2022 Fourth Quarter Highlights compared with 2021 Fourth Quarter:
-
Financial Results:
- Net income of $8.0 million, compared to $9.1 million
- Diluted earnings per share of $0.51, compared to $0.59
- Net interest income of $20.2 million, compared to $17.1 million
- Net interest margin of 4.08%, compared to 4.07%
- Provision for loan losses of $977 thousand, compared to $1.9 million
- Total assets of $2.1 billion, a 21% increase compared to $1.7 billion
- Total loans (1) of $1.7 billion, a 23% increase compared to $1.4 billion
- Total deposits of $1.9 billion, a 23% increase compared to $1.5 billion
- Noninterest-bearing deposits of $701.6 million, or 37.2% of total deposits
-
Credit Quality:
- Allowance for loan losses to gross loans of 1.13%, compared to 1.23%
- Net loan charge-offs to average gross loans of 0.03%, compared to 0.05%
- Nonperforming loans to gross loans of 0.18%, compared to 0.24%
- Criticized loans (2) to gross loans of 0.23%, compared to 0.31%
-
Capital Levels:
- Quarterly cash dividend of $0.12 per share, a 20% increase from $0.10 per share
- Remained well-capitalized with a Common Equity Tier 1 (“CET1”) ratio of 11.70%.
- Book value per common share of $11.59, compared to $10.92
___________________________________________________________
(1) Includes loans held for sale.
(2) Includes special mention, substandard, doubtful, and loss categories.
LOS ANGELES–(BUSINESS WIRE)–OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company of Open Bank, today reported its financial results for the fourth quarter of 2022. Net income for the fourth quarter of 2022 was $8.0 million, or $0.51 per diluted common share, compared with $8.7 million, or $0.55 per diluted common share, for the third quarter of 2022, and $9.1 million, or $0.59 per diluted common share, for the fourth quarter of 2021.
Min Kim, President and Chief Executive Officer:
“Despite the challenging banking environment created by external headwinds related to prolonged inflation, Federal Reserve’s drastic rate hikes, and economic slowdowns, we continued to report strong balance sheet growth with pristine asset quality. Based on the growth and strength of our balance sheet, we remain optimistic about future performance and will continue to focus on executing our strategic goals while maintaining appropriate risk and control environment.”
SELECTED FINANCIAL HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
($ in thousands, except per share data) |
|
As of and For the Three Months Ended |
|
% Change 4Q22 vs. |
||||||||||||||
|
|
|
4Q22 |
|
|
|
3Q22 |
|
|
|
4Q21 |
|
|
3Q22 |
|
|
4Q21 |
|
|
|
Selected Income Statement Data: |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net interest income |
|
$ |
20,198 |
|
|
$ |
20,344 |
|
|
$ |
17,096 |
|
|
(0.7 |
) % |
|
18.1 |
% |
|
Provision for loan losses |
|
|
977 |
|
|
|
662 |
|
|
|
1,898 |
|
|
47.6 |
|
|
(48.5 |
) |
|
Noninterest income |
|
|
3,223 |
|
|
|
4,821 |
|
|
|
7,289 |
|
|
(33.1 |
) |
|
(55.8 |
) |
|
Noninterest expense |
|
|
11,327 |
|
|
|
12,338 |
|
|
|
9,591 |
|
|
(8.2 |
) |
|
18.1 |
|
|
Income tax expense |
|
|
3,089 |
|
|
|
3,515 |
|
|
|
3,762 |
|
|
(12.1 |
) |
|
(17.9 |
) |
|
Net Income |
|
$ |
8,028 |
|
|
$ |
8,650 |
|
|
$ |
9,134 |
|
|
(7.2 |
) % |
|
(12.1 |
) % |
|
Diluted earnings per share |
|
$ |
0.51 |
|
|
$ |
0.55 |
|
|
$ |
0.59 |
|
|
(7.3 |
) % |
|
(13.6 |
) % |
|
Selected Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Total loans (1) |
|
$ |
1,722,627 |
|
|
$ |
1,654,660 |
|
|
$ |
1,403,447 |
|
|
4.1 |
% |
|
22.7 |
% |
|
Total deposits |
|
$ |
1,885,771 |
|
|
$ |
1,816,811 |
|
|
$ |
1,534,066 |
|
|
3.8 |
% |
|
22.9 |
% |
|
Total assets |
|
$ |
