OPBK - OP Bancorp Reports Net Income for 2022 Fourth Quarter of $8.0 Million and Diluted Earnings Per Share of $0.51

January, 26 2023 04:30 PM OP Bancorp

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.

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












($ 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

$ 106,083

$ 328,317

$ 27,324

$ 657,866
Weighted average rate

3.03 %

3.02 %

2.36 %

4.06 %

3.83 %

3.47 %

Capital and Cash Dividend












Basel III

OP Bancorp ⁽¹⁾

Open Bank

Minimum Well Capitalized Ratio

Minimum Capital Ratio+ Conservation Buffer ⁽²⁾
Risk-Based Capital Ratios:








Total risk-based capital ratio

12.87 %

12.76 %

10.00 %

10.50 %
Tier 1 risk-based capital ratio

11.70 %

11.59 %

8.00 %

8.50 %
Common equity tier 1 ratio

11.70 %

11.59 %

6.50 %

7.00 %
Leverage ratio

9.38 %

9.29 %

5.00 %

4.00 %

(1)

The capital requirements are only applicable to the Bank, and the Company's ratios are included for comparison purpose.

(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.












OP Bancorp

Basel III

% Change 4Q22 vs.


4Q22



3Q22



4Q21


3Q22


4Q21

Risk-Based Capital Ratios:










Total risk-based capital ratio


12.87
%


13.51
%


13.81
%

(0.64
) %

(0.94
) %
Tier 1 risk-based capital ratio


11.70
%


12.29
%


12.63
%

(0.59
) %

(0.93
) %
Common equity tier 1 ratio


11.70
%


12.29
%


12.63
%

(0.59
) %

(0.93
) %
Leverage ratio


9.38
%


9.48
%


9.75
%

(0.10
) %

(0.37
) %
Risk-weighted Assets ($ in thousands)

$
1,661,095


$
1,465,707


$
1,251,867


13.33
%

32.69
%

Capital ratios remained strong during the quarter. Our CET1 and total risk-based capital ratios were 11.70% and 12.87% as of December 31, 2022, down 93 basis points and 94 basis points from a year ago, respectively. The decreases in capital ratios were primarily due to year-over-year asset growth.

The Company’s Board of Directors has declared a quarterly cash dividend of $0.12 per share of its common stock. The cash dividend is payable on or about February 23, 2023 to all shareholders of record as of the close of business on February 9, 2023.

The Company did not repurchase any shares during the fourth quarter of 2022. Since the announcement of the initial stock repurchase program in January 2019, the Company has repurchased a total of 1.57 million shares of its common stock at an average repurchase price of $8.58 per share through December 31, 2022.

Asset Quality












($ in thousands)

As of and For the Three Months Ended

% Change 4Q22 vs.


4Q22



3Q22



4Q21


3Q22


4Q21

Nonperforming loans ⁽¹⁾

$
3,080


$
2,251


$
3,200


36.8
%

(3.8
) %
OREO


—



—



—


—


—

Total nonperforming assets

$
3,080


$
2,251


$
3,200


36.8
%

(3.8
) %











Nonperforming loans to gross loans


0.18
%


0.14
%


0.24
%

0.04
%

(0.06
) %
Nonperforming assets to total assets


0.15
%


0.11
%


0.19
%

0.04
%

(0.04
) %











Criticized ⁽²⁾ Loan:










Special mention loans

$
563


$
—


$
—


—
%

—
%
Classified loans ⁽³⁾


3,307



3,542



4,039


(6.6
)

(18.1
)
Total criticized loans

$
3,870


$
3,542


$
4,039


9.3
%

(4.2
) %











Criticized ⁽²⁾ loans to gross loans


0.23
%


0.22
%


0.31
%

0.01
%

(0.08
) %
Classified loans ⁽³⁾ to gross loans


0.19
%


0.22
%


0.31
%

(0.03
) %

(0.12
) %











Allowance for loan losses, beginning

$
18,369


$
17,702


$
14,134


3.8
%

30.0
%
Provision for loan losses ⁽⁴⁾


977



662



2,157


47.6


(54.7
)
Gross charge-offs


(109
)


