OP Bancorp

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the related notes thereto contained in this Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review “Part II, Item 1A. Risk Factors” for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

OP Bancorp (referred to herein on an unconsolidated basis as "OP Bancorp" and on a consolidated basis as the "Company") is a bank holding company headquartered in Los Angeles, California. Our commercial community banking activities are operated through Open Bank ("Open Bank" or the "Bank"), our wholly owned banking subsidiary, and we do not conduct material business operations other than through the Bank. We offer commercial banking services to small and medium-sized businesses, their owners and retail customers primarily in the Korean-American communities within our primary market areas. We currently operate twelve full service branches: nine branches across Los Angeles and Orange Counties in California, as well as one branch each in Santa Clara, California; Carrollton, Texas; and Las Vegas, Nevada. As of May 2026, we operate two loan production offices, following the opening of a new office in Bellevue, Washington effective May 2026, and the closure of four other loan production offices (Pleasanton, California; Atlanta, Georgia; Aurora, Colorado; and Fairfax, Virginia) in April 2026, with the remaining office located in Lynnwood, Washington. We closed the four loan production offices due to limited market demand,

Our results of operations depend primarily on net interest income, which represents the interest we earn on loans and related products, reduced by the interest we pay on deposits and other borrowings including our senior subordinated note. In addition to net interest income, we derive earnings from fee income we receive in connection with our deposits, and from gains on sale and service of SBA loans. Our major operating expenses are salaries and related benefits we pay our management and staff, and rent we pay on our leased properties. We rely primarily on locally-generated deposits, mostly from the Korean-American market within California, to fund our loan activities.

Current Developments

Interest Rate Environment

The Board of Governors of the Federal Reserve System ("Federal Reserve") maintained the Federal Funds Rate target range at 3.50% to 3.75% on April 29, 2026, marking the third consecutive policy pause this year. The FOMC reiterated that future rate decisions will remain data‑dependent as inflation continues to moderate unevenly and labor‑market indicators show signs of softening. Uncertainty has been heightened by ongoing geopolitical tensions in the Middle East, which have contributed to elevated oil prices and added upward pressure on inflation. The current rate environment continues to influence loan demand, deposit pricing, funding costs, and credit risk trends across the banking industry. These economic and geopolitical dynamics also increase the difficulty of forecasting interest‑rate movements and overall economic conditions, affecting the Company’s balance sheet management strategies and our ability to effectively price loans and longer‑term deposit products.

We believe we have responded effectively to the evolving dynamics of the banking environment. Our ability to navigate recent challenges is largely attributable to the continued loyalty of our customers and the dedication and expertise of our employees and management team.