quality

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of and For the Three Months Ended

 

% Change 3Q21 vs.

 

3Q21

 

2Q21

 

3Q20

 

2Q21

 

3Q20

Nonperforming loans

 

$

1,052

 

 

$

757

 

 

$

330

 

 

39.0

%

 

218.8

%

OREO

 

 

 

 

 

 

 

 

 

 

Total nonperforming assets

 

$

1,052

 

 

$

757

 

 

$

330

 

 

39.0

%

 

218.8

%

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to gross loans

 

0.09

%

 

0.06

%

 

0.03

%

 

0.03

%

 

0.06

%

Nonperforming assets to total assets

 

0.06

%

 

0.05

%

 

0.02

%

 

0.01

%

 

0.04

%

 

 

 

 

 

 

 

 

 

 

 

Criticized (1) Loan:

 

 

 

 

 

 

 

 

 

 

Special mention loans

 

$

 

 

$

1,790

 

 

$

4,664

 

 

(100.0

)%

 

(100.0

)%

Classified loans (2)

 

2,191

 

 

6,553

 

 

2,106

 

 

(66.6

)%

 

4.0

%

Total criticized loans

 

$

2,191

 

 

$

8,343

 

 

$

6,770

 

 

(73.7

)%

 

(67.6

)%

 

 

 

 

 

 

 

 

 

 

 

Criticized (1) loans to gross loans

 

0.18

%

 

0.67

%

 

0.63

%

 

(0.49

)%

 

(0.45

)%

Classified loans (2) to gross loans

 

0.18

%

 

0.53

%

 

0.20

%

 

(0.35

)%

 

(0.02

)%

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses, beginning

 

$

14,687

 

 

$

15,339

 

 

$

12,764

 

 

(4.3

)%

 

15.1

%

(Reversal of) provision for loan losses (3)

 

(557

)

 

(625

)

 

1,399

 

 

(10.9

)

 

(139.8

)

Gross charge-offs

 

 

 

(27

)

 

 

 

(100.0

)

 

 

Gross recoveries

 

4

 

 

 

 

1

 

 

100.0

 

 

300.0

 

Allowance for loan losses, ending (4)

 

$

14,134

 

 

$

14,687

 

 

$

14,164

 

 

(3.8

)%

 

(0.2

)%

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses ratios:

 

 

 

 

 

 

 

 

 

 

As a % of gross loans

 

1.15

%

 

1.18

%

 

1.32

%

 

(0.03

)%

 

(0.17

)%

As an adjusted of gross loans (5)

 

1.34

%

 

1.46

%

 

1.40

%

 

(0.12

)%

 

(0.06

)%

As a % of nonperforming loans

 

1,344

%

 

1,940

%

 

4,295

%

 

(597

)%

 

(2951

)%

As a % of nonperforming assets

 

1,344

%

 

1,940

%

 

4,295

%

 

(597

)%

 

(2951

)%

Net (recoveries)charge-offs to average gross loans

 

(0.00

)%

 

0.01

%

 

(0.00

)%

 

(0.01

)%

 

0.00

%

 

 

 

 

 

 

 

 

 

 

 

(1) Includes special mention, substandard, doubtful and loss categories.

(2) Includes substandard, doubtful and loss categories.

(3) Excludes (reversal of) provision for uncollectible accrued interest receivable of $(327) thousand and $(487) thousand for the three months ended September 30, 2021 and June 30, 2021, respectively. In comparison, there was no provision for uncollectible accrued interest receivable for the three months ended September 30, 2020.

(4) Excludes allowance for uncollectible accrued interest receivable of $465 thousand and $792 thousand as of September 30, 2021 and June 30, 2021, respectively. In comparison, there was no allowance for uncollectible accrued interest receivable as of September 30, 2020.

(5) See the Reconciliation of GAAP to NON-GAAP Financial Measures.

Overall, the Company maintained solid asset quality with low levels of nonperforming loans and net charge-offs. Nonperforming assets and criticized loans remained below our historical norms, a true reflection of our conservative credit culture and expertise in the industries we serve. Our allowance remained strong with an adjusted allowance to gross loans ratio of 1.34%. We expect economic growth over the remainder of the year; however, we remain vigilant given potential impacts on our customers from supply chain and labor constraints as well as COVID variants.

  • Allowance for loan losses decreased $30 thousand to $14.1 million from a year ago. Excluding the impacts of the purchased Hana loans, PPP loans, and the allowance for uncollectible accrued interest receivable, adjusted allowance to gross loans ratio was 1.34% as of September 30, 2021.
  • Criticized loans decreased by $4.6 million or 68% from a year ago, and the criticized loans ratio improved by 45 basis points, primarily due to a $3.9 million payoff in one C&I relationship, as well as improvement in the credit risk ratings of SBA loans. Criticized loans are generally consistent with the Special Mention, Substandard, Doubtful and Loss categories defined by regulatory authorities.
  • Nonperforming assets increased $722 thousand to $1.1 million, or 0.06% of total assets from a year ago. The increase in nonperforming assets was primarily due to SBA loans that were placed on nonaccrual in 2021. The Company did not have OREO as of both September 30, 2021 and 2020.
  • Net recoveries were $4 thousand or 0.00% of average loans compared to net recoveries of $1 thousand, or 0.00% of average loans for third quarter 2020.

