OP Bancorp Reports Third Quarter 2025 Net Income of $6.7 Million, Diluted EPS of $0.45

compared with second quarter 2025 net income of $6.3 million, diluted EPS of $0.42, and third quarter 2024 net income of $5.4 million, diluted EPS of $0.36

Higher revenue and net income; improved efficiency ratio; stable credit quality

OP Bancorp (the "Company") (NASDAQ:OPBK), parent company of Open Bank, today reported:

Sang K. Oh, President and Chief Executive Officer:

"We delivered another solid quarter of performance, highlighted by a 6% increase in net income supported by a 3% rise in revenue and a 3% decrease in noninterest expense compared to prior quarter. Our net interest margin expanded by 3 basis points to 3.26%, and our efficiency ratio improved to 55.68%, reflecting our continued focus on profitability and operational discipline. Credit quality remained stable, with low net charge-offs and a steady allowance for credit losses, demonstrating the strength of our portfolio and prudent risk management. As we look ahead, we remain focused on driving sustainable growth and maintaining sound financial management," said Sang K. Oh, President and Chief Executive Officer."

INCOME STATEMENT HIGHLIGHTS

Net Interest Income and Net Interest Margin

Third Quarter 2025 vs. Second Quarter 2025

Net interest income increased by $625 thousand, or 3%, primarily driven by loan growth, partially offset by higher borrowings and lower loan yields. Net interest margin expanded by 3 basis points to 3.26%.

• Loans: Interest income increased by $738 thousand, largely attributable to a $37.1 million increase in average loan balances. This increase was partially offset by a 4 basis point decline in loan yields, reflecting increased interest income reversals due to changes in nonaccrual status compared to the prior quarter.
• Borrowings: Interest expense increased by $265 thousand, mainly due to a $29.5 million increase in average balances of Federal Home Loan Bank ("FHLB") advances.
• Deposits: Interest expense decreased slightly by $33 thousand, primarily due to an 11 basis point reduction in interest-bearing deposit costs, reflecting the repricing of time deposits in response to the downward shift in federal funds rate that began in the late 2024. The decrease was nearly offset by a $24.6 million increase in average interest-bearing deposit balances.

Third Quarter 2025 vs. Third Quarter 2024

Net interest income increased by $3.8 million, or 23%. The increase was due to loan growth and lower deposit rates. These changes were partially offset by interest-bearing deposit growth. Net interest margin rose 31 basis points to 3.26%.

• Loans: Interest income increased by $3.1 million, largely driven by a $226.3 million increase in average loan balances. This increase was partially offset by a 14 basis point decline in loan yields, reflecting the repricing of existing loans at lower interest rates following the 2024 reduction in the federal funds rate.
• Deposits: Interest expense decreased by $479 thousand, mainly driven by a 78 basis point reduction in interest-bearing deposit costs, resulting from the repricing of deposit products in response to the federal funds rate cut implemented in 2024. This decrease was partially offset by a $230.2 million increase in average interest-bearing deposit balances.

Provision for Credit Losses

Third Quarter 2025 vs. Second Quarter 2025

Provision for credit losses on loans remained relatively stable, decreasing by $49 thousand. The modest decline was primarily driven by reductions in qualitative reserves, following qualitative factor adjustments made after management reassessed the underlying assumptions. These adjustments were mostly offset by the increases resulting from risk rating downgrades and net charge-offs.

Third Quarter 2025 vs. Third Quarter 2024

Provision for credit losses on loans increased by $972 thousand, primarily due to higher historical loss factors stemming from risk rating downgrades, increased specific reserves, net charge-offs, and loan growth compared to the prior period.

Noninterest Income

Third Quarter 2025 vs. Second Quarter 2025

Noninterest income increased by $162 thousand, or 4%, primarily due to higher gains on sale of loans, partially offset by declines in service charges on deposits and loan servicing fees.

• Gains on Sale of Loans: Increased by $596 thousand, primarily driven by higher SBA loan sale activity. During the quarter, the Bank sold $36.8 million in SBA loans at an average premium rate of 6.71%, compared to $25.3 million sold at an average premium rate of 7.05% in the prior period.
• Service Charges on Deposits: Decreased by $292 thousand, primarily due to the closure of certain currency exchange-related accounts.
• Loan Servicing Fees, Net of Amortization: Decreased by $176 thousand, mainly due to higher amortization of servicing assets, reflecting elevated payoff activity within servicing portfolio.

