OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company of Open Bank (the “Bank”), today reported its financial results for the first quarter of 2025. Net income for the first quarter of 2025 was $5.6 million, or $0.37 per diluted common share, compared with $5.0 million, or $0.33 per diluted common share, for the fourth quarter of 2024, and $5.2 million, or $0.34 per diluted common share, for the first quarter of 2024.
Min Kim, President and Chief Executive Officer:
“We continued to grow our loans by 4.4% and deposits by 8.0% in this quarter while improving net interest margin by 5 basis points. This double-digit annualized growth in loans and deposits, combined with the net interest margin expansion, resulted in our strong performance for this quarter, reporting a 12% increase in diluted earnings per share over the previous quarter,” said Min Kim, President and Chief Executive Officer. “While recently heightened uncertainties about economic conditions and interest rate directions are expected to affect the banking environment in the next few quarters, we remain optimistic about our future growth and performance and will continue to focus on executing our strategic goals.”
SELECTED FINANCIAL HIGHLIGHTS
($ in thousands, except per share data) | As of and For the Quarter | % Change 1Q2025 vs. | ||||||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | 4Q2024 | 1Q2024 | ||||||||||||||
Selected Income Statement Data: | ||||||||||||||||||
Net interest income | $ | 17,418 | $ | 16,929 | $ | 15,979 | 2.9 | % | 9.0 | % | ||||||||
Provision for credit losses | 736 | 1,547 | 145 | (52.4 | ) | 407.6 | ||||||||||||
Noninterest income | 4,816 | 4,417 | 3,586 | 9.0 | 34.3 | |||||||||||||
Noninterest expense | 13,814 | 13,133 | 12,157 | 5.2 | 13.6 | |||||||||||||
Income tax expense | 2,124 | 1,695 | 2,037 | 25.3 | 4.3 | |||||||||||||
Net income | 5,560 | 4,971 | 5,226 | 11.8 | 6.4 | |||||||||||||
Diluted earnings per share | 0.37 | 0.33 | 0.34 | 12.1 | 8.8 | |||||||||||||
Selected Balance Sheet Data: | ||||||||||||||||||
Gross loans | $ | 2,043,885 | $ | 1,956,852 | $ | 1,804,987 | 4.4 | % | 13.2 | % | ||||||||
Total deposits | 2,189,871 | 2,027,285 | 1,895,411 | 8.0 | 15.5 | |||||||||||||
Total assets | 2,512,971 | 2,366,013 | 2,234,520 | 6.2 | 12.5 | |||||||||||||
Average loans(1) | 2,005,044 | 1,947,653 | 1,808,932 | 2.9 | 10.8 | |||||||||||||
Average deposits | 2,083,890 | 2,029,855 | 1,836,331 | 2.7 | 13.5 | |||||||||||||
Credit Quality: | ||||||||||||||||||
Nonperforming loans | $ | 10,412 | $ | 7,820 | $ | 4,343 | 33.1 | % | 139.7 | % | ||||||||
Nonperforming loans to gross loans | 0.51 | % | 0.40 | % | 0.24 | % | 0.11 | %p | 0.27 | %p | ||||||||
Criticized loans(2) to gross loans | 1.13 | 1.00 | 0.64 | 0.13 | 0.49 | |||||||||||||
Net charge-offs(3) to average gross loans(1) | 0.02 | 0.00 | 0.01 | 0.02 | 0.01 | |||||||||||||
Allowance for credit losses to gross loans | 1.24 | 1.27 | 1.23 | (0.03 | ) | 0.01 | ||||||||||||
Allowance for credit losses to nonperforming loans | 244 | 317 | 510 | (73 | ) | (266 | ) | |||||||||||
Financial Ratios: | ||||||||||||||||||
Return on average assets(3) | 0.92 | % | 0.84 | % | 0.96 | % | 0.08 | %p | (0.04 | )%p | ||||||||
Return on average equity(3) | 10.73 | 9.75 | 10.83 | 0.98 | (0.10 | ) | ||||||||||||
Net interest margin(3) | 3.01 | 2.96 | 3.06 | 0.05 | (0.05 | ) | ||||||||||||
Efficiency ratio(4) | 62.13 | 61.52 | 62.14 | 0.61 | (0.01 | ) | ||||||||||||
Common equity tier 1 capital ratio | 11.08 | 11.35 | 12.34 | (0.27 | ) | (1.26 | ) | |||||||||||
Leverage ratio | 9.22 | 9.27 | 9.65 | (0.05 | ) | (0.43 | ) | |||||||||||
Book value per common share | $ | 14.09 | $ | 13.83 | $ | 13.00 | 1.9 | % | 8.4 | % | ||||||||
| (1) | Includes loans held for sale. |
| (2) | Includes Special Mention, Substandard, Doubtful, and Loss categories. |
| (3) | Annualized. |
| (4) | Represents noninterest expense divided by the sum of net interest income and noninterest income. |
INCOME STATEMENT HIGHLIGHTS
Net Interest Income and Net Interest Margin
($ in thousands) | For the Three Months Ended | % Change 1Q2025 vs. | |||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | 4Q2024 | 1Q2024 | |||||||||||
Interest Income | |||||||||||||||
Interest income | $ | 34,859 | $ | 35,051 | $ | 32,913 | (0.5 | )% | 5.9 | % | |||||
Interest expense | 17,441 | 18,122 | 16,934 | (3.8 | ) | 3.0 | |||||||||
Net interest income | $ | 17,418 | $ | 16,929 | $ | 15,979 | 2.9 | % | 9.0 | % | |||||
($ in thousands) | For the Three Months Ended | Yield Change 1Q2025 vs. | |||||||||||||||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | |||||||||||||||||||||||||
Interest
| Yield/Rate(1) | Interest
| Yield/Rate(1) | Interest
| Yield/Rate(1) | 4Q2024 | 1Q2024 | ||||||||||||||||||||
Interest-earning Assets: | |||||||||||||||||||||||||||
Loans | $ | 31,689 | 6.39 | % | $ | 31,729 | 6.49 | % | $ | 30,142 | 6.69 | % | (0.10 | )% | (0.30 | )% | |||||||||||
Total interest-earning assets | 34,859 | 6.04 | 35,051 | 6.12 | 32,913 | 6.32 | (0.08 | ) | (0.28 | ) | |||||||||||||||||
Interest-bearing Liabilities: | |||||||||||||||||||||||||||
Interest-bearing deposits | 16,608 | 4.31 | 17,182 | 4.60 | 15,675 | 4.77 | (0.29 | ) | (0.46 | ) | |||||||||||||||||
Total interest-bearing liabilities | 17,441 | 4.31 | 18,122 | 4.58 | 16,934 | 4.76 | (0.27 | ) | (0.45 | ) | |||||||||||||||||
Ratios: | |||||||||||||||||||||||||||
Net interest income / interest rate spreads | 17,418 | 1.73 | 16,929 | 1.54 | 15,979 | 1.56 | 0.19 | 0.17 | |||||||||||||||||||
Net interest margin | 3.01 | 2.96 | 3.06 | 0.05 | (0.05 | ) | |||||||||||||||||||||
Total deposits / cost of deposits | 16,608 | 3.23 | 17,182 | 3.37 | 15,675 | 3.43 | (0.14 | ) | (0.20 | ) | |||||||||||||||||
Total funding liabilities / cost of funds | 17,441 | 3.27 | 18,122 | 3.41 | 16,934 | 3.50 | (0.14 | ) | (0.23 | ) | |||||||||||||||||
| (1) Annualized. | |||||||||||||||||||||||||||
($ in thousands) | For the Three Months Ended | Yield Change 1Q2025 vs. | |||||||||||||||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | |||||||||||||||||||||||||
Interest
| Yield(1) | Interest
| Yield(1) | Interest
| Yield(1) | 4Q2024 | 1Q2024 | ||||||||||||||||||||
Loan Yield Component: | |||||||||||||||||||||||||||
