OP Bancorp
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
OPBK$14.76-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001628280-24-023574
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001628280-24-037215
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 131 previous paragraphs and 159 current paragraphs.
86 unchanged; 42 reworded; 23 added; 3 removed; 0 previous and 8 current paragraphs rearranged.
Tables are not compared: 23 previous and 29 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (23)
Current report
•Net interest income decreased to $16.2 million, a decrease of $1.1 million, or 6.1%, from $17.3 million.
Current report
•Net income was $5.4 million or $0.36 per diluted common share, a decrease of $655 thousand, or 10.8%, from $6.1 million or $0.39 per diluted common share.
Current report
For the six months ended June 30, 2024 compared to six months ended June 30, 2023
Current report
•Net interest income decreased to $32.2 million, a decrease of $3.0 million, or 8.5%, from $35.1 million.
Current report
We reported net income for the six months ended June 30, 2024 of $10.7 million, a decrease of $3.0 million, or 21.7%, compared to net income of $13.6 million for the same period of 2023. The decrease was primarily due to a $3.0 million decrease in net interest income and a $1.1 million increase in provision for credit losses, offset by a $1.4 million decrease in income tax expense.
Current report
(1)Annualized.
Current report
Net interest income decreased $1.1 million, or 6.1%, to $16.2 million for the three months ended June 30, 2024 from $17.3 million for the same period of 2023, primarily due to higher interest expense on interest-bearing deposits, partially offset by higher interest income on loans and deposits in other banks as our deposit costs repriced quicker than our interest-earning asset yields following the Federal Reserve’s rate increases.
Current report
Interest expense on interest-bearing deposits increased $5.4 million, or 45.5%, to $17.3 million for the three months ended June 30, 2024, compared with $11.9 million for the same period of 2023. The increase was primarily due to a $239.8 million, or 20.0%, increase in average balance of interest-bearing deposits and an 86 basis point increase in average cost of interest-bearing deposits driven by the Federal Reserve's rate increases.
Current report
Interest income on interest-bearing deposits in other banks increased $844 thousand, or 84.1%, to $1.8 million for the three months ended June 30, 2024, compared with $1.0 million for the same period of 2023. The increase was primarily due to a $56.8 million, or 71.7%, increase in average balance of interest-bearing deposits in other banks and a 36 basis point increase in average yield of interest-bearing deposits in other banks.
Current report
Net interest income decreased $3.0 million, or 8.5%, to $32.2 million for the six months ended June 30, 2024 from $35.1 million for the same period of 2023, primarily due to higher interest expense on interest-bearing deposits, partially offset by higher interest income on loans as our deposit costs repriced quicker than our interest-earning asset yields following the Federal Reserve’s rate increases.
Current report
Interest income on loans increased $7.4 million to $60.7 million for the six months ended June 30, 2024, compared with $53.3 million for the same period of 2023, primarily due to a $100.5 million, or 5.8%, increase in average balance of loans and a 46 basis point increase in average yield on loans as a result of the Federal Reserve's rate increase.
Current report
The provision for credit losses was $617 thousand for the three months ended June 30, 2024, compared to none for the same period of 2023. The provision for credit losses on loans of $627 thousand was partially offset by a $10 thousand reversal of credit losses on off-balance sheet exposure. The provision for credit losses on loans of $627 thousand was primarily due to a $634 thousand increase in the qualitative reserve. The quantitative reserve was unchanged from the prior quarter. The increase in the qualitative reserve was primarily due to weakening economic and business conditions, increasing criticized loans, and declining collateral values for collateral dependent CRE loans for the three months ended June 30, 2024.
Current report
Noninterest income for the three months ended June 30, 2024 was $4.2 million, an increase of $579 thousand, or 16.1%, compared to $3.6 million for the same period of 2023, primarily due to increases in gain on sale of loans, service charges on deposits, and other income.
Current report
Other income was $491 thousand for the three months ended June 30, 2024, compared to $339 thousand for the same period of 2023, an increase of $152 thousand, or 44.8%, primarily due to an increase of $98 thousand in credit related fee income.
Current report
Service charges on deposits was $1.4 million for the six months ended June 30, 2024, compared to $991 thousand for the same period of 2023, an increase of $414 thousand, or 41.8%, primarily due to an increase in deposit analysis fees from an increase in the number of analysis accounts.
Current report
Salaries and employee benefits for the three months ended June 30, 2024 was $7.6 million, compared to $7.7 million for the same period of 2023, a decrease of $113 thousand, or 1.5%. The decrease was primarily due to decreases in employee incentive accruals and employee vacation accruals.
