2021 Third Quarter Highlights compared with 2020 Third
Quarter:
- Financial Results:
- Net income of $8.3 million, up $4.7 million, or 129%
- Diluted earnings per share of $0.54, up $0.31, or 135%
- Net interest income of $16.6 million, up $5.2 million, or
45%
- Reversal of provision for loan losses of $884 thousand, a $2.3
million decrease in provision for loan losses
- Noninterest income of $3.5 million, up $521 thousand, or
17%
- Noninterest expense of $9.5 million, up $1.5 million, or
19%
- Pre-provision net revenue (1) of $10.6 million, up $4.2
million, or 64%
- Total assets of $1.68 billion, up $340.1 million, or 25%
- Total loans (2) of $1.33 billion, up $212.1 million, or 19%;
Average loans (2) of $1.31 billion, up $246.2 million, or 23%
- Total deposits of $1.50 billion, up $326.2 million, or 28%;
Average deposits of $1.45 billion, up $323.9 million, or 29%
- Noninterest-bearing deposits to total deposits of 48%, up from
42%
- Net interest margin of 4.21%, up from 3.66%
- Return on average equity of 21.30%, up from 10.22%
- Return on average assets of 2.03%, up from 1.11%
- Efficiency ratio of 47.28%, an improvement from 55.31%
- Credit Quality:
- Allowance for loan losses to gross loans of 1.15%, compared to
1.32%
- Adjusted allowance to gross loans (1) of 1.34%, compared to
1.40%
- Net loan (recoveries) charge-offs to average gross loans
remained minimal at zero percent.
- Nonperforming loans to gross loans of 0.09%, compared to
0.03%
- Criticized loans (3) to gross loans of 0.18%, down from
0.63%
- Capital Levels:
- Quarterly cash dividend of $0.10 per share, a 43% increase from
$0.07 per share
- Capital position remained well-capitalized with a Common Equity
Tier 1 (“CET1”) ratio of 12.63%.
- Book value per common share of $10.48, up 12%
- Returned $1.5 million of capital to shareholders through cash
dividend
___________________________________________________________ (1)
See reconciliation of GAAP to non-GAAP financial measures. (2)
Includes loans held for sale. (3) Includes special mention,
substandard, doubtful, and loss categories.
OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company
of Open Bank, today reported its financial results for the third
quarter of 2021. Net income for the third quarter of 2021 was $8.3
million, or $0.54 per diluted common share, compared with $6.4
million, or $0.42 per diluted common share, for the second quarter
of 2021, and $3.6 million, or $0.23 per diluted common share, for
the third quarter of 2020.
Min Kim, President and Chief Executive Officer:
“We demonstrated solid performance in the quarter with net
income available to common shareholders of $8.3 million reflecting
the benefit of improving overall economic conditions and credit
quality. We continued to focus on executing our strategic goals
despite the challenging environment across the banking industry. We
are pleased with continued strong performance in the growth of our
deposits, with a record level of noninterest bearing deposits at
48% of total deposits at quarter end. We are seeing encouraging
signs of economic recovery, and customer activities are starting to
normalize. We will continue to make investments in technologies to
improve our operations. We remain focused on managing risks,
especially in cybersecurity, while maintaining safe and sound
banking operations.”
SELECTED FINANCIAL HIGHLIGHTS
($ in thousands, except per share
data)
As of and For the Three Months
Ended
% Change 3Q21 vs.
3Q21
2Q21
3Q20
2Q21
3Q20
Selected Income Statement Data:
Net interest income
$
16,589
$
14,586
$
11,419
13.7
%
45.3
%
(Reversal of) provision for loan
losses
(884
)
(1,112
)
1,399
(20.5
)
(163.2
)
Noninterest income
3,542
2,220
3,021
59.5
17.2
Noninterest expense
9,519
8,789
7,987
8.3
19.2
Income tax expense
3,246
2,750
1,459
18.0
122.5
Net Income
$
8,250
$
6,379
$
3,595
29.3
%
129.5
%
Diluted earnings per share
$
0.54
$
0.42
$
0.23
28.6
%
134.8
%
Selected Balance Sheet Data:
Total loans (1)
$
1,326,287
$
1,314,262
$
1,114,220
0.9
%
19.0
%
Total deposits
$
1,496,406
$
1,434,103
$
1,170,164
4.3
%
27.9
%
Total assets
$
1,679,911
$
1,601,860
$
1,339,821
4.9
%
25.4
%
Average loans (1)
$
1,308,338
$
1,242,058
$
1,062,175
5.3
%
23.2
%
Average deposits
$
1,448,771
$
1,348,910
$
1,124,835
7.4
%
28.8
%
Credit Quality:
Nonperforming loans
$
1,052
$
757
$
330
39.0
%
218.8
%
Net (recoveries) charge-offs to average
gross loans (2)
(0.00
)%
0.01
%
(0.00
)%
(0.01
)%
0.00
%
Allowance for loan losses to gross
loans
1.15
%
1.18
%
1.32
%
(0.03
)%
(0.17
)%
Financial Ratios:
Return on average assets (2)
2.03
%
1.68
%
1.11
%
0.35
%
0.92
%
Return on average equity (2)
21.30
%
17.10
%
10.22
%
4.20
%
11.08
%
Net interest margin (2)
4.21
%
3.98
%
3.66
%
0.23
%
0.55
%
Common equity tier 1 capital ratio
12.63
%
12.62
%
13.67
%
0.01
%
(1.04
)%
Leverage ratio
9.75
%
9.96
%
10.85
%
(0.21
)%
(1.10
)%
Efficiency ratio (3)
47.28
%
52.30
%
55.31
%
(5.02
)%
(8.03
)%
Book value per common share
$
10.48
$
10.04
$
9.36
4.4
%
12.0
%
(1) Includes loans held for sale. (2) Annualized. (3) Represents
noninterest expense divided by the sum of net interest income and
noninterest income.
INCOME STATEMENT HIGHLIGHTS
Net Interest Income and Net Interest
Margin
($ in thousands)
For the Three Months
Ended
% Change 3Q21 vs.
3Q21
2Q21
3Q20
2Q21
3Q20
Interest Income
Interest income
$
17,355
$
15,349
$
13,016
13.1
%
33.3
%
Interest expense
766
763
1,597
0.4
(52.0)
Net interest income
$
16,589
$
14,586
$
11,419
13.7
%
45.3
%
($ in thousands)
For the Three Months
Ended
3Q21
2Q21
3Q20
Average
Balance
Interest
Yield/Rate (1)
Average
Balance
Interest
and Fees
Yield/Rate (1)
Average
Balance
Interest
and Fees
Yield/Rate (1)
Interest-earning Assets
Loans
$
1,308,338
$
16,922
5.13
%
$
1,242,058
$
14,971
4.83
%
$
1,062,175
$
12,581
4.72
%
Total interest-earning assets
$
1,565,697
$
17,355
4.40
%
$
1,468,623
$
15,349
4.19
%
$
1,240,871
$
13,016
4.18
%
Interest-bearing Liabilities
Interest-bearing deposits
$
752,010
$
766
0.40
%
$
733,525
$
763
0.42
%
$
663,870
$
1,597
0.96
%
Total interest-bearing liabilities
$
752,010
$
766
0.40
%
$
736,550
$
763
0.42
%
$
673,871
$
1,597
0.94
%
Ratios
Net interest Income/interest rate
spreads
$
16,589
4.00
%
$
14,586
3.77
%
$
11,419
3.24
%
Net interest margin
4.21
%
3.98
%
3.66
%
Total deposits / cost of deposits
$
1,448,771
$
766
0.21
%
$
1,348,910
$
763
0.23
%
$
1,124,835
$
1,597
0.56
%
Total funding liabilities / cost of
funds
$
1,448,771
$
766
0.21
%
$
1,351,935
$
763
0.23
%
$
1,134,836
$
1,597
0.56
%
(1) Annualized.
