OP Bancorp Reports Net Income for 2022 Fourth Quarter of $8.0 Million and Diluted Earnings Per Share of $0.51

2022 Fourth Quarter Highlights compared with 2021 Fourth Quarter:

Financial Results:
- Net income of $8.0 million, compared to $9.1 million
- Diluted earnings per share of $0.51, compared to $0.59
- Net interest income of $20.2 million, compared to $17.1 million
- Net interest margin of 4.08%, compared to 4.07%
- Provision for loan losses of $977 thousand, compared to $1.9 million
- Total assets of $2.1 billion, a 21% increase compared to $1.7 billion
- Total loans⁽¹⁾ of $1.7 billion, a 23% increase compared to $1.4 billion
- Total deposits of $1.9 billion, a 23% increase compared to $1.5 billion
- Noninterest-bearing deposits of $701.6 million, or 37.2% of total deposits
Credit Quality:
- Allowance for loan losses to gross loans of 1.13%, compared to 1.23%
- Net loan charge-offs to average gross loans of 0.03%, compared to 0.05%
- Nonperforming loans to gross loans of 0.18%, compared to 0.24%
- Criticized loans ⁽²⁾ to gross loans of 0.23%, compared to 0.31%
Capital Levels:
- Quarterly cash dividend of $0.12 per share, a 20% increase from $0.10 per share
- Remained well-capitalized with a Common Equity Tier 1 (“CET1”) ratio of 11.70%.
- Book value per common share of $11.59, compared to $10.92

___________________________________________________________

⁽¹⁾Includes loans held for sale.
⁽²⁾ Includes special mention, substandard, doubtful, and loss categories.

January 26, 2023 04:30 PM Eastern Standard Time

LOS ANGELES--(BUSINESS WIRE)--OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company of Open Bank, today reported its financial results for the fourth quarter of 2022. Net income for the fourth quarter of 2022 was $8.0 million, or $0.51 per diluted common share, compared with $8.7 million, or $0.55 per diluted common share, for the third quarter of 2022, and $9.1 million, or $0.59 per diluted common share, for the fourth quarter of 2021.

Min Kim, President and Chief Executive Officer:

“Despite the challenging banking environment created by external headwinds related to prolonged inflation, Federal Reserve's drastic rate hikes, and economic slowdowns, we continued to report strong balance sheet growth with pristine asset quality. Based on the growth and strength of our balance sheet, we remain optimistic about future performance and will continue to focus on executing our strategic goals while maintaining appropriate risk and control environment.”

SELECTED FINANCIAL HIGHLIGHTS


($ in thousands, except per share data)	As of and For the Three Months Ended									% Change 4Q22 vs.
($ in thousands, except per share data)		4Q22			3Q22			4Q21		3Q22		4Q21
Selected Income Statement Data:
Net interest income	$	20,198		$	20,344		$	17,096		(0.7	) %	18.1	%
Provision for loan losses		977			662			1,898		47.6		(48.5	)
Noninterest income		3,223			4,821			7,289		(33.1	)	(55.8	)
Noninterest expense		11,327			12,338			9,591		(8.2	)	18.1
Income tax expense		3,089			3,515			3,762		(12.1	)	(17.9	)
Net Income	$	8,028		$	8,650		$	9,134		(7.2	) %	(12.1	) %
Diluted earnings per share	$	0.51		$	0.55		$	0.59		(7.3	) %	(13.6	) %
Selected Balance Sheet Data:
Total loans ⁽¹⁾	$	1,722,627		$	1,654,660		$	1,403,447		4.1	%	22.7	%
Total deposits	$	1,885,771		$	1,816,811		$	1,534,066		3.8	%	22.9	%
Total assets	$	2,094,293		$	2,029,575		$	1,726,691		3.2	%	21.3	%
Average loans ⁽¹⁾	$	1,691,642		$	1,614,000		$	1,343,414		4.8	%	25.9	%
Average deposits	$	1,836,736		$	1,753,726		$	1,545,799		4.7	%	18.8	%
Credit Quality:
Nonperforming loans	$	3,080		$	2,251		$	3,200		36.8	%	(3.8	) %
Net charge-offs (recoveries) to average gross loans ⁽²⁾		0.03	%		(0.00	) %		0.05	%	0.03	%	(0.02	) %
Allowance for loan losses to gross loans		1.13	%		1.14	%		1.23	%	(0.01	) %	(0.10	) %
Financial Ratios:
Return on average assets ⁽²⁾		1.56	%		1.77	%		2.11	%	(0.21	) %	(0.55	) %
Return on average equity ⁽²⁾		18.58	%		19.91	%		22.68	%	(1.33	) %	(4.10	) %
Net interest margin ⁽²⁾		4.08	%		4.31	%		4.07	%	(0.23	) %	0.01	%
Common equity tier 1 capital ratio		11.70	%		11.92	%		12.42	%	(0.22	) %	(0.72	) %
Leverage ratio		9.38	%		9.52	%		9.58	%	(0.14	) %	(0.20	) %
Efficiency ratio ⁽³⁾		48.36	%		49.03	%		39.34	%	(0.67	) %	9.02	%
Book value per common share	$	11.59		$	11.19		$	10.92		3.6	%	6.1	%

(1)	Includes loans held for sale.
(2)	Annualized.
(3)	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 4Q22 vs.
($ in thousands)		4Q22		3Q22		4Q21	3Q22		4Q21
Interest Income
Interest income	$	26,886	$	23,234	$	17,822	15.7	%	50.9	%
Interest expense		6,688		2,890		726	131.4		821.2
Net interest income	$	20,198	$	20,344	$	17,096	(0.7	) %	18.1	%


($ in thousands)	For the Three Months Ended
	4Q22			3Q22			4Q21
	Average Balance	Interest and Fees	Yield/Rate ⁽¹⁾	Average Balance	Interest and Fees	Yield/Rate ⁽¹⁾	Average Balance	Interest and Fees	Yield/Rate ⁽¹⁾
Interest-earning Assets
Loans	$ 1,691,642	$ 24,719	5.81 %	$ 1,614,000	$ 21,780	5.36 %	$ 1,343,414	$ 17,271	5.10 %
Total interest-earning assets	$ 1,966,165	$ 26,886	5.43 %	$ 1,874,516	$ 23,234	4.92 %	$ 1,668,865	$ 17,822	4.24 %
Interest-bearing Liabilities
Interest-bearing deposits	$ 1,085,331	$ 6,598	2.41 %	$ 947,437	$ 2,889	1.21 %	$ 780,787	$ 726	0.37 %
Total interest-bearing liabilities	$ 1,093,489	$ 6,688	2.43 %	$ 947,567	$ 2,890	1.21 %	$ 780,791	$ 726	0.37 %
Ratios
Net interest Income/interest rate spreads		$ 20,198	3.01 %		$ 20,344	3.71 %		$ 17,096	3.87 %
Net interest margin			4.08 %			4.31 %			4.07 %
Total deposits / cost of deposits	$ 1,836,736	$ 6,598	1.43 %	$ 1,753,726	$ 2,889	0.65 %	$ 1,545,799	$ 726	0.19 %
Total funding liabilities / cost of funds	$ 1,844,894	$ 6,688	1.44 %	$ 1,753,856	$ 2,890	0.65 %	$ 1,545,803	$ 726	0.19 %

(1)	Annualized.