2,094,293 |
|
|
$ |
2,029,575 |
|
|
$ |
1,726,691 |
|
|
3.2 |
% |
|
21.3 |
% |
|
Average loans (1) |
|
$ |
1,691,642 |
|
|
$ |
1,614,000 |
|
|
$ |
1,343,414 |
|
|
4.8 |
% |
|
25.9 |
% |
|
Average deposits |
|
$ |
1,836,736 |
|
|
$ |
1,753,726 |
|
|
$ |
1,545,799 |
|
|
4.7 |
% |
|
18.8 |
% |
|
Credit Quality: |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Nonperforming loans |
|
$ |
3,080 |
|
|
$ |
2,251 |
|
|
$ |
3,200 |
|
|
36.8 |
% |
|
(3.8 |
) % |
|
Net charge-offs (recoveries) to average gross loans (2) |
|
|
0.03 |
% |
|
|
(0.00 |
) % |
|
|
0.05 |
% |
|
0.03 |
% |
|
(0.02 |
) % |
|
Allowance for loan losses to gross loans |
|
|
1.13 |
% |
|
|
1.14 |
% |
|
|
1.23 |
% |
|
(0.01 |
) % |
|
(0.10 |
) % |
|
Financial Ratios: |
|
|
|
|
|
|
|
|
|
|
||||||||
|
Return on average assets (2) |
|
|
1.56 |
% |
|
|
1.77 |
% |
|
|
2.11 |
% |
|
(0.21 |
) % |
|
(0.55 |
) % |
|
Return on average equity (2) |
|
|
18.58 |
% |
|
|
19.91 |
% |
|
|
22.68 |
% |
|
(1.33 |
) % |
|
(4.10 |
) % |
|
Net interest margin (2) |
|
|
4.08 |
% |
|
|
4.31 |
% |
|
|
4.07 |
% |
|
(0.23 |
) % |
|
0.01 |
% |
|
Common equity tier 1 capital ratio |
|
|
11.70 |
% |
|
|
11.92 |
% |
|
|
12.42 |
% |
|
(0.22 |
) % |
|
(0.72 |
) % |
|
Leverage ratio |
|
|
9.38 |
% |
|
|
9.52 |
% |
|
|
9.58 |
% |
|
(0.14 |
) % |
|
(0.20 |
) % |
|
Efficiency ratio (3) |
|
|
48.36 |
% |
|
|
49.03 |
% |
|
|
39.34 |
% |
|
(0.67 |
) % |
|
9.02 |
% |
|
Book value per common share |
|
$ |
11.59 |
|
|
$ |
11.19 |
|
|
$ |
10.92 |
|
|
3.6 |
% |
|
6.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
| (1) |
Includes loans held for sale. |
| (2) |
Annualized. |
| (3) |
Represents noninterest expense divided by the sum of net interest income and noninterest income. |
INCOME STATEMENT HIGHLIGHTS
Net Interest Income and Net Interest Margin
|
|
|
|
|
|
|
|
|
|
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|
|||||
|
($ in thousands) |
|
For the Three Months Ended |
|
% Change 4Q22 vs. |
|||||||||||
|
|
|
4Q22 |
|
|
3Q22 |
|
|
4Q21 |
|
3Q22 |
|
|
4Q21 |
|
|
|
Interest Income |
|
|
|
|
|
|
|
|
|
|
|||||
|
Interest income |
|
$ |
26,886 |
|
$ |
23,234 |
|
$ |
17,822 |
|
15.7 |
% |
|
50.9 |
% |
|
Interest expense |
|
|
6,688 |
|
|
2,890 |
|
|
726 |
|
131.4 |
|
|
821.2 |
|
|
Net interest income |
|
$ |
20,198 |
|
$ |
20,344 |
|
$ |
17,096 |
|
(0.7 |
) % |
|
18.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands) |
|
For the Three Months Ended |
||||||||||||||||
|
|
4Q22 |
|
3Q22 |
|
4Q21 |
|||||||||||||
|
|
Average Balance |
|
Interest and Fees |
|
Yield/Rate (1) |
|
Average Balance |
|
Interest and Fees |
|
Yield/Rate (1) |
|
Average Balance |
|
Interest and Fees |
|
Yield/Rate (1) |
|
|
Interest-earning Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans |
|
$ 1,691,642 |
|
$ 24,719 |
|
5.81 % |
|
$ 1,614,000 |
|
$ 21,780 |
|
5.36 % |
|
$ 1,343,414 |
|
$ 17,271 |
|
5.10 % |
|
Total interest-earning assets |
|
$ 1,966,165 |
|
$ 26,886 |
|
5.43 % |
|
$ 1,874,516 |
|
$ 23,234 |
|
4.92 % |
|
$ 1,668,865 |
|
$ 17,822 |
|
4.24 % |
|
Interest-bearing Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits |
|
$ 1,085,331 |
|
$ 6,598 |
|
2.41 % |
|
$ 947,437 |
|
$ 2,889 |
|
1.21 % |
|
$ 780,787 |
|
$ 726 |
|
0.37 % |
|
Total interest-bearing liabilities |
|
$ 1,093,489 |
|
$ 6,688 |
|
2.43 % |
|
$ 947,567 |
|
$ 2,890 |
|
1.21 % |
|
$ 780,791 |
|
$ 726 |
|
0.37 % |
|
Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest Income/interest rate spreads |
|
|
|
$ 20,198 |
|
3.01 % |
|
|
|
$ 20,344 |
|
3.71 % |
|
|
|
$ 17,096 |
|
3.87 % |
|
Net interest margin |
|
|
|
|
|
4.08 % |
|
|
|
|
|
4.31 % |
|
|
|
|
|
4.07 % |
|
Total deposits / cost of deposits |
|
$ 1,836,736 |
|
