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OP Bancorp Reports Net Income for 2024 First Quarter of $5.2 Million and Diluted Earnings Per Share of $0.34

2024 First Quarter Highlights compared with 2023 Fourth Quarter:

  • Financial Results:
    • Net income of $5.23 million, compared to $5.17 million
    • Diluted earnings per share of $0.34, compared to $0.34
    • Net interest income of $16.0 million, compared to $16.2 million
    • Net interest margin of 3.06%, compared to 3.12%
    • Provision for credit losses of $0.1 million, compared to $0.6 million
    • Total assets of $2.23 billion, compared to $2.15 billion
    • Gross loans of $1.80 billion, compared to $1.77 billion
    • Total deposits of $1.90 billion, compared to $1.81 billion
  • Credit Quality:
    • Allowance for credit losses to gross loans of 1.23%, compared to 1.25%
    • Net charge-offs(1) to average gross loans(2) of 0.01%, compared to 0.04%
    • Past due 30-89 days to gross loans of 0.22%, compared to 0.54%
    • Nonperforming loans to gross loans of 0.24%, compared to 0.34%
    • Criticized loans(3) to gross loans of 0.64%, compared to 0.76%
  • Capital Levels:
    • Remained well-capitalized with a Common Equity Tier 1 (“CET1”) ratio of 12.34%
    • Book value per common share increased to $13.00, compared to $12.84
    • Repurchased 49,697 shares of common stock at an average price of $10.02 per share
    • Paid quarterly cash dividend of $0.12 per share for the periods

___________________________________________________________

(1) Annualized.

(2) Includes loans held for sale.

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

OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company of Open Bank (the “Bank”), today reported its financial results for the first quarter of 2024. Net income for the first quarter of 2024 was $5.23 million, or $0.34 per diluted common share, compared with $5.17 million, or $0.34 per diluted common share, for the fourth quarter of 2023, and $7.5 million, or $0.48 per diluted common share, for the first quarter of 2023.

Min Kim, President and Chief Executive Officer:

“Despite the prolonged stress from the high interest rate environment, we were able to grow loans and deposits in the first quarter while controlling impacts to net interest margin at a manageable level. Our credit quality improved noticeably across all metrics even in the face of significant uncertainties that affect our borrowers. I’d like to thank our loyal customers and our dedicated employees for their continuing support of Open Bank, and we look forward to continuing to grow prudently while maintaining an optimum risk profile,” said Min Kim, President and Chief Executive.

SELECTED FINANCIAL HIGHLIGHTS

 

 

 

 

 

 

 

 

 

 

 

($ in thousands, except per share data)

 

As of and For the Three Months Ended

 

% Change 1Q2024 vs.

 

1Q2024

 

4Q2023

 

1Q2023

 

4Q2023

 

1Q2023

Selected Income Statement Data:

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

15,979

 

 

$

16,230

 

 

$

17,892

 

 

(1.5

)%

 

(10.7

)%

Provision for (reversal of) credit losses

 

 

145

 

 

 

630

 

 

 

(338

)

 

(77.0

)

 

(142.9

)

Noninterest income

 

 

3,586

 

 

 

3,680

 

 

 

4,295

 

 

(2.6

)

 

(16.5

)

Noninterest expense

 

 

12,157

 

 

 

11,983

 

 

 

11,908

 

 

1.5

 

 

2.1

 

Income tax expense

 

 

2,037

 

 

 

2,125

 

 

 

3,083

 

 

(4.1

)

 

(33.9

)

Net income

 

 

5,226

 

 

 

5,172

 

 

 

7,534

 

 

1.0

 

 

(30.6

)

Diluted earnings per share

 

 

0.34

 

 

 

0.34

 

 

 

0.48

 

 

 

 

(29.2

)

Selected Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

Gross loans

 

$

1,804,987

 

 

$

1,765,845

 

 

$

1,692,485

 

 

2.2

%

 

6.6

%

Total deposits

 

 

1,895,411

 

 

 

1,807,558

 

 

 

1,904,818

 

 

4.9

 

 

(0.5

)

Total assets

 

 

2,234,520

 

 

 

2,147,730

 

 

 

2,170,594

 

 

4.0

 

 

2.9

 

Average loans(1)

 

 

1,808,932

 

 

 

1,787,540

 

 

 

1,725,392

 

 

1.2

 

 

4.8

 

Average deposits

 

 

1,836,331

 

 

 

1,813,411

 

 

 

1,867,684

 

 

1.3

 

 

(1.7

)

Credit Quality:

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

$

4,343

 

 

$

6,082

 

 

$

2,504

 

 

(28.6

)%

 

73.4

%

Nonperforming loans to gross loans

 

 

0.24

%

 

 

0.34

%

 

 

0.15

%

 

(0.10

)

 

0.09

 

Criticized loans(2) to gross loans

 

 

0.64

 

 

 

0.76

 

 

 

0.34

 

 

(0.12

)

 

0.30

 

Net charge-offs(3) to average gross loans(1)

 

 

0.01

 

 

 

0.04

 

 

 

0.02

 

 

(0.03

)

 

(0.01

)

Allowance for credit losses to gross loans

 

 

1.23

 

 

 

1.25

 

 

 

1.23

 

 

(0.02

)

 

 

Allowance for credit losses to nonperforming loans

 

 

510

 

 

 

362

 

 

 

831

 

 

148.00

 

 

(321.00

)

Financial Ratios:

 

 

 

 

 

 

 

 

 

 

Return on average assets(3)

 

 

0.96

%

 

 

0.96

%

 

 

1.43

%

 

%

 

(0.47

)%

Return on average equity(3)

 

 

10.83

 

 

 

11.18

 

 

 

16.82

 

 

(0.35

)

 

(5.99

)

Net interest margin(3)

 

 

3.06

 

 

 

3.12

 

 

 

3.57

 

 

(0.06

)

 

(0.51

)

Efficiency ratio(4)

 

 

62.14

 

 

 

60.19

 

 

 

53.67

 

 

1.95

 

 

8.47

 

Common equity tier 1 capital ratio

 

 

12.34

 

 

 

12.52

 

 

 

12.06

 

 

(0.18

)

 

0.28

 

Leverage ratio

 

 

9.65

 

 

 

9.57

 

 

 

9.43

 

 

0.08

 

 

0.22

 

Book value per common share

 

$

13.00

 

 

$

12.84

 

 

$

12.02

 

 

1.2

 

 

8.2

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes loans held for sale.

(2)

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

(3)

Annualized.

(4)

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

INCOME STATEMENT HIGHLIGHTS

Net Interest Income and Net Interest Margin

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 1Q2024 vs.