($ in thousands)	For the Three Months Ended																		Yield Change 4Q22 vs.
				4Q22						3Q22						4Q21			Yield Change 4Q22 vs.
	Interest & Fees				Yield ⁽¹⁾		Interest & Fees				Yield ⁽¹⁾		Interest & Fees				Yield ⁽¹⁾		3Q22		4Q21
Loan Yield Component
Contractual interest rate	$	23,694			5.57	%	$	20,419			5.02	%	$	14,509			4.29	%	0.55	%	1.28	%
SBA discount accretion		1,034			0.24			1,336			0.33			1,571			0.46		(0.09	)	(0.22	)
Amortization of net deferred fees		46			0.01			122			0.03			1,087			0.32		(0.02	)	(0.31	)
Amortization of premium		(344	)		(0.08	)		(250	)		(0.06	)		3			—		(0.02	)	(0.08	)
Net interest recognized on nonaccrual loans		—			—			—			—			(16	)		—		—		—
Prepayment penalties ⁽²⁾ and other fees		289			0.07			153			0.04			117			0.03		0.03		0.04
Yield on loans	$	24,719			5.81	%	$	21,780			5.36	%	$	17,271			5.10	%	0.45	%	0.71	%

Amortization of net deferred fees:
PPP loan forgiveness ⁽³⁾	$	15			—	%	$	146			0.04	%	$	920			0.27	%	(0.04	) %	(0.27	) %
Other		31			0.01			(24	)		-0.01			167			0.05		0.02		(0.04	)
Total amortization of net deferred fees	$	46			0.01	%	$	122			0.03	%	$	1,087			0.32	%	(0.02	) %	(0.31	) %

(1)	Annualized.
(2)	Prepayment penalty income of $172 thousand, $79 thousand and $84 thousand for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively, was from commercial real estate and C&I loans.
(3)	As of December 31, 2022, there were unamortized net deferred fees and unaccredited discounts of $8 thousand to be recognized over the estimated life of the loans as a yield adjustment on the loans.

Impact of Hana Loan Purchase on Average Loan Yield and Net Interest Margin

During the second quarter of 2021, the Company purchased an SBA portfolio of 638 loans with an ending balance of $100.0 million, excluding loan discount of $8.9 million from Hana Small Business Lending, Inc. (“Hana”). The following table presents impacts of the Hana loan purchase on average loan yield and net interest margin:


($ in thousands)	For the Three Months Ended
($ in thousands)		4Q22			3Q22			4Q21
Hana Loan Purchase:
Contractual interest rate	$	1,286		$	1,114		$	1,027
Purchased loan discount accretion		374			594			826
Other fees		25			9			10
Total interest income	$	1,685		$	1,717		$	1,863

Effect on average loan yield ⁽¹⁾		0.20	%		0.21	%		0.26	%
Effect on net interest margin ⁽¹⁾		0.22	%		0.22	%		0.26	%


($ in thousands)	For the Three Months Ended
	4Q22						3Q22						4Q21
	Average Balance		Interest and Fees		Yield/ Rate		Average Balance		Interest and Fees		Yield/ Rate		Average Balance		Interest and Fees		Yield/ Rate
Average loan yield⁽¹⁾	$	1,691,642	$	24,719	5.81	%	$	1,614,000	$	21,780	5.36	%	$	1,343,414	$	17,271	5.10	%
Adjusted average loan yield excluding purchased Hana loans ⁽¹⁾⁽²⁾	$	1,631,128	$	23,034	5.61	%	$	1,549,313	$	20,063	5.15	%	$	1,263,789	$	15,408	4.84	%

Net interest margin ⁽¹⁾	$	1,966,165	$	20,198	4.08	%	$	1,874,516	$	20,344	4.31	%	$	1,668,865	$	17,096	4.07	%
Adjusted interest margin excluding purchased Hana loans ⁽¹⁾⁽²⁾	$	1,905,651	$	18,513	3.86	%	$	1,809,829	$	18,627	4.09	%	$	1,589,240	$	15,233	3.81	%

(1)	Annualized.
(2)	See reconciliation of GAAP to non-GAAP financial measures.

Fourth Quarter 2022 vs. Third Quarter 2022

Net interest income decreased $146 thousand, or 0.7%, primarily due to higher interest expense on deposits. Net interest margin was 4.08%, a decrease of 23 basis points from 4.31%.

A $2.9 million increase in interest income on loans was primarily due to a 55 basis point increase in contractual loan yield as a result of market rate increases by the Federal Reserve and a $77.6 million increase in average loan balance.

A $3.7 million increase in interest expense on deposits was primarily due to a 120 basis point increase in average cost of interest-bearing deposits driven by the Federal Reserve’s rate increases.

Average loan yield was 5.81%, a 45 basis point increase from 5.36%, primarily due to a 55 basis point increase in contractual loan yield driven by repricing of variable rate loans and higher rates on new loans, partially offset by a 9 basis points decrease in SBA discount accretion income as a result of lower SBA loan payoffs.

Average cost of interest-bearing deposits was 2.41%, a 120 basis point increase from 1.21%. Average cost of deposits was 1.43%, a 78 basis point increase from 0.65%.

Fourth Quarter 2022 vs. Fourth Quarter 2021

Net interest income increased $3.1 million, or 18.1%, primarily due to higher interest income on loans. Net interest margin was 4.08%, an increase of 1 basis point from 4.07%.

A $7.4 million increase in interest income on loans was primarily due to a 128 basis point increase in contractual loan yield as a result of market rate increases by the Federal Reserve and a $348.2 million increase in average loan balance.

A $5.9 million increase in interest expense on deposits was primarily due to a 204 basis point increase in average cost of interest-bearing deposits driven by the Federal Reserve’s rate increases.

Average loan yield was 5.81%, a 71 basis point increase from 5.10%, primarily due to a 128 basis point increase in contractual loan yield driven by repricing of variable rate loans and higher rates on new loans, partially offset by a 22 basis point decrease in SBA discount accretion income as a result of lower SBA loan payoffs and a 31 basis point decrease in amortization of net deferred fees as a result of lower net deferred fees on SBA Paycheck Protection Program (“PPP”) loans.

Average yield on interesting-bearing deposits in other banks was 3.78%, a 363 basis point increase from 0.15%. Average yield on available-for-sale debt securities was 2.66%, a 147 basis point increase from 1.19%, primarily due to higher yields on securities purchased in 2022.

Average cost of interest-bearing deposits was 2.41%, a 204 basis point increase from 0.37%. Average cost of deposits was 1.43%, a 124 basis point increase from 0.19%.

Provision for loan losses

Fourth Quarter 2022 vs. Third Quarter 2022

The Company recorded $977 thousand provision for loan losses, an increase of $315 thousand, compared with a $662 thousand provision for loan losses. The $977 thousand provision for loan losses was primarily due to an increase of $834 thousand in quantitative reserves from loan growth in home mortgage and SBA loans.

Fourth Quarter 2022 vs. Fourth Quarter 2021

The Company recorded $977 thousand provision for loan losses, a decrease of $921 thousand, compared with $1.9 million provision for loan losses.