     

COVID-19 Pandemic Update

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

Total deferments

under the CARES Act

through September 30, 2021

 

Payment resumed

or paid off

through September 30, 2021

 

Remaining deferments

as of September 30, 2021

 

Number

of

accounts

 

Balance

 

Number

of

accounts

 

Balance

 

Number

of

accounts

 

Balance

Loan Type

 

 

 

 

 

 

 

 

 

 

 

 

Loans, excluding home mortgage and consumer loans

 

156

 

 

$

220,522

 

 

152

 

 

$

213,774

 

 

4

 

 

$

6,748

 

Home mortgage loans

 

69

 

 

30,205

 

 

69

 

 

30,205

 

 

 

 

 

Total

 

225

 

 

$

250,727

 

 

221

 

 

$

243,979

 

 

4

 

 

$

6,748

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total outstanding balance of loans remaining in deferment status as of September 30, 2021, represented 0.5% of the total loan portfolio.

The Company continue to carefully monitor the trajectory of the economic recovery, which could be impacted by the emergence of new variants and continued spread of COVID-19. In addition, we continue to support our clients, employees, and communities.

Since the PPP’s inception through September 30, 2021, we have funded $154.5 million, and $88.8 million of principal forgiveness has been provided on qualifying PPP loans. There were no new PPP loans during the third quarter of 2021.

Reconciliation of GAAP to Non-GAAP Financial Measures

In addition to GAAP measures, management uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance.

Pre-provision net revenue removes provision for loan losses and income tax expense. Management believes that this non-GAAP measure, when taken together with the corresponding GAAP financial measures (as applicable), provides meaningful supplemental information regarding our performance. This non-GAAP financial measure also facilitates a comparison of our performance to prior periods.

During the second quarter of 2021, the Company purchased 638 loans from Hana for a total purchase price of $97.6 million. The Company evaluated $100.0 million of the loans purchased in accordance with the provisions of ASC 310-20, Nonrefundable Fees and Other Costs, which were recorded with a $8.9 million discount. As a result, the fair value discount on these loans is being accreted into interest income over the expected life of the loans using the effective yield method. Adjusted loan yield and net interest margin for the three months ended September 30, 2021 and June 30, 2021 excluded the impacts of contractual interest and discount accretion of the purchased loans as management does not consider purchasing loan portfolios to be normal or recurring transactions. Management believes that presenting the adjusted average loan yield and net interest margin provide comparability to prior periods and these non-GAAP financial measures provide supplemental information regarding the Company’s performance.

Adjusted allowance to gross loans ratio removes the impacts of purchased loans, PPP loans and allowance on accrued interest receivable. Management believes that this ratio provides greater consistency and comparability between the Company’s results and those of its peer banks.

 

 

 

 

 

 

 

 

($ in thousands)

 

 

For the Three Months Ended

 

 

3Q21

 

2Q21

 

3Q20

Interest income

 

 

$

17,355

 

 

$

15,349

 

 

$

13,016

Interest expense

 

 

766

 

 

763

 

 

1,597

Net interest income

 

 

16,589

 

 

14,586

 

 

11,419

Noninterest income

 

 

3,542

 

 

2,220

 

 

3,021

Noninterest expense

 

 

9,519

 

 

8,789

 

 

7,987

Pre-provision net revenue

 

(a)

$

10,612

 

 

$

8,017

 

 

$

6,453

Reconciliation to Net Income:

 

 

 

 

 

 

 

(Reversal of) provision for loan losses

 

(b)

(884

)

 

(1,112

)

 

1,399

Income tax expense

 

(c)

3,246

 

 

2,750

 

 

1,459

Net Income

 

(a) + (b) + (c)

$

8,250

 

 

$

6,379

 

 

$

3,595

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

 

For the Three Months Ended

 

 

3Q21

 

2Q21

 

3Q20

Yield on Average Loans

 

 

 

 

 

 

 

Interest income on loans

 

 

$

16,922

 

 

$

14,971

 

 

$

12,581

 

Less: interest income on purchased loans

 

 

2,057

 

 

860

 

 

 

Adjusted interest income on loans

 

(a)

$

14,865

 

 

$

14,111

 

 

$

12,581

 

 

 

 

 

 

 

 

 

Average loans

 

 

$

1,308,338

 

 

$

1,242,058

 

 

$

1,062,175

 

Less: Average purchased loans

 

 

85,710

 

 

37,526

 

 

 

Adjusted average loans

 

(b)

$

1,222,628

 

 

$

1,204,532

 

 

$

1,062,175

 

 

 

 

 

 

 

 

 

Average loan yield (1)

 

 

5.13

%

 

4.83

%

 

4.72

%

Effect on average loan yield (1)

 

 

0.30

 

 

0.13

 

 

0.00

 

Adjusted average loan yield (1)

 

(a)/(b)

4.83

%

 

4.70

%

 

4.72

%

 

 

 

 

 

 

 

 

Net Interest Margin

 

 

 

 

 

 

 

Net interest income

 

 

$

16,589

 

 

$

14,586

 

 

$

11,419

 

Less: interest income on purchased loans

 

 

2,057

 

 

860

 

 

 

Adjusted net interest income

 

(c)

$

14,532

 

 

$

13,726

 

 

$

11,419

 

 

 

 

 

 

 

 

 

Average interest-earning assets

 

 

$

1,565,697

 

 

$

1,468,623

 

 

$

1,240,871

 

Less: Average purchased loans

 

 

85,710

 

 

37,526

 

 

 

Adjusted average interest-earning assets

 

(d)

$

1,479,987

 

 

$

1,431,097

 

 

$

1,240,871

 

 

 

 

 

 

 

 

 

Net interest margin (1)

 

 

4.21

%

 

3.98

%

 

3.66

%

Effect on net interest margin (1)

 

 

0.30

 

 

0.13

 

 

0.00

 

Adjusted net interest margin (1)

 

(c)/(d)

3.91

%

 

3.85

%

 

3.66

%

 

 

 

 

 

 

 

 

(1) Annualized.

