opbk-20221027
0001722010False00017220102022-07-282022-07-28

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________
FORM 8-K
____________________________________
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 27, 2022
____________________________________
OP BANCORP
(Exact name of registrant as specified in its charter)
____________________________________
California001-3843781-3114676
(State or other jurisdiction of incorporation)
(Commission File Number)(IRS Employer Identification No.)
1000 Wilshire Blvd., Suite 500, Los Angeles, CA
90017
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (213) 892-9999

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, no par valueOPBK
NASDAQ Global Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☒


Item 2.02.    Results of Operations and Financial Condition
On October 27, 2022, OP Bancorp, (the “Company”), the holding company of Open Bank, issued a press release announcing preliminary unaudited results for the third quarter ended September 30, 2022. A copy of the press release is attached as Exhibit 99.1 to this Current Report and is incorporated herein by reference. Also attached as Exhibit 99.3 is a slide deck presentation for the results for the third quarter.
The information in this report set forth under this Item 2.02 shall not be treated as “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933 or the Securities Act of 1934, except as expressly stated by specific reference in such filing.
Item 8.01.    Other Events
On October 27, 2022, the Company also announced that its Board of Directors declared a quarterly cash dividend of $0.12 per common share. The cash dividend is payable on or about November 24, 2022 to all shareholders of record as of the close of business on November 10, 2022. A copy of the press release is attached hereto as Exhibit 99.2.
Item 9.01.    Financial Statements and Exhibits
(d)    Exhibits.
Exhibit NumberExhibit Description
99.1
99.2
99.3
104Cover Page Interactive Data File (embedded within the Inline XBRL document)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
OP Bancorp
Dated: October 28, 2022By:/s/ Christine Oh
Christine Oh
Executive Vice President and
Chief Financial Officer
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Exhibit 99.1
OP BANCORP REPORTS NET INCOME FOR 2022 THIRD QUARTER
OF $8.7 MILLION AND DILUTED EARNINGS PER SHARE OF $0.55

2022 Third Quarter Highlights compared with 2021 Third Quarter:
•Financial Results:
◦Net income of $8.7 million, up $400 thousand, or 5%
◦Diluted earnings per share of $0.55, up $0.01, or 2%
◦Net interest income of $20.3 million, up $3.8 million, or 23%
◦Provision for loan losses of $662 thousand, a $1.5 million increase, compared to reversal of provision for loan losses of $884 thousand
◦Noninterest income of $4.8 million, up $1.3 million, or 36%
◦Noninterest expense of $12.3 million, up $2.8 million, or 30%
◦Pre-provision net revenue (1) of $12.8 million, up $2.2 million, or 21%
◦Total assets of $2.03 billion, up $349.7 million, or 21%
◦Total loans (2) of $1.65 billion, up $328.4 million, or 25%; Average loans (2) of $1.61 billion, up $305.7 million, or 23%
◦Total deposits of $1.82 billion, up $320.4 million, or 21%; Average deposits of $1.75 billion, up $305.0 million, or 21%
◦Noninterest-bearing deposits of $794.6 million, up $81.5 million, or 11%; noninterest-bearing deposits to total deposits of 43.7%, compared to 47.6%
◦Net interest margin of 4.31%, up from 4.21%
◦Return on average equity of 19.91%, compared to 21.30%
◦Return on average assets of 1.77%, compared to 2.03%
◦Efficiency ratio of 49.03%, compared to 47.28%
•Credit Quality:
◦Allowance for loan losses to gross loans of 1.14%, compared to 1.15%
◦Adjusted allowance to gross loans (1) of 1.18%, compared to 1.34%
◦Net loan recoveries to average gross loans of 0.00%
◦Nonperforming loans to gross loans of 0.14%, compared to 0.09%
◦Criticized loans (3) to gross loans of 0.22%, compared to 0.18%
•Capital Levels:
◦Quarterly cash dividend of $0.12 per share, a 20% increase from $0.10 per share
◦Capital position remained well-capitalized with a Common Equity Tier 1 (“CET1”) ratio of 11.92%.
◦Book value per common share of $11.19, up 7%
1

___________________________________________________________
(1)    See reconciliation of GAAP to non-GAAP financial measures.
(2)     Includes loans held for sale.
(3)     Includes special mention, substandard, doubtful, and loss categories.
LOS ANGELES, October 27, 2022 — OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company of Open Bank, today reported its financial results for the third quarter of 2022. Net income for the third quarter of 2022 was $8.7 million, or $0.55 per diluted common share, compared with $8.5 million, or $0.54 per diluted common share, for the second quarter of 2022, and $8.3 million, or $0.54 per diluted common share, for the third quarter of 2021.
Min Kim, President and Chief Executive Officer:
“We are pleased to report another strong quarter of balance sheet growth and earnings performance. Our total assets surpassed $2 billion for the first time as our average loans and deposits grew 23% and 21%, respectively, from a year ago. The growth was accompanied by increased net income and diluted earnings per share, expanded net interest margin, and maintenance of strong asset quality. Despite external headwinds related to supply chain bottlenecks, inflation, and market rate increases by the Federal Reserve, we remain optimistic about our future growth and performance and will continue to focus on executing our strategic goals while maintaining appropriate risk and control environment.”



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SELECTED FINANCIAL HIGHLIGHTS
($ in thousands, except per share data)As of and For the Three Months Ended% Change 3Q22 vs.
3Q222Q223Q212Q223Q21
Selected Income Statement Data:
Net interest income$20,344 $19,079 $16,589 6.6 %22.6 %
Provision for (reversal of) loan losses662 996 (884)(33.5)n/m
Noninterest income4,821 5,359 3,542 (10.0)36.1 
Noninterest expense12,338 11,503 9,519 7.3 29.6 
Income tax expense3,515 3,459 3,246 1.6 8.3 
Net Income$8,650 $8,480 $8,250 2.0 %4.8 %
Diluted earnings per share$0.55 $0.54 $0.54 1.9 %1.9 %
Selected Balance Sheet Data:
Total loans (1)
$1,654,660 $1,551,973 $1,326,287 6.6 %24.8 %
Total deposits$1,816,811 $1,741,623 $1,496,406 4.3 %21.4 %
Total assets$2,029,575 $1,934,242 $1,679,911 4.9 %20.8 %
Average loans (1)
$1,614,000 $1,560,064 $1,308,338 3.5 %23.4 %
Average deposits$1,753,726 $1,702,860 $1,448,771 3.0 %21.0 %
Credit Quality:
Nonperforming loans$2,251 $2,177 $1,052 3.4 %114.0 %
Net (recoveries) charge-offs to average gross loans (2)
(0.00)%(0.01)%(0.00)%0.01 %0.00 %
Allowance for loan losses to gross loans1.14 %1.19 %1.15 %(0.05)%(0.01)%
Financial Ratios:
Return on average assets (2)
1.77 %1.79 %2.03 %(0.02)%(0.26)%
Return on average equity (2)
19.91 %20.29 %21.30 %(0.38)%(1.39)%
Net interest margin (2)
4.31 %4.21 %4.21 %0.10 %0.10 %
Common equity tier 1 capital ratio11.92 %12.29 %12.63 %(0.37)%(0.71)%
Leverage ratio9.52 %9.48 %9.75 %0.04 %(0.23)%
Efficiency ratio (3)
49.03 %47.07 %47.28 %1.96 %1.75 %
Book value per common share$11.19 $11.16 $10.48 0.3 %6.8 %
(1)Includes loans held for sale.
(2)Annualized.
(3)Represents noninterest expense divided by the sum of net interest income and noninterest income.
INCOME STATEMENT HIGHLIGHTS
Net Interest Income and Net Interest Margin
($ in thousands)For the Three Months Ended% Change 3Q22 vs.
3Q222Q223Q212Q223Q21
Interest Income
Interest income$23,234 $20,148 $17,355 15.3 %33.9 %
Interest expense2,890 1,069 766 170.3 277.3 
Net interest income$20,344 $19,079 $16,589 6.6 %22.6 %