($ in thousands)
For the Three Months
Ended
Yield % Change 3Q21
vs.
3Q21
2Q21
3Q20
Interest
& Fees
Yield (1)
Interest
& Fees
Yield (1)
Interest
& Fees
Yield (1)
2Q21
3Q20
Loan Yield Component
Contractual interest rate
$
14,251
4.32
%
$
13,189
4.26
%
$
11,715
4.39
%
0.06
%
(0.07
)%
SBA discount accretion
1,584
0.48
1,161
0.38
389
0.15
0.10
0.33
Amortization of net deferred fees
1,249
0.38
618
0.20
393
0.15
0.18
0.23
Amortization of premium
(188
)
(0.06
)
(170
)
(0.06
)
—
—
0.00
(0.06
)
Net interest recognized on nonaccrual
loans
(15
)
0.00
37
0.01
48
0.02
(0.01
)
(0.02
)
Prepayment penalties (2) and other
fees
41
0.01
136
0.04
36
0.01
(0.03
)
—
Yield on loans
$
16,922
5.13
%
$
14,971
4.83
%
$
12,581
4.72
%
0.30
%
0.41
%
Amortization of net deferred fees:
PPP forgiveness (3)
$
1,006
0.31
%
$
290
0.09
%
$
175
0.07
%
0.22
%
0.24
%
Other
243
0.07
328
0.11
218
0.08
(0.04
)
(0.01
)
Total amortization of net deferred
fees
$
1,249
0.38
%
$
618
0.20
%
$
393
0.15
%
0.18
%
0.23
%
(1) Annualized.
(2) For the three months ended September
30, 2021, there was no prepayment penalty income. In comparison,
prepayment penalty income of $116 thousand and $27 thousand for the
three months ended June 30, 2021 and September 30, 2020,
respectively, are from commercial real estate loans.
(3) As of September 30, 2021, there were
unamortized net deferred fees of $2.2 million to be recognized over
the estimated life of the loans as a yield adjustment on the
loans.
Impact of Loan Purchase on Average Loan Yield and Net
Interest Margin
During the second quarter of 2021, the Company purchased an SBA
portfolio of 638 loans with an ending balance of $100.0 million,
excluding loan discount of $8.9 million from Hana Small Business
Lending, Inc. (“Hana”). The following table presents impacts of the
Hana loan purchase on average loan yield and net interest
margin:
($ in thousands)
For the Three Months
Ended
3Q21
2Q21
Hana Loan Purchase:
Contractual interest rate
$
1,094
$
473
Purchased loan discount accretion
948
381
Other fees
15
6
Total interest income
$
2,057
$
860
Effect on average loan yield
(1)
0.30
%
0.13
%
Effect on net interest margin
(1)
0.30
%
0.13
%
($ in thousands)
For the Three Months
Ended
3Q21
2Q21
3Q20
Average
Balance
Interest
Yield/
Rate
Average
Balance
Interest
and Fees
Yield/
Rate
Average
Balance
Interest
and Fees
Yield/
Rate
Average loan yield (1)
$
1,308,338
$
16,922
5.13
%
$
1,242,058
$
14,971
4.83
%
$
1,062,175
$
12,581
4.72
%
Adjusted average loan yield excluding
purchased loans (1)(2)
$
1,222,628
$
14,865
4.83
%
$
1,204,532
$
14,111
4.70
%
$
1,062,175
$
12,581
4.72
%
Net interest margin (1)
$
1,565,697
$
16,589
4.21
%
$
1,468,623
$
14,586
3.98
%
$
1,240,871
$
11,419
3.66
%
Adjusted interest margin excluding
purchased loans (1)(2)
$
1,479,987
$
14,532
3.91
%
$
1,431,097
$
13,726
3.85
%
$
1,240,871
$
11,419
3.66
%
(1) Annualized.
(2) See reconciliation of GAAP to
non-GAAP financial measures.
Third Quarter 2021 vs. Second Quarter
2021
Net interest income increased $2.0 million, or 14%, primarily
due to higher average loan balance and SBA discount accretion
largely resulting from the Hana loan purchase, as well as higher
loan fees from PPP forgiveness. Net interest margin was 4.21%, an
increase of 23 basis points from 3.98%.
- An increase of $2.0 million in interest income from loans was
primarily due to higher average loan balances and loan yields
mainly driven by higher accretion of discounts from the Hana loan
purchase, and loan fees from PPP forgiveness.
- An increase of 23 basis points in net interest margin was
primarily driven by a 21 basis point increase in the yield on
average interest-earning assets.
- Average loan yield was 5.13%, an increase of 30 basis points
from 4.83%, reflecting higher loan fees from PPP forgiveness and
the impact of SBA discount accretion from the Hana loan
purchase.
- Average cost of deposits was 0.21%, a decrease of two basis
points from 0.23%.
Third Quarter 2021 vs. Third Quarter
2020
Net interest income increased $5.2 million, or 45%, primarily
due to higher average loan balance and lower average cost of
deposits. Net interest margin was 4.21%, an increase of 55 basis
points from 3.66%.
- An increase of $4.3 million in interest income from loans was
primarily due to average loan growth. Higher discount accretion
from the Hana loan purchase and higher loan fees from PPP
forgiveness have also contributed to the increase.
- A decrease of $831 thousand in interest expense from
interest-bearing deposits was primarily due to continued downward
adjustments in deposit rates.
- The improvement of 55 basis points in net interest margin was
primarily driven by a 54 basis point decrease in the cost of
interest-bearing liabilities and a 22 basis point increase in the
yield on average interest-earning assets.
- Average loan yield was 5.13%, an increase of 41 basis points
from 4.72%, reflecting higher SBA discount accretions from an
increase in loan payoffs and the Hana loan purchase, and higher
loan fees from PPP forgiveness, partially offset by the impact of
lower interest rates.
- Average cost of deposits was 0.21%, a decrease of 35 basis
points from 0.56%. The decrease in the cost of deposits primarily
reflects the impact of lower interest rates and an increase of
noninterest bearing deposits in deposit mix.
Provision for loan losses
Third Quarter 2021 vs. Second Quarter
2021
The Company recorded a negative $884 thousand provision for loan
losses, compared with a negative $1.1 million provision for loan
losses. The change was primarily due to a specific reserve on one
SBA loan during the third quarter of 2021, and, to a lesser extent,
qualitative factor adjustments compared with second quarter
2021.
Third Quarter 2021 vs. Third Quarter
2020
The Company recorded a negative $884 thousand provision for loan
losses, compared with a positive $1.4 million provision for loan
losses. The change was primarily due to a continued improvement in
the economic outlook.
Noninterest Income
($ in thousands)
For the Three Months
Ended
% Change 3Q21 vs.
3Q21
2Q21
3Q20
2Q21
3Q20
Noninterest income
Service charges on deposits
$
409
$
393
$
334
4.1
%
22.5
%
Loan servicing fees, net of
amortization
599
302
583
98.3
2.7
Gain on sale of loans
2,188
1,210
1,813
80.8
20.7
Other income
346
315
291
9.8
18.9
Total noninterest income
$
3,542
$
2,220
$
3,021
59.5
%
17.2
%
Third Quarter 2021 vs. Second Quarter
2021
Noninterest income increased $1.3 million, or 60%, primarily due
to higher gains on sale of loans and loan servicing fees, net of
amortization.
- Gains on sale of loans were $2.2 million, up $978 thousand from
second quarter 2021. The increase was primarily due to higher gain
on sale of SBA loans from increased SBA loan sale activity. The
Company sold $20.6 million in SBA loans at an average premium of
11.59%, compared with the sale of $10.6 million at an average
premium of 11.48%.
