OP Bancorp

Note 1. Significant Accounting Policies

Organization

OP Bancorp is a California-based bank holding company for Open Bank, an FDIC-insured, state-chartered financial institution headquartered in Los Angeles. The Bank operates twelve full-service branches across California, Washington, Nevada and Texas, andfive loan production offices in California, Georgia, Washington, Colorado, and Virginia. The Bank offers a full range of banking services to individuals and businesses

Significant Accounting Policies

Basis of Presentation and Principles of Consolidation: The accounting and reporting policies of the Company are prepared in accordance with GAAP and prevailing practices within the financial services industry. The Company's Consolidated Financial Statements include the accounts of OP Bancorp and its wholly owned bank subsidiary, Open Bank. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain items within the Consolidated Financial Statements and accompanying notes for the prior years have been reclassified to conform to the 2025 presentation.

Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that have a significant impact on the amounts reported within the Consolidated Financial Statements. The Company employs processes that rely on management's significant estimates and the judgments, particularly when determining the allowance for credit losses, income taxes, as well as certain fair value measurements. As with any estimate, actual results may differ from those estimates.

Segments: The Chief Executive Officer, as our Chief Operating Decision Maker (“CODM”), oversees the business asone reportable operating segment at the consolidated level. The CODM uses consolidated net income, along with net interest income, noninterest income and key noninterest expense categories such as compensation and benefits, information services, occupancy and general, administrative and other, to allocate resources and assess company performance.

Cash and Cash equivalents: Cash and cash equivalents include cash, deposits with other financial institutions with original maturities less than 90 days, and federal funds sold.

Debt Securities: Debt securities purchased that the Company has the positive intent and ability to hold to their maturity classified as HTM and carried at amortized cost, net of allowance for credit losses. Debt securities not classified as trading or HTM securities are classified as AFS and carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax. Interest income including amortization of premium or accretion of discount is recognized on the level-yield method without anticipating prepayments. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

AFS debt securities are measured for impairment if their fair value is less than the amortized cost. For ASF debt securities in an unrealized loss position, management evaluates whether the decline in fair value has resulted in from a credit-related loss or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. Management (1) recognizes an allowance for credit losses by a charge to earnings for the credit-related component of the decline in fair value, and (2) recognizes in other comprehensive income (loss) any non-credit related components of the fair value decline. If the amount of the amortized cost basis expected to be recovered increases in a future period, the valuation reserve would be reduced, but not more than the amount of the current existing reserve for that security. The amortized cost of the AFS debt securities does not include accrued interest. The Company has made an accounting policy election not to recognize an allowance for credit losses for accrued interest receivable on AFS debt securities as the Company reverses any accrued interest if an AFS debt security is impaired. For additional information on allowance for credit losses on AFS debt securities, see Note 2. Securities to the Consolidated Financial Statements in this Form 10-K.

Equity Securities: The Company's investment in equity securities consist of both marketable and non-marketable equity securities:

•Marketable equity securities — When equity securities have readily determinable fair value such as mutual funds, they are carried at fair value, with unrealized gains and losses included in Other income on the Consolidated Statement of Income. The Company's CRA mutual funds are included in Other investments on the Consolidated Balance Sheet.

•Non-marketable equity securities — When equity securities do not have readily determinable fair value such as FHLB and PCBB stock, they are recorded at their cost minus impairment. The Company's FHLB and PCBB stock are included Other investments on the Consolidated Balance Sheet. Both cash and stock dividends are reported in Other interest income on the Consolidated Statement of Income.

Loans Held-for-Sale: Loans are classified as held-for-sale when they are specifically identified as available for immediate sale and management has formally committed to a plan to sell them. These loans are recorded at the lower of cost or fair value less costs to sell. In accordance with the Company's periodic evaluation process, certain loans may be reclassified from held-for-investment to held-for-sale. Any reduction in carrying value at the time of transfer is recognized as a charge-off against the allowance for credit losses. Loan origination fees, net of certain direct origination costs, are deferred until the sale and are factored into the lower of cost or fair value assessment and/or the gain or loss recognized upon sale. If the fair value of a loan is less than its cost, a valuation allowance is established with a corresponding charge to noninterest income. Should a loan or a portion thereof, become unsalable, it is transferred back to held-for-investment portfolio at the lower of cost or fair value as of the transfer date.

Loans Receivable: Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are reported at their outstanding principal balance, net of deferred loan fees and costs, and an allowance for credit losses. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment to interest income over the loan's term using the level-yield method without anticipating prepayments.

For CRE and C&I loans, the accrual of interest income is discontinued when a loan becomes 90 days past due, unless the loan is well-secured and collection is in process. Consumer loans are generally charged off no later than 120 days past due. Past due status is determined based on the contractual terms of the loan. Loans are placed on nonaccrual status or charged off earlier if collection of principal or interest is deemed doubtful. Nonaccrual loans, and loans past due 90 days still accruing include both smaller-balance homogeneous loans evaluated collectively for impairment and individually assessed loans.

All interest accrued but not received on loans placed on nonaccrual status is reversed against interest income. Subsequent interest receipts on such loans are recognized on a cash-basis or cost-recovery method until the loan qualifies for return to accrual status. Loans are returned to accrual status when all contractual principal and interest amounts are current and future payments are reasonably assured.

