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OP Bancorp Reports Record Net Income for Fourth Quarter 2021 of $9.1 Million and Diluted Earnings Per Share of $0.59

2021 Fourth Quarter Highlights compared with 2020 Fourth Quarter:

  • Financial Results:
    • Net income of $9.1 million, up $5.3 million, or 140%
    • Diluted earnings per share of $0.59, up $0.34, or 136%
    • Net interest income of $17.1 million, up $4.9 million, or 40%
    • Provision for loan losses of $1.9 million, up $67 thousand, or 4%
    • Noninterest income of $7.3 million, up $3.9 million, or 115%
    • Noninterest expense of $9.6 million, up $1.2 million, or 14%
    • Pre-provision net revenue (1) of $14.8 million, up $7.6 million, or 107%
    • Total assets of $1.73 billion, up $359.9 million, or 26%
    • Total loans (2) of $1.40 billion, up $277.1 million, or 25%; Average loans (2) of $1.34 billion, up $230.5 million, or 21%
    • Total deposits of $1.53 billion, up $334.0 million, or 28%; Average deposits of $1.55 billion, up $365.9 million, or 31%
    • Noninterest-bearing deposits to total deposits of 51%, up from 44%
    • Net interest margin of 4.07%, up from 3.73%
    • Return on average equity of 22.72%, up from 10.72%
    • Return on average assets of 2.11%, up from 1.13%
    • Efficiency ratio of 39.34%, an improvement from 54.02%
  • Credit Quality:
    • Allowance for loan losses to gross loans of 1.23%, compared to 1.40%
    • Adjusted allowance to gross loans (1) of 1.36%, compared to 1.54%
    • Net loan charge-offs to average gross loans of 0.05%, compared to  0.00%
    • Nonperforming loans to gross loans of 0.24%, compared to 0.09%
    • Criticized loans (3) to gross loans of 0.31%, down from 0.71%
  • Capital Levels:
    • Quarterly cash dividend of $0.10 per share, a 43% increase from $0.07 per share
    • Capital position well-capitalized with a Common Equity Tier 1 (“CET1”) ratio of 12.42%.
    • Book value per common share of $10.92, up 14%
    • Returned $1.5 million of capital to shareholders through cash dividend

___________________________________________________________

(1)     See reconciliation of GAAP to non-GAAP financial measures.

(2)     Includes loans held for sale.

(3)     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 2021. Net income for the fourth quarter of 2021 was $9.1 million, or $0.59 per diluted common share, compared with $8.3 million, or $0.54 per diluted common share, for the third quarter of 2021, and $3.8 million, or $0.25 per diluted common share, for the fourth quarter of 2020. Net income for the full year of 2021 was $28.9 million, or $1.88 per diluted common share, compared with $13.1 million, or $0.85 per diluted common share, for the full year of 2021.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220127005941/en/

Min Kim, President and Chief Executive Officer:

“We are pleased to report record earnings of $9.1 million, or $0.59 per diluted common share in the fourth quarter. Our loans and deposits grew 25% and 28%, respectively, from a year ago. The loan growth has come from all our loan categories. During the fourth quarter, we have added a new Specialty Deposit Center, which focuses on servicing escrow and trust clients. The growth in our noninterest-bearing deposits during the fourth quarter, which reached a record level at 51% of total deposits, was largely attributable to the Specialty Deposit Center. Our efficiency was also significantly improved as we focused on managing expenses while growing our revenue-generating activities. The economy seems poised for continued growth over the next several quarters despite headwinds related to the Omicron variant, inflation, and supply chain bottlenecks. We remain optimistic about the future 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 4Q21 vs.

 

4Q21

 

 

3Q21

 

 

4Q20

 

 

3Q21

 

 

4Q20

 

Selected Income Statement Data:

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$ 17,096

 

 

$ 16,589

 

 

$ 12,181

 

 

3.1

%

 

40.3

%

(Reversal of) provision for loan losses

 

1,898

 

 

(884

)

 

1,831

 

 

(314.7

)

 

3.7

 

Noninterest income

 

7,289

 

 

3,542

 

 

3,392

 

 

105.8

 

 

114.9

 

Noninterest expense

 

9,591

 

 

9,519

 

 

8,412

 

 

0.8

 

 

14.0

 

Income tax expense

 

3,747

 

 

3,246

 

 

1,513

 

 

15.4

 

 

147.7

 

Net Income

 

$ 9,149

 

 

$ 8,250

 

 

$ 3,817

 

 

10.9

%

 

139.7

%

Diluted earnings per share

 

$ 0.59

 

 

$ 0.54

 

 

$ 0.25

 

 

9.3

%

 

136.0

%

Selected Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

Total loans (1)

 

$ 1,403,447

 

 

$ 1,326,287

 

 

$ 1,126,395

 

 

5.8

%

 

24.6

%

Total deposits

 

$ 1,534,066

 

 

$ 1,496,406

 

 

$ 1,200,090

 

 

2.5

%

 

27.8

%

Total assets

 

$ 1,726,706

 

 

$ 1,679,911

 

 

$ 1,366,826

 

 

2.8

%

 

26.3

%

Average loans (1)

 

$ 1,343,414

 

 

$ 1,308,338

 

 

$ 1,112,889

 

 

2.7

%

 

20.7

%

Average deposits

 

$ 1,545,799

 

 

$ 1,448,771

 

 

$ 1,179,877

 

 

6.7

%

 

31.0

%

Credit Quality:

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

$ 3,202

 

 

$ 1,052

 

 

$ 985

 

 

204.4

%

 

225.1

%

Net charge-offs (recoveries) to average gross loans (2)

 

0.05

%

 

(0.00

)%

 

0.00

%

 

0.05

%

 

0.05

%

Allowance for loan losses to gross loans

 

1.23

%

 

1.15

%

 

1.40

%

 

0.08

%

 

(0.17

) %

Financial Ratios:

 

 

 

 

 

 

 

 

 

 

Return on average assets (2)

 

2.11

%

 

2.03

%

 

1.13

%

 

0.08

%

 

0.98

%

Return on average equity (2)

 

22.72

%

 

21.30

%

 

10.72

%

 

1.42

%

 

12.00

%

Net interest margin (2)

 

4.07

%

 

4.21

%

 

3.73

%

 

(0.14

) %

 

0.34

%

Common equity tier 1 capital ratio

 

12.42

%

 

12.63

%

 

13.56

%

 

(0.21

) %

 

(1.14

) %

Leverage ratio

 

9.58

%

 

9.75

%

 

10.55

%

 

(0.17

) %

 

(0.97

) %

Efficiency ratio (3)

 

39.34

%

 

47.28

%

 

54.02

%

 

(7.94

) %

 

(14.68

) %

Book value per common share

 

$ 10.92

 

 

$ 10.48

 

 

$ 9.55

 

 

4.2

%

 

14.3

%

 

 

 

 

 

 

 

 

 

 

 

(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 4Q21 vs.

 

4Q21

 

3Q21

 

4Q20

 

3Q21

 

 

4Q20

 

Interest Income

 

 

 

 

 

 

 

 

 

 

Interest income

 

$ 17,822

 

$ 17,355

 

$ 13,375

 

2.7

%

 

33.2

%

Interest expense

 

726

 

766

 

1,194

 

(5.2

)

 

(39.2

)

Net interest income

 

$ 17,096

 

$ 16,589

 

$ 12,181

 

3.1

%

 

40.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

4Q21

 

 

3Q21

 

 

4Q20

 

 

Average

Balance

 

Interest

 

Yield/Rate (1)

 

Average

Balance

 

Interest

and Fees

 

Yield/Rate (1)

 

Average

Balance

 

Interest

and Fees

 

Yield/Rate (1)

Interest-earning Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$ 1,343,414

 

$ 17,271

 

5.10

%

 

$ 1,308,338

 

$ 16,922

 

5.13

%

 

$ 1,112,889

 

$ 13,006

 

4.65

%

Total interest-earning assets

 

$ 1,668,865

 

$ 17,822

 

4.24

%

 

$ 1,566,050

 

$ 17,355

 

4.40

%

 

$ 1,299,347

 

$ 13,375

 

4.10

%

Interest-bearing Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits

 

$ 780,787

 

$ 726

 

0.37

%

 

$ 752,010

 

$ 766

 

0.40

%

 

$ 672,183

 

$ 1,194

 

0.71

%

Total interest-bearing liabilities

 

$ 780,791

 

$ 726

 

0.37

%

 

$ 752,010

 

$ 766

 

0.40

%

 

$ 680,121

 

$ 1,194

 

0.70

%

Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest Income/interest rate spreads

 

 

 

$ 17,096

 

3.87

%

 

 

 

$ 16,589

 

4.00

%

 

 

 

$ 12,181

 

3.40

%

Net interest margin

 

 

 

 

 

4.07

%

 

 

 

 

 

4.21

%

 

 

 

 

 

3.73

%

Total deposits / cost of deposits

 

$ 1,545,799

 

$ 726

 

0.19

%

 

$ 1,448,771

 

$ 766

 

0.21

%

 

$ 1,179,877

 

$ 1,194

 

0.40

%

Total funding liabilities / cost of funds

 

$ 1,545,803

 

$ 726

 

0.19

%

 

$ 1,448,771

 

$ 766

 

0.21

%

 

$ 1,187,815

 

$ 1,194

 

0.40

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

Yield % Change 4Q21 vs.