Contractual interest rate | $ | 31,240 | 6.30 | % | $ | 31,406 | 6.42 | % | $ | 28,877 | 6.41 | % | (0.12 | )% | (0.11 | )% | |||||||||||
Accretion of SBA loan discount(2) | 683 | 0.14 | 813 | 0.17 | 881 | 0.20 | (0.03 | ) | (0.06 | ) | |||||||||||||||||
Amortization of net deferred fees | (106 | ) | (0.02 | ) | (47 | ) | (0.01 | ) | 54 | 0.01 | (0.01 | ) | (0.03 | ) | |||||||||||||
Amortization of premium | (490 | ) | (0.10 | ) | (363 | ) | (0.07 | ) | (428 | ) | (0.10 | ) | (0.03 | ) | — | ||||||||||||
Net interest recognized on nonaccrual loans | 43 | 0.01 | (232 | ) | (0.05 | ) | 492 | 0.11 | 0.06 | (0.10 | ) | ||||||||||||||||
Prepayment penalty income and other fees(3) | 319 | 0.06 | 152 | 0.03 | 266 | 0.06 | 0.03 | — | |||||||||||||||||||
Yield on loans | $ | 31,689 | 6.39 | % | $ | 31,729 | 6.49 | % | $ | 30,142 | 6.69 | % | (0.10 | )% | (0.30 | )% | |||||||||||
(1) | Annualized. |
(2) | Includes discount accretion from SBA loan payoffs of $329 thousand, $329 thousand and $345 thousand for the three months ended March 31, 2025, December 31, 2024 and March 31, 2024, respectively. |
(3) | Includes prepayment penalty income of $45 thousand, $45 thousand and $115 thousand for the three months ended March 31, 2025, December 31, 2024 and March 31, 2024, respectively, from Commercial Real Estate (“CRE”) loans. |
First Quarter 2025 vs. Fourth Quarter 2024
Net interest income increased $489 thousand, or 2.9%, 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 through December 2024. Net interest margin was 3.01%, an increase of 5 basis points from 2.96%.
- A $574 thousand decrease in interest expense on interest-bearing deposits was primarily due to a 29 basis point decrease in average cost of interest-bearing deposits.
- A $40 thousand decrease in interest income on loans was primarily due to a 10 basis point decrease in average yield on loans.
First Quarter 2025 vs. First Quarter 2024
Net interest income increased $1.4 million, or 9.0%, as higher interest income from a $240.6 million, or 11.5%, increase in average earning assets (loans and interest-bearing deposits in other banks) surpassed higher interest expense from a $210.3 million, or 14.7%, increase in average interest-bearing liabilities (deposits and borrowings). Net interest margin, however, decreased 5 basis points to 3.01% from 3.06%, 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.
- A $1.5 million increase in interest income on loans was primarily due to a $196.1 million, or 10.8%, increase in average balance, partially offset by a 30 basis point decrease in average yield.
- A $383 thousand increase in interest income on interest-bearing deposits in other banks was primarily due to a $51.0 million increase in average balance, partially offset by a 93 basis point decrease in average yield.
- A $933 thousand increase in interest expense on interest-bearing deposits was primarily due to a $240.0 million, or 18.2%, increase in average balance, partially offset by a 46 basis point decrease in average cost.
- A $426 thousand decrease in interest expense on borrowings was primarily due to a $30 million, or 27.4%, decrease in average balance and a 38 basis point decrease in average cost.
Provision for Credit Losses
($ in thousands) | For the Three Months Ended | ||||||||||
1Q2025 | 4Q2024 | 1Q2024 | |||||||||
Provision for credit losses on loans | $ | 687 | $ | 1,859 | $ | 193 | |||||
Provision for (reversal of) credit losses on off-balance sheet exposure | 49 | (312 | ) | (48 | ) | ||||||
Total provision for credit losses | $ | 736 | $ | 1,547 | $ | 145 | |||||
First Quarter 2025 vs. Fourth Quarter 2024
The Company recorded $736 thousand in total provision for credit losses, a decrease of $811 thousand, compared with $1.5 million. Provision for credit losses on loans decreased $1.2 million and provision for credit losses on off-balance sheet exposure increased $361 thousand.
Provision for credit losses on loans of $687 thousand was primarily due to an $87.0 million, or 4.4%, increase in loan balances. Home mortgage and CRE loans increased $43.0 million, or 4.4%, and $50.0 million, or 9.8%, respectively, in the first quarter of 2025.
Provision of credit losses on off-balance sheet exposure of $49 thousand was primarily due to an increase in unfunded balance of loans.
First Quarter 2025 vs. First Quarter 2024
The Company recorded $736 thousand in total provision for credit losses, an increase of $591 thousand, compared with $145 thousand. Provision for credit losses on loans increased $494 thousand and provision for credit losses on off-balance sheet exposure increased $97 thousand.
Noninterest Income
($ in thousands) | For the Three Months Ended | % Change 1Q2025 vs. | |||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | 4Q2024 | 1Q2024 | |||||||||||
Noninterest Income | |||||||||||||||
Service charges on deposits | $ | 1,000 | $ | 967 | $ | 612 | 3.4 | % | 63.4 | % | |||||
Loan servicing fees, net of amortization | 1,007 | 858 | 772 | 17.4 | 30.4 | ||||||||||
Gain on sale of loans | 2,019 | 2,197 | 1,703 | (8.1 | ) | 18.6 | |||||||||
Other income | 790 | 395 | 499 | 100.0 | 58.3 | ||||||||||
Total noninterest income | $ | 4,816 | $ | 4,417 | $ | 3,586 | 9.0 | % | 34.3 | % | |||||
First Quarter 2025 vs. Fourth Quarter 2024
Noninterest income increased $399 thousand, or 9.0%, primarily due to higher other income and loan servicing fees, partially offset by lower gain on sale of loans.
- Other income was $790 thousand, an increase of $395 thousand from $395 thousand, primarily due to an increase in credit related fees collected and a decrease in unrealized loss of CRA-qualified mutual funds driven by market interest rate changes.
- Loan servicing fees, net of amortization, were $1.0 million, an increase of $149 thousand from $858 thousand, primarily due to a decrease in servicing fee amortization driven by lower loan payoffs in loan servicing portfolio.
- Gain on sale of loans was $2.0 million, a decrease of $178 thousand from $2.2 million, primarily due to a lower sold amount partially offset by a higher average premium on sales. The Bank sold $31.1 million in SBA loans at an average premium rate of 8.08%, compared to the sale of $34.7 million at an average premium rate of 7.82%.
