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Market Overview

OP Bancorp Reports Fourth Quarter and Year End Results For 2020

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2020 Fourth Quarter Highlights:

  • Net income totaled $3.9 million, or $0.25 per diluted common share, compared to $3.6 million, or $0.23 per diluted common share, for the third quarter of 2020 and $4.2 million, or $0.26 per diluted common share, for the fourth quarter of 2019
  • Net interest margin was 3.73%, compared to 3.66% for the third quarter of 2020 and 3.99% for the fourth quarter of 2019
  • Return on average assets was 1.15% and return on average equity was 10.86%, compared to 1.11% and 10.22%, respectively, for the third quarter of 2020 and 1.45% and 12.05%, respectively, for the fourth quarter of 2019
  • Total assets increased 2.0% to $1.37 billion at December 31, 2020, from $1.34 billion at September 30, 2020
  • Net loans receivable increased 2.4% to $1.08 billion at December 31, 2020, from $1.06 billion at September 30, 2020
  • Total deposits increased 2.6% to $1.20 billion at December 31, 2020, from $1.17 billion at September 30, 2020
  • Noninterest-bearing deposits accounted for 43.6% of total deposits at December 31, 2020, compared to 41.8% at September 30, 2020
  • Nonperforming assets to total assets was 0.07% at December 31, 2020, compared to 0.02% at September 30, 2020
  • Total risk-based capital ratio and leverage ratio were 14.82% and 10.55%, respectively, at December 31, 2020, compared to 14.93% and 10.85%, respectively, at September 30, 2020
  • The provision for loan losses was $1.8 million, compared to $1.4 million for the third quarter of 2020 and $411,000 for the fourth quarter of 2019
  • The allowance for loan losses, excluding fully guaranteed SBA PPP loans, was 1.48% of gross loans at December 31, 2020, compared to 1.40% of gross loans at September 30, 2020
  • Pre-provision net revenue was $7.2 million, compared to $6.5 million for the third quarter of 2020 and $5.9 million for the fourth quarter of 2019
  • Remaining loan deferments under the CARES Act were 2.7% of our loan portfolio as of December 31, 2020, down from 5.1% of our loan portfolio as of September 30, 2020

2020 Full Year Highlights:

  • Net income totaled $13.2 million, or $0.85 per diluted common share, compared to $16.8 million, or $1.03 per diluted common share, for the full year of 2019. Excluding a one-time gain on company owned life insurance of $1.2 million, net income was $15.5 million, or $0.95 per diluted common share, for the full year of 2019
  • Net interest margin was 3.72% compared to 4.19% for the full year of 2019
  • Return on average assets was 1.04% and return on average equity was 9.38%, compared to 1.51% and 12.42%, respectively, for the full year of 2019. Excluding the one-time gain on company owned life insurance of $1.2 million, return on average assets was 1.40% and return on average equity was 11.51% for the full year of 2019
  • Total assets increased 15.9% to $1.37 billion at December 31, 2020, from $1.18 billion at December 31, 2019
  • Net loans receivable increased 10.6% to $1.08 billion at December 31, 2020, from $980.1 million at December 31, 2019
  • Total deposits increased 17.6% to $1.20 billion at December 31, 2020, from $1.02 billion at December 31, 2019
  • Noninterest-bearing deposits accounted for 43.6% of total deposits at December 31, 2020, compared to 28.8% at December 31, 2019
  • Nonperforming assets to total assets was 0.07% compared to 0.13% at December 31, 2019
  • Total risk-based capital ratio and leverage ratio were 14.82% and 10.55%, respectively, at December 31, 2020, compared to 15.18% and 12.14%, respectively, at December 31, 2019
  • The provision for loan losses increased $4.8 million to $5.9 million, compared to $1.1 million for the full year of 2019, in response to changes in qualitative economic and business conditions amid COVID-19 pandemic
  • The allowance for loan losses, excluding fully guaranteed SBA PPP loans, was 1.48% of gross loans at December 31, 2020, compared to 1.02% of gross loans at December 31, 2019
  • Pre-provision net revenue was $24.2 million, compared to $23.2 million for the full year of 2019
  • Announced two programs each to repurchase up to 500,000 shares of common stock in February and September of 2020 and repurchased 698,000 shares at an average price of $7.48 as of December 31, 2020

OP Bancorp (the "Company") (NASDAQ:OPBK), the holding company of Open Bank (the "Bank"), today reported unaudited financial results for the fourth quarter of 2020. Net income for the fourth quarter of 2020 was $3.9 million, or $0.25 per diluted common share, compared to net income of $3.6 million, or $0.23 per diluted common share, for the third quarter of 2020, and net income of $4.2 million, or $0.26 per diluted common share, for the fourth quarter of 2019.

"I am pleased to report another strong quarter with solid financial results in this challenging environment. We have exceeded our expectations in all key financial areas through proactive management of the risks, margin, and expenses during this historically difficult period. As we start a new year, we will continue to put our best efforts in supporting our customers who are still experiencing many challenges through new PPP, loan deferments, and any other means of assistance. In addition, we continue to put our priority in the well-being of employees and will promote safer working environment through expanding remote capabilities and more automated platforms. The contribution to our communities will remain a focus as we seek more ways to work with various organizations to help those who are in need. Lastly and most importantly, managing risks and maintaining safe and sound banking operations will continue to be our key focus this year," commented Min Kim, President and Chief Executive Officer of OP Bancorp and Open Bank.