—



(168
)

n/m


(35.1
)
Gross recoveries


4



5



—


(20.0
)

n/m

Allowance for loan losses, ending ⁽⁵⁾

$
19,241


$
18,369


$
16,123


4.7
%

19.3
%











Allowance for loan losses ratios:










As a % of gross loans


1.13
%


1.14
%


1.23
%

(0.01
) %

(0.10
) %
As an adjusted % of gross loans ⁽⁶⁾


1.16
%


1.18
%


1.36
%

(0.02
) %

(0.20
) %
As a % of nonperforming loans


625
%


816
%


503
%

(191
) %

122
%
As a % of nonperforming assets


625
%


816
%


503
%

(191
) %

122
%
Net charge-offs (recoveries) to average gross loans


0.03
%


(0.00
) %


0.05
%

0.03
%

(0.02
) %

(1)
Includes the guaranteed portion of SBA loans totaling $1.0 million, $442 thousand and $1.2 million as of December 31, 2022, September 30, 2022 and December 31, 2021, respectively.
(2)
Includes special mention, substandard, doubtful and loss categories.
(3)
Includes substandard, doubtful and loss categories.
(4)
Excludes reversal of uncollectible accrued interest receivable of $259 thousand for the three months ended December 31, 2021.
(5)
Excludes allowance for uncollectible accrued interest receivable of $205 thousand as of December 31, 2021.
(6)
See the Reconciliation of GAAP to NON-GAAP Financial Measures.

Overall, the Company continued to maintain solid asset quality with low levels of nonperforming loans and net charge-offs. Nonperforming assets and criticized loans remained below our historical norms, a reflection of our conservative credit culture and expertise in the industries we serve. Our allowance remained strong with an adjusted allowance to gross loans ratio of 1.16%.

Allowance for loan losses increased $3.1 million to $19.2 million from a year ago. Excluding the impacts of the purchased Hana loans, PPP loans, adjusted allowance to gross loans ratio was 1.16% as of December 31, 2022.

Criticized loans decreased by $169 thousand or 4.2% from a year ago, and the criticized loans to gross loans ratio decreased by 8 basis points. Criticized loans are generally consistent with the Special Mention, Substandard, Doubtful and Loss categories defined by regulatory authorities.

Nonperforming assets decreased $120 thousand to $3.1 million, or 0.15% of total assets from a year ago. As of December 31, 2022, $606 thousand of nonaccrual loans was the guaranteed portion of SBA loans that are in liquidation. The Company did not have OREO as of December 31, 2022 or 2021.

Net charge-offs were $105 thousand or 0.03% of average loans in the fourth quarter of 2022, compared to $168 thousand, or 0.05%, of average loans in the fourth quarter of 2021.

COVID-19 Pandemic Update

As of December 31, 2022, no loan was under COVID-19 loan payment modification.

Since the PPP’s inception through December 31, 2022, we have funded $154.5 million, and $154.0 million of principal forgiveness has been provided on qualifying PPP loans.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

In addition to GAAP measures, management uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance.

Pre-provision net revenue removes provision for loan losses and income tax expense. Management believes that this non-GAAP measure, when taken together with the corresponding GAAP financial measures (as applicable), provides meaningful supplemental information regarding our performance. This non-GAAP financial measure also facilitates a comparison of our performance to prior periods.