 

1Q2024

 

4Q2023

 

1Q2023

 

4Q2023

 

1Q2023

Interest Income

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

32,913

 

$

31,783

 

$

28,594

 

3.6

%

 

15.1

%

Interest expense

 

 

16,934

 

 

 

15,553

 

 

 

10,702

 

 

8.9

 

 

58.2

 

Net interest income

 

$

15,979

 

 

$

16,230

 

 

$

17,892

 

 

(1.5

)%

 

(10.7

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

1Q2024

 

4Q2023

 

1Q2023

 

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

 

$

1,808,932

 

$

30,142

 

6.69

%

 

$

1,787,540

 

$

28,914

 

6.43

%

 

$

1,725,392

 

$

26,011

 

6.10

%

Total interest-earning assets

 

 

2,089,627

 

 

 

32,913

 

 

6.32

 

 

 

2,071,613

 

 

 

31,783

 

 

6.10

 

 

 

2,022,146

 

 

 

28,594

 

 

5.71

 

Interest-bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

 

1,321,828

 

 

 

15,675

 

 

4.77

 

 

 

1,243,446

 

 

 

14,127

 

 

4.51

 

 

 

1,196,194

 

 

 

10,382

 

 

3.52

 

Total interest-bearing liabilities

 

 

1,430,509

 

 

 

16,934

 

 

4.76

 

 

 

1,362,210

 

 

 

15,553

 

 

4.53

 

 

 

1,222,362

 

 

 

10,702

 

 

3.55

 

Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / interest rate spreads

 

 

 

 

15,979

 

 

1.56

 

 

 

 

 

16,230

 

 

1.57

 

 

 

 

 

17,892

 

 

2.16

 

Net interest margin

 

 

 

 

 

3.06

 

 

 

 

 

 

3.12

 

 

 

 

 

 

3.57

 

Total deposits / cost of deposits

 

 

1,836,331

 

 

 

15,675

 

 

3.43

 

 

 

1,813,411

 

 

 

14,127

 

 

3.09

 

 

 

1,867,684

 

 

 

10,382

 

 

2.25

 

Total funding liabilities / cost of funds

 

 

1,945,012

 

 

 

16,934

 

 

3.50

 

 

 

1,932,175

 

 

 

15,553

 

 

3.19

 

 

 

1,893,852

 

 

 

10,702

 

 

2.29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

Yield Change 1Q2024

vs.

 

1Q2024

 

4Q2023

 

1Q2023

 

 

Interest

& Fees

 

Yield(1)

 

Interest

& Fees

 

Yield(1)

 

Interest

& Fees

 

Yield(1)

 

4Q2023

 

1Q2023

Loan Yield Component:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractual interest rate

 

$

28,877

 

 

6.41

%

 

$

28,596

 

 

6.36

%

 

$

25,477

 

 

5.97

%

 

0.05

%

 

0.44

%

SBA loan discount accretion

 

 

881

 

 

0.20

 

 

 

960

 

 

0.21

 

 

 

974

 

 

0.23

 

 

(0.01

)

 

(0.03

)

Amortization of net deferred fees

 

 

54

 

 

0.01

 

 

 

(67

)

 

(0.01

)

 

 

79

 

 

0.02

 

 

0.02

 

 

(0.01

)

Amortization of premium

 

 

(428

)

 

(0.10

)

 

 

(423

)

 

(0.09

)

 

 

(392

)

 

(0.09

)

 

(0.01

)

 

(0.01

)

Net interest recognized on nonaccrual loans

 

 

492

 

 

0.11

 

 

 

(345

)

 

(0.08

)

 

 

(243

)

 

(0.06

)

 

0.19

 

 

0.17

 

Prepayment penalties(2) and other fees

 

 

266

 

 

0.06

 

 

 

193

 

 

0.04

 

 

 

116

 

 

0.03

 

 

0.02

 

 

0.03

 

Yield on loans

 

$

30,142

 

 

6.69

%

 

$

28,914

 

 

6.43

%

 

$

26,011

 

 

6.10

%

 

0.26

%

 

0.59

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

(2)

Prepayment penalty income of $115 thousand, $43 thousand and $3 thousand for the three months ended March 31, 2024, December 31, 2023 and March 31, 2023, respectively, was from Commercial Real Estate (“CRE”) and Commercial and Industrial (“C&I”) loans.

First Quarter 2024 vs. Fourth Quarter 2023

Net interest income decreased $251 thousand, or 1.5%, primarily due to higher interest expense on deposits, partially offset by higher interest income on loans. Net interest margin was 3.06%, a decrease of 6 basis points from 3.12%.

  • A $1.5 million increase in interest expense on interest-bearing deposits was primarily due to a $78.4 million, or 6.3%, increase in average balance.
  • A $1.2 million increase in interest income on loans was primarily due to a $21.4 million, or 1.2%, increase in average balance and a $837 thousand increase in net interest recognized on nonaccrual loans.

First Quarter 2024 vs. First Quarter 2023

Net interest income decreased $1.9 million, or 10.7%, primarily due to higher interest expense on deposits and borrowings, partially offset by higher interest income on loans as our deposit and borrowing costs repriced more quickly than our interest-earning assets. Net interest margin was 3.06%, a decrease of 51 basis points from 3.57%.

  • A $5.3 million increase in interest expense on interest-bearing deposits was primarily due to a $125.6 million, or 10.5%, increase in average balance and a 125 basis point increase in average cost driven by the Federal Reserve’s rate increases.
  • A $939 thousand increase in interest expense on borrowings was primarily due to a $82.5 million, or 315.3%, increase in average balance.
  • A $4.1 million increase in interest income on loans was primarily due to a $83.5 million, or 4.8%, increase in average balance and a 59 basis point increase in average yield as a result of the Federal Reserve’s rate increases.

Provision for Credit Losses

 

 

 

 

 

 

 

 

 

For the Three Months Ended

($ in thousands)

 

1Q2024

 

4Q2023

 

1Q2023

Provision for (reversal of) credit losses on loans

 

$

193

 

 

$

537

 

$

(258

)

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

 

 

(48

)

 

 

93

 

 

 

(80

)

Total provision for (reversal of) credit losses

 

$

145

 

 

$

630

 

 

$

(338

)

 

 

 

 

 

 

 

First Quarter 2024 vs. Fourth Quarter 2023

The Company recorded a $145 thousand provision for credit losses, a decrease of $485 thousand, compared with a $630 thousand provision for credit losses.

Provision for credit losses on loans was $193 thousand, primarily due to a $1.8 million increase in the quantitative general reserve, mostly offset by a $1.7 million decrease in the qualitative reserve. The increase in the quantitative reserve was due to the increase in the average life of home mortgage loans because of the slower prepayment rate based on the 2-year look back period. The decrease in the qualitative reserve was due to noticeable improvements in various asset quality metrics and improving economic and business conditions.

First Quarter 2024 vs. First Quarter 2023

The Company recorded a $145 thousand provision for credit losses, a decrease of $483 thousand, compared with a $338 thousand reversal of credit losses.

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 1Q2024 vs.

 

1Q2024

 

4Q2023

 

1Q2023

 

4Q2023

 

1Q2023

Noninterest Income

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

$

612

 

$

557

 

$

418

 

9.9

%

 

46.4

%

Loan servicing fees, net of amortization

 

 

772

 

 

 

540

 

 

 

846

 

 

43.0

 

 

(8.7

)

Gain on sale of loans

 

 

1,703

 

 

 

1,996

 

 

 

2,570

 

 

(14.7

)

 

(33.7

)

Other income

 

 

499

 

 

 

587

 

 

 

461

 

 

(15.0

)

 

8.2

 

Total noninterest income

 

$

3,586

 

 

$

3,680

 

 

$

4,295

 

 

(2.6

)%

 

(16.5

)%

 

 

 

 

 

 

 

 

 

 

 

First Quarter 2024 vs. Fourth Quarter 2023

Noninterest income decreased $94 thousand, or 2.6%, primarily due to lower gain on sale of loans, partially offset by higher loan servicing fee.

  • Gain on sale of loans was $1.7 million, a decrease of $293 thousand from $2.0 million, primarily due to a lower Small Business Administration (“SBA”) loan sold amount partially offset by a higher average premium on sales. The Bank sold $24.8 million in SBA loans at an average premium rate of 8.33%, compared to the sale of $40.1 million at an average premium rate of 5.99%.
  • Loan servicing fees, net of amortization, was $772 thousand, an increase of $232 thousand from $540 thousand, primarily due to a decrease in servicing fee amortization driven by lower loan payoffs in loan servicing portfolio.

First Quarter 2024 vs. First Quarter 2023

Noninterest income decreased $709 thousand, or 16.5%, primarily due to a lower gain on sale of loans, partially offset by higher service charges on deposits.