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($ in thousands)For the Three Months Ended
3Q222Q223Q21
Average BalanceInterest
and Fees
Yield/Rate (1)
Average BalanceInterest
and Fees
Yield/Rate (1)
Average BalanceInterest
and Fees
Yield/Rate (1)
Interest-earning Assets
Loans$1,614,000 $21,780 5.36 %$1,560,064 $19,108 4.91 %$1,308,338 $16,922 5.13 %
Total interest-earning assets$1,874,516 $23,234 4.92 %$1,817,157 $20,148 4.44 %$1,566,050 $17,355 4.40 %
Interest-bearing Liabilities
Interest-bearing deposits$947,437 $2,889 1.21 %$859,072 $1,069 0.50 %$752,010 $766 0.40 %
Total interest-bearing liabilities$947,567 $2,890 1.21 %$859,072 $1,069 0.50 %$752,010 $766 0.40 %
Ratios
Net interest Income/interest rate spreads$20,344 3.71 %$19,079 3.94 %$16,589 4.00 %
Net interest margin4.31 %4.21 %4.21 %
Total deposits / cost of deposits$1,753,726 $2,889 0.65 %$1,702,860 $1,069 0.25 %$1,448,771 $766 0.21 %
Total funding liabilities / cost of funds$1,753,856 $2,890 0.65 %$1,702,860 $1,069 0.25 %$1,448,771 $766 0.21 %
(1)Annualized.

($ in thousands)For the Three Months EndedYield Change 3Q22 vs.
3Q222Q223Q21
Interest
& Fees
Yield (1)
Interest
& Fees
Yield (1)
Interest
& Fees
Yield (1)
2Q223Q21
Loan Yield Component
Contractual interest rate$20,419 5.02 %$17,425 4.48 %$14,251 4.32 %0.54 %0.70 %
SBA discount accretion1,336 0.33 1,151 0.30 1,584 0.48 0.03 (0.15)
Amortization of net deferred fees122 0.03 493 0.13 1,249 0.38 (0.10)(0.35)
Amortization of premium(250)(0.06)(197)(0.05)(188)(0.06)(0.01)— 
Net interest recognized on nonaccrual loans— 0.00 5 0.00 (15)— 0.00 0.00 
 Prepayment penalties (2) and other fees
153 0.04 231 0.05 41 0.01 (0.01)0.03 
Yield on loans$21,780 5.36 %$19,108 4.91 %$16,922 5.13 %0.45 %0.23 %
Amortization of net deferred fees:
PPP loan forgiveness (3)
$146 0.04 %$351 0.09 %$1,006 0.31 %(0.05)%(0.27)%
Other(24)-0.01 142 0.04 243 0.07 (0.05)(0.08)
Total amortization of net deferred fees$122 0.03 %$493 0.13 %$1,249 0.38 %(0.10)%(0.35)%
(1)Annualized.
(2)Prepayment penalty income of $79 thousand, $118 thousand and $0 for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively, was from commercial real estate and C&I loans.
(3)As of September 30, 2022, there were unamortized net deferred fees and unaccredited discounts of $28 thousand to be recognized over the estimated life of the loans as a yield adjustment on the loans.
Impact of Hana Loan Purchase on Average Loan Yield and Net Interest Margin

During the second quarter of 2021, the Company purchased an SBA portfolio of 638 loans with an ending balance of $100.0 million, excluding loan discount of $8.9 million from Hana Small Business Lending, Inc. (“Hana”). The following table presents impacts of the Hana loan purchase on average loan
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yield and net interest margin:
($ in thousands)For the Three Months Ended
3Q222Q223Q21
Hana Loan Purchase:
Contractual interest rate$1,114 $956 $1,094 
Purchased loan discount accretion594 592 948 
Other fees9 24 15 
Total interest income$1,717 $1,572 $2,057 
Effect on average loan yield (1)
0.21 %0.19 %0.30 %
Effect on net interest margin (1)
0.22 %0.20 %0.30 %

($ in thousands)For the Three Months Ended
3Q222Q223Q21
Average
Balance		Interest
and Fees		Yield/
Rate		Average
Balance		Interest
and Fees		Yield/
Rate		Average
Balance		Interest
and Fees		Yield/
Rate
Average loan yield (1)
$1,614,000 $21,780 5.36 %$1,560,064 $19,108 4.91 %$1,308,338 $16,922 5.13 %
Adjusted average loan yield excluding purchased Hana loans (1)(2)
$1,549,313 $20,063 5.15 %$1,490,884 $17,536 4.72 %$1,222,628 $14,865 4.83 %
Net interest margin (1)
$1,874,516 $20,344 4.31 %$1,817,157 $19,079 4.21 %$1,566,050 $16,589 4.21 %
Adjusted interest margin excluding purchased Hana loans (1)(2)
$1,809,829 $18,627 4.09 %$1,747,977 $17,507 4.01 %$1,480,340 $14,532 3.91 %
(1)Annualized.
(2)See reconciliation of GAAP to non-GAAP financial measures.

Third Quarter 2022 vs. Second Quarter 2022
Net interest income increased $1.3 million, or 6.6%, primarily due to higher interest income on loans. Net interest margin was 4.31%, an increase of 10 basis points from 4.21%.
◦A $2.7 million increase in interest income on loans was primarily due to interest income increases of $1.4 million on real estate loans and $983 thousand on home mortgage loans driven by average balance increases of $58.5 million on real estate loans and $81.5 million on home mortgage loans.
◦The 10 basis point increase in net interest margin was primarily due to a 48 basis point increase in average yield on interest-earning assets.
◦Average loan yield was 5.36%, a 45 basis point increase from 4.91%, primarily due to a 54 basis point increase in contractual loan yield as a result of market rate increases by the Federal Reserve.
◦Average cost of interest-bearing deposits was 1.21%, a 71 basis point increase from 0.50%. Average cost of deposits was 0.65%, a 40 basis point increase from 0.25%, primarily due to the Federal Reserve’s rate increases.

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Third Quarter 2022 vs. Third Quarter 2021
Net interest income increased $3.8 million, or 22.6%, primarily due to higher interest income on loans. Net interest margin was 4.31%, an increase of 10 basis points from 4.21%.
◦A $4.9 million increase in interest income on loans was primarily due to higher average loan balance from loan growth in home loans and real estate loans.
◦The improvement of 10 basis points in net interest margin was primarily due to a 52 basis point increase in average yield on interest-earning assets.
◦Average loan yield was 5.36%, a 23 basis point increase from 5.13%, primarily due to a 70 basis point increase in contractual loan yield as a result of market rate increases by the Federal Reserve, partially offset by a 15 basis point decrease in SBA discount accretion income as a result of lower SBA loan payoffs and a 35 basis point decrease in amortization of net deferred fees as a result of lower net deferred fees on SBA PPP loans.
◦Average yield on interesting-bearing deposits in other banks was 2.21%, a 208 basis point increase from 0.13%, primarily due to the Federal Reserve’s rate increases. Average yield on available-for-sale debt securities was 2.04%, a 105 basis point increase from 0.99%, primarily due to higher yields on securities purchased in 2022 as a result of the Federal Reserve’s rate increases.
◦Average cost of interest-bearing deposits was 1.21%, an 81 basis point increase from 0.40% primarily due to the Federal Reserve’s rate increases. Average cost of deposits was 0.65%, a 44 basis point increase from 0.21%, primarily due to the Federal Reserve’s rate increases.
Provision for loan losses
Third Quarter 2022 vs. Second Quarter 2022
The Company recorded $662 thousand provision for loan losses, a decrease of $334 thousand, compared with a $996 thousand provision for loan losses. The $662 thousand provision for loan losses was primarily due to an increase of $2.3 million in quantitative reserves from loan growth in real estate and home mortgage loans, partially offset by a decrease of $1.6 million in qualitative assessments of our loan portfolio.

Third Quarter 2022 vs. Third Quarter 2021
The Company recorded $662 thousand provision for loan losses, an increase of $1.5 million, compared with $884 thousand reversal of provision for loan losses.

