Sign in

You're signed outSign in or to get full access.

OB

OP Bancorp (OPBK)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 diluted EPS was $0.33, down from $0.36 in Q3 and $0.34 in Q4 2023; net income was $4.971M, as credit costs rose and the efficiency ratio ticked up to 61.52% .
  • Net interest margin held essentially flat at 2.96% (vs. 2.95% in Q3; 3.12% in Q4 2023) as deposit costs eased marginally QoQ, while loan yields drifted down; pre-provision net revenue was $8.213M .
  • Credit quality mixed: allowance to loans rose to 1.27% and net charge-offs were negligible, but nonperforming loans increased to 0.40% of gross loans, largely tied to three SBA relationships and an isolated wildfire-related issue .
  • Loans grew to $1.957B (+1.3% QoQ) while deposits fell 1.8% QoQ as mix continued to shift toward higher-cost time deposits (58.9% of deposits); CET1 remained strong at 11.35% and the dividend was maintained at $0.12 per share .
  • Wall Street consensus estimates via S&P Global were unavailable at the time of analysis; therefore, beats/misses vs. consensus are not provided (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well

  • Net interest income increased to $16.929M (+2.6% QoQ; +4.3% YoY) and NIM improved by 1 bp QoQ to 2.96% as deposit costs declined slightly .
  • Noninterest income rose to $4.417M (+4.2% QoQ; +20.0% YoY) on higher loan servicing fees and gain on sale of SBA loans (sold $34.7M at a 7.82% average premium) .
  • CEO emphasized resilience and community support amid market uncertainty: “We are continuing to experience the effects of uncertainty in the financial markets... We look forward to opportunities to assist in the recovery of the affected communities.” — Min Kim, President & CEO .

What Went Wrong

  • Provision for credit losses increased sharply to $1.547M (vs. $0.448M in Q3), driven by higher qualitative and specific reserves (two SBA relationships) and lower CRE value indices .
  • Asset quality metrics deteriorated: NPLs rose to 0.40% of loans (from 0.19% in Q3) and criticized loans increased to 1.00% of loans, although net charge-offs remained near zero .
  • Deposits fell 1.8% QoQ to $2.027B, with noninterest-bearing deposits down 10.1% QoQ; composition shifted toward time deposits (58.9%), sustaining funding cost pressure .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Total Net Revenue ($USD Millions)$19.910 (= $16.230 NII + $3.680 noninterest) $20.746 (= $16.506 NII + $4.240 noninterest) $21.346 (= $16.929 NII + $4.417 noninterest)
Diluted EPS ($)$0.34 $0.36 $0.33
Net Income ($USD Millions)$5.172 $5.436 $4.971
Net Interest Margin (%)3.12% 2.95% 2.96%
Efficiency Ratio (%)60.19% 61.31% 61.52%
Provision for Credit Losses ($USD Millions)$0.630 $0.448 $1.547

Segment/Component Detail

Noninterest Income Components ($USD Millions)Q4 2023Q3 2024Q4 2024
Service Charges on Deposits$0.557 $0.889 $0.967
Loan Servicing Fees, Net of Amortization$0.540 $0.693 $0.858
Gain on Sale of Loans$1.996 $2.088 $2.197
Other Income$0.587 $0.570 $0.395
Total Noninterest Income$3.680 $4.240 $4.417

KPIs

KPIQ4 2023Q3 2024Q4 2024
Total Assets ($USD Billions)$2.148 $2.388 $2.366
Gross Loans ($USD Billions)$1.766 $1.931 $1.957
Total Deposits ($USD Billions)$1.808 $2.065 $2.027
ROA (%)0.96% 0.94% 0.84%
ROE (%)11.18% 10.95% 9.75%
CET1 Ratio (%)12.52% 11.57% 11.35%
Book Value per Share ($)$12.84 $13.75 $13.83
NPLs / Gross Loans (%)0.34% 0.19% 0.40%
Criticized Loans / Gross Loans (%)0.76% 0.85% 1.00%
ACL / Gross Loans (%)1.25% 1.19% 1.27%
Net Charge-offs to Avg Loans (%)0.04% 0.01% 0.00%

Note: “Total Net Revenue” defined as Net Interest Income + Total Noninterest Income (from consolidated statements) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per Share ($)Q1 2025 payable (declared Jan 23, 2025)$0.12 (declared Oct 24, 2024) $0.12 (declared Jan 23, 2025) Maintained
Formal EPS/Revenue Guidance2025None disclosed None disclosed N/A
Tax Rate Guidance2025Not provided Not provided N/A

Earnings Call Themes & Trends

Note: A Q4 2024 earnings call transcript was not available; thematic tracking is based on management press releases.

