Exhibit 99.1

 

 

OP Bancorp Exceeds Total Assets of $1 Billion in the Third Quarter of 2018

2018 Third Quarter Highlights:

 

Net income totaled $3.5 million or $0.21 per diluted common share for the third quarter of 2018.

 

Net interest margin was 4.44% for the third quarter of 2018.

 

Total assets were $1.0 billion at September 30, 2018, up 5.7% from $979 million at June 30, 2018, and up 17.7% from $879 million at September 30, 2017.

 

Net loans receivable were $840 million at September 30, 2018, up 3.0% from $816 million at June 30, 2018 and up 15.6% from $727 million at September 30, 2017.

 

Total deposits were $897 million at September 30, 2018, up 8.9% from $823 million at June 30, 2018 and up 18.9% from $755 million at September 30, 2017.

 

Noninterest bearing deposits at September 30, 2018 were $286 million or 31.9% of total deposits.

 

Nonperforming assets to total assets were 0.12% at September 30, 2018.

LOS ANGELES, October 25, 2018 — OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company of Open Bank (the “Bank”), today reported unaudited financial results for the third quarter and first nine months of 2018.  Net income for the third quarter of 2018 was $3.5 million, or $0.21 per diluted common share, compared with net income of $3.8 million, or $0.23 per diluted share for the second quarter of 2018, and net income of $2.7 million, or $0.19 per diluted share for the third quarter of 2017.

“We are happy to announce that our assets exceeded $1.0 billion for the first time in our history at September 30, 2018. During the third quarter, we experienced a strong deposit growth of 8.9% from the previous quarter in this challenging and competitive environment. Our loan growth continues to be solid while maintaining strong asset quality”, commented Min Kim, President and Chief Executive Officer of OP Bancorp and Open Bank.

 

1


 

Financial Highlights (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

 

 

As of or for the Three Months Ended

 

 

 

 

September 30,

 

 

 

June 30,

 

 

 

September 30,

 

 

 

 

2018

 

 

 

2018

 

 

 

2017

 

Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

$

13,006

 

 

 

$

12,062

 

 

 

$

10,419

 

Interest expense

 

 

 

2,521

 

 

 

 

2,075

 

 

 

 

1,211

 

Net interest income

 

 

 

10,485

 

 

 

 

9,987

 

 

 

 

9,208

 

Provision for loan losses

 

 

 

439

 

 

 

 

33

 

 

 

 

278

 

Noninterest income

 

 

 

2,284

 

 

 

 

2,783

 

 

 

 

2,255

 

Noninterest expense

 

 

 

7,705

 

 

 

 

7,478

 

 

 

 

6,744

 

Income before taxes

 

 

 

4,625

 

 

 

 

5,259

 

 

 

 

4,441

 

Provision for income taxes

 

 

 

1,144

 

 

 

 

1,468

 

 

 

 

1,713

 

Net Income

 

 

$

3,481

 

 

 

$

3,791

 

 

 

$

2,728

 

Diluted earnings per share

 

 

$

0.21

 

 

 

$

0.23

 

 

 

$

0.19

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

 

$

3,254

 

 

 

$

8,718

 

 

 

$

12,893

 

Gross loans, net of unearned income

 

 

 

850,018

 

 

 

 

826,040

 

 

 

 

736,058

 

Allowance for loan losses

 

 

 

9,551

 

 

 

 

9,723

 

 

 

 

8,909

 

Total assets

 

 

 

1,035,028

 

 

 

 

979,441

 

 

 

 

879,087

 

Deposits

 

 

 

896,891

 

 

 

 

823,373

 

 

 

 

754,533

 

Shareholders’ equity

 

 

 

124,975

 

 

 

 

121,393

 

 

 

 

89,478

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

 

 

1.42

%

 

 

 

1.61

%

 

 

 

1.31

%

Return on average equity (annualized)

 

 

 

11.28

%

 

 

 

12.70

%

 

 

 

12.35

%

Net interest margin (annualized)

 

 

 

4.44

%

 

 

 

4.46

%

 

 

 

4.68

%

Efficiency ratio (1)

 

 

 

60.34

%

 

 

 

58.56

%

 

 

 

58.83

%

Credit Quality:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

 

$

1,233

 

 

 

$

990

 

 

 

$

734

 

Nonperforming assets

 

 

 

1,233

 

 

 

 

990

 

