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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.435 | 3.34% | 13.46 | 13.39 | 13.50 | 13.46 | 13.05 | 13.05 | 9,793 | 17:34:22 |
From Jul 2024 to Jan 2025
2024 Third Quarter Highlights compared with 2024 Second 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 third quarter of 2024. Net income remained relatively the same for both the third quarter and second quarter of 2024 at $5.4 million, or $0.36 per diluted common share, compared with $5.1 million, or $0.33 per diluted common share, for the third quarter of 2023.
Min Kim, President and Chief Executive Officer:
“We continued to grow our loans and deposits at double digit annualized rates in this quarter while maintaining ample liquidity, stable net interest margin, and strong credit quality. As the Fed's easing cycle began in the quarter, the pressure on funding cost and net interest margin is diminishing, and we believe we are well positioned to prolong our growth and performance to achieve our long term strategic goals,” said Min Kim, President and Chief Executive.
SELECTED FINANCIAL HIGHLIGHTS
($ in thousands, except per share data)
As of and For the Quarter
% Change 3Q2024 vs.
3Q2024
2Q2024
3Q2023
2Q2024
3Q2023
Selected Income Statement Data:
Net interest income
$
16,506
$
16,194
$
17,313
1.9
%
(4.7
)%
Provision for credit losses
448
617
1,359
(27.4
)
(67.0
)
Noninterest income
4,240
4,184
2,601
1.3
63.0
Noninterest expense
12,720
12,189
11,535
4.4
10.3
Income tax expense
2,142
2,136
1,899
0.3
12.8
Net income
5,436
5,436
5,121
—
6.2
Diluted earnings per share
0.36
0.36
0.33
—
9.1
Selected Balance Sheet Data:
Gross loans
$
1,931,007
$
1,870,106
$
1,759,525
3.3
%
9.7
%
Total deposits
2,064,603
1,940,821
1,825,171
6.4
13.1
Total assets
2,387,980
2,290,680
2,142,675
4.2
11.4
Average loans(1)
1,905,952
1,843,284
1,740,188
3.4
9.5
Average deposits
1,998,633
1,970,320
1,821,361
1.4
9.7
Credit Quality:
Nonperforming loans
$
3,620
$
4,389
$
4,211
(17.5
)%
(14.0
)%
Nonperforming loans to gross loans
0.19
%
0.23
%
0.24
%
(0.04
)
(0.05
)
Criticized loans(2) to gross loans
0.85
0.88
0.78
(0.03
)
0.07
Net charge-offs (recoveries)(3) to average gross loans(1)
0.01
(0.00
)
0.11
0.01
(0.10
)
Allowance for credit losses to gross loans
1.19
1.22
1.23
(0.03
)
(0.04
)
Allowance for credit losses to nonperforming loans
634
519
513
115.00
121.00
Financial Ratios:
Return on average assets(3)
0.94
%
0.95
%
0.96
%
(0.01
)%
(0.02
)%
Return on average equity(3)
10.95
11.23
11.07
(0.28
)
(0.12
)
Net interest margin(3)
2.95
2.96
3.38
(0.01
)
(0.43
)
Efficiency ratio(4)
61.31
59.81
57.92
1.50
3.39
Common equity tier 1 capital ratio
11.57
12.01
12.09
(0.44
)
(0.52
)
Leverage ratio
9.30
9.28
9.63
0.02
(0.33
)
Book value per common share
$
13.75
$
13.23
$
12.17
3.9
13.0
(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 3Q2024 vs.
3Q2024
2Q2024
3Q2023
2Q2024
3Q2023
Interest Income
Interest income
$
35,299
$
34,357
$
31,186
2.7
%
13.2
%
Interest expense
18,793
18,163
13,873
3.5
35.5
Net interest income
$
16,506
$
16,194
$
17,313
1.9
%
(4.7
)%
($ in thousands)
For the Three Months Ended
Yield Change 3Q2024 vs.
3Q2024
2Q2024
3Q2023
Interest
and Fees
Yield/Rate(1)
Interest
and Fees
Yield/Rate(1)
Interest
and Fees
Yield/Rate(1)
2Q2024
3Q2023
Interest-earning Assets:
Loans
$
31,885
6.66
%
$
30,605
6.67
%
$
28,250
6.45
%
(0.01
)%
0.21
%
Total interest-earning assets
35,299
6.30
34,357
6.29
31,186
6.08
0.01
0.22
Interest-bearing Liabilities:
Interest-bearing deposits
17,921
4.85
17,343
4.84
13,006
4.22
0.01
0.63
Total interest-bearing liabilities
18,793
4.82
18,163
4.81
13,873
4.23
0.01
0.59
Ratios:
Net interest income / interest rate spreads
16,506
1.48
16,194
1.48
17,313
1.85
—
(0.37
)
Net interest margin
2.95
2.96
3.38
(0.01
)
(0.43
)
Total deposits / cost of deposits
17,921
3.57
17,343
3.54
13,006
2.83
0.03
0.74
Total funding liabilities / cost of funds
18,793
3.60
18,163
3.57
13,873
2.90
0.03
0.70
(1)
Annualized.