Current report
Other expense for the three months ended June 30, 2024 was $779 thousand, an increase of $68 thousand, or 9.6%, compared to $711 thousand for the same period of 2023. The increase was primarily due to an increase of $84 thousand in OREO expense.
Current report
Noninterest expense for the six months ended June 30, 2024 was $24.3 million, compared with $24.2 million for the same period of 2023, an increase of $138 thousand, or 0.6%, primarily due to increases in salaries and employee benefits expense and occupancy and equipment expense, primarily offset by decreases in foundation donation and other contributions, and FDIC insurance and regulatory assessments.
Current report
Occupancy and equipment for the six months ended June 30, 2024 was $3.3 million, compared to $3.2 million for the same period of 2023, an increase of $147 thousand, or 4.6%. The increase was primarily due to the opening of a new full service branch in the third quarter of 2023.
Current report
FDIC insurance and regulatory assessments for the six months ended June 30, 2024 was $752 thousand, a decrease of $135 thousand, or 15.2%, compared to $887 thousand for the same period of 2023, primarily due to lower FDIC assessment amounts driven by lower base assessment rates compared to the same period in 2023.
Current report
Income tax expense was $4.2 million for the six months ended June 30, 2024, compared to $5.5 million for the same period of 2023, primarily due to a $4.3 million, or 22.6%, decrease in income before income tax to $14.8 million for the six months ended June 30, 2024 from $19.2 million for the same period of 2023. Effective tax rates were 28.1% and 28.9% for the six months ended June 30, 2024 and 2023, respectively.
Current report
(1) Excludes loans held for sale.
Current report
(2) Annualized
Removed paragraphs (3)
Previous report
•Net interest income decreased to $16.0 million, a decrease of $1.9 million, or 10.7%, from $17.9 million.
Previous report
Net interest income decreased $1.9 million, or 10.7%, to $16.0 million for the three months ended March 31, 2024 from $17.9 million for the same period of 2023, primarily due to higher interest expense on deposits and borrowings, partially offset by higher interest income on loans. As with most smaller community banks, our interest income on loans will tend to reprice more slowly than deposits in a rising interest rate environment, both because our loans tend to have longer maturity and repricing periods and because demand for loans and draws on existing lines of credit tend to decrease as interest rates increase.
Previous report
Interest expense on borrowings increased $939 thousand to $1.3 million for the three months ended March 31, 2024, compared with $320 thousand for the same period of 2023. The increase was primarily due to a $82.5 million or 315.3%, increase in average balance of borrowings.
Reworded paragraphs (42)
Previous wording
Our results of operations depend primarily on our net interest income. We drive our income from interest received on our loan portfolio and the fee income we receive in connection with our deposits, and the sale and service of SBA loans. Our major operating expenses are the interest we pay on deposits, the salaries and related benefits we pay our management and staff, and the rent we pay on our leased properties. We rely primarily on locally-generated deposits, mostly from the Korean-American market within California, to fund our loan activities. We currently operate eight branches in Los Angeles and Orange Counties in California, one branch in Santa Clara, California, one branch in Carrollton, Texas and one branch in Las Vegas, Nevada. We have four loan production offices in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, and Lynnwood, Washington.
Current wording
Our results of operations depend primarily on our net interest income. We drive our income from interest received on our loan portfolio, the fee income we receive in connection with our deposits, and the sale and service of SBA loans. Our major operating expenses are the interest we pay on deposits and other borrowings, the salaries and related benefits we pay our management and staff, and the rent we pay on our leased properties. We rely primarily on locally-generated deposits, mostly from the Korean-American market within California, to fund our loan activities. We currently operate eight branches in Los Angeles and Orange Counties in California, one branch in Santa Clara, California, one branch in Carrollton, Texas and one branch near Las Vegas, Nevada. We have four loan production offices in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, and Lynnwood, Washington.
Previous wording
Beginning in late 2021, the Federal Reserve Board Open Markets Committee, which strives to manage benchmark interest rates in the United States, began a series of upward adjustments to the “discount rate” for short-term borrowings in response to perceived increases in inflationary pressures. Financial institutions and markets promptly followed these adjustments, significantly increasing interest rate pricing on loans and deposits. While such adjustments are commonplace and tend to affect the banking industry as a whole, the pace and degree of these adjustments were nearly unprecedented, resulting in banks, including the Bank, experiencing substantial pressure on multiple fronts. In particular, banks were forced to increase interest rates paid on deposits in order to meet competitive pressures from other financial institutions, as well as from treasury securities and other investment opportunities that offered greater earning capabilities for those customers. These increases correspondingly increased the Bank’s cost of funds and exerted downward pressure on our net interest margins.