6

Noninterest Income
($ in thousands)For the Three Months Ended% Change 3Q22 vs.
3Q222Q223Q212Q223Q21
Noninterest income
Service charges on deposits$454 $427 $409 6.3 %11.0 %
Loan servicing fees, net of amortization610 654 599 (6.7)1.8 
Gain on sale of loans3,490 3,873 2,188 (9.9)59.5 
Other income267 405 346 (34.1)(22.8)
Total noninterest income$4,821 $5,359 $3,542 (10.0)%36.1 %
Third Quarter 2022 vs. Second Quarter 2022
Noninterest income decreased $538 thousand, or 10.0%, primarily due to lower gains on sale of loans and other income.
◦Gains on sale of loans were $3.5 million, down $383 thousand from the second quarter of 2022, primarily due to lower average premium on loan sales. The Company sold $59.3 million in SBA loans at an average premium of 6.67%, compared to the sale of $58.6 million at an average premium of 7.02%.
◦Other income were $267 thousand, down $138 thousand from second quarter of 2022, primarily due to a decreases in credit related fees and an increase in unrealized loss on CRA qualified mutual fund.

Third Quarter 2022 vs. Third Quarter 2021
Noninterest income increased $1.3 million, or 36.1%, primarily due to higher gains on sale of loans.
◦Gains on sales of loans were $3.5 million, up $1.3 million from the third quarter of 2021. The increase was primarily due to higher sales volume partially offset by lower average premium on loan sales. The Company sold $59.3 million in SBA loans at an average premium of 6.67%, compared to the sale of $10.6 million at an average premium of 11.48%.
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Noninterest Expense
($ in thousands)For the Three Months Ended% Change 3Q22 vs.
3Q222Q223Q212Q223Q21
Noninterest expense
Salaries and employee benefits$7,343 $7,109 $5,724 3.3 %28.3 %
Occupancy and equipment1,537 1,489 1,326 3.2 15.9 
Data processing and communication586 492 448 19.1 30.8 
Professional fees602 364 308 65.4 95.5 
FDIC insurance and regulatory assessments238 192 146 24.0 63.0 
Promotion and advertising177 165 175 7.3 1.1 
Directors’ fees170 190 183 (10.5)(7.1)
Foundation donation and other contributions875 852 842 2.7 3.9 
Other expenses810 650 367 24.6 120.7 
Total noninterest expense$12,338 $11,503 $9,519 7.3 %29.6 %

Third Quarter 2022 vs. Second Quarter 2022
Noninterest expense increased $835 thousand, or 7.3%, primarily due to higher salaries and employee benefits, professional fees and other expenses.
◦Salaries and employee benefits were $7.3 million, up $234 thousand from the second quarter of 2022. The increase was primarily due to an increase in employee incentive accruals and salaries as a result of 13 additional employees.
◦Professional fees were $602 thousand, up $238 thousand from the second of 2022, primarily due to increases in other consulting fees.
◦Other expenses were $810 thousand, up $160 thousand from the second of 2022, primarily due to an increase in business development expense.
Third Quarter 2022 vs. Third Quarter 2021
Noninterest expense increased $2.8 million, or 29.6%, primarily due to higher salaries and employee benefits and other expenses.
◦Salaries and employee benefits were $7.3 million, up $1.6 million from the third quarter of 2021. The increase was primarily due to an increase in employee incentive accruals and salaries as a result of 30 additional employees to support continued growth of the Company.
◦Occupancy and equipment expenses were $1.5 million, up $211 thousand from the third quarter of 2021, primarily due to a new branch opened in the first quarter of 2022.
◦Professional fees were $602 thousand, up $294 thousand from the third of 2021, primarily due to increases in other consulting fees.
◦Other expenses were $810 thousand, up $443 thousand from the third quarter of 2021, primarily due to an increase in business development expense.
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Income Tax Expense
Third Quarter 2022 vs. Second Quarter 2022
Income tax expense was $3.5 million, and the effective tax rate was 28.9%, compared to income tax expense of $3.5 million and the effective rate of 29.0% for the second quarter of 2022.
Third Quarter 2022 vs. Third Quarter 2021

Income tax expense was $3.5 million and the effective tax rate was 28.9%, compared to income tax expense of $3.2 million and the effective rate of 28.2% for the third quarter of 2021.

Balance Sheet Highlights

Loans
($ in thousands)As of% Change 3Q22 vs.
3Q222Q223Q212Q223Q21
Real estate loans$830,125 $776,785 $688,430 6.9 %20.6 %
SBA loans (1)
232,569 247,413 303,625 (6.0)(23.4)
C&I loans133,855 128,620 123,422 4.1 8.5 
Home mortgage loans419,469 331,362 115,255 26.6 263.9 
Consumer & other loans2,000 538 1,089 271.7 83.7 
Gross loans$1,618,018 $1,484,718 $1,231,821 9.0 %31.4 %
(1)Includes PPP loans of $1.1 million, $8.1 million and $69.3 million as of September 30, 2022, June 30, 2022 and September 30, 2021, respectively.

The following table presents new loan originations based on loan commitment amounts for the periods indicated:
($ in thousands)For the Three Months Ended% Change 3Q22 vs.
3Q222Q223Q212Q223Q21
Real estate loans$43,929 $61,924 $27,671 (29.1)%58.8 %
SBA loans (1)
43,984 55,085 57,541 (20.2)(23.6)
C&I loans9,720 2,718 35,279 257.6 (72.4)
Home mortgage loans68,842 30,345 13,437 126.9 412.3 
Consumer & other loans2,500 — — —— 
Gross loans$168,975 $150,072 $133,928 12.6 %26.2 %
(1)There were no new PPP originations for the periods indicated.

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The following table presents changes in gross loans by loan activity for the periods indicated:
($ in thousands)For the Three Months Ended
3Q222Q223Q21
Gross loans, beginning$1,484,718 $1,428,410 $1,245,866 
New originations168,975 150,072 152,913 
Net line advances18,642 (46,773)(24,018)
Purchases37,146 56,455 — 
Sales(60,307)(57,954)(22,506)
Paydowns(19,084)(16,011)(14,675)
Payoffs(37,817)(33,098)(46,409)
PPP Payoffs(7,206)(14,347)(36,108)
Other32,951 17,964 (23,242)
Total133,300 56,308 (14,045)
Gross loans, ending$1,618,018 $1,484,718 $1,231,821 
As of September 30, 2022 vs. June 30, 2022

Gross loans were $1.62 billion at September 30, 2022, up $133.3 million from June 30, 2022, primarily due to new loan originations and home mortgage loan purchases.

Home mortgage loans of $37.1 million were purchased from third party mortgage originators, compared to $56.5 million in the second quarter of 2022. New loan originations and loan payoffs were $169.0 million and $45.0 million for the third quarter of 2022, compared with $150.1 million and $47.4 million for the second quarter of 2022, respectively. Of the PPP loans, $7.2 million in principal amount has been forgiven under the program, compared to a $14.3 million of PPP loans forgiven in the second quarter of 2022.
As of September 30, 2022 vs. September 30, 2021

Gross loans were $1.62 billion at September 30, 2022, up $386.2 million from September 30, 2021, primarily due to new loan originations of $609.2 million and home mortgage loan purchases of $224.1 million, partially offset by loan sales of $211.0 million and loan payoffs of $233.6 million.