Noninterest Income


($ in thousands)	For the Three Months Ended						% Change 4Q22 vs.
($ in thousands)		4Q22		3Q22		4Q21	3Q22		4Q21
Noninterest income
Service charges on deposits	$	406	$	454	$	405	(10.6	) %	0.2	%
Loan servicing fees, net of amortization		705		610		521	15.6		35.3
Gain on sale of loans		1,684		3,490		6,033	(51.7	)	(72.1	)
Other income		428		267		330	60.3		29.7
Total noninterest income	$	3,223	$	4,821	$	7,289	(33.1	) %	(55.8	) %

Fourth Quarter 2022 vs. Third Quarter 2022

Noninterest income decreased $1.6 million, or 33.1%, primarily due to lower gain on sale of loans.

Gain on sale of loans was $1.7 million, down $1.8 million, primarily due to lower SBA loan sold on lower average sales premium. The Company sold $32.2 million in SBA loans at an average premium rate of 6.13%, compared to the sale of $59.3 million at an average premium rate of 6.67%.

Fourth Quarter 2022 vs. Fourth Quarter 2021

Noninterest income decreased $4.1 million, or 55.8%, primarily due to lower gain on sale of loans.

Gain on sale of loans was $1.7 million, down $4.3 million, primarily due to lower SBA loans sold on lower average sales premium. The Company sold $32.2 million in SBA loans at an average premium rate of 6.13%, compared to the sale of $56.8 million at an average premium rate of 10.98%.

Noninterest Expense


($ in thousands)	For the Three Months Ended						% Change 4Q22 vs.
($ in thousands)		4Q22		3Q22		4Q21	3Q22		4Q21
Noninterest expense
Salaries and employee benefits	$	7,080	$	7,343	$	5,560	(3.6	) %	27.3	%
Occupancy and equipment		1,560		1,537		1,418	1.5		10.0
Data processing and communication		514		586		637	(12.3	)	(19.3	)
Professional fees		330		602		267	(45.2	)	23.6
FDIC insurance and regulatory assessments		176		238		182	(26.1	)	(3.3	)
Promotion and advertising		12		177		156	(93.2	)	(92.3	)
Directors’ fees		145		170		166	(14.7	)	(12.7	)
Foundation donation and other contributions		851		875		901	(2.7	)	(5.5	)
Other expenses		659		810		304	(18.6	)	116.8
Total noninterest expense	$	11,327	$	12,338	$	9,591	(8.2	) %	18.1	%

Fourth Quarter 2022 vs. Third Quarter 2022

Noninterest expense decreased $1.0 million, or 8.2%, primarily due to lower salaries and employee benefits and professional fees.

Salaries and employee benefits were $7.1 million, down $263 thousand from $7.3 million. The decrease was primarily due to a decrease in employee incentive accruals, partially offset by an increase in salaries.

Professional fees and promotion and advertising decreased $272 thousand and $165 thousand, respectively, primarily due to year-end accrual adjustments.

Fourth Quarter 2022 vs. Fourth Quarter 2021

Noninterest expense increased $1.7 million, or 18.1%, primarily due to higher salaries and employee benefits and other expenses.

Salaries and employee benefits were $7.1 million, up $1.5 million from $5.6 million. The increase was primarily due to 30 additional employees to support continued growth of the Company.

Other expenses were $659 thousand, up $355 thousand from $304 thousand, primarily due to an increase in business development expense.

Income Tax Expense

Fourth Quarter 2022 vs. Third Quarter 2022

Income tax expense was $3.1 million, and the effective tax rate was 27.8%, compared to income tax expense of $3.5 million and the effective rate of 28.9%.

Fourth Quarter 2022 vs. Fourth Quarter 2021

Income tax expense was $3.1 million and the effective tax rate was 27.8%, compared to income tax expense of $3.8 million and the effective rate of 29.2%.

BALANCE SHEET HIGHLIGHTS

Loans


($ in thousands)	As of						% Change 4Q22 vs.
($ in thousands)		4Q22		3Q22		4Q21	3Q22		4Q21
Real estate loans	$	842,208	$	830,125	$	701,450	1.5	%	20.1	%
SBA loans ⁽¹⁾		263,644		232,569		275,858	13.4		(4.4	)
C&I loans		116,951		133,855		162,543	(12.6	)	(28.0	)
Home mortgage loans		482,949		419,469		173,303	15.1		178.7
Consumer & other loans		1,467		2,000		865	(26.7	)	69.6
Gross loans	$	1,707,219	$	1,618,018	$	1,314,019	5.5	%	29.9	%

(1)	Includes PPP loans of $442 thousand, $1.1 million and $40.6 million as of December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

The following table presents new loan originations based on loan commitment amounts for the periods indicated:


($ in thousands)	For the Three Months Ended						% Change 4Q22 vs.
($ in thousands)		4Q22		3Q22		4Q21	3Q22		4Q21
Real estate loans	$	44,416	$	43,929	$	35,458	1.1	%	25.3	%
SBA loans ⁽¹⁾		55,594		43,984		65,492	26.4		(15.1	)
C&I loans		46,014		39,720		47,981	15.8		(4.1	)
Home mortgage loans		28,188		68,842		19,295	(59.1	)	46.1
Consumer & other loans		—		2,500		—	(100.0	)	—
Gross loans	$	174,212	$	198,975	$	168,226	(12.4	) %	3.6	%

(1)	There were no new PPP originations for the periods indicated.

The following table presents changes in gross loans by loan activity for the periods indicated:


($ in thousands)	For the Three Months Ended
($ in thousands)		4Q22			3Q22			4Q21
Gross loans, beginning	$	1,618,018		$	1,484,718		$	1,231,821
New originations		174,212			198,975			168,226
Net line advances		(80,144	)		(11,358	)		7,759
Purchases		49,980			37,146			48,915
Sales		(32,204	)		(59,293	)		(68,064	)
Paydowns		(22,939	)		(19,087	)		(12,373	)
Payoffs		(23,238	)		(37,817	)		(46,778	)
PPP Payoffs		(657	)		(7,206	)		(29,918	)
Other		24,191			31,940			14,431
Total		89,201			133,300			82,198
Gross loans, ending	$	1,707,219		$	1,618,018		$	1,314,019

As of December 31, 2022 vs. September 30, 2022

Gross loans were $1.71 billion as of December 31, 2022, up $89.2 million from September 30, 2022, primarily due to new loan originations and home mortgage loan purchases.

Home mortgage loans of $39.0 million and real estate loans of $11.0 million were purchased from third party mortgage originators in the fourth quarter of 2022, compared to total purchases of $37.1 million in the third quarter of 2022. New loan originations and loan payoffs were $174.2 million and $23.9 million for the fourth quarter of 2022, respectively, compared with $199.0 million and $45.0 million for the third quarter of 2022, respectively. Of the PPP loans, $636 thousand in principal amount has been forgiven under the program, compared to a $7.2 million of PPP loans forgiven in the third quarter of 2022.

