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OP Bancorp Reports Fourth Quarter and Year End Financial Result of 2019

2019 Fourth Quarter Highlights:

  • Net income totaled $4.2 million or $0.26 per diluted common share, up 4.5%, compared to $4.0 million or $0.24 per diluted common share for the third quarter of 2019
  • Net interest margin was 3.99% compared to 4.13% for the third quarter of 2019
  • Return on average assets was 1.45% and return on average equity was 12.05% compared to 1.41% and 11.74%, respectively, for the third quarter of 2019
  • Total assets increased 2.4% to $1.18 billion at December 31, 2019, from $1.15 billion at September 30, 2019
  • Net loans receivable increased 2.7% to $980.1 million at December 31, 2019, from $954.7 million at September 30, 2019
  • Total deposits increased 2.5% to $1.02 billion at December 31, 2019, from $996.0 million at September 30, 2019
  • Nonperforming assets to total assets was 0.13% compared to 0.29% at September 30, 2019

2019 Full Year Highlights:

  • Net income totaled $16.8 million or $1.03 per diluted common share, up 17.6%, compared to $14.3 million or $0.89 per diluted common share for the full year of 2018
  • Excluding a one-time gain on company owned life insurance of $1.2 million, net income totaled $15.5 million or $0.95 per diluted common share, up 9.0%, compared to the full year of 2018
  • Net interest margin was 4.19% compared to 4.49% for the full year of 2018
  • Return on average assets was 1.51% and return on average equity was 12.42% compared to 1.49% and 12.27%, respectively, for the full year of 2018
  • Excluding a one-time gain on company owned life insurance of $1.2 million, return on average assets was 1.40% and return on average equity was 11.51%
  • Total assets increased 13.0% to $1.18 billion at December 31, 2019, from $1.04 billion at December 31, 2018
  • Net loans receivable increased 13.2% to $980.1 million at December 31, 2019, from $865.4 billion at December 31, 2018
  • Total deposits increased 12.8% to $1.02 billion at December 31, 2019, from $905.2 million at December 31, 2018
  • Nonperforming assets to total assets was 0.13% compared to 0.18% at December 31, 2018

OP Bancorp (the "Company") (NASDAQ: OPBK), the holding company of Open Bank (the "Bank"), today reported unaudited financial results for the fourth quarter of 2019. Net income for the fourth quarter of 2019 was $4.2 million, or $0.26 per diluted common share, compared with net income of $4.0 million, or $0.24 per diluted common share, for the third quarter of 2019, and net income of $3.8 million, or $0.23 per diluted common share, for the fourth quarter of 2018.

"We are pleased to complete the year achieving a record annual net income of $16.8 million or $1.03 per diluted common share, along with another solid quarterly net income of $4.2 million, or $0.26 per diluted common share. Despite a challenging and competitive rate environment, we have continued to grow our loans and deposits this year by 13.2% and 12.8%, respectively, while maintaining strong asset quality and retaining our noninterest bearing deposits at 28.8% of total deposits," commented Min Kim, President and Chief Executive Officer of OP Bancorp and Open Bank. Ms. Kim continued, "We are also pleased to announce an increase to our quarterly cash dividend to $0.07 per share from $0.05 per share starting from the first quarter of 2020. Additionally, as of January 23, 2020, we have repurchased an aggregate of 278,924 shares of our common stock at an average price of $9.58 per share under our second stock repurchase program."

Financial Highlights (unaudited)

(Dollars in thousands, except per share data)

 

As of or for the Three Months Ended

 

 

December 31,

 

September 30,

 

December 31,

 

 

2019

 

2019

 

2018

Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

14,703

 

 

$

15,112

 

 

$

13,820

 

Interest expense

 

 

3,625

 

 

 

3,893

 

 

 

2,894

 

Net interest income

 

 

11,078

 

 

 

11,219

 

 

 

10,926

 

Provision for loan losses

 

 

411

 

 

 

290

 

 

 

220

 

Noninterest income

 

 

2,513

 

 

 

2,732

 

 

 

2,050

 

Noninterest expense

 

 

7,665

 

 

 

8,424

 

 

 

7,568

 

Income before taxes

 

 

5,515

 

 

 

5,237

 

 

 

5,188

 

Provision for income taxes

 

 

1,334

 

 

 

1,237

 

 

 

1,423

 

Net Income

 

