OP Bancorp Reports Net Income for Second Quarter 2022 of $8.5 Million and Diluted Earnings Per Share of $0.54

2022 Second Quarter Highlights compared with 2021 Second Quarter:

  • Financial Results:
    • Net income of $8.5 million, up $2.1 million, or 33%
    • Diluted earnings per share of $0.54, up $0.12, or 29%
    • Net interest income of $19.1 million, up $4.5 million, or 31%
    • Provision for loan losses of $996 thousand, up $2.1 million
    • Noninterest income of $5.4 million, up $3.1 million, or 141%
    • Noninterest expense of $11.5 million, up $2.7 million, or 31%
    • Pre-provision net revenue (1) of $12.9 million, up $4.9 million, or 61%
    • Total assets of $1.93 billion, up $332.4 million, or 21%
    • Total loans (2) of $1.55 billion, up $237.7 million, or 18%; Average loans (2) of $1.56 billion, up $318.0 million, or 26%
    • Total deposits of $1.74 billion, up $307.5 million, or 21%; Average deposits of $1.70 billion, up $354.0 million, or 26%
    • Noninterest-bearing deposits to total deposits of 47.1%, up from 46.6%
    • Net interest margin of 4.21%, up from 3.98%
    • Return on average equity of 20.29%, up from 17.10%
    • Return on average assets of 1.79%, up from 1.68%
    • Efficiency ratio of 47.07%, an improvement from 52.30%
  • Credit Quality:
    • Allowance for loan losses to gross loans of 1.19%, compared to 1.18%
    • Adjusted allowance to gross loans (1) of 1.25%, compared to 1.46%
    • Net loan recoveries to average gross loans of 0.01%
    • Nonperforming loans to gross loans of 0.15%, compared to 0.06%
    • Criticized loans (3) to gross loans of 0.20%, down from 0.67%
  • Capital Levels:
    • Quarterly cash dividend of $0.12 per share, a 20% increase from $0.10 per share
    • Capital position well-capitalized with a Common Equity Tier 1 (“CET1”) ratio of 12.29%.
    • Book value per common share of $11.16, up 11%

__________________________________________________________

(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 second quarter of 2022. Net income for the second quarter of 2022 was $8.5 million, or $0.54 per diluted common share, compared with $8.2 million, or $0.53 per diluted common share, for the first quarter of 2022, and $6.4 million, or $0.42 per diluted common share, for the second quarter of 2021.

Min Kim, President and Chief Executive Officer:

“We are pleased to report another strong quarter of earnings performance and balance sheet growth. Our net income and diluted earnings per share increased 33% and 29%, respectively, from a year ago, while our average loans and deposits grew 26% each during the same period. These results were accompanied by expanded net interest margin, improved efficiency, and maintenance of strong asset quality. We are also pleased to announce that OP Bancorp’s Board of Directors approved a 20% increase of the quarterly cash dividend to $0.12 per share, up from $0.10 per share. Despite external headwinds related to supply chain bottlenecks, inflation, and market rate increases by the Federal Reserve, we remain optimistic about our future growth and performance and will continue to focus on executing our strategic goals while maintaining appropriate risk and control environment.”

SELECTED FINANCIAL HIGHLIGHTS

 

 

 

 

 

 

 

 

 

 

 

($ in thousands, except per share data)

 

As of and For the Three Months Ended

 

% Change 2Q22 vs.

 

 

2Q22

 

 

 

1Q22

 

 

 

2Q21

 

 

1Q22

 

 

2Q21

 

Selected Income Statement Data:

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

19,079

 

 

$

17,290

 

 

$

14,586

 

 

10.3

%

 

30.8

%

Provision for (reversal of) loan losses

 

 

996

 

 

 

341

 

 

 

(1,112

)

 

192.1

 

 

n/a

 

Noninterest income

 

 

5,359

 

 

 

4,216

 

 

 

2,220

 

 

27.1

 

 

141.4

 

Noninterest expense

 

 

11,503

 

 

 

9,662

 

 

 

8,789

 

 

19.1

 

 

30.9

 

Income tax expense

 

 

3,459

 

 

 

3,351

 

 

 

2,750

 

 

3.2

 

 

25.8

 

Net Income

 

$

8,480

 

 

$

8,152

 

 

$

6,379

 

 

4.0

%

 

32.9

%

Diluted earnings per share

 

$

0.54

 

 

$

0.53

 

 

$

0.42

 

 

1.9

%

 

28.6

%

Selected Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

Total loans (1)

 

$

1,551,973

 

 

$

1,514,653

 

 

$

1,314,262

 

 

2.5

%

 

18.1

%

Total deposits

 

$

1,741,623

 

 

$

1,672,003

 

 

$

1,434,103

 

 

4.2

%

 

21.4

%

Total assets

 

$

1,934,242

 

 

$

1,863,945

 

 

$

1,601,860

 

 

3.8

%

 

20.7

%

Average loans (1)

 

$

1,560,064

 

 

$

1,444,054

 

 

$

1,242,058

 

 

8.0

%

 

25.6

%

Average deposits

 

$

1,702,860

 

 

$

1,570,376

 

 

$

1,348,910

 

 

8.4

%

 

26.2

%

Credit Quality:

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

$

2,177

 

 

$

2,806

 

 

$

757

 

 

(22.4

) %

 

187.6

%

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

 

 

(0.01

) %

 

 

(0.00

) %

 

 

0.01

%

 

(0.01

) %

 

(0.02

) %

Allowance for loan losses to gross loans

 

 

1.19

%

 

 

1.17

%

 

 

1.18

%

 

0.02

%

 

0.01

%

Financial Ratios:

 

 

 

 

 

 

 

 

 

 

Return on average assets (2)

 

 

1.79

%

 

 

1.85

%

 

 

1.68

%

 

(0.06

) %

 

0.11

%

Return on average equity (2)

 

 

20.29

%

 

 

19.54

%

 

 

17.10

%

 

0.75

%

 

3.19

%

Net interest margin (2)

 

 

4.21

%

 

 

4.12

%

 

 

3.98

%

 

0.09

%

 

0.23

%

Common equity tier 1 capital ratio

 

 

12.29

%

 

 

12.11

%

 

 

12.62

%

 

0.18

%

 

(0.33

) %

Leverage ratio

 

 

9.48

%

 

 

9.80

%

 

 

9.96

%

 

(0.32

) %

 

(0.48

) %

Efficiency ratio (3)

 

 

47.07

%

 

 

44.93

%

 

 

52.30

%

 

2.14

%

 

(5.23

) %

Book value per common share

 

$

11.16

 

 

$

10.97

 

 

$

10.04

 

 

1.7

%

 

11.2

%

 

 

 

 

 

 

 

 

 

 

 

(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 2Q22 vs.

 

 

2Q22

 

 

1Q22

 

 

2Q21

 

1Q22

 

 

2Q21

 

Interest Income

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

20,148

 

$

17,944

 

$

15,349

 

12.3

%

 

31.3

%

Interest expense

 

 

1,069

 

 

654

 

 

763

 

63.5

 

 

40.1

 

Net interest income

 

$

19,079

 

$

17,290

 

$

14,586

 

10.3

%

 

30.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

 

2Q22

 

 

 

1Q22

 

 

 

2Q21

 

 

Average Balance

 

Interest

and Fees

 

Yield/Rate (1)

 

Average Balance

 

Interest

and Fees

 

Yield/Rate (1)

 

Average Balance

 

Interest

and Fees

 

Yield/Rate (1)

Interest-earning Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

1,560,064

 

$

19,108

 

4.91

%

 

$

1,444,054

 

$

17,257

 

4.84

%

 

$

1,242,058

 

$

14,971

 

4.83

%

Total interest-earning assets

 

$

1,817,157

 

$

20,148

 

4.44

%

 

$

1,698,799

 

$

17,944

 

4.28

%

 

$

1,469,163

 

$

15,349

 

4.19

%

Interest-bearing Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$

859,072

 

$

1,069

 

0.50

%

 

$

786,915

 

$

654

 

0.34

%

 

$

733,525

 

$

763

 

0.42

%

Total interest-bearing liabilities

 

$

859,072

 

$

1,069

 

0.50

%

 

$

786,915

 

$

654

 

0.34

%

 

$

736,550

 

$

763

 

0.42

%

Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest Income/interest rate spreads

 

 

 

$

19,079

 

3.94

%

 

 

 

$

17,290

 

3.94

%

 

 

 

$

14,586

 

3.77

%

Net interest margin

 

 

 

 

 

4.21

%

 

 

 

 

 

4.12

%

 

 

 

 

 

3.98

%

Total deposits / cost of deposits

 

$

1,702,860

 

$

1,069

 

0.25

%

 

$

1,570,376

 

$

654

 

0.17

%

 

$

1,348,910

 

$

763

 

0.23

%

Total funding liabilities / cost of funds

 

$

1,702,860

 

$

1,069

 

0.25

%

 

$

1,570,376

 

$

654

 

0.17

%

 

$

1,351,935

 

$

763

 

0.23

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

Yield % Change 2Q22 vs.

