2023 First Quarter Highlights compared with 2022 First
Quarter:
- Financial Results:
- Net income of $7.5 million, compared to $8.2 million
- Diluted earnings per share of $0.48, compared to $0.53
- Net interest income of $17.9 million, compared to $17.3
million
- Net interest margin of 3.56%, compared to 4.12%
- Adopted Current Expected Credit Losses (“CECL”) and recorded
additional allowance for credit losses of $2.1 million on January
1, 2023
- Reversal of credit losses of $338 thousand, compared to
provision for credit losses of $341 thousand
- Total assets of $2.2 billion, a 16% increase compared to $1.9
billion
- Gross loans of $1.7 billion, a 18% increase compared to $1.4
billion
- Total deposits of $1.9 billion, a 14% increase compared to $1.7
billion
- Credit Quality:
- Allowance for credit losses to gross loans of 1.23%, compared
to 1.17%, reflecting implementation of CECL
- Net loan charge-offs (1) to average gross loans (2) of 0.02%,
compared to 0.00%
- Nonperforming loans to gross loans of 0.26%, compared to
0.20%
- Criticized loans (3) to gross loans of 0.44%, compared to
0.27%
- Capital Levels:
- Quarterly cash dividend of $0.12 per share, a 20% increase from
$0.10 per share
- Remained well-capitalized with a Common Equity Tier 1 (“CET1”)
ratio of 12.06%.
- Book value per common share increased to $12.02, compared to
$10.97
- Repurchased 76,990 shares of common stock at an average price
of $9.25
___________________________________________________________
(1) Annualized. (2) Includes loans held for sale. (3) Includes
special mention, substandard, doubtful, and loss categories.
OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company
of Open Bank, today reported its financial results for the first
quarter of 2023. Net income for the first quarter of 2023 was $7.5
million, or $0.48 per diluted common share, compared with $8.0
million, or $0.51 per diluted common share, for the fourth quarter
of 2022, and $8.2 million, or $0.53 per diluted common share, for
the first quarter of 2022.
Min Kim, President and Chief Executive Officer:
“With the unexpected recent turmoil in the banking industry, we
have focused our effort on connecting with our customers to
reassure them that the Company maintains strong liquidity and
capital positions to withstand challenges in these unusual times,”
said Min Kim, President and Chief Executive.
“Although we have experienced migration from noninterest bearing
to interest bearing deposits amid higher rate environment, we did
not have much outflow during the quarter. We are grateful for our
customers’ loyalty and the trust that they have in us. As we
continue to face many headwinds, we anticipate stress on our
short-term earnings. However, we believe we are well positioned to
build a stronger franchise as we remain focused in maintaining the
safety and soundness of our operations.”
SELECTED FINANCIAL HIGHLIGHTS
($ in thousands, except per share
data)
As of and For the Three Months
Ended
% Change 1Q23 vs.
1Q2023
4Q2022
1Q2022
4Q2022
1Q2022
Selected Income Statement Data:
Net interest income
$
17,892
$
20,198
$
17,290
(11.4
) %
3.5
%
(Reversal of) provision for credit
losses
(338
)
977
341
n/m
n/m
Noninterest income
4,295
3,223
4,216
33.3
1.9
Noninterest expense
11,908
11,327
9,662
5.1
23.2
Income tax expense
3,083
3,089
3,351
(0.2
)
(8.0
)
Net Income
7,534
8,028
8,152
(6.2
)
(7.6
)
Diluted earnings per share
0.48
0.51
0.53
(5.9
)
(9.4
)
Selected Balance Sheet Data:
Gross loans
$
1,692,485
$
1,678,292
$
1,428,410
0.8
%
18.5
%
Total deposits
1,904,818
1,885,771
1,672,003
1.0
13.9
Total assets
2,170,450
2,094,497
1,863,945
3.6
16.4
Average loans (1)
1,725,392
1,691,642
1,444,054
2.0
19.5
Average deposits
1,867,684
1,836,736
1,570,376
1.7
18.9
Credit Quality:
Nonperforming loans
$
4,358
$
3,080
$
2,806
41.5
%
55.3
%
Net charge-offs to average gross loans
(2)
0.02
%
0.03
%
0.00
%
(0.01
) %
0.02
%
Allowance for credit losses to gross
loans
1.23
%
1.15
%
1.17
%
0.08
%
0.06
%
Allowance for credit losses to
nonperforming loans
478
%
625
%
594
%
(147
) %
(116
) %
Financial Ratios:
Return on average assets (2)
1.43
%
1.56
%
1.85
%
(0.13
) %
(0.42
) %
Return on average equity (2)
16.82
%
18.58
%
19.54
%
(1.76
) %
(2.72
) %
Net interest margin (2)
3.56
%
4.08
%
4.12
%
(0.52
) %
(0.56
) %
Efficiency ratio (3)
53.67
%
48.36
%
44.93
%
5.31
%
8.74
%
Common equity tier 1 capital ratio
12.06
%
11.87
%
12.11
%
0.19
%
(0.05
) %
Leverage ratio
9.43
%
9.38
%
9.80
%
0.05
%
(0.37
) %
Book value per common share
$
12.02
$
11.59
$
10.97
3.7
%
9.6
%
(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 1Q23 vs.
1Q2023
4Q2022
1Q2022
4Q2022
1Q2022
Interest Income
Interest income
$
28,594
$
26,886
$
17,944
6.4
%
59.4
%
Interest expense
10,702
6,688
654
60.0
1536.4
Net interest income
$
17,892
$
20,198
$
17,290
(11.4
) %
3.5
%
($ in thousands)
For the Three Months
Ended
1Q2023
4Q2022
1Q2022
Average Balance
Interest
and Fees
Yield/Rate (1)
Average Balance
Interest
and Fees
Yield/Rate (1)
Average Balance
Interest
and Fees
Yield/Rate (1)
Interest-earning Assets
Loans
$
1,725,392
$
26,011
6.10
%
$
1,691,642
$
24,719
5.81
%
$
1,444,054
$
17,257
4.84
%
Total interest-earning assets
2,022,146
28,594
5.71
1,966,165
26,886
5.43
1,698,799
17,944
4.28
Interest-bearing Liabilities
Interest-bearing deposits
1,196,194
10,382
3.52
1,085,331
6,598
2.41
786,915
654
0.34
Total interest-bearing liabilities
1,222,362
10,702
3.55
1,093,489
6,688
2.43
786,915
654
0.34
Ratios
Net interest Income/interest rate
spreads
17,892
2.16
20,198
3.00
17,290
3.94
Net interest margin
3.56
4.08
4.12
Total deposits / cost of deposits
1,867,684
10,382
2.25
1,836,736
6,598
1.43
1,570,376
654
0.17
Total funding liabilities / cost of
funds
1,893,852
10,702
2.29
1,844,894
6,688
1.44
1,570,376
654
0.17
(1) Annualized.