$

4,181

 

 

$

4,000

 

 

$

3,765

 

Diluted earnings per share

 

$

0.26

 

 

$

0.24

 

 

$

0.23

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale

 

$

2,100

 

 

$

368

 

 

$

752

 

Gross loans, net of unearned income

 

 

990,138

 

 

 

964,370

 

 

 

875,059

 

Allowance for loan losses

 

 

10,050

 

 

 

9,640

 

 

 

9,636

 

Total assets

 

 

1,179,520

 

 

 

1,151,934

 

 

 

1,044,186

 

Deposits

 

 

1,020,711

 

 

 

995,993

 

 

 

905,176

 

Shareholders’ equity

 

 

140,576

 

 

 

137,593

 

 

 

129,787

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

 

1.45

%

 

 

1.41

%

 

 

1.49

%

Return on average equity (annualized)

 

 

12.05

%

 

 

11.74

%

 

 

11.84

%

Net interest margin (annualized)

 

 

3.99

%

 

 

4.13

%

 

 

4.50

%

Efficiency ratio (1)

 

 

56.40

%

 

 

60.39

%

 

 

58.33

%

Credit Quality:

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans

 

$

1,548

 

 

$

1,570

 

 

$

1,914

 

Nonperforming assets

 

 

1,548

 

 

 

3,387

 

 

 

1,914

 

Net charge-offs to average gross loans (annualized)

 

 

0.00

%

 

 

0.07

%

 

 

0.06

%

Nonperforming assets to gross loans plus OREO

 

 

0.16

%

 

 

0.35

%

 

 

0.22

%

ALL to nonperforming loans

 

 

649

%

 

 

614

%

 

 

503

%

ALL to gross loans, net of unearned income

 

 

1.02

%

 

 

1.00

%

 

 

1.10

%

Capital Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Total risk-based capital ratio

 

 

15.18

%

 

 

15.36

%

 

 

16.26

%

Tier 1 risk-based capital ratio

 

 

14.16

%

 

 

14.35

%

 

 

15.13

%

Common equity tier 1 ratio

 

 

14.16

%

 

 

14.35

%

 

 

15.13

%

Leverage ratio

 

 

12.14

%

 

 

12.11

%

 

 

12.88

%

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Represents noninterest expense divided by the sum of net interest income and noninterest income.

 

Financial Highlights (unaudited)

(Dollars in thousands, except per share data)

 

For the Twelve Months Ended

 

 

December 31,

 

December 31,

 

 

2019

 

2018

Income Statement Data:

 

 

 

 

 

 

 

 

Interest income

 

$

58,779

 

 

$

50,068

 

Interest expense

 

 

14,507

 

 

 

9,111

 

Net interest income

 

 

44,272

 

 

 

40,957

 

Provision for loan losses

 

 

1,102

 

 

 

1,267

 

Noninterest income

 

 

11,426

 

 

 

9,329

 

Noninterest expense

 

 

32,520

 

 

 

29,562

 

Income before taxes

 

 

22,076

 

 

 

19,457

 

Provision for income taxes

 

 

5,319

 

 

 

5,204

 

Net Income

 

$

16,757

 

 

$

14,253

 

Diluted earnings per share

 

$

1.03

 

 

$

0.89

 

Performance Ratios:

 

 

 

 

 

 

 

 

Return on average assets

 

 

1.51

%

 

 

1.49

%

Return on average equity

 

 

12.42

%

 

 

12.27

%

Net interest margin

 

 

4.19

%

 

 

4.49

%

Efficiency ratio (1)

 

 

58.39

%

 

 

58.79

%

 

 

 

 

 

 

 

 

 

(1) Represents noninterest expense divided by the sum of net interest income and noninterest income.

 

Financial Highlights, excluding Gain on COLI

(Dollars in thousands, except per share data)

 

For the Twelve Months Ended

 

 

December 31,

 

December 31,

 

 

2019

 

2018

Income before taxes, as reported

 

$

22,076

 

 

$

19,457

 

Gain on COLI

 

 

1,228

 

 

 

 

Provision for income taxes

 

 

5,319

 

 

 

5,204

 

Net Income

 

$

15,529

 

 

$

14,253

 

Diluted earnings per share

 

$

0.95

 

 

$

0.89

 

Return on average assets

 

 

1.40

%

 

 

1.49

%

Return on average equity

 

 

11.51

%

 

 

12.27

%

Results of Operations

The reported interest income and yield on our loan portfolio are impacted by a number of components, including changes in the average contractual interest rate earned on loans and the amount of discount accretion on SBA loans. The following table reconciles the contractual interest income and yield on our loan portfolio to the reported interest income and yield for the periods indicated.

 

Three Months Ended

 

December 31,
2019

 

September 30,
2019

 

December 31,
2018

(Dollars in thousands)

Interest
& Fees

 

Yield

 

Interest &
Fees

 

Yield

 

Interest
& Fees

 

Yield

Contractual interest rate

$

13,337

 

 

5.44

%

 

$

13,492

 

 

 

5.66

%

 

$

12,127

 

 

 

5.58

%

SBA discount accretion

 

589

 

 

0.24

%

 

 

717

 

 

 

0.30

%

 

 

967

 

 

 

0.44

%

Amortization of net deferred fees/(costs)

 

41

 

 

0.02

%

 

 

37

 

 

 

0.02

%

 

 

1

 

 

 

0.00

%

Interest recognized on nonaccrual loans

 

-

 

 

0.00

%

 

 

(12

)

 

 

-0.01

%

 

 

(69

)

 

 

-0.03

%

Prepayment penalties and other fees

 

28

 

 

0.01

%

 

 

44

 

 

 

0.02

%

 

 

40

 

 

 

0.02

%

Yield on loans (as reported)

$

13,995

 

 

5.71

%

 

$

14,278

 

 

 

5.99

%

 

$

13,066

 

 

 

6.01

%

 

 

Twelve Months Ended

 

 

December 31, 2019

 

December 31, 2018

(Dollars in thousands)

 

Interest &
Fees

 

Yield

 

Interest &
Fees

 

Yield

Contractual interest rate

 

$

52,622

 

 

 

5.63

%

 

$

45,147

 

 

 

5.41

%

SBA discount accretion

 

 

2,518

 

 

 

0.27

%

 

 

2,626

 

 

 

0.31

%

Amortization of net deferred fees/(costs)

 

 

232

 

 

 

0.02

%

 

 

215

 

 

 

0.03

%

Interest recognized on nonaccrual loans

 

 

(12

)

 

 

0.00

%

 

 

(47

)

 

 

-0.01

%

Prepayment penalties and other fees

 

 

360

 

 

 

0.04

%

 

 

167

 

 

 

0.02

%

Yield on loans (as reported)

 

$

55,720

 

 

 

5.96

%

 

$

48,108

 

 

 

5.76

%

Net interest margin for the fourth quarter of 2019 decreased 14 basis points to 3.99% from 4.13% for the third quarter of 2019 primarily due to a greater decrease in the reported yield on interest-earning assets compared to a decrease in the cost of interest-bearing liabilities as a result of the cumulative market rate decreases by the Federal Reserve in August, September, and October 2019.

Net interest income before the provision for loan losses for the fourth quarter of 2019 was $11.1 million, a decrease of $141,000, or 1.3%, compared to the third quarter of 2019, primarily due to a $409,000 decrease in interest income, partially offset by a $268,000 decrease in interest expense.

Interest income on securities available for sale and other interest income decreased $126,000, or 15.1%, during the fourth quarter of 2019 compared to the third quarter of 2019. The decrease was primarily due to the aforementioned decrease in Fed funds rate and a $128,000 decrease in other interest income as a result of a $6.8 million, or 8.7%, decrease in the average balance of Fed funds sold and other investments, compared to the third quarter of 2019.

Interest income from the contractual interest rates on loans decreased $155,000, or 1.1%, during the fourth quarter of 2019 compared to the third quarter of 2019, reflecting a 22 basis point decrease in the average contractual interest rate, primarily resulting from the cumulative rate cuts by the Federal Reserve in late 2019. The amount of discount accretion on SBA loans decreased $128,000 during the fourth quarter of 2019 due to a decrease in SBA loan payoffs. The reported interest income on loans, net of SBA discount accretions and other components, decreased $283,000 during the fourth quarter of 2019.

Interest expense for the fourth quarter of 2019 decreased $268,000, or 6.9%, compared to the third quarter of 2019, due to a decrease of 17 basis points in the average cost of interest-bearing liabilities, primarily due to the decrease in the Fed funds rate.

Net interest margin for the fourth quarter of 2019 decreased 51 basis points to 3.99% from 4.50% for the fourth quarter of 2018, primarily due to a decrease in the reported yield on interest-earning assets as a result of cumulative market rate decreases of 75 basis points through three rate cuts by the Federal Reserve in late 2019.

Net interest income before provision for loan losses for the fourth quarter of 2019 increased $152,000, or 1.4%, to $11.1 million, compared to $10.9 million for the fourth quarter of 2018, primarily due to a $929,000 increase in interest income, partially offset by a $731,000 increase in interest expense.

Interest income on securities available for sale and other interest income decreased $46,000, or 6.1%, for the fourth quarter of 2019 compared to the fourth quarter of 2018. The decrease was primarily due to a $40,000 decrease in other interest income as a result of a 126 basis point decrease in the yield on the average balance of Fed funds sold and other investments and a $6,000 decrease in interest income on securities available for sale from purchases of lower yielding securities during the fourth quarter of 2019.

The increase of $929,000 in interest income on loans in the fourth quarter of 2019 was primarily due to a $110.6 million, or 12.8%, increase in the balance of average loans, including loans held for sale, compared to the fourth quarter of 2018, partially offset by a 30 basis point decrease in the yield on average loans to 5.71% for the fourth quarter of 2019 from 6.01% for the same period of 2018.

The increase of $731,000 in interest expense in the fourth quarter of 2019, compared to the fourth quarter of 2018 was due to a $104.2 million, or 17.3%, increase in the average balance of the total interest-bearing liabilities and a 13 basis point increase in the cost of interest-bearing liabilities.

The following tables show the asset yields, liability costs, spreads and margins for the periods indicated.

 

 

Three Months Ended

 

 

Percentage Change

 

 

December 31,

 

September 30,

 

December 31,

 

 

Q4-19

 

Q4-19

 

 

2019

 

2019

 

2018

 

 

vs. Q3-19

 

vs. Q4-18

Yield on loans

 

 

5.71

%

 

 

5.99

%

 

 

6.01

%

 

 

 

-0.28

%

 

 

-0.30

%

Yield on interest-earning assets

 

 

5.30

%

 

 

5.56

%

 

 

5.69

%

 

 

 

-0.26

%

 

 

-0.39

%

Cost of interest-bearing liabilities

 

 

2.03

%

 

 

2.20

%

 

 

1.90

%

 

 

 

-0.17

%

 

 

0.13

%

Cost of deposits

 

 

1.44

%

 

 

1.58

%

 

 

1.32

%

 

 

 

-0.14

%

 

 

0.12

%

Cost of funds

 

 

1.44

%

 

 

1.58

%

 

 

1.32

%

 

 

 

-0.14

%

 

 

0.12

%

Net interest spread

 

 

3.27

%

 

 

3.36

%

 

 

3.79

%

 

 

 

-0.09

%

 

 

-0.52

%

Net interest margin

 

 

3.99

%

 

 

4.13

%

 

 

4.50

%

 

 

 

-0.14

%

 

 

-0.51

%

 

 

Twelve Months Ended

 

 

Percentage
Change

 

 

December 31,

 

December 31,

 

 

2019 YTD

 

 

2019

 

2018

 

 

vs. 2018 YTD

Yield on loans

 

 

5.96

%

 

 

5.76

%

 

 

 

0.20

%

Yield on interest-earning assets

 

 

5.56

%

 

 

5.49

%

 

 

 

0.07

%

Cost of interest-bearing liabilities

 

 

2.13

%

 

 

1.59

%

 

 

 

0.54

%

Cost of deposits

 

 

1.52

%

 

 

1.09

%

 

 

 

0.43

%

Cost of funds

 

 

1.52

%

 

 

1.09

%

 

 

 

0.43

%

Net interest spread

 

 

3.43

%

 

 

3.90

%

 

 

 

-0.47

%

Net interest margin

 

 

4.19

%

 

 

4.49

%

 

 

 

-0.30

%

The Company recorded the provision for loan losses of $411,000 for the fourth quarter of 2019 compared to $290,000 for the third quarter of 2019 and $220,000 for the fourth quarter of 2018. The increases in the provision for loan losses from the third quarter of 2019, and the fourth quarter of 2018 were primarily due to a greater loan growth during the fourth quarter.

Noninterest income for the fourth quarter of 2019 was $2.5 million, a decrease of $219,000, or 8.0%, from $2.7 million for the third quarter of 2019, primarily due to a decrease of $187,000 in gain on sale of loans and a decrease of $172,000 in other income as result of a loss on sale of other real estate owned ("OREO"), partially offset by an increase of $90,000 in loan servicing fees and an increase of $50,000 in service charges on deposits.

Gain on sale of loans decreased $187,000 to $1.5 million for the fourth quarter of 2019 from $1.7 million for the third quarter of 2019. The Company sold $23.9 million in SBA loans with an average premium of 7.73% in the fourth quarter of 2019, compared to the sale of $22.2 million in SBA loans with an average premium of 8.85% in the third quarter of 2019.

Noninterest income for the fourth quarter of 2019 increased $463,000 to $2.5 million compared to $2.1 million for the fourth quarter of 2018, primarily due to an increase of $499,000 in gain on sale of SBA loans and an increase of $261,000 in loan servicing fees, partially offset by a decrease of $319,000 in other income.

Gain on sale of loans for the fourth quarter of 2018 was $1.0 million from the sale of $24.7 million in SBA loans with an average premium of 5.65%. Loan servicing fees, net of amortization, increased $261,000 to $333,000 for the fourth quarter of 2019 from $72,000 for the fourth quarter of 2018, primarily due to a decrease in the amortization of SBA servicing assets from the decrease in SBA loan payoffs.

Noninterest expense for the fourth quarter of 2019 was $7.7 million, a decrease of $759,000, or 9.0%, compared to the third quarter of 2019. The decrease was primarily due to a decrease of $944,000 in salary and employee benefits, partially offset by an increase of $92,000 in FDIC insurance and regulatory assessments, and an increase of $81,000 in corporate promotion and advertising expenses. The decrease in salary and employee benefits expense was primarily due to adjustments in management incentive accruals that are tied to the Company’s actual financial performance.

Noninterest expense for the fourth quarter of 2019 increased $97,000, or 1.3%, to $7.7 million, compared to $7.6 million for the fourth quarter of 2018. The increase was primarily due to an increase of $161,000 in occupancy and equipment expense and an increase of $137,000 in data processing and communication expense, partially offset by a decrease of $162,000 in salary and employee benefits. The increases in occupancy and equipment expense and data processing and communication expense were primarily attributable to new loan production offices and a new branch opening in 2019.

Income tax provision was $1.3 million for the fourth quarter of 2019, $1.2 million for the third quarter of 2019, and $1.4 million for the fourth quarter of 2018. The effective tax rate for the fourth quarter of 2019 was 24.2%, compared to 23.6% for the third quarter of 2019 and 27.4% for the fourth quarter of 2018. The lower effective tax rates for the third and fourth quarters of 2019 compared to the fourth of 2018 were primarily due to additional tax benefits from an increase in non-qualified stock option exercises in 2019.

Balance Sheet

Total assets at December 31, 2019, were $1.18 billion, an increase of $27.6 million, or 2.4%, compared to $1.15 billion at September 30, 2019, and an increase of $135.3 million, or 13.0%, compared to $1.04 billion at December 31, 2018.

Gross loans, net of unearned income, were $990.1 million at December 31, 2019, an increase of $25.8 million, or 2.7%, from $964.4 million at September 30, 2019, and an increase of $115.1 million, or 13.2%, from $875.1 million at December 31, 2018.

New loan originations for the fourth quarter of 2019 totaled $98.4 million, including SBA loan originations of $26.3 million, compared to $100.9 million, including SBA loan originations of $30.9 million, for the third quarter of 2019, and $62.4 million, including SBA loan originations of $23.5 million, for the fourth quarter of 2018. Loan payoffs for the fourth quarter of 2019 were $35.9 million, compared to $38.7 million for the third quarter of 2019, and $13.2 million for the fourth quarter of 2018.

Total deposits were $1.02 billion at December 31, 2019, an increase of $24.7 million, or 2.5%, from $996.0 million at September 30, 2019, and an increase of $115.5 million, or 12.8%, from $905.2 million at December 31, 2018. Noninterest bearing deposits were $294.3 million at December 31, 2019, compared to $296.8 million at September 30, 2019, and $285.1 million at December 31, 2018.

Noninterest bearing deposits accounted for 28.8% of total deposits at December 31, 2019, compared to 29.8% at September 30, 2019, and 31.5% at December 31, 2018. The following table shows the Company’s deposits by type as a percentage of total deposits as of the periods indicated.

 

 

As of

 

 

December 31,

 

September 30,

 

December 31,

 

 

2019

 

2019

 

2018

Noninterest bearing deposits

 

 

28.8

%

 

 

29.8

%

 

 

31.5

%

Interest bearing demand deposits

 

 

28.6

%

 

 

27.6

%

 

 

28.9

%

Savings

 

 

0.5

%

 

 

0.3

%

 

 

0.4

%

Time deposits over $250,000

 

 

20.9

%

 

 

22.1

%

 

 

18.1

%

Other time deposits

 

 

21.2

%

 

 

20.2

%

 

 

21.1

%

Total deposits

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

The Company had no borrowings from the Federal Home Loan Bank ("FHLB") at December 31, 2019, September 30, 2019, and December 31, 2018.

The adoption of the new lease accounting standard ASU 2016-02, Leases (Topic 842) effective January 1, 2019, resulted in the recognition of $7.7 million and $9.6 million in right-of-use assets and lease liabilities, respectively, on the balance sheet. With the new branch opening, the Company had right-of-use assets and lease liabilities of $8.3 million and $10.1 million, respectively, at December 31, 2019.

The Company’s consolidated regulatory capital ratios exceeded regulatory guidelines and the Bank’s capital ratios exceeded the regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements at December 31, 2019, as summarized in the following table.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulatory

 

 

 

 

 

 

 

 

 

 

Well-capitalized

 

Capital Ratio

 

 

 

 

 

 

 

 

 

 

Financial

 

Requirements (1),

 

 

 

 

 

 

 

 

 

 

Institution

 

Including

 

 

 

 

 

 

 

 

 

 

Basel III

 

Fully Phased-in

 

 

 

 

 

 

 

 

 

 

Regulatory

 

Capital Conservation

Capital Ratios

 

OP Bancorp

 

Open Bank

 

Guidelines

 

Buffer

Total risk-based

 

 

15.18

%

 

 

14.96

%

 

 

10.00

%

 

 

10.50

%

Tier 1 risk-based

 

 

14.16

%

 

 

13.93

%

 

 

8.00

%

 

 

8.50

%

Common equity tier 1 Risk-Based

 

 

14.16

%

 

 

13.93

%

 

 

6.50

%

 

 

7.00

%

Leverage

 

 

12.14

%

 

 

11.95

%

 

 

5.00

%

 

 

4.00

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Fully phased in Basel III requirement for both OP Bancorp and Open Bank. Includes a 2.5% capital conservation buffer, except the leverage ratio.

 

 

 

 

 

The Company announced a second stock repurchase program on August 28, 2019, which authorizes the Company to repurchase up to 475,000 shares of its common stock following the completion of the Company’s first stock repurchase program in August 2019. Since the announcement of the second stock repurchase program, the Company has repurchased an aggregate of 278,924 shares of its common stock at an average repurchase price of $9.58 per share through January 23, 2020.

Asset Quality

Nonperforming loans were $1.55 million at December 31, 2019, a decrease of $22,000 from $1.57 million at September 30, 2019, and a decrease of $366,000 from $1.9 million at December 31, 2018.

The company had no OREO at December 31, 2019 and 2018 but had $1.8 million in OREO at September 30, 2019. The Company sold OREO of $1.8 million during the fourth quarter of 2019 with a loss of $145,000.

Nonperforming assets were $1.5 million, or 0.13% of total assets, at December 31, 2019, $3.4 million, or 0.29% of total assets, at September 30, 2019, and $1.9 million, or 0.18% of total assets, at December 31, 2018.

Nonperforming loans to gross loans were 0.16% at December 31, 2019, and September 30, 2019, compared to 0.22% at December 31, 2018. Total classified loans were $3.5 million, or 0.35% of gross loans, at December 31, 2019, compared to $3.2 million, or 0.34% of gross loans, at September 30, 2019, and $3.6 million, or 0.41% of gross loans, at December 31, 2018.

The following tables shows the trend of classified loans by loan type as of the date stated.

...

 

 

As of

 

 

December 31,

 

 

September 30,

 

 

June 30,

 

 

March 31,

 

 

December 31,

 

 

2019