As of December 31, 2022 vs. December 31, 2021

Gross loans were $1.71 billion as of December 31, 2022, up $393.2 million from December 31, 2021, primarily due to new loan originations of $645.2 million and loan purchases of $225.1 million, partially offset by loan sales of $182.3 million and loan payoffs of $180.8 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
	4Q22				3Q22				4Q21
	%		Rate		%		Rate		%		Rate
Fixed rate	35.4	%	4.63	%	35.2	%	4.39	%	31.5	%	4.12	%
Hybrid rate	33.3		4.79		34.1		4.59		22.8		4.45
Variable rate	31.3		8.01		30.7		6.97		45.7		4.94
Gross loans	100.0	%	5.74	%	100.0	%	5.25	%	100.0	%	4.57	%

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 December 31, 2022
	Within One Year				One Year Through Five Years				After Five Years				Total
	Amount		Rate		Amount		Rate		Amount		Rate		Amount		Rate
Fixed rate	$	30,168	4.44	%	$	337,054	4.59	%	$	237,195	4.72	%	$	604,417	4.63	%
Hybrid rate		6,472	7.09			52,902	5.06			508,550	4.73			567,924	4.79
Variable rate		63,021	8.22			148,498	7.93			323,359	8.00			534,878	8.01
Gross loans	$	99,661	7.00	%	$	538,454	5.56	%	$	1,069,104	5.72	%	$	1,707,219	5.74	%

Deposits


($ in thousands)	As of												% Change 4Q22 vs.
	4Q22				3Q22				4Q21				% Change 4Q22 vs.
	Amount		%		Amount		%		Amount		%		3Q22		4Q21
Noninterest-bearing deposits	$	701,584	37.2	%	$	794,631	43.7	%	$	774,754	50.5	%	(11.7	) %	(9.4	) %
Money market deposits and others		526,321	27.9	%		524,911	28.9			380,226	24.8	%	0.3		38.4
Time deposits		657,866	34.9	%		497,269	27.4			379,086	24.7	%	32.3		73.5
Total deposits	$	1,885,771	100.0	%	$	1,816,811	100.0	%	$	1,534,066	100.0	%	3.8	%	22.9	%

As of December 31, 2022 vs. September 30, 2022

Total deposits were $1.89 billion as of December 31, 2022, up $69.0 million from September 30, 2022, primarily due to growth in time deposits, partially offset by a decrease in noninterest-bearing deposits. Time deposits grew $160.6 million, due to management’s actions to support loan growth during the third quarter of 2022 including upward adjustments of interest rates on customer deposits and increases in wholesale deposits. Noninterest-bearing deposits decreased $93.0 million, primarily due to decreases in lower transaction volumes in escrow and 1031 exchanges accounts and other decreases affected by market rate increases by the Federal Reserve.

As of December 31, 2022 vs. December 31, 2021

Total deposits were $1.89 billion as of December 31, 2022, up $351.7 million from December 31, 2021, primarily driven by growth in time deposits and money market deposits, offset by a decrease in noninterest-bearing deposits. Time deposits grew $278.8 million to $657.9 million from $379.1 million, and money market deposits increased $146.1 million to $526.3 million from $380.2 million. Noninterest-bearing deposits decreased $73.2 million, primarily due to decreases in lower transaction volumes in escrow and 1031 exchanges accounts and other decreases affected by market rate increases by the Federal Reserve.

The following table sets forth the maturity of time deposits as of December 31, 2022:


	As of December 31, 2022
($ in thousands)	Within Three Months	Three to Six Months	Six to Nine Months	Nine to Twelve Months	After Twelve Months	Total
Time deposits (more than $250,000)	$ 82,676	$ 26,156	$ 61,254	$ 183,822	$ 2,289	$ 356,197
Time deposits ($250,000 or less)	36,551	50,759	44,829	144,495	25,035	301,669
Total time deposits	$ 119,227	$ 76,915	$ 106,083	$ 328,317	$ 27,324	$ 657,866
Weighted average rate	3.03 %	3.02 %	2.36 %	4.06 %	3.83 %	3.47 %

Capital and Cash Dividend


	Basel III
	OP Bancorp ⁽¹⁾	Open Bank	Minimum Well Capitalized Ratio	Minimum Capital Ratio+ Conservation Buffer ⁽²⁾
Risk-Based Capital Ratios:
Total risk-based capital ratio	12.87 %	12.76 %	10.00 %	10.50 %
Tier 1 risk-based capital ratio	11.70 %	11.59 %	8.00 %	8.50 %
Common equity tier 1 ratio	11.70 %	11.59 %	6.50 %	7.00 %
Leverage ratio	9.38 %	9.29 %	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 bonus to executive officers.


OP Bancorp	Basel III									% Change 4Q22 vs.
OP Bancorp		4Q22			3Q22			4Q21		3Q22		4Q21
Risk-Based Capital Ratios:
Total risk-based capital ratio		12.87	%		13.51	%		13.81	%	(0.64	) %	(0.94	) %
Tier 1 risk-based capital ratio		11.70	%		12.29	%		12.63	%	(0.59	) %	(0.93	) %
Common equity tier 1 ratio		11.70	%		12.29	%		12.63	%	(0.59	) %	(0.93	) %
Leverage ratio		9.38	%		9.48	%		9.75	%	(0.10	) %	(0.37	) %
Risk-weighted Assets ($ in thousands)	$	1,661,095		$	1,465,707		$	1,251,867		13.33	%	32.69	%

Capital ratios remained strong during the quarter. Our CET1 and total risk-based capital ratios were 11.70% and 12.87% as of December 31, 2022, down 93 basis points and 94 basis points from a year ago, respectively. The decreases in capital ratios were primarily due to year-over-year asset growth.

The Company’s Board of Directors has declared a quarterly cash dividend of $0.12 per share of its common stock. The cash dividend is payable on or about February 23, 2023 to all shareholders of record as of the close of business on February 9, 2023.

The Company did not repurchase any shares during the fourth quarter of 2022. Since the announcement of the initial stock repurchase program in January 2019, the Company has repurchased a total of 1.57 million shares of its common stock at an average repurchase price of $8.58 per share through December 31, 2022.

Asset Quality


($ in thousands)	As of and For the Three Months Ended									% Change 4Q22 vs.
($ in thousands)		4Q22			3Q22			4Q21		3Q22		4Q21
Nonperforming loans ⁽¹⁾	$	3,080		$	2,251		$	3,200		36.8	%	(3.8	) %
OREO		—			—			—		—		—
Total nonperforming assets	$	3,080		$	2,251		$	3,200		36.8	%	(3.8	) %

Nonperforming loans to gross loans		0.18	%		0.14	%		0.24	%	0.04	%	(0.06	) %
Nonperforming assets to total assets		0.15	%		0.11	%		0.19	%	0.04	%	(0.04	) %

Criticized ⁽²⁾ Loan:
Special mention loans	$	563		$	—		$	—		—	%	—	%
Classified loans ⁽³⁾		3,307			3,542			4,039		(6.6	)	(18.1	)
Total criticized loans	$	3,870		$	3,542		$	4,039		9.3	%	(4.2	) %

Criticized ⁽²⁾loans to gross loans		0.23	%		0.22	%		0.31	%	0.01	%	(0.08	) %
Classified loans ⁽³⁾ to gross loans		0.19	%		0.22	%		0.31	%	(0.03	) %	(0.12	) %

