OP Bancorp(OPBK) - 2022 Q3 - Quarterly Report

Financial Performance - Net income for the three months ended September 30, 2022, was $8.7 million, a 4.8% increase from $8.3 million in the same period of 2021[107]. - Net income for the nine months ended September 30, 2022, was $25,282,000, an increase of 28.3% from $19,706,000 in 2021[119]. - Noninterest income for the nine months ended September 30, 2022, was $14.4 million, an increase of $5.7 million or 64.9%, compared to $8.7 million for the same period in 2021[144]. - Net interest income for the three months ended September 30, 2022, increased to $20.3 million, up by $3.8 million or 22.6% from $16.6 million[107]. - Net interest income for the nine months ended September 30, 2022, was $61,326,000, an increase of 32.1% from $46,336,000 in 2021[119]. Asset Growth - Total assets increased to $2.03 billion, up by $349.7 million or 20.8% from $1.68 billion[107]. - Total assets reached $1,957,914,000 as of September 30, 2022, compared to $1,622,857,000 in 2021, reflecting a growth of 21.0%[123]. - Total deposits reached $1.82 billion, an increase of $320.4 million or 21.4% from $1.50 billion[107]. - Total deposits increased to $1.82 billion as of September 30, 2022, up from $1.53 billion at December 31, 2021, reflecting a growth of approximately 18.6%[198]. Loan Portfolio - Gross loans rose to $1.62 billion, an increase of $386.2 million or 31.4% from $1.23 billion[107]. - The loan portfolio included $830.1 million in commercial real estate loans, representing 51.3% of total loans as of September 30, 2022, compared to $701.5 million, or 53.3%, as of December 31, 2021[171]. - Home mortgage loans increased significantly to $419.5 million as of September 30, 2022, compared to $173.3 million at December 31, 2021, marking a growth of about 142.3%[179]. - The SBA loan portfolio decreased to $232.6 million as of September 30, 2022, down from $275.9 million as of December 31, 2021, reflecting a decline of approximately 15.7%[177]. Noninterest Expenses - Total noninterest expense for the three months ended September 30, 2022, was $12.3 million, an increase of $2.8 million, or 29.6%, compared to $9.5 million for the same period in 2021[147]. - Total noninterest expense for the nine months ended September 30, 2022, was $33.5 million, an increase of $7.2 million, or 27.5%, compared to $26.3 million for the same period in 2021, driven by higher salaries and employee benefits, occupancy and equipment, and other expenses[151]. - Salaries and employee benefits expense for the three months ended September 30, 2022, was $7.3 million, an increase of $1.6 million, or 28.3%, due to an increase in salaries and employee incentive accruals[148]. Loan Losses and Allowance - The allowance for loan losses to gross loans receivable was 1.14% as of September 30, 2022, compared to 1.23% as of December 31, 2021[109]. - Provision for loan losses was $1,999,000 for the nine months ended September 30, 2022, compared to a reversal of $1,376,000 in 2021, indicating a change of $3,375,000[119]. - The total allowance for loan losses was $18.37 million as of September 30, 2022, compared to $16.12 million at December 31, 2021, indicating an increase of approximately 13.9%[191]. Capital Ratios - The total capital to risk-weighted assets ratio for the consolidated entity was 13.10% as of September 30, 2022, exceeding the minimum requirement for being considered "well-capitalized"[206]. - The Tier 1 capital to risk-weighted assets ratio for the consolidated entity was 11.92% as of September 30, 2022, above the required minimum of 6.00%[207]. - The CET1 capital to risk-weighted assets ratio for the consolidated entity was also 11.92% as of September 30, 2022, surpassing the minimum requirement of 4.50%[207]. Interest Rate Risk - Interest rate risk is identified as the primary source of market risk, with management actively monitoring and managing this risk through various strategies[208]. - The net interest sensitivity for a +400 basis points shift is 1.13%, compared to 26.96% on December 31, 2021[217]. - The economic value of equity sensitivity decreased significantly from (8.18)% on December 31, 2021, to (52.12)% with a +400 basis points shift as of September 30, 2022[217].