Allowance for Credit Losses on Loans: For loans that share risk characteristics, the Company employs a modeled approach that takes into account current and future economic conditions to estimate lifetime expected losses on a collective basis. With the adoption of CECL, the Company elected not to consider accrued interest receivable in its estimated credit losses as the Company writes off uncollectible accrued interest receivable in a timely manner. Generally, loans are placed on nonaccrual status when they become 90 days or more past due, and any previously accrued but unpaid interest is reversed against interest income. Accrued interest receivable on loans totaled $8.8 million and $8.1 million as of December 31, 2025 and 2024, respectively.

For collectively evaluated loans, the Company uses transition matrices to develop the Probability of Default ("PD") and Loss Given Default ("LGD") approaches, incorporating quantitative factors and qualitative considerations in the calculation of the allowance. The model provides forecasts of PD and LGD based on national unemployment rates using regression analysis. The Company incorporates future economic conditions using a weighted multiple scenario approach: baseline and adverse. The Company applies a reasonable and supportable period ofone year for the baseline scenario andtwo years for the adverse scenario, after which loss assumptions revert to historical loss information through aone-year reversion period for the baseline scenario and atwo-year reversion period for the adverse scenario. The Company segments loan portfolio by major loan type using the Call Report codes and internal loan risk ratings to determine the Bank's allowance for credit losses.

The methodologies described above generally rely on historical loss experience to determine the quantitative portion of the allowance for credit losses. The Company also considers other qualitative and macroeconomic variables related to current conditions and reasonable and supportable forecasts that may indicate current expected credit losses could differ from the historical information reflected in the quantitative models. Key qualitative and macroeconomic variables include GDP, unemployment rates, interest rates, asset quality ratios, loan portfolio concentration, California house price index, and CRE price index. The parameters for making adjustments are established under a Credit Risk Matrix that provides different possible scenarios for each of the factors listed below. The Credit Risk Matrix and the possible scenarios enable the Bank to qualitatively adjust the loss rates. This matrix considers the following nine factors, which are patterned after the guidelines provided under the Federal Financial Institutions Examination Council Interagency Policy Statement on the Allowance for Credit Losses, updated to reflect the adoption of CECL:

• Changes in lending policies and procedures, including changes in underwriting standards and practices for collection, charge-offs, and recoveries;

• Actual and expected changes in national and local economic and business conditions and developments in which the institution operates that affect the collectivity of loans;

• Changes in the nature and volume of the loan portfolio;

• Changes in the experience, ability, and depth of lending management and staff;

• Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified loans;

• Changes in the quality of the credit review function;

• Changes in the value of the underlying collateral for loans that are not collateral-dependent;

• The existence, growth, and effect of any concentrations of credit, and

• The effect of other external factors, such as the regulatory, legal and technological environments; competition; and events such as natural disasters.

For loans that do not share similar risk characteristics such as nonaccrual loans above $500 thousand, the Company evaluates these loans on an individual basis. Such nonaccrual loans are considered to have different risk profiles than performing loans and are therefore evaluated individually. The Company elected to collectively assess nonaccrual loans with balances below $500 thousand along with the performing and accrual loans, in order to reduce the operational burden of individually assessing small nonaccrual loans with immaterial balances. When a loan is individually evaluated for the allowance for credit losses, the Company uses one of two different asset valuation measurement methods: 1) the present value of future cash flows discounted at the loan’s effective interest rate; or 2) the fair value of the collateral for a collateral-dependent loan. For the collateral-dependent loans, the Company obtains a new "as-is" valuation appraisal to determine an updated fair value of collateral. To ensure that appraised values remain current, the Company obtains updated appraisals every twelve months from a qualified independent appraiser. If the fair value of the collateral is less than the amortized balance of the loan, the Company recognizes an allowance for credit losses with a corresponding charge to the provision for credit losses.

The Company maintains a separate allowance for credit losses for its off-balance sheet commitments. The Company uses an estimated funding rate to allocate an allowance to undrawn exposures. This funding rate serves as a credit conversion factor, reflecting the likelihood that undrawn lines of credit may be drawn at any point. The funding rate is determined based on a look-back period of 8 quarters. Credit loss is not estimated for off-balance sheet commitments that are unconditionally cancellable by the Company.

Loan Modifications: The Company follows ASC 310-20 for all loan modifications, including those for borrowers in financial difficulty. A modification is considered a new loan only if: (1) the new term are as favorable as those offered to others with similar risk; and (2) changes to the original loan terms are more than minor. If not, the modification is accounted for as a continuation of the existing loan, prospectively adjusting the effective interest rate. Modification may include rate reductions, principal forgiveness, term extensions, or payment delays, aiming to minimize loss and avoid foreclosure. The Company applies its standard credit loss methodology for all modified loans.

Servicing Assets: When loans are sold with servicing retained, the Company initially recognizes servicing assets at fair value, with the resulting impact reflected in gains on sales of loans. Fair value is determined using a valuation model that estimates the present value of expected future net servicing income. This model incorporates assumptions that market participants would use, including servicing costs, the discount rates, prepayment speeds, and default and loss rates. To ensure reliability, the Company compares model inputs and results to published industry benchmarks. After initial recognition, servicing assets are subsequently measured using the amortization method. Under this approach, servicing assets are amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Servicing assets are evaluated for impairment by comparing their fair value to their carrying amount. If fair value is less than carrying amount, impairment is recognized through a valuation allowance, with changes reported in noninterest income. The fair values of servicing rights may fluctuate due to changes in estimated or actual prepayment speeds, default rates, and losses.