First Quarter 2025 vs. First Quarter 2024
Noninterest income increased $1.2 million, or 34.3%, primarily due to higher service charges on deposits, loan servicing fees, gain on sale of loans, and other income.
- Service charges on deposits were $1.0 million, an increase of $388 thousand from $612 thousand, primarily due to an increase in deposit analysis fees from an increase in the number of analysis accounts.
- Loan servicing fees were $1.0 million, an increase of $235 thousand from $772 thousand, primarily due to a decrease in servicing fee amortization driven by lower loan payoffs in loan servicing portfolio.
- Gain on sale of loans was $2.0 million, an increase of $316 thousand from $1.7 million, primarily due to a higher sold amount partially offset by a lower average premium rate. The Bank sold $31.1 million in SBA loans at an average premium rate of 8.08%, compared to the sale of $24.8 million at an average premium rate of 8.33%.
- Other income was $790 thousand, an increase of $291 thousand from $499 thousand, primarily due to an increase in credit related fees collected and a decrease in unrealized loss of CRA-qualified mutual fund driven by market interest rate changes.
Noninterest Expense
($ in thousands) | For the Three Months Ended | % Change 1Q2025 vs. | |||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | 4Q2024 | 1Q2024 | |||||||||||
Noninterest Expense | |||||||||||||||
Salaries and employee benefits | $ | 8,776 | $ | 8,277 | $ | 7,841 | 6.0 | % | 11.9 | % | |||||
Occupancy and equipment | 1,581 | 1,682 | 1,655 | (6.0 | ) | (4.5 | ) | ||||||||
Data processing and communication | 296 | 594 | 487 | (50.2 | ) | (39.2 | ) | ||||||||
Professional fees | 407 | 388 | 395 | 4.9 | 3.0 | ||||||||||
FDIC insurance and regulatory assessments | 487 | 529 | 374 | (7.9 | ) | 30.2 | |||||||||
Promotion and advertising | 156 | 82 | 149 | 90.2 | 4.7 | ||||||||||
Directors’ fees | 180 | 151 | 157 | 19.2 | 14.6 | ||||||||||
Foundation donation and other contributions | 556 | 480 | 540 | 15.8 | 3.0 | ||||||||||
Other expenses | 1,375 | 950 | 559 | 44.7 | 146.0 | ||||||||||
Total noninterest expense | $ | 13,814 | $ | 13,133 | $ | 12,157 | 5.2 | % | 13.6 | % | |||||
First Quarter 2025 vs. Fourth Quarter 2024
Noninterest expense increased $681 thousand, or 5.2%, primarily due to higher salaries and employee benefits and other expenses, partially offset by lower data processing and communication.
- Salaries and employee benefits increased $499 thousand, primarily due to an increase in employee salaries as a result of an increase in our employee headcount to 240 from 231.
- Other expenses increased $425 thousand, primarily due to an increase in credit related expenses.
- Data processing and communication decreased $298 thousand, primarily due to a reduction in data processing expenses following our core banking system change completed in the fourth quarter of 2024.
First Quarter 2025 vs. First Quarter 2024
Noninterest expense increased $1.7 million, or 13.6%, primarily due to higher salaries and employee benefits and other expenses, partially offset by lower data processing and communication.
- Salaries and employee benefits increased $935 thousand, primarily due to increases in salaries and employee benefits as our employee headcount increased to 240 from 228.
- Other expenses increased $816 thousand, primarily due to an increase in credit related expenses and an increase in customer services expenses related to the increase in the number of analysis accounts.
- Data processing and communication decreased $191 thousand, primarily due to a reduction in data processing expenses following our core banking system change completed in the fourth quarter of 2024.
Income Tax Expense
First Quarter 2025 vs. Fourth Quarter 2024
Income tax expense was $2.1 million, or an effective tax rate of 27.6%, compared to income tax expense of $1.7 million, or an effective tax rate of 25.4%. The increase in effective tax rate was primarily due to the absence of additional tax benefits from year-end tax provision adjustments in the fourth quarter of 2024.
First Quarter 2025 vs. First Quarter 2024
Income tax expense was $2.1 million, resulting in an effective tax rate of 27.6%, compared to income tax expense of $2.0 million, resulting in an effective tax rate of 28.0%. The decrease in effective tax rate was primarily due to tax benefits recognized from restricted stock awards vested in the first quarter of 2025.
BALANCE SHEET HIGHLIGHTS
Loans
($ in thousands) | As of | % Change 1Q2025 vs. | |||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | 4Q2024 | 1Q2024 | |||||||||||
CRE loans | $ | 1,023,278 | $ | 980,247 | $ | 905,534 | 4.4 | % | 13.0 | % | |||||
SBA loans | 258,778 | 253,710 | 247,550 | 2.0 | 4.5 | ||||||||||
C&I loans | 202,250 | 213,097 | 147,508 | (5.1 | ) | 37.1 | |||||||||
Home mortgage loans | 559,543 | 509,524 | 502,995 | 9.8 | 11.2 | ||||||||||
Consumer & other loans | 36 | 274 | 1,400 | (86.9 | ) | (97.4 | ) | ||||||||
Gross loans | $ | 2,043,885 | $ | 1,956,852 | $ | 1,804,987 | 4.4 | % | 13.2 | % | |||||
The following table presents new loan originations based on loan commitment amounts for the periods indicated:
($ in thousands) | For the Three Months Ended | % Change 1Q2025 vs. | |||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | 4Q2024 | 1Q2024 | |||||||||||
CRE loans | $ | 58,105 | $ | 64,827 | $ | 44,595 | (10.4 | )% | 30.3 | % | |||||
SBA loans | 45,899 | 36,810 | 52,379 | 24.7 | (12.4 | ) | |||||||||
C&I loans | 28,197 | 7,783 | 22,124 | 262.3 | 27.4 | ||||||||||
Home mortgage loans | 73,375 | 17,937 | 2,478 | 309.1 | 2861.1 | ||||||||||
Consumer & other loans | 200 | — | — | — | — | ||||||||||
Gross loans | $ | 205,776 | $ | 127,357 | $ | 121,576 | 61.6 | % | 69.3 | % | |||||
The following table presents changes in gross loans by loan activity for the periods indicated:
($ in thousands) | For the Three Months Ended | |||||||||||
1Q2025 | 4Q2024 | 1Q2024 | ||||||||||
Loan Activities: | ||||||||||||
Gross loans, beginning | $ | 1,956,852 | $ | 1,931,007 | $ | 1,765,845 | ||||||
New originations | 205,776 | 127,357 | 121,576 | |||||||||
Purchases | — | — | — | |||||||||
Sales | (31,068 | ) | (34,715 | ) | (24,820 | ) | ||||||
Payoffs & paydowns | (87,701 | ) | (70,375 | ) | (43,334 | ) | ||||||
Decrease (increase) in loans held for sale | 26 | 3,578 | (14,280 | ) | ||||||||
Total | 87,033 | 25,845 | 39,142 | |||||||||
Gross loans, ending | $ | 2,043,885 | $ | 1,956,852 | $ | 1,804,987 | ||||||
As of March 31, 2025 vs. December 31, 2024
Gross loans were $2.04 billion as of March 31, 2025, an increase of $87.0 million, or 4.4%, from December 31, 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 $205.8 million, $31.1 million, and $87.7 million, respectively, for the first quarter of 2025, compared with $127.4 million, $34.7 million, and $70.4 million, respectively, for the fourth quarter of 2024.