Allowance for loan losses, beginning	$	18,369		$	17,702		$	14,134		3.8	%	30.0	%
Provision for loan losses ⁽⁴⁾		977			662			2,157		47.6		(54.7	)
Gross charge-offs		(109	)		—			(168	)	n/m		(35.1	)
Gross recoveries		4			5			—		(20.0	)	n/m
Allowance for loan losses, ending ⁽⁵⁾	$	19,241		$	18,369		$	16,123		4.7	%	19.3	%

Allowance for loan losses ratios:
As a % of gross loans		1.13	%		1.14	%		1.23	%	(0.01	) %	(0.10	) %
As an adjusted % of gross loans ⁽⁶⁾		1.16	%		1.18	%		1.36	%	(0.02	) %	(0.20	) %
As a % of nonperforming loans		625	%		816	%		503	%	(191	) %	122	%
As a % of nonperforming assets		625	%		816	%		503	%	(191	) %	122	%
Net charge-offs (recoveries) to average gross loans		0.03	%		(0.00	) %		0.05	%	0.03	%	(0.02	) %

(1)	Includes the guaranteed portion of SBA loans totaling $1.0 million, $442 thousand and $1.2 million as of December 31, 2022, September 30, 2022 and December 31, 2021, respectively.
(2)	Includes special mention, substandard, doubtful and loss categories.
(3)	Includes substandard, doubtful and loss categories.
(4)	Excludes reversal of uncollectible accrued interest receivable of $259 thousand for the three months ended December 31, 2021.
(5)	Excludes allowance for uncollectible accrued interest receivable of $205 thousand as of December 31, 2021.
(6)	See the Reconciliation of GAAP to NON-GAAP Financial Measures.

Overall, the Company continued to maintain solid asset quality with low levels of nonperforming loans and net charge-offs. Nonperforming assets and criticized loans remained below our historical norms, a reflection of our conservative credit culture and expertise in the industries we serve. Our allowance remained strong with an adjusted allowance to gross loans ratio of 1.16%.

Allowance for loan losses increased $3.1 million to $19.2 million from a year ago. Excluding the impacts of the purchased Hana loans, PPP loans, adjusted allowance to gross loans ratio was 1.16% as of December 31, 2022.

Criticized loans decreased by $169 thousand or 4.2% from a year ago, and the criticized loans to gross loans ratio decreased by 8 basis points. Criticized loans are generally consistent with the Special Mention, Substandard, Doubtful and Loss categories defined by regulatory authorities.

Nonperforming assets decreased $120 thousand to $3.1 million, or 0.15% of total assets from a year ago. As of December 31, 2022, $606 thousand of nonaccrual loans was the guaranteed portion of SBA loans that are in liquidation. The Company did not have OREO as of December 31, 2022 or 2021.

Net charge-offs were $105 thousand or 0.03% of average loans in the fourth quarter of 2022, compared to $168 thousand, or 0.05%, of average loans in the fourth quarter of 2021.

COVID-19 Pandemic Update

As of December 31, 2022, no loan was under COVID-19 loan payment modification.

Since the PPP’s inception through December 31, 2022, we have funded $154.5 million, and $154.0 million of principal forgiveness has been provided on qualifying PPP loans.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

In addition to GAAP measures, management uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance.

Pre-provision net revenue removes provision for loan losses and income tax expense. Management believes that this non-GAAP measure, when taken together with the corresponding GAAP financial measures (as applicable), provides meaningful supplemental information regarding our performance. This non-GAAP financial measure also facilitates a comparison of our performance to prior periods.


($ in thousands)		For the Three Months Ended
($ in thousands)			4Q22		3Q22		4Q21
Interest income		$	26,886	$	23,234	$	17,822
Interest expense			6,688		2,890		726
Net interest income			20,198		20,344		17,096
Noninterest income			3,223		4,821		7,289
Noninterest expense			11,327		12,338		9,591
Pre-provision net revenue	(a)	$	12,094	$	12,827	$	14,794
Reconciliation to net income:
Provision for loan losses	(b)	$	977	$	662	$	1,898
Income tax expense	(c)		3,089		3,515		3,762
Net income	(a)+(b) +(c)	$	8,028	$	8,650	$	9,134

During the second quarter of 2021, the Company purchased 638 loans from Hana for a total purchase price of $97.6 million. The Company evaluated $100.0 million of the loans purchased in accordance with the provisions of ASC 310-20, Nonrefundable Fees and Other Costs, which were recorded with a $8.9 million discount. As a result, the fair value discount on these loans is being accreted into interest income over the expected life of the loans using the effective yield method. Adjusted loan yield and net interest margin for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021 excluded the impacts of contractual interest and discount accretion of the purchased Hana loans as management does not consider purchasing loan portfolios to be normal or recurring transactions. Management believes that presenting the adjusted average loan yield and net interest margin provide comparability to prior periods and these non-GAAP financial measures provide supplemental information regarding the Company’s performance.


($ in thousands)		For the Three Months Ended
($ in thousands)			4Q22			3Q22			4Q21
Yield on Average Loans
Interest income on loans		$	24,719		$	21,780		$	17,271
Less: interest income on purchased Hana loans			1,685			1,717			1,863
Adjusted interest income on loans	(a)	$	23,034		$	20,063		$	15,408

Average loans		$	1,691,642		$	1,614,000		$	1,343,414
Less: Average purchased Hana loans			60,514			64,687			79,625
Adjusted average loans	(b)	$	1,631,128		$	1,549,313		$	1,263,789

Average loan yield ⁽¹⁾			5.81	%		5.36	%		5.10	%
Effect on average loan yield ⁽¹⁾			0.20	%		0.21	%		0.26	%
Adjusted average loan yield ⁽¹⁾	(a)/(b)		5.61	%		5.15	%		4.84	%

Net Interest Margin
Net interest income		$	20,198		$	20,344		$	17,096
Less: interest income on purchased Hana loans			1,685			1,717			1,863
Adjusted net interest income	(c)	$	18,513		$	18,627		$	15,233

Average interest-earning assets		$	1,966,165		$	1,874,516		$	1,668,865
Less: Average purchased Hana loans			60,514			64,687			79,625
Adjusted average interest-earning assets	(d)	$	1,905,651		$	1,809,829		$	1,589,240

Net interest margin ⁽¹⁾			4.08	%		4.31	%		4.07	%
Effect on net interest margin ⁽¹⁾			0.22	%		0.22	%		0.26	%
Adjusted net interest margin ⁽¹⁾	(c)/(d)		3.86	%		4.09	%		3.81	%

(1)	Annualized.

Adjusted allowance to gross loans ratio removes the impacts of purchased Hana loans, PPP loans and allowance on accrued interest receivable. Management believes that this ratio provides greater consistency and comparability between the Company’s results and those of its peer banks.