Current wording
In recent periods, our earnings have been affected by a series of upward adjustments to the “discount rate” for short-term borrowings updated by the Federal Reserve Board Open Markets Committee in response to perceived increases in inflationary pressures. Financial institutions and markets promptly followed these adjustments, significantly increasing interest rate pricing on loans and deposits. While such adjustments are commonplace and tend to affect the banking industry as a whole, the pace and degree of these adjustments were nearly unprecedented, resulting in banks, including the Bank, experiencing substantial pressure on multiple fronts. In particular, banks were forced to increase interest rates paid on deposits in order to meet competitive pressures from other financial institutions, as well as from treasury securities and other investment opportunities that offered greater earning capabilities for those customers. These increases correspondingly increased the Bank’s cost of funds and exerted downward pressure on our net interest margins.
Previous wording
The increases in market interest rates also were reflected in loan pricing, which had multiple effects, including a reduction in borrowing (and thus a reduction in interest paid to banks) by customers that had the ability to avoid or defer additional indebtedness, a decline in the origination of new loans, and an increase in credit risk as borrowers who faced rising interest rates found it more difficult to comply with their loan obligations. The combination of these factors has exerted downward pressure on our fee income, the volume of our interest-earning assets and our net interest income.
Current wording
The increases in market interest rates also affected in loan pricing, which had multiple effects, including a reduction in borrowing (and thus a reduction in interest paid to banks) by customers that had the ability to avoid or defer additional indebtedness, a decline in the origination of new loans, and an increase in credit risk as borrowers who faced rising interest rates found it more difficult to comply with their loan obligations. The combination of these factors has exerted downward pressure on our fee income, the volume of our interest-earning assets and our net interest income.
Previous wording
Lastly, as a result of the prolonged low-interest-rate environment that had prevailed for years prior to the more recent market rate increases, the Bank, like most other financial institutions, had invested in treasury securities and other relatively low-yielding but stable instruments as a means to preserve liquidity, accepting the lower returns as a trade-off for a perceived lower risk profile. However, the rapidity of the Federal Reserve’s rate increases resulted in a dramatic loss of value for bonds that were paying at lower interest rates as investors eschewed those investments for higher-yielding fixed- and adjustable-rate debt securities. These forces even resulted in the closure of three large U.S. banks, including two banks with extensive operations in our market area, when customers grew alarmed at the apparent instability in the banking sector in general, and these banks in particular.
Current wording
Lastly, as a result of the prolonged low-interest-rate environment that had prevailed for years prior to the more recent market rate increases, the Bank, like most other financial institutions, had invested in treasury securities and other relatively low-yielding but stable instruments as a means to preserve liquidity, accepting the lower returns as a trade-off for a perceived lower risk profile. However, the rapidity of the Federal Reserve’s rate increases resulted in a dramatic loss of value for bonds that were paying at lower interest rates as investors eschewed those investments for higher-yielding fixed- and adjustable-rate debt securities. These forces even resulted in the closure of three large U.S. banks in early 2023, including two banks with extensive operations in our market area, when customers grew alarmed at the apparent instability in the banking sector in general, and these banks in particular.
Previous wording
•Total assets were $2.23 billion, an increase of $86.8 million, or 4.0%, from $2.15 billion.
Current wording
•Total assets were $2.29 billion, an increase of $143.0 million, or 6.7%, from $2.15 billion.
Previous wording
•Gross loans were $1.80 billion, an increase of $39.1 million, or 2.2%, from $1.77 billion.
Current wording
•Gross loans were $1.87 billion, an increase of $104.3 million, or 5.9%, from $1.77 billion.
Previous wording
•Total deposits were $1.90 billion, a increase of $87.9 million, or 4.9%, from $1.81 billion.
Current wording
•Total deposits were $1.94 billion, an increase of $133.3 million, or 7.4%, from $1.81 billion.
Previous wording
•Shareholders’ equity was $194.7 million, an increase of $2.1 million, or 1.1%, from $192.6 million.
Current wording
•Shareholders’ equity was $196.0 million, an increase of $3.4 million, or 1.7%, from $192.6 million.
Previous wording
•Net income was $5.2 million or $0.34 per diluted common share, a decrease of $2.3 million, or 30.6%, from $7.5 million or $0.48 per diluted common share.
Current wording
•Net income was $10.7 million or $0.70 per diluted common share, a decrease of $3.0 million, or 21.7%, from $13.6 million or $0.88 per diluted common share.
