OP Bancorp Reports Net Income for 2023 Third Quarter of $5.1 Million and Diluted Earnings Per Share of $0.33

2023 Third Quarter Highlights compared with 2023 Second Quarter:

  • Financial Results:
    • Net income of $5.1 million, compared to $6.1 million
    • Diluted earnings per share of $0.33, compared to $0.39
    • Net interest income of $17.3 million, compared to $17.3 million
    • Net interest margin of 3.38%, compared to 3.40%
    • Provision for credit losses of $1.4 million, compared to none
    • Total assets of $2.14 billion, compared to $2.15 billion
    • Gross loans of $1.76 billion, compared to $1.72 billion
    • Total deposits of $1.83 billion, compared to $1.86 billion
  • Credit Quality:
    • Allowance for credit losses to gross loans of 1.23%, compared to 1.21%
    • Net charge-offs(1) to average gross loans(2) of 0.11%, compared to 0.00%
    • Nonperforming loans to gross loans of 0.24%, compared to 0.20%
    • Criticized loans(3) to gross loans of 0.78%, compared to 0.44%
  • Capital Levels:
    • Remained well-capitalized with a Common Equity Tier 1 (“CET1”) ratio of 12.09%
    • Book value per common share increased to $12.17, compared to $12.16
    • Paid quarterly cash dividend of $0.12 per share for the periods
    • Announced a new program to repurchase up to 750,000 shares of its common stock

___________________________________________________________

(1) Annualized.

(2) Includes loans held for sale.

(3) Includes special mention, substandard, doubtful, and loss categories.

OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company of Open Bank (the “Bank”), today reported its financial results for the third quarter of 2023. Net income for the third quarter of 2023 was $5.1 million, or $0.33 per diluted common share, compared with $6.1 million, or $0.39 per diluted common share, for the second quarter of 2023, and $8.7 million, or $0.55 per diluted common share, for the third quarter of 2022.

Min Kim, President and Chief Executive Officer:

“Recognizing the continued challenges in banking environment, we have been actively engaging with our borrowers to provide support in this high interest rate environment. As we maintain a healthy level of liquidity, our primary emphasis has been on fine-tuning our deposit composition to control costs effectively. Our noninterest-bearing deposits stand at 33% of total deposits showing promising signs of stability in our net interest margin,” said Min Kim, President and Chief Executive.

“We also expanded our branch network by opening our eleventh full service branch in Las Vegas, Nevada during the quarter. Although we anticipate additional challenges in the short term, we remain optimistic about achieving our longer-term goals.”

SELECTED FINANCIAL HIGHLIGHTS

 

 

 

 

 

 

 

 

 

 

 

($ in thousands, except per share data)

 

As of and For the Three Months Ended

 

% Change 3Q23 vs.

 

3Q2023

 

2Q2023

 

3Q2022

 

2Q2023

 

3Q2022

Selected Income Statement Data:

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

17,313

 

 

$

17,252

 

 

$

20,344

 

 

0.4

%

 

(14.9

)%

Provision for credit losses

 

 

1,359

 

 

 

 

 

 

662

 

 

n/m

 

 

105.3

 

Noninterest income

 

 

2,601

 

 

 

3,605

 

 

 

4,821

 

 

(27.9

)

 

(46.0

)

Noninterest expense

 

 

11,535

 

 

 

12,300

 

 

 

12,338

 

 

(6.2

)

 

(6.5

)

Income tax expense

 

 

1,899

 

 

 

2,466

 

 

 

3,515

 

 

(23.0

)

 

(46.0

)

Net income

 

 

5,121

 

 

 

6,091

 

 

 

8,650

 

 

(15.9

)

 

(40.8

)

Diluted earnings per share

 

 

0.33

 

 

 

0.39

 

 

 

0.55

 

 

(15.4

)

 

(40.0

)

Selected Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

Gross loans

 

$

1,759,525

 

 

$

1,716,197

 

 

$

1,618,018

 

 

2.5

%

 

8.7

%

Total deposits

 

 

1,825,171

 

 

 

1,859,639

 

 

 

1,816,811

 

 

(1.9

)

 

0.5

 

Total assets

 

 

2,142,675

 

 

 

2,151,701

 

 

 

2,029,575

 

 

(0.4

)

 

5.6

 

Average loans(1)

 

 

1,740,188

 

 

 

1,725,764

 

 

 

1,614,000

 

 

0.8

 

 

7.8

 

Average deposits

 

 

1,821,361

 

 

 

1,817,101

 

 

 

1,753,726

 

 

0.2

 

 

3.9

 

Credit Quality:

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

$

4,211

 

 

$

3,447

 

 

$

1,809

 

 

22.2

%

 

132.8

%

Nonperforming loans to gross loans

 

 

0.24

%

 

 

0.20

%

 

 

0.11

%

 

20.0

 

 

118.2

 

Criticized loans(2) to gross loans

 

 

0.78

 

 

 

0.44

 

 

 

0.19

 

 

77.3

 

 

310.5

 

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

 

 

0.11

 

 

 

0.00

 

 

 

(0.00

)

 

0.11

 

 

0.11

 

Allowance for credit losses to gross loans

 

 

1.23

 

 

 

1.21

 

 

 

1.14

 

 

0.02

 

 

0.09

 

Allowance for credit losses to nonperforming loans

 

 

513

 

 

 

603

 

 

 

1015

 

 

(90

)

 

(502

)

Financial Ratios:

 

 

 

 

 

 

 

 

 

 

Return on average assets(3)

 

 

0.96

%

 

 

1.15

%

 

 

1.77

%

 

(0.19

)%

 

(0.81

)%

Return on average equity(3)

 

 

11.07

 

 

 

13.27

 

 

 

19.91

 

 

(2.20

)

 

(8.84

)

Net interest margin(3)

 

 

3.38

 

 

 

3.40

 

 

 

4.31

 

 

(0.02

)

 

(0.93

)

Efficiency ratio(4)

 

 

57.92

 

 

 

58.97

 

 

 

49.03

 

 

(1.05

)

 

8.89

 

Common equity tier 1 capital ratio

 

 

12.09

 

 

 

11.92

 

 

 

11.92

 

 

0.17

 

 

0.17

 

Leverage ratio

 

 

9.63

 

 

 

9.50

 

 

 

9.52

 

 

0.13

 

 

0.11

 

Book value per common share

 

$

12.17

 

 

$

12.16

 

 

$

11.19

 

 

0.1

 

 

8.8

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes loans held for sale.

(2)

Includes special mention, substandard, doubtful, and loss categories.

(3)

Annualized.

(4)

Represents noninterest expense divided by the sum of net interest income and noninterest income.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income and Net Interest Margin

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 3Q23 vs.

 

3Q2023

 

2Q2023

 

3Q2022

 

2Q2023

 

3Q2022

Interest Income

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

31,186

 

$

30,102

 

$

23,234

 

3.6

%

 

34.2

%

Interest expense

 

 

13,873

 

 

12,850

 

 

2,890

 

8.0

 

 

380.0

 

Net interest income

 

$

17,313

 

$

17,252

 

$

20,344

 

0.4

%

 

(14.9

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

3Q2023

 

2Q2023

 

3Q2022

 

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

 

$

1,740,188

 

$

28,250

 

6.45

%

 

$

1,725,764

 

$

27,288

 

6.34

%

 

$

1,614,000

 

$

21,780

 

5.36

%

Total interest-earning assets

 

 

2,038,321

 

 

31,186

 

6.08

 

 

 

2,030,139

 

 

30,102

 

5.94

 

 

 

1,874,516

 

 

23,234

 

4.92

 

Interest-bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

1,222,099

 

 

13,006

 

4.22

 

 

 

1,201,353

 

 

11,920

 

3.98

 

 

 

947,437

 

 

2,889

 

1.21

 

Total interest-bearing liabilities

 

 

1,301,990

 

 

13,873

 

4.23

 

 

 

1,283,939

 

 

12,850

 

4.01

 

 

 

947,567

 

 

2,890

 

1.21

 

Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / interest rate spreads

 

 

 

 

17,313

 

1.85

 

 

 

 

 

17,252

 

1.93

 

 

 

 

 

20,344

 

3.71

 

Net interest margin

 

 

 

 

 

3.38

 

 

 

 

 

 

3.40

 

 

 

 

 

 

4.31

 

Total deposits / cost of deposits

 

 

1,821,361

 

 

13,006

 

2.83

 

 

 

1,817,101

 

 

11,920

 

2.63

 

 

 

1,753,726

 

 

2,889

 

0.65

 

Total funding liabilities / cost of funds

 

 

1,901,252

 

 

13,873

 

2.90

 

 

 

1,899,687

 

 

12,850

 

2.71

 

 

 

1,753,856

 

 

2,890

 

0.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

Yield Change 3Q23 vs.