- Loan servicing fees, net of amortization, were $599 thousand,
up $297 thousand from second quarter 2021. The increase was
primarily due to higher net servicing fee income resulting from
purchased loans in the second quarter of 2021 and lower
amortization of servicing assets associated with loan payoffs.
Third Quarter 2021 vs. Third Quarter
2020
Noninterest income increased $521 thousand, or 17%, primarily
due to higher gains on sale of loans.
- Gains on sales of loans were $2.2 million, up $375 thousand
from third quarter 2020. The increase was mainly driven by higher
sales premiums on SBA loans. The Company sold $20.6 million in SBA
loans at an average premium of 11.59%, compared with the sale of
$24.0 million at an average premium of 9.66%.
Noninterest Expense
($ in thousands)
For the Three Months
Ended
% Change 3Q21 vs.
3Q21
2Q21
3Q20
2Q21
3Q20
Noninterest expense
Salaries and employee benefits
$
5,724
$
5,307
$
5,086
7.9
%
12.5
%
Occupancy and equipment
1,326
1,234
1,266
7.5
4.7
Data processing and communication
448
467
424
(4.1
)
5.7
Professional fees
308
303
287
1.7
7.3
FDIC insurance and regulatory
assessments
146
123
112
18.7
30.4
Promotion and advertising
175
176
81
(0.6
)
116.0
Directors’ fees
183
128
147
43.0
24.5
Foundation donation and other
contributions
842
640
360
31.6
133.9
Other expenses
367
411
224
(10.7
)
63.8
Total noninterest expense
$
9,519
$
8,789
$
7,987
8.3
%
19.2
%
Third Quarter 2021 vs. Second Quarter
2021
Noninterest expense increased $730 thousand, or 8%, primarily
due to higher salaries and employee benefits, and foundation
donation and other contributions.
- Salaries and employee benefits were $5.7 million, up $417
thousand from second quarter 2021. The increase was primarily due
to lower deferred loan origination costs, partially offset by lower
incentive and vacation accruals. Deferred loan origination costs
were $473 thousand compared with $1.3 million.
- Foundation donation and other contributions were $842 thousand,
up $202 thousand from second quarter 2021. The increase was
primarily due to higher donation accruals for Open Stewardship
Foundation as a result of higher net income compared to second
quarter 2021.
Third Quarter 2021 vs. Third Quarter
2020
Noninterest expense increased $1.5 million, or 19%, primarily
due to higher salaries and employee benefits, and foundation
donation and other contributions.
- Salaries and employee benefits were $5.7 million, up $638
thousand from third quarter 2020. The increase was primarily due to
an increase in the number of employees to support continued growth
of the Company and higher SBA incentive expense, partially offset
by lower incentive accruals.
- Foundation donation and other contributions were $842 thousand,
up $482 thousand from third quarter 2020. The increase was
primarily due to higher donation accruals for Open Stewardship
Foundation as a result of higher net income compared to third
quarter 2020.
Income Tax Expense
Third Quarter 2021 vs. Second Quarter
2021
Income tax expense was $3.2 million, and the effective tax rate
was 28%, compared to income tax expense of $2.8 million and the
effective rate of 30% for second quarter 2021.
Third Quarter 2021 vs. Third Quarter
2020
Income tax expense was $3.2 million, and the effective tax rate
was 28%, compared to income tax expense of $1.5 million and the
effective rate of 29% for third quarter 2020.
BALANCE SHEET HIGHLIGHTS
Loans
($ in thousands)
As of
% Change 3Q21 vs.
3Q21
2Q21
3Q20
2Q21
3Q20
Real estate loans
$
688,430
$
684,082
$
640,281
0.6
%
7.5
%
SBA loans (1)
303,625
338,751
213,678
(10.4
)
42.1
C & I loans
123,422
102,562
91,814
20.3
34.4
Home mortgage loans
115,255
119,319
125,656
(3.4
)
(8.3
)
Consumer & other loans
1,089
1,152
1,361
(5.5
)
(20.0
)
Total gross loans
$
1,231,821
$
1,245,866
$
1,072,790
(1.1
)%
14.8
%
(1) Includes PPP loans of $69.3
million, $103.9 million and $64.6 million as of September 30, 2021,
June 30, 2021 and September 30, 2020, respectively.
The following table presents new loan originations based on loan
commitment amounts for the periods indicated:
($ in thousands)
For the Three Months
Ended
% Change 3Q21 vs.
3Q21
2Q21
3Q20
2Q21
3Q20
Real estate loans
$
27,671
$
51,107
$
39,476
(45.9
)%
(29.9
)%
SBA loans (1)
57,541
76,535
77,479
(24.8
)
(25.7
)
C & I loans
35,279
40,771
10,458
(13.5
)
237.3
Home mortgage loans
13,437
13,262
12,835
1.3
4.7
Total gross loans
$
133,928
$
181,675
$
140,248
(26.3
)%
(4.5
)%
(1) For the three months ended September
30, 2021, there were no new PPP originations. In comparison, it
includes PPP loans of $13.9 million and $1.3 million for the three
months ended June 30, 2021 and September 30, 2020,
respectively.
Third Quarter 2021 vs. Second Quarter
2021
Gross loan balances were $1.23 billion at September 30, 2021,
down $14.0 million from June 30, 2021, primarily due to PPP
forgiveness, partially offset by an increase in C&I Loans.
During third quarter 2021, $36.1 million of PPP loans outstanding
were forgiven by the Small Business Administration. Excluding PPP
loans, gross loans grew by $20.6 million, or 2%. New loan
originations and loan payoffs were $133.9 million and $84.8 million
for third quarter 2021, compared with $181.7 million and $83.2
million for second quarter 2021, respectively.
Third Quarter 2021 vs. Third Quarter
2020
Gross loan balances were $1.23 billion at September 30, 2021, up
$159.0 million from September 30, 2020, primarily due to the Hana
loan purchase during second quarter 2021 and broad-based growth in
real estate and C&I loans. For the nine months ended September
30, 2021, $88.8 million of PPP loans outstanding were forgiven by
the Small Business Administration. New loan originations and loan
payoffs were $133.9 million and $84.8 million for third quarter
2021, compared with $140.2 million and $47.1 million for third
quarter 2020, respectively.
Deposits
($ in thousands)
As of
% Change 3Q21 vs.
3Q21
2Q21
3Q20
Amount
%
Amount
%
Amount
%
2Q21
3Q20
Noninterest-bearing deposits
$
713,141
47.6
%
$
668,244
46.6
%
$
488,815
41.7
%
6.7
%
45.9
%
Money market deposits and others
351,186
23.5
386,612
27.0
339,981
29.1
(9.2
)
3.3
Time deposits
432,079
28.9
379,247
26.4
341,368
29.2
13.9
26.6
Total deposits
$
1,496,406
100.0
%
$
1,434,103
100.0
%
$
1,170,164
100.0
%
4.3
%
27.9
%
Third Quarter 2021 vs. Second Quarter
2021
Deposit balances were $1.50 billion at September 30, 2021, up
$62.3 million from June 30, 2021, primarily driven by growth in
time and noninterest-bearing deposits, partially offset by a
decrease in money market. Noninterest-bearing deposits reached a
record $713.1 million or 48% of total deposits as of September 30,
2021, up from $668.2 million or 47% as of June 30, 2021. Deposit
growth was primarily due to continued addition of new customers and
increased balances of existing customer accounts reflecting excess
liquidity in the sustained low rate environment.