($ in thousands)
For the Three Months Ended
Yield Change 3Q2024 vs.
3Q2024
2Q2024
3Q2023
Interest
& Fees
Yield(1)
Interest
& Fees
Yield(1)
Interest
& Fees
Yield(1)
2Q2024
3Q2023
Loan Yield Component:
Contractual interest rate
$
31,182
6.52
%
$
29,719
6.48
%
$
27,319
6.24
%
0.04
%
0.28
%
Accretion of SBA loan discount(2)
918
0.19
1,087
0.24
1,263
0.29
(0.05
)
(0.10
)
Amortization of net deferred fees
23
—
(44
)
(0.01
)
1
—
0.01
—
Amortization of premium
(487
)
(0.10
)
(396
)
(0.09
)
(445
)
(0.10
)
(0.01
)
—
Net interest recognized on nonaccrual loans
(61
)
(0.01
)
(3
)
0.00
(26
)
(0.01
)
(0.01
)
—
Prepayment penalty income and other fees(3)
310
0.06
242
0.05
138
0.03
0.01
0.03
Yield on loans
$
31,885
6.66
%
$
30,605
6.67
%
$
28,250
6.45
%
(0.01
)%
0.21
%
(1)
Annualized.
(2)
Includes discount accretion from SBA loan payoffs of $426 thousand, $564 thousand and $666 thousand for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively.
(3)
Includes prepayment penalty income of $114 thousand and $26 thousand for the three months ended September 30, 2024 and June 30, 2024, respectively, from Commercial Real Estate (“CRE”) loans.
Third Quarter 2024 vs. Second Quarter 2024
Net interest income increased $312 thousand, or 1.9%, primarily due to higher interest income on loans but partially offset by higher interest expense on interest-bearing deposits and lower interest income on interest-bearing deposits in other banks. Net interest margin was 2.95%, a decrease of 1 basis point from 2.96%.
Third Quarter 2024 vs. Third Quarter 2023
Net interest income decreased $807 thousand, or 4.7%, primarily due to higher interest expense on interest-bearing deposits, partially offset by higher interest income on loans and higher interest-bearing deposits in other banks, as our deposit costs repriced quicker than our interest-earning asset yields following the Federal Reserve’s rate increases. Net interest margin was 2.95%, a decrease of 43 basis points from 3.38%.
Provision for Credit Losses
($ in thousands)
For the Three Months Ended
3Q2024
2Q2024
3Q2023
Provision for credit losses on loans
$
234
$
627
$
1,303
Provision for (reversal of) credit losses on off-balance sheet exposure
214
(10
)
56
Total provision for credit losses
$
448
$
617
$
1,359
Third Quarter 2024 vs. Second Quarter 2024
The Company recorded $448 thousand in total provision for credit losses, a decrease of $169 thousand, compared with $617 thousand. Provision for credit losses on loans decreased $393 thousand and provision for credit losses on off-balance sheet exposure increased $224 thousand.
Provision for credit losses on loans of $234 thousand was primarily due to a $215 thousand increase in the qualitative reserve driven by declining collateral values for collateral dependent CRE loans and weakening economic and business conditions.
Provision for credit losses on off-balance sheet exposure of $214 thousand was primarily due to increases in unfunded commitment balance and utilization of commitment.
Third Quarter 2024 vs. Third Quarter 2023
The Company recorded $448 thousand in total provision for credit losses, a decrease of $911 thousand, compared with $1.4 million.
Noninterest Income
($ in thousands)
For the Three Months Ended
% Change 3Q2024 vs.
3Q2024
2Q2024
3Q2023
2Q2024
3Q2023
Noninterest Income
Service charges on deposits
$
889
$
793
$
575
12.1
%
54.6
%
Loan servicing fees, net of amortization
693
575
468
20.5
48.1
Gain on sale of loans
2,088
2,325
1,179
(10.2
)
77.1
Other income
570
491
379
16.1
50.4
Total noninterest income
$
4,240
$
4,184
$
2,601
1.3
%
63.0
%
Third Quarter 2024 vs. Second Quarter 2024
Noninterest income increased $56 thousand, or 1.3%, primarily due to higher loan servicing fees and higher service charges on deposits, partially offset by lower gain on the sale of loans.
Third Quarter 2024 vs. Third Quarter 2023
Noninterest income increased $1.6 million, or 63.0%, primarily due to higher gain on sale of loans, higher service charges on deposits, and higher loan servicing fees.
Noninterest Expense
($ in thousands)
For the Three Months Ended
% Change 3Q2024 vs.
3Q2024
2Q2024
3Q2023
2Q2024
3Q2023
Noninterest Expense
Salaries and employee benefits
$
8,031
$
7,568
$
7,014
6.1
%
14.5
%
Occupancy and equipment
1,676
1,660
1,706
1.0
(1.8
)
Data processing and communication
634
530
369
19.6
71.8
Professional fees
346
406
440
(14.8
)
(21.4
)
FDIC insurance and regulatory assessments
391
378
333
3.4
17.4
Promotion and advertising
151
151
207
—
(27.1
)
Directors’ fees
154
178
164
(13.5
)
(6.1
)
Foundation donation and other contributions
549
539
529
1.9
3.8
Other expenses
788
779
773
1.2
1.9
Total noninterest expense
$
12,720
$
12,189
$
11,535
4.4
%
10.3
%
Third Quarter 2024 vs. Second Quarter 2024
Noninterest expense increased $531 thousand, or 4.4%, primarily due to higher salaries and employee benefits, and data processing and communication.