 

4Q21

 

 

 

3Q21

 

 

 

4Q20

 

 

 

 

Interest

& Fees

 

Yield (1)

 

Interest

& Fees

 

Yield (1)

 

Interest

& Fees

 

Yield (1)

 

3Q21

 

 

4Q20

 

Loan Yield Component

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contractual interest rate

 

$ 14,509

 

 

4.29

%

 

$ 14,063

 

 

4.27

%

 

$ 12,156

 

 

4.35

%

 

0.02

%

 

(0.06

) %

SBA discount accretion

 

1,571

 

 

0.46

 

 

1,584

 

 

0.48

 

 

619

 

 

0.22

 

 

(0.02

)

 

0.24

 

Amortization of net deferred fees

 

1,087

 

 

0.32

 

 

1,249

 

 

0.37

 

 

242

 

 

0.09

 

 

(0.05

)

 

0.23

 

Amortization of premium

 

3

 

 

 

 

 

 

 

 

 

 

 

 

0.00

 

 

 

Net interest recognized on nonaccrual loans

 

(16

)

 

-0.00

 

 

(15

)

 

-0.00

 

 

(20

)

 

-0.01

 

 

0.00

 

 

0.00

 

Prepayment penalties (2) and other fees

 

117

 

 

0.03

 

 

41

 

 

0.01

 

 

9

 

 

 

 

0.02

 

 

0.03

 

Yield on loans

 

$ 17,271

 

 

5.10

%

 

$ 16,922

 

 

5.13

%

 

$ 13,006

 

 

4.65

%

 

(0.03

) %

 

0.44

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of net deferred fees:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PPP loan forgiveness (3)

 

$ 920

 

 

0.27

%

 

$ 1,006

 

 

0.31

%

 

$ —

 

 

%

 

(0.04

) %

 

0.27

%

Other

 

167

 

 

0.05

 

 

243

 

 

0.07

 

 

242

 

 

0.09

 

 

(0.02

)

 

(0.04

)

Total amortization of net deferred fees

 

$ 1,087

 

 

0.32

%

 

$ 1,249

 

 

0.38

%

 

$ 242

 

 

0.09

%

 

(0.06

) %

 

0.23

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

(2)

Prepayment penalty income of $84 thousand for the three months ended December 31, 2021 was from commercial real estate and C&I loans. In comparison, there was no prepayment penalty income for the three months ended September 30, 2021 and December 31, 2020.

(3)

As of December 31, 2021, there were unamortized net deferred fees of $1.1 million to be recognized over the estimated life of the loans as a yield adjustment on the loans.

Impact of 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

 

4Q21

 

 

3Q21

 

Hana Loan Purchase:

 

 

 

 

Contractual interest rate

 

$ 1,027

 

 

$ 1,094

 

Purchased loan discount accretion

 

826

 

 

948

 

Other fees

 

10

 

 

15

 

Total interest income

 

$ 1,863

 

 

$ 2,057

 

 

 

 

 

 

Effect on average loan yield (1)

 

0.26

%

 

0.30

%

Effect on net interest margin (1)

 

0.26

%

 

0.30

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

4Q21

 

 

3Q21

 

 

4Q20

 

 

Average

Balance

 

Interest

 

Yield/

Rate

 

Average

Balance

 

Interest

and Fees

 

Yield/

Rate

 

Average

Balance

 

Interest

and Fees

 

Yield/

Rate

Average loan yield (1)

 

$ 1,343,414

 

$ 17,271

 

5.10

%

 

$ 1,308,338

 

$ 16,922

 

5.13

%

 

$ 1,112,889

 

$ 13,006

 

4.65

%

Adjusted average loan yield excluding purchased loans (1)(2)

 

$ 1,263,789

 

$ 15,408

 

4.84

%

 

$ 1,222,628

 

$ 14,865

 

4.83

%

 

$ 1,112,889

 

$ 13,006

 

4.65

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin (1)

 

$ 1,668,865

 

$ 17,096

 

4.07

%

 

$ 1,566,050

 

$ 16,589

 

4.21

%

 

$ 1,299,347

 

$ 12,181

 

3.73

%

Adjusted interest margin excluding purchased loans (1)(2)

 

$ 1,589,240

 

$ 15,233

 

3.81

%

 

$ 1,480,340

 

$ 14,532

 

3.91

%

 

$ 1,299,347

 

$ 12,181

 

3.73

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

(2)

See reconciliation of GAAP to non-GAAP financial measures.

In addition, the Company purchased home mortgage loans with unpaid principal balance of $48.9 million from third-party sellers in December 2021. Because these loans generally earn interest at a rate that is higher than current market rates, the loans were purchased at a premium to par, resulting in a total purchase price of $49.5 million. The Company amortizes the purchase premium over the expected life of the portfolio using the interest method of accounting.

Fourth Quarter 2021 vs. Third Quarter 2021

Net interest income increased $507 thousand, or 3%, primarily due to higher interest income on loans. Net interest margin was 4.07%, a decrease of 14 basis points from 4.21%.

  • An increase of $349 thousand in interest income from loans was primarily due to higher average balances from C & I loan growth and higher contractual loan yield from loan composition change driven by a decrease in lower-yielding PPP balances.
  • A decrease of 14 basis points in net interest margin was primarily due to a 16 basis point decrease in the yield on average interest-earning assets driven by higher average balances on lower-yielding cash equivalents.
  • Average loan yield was 5.10%, a decrease of three basis points from 5.13%, reflecting lower loan fees from PPP loan forgiveness.
  • Average cost of deposits was 0.19%, a decrease of two basis points from 0.21%.

Fourth Quarter 2021 vs. Fourth Quarter 2020

Net interest income increased $4.9 million, or 40%, primarily due to higher average loan balance and SBA discount accretion largely resulting from the Hana loan purchase, as well as higher loan fees from PPP loan forgiveness. Net interest margin was 4.07%, an increase of 34 basis points from 3.73%.

  • An increase of $4.3 million in interest income from loans was primarily due to average loan growth. SBA discount accretions from the Hana loan purchase and loan fees from PPP loan forgiveness have also contributed to the increase.
  • The improvement of 34 basis points in net interest margin was primarily driven by a 33 basis point decrease in the cost of interest-bearing liabilities.
  • Average loan yield was 5.10%, an increase of 45 basis points from 4.65%, reflecting higher SBA discount accretions from the Hana loan purchase, and higher loan fees from PPP loan forgiveness.
  • Average cost of deposits was 0.19%, a decrease of 21 basis points from 0.40%. The decrease in the cost of deposits primarily reflects the impact of lower interest rates and an increase of noninterest bearing deposits in deposit mix.

     

Provision for loan losses

Fourth Quarter 2021 vs. Third Quarter 2021

The Company recorded $1.9 million provision for loan losses, compared with a negative $884 thousand provision for loan losses. The $1.9 million provision for loan losses was primarily due to loan growth from new warehouse lines of credit and home mortgage purchases.

Fourth Quarter 2021 vs. Fourth Quarter 2020

The Company recorded $1.9 million provision for loan losses, compared with $1.8 million provision for loan losses.

Noninterest Income

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 4Q21 vs.

 

4Q21

 

3Q21

 

4Q20

 

3Q21

 

 

4Q20

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

$ 405

 

$ 409

 

$ 367

 

(1.0

) %

 

10.4

%

Loan servicing fees, net of amortization

 

521

 

599

 

367

 

(13.0

)

 

42.0

 

Gain on sale of loans

 

6,033

 

2,188

 

2,188

 

175.7

 

 

175.7

 

Other income

 

330

 

346

 

470

 

(4.6

)

 

(29.8

)

Total noninterest income

 

$ 7,289

 

$ 3,542

 

$ 3,392

 

105.8

%

 

114.9

%

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter 2021 vs. Third Quarter 2021

Noninterest income increased $3.7 million, or 106%, primarily due to higher gains on sale of loans.

  • Gains on sale of loans were $6.0 million, up $3.8 million from third quarter 2021. The increase was primarily due to an increased sales volume. The Company sold $56.8 million in SBA loans at an average premium of 10.98%, compared with the sale of $20.6 million at an average premium of 11.59%.

Fourth Quarter 2021 vs. Fourth Quarter 2020

Noninterest income increased $3.9 million, or 115%, primarily due to higher gains on sale of loans.

  • Gains on sales of loans were $6.0 million, up $3.8 million from fourth quarter 2020. The increase was mainly driven by higher sales volume and premiums on SBA loans. The Company sold $56.8 million in SBA loans at an average premium of 10.98%, compared with the sale of $28.5 million at an average premium of 8.83%.

