News Details

Financial Highlights

• Net income totaled $1.80 million for the second quarter of 2016, or $0.14 per diluted common share, up 36.5% from $1.32 million for the first quarter of 2016 and 13.6% from $1.59 million for the second quarter of 2015.
• Net interest margin was 4.30% for the second quarter of 2016, compared to 4.15% for the first quarter of 2016 and 4.32% for the second quarter of 2016.
• Total assets were $673 million at June 30, 2016, up 2.9% from $654 million at March 31, 2016, and up 19.2% from $565 million at June 30, 2015.
• Net loans receivable were $576 million at June 30, 2016, up 10.7% from $520 million at March 31, 2016 and up 25.3% from $460 million at June 30, 2015.
• Total deposits were $582 million at June 30, 2016, up 4.8% from $555 million at March 31, 2016 and up 21.0% from $481 million at June 30, 2015.
• Non-interest bearing deposits were $205 million at June 30, 2016, up 17.7% from $174 million at March 31, 2016, and up 23.0% from $167 million at June 30, 2015.
• Non-performing assets to total assets were 0.15% at June 30, 2016 and March 31, 2016 and 0.20% at June 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 second quarter of 2016 was $1.80 million, or $0.14 per diluted common share. This compares with net income of $1.32 million, or $0.10 per diluted share, for the first quarter of 2016, and net income of $1.59 million, or $0.12 per diluted share, for the second quarter of 2015. Pre-tax pre-provision income was $3.5 million for the second quarter 2016, up 42.9% from $2.4 million for the first quarter 2016, and 28.5% from $2.7 million for the second quarter 2015.

“We reported strong second quarter results, delivering record net income, record loan originations, and solid growth in deposits, especially in our non-interest bearing deposits. Non-interest bearing deposits grew 18% from the previous quarter and accounts for 35% of our total deposits as of June 30, 2016. Our net interest margin improved to 4.30%, which is the highest among our direct competitors and peers. These are amazing accomplishments in light of the current hyper-competitive market conditions, low interest rate environment and strong economic headwinds,” stated Min Kim, President and Chief Executive Officer. “We intend to continue our strategy of growing our non-interest bearing deposits, further strengthening the value of our franchise, continuing to grow our earning assets, all the while managing our risk, and controlling expenses to further improve our efficiency.”

Results of Operations

Net interest income before loan loss provision was $6.8 million for the three months ended June 30, 2016, compared to $6.2 million for the first quarter of 2016 and $5.5 million for the second quarter of 2015. The increases from the first quarter of 2016 and the second quarter of 2015 were primarily the result of continued growth in interest earning assets, mostly loans. Average gross loans were $557 million for the second quarter of 2016, an increase of $33 million, or 6.3%, from $524 million for the first quarter of 2016 and an increase of $103 million, or 22.6%, from $454 million for the second quarter of 2015.

The net interest margin for the second quarter of 2016 was 4.30%, a 15 basis point increase from 4.15% for the first quarter of 2016 and a 2 basis point decrease from 4.32% for the second quarter of 2015. The net interest margin expansion of 15 basis points from the prior quarter is attributable to higher yield on loans and increased level of non-interest bearing deposits. The net interest margin compression of 2 basis points from the second quarter of 2015 was primarily due to increased cost of funds. Total cost of funds, including non-interest bearing deposits and borrowings, increased to 0.57% for the second quarter of 2016, compared to 0.50% for the same quarter of 2015. The following table shows the asset yields, liability costs, spreads and margins.

Non-interest income was $2.3 million for the second quarter of 2016, up 25% compared to $1.8 million for the first quarter of 2016 and 4% from $2.2 million for the second quarter of 2015. The increases in non-interest income from the first quarter of 2016 and the second quarter of 2015 were primarily attributable to higher net gain on sale of SBA loans.

Net gain on sale of SBA loans totaled $1.5 million for the second quarter of 2016, compared to $944 thousand for the first quarter of 2016 and $1.3 million for the second quarter of 2015. Sale of SBA loans for the second quarter of 2016 was $24.1 million, compared to $12.7 million for the first quarter of 2016 and $15.3 million for the second quarter of 2015. The average premium on the sale of SBA loans for the second quarter of 2016 decreased to 9.4%, compared to 10.2% for the first quarter of 2016 and 11.0% for the second quarter of 2016.