Third Quarter 2024 vs. Third Quarter 2023
Noninterest expense increased $1.2 million, or 10.3%, primarily due to higher salaries and employee benefits, and data processing and communication.
Income Tax Expense
Third Quarter 2024 vs. Second Quarter 2024
Income tax expense was $2.1 million, resulting in an effective tax rate of 28.3%, compared to income tax expense of $2.1 million, resulting in an effective tax rate of 28.2%.
Third Quarter 2024 vs. Third Quarter 2023
Income tax expense was $2.1 million, resulting in an effective tax rate of 28.3%, compared to income tax expense of $1.9 million, resulting in an effective tax rate of 27.1%. The effective tax rate for the third quarter of 2023 was lower primarily due to adjustments for differences between the prior year tax provision and the final tax returns that were applied in the quarter.
BALANCE SHEET HIGHLIGHTS
Loans
($ in thousands)
As of
% Change 3Q2024 vs.
3Q2024
2Q2024
3Q2023
2Q2024
3Q2023
CRE loans
$
966,472
$
931,284
$
878,824
3.8
%
10.0
%
SBA loans
252,379
242,395
240,154
4.1
5.1
C&I loans
212,476
188,557
124,632
12.7
70.5
Home mortgage loans
499,666
506,873
515,789
(1.4
)
(3.1
)
Consumer & other loans
14
997
126
(98.6
)
(88.9
)
Gross loans
$
1,931,007
$
1,870,106
$
1,759,525
3.3
%
9.7
%
The following table presents new loan originations based on loan commitment amounts for the periods indicated:
($ in thousands)
For the Three Months Ended
% Change 3Q2024 vs.
3Q2024
2Q2024
3Q2023
2Q2024
3Q2023
CRE loans
$
68,525
$
41,990
$
33,222
63.2
%
106.3
%
SBA loans
46,302
24,142
39,079
91.8
18.5
C&I loans
27,771
21,271
14,617
30.6
90.0
Home mortgage loans
10,105
13,720
9,137
(26.3
)
10.6
Gross loans
$
152,703
$
101,123
$
96,055
51.0
%
59.0
%
The following table presents changes in gross loans by loan activity for the periods indicated:
($ in thousands)
For the Three Months Ended
3Q2024
2Q2024
3Q2023
Loan Activities:
Gross loans, beginning
$
1,870,106
$
1,804,987
$
1,716,197
New originations
152,703
101,123
96,055
Net line advances
(526
)
37,929
22,146
Purchases
862
5,559
6,732
Sales
(35,576
)
(32,102
)
(23,377
)
Paydowns
(24,798
)
(19,710
)
(22,169
)
Payoffs
(29,642
)
(36,902
)
(36,024
)
Decrease (increase) in loans held for sale
(1,674
)
9,590
—
Other
(448
)
(368
)
215
Total
60,901
65,119
43,328
Gross loans, ending
$
1,931,007
$
1,870,106
$
1,759,525
As of September 30, 2024 vs. June 30, 2024
Gross loans were $1.93 billion as of September 30, 2024, up $60.9 million from June 30, 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 $152.7 million, $35.6 million, and $54.4 million, respectively, for the third quarter of 2024, compared with $101.1 million, $32.1 million, and $56.6 million, respectively, for the second quarter of 2024.
As of September 30, 2024 vs. September 30, 2023
Gross loans were $1.93 billion as of September 30, 2024, up $171.5 million, from September 30, 2023, primarily due to and increase in new loan originations of $472.3 million, partially offset by loan sales of $132.6 million and loan payoffs and paydowns of $214.9 million.
The following table presents the composition of gross loans by interest rate type accompanied with the weighted average contractual rates as of the periods indicated:
($ in thousands)
As of
3Q2024
2Q2024
3Q2023
%
Rate
%
Rate
%
Rate
Fixed rate
35.7
%
5.42
%
36.2
%
5.39
%
36.3
%
4.95
%
Hybrid rate
34.7
5.60
33.9
5.42
34.0
5.08
Variable rate
29.6
8.94
29.9
9.19
29.7
9.23
Gross loans
100.0
%
6.52
%
100.0
%
6.54
%
100.0
%
6.27
%
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 September 30, 2024
Within One Year
One Year Through Five Years
After Five Years
Total
Amount
Rate
Amount
Rate
Amount
Rate
Amount
Rate
Fixed rate
$
191,036
5.96
%
$
282,324
5.27
%
$
216,044
5.13
%
$
689,404
5.42
%
Hybrid rate
2,651
9.25
211,150
4.39
456,362
6.14
670,163
5.60
Variable rate
87,435
8.47
139,453
8.57
344,552
9.21
571,440
8.94
Gross loans
$
281,122
6.77
%
$
632,927
5.71
%
$
1,016,958
6.97
%
$
1,931,007
6.52
%
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 3Q2024 vs.