 

 

 

 

 

 

 

 

($ in thousands)

 

 

As of

 

 

3Q21

 

2Q21

 

3Q20

Gross loans

 

 

$

1,231,821

 

 

$

1,245,866

 

 

$

1,072,790

 

Less: Purchased loans

 

 

(83,025

)

 

(88,438

)

 

 

PPP loans (1)

 

 

(64,574

)

 

(97,673

)

 

(64,634

)

Adjusted gross loans

 

(a)

$

1,084,222

 

 

$

1,059,755

 

 

$

1,008,156

 

 

 

 

 

 

 

 

 

Accrued interest receivable on loans

 

 

$

3,659

 

 

$

3,179

 

 

$

4,689

 

Less: Accrued interest receivable on purchased loans

 

 

(375

)

 

(290

)

 

 

Accrued interest receivable on PPP loans (2)

 

 

(416

)

 

(461

)

 

(280

)

Add: Allowance on accrued interest receivable

 

 

465

 

 

792

 

 

 

Adjusted accrued interest receivable on loans

 

(b)

$

3,333

 

 

$

3,220

 

 

$

4,409

 

 

 

 

 

 

 

 

 

Adjusted gross loans and accrued interest receivable

 

(a) + (b) = (c)

$

1,087,555

 

 

$

1,062,975

 

 

$

1,012,565

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

 

$

14,134

 

 

$

14,687

 

 

$

14,164

 

Add: Allowance on accrued interest receivable

 

 

465

 

 

792

 

 

 

Adjusted Allowance

 

(d)

$

14,599

 

 

$

15,479

 

 

$

14,164

 

 

 

 

 

 

 

 

 

Adjusted allowance to gross loans ratio

 

(d)/(c)

1.34

%

 

1.46

%

 

1.40

%

 

 

 

 

 

 

 

 

(1) Excludes purchased PPP loans of $4.7 million and $6.3 million as of September 30, 2021 and June 30, 2021, respectively.

(2) Excludes purchased accrued interest receivable on PPP loans of $30 thousand and $26 thousand as of September 30, 2021 and June 30, 2021, respectively.

About OP Bancorp

OP Bancorp, the holding company for Open Bank (the “Bank”), is a California corporation whose common stock is quoted on the Nasdaq Global Market under the ticker symbol, “OPBK.” The Bank is engaged in the general commercial banking business in Los Angeles, Orange, and Santa Clara Counties, California, and Carrollton, Texas and is focused on serving the banking needs of small- and medium-sized businesses, professionals, and residents with a particular emphasis on Korean and other ethnic minority communities. The Bank currently operates with 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 constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company’s current business plans and expectations regarding future operating results. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties, some of which are beyond our control, include, but are not limited to: the uncertainties related to the coronavirus pandemic including, but not limited to, the potential adverse effect of the pandemic on the economy, our employees and customers, and our financial performance; the impact of the federal CARES Act and the significant additional lending activities undertaken by the Company in connection with the Small Business Administration’s Paycheck Protection Program enacted thereunder, including risks to the Company with respect to the uncertain application by the Small Business Administration of new borrower and loan eligibility, forgiveness and audit criteria; business and economic conditions, particularly those affecting the financial services industry and our primary market areas; our ability to successfully manage our credit risk and the sufficiency of our allowance for loan losses; factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers, the success of construction projects that we finance, including any loans acquired in acquisition transactions; our ability to effectively execute our strategic plan and manage our growth; interest rate fluctuations, which could have an adverse effect on our profitability; liquidity issues, including fluctuations in the fair value and liquidity of the securities we hold for sale and our ability to raise additional capital, if necessary; external economic and/or market factors, such as changes in monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve, inflation or deflation, changes in the demand for loans, and fluctuations in consumer spending, borrowing and savings habits, which may have an adverse impact on our financial condition; continued or increasing competition from other financial institutions, credit unions, and non-bank financial services companies, many of which are subject to different regulations than we are; challenges arising from unsuccessful attempts to expand into new geographic markets, products, or services; restraints on the ability of Open Bank to pay dividends to us, which could limit our liquidity; increased capital requirements imposed by banking regulators, which may require us to raise capital at a time when capital is not available on favorable terms or at all; a failure in the internal controls we have implemented to address the risks inherent to the business of banking; inaccuracies in our assumptions about future events, which could result in material differences between our financial projections and actual financial performance; changes in our management personnel or our inability to retain motivate and hire qualified management personnel; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems; disruptions, security breaches, or other adverse events affecting the third-party vendors who perform several of our critical processing functions; an inability to keep pace with the rate of technological advances due to a lack of resources to invest in new technologies; risks related to potential acquisitions; political developments, uncertainties or instability, catastrophic events, acts of war or terrorism, or natural disasters, such as earthquakes, fires, drought, pandemic diseases (such as the coronavirus) or extreme weather events, any of which may affect services we use or affect our customers, employees or third parties with which we conduct business; incremental costs and obligations associated with operating as a public company; the impact of any claims or legal actions to which we may be subject, including any effect on our reputation; compliance with governmental and regulatory requirements, including the Dodd-Frank Act and others relating to banking, consumer protection, securities and tax matters, and our ability to maintain licenses required in connection with commercial mortgage origination, sale and servicing operations; changes in federal tax law or policy; and our ability the manage the foregoing and other factors set forth in the Company’s public reports. We describe these and other risks that could affect our results in Item 1A. “Risk Factors,” of our latest Annual Report on Form 10-K for the year ended December 31, 2020 and in our other subsequent filings with the Securities and Exchange Commission.