 

 

 

734

 

Net charge-offs to average gross loans  (annualized)

 

 

 

0.29

%

 

 

 

0.01

%

 

 

 

-0.04

%

Nonperforming assets to gross loans plus OREO

 

 

 

0.15

%

 

 

 

0.12

%

 

 

 

0.10

%

ALL to nonperforming loans

 

 

 

775

%

 

 

 

982

%

 

 

 

1214

%

ALL to gross loans

 

 

 

1.12

%

 

 

 

1.18

%

 

 

 

1.21

%

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

 

 

16.16

%

 

 

 

16.09

%

 

 

 

13.37

%

Tier 1 risk-based capital ratio

 

 

 

15.01

%

 

 

 

14.90

%

 

 

 

12.15

%

Common equity tier 1 ratio

 

 

 

15.01

%

 

 

 

14.90

%

 

 

 

12.15

%

Leverage ratio

 

 

 

12.77

%

 

 

 

12.91

%

 

 

 

10.77

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Represents noninterest expense divided by the sum of net interest income and noninterest income.

 

2


 

Financial Highlights (unaudited)

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

 

 

For the Nine Months Ended

 

 

 

 

September 30,

 

 

 

September 30,

 

 

 

 

2018

 

 

 

2017

 

Income Statement Data:

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

$

36,248

 

 

 

$

29,205

 

Interest expense

 

 

 

6,217

 

 

 

 

3,197

 

Net interest income

 

 

 

30,031

 

 

 

 

26,008

 

Provision for loan losses

 

 

 

1,047

 

 

 

 

989

 

Noninterest income

 

 

 

7,279

 

 

 

 

6,708

 

Noninterest expense

 

 

 

21,993

 

 

 

 

19,685

 

Income before taxes

 

 

 

14,270

 

 

 

 

12,042

 

Provision for income taxes

 

 

 

3,781

 

 

 

 

4,706

 

Net Income

 

 

$

10,489

 

 

 

$

7,336

 

Diluted earnings per share

 

 

$

0.66

 

 

 

$

0.52

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

 

 

1.48

%

 

 

 

1.22

%

Return on average equity (annualized)

 

 

 

12.43

%

 

 

 

11.45

%

Net interest margin (annualized)

 

 

 

4.49

%

 

 

 

4.58

%

Efficiency ratio (1)

 

 

 

58.94

%

 

 

 

60.17

%

 

 

 

 

 

 

 

 

 

 

 

(1) Represents noninterest expense divided by the sum of net interest income and noninterest income.

 

 

Results of Operations

The reported interest income and yield on our loan portfolio are impacted by a number of components, including changes in the average contractual interest rate earned on loans and the amount of discount accretion on SBA loans.  The following table reconciles the contractual interest income and yield on our loan portfolio to the reported interest income and yield for the periods indicated.

 

 

Three Months Ended

 

 

 

September 30, 2018

 

 

June 30, 2018

 

 

September 30, 2017

 

(Dollars in thousands)

 

Interest & Fees

 

 

Yield

 

 

Interest & Fees

 

 

Yield

 

 

Interest & Fees

 

 

Yield

 

Contractual interest rate

 

$

11,820

 

 

 

5.46

%

 

$

11,032

 

 

 

5.33

%

 

$

9,296

 

 

 

5.12

%

SBA discount accretion

 

 

611

 

 

 

0.28

%

 

 

481

 

 

 

0.23

%

 

 

592

 

 

 

0.33

%

Amortization of net deferred fees/(costs)

 

 

65

 

 

 

0.03

%

 

 

98

 

 

 

0.05

%

 

 

69

 

 

 

0.04

%

Interest recognized on nonaccrual loans

 

 

(8

)

 

 

0.00

%

 

 

9

 

 

 

0.00

%

 

 

113

 

 

 

0.06

%

Prepayment penalties and late fees

 

 

36

 

 

 

0.02

%

 

 

50

 

 

 

0.02

%

 

 

41

 

 

 

0.02

%

Yield on loans (as reported)

 

$

12,524

 

 

 

5.79

%

 

$

11,670

 

 

 

5.64

%

 

$

10,111

 

 

 

5.57

%

 

3


  

 

Nine Months Ended

 

 

 

September 30, 2018

 

 

September 30, 2017

 

(Dollars in thousands)

 

Interest & Fees

 

 

Yield

 

