OP Bancorp
For the period ended Sep 30, 2024. Filed Nov 14, 2024.
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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.
Sep 30, 2024 · Filed Nov 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 2024-06-30; filed 2024-08-14.
0001628280-24-037215
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001628280-24-047832
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 159 previous paragraphs and 161 current paragraphs.
92 unchanged; 58 reworded; 11 added; 9 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 29 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 (11)
Current report
More recently, following a prolonged low-interest-rate environment, a series of rapid rate increases by the Federal Reserve resulted in a dramatic loss of value for bonds had been priced during the previous market. Those increases had the effect of rapidly diminishing the value of debt securities and, concomitantly, adversely affected liquidity of many financial institutions. These markets appear to have stabilized substantially; however, the United States continues to confront considerable political and economic uncertainty owing to a relatively volatile election cycle, and it remains difficult to predict or to hedge against future fluctuations. While we do not presently expect that the Federal Reserve will resume significant adjustments, the conditions that led the Federal Reserve to make the recent adjustments remain uncertain and relatively volatile, and thus are highly unpredictable. Moreover, although the U.S. presidential election cycle has concluded as of the date of this report, the implications of these events is quite recent and remains difficult to predict.
Current report
For the nine months ended September 30, 2024 compared to nine months ended September 30, 2023
Current report
•Net interest income decreased to $48.7 million, a decrease of $3.8 million, or 7.2%, from $52.5 million.
Current report
Interest income on interest-bearing deposits in other banks increased $358 thousand, or 32.1%, to $1.5 million for the three months ended September 30, 2024, compared with $1.1 million for the same period of 2023. The increase was primarily due to a $26.3 million, or 31.7%, increase in average balance of interest-bearing deposits in other banks.
Current report
Loan servicing fees was $693 thousand for the three months ended September 30, 2024, compared to $468 thousand for the same period of 2023, an increase of $225 thousand, or 48.1%, primarilydue to a decrease in servicing fee amortization driven by lower loan payoffs in loan servicing portfolio.
Current report
Noninterest income for the nine months ended September 30, 2024 was $12.0 million, an increase of $1.5 million, or 14.4%, compared to $10.5 million for the same period of 2023, primarily due to increases in service charge on deposits, other income, and gain on sale of loans.
Current report
Other income was $1.6 million for the nine months ended September 30, 2024, compared to $1.2 million for the same period of 2023, an increase of $381 thousand, or 32.3%, primarily due to an increase of $179 thousand in credit related fees and a decrease of $178 thousand in unrealized loss on the CRA mutual fund.
Current report
Salaries and employee benefits for the three months ended September 30, 2024 was $8.0 million, an increase of $1.0 million, or 14.5%, compared with $7.0 million for the same period of 2023. The increase was primarily due to increases in salaries and employee benefits to support our growth and a lower accrual on employee incentives in the third quarter of 2023.
Current report
Data processing and communication for the three months ended September 30, 2024 was $634 thousand, an increase of $265 thousand, or 71.8%, compared with $369 thousand for the same period of 2023. The increase was primarily due to an increase from our continued growth and a lower expense in the third quarter of 2023 from a credit received on data processing fees.
Current report
Professional fees for the three months ended September 30, 2024 was $346 thousand, a decrease of $94 thousand, or 21.4%, compared with $440 thousand for the same period of 2023, The decrease was primarily due to an accrual adjustments made in the third quarter of 2024.
Current report
Data processing and communication for the nine months ended September 30, 2024 was $1.7 million, an increase of $186 thousand, or 12.7%, compared with $1.5 million for the same period of 2023, to support our continued growth.
Removed paragraphs (9)
Previous report
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 report
For the six months ended June 30, 2024 compared to six months ended June 30, 2023
Previous report
•Net interest income decreased to $32.2 million, a decrease of $3.0 million, or 8.5%, from $35.1 million.
Previous 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.
Previous report
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 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.
Previous report
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 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.
Previous 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.
Reworded paragraphs (58)
Previous wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our historical financial statements and the related notes thereto contained in this Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A. Risk Factors” for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Current wording
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto contained in this Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Part II, Item 1A. Risk Factors” for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Previous 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.
