News Details

Financial highlights

• Net income for the second quarter of 2015 was $1.6 million, an increase of 22% from $1.3 million for the first quarter of 2015 and an increase of 32% from $1.2 million for the second quarter of 2014.
• Total assets were $565 million at June 30, 2015, up 1.8% from $555 million at March 31, 2015, and up 28.6% from $439 million a year ago.
• Net Loans receivables were $460 million at June 30, 2015, an increase of 8.5% from $424 million at March 31, 2015 and an increase of 44.7% from $318 million at June 30, 2014.
• Total deposits were $481 million at June 30, 2015, an increase of 6.0% from $453 million at March 31, 2015 and an increase of 29.2% from $372 million at June 30, 2014.
• Non-interest bearing deposits represented 35% of total deposits at June 30, 2015, compared to 36% at March 31, 2015 and 41% at June 30, 2014.
• Non-performing assets to total assets was 0.20% at June 30, 2015, compared to 0.25% at March 31, 2015 and 0.32% at June 30, 2014.
• Opened 3 new loan production offices in Dallas, Seattle and New York.

LOS ANGELES--(BUSINESS WIRE)-- Open Bank (OTCQB: OPBK) today reported that the net income for the second quarter of 2015 was $1.6 million, or $0.12 per diluted share. This compares with net income of $1.3 million, or $0.10 per diluted share, for the first quarter of 2015, and net income of $1.2 million, or $0.14 per diluted share, for the second quarter of 2014. Pre-tax pre-provision income was $2.7 million for the second quarter 2015, $2.3 million for the first quarter 2015, and $2.1 million for the second quarter 2014.

“We are pleased to report another solid quarter with net income up 22% compared to the first quarter of 2015,” stated Min Kim, President and Chief Executive Officer. “We are also excited to announce that we will be opening our 7^th full service branch in the heart of Koreatown on Western Blvd. in Los Angeles. The branch is expected to open in the fourth quarter of 2015. During the quarter, we focused on growing our loan portfolio, which increased $36 million or 8.4% to $466 million for the quarter from $430 million for the previous quarter. Our net interest margin remained strong at 4.32%. We will continue to grow our franchise through our branch network and loan production offices while enhancing our risk management program to solidify the foundation and to support the bank’s future growth and expansion.”

Results of Operations

Net interest income was $5.5 million for the three months ended June 30, 2015, compared to $5.0 million for the first quarter of 2015 and $3.9 million for the second quarter of 2014. This represents increases of 9.7% from the first quarter of 2015 and 40.9% from the second quarter of 2014, respectively. The increases were primarily the result of increases in average interest earning assets, mostly loans. Average gross loans increased to $454.3 million for the second quarter of 2015, an increase of $ 29.5 million, or 6.9% from $424.8 million for the first quarter 2015, and an increase of $127.1 million, or 38.8%, from $327.2 million for the second quarter of 2014.

The net interest margin for the second quarter of 2015 was 4.32%, a 13 basis points increase from 4.19% for the first quarter of 2015, and a 17 basis points increase from 4.15% for the second quarter of 2014. The net interest margin improvement was primarily due to the lower level of cash/overnight fund balances during the second quarter of 2015 compared to the first quarter of 2015 and the prior-year second quarter. The following table shows the asset yields, liability cost, spread and margin.

No provision was recorded for the second quarter of 2015. This compares to the provision for loan losses of $77 thousand for the first quarter of 2015 and $50 thousand for the second quarter of 2014.

Non-interest income for the second quarter 2015 was $2.2 million, compared to $1.8 million for the first quarter of 2015 and $2.6 million for the prior-year second quarter. The net gains on sale of SBA loans totaled $1.3 million for the second quarter of 2015, compared to $908 thousand for the first quarter of 2015. Sales of SBA loans for the second quarter of 2015 were $15.3 million, compared to $11.6 million for the first quarter of 2015.

The decrease in non-interest income from the prior-year second quarter was primarily due to a $456 thousand decrease in net gains on sale of SBA loans. Sales of SBA loans for the second quarter of 2014 were $22.3 million with a net gain of $1.8 million.

Non-interest expense for the second quarter 2015 was $5.0 million, compared to $4.6 million for the first quarter of 2015 and $4.4 million for the prior-year second quarter. The increase from the preceding quarter was primarily attributable to an increase of $237 thousand, or 8%, in salaries and employee benefits expense. The increase is due to an annual salary adjustment effective April 1, 2015, addition of new employees, and increase in incentive payment. The total number of full time employees was 108 as of June 30, 2015 and 103 as of March 31, 2015. Occupancy expense increased $124 thousand, or 31%, to $521 thousand for the second quarter of 2015, from $397 thousand for the first quarter of 2015. The increase is primarily due to a lease for new branch location effective May of 2015.

The increase in non-interest expense from the prior-year second quarter was primarily due to an increase in salaries and employee benefits expense, occupancy and FF&E expenses. Salaries and employee benefits expense increased $243 thousand, or 8.6%, from $2.8 million for the second quarter of 2014. The increase reflected an increase in the number of full-time employees from 97 as of June 30, 2014. Occupancy expense increased $184 thousand, or 54.7%, from $337 thousand for the second quarter of 2014. The increase was primarily due to an addition of new branch in mid-2014 as well as the operating expense for headquarter office, which resulted in higher lease expenses. FF&E expense increased primarily due to the bank’s continued expansion.