Servicing fee income, reported as other income, represents fees earned for servicing loans and is based on a contractual percentage of the outstanding principal. These fees are recognized as income when earned. Amortization of servicing assets is netted against loan servicing fee income. Late fees and ancillary fees related to loan servicing are not material.

Derivatives: The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company uses interest rate swaps to eliminate or reduce the variability of interest payments on floating rate liability due to changes in contractually specified interest rates.

The Company records interest rate swaps on the Consolidated Balance Sheets at fair value in Other assetsor Other liabilities. The net increase or decrease in interest rate swaps is included in Accrued interest receivable and other assets or Accrued interest payable and other liabilities within the statement of cash flows. We enter into International Swaps and Derivatives Association, Inc. ("ISDA") master netting agreements with cash flow hedge counterparty. Where enforceable, these agreements allow the Company to use or liquidate collateral and offset amounts with counterparties in case of default or certain events. For balance sheet presentation, the Company does not elect to use the offsetting option permitted under ASC 210-20-45-1. Accordingly, the interest rate swaps are reported at gross fair value without offsetting assets, liabilities, or collateral, even with netting agreements.

Accounting for changes in the fair value of interest rate swaps depends on whether the swaps have been designated as derivatives within a qualifying hedging relationship and whether they meet the criteria required for hedge accounting. Derivatives designated and qualifying as hedges of exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally aligns the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply, or the Company elects not to apply hedge accounting.

The Company designates interest rate swaps as cash flow hedges for accounting purpose. For cash flow hedges that are designated and qualified, gains or losses are initially recorded in accumulated other comprehensive income ("AOCI"). These amounts are subsequently reclassified into interest expense during the period(s) in which the hedged transactions impact earnings. Specifically, amounts recognized in AOCI related to these derivatives are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

The Company discontinues hedge accounting when hedging relationship ceases to meet the qualifying criteria (e.g., failing effectiveness tests, instrument expiration, sale, termination, or exercise). Once hedge accounting is discontinued, any subsequent changes in fair value are recorded as non-interest income. For discontinued cash flow hedges where the forecasted cash flows or transactions are still expected to occur, gains or losses that previously accumulated in other comprehensive income are amortized into earnings over the same periods which the hedged transactions will affect earnings.

Company Owned Life Insurance: The Company has purchased life insurance policies on primarily certain executives, recorded at the cash surrender value on the consolidated balance sheet, adjusted for expected charges or amounts due at settlement.

Transfers of Financial Assets: Financial asset transfers are accounted for as sales when the Company no longer controls assets. Control is considered surrendered once the assets are separated from the Company, the transferee has full right to use or trade the assets without restrictions, and the Company does not retain control through any agreement to repurchase the assets before their mature.

Premises and Equipment: Premises and equipment are recorded at cost minus accumulated depreciation. Equipment and furnishings are depreciated over 3 to 10 years, while leasehold improvements are amortized over either the lease term or their useful life, whichever is shorter using straight-line depreciation. Repairs and maintenance are expensed as incurred.

Other Real Estate Owned: OREO is property obtained through foreclosure or deed in lieu, recorded at fair value at acquisition. It is carried at the lower of its carrying value or fair value minus estimated cost to sell. Further write-downs are charged to noninterest expense. Income, expenses, and gains or losses from these properties are included in Other income or Other expensesin the Consolidated Statements of Income.

Operating Lease Right of Use Assets and Lease Liabilities: Operating lease ROU assets represent the Company's right to use leased property, and operating lease liabilities represent its obligation to make lease payments. Both are measured at the present value of the future minimum lease payments over the lease term at commencement date using the Company's incremental borrowing rate. Lease terms include periods subject to extension or termination options when it is reasonably certain that such options will be exercised. Operating lease ROU assets or lease liabilities are not recognized for short-term leases.

Contracts are evaluated at inception to determine if they constitute a lease. The majority of the Company's operating lease agreements relate to branch locations, office space, and certain equipment. Operating lease expense, comprising amortization of operating lease ROU assets and interest on the lease liabilities, is recognized on a straight-line basis throughout the lease term in occupancy expense. Occupancy expense also includes variable lease costs such as utilities, maintenance, property taxes, insurance, and rend adjustments tied to indices like the Consumer Price Index, which are expensed as incurred.

Loan Commitments and Related Financial Instruments: Off-balance sheet credit instruments, such as loan commitments and commercial letters of credit, expose the Company to potential loss, which are recorded when funded.

Low Income Housing Partnership Investments: Low income housing partnership investments are reported net of amortization using the proportional amortization method and are included in Other assets on the Consolidated Balance Sheets. Tax credits are recognized in Income tax expense on the Consolidated Statement of Income and funding commitments are included to Other liabilities on the Consolidated Balance Sheets.

Stock-Based Compensation: The Company grants time-based restricted stock awards ("RSA"), which include service conditions for vesting. Stock-based compensation for these time-based RSA is based on their grant values. Compensation cost is amortized on a straight-time basis over the required service period, generally defined as the vesting period.

Earnings Per Share: Basic EPS is calculated by dividing net income attributable to common shareholders by the weighted-average common shares outstanding during the period. Diluted EPS is calculated by dividing net income attributable to common shareholders by the weighted-average common shares outstanding during the period, adjusted for the dilutive effect of outstanding share-based awards using the treasury stock method.