($ in thousands)
For the Three Months
Ended
Yield Change 1Q23 vs.
1Q2023
4Q2022
1Q2022
Interest
& Fees
Yield (1)
Interest
& Fees
Yield (1)
Interest
& Fees
Yield (1)
4Q2022
1Q2022
Loan Yield Component
Contractual interest rate
$
25,477
5.97
%
$
23,694
5.57
%
$
15,312
4.29
%
0.40
%
1.68
%
SBA discount accretion
974
0.23
1,034
0.24
1,433
0.40
(0.01
)
(0.17
)
Amortization of net deferred fees
79
0.02
46
0.01
500
0.14
0.01
(0.12
)
Amortization of premium
(392
)
(0.09
)
(344
)
(0.08
)
(188
)
(0.05
)
(0.01
)
(0.04
)
Net interest recognized on nonaccrual
loans
(243
)
(0.06
)
—
—
34
0.01
(0.06
)
(0.07
)
Prepayment penalties (2) and other
fees
116
0.03
289
0.07
166
0.05
(0.04
)
(0.02
)
Yield on loans
$
26,011
6.10
%
$
24,719
5.81
%
$
17,257
4.84
%
0.29
%
1.26
%
Amortization of net deferred fees:
PPP loan forgiveness (3)
$
3
—
%
$
15
—
%
$
483
0.13
%
—
%
(0.13
) %
Other
76
0.02
31
0.01
17
0.01
0.01
0.01
Total amortization of net deferred
fees
$
79
0.02
%
$
46
0.01
%
$
500
0.14
%
0.01
%
(0.12
) %
(1)
Annualized.
(2)
Prepayment penalty income of $3 thousand,
$172 thousand and $95 thousand for the three months ended March 31,
2023, December 31, 2022 and March 31, 2022, respectively, was from
commercial real estate and C&I loans.
(3)
As of March 31, 2023, there were
unamortized net deferred fees and unaccredited discounts of $4
thousand to be recognized over the estimated life of the loans as a
yield adjustment on the loans.
Impact of Hana Loan Purchase on Average Loan Yield and Net
Interest Margin
During the second quarter of 2021, the Company purchased an SBA
portfolio of 638 loans with an ending balance of $100.0 million,
excluding loan discount of $8.9 million from Hana Small Business
Lending, Inc. (“Hana”). The following table presents impacts of the
Hana loan purchase on average loan yield and net interest
margin:
($ in thousands)
For the Three Months
Ended
1Q2023
4Q2022
1Q2022
Hana Loan Purchase:
Contractual interest rate
$
1,400
$
1,286
$
976
Purchased loan discount accretion
413
374
772
Other fees
24
25
7
Total interest income
$
1,837
$
1,685
$
1,755
Effect on average loan yield
(1)
0.24
%
0.20
%
0.26
%
Effect on net interest margin
(1)
0.27
%
0.22
%
0.25
%
($ in thousands)
For the Three Months
Ended
1Q2023
4Q2022
1Q2022
Average
Balance
Interest
and Fees
Yield/
Rate
Average
Balance
Interest
and Fees
Yield/
Rate
Average
Balance
Interest
and Fees
Yield/
Rate
Average loan yield (1)
$
1,725,392
$
26,011
6.10
%
$
1,691,642
$
24,719
5.81
%
$
1,444,054
$
17,257
4.84
%
Adjusted average loan yield excluding
purchased Hana loans (1)(2)
1,667,155
24,174
5.86
1,631,128
23,034
5.61
1,369,423
15,502
4.58
Net interest margin (1)
2,022,146
17,892
3.56
1,966,165
20,198
4.08
1,698,799
17,290
4.12
Adjusted interest margin excluding
purchased Hana loans (1)(2)
1,963,909
16,055
3.29
1,905,651
18,513
3.86
1,624,168
15,535
3.87
(1)
Annualized.
(2)
See reconciliation of GAAP to non-GAAP
financial measures.
First Quarter 2023 vs. Fourth Quarter
2022
Net interest income decreased $2.3 million, or 11.4%, primarily
due to higher interest expense on time deposits, partially offset
by higher interest income on loans and available-for-sale debt
securities. Net interest margin was 3.56%, a decrease of 52 basis
points from 4.08%.
- A $1.3 million increase in interest income on loans was
primarily due to a $33.8 million increase in average balance and a
29 basis point increase in contractual loan yield as a result of
the Federal Reserve’s rate increases.
- A $329 thousand increase in interest income on
available-for-sale debt securities was primarily due to a $24.0
million increase in average balance and a 28 basis point increase
in average yield due to higher yields on recently purchased
securities.
- A $3.7 million increase in interest expense on time deposits
was primarily due to a $216.8 million increase in average balance
and a 126 basis point increase in average cost driven by the
Federal Reserve’s rate increases.
First Quarter 2023 vs. First Quarter
2022
Net interest income increased $602 thousand, or 3.5%, primarily
due to higher interest income on loans and available-for-sale debt
securities, mostly offset by higher interest expenses on time
deposits and money market deposits. Net interest margin was 3.56%,
a decrease of 56 basis point from 4.12%.
- An $8.8 million increase in interest income on loans was
primarily due to a $281.3 million increase in average balance and a
126 basis point increase in contractual loan yield as a result of
the Federal Reserve’s rate increases.
- A $1.0 million increase in interest income on
available-for-sale debt securities was primarily due to a $53.5
million increase in average balance and a 159 basis point increase
in average yield due to higher yields on recently purchased
securities.
- A $6.8 million increase in interest expense on time deposits
was primarily due to a $411.8 million increase in average balance
and a 329 basis point increase in average cost driven by the
Federal Reserve’s rate increases.
- A $2.9 million increase in interest expense on money market
deposits was primarily due to a 287 basis point increase in average
cost driven by the Federal Reserve’s rate increases.
Provision for Credit Losses
($ in thousands)
For the Three Months
Ended
% Change 1Q23 vs.
1Q2023
4Q2022
1Q2022
4Q2022
1Q2022
(Reversal of) provision for credit losses
on loans
$
(258
)
$
977
$
341
n/m
n/m
(Reversal of) provision for credit losses
on off-balance sheet exposure (1)
(80
)
74
5
n/m
n/m
Total (reversal of) provision for
credit losses
$
(338
)
$
1,051
$
346
n/m
n/m
(1)
Reversal of credit losses on off-balance
sheet exposure of $80 thousand for the three months ended March 31,
2023 was included in total (reversal of) provision for credit
losses. Prior to CECL adoption, provisions for credit losses on
off-balance sheet exposure of $74 thousand and $5 thousand for the
three months ended December 31, 2022 and March 31, 2022,
respectively, were included in other expenses.