3Q2024
2Q2024
3Q2023
2Q2024
3Q2023
Allowance for credit losses on loans, beginning
$
22,760
$
22,129
$
20,802
$
631
$
1,958
Provision for credit losses
234
627
1,303
(393
)
(1,069
)
Gross charge-offs
(40
)
—
(492
)
(40
)
452
Gross recoveries
6
4
4
2
2
Net (charge-offs) recoveries
(34
)
4
(488
)
(38
)
454
Allowance for credit losses on loans, ending
$
22,960
$
22,760
$
21,617
$
200
$
1,343
Allowance for credit losses on off-balance sheet exposure, beginning
$
458
$
468
$
367
$
(10
)
$
91
Provision for (reversal of) credit losses
214
(10
)
56
224
158
Allowance for credit losses on off-balance sheet exposure, ending
$
672
$
458
$
423
$
214
$
249
Asset Quality
($ in thousands)
As of and For the Three Months Ended
Change 3Q2024 vs.
3Q2024
2Q2024
3Q2023
2Q2024
3Q2023
Loans 30-89 days past due and still accruing
$
10,306
$
6,652
$
8,356
54.9
%
23.3
%
As a % of gross loans
0.53
%
0.36
%
0.47
%
0.17
0.06
Nonperforming loans(1)
$
3,620
$
4,389
$
4,211
(17.5
)%
(14.0
)%
Nonperforming assets(1)
4,857
5,626
4,211
(13.7
)
15.3
Nonperforming loans to gross loans
0.19
%
0.23
%
0.24
%
(0.04
)
(0.05
)
Nonperforming assets to total assets
0.20
0.25
0.20
(0.05
)
—
Criticized loans(1)(2)
$
16,500
$
16,428
$
13,790
0.4
%
19.7
%
Criticized loans to gross loans
0.85
%
0.88
%
0.78
%
(0.03
)
0.07
Allowance for credit losses ratios:
As a % of gross loans
1.19
%
1.22
%
1.23
%
(0.03
)%
(0.04
)%
As a % of nonperforming loans
634
519
513
115
121
As a % of nonperforming assets
473
405
513
68
(40
)
As a % of criticized loans
139
139
157
—
(18
)
Net charge-offs (recoveries)(3) to average gross loans(4)
0.01
(0.00
)
0.11
0.01
(0.10
)
(1)
Excludes the guaranteed portion of SBA loans that are in liquidation totaling $11.1 million, $3.5 million and $5.2 million as of September 30, 2024, June 30, 2024 and September 30, 2023, respectively.
(2)
Consists of special mention, substandard, doubtful and loss categories.
(3)
Annualized.
(4)
Includes loans held for sale.
Overall, the Bank continued to maintain low levels of nonperforming loans and net charge-offs. Our allowance remained strong with an allowance to gross loans ratio of 1.19%.
Deposits
($ in thousands)
As of
% Change 3Q2024 vs.
3Q2024
2Q2024
3Q2023
Amount
%
Amount
%
Amount
%
2Q2024
3Q2023
Noninterest-bearing deposits
$
561,801
27.2
%
$
518,456
26.7
%
$
605,509
33.2
%
8.4
%
(7.2
)%
Money market deposits and others
343,188
16.6
332,137
17.1
348,869
19.1
3.3
(1.6
)
Time deposits
1,159,614
56.2
1,090,228
56.2
870,793
47.7
6.4
33.2
Total deposits
$
2,064,603
100.0
%
$
1,940,821
100.0
%
$
1,825,171
100.0
%
6.4
%
13.1
%
Estimated uninsured deposits
$
946,406
45.8
%
$
860,419
44.3
%
$
808,776
44.3
%
10.0
%
17.0
%
As of September 30, 2024 vs. June 30, 2024
Total deposits were $2.06 billion as of September 30, 2024, reflecting an increase of $123.8 million from June 30, 2024, primarily due to increases of $69.4 million in time deposits and $43.3 million in noninterest-bearing deposits. Customers’ preference for high-rate deposit products continued to drive the increase in time deposits. The increase in noninterest-bearing deposits was mostly driven by balance increases in existing customers, including escrow and 1031 exchanges accounts. The composition of noninterest-bearing deposits also increased to 27.2% of total deposits from 26.7%.
As of September 30, 2024 vs. September 30, 2023
Total deposits were $2.06 billion as of September 30, 2024, up $239.4 million from September 30, 2023, primarily driven by a $288.8 million increase in time deposits, offset by decreases of $43.7 million in noninterest-bearing deposits and $5.7 million in money market deposits. Noninterest-bearing deposits, as a percentage of total deposits, decreased to 27.2% from 33.2%. The composition shift to time deposits was primarily due to customers’ preference for high-rate deposit products driven by market rate increases as a result of the Federal Reserve’s rate increases.
