Exhibit 99.1
OP Bancorp Earns Record Net Income of $3.2 Million in the First Quarter of 2018
2018 First Quarter Highlights:
| • | Net income totaled $3.2 million or $0.22 per diluted common share for the first quarter of 2018. |
| • | Net interest margin was 4.56% for the first quarter of 2018, compared to 4.69% for the fourth quarter of 2017 and 4.47% for the first quarter of 2017. |
| • | Total assets were $957 million at March 31, 2018, up 6.2% from $901 million at December 31, 2017, and up 19.6% from $800 million at March 31, 2017. |
| • | Net loans receivable were $784 million at March 31, 2018, up 6.1% from $739 million at December 31, 2017 and up 16.4% from $674 million at March 31, 2017. |
| • | Total deposits were $818 million at March 31, 2018, up 5.8% from $773 million at December 31, 2017 and up 15.1% from $711 million at March 31, 2017. |
| • | Noninterest bearing deposits at March 31, 2018 were $289 million or 35.3% of total deposits. |
| • | Nonperforming assets to total assets were 0.06% at March 31, 2018. |
| • | Initial public offering of 2,300,000 shares of common stock completed on March 29, 2018 for net proceeds of $22.6 million. |
LOS ANGELES, April 26, 2018 — OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company of Open Bank (the “Bank”), today reported unaudited financial results for the first quarter of 2018. Net income for the first quarter of 2018 was $3.2 million, or $0.22 per diluted common share, compared with net income of $1.9 million, or $0.13 per diluted share for the fourth quarter of 2017, and net income of $2.1 million, or $0.15 per diluted share for the first quarter of 2017.
The Company closed its initial public offering of 2,300,000 shares of common stock, including the exercise of the over-allotment option of 300,000, on March 29, 2018 for net proceeds of $22.6 million after deducting underwriting discounts and commissions and estimated offering expenses.
“We were pleased to have successfully completed our initial public offering and listing on Nasdaq during the first quarter of 2018. We also opened our eighth full service branch in Santa Clara, California, which is our first branch opening outside of Southern California. Our assets grew over 6% from the year ended 2017, and our earnings for 2018 first quarter increased 49.9% from the prior year’s first quarter”, commented Min Kim, President and Chief Executive Officer of OP Bancorp.
“With our growing asset base, including the net proceeds from our public offering, we are poised to successfully execute our business plan for 2018. We believe our efforts will not only strengthen our franchise and expand our relationships with our customers and the communities which we serve, but also result in an increase in shareholder value and opportunities for our employees.” Ms. Kim continued, “we are presently taking the necessary steps to expand our loan production offices in Dallas, Texas and Atlanta, Georgia into operating branch offices. We are thankful for the overall efforts of our management team and all of our employees, which have been critical in getting the Company off to a wonderful start for 2018.”
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Financial Highlights (unaudited)
| (Dollars in thousands, except per share data) | As of or for the Three Months Ended | |||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2018 | 2017 | 2017 | ||||||||||
| Income Statement Data: |
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| Interest income |
$ | 11,180 | $ | 11,077 | $ | 9,185 | ||||||
| Interest expense |
1,621 | 1,376 | 978 | |||||||||
| Net interest income |
9,559 | 9,701 | 8,207 | |||||||||
| Provision for loan losses |
575 | 322 | 541 | |||||||||
| Noninterest income |
2,212 | 2,278 | 2,244 | |||||||||
| Noninterest expense |
6,811 | 6,571 | 6,389 | |||||||||
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| Income before taxes |
4,385 | 5,086 | 3,521 | |||||||||
| Provision for income taxes |
1,169 | 3,186 | 1,375 | |||||||||
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| Net Income |
$ | 3,216 | $ | 1,900 | $ | 2,146 | ||||||
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| Diluted earnings per share |
$ | 0.22 | $ | 0.13 | $ | 0.15 | ||||||
| Balance Sheet Data: |
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| Loans held for sale |
$ | 18,571 | $ | 15,739 | $ | 925 | ||||||
| Gross loans, net of unearned income |
793,751 | 748,023 | 681,937 | |||||||||
| Allowance for loan losses |
9,716 | 9,139 | 8,380 | |||||||||
| Total assets |
956,842 | 900,999 | 800,188 | |||||||||
| Deposits |
818,280 | 773,306 | 711,047 | |||||||||
| Shareholders’ equity |
117,260 | 91,480 | 83,781 | |||||||||
| Performance Ratios: |
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| Return on average assets (annualized) |
1.43 | % | 0.87 | % | 1.10 | % | ||||||
| Return on average equity (annualized) |
13.64 | % | 8.33 | % | 10.39 | % | ||||||
| Net interest margin (annualized) |
4.56 | % | 4.69 | % | 4.47 | % | ||||||
| Efficiency ratio (1) |
57.86 | % | 54.86 | % | 61.13 | % | ||||||
| Credit Quality: |
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| Nonperforming loans |
$ | 592 | $ | 1,037 | $ | 364 | ||||||
| Nonperforming assets |
592 | 1,037 | 364 | |||||||||
| Net charge-offs to average gross loans (annualized) |
0.00 | % | 0.05 | % | 0.04 | % | ||||||
| Nonperforming assets to gross loans plus OREO |
0.07 | % | 0.14 | % | 0.05 | % | ||||||
| ALL to nonperforming loans |
1641 | % | 881 | % | 2302 | % | ||||||
| ALL to gross loans |
1.22 | % | 1.22 | % | 1.23 | % | ||||||
| Capital Ratios: |
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| Leverage ratio |
13.09 | % | 10.46 | % | 10.74 | % | ||||||
| Common equity tier 1 ratio |
14.93 | % | 12.26 | % | 12.41 | % | ||||||
| Tier 1 risk-based capital ratio |
14.93 | % | 12.26 | % | 12.41 | % | ||||||
| Total risk-based capital ratio |
16.17 | % | 13.49 | % | 13.66 | % | ||||||
| (1) | Represents noninterest expense divided by the sum of net interest income and noninterest income. |
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Results of Operations
Net interest income before provision for loan losses for the first quarter of 2018 was $9.6 million, a decrease of $142 thousand, or 1.5%, compared to $9.7 million for the fourth quarter of 2017, primarily due to a $245 thousand increase in interest expense, partially offset by a $103 thousand increase in interest income.