Financial Highlights (unaudited)

(Dollars in thousands, except per share data)

As of or for the Three Months Ended

 

 

 

 

December 31,

 

 

 

September 30,

 

 

 

December 31,

 

 

 

 

2020

 

 

 

2020

 

 

 

2019

 

Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

$

13,375

 

 

 

$

13,016

 

 

 

$

14,703

 

Interest expense

 

 

 

1,194

 

 

 

 

1,597

 

 

 

 

3,625

 

Net interest income

 

 

 

12,181

 

 

 

 

11,419

 

 

 

 

11,078

 

Provision for loan losses

 

 

 

1,790

 

 

 

 

1,399

 

 

 

 

411

 

Noninterest income

 

 

 

3,392

 

 

 

 

3,021

 

 

 

 

2,513

 

Noninterest expense

 

 

 

8,402

 

 

 

 

7,987

 

 

 

 

7,665

 

Income before taxes

 

 

 

5,381

 

 

 

 

5,054

 

 

 

 

5,515

 

Provision for income taxes

 

 

 

1,513

 

 

 

 

1,459

 

 

 

 

1,334

 

Net Income

 

 

$

3,868

 

 

 

$

3,595

 

 

 

$

4,181

 

Diluted earnings per share

 

 

$

0.25

 

 

 

$

0.23

 

 

 

$

0.26

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

 

$

26,659

 

 

 

$

41,430

 

 

 

$

2,100

 

Gross loans, net of unearned income

 

 

 

1,099,736

 

 

 

 

1,072,790

 

 

 

 

990,138

 

Allowance for loan losses (ALL)

 

 

 

15,321

 

 

 

 

14,164

 

 

 

 

10,050

 

Total assets

 

 

 

1,366,867

 

 

 

 

1,339,821

 

 

 

 

1,179,520

 

Deposits

 

 

 

1,200,090

 

 

 

 

1,170,164

 

 

 

 

1,020,711

 

Shareholders' equity

 

 

 

143,407

 

 

 

 

141,549

 

 

 

 

140,576

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

 

 

1.15

%

 

 

 

1.11

%

 

 

 

1.45

%

Return on average equity (annualized)

 

 

 

10.86

%

 

 

 

10.22

%

 

 

 

12.05

%

Net interest margin (annualized)

 

 

 

3.73

%

 

 

 

3.66

%

 

 

 

3.99

%

Efficiency ratio (1)

 

 

 

53.96

%

 

 

 

55.31

%

 

 

 

56.40

%

Credit Quality:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

 

$

985

 

 

 

$

330

 

 

 

$

1,548

 

Nonperforming assets

 

 

 

985

 

 

 

 

330

 

 

 

 

1,548

 

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

 

 

 

0.00

%

 

 

 

0.00

%

 

 

 

0.00

%

Nonperforming assets to gross loans plus OREO

 

 

 

0.09

%

 

 

 

0.03

%

 

 

 

0.16

%

ALL to nonperforming loans

 

 

 

1,555

%

 

 

 

4,295

%

 

 

 

649

%

ALL to gross loans, net of unearned income

 

 

 

1.39

%

 

 

 

1.32

%

 

 

 

1.02

%

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

 

 

14.82

%

 

 

 

14.93

%

 

 

 

15.18

%

Tier 1 risk-based capital ratio

 

 

 

13.56

%

 

 

 

13.67

%

 

 

 

14.16

%

Common equity tier 1 ratio

 

 

 

13.56

%

 

 

 

13.67

%

 

 

 

14.16

%

Leverage ratio

 

 

 

10.55

%

 

 

 

10.85

%

 

 

 

12.14

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

Financial Highlights (unaudited)

(Dollars in thousands, except per share data)

For the Twelve Months Ended

 

 

 

 

December 31,

 

 

 

December 31,

 

 

 

 

2020

 

 

 

2019

 

Income Statement Data:

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

$

53,655

 

 

 

$

58,779

 

Interest expense

 

 

 

8,291

 

 

 

 

14,507

 

Net interest income

 

 

 

45,364

 

 

 

 

44,272

 

Provision for loan losses

 

 

 

5,920

 

 

 

 

1,102

 

Noninterest income

 

 

 

10,771

 

 

 

 

11,426

 

Noninterest expense

 

 

 

31,930

 

 

 

 

32,520

 

Income before taxes

 

 

 

18,285

 

 

 

 

22,076

 

Provision for income taxes

 

 

 

5,107

 

 

 

 

5,319

 

Net Income

 

 

$

13,178

 

 

 

$

16,757

 

Diluted earnings per share

 

 

$

0.85

 

 

 

$

1.03

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

 

1.04

%

 

 

 

1.51

%

Return on average equity

 

 

 

9.38

%

 

 

 

12.42

%

Net interest margin

 

 

 

3.72

%

 

 

 

4.19

%

Efficiency ratio (1)

 

 

 

56.88

%

 

 

 

58.39

%

 

 

 

 

 

 

 

 

 

 

 

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

Financial Highlights, excluding Gain on COLI

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

 

 

For the Twelve Months Ended

 

 

 

 

December 31,

 

 

 

December 31,

 

 

 

 

2020

 

 

 

2019

 

Income before taxes, as reported

 

 

$

18,285

 

 

 

$

22,076

 

Gain on COLI

 

 

 

 

 

 

 

1,228

 

Provision for income taxes

 

 

 

5,107

 

 

 

 

5,319

 

Net Income, excluding gain on COLI

 

 

$

13,178

 

 

 

$

15,529

 

Diluted earnings per share

 

 

$

0.85

 

 

 

$

0.95

 

Return on average assets

 

 

 

1.04

%

 

 

 

1.40

%

Return on average equity

 

 

 

9.38

%

 

 

 

11.51

%

Pre-Provision Net Revenue

(Dollars in thousands)

For the Three Months Ended

 

 

For the Twelve Months Ended

 

 

 

December 31,

 

 

September 30,

 

 

December 31,

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Interest income

 

$

13,375

 

 

$

13,016

 

 

$

14,703

 

 

$

53,655

 

 

$

58,779

 

Interest expense

 

 

1,194

 

 

 

1,597

 

 

 

3,625

 

 

 

8,291

 

 

 

14,507

 

Net interest income

 

 

12,181

 

 

 

11,419

 

 

 

11,078

 

 

 

45,364

 

 

 

44,272

 

Noninterest income

 

 

3,392

 

 

 

3,021

 

 

 

2,513

 

 

 

10,771

 

 

 

11,426

 

Noninterest expense

 

 

8,402

 

 

 

7,987

 

 

 

7,665

 

 

 

31,930

 

 

 

32,520

 

Pre-provision net revenue

 

$

7,171

 

 

$

6,453

 

 

$

5,926

 

 

$

24,205

 

 

$

23,178

 

Reconciliation to Net Income:

Provision for loan losses

 

 

1,790

 

 

 

1,399

 

 

 

411

 

 

 

5,920

 

 

 

1,102

 

Provision for income taxes

 

 

1,513

 

 

 

1,459

 

 

 

1,334

 

 

 

5,107

 

 

 

5,319

 

Net Income

 

$

3,868

 

 

$

3,595

 

 

$

4,181

 

 

$

13,178

 

 

$

16,757

(1) Pre-provision net revenue is a non-GAAP measure. Pre-provision net revenue excludes income taxes and provision for loan losses from net income. Management believes that this information provides useful information with a better comparison to the financial results of each periods and a better understanding of the operating results of the Bank.