 

 

2Q22

 

 

 

 

1Q22

 

 

 

 

2Q21

 

 

 

 

Interest

& Fees

 

Yield (1)

 

Interest

& Fees

 

Yield (1)

 

Interest

& Fees

 

Yield (1)

 

1Q22

 

 

2Q21

 

Loan Yield Component

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractual interest rate

 

$

17,441

 

 

4.48

%

 

$

15,312

 

 

4.29

%

 

$

13,189

 

 

4.26

%

 

0.19

%

 

0.22

%

SBA discount accretion

 

 

1,151

 

 

0.30

 

 

 

1,433

 

 

0.40

 

 

 

1,161

 

 

0.38

 

 

(0.10

)

 

(0.08

)

Amortization of net deferred fees

 

 

493

 

 

0.13

 

 

 

500

 

 

0.14

 

 

 

618

 

 

0.20

 

 

(0.01

)

 

(0.07

)

Amortization of premium

 

 

(197

)

 

(0.05

)

 

 

(188

)

 

(0.05

)

 

 

(170

)

 

-0.06

 

 

0.00

 

 

0.01

 

Net interest recognized on nonaccrual loans

 

 

5

 

 

0.00

 

 

 

34

 

 

0.01

 

 

 

37

 

 

0.01

 

 

(0.01

)

 

(0.01

)

Prepayment penalties (2) and other fees

 

 

215

 

 

0.05

 

 

 

166

 

 

0.05

 

 

 

136

 

 

0.04

 

 

 

 

0.01

 

Yield on loans

 

$

19,108

 

 

4.91

%

 

$

17,257

 

 

4.84

%

 

$

14,971

 

 

4.83

%

 

0.07

%

 

0.08

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of net deferred fees:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PPP loan forgiveness (3)

 

$

351

 

 

0.09

%

 

$

483

 

 

0.13

%

 

$

290

 

 

0.09

%

 

(0.04

) %

 

%

Other

 

 

142

 

 

0.04

 

 

 

17

 

 

0.01

 

 

 

328

 

 

0.11

 

 

0.03

 

 

(0.07

)

Total amortization of net deferred fees

 

$

493

 

 

0.13

%

 

$

500

 

 

0.14

%

 

$

618

 

 

0.20

%

 

(0.01

) %

 

(0.07

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

(2)

Prepayment penalty income of $118 thousand, $95 thousand and $116 thousand for the three months ended June 30, 2022, March 31, 2022 and June 30, 2021, respectively, was from commercial real estate and C&I loans.

(3)

As of June 30, 2022, there were unamortized net deferred fees of $183 thousand to be recognized over the estimated life of the loans as a yield adjustment on the loans.

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

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

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

 

2Q22

 

 

 

1Q22

 

 

 

2Q21

 

Hana Loan Purchase:

 

 

 

 

 

 

Contractual interest rate

 

$

956

 

 

$

976

 

 

$

473

 

Purchased loan discount accretion

 

 

592

 

 

 

772

 

 

 

381

 

Other fees

 

 

24

 

 

 

7

 

 

 

6

 

Total interest income

 

$

1,572

 

 

$

1,755

 

 

$

860

 

 

 

 

 

 

 

 

Effect on average loan yield (1)

 

 

0.19

%

 

 

0.26

%

 

 

0.13

%

Effect on net interest margin (1)

 

 

0.20

%

 

 

0.25

%

 

 

0.13

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

 

2Q22

 

 

 

1Q22

 

 

 

2Q21

 

 

Average

Balance

 

Interest

and Fees

 

Yield/

Rate

 

Average

Balance

 

Interest

and Fees

 

Yield/

Rate

 

Average

Balance

 

Interest

and Fees

 

Yield/

Rate

Average loan yield (1)

 

$

1,560,064

 

$

19,108

 

4.91

%

 

$

1,444,054

 

$

17,257

 

4.84

%

 

$

1,242,058

 

$

14,971

 

4.83

%

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

 

$

1,490,884

 

$

17,536

 

4.72

%

 

$

1,369,423

 

$

15,502

 

4.58

%

 

$

1,204,532

 

$

14,111

 

4.70

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (1)

 

$

1,817,157

 

$

19,079

 

4.21

%

 

$

1,698,799

 

$

17,290

 

4.12

%

 

$

1,469,163

 

$

14,586

 

3.98

%

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

 

$

1,747,977

 

$

17,507

 

4.01

%

 

$

1,624,168

 

$

15,535

 

3.87

%

 

$

1,431,097

 

$

13,726

 

3.85

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

(2)

See reconciliation of GAAP to non-GAAP financial measures.

Second Quarter 2022 vs. First Quarter 2022

Net interest income increased $1.8 million, or 10.3%, primarily due to higher interest income on loans. Net interest margin was 4.21%, an increase of 9 basis points from 4.12%.

  • A $1.9 million increase in interest income on loans was primarily due to interest income increases of $941 thousand on real estate loans and $763 thousand on home mortgage loans driven by average balance increases of $40.6 million on real estate loans and $77.2 million on home mortgage loans.
  • The 9 basis point increase in net interest margin was primarily due to a 16 basis point increase in average yield on interest-earning assets.
  • Average loan yield was 4.91%, a 7 basis point increase from 4.84%, primarily due to a 19 basis point increase in contractual loan yield as a result of market rate increases by the Federal Reserve, partially offset by a 10 basis point decrease from lower SBA discount accretion income as a result of slower SBA loan payoffs.
  • Average yield on interesting-bearing deposits in other banks was 0.98%, a 79 basis point increase from 0.19%, primarily due to the Federal Reserve’s rate increases.
  • Average cost of interest-bearing deposits was 0.50%, a 16 basis point increase from 0.34%. Average cost of deposits was 0.25%, an 8 basis point increase from 0.17%, primarily due to the Federal Reserve’s rate increases.

Second Quarter 2022 vs. Second Quarter 2021

Net interest income increased $4.5 million, or 30.8%, primarily due to higher interest income on loans. Net interest margin was 4.21%, an increase of 23 basis points from 3.98%.

  • A $4.1 million increase in interest income on loans was primarily due to higher average loan balance from loan growth in home loans, real estate loans, and C&I loans.
  • The improvement of 23 basis points in net interest margin was primarily due to a 25 basis point increase in average yield on interest-earning assets.
  • Average loan yield was 4.91%, an 8 basis point increase from 4.83%, primarily due to a 22 basis point increase in contractual loan yield as a result of market rate increases by the Federal Reserve, partially offset by an 8 basis point decrease from lower SBA discount accretion income as a result of lower SBA loan payoffs and a 7 basis point decrease in amortization of net deferred fees as a result of lower balance in net deferred fees on SBA PPP loans.
  • Average yield on interesting-bearing deposits in other banks was 0.98%, an 88 basis point increase from 0.10%, primarily due to the Federal Reserve’s rate increases. Average yield on available-for-sale debt securities was 1.70%, a 90 basis point increase from 0.80%, primarily due to purchases of higher yield securities in 2022.
  • Average cost of interest-bearing deposits was 0.50%, an 8 basis point increase from 0.42% primarily due to the Federal Reserve’s rate increases. Average cost of deposits was 0.25%, a 2 basis point increase from 0.23%, primarily due to the Federal Reserve’s rate increases, partially offset by higher average balance of noninterest-bearing deposits.

Provision for loan losses

Second Quarter 2022 vs. First Quarter 2022

The Company recorded $996 thousand provision for loan losses, compared with a $341 thousand provision for loan losses. The $996 thousand provision for loan losses was primarily due to an increase of $746 thousand in quantitative reserves from loan growth in real estate and home mortgage loans and an adjustments of $270 thousand in qualitative assessments of our loan portfolio.

Second Quarter 2022 vs. Second Quarter 2021

The Company recorded $996 thousand provision for loan losses, compared with $1.1 million reversal of loan losses.

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 2Q22 vs.

 

 

2Q22

 

 

1Q22

 

 

2Q21

 

1Q22

 

 

2Q21

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

$

427

 

$

388

 

$

393

 

10.1

%

 

8.7

%

Loan servicing fees, net of amortization

 

 

654

 

 

447

 

 

302

 

46.3

 

 

116.6

 

Gain on sale of loans

 

 

3,873

 

 

3,238

 

 

1,210

 

19.6

 

 

220.1

 

Other income

 

 

405

 

 

143

 

 

315

 

183.2

 

 

28.6

 

Total noninterest income

 

$

5,359

 

$

4,216

 

$

2,220

 

27.1

%

 

141.4

%

 

 

 

 

 

 

 

 

 

 

 

Second Quarter 2022 vs. First Quarter 2022

Noninterest income increased $1.1 million, or 27.1%, primarily due to higher gains on sale of loans, loan servicing fees and other income.