Interest income from the contractual interest rates on loans increased $405 thousand, or 4.1%, during the first quarter, reflecting a 4.0% increase in average loans and an 11 basis point increase in the average contractual interest rate. The amount of discount accretion on SBA loans decreased $343 thousand during the quarter due to a reduction in SBA loan payoffs during the first quarter of 2018. The reported interest income on loans, net of SBA discount accretions and other components, increased $115 thousand during the quarter.
The reported interest income and yield on our loan portfolio are impacted by a number of components, including changes in the average contractual interest rate earned on loans and the amount of discount accretion on SBA loans. The following table reconciles the contractual interest income and yield on our loan portfolio to the reported interest income and yield for the periods indicated.
| Three Months Ended | ||||||||||||||||||||||||
| March 31, 2018 | December 31, 2017 | March 31, 2017 | ||||||||||||||||||||||
| (Dollars in thousands) | Interest & Fees |
Yield | Interest & Fees |
Yield | Interest & Fees |
Yield | ||||||||||||||||||
| Contractual interest rate |
$ | 10,185 | 5.24 | % | $ | 9,780 | 5.13 | % | $ | 8,310 | 4.91 | % | ||||||||||||
| SBA discount accretion |
567 | 0.29 | % | 910 | 0.48 | % | 523 | 0.31 | % | |||||||||||||||
| Amortization of net deferred fees/(costs) |
51 | 0.03 | % | (16 | ) | -0.01 | % | 59 | 0.03 | % | ||||||||||||||
| Interest recognized on nonaccrual loans |
20 | 0.01 | % | 42 | 0.02 | % | 24 | 0.01 | % | |||||||||||||||
| Prepayment penalties and late fees |
25 | 0.01 | % | 17 | 0.01 | % | 13 | 0.01 | % | |||||||||||||||
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| Yield on loans (as reported) |
$ | 10,848 | 5.58 | % | $ | 10,733 | 5.63 | % | $ | 8,929 | 5.27 | % | ||||||||||||
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Interest expense for the first quarter of 2018 increased $245 thousand compared to the fourth quarter of 2017, due to an increase of $29.5 million, or 5.8% in average balance of interest-bearing liabilities and an increase of 15 basis points in average cost of interest-bearing liabilities.
Net interest margin for the first quarter of 2018 decreased 13 basis points to 4.56% from 4.69% for the fourth quarter of 2017, due to the increase in the cost of interest-bearing liabilities and the decrease in the reported yield on loans.
Net interest income before provision for loan losses for the first quarter of 2018 increased $1.4 million, or 16.5%, compared to $8.2 million for the first quarter of 2017, primarily due to a $2.0 million or 21.7%, increase in interest income, partially offset by an increase of $643 thousand in interest expense.
The increase in interest income was primarily due to a 14.9% increase in average loans, including loans held-for-sale, and a 31 basis point increase in the yield on average loans to 5.58% from 5.27% for the first quarter of 2017. The increase in interest expense was due to a 17.3% increase in average interest-bearing liabilities and a 36 basis point increase in the cost of interest-bearing liabilities. The increases in the average yields on loans and average cost of deposits were primarily due to cumulative market rate increases by the Federal Reserve of 75 basis points through three rate hikes of 25 basis points in each of June 2017, December 2017 and March 2018.
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Net interest margin for the first quarter of 2018 increased 9 basis points to 4.56% from 4.47% for the first quarter of 2017.