First Quarter 2023 vs. Fourth Quarter
2022
The Company recorded a $338 thousand reversal of credit losses,
a decrease of $1.4 million, compared with a $1.1 million provision
for credit losses. The $258 thousand reversal of credit losses on
loans and the $80 thousand reversal of credit losses on off-balance
sheet exposure were primarily due to changes in the qualitative
adjustments, reflecting improving trends in loan concentration
ratios.
First Quarter 2023 vs. First Quarter
2022
The Company recorded a $338 thousand reversal of credit losses,
a decrease of $684 thousand, compared with a $346 thousand
provision for credit losses.
Noninterest Income
($ in thousands)
For the Three Months
Ended
% Change 1Q23 vs.
1Q2023
4Q2022
1Q2022
4Q2022
1Q2022
Noninterest income
Service charges on deposits
$
418
$
406
$
388
3.0
%
7.7
%
Loan servicing fees, net of
amortization
846
705
447
20.0
89.3
Gain on sale of loans
2,570
1,684
3,238
52.6
(20.6
)
Other income
461
428
143
7.7
222.4
Total noninterest income
$
4,295
$
3,223
$
4,216
33.3
%
1.9
%
First Quarter 2023 vs. Fourth Quarter
2022
Noninterest income increased $1.1 million, or 33.3%, primarily
due to higher gain on sale of loans.
- Gain on sale of loans was $2.6 million, an increase of $886
thousand from $1.7 million, primarily due to a higher SBA loan sold
amount and a higher average sales premium. The Company sold $44.7
million in SBA loans at an average premium rate of 7.33%, compared
to the sale of $32.2 million at an average premium rate of
6.13%.
First Quarter 2023 vs. First Quarter
2022
Noninterest income increased $79 thousand, or 1.9%, due to an
increase in loan servicing fees and other income, mostly offset by
lower gain on sale of loans.
- Loan servicing fees were $846 thousand, an increase $399
thousand from $447 thousand, primarily due to an increase in
servicing portfolio and a decrease in servicing asset amortization
driven by slower loan prepayments in the first quarter of
2023.
- Other income was $461 thousand, an increase of $318 thousand
from $143 thousand, primarily due to an increase of $226 thousand
in fair value of equity investment.
- Gain on sale of loans was $2.6 million, a decrease of $668
thousand from $3.2 million, primarily due to a lower average sales
premium partially offset by a higher SBA loans sold amount. The
Company sold $44.7 million in SBA loans at an average premium rate
of 7.33%, compared to the sale of $31.8 million at an average
premium rate of 11.02%.
Noninterest Expense
($ in thousands)
For the Three Months
Ended
% Change 1Q23 vs.
1Q2023
4Q2022
1Q2022
4Q2022
1Q2022
Noninterest expense
Salaries and employee benefits
$
7,252
$
7,080
$
5,657
2.4
%
28.2
%
Occupancy and equipment
1,570
1,560
1,378
0.6
13.9
Data processing and communication
550
514
493
7.0
11.6
Professional fees
359
330
324
8.8
10.8
FDIC insurance and regulatory
assessments
467
176
207
165.3
125.6
Promotion and advertising
162
12
189
1,250.0
(14.3
)
Directors’ fees
161
145
177
11.0
(9.0
)
Foundation donation and other
contributions
753
851
815
(11.5
)
(7.6
)
Other expenses
634
659
422
(3.8
)
50.2
Total noninterest expense
$
11,908
$
11,327
$
9,662
5.1
%
23.2
%
First Quarter 2023 vs. Fourth Quarter
2022
Noninterest expense increased $581 thousand, or 5.1%, primarily
due to increases in FDIC insurance and regulatory assessments,
salaries and employee benefits, and promotion and advertising.
- FDIC insurance and regulatory assessments increased $291
thousand due to increases in FDIC assessment fees in 2023.
- Salaries and employee benefits increased $172 thousand
primarily due to lower employee incentive accruals in the fourth
quarter of 2022.
- Promotion and advertising increased $150 thousand primarily due
to lower expense in the fourth quarter of 2022 from year-end
accrual adjustments.
First Quarter 2023 vs. First Quarter
2022
Noninterest expense increased $2.2 million, or 23.2%, primarily
due to higher salaries and employee benefits and FDIC insurance and
regulatory assessments.
- Salaries and employee benefits increased $1.6 million primarily
due to 23 additional full-time employees to support continued
growth of the Company.
- FDIC insurance and regulatory assessments increased $260
thousand primarily due to our deposit growth from the first quarter
of 2022 and increases in FDIC assessment fees in 2023.
Income Tax Expense
First Quarter 2023 vs. Fourth Quarter
2022
Income tax expense was $3.1 million, and the effective tax rate
was 29.0%, compared to income tax expense of $3.1 million and the
effective rate of 27.8%.
First Quarter 2023 vs. First Quarter
2022
Income tax expense was $3.1 million and the effective tax rate
was 29.0%, compared to income tax expense of $3.4 million and an
effective rate of 29.1%.
BALANCE SHEET HIGHLIGHTS
Loans
($ in thousands)
As of
% Change 1Q23 vs.
1Q2023
4Q2022
1Q2022
4Q2022
1Q2022
Real estate loans
$
833,615
$
842,208
$
730,841
(1.0
) %
14.1
%
SBA loans
238,994
234,717
253,064
1.8
(5.6
)
C&I loans
117,841
116,951
176,934
0.8
(33.4
)
Home mortgage loans
500,635
482,949
266,465
3.7
87.9
Consumer & other loans
1,400
1,467
1,106
(4.6
)
26.6
Gross loans
$
1,692,485
$
1,678,292
$
1,428,410
0.8
%
18.5
%
The following table presents new loan originations based on loan
commitment amounts for the periods indicated:
($ in thousands)
For the Three Months
Ended
% Change 1Q23 vs.
1Q2023
4Q2022
1Q2022
4Q2022
1Q2022
Real estate loans
$
24,200
$
44,416
$
49,868
(45.5
) %
(51.5
) %
SBA loans
16,258
55,594
37,400
(70.8
)
(56.5
)
C&I loans
7,720
46,014
11,876
(83.2
)
(35.0
)
Home mortgage loans
20,903
28,188
22,785
(25.8
)
(8.3
)
Gross loans
$
69,081
$
174,212
$
121,929
(60.3
) %
(43.3
) %
The following table presents changes in gross loans by loan
activity for the periods indicated:
($ in thousands)
For the Three Months
Ended
1Q2023
4Q2022
1Q2022
Loan activities:
Gross loans, beginning
$
1,678,292
$
1,618,018
$
1,314,019
New originations
69,081
174,212
121,929
Net line advances
9,949
(80,144
)
17,455
Purchases
12,142
49,980
81,552
Sales
(41,032
)
(32,204
)
(31,819
)
Paydowns
(40,190
)
(22,939
)
(15,972
)
Payoffs
(28,326
)
(23,238
)
(45,391
)
PPP Payoffs
(200
)
(657
)
(19,079
)
Decrease / (increase) in loans held for
sale
36,802
(7,693
)
3,185
Other
(4,033
)
2,957
2,531
Total
14,193
60,274
114,391
Gross loans, ending
$
1,692,485
$
1,678,292
$
1,428,410
As of March 31, 2023 vs. December 31,
2022
Gross loans were $1.69 billion as of March 31, 2023, up $14.2
million from December 31, 2022, primarily due to new loan
originations and a decrease in loans held for sale, partially
offset by loan sales, payoffs and paydowns.
