Open bank reports first quarter 2016 results
Los angeles--(business wire)--open bank (otcqb:opbk) today reported that net income for the first quarter of 2016 was $1.32 million, or $0.10 per diluted share. this compares with net income of $1.56 million, or $0.12 per diluted share, for the fourth quarter of 2015, and net income of $1.30 million, or $0.10 per diluted share, for the first quarter of 2015. pre-tax pre-provision income was $2.4 million for the first quarter 2016, $2.6 million for the fourth quarter 2015, and $2.3 million for the first quarter 2015. “we are pleased to see continued strong growth in total assets, net loans receivables and total deposits, which are up 18%, 23% and 23% respectively from march 31, 2015. for 2016, we will continue to focus on building a relationship-driven business and on growing our non-interest bearing deposits. i believe that the significant increase in our non-interest bearing deposits during the first quarter of 2016 is testament to the success of our strategy. although our new loan originations for the first quarter of 2016 were lower than in the prior quarter, we continue to see solid loan growth,” stated min kim, president and chief executive officer. “for the remainder of 2016, we intend to continue to focus on successfully executing our strategies in order to build a solid foundation for our continued growth.” quarter financial highlights (in thousands, except per share data) march 31, 2016 december 31, 2015 march 31, 2015 results of operations net interest income was $6.2 million for the three months ended march 31, 2016, compared to $6.0 million for the fourth quarter of 2015 and $5.0 million for the first quarter of 2015. the increases from the fourth quarter of 2015 and the first quarter of 2015 were primarily the result of continued growth in interest earning assets, mostly loans. average gross loans were $528 million for the first quarter of 2016, compared to $506 million for the fourth quarter of 2015 and $425 million for the first quarter of 2015, which represented an increase of $22 million, or 4.4%, and $103 million, or 24.3%, respectively. the net interest margin for the first quarter of 2016 was 4.12%, a 10 basis point increase from 4.02% for the fourth quarter of 2015 and a 7 basis point decrease from 4.19% for the first quarter of 2015. the net interest margin expansion from the prior quarter is attributable to an improved mix of earning assets and lower cost of funds. the net interest margin compression from the first quarter of 2015 was primarily due to increased cost of funds. total cost of funds increased to 0.82% for the first quarter of 2016, compared to 0.71% for the same quarter of 2015. most of the increase was in the time deposit accounts, mainly due to the increased market rates. the following table shows the asset yields, liability costs, spread and margin. march 31, 2016 december 31, 2015 march 31, 2015 non-interest income was $1.8 million for the first quarter of 2016, compared to $2.0 million for the fourth quarter of 2015 and $1.8 million for the first quarter of 2015. the decrease in non-interest income from the fourth quarter of 2015 was primarily attributable to lower net gain on sale of sba loans. net gain on sale of sba loans totaled $944 thousand for the first quarter of 2016, compared to $1.2 million for the fourth quarter of 2015 and $908 thousand for the first quarter of 2015. sale of sba loans for the first quarter of 2016 was $12.7 million, compared to $19.6 million for the fourth quarter of 2015 and $11.6 million for the first quarter of 2015. the average premium on the sale of sba loans for the first quarter of 2016 increased 1.8% to 10.2%, compared to 8.3% for the fourth quarter of 2015. the average premium on the sale of sba loans for the first quarter of 2015 was 10.3%. non-interest expense for the first quarter of 2016 was $5.6 million, compared to $5.3 million for the fourth quarter of 2015 and $4.6 million for the first quarter of 2015. the increases from the fourth quarter of 2015 and the first quarter of 2015 were primarily due to increased operating expenses to support continued growth in loans and deposits. total salaries and employee benefits expenses for the first quarter of 2016 increased $168 thousand, or 5.0%, to $3.5 million from $3.3 million for the fourth quarter of 2015, and $676 thousand, or 23.9%, from $2.8 million for the first quarter of 2015. the increase reflects an increased number of full time equivalent employees of 120.5 at march 31, 2016, compared to 115.5 at december 31, 2015 and 102.5 at march 31, 2015. occupancy expenses for the first quarter of 2016 were $648 thousand, a decrease of $25 thousand, or 3.6%, from $673 thousand for the fourth quarter of 2015, and an increase of $251 thousand, or 63.1%, from $397 thousand for the first quarter of 2015. the decrease from the prior quarter was attributable to certain expense accruals. the increase from the first quarter prior year was primarily due to branch expansions during past couple years. ff&e expenses, professional services and data processing fees also increased primarily due to the bank’s continued expansion. the effective tax rate for the first quarter of 2016 was 39.9%, compared to 41.1% for the fourth quarter of 2015 and 41.2% for the first quarter of 2015. balance sheet total assets were $654.3 million at march 31, 2016, an increase of $37 million, or 6.0%, from $617.4 million at december 31, 2015, and an increase of $100 million, or 18.0%, from $554.7 million at march 31, 2015. gross loans, net of unearned income, were $526.9 million at march 31, 2016, an increase of $19.7 million, or 3.9%, from $507.3 million at december 31, 2015, and an increase of $97.3 million, or 22.6%, from $429.6 million at march 31, 2015. new loan originations for the first quarter of 2016 amounted to $56.9 million, including sba loan originations of $20.6 million, compared to $65.7 million, including sba loan originations of $32.8 million for the fourth quarter of 2015. new loan originations for the first quarter of 2015 were $46.1 million, including sba loan originations of $13.3 million. total deposits were $555.3 million at march 31, 2016, an increase of $35.5 million, or 6.8%, from $519.7 million at december 31, 2015, and an increase of $101.9 million, or 22.5%, from $453.3 million at march 31, 2015. non-interest bearing deposits were $174.5 million at march 31, 2016, an increase of $19.4 million, or 12.5%, from $155.1 million at december 31, 2015, and an increase of $13.3 million, or 8.2%, from $161 million at march 31, 2015. at march 31, 2016, the bank retained its borrowings of $20.0 million from the federal home loan bank (“fhlb”), which will mature during the second and the third quarters of 2016. non-interest bearing deposits accounted for 31.4% of total deposits at march 31, 2016, compared to 29.9% at december 31, 2015 and 35.6% at march 31, 2015. march 31, 2016 december 31, 2015 march 31, 2015 35.6 % at march 31, 2016, the bank continued to exceed all regulatory capital requirements to be classified as “well-capitalized,” as summarized in the following table. march 31, 2016 december 31, 2015 march 31, 2015 at march 31, 2016, the tangible common equity represented 11.34% of tangible assets, compared to 11.74% at december 31, 2015 and 12.12% at march 31, 2015. 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 bank’s capital levels. asset quality the loan loss provision of $230 thousand was made during the first quarter of 2016, compared to $77 thousand for the first quarter of 2015. no provision for loan losses was made during the fourth quarter of 2015. non-performing assets were $1.0 million, or 0.15% of total assets, at march 31, 2016, compared to $1.0 million, or 0.17% of total assets, at december 31, 2015 and $1.4 million, or 0.25% of total assets, at march 31, 2015. there was no other real estate owned (“oreo”) at march 31, 2016, december 31, 2015, or march 31, 2015. non-performing loans to gross loans were 0.19% at march 31, 2016, compared to 0.20% at december 31, 2015 and 0.33% at march 31, 2015. total classified loans were $1.2 million, or 0.23% of gross loans, at march 31, 2016, compared to $827 thousand, or 0.16% of gross loans, at december 31, 2015 and $1.7 million, or 0.38% of gross loans, at march 31, 2015. the allowance for loan losses was $6.6 million at march 31, 2016, compared to $6.4 million at december 31, 2015 and $5.9 million at march 31, 2015. the allowance for loan losses was 1.26% of gross loans at march 31, 2016, compared to 1.26% at december 31, 2015 and 1.37% at march 31, 2015. 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 open bank’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 open bank 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 flushing, new york. 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 this press release contains certain forward-looking information about open bank 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 bank’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 bank’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 open bank such as the ability of the new branch to attract sufficient number of customers, deposits and new business to become profitable. open bank 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, open bank’s results could differ materially from those expressed in, or implied or projected by such forward-looking statements. open bank assumes no obligation to update such forward-looking statements, except as required by law. $ change $ change non-interest bearing deposits non-interest income non-interest expense return on average equity (roe)* net interest margin* non-interest bearing deposits net charge-offs to average gross loans* * annualized