  • Gains on sale of loans were $3.9 million, up $635 thousand from the first quarter of 2022. The increase was primarily due to higher loan sales volume partially offset by lower average premium on loan sales. The Company sold $58.6 million in SBA loans at an average premium of 7.02%, compared to the sale of $31.8 million at an average premium of 11.02%.
  • Loan service fees, net of amortization, were $654 thousand, up $207 thousand from first quarter of 2022, primarily due to lower amortization of loan servicing fees as a result of lower SBA loan payoffs.
  • Other income were $405 thousand, up $262 thousand from first quarter of 2022, primarily due to increases in credit related fees and net earnings on Company owned life insurance and a decrease in unrealized loss on CRA qualified mutual fund.

Second Quarter 2022 vs. Second Quarter 2021

Noninterest income increased $3.1 million, or 141.4%, primarily due to higher gains on sale of loans and loan service fees.

  • Gains on sales of loans were $3.9 million, up $2.7 million from the second quarter of 2021. The increase was primarily due to higher sales volume partially offset by lower average premium on loan sales. The Company sold $58.6 million in SBA loans at an average premium of 7.02%, compared to the sale of $10.6 million at an average premium of 11.48%.
  • Loan service fees, net of amortization, were $654 thousand, up $352 thousand from the second quarter of 2021, primarily due to an increase in loan servicing portfolio and lower amortization of loan servicing fees as a result of lower SBA loan payoffs.

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 2Q22 vs.

 

 

2Q22

 

 

1Q22

 

 

2Q21

 

1Q22

 

 

2Q21

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

7,109

 

$

5,657

 

$

5,307

 

25.7

%

 

34.0

%

Occupancy and equipment

 

 

1,489

 

 

1,378

 

 

1,234

 

8.1

 

 

20.7

 

Data processing and communication

 

 

492

 

 

493

 

 

467

 

(0.2

)

 

5.4

 

Professional fees

 

 

364

 

 

324

 

 

303

 

12.3

 

 

20.1

 

FDIC insurance and regulatory assessments

 

 

192

 

 

207

 

 

123

 

(7.2

)

 

56.1

 

Promotion and advertising

 

 

165

 

 

189

 

 

176

 

(12.7

)

 

(6.3

)

Directors’ fees

 

 

190

 

 

177

 

 

128

 

7.3

 

 

48.4

 

Foundation donation and other contributions

 

 

852

 

 

815

 

 

640

 

4.5

 

 

33.1

 

Other expenses

 

 

650

 

 

422

 

 

411

 

54.0

 

 

58.2

 

Total noninterest expense

 

$

11,503

 

$

9,662

 

$

8,789

 

19.1

%

 

30.9

%

 

 

 

 

 

 

 

 

 

 

 

Second Quarter 2022 vs. First Quarter 2022

Noninterest expense increased $1.8 million, or 19.1%, primarily due to higher salaries and employee benefits.

  • Salaries and employee benefits were $7.1 million, up $1.5 million from the first quarter of 2022. The increase was primarily due to a $476 thousand increase in salaries as a result of five additional employees and annual salary adjustments effective in the second quarter of 2022, and a $860 thousand increase in employee incentive accruals.

Second Quarter 2022 vs. Second Quarter 2021

Noninterest expense increased $2.7 million, or 30.9%, primarily due to higher salaries and employee benefits.

  • Salaries and employee benefits were $7.1 million, up $1.8 million from the second quarter of 2021. The increase was primarily due to a $748 thousand increase in salaries as a result of 20 additional employees to support continued growth of the Company, and a $767 thousand decrease in deferred loan origination costs compared to higher origination costs related to SBA PPP loans for the second quarter of 2021.
  • Occupancy and equipment expenses were $1.5 million, up $255 thousand from the second quarter of 2021, primarily due to a new branch opened in the first quarter of 2022.
  • Foundation donation and other contributions were $852 thousand, up $212 thousand from the second quarter of 2021. The increase was primarily due to higher donation accruals for Open Stewardship Foundation as a result of higher net income compared to the second quarter of 2021.
  • Other expenses were $650 thousand, up $239 thousand from the second quarter of 2021, primarily due to a $172 thousand increase in business development expenses.

Income Tax Expense

Second Quarter 2022 vs. First Quarter 2022

Income tax expense was $3.5 million, and the effective tax rate was 29.0%, compared to income tax expense of $3.4 million and the effective rate of 29.1% for the first quarter of 2022.

Second Quarter 2022 vs. Second Quarter 2021

Income tax expense was $3.5 million and the effective tax rate was 29.0%, compared to income tax expense of $2.8 million and the effective rate of 30.1% for the second quarter of 2021.

Balance Sheet Highlights

Loans

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of

 

% Change 2Q22 vs.

 

 

2Q22

 

 

1Q22

 

 

2Q21

 

1Q22

 

 

2Q21

 

Real estate loans

 

$

776,785

 

$

730,841

 

$

684,082

 

6.3

%

 

13.6

%

SBA loans (1)

 

 

247,413

 

 

253,064

 

 

338,751

 

(2.2

)

 

(27.0

)

C&I loans

 

 

128,620

 

 

176,934

 

 

102,562

 

(27.3

)

 

25.4

 

Home mortgage loans

 

 

331,362

 

 

266,465

 

 

119,319

 

24.4

 

 

177.7

 

Consumer & other loans

 

 

538

 

 

1,106

 

 

1,152

 

(51.4

)

 

(53.3

)

Gross loans

 

$

1,484,718

 

$

1,428,410

 

$

1,245,866

 

3.9

%

 

19.2

%

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes PPP loans of $8.1 million, $22.1 million and $103.9 million as of June 30, 2022, March 31, 2022 and June 30, 2021, 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 2Q22 vs.

 

 

2Q22

 

 

1Q22

 

 

2Q21

 

1Q22

 

 

2Q21

 

Real estate loans

 

$

61,924

 

$

49,868

 

$

51,107

 

24.2

%

 

21.2

%

SBA loans (1)

 

 

55,085

 

 

37,400

 

 

76,535

 

47.3

 

 

(28.0

)

C&I loans

 

 

2,718

 

 

11,876

 

 

40,771

 

(77.1

)

 

(93.3

)

Home mortgage loans

 

 

30,345

 

 

22,785

 

 

13,262

 

33.2

 

 

128.8

 

Gross loans

 

$

150,072

 

$

121,929

 

$

181,675

 

23.1

%

 

(17.4

) %

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes PPP loans of $13.9 million for the three months ended June 30, 2021.

The following table presents changes in gross loans by loan activity for the periods indicated:

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

 

2Q22

 

 

 

1Q22

 

 

 

2Q21

 

Loan activities:

 

 

 

 

 

 

Gross loans, beginning

 

$

1,428,410

 

 

$

1,314,019

 

 

$

1,155,872

 

New originations

 

 

150,072

 

 

 

121,929

 

 

 

181,675

 

Net line advances

 

 

(46,773

)

 

 

17,455

 

 

 

(33,569

)

Purchases

 

 

56,455

 

 

 

81,552

 

 

 

99,849

 

Sales

 

 

(57,954

)

 

 

(31,819

)

 

 

(15,732

)

Paydowns

 

 

(16,011

)

 

 

(15,972

)

 

 

(12,688

)

Payoffs

 

 

(33,098

)

 

 

(45,391

)

 

 

(53,230

)

PPP Payoffs

 

 

(14,347

)

 

 

(19,079

)

 

 

(29,953

)

Other

 

 

17,964

 

 

 

5,716

 

 

 

(46,358

)

Total

 

 

56,308

 

 

 

114,391

 

 

 

89,994

 

Gross loans, ending

 

$

1,484,718

 

 

$

1,428,410

 

 

$

1,245,866

 

 

 

 

 

 

 

 

Second Quarter 2022 vs. First Quarter 2022

Gross loans were $1.48 billion at June 30, 2022, up $56.3 million from March 31, 2022, primarily due to new loan originations and home mortgage loan purchases.

Home mortgage loans of $56.5 million were purchased from third party mortgage originators, compared to $81.6 million in the first quarter of 2022. New loan originations and loan payoffs were $150.1 million and $47.4 million for the second quarter of 2022, compared with $121.9 million and $64.5 million for the first quarter of 2022, respectively. Of the PPP loans, $14.3 million in principal amount has been forgiven under the program, compared to a $18.2 million of PPP loans forgiven in the first quarter of 2022.