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:
($ in thousands)As of
3Q222Q223Q21
%Rate%Rate%Rate
Fixed rate35.2 %4.39 %34.9 %4.19 %32.2 %4.05 %
Hybrid rate34.1 4.59 28.2 4.47 22.4 4.55 
Variable rate30.7 6.97 36.9 5.77 45.4 5.08 
Gross loans100.0 %5.25 %100.0 %4.85 %100.0 %4.63 %

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The following table presents the maturity of gross loans by interest rate type accompanied with the weighted average contractual rates for the periods indicated:
($ in thousands)As of September 30, 2022
Within One YearOne Year Through Five YearsAfter Five YearsTotal
AmountRateAmountRateAmountRateAmountRate
Fixed rate$33,014 4.32 %$325,509 4.47 %$211,033 4.29 %$569,556 4.39 %
Hybrid rate28,577 4.35 52,341 5.12 470,087 4.54 551,005 4.59 
Variable rate76,193 6.83 132,162 6.84 289,102 7.08 497,457 6.97 
Gross loans$137,784 5.71 %$510,012 5.15 %$970,222 5.24 %$1,618,018 5.25 %
Deposits
($ in thousands)As of% Change 3Q22 vs.
3Q222Q223Q21
Amount%Amount%Amount%2Q223Q21
Noninterest-bearing deposits$794,631 43.7 %$820,311 47.1 %$713,141 47.6 %(3.1)%11.4 %
Money market deposits and others524,911 28.9 %519,389 29.8 351,186 23.5 %1.1 49.5 
Time deposits497,269 27.4 %401,923 23.1 432,079 28.9 %23.7 15.1 
Total deposits$1,816,811 100.0 %$1,741,623 100.0 %$1,496,406 100.0 %4.3 %21.4 %
As of September 30, 2022 vs. June 30, 2022

Total deposits were $1.82 billion as of September 30, 2022, up $75.2 million from June 30, 2022, primarily driven by growth in money market deposits and time deposits, partially offset by a decrease in noninterest-bearing deposits. Money market deposits and time deposits grew $5.5 million and $95.3 million, respectively, due to management’s actions to support loan growth during the third quarter of 2022 including upward adjustments of interest rates on customer deposits and increases in wholesale deposits. Noninterest-bearing deposits decreased $25.7 million, primarily due to decreases from Special Deposit Center as a result of lower transaction volumes, specifically escrow and 1031 exchange accounts.
As of September 30, 2022 vs. September 30, 2021

Total deposits were $1.82 billion as of September 30, 2022, up $320.4 million from September 30, 2021, primarily driven by growth in money market and noninterest-bearing deposits. Money market deposits were $524.9 million, up $173.7 million from $351.2 million at September 30, 2021. Noninterest-bearing deposits were $794.6 million, up $81.5 million from $713.1 million as of September 30, 2021. The growth in noninterest-bearing deposits was primarily due to addition of new customers from our Specialty Deposit Center.

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The following table sets forth the maturity of time deposits as of September 30, 2022:
As of September 30, 2022
($ in thousands)Within Three
Months		Three to
Six Months		Six to Nine MonthsNine to Twelve
Months		After
Twelve Months		Total
Time deposits (more than $250,000)$76,174 $15,362 $33,682 $149,265 $3,302 $277,785 
Time deposits ($250,000 or less)51,818 39,287 37,942 84,080 6,357 219,484 
Total time deposits$127,992 $54,649 $71,624 $233,345 $9,659 $497,269 
Weighted average rate1.65 %1.29 %1.07 %1.95 %1.68 %1.63 %

Capital and Cash Dividend

Basel III
OP Bancorp (1)
Open BankMinimum Well
Capitalized
Ratio
Minimum
Capital Ratio+
Conservation
Buffer (2)
Risk-Based Capital Ratios:
Total risk-based capital ratio13.10 %12.97 %10.00 %10.50 %
Tier 1 risk-based capital ratio11.92 %11.79 %8.00 %8.50 %
Common equity tier 1 ratio11.92 %11.79 %6.50 %7.00 %
Leverage ratio9.52 %9.41 %5.00 %4.00 %
(1)The capital requirements are only applicable to the Bank, and the Company's ratios are included for comparison purpose.
(2)An additional 2.5% capital conservation buffer above the minimum capital ratios are required in order to avoid limitations on distributions, including dividend payments and certain discretionary bonus to executive officers.

($ in thousands)Basel III% Change 3Q22 vs.
3Q222Q223Q212Q223Q21
Risk-Based Capital Ratios:
Total risk-based capital ratio13.10 %13.51 %13.81 %(0.41)%(0.71)%
Tier 1 risk-based capital ratio11.92 %12.29 %12.63 %(0.37)%(0.71)%
Common equity tier 1 ratio11.92 %12.29 %12.63 %(0.37)%(0.71)%
Leverage ratio9.52 %9.48 %9.75 %0.04 %(0.23)%
Risk-weighted Assets$1,571,593 $1,465,707 $1,251,867 7.22 %25.54 %

Capital ratios remained strong during the quarter. Our CET1 and total risk-based capital ratios were 11.92% and 13.10% as of September 30, 2022, down 71 basis points and 71 basis points from a year ago, respectively. The decreases in capital ratios were primarily due to year-over-year asset growth.

The Company’s Board of Directors has declared a quarterly cash dividend of $0.12 per share of its common stock. The cash dividend is payable on or about November 24, 2022 to all shareholders of record as of the close of business on November 10, 2022.

The Company did not repurchase any shares during the third quarter of 2022. Since the announcement of the initial stock repurchase program in January 2019, the Company has repurchased a total of 1.57 million shares of its common stock at an average repurchase price of $8.58 per share through September 30, 2022.
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Asset Quality
($ in thousands)As of and For the Three Months Ended% Change 3Q22 vs.
3Q222Q223Q212Q223Q21
Nonperforming loans (1)
$2,251 $2,177 $1,052 3.4 %114.0 %
OREO— — — — — 
Total nonperforming assets$2,251 $2,177 $1,052 3.4 %114.0 %
Nonperforming loans to gross loans0.14 %0.15 %0.09 %(0.01)%0.05 %
Nonperforming assets to total assets0.11 %0.11 %0.06 %0.00 %0.05 %
Criticized (2) Loan:
Special mention loans$— $— $— — %— %
Classified loans (3)
3,542 3,020 2,201 17.3 60.9 
Total criticized loans$3,542 $3,020 $2,201 17.3 %60.9 %
Criticized (2) loans to gross loans
0.22 %0.27 %0.18 %(0.05)%0.04 %
Classified loans (3) to gross loans
0.22 %0.27 %0.18 %(0.05)%0.04 %
Allowance for loan losses, beginning$17,702 $16,672 $14,687 6.2 %20.5 %
Provision for (reversal of) loan losses (4)
662 996 (557)(33.5)n/m
Gross charge-offs— (18)— (100.0)— 
Gross recoveries5 52 4 (90.4)25.0 
Allowance for loan losses, ending (5)
$18,369 $17,702 $14,134 3.8 %30.0 %
Allowance for loan losses ratios:
As a % of gross loans1.14 %1.19 %1.15 %(0.05)%(0.01)%
As an adjusted % of gross loans (6)
1.18 %1.25 %1.34 %(0.07)%(0.16)%
As a % of nonperforming loans816 %813 %1,344 %3 %(528)%
As a % of nonperforming assets816 %813 %1,344 %3 %(528)%
Net (recoveries) charge-offs to average gross loans(0.00)%(0.01)%0.00 %0.01 %0.00 %
(1)Includes the guaranteed portion of SBA loans totaling $442 thousand and $346 thousand as of September 30, 2022 and June 30, 2022, respectively.
(2)Includes special mention, substandard, doubtful and loss categories.
(3)Includes substandard, doubtful and loss categories.
(4)Excludes reversal of uncollectible accrued interest receivable of $327 thousand for the three months ended September 30, 2021.
(5)Excludes allowance for uncollectible accrued interest receivable of $465 thousand as of September 30, 2021.
(6)See the Reconciliation of GAAP to NON-GAAP Financial Measures.

Overall, the Company continued to maintain solid asset quality with low levels of nonperforming loans and net charge-offs. Nonperforming assets and criticized loans remained below our historical norms, a reflection of our conservative credit culture and expertise in the industries we serve. Our allowance remained strong with an adjusted allowance to gross loans ratio of 1.18%.
◦Allowance for loan losses increased $4.2 million to $18.4 million from a year ago. Excluding the impacts of the purchased Hana loans, PPP loans, adjusted allowance to gross loans ratio was 1.18% as of September 30, 2022.
◦Criticized loans increased by $1.3 million or 60.9% from a year ago, and the criticized loans to gross loans ratio increased by 4 basis points, primarily due to home mortgage loans that were categorized as Substandard in the fourth quarter of 2021. Criticized loans are generally consistent
13

with the Special Mention, Substandard, Doubtful and Loss categories defined by regulatory authorities.
◦Nonperforming assets increased $1.2 million to $2.3 million, or 0.11% of total assets from a year ago. The increase in nonperforming assets was primarily due to home mortgage loans that were placed on nonaccrual in the fourth quarter of 2021. As of September 30, 2022, $442 thousand of nonaccrual loans was the guaranteed portion of SBA loans that are in liquidation. The Company did not have OREO as of September 30, 2022 or 2021.
◦Net recoveries were $5 thousand or 0.00% of average loans in the third quarter of 2022, compared to net recoveries of $4 thousand in the third quarter of 2021.