Third Quarter 2021 vs. Third Quarter
2020
Deposit balances were $1.50 billion at September 30, 2021, up
$326.2 million from September 30, 2020, primarily driven by growth
in noninterest-bearing and time deposits. Noninterest-bearing
deposits were $713.1 million or 48% of total deposits, up from
$488.8 million or 42% of total deposits as of September 30, 2020.
Deposit growth was primarily driven by continued customer
preferences for liquidity given the sustained economic uncertainty
associated with the COVID-19 pandemic.
Capital and Cash Dividend
Basel III
OP Bancorp
Open Bank
Well
Capitalized
Ratio
Minimum
Capital Ratio+
Conservation
Buffer (1)
Risk-Based Capital Ratios:
Total risk-based capital ratio
13.81
%
13.60
%
10.00
%
10.50
%
Tier 1 risk-based capital ratio
12.63
%
12.42
%
8.00
%
8.50
%
Common equity tier 1 ratio
12.63
%
12.42
%
6.50
%
7.00
%
Leverage ratio
9.75
%
9.58
%
5.00
%
4.00
%
(1) An additional 2.5% capital
conservation buffer above the minimum capital ratios are required
in order to avoid limitations on distributions, including dividend
payments and certain discretionary bonus to executive officers.
($ in thousands)
Basel III
% Change 3Q21 vs.
3Q21
2Q21
3Q20
2Q21
3Q20
Risk-Based Capital Ratios:
Total risk-based capital ratio
13.81
%
13.87
%
14.93
%
(0.06
)%
(1.12
)%
Tier 1 risk-based capital ratio
12.63
%
12.62
%
13.67
%
0.01
%
(1.04
)%
Common equity tier 1 ratio
12.63
%
12.62
%
13.67
%
0.01
%
(1.04
)%
Leverage ratio
9.75
%
9.96
%
10.85
%
(0.21
)%
(1.10
)%
Risk-weighted Assets
$
1,251,867
$
1,198,373
$
1,025,241
4.46
%
22.10
%
Capital ratios remained strong during the quarter. Our CET1 and
total risk-based capital ratios were 12.63% and 13.81% as of
September 30, 2021, respectively, down from a year ago due to
year-over-year asset growth.
The Company’s Board of Directors has declared a quarterly cash
dividend of $0.10 per share of its common stock. The cash dividend
is payable on or about November 25, 2021 to all shareholders of
record as of the close of business on November 11, 2021.
The Company did not repurchase any shares during third quarter
2021. Since the announcement of the initial stock repurchase
program in January 2019, the Company has repurchased a total of
1.57 million shares of its common stock at an average repurchase
price of $8.58 per share through September 30, 2021.
Asset Quality
($ in thousands)
As of and For the Three Months
Ended
% Change 3Q21 vs.
3Q21
2Q21
3Q20
2Q21
3Q20
Nonperforming loans
$
1,052
$
757
$
330
39.0
%
218.8
%
OREO
—
—
—
—
—
Total nonperforming assets
$
1,052
$
757
$
330
39.0
%
218.8
%
Nonperforming loans to gross loans
0.09
%
0.06
%
0.03
%
0.03
%
0.06
%
Nonperforming assets to total assets
0.06
%
0.05
%
0.02
%
0.01
%
0.04
%
Criticized (1) Loan:
Special mention loans
$
—
$
1,790
$
4,664
(100.0
)%
(100.0
)%
Classified loans (2)
2,191
6,553
2,106
(66.6
)%
4.0
%
Total criticized loans
$
2,191
$
8,343
$
6,770
(73.7
)%
(67.6
)%
Criticized (1) loans to gross loans
0.18
%
0.67
%
0.63
%
(0.49
)%
(0.45
)%
Classified loans (2) to gross loans
0.18
%
0.53
%
0.20
%
(0.35
)%
(0.02
)%
Allowance for loan losses, beginning
$
14,687
$
15,339
$
12,764
(4.3
)%
15.1
%
(Reversal of) provision for loan losses
(3)
(557
)
(625
)
1,399
(10.9
)
(139.8
)
Gross charge-offs
—
(27
)
—
(100.0
)
—
Gross recoveries
4
—
1
100.0
300.0
Allowance for loan losses, ending (4)
$
14,134
$
14,687
$
14,164
(3.8
)%
(0.2
)%
Allowance for loan losses ratios:
As a % of gross loans
1.15
%
1.18
%
1.32
%
(0.03
)%
(0.17
)%
As an adjusted of gross loans (5)
1.34
%
1.46
%
1.40
%
(0.12
)%
(0.06
)%
As a % of nonperforming loans
1,344
%
1,940
%
4,295
%
(597
)%
(2951
)%
As a % of nonperforming assets
1,344
%
1,940
%
4,295
%
(597
)%
(2951
)%
Net (recoveries)charge-offs to average
gross loans
(0.00
)%
0.01
%
(0.00
)%
(0.01
)%
0.00
%
(1) Includes special mention, substandard,
doubtful and loss categories.
(2) Includes substandard, doubtful and
loss categories.
(3) Excludes (reversal of) provision
for uncollectible accrued interest receivable of $(327) thousand
and $(487) thousand for the three months ended September 30, 2021
and June 30, 2021, respectively. In comparison, there was no
provision for uncollectible accrued interest receivable for the
three months ended September 30, 2020.
(4) Excludes allowance for uncollectible
accrued interest receivable of $465 thousand and $792 thousand as
of September 30, 2021 and June 30, 2021, respectively. In
comparison, there was no allowance for uncollectible accrued
interest receivable as of September 30, 2020.
(5) See the Reconciliation of GAAP to
NON-GAAP Financial Measures.
Overall, the Company maintained solid asset quality with low
levels of nonperforming loans and net charge-offs. Nonperforming
assets and criticized loans remained below our historical norms, a
true reflection of our conservative credit culture and expertise in
the industries we serve. Our allowance remained strong with an
adjusted allowance to gross loans ratio of 1.34%. We expect
economic growth over the remainder of the year; however, we remain
vigilant given potential impacts on our customers from supply chain
and labor constraints as well as COVID variants.
- Allowance for loan losses decreased $30 thousand to $14.1
million from a year ago. Excluding the impacts of the purchased
Hana loans, PPP loans, and the allowance for uncollectible accrued
interest receivable, adjusted allowance to gross loans ratio was
1.34% as of September 30, 2021.
- Criticized loans decreased by $4.6 million or 68% from a year
ago, and the criticized loans ratio improved by 45 basis points,
primarily due to a $3.9 million payoff in one C&I relationship,
as well as improvement in the credit risk ratings of SBA loans.
Criticized loans are generally consistent with the Special Mention,
Substandard, Doubtful and Loss categories defined by regulatory
authorities.
- Nonperforming assets increased $722 thousand to $1.1 million,
or 0.06% of total assets from a year ago. The increase in
nonperforming assets was primarily due to SBA loans that were
placed on nonaccrual in 2021. The Company did not have OREO as of
both September 30, 2021 and 2020.
- Net recoveries were $4 thousand or 0.00% of average loans
compared to net recoveries of $1 thousand, or 0.00% of average
loans for third quarter 2020.
COVID-19 Pandemic Update
($ in thousands)
Total deferments
under the CARES Act
through September 30,
2021
Payment resumed
or paid off
through September 30,
2021
Remaining deferments
as of September 30,
2021
Number
of
accounts
Balance
Number
of
accounts
Balance
Number
of
accounts
Balance
Loan Type
Loans, excluding home mortgage and
consumer loans
156
$
220,522
152
$
213,774
4
$
6,748
Home mortgage loans
69
30,205
69
30,205
—
—
Total
225
$
250,727
221
$
243,979
4
$
6,748
Total outstanding balance of loans remaining in deferment status
as of September 30, 2021, represented 0.5% of the total loan
portfolio.