New loan originations and loan payoffs and paydowns were $69.1
million and $68.7 million for the first quarter of 2023,
respectively, compared with $174.2 million and $46.8 million for
the fourth quarter of 2022, respectively.
As of March 31, 2023 vs. March 31,
2022
Gross loans were $1.69 billion as of March 31, 2023, up $264.1
million from March 31, 2022, primarily due to new loan originations
of $592.3 million and loan purchases of $155.7 million, primarily
offset by loan sales of $191.5 million and loan payoffs and
paydowns of $243.1 million.
The following table presents the composition of gross loans by
interest rate type accompanied with the weighted average
contractual rates as of the periods indicated:
($ in thousands)
As of
1Q2023
4Q2022
1Q2022
%
Rate
%
Rate
%
Rate
Fixed rate
36.5
%
4.76
%
36.0
%
4.63
%
33.3
%
4.11
%
Hybrid rate
34.2
4.94
33.8
4.79
25.6
4.30
Variable rate
29.3
8.76
30.2
8.46
41.1
5.09
Gross loans
100.0
%
5.99
%
100.0
%
5.84
%
100.0
%
4.56
%
The following table presents the maturity of gross loans by
interest rate type accompanied with the weighted average
contractual rates for the periods indicated:
($ in thousands)
As of March 31, 2023
Within One Year
One Year Through Five
Years
After Five Years
Total
Amount
Rate
Amount
Rate
Amount
Rate
Amount
Rate
Fixed rate
$
35,609
5.49
%
$
342,741
4.68
%
$
239,129
4.76
%
$
617,479
4.76
%
Hybrid rate
5,703
7.54
76,729
4.71
496,995
4.94
579,427
4.94
Variable rate
78,333
8.54
117,492
8.39
299,754
8.96
495,579
8.76
Gross loans
$
119,645
7.58
%
$
536,962
5.49
%
$
1,035,878
6.06
%
$
1,692,485
5.99
%
Allowance for Credit Losses
The Company adopted the CECL accounting standard effective as of
January 1, 2023 under a modified retrospective approach. The
adoption resulted in a $1.9 million increase to the allowance for
credit losses on loans, a $184 thousand increase to the allowance
for credit losses on off-balance sheet exposure, a $624 thousand
increase to deferred tax assets, and a $1.5 million charge to
retained earnings.
The following table presents impact of CECL adoption for
allowance for credit losses and related items on January 1,
2023:
($ in thousands)
Allowance For Credit Losses on
Loans
Allowance For Credit Losses on
Off-Balance Sheet Exposure
Deferred Tax Assets
Retained Earnings
As of December 31, 2022
$ 19,241
$ 263
$ 14,316
$ 105,690
Day 1 adjustments on January 1, 2023
1,924
184
624
(1,484)
After Day 1 adjustments
$ 21,165
$ 447
$ 14,940
$ 104,206
The following table presents allowance for credit losses and
provision for credit losses as of and for the periods
presented:
($ in thousands)
As of and For the Three Months
Ended
% Change 1Q23 vs.
1Q2023
4Q2022
1Q2022
4Q2022
1Q2022
Allowance for credit losses on loans,
beginning
$
19,241
$
18,369
$
16,123
4.7
%
19.3
%
Impact of CECL adoption
1,924
—
—
n/m
n/m
(Reversal of) provision for credit losses
(1)
(258
)
977
341
n/m
n/m
Gross charge-offs
(116
)
(109
)
(14
)
6.4
728.6
%
Gross recoveries
23
4
17
475.0
35.3
%
Net (charge-offs) recoveries
(93
)
(105
)
3
(11.4
)
n/m
Allowance for credit losses on loans,
ending (2)
$
20,814
$
19,241
$
16,467
8.2
%
26.4
%
Allowance for credit losses on off-balance
sheet exposure, beginning
$
263
$
189
$
167
39.2
%
57.5
%
Impact of CECL adoption
184
—
—
n/m
n/m
(Reversal of) provision for credit
losses
(80
)
74
5
n/m
n/m
Allowance for credit losses on off-balance
sheet exposure, ending (2)
$
367
$
263
$
172
39.5
%
113.4
%
(1)
Excludes reversal of uncollectible accrued
interest receivable of $205 thousand for the three months ended
March 31, 2022.
(2)
Allowance for credit losses as of March
31, 2023 was calculated under the CECL methodology while allowance
for loan losses for prior periods were calculated under the
incurred loss methodology.
Asset Quality
($ in thousands)
% Change 1Q23 vs.
1Q2023
4Q2022
1Q2022
4Q2022
1Q2022
Nonperforming loans (1)
$
4,358
$
3,080
$
2,806
41.5
%
55.3
%
Nonperforming assets (1)
$
4,358
$
3,080
$
2,806
41.5
%
55.3
%
Nonperforming loans to gross loans
0.26
%
0.18
%
0.20
%
0.08
%
0.06
%
Nonperforming assets to total assets
0.20
%
0.15
%
0.15
%
0.05
%
0.05
%
Criticized loans (2):
Special mention loans
$
2,617
$
563
$
--
364.8
%
n/m
Classified loans (3)
4,763
3,307
3,848
44.0
23.8
Total criticized loans
$
7,380
$
3,870
$
3,848
90.7
%
91.8
%
Criticized loans (2) to gross loans
0.44
%
0.23
%
0.27
%
0.21
%
0.17
%
Classified loans (3) to gross loans
0.28
%
0.20
%
0.27
%
0.08
%
0.01
%
Allowance for credit losses ratios:
As a % of gross loans
1.23
%
1.15
%
1.17
%
0.08
%
0.06
%
As an adjusted % of gross loans (4)
1.27
1.18
1.24
0.09
0.03
As a % of nonperforming loans
478
625
594
(147
)
(116
)
As a % of nonperforming assets
478
625
594
(147
)
(116
)
Net charge-offs (5) to average gross loans
(6)
0.02
0.03
0.00
(0.01
)
0.02
(1)
Includes the guaranteed portion of SBA
loans totaling $1.6 million, $1.0 million and $899 thousand as of
March 31, 2023, December 31, 2022 and March 31, 2022,
respectively.