Income Taxes: The Company files consolidated federal and various state tax returns. Income tax expense includes current and deferred components. Current tax reflects taxes payable or refundable for the period. Deferred tax expense results from changes in DTA and deferred tax liabilities ("DTL") between period, and is determined using the asset and liability method. Under the balance sheet method, the net DTA or DTL is based on the tax effects of the difference between the book and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on DTA and DTL is recognized in income in the period that includes the enactment date.

DTA is subject to a more-likely-than-not test to determine if the full amount should be recognized in financial statements. The Company assesses the likelihood of realization of DTA based on both positive and negative factors available, including projected future taxable income, recent performance and tax planning. If the test is not met, a valuation allowance is required for the DTA.

The Company accounts for uncertainty in income taxes in accordance with ASC 740, which prescribes a two-step approach for evaluating and measuring tax positions. A tax benefit is recognized only when it is more-likely-than-not that the position will be sustained upon examination by the relevant taxing authority based solely on the technical merits of the positions. If a tax position does not meet this recognition threshold, the Company records a liability for unrecognized tax benefits. For tax positions that meet the recognition threshold, the amount of tax benefit recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.

Comprehensive Income: Comprehensive income includes both net income and other comprehensive income. Other comprehensive income comprises net changes in unrealized gains and losses on AFS debt securities and cash flow hedges, net of taxes.

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated.

Fair Value of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions, as detailed in Note 14. Fair Value of Financial Instruments. These fair value estimates require significant judgment and involve uncertainties related to interest rates, credit risk, prepayments, and other factors, particularly when active markets do not exist for certain items. As a result, changes in assumptions or market conditions could have a substantial impact on these fair value estimates.

Accounting Pronouncements Adopted in 2025

The following standard was adopted on January 1, 2025, but it did not have a material impact on the Company's Consolidated Financial Statements.

•ASU 2024-02, Codification Improvements -Amendments to Remove Reference to the Concepts Statements

Accounting Pronouncements Adopted in 2026

The following standards were adopted on January 1, 2026, but they did not have a material impact on the Company's Consolidated Financial Statements:

•ASU 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments

•ASU 2025-05, Financial Instruments - Credit Losses(Topic 326): Measurement of Credit Losses for Account Receivable and Contract Assets

Recently Issued Accounting Pronouncements

Note 2. Securities

The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of AFS debt securities as of December 31, 2025 and 2024:

Expected maturities may differ from contractual maturities on certain securities as the issuers and borrowers of the underlying collateral may have the right to call or prepay obligations with or without call or prepayment penalties. The amortized cost and estimated fair value of AFS debt securities as of December 31, 2025, by contractual maturity, are shown below:

The following tables present the fair values and the associated gross unrealized losses of AFS debt securities, aggregated by length of time that the securities have been in a continuous unrealized loss position as of December 31, 2025 and 2024:

As of December 31, 2025 and 2024, the number of AFS debt securities in an unrealized loss position was 78 and 84, respectively.

The Company monitors credit quality of individual AFS debt securities by evaluating a range of factors, including issuer credit ratings, changes in those ratings over time, market indicators of credit risk, and any adverse economic or sector-specific conditions that may affect the issuer's ability to meet its obligations. These evaluations inform the Company's assessment of the appropriateness of the allowance for credit losses. The gross unrealized losses presented in the preceding tables were primarily attributable to changes in interest rates rather than credit deterioration.

As of December 31, 2025 and 2024, the Company's AFS debt securities portfolio was primarily composed of securities issued, guaranteed, or otherwise supported by the U.S. government. These securities were considered to have a zero credit loss assumption, and no material changes in credit ratings or adverse conditions were identified. Approximately 97% of the portfolio consisted of residential mortgage-backed securities and collateralized mortgage obligations issued by U.S. government-sponsored agencies, including Ginnie Mae, Fannie Mae and Freddie Mac. The remaining 3% consisted of the portfolio comprised of tax-exempt municipal securities. These securities were evaluated using similar criteria, including issuer credit ratings and financial condition. No significant deterioration in credit quality or adverse developments were noted for these securities, and there were no downgrades in credit ratings during the period. Based on this evaluation, the Company did not record an allowance for credit losses on its AFS debt securities as of December 31, 2025 and 2024. For a discussion of the factors and criteria the Company uses in analyzing securities for impairment related to credit losses, see Note 1. Significant Accounting Policies to the Consolidated Financial Statements in this Form 10-K.

As of December 31, 2025 and 2024, there wereno pledged securities to secure public deposits, borrowing and letters of credit from the FHLB and the Board of Governors of the Federal Reserve System, and for other purposes required or permitted by law.

The following table presents the other investment securities, which are included in Other investments on the Consolidated Balance Sheets as of December 31, 2025 and 2024:

(1)The Company recorded $114 thousand, $(32) thousand, and $48 thousand unrealized gains (losses) for the years ended December 31, 2025, 2024 and 2023, respectively. The unrealized gains (losses) of the mutual fund are included in Other income in the Consolidated Statements of Income.

Note 3. Loans and Allowance for Credit Losses on Loans

The following table presents the composition of the loan portfolio as of December 31, 2025 and 2024:

(1)Includes net deferred loan cost (fees) and net unamortized premiums (discounts) of $(331) thousand and $(702) thousand as of December 31, 2025 and 2024, respectively.