Previous wording
We reported net income for the three months ended March 31, 2024 of $5.2 million, a decrease of $2.3 million, or 30.6%, compared to net income of $7.5 million for the same period of 2023. The decrease was primarily due to a $1.9 million decrease in net interest income, a $709 thousand decrease in noninterest income, $483 thousand increase in provision for credit losses and a $249 thousand increase in noninterest expense, offset by a $1.0 million decrease income tax expense.
Current wording
We reported net income for the three months ended June 30, 2024 of $5.4 million, a decrease of $655 thousand, or 10.8%, compared to net income of $6.1 million for the same period of 2023. The decrease was due to a $1.1 million decrease in net interest income and a $617 thousand increase in provision for credit losses, primarily offset by a $579 thousand increase in noninterest income and a $330 thousand decrease in income tax expense.
Previous wording
The management of interest income and expense is fundamental to our financial performance. Net interest income, the difference between interest income and interest expense, is the largest component of our total revenue. Management closely monitors both total net interest income and the net interest margin (net interest income divided by average earning assets). We seek to maximize net interest income without exposing us to an excessive level of interest rate risk through our asset and liability policies. Interest rate risk is managed by monitoring the pricing, maturity and repricing options of all classes of interest-bearing assets and liabilities. Our net interest margin is also adversely impacted by the reversal of interest on nonaccrual loans and the reinvestment of loan payoffs into lower yielding investment securities and other short-term investments.
Current wording
The management of interest income and expense is fundamental to our financial performance. Net interest income, the difference between interest income and interest expense, is the largest component of our total revenue. Management closely monitors both total net interest income and the net interest margin (net interest income divided by average earning assets). We seek to maximize net interest income without exposing us to excessive interest rate risk through our asset and liability policies. Interest rate risk is managed by monitoring the pricing, maturity and repricing options of all classes of interest-bearing assets and liabilities. Our net interest margin is also adversely impacted by the reversal of interest on nonaccrual loans and the reinvestment of loan payoffs into lower yielding investment securities and other short-term investments.
Previous wording
Interest income on loans increased $4.1 million to $30.1 million for the three months ended March 31, 2024, compared with $26.0 million for the same period of 2023, primarily due to a $83.5 million, or 4.8%, increase in average balance of loans and a 59 basis point increase in average yield on loans as a result of the Federal Reserve's rate increase.
Current wording
Interest income on loans increased $3.3 million, or 12.2%, to $30.6 million for the three months ended June 30, 2024, compared with $27.3 million for the same period of 2023, primarily due to a $117.5 million, or 6.8%, increase in average balance of loans and a 33 basis point increase in average yield on loans as a result of the Federal Reserve's rate increase.
Previous wording
Net interest margin was 3.06% for the three months ended March 31, 2024, a 50 basis point decrease from 3.56% for the same period of 2023, primarily due to a 60 basis point decrease in net interest spread from the higher increase in average cost of interest-bearing deposits and borrowings compared to the increase in average yield on loans.
Current wording
Net interest margin was 2.96% for the three months ended June 30, 2024, a 44 basis point decrease from 3.40% for the same period of 2023, primarily due to a 45 basis point decrease in net interest spread from the higher increase in average cost of interest-bearing deposits and borrowings compared to the increase in average yield on loans.
Previous wording
Interest expense on deposits increased $5.3 million to $15.7 million for the three months ended March 31, 2024, compared with $10.4 million for the same period of 2023. The increase was primarily due to a $125.6 million, or 10.5%, increase in average balance of interest-bearing deposits and a 125 basis point increase in average cost of interest-bearing deposits driven by the Federal Reserve's rate increases.
Current wording
Interest expense on interest-bearing deposits increased $10.7 million to $33.0 million for the six months ended June 30, 2024, compared with $22.3 million for the same period of 2023. The increase was primarily due to a $182.7 million, or 15.2%, increase in average balance of interest-bearing deposits and a 106 basis point increase in average cost of interest-bearing deposits driven by the Federal Reserve's rate increases.
Previous wording
The provision for credit losses was $145 thousand for the three months ended March 31, 2024, compared to reversal of credit losses of $338 thousand for the same period of 2023. The provision for credit losses on loans for the three months ended March 31, 2024 of $145 thousand was primarily due to a $1.8 million increase in the quantitative general reserve, mostly offset by a $1.7 million decrease in the qualitative reserve. The increase in the quantitative reserve was due to the increase in the life of home mortgage loans because of the slower prepayment rate based on the 2-year look back period. The decrease in the qualitative reserve was due to noticeable improvements in various asset quality metrics and improving economic and business conditions.
