Open bank reports 2014 fourth quarter financial results
Los angeles--(business wire)--open bank (otcbb:opbk) today reported that income before taxes was $1.7 million for the fourth quarter of 2014, up 151.0% from $675 thousand for the same quarter of 2013, down 21.1% from $2.1 million for the three months ended september 30, 2014. the net income for the fourth quarter of 2014 was $984 thousand, or $0.08 per diluted share. this compares with net income of $1.3 million, or $0.10 per diluted share, for the third quarter of 2014 and net loss of $472 thousand, or $0.06 per diluted share, for the fourth quarter of 2013. pre-tax pre-provision income was $2.4 million for the fourth quarter 2014, $2.1 million for the third quarter 2014, and $675 thousand for the fourth quarter 2013. “i am excited to announce that for the first time in the bank’s history, we have surpassed a half a billion dollars in assets, an impressive 55% year over year increase. underlying this growth was an almost equally large 48% year-over-year increase in net loans receivable with non-interest bearing deposits rising from 30% of total deposits to over 40%,” stated min kim, president and chief executive officer. “at the same time, our net interest margin remains at 4.34%, which we believe is among the highest in our peer group. this performance is the result of our concentrated focus on growing our core business combined with our commitment to serving the banking needs of our community and we feel well positioned to continue this momentum into 2015. we will continue to focus on growing our company through existing six full branches and through the additional planned branch and loan production offices.” pre-tax pre-provision income to average assets (annualized) net charge-offs to average gross loans (annualized) nonperforming assets to gross loans plus oreo 14.85 results of operations net interest income was $4.7 million for the three months ended december 31, 2014, compared to $4.4 million for the third quarter of 2014 and $3.2 million for the fourth quarter of 2013. this represents increases of 7.1% from the third quarter of 2014 and 46.4% from the fourth quarter of 2013, respectively. the increases were primarily the result of increases in average interest earning assets, specifically loans. average loans, including loans held for sale, increased to $380.6 million for the fourth quarter of 2014, an increase of $37.0 million, or 10.8% from $343.6 million for the third quarter 2014, and an increase of $114.4 million, or 43.0%, from $266.2 million for the fourth quarter of 2013. the net interest margin for the fourth quarter of 2014 was 4.34%, a 3 basis point increase from 4.31% for the third quarter of 2014, and a 13 basis decrease from 4.47% for the fourth quarter of 2013. the following table shows the asset yields, liability cost, spread and margin. the bank recorded $740 thousand of provision for loan losses for the fourth quarter of 2014. no provision for loan losses was recorded for the third quarter of 2014 as well as for the fourth quarter of 2013. the bank charged off $477 thousand in loans during the fourth quarter of 2014. this increase was primarily due to one sba loan of $474 thousand. there were no charge offs during the third quarter of 2014 and the fourth quarter of 2013. loan recovery was $10 thousand for the fourth quarter of 2014, compared to $11 thousand for the third quarter of 2014, and $182 thousand for the fourth quarter of 2013. non-interest income for the fourth quarter 2014 was $1.8 million, compared to $2.0 million for the third quarter of 2014 and $1.0 million for the prior-year fourth quarter. the decrease from the preceding quarter was primarily attributable to a $487 thousand decrease in net gains on sale of sba loans, which was $816 thousand for the fourth quarter of 2014, compared to $1.3 million for the third quarter of 2014. sales of sba loans for the fourth quarter of 2014 were $7.6 million, compared to $17.5 million for the third quarter of 2014. service charges on deposits increased $95 thousand, or 25%, to $479 thousand for the fourth quarter of 2014, compared to $384 thousand for the third quarter of 2014, primarily due to an increase in operational transactions from one large client. the increase in non-interest income from the prior year fourth quarter was primarily due to a $341 thousand increase in net gains on sale of sba loans. sales of sba loans for the fourth quarter of 2013 were $6.7 million. service charges and other deposit related fees increased $376 thousand, or 367%, from $103 thousand for the prior-year fourth quarter. there was a significant increase in the number of demand deposit accounts as well as transactions such as wire transfers. non-interest expense for the fourth quarter 2014 was $4.1 million, compared to $4.3 million for the third quarter of 2014 and $3.6 million for the prior-year fourth quarter. the decrease from the preceding quarter was primarily attributable to a decrease of $171 thousand, or 6%, in salaries and employee benefits, driven by a decrease in bonus reserves. the total number of full time employees was 101 as of december 31, 2014, 102 as of september 30, 2014, and 84 as of december 31, 2013. the decrease from the fourth quarter of 2013 was primarily due to a decrease in professional service expenses. professional service expenses were $12 thousand for the fourth quarter of 2014, a decrease of $187 thousand or 94%, compared to $198 thousand for the fourth quarter of 2013. the effective tax rate for the third and fourth quarters of 2014 was 41% and 42%, respectively. during the fourth quarter of 2013, the provision for income taxes was $1.1 million. balance sheet total assets were $530.9 million at december 31, 2014, an increase of $83.5 million or 18.7%, from $447.4 million at september 30, 2014, and an increase of $188.6 million, or 55.1%, from $342.3 million at december 31, 2013. gross loans, net of unearned income, were $413.5 million at december 31, 2014, an increase of $49.4 million, or 13.6%, from $364.1 million at september 30, 2014, and an increase of $132.3 million, or 47.0%, from $281.3 million a year ago. new loan originations for the fourth quarter of 2014 amounted to $71.0 million, including sba loan origination of $17.9 million, compared to $63.6 million, including sba loan origination of $20.9 million for the third quarter of 2014. the new loan originations for the fourth quarter of 2013 amounted to $65.9 million, including sba loan origination of $27.5 million. total deposits were $428.5 million at december 31, 2014, an increase of $51.6 million, or 13.7%, from $376.9 million at september 30, 2014 and an increase of $119.2 million, or 38.5%, from $309.3 million at december 31, 2013. the bank borrowed $30.0 million from federal loan home bank (“fhlb”); $10.0 million of overnight borrowing and $20.0 million of term borrowing for six months. non-interest bearing deposits accounted for 40.7% of total deposits at december 31, 2014. this is compared to 42.9% at september 30, 2014 and 29.9% at december 31, 2013. 42.9 % 29.9 % 29.0 % 0.3 % 16.6 % 11.2 % at december 31, 2014, the leverage ratio was 14.04%, compared to 14.85% at september 30, 2014 and 9.43% at december 31, 2013; tier 1 risk-based capital ratio was 15.42%, compared to 17.52% at september 30, 2014 and 9.85% at december 31, 2013; and total risk-based capital ratio was 16.67%, compared to 18.78% at september 30, 2014 and 11.11% at december 31, 2013. at december 31, 2014, the tangible common equity represented 12.33% of tangible assets, compared to 14.31% at september 30, 2014 and 9.11% at december 31, 2013. 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 non-performing assets were $1.3 million, or 0.25% of total assets at december 31, 2014, compared to $1.5 million, or 0.33% of total assets at september 30, 2014 and $1.6 million, or 0.46% of total assets at december 31, 2013. there were no other real estate owned (“oreo”) at december 31, 2014, september 30, 2014 or december 31, 2013. non-performing loans to gross loans decreased to 0.33% at december 31, 2014, compared to 0.40% at september 30, 2014 and 0.56% at december 31, 2013. the decrease versus prior year was primarily attributable to sales of problem loans during 2013. the allowance for loan losses was $5.8 million at december 31, 2014, compared to $5.5 million at september 30, 2014, and $5.2 million at december 31, 2013. total classified loans were $1.7 million, or 0.42% of gross loans, at december 31, 2014, compared to $1.8 million, or 0.50% of gross loans at september 30, 2014 and $4.8 million, or 1.71% of gross loans at december 31, 2013. the allowance for loan losses was 1.39% of gross loans at december 31, 2014, compared to 1.51% at september 30, 2014 and 1.86% at december 31, 2013. 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, conference call slides, or the form 8-k related to this document, all of 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 county 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 the korean and other ethnic minority communities. the bank has branches in downtown los angeles, los angeles fashion district, los angeles koreatown, gardena and buena park. 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 are 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. 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. (dollars in thousand, except per share data) december 31,2014 september 30,2014 december 31,2013 december 31,2014 september 30,2014 december 31,2013 december 31,2014 december 31,2013 * annualized