For the Company's accounting policy on allowance for credit losses on loans and unfunded commitments, see Note 1. Significant Accounting Policies to the Consolidated Financial Statements in this Form 10-K. The following table summarizes the activity in the allowance for credit losses on loans by portfolio segment and unfunded commitments for the years ended December 31, 2025, 2024 and 2023:

Collateral-dependent loans are loans where repayment is expected to be provided solely by the sale or operation of the underlying collateral and there are no other available and reliable sources of repayment. The estimated credit losses for these loans are based on the collateral’s fair value less selling costs. Generally, the Company records a partial charge-off to reduce the loan’s carrying value to the collateral’s fair value less selling costs at the time of foreclosure.

The following table represents the amortized cost basis of collateral-dependent loans by class of loans as of December 31, 2025 and 2024, for which repayment is expected to be obtained through the sale or operation of the underlying collateral.

(1)Excludes guaranteed portion of SBA loans totaling $12.7 million and $15.2 million as of December 31, 2025 and 2024.

(2)The allowance for credit losses allocated to these loans as of December 31, 2025 and 2024 was $1.3 million and $1.2 million, respectively.

The following table presents the amortized cost in nonaccrual loans and loans past due 90 or more days and still accruing interest as of December 31, 2025 and 2024:

(1)Excludes guaranteed portion of loans of $20.9 million and $16.3 million as of December 31, 2025 and 2024, respectively.

Nonaccrual loans and loans past due 90 or more include both (i) loans with similar risk characteristics that are collectively evaluated for allowance, and (ii) loans that do not share similar risk characteristics that are individually evaluated for allowance. Under the Company's policy, nonaccrual loans with outstanding balances above the $500 thousand threshold that lack shared risk characteristics are subject to individual evaluation for expected credit losses.

The following table represents the aging analysis of the gross loans as of December 31, 2025 and 2024:

(1)Excludes guaranteed portion of loans totaling $3.2 million as of December 31, 2025, with the excluded portion classified within "Current Accruing" loans. No such guaranteed portion existed as of December 31, 2024.

(2)Excludes guaranteed portion of loans totaling $20.9 million and $16.3 million as of December 31, 2025 and 2024, respectively, with the excluded portion classified within "Current Accruing" loans.

(3)Revised to conform with the current presentation.

Loan Modifications to Borrowers Experiencing Financial Difficulty

To help borrowers facing financial difficulty, the Company may agree to modify the contractual terms of a loan as a way to mitigate loss. These modifications are handled individually, aiming to create terms that support both repayment and the borrower's financial needs. A borrower is considered as experiencing financial difficulty when there is significant uncertainty regarding the borrower's ability to meet required debt payments or secure comparable financing from another creditor at a market rate for similar debt. Modification may include, but not limited to, payment delays, interest rate reductions, term extensions, principal forgiveness, or a combination of such modifications.

The following table presents the amortized cost of loans as December 31, 2025 that were modified for borrowers experiencing financial difficulty during the years ended December 31, 2025, 2024 and 2023 by loan class and modification type:

(1)Excludes guaranteed portion of SBA loans totaling $7.8 million, $7.4 million and $2.4 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The following tables describe the financial effect of the loan modifications made to borrowers experiencing financial difficulty for the periods presented:

A modified loan may become delinquent and may result in a payment default (generally 90 days past due) subsequent to modification. There were no loans that received modifications within the past 12 months as of December 31, 2025, 2024 and 2023, and subsequently defaulted in the years ended December 31, 2025, 2024 and 2023.

For the years ended December 31, 2025 and 2024, the Company hadno additional commitments to lend to borrowers whose loans were modified during the period. In comparison, the Company had additional commitments totaling $3.6 million to lend to borrowers whose loans were modified as of December 31, 2023.

The Company closely monitors the performance of modified loans to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following tables present the performance of such loans that were modified during the last 12 months as of December 31, 2025, 2024 and 2023:

(1)Excludes guaranteed portion of SBA loans totaling $7.8 million, $7.4 million, and $2.4 million, for the years ended December 31, 2025, 2024 and 2023, respectively.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about borrowers' ability to service their debt including: current financial information, historical payment experience, credit documentation, public information, and current economic trends. For consumer loans, a credit grade is established at inception, and generally only adjusted based on performance. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings:

Special Mention—Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.

Substandard—Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful—Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans.

The following tables present the loan portfolio's amortized cost and current year-to-date gross write-offs by loan type, risk rating and year of origination as of December 31, 2025 and 2024:

(1)As of December 31, 2025 and 2024, $27.3 million and $16.3 million, respectively, of criticized loans with payments guaranteed by government agencies were classified as "Pass" rated.

Note 4. Premises and Equipment

The following table presents information regarding the premises and equipment as of December 31, 2025 and 2024:

Total depreciation expense included in Occupancy and equipment in the Consolidated Statements of Income was $1.4 million for both the years ended December 31, 2025 and 2024 and $1.3 million for the year ended December 31, 2023.

Note 5. Servicing Assets

The Company recognizes the rights to service SBA loans for others as servicing assets when the benefit of servicing is expected to more than adequately compensation the Company for performing the servicing. Servicing assets are initially recorded at fair value and subsequently amortized in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. As of December 31, 2025 and 2024, the Company serviced SBA loans for others with principal balances of $682.9 million and $700.9 million, respectively.

The Company periodically stratifies its servicing assets into groupings based on risk characteristics and evaluates each group for impairment based on the fair value. Based on the impairment test as of December 31, 2025 and 2024, there wasno valuation allowance for impairment.

