Op bancorp reports net income for second quarter 2022 of $8.5 million and diluted earnings per share of $0.54
Los angeles--(business wire)--op bancorp (the “company”) (nasdaq: opbk), the holding company of open bank, today reported its financial results for the second quarter of 2022. net income for the second quarter of 2022 was $8.5 million, or $0.54 per diluted common share, compared with $8.2 million, or $0.53 per diluted common share, for the first quarter of 2022, and $6.4 million, or $0.42 per diluted common share, for the second quarter of 2021. min kim, president and chief executive officer: “we are pleased to report another strong quarter of earnings performance and balance sheet growth. our net income and diluted earnings per share increased 33% and 29%, respectively, from a year ago, while our average loans and deposits grew 26% each during the same period. these results were accompanied by expanded net interest margin, improved efficiency, and maintenance of strong asset quality. we are also pleased to announce that op bancorp’s board of directors approved a 20% increase of the quarterly cash dividend to $0.12 per share, up from $0.10 per share. despite external headwinds related to supply chain bottlenecks, inflation, and market rate increases by the federal reserve, we remain optimistic about our future growth and performance and will continue to focus on executing our strategic goals while maintaining appropriate risk and control environment.” selected financial highlights ($ in thousands, except per share data) as of and for the three months ended % change 2q22 vs. 2q22 1q22 2q21 1q22 2q21 selected income statement data: net interest income $ 19,079 $ 17,290 $ 14,586 10.3 % 30.8 % provision for (reversal of) loan losses 996 341 (1,112 ) 192.1 n/a noninterest income 5,359 4,216 2,220 27.1 141.4 noninterest expense 11,503 9,662 8,789 19.1 30.9 income tax expense 3,459 3,351 2,750 3.2 25.8 net income $ 8,480 $ 8,152 $ 6,379 4.0 % 32.9 % diluted earnings per share $ 0.54 $ 0.53 $ 0.42 1.9 % 28.6 % selected balance sheet data: total loans (1) $ 1,551,973 $ 1,514,653 $ 1,314,262 2.5 % 18.1 % total deposits $ 1,741,623 $ 1,672,003 $ 1,434,103 4.2 % 21.4 % total assets $ 1,934,242 $ 1,863,945 $ 1,601,860 3.8 % 20.7 % average loans (1) $ 1,560,064 $ 1,444,054 $ 1,242,058 8.0 % 25.6 % average deposits $ 1,702,860 $ 1,570,376 $ 1,348,910 8.4 % 26.2 % credit quality: nonperforming loans $ 2,177 $ 2,806 $ 757 (22.4 ) % 187.6 % net (recoveries) charge-offs to average gross loans (2) (0.01 ) % (0.00 ) % 0.01 % (0.01 ) % (0.02 ) % allowance for loan losses to gross loans 1.19 % 1.17 % 1.18 % 0.02 % 0.01 % financial ratios: return on average assets (2) 1.79 % 1.85 % 1.68 % (0.06 ) % 0.11 % return on average equity (2) 20.29 % 19.54 % 17.10 % 0.75 % 3.19 % net interest margin (2) 4.21 % 4.12 % 3.98 % 0.09 % 0.23 % common equity tier 1 capital ratio 12.29 % 12.11 % 12.62 % 0.18 % (0.33 ) % leverage ratio 9.48 % 9.80 % 9.96 % (0.32 ) % (0.48 ) % efficiency ratio (3) 47.07 % 44.93 % 52.30 % 2.14 % (5.23 ) % book value per common share $ 11.16 $ 10.97 $ 10.04 1.7 % 11.2 % includes loans held for sale. annualized. 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 2q22 vs. 2q22 1q22 2q21 1q22 2q21 interest income interest income $ 20,148 $ 17,944 $ 15,349 12.3 % 31.3 % interest expense 1,069 654 763 63.5 40.1 net interest income $ 19,079 $ 17,290 $ 14,586 10.3 % 30.8 % ($ in thousands) for the three months ended 2q22 1q22 2q21 average balance interest and fees yield/rate (1) average balance interest and fees yield/rate (1) average balance interest and fees yield/rate (1) interest-earning assets loans $ 1,560,064 $ 19,108 4.91 % $ 1,444,054 $ 17,257 4.84 % $ 1,242,058 $ 14,971 4.83 % total interest-earning assets $ 1,817,157 $ 20,148 4.44 % $ 1,698,799 $ 17,944 4.28 % $ 1,469,163 $ 15,349 4.19 % interest-bearing liabilities interest-bearing deposits $ 859,072 $ 1,069 0.50 % $ 786,915 $ 654 0.34 % $ 733,525 $ 763 0.42 % total interest-bearing liabilities $ 859,072 $ 1,069 0.50 % $ 786,915 $ 654 0.34 % $ 736,550 $ 763 0.42 % ratios net interest income/interest rate spreads $ 19,079 3.94 % $ 17,290 3.94 % $ 14,586 3.77 % net interest margin 4.21 % 4.12 % 3.98 % total deposits / cost of deposits $ 1,702,860 $ 1,069 0.25 % $ 1,570,376 $ 654 0.17 % $ 1,348,910 $ 763 0.23 % total funding liabilities / cost of funds $ 1,702,860 $ 1,069 0.25 % $ 1,570,376 $ 654 0.17 % $ 1,351,935 $ 763 0.23 % (1) annualized. ($ in thousands) for the three months ended yield % change 2q22 vs. 2q22 1q22 2q21 interest & fees yield (1) interest & fees yield (1) interest & fees yield (1) 1q22 2q21 loan yield component contractual interest rate $ 17,441 4.48 % $ 15,312 4.29 % $ 13,189 4.26 % 0.19 % 0.22 % sba discount accretion 1,151 0.30 1,433 0.40 1,161 0.38 (0.10 ) (0.08 ) amortization of net deferred fees 493 0.13 500 0.14 618 0.20 (0.01 ) (0.07 ) amortization of premium (197 ) (0.05 ) (188 ) (0.05 ) (170 ) -0.06 0.00 0.01 net interest recognized on nonaccrual loans 5 0.00 34 0.01 37 0.01 (0.01 ) (0.01 ) prepayment penalties (2) and other fees 215 0.05 166 0.05 136 0.04 — 0.01 yield on loans $ 19,108 4.91 % $ 17,257 4.84 % $ 14,971 4.83 % 0.07 % 0.08 % amortization of net deferred fees: ppp loan forgiveness (3) $ 351 0.09 % $ 483 0.13 % $ 290 0.09 % (0.04 ) % — % other 142 0.04 17 0.01 328 0.11 0.03 (0.07 ) total amortization of net deferred fees $ 493 0.13 % $ 500 0.14 % $ 618 0.20 % (0.01 ) % (0.07 ) % annualized. prepayment penalty income of $118 thousand, $95 thousand and $116 thousand for the three months ended june 30, 2022, march 31, 2022 and june 30, 2021, respectively, was from commercial real estate and c&i loans. as of june 30, 2022, there were unamortized