Op bancorp announces record net income for q3 of $2.73 million up
32.9% over 2016
Los angeles--(business wire)--op bancorp (the “company”) (otcqb: opbk), the holding company of open bank (the “bank”), today reported that net income for the third quarter of 2017 was $2.73 million, or $0.19 per diluted common share. this compares with net income of $2.46 million, or $0.18 per diluted share, for the second quarter of 2017, and net income of $2.05 million, or $0.15 per diluted share, for the third quarter of 2016. “we are pleased to announce another successful quarter with the record quarter net income of $2.73 million. i am hopeful that 2017 will be another banner year. the bank’s profitability continued to improve in the third quarter with the net interest margin expanding to 4.68%, from 4.58% in the second quarter of 2017 and from 4.46% in the third quarter of 2016,” stated min kim, president and chief executive officer. quarter financial highlights(in thousands, except per share data) september 30,2017 june 30,2017 september 30,2016 results of operations net interest income before loan loss provision was $9.2 million for the three months ended september 30, 2017, an increase of 7.1% from $8.6 million for the second quarter of 2017, and an increase of 24.1% from $7.4 million for the third quarter of 2016. the increases from the second quarter of 2017 and the third quarter of 2016 were the results of continued growth in interest earning assets, mostly loans, and improvements in net interest margin. average gross loans, including held-for-sale loans, were $721 million for the third quarter of 2017, an increase of $27 million, or 4.0%, from $693 million for the second quarter of 2017 and an increase of $113 million, or 18.6%, from $608 million for the third quarter of 2016. the net interest margin for the third quarter of 2017 was 4.68%, a 10 basis point increase from 4.58% for the second quarter of 2017, and a 22 basis point increase from 4.46% for the third quarter of 2016. excluding impacts from non-recurring items, such as discount accretions from sba loan payoffs, fhlb special dividend and non-accrual loans, the net interest margin for the third quarter of 2017 was 4.49%, up 3 basis points compared to 4.46% for the second quarter of 2017, and up 21 basis points from 4.28% for the third quarter of 2016. the net interest margin expansions from the second quarter of 2017 and the third quarter of 2016 were primarily due to higher increases in average yield on gross loans than increases in average cost of funds. the increases were primarily due to increases in the fed funds rate during the period, which positively impacted our net interest margin. the fed funds rate increased three times, or 75 basis points, since december 2016. average yield on gross loans for the third quarter of 2017 increased 17 basis points from the second quarter 2017 and 32 basis points from the third quarter of 2016. average cost of funds for the third quarter of 2017 increased 8 basis points from the second quarter of 2017 and 11 basis points increased from the third quarter of 2016. the following table shows the asset yields, liability costs, spreads and margins. september 30,2017 june 30,2017 september 30,2016 loan loss provision for the third quarter of 2017 was $278 thousand, compared to $170 thousand for the second quarter of 2017 and $677 thousand for the third quarter of 2016. non-interest income was $2.26 million for the third quarter of 2017, up 2.1% from $2.21 million for the second quarter of 2017, and down 6% from $2.40 million for the third quarter of 2016. the changes were primarily due to changes in net gains on sale of sba loans for the third quarter of 2017 compared to the second quarter of 2017 and the third quarter of 2016. net gain on sale of sba loans totaled $1.2 million for the third quarter of 2017, compared to $1.1 million for the second quarter of 2017 and $1.5 million for the third quarter of 2016. sale of sba loans for the third quarter of 2017 was $15.0 million, compared to $16.2 million for the second quarter of 2017 and $25.3 million for the third quarter of 2016. the average premium on the sale of sba loans for the third quarter of 2017 was 9.8%, compared to 8.6% for the second quarter of 2017 and 8.3% for the third quarter of 2016. non-interest expense increased $192 thousand, or 2.9%, to $6.7 million for the third quarter of 2017, compared to $6.6 million for the second quarter of 2017. compared to the third quarter of 2016, non-interest expense increased $1.0 million, or 18.3%, primarily due to increased operating expenses to support continued growth of the company. salary & employee benefits expenses increased $139 thousand from the second quarter of 2017 and $851 thousand from the third quarter of 2016 as the number of full time equivalent employees increased to 131.5 at september 30, 2017 from 128.5 at june 30, 2017 and 126.5 at september 30, 2016. the increases in data processing, occupancy, and business development expenses totaled $25 thousand from the second quarter of 2017 and $146 thousand from the third quarter of 2016. the effective tax rate for the third quarter of 2017 was 38.6%, compared to 39.6% for the second quarter of 2017 and 40.4% for the third quarter of 2016. balance sheet total assets were $876.4 million at september 30, 2017, an increase of $41.0 million, or 4.9% from $835.4 million at june 30, 2017, and an increase of $154.8 million, or 21.4%, from $721.7 million at september 30, 2016. gross loans, net of unearned income, were $736.1 million at september 30, 2017, an increase of $33.6 million, or 4.8%, from $702.4 million at june 30, 2017, and an increase of $108.9 million, or 17.4%, from $627.2 million at september 30, 2016. new loan originations for the third quarter of 2017 totaled $87.5 million, including sba loan originations of $34.6 million, compared to $70.0 million, including sba loan originations of $24.1 million for the second quarter of 2017. new loan originations for the third quarter of 2016 were $93.2 million, including sba loan originations of $21.5 million. loan payoffs for the third quarter of 2017 were $28.2 million, compared to $32.4 million for the second quarter of 2017, and $18.8 million for the third quarter of 2016. total deposits were $754.5 million at september 30, 2017, an increase of $21.6 million, or 2.9% from $732.9 million at june 30, 2017, and an increase of $127.7 million, or 20.4%, from $626.9 million at september 30, 2016. non-interest bearing deposits were $289.2 million at september 30, 2017, an increase of $2.3 million, or 0.8%, from $286.9 million at june 30, 2017, and an increase of $61.4 million, or 27.0%, from $227.7 million at september 30, 2016. non-interest bearing deposits accounted for 38.3% of total deposits at september 30, 2017, compared to 39.1% at june 30, 2017 and 36.3% at september 30, 2016. september 30,2017 june 30,2017 september 30,2016 36.3 % there was $25 million in borrowing from the federal home loan bank (“fhlb”) at september 30, 2017, compared to $10 million at june 30, 2017 and $10 million at september 30, 2016. at september 30, 2017, the company continued to exceed all regulatory capital requirements to be classified as “well-capitalized,” as summarized in the following table. september 30,2017 june 30,2017 september 30,2016 at september 30, 2017, the tangible common equity represented 10.21% of tangible assets, compared to 10.38% at june 30, 2017 and 10.92% at september 30, 2016. the tangible common equity to tangible assets ratio is a non-gaap financial measure that represents common equity less goodwill and other net intangible assets divided by total assets less goodwill and other net intangible assets. management reviews the tangible common equity to tangible assets ratio to evaluate the company’s capital levels. asset quality loan loss provision for the third quarter of 2017 was $278 thousand, compared to $170 thousand for the second quarter of 2017 and $677 thousand for the third quarter of 2016. non-performing assets were $734 thousand, or 0.08% of total assets, at september 30, 2017, $781 thousand, or 0.09% of total assets, at june 30, 2017 and $968 thousand, or 0.13% of total assets, at september 30, 2016. there was no other real estate owned (“oreo”) at september 30, 2017, june 30, 2017, or september 30, 2016. non-performing loans to gross loans were 0.10% at september 30, 2017, compared to 0.11% at june 30, 2017 and 0.15% at september 30, 2016. total classified loans were $2.1 million, or 0.29% of gross loans, at september 30, 2017, compared to $2.6 million, or 0.36% of gross loans, at june 30, 2017 and $1.3 million, or 0.21% of gross loans, at september 30, 2016. the allowance for loan losses was $8.9 million at september 30, 2017, compared to $8.6 million at june 30, 2017 and $7.6 million at september 30, 2016. the allowance for loan losses was 1.19% of gross loans at september 30, 2017 and 1.22% at june 30, 2017 and 1.21% at september 30, 2016. use of non-gaap financial measures. this document may contain gaap financial measures and non-gaap financial measures where management believes it to be helpful in understanding the company’s results of operations or financial position. where non-gaap financial measures are used, the comparable gaap financial measure, as well as the reconciliation to the comparable gaap financial measure, can be found in this earnings release, which can be found on open bank’s website at www.myopenbank.com. about op bancorp op bancorp, the holding company for open bank, is a california corporation whose common stock is traded on the otcqb under the ticker symbol, “opbk.” open bank (the "bank") is engaged in the general commercial banking business in los angeles and orange counties and is focused on serving the banking needs of small- and medium-sized businesses, professionals, and residents with a particular emphasis on korean and other ethnic minority communities. the bank currently operates with seven full branch offices in downtown los angeles, los angeles fashion district, los angeles koreatown, gardena and buena park. the bank also has three loan production offices in seattle, washington, dallas, texas, and atlanta, georgia. the bank commenced its operations on june 10, 2005 as first standard bank and changed its name to open bank in october 2010. its headquarters is located at 1000 wilshire blvd., suite 500, los angeles, california 90017. phone 213.892.9999; www.myopenbank.com member fdic, equal housing lender safe harbor statement this press release contains certain forward-looking information about op bancorp that is intended to be covered by the safe harbor for “forward-looking statements” provided by the private securities litigation reform act of 1995. all statements other than statements of historical fact are forward-looking statements, including statements about the company’s successful implementation of its strategies resulting in significant increase in non-interest bearing deposits. these forward-looking statements may include, but are not limited to, such words as "believes," "expects," "anticipates," "intends," "plans," "estimates," "may," "will," "should," "could," "predicts," "potential," "continue," or the negative of such terms and other comparable terminology or similar expressions and may include statements about the company’s focus on exploring new opportunities, building customer relationship through core deposits, growing core deposits, and improving asset quality. forward-looking statements are not guarantees. such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of op bancorp such as the ability of the new branch to attract sufficient number of customers, deposits and new business to become profitable. op bancorp cautions readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements. if any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, op bancorp’s results could differ materially from those expressed in, or implied or projected by such forward-looking statements. op bancorp assumes no obligation to update such forward-looking statements, except as required by law. september 30,2017 june 30,2017 $ change september 30,2016 $ change september 30,2017 june 30,2017 september 30,2016 september 30,2017 september 30,2016 september 30,2017 june 30,2017 september 30,2016 september 30,2017 september 30,2016