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 five loan production offices in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, Lynnwood, Washington, and Fairfax, Virginia.
Previous 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.
Current wording
The increases in market interest rates also affected 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
•Total assets were $2.29 billion, an increase of $143.0 million, or 6.7%, from $2.15 billion.
Current wording
•Total assets were $2.39 billion, an increase of $240.3 million, or 11.2%, from $2.15 billion.
Previous wording
•Gross loans were $1.87 billion, an increase of $104.3 million, or 5.9%, from $1.77 billion.
Current wording
•Gross loans were $1.93 billion, an increase of $165.2 million, or 9.4%, from $1.77 billion.
Previous wording
•Total deposits were $1.94 billion, an increase of $133.3 million, or 7.4%, from $1.81 billion.
Current wording
•Total deposits were $2.06 billion, an increase of $257.0 million, or 14.2%, from $1.81 billion.
Previous wording
•Shareholders’ equity was $196.0 million, an increase of $3.4 million, or 1.7%, from $192.6 million.
Current wording
•Shareholders’ equity was $203.6 million, an increase of $11.0 million, or 5.7%, from $192.6 million.
Previous wording
•Net interest income decreased to $16.2 million, a decrease of $1.1 million, or 6.1%, from $17.3 million.
Current wording
•Net interest income decreased to $16.5 million, a decrease of $0.8 million, or 4.7%, from $17.3 million.
Previous wording
•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 wording
•Net income was $5.4 million or $0.36 per diluted common share, an increase of $315 thousand, or 6.2%, from $5.1 million or $0.33 per diluted common share.
Previous 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.
Current wording
•Net income was $16.1 million or $1.06 per diluted common share, a decrease of $2.6 million, or 14.1%, from $18.7 million or $1.21 per diluted common share.
Previous wording
There have been no material changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2023.
Current wording
There have been no material changes to our critical accounting policies and estimates since those described in our Annual Report on Form 10-K for the year ended December 31, 2023.
Previous 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.
Current wording
We reported net income for the three months ended September 30, 2024 of $5.4 million, an increase of $315 thousand, or 6.2%, compared to net income of $5.1 million for the same period of 2023. The increase was due to a $1.6 million increase in noninterest income and a $911 thousand decrease in provision for credit losses, primarily offset by a $1.2 million increase in noninterest expense and a $807 thousand decrease in net interest income.
Previous wording
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 wording
We reported net income for the nine months ended September 30, 2024 of $16.1 million, a decrease of $2.6 million, or 14.1%, compared to net income of $18.7 million for the same period of 2023. The decrease was primarily due to a $3.8 million decrease in net interest income and a $1.3 million increase in noninterest expense, offset by a $1.5 million increase in noninterest income and a $1.1 million decrease in income tax expense.
Previous wording
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 wording
Net interest income decreased $807 thousand, or 4.7%, to $16.5 million for the three months ended September 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 higher interest income on interest-bearing deposits in other banks as our deposit costs repriced quicker than our interest-earning asset yields following the Federal Reserve’s rate increases.
Previous wording
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 wording
Interest expense on interest-bearing deposits increased $4.9 million, or 37.8%, to $17.9 million for the three months ended September 30, 2024, compared with $13.0 million for the same period of 2023. The increase was primarily due to a $248.4 million, or 20.3%, increase in average balance of interest-bearing deposits and an 63 basis point increase in average cost of interest-bearing deposits driven by the Federal Reserve's rate increases.
Previous 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.
Current wording
Interest income on loans increased $3.6 million, or 12.9%, to $31.9 million for the three months ended September 30, 2024, compared with $28.3 million for the same period of 2023, primarily due to a $165.8 million, or 9.5%, increase in average balance of loans and a 21 basis point increase in average yield on loans as a result of the Federal Reserve's rate increase.
Previous 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.