     

Noninterest Expense

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

% Change 4Q21 vs.

 

4Q21

 

3Q21

 

4Q20

 

3Q21

 

 

4Q20

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

$ 5,560

 

$ 5,724

 

$ 5,536

 

(2.9

) %

 

0.4

%

Occupancy and equipment

 

1,418

 

1,326

 

1,237

 

6.9

 

 

14.6

 

Data processing and communication

 

637

 

448

 

435

 

42.2

 

 

46.4

 

Professional fees

 

267

 

308

 

265

 

(13.3

)

 

0.8

 

FDIC insurance and regulatory assessments

 

182

 

146

 

115

 

24.7

 

 

58.3

 

Promotion and advertising

 

156

 

175

 

62

 

(10.9

)

 

151.6

 

Directors’ fees

 

166

 

183

 

97

 

(9.3

)

 

71.1

 

Foundation donation and other contributions

 

901

 

842

 

400

 

7.0

 

 

125.3

 

Other expenses

 

304

 

367

 

265

 

(17.2

)

 

14.7

 

Total noninterest expense

 

$ 9,591

 

$ 9,519

 

$ 8,412

 

0.8

%

 

14.0

%

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter 2021 vs. Third Quarter 2021

Noninterest expense remained relatively stable in the fourth quarter of 2021 at $9.6 million compared to $9.5 million for the third quarter of 2021.

Fourth Quarter 2021 vs. Fourth Quarter 2020

Noninterest expense increased $1.2 million, or 14%, primarily due to a higher foundation donation and other contributions.

  • Foundation donation and other contributions were $901 thousand, up $501 thousand from fourth quarter 2020. The increase was primarily due to higher donation accruals for Open Stewardship Foundation as a result of higher net income compared to fourth quarter 2020.
  • Data processing and communication, and occupancy and equipment also increased $202 thousand and $181 thousand, respectively, primarily to support balance sheet growth.

     

Income Tax Expense

Fourth Quarter 2021 vs. Third Quarter 2021

Income tax expense was $3.7 million, and the effective tax rate was 29%, compared to income tax expense of $3.2 million and the effective rate of 28% for third quarter 2021.

Fourth Quarter 2021 vs. Fourth Quarter 2020

Income tax expense was $3.7 million, and the effective tax rate was 29%, compared to income tax expense of $1.5 million and the effective rate of 28% for fourth quarter 2020.

BALANCE SHEET HIGHLIGHTS

Loans

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of

 

% Change 4Q21 vs.

 

4Q21

 

3Q21

 

4Q20

 

3Q21

 

 

4Q20

 

Real estate loans

 

$ 701,450

 

$ 688,430

 

$ 651,684

 

1.9

%

 

7.6

%

SBA loans (1)

 

275,858

 

303,625

 

211,375

 

(9.1

)

 

30.5

 

C & I loans

 

162,543

 

123,422

 

107,307

 

31.7

 

 

51.5

 

Home mortgage loans

 

173,303

 

115,255

 

128,212

 

50.4

 

 

35.2

 

Consumer & other loans

 

865

 

1,089

 

1,158

 

(20.6

)

 

(25.3

)

Gross loans

 

$ 1,314,019

 

$ 1,231,821

 

$ 1,099,736

 

6.7

%

 

19.5

%

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes PPP loans of $40.6 million, $69.3 million and $64.9 million as of December 31, 2021, September 30, 2021 and December 31, 2020, 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 4Q21 vs.

 

4Q21

 

3Q21

 

4Q20

 

3Q21

 

 

4Q20

 

Real estate loans

 

$ 35,458

 

$ 27,671

 

$ 30,828

 

28.1

%

 

15.0

%

SBA loans

 

65,492

 

57,541

 

16,634

 

13.8

 

 

293.7

 

C & I loans

 

47,981

 

54,264

 

47,308

 

(11.6

)

 

1.4

 

Home mortgage loans

 

19,295

 

13,437

 

17,027

 

43.6

 

 

13.3

 

Gross loans

 

$ 168,226

 

$ 152,913

 

$ 111,797

 

10.0

%

 

50.5

%

 

 

 

 

 

 

 

 

 

 

 

The following table presents changes in gross loans by loan activity for the periods indicated:

 

 

 

 

 

 

 

($ in thousands)

 

For the Three Months Ended

 

4Q21

 

 

3Q21

 

 

4Q20

 

Gross loans, beginning

 

$ 1,231,821

 

 

$ 1,245,866

 

 

$ 1,072,790

 

Loan activities:

 

 

 

 

 

 

New originations

 

168,226

 

 

152,913

 

 

111,797

 

Net line advances

 

7,759

 

 

(24,017

)

 

(17,276

)

Purchases

 

48,915

 

 

 

 

 

Sales

 

(66,956

)

 

(22,506

)

 

(33,826

)

Paydowns

 

(12,373

)

 

(14,675

)

 

(8,682

)

Payoffs

 

(46,818

)

 

(46,409

)

 

(41,157

)

PPP Payoffs

 

(29,918

)

 

(36,108

)

 

 

Other

 

13,363

 

 

(23,243

)

 

16,090

 

Total

 

82,198

 

 

(14,045

)

 

26,946

 

Gross loans, ending

 

$ 1,314,019

 

 

$ 1,231,821

 

 

$ 1,099,736

 

 

 

 

 

 

 

 

Fourth Quarter 2021 vs. Third Quarter 2021

Gross loan balances were $1.31 billion at December 31, 2021, up $82.2 million from September 30, 2021, primarily due to home mortgage loan purchases and an increase in C&I loans, partially offset by PPP loan forgiveness. During fourth quarter 2021, $29.9 million of PPP loans outstanding were forgiven by the Small Business Administration. New loan originations and loan payoffs were $168.2 million and $76.7 million for fourth quarter 2021, compared with $152.9 million and $82.5 million for third quarter 2021, respectively.

Fourth Quarter 2021 vs. Fourth Quarter 2020

Gross loan balances were $1.31 billion at December 31, 2021, up $214.3 million from December 31, 2020, primarily due to the Hana and home mortgage loan purchases during 2021 and broad-based growth in C & I and real estate loans. For the year ended December 31, 2021, $118.7 million of PPP loans outstanding were forgiven by the Small Business Administration. New loan originations and loan payoffs were $168.2 million and $76.7 million for fourth quarter 2021, compared with $111.8 million and $41.2 million for fourth quarter 2020, respectively.

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

 

4Q21

 

 

 

3Q21

 

 

 

4Q20

 

 

 

%

 

Rate

 

%

 

Rate

 

%

 

Rate

Fixed rate

 

31.5

%

 

4.12

%

 

32.2

%

 

4.05

%

 

34.4

%

 

4.09

%

Hybrid rate

 

22.8

 

 

4.45

 

 

22.4

 

 

4.55

 

 

21.9

 

 

4.92

 

Variable rate

 

45.7

 

 

4.94

 

 

45.4

 

 

5.08

 

 

43.7

 

 

4.40

 

Gross loans

 

100.0

%

 

4.57

%

 

100.0

%

 

4.63

%

 

100.0

%

 

4.40

%

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2021

 

Within One Year

 

One Year Through Five Years

 

After Five Years

 

Total

 

Amount

 

Rate

 

Amount

 

Rate

 

Amount

 

Rate

 

Amount

 

Rate

Fixed rate

 

$ 34,658

 

4.33

%

 

$ 314,815

 

4.00

%

 

$ 64,563

 

4.56

%

 

$ 414,036

 

4.12

%

Hybrid rate

 

11,972

 

3.29

 

 

43,004

 

5.33

 

 

244,690

 

4.36

 

 

299,666

 

4.45

 

Variable rate

 

131,374

 

3.86

 

 

165,102

 

4.02

 

 

303,841

 

5.90

 

 

600,317

 

4.94

 

Gross loans

 

$ 178,004

 

3.92

%

 

$ 522,921

 

4.12

%

 

$ 613,094

 

5.14

%

 

$ 1,314,019

 

4.57

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of

 

% Change 4Q21 vs.

 

4Q21

 

 

3Q21

 

 

4Q20

 

 

 

Amount

 

%

 

Amount

 

%

 

Amount

 

%

 

3Q21

 

 

4Q20

 

Noninterest-bearing deposits

 

$ 774,754

 

50.5

%

 

$ 713,141

 

47.6

%

 

$ 522,754

 

43.5

%

 

8.6

%

 

48.2

%

Money market deposits and others

 

380,226

 

24.8

 

 

351,186

 

23.5

 

 

328,323

 

27.4

 

 

8.3

 

 

15.8

 

Time deposits

 

379,086

 

24.7

 

 

432,079

 

28.9

 

 

349,013

 

29.1

 

 

(12.3

)

 

8.6

 

Total deposits

 

$ 1,534,066

 

100.0

%

 

$ 1,496,406

 

100.0

%

 

$ 1,200,090

 

100.0

%

 

2.5

%

 

27.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth Quarter 2021 vs. Third Quarter 2021

Deposit balances were $1.53 billion at December 31, 2021, up $37.7 million from September 30, 2021, primarily driven by growth in noninterest-bearing and money market deposits, partially offset by time deposits. Noninterest-bearing deposits reached a record $774.8 million or 51% of total deposits as of December 31, 2021, up from $713.1 million or 48% of total deposits as of September 30, 2021. The growth in noninterest-bearing deposits was primarily due to addition of new customers from a new Specialty Deposit Center, which was added during fourth quarter 2021.