(2)
Consists of special mention, substandard,
doubtful and loss categories.
(3)
Consists of substandard, doubtful and loss
categories.
(4)
See the Reconciliation of GAAP to NON-GAAP
Financial Measures.
(5)
Annualized.
(6)
Includes loans held for sale
Overall, the Company continued to maintain solid asset quality
with low levels of nonperforming loans and net charge-offs.
Nonperforming assets and criticized loans remained below our
historical norms, a reflection of our conservative credit culture
and expertise in the industries we serve. Our allowance remained
strong with an adjusted allowance to gross loans ratio of
1.27%.
- Criticized loans increased by $3.5 million or 91.8% from a year
ago, and the criticized loans to gross loans ratio increased by 17
basis points. Criticized loans consist of loans categorized as
Special Mention, Substandard, Doubtful and Loss categories defined
by regulatory authorities.
- Nonperforming assets increased $1.6 million to $4.4 million, or
0.20% of total assets from a year ago. As of March 31, 2023, $1.6
million of nonaccrual assets consisted of guaranteed portion of SBA
loans that are in liquidation. The Company did not have OREO as of
March 31, 2023 or 2022.
- Net charge-offs were $93 thousand or 0.02% of average loans in
the first quarter of 2023, compared to net charge-offs of $105
thousand, or 0.03%, of average loans in the fourth quarter of 2022
and net recoveries of $3 thousand, or 0.00%, of average loans in
the first quarter of 2022.
Deposits
($ in thousands)
As of
% Change 1Q23 vs.
1Q2023
4Q2022
1Q2022
Amount
%
Amount
%
Amount
%
4Q2022
1Q2022
Noninterest bearing deposits
$
643,902
33.8
%
$
701,584
37.2
%
$
848,531
50.8
%
(8.2
) %
(24.1
) %
Money market deposits and others
436,796
22.9
526,321
27.9
456,890
27.3
(17.0
)
(4.4
)
Time deposits
824,120
43.3
657,866
34.9
366,582
21.9
25.3
124.8
Total deposits
$
1,904,818
100.0
%
$
1,885,771
100.0
%
$
1,672,003
100.0
%
1.0
%
13.9
%
Estimated uninsured deposits
$
900,579
47.3
%
$
938,329
49.8
%
$
952,501
57.0
%
(4.0
) %
(5.5
) %
As of March 31, 2023 vs. December 31,
2022
Total deposits were $1.90 billion as of March 31, 2023, up $19.0
million from December 31, 2022, primarily due to growth in time
deposits, mostly offset by decreases in noninterest bearing
deposits and money market deposits and others. Time deposits grew
$166.3 million to $824.1 million from $657.9 million, due to
management’s actions to support loan growth during the third
quarter of 2022 including upward adjustments of interest rates on
customer deposits and increases in wholesale deposits.
Noninterest-bearing deposits decreased $57.7 million to $643.9
million from $701.6 million, primarily due to decreases in
transaction volumes in escrow and 1031 exchanges accounts and other
decreases affected by market rate increases by the Federal Reserve.
Money market deposits and others decreased $89.5 million to $436.8
million from $526.3 million, primarily due to market rate increases
as a result of the Federal Reserve’s rate increases.
As of March 31, 2023 vs. March 31,
2022
Total deposits were $1.90 billion as of March 31, 2023, up
$232.8 million from March 31, 2022, primarily driven by growth in
time deposits, partially offset by a decrease in noninterest
bearing deposits. Time deposits grew $457.5 million to $824.1
million from $366.6 million, primarily due to customers’ preference
for high-rate deposit products driven by market rate increases as a
result of the Federal Reserve’s rate increases. Noninterest-bearing
deposits decreased $204.6 million to $643.9 million from $848.5
million, primarily due to decreases in transaction volumes in
escrow and 1031 exchanges accounts and other decreases affected by
market rate increases by the Federal Reserve.
The following table sets forth the maturity of time deposits as
of March 31, 2023:
As of March 31, 2023
($ in thousands)
Within Three
Months
Three to
Six Months
Six to Nine Months
Nine to Twelve
Months
After
Twelve Months
Total
Time deposits (more than $250)
$
84,818
$
29,657
$
138,288
$
158,140
$
745
$
411,648
Time deposits ($250 or less)
48,402
65,444
163,976
92,110
42,540
412,472
Total time deposits
$
133,220
$
95,101
$
302,264
$
250,250
$
43,285
$
824,120
Weighted average rate
3.88
%
3.18
%
4.19
%
4.41
%
4.06
%
4.12
%
OTHER HIGHLIGHTS
Liquidity
The Company maintains ample access to liquidity, including
highly liquid assets on our balance sheet and available unused
borrowings from other financial institutions. The following table
presents the Company's liquid assets and available borrowings as of
dates presented:
($ in thousands)
March 31, 2023
December 31, 2022
% Change
Liquid assets:
Cash and cash equivalents
$
181,509
$
82,972
118.8
%
Available-for-sale debt securities
212,767
209,809
1.4
%
Liquid assets
$
394,276
$
292,781
34.7
%
Liquid assets to total assets
18.2
%
14.0
%
Available borrowings:
Federal Home Loan Bank—San Francisco
$
406,500
$
440,358
(7.7
) %
Federal Reserve Bank
174,284
175,605
(0.8
) %
Pacific Coast Bankers Bank
50,000
50,000
—
%
Zions Bank
25,000
25,000
—
%
First Horizon Bank
25,000
24,950
0.2
%
Total available borrowings
$
680,784
$
715,913
(4.9
) %
Total available borrowings to total
assets
31.4
%
34.2
%
Liquid assets and available borrowings to
total assets
49.5
%
48.2
%
Capital and Capital Ratios
The Company’s Board of Directors declared a quarterly cash
dividend of $0.12 per share of its common stock. The cash dividend
is payable on or about May 25, 2023 to all shareholders of record
as of the close of business on May 11, 2023.
The Company repurchased 76,990 shares of its common stock at an
average price of $9.25 during the first quarter of 2023. Since the
announcement of the initial stock repurchase program in January
2019, the Company repurchased a total of 1.65 million shares of its
common stock at an average repurchase price of $8.61 per share
through March 31, 2023.
Basel III
OP Bancorp (1)
Open Bank
Minimum Well
Capitalized
Ratio
Minimum
Capital Ratio+
Conservation
Buffer (2)
Risk-Based Capital Ratios:
Total risk-based capital ratio
13.31
%
13.08
%
10.00
%
10.50
%
Tier 1 risk-based capital ratio
12.06
11.80
8.00
8.50
Common equity tier 1 ratio
12.06
11.80
6.50
7.00
Leverage ratio
9.43
9.24
5.00
4.00
(1)
The capital requirements are only
applicable to the Bank, and the Company's ratios are included for
comparison purpose.