The following table shows the asset yields, liability costs, spreads and margins.
| Three Months Ended | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2018 | 2017 | 2017 | ||||||||||
| Yield on loans |
5.58 | % | 5.63 | % | 5.27 | % | ||||||
| Yield on interest-earning assets |
5.34 | % | 5.35 | % | 5.01 | % | ||||||
| Cost of interest-bearing liabilities |
1.23 | % | 1.08 | % | 0.87 | % | ||||||
| Cost of deposits |
0.81 | % | 0.70 | % | 0.57 | % | ||||||
| Cost of funds |
0.83 | % | 0.71 | % | 0.57 | % | ||||||
| Net interest spread |
4.11 | % | 4.27 | % | 4.14 | % | ||||||
| Net interest margin |
4.56 | % | 4.69 | % | 4.47 | % | ||||||
The provision for loan losses for the first quarter of 2018 increased $253 thousand to $575 thousand from $322 thousand for the fourth quarter of 2017, primarily due to a $45.7 million or 6.1% increase in gross loans, net of unearned income, during the first quarter of 2018 and an increase of $1.3 million in classified loans. The provision for loan losses for the first quarter of 2018 increased $34 thousand compared to $541 thousand for the first quarter of 2017.
Noninterest income for the first quarter of 2018 was $2.21 million, a decrease of $66 thousand, or 2.9%, from $2.28 million for the fourth quarter of 2017, primarily due to a decrease in gain on sale of loans, partially offset by increases in loan servicing income and other service fees on deposits. Gain on sale of loans decreased $413 thousand to $989 thousand for the first quarter of 2018 from $1.4 million for the fourth quarter of 2017. We sold $13.4 million in SBA loans with an average premium of 8.66% in the first quarter of 2018 compared to the sale of $18.6 million in SBA loans with an average premium of 9.35% in the fourth quarter of 2017. Loan servicing income, net of amortization, increased $255 thousand, due to a decrease in servicing assets amortization on SBA loan payoffs, and service charges on deposit accounts increased $82 thousand due to increased activities on noninterest bearing accounts.
Noninterest income for the first quarter of 2018 decreased $32 thousand, or 1.4%, compared to $2.24 million for the first quarter of 2017, due to decreases in gain on sale of loans and loan servicing income, partially offset by increases in service charges on deposit accounts and trade finance fees. Gain on sale of loans decreased $204 thousand from $1.2 million for the first quarter of 2017. We sold $16.4 million in SBA loans with an average premium of 9.41% in the first quarter of 2017. Loan servicing income, net of amortization, decreased $42 thousand, primarily due to an increase in servicing assets amortization on SBA loan payoffs. Service charges on deposit accounts increased $117 thousand due to increased activities on noninterest bearing accounts, and trade finance fees increased $91 thousand to $153 thousand in the first quarter of 2018 from $62 thousand in the first quarter of 2017.
Noninterest expense for the first quarter of 2018 was $6.8 million, an increase of $240 thousand, or 3.7%, compared to $6.6 million for the fourth quarter of 2017. The increase was primarily due to $150 thousand increase in salary and employee benefits to support continued growth of the Company, and $127 thousand increase in foundation donation and other contributions, which was in line with the increase in net income for the first quarter of 2018.
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Noninterest expense for the first quarter of 2018 increased $422 thousand, or 6.6%, compared to $6.4 million for the first quarter of 2017. The increase was primarily due to $187 thousand increase in salary and benefit, $114 thousand increase in foundation donation and other contributions and $63 thousand increase in occupancy and equipment expenses.
On December 22, 2017, H.R.1, commonly known as the Tax Cuts and Jobs Act (the “Tax Act”), was signed into law, which among other items reduced the federal corporate tax rate to 21% from 35%, effective January 1, 2018. U.S. generally accepted accounting principles required companies to re-measure certain tax-related assets and liabilities as of the date of enactment of the new legislation with resulting tax effects accounted for in the reporting period of enactment. The Company concluded that the enactment of the Tax Act caused its net deferred tax assets (“DTA”) to be re-measured at the new lower tax rate. The Company performed an analysis and determined the value of the net DTA should be reduced by $1.3 million, which was recognized as a one-time, incremental income tax expense in the fourth quarter of 2017.
Income tax provision for the first quarter of 2018 was $1.2 million, compared to $3.2 million for the fourth quarter of 2017 and $1.4 million for the first quarter of 2017. The effective tax rate for the first quarter of 2018 was 26.7%, compared to 62.6% for the fourth quarter of 2017 and 39.1% for the first quarter of 2017.
Balance Sheet
Total assets were $957 million at March 31, 2018, an increase of $55.8 million, or 6.2% from $901.0 million at December 31, 2017, and an increase of $156.7 million, or 19.6%, from $800.2 million at March 31, 2017. Gross loans, net of unearned income, were $793.8 million at March 31, 2018, an increase of $45.7 million, or 6.1%, from $748.0 million at December 31, 2017, and an increase of $111.8 million, or 16.4%, from $681.9 million at March 31, 2017.