As of March 31, 2025 vs. March 31, 2024
Gross loans were $2.04 billion as of March 31, 2025, an increase of $238.9 million, or 13.2%, from March 31, 2024, primarily due to an increase in new loan originations of $587.0 million, partially offset by loan sales of $133.5 million and loan payoffs and paydowns of $232.5 million.
The following table presents the composition of gross loans by interest rate type accompanied with the weighted average contractual rates as of the periods indicated:
($ in thousands) | As of | |||||||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | ||||||||||||||||
% | Rate | % | Rate | % | Rate | |||||||||||||
Fixed rate | 32.8 | % | 5.55 | % | 33.2 | % | 5.44 | % | 35.1 | % | 5.17 | % | ||||||
Hybrid rate | 37.4 | 5.71 | 37.0 | 5.66 | 32.8 | 5.22 | ||||||||||||
Variable rate | 29.8 | 8.20 | 29.8 | 8.47 | 32.1 | 9.16 | ||||||||||||
Gross loans | 100.0 | % | 6.40 | % | 100.0 | % | 6.43 | % | 100.0 | % | 6.47 | % | ||||||
The following table presents the maturity of gross loans by interest rate type accompanied with the weighted average contractual rates for the periods indicated:
($ in thousands) | As of March 31, 2025 | |||||||||||||||||||||||
Within One Year | One Year Through
| After Five Years | Total | |||||||||||||||||||||
Amount | Rate | Amount | Rate | Amount | Rate | Amount | Rate | |||||||||||||||||
Fixed rate | $ | 172,311 | 5.89 | % | $ | 297,273 | 5.69 | % | $ | 201,461 | 5.06 | % | $ | 671,045 | 5.55 | % | ||||||||
Hybrid rate | — | — | 206,392 | 4.44 | 556,909 | 6.18 | 763,301 | 5.71 | ||||||||||||||||
Variable rate | 85,532 | 7.90 | 151,942 | 7.87 | 372,065 | 8.40 | 609,539 | 8.20 | ||||||||||||||||
Gross loans | $ | 257,843 | 6.55 | % | $ | 655,607 | 5.80 | % | $ | 1,130,435 | 6.71 | % | $ | 2,043,885 | 6.40 | % | ||||||||
Allowance for Credit Losses
The following table presents allowance for credit losses and provision for credit losses as of and for the periods presented:
($ in thousands) | As of and For the Three Months Ended | Change 1Q2025 vs. | ||||||||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | 4Q2024 | 1Q2024 | ||||||||||||||||
Allowance for credit losses on loans, beginning | $ | 24,796 | $ | 22,960 | $ | 21,993 | $ | 1,836 | $ | 2,803 | ||||||||||
Provision for credit losses | 687 | 1,859 | 193 | (1,172 | ) | 494 | ||||||||||||||
Gross charge-offs | (130 | ) | (29 | ) | (68 | ) | (101 | ) | (62 | ) | ||||||||||
Gross recoveries | 15 | 6 | 11 | 9 | 4 | |||||||||||||||
Net charge-offs | (115 | ) | (23 | ) | (57 | ) | (92 | ) | (58 | ) | ||||||||||
Allowance for credit losses on loans, ending | $ | 25,368 | $ | 24,796 | $ | 22,129 | $ | 572 | $ | 3,239 | ||||||||||
Allowance for credit losses on off-balance sheet exposure, beginning | $ | 360 | $ | 672 | $ | 516 | $ | (312 | ) | $ | (156 | ) | ||||||||
Provision for (reversal of) credit losses | 49 | (312 | ) | (48 | ) | 361 | 97 | |||||||||||||
Allowance for credit losses on off-balance sheet exposure, ending | $ | 409 | $ | 360 | $ | 468 | $ | 49 | $ | (59 | ) | |||||||||
Asset Quality
($ in thousands) | As of and For the Three Months Ended | Change 1Q2025 vs. | ||||||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | 4Q2024 | 1Q2024 | ||||||||||||||
Loans 30-89 days past due and still accruing | $ | 6,452 | $ | 8,964 | $ | 3,904 | (28.0 | )% | 65.3 | % | ||||||||
As a % of gross loans | 0.32 | % | 0.46 | % | 0.22 | % | (0.14 | )%p | 0.10 | %p | ||||||||
Nonperforming loans(1) | $ | 10,412 | $ | 7,820 | $ | 4,343 | 33.1 | % | 139.7 | % | ||||||||
Nonperforming assets(1) | 11,649 | 9,057 | 5,580 | 28.6 | 108.8 | |||||||||||||
Nonperforming loans to gross loans | 0.51 | % | 0.40 | % | 0.24 | % | 0.11 | %p | 0.27 | %p | ||||||||
Nonperforming assets to total assets | 0.46 | 0.38 | 0.25 | 0.08 | 0.21 | |||||||||||||
Criticized loans(2)(3) | $ | 23,055 | $ | 19,570 | $ | 11,564 | 17.8 | % | 99.4 | % | ||||||||
Criticized loans to gross loans | 1.13 | % | 1.00 | % | 0.64 | % | 0.13 | %p | 0.49 | %p | ||||||||
Allowance for credit losses ratios: | ||||||||||||||||||
As a % of gross loans | 1.24 | % | 1.27 | % | 1.23 | % | (0.03 | )%p | 0.01 | %p | ||||||||
As a % of nonperforming loans | 244 | 317 | 510 | (73 | ) | (266 | ) | |||||||||||
As a % of nonperforming assets | 218 | 274 | 397 | (56 | ) | (179 | ) | |||||||||||
As a % of criticized loans | 110 | 127 | 191 | (17 | ) | (81 | ) | |||||||||||
Net charge-offs(4) to average gross loans(5) | 0.02 | 0.00 | 0.01 | 0.02 | 0.01 | |||||||||||||
(1) | Excludes the guaranteed portion of loans that are in liquidation totaling $14.3 million, $16.3 million and $3.1 million as of March 31, 2025, December 31, 2024 and March 31, 2024, respectively. |
(2) | Excludes the guaranteed portion of loans that are in liquidation totaling $17.2 million, $16.3 million and $3.1 million as of March 31, 2025, December 31, 2024 and March 31, 2024, respectively. |
(3) | Consists of Special Mention, Substandard, Doubtful and Loss categories. |
(4) | Annualized. |
(5) | Includes loans held for sale. |
Overall, the Bank’s nonperforming loans and net charge-offs remained relatively low. Our allowance remained adequate with an allowance to gross loans ratio of 1.24%.
- Loans 30-89 days past due and still accruing were $6.5 million or 0.32% of gross loans as of March 31, 2025, compared with $9.0 million or 0.46% as of December 31, 2024.
- Nonperforming loans were $10.4 million or 0.51% of gross loans as of March 31, 2025, compared with $7.8 million or 0.40% as of December 31, 2024. The increase of $2.6 million was primarily due to two home mortgage loans totaling $2.1 million. No loss is expected from the loans owing to sufficient equity in the collateral properties. One of the properties is currently in escrow for sale, and the other is listed on the market for sale.
