News Details

Financial Highlights

• Net income totaled $2.05 million for the third quarter of 2016, or $0.15 per diluted common share, up 14.0% from $1.80 million for the second quarter of 2016 and 34.7% from $1.52 million for the third quarter of 2015.
• Net interest margin was 4.46% for the third quarter of 2016, compared to 4.30% for the second quarter of 2016 and 4.29% for the third quarter of 2015.
• Total assets were $722 million at September 30, 2016, up 7.2% from $673 million at June 30, 2016, and up 19.0% from $606 million at September 30, 2015.
• Net loans receivable were $620 million at September 30, 2016, up 7.5% from $576 million at June 30, 2016 and up 23.9% from $500 million at September 30, 2015.
• Total deposits were $627 million at September 30, 2016, up 7.8% from $582 million at June 30, 2016 and up 23.0% from $510 million at September 30, 2015.
• Non-interest bearing deposits were $228 million at September 30, 2016, up 10.9% from $205 million at June 30, 2016, and up 47.0% from $155 million at September 30, 2015.
• Non-performing assets to total assets were 0.13% at September 30, 2016, compared to 0.15% at June 30, 2016 and 0.17% at September 30, 2015.

LOS ANGELES--(BUSINESS WIRE)-- OP Bancorp (the “Company”) (OTCQB: OPBK), the holding company of Open Bank (the “Bank”), today reported that net income for the third quarter of 2016 was $2.05 million, or $0.15 per diluted common share. This compares with net income of $1.80 million, or $0.14 per diluted share, for the second quarter of 2016, and net income of $1.52 million, or $0.12 per diluted share, for the third quarter of 2015. Pre-tax pre-provision income was $4.1 million for the third quarter 2016, up 18.9% from $3.5 million for the second quarter 2016, and 34.3% from $3.1 million for the third quarter 2015.

“We are very pleased to report record third quarter financial results. Our net interest income before provisions for loan losses for the three and nine months ended September 30, 2016 totaled $7.4 million and $20.5 million respectively. Our non-interest income for the three and nine months ended September 30, 2016 totaled $2.4 million and $6.5 million respectively. Our net income was equally impressive, at $2.1 million and $5.2 million respectively for the three and nine months ended September 30, 2016. We also had very strong growth in both loans and deposits, with an over 20% year over year increase. We are especially pleased with the continued growth in our non-interest bearing deposits, which grew over 10% in Q3 alone and now accounts for over 36% of total deposits. Our net interest margin also continues to improve, marking the highest level in years.” stated Min Kim, President and Chief Executive Officer.

Results of Operations

Net interest income before loan loss provision was $7.4 million for the three months ended September 30, 2016, compared to $6.8 million for the second quarter of 2016, and $6.0 million for the third quarter of 2015. The increases from the second quarter of 2016 and the third quarter of 2015 were primarily the result of continued growth in interest earning assets, mostly loans. Average gross loans were $608 million for the third quarter of 2016, an increase of $51 million, or 9.1%, from $557 million for the second quarter of 2016 and an increase of $114 million, or 23.2%, from $493 million for the third quarter of 2015.

The net interest margin for the third quarter of 2016 was 4.46%, a 16 basis point increase from 4.30% for the second quarter of 2016, and a 17 basis point increase from 4.29% for the third quarter of 2015. Excluding impacts from loan payoffs, the net interest margin for the third quarter of 2016 was 4.28%, compared to 4.09% for the second quarter of 2016, and 4.06% for the third quarter of 2015. The net interest margin expansions were attributable to improved mix of earning assets and lower cost of funds.

Average gross loans, net of unearned income, increased to 92% of earning assets for the third quarter 2016, compared to 88% for the second quarter 2016, and 90% for the third quarter 2015. Total cost of funds, including non-interest bearing deposits and borrowings, decreased to 0.54% for the third quarter of 2016, compared to 0.57% for the second quarter 2016, and 0.58% for the third quarter 2015, as average non-interest bearing deposits increased to 36% of total deposit for the third quarter 2016 from 32% for the second quarter 2016, and 31% from the third quarter 2015.

The following table shows the asset yields, liability costs, spreads and margins.

Non-interest income was $2.4 million for the third quarter of 2016, up 5.9% compared to $2.3 million for the second quarter of 2016, and up 20.4% from $2.0 million for the third quarter of 2015. The increases were primarily attributable to higher net gains on sale of SBA loans and increased service fees on deposits.

Net gain on sale of SBA loans totaled $1.54 million for the third quarter of 2016, $1.50 million for the second quarter of 2016 and $1.22 million for the third quarter of 2015. Sale of SBA loans for the third quarter of 2016 was $25.3 million, compared to $24.1 million for the second quarter of 2016 and $18.3 million for the third quarter of 2015. The average premium on the sale of SBA loans for the third quarter of 2016 was 8.3%, compared to 9.4% for the second quarter of 2016 and 8.9% for the third quarter of 2015.

Non-interest expense was $5.7 million for the third quarter of 2016, compared to $5.6 million for the second quarter of 2016. Non-interest expense has been consistent from quarter to quarter during the year.

Non-interest expense for the third quarter of 2016 increased $823 thousand from $4.9 million for the third quarter of 2015. The increase from the third quarter of 2015 was primarily due to increased operating expenses to support continued growth of the Company.