net deferred fees of $183 thousand to be recognized over the estimated life of the loans as a yield adjustment on the loans. impact of hana loan purchase on average loan yield and net interest margin during the second quarter of 2021, the company purchased an sba portfolio of 638 loans with an ending balance of $100.0 million, excluding loan discount of $8.9 million from hana small business lending, inc. (“hana”). the following table presents impacts of the hana loan purchase on average loan yield and net interest margin: ($ in thousands) for the three months ended 2q22 1q22 2q21 hana loan purchase: contractual interest rate $ 956 $ 976 $ 473 purchased loan discount accretion 592 772 381 other fees 24 7 6 total interest income $ 1,572 $ 1,755 $ 860 effect on average loan yield (1) 0.19 % 0.26 % 0.13 % effect on net interest margin (1) 0.20 % 0.25 % 0.13 % ($ in thousands) for the three months ended 2q22 1q22 2q21 average balance interest and fees yield/ rate average balance interest and fees yield/ rate average balance interest and fees yield/ rate average loan yield (1) $ 1,560,064 $ 19,108 4.91 % $ 1,444,054 $ 17,257 4.84 % $ 1,242,058 $ 14,971 4.83 % adjusted average loan yield excluding purchased loans (1)(2) $ 1,490,884 $ 17,536 4.72 % $ 1,369,423 $ 15,502 4.58 % $ 1,204,532 $ 14,111 4.70 % net interest margin (1) $ 1,817,157 $ 19,079 4.21 % $ 1,698,799 $ 17,290 4.12 % $ 1,469,163 $ 14,586 3.98 % adjusted interest margin excluding purchased loans (1)(2) $ 1,747,977 $ 17,507 4.01 % $ 1,624,168 $ 15,535 3.87 % $ 1,431,097 $ 13,726 3.85 % annualized. see reconciliation of gaap to non-gaap financial measures. second quarter 2022 vs. first quarter 2022 net interest income increased $1.8 million, or 10.3%, primarily due to higher interest income on loans. net interest margin was 4.21%, an increase of 9 basis points from 4.12%. a $1.9 million increase in interest income on loans was primarily due to interest income increases of $941 thousand on real estate loans and $763 thousand on home mortgage loans driven by average balance increases of $40.6 million on real estate loans and $77.2 million on home mortgage loans. the 9 basis point increase in net interest margin was primarily due to a 16 basis point increase in average yield on interest-earning assets. average loan yield was 4.91%, a 7 basis point increase from 4.84%, primarily due to a 19 basis point increase in contractual loan yield as a result of market rate increases by the federal reserve, partially offset by a 10 basis point decrease from lower sba discount accretion income as a result of slower sba loan payoffs. average yield on interesting-bearing deposits in other banks was 0.98%, a 79 basis point increase from 0.19%, primarily due to the federal reserve’s rate increases. average cost of interest-bearing deposits was 0.50%, a 16 basis point increase from 0.34%. average cost of deposits was 0.25%, an 8 basis point increase from 0.17%, primarily due to the federal reserve’s rate increases. second quarter 2022 vs. second quarter 2021 net interest income increased $4.5 million, or 30.8%, primarily due to higher interest income on loans. net interest margin was 4.21%, an increase of 23 basis points from 3.98%. a $4.1 million increase in interest income on loans was primarily due to higher average loan balance from loan growth in home loans, real estate loans, and c&i loans. the improvement of 23 basis points in net interest margin was primarily due to a 25 basis point increase in average yield on interest-earning assets. average loan yield was 4.91%, an 8 basis point increase from 4.83%, primarily due to a 22 basis point increase in contractual loan yield as a result of market rate increases by the federal reserve, partially offset by an 8 basis point decrease from lower sba discount accretion income as a result of lower sba loan payoffs and a 7 basis point decrease in amortization of net deferred fees as a result of lower balance in net deferred fees on sba ppp loans. average yield on interesting-bearing deposits in other banks was 0.98%, an 88 basis point increase from 0.10%, primarily due to the federal reserve’s rate increases. average yield on available-for-sale debt securities was 1.70%, a 90 basis point increase from 0.80%, primarily due to purchases of higher yield securities in 2022. average cost of interest-bearing deposits was 0.50%, an 8 basis point increase from 0.42% primarily due to the federal reserve’s rate increases. average cost of deposits was 0.25%, a 2 basis point increase from 0.23%, primarily due to the federal reserve’s rate increases, partially offset by higher average balance of noninterest-bearing deposits. provision for loan losses second quarter 2022 vs. first quarter 2022 the company recorded $996 thousand provision for loan losses, compared with a $341 thousand provision for loan losses. the $996 thousand provision for loan losses was primarily due to an increase of $746 thousand in quantitative reserves from loan growth in real estate and home mortgage loans and an adjustments of $270 thousand in qualitative assessments of our loan portfolio. second quarter 2022 vs. second quarter 2021 the company recorded $996 thousand provision for loan losses, compared with $1.1 million reversal of loan losses. noninterest income ($ in thousands) for the three months ended % change 2q22 vs. 2q22 1q22 2q21 1q22 2q21 noninterest income service charges on deposits $ 427 $ 388 $ 393 10.1 % 8.7 % loan servicing fees, net of amortization 654 447 302 46.3 116.6 gain on sale of loans 3,873 3,238 1,210 19.6 220.1 other income 405 143 315 183.2 28.6 total noninterest income $ 5,359 $ 4,216 $ 2,220 27.1 % 141.4 % second quarter 2022 vs. first quarter 2022 noninterest