$ 6,598 |
|
1.43 % |
|
$ 1,753,726 |
|
$ 2,889 |
|
0.65 % |
|
$ 1,545,799 |
|
$ 726 |
|
0.19 % |
|
Total funding liabilities / cost of funds |
|
$ 1,844,894 |
|
$ 6,688 |
|
1.44 % |
|
$ 1,753,856 |
|
$ 2,890 |
|
0.65 % |
|
$ 1,545,803 |
|
$ 726 |
|
0.19 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Annualized. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
($ in thousands) |
|
For the Three Months Ended |
|
Yield Change 4Q22 vs. |
|||||||||||||||||||||||
|
|
|
4Q22 |
|
|
|
|
3Q22 |
|
|
|
|
4Q21 |
|
|
|
||||||||||||
|
|
Interest & Fees |
|
Yield (1) |
|
Interest & Fees |
|
Yield (1) |
|
Interest & Fees |
|
Yield (1) |
|
3Q22 |
|
|
4Q21 |
|
||||||||||
|
Loan Yield Component |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Contractual interest rate |
|
$ |
23,694 |
|
|
5.57 |
% |
|
$ |
20,419 |
|
|
5.02 |
% |
|
$ |
14,509 |
|
|
4.29 |
% |
|
0.55 |
% |
|
1.28 |
% |
|
SBA discount accretion |
|
|
1,034 |
|
|
0.24 |
|
|
|
1,336 |
|
|
0.33 |
|
|
|
1,571 |
|
|
0.46 |
|
|
(0.09 |
) |
|
(0.22 |
) |
|
Amortization of net deferred fees |
|
|
46 |
|
|
0.01 |
|
|
|
122 |
|
|
0.03 |
|
|
|
1,087 |
|
|
0.32 |
|
|
(0.02 |
) |
|
(0.31 |
) |
|
Amortization of premium |
|
|
(344 |
) |
|
(0.08 |
) |
|
|
(250 |
) |
|
(0.06 |
) |
|
|
3 |
|
|
— |
|
|
(0.02 |
) |
|
(0.08 |
) |
|
Net interest recognized on nonaccrual loans |
|
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
(16 |
) |
|
— |
|
|
— |
|
|
— |
|
|
Prepayment penalties (2) and other fees |
|
|
289 |
|
|
0.07 |
|
|
|
153 |
|
|
0.04 |
|
|
|
117 |
|
|
0.03 |
|
|
0.03 |
|
|
0.04 |
|
|
Yield on loans |
|
$ |
24,719 |
|
|
5.81 |
% |
|
$ |
21,780 |
|
|
5.36 |
% |
|
$ |
17,271 |
|
|
5.10 |
% |
|
0.45 |
% |
|
0.71 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Amortization of net deferred fees: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
PPP loan forgiveness (3) |
|
$ |
15 |
|
|
— |
% |
|
$ |
146 |
|
|
0.04 |
% |
|
$ |
920 |
|
|
0.27 |
% |
|
(0.04 |
) % |
|
(0.27 |
) % |
|
Other |
|
|
31 |
|
|
0.01 |
|
|
|
(24 |
) |
|
-0.01 |
|
|
|
167 |
|
|
0.05 |
|
|
0.02 |
|
|
(0.04 |
) |
|
Total amortization of net deferred fees |
|
$ |
46 |
|
|
0.01 |
% |
|
$ |
122 |
|
|
0.03 |
% |
|
$ |
1,087 |
|
|
0.32 |
% |
|
(0.02 |
) % |
|
(0.31 |
) % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
(1) |
Annualized. |
|
(2) |
Prepayment penalty income of $172 thousand, $79 thousand and $84 thousand for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively, was from commercial real estate and C&I loans. |
|
(3) |
As of December 31, 2022, there were unamortized net deferred fees and unaccredited discounts of $8 thousand to be recognized over the estimated life of the loans as a yield adjustment on the loans. |
Impact of Hana Loan Purchase on Average Loan Yield and Net Interest Margin
During the second quarter of 2021, the Company purchased an SBA portfolio of 638 loans with an ending balance of $100.0 million, excluding loan discount of $8.9 million from Hana Small Business Lending, Inc. (“Hana”). The following table presents impacts of the Hana loan purchase on average loan yield and net interest margin:
|
|
|
|
|
|
|
|
||||||
|
($ in thousands) |
|
For the Three Months Ended |
||||||||||
|
|
|
4Q22 |
|
|
|
3Q22 |
|
|
|
4Q21 |
|
|
|
Hana Loan Purchase: |
|
|
|
|
|
|
||||||
|
Contractual interest rate |
|
$ |
1,286 |
|
|
$ |
1,114 |
|
|
$ |
1,027 |
|
|
Purchased loan discount accretion |
|
|
374 |
|
|
|
594 |
|
|
|
826 |
|
|
Other fees |
|
|
25 |
|
|
|
9 |
|
|
|
10 |
|
|
Total interest income |
|
$ |
1,685 |
|
|
$ |
1,717 |
|
|
$ |
1,863 |
|
|
|
|
|
|
|
|
|
||||||
|
Effect on average loan yield (1) |
|
|
0.20 |
% |
|
|
0.21 |
% |
|
|
0.26 |
% |
|