 

Interest & Fees

 

 

Yield

 

Contractual interest rate

 

$

33,016

 

 

 

5.34

%

 

$

26,299

 

 

 

5.02

%

SBA discount accretion

 

 

1,660

 

 

 

0.27

%

 

 

1,648

 

 

 

0.31

%

Amortization of net deferred fees/(costs)

 

 

215

 

 

 

0.03

%

 

 

178

 

 

 

0.03

%

Interest recognized on nonaccrual loans

 

 

21

 

 

 

0.00

%

 

 

185

 

 

 

0.04

%

Prepayment penalties and late fees

 

 

130

 

 

 

0.02

%

 

 

68

 

 

 

0.01

%

Yield on loans (as reported)

 

$

35,042

 

 

 

5.67

%

 

$

28,378

 

 

 

5.42

%

 

Net interest income before provision for loan losses for the third quarter of 2018 was $10.5 million, an increase of $498 thousand, or 5.0%, compared to $10.0 million for the second quarter of 2018, primarily due to a $944 thousand increase in interest income, partially offset by a $446 thousand increase in interest expense.  

Interest income from the contractual interest rates on loans increased $788 thousand, or 7.1%, during the third quarter compared to the second quarter of 2018, reflecting a 3.5% increase in average loans, including loans held for sale, and a 13 basis point increase in the average contractual interest rate from the increase in Fed funds rate in June 2018 of 25 basis points.   The amount of discount accretion on SBA loans increased $130 thousand during the third quarter due to an increase in SBA loan payoffs.  The reported interest income on loans, net of SBA discount accretions and other components, increased $854 thousand during the quarter.  

Interest expense for the third quarter of 2018 increased $446 thousand, or 21.5%, compared to the second quarter of 2018, due to an increase of $30.8 million, or 5.5% in average balance of interest-bearing liabilities and an increase of 21 basis points in average cost of interest-bearing liabilities, primarily due to the aforementioned increase in Fed funds rate.  

Net interest margin for the third quarter of 2018 decreased 2 basis points to 4.44% from 4.46% for the second quarter of 2018, primarily due to the increase in the cost of interest-bearing liabilities, partially offset by the increase in the reported yield on loans.

Net interest income before provision for loan losses for the third quarter of 2018 increased $1.3 million, or 13.9%, to $10.5 million, compared to $9.2 million for the third quarter of 2017, primarily due to a $2.6 million increase in interest income, partially offset by an increase of $1.3 million in interest expense.  

The increase in interest income was primarily due to a 19.2% increase in average loans, including loans held for sale, and a 22 basis point increase in the yield on average loans to 5.79% for the third quarter of 2018 from 5.57% for the third quarter of 2017.  

The increase in interest expense in the third quarter of 2018 compared to the third quarter of 2017 was due to a 24.9% increase in average interest-bearing liabilities and a 68 basis point increase in the cost of interest-bearing liabilities.  The increases in the average yields on loans and average cost of deposits were primarily due to cumulative market rate increases by the Federal Reserve of 75 basis points through three rate hikes of 25 basis points in each of December 2017, March 2018 and June 2018.

4


Net interest margin for the third quarter of 2018 decreased 24 basis points to 4.44% from 4.68% for the third quarter of 2017.

Net interest income for the nine months ended September 30, 2018 increased $4.0 million, or 15.5%, to $30.0 million, compared to $26.0 million for the same period last year, primarily due to a $7.0 million increase in interest income, partially offset by an increase of $3.0 million in interest expense.

The increase in interest income for the nine months ended September 30, 2018 was primarily due to a 18.0% increase in average loans, including loans held for sale, and a 25 basis point increase in the yield on average loans to 5.67% from 5.42% for the nine months ended September 30, 2017.   The increase in interest expense was due to a 22.8% increase in average interest-bearing liabilities and a 55 basis point increase in the cost of average interest-bearing liabilities to 1.48% for the nine months ended September 30, 2018 from 0.93% for the same period last year.

Net interest margin for the nine months ended September 30, 2018 decreased 9 basis points to 4.49% from 4.58% for the nine months ended September 30, 2017.