Consolidated Balance Sheet (unaudited)

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

% Change 3Q21 vs.

 

3Q21

 

2Q21

 

3Q20

 

2Q21

 

3Q20

Assets

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

188,145

 

 

$

128,687

 

 

$

87,888

 

 

46.2

%

 

114.1

%

Available-for-sale debt securities, at fair value

 

102,535

 

 

111,832

 

 

93,482

 

 

(8.3

)

 

9.7

 

Other investments

 

11,025

 

 

11,028

 

 

10,097

 

 

0.0

 

 

9.2

 

Loans held for sale

 

94,466

 

 

68,396

 

 

41,430

 

 

38.1

 

 

128.0

 

Real estate loans

 

688,430

 

 

684,082

 

 

640,281

 

 

0.6

 

 

7.5

 

SBA loans (1)

 

303,625

 

 

338,751

 

 

213,678

 

 

(10.4

)

 

42.1

 

C & I loans

 

123,422

 

 

102,562

 

 

91,814

 

 

20.3

 

 

34.4

 

Home mortgage loans

 

115,255

 

 

119,319

 

 

125,656

 

 

(3.4

)

 

(8.3

)

Consumer & other loans

 

1,089

 

 

1,152

 

 

1,361

 

 

(5.5

)

 

(20.0

)

Gross loans, net of unearned income

 

1,231,821

 

 

1,245,866

 

 

1,072,790

 

 

(1.1

)

 

14.8

 

Allowance for loan losses

 

(14,134

)

 

(14,687

)

 

(14,164

)

 

(3.8

)

 

(0.2

)

Net loans receivable

 

1,217,687

 

 

1,231,179

 

 

1,058,626

 

 

(1.1

)

 

15.0

 

Premises and equipment, net

 

4,199

 

 

4,271

 

 

4,756

 

 

(1.7

)

 

(11.7

)

Accrued interest receivable, net

 

3,931

 

 

3,469

 

 

4,968

 

 

13.3

 

 

(20.9

)

Servicing assets

 

12,389

 

 

12,903

 

 

7,222

 

 

(4.0

)

 

71.5

 

Company owned life insurance

 

11,070

 

 

11,005

 

 

10,815

 

 

0.6

 

 

2.4

 

Deferred tax assets

 

5,247

 

 

4,861

 

 

3,911

 

 

7.9

 

 

34.2

 

Operating right-of-use assets

 

9,270

 

 

6,065

 

 

7,151

 

 

52.8

 

 

29.6

 

Other assets

 

19,947

 

 

8,164

 

 

9,475

 

 

144.3

 

 

110.5

 

Total assets

 

$

1,679,911

 

 

$

1,601,860

 

 

$

1,339,821

 

 

4.9

%

 

25.4

%

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

713,141

 

 

$

668,244

 

 

$

488,815

 

 

6.7

%

 

45.9

%

Money market deposits and others

 

351,186

 

 

386,612

 

 

339,981

 

 

(9.2

)

 

3.3

 

Time deposits over $250,000

 

209,091

 

 

193,704

 

 

194,630

 

 

7.9

 

 

7.4

 

Other time deposits

 

222,988

 

 

185,543

 

 

146,738

 

 

20.2

 

 

52.0

 

Total deposits

 

1,496,406

 

 

1,434,103

 

 

1,170,164

 

 

4.3

 

 

27.9

 

Federal Home Loan Bank advances

 

 

 

 

 

10,000

 

 

 

 

(100.0

)

Accrued interest payable

 

575

 

 

608

 

 

1,355

 

 

(5.4

)

 

(57.6

)

Operating lease liabilities

 

10,703

 

 

7,567

 

 

8,857

 

 

41.4

 

 

20.8

 

Other liabilities

 

13,603

 

 

7,620

 

 

7,896

 

 

78.5

 

 

72.3

 

Total liabilities

 

1,521,287

 

 

1,449,898

 

 

1,198,272

 

 

4.9

 

 

27.0

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

78,718

 

 

78,718

 

 

79,600

 

 

0.0

 

 

(1.1

)

Additional paid-in capital

 

8,491

 

 

8,324

 

 

8,382

 

 

2.0

 

 

1.3

 

Retained earnings

 

71,436

 

 

64,700

 

 

52,590

 

 

10.4

 

 

35.8

 

Accumulated other comprehensive income (loss)

 

(21

)

 

220

 

 

977

 

 

(109.5

)

 

(102.1

)

Total shareholders' equity

 

158,624

 

 

151,962

 

 

141,549

 

 

4.4

 

 

12.1

 

Total Liabilities and Shareholders' Equity

 

$

1,679,911

 

 

$

1,601,860

 

 

$

1,339,821

 

 

4.9

%

 

25.4

%

 

 

 

 

 

 

 

 

 

 

 

(1) Includes SBA Paycheck Protection Program (“PPP”) loans of $69.3 million, $103.9 million and $64.6 million as of September 30, 2021, June 30, 2021 and September 30, 2020, respectively.

Consolidated Statements of Income (unaudited)

($ in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

% Change 3Q21 vs.