The following table presents the activity in the servicing assets for the years ended December 31, 2025, 2024 and 2023:

The fair value of the servicing assets was $14.8 million as of December 31, 2025, which was determined using discount rates ranging from 4.97% to 11.77% and prepayment speeds ranging from 12.90% to 13.60%, depending on the stratification of the specific assets.

The fair value of the servicing assets was $16.2 million as of December 31, 2024, which was determined using discount rates ranging from 4.07% to 11.29% and prepayment speeds ranging from 12.90% to 13.60% depending on the stratification of the specific assets.

The fair value of the servicing assets was $17.2 million as of December 31, 2023, which was determined using discount rates ranging from 3.75% to 11.00% and prepayment speeds ranging from 12.80% to 13.20% depending on the stratification of the specific assets.

Note 6. Leases

The Company leases buildings mainly for bank branches and office space from nonaffiliated parties with lease terms of 1 to 10 years as of December 31, 2025. Certain lease arrangements have optional extensions of about 5 years, but these are not included in the lease term unless reasonably certain.

The table below summarizes total lease costfor the periods indicated:

The tables below summarize other information related to the Company’s operating leases as of the associated period:

Rent expense was $3.1 million, $3.3 million and $3.1 million for the years ended December 31, 2025 and 2024 and 2023, respectively.

The table below summarizes the remaining contractually obligated lease payments and a reconciliation to the lease liability reported on the Consolidated Balance Sheets as of December 31, 2025:

Note 7. Deposits

Time deposits that exceed the FDIC insurance limit of $250 thousand as of December 31, 2025 and 2024 were $684.0 million and $565.8 million, respectively.

The following table presents the scheduled contractual maturities of time deposits as of December 31, 2025:

Note 8. Borrowing Arrangements

As of December 31, 2025, the Company had $75.0 million advances from FHLB with a weighted average interest rate of 3.55% and a weighted average remaining term of 2.1 years, compared to $95.0 million advances with a weighted average interest rate of 4.34% and a weighted average remaining term of 0.2 years as of December 31, 2024. The Company has a letter of credit with the FHLB in the amount of $135.0 million and $100.0 million to secure public deposits as of December 31, 2025 and 2024, respectively.

The Company had available borrowing capacity from the following institutions as of December 31, 2025:

The Company has pledged approximately $1.64 billion and $1.41 billion of loans as collateral for these lines of credit as of December 31, 2025 and 2024, respectively.

Note 9. Subordinated Note

On November 7, 2025, OP Bancorp issued in a private placement a $25.0 million principal amount of fixed-to-floating rate note due 2035 (the "2035 Note"). The 2035 Note will mature on November 15, 2035, From the original issue date to, but excluding, November 15, 2030, the 2035 Note will bear interest at a fixed rate of 7.50% per annum and payable semi-annually in arrears on May 15 and November 15 of each year, beginning May 15, 2026. Thereafter, until maturity or earlier redemption, the 2035 Note will bear interest a floating rate, reset quarterly, equal to the three-month term Secured Overnight Financing Rate ("SOFR") plus 411 basis points and payable in arrears on February 15, May 15, August 15, and November 15 of each year. The Company may, at its option, redeem the 2035 Note, in whole or part, at any time after the fifth anniversary of issuance, subject to any required regulatory approvals. The 2035 Note is qualified as tier 2 capital under current regulatory guidelines and interpretations. Debt issuance costs incurred in connection with the issuance of the 2035 Note totaled $426 thousand and were capitalized in accordance with ASC 835-30. These costs are presented as a direct deduction from the carrying amount of the subordinated note on the Consolidated Balance Sheet and are amortized into interest expense over the contractual term of the note using the straight-line method. As of December 31, 2025, the balance of the 2035 Note, net of unamortized debt issuance cost was $24.6 million. The amortization of debt issuance cost was $12 thousand for the year ended December 31, 2025.

Note 10. Income Taxes

The following table presents the components of income taxes expense (benefit) from continuing operations for the years ended December 31, 2025, 2024 and 2023. The Company conducts operations solely in the U.S. and does not have any foreign operations; accordingly, the Company does not have pretax income or income tax expense related to foreign jurisdictions:

The following table presents a reconciliation of the applicable statutory U.S. federal income tax rate to the effective tax rate for the years ended December 31, 2025, 2024 and 2023:

(1)Prior periods were retrospectively presented in accordance with ASU 2023-09.

(2)State tax in California made up the majority (greater than 50 percent) of the tax effect in this category.

(3)Includes impacts of affordable housing tax credit investments.

The significant components of deferred tax assets and liabilities as of December 31, 2025 and 2024 are reflected in the following table:

A valuation allowance for deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and tax planning strategies which will create taxable income during the periods in which those temporary differences become deductible. Management reevaluated all positive and negative evidence that existed and concluded all deferred tax assets are realizable. Therefore, no valuation allowance was necessary as of December 31, 2025 and 2024. There wereno interest or penalties recognized as a component of Income tax expense in the years ended December 31, 2025 or 2024.

The Company is subject to U.S. Federal income tax as well as various state taxing jurisdictions. The Company is no longer subject to examination by Federal taxing authorities for tax years prior to 2022 and for state and local taxing authorities for tax years prior to 2021.