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

 

Three Months Ended

 

 

 

Percentage Change

 

 

 

September 30,

 

 

June 30,

 

 

September 30,

 

 

 

Q3-18

 

 

Q3-18

 

 

 

2018

 

 

2018

 

 

2017

 

 

 

vs. Q2-18

 

 

vs. Q3-17

 

Yield on loans

 

 

5.79

%

 

 

5.64

%

 

 

5.57

%

 

 

 

0.15

%

 

 

0.22

%

Yield on interest-earning assets

 

 

5.51

%

 

 

5.39

%

 

 

5.29

%

 

 

 

0.12

%

 

 

0.22

%

Cost of interest-bearing liabilities

 

 

1.69

%

 

 

1.48

%

 

 

1.01

%

 

 

 

0.21

%

 

 

0.68

%

Cost of deposits

 

 

1.17

%

 

 

1.02

%

 

 

0.64

%

 

 

 

0.15

%

 

 

0.53

%

Cost of funds

 

 

1.18

%

 

 

1.02

%

 

 

0.65

%

 

 

 

0.16

%

 

 

0.53

%

Net interest spread

 

 

3.82

%

 

 

3.91

%

 

 

4.28

%

 

 

 

-0.09

%

 

 

-0.46

%

Net interest margin

 

 

4.44

%

 

 

4.46

%

 

 

4.68

%

 

 

 

-0.02

%

 

 

-0.24

%

 

  

 

Nine Months Ended

 

 

 

Percentage Change

 

 

 

September 30,

 

 

September 30,

 

 

 

2018 YTD

 

 

 

2018

 

 

2017

 

 

 

vs. 2017 YTD

 

Yield on loans

 

 

5.67

%

 

 

5.42

%

 

 

 

0.25

%

Yield on interest-earning assets

 

 

5.41

%

 

 

5.14

%

 

 

 

0.27

%

Cost of interest-bearing liabilities

 

 

1.48

%

 

 

0.93

%

 

 

 

0.55

%

Cost of deposits

 

 

1.00

%

 

 

0.60

%

 

 

 

0.40

%

Cost of funds

 

 

1.01

%

 

 

0.60

%

 

 

 

0.41

%

Net interest spread

 

 

3.94

%

 

 

4.21

%

 

 

 

-0.27

%

Net interest margin

 

 

4.49

%

 

 

4.58

%

 

 

 

-0.09

%

 

The provision for loan losses for the third quarter of 2018 increased $406 thousand to $439 thousand, compared to $33 thousand for the second quarter of 2018, primarily due to an increase in the loan portfolio and the change in historical loss factors (including a charge off of $566 thousand in one C&I loan relationship). The provision for loan losses for the third quarter of 2018 increased $161

5


thousand compared to $278 thousand for the third quarter of 2017, primarily due to an increase in the loan portfolio.

Noninterest income for the third quarter of 2018 was $2.3 million, a decrease of $499 thousand, or 17.9%, from $2.8 million for the second quarter of 2018, primarily due to a decrease of $593 thousand in gain on sale of SBA loans, partially offset by an increase of $86 thousand in service charges on deposits.  

Gain on sale of SBA loans decreased $593 thousand to $1.1 million for the third quarter of 2018 from $1.7 million for the second quarter of 2018.  We sold $22.8 million in SBA loans with an average premium of 6.47% in the third quarter of 2018, compared to the sale of $24.8 million in SBA loans with an average premium of 8.60% in the second quarter of 2018.   The significant decrease in average premium in the secondary market was primarily due to faster prepayment speed in SBA loans as more borrowers are refinancing SBA loans to conventional loans with lower interest rates, which in turn shortens investors’ duration and reducing investment value.

Noninterest income for the third quarter of 2018 increased $29 thousand compared to $2.3 million for the third quarter of 2017, primarily due to an increase of $90 thousand in service charges on deposit accounts, partially offset by a decrease of $56 thousand in gain on sale of SBA loans. Gain on sale of SBA loans for the third quarter of 2017 was $1.2 million. We sold $15.0 million in SBA loans with an average premium of 9.97% in the third quarter of 2017.

Noninterest expense for the third quarter of 2018 was $7.7 million, an increase of $227 thousand, or 3.0%, compared to $7.5 million for the second quarter of 2018.  The increase was primarily due to a $188 thousand increase in salary and employee benefits and a $128 thousand increase in professional fees, partially offset by a decrease of $88 thousand in occupancy and equipment expenses. The increase in salary and employee benefits was primarily due to an increase in employee headcount to support the continued growth of the Company. The employee headcount increased to 157 at September 30, 2018 from 138 at June 30, 2018. The increase in professional fees was due to increased expense related to other corporate matters during the quarter.