 

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 both the contractual interest income and yield on our loan portfolio to the reported interest income and yield for the periods indicated.

 

 

Three Months Ended

 

 

 

December 31,

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2020

 

 

2019

 

(Dollars in thousands)

 

Interest & Fees

 

 

Yield

 

 

Interest & Fees

 

 

Yield

 

 

Interest & Fees

 

 

Yield

 

Contractual interest rate

 

$

12,156

 

 

 

4.35

%

 

$

11,715

 

 

 

4.39

%

 

$

13,337

 

 

 

5.44

%

SBA discount accretion

 

 

619

 

 

 

0.22

%

 

 

389

 

 

 

0.15

%

 

 

589

 

 

 

0.24

%

Amortization of net deferred fees

 

 

242

 

 

 

0.09

%

 

 

393

 

 

 

0.15

%

 

 

41

 

 

 

0.02

%

Net interest recognized on nonaccrual loans

 

 

(20

)

 

 

-0.01

%

 

 

48

 

 

 

0.02

%

 

 

-

 

 

 

0.00

%

Prepayment penalties and other fees

 

 

9

 

 

 

0.00

%

 

 

36

 

 

 

0.01

%

 

 

28

 

 

 

0.01

%

Yield on loans (as reported)

 

$

13,006

 

 

 

4.65

%

 

$

12,581

 

 

 

4.72

%

 

$

13,995

 

 

 

5.71

%

 

 

Twelve Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

 

2020

 

 

2019

 

(Dollars in thousands)

 

Interest & Fees

 

 

Yield

 

 

Interest & Fees

 

 

Yield

 

Contractual interest rate

 

$

48,639

 

 

 

4.60

%

 

$

52,866

 

 

 

5.66

%

SBA discount accretion

 

 

1,978

 

 

 

0.19

%

 

 

2,518

 

 

 

0.27

%

Amortization of net deferred fees

 

 

1,032

 

 

 

0.10

%

 

 

232

 

 

 

0.02

%

Net interest recognized on nonaccrual loans

 

 

111

 

 

 

0.01

%

 

 

(12

)

 

 

0.00

%

Prepayment penalties and other fees

 

 

69

 

 

 

0.01

%

 

 

116

 

 

 

0.01

%

Yield on loans (as reported)

 

$

51,829

 

 

 

4.91

%

 

$

55,720

 

 

 

5.96

%

Net interest margin for the fourth quarter of 2020 increased 7 basis points to 3.73% from 3.66% for the third quarter of 2020, primarily due to a 24 basis point decrease in the cost of interest-bearing liabilities, partially offset by an 8 basis point decrease in the reported yield on interest-earning assets.

Net interest income before provision for loan losses for the fourth quarter of 2020 was $12.2 million, an increase of $762,000, or 6.7%, compared to $11.4 million for the third quarter of 2020, primarily due to a $403,000 decrease in interest expense and a $359,000 increase in interest income.

Interest income on securities available for sale and other investments for the fourth quarter of 2020 decreased $66,000, or 15.2%, to $369,000, compared to $435,000 for the third quarter of 2020. The decrease was primarily due to a $62,000 decrease in interest income on securities available for sale primarily due to lower yields on securities purchased during the third and fourth quarters of 2020 and increased premium amortizations from prepayments on investment portfolio.

Interest income from contractual interest rates on loans for the fourth quarter of 2020 increased $441,000, or 3.8%, compared to the third quarter of 2020, reflecting an increase of $50.7 million, or 4.8% in average balance of loans, partially offset by a 4 basis point decrease in average contractual interest rate on loans. The amount of discount accretion on SBA loans for the fourth quarter of 2020 increased $230,000 compared to the third quarter of 2020 due to an increase in SBA loan payoffs. The reported interest income on loans, net of SBA discount accretions and other components, for the fourth quarter of 2020 increased $425,000, or 3.4%, compared to the third quarter of 2020.

Interest expense for the fourth quarter of 2020 was $1.2 million, a decrease of $403,000, or 25.2%, compared to $1.6 million for the third quarter of 2020, primarily due to continued downward adjustments of the Bank's deposit rates, partially offset by an increase of $6.3 million, or 0.9%, in the average balance of interest-bearing liabilities.

Net interest margin for the fourth quarter of 2020 decreased 26 basis points to 3.73% from 3.99% for the fourth quarter of 2019, primarily due to a 120 basis point decrease in the reported yield on interest-earning assets, partially offset by a 133 basis point decrease in the cost of interest-bearing liabilities as a result of cumulative market rate cuts of 150 basis points by the Federal Reserve in first quarter of 2020.

Net interest income before provision for loan losses for the fourth quarter of 2020 increased $1.1 million, or 10.0%, to $12.2 million, compared to $11.1 million for the fourth quarter of 2019, primarily due to a $2.4 million decrease in interest expense, partially offset by a $1.3 million decrease in interest income.

Interest income on securities available for sale and other investments for the fourth quarter of 2020 decreased $339,000, or 47.8%, to $369,000, compared to $708,000, for the fourth quarter of 2019. The decrease was primarily due to a decrease in interest income on Fed funds as a result of the aforementioned cumulative rate cuts, a decrease in interest income on other investments from lower FHLB dividend income, and a decrease in interest income on securities available for sale as a result of lower yields from investment purchases and higher premium amortizations from accelerated prepayments in 2020.