Fourth Quarter 2021 vs. Fourth Quarter 2020

Deposit balances were $1.53 billion at December 31, 2021, up $334.0 million from December 31, 2020, primarily driven by growth in noninterest-bearing deposits. Noninterest-bearing deposits were $774.8 million or 51% of total deposits, up from $522.8 million or 44% of total deposits as of December 31, 2020. Deposit growth was primarily driven by continued customer preferences for liquidity given the sustained economic uncertainty associated with the COVID-19 pandemic.

The following table sets forth the maturity of time deposits as of December 31, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2021

(Dollars in thousands)

Within Three

Months

 

Three to

Six Months

 

Six to Nine Months

 

Nine to 12

Months

 

After

12 Months

 

Total

Time deposits (more than $250,000)

$ 99,381

 

 

$ 33,645

 

 

$ 42,025

 

 

$ 30,929

 

 

$ 1,308

 

 

$ 207,288

 

Time deposits ($250,000 or less)

49,086

 

 

39,434

 

 

42,956

 

 

33,454

 

 

6,868

 

 

171,798

 

Total time deposits

$ 148,467

 

 

$ 73,079

 

 

$ 84,981

 

 

$ 64,383

 

 

$ 8,176

 

 

$ 379,086

 

Weighted average rate

0.31

%

 

0.54

%

 

0.52

%

 

0.45

%

 

1.41

%

 

0.45

%

 

 

 

 

 

 

 

 

 

 

 

 

Capital and Cash Dividend

 

 

 

 

 

 

 

 

 

 

 

Basel III

 

OP Bancorp

 

Open Bank

 

Well

Capitalized

Ratio

 

Minimum

Capital Ratio+

Conservation

Buffer (1)

Risk-Based Capital Ratios:

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

13.66

%

 

13.47

%

 

10.00

%

 

10.50

%

Tier 1 risk-based capital ratio

 

12.42

%

 

12.23

%

 

8.00

%

 

8.50

%

Common equity tier 1 ratio

 

12.42

%

 

12.23

%

 

6.50

%

 

7.00

%

Leverage ratio

 

9.58

%

 

9.44

%

 

5.00

%

 

4.00

%

 

 

 

 

 

 

 

 

 

(1)

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.

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

Basel III

 

% Change 4Q21 vs.

 

4Q21

 

 

3Q21

 

 

4Q20

 

 

3Q21

 

 

4Q20

 

Risk-Based Capital Ratios:

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

13.66

%

 

13.81

%

 

14.81

%

 

(0.15

) %

 

(1.15

) %

Tier 1 risk-based capital ratio

 

12.42

%

 

12.63

%

 

13.56

%

 

(0.21

) %

 

(1.14

) %

Common equity tier 1 ratio

 

12.42

%

 

12.63

%

 

13.56

%

 

(0.21

) %

 

(1.14

) %

Leverage ratio

 

9.58

%

 

9.75

%

 

10.55

%

 

(0.17

) %

 

(0.97

) %

Risk-weighted Assets

 

$ 1,335,889

 

 

$ 1,251,867

 

 

$ 1,048,275

 

 

6.71

%

 

27.44

%

 

 

 

 

 

 

 

 

 

 

 

Capital ratios remained strong during the quarter. Our CET1 and total risk-based capital ratios were 12.42% and 13.66% as of December 31, 2021, respectively, down from a year ago due to year-over-year asset growth.

The Company’s Board of Directors has declared a quarterly cash dividend of $0.10 per share of its common stock. The cash dividend is payable on or about February 24, 2022 to all shareholders of record as of the close of business on February 10, 2022.

The Company did not repurchase any shares during fourth quarter 2021. 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, 2021.

Asset Quality

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of and For the Three Months Ended

 

% Change 4Q21 vs.

 

4Q21

 

 

3Q21

 

 

4Q20

 

 

3Q21

 

 

4Q20

 

Nonperforming loans (1)

 

$ 3,202

 

 

$ 1,052

 

 

$ 985

 

 

204.4

%

 

225.1

%

OREO

 

 

 

 

 

 

 

 

 

 

Total nonperforming assets

 

$ 3,202

 

 

$ 1,052

 

 

$ 985

 

 

204.4

%

 

225.1

%

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to gross loans

 

0.24

%

 

0.09

%

 

0.09

%

 

0.15

%

 

0.15

%

Nonperforming assets to total assets

 

0.19

%

 

0.06

%

 

0.07

%

 

0.13

%

 

0.12

%

 

 

 

 

 

 

 

 

 

 

 

Criticized (2) Loan:

 

 

 

 

 

 

 

 

 

 

Special mention loans

 

$ —

 

 

$ —

 

 

$ 535

 

 

%

 

(100.0

) %

Classified loans (3)

 

4,039

 

 

2,191

 

 

7,325

 

 

84.3

 

 

(44.9

)

Total criticized loans

 

$ 4,039

 

 

$ 2,191

 

 

$ 7,860

 

 

84.3

%

 

(48.6

) %

 

 

 

 

 

 

 

 

 

 

 

Criticized (2) loans to gross loans

 

0.31

%

 

0.18

%

 

0.71

%

 

0.13

%

 

(0.40

) %

Classified loans (3) to gross loans

 

0.31

%

 

0.18

%

 

0.67

%

 

0.13

%

 

(0.36

) %

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses, beginning

 

$ 14,134

 

 

$ 14,687

 

 

$ 14,164

 

 

(3.8

) %

 

(0.2

) %

Provision for (reversal of) loan losses (4)

 

2,157

 

 

(557

)

 

1,188

 

 

(487.3

)

 

81.6

 

Gross charge-offs

 

(168

)

 

 

 

 

 

100.0

 

 

100.0

 

Gross recoveries

 

 

 

4

 

 

 

 

(100.0

)

 

 

Allowance for loan losses, ending (5)

 

$ 16,123

 

 

$ 14,134

 

 

$ 15,352

 

 

14.1

%

 

5.0

%

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses ratios:

 

 

 

 

 

 

 

 

 

 

As a % of gross loans

 

1.23

%

 

1.15

%

 

1.40

%

 

0.08

%

 

(0.17

) %

As an adjusted of gross loans (6)

 

1.36

%

 

1.34

%

 

1.54

%

 

0.02

%

 

(0.18

) %

As a % of nonperforming loans

 

503

%

 

1,344

%

 

1,559

%

 

(841

) %

 

(1,056

) %

As a % of nonperforming assets

 

503

%

 

1,344

%

 

1,559

%

 

(841

) %

 

(1,056

) %

Net charge-offs (recoveries) to average gross loans

 

0.05

%

 

(0.00

)%

 

0.00

%

 

0.05

%

 

0.05

%

 

 

 

 

 

 

 

 

 

 

 

(1) 

Includes the guaranteed portion of SBA loans totaling $1.2 million as of December 31, 2021.

(2) 

Includes special mention, substandard, doubtful and loss categories.

(3) 

Includes substandard, doubtful and loss categories.

(4) 

Excludes (reversal of) provision for uncollectible accrued interest receivable of $(259) thousand, $(327) thousand and $643 thousand for the three months ended December 31, 2021, September 30, 2021, and December 31, 2020, respectively.

(5)

Excludes allowance for uncollectible accrued interest receivable of $205 thousand, $465 thousand and $643 thousand as of December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

(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 1.36%. We expect economic metrics to remain relatively strong over the next year, which bodes well for growth.; however, we remain vigilant given potential impacts on our customers from supply chain and labor constraints as well as COVID variants.

  • Allowance for loan losses increased $771 thousand to $16.1 million from a year ago. Excluding the impacts of the purchased Hana loans, PPP loans, and the allowance for uncollectible accrued interest receivable, adjusted allowance to gross loans ratio was 1.36% as of December 31, 2021.
  • Criticized loans decreased by $3.8 million or 49% from a year ago, and the criticized loans to gross loans ratio improved by 40 basis points, primarily due to a $3.8 million payoff in one C&I relationship. Criticized loans are generally consistent with the Special Mention, Substandard, Doubtful and Loss categories defined by regulatory authorities.
  • Nonperforming assets increased $2.2 million to $3.2 million, or 0.19% of total assets from a year ago. The increase in nonperforming assets was primarily due to SBA loans that were placed on nonaccrual in 2021. As of December 31, 2021, $1.0 million of nonaccrual loans was the guaranteed portion of SBA loans that are in liquidation. The Company did not have OREO as of December 31, 2021 or 2020.
  • Net charge-offs were $168 thousand or 0.05% of average loans. In comparison, there were no net charge-offs recorded in the fourth quarter 2020.