income increased $1.1 million, or 27.1%, primarily due to higher gains on sale of loans, loan servicing fees and other income. gains on sale of loans were $3.9 million, up $635 thousand from the first quarter of 2022. the increase was primarily due to higher loan sales volume partially offset by lower average premium on loan sales. the company sold $58.6 million in sba loans at an average premium of 7.02%, compared to the sale of $31.8 million at an average premium of 11.02%. loan service fees, net of amortization, were $654 thousand, up $207 thousand from first quarter of 2022, primarily due to lower amortization of loan servicing fees as a result of lower sba loan payoffs. other income were $405 thousand, up $262 thousand from first quarter of 2022, primarily due to increases in credit related fees and net earnings on company owned life insurance and a decrease in unrealized loss on cra qualified mutual fund. second quarter 2022 vs. second quarter 2021 noninterest income increased $3.1 million, or 141.4%, primarily due to higher gains on sale of loans and loan service fees. gains on sales of loans were $3.9 million, up $2.7 million from the second quarter of 2021. the increase was primarily due to higher sales volume partially offset by lower average premium on loan sales. the company sold $58.6 million in sba loans at an average premium of 7.02%, compared to the sale of $10.6 million at an average premium of 11.48%. loan service fees, net of amortization, were $654 thousand, up $352 thousand from the second quarter of 2021, primarily due to an increase in loan servicing portfolio and lower amortization of loan servicing fees as a result of lower sba loan payoffs. noninterest expense ($ in thousands) for the three months ended % change 2q22 vs. 2q22 1q22 2q21 1q22 2q21 noninterest expense salaries and employee benefits $ 7,109 $ 5,657 $ 5,307 25.7 % 34.0 % occupancy and equipment 1,489 1,378 1,234 8.1 20.7 data processing and communication 492 493 467 (0.2 ) 5.4 professional fees 364 324 303 12.3 20.1 fdic insurance and regulatory assessments 192 207 123 (7.2 ) 56.1 promotion and advertising 165 189 176 (12.7 ) (6.3 ) directors’ fees 190 177 128 7.3 48.4 foundation donation and other contributions 852 815 640 4.5 33.1 other expenses 650 422 411 54.0 58.2 total noninterest expense $ 11,503 $ 9,662 $ 8,789 19.1 % 30.9 % second quarter 2022 vs. first quarter 2022 noninterest expense increased $1.8 million, or 19.1%, primarily due to higher salaries and employee benefits. salaries and employee benefits were $7.1 million, up $1.5 million from the first quarter of 2022. the increase was primarily due to a $476 thousand increase in salaries as a result of five additional employees and annual salary adjustments effective in the second quarter of 2022, and a $860 thousand increase in employee incentive accruals. second quarter 2022 vs. second quarter 2021 noninterest expense increased $2.7 million, or 30.9%, primarily due to higher salaries and employee benefits. salaries and employee benefits were $7.1 million, up $1.8 million from the second quarter of 2021. the increase was primarily due to a $748 thousand increase in salaries as a result of 20 additional employees to support continued growth of the company, and a $767 thousand decrease in deferred loan origination costs compared to higher origination costs related to sba ppp loans for the second quarter of 2021. occupancy and equipment expenses were $1.5 million, up $255 thousand from the second quarter of 2021, primarily due to a new branch opened in the first quarter of 2022. foundation donation and other contributions were $852 thousand, up $212 thousand from the second quarter of 2021. the increase was primarily due to higher donation accruals for open stewardship foundation as a result of higher net income compared to the second quarter of 2021. other expenses were $650 thousand, up $239 thousand from the second quarter of 2021, primarily due to a $172 thousand increase in business development expenses. income tax expense second quarter 2022 vs. first quarter 2022 income tax expense was $3.5 million, and the effective tax rate was 29.0%, compared to income tax expense of $3.4 million and the effective rate of 29.1% for the first quarter of 2022. second quarter 2022 vs. second quarter 2021 income tax expense was $3.5 million and the effective tax rate was 29.0%, compared to income tax expense of $2.8 million and the effective rate of 30.1% for the second quarter of 2021. balance sheet highlights loans ($ in thousands) as of % change 2q22 vs. 2q22 1q22 2q21 1q22 2q21 real estate loans $ 776,785 $ 730,841 $ 684,082 6.3 % 13.6 % sba loans (1) 247,413 253,064 338,751 (2.2 ) (27.0 ) c&i loans 128,620 176,934 102,562 (27.3 ) 25.4 home mortgage loans 331,362 266,465 119,319 24.4 177.7 consumer & other loans 538 1,106 1,152 (51.4 ) (53.3 ) gross loans $ 1,484,718 $ 1,428,410 $ 1,245,866 3.9 % 19.2 % includes ppp loans of $8.1 million, $22.1 million and $103.9 million as of june 30, 2022, march 31, 2022 and june 30, 2021, respectively. the following table presents new loan originations based on loan commitment amounts for the periods indicated: ($ in thousands) for the three months ended % change 2q22 vs. 2q22 1q22 2q21 1q22 2q21 real estate loans $ 61,924 $ 49,868 $ 51,107 24.2 % 21.2 % sba loans (1) 55,085 37,400 76,535 47.3 (28.0 ) c&i loans 2,718 11,876 40,771 (77.1 ) (93.3 ) home mortgage loans 30,345 22,785 13,262 33.2 128.8 gross loans $ 150,072 $ 121,929 $ 181,675 23.1 % (17.4 ) % includes ppp loans of $13.9 million for the three months ended june 30, 2021. the following table presents changes in gross loans by loan activity for the periods indicated: ($ in thousands) for the three months