($ in thousands)

For the Three Months Ended


4Q22


3Q22


4Q21
Interest income

$
26,886

$
23,234

$
17,822
Interest expense


6,688


2,890


726
Net interest income


20,198


20,344


17,096
Noninterest income


3,223


4,821


7,289
Noninterest expense


11,327


12,338


9,591
Pre-provision net revenue
(a)
$
12,094

$
12,827

$
14,794
Reconciliation to net income:






Provision for loan losses
(b)
$
977

$
662

$
1,898
Income tax expense
(c)

3,089


3,515


3,762
Net income
(a)+(b) +(c)
$
8,028

$
8,650

$
9,134

During the second quarter of 2021, the Company purchased 638 loans from Hana for a total purchase price of $97.6 million. The Company evaluated $100.0 million of the loans purchased in accordance with the provisions of ASC 310-20, Nonrefundable Fees and Other Costs, which were recorded with a $8.9 million discount. As a result, the fair value discount on these loans is being accreted into interest income over the expected life of the loans using the effective yield method. Adjusted loan yield and net interest margin for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021 excluded the impacts of contractual interest and discount accretion of the purchased Hana loans as management does not consider purchasing loan portfolios to be normal or recurring transactions. Management believes that presenting the adjusted average loan yield and net interest margin provide comparability to prior periods and these non-GAAP financial measures provide supplemental information regarding the Company’s performance.








($ in thousands)

For the Three Months Ended


4Q22



3Q22



4Q21

Yield on Average Loans






Interest income on loans

$
24,719


$
21,780


$
17,271

Less: interest income on purchased Hana loans


1,685



1,717



1,863

Adjusted interest income on loans
(a)
$
23,034


$
20,063


$
15,408








Average loans

$
1,691,642


$
1,614,000


$
1,343,414

Less: Average purchased Hana loans


60,514



64,687



79,625

Adjusted average loans
(b)
$
1,631,128


$
1,549,313


$
1,263,789








Average loan yield ⁽¹⁾


5.81
%


5.36
%


5.10
%
Effect on average loan yield ⁽¹⁾


0.20
%


0.21
%


0.26
%
Adjusted average loan yield ⁽¹⁾
(a)/(b)

5.61
%


5.15
%


4.84
%







Net Interest Margin






Net interest income

$
20,198


$
20,344


$
17,096

Less: interest income on purchased Hana loans


1,685



1,717



1,863

Adjusted net interest income
(c)
$
18,513


$
18,627


$
15,233








Average interest-earning assets

$
1,966,165


$
1,874,516


$
1,668,865

Less: Average purchased Hana loans


60,514



64,687



79,625

Adjusted average interest-earning assets
(d)
$
1,905,651


$
1,809,829


$
1,589,240








Net interest margin ⁽¹⁾


4.08
%


4.31
%


4.07
%
Effect on net interest margin ⁽¹⁾


0.22
%


0.22
%


0.26
%
Adjusted net interest margin ⁽¹⁾
(c)/(d)

3.86
%


4.09
%


3.81
%

(1)

Annualized.

Adjusted allowance to gross loans ratio removes the impacts of purchased Hana loans, PPP loans and allowance on accrued interest receivable. Management believes that this ratio provides greater consistency and comparability between the Company’s results and those of its peer banks.








($ in thousands)

For the Three Months Ended


4Q22



3Q22



4Q21

Gross loans

$
1,707,219


$
1,618,018


$
1,314,019

Less: Purchased Hana loans


(58,966
)


(61,899
)


(77,170
)
PPP loans ⁽¹⁾


(434
)


(1,022
)


(38,918
)
Adjusted gross loans
(a)
$
1,647,819


$
1,555,097


$
1,197,931








Accrued interest receivable on loans

$
6,413


$
5,203


$
4,231

Less: Accrued interest receivable on purchased Hana loans


(397
)


(323
)


(340
)
Accrued interest receivable on PPP loans ⁽²⁾


(8
)


(16
)


(340
)
Add: Allowance on accrued interest receivable


—



—



205

Adjusted accrued interest receivable on loans
(b)
$
6,008


$
4,864


$
3,756








Adjusted gross loans and accrued interest receivable
(a)+(b) =(c)
$
1,653,827


$
1,559,961


$
1,201,687








Allowance for loan losses

$
19,241


$
18,369


$
16,123

Add: Allowance on accrued interest receivable


—



—



205

Adjusted Allowance
(d)
$
19,241


$
18,369


$
16,328








Adjusted allowance to gross loans ratio
(d)/(c)

1.16
%


1.18
%


1.36
%

(1)

Excludes purchased PPP loans of $8 thousand, $57 thousand and $1.7 million as of December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

(2)

Excludes purchased accrued interest receivable on PPP loans of $1 thousand and $15 thousand as of September 30, 2022 and December 31, 2021, respectively.