Current wording
Net interest margin was 2.95% for the three months ended September 30, 2024, a 43 basis point decrease from 3.38% for the same period of 2023, primarily due to a 37 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
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 wording
Net interest income decreased $3.8 million, or 7.2%, to $48.7 million for the nine months ended September 30, 2024 from $52.5 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 higher interest income on interest-bearing deposits in other banks as our deposit costs repriced quicker than our interest-earning asset yields following the Federal Reserve’s rate increases.
Previous 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.
Current wording
Interest expense on interest-bearing deposits increased $15.6 million to $50.9 million for the nine months ended September 30, 2024, compared with $35.3 million for the same period of 2023. The increase was primarily due to a $204.7 million, or 17.0%, increase in average balance of interest-bearing deposits and a 91 basis point increase in average cost of interest-bearing deposits driven by the Federal Reserve's rate increases.
Previous wording
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 wording
Interest income on loans increased $11.1 million to $92.6 million for the nine months ended September 30, 2024, compared with $81.5 million for the same period of 2023, primarily due to a $122.4 million, or 7.1%, increase in average balance of loans and a 38 basis point increase in average yield on loans as a result of the Federal Reserve's rate increase.
Previous wording
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 wording
Interest income on interest-bearing deposits in other banks increased $1.3 million, or 45.4%, to $4.3 million for the nine months ended September 30, 2024, compared with $3.0 million for the same period of 2023. The increase was primarily due to a $27.3 million, or 34.7%, increase in average balance of interest-bearing deposits in other banks and a 37 basis point increase in average yield of interest-bearing deposits in other banks.
Previous wording
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 wording
Net interest margin was 2.99% for the nine months ended September 30, 2024, a 46 basis point decrease from 3.45% for the same period of 2023, primarily due to a 47 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
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 wording
Total provision for credit losses was $448 thousand for the three months ended September 30, 2024, compared to $1.4 million for the same period of 2023. The provision for credit losses on loans and on off-balance sheet exposure were $234 thousand and $214 thousand, respectively. The provision for credit losses on loans of $234 thousand for three months ended September 30, 2024 was primarily due to a $215 thousand increase in the qualitative reserve driven by declining collateral values for collateral dependent CRE loans and weakening economic and business conditions. The provision for credit losses on off-balance sheet exposure of $214 thousand was primarily due to increases in unfunded commitment balance and utilization of commitment.
Previous 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.
Current wording
Total provision for credit losses was $1.2 million for the nine months ended September 30, 2024, compared to the credit losses of $1.0 million for the same period of 2023. The provision for credit losses on loans and on off-balance sheet exposure were $1.1 million and $156 thousand, respectively. The provision for credit losses on loans of $1.1 million for the nine months ended September 30, 2024 was primarily due to a $1.7 million increase in the quantitative general reserve, partially offset by a $843 thousand decrease in the qualitative reserve. The increase in the quantitative reserve was primarily due to changes in historical loss factors and increases in loan balances. The decrease in the qualitative reserve was due to net improvements in various asset quality metrics and economic conditions compared to those metrics and conditions as of December 31, 2023. The provision for credit losses on off-balance sheet exposure of $156 thousand was primarily due to increases in unfunded commitment balance and utilization of commitment.
Previous wording
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 wording
Noninterest income for the three months ended September 30, 2024 was $4.2 million, an increase of $1.6 million, or 63.0%, compared to $2.6 million for the same period of 2023, primarily due to increases in gain on sale of loans, service charges on deposits, and loan servicing fees.
Previous wording
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 wording
Gain on sale of loans was $2.1 million for the three months ended September 30, 2024, compared to $1.2 million for the same period of 2023, an increase of $909 thousand, or 77.1%. The increase was primarily due to a higher sold amount in SBA loans and a higher average sales premium rate. We sold $35.6 million of SBA loans with an average premium of 7.30% for the three months ended September 30, 2024, compared to a sale of $23.4 million of SBA loans with an average premium of 6.50% in the same period of 2023.
Previous 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.
Current wording
Service charges on deposit was $889 thousand for the three months ended September 30, 2024, compared to $575 thousand for the same period of 2023, an increase of $314 thousand, or 54.6%, primarily due toan increase in deposit analysis fees from an increase in the number of analysis accounts.
