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OP Bancorp Reports Net Income for 2022 Fourth Quarter of $8.0 Million and Diluted Earnings Per Share of $0.51

2022 Fourth Quarter Highlights compared with 2021 Fourth Quarter:

  • Financial Results:
    • Net income of $8.0 million, compared to $9.1 million
    • Diluted earnings per share of $0.51, compared to $0.59
    • Net interest income of $20.2 million, compared to $17.1 million
    • Net interest margin of 4.08%, compared to 4.07%
    • Provision for loan losses of $977 thousand, compared to $1.9 million
    • Total assets of $2.1 billion, a 21% increase compared to $1.7 billion
    • Total loans (1) of $1.7 billion, a 23% increase compared to $1.4 billion
    • Total deposits of $1.9 billion, a 23% increase compared to $1.5 billion
    • Noninterest-bearing deposits of $701.6 million, or 37.2% of total deposits
  • Credit Quality:
    • Allowance for loan losses to gross loans of 1.13%, compared to 1.23%
    • Net loan charge-offs to average gross loans of 0.03%, compared to 0.05%
    • Nonperforming loans to gross loans of 0.18%, compared to 0.24%
    • Criticized loans (2) to gross loans of 0.23%, compared to 0.31%
  • Capital Levels:
    • Quarterly cash dividend of $0.12 per share, a 20% increase from $0.10 per share
    • Remained well-capitalized with a Common Equity Tier 1 (“CET1”) ratio of 11.70%.
    • Book value per common share of $11.59, compared to $10.92

___________________________________________________________

(1) Includes loans held for sale.

(2) 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 fourth quarter of 2022. Net income for the fourth quarter of 2022 was $8.0 million, or $0.51 per diluted common share, compared with $8.7 million, or $0.55 per diluted common share, for the third quarter of 2022, and $9.1 million, or $0.59 per diluted common share, for the fourth quarter of 2021.

Min Kim, President and Chief Executive Officer:

“Despite the challenging banking environment created by external headwinds related to prolonged inflation, Federal Reserve's drastic rate hikes, and economic slowdowns, we continued to report strong balance sheet growth with pristine asset quality. Based on the growth and strength of our balance sheet, we remain optimistic about future 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 4Q22 vs.

 

 

4Q22

 

 

 

3Q22

 

 

 

4Q21

 

 

3Q22

 

 

4Q21

 

Selected Income Statement Data:

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

20,198

 

 

$

20,344

 

 

$

17,096

 

 

(0.7

) %

 

18.1

%

Provision for loan losses

 

 

977

 

 

 

662

 

 

 

1,898

 

 

47.6

 

 

(48.5

)

Noninterest income

 

 

3,223

 

 

 

4,821

 

 

 

7,289

 

 

(33.1

)

 

(55.8

)

Noninterest expense

 

 

11,327

 

 

 

12,338

 

 

 

9,591

 

 

(8.2

)

 

18.1

 

Income tax expense

 

 

3,089

 

 

 

3,515

 

 

 

3,762

 

 

(12.1

)

 

(17.9

)

Net Income

 

$

8,028

 

 

$

8,650

 

 

$

9,134

 

 

(7.2

) %

 

(12.1

) %

Diluted earnings per share

 

$

0.51

 

 

$

0.55

 

 

$

0.59

 

 

(7.3

) %

 

(13.6

) %

Selected Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

Total loans (1)

 

$

1,722,627

 

 

$

1,654,660

 

 

$

1,403,447

 

 

4.1

%

 

22.7

%

Total deposits

 

$

1,885,771

 

 

$

1,816,811

 

 

$

1,534,066

 

 

3.8

%

 

22.9

%

Total assets

 

$

2,094,293

 

 

$

2,029,575

 

 

$

1,726,691

 

 

3.2

%

 

21.3

%

Average loans (1)

 

$

1,691,642

 

 

$

1,614,000

 

 

$

1,343,414

 

 

4.8

%

 

25.9

%

Average deposits

 

$

1,836,736

 

 

$

1,753,726

 

 

$

1,545,799

 

 

4.7

%

 

18.8

%

Credit Quality:

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

$

3,080

 

 

$

2,251

 

 

$

3,200

 

 

36.8

%

 

(3.8

) %

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

 

 

0.03

%

 

 

(0.00

) %

 

 

0.05

%

 

0.03

%

 

(0.02

) %

Allowance for loan losses to gross loans

 

 

1.13

%

 

 

1.14

%

 

 

1.23

%

 

(0.01

) %

 

(0.10

) %

Financial Ratios:

 

 

 

 

 

 

 

 

 

 

Return on average assets (2)

 

 

1.56

%

 

 

1.77

%

 

 

2.11

%

 

(0.21

) %

 

(0.55

) %

Return on average equity (2)

 

 

18.58

%

 

 

19.91

%

 

 

22.68

%

 

(1.33

) %

 

(4.10

) %

Net interest margin (2)

 

 

4.08

%

 

 

4.31

%

 

 

4.07

%

 

(0.23

) %

 

0.01

%

Common equity tier 1 capital ratio

 

 

11.70

%

 

 

11.92

%

 

 

12.42

%

 

(0.22

) %

 

(0.72

) %

Leverage ratio

 

 

9.38

%

 

 

9.52

%

 

 

9.58

%

 

(0.14

) %

 

(0.20

) %

Efficiency ratio (3)

 

 

48.36

%

 

 

49.03

%

 

 

39.34

%

 

(0.67

) %

 

9.02

%

Book value per common share

 

$

11.59

 

 

$

11.19

 

 

$

10.92

 

 

3.6

%

 

6.1

%

 

 

 

 

 

 

 

 

 

 

 

(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 4Q22 vs.

 

 

4Q22

 

 

3Q22

 

 

4Q21

 

3Q22

 

 

4Q21

 

Interest Income

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

26,886

 

$

23,234

 

$

17,822

 

15.7

%

 

50.9

%

Interest expense

 

 

6,688

 

 

2,890

 

 

726

 

131.4

 

 

821.2

 

Net interest income

 

$

20,198

 

$

20,344

 

$

17,096

 

(0.7

) %

 

18.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

4Q22

 

3Q22

 

4Q21

 

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

 

$ 1,691,642

 

$ 24,719

 

5.81 %

 

$ 1,614,000

 

$ 21,780

 

5.36 %

 

$ 1,343,414

 

$ 17,271

 

5.10 %

Total interest-earning assets

 

$ 1,966,165

 

$ 26,886

 

5.43 %

 

$ 1,874,516

 

$ 23,234

 

4.92 %

 

$ 1,668,865

 

$ 17,822

 

4.24 %

Interest-bearing Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$ 1,085,331

 

$ 6,598

 

2.41 %

 

$ 947,437

 

$ 2,889

 

1.21 %

 

$ 780,787

 

$ 726

 

0.37 %

Total interest-bearing liabilities

 

$ 1,093,489

 

$ 6,688

 

2.43 %

 

$ 947,567

 

$ 2,890

 

1.21 %

 

$ 780,791

 

$ 726

 

0.37 %

Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest Income/interest rate spreads

 

 

 

$ 20,198

 

3.01 %

 

 

 

$ 20,344

 

3.71 %

 

 

 

$ 17,096

 

3.87 %

Net interest margin

 

 

 

 

 

4.08 %

 

 

 

 

 

4.31 %

 

 

 

 

 

4.07 %

Total deposits / cost of deposits

 

$ 1,836,736

 

$ 6,598

 

1.43 %

 

$ 1,753,726

 

$ 2,889

 

0.65 %

 

$ 1,545,799

 

$ 726

 

0.19 %

Total funding liabilities / cost of funds

 

$ 1,844,894

 

$ 6,688

 

1.44 %

 

$ 1,753,856

 

$ 2,890

 

0.65 %

 

$ 1,545,803

 

$ 726

 

0.19 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

Yield Change 4Q22 vs.