     

COVID-19 Pandemic Update

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

Total deferments

under the CARES Act

through December 31, 2021

 

Payment resumed

or paid off

through December 31, 2021

 

Remaining deferments

as of December 31, 2021

 

Number

of

accounts

 

Balance

 

Number

of

accounts

 

Balance

 

Number

of

accounts

 

Balance

Loan Type

 

 

 

 

 

 

 

 

 

 

 

 

Loans, excluding home mortgage and consumer loans

 

157

 

$ 220,553

 

154

 

$ 215,509

 

3

 

$ 5,044

Home mortgage loans

 

69

 

30,205

 

69

 

30,205

 

 

Total

 

226

 

$ 250,758

 

223

 

$ 245,714

 

3

 

$ 5,044

 

 

 

 

 

 

 

 

 

 

 

 

 

Total outstanding balance of loans remaining in deferment status as of December 31, 2021, represented 0.4% of the total loan portfolio.

The Company continues to carefully monitor the trajectory of the economic recovery, which could be impacted by the emergence of new variants and continued spread of COVID-19. In addition, we continue to support our clients, employees, and communities.

Since the PPP’s inception through December 31, 2021, we have funded $154.5 million, and $118.7 million of principal forgiveness has been provided on qualifying PPP loans. There were no new PPP loans during the fourth quarter of 2021.

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

 

 

4Q21

 

3Q21

 

 

4Q20

Interest income

 

 

$ 17,822

 

$ 17,355

 

 

$ 13,375

Interest expense

 

 

726

 

766

 

 

1,194

Net interest income

 

 

17,096

 

16,589

 

 

12,181

Noninterest income

 

 

7,289

 

3,542

 

 

3,392

Noninterest expense

 

 

9,591

 

9,519

 

 

8,412

Pre-provision net revenue

 

(a)

$ 14,794

 

$ 10,612

 

 

$ 7,161

Reconciliation to Net Income:

 

 

 

 

 

 

 

(Reversal of) provision for loan losses

 

(b)

$ 1,898

 

$ (884

)

 

$ 1,831

Income tax expense

 

(c)

3,747

 

3,246

 

 

1,513

Net Income

 

(a) - (b) - (c)

$ 9,149

 

$ 8,250

 

 

$ 3,817

 

 

 

 

 

 

 

 

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, 2021 and September 30, 2021 excluded the impacts of contractual interest and discount accretion of the purchased 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

 

 

4Q21

 

 

3Q21

 

 

4Q20

 

Yield on Average Loans

 

 

 

 

 

 

 

Interest income on loans

 

 

$ 17,271

 

 

$ 16,922

 

 

$ 13,006

 

Less: interest income on purchased loans

 

 

1,863

 

 

2,057

 

 

 

Adjusted interest income on loans

 

(a)

$ 15,408

 

 

$ 14,865

 

 

$ 13,006

 

 

 

 

 

 

 

 

 

Average loans

 

 

$ 1,343,414

 

 

$ 1,308,338

 

 

$ 1,112,889

 

Less: Average purchased loans

 

 

79,625

 

 

85,710

 

 

 

Adjusted average loans

 

(b)

$ 1,263,789

 

 

$ 1,222,628

 

 

$ 1,112,889

 

 

 

 

 

 

 

 

 

Average loan yield (1)

 

 

5.10

%

 

5.13

%

 

4.65

%

Effect on average loan yield (1)

 

 

0.26

 

 

0.30

 

 

 

Adjusted average loan yield (1)

 

(a)/(b)

4.84

%

 

4.83

%

 

4.65

%

 

 

 

 

 

 

 

 

Net Interest Margin

 

 

 

 

 

 

 

Net interest income

 

 

$ 17,096

 

 

$ 16,589

 

 

$ 12,181

 

Less: interest income on purchased loans

 

 

1,863

 

 

2,057

 

 

 

Adjusted net interest income

 

(c)

$ 15,233

 

 

$ 14,532

 

 

$ 12,181

 

 

 

 

 

 

 

 

 

Average interest-earning assets

 

 

$ 1,668,865

 

 

$ 1,566,050

 

 

$ 1,299,347

 

Less: Average purchased loans

 

 

79,625

 

 

85,710

 

 

 

Adjusted average interest-earning assets

 

(d)

$ 1,589,240

 

 

$ 1,480,340

 

 

$ 1,299,347

 

 

 

 

 

 

 

 

 

Net interest margin (1)

 

 

4.07

%

 

4.21

%

 

3.73

%

Effect on net interest margin (1)

 

 

0.26

 

 

0.30

 

 

 

Adjusted net interest margin (1)

 

(c)/(d)

3.81

%

 

3.91

%

 

3.73

%

 

 

 

 

 

 

 

 

(1)

 

Annualized.

Adjusted allowance to gross loans ratio removes the impacts of purchased 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)

 

 

As of

 

 

4Q21

 

 

3Q21

 

 

4Q20

 

Gross loans

 

 

$ 1,314,019

 

 

$ 1,231,821

 

 

$ 1,099,736

 

Less: Purchased loans

 

 

(77,170

)

 

(83,025

)

 

 

PPP loans (1)

 

 

(38,918

)

 

(64,574

)

 

(64,906

)

Adjusted gross loans

 

(a)

$ 1,197,931

 

 

$ 1,084,222

 

 

$ 1,034,830

 

 

 

 

 

 

 

 

 

Accrued interest receivable on loans

 

 

$ 4,231

 

 

$ 3,659

 

 

$ 3,729

 

Less: Accrued interest receivable on purchased loans

 

 

(340

)

 

(375

)

 

 

Accrued interest receivable on PPP loans (2)

 

 

(340

)

 

(416

)

 

(445

)

Add: Allowance on accrued interest receivable

 

 

205

 

 

465

 

 

643

 

Adjusted accrued interest receivable on loans

 

(b)

$ 3,756

 

 

$ 3,333

 

 

$ 3,927

 

 

 

 

 

 

 

 

 

Adjusted gross loans and accrued interest receivable

 

(a) + (b) = (c)

$ 1,201,687

 

 

$ 1,087,555

 

 

$ 1,038,757

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

 

$ 16,123

 

 

$ 14,134

 

 

$ 15,352

 

Add: Allowance on accrued interest receivable

 

 

205

 

 

465

 

 

643

 

Adjusted Allowance

 

(d)

$ 16,328

 

 

$ 14,599

 

 

$ 15,995

 

 

 

 

 

 

 

 

 

Adjusted allowance to gross loans ratio

 

(d)/(c)

1.36

%

 

1.34

%

 

1.54

%

 

 

 

 

 

 

 

 

(1)

Excludes purchased PPP loans of $1.7 million and $4.7 million as of December 31, 2021 and September 30, 2021, respectively.

(2)

Excludes purchased accrued interest receivable on PPP loans of $15 thousand and $30 thousand as of December 31, 2021 and September 30, 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 nine full branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Gardena, Buena Park, and Santa Clara, California and Carrollton, Texas. The Bank also has four loan production offices in Atlanta, Georgia, Aurora, Colorado, and Lynnwood and Seattle, 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 Member FDIC, Equal Housing Lender.

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: the uncertainties related to the coronavirus pandemic including, but not limited to, the potential adverse effect of the pandemic on the economy, our employees and customers, and our financial performance; the impact of the federal CARES Act and the significant additional lending activities undertaken by the Company in connection with the Small Business Administration’s Paycheck Protection Program enacted thereunder, including risks to the Company with respect to the uncertain application by the Small Business Administration of new borrower and loan eligibility, forgiveness and audit criteria; 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, 2020 and in our other subsequent filings with the Securities and Exchange Commission.

Consolidated Balance Sheet (unaudited)

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

% Change 4Q21 vs.