 

3Q21

 

2Q21

 

3Q20

 

2Q21

 

3Q20

Interest income

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

16,922

 

 

$

14,971

 

 

$

12,581

 

 

13.0

%

 

34.5

%

Interest on available-for-sale debt securities

 

269

 

 

218

 

 

319

 

 

23.4

 

 

(15.7

)

Other interest income

 

164

 

 

160

 

 

116

 

 

2.5

 

 

41.4

 

Total interest income

 

17,355

 

 

15,349

 

 

13,016

 

 

13.1

 

 

33.3

 

Interest expense

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

766

 

 

763

 

 

1,597

 

 

0.4

 

 

(52.0

)

Total interest expense

 

766

 

 

763

 

 

1,597

 

 

0.4

 

 

(52.0

)

Net interest income

 

16,589

 

 

14,586

 

 

11,419

 

 

13.7

 

 

45.3

 

(Reversal of) provision for loan losses

 

(884

)

 

(1,112

)

 

1,399

 

 

(20.5

)

 

(163.2

)

Net interest income after (reversal of) provision for loan losses

 

17,473

 

 

15,698

 

 

10,020

 

 

11.3

 

 

74.4

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

409

 

 

393

 

 

334

 

 

4.1

 

 

22.5

 

Loan servicing fees, net of amortization

 

599

 

 

302

 

 

583

 

 

98.3

 

 

2.7

 

Gain on sale of loans

 

2,188

 

 

1,210

 

 

1,813

 

 

80.8

 

 

20.7

 

Other income

 

346

 

 

315

 

 

291

 

 

9.8

 

 

18.9

 

Total noninterest income

 

3,542

 

 

2,220

 

 

3,021

 

 

59.5

 

 

17.2

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

5,724

 

 

5,307

 

 

5,086

 

 

7.9

 

 

12.5

 

Occupancy and equipment

 

1,326

 

 

1,234

 

 

1,266

 

 

7.5

 

 

4.7

 

Data processing and communication

 

448

 

 

467

 

 

424

 

 

(4.1

)

 

5.7

 

Professional fees

 

308

 

 

303

 

 

287

 

 

1.7

 

 

7.3

 

FDIC insurance and regulatory assessments

 

146

 

 

123

 

 

112

 

 

18.7

 

 

30.4

 

Promotion and advertising

 

175

 

 

176

 

 

81

 

 

(0.6

)

 

116.0

 

Directors’ fees

 

183

 

 

128

 

 

147

 

 

43.0

 

 

24.5

 

Foundation donation and other contributions

 

842

 

 

640

 

 

360

 

 

31.6

 

 

133.9

 

Other expenses

 

367

 

 

411

 

 

224

 

 

(10.7

)

 

63.8

 

Total noninterest expense

 

9,519

 

 

8,789

 

 

7,987

 

 

8.3

 

 

19.2

 

Income before income tax expense

 

11,496

 

 

9,129

 

 

5,054

 

 

25.9

 

 

127.5

 

Income tax expense

 

3,246

 

 

2,750

 

 

1,459

 

 

18.0

 

 

122.5

 

Net income

 

$

8,250

 

 

$

6,379

 

 

$

3,595

 

 

29.3

%

 

129.5

%

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

10.48

 

 

$

10.04

 

 

$

9.36

 

 

4.4

%

 

12.0

%

Basic EPS

 

$

0.54

 

 

$

0.42

 

 

$

0.23

 

 

28.6

%

 

134.8

%

Diluted EPS

 

$

0.54

 

 

$

0.42

 

 

$

0.23

 

 

28.6

%

 

134.8

%

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock outstanding

 

15,133,407

 

 

15,133,407

 

 

15,126,270

 

 

%

 

0.0

%

Weighted Average Shares:

 

 

 

 

 

 

 

 

 

 

- Basic

 

15,133,407

 

 

15,056,484

 

 

15,148,833

 

 

0.5

%

 

(0.1

)%

- Diluted

 

15,200,613

 

 

15,129,451

 

 

15,182,733

 

 

0.5

%

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

Key Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and For the Three Months Ended

 

% Change 3Q21 vs.

 

3Q21

 

2Q21

 

3Q20

 

2Q21

 

3Q20

Return on average assets (ROA) (1)

 

2.03

%

 

1.68

%

 

1.11

%

 

0.35

%

 

0.92

%

Return on average equity (ROE) (1)

 

21.30

%

 

17.10

%

 

10.22

%

 

4.20

%

 

11.08

%

Net interest margin (1)

 

4.21

%

 

3.98

%

 

3.66

%

 

0.23

%

 

0.55

%

Efficiency ratio

 

47.28

%

 

52.30

%

 

55.31

%

 

(5.02

)%

 

(8.03

)%

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio (2)

 

13.81

%

 

13.87

%

 

14.93

%

 

(0.06

)%

 

(1.12

)%

Tier 1 risk-based capital ratio (2)

 

12.63

%

 

12.62

%

 

13.67

%

 

0.01

%

 

(1.04

)%

Common equity tier 1 ratio (2)

 

12.63

%

 

12.62

%

 

13.67

%

 

0.01

%

 

(1.04

)%

Leverage ratio (2)

 

9.75

%

 

9.96

%

 

10.85

%

 

(0.21

)%

 

(1.10

)%

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized.

(2) The Company’s September 30, 2021 regulatory capital ratios are preliminary.