The following table sets forth the maturity of time deposits as of September 30, 2024:
As of September 30, 2024
($ 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)
$
205,957
$
189,693
$
87,508
$
80,133
$
1,256
$
564,547
Time deposits ($250 or less)
261,163
124,315
97,180
92,585
19,824
595,067
Total time deposits
$
467,120
$
314,008
$
184,688
$
172,718
$
21,080
$
1,159,614
Weighted average rate
5.18
%
5.03
%
5.16
%
4.93
%
3.94
%
5.08
%
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)
3Q2024
2Q2024
3Q2023
Liquidity Assets:
Cash and cash equivalents
$
166,756
$
127,676
$
105,740
Available-for-sale debt securities
199,373
199,205
191,313
Liquid assets
$
366,129
$
326,881
$
297,053
Liquid assets to total assets
15.3
%
14.3
%
13.9
%
Available borrowings:
Federal Home Loan Bank—San Francisco
$
397,617
$
343,600
$
375,874
Federal Reserve Bank
207,782
191,421
186,380
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
$
705,399
$
635,021
$
662,254
Total available borrowings to total assets
29.5
%
27.6
%
30.9
%
Liquid assets and available borrowings to total deposits
51.9
%
49.6
%
52.6
%
Capital and Capital Ratios
On October 24, 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 November 21, 2024 to all shareholders of record as of the close of business on November 7, 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 4,610 shares of its common stock at an average price of $10.09 per share during the third 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 428,628 shares of its common stock at an average repurchase price of $9.37 per share through September 30, 2024.
OP Bancorp(1)
Open Bank
Minimum Well
Capitalized
Ratio
Minimum
Capital Ratio+
Conservation
Buffer(2)
Risk-Based Capital Ratios:
Total risk-based capital ratio
12.79
%
12.69
%
10.00
%
10.50
%
Tier 1 risk-based capital ratio
11.57
11.47
8.00
8.50
Common equity tier 1 ratio
11.57
11.47
6.50
7.00
Leverage ratio
9.30
9.22
5.00
4.00
(1)
The capital requirements are only applicable to the Bank, and the Company's ratios are included for comparison purpose.
(2)
An additional 2.5% capital conservation buffer above the minimum capital ratios are required in order to avoid limitations on distributions, including dividend payments and certain discretionary bonuses to executive officers.
OP Bancorp
Change 3Q2024 vs.
3Q2024
2Q2024
3Q2023
2Q2024
3Q2023
Risk-Based Capital Ratios:
Total risk-based capital ratio
12.79
%
13.26
%
13.31
%
(0.47
)%
(0.52
)%
Tier 1 risk-based capital ratio
11.57
12.01
12.09
(0.44
)
(0.52
)
Common equity tier 1 ratio
11.57
12.01
12.09
(0.44
)
(0.52
)
Leverage ratio
9.30
9.28
9.63
0.02
(0.33
)
Risk-weighted Assets ($ in thousands)
$
1,876,698
$
1,776,821
$
1,707,318
5.62
9.92
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 five loan production offices in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, Lynnwood, Washington, and Fairfax, Virginia. 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 3Q2024 vs.
3Q2024
2Q2024
3Q2023
2Q2024
3Q2023
Assets
Cash and due from banks
$
24,519
$
21,771
$
21,748
12.6
%
12.7
%
Interest-bearing deposits in other banks
142,237
105,905
83,992
34.3
69.3
Cash and cash equivalents
166,756
127,676
105,740
30.6
57.7
Available-for-sale debt securities, at fair value
199,373
199,205
191,313
0.1
4.2
Other investments
16,520
16,367
16,100
0.9
2.6
Loans held for sale
8,160
6,485
—
25.8
n/m
CRE loans
966,472
931,284
878,824
3.8
10.0
SBA loans
252,379
242,395
240,154
4.1
5.1
C&I loans
212,476
188,557
124,632
12.7
70.5
Home mortgage loans
499,666
506,873
515,789
(1.4
)
(3.1
)
Consumer loans
14
997
126
(98.6
)
(88.9
)
Gross loans receivable
1,931,007
1,870,106
1,759,525
3.3
9.7
Allowance for credit losses
(22,960
)
(22,760
)
(21,617
)
0.9
6.2
Net loans receivable
1,908,047
1,847,346
1,737,908
3.3
9.8
Premises and equipment, net
4,961
4,716
5,378
5.2
(7.8
)
Accrued interest receivable, net
9,479
8,555
7,996
10.8
18.5
Servicing assets
10,877
11,043
11,931
(1.5
)
(8.8
)
Company owned life insurance
22,739
22,566
22,071
0.8
3.0
Deferred tax assets, net
12,288
14,117
15,061
(13.0
)
(18.4
)
Other real estate owned
1,237
1,237
—
—
n/m
Operating right-of-use assets
7,870
8,348
8,993
(5.7
)
(12.5
)
Other assets
19,673
23,019
20,184
(14.5
)
(2.5
)
Total assets
$
2,387,980
$
2,290,680
$
2,142,675
4.2
%
11.4
%
Liabilities and Shareholders' Equity
Liabilities:
Noninterest-bearing
$
561,801
$
518,456
$
605,509
8.4
%
(7.2
)%
Money market and others
343,188
332,137
348,869
3.3
(1.6
)
Time deposits greater than $250
564,547
533,857
420,162
5.7
34.4
Other time deposits
595,067
556,371
450,631
7.0
32.1
Total deposits
2,064,603
1,940,821
1,825,171
6.4
13.1
Federal Home Loan Bank advances
75,000
115,000
95,000
(34.8
)
(21.1
)
Accrued interest payable
19,483
15,504
13,552
25.7
43.8
Operating lease liabilities
8,417
9,000
9,926
(6.5
)
(15.2
)
Other liabilities
16,874
14,369
14,719
17.4
14.6
Total liabilities
2,184,377
2,094,694
1,958,368
4.3
11.5
Shareholders' equity:
Common stock
73,697
73,749
77,632
(0.1
)
(5.1
)
Additional paid-in capital
11,713
11,441
10,606
2.4
10.4
Retained earnings
131,588
127,929
117,483
2.9
12.0
Accumulated other comprehensive loss
(13,395
)
(17,133
)
(21,414
)
(21.8
)
(37.4
)
Total shareholders’ equity
203,603
195,986
184,307
3.9
10.5
Total liabilities and shareholders' equity
$
2,387,980
$
2,290,680
$
2,142,675
4.2
%
11.4
%
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
($ in thousands, except share and per share data)
For the Three Months Ended
% Change 3Q2024 vs.