ABOUT OP BANCORP

OP Bancorp, the holding company for Open Bank (the “Bank”), is a California corporation whose common stock is quoted on the Nasdaq Global Market under the ticker symbol, “OPBK.” The Bank is engaged in the general commercial banking business in Los Angeles, Orange, and Santa Clara Counties, California, and Carrollton, Texas 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 ten full-service branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Cerritos, Gardena, Buena Park, and Santa Clara, California and Carrollton, Texas. The Bank also has four loan production offices in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, and Lynnwood, Washington. 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.com .

Cautionary Note Regarding Forward-Looking Statements

Certain matters set forth herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company’s current business plans and expectations regarding future operating results. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties, some of which are beyond our control, include, but are not limited to: business and economic conditions, particularly those affecting the financial services industry and our primary market areas; our ability to successfully manage our credit risk and the sufficiency of our allowance for loan losses; factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers, the success of construction projects that we finance, including any loans acquired in acquisition transactions; our ability to effectively execute our strategic plan and manage our growth; interest rate fluctuations, which could have an adverse effect on our profitability; liquidity issues, including fluctuations in the fair value and liquidity of the securities we hold for sale and our ability to raise additional capital, if necessary; external economic and/or market factors, such as changes in monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve, inflation or deflation, changes in the demand for loans, and fluctuations in consumer spending, borrowing and savings habits, which may have an adverse impact on our financial condition; continued or increasing competition from other financial institutions, credit unions, and non-bank financial services companies, many of which are subject to different regulations than we are; challenges arising from unsuccessful attempts to expand into new geographic markets, products, or services; restraints on the ability of Open Bank to pay dividends to us, which could limit our liquidity; increased capital requirements imposed by banking regulators, which may require us to raise capital at a time when capital is not available on favorable terms or at all; a failure in the internal controls we have implemented to address the risks inherent to the business of banking; inaccuracies in our assumptions about future events, which could result in material differences between our financial projections and actual financial performance; changes in our management personnel or our inability to retain motivate and hire qualified management personnel; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems; disruptions, security breaches, or other adverse events affecting the third-party vendors who perform several of our critical processing functions; an inability to keep pace with the rate of technological advances due to a lack of resources to invest in new technologies; risks related to potential acquisitions; political developments, uncertainties or instability, catastrophic events, acts of war or terrorism, or natural disasters, such as earthquakes, fires, drought, pandemic diseases (such as the coronavirus) or extreme weather events, any of which may affect services we use or affect our customers, employees or third parties with which we conduct business; incremental costs and obligations associated with operating as a public company; the impact of any claims or legal actions to which we may be subject, including any effect on our reputation; compliance with governmental and regulatory requirements, including the Dodd-Frank Act and others relating to banking, consumer protection, securities and tax matters, and our ability to maintain licenses required in connection with commercial mortgage origination, sale and servicing operations; changes in federal tax law or policy; and our ability the manage the foregoing and other factors set forth in the Company’s public reports. We describe these and other risks that could affect our results in Item 1A. “Risk Factors,” of our latest Annual Report on Form 10-K for the year ended December 31, 2021 and in our other subsequent filings with the Securities and Exchange Commission.

CONSOLIDATED BALANCE SHEETS (unaudited)












($ in thousands)

As of

% Change 4Q22 vs.