The Company continue to carefully monitor the trajectory of the
economic recovery, which could be impacted by the emergence of new
variants and continued spread of COVID-19. In addition, we continue
to support our clients, employees, and communities.
Since the PPP’s inception through September 30, 2021, we have
funded $154.5 million, and $88.8 million of principal forgiveness
has been provided on qualifying PPP loans. There were no new PPP
loans during the third quarter of 2021.
Reconciliation of GAAP to Non-GAAP Financial Measures
In addition to GAAP measures, management uses certain non-GAAP
financial measures to provide supplemental information regarding
the Company’s performance.
Pre-provision net revenue removes provision for loan losses and
income tax expense. Management believes that this non-GAAP measure,
when taken together with the corresponding GAAP financial measures
(as applicable), provides meaningful supplemental information
regarding our performance. This non-GAAP financial measure also
facilitates a comparison of our performance to prior periods.
During the second quarter of 2021, the Company purchased 638
loans from Hana for a total purchase price of $97.6 million. The
Company evaluated $100.0 million of the loans purchased in
accordance with the provisions of ASC 310-20, Nonrefundable Fees
and Other Costs, which were recorded with a $8.9 million discount.
As a result, the fair value discount on these loans is being
accreted into interest income over the expected life of the loans
using the effective yield method. Adjusted loan yield and net
interest margin for the three months ended September 30, 2021 and
June 30, 2021 excluded the impacts of contractual interest and
discount accretion of the purchased loans as management does not
consider purchasing loan portfolios to be normal or recurring
transactions. Management believes that presenting the adjusted
average loan yield and net interest margin provide comparability to
prior periods and these non-GAAP financial measures provide
supplemental information regarding the Company’s performance.
Adjusted allowance to gross loans ratio removes the impacts of
purchased loans, PPP loans and allowance on accrued interest
receivable. Management believes that this ratio provides greater
consistency and comparability between the Company’s results and
those of its peer banks.
($ in thousands)
For the Three Months
Ended
3Q21
2Q21
3Q20
Interest income
$
17,355
$
15,349
$
13,016
Interest expense
766
763
1,597
Net interest income
16,589
14,586
11,419
Noninterest income
3,542
2,220
3,021
Noninterest expense
9,519
8,789
7,987
Pre-provision net revenue
(a)
$
10,612
$
8,017
$
6,453
Reconciliation to Net Income:
(Reversal of) provision for loan
losses
(b)
(884
)
(1,112
)
1,399
Income tax expense
(c)
3,246
2,750
1,459
Net Income
(a) + (b) + (c)
$
8,250
$
6,379
$
3,595
($ in thousands)
For the Three Months
Ended
3Q21
2Q21
3Q20
Yield on Average Loans
Interest income on loans
$
16,922
$
14,971
$
12,581
Less: interest income on purchased
loans
2,057
860
—
Adjusted interest income on
loans
(a)
$
14,865
$
14,111
$
12,581
Average loans
$
1,308,338
$
1,242,058
$
1,062,175
Less: Average purchased loans
85,710
37,526
—
Adjusted average loans
(b)
$
1,222,628
$
1,204,532
$
1,062,175
Average loan yield (1)
5.13
%
4.83
%
4.72
%
Effect on average loan yield
(1)
0.30
0.13
0.00
Adjusted average loan yield (1)
(a)/(b)
4.83
%
4.70
%
4.72
%
Net Interest Margin
Net interest income
$
16,589
$
14,586
$
11,419
Less: interest income on purchased
loans
2,057
860
—
Adjusted net interest income
(c)
$
14,532
$
13,726
$
11,419
Average interest-earning assets
$
1,565,697
$
1,468,623
$
1,240,871
Less: Average purchased loans
85,710
37,526
—
Adjusted average interest-earning
assets
(d)
$
1,479,987
$
1,431,097
$
1,240,871
Net interest margin (1)
4.21
%
3.98
%
3.66
%
Effect on net interest margin
(1)
0.30
0.13
0.00
Adjusted net interest margin
(1)
(c)/(d)
3.91
%
3.85
%
3.66
%
(1) Annualized.
($ in thousands)
As of
3Q21
2Q21
3Q20
Gross loans
$
1,231,821
$
1,245,866
$
1,072,790
Less: Purchased loans
(83,025
)
(88,438
)
—
PPP loans (1)
(64,574
)
(97,673
)
(64,634
)
Adjusted gross loans
(a)
$
1,084,222
$
1,059,755
$
1,008,156
Accrued interest receivable on loans
$
3,659
$
3,179
$
4,689
Less: Accrued interest receivable on
purchased loans
(375
)
(290
)
—
Accrued interest receivable on PPP loans
(2)
(416
)
(461
)
(280
)
Add: Allowance on accrued interest
receivable
465
792
—
Adjusted accrued interest receivable on
loans
(b)
$
3,333
$
3,220
$
4,409
Adjusted gross loans and accrued
interest receivable
(a) + (b) = (c)
$
1,087,555
$
1,062,975
$
1,012,565
Allowance for loan losses
$
14,134
$
14,687
$
14,164
Add: Allowance on accrued interest
receivable
465
792
—
Adjusted Allowance
(d)
$
14,599
$
15,479
$
14,164
Adjusted allowance to gross loans
ratio
(d)/(c)
1.34
%
1.46
%
1.40
%
(1) Excludes purchased PPP loans of $4.7
million and $6.3 million as of September 30, 2021 and June 30,
2021, respectively.
(2) Excludes purchased accrued interest
receivable on PPP loans of $30 thousand and $26 thousand as of
September 30, 2021 and June 30, 2021, respectively.
About OP Bancorp
OP Bancorp, the holding company for Open Bank (the “Bank”), is a
California corporation whose common stock is quoted on the Nasdaq
Global Market under the ticker symbol, “OPBK.” The Bank is engaged
in the general commercial banking business in Los Angeles, Orange,
and Santa Clara Counties, California, and Carrollton, Texas and is
focused on serving the banking needs of small- and medium-sized
businesses, professionals, and residents with a particular emphasis
on Korean and other ethnic minority communities. The Bank currently
operates with nine full branch offices in Downtown Los Angeles, Los
Angeles Fashion District, Los Angeles Koreatown, Gardena, Buena
Park, and Santa Clara, California and Carrollton, Texas. The Bank
also has four loan production offices in Atlanta, Georgia, Aurora,
Colorado, and Lynnwood and Seattle, Washington. The Bank commenced
its operations on June 10, 2005 as First Standard Bank and changed
its name to Open Bank in October 2010. Its headquarters is located
at 1000 Wilshire Blvd., Suite 500, Los Angeles, California 90017.
Phone 213.892.9999; www.myopenbank.com
Member FDIC, Equal Housing Lender.