ended 2q22 1q22 2q21 loan activities: gross loans, beginning $ 1,428,410 $ 1,314,019 $ 1,155,872 new originations 150,072 121,929 181,675 net line advances (46,773 ) 17,455 (33,569 ) purchases 56,455 81,552 99,849 sales (57,954 ) (31,819 ) (15,732 ) paydowns (16,011 ) (15,972 ) (12,688 ) payoffs (33,098 ) (45,391 ) (53,230 ) ppp payoffs (14,347 ) (19,079 ) (29,953 ) other 17,964 5,716 (46,358 ) total 56,308 114,391 89,994 gross loans, ending $ 1,484,718 $ 1,428,410 $ 1,245,866 second quarter 2022 vs. first quarter 2022 gross loans were $1.48 billion at june 30, 2022, up $56.3 million from march 31, 2022, primarily due to new loan originations and home mortgage loan purchases. home mortgage loans of $56.5 million were purchased from third party mortgage originators, compared to $81.6 million in the first quarter of 2022. new loan originations and loan payoffs were $150.1 million and $47.4 million for the second quarter of 2022, compared with $121.9 million and $64.5 million for the first quarter of 2022, respectively. of the ppp loans, $14.3 million in principal amount has been forgiven under the program, compared to a $18.2 million of ppp loans forgiven in the first quarter of 2022. second quarter 2022 vs. second quarter 2021 gross loans were $1.48 billion at june 30, 2022, up $238.9 million from june 30, 2021, primarily due to new loan originations and home mortgage loan purchases. the following table presents the composition of gross loans by interest rate type accompanied with the weighted average contractual rates as of the periods indicated: ($ in thousands) as of 2q22 1q22 2q21 % rate % rate % rate fixed rate 34.9 % 4.19 % 33.3 % 4.11 % 34.8 % 3.85 % hybrid rate 28.2 4.47 25.6 4.30 20.2 4.74 variable rate 36.9 5.77 41.1 5.09 45.0 4.91 gross loans 100.0 % 4.85 % 100.0 % 4.56 % 100.0 % 4.51 % 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 june 30, 2022 within one year one year through five years after five years total amount rate amount rate amount rate amount rate fixed rate $ 21,542 4.05 % $ 313,372 4.31 % $ 183,646 4.01 % $ 518,560 4.19 % hybrid rate — — 50,346 5.26 368,276 4.36 418,622 4.47 variable rate 111,724 5.48 136,586 5.38 299,226 6.06 547,536 5.77 gross loans $ 133,266 5.25 % $ 500,304 4.70 % $ 851,148 4.88 % $ 1,484,718 4.85 % deposits ($ in thousands) as of % change 1q22 vs. 2q22 1q22 2q21 amount % amount % amount % 1q22 2q21 noninterest-bearing deposits $ 820,311 47.1 % $ 848,531 50.8 % $ 668,244 46.6 % (3.3 ) % 22.8 % money market deposits and others 519,389 29.8 % 456,890 27.3 386,612 27.0 % 13.7 34.3 time deposits 401,923 23.1 % 366,582 21.9 379,247 26.4 % 9.6 6.0 total deposits $ 1,741,623 100.0 % $ 1,672,003 100.0 % $ 1,434,103 100.0 % 4.2 % 21.4 % second quarter 2022 vs. first quarter 2022 total deposits were $1.74 billion as of june 30, 2022, up $69.6 million from march 31, 2022, primarily driven by growth in money market deposits and time deposits, partially offset by a decrease in noninterest-bearing deposits. money market deposits and time deposits grew $62.5 million and $35.3 million, respectively, due to management’s proactive actions to support loan growth during the second quarter of 2022 including upward adjustments of interest rates on customer deposits and increases in wholesale deposits. second quarter 2022 vs. second quarter 2021 total deposits were $1.74 billion as of june 30, 2022, up $307.5 million from june 30, 2021, primarily driven by growth in noninterest-bearing deposits and money market deposits. noninterest-bearing deposits were $820.3 million, up $152.1 million from $668.2 million as of june 30, 2021. the growth in noninterest-bearing deposits was primarily due to addition of new customers from our specialty deposit center. money market deposits were $519.4 million, up $132.8 million from $386.6 million at june 30, 2021, due to increases of $46 million in customer deposits and $87 million in wholesale deposits to support continued growth of the company. the following table sets forth the maturity of time deposits as of june 30, 2022: as of june 30, 2022 ($ in thousands) within three months three to six months six to nine months nine to twelve months after twelve months total time deposits (more than $250,000) $ 118,765 $ 29,487 $ 25,222 $ 62,522 $ 1,638 $ 237,634 time deposits ($250,000 or less) 41,015 29,282 25,821 61,078 7,093 164,289 total time deposits $ 159,780 $ 58,769 $ 51,043 $ 123,600 $ 8,731 $ 401,923 weighted average rate 0.75 % 0.48 % 0.44 % 1.01 % 1.41 % 0.77 % capital and cash dividend basel iii op bancorp (1) open bank minimum well capitalized ratio minimum capital ratio+ conservation buffer (2) risk-based capital ratios: total risk-based capital ratio 13.51 % 13.36 % 10.00 % 10.50 % tier 1 risk-based capital ratio 12.29 % 12.14 % 8.00 % 8.50 % common equity tier 1 ratio 12.29 % 12.14 % 6.50 % 7.00 % leverage ratio 9.48 % 9.36 % 5.00 % 4.00 % (1) the capital requirements are only applicable to the bank, and the company's ratios are included for comparison purpose. (2) an additional 2.5% capital conservation buffer above the minimum capital ratios are required in order to avoid limitations on distributions, including dividend payments and certain discretionary bonus to executive officers. ($ in thousands) basel iii % change 2q22 vs. 2q22 1q22 2q21 1q22 2q21 risk-based capital ratios: total risk-based capital ratio 13.51 % 13.29 % 13.87 % 0.22 % (0.36 ) % tier 1 risk-based capital ratio 12.29 % 12.11 % 12.62 % 0.18 % (0.33 ) % common equity tier 1 ratio 12.29 % 12.11 % 12.62 % 0.18 % (0.33 ) % leverage ratio 9.48 % 9.80 % 9.96 % (0.32 ) % (0.48 ) % risk-weighted assets $ 1,465,707 $ 1,427,569 $ 1,198,373 2.67 % 22.31 % capital ratios remained strong during the