 

3Q2023

 

2Q2023

 

3Q2022

 

 

Interest

& Fees

 

Yield(1)

 

Interest

& Fees

 

Yield(1)

 

Interest

& Fees

 

Yield(1)

 

2Q2023

 

3Q2022

Loan Yield Component:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractual interest rate

 

$

27,319

 

 

6.24

%

 

$

26,411

 

 

6.13

%

 

$

20,419

 

 

5.02

%

 

0.11

%

 

1.22

%

SBA discount accretion

 

 

1,263

 

 

0.29

 

 

 

1,078

 

 

0.25

 

 

 

1,336

 

 

0.33

 

 

0.04

 

 

(0.04

)

Amortization of net deferred fees

 

 

1

 

 

 

 

 

16

 

 

0.01

 

 

 

122

 

 

0.03

 

 

(0.01

)

 

(0.03

)

Amortization of premium

 

 

(445

)

 

(0.10

)

 

 

(452

)

 

(0.11

)

 

 

(250

)

 

(0.06

)

 

0.01

 

 

(0.04

)

Net interest recognized on nonaccrual loans

 

 

(26

)

 

(0.01

)

 

 

40

 

 

0.01

 

 

 

 

 

 

 

(0.02

)

 

(0.01

)

Prepayment penalties(2) and other fees

 

 

138

 

 

0.03

 

 

 

195

 

 

0.05

 

 

 

153

 

 

0.04

 

 

(0.02

)

 

(0.01

)

Yield on loans

 

$

28,250

 

 

6.45

%

 

$

27,288

 

 

6.34

%

 

$

21,780

 

 

5.36

%

 

0.11

%

 

1.09

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of Net Deferred Fees:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PPP loan forgiveness

 

$

3

 

 

%

 

$

 

 

%

 

$

351

 

 

0.04

%

 

%

 

(0.04

)%

Other

 

 

(2

)

 

 

 

 

16

 

 

0.01

 

 

 

142

 

 

-0.01

 

 

(0.01

)

 

0.01

 

Total amortization of net deferred fees

 

$

1

 

 

%

 

$

16

 

 

0.01

%

 

$

493

 

 

0.03

%

 

(0.01

)%

 

(0.03

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

(2)

Prepayment penalty income of $110 thousand and $79 thousand for the three months ended June 30, 2023 and September 30, 2022, respectively, was from commercial real estate (“CRE”) and Commercial and Industrial (“C&I”) loans.

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

During the second quarter of 2021, the Bank 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

 

3Q2023

 

2Q2023

 

3Q2022

Hana Loan Purchase:

 

 

 

 

 

 

Contractual interest rate

 

$

1,383

 

 

$

1,409

 

 

$

1,114

 

Purchased loan discount accretion

 

 

513

 

 

 

384

 

 

 

594

 

Other fees

 

 

27

 

 

 

16

 

 

 

9

 

Total interest income

 

$

1,923

 

 

$

1,809

 

 

$

1,717

 

 

 

 

 

 

 

 

Effect on average loan yield(1)

 

 

0.25

%

 

 

0.23

%

 

 

0.21

%

Effect on net interest margin(1)

 

 

0.30

%

 

 

0.27

%

 

 

0.22

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

3Q2023

 

2Q2023

 

3Q2022

 

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)

 

$

1,740,188

 

$

28,250

 

6.45

%

 

$

1,725,764

 

$

27,288

 

6.34

%

 

$

1,614,000

 

$

21,780

 

5.36

%

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

 

 

1,688,404

 

 

26,327

 

6.20

 

 

 

1,670,530

 

 

25,479

 

6.11

 

 

 

1,549,313

 

 

20,063

 

5.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin(1)

 

 

2,038,321

 

 

17,313

 

3.38

 

 

 

2,030,139

 

 

17,252

 

3.40

 

 

 

1,874,516

 

 

20,344

 

4.31

 

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

 

 

1,986,537

 

 

15,390

 

3.08

 

 

 

1,974,905

 

 

15,443

 

3.13

 

 

 

1,809,829

 

 

18,627

 

4.09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

(2)

See reconciliation of GAAP to non-GAAP financial measures.

Third Quarter 2023 vs. Second Quarter 2023

Net interest income increased $0.1 million, or 0.4%, primarily due to higher interest income on loans and interest-bearing deposits in other banks, mostly offset by higher interest expense on deposits. Net interest margin was 3.38%, a decrease of 2 basis points from 3.40%.

  • A $1.0 million increase in interest income on loans was primarily due to a 11 basis point increase in average yield as a result of the Federal Reserve’s rate increases.
  • A $113 thousand increase in interest income on interest-bearing deposits in other banks was primarily due the Federal Reserve’s rate increases.
  • A $1.1 million increase in interest expense on interest-bearing deposits was primarily due to a 24 basis point increase in average cost.

Third Quarter 2023 vs. Third Quarter 2022

Net interest income decreased $3.0 million, or 14.9%, primarily due to higher interest expense on deposits, partially offset by higher interest income on loans. Net interest margin was 3.38%, a decrease of 93 basis points from 4.31%.

  • A $10.1 million increase in interest expense on deposits was primarily due to a $274.7 million increase in average balance and a 301 basis point increase in average cost driven by the Federal Reserve’s rate increases.
  • A $6.5 million increase in interest income on loans was primarily due to a $126.2 million increase in average balance and a 109 basis point increase in average yield as a result of the Federal Reserve’s rate increases.

Provision for Credit Losses

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

3Q2023

 

2Q2023

 

3Q2022

Provision for credit losses on loans

 

$

1,303

 

$

 

$

662

 

Provision for (reversal of) credit losses on off-balance sheet exposure(1)

 

 

56

 

 

 

 

(6

)

Total provision for credit losses

 

$

1,359

 

$

 

$

656

 

 

 

 

 

 

 

 

(1)

Provision for credit losses on off-balance sheet exposure of $56 thousand for the three months ended September 30, 2023 was included in total provision for credit losses. Prior to CECL adoption, reversal of provisions for credit losses on off-balance sheet exposure of $6 thousand for the three months ended September 30, 2022 was included in other expenses.

Third Quarter 2023 vs. Second Quarter 2023

The Company recorded a $1.4 million provision for credit losses, an increase of $1.4 million, compared with no provision for credit losses. The increase was primarily due to a $488 thousand in net charge-offs, a $356 thousand increase from loan balance and historical loss factor changes, and a $575 thousand increase in qualitative factor adjustments in the third quarter of 2023.

Third Quarter 2023 vs. Third Quarter 2022

The Company recorded a $1.4 million provision for credit losses, compared with a $656 thousand provision for credit losses.

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 3Q23 vs.

 

3Q2023

 

2Q2023

 

3Q2022

 

2Q2023

 

3Q2022

Noninterest Income

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

$

575

 

$

573

 

$

454

 

0.3

%

 

26.7

%

Loan servicing fees, net of amortization

 

 

468

 

 

595

 

 

610

 

(21.3

)

 

(23.3

)

Gain on sale of loans

 

 

1,179

 

 

2,098

 

 

3,490

 

(43.8

)

 

(66.2

)

Other income

 

 

379

 

 

339

 

 

267

 

11.8

 

 

41.9

 

Total noninterest income

 

$

2,601

 

$

3,605

 

$

4,821

 

(27.9

)%

 

(46.0

)%

 

 

 

 

 

 

 

 

 

 

 

Third Quarter 2023 vs. Second Quarter 2023

Noninterest income decreased $1.0 million, or 27.9%, primarily due to lower gain on sale of loans.

  • Gain on sale of loans was $1.2 million, a decrease of $919 thousand from $2.1 million, primarily due to a lower SBA loan sold amount and a lower average sales premium. The Bank sold $23.4 million in SBA loans at an average premium rate of 6.50%, compared to the sale of $36.8 million at an average premium rate of 6.64%.

Third Quarter 2023 vs. Third Quarter 2022

Noninterest income decreased $2.2 million, or 46.0%, primarily due to lower gain on sale of loans.

  • Gain on sale of loans was $1.2 million, a decrease of $2.3 million from $3.5 million, primarily due to a lower SBA loan sold amount and a lower average sales premium. The Bank sold $23.4 million in SBA loans at an average premium rate of 6.50%, compared to the sale of $59.3 million at an average premium rate of 6.67%.

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 3Q23 vs.