COVID-19 Pandemic Update

As of September 30, 2022, no loan was under COVID-19 loan payment modification.

Since the PPP’s inception through September 30, 2022, we have funded $154.5 million, and $153.4 million of principal forgiveness has been provided on qualifying PPP loans.

Reconciliation of GAAP to Non-GAAP Financial Measures

In addition to GAAP measures, management uses certain non-GAAP financial measures to provide supplemental information regarding the Company’s performance.

Pre-provision net revenue removes provision for loan losses and income tax expense. Management believes that this non-GAAP measure, when taken together with the corresponding GAAP financial measures (as applicable), provides meaningful supplemental information regarding our performance. This non-GAAP financial measure also facilitates a comparison of our performance to prior periods.

($ in thousands)For the Three Months Ended
3Q222Q223Q21
Interest income$23,234 $20,148 $17,355 
Interest expense2,890 1,069 766 
Net interest income20,344 19,079 16,589 
Noninterest income4,821 5,359 3,542 
Noninterest expense12,338 11,503 9,519 
Pre-provision net revenue(a)$12,827 $12,935 $10,612 
Reconciliation to net income:
Provision for (reversal of) loan losses(b)$662 $996 $(884)
Income tax expense(c)3,515 3,459 3,246 
Net income(a)+(b) +(c)$8,650 $8,480 $8,250 

14

During the second quarter of 2021, the Company purchased 638 loans from Hana for a total purchase price of $97.6 million. The Company evaluated $100.0 million of the loans purchased in accordance with the provisions of ASC 310-20, Nonrefundable Fees and Other Costs, which were recorded with a $8.9 million discount. As a result, the fair value discount on these loans is being accreted into interest income over the expected life of the loans using the effective yield method. Adjusted loan yield and net interest margin for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021 excluded the impacts of contractual interest and discount accretion of the purchased Hana loans as management does not consider purchasing loan portfolios to be normal or recurring transactions. Management believes that presenting the adjusted average loan yield and net interest margin provide comparability to prior periods and these non-GAAP financial measures provide supplemental information regarding the Company’s performance.

($ in thousands)For the Three Months Ended
3Q222Q223Q21
Yield on Average Loans
Interest income on loans$21,780 $19,108 $16,922 
Less: interest income on purchased Hana loans1,717 1,572 2,057 
Adjusted interest income on loans(a)$20,063 $17,536 $14,865 
Average loans$1,614,000 $1,560,064 $1,308,338 
Less: Average purchased Hana loans64,687 69,180 85,710 
Adjusted average loans(b)$1,549,313 $1,490,884 $1,222,628 
Average loan yield (1)
5.36 %4.91 %5.13 %
Effect on average loan yield (1)
0.21 %0.19 %0.30 %
Adjusted average loan yield (1)
(a)/(b)5.15 %4.72 %4.83 %
Net Interest Margin
Net interest income$20,344 $19,079 $16,589 
Less: interest income on purchased Hana loans1,717 1,572 2,057 
Adjusted net interest income(c)$18,627 $17,507 $14,532 
Average interest-earning assets$1,874,516 $1,817,157 $1,566,050 
Less: Average purchased Hana loans64,687 69,180 85,710 
Adjusted average interest-earning assets(d)$1,809,829 $1,747,977 $1,480,340 
Net interest margin (1)
4.31 %4.21 %4.21 %
Effect on net interest margin (1)
0.22 %0.20 %0.30 %
Adjusted net interest margin (1)
(c)/(d)4.09 %4.01 %3.91 %
(1)Annualized.

15

Adjusted allowance to gross loans ratio removes the impacts of purchased Hana loans, PPP loans and allowance on accrued interest receivable. Management believes that this ratio provides greater consistency and comparability between the Company’s results and those of its peer banks.
($ in thousands)For the Three Months Ended
3Q222Q223Q21
Gross loans$1,618,018 $1,484,718 $1,231,821 
Less: Purchased Hana loans(61,899)(66,946)(83,025)
PPP loans (1)
(1,022)(7,151)(64,574)
Adjusted gross loans(a)$1,555,097 $1,410,621 $1,084,222 
Accrued interest receivable on loans$5,203 $4,602 $3,659 
Less: Accrued interest receivable on purchased Hana loans(323)(290)(375)
         Accrued interest receivable on PPP loans (2)
(16)(93)(416)
Add: Allowance on accrued interest receivable— — 465 
Adjusted accrued interest receivable on loans(b)$4,864 $4,219 $3,333 
Adjusted gross loans and accrued interest receivable(a)+(b) =(c)$1,559,961 $1,414,840 $1,087,555 
Allowance for loan losses$18,369 $17,702 $14,134 
Add: Allowance on accrued interest receivable— — 465 
Adjusted Allowance(d)$18,369 $17,702 $14,599 
Adjusted allowance to gross loans ratio(d)/(c)1.18 %1.25 %1.34 %
(1)Excludes purchased PPP loans of $57 thousand, $942 thousand and $4.7 million as of September 30, 2022, June 30, 2022 and September 30, 2021, respectively.
(2)Excludes purchased accrued interest receivable on PPP loans of $1 thousand, $13 thousand and $30 thousand as of September 30, 2022, June 30, 2022 and September 30, 2021 respectively.
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, California, and Carrollton, Texas 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 with ten full service branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Cerritos, Gardena, Buena Park, and Santa Clara, California and Carrollton, Texas. The Bank also has four loan production offices in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, and Lynnwood, Washington. 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 Member FDIC, Equal Housing Lender.
Cautionary Note Regarding Forward-Looking Statements
Certain matters set forth herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company’s current business plans and expectations regarding future operating results. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties, some of which are beyond our control, include, but are not limited to: business and economic conditions, particularly those
16

affecting the financial services industry and our primary market areas; our ability to successfully manage our credit risk and the sufficiency of our allowance for loan losses; factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers, the success of construction projects that we finance, including any loans acquired in acquisition transactions; our ability to effectively execute our strategic plan and manage our growth; interest rate fluctuations, which could have an adverse effect on our profitability; liquidity issues, including fluctuations in the fair value and liquidity of the securities we hold for sale and our ability to raise additional capital, if necessary; external economic and/or market factors, such as changes in monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve, inflation or deflation, changes in the demand for loans, and fluctuations in consumer spending, borrowing and savings habits, which may have an adverse impact on our financial condition; continued or increasing competition from other financial institutions, credit unions, and non-bank financial services companies, many of which are subject to different regulations than we are; challenges arising from unsuccessful attempts to expand into new geographic markets, products, or services; restraints on the ability of Open Bank to pay dividends to us, which could limit our liquidity; increased capital requirements imposed by banking regulators, which may require us to raise capital at a time when capital is not available on favorable terms or at all; a failure in the internal controls we have implemented to address the risks inherent to the business of banking; inaccuracies in our assumptions about future events, which could result in material differences between our financial projections and actual financial performance; changes in our management personnel or our inability to retain motivate and hire qualified management personnel; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems; disruptions, security breaches, or other adverse events affecting the third-party vendors who perform several of our critical processing functions; an inability to keep pace with the rate of technological advances due to a lack of resources to invest in new technologies; risks related to potential acquisitions; political developments, uncertainties or instability, catastrophic events, acts of war or terrorism, or natural disasters, such as earthquakes, fires, drought, pandemic diseases (such as the coronavirus) or extreme weather events, any of which may affect services we use or affect our customers, employees or third parties with which we conduct business; incremental costs and obligations associated with operating as a public company; the impact of any claims or legal actions to which we may be subject, including any effect on our reputation; compliance with governmental and regulatory requirements, including the Dodd-Frank Act and others relating to banking, consumer protection, securities and tax matters, and our ability to maintain licenses required in connection with commercial mortgage origination, sale and servicing operations; changes in federal tax law or policy; and our ability the manage the foregoing and other factors set forth in the Company’s public reports. We describe these and other risks that could affect our results in Item 1A. “Risk Factors,” of our latest Annual Report on Form 10-K for the year ended December 31, 2021 and in our other subsequent filings with the Securities and Exchange Commission.
Contact
Investor Relations
OP Bancorp
Christine Oh
EVP & CFO
213.892.1192
[email protected]