The effective tax rate for the second quarter was 41.2%, compared to 41.2% for the first quarter of 2015 and 40.7% for the second quarter of 2014.

Balance Sheet

Total assets were $564.8 million at June 30, 2015, an increase of $10.1 million, or 1.8%, from $554.7 million at March 31, 2015, and an increase of $125.5 million, or 28.6%, from $439.3 million at June 30, 2014. Gross loans, net of unearned income, were $465.7 million at June 30, 2015, an increase of $36.1 million, or 8.4%, from $429.6 million at March 31, 2015, and an increase of $142.4 million, or 44.0%, from $323.3 million a year ago. New loan originations for the second quarter of 2015 amounted to $76.6 million, including SBA loan origination of $20.7 million, compared to $46.1 million, including SBA loan origination of $13.3 million for the first quarter of 2015. The new loan originations for the second quarter of 2014 amounted to $51.1 million, including SBA loan origination of $23.2 million.

Total deposits were $480.7 million at June 30, 2015, an increase of $27.4 million, or 6.0% from $453.3 million at March 31, 2015, and an increase of $108.8 million, or 29.2%, from $372.0 million at June 30, 2014. At June 30, 2015, the bank borrowed $10.0 million from Federal Loan Home Bank (“FHLB”) with one year term.

Non-interest bearing deposits accounted for 34.7% of total deposits at June 30, 2015. This is compared to 35.6% at March 31, 2015 and 40.9% at June 30, 2014.

Effective January 1, 2015, the Basel III capital rules revise the definition of capital, introduce a minimum CET1 capital ratio and change the risk weightings of certain balance sheet and off-balance sheet assets. The impact of changes in the risk weighting was minimal. At June 30, 2015, the bank continued to exceed all regulatory capital requirements to be classified as “well-capitalized,” as summarized in the following table.

At June 30, 2015, the tangible common equity represented 12.23% of tangible assets, compared to 12.12% at March 31, 2015 and 14.23% at June 30, 2014. The tangible common equity to tangible assets ratio is a non-GAAP financial measure that represents common equity less goodwill and other net intangible assets divided by total assets less goodwill and other net intangible assets. Management reviews the tangible common equity to tangible assets ratio to evaluate the bank’s capital levels.

Asset Quality

Non-performing assets were $1.2 million, or 0.2% of total assets at June 30, 2015, compared to $1.4 million, or 0.25% of total assets at March 31, 2015 and $1.4 million, or 0.32% of total assets at June 30, 2014. There were no other real estate owned (“OREO”) at June 30, 2015, March 31, 2015, or June 30, 2014.

Non-performing loans to gross loans was 0.25% at June 30, 2015, compared to 0.33% at March 31, 2015 and 0.43% at June 30, 2014. Total classified loans were $1.6 million, or 0.34% of gross loans, at June 30, 2015, compared to $1.7 million, or 0.38% of gross loans at March 31, 2015 and $2.9 million, or 0.89% of gross loans at June 30, 2014.

The allowance for loan losses was $5.9 million at June 30, 2015, compared to $5.9 million at March 31, 2015, and $5.5 million at June 30, 2014. The allowance for loan losses was 1.26% of gross loans at June 30, 2015, compared to 1.37% at March 31, 2015 and 1.69% at June 30, 2014.

Use of Non-GAAP Financial Measures. This document may contain GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Open Bank’s results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this earnings release, conference call slides, or the Form 8-K related to this document, all of which can be found on Open Bank’s website at www.myopenbank.com.

About Open Bank

Open Bank (the "Bank") is engaged in the general commercial banking business in Los Angeles and Orange County and is focused on serving the banking needs of small- and medium-sized businesses, professionals, and residents with a particular emphasis on the Korean and other ethnic minority communities. The Bank has branches in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Gardena and Buena Park. The Bank commenced its operations on June 10, 2005 as First Standard Bank and changed its name to Open Bank on September 20, 2010. Its headquarters are located at 1000 Wilshire Blvd., Suite 500, Los Angeles, California 90017. Phone 213-892-9999; www.myopenbank.comMember FDIC, Equal Housing Lender

Safe Harbor

This press release contains certain forward-looking information about Open Bank that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. These forward-looking statements may include, but are not limited to, such words as "believes," "expects," "anticipates," "intends," "plans," "estimates," "may," "will," "should," "could," "predicts," "potential," "continue," or the negative of such terms and other comparable terminology or similar expressions and may include statements about the bank’s focus on exploring new opportunities, building customer relationship through core deposits, growing core deposits, and improving asset quality. Forward-looking statements are not guarantees. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of Open Bank such as the ability of the new branch to attract sufficient number of customers, deposits and new business to become profitable. Open Bank cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, Open Bank’s results could differ materially from those expressed in, or implied or projected by such forward-looking statements. Open Bank assumes no obligation to update such forward-looking statements, except as required by law.

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Open Bank
Christine Oh, 213-892-1192
EVP & CFO
Christine.oh@myopenbank.com

Source: Open Bank