 

4Q21

 

 

3Q21

 

 

4Q20

 

 

3Q21

 

 

4Q20

 

Assets

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$ 11,283

 

 

$ 17,617

 

 

$ 12,622

 

 

(36.0

) %

 

(10.6

) %

Interest-bearing deposits in other banks

 

104,176

 

 

170,528

 

 

93,688

 

 

(38.9

)

 

11.2

 

Cash and cash equivalents

 

115,459

 

 

188,145

 

 

106,310

 

 

(38.6

)

 

8.6

 

Available-for-sale debt securities, at fair value

 

150,444

 

 

102,535

 

 

91,791

 

 

46.7

 

 

63.9

 

Other investments

 

10,999

 

 

11,025

 

 

10,101

 

 

(0.2

)

 

8.9

 

Loans held for sale

 

89,428

 

 

94,466

 

 

26,659

 

 

(5.3

)

 

235.5

 

Real estate loans

 

701,450

 

 

688,430

 

 

651,684

 

 

1.9

 

 

7.6

 

SBA loans (1)

 

275,858

 

 

303,625

 

 

211,375

 

 

(9.1

)

 

30.5

 

C & I loans

 

162,543

 

 

123,422

 

 

107,307

 

 

31.7

 

 

51.5

 

Home mortgage loans

 

173,303

 

 

115,255

 

 

128,212

 

 

50.4

 

 

35.2

 

Consumer & other loans

 

865

 

 

1,089

 

 

1,158

 

 

(20.6

)

 

(25.3

)

Gross loans, net of unearned income

 

1,314,019

 

 

1,231,821

 

 

1,099,736

 

 

6.7

 

 

19.5

 

Allowance for loan losses

 

(16,123

)

 

(14,134

)

 

(15,352

)

 

14.1

 

 

5.0

 

Net loans receivable

 

1,297,896

 

 

1,217,687

 

 

1,084,384

 

 

6.6

 

 

19.7

 

Premises and equipment, net

 

4,355

 

 

4,199

 

 

4,544

 

 

3.7

 

 

(4.2

)

Accrued interest receivable, net

 

4,579

 

 

3,931

 

 

3,985

 

 

16.5

 

 

14.9

 

Servicing assets

 

12,720

 

 

12,389

 

 

7,360

 

 

2.7

 

 

72.8

 

Company owned life insurance

 

11,134

 

 

11,070

 

 

10,879

 

 

0.6

 

 

2.3

 

Deferred tax assets

 

8,424

 

 

5,247

 

 

5,242

 

 

60.5

 

 

60.7

 

Operating right-of-use assets

 

8,905

 

 

9,270

 

 

6,786

 

 

(3.9

)

 

31.2

 

Other assets

 

12,363

 

 

19,947

 

 

8,785

 

 

(38.0

)

 

40.7

 

Total assets

 

$ 1,726,706

 

 

$ 1,679,911

 

 

$ 1,366,826

 

 

2.8

%

 

26.3

%

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$ 774,754

 

 

$ 713,141

 

 

$ 522,754

 

 

8.6

%

 

48.2

%

Money market deposits and others

 

380,226

 

 

351,186

 

 

328,323

 

 

8.3

 

 

15.8

 

Time deposits over $250,000

 

207,288

 

 

209,091

 

 

200,210

 

 

(0.9

)

 

3.5

 

Other time deposits

 

171,798

 

 

222,988

 

 

148,803

 

 

(23.0

)

 

15.5

 

Total deposits

 

1,534,066

 

 

1,496,406

 

 

1,200,090

 

 

2.5

 

 

27.8

 

Federal Home Loan Bank advances

 

 

 

 

 

5,000

 

 

 

 

(100.0

)

Accrued interest payable

 

558

 

 

575

 

 

1,021

 

 

(3.0

)

 

(45.3

)

Operating lease liabilities

 

10,307

 

 

10,703

 

 

8,429

 

 

(3.7

)

 

22.3

 

Other liabilities

 

16,538

 

 

13,603

 

 

8,920

 

 

21.6

 

 

85.4

 

Total liabilities

 

1,561,469

 

 

1,521,287

 

 

1,223,460

 

 

2.6

 

 

27.6

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

78,718

 

 

78,718

 

 

78,657

 

 

 

 

0.1

 

Additional paid-in capital

 

8,645

 

 

8,491

 

 

8,521

 

 

1.8

 

 

1.5

 

Retained earnings

 

79,071

 

 

71,436

 

 

55,348

 

 

10.7

 

 

42.9

 

Accumulated other comprehensive income (loss)

 

(1,197

)

 

(21

)

 

840

 

 

5600.0

 

 

(242.5

)

Total shareholders' equity

 

165,237

 

 

158,624

 

 

143,366

 

 

4.2

 

 

15.3

 

Total Liabilities and Shareholders' Equity

 

$ 1,726,706

 

 

$ 1,679,911

 

 

$ 1,366,826

 

 

2.8

%

 

26.3

%

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes SBA Paycheck Protection Program (“PPP”) loans of $40.6 million, $69.3 million and $64.9 million as of December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

Consolidated Statements of Income (unaudited)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

% Change 4Q21 vs.

 

4Q21

 

3Q21

 

 

4Q20

 

3Q21

 

 

4Q20

 

Interest income

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$ 17,271

 

$ 16,922

 

 

$ 13,006

 

2.1

%

 

32.8

%

Interest on available-for-sale debt securities

 

362

 

269

 

 

257

 

34.6

 

 

40.9

 

Other interest income

 

189

 

164

 

 

112

 

15.2

 

 

68.8

 

Total interest income

 

17,822

 

17,355

 

 

13,375

 

2.7

 

 

33.2

 

Interest expense

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

726

 

766

 

 

1,194

 

(5.2

)

 

(39.2

)

Total interest expense

 

726

 

766

 

 

1,194

 

(5.2

)

 

(39.2

)

Net interest income

 

17,096

 

16,589

 

 

12,181

 

3.1

 

 

40.3

 

Provision for (reversal of) loan losses

 

1,898

 

(884

)

 

1,831

 

(314.7

)

 

3.7

 

Net interest income after provision for (reversal of) loan losses

 

15,198

 

17,473

 

 

10,350

 

(13.0

)

 

46.8

 

Noninterest income

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

405

 

409

 

 

367

 

(1.0

)

 

10.4

 

Loan servicing fees, net of amortization

 

521

 

599

 

 

367

 

(13.0

)

 

42.0

 

Gain on sale of loans

 

6,033

 

2,188

 

 

2,188

 

175.7

 

 

175.7

 

Other income

 

330

 

346

 

 

470

 

(4.6

)

 

(29.8

)

Total noninterest income

 

7,289

 

3,542

 

 

3,392

 

105.8

 

 

114.9

 

Noninterest expense

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

5,560

 

5,724

 

 

5,536

 

(2.9

)

 

0.4

 

Occupancy and equipment

 

1,418

 

1,326

 

 

1,237

 

6.9

 

 

14.6

 

Data processing and communication

 

637

 

448

 

 

435

 

42.2

 

 

46.4

 

Professional fees

 

267

 

308

 

 

265

 

(13.3

)

 

0.8

 

FDIC insurance and regulatory assessments

 

182

 

146

 

 

115

 

24.7

 

 

58.3

 

Promotion and advertising

 

156

 

175

 

 

62

 

(10.9

)

 

151.6

 

Directors’ fees

 

166

 

183

 

 

97

 

(9.3

)

 

71.1

 

Foundation donation and other contributions

 

901

 

842

 

 

400

 

7.0

 

 

125.3

 

Other expenses

 

304

 

367

 

 

265

 

(17.2

)

 

14.7

 

Total noninterest expense

 

9,591

 

9,519

 

 

8,412

 

0.8

 

 

14.0

 

Income before income tax expense

 

12,896

 

11,496

 

 

5,330

 

12.2

 

 

142.0

 

Income tax expense

 

3,747

 

3,246

 

 

1,513

 

15.4

 

 

147.7

 

Net income

 

$ 9,149

 

$ 8,250

 

 

$ 3,817

 

10.9

%

 

139.7

%

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$ 10.92

 

$ 10.48

 

 

$ 9.55

 

4.2

%

 

14.3

%

Basic EPS

 

$ 0.60

 

$ 0.54

 

 

$ 0.25

 

11.1

%

 

140.0

%

Diluted EPS

 

$ 0.59

 

$ 0.54

 

 

$ 0.25

 

9.3

%

 

136.0

%

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock outstanding

 

15,137,808

 

15,133,407

 

 

15,016,700

 

0.0

%

 

0.8

%

Weighted Average Shares:

 

 

 

 

 

 

 

 

 

 

- Basic

 

15,136,229

 

15,133,407

 

 

15,079,407

 

0.0

%

 

0.4

%

- Diluted

 

15,227,291

 

15,200,613

 

 

15,103,029

 

0.2

%

 

0.8

%

 

 

 

 

 

 

 

 

 

 

 

Key Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and For the Three Months Ended

 

% Change 4Q21 vs.

 

4Q21

 

 

3Q21

 

 

4Q20

 

 

3Q21

 

 

4Q20

 

Return on average assets (ROA) (1)

 

2.11

%

 

2.03

%

 

1.13

%

 

0.08

%

 

0.98

%

Return on average equity (ROE) (1)

 

22.72

%

 

21.30

%

 

10.72

%

 

1.42

%

 

12.00

%

Net interest margin (1)

 

4.07

%

 

4.21

%

 

3.73

%

 

(0.14

) %

 

0.34

%

Efficiency ratio

 

39.34

%

 

47.28

%

 

54.02

%

 

(7.94

) %

 

(14.68

) %

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio (2)

 

13.66

%

 

13.81

%

 

14.81

%

 

(0.15

) %

 

(1.15

) %

Tier 1 risk-based capital ratio (2)

 

12.42

%

 

12.63

%

 

13.56

%

 

(0.21

) %

 

(1.14

) %

Common equity tier 1 ratio (2)

 

12.42

%

 

12.63

%

 

13.56

%

 

(0.21

) %

 

(1.14

) %

Leverage ratio (2)

 

9.58

%

 

9.75

%

 

10.55

%

 

(0.17

) %

 

(0.97

) %

 

 

 

 

 

 

 

 

 

 

 

(1)

Annualized.

