OP Bancorp(OPBK) - 2022 Q1 - Quarterly Report

Financial Performance - Net income for the three months ended March 31, 2022, was $8.2 million, an increase of $3.1 million or 60.6% from $5.1 million in the same period of 2021[109] - Net interest income increased to $17.3 million, a rise of $4.5 million or 35.6% from $12.8 million, primarily due to higher interest income on loans[109] - Noninterest income for the three months ended March 31, 2022, was $4.2 million, an increase of $1.3 million, or 42.1%, compared to $3.0 million for the same period in 2021[128] - The total gain on sale of loans was $3.2 million for the three months ended March 31, 2022, compared to $1.9 million for the same period in 2021, an increase of 72.1%[129] - Noninterest expense for the three months ended March 31, 2022, was $9.7 million, an increase of $1.7 million, or 21.3%, compared to $8.0 million for the same period in 2021[130] Asset and Loan Growth - Total assets reached $1.86 billion, an increase of $408.6 million or 7.9% from $1.46 billion[109] - Gross loans amounted to $1.43 billion, up $272.5 million or 23.6% from $1.16 billion, driven by Hana loan purchases and home mortgage loan purchases[109] - Total deposits increased to $1.67 billion, a growth of $386.6 million or 30.1% from $1.29 billion, mainly due to an increase in noninterest-bearing deposits[109] - The home mortgage loan portfolio grew by $93.2 million, or 53.8%, totaling $266.5 million as of March 31, 2022, primarily due to an $81.6 million purchase from third-party mortgage originators[152] - The commercial real estate loan portfolio reached $730.8 million as of March 31, 2022, an increase of $29.4 million from $701.5 million as of December 31, 2021[148] Capital and Equity - Shareholders' equity rose to $166 million, an increase of $19 million or 12.9% from $147 million[109] - The company reported total capital to risk-weighted assets at 13.29%, exceeding the minimum requirement to be considered "well-capitalized"[184] - The Tier 1 capital ratio was 12.11% as of March 31, 2022, compared to 13.66% as of December 31, 2021, indicating a slight decrease in capital adequacy[186] Loan Losses and Allowances - The allowance for loan losses to gross loans receivable was 1.17%, a slight decrease from 1.23% as of December 31, 2021[110] - Provision for loan losses decreased to $341 thousand for the three months ended March 31, 2022, down $279 thousand, or 45.0%, from $620 thousand for the same period in 2021[125] - The allowance for loan losses increased from $16.123 million as of December 31, 2021, to $16.672 million as of March 31, 2022[145] - The total allowance for loan losses to nonperforming loans ratio was 594% as of March 31, 2022, compared to 504% at December 31, 2021[170] Liquidity and Deposits - Total liquid assets as of March 31, 2022, were $291,158,000, up from $265,903,000 as of December 31, 2021, indicating improved liquidity[179] - The loans-to-deposit ratio was 84.4% as of March 31, 2022, slightly down from 84.6% at the end of 2021, with net loans totaling $1,411,738,000[176] - Noninterest-bearing demand deposits accounted for 50.7% of total deposits as of March 31, 2022, up from 50.5% at December 31, 2021[172] Interest Rate Risk Management - Interest rate risk is identified as the primary source of market risk for the company, arising from changes in market interest rates affecting earnings and asset values[187] - The company continuously monitors its liquidity position to meet both short-term and long-term cash flow requirements, ensuring a balance between assets and liabilities[175] - The company's asset liability committee (ALM) establishes broad policy limits for interest rate risk, while the management's asset liability committee (ALCO) sets specific operating guidelines[189] - The net interest income simulation model evaluates potential changes in net interest income under various hypothetical interest rate scenarios[193] - An asset sensitive position indicates that an increase in short-term interest rates is expected to generate higher net interest income[191]