quarter. our cet1 and total risk-based capital ratios were 12.29% and 13.51% as of june 30, 2022, respectively, a decrease from a year ago due to year-over-year asset growth. the company’s board of directors has declared a quarterly cash dividend of $0.12 per share of its common stock. the cash dividend is payable on or about august 25, 2022 to all shareholders of record as of the close of business on august 11, 2022. the company did not repurchase any shares during the second quarter of 2022. since the announcement of the initial stock repurchase program in january 2019, the company has repurchased a total of 1.57 million shares of its common stock at an average repurchase price of $8.58 per share through june 30, 2022. asset quality ($ in thousands) as of and for the three months ended % change 2q22 vs. 2q22 1q22 2q21 1q22 2q21 nonperforming loans (1) $ 2,177 $ 2,806 $ 757 (22.4 ) % 187.6 % oreo — — — — — total nonperforming assets $ 2,177 $ 2,806 $ 757 (22.4 ) % 187.6 % nonperforming loans to gross loans 0.15 % 0.20 % 0.06 % (0.05 ) % 0.09 % nonperforming assets to total assets 0.11 % 0.15 % 0.05 % (0.04 ) % 0.06 % criticized (2) loan: special mention loans $ — $ — $ 1,790 — % (100.0 ) % classified loans (3) 3,020 3,848 6,553 (21.5 ) (53.9 ) total criticized loans $ 3,020 $ 3,848 $ 8,343 (21.5 ) % (63.8 ) % criticized (2) loans to gross loans 0.20 % 0.27 % 0.67 % (0.07 ) % (0.47 ) % classified loans (3) to gross loans 0.20 % 0.27 % 0.53 % (0.07 ) % (0.33 ) % allowance for loan losses, beginning $ 16,672 $ 16,123 $ 15,339 3.4 % 8.7 % provision for (reversal of) loan losses (4) 996 546 (625 ) 82.4 n/a gross charge-offs (18 ) (14 ) (27 ) 28.6 (33.3 ) gross recoveries 52 17 — 205.9 — allowance for loan losses, ending (5) $ 17,702 $ 16,672 $ 14,687 6.2 % 20.5 % allowance for loan losses ratios: as a % of gross loans 1.19 % 1.17 % 1.18 % 0.02 % 0.01 % as an adjusted % of gross loans (6) 1.25 % 1.24 % 1.46 % 0.01 % (0.21 ) % as a % of nonperforming loans 813 % 594 % 1,940 % 219 % (1,127 ) % as a % of nonperforming assets 813 % 594 % 1,940 % 219 % (1,127 ) % net (recoveries) charge-offs to average gross loans (0.01 ) % (0.00 ) % 0.01 % (0.01 ) % (0.02 ) % (1) includes the guaranteed portion of sba loans totaling $346 thousand and $899 thousand as of june 30, 2022 and march 31, 2022, respectively. (2) includes special mention, substandard, doubtful and loss categories. (3) includes substandard, doubtful and loss categories. (4) excludes reversal of uncollectible accrued interest receivable of $205 thousand and $487 thousand for the three months ended march 31, 2022 and june 30, 2021, respectively. (5) excludes allowance for uncollectible accrued interest receivable of $792 thousand as of june 30, 2021. (6) see the reconciliation of gaap to non-gaap financial measures. overall, the company continued to maintain solid asset quality with low levels of nonperforming loans and net charge-offs. nonperforming assets and criticized loans remained below our historical norms, a reflection of our conservative credit culture and expertise in the industries we serve. our allowance remained strong with an adjusted allowance to gross loans ratio of 1.25%. 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 continued supply chain and labor constraints as well as increases in inflation and market rates by the federal reserve. allowance for loan losses increased $3.0 million to $17.7 million from a year ago. excluding the impacts of the purchased hana loans, ppp loans, adjusted allowance to gross loans ratio was 1.25% as of june 30, 2022. criticized loans decreased by $5.3 million or 63.8% from a year ago, and the criticized loans to gross loans ratio improved by 47 basis points, primarily due to a $3.8 million payoff in one c&i relationship as well as improvements in credit risk ratings for sba loans. criticized loans are generally consistent with the special mention, substandard, doubtful and loss categories defined by regulatory authorities. nonperforming assets increased $1.4 million to $2.2 million, or 0.11% of total assets from a year ago. the increase in nonperforming assets was primarily due to home mortgage and sba loans that were placed on nonaccrual in 2021. as of june 30, 2022, $346 thousand of nonaccrual loans was the guaranteed portion of sba loans that are in liquidation. the company did not have oreo as of june 30, 2022 or 2021. net recoveries were $34 thousand or 0.01% of average loans in the second quarter of 2022, compared to net charge-offs of $27 thousand in the second quarter of 2021. covid-19 pandemic update as of june 30, 2022, one c&i loan with outstanding balance of $454 thousand was under covid-19 loan payment modification, which has ended on july 19, 2022. since the ppp’s inception through june 30, 2022, we have funded $154.5 million, and $151.3 million of principal forgiveness has been provided on qualifying ppp loans. reconciliation of gaap to non-gaap financial measures in addition to gaap measures, management uses certain non-gaap financial measures to provide supplemental information regarding the company’s performance. pre-provision net revenue removes provision for loan losses and income tax expense. management believes that this non-gaap measure, when taken together with the corresponding gaap financial measures (as applicable), provides meaningful supplemental information regarding our performance. this non-gaap financial measure also facilitates a comparison of our performance to prior periods. ($ in thousands) for the three months ended 2q22 1q22 2q21 interest income $ 20,148 $ 17,944 $ 15,349 interest expense 1,069 654 763 net interest income 19,079 17,290 14,586 noninterest income 5,359 4,216 2,220 noninterest expense 