New loan originations for the first quarter of 2018 totaled $100.9 million, including SBA loan originations of $16.4 million, compared to $57.1 million, including SBA loan originations of $18.0 million for the fourth quarter of 2017. New loan originations for the first quarter of 2017 were $66.7 million, including SBA loan originations of $23.0 million. Loan payoffs for the first quarter of 2018 were $32.2 million, compared to $22.9 million for the fourth quarter of 2017, and $28.3 million for the first quarter of 2017.
Total deposits were $818.3 million at March 31, 2018, an increase of $45.0 million, or 5.8% from $773.3 million at December 31, 2017, and an increase of $107.2 million, or 15.1%, from $711.0 million at March 31, 2017. Noninterest bearing deposits were $289.0 million at March 31, 2018, a decrease of $398 thousand or 0.1%, from $289.4 million at December 31, 2017, and an increase of $32.2 million, or 12.5%, from $256.9 million at March 31, 2017.
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Noninterest bearing deposits accounted for 35.3% of total deposits at March 31, 2018, compared to 37.4% at December 31, 2017 and 36.1% at March 31, 2017.
| As of | ||||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2018 | 2017 | 2017 | ||||||||||
| Non-interest bearing deposits |
35.3 | % | 37.4 | % | 36.1 | % | ||||||
| Interest bearing demand deposits |
32.0 | % | 32.0 | % | 36.9 | % | ||||||
| Savings |
0.5 | % | 0.5 | % | 0.6 | % | ||||||
| Time deposits over $250,000 |
15.2 | % | 14.1 | % | 11.6 | % | ||||||
| Other time deposits |
17.0 | % | 16.0 | % | 14.8 | % | ||||||
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| Total deposits |
100.0 | % | 100.0 | % | 100.0 | % | ||||||
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The Company had a $10 million advance from the Federal Home Loan Bank (“FHLB”) at March 31, 2018, which was paid off on April 2, 2018 as scheduled. The Company had advances of $25 million at December 31, 2017 and no borrowing at March 31, 2017.
The Company’s consolidated capital ratios exceeded regulatory guidelines and the Bank’s capital ratios exceeded the regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements at March 31, 2018, as summarized in the following table.
| Capital Ratios |
OP Bancorp |
Open Bank |
Financial Institution Basel III Regulatory Guidelines |
Basel III Minimal Requirement (1) Effective January 1, 2019 |
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| Total Risk-Based |
16.17 | % | 16.17 | % | 10.00 | % | 10.50 | % | ||||||||
| Tier 1 Risk-Based |
14.93 | % | 14.93 | % | 8.00 | % | 8.50 | % | ||||||||
| Common Equity Tier 1 Risk-Based |
14.93 | % | 14.93 | % | 6.50 | % | 7.00 | % | ||||||||
| Leverage |
13.09 | % | 13.09 | % | 5.00 | % | 4.00 | % | ||||||||
Net proceeds of $22.6 million, after deducting underwriting discounts and commissions and estimated offering expenses, from our initial public offering of 2,300,000 shares of common stock in March 2018 increased our Tier 1 leverage capital ratio and total risk-based capital ratio by 2.63% and 2.68%, respectively.
Asset Quality
Nonperforming loans were $592 thousand at March 31, 2018, a decrease of $445 thousand from $1,037 thousand at December 31, 2017 and an increase of $228 thousand from $364 thousand at March 31, 2017.
Nonperforming assets were $592 thousand, or 0.06% of total assets, at March 31, 2018, $1.0 million, or 0.12% of total assets, at December 31, 2017 and $364 thousand, or 0.05% of total assets, at March 31, 2017. There was no other real estate owned (“OREO”) at March 31, 2018, December 31, 2017, or March 31, 2017.
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Nonperforming loans to gross loans were 0.07% at March 31, 2018, compared to 0.14% at December 31, 2017 and 0.05% at March 31, 2017. Total classified loans were $3.4 million, or 0.43% of gross loans, at March 31, 2018, compared to $2.1 million, or 0.28% of gross loans, at December 31, 2017 and $2.1 million, or 0.30% of gross loans, at March 31, 2017.
Classified loans were $3.4 million at March 31, 2018, an increase of $1.3 million compared to $2.1 million at December 31, 2017 and March 31, 2017. The increase in classified loans was primarily due to a lending relationship with a $1.4 million loan outstanding, which was downgraded to substandard.
The allowance for loan losses was $9.7 million at March 31, 2018, compared to $9.1 million at December 31, 2017 and $8.4 million at March 31, 2017. The allowance for loan losses was 1.22% of gross loans at March 31, 2018 and December 31, 2017 and 1.23% at March 31, 2017. The allowance for loan losses was 1,641% of nonperforming assets at March 31, 2018, 881% at December 31, 2017 and 2,302% at March 31, 2017.