Interest income from contractual interest rates on loans for the fourth quarter of 2020 decreased $1.2 million, or 8.9%, compared to the fourth quarter of 2019, reflecting a 109 basis point decrease in average contractual interest rate on loans, primarily due to the aforementioned cumulative rate cuts, partially offset by an increase of $139.5 million, or 14.3% in average balance of loans. The amount of discount accretion on SBA loans for the fourth quarter of 2020 increased $30,000 compared to the fourth quarter of 2019, primarily due to an increase in monthly discount accretions in line with an increase in SBA loan balance in 2020. The reported interest income on loans, net of SBA discount accretions and other components, for the fourth quarter of 2020 decreased $989,000, or 7.1%, compared to the fourth quarter of 2019.

Interest expense for the fourth quarter of 2020 decreased $2.4 million, or 67.1%, to $1.2 million, compared to $3.6 million for the fourth quarter of 2019, primarily due to the Bank's downward adjustments in deposit rates after the rate cuts by the Federal Reserve in March of 2020 and a decrease of $26.8 million, or 3.8%, in the average balance of interest-bearing liabilities.

The following tables show the asset yields, liability costs, net interest spread, and net interest margin for the periods indicated, along with the percentage changes in the periods indicated.

 

 

Three Months Ended

 

 

 

Percentage Change

 

 

 

December 31,

 

 

September 30,

 

 

December 31,

 

 

 

Q4-20

 

 

Q4-20

 

 

 

2020

 

 

2020

 

 

2019

 

 

 

vs. Q3-20

 

 

vs. Q4-19

 

Yield on loans

 

 

4.65

%

 

 

4.72

%

 

 

5.71

%

 

 

 

-0.07

%

 

 

-1.06

%

Yield on interest-earning assets

 

 

4.10

%

 

 

4.18

%

 

 

5.30

%

 

 

 

-0.08

%

 

 

-1.20

%

Cost of interest-bearing liabilities

 

 

0.70

%

 

 

0.94

%

 

 

2.03

%

 

 

 

-0.24

%

 

 

-1.33

%

Cost of deposits

 

 

0.40

%

 

 

0.56

%

 

 

1.44

%

 

 

 

-0.16

%

 

 

-1.04

%

Cost of funds

 

 

0.40

%

 

 

0.56

%

 

 

1.44

%

 

 

 

-0.16

%

 

 

-1.04

%

Net interest spread

 

 

3.40

%

 

 

3.24

%

 

 

3.27

%

 

 

 

0.16

%

 

 

0.13

%

Net interest margin

 

 

3.73

%

 

 

3.66

%

 

 

3.99

%

 

 

 

0.07

%

 

 

-0.26

%

 

 

Twelve Months Ended

 

 

 

Percentage Change

 

 

 

December 31,

 

 

December 31,

 

 

 

2020 YTD

 

 

 

2020

 

 

2019

 

 

 

vs. 2019 YTD

 

Yield on loans

 

 

4.91

%

 

 

5.96

%

 

 

 

-1.05

%

Yield on interest-earning assets

 

 

4.40

%

 

 

5.56

%

 

 

 

-1.16

%

Cost of interest-bearing liabilities

 

 

1.18

%

 

 

2.13

%

 

 

 

-0.95

%

Cost of deposits

 

 

0.75

%

 

 

1.52

%

 

 

 

-0.77

%

Cost of funds

 

 

0.75

%

 

 

1.52

%

 

 

 

-0.77

%

Net interest spread

 

 

3.22

%

 

 

3.43

%

 

 

 

-0.21

%

Net interest margin

 

 

3.72

%

 

 

4.19

%

 

 

 

-0.47

%

The Bank recorded $1.8 million in provision for loan losses for the fourth quarter of 2020. Management evaluates the qualitative and quantitative factors on all loan types to reflect continued adverse impacts on national, state, and local economies caused by the COVID-19 pandemic. The changes in quantitative factors accounted for $1.3 million, or 70%, of provision for loan losses for the quarter, which includes $633,000 for accrued interest receivables on deferred loans, $440,000 for an increase in loan balance, and $226,000 for loan balance migration to classified loans. The Bank recorded a provision for loan losses of $1.4 million for the third quarter of 2020 and $411,000 for the fourth quarter of 2019.

Noninterest income for the fourth quarter of 2020 was $3.4 million, an increase of $371,000, or 12.3%, from $3.0 million for the third quarter of 2020, primarily due to an increase of $375,000 in gain on sale of loans and an increase of $180,000 in other income, partially offset by a decrease of $216,000 in loan servicing fees from an increase in SBA loan payoffs. Gain on sale of loans for the fourth quarter of 2020 was $2.2 million, an increase of $375,000, compared to $1.8 million for the third quarter of 2020. The Bank sold $28.5 million in SBA loans with an average premium of 8.83% in the fourth quarter of 2020, compared to the sale of $24.0 million in SBA loans with an average premium of 9.66% in the third quarter of 2020.

Noninterest income for the fourth quarter of 2020 was $3.4 million, an increase of $879,000, compared to $2.5 million for the fourth quarter of 2019, primarily due to an increase of $661,000 in gain on sale of loans and an increase of $343,000 in other income, partially offset by a decrease of $159,000 in service charges on deposits. Gain on sale of loans for the fourth quarter of 2019 was $1.5 million from the sale of $23.9 million in SBA loans with an average premium of 7.73%. The Bank sold a property that had been used for the Bank's internal use with a gain of $213,000 during the fourth quarter of 2020, while the Bank sold OREO with a loss of $145,000 during the fourth quarter of 2019.

Noninterest expense for the fourth quarter of 2020 was $8.4 million, an increase of $415,000, or 5.2%, compared to $8.0 million for the third quarter of 2020. The increase was primarily due to an increase of $440,000 in salary and employee benefits as a result of year-end adjustments in employee bonus and incentive accruals.

Noninterest expense for the fourth quarter of 2020 was $8.4 million, an increase of $737,000, or 9.6%, compared to $7.7 million for the fourth quarter of 2019. The increase was primarily due to an increase of $1.1 million in salary and employee benefits, partially offset by a decrease of $201,000 in promotion and advertising expenses, and a decrease of $131,000 in director's fees expenses. The increase in salary and employee benefits was primarily due to additional accruals made to employee bonus and incentives during the fourth quarter of 2020 compared to accrual reversals made to employee bonus during the fourth quarter of 2019. The decrease in promotion and advertising expenses was primarily due to Management's proactive management of overhead expenses amid the COVID-19 pandemic. The decrease in director's expense was due to a decrease of $108,000 in restricted stock unit expense resulting from the full vesting of the restricted stock units in July 2020.

