News Details

Financial Highlights

• Net income totaled $2.46 million for the second quarter of 2017, or $0.18 per diluted common share, up 14.8% from $2.15 million for the first quarter of 2017 and 36.8% from $1.80 million for the second quarter of 2016.
• Net interest margin was 4.58% for the second quarter of 2017, compared to 4.47% for the first quarter of 2017 and 4.30% for the second quarter of 2016.
• Total assets were $835 million at June 30, 2017, up 4.4% from $800 million at March 31, 2017, and up 24.1% from $673 million at June 30, 2016.
• Net loans receivable were $694 million at June 30, 2017, up 3.0% from $674 million at March 31, 2017, and up 20.4% from $576 million at June 30, 2016.
• Total deposits were $733 million at June 30, 2017, up 3.1% from $711 million at March 31, 2017, and up 26.0% from $582 million at June 30, 2016.
• Non-interest bearing deposits were $287 million at June 30, 2017, up 11.7% from $257 million at March 31, 2017, and up 39.7% from $205 million at June 30, 2016.
• Non-performing assets to total assets were 0.09% at June 30, 2017, compared to 0.05% at March 31, 2017, and 0.15% at June 30, 2016.

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 2017 was $2.46 million, or $0.18 per diluted common share. This compares with net income of $2.15 million, or $0.15 per diluted share, for the first quarter of 2017, and net income of $1.80 million, or $0.13 per diluted share, for the second quarter of 2016. Pre-tax pre-provision income was $4.3 million for the second quarter 2017, compared to $4.1 million for the first quarter 2017, and $3.5 million for the second quarter 2016.

“We are pleased to announce yet another quarter of strong performance. The growth of our total assets, which have now eclipsed $800 million, are a reflection of the trust we have built within our local community. As part of preserving this trust, we have maintained a solid foundation of core deposits, specifically non-interest bearing deposits, which accounted for 39% of our total deposits, and we have continued to strengthen our credit quality and performance ratios” stated Min Kim, President and Chief Executive Officer.”

Results of Operations

Net interest income before loan loss provision was $8.6 million for the three months ended June 30, 2017, an increase of 4.7% from $8.2 million for the first quarter of 2017, and an increase of 26.2% from $6.8 million for the second quarter of 2016. The increases from the first quarter of 2017 and the second quarter of 2016 were the results of continued growth in interest earning assets, mostly loans, and improvements in net interest margin.

Average gross loans, including held-for-sale loans, were $693 million for the second quarter of 2017, an increase of $8 million, or 1.2%, from $685 million for the first quarter of 2017, and an increase of $137 million, or 24.5%, from $557 million for the second quarter of 2016.

The net interest margin for the second quarter of 2017 was 4.58%, an 11 basis point increase from 4.47% for the first quarter of 2017, and a 28 basis point increase from 4.30% for the second quarter of 2016. Excluding impacts from non-recurring items, such as loan payoffs, FHLB special dividend and non-accrual loans, the net interest margin for the second quarter of 2017 was 4.46%, up 9 basis points compared to 4.37% for the first quarter of 2017, and up 37 basis points from 4.09% for the second quarter of 2016.

The net interest margin expansions from the first quarter of 2017 and the second quarter of 2016 were primarily due to increases in average yield on gross loans with stable average cost of funds. Average yield on gross loans for the second quarter of 2017, excluding non-recurring items, increased 11 basis points from the first quarter 2017 and 21 basis points from the second quarter of 2016. The increase in the average yield on gross loans was primarily due to three hikes in Prime rates since December 2016. Average cost of funds for the second quarter of 2017 remained the same as the first quarter of 2017 and the second quarter of 2016.

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

Loan loss provision for the second quarter of 2017 was $170 thousand, compared to $541 thousand for the first quarter of 2017 and $452 thousand for the second quarter of 2016.

Non-interest income was $2.21 million for the second quarter of 2017, down 1.6% from $2.24 million for the first quarter of 2017 and down 2.5% from $2.27 million for the second quarter of 2016. The changes were primarily due to decreases in net gains on sale of SBA loans for the second quarter of 2017, from the first quarter of 2017 and the second quarter of 2016.