 

 

4Q22

 

 

 

 

3Q22

 

 

 

 

4Q21

 

 

 

 

Interest

& Fees

 

Yield (1)

 

Interest

& Fees

 

Yield (1)

 

Interest

& Fees

 

Yield (1)

 

3Q22

 

 

4Q21

 

Loan Yield Component

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractual interest rate

 

$

23,694

 

 

5.57

%

 

$

20,419

 

 

5.02

%

 

$

14,509

 

 

4.29

%

 

0.55

%

 

1.28

%

SBA discount accretion

 

 

1,034

 

 

0.24

 

 

 

1,336

 

 

0.33

 

 

 

1,571

 

 

0.46

 

 

(0.09

)

 

(0.22

)

Amortization of net deferred fees

 

 

46

 

 

0.01

 

 

 

122

 

 

0.03

 

 

 

1,087

 

 

0.32

 

 

(0.02

)

 

(0.31

)

Amortization of premium

 

 

(344

)

 

(0.08

)

 

 

(250

)

 

(0.06

)

 

 

3

 

 

 

 

(0.02

)

 

(0.08

)

Net interest recognized on nonaccrual loans

 

 

 

 

 

 

 

 

 

 

 

 

(16

)

 

 

 

 

 

 

Prepayment penalties (2) and other fees

 

 

289

 

 

0.07

 

 

 

153

 

 

0.04

 

 

 

117

 

 

0.03

 

 

0.03

 

 

0.04

 

Yield on loans

 

$

24,719

 

 

5.81

%

 

$

21,780

 

 

5.36

%

 

$

17,271

 

 

5.10

%

 

0.45

%

 

0.71

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of net deferred fees:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PPP loan forgiveness (3)

 

$

15

 

 

%

 

$

146

 

 

0.04

%

 

$

920

 

 

0.27

%

 

(0.04

) %

 

(0.27

) %

Other

 

 

31

 

 

0.01

 

 

 

(24

)

 

-0.01

 

 

 

167

 

 

0.05

 

 

0.02

 

 

(0.04

)

Total amortization of net deferred fees

 

$

46

 

 

0.01

%

 

$

122

 

 

0.03

%

 

$

1,087

 

 

0.32

%

 

(0.02

) %

 

(0.31

) %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

(2)

Prepayment penalty income of $172 thousand, $79 thousand and $84 thousand for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively, was from commercial real estate and C&I loans.

(3)

As of December 31, 2022, there were unamortized net deferred fees and unaccredited discounts of $8 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

 

 

4Q22

 

 

 

3Q22

 

 

 

4Q21

 

Hana Loan Purchase:

 

 

 

 

 

 

Contractual interest rate

 

$

1,286

 

 

$

1,114

 

 

$

1,027

 

Purchased loan discount accretion

 

 

374

 

 

 

594

 

 

 

826

 

Other fees

 

 

25

 

 

 

9

 

 

 

10

 

Total interest income

 

$

1,685

 

 

$

1,717

 

 

$

1,863

 

 

 

 

 

 

 

 

Effect on average loan yield (1)

 

 

0.20

%

 

 

0.21

%

 

 

0.26

%

Effect on net interest margin (1)

 

 

0.22

%

 

 

0.22

%

 

 

0.26

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

4Q22

 

3Q22

 

4Q21

 

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)

 

$

1,691,642

 

$

24,719

 

5.81

%

 

$

1,614,000

 

$

21,780

 

5.36

%

 

$

1,343,414

 

$

17,271

 

5.10

%

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

 

$

1,631,128

 

$

23,034

 

5.61

%

 

$

1,549,313

 

$

20,063

 

5.15

%

 

$

1,263,789

 

$

15,408

 

4.84

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (1)

 

$

1,966,165

 

$

20,198

 

4.08

%

 

$

1,874,516

 

$

20,344

 

4.31

%

 

$

1,668,865

 

$

17,096

 

4.07

%

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

 

$

1,905,651

 

$

18,513

 

3.86

%

 

$

1,809,829

 

$

18,627

 

4.09

%

 

$

1,589,240

 

$

15,233

 

3.81

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

(2)

See reconciliation of GAAP to non-GAAP financial measures.

Fourth Quarter 2022 vs. Third Quarter 2022

Net interest income decreased $146 thousand, or 0.7%, primarily due to higher interest expense on deposits. Net interest margin was 4.08%, a decrease of 23 basis points from 4.31%.

  • A $2.9 million increase in interest income on loans was primarily due to a 55 basis point increase in contractual loan yield as a result of market rate increases by the Federal Reserve and a $77.6 million increase in average loan balance.
  • A $3.7 million increase in interest expense on deposits was primarily due to a 120 basis point increase in average cost of interest-bearing deposits driven by the Federal Reserve’s rate increases.
  • Average loan yield was 5.81%, a 45 basis point increase from 5.36%, primarily due to a 55 basis point increase in contractual loan yield driven by repricing of variable rate loans and higher rates on new loans, partially offset by a 9 basis points decrease in SBA discount accretion income as a result of lower SBA loan payoffs.
  • Average cost of interest-bearing deposits was 2.41%, a 120 basis point increase from 1.21%. Average cost of deposits was 1.43%, a 78 basis point increase from 0.65%.

Fourth Quarter 2022 vs. Fourth Quarter 2021

Net interest income increased $3.1 million, or 18.1%, primarily due to higher interest income on loans. Net interest margin was 4.08%, an increase of 1 basis point from 4.07%.

  • A $7.4 million increase in interest income on loans was primarily due to a 128 basis point increase in contractual loan yield as a result of market rate increases by the Federal Reserve and a $348.2 million increase in average loan balance.
  • A $5.9 million increase in interest expense on deposits was primarily due to a 204 basis point increase in average cost of interest-bearing deposits driven by the Federal Reserve’s rate increases.
  • Average loan yield was 5.81%, a 71 basis point increase from 5.10%, primarily due to a 128 basis point increase in contractual loan yield driven by repricing of variable rate loans and higher rates on new loans, partially offset by a 22 basis point decrease in SBA discount accretion income as a result of lower SBA loan payoffs and a 31 basis point decrease in amortization of net deferred fees as a result of lower net deferred fees on SBA Paycheck Protection Program (“PPP”) loans.
  • Average yield on interesting-bearing deposits in other banks was 3.78%, a 363 basis point increase from 0.15%. Average yield on available-for-sale debt securities was 2.66%, a 147 basis point increase from 1.19%, primarily due to higher yields on securities purchased in 2022.
  • Average cost of interest-bearing deposits was 2.41%, a 204 basis point increase from 0.37%. Average cost of deposits was 1.43%, a 124 basis point increase from 0.19%.

Provision for loan losses

Fourth Quarter 2022 vs. Third Quarter 2022

The Company recorded $977 thousand provision for loan losses, an increase of $315 thousand, compared with a $662 thousand provision for loan losses. The $977 thousand provision for loan losses was primarily due to an increase of $834 thousand in quantitative reserves from loan growth in home mortgage and SBA loans.

Fourth Quarter 2022 vs. Fourth Quarter 2021

The Company recorded $977 thousand provision for loan losses, a decrease of $921 thousand, compared with $1.9 million provision for loan losses.

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 4Q22 vs.

 

 

4Q22

 

 

3Q22

 

 

4Q21

 

3Q22

 

 

4Q21

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

$

406

 

$

454

 

$

405

 

(10.6

) %

 

0.2

%

Loan servicing fees, net of amortization

 

 

705

 

 

610

 

 

521

 

15.6

 

 

35.3

 

Gain on sale of loans

 

 

1,684

 

 

3,490

 

 

6,033

 

(51.7

)

 

(72.1

)

Other income

 

 

428

 

 

267

 

 

330

 

60.3

 

 

29.7

 

Total noninterest income

 

$

3,223

 

$

4,821

 

$

7,289

 

(33.1

) %

 

(55.8

) %

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter 2022 vs. Third Quarter 2022

Noninterest income decreased $1.6 million, or 33.1%, primarily due to lower gain on sale of loans.