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 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 eight full branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Gardena, Buena Park, and Santa Clara. The Bank also has three loan production offices in Seattle, Washington, Dallas, Texas, and Atlanta, Georgia. The Bank commenced its operations on June 10, 2005 as First Standard Bank and changed its name to Open Bank in October 2010. Its headquarters is located at 1000 Wilshire Blvd., Suite 500, Los Angeles, California 90017. Phone 213.892.9999; www.myopenbank.com Member FDIC, Equal Housing Lender.
Cautionary Note Regarding Forward-Looking Statements
Certain matters set forth herein (including any exhibits hereto) 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. Forward-looking statements may include, but are not limited to, the use of forward-looking language, such as “likely result in,” “expects,” “anticipates,” “estimates,” “forecasts,” “projects,” “intends to,” or may include other similar words or phrases, such as “believes,” “plans,” “trend,” “objective,” “continues,” “remains,” or similar expressions, or future or conditional verbs, such as “will,” “would,” “should,” “could,” “may,” “might,” “can,” or similar verbs. 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 loss; 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 and 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
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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 the 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; 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 including its Registration Statement on Form S-1 effective as of March 27, 2018, and particularly the discussion of risk factors within that document. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, our results could differ materially from those expressed in, implied or projected by such forward-looking statements. We assume no obligation to update such forward-looking statements. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, except as required by law.
Contact
Investor Relations
OP Bancorp
Christine Oh
EVP & CFO
213.892.1192
Christine.oh@myopenbank.com
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Consolidated Balance Sheet (unaudited)
(Dollars in thousands)
| 03/31/2018 | 12/31/2017 | % change | 03/31/2017 | % change | ||||||||||||||||
| Assets |
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| Cash and due from banks |
$ | 69,900 | $ | 63,250 | 10.5 | % | $ | 55,575 | 25.8 | % | ||||||||||
| Investment securities |
39,397 | 41,472 | -5.0 | % | 33,750 | 16.7 | % | |||||||||||||
| Loans held for sale |
18,571 | 15,739 | 18.0 | % | 925 | 1907.7 | % | |||||||||||||
| Real Estate Loans |
455,663 | 420,760 | 8.3 | % | 362,826 | 25.6 | % | |||||||||||||
| SBA Loans |
113,491 | 115,559 | -1.8 | % | 107,849 | 5.2 | % | |||||||||||||
| C & I Loans |
114,747 | 103,681 | 10.7 | % | 99,544 | 15.3 | % | |||||||||||||
| Home Mortgage Loans |
106,187 | 104,068 | 2.0 | % | 107,047 | -0.8 | % | |||||||||||||
| Consumer & Other Loans |
3,663 | 3,955 | -7.4 | % | 4,671 | -21.6 | % | |||||||||||||
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| Gross loans, net of unearned income |
793,751 | 748,023 | 6.1 | % | 681,937 | 16.4 | % | |||||||||||||
| Allowance for loan losses |
(9,716 | ) | (9,139 | ) | -6.3 | % | (8,380 | ) | -15.9 | % | ||||||||||
| Net loans receivable |
784,035 | 738,884 | 6.1 | % | 673,557 | 16.4 | % | |||||||||||||
| Premises and equipment, net |
4,707 | 4,481 | 5.0 | % | 4,823 | -2.4 | % | |||||||||||||
| Accrued interest receivable |
2,504 | 2,463 | 1.7 | % | 2,043 | 22.6 | % | |||||||||||||
| FHLB and Pacific Coast Bankers Bank Stock, at cost |
4,287 | 4,287 | 0.0 | % | 3,438 | 24.7 | % | |||||||||||||
| Servicing assets |
6,725 | 6,771 | -0.7 | % | 6,883 | -2.3 | % | |||||||||||||
| Company owned life insurance |
11,165 | 11,090 | 0.7 | % | 10,849 | 2.9 | % | |||||||||||||
| Deferred tax assets |
4,003 | 3,383 | 18.3 | % | 3,627 | 10.4 | % | |||||||||||||
| Other assets |
11,548 | 9,179 | 25.8 | % | 4,718 | 144.8 | % | |||||||||||||
