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  Title	OP Bancorp Reports Net Income for 2024 Fourth Quarter of $5.0 Million and Diluted Earnings Per Share of $0.33
  ID	6130283
  External ID	7492730497
  Author	Unknown
  Published Date	Jan. 23, 2025, 5:37 p.m.
  Summary	January 23, 2025 at 16:30 PM EST 2024 Fourth Quarter Highlights compared with 2024 Third Quarter: Financial Results: Net income of $5.0 million, compared to $5.4 million Diluted earnings per shar
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  URL	http://business.malvern-online.com/malvern-online/article/bizwire-2025-1-23-op-bancorp-reports-net-income-for-2024-fourth-quarter-of-50-million-and-diluted-earnings-per-share-of-033
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  Key	29750dff-08b1-42ca-9a25-3465e8b87e3c
  Content	January 23, 2025 at 16:30 PM EST 2024 Fourth Quarter Highlights compared with 2024 Third Quarter: Financial Results: Net income of $5.0 million, compared to $5.4 million Diluted earnings per share of $0.33, compared to $0.36 Net interest income of $16.9 million, compared to $16.5 million Net interest margin of 2.96%, compared to 2.95% Provision for credit losses of $1.5 million, compared to $448 thousand Total assets of $2.37 billion, compared to $2.39 billion Gross loans of $1.96 billion, compared to $1.93 billion Total deposits of $2.03 billion, compared to $2.06 billion Credit Quality: Allowance for credit losses to gross loans of 1.27%, compared to 1.19% Net charge-offs to average gross loans of 0.00%, compared to 0.01% Loans past due 30-89 days to gross loans of 0.46%, compared to 0.53% Nonperforming loans to gross loans of 0.40%, compared to 0.19% Criticized loans to gross loans of 1.00%, compared to 0.85% Capital Levels: Remained well-capitalized with a Common Equity Tier 1 (“CET1”) ratio of 11.35% Book value per common share increased to $13.83, compared to $13.75 Paid quarterly cash dividend of $0.12 per share for the periods ___________________________________________________________ Annualized. Includes loans held for sale. Includes Special Mention, Substandard, Doubtful, and Loss categories. OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company of Open Bank (the “Bank”), today reported its financial results for the fourth quarter of 2024. Net income for the fourth quarter of 2024 was $5.0 million, or $0.33 per diluted common share, compared with $5.4 million, or $0.36 per diluted common share, for the third quarter of 2024, and $5.2 million, or $0.34 per diluted common share, for the fourth quarter of 2023. Min Kim, President and Chief Executive Officer “We are continuing to experience the effects of uncertainty in the financial markets providing challenges in increasing customer deposits and lowering costs of deposit,” said Min Kim, President and Chief Executive. “We continue to see slightly elevated levels of classified loans, and we have responded prudently to managing these assets. We are also paying careful attention to those of our customers and employees who have been affected by the unprecedented wildfires in the Los Angeles basin, and we express our deepest condolences to all of those who have lost homes, businesses or jobs, or who have been affected by these disasters. We look forward to opportunities to assist in the recovery of the affected communities.” SELECTED FINANCIAL HIGHLIGHTS INCOME STATEMENT HIGHLIGHTS Net Interest Income and Net Interest Margin Fourth Quarter 2024 vs. Third Quarter 2024 Net interest income increased $423 thousand, or 2.6%, primarily due to lower interest expense on interest-bearing deposits, partially offset by lower interest income on loans as our deposit costs repriced faster than our loan yields following the Federal Reserve's rate cuts from September 2024. Net interest margin was 2.96%, an increase of 1 basis point from 2.95%. Fourth Quarter 2024 vs. Fourth Quarter 2023 Net interest income increased $699 thousand, or 4.3%, as higher interest income from a $206.4 million, or 10.0%, increase in average earning assets (loans and interest-bearing deposits in other banks) surpassed higher interest expense from a $210.6 million, or 15.5%, increase in average interest-bearing liabilities (deposits and borrowings). Net interest margin, however, decreased 16 basis points to 2.96% from 3.12%, primarily due to a faster increase in average interest-bearing liabilities over average earnings assets and a faster repricing in deposits costs over loan yields. Provision for Credit Losses Fourth Quarter 2024 vs. Third Quarter 2024 The Company recorded $1.5 million in total provision for credit losses, an increase of $1.1 million, compared with $448 thousand, , reflecting an ongoing period of relatively elevated interest rates and the related impacts on our customers and on the values of the collateral securing our loans. Provision for credit losses on loans increased $1.6 million and provision for credit losses on off-balance sheet exposure decreased $526 thousand. Provision for credit losses on loans of $1.9 million was due to a $1.5 million increase in qualitative reserves, and a $810 thousand increase in specific reserves, partially offset by a $439 thousand decrease in general reserves. Reversal of credit losses on off-balance sheet exposure of $312 thousand was primarily due to a change in calculation method for revolving accounts using expected funding amount instead of unfunded commitment amount. Fourth Quarter 2024 vs. Fourth Quarter 2023 The Company recorded $1.5 million in total provision for credit losses, an increase of $917 thousand, compared with $630 thousand. Provision for credit losses on loans increased $1.3 million and provision for credit losses on off-balance sheet exposure decreased $405 thousand. Noninterest Income Fourth Quarter 2024 vs. Third Quarter 2024 Noninterest income increased $177 thousand, or 4.2%, primarily due to higher loan servicing fees and gain on sale of loans, partially offset by lower other income. Fourth Quarter 2024 vs. Fourth Quarter 2023 Noninterest income increased $737 thousand, or 20.0%, primarily due to higher service charges on deposits, loan servicing fees and gain on sale of loans, offset by lower other income. Noninterest Expense Fourth Quarter 2024 vs. Third Quarter 2024 Noninterest expense increased $413 thousand, or 3.2%, primarily due to higher salaries and employee benefits, other expenses, and FDIC insurance and regulatory assessments. Fourth Quarter 2024 vs. Fourth Quarter 2023 Noninterest expense increased $1.2 million, or 9.6%, primarily due to higher salaries and employee benefits, FDIC insurance and regulatory assessments, and other expenses. Income Tax Expense Fourth Quarter 2024 vs. Third Quarter 2024 Income tax expense was $1.7 million, or an effective tax rate of 25.4%, compared to income tax expense of $2.1 million, or an effective tax rate of 28.3%. The decrease in effective tax rate was primarily due to year-end provision adjustments for additional tax benefits from low income housing tax credit fund investments, and adjustments for differences between the prior year tax provision and the final tax returns that were applied in the quarter. Fourth Quarter 2024 vs. Fourth Quarter 2023 Income tax expense was $1.7 million, resulting in an effective tax rate of 25.4%, compared to income tax expense of $2.1 million, resulting in an effective tax rate of 29.1%. The decrease in effective tax rate was primarily due to year-end provision adjustments for additional tax benefits from low income housing tax credit fund investments, and adjustments for differences between the prior year tax provision and the final tax returns that were applied in the quarter. BALANCE SHEET HIGHLIGHTS Loans The following table presents new loan originations based on loan commitment amounts for the periods indicated: The following table presents changes in gross loans by loan activity for the periods indicated: As of December 31, 2024 vs. September 30, 2024 Gross loans were $1.96 billion as of December 31, 2024, up $25.8 million from September 30, 2024, primarily due to new loan originations, partially offset by loan sales, payoffs and paydowns. New loan originations, loan sales, and loan payoffs and paydowns were $127.4 million, $34.7 million, and $70.4 million, respectively, for the fourth quarter of 2024, compared with $152.7 million, $35.6 million, and $55.4 million, respectively, for the third quarter of 2024. As of December 31, 2024 vs. December 31, 2023 Gross loans were $1.96 billion as of December 31, 2024, up $191.0 million, from December 31, 2023, primarily due to an increase in new loan originations of $502.8 million, partially offset by loan sales of $127.2 million and loan payoffs and paydowns of $188.2 million. 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: The following table presents the maturity of gross loans by interest rate type accompanied with the weighted average contractual rates for the periods indicated: Allowance for Credit Losses The following table presents allowance for credit losses and provision for credit losses as of and for the periods presented: Asset Quality Overall, the Bank continued to maintain low levels of nonperforming loans and net charge-offs. Our allowance remained strong with an allowance to gross loans ratio of 1.27%. Los Angeles Wildfires Impact The Company's overall exposure from the Los Angeles wildfires is limited to $23.5 million (or 1.3% of net loans) based on zip code. Only three borrowers suffered direct impact from the wildfires, totaling $6.3 million in outstanding principal balance. Of the three borrowers, only two borrowers with combined outstanding principal balance of $2.2 million may require temporary loan payment adjustments. The Company will continue to monitor the loans to timely assess both direct and indirect impacts to the Company's asset quality. Deposits As of December 31, 2024 vs. September 30, 2024 Total deposits were $2.03 billion as of December 31, 2024, reflecting a decrease of $37.3 million or 1.8% from September 30, 2024, primarily due to decreases of $56.9 million in noninterest-bearing deposits and $14.1 million in money market deposits, partially offset by an increase of $33.6 million in time deposits. Customers' preference for high-rate deposit products continued to drive the increase in time deposits over money market deposits. The decrease in noninterest-bearing deposits was primarily driven by a significant downward shift in market expectation on the Federal Reserve's future rate cut trajectory and an uncertainty of economic and business outlook. Average balance of noninterest-bearing deposits, however, increased $15.4 million or 2.9% to $543.5 million from $528.1 million continuing the upward trend started from the beginning of 2024. As of December 31, 2024 vs. December 31, 2023 Total deposits were $2.03 billion as of December 31, 2024, an increase of $219.7 million from December 31, 2023, primarily driven by a $307.5 million increase in time deposits, offset by decreases of $69.9 million in money market deposits and $17.8 million in noninterest-bearing deposits. Noninterest-bearing deposits, as a percentage of total deposits, decreased to 24.9% from 28.9%. The composition shift to time deposits was primarily due to customers' preference for high-rate deposit products driven by market rate increases as a result of the Federal Reserve's rate increases. The following table sets forth the maturity of time deposits as of December 31, 2024: OTHER HIGHLIGHTS Liquidity The Company maintains ample access to liquidity, including highly liquid assets on our balance sheet and available unused borrowings from other financial institutions. The following table presents the Company's liquid assets and available borrowings as of dates presented: Capital and Capital Ratios On January 23, 2025, the Company's Board of Directors declared a quarterly cash dividend of $0.12 per share of its common stock. The cash dividend is payable on or about February 20, 2025 to all shareholders of record as of the close of business on February 6, 2025. The payment of the dividend is based primarily on dividends from the Bank to the Company, and future dividends will depend on the Board's assessment of the availability of capital levels to support the ongoing operating capital needs of both the Company and the Bank. The Company did not repurchase share of its common stock during the fourth quarter of 2024. Since the announcement of the stock repurchase program in August 2023, the Company repurchased a total of 428,628 shares of its common stock at an average repurchase price of $9.37 per share through December 31, 2024. 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 in California, the Dallas metropolitan area in Texas, and Clark County in Nevada 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 eleven full-service branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Cerritos, Gardena, Buena Park, and Santa Clara, California, Carrollton, Texas and Las Vegas, Nevada. The Bank also has five loan production offices in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, Lynnwood, Washington, and Fairfax, Virginia. 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 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain matters set forth herein constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, 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 impacts of recent wildfires affecting the Los Angeles Basin, which have dramatically affected our customers, communities and employees, and which will have as-yet-unquantified effects upon the value of our loans, the adequacy of our loan loss reserves, and the value of the associated collateral; the effects of substantial fluctuations in, and continuing elevated levels of, interest rates on our borrowers' ability to perform in accordance with the terms of their loans and on our deposit customers' expectation for higher rates on deposit products; cybersecurity risks, including the potential for the occurrence of successful cyberattacks and our ability to prevent and to mitigate the harms resulting from any such attacks; the geographic concentration of our customer base and our earning assets; infrastructure risks and similar circumstances that affect our and our customers' ability to communicate and to engage in routine online banking activities; business and economic conditions, particularly those affecting the financial services industry and our primary market areas; risks of international conflict, terrorism, civil unrest and domestic instability; the continuing effects of inflation and monetary policies, particularly those relating to the decisions and indicators of intent expressed by the Federal Reserve Open Markets Committee, as those circumstances impact our operations and our current and prospective borrowers and depositors; our ability to balance deposit liabilities and liquidity sources (including our ability to reprice those instruments and balancing our borrowings and investments to keep pace with changing market conditions) so as to meet current and expected withdrawals while promoting strong earning capacity; our ability to manage our credit risk successfully and to assess, adjust and monitor the sufficiency of our allowance for credit 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; the impacts of credit quality on our earnings and the related effects of increases to the reserve on our net income; our ability effectively to execute our strategic plan and manage our growth; interest rate fluctuations, which could have an adverse effect on our profitability; external economic and/or market factors, such as changes in monetary and fiscal policies and laws, including 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 banks and from credit unions and non-bank financial services companies, many of which are subject to less restrictive or less costly regulations than we are; challenges arising from unsuccessful attempts to expand into new geographic markets, products, or services; practical and regulatory constraints on the ability of Open Bank to pay dividends to us; our ability to protect and to use our trademarks and related intellectual property; 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; including internal controls that affect the reliability of our publicly reported financial statements; inaccuracies in our assumptions about future events, which could result in material differences between our financial projections and actual financial performance, particularly with respect to the effects of predictions of future economic conditions as those circumstances affect our estimates for the adequacy of our allowance for credit losses and the related provision expense; 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, or natural disasters, such as earthquakes, fires, drought, pandemic diseases (such as the coronavirus) or extreme weather events (including but not limited to the above-described wildfires affecting the Los Angeles Metropolitan Area), 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, 2023 and in our subsequent filings with the Securities and Exchange Commission. CONSOLIDATED BALANCE SHEETS (unaudited) CONSOLIDATED STATEMENTS OF INCOME (unaudited) KEY RATIOS CONSOLIDATED STATEMENTS OF INCOME (unaudited) KEY RATIOS ASSET QUALITY AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS View source version on businesswire.com: https://www.businesswire.com/news/home/20250123018544/en/ Contacts Investor Relations OP Bancorp Christine Oh EVP & CFO Christine.oh@myopenbank.com
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