Current wording
The provision for credit losses was $762 thousand for the six months ended June 30, 2024, compared to reversal of credit losses of $258 thousand for the same period of 2023. The provision for credit losses on loans of $820 thousand was partially offset by a $58 thousand reversal of credit losses on off-balance sheet exposure. The provision for credit losses on loans for the six months ended June 30, 2024 of $820 thousand was primarily due to a $1.8 million increase in the quantitative general reserve, partially offset by a $1.1 million decrease in the qualitative reserve. The increase in the quantitative reserve was primarily due to the increase in the life of home mortgage loans because of the slower prepayment rate based on the 2-year look back period. The decrease in the qualitative reserve was due to improvements in various asset quality metrics and improving economic and business conditions compared to those metrics and conditions as of December 31, 2023.
Previous wording
Service charges on deposit was $612 thousand for the three months ended March 31, 2024, compared to $418 thousand for the same period of 2023, an increase of $194 thousand or 46.4%, primarily due to an increase in deposit analysis fees from an increase in the number of analysis accounts.
Current wording
Service charges on deposit was $793 thousand for the three months ended June 30, 2024, compared to $573 thousand for the same period of 2023, an increase of $220 thousand, or 38.4%, primarily due to an increase in deposit analysis fees from an increase in the number of analysis accounts.
Previous wording
Noninterest income for the three months ended March 31, 2024 was $3.6 million, a decrease of $709 thousand, or 16.5%, compared to $4.3 million for the same period of 2023, primarily due to a decrease in gain on sale of loans.
Current wording
Noninterest income for the six months ended June 30, 2024 was $7.8 million, a decrease of $130 thousand, or 1.6%, compared to $7.9 million for the same period of 2023, primarily due to a decrease in gain on sale of loans, offset by an increase in service charge on deposits.
Previous wording
Gain on sale of loans was $1.7 million for the three months ended March 31, 2024, compared to $2.6 million for the same period of 2023, a decrease of $867 thousand or 33.7%. The decrease was primarily due to a lower sold amount in SBA loans, partially offset by a higher average sales premium. We sold $24.8 million of SBA loans with an average premium of 8.33% for the three months ended March 31, 2024, compared to a sale of $44.7 million of SBA loans with an average premium of 7.33% in the same period of 2023.
Current wording
Gain on sale of loans was $4.0 million for the six months ended June 30, 2024, compared to $4.7 million for the same period of 2023, a decrease of $640 thousand, or 13.7%. The decrease was primarily due to a lower sold amount in SBA loans, partially offset by a higher average sales premium rate. We sold $56.9 million of SBA loans with an average premium of 8.47% for the six months ended June 30, 2024, compared to a sale of $81.5 million of SBA loans with an average premium of 7.02% in the same period of 2023.
Previous wording
The following table sets forth the major components of our noninterest expense for the years ended March 31, 2024 and 2023:
Current wording
The following table sets forth the major components of our noninterest expense for the three months ended June 30, 2024 and 2023:
Previous wording
Noninterest expense for the three months ended March 31, 2024 was $12.2 million, compared with $11.9 million for the same period of 2023, an increase of $249 thousand or 2.1%, primarily due to an increase in salaries and employee benefits.
Current wording
Noninterest expense for the three months ended June 30, 2024 was $12.2 million, compared with $12.3 million for the same period of 2023, a decrease of $111 thousand, or 0.9%, primarily due to decreases in salaries and employee benefits, andfoundation donation and other contributions, partially offset by an increase in other expenses.
Previous wording
Foundation donations and other contributions for the three months ended March 31, 2024 was $540 thousand, compared to $753 thousand, a decrease of $213 thousand, or 28.3%. The decrease was primarily due to lower donation accruals for Open Stewardship Foundation as a result of lower net income.
Current wording
Foundation donations and other contributions for the three months ended June 30, 2024 was $539 thousand, a decrease of $55 thousand, or 9.3%, compared to $594 thousand for the same period of 2023. The decrease was primarily due to a lower donation accrual for Open Stewardship as a result of lower net income.
Previous wording
Salaries and employee benefits for the three months ended March 31, 2024 was $7.8 million, compared to $7.3 million for the same period of 2023, an increase of $589 thousand, or 8.1%. The increase was primarily due to an increase from employee salary adjustments in 2023 and an increase in employee health insurance.
Current wording
Salaries and employee benefits for the six months ended June 30, 2024 was $15.4 million, compared to $14.9 million for the same period of 2023, an increase of $476 thousand, or 3.2%. The increase was primarily due to an increase in employee health insurance expense and an increase from employee salary adjustments in 2024.