- Nonperforming assets were $11.6 million or 0.46% of total assets as of March 31, 2025, compared with $9.1 million or 0.38% as of December 31, 2024. OREO remained the same at $1.2 million as of March 31, 2025 and December 31, 2024, which is secured by a mix-use property in Los Angeles Koreatown.
- Criticized loans were $23.1 million or 1.13% of gross loans as of March 31, 2025, compared with $19.6 million or 1.00% as of December 31, 2024. The increase was primarily due to the aforementioned two home mortgage loans and an SBA loan extended to finance construction of a full-service restaurant in Santa Monica, CA, by an experienced multi-store restaurant owner/operator. The SBA loan is performing, but it was downgraded to Special Mention to account for a longer period needed to complete the construction.
- Net charge-offs were $115 thousand or 0.02% of average loans in the first quarter of 2025, compared to net charge-offs of $23 thousand, or 0.00% of average loans in the fourth quarter of 2024 and net charge-offs of $57 thousand, or 0.01% of average loans in the first quarter of 2024.
Deposits
($ in thousands) | As of | % Change 1Q2025 vs. | ||||||||||||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | ||||||||||||||||||||||
Amount | % | Amount | % | Amount | % | 4Q2024 | 1Q2024 | |||||||||||||||||
Noninterest-bearing deposits | $ | 552,797 | 25.2 | % | $ | 504,928 | 24.9 | % | $ | 539,396 | 28.5 | % | 9.5 | % | 2.5 | % | ||||||||
Money market deposits and others | 385,080 | 17.6 | 329,095 | 16.2 | 327,718 | 17.3 | 17.0 | 17.5 | ||||||||||||||||
Time deposits | 1,251,994 | 57.2 | 1,193,262 | 58.9 | 1,028,297 | 54.2 | 4.9 | 21.8 | ||||||||||||||||
Total deposits | $ | 2,189,871 | 100.0 | % | $ | 2,027,285 | 100.0 | % | $ | 1,895,411 | 100.0 | % | 8.0 | % | 15.5 | % | ||||||||
Estimated uninsured deposits | $ | 1,072,753 | 49.0 | % | $ | 961,687 | 47.4 | % | $ | 805,523 | 42.5 | % | 11.5 | % | 33.2 | % | ||||||||
As of March 31, 2025 vs. December 31, 2024
Total deposits were $2.19 billion as of March 31, 2025, reflecting an increase of $162.6 million or 8.0% from December 31, 2024, primarily due to increases of $47.9 million in noninterest-bearing deposits, $56.0 million in money market deposits, and $58.7 million in time deposits. Customers’ preference for high-rate deposit products continued to drive the increase in time deposits and money market deposits. Even with the elevated uncertainty on economic and business outlook in the first quarter of 2025, noninterest-bearing deposits recovered fully from the temporary low balance as of December 31, 2024 continuing the upward trend started from January 2024.
As of March 31, 2025 vs. March 31, 2024
Total deposits were $2.19 billion as of March 31, 2025, an increase of $294.5 million from March 31, 2024, primarily driven by a $223.7 million increase in time deposits and a $57.4 million increase in money market deposits, and a $13.4 million increase in noninterest-bearing deposits. Noninterest-bearing deposits, as a percentage of total deposits, decreased to 25.2% from 28.5%. The composition shift to time deposits was primarily due to customers’ continued preference for high-rate time deposit products in anticipation of the Federal Reserve’s rate cuts in the next few years.
The following table sets forth the maturity of time deposits as of March 31, 2025:
As of March 31, 2025 | ||||||||||||||||||||||||
($ in thousands) | Within Three
| Three to
| Six to
| Nine to
| After
| Total | ||||||||||||||||||
Time deposits (greater than $250) | $ | 178,030 | $ | 158,269 | $ | 130,971 | $ | 143,513 | $ | — | $ | 610,783 | ||||||||||||
Time deposits ($250 or less) | 206,734 | 172,099 | 143,847 | 116,009 | 2,522 | 641,211 | ||||||||||||||||||
Total time deposits | $ | 384,764 | $ | 330,368 | $ | 274,818 | $ | 259,522 | $ | 2,522 | $ | 1,251,994 | ||||||||||||
Weighted average rate | 4.68 | % | 4.60 | % | 4.26 | % | 4.24 | % | 2.83 | % | 4.47 | % | ||||||||||||
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:
($ in thousands) | 1Q2025 | 4Q2024 | 1Q2024 | |||||||||
Liquidity Assets: | ||||||||||||
Cash and cash equivalents | $ | 198,861 | $ | 134,943 | $ | 139,246 | ||||||
Available-for-sale debt securities | 182,480 | 185,909 | 187,225 | |||||||||
Liquid assets | $ | 381,341 | $ | 320,852 | $ | 326,471 | ||||||
Liquid assets to total assets | 15.2 | % | 13.6 | % | 14.6 | % | ||||||
Available Borrowings: | ||||||||||||
Federal Home Loan Bank—San Francisco | $ | 381,456 | $ | 401,900 | $ | 331,917 | ||||||
Federal Reserve Bank | 217,563 | 215,115 | 185,913 | |||||||||
Pacific Coast Bankers Bank | 50,000 | 50,000 | 50,000 | |||||||||
Zions Bank | 25,000 | 25,000 | 25,000 | |||||||||
First Horizon Bank | 25,000 | 25,000 | 25,000 | |||||||||
Total available borrowings | $ | 699,019 | $ | 717,015 | $ | 617,830 | ||||||
Total available borrowings to total assets | 27.8 | % | 30.3 | % | 27.6 | % | ||||||
Liquid assets and available borrowings to total deposits | 49.3 | % | 51.2 | % | 49.8 | % | ||||||
Capital and Capital Ratios
On April 24, 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 May 22, 2025 to all shareholders of record as of the close of business on May 8, 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 first quarter of 2025. Since the announcement of the stock repurchase program in August 2023, the Company has repurchased a total of 428,628 shares of our common stock at an average repurchase price of $9.37 per share through March 31, 2025.