17

Consolidated Balance Sheets (unaudited)
($ in thousands)As of% Change 3Q22 vs.
3Q222Q223Q212Q223Q21
Assets  
Cash and due from banks$25,516 $14,937 $17,617 70.8 %44.8 %
Interest-bearing deposits in other banks81,765 117,760 170,528 (30.6)(52.1)
Cash and cash equivalents107,281 132,697 188,145 (19.2)(43.0)
Securities available for sale, at fair value186,438 174,814 102,535 6.6 81.8 
Other investments12,074 12,205 11,025 (1.1)9.5 
Loans held for sale36,642 67,255 94,466 (45.5)(61.2)
Real estate loans830,125 776,785 688,430 6.9 20.6 
SBA loans (1)
232,569 247,413 303,625 (6.0)(23.4)
C&I loans133,855 128,620 123,422 4.1 8.5 
Home mortgage loans419,469 331,362 115,255 26.6 263.9 
Consumer & other loans2,000 538 1,089 271.7 83.7 
Gross loans, net of unearned income1,618,018 1,484,718 1,231,821 9.0 31.4 
Allowance for loan losses(18,369)(17,702)(14,134)3.8 30.0 
Net loans receivable1,599,649 1,467,016 1,217,687 9.0 31.4 
Premises and equipment, net4,383 4,493 4,199 (2.4)4.4 
Accrued interest receivable, net5,856 5,112 3,931 14.6 49.0 
Servicing assets12,889 12,708 12,389 1.4 4.0 
Company owned life insurance21,464 21,317 11,070 0.7 93.9 
Deferred tax assets17,296 13,371 5,247 29.4 229.6 
Operating right-of-use assets8,265 8,036 9,270 2.8 (10.8)
Other assets17,338 15,218 19,947 13.9 (13.1)
Total assets$2,029,575 $1,934,242 $1,679,911 4.9 %20.8 %
Liabilities and Shareholders' Equity
Liabilities
Noninterest bearing$794,631 $820,311 $713,141 (3.1)%11.4 %
Money market and others524,911 519,389 351,186 1.1 49.5 
Time deposits greater than $250,000277,785 237,634 209,091 16.9 32.9 
Other time deposits219,484 164,289 222,988 33.6 (1.6)
Total deposits1,816,811 1,741,623 1,496,406 4.3 21.4 
Federal Home Loan Bank advances10,000 — — — — 
Accrued interest payable1,099 612 575 79.6 91.1 
Operating lease liabilities9,485 9,335 10,703 1.6 (11.4)
Other liabilities22,085 13,180 13,603 67.6 62.4 
Total liabilities1,859,480 1,764,750 1,521,287 5.4 22.2 
Shareholders’ equity
Common stock
78,782 78,718 78,718 0.1 0.1 
Additional paid-in capital9,424 9,089 8,491 3.7 11.0 
Retained earnings99,487 92,659 71,436 7.4 39.3 
Accumulated other comprehensive (loss) income(17,598)(10,974)(21)60.4 n/m
Total shareholders’ equity170,095 169,492 158,624 0.4 7.2 
Total liabilities and shareholders' equity$2,029,575 $1,934,242 $1,679,911 4.9 %20.8 %
(1)Includes SBA Paycheck Protection Program (“PPP”) loans of $1.1 million, $8.1 million and $69.3 million as of September 30, 2022, June 30, 2022 and September 30, 2021, respectively.
18

Consolidated Statements of Income (unaudited)
($ in thousands, except share and per share data)For the Three Months Ended% Change 3Q22 vs.
3Q222Q223Q212Q223Q21
Interest income
Interest and fees on loans$21,780 $19,108 $16,922 14.0 %28.7 %
Interest on securities available for sale881 703 269 25.3 227.5 
Other interest income573 337 164 70.0 249.4 
Total interest income23,234 20,148 17,355 15.3 33.9 
Interest expense
Interest on deposits2,890 1,069 766 170.3 277.3 
Total interest expense2,890 1,069 766 170.3 277.3 
Net interest income20,344 19,079 16,589 6.6 22.6 
Provision for (reversal of) loan losses662 996 (884)(33.5)(174.9)
Net interest income after provision for loan losses19,682 18,083 17,473 8.8 12.6 
Noninterest income
Service charges on deposits454 427 409 6.3 11.0 
Loan servicing fees, net of amortization610 654 599 (6.7)1.8 
Gain on sale of loans3,490 3,873 2,188 (9.9)59.5 
Other income267 405 346 (34.1)(22.8)
Total noninterest income4,821 5,359 3,542 (10.0)36.1 
Noninterest expense
Salaries and employee benefits7,343 7,109 5,724 3.3 28.3 
Occupancy and equipment1,537 1,489 1,326 3.2 15.9 
Data processing and communication586 492 448 19.1 30.8 
Professional fees602 364 308 65.4 95.5 
FDIC insurance and regulatory assessments238 192 146 24.0 63.0 
Promotion and advertising177 165 175 7.3 1.1 
Directors’ fees170 190 183 (10.5)(7.1)
Foundation donation and other contributions875 852 842 2.7 3.9 
Other expenses810 650 367 24.6 120.7 
Total noninterest expense12,338 11,503 9,519 7.3 29.6 
Income before income tax expense12,165 11,939 11,496 1.9 5.8 
Income tax expense3,515 3,459 3,246 1.6 8.3 
Net income$8,650 $8,480 $8,250 2.0 %4.8 %
Book value per share$11.19 $11.16 $10.48 0.3 %6.8 %
Earnings per share - Basic$0.56 $0.55 $0.54 1.8 %3.7 %
Earnings per share - Diluted$0.55 $0.54 $0.54 1.9 %1.9 %
Shares of common stock outstanding15,199,84015,189,20315,133,4070.1 %0.4 %
Weighted Average Shares:
- Basic15,195,82615,141,97515,133,4070.4 %0.4 %
- Diluted15,275,15615,234,57715,200,6130.3 %0.5 %

19

Key Ratios
For the Three Months EndedChange 3Q22 vs.
3Q222Q223Q212Q223Q21
Return on average assets (ROA) (1)
1.77 %1.79 %2.03 %— %(0.3)%
Return on average equity (ROE) (1)
19.91 %20.29 %21.30 %(0.4)%(1.4)%
Net interest margin (1)
4.31 %4.21 %4.21 %0.1 %0.1 %
Efficiency ratio49.03 %47.07 %47.28 %2.0 %1.8 %
Total risk-based capital ratio13.10 %13.51 %13.81 %(0.4)%(0.7)%
Tier 1 risk-based capital ratio11.92 %12.29 %12.63 %(0.4)%(0.7)%
Common equity tier 1 ratio11.92 %12.29 %12.63 %(0.4)%(0.7)%
Leverage ratio9.52 %9.48 %9.75 %— %(0.2)%
(1)Annualized.

20

Consolidated Statements of Income (unaudited)
($ in thousands, except share and per share data)For the Nine Months Ended
3Q223Q21% Change
Interest income
Interest and fees on loans$58,145 $45,177 28.7 %
Interest on securities available for sale2,114 723 192.4 
Other interest income1,067 436 144.7 
Total interest income61,326 46,336 32.4 
Interest expense
Interest on deposits4,613 2,406 91.7 
Total interest expense4,613 2,406 91.7 
Net interest income56,713 43,930 29.1 
Provision for (reversal of) loan losses1,999 (1,376)(245.3)
Net interest income after provision for loan losses54,714 45,306 20.8 
Noninterest income
Service charges on deposits1,269 1,157 9.7 
Loan servicing fees, net of amortization1,711 1,432 19.5 
Gain on sale of loans10,601 5,280 100.8 
Other income815 859 (5.1)
Total noninterest income14,396 8,728 64.9 
Noninterest expense
Salaries and employee benefits20,109 15,693 28.1 
Occupancy and equipment4,404 3,795 16.0 
Data processing and communication1,571 1,363 15.3 
Professional fees1,290 925 39.5 
FDIC insurance and regulatory assessments637 401 58.9 
Promotion and advertising531 528 0.6 
Directors’ fees537 427 25.8 
Foundation donation and other contributions2,542 1,989 27.8 
Other expenses1,882 1,153 63.2 
Total noninterest expense33,503 26,274 27.5 
Income before income tax expense35,607 27,760 28.3 
Income tax expense10,325 8,054 28.2 
Net income$25,282 $19,706 28.3 %
Book value per share$11.19 $10.48 6.8 %
Earnings per share - Basic$1.63 $1.29 26.4 %
Earnings per share - Diluted$1.62 $1.29 25.6 %
Shares of common stock outstanding15,199,84015,133,4070.4 %
Weighted Average Shares:
- Basic15,158,74915,071,3270.6 %
- Diluted15,246,34515,133,5730.7 %

21

Key Ratios
For the Nine Months Ended
3Q223Q21Change
Return on average assets (ROA) (1)
1.80 %1.73 %0.1 %
Return on average equity (ROE) (1)
19.91 %17.55 %2.4 %
Net interest margin (1)
4.22 %4.01 %0.2 %
Efficiency ratio47.11 %49.90 %(2.8)%
Total risk-based capital ratio13.10 %13.81 %(0.7)%
Tier 1 risk-based capital ratio11.92 %12.63 %(0.7)%
Common equity tier 1 ratio11.92 %12.63 %(0.7)%
Leverage ratio9.52 %9.75 %(0.2)%
(1)Annualized.
22

Asset Quality
($ in thousands)As of and For the Three Months Ended
3Q222Q223Q21
Nonaccrual Loans (1)
$2,251 $2,172 $1,052 
Loans 90 days or more past due, accruing— 5 — 
Accruing restructured loans— — — 
Nonperforming loans2,251 2,177 1,052 
Other real estate owned ("OREO")— — — 
Nonperforming assets$2,251 $2,177 $1,052 
Criticized loans (2) by loan type:
SBA loans$1,817 $1,738 $1,881 
C&I loans742 297 320 
Home mortgage loans983 985 — 
Total criticized loans (2)
$3,542 $3,020 $2,201 
   
Nonperforming assets/total assets0.11 %0.11 %0.06 %
Nonperforming assets / gross loans plus OREO0.14 %0.15 %0.09 %
Nonperforming loans / gross loans0.14 %0.15 %0.09 %
Allowance for loan losses / nonperforming loans816 %813 %1344 %
Allowance for loan losses / nonperforming assets816 %813 %1344 %
Allowance for loan losses / gross loans1.14 %1.19 %1.15 %
Criticized loans (2) / gross loans
0.22 %0.20 %0.18 %
Classified loans / gross loans0.22 %0.20 %0.18 %
Net (recoveries) charge-offs$(5)$(34)$(4)
Net (recoveries) charge-offs to average gross loans (3)
(0.00)%(0.01)%(0.00)%
(1)Includes the guaranteed portion of SBA loans that are in liquidation totaling $442 thousand and $346 thousand as of September 30, 2022 and June 30, 2022, respectively.
(2)Consists of special mention, substandard, doubtful and loss categories.
(3)Annualized.

($ in thousands)3Q222Q223Q21
Accruing delinquent loans 30-89 days past due
30-59 days$360 $447 $263 
60-89 days845 — 1,064 
Total (1)
$1,205 $447 $1,327 
(1)Includes the guaranteed portion of PPP loans totaling $756 thousand as of September 30, 2022.

23

Average Balance Sheet, Interest and Yield/Rate Analysis
For the Three Months Ended
3Q222Q20223Q21
($ in thousands)Average
Balance		Interest
and Fees
Yield/
Rate (1)
Average
Balance		Interest
and Fees
Yield/
Rate (1)
Average
Balance		Interest
and Fees
Yield/
Rate (1)
Interest-earning assets:
Interest-bearing deposits in other banks$75,599 $427 2.21 %$79,628 $197 0.98 %$137,662 $47 0.13 %
Federal funds sold and other investments12,221 146 4.78 11,966 140 4.70 11,041 117 4.25 
Available-for-sale debt securities, at fair value172,696 881 2.04 165,499 703 1.70 109,009 269 0.99 
Real estate loans810,158 10,144 4.97 751,610 8,743 4.67 678,642 7,680 4.49 
SBA loans286,903 5,850 8.09 353,138 5,707 6.48 403,279 6,835 6.72 
C&I loans140,098 1,952 5.53 160,291 1,811 4.53 107,614 1,074 3.96 
Home mortgage loans375,804 3,820 4.07 294,341 2,837 3.86 117,825 1,317 4.47 
Consumer & other loans1,037 14 4.88 684 10 5.49 978 16 6.49 
Loans (2)
1,614,000 21,780 5.36 1,560,064 19,108 4.91 1,308,338 16,922 5.13 
Total interest-earning assets1,874,516 23,234 4.92 1,817,157 20,148 4.44 1,566,050 17,355 4.40 
Noninterest-earning assets83,398 73,594 56,807 
Total assets$1,957,914 $1,890,751 $1,622,857 
Interest-bearing liabilities:
Money market deposits and others$502,166 $1,506 1.19 %$470,013 $503 0.43 %$368,507 $299 0.32 %
Time deposits445,271 1,383 1.23 389,059 566 0.58 383,503 467 0.48 
Total interest-bearing deposits947,437 2,889 1.21 859,072 1,069 0.50 752,010 766 0.40 
Borrowings130 1 3.00 — — — — — — 
Total interest-bearing liabilities947,567 2,890 1.21 859,072 1,069 0.50 752,010 766 0.40 
Noninterest-bearing liabilities:
Noninterest-bearing deposits806,289 843,788 696,761 
Other noninterest-bearing liabilities30,258 20,720 19,169 
Total noninterest-bearing liabilities836,547 864,508 715,930 
Shareholders’ equity173,800 167,171 154,917 
Total liabilities and shareholders’ equity$1,957,914 $1,890,751 $1,622,857 
Net interest income / interest rate spreads$20,344 3.71 %$19,079 3.94 %$16,589 4.00 %
Net interest margin4.31 %4.21 %4.21 %
Cost of deposits & cost of funds:
Total deposits / cost of deposits$1,753,726 $2,889 0.65 %$1,702,860 $1,069 0.25 %1,448,771 $766 0.21 %
Total funding liabilities / cost of funds$1,753,856 $2,890 0.65 %$1,702,860 $1,069 0.25 %1,448,771 $766 0.21 %
(1)Annualized.
(2)Includes loans held for sale.