Previous wording
Income tax expense was $2.0 million for the three months ended March 31, 2024, compared to $3.1 million for the same period of 2023, primarily due to a $3.4 million, or 31.6%, decrease in income before income tax to $7.3 million for the three months ended March 31, 2024 from $10.6 million for the same period of 2023. Effective tax rates were 28.0% and 29.0% for the three months ended March 31, 2024 and 2023, respectively.
Current wording
Income tax expense was $2.1 million for the three months ended June 30, 2024, compared to $2.5 million for the same period of 2023, primarily due to a $985 thousand, or 11.5%, decrease in income before income tax to $7.6 million for the three months ended June 30, 2024 from $8.6 million for the same period of 2023. Effective tax rates were 28.2% and 28.8% for the three months ended June 30, 2024 and 2023, respectively.
Previous wording
We recognized net deferred tax assets of $13.8 million and $13.3 million as of March 31, 2024 and December 31, 2023, respectively. After consideration of the matters in the preceding paragraph, we have determined that it is more likely than not that net deferred tax assets as of March 31, 2024 will be fully realized in future years.
Current wording
We recognized net deferred tax assets of $14.1 million and $13.3 million as of June 30, 2024 and December 31, 2023, respectively. After consideration of the matters in the preceding paragraph, we have determined that it is more likely than not that net deferred tax assets as of June 30, 2024 will be fully realized in future years.
Previous wording
Available-for-sale debt securities decreased $7.0 million, or 3.6%, to $187.2 million as of March 31, 2024 from $194.3 million as of December 31, 2023, primarily due to $5.1 million principal paydowns and a $1.8 million increase in unrealized loss for the three months ended March 31, 2024. No issuer of the available-for-sale securities, other than U.S. Government and its agencies, comprised more than ten percent of our shareholders’ equity as of March 31, 2024 and December 31, 2023.
Current wording
Available-for-sale debt securities decreased $5.0 million, or 2.6%, to $199.2 million as of June 30, 2024 from $194.3 million as of December 31, 2023, primarily due to $12.0 million principal paydowns and a $2.0 million increase in unrealized loss for the six months ended June 30, 2024. No issuer of the available-for-sale securities, other than U.S. Government and its agencies, comprised more than ten percent of our shareholders’ equity as of June 30, 2024 and December 31, 2023.
Previous wording
(1) Includes net deferred loan costs and unamortized premiums of $108 thousand and $140 thousand as of March 31, 2024 and December 31, 2023, respectively.
Current wording
(1) Includes net deferred loan costs and unamortized premiums of $18 thousand and $140 thousand as of June 30, 2024 and December 31, 2023, respectively.
Previous wording
Gross loans increased $39.1 million, or 2.2%, to $1.80 billion as of March 31, 2024, compared to $1.77 billion as of December 31, 2023. The increase was primarily attributable to new loan production of $123.2 million, partially offset by loan payoffs and paydowns of $53.1 million.
Current wording
Gross loans increased $104.3 million, or 5.9%, to $1.87 billion as of June 30, 2024, compared to $1.77 billion as of December 31, 2023. The increase was primarily attributable to new loan production of $222.7 million, partially offset by loan payoffs and paydowns of $109.7 million.
Previous wording
Our loan portfolio is concentrated in commercial real estate, which includes unguaranteed balances in SBA loans, home mortgage and commercial (primarily manufacturing, wholesale, and services oriented entities). We do not have any material concentrations by industry or group of industries in the loan portfolio. However, 90.9% of our gross loans were secured by real property as of March 31, 2024, compared to 92.2% as of December 31, 2023.
Current wording
Our loan portfolio is concentrated in commercial real estate, which includes unguaranteed balances in SBA loans, home mortgage and commercial (primarily manufacturing, wholesale, and services oriented entities). We do not have any material concentrations by industry or group of industries in the loan portfolio. However, 88.9% of our gross loans were secured by real property as of June 30, 2024, compared to 92.2% as of December 31, 2023.
Previous wording
Commercial real estate loans include owner-occupied and non-occupied commercial real estate. We originate both fixed and adjustable rate loans. Adjustable rate loans are based on the Wall Street Journal prime rate. Our commercial real estate loan portfolio totaled $905.5 million as of March 31, 2024 compared to $885.6 million as of December 31, 2023. During the three months ended March 31, 2024, we originated $44.6 million of commercial real estate loans. As of March 31, 2024, approximately 73.7% of the commercial real estate portfolio consisted of fixed-rate loans. Our policy maximum loan-to-value, or LTV, is 70% for commercial real estate loans. As of March 31, 2024, our average loan to value for commercial real estate loans was 50.7%.