Second Quarter 2022 vs. Second Quarter 2021

Gross loans were $1.48 billion at June 30, 2022, up $238.9 million from June 30, 2021, primarily due to new loan originations and home mortgage loan purchases.

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

 

2Q22

 

 

 

1Q22

 

 

 

2Q21

 

 

 

%

 

Rate

 

%

 

Rate

 

%

 

Rate

Fixed rate

 

34.9

%

 

4.19

%

 

33.3

%

 

4.11

%

 

34.8

%

 

3.85

%

Hybrid rate

 

28.2

 

 

4.47

 

 

25.6

 

 

4.30

 

 

20.2

 

 

4.74

 

Variable rate

 

36.9

 

 

5.77

 

 

41.1

 

 

5.09

 

 

45.0

 

 

4.91

 

Gross loans

 

100.0

%

 

4.85

%

 

100.0

%

 

4.56

%

 

100.0

%

 

4.51

%

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table presents the maturity of gross loans by interest rate type accompanied with the weighted average contractual rates for the periods indicated:

($ in thousands)

 

As of June 30, 2022

 

Within One Year

 

One Year Through Five Years

 

After Five Years

 

Total

 

Amount

 

Rate

 

Amount

 

Rate

 

Amount

 

Rate

 

Amount

 

Rate

Fixed rate

 

$

21,542

 

4.05

%

 

$

313,372

 

4.31

%

 

$

183,646

 

4.01

%

 

$

518,560

 

4.19

%

Hybrid rate

 

 

 

 

 

 

50,346

 

5.26

 

 

 

368,276

 

4.36

 

 

 

418,622

 

4.47

 

Variable rate

 

 

111,724

 

5.48

 

 

 

136,586

 

5.38

 

 

 

299,226

 

6.06

 

 

 

547,536

 

5.77

 

Gross loans

 

$

133,266

 

5.25

%

 

$

500,304

 

4.70

%

 

$

851,148

 

4.88

%

 

$

1,484,718

 

4.85

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of

 

% Change 1Q22 vs.

 

 

2Q22

 

 

 

1Q22

 

 

 

2Q21

 

 

 

Amount

 

%

 

Amount

 

%

 

Amount

 

%

 

1Q22

 

 

2Q21

 

Noninterest-bearing deposits

 

$

820,311

 

47.1

%

 

$

848,531

 

50.8

%

 

$

668,244

 

46.6

%

 

(3.3

) %

 

22.8

%

Money market deposits and others

 

 

519,389

 

29.8

%

 

 

456,890

 

27.3

 

 

 

386,612

 

27.0

%

 

13.7

 

 

34.3

 

Time deposits

 

 

401,923

 

23.1

%

 

 

366,582

 

21.9

 

 

 

379,247

 

26.4

%

 

9.6

 

 

6.0

 

Total deposits

 

$

1,741,623

 

100.0

%

 

$

1,672,003

 

100.0

%

 

$

1,434,103

 

100.0

%

 

4.2

%

 

21.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Second Quarter 2022 vs. First Quarter 2022

Total deposits were $1.74 billion as of June 30, 2022, up $69.6 million from March 31, 2022, primarily driven by growth in money market deposits and time deposits, partially offset by a decrease in noninterest-bearing deposits. Money market deposits and time deposits grew $62.5 million and $35.3 million, respectively, due to management’s proactive actions to support loan growth during the second quarter of 2022 including upward adjustments of interest rates on customer deposits and increases in wholesale deposits.

Second Quarter 2022 vs. Second Quarter 2021

Total deposits were $1.74 billion as of June 30, 2022, up $307.5 million from June 30, 2021, primarily driven by growth in noninterest-bearing deposits and money market deposits. Noninterest-bearing deposits were $820.3 million, up $152.1 million from $668.2 million as of June 30, 2021. The growth in noninterest-bearing deposits was primarily due to addition of new customers from our Specialty Deposit Center. Money market deposits were $519.4 million, up $132.8 million from $386.6 million at June 30, 2021, due to increases of $46 million in customer deposits and $87 million in wholesale deposits to support continued growth of the Company.

The following table sets forth the maturity of time deposits as of June 30, 2022:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2022

($ in thousands)

 

Within Three

Months

 

Three to

Six Months

 

Six to Nine Months

 

Nine to Twelve

Months

 

After

Twelve Months

 

Total

Time deposits (more than $250,000)

 

$

118,765

 

 

$

29,487

 

 

$

25,222

 

 

$

62,522

 

 

$

1,638

 

 

$

237,634

 

Time deposits ($250,000 or less)

 

 

41,015

 

 

 

29,282

 

 

 

25,821

 

 

 

61,078

 

 

 

7,093

 

 

 

164,289

 

Total time deposits

 

$

159,780

 

 

$

58,769

 

 

$

51,043

 

 

$

123,600

 

 

$

8,731

 

 

$

401,923

 

Weighted average rate

 

 

0.75

%

 

 

0.48

%

 

 

0.44

%

 

 

1.01

%

 

 

1.41

%

 

 

0.77

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital and Cash Dividend

 

 

 

 

 

 

 

 

 

 

 

Basel III

 

OP Bancorp (1)

 

Open Bank

 

Minimum Well

Capitalized

Ratio

 

Minimum

Capital Ratio+

Conservation

Buffer (2)

Risk-Based Capital Ratios:

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

13.51

%

 

13.36

%

 

10.00

%

 

10.50

%

Tier 1 risk-based capital ratio

 

12.29

%

 

12.14

%

 

8.00

%

 

8.50

%

Common equity tier 1 ratio

 

12.29

%

 

12.14

%

 

6.50

%

 

7.00

%

Leverage ratio

 

9.48

%

 

9.36

%

 

5.00

%

 

4.00

%

 

 

 

 

 

 

 

 

 

(1)

The capital requirements are only applicable to the Bank, and the Company's ratios are included for comparison purpose.

(2)

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

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

Basel III

 

% Change 2Q22 vs.

 

 

2Q22

 

 

 

1Q22

 

 

 

2Q21

 

 

1Q22

 

 

2Q21

 

Risk-Based Capital Ratios:

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

 

13.51

%

 

 

13.29

%

 

 

13.87

%

 

0.22

%

 

(0.36

) %

Tier 1 risk-based capital ratio

 

 

12.29

%

 

 

12.11

%

 

 

12.62

%

 

0.18

%

 

(0.33

) %

Common equity tier 1 ratio

 

 

12.29

%

 

 

12.11

%

 

 

12.62

%

 

0.18

%

 

(0.33

) %

Leverage ratio

 

 

9.48

%

 

 

9.80

%

 

 

9.96

%

 

(0.32

) %

 

(0.48

) %

Risk-weighted Assets

 

$

1,465,707

 

 

$

1,427,569

 

 

$

1,198,373

 

 

2.67

%

 

22.31

%

 

 

 

 

 

 

 

 

 

 

 

Capital ratios remained strong during the quarter. Our CET1 and total risk-based capital ratios were 12.29% and 13.51% as of June 30, 2022, respectively, a decrease from a year ago due to year-over-year asset growth.

The Company’s Board of Directors has declared a quarterly cash dividend of $0.12 per share of its common stock. The cash dividend is payable on or about August 25, 2022 to all shareholders of record as of the close of business on August 11, 2022.

The Company did not repurchase any shares during the second quarter of 2022. 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 June 30, 2022.

Asset Quality

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of and For the Three Months Ended

 

% Change 2Q22 vs.