3Q2024
2Q2024
3Q2023
2Q2024
3Q2023
Interest income
Interest and fees on loans
$
31,885
$
30,605
$
28,250
4.2
%
12.9
%
Interest on available-for-sale debt securities
1,626
1,590
1,519
2.3
7.0
Other interest income
1,788
2,162
1,417
(17.3
)
26.2
Total interest income
35,299
34,357
31,186
2.7
13.2
Interest expense
Interest on deposits
17,921
17,343
13,006
3.3
37.8
Interest on borrowings
872
820
867
6.3
0.6
%
Total interest expense
18,793
18,163
13,873
3.5
35.5
Net interest income
16,506
16,194
17,313
1.9
(4.7
)
Provision for credit losses
448
617
1,359
(27.4
)
(67.0
)
Net interest income after provision for credit losses
16,058
15,577
15,954
3.1
0.7
Noninterest income
Service charges on deposits
889
793
575
12.1
54.6
Loan servicing fees, net of amortization
693
575
468
20.5
48.1
Gain on sale of loans
2,088
2,325
1,179
(10.2
)
77.1
Other income
570
491
379
16.1
50.4
Total noninterest income
4,240
4,184
2,601
1.3
63.0
Noninterest expense
Salaries and employee benefits
8,031
7,568
7,014
6.1
14.5
Occupancy and equipment
1,676
1,660
1,706
1.0
(1.8
)
Data processing and communication
634
530
369
19.6
71.8
Professional fees
346
406
440
(14.8
)
(21.4
)
FDIC insurance and regulatory assessments
391
378
333
3.4
17.4
Promotion and advertising
151
151
207
—
(27.1
)
Directors’ fees
154
178
164
(13.5
)
(6.1
)
Foundation donation and other contributions
549
539
529
1.9
3.8
Other expenses
788
779
773
1.2
1.9
Total noninterest expense
12,720
12,189
11,535
4.4
10.3
Income before income tax expense
7,578
7,572
7,020
0.1
7.9
Income tax expense
2,142
2,136
1,899
0.3
12.8
Net income
$
5,436
$
5,436
$
5,121
—
%
6.2
%
Book value per share
$
13.75
$
13.23
$
12.17
3.9
%
13.0
%
Earnings per share - basic
0.36
0.36
0.33
—
9.1
Earnings per share - diluted
0.36
0.36
0.33
—
9.1
Shares of common stock outstanding, at period end
14,811,671
14,816,281
15,149,203
—
%
(2.2
)%
Weighted average shares:
- Basic
14,812,118
14,868,344
15,131,587
(0.4
)%
(2.1
)%
- Diluted
14,812,118
14,868,344
15,140,577
(0.4
)
(2.2
)
KEY RATIOS
For the Three Months Ended
% Change 3Q2024 vs.