Noninterest expense for the third quarter of 2018 increased $961 thousand, or 14.2%, to $7.7 million, compared to $6.7 million for the third quarter of 2017.  The increase was primarily due to a $539 thousand increase in salary and employee benefits, consisted of an increase of 25 person in employee headcount from 132 at September 30,2017. Professional fees were increased of $145 thousand and other expenses were increased of $129 thousand, which were in line with the growth of the Company.

Noninterest expense for the third quarter of 2018 increased $961 thousand, or 14.2%, to $7.7 million, compared to $6.7 million for the third quarter of 2017.  The increase was primarily due to a $539 thousand increase in salary and employee benefits, a $145 thousand increase in professional fees, and a $129 thousand increase in other expense, which were in line with the growth of the Company. The employee headcount increased by 25 to 157 from 132 at September 30, 2017.

Income tax provision for the third quarter of 2018 was $1.1 million, compared to $1.5 million for the second quarter of 2018 and $1.7 million for the third quarter of 2017.  The effective tax rate for the third quarter of 2018 was 24.7%, compared to 27.9% for the second quarter of 2018 and 38.6% for the third quarter of 2017. The decrease in the effective tax rate in the third quarter of 2018 compared to the second quarter of 2018 was due to additional tax benefits from vesting of restricted stock units during

6


the quarter. The effective tax rates were 26.5% and 39.1% for the nine months ended September 30, 2018 and 2017, respectively. The significant decrease in the effective tax rate was due to the enactment the Tax Cuts and Jobs Act signed into law on December 22, 2017.

Balance Sheet

Total assets were $1.0 billion at September 30, 2018, an increase of $55.6 million, or 5.7%, from $979.4 million at June 30, 2018, and an increase of $156.0 million, or 17.7%, from $879.1 million at September 30, 2017.  Gross loans, net of unearned income, were $850.0 million at September 30, 2018, an increase of $24.0 million, or 2.9%, from $826.0 million at June 30, 2018, and an increase of $114.0 million, or 15.5%, from $736.1 million at September 30, 2017.

New loan originations for the third quarter of 2018 totaled $91.1 million, including SBA loan originations of $30.3 million, compared to $92.0 million, including SBA loan originations of $29.3 million for the second quarter of 2018.  New loan originations for the third quarter of 2017 were $87.5 million, including SBA loan originations of $34.6 million.  Loan payoffs for the third quarter of 2018 were $29.3 million, compared to $30.1 million for the second quarter of 2018, and $28.2 million for the third quarter of 2017.

Total deposits were $896.9 million at September 30, 2018, an increase of $73.5 million, or 8.9%, from $823.4 million at June 30, 2018, and an increase of $142.4 million, or 18.9%, from $754.5 million at September 30, 2017.  Noninterest bearing deposits were $286.3 million at September 30, 2018, an increase of $16.2 million, or 6.0%, from $270.1 million at June 30, 2018, and a decrease of $2.8 million, or 1.0%, from $289.2 million at September 30, 2017.  

Noninterest bearing deposits accounted for 31.9% of total deposits at September 30, 2018, compared to 32.8% at June 30, 2018 and 38.3% at September 30, 2017.  

 

 

As of

 

 

 

September 30,

 

 

June 30,

 

 

September 30,

 

 

 

2018

 

 

2018

 

 

2017

 

Noninterest bearing deposits

 

 

31.9

%

 

 

32.8

%

 

 

38.3

%

Interest bearing demand deposits

 

 

28.3

%

 

 

29.7

%

 

 

34.6

%

Savings

 

 

0.4

%

 

 

0.4

%

 

 

0.5

%

Time deposits over $250,000

 

 

17.6

%

 

 

17.2

%

 

 

12.8

%

Other time deposits

 

 

21.8

%

 

 

19.9

%

 

 

13.8

%

Total deposits

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

The Company had no borrowings from the Federal Home Loan Bank (“FHLB”) at September 30, 2018, compared to the advances from the FHLB of $25 million at June 30, 2018 and September 30, 2017. The payoff advances from the FHLB were funded by the increase in total deposits.

7


The Company’s consolidated regulatory capital ratios exceeded regulatory guidelines and the Bank’s capital ratios exceeded the regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements at September 30, 2018, as summarized in the following table.