Cautionary Note Regarding Forward-Looking Statements
Certain matters set forth herein constitute “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995, including forward-looking statements relating
to the Company’s current business plans and expectations regarding
future operating results. These forward-looking statements are
subject to risks and uncertainties that could cause actual results,
performance or achievements to differ materially from those
projected. These risks and uncertainties, some of which are beyond
our control, include, but are not limited to: the uncertainties
related to the coronavirus pandemic including, but not limited to,
the potential adverse effect of the pandemic on the economy, our
employees and customers, and our financial performance; the impact
of the federal CARES Act and the significant additional lending
activities undertaken by the Company in connection with the Small
Business Administration’s Paycheck Protection Program enacted
thereunder, including risks to the Company with respect to the
uncertain application by the Small Business Administration of new
borrower and loan eligibility, forgiveness and audit criteria;
business and economic conditions, particularly those affecting the
financial services industry and our primary market areas; our
ability to successfully manage our credit risk and the sufficiency
of our allowance for loan losses; factors that can impact the
performance of our loan portfolio, including real estate values and
liquidity in our primary market areas, the financial health of our
commercial borrowers, the success of construction projects that we
finance, including any loans acquired in acquisition transactions;
our ability to effectively execute our strategic plan and manage
our growth; interest rate fluctuations, which could have an adverse
effect on our profitability; liquidity issues, including
fluctuations in the fair value and liquidity of the securities we
hold for sale and our ability to raise additional capital, if
necessary; external economic and/or market factors, such as changes
in monetary and fiscal policies and laws, including the interest
rate policies of the Federal Reserve, inflation or deflation,
changes in the demand for loans, and fluctuations in consumer
spending, borrowing and savings habits, which may have an adverse
impact on our financial condition; continued or increasing
competition from other financial institutions, credit unions, and
non-bank financial services companies, many of which are subject to
different regulations than we are; challenges arising from
unsuccessful attempts to expand into new geographic markets,
products, or services; restraints on the ability of Open Bank to
pay dividends to us, which could limit our liquidity; increased
capital requirements imposed by banking regulators, which may
require us to raise capital at a time when capital is not available
on favorable terms or at all; a failure in the internal controls we
have implemented to address the risks inherent to the business of
banking; inaccuracies in our assumptions about future events, which
could result in material differences between our financial
projections and actual financial performance; changes in our
management personnel or our inability to retain motivate and hire
qualified management personnel; disruptions, security breaches, or
other adverse events, failures or interruptions in, or attacks on,
our information technology systems; disruptions, security breaches,
or other adverse events affecting the third-party vendors who
perform several of our critical processing functions; an inability
to keep pace with the rate of technological advances due to a lack
of resources to invest in new technologies; risks related to
potential acquisitions; political developments, uncertainties or
instability, catastrophic events, acts of war or terrorism, or
natural disasters, such as earthquakes, fires, drought, pandemic
diseases (such as the coronavirus) or extreme weather events, any
of which may affect services we use or affect our customers,
employees or third parties with which we conduct business;
incremental costs and obligations associated with operating as a
public company; the impact of any claims or legal actions to which
we may be subject, including any effect on our reputation;
compliance with governmental and regulatory requirements, including
the Dodd-Frank Act and others relating to banking, consumer
protection, securities and tax matters, and our ability to maintain
licenses required in connection with commercial mortgage
origination, sale and servicing operations; changes in federal tax
law or policy; and our ability the manage the foregoing and other
factors set forth in the Company’s public reports. We describe
these and other risks that could affect our results in Item 1A.
“Risk Factors,” of our latest Annual Report on Form 10-K for the
year ended December 31, 2020 and in our other subsequent filings
with the Securities and Exchange Commission.
Consolidated Balance Sheet
(unaudited)
($ in thousands)
As of
% Change 3Q21 vs.
3Q21
2Q21
3Q20
2Q21
3Q20
Assets
Cash and cash equivalents
$
188,145
$
128,687
$
87,888
46.2
%
114.1
%
Available-for-sale debt securities, at
fair value
102,535
111,832
93,482
(8.3
)
9.7
Other investments
11,025
11,028
10,097
0.0
9.2
Loans held for sale
94,466
68,396
41,430
38.1
128.0
Real estate loans
688,430
684,082
640,281
0.6
7.5
SBA loans (1)
303,625
338,751
213,678
(10.4
)
42.1
C & I loans
123,422
102,562
91,814
20.3
34.4
Home mortgage loans
115,255
119,319
125,656
(3.4
)
(8.3
)
Consumer & other loans
1,089
1,152
1,361
(5.5
)
(20.0
)
Gross loans, net of unearned income
1,231,821
1,245,866
1,072,790
(1.1
)
14.8
Allowance for loan losses
(14,134
)
(14,687
)
(14,164
)
(3.8
)
(0.2
)
Net loans receivable
1,217,687
1,231,179
1,058,626
(1.1
)
15.0
Premises and equipment, net
4,199
4,271
4,756
(1.7
)
(11.7
)
Accrued interest receivable, net
3,931
3,469
4,968
13.3
(20.9
)
Servicing assets
12,389
12,903
7,222
(4.0
)
71.5
Company owned life insurance
11,070
11,005
10,815
0.6
2.4
Deferred tax assets
5,247
4,861
3,911
7.9
34.2
Operating right-of-use assets
9,270
6,065
7,151
52.8
29.6
Other assets
19,947
8,164
9,475
144.3
110.5
Total assets
$
1,679,911
$
1,601,860
$
1,339,821
4.9
%
25.4
%
Liabilities and Shareholders'
Equity
Noninterest-bearing deposits
$
713,141
$
668,244
$
488,815
6.7
%
45.9
%
Money market deposits and others
351,186
386,612
339,981
(9.2
)
3.3
Time deposits over $250,000
209,091
193,704
194,630
7.9
7.4
Other time deposits
222,988
185,543
146,738
20.2
52.0
Total deposits
1,496,406
1,434,103
1,170,164
4.3
27.9
Federal Home Loan Bank advances
—
—
10,000
—
(100.0
)
Accrued interest payable
575
608
1,355
(5.4
)
(57.6
)
Operating lease liabilities
10,703
7,567
8,857
41.4
20.8
Other liabilities
13,603
7,620
7,896
78.5
72.3
Total liabilities
1,521,287
1,449,898
1,198,272
4.9
27.0
Common stock
78,718
78,718
79,600
0.0
(1.1
)
Additional paid-in capital
8,491
8,324
8,382
2.0
1.3
Retained earnings
71,436
64,700
52,590
10.4
35.8
Accumulated other comprehensive income
(loss)
(21
)
220
977
(109.5
)
(102.1
)
Total shareholders' equity
158,624
151,962
141,549
4.4
12.1
Total Liabilities and Shareholders'
Equity
$
1,679,911
$
1,601,860
$
1,339,821
4.9
%
25.4
%
(1) Includes SBA Paycheck Protection
Program (“PPP”) loans of $69.3 million, $103.9 million and $64.6
million as of September 30, 2021, June 30, 2021 and September 30,
2020, respectively.
Consolidated Statements of Income
(unaudited)
($ in thousands, except share and per
share data)
For the Three Months
Ended
% Change 3Q21 vs.
3Q21
2Q21
3Q20
2Q21
3Q20
Interest income
Interest and fees on loans
$
16,922
$
14,971
$
12,581
13.0
%
34.5
%
Interest on available-for-sale debt
securities
269
218
319
23.4
(15.7
)
Other interest income
164
160
116
2.5
41.4
Total interest income
17,355
15,349
13,016
13.1
33.3
Interest expense
Interest on deposits
766
763
1,597
0.4
(52.0
)
Total interest expense
766
763
1,597
0.4
(52.0
)
Net interest income
16,589
14,586
11,419
13.7
45.3
(Reversal of) provision for loan
losses
(884
)
(1,112
)
1,399
(20.5
)
(163.2
)
Net interest income after (reversal of)
provision for loan losses
17,473
15,698
10,020
11.3
74.4
Noninterest income
Service charges on deposits
409
393
334
4.1
22.5
Loan servicing fees, net of
amortization
599
302
583
98.3
2.7
Gain on sale of loans
2,188
1,210
1,813
80.8
20.7
Other income
346
315
291
9.8
18.9
Total noninterest income
3,542
2,220
3,021
59.5
17.2
Noninterest expense
Salaries and employee benefits
5,724
5,307
5,086
7.9
12.5
Occupancy and equipment
1,326
1,234
1,266
7.5
4.7
Data processing and communication
448
467
424
(4.1
)
5.7
Professional fees
308
303
287
1.7
7.3
FDIC insurance and regulatory
assessments
146
123
112
18.7
30.4
Promotion and advertising
175
176
81
(0.6
)
116.0
Directors’ fees
183
128
147
43.0
24.5
Foundation donation and other
contributions
842
640
360
31.6
133.9
Other expenses
367
411
224
(10.7
)
63.8
Total noninterest expense
9,519
8,789
7,987
8.3
19.2
Income before income tax expense
11,496
9,129
5,054
25.9
127.5
Income tax expense
3,246
2,750
1,459
18.0
122.5
Net income
$
8,250
$
6,379
$
3,595
29.3
%
129.5
%
Book value per share
$
10.48
$
10.04
$
9.36
4.4
%
12.0
%
Basic EPS
$
0.54
$
0.42
$
0.23
28.6
%
134.8
%
Diluted EPS
$
0.54
$
0.42
$
0.23
28.6
%
134.8
%
Shares of common stock outstanding
15,133,407
15,133,407
15,126,270
—
%
0.0
%
Weighted Average Shares:
- Basic
15,133,407
15,056,484
15,148,833
0.5
%
(0.1
)%
- Diluted
15,200,613
15,129,451
15,182,733
0.5
%
0.1
%
Key Ratios
As of and For the Three Months
Ended
% Change 3Q21 vs.