Income tax provision was $1.5 million for the fourth quarter and for the third quarter of 2020, and $1.3 million for the fourth quarter of 2019. The effective tax rate for the fourth quarter of 2020 was 28.1%, compared to 28.9% for the third quarter of 2020 and 24.2% for the fourth quarter of 2019. The higher effective tax rate for the fourth quarter of 2020 compared to the fourth quarter of 2019 was primarily due to realizing a lower amount of tax benefits resulting from the exercise of non-qualified stock options. There was no non-qualified stock option exercised during the fourth quarter of 2020.

Balance Sheet

Total assets were $1.37 billion at December 31, 2020, an increase of $27.0 million, or 2.0%, compared to $1.34 billion at September 30, 2020, and an increase of $187.3 million, or 15.9%, compared to $1.18 billion at December 31, 2019.

Gross loans, net of unearned income, were $1.10 billion at December 31, 2020, an increase of $26.9 million, or 2.5%, from $1.07 billion at September 30, 2020, and an increase of $109.6 million, or 11.1%, from $990.1 million at December 31, 2019.

The Following tables shows new loan originations for the periods indicated.

 

 

Three Month Ended

 

 

 

December 31,

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2020

 

 

2019

 

Real estate loans

 

$

30,828

 

 

$

39,476

 

 

$

58,854

 

SBA loans

 

 

16,634

 

 

 

77,479

 

(1)

 

26,347

 

C & I loans

 

 

47,308

 

 

 

10,458

 

 

 

6,342

 

Home mortgage loans

 

 

17,027

 

 

 

12,835

 

 

 

6,924

 

Total

 

$

111,797

 

 

$

140,248

 

 

$

98,467

 

(1) Include SBA Paycheck Protection Program (PPP) loans of $1.3 million.

 

Loan payoffs were $41.2 million for the fourth quarter of 2020, compared to $47.1 million for the third quarter of 2020, and $35.9 million for the fourth quarter of 2019.

Total deposits were $1.20 billion at December 31, 2020, an increase of $29.9 million, or 2.6%, from $1.17 billion at September 30, 2020, and an increase of $179.4 million, or 17.6%, from $1.02 billion at December 31, 2019. Noninterest-bearing deposits were $522.8 million at December 31, 2020, compared to $488.8 million at September 30, 2020, and $294.3 million at December 31, 2019. The increase in noninterest-bearing deposits during the fourth quarter of 2020 was primarily due to new accounts being opened during the quarter.

Noninterest-bearing deposits accounted for 43.6% of total deposits at December 31, 2020, compared to 41.8% at September 30, 2020, and 28.8% at December 31, 2019. The following table shows the Bank's deposits, by type as a percentage of total deposits as of the periods indicated.

 

 

As of

 

 

 

December 31,

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2020

 

 

2019

 

Noninterest-bearing deposits

 

 

43.6

%

 

 

41.8

%

 

 

28.8

%

Money market deposits and others

 

 

27.3

%

 

 

29.1

%

 

 

29.1

%

Time deposits over $250,000

 

 

16.7

%

 

 

16.6

%

 

 

20.9

%

Other time deposits

 

 

12.4

%

 

 

12.5

%

 

 

21.2

%

Total deposits

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

The Bank had $5.0 million in borrowings from the Federal Home Loan Bank (FHLB) at December 31, 2020 and $10.0 million at September 30, 2020, which has a 0% interest rate under the Zero-Rate Recovery Advance Program, FHLB's pandemic relief initiatives. The Bank had no borrowings from the FHLB at December 31, 2019.

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 December 31, 2020, as summarized in the following table.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory

 

 

 

 

 

 

 

 

 

 

 

Well-capitalized

 

 

Capital Ratio

 

 

 

 

 

 

 

 

 

 

 

Financial

 

 

Requirements (1),

 

 

 

 

 

 

 

 

 

 

 

Institution

 

 

Including

 

 

 

 

 

 

 

 

 

 

 

Basel III

 

 

Fully Phased-in

 

 

 

 

 

 

 

 

 

 

 

Regulatory

 

 

Capital Conservation

 

Capital Ratios

 

OP Bancorp

 

 

Open Bank

 

 

Guidelines

 

 

Buffer

 

Total risk-based capital ratio

 

 

14.82

%

 

 

14.53

%

 

 

10.00

%

 

 

10.50

%

Tier 1 risk-based capital ratio

 

 

13.56

%

 

 

13.27

%

 

 

8.00

%

 

 

8.50

%

Common equity tier 1 ratio

 

 

13.56

%

 

 

13.27

%

 

 

6.50

%

 

 

7.00

%

Leverage ratio

 

 

10.55

%

 

 

10.32

%

 

 

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.

 

The Company announced a fourth stock repurchase program on September 9, 2020, which authorizes the Company to repurchase up to 500,000 shares of its common stock. As of January 25, 2021, the Company has repurchased 201,000 shares of its common stock at an average price of $6.66 in the fourth stock repurchase program. 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 $8.64 per share through January 25, 2021.

Asset Quality

Nonperforming loans were $985,000 at December 31, 2020, an increase of $655,000 from $330,000 at September 30, 2020 and a decrease of $563,000 from $1.5 million at December 31, 2019.

The Bank had no other real estate owned (OREO) at December 31, 2020, September 30, 2020 and December 31, 2019.

Nonperforming assets were $985,000, or 0.07% of total assets, at December 31, 2020, compared to $330,000, or 0.02% of total assets, at September 30, 2020, and $1.5 million, or 0.13% of total assets, at December 31, 2019. Nonperforming loans to gross loans were 0.09% at December 31, 2020, compared to 0.03% at September 30, 2020, and 0.16% at December 31, 2019.