  • Gain on sale of loans was $1.7 million, a decrease of $867 thousand from $2.6 million, primarily due to a lower SBA loan sold amount. The Bank sold $24.8 million in SBA loans at an average premium rate of 8.33%, compared to the sale of $44.7 million at an average premium rate of 7.33%.
  • Service charges on deposits was $612 thousand, and an increase of $194 thousand from $418 thousand, primarily due to an increase in deposit analysis fees from an increase in the number of analysis accounts.

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 1Q2024 vs.

 

1Q2024

 

4Q2023

 

1Q2023

 

4Q2023

 

1Q2023

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$

7,841

 

$

7,646

 

$

7,252

 

2.6

%

 

8.1

%

Occupancy and equipment

 

 

1,655

 

 

 

1,616

 

 

 

1,570

 

 

2.4

 

 

5.4

 

Data processing and communication

 

 

487

 

 

 

644

 

 

 

550

 

 

(24.4

)

 

(11.5

)

Professional fees

 

 

395

 

 

 

391

 

 

 

359

 

 

1.0

 

 

10.0

 

FDIC insurance and regulatory assessments

 

 

374

 

 

 

237

 

 

 

467

 

 

57.8

 

 

(19.9

)

Promotion and advertising

 

 

149

 

 

 

86

 

 

 

162

 

 

73.3

 

 

(8.0

)

Directors’ fees

 

 

157

 

 

 

145

 

 

 

161

 

 

8.3

 

 

(2.5

)

Foundation donation and other contributions

 

 

540

 

 

 

524

 

 

 

753

 

 

3.1

 

 

(28.3

)

Other expenses

 

 

559

 

 

 

694

 

 

 

634

 

 

(19.5

)

 

(11.8

)

Total noninterest expense

 

$

12,157

 

 

$

11,983

 

 

$

11,908

 

 

1.5

%

 

2.1

%

 

 

 

 

 

 

 

 

 

 

 

First Quarter 2024 vs. Fourth Quarter 2023

Noninterest expense increased $174 thousand, or 1.5%, primarily due to higher salaries and employee benefits, and FDIC insurance and regulatory assessments, partially offset by lower data processing and communication and other expenses.

  • Salaries and employee benefits increased $195 thousand, primarily due to increases in employer payroll taxes and employee vacation accruals, partially offset by lower employee incentive accruals.
  • FDIC insurance and regulatory assessments increased $137 thousand, primarily due to a lower expense in the fourth quarter of 2023 as a result of an accrual adjustment.
  • Data processing and communication decreased $157 thousand, primarily due to an accrual adjustment for a credit received on data processing fees in the first quarter of 2024.

First Quarter 2024 vs. First Quarter 2023

Noninterest expense increased $249 thousand, or 2.1%, primarily due to higher salaries and employee benefits, partially offset by lower foundation donation and other contributions.

  • Salaries and employee benefits increased $589 thousand, primarily due to an increase from employee salary adjustments in 2023 and an increase in employee health insurance.
  • Foundation donations and other contributions decreased $213 thousand, primarily due to a lower donation accrual for Open Stewardship as a result of lower net income.

Income Tax Expense

First Quarter 2024 vs. Fourth Quarter 2023

Income tax expense was $2.0 million and the effective tax rate was 28.1%, compared to income tax expense of $2.1 million and the effective rate of 29.1%. The decrease in the effective tax rate was primarily due to an increased tax benefits from an increase in low income housing tax credit investments.

First Quarter 2024 vs. First Quarter 2023

Income tax expense was $2.0 million and the effective tax rate was 28.1%, compared to income tax expense of $3.1 million and an effective rate of 29.0%. The decrease in the effective tax rate was primarily due to an increased tax benefits from an increase in low income housing tax credit investments.

BALANCE SHEET HIGHLIGHTS

Loans

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

% Change 1Q2024 vs.

($ in thousands)

 

1Q2024

 

4Q2023

 

1Q2023

 

4Q2023

 

1Q2023

CRE loans

 

$

905,534

 

$

885,585

 

$

833,615

 

2.3

%

 

8.6

%

SBA loans

 

 

247,550

 

 

 

239,692

 

 

 

238,994

 

 

3.3

 

 

3.6

 

C&I loans

 

 

147,508

 

 

 

120,970

 

 

 

117,841

 

 

21.9

 

 

25.2

 

Home mortgage loans

 

 

502,995

 

 

 

518,024

 

 

 

500,635

 

 

(2.9

)

 

0.5

 

Consumer & other loans

 

 

1,400

 

 

 

1,574

 

 

 

1,400

 

 

(11.1

)

 

 

Gross loans

 

$

1,804,987

 

 

$

1,765,845

 

 

$

1,692,485

 

 

2.2

%

 

6.6

%

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

% Change 1Q2024 vs.

($ in thousands)

 

1Q2024

 

4Q2023

 

1Q2023

 

4Q2023

 

1Q2023

CRE loans

 

$

44,596

 

$

15,885

 

$

24,200

 

180.7

%

 

84.3

%

SBA loans

 

 

52,379

 

 

 

51,855

 

 

 

16,258

 

 

1.0

 

 

222.2

 

C&I loans

 

 

23,775

 

 

 

15,270

 

 

 

7,720

 

 

55.7

 

 

208.0

 

Home mortgage loans

 

 

2,478

 

 

 

12,417

 

 

 

20,617

 

 

(80.0

)

 

(88.0

)

Consumer & other loans

 

 

 

 

 

1,500

 

 

 

 

 

(100.0

)

 

 

Gross loans

 

$

123,228

 

 

$

96,927

 

 

$

68,795

 

 

27.1

%

 

79.1

%

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

For the Three Months Ended

($ in thousands)

 

1Q2024

 

4Q2023

 

1Q2023

Loan Activities:

 

 

 

 

 

 

Gross loans, beginning

 

$

1,765,845

 

 

$

1,759,525

 

 

$

1,678,292

 

New originations

 

 

123,228

 

 

 

96,927

 

 

 

68,795

 

Net line advances

 

 

15,313

 

 

 

(7,350

)

 

 

10,356

 

Purchases

 

 

 

 

 

2,371

 

 

 

12,142

 

Sales

 

 

(32,106

)

 

 

(40,122

)

 

 

(45,021

)

Paydowns

 

 

(24,557

)

 

 

(19,901

)

 

 

(40,190

)

Payoffs

 

 

(28,539

)

 

 

(23,590

)

 

 

(28,326

)

PPP payoffs

 

 

 

 

 

 

 

 

(200

)

Decrease (increase) in loans held for sale

 

 

(14,280

)

 

 

(1,795

)

 

 

36,802

 

Other

 

 

83

 

 

 

(220

)

 

 

(165

)

Total

 

 

39,142

 

 

 

6,320

 

 

 

14,193

 

Gross loans, ending

 

$

1,804,987

 

 

$

1,765,845

 

 

$

1,692,485

 

 

 

 

 

 

 

 

As of March 31, 2024 vs. December 31, 2023

Gross loans were $1.80 billion as of March 31, 2024, up $39.1 million, from December 31, 2023, primarily due to new loan originations, partially offset by loan sales, payoffs and paydowns.

New loan originations, loan sales, and loan payoffs and paydowns were $123.2 million $32.1 million and $53.1 million, respectively, for the first quarter of 2024, compared with $96.9 million, $40.1 million and $43.5 million, respectively, for the fourth quarter of 2023.