3Q21
2Q21
3Q20
2Q21
3Q20
Return on average assets (ROA) (1)
2.03
%
1.68
%
1.11
%
0.35
%
0.92
%
Return on average equity (ROE) (1)
21.30
%
17.10
%
10.22
%
4.20
%
11.08
%
Net interest margin (1)
4.21
%
3.98
%
3.66
%
0.23
%
0.55
%
Efficiency ratio
47.28
%
52.30
%
55.31
%
(5.02
)%
(8.03
)%
Total risk-based capital ratio (2)
13.81
%
13.87
%
14.93
%
(0.06
)%
(1.12
)%
Tier 1 risk-based capital ratio (2)
12.63
%
12.62
%
13.67
%
0.01
%
(1.04
)%
Common equity tier 1 ratio (2)
12.63
%
12.62
%
13.67
%
0.01
%
(1.04
)%
Leverage ratio (2)
9.75
%
9.96
%
10.85
%
(0.21
)%
(1.10
)%
(1) Annualized.
(2) The Company’s September 30, 2021
regulatory capital ratios are preliminary.
Consolidated Statements of Income
(unaudited)
($ in thousands, except share and per
share data)
For the Nine Months
Ended
3Q21
3Q20
% change
Interest income
Interest and fees on loans
$
45,177
$
38,823
16.4
%
Interest on available-for-sale debt
securities
723
920
(21.4
)
Other interest income
436
538
(19.0
)
Total interest income
46,336
40,281
15.0
Interest expense
Interest on deposits
2,406
7,098
(66.1
)
Total interest expense
2,406
7,098
(66.1
)
Net interest income
43,930
33,183
32.4
(Reversal of) provision for loan
losses
(1,376
)
4,130
(133.3
)
Net interest income after (reversal of)
provision for loan losses
45,306
29,053
55.9
Noninterest income
Service charges on deposits
1,157
1,063
8.8
Loan servicing fees, net of
amortization
1,432
1,489
(3.8
)
Gain on sale of loans
5,280
3,904
35.2
Other income
859
923
(6.9
)
Total noninterest income
8,728
7,379
18.3
Noninterest expense
Salaries and employee benefits
15,693
14,505
8.2
Occupancy and equipment
3,795
3,737
1.6
Data processing and communication
1,363
1,247
9.3
Professional fees
925
836
10.6
FDIC insurance and regulatory
assessments
401
334
20.1
Promotion and advertising
528
405
30.4
Directors’ fees
427
603
(29.2
)
Foundation donation and other
contributions
1,989
935
112.7
Other expenses
1,153
926
24.5
Total noninterest expense
26,274
23,528
11.7
Income before income tax expense
27,760
12,904
115.1
Income tax expense
8,054
3,594
124.1
Net income
$
19,706
$
9,310
111.7
%
Book value per share
$
10.48
$
9.36
12.0
%
Basic EPS
$
1.29
$
0.60
115.0
%
Diluted EPS
$
1.29
$
0.60
115.0
%
Shares of common stock outstanding
15,133,407
15,126,270
0.0
%
Weighted Average Shares:
- Basic
15,071,327
15,235,617
(1.1
)%
- Diluted
15,133,573
15,284,190
(1.0
)%
Key Ratios
As of and For the Nine Months
Ended
3Q21
3Q20
% Change
Return on average assets (ROA) (1)
1.73
%
1.00
%
0.73
%
Return on average equity (ROE) (1)
17.55
%
8.88
%
8.67
%
Net interest margin (1)
4.01
%
3.71
%
0.30
%
Efficiency ratio
49.90
%
58.00
%
(8.10
)%
Total risk-based capital ratio (2)
13.81
%
14.93
%
(1.12
)%
Tier 1 risk-based capital ratio (2)
12.63
%
13.67
%
(1.04
)%
Common equity tier 1 ratio (2)
12.63
%
13.67
%
(1.04
)%
Leverage ratio (2)
9.75
%
10.85
%
(1.10
)%
(1) Annualized.
(2) The Company’s September 30, 2021
regulatory capital ratios are preliminary.
Asset Quality
($ in thousands)
As of and For the Three Months
Ended
3Q21
2Q21
3Q20
Nonaccrual Loans
$
1,052
$
757
$
—
Loans 90 days or more past due,
accruing
—
—
—
Accruing restructured loans
—
—
330
Nonperforming loans
1,052
757
330
Other real estate owned (“OREO”)
—
—
—
Nonperforming assets
$
1,052
$
757
$
330
Criticized loans (1) by loan type:
SBA loans
$
1,871
$
3,681
$
1,677
C & I loans
320
4,662
5,093
Home mortgage loans
—
—
—
Total criticized loans (1)
$
2,191
$
8,343
$
6,770
Nonperforming assets/total assets
0.06
%
0.05
%
0.02
%
Nonperforming assets/gross loans plus
OREO
0.09
%
0.06
%
0.03
%
Nonperforming loans/gross loans
0.09
%
0.06
%
0.03
%
Allowance for loan losses/nonperforming
loans
1,344
%
1,940
%
4,295
%
Allowance for loan losses/nonperforming
assets
1,344
%
1,940
%
4,295
%
Allowance for loan losses/gross loans
1.15
%
1.18
%
1.32
%
Criticized loans (1) /gross loans
0.18
%
0.67
%
0.63
%
Net (recoveries) charge-offs
$
(4
)
$
27
$
(1
)
Net (recoveries) charge-offs to average
gross loans (2)
(0.00
)%
0.01
%
(0.00
)%
(1) Consists of special mention,
substandard, doubtful and loss categories.
(2) Annualized.