11,503 9,662 8,789 pre-provision net revenue (a) $ 12,935 $ 11,844 $ 8,017 reconciliation to net income: provision for (reversal of) loan losses (b) $ 996 $ 341 $ (1,112 ) income tax expense (c) 3,459 3,351 2,750 net income (a)+(b) +(c) $ 8,480 $ 8,152 $ 6,379 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 $8.9 million discount. as a result, the fair value discount on these loans is being accreted into interest income over the expected life of the loans using the effective yield method. adjusted loan yield and net interest margin for the three months ended june 30, 2022, march 31, 2022 and june 30, 2021 excluded the impacts of contractual interest and discount accretion of the purchased loans as management does not consider purchasing loan portfolios to be normal or recurring transactions. management believes that presenting the adjusted average loan yield and net interest margin provide comparability to prior periods and these non-gaap financial measures provide supplemental information regarding the company’s performance. ($ in thousands) for the three months ended 2q22 1q22 2q21 yield on average loans interest income on loans $ 19,108 $ 17,257 $ 14,971 less: interest income on purchased loans 1,571 1,755 860 adjusted interest income on loans (a) $ 17,537 $ 15,502 $ 14,111 average loans $ 1,560,064 $ 1,444,054 $ 1,242,058 less: average purchased loans 69,180 74,631 37,526 adjusted average loans (b) $ 1,490,884 $ 1,369,423 $ 1,204,532 average loan yield (1) 4.91 % 4.84 % 4.83 % effect on average loan yield (1) 0.19 % 0.26 % 0.13 % adjusted average loan yield (1) (a)/(b) 4.72 % 4.58 % 4.70 % net interest margin net interest income $ 19,079 $ 17,290 $ 14,586 less: interest income on purchased loans 1,571 1,755 860 adjusted net interest income (c) $ 17,508 $ 15,535 $ 13,726 average interest-earning assets $ 1,817,157 $ 1,698,799 $ 1,468,623 less: average purchased loans 69,180 74,631 37,526 adjusted average interest-earning assets (d) $ 1,747,977 $ 1,624,168 $ 1,431,097 net interest margin (1) 4.21 % 4.12 % 3.98 % effect on net interest margin (1) 0.20 % 0.25 % 0.13 % adjusted net interest margin (1) (c)/(d) 4.01 % 3.87 % 3.85 % (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) for the three months ended 2q22 1q22 2q21 gross loans $ 1,484,718 $ 1,428,410 $ 1,245,866 less: purchased loans (66,946 ) (71,377 ) (88,438 ) ppp loans (1) (7,151 ) (21.016 ) (97,673 ) adjusted gross loans (a) 1,410,621 $ 1,336,017 $ 1,059,755 accrued interest receivable on loans $ 4,602 $ 4,494 $ 3,179 less: accrued interest receivable on purchased loans (290 ) (295 ) (290 ) accrued interest receivable on ppp loans (2) (93 ) (229 ) (461 ) add: allowance on accrued interest receivable — — 792 adjusted accrued interest receivable on loans (b) $ 4,219 $ 3,970 $ 3,220 adjusted gross loans and accrued interest receivable (a)+(b) =(c) $ 1,414,840 $ 1,339,987 $ 1,062,975 allowance for loan losses $ 17,702 $ 16,672 $ 14,687 add: allowance on accrued interest receivable — — 792 adjusted allowance (d) $ 17,702 $ 16,672 $ 15,479 adjusted allowance to gross loans ratio (d)/(c) 1.25 % 1.24 % 1.46 % excludes purchased ppp loans of $942 thousand, $1.0 million and $6.3 million as of june 30, 2022, march 31, 2022 and june 30, 2021, respectively. excludes purchased accrued interest receivable on ppp loans of $13 thousand, $11 thousand and $26 thousand as of june 30, 2022, march 31, 2022 and june 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 ten full service branch offices in downtown los angeles, los angeles fashion district, los angeles koreatown, cerritos, gardena, buena park, and santa clara, california and carrollton, texas. the bank also has four loan production offices in 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, 2021 and in our other subsequent filings with the securities and exchange commission. consolidated balance sheets (unaudited) ($ in thousands) as of % change 2q22 vs. 2q22 1q22 2q21 1q22 2q21 assets cash and due from banks $ 14,937 $ 18,206 $ 15,964 (18.0 ) % (6.4 ) % interest-bearing deposits in other banks 117,760 111,770 112,723 5.4 4.5 cash and cash equivalents 132,697 129,976 128,687 2.1 3.1 securities available for sale, at fair value 174,814 161,182 111,832 8.5 56.3 other investments 12,205 10,836 11,028 12.6 10.7 loans held for sale 67,255 86,243 68,396 (22.0 ) (1.7 ) real estate loans 776,785 730,841 684,082 6.3 13.6 sba loans (1) 247,413 253,064 338,751 (2.2 ) (27.0 ) c&i loans 128,620 176,934 102,562 (27.3 ) 25.4 home mortgage loans 331,362 266,465 119,319 24.4 177.7 consumer & other loans 538 1,106 1,152 (51.4 ) (53.3 ) gross loans, net of unearned income 1,484,718 1,428,410 1,245,866 3.9 19.2 allowance for loan losses (17,702 ) (16,672 ) (14,687 ) 6.2 20.5 net loans receivable 1,467,016 1,411,738 1,231,179 3.9 19.2 premises and equipment, net 4,493 4,570 4,271 (1.7 ) 5.2 accrued interest receivable, net 5,112 4,893 3,469 4.5 47.4 servicing assets 12,708 12,341 12,903 3.0 (1.5 ) company owned life insurance 21,317 11,197 11,005 90.4 93.7 deferred tax assets 13,371 10,882 4,861 22.9 175.1 operating right-of-use assets 8,036 8,471 6,065 (5.1 ) 32.5 other assets 15,218 11,616 8,164 31.0 86.4 total assets $ 1,934,242 $ 1,863,945 $ 1,601,860 3.8 % 20.7 % liabilities and shareholders' equity liabilities noninterest bearing $ 820,311 $ 848,531 $ 668,244 (3.3 ) % 22.8 % money market and others 519,389 456,890 386,612 13.7 34.3 time deposits greater than $250,000 237,634 192,849 193,704 23.2 22.7 other time deposits 164,289 173,733 185,543 (5.4 ) (11.5 ) total deposits 1,741,623 1,672,003 1,434,103 4.2 21.4 accrued interest payable 612 548 608 11.7 0.7 operating lease liabilities 9,335 9,839 7,567 (5.1 ) 23.4 other liabilities 13,180 