On July 25, 2024, OP Bancorp (OPBK, Financial) released its 8-K filing for the second quarter of 2024, reporting a net income of $5.4 million and diluted earnings per share (EPS) of $0.36. This performance surpassed the analyst estimates of $0.30 EPS and $18.50 million in revenue.
Company Overview
OP Bancorp is engaged in the general commercial banking business in Los Angeles, Orange, and Santa Clara Counties, California, Carrollton, Texas, and Las Vegas, Nevada. The Bank focuses on serving the banking needs of small- and medium-sized businesses, professionals, and residents, with a particular emphasis on Korean and other ethnic minority communities. It operates eleven full-service branches.
Quarterly Performance Highlights
For the second quarter of 2024, OP Bancorp reported a net income of $5.4 million, a 4.0% increase from the first quarter of 2024. Diluted EPS rose by 5.9% to $0.36 from $0.34 in the previous quarter. However, compared to the second quarter of 2023, net income decreased by 10.8%, and diluted EPS fell by 7.7%.
“Even with the extended pressure on the business and banking environment, we continued to grow our loans and deposits while improving net income and earnings per share over the last quarter. Our net interest margin was controlled with a slight decline while our credit quality remained strong. We remain optimistic about our future growth and performance and will continue to focus on executing our strategic goals while maintaining an optimal risk profile,” said Min Kim, President and Chief Executive Officer.
Financial Achievements
OP Bancorp's net interest income for Q2 2024 was $16.2 million, a slight increase from $16.0 million in Q1 2024. The net interest margin decreased to 2.96% from 3.06% in the previous quarter. The provision for credit losses increased significantly to $617 thousand from $145 thousand in Q1 2024, reflecting a cautious approach to potential credit risks.
| Metric | Q2 2024 | Q1 2024 | Q2 2023 | % Change (Q2 2024 vs. Q1 2024) | % Change (Q2 2024 vs. Q2 2023) |
|---|---|---|---|---|---|
| Net Income ($M) | 5.4 | 5.2 | 6.1 | 4.0% | -10.8% |
| Diluted EPS ($) | 0.36 | 0.34 | 0.39 | 5.9% | -7.7% |
| Net Interest Income ($M) | 16.2 | 16.0 | 17.3 | 1.3% | -6.1% |
| Net Interest Margin (%) | 2.96 | 3.06 | 3.40 | -0.10% | -0.44% |
| Total Assets ($B) | 2.29 | 2.23 | 2.15 | 2.5% | 6.5% |
| Gross Loans ($B) | 1.87 | 1.80 | 1.72 | 3.6% | 9.0% |
| Total Deposits ($B) | 1.94 | 1.90 | 1.86 | 2.4% | 4.4% |
Income Statement and Balance Sheet Insights
OP Bancorp's noninterest income increased by 16.7% to $4.2 million in Q2 2024, driven by higher gains on the sale of loans and increased service charges on deposits. Noninterest expense remained relatively stable, increasing by only 0.3% to $12.2 million.
The bank's total assets grew by 2.5% to $2.29 billion, while gross loans increased by 3.6% to $1.87 billion. Total deposits rose by 2.4% to $1.94 billion, reflecting the bank's ability to attract and retain customer deposits.
Credit Quality and Capital Levels
OP Bancorp maintained strong credit quality with an allowance for credit losses to gross loans ratio of 1.22%. Nonperforming loans were stable at 0.23% of gross loans. The bank's capital levels remained robust, with a Common Equity Tier 1 (CET1) ratio of 12.01% and a book value per common share of $13.22.
Analysis and Outlook
OP Bancorp's performance in Q2 2024 demonstrates its resilience and ability to navigate a challenging banking environment. The increase in net income and EPS, along with growth in loans and deposits, highlights the bank's strong operational capabilities. However, the rise in the provision for credit losses indicates a cautious approach to potential economic uncertainties.
Overall, OP Bancorp
Explore the complete 8-K earnings release (here) from OP Bancorp for further details.