($ in thousands)
3Q21
2Q21
3Q20
Accruing delinquent loans 30-89 days
past due:
30-59 days
$
263
$
41
$
600
60-89 days
1,064
—
—
Total
$
1,327
$
41
$
600
Average Balance Sheet, Interest and
Yield/Rate Analysis
($ in thousands)
For the Three Months
Ended
3Q21
2Q21
3Q20
Average
Balance
Interest
and Fees
Yield/
Rate (1)
Average
Balance
Interest
and Fees
Yield/
Rate (1)
Average
Balance
Interest
and Fees
Yield/
Rate (1)
Interest-earning assets:
Federal funds sold and other
investments
$
148,350
$
164
0.44
%
$
117,605
$
160
0.54
%
$
93,827
$
116
0.49
%
Available-for-sale debt securities, at
fair value
109,009
269
0.99
108,960
218
0.80
84,869
319
1.51
Total investments
257,359
433
0.67
226,565
378
0.67
178,696
435
0.97
Real estate loans
678,642
7,680
4.49
670,224
7,725
4.62
630,255
7,461
4.71
SBA loans
403,279
6,835
6.72
346,702
4,816
5.57
219,183
2,719
4.94
C & I loans
107,614
1,074
3.96
101,362
983
3.89
89,103
847
3.78
Home mortgage loans
117,825
1,317
4.47
122,588
1,431
4.67
122,222
1,531
5.01
Consumer & other loans
978
16
6.49
1,182
16
5.30
1,412
23
6.43
Loans (2)
1,308,338
16,922
5.13
1,242,058
14,971
4.83
1,062,175
12,581
4.72
Total interest-earning assets
1,565,697
17,355
4.40
1,468,623
15,349
4.19
1,240,871
13,016
4.18
Noninterest-earning assets
57,160
49,691
52,145
Total assets
$
1,622,857
$
1,518,314
$
1,293,016
Interest-bearing liabilities:
Money market deposits and others
$
368,507
$
299
0.32
%
$
366,922
$
281
0.31
%
$
298,942
$
394
0.52
%
Time deposits
383,503
467
0.48
366,603
482
0.53
364,928
1,203
1.31
Total interest-bearing deposits
752,010
766
0.40
733,525
763
0.42
663,870
1,597
0.96
Borrowings
—
—
—
3,025
—
—
10,001
—
—
Total interest-bearing liabilities
752,010
766
0.40
736,550
763
0.42
673,871
1,597
0.94
Noninterest-bearing liabilities:
Noninterest-bearing deposits
696,761
615,385
460,965
Other noninterest-bearing liabilities
19,169
17,119
17,507
Total noninterest-bearing liabilities
715,930
632,504
478,472
Shareholders’ equity
154,917
149,260
140,673
Total liabilities and shareholders’
equity
$
1,622,857
$
1,518,314
$
1,293,016
Net interest income / interest rate
spreads
$
16,589
4.00
%
$
14,586
3.77
%
$
11,419
3.24
%
Net interest margin
4.21
%
3.98
%
3.66
%
Cost of deposits & cost of funds:
Total deposits / cost of deposits
$
1,448,771
$
766
0.21
%
$
1,348,910
$
763
0.23
%
$
1,124,835
$
1,597
0.56
%
Total funding liabilities / cost of
funds
$
1,448,771
$
766
0.21
%
$
1,351,935
$
763
0.23
%
$
1,134,836
$
1,597
0.56
%
(1) Annualized.
(2) Includes loans held for sale.
Average Balance Sheet, Interest and
Yield/Rate Analysis
($ in thousands)
For the Nine Months
Ended
3Q21
3Q20
Average
Balance
Interest
and Fees
Yield/ Rate (1)
Average
Balance
Interest
and Fees
Yield/ Rate (1)
Interest-earning assets:
Federal funds sold and other
investments
$
121,947
$
436
0.47
%
$
90,733
$
538
0.78
%
Available-for-sale debt securities, at
fair value
103,699
723
0.93
66,752
920
1.84
Total investments
225,646
1,159
0.68
157,485
1,458
1.23
Real estate loans
667,547
22,870
4.58
634,178
23,159
4.88
SBA loans
339,968
14,931
5.87
182,842
8,001
5.84
C & I loans
108,402
3,129
3.86
94,455
3,044
4.30
Home mortgage loans
122,008
4,200
4.59
121,332
4,521
4.97
Consumer & other loans
1,115
47
5.61
2,362
98
5.61
Loans (2)
1,239,040
45,177
4.87
1,035,169
38,823
5.01
Total interest-earning assets
1,464,686
46,336
4.23
1,192,654
40,281
4.51
Noninterest-earning assets
53,093
50,065
Total assets
$
1,517,779
$
1,242,719
Interest-bearing liabilities:
Money market deposits and others
$
357,525
$
851
0.32
%
$
300,356
$
1,835
0.82
%
Time deposits
370,715
1,555
0.56
407,625
5,263
1.72
Total interest-bearing deposits
728,240
2,406
0.44
707,981
7,098
1.34
Borrowings
2,657
—
0.00
4,688
—
0.00
Total interest-bearing liabilities
730,897
2,406
0.44
712,669
7,098
1.33
Noninterest-bearing liabilities:
Noninterest-bearing deposits
619,437
372,390
Other noninterest-bearing liabilities
17,726
17,929
Total noninterest-bearing liabilities
637,163
390,319
Shareholders’ equity
149,719
139,731
Total liabilities and shareholders’
equity
$
1,517,779
$
1,242,719
Net interest income / interest rate
spreads
$
43,930
3.79
%
$
33,183
3.18
%
Net interest margin
4.01
%
3.71
%
Cost of deposits & cost of funds:
Total deposits / cost of deposits
$
1,347,677
$
2,406
0.24
%
$
1,080,371
$
7,098
0.88
%
Total funding liabilities / cost of
funds
$
1,350,334
$
2,406
0.24
%
$
1,085,059
$
7,098
0.87
%
(1) Annualized.
(2) Includes loans held for sale.
Loan Portfolio Breakdown by Industry,
excluding home mortgage and consumer loans
($ in thousands)
As of September 30,
2021
Industry
Number
of
accounts
% of
total
Balance
% of
total
Hotel / motel
279
9.3
%
$
205,018
16.9
%
Personal and laundry services
162
5.4
25,226
2.1
Wholesale
246
8.2
70,115
5.8
Food services / restaurant
425
14.2
49,457
4.1
Real estate lessor
242
8.1
407,290
33.7
Gas station
251
8.4
189,515
15.6
Other
1,388
46.4
263,322
21.8
Total (1)
2,993
100.0
%
$
1,209,943
100.0
%
(1) Includes loans held for sale.
Loan Deferment Summary by Industry,
excluding home mortgage and consumer loans
($ in thousands)
As of September 30,
2021
Number of accounts
Loan balance
Industry
Number
of
accounts
% of
deferment
% of
total
loans
Balance
% of
deferment
% of
total
loans
Hotel / motel
2
50.0
%
0.7
%
$
5,311
78.7
%
2.6
%
Personal and laundry services
1
25.0
0.6
963
14.3
3.8
Wholesale
1
25.0
0.4
474
7.0
0.7
Total
4
100.0
%
0.1
%
$
6,748
100.0
%
0.6
%
Loan Deferment Summary by Loan
Type
($ in thousands)
As of September 30,
2021
Number of accounts
Loan balance
Loan Type
Number
of
accounts
% of
deferment
% of
total
loans
Balance
% of
deferment
% of
total
loans
Real estate loans
3
75.0
%
0.3
%
$
6,274
93.0
%
0.6
%
C & I loans
1
25.0
0.1
474
7.0
0.2
Loans, excluding home mortgage and
consumer loans
4
100.0
0.1
6,748
100.0
0.6
Home mortgage loans
—
—
—
—
—
—
Total
4
100.0
%
0.1
%
$
6,748
100.0
%
0.5
%
Loan Deferment Status Change by Loan
Type
($ in thousands)
Total deferments
under the CARES Act
through September 30,
2021
Payment resumed
or paid off
through September 30,
2021
Remaining deferments as of
September 30, 2021
Loan Type
Number
of
accounts
Balance
Number
of
accounts
Balance
Number
of
accounts
Balance
Loans, excluding home mortgage and
consumer loans
156
$
220,522
152
$
213,774
4
$
6,748
Home mortgage loans
69
30,205
69
30,205
—
—
Total
225
$
250,727
221
$
243,979
4
$
6,748
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211028006242/en/
Investor Relations OP Bancorp Christine Oh EVP & CFO
213.892.1192 Christine.oh@myopenbank.com
OP Bancorp (NASDAQ:OPBK)
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