Total classified loans were $7.3 million, or 0.67% of gross loans, at December 31, 2020, compared to $2.1 million, or 0.20% of gross loans, at September 30, 2020, and $3.5 million, or 0.35% of gross loans, at December 31, 2019. The increase of $5.2 million was primarily due to a commercial loan of $3.8 million, two SBA real estate loans of $751,000, which were reclassified from special mentioned loans, and a home mortgage loan of $600,000, which was newly classified and placed on a nonaccrual status. All of these loans are fully secured by real estate collaterals.

The following tables shows the trend of classified loans by loan type as of the date stated.

 

 

As of

 

 

 

December 31,

 

 

September 30,

 

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

 

2020

 

 

2020

 

 

2020

 

 

2020

 

 

2019

 

Classified loans by loan type

 

(Dollars in thousands)

 

SBA loans—real estate

 

$

1,523

 

 

$

774

 

 

$

786

 

 

$

2,021

 

 

$

2,036

 

SBA loans—non-real estate

 

 

198

 

 

 

121

 

 

 

124

 

 

 

159

 

 

 

33

 

Commercial and industrial

 

 

5,004

 

 

 

1,207

 

 

 

1,211

 

 

 

686

 

 

 

697

 

Home mortgage

 

 

600

 

 

 

 

 

 

689

 

 

 

694

 

 

 

698

 

Total classified loans

 

$

7,325

 

 

$

2,102

 

 

$

2,810

 

 

$

3,560

 

 

$

3,464

 

SBA guarantee balance retained

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SBA loans—real estate

 

 

 

 

 

 

 

 

 

 

 

357

 

 

 

363

 

SBA loans—non-real estate

 

 

 

 

 

 

 

 

 

 

 

33

 

 

 

33

 

Total SBA unsold guarantee portion

 

$

 

 

$

 

 

$

 

 

$

390

 

 

$

396

 

Total classified loans, net of SBA guarantee balance retained

 

$

7,325

 

 

$

2,102

 

 

$

2,810

 

 

$

3,170

 

 

$

3,068

 

The Bank had 18 loans in deferred status with an aggregate balance of $31.2 million, or 2.7% of total loans at December 31, 2020, compared to 42 loans in deferred status with an aggregate balance of $56.9 million, or 5.1% of total loans at September 30, 2020. Since we started loan deferments under the CARES Act in the second quarter of 2020, 165 loans with an aggregate balance of $205.0 million have resumed regular payments or have been paid off through December 31, 2020.

The allowance for loan losses (ALL) was $15.3 million at December 31, 2020, compared to $14.2 million at September 30, 2020, and $10.1 million at December 31, 2019. The ALL was 1.39% of gross loans at December 31, 2020, 1.32% of gross loans at September 30, 2020, and 1.02% of gross loans at December 31, 2019. Excluding fully guaranteed SBA PPP loans, the ALL was 1.48% of gross loans at December 31, 2020, 1.40% of gross loans at September 30, 2020, and 1.02% of gross loans at December 31, 2019. The ALL was 1,555% of nonperforming assets at December 31, 2020, 4,295% at September 30, 2020, and 649% at December 31, 2019.

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: 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; the rapidly changing 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; 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, 2019 and in our other subsequent filings with the Securities and Exchange Commission.

Consolidated Balance Sheet (unaudited)

(Dollars in thousands)

 

 

As of

 

 

 

12/31/2020

 

 

09/30/2020

 

 

% change

 

 

12/31/2019

 

 

% change

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

106,405

 

 

$

87,983

 

 

 

20.9

%

 

$

86,036

 

 

 

23.7

%

Securities available for sale, at fair value

 

 

91,791

 

 

 

93,482

 

 

 

-1.8

%

 

 

56,549

 

 

 

62.3

%

Other investments

 

 

10,006

 

 

 

10,002

 

 

 

0.0

%

 

 

9,176

 

 

 

9.0

%

Loans held for sale

 

 

26,659

 

 

 

41,430

 

 

 

-35.7

%

 

 

2,100

 

 

 

1169.5

%

Real estate loans

 

 

651,684

 

 

 

640,281

 

 

 

1.8

%

 

 

630,668

 

 

 

3.3

%

SBA loans

 

 

211,376

 

 

 

213,678

 

 

 

-1.1

%

 

 

132,268

 

 

 

59.8

%

C & I loans

 

 

107,308

 

 

 

91,814

 

 

 

16.9

%

 

 

103,852

 

 

 

3.3

%

Home mortgage loans

 

 

128,211

 

 

 

125,656

 

 

 

2.0

%

 

 

120,686

 

 

 

6.2

%

Consumer & other loans

 

 

1,157

 

 

 

1,361

 

 

 

-15.0

%

 

 

2,664

 

 

 

-56.6

%

Gross loans, net of unearned income

 

 

1,099,736

 

 

 

1,072,790

 

 

 

2.5

%

 

 

990,138

 

 

 

11.1

%

Allowance for loan losses

 

 

(15,321

)

 

 

(14,164

)

 

 

8.2

%

 

 

(10,050

)

 

 

52.4

%

Net loans receivable

 

 

1,084,415

 

 

 

1,058,626

 

 

 

2.4

%

 

 

980,088

 

 

 

10.6

%

Premises and equipment, net

 

 

4,544

 

 

 

4,756

 

 

 

-4.5

%

 

 

5,226

 

 

 

-13.1

%

Accrued interest receivable

 

 

3,995

 

 

 

4,968

 

 

 

-19.6

%

 

 

3,166

 

 

 

26.2

%

Servicing assets

 

 

7,360

 

 

 

7,222

 

 

 

1.9

%

 

 

7,024

 

 

 

4.8

%

Company owned life insurance

 

 

10,879

 

 

 

10,815

 

 

 

0.6

%

 

 

10,618

 

 

 

2.5

%

Deferred tax assets

 

 

5,242

 

 

 

3,911

 

 

 

34.0

%

 

 

3,189

 

 

 

64.4

%

Operating right-of-use assets

 

 

6,786

 

 

 

7,151

 

 

 

-5.1

%

 

 

8,254

 

 

 

-17.8

%

Other assets

 

 

8,785

 

 

 

9,475

 

 

 

-7.3

%

 

 

8,094

 

 

 

8.5

%

Total assets

 