  • Gain on sale of loans was $1.7 million, down $1.8 million, primarily due to lower SBA loan sold on lower average sales premium. The Company sold $32.2 million in SBA loans at an average premium rate of 6.13%, compared to the sale of $59.3 million at an average premium rate of 6.67%.

Fourth Quarter 2022 vs. Fourth Quarter 2021

Noninterest income decreased $4.1 million, or 55.8%, primarily due to lower gain on sale of loans.

  • Gain on sale of loans was $1.7 million, down $4.3 million, primarily due to lower SBA loans sold on lower average sales premium. The Company sold $32.2 million in SBA loans at an average premium rate of 6.13%, compared to the sale of $56.8 million at an average premium rate of 10.98%.

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 4Q22 vs.

 

 

4Q22

 

 

3Q22

 

 

4Q21

 

3Q22

 

 

4Q21

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

7,080

 

$

7,343

 

$

5,560

 

(3.6

) %

 

27.3

%

Occupancy and equipment

 

 

1,560

 

 

1,537

 

 

1,418

 

1.5

 

 

10.0

 

Data processing and communication

 

 

514

 

 

586

 

 

637

 

(12.3

)

 

(19.3

)

Professional fees

 

 

330

 

 

602

 

 

267

 

(45.2

)

 

23.6

 

FDIC insurance and regulatory assessments

 

 

176

 

 

238

 

 

182

 

(26.1

)

 

(3.3

)

Promotion and advertising

 

 

12

 

 

177

 

 

156

 

(93.2

)

 

(92.3

)

Directors’ fees

 

 

145

 

 

170

 

 

166

 

(14.7

)

 

(12.7

)

Foundation donation and other contributions

 

 

851

 

 

875

 

 

901

 

(2.7

)

 

(5.5

)

Other expenses

 

 

659

 

 

810

 

 

304

 

(18.6

)

 

116.8

 

Total noninterest expense

 

$

11,327

 

$

12,338

 

$

9,591

 

(8.2

) %

 

18.1

%

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter 2022 vs. Third Quarter 2022

Noninterest expense decreased $1.0 million, or 8.2%, primarily due to lower salaries and employee benefits and professional fees.

  • Salaries and employee benefits were $7.1 million, down $263 thousand from $7.3 million. The decrease was primarily due to a decrease in employee incentive accruals, partially offset by an increase in salaries.
  • Professional fees and promotion and advertising decreased $272 thousand and $165 thousand, respectively, primarily due to year-end accrual adjustments.

Fourth Quarter 2022 vs. Fourth Quarter 2021

Noninterest expense increased $1.7 million, or 18.1%, primarily due to higher salaries and employee benefits and other expenses.

  • Salaries and employee benefits were $7.1 million, up $1.5 million from $5.6 million. The increase was primarily due to 30 additional employees to support continued growth of the Company.
  • Other expenses were $659 thousand, up $355 thousand from $304 thousand, primarily due to an increase in business development expense.

Income Tax Expense

Fourth Quarter 2022 vs. Third Quarter 2022

Income tax expense was $3.1 million, and the effective tax rate was 27.8%, compared to income tax expense of $3.5 million and the effective rate of 28.9%.

Fourth Quarter 2022 vs. Fourth Quarter 2021

Income tax expense was $3.1 million and the effective tax rate was 27.8%, compared to income tax expense of $3.8 million and the effective rate of 29.2%.

BALANCE SHEET HIGHLIGHTS

Loans

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of

 

% Change 4Q22 vs.

 

 

4Q22

 

 

3Q22

 

 

4Q21

 

3Q22

 

 

4Q21

 

Real estate loans

 

$

842,208

 

$

830,125

 

$

701,450

 

1.5

%

 

20.1

%

SBA loans (1)

 

 

263,644

 

 

232,569

 

 

275,858

 

13.4

 

 

(4.4

)

C&I loans

 

 

116,951

 

 

133,855

 

 

162,543

 

(12.6

)

 

(28.0

)

Home mortgage loans

 

 

482,949

 

 

419,469

 

 

173,303

 

15.1

 

 

178.7

 

Consumer & other loans

 

 

1,467

 

 

2,000

 

 

865

 

(26.7

)

 

69.6

 

Gross loans

 

$

1,707,219

 

$

1,618,018

 

$

1,314,019

 

5.5

%

 

29.9

%

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes PPP loans of $442 thousand, $1.1 million and $40.6 million as of December 31, 2022, September 30, 2022 and December 31, 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 4Q22 vs.

 

 

4Q22

 

 

3Q22

 

 

4Q21

 

3Q22

 

 

4Q21

 

Real estate loans

 

$

44,416

 

$

43,929

 

$

35,458

 

1.1

%

 

25.3

%

SBA loans (1)

 

 

55,594

 

 

43,984

 

 

65,492

 

26.4

 

 

(15.1

)

C&I loans

 

 

46,014

 

 

39,720

 

 

47,981

 

15.8

 

 

(4.1

)

Home mortgage loans

 

 

28,188

 

 

68,842

 

 

19,295

 

(59.1

)

 

46.1

 

Consumer & other loans

 

 

 

 

2,500

 

 

 

(100.0

)

 

 

Gross loans

 

$

174,212

 

$

198,975

 

$

168,226

 

(12.4

) %

 

3.6

%

 

 

 

 

 

 

 

 

 

 

 

(1)

There were no new PPP originations for the periods indicated.

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

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

 

4Q22

 

 

 

3Q22

 

 

 

4Q21

 

Gross loans, beginning

 

$

1,618,018

 

 

$

1,484,718

 

 

$

1,231,821

 

New originations

 

 

174,212

 

 

 

198,975

 

 

 

168,226

 

Net line advances

 

 

(80,144

)

 

 

(11,358

)

 

 

7,759

 

Purchases

 

 

49,980

 

 

 

37,146

 

 

 

48,915

 

Sales

 

 

(32,204

)

 

 

(59,293

)

 

 

(68,064

)

Paydowns

 

 

(22,939

)

 

 

(19,087

)

 

 

(12,373

)

Payoffs

 

 

(23,238

)

 

 

(37,817

)

 

 

(46,778

)

PPP Payoffs

 

 

(657

)

 

 

(7,206

)

 

 

(29,918

)

Other

 

 

24,191

 

 

 

31,940

 

 

 

14,431

 

Total

 

 

89,201

 

 

 

133,300

 

 

 

82,198

 

Gross loans, ending

 

$

1,707,219

 

 

$

1,618,018

 

 

$

1,314,019

 

 

 

 

 

 

 

 

As of December 31, 2022 vs. September 30, 2022

Gross loans were $1.71 billion as of December 31, 2022, up $89.2 million from September 30, 2022, primarily due to new loan originations and home mortgage loan purchases.

Home mortgage loans of $39.0 million and real estate loans of $11.0 million were purchased from third party mortgage originators in the fourth quarter of 2022, compared to total purchases of $37.1 million in the third quarter of 2022. New loan originations and loan payoffs were $174.2 million and $23.9 million for the fourth quarter of 2022, respectively, compared with $199.0 million and $45.0 million for the third quarter of 2022, respectively. Of the PPP loans, $636 thousand in principal amount has been forgiven under the program, compared to a $7.2 million of PPP loans forgiven in the third quarter of 2022.