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Funding costs & NIMNIM down to 2.96% amid deposit repricing; customers prefer high-rate time deposits NIM 2.95%; easing cycle beginning diminishes funding cost pressure NIM 2.96%; deposit cost repricing eased QoQ, loan yields down post Fed rate cuts in Sept Stabilizing NIM; slight improvement QoQ
Deposit mix & balancesTime deposits up; NIB down to 26.7% of total Deposits +6.4% QoQ; NIB 27.2%; time deposits 56.2% Deposits -1.8% QoQ; NIB 24.9%; time deposits 58.9% Mix shifting further to CDs; NIB softness QoQ
Credit quality & reservesCriticized loans up; qualitative reserve increased due to weaker collateral values NPLs down QoQ; criticized loans stable; provision modest NPLs up sharply to 0.40%; provision rose; drivers include SBA relationships and wildfire impact Watchlist elevated; selective stress
SBA loan sales economicsSold $32.1M at 8.58% avg premium Sold $35.6M at 7.30% avg premium Sold $34.7M at 7.82% avg premium Premiums remain healthy
Liquidity & capitalLiquid assets $326.9M; available borrowings $635.0M; CET1 12.01% Liquidity strengthened; CET1 11.57% Liquid assets $320.9M; available borrowings $717.0M; CET1 11.35% Ample access; CET1 solid

Management Commentary

  • “We are continuing to experience the effects of uncertainty in the financial markets providing challenges in increasing customer deposits and lowering costs of deposit... We look forward to opportunities to assist in the recovery of the affected communities.” — Min Kim, President & CEO (Q4 2024 press release) .
  • “As the Fed's easing cycle began in the quarter, the pressure on funding cost and net interest margin is diminishing, and we believe we are well positioned to prolong our growth and performance…” — Min Kim (Q3 2024 press release) .
  • “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…” — Min Kim (Q2 2024 press release) .

Q&A Highlights

  • Q4 2024 earnings call transcript could not be located; no Q&A highlights are available at this time. Management clarifications in the press release emphasized provision drivers (qualitative reserve increase, specific reserves on SBA relationships, and CRE value indices) and detailed NPL changes tied to specific exposures (including an isolated wildfire-related hotel property and apparel relationships) .

Estimates Context

  • S&P Global/Capital IQ Wall Street consensus estimates for Q4 2024 were unavailable at the time of analysis due to API access limits; comparison to consensus and beat/miss assessment is therefore not provided (S&P Global data unavailable).

Key Takeaways for Investors

  • Stable core margin profile: NIM held at ~2.96% despite mixed rate dynamics; modest QoQ improvement driven by lower deposit costs .
  • Revenue durability from SBA platform: Gain on sale and servicing income continued to support noninterest income, with solid premiums on SBA sales .
  • Credit watch: Elevated provision and higher NPLs/criticized loans warrant attention; drivers are concentrated and identified (SBA relationships, Tucson hotel wildfire) .
  • Deposit mix headwind: Continued shift toward time deposits and QoQ decline in NIB deposits could pressure funding costs and limit NIM expansion if NIB does not recover .
  • Capital and liquidity intact: CET1 at 11.35%, liquid assets and available borrowings equal to ~51% of deposits; dividend maintained at $0.12/share .
  • Operating leverage mixed: Efficiency ratio edged up to 61.52% QoQ; continued discipline around expenses and credit costs will be pivotal to EPS trajectory .
  • Near-term narrative drivers: Resolution of identified SBA issues, deposit gathering in low/zero-cost categories, and rate path clarity should be the key catalysts for stock reaction .