($ in thousands)		For the Three Months Ended
($ in thousands)			4Q22			3Q22			4Q21
Gross loans		$	1,707,219		$	1,618,018		$	1,314,019
Less: Purchased Hana loans			(58,966	)		(61,899	)		(77,170	)
PPP loans ⁽¹⁾			(434	)		(1,022	)		(38,918	)
Adjusted gross loans	(a)	$	1,647,819		$	1,555,097		$	1,197,931

Accrued interest receivable on loans		$	6,413		$	5,203		$	4,231
Less: Accrued interest receivable on purchased Hana loans			(397	)		(323	)		(340	)
Accrued interest receivable on PPP loans ⁽²⁾			(8	)		(16	)		(340	)
Add: Allowance on accrued interest receivable			—			—			205
Adjusted accrued interest receivable on loans	(b)	$	6,008		$	4,864		$	3,756

Adjusted gross loans and accrued interest receivable	(a)+(b) =(c)	$	1,653,827		$	1,559,961		$	1,201,687

Allowance for loan losses		$	19,241		$	18,369		$	16,123
Add: Allowance on accrued interest receivable			—			—			205
Adjusted Allowance	(d)	$	19,241		$	18,369		$	16,328

Adjusted allowance to gross loans ratio	(d)/(c)		1.16	%		1.18	%		1.36	%

(1)	Excludes purchased PPP loans of $8 thousand, $57 thousand and $1.7 million as of December 31, 2022, September 30, 2022 and December 31, 2021, respectively.
(2)	Excludes purchased accrued interest receivable on PPP loans of $1 thousand and $15 thousand as of September 30, 2022 and December 31, 2021, respectively.

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, California, and Carrollton, Texas 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 ten full-service branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Cerritos, Gardena, Buena Park, and Santa Clara, California and Carrollton, Texas. The Bank also has four loan production offices in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, and Lynnwood, Washington. 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 the Private Securities Litigation Reform Act of 1995, 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: business and economic conditions, particularly those affecting the financial services industry and our primary market areas; our ability to successfully manage our credit risk and the sufficiency of our allowance for loan 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; our ability to effectively execute our strategic plan and manage our growth; interest rate fluctuations, which could have an adverse effect on our profitability; liquidity issues, including fluctuations in the fair value and liquidity of the securities we hold for sale and our ability to raise additional capital, if necessary; external economic and/or market factors, such as changes in monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve, 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 financial institutions, credit unions, and non-bank financial services companies, many of which are subject to different regulations than we are; challenges arising from unsuccessful attempts to expand into new geographic markets, products, or services; restraints on the ability of Open Bank to pay dividends to us, which could limit our liquidity; 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; inaccuracies in our assumptions about future events, which could result in material differences between our financial projections and actual financial performance; 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, acts of war or terrorism, or natural disasters, such as earthquakes, fires, drought, pandemic diseases (such as the coronavirus) or extreme weather events, 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, 2021 and in our other subsequent filings with the Securities and Exchange Commission.

CONSOLIDATED BALANCE SHEETS (unaudited)


($ in thousands)	As of									% Change 4Q22 vs.
($ in thousands)		4Q22			3Q22			4Q21		3Q22		4Q21
Assets
Cash and due from banks	$	12,952		$	25,516		$	11,283		(49.2	) %	14.8	%
Interest-bearing deposits in other banks		70,020			81,765			104,176		(14.4	)	(32.8	)
Cash and cash equivalents		82,972			107,281			115,459		(22.7	)	(28.1	)
Securities available for sale, at fair value		209,809			186,438			150,444		12.5		39.5
Other investments		12,098			12,074			10,999		0.2		10.0
Loans held for sale		15,408			36,642			89,428		(57.9	)	(82.8	)
Real estate loans		842,208			830,125			701,450		1.5		20.1
SBA loans ⁽¹⁾		263,644			232,569			275,858		13.4		(4.4	)
C&I loans		116,951			133,855			162,543		(12.6	)	(28.0	)
Home mortgage loans		482,949			419,469			173,303		15.1		178.7
Consumer & other loans		1,467			2,000			865		(26.7	)	69.6
Gross loans, net of unearned income		1,707,219			1,618,018			1,314,019		5.5		29.9
Allowance for loan losses		(19,241	)		(18,369	)		(16,123	)	4.7		19.3
Net loans receivable		1,687,978			1,599,649			1,297,896		5.5		30.1
Premises and equipment, net		4,400			4,383			4,355		0.4		1.0
Accrued interest receivable, net		7,180			5,856			4,579		22.6		56.8
Servicing assets		12,759			13,000			12,720		(1.9	)	0.3
Company owned life insurance		21,613			21,464			11,134		0.7		94.1
Deferred tax assets		13,717			17,296			8,409		(20.7	)	63.1
Operating right-of-use assets		9,097			8,265			8,905		10.1		2.2
Other assets		17,262			17,228			12,363		0.2		39.6
Total assets	$	2,094,293		$	2,029,575		$	1,726,691		3.2	%	21.3	%
Liabilities and Shareholders' Equity
Liabilities
Noninterest bearing	$	701,584		$	794,631		$	774,754		(11.7	) %	(9.4	) %
Money market and others		526,321			524,911			380,226		0.3		38.4
Time deposits greater than $250,000		356,197			277,785			207,288		28.2		71.8
Other time deposits		301,669			219,484			171,798		37.4		75.6
Total deposits		1,885,771			1,816,811			1,534,066		3.8		22.9
Borrowings		50			10,000			—		(99.5	)	n/m
Accrued interest payable		2,771			1,099			558		152.1		396.6
Operating lease liabilities		10,213			9,485			10,307		7.7		(0.9	)
Other liabilities		18,572			22,085			16,538		(15.9	)	12.3
Total liabilities		1,917,377			1,859,480			1,561,469		3.1		22.8
Shareholders’ equity
Common stock		79,326			78,782			78,718		0.7		0.8
Additional paid-in capital		9,743			9,424			8,645		3.4		12.7
Retained earnings		105,690			99,487			79,056		6.2		33.7
Accumulated other comprehensive loss		(17,843	)		(17,598	)		(1,197	)	1.4		1390.6
Total shareholders’ equity		176,916			170,095			165,222		4.0		7.1
Total liabilities and shareholders' equity	$	2,094,293		$	2,029,575		$	1,726,691		3.2	%	21.3	%

(1)	Includes SBA PPP loans of $442 thousand, $1.1 million and $40.6 million as of December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)


($ in thousands, except share and per share data)	For the Three Months Ended						% Change 4Q22 vs.
($ in thousands, except share and per share data)		4Q22		3Q22		4Q21	3Q22		4Q21
Interest income
Interest and fees on loans	$	24,719	$	21,780	$	17,271	13.5	%	43.1	%
Interest on securities available for sale		1,237		881		362	40.4		241.7
Other interest income		930		573		189	62.3		392.1
Total interest income		26,886		23,234		17,822	15.7		50.9
Interest expense
Interest on deposits		6,598		2,889		726	128.4		808.8
Interest on borrowings		90		1		—	n/m		n/m
Total interest expense		6,688		2,890		726	131.4		821.2
Net interest income		20,198		20,344		17,096	(0.7	)	18.1
Provision for loan losses		977		662		1,898	47.6		(48.5	)
Net interest income after provision for loan losses		19,221		19,682		15,198	(2.3	)	26.5
Noninterest income
Service charges on deposits		406		454		405	(10.6	)	0.2
Loan servicing fees, net of amortization		705		610		521	15.6		35.3
Gain on sale of loans		1,684		3,490		6,033	(51.7	)	(72.1	)
Other income		428		267		330	60.3		29.7
Total noninterest income		3,223		4,821		7,289	(33.1	)	(55.8	)
Noninterest expense
Salaries and employee benefits		7,080		7,343		5,560	(3.6	)	27.3
Occupancy and equipment		1,560		1,537		1,418	1.5		10.0
Data processing and communication		514		586		637	(12.3	)	(19.3	)
Professional fees		330		602		267	(45.2	)	23.6
FDIC insurance and regulatory assessments		176		238		182	(26.1	)	(3.3	)
Promotion and advertising		12		177		156	(93.2	)	(92.3	)
Directors’ fees		145		170		166	(14.7	)	(12.7	)
Foundation donation and other contributions		851		875		901	(2.7	)	(5.5	)
Other expenses		659		810		304	(18.6	)	116.8
Total noninterest expense		11,327		12,338		9,591	(8.2	)	18.1
Income before income tax expense		11,117		12,165		12,896	(8.6	)	(13.8	)
Income tax expense		3,089		3,515		3,762	(12.1	)	(17.9	)
Net income	$	8,028	$	8,650	$	9,134	(7.2	) %	(12.1	) %

Book value per share	$	11.59	$	11.19	$	10.92	3.6	%	6.1	%
Earnings per share - Basic	$	0.52	$	0.56	$	0.60	(7.1	) %	(13.3	) %
Earnings per share - Diluted	$	0.51	$	0.55	$	0.59	(7.3	) %	(13.6	) %

Shares of common stock outstanding		15,270,344		15,199,840		15,137,808	0.5	%	0.9	%
Weighted Average Shares:
- Basic		15,208,308		15,195,826		15,136,229	0.1	%	0.5	%
- Diluted		15,264,971		15,275,156		15,227,291	(0.1	) %	0.2	%

Key Ratios


	For the Three Months Ended						Change 4Q22 vs.
	4Q22		3Q22		4Q21		3Q22		4Q21
Return on average assets (ROA) ⁽¹⁾	1.56	%	1.77	%	2.11	%	(0.2	) %	(0.6	) %
Return on average equity (ROE) ⁽¹⁾	18.58	%	19.91	%	22.68	%	(1.3	) %	(4.1	) %
Net interest margin ⁽¹⁾	4.08	%	4.31	%	4.07	%	(0.2	) %	—	%
Efficiency ratio	48.36	%	49.03	%	39.34	%	(0.7	) %	9.0	%

Total risk-based capital ratio	12.87	%	13.10	%	13.66	%	(0.2	) %	(0.8	) %
Tier 1 risk-based capital ratio	11.70	%	11.92	%	12.42	%	(0.2	) %	(0.7	) %
Common equity tier 1 ratio	11.70	%	11.92	%	12.42	%	(0.2	) %	(0.7	) %
Leverage ratio	9.38	%	9.52	%	9.58	%	(0.1	) %	(0.2	) %

(1)	Annualized.

CONSOLIDATED STATEMENTS OF INCOME (unaudited)


($ in thousands, except share and per share data)	For the Twelve Months Ended December 31,
($ in thousands, except share and per share data)		2022		2021	% Change
Interest income
Interest and fees on loans	$	82,864	$	62,448	32.7	%
Interest on securities available for sale		3,351		1,085	208.8
Other interest income		1,997		625	219.5
Total interest income		88,212		64,158	37.5
Interest expense
Interest on deposits		11,210		3,132	257.9
Interest on borrowings		91		—	n/m
Total interest expense		11,301		3,132	260.8
Net interest income		76,911		61,026	26.0
Provision for loan losses		2,976		522	470.1
Net interest income after provision for loan losses		73,935		60,504	22.2
Noninterest income
Service charges on deposits		1,675		1,562	7.2
Loan servicing fees, net of amortization		2,416		1,953	23.7
Gain on sale of loans		12,285		11,313	8.6
Other income		1,243		1,189	4.5
Total noninterest income		17,619		16,017	10.0
Noninterest expense
Salaries and employee benefits		27,189		21,253	27.9
Occupancy and equipment		5,964		5,213	14.4
Data processing and communication		2,085		2,000	4.3
Professional fees		1,620		1,192	35.9
FDIC insurance and regulatory assessments		813		583	39.5
Promotion and advertising		543		684	(20.6	)
Directors’ fees		682		593	15.0
Foundation donation and other contributions		3,393		2,890	17.4
Other expenses		2,541		1,457	74.4
Total noninterest expense		44,830		35,865	25.0
Income before income tax expense		46,724		40,656	14.9
Income tax expense		13,414		11,816	13.5
Net income	$	33,310	$	28,840	15.5	%

Book value per share	$	11.59	$	10.92	6.1	%
Earnings per share - Basic	$	2.15	$	1.89	13.8	%
Earnings per share - Diluted	$	2.14	$	1.88	13.8	%

Shares of common stock outstanding		15,270,344		15,137,808	0.9	%
Weighted Average Shares:
- Basic		15,171,240		15,087,686	0.6	%
- Diluted		15,231,418		15,155,347	0.5	%

Key Ratios


	For the Twelve Months Ended December 31,
	2022		2021		Change
Return on average assets (ROA) ⁽¹⁾	1.74	%	1.83	%	(0.1	) %
Return on average equity (ROE) ⁽¹⁾	19.57	%	18.90	%	0.7	%
Net interest margin ⁽¹⁾	4.18	%	4.02	%	0.2	%
Efficiency ratio	47.42	%	46.55	%	0.9	%

Total risk-based capital ratio	12.87	%	13.66	%	(0.8	) %
Tier 1 risk-based capital ratio	11.70	%	12.42	%	(0.7	) %
Common equity tier 1 ratio	11.70	%	12.42	%	(0.7	) %
Leverage ratio	9.38	%	9.58	%	(0.2	) %

(1)	Annualized.

ASSET QUALITY


($ in thousands)	As of and For the Three Months Ended
($ in thousands)		4Q22			3Q22			4Q21
Nonaccrual Loans ⁽¹⁾	$	2,639		$	2,251		$	3,000
Loans 90 days or more past due, accruing ⁽²⁾		441			—			200
Accruing restructured loans		—			—			—
Nonperforming loans		3,080			2,251			3,200
Other real estate owned ("OREO")		—			—			—
Nonperforming assets	$	3,080		$	2,251		$	3,200

Criticized loans ⁽³⁾ by loan type:
Commercial real estate	$	563		$	—		$	—
SBA loans		1,472			1,817			2,688
C&I loans		555			742			313
Home mortgage loans		1,280			983			1,038
Total criticized loans ⁽³⁾	$	3,870		$	3,542		$	4,039

Nonperforming assets/total assets		0.15	%		0.11	%		0.19	%
Nonperforming assets / gross loans plus OREO		0.18	%		0.14	%		0.24	%
Nonperforming loans / gross loans		0.18	%		0.14	%		0.24	%
Allowance for loan losses / nonperforming loans		625	%		816	%		503	%
Allowance for loan losses / nonperforming assets		625	%		816	%		503	%
Allowance for loan losses / gross loans		1.13	%		1.14	%		1.23	%
Criticized loans ⁽³⁾ / gross loans		0.23	%		0.22	%		0.31	%
Classified loans / gross loans		0.19	%		0.22	%		0.31	%

Net charge-offs (recoveries)	$	105		$	(5	)	$	168
Net charge-offs (recoveries) to average gross loans ⁽⁴⁾		0.03	%		(0.00	) %		0.05	%

(1)	Includes the guaranteed portion of SBA loans that are in liquidation totaling $606 thousand, $442 thousand and $1.0 million as of December 31, 2022, September 30, 2022 and December 31, 2021, respectively.
(2)	Includes the guaranteed portion of PPP loans totaling $200 thousand as of December 31, 2021.
(3)	Consists of special mention, substandard, doubtful and loss categories.
(4)	Annualized.


($ in thousands)	4Q22	3Q22	4Q21
Accruing delinquent loans 30-89 days past due
30-59 days	$ 1,918	$ 360	$ 76
60-89 days	1,559	845	336
Total ⁽¹⁾	$ 3,477	$ 1,205	$ 412

(1)	Includes the guaranteed portion of PPP loans totaling $756 thousand and $408 thousand as of September 30, 2022 and December 31, 2021, respectively.

AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS


	For the Three Months Ended
	4Q22						3Q22						4Q21
($ in thousands)	Average Balance		Interest and Fees		Yield/ Rate ⁽¹⁾		Average Balance		Interest and Fees		Yield/ Rate ⁽¹⁾		Average Balance		Interest and Fees		Yield/ Rate ⁽¹⁾
Interest-earning assets:
Interest-bearing deposits in other banks	$	75,988	$	734	3.78	%	$	75,599	$	427	2.21	%	$	192,302	$	73	0.15	%
Federal funds sold and other investments		12,074		196	6.47			12,221		146	4.78			11,012		116	4.23
Available-for-sale debt securities, at fair value		186,461		1,237	2.66			172,696		881	2.04			122,137		362	1.19
Real estate loans		836,609		11,172	5.30			810,158		10,144	4.97			685,394		7,774	4.50
SBA loans		289,408		6,681	9.16			286,903		5,850	8.09			400,059		6,829	6.77
C&I loans		114,265		1,917	6.66			140,098		1,952	5.53			133,104		1,334	3.98
Home mortgage loans		449,684		4,929	4.38			375,804		3,820	4.07			123,822		1,320	4.27
Consumer & other loans		1,676		20	4.80			1,037		14	4.88			1,035		14	5.21
Loans ⁽²⁾		1,691,642		24,719	5.81			1,614,000		21,780	5.36			1,343,414		17,271	5.10
Total interest-earning assets		1,966,165		26,886	5.43			1,874,516		23,234	4.92			1,668,865		17,822	4.24
Noninterest-earning assets		87,189						83,398						62,996
Total assets	$	2,053,354					$	1,957,914					$	1,731,861

Interest-bearing liabilities:
Money market deposits and others	$	515,747	$	3,045	2.34	%	$	502,166	$	1,506	1.19	%	$	378,849	$	283	0.30	%
Time deposits		569,584		3,553	2.47			445,271		1,383	1.23			401,938		443	0.44
Total interest-bearing deposits		1,085,331		6,598	2.41			947,437		2,889	1.21			780,787		726	0.37
Borrowings		8,158		90	4.35			130		1	3.00			4		—	—
Total interest-bearing liabilities		1,093,489		6,688	2.43			947,567		2,890	1.21			780,791		726	0.37
Noninterest-bearing liabilities:
Noninterest-bearing deposits		751,405						806,289						765,012
Other noninterest-bearing liabilities		35,593						30,258						24,994
Total noninterest-bearing liabilities		786,998						836,547						790,006
Shareholders’ equity		172,867						173,800						161,064
Total liabilities and shareholders’ equity	$	2,053,354					$	1,957,914					$	1,731,861

Net interest income / interest rate spreads			$	20,198	3.01	%			$	20,344	3.71	%			$	17,096	3.87	%
Net interest margin					4.08	%					4.31	%					4.07	%

Cost of deposits & cost of funds:
Total deposits / cost of deposits	$	1,836,736	$	6,598	1.43	%	$	1,753,726	$	2,889	0.65	%		1,545,799	$	726	0.19	%
Total funding liabilities / cost of funds	$	1,844,894	$	6,688	1.44	%	$	1,753,856	$	2,890	0.65	%		1,545,803	$	726	0.19	%

(1)	Annualized.
(2)	Includes loans held for sale.

AVERAGE BALANCE SHEET, INTEREST AND YIELD/RATE ANALYSIS


	For the Twelve Months Ended December 31,
	2022						2021
($ in thousands)	Average Balance		Interest and Fees		Yield/ Rate ⁽¹⁾		Average Balance		Interest and Fees		Yield/ Rate ⁽¹⁾
Interest-earning assets:
Interest-bearing deposits in other banks	$	79,482	$	1,399	1.76	%	$	132,090	$	170	0.13	%
Federal funds sold and other investments		11,810		598	5.06			10,755		455	4.23
Available-for-sale debt securities, at fair value		170,479		3,351	1.97			108,346		1,085	1.00
Real estate loans		777,776		37,861	4.87			672,045		30,645	4.56
SBA loans		321,757		24,073	7.48			355,114		21,760	6.13
C&I loans		142,630		7,217	5.06			114,629		4,463	3.89
Home mortgage loans		334,984		13,660	4.08			122,465		5,520	4.51
Consumer & other loans		1,071		53	4.94			1,095		60	5.51
Loans ⁽²⁾		1,578,218		82,864	5.25			1,265,348		62,448	4.94
Total interest-earning assets		1,839,989		88,212	4.79			1,516,539		64,158	4.23
Noninterest-earning assets		76,883						55,200
Total assets	$	1,916,872					$	1,571,739

Interest-bearing liabilities:
Money market deposits and others	$	475,414	$	5,305	1.12	%	$	362,900	$	1,134	0.31	%
Time deposits		445,169		5,905	1.33			378,585		1,998	0.53
Total interest-bearing deposits		920,583		11,210	1.22			741,485		3,132	0.42
Borrowings		2,089		91	4.33			1,988		—	—
Total interest-bearing liabilities		922,672		11,301	1.22			743,473		3,132	0.42
Noninterest-bearing liabilities:
Noninterest-bearing deposits		796,175						656,130
Other noninterest-bearing liabilities		27,829						19,558
Total noninterest-bearing liabilities		824,004						675,688
Shareholders’ equity		170,196						152,578
Total liabilities and shareholders’ equity	$	1,916,872						1,571,739

Net interest income / interest rate spreads			$	76,911	3.57	%			$	61,026	3.81	%
Net interest margin					4.18	%					4.02	%

Cost of deposits & cost of funds:
Total deposits / cost of deposits	$	1,716,758	$	11,210	0.65	%		1,397,615	$	3,132	0.22	%
Total funding liabilities / cost of funds	$	1,718,847	$	11,301	0.66	%		1,399,603	$	3,132	0.22	%

(1)	Annualized.
(2)	Includes loans held for sale.

Contacts

Investor Relations
OP Bancorp
Christine Oh
EVP & CFO
213.892.1192
Christine.oh@myopenbank.com

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