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| Total assets |
$ | 956,842 | $ | 900,999 | 6.2 | % | $ | 800,188 | 19.6 | % | ||||||||||
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| Liabilities and Shareholders’ Equity |
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| Noninterest bearing deposits |
289,012 | 289,410 | -0.1 | % | 256,851 | 12.5 | % | |||||||||||||
| Savings |
3,914 | 3,838 | 2.0 | % | 4,011 | -2.4 | % | |||||||||||||
| Money market and others |
261,506 | 247,324 | 5.7 | % | 262,071 | -0.2 | % | |||||||||||||
| Time deposits over $250,000 |
124,637 | 108,952 | 14.4 | % | 82,741 | 50.6 | % | |||||||||||||
| Other time deposits |
139,211 | 123,782 | 12.5 | % | 105,373 | 32.1 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total deposits |
818,280 | 773,306 | 5.8 | % | 711,047 | 15.1 | % | |||||||||||||
| Other borrowings |
10,000 | 25,000 | -60.0 | % | — | NA | ||||||||||||||
| Accrued interest payable |
558 | 423 | 31.9 | % | 377 | 48.0 | % | |||||||||||||
| Other liabilities |
10,744 | 10,790 | -0.4 | % | 4,983 | 115.6 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total liabilities |
839,582 | 809,519 | 3.7 | % | 716,407 | 17.2 | % | |||||||||||||
| Common stock |
90,677 | 67,926 | 33.5 | % | 67,690 | 34.0 | % | |||||||||||||
| Additional paid-in capital |
5,526 | 5,280 | 4.7 | % | 4,791 | 15.3 | % | |||||||||||||
| Retained earnings |
21,840 | 18,624 | 17.3 | % | 11,533 | 89.4 | % | |||||||||||||
| Accumulated other comprehensive loss |
(783 | ) | (350 | ) | -123.7 | % | (233 | ) | -236.1 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total shareholders’ equity |
117,260 | 91,480 | 28.2 | % | 83,781 | 40.0 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Liabilities and Shareholders’ Equity |
$ | 956,842 | $ | 900,999 | 6.2 | % | $ | 800,188 | 19.6 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
9
Consolidated Statements of Income (unaudited)
| (Dollars in thousands, except per share data) | Three Months Ended | |||||||||||||||||||
| 03/31/2018 | 12/31/2017 | % change | 03/31/2017 | % change | ||||||||||||||||
| Interest income |
||||||||||||||||||||
| Interest and fees on loans |
$ | 10,848 | $ | 10,733 | 1.1 | % | $ | 8,929 | 21.5 | % | ||||||||||
| Interest on investment securities |
202 | 200 | 1.0 | % | 144 | 40.3 | % | |||||||||||||
| Other interest income |
130 | 144 | -9.7 | % | 112 | 16.1 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest income |
11,180 | 11,077 | 0.9 | % | 9,185 | 21.7 | % | |||||||||||||
| Interest expense |
||||||||||||||||||||
| Interest on deposits |
1,534 | 1,344 | 14.1 | % | 971 | 58.0 | % | |||||||||||||
| Interest on borrowed funds |
87 | 32 | 171.9 | % | 7 | 1142.9 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest expense |
1,621 | 1,376 | 17.8 | % | 978 | 65.7 | % | |||||||||||||
| Net interest income |
9,559 | 9,701 | -1.5 | % | 8,207 | 16.5 | % | |||||||||||||
| Provision for loan losses |
575 | 322 | 78.6 | % | 541 | 6.3 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net interest income after provision for loan losses |
8,984 | 9,379 | -4.2 | % | 7,666 | 17.2 | % | |||||||||||||
| Noninterest income |
||||||||||||||||||||
| Service charges on deposits |
537 | 455 | 18.0 | % | 420 | 27.9 | % | |||||||||||||
| Loan servicing fees, net of amortization |
324 | 69 | 369.6 | % | 366 | -11.5 | % | |||||||||||||
| Gain on sale of loans |
989 | 1,402 | -29.5 | % | 1,193 | -17.1 | % | |||||||||||||
| Other income |
362 | 352 | 2.8 | % | 265 | 36.6 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total noninterest income |
2,212 | 2,278 | -2.9 | % | 2,244 | -1.4 | % | |||||||||||||
| Noninterest expense |
||||||||||||||||||||
| Salaries and employee benefits |
4,211 | 4,061 | 3.7 | % | 4,024 | 4.6 | % | |||||||||||||
| Occupancy and equipment |
1,026 | 1,000 | 2.6 | % | 963 | 6.5 | % | |||||||||||||
| Data processing and communication |
331 | 326 | 1.5 | % | 331 | 0.0 | % | |||||||||||||
| Professional fees |
152 | 154 | -1.3 | % | 141 | 7.8 | % | |||||||||||||
| FDIC insurance and regulatory assessments |
96 | 76 | 26.3 | % | 100 | -4.0 | % | |||||||||||||
| Promotion and advertising |
145 | 173 | -16.2 | % | 146 | -0.7 | % | |||||||||||||
| Directors’ fees |
209 | 198 | 5.6 | % | 195 | 7.2 | % | |||||||||||||
| Foundation donation and other contributions |
329 | 202 | 62.9 | % | 215 | 53.0 | % | |||||||||||||
| Other expenses |
312 | 381 | -18.1 | % | 274 | 13.9 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total noninterest expense |
6,811 | 6,571 | 3.7 | % | 6,389 | 6.6 | % | |||||||||||||
| Income before income taxes |
4,385 | 5,086 | -13.8 | % | 3,521 | 24.5 | % | |||||||||||||
| Provision for income taxes |
1,169 | 3,186 | -63.3 | % | 1,375 | -15.0 | % | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net income (loss) |
$ | 3,216 | $ | 1,900 | 69.3 | % | $ | 2,146 | 49.9 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Book value per share |
$ | 7.55 | $ | 6.94 | 8.9 | % | $ | 6.45 | 17.1 | % | ||||||||||
| Basic EPS |
$ | 0.23 | $ | 0.14 | 67.9 | % | $ | 0.16 | 47.7 | % | ||||||||||
| Diluted EPS |
$ | 0.22 | $ | 0.13 | 67.0 | % | $ | 0.15 | 46.3 | % | ||||||||||
| Shares of common stock outstanding |
15,530,527 | 13,190,527 | 17.7 | % | 12,989,228 | 19.6 | % | |||||||||||||
| Weighted Average Shares: |
||||||||||||||||||||
| - Basic |
13,292,083 | 13,182,630 | 0.8 | % | 12,925,946 | 2.8 | % | |||||||||||||
| - Diluted |
13,826,956 | 13,655,872 | 1.3 | % | 13,341,295 | 3.6 | % | |||||||||||||
10
Key Ratios
| (Dollars in thousands, except ratios) | Three Months Ended | |||||||||||||||||||
| 03/31/2018 | 12/31/2017 | % change | 03/31/2017 | % change | ||||||||||||||||
| Return on average assets (ROA)* |
1.43 | % | 0.87 | % | 0.56 | % | 1.10 | % | 0.33 | % | ||||||||||
| Return on average equity (ROE) * |
13.64 | % | 8.33 | % | 5.31 | % | 10.39 | % | 3.25 | % | ||||||||||
| Net interest margin * |
4.56 | % | 4.69 | % | -0.13 | % | 4.47 | % | 0.09 | % | ||||||||||
| Efficiency ratio |
57.86 | % | 54.86 | % | 3.00 | % | 61.13 | % | -3.27 | % | ||||||||||
| Tier 1 Leverage Ratio |
13.09 | % | 10.46 | % | 2.63 | % | 10.74 | % | 2.35 | % | ||||||||||
| Common Equity Tier 1 Ratio |
14.93 | % | 12.26 | % | 2.67 | % | 12.41 | % | 2.52 | % | ||||||||||
| Tier 1 Capital Ratio |
14.93 | % | 12.26 | % | 2.67 | % | 12.41 | % | 2.52 | % | ||||||||||
| Total Risk Based Capital Ratio |
16.17 | % | 13.49 | % | 2.68 | % | 13.66 | % | 2.51 | % | ||||||||||
| * | Annualized |
Asset Quality
| (Dollars in thousands, except ratios) | Three Months Ended | |||||||||||||||||||
| 03/31/2018 | 12/31/2017 | 09/30/2017 | 06/30/2017 | 03/31/2017 | ||||||||||||||||
| Nonaccrual Loans |
$ | 241 | $ | 683 | $ | 377 | $ | 421 | $ | — | ||||||||||
| Loans 90 days or more past due, accruing |
— | — | — | — | — | |||||||||||||||
| Accruing restructured loans |
351 | 354 | 357 | 360 | 364 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Nonperforming loans |
592 | 1,037 | 734 | 781 | 364 | |||||||||||||||
| Other real estate loans (OREO) |
— | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Nonperforming assets |
592 | 1,037 | 734 | 781 | 364 | |||||||||||||||
| Classified loans |
3,395 | 2,127 | 2,138 | 2,561 | 2,065 | |||||||||||||||
| Nonperforming assets/total assets |
0.06 | % | 0.12 | % | 0.08 | % | 0.09 | % | 0.05 | % | ||||||||||
| Nonperforming assets to gross loans plus OREO |
0.07 | % | 0.14 | % | 0.10 | % | 0.11 | % | 0.05 | % | ||||||||||
| Nonperforming loans/gross loans |
0.07 | % | 0.14 | % | 0.10 | % | 0.11 | % | 0.05 | % | ||||||||||
| Allowance for loan losses/Nonperforming loans |
1641 | % | 881 | % | 1214 | % | 1096 | % | 2302 | % | ||||||||||
| Allowance for loan losses/Nonperforming assets |
1641 | % | 881 | % | 1214 | % | 1096 | % | 2302 | % | ||||||||||
| Allowance for loan losses/gross loans |
1.22 | % | 1.22 | % | 1.21 | % | 1.22 | % | 1.23 | % | ||||||||||
| Classified loans/gross loans |
0.43 | % | 0.28 | % | 0.29 | % | 0.36 | % | 0.30 | % | ||||||||||
| Net charge-offs |
$ | (2 | ) | $ | 92 | $ | (75 | ) | $ | (6 | ) | $ | 71 | |||||||
| Net charge-offs to average gross loans * |
0.00 | % | 0.05 | % | -0.04 | % | 0.00 | % | 0.04 | % | ||||||||||
| * | Annualized |
11
Average Balance Sheet, Interest and Yield/Rate Analysis
| (Dollars in thousands) | Three Months Ended | |||||||||||||||||||||||||||||||||||
| March 31, 2018 | December 31, 2017 | March 31, 2017 | ||||||||||||||||||||||||||||||||||
| Average Balance |
Interest and Fees |
Yield/ Rate |
Average Balance |
Interest and Fees |
Yield/ Rate |
Average Balance |
Interest and Fees |
Yield/ Rate |
||||||||||||||||||||||||||||
| Earning assets: |
||||||||||||||||||||||||||||||||||||
| Federal funds sold and other investments |
$ | 19,422 | $ | 130 | 2.70 | % | $ | 22,449 | $ | 144 | 2.55 | % | $ | 22,169 | $ | 112 | 2.03 | % | ||||||||||||||||||
| Securities available for sale |
40,676 | 202 | 1.98 | 42,756 | 200 | 1.84 | 34,749 | 144 | 1.65 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total investments |
60,098 | 332 | 2.21 | 65,205 | 344 | 2.08 | 56,918 | 256 | 1.80 | |||||||||||||||||||||||||||
| Real estate |
444,224 | 5,535 | 5.05 | 417,214 | 5,210 | 4.95 | 362,083 | 4,245 | 4.75 | |||||||||||||||||||||||||||
| SBA |
134,935 | 2,550 | 7.67 | 135,074 | 2,807 | 8.24 | 114,699 | 2,023 | 7.15 | |||||||||||||||||||||||||||
| C & I |
100,187 | 1,366 | 5.53 | 98,107 | 1,340 | 5.42 | 98,436 | 1,230 | 5.07 | |||||||||||||||||||||||||||
| Home Mortgage |
104,254 | 1,345 | 5.16 | 102,530 | 1,320 | 5.15 | 105,062 | 1,367 | 5.21 | |||||||||||||||||||||||||||
| Consumer |
3,630 | 52 | 5.68 | 4,031 | 56 | 5.49 | 4,814 | 64 | 5.46 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Loans (1) |
787,230 | 10,848 | 5.58 | 756,956 | 10,733 | 5.63 | 685,094 | 8,929 | 5.27 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total earning assets |
847,328 | 11,180 | 5.34 | 822,161 | 11,077 | 5.35 | 742,012 | 9,185 | 5.01 | |||||||||||||||||||||||||||
| Noninterest-earning assets |
52,084 | 53,366 | 37,887 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Total assets |
$ | 899,412 | $ | 875,527 | $ | 779,899 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||||||||||||||||||
| NOW and savings deposits |
$ | 6,404 | 4 | 0.25 | % | $ | 6,504 | 4 | 0.25 | % | $ | 5,457 | 3 | 0.25 | % | |||||||||||||||||||||
| Money market deposits |
260,912 | 708 | 1.10 | 267,676 | 655 | 0.97 | 258,434 | 544 | 0.85 | |||||||||||||||||||||||||||
| Time deposits |
243,597 | 822 | 1.37 | 220,334 | 685 | 1.23 | 187,613 | 424 | 0.92 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total interest-bearing deposits |
510,913 | 1,534 | 1.22 | 494,514 | 1,344 | 1.08 | 451,504 | 971 | 0.87 | |||||||||||||||||||||||||||
| Borrowings |
23,779 | 87 | 1.49 | 10,632 | 32 | 1.21 | 4,233 | 7 | 0.68 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
| Total interest-bearing liabilities |
534,692 | 1,621 | 1.23 | 505,146 | 1,376 | 1.08 | 455,737 | 978 | 0.87 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| Noninterest-bearing liabilities: |
||||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits |
260,221 | 268,691 | 236,194 | |||||||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities |
10,180 | 10,445 | 5,386 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Total noninterest-bearing liabilities |
270,401 | 279,136 | 241,580 | |||||||||||||||||||||||||||||||||
| Shareholders’ equity |
94,319 | 91,245 | 82,582 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity |
$ | 899,412 | $ | 875,527 | $ | 779,899 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Net interest income / interest rate spreads |
$ | 9,559 | 4.11 | % | $ | 9,701 | 4.27 | % | $ | 8,207 | 4.14 | % | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| Net interest margin |
4.56 | % | 4.69 | % | 4.47 | % | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Cost of deposits & cost of funds: |
||||||||||||||||||||||||||||||||||||
| Total deposits / cost of deposits |
$ | 771,134 | $ | 1,534 | 0.81 | % | $ | 763,205 | $ | 1,344 | 0.70 | % | $ | 687,698 | $ | 971 | 0.57 | % | ||||||||||||||||||
| Total funding liabilities / cost of funds |
$ | 794,913 | $ | 1,622 | 0.83 | % | $ | 773,837 | $ | 1,376 | 0.71 | % | $ | 691,931 | $ | 978 | 0.57 | % | ||||||||||||||||||
| (1) | Includes loans held for sale. |
12