Effect on net interest margin (1) |
|
|
0.22 |
% |
|
|
0.22 |
% |
|
|
0.26 |
% |
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
($ in thousands) |
|
For the Three Months Ended |
|||||||||||||||||||||||||
|
|
4Q22 |
|
3Q22 |
|
4Q21 |
||||||||||||||||||||||
|
|
Average Balance |
|
Interest and Fees |
|
Yield/ Rate |
|
Average Balance |
|
Interest and Fees |
|
Yield/ Rate |
|
Average Balance |
|
Interest and Fees |
|
Yield/ Rate |
||||||||||
|
Average loan yield (1) |
|
$ |
1,691,642 |
|
$ |
24,719 |
|
5.81 |
% |
|
$ |
1,614,000 |
|
$ |
21,780 |
|
5.36 |
% |
|
$ |
1,343,414 |
|
$ |
17,271 |
|
5.10 |
% |
|
Adjusted average loan yield excluding purchased Hana loans (1)(2) |
|
$ |
1,631,128 |
|
$ |
23,034 |
|
5.61 |
% |
|
$ |
1,549,313 |
|
$ |
20,063 |
|
5.15 |
% |
|
$ |
1,263,789 |
|
$ |
15,408 |
|
4.84 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Net interest margin (1) |
|
$ |
1,966,165 |
|
$ |
20,198 |
|
4.08 |
% |
|
$ |
1,874,516 |
|
$ |
20,344 |
|
4.31 |
% |
|
$ |
1,668,865 |
|
$ |
17,096 |
|
4.07 |
% |
|
Adjusted interest margin excluding purchased Hana loans (1)(2) |
|
$ |
1,905,651 |
|
$ |
18,513 |
|
3.86 |
% |
|
$ |
1,809,829 |
|
$ |
18,627 |
|
4.09 |
% |
|
$ |
1,589,240 |
|
$ |
15,233 |
|
3.81 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
(1) |
Annualized. |
|
(2) |
See reconciliation of GAAP to non-GAAP financial measures. |
Fourth Quarter 2022 vs. Third Quarter 2022
Net interest income decreased $146 thousand, or 0.7%, primarily due to higher interest expense on deposits. Net interest margin was 4.08%, a decrease of 23 basis points from 4.31%.
- A $2.9 million increase in interest income on loans was primarily due to a 55 basis point increase in contractual loan yield as a result of market rate increases by the Federal Reserve and a $77.6 million increase in average loan balance.
- A $3.7 million increase in interest expense on deposits was primarily due to a 120 basis point increase in average cost of interest-bearing deposits driven by the Federal Reserve’s rate increases.
- Average loan yield was 5.81%, a 45 basis point increase from 5.36%, primarily due to a 55 basis point increase in contractual loan yield driven by repricing of variable rate loans and higher rates on new loans, partially offset by a 9 basis points decrease in SBA discount accretion income as a result of lower SBA loan payoffs.
- Average cost of interest-bearing deposits was 2.41%, a 120 basis point increase from 1.21%. Average cost of deposits was 1.43%, a 78 basis point increase from 0.65%.
Fourth Quarter 2022 vs. Fourth Quarter 2021
Net interest income increased $3.1 million, or 18.1%, primarily due to higher interest income on loans. Net interest margin was 4.08%, an increase of 1 basis point from 4.07%.
- A $7.4 million increase in interest income on loans was primarily due to a 128 basis point increase in contractual loan yield as a result of market rate increases by the Federal Reserve and a $348.2 million increase in average loan balance.
- A $5.9 million increase in interest expense on deposits was primarily due to a 204 basis point increase in average cost of interest-bearing deposits driven by the Federal Reserve’s rate increases.
- Average loan yield was 5.81%, a 71 basis point increase from 5.10%, primarily due to a 128 basis point increase in contractual loan yield driven by repricing of variable rate loans and higher rates on new loans, partially offset by a 22 basis point decrease in SBA discount accretion income as a result of lower SBA loan payoffs and a 31 basis point decrease in amortization of net deferred fees as a result of lower net deferred fees on SBA Paycheck Protection Program (“PPP”) loans.