Note 11. Commitments and Contingencies

Off-Balance-Sheet Credit Risk

In the normal course of business, the Company enters into commitments to extend credit such as loan commitments and standby letters of credits. These commitments expose the Company to varying degrees of credit and market risk and are subject to the same credit and market reviews as those instruments recorded on the Consolidated Balance Sheets. Loan commitments represent arrangements to lend funds or provide liquidity subject to specified contractual conditions. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These commitments generally have fixed expiration dates or contain termination clauses in the event the customer’s credit quality deteriorates. Since many of the commitments are expected to expire without being drawn upon, the commitment amounts do not necessarily represent future funding requirements.

The Company applies the same credit underwriting criteria to extend loans and commitments to customers. Each customer’s credit worthiness is evaluated on a case-by-case basis. Collateral may be obtained based on management’s assessment of a customer’s credit. Collateral may include securities, accounts receivable, inventory, property, plant and equipment, and income producing commercial or other properties. The majority of these off-balance sheet commitments have a variable interest rate. Management does not anticipate any material losses as a result of these transactions.

The following table presents the distribution of undisbursed credit-related commitments as of December 31, 2025 and 2024:

Investments in low-income housing partnership

The Company invests in qualified affordable housing partnerships. The following table shows the investments and unfunded commitments of the Company's low-income housing partnerships as of December 31, 2025 and 2024:

(1)These balances are reflected in Other assets and Other liabilities on the Consolidated Balance Sheets. The Company expects to finish fulfilling these commitments during the year ending 2042.

Under the proportional amortization method, the Company amortizes the initial cost of the investment in proportion to the tax credit and other benefits received andrecognizes the amortization in income tax expense on the Consolidated Statements of Income. The Company recognized amortization expense of $2.0 million, $1.7 million and $1.3 million for the years ended December 31, 2025, 2024 and 2023, respectively. In addition, the Company recognized tax credits and other benefits of $2.9 million, $2.5 million and $1.7 million for the years ended December 31, 2025, 2024 and 2023, respectively.

From time to time the Company or the Bank are parties to legal proceedings in the ordinary course of business. In accordance with ASC 450, Contingencies, the Company accrues reserves for outstanding lawsuits, claims and proceedings when a loss is probable and its amount can be reasonably estimated with specificity or within a given range. Management estimates the likelihood and the amount of a possible loss using current available information from legal proceedings, advice from legal counsel, and available insurance coverage. Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to the Company from any legal proceedings. The Company is not presently subject to any legal action for which an accrual is required and, accordingly, no accrual has been recorded; however, actual exposure and ultimate losses may differ from current expectations. While it is impossible to ascertain the ultimate resolution or range of financial liability, based on information known to management as of December 31, 2025, management does not believe there are any pending legal proceedings to which the Company or the Bank is a party that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the Company’s financial condition or results of operations.

Note 12. Stock-Based Compensation

The Company hasone stock-based compensation plan, the OP Bancorp 2021 Equity Incentive Plan ("2021 Plan") as of December 31, 2025. The Board of Directors approved the 2021 Plan, an equity incentive plan for granting stock options and restricted stock awards to key employees, officers, and non-employee directors of the Company. An aggregate of 1,500,000 shares of the Company’s common stock were authorized under the 2021 Plan. The exercise prices of stock options granted under the plan may not be less than 100% of the fair value of the Company’s stock at the date of grant. There areno stock options granted under the 2021 Plan as of December 31, 2025 and 2024.

Restricted stock awards issued under the 2021 Plan may or may not be subject to vesting provisions. These awards do not confer voting rights or receive dividend entitlements until the shares have vested.

The following table presents a summary of the activity in the Company’s restricted stock awards under the 2021 Plan for the year ended December 31, 2025:

The following table presents compensation cost and the related tax benefit for the restricted stock awards under the 2021 Plan for the periods indicated:

There were 1,062,190 shares available for future grants of either stock options or restricted stock awards under the 2021 Plan as of December 31, 2025. The Company had approximately $1.3 million of unrecognized compensation cost related to unvested restricted stock awards under the 2021 Plan as of December 31, 2025. The Company expects to recognize these costs over a weighted average period of 3.1 years.

Note 13. Employee Benefit Plan

The Company sponsors a defined contribution plan, the 401(k) profit sharing plan (the “401(k) Plan”), which provides retirement benefits funded by participant contributions and, at the Company's discretion, employer contributions. Employees are eligible to participate in the 401(k) Plan on the first day of the calendar month following completion ofthree months of service and attainment of age 18. Participants may contribute up to the maximum amount permitted under applicable IRS Code limitations. Each year, the Company may elect to make matching contributions to the 401(k) Plan. Employer contributions totaled $1.2 million, $1.1 million and $986 thousand for the years ended December 31, 2025, 2024 and 2023, respectively.

Note 14. Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or the price that would be paid to transfer a liability on the measurement date and is determined using an exit price in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Assets and liabilities recorded at fair value on a recurring basis, such as AFS securities and equity investments. Additionally, from time to time, the Company records fair value adjustments on a nonrecurring basis. These nonrecurring adjustments typically involve application of lower of cost or fair value accounting and write-downs of individual assets.

The Company classifies its assets and liabilities recorded at fair value as one of the following three categories and a financial instrument’s level within the fair value hierarchy is based on the lowest level of input significant to the fair value measurement:

Level 1 — Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 — Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy.

AFS Debt Securities— The fair values of investment securities are determined by matrix pricing, which is a mathematical technique used to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2). Management obtains the fair values of investment securities on a monthly basis from a third-party pricing service.