Current wording
Commercial real estate loans include owner-occupied and non-occupied commercial real estate. We originate both fixed and adjustable rate loans. Adjustable rate loans are based on the Wall Street Journal prime rate. Our commercial real estate loan portfolio totaled $931.3 million as of June 30, 2024 compared to $885.6 million as of December 31, 2023. During the six months ended June 30, 2024, we originated $86.6 million of commercial real estate loans. As of June 30, 2024, approximately 75.9% of the commercial real estate portfolio consisted of fixed-rate loans. Our policy maximum loan-to-value, or LTV, is 70% for commercial real estate loans. As of June 30, 2024, our average loan to value for commercial real estate loans was 51.0%.
Previous wording
As of March 31, 2024, our SBA portfolio totaled $247.6 million, compared to $239.7 million as of December 31, 2023. We originated $52.4 million for the three months ended March 31, 2024. We sold SBA loans of $24.8 million with a 8.33% average premium during the three months ended March 31, 2024.
Current wording
As of June 30, 2024, our SBA portfolio totaled $242.4 million, compared to $239.7 million as of December 31, 2023. We originated $76.5 million for the six months ended June 30, 2024. We sold SBA loans of $56.9 million with a 8.47% average premium during the six months ended June 30, 2024.
Previous wording
From our total SBA loan portfolio, $231.5 million is secured by real estate and $16.0 million is unsecured or secured by business assets as of March 31, 2024.
Current wording
From our total SBA loan portfolio, $223.8 million is secured by real estate and $18.6 million is unsecured or secured by business assets as of June 30, 2024.
Previous wording
Loans — Commercial and Industrial: Commercial and industrial loans totaled $147.5 million as of March 31, 2024, compared to $121.0 million as of December 31, 2023. We originated $23.8 million for the three months ended March 31, 2024.
Current wording
Loans — Commercial and Industrial: Commercial and industrial loans totaled $188.6 million as of June 30, 2024, compared to $121.0 million as of December 31, 2023. We originated $43.4 million for the six months ended June 30, 2024.
Previous wording
Home mortgage loans totaled $503.0 million as of March 31, 2024, compared to $518.0 million as of December 31, 2023. For the three months ended March 31, 2024, we originated $2.5 million of home mortgage loans and purchased $10.0 million of home mortgage loans from third party mortgage originators.
Current wording
Home mortgage loans totaled $506.9 million as of June 30, 2024, compared to $518.0 million as of December 31, 2023. For the six months ended June 30, 2024, we originated $16.2 million of home mortgage loans. There was no home mortgage loan purchase from third party mortgage originators for the same period.
Previous wording
As of March 31, 2024 and December 31, 2023, we serviced $705.8 million and $707.4 million, respectively, of SBA loans for others. Activity for loan servicing rights was as follows:
Current wording
As of June 30, 2024 and December 31, 2023, we serviced $693.4 million and $707.4 million, respectively, of SBA loans for others. Activity for loan servicing rights was as follows:
Previous wording
The allowance for credit losses was $22.1 million as of March 31, 2024, compared to $22.0 million as of December 31, 2023. Provision of credit losses of $145 thousand was recorded for the three months ended March 31, 2024, compared to reversal of credit losses of $338 thousand for the same period in 2023.
Current wording
The allowance for credit losses was $22.8 million as of June 30, 2024, compared to $22.0 million as of December 31, 2023. Provision of credit losses of $617 thousand was recorded for the three months ended June 30, 2024, compared to none for the same period in 2023. Provision of credit losses of $762 thousand was recorded for the six months ended June 30, 2024, compared to reversal of credit losses of $338 thousand for the same period in 2023.
Previous wording
The following table provides an analysis of the allowance for credit losses, provision for credit losses and net charge-offs, by category, for the three months ended March 31, 2024 and 2023:
Current wording
The following table provides an analysis of the allowance for credit losses, provision for credit losses and net charge-offs, by category, for the three and six months ended June 30, 2024 and 2023:
Previous wording
Nonperforming loans were $4.3 million as of March 31, 2024, compared to $6.1 million as of December 31, 2023. Nonperforming loans excluded the guaranteed portion of SBA loans of $3.1 million and$2.0 million as of March 31, 2024 and December 31, 2023, respectively.
Current wording
Nonperforming loans were $4.4 million as of June 30, 2024, compared to $6.1 million as of December 31, 2023. Nonperforming loans excluded the guaranteed portion of SBA loans of $3.5 million and $2.0 million as of June 30, 2024 and December 31, 2023, respectively.
Previous wording
(1)Excludes guaranteed portion of SBA loans of $3.1 million and $2.0 million as of March 31, 2024 and December 31, 2023, respectively.