As of December 31, 2022 vs. December 31, 2021

Gross loans were $1.71 billion as of December 31, 2022, up $393.2 million from December 31, 2021, primarily due to new loan originations of $645.2 million and loan purchases of $225.1 million, partially offset by loan sales of $182.3 million and loan payoffs of $180.8 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

 

4Q22

 

 

 

3Q22

 

 

 

4Q21

 

 

 

%

 

Rate

 

%

 

Rate

 

%

 

Rate

Fixed rate

 

35.4

%

 

4.63

%

 

35.2

%

 

4.39

%

 

31.5

%

 

4.12

%

Hybrid rate

 

33.3

 

 

4.79

 

 

34.1

 

 

4.59

 

 

22.8

 

 

4.45

 

Variable rate

 

31.3

 

 

8.01

 

 

30.7

 

 

6.97

 

 

45.7

 

 

4.94

 

Gross loans

 

100.0

%

 

5.74

%

 

100.0

%

 

5.25

%

 

100.0

%

 

4.57

%

 

 

 

 

 

 

 

 

 

 

 

 

 

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 December 31, 2022

 

Within One Year

 

One Year Through Five Years

 

After Five Years

 

Total

 

Amount

 

Rate

 

Amount

 

Rate

 

Amount

 

Rate

 

Amount

 

Rate

Fixed rate

 

$

30,168

 

4.44

%

 

$

337,054

 

4.59

%

 

$

237,195

 

4.72

%

 

$

604,417

 

4.63

%

Hybrid rate

 

 

6,472

 

7.09

 

 

 

52,902

 

5.06

 

 

 

508,550

 

4.73

 

 

 

567,924

 

4.79

 

Variable rate

 

 

63,021

 

8.22

 

 

 

148,498

 

7.93

 

 

 

323,359

 

8.00

 

 

 

534,878

 

8.01

 

Gross loans

 

$

99,661

 

7.00

%

 

$

538,454

 

5.56

%

 

$

1,069,104

 

5.72

%

 

$

1,707,219

 

5.74

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of

 

% Change 4Q22 vs.

 

4Q22

 

3Q22

 

4Q21

 

 

Amount

 

%

 

Amount

 

%

 

Amount

 

%

 

3Q22

 

 

4Q21

 

Noninterest-bearing deposits

 

$

701,584

 

37.2

%

 

$

794,631

 

43.7

%

 

$

774,754

 

50.5

%

 

(11.7

) %

 

(9.4

) %

Money market deposits and others

 

 

526,321

 

27.9

%

 

 

524,911

 

28.9

 

 

 

380,226

 

24.8

%

 

0.3

 

 

38.4

 

Time deposits

 

 

657,866

 

34.9

%

 

 

497,269

 

27.4

 

 

 

379,086

 

24.7

%

 

32.3

 

 

73.5

 

Total deposits

 

$

1,885,771

 

100.0

%

 

$

1,816,811

 

100.0

%

 

$

1,534,066

 

100.0

%

 

3.8

%

 

22.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2022 vs. September 30, 2022

Total deposits were $1.89 billion as of December 31, 2022, up $69.0 million from September 30, 2022, primarily due to growth in time deposits, partially offset by a decrease in noninterest-bearing deposits. Time deposits grew $160.6 million, due to management’s actions to support loan growth during the third quarter of 2022 including upward adjustments of interest rates on customer deposits and increases in wholesale deposits. Noninterest-bearing deposits decreased $93.0 million, primarily due to decreases in lower transaction volumes in escrow and 1031 exchanges accounts and other decreases affected by market rate increases by the Federal Reserve.

As of December 31, 2022 vs. December 31, 2021

Total deposits were $1.89 billion as of December 31, 2022, up $351.7 million from December 31, 2021, primarily driven by growth in time deposits and money market deposits, offset by a decrease in noninterest-bearing deposits. Time deposits grew $278.8 million to $657.9 million from $379.1 million, and money market deposits increased $146.1 million to $526.3 million from $380.2 million. Noninterest-bearing deposits decreased $73.2 million, primarily due to decreases in lower transaction volumes in escrow and 1031 exchanges accounts and other decreases affected by market rate increases by the Federal Reserve.

The following table sets forth the maturity of time deposits as of December 31, 2022:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 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)

 

$ 82,676

 

$ 26,156

 

$ 61,254

 

$ 183,822

 

$ 2,289

 

$ 356,197

Time deposits ($250,000 or less)

 

36,551

 

50,759

 

44,829

 

144,495

 

25,035

 

301,669

Total time deposits

 

$ 119,227

 

$ 76,915

 

$ 106,083

 

$ 328,317

 

$ 27,324

 

$ 657,866

Weighted average rate

 

3.03 %

 

3.02 %

 

2.36 %

 

4.06 %

 

3.83 %

 

3.47 %

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

12.87 %

 

12.76 %

 

10.00 %

 

10.50 %

Tier 1 risk-based capital ratio

 

11.70 %

 

11.59 %

 

8.00 %

 

8.50 %

Common equity tier 1 ratio

 

11.70 %

 

11.59 %

 

6.50 %

 

7.00 %

Leverage ratio

 

9.38 %

 

9.29 %

 

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.

 

 

 

 

 

 

 

 

 

 

 

OP Bancorp

 

Basel III

 

% Change 4Q22 vs.

 

 

4Q22

 

 

 

3Q22

 

 

 

4Q21

 

 

3Q22

 

 

4Q21

 

Risk-Based Capital Ratios:

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

 

12.87

%

 

 

13.51

%

 

 

13.81

%

 

(0.64

) %

 

(0.94

) %

Tier 1 risk-based capital ratio

 

 

11.70

%

 

 

12.29

%

 

 

12.63

%

 

(0.59

) %

 

(0.93

) %

Common equity tier 1 ratio

 

 

11.70

%

 

 

12.29

%

 

 

12.63

%

 

(0.59

) %

 

(0.93

) %

Leverage ratio

 

 

9.38

%

 

 

9.48

%

 

 

9.75

%

 

(0.10

) %

 

(0.37

) %

Risk-weighted Assets ($ in thousands)

 

$

1,661,095

 

 

$

1,465,707

 

 

$

1,251,867

 

 

13.33

%

 

32.69

%

 

 

 

 

 

 

 

 

 

 

 

Capital ratios remained strong during the quarter. Our CET1 and total risk-based capital ratios were 11.70% and 12.87% as of December 31, 2022, down 93 basis points and 94 basis points from a year ago, respectively. The decreases in capital ratios were primarily 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 February 23, 2023 to all shareholders of record as of the close of business on February 9, 2023.

The Company did not repurchase any shares during the fourth 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 December 31, 2022.

Asset Quality

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of and For the Three Months Ended

 

% Change 4Q22 vs.

 

 

4Q22

 

 

 

3Q22

 

 

 

4Q21

 

 

3Q22

 

 

4Q21

 

Nonperforming loans (1)

 

$

3,080

 

 

$

2,251

 

 

$

3,200

 

 

36.8

%

 

(3.8

) %

OREO

 

 

 

 

 

 

 

 

 

 

 

 

 

Total nonperforming assets

 

$

3,080

 

 

$

2,251

 

 

$

3,200

 

 

36.8

%

 

(3.8

) %

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to gross loans

 

 

0.18

%

 

 

0.14

%

 

 

0.24

%

 

0.04

%

 

(0.06

) %

Nonperforming assets to total assets

 

 

0.15

%

 

 

0.11

%

 

 

0.19

%

 

0.04

%

 

(0.04

) %

 

 

 

 

 

 

 

 

 

 

 

Criticized (2) Loan:

 

 

 

 

 

 

 

 

 

 

Special mention loans

 

$

563

 

 

$

 

 

$

 

 

%

 

%

Classified loans (3)

 

 

3,307

 

 

 

3,542

 

 

 

4,039

 

 

(6.6

)

 

(18.1

)

Total criticized loans

 

$

3,870

 

 

$

3,542

 

 

$

4,039

 

 

9.3

%

 

(4.2

) %

 

 

 

 

 

 

 

 

 

 

 

Criticized (2) loans to gross loans

 

 

0.23

%

 

 

0.22

%

 

 

0.31

%

 

0.01

%

 

(0.08

) %

Classified loans (3) to gross loans

 

 

0.19

%

 

 

0.22

%

 

 

0.31

%

 

(0.03

) %

 

(0.12

) %

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses, beginning

 

$

18,369

 

 

$

17,702

 

 

$

14,134

 

 

3.8

%

 

30.0

%

Provision for loan losses (4)

 

 

977

 

 

 

662

 

 

 

2,157

 

 

47.6

 

 

(54.7

)

Gross charge-offs

 

 

(109

)

 

 