Non-interest expense for the second quarter of 2016 remained stable at $5.6 million, which was the same as the first quarter of 2016. Non-interest expense has been managed well within the Company’s budget during the year.

Non-interest expense for the second quarter of 2016 increased $589 thousand from $5.0 million for the second quarter of 2015. The increase from the second 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 second quarter of 2016 increased $332 thousand to $3.4 million from $3.1 million for the second quarter of 2015, reflecting an increased number of full time equivalent employees of 125.5 at June 30, 2016, compared to 107.5 at June 30, 2015. Occupancy expenses, professional services fees and data processing expenses for the second quarter of 2016 increased $125 thousand, $82 thousand, and $67 thousand, respectively, compared to the second quarter of 2015, primary due to the Bank’s continued expansion.

The effective tax rate for the second quarter of 2016 was 40.2%, compared to 39.9% for the first quarter of 2016 and 41.2% for the second quarter of 2015.

Balance Sheet

Total assets were $673.3 million at June 30, 2016, an increase of $18.9 million, or 2.9% from 654.3 million at March 31, 2016, and an increase of $108.5 million, or 19.2%, from $564.8 million at June 30, 2015. Gross loans, net of unearned income, were $583.2 million at June 30, 2016, an increase of $56.2 million, or 10.7%, from $526.9 million at March 31, 2016, and an increase of $117.5 million, or 25.2%, from $465.7 million at June 30, 2015.

New loan originations for the second quarter of 2016 totaled $116.7 million, including SBA loan originations of $39.9 million, compared to $56.9 million, including SBA loan originations of $20.6 million for the first quarter of 2016. New loan originations for the second quarter of 2015 were $76.6 million, including SBA loan originations of $20.7 million.

Total deposits were $581.7 million at June 30, 2016, an increase of $26.5 million, or 4.8% from $555.3 million at March 31, 2016, and an increase of $101.0 million, or 21.0%, from $480.7 million at June 30, 2015. Non-interest bearing deposits were $205.4 million at June 30, 2016, an increase of $30.9 million, or 17.7%, from $174.5 million at March 31, 2016, and an increase of $38.4 million, or 23.0% from $167.0 million at June 30, 2015.

Borrowings from the Federal Home Loan Bank (“FHLB”) at June 30, 2016 were $10.0 million, compared to $20.0 million at March 31, 2016 and $10.0 million at June 30, 2015.

Non-interest bearing deposits accounted for 35.3% of total deposits at June 30, 2016, compared to 31.4% at March 31, 2016 and 34.7% at June 30, 2015.

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

At June 30, 2016, the tangible common equity represented 11.36% of tangible assets, compared to 11.34% at March 31, 2016 and 12.23% at June 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 Bank’s capital levels.

Asset Quality

Loan loss provision for the second quarter of 2016 was $452 thousand, compared to $230 for the first quarter of 2016. No provision for loan losses was recorded during the second quarter of 2015. Non-performing assets were $1.0 million, or 0.15% of total assets, at June 30, 2016 and March 31, 2016 and $1.2 million, or 0.20% of total assets, at June 30, 2015. There was no other real estate owned (“OREO”) at June 30, 2016, March 31, 2016, or June 30, 2015.

Non-performing loans to gross loans were 0.18% at June 30, 2016, compared to 0.19% at March 31, 2016 and 0.25% at June 30, 2015. Total classified loans were $1.2 million, or 0.21% of gross loans, at June 30, 2016, compared to $1.2 million, or 0.23% of gross loans, at March 31, 2016 and $1.4 million, or 0.30% of gross loans, at June 30, 2015.

The allowance for loan losses was $7.1 million at June 30, 2016, compared to $6.6 million at March 31, 2016 and $5.9 million at June 30, 2015. The allowance for loan losses was 1.21% of gross loans at June 30, 2016, compared to 1.26% at March 31, 2016 and June 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 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, 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

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 bank’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 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 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/20160726005577/en/

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

Source: OP Bancorp