3Q2024
2Q2024
3Q2023
2Q2024
3Q2023
Return on average assets (ROA)(1)
0.94
%
0.95
%
0.96
%
—
%
—
%
Return on average equity (ROE)(1)
10.95
11.23
11.07
(0.3
)
(0.1
)
Net interest margin(1)
2.95
2.96
3.38
—
(0.4
)
Efficiency ratio
61.31
59.81
57.92
1.5
3.4
Total risk-based capital ratio
12.79
%
13.26
%
13.31
%
(0.5
)%
(0.5
)%
Tier 1 risk-based capital ratio
11.57
12.01
12.09
(0.4
)
(0.5
)
Common equity tier 1 ratio
11.57
12.01
12.09
(0.4
)
(0.5
)
Leverage ratio
9.30
9.28
9.63
—
(0.3
)
(1)
Annualized.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
($ in thousands, except share and per share data)
For the Nine Months Ended
3Q2024
3Q2023
% Change
Interest income
Interest and fees on loans
$
92,632
$
81,549
13.6
%
Interest on available-for-sale debt securities
4,676
4,647
0.6
Other interest income
5,261
3,686
42.7
Total interest income
102,569
89,882
14.1
Interest expense
Interest on deposits
50,939
35,308
44.3
Interest on borrowings
2,951
2,117
39.4
Total interest expense
53,890
37,425
44.0
Net interest income
48,679
52,457
(7.2
)
Provision for credit losses
1,210
1,021
18.5
Net interest income after provision for credit losses
47,469
51,436
(7.7
)
Noninterest income
Service charges on deposits
2,294
1,566
46.5
%
Loan servicing fees, net of amortization
2,040
1,909
6.9
Gain on sale of loans
6,116
5,847
4.6
Other income
1,560
1,179
32.3
Total noninterest income
12,010
10,501
14.4
Noninterest expense
Salaries and employee benefits
23,440
21,947
6.8
Occupancy and equipment
4,991
4,874
2.4
Data processing and communication
1,651
1,465
12.7
Professional fees
1,147
1,180
(2.8
)
FDIC insurance and regulatory assessments
1,143
1,220
(6.3
)
Promotion and advertising
451
528
(14.6
)
Directors’ fees
489
535
(8.6
)
Foundation donation and other contributions
1,628
1,876
(13.2
)
Other expenses
2,126
2,118
0.4
Total noninterest expense
37,066
35,743
3.7
Income before income tax expense
22,413
26,194
(14.4
)
Income tax expense
6,315
7,448
(15.2
)
Net income
$
16,098
$
18,746
(14.1
)%
Book value per share
$
13.75
$
12.17
13.0
%
Earnings per share - basic
1.06
1.21
(12.4
)
Earnings per share - diluted
1.06
1.21
(12.4
)
Shares of common stock outstanding, at period end
14,811,671
15,149,203
(2.2
)%
Weighted average shares:
- Basic
14,890,479
15,158,365
(1.8
)%
- Diluted
14,890,479
15,169,794
(1.8
)
KEY RATIOS
For the Nine Months Ended
3Q2024
3Q2023
% Change
Return on average assets (ROA)(1)
0.95
%
1.18
%
(0.2
)%
Return on average equity (ROE)(1)
11.00
13.69
(2.7
)
Net interest margin(1)
2.99
3.45
(0.5
)
Efficiency ratio
61.08
56.77
4.3
Total risk-based capital ratio
12.79
%
13.31
%
(0.5
)%
Tier 1 risk-based capital ratio
11.57
12.09
(0.5
)
Common equity tier 1 ratio
11.57
12.09
(0.5
)
Leverage ratio
9.30
9.63
(0.3
)
(1)
Annualized.
ASSET QUALITY
($ in thousands)
As of and For the Three Months Ended
3Q2024
2Q2024
3Q2023
Nonaccrual loans(1)
$
3,620
$
4,389
$
4,211
Loans 90 days or more past due, accruing
—
—
—
Nonperforming loans
3,620
4,389
4,211
OREO
1,237
1,237
—
Nonperforming assets
$
4,857
$
5,626
$
4,211
Criticized loans by risk categories:
Special mention loans
$
4,540
$
3,339
$
3,651
Classified loans(1)(2)
11,960
13,089
10,139
Total criticized loans
$
16,500
$
16,428
$
13,790
Criticized loans by loan type:
CRE loans
$
5,249
$
5,896
$
5,130
SBA loans
10,144
9,771
6,169
C&I loans
1,107
550
—
Home mortgage loans
—
211
2,491
Total criticized loans
$
16,500
$
16,428
$
13,790
Nonperforming loans / gross loans
0.19
%
0.23
%
0.24
%
Nonperforming assets / gross loans plus OREO
0.25
0.30
0.24
Nonperforming assets / total assets
0.20
0.25
0.20
Classified loans / gross loans
0.62
0.70
0.58
Criticized loans / gross loans
0.85
0.88
0.78
Allowance for credit losses ratios:
As a % of gross loans
1.19
%
1.22
%
1.23
%
As a % of nonperforming loans
634
519
513
As a % of nonperforming assets
473
405
513
As a % of classified loans
192
174
213
As a % of criticized loans
139
139
157
Net charge-offs (recoveries)
$
34
$
(4
)
$
488
Net charge-offs (recoveries)(3) to average gross loans(4)
0.01
%
(0.00
)%
0.11
%
(1)
Excludes the guaranteed portion of SBA loans that are in liquidation totaling $11.1 million, $3.5 million and $5.2 million as of September 30, 2024, June 30, 2024 and September 30, 2023, respectively.
(2)
Consists of substandard, doubtful and loss categories.
(3)
Annualized.
(4)
Includes loans held for sale.