Consolidated Statements of Income (unaudited)

($ in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

For the Nine Months Ended

 

3Q21

 

3Q20

 

% change

Interest income

 

 

 

 

 

 

Interest and fees on loans

 

$

45,177

 

 

$

38,823

 

 

16.4

%

Interest on available-for-sale debt securities

 

723

 

 

920

 

 

(21.4

)

Other interest income

 

436

 

 

538

 

 

(19.0

)

Total interest income

 

46,336

 

 

40,281

 

 

15.0

 

Interest expense

 

 

 

 

 

 

Interest on deposits

 

2,406

 

 

7,098

 

 

(66.1

)

Total interest expense

 

2,406

 

 

7,098

 

 

(66.1

)

Net interest income

 

43,930

 

 

33,183

 

 

32.4

 

(Reversal of) provision for loan losses

 

(1,376

)

 

4,130

 

 

(133.3

)

Net interest income after (reversal of) provision for loan losses

 

45,306

 

 

29,053

 

 

55.9

 

Noninterest income

 

 

 

 

 

 

Service charges on deposits

 

1,157

 

 

1,063

 

 

8.8

 

Loan servicing fees, net of amortization

 

1,432

 

 

1,489

 

 

(3.8

)

Gain on sale of loans

 

5,280

 

 

3,904

 

 

35.2

 

Other income

 

859

 

 

923

 

 

(6.9

)

Total noninterest income

 

8,728

 

 

7,379

 

 

18.3

 

Noninterest expense

 

 

 

 

 

 

Salaries and employee benefits

 

15,693

 

 

14,505

 

 

8.2

 

Occupancy and equipment

 

3,795

 

 

3,737

 

 

1.6

 

Data processing and communication

 

1,363

 

 

1,247

 

 

9.3

 

Professional fees

 

925

 

 

836

 

 

10.6

 

FDIC insurance and regulatory assessments

 

401

 

 

334

 

 

20.1

 

Promotion and advertising

 

528

 

 

405

 

 

30.4

 

Directors’ fees

 

427

 

 

603

 

 

(29.2

)

Foundation donation and other contributions

 

1,989

 

 

935

 

 

112.7

 

Other expenses

 

1,153

 

 

926

 

 

24.5

 

Total noninterest expense

 

26,274

 

 

23,528

 

 

11.7

 

Income before income tax expense

 

27,760

 

 

12,904

 

 

115.1

 

Income tax expense

 

8,054

 

 

3,594

 

 

124.1

 

Net income

 

$

19,706

 

 

$

9,310

 

 

111.7

%

 

 

 

 

 

 

 

Book value per share

 

$

10.48

 

 

$

9.36

 

 

12.0

%

Basic EPS

 

$

1.29

 

 

$

0.60

 

 

115.0

%

Diluted EPS

 

$

1.29

 

 

$

0.60

 

 

115.0

%

 

 

 

 

 

 

 

Shares of common stock outstanding

 

15,133,407

 

 

15,126,270

 

 

0.0

%

Weighted Average Shares:

 

 

 

 

 

 

- Basic

 

15,071,327

 

 

15,235,617

 

 

(1.1

)%

- Diluted

 

15,133,573

 

 

15,284,190

 

 

(1.0

)%

 

 

 

 

 

 

 

Key Ratios

 

 

 

 

 

 

 

 

 

As of and For the Nine Months Ended

 

3Q21

 

3Q20

 

% Change

Return on average assets (ROA) (1)

 

1.73

%

 

1.00

%

 

0.73

%

Return on average equity (ROE) (1)

 

17.55

%

 

8.88

%

 

8.67

%

Net interest margin (1)

 

4.01

%

 

3.71

%

 

0.30

%

Efficiency ratio

 

49.90

%

 

58.00

%

 

(8.10

)%

 

 

 

 

 

 

 

Total risk-based capital ratio (2)

 

13.81

%

 

14.93

%

 

(1.12

)%

Tier 1 risk-based capital ratio (2)

 

12.63

%

 

13.67

%

 

(1.04

)%

Common equity tier 1 ratio (2)

 

12.63

%

 

13.67

%

 

(1.04

)%

Leverage ratio (2)

 

9.75

%

 

10.85

%

 

(1.10

)%

 

 

 

 

 

 

 

(1) Annualized.

(2) The Company’s September 30, 2021 regulatory capital ratios are preliminary.

Asset Quality

 

 

 

 

 

 

 

($ in thousands)

 

As of and For the Three Months Ended

 

3Q21

 

2Q21

 

3Q20

Nonaccrual Loans

 

$

1,052

 

 

$

757

 

 

$

 

Loans 90 days or more past due, accruing

 

 

 

 

 

 

Accruing restructured loans

 

 

 

 

 

330

 

Nonperforming loans

 

1,052

 

 

757

 

 

330

 

Other real estate owned (“OREO”)

 

 

 

 

 

 

Nonperforming assets

 

$

1,052

 

 

$

757

 

 

$

330

 

 

 

 

 

 

 

 

Criticized loans (1) by loan type:

 

 

 

 

 

 

SBA loans

 

$

1,871

 

 

$

3,681

 

 

$

1,677

 

C & I loans

 

320

 

 

4,662

 

 

5,093

 

Home mortgage loans

 

 

 

 

 

 

Total criticized loans (1)

 

$

2,191

 

 

$

8,343

 

 

$

6,770

 

 

 

 

 

 

 

 

Nonperforming assets/total assets

 

0.06

%

 

0.05

%

 

0.02

%

Nonperforming assets/gross loans plus OREO

 

0.09

%

 

0.06

%

 

0.03

%

Nonperforming loans/gross loans

 

0.09

%

 

0.06

%

 

0.03

%

Allowance for loan losses/nonperforming loans

 

1,344

%

 

1,940

%

 

4,295

%

Allowance for loan losses/nonperforming assets

 

1,344

%

 

1,940

%

 

4,295

%

Allowance for loan losses/gross loans

 

1.15

%

 

1.18

%

 

1.32

%

Criticized loans (1) /gross loans

 

0.18

%

 

0.67

%

 

0.63

%

 

 

 

 

 

 

 

Net (recoveries) charge-offs

 

$

(4

 

$

27

 

 

$

(1

Net (recoveries) charge-offs to average gross loans (2)

 

(0.00

)%

 

0.01

%

 

(0.00

)%

 

 

 

 

 

 

 

(1) Consists of special mention, substandard, doubtful and loss categories.