Total salaries and employee benefits expenses for the third quarter of 2016 increased $399 thousand to $3.4 million from $3.0 million for the third quarter of 2015, reflecting an increased number of full time equivalent employees of 126.5 at September 30, 2016, compared to 116.5 at September 30, 2015. FF&E expenses, professional services fees and data processing expenses for the third quarter of 2016 increased $39 thousand, $64 thousand, and $31 thousand, respectively, compared to the third quarter of 2015, primary due to the Company’s continued expansion.

The effective tax rate for the third quarter of 2016 was 40.4%, compared to 40.2% for the second quarter of 2016 and 41.2% for the third quarter of 2015.

Balance Sheet

Total assets were $721.7 million at September 30, 2016, an increase of $48.4 million, or 7.2% from $673.3 million at June 30, 2016, and an increase of $115.4 million, or 19.0%, from $606.2 million at September 30, 2015. Gross loans, net of unearned income, were $627.2 million at September 30, 2016, an increase of $44.0 million, or 7.5%, from $583.2 million at June 30, 2016, and an increase of $120.9 million, or 23.9%, from $506.3 million at September 30, 2015.

New loan originations for the third quarter of 2016 totaled $93.2 million, including SBA loan originations of $21.5 million, compared to $116.7 million, including SBA loan originations of $39.9 million for the second quarter of 2016. New loan originations for the third quarter of 2015 were $97.8 million, including SBA loan originations of $20.7 million.

Total deposits were $626.9 million at September 30, 2016, an increase of $45.1 million, or 7.8% from $581.7 million at June 30, 2016, and an increase of $117.2 million, or 23.0%, from $509.7 million at September 30, 2015. Non-interest bearing deposits were $227.7 million at September 30, 2016, an increase of $22.4 million, or 10.9%, from $205.4 million at June 30, 2016, and an increase of $72.8 million, or 47.0% from $155.0 million at September 30, 2015.

Borrowings from the Federal Home Loan Bank (“FHLB”) at September 30, 2016 were $10.0 million, compared to $10.0 million at June 30, 2016 and $20.0 million at September 30, 2015.

Non-interest bearing deposits accounted for 36.3% of total deposits at September 30, 2016, compared to 35.3% at June 30, 2016 and 30.4% at September 30, 2015.

At September 30, 2016, the Company continued to exceed all regulatory capital requirements to be classified as “well-capitalized,” as summarized in the following table.

At September 30, 2016, the tangible common equity represented 10.92% of tangible assets, compared to 11.36% at June 30, 2016 and 11.68% at September 30, 2015. 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 Company’s capital levels.

Asset Quality

Loan loss provision for the third quarter of 2016 was $677 thousand, compared to $452 thousand for the second quarter of 2016 and $476 thousand for the third quarter of 2015. Non-performing assets were $1.0 million, or 0.13% of total assets, at September 30, 2016 and $1.0 million, or 0.15% of total assets, at June 30, 2016 and $1.0 million, or 0.17% of total assets, at September 30, 2015. There was no other real estate owned (“OREO”) at September 30, 2016, June 30, 2016, or September 30, 2015.

Non-performing loans to gross loans were 0.15% at September 30, 2016, compared to 0.18% at June 30, 2016 and 0.20% at September 30, 2015. Total classified loans were $0.8 million, or 0.13% of gross loans, at September 30, 2016, compared to $1.2 million, or 0.21% of gross loans, at June 30, 2016 and $0.8 million, or 0.15% of gross loans, at September 30, 2015.

The allowance for loan losses was $7.6 million at September 30, 2016, compared to $7.1 million at June 30, 2016 and $6.4 million at September 30, 2015. The allowance for loan losses was 1.21% of gross loans at September 30, 2016 and June 30, 2016 and 1.26% at September 30, 2015.

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 the Company’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, which can be found on Open Bank’s website at www.myopenbank.com.

About OP Bancorp

OP Bancorp, the holding company for Open Bank, is a California corporation whose common stock is traded on the OTCQB under the ticker symbol, “OPBK.” Open Bank (the "Bank") is engaged in the general commercial banking business in Los Angeles and Orange Counties and is focused on serving the banking needs of small- and medium-sized businesses, professionals, and residents with a particular emphasis on Korean and other ethnic minority communities. The Bank currently operates with seven full branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Gardena and Buena Park. The Bank also has three loan production offices in Seattle, Washington; Dallas, Texas; and Flushing, New York. 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.comMember FDIC, Equal Housing Lender

Safe Harbor Statement

This press release contains certain forward-looking information about OP Bancorp 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, including statements about the Company’s successful implementation of its strategies resulting in significant increase in non-interest bearing deposits. 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 Company’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 OP Bancorp such as the ability of the new branch to attract sufficient number of customers, deposits and new business to become profitable. OP Bancorp 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, OP Bancorp’s results could differ materially from those expressed in, or implied or projected by such forward-looking statements. OP Bancorp assumes no obligation to update such forward-looking statements, except as required by law.

View source version on businesswire.com: http://www.businesswire.com/news/home/20161027005296/en/

OP Bancorp
Christine Oh, 213.892.1192
EVP & CFO
Christine.oh@myopenbank.com

Source: OP Bancorp