4Q22



3Q22



4Q21


3Q22


4Q21

Assets










Cash and due from banks

$
12,952


$
25,516


$
11,283


(49.2
) %

14.8
%
Interest-bearing deposits in other banks


70,020



81,765



104,176


(14.4
)

(32.8
)
Cash and cash equivalents


82,972



107,281



115,459


(22.7
)

(28.1
)
Securities available for sale, at fair value


209,809



186,438



150,444


12.5


39.5

Other investments


12,098



12,074



10,999


0.2


10.0

Loans held for sale


15,408



36,642



89,428


(57.9
)

(82.8
)
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, net of unearned income


1,707,219



1,618,018



1,314,019


5.5


29.9

Allowance for loan losses


(19,241
)


(18,369
)


(16,123
)

4.7


19.3

Net loans receivable


1,687,978



1,599,649



1,297,896


5.5


30.1

Premises and equipment, net


4,400



4,383



4,355


0.4


1.0

Accrued interest receivable, net


7,180



5,856



4,579


22.6


56.8

Servicing assets


12,759



13,000



12,720


(1.9
)

0.3

Company owned life insurance


21,613



21,464



11,134


0.7


94.1

Deferred tax assets


13,717



17,296



8,409


(20.7
)

63.1

Operating right-of-use assets


9,097



8,265



8,905


10.1


2.2

Other assets


17,262



17,228



12,363


0.2


39.6

Total assets

$
2,094,293


$
2,029,575


$
1,726,691


3.2
%

21.3
%
Liabilities and Shareholders' Equity










Liabilities










Noninterest bearing

$
701,584


$
794,631


$
774,754


(11.7
) %

(9.4
) %
Money market and others


526,321



524,911



380,226


0.3


38.4

Time deposits greater than $250,000


356,197



277,785



207,288


28.2


71.8

Other time deposits


301,669



219,484



171,798


37.4


75.6

Total deposits


1,885,771



1,816,811



1,534,066


3.8


22.9

Borrowings


50



10,000



—


(99.5
)

n/m

Accrued interest payable


2,771



1,099



558


152.1


396.6

Operating lease liabilities


10,213



9,485



10,307


7.7


(0.9
)
Other liabilities


18,572



22,085



16,538


(15.9
)

12.3

Total liabilities


1,917,377



1,859,480



1,561,469


3.1


22.8

Shareholders’ equity










Common stock


79,326



78,782



78,718


0.7


0.8

Additional paid-in capital


9,743



9,424



8,645


3.4


12.7

Retained earnings


105,690



99,487



79,056


6.2


33.7

Accumulated other comprehensive loss


(17,843
)


(17,598
)


(1,197
)

1.4


1390.6

Total shareholders’ equity


176,916



170,095



165,222


4.0


7.1

Total liabilities and shareholders' equity

$
2,094,293


$
2,029,575


$
1,726,691


3.2
%

21.3
%

(1)

Includes SBA 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.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)












($ in thousands, except share and per share data)

For the Three Months Ended

% Change 4Q22 vs.


4Q22


3Q22


4Q21

3Q22


4Q21

Interest income










Interest and fees on loans

$
24,719

$
21,780

$
17,271

13.5
%

43.1
%
Interest on securities available for sale


1,237


881


362

40.4


241.7

Other interest income


930


573


189

62.3


392.1

Total interest income


26,886


23,234


17,822

15.7


50.9

Interest expense










Interest on deposits


6,598


2,889


726

128.4


808.8

Interest on borrowings


90


1


—

n/m


n/m

Total interest expense


6,688


2,890


726

131.4


821.2

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
)
Net interest income after provision for loan losses


19,221


19,682


15,198

(2.3
)

26.5

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
)
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

Income before income tax expense


11,117


12,165


12,896

(8.6
)

(13.8
)
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
) %











Book value per share

$
11.59

$
11.19

$
10.92

3.6
%

6.1
%
Earnings per share - Basic

$
0.52

$
0.56

$
0.60

(7.1
) %

(13.3
) %
Earnings per share - Diluted

$
0.51

$
0.55

$
0.59

(7.3
) %

(13.6
) %











Shares of common stock outstanding


15,270,344


15,199,840


15,137,808

0.5
%

0.9
%
Weighted Average Shares:










- Basic


15,208,308


15,195,826


15,136,229

0.1
%

0.5
%
- Diluted


15,264,971


15,275,156


15,227,291

(0.1
) %

0.2
%

Key Ratios














For the Three Months Ended

Change 4Q22 vs.