(2) Annualized.

 

 

 

 

 

 

 

($ in thousands)

 

3Q21

 

2Q21

 

3Q20

Accruing delinquent loans 30-89 days past due:

 

 

 

 

 

 

30-59 days

 

$

263

 

 

$

41

 

 

$

600

 

60-89 days

 

1,064

 

 

 

 

 

Total

 

$

1,327

 

 

$

41

 

 

$

600

 

 

 

 

 

 

 

 

Average Balance Sheet, Interest and Yield/Rate Analysis

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

3Q21

 

2Q21

 

3Q20

 

 

Average

Balance

 

Interest

and Fees

 

Yield/

Rate (1)

 

Average

Balance

 

Interest

and Fees

 

Yield/

Rate (1)

 

Average

Balance

 

Interest

and Fees

 

Yield/

Rate (1)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold and other investments

 

$

148,350

 

 

$

164

 

 

0.44

%

 

$

117,605

 

 

$

160

 

 

0.54

%

 

$

93,827

 

 

$

116

 

 

0.49

%

Available-for-sale debt securities, at fair value

 

109,009

 

 

269

 

 

0.99

 

 

108,960

 

 

218

 

 

0.80

 

 

84,869

 

 

319

 

 

1.51

 

Total investments

 

257,359

 

 

433

 

 

0.67

 

 

226,565

 

 

378

 

 

0.67

 

 

178,696

 

 

435

 

 

0.97

 

Real estate loans

 

678,642

 

 

7,680

 

 

4.49

 

 

670,224

 

 

7,725

 

 

4.62

 

 

630,255

 

 

7,461

 

 

4.71

 

SBA loans

 

403,279

 

 

6,835

 

 

6.72

 

 

346,702

 

 

4,816

 

 

5.57

 

 

219,183

 

 

2,719

 

 

4.94

 

C & I loans

 

107,614

 

 

1,074

 

 

3.96

 

 

101,362

 

 

983

 

 

3.89

 

 

89,103

 

 

847

 

 

3.78

 

Home mortgage loans

 

117,825

 

 

1,317

 

 

4.47

 

 

122,588

 

 

1,431

 

 

4.67

 

 

122,222

 

 

1,531

 

 

5.01

 

Consumer & other loans

 

978

 

 

16

 

 

6.49

 

 

1,182

 

 

16

 

 

5.30

 

 

1,412

 

 

23

 

 

6.43

 

Loans (2)

 

1,308,338

 

 

16,922

 

 

5.13

 

 

1,242,058

 

 

14,971

 

 

4.83

 

 

1,062,175

 

 

12,581

 

 

4.72

 

Total interest-earning assets

 

1,565,697

 

 

17,355

 

 

4.40

 

 

1,468,623

 

 

15,349

 

 

4.19

 

 

1,240,871

 

 

13,016

 

 

4.18

 

Noninterest-earning assets

 

57,160

 

 

 

 

 

 

49,691

 

 

 

 

 

 

52,145

 

 

 

 

 

Total assets

 

$

1,622,857

 

 

 

 

 

 

$

1,518,314

 

 

 

 

 

 

$

1,293,016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market deposits and others

 

$

368,507

 

 

$

299

 

 

0.32

%

 

$

366,922

 

 

$

281

 

 

0.31

%

 

$

298,942

 

 

$

394

 

 

0.52

%

Time deposits

 

383,503

 

 

467

 

 

0.48

 

 

366,603

 

 

482

 

 

0.53

 

 

364,928

 

 

1,203

 

 

1.31

 

Total interest-bearing deposits

 

752,010

 

 

766

 

 

0.40

 

 

733,525

 

 

763

 

 

0.42

 

 

663,870

 

 

1,597

 

 

0.96

 

Borrowings

 

 

 

 

 

 

 

3,025

 

 

 

 

 

 

10,001

 

 

 

 

 

Total interest-bearing liabilities

 

752,010

 

 

766

 

 

0.40

 

 

736,550

 

 

763

 

 

0.42

 

 

673,871

 

 

1,597

 

 

0.94

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

696,761

 

 

 

 

 

 

615,385

 

 

 

 

 

 

460,965

 

 

 

 

 

Other noninterest-bearing liabilities

 

19,169

 

 

 

 

 

 

17,119

 

 

 

 

 

 

17,507

 

 

 

 

 

Total noninterest-bearing liabilities

 

715,930

 

 

 

 

 

 

632,504

 

 

 

 

 

 

478,472

 

 

 

 

 

Shareholders’ equity

 

154,917

 

 

 

 

 

 

149,260

 

 

 

 

 

 

140,673

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

1,622,857

 

 

 

 

 

 

$

1,518,314

 

 

 

 

 

 

$

1,293,016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / interest rate spreads

 

 

 

$

16,589

 

 

4.00

%

 

 

 

$

14,586

 

 

3.77

%

 

 

 

$

11,419

 

 

3.24

%

Net interest margin

 

 

 

 

 

4.21

%

 

 

 

 

 

3.98

%

 

 

 

 

 

3.66

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of deposits & cost of funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits / cost of deposits

 

$

1,448,771

 

 

$

766

 

 

0.21

%

 

$

1,348,910

 

 

$

763

 

 

0.23

%

 

$

1,124,835

 

 

$

1,597

 

 

0.56

%

Total funding liabilities / cost of funds

 

$

1,448,771

 

 

$

766

 

 

0.21

%

 

$

1,351,935

 

 

$

763

 

 

0.23

%

 

$

1,134,836

 

 

$

1,597

 

 

0.56

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized.