Previous wording
The following table sets forth the various components of our noninterest income for the six months ended June 30, 2024 and 2023:
Current wording
The following table sets forth the various components of our noninterest income for the nine months ended September 30, 2024 and 2023:
Previous wording
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 wording
Service charges on deposits was $2.3 million for the nine months ended September 30, 2024, compared to $1,566 thousand for the same period of 2023, an increase of $728 thousand, or 46.5%, primarily due to an increase in deposit analysis fees from an increase in the number of analysis accounts.
Previous 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.
Current wording
Gain on sale of loans was $6.1 million for the nine months ended September 30, 2024, compared to $5.8 million for the same period of 2023, an increase of $269 thousand, or 4.6%. The increase was primarily due to a higher average sales premium rate, primarily offset by a lower sold amount in SBA loans. We sold $92.5 million of SBA loans with an average premium of 8.02% for the nine months ended September 30, 2024, compared to a sale of $104.8 million of SBA loans with an average premium of 6.91% in the same period of 2023.
Previous 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.
Current wording
Noninterest expense for the three months ended September 30, 2024 was $12.7 million, compared with $11.5 million for the same period of 2023, a decrease of $1.2 million, or 10.3%, primarily due to decreases in salaries and employee benefits, and data processing and communication, partially offset by a decrease in professional fees.
Previous wording
The following table sets forth the major components of our noninterest expense for the six months ended June 30, 2024 and 2023:
Current wording
The following table sets forth the major components of our noninterest expense for the nine months ended September 30, 2024 and 2023:
Previous wording
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 wording
Noninterest expense for the nine months ended September 30, 2024 was $37.1 million, an increase of $1.3 million, or 3.7%, compared to $35.7 million for the same period of 2023, primarily due to increases in salaries and employee benefits expense, occupancy and equipment expense and data processing and communication, partially offset by a decrease in foundation donation and other contributions.
Previous 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.
Current wording
Salaries and employee benefits for the nine months ended September 30, 2024 was $23.4 million, an increase of $1,493 thousand, or 6.8%, compared with $21.9 million for the same period of 2023. The increase was primarily due to an increase in the number of employees to support our growth, an increase from employee salary adjustments in 2024, and an increase in employee marketing incentives.
Previous wording
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 wording
Occupancy and equipment for the nine months ended September 30, 2024 was $5.0 million, an increase of $117 thousand, or 2.4%, compared with $4.9 million for the same period of 2023. The increase was primarily due to the opening of a new full service branch in the third quarter of 2023.
Previous wording
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 wording
Foundation donations and other contributions for the nine months ended September 30, 2024 was $1.6 million, a decrease of $248 thousand, or 13.2%, compared with $1.9 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.
Previous 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.
Current wording
Income tax expense was $2.1 million for the three months ended September 30, 2024, compared to $1.9 million for the same period of 2023, primarily due to a $558 thousand, or 7.9%, increase in income before income tax to $7.6 million for the three months ended September 30, 2024 from $7.0 million for the same period of 2023. Effective tax rates were 28.3% and 27.1% for the three months ended September 30, 2024 and 2023, respectively.
Previous wording
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 wording
Income tax expense was $6.3 million for the nine months ended September 30, 2024, compared to $7.4 million for the same period of 2023, primarily due to a $3.8 million, or 14.4%, decrease in income before income tax to $22.4 million for the nine months ended September 30, 2024 from $26.2 million for the same period of 2023. Effective tax rates were 28.2% and 28.4% for the nine months ended September 30, 2024 and 2023, respectively.
Previous 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.
Current wording
We recognized net deferred tax assets of $12.3 million and $13.3 million as of September 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 September 30, 2024 will be fully realized in future years.
Previous 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.
Current wording
Available-for-sale debt securities increased $5.1 million, or 2.6%, to $199.4 million as of September 30, 2024 from $194.3 million as of December 31, 2023, primarily due to a $5.2 million decrease in unrealized loss for the nine months ended September 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 September 30, 2024 and December 31, 2023.
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