$

1,366,867

 

 

$

1,339,821

 

 

 

2.0

%

 

$

1,179,520

 

 

 

15.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

522,754

 

 

$

488,815

 

 

 

6.9

%

 

$

294,281

 

 

 

77.6

%

Money market deposits and others

 

 

328,323

 

 

 

339,981

 

 

 

-3.4

%

 

 

296,618

 

 

 

10.7

%

Time deposits over $250,000

 

 

200,210

 

 

 

194,630

 

 

 

2.9

%

 

 

213,345

 

 

 

-6.2

%

Other time deposits

 

 

148,803

 

 

 

146,738

 

 

 

1.4

%

 

 

216,467

 

 

 

-31.3

%

Total deposits

 

 

1,200,090

 

 

 

1,170,164

 

 

 

2.6

%

 

 

1,020,711

 

 

 

17.6

%

Other borrowings

 

 

5,000

 

 

 

10,000

 

 

 

-50.0

%

 

 

-

 

 

 

100.0

%

Accrued interest payable

 

 

1,021

 

 

 

1,355

 

 

 

-24.6

%

 

 

2,686

 

 

 

-62.0

%

Operating lease liabilities

 

 

8,429

 

 

 

8,857

 

 

 

-4.8

%

 

 

10,126

 

 

 

-16.8

%

Other liabilities

 

 

8,920

 

 

 

7,896

 

 

 

13.0

%

 

 

5,421

 

 

 

64.5

%

Total liabilities

 

 

1,223,460

 

 

 

1,198,272

 

 

 

2.1

%

 

 

1,038,944

 

 

 

17.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

78,657

 

 

 

79,600

 

 

 

-1.2

%

 

 

86,381

 

 

 

-8.9

%

Additional paid-in capital

 

 

8,512

 

 

 

8,382

 

 

 

1.6

%

 

 

7,524

 

 

 

13.1

%

Retained earnings

 

 

55,398

 

 

 

52,590

 

 

 

5.3

%

 

 

46,483

 

 

 

19.2

%

Accumulated other comprehensive income

 

 

840

 

 

 

977

 

 

 

-14.0

%

 

 

188

 

 

 

346.8

%

Total shareholders' equity

 

 

143,407

 

 

 

141,549

 

 

 

1.3

%

 

 

140,576

 

 

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Shareholders' Equity

 

$

1,366,867

 

 

$

1,339,821

 

 

 

2.0

%

 

$

1,179,520

 

 

 

15.9

%

Consolidated Statements of Income (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

 

Three Months Ended

 

 

 

12/31/2020

 

 

09/30/2020

 

 

% change

 

 

12/31/2019

 

 

% change

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

13,006

 

 

$

12,581

 

 

 

3.4

%

 

$

13,995

 

 

 

-7.1

%

Interest on securities available for sale

 

 

257

 

 

 

319

 

 

 

-19.4

%

 

 

334

 

 

 

-23.1

%

Other interest income

 

 

112

 

 

 

116

 

 

 

-3.4

%

 

 

374

 

 

 

-70.1

%

Total interest income

 

 

13,375

 

 

 

13,016

 

 

 

2.8

%

 

 

14,703

 

 

 

-9.0

%

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

1,194

 

 

 

1,597

 

 

 

-25.2

%

 

 

3,625

 

 

 

-67.1

%

Total interest expense

 

 

1,194

 

 

 

1,597

 

 

 

-25.2

%

 

 

3,625

 

 

 

-67.1

%

Net interest income

 

 

12,181

 

 

 

11,419

 

 

 

6.7

%

 

 

11,078

 

 

 

10.0

%

Provision for loan losses

 

 

1,790

 

 

 

1,399

 

 

 

27.9

%

 

 

411

 

 

 

335.5

%

Net interest income after provision for loan losses

 

 

10,391

 

 

 

10,020

 

 

 

3.7

%

 

 

10,667

 

 

 

-2.6

%

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

 

283

 

 

 

251

 

 

 

12.7

%

 

 

442

 

 

 

-36.0

%

Loan servicing fees, net of amortization

 

 

367

 

 

 

583

 

 

 

-37.0

%

 

 

333

 

 

 

10.2

%

Gain on sale of loans

 

 

2,188

 

 

 

1,813

 

 

 

20.7

%

 

 

1,527

 

 

 

43.3

%

Other income

 

 

554

 

 

 

374

 

 

 

48.1

%

 

 

211

 

 

 

162.6

%

Total noninterest income

 

 

3,392

 

 

 

3,021

 

 

 

12.3

%

 

 

2,513

 

 

 

35.0

%

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

5,526

 

 

 

5,086

 

 

 

8.7

%

 

 

4,405

 

 

 

25.4

%

Occupancy and equipment

 

 

1,237

 

 

 

1,266

 

 

 

-2.3

%

 

 

1,207

 

 

 

2.5

%

Data processing and communication

 

 

435

 

 

 

424

 

 

 

2.6

%

 

 

420

 

 

 

3.6

%

Professional fees

 

 

265

 

 

 

287

 

 

 

-7.7

%

 

 

268

 

 

 

-1.1

%

FDIC insurance and regulatory assessments

 

 

115

 

 

 

112

 

 

 

2.7

%

 

 

71

 

 

 

62.0

%

Promotion and advertising

 

 

62

 

 

 

81

 

 

 

-23.5

%

 

 

263

 

 

 

-76.4

%

Directors' fees

 

 

97

 

 

 

147

 

 

 

-34.0

%

 

 

228

 

 

 

-57.5

%

Foundation donation and other contributions

 

 

400

 

 

 

360

 

 

 

11.1

%

 

 

417

 

 

 

-4.1

%

Other expenses

 

 

265

 

 

 

224

 

 

 

18.3

%

 

 

386

 

 

 

-31.3

%

Total noninterest expense

 

 

8,402

 

 

 

7,987

 

 

 

5.2

%

 

 

7,665

 

 

 

9.6

%

Income before income taxes

 

 

5,381

 

 

 

5,054

 

 

 

6.5

%

 

 

5,515

 

 

 

-2.4

%

Provision for income taxes

 

 

1,513

 

 

 