(2)
An additional 2.5% capital conservation
buffer above the minimum capital ratios are required in order to
avoid limitations on distributions, including dividend payments and
certain discretionary bonus to executive officers.
OP Bancorp
Basel III
% Change 1Q23 vs.
1Q2023
4Q2022
1Q2022
4Q2022
1Q2022
Risk-Based Capital Ratios:
Total risk-based capital ratio
13.31
%
13.06
%
13.29
%
0.25
%
0.02
%
Tier 1 risk-based capital ratio
12.06
11.87
12.11
0.19
(0.05
)
Common equity tier 1 ratio
12.06
11.87
12.11
0.19
(0.05
)
Leverage ratio
9.43
9.38
9.80
0.05
(0.37
)
Risk-weighted Assets ($ in thousands)
$
1,659,737
$
1,638,040
$
1,427,569
1.32
16.26
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 credit losses
and income tax expense. Management believes that this non-GAAP
measure, when taken together with the corresponding GAAP financial
measures (as applicable), provides meaningful supplemental
information regarding our performance. This non-GAAP financial
measure also facilitates a comparison of our performance to prior
periods.
($ in thousands)
For the Three Months
Ended
1Q2023
4Q2022
1Q2022
Interest income
$
28,594
$
26,886
$
17,944
Interest expense
10,702
6,688
654
Net interest income
17,892
20,198
17,290
Noninterest income
4,295
3,223
4,216
Noninterest expense
11,908
11,327
9,662
Pre-provision net revenue
(a)
$
10,279
$
12,094
$
11,844
Reconciliation to net income:
(Reversal of) provision for credit
losses
(b)
$
(338
)
$
977
$
341
Income tax expense
(c)
3,083
3,089
3,351
Net income
(a)+(b) +(c)
$
7,534
$
8,028
$
8,152
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 $8.9 million discount.
As a result, the fair value discount on these loans is being
accreted into interest income over the expected life of the loans
using the effective yield method. Adjusted loan yield and net
interest margin for the three months ended March 31, 2023, December
31, 2022 and March 31, 2022 excluded the impacts of contractual
interest and discount accretion of the purchased Hana loans as
management does not consider purchasing loan portfolios to be
normal or recurring transactions. Management believes that
presenting the adjusted average loan yield and net interest margin
provide comparability to prior periods and these non-GAAP financial
measures provide supplemental information regarding the Company’s
performance.
($ in thousands)
For the Three Months
Ended
1Q2023
4Q2022
1Q2022
Yield on Average Loans
Interest income on loans
$
26,011
$
24,719
$
17,257
Less: interest income on purchased Hana
loans
1,837
1,685
1,755
Adjusted interest income on loans
(a)
$
24,174
$
23,034
$
15,502
Average loans
$
1,725,392
$
1,691,642
$
1,444,054
Less: Average purchased Hana loans
58,237
60,514
74,631
Adjusted average loans
(b)
$
1,667,155
$
1,631,128
$
1,369,423
Average loan yield (1)
6.10
%
5.81
%
4.84
%
Effect on average loan yield (1)
0.24
%
0.20
%
0.26
%
Adjusted average loan yield (1)
(a)/(b)
5.86
%
5.61
%
4.58
%
Net Interest Margin
Net interest income
$
17,892
$
20,198
$
17,290
Less: interest income on purchased Hana
loans
1,837
1,685
1,755
Adjusted net interest income
(c)
$
16,055
$
18,513
$
15,535
Average interest-earning assets
$
2,022,146
$
1,966,165
$
1,698,799
Less: Average purchased Hana loans
58,237
60,514
74,631
Adjusted average interest-earning
assets
(d)
$
1,963,909
$
1,905,651
$
1,624,168
Net interest margin (1)
3.56
%
4.08
%
4.12
%
Effect on net interest margin (1)
0.27
0.22
0.25
Adjusted net interest margin (1)
(c)/(d)
3.29
%
3.86
%
3.87
%
(1) Annualized.
Adjusted allowance to gross loans ratio removes the impacts of
purchased Hana loans, PPP loans and allowance on accrued interest
receivable. Management believes that this ratio provides greater
consistency and comparability between the Company’s results and
those of its peer banks.
($ in thousands)
For the Three Months
Ended
1Q2023
4Q2022
1Q2022
Gross loans
$
1,692,485
$
1,678,292
$
1,428,410
Less: Purchased Hana loans
(56,717
)
(58,966
)
(71,377
)
PPP loans (1)
(247
)
(434
)
(21,016
)
Adjusted gross loans
(a)
$
1,635,521
$
1,618,892
$
1,336,017
Accrued interest receivable on loans
$
6,440
$
6,413
$
4,494
Less: Accrued interest receivable on
purchased Hana loans
(432
)
(397
)
(295
)
Accrued interest receivable on PPP loans
(2)
(5
)
(8
)
(229
)
Add: Allowance on accrued interest
receivable
—
—
—
Adjusted accrued interest receivable on
loans
(b)
$
6,003
$
6,008
$
3,970
Adjusted gross loans and accrued interest
receivable
(a)+(b) =(c)
$
1,641,524
$
1,624,900
$
1,339,987
Allowance for credit losses
$
20,814
$
19,241
$
16,672
Add: Allowance on accrued interest
receivable
—
—
—
Adjusted Allowance
(d)
$
20,814
$
19,241
$
16,672
Adjusted allowance to gross loans
ratio
(d)/(c)
1.27
%
1.18
%
1.24
%
(1)
Excludes purchased PPP loans of $8
thousand and $1.0 million as of December 31, 2022 and March 31,
2022, respectively.
(2)
Excludes purchased accrued interest
receivable on PPP loans of $11 thousand as of March 31, 2022.
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 ten full-service branch offices in Downtown Los Angeles,
Los Angeles Fashion District, Los Angeles Koreatown, Cerritos,
Gardena, Buena Park, and Santa Clara, California and Carrollton,
Texas. The Bank also has four loan production offices in
Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, and
Lynnwood, Washington. The Bank commenced its operations on June 10,
2005 as First Standard Bank and changed its name to Open Bank in
October 2010. Its headquarters is located at 1000 Wilshire Blvd.,
Suite 500, Los Angeles, California 90017. Phone 213.892.9999;
www.myopenbank.com.
Cautionary Note Regarding Forward-Looking Statements
Certain matters set forth herein constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, including forward-looking statements relating
to the Company’s current business plans and expectations regarding
future operating results. These forward-looking statements are
subject to risks and uncertainties that could cause actual results,
performance or achievements to differ materially from those
projected. These risks and uncertainties, some of which are beyond
our control, include, but are not limited to: business and economic
conditions, particularly those affecting the financial services
industry and our primary market areas; the continuing effects of
inflation and monetary policies, and the impacts of those
circumstances upon our current and prospective borrowers and
depositors; our ability to mitigate and manage deposit liabilities
in a manner that balances the need to meet current and expected
withdrawals while investing a sufficient portion of our assets to
promote strong earning capacity; our ability to successfully manage
our credit risk and the sufficiency of our allowance for credit
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; 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 less restrictive or less
costly 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, particularly with
respect to the effects of predictions of future economic conditions
as those circumstances affect our estimates for the adequacy of our
allowance for credit losses and the related provision expense;
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, 2022 and
in our other subsequent filings with the Securities and Exchange
Commission.
CONSOLIDATED BALANCE SHEETS
(unaudited)
($ in thousands)
As of
% Change 1Q23 vs.
1Q2023
4Q2022
1Q2022
4Q2022
1Q2022
Assets
Cash and due from banks
$
16,781
$
12,952
$
18,206
29.6
%
(7.8
) %
Interest-bearing deposits in other
banks
164,728
70,020
111,770
135.3
47.4
Cash and cash equivalents
181,509
82,972
129,976
118.8
39.6
Available-for-sale debt securities, at
fair value
212,767
209,809
161,182
1.4
32.0
Other investments
12,172
12,098
10,836
0.6
12.3
Loans held for sale
7,534
44,335
86,243
(83.0
)
(91.3
)
Commercial real estate loans
833,615
842,208
730,841
(1.0
)
14.1
SBA loans
238,994
234,717
253,064
1.8
(5.6
)
C&I loans
117,841
116,951
176,934
0.8
(33.4
)
Home mortgage loans
500,635
482,949
266,465
3.7
87.9
Consumer loans
1,400
1,467
1,106
(4.6
)
26.6
Gross loans receivable
1,692,485
1,678,292
1,428,410
0.8
18.5
Allowance for credit losses
(20,814
)
(19,241
)
(16,672
)
8.2
24.8
Net loans receivable
1,671,671
1,659,051
1,411,738
0.8
18.4
Premises and equipment, net
4,647
4,400
4,570
5.6
1.7
Accrued interest receivable, net
7,302
7,180
4,893
1.7
49.2
Servicing assets
12,898
12,759
12,341
1.1
4.5
Company owned life insurance
21,762
21,613
11,197
0.7
94.4
Deferred tax assets, net
12,008
14,316
10,882
(16.1
)
10.3
Operating right-of-use assets
9,459
9,097
8,471
4.0
11.7
Other assets
16,721
16,867
11,616
(0.9
)
43.9
Total assets
$
2,170,450
$
2,094,497
$
1,863,945
3.6
%
16.4
%
Liabilities and Shareholders'
Equity
Liabilities:
Noninterest bearing
$
643,902
$
701,584
$
848,531
(8.2
) %
(24.1
) %
Money market and others
436,796
526,321
456,890
(17.0
)
(4.4
)
Time deposits greater than $250
411,648
356,197
192,849
15.6
113.5
Other time deposits
412,472
301,669
173,733
36.7
137.4
Total deposits
1,904,818
1,885,771
1,672,003
1.0
13.9
Federal Home Loan Bank advances
50,000
—
—
n/m
n/m
Accrued interest payable
5,751
2,771
548
107.5
949.5
Operating lease liabilities
10,513
10,213
9,839
2.9
6.9
Other liabilities
15,587
18,826
15,564
(17.2
)
0.1
Total liabilities
1,986,669
1,917,581
1,697,954
3.6
17.0
Shareholders' equity:
Common stock
79,475
79,326
78,718
0.2
1.0
Additional paid-in capital
10,056
9,743
8,860
3.2
13.5
Retained earnings
109,908
105,690
85,694
4.0
28.3
Accumulated other comprehensive loss
(15,658
)
(17,843
)
(7,281
)
(12.2
)
115.1
Total shareholders’ equity
183,781
176,916
165,991
3.9
10.7
Total liabilities and shareholders'
equity
$
2,170,450
$
2,094,497
$
1,863,945
3.6
%
16.4
%
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
($ in thousands, except share and per
share data)
For the Three Months
Ended
% Change 1Q23 vs.
1Q2023
4Q2022
1Q2022
4Q2022
1Q2022
Interest income
Interest and fees on loans
$
26,011
$
24,719
$
17,257
5.2
%
50.7
%
Interest on available-for-sale debt
securities
1,566
1,237
530
26.6
195.5
Other interest income
1,017
930
157
9.4
547.8
Total interest income
28,594
26,886
17,944
6.4
59.4
Interest expense
Interest on deposits
10,382
6,597
654
57.4
1487.5
Interest on borrowings
320
91
—
252
%
n/m
Total interest expense
10,702
6,688
654
60.0
n/m
Net interest income
17,892
20,198
17,290
(11.4
)
3.5
(Reversal of) provision for credit
losses
(338
)
977
341
n/m
n/m
Net interest income after provision for
credit losses
18,230
19,221
16,949
(5.2
)
7.6
Noninterest income
Service charges on deposits
418
406
388
3.0
7.7
Loan servicing fees, net of
amortization
846
705
447
20.0
89.3
Gain on sale of loans
2,570
1,684
3,238
52.6
(20.6
)
Other income
461
428
143
7.7
222.4
Total noninterest income
4,295
3,223
4,216
33.3
1.9
Noninterest expense
Salaries and employee benefits
7,252
7,080
5,657
2.4
28.2
Occupancy and equipment
1,570
1,560
1,378
0.6
13.9
Data processing and communication
550
514
493
7.0
11.6
Professional fees
359
330
324
8.8
10.8
FDIC insurance and regulatory
assessments
467
176
207
165.3
125.6
Promotion and advertising
162
12
189
1250.0
(14.3
)
Directors’ fees
161
145
177
11.0
(9.0
)
Foundation donation and other
contributions
753
851
815
(11.5
)
(7.6
)
Other expenses
634
659
422
(3.8
)
50.2
Total noninterest expense
11,908
11,327
9,662
5.1
23.2
Income before income tax expense
10,617
11,117
11,503
(4.5
)
(7.7
)
Income tax expense
3,083
3,089
3,351
(0.2
)
(8.0
)
Net income
$
7,534
$
8,028
$
8,152
(6.2
) %
(7.6
) %
Book value per share
$
12.02
$
11.59
$
10.97
3.7
%
9.6
%
Earnings per share - Basic
$
0.48
0.52
$
0.53
(7.7
)
(9.4
)
Earnings per share - Diluted
$
0.48
0.51
$
0.53
(5.9
)
(9.4
)
Shares of common stock outstanding, at
period end
15,286,558
15,270,344
15,137,808
0.1
1.0
Weighted average shares:
- Basic
15,284,350
15,208,308
15,137,808
0.5
1.0
- Diluted
15,312,673
15,264,971
15,242,214
0.3
0.5
Key Ratios
For the Three Months
Ended
Change 1Q23 vs.
