Open bank reports strong fourth quarter and full year 2015 results
Los angeles--(business wire)--open bank (otcqb: opbk) today reported that net income for the fourth quarter of 2015 was $1.6 million, or $0.12 per diluted share. this compares with net income of $1.5 million, or $0.12 per diluted share, for the third quarter of 2015, and net income of $984 thousand, or $0.08 per diluted share, for the fourth quarter of 2014. pre-tax pre-provision income was $2.7 million for the fourth quarter 2015, $3.1 million for the third quarter 2015, and $2.4 million for the fourth quarter 2014. “we are pleased to report a solid quarter rounding out a strong 2015 in which we continue to validate our current strategy. our fourth quarter 2015 net income was up 61% compared to fourth quarter 2014 and our net interest margin remained above 4.0%, all despite significant competitive price pressure in both the lending and deposit markets” stated min kim, president and chief executive officer. “in 2016, we intend to continue to organically grow our market share through our now seven branches and three loan production offices.” (in thousands, except per share data) december 31,2015 september 30,2015 december 31,2014 results of operations net interest income was $6.0 million for the three months ended december 31, 2015, compared to $6.0 million for the third quarter of 2015 and $4.7 million for the fourth quarter of 2014. there was no change from the prior quarter and an increase of 26.0% from the fourth quarter of 2014. the increase from the fourth quarter of 2014 was primarily the result of increase in average interest earning assets, mostly loans. average gross loans were $506 million for the fourth quarter of 2015 and $381 million for the fourth quarter of 2014, which represented an increase of $125 million, or 32.9%. the net interest margin for the fourth quarter of 2015 was 4.02%, a 27 basis point decrease from 4.29% for the third quarter of 2015, and a 33 basis point decrease from 4.35% for the fourth quarter of 2014. the net interest margin compression was due to lower yield on interest-earning assets and increased cost of funds during the fourth quarter of 2015 compared to the third quarter of 2015 and the fourth quarter of 2014. lower yield on interest-earning assets was primarily attributable to higher level of cash balance, which only earned 25 basis points. the following table shows the asset yields, liability costs, spread and margin. december 31,2015 september 30,2015 december 31,2014 non-interest income was $2.0 million for both the fourth quarter and third quarter of 2015, compared to $1.8 million for the fourth quarter of 2014. the increase in non-interest income from the fourth quarter of 2014 was primarily attributable to higher net gain on sale of sba loans, which totaled $802 thousand for the fourth quarter 2014. net gain on sale of sba loans totaled $1.2 million for the third and the fourth quarters of 2015, compared to $802 thousand for the fourth quarter of 2014. sale of sba loans for the fourth quarter of 2015 was $19.6 million, compared to $18.3 million for the third quarter of 2015 and $7.6 million for the fourth quarter of 2014. the average premium on the sale of sba loans for the fourth quarter of 2015 was slightly lower at 8.32%, compared to 8.89% for the third quarter of 2015 and 10.62% for the fourth quarter of 2014. non-interest expense for the fourth quarter 2015 was $5.3 million, compared to $4.9 million for the third quarter of 2015 and $4.1 million for the fourth quarter of 2014. total salaries and employee benefits expense was $3.3 million for the fourth quarter of 2015, compared to $3.0 million for the third quarter of 2015 and $2.5 million for the fourth quarter of 2014. the increase in salaries and employee benefits expense during the fourth quarter of 2015 compared to the third quarter of 2015 was primarily due to accruals for unused vacation and certain employee incentives. the total number of full time equivalent employees was 115.5 as of december 31, 2015 and 116.5 as of september 30, 2015. the increase in non-interest expense from the fourth quarter of 2014 was primarily due to an increase in salaries and employee benefits expense, occupancy and ff&e expenses. salaries and employee benefits expense increased $797 thousand, or 31%, from $2.5 million for the fourth quarter of 2014. the increase reflected an increase in the number of full-time equivalent employees from 100.5 as of december 31, 2014. occupancy expense increased $243 thousand, or 57%, from $430 thousand for the fourth quarter of 2014. the increase was primarily due to addition of new branch in 2015 as well as increased operating expense related to the headquarters office, which resulted in higher overall lease expenses. ff&e expense increased primarily due to the bank’s continued expansion. the effective tax rate for the fourth quarter was 41.1%, compared to 41.2% for the third quarter of 2015 and 41.9% for the fourth quarter of 2014. balance sheet total assets were $618.7 million at december 31, 2015, an increase of $12.5 million, or 2.1%, from $606.2 million at september 30, 2015, and an increase of $90.5 million, or 17.1%, from $528.2 million at december 31, 2014. gross loans, net of unearned income, were $507.3 million at december 31, 2015, an increase of $1.0 million, or 0.2%, from $506.3 million at september 30, 2015, and an increase of $93.8 million, or 22.7%, from $413.5 at december 31, 2014. new loan originations for the fourth quarter of 2015 amounted to $65.7 million, including sba loan originations of $32.8 million, compared to $97.8 million, including sba loan originations of $20.7 million for the third quarter of 2015. new loan originations for the fourth quarter of 2014 amounted to $71.0 million, including sba loan originations of $17.9 million. total deposits were $519.7 million at december 31, 2015, an increase of $10.0 million, or 2.0% from $509.7 million at september 30, 2015, and an increase of $91.2 million, or 21.3%, from $428.5 million at december 31, 2014. at december 31, 2015, 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 29.9% of total deposits at december 31, 2015, compared to 30.4% at september 30, 2015 and 40.7% at december 31, 2014. december 31,2015 september 30,2015 december 31,2014 40.7% effective january 1, 2015, the basel iii capital rules revised the definition of capital, introduced a minimum cet1 capital ratio and changed the risk weightings of certain balance sheet and off-balance sheet assets. the impact of changes in the risk weightings was minimal. at december 31, 2015, the bank continued to exceed all regulatory capital requirements to be classified as “well-capitalized”, as summarized in the following table. december 31,2015 september 30,2015 december 31,2014 at december 31, 2015, the tangible common equity represented 11.72% of tangible assets, compared to 11.68% at september 30, 2015 and 12.39% at december 31, 2014. 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 no provision for loan losses was made during the fourth quarter of 2015, compared to a provision of $476 thousand for the third quarter of 2015 and $740 thousand for the fourth quarter of 2014. non-performing assets were $1.0 million, or 0.17% of total assets at december 31, 2015, compared to $1.0 million, or 0.17% of total assets at september 30, 2015 and $1.3 million, or 0.26% of total assets at december 31, 2014. there was no other real estate owned (“oreo”) at december 31, 2015, september 30, 2015, or december 31, 2014. non-performing loans to gross loans were 0.20% at december 31, 2015, compared to 0.20% at september 30, 2015 and 0.33% at december 31, 2014. total classified loans were $827 thousand, or 0.16% of gross loans, at december 31, 2015, compared to $758 thousand, or 0.15% of gross loans at september 30, 2015 and $1.7 million, or 0.42% of gross loans at december 31, 2014. the allowance for loan losses was $6.4 million at december 31, 2015 and september 30, 2015, compared to $5.8 million at december 31, 2014. the allowance for loan losses was 1.26% of gross loans at december 31, 2015, compared to 1.26% at september 31, 2015 and 1.39% at december 31, 2014. 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 county 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 on september 20, 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 plans to continue to grow the bank organically. 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