1,459

 

 

 

3.7

%

 

 

1,334

 

 

 

13.4

%

Net income

 

$

3,868

 

 

$

3,595

 

 

 

7.6

%

 

$

4,181

 

 

 

-7.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

9.55

 

 

$

9.36

 

 

 

2.0

%

 

$

8.95

 

 

 

6.7

%

Basic EPS

 

$

0.25

 

 

$

0.23

 

 

 

8.7

%

 

$

0.26

 

 

 

-3.8

%

Diluted EPS

 

$

0.25

 

 

$

0.23

 

 

 

8.7

%

 

$

0.26

 

 

 

-3.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock outstanding

 

 

15,016,700

 

 

 

15,126,270

 

 

 

-0.7

%

 

 

15,703,276

 

 

 

-4.4

%

Weighted Average Shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic

 

 

15,079,407

 

 

 

15,148,833

 

 

 

-0.5

%

 

 

15,697,531

 

 

 

-3.9

%

- Diluted

 

 

15,103,029

 

 

 

15,182,733

 

 

 

-0.5

%

 

 

15,899,419

 

 

 

-5.0

%

Key Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except ratios)

 

Three Months Ended

 

 

 

12/31/2020

 

 

09/30/2020

 

 

% change

 

 

12/31/2019

 

 

% change

 

Return on average assets (ROA)*

 

 

1.15

%

 

 

1.11

%

 

 

0.04

%

 

 

1.45

%

 

 

-0.30

%

Return on average equity (ROE) *

 

 

10.86

%

 

 

10.22

%

 

 

0.64

%

 

 

12.05

%

 

 

-1.19

%

Net interest margin *

 

 

3.73

%

 

 

3.66

%

 

 

0.07

%

 

 

3.99

%

 

 

-0.26

%

Efficiency ratio

 

 

53.96

%

 

 

55.31

%

 

 

-1.35

%

 

 

56.40

%

 

 

-2.44

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

 

14.82

%

 

 

14.93

%

 

 

-0.11

%

 

 

15.18

%

 

 

-0.36

%

Tier 1 risk-based capital ratio

 

 

13.56

%

 

 

13.67

%

 

 

-0.11

%

 

 

14.16

%

 

 

-0.60

%

Common equity tier 1 ratio

 

 

13.56

%

 

 

13.67

%

 

 

-0.11

%

 

 

14.16

%

 

 

-0.60

%

Leverage ratio

 

 

10.55

%

 

 

10.85

%

 

 

-0.30

%

 

 

12.14

%

 

 

-1.59

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Annualized

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Income (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

 

Twelve Months Ended

 

 

 

12/31/2020

 

 

12/31/2019

 

 

% change

 

Interest income

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

51,829

 

 

$

55,720

 

 

 

-7.0

%

Interest on securities available for sale

 

 

1,177

 

 

 

1,353

 

 

 

-13.0

%

Other interest income

 

 

650

 

 

 

1,706

 

 

 

-61.9

%

Total interest income

 

 

53,656

 

 

 

58,779

 

 

 

-8.7

%

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

8,292

 

 

 

14,507

 

 

 

-42.8

%

Total interest expense

 

 

8,292

 

 

 

14,507

 

 

 

-42.8

%

Net interest income

 

 

45,364

 

 

 

44,272

 

 

 

2.5

%

Provision for loan losses

 

 

5,920

 

 

 

1,102

 

 

 

437.2

%

Net interest income after provision for loan losses

 

 

39,444

 

 

 

43,170

 

 

 

-8.6

%

Noninterest income

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposits

 

 

1,132

 

 

 

1,695

 

 

 

-33.2

%

Loan servicing fees, net of amortization

 

 

1,856

 

 

 

1,186

 

 

 

56.5

%

Gain on sale of loans

 

 

6,092

 

 

 

5,905

 

 

 

3.2

%

Other income

 

 

1,691

 

 

 

2,640

 

 

 

-35.9

%

Total noninterest income

 

 

10,771

 

 

 

11,426

 

 

 

-5.7

%

Noninterest expense

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

20,031

 

 

 

20,267

 

 

 

-1.2

%

Occupancy and equipment

 

 

4,974

 

 

 

4,648

 

 

 

7.0

%

Data processing and communication

 

 

1,682

 

 

 

1,530

 

 

 

9.9

%

Professional fees

 

 

1,101

 

 

 

980

 

 

 

12.3

%

FDIC insurance and regulatory assessments

 

 

449

 

 

 

259

 

 

 

73.4

%

Promotion and advertising

 

 

467

 

 

 

806

 

 

 

-42.1

%

Directors' fees

 

 

700

 

 

 

908

 

 

 

-22.9

%

Foundation donation and other contributions

 

 

1,335

 

 

 

1,586

 

 

 

-15.8

%

Other expenses

 

 

1,191

 

 

 

1,536

 

 

 

-22.5

%

Total noninterest expense

 

 

31,930

 

 

 

32,520

 

 

 

-1.8

%

Income before income taxes

 

 

18,285

 

 

 

22,076

 

 

 

-17.2

%

Provision for income taxes

 

 

5,107

 

 

 

5,319

 

 

 

-4.0

%

Net income

 

$

13,178

 

 

$

16,757

 

 

 

-21.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share

 

$

9.55

 

 

$

9.36

 

 

 

2.0

%

Basic EPS

 

$

0.85

 

 

$

1.04

 

 

 

-18.3

%

Diluted EPS

 

$

0.85

 

 

$

1.03

 

 

 

-17.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock outstanding

 

 

15,016,700

 

 

 

15,126,270

 

 

 

-0.7

%

Weighted Average Shares:

 

 

 

 

 

 

 

 

 

 

 

 

- Basic

 

 

15,196,351

 

 

 

15,741,926

 

 

 

-3.5

%

- Diluted

 

 

15,223,888

 

 

 

15,935,314

 

 

 

-4.5

%

Key Ratios

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands, except ratios)

 

Twelve Months Ended

 

 

 

12/31/2020

 

 

12/31/2019

 

 

% change

 

Return on average assets (ROA)

 

 

1.04

%

 

 

1.51

%

 

 

-0.47