 

 

 

 

 

 

 

 

 

 

 

Well-capitalized

 

 

Fully Phased-in

 

 

 

 

 

 

 

 

 

 

 

Financial

 

 

Basel III

 

 

 

 

 

 

 

 

 

 

 

Institution

 

 

Minimal

 

 

 

 

 

 

 

 

 

 

 

Basel III

 

 

Requirements (1)

 

 

 

 

 

 

 

 

 

 

 

Regulatory

 

 

Effective

 

Capital Ratios

 

OP Bancorp

 

 

Open Bank

 

 

Guidelines

 

 

January 1, 2019

 

Total risk-based

 

 

16.16

%

 

 

16.15

%

 

 

10.00

%

 

 

10.50

%

Tier 1 risk-based

 

 

15.01

%

 

 

15.00

%

 

 

8.00

%

 

 

8.50

%

Common equity tier 1 Risk-Based

 

 

15.01

%

 

 

15.00

%

 

 

6.50

%

 

 

7.00

%

Leverage

 

 

12.77

%

 

 

12.76

%

 

 

5.00

%

 

 

4.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Fully phased in Basel III requirement for both OP Bancorp and Open Bank. Includes a 2.5% capital conservation buffer, except the leverage ratio.

 

 

Asset Quality

Nonperforming loans were $1.2 million at September 30, 2018, an increase of $243 thousand from $990 thousand at June 30, 2018 and an increase of $499 thousand from $734 thousand at September 30, 2017.

Nonperforming assets were $1.2 million, or 0.12% of total assets, at September 30, 2018, $990 thousand, or 0.10% of total assets, at June 30, 2018 and $734 thousand, or 0.08% of total assets, at September 30, 2017.  There was no other real estate owned (“OREO”) at September 30, 2018, June 30, 2018, or September 30, 2017.

Nonperforming loans to gross loans were 0.15% at September 30, 2018, compared to 0.12% at June 30, 2018 and 0.10% at September 30, 2017.  Total classified loans were $3.0 million, or 0.35% of gross loans, at September 30, 2018, compared to $3.1 million, or 0.37% of gross loans, at June 30, 2018 and $2.1 million, or 0.29% of gross loans, at September 30, 2017.  

The allowance for loan losses was $9.6 million at September 30, 2018, compared to $9.7 million at June 30, 2018 and $8.9 million at September 30, 2017.  The allowance for loan losses was 1.12% of gross loans at September 30, 2018, 1.18% at June 30, 2018 and 1.21% at September 30, 2017.  The allowance for loan losses was 775% of nonperforming assets at September 30, 2018, 982% at June 30, 2018 and 1,214% at September 30, 2017.

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 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

8


currently operates with eight full branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Gardena, Buena Park, and Santa Clara.  The Bank also has three loan production offices in Seattle, Washington, Dallas, Texas, and Atlanta, Georgia.  The Bank commenced its operations on June 10, 2005 as First Standard Bank and changed its name to Open Bank in October 2010.  Its headquarters is located at 1000 Wilshire Blvd., Suite 500, Los Angeles, California 90017. Phone 213.892.9999; www.myopenbank.com  Member FDIC, Equal Housing Lender.

Cautionary Note Regarding Forward-Looking Statements

Certain matters set forth herein (including any exhibits hereto) 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. Forward-looking statements may include, but are not limited to, the use of forward-looking language, such as “likely result in,” “expects,” “anticipates,” “estimates,” “forecasts,” “projects,” “intends to,” or may include other similar words or phrases, such as “believes,” “plans,” “trend,” “objective,” “continues,” “remains,” or similar expressions, or future or conditional verbs, such as “will,” “would,” “should,” “could,” “may,” “might,” “can,” or similar verbs. 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 loss;  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 and 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 the 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; 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

9


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 including its Registration Statement on Form S-1 effective as of March 27, 2018, and particularly the discussion of risk factors within that document. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, our results could differ materially from those expressed in, implied or projected by such forward-looking statements. We assume no obligation to update such forward-looking statements.  Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, except as required by law.