4Q22


3Q22


4Q21


3Q22


4Q21

Return on average assets (ROA) ⁽¹⁾

1.56
%

1.77
%

2.11
%

(0.2
) %

(0.6
) %
Return on average equity (ROE) ⁽¹⁾

18.58
%

19.91
%

22.68
%

(1.3
) %

(4.1
) %
Net interest margin ⁽¹⁾

4.08
%

4.31
%

4.07
%

(0.2
) %

—
%
Efficiency ratio

48.36
%

49.03
%

39.34
%

(0.7
) %

9.0
%











Total risk-based capital ratio

12.87
%

13.10
%

13.66
%

(0.2
) %

(0.8
) %
Tier 1 risk-based capital ratio

11.70
%

11.92
%

12.42
%

(0.2
) %

(0.7
) %
Common equity tier 1 ratio

11.70
%

11.92
%

12.42
%

(0.2
) %

(0.7
) %
Leverage ratio

9.38
%

9.52
%

9.58
%

(0.1
) %

(0.2
) %

(1)

Annualized.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)








($ in thousands, except share and per share data)

For the Twelve Months Ended December 31,


2022


2021

% Change
Interest income






Interest and fees on loans

$
82,864

$
62,448

32.7
%
Interest on securities available for sale


3,351


1,085

208.8

Other interest income


1,997


625

219.5

Total interest income


88,212


64,158

37.5

Interest expense






Interest on deposits


11,210


3,132

257.9

Interest on borrowings


91


—

n/m

Total interest expense


11,301


3,132

260.8

Net interest income


76,911


61,026

26.0

Provision for loan losses


2,976


522

470.1

Net interest income after provision for loan losses


73,935


60,504

22.2

Noninterest income






Service charges on deposits


1,675


1,562

7.2

Loan servicing fees, net of amortization


2,416


1,953

23.7

Gain on sale of loans


12,285


11,313

8.6

Other income


1,243


1,189

4.5

Total noninterest income


17,619


16,017

10.0

Noninterest expense






Salaries and employee benefits


27,189


21,253

27.9

Occupancy and equipment


5,964


5,213

14.4

Data processing and communication


2,085


2,000

4.3

Professional fees


1,620


1,192

35.9

FDIC insurance and regulatory assessments


813


583

39.5

Promotion and advertising


543


684

(20.6
)
Directors’ fees


682


593

15.0

Foundation donation and other contributions


3,393


2,890

17.4

Other expenses


2,541


1,457

74.4

Total noninterest expense


44,830


35,865

25.0

Income before income tax expense


46,724


40,656

14.9

Income tax expense


13,414


11,816

13.5

Net income

$
33,310

$
28,840

15.5
%







Book value per share

$
11.59

$
10.92

6.1
%
Earnings per share - Basic

$
2.15

$
1.89

13.8
%
Earnings per share - Diluted

$
2.14

$
1.88

13.8
%







Shares of common stock outstanding


15,270,344


15,137,808

0.9
%
Weighted Average Shares:






- Basic


15,171,240


15,087,686

0.6
%
- Diluted


15,231,418


15,155,347

0.5
%

Key Ratios










For the Twelve Months Ended December 31,

2022


2021


Change
Return on average assets (ROA) ⁽¹⁾

1.74
%

1.83
%

(0.1
) %
Return on average equity (ROE) ⁽¹⁾

19.57
%

18.90
%

0.7
%
Net interest margin ⁽¹⁾

4.18
%

4.02
%

0.2
%
Efficiency ratio

47.42
%

46.55
%

0.9
%







Total risk-based capital ratio

12.87
%

13.66
%

(0.8
) %
Tier 1 risk-based capital ratio

11.70
%

12.42
%

(0.7
) %
Common equity tier 1 ratio

11.70
%

12.42
%

(0.7
) %
Leverage ratio

9.38
%

9.58
%

(0.2
) %

(1)

Annualized.