 

 

 

(168

)

 

n/m

 

 

(35.1

)

Gross recoveries

 

 

4

 

 

 

5

 

 

 

 

 

(20.0

)

 

n/m

 

Allowance for loan losses, ending (5)

 

$

19,241

 

 

$

18,369

 

 

$

16,123

 

 

4.7

%

 

19.3

%

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses ratios:

 

 

 

 

 

 

 

 

 

 

As a % of gross loans

 

 

1.13

%

 

 

1.14

%

 

 

1.23

%

 

(0.01

) %

 

(0.10

) %

As an adjusted % of gross loans (6)

 

 

1.16

%

 

 

1.18

%

 

 

1.36

%

 

(0.02

) %

 

(0.20

) %

As a % of nonperforming loans

 

 

625

%

 

 

816

%

 

 

503

%

 

(191

) %

 

122

%

As a % of nonperforming assets

 

 

625

%

 

 

816

%

 

 

503

%

 

(191

) %

 

122

%

Net charge-offs (recoveries) to average gross loans

 

 

0.03

%

 

 

(0.00

) %

 

 

0.05

%

 

0.03

%

 

(0.02

) %

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes the guaranteed portion of SBA loans totaling $1.0 million, $442 thousand and $1.2 million as of December 31, 2022, September 30, 2022 and December 31, 2021, 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 $259 thousand for the three months ended December 31, 2021.

(5)

Excludes allowance for uncollectible accrued interest receivable of $205 thousand as of December 31, 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 1.16%.

  • Allowance for loan losses increased $3.1 million to $19.2 million from a year ago. Excluding the impacts of the purchased Hana loans, PPP loans, adjusted allowance to gross loans ratio was 1.16% as of December 31, 2022.
  • Criticized loans decreased by $169 thousand or 4.2% from a year ago, and the criticized loans to gross loans ratio decreased by 8 basis points. Criticized loans are generally consistent with the Special Mention, Substandard, Doubtful and Loss categories defined by regulatory authorities.
  • Nonperforming assets decreased $120 thousand to $3.1 million, or 0.15% of total assets from a year ago. As of December 31, 2022, $606 thousand of nonaccrual loans was the guaranteed portion of SBA loans that are in liquidation. The Company did not have OREO as of December 31, 2022 or 2021.
  • Net charge-offs were $105 thousand or 0.03% of average loans in the fourth quarter of 2022, compared to $168 thousand, or 0.05%, of average loans in the fourth quarter of 2021.

COVID-19 Pandemic Update

As of December 31, 2022, no loan was under COVID-19 loan payment modification.

Since the PPP’s inception through December 31, 2022, we have funded $154.5 million, and $154.0 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

 

 

4Q22

 

 

3Q22

 

 

4Q21

Interest income

 

$

26,886

 

$

23,234

 

$

17,822

Interest expense

 

 

6,688

 

 

2,890

 

 

726

Net interest income

 

 

20,198

 

 

20,344

 

 

17,096

Noninterest income

 

 

3,223

 

 

4,821

 

 

7,289

Noninterest expense

 

 

11,327

 

 

12,338

 

 

9,591

Pre-provision net revenue

(a)

$

12,094

 

$

12,827

 

$

14,794

Reconciliation to net income:

 

 

 

 

 

 

Provision for loan losses

(b)

$

977

 

$

662

 

$

1,898

Income tax expense

(c)

 

3,089

 

 

3,515

 

 

3,762

Net income

(a)+(b) +(c)

$

8,028

 

$

8,650

 

$

9,134

 

 

 

 

 

 

 

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 December 31, 2022, September 30, 2022 and December 31, 2021 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

 

 

4Q22

 

 

 

3Q22

 

 

 

4Q21

 

Yield on Average Loans

 

 

 

 

 

 

Interest income on loans

 

$

24,719

 

 

$

21,780

 

 

$

17,271

 

Less: interest income on purchased Hana loans

 

 

1,685

 

 

 

1,717

 

 

 

1,863

 

Adjusted interest income on loans

(a)

$

23,034

 

 

$

20,063

 

 

$

15,408

 

 

 

 

 

 

 

 

Average loans

 

$

1,691,642

 

 

$

1,614,000

 

 

$

1,343,414

 

Less: Average purchased Hana loans

 

 

60,514

 

 

 

64,687

 

 

 

79,625

 

Adjusted average loans

(b)

$

1,631,128

 

 

$

1,549,313

 

 

$

1,263,789

 

 

 

 

 

 

 

 

Average loan yield (1)

 

 

5.81

%

 

 

5.36

%

 

 

5.10

%

Effect on average loan yield (1)

 

 

0.20

%

 

 

0.21

%

 

 

0.26

%

Adjusted average loan yield (1)

(a)/(b)

 

5.61

%

 

 

5.15

%

 

 

4.84

%

 

 

 

 

 

 

 

Net Interest Margin

 

 

 

 

 

 

Net interest income

 

$

20,198

 

 

$

20,344

 

 

$

17,096

 

Less: interest income on purchased Hana loans

 

 

1,685

 

 

 

1,717

 

 

 

1,863

 

Adjusted net interest income

(c)

$

18,513

 

 

$

18,627

 

 

$

15,233

 

 

 

 

 

 

 

 

Average interest-earning assets

 

$

1,966,165

 

 

$

1,874,516

 

 

$

1,668,865

 

Less: Average purchased Hana loans

 

 

60,514

 

 

 

64,687

 

 

 

79,625

 

Adjusted average interest-earning assets

(d)

$

1,905,651

 

 

$

1,809,829

 

 

$

1,589,240

 

 

 

 

 

 

 

 

Net interest margin (1)

 

 

4.08

%

 

 

4.31

%

 

 

4.07

%

Effect on net interest margin (1)

 

 

0.22

%

 

 

0.22

%

 

 

0.26

%

Adjusted net interest margin (1)

(c)/(d)

 

3.86

%

 

 

4.09

%

 

 

3.81

%

 

 

 

 

 

 

 

(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

 

 

4Q22

 

 

 

3Q22

 

 

 

4Q21

 

Gross loans

 

$

1,707,219

 

 

$

1,618,018

 

 

$

1,314,019

 

Less: Purchased Hana loans

 

 

(58,966

)

 

 

(61,899

)

 

 

(77,170

)

PPP loans (1)

 

 

(434

)

 

 

(1,022

)

 

 

(38,918

)

Adjusted gross loans

(a)

$

1,647,819

 

 

$

1,555,097

 

 

$

1,197,931

 

 

 

 

 

 

 

 

Accrued interest receivable on loans

 

$

6,413

 

 

$

5,203

 

 

$

4,231

 

Less: Accrued interest receivable on purchased Hana loans

 

 

(397

)

 

 

(323

)

 

 

(340

)

Accrued interest receivable on PPP loans (2)

 

 

(8

)

 

 

(16

)

 

 

(340

)

Add: Allowance on accrued interest receivable

 

 

 

 

 

 

 

 

205

 

Adjusted accrued interest receivable on loans

(b)

$

6,008

 

 

$

4,864

 

 

$

3,756

 

 

 

 

 

 

 

 

Adjusted gross loans and accrued interest receivable

(a)+(b) =(c)

$

1,653,827

 

 

$

1,559,961

 

 

$

1,201,687

 

 

 

 

 

 

 

 

Allowance for loan losses

 

$

19,241

 

 

$

18,369

 

 

$

16,123

 

Add: Allowance on accrued interest receivable

 

 

 

 

 

 

 

 

205

 

Adjusted Allowance

(d)

$

19,241

 

 

$

18,369

 

 

$

16,328

 

 

 

 

 

 

 

 

Adjusted allowance to gross loans ratio

(d)/(c)

 

1.16

%

 

 

1.18

%

 

 

1.36

%

 

 

 

 

 

 

 

(1)

Excludes purchased PPP loans of $8 thousand, $57 thousand and $1.7 million as of December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

(2)

Excludes purchased accrued interest receivable on PPP loans of $1 thousand and $15 thousand as of September 30, 2022 and December 31, 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 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; 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 4Q22 vs.