 

 

2Q22

 

 

 

1Q22

 

 

 

2Q21

 

 

1Q22

 

 

2Q21

 

Nonperforming loans (1)

 

$

2,177

 

 

$

2,806

 

 

$

757

 

 

(22.4

) %

 

187.6

%

OREO

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonperforming assets

 

$

2,177

 

 

$

2,806

 

 

$

757

 

 

(22.4

) %

 

187.6

%

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to gross loans

 

 

0.15

%

 

 

0.20

%

 

 

0.06

%

 

(0.05

) %

 

0.09

%

Nonperforming assets to total assets

 

 

0.11

%

 

 

0.15

%

 

 

0.05

%

 

(0.04

) %

 

0.06

%

 

 

 

 

 

 

 

 

 

 

 

Criticized (2) Loan:

 

 

 

 

 

 

 

 

 

 

Special mention loans

 

$

 

 

$

 

 

$

1,790

 

 

%

 

(100.0

) %

Classified loans (3)

 

 

3,020

 

 

 

3,848

 

 

 

6,553

 

 

(21.5

)

 

(53.9

)

Total criticized loans

 

$

3,020

 

 

$

3,848

 

 

$

8,343

 

 

(21.5

) %

 

(63.8

) %

 

 

 

 

 

 

 

 

 

 

 

Criticized (2) loans to gross loans

 

 

0.20

%

 

 

0.27

%

 

 

0.67

%

 

(0.07

) %

 

(0.47

) %

Classified loans (3) to gross loans

 

 

0.20

%

 

 

0.27

%

 

 

0.53

%

 

(0.07

) %

 

(0.33

) %

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses, beginning

 

$

16,672

 

 

$

16,123

 

 

$

15,339

 

 

3.4

%

 

8.7

%

Provision for (reversal of) loan losses (4)

 

 

996

 

 

 

546

 

 

 

(625

)

 

82.4

 

 

n/a

 

Gross charge-offs

 

 

(18

)

 

 

(14

)

 

 

(27

)

 

28.6

 

 

(33.3

)

Gross recoveries

 

 

52

 

 

 

17

 

 

 

 

 

205.9

 

 

 

Allowance for loan losses, ending (5)

 

$

17,702

 

 

$

16,672

 

 

$

14,687

 

 

6.2

%

 

20.5

%

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses ratios:

 

 

 

 

 

 

 

 

 

 

As a % of gross loans

 

 

1.19

%

 

 

1.17

%

 

 

1.18

%

 

0.02

%

 

0.01

%

As an adjusted % of gross loans (6)

 

 

1.25

%

 

 

1.24

%

 

 

1.46

%

 

0.01

%

 

(0.21

) %

As a % of nonperforming loans

 

 

813

%

 

 

594

%

 

 

1,940

%

 

219

%

 

(1,127

) %

As a % of nonperforming assets

 

 

813

%

 

 

594

%

 

 

1,940

%

 

219

%

 

(1,127

) %

Net (recoveries) charge-offs to average gross loans

 

 

(0.01

) %

 

 

(0.00

) %

 

 

0.01

%

 

(0.01

) %

 

(0.02

) %

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes the guaranteed portion of SBA loans totaling $346 thousand and $899 thousand as of June 30, 2022 and March 31, 2022, respectively.

(2)

Includes special mention, substandard, doubtful and loss categories.

(3)

Includes substandard, doubtful and loss categories.

(4)

Excludes reversal of uncollectible accrued interest receivable of $205 thousand and $487 thousand for the three months ended March 31, 2022 and June 30, 2021, respectively.

(5)

Excludes allowance for uncollectible accrued interest receivable of $792 thousand as of June 30, 2021.

(6)

See the Reconciliation of GAAP to NON-GAAP Financial Measures.

Overall, the Company continued to maintain solid asset quality with low levels of nonperforming loans and net charge-offs. Nonperforming assets and criticized loans remained below our historical norms, a reflection of our conservative credit culture and expertise in the industries we serve. Our allowance remained strong with an adjusted allowance to gross loans ratio of 1.25%. We expect economic metrics to remain relatively strong over the next year, which bodes well for growth; however, we remain vigilant given potential impacts on our customers from continued supply chain and labor constraints as well as increases in inflation and market rates by the Federal Reserve.

  • Allowance for loan losses increased $3.0 million to $17.7 million from a year ago. Excluding the impacts of the purchased Hana loans, PPP loans, adjusted allowance to gross loans ratio was 1.25% as of June 30, 2022.
  • Criticized loans decreased by $5.3 million or 63.8% from a year ago, and the criticized loans to gross loans ratio improved by 47 basis points, primarily due to a $3.8 million payoff in one C&I relationship as well as improvements in credit risk ratings for SBA loans. Criticized loans are generally consistent with the Special Mention, Substandard, Doubtful and Loss categories defined by regulatory authorities.
  • Nonperforming assets increased $1.4 million to $2.2 million, or 0.11% of total assets from a year ago. The increase in nonperforming assets was primarily due to home mortgage and SBA loans that were placed on nonaccrual in 2021. As of June 30, 2022, $346 thousand of nonaccrual loans was the guaranteed portion of SBA loans that are in liquidation. The Company did not have OREO as of June 30, 2022 or 2021.
  • Net recoveries were $34 thousand or 0.01% of average loans in the second quarter of 2022, compared to net charge-offs of $27 thousand in the second quarter of 2021.

COVID-19 Pandemic Update

As of June 30, 2022, one C&I loan with outstanding balance of $454 thousand was under COVID-19 loan payment modification, which has ended on July 19, 2022.

Since the PPP’s inception through June 30, 2022, we have funded $154.5 million, and $151.3 million of principal forgiveness has been provided on qualifying PPP loans.

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.

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

 

2Q22

 

 

1Q22

 

 

2Q21

 

Interest income

 

$

20,148

 

$

17,944

 

$

15,349

 

Interest expense

 

 

1,069

 

 

654

 

 

763

 

Net interest income

 

 

19,079

 

 

17,290

 

 

14,586

 

Noninterest income

 

 

5,359

 

 

4,216

 

 

2,220

 

Noninterest expense

 

 

11,503

 

 

9,662

 

 

8,789

 

Pre-provision net revenue

(a)

$

12,935

 

$

11,844

 

$

8,017

 

Reconciliation to net income:

 

 

 

 

 

 

Provision for (reversal of) loan losses

(b)

$

996

 

$

341

 

$

(1,112

)

Income tax expense

(c)

 

3,459

 

 

3,351

 

 

2,750

 

Net income

(a)+(b) +(c)

$

8,480

 

$

8,152

 

$

6,379

 

 

 

 

 

 

 

 

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 June 30, 2022, March 31, 2022 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.

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

 

2Q22

 

 

 

1Q22

 

 

 

2Q21

 

Yield on Average Loans

 

 

 

 

 

 

Interest income on loans

 

$

19,108

 

 

$

17,257

 

 

$

14,971

 

Less: interest income on purchased loans

 

 

1,571

 

 

 

1,755

 

 

 

860

 

Adjusted interest income on loans

(a)

$

17,537

 

 

$

15,502

 

 

$

14,111

 

 

 

 

 

 

 

 

Average loans

 

$

1,560,064

 

 

$

1,444,054

 

 

$

1,242,058

 

Less: Average purchased loans

 

 

69,180

 

 

 

74,631

 

 

 

37,526

 

Adjusted average loans

(b)

$

1,490,884

 

 

$

1,369,423

 

 

$

1,204,532

 

 

 

 

 

 

 

 

Average loan yield (1)

 

 

4.91

%

 

 

4.84

%

 

 

4.83

%

Effect on average loan yield (1)

 

 

0.19

%

 

 

0.26

%

 

 

0.13

%

Adjusted average loan yield (1)

(a)/(b)

 

4.72

%

 

 

4.58

%

 

 

4.70

%

 

 

 

 

 

 

 

Net Interest Margin

 

 

 

 

 

 

Net interest income

 

$

19,079

 

 

$

17,290

 

 

$

14,586

 

Less: interest income on purchased loans

 

 

1,571

 

 

 

1,755

 

 

 

860

 

Adjusted net interest income

(c)

$

17,508

 

 

$

15,535

 

 

$

13,726

 

 

 

 

 

 

 

 

Average interest-earning assets

 

$

1,817,157

 

 

$

1,698,799

 

 

$

1,468,623

 

Less: Average purchased loans

 

 

69,180

 

 

 

74,631

 

 

 

37,526

 

Adjusted average interest-earning assets

(d)

$

1,747,977

 

 

$

1,624,168

 

 

$

1,431,097

 

 

 

 

 

 

 

 

Net interest margin (1)

 

 

4.21

%

 

 

4.12

%

 

 

3.98

%

Effect on net interest margin (1)

 

 

0.20

%

 

 

0.25

%

 

 

0.13

%

Adjusted net interest margin (1)

(c)/(d)

 

4.01

%

 

 

3.87

%

 

 

3.85

%

 

 

 

 

 

 

 

(1)

Annualized.

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

 

 

2Q22

 

 

 

1Q22

 

 

 

2Q21

 

Gross loans

 

$

1,484,718

 

 

$

1,428,410

 

 

$

1,245,866

 

Less: Purchased loans

 

 

(66,946

)

 

 

(71,377

)

 

 

(88,438

)

PPP loans (1)

 

 

(7,151

)

 

 

(21.016

)

 

 

(97,673

)

Adjusted gross loans

(a)

 

1,410,621

 

 

$

1,336,017

 

 

$

1,059,755

 

 

 

 

 

 

 

 

Accrued interest receivable on loans

 

$

4,602

 

 

$

4,494

 

 

$

3,179

 

Less: Accrued interest receivable on purchased loans

 

 

(290

)

 

 

(295

)

 

 

(290

)

Accrued interest receivable on PPP loans (2)

 

 

(93

)

 

 

(229

)

 

 

(461

)

Add: Allowance on accrued interest receivable

 

 

 

 

 

 

 

 

792

 

Adjusted accrued interest receivable on loans

(b)

$

4,219

 

 

$

3,970

 

 

$

3,220

 

 

 

 

 

 

 

 

Adjusted gross loans and accrued interest receivable

(a)+(b) =(c)

$

1,414,840

 

 

$

1,339,987

 

 

$

1,062,975

 

 

 

 

 

 

 

 

Allowance for loan losses

 

$

17,702

 

 

$

16,672

 

 

$

14,687

 

Add: Allowance on accrued interest receivable

 

 

 

 

 

 

 

 

792

 

Adjusted Allowance

(d)

$

17,702

 

 

$

16,672

 

 

$

15,479

 

 

 

 

 

 

 

 

Adjusted allowance to gross loans ratio

(d)/(c)

 

1.25

%

 

 

1.24

%

 

 

1.46

%

 

 

 

 

 

 

(1)

Excludes purchased PPP loans of $942 thousand, $1.0 million and $6.3 million as of June 30, 2022, March 31, 2022 and June 30, 2021, respectively.