ASSET QUALITY








($ in thousands)

As of and For the Three Months Ended


4Q22



3Q22



4Q21

Nonaccrual Loans ⁽¹⁾

$
2,639


$
2,251


$
3,000

Loans 90 days or more past due, accruing ⁽²⁾


441



—



200

Accruing restructured loans


—



—



—

Nonperforming loans


3,080



2,251



3,200

Other real estate owned ("OREO")


—



—



—

Nonperforming assets

$
3,080


$
2,251


$
3,200








Criticized loans ⁽³⁾ by loan type:






Commercial real estate

$
563


$
—


$
—

SBA loans


1,472



1,817



2,688

C&I loans


555



742



313

Home mortgage loans


1,280



983



1,038

Total criticized loans ⁽³⁾

$
3,870


$
3,542


$
4,039








Nonperforming assets/total assets


0.15
%


0.11
%


0.19
%
Nonperforming assets / gross loans plus OREO


0.18
%


0.14
%


0.24
%
Nonperforming loans / gross loans


0.18
%


0.14
%


0.24
%
Allowance for loan losses / nonperforming loans


625
%


816
%


503
%
Allowance for loan losses / nonperforming assets


625
%


816
%


503
%
Allowance for loan losses / gross loans


1.13
%


1.14
%


1.23
%
Criticized loans ⁽³⁾ / gross loans


0.23
%


0.22
%


0.31
%
Classified loans / gross loans


0.19
%


0.22
%


0.31
%







Net charge-offs (recoveries)

$
105


$
(5
)

$
168

Net charge-offs (recoveries) to average gross loans ⁽⁴⁾


0.03
%


(0.00
) %


0.05
%

(1)
Includes the guaranteed portion of SBA loans that are in liquidation totaling $606 thousand, $442 thousand and $1.0 million as of December 31, 2022, September 30, 2022 and December 31, 2021, respectively.
(2)
Includes the guaranteed portion of PPP loans totaling $200 thousand as of December 31, 2021.
(3)
Consists of special mention, substandard, doubtful and loss categories.
(4)
Annualized.








($ in thousands)

4Q22

3Q22

4Q21
Accruing delinquent loans 30-89 days past due






30-59 days

$ 1,918

$ 360

$ 76
60-89 days

1,559

845

336
Total ⁽¹⁾

$ 3,477

$ 1,205

$ 412

(1)

Includes the guaranteed portion of PPP loans totaling $756 thousand and $408 thousand as of September 30, 2022 and December 31, 2021, respectively.

AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS






















For the Three Months Ended


4Q22

3Q22

4Q21
($ in thousands)

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:


















Interest-bearing deposits in other banks

$
75,988

$
734

3.78
%

$
75,599

$
427

2.21
%

$
192,302

$
73

0.15
%
Federal funds sold and other investments


12,074


196

6.47



12,221


146

4.78



11,012


116

4.23

Available-for-sale debt securities, at fair value


186,461


1,237

2.66



172,696


881

2.04



122,137


362

1.19

Real estate loans


836,609


11,172

5.30



810,158


10,144

4.97



685,394


7,774

4.50

SBA loans


289,408


6,681

9.16



286,903


5,850

8.09



400,059


6,829

6.77

C&I loans


114,265


1,917

6.66



140,098


1,952

5.53



133,104


1,334

3.98

Home mortgage loans


449,684


4,929

4.38



375,804


3,820

4.07



123,822


1,320

4.27

Consumer & other loans


1,676


20

4.80



1,037


14

4.88



1,035


14

5.21

Loans ⁽²⁾


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

Noninterest-earning assets


87,189






83,398






62,996




Total assets

$
2,053,354





$
1,957,914





$
1,731,861























Interest-bearing liabilities:


