- Average yield on interesting-bearing deposits in other banks was 3.78%, a 363 basis point increase from 0.15%. Average yield on available-for-sale debt securities was 2.66%, a 147 basis point increase from 1.19%, primarily due to higher yields on securities purchased in 2022.
- Average cost of interest-bearing deposits was 2.41%, a 204 basis point increase from 0.37%. Average cost of deposits was 1.43%, a 124 basis point increase from 0.19%.
Provision for loan losses
Fourth Quarter 2022 vs. Third Quarter 2022
The Company recorded $977 thousand provision for loan losses, an increase of $315 thousand, compared with a $662 thousand provision for loan losses. The $977 thousand provision for loan losses was primarily due to an increase of $834 thousand in quantitative reserves from loan growth in home mortgage and SBA loans.
Fourth Quarter 2022 vs. Fourth Quarter 2021
The Company recorded $977 thousand provision for loan losses, a decrease of $921 thousand, compared with $1.9 million provision for loan losses.
Noninterest Income
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
($ in thousands) |
|
For the Three Months Ended |
|
% Change 4Q22 vs. |
|||||||||||
|
|
|
4Q22 |
|
|
3Q22 |
|
|
4Q21 |
|
3Q22 |
|
|
4Q21 |
|
|
|
Noninterest income |
|
|
|
|
|
|
|
|
|
|
|||||
|
Service charges on deposits |
|
$ |
406 |
|
$ |
454 |
|
$ |
405 |
|
(10.6 |
) % |
|
0.2 |
% |
|
Loan servicing fees, net of amortization |
|
|
705 |
|
|
610 |
|
|
521 |
|
15.6 |
|
|
35.3 |
|
|
Gain on sale of loans |
|
|
1,684 |
|
|
3,490 |
|
|
6,033 |
|
(51.7 |
) |
|
(72.1 |
) |
|
Other income |
|
|
428 |
|
|
267 |
|
|
330 |
|
60.3 |
|
|
29.7 |
|
|
Total noninterest income |
|
$ |
3,223 |
|
$ |
4,821 |
|
$ |
7,289 |
|
(33.1 |
) % |
|
(55.8 |
) % |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fourth Quarter 2022 vs. Third Quarter 2022
Noninterest income decreased $1.6 million, or 33.1%, primarily due to lower gain on sale of loans.
- Gain on sale of loans was $1.7 million, down $1.8 million, primarily due to lower SBA loan sold on lower average sales premium. The Company sold $32.2 million in SBA loans at an average premium rate of 6.13%, compared to the sale of $59.3 million at an average premium rate of 6.67%.
Fourth Quarter 2022 vs. Fourth Quarter 2021
Noninterest income decreased $4.1 million, or 55.8%, primarily due to lower gain on sale of loans.
- Gain on sale of loans was $1.7 million, down $4.3 million, primarily due to lower SBA loans sold on lower average sales premium. The Company sold $32.2 million in SBA loans at an average premium rate of 6.13%, compared to the sale of $56.8 million at an average premium rate of 10.98%.
Noninterest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
($ in thousands) |
|
For the Three Months Ended |
|
% Change 4Q22 vs. |
|||||||||||
|
|
|
4Q22 |
|
|
3Q22 |
|
|
4Q21 |
|
3Q22 |
|
|
4Q21 |
|
|
|
Noninterest expense |
|
|
|
|
|
|
|
|
|
|
|||||
|
Salaries and employee benefits |
|
$ |
7,080 |
|
$ |
7,343 |
|
$ |
5,560 |
|
(3.6 |
) % |
|
27.3 |
% |
|
Occupancy and equipment |
|
|
1,560 |
|
|
1,537 |
|
|
1,418 |
|
1.5 |
|
|
10.0 |
|
|
Data processing and communication |
|
|
514 |
|
|
586 |
|
|
637 |
|
(12.3 |
) |
|
(19.3 |
) |
|
Professional fees |
|
|
330 |
|
|
602 |
|
|
267 |
|
(45.2 |
) |
|
23.6 |
|
|
FDIC insurance and regulatory assessments |
|
|
176 |
|
|
238 |
|
|
182 |
|
(26.1 |
) |
|
(3.3 |
) |
|
Promotion and advertising |
|
|
12 |
|
|
177 |
|
|
156 |
|
(93.2 |
) |
|
(92.3 |
) |
|
Directors’ fees |
|
|
145 |
|
|
170 |
|
|
166 |
|
(14.7 |
) |
|
(12.7 |
) |
|
Foundation donation and other contributions |
|
|
851 |
|
|
875 |
|
|
901 |
|
(2.7 |
) |
|
(5.5 |
) |
|
Other expenses |
|
|
659 |
|
|
810 |
|
|
304 |
|
(18.6 |
) |
|
116.8 |
|
|
Total noninterest expense |
|
$ |
11,327 |
|
$ |
12,338 |
|
$ |
9,591 |
|
(8.2 |
) % |
|
18.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fourth Quarter 2022 vs. Third Quarter 2022
Noninterest expense decreased $1.0 million, or 8.2%, primarily due to lower salaries and employee benefits and professional fees.