Third Quarter 2025 vs. Third Quarter 2024

Noninterest income decreased by $110 thousand, or 3%, primarily due to lower service charges on deposits.

• Service Charges on Deposits: Decreased by $164 thousand, largely driven by the closure of certain currency exchange-related accounts.

Noninterest Expense

Third Quarter 2025 vs. Second Quarter 2025

Noninterest expense decreased by $408 thousand, or 3%, primarily due to reductions in salaries and employee benefits, promotion and advertising, and other expenses.

• Salaries and Employee Benefits: Decreased by $183 thousand, mainly due to lower incentive compensation accruals, resulting from a non-recurring adjustment recognized in the prior quarter.
• Promotion and Advertising: Decreased by $106 thousand, reflecting the absence of a one-time accrual adjustment that was recorded in the second quarter of 2025.
• Other Expenses: Decreased by $79 thousand, primarily due to reduced armored car service costs following the closure of certain currency exchange-related accounts.

Third Quarter 2025 vs. Third Quarter 2024

Noninterest expense increased by $909 thousand, or 7%, primarily due to higher salaries and employee benefits, and other expenses, partially offset by lower data processing and communication.

• Salaries and Employee Benefits: Increased by $861 thousand, mainly driven by staffing growth and annual merit-based salary adjustments. Higher health insurance costs also contributed to the increase in employee benefits.
• Other Expenses: Increased by $215 thousand, primarily due to reclassification of credit-related fees collections from contra-expense to income in 2025. This regrouping reflects a change in presentation rather than a change in underlying activity.
• Data Processing and Communication: Decreased by $371 thousand, largely due to contractual credits received following the conversion to a new core banking system in the fourth quarter of 2024.

Income Tax Expense

Third Quarter 2025 vs. Second Quarter 2025

Income tax expense increased by $856 thousand to $3.0 million, with the effective tax rate rising to 30.7% from 25.0%. The increases were primarily driven by higher pre-tax income and a one-time revaluation of deferred tax assets, associated with the adoption of the California's single sales factor apportionment method and the implementation of an enhanced interim state tax apportionment methodology.

Third Quarter 2025 vs. Third Quarter 2024

Income tax expense increased by $827 thousand to $3.0 million, with the effective tax rate rising to 30.7% from 28.3%. The increases were primarily attributable to the factors noted above.

BALANCE SHEET HIGHLIGHTS

Loans

The following table presents loan originations and the corresponding weighted average contractual rates for the periods indicated:

The following table summarizes the loan activity for the periods indicated:

The following table presents the composition of gross loans by interest rate type accompanied with the weighted average contractual rates as of the periods indicated:

The following table presents the maturity of gross loans by interest rate type accompanied with the weighted average contractual rates for the periods indicated:

Allowance for Credit Losses

The following table summarizes the activity in the allowance for credit losses for the periods presented:

Asset Quality

Credit quality remained strong during the period, with nonperforming loans at a low 0.57% of gross loans and annualized net charge-offs at just 0.04%. The allowance remained adequate at 1.27% of gross loans.

• Accruing loans 30-89 days past due decreased to $5.4 million, primarily due to $4.2 million in SBA and home mortgage loans returning to current status and $2.5 million in reclassified SBA loans to nonaccrual status. These reductions were partially offset by $2.8 million in new past due balances across various loan categories.
• Nonperforming loans increased by $3.4 million, primarily attributable to the reclassification of loans previously in the accruing 30-89 days past due category.
• Criticized loans increased by $4.3 million, primarily attributable to downgrades of SBA and home mortgage loans.

Deposits

As of September 30, 2025 vs. June 30, 2025

Total deposits increased by $18.7 million or 1%, primarily driven by a $68.8 million increase in time deposits, partially offset by a $28.4 million decrease in money market deposits and others, and a $21.7 million decrease in noninterest-bearing deposits. The increase in time deposits reflects new customers opening CD accounts, existing customers reallocating funds seeking higher yields, and a rise in wholesale CD balances to support loan growth. The declines in money market and noninterest-bearing deposits were primarily attributable to reductions in existing customer balances, reflecting operational funding needs.

As of September 30, 2025 vs. September 30, 2024

Total deposits increased by $208.8 million or 10%, primarily driven by growth of $166.9 million in time deposits and $59.7 million in money market deposits and others. The increase in time deposits was largely attributable to new customers opening CD accounts, reflecting a preference for higher-yielding products, as well as an increase in wholesale CD balances. The growth in money market deposits and others was mainly due to inflows from new customers and higher balances from existing customers.

The following table sets forth the maturity of time deposits as of September 30, 2025:

OTHER HIGHLIGHTS

Liquidity

The Company maintains ample access to liquidity, including highly liquid assets on our balance sheet and available unused borrowings from other financial institutions. The following table presents the Company's liquid assets and available borrowings as of dates presented:

Capital and Capital Ratios

On October 23, 2025, the Company's Board of Directors declared a quarterly cash dividend of $0.12 per share of its common stock. The dividend is payable on or about November 20, 2025, to shareholders of record as of the close of business on November 6, 2025. The principal source of funds from which the Company pays dividends are the dividends received from the Bank. Future dividends are subject to Board of Directors' approval and will depend on the Company's earnings, financial condition, capital requirements, and other relevant factors. On August 28, 2025, the Company's Board of Directors approved a stock repurchase program authorizing the repurchase of up to 700,000 shares of the Company's common stock (the "Repurchase Program"). No shares were repurchased under the Repurchase Program during the third quarter of 2025.

ABOUT OP BANCORP

OP Bancorp, the holding company for Open Bank (the "Bank"), is a California corporation whose common stock is quoted on the Nasdaq Global Market under the ticker symbol, "OPBK." The Bank is engaged in the general commercial banking business in Los Angeles, Orange, and Santa Clara Counties in California, the Dallas metropolitan area in Texas, and Clark County in Nevada and is focused on serving the banking needs of small- and medium-sized businesses, professionals, and residents with a particular emphasis on Korean and other ethnic minority communities. The Bank currently operates twelve full-service branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Cerritos, Gardena, Buena Park, Garden Grove and Santa Clara, California, Carrollton, Texas and Las Vegas, Nevada. The Bank also has five loan production offices in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, Lynnwood, Washington, and Fairfax, Virginia. The Bank commenced its operations on June 10, 2005 as First Standard Bank and changed its name to Open Bank in October 2010. Its headquarters is located at 1000 Wilshire Blvd., Suite 500, Los Angeles, California 90017. Phone 213.892.9999; www.myopenbank.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain matters set forth herein constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder. All statements that are not statements of historical fact are forward-looking, and readers should not construe these statements of assurances of expected or intended results, or of promises that management will take a given course of action or pursue the currently expected strategies and objectives. Forward-looking statements in this report include comments about the Company's current business plans and expectations regarding future operating results, as well as management's statements about expected future events and economic developments, plans, strategies and objectives. All such statements reflect the current intentions, beliefs and expectations of the Company's executive management based on currently available information and current and expected market conditions. Forward-looking statements can sometimes be identified by the use of forward-looking language, such as "likely result in," "expects," "anticipates," "estimates," "forecasts," "projects," "intends to," or may include other similar words or phrases, such as "believes," "plans," "trend," "objective," "continues," "remains," or similar expressions, or future or conditional verbs, such as "will," "would," "should," "could," "may," "might," "can," or similar verbs. Readers should not construe these statements as assurances of a given level of performance, or as promises that we will take the actions our management currently expects.

Our forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected or could cause us to change plans or strategies or otherwise to take actions that differ from those we currently expect. The known risks and uncertainties that may have these effects are described in Part II, Item 1A, of our Quarterly Report on Form 10-Q for the period ended June 30, 2025, and in our other filings with the Securities and Exchange Commission. You should read all forward-looking statements in the context of the foregoing and should not consider them to be reliable predictions of future events or as assurances of a particular level of performance or intended course of action. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.