Equity Investments — The Company has an equity investment with readily determinable fair value. The fair value for the equity investment with readily determinable fair value is obtained from unadjusted quoted prices in active markets on the date of measurement and classified as Level 1.

Derivatives— The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2).

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024 are summarized below:

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from application of lower of cost or fair value and write-downs of individual assets.

Collateral-dependent loans— Collateral-dependent loans are loans where repayment is expected to be provided solely by the sale or operation of the underlying collateral and there are no other available and reliable sources of repayment. Fair value for collateral-dependent loans are measured based on the value of the collateral securing these loans and are classified at a Level 3 in the fair value hierarchy. Collateral may include real estate, or business assets including equipment, inventory and accounts receivable. The value of real estate collateral is determined based on an appraisal by qualified licensed appraisers hired by the Company. The value of business equipment is based on an appraisal by qualified licensed appraisers hired by the Company if significant, or the equipment’s net book value on the business’ financial statements. Inventory and accounts receivable collateral are valued based on independent field examiner review or aging reports. Appraisals may utilize a single valuation approach or a combination or approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available for similar loans and collateral underlying such loans. Appraised values are reviewed by management using historical knowledge, market considerations, and knowledge of the client and client’s business.

Other Real Estate Owned— Fair value of OREO is based primarily on third party appraisals, less costs to sell and result in a Level 3 classification of the inputs for determining fair value. Appraisals are required annually and may be updated more frequently as circumstances require and the fair value adjustments are made to OREO based on the updated appraised value of the property.

The following table presents the fair value hierarchy and fair value of assets that were still held and had fair value adjustments measured on a nonrecurring basis as of December 31, 2025 and 2024:

(1)Represents the carrying value of OREO property that was written down subsequent to its initial classification as OREO.

The following table presents the increase (decrease) in value of certain assets held at the end of the reporting periods presented for which a nonrecurring fair value adjustment was recognized during the respective periods:

The following table presents information about significant unobservable inputs utilized in the Company’s nonrecurring Level 3 fair value measurements as of December 31, 2025 and 2024:

(1)Weighted-average of inputs is based on the relative fair value of the respective assets as of December 31, 2025 and 2024.

Financial Instruments

The carrying amounts and estimated fair values of financial instruments that are not carried at fair value on a recurring basis as of December 31, 2025 and 2024 are as follows. These financial assets and liabilities are measured at amortized cost basis on the Company’s Consolidated Balance Sheets:

Note 15. Derivative Financial Instruments

The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. As of December 31, 2025, the Company anticipates reclassifying an estimated $580 thousand of pre-tax of deferred net gains from AOCI into earnings during the next 12 months. For the Company's accounting policy on derivatives, see Note 1. Significant Accounting Policies to the Consolidated Financial Statements in this Form 10-K.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet as of December 31, 2025 and 2024:

The following table presents the pre-tax changes in AOCI from cash flow hedges for the years ended December 31, 2025 and 2024:

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of December 31, 2025. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the Balance Sheet:

Note 16. Regulatory Capital Matters

The Bank is subject to certain risk-based capital and leverage ratio requirements under the U.S. Basel III capital rules administered by the federal and state banking agencies. Failure to be well-capitalized or to meet minimum capital requirements could result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have an adverse material effect on the Company's operations or financial condition. The Basel III capital rules also require the Bank to maintain a capital conservation buffer of 2.50% above the minimum risk-based capital ratios in order to absorb losses during periods of economic stress. Banking institutions with a ratio of common equity tier 1 capital to risk-weighted assets above the minimum but below the capital conservation buffer will face constraints on dividends. equity repurchases and compensation based on the amount of the shortfall. As of both December 31, 2025 and 2024, the Bank met all capital adequacy requirements. On November 7, 2025, the Company issued a $25.0 million subordinated note. This qualified as Tier 2 capital at the consolidated level and Tier 1 capital at the Bank level under current regulatory guidelines and interpretations.

The following tables present the regulatory capital amounts and ratios for the Company and the Bank as of dates indicated:

(1)The capital requirements are only applicable to the Bank, and the Company's ratios are included for comparison purpose.

Note 17. Earnings Per Share

The following table presents the calculation of the basic and diluted EPS for the years ended December 31, 2025, 2024 and 2023. For more information on the calculation of EPS, see Note 1. Significant Accounting Policies to the Consolidated Financial Statements in this Form 10-K:

(1)Approximately 16 thousand weighted-average shares of anti-dilutive restricted stock awards were excluded from the diluted EPS computation for the year ended December 31, 2025. no shares of common stock was antidilutive for the years of December 31, 2024 and 2023.

Note 18. Related-Party Transactions

During the years ended December 31, 2025, 2024 and 2023, the Company made charitable contributions totaling $2.6 million,$2.1 million, and $2.4 million, respectively, to the Open Stewardship Foundation. The Foundation's Board of Directors and Executive Officers are comprised primarily of the Company's insiders, all of whom serve on a voluntary basis and receive no compensation for their service. The Company's bylaws require an annual donation to the Foundation equal to 10% of consolidated after-tax net income, subject to legal and regulatory restrictions. The transaction was reviewed and approved in accordance with the Company's related-party transaction policy. The Company had no other material related-party transactions requiring disclosure.

Note 19. Parent Company Condensed Financial Statements

The following tables present the Parent Company-only condensed financial statements:

Condensed Balance Sheets

Condensed Statements of Income and Comprehensive Income

Condensed Statements of Cash Flows