- Salaries and employee benefits were $7.1 million, down $263 thousand from $7.3 million. The decrease was primarily due to a decrease in employee incentive accruals, partially offset by an increase in salaries.
- Professional fees and promotion and advertising decreased $272 thousand and $165 thousand, respectively, primarily due to year-end accrual adjustments.
Fourth Quarter 2022 vs. Fourth Quarter 2021
Noninterest expense increased $1.7 million, or 18.1%, primarily due to higher salaries and employee benefits and other expenses.
- Salaries and employee benefits were $7.1 million, up $1.5 million from $5.6 million. The increase was primarily due to 30 additional employees to support continued growth of the Company.
- Other expenses were $659 thousand, up $355 thousand from $304 thousand, primarily due to an increase in business development expense.
Income Tax Expense
Fourth Quarter 2022 vs. Third Quarter 2022
Income tax expense was $3.1 million, and the effective tax rate was 27.8%, compared to income tax expense of $3.5 million and the effective rate of 28.9%.
Fourth Quarter 2022 vs. Fourth Quarter 2021
Income tax expense was $3.1 million and the effective tax rate was 27.8%, compared to income tax expense of $3.8 million and the effective rate of 29.2%.
BALANCE SHEET HIGHLIGHTS
Loans
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
($ in thousands) |
|
As of |
|
% Change 4Q22 vs. |
|||||||||||
|
|
|
4Q22 |
|
|
3Q22 |
|
|
4Q21 |
|
3Q22 |
|
|
4Q21 |
|
|
|
Real estate loans |
|
$ |
842,208 |
|
$ |
830,125 |
|
$ |
701,450 |
|
1.5 |
% |
|
20.1 |
% |
|
SBA loans (1) |
|
|
263,644 |
|
|
232,569 |
|
|
275,858 |
|
13.4 |
|
|
(4.4 |
) |
|
C&I loans |
|
|
116,951 |
|
|
133,855 |
|
|
162,543 |
|
(12.6 |
) |
|
(28.0 |
) |
|
Home mortgage loans |
|
|
482,949 |
|
|
419,469 |
|
|
173,303 |
|
15.1 |
|
|
178.7 |
|
|
Consumer & other loans |
|
|
1,467 |
|
|
2,000 |
|
|
865 |
|
(26.7 |
) |
|
69.6 |
|
|
Gross loans |
|
$ |
1,707,219 |
|
$ |
1,618,018 |
|
$ |
1,314,019 |
|
5.5 |
% |
|
29.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
| (1) |
Includes PPP loans of $442 thousand, $1.1 million and $40.6 million as of December 31, 2022, September 30, 2022 and December 31, 2021, respectively. |
The following table presents new loan originations based on loan commitment amounts for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
($ in thousands) |
|
For the Three Months Ended |
|
% Change 4Q22 vs. |
|||||||||||
|
|
|
4Q22 |
|
|
3Q22 |
|
|
4Q21 |
|
3Q22 |
|
|
4Q21 |
|
|
|
Real estate loans |
|
$ |
44,416 |
|
$ |
43,929 |
|
$ |
35,458 |
|
1.1 |
% |
|
25.3 |
% |
|
SBA loans (1) |
|
|
55,594 |
|
|
43,984 |
|
|
65,492 |
|
26.4 |
|
|
(15.1 |
) |
|
C&I loans |
|
|
46,014 |
|
|
39,720 |
|
|
47,981 |
|
15.8 |
|
|
(4.1 |
) |
|
Home mortgage loans |
|
|
28,188 |
|
|
68,842 |
|
|
19,295 |
|
(59.1 |
) |
|
46.1 |
|
|
Consumer & other loans |
|
|
— |
|
|
2,500 |
|
|
— |
|
(100.0 |
) |
|
— |
|
|
Gross loans |
|
$ |
174,212 |
|
$ |
198,975 |
|
$ |
168,226 |
|
(12.4 |
) % |
|
3.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
| (1) |
There were no new PPP originations for the periods indicated. |
The following table presents changes in gross loans by loan activity for the periods indicated:
|
|
|
|
|
|
|
|
||||||
|
($ in thousands) |
|
For the Three Months Ended |
||||||||||
|
|
|
4Q22 |
|
|
|
3Q22 |
|
|
|
4Q21 |
|
|
|
Gross loans, beginning |
|
$ |
1,618,018 |
|
|
$ |
1,484,718 |
|
|
$ |
1,231,821 |
|
|
New originations |
|
|
174,212 |
|
|
|
198,975 |
|
|
|
168,226 |
|
|
Net line advances |
|
|
(80,144 |
) |
|
|
(11,358 |
) |
|
|
7,759 |
|
|
Purchases |
|
|
49,980 |
|
|
|
37,146 |
|
|
|
48,915 |
|
|
Sales |
|
|
(32,204 |
) |
|
|
(59,293 |
) |
|
|
(68,064 |
) |
|
Paydowns |
|
|
(22,939 |
) |
|
|
(19,087 |
) |
|
|
(12,373 |
) |
|
Payoffs |
|
|
(23,238 |
) |
|
|
(37,817 |
) |
|
|
(46,778 |
) |
|
PPP Payoffs |
|
|
(657 |
) |
|
|
(7,206 |
) |
|
|
(29,918 |
) |
|
Other |
|
|
24,191 |
|
|
|
31,940 |
|
|
|
14,431 |
|
|
Total |
|
|
89,201 |
|
|
|
133,300 |
|
|
|
82,198 |
|
|
Gross loans, ending |
|
$ |
1,707,219 |
|
|
$ |
1,618,018 |
|
|
$ |
1,314,019 |
|
|
|
|
|
|
|
|
|
||||||
As of December 31, 2022 vs. September 30, 2022
Gross loans were $1.71 billion as of December 31, 2022, up $89.2 million from September 30, 2022, primarily due to new loan originations and home mortgage loan purchases.