 

3Q2023

 

2Q2023

 

3Q2022

 

2Q2023

 

3Q2022

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

7,014

 

$

7,681

 

$

7,343

 

(8.7

)%

 

(4.5

)%

Occupancy and equipment

 

 

1,706

 

 

1,598

 

 

1,537

 

6.8

 

 

11.0

 

Data processing and communication

 

 

369

 

 

546

 

 

586

 

(32.4

)

 

(37.0

)

Professional fees

 

 

440

 

 

381

 

 

602

 

15.5

 

 

(26.9

)

FDIC insurance and regulatory assessments

 

 

333

 

 

420

 

 

238

 

(20.7

)

 

39.9

 

Promotion and advertising

 

 

207

 

 

159

 

 

177

 

30.2

 

 

16.9

 

Directors’ fees

 

 

164

 

 

210

 

 

170

 

(21.9

)

 

(3.5

)

Foundation donation and other contributions

 

 

529

 

 

594

 

 

875

 

(10.9

)

 

(39.5

)

Other expenses

 

 

773

 

 

711

 

 

810

 

8.7

 

 

(4.6

)

Total noninterest expense

 

$

11,535

 

$

12,300

 

$

12,338

 

(6.2

)%

 

(6.5

)%

 

 

 

 

 

 

 

 

 

 

 

Third Quarter 2023 vs. Second Quarter 2023

Noninterest expense decreased $765 thousand, or 6.2%, primarily due to lower salaries and employee benefits, and data processing communication, partially offset by a higher occupancy and equipment.

  • Salaries and employee benefits decreased $667 thousand primarily due to a lower accrual on employee incentives.
  • Data processing and communication decreased $177 thousand primarily due to an accrual adjustment for a credit received on data processing fees.
  • Occupancy and equipment increased $108 thousand primarily due to increases in leasehold improvements and equipment expense accrual adjustments.

Third Quarter 2023 vs. Third Quarter 2022

Noninterest expense decreased $803 thousand, or 6.5%, primarily due to lower foundation donation and other contributions, salaries and employee benefits, and data processing and communication.

  • Foundation donations and other contributions decreased $346 thousand, primarily due to a lower donation accrual for Open Stewardship as a result of lower net income.
  • Salaries and employee benefits decreased $329 thousand, primarily due to a lower accrual on employee incentives.
  • Data processing and communication decreased $217 thousand, primarily due to an accrual adjustment for a credit received on data processing fees.

Income Tax Expense

Third Quarter 2023 vs. Second Quarter 2023

Income tax expense was $1.9 million and the effective tax rate was 27.1%, compared to income tax expense of $2.5 million and the effective rate of 28.8%. The decrease in the effective tax rate was primarily due to adjustments for differences between the prior year tax provision and the final tax returns that were applied in the third quarter of 2023.

Third Quarter 2023 vs. Third Quarter 2022

Income tax expense was $1.9 million and the effective tax rate was 27.1%, compared to income tax expense of $3.5 million and an effective rate of 28.9%. The decrease in the effective tax rate was primarily due to return to provision adjustments applied in the third quarter of 2023.

BALANCE SHEET HIGHLIGHTS

Loans

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of

 

% Change 3Q23 vs.

 

3Q2023

 

2Q2023

 

3Q2022

 

2Q2023

 

3Q2022

CRE loans

 

$

878,824

 

$

847,863

 

$

830,125

 

3.7

%

 

5.9

%

SBA loans

 

 

240,154

 

 

238,785

 

 

232,569

 

0.6

 

 

3.3

 

C&I loans

 

 

124,632

 

 

112,160

 

 

133,855

 

11.1

 

 

(6.9

)

Home mortgage loans

 

 

515,789

 

 

516,226

 

 

419,469

 

(0.1

)

 

23.0

 

Consumer & other loans

 

 

126

 

 

1,163

 

 

2,000

 

(89.2

)

 

(93.7

)

Gross loans

 

$

1,759,525

 

$

1,716,197

 

$

1,618,018

 

2.5

%

 

8.7

%

 

 

 

 

 

 

 

 

 

 

 

The following table presents new loan originations based on loan commitment amounts for the periods indicated:

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 3Q23 vs.

 

3Q2023

 

2Q2023

 

3Q2022

 

2Q2023

 

3Q2022

CRE loans

 

$

33,222

 

$

29,976

 

$

43,929

 

10.8

%

 

(24.4

)%

SBA loans

 

 

39,079

 

 

34,312

 

 

43,984

 

13.9

 

 

(11.2

)

C&I loans

 

 

14,617

 

 

25,650

 

 

39,720

 

(43.0

)

 

(63.2

)

Home mortgage loans

 

 

9,137

 

 

22,788

 

 

68,842

 

(59.9

)

 

(86.7

)

Gross loans

 

$

96,055

 

$

112,726

 

$

198,975

 

(14.8

)%

 

(51.7

)%

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

3Q2023

 

2Q2023

 

3Q2022

Loan Activities:

 

 

 

 

 

 

Gross loans, beginning

 

$

1,716,197

 

 

$

1,692,485

 

 

$

1,484,718

 

New originations

 

 

96,055

 

 

 

112,726

 

 

 

198,975

 

Net line advances

 

 

25,464

 

 

 

(25,961

)

 

 

(6,337

)

Purchases

 

 

3,415

 

 

 

6,359

 

 

 

37,146

 

Sales

 

 

(22,137

)

 

 

(36,791

)

 

 

(64,314

)

Paydowns

 

 

(22,169

)

 

 

(17,210

)

 

 

(19,087

)

Payoffs

 

 

(36,024

)

 

 

(25,969

)

 

 

(37,817

)

PPP payoffs

 

 

(250

)

 

 

 

 

 

(7,206

)

Decrease in loans held for sale

 

 

 

 

 

7,534

 

 

 

30,613

 

Other

 

 

(1,026

)

 

 

3,024

 

 

 

1,327

 

Total

 

 

43,328

 

 

 

23,712

 

 

 

133,300

 

Gross loans, ending

 

$

1,759,525

 

 

$

1,716,197

 

 

$

1,618,018

 

 

 

 

 

 

 

 

As of September 30, 2023 vs. June 30, 2023

Gross loans were $1.76 billion as of September 30, 2023, up $43.3 million from June 30, 2023, primarily due to new loan originations and net line advances, partially offset by loan sales, and payoffs and paydowns.

New loan originations, net line advances, and loan payoffs and paydowns were $96.1 million $25.5 million, and $58.4 million for the third quarter of 2023, respectively, compared with $112.7 million $(26.0) million and $43.2 million for the second quarter of 2023, respectively.

As of September 30, 2023 vs. September 30, 2022

Gross loans were $1.76 billion as of September 30, 2023, up $141.5 million from September 30, 2022, primarily due to new loan originations of $451.8 million and loan purchases of $71.9 million, primarily offset by loan sales of $136.2 million and loan payoffs and paydowns of $217.2 million.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of

 

3Q2023

 

2Q2023

 

3Q2022

 

%

 

Rate

 

%

 

Rate

 

%

 

Rate

Fixed rate

 

36.3

%

 

4.95

%

 

36.2

%

 

4.82

%

 

35.2

%

 

4.39

%

Hybrid rate

 

34.0

 

 

5.08

 

 

34.7

 

 

4.99

 

 

34.1

 

 

4.59

 

Variable rate

 

29.7

 

 

9.23

 

 

29.1

 

 

9.05

 

 

30.7

 

 

6.97

 

Gross loans

 

100.0

%

 

6.27

%

 

100.0

%

 

6.11

%

 

100.0

%

 

5.25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of September 30, 2023

 

Within One Year

 

One Year Through Five Years

 

After Five Years

 

Total

 

Amount

 

Rate

 

Amount

 

Rate

 

Amount

 

Rate

 

Amount

 

Rate

Fixed rate

 

$

77,850

 

5.84

%

 

$

316,120

 

4.82

%

 

$

243,749

 

4.83

%

 

$

637,719

 

4.95

%

Hybrid rate

 

 

 

 

 

 

96,038

 

4.49

 

 

 

502,942

 

5.19

 

 

 

598,980

 

5.08

 

Variable rate

 

 

91,108

 

9.18

 

 

 

113,209

 

8.83

 

 

 

318,509

 

9.39

 

 

 

522,826

 

9.23

 

Gross loans

 

$

168,958

 

7.52

%

 

$

525,367

 

5.63

%

 

$

1,065,200

 

6.36

%

 

$

1,759,525

 

6.27

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Credit Losses

The Company adopted the CECL accounting standard effective as of January 1, 2023 under a modified retrospective approach. The adoption resulted in a $1.9 million increase to the allowance for credit losses on loans, a $184 thousand increase to the allowance for credit losses on off-balance sheet exposure, a $624 thousand increase to deferred tax assets, and a $1.5 million charge to retained earnings.

The following table presents impact of CECL adoption for allowance for credit losses and related items on January 1, 2023:

 

 

 

 

 

 

 

 

 

($ in thousands)

 

Allowance For Credit Losses on Loans

 

Allowance For Credit Losses on Off-Balance Sheet Exposure

 

Deferred Tax Assets

 

Retained Earnings

As of December 31, 2022

 

$

19,241

 

$

263

 

$

14,316

 

$

105,690

 

Day 1 adjustments on January 1, 2023

 

 

1,924

 

 

184

 

 

624

 

 

(1,484

)

After Day 1 adjustments

 

$

21,165

 

$

447

 

$

14,940

 

$

104,206

 

 

 

 

 

 

 

 

 

 

The following table presents allowance for credit losses and provision for credit losses as of and for the periods presented:

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of and For the Three Months Ended

 

% Change 3Q23 vs.

 

3Q2023

 

2Q2023

 

3Q2022

 

2Q2023

 

3Q2022

Allowance for credit losses on loans, beginning

 

$

20,802

 

 

$

20,814

 

 

$

17,702

 

 

(0.1

)%

 

17.5

%

Provision for credit losses

 

 

1,303

 

 

 

 

 

 

662

 

 

n/m

 

 

96.8

 

Gross charge-offs

 

 

(492

)

 

 

(20

)

 

 

 

 

n/m

 

 

n/m

 

Gross recoveries

 

 

4

 

 

 

8

 

 

 

5

 

 

(50.0

)

 

(20.0

)

Net (charge-offs) recoveries

 

 

(488

)

 

 

(12

)

 

 

5

 

 

n/m

 

 

n/m

 

Allowance for credit losses on loans, ending(1)

 

$

21,617

 

 

$

20,802

 

 

$

18,369

 

 

3.9

%

 

17.7

%

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses on off-balance sheet exposure, beginning

 

$

367

 

 

$

367

 

 

$

195

 

 

%

 

88.2

%

Impact of CECL adoption

 

 

 

 

 

 

 

 

 

 

n/m

 

 

n/m

 

Provision for (reversal of) credit losses

 

 

56

 

 

 

 

 

 

(6

)

 

n/m

 

 

n/m

 

Allowance for credit losses on off-balance sheet exposure, ending(1)

 

$

423

 

 

$

367

 

 

$

189

 

 

15.3

%

 

123.8

%

 

 

 

 

 

 

 

 

 

 

 

(1)

Allowance for credit losses as of September 30, 2023 and June 30, 2023 were calculated under the CECL methodology while allowance for loan losses for September 30, 2022 was calculated under the incurred loss methodology.

Asset Quality

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of and For the Three Months Ended

 

Change 3Q2023 vs.

 

3Q2023

 

2Q2023

 

3Q2022

 

2Q2023

 

3Q2022

Loans 30-89 days past due and still accruing

 

$

8,356

 

 

$

5,215

 

 

$

1,205

 

 

60.2

%

 

593.4

%

As a % of gross loans

 

 

0.47

%

 

 

0.30

%

 

 

0.07

%

 

0.17

%

 

0.40

%

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans(1)

 

$

4,211

 

 

$

3,447

 

 

$

1,809

 

 

22.2

%

 

132.8

%

Nonperforming assets(1)

 

 

4,211

 

 

 

3,447

 

 

 

1,809

 

 

22.2

 

 

132.8

 

Nonperforming loans to gross loans

 

 

0.24

%

 

 

0.20

%

 

 

0.11

%

 

0.04

 

 

0.13

 

Nonperforming assets to total assets

 

 

0.20

%

 

 

0.16

%

 

 

0.09

%

 

0.04

 

 

0.11

 

 

 

 

 

 

 

 

 

 

 

 

Criticized loans(1)(2)

 

$

13,790

 

 

$

7,538

 

 

$

3,100

 

 

82.9

%

 

344.8

%

Criticized loans to gross loans

 

 

0.78

%

 

 

0.44

%

 

 

0.19

%

 

0.34

 

 

0.59

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses ratios:

 

 

 

 

 

 

 

 

 

 

As a % of gross loans

 

 

1.23

%

 

 

1.21

%

 

 

1.14

%

 

0.02

%

 

0.09

%

As an adjusted % of gross loans(3)

 

 

1.26

 

 

 

1.25

 

 

 

1.18

 

 

0.01

 

 

0.08

 

As a % of nonperforming loans

 

 

513

 

 

 

603

 

 

 

1,015

 

 

(90

)

 

(502

)

As a % of nonperforming assets

 

 

513

 

 

 

603

 

 

 

1,015

 

 

(90

)

 

(502

)

As a % of criticized loans

 

 

157

 

 

 

276

 

 

 

593

 

 

(119

)

 

(436

)

Net charge-offs (recoveries)(4) to average gross loans(5)

 

 

0.11

 

 

 

0.00

 

 

 

(0.00

)

 

0.11

 

 

0.11

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Excludes the guaranteed portion of SBA loans that are in liquidation totaling $5.2 million, $5.4 million and $442 thousand as of September 30, 2023, June 30, 2023 and September 30, 2022, respectively.

(2)

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

(3)

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

(4)

Annualized.

(5)

Includes loans held for sale.

Overall, the Bank continued to maintain low levels of nonperforming loans and net charge-offs. Our allowance remained strong with an adjusted allowance to gross loans ratio of 1.26%.

  • Loans 30-89 days past due and still accruing were $8.4 million or 0.47% of gross loans as of September 30, 2023, compared with $5.2 million or 0.30% as of June 30, 2023. The increase was mainly due to one home mortgage loan and one CRE and C&I relationship. Subsequent to September 30, 2023, past due payments on five loans totaling $3.5 million were collected, and the loans are now current.
  • Nonperforming loans were $4.2 million or 0.24% of gross loans as of September 30, 2023, compared with $3.4 million or 0.20% as of June 30, 2023. The increase was due to one home mortgage loan in Los Angeles with loan to value below 60% and one USDA loan with 80% government guaranty which has been written down to its fair value per the impairment analysis.
  • Nonperforming assets were $4.2 million or 0.20% of total assets as of September 30, 2023, compared with $3.4 million or 0.16% as of June 30, 2023. The Company did not have OREO as of September 30, 2023 or 2022.
  • Criticized loans were $13.8 million or 0.78% of gross loans as of September 30, 2023, compared with $7.5 million or 0.44% as of June 30, 2023. The increase was mainly due to one CRE loan to a motel in San Diego for $4.4 million and two relationships already mentioned under the nonperforming loans above. Subsequent to September 30, 2023, two loans totaling $1.4 million have been upgraded to Pass risk rating based on satisfactory cash flows.
  • Net charge-offs were $488 thousand or 0.11% of average loans in the third quarter of 2023, compared to net charge-offs of $12 thousand, or 0.00%, of average loans in the second quarter of 2023 and net recoveries of $5 thousand, or 0.00%, of average loans in the third quarter of 2022.

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of

 

% Change 3Q23 vs.

 

3Q2023

 

2Q2023

 

3Q2022

 

 

Amount

 

%

 

Amount

 

%

 

Amount

 

%

 

2Q2023

 

3Q2022

Noninterest-bearing deposits

 

$

605,509

 

33.2

%

 

$

634,745

 

34.1

%

 

$

794,631

 

43.7

%

 

(4.6

)%

 

(23.8

)%

Money market deposits and others

 

 

348,869

 

19.1

 

 

 

344,162

 

18.5

 

 

 

524,911

 

28.9

 

 

1.4

 

 

(33.5

)

Time deposits

 

 

870,793

 

47.7

 

 

 

880,732

 

47.4

 

 

 

497,269

 

27.4

 

 

(1.1

)

 

75.1

 

Total deposits

 

$

1,825,171

 

100.0

%

 

$

1,859,639

 

100.0

%

 

$

1,816,811

 

100.0

%

 

(1.9

)%

 

0.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated uninsured deposits

 

$

1,061,964

 

58.2

%

 

$

1,091,753

 

58.7

%

 

$

1,073,483

 

59.1

%

 

(2.7

)%

 

(1.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2023 vs. June 30, 2023

Total deposits were $1.83 billion as of September 30, 2023, down $34.5 million from June 30, 2023, primarily due to decreases in noninterest-bearing deposits. Noninterest-bearing deposits, as a percentage of total deposits, decreased to 33.2% from 34.1%. The composition shift to money market and time deposits was primarily due to customers’ continued preference for high-rate deposit products driven by the Federal Reserve’s rate increases.

As of September 30, 2023 vs. September 30, 2022

Total deposits were $1.83 billion as of September 30, 2023, up $8.4 million from September 30, 2022, primarily driven by growth in time deposits, partially offset by decreases in noninterest-bearing deposits, and money market and others. The composition shift to time deposits was primarily due to customers’ preference for high-rate deposit products driven by market rate increases as a result of the Federal Reserve’s rate increases.

The following table sets forth the maturity of time deposits as of September 30, 2023:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2023

($ in thousands)

 

Within Three

Months

 

Three to

Six Months

 

Six to Nine Months

 

Nine to Twelve

Months

 

After

Twelve Months

 

Total

Time deposits (more than $250)

 

$

184,757

 

 

$

141,526

 

 

$

46,464

 

 

$

45,929

 

 

$

1,486

 

 

$

420,162

 

Time deposits ($250 or less)

 

 

178,507

 

 

 

92,788

 

 

 

88,265

 

 

 

49,049

 

 

 

42,022

 

 

 

450,631

 

Total time deposits

 

$

363,264

 

 

$

234,314

 

 

$

134,729

 

 

$

94,978

 

 

$

43,508

 

 

$

870,793

 

Weighted average rate

 

 

4.39

%

 

 

4.41

%

 

 

4.70

%

 

 

4.67

%

 

 

4.02

%

 

 

4.46

%

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER HIGHLIGHTS

Liquidity

The Company maintains ample access to liquidity, including highly liquid assets on our balance sheet and available unused borrowings from other financial institutions. The following table presents the Company's liquid assets and available borrowings as of dates presented:

 

 

 

 

 

($ in thousands)

 

3Q2023

 

2Q2023

 

3Q2022

Liquidity Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

105,740

 

 

$

143,761

 

 

$

107,281

 

Available-for-sale debt securities

 

 

191,313

 

 

 

202,250

 

 

 

186,438

 

Liquid assets

 

$

297,053

 

 

$

346,011

 

 

$

293,719

 

Liquid assets to total assets

 

 

13.9

%

 

 

16.1

%

 

 

14.5

%

 

 

 

 

 

 

 

Available borrowings:

 

 

 

 

 

 

Federal Home Loan Bank—San Francisco

 

$

375,874

 

 

$

400,543

 

 

$

406,523

 

Federal Reserve Bank

 

 

186,380

 

 

 

172,316

 

 

 

179,942

 

Pacific Coast Bankers Bank

 

 

50,000

 

 

 

50,000

 

 

 

50,000

 

Zions Bank

 

 

25,000

 

 

 

25,000

 

 

 

25,000

 

First Horizon Bank

 

 

25,000

 

 

 

25,000

 

 

 

25,000

 

Total available borrowings

 

$

662,254

 

 

$

672,859

 

 

$

686,465

 

Total available borrowings to total assets

 

 

30.9

%

 

 

31.3

%

 

 

33.8

%

 

 

 

 

 

 

 

Liquid assets and available borrowings to total deposits

 

 

52.6

%

 

 

54.8

%

 

 

54.0

%

 

 

 

 

 

Capital and Capital Ratios

The Company’s Board of Directors declared a quarterly cash dividend of $0.12 per share of its common stock. The cash dividend is payable on or about November 23, 2023 to all shareholders of record as of the close of business on November 9, 2023.

The Company has an active stock repurchase program to repurchase up to 750,000 shares of its common stock, which was announced in August 2023. There was no repurchase during the third quarter of 2023.

 

 

 

 

 

 

 

 

 

 

 

Basel III

 

OP Bancorp(1)

 

Open Bank

 

Minimum Well

Capitalized

Ratio

 

Minimum

Capital Ratio+

Conservation

Buffer(2)

Risk-Based Capital Ratios:

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

13.31

%

 

13.20

%

 

10.00

%

 

10.50

%

Tier 1 risk-based capital ratio

 

12.09

 

 

11.98

 

 

8.00

 

 

8.50

 

Common equity tier 1 ratio

 

12.09

 

 

11.98

 

 

6.50

 

 

7.00

 

Leverage ratio

 

9.63

 

 

9.55

 

 

5.00

 

 

4.00

 

 

 

 

 

 

 

 

 

 

(1)

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

(2)

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

 

 

 

 

 

 

 

 

 

 

 

OP Bancorp

 

Basel III

 

Change 3Q2023 vs.

 

3Q2023

 

2Q2023

 

3Q2022

 

2Q2023

 

3Q2022

Risk-Based Capital Ratios:

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

 

13.31

%

 

 

13.10

%

 

 

13.10

%

 

0.21

%

 

0.21

%

Tier 1 risk-based capital ratio

 

 

12.09

 

 

 

11.92

 

 

 

11.92

 

 

0.17

 

 

0.17

 

Common equity tier 1 ratio

 

 

12.09

 

 

 

11.92

 

 

 

11.92

 

 

0.17

 

 

0.17

 

Leverage ratio

 

 

9.63

 

 

 

9.50

 

 

 

9.52

 

 

0.13

 

 

0.11

 

Risk-weighted Assets ($ in thousands)

 

$

1,707,318

 

 

$

1,700,205

 

 

$

1,571,593

 

 

0.42

 

 

8.64

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

In addition to GAAP measures, management uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance.

Pre-provision net revenue removes provision for credit losses and income tax expense. Management believes that this non-GAAP measure, when taken together with the corresponding GAAP financial measures (as applicable), provides meaningful supplemental information regarding our performance. This non-GAAP financial measure also facilitates a comparison of our performance to prior periods.

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

3Q2023

 

2Q2023

 

3Q2022

Interest income

 

$

31,186

 

$

30,102

 

$

23,234

Interest expense

 

 

13,873

 

 

12,850

 

 

2,890

Net interest income

 

 

17,313

 

 

17,252

 

 

20,344

Noninterest income

 

 

2,601

 

 

3,605

 

 

4,821

Noninterest expense

 

 

11,535

 

 

12,300

 

 

12,338

Pre-provision net revenue

(a)

$

8,379

 

$

8,557

 

$

12,827

Reconciliation to net income

 

 

 

 

 

 

Provision for credit losses

(b)

$

1,359

 

$

 

$

662

Income tax expense

(c)

 

1,899

 

 

2,466

 

 

3,515

Net income

(a)-(b)-(c)

$

5,121

 

$

6,091

 

$

8,650

 

 

 

 

 

 

 

During the second quarter of 2021, the Bank 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, 2023, June 30, 2023 and September 30, 2022 excluded the impacts of contractual interest and discount accretion of the purchased Hana loans as management does not consider purchasing loan portfolios to be normal or recurring transactions. Management believes that presenting the adjusted average loan yield and net interest margin provide comparability to prior periods and these non-GAAP financial measures provide supplemental information regarding the Company’s performance.

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

3Q2023

 

2Q2023

 

3Q2022

Yield on Average Loans

 

 

 

 

 

 

Interest income on loans

 

$

28,250

 

 

$

27,288

 

 

$

21,780

 

Less: interest income on purchased Hana loans

 

 

1,923

 

 

 

1,809

 

 

 

1,717

 

Adjusted interest income on loans

(a)

$

26,327

 

 

$

25,479

 

 

$

20,063

 

 

 

 

 

 

 

 

Average loans

 

$

1,740,188

 

 

$

1,725,764

 

 

$

1,614,000

 

Less: Average purchased Hana loans

 

 

51,784

 

 

 

55,234

 

 

 

64,687

 

Adjusted average loans

(b)

$

1,688,404

 

 

$

1,670,530

 

 

$

1,549,313

 

 

 

 

 

 

 

 

Average loan yield(1)

 

 

6.45

%

 

 

6.34

%

 

 

5.36

%

Effect on average loan yield(1)

 

 

0.25

%

 

 

0.23

%

 

 

0.21

%

Adjusted average loan yield(1)

(a)/(b)

 

6.20

%

 

 

6.11

%

 

 

5.15

%

 

 

 

 

 

 

 

Net Interest Margin

 

 

 

 

 

 

Net interest income

 

$

17,313

 

 

$

17,252

 

 

$

20,344

 

Less: interest income on purchased Hana loans

 

 

1,923

 

 

 

1,809

 

 

 

1,717

 

Adjusted net interest income

(c)

$

15,390

 

 

$

15,443

 

 

$

18,627

 

 

 

 

 

 

 

 

Average interest-earning assets

 

$

2,038,321

 

 

$

2,030,139

 

 

$

1,874,516

 

Less: Average purchased Hana loans

 

 

51,784

 

 

 

55,234

 

 

 

64,687

 

Adjusted average interest-earning assets

(d)

$

1,986,537

 

 

$

1,974,905

 

 

$

1,809,829

 

 

 

 

 

 

 

 

Net interest margin(1)

 

 

3.38

%

 

 

3.40

%

 

 

4.31

%

Effect on net interest margin(1)

 

 

0.30

 

 

 

0.27

 

 

 

0.22

 

Adjusted net interest margin(1)

(c)/(d)

 

3.08

%

 

 

3.13

%

 

 

4.09

%

 

 

 

 

 

 

 

(1)

Annualized.

Adjusted allowance to gross loans ratio removes the impacts of purchased Hana loans, PPP loans and allowance on accrued interest receivable. Management believes that this ratio provides greater consistency and comparability between the Company’s results and those of its peer banks.

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

3Q2023

 

2Q2023

 

3Q2022

Gross loans

 

$

1,759,525

 

 

$

1,716,197

 

 

$

1,618,018

 

Less: Purchased Hana loans

 

 

(48,780

)

 

 

(54,016

)

 

 

(61,899

)

PPP loans(1)

 

 

(1

)

 

 

(247

)

 

 

(1,022

)

Adjusted gross loans

(a)

$

1,710,744

 

 

$

1,661,934

 

 

$

1,555,097

 

 

 

 

 

 

 

 

Accrued interest receivable on loans

 

$

7,057

 

 

$

6,815

 

 

$

5,203

 

Less: Accrued interest receivable on purchased Hana loans

 

 

(402

)

 

 

(426

)

 

 

(323

)

Accrued interest receivable on PPP loans(2)

 

 

 

 

 

(6

)

 

 

(16

)

Adjusted accrued interest receivable on loans

(b)

$

6,655

 

 

$

6,383

 

 

$

4,864

 

Adjusted gross loans and accrued interest receivable

(a)+(b)=(c)

$

1,717,399

 

 

$

1,668,317

 

 

$

1,559,961

 

 

 

 

 

 

 

 

Allowance for credit losses

 

$

21,617

 

 

$

20,802

 

 

$

18,369

 

Add: Allowance on accrued interest receivable

 

 

 

 

 

 

 

 

 

Adjusted Allowance

(d)

$

21,617

 

 

$

20,802

 

 

$

18,369

 

Adjusted allowance to gross loans ratio

(d)/(c)

 

1.26

%

 

 

1.25

%

 

 

1.18

%

 

 

 

 

 

 

 

(1)

Excludes purchased PPP loans of $57 thousand as of September 30, 2022.

(2)

Excludes purchased accrued interest receivable on PPP loans of $1 thousand as of September 30, 2022.

ABOUT OP BANCORP

OP Bancorp, the holding company for Open Bank (the “Bank”), is a California corporation whose common stock is quoted on the Nasdaq Global Market under the ticker symbol, “OPBK.” The Bank is engaged in the general commercial banking business in Los Angeles, Orange, and Santa Clara Counties, California, and Carrollton, Texas and is focused on serving the banking needs of small- and medium-sized businesses, professionals, and residents with a particular emphasis on Korean and other ethnic minority communities. The Bank currently operates eleven full-service branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Cerritos, Gardena, Buena Park, and Santa Clara, California, Carrollton, Texas and Las Vegas, Nevada. The Bank also has four loan production offices in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, and Lynnwood, Washington. The Bank commenced its operations on June 10, 2005 as First Standard Bank and changed its name to Open Bank in October 2010. Its headquarters is located at 1000 Wilshire Blvd., Suite 500, Los Angeles, California 90017. Phone 213.892.9999; www.myopenbank.com.

Cautionary Note Regarding Forward-Looking Statements

Certain matters set forth herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company’s current business plans and expectations regarding future operating results. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties, some of which are beyond our control, include, but are not limited to: business and economic conditions, particularly those affecting the financial services industry and our primary market areas; the continuing effects of inflation and monetary policies, and the impacts of those circumstances upon our current and prospective borrowers and depositors; our ability to manage deposit liabilities and liquidity sources in a manner that balances the need to meet current and expected withdrawals while investing a sufficient portion of our assets to promote strong earning capacity; our ability to successfully manage our credit risk and to assess, adjust and monitor the sufficiency of our allowance for credit losses; factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers, the success of construction projects that we finance, including any loans acquired in acquisition transactions; the impacts of credit quality on our earnings and the related effects of increases to the reserve on our net income; our ability to effectively execute our strategic plan and manage our growth; interest rate fluctuations, which could have an adverse effect on our profitability; external economic and/or market factors, such as changes in monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve, inflation or deflation, changes in the demand for loans, and fluctuations in consumer spending, borrowing and savings habits, which may have an adverse impact on our financial condition; continued or increasing competition from other financial institutions, credit unions, and non-bank financial services companies, many of which are subject to less restrictive or less costly regulations than we are; challenges arising from unsuccessful attempts to expand into new geographic markets, products, or services; restraints on the ability of Open Bank to pay dividends to us, which could limit our liquidity; increased capital requirements imposed by banking regulators, which may require us to raise capital at a time when capital is not available on favorable terms or at all; a failure in the internal controls we have implemented to address the risks inherent to the business of banking; inaccuracies in our assumptions about future events, which could result in material differences between our financial projections and actual financial performance, particularly with respect to the effects of predictions of future economic conditions as those circumstances affect our estimates for the adequacy of our allowance for credit losses and the related provision expense; changes in our management personnel or our inability to retain motivate and hire qualified management personnel; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems; disruptions, security breaches, or other adverse events affecting the third-party vendors who perform several of our critical processing functions; an inability to keep pace with the rate of technological advances due to a lack of resources to invest in new technologies; risks related to potential acquisitions; political developments, uncertainties or instability, catastrophic events, acts of war or terrorism, or natural disasters, such as earthquakes, fires, drought, pandemic diseases (such as the coronavirus) or extreme weather events, any of which may affect services we use or affect our customers, employees or third parties with which we conduct business; incremental costs and obligations associated with operating as a public company; the impact of any claims or legal actions to which we may be subject, including any effect on our reputation; compliance with governmental and regulatory requirements, including the Dodd-Frank Act and others relating to banking, consumer protection, securities and tax matters, and our ability to maintain licenses required in connection with commercial mortgage origination, sale and servicing operations; changes in federal tax law or policy; and our ability the manage the foregoing and other factors set forth in the Company’s public reports. We describe these and other risks that could affect our results in Item 1A. “Risk Factors,” of our latest Annual Report on Form 10-K for the year ended December 31, 2022 and in our other subsequent filings with the Securities and Exchange Commission.

CONSOLIDATED BALANCE SHEETS (unaudited)

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of

 

% Change 3Q23 vs.

 

3Q2023

 

2Q2023

 

3Q2022

 

2Q2023

 

3Q2022

Assets

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

21,748

 

 

$

21,295

 

 

$

25,516

 

 

2.1

%

 

(14.8

)%

Interest-bearing deposits in other banks

 

 

83,992

 

 

 

122,466

 

 

 

81,765

 

 

(31.4

)

 

2.7

 

Cash and cash equivalents

 

 

105,740

 

 

 

143,761

 

 

 

107,281

 

 

(26.4

)

 

(1.4

)

Available-for-sale debt securities, at fair value

 

 

191,313

 

 

 

202,250

 

 

 

186,438

 

 

(5.4

)

 

2.6

 

Other investments

 

 

16,100

 

 

 

16,183

 

 

 

12,074

 

 

(0.5

)

 

33.3

 

Loans held for sale

 

 

 

 

 

 

 

 

36,642

 

 

n/m

 

 

n/m

 

CRE loans

 

 

878,824

 

 

 

847,863

 

 

 

830,125

 

 

3.7

 

 

5.9

 

SBA loans

 

 

240,154

 

 

 

238,785

 

 

 

232,569

 

 

0.6

 

 

3.3

 

C&I loans

 

 

124,632

 

 

 

112,160

 

 

 

133,855

 

 

11.1

 

 

(6.9

)

Home mortgage loans

 

 

515,789

 

 

 

516,226

 

 

 

419,469

 

 

(0.1

)

 

23.0

 

Consumer loans

 

 

126

 

 

 

1,163

 

 

 

2,000

 

 

(89.2

)

 

(93.7

)

Gross loans receivable

 

 

1,759,525

 

 

 

1,716,197

 

 

 

1,618,018

 

 

2.5

 

 

8.7

 

Allowance for credit losses

 

 

(21,617

)

 

 

(20,802

)

 

 

(18,369

)

 

3.9

 

 

17.7

 

Net loans receivable

 

 

1,737,908

 

 

 

1,695,395

 

 

 

1,599,649

 

 

2.5

 

 

8.6

 

Premises and equipment, net

 

 

5,378

 

 

 

5,093

 

 

 

4,383

 

 

5.6

 

 

22.7

 

Accrued interest receivable, net

 

 

7,996

 

 

 

7,703

 

 

 

5,856

 

 

3.8

 

 

36.5

 

Servicing assets

 

 

11,931

 

 

 

12,654

 

 

 

12,889

 

 

(5.7

)

 

(7.4

)

Company owned life insurance

 

 

22,071

 

 

 

21,913

 

 

 

21,464

 

 

0.7

 

 

2.8

 

Deferred tax assets, net

 

 

15,061

 

 

 

13,360

 

 

 

17,296

 

 

12.7

 

 

(12.9

)

Operating right-of-use assets

 

 

8,993

 

 

 

9,487

 

 

 

8,265

 

 

(5.2

)

 

8.8

 

Other assets

 

 

20,184

 

 

 

23,902

 

 

 

17,338

 

 

(15.6

)

 

16.4

 

Total assets

 

$

2,142,675

 

 

$

2,151,701

 

 

$

2,029,575

 

 

(0.4

)%

 

5.6

%

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

605,509

 

 

$

634,745

 

 

$

794,631

 

 

(4.6

)%

 

(23.8

)%

Money market and others

 

 

348,869

 

 

 

344,162

 

 

 

524,911

 

 

1.4

 

 

(33.5

)

Time deposits greater than $250

 

 

420,162

 

 

 

416,208

 

 

 

277,785

 

 

1.0

 

 

51.3

 

Other time deposits

 

 

450,631

 

 

 

464,524

 

 

 

219,484

 

 

(3.0

)

 

105.3

 

Total deposits

 

 

1,825,171

 

 

 

1,859,639

 

 

 

1,816,811

 

 

(1.9

)

 

0.5

 

Federal Home Loan Bank advances

 

 

95,000

 

 

 

75,000

 

 

 

10,000

 

 

26.7

 

 

850.0

 

Accrued interest payable

 

 

13,552

 

 

 

9,354

 

 

 

1,099

 

 

44.9

 

 

1133.1

 

Operating lease liabilities

 

 

9,926

 

 

 

10,486

 

 

 

9,485

 

 

(5.3

)

 

4.6

 

Other liabilities

 

 

14,719

 

 

 

13,452

 

 

 

22,085

 

 

9.4

 

 

(33.4

)

Total liabilities

 

 

1,958,368

 

 

 

1,967,931

 

 

 

1,859,480

 

 

(0.5

)

 

5.3

 

Shareholders' equity:

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

77,632

 

 

 

77,464

 

 

 

78,782

 

 

0.2

 

 

(1.5

)

Additional paid-in capital

 

 

10,606

 

 

 

10,297

 

 

 

9,424

 

 

3.0

 

 

12.5

 

Retained earnings

 

 

117,483

 

 

 

114,177

 

 

 

99,487

 

 

2.9

 

 

18.1

 

Accumulated other comprehensive loss

 

 

(21,414

)

 

 

(18,168

)

 

 

(17,598

)

 

17.9

 

 

21.7

 

Total shareholders’ equity

 

 

184,307

 

 

 

183,770

 

 

 

170,095

 

 

0.3

 

 

8.4

 

Total liabilities and shareholders' equity

 

$

2,142,675

 

 

$

2,151,701

 

 

$

2,029,575

 

 

(0.4

)%

 

5.6

%

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

 

 

 

 

 

 

 

 

 

 

 

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

 

For the Three Months Ended

 

% Change 3Q23 vs.

 

3Q2023

 

2Q2023

 

3Q2022

 

2Q2023

 

3Q2022

Interest income

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

28,250

 

$

27,288

 

$

21,780

 

3.5

%

 

29.7

%

Interest on available-for-sale debt securities

 

 

1,519

 

 

1,562

 

 

881

 

(2.8

)

 

72.4

 

Other interest income

 

 

1,417

 

 

1,252

 

 

573

 

13.2

 

 

147.3

 

Total interest income

 

 

31,186

 

 

30,102

 

 

23,234

 

3.6

 

 

34.2

 

Interest expense

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

13,006

 

 

11,920

 

 

2,890

 

9.1

 

 

350.0

 

Interest on borrowings

 

 

867

 

 

930

 

 

 

(6.8

)

 

n/m

 

Total interest expense

 

 

13,873

 

 

12,850

 

 

2,890

 

8.0

 

 

380.0

 

Net interest income

 

 

17,313

 

 

17,252

 

 

20,344

 

0.4

 

 

(14.9

)

Provision for credit losses

 

 

1,359

 

 

 

 

662

 

n/m

 

 

105.3

 

Net interest income after provision for credit losses

 

 

15,954

 

 

17,252

 

 

19,682

 

(7.5

)

 

(18.9

)

Noninterest income

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

 

575

 

 

573

 

 

454

 

0.3

 

 

26.7

 

Loan servicing fees, net of amortization

 

 

468

 

 

595

 

 

610

 

(21.3

)

 

(23.3

)

Gain on sale of loans

 

 

1,179

 

 

2,098

 

 

3,490

 

(43.8

)

 

(66.2

)

Other income

 

 

379

 

 

339

 

 

267

 

11.8

 

 

41.9

 

Total noninterest income

 

 

2,601

 

 

3,605

 

 

4,821

 

(27.9

)

 

(46.0

)

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

7,014

 

 

7,681

 

 

7,343

 

(8.7

)

 

(4.5

)

Occupancy and equipment

 

 

1,706

 

 

1,598

 

 

1,537

 

6.8

 

 

11.0

 

Data processing and communication

 

 

369

 

 

546

 

 

586

 

(32.4

)

 

(37.0

)

Professional fees

 

 

440

 

 

381

 

 

602

 

15.5

 

 

(26.9

)

FDIC insurance and regulatory assessments

 

 

333

 

 

420

 

 

238

 

(20.7

)

 

39.9

 

Promotion and advertising

 

 

207

 

 

159

 

 

177

 

30.2

 

 

16.9

 

Directors’ fees

 

 

164

 

 

210

 

 

170

 

(21.9

)

 

(3.5

)

Foundation donation and other contributions

 

 

529

 

 

594

 

 

875

 

(10.9

)

 

(39.5

)

Other expenses

 

 

773

 

 

711

 

 

810

 

8.7

 

 

(4.6

)

Total noninterest expense

 

 

11,535

 

 

12,300

 

 

12,338

 

(6.2

)

 

(6.5

)

Income before income tax expense

 

 

7,020

 

 

8,557

 

 

12,165

 

(18.0

)

 

(42.3

)

Income tax expense

 

 

1,899

 

 

2,466

 

 

3,515

 

(23.0

)

 

(46.0

)

Net income

 

$

5,121

 

$

6,091

 

$

8,650

 

(15.9

)%

 

(40.8

)%

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

12.17

 

$

12.16

 

$

11.19

 

0.1

%

 

8.8

%

Earnings per share - basic

 

 

0.33

 

 

0.39

 

 

0.56

 

(15.4

)

 

(41.1

)

Earnings per share - diluted

 

 

0.33

 

 

0.39

 

 

0.55

 

(15.4

)

 

(40.0

)

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock outstanding, at period end

 

 

15,149,203

 

 

15,118,268

 

 

15,199,840

 

0.2

%

 

(0.3

)%

Weighted average shares:

 

 

 

 

 

 

 

 

 

 

- Basic

 

 

15,131,587

 

 

15,158,365

 

 

15,195,826

 

(0.2

)%

 

(0.4

)%

- Diluted

 

 

15,140,577

 

 

15,169,794

 

 

15,275,156

 

(0.2

)

 

(0.9

)

 

 

 

 

 

 

 

 

 

 

 

KEY RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

Change 3Q23 vs.

 

3Q2023

 

2Q2023

 

3Q2022

 

2Q2023

 

3Q2022

Return on average assets (ROA)(1)

 

0.96

%

 

1.15

%

 

1.77

%

 

(0.2

)%

 

(0.8

)%

Return on average equity (ROE)(1)

 

11.07

 

 

13.27

 

 

19.91

 

 

(2.2

)

 

(8.8

)

Net interest margin(1)

 

3.38

 

 

3.40

 

 

4.31

 

 

 

 

(0.9

)

Efficiency ratio

 

57.92

 

 

58.97

 

 

49.03

 

 

(1.1

)

 

8.9

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

13.31

%

 

13.10

%

 

13.10

%

 

0.2

%

 

0.2

%

Tier 1 risk-based capital ratio

 

12.09

 

 

11.92

 

 

11.92

 

 

0.2

 

 

0.2

 

Common equity tier 1 ratio

 

12.09

 

 

11.92

 

 

11.92

 

 

0.2

 

 

0.2

 

Leverage ratio

 

9.63

 

 

9.50

 

 

9.52

 

 

0.1

 

 

0.1

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

 

 

 

 

 

 

 

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

 

For the Nine Months Ended

 

3Q2023

 

3Q2022

 

% Change

Interest income

 

 

 

 

 

 

Interest and fees on loans

 

$

81,549

 

$

58,145

 

40.3

%

Interest on available-for-sale debt securities

 

 

4,647

 

 

2,114

 

119.8

 

Other interest income

 

 

3,686

 

 

1,067

 

245.5

 

Total interest income

 

 

89,882

 

 

61,326

 

46.6

 

Interest expense

 

 

 

 

 

 

Interest on deposits

 

 

35,308

 

 

4,613

 

665.4

 

Interest on borrowings

 

 

2,117

 

 

 

n/m

 

Total interest expense

 

 

37,425

 

 

4,613

 

711.3

 

Net interest income

 

 

52,457

 

 

56,713

 

(7.5

)

Provision for credit losses

 

 

1,021

 

 

1,999

 

(48.9

)

Net interest income after provision for credit losses

 

 

51,436

 

 

54,714

 

(6.0

)

Noninterest income

 

 

 

 

 

 

Service charges on deposits

 

 

1,566

 

 

1,269

 

23.4

 

Loan servicing fees, net of amortization

 

 

1,909

 

 

1,711

 

11.6

 

Gain on sale of loans

 

 

5,847

 

 

10,601

 

(44.8

)

Other income

 

 

1,179

 

 

815

 

44.7

 

Total noninterest income

 

 

10,501

 

 

14,396

 

(27.1

)

Noninterest expense

 

 

 

 

 

 

Salaries and employee benefits

 

 

21,947

 

 

20,109

 

9.1

 

Occupancy and equipment

 

 

4,874

 

 

4,404

 

10.7

 

Data processing and communication

 

 

1,465

 

 

1,571

 

(6.7

)

Professional fees

 

 

1,180

 

 

1,290

 

(8.5

)

FDIC insurance and regulatory assessments

 

 

1,220

 

 

637

 

91.5

 

Promotion and advertising

 

 

528

 

 

531

 

(0.6

)

Directors’ fees

 

 

535

 

 

537

 

(0.4

)

Foundation donation and other contributions

 

 

1,876

 

 

2,542

 

(26.2

)

Other expenses

 

 

2,118

 

 

1,882

 

12.5

 

Total noninterest expense

 

 

35,743

 

 

33,503

 

6.7

 

Income before income tax expense

 

 

26,194

 

 

35,607

 

(26.4

)

Income tax expense

 

 

7,448

 

 

10,325

 

(27.9

)

Net income

 

$

18,746

 

$

25,282

 

(25.9

)%

 

 

 

 

 

 

 

Book value per share

 

$

12.17

 

$

11.19

 

8.8

%

Earnings per share - basic

 

 

1.21

 

 

1.63

 

(25.8

)

Earnings per share - diluted

 

 

1.21

 

 

1.62

 

(25.3

)

 

 

 

 

 

 

 

Shares of common stock outstanding, at period end

 

 

15,149,203

 

 

15,199,840

 

(0.3

)%

Weighted average shares:

 

 

 

 

 

 

- Basic

 

 

15,190,874

 

 

15,158,749

 

0.2

%

- Diluted

 

 

15,200,612

 

 

15,246,345

 

(0.3

)

 

 

 

 

 

 

 

KEY RATIOS

 

 

 

 

 

 

 

 

 

For the Nine Months Ended

 

3Q2023

 

3Q2022

 

% Change

Return on average assets (ROA)(1)

 

1.18

%

 

1.80

%

 

(0.6

)%

Return on average equity (ROE)(1)

 

13.69

 

 

19.91

 

 

(6.2

)

Net interest margin(1)

 

3.45

 

 

4.22

 

 

(0.8

)

Efficiency ratio

 

56.77

 

 

47.11

 

 

9.7

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

13.31

%

 

13.10

%

 

0.2

%

Tier 1 risk-based capital ratio

 

12.09

 

 

11.92

 

 

0.2

 

Common equity tier 1 ratio

 

12.09

 

 

11.92

 

 

0.2

 

Leverage ratio

 

9.63

 

 

9.52

 

 

0.1

 

 

 

 

 

 

 

 

(1)

Annualized.

ASSET QUALITY

 

 

 

 

 

 

 

($ in thousands)

 

As of and For the Three Months Ended

 

3Q2023

 

2Q2023

 

3Q2022

Nonaccrual loans(1)

 

$

4,211

 

 

$

3,447

 

 

$

1,809

 

Loans 90 days or more past due, accruing(2)

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

 

4,211

 

 

 

3,447

 

 

 

1,809

 

Other real estate owned ("OREO")

 

 

 

 

 

 

 

 

 

Nonperforming assets

 

$

4,211

 

 

$

3,447

 

 

$

1,809

 

 

 

 

 

 

 

 

Criticized loans by risk categories:

 

 

 

 

 

 

Special mention loans

 

$

3,651

 

 

$

2,909

 

 

$

 

Classified loans(1)(3)

 

 

10,139

 

 

 

4,629

 

 

 

3,100

 

Total criticized loans

 

$

13,790

 

 

$

7,538

 

 

$

3,100

 

 

 

 

 

 

 

 

Criticized loans by loan type:

 

 

 

 

 

 

CRE loans

 

$

5,130

 

 

$

 

 

$

 

SBA loans

 

 

6,169

 

 

 

4,784

 

 

 

1,375

 

C&I loans

 

 

 

 

 

200

 

 

 

742

 

Home mortgage loans

 

 

2,491

 

 

 

2,554

 

 

 

983

 

Total criticized loans

 

$

13,790

 

 

$

7,538

 

 

$

3,100

 

 

 

 

 

 

 

 

Nonperforming loans / gross loans

 

 

0.24

%

 

 

0.20

%

 

 

0.11

%

Nonperforming assets / gross loans plus OREO

 

 

0.24

 

 

 

0.20

 

 

 

0.11

 

Nonperforming assets / total assets

 

 

0.20

 

 

 

0.16

 

 

 

0.09

 

Classified loans / gross loans

 

 

0.58

 

 

 

0.27

 

 

 

0.19

 

Criticized loans / gross loans

 

 

0.78

 

 

 

0.44

 

 

 

0.19

 

 

 

 

 

 

 

 

Allowance for credit losses ratios:

 

 

 

 

 

 

As a % of gross loans

 

 

1.23

%

 

 

1.21

%

 

 

1.14

%

As an adjusted % of gross loans(4)

 

 

1.26

 

 

 

1.25

 

 

 

1.18

 

As a % of nonperforming loans

 

 

513

 

 

 

603

 

 

 

1015

 

As a % of nonperforming assets

 

 

513

 

 

 

603

 

 

 

1015

 

As a % of classified loans

 

 

213

 

 

 

449

 

 

 

593

 

As a % of criticized loans

 

 

157

 

 

 

276

 

 

 

593

 

 

 

 

 

 

 

 

Net charge-offs (recoveries)

 

$

488

 

 

$

12

 

 

$

(5

)

Net charge-offs (recoveries)(5) to average gross loans(6)

 

 

0.11

%

 

 

0.00

%

 

 

(0.00

)%

 

 

 

 

 

 

 

(1)

Excludes the guaranteed portion of SBA loans that are in liquidation totaling $5.2 million, $5.1 million and $442 thousand as of September 30, 2023, June 30, 2023 and September 30, 2022, respectively.

(2)

Excludes the guaranteed portion of SBA loans that are in liquidation totaling $246 thousand as of June 30, 2023.

(3)

Consists of substandard, doubtful and loss categories.

(4)

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

(5)

Annualized.

(6)

Includes loans held for sale.

 

 

 

 

 

 

($ in thousands)

 

3Q2023

 

2Q2023

 

3Q2022

Accruing delinquent loans 30-89 days past due

 

 

 

 

 

 

30-59 days

 

$

5,979

 

$

3,647

 

$

360

60-89 days

 

 

2,377

 

 

1,568

 

 

845

Total

 

$

8,356

 

$

5,215

 

$

1,205

 

 

 

 

 

 

 

AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS