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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| OP Bancorp | NASDAQ:OPBK | NASDAQ | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 14.89 | 14.60 | 17.73 | 0 | 00:00:00 |
From Jul 2024 to Jan 2025
2024 Second Quarter Highlights compared with 2024 First Quarter:
__________________________________________________________
(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 (the “Bank”), today reported its financial results for the second quarter of 2024. Net income for the second quarter of 2024 was $5.4 million, or $0.36 per diluted common share, compared with $5.2 million, or $0.34 per diluted common share, for the first quarter of 2024, and $6.1 million, or $0.39 per diluted common share, for the second quarter of 2023.
Min Kim, President and Chief Executive Officer:
“Even with the extended pressure on the business and banking environment, we continued to grow our loans and deposits while improving net income and earnings per share over the last quarter. Our net interest margin was controlled with a slight decline while our credit quality remained strong. We remain optimistic about our future growth and performance and will continue to focus on executing our strategic goals while maintaining an optimal risk profile,” said Min Kim, President and Chief Executive.
SELECTED FINANCIAL HIGHLIGHTS
($ in thousands, except per share data)
As of and For the Three Months Ended
% Change 2Q2024 vs.
2Q2024
1Q2024
2Q2023
1Q2024
2Q2023
Selected Income Statement Data:
Net interest income
$
16,194
$
15,979
$
17,252
1.3
%
(6.1
)%
Provision for credit losses
617
145
—
325.5
n/m
Noninterest income
4,184
3,586
3,605
16.7
16.1
Noninterest expense
12,189
12,157
12,300
0.3
(0.9
)
Income tax expense
2,136
2,037
2,466
4.9
(13.4
)
Net income
5,436
5,226
6,091
4.0
(10.8
)
Diluted earnings per share
0.36
0.34
0.39
5.9
(7.7
)
Selected Balance Sheet Data:
Gross loans
$
1,870,106
$
1,804,987
$
1,716,197
3.6
%
9.0
%
Total deposits
1,940,821
1,895,411
1,859,639
2.4
4.4
Total assets
2,290,680
2,234,520
2,151,701
2.5
6.5
Average loans(1)
1,843,284
1,808,932
1,725,764
1.9
6.8
Average deposits
1,970,320
1,836,331
1,817,101
7.3
8.4
Credit Quality:
Nonperforming loans
$
4,389
$
4,343
$
3,447
1.1
%
27.3
%
Nonperforming loans to gross loans
0.23
%
0.24
%
0.20
%
(0.01
)
0.03
Criticized loans(2) to gross loans
0.88
0.64
0.44
0.24
0.44
Net charge-offs (recoveries)(3) to average gross loans(1)
(0.00
)
0.01
0.00
(0.01
)
(0.00
)
Allowance for credit losses to gross loans
1.22
1.23
1.21
(0.01
)
0.01
Allowance for credit losses to nonperforming loans
519
510
603
9.00
(84.00
)
Financial Ratios:
Return on average assets(3)
0.95
%
0.96
%
1.15
%
(0.01
)%
(0.20
)%
Return on average equity(3)
11.23
10.83
13.27
0.40
(2.04
)
Net interest margin(3)
2.96
3.06
3.40
(0.10
)
(0.44
)
Efficiency ratio(4)
59.81
62.14
58.97
(2.33
)
0.84
Common equity tier 1 capital ratio
12.01
12.34
11.92
(0.33
)
0.09
Leverage ratio
9.28
9.65
9.50
(0.37
)
(0.22
)
Book value per common share
$
13.22
$
13.00
$
12.16
1.7
8.7
(1)
Includes loans held for sale.
(2)
Includes special mention, substandard, doubtful, and loss categories.
(3)
Annualized.
(4)
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 2Q2024 vs.
2Q2024
1Q2024
2Q2023
1Q2024
2Q2023
Interest Income
Interest income
$
34,357
$
32,913
$
30,102
4.4
%
14.1
%
Interest expense
18,163
16,934
12,850
7.3
41.3
Net interest income
$
16,194
$
15,979
$
17,252
1.3
%
(6.1
)%
($ in thousands)
For the Three Months Ended
Yield Change 2Q2024 vs.
2Q2024
1Q2024
2Q2023
Interest
and Fees
Yield/Rate(1)
Interest
and Fees
Yield/Rate(1)
Interest
and Fees
Yield/Rate(1)
1Q2024
2Q2023
Interest-earning Assets:
Loans
$
30,605
6.67
%
$
30,142
6.69
%
$
27,288
6.34
%
(0.02
)%
0.33
%
Total interest-earning assets
34,357
6.29
32,913
6.32
30,102
5.94
(0.03
)
0.35
Interest-bearing Liabilities:
Interest-bearing deposits
17,343
4.84
15,675
4.77
11,920
3.98
0.07
0.86
Total interest-bearing liabilities
18,163
4.81
16,934
4.76
12,850
4.01
0.05
0.80
Ratios:
Net interest income / interest rate spreads
16,194
1.48
15,979
1.56
17,252
1.93
(0.08
)
(0.45
)
Net interest margin
2.96
3.06
3.40
(0.10
)
(0.44
)
Total deposits / cost of deposits
17,343
3.54
15,675
3.43
11,920
2.63
0.11
0.91
Total funding liabilities / cost of funds
18,163
3.57
16,934
3.50
12,850
2.71
0.07
0.86
(1)
Annualized.
($ in thousands)
For the Three Months Ended
Yield Change 2Q2024 vs.
2Q2024
1Q2024
2Q2023
Interest
& Fees
Yield(1)
Interest
& Fees
Yield(1)
Interest
& Fees
Yield(1)
1Q2024
2Q2023
Loan Yield Component:
Contractual interest rate
$
29,719
6.48
%
$
28,877
6.41
%
$
26,411
6.13
%
0.07
%
0.35
%
SBA loan discount accretion(2)
1,087
0.24
881
0.20
1,078
0.25
0.04
(0.01
)
Amortization of net deferred fees
(44
)
(0.01
)
54
0.01
16
0.01
(0.02
)
(0.02
)
Amortization of premium
(396
)
(0.09
)
(428
)
(0.10
)
(452
)
(0.11
)
0.01
0.02
Net interest recognized on nonaccrual loans
(3
)
—
492
0.11
40
0.01
(0.11
)
(0.01
)
Prepayment penalties and other fees(3)
242
0.05
266
0.06
195
0.05
(0.01
)
—
Yield on loans
$
30,605
6.67
%
$
30,142
6.69
%
$
27,288
6.34
%
(0.02
)%
0.33
%
(1)
Annualized.
(2)Includes discount accretion from SBA loan payoffs of $564 thousand, $345 thousand and $459 thousand for the three months ended June 30, 2024, March 31, 2024 and June 30, 2023, respectively.
(3)Includes prepayment penalty income of $26 thousand, $115 thousand and $110 thousand for the three months ended June 30, 2024, March 31, 2024 and June 30, 2023, respectively, from Commercial Real Estate (“CRE”) and Commercial and Industrial (“C&I”) loans.
Second Quarter 2024 vs. First Quarter 2024
Net interest income increased $215 thousand, or 1.3%, primarily due to higher interest income on deposits in other banks and loans, coupled with lower interest expense on borrowings, but partially offset by higher interest expense on interest-bearing deposits. Net interest margin was 2.96%, a decrease of 10 basis points from 3.06%.
Second Quarter 2024 vs. Second Quarter 2023
Net interest income decreased $1.1 million, or 6.1%, primarily due to higher interest expense on interest-bearing deposits, partially offset by higher interest income on loans and deposits in other banks as our deposit costs repriced quicker than our interest-earning asset yields following the Federal Reserve’s rate increases. Net interest margin was 2.96%, a decrease of 44 basis points from 3.40%.
Provision for Credit Losses
($ in thousands)
For the Three Months Ended
2Q2024
1Q2024
2Q2023
Provision for credit losses on loans
$
627
$
193
$
—
Reversal of credit losses on off-balance sheet exposure
(10
)
(48
)
—
Total provision for credit losses
$
617
$
145
$
—
Second Quarter 2024 vs. First Quarter 2024
The Company recorded a $617 thousand provision for credit losses, an increase of $472 thousand, compared with a $145 thousand provision for credit losses. Provision for credit losses on loans of $627 thousand was partially offset by a $10 thousand reversal of credit losses on off-balance sheet exposure.
Provision for credit losses on loans of $627 thousand was primarily due to a $634 thousand increase in the qualitative reserve. The quantitative reserve was unchanged from the prior quarter. The increase in the qualitative reserve was primarily due to weakening economic and business conditions, increasing criticized loans, and declining collateral values for collateral dependent CRE loans.
Second Quarter 2024 vs. Second Quarter 2023
The Company recorded a $617 thousand provision for credit losses, an increase of $617 thousand, compared with no provision for credit losses.
Noninterest Income
($ in thousands)
For the Three Months Ended
% Change 2Q2024 vs.
2Q2024
1Q2024
2Q2023
1Q2024
2Q2023
Noninterest Income
Service charges on deposits
$
793
$
612
$
573
29.6
%
38.4
%
Loan servicing fees, net of amortization
575
772
595
(25.5
)
(3.4
)
Gain on sale of loans
2,325
1,703
2,098
36.5
10.8
Other income
491
499
339
(1.6
)
44.8
Total noninterest income
$
4,184
$
3,586
$
3,605
16.7
%
16.1
%
Second Quarter 2024 vs. First Quarter 2024
Noninterest income increased $598 thousand, or 16.7%, primarily due to higher gain on sale of loans and higher service charges on deposits, offset by lower loan servicing fee.
Second Quarter 2024 vs. Second Quarter 2023
Noninterest income increased $579 thousand, or 16.1%, primarily due to higher gain on sale of loans, higher service charges on deposits and higher other income.
Noninterest Expense
($ in thousands)
For the Three Months Ended
% Change 2Q2024 vs.
2Q2024
1Q2024
2Q2023
1Q2024
2Q2023
Noninterest Expense
Salaries and employee benefits
$
7,568
$
7,841
$
7,681
(3.5
)%
(1.5
)%
Occupancy and equipment
1,660
1,655
1,598
0.3
3.9
Data processing and communication
530
487
546
8.8
(2.9
)
Professional fees
406
395
381
2.8
6.6
FDIC insurance and regulatory assessments
378
374
420
1.1
(10.0
)
Promotion and advertising
151
149
159
1.3
(5.0
)
Directors’ fees
178
157
210
13.4
(15.2
)
Foundation donation and other contributions
539
540
594
(0.2
)
(9.3
)
Other expenses
779
559
711
39.4
9.6
Total noninterest expense
$
12,189
$
12,157
$
12,300
0.3
%
(0.9
)%
Second Quarter 2024 vs. First Quarter 2024
Noninterest expense increased $32 thousand, or 0.3%, primarily due to higher other expenses and data processing and communication, partially offset by lower salaries and employee benefits.
Second Quarter 2024 vs. Second Quarter 2023
Noninterest expense decreased $111 thousand, or 0.9%, primarily due to lower salaries and employee benefits and foundation donation and other contributions, partially offset by higher other expenses.
Income Tax Expense
Second Quarter 2024 vs. First Quarter 2024
Income tax expense was $2.1 million and the effective tax rate was 28.2%, compared to income tax expense of $2.0 million and the effective rate of 28.0%. The increase in income tax expense was in line with the increase in income before income taxes.
Second Quarter 2024 vs. Second Quarter 2023
Income tax expense was $2.1 million and the effective tax rate was 28.2%, compared to income tax expense of $2.5 million and an effective rate of 28.8%. The decrease in the effective tax rate was primarily due to an increased tax benefits from an increase in low income housing tax credit investments.
BALANCE SHEET HIGHLIGHTS
Loans
($ in thousands)
As of
% Change 2Q2024 vs.
2Q2024
1Q2024
2Q2023
1Q2024
2Q2023
CRE loans
$
931,284
$
905,534
$
847,863
2.8
%
9.8
%
SBA loans
242,395
247,550
238,785
(2.1
)
1.5
C&I loans
188,557
147,508
112,160
27.8
68.1
Home mortgage loans
506,873
502,995
516,226
0.8
(1.8
)
Consumer & other loans
997
1,400
1,163
(28.8
)
(14.3
)
Gross loans
$
1,870,106
$
1,804,987
$
1,716,197
3.6
%
9.0
%
The following table presents new loan originations based on loan commitment amounts for the periods indicated:
($ in thousands)
For the Three Months Ended
% Change 2Q2024 vs.
2Q2024
1Q2024
2Q2023
1Q2024
2Q2023
CRE loans
$
41,990
$
44,595
$
29,976
(5.8
)%
40.1
%
SBA loans
24,142
52,379
34,312
(53.9
)
(29.6
)
C&I loans
21,271
22,124
25,650
(3.9
)
(17.1
)
Home mortgage loans
13,720
2,478
22,788
453.7
(39.8
)
Gross loans
$
101,123
$
121,576
$
112,726
(16.8
)%
(10.3
)%
The following table presents changes in gross loans by loan activity for the periods indicated:
($ in thousands)
For the Three Months Ended
2Q2024
1Q2024
2Q2023
Loan Activities:
Gross loans, beginning
$
1,804,987
$
1,765,845
$
1,692,485
New originations
101,123
121,576
112,726
Net line advances
43,488
16,965
(25,961
)
Purchases
—
—
6,359
Sales
(32,102
)
(32,106
)
(36,791
)
Paydowns
(19,710
)
(24,557
)
(17,210
)
Payoffs
(36,902
)
(28,539
)
(25,969
)
Decrease (increase) in loans held for sale
9,590
(14,280
)
7,534
Other
(368
)
83
3,024
Total
65,119
39,142
23,712
Gross loans, ending
$
1,870,106
$
1,804,987
$
1,716,197
As of June 30, 2024 vs. March 31, 2024
Gross loans were $1.87 billion as of June 30, 2024, up $65.1 million, from March 31, 2024, primarily due to new loan originations, partially offset by loan sales, payoffs and paydowns. New loan originations, loan sales, and loan payoffs and paydowns were $101.1 million $32.1 million and $56.6 million, respectively, for the second quarter of 2024, compared with $121.6 million, $32.1 million and $53.1 million, respectively, for the first quarter of 2024.
As of June 30, 2024 vs. June 30, 2023
Gross loans were $1.87 billion as of June 30, 2024, up $153.9 million, from June 30, 2023, primarily due to new loan originations of $415.7 million, primarily offset by loan sales of $127.7 million and loan payoffs and paydowns of $211.6 million.
The following table presents the composition of gross loans by interest rate type accompanied with the weighted average contractual rates as of the periods indicated:
($ in thousands)
As of
2Q2024
1Q2024
2Q2023
%
Rate
%
Rate
%
Rate
Fixed rate
36.2
%
5.39
%
35.1
%
5.17
%
36.2
%
4.82
%
Hybrid rate
33.9
5.42
32.8
5.22
34.7
4.99
Variable rate
29.9
9.19
32.1
9.16
29.1
9.05
Gross loans
100.0
%
6.54
%
100.0
%
6.47
%
100.0
%
6.11
%
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 June 30, 2024
Within One Year
One Year Through Five Years
After Five Years
Total
Amount
Rate
Amount
Rate
Amount
Rate
Amount
Rate
Fixed rate
$
155,421
6.17
%
$
292,706
5.11
%
$
229,174
5.21
%
$
677,301
5.39
%
Hybrid rate
5,032
8.38
173,341
4.21
454,749
5.84
633,122
5.42
Variable rate
93,103
9.03
128,778
9.04
337,802
9.29
559,683
9.19
Gross loans
$
253,556
7.26
%
$
594,825
5.70
%
$
1,021,725
6.84
%
$
1,870,106
6.54
%
Allowance for Credit Losses
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 2Q2024 vs.
2Q2024
1Q2024
2Q2023
1Q2024
2Q2023
Allowance for credit losses on loans, beginning
$
22,129
$
21,993
$
20,814
$
136
$
1,315
Provision for credit losses
627
193
—
434
627
Gross charge-offs
—
(68
)
(20
)
68
20
Gross recoveries
4
11
8
(7
)
(4
)
Net (charge-offs) recoveries
4
(57
)
(12
)
61
16
Allowance for credit losses on loans, ending
$
22,760
$
22,129
$
20,802
$
631
$
1,958
Allowance for credit losses on off-balance sheet exposure, beginning
$
468
$
516
$
367
$
(48
)
$
101
Reversal of credit losses
(10
)
(48
)
—
38
(10
)
Allowance for credit losses on off-balance sheet exposure, ending
$
458
$
468
$
367
$
(10
)
$
91
Asset Quality
($ in thousands)
As of and For the Three Months Ended
Change 2Q2024 vs.
