OP Bancorp

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 compensate 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 March 31, 2026 and December 31, 2025, the Company serviced SBA loans for others with principal balances of $672.8 million and $682.9 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 March 31, 2026 and December 31, 2025, there wasno impairment.

The following table presents the activity in the servicing assets for the three months ended March 31, 2026 and 2025:

The fair value of the servicing assets was $14.7 million as of March 31, 2026, which was determined using discount rates ranging from 4.50% to 11.64% 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 March 31, 2025, which was determined using discount rates ranging from 4.32% to 12.90% and prepayment speeds ranging from 11.49% to 13.60% depending on the stratification of the specific assets.