24

Average Balance Sheet, Interest and Yield/Rate Analysis
For the Nine Months Ended
3Q223Q21
($ in thousands)Average
Balance		Interest
and Fees
Yield/
Rate (1)
Average
Balance		Interest
and Fees
Yield/
Rate (1)
Interest-earning assets:
Interest-bearing deposits in other banks$80,659 $665 1.09 %$111,799 $97 0.11 %
Federal funds sold and other investments11,720 402 4.59 10,668 339 4.22 
Available-for-sale debt securities, at fair value165,094 2,114 1.71 103,699 723 0.93 
Real estate loans757,950 26,689 4.71 667,547 22,870 4.58 
SBA loans332,659 17,392 6.99 339,968 14,931 5.87 
C&I loans152,189 5,300 4.66 108,402 3,129 3.86 
Home mortgage loans296,331 8,731 3.93 122,008 4,200 4.59 
Consumer & other loans866 33 5.04 1,115 47 5.61 
Loans (2)
1,539,995 58,145 5.05 1,239,040 45,177 4.87 
Total interest-earning assets1,797,468 61,326 4.56 1,465,206 46,336 4.23 
Noninterest-earning assets73,410 52,573 
Total assets$1,870,878 $1,517,779 
Interest-bearing liabilities:
Money market deposits and others$461,821 $2,260 0.65 %$357,525 $851 0.32 %
Time deposits403,242 2,352 0.78 370,715 1,555 0.56 
Total interest-bearing deposits865,063 4,612 0.71 728,240 2,406 0.44 
Borrowings44 1 3.00 2,657 — — 
Total interest-bearing liabilities865,107 4,613 0.71 730,897 2,406 0.44 
Noninterest-bearing liabilities:
Noninterest-bearing deposits811,263 619,437 
Other noninterest-bearing liabilities25,213 17,726 
Total noninterest-bearing liabilities836,476 637,163 
Shareholders’ equity169,295 149,719 
Total liabilities and shareholders’ equity$1,870,878 1,517,779 
Net interest income / interest rate spreads$56,713 3.85 %$43,930 3.79 %
Net interest margin4.22 %4.01 %
Cost of deposits & cost of funds:
Total deposits / cost of deposits$1,676,326 $4,612 0.37 %1,347,677 $2,406 0.24 %
Total funding liabilities / cost of funds$1,676,370 $4,613 0.37 %1,350,334 $2,406 0.24 %
(1)Annualized.
(2)Includes loans held for sale.
25

Exhibit 99.2

OP Bancorp Declares Quarterly Cash Dividend of $0.12 per Share
LOS ANGELES, October 27, 2022 — OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company of Open Bank (the “Bank”), announced today that its 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 24, 2022 to all shareholders of record as of the close of business on November 10, 2022.
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, California, and Carrollton, Texas 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 with ten full service branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Cerritos, Gardena, Buena Park, and Santa Clara, California and Carrollton, Texas. The Bank also has four loan production offices in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, and Lynnwood, Washington. 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 Member FDIC, Equal Housing Lender.
Contact
Investor Relations
OP Bancorp
Christine Oh
EVP & CFO
213.892.1192
[email protected]

2022 Third Quarter Earnings Presentation October 27, 2022

 
Certain matters set forth herein constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company’s current business plans and expectations regarding future operating results. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties, some of which are beyond our control, include, but are not limited to: business and economic conditions, particularly those affecting the financial services industry and our primary market areas; our ability to successfully manage our credit risk and the sufficiency of our allowance for loan losses; factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers, the success of construction projects that we finance, including any loans acquired in acquisition transactions; our ability to effectively execute our strategic plan and manage our growth; interest rate fluctuations, which could have an adverse effect on our profitability; liquidity issues, including fluctuations in the fair value and liquidity of the securities we hold for sale and our ability to raise additional capital, if necessary; external economic and/or market factors, such as changes in monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve, inflation or deflation, changes in the demand for loans, and fluctuations in consumer spending, borrowing and savings habits, which may have an adverse impact on our financial condition; continued or increasing competition from other financial institutions, credit unions, and non-bank financial services companies, many of which are subject to different regulations than we are; challenges arising from unsuccessful attempts to expand into new geographic markets, products, or services; restraints on the ability of Open Bank to pay dividends to us, which could limit our liquidity; increased capital requirements imposed by banking regulators, which may require us to raise capital at a time when capital is not available on favorable terms or at all; a failure in the internal controls we have implemented to address the risks inherent to the business of banking; inaccuracies in our assumptions about future events, which could result in material differences between our financial projections and actual financial performance; changes in our management personnel or our inability to retain motivate and hire qualified management personnel; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems; disruptions, security breaches, or other adverse events affecting the third-party vendors who perform several of our critical processing functions; an inability to keep pace with the rate of technological advances due to a lack of resources to invest in new technologies; risks related to potential acquisitions; political developments, uncertainties or instability, catastrophic events, acts of war or terrorism, or natural disasters, such as earthquakes, fires, drought, pandemic diseases (such as the coronavirus) or extreme weather events, any of which may affect services we use or affect our customers, employees or third parties with which we conduct business; incremental costs and obligations associated with operating as a public company; the impact of any claims or legal actions to which we may be subject, including any effect on our reputation; compliance with governmental and regulatory requirements, including the Dodd-Frank Act and others relating to banking, consumer protection, securities and tax matters, and our ability to maintain licenses required in connection with commercial mortgage origination, sale and servicing operations; changes in federal tax law or policy; and our ability the manage the foregoing and other factors set forth in the Company’s public reports. We describe these and other risks that could affect our results in Item 1A. “Risk Factors,” of our latest Annual Report on Form 10-K for the year ended December 31, 2021 and in our other subsequent filings with the Securities and Exchange Commission. Cautionary Note Regarding Forward-Looking Statements 2

 
3Q-2022 Highlights vs 3Q-2021 3(1) Includes loans held for sale. Net Income $8.7M Earnings & Profitability Balance Sheet Growth Credit Quality Capital Adequacy • Net income of $8.7 million, up $400 thousand or 5% • Diluted earnings per share of $0.55, up $0.01 or 2% • Net interest margin of 4.31%, up 0.10% from 4.21% • ROAA and ROAE of 1.77% and 19.91%, compared to 2.03% and 21.30, respectively • Efficiency ratio of 49.03%, compared to 47.07% • Total assets of $2.03 billion, up $350 million, or 21% • Total loans(1) of $1.65 billion, up $328 million, or 25% • Total deposits of $1.82 billion, up $320 million, or 21% • Noninterest-bearing deposits to total deposits of 43.7%, compared to 47.6% • Adjusted allowance to gross loans of 1.18%, compared to 1.34% • Net loan recoveries to average gross loans of 0.00% • Nonperforming loans to gross loans of 0.14%, compared to 0.09%. • Criticized loans to gross loans of 0.22%, compared to 0.18% • Quarterly cash dividend of $0.12 per share, a 20% increase from $0.10 per share • Capital position remained solid with a Common Equity Tier 1 ratio of 11.92% Diluted EPS $0.55 ROAA 1.77% ROAE 19.91% NIM 4.31% Efficiency 49.03%

 
Balance Sheet Trend 4 Gross Loans ($mm)Total Assets ($mm) Total Equity ($mm) & Book Value Per Share ($)Total Deposits ($mm)

 
Loan Trend 5 Loan Originations ($mm)Loan Composition ($mm) Loan Yields (%) Commercial Real Estate Concentration (%)

 
Loan by Interest Rate Type 6 Hybrid Loan Repricing Schedule ($mm)Composition by Interest Rate Type (%) Contractual Rates by Interest Rate Type (%) Loan Maturity Schedule ($mm)

 
Gross Loan Changes by Activity 7

 
Deposit Trend 8 Noninterest Bearing Deposits ($mm)Deposit Composition ($mm) Cost of Deposits (%) CD Maturity Schedule ($mm)

 
Earnings & Profitability 9 Noninterest Income ($mm)Net Interest Income ($mm) & Net Interest Margin (%) Interest Income & Interest Expense ($mm) Noninterest Income Components ($mm) * Ratios for interest income & interest expense are percentages of average assets and are annualized.

 
Earnings & Profitability 10 Efficiency Ratio (%)Noninterest Expense ($mm) Noninterest Expense Components ($mm) Efficiency Ratio Components (%) * Ratios for Efficiency Ratio Components are percentages of average assets and are annualized.

 
Earnings & Profitability 11 Pre-Provision Net Revenue ($mm)Provision for Loan Losses ($mm) Net Income ($mm) & Diluted EPS ($) Return on Assets & Return on Equity (%)

 
Source: Target Fed Funds Rate per Federal Open Market Committee guidance. Net Interest Margin Trend 12

 
Asset Quality 13 Criticized Loans ($mm)Nonperforming Loans ($mm) Net Charge-Offs ($mm)Allowance for Loan Losses ($mm)

 
Liquidity & Capital 14 Total Liquidity ($mm)On Balance Sheet Liquidity ($mm) Tier 1 Leverage ($mm) Total Risk Based Capital ($mm)

 
Non-GAAP Reconciliation 15

 
Non-GAAP Reconciliation 16