OP Bancorp(1) | Open Bank | Minimum Well
| Minimum
| |||||||||
Risk-Based Capital Ratios: | ||||||||||||
Total risk-based capital ratio | 12.33 | % | 12.24 | % | 10.00 | % | 10.50 | % | ||||
Tier 1 risk-based capital ratio | 11.08 | 10.99 | 8.00 | 8.50 | ||||||||
Common equity tier 1 ratio | 11.08 | 10.99 | 6.50 | 7.00 | ||||||||
Leverage ratio | 9.22 | 9.15 | 5.00 | 4.00 | ||||||||
(1) | The capital requirements are only applicable to the Bank, and the Company's ratios are included for comparison purpose. |
(2) | An additional 2.5% capital conservation buffer above the minimum capital ratios are required in order to avoid limitations on distributions, including dividend payments and certain discretionary bonuses to executive officers. This buffer does not apply and is not included in the leverage ratio. |
OP Bancorp | Change 1Q2025 vs. | |||||||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | 4Q2024 | 1Q2024 | ||||||||||||||
Risk-Based Capital Ratios: | ||||||||||||||||||
Total risk-based capital ratio | 12.33 | % | 12.60 | % | 13.59 | % | (0.27 | )%p | (1.26 | )%p | ||||||||
Tier 1 risk-based capital ratio | 11.08 | 11.35 | 12.34 | (0.27 | ) | (1.26 | ) | |||||||||||
Common equity tier 1 ratio | 11.08 | 11.35 | 12.34 | (0.27 | ) | (1.26 | ) | |||||||||||
Leverage ratio | 9.22 | 9.27 | 9.65 | (0.05 | ) | (0.43 | ) | |||||||||||
Risk-weighted Assets ($ in thousands) | $ | 2,014,615 | $ | 1,941,549 | $ | 1,715,186 | 3.76 | % | 17.46 | % | ||||||||
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)
($ in thousands) | As of | % Change 1Q2025 vs. | ||||||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | 4Q2024 | 1Q2024 | ||||||||||||||
Assets | ||||||||||||||||||
Cash and due from banks | $ | 12,575 | $ | 12,268 | $ | 20,513 | 2.5 | % | (38.7 | )% | ||||||||
Interest-bearing deposits in other banks | 186,286 | 122,675 | 118,733 | 51.9 | 56.9 | |||||||||||||
Cash and cash equivalents | 198,861 | 134,943 | 139,246 | 47.4 | 42.8 | |||||||||||||
Available-for-sale debt securities, at fair value | 182,480 | 185,909 | 187,225 | (1.8 | ) | (2.5 | ) | |||||||||||
Other investments | 16,517 | 16,437 | 16,264 | 0.5 | 1.6 | |||||||||||||
Loans held for sale | 4,555 | 4,581 | 16,075 | (0.6 | ) | (71.7 | ) | |||||||||||
CRE loans | 1,023,278 | 980,247 | 905,534 | 4.4 | 13.0 | |||||||||||||
SBA loans | 258,778 | 253,710 | 247,550 | 2.0 | 4.5 | |||||||||||||
C&I loans | 202,250 | 213,097 | 147,508 | (5.1 | ) | 37.1 | ||||||||||||
Home mortgage loans | 559,543 | 509,524 | 502,995 | 9.8 | 11.2 | |||||||||||||
Consumer loans | 36 | 274 | 1,400 | (86.9 | ) | (97.4 | ) | |||||||||||
Gross loans receivable | 2,043,885 | 1,956,852 | 1,804,987 | 4.4 | 13.2 | |||||||||||||
Allowance for credit losses | (25,368 | ) | (24,796 | ) | (22,129 | ) | 2.3 | 14.6 | ||||||||||
Net loans receivable | 2,018,517 | 1,932,056 | 1,782,858 | 4.5 | 13.2 | |||||||||||||
Premises and equipment, net | 6,526 | 5,449 | 4,971 | 19.8 | 31.3 | |||||||||||||
Accrued interest receivable, net | 9,871 | 9,188 | 8,370 | 7.4 | 17.9 | |||||||||||||
Servicing assets | 10,848 | 10,834 | 11,405 | 0.1 | (4.9 | ) | ||||||||||||
Company owned life insurance | 23,084 | 22,912 | 22,399 | 0.8 | 3.1 | |||||||||||||
Deferred tax assets, net | 13,183 | 14,893 | 13,802 | (11.5 | ) | (4.5 | ) | |||||||||||
Other real estate owned | 1,237 | 1,237 | 1,237 | — | — | |||||||||||||
Operating right-of-use assets | 6,930 | 7,415 | 8,864 | (6.5 | ) | (21.8 | ) | |||||||||||
Other assets | 20,362 | 20,159 | 21,804 | 1.0 | (6.6 | ) | ||||||||||||
Total assets | $ | 2,512,971 | $ | 2,366,013 | $ | 2,234,520 | 6.2 | % | 12.5 | % | ||||||||
Liabilities and Shareholders' Equity | ||||||||||||||||||
Liabilities: | ||||||||||||||||||
Noninterest-bearing | $ | 552,797 | $ | 504,928 | $ | 539,396 | 9.5 | % | 2.5 | % | ||||||||
Money market and others | 385,080 | 329,095 | 327,718 | 17.0 | 17.5 | |||||||||||||
Time deposits greater than $250 | 610,783 | 565,813 | 451,497 | 7.9 | 35.3 | |||||||||||||
Other time deposits | 641,211 | 627,449 | 576,800 | 2.2 | 11.2 | |||||||||||||
Total deposits | 2,189,871 | 2,027,285 | 1,895,411 | 8.0 | 15.5 | |||||||||||||
Federal Home Loan Bank advances | 75,000 | 95,000 | 105,000 | (21.1 | ) | (28.6 | ) | |||||||||||
Accrued interest payable | 14,994 | 16,067 | 12,270 | (6.7 | ) | 22.2 | ||||||||||||
Operating lease liabilities | 9,193 | 7,857 | 9,614 | 17.0 | (4.4 | ) | ||||||||||||
Other liabilities | 13,824 | 14,811 | 17,500 | (6.7 | ) | (21.0 | ) | |||||||||||
Total liabilities | 2,302,882 | 2,161,020 | 2,039,795 | 6.6 | 12.9 | |||||||||||||
Shareholders' equity: | ||||||||||||||||||
Common stock | 73,697 | 73,697 | 75,957 | — | (3.0 | ) | ||||||||||||
Additional paid-in capital | 11,371 | 11,928 | 11,240 | (4.7 | ) | 1.2 | ||||||||||||
Retained earnings | 138,563 | 134,781 | 124,280 | 2.8 | 11.5 | |||||||||||||
Accumulated other comprehensive loss | (13,542 | ) | (15,413 | ) | (16,752 | ) | (12.1 | ) | (19.2 | ) | ||||||||
Total shareholders’ equity | 210,089 | 204,993 | 194,725 | 2.5 | 7.9 | |||||||||||||
Total liabilities and shareholders' equity | $ | 2,512,971 | $ | 2,366,013 | $ | 2,234,520 | 6.2 | % | 12.5 | % | ||||||||
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
($ in thousands, except share and per share data) | For the Three Months Ended | % Change 1Q2025 vs. | ||||||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | 4Q2024 | 1Q2024 | ||||||||||||||
Interest income | ||||||||||||||||||
Interest and fees on loans | $ | 31,689 | $ | 31,729 | $ | 30,142 | (0.1 | )% | 5.1 | % | ||||||||
Interest on available-for-sale debt securities | 1,496 | 1,551 | 1,460 | (3.5 | ) | 2.5 | ||||||||||||
Other interest income | 1,674 | 1,771 | 1,311 | (5.5 | ) | 27.7 | ||||||||||||
Total interest income | 34,859 | 35,051 | 32,913 | (0.5 | ) | 5.9 | ||||||||||||
Interest expense | ||||||||||||||||||
Interest on deposits | 16,608 | 17,182 | 15,675 | (3.3 | ) | 6.0 | ||||||||||||
Interest on borrowings | 833 | 940 | 1,259 | (11.4 | ) | (33.8 | )% | |||||||||||
Total interest expense | 17,441 | 18,122 | 16,934 | (3.8 | ) | 3.0 | ||||||||||||
Net interest income | 17,418 | 16,929 | 15,979 | 2.9 | 9.0 | |||||||||||||
Provision for credit losses | 736 | 1,547 | 145 | (52.4 | ) | 407.6 | ||||||||||||
Net interest income after provision for credit losses | 16,682 | 15,382 | 15,834 | 8.5 | 5.4 | |||||||||||||
Noninterest income | ||||||||||||||||||
Service charges on deposits | 1,000 | 967 | 612 | 3.4 | 63.4 | |||||||||||||
Loan servicing fees, net of amortization | 1,007 | 858 | 772 | 17.4 | 30.4 | |||||||||||||
Gain on sale of loans | 2,019 | 2,197 | 1,703 | (8.1 | ) | 18.6 | ||||||||||||
Other income | 790 | 395 | 499 | 100.0 | 58.3 | |||||||||||||
Total noninterest income | 4,816 | 4,417 | 3,586 | 9.0 | 34.3 | |||||||||||||
Noninterest expense | ||||||||||||||||||
Salaries and employee benefits | 8,776 | 8,277 | 7,841 | 6.0 | 11.9 | |||||||||||||
Occupancy and equipment | 1,581 | 1,682 | 1,655 | (6.0 | ) | (4.5 | ) | |||||||||||
Data processing and communication | 296 | 594 | 487 | (50.2 | ) | (39.2 | ) | |||||||||||
Professional fees | 407 | 388 | 395 | 4.9 | 3.0 | |||||||||||||
FDIC insurance and regulatory assessments | 487 | 529 | 374 | (7.9 | ) | 30.2 | ||||||||||||
Promotion and advertising | 156 | 82 | 149 | 90.2 | 4.7 | |||||||||||||
Directors’ fees | 180 | 151 | 157 | 19.2 | 14.6 | |||||||||||||
Foundation donation and other contributions | 556 | 480 | 540 | 15.8 | 3.0 | |||||||||||||
Other expenses | 1,375 | 950 | 559 | 44.7 | 146.0 | |||||||||||||
Total noninterest expense | 13,814 | 13,133 | 12,157 | 5.2 | 13.6 | |||||||||||||
Income before income tax expense | 7,684 | 6,666 | 7,263 | 15.3 | 5.8 | |||||||||||||
Income tax expense | 2,124 | 1,695 | 2,037 | 25.3 | 4.3 | |||||||||||||
Net income | $ | 5,560 | $ | 4,971 | $ | 5,226 | 11.8 | % | 6.4 | % | ||||||||
Book value per share | $ | 14.09 | $ | 13.83 | $ | 13.00 | 1.9 | % | 8.4 | % | ||||||||
Earnings per share - basic | 0.37 | 0.33 | 0.34 | 12.1 | 8.8 | |||||||||||||
Earnings per share - diluted | 0.37 | 0.33 | 0.34 | 12.1 | 8.8 | |||||||||||||
Shares of common stock outstanding, at period end | 14,914,261 | 14,819,866 | 14,982,555 | 0.6 | % | (0.5 | )% | |||||||||||
Weighted average shares: | ||||||||||||||||||
- Basic | 14,857,234 | 14,816,416 | 14,991,835 | 0.3 | % | (0.9 | )% | |||||||||||
- Diluted | 14,857,234 | 14,816,416 | 14,991,835 | 0.3 | (0.9 | ) | ||||||||||||
KEY RATIOS
For the Three Months Ended | Change 1Q2025 vs. | ||||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | 4Q2024 | 1Q2024 | |||||||||||
Return on average assets (ROA)(1) | 0.92 | % | 0.84 | % | 0.96 | % | 0.08 | %p | (0.04 | )%p | |||||
Return on average equity (ROE)(1) | 10.73 | 9.75 | 10.83 | 0.98 | (0.10 | ) | |||||||||
Net interest margin(1) | 3.01 | 2.96 | 3.06 | 0.05 | (0.05 | ) | |||||||||
Efficiency ratio | 62.13 | 61.52 | 62.14 | 0.61 | (0.01 | ) | |||||||||
Total risk-based capital ratio | 12.33 | % | 12.60 | % | 13.59 | % | (0.27 | )%p | (1.26 | )%p | |||||
Tier 1 risk-based capital ratio | 11.08 | 11.35 | 12.34 | (0.27 | ) | (1.26 | ) | ||||||||
Common equity tier 1 ratio | 11.08 | 11.35 | 12.34 | (0.27 | ) | (1.26 | ) | ||||||||
Leverage ratio | 9.22 | 9.27 | 9.65 | (0.05 | ) | (0.43 | ) | ||||||||
| (1) Annualized. | |||||||||||||||
ASSET QUALITY
($ in thousands) | As of and For the Three Months Ended | |||||||||||
1Q2025 | 4Q2024 | 1Q2024 | ||||||||||
Nonaccrual loans(1) | $ | 10,412 | $ | 7,820 | $ | 4,343 | ||||||
Loans 90 days or more past due, accruing | — | — | — | |||||||||
Nonperforming loans | 10,412 | 7,820 | 4,343 | |||||||||
OREO | 1,237 | 1,237 | 1,237 | |||||||||
Nonperforming assets | $ | 11,649 | $ | 9,057 | $ | 5,580 | ||||||
Criticized loans(2) by risk categories: | ||||||||||||
Special mention loans | $ | 7,190 | $ | 6,309 | $ | 1,415 | ||||||
Classified loans(3) | 15,865 | 13,261 | 10,149 | |||||||||
Total criticized loans | $ | 23,055 | $ | 19,570 | $ | 11,564 | ||||||
Nonperforming loans / gross loans | 0.51 | % | 0.40 | % | 0.24 | % | ||||||
Nonperforming assets / gross loans plus OREO | 0.57 | 0.46 | 0.31 | |||||||||
Nonperforming assets / total assets | 0.46 | 0.38 | 0.25 | |||||||||
Classified loans / gross loans | 0.78 | 0.68 | 0.56 | |||||||||
Criticized loans / gross loans | 1.13 | 1.00 | 0.64 | |||||||||
Allowance for credit losses ratios: | ||||||||||||
As a % of gross loans | 1.24 | % | 1.27 | % | 1.23 | % | ||||||
As a % of nonperforming loans | 244 | 317 | 510 | |||||||||
As a % of nonperforming assets | 218 | 274 | 397 | |||||||||
As a % of classified loans | 160 | 187 | 218 | |||||||||
As a % of criticized loans | 110 | 127 | 191 | |||||||||
Net charge-offs | $ | 115 | $ | 23 | $ | 57 | ||||||
Net charge-offs(4) to average gross loans(5) | 0.02 | % | 0.00 | % | 0.01 | % | ||||||
(1) | Excludes the guaranteed portion of loans that are in liquidation totaling $14.3 million, $16.3 million and $3.1 million as of March 31, 2025, December 31, 2024 and March 31, 2024, respectively. |
(2) | Excludes the guaranteed portion of loans that are in liquidation totaling $17.2 million, $16.3 million and $3.1 million as of March 31, 2025, December 31, 2024 and March 31, 2024, respectively. |
(3) | Consists of Substandard, Doubtful and Loss categories. |
(4) | Annualized. |
(5) | Includes loans held for sale. |
($ in thousands) | 1Q2025 | 4Q2024 | 1Q2024 | |||||||||
Accruing delinquent loans 30-89 days past due by loan type: | ||||||||||||
CRE loans | $ | — | $ | — | $ | — | ||||||
SBA loans | 2,483 | 370 | 801 | |||||||||
C&I loans | — | 15 | — | |||||||||
Home mortgage loans | 3,969 | 2,774 | — | |||||||||
Total 30-59 days | 6,452 | 3,159 | 801 | |||||||||
CRE loans | — | — | — | |||||||||
SBA loans | — | 211 | 211 | |||||||||
C&I loans | — | — | — | |||||||||
Home mortgage loans | — | 5,594 | 2,892 | |||||||||
Total 60-89 days | — | 5,805 | 3,103 | |||||||||
CRE loans | — | — | — | |||||||||
SBA loans | 2,483 | 581 | 1,012 | |||||||||
C&I loans | — | 15 | — | |||||||||
Home mortgage loans | 3,969 | 8,368 | 2,892 | |||||||||
Total accruing delinquent loans 30-89 days past due | $ | 6,452 | $ | 8,964 | $ | 3,904 | ||||||
Nonaccrual loans(1) by loan type: | ||||||||||||
CRE loans | $ | 1,937 | $ | 1,943 | $ | 319 | ||||||
SBA loans | 6,371 | 5,877 | 3,807 | |||||||||
C&I loans | — | — | — | |||||||||
Home mortgage loans | 2,104 | — | 217 | |||||||||
Total nonaccrual loans | $ | 10,412 | $ | 7,820 | $ | 4,343 | ||||||
Criticized loans(2) by loan type: | ||||||||||||
CRE loans | $ | 8,988 | $ | 9,042 | $ | 5,292 | ||||||
SBA loans | 11,574 | 10,128 | 6,055 | |||||||||
C&I loans | 389 | 400 | — | |||||||||
Home mortgage loans | 2,104 | — | 217 | |||||||||
Total criticized loans | $ | 23,055 | $ | 19,570 | $ | 11,564 | ||||||
(1) | Excludes the guaranteed portion of loans that are in liquidation totaling $14.3 million, $16.3 million and $3.1 million as of March 31, 2025, December 31, 2024 and March 31, 2024, respectively. |
(2) | Excludes the guaranteed portion of loans that are in liquidation totaling $17.2 million, $16.3 million and $3.1 million as of March 31, 2025, December 31, 2024 and March 31, 2024, respectively. |
AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS
For the Three Months Ended | |||||||||||||||||||||||||||
1Q2025 | 4Q2024 | 1Q2024 | |||||||||||||||||||||||||
($ in thousands) | Average
| Interest
| Yield/
| Average
| Interest
| Yield/
| Average
| Interest
| Yield/
| ||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||||||
Interest-bearing deposits in other banks | $ | 124,069 | $ | 1,372 | 4.42 | % | $ | 120,170 | $ | 1,456 | 4.74 | % | $ | 73,047 | $ | 989 | 5.35 | % | |||||||||
Federal funds sold and other investments | 16,469 | 302 | 7.33 | 16,478 | 315 | 7.63 | 16,265 | 322 | 7.92 | ||||||||||||||||||
Available-for-sale debt securities, at fair value | 184,649 | 1,496 | 3.24 | 193,738 | 1,551 | 3.20 | 191,383 | 1,460 | 3.05 | ||||||||||||||||||
CRE loans | 1,000,426 | 14,980 | 6.07 | 960,639 | 14,653 | 6.07 | 901,262 | 13,729 | 6.13 | ||||||||||||||||||
SBA loans | 265,953 | 6,207 | 9.47 | 269,842 | 6,542 | 9.65 | 259,368 | 7,213 | 11.19 | ||||||||||||||||||
C&I loans | 212,106 | 3,778 | 7.22 | 217,816 | 4,086 | 7.46 | 134,893 | 2,670 | 7.96 | ||||||||||||||||||
Home mortgage loans | 526,326 | 6,718 | 5.11 | 499,151 | 6,441 | 5.16 | 512,023 | 6,495 | 5.07 | ||||||||||||||||||
Consumer loans | 233 | 6 | 9.75 | 205 | 7 | 13.55 | 1,386 | 35 | 10.10 | ||||||||||||||||||
Loans(2) | 2,005,044 | 31,689 | 6.39 | 1,947,653 | 31,729 | 6.49 | 1,808,932 | 30,142 | 6.69 | ||||||||||||||||||
Total interest-earning assets | 2,330,231 | 34,859 | 6.04 | 2,278,039 | 35,051 | 6.12 | 2,089,627 | 32,913 | 6.32 | ||||||||||||||||||
Noninterest-earning assets | 77,823 | 85,218 | 87,586 | ||||||||||||||||||||||||
Total assets | $ | 2,408,054 | $ | 2,363,257 | $ | 2,177,213 | |||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||
Money market deposits and others | $ | 353,804 | $ | 3,085 | 3.54 | % | $ | 335,197 | $ | 3,100 | 3.68 | % | $ | 367,386 | $ | 3,940 | 4.31 | % | |||||||||
Time deposits | 1,208,032 | 13,523 | 4.54 | 1,151,112 | 14,082 | 4.87 | 954,442 | 11,735 | 4.94 | ||||||||||||||||||
Total interest-bearing deposits | 1,561,836 | 16,608 | 4.31 | 1,486,309 | 17,182 | 4.60 | 1,321,828 | 15,675 | 4.77 | ||||||||||||||||||
Borrowings | 78,944 | 833 | 4.28 | 86,525 | 940 | 4.32 | 108,681 | 1,259 | 4.66 | ||||||||||||||||||
Total interest-bearing liabilities | 1,640,780 | 17,441 | 4.31 | 1,572,834 | 18,122 | 4.58 | 1,430,509 | 16,934 | 4.76 | ||||||||||||||||||
Noninterest-bearing liabilities: | |||||||||||||||||||||||||||
Noninterest-bearing deposits | 522,054 | 543,546 | 514,503 | ||||||||||||||||||||||||
Other noninterest-bearing liabilities | 38,014 | 42,925 | 39,207 | ||||||||||||||||||||||||
Total noninterest-bearing liabilities | 560,068 | 586,471 | 553,710 | ||||||||||||||||||||||||
Shareholders’ equity | 207,206 | 203,952 | 192,994 | ||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,408,054 | 2,363,257 | 2,177,213 | |||||||||||||||||||||||
Net interest income / interest rate spreads | $ | 17,418 | 1.73 | % | $ | 16,929 | 1.54 | % | $ | 15,979 | 1.56 | % | |||||||||||||||
Net interest margin | 3.01 | % | 2.96 | % | 3.06 | % | |||||||||||||||||||||
Cost of deposits & cost of funds: | |||||||||||||||||||||||||||
Total deposits / cost of deposits | $ | 2,083,890 | $ | 16,608 | 3.23 | % | $ | 2,029,855 | $ | 17,182 | 3.37 | % | $ | 1,836,331 | $ | 15,675 | 3.43 | % | |||||||||
Total funding liabilities / cost of funds | 2,162,834 | 17,441 | 3.27 | 2,116,380 | 18,122 | 3.41 | 1,945,012 | 16,934 | 3.50 | ||||||||||||||||||
| (1) | Annualized. |
| (2) | Includes loans held for sale. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20250424756522/en/