(2)

The Company’s December 31, 2021 regulatory capital ratios are preliminary.

Consolidated Statements of Income (unaudited)

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

 

 

 

 

 

 

 

 

 

For the Twelve Months Ended

 

4Q21

 

4Q20

 

% change

Interest income

 

 

 

 

 

 

Interest and fees on loans

 

$ 62,448

 

$ 51,829

 

20.5

%

Interest on available-for-sale debt securities

 

1,085

 

1,177

 

(7.8

)

Other interest income

 

625

 

650

 

(3.8

)

Total interest income

 

64,158

 

53,656

 

19.6

 

Interest expense

 

 

 

 

 

 

Interest on deposits

 

3,132

 

8,292

 

(62.2

)

Total interest expense

 

3,132

 

8,292

 

(62.2

)

Net interest income

 

61,026

 

45,364

 

34.5

 

Provision for loan losses

 

522

 

5,961

 

(91.2

)

Net interest income after provision for loan losses

 

60,504

 

39,403

 

53.6

 

Noninterest income

 

 

 

 

 

 

Service charges on deposits

 

1,562

 

1,431

 

9.2

 

Loan servicing fees, net of amortization

 

1,953

 

1,856

 

5.2

 

Gain on sale of loans

 

11,313

 

6,092

 

85.7

 

Other income

 

1,189

 

1,392

 

(14.6

)

Total noninterest income

 

16,017

 

10,771

 

48.7

 

Noninterest expense

 

 

 

 

 

 

Salaries and employee benefits

 

21,253

 

20,041

 

6.0

 

Occupancy and equipment

 

5,213

 

4,974

 

4.8

 

Data processing and communication

 

2,000

 

1,682

 

18.9

 

Professional fees

 

1,192

 

1,101

 

8.3

 

FDIC insurance and regulatory assessments

 

583

 

449

 

29.8

 

Promotion and advertising

 

684

 

467

 

46.5

 

Directors’ fees

 

593

 

700

 

(15.3

)

Foundation donation and other contributions

 

2,890

 

1,335

 

116.5

 

Other expenses

 

1,457

 

1,191

 

22.3

 

Total noninterest expense

 

35,865

 

31,940

 

12.3

 

Income before income tax expense

 

40,656

 

18,234

 

123.0

 

Income tax expense

 

11,801

 

5,107

 

131.1

 

Net income

 

$ 28,855

 

$ 13,127

 

119.8

%

 

 

 

 

 

 

 

Book value per share

 

$ 10.92

 

$ 9.55

 

14.3

%

Basic EPS

 

$ 1.89

 

$ 0.85

 

122.4

%

Diluted EPS

 

$ 1.88

 

$ 0.85

 

121.2

%

 

 

 

 

 

 

 

Shares of common stock outstanding

 

15,137,808

 

15,016,700

 

0.8

%

Weighted Average Shares:

 

 

 

 

 

 

- Basic

 

15,087,686

 

15,196,351

 

(0.7

) %

- Diluted

 

15,155,347

 

15,223,888

 

(0.5

) %

 

 

 

 

 

 

 

Key Ratios

 

 

 

 

 

 

 

 

 

As of and For the Twelve Months Ended

 

4Q21

 

 

4Q20

 

 

% Change

Return on average assets (ROA)

 

1.84

%

 

1.03

%

 

0.81

%

Return on average equity (ROE)

 

18.91

%

 

9.35

%

 

9.56

%

Net interest margin

 

4.02

%

 

3.72

%

 

0.30

%

Efficiency ratio

 

46.55

%

 

56.90

%

 

(10.35

) %

 

 

 

 

 

 

 

Total risk-based capital ratio (1)

 

13.66

%

 

14.81

%

 

(1.15

) %

Tier 1 risk-based capital ratio (1)

 

12.42

%

 

13.56

%

 

(1.14

) %

Common equity tier 1 ratio (1)

 

12.42

%

 

13.56

%

 

(1.14

) %

Leverage ratio (1)

 

9.58

%

 

10.55

%

 

(0.97

) %

 

 

 

 

 

 

 

(1)

The Company’s December 31, 2021 regulatory capital ratios are preliminary.

Asset Quality

 

 

 

 

 

 

 

($ in thousands)

 

As of and For the Three Months Ended

 

4Q21

 

 

3Q21

 

 

4Q20

 

Nonaccrual Loans (1)

 

$ 3,002

 

 

$ 1,052

 

 

$ 985

 

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

 

200

 

 

 

 

 

Accruing restructured loans

 

 

 

 

 

 

Nonperforming loans

 

3,202

 

 

1,052

 

 

985

 

Other real estate owned (“OREO”)

 

 

 

 

 

 

Nonperforming assets

 

$ 3,202

 

 

$ 1,052

 

 

$ 985

 

 

 

 

 

 

 

 

Criticized loans (3) by loan type:

 

 

 

 

 

 

SBA loans

 

$ 2,688

 

 

$ 1,871

 

 

$ 2,256

 

C & I loans

 

313

 

 

320

 

 

5,004

 

Home mortgage loans

 

1,038

 

 

 

 

600

 

Total criticized loans (3)

 

$ 4,039

 

 

$ 2,191

 

 

$ 7,860

 

 

 

 

 

 

 

 

Nonperforming assets/total assets

 

0.19

%

 

0.06

%

 

0.07

%

Nonperforming assets/gross loans plus OREO

 

0.24

%

 

0.09

%

 

0.09

%

Nonperforming loans/gross loans

 

0.24

%

 

0.09

%

 

0.09

%

Allowance for loan losses/nonperforming loans

 

503

%

 

1,344

%

 

1,559

%

Allowance for loan losses/nonperforming assets

 

503

%

 

1,344

%

 

1,559

%

Allowance for loan losses/gross loans

 

1.23

%

 

1.15

%

 

1.40

%

Criticized loans (3) /gross loans

 

0.31

%

 

0.18

%

 

0.71

%

 

 

 

 

 

 

 

Net charge-offs (recoveries)

 

$ 168

 

 

$ (4

)

 

$ —

 

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

 

0.05

%

 

(0.00

)%

 

0.00

%

 

 

 

 

 

 

 

(1)

Includes the guaranteed portion of SBA loans that are in liquidation totaling $1.0 million as of December 31, 2021.

(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)

 

4Q21

 

3Q21

 

4Q20

Accruing delinquent loans 30-89 days past due:

 

 

 

 

 

 

30-59 days

 

$ 72

 

$ 263

 

$ —

60-89 days

 

336

 

1,064

 

Total (1)

 

$ 408

 

$ 1,327

 

$ —

 

 

 

 

 

 

 

(1)

Includes the guaranteed portion of PPP loans totaling $408 thousand as of December 31, 2021.

Average Balance Sheet, Interest and Yield/Rate Analysis

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

4Q21

 

 

3Q21

 

 

4Q20

 

 

 

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

 

$ 192,302

 

$ 73

 

0.15

%

 

$ 137,662

 

$ 47

 

0.13

%

 

$ 83,129

 

$ 20

 

0.10

%

Federal funds sold and other investments

 

11,012

 

116

 

4.23

 

 

11,041

 

117

 

4.25

 

 

10,091

 

92

 

3.62

 

Available-for-sale debt securities, at fair value

 

122,137

 

362

 

1.19

 

 

109,009

 

269

 

0.99

 

 

93,238

 

257

 

1.10

 

Real estate loans

 

685,394

 

7,774

 

4.50

 

 

678,642

 

7,680

 

4.49

 

 

644,643

 

7,457

 

4.60

 

SBA loans

 

400,059

 

6,829

 

6.77

 

 

403,279

 

6,835

 

6.72

 

 

251,541

 

3,231

 

5.11

 

C & I loans

 

133,104

 

1,334

 

3.98

 

 

107,614

 

1,074

 

3.96

 

 

90,617

 

843

 

3.70

 

Home mortgage loans

 

123,822

 

1,320

 

4.27

 

 

117,825

 

1,317

 

4.47

 

 

124,763

 

1,456

 

4.67

 

Consumer & other loans

 

1,035

 

14

 

5.21

 

 

978

 

16

 

6.49

 

 

1,325

 

19

 

5.70

 

Loans (2)

 

1,343,414

 

17,271

 

5.10

 

 

1,308,338

 

16,922

 

5.13

 

 

1,112,889

 

13,006

 

4.65

 

Total interest-earning assets

 

1,668,865

 

17,822

 

4.24

 

 

1,566,050

 

17,355

 

4.40

 

 

1,299,347

 

13,375

 

4.10

 

Noninterest-earning assets

 

62,996

 

 

 

 

 

56,807

 

 

 

 

 

48,678

 

 

 

 

Total assets

 

$ 1,731,861

 

 

 

 

 

$ 1,622,857

 

 

 

 

 

$ 1,348,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market deposits and others

 

$ 378,849

 