Home mortgage loans of $39.0 million and real estate loans of $11.0 million were purchased from third party mortgage originators in the fourth quarter of 2022, compared to total purchases of $37.1 million in the third quarter of 2022. New loan originations and loan payoffs were $174.2 million and $23.9 million for the fourth quarter of 2022, respectively, compared with $199.0 million and $45.0 million for the third quarter of 2022, respectively. Of the PPP loans, $636 thousand in principal amount has been forgiven under the program, compared to a $7.2 million of PPP loans forgiven in the third quarter of 2022.
As of December 31, 2022 vs. December 31, 2021
Gross loans were $1.71 billion as of December 31, 2022, up $393.2 million from December 31, 2021, primarily due to new loan originations of $645.2 million and loan purchases of $225.1 million, partially offset by loan sales of $182.3 million and loan payoffs of $180.8 million.
The following table presents the composition of gross loans by interest rate type accompanied with the weighted average contractual rates as of the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
($ in thousands) |
|
As of |
||||||||||||||||
|
|
4Q22 |
|
|
|
3Q22 |
|
|
|
4Q21 |
|
|
|||||||
|
|
% |
|
Rate |
|
% |
|
Rate |
|
% |
|
Rate |
|||||||
|
Fixed rate |
|
35.4 |
% |
|
4.63 |
% |
|
35.2 |
% |
|
4.39 |
% |
|
31.5 |
% |
|
4.12 |
% |
|
Hybrid rate |
|
33.3 |
|
|
4.79 |
|
|
34.1 |
|
|
4.59 |
|
|
22.8 |
|
|
4.45 |
|
|
Variable rate |
|
31.3 |
|
|
8.01 |
|
|
30.7 |
|
|
6.97 |
|
|
45.7 |
|
|
4.94 |
|
|
Gross loans |
|
100.0 |
% |
|
5.74 |
% |
|
100.0 |
% |
|
5.25 |
% |
|
100.0 |
% |
|
4.57 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
The following table presents the maturity of gross loans by interest rate type accompanied with the weighted average contractual rates for the periods indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
($ in thousands) |
|
As of December 31, 2022 |
||||||||||||||||||||||
|
|
Within One Year |
|
One Year Through Five Years |
|
After Five Years |
|
Total |
|||||||||||||||||
|
|
Amount |
|
Rate |
|
Amount |
|
Rate |
|
Amount |
|
Rate |
|
Amount |
|
Rate |
|||||||||
|
Fixed rate |
|
$ |
30,168 |
|
4.44 |
% |
|
$ |
337,054 |
|
4.59 |
% |
|
$ |
237,195 |
|
4.72 |
% |
|
$ |
604,417 |
|
4.63 |
% |
|
Hybrid rate |
|
|
6,472 |
|
7.09 |
|
|
|
52,902 |
|
5.06 |
|
|
|
508,550 |
|
4.73 |
|
|
|
567,924 |
|
4.79 |
|
|
Variable rate |
|
|
63,021 |
|
8.22 |
|
|
|
148,498 |
|
7.93 |
|
|
|
323,359 |
|
8.00 |
|
|
|
534,878 |
|
8.01 |
|
|
Gross loans |
|
$ |
99,661 |
|
7.00 |
% |
|
$ |
538,454 |
|
5.56 |
% |
|
$ |
1,069,104 |
|
5.72 |
% |
|
$ |
1,707,219 |
|
5.74 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
($ in thousands) |
|
As of |
|
% Change 4Q22 vs. |
||||||||||||||||||||
|
|
4Q22 |
|
3Q22 |
|
4Q21 |
|
||||||||||||||||||
|
|
Amount |
|
% |
|
Amount |
|
% |
|
Amount |
|
% |
|
3Q22 |
|
|
4Q21 |
|
|||||||
|
Noninterest-bearing deposits |
|
$ |
701,584 |
|
37.2 |
% |
|
$ |
794,631 |
|
43.7 |
% |
|
$ |
774,754 |
|
50.5 |
% |
|
(11.7 |
) % |
|
(9.4 |
) % |
|
Money market deposits and others |
|
|
526,321 |
|
27.9 |
% |
|
|
524,911 |
|
28.9 |
|
|
|
380,226 |
|
24.8 |
% |
|
0.3 |
|
|
38.4 |
|
|
Time deposits |
|
|
657,866 |
|
34.9 |
% |
|
|
497,269 |
|
27.4 |
|
|
|
379,086 |
|
24.7 |
% |
|
32.3 |
|
|
73.5 |
|
|
Total deposits |
|
$ |
1,885,771 |
|
100.0 |
% |
|
$ |
1,816,811 |
|
100.0 |
% |
|
$ |
1,534,066 |
|
100.0 |
% |
|
3.8 |
% |
|
22.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
As of December 31, 2022 vs. September 30, 2022
Total deposits were $1.89 billion as of December 31, 2022, up $69.0 million from September 30, 2022, primarily due to growth in time deposits, partially offset by a decrease in noninterest-bearing deposits. Time deposits grew $160.6 million, due to management’s actions to support loan growth during the third quarter of 2022 including upward adjustments of interest rates on customer deposits and increases in wholesale deposits. Noninterest-bearing deposits decreased $93.0 million, primarily due to decreases in lower transaction volumes in escrow and 1031 exchanges accounts and other decreases affected by market rate increases by the Federal Reserve.
As of December 31, 2022 vs. December 31, 2021