 

 

4Q22

 

 

 

3Q22

 

 

 

4Q21

 

 

3Q22

 

 

4Q21

 

Assets

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

12,952

 

 

$

25,516

 

 

$

11,283

 

 

(49.2

) %

 

14.8

%

Interest-bearing deposits in other banks

 

 

70,020

 

 

 

81,765

 

 

 

104,176

 

 

(14.4

)

 

(32.8

)

Cash and cash equivalents

 

 

82,972

 

 

 

107,281

 

 

 

115,459

 

 

(22.7

)

 

(28.1

)

Securities available for sale, at fair value

 

 

209,809

 

 

 

186,438

 

 

 

150,444

 

 

12.5

 

 

39.5

 

Other investments

 

 

12,098

 

 

 

12,074

 

 

 

10,999

 

 

0.2

 

 

10.0

 

Loans held for sale

 

 

15,408

 

 

 

36,642

 

 

 

89,428

 

 

(57.9

)

 

(82.8

)

Real estate loans

 

 

842,208

 

 

 

830,125

 

 

 

701,450

 

 

1.5

 

 

20.1

 

SBA loans (1)

 

 

263,644

 

 

 

232,569

 

 

 

275,858

 

 

13.4

 

 

(4.4

)

C&I loans

 

 

116,951

 

 

 

133,855

 

 

 

162,543

 

 

(12.6

)

 

(28.0

)

Home mortgage loans

 

 

482,949

 

 

 

419,469

 

 

 

173,303

 

 

15.1

 

 

178.7

 

Consumer & other loans

 

 

1,467

 

 

 

2,000

 

 

 

865

 

 

(26.7

)

 

69.6

 

Gross loans, net of unearned income

 

 

1,707,219

 

 

 

1,618,018

 

 

 

1,314,019

 

 

5.5

 

 

29.9

 

Allowance for loan losses

 

 

(19,241

)

 

 

(18,369

)

 

 

(16,123

)

 

4.7

 

 

19.3

 

Net loans receivable

 

 

1,687,978

 

 

 

1,599,649

 

 

 

1,297,896

 

 

5.5

 

 

30.1

 

Premises and equipment, net

 

 

4,400

 

 

 

4,383

 

 

 

4,355

 

 

0.4

 

 

1.0

 

Accrued interest receivable, net

 

 

7,180

 

 

 

5,856

 

 

 

4,579

 

 

22.6

 

 

56.8

 

Servicing assets

 

 

12,759

 

 

 

13,000

 

 

 

12,720

 

 

(1.9

)

 

0.3

 

Company owned life insurance

 

 

21,613

 

 

 

21,464

 

 

 

11,134

 

 

0.7

 

 

94.1

 

Deferred tax assets

 

 

13,717

 

 

 

17,296

 

 

 

8,409

 

 

(20.7

)

 

63.1

 

Operating right-of-use assets

 

 

9,097

 

 

 

8,265

 

 

 

8,905

 

 

10.1

 

 

2.2

 

Other assets

 

 

17,262

 

 

 

17,228

 

 

 

12,363

 

 

0.2

 

 

39.6

 

Total assets

 

$

2,094,293

 

 

$

2,029,575

 

 

$

1,726,691

 

 

3.2

%

 

21.3

%

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

Noninterest bearing

 

$

701,584

 

 

$

794,631

 

 

$

774,754

 

 

(11.7

) %

 

(9.4

) %

Money market and others

 

 

526,321

 

 

 

524,911

 

 

 

380,226

 

 

0.3

 

 

38.4

 

Time deposits greater than $250,000

 

 

356,197

 

 

 

277,785

 

 

 

207,288

 

 

28.2

 

 

71.8

 

Other time deposits

 

 

301,669

 

 

 

219,484

 

 

 

171,798

 

 

37.4

 

 

75.6

 

Total deposits

 

 

1,885,771

 

 

 

1,816,811

 

 

 

1,534,066

 

 

3.8

 

 

22.9

 

Borrowings

 

 

50

 

 

 

10,000

 

 

 

 

 

(99.5

)

 

n/m

 

Accrued interest payable

 

 

2,771

 

 

 

1,099

 

 

 

558

 

 

152.1

 

 

396.6

 

Operating lease liabilities

 

 

10,213

 

 

 

9,485

 

 

 

10,307

 

 

7.7

 

 

(0.9

)

Other liabilities

 

 

18,572

 

 

 

22,085

 

 

 

16,538

 

 

(15.9

)

 

12.3

 

Total liabilities

 

 

1,917,377

 

 

 

1,859,480

 

 

 

1,561,469

 

 

3.1

 

 

22.8

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

79,326

 

 

 

78,782

 

 

 

78,718

 

 

0.7

 

 

0.8

 

Additional paid-in capital

 

 

9,743

 

 

 

9,424

 

 

 

8,645

 

 

3.4

 

 

12.7

 

Retained earnings

 

 

105,690

 

 

 

99,487

 

 

 

79,056

 

 

6.2

 

 

33.7

 

Accumulated other comprehensive loss

 

 

(17,843

)

 

 

(17,598

)

 

 

(1,197

)

 

1.4

 

 

1390.6

 

Total shareholders’ equity

 

 

176,916

 

 

 

170,095

 

 

 

165,222

 

 

4.0

 

 

7.1

 

Total liabilities and shareholders' equity

 

$

2,094,293

 

 

$

2,029,575

 

 

$

1,726,691

 

 

3.2

%

 

21.3

%

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes SBA PPP loans of $442 thousand, $1.1 million and $40.6 million as of December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

 

 

 

 

 

 

 

 

 

 

 

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

 

For the Three Months Ended

 

% Change 4Q22 vs.

 

 

4Q22

 

 

3Q22

 

 

4Q21

 

3Q22

 

 

4Q21

 

Interest income

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

24,719

 

$

21,780

 

$

17,271

 

13.5

%

 

43.1

%

Interest on securities available for sale

 

 

1,237

 

 

881

 

 

362

 

40.4

 

 

241.7

 

Other interest income

 

 

930

 

 

573

 

 

189

 

62.3

 

 

392.1

 

Total interest income

 

 

26,886

 

 

23,234

 

 

17,822

 

15.7

 

 

50.9

 

Interest expense

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

6,598

 

 

2,889

 

 

726

 

128.4

 

 

808.8

 

Interest on borrowings

 

 

90

 

 

1

 

 

 

n/m

 

 

n/m

 

Total interest expense

 

 

6,688

 

 

2,890

 

 

726

 

131.4

 

 

821.2

 

Net interest income

 

 

20,198

 

 

20,344

 

 

17,096

 

(0.7

)

 

18.1

 

Provision for loan losses

 

 

977

 

 

662

 

 

1,898

 

47.6

 

 

(48.5

)

Net interest income after provision for loan losses

 

 

19,221

 

 

19,682

 

 

15,198

 

(2.3

)

 

26.5

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

 

406

 

 

454

 

 

405

 

(10.6

)

 

0.2

 

Loan servicing fees, net of amortization

 

 

705

 

 

610

 

 

521

 

15.6

 

 

35.3

 

Gain on sale of loans

 

 

1,684

 

 

3,490

 

 

6,033

 

(51.7

)

 

(72.1

)

Other income

 

 

428

 

 

267

 

 

330

 

60.3

 

 

29.7

 

Total noninterest income

 

 

3,223

 

 

4,821

 

 

7,289

 

(33.1

)

 

(55.8

)

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

7,080

 

 

7,343

 

 

5,560

 

(3.6

)

 

27.3

 

Occupancy and equipment

 

 

1,560

 

 

1,537

 

 

1,418

 

1.5

 

 

10.0

 

Data processing and communication

 

 

514

 

 

586

 

 

637

 

(12.3

)

 

(19.3

)

Professional fees

 

 

330

 

 

602

 

 

267

 

(45.2

)

 

23.6

 

FDIC insurance and regulatory assessments

 

 

176

 

 

238

 

 

182

 

(26.1

)

 

(3.3

)

Promotion and advertising

 

 

12

 

 

177

 

 

156

 

(93.2

)

 

(92.3

)

Directors’ fees

 

 

145

 

 

170

 

 

166

 

(14.7

)

 

(12.7

)

Foundation donation and other contributions

 

 

851

 

 

875

 

 

901

 

(2.7

)

 

(5.5

)

Other expenses

 

 

659

 

 

810

 

 

304

 

(18.6

)

 

116.8

 

Total noninterest expense

 

 

11,327

 

 

12,338

 

 

9,591

 

(8.2

)

 

18.1

 

Income before income tax expense

 

 

11,117

 

 

12,165

 

 

12,896

 

(8.6

)

 

(13.8

)

Income tax expense

 

 

3,089

 

 

3,515

 

 

3,762

 

(12.1

)

 

(17.9

)

Net income

 

$

8,028

 

$

8,650

 

$

9,134

 

(7.2

) %

 

(12.1

) %

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

11.59

 

$

11.19

 

$

10.92

 

3.6

%

 

6.1

%

Earnings per share - Basic

 

$

0.52

 

$

0.56

 

$

0.60

 

(7.1

) %

 

(13.3

) %

Earnings per share - Diluted

 

$

0.51

 

$

0.55

 

$

0.59

 

(7.3

) %

 

(13.6

) %

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock outstanding

 

 

15,270,344

 

 

15,199,840

 

 

15,137,808

 

0.5

%

 

0.9

%

Weighted Average Shares:

 

 

 

 

 

 

 

 

 

 

- Basic

 

 

15,208,308

 

 

15,195,826

 

 

15,136,229

 

0.1

%

 

0.5

%

- Diluted

 

 

15,264,971

 

 

15,275,156

 

 

15,227,291

 

(0.1

) %

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

Key Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

Change 4Q22 vs.

 

4Q22

 

 

3Q22

 

 

4Q21

 

 

3Q22

 

 

4Q21

 

Return on average assets (ROA) (1)

 

1.56

%

 

1.77

%

 

2.11

%

 

(0.2

) %

 

(0.6

) %

Return on average equity (ROE) (1)

 

18.58

%

 

19.91

%

 

22.68

%

 

(1.3

) %

 

(4.1

) %

Net interest margin (1)

 

4.08

%

 

4.31

%

 

4.07

%

 

(0.2

) %

 

%

Efficiency ratio

 

48.36

%

 

49.03

%

 

39.34

%

 

(0.7

) %

 

9.0

%

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

12.87

%

 

13.10

%

 

13.66

%

 

(0.2

) %

 

(0.8

) %

Tier 1 risk-based capital ratio

 

11.70

%

 

11.92

%

 

12.42

%

 

(0.2

) %

 

(0.7

) %

Common equity tier 1 ratio

 

11.70

%

 

11.92

%

 

12.42

%

 

(0.2

) %

 

(0.7

) %

Leverage ratio

 

9.38

%

 

9.52

%

 

9.58

%

 

(0.1

) %

 

(0.2

) %

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

 

 

 

 

 

 

 

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

 

For the Twelve Months Ended December 31,

 

 

2022

 

 

2021

 

% Change

Interest income

 

 

 

 

 

 

Interest and fees on loans

 

$

82,864

 

$

62,448

 

32.7

%

Interest on securities available for sale

 

 

3,351

 

 

1,085

 

208.8

 

Other interest income

 

 

1,997

 

 

625

 

219.5

 

Total interest income

 

 

88,212

 

 

64,158

 

37.5

 

Interest expense

 

 

 

 

 

 

Interest on deposits

 

 

11,210

 

 

3,132

 

257.9

 

Interest on borrowings

 

 

91

 

 

 

n/m

 

Total interest expense

 

 

11,301

 

 

3,132

 

260.8

 

Net interest income

 

 

76,911

 

 

61,026

 

26.0

 

Provision for loan losses

 

 

2,976

 

 

522

 

470.1

 

Net interest income after provision for loan losses

 

 

73,935

 

 

60,504

 

22.2

 

Noninterest income

 

 

 

 

 

 

Service charges on deposits

 

 

1,675

 

 

1,562

 

7.2

 

Loan servicing fees, net of amortization

 

 

2,416

 

 

1,953

 

23.7

 

Gain on sale of loans

 

 

12,285

 

 

11,313

 

8.6

 

Other income

 

 

1,243

 

 

1,189

 

4.5

 

Total noninterest income

 

 

17,619

 

 

16,017

 

10.0

 

Noninterest expense

 

 

 

 

 

 

Salaries and employee benefits

 

 

27,189

 

 

21,253

 

27.9

 

Occupancy and equipment

 

 

5,964

 

 

5,213

 

14.4

 

Data processing and communication

 

 

2,085

 

 

2,000

 

4.3

 

Professional fees

 

 

1,620

 

 

1,192

 

35.9

 

FDIC insurance and regulatory assessments

 

 

813

 

 

583

 

39.5

 

Promotion and advertising

 

 

543

 

 

684

 

(20.6

)

Directors’ fees

 

 

682

 

 

593

 

15.0

 

Foundation donation and other contributions

 

 

3,393

 

 

2,890

 

17.4

 

Other expenses

 

 

2,541

 

 

1,457

 

74.4

 

Total noninterest expense

 

 

44,830

 

 

35,865

 

25.0

 

Income before income tax expense

 

 

46,724

 

 

40,656

 

14.9

 

Income tax expense

 

 

13,414

 

 

11,816

 

13.5

 

Net income

 

$

33,310

 

$

28,840

 

15.5

%

 

 

 

 

 

 

 

Book value per share

 

$

11.59

 

$

10.92

 

6.1

%

Earnings per share - Basic

 

$

2.15

 

$

1.89

 

13.8

%

Earnings per share - Diluted

 

$

2.14

 

$

1.88

 

13.8

%

 

 

 

 

 

 

 

Shares of common stock outstanding

 

 

15,270,344

 

 

15,137,808

 

0.9

%

Weighted Average Shares:

 

 

 

 

 

 

- Basic

 

 

15,171,240

 

 

15,087,686

 

0.6

%

- Diluted

 

 

15,231,418

 

 

15,155,347

 

0.5

%

 

 

 

 

 

 

 

Key Ratios

 

 

 

 

 

 

 

 

 

For the Twelve Months Ended December 31,

 

2022

 

 

2021

 

 

Change

Return on average assets (ROA) (1)

 

1.74

%

 

1.83

%

 

(0.1

) %

Return on average equity (ROE) (1)

 

19.57

%

 

18.90

%

 

0.7

%

Net interest margin (1)

 

4.18

%

 

4.02

%

 

0.2

%

Efficiency ratio

 

47.42

%

 

46.55

%

 

0.9

%

 

 

 

 

 

 

 

Total risk-based capital ratio

 

12.87

%

 

13.66

%

 

(0.8

) %

Tier 1 risk-based capital ratio

 

11.70

%

 

12.42

%

 

(0.7

) %

Common equity tier 1 ratio

 

11.70

%

 

12.42

%

 

(0.7

) %

Leverage ratio

 

9.38

%

 

9.58

%

 

(0.2

) %

 

 

 

 

 

 

 

(1)

Annualized.

