OP Bancorp(OPBK) - 2020 Q3 - Quarterly Report

Financial Performance - Interest income for Q3 2020 was $13,016,000, a decrease of 13.9% from $15,112,000 in Q3 2019[115]. - Net income for Q3 2020 was $3,595,000, down 10.1% from $4,000,000 in Q3 2019[115]. - For the three months ended September 30, 2020, the company reported net income of $3.6 million, a decrease of 10.1% from $4.0 million in the same period of 2019[130]. - Noninterest income increased $289,000, or 10.6%, to $3.0 million for the three months ended September 30, 2020, compared to $2.7 million for the same period in 2019[148]. - Noninterest income decreased by $1.5 million, or 17.2%, to $7.4 million for the nine months ended September 30, 2020, primarily due to a decrease in other income and gains on loan sales[171]. Loan Loss Provisions - Provision for loan losses increased to $1,399,000 in Q3 2020, compared to $290,000 in Q3 2019, reflecting a significant rise in expected credit losses[115]. - The provision for loan losses increased by $1.1 million, contributing to the decline in net income[130]. - Provision for loan losses increased $1.1 million to $1.4 million for the three months ended September 30, 2020, compared to $290,000 for the same period in 2019[146]. - Provision for loan losses increased by $3.4 million, or 497.7%, to $4.1 million for the nine months ended September 30, 2020, reflecting adjustments for potential adverse impacts from the pandemic[170]. - The increase in qualitative factors accounted for $3.7 million, or 91%, of the provision for loan losses for the nine months ended September 30, 2020[208]. Asset Growth - Total assets as of September 30, 2020, reached $1,339,821,000, up from $1,179,520,000 as of December 31, 2019, indicating a growth of 13.6%[116]. - The company’s total assets increased to $1.29 billion as of September 30, 2020, compared to $1.13 billion in the previous year[134]. - Total assets increased to $1.24 billion as of September 30, 2020, compared to $1.09 billion in 2019[164]. - Total assets increased by $160.3 million, or 13.6%, to $1.34 billion at September 30, 2020, compared to $1.18 billion at December 31, 2019[178]. Loan Performance - Nonperforming loans decreased to $330,000 as of September 30, 2020, down from $1,548,000 as of December 31, 2019, showing improved credit quality[116]. - The allowance for loan losses (ALL) was $14,164,000 as of September 30, 2020, compared to $10,050,000 as of December 31, 2019, representing a 40.8% increase[116]. - The allowance for loan losses increased to $14.2 million at September 30, 2020, compared to $10.1 million at December 31, 2019[188]. - The allowance for loan losses was $14.2 million at September 30, 2020, representing 1.32% of gross loans, up from 1.02% at December 31, 2019[203]. - The commercial real estate loan portfolio totaled $640.3 million as of September 30, 2020, compared to $630.7 million at December 31, 2019[192]. Deposits and Borrowings - Total deposits increased by $149.5 million, or 14.6%, to $1.17 billion at September 30, 2020, compared to $1.02 billion at December 31, 2019[217]. - Noninterest-bearing deposits rose by $194.5 million, or 66.1%, to $488.8 million at September 30, 2020, accounting for 41.8% of total deposits[217]. - The company had $10.0 million in borrowings from the FHLB at September 30, 2020, with a maximum borrowing capacity of $398.4 million[220]. - Total interest-bearing deposits decreased to $663,871 thousand in Q3 2020, down from $701,502 thousand in Q3 2019, a decline of 5.4%[218]. Interest Rate Sensitivity - Interest rate risk is identified as the primary source of market risk, with management actively monitoring and managing this risk[237][238]. - In a hypothetical scenario of a 400 basis points increase in interest rates, net interest income sensitivity is projected to be 21.41% as of September 30, 2020[246]. - Economic Value of Equity sensitivity under a 400 basis points increase in interest rates shows a change of 10.85% as of September 30, 2020[246]. - The company utilizes a net interest income simulation model to evaluate potential changes in net interest income under various interest rate scenarios[243]. Noninterest Expenses - Noninterest expense decreased $437,000, or 5.2%, to $8.0 million for the three months ended September 30, 2020, compared to $8.4 million for the same period in 2019[151]. - Noninterest expense decreased by $1.3 million, or 5.3%, to $23.5 million for the nine months ended September 30, 2020, mainly due to reductions in salaries and employee benefits[173]. - Salaries and employee benefits expense decreased by $1.4 million, or 8.6%, to $14.5 million for the nine months ended September 30, 2020, primarily due to increased deferred loan origination costs[174]. Community Support - The company donated $1.0 million to support small restaurants and $100,000 to local non-profits during the pandemic[119]. - The company offered loan payment deferrals for 172 loan accounts totaling $229.9 million to assist clients affected by the pandemic[121].