(2) Includes loans held for sale.

Average Balance Sheet, Interest and Yield/Rate Analysis

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended

 

3Q21

 

3Q20

 

Average

Balance

 

Interest

and Fees

 

Yield/ Rate (1)

 

Average

Balance

 

Interest

and Fees

 

Yield/ Rate (1)

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold and other investments

 

$

121,947

 

 

$

436

 

 

0.47

%

 

$

90,733

 

 

$

538

 

 

0.78

%

Available-for-sale debt securities, at fair value

 

103,699

 

 

723

 

 

0.93

 

 

66,752

 

 

920

 

 

1.84

 

Total investments

 

225,646

 

 

1,159

 

 

0.68

 

 

157,485

 

 

1,458

 

 

1.23

 

Real estate loans

 

667,547

 

 

22,870

 

 

4.58

 

 

634,178

 

 

23,159

 

 

4.88

 

SBA loans

 

339,968

 

 

14,931

 

 

5.87

 

 

182,842

 

 

8,001

 

 

5.84

 

C & I loans

 

108,402

 

 

3,129

 

 

3.86

 

 

94,455

 

 

3,044

 

 

4.30

 

Home mortgage loans

 

122,008

 

 

4,200

 

 

4.59

 

 

121,332

 

 

4,521

 

 

4.97

 

Consumer & other loans

 

1,115

 

 

47

 

 

5.61

 

 

2,362

 

 

98

 

 

5.61

 

Loans (2)

 

1,239,040

 

 

45,177

 

 

4.87

 

 

1,035,169

 

 

38,823

 

 

5.01

 

Total interest-earning assets

 

1,464,686

 

 

46,336

 

 

4.23

 

 

1,192,654

 

 

40,281

 

 

4.51

 

Noninterest-earning assets

 

53,093

 

 

 

 

 

 

50,065

 

 

 

 

 

Total assets

 

$

1,517,779

 

 

 

 

 

 

$

1,242,719

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Money market deposits and others

 

$

357,525

 

 

$

851

 

 

0.32

%

 

$

300,356

 

 

$

1,835

 

 

0.82

%

Time deposits

 

370,715

 

 

1,555

 

 

0.56

 

 

407,625

 

 

5,263

 

 

1.72

 

Total interest-bearing deposits

 

728,240

 

 

2,406

 

 

0.44

 

 

707,981

 

 

7,098

 

 

1.34

 

Borrowings

 

2,657

 

 

 

 

0.00

 

 

4,688

 

 

 

 

0.00

 

Total interest-bearing liabilities

 

730,897

 

 

2,406

 

 

0.44

 

 

712,669

 

 

7,098

 

 

1.33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

619,437

 

 

 

 

 

 

372,390

 

 

 

 

 

Other noninterest-bearing liabilities

 

17,726

 

 

 

 

 

 

17,929

 

 

 

 

 

Total noninterest-bearing liabilities

 

637,163

 

 

 

 

 

 

390,319

 

 

 

 

 

Shareholders’ equity

 

149,719

 

 

 

 

 

 

139,731

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

1,517,779

 

 

 

 

 

 

$

1,242,719

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / interest rate spreads

 

 

 

$

43,930

 

 

3.79

%

 

 

 

$

33,183

 

 

3.18

%

Net interest margin

 

 

 

 

 

4.01

%

 

 

 

 

 

3.71

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of deposits & cost of funds:

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits / cost of deposits

 

$

1,347,677

 

 

$

2,406

 

 

0.24

%

 

$

1,080,371

 

 

$

7,098

 

 

0.88

%

Total funding liabilities / cost of funds

 

$

1,350,334

 

 

$

2,406

 

 

0.24

%

 

$

1,085,059

 

 

$

7,098

 

 

0.87

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Annualized.

(2) Includes loans held for sale.

Loan Portfolio Breakdown by Industry, excluding home mortgage and consumer loans

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of September 30, 2021

Industry

 

Number

of

accounts

 

% of

total

 

Balance

 

% of

total

Hotel / motel

 

279

 

 

9.3

%

 

$

205,018

 

 

16.9

%

Personal and laundry services

 

162

 

 

5.4

 

 

25,226

 

 

2.1

 

Wholesale

 

246

 

 

8.2

 

 

70,115

 

 

5.8

 

Food services / restaurant

 

425

 

 

14.2

 

 

49,457

 

 

4.1

 

Real estate lessor

 

242

 

 

8.1

 

 

407,290

 

 

33.7

 

Gas station

 

251

 

 

8.4

 

 

189,515

 

 

15.6

 

Other

 

1,388

 

 

46.4

 

 

263,322

 

 

21.8

 

Total (1)

 

2,993

 

 

100.0

%

 

$

1,209,943

 

 

100.0

%

 

 

 

 

 

 

 

 

 

(1) Includes loans held for sale.

Loan Deferment Summary by Industry, excluding home mortgage and consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of September 30, 2021

 

Number of accounts

 

Loan balance

Industry

 

Number

of

accounts

 

% of

deferment

 

% of

total

loans

 

Balance

 

% of

deferment

 

% of

total

loans

Hotel / motel

 

2

 

 

50.0

%

 

0.7

%

 

$