15,564 7,620 (15.3 ) 73.0 total liabilities 1,764,750 1,697,954 1,449,898 3.9 21.7 shareholders’ equity common stock 78,718 78,718 78,718 — — additional paid-in capital 9,089 8,860 8,324 2.6 9.2 retained earnings 92,659 85,694 64,700 8.1 43.2 accumulated other comprehensive (loss) income (10,974 ) (7,281 ) 220 50.7 (5088.2 ) total shareholders’ equity 169,492 165,991 151,962 2.1 11.5 total liabilities and shareholders' equity $ 1,934,242 $ 1,863,945 $ 1,601,860 3.8 % 20.7 % includes sba paycheck protection program (“ppp”) loans of $8.1 million, $22.1 million and $103.9 million as of june 30, 2022, march 31, 2022 and june 30, 2021, respectively. consolidated statements of income (unaudited) ($ in thousands, except share and per share data) for the three months ended % change 1q22 vs. 2q22 1q22 2q21 1q22 2q21 interest income interest and fees on loans $ 19,108 $ 17,257 $ 14,971 10.7 % 27.6 % interest on securities available for sale 703 530 218 32.6 222.5 other interest income 337 157 160 114.6 110.6 total interest income 20,148 17,944 15,349 12.3 31.3 interest expense interest on deposits 1,069 654 763 63.5 40.1 total interest expense 1,069 654 763 63.5 40.1 net interest income 19,079 17,290 14,586 10.3 30.8 provision for (reversal of) loan losses 996 341 (1,112 ) 192.1 n/a net interest income after provision for loan losses 18,083 16,949 15,698 6.7 15.2 noninterest income service charges on deposits 427 388 393 10.1 8.7 loan servicing fees, net of amortization 654 447 302 46.3 116.6 gain on sale of loans 3,873 3,238 1,210 19.6 220.1 other income 405 143 315 183.2 28.6 total noninterest income 5,359 4,216 2,220 27.1 141.4 noninterest expense salaries and employee benefits 7,109 5,657 5,307 25.7 34.0 occupancy and equipment 1,489 1,378 1,234 8.1 20.7 data processing and communication 492 493 467 (0.2 ) 5.4 professional fees 364 324 303 12.3 20.1 fdic insurance and regulatory assessments 192 207 123 (7.2 ) 56.1 promotion and advertising 165 189 176 (12.7 ) (6.3 ) directors’ fees 190 177 128 7.3 48.4 foundation donation and other contributions 852 815 640 4.5 33.1 other expenses 650 422 411 54.0 58.2 total noninterest expense 11,503 9,662 8,789 19.1 30.9 income before income tax expense 11,939 11,503 9,129 3.8 30.8 income tax expense 3,459 3,351 2,750 3.2 25.8 net income $ 8,480 $ 8,152 $ 6,379 4.0 % 32.9 % book value per share $ 11.16 $ 10.97 $ 10.04 1.7 % 11.2 % earnings per share - basic $ 0.55 $ 0.53 $ 0.42 3.8 % 31.0 % earnings per share - diluted $ 0.54 $ 0.53 $ 0.42 1.9 % 28.6 % shares of common stock outstanding 15,189,203 15,137,808 15,133,407 0.3 % 0.4 % weighted average shares: - basic 15,141,975 15,137,808 15,056,484 — % 0.6 % - diluted 15,234,577 15,242,214 15,129,451 (0.1 ) % 0.7 % key ratios for the three months ended % change 1q22 vs. 2q22 1q22 2q21 1q22 2q21 return on average assets (roa) (1) 1.79 % 1.85 % 1.68 % (0.1 ) % 0.1 % return on average equity (roe) (1) 20.29 % 19.54 % 17.10 % 0.8 % 3.2 % net interest margin (1) 4.21 % 4.12 % 3.98 % 0.1 % 0.2 % efficiency ratio 47.07 % 44.93 % 52.30 % 2.1 % (5.2 ) % total risk-based capital ratio 13.51 % 13.29 % 13.87 % 0.2 % (0.4 ) % tier 1 risk-based capital ratio 12.29 % 12.11 % 12.62 % 0.2 % (0.3 ) % common equity tier 1 ratio 12.29 % 12.11 % 12.62 % 0.2 % (0.3 ) % leverage ratio 9.48 % 9.80 % 9.96 % (0.3 ) % (0.5 ) % (1) annualized. consolidated statements of income (unaudited) ($ in thousands, except share and per share data) for the six months ended 2q22 2q21 % change interest income interest and fees on loans $ 36,365 $ 28,255 28.7 % interest on securities available for sale 1,233 454 171.6 % other interest income 494 272 81.6 % total interest income 38,092 28,981 31.4 % interest expense interest on deposits 1,723 1,640 5.1 % total interest expense 1,723 1,640 5.1 % net interest income 36,369 27,341 33.0 % provision for (reversal of) loan losses 1,337 (492 ) n/a net interest income after provision for loan losses 35,032 27,833 25.9 % noninterest income service charges on deposits 815 748 9.0 % loan servicing fees, net of amortization 1,101 833 32.2 % gain on sale of loans 7,111 3,092 130.0 % other income 548 513 6.8 % total noninterest income 9,575 5,186 84.6 % noninterest expense salaries and employee benefits 12,766 9,969 28.1 % occupancy and equipment 2,867 2,469 16.1 % data processing and communication 985 915 7.7 % professional fees 688 617 11.5 % fdic insurance and regulatory assessments 399 255 56.5 % promotion and advertising 354 353 0.3 % directors’ fees 367 244 50.4 % foundation donation and other contributions 1,667 1,147 45.3 % other expenses 1,072 786 36.4 % total noninterest expense 21,165 16,755 26.3 % income before income tax expense 23,442 16,264 44.1 % income tax expense 6,810 4,808 41.6 % net income $ 16,632 $ 11,456 45.2 % book value per share $ 11.16 $ 10.04 11.2 % earnings per share - basic $ 1.08 $ 0.75 44.0 % earnings per share - diluted $ 1.07 $ 0.75 42.7 % shares of common stock outstanding 15,189,203 15,133,407 0.4 % weighted average shares: - basic 15,139,903 15,039,773 0.7 % - diluted 15,238,113 15,099,403 0.9 % key ratios for the six months ended 2q22 2q21 % change return on average assets (roa) (1) 1.82 % 1.56 % 0.3 % return on average equity (roe) (1) 19.92 % 15.58 % 4.3 % net interest margin (1) 4.16 % 3.90 % 0.3 % efficiency ratio 46.07 % 51.51 % (5.4 ) % total risk-based capital ratio 13.51 % 13.87 % (0.4 ) % tier 1 risk-based capital ratio 12.29 % 12.62 % (0.3 ) % common equity tier 1 ratio 12.29 % 12.62 % (0.3 ) % leverage ratio 9.48 % 9.96 % (0.5 ) % annualized. asset quality ($ in thousands) as of and for the three months ended 2q22 1q22 2q21 nonaccrual loans (1) $ 2,172 $ 2,806 $ 757 loans 90 days or more past due, accruing 5 — — accruing restructured loans — — — nonperforming loans 2,177 2,806 757 other real estate owned ("oreo") — — — nonperforming assets $ 2,177 $ 2,806 $ 757 criticized loans (2) by loan type: sba loans $ 1,738 $ 2,543 $ 3,681 c&i loans 297 305 4,662 home mortgage loans 985 1,000 — total criticized loans (2) $ 3,020 $ 3,848 $ 8,343 nonperforming assets/total assets 0.11 % 0.15 % 0.05 % nonperforming assets / gross loans plus oreo 0.15 % 0.20 % 0.06 % nonperforming loans / gross loans 0.15 % 0.20 % 0.06 % allowance for loan losses / nonperforming loans 813 % 594 % 1940 % allowance for loan losses / nonperforming assets 813 % 594 % 1940 % allowance for loan losses / gross loans 1.19 % 1.17 % 1.18 % criticized loans (2) / gross loans 0.20 % 0.27 % 0.67 % classified loans / gross loans 0.20 % 0.27 % 0.53 % net (recoveries) charge-offs $ (34 ) $ (3 ) $ 27 net (recoveries) charge-offs to average gross loans (3) (0.01 ) % (0.00 ) % 0.01 % includes the guaranteed portion of sba loans that are in liquidation totaling $346 thousand and $899 thousand as of june 30, 2022 and march 31, 2022, respectively. consists of special mention, substandard, doubtful and loss categories. annualized. ($ in thousands) 2q22 1q22 2q21 accruing delinquent loans 30-89 days past due 30-59 days $ 447 $ 201 $ 41 60-89 days — — — total (1) $ 447 $ 201 $ 41 (1) includes the guaranteed portion of ppp loans totaling $9 thousand as of march 31, 2022. average balance sheet, interest and yield/rate analysis for the three months ended 2q22 1q2022 2q21 ($ in thousands) average balance interest and fees yield/ rate (1) average balance interest and fees yield/ rate (1) average balance interest and fees yield/ rate (1) interest-earning assets: interest-bearing deposits in other banks $ 79,628 $ 197 0.98 % $ 86,875 $ 42 0.19 % $ 107,280 $ 28 0.10 % federal funds sold and other investments 11,966 140 4.70 10,957 115 4.19 10,865 132 4.85 available-for-sale debt securities, at fair value 165,499 703 1.70 156,913 530 1.35 108,960 218 0.80 real estate loans 751,610 8,743 4.67 710,993 7,802 4.45 670,224 7,725 4.62 sba loans 353,138 5,707 6.48 358,725 5,834 6.60 346,702 4,816 5.57 c&i loans 160,291 1,811 4.53 156,355 1,536 3.98 101,362 983 3.89 home mortgage loans 294,341 2,837 3.86 217,103 2,074 3.82 122,588 1,431 4.67 consumer & other loans 684 10 5.49 878 11 4.88 1,182 16 5.30 loans (2) 1,560,064 19,108 4.91 1,444,054 17,257 4.84 1,242,058 14,971 4.83 total interest-earning assets 1,817,157 20,148 4.44 1,698,799 17,944 4.28 1,469,163 15,349 4.19 noninterest-earning assets 73,594 63,016 49,151 total assets $ 1,890,751 $ 1,761,815 $ 1,518,314 interest-bearing liabilities: money market deposits and others $ 470,013 $ 503 0.43 % $ 412,295 $ 251 0.25 % $ 366,922 $ 281 0.31 % time deposits 389,059 566 0.58 374,620 403 0.44 366,603 482 0.53 total interest-bearing deposits 859,072 1,069 0.50 786,915 654 0.34 733,525 763 0.42 borrowings — — — — — — 3,025 — — total interest-bearing liabilities 859,072 1,069 0.50 786,915 654 0.34 736,550 763 0.42 noninterest-bearing liabilities: noninterest-bearing deposits 843,788 783,461 615,385 other noninterest-bearing liabilities 20,720 24,599 17,119 total noninterest-bearing liabilities 864,508 808,060 632,504 shareholders’ equity 167,171 166,840 149,260 total liabilities and shareholders’ equity $ 1,890,751 $ 1,761,815 $ 1,518,314 net interest income / interest rate spreads $ 19,079 3.94 % $ 17,290 3.94 % $ 14,586 3.77 % net interest margin 4.21 % 4.12 % 3.98 % cost of deposits & cost of funds: total deposits / cost of deposits $ 1,702,860 $ 1,069 0.25 % $ 1,570,376 $ 654 0.17 % 1,348,910 $ 763 0.23 % total funding liabilities / cost of funds $ 1,702,860 $ 1,069 0.25 % $ 1,570,376 $ 654 0.17 % 1,351,935 $ 763 0.23 % (1) annualized. (2) includes loans held for sale. average balance sheet, interest and yield/rate analysis for the six months ended 2q22 2q21 ($ in thousands) average balance interest and fees yield/ rate (1) average balance interest and fees yield/ rate (1) interest-earning assets: interest-bearing deposits in other banks $ 83,231 $ 238 0.57 % $ 98,654 $ 51 0.10 % federal funds sold and other investments 11,465 256 4.45 10,478 221 4.21 available-for-sale debt securities, at fair value 161,230 1,233 1.53 101,000 454 0.90 real estate loans 731,413 16,545 4.56 661,907 15,191 4.63 sba loans 355,916 11,542 6.54 307,787 8,096 5.30 c&i loans 158,334 3,348 4.26 108,803 2,055 3.81 home mortgage loans 255,936 4,911 3.84 124,135 2,882 4.64 consumer & other loans 780 19 5.15 1,184 31 5.24 loans (2) 1,502,379 36,365 4.88 1,203,816 28,255 4.73 total interest-earning assets 1,758,305 38,092 4.36 1,413,948 28,981 4.13 noninterest-earning assets 68,334 50,422 total assets $ 1,826,639 $ 1,464,370 interest-bearing liabilities: money market deposits and others $ 441,314 $ 754 0.34 % $ 351,943 $ 551 0.32 % time deposits 381,879 969 0.51 364,216 1,089 0.60 total interest-bearing deposits 823,193 1,723 0.42 716,159 1,640 0.46 borrowings — — — 4,007 — — total interest-bearing liabilities 823,193 1,723 0.42 720,166 1,640 0.46 noninterest-bearing liabilities: noninterest-bearing deposits 813,791 580,134 other noninterest-bearing liabilities 22,649 16,993 total noninterest-bearing liabilities 836,440 597,127 shareholders’ equity 167,006 147,077 total liabilities and shareholders’ equity $ 1,826,639 1,464,370 net interest income / interest rate spreads $ 36,369 3.94 % $ 27,341 3.67 % net interest margin 4.16 % 3.90 % cost of deposits & cost of funds: total deposits / cost of deposits $ 1,636,984 $ 1,723 0.21 % 1,296,293 $ 1,640 0.26 % total funding liabilities / cost of funds $ 1,636,984 $ 1,723 0.21 % 1,300,300 $ 1,640 0.25 % (1) annualized. (2) includes loans held for sale.