Net gain on sale of SBA loans totaled $1.1 million for the second quarter of 2017, compared to $1.2 million for the first quarter of 2017 and $1.5 million for the second quarter of 2016. Sale of SBA loans for the second quarter of 2017 was $16.2 million, compared to $16.4 million for the first quarter of 2017 and $24.1 million for the second quarter of 2016. The average premium on the sale of SBA loans for the second quarter of 2017 was 8.6%, compared to 9.4% for the first quarter of 2017 and for the second quarter of 2016.

Non-interest expense increased $164 thousand, or 2.6%, to $6.6 million for the second quarter of 2017, compared to $6.4 million for the first quarter of 2017. Compared to the second quarter of 2016, non-interest expense increased $942 thousand, or 16.8%, primarily due to increased operating expenses to support continued growth of the Company. Salary & employee benefits expenses increased $725 thousand as the number of full time equivalent employees increased to 128.5 at June 30, 2017, from 125.5 at June 30, 2016. The increases in data processing, occupancy, and other business development related expenses totaled $137 thousand.

The effective tax rate for the second quarter of 2017 was 39.6%, compared to 39.1% for the first quarter of 2017 and 40.2% for the second quarter of 2016.

Balance Sheet

Total assets were $835.4 million at June 30, 2017, an increase of $35.2 million, or 4.4%, from $800.2 million at March 31, 2017, and an increase of $162.2 million, or 24.1%, from $673.3 million at June 30, 2016. Gross loans, net of unearned income, were $702.4 million at June 30, 2017, an increase of $20.5 million, or 3.0%, from $681.9 million at March 31, 2017, and an increase of $119.2 million, or 20.4%, from $583.2 million at June 30, 2016.

New loan originations for the second quarter of 2017 totaled $70.0 million, including SBA loan originations of $24.1 million, compared to $66.7 million, including SBA loan originations of $23.0 million for the first quarter of 2017. New loan originations for the second quarter of 2016 were $116.7 million, including SBA loan originations of $39.9 million. Loan payoffs for the second quarter of 2017 was $32.4 million, compared to $28.3 million for the first quarter of 2017, and $21.3 million for the second quarter of 2016.

Total deposits were $732.9 million at June 30, 2017, an increase of $21.9 million, or 3.1%, from $711.0 million at March 31, 2017, and an increase of $151.2 million, or 26.0%, from $581.7 million at June 30, 2016. Non-interest bearing deposits were $286.9 million at June 30, 2017, an increase of $30.0 million, or 11.7%, from $256.9 million at March 31, 2017, and an increase of $81.5 million, or 39.7% from $205.4 million at June 30, 2016.

Non-interest bearing deposits accounted for 39.1% of total deposits at June 30, 2017, compared to 36.1% at March 31, 2017, and 35.3% at June 30, 2016.

There was $10 million in borrowing from the Federal Home Loan Bank (“FHLB”) at June 30, 2017, compared to no borrowing at March 31, 2017, and $10 million at June 30, 2016.

At June 30, 2017, the Company continued to exceed all regulatory capital requirements to be classified as “well-capitalized,” as summarized in the following table.

At June 30, 2017, the tangible common equity represented 10.38% of tangible assets, compared to 10.47% at March 31, 2017, and 11.36% at June 30, 2016. 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 second quarter of 2017 was $170 thousand, compared to $541 thousand for the first quarter of 2017 and $452 thousand for the second quarter of 2016. Non-performing assets were $781 thousand, or 0.09% of total assets, at June 30, 2017, $364 thousand, or 0.05% of total assets, at March 31, 2017, and $1.0 million, or 0.15% of total assets, at June 30, 2016. There was no other real estate owned (“OREO”) at June 30, 2017, March 31, 2017, or June 30, 2016.

Non-performing loans to gross loans were 0.11% at June 30, 2017, compared to 0.05% at March 31, 2017, and 0.18% at June 30, 2016. Total classified loans were $2.6 million, or 0.36% of gross loans, at June 30, 2017, compared to $2.1 million, or 0.30% of gross loans, at March 31, 2017, and $1.2 million, or 0.21% of gross loans, at June 30, 2016.

The allowance for loan losses was $8.6 million at June 30, 2017, compared to $8.4 million at March 31, 2017, and $7.1 million at June 30, 2016. The allowance for loan losses was 1.22% of gross loans at June 30, 2017, and 1.23% at March 31, 2017, and 1.21% at June 30, 2016.

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 Duluth, Georgia. 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/20170726005422/en/

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

Source: OP Bancorp