ASSET QUALITY

 

 

 

 

 

 

 

($ in thousands)

 

As of and For the Three Months Ended

 

 

4Q22

 

 

 

3Q22

 

 

 

4Q21

 

Nonaccrual Loans (1)

 

$

2,639

 

 

$

2,251

 

 

$

3,000

 

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

 

 

441

 

 

 

 

 

 

200

 

Accruing restructured loans

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

 

3,080

 

 

 

2,251

 

 

 

3,200

 

Other real estate owned ("OREO")

 

 

 

 

 

 

 

 

 

Nonperforming assets

 

$

3,080

 

 

$

2,251

 

 

$

3,200

 

 

 

 

 

 

 

 

Criticized loans (3) by loan type:

 

 

 

 

 

 

Commercial real estate

 

$

563

 

 

$

 

 

$

 

SBA loans

 

 

1,472

 

 

 

1,817

 

 

 

2,688

 

C&I loans

 

 

555

 

 

 

742

 

 

 

313

 

Home mortgage loans

 

 

1,280

 

 

 

983

 

 

 

1,038

 

Total criticized loans (3)

 

$

3,870

 

 

$

3,542

 

 

$

4,039

 

 

 

 

 

 

 

 

Nonperforming assets/total assets

 

 

0.15

%

 

 

0.11

%

 

 

0.19

%

Nonperforming assets / gross loans plus OREO

 

 

0.18

%

 

 

0.14

%

 

 

0.24

%

Nonperforming loans / gross loans

 

 

0.18

%

 

 

0.14

%

 

 

0.24

%

Allowance for loan losses / nonperforming loans

 

 

625

%

 

 

816

%

 

 

503

%

Allowance for loan losses / nonperforming assets

 

 

625

%

 

 

816

%

 

 

503

%

Allowance for loan losses / gross loans

 

 

1.13

%

 

 

1.14

%

 

 

1.23

%

Criticized loans (3) / gross loans

 

 

0.23

%

 

 

0.22

%

 

 

0.31

%

Classified loans / gross loans

 

 

0.19

%

 

 

0.22

%

 

 

0.31

%

 

 

 

 

 

 

 

Net charge-offs (recoveries)

 

$

105

 

 

$

(5

)

 

$

168

 

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

 

 

0.03

%

 

 

(0.00

) %

 

 

0.05

%

 

 

 

 

 

 

 

(1)

Includes the guaranteed portion of SBA loans that are in liquidation totaling $606 thousand, $442 thousand and $1.0 million as of December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

(2)

Includes the guaranteed portion of PPP loans totaling $200 thousand as of December 31, 2021.

(3)

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

(4)

Annualized.

 

 

 

 

 

 

 

($ in thousands)

 

4Q22

 

3Q22

 

4Q21

Accruing delinquent loans 30-89 days past due

 

 

 

 

 

 

30-59 days

 

$ 1,918

 

$ 360

 

$ 76

60-89 days

 

1,559

 

845

 

336

Total (1)

 

$ 3,477

 

$ 1,205

 

$ 412

 

 

 

 

 

 

 

(1)

Includes the guaranteed portion of PPP loans totaling $756 thousand and $408 thousand as of September 30, 2022 and December 31, 2021, respectively.

AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

4Q22

 

3Q22

 

4Q21

($ 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

 

$

75,988

 

$

734

 

3.78

%

 

$

75,599

 

$

427

 

2.21

%

 

$

192,302

 

$

73

 

0.15

%

Federal funds sold and other investments

 

 

12,074

 

 

196

 

6.47

 

 

 

12,221

 

 

146

 

4.78

 

 

 

11,012

 

 

116

 

4.23

 

Available-for-sale debt securities, at fair value

 

 

186,461

 

 

1,237

 

2.66

 

 

 

172,696

 

 

881

 

2.04

 

 

 

122,137

 

 

362

 

1.19

 

Real estate loans

 

 

836,609

 

 

11,172

 

5.30

 

 

 

810,158

 

 

10,144

 

4.97

 

 

 

685,394

 

 

7,774

 

4.50

 

SBA loans

 

 

289,408

 

 

6,681

 

9.16

 

 

 

286,903

 

 

5,850

 

8.09

 

 

 

400,059

 

 

6,829

 

6.77

 

C&I loans

 

 

114,265

 

 

1,917

 

6.66

 

 

 

140,098

 

 

1,952

 

5.53

 

 

 

133,104

 

 

1,334

 

3.98

 

Home mortgage loans

 

 

449,684

 

 

4,929

 

4.38

 

 

 

375,804

 

 

3,820

 

4.07

 

 

 

123,822

 

 

1,320

 

4.27

 

Consumer & other loans

 

 

1,676

 

 

20

 

4.80

 

 

 

1,037

 

 

14

 

4.88

 

 

 

1,035

 

 

14

 

5.21

 

Loans (2)

 

 

1,691,642

 

 

24,719

 

5.81

 

 

 

1,614,000

 

 

21,780

 

5.36

 

 

 

1,343,414

 

 

17,271

 

5.10

 

Total interest-earning assets

 

 

1,966,165

 

 

26,886

 

5.43

 

 

 

1,874,516

 

 

23,234

 

4.92

 

 

 

1,668,865

 

 

17,822

 

4.24

 

Noninterest-earning assets

 

 

87,189

 

 

 

 

 

 

83,398

 

 

 

 

 

 

62,996

 

 

 

 

Total assets

 

$

2,053,354

 

 

 

 

 

$

1,957,914

 

 

 

 

 

$

1,731,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market deposits and others

 

$

515,747

 

$

3,045

 

2.34

%

 

$

502,166

 

$

1,506

 

1.19

%

 

$

378,849

 

$

283

 

0.30

%

Time deposits

 

 

569,584

 

 

3,553

 

2.47

 

 

 

445,271

 

 

1,383

 

1.23

 

 

 

401,938

 

 

443

 

0.44

 

Total interest-bearing deposits

 

 

1,085,331

 

 

6,598

 

2.41

 

 

 

947,437

 

 

2,889

 

1.21

 

 

 

780,787

 

 

726

 

0.37

 

Borrowings

 

 

8,158

 

 

90

 

4.35

 

 

 

130

 

 

1

 

3.00

 

 

 

4

 

 

 

 

Total interest-bearing liabilities

 

 

1,093,489

 

 

6,688

 

2.43

 

 

 

947,567

 

 

2,890

 

1.21

 

 

 

780,791

 

 

726

 

0.37

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

751,405

 

 

 

 

 

 

806,289

 

 

 

 

 

 

765,012

 

 

 

 

Other noninterest-bearing liabilities

 

 

35,593

 

 

 

 

 

 

30,258

 

 

 

 

 

 

24,994

 

 

 

 

Total noninterest-bearing liabilities

 

 

786,998

 

 

 

 

 

 

836,547

 

 

 

 

 

 

790,006

 

 

 

 

Shareholders’ equity

 

 

172,867

 

 

 

 

 

 

173,800

 

 

 

 

 

 

161,064

 

 

 

 

Total liabilities and shareholders’ equity

 

$

2,053,354

 

 

 

 

 

$

1,957,914

 

 

 

 

 

$

1,731,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / interest rate spreads

 

 

 

$

20,198

 

3.01

%

 

 

 

$

20,344

 

3.71

%

 

 

 

$

17,096

 

3.87

%

Net interest margin

 

 

 

 

 

4.08

%

 

 

 

 

 

4.31

%

 

 

 

 

 

4.07

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of deposits & cost of funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits / cost of deposits

 

$

1,836,736

 

$

6,598

 

1.43

%

 

$

1,753,726

 

$

2,889

 

0.65

%

 

 

1,545,799

 

$

726

 

0.19

%

Total funding liabilities / cost of funds

 

$

1,844,894

 

$

6,688

 

1.44

%

 

$

1,753,856

 

$

2,890

 

0.65

%

 

 

1,545,803

 

$

726

 

0.19

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

(2)

Includes loans held for sale.

AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Twelve Months Ended December 31,

 

 

2022

 

2021

($ 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

 

$

79,482

 

$

1,399

 

1.76

%

 

$

132,090

 

$

170

 

0.13

%

Federal funds sold and other investments

 

 

11,810

 

 

598

 

5.06

 

 

 

10,755

 

 

455

 

4.23

 

Available-for-sale debt securities, at fair value

 

 

170,479

 

 

3,351

 

1.97

 

 

 

108,346

 

 

1,085

 

1.00

 

Real estate loans

 

 

777,776

 

 

37,861

 

4.87

 

 

 

672,045

 

 

30,645

 

4.56

 

SBA loans