Total deposits were $1.89 billion as of December 31, 2022, up $351.7 million from December 31, 2021, primarily driven by growth in time deposits and money market deposits, offset by a decrease in noninterest-bearing deposits. Time deposits grew $278.8 million to $657.9 million from $379.1 million, and money market deposits increased $146.1 million to $526.3 million from $380.2 million. Noninterest-bearing deposits decreased $73.2 million, primarily due to decreases in lower transaction volumes in escrow and 1031 exchanges accounts and other decreases affected by market rate increases by the Federal Reserve.
The following table sets forth the maturity of time deposits as of December 31, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2022 |
||||||||||
|
($ in thousands) |
|
Within Three Months |
|
Three to Six Months |
|
Six to Nine Months |
|
Nine to Twelve Months |
|
After Twelve Months |
|
Total |
|
Time deposits (more than $250,000) |
|
$ 82,676 |
|
$ 26,156 |
|
$ 61,254 |
|
$ 183,822 |
|
$ 2,289 |
|
$ 356,197 |
|
Time deposits ($250,000 or less) |
|
36,551 |
|
50,759 |
|
44,829 |
|
144,495 |
|
25,035 |
|
301,669 |
|
Total time deposits |
|
$ 119,227 |
|
$ 76,915 |
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$ 106,083 |
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$ 328,317 |
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$ 27,324 |
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$ 657,866 |
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Weighted average rate |
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3.03 % |
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3.02 % |
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2.36 % |
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4.06 % |
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3.83 % |
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3.47 % |
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Capital and Cash Dividend
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Basel III |
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OP Bancorp (1) |
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Open Bank |
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Minimum Well Capitalized Ratio |
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Minimum Capital Ratio+ Conservation Buffer (2) |
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Risk-Based Capital Ratios: |
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Total risk-based capital ratio |
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12.87 % |
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12.76 % |
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10.00 % |
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10.50 % |
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Tier 1 risk-based capital ratio |
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11.70 % |
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11.59 % |
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8.00 % |
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8.50 % |
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Common equity tier 1 ratio |
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11.70 % |
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11.59 % |
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6.50 % |
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7.00 % |
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Leverage ratio |
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9.38 % |
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9.29 % |
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5.00 % |
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4.00 % |
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(1) |
The capital requirements are only applicable to the Bank, and the Company’s ratios are included for comparison purpose. |
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(2) |
An additional 2.5% capital conservation buffer above the minimum capital ratios are required in order to avoid limitations on distributions, including dividend payments and certain discretionary bonus to executive officers. |
Contacts
Investor Relations
OP Bancorp
Christine Oh
EVP & CFO
213.892.1192
[email protected]