2Q2024
1Q2024
2Q2023
1Q2024
2Q2023
Loans 30-89 days past due and still accruing
$
6,652
$
3,904
$
5,215
70.4
%
27.6
%
As a % of gross loans
0.36
%
0.22
%
0.30
%
0.14
0.06
Nonperforming loans(1)
$
4,389
$
4,343
$
3,447
1.1
%
27.3
%
Nonperforming assets(1)
5,626
5,580
3,447
0.8
63.2
Nonperforming loans to gross loans
0.23
%
0.24
%
0.20
%
(0.01
)
0.03
Nonperforming assets to total assets
0.25
0.25
0.16
0.00
0.09
Criticized loans(1)(2)
$
16,428
$
11,564
$
7,538
42.1
%
117.9
%
Criticized loans to gross loans
0.88
%
0.64
%
0.44
%
0.24
0.44
Allowance for credit losses ratios:
As a % of gross loans
1.22
%
1.23
%
1.21
%
(0.01
)%
0.01
%
As a % of nonperforming loans
519
510
603
9
(84
)
As a % of nonperforming assets
405
397
603
8
(198
)
As a % of criticized loans
139
191
276
(52
)
(137
)
Net charge-offs (recoveries)(3) to average gross loans(4)
(0.00
)
0.01
0.00
(0.01
)
(0.00
)
(1)
Excludes the guaranteed portion of SBA loans that are in liquidation totaling $3.5 million, $3.1 million and $5.4 million as of June 30, 2024, March 31, 2024 and June 30, 2023, respectively.
(2)
Consists of special mention, substandard, doubtful and loss categories.
(3)
Annualized.
(4)
Includes loans held for sale.
Overall, the Bank continued to maintain low levels of nonperforming loans and net charge-offs. Our allowance remained strong with an allowance to gross loans ratio of 1.22%.
Deposits
($ in thousands)
As of
% Change 2Q2024 vs.
2Q2024
1Q2024
2Q2023
Amount
%
Amount
%
Amount
%
1Q2024
2Q2023
Noninterest-bearing deposits
$
518,456
26.7
%
$
539,396
28.5
%
$
634,745
34.1
%
(3.9
)%
(18.3
)%
Money market deposits and others
332,137
17.1
327,718
17.3
344,162
18.5
1.3
(3.5
)
Time deposits
1,090,228
56.2
1,028,297
54.2
880,732
47.4
6.0
23.8
Total deposits
$
1,940,821
100.0
%
$
1,895,411
100.0
%
$
1,859,639
100.0
%
2.4
%
4.4
%
Estimated uninsured deposits
$
860,419
44.3
%
$
805,523
42.5
%
$
805,070
43.3
%
6.8
%
6.9
%
As of June 30, 2024 vs. March 31, 2024
Total deposits were $1.94 billion as of June 30, 2024, up $45.4 million from March 31, 2024, primarily due to increases of $61.9 million in time deposits and $4.4 million in money market deposits, offset by a $20.9 million decrease in noninterest-bearing deposit. Noninterest-bearing deposits, as a percentage of total deposits, decreased to 26.7% from 28.5%. The composition shift to time deposits driven by customers’ preference for high-rate deposit products continued but slowed to a lesser extent.
As of June 30, 2024 vs. June 30, 2023
Total deposits were $1.94 billion as of June 30, 2024, up $81.2 million from June 30, 2023, primarily driven by a $209.5 million increase in time deposits, offset by decreases of $116.3 million in noninterest-bearing deposits and $12.0 million in money market deposits. Noninterest-bearing deposits, as a percentage of total deposits, decreased to 26.7% from 34.1%. The composition shift to time deposits was primarily due to customers’ preference for high-rate deposit products driven by market rate increases as a result of the Federal Reserve’s rate increases.
The following table sets forth the maturity of time deposits as of June 30, 2024:
As of June 30, 2024
($ in thousands)
Within Three
Months
Three to
Six Months
Six to Nine Months
Nine to Twelve
Months
After
Twelve Months
Total
Time deposits (greater than $250)
$
96,968
$
201,334
$
145,549
$
85,958
$
4,048
$
533,857
Time deposits ($250 or less)
155,311
188,367
102,834
77,680
32,179
556,371
Total time deposits
$
252,279
$
389,701
$
248,383
$
163,638
$
36,227
$
1,090,228
Weighted average rate
5.09
%
5.18
%
5.07
%
5.16
%
4.17
%
5.10
%
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)
2Q2024
1Q2024
2Q2023
Liquidity Assets:
Cash and cash equivalents
$
127,676
$
139,246
$
143,761
Available-for-sale debt securities
199,205
187,225
202,250
Liquid assets
$
326,881
$
326,471
$
346,011
Liquid assets to total assets
14.3
%
14.6
%
16.1
%
Available borrowings:
Federal Home Loan Bank—San Francisco
$
343,600
$
331,917
$
400,543
Federal Reserve Bank
191,421
185,913
172,316
Pacific Coast Bankers Bank
50,000
50,000
50,000
Zions Bank
25,000
25,000
25,000
First Horizon Bank
25,000
25,000
25,000
Total available borrowings
$
635,021
$
617,830
$
672,859
Total available borrowings to total assets
27.7
%
27.6
%
31.3
%
Liquid assets and available borrowings to total deposits
49.6
%
49.8
%
54.8
%
Capital and Capital Ratios
On July 25, 2024, 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 August 22, 2024 to all shareholders of record as of the close of business on August 8, 2024. The payment of the dividend is based primarily on dividends from the Bank to the Company, and future dividends will depend on the Board’s assessment of the availability of capital levels to support the ongoing operating capital needs of both the Company and the Bank.
The Company also repurchased 224,321 shares of its common stock at an average price of $9.64 per share during the second quarter of 2024 under the stock repurchase program announced in August 2023. Since the announcement of the stock repurchase program in August 2023, the Company repurchased a total of 424,018 shares of its common stock at an average repurchase price of $9.36 per share through June 30, 2024.
OP Bancorp(1)
Open Bank
Minimum Well
Capitalized
Ratio
Minimum
Capital Ratio+
Conservation
Buffer(2)
Risk-Based Capital Ratios:
Total risk-based capital ratio
13.26
%
13.24
%
10.00
%
10.50
%
Tier 1 risk-based capital ratio
12.01
11.99
8.00
8.50
Common equity tier 1 ratio
12.01
11.99
6.50
7.00
Leverage ratio
9.28
9.27
5.00
4.00
(1)
The capital requirements are only applicable to the Bank, and the Company's ratios are included for comparison purpose.
(2)An additional 2.5% capital conservation buffer above the minimum capital ratios are required in order to avoid limitations on distributions, including dividend payments and certain discretionary bonuses to executive officers.
OP Bancorp
Change 2Q2024 vs.
2Q2024
1Q2024
2Q2023
1Q2024
2Q2023
Risk-Based Capital Ratios:
Total risk-based capital ratio
13.26
%
13.59
%
13.10
%
(0.33
)%
0.16
%
Tier 1 risk-based capital ratio
12.01
12.34
11.92
(0.33
)
0.09
Common equity tier 1 ratio
12.01
12.34
11.92
(0.33
)
0.09
Leverage ratio
9.28
9.65
9.50
(0.37
)
(0.22
)
Risk-weighted Assets ($ in thousands)
$
1,776,771
$
1,715,186
$
1,700,205
3.59
4.50
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 in California, the Dallas metropolitan area in Texas, and Clark County in Nevada 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 eleven full-service branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Cerritos, Gardena, Buena Park, and Santa Clara, California, Carrollton, Texas and Las Vegas, Nevada. 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 Section 21E of the Securities Exchange Act of 1934, as amended, 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 effects of substantial fluctuations in, and continuing elevated levels of, interest rates on our borrowers’ ability to perform in accordance with the terms of their loans and on our deposit customers’ expectation for higher rates on deposit products; cybersecurity risks, including the potential for the occurrence of successful cyberattacks and our ability to prevent and to mitigate the harms resulting from any such attacks; infrastructure risks and similar circumstances that affect our and our customers’ ability to communicate and to engage in routine online banking activities; business and economic conditions, particularly those affecting the financial services industry and our primary market areas; risks of international conflict, terrorism, civil unrest and domestic instability; the continuing effects of inflation and monetary policies, particularly those relating to the decisions and indicators of intent expressed by the Federal Reserve Open Markets Committee, as those circumstances impact our operations and our current and prospective borrowers and depositors; our ability to balance deposit liabilities and liquidity sources (including our ability to reprice those instruments and balancing our borrowings and investments to keep pace with changing market conditions) so as to meet current and expected withdrawals while promoting strong earning capacity; our ability to manage our credit risk successfully and to assess, adjust and monitor 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; the impacts of credit quality on our earnings and the related effects of increases to the reserve on our net income; our ability effectively to 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 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 banks and from 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; practical and regulatory constraints on the ability of Open Bank to pay dividends to us; 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; including internal controls that affect the reliability of our publicly reported financial statements; 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, 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, 2023 and in our subsequent filings with the Securities and Exchange Commission.
CONSOLIDATED BALANCE SHEETS (unaudited)
($ in thousands)
As of
% Change 2Q2024 vs.
2Q2024
1Q2024
2Q2023
1Q2024
2Q2023
Assets
Cash and due from banks
$
21,771
$
20,513
$
21,295
6.1
%
2.2
%
Interest-bearing deposits in other banks
105,905
118,733
122,466
(10.8
)
(13.5
)
Cash and cash equivalents
127,676
139,246
143,761
(8.3
)
(11.2
)
Available-for-sale debt securities, at fair value
199,205
187,225
202,250
6.4
(1.5
)
Other investments
16,367
16,264
16,183
0.6
1.1
Loans held for sale
6,485
16,075
—
(59.7
)
n/m
CRE loans
931,284
905,534
847,863
2.8
9.8
SBA loans
242,395
247,550
238,785
(2.1
)
1.5
C&I loans
188,557
147,508
112,160
27.8
68.1
Home mortgage loans
506,873
502,995
516,226
0.8
(1.8
)
Consumer loans
997
1,400
1,163
(28.8
)
(14.3
)
Gross loans receivable
1,870,106
1,804,987
1,716,197
3.6
9.0
Allowance for credit losses
(22,760
)
(22,129
)
(20,802
)
2.9
9.4
Net loans receivable
1,847,346
1,782,858
1,695,395
3.6
9.0
Premises and equipment, net
4,716
4,971
5,093
(5.1
)
(7.4
)
Accrued interest receivable, net
8,555
8,370
7,703
2.2
11.1
Servicing assets
11,043
11,405
12,654
(3.2
)
(12.7
)
Company owned life insurance
22,566
22,399
21,913
0.7
3.0
Deferred tax assets, net
14,117
13,802
13,360
2.3
5.7
Other real estate owned
1,237
1,237
—
—
n/m
Operating right-of-use assets
8,348
8,864
9,487
(5.8
)
(12.0
)
Other assets
23,019
21,804
23,902
5.6
(3.7
)
Total assets
$
2,290,680
$
2,234,520
$
2,151,701
2.5
%
6.5
%
Liabilities and Shareholders' Equity
Liabilities:
Noninterest-bearing
$
518,456
$
539,396
$
634,745
(3.9
)%
(18.3
)%
Money market and others
332,137
327,718
344,162
1.3
(3.5
)
Time deposits greater than $250
533,857
451,497
416,208
18.2
28.3
Other time deposits
556,371
576,800
464,524
(3.5
)
19.8
Total deposits
1,940,821
1,895,411
1,859,639
2.4
4.4
Federal Home Loan Bank advances
115,000
105,000
75,000
9.5
53.3
Accrued interest payable
15,504
12,270
9,354
26.4
65.7
Operating lease liabilities
9,000
9,614
10,486
(6.4
)
(14.2
)
Other liabilities
14,449
17,500
13,452
(17.4
)
7.4
Total liabilities
2,094,774
2,039,795
1,967,931
2.7
6.4
Shareholders' equity:
Common stock
73,749
75,957
77,464
(2.9
)
(4.8
)
Additional paid-in capital
11,441
11,240
10,297
1.8
11.1
Retained earnings
127,929
124,280
114,177
2.9
12.0
Accumulated other comprehensive loss
(17,213
)
(16,752
)
(18,168
)
2.8
(5.3
)
Total shareholders’ equity
195,906
194,725
183,770
0.6
6.6
Total liabilities and shareholders' equity
$
2,290,680
$
2,234,520
$
2,151,701
2.5
%
6.5
%
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
($ in thousands, except share and per share data)
For the Three Months Ended
% Change 2Q2024 vs.
2Q2024
1Q2024
2Q2023
1Q2024
2Q2023
Interest income
Interest and fees on loans
$
30,605
$
30,142
$
27,288
1.5
%
12.2
%
Interest on available-for-sale debt securities
1,590
1,460
1,562
8.9
1.8
Other interest income
2,162
1,311
1,252
64.9
72.7
Total interest income
34,357
32,913
30,102
4.4
14.1
Interest expense
Interest on deposits
17,343
15,675
11,920
10.6
45.5
Interest on borrowings
820
1,259
930
(34.9
)
(11.8
)%
Total interest expense
18,163
16,934
12,850
7.3
41.3
Net interest income
16,194
15,979
17,252
1.3
(6.1
)
Provision for credit losses
617
145
—
325.5
n/m
Net interest income after provision for credit losses
15,577
15,834
17,252
(1.6
)
(9.7
)
Noninterest income
Service charges on deposits
793
612
573
29.6
38.4
Loan servicing fees, net of amortization
575
772
595
(25.5
)
(3.4
)
Gain on sale of loans
2,325
1,703
2,098
36.5
10.8
Other income
491
499
339
(1.6
)
44.8
Total noninterest income
4,184
3,586
3,605
16.7
16.1
Noninterest expense
Salaries and employee benefits
7,568
7,841
7,681
(3.5
)
(1.5
)
Occupancy and equipment
1,660
1,655
1,598
0.3
3.9
Data processing and communication
530
487
546
8.8
(2.9
)
Professional fees
406
395
381
2.8
6.6
FDIC insurance and regulatory assessments
378
374
420
1.1
(10.0
)
Promotion and advertising
151
149
159
1.3
(5.0
)
Directors’ fees
178
157
210
13.4
(15.2
)
Foundation donation and other contributions
539
540
594
(0.2
)
(9.3
)
Other expenses
779
559
711
39.4
9.6
Total noninterest expense
12,189
12,157
12,300
0.3
(0.9
)
Income before income tax expense
7,572
7,263
8,557
4.3
(11.5
)
Income tax expense
2,136
2,037
2,466
4.9
(13.4
)
Net income
$
5,436
$
5,226
$
6,091
4.0
%
(10.8
)%
Book value per share
$
13.22
$
13.00
$
12.16
1.7
%
8.7
%
Earnings per share - basic
0.36
0.34
0.39
5.9
(7.7
)
Earnings per share - diluted
0.36
0.34
0.39
5.9
(7.7
)
Shares of common stock outstanding, at period end
14,816,281
14,982,555
15,118,268
(1.1
)%
(2.0
)%
Weighted average shares:
- Basic
14,868,344
14,991,835
15,158,365
(0.8
)%
(1.9
)%
- Diluted
14,868,344
14,991,835
15,169,794
(0.8
)
(2.0
)
KEY RATIOS
For the Three Months Ended
% Change 2Q2024 vs.
2Q2024
1Q2024
2Q2023
1Q2024
2Q2023
Return on average assets (ROA)(1)
0.95
%
0.96
%
1.15
%
—
%
(0.2
)%
Return on average equity (ROE)(1)
11.23
10.83
13.27
0.4
(2.0
)
Net interest margin(1)
2.96
3.06
3.40
(0.1
)
(0.4
)
Efficiency ratio
59.81
62.14
58.97
(2.3
)
0.8
Total risk-based capital ratio
13.26
%
13.59
%
13.10
%
(0.3
)%
0.2
%
Tier 1 risk-based capital ratio
12.01
12.34
11.92
(0.3
)
0.1
Common equity tier 1 ratio
12.01
12.34
11.92
(0.3
)
0.1
Leverage ratio
9.28
9.65
9.50
(0.4
)
(0.2
)
(1)
Annualized.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
($ in thousands, except share and per share data)
For the Six Months Ended
2Q2024
2Q2023
% Change
Interest income
Interest and fees on loans
$
60,747
$
53,299
14.0
%
Interest on available-for-sale debt securities
3,050
3,128
(2.5
)
Other interest income
3,473
2,269
53.1
Total interest income
67,270
58,696
14.6
Interest expense
Interest on deposits
33,018
22,302
48.0
Interest on borrowings
2,079
1,250
66.3
Total interest expense
35,097
23,552
49.0
Net interest income
32,173
35,144
(8.5
)
Provision for (reversal of) credit losses
762
(338
)
n/m
Net interest income after provision for credit losses
31,411
35,482
(11.5
)
Noninterest income
Service charges on deposits
1,405
991
41.8
%
Loan servicing fees, net of amortization
1,347
1,441
(6.5
)
Gain on sale of loans
4,028
4,668
(13.7
)
Other income
990
800
23.8
Total noninterest income
7,770
7,900
(1.6
)
Noninterest expense
Salaries and employee benefits
15,409
14,933
3.2
Occupancy and equipment
3,315
3,168
4.6
Data processing and communication
1,017
1,096
(7.2
)
Professional fees
801
740
8.2
FDIC insurance and regulatory assessments
752
887
(15.2
)
Promotion and advertising
300
321
(6.5
)
Directors’ fees
335
371
(9.7
)
Foundation donation and other contributions
1,079
1,347
(19.9
)
Other expenses
1,338
1,345
(0.5
)
Total noninterest expense
24,346
24,208
0.6
Income before income tax expense
14,835
19,174
(22.6
)
Income tax expense
4,173
5,549
(24.8
)
Net income
$
10,662
$
13,625
(21.7
)%
Book value per share
$
13.22
$
12.16
8.7
%
Earnings per share - basic
0.70
0.88
(20.5
)
Earnings per share - diluted
0.70
0.88
(20.5
)
Shares of common stock outstanding, at period end
14,816,281
15,118,268
(2.0
)%
Weighted average shares:
- Basic
14,930,090
15,221,010
(1.9
)%
- Diluted
14,930,090
15,241,903
(2.0
)
KEY RATIOS
For the Six Months Ended
2Q2024
2Q2023
% Change
Return on average assets (ROA)(1)
0.96
%
1.29
%
(0.3
)%
Return on average equity (ROE)(1)
11.03
15.02
(4.0
)
Net interest margin(1)
3.01
3.48
(0.5
)
Efficiency ratio
60.95
56.24
4.7
Total risk-based capital ratio
13.26
%
13.10
%
0.2
%
Tier 1 risk-based capital ratio
12.01
11.92
0.1
Common equity tier 1 ratio
12.01
11.92
0.1
Leverage ratio
9.28
9.50
(0.2
)
(1)
Annualized.
ASSET QUALITY
($ in thousands)
As of and For the Three Months Ended
2Q2024
1Q2024
2Q2023
Nonaccrual loans(1)
$
4,389
$
4,343
$
3,447
Loans 90 days or more past due, accruing(2)
—
—
—
Nonperforming loans
4,389
4,343
3,447
OREO
1,237
1,237
—
Nonperforming assets
$
5,626
$
5,580
$
3,447
Criticized loans by risk categories:
Special mention loans
$
3,339
$
1,415
$
2,909
Classified loans(1)(3)
13,089
10,149
4,629
Total criticized loans
$
16,428
$
11,564
$
7,538
Criticized loans by loan type:
CRE loans
$
5,896
$
5,292
$
—
SBA loans
9,771
6,055
4,784
C&I loans
550
—
200
Home mortgage loans
211
217
2,554
Total criticized loans
$
16,428
$
11,564
$
7,538
Nonperforming loans / gross loans
0.23
%
0.24
%
0.20
%
Nonperforming assets / gross loans plus OREO
0.30
0.31
0.20
Nonperforming assets / total assets
0.25
0.25
0.16
Classified loans / gross loans
0.70
0.56
0.27
Criticized loans / gross loans
0.88
0.64
0.44
Allowance for credit losses ratios:
As a % of gross loans
1.22
%
1.23
%
1.21
%
As a % of nonperforming loans
519
510
603
As a % of nonperforming assets
405
397
603
As a % of classified loans
174
218
449
As a % of criticized loans
139
191
276
Net charge-offs (recoveries)
$
(4
)
$
57
$
12
Net charge-offs (recoveries)(4) to average gross loans(5)
(0.00
)%
0.01
%
0.00
%
(1)
Excludes the guaranteed portion of SBA loans that are in liquidation totaling $3.5 million, $3.1 million and $5.1 million as of June 30, 2024, March 31, 2024 and June 30, 2023, respectively.
(2)
Excludes the guaranteed portion of SBA loans that are in liquidation totaling $246 thousand as of June 30, 2023.
(3)
Consists of substandard, doubtful and loss categories.
(4)
Annualized.
(5)
Includes loans held for sale.