$ 283

 

0.30

%

 

$ 368,507

 

$ 299

 

0.32

%

 

$ 328,044

 

$ 340

 

0.41

%

Time deposits

 

401,938

 

443

 

0.44

 

 

383,503

 

467

 

0.48

 

 

344,139

 

854

 

0.99

 

Total interest-bearing deposits

 

780,787

 

726

 

0.37

 

 

752,010

 

766

 

0.40

 

 

672,183

 

1,194

 

0.71

 

Borrowings

 

4

 

 

 

 

 

 

 

 

7,938

 

 

 

Total interest-bearing liabilities

 

780,791

 

726

 

0.37

 

 

752,010

 

766

 

0.40

 

 

680,121

 

1,194

 

0.70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

765,012

 

 

 

 

 

696,761

 

 

 

 

 

507,694

 

 

 

 

Other noninterest-bearing liabilities

 

24,994

 

 

 

 

 

19,169

 

 

 

 

 

17,769

 

 

 

 

Total noninterest-bearing liabilities

 

790,006

 

 

 

 

 

715,930

 

 

 

 

 

525,463

 

 

 

 

Shareholders’ equity

 

161,064

 

 

 

 

 

154,917

 

 

 

 

 

142,441

 

 

 

 

Total liabilities and shareholders’ equity

 

$ 1,731,861

 

 

 

 

 

$ 1,622,857

 

 

 

 

 

$ 1,348,025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / interest rate spreads

 

 

 

$ 17,096

 

3.87

%

 

 

 

$ 16,589

 

4.00

%

 

 

 

$ 12,181

 

3.40

%

Net interest margin

 

 

 

 

 

4.07

%

 

 

 

 

 

4.21

%

 

 

 

 

 

3.73

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of deposits & cost of funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits / cost of deposits

 

$ 1,545,799

 

$ 726

 

0.19

%

 

$ 1,448,771

 

$ 766

 

0.21

%

 

$ 1,179,877

 

$ 1,194

 

0.40

%

Total funding liabilities / cost of funds

 

$ 1,545,803

 

$ 726

 

0.19

%

 

$ 1,448,771

 

$ 766

 

0.21

%

 

$ 1,187,815

 

$ 1,194

 

0.40

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) 

Annualized.

(2) 

Includes loans held for sale.

Average Balance Sheet, Interest and Yield/Rate Analysis

($ in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Twelve Months Ended

 

4Q21

 

 

4Q20

 

 

Average

Balance

 

Interest

and Fees

 

Yield/ Rate

 

Average

Balance

 

Interest

and Fees

 

Yield/ Rate

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits in other banks

 

$ 132,090

 

$ 170

 

0.13

%

 

$ 81,997

 

$ 281

 

0.34

%

Federal funds sold and other investments

 

10,755

 

455

 

4.23

 

 

9,853

 

369

 

3.74

 

Available-for-sale debt securities, at fair value

 

108,346

 

1,086

 

1.00

 

 

73,410

 

1,177

 

1.60

 

Real estate loans

 

672,045

 

30,644

 

4.56

 

 

636,809

 

30,616

 

4.81

 

SBA loans

 

355,114

 

21,760

 

6.13

 

 

200,110

 

11,231

 

5.61

 

C & I loans

 

114,629

 

4,463

 

3.89

 

 

93,490

 

3,887

 

4.16

 

Home mortgage loans

 

122,465

 

5,520

 

4.51

 

 

122,195

 

5,977

 

4.89

 

Consumer & other loans

 

1,095

 

60

 

5.51

 

 

2,102

 

118

 

5.61

 

Loans (1)

 

1,265,348

 

62,447

 

4.94

 

 

1,054,706

 

51,829

 

4.91

 

Total interest-earning assets

 

1,516,539

 

64,158

 

4.23

 

 

1,219,966

 

53,656

 

4.40

 

Noninterest-earning assets

 

55,200

 

 

 

 

 

49,224

 

 

 

 

Total assets

 

$ 1,571,739

 

 

 

 

 

$ 1,269,190

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Money market deposits and others

 

$ 362,900

 

$ 1,134

 

0.31

%

 

$ 307,316

 

$ 2,174

 

0.71

%

Time deposits

 

378,585

 

1,998

 

0.53

 

 

391,667

 

6,118

 

1.56

 

Total interest-bearing deposits

 

741,485

 

3,132

 

0.42

 

 

698,983

 

8,292

 

1.19

 

Borrowings

 

1,988

 

 

 

 

5,505

 

 

 

Total interest-bearing liabilities

 

743,473

 

3,132

 

0.42

 

 

704,488

 

8,292

 

1.18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

656,130

 

 

 

 

 

406,401

 

 

 

 

Other noninterest-bearing liabilities

 

19,558

 

 

 

 

 

17,889

 

 

 

 

Total noninterest-bearing liabilities

 

675,688

 

 

 

 

 

424,290

 

 

 

 

Shareholders’ equity

 

152,578

 

 

 

 

 

140,412

 

 

 

 

Total liabilities and shareholders’ equity

 

$ 1,571,739

 

 

 

 

 

$ 1,269,190

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income / interest rate spreads

 

 

 

$ 61,026

 

3.81

%

 

 

 

$ 45,364

 

3.22

%

Net interest margin

 

 

 

 

 

4.02

%

 

 

 

 

 

3.72

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of deposits & cost of funds:

 

 

 

 

 

 

 

 

 

 

 

 

Total deposits / cost of deposits

 

$ 1,397,615

 

$ 3,132

 

0.22

%

 

$ 1,105,384

 

$ 8,292

 

0.75

%

Total funding liabilities / cost of funds

 

$ 1,399,603

 

$ 3,132

 

0.22

%

 

$ 1,110,889

 

$ 8,292

 

0.75

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) 

Includes loans held for sale.

Loan Portfolio Breakdown by Industry, excluding home mortgage and consumer loans

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of December 31, 2021

Industry

 

Number

of

accounts

 

% of

total

 

Balance

 

% of

total

Hotel / motel

 

249

 

11.5

%

 

$ 186,534

 

15.2

%

Wholesale

 

154

 

7.2

 

 

70,181

 

5.7

 

Food services / restaurant

 

298

 

13.9

 

 

45,707

 

3.7

 

Real estate lessor

 

239

 

11.1

 

 

412,641

 

33.6

 

Gas station

 

243

 

11.3

 

 

207,295

 

16.8

 

Other

 

967

 

45.0

 

 

306,921

 

25.0

 

Total (1)

 

2,150

 

100.0

%

 

$ 1,229,279

 

100.0

%

 

 

 

 

 

 

 

 

 

(1) 

Includes loans held for sale.

Loan Deferment Summary by Industry, excluding home mortgage and consumer loans

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of December 31, 2021

 

Number of accounts

 

Loan balance

Industry

 

Number

of

accounts

 

% of

deferment

 

% of

total

loans

 

Balance

 

% of

deferment

 

% of

total

loans

Hotel / motel

 

1

 

33.4

%

 

0.4

%

 

$ 4,546

 

90.1

%

 

2.4

%

Wholesale

 

1

 

33.3

 

 

0.6

 

 

467

 

9.3

 

 

0.7

 

Food services / restaurant

 

1

 

33.3

 

 

0.3

 

 

31

 

0.6

 

 

0.1

 

Total

 

3

 

100.0

%

 

0.1

%

 

$ 5,044

 

100.0

%

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan Deferment Summary by Loan Type

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

As of December 31, 2021

 

Number of accounts

 

Loan balance

Loan Type

 

Number

of

accounts

 

% of

deferment

 

% of

total

loans

 

Balance

 

% of

deferment

 

% of

total

loans

Real estate loans

 

1

 

33.3

%

 

0.1

%

 

$ 4,546

 

90.1

%

 

0.5

%

C & I loans

 

2

 

66.7

 

 

0.2

 

 

498

 

9.9

 

 

0.2

 

Loans, excluding home mortgage and consumer loans

 

3

 

100.0

 

 

0.1

 

 

5,044

 

100.0

 

 

0.4

 

Home mortgage loans

 

 

 

 

 

 

 

 

 

 

Total

 

3

 

100.0

%

 

0.1

%

 

$ 5,044

 

100.0

%

 

0.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan Deferment Status Change by Loan Type

 

 

 

 

 

 

 

 

 

 

 

 

 

($ in thousands)

 

Total deferments

under the CARES Act

through December 31, 2021

 

Payment resumed

or paid off

through December 31, 2021

 

Remaining deferments as of December 31, 2021

Loan Type

 

Number

of

accounts

 

Balance

 

Number

of

accounts

 

Balance

 

Number

of

accounts

 

Balance

Loans, excluding home mortgage and consumer loans

 

157

 

$ 220,553

 

154

 

$ 215,509

 

3

 

$ 5,044

Home mortgage loans

 

69

 

30,205

 

69

 

30,205

 

 

Total

 

226

 

$ 250,758

 

223

 

$ 245,714

 

3

 

$ 5,044

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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