Contact

Investor Relations

OP Bancorp

Christine Oh

EVP & CFO

213.892.1192

Christine.oh@myopenbank.com

 

 

10


 

Consolidated Balance Sheet (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/30/2018

 

 

6/30/2018

 

 

% change

 

 

9/30/2017

 

 

% change

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

95,787

 

 

$

61,252

 

 

 

56.4

%

 

$

53,961

 

 

 

77.5

%

Securities available for sale, at fair value

 

 

46,324

 

 

 

45,006

 

 

 

2.9

%

 

 

43,578

 

 

 

6.3

%

Other investments

 

 

7,221

 

 

 

7,226

 

 

 

-0.1

%

 

 

4,286

 

 

 

68.5

%

Loans held for sale

 

 

3,254

 

 

 

8,718

 

 

 

-62.7

%

 

 

12,893

 

 

 

-74.8

%

Real Estate Loans

 

 

489,828

 

 

 

465,125

 

 

 

5.3

%

 

 

405,453

 

 

 

20.8

%

SBA Loans

 

 

132,505

 

 

 

125,378

 

 

 

5.7

%

 

 

116,680

 

 

 

13.6

%

C & I Loans

 

 

104,301

 

 

 

117,353

 

 

 

-11.1

%

 

 

107,476

 

 

 

-3.0

%

Home Mortgage Loans

 

 

120,262

 

 

 

114,710

 

 

 

4.8

%

 

 

102,283

 

 

 

17.6

%

Consumer & Other Loans

 

 

3,122

 

 

 

3,474

 

 

 

-10.1

%

 

 

4,166

 

 

 

-25.1

%

Gross loans, net of unearned income

 

 

850,018

 

 

 

826,040

 

 

 

2.9

%

 

 

736,058

 

 

 

15.5

%

Allowance for loan losses

 

 

(9,551

)

 

 

(9,723

)

 

 

-1.8

%

 

 

(8,909

)

 

 

7.2

%

Net loans receivable

 

 

840,467

 

 

 

816,317

 

 

 

3.0

%

 

 

727,149

 

 

 

15.6

%

Premises and equipment, net

 

 

4,757

 

 

 

4,818

 

 

 

-1.3

%

 

 

4,442

 

 

 

7.1

%

Accrued interest receivable

 

 

2,783

 

 

 

2,598

 

 

 

7.1

%

 

 

2,182

 

 

 

27.5

%

Servicing assets

 

 

7,097

 

 

 

6,994

 

 

 

1.5

%

 

 

6,957

 

 

 

2.0

%

Company owned life insurance

 

 

11,321

 

 

 

11,243

 

 

 

0.7

%

 

 

11,012

 

 

 

2.8

%

Deferred tax assets

 

 

4,257

 

 

 

4,239

 

 

 

0.4

%

 

 

4,214

 

 

 

1.0

%

Other assets

 

 

11,760

 

 

 

11,030

 

 

 

6.6

%

 

 

8,413

 

 

 

39.8

%

Total assets

 

$

1,035,028

 

 

$

979,441

 

 

 

5.7

%

 

$

879,087

 

 

 

17.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest bearing deposits

 

$

286,347

 

 

$

270,144

 

 

 

6.0

%

 

$

289,154

 

 

 

-1.0

%

Savings

 

 

3,240

 

 

 

3,097

 

 

 

4.6

%

 

 

3,809

 

 

 

-14.9

%

Money market and others

 

 

253,807

 

 

 

244,620

 

 

 

3.8

%

 

 

260,930

 

 

 

-2.7

%

Time deposits over $250,000

 

 

157,687

 

 

 

141,823

 

 

 

11.2

%

 

 

96,642

 

 

 

63.2

%

Other time deposits

 

 

195,810

 

 

 

163,689

 

 

 

19.6

%

 

 

103,998

 

 

 

88.3

%

Total deposits

 

 

896,891

 

 

 

823,373

 

 

 

8.9

%

 

 

754,533

 

 

 

18.9

%

Other borrowings

 

 

-

 

 

 

25,000

 

 

 

-100.0

%

 

 

25,000

 

 

 

-100.0

%

Accrued interest payable

 

 

1,196

 

 

 

873

 

 

 

37.0

%

 

 

377

 

 

 

217.2

%

Other liabilities

 

 

11,966

 

 

 

8,802

 

 

 

35.9

%

 

 

9,699

 

 

 

23.4

%

Total liabilities

 

 

910,053

 

 

 

858,048

 

 

 

6.1

%

 

 

789,609

 

 

 

15.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

91,009

 

 

 

90,894

 

 

 

0.1

%