($ in thousands)
3Q2024
2Q2024
3Q2023
Accruing delinquent loans 30-89 days past due
30-59 days
$
4,095
$
3,774
$
5,979
60-89 days
6,211
2,878
2,377
Total
$
10,306
$
6,652
$
8,356
AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS
For the Three Months Ended
3Q2024
2Q2024
3Q2023
($ 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
$
109,003
$
1,474
5.29
%
$
135,984
$
1,847
5.37
%
$
82,752
$
1,116
5.28
%
Federal funds sold and other investments
16,432
314
7.65
16,307
315
7.72
16,176
301
7.44
Available-for-sale debt securities, at fair value
199,211
1,626
3.26
195,512
1,590
3.25
199,205
1,519
3.05
CRE loans
944,818
14,759
6.21
908,073
13,742
6.09
856,911
12,207
5.65
SBA loans
270,282
7,107
10.46
259,649
7,116
11.02
248,960
7,303
11.64
C&I loans
187,163
3,642
7.74
172,481
3,367
7.85
117,578
2,340
7.90
Home mortgage loans
503,148
6,364
5.06
501,862
6,348
5.06
516,465
6,393
4.95
Consumer loans
541
13
9.37
1,219
32
10.44
274
7
10.01
Loans(2)
1,905,952
31,885
6.66
1,843,284
30,605
6.67
1,740,188
28,250
6.45
Total interest-earning assets
2,230,598
35,299
6.30
2,191,087
34,357
6.29
2,038,321
31,186
6.08
Noninterest-earning assets
88,747
89,446
84,580
Total assets
$
2,319,345
$
2,280,533
$
2,122,901
Interest-bearing liabilities:
Money market deposits and others
$
343,429
$
3,601
4.17
%
$
338,554
$
3,494
4.15
%
$
352,424
$
3,487
3.93
%
Time deposits
1,127,078
14,320
5.05
1,102,587
13,849
5.05
869,675
9,519
4.34
Total interest-bearing deposits
1,470,507
17,921
4.85
1,441,141
17,343
4.84
1,222,099
13,006
4.22
Borrowings
80,326
872
4.32
77,314
820
4.27
79,891
867
4.31
Total interest-bearing liabilities
1,550,833
18,793
4.82
1,518,455
18,163
4.81
1,301,990
13,873
4.23
Noninterest-bearing liabilities:
Noninterest-bearing deposits
528,126
529,179
599,262
Other noninterest-bearing liabilities
41,892
39,301
36,620
Total noninterest-bearing liabilities
570,018
568,480
635,882
Shareholders’ equity
198,494
193,598
185,029
Total liabilities and shareholders’ equity
$
2,319,345
2,280,533
2,122,901
Net interest income / interest rate spreads
$
16,506
1.48
%
$
16,194
1.48
%
$
17,313
1.85
%
Net interest margin
2.95
%
2.96
%
3.38
%
Cost of deposits & cost of funds:
Total deposits / cost of deposits
$
1,998,633
$
17,921
3.57
%
$
1,970,320
$
17,343
3.54
%
$
1,821,361
$
13,006
2.83
%
Total funding liabilities / cost of funds
2,078,959
18,793
3.60
2,047,634
18,163
3.57
1,901,252
13,873
2.90
(1)
Annualized.
(2)
Includes loans held for sale.
For the Nine Months Ended
3Q2024
3Q2023
($ 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
$
106,022
$
4,310
5.34
%
$
78,736
$
2,965
4.97
%
Federal funds sold and other investments
16,335
951
7.76
14,575
721
6.59
Available-for-sale debt securities, at fair value
195,383
4,676
3.19
206,448
4,647
3.00
CRE loans
918,149
42,230
6.14
845,340
35,209
5.57
SBA loans
263,126
21,436
10.88
262,130
21,459
10.94
C&I loans
164,927
9,679
7.84
117,850
6,772
7.68
Home mortgage loans
505,669
19,207
5.06
504,188
18,069
4.78
Consumer & other loans
1,046
80
10.10
994
40
5.40
Loans(2)
1,852,917
92,632
6.68
1,730,502
81,549
6.30
Total interest-earning assets
2,170,657
102,569
6.30
2,030,261
89,882
5.91
Noninterest-earning assets
88,594
84,044
Total assets
$
2,259,251
$
2,114,305
Interest-bearing liabilities:
Money market deposits and others
$
349,766
$
11,035
4.21
%
$
373,041
$
9,838
3.53
%
Time deposits
1,061,609
39,904
5.02
833,603
25,470
4.09
Total interest-bearing deposits
1,411,375
50,939
4.82
1,206,644
35,308
3.91
Borrowings
88,743
2,951
4.44
63,078
2,117
4.49
Total interest-bearing liabilities
1,500,118
53,890
4.80
1,269,722
37,425
3.94
Noninterest-bearing liabilities:
Noninterest-bearing deposits
523,951
628,569
Other noninterest-bearing liabilities
40,141
33,377
Total noninterest-bearing liabilities
564,092
661,946
Shareholders’ equity
195,041
182,637
Total liabilities and shareholders’ equity
$
2,259,251
2,114,305
Net interest income / interest rate spreads
$
48,679
1.50
%
$
52,457
1.97
%
Net interest margin
2.99
%
3.45
%
Cost of deposits & cost of funds:
Total deposits / cost of deposits
$
1,935,326
$
50,939
3.52
%
1,835,213
$
35,308
2.57
%
Total funding liabilities / cost of funds
2,024,069
53,890
3.56
1,898,291
37,425
2.64
(1)
Annualized.
(2)
Includes loans held for sale.
View source version on businesswire.com: https://www.businesswire.com/news/home/20241024516652/en/
Investor Relations OP Bancorp Christine Oh EVP & CFO 213.892.1192 Christine.oh@myopenbank.com
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