Money market deposits and others

$
515,747

$
3,045

2.34
%

$
502,166

$
1,506

1.19
%

$
378,849

$
283

0.30
%
Time deposits


569,584


3,553

2.47



445,271


1,383

1.23



401,938


443

0.44

Total interest-bearing deposits


1,085,331


6,598

2.41



947,437


2,889

1.21



780,787


726

0.37

Borrowings


8,158


90

4.35



130


1

3.00



4


—

—

Total interest-bearing liabilities


1,093,489


6,688

2.43



947,567


2,890

1.21



780,791


726

0.37

Noninterest-bearing liabilities:


















Noninterest-bearing deposits


751,405






806,289






765,012




Other noninterest-bearing liabilities


35,593






30,258






24,994




Total noninterest-bearing liabilities


786,998






836,547






790,006




Shareholders’ equity


172,867






173,800






161,064




Total liabilities and shareholders’ equity

$
2,053,354





$
1,957,914





$
1,731,861























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
%



















Cost of deposits & cost of funds:


















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.

(2)

Includes loans held for sale.

AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS
















For the Twelve Months Ended December 31,


2022

2021
($ in thousands)

Average Balance

Interest and Fees

Yield/ Rate ⁽¹⁾

Average Balance

Interest and Fees

Yield/ Rate ⁽¹⁾
Interest-earning assets:












Interest-bearing deposits in other banks

$
79,482

$
1,399

1.76
%

$
132,090

$
170

0.13
%
Federal funds sold and other investments


11,810


598

5.06



10,755


455

4.23

Available-for-sale debt securities, at fair value


170,479


3,351

1.97



108,346


1,085

1.00

Real estate loans


777,776


37,861

4.87



672,045


30,645

4.56

SBA loans


321,757


24,073

7.48



355,114


21,760

6.13

C&I loans


142,630


7,217

5.06



114,629


4,463

3.89

Home mortgage loans


334,984


13,660

4.08



122,465


5,520

4.51

Consumer & other loans


1,071


53

4.94



1,095


60

5.51

Loans ⁽²⁾


1,578,218


82,864

5.25



1,265,348


62,448

4.94

Total interest-earning assets


1,839,989


88,212

4.79



1,516,539


64,158

4.23

Noninterest-earning assets


76,883






55,200




Total assets

$
1,916,872





$
1,571,739

















Interest-bearing liabilities:












Money market deposits and others

$
475,414

$
5,305

1.12
%

$
362,900

$
1,134

0.31
%
Time deposits


445,169


5,905

1.33



378,585


1,998

0.53

Total interest-bearing deposits


920,583


11,210

1.22



741,485


3,132

0.42

Borrowings


2,089


91

4.33



1,988


—

—

Total interest-bearing liabilities


922,672


11,301

1.22



743,473


3,132

0.42

Noninterest-bearing liabilities:












Noninterest-bearing deposits


796,175






656,130




Other noninterest-bearing liabilities


27,829






19,558




Total noninterest-bearing liabilities


824,004






675,688




Shareholders’ equity


170,196






152,578




Total liabilities and shareholders’ equity

$
1,916,872






1,571,739

















Net interest income / interest rate spreads



$
76,911

3.57
%



$
61,026

3.81
%
Net interest margin





4.18
%





4.02
%













Cost of deposits & cost of funds:












Total deposits / cost of deposits

$
1,716,758

$
11,210

0.65
%


1,397,615

$
3,132

0.22
%
Total funding liabilities / cost of funds

$
1,718,847

$
11,301

0.66
%


1,399,603

$
3,132

0.22
%

(1)

Annualized.

(2)

Includes loans held for sale.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230126005906/en/

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

Company Name:	OP Bancorp
Stock Symbol:	OPBK
Market:	NASDAQ
Website:	myopenbank.com

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