1Q2023
4Q2022
1Q2022
4Q2022
1Q2022
Return on average assets (ROA) (1)
1.43
%
1.56
%
1.85
%
(0.1
) %
(0.4
) %
Return on average equity (ROE) (1)
16.82
18.58
19.54
(1.8
)
(2.7
)
Net interest margin (1)
3.56
4.08
4.12
(0.5
)
(0.6
)
Efficiency ratio
53.67
48.36
44.93
5.3
8.7
Total risk-based capital ratio
13.31
%
13.06
%
13.29
%
0.3
%
—
%
Tier 1 risk-based capital ratio
12.06
11.87
12.11
0.2
(0.1
)
Common equity tier 1 ratio
12.06
11.87
12.11
0.2
(0.1
)
Leverage ratio
9.43
9.38
9.80
0.1
(0.4
)
(1) Annualized.
ASSET QUALITY
($ in thousands)
As of and For the Three Months
Ended
1Q2023
4Q2022
1Q2022
Nonaccrual loans (1)
$
4,112
$
2,639
$
2,806
Loans 90 days or more past due, accruing
(2)
246
441
—
Nonperforming loans
4,358
3,080
2,806
Other real estate owned ("OREO")
—
—
—
Nonperforming assets
$
4,358
$
3,080
$
2,806
Criticized loans (3) by loan type:
Commercial real estate
$
560
$
563
$
—
SBA loans
5,284
1,472
2,543
C&I loans
271
555
305
Home mortgage loans
1,265
1,280
1,000
Total criticized loans (3)
$
7,380
$
3,870
$
3,848
Nonperforming assets/total assets
0.20
%
0.15
%
0.15
%
Nonperforming assets / gross loans plus
OREO
0.26
0.18
0.20
Nonperforming loans / gross loans
0.26
0.18
0.20
Allowance for credit losses /
nonperforming loans
478
625
594
Allowance for credit losses /
nonperforming assets
478
625
594
Allowance for credit losses / gross
loans
1.23
1.15
1.17
Criticized loans (3) / gross loans
0.44
0.23
0.27
Classified loans / gross loans
0.28
0.20
0.27
Net charge-offs (recoveries)
$
93
$
105
$
(3
)
Net charge-offs (recoveries) to average
gross loans (4)
0.02
%
0.03
%
(0.00
) %
(1)
Includes the guaranteed portion of SBA
loans that are in liquidation totaling $1.6 million, $606 thousand
and $899 thousand as of March 31, 2023, December 31, 2022 and March
31, 2022, respectively.
(2)
Includes the guaranteed portion of PPP
loans totaling $441 thousand as of December 31, 2022.
(3)
Consists of special mention, substandard,
doubtful and loss categories.
(4)
Annualized.
($ in thousands)
1Q2023
4Q2022
1Q2022
Accruing delinquent loans 30-89 days past
due
30-59 days
$
4,866
$
1,918
$
201
60-89 days
—
1,559
—
Total (1)
$
4,866
$
3,477
$
201
(1) Includes the guaranteed portion of PPP loans totaling $9
thousand as of March 31, 2022.
AVERAGE BALANCE SHEET, INTEREST AND
YIELD/RATE ANALYSIS
For the Three Months
Ended
1Q2023
4Q2022
1Q2022
($ in thousands)
Average
Balance
Interest
and Fees
Yield/
Rate (1)
Average
Balance
Interest
and Fees
Yield/
Rate (1)
Average
Balance
Interest
and Fees
Yield/
Rate (1)
Interest-earning assets:
Interest-bearing deposits in other
banks
$
74,162
$
846
4.56
%
$
75,988
$
734
3.78
%
$
86,875
$
42
0.19
%
Federal funds sold and other
investments
12,130
171
5.65
12,074
196
6.47
10,957
115
4.19
Available-for-sale debt securities, at
fair value
210,462
1,566
2.94
186,461
1,237
2.66
156,913
530
1.35
Commercial real estate loans
840,402
11,179
5.39
836,609
11,172
5.30
710,993
7,802
4.45
SBA loans
274,889
6,982
10.30
289,408
6,681
9.16
358,725
5,834
6.60
C&I loans
121,915
2,200
7.32
114,265
1,917
6.66
156,355
1,536
3.98
Home mortgage loans
486,800
5,633
4.63
449,684
4,929
4.38
217,103
2,074
3.82
Consumer loans
1,386
17
5.07
1,676
20
4.80
878
11
4.88
Loans (2)
1,725,392
26,011
6.10
1,691,642
24,719
5.81
1,444,054
17,257
4.84
Total interest-earning assets
2,022,146
28,594
5.71
1,966,165
26,886
5.43
1,698,799
17,944
4.28
Noninterest-earning assets
82,538
87,189
63,016
Total assets
$
2,104,684
$
2,053,354
$
1,761,815
Interest-bearing liabilities:
Money market deposits and others
$
409,813
$
3,150
3.12
%
$
515,747
$
3,045
2.34
%
$
412,295
$
251
0.25
%
Time deposits
786,381
7,232
3.73
569,584
3,553
2.47
374,620
403
0.44
Total interest-bearing deposits
1,196,194
10,382
3.52
1,085,331
6,598
2.41
786,915
654
0.34
Borrowings
26,168
320
4.95
8,158
90
4.35
—
—
—
Total interest-bearing liabilities
1,222,362
10,702
3.55
1,093,489
6,688
2.43
786,915
654
0.34
Noninterest-bearing liabilities:
Noninterest-bearing deposits
671,490
751,405
783,461
Other noninterest-bearing liabilities
31,648
35,593
24,599
Total noninterest-bearing liabilities
703,138
786,998
808,060
Shareholders’ equity
179,184
172,867
166,840
Total liabilities and shareholders’
equity
$
2,104,684
2,053,354
1,761,815
Net interest income / interest rate
spreads
$
17,892
2.16
%
$
20,198
3.00
%
$
17,290
3.94
%
Net interest margin
3.56
%
4.08
%
4.12
%
Cost of deposits & cost of funds:
Total deposits / cost of deposits
$
1,867,684
$
10,382
2.25
%
$
1,836,736
$
6,598
1.43
%
1,570,376
$
654
0.17
%
Total funding liabilities / cost of
funds
$
1,893,852
$
10,702
2.29
%
$
1,844,894
$
6,688
1.44
%
1,570,376
$
654
0.17
%
(1)
Annualized.
(2)
Includes loans held for sale.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230427005904/en/
Investor Relations OP Bancorp Christine Oh EVP & CFO
213.892.1192 Christine.oh@myopenbank.com
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