(2)

Excludes purchased accrued interest receivable on PPP loans of $13 thousand, $11 thousand and $26 thousand as of June 30, 2022, March 31, 2022 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 ten full service branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Cerritos, Gardena, Buena Park, and Santa Clara, California and Carrollton, Texas. The Bank also has four loan production offices in 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, 2021 and in our other subsequent filings with the Securities and Exchange Commission.

Consolidated Balance Sheets (unaudited)

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of

 

% Change 2Q22 vs.

 

 

2Q22

 

 

 

1Q22

 

 

 

2Q21

 

 

1Q22

 

 

2Q21

 

Assets

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

14,937

 

 

$

18,206

 

 

$

15,964

 

 

(18.0

) %

 

(6.4

) %

Interest-bearing deposits in other banks

 

 

117,760

 

 

 

111,770

 

 

 

112,723

 

 

5.4

 

 

4.5

 

Cash and cash equivalents

 

 

132,697

 

 

 

129,976

 

 

 

128,687

 

 

2.1

 

 

3.1

 

Securities available for sale, at fair value

 

 

174,814

 

 

 

161,182

 

 

 

111,832

 

 

8.5

 

 

56.3

 

Other investments

 

 

12,205

 

 

 

10,836

 

 

 

11,028

 

 

12.6

 

 

10.7

 

Loans held for sale

 

 

67,255

 

 

 

86,243

 

 

 

68,396

 

 

(22.0

)

 

(1.7

)

Real estate loans

 

 

776,785

 

 

 

730,841

 

 

 

684,082

 

 

6.3

 

 

13.6

 

SBA loans (1)

 

 

247,413

 

 

 

253,064

 

 

 

338,751

 

 

(2.2

)

 

(27.0

)

C&I loans

 

 

128,620

 

 

 

176,934

 

 

 

102,562

 

 

(27.3

)

 

25.4

 

Home mortgage loans

 

 

331,362

 

 

 

266,465

 

 

 

119,319

 

 

24.4

 

 

177.7

 

Consumer & other loans

 

 

538

 

 

 

1,106

 

 

 

1,152

 

 

(51.4

)

 

(53.3

)

Gross loans, net of unearned income

 

 

1,484,718

 

 

 

1,428,410

 

 

 

1,245,866

 

 

3.9

 

 

19.2

 

Allowance for loan losses

 

 

(17,702

)

 

 

(16,672

)

 

 

(14,687

)

 

6.2

 

 

20.5

 

Net loans receivable

 

 

1,467,016

 

 

 

1,411,738

 

 

 

1,231,179

 

 

3.9

 

 

19.2

 

Premises and equipment, net

 

 

4,493

 

 

 

4,570

 

 

 

4,271

 

 

(1.7

)

 

5.2

 

Accrued interest receivable, net

 

 

5,112

 

 

 

4,893

 

 

 

3,469

 

 

4.5

 

 

47.4

 

Servicing assets

 

 

12,708

 

 

 

12,341

 

 

 

12,903

 

 

3.0

 

 

(1.5

)

Company owned life insurance

 

 

21,317

 

 

 

11,197

 

 

 

11,005

 

 

90.4

 

 

93.7

 

Deferred tax assets

 

 

13,371

 

 

 

10,882

 

 

 

4,861

 

 

22.9

 

 

175.1

 

Operating right-of-use assets

 

 

8,036

 

 

 

8,471

 

 

 

6,065

 

 

(5.1

)

 

32.5

 

Other assets

 

 

15,218

 

 

 

11,616

 

 

 

8,164

 

 

31.0

 

 

86.4

 

Total assets

 

$

1,934,242

 

 

$

1,863,945

 

 

$

1,601,860

 

 

3.8

%

 

20.7

%

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

Noninterest bearing

 

$

820,311

 

 

$

848,531

 

 

$

668,244

 

 

(3.3

) %

 

22.8

%

Money market and others

 

 

519,389

 

 

 

456,890

 

 

 

386,612

 

 

13.7

 

 

34.3

 

Time deposits greater than $250,000

 

 

237,634

 

 

 

192,849

 

 

 

193,704

 

 

23.2

 

 

22.7

 

Other time deposits

 

 

164,289

 

 

 

173,733

 

 

 

185,543

 

 

(5.4

)

 

(11.5

)

Total deposits

 

 

1,741,623

 

 

 

1,672,003

 

 

 

1,434,103

 

 

4.2

 

 

21.4

 

Accrued interest payable

 

 

612

 

 

 

548

 

 

 

608

 

 

11.7

 

 

0.7

 

Operating lease liabilities

 

 

9,335

 

 

 

9,839

 

 

 

7,567

 

 

(5.1

)

 

23.4

 

Other liabilities

 

 

13,180

 

 

 

15,564

 

 

 

7,620

 

 

(15.3

)

 

73.0

 

Total liabilities

 

 

1,764,750

 

 

 

1,697,954

 

 

 

1,449,898

 

 

3.9

 

 

21.7

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

78,718

 

 

 

78,718

 

 

 

78,718

 

 

 

 

 

Additional paid-in capital

 

 

9,089

 

 

 

8,860

 

 

 

8,324

 

 

2.6

 

 

9.2

 

Retained earnings

 

 

92,659

 

 

 

85,694

 

 

 

64,700

 

 

8.1

 

 

43.2

 

Accumulated other comprehensive (loss) income

 

 

(10,974

)

 

 

(7,281

)

 

 

220

 

 

50.7

 

 

(5088.2

)

Total shareholders’ equity

 

 

169,492

 

 

 

165,991

 

 

 

151,962

 

 

2.1

 

 

11.5

 

Total liabilities and shareholders' equity

 

$

1,934,242

 

 

$

1,863,945

 

 

$

1,601,860

 

 

3.8

%

 

20.7

%

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes SBA Paycheck Protection Program (“PPP”) loans of $8.1 million, $22.1 million and $103.9 million as of June 30, 2022, March 31, 2022 and June 30, 2021, respectively.

Consolidated Statements of Income (unaudited)

 

 

 

 

 

 

 

 

 

 

 

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

 

For the Three Months Ended

 

% Change 1Q22 vs.

 

 

2Q22

 

 

1Q22

 

 

2Q21

 

 

1Q22

 

 

2Q21

 

Interest income

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

19,108

 

$

17,257

 

$

14,971

 

 

10.7

%

 

27.6

%

Interest on securities available for sale

 

 

703

 

 

530

 

 

218

 

 

32.6

 

 

222.5

 

Other interest income

 

 

337

 

 

157

 

 

160

 

 

114.6

 

 

110.6

 

Total interest income

 

 

20,148

 

 

17,944

 

 

15,349

 

 

12.3

 

 

31.3

 

Interest expense

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

1,069

 

 

654

 

 

763

 

 

63.5

 

 

40.1

 

Total interest expense

 

 

1,069

 

 

654

 

 

763

 

 

63.5

 

 

40.1

 

Net interest income

 

 

19,079

 

 

17,290

 

 

14,586

 

 

10.3

 

 

30.8

 

Provision for (reversal of) loan losses

 

 

996

 

 

341

 

 

(1,112

)

 

192.1

 

 

n/a

 

Net interest income after provision for loan losses

 

 

18,083

 

 

16,949

 

 

15,698

 

 

6.7

 

 

15.2

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

 

427

 

 

388

 

 

393

 

 

10.1

 

 

8.7

 

Loan servicing fees, net of amortization

 

 

654

 

 

447

 

 

302

 

 

46.3

 

 

116.6

 

Gain on sale of loans

 

 

3,873

 

 

3,238

 

 

1,210

 

 

19.6

 

 

220.1

 

Other income

 

 

405

 

 

143

 

 

315

 

 

183.2

 

 

28.6

 

Total noninterest income

 

 

5,359

 

 

4,216

 

 

2,220

 

 

27.1

 

 

141.4

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

7,109

 

 

5,657

 

 

5,307

 

 

25.7

 

 

34.0

 

Occupancy and equipment

 

 

1,489

 

 

1,378

 

 

1,234

 

 

8.1

 

 

20.7

 

Data processing and communication

 

 

492

 

 

493

 

 

467

 

 

(0.2

)

 

5.4

 

Professional fees

 

 

364

 

 

324

 

 

303

 

 

12.3

 

 

20.1

 

FDIC insurance and regulatory assessments

 

 

192

 

 

207

 

 

123

 

 

(7.2

)

 

56.1

 

Promotion and advertising

 

 

165

 

 

189

 

 

176

 

 

(12.7

)

 

(6.3

)

Directors’ fees

 

 

190

 

 

177

 

 

128

 

 

7.3

 

 

48.4

 

Foundation donation and other contributions

 

 

852

 

 

815

 

 

640

 

 

4.5

 

 

33.1

 

Other expenses

 

 

650

 

 

422

 

 

411

 

 

54.0

 

 

58.2

 

Total noninterest expense

 

 

11,503

 

 

9,662

 

 

8,789

 

 

19.1

 

 

30.9

 

Income before income tax expense

 

 

11,939

 

 

11,503

 

 

9,129

 

 

3.8

 

 

30.8

 

Income tax expense

 

 

3,459

 

 

3,351

 

 

2,750

 

 

3.2

 

 

25.8

 

Net income

 

$

8,480

 

$

8,152

 

$

6,379

 

 

4.0

%

 

32.9

%

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

11.16

 

$

10.97

 

$

10.04

 

 

1.7

%

 

11.2

%

Earnings per share - Basic

 

$

0.55

 

$

0.53

 

$

0.42

 

 

3.8

%

 

31.0

%

Earnings per share - Diluted

 

$

0.54

 

$

0.53

 

$

0.42

 

 

1.9

%

 

28.6

%

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock outstanding

 

 

15,189,203

 

 

15,137,808

 

 

15,133,407

 

 

0.3

%

 

0.4

%

Weighted Average Shares:

 

 

 

 

 

 

 

 

 

 

- Basic

 

 

15,141,975

 

 

15,137,808

 

 

15,056,484

 

 

%

 

0.6

%

- Diluted

 

 

15,234,577

 

 

15,242,214

 

 

15,129,451

 

 

(0.1

) %

 

0.7

%

 

 

 

 

 

 

 

 

 

 

 

Key Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

% Change 1Q22 vs.

 

2Q22

 

 

1Q22

 

 

2Q21

 

 

1Q22

 

 

2Q21

 

Return on average assets (ROA) (1)

 

1.79

%

 

1.85

%

 

1.68

%

 

(0.1

) %

 

0.1

%

Return on average equity (ROE) (1)

 

20.29

%

 

19.54

%

 

17.10

%

 

0.8

%

 

3.2

%

Net interest margin (1)

 

4.21

%

 

4.12

%

 

3.98

%

 

0.1

%

 

0.2

%

Efficiency ratio

 

47.07

%

 

44.93

%

 

52.30

%

 

2.1

%

 

(5.2

) %

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

13.51

%

 

13.29

%

 

13.87

%

 

0.2

%

 

(0.4

) %

Tier 1 risk-based capital ratio

 

12.29

%

 

12.11

%

 

12.62

%

 

0.2

%

 

(0.3

) %

Common equity tier 1 ratio

 

12.29

%

 

12.11

%

 

12.62

%

 

0.2

%

 

(0.3

) %

Leverage ratio

 

9.48

%

 

9.80

%

 

9.96

%

 

(0.3

) %

 

(0.5

) %

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

Consolidated Statements of Income (unaudited)

 

 

 

 

 

 

 

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

 

For the Six Months Ended

 

 

2Q22

 

 

2Q21

 

 

% Change

Interest income

 

 

 

 

 

 

Interest and fees on loans

 

$

36,365

 

$

28,255

 

 

28.7

%

Interest on securities available for sale

 

 

1,233

 

 

454

 

 

171.6

%

Other interest income

 

 

494

 

 

272

 

 

81.6

%

Total interest income

 

 

38,092

 

 

28,981

 

 

31.4

%

Interest expense

 

 

 

 

 

 

Interest on deposits

 

 

1,723

 

 

1,640

 

 

5.1

%

Total interest expense

 

 

1,723

 

 

1,640

 

 

5.1

%

Net interest income

 

 

36,369

 

 

27,341

 

 

33.0

%

Provision for (reversal of) loan losses

 

 

1,337

 

 

(492

)

 

n/a

 

Net interest income after provision for loan losses

 

 

35,032

 

 

27,833

 

 

25.9

%

Noninterest income

 

 

 

 

 

 

Service charges on deposits

 

 

815

 

 

748

 

 

9.0

%

Loan servicing fees, net of amortization

 

 

1,101

 

 

833

 

 

32.2

%

Gain on sale of loans

 

 

7,111

 

 

3,092

 

 

130.0

%

Other income

 

 

548

 

 

513

 

 

6.8

%

Total noninterest income

 

 

9,575

 

 

5,186

 

 

84.6

%

Noninterest expense

 

 

 

 

 

 

Salaries and employee benefits

 

 

12,766

 

 

9,969

 

 

28.1

%

Occupancy and equipment

 

 

2,867

 

 

2,469

 

 

16.1

%

Data processing and communication

 

 

985

 

 

915

 

 

7.7

%

Professional fees

 

 

688

 

 

617

 

 

11.5

%

FDIC insurance and regulatory assessments

 

 

399

 

 

255

 

 

56.5

%

Promotion and advertising

 

 

354

 

 

353

 

 

0.3

%

Directors’ fees

 

 

367

 

 

244

 

 

50.4

%

Foundation donation and other contributions

 

 

1,667

 

 

1,147

 

 

45.3

%

Other expenses

 

 

1,072

 

 

786

 

 

36.4

%

Total noninterest expense

 

 

21,165

 

 

16,755

 

 

26.3

%

Income before income tax expense

 

 

23,442

 

 

16,264

 

 

44.1

%

Income tax expense

 

 

6,810

 

 

4,808

 

 

41.6

%

Net income

 

$

16,632

 

$

11,456

 

 

45.2

%

 

 

 

 

 

 

 

Book value per share

 

$

11.16

 

$

10.04

 

 

11.2

%

Earnings per share - Basic

 

$

1.08

 

$

0.75

 

 

44.0

%

Earnings per share - Diluted

 

$

1.07

 

$

0.75

 

 

42.7

%

 

 

 

 

 

 

 

Shares of common stock outstanding

 

 

15,189,203

 

 

15,133,407

 

 

0.4

%

Weighted Average Shares:

 

 

 

 

 

 

- Basic

 

 

15,139,903

 

 

15,039,773

 

 

0.7

%

- Diluted

 

 

15,238,113

 

 

15,099,403

 

 

0.9

%

 

 

 

 

 

 

 

Key Ratios

 

 

 

 

 

 

 

 

 

For the Six Months Ended

 

2Q22

 

 

2Q21

 

 

% Change

Return on average assets (ROA) (1)

 

1.82

%

 

1.56

%

 

0.3

%

Return on average equity (ROE) (1)

 

19.92

%

 

15.58

%

 

4.3

%

Net interest margin (1)

 

4.16

%

 

3.90

%

 

0.3

%

Efficiency ratio

 

46.07

%

 

51.51

%

 

(5.4

) %

 

 

 

 

 

 

 

Total risk-based capital ratio

 

13.51

%

 

13.87

%

 

(0.4

) %

Tier 1 risk-based capital ratio

 

12.29

%

 

12.62

%

 

(0.3

) %

Common equity tier 1 ratio

 

12.29

%

 

12.62

%

 

(0.3

) %

Leverage ratio

 

9.48

%

 

9.96

%

 

(0.5

) %

 

 

 

 

 

 

 

(1)

Annualized.