As of March 31, 2024 vs. March 31, 2023

Gross loans were $1.80 billion as of March 31, 2024, up $112.5 million, from March 31, 2023, primarily due to new loan originations of $428.9 million and loan purchases of $15.5 million, primarily offset by loan sales of $132.4 million and loan payoffs and paydowns of $198.2 million.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

1Q2024

 

4Q2023

 

1Q2023

($ in thousands)

 

%

 

Rate

 

%

 

Rate

 

%

 

Rate

Fixed rate

 

35.1

%

 

5.17

%

 

35.1

%

 

5.07

%

 

36.5

%

 

4.76

%

Hybrid rate

 

32.8

 

 

5.22

 

 

33.9

 

 

5.15

 

 

34.2

 

 

4.94

 

Variable rate

 

32.1

 

 

9.16

 

 

31.0

 

 

9.15

 

 

29.3

 

 

8.76

 

Gross loans

 

100.0

%

 

6.47

%

 

100.0

%

 

6.35

%

 

100.0

%

 

5.99

%

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2024

 

Within One Year

 

One Year Through

Five Years

 

After Five Years

 

Total

($ in thousands)

 

Amount

 

Rate

 

Amount

 

Rate

 

Amount

 

Rate

 

Amount

 

Rate

Fixed rate

 

$

125,369

 

5.81

%

 

$

282,814

 

4.93

%

 

$

226,332

 

5.11

%

 

$

634,515

 

5.17

%

Hybrid rate

 

 

 

 

 

 

 

138,336

 

 

4.17

 

 

 

453,281

 

 

5.54

 

 

 

591,617

 

 

5.22

 

Variable rate

 

 

113,184

 

 

8.79

 

 

 

130,126

 

 

9.02

 

 

 

335,545

 

 

9.34

 

 

 

578,855

 

 

9.16

 

Gross loans

 

$

238,553

 

 

7.22

%

 

$

551,276

 

 

5.71

%

 

$

1,015,158

 

 

6.70

%

 

$

1,804,987

 

 

6.47

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Credit Losses

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

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

 

 

 

 

 

 

 

 

 

 

 

 

As of and For the Three Months Ended

 

% Change 1Q2024 vs.

($ in thousands)

 

1Q2024

 

4Q2023

 

1Q2023

 

4Q2023

 

1Q2023

Allowance for credit losses on loans, beginning

 

$

21,993

 

 

$

21,617

 

 

$

19,241

 

 

1.7

%

 

14.3

%

Impact of CECL adoption

 

 

 

 

 

 

 

 

1,924

 

 

n/m

 

 

n/m

 

Provision for (reversal of) credit losses

 

 

193

 

 

 

537

 

 

 

(258

)

 

(64.1

)

 

(174.8

)

Gross charge-offs

 

 

(68

)

 

 

(236

)

 

 

(116

)

 

(71.2

)

 

(41.4

)

Gross recoveries

 

 

11

 

 

 

75

 

 

 

23

 

 

(85.3

)

 

(52.2

)

Net charge-offs

 

 

(57

)

 

 

(161

)

 

 

(93

)

 

(64.6

)

 

(38.7

)

Allowance for credit losses on loans, ending

 

$

22,129

 

 

$

21,993

 

 

$

20,814

 

 

0.6

%

 

6.3

%

 

 

 

 

 

 

 

 

 

 

 

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

 

$

516

 

 

$

423

 

 

$

263

 

 

22.0

%

 

96.2

%

Impact of CECL adoption

 

 

 

 

 

 

 

 

184

 

 

n/m

 

 

n/m

 

Provision for (reversal of) credit losses

 

 

(48

)

 

 

93

 

 

 

(80

)

 

(151.6

)

 

(40.0

)

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

 

$

468

 

 

$

516

 

 

$

367

 

 

(9.3

)%

 

27.5

%

 

 

 

 

 

 

 

 

 

 

 

Asset Quality

 

 

 

 

 

 

 

 

 

 

 

 

As of and For the Three Months Ended

 

Change 1Q2024 vs.

($ in thousands)

 

1Q2024

 

4Q2023

 

1Q2023

 

4Q2023

 

1Q2023

Loans 30-89 days past due and still accruing

 

$

3,904

 

 

$

9,607

 

 

$

4,866

 

 

(59.4

)%

 

(19.8

)%

As a % of gross loans

 

 

0.22

%

 

 

0.54

%

 

 

0.29

%

 

(0.32

)

 

(0.07

)

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans(1)

 

$

4,343

 

 

$

6,082

 

 

$

2,504

 

 

(28.6

)%

 

73.4

%

Nonperforming assets(1)

 

 

5,580

 

 

 

6,082

 

 

 

2,504

 

 

(8.3

)

 

122.8

 

Nonperforming loans to gross loans

 

 

0.24

%

 

 

0.34

%

 

 

0.15

%

 

(0.10

)

 

0.09

 

Nonperforming assets to total assets

 

 

0.25

%

 

 

0.28

%

 

 

0.12

%

 

(0.03

)

 

0.13

 

 

 

 

 

 

 

 

 

 

 

 

Criticized loans(1)(2)

 

$

11,564

 

 

$

13,349

 

 

$

5,772

 

 

(13.4

)%

 

100.3

%

Criticized loans to gross loans

 

 

0.64

%

 

 

0.76

%

 

 

0.34

%

 

(0.12

)

 

0.30

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for credit losses ratios:

 

 

 

 

 

 

 

 

 

 

As a % of gross loans

 

 

1.23

%

 

 

1.25

%

 

 

1.23

%

 

(0.02

)%

 

%

As a % of nonperforming loans

 

 

510

 

 

 

362

 

 

 

831

 

 

148

 

 

(321

)

As a % of nonperforming assets

 

 

397

 

 

 

362

 

 

 

831

 

 

35

 

 

(434

)

As a % of criticized loans

 

 

191

 

 

 

165

 

 

 

361

 

 

26

 

 

(170

)

Net charge-offs(3) to average gross loans(4)

 

 

0.01

 

 

 

0.04

 

 

 

0.02

 

 

(0.03

)

 

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

(1)

Excludes the guaranteed portion of SBA loans that are in liquidation totaling $3.1 million, $2.0 million and $1.9 million as of March 31, 2024, December 31, 2023 and March 31, 2023, respectively.

(2)

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

(3)

Annualized.

(4)

Includes loans held for sale.

Overall, the Bank continued to maintain low levels of nonperforming loans and net charge-offs. Our allowance remained strong with an allowance to gross loans ratio of 1.23%.

  • Loans 30-89 days past due and still accruing were $3.9 million or 0.22% of gross loans as of March 31, 2024, compared with $9.6 million or 0.54% as of December 31, 2023. Several past due home mortgage loans were paid off through voluntary sale and several home mortgage and SBA loans were brought current.
  • Nonperforming loans were $4.3 million or 0.24% of gross loans as of March 31, 2024, compared with $6.1 million or 0.34% as of December 31, 2023. Several escrows on the nonperforming home mortgage loans were closed during the quarter with full payoffs.
  • Nonperforming assets were $5.6 million or 0.25% of total assets as of March 31, 2024, compared with $6.1 million or 0.28% as of December 31, 2023. Other Real Estate Owned (“OREO”) was $1.2 million as of March 31, 2024, which is secured by a mix-use property in Los Angeles Koreatown with 90% guaranteed by SBA. We are in receipt of a few written offers above the OREO balance and negotiating the terms of the offer.
  • Criticized loans were $11.6 million or 0.64% of gross loans as of March 31, 2024, compared with $13.3 million or 0.76% as of December 31, 2023. The improvement was due to the payoffs of several nonperforming home mortgage loans.
  • Net charge-offs were $57 thousand or 0.01% of average loans in the first quarter of 2024, compared to net charge-offs of $161 thousand, or 0.04% of average loans in the fourth quarter of 2023 and of $93 thousand, or 0.02% of average loans in the first quarter of 2023. The charge-off in the first quarter of 2024 was the reversal of the accrued interest on three loans totaling $519 thousand that were placed on nonaccrual during the same quarter.

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

% Change 1Q2024 vs.

 

1Q2024

 

4Q2023

 

1Q2023

 

($ in thousands)

 

Amount

 

%

 

Amount

 

%

 

Amount

 

%

 

4Q2023

 

1Q2023

Noninterest-bearing deposits

 

$

539,396

 

28.5

%

 

$

522,751

 

28.9

%

 

$

643,902

 

33.8

%

 

3.2

%

 

(16.2

)%

Money market deposits and others

 

 

327,718

 

 

17.3

 

 

 

399,018

 

 

22.1

 

 

 

436,796

 

 

22.9

 

 

(17.9

)

 

(25.0

)

Time deposits

 

 

1,028,297

 

 

54.2

 

 

 

885,789

 

 

49.0

 

 

 

824,120

 

 

43.3

 

 

16.1

 

 

24.8

 

Total deposits

 

$

1,895,411

 

 

100.0

%

 

$

1,807,558

 

 

100.0

%

 

$

1,904,818

 

 

100.0

%

 

4.9

%

 

(0.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated uninsured deposits

 

$

1,248,644

 

 

65.9

%

 

$

1,156,270

 

 

64.0

%

 

$

900,579

 

 

47.3

%

 

8.0

%

 

38.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2024 vs. December 31, 2023

Total deposits were $1.90 billion as of March 31, 2024, up $87.9 million from December 31, 2023, primarily due to increases of $142.5 million in time deposits and $16.6 million in noninterest-bearing deposit, offset by a $71.3 million decrease in money market deposits. Noninterest-bearing deposits, as a percentage of total deposits, decreased to 28.5% from 28.9%. The composition shift to time deposits was primarily due to customers’ continued preference for high-rate deposit products driven by the Federal Reserve’s rate increases.

As of March 31, 2024 vs. March 31, 2023

Total deposits were $1.90 billion as of March 31, 2024, down $9.4 million from March 31, 2023, primarily driven by decreases of $104.5 million in noninterest-bearing deposits and $109.1 million in money market deposits, offset by a $204.2 million increase in time deposits. The composition shift to time deposits was primarily due to customers’ preference for high-rate deposit products driven by market rate increases as a result of the Federal Reserve’s rate increases.

The following table sets forth the maturity of time deposits as of March 31, 2024:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of March 31, 2024

($ 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)

 

$

95,516

 

 

$

65,321

 

 

$

143,382

 

 

$

142,830

 

 

$

4,448

 

 

$

451,497

 

Time deposits ($250 or less)

 

 

151,358

 

 

 

102,471

 

 

 

186,340

 

 

 

104,481

 

 

 

32,150

 

 

 

576,800

 

Total time deposits

 

$

246,874

 

 

$

167,792

 

 

$

329,722

 

 

$

247,311

 

 

$

36,598

 

 

$

1,028,297

 

Weighted average rate

 

 

4.97

%

 

 

4.99

%

 

 

5.18

%

 

 

5.04

%

 

 

4.25

%

 

 

5.03

%

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER HIGHLIGHTS

Liquidity

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

 

 

 

 

 

($ in thousands)

 

 

1Q2024

 

 

 

4Q2023

 

 

 

1Q2023

 

Liquidity Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

139,246

 

 

$

91,216

 

 

$

181,509

 

Available-for-sale debt securities

 

 

187,225

 

 

 

194,250

 

 

 

212,767

 

Liquid assets

 

$

326,471

 

 

$

285,466

 

 

$

394,276

 

Liquid assets to total assets

 

 

14.6

%

 

 

13.3

%

 

 

18.2

%

 

 

 

 

 

 

 

Available borrowings:

 

 

 

 

 

 

Federal Home Loan Bank—San Francisco

 

$

331,917

 

 

$

363,615

 

 

$

406,500

 

Federal Reserve Bank

 

 

185,913

 

 

 

182,989

 

 

 

174,284

 

Pacific Coast Bankers Bank

 

 

50,000

 

 

 

50,000

 

 

 

50,000

 

Zions Bank

 

 

25,000

 

 

 

25,000

 

 

 

25,000

 

First Horizon Bank

 

 

25,000

 

 

 

25,000

 

 

 

24,950

 

Total available borrowings

 

$

617,830

 

 

$

646,604

 

 

$

680,734

 

Total available borrowings to total assets

 

 

27.6

%

 

 

30.1

%

 

 

31.4

%

 

 

 

 

 

 

 

Liquid assets and available borrowings to total deposits

 

 

49.8

%

 

 

51.6

%

 

 

56.4

%

 

 

 

 

 

Capital and Capital Ratios

On April 25, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.12 per share of its common stock. The cash dividend is payable on or about May 23, 2024 to all shareholders of record as of the close of business on May 9, 2024. The payment of the dividend is based primarily on dividends from the Bank to the Company, and future dividends will depend on the Board’s assessment of the availability of capital levels to support the ongoing operating capital needs of both the Company and the Bank.

The Company also repurchased 49,697 shares of its common stock at an average price of $10.02 per share during the first quarter of 2024 under the stock repurchase program announced in August 2023. Since the announcement of the initial stock repurchase program in January 2019, the Company repurchased a total of 2,069,697 shares of its common stock at an average repurchase price of $8.63 per share through March 31, 2024.

 

 

 

 

 

 

 

 

 

 

Basel III

 

OP Bancorp(1)

 

Open Bank

 

Minimum

Well

Capitalized

Ratio

 

Minimum

Capital Ratio+

Conservation

Buffer(2)

Risk-Based Capital Ratios:

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

13.59

%

 

13.53

%

 

10.00

%

 

10.50

%

Tier 1 risk-based capital ratio

 

12.34

 

 

12.28

 

 

8.00

 

 

8.50

 

Common equity tier 1 ratio

 

12.34

 

 

12.28

 

 

6.50

 

 

7.00

 

Leverage ratio

 

9.65

 

 

9.60

 

 

5.00

 

 

4.00

 

 

 

 

 

 

 

 

 

 

(1)

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

(2)

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

 

 

 

 

 

 

 

 

 

 

 

 

Basel III

 

Change 1Q2024 vs.

OP Bancorp

 

1Q2024

 

4Q2023

 

1Q2023

 

4Q2023

 

1Q2023

Risk-Based Capital Ratios:

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

 

13.59

%

 

 

13.77

%

 

 

13.27

%

 

(0.18

)%

 

0.32

%

Tier 1 risk-based capital ratio

 

 

12.34

 

 

 

12.52

 

 

 

12.06

 

 

(0.18

)

 

0.28

 

Common equity tier 1 ratio

 

 

12.34

 

 

 

12.52

 

 

 

12.06

 

 

(0.18

)

 

0.28

 

Leverage ratio

 

 

9.65

 

 

 

9.57

 

 

 

9.43

 

 

0.08

 

 

0.22

 

Risk-weighted Assets ($ in thousands)

 

$

1,715,185

 

 

$

1,667,067

 

 

$

1,659,584

 

 

2.89

 

 

3.35

 

 

 

 

 

 

 

 

 

 

 

 

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 in California, the Dallas metropolitan area in Texas, and Clark County in Nevada and is focused on serving the banking needs of small- and medium-sized businesses, professionals, and residents with a particular emphasis on Korean and other ethnic minority communities. The Bank currently operates eleven full-service branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Cerritos, Gardena, Buena Park, and Santa Clara, California, Carrollton, Texas and Las Vegas, Nevada. The Bank also has four loan production offices in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, and Lynnwood, Washington. The Bank commenced its operations on June 10, 2005 as First Standard Bank and changed its name to Open Bank in October 2010. Its headquarters is located at 1000 Wilshire Blvd., Suite 500, Los Angeles, California 90017. Phone 213.892.9999; www.myopenbank.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain matters set forth herein constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, including forward-looking statements relating to the Company’s current business plans and expectations regarding future operating results. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties, some of which are beyond our control, include, but are not limited to: the effects of substantial fluctuations in, and continuing elevated levels of, interest rates on our borrowers’ ability to perform in accordance with the terms of their loans and on our deposit customers’ expectation for higher rates on deposit products; cybersecurity risks, including the potential for the occurrence of successful cyberattacks and our ability to prevent and to mitigate the harms resulting from any such attacks; business and economic conditions, particularly those affecting the financial services industry and our primary market areas; risks of international conflict, terrorism, civil unrest and domestic instability; the continuing effects of inflation and monetary policies, particularly those relating to the decisions and indicators of intent expressed by the Federal Reserve Open Markets Committee, as those circumstances impact our operations and our current and prospective borrowers and depositors; our ability to balance deposit liabilities and liquidity sources (including our ability to reprice those instruments and balancing our borrowings and investments to keep pace with changing market conditions) so as to meet current and expected withdrawals while promoting strong earning capacity; our ability to manage our credit risk successfully and to assess, adjust and monitor the sufficiency of our allowance for credit losses; factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers, the success of construction projects that we finance, including any loans acquired in acquisition transactions; the impacts of credit quality on our earnings and the related effects of increases to the reserve on our net income; our ability effectively to execute our strategic plan and manage our growth; interest rate fluctuations, which could have an adverse effect on our profitability; external economic and/or market factors, such as changes in monetary and fiscal policies and laws, including 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 banks and from credit unions and non-bank financial services companies, many of which are subject to less restrictive or less costly regulations than we are; challenges arising from unsuccessful attempts to expand into new geographic markets, products, or services; practical and regulatory constraints on the ability of Open Bank to pay dividends to us; 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; including internal controls that affect the reliability of our publicly reported financial statements; inaccuracies in our assumptions about future events, which could result in material differences between our financial projections and actual financial performance, particularly with respect to the effects of predictions of future economic conditions as those circumstances affect our estimates for the adequacy of our allowance for credit losses and the related provision expense; changes in our management personnel or our inability to retain motivate and hire qualified management personnel; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems; disruptions, security breaches, or other adverse events affecting the third-party vendors who perform several of our critical processing functions; an inability to keep pace with the rate of technological advances due to a lack of resources to invest in new technologies; risks related to potential acquisitions; political developments, uncertainties or instability, catastrophic events, 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, 2023 and in our other subsequent filings with the Securities and Exchange Commission.

CONSOLIDATED BALANCE SHEETS (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

% Change 1Q2024 vs.

($ in thousands)

 

1Q2024

 

4Q2023

 

1Q2023

 

4Q2023

 

1Q2023

Assets

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

20,513

 

 

$

16,948

 

 

$

16,781

 

 

21.0

%

 

22.2

%

Interest-bearing deposits in other banks

 

 

118,733

 

 

 

74,268

 

 

 

164,728

 

 

59.9

 

 

(27.9

)

Cash and cash equivalents

 

 

139,246

 

 

 

91,216

 

 

 

181,509

 

 

52.7

 

 

(23.3

)

Available-for-sale debt securities, at fair value

 

 

187,225

 

 

 

194,250

 

 

 

212,767

 

 

(3.6

)

 

(12.0

)

Other investments

 

 

16,264

 

 

 

16,276

 

 

 

12,172

 

 

(0.1

)

 

33.6

 

Loans held for sale

 

 

16,075

 

 

 

1,795

 

 

 

7,534

 

 

795.5

 

 

113.4

 

CRE loans

 

 

905,534

 

 

 

885,585

 

 

 

833,615

 

 

2.3

 

 

8.6

 

SBA loans

 

 

247,550

 

 

 

239,692

 

 

 

238,994

 

 

3.3

 

 

3.6

 

C&I loans

 

 

147,508

 

 

 

120,970

 

 

 

117,841

 

 

21.9

 

 

25.2

 

Home mortgage loans

 

 

502,995

 

 

 

518,024

 

 

 

500,635

 

 

(2.9

)

 

0.5

 

Consumer loans

 

 

1,400

 

 

 

1,574

 

 

 

1,400

 

 

(11.1

)

 

 

Gross loans receivable

 

 

1,804,987

 

 

 

1,765,845

 

 

 

1,692,485

 

 

2.2

 

 

6.6

 

Allowance for credit losses

 

 

(22,129

)

 

 

(21,993

)

 

 

(20,814

)

 

0.6

 

 

6.3

 

Net loans receivable

 

 

1,782,858

 

 

 

1,743,852

 

 

 

1,671,671

 

 

2.2

 

 

6.7

 

Premises and equipment, net

 

 

4,971

 

 

 

5,248

 

 

 

4,647

 

 

(5.3

)

 

7.0

 

Accrued interest receivable, net

 

 

8,370

 

 

 

8,259

 

 

 

7,302

 

 

1.3

 

 

14.6

 

Servicing assets

 

 

11,405

 

 

 

11,741

 

 

 

12,898

 

 

(2.9

)

 

(11.6

)

Company owned life insurance

 

 

22,399

 

 

 

22,233

 

 

 

21,762

 

 

0.7

 

 

2.9

 

Deferred tax assets, net

 

 

13,802

 

 

 

13,309

 

 

 

12,323

 

 

3.7

 

 

12.0

 

Other real estate owned

 

 

1,237

 

 

 

 

 

 

 

 

n/m

 

 

n/m

 

Operating right-of-use assets

 

 

8,864

 

 

 

8,497

 

 

 

9,459

 

 

4.3

 

 

(6.3

)

Other assets

 

 

21,804

 

 

 

31,054

 

 

 

16,550

 

 

(29.8

)

 

31.7

 

Total assets

 

$

2,234,520

 

 

$

2,147,730

 

 

$

2,170,594

 

 

4.0

%

 

2.9

%

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

539,396

 

 

$

522,751

 

 

$

643,902

 

 

3.2

%

 

(16.2

)%

Money market and others

 

 

327,718

 

 

 

399,018

 

 

 

436,796

 

 

(17.9

)

 

(25.0

)

Time deposits greater than $250

 

 

451,497

 

 

 

433,892

 

 

 

411,648

 

 

4.1

 

 

9.7

 

Other time deposits

 

 

576,800

 

 

 

451,897

 

 

 

412,472

 

 

27.6

 

 

39.8

 

Total deposits

 

 

1,895,411

 

 

 

1,807,558

 

 

 

1,904,818

 

 

4.9

 

 

(0.5

)

Federal Home Loan Bank advances

 

 

105,000

 

 

 

105,000

 

 

 

50,000

 

 

 

 

110.0

 

Accrued interest payable

 

 

12,270

 

 

 

12,628

 

 

 

5,751

 

 

(2.8

)

 

113.4

 

Operating lease liabilities

 

 

9,614

 

 

 

9,341

 

 

 

10,513

 

 

2.9

 

 

(8.6

)

Other liabilities

 

 

17,500

 

 

 

20,577

 

 

 

15,731

 

 

(15.0

)

 

11.2

 

Total liabilities

 

 

2,039,795

 

 

 

1,955,104

 

 

 

1,986,813

 

 

4.3

 

 

2.7

 

Shareholders' equity:

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

75,957

 

 

 

76,280

 

 

 

79,475

 

 

(0.4

)

 

(4.4

)

Additional paid-in capital

 

 

11,240

 

 

 

10,942

 

 

 

10,056

 

 

2.7

 

 

11.8

 

Retained earnings

 

 

124,280

 

 

 

120,855

 

 

 

109,908

 

 

2.8

 

 

13.1

 

Accumulated other comprehensive loss

 

 

(16,752

)

 

 

(15,451

)

 

 

(15,658

)

 

8.4

 

 

7.0

 

Total shareholders’ equity

 

 

194,725

 

 

 

192,626

 

 

 

183,781

 

 

1.1

 

 

6.0

 

Total liabilities and shareholders' equity

 

$

2,234,520

 

 

$

2,147,730

 

 

$

2,170,594

 

 

4.0

%

 

2.9

%

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

% Change 1Q2024 vs.

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

 

1Q2024

 

4Q2023

 

1Q2023

 

4Q2023

 

1Q2023

Interest income

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

30,142

 

$

28,914

 

$

26,011

 

 

4.2

%

 

15.9

%

Interest on available-for-sale debt securities

 

 

1,460

 

 

 

1,484

 

 

 

1,566

 

 

(1.6

)

 

(6.8

)

Other interest income

 

 

1,311

 

 

 

1,385

 

 

 

1,017

 

 

(5.3

)

 

28.9

 

Total interest income

 

 

32,913

 

 

 

31,783

 

 

 

28,594

 

 

3.6

 

 

15.1

 

Interest expense

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

15,675

 

 

 

14,127

 

 

 

10,382

 

 

11.0

 

 

51.0

 

Interest on borrowings

 

 

1,259

 

 

 

1,426

 

 

 

320

 

 

(11.7

)

 

293.4

%

Total interest expense

 

 

16,934

 

 

 

15,553

 

 

 

10,702

 

 

8.9

 

 

58.2

 

Net interest income

 

 

15,979

 

 

 

16,230

 

 

 

17,892

 

 

(1.5

)

 

(10.7

)

Provision for (reversal of) credit losses

 

 

145

 

 

 

630

 

 

 

(338

)

 

(77.0

)

 

n/m

 

Net interest income after provision for credit losses

 

 

15,834

 

 

 

15,600

 

 

 

18,230

 

 

1.5

 

 

(13.1

)

Noninterest income

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

 

612

 

 

 

557

 

 

 

418

 

 

9.9

 

 

46.4

 

Loan servicing fees, net of amortization

 

 

772

 

 

 

540

 

 

 

846

 

 

43.0

 

 

(8.7

)

Gain on sale of loans

 

 

1,703

 

 

 

1,996

 

 

 

2,570

 

 

(14.7

)

 

(33.7

)

Other income

 

 

499

 

 

 

587

 

 

 

461

 

 

(15.0

)

 

8.2

 

Total noninterest income

 

 

3,586

 

 

 

3,680

 

 

 

4,295

 

 

(2.6

)

 

(16.5

)

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

7,841

 

 

 

7,646

 

 

 

7,252

 

 

2.6

 

 

8.1

 

Occupancy and equipment

 

 

1,655

 

 

 

1,616

 

 

 

1,570

 

 

2.4

 

 

5.4

 

Data processing and communication

 

 

487

 

 

 

644

 

 

 

550

 

 

(24.4

)

 

(11.5

)

Professional fees

 

 

395

 

 

 

391

 

 

 

359

 

 

1.0

 

 

10.0

 

FDIC insurance and regulatory assessments

 

 

374

 

 

 

237

 

 

 

467

 

 

57.8

 

 

(19.9

)

Promotion and advertising

 

 

149

 

 

 

86

 

 

 

162

 

 

73.3

 

 

(8.0

)

Directors’ fees

 

 

157

 

 

 

145

 

 

 

161

 

 

8.3

 

 

(2.5

)

Foundation donation and other contributions

 

 

540

 

 

 

524

 

 

 

753

 

 

3.1

 

 

(28.3

)

Other expenses

 

 

559

 

 

 

694

 

 

 

634

 

 

(19.5

)

 

(11.8

)

Total noninterest expense

 

 

12,157

 

 

 

11,983

 

 

 

11,908

 

 

1.5

 

 

2.1

 

Income before income tax expense

 

 

7,263

 

 

 

7,297

 

 

 

10,617

 

 

(0.5

)

 

(31.6

)

Income tax expense

 

 

2,037

 

 

 

2,125

 

 

 

3,083

 

 

(4.1

)

 

(33.9

)

Net income

 

$

5,226

 

 

$

5,172

 

 

$

7,534

 

 

1.0

%

 

(30.6

)%

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

13.00

 

 

$

12.84

 

 

$

12.02

 

 

1.2

%

 

8.2

%

Earnings per share - basic

 

 

0.34

 

 

 

0.34

 

 

 

0.48

 

 

 

 

(29.2

)

Earnings per share - diluted

 

 

0.34

 

 

 

0.34

 

 

 

0.48

 

 

 

 

(29.2

)

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock outstanding, at period end

 

 

14,982,555

 

 

 

15,000,436

 

 

 

15,286,558

 

 

(0.1

)%

 

(2.0

)%

Weighted average shares:

 

 

 

 

 

 

 

 

 

 

- Basic

 

 

14,991,835

 

 

 

15,027,110

 

 

 

15,284,350

 

 

(0.2

)%

 

(1.9

)%

- Diluted

 

 

14,991,835

 

 

 

15,034,822

 

 

 

15,312,673

 

 

(0.3

)

 

(2.1

)

 

 

 

 

 

 

 

 

 

 

 

KEY RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

% Change 1Q2024 vs.

 

1Q2024

 

4Q2023

 

1Q2023

 

4Q2023

 

1Q2023

Return on average assets (ROA)(1)

 

0.96

%

 

0.96

%

 

1.43

%

 

%

 

(0.5

)%

Return on average equity (ROE)(1)

 

10.83

 

 

11.18

 

 

16.82

 

 

(0.4

)

 

(6.0

)

Net interest margin(1)

 

3.06

 

 

3.12

 

 

3.57

 

 

(0.1

)

 

(0.5

)

Efficiency ratio

 

62.14

 

 

60.19

 

 

53.67

 

 

2.0

 

 

8.5

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

13.59

%

 

13.77

%

 

13.27

%

 

(0.2

)%

 

0.3

%

Tier 1 risk-based capital ratio

 

12.34

 

 

12.52

 

 

12.06

 

 

(0.2

)

 

0.3

 

Common equity tier 1 ratio

 

12.34

 

 

12.52

 

 

12.06

 

 

(0.2

)

 

0.3

 

Leverage ratio

 

9.65

 

 

9.57

 

 

9.43

 

 

0.1

 

 

0.2

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

ASSET QUALITY

 

 

 

 

 

 

 

 

As of and For the Three Months Ended

($ in thousands)

 

1Q2024

 

4Q2023

 

1Q2023

Nonaccrual loans(1)

 

$

4,343

 

 

$

6,082

 

 

$

2,504

 

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

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

 

4,343

 

 

 

6,082

 

 

 

2,504

 

OREO

 

 

1,237

 

 

 

 

 

 

 

Nonperforming assets

 

$

5,580

 

 

$

6,082

 

 

$

2,504

 

 

 

 

 

 

 

 

Criticized loans by risk categories:

 

 

 

 

 

 

Special mention loans

 

$

1,415

 

 

$

1,428

 

 

$

2,617

 

Classified loans(1)(3)

 

 

10,149

 

 

 

11,921

 

 

 

3,155

 

Total criticized loans

 

$

11,564

 

 

$

13,349

 

 

$

5,772

 

 

 

 

 

 

 

 

Criticized loans by loan type:

 

 

 

 

 

 

CRE loans

 

$

5,292

 

 

$

4,995

 

 

$

560

 

SBA loans

 

 

6,055

 

 

 

5,864

 

 

 

3,676

 

C&I loans

 

 

 

 

 

 

 

 

271

 

Home mortgage loans

 

 

217

 

 

 

2,490

 

 

 

1,265

 

Total criticized loans

 

$

11,564

 

 

$

13,349

 

 

$

5,772

 

 

 

 

 

 

 

 

Nonperforming loans / gross loans

 

 

0.24

%

 

 

0.34

%

 

 

0.15

%

Nonperforming assets / gross loans plus OREO

 

 

0.31

 

 

 

0.34

 

 

 

0.15

 

Nonperforming assets / total assets

 

 

0.25

 

 

 

0.28

 

 

 

0.12

 

Classified loans / gross loans

 

 

0.56

 

 

 

0.68

 

 

 

0.19

 

Criticized loans / gross loans

 

 

0.64

 

 

 

0.76

 

 

 

0.34

 

 

 

 

 

 

 

 

Allowance for credit losses ratios:

 

 

 

 

 

 

As a % of gross loans

 

 

1.23

%

 

 

1.25

%

 

 

1.23

%

As a % of nonperforming loans

 

 

510

 

 

 

362

 

 

 

831

 

As a % of nonperforming assets

 

 

397

 

 

 

362

 

 

 

831

 

As a % of classified loans

 

 

218

 

 

 

184

 

 

 

660

 

As a % of criticized loans

 

 

191

 

 

 

165

 

 

 

361

 

 

 

 

 

 

 

 

Net charge-offs

 

$

57

 

 

$

161

 

 

$

93

 

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

 

 

0.01

%

 

 

0.04

%

 

 

0.02

%

 

 

 

 

 

 

 

(1)

Excludes the guaranteed portion of SBA loans that are in liquidation totaling $3.1 million, $2.0 million and $1.6 million as of March 31, 2024, December 31, 2023 and March 31, 2023, respectively.

(2)

Excludes the guaranteed portion of SBA loans that are in liquidation totaling $246 thousand as of March 31, 2023.

(3)

Consists of substandard, doubtful and loss categories.

(4)

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

(5)

Annualized.

(6)

Includes loans held for sale.

 

 

 

 

 

 

 

($ in thousands)

 

1Q2024

 

4Q2023

 

1Q2023

Accruing delinquent loans 30-89 days past due

 

 

 

 

 

 

30-59 days

 

$

801

 

$

5,945

 

$

4,866

60-89 days

 

 

3,103

 

 

 

3,662

 

 

 

 

Total

 

$

3,904

 

 

$

9,607

 

 

$

4,866

 

 

 

 

 

 

 

 

AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

1Q2024

 

4Q2023

 

1Q2023

($ 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

 

$

73,047

 

$

989

 

5.35

%

 

$

78,496

 

$

1,076

 

5.36

%

 

$

74,162

 

$

846

 

4.56

%

Federal funds sold and other investments

 

 

16,265

 

 

 

322

 

 

7.92

 

 

 

16,115

 

 

 

309

 

 

7.66

 

 

 

12,130

 

 

 

171

 

 

5.65

 

Available-for-sale debt securities, at fair value

 

 

191,383

 

 

 

1,460

 

 

3.05

 

 

 

189,462

 

 

 

1,484

 

 

3.13

 

 

 

210,462

 

 

 

1,566

 

 

2.98

 

CRE loans

 

 

901,262

 

 

 

13,729

 

 

6.13

 

 

 

892,092

 

 

 

13,104

 

 

5.83

 

 

 

840,402

 

 

 

11,179

 

 

5.39

 

SBA loans

 

 

259,368

 

 

 

7,213

 

 

11.19

 

 

 

255,692

 

 

 

7,055

 

 

10.95

 

 

 

274,889

 

 

 

6,982

 

 

10.30

 

C&I loans

 

 

134,893

 

 

 

2,670

 

 

7.96

 

 

 

122,950

 

 

 

2,416

 

 

7.80

 

 

 

121,915

 

 

 

2,200

 

 

7.32

 

Home mortgage loans

 

 

512,023

 

 

 

6,495

 

 

5.07

 

 

 

515,840

 

 

 

6,315

 

 

4.90

 

 

 

486,800

 

 

 

5,633

 

 

4.63

 

Consumer loans

 

 

1,386

 

 

 

35

 

 

10.10

 

 

 

966

 

 

 

24

 

 

9.92

 

 

 

1,386

 

 

 

17

 

 

5.07

 

Loans(2)

 

 

1,808,932

 

 

 

30,142

 

 

6.69

 

 

 

1,787,540

 

 

 

28,914

 

 

6.43

 

 

 

1,725,392

 

 

 

26,011

 

 

6.10

 

Total interest-earning assets

 

 

2,089,627

 

 

 

32,913

 

 

6.32

 

 

 

2,071,613

 

 

 

31,783

 

 

6.10

 

 

 

2,022,146

 

 

 

28,594

 

 

5.71

 

Noninterest-earning assets

 

 

87,586

 

 

 

 

 

 

 

86,874

 

 

 

 

 

 

 

82,538

 

 

 

 

 

Total assets

 

$

2,177,213

 

 

 

 

 

 

$

2,158,487

 

 

 

 

 

 

$

2,104,684

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market deposits and others

 

$

367,386

 

 

$

3,940

 

 

4.31

%

 

$

377,304

 

 

$

3,993

 

 

4.20

%

 

$

409,813

 

 

$

3,150

 

 

3.12

%

Time deposits

 

 

954,442

 

 

 

11,735

 

 

4.94

 

 

 

866,142

 

 

 

10,134

 

 

4.64

 

 

 

786,381

 

 

 

7,232

 

 

3.73

 

Total interest-bearing deposits

 

 

1,321,828

 

 

 

15,675

 

 

4.77

 

 

 

1,243,446

 

 

 

14,127

 

 

4.51

 

 

 

1,196,194

 

 

 

10,382

 

 

3.52

 

Borrowings

 

 

108,681

 

 

 

1,259

 

 

4.66

 

 

 

118,764

 

 

 

1,426

 

 

4.76

 

 

 

26,168

 

 

 

320

 

 

4.95

 

Total interest-bearing liabilities

 

 

1,430,509

 

 

 

16,934

 

 

4.76

 

 

 

1,362,210

 

 

 

15,553

 

 

4.53

 

 

 

1,222,362

 

 

 

10,702

 

 

3.55

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

 

514,503

 

 

 

 

 

 

 

569,965

 

 

 

 

 

 

 

671,490

 

 

 

 

 

Other noninterest-bearing liabilities

 

 

39,207

 

 

 

 

 

 

 

41,312

 

 

 

 

 

 

 

31,648

 

 

 

 

 

Total noninterest-bearing liabilities

 

 

553,710

 

 

 

 

 

 

 

611,277

 

 

 

 

 

 

 

703,138

 

 

 

 

 

Shareholders’ equity

 

 

192,994

 

 

 

 

 

 

 

185,000

 

 

 

 

 

 

 

179,184

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

2,177,213

 

 

 

 

 

 

 

2,158,487

 

 

 

 

 

 

 

2,104,684

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / interest rate spreads

 

 

 

$

15,979

 

 

1.56

%

 

 

 

$

16,230

 

 

1.57

%

 

 

 

$

17,892

 

 

2.16

%

Net interest margin

 

 

 

 

 

3.06

%

 

 

 

 

 

3.12

%

 

 

 

 

 

3.57

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of deposits & cost of funds: