OP Bancorp

Our loans represent the largest portion of our earning assets, substantially greater than the securities portfolio or any other asset category, and the quality and diversification of the loan portfolio is an important consideration when reviewing our financial condition.

The loan distribution table that follows sets forth our gross loans outstanding, and the percentage distribution in each category as of the dates indicated:

(1)Includes net deferred loan costs (fees) and net unamortized premiums (unaccreted discounts) of $(248) thousand and $(702) thousand as of September 30, 2025 and December 31, 2024, respectively.

Gross loans increased $194.4 million, or 10%, to $2.15 billion as of September 30, 2025 from December 31, 2024. The growth was primarily driven by new loan originations in CRE, home mortgage and SBA loans, partially offset by payoffs in CRE and home mortgage loans, SBA loan sales, and paydowns in CRE loans.

Our loan portfolio is concentrated in CRE, 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, 89% of our gross loans were secured by real property as of September 30, 2025, compared to 88% as of December 31, 2024.

Loans Concentration: We have established concentration limits in the loan portfolio for CRE, C&I, and unsecured lending, among others. All loan types are within established limits. We use underwriting guidelines to assess the borrowers’ historical cash flow to determine debt service, and we further stress test the debt service under higher interest rate scenarios. Financial and performance covenants are used in commercial lending agreements to allow us to react to a borrower’s deteriorating financial condition, should that occur.

Loans — CRE: Our CRE loans include both owner-occupied and non-occupied properties. We originate a mix of fixed- and adjustable-rate loans, with adjustable rates tied to the Wall Street Journal prime rate. As of September 30, 2025, our CRE loans totaled $1.09 billion, up from $980.2 million as of December 31, 2024. During the first nine months of 2025, we originated $208.4 million in new CRE loans. Approximately 80% of the CRE portfolio consisted of fixed-rate loans as of September 30, 2025, compared to 76% as of December 31, 2024. Our policy sets the maximum loan-to-value ("LTV") for CRE at 70%. Our weighted average LTV ratio was 49% as of September 30, 2025, compared to 54% as of December 31, 2024.

Loans — SBA: We are designated as an SBA Preferred Lender under the SBA Preferred Lender Program. We offer mostly SBA 7(a) variable-rate loans. We generally sell the 75% guaranteed portion of the SBA loans that we originate. Our SBA loans are typically made to small-sized manufacturing, wholesale, retail, hotel/motel and service businesses for working capital needs or business expansions. SBA loans have maturities up to 25 years. Typically, non-real estate secured loans mature in less than 10 years. Collateral may also include inventory, accounts receivable and equipment, and may include personal guarantees. Our unguaranteed SBA loans collateralized by real estate are monitored by collateral type and included in our CRE Concentration Guidance.

As of September 30, 2025, our SBA portfolio totaled $256.2 million, up from $253.7 million as of December 31, 2024. Of the total portfolio, $234.1 million was secured by real estate, while $22.2 million was either unsecured or secured by business assets. In comparison, as of December 31, 2024, $232.0 million was secured by real estate and $21.7 million was either unsecured or secured by business assets.

Loans — C&I: C&I loans totaled $214.4 million as of September 30, 2025, up from $213.1 million as of December 31, 2024.

Loans - Home Mortgage: We primarily originate non-qualified, alternative documentation single-family home mortgage loans through our retail branches and our correspondent lender network. Our primary loan product is a five-year or seven-year hybrid adjustable-rate mortgage, which reprices after the initial five- or seven-year lock period to a selected SOFR plus applicable margin. We also purchase residential mortgage loans from third-party originators based on the underwriting quality and file review as opportunities arise.

Home mortgage loans totaled $587.6 million as of September 30, 2025, up from $509.5 million as of December 31, 2024. During the first nine months of 2025, we originated $135.7 million in new home mortgage loans.