($ in thousands)
2Q2024
1Q2024
2Q2023
Accruing delinquent loans 30-89 days past due
30-59 days
$
3,774
$
801
$
3,647
60-89 days
2,878
3,103
1,568
Total
$
6,652
$
3,904
$
5,215
AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS
For the Three Months Ended
2Q2024
1Q2024
2Q2023
($ 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
$
135,984
$
1,847
5.37
%
$
73,047
$
989
5.35
%
$
79,200
$
1,003
5.01
%
Federal funds sold and other investments
16,307
315
7.72
16,265
322
7.92
15,374
249
6.46
Available-for-sale debt securities, at fair value
195,512
1,590
3.25
191,383
1,460
3.05
209,801
1,562
2.98
CRE loans
908,073
13,742
6.09
901,262
13,729
6.13
838,526
11,823
5.66
SBA loans
259,649
7,116
11.02
259,368
7,213
11.19
262,825
7,174
10.95
C&I loans
172,481
3,367
7.85
134,893
2,670
7.96
114,103
2,232
7.85
Home mortgage loans
501,862
6,348
5.06
512,023
6,495
5.07
508,976
6,043
4.75
Consumer loans
1,219
32
10.44
1,386
35
10.10
1,334
16
4.77
Loans(2)
1,843,284
30,605
6.67
1,808,932
30,142
6.69
1,725,764
27,288
6.34
Total interest-earning assets
2,191,087
34,357
6.29
2,089,627
32,913
6.32
2,030,139
30,102
5.94
Noninterest-earning assets
89,446
87,586
84,991
Total assets
$
2,280,533
$
2,177,213
$
2,115,130
Interest-bearing liabilities:
Money market deposits and others
$
338,554
$
3,494
4.15
%
$
367,386
$
3,940
4.31
%
$
357,517
$
3,201
3.59
%
Time deposits
1,102,587
13,849
5.05
954,442
11,735
4.94
843,836
8,719
4.14
Total interest-bearing deposits
1,441,141
17,343
4.84
1,321,828
15,675
4.77
1,201,353
11,920
3.98
Borrowings
77,314
820
4.27
108,681
1,259
4.66
82,586
930
4.52
Total interest-bearing liabilities
1,518,455
18,163
4.81
1,430,509
16,934
4.76
1,283,939
12,850
4.01
Noninterest-bearing liabilities:
Noninterest-bearing deposits
529,179
514,503
615,748
Other noninterest-bearing liabilities
39,301
39,207
31,810
Total noninterest-bearing liabilities
568,480
553,710
647,558
Shareholders’ equity
193,598
192,994
183,633
Total liabilities and shareholders’ equity
$
2,280,533
2,177,213
2,115,130
Net interest income / interest rate spreads
$
16,194
1.48
%
$
15,979
1.56
%
$
17,252
1.93
%
Net interest margin
2.96
%
3.06
%
3.40
%
Cost of deposits & cost of funds:
Total deposits / cost of deposits
$
1,970,320
$
17,343
3.54
%
$
1,836,331
$
15,675
3.43
%
$
1,817,101
$
11,920
2.63
%
Total funding liabilities / cost of funds
2,047,634
18,163
3.57
1,945,012
16,934
3.50
1,899,687
12,850
2.71
(1)
Annualized.
(2)Includes loans held for sale.
For the Six Months Ended
2Q2024
2Q2023
($ in thousands)
Average
Balance
Interest
and Fees
Yield/
Rate(1)
Average
Balance
Interest
and Fees
Yield/
Rate(1)
Interest-earning assets:
Interest-bearing deposits in other banks
$
104,515
$
2,836
5.37
%
$
76,695
$
1,849
4.79
%
Federal funds sold and other investments
16,286
637
7.82
13,761
420
6.10
Available-for-sale debt securities, at fair value
193,448
3,050
3.15
210,130
3,128
2.98
CRE loans
904,667
27,471
6.11
839,459
23,002
5.53
SBA loans
259,508
14,329
11.10
268,823
14,156
10.62
C&I loans
153,687
6,037
7.90
117,988
4,432
7.58
Home mortgage loans
506,943
12,843
5.07
497,949
11,676
4.69
Consumer & other loans
1,303
67
10.26
1,360
33
4.92
Loans(2)
1,826,108
60,747
6.68
1,725,579
53,299
6.22
Total interest-earning assets
2,140,357
67,270
6.31
2,026,165
58,696
5.83
Noninterest-earning assets
88,516
83,771
Total assets
$
2,228,873
$
2,109,936
Interest-bearing liabilities:
Money market deposits and others
$
352,970
$
7,434
4.24
%
$
383,521
$
6,351
3.34
%
Time deposits
1,028,515
25,584
5.00
815,267
15,952
3.95
Total interest-bearing deposits
1,381,485
33,018
4.81
1,198,788
22,303
3.75
Borrowings
92,998
2,079
4.50
54,533
1,249
4.62
Total interest-bearing liabilities
1,474,483
35,097
4.79
1,253,321
23,552
3.79
Noninterest-bearing liabilities:
Noninterest-bearing deposits
521,841
643,465
Other noninterest-bearing liabilities
39,253
31,729
Total noninterest-bearing liabilities
561,094
675,194
Shareholders’ equity
193,296
181,421
Total liabilities and shareholders’ equity
$
2,228,873
2,109,936
Net interest income / interest rate spreads
$
32,173
1.52
%
$
35,144
2.04
%
Net interest margin
3.01
%
3.48
%
Cost of deposits & cost of funds:
Total deposits / cost of deposits
$
1,903,326
$
33,018
3.49
%
1,842,253
$
22,303
2.44
%
Total funding liabilities / cost of funds
1,996,324
35,097
3.54
1,896,786
23,552
2.50
(1)
Annualized.
(2)
Includes loans held for sale.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240725607933/en/
Investor Relations OP Bancorp Christine Oh EVP & CFO 213.892.1192 Christine.oh@myopenbank.com
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