Current wording
(1)Excludes guaranteed portion of SBA loans of $3.5 million and $2.0 million as of June 30, 2024 and December 31, 2023, respectively.
Previous wording
Other than deposits, we also utilized FHLB advances as a supplementary funding source to finance our operations. The advances from the FHLB are collateralized by residential and commercial real estate loans. As of March 31, 2024 and December 31, 2023, we had maximum borrowing capacity from the FHLB of $670.4 million and $655.9 million, respectively. We had borrowings from FHLB of $105.0 million as of March 31, 2024 and December 31, 2023, respectively. The Company had estimated uninsured deposits of $1.25 billion, or 65.9% of total deposits, and $1.14 billion, or 63.3% of total deposits, as of March 31, 2024 and December 31, 2023, respectively.
Current wording
Other than deposits, we also utilized FHLB advances as a supplementary funding source to finance our operations. The advances from the FHLB are collateralized by residential and commercial real estate loans. As of June 30, 2024 and December 31, 2023, we had maximum borrowing capacity from the FHLB of $663.5 million and $655.9 million, respectively. We had borrowings from FHLB of $115.0 million and $105.0 million as of June 30, 2024 and December 31,
Previous wording
Liquidity refers to the measure of our ability to meet the cash flow requirements of depositors and borrowers, while at the same time meeting our operating, capital and strategic cash flow needs, all at a reasonable cost. We continuously monitor our liquidity position to ensure that assets and liabilities are managed in a manner that will meet all short-term and long-term cash requirements. We manage our liquidity position to meet the daily cash flow needs of customers, while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of our shareholders. Our short-term and long-term liquidity requirements are primarily met through cash flow from operations, redeployment of prepaying and maturing balances in our loan and investment portfolios, and increases in customer deposits. Other alternative sources of funds will supplement these primary sources to the extent necessary to meet additional liquidity requirements on either a short-term or long-term basis.
Current wording
Liquidity refers to our ability to meet the cash flow requirements of depositors and borrowers, while at the same time meeting our operating, capital and strategic cash flow needs, while effectively balancing the related costs. We continuously monitor our liquidity position to ensure that assets and liabilities are managed in a manner that will meet all short-term and long-term cash requirements. We manage our liquidity position to meet the daily cash flow needs of customers, while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of our shareholders. Our short-term and long-term liquidity requirements are primarily met through cash flow from operations, redeployment of prepaying and maturing balances in our loan and investment portfolios, and increases in customer deposits. Other alternative sources of funds will supplement these primary sources to the extent necessary to meet additional liquidity requirements on either a short-term or long-term basis.
Showing the first 40 of 42 pairs. Open the source sections for the rest.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
(2)Includes income and average balances for Federal Home Loan Bank (“FHLB”) and Pacific Coast Bankers Bank stock, CRA qualified mutual fund, term federal funds, interest-earning time deposits and other miscellaneous interest-earning assets.
Current report — wording carried from elsewhere
(3)Average loan balances include non-accrual loans and loans held for sale.
Current report — wording carried from elsewhere
Net interest margin was 3.01% for the six months ended June 30, 2024, a 47 basis point decrease from 3.48% for the same period of 2023, primarily due to a 52 basis point decrease in net interest spread from the higher increase in average cost of interest-bearing deposits and borrowings compared to the increase in average yield on loans.
Current report — wording carried from elsewhere
Gain on sale of loans was $2.3 million for the three months ended June 30, 2024, compared to $2.1 million for the same period of 2023, an increase of $227 thousand, or 10.8%. The increase was primarily due to a higher average sales premium rate, offset by a lower sold amount in SBA loans. We sold $32.1 million of SBA loans with an average premium of 8.58% for the three months ended June 30, 2024, compared to a sale of $36.8 million of SBA loans with an average premium of 6.64% in the same period of 2023.
Current report — wording carried from elsewhere
The following table sets forth the various components of our noninterest income for the six months ended June 30, 2024 and 2023:
Current report — wording carried from elsewhere
The following table sets forth the major components of our noninterest expense for the six months ended June 30, 2024 and 2023:
Current report — wording carried from elsewhere
Foundation donations and other contributions for the six months ended June 30, 2024 was $1.1 million, a decrease of $268 thousand, or 19.9%, compared to $1.3 million for the same period of 2023. The decrease was primarily due to lower donation accruals for Open Stewardship Foundation as a result of lower net income.
Current report — wording carried from elsewhere
2023, respectively. The Company had estimated uninsured deposits of $860.4 million, or 44.3% of total deposits, and $781.0 million, or 43.2% of total deposits, as of June 30, 2024 and December 31, 2023, respectively.