Asset Quality

 

 

 

 

 

 

 

($ in thousands)

 

As of and For the Three Months Ended

 

 

2Q22

 

 

 

1Q22

 

 

 

2Q21

 

Nonaccrual Loans (1)

 

$

2,172

 

 

$

2,806

 

 

$

757

 

Loans 90 days or more past due, accruing

 

 

5

 

 

 

 

 

 

 

Accruing restructured loans

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

 

2,177

 

 

 

2,806

 

 

 

757

 

Other real estate owned ("OREO")

 

 

 

 

 

 

 

 

 

Nonperforming assets

 

$

2,177

 

 

$

2,806

 

 

$

757

 

 

 

 

 

 

 

 

Criticized loans (2) by loan type:

 

 

 

 

 

 

SBA loans

 

$

1,738

 

 

$

2,543

 

 

$

3,681

 

C&I loans

 

 

297

 

 

 

305

 

 

 

4,662

 

Home mortgage loans

 

 

985

 

 

 

1,000

 

 

 

 

Total criticized loans (2)

 

$

3,020

 

 

$

3,848

 

 

$

8,343

 

 

 

 

 

 

 

 

Nonperforming assets/total assets

 

 

0.11

%

 

 

0.15

%

 

 

0.05

%

Nonperforming assets / gross loans plus OREO

 

 

0.15

%

 

 

0.20

%

 

 

0.06

%

Nonperforming loans / gross loans

 

 

0.15

%

 

 

0.20

%

 

 

0.06

%

Allowance for loan losses / nonperforming loans

 

 

813

%

 

 

594

%

 

 

1940

%

Allowance for loan losses / nonperforming assets

 

 

813

%

 

 

594

%

 

 

1940

%

Allowance for loan losses / gross loans

 

 

1.19

%

 

 

1.17

%

 

 

1.18

%

Criticized loans (2) / gross loans

 

 

0.20

%

 

 

0.27

%

 

 

0.67

%

Classified loans / gross loans

 

 

0.20

%

 

 

0.27

%

 

 

0.53

%

 

 

 

 

 

 

 

Net (recoveries) charge-offs

 

$

(34

)

 

$

(3

)

 

$

27

 

Net (recoveries) charge-offs to average gross loans (3)

 

 

(0.01

) %

 

 

(0.00

) %

 

 

0.01

%

 

 

 

 

 

 

 

(1)

Includes the guaranteed portion of SBA loans that are in liquidation totaling $346 thousand and $899 thousand as of June 30, 2022 and March 31, 2022, respectively.

(2)

Consists of special mention, substandard, doubtful and loss categories.

(3)

Annualized.

 

 

 

 

 

 

 

($ in thousands)

 

 

2Q22

 

 

1Q22

 

 

2Q21

Accruing delinquent loans 30-89 days past due

 

 

 

 

 

 

30-59 days

 

$

447

 

$

201

 

$

41

60-89 days

 

 

 

 

 

 

Total (1)

 

$

447

 

$

201

 

$

41

 

 

 

 

 

 

 

(1)

Includes the guaranteed portion of PPP loans totaling $9 thousand as of March 31, 2022.

Average Balance Sheet, Interest and Yield/Rate Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

2Q22

 

 

 

1Q2022

 

 

 

2Q21

 

($ 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

 

$

79,628

 

$

197

 

0.98

%

 

$

86,875

 

$

42

 

0.19

%

 

$

107,280

 

$

28

 

0.10

%

Federal funds sold and other investments

 

 

11,966

 

 

140

 

4.70

 

 

 

10,957

 

 

115

 

4.19

 

 

 

10,865

 

 

132

 

4.85

 

Available-for-sale debt securities, at fair value

 

 

165,499

 

 

703

 

1.70

 

 

 

156,913

 

 

530

 

1.35

 

 

 

108,960

 

 

218

 

0.80

 

Real estate loans

 

 

751,610

 

 

8,743

 

4.67

 

 

 

710,993

 

 

7,802

 

4.45

 

 

 

670,224

 

 

7,725

 

4.62

 

SBA loans

 

 

353,138

 

 

5,707

 

6.48

 

 

 

358,725

 

 

5,834

 

6.60

 

 

 

346,702

 

 

4,816

 

5.57

 

C&I loans

 

 

160,291

 

 

1,811

 

4.53

 

 

 

156,355

 

 

1,536

 

3.98

 

 

 

101,362

 

 

983

 

3.89

 

Home mortgage loans

 

 

294,341

 

 

2,837

 

3.86

 

 

 

217,103

 

 

2,074

 

3.82

 

 

 

122,588

 

 

1,431

 

4.67

 

Consumer & other loans

 

 

684

 

 

10

 

5.49

 

 

 

878

 

 

11

 

4.88

 

 

 

1,182

 

 

16

 

5.30

 

Loans (2)

 

 

1,560,064

 

 

19,108

 

4.91

 

 

 

1,444,054

 

 

17,257

 

4.84

 

 

 

1,242,058

 

 

14,971

 

4.83

 

Total interest-earning assets

 

 

1,817,157

 

 

20,148

 

4.44

 

 

 

1,698,799

 

 

17,944

 

4.28

 

 

 

1,469,163

 

 

15,349

 

4.19

 

Noninterest-earning assets

 

 

73,594

 

 

 

 

 

 

63,016

 

 

 

 

 

 

49,151

 

 

 

 

Total assets

 

$

1,890,751

 

 

 

 

 

$

1,761,815

 

 

 

 

 

$

1,518,314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market deposits and others

 

$

470,013

 

$

503

 

0.43

%

 

$

412,295

 

$

251

 

0.25

%

 

$

366,922

 

$

281

 

0.31

%

Time deposits

 

 

389,059

 

 

566

 

0.58

 

 

 

374,620

 

 

403

 

0.44

 

 

 

366,603

 

 

482

 

0.53

 

Total interest-bearing deposits

 

 

859,072

 

 

1,069

 

0.50

 

 

 

786,915

 

 

654

 

0.34

 

 

 

733,525

 

 

763

 

0.42

 

Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,025

 

 

 

 

Total interest-bearing liabilities

 

 

859,072

 

 

1,069

 

0.50

 

 

 

786,915

 

 

654

 

0.34

 

 

 

736,550

 

 

763

 

0.42

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

843,788

 

 

 

 

 

 

783,461

 

 

 

 

 

 

615,385

 

 

 

 

Other noninterest-bearing liabilities

 

 

20,720

 

 

 

 

 

 

24,599

 

 

 

 

 

 

17,119

 

 

 

 

Total noninterest-bearing liabilities

 

 

864,508

 

 

 

 

 

 

808,060

 

 

 

 

 

 

632,504

 

 

 

 

Shareholders’ equity

 

 

167,171

 

 

 

 

 

 

166,840

 

 

 

 

 

 

149,260

 

 

 

 

Total liabilities and shareholders’ equity

 

$

1,890,751

 

 

 

 

 

$

1,761,815

 

 

 

 

 

$

1,518,314

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / interest rate spreads

 

 

 

$

19,079

 

3.94

%

 

 

 

$

17,290

 

3.94

%

 

 

 

$

14,586

 

3.77

%

Net interest margin

 

 

 

 

 

4.21

%

 

 

 

 

 

4.12

%

 

 

 

 

 

3.98

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of deposits & cost of funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits / cost of deposits

 

$

1,702,860

 

$

1,069

 

0.25

%

 

$

1,570,376

 

$

654

 

0.17

%

 

 

1,348,910

 

$

763

 

0.23

%

Total funding liabilities / cost of funds

 

$

1,702,860

 

$

1,069

 

0.25

%

 

$

1,570,376

 

$

654

 

0.17

%

 

 

1,351,935

 

$

763

 

0.23

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

(2)

Includes loans held for sale.

Average Balance Sheet, Interest and Yield/Rate Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended

 

 

 

2Q22

 

 

 

2Q21

 

($ 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

 

$

83,231

 

$

238

 

0.57

%

 

$

98,654

 

$

51

 

0.10

%

Federal funds sold and other investments

 

 

11,465

 

 

256

 

4.45

 

 

 

10,478

 

 

221

 

4.21

 

Available-for-sale debt securities, at fair value

 

 

161,230

 

 

1,233

 

1.53

 

 

 

101,000

 

 

454

 

0.90

 

Real estate loans

 

 

731,413

 

 

16,545

 

4.56

 

 

 

661,907

 

 

15,191

 

4.63

 

SBA loans

 

 

355,916

 

 

11,542

 

6.54

 

 

 

307,787

 

 

8,096

 

5.30

 

C&I loans

 

 

158,334

 

 

3,348

 

4.26

 

 

 

108,803

 

 

2,055

 

3.81

 

Home mortgage loans

 

 

255,936

 

 

4,911

 

3.84

 

 

 

124,135

 

 

2,882

 

4.64

 

Consumer & other loans

 

 

780

 

 

19

 

5.15

 

 

 

1,184

 

 

31

 

5.24

 

Loans (2)

 

 

1,502,379

 

 

36,365

 

4.88

 

 

 

1,203,816

 

 

28,255

 

4.73

 

Total interest-earning assets

 

 

1,758,305

 

 

38,092

 

4.36

 

 

 

1,413,948

 

 

28,981

 

4.13

 

Noninterest-earning assets

 

 

68,334

 

 

 

 

 

 

50,422

 

 

 

 

Total assets

 

$

1,826,639

 

 

 

 

 

$

1,464,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities: