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Item 9A. Controls and Procedures

2025-03-28 compared with 2024-03-29 · 479 added, 338 removed, 1712 unchanged (32% of the section changed)

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Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control Integrated Framework by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

This evaluation applies to policies and procedures that:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of a company;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of a company are being made only in accordance with authorizations of management and the board of directors of the company;

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company’s assets that could have a material effect on its financial statements.

However, because of the inherent limitations in these policies and procedures, internal control over financial reporting may not prevent or detect misstatements, including misstatements that may later prove to be material.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management concluded that, as of December 31, 2024, our internal control over financial reporting was effective based on these criteria

The independent registered public accounting firm of Crowe LLP, as auditors of our consolidated financial statements included in this Report, has issued an audit report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024.

That report is set forth herein beginning at page F- 1 .

Changes in internal control over financial reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) during The period covered to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act), during the period covered by this Report, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures and Internal Control over Financial Reporting

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All of the directors of Open Bank became members of the OP Bancorp board of directors when we reorganized into our present bank holding company structure in 2016.

The age indicated in each director’s biography is as of December 31, 2023.

The age indicated in each director’s biography is as of March 28, 2025.

Choi, age 75, a director of the Bank since 2008, has served as the Chairman of the Board of the Bank since 2010, and OP Bancorp since 2016.

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His leadership ability, judgment and prior business executive experience led the Board to elect him as Chairman of the Board.

Dow, age 74, has served as a member of the Board since the founding of the Bank in 2005.

He is a retired Certified Public Accountant and has been a Principal of Dow & Sohn CPAs for 15 years.

He has maintained his accounting practice for over 38 years providing accounting, auditing, tax and business consulting services for international and local companies operating in Southern California.

Dow served as a director for Pacific Union Bank from May 2003 until the bank’s acquisition by Hanmi Bank in April 2004.

Dow is a member of the California Society of Certified Public Accountants.

Dow obtained his Bachelor of Science from California State University, Northridge, in 1976.

Dow’s significant accounting experience provides among other things in-depth knowledge of generally accepted accounting principles and auditing standards to the Board.

Dow was a member of Choi Dow Ivan Hong & Lee Accountancy Corporation (“CDIH&L”) from August 1992 to December 2007.

He is particularly suited to serve as Chair of the audit committee.

Soo Hun Jung, M.D .

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Good Samaritan Hospital, and Korean-American Medical Group.

In addition, he is a member of American Medical Association, American

College of Physicians, and Korean Medical Association.

In addition, he is a member of American Medical Association, American College of Physicians, and Korean Medical Association.

He serves as Clinical Assistant Professor of Medicine for U.S.C.

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Jung has a broad-based understanding of the Company and the Bank and is deeply committed to the community through his medical practice and affiliations with medical organizations and associations.

Kim, age 61, is a founder and CEO of KLK Capital Management LLC, California-based investment firm.

Kim, age 62, has served as a Board member since 2023.

He is a founder and CEO of KLK Capital Management LLC, California-based investment firm.

Prior to establishing his own investment firm, he served as Vice President at Merrill Lynch, with more than 20 years of experience in the finance industry.

In addition to receiving his Bachelor of Arts in Chemistry from Binghamton University, he holds his Certified Financial Planner professional designation and the Financial Industry Regulatory Authority (FINRA) Series 3, 7, and 66 licenses.

With his extensive knowledge and understanding of macroeconomics and finance, he contributes to the Board with historical economic trends, current headlines, and forecasting economic trends.

With his extensive

knowledge and understanding of macroeconomics and finance, he contributes to the Board with historical economic trends, current headlines, and forecasting economic trends.

Kim, age 65, has served as the President and Chief Executive Officer and a member of the Board of the Company and the Bank since April 2010.

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She provides the Board with an overall perspective of all facets of the Company’s business, financial condition and strategic direction.

Kwon, age 67, is the President of UNI & Good Friend Insurance, an independent retail insurance brokerage in the Greater Los Angeles area.

Kwon, age 68, has served as a Board member since 2023.

She is the President of UNI & Good Friend Insurance, an independent retail insurance brokerage in the Greater Los Angeles area.

She has over 40 years of leading insurance experience within the Korean and American insurance industries.

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Also as an active member of the Korean American Chamber of Commerce in Los Angeles she brings to the Board various business and cultural insights from the local community.

Myung Shin Sohn.

Sohn, age 51, has served as a Board member since 2024.

He is the Managing Partner of Dow & Sohn CPAs, Professional Corporation, and has over 15 years of distinguished experience in the public accounting industry.

With his deep understanding of Generally Accepted Accounting Principles (GAAP) and Generally Accepted Audit Standards (GAAS), he provides accounting, tax, and business consulting services to domestic and international companies across the United States.

His expertise extends to international tax compliance issues and Korean International Financial Reporting Standards (KIFRS) allowing him to offer comprehensive solutions tailored to clients operating in a global landscape.

Sohn graduated with a Master of Business Administration in Accountancy from California State University Fullerton.

In addition to his professional accomplishments, he is deeply committed to making impactful contributions to the community.

From 2018 to 2023, he served as a Publication and Social Networking Service (SNS) Officer at the Korean-American CPA Society of Southern California (KACPA) playing a pivotal role in advancing the organization's mission and objectives.

Presently, he holds the position of Chief Financial Officer at the Korea Franchise Association USA (KFAUSA) and the Korean American United Foundation (KAUF), where he contributes significantly to the growth and success of these non-profit organizations.

Board Leadership Structure

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The Chairman of the Board provides guidance to the Chief Executive Officer, sets the agenda for Board meetings, presides over meetings of the full Board (including executive sessions), and facilitates communication among the independent directors and between the independent directors and the Chief Executive Officer.

The Board further believes that the separation of the duties of the Chief Executive Officer and the Chairman of the Board eliminates any inherent conflict of interest that may arise when the roles are combined, and that an independent director who has not served as an executive of the Company can best provide the necessary leadership and objectivity required as Chairman of the Board.

The Board further believes that the separation of the duties of the Chief Executive Officer and the Chairman of the Board eliminates any inherent conflict of interest that

may arise when the roles are combined, and that an independent director who has not served as an executive of the Company can best provide the necessary leadership and objectivity required as Chairman of the Board.

Risk Management and Oversight

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Each member of the Audit Committee meets the independence criteria as defined by applicable rules and regulations of the SEC for audit committee membership and is independent and is “financially sophisticated” as defined by the applicable rules and regulations of the Nasdaq Stock Market.

The members of the Audit Committee are Brian Choi, Ernest E.

Dow (committee chair), Soo Hun Jung, M.D., Sunny Kwon, Hyung J.

Kim, and Yong Sin Shin.

The Audit Committee met thirteen times in 2023.

The members of the Audit Committee are Brian Choi, Soo Hun Jung, M.D., Sunny Kwon, Hyung J.

Kim, Yong Sin Shin, and Myung Shin Sohn (committee chair).

The Audit Committee met twelve times in 2024.

Human Resources & Compensation Committee

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• review and approve general employee welfare benefit plans and other plans on an as needed basis.

The members of the Human Resources & Compensation Committee are Brian Choi, Ernest E.

Dow, Soo Hun Jung, M.D., Sunny Kwon (committee chair), Hyung J.

Kim, and Yong Sin Shin.

The members of the Human Resources & Compensation Committee are Brian Choi, Soo Hun Jung, M.D., Sunny Kwon (committee chair), Hyung J.

Kim, Yong Sin Shin, and Myung Shin Sohn.

The Committee met six times in 2024.

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• develop for Board approval the Code of Business Conduct and Business Ethics Policy and periodically review and assess the codes and their application, and recommend to the Board any changes that the committee deems appropriate.

The members of the Nomination & Governance Committee are Brian Choi (committee chair), Ernest E.

Dow, Soo Hun Jung, M.D, Sunny Kwon, Hyung J.

Kim, and Yong Sin Shin.

The members of the Nomination & Governance Committee are Brian Choi (committee chair), Soo Hun Jung, M.D, Sunny Kwon, Hyung J.

Kim, Yong Sin Shin, and Myung Shin Sohn.

The Committee met four times during 2024.

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The following table sets forth certain information regarding our executive officers, including their names, ages and positions.

The ages indicated in the table are as of March 28, 2025.

Name Age Position

Kim 65 President and Chief Executive Officer of the Company and the Bank

Oh 56 Executive Vice President and Chief Financial Officer of the Company and the Bank

Oh 51 Executive Vice President and Chief Credit Officer of the Company and the Bank

Oh 53 Executive Vice President and Chief Executive Officer In Transit of the Company and the Bank

Oh 58 Executive Vice President and Chief Operating Officer of the Company and the Bank

Jaehyun Park 53 Executive Vice President and Chief Financial Officer of the Company and the Bank

Yeong Gwon Pak 54 Executive Vice President and Chief Credit Officer of the Company and the Bank

Ki Won Yoon 64 Executive Vice President and Chief Lending Officer of the Bank

Bang 57 Executive Vice President and Chief Banking Officer of the Bank

Ryan Shin 52 Executive Vice President and Chief SBA Officer of the Bank

Park 46 Executive Vice President and Chief Risk Officer of the Bank

Wesley Won 53 Executive Vice President and Chief Technology Officer of the Bank

The business experience of each of our executive officers, other than Ms.

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There are no arrangements or understandings between any of the officers and any other person pursuant to which he or she was selected as an officer.

Oh was appointed Executive Vice President and Chief Financial Officer of the Bank in July 2010 and of the Company in March 2016.

Oh was appointed Executive Vice President and Chief Executive Officer of the Bank and the Company in August 2024.

Prior to the appointment, he served as Executive Vice President and Chief Credit Officer of the Company and the Bank since October 2020.

Oh has over 28 years of banking experience, all with Bank of Hope, Los Angeles, California.

Prior to joining the Bank, he served as Senior Vice President and Senior Credit Administrator at Bank of Hope since 2007, and served in a various senior lending positions with Bank of Hope since 1997.

Oh has a Bachelor of Arts in Business Economics with a Minor in Accounting from the University of California, Los Angeles, and is a graduate of Pacific Coast Banking School.

Oh was appointed Executive Vice President and Chief Operating Officer of the Company and the Bank in March 2025, after serving as Chief Financial Officer of the Bank since July 2010 and of the Company since March 2016.

Oh has over 34 years of banking experience.

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Oh has a Bachelor of Science in Accounting from California State University, Northridge.

Oh has served as Executive Vice President and Chief Credit Officer of the Company and the Bank since October 2020.

Oh has over 26 years of banking experience, all with Bank of Hope, Los Angeles, California.

Oh has a Bachelor of Arts in Business Economics with a Minor in Accounting from the University of California, Los Angeles, and is a graduate of Pacific Coast Banking School.

Jaehyun Park .

Park was appointed as Executive Vice President and Chief Financial Officer of the Company and the Bank in March 2025.

Prior to the appointment, he has served Senior Vice President and Controller of the Company and the Bank since June 2014.

Prior to joining the Bank, Mr.

Park had served various roles in finance areas at Nara Bank (now Bank of Hope), headquartered in Los Angeles, California since April 2005.

Park holds a Bachelor of Science in Economics from Korea University, South Korea, a Master of Science in Finance and a Juris Doctor from Suffolk University in Boston, Massachusetts.

Yeong Gwon Pak.

Pak previously served as Senior Vice President and District Manager at Bank of Hope from July 2022 until his departure in December 2024.

Prior to that he had served in various executive roles at Commonwealth Business Bank since June 2015, including, most recently, as Executive Vice President and Chief Lending Officer from June 2020 to June 2022.

Pak has more than 20 years of banking experience in community banks throughout the greater Los Angeles area, and has a Bachelor of Arts in Molecular and Cellular Biology from the University of California, Berkeley.

Ki Won Yoon .

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Yoon has a Bachelor of Arts in Food & Nutrition from Sook Myung Women’s University and is a graduate of Pacific Coast Banking School.

Bang has served as Executive Vice President and Chief Banking Officer of the Bank since October 2020.

Bang has over 24 years of lending experience.

Prior to joining the Bank, he served as President at Hana Small Business Lending, Inc., a nationally ranked, non-bank SBA lender, since 2011, and served in various senior lending positions with Hanmi Bank, Wells Fargo Bank, and Bank of Hope from 1991 through 2003.

Bang has a Bachelor of Arts in Business Economics with Minor in Mathematics from the University of California, Santa Cruz, and a Master’s in Business Administration in Finance from the Marshall School of Business at the University of Southern California.

Shin has served as Executive Vice President and Chief SBA Officer of the Bank since February 2022.

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Park's professional credentials include Certified Regulatory Compliance Manager (CRCM), Certified Advanced AML Audit Specialist (CAMS-Audit), Certified AML and Fraud Professional (CAFP), and Certified Information Privacy Professional (CIPP/US).

Wesley Won Mr.

Won was appointed Executive Vice President and Chief Technology Officer in March 2025.

He previously served as Senior Vice President and Chief Information Officer since April 2022 and has been with the Bank since September 2010, initially joining as MIS Manager.

With over two decades of experience in financial technology and operations, Mr.

Won held various leadership roles in Information Technology at Hanmi Bank from 2001 to 2009 and at Nara Bank (now Bank of Hope) from 1996 to 2009.

Before his banking career, he honorably served in the U.S.

Marine Corps.

Won holds a Master of Business Administration from the Graziadio School of Business and Management at Pepperdine University in Malibu, California.

C ORPORATE G OVERNANCE AND B OARD M ATTERS

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Yong Sin Shin

Myung Shin Sohn

Board and Committee Meeting Attendance

During the fiscal year ended December 31, 2023, our Board of Directors held a total of thirteen meetings.

During the fiscal year ended December 31, 2024, our Board of Directors held a total of fourteen meetings.

Each incumbent director who was a director during 2024 attended each such meeting and each meeting held by the standing committees of the Board on which such director served.

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The Nomination & Governance Committee does not have a separate policy for consideration of any director candidates recommended by shareholders.

Instead, the Nomination & Governance Committee considers any candidate meeting the requirements for nomination by a shareholder set forth in the Company’s Bylaws (as well as applicable laws

and regulations) in the same manner as any other director candidate.

Instead, the Nomination & Governance Committee considers any candidate meeting the requirements for nomination by a shareholder set forth in the Company’s Bylaws (as well as applicable laws and regulations) in the same manner as any other director candidate.

The Nomination & Governance Committee believes that requiring shareholder recommendations for director candidates to comply with the requirements for nominations in accordance with the Company’s Bylaws ensures that the Nomination & Governance Committee receives at least the minimum information necessary for it to begin an appropriate evaluation of any such director nominee.

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The code provides fundamental ethical principles to which these individuals are expected to adhere to and will operate as a tool to help our directors, officers and employees understand the high ethical standards required for employment by, or association with, our Company.

This policy governs insider trading, whistleblowing and the protection of whistleblowers, related party transactions, conflicts of interest, and a variety of other requirements applicable to our officers and directors.

This policy governs whistleblowing and the protection of whistleblowers, related party transactions, conflicts of interest, and a variety of other requirements applicable to our officers and directors.

Additionally, our Code of Business Conduct and Business Ethics Policy sets forth our insider trading policies and governs the purchase, sale, hedging and other acquisitions and dispositions of our securities, as well as the securities of publicly traded companies with whom we have a business relationship, and is designed to promote compliance with all applicable insider trading laws, listing standards, rules and regulations.

Our Code of Business Conduct and Business Ethics Policy is available on our website at www.myopenbank.com under the “Investor Relations” tab.

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Name Transaction Date Filed

Brian Choi Acquisition of Common Stock Form 4 Filed on 2/8/2023

Min Kim Acquisition of Common Stock Form 4 Filed on 3/23/2023

Ki Won Yoon Acquisition of Common Stock Form 4 Filed on 2/7/2024

Ryan Shin Acquisition of Restricted Stock Units Form 4 filed 5/31/2024

Brian Choi Acquisition of Restricted Stock Units;

Acquisition of Common Stock Form 4 filed 7/2/2024

Soo Hun Jung Acquisition of Restricted Stock Units;

Acquisition of Common Stock Form 4 filed 7/2/2024

Yong Sin Shin Acquisition of Restricted Stock Units;

Acquisition of Common Stock Form 4 filed 7/2/2024

Kim Acquisition of Restricted Stock Units;

Acquisition of Common Stock Form 4 filed 7/2/2024

Sunny Kwon Acquisition of Restricted Stock Units;

Acquisition of Common Stock Form 4 filed 7/2/2024

Ernest Dow Acquisition of Common Stock Form 4 filed 7/2/2024

Executive Compensation.

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Kim, our President and Chief Executive Officer.

The agreement provides for an initial three-year term and thereafter renews annually for a one-year term

unless terminated by either party upon 45 days written notice prior to the end of the then-current term.

The agreement provides for an initial three-year term and thereafter renews annually for a one-year term unless terminated by either party upon 45 days written notice prior to the end of the then-current term.

An addendum to this agreement was executed on June 24, 2021, which extended the initial term to December 31, 2024.

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(ii) a material reduction in her aggregate compensation or benefits in effect immediately prior to the applicable Change in Control;

a relocation of Ms.

or (iii) a relocation of Ms.

Kim’s primary place of employment of more than fifty (50) miles from the her primary place of employment immediately prior to the applicable Change in Control.

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The Management Incentive Plan for 2024 and 2023 provides an opportunity for the executive officers and key employees to earn a bonus up to their designated percentage cap based on their base salary.

The limits for the Management Incentive Plan for 2023 and 2022 were up to 100% and 110% of the annual base salary respectively for the President and Chief Executive Officer and up to 35% and 45% of their annual base salary respectively for the other executive officers.

The limits for the Management Incentive Plan for 2024 and 2023 were up to 100% of the annual base salary respectively for the President and Chief Executive Officer and up to 35% of their annual base salary respectively for the other executive officers.

Specific bonuses payouts are recommended by the President and Chief Executive Officer to the HRCC.

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In addition, the Board has the discretion to approve any additional cash bonuses or adjustments to the accrual and/or distribution under the Management Incentive Plan as they deem appropriate and in line with the profits and the growth of the Company.

However, no eligible executive would receive a bonus if he or she achieved less than 80% of performance goals set forth in the Management Incentive Plan for 2023 and 70% in 2022, and/or the return on assets (“ROA”) for the Plan Year is less than 1%.

However, no eligible executive would receive a bonus if he or she achieved less than 80% of performance goals set forth in the Management Incentive Plan for 2024 and 2023.

The availability of bonuses and the amounts earned is based on various metrics approved by the HRCC.

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The Individual Goals were customized to each individual’s respective responsibilities.

For the President and Chief Executive Officer and the other executive officers the weight allocation was 70% in Bank Goals and 30% in Individual Goals.

For the President and Chief Executive Officer, the weight allocation was 70% in Bank Goals and 30% in Individual Goals.

For the other executive officers, the weight allocation was 60% in Bank Goals and 40% in Individual Goals.

In 2023, our ROA was 1.13%, ROE was 13.05%, and the efficiency ratio was 57.59%.

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The 2021 Plan authorized up to 1,500,000 shares of the Company's common stock for issuance of equity awards including stock options and restricted stock units.

Option exercise prices are the fair market value of the underlying stock

as of the grant date.

Option exercise prices are the fair market value of the underlying stock as of the grant date.

Restricted stock units are valued at the fair market value on the date of grant.

2 unchanged sentences

As of December 31, 2024, 1,078,188 shares were available for future grants in either stock options or restricted stock awards under the 2021 Plan.

2010 Equity Incentive Plan

On August 19, 2010, the shareholders of Open Bank approved the 2010 Equity Incentive Plan (the “2010 Plan”).

The 2010 Plan was amended by the Board and shareholders of Open Bank in 2013 to increase the number of authorized shares for issuance from 1,350,000 shares to 2,500,000 shares of common stock.

In June 2016, OP Bancorp assumed the 2010 Plan in connection with the formation of the bank holding company.

The shares of common stock are authorized and reserved for issuance for equity awards including stock options and restricted stock units.

Option exercise prices are the fair market value of the underlying stock as of the grant date.

Restricted stock units are valued at the fair market value on the date of grant.

As of December 31, 2023, we had options outstanding to purchase a total of 60,000 shares of our common stock under the 2010 Plan, at an average exercise price of $ 8.00 per share, and 10,000 restricted stock units at an average issue price of $ 9.69 were outstanding.

The 2010 Plan expired in August 2020 and no future grants can be made under the 2010 Plan.

Outstanding Equity Awards

The following table provides information for each of our named executive officers regarding outstanding stock awards held by the officers as of December 31, 2024.

Option Awards Stock Awards

Name Number of

Exercisable Number of

Unexercisable Option

Date Number of

Shares or Units

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Vested ($) (2)

Kim 60,000 — $ 8.00 4/1/2024 21,407 $ 234,407

Oh 18,000 $ 284,580

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With regard to 18,000 restricted stock units for Ms.

Kim, 64,219 restricted stock units vest 1/3rd per year from the date of grant of June 24, 2021, subject to continuing service.

With regard to 20,000 restricted stock units for Ms.

Oh, 10,000 restricted stock units vest at the end of three years from the date of grant of February 24, 2022, subject to continuing service and 10,000 restricted stock units vest 1/3rd per year from the date of grant of May 25, 2023.

Oh, 10,000 restricted stock units vest at the end of three years from the date of grant of February 24, 2022 and 12,000 restricted stock units vest 1/3rd per year from the date of

grant of May 25, 2023, subject to continuing service.

With regard to 18,000 restricted stock units for Mr.

Oh, 45,000 restricted stock units vest 1/5th per year from the date of grant of June 24, 2021, subject to continuing service.

(2) The market value of the shares of restricted stock units that have not vested is calculated by multiplying the number of shares of stock underlying the restricted stock units that have not vested by the closing price of our common stock as of December 31, 2024, which was $15.81.

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Brian Choi $ 84,000 $ 41,999 $ 125,999

Dow 60,000 29,996 89,996

Soo Hun Jung, M.D.

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Yong Sin Shin 60,000 30,002 90,002

Myung Shin Sohn 35,000 30,002 65,002

(1) Excludes reimbursement for traveling and other expenses and stock-based expenses relating to equity awards granted in prior years under our equity plans.

7 unchanged sentences

Yong Sin Shin 3,226

Myung Shin Sohn 3,226

The Company paid fees to the non-officer directors for attendance at Board of Directors and Board of Directors’ committee meetings or for performing other services in connection with operation of the Company.

1 unchanged sentence

Directors receive reimbursement for their out-of-pocket expenses incurred in connection with their duties as directors, including their attendance at director meetings.

Grants of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

Our policy is to not grant stock options in anticipation of the release of material nonpublic information, such as a significant positive or negative earnings announcement, and not time the public release of such information based on grant dates.

Additionally, we do not grant stock options or similar equity awards during periods in which there is material nonpublic information about the Company or Bank, including (i) during our “blackout” periods or outside “trading windows” established under our Insider Trading Policy or (ii) at any time between four business days prior to or one business day following the filing of our periodic reports or a Form 8-K that discloses material nonpublic information.

These restrictions do not apply to restricted stock awards, restricted stock units, or other types of equity awards that do not include an exercise price related to the market price of our common stock on the date of grant.

Our executive officers are not permitted to choose the grant date for their grants.

The grants are effective on the date on which they are approved.

However, if such date is during a blackout or a filing window, the grants will not be effective until after the second business day following the earnings announcement, unless such day is within a filing

window, in which case such grants will not be effective until after the second business day following the filing of the applicable report.

During the 2024 fiscal year, none of our NEOs were awarded options with an effective grant date during any period beginning four business days before the filing or furnishing of a Form 10-Q, Form 10-K, or Form 8-K that disclosed material nonpublic information and ending one business day after the filing or furnishing of such reports.

We do not backdate or reprice stock options or other equity awards.

Compensation Committee Interlocks and Insider Participation

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Brian Choi 1,303,562 8.74 %

Dow 247,513 1.65 %

Soo Hun Jung, M.D.

241,988 1.62 %

Kim 3,601 0.02 %

Sunny Kwon 3,601 0.02 %

Yong Sin Shin 494,036 3.31 %

Myung Shin Sohn 20,400 0.14 %

Kim 611,425 4.10 %

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(2) Subject to applicable community property laws and shared voting and investment power with a spouse, the persons listed have sole voting and investment power with respect to such shares unless otherwise noted.

(3) Includes shares beneficially owned (including options exercisable and restricted stock units vesting within 60 days of March 1, 2024).

(4) Consists of 567,648 shares held by Ms.

Kim individually and 60,000 shares that are subject to options that are currently exercisable or are exercisable within 60 days of March 1, 2024.

(5) Includes 60,000 shares that are subject to options that are currently exercisable or are exercisable within 60 days of March 1, 2024.

(3) Represents the number of common shares beneficially owned by Manulife Financial Corporation (“MFC”) and MFC’s indirect, wholly-owned subsidiaries, Manulife Investments (US) LLC (“MIM (US)”) and Manulife Investment Management Limited (“MIML”).

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Any loans we originate with officers, directors and principal shareholders, as well as their immediate family members and affiliates, are approved by our Board of Directors in accordance with the bank regulatory requirements

As of December 31, 2023, our officers and directors as well as their immediate families and affiliated companies, taken as a group, were not indebted directly or indirectly to us, while deposits from this group totaled $ 1.8 million as of

As of December 31, 2024, our officers and directors as well as their immediate families and affiliated companies, taken as a group, were not indebted directly or indirectly to us, while deposits from this group totaled $2.3 million as of such date.

We expect to continue to enter into transactions in the ordinary course of business on similar terms with our officers, directors and principal shareholders, as well as their immediate family members and affiliates.

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Since inception, we have donated over $17.5 million to the Foundation, aiding over 230 local non-profits.

The Foundation’s Board of Directors is comprised of five of our directors, Brian Choi, Ernest E.

The Foundation’s Board of Directors is comprised of five of our current and former directors, Brian Choi, Ernest E.

Kim, Soo Hun Jung, and Yong Sin Shin.

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A copy of the Company’s Code of Business Conduct and Ethics is available under the Corporate Governance tab on the Company’s investor relations website, https://opbancorp.q4ir.com/governance/corporate-governance/default.aspx.

A copy of the Company’s Code of Business Conduct and

Ethics is available under the Corporate Governance tab on the Company’s investor relations website, https://opbancorp.q4ir.com/governance/corporate-governance/default.aspx.

Director Independence

3 unchanged sentences

Yong Sin Shin

Myung Shin Sohn

Principal Accountant Fees and Services.

The following table summarizes the aggregate fees billed to the Company by its independent auditor:

Category of Services Fiscal Year

2023 Fiscal Year

Category of Services Fiscal Year 2024 Fiscal Year 2023

Audit fees (1)

4 unchanged sentences

Total accounting fees $ 742,271 $ 654,803

(1) Audit fees relate to professional services rendered in connection with the audit of the Company’s annual financial statements, quarterly review of financial statements included in the Company’s Quarterly Reports on Form 10-Q, and audit services provided in connection with other statutory and regulatory filings.

(1) Audit fees relate to professional services rendered in connection with the audit of the Company’s annual financial statements and internal controls for 2024, quarterly review of financial statements included in the Company’s Quarterly Reports on Form 10-Q, and audit services provided in connection with other statutory and regulatory filings.

(2) Tax fees were related to tax services provided to Company, including annual Federal and State tax return, quarterly tax estimates, and any assistance, review, or resolution of tax notice.

2 unchanged sentences

The Audit Committee discussed these services with the independent registered public accounting firm and Company management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by the SEC and the Public Company Accounting Oversight Board.

Exhibits and Financial Statement Schedules.

(a)(1) Financial Statements :

The financial statements listed under Part II-Item 8.

“Financial Statements and Supplementary Data” are filed as part of this Item 15 of this 10-K.

(a)(2) Financial Statement Schedules :

All financial statement schedules have been omitted as such required information is not applicable or has been included in the Financial Statements and related notes.

(a)(3) List of Exhibits :

The exhibits required by Item 601 of Regulation S-K are included under Item 15(b) below.

Exhibits and Financial Statements.

Exhibit Number Description

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333-223444) filed on March 5, 2018)

10.4* 2010 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.6 to the Registrant’s Form S-1 Registration Statement (Registration No.

333-223444) filed on March 5, 2018)

10.5* First Amendment to the 2010 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.7 to the Registrant’s Form S-1 Registration Statement (Registration No.

333-223444) filed on March 5, 2018)

10.6* Form of Stock Option Award under the 2010 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.8 to the Registrant’s Form S-1 Registration Statement (Registration No.

333-223444) filed on March 5, 2018)

10.7* Form of Restricted Stock Unit Agreement under the 2010 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.9 to the Registrant’s Form S-1 Registration Statement (Registration No.

333-223444) filed on March 5, 2018)

10.8* OP Bancorp 2017 Management Incentive Plan (incorporated herein by reference to Exhibit 10.12 to the Registrant’s Form S-1 Registration Statement (Registration No.

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10.13* Employment Offer Letter, dated September 18, 2020, from Open Bank to Ihnsuk J.

Bang (incorporated herein by reference to Exhibit 10.17 to the R egis t rant's Annual Report on Form 10-K (File No.

Bang (incorporated herein by reference to Exhibit 10.17 to the Registrant's Annual Report on Form 10-K (File No.

001-38437) filed on March 18, 2022).

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333-257362) filed on June 24, 2021

10.16* Form of Restricted Stock Unit Agreement under the OP Bancorp 2021 Equity Incentive Pla n (incorporated herein by reference to Exhibit 10.20 to the R egis trant's Annual Report on Form 10-K (File No .

10.16* Form of Restricted Stock Unit Agreement under the OP Bancorp 2021 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.20 to the Registrant's Annual Report on Form 10-K (File No.

001-38437) filed on March 28, 2022).

19.1 OP Bancorp Insider Trading Policy, filed herewith

21.1 Subsidiaries of OP Bancorp (incorporated herein by reference to Exhibit 21.1 to the Registrant’s Form S-1 Registration Statement (Registration No.

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23.1 Consent of Crowe, LLP, filed herewith.

24.1 Power of Attorney (incorporated by reference to the signature page of this Annual Report on Form 10-K)

31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.

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104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101).

* Indicates management contract or compensatory plan or arrangement.

** Furnished, not filed.

Form 10-K Summary.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized .

Pursuant to the requirements of Section 13 or 15(d) 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 .

March 28, 2025

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KIM President, Chief Executive Officer and Director (Principal Executive Officer) March 28, 2025

/s/ CHRISTINE Y.

OH Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer) March 29, 2024

/s/ JAEHYUN PARK Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer) March 28, 2025

/s/ BRIAN CHOI Director March 28, 2025

/s/ ERNEST E.

DOW Director March 29, 2024

/s/ SOO HUN JUNG Director March 28, 2025

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Yong Sin Shin

/s/ MYUNG SHIN SOHN Director March 28, 2025

Myung Shin Sohn

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 173 ).

Consolidated Balance Sheets a s of December 31, 202 3 and 202 2

Consolidated Balance Sheets as of December 31, 2024 and 2023.

Consolidated Statements of Income for the Years Ended December 31, 2024, 2023 and 2022.

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Los Angeles, California

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of OP Bancorp (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of OP Bancorp (the "Company") as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").

We also have audited the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework:

(2013) issued by COSO.

Change in Accounting Principle

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The Company adopted the new credit loss standard using the modified retrospective method such that prior period amounts are not adjusted and continue to be reported in accordance with previously applicable generally accepted accounting principles.

The adoption of the new credit loss standard and its subsequent application is also communicated as a critical audit matter below.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded

as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Critical Audit Matter

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Allowance for Credit Losses – Loans

As described in Notes 1 and 3 to the financial statements, effective January 1, 2023 the Company adopted ASU 2016-13, Financial instruments – Credit Losses (Topic 326) using the modified retrospective method.

See change in accounting principle explanatory paragraph above.

The allowance for credit losses on loans is an estimate of expected credit losses, measured over the contractual life of the loans based on historical experience, current conditions, and reasonable and supportable forecasts.

As of January 1, 2023, the Company recorded a $1.9 million increase to the allowance for credit losses (ACL) on loans and a $1.5 million decrease to retained earnings.

At December 31, 2023 the Company had a gross loan portfolio of $1.8 billion and a related ACL on loans of $22.0 million.

The Company uses a probability of default (PD)/loss given default (LGD) quantitative model using transition matrices and a qualitative framework to estimate expected credit losses on loans held for investment.

As of December 31, 2024, the Bank had a gross loan portfolio of $1.96 billion and a related allowance for credit losses (ACL) on loans of $24.8 million.

As described in Notes 1 and 3 to the financial statements, the Company uses a probability of default (PD)/loss given default (LGD) quantitative model using transition matrices and a qualitative framework to estimate expected credit losses on loans held for investment.

The quantitative component of the model provides forecasts of PD and LGD based on forecasted national unemployment rates using regression analysis and under a weighted multiple scenario approach.

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The primary procedures we performed to address this critical audit matter included:

• Substantively testing management’s process, including evaluating their judgments and assumptions, for developing the qualitative factor adjustments, which included:

◦ Evaluating the appropriateness of the qualitative framework and the reasonableness of significant assumptions used in the development of qualitative factor adjustments.

◦ Evaluating the relevance and reliability of internal and external data used to develop the qualitative factor adjustments.

◦ Evaluating the mathematical accuracy of qualitative factor adjustments derived from management’s credit risk matrix.

• Testing the design and operating effectiveness of controls over management’s determination of qualitative factor adjustments, including relevance and reliability of data used to develop the qualitative factor adjustments, the mathematical accuracy of qualitative factor adjustments derived from management’s credit risk matrix, the appropriateness of the qualitative framework and the reasonableness of management’s judgments and significant assumptions used to develop the qualitative factor adjustments.

• Substantively testing management’s process for developing the qualitative factor adjustments, which included testing the relevance and reliability of data used to develop the qualitative factor adjustments, evaluating the mathematical accuracy of qualitative factor adjustments derived from management’s credit risk matrix, evaluating the appropriateness of the qualitative framework and evaluating the reasonableness of significant assumptions used in the development of the qualitative factor adjustments.

• Analytically comparing trends within the qualitative factors to trends within the portfolio and other economic data for reasonableness, which included comparison to the prior period end and evaluating the reasonableness of the qualitative factors as of period end.

We have served as the Company's auditor since 2016.

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Deferred tax assets, net 14,893 13,309

Other real estate owned 1,237 —

Operating right-of-use assets 7,415 8,497

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Other comprehensive income (loss)

Change in unrealized gain (loss) on available-for-sale debt securities

Change in unrealized gain (loss) on available-for-sale debt securities, net of tax effect

216 2,392 ( 16,646 )

Tax effect ( 1,005 ) 6,988 854

Change in unrealized loss on cash flow hedge, net ( 178 ) — —

Total other comprehensive income (loss) 38 2,392 ( 16,646 )

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

($ in thousands, except per share data) Common Stock Additional

Common Stock Additional

Comprehensive

Income (Loss)

Shareholders’

Balance as of January 1, 2021 15,016,700 $ 78,657 $ 8,521 $ 55,348 $ 840 $ 143,366

($ in thousands, except per share data) Shares

Balance at January 1, 2022 15,137,808 $ 78,718 $ 8,645 $ 79,056 $ ( 1,197 ) $ 165,222

Net income — — — 33,310 — 33,310

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— — — — ( 16,646 ) ( 16,646 )

Stock issued under stock-based compensation plans, net of forfeitures

Stock issued under stock-based compensation plans, net of forfeiture

132,536 608 ( 81 ) — — 527

Stock-based compensation, net — — 1,179 — — 1,179

Repurchase of common stock ( 3,830 ) ( 28 ) — — — ( 28 )

Cash dividends declared ($ 0.44 per share)

— — — ( 6,676 ) — ( 6,676 )

Balance as of December 31, 2021 15,137,808 78,718 8,645 79,056 ( 1,197 ) 165,222

Balance at December 31, 2022 15,270,344 79,326 9,743 105,690 ( 17,843 ) 176,916

Cumulative effect related to adoption of ASC 326, net of tax — — — ( 1,484 ) — ( 1,484 )

Adjusted balance at January 1, 2023 15,270,344 79,326 9,743 104,206 ( 17,843 ) 175,432

Net income — — — 23,918 — 23,918

Other comprehensive loss

Other comprehensive income

— — — — 2,392 2,392

Stock issued under stock-based compensation plans, net of forfeitures

Stock issued under stock-based compensation plans, net of forfeiture

178,576 888 ( 98 ) — — 790

Stock-based compensation, net — — 1,297 — — 1,297

Repurchase of common stock ( 448,484 ) ( 3,934 ) — — — ( 3,934 )

Cash dividends declared ($ 0.48 per share)

— — — ( 7,269 ) — ( 7,269 )

Balance as of December 31, 2022 15,270,344 79,326 9,743 105,690 ( 17,843 ) 176,916

Cumulative effect related to adoption of ASC 326, net of tax — — — ( 1,484 ) —

Adjusted balance as of January 1, 2023 15,270,344 79,326 9,743 104,206 ( 17,843 ) 175,432

Balance at December 31, 2023 15,000,436 76,280 10,942 120,855 ( 15,451 ) 192,626

Net income — — — 21,069 — 21,069

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— — — — 38 38

Stock issued under stock-based compensation plans, net of forfeitures

Stock issued under stock-based compensation plans, net of forfeiture

98,058 160 ( 197 ) — — ( 37 )

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— — — ( 7,143 ) — ( 7,143 )

Balance as of December 31, 2023 15,000,436 $ 76,280 $ 10,942 $ 120,855 $ ( 15,451 ) $ 192,626

Balance at December 31, 2024 14,819,866 $ 73,697 $ 11,928 $ 134,781 $ ( 15,413 ) $ 204,993

See accompanying notes to consolidated financial statements

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Amortization of low income housing partnerships 1,696 1,325 697

Stock-based compensation 1,297 1,179 558

Stock-based compensation, net 1,183 1,297 1,179

Deferred income taxes ( 1,600 ) 626 1,081

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Other liabilities ( 4,397 ) ( 3,831 ) ( 3,664 )

Net cash provided by operating activities 67,842 83,734 ( 28,278 )

Net cash from operating activities 31,344 67,842 83,734

Cash flows from investing activities

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Purchase of premises and equipment, net ( 1,562 ) ( 2,184 ) ( 1,412 )

Investment in low income housing partnerships ( 2,843 ) ( 1,076 ) ( 829 )

Net cash used in investing activities ( 75,972 ) ( 461,777 ) ( 286,044 )

Investments in low-income housing partnerships ( 4,282 ) ( 2,843 ) ( 1,076 )

Net cash from investing activities ( 187,421 ) ( 75,972 ) ( 461,777 )

Cash flows from financing activities

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Payments related to tax-withholding for vested restricted stock awards ( 197 ) ( 98 ) ( 81 )

Net cash provided by financing activities 16,374 345,556 323,471

Net cash from financing activities 199,804 16,374 345,556

Net change in cash and cash equivalents 43,727 8,244 ( 32,487 )

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Interest 68,573 43,121 9,088

Supplemental non-cash disclosure:

Supplemental noncash disclosure:

Initial recognition of right-of-use assets $ 984 $ 1,369 $ 1,961

New commitments to low income housing partnership investments — 6,000 5,000

Transfer of loan to other real estate owned 1,237 — —

See accompanying notes to consolidated financial statements

OP BANCORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Business and Basis of Presentation

Business Description:

OP Bancorp is a California corporation that was formed to acquire 100.00 % of the voting equity of Open Bank (the “Bank”) and commenced operation as a bank holding company on June 1, 2016.

This transaction was treated as an internal reorganization as all shareholders of the Bank became shareholders of OP Bancorp.

OP Bancorp has no operations other than ownership of the Bank.

The Bank is a California state-chartered and FDIC-insured financial institution, which began its operations on June 10, 2005.

Headquartered in downtown Los Angeles, California, OP Bancorp operates primarily in the traditional banking business arena that includes accepting deposits and making loans and investments.

OP Bancorp’s primary deposit products are demand and time deposits, and the primary lending products are commercial business loans to small to medium sized businesses.

OP Bancorp is operating with 11 full-service branches.

OP Bancorp ("Company") is a California corporation and bank holding company for Open Bank (“Bank”).

The Company commenced operation as a bank holding company on June 1, 2016, and substantially all of its assets, operations and business are owned and conducted through the Bank.

The Bank is a California state-chartered and Federal Deposit Insurance Corporation ("FDIC")-insured financial institution, which began its operations on June 10, 2005.

Headquartered in downtown Los Angeles, California, Open Bank operates primarily in the traditional banking business arena that includes accepting deposits and making loans and investments.

Open Bank's primary deposit products are demand and time deposits, and the primary lending products are commercial business loans to small to medium sized businesses.

OP Bancorp is operating with eleven full-service branches located in California, Washington, Nevada and Texas, and five loan production offices located in California, Georgia, Washington, Colorado, and Virginia.

Basis of Presentation:

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The extent and value of the collateral obtained varies based upon the details underlying each loan agreement.

Our chief operating decision maker (“CODM”), the Chief Executive Officer, manages the Company’s business activities as one single operating and reportable segment at the consolidated level.

Accordingly, our CODM uses consolidated net income to measure segment profit or loss, allocate resources and assess performance.

Further, the CODM reviews and utilizes net interest income, noninterest income and noninterest expenses (compensation and benefits, information services, occupancy and general, administrative and other) at the consolidated level to manage the Company’s operations.

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

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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 Company does not recognize a separate allowance for expected credit losses for accrued interest receivable and records reversals of accrued interest receivable as reductions of interest income.

Other Investments:

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Additionally, the Company aggregated loan portfolio based on similar risk characteristic.

The Company elected to use the Call Report codes and loan risk ratings for loan segmentation in allowance for credit losses.

The Company used the following assumptions in a sensitivity analysis of our allowance for credit losses:

unemployment rate forecast based on supervisory severely adverse scenario, 0% prepayment rates, loan risk grade changes of commercial real estate and commercial and industrial loan portfolio in worst case scenario based on the Company history, and applying a 100% weighting to severely adverse scenario.

The analysis demonstrates the sensitivity to the allowance for credit losses to key quantitative assumptions and it is not intended to estimate changes in the overall allowance for credit losses and it does not capture all the potential unknown variables that could arise in the forecast period, but it provides an approximation of a possible outcome under hypothetical severe conditions.

The Company does not recognize a separate allowance for expected credit losses for accrued interest receivable and records reversals of accrued interest receivable as reductions of interest income.

The Company reverses previously accrued but uncollected interest when an asset is placed on nonaccrual status.

Accrued interest receivable and the related allowance for expected credit losses is included as a component of other assets.

The Company uses the Call Report codes and loan risk ratings for loan segmentation in allowance for credit losses.

In order to quantify the credit risk impact of other trends and changes within the loan portfolio, the Company utilizes qualitative adjustments to the modeled estimated loss approaches.

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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 Current Expected Credit Losses:

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 Current Expected Credit Losses:

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

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Late fees and ancillary fees related to loan servicing are not material.

Derivative Instruments and Hedging Activities:

FASB ASC 815, Derivatives and Hedging (“ASC 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of:

(a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows.

Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.

As required by ASC 815, the Company records all derivatives on the balance sheet at fair value.

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges.

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

Hedge accounting generally provides for the matching of 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 hedged risk in a fair value hedge or 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.

For a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item attributable to the hedged risk, are recognized in current earnings as fair values change.

For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same period during which the hedged transaction affects earnings.

Changes in fair value of derivatives not designated are reported currently in earnings, as non-interest income.

The Company discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended.

When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as non-interest income.

When a fair value hedge is discontinued, the hedged asset or liability is no longer adjusted for changes in fair value and the existing basis adjustment is amortized or accreted over the remaining life of the asset or liability.

When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods which the hedged transactions will affect earnings.

In accordance with the FASB’s fair value measurement guidance in Accounting Standards Update ("ASU") No.

2011-04, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Company Owned Life Insurance:

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Repairs and maintenance are charged to operating expenses as incurred.

Other Real Estate Owned ("OREO"):

Real estate acquired by foreclosure or deed in lieu of foreclosure is recorded at fair value at the date of foreclosure, establishing a new cost basis by a charge to the allowance for credit losses, if necessary.

Other real estate owned is carried at the lower of our carrying value of the property or its fair value, less estimated carrying costs and costs of disposition.

Fair value is based on current appraisals less estimated selling costs.

Any subsequent write-downs are charged against operating expenses and recognized as a valuation allowance.

Operating expenses and related income of such properties and gains and losses on their disposition are included in other income or expenses.

Operating Lease Right of Use ("ROU') Assets and Lease Liabilities:

The ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date.

The lease terms include periods covered by options to extend or terminate the lease if we are reasonably certain to exercise such options.

We use our incremental borrowing rate to determine the present value of our lease liabilities, and we do not recognize ROU assets or lease liabilities for short-term leases.

We determine if a contract arrangement is a lease at inception and we primarily enter into operating lease contracts for our branch locations, office space, and certain equipment.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

We did not possess any leases that have variable lease payments or residual value guarantees as of December 31, 2024 .

Loan Commitments and Related Financial Instruments:

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Earnings per Common Share:

Basic and diluted earnings per share is based on the two-class method prescribed in ASC Topic 260, Earnings Per Share (ASC 260).

Basic and diluted earnings per share ("EPS") is based on the two-class method prescribed in ASC Topic 260, Earnings Per Share (ASC 260).

Stock options and restricted stock awards are considered outstanding for this calculation unless unearned.

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Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities.

Deferred tax assets and liabilities are the expected future tax amounts for the temporary differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates.

Deferred tax assets and liabilities are the expected future tax amounts for the temporary

differences between carrying amounts and tax bases of assets and liabilities, computed using enacted tax rates.

A valuation allowance, if needed, reduces deferred tax assets to the amount expected to be realized.

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Changes in assumptions or in market conditions could significantly affect these estimates.

Operating Segments:

While the chief decision-makers monitor the revenue streams of the various products and services, operations are managed and financial performance is evaluated on a Company-wide basis.

Discrete financial information is not available other than on a Company-wide basis.

New Accounting Pronouncements Adopted

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The Company adopted ASU 2022-02 on January 1, 2023, and the adoption of ASU 2022-02 did not have a significant impact on its consolidated financial statements.

In March 2023, the FASB issued ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323):

2023-02 - Investments - Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method .

This ASU permits reporting entities to elect to account for tax equity investments, regardless of the tax credit program for which the income tax credits are received, using the proportional amortization method if certain conditions are met.

Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the income tax credits and other income tax benefits received and recognizes the net amortization and income tax credits and other income tax benefits in the income statement as a component of income tax expense.

Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the income tax credits and other income tax benefits received and recognizes the net amortization and income tax credits and other income tax benefits in the Statement of Income as a component of income tax expense.

A reporting entity makes an accounting policy election to apply the proportional amortization method on a tax-credit-program-by-tax-credit-program basis rather than electing to apply the proportional amortization method at the reporting entity level or to individual investments.

The Company adopted ASU 2023-02 on January 1, 2024, and the adoption did not have a material impact on its consolidated financial statements.

The Company adopted ASU No.

2023-02 on January 1, 2024, and the adoption did not have a material impact on its consolidated financial statements.

2023-07 - Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

This expands disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker uses reported segment profit or loss information in assessing segment performance and allocating resources.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024 and should be applied retrospectively.

The Company adopted ASU 2023-07 in 2024 and it did not have an impact on the Company's financial position or results of operation as it impacts disclosures only.

Recently Issued Accounting Pronouncement under Evaluation

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

2023-09 - Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

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Residential collateralized mortgage obligations 162,142 67 ( 17,750 ) 144,459

Municipal securities - tax exempt 5,726 189 ( 1 ) 5,914

Total AFS debt securities $ 216,186 $ 256 $ ( 22,192 ) $ 194,250

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The amortized cost and estimated fair value of AFS debt securities as of December 31, 2024, by contractual maturity, are shown below:

($ in thousands) Amortized

($ in thousands) Amortized Cost Fair Value

One year or less $ 22 $ 22

After one year through five years 1,172 1,134

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Less Than 12 Months 12 Months or Longer Total

($ in thousands) Fair

($ in thousands) Fair Value

Government agencies or sponsored agency securities:

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Less Than 12 Months 12 Months or Longer Total

($ in thousands) Fair

($ in thousands) Fair Value

Government agencies or sponsored agency securities:

1 unchanged sentence

Residential collateralized mortgage obligations 25,439 ( 177 ) 105,963 ( 17,573 ) 131,402 ( 17,750 )

Municipal securities - tax exempt 1,842 ( 1 ) — — 1,842 ( 1 )

Total AFS debt securities $ 33,769 $ ( 237 ) $ 143,352 $ ( 21,955 ) $ 177,121 $ ( 22,192 )

As a result of the Company's adoption of ASU 2016-13 on January 1, 2023, available-for-sale debt securities are measured at fair value and are subject to impairment testing.

Available-for-sale debt securities are measured at fair value and are subject to impairment testing.

A security is impaired if the fair value of the security is less than its amortized cost basis.

7 unchanged sentences

The remaining 3 % of the AFS debt securities are tax-exempt municipal securities.

We believe that the unrealized losses presented in the previous tables are temporary and no credit losses are expected.

As a result, the Company expects full collection of the carrying amount of these securities, does not intend to sell

the securities in an unrealized loss position, and it was more-likely-than-not the Company will not have to sell these securities prior to recovery of amortized cost.

Accordingly, for available-for-sale debt securities, the Company did not record allowance for credit losses on January 1, 2023 and did not have allowance for credit losses as of December 31, 2023.

As of December 31, 2023 or 2022, there were no pledged securities to secure public deposits, borrowing and letters of credit from 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, 2023 and 2022:

All securities are performing and the Company believes that the unrealized losses presented in the previous tables are temporary and no credit losses are expected.

As a result, the Company expects full collection of the carrying amount of these securities, does not intend to sell the securities in an unrealized loss position, and it was more-likely-than-not the Company will not have to sell these securities prior to recovery of amortized cost.

Accordingly, for available-for-sale debt securities, the Company did not have allowance for credit losses as of December 31, 2024 and 2023.

As of December 31, 2024 and 2023, there were no pledged securities to secure public deposits, borrowing and letters of credit from the Federal Home Loan Bank System ("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 investments, which are included in other investments on the Consolidated Balance Sheets as of December 31, 2024 and 2023:

($ in thousands) 2024 2023

4 unchanged sentences

Total other investments $ 16,437 $ 16,276

The Company has equity investment in a mutual fund with readily determinable fair value of $ 3.5 million and $ 3.3 million as of December 31, 2023 and 2022, respectively, which is measured at fair value with changes in fair value recorded in net income.

The Company has equity investment in a mutual fund with readily determinable fair value of $ 3.5 million as of December 31, 2024 and 2023, which is measured at fair value with changes in fair value recorded in net income.

The Company invested in the mutual fund for CRA purposes.

For the mutual fund, the Company recorded a $ 48 thousand unrealized gain and a $ 431 thousand unrealized loss for the years ended December 31, 2023 and 2022, respectively.

For the mutual fund, the Company recorded unrealized losses of $ 32 thousand and unrealized gains of $ 48 thousand for the years ended December 31, 2024 and 2023, respectively.

The unrealized gains (losses) of the mutual fund are included in other income in the consolidated statements of income.

12 unchanged sentences

$ 1,932,056 $ 1,743,852

(1) Includes net deferred loan costs and unamortized premiums of $ 140 thousand and $ 160 thousand as of December 31, 2023 and 2022, respectively.

(1) Includes net deferred loan fees and net unamortized discounts of $ 702 thousand as of December 31, 2024 and net deferred loan costs and net unamortized premiums of $ 140 thousand as of December 31, 2023.

No loans were outstanding to related parties as of December 31, 2024 and 2023.

1 unchanged sentence

($ in thousands) Commercial

Home Mortgage

Consumer Total

Balance as of January 1, 2022 $ 8,150 $ 2,022 $ 199 $ 2,848 $ 2,891 $ 13 $ 16,123

Provision for (reversal of) loan losses (1)

( 355 ) 279 54 285 706 ( 10 ) 959

Provision for (reversal of) credit losses ( 1,199 ) ( 409 ) 66 ( 1,205 ) 5,935 ( 7 ) 3,181

Charge-offs — ( 14 ) ( 127 ) — — — ( 141 )

1 unchanged sentence

Balance as of December 31, 2022 6,951 1,607 207 1,643 8,826 7 19,241

Provision for (reversal of) loan losses (1)

( 1,199 ) ( 409 ) 66 ( 1,205 ) 5,935 ( 7 ) 3,181

Impact of CECL adoption 875 ( 238 ) ( 142 ) ( 320 ) 1,753 ( 4 ) 1,924

Provision for (reversal of) credit losses 723 321 73 ( 11 ) 466 10 1,582

Charge-offs ( 686 ) ( 46 ) ( 35 ) ( 97 ) — — ( 864 )

1 unchanged sentence

Balance as of December 31, 2023 7,915 1,657 147 1,215 11,045 14 21,993

Impact of CECL adoption 875 ( 238 ) ( 142 ) ( 320 ) 1,753 ( 4 ) 1,924

Provision for (reversal of) credit losses 1,375 3,966 271 673 ( 3,361 ) ( 11 ) 2,913

2 unchanged sentences

Balance as of December 31, 2024 $ 9,290 $ 5,557 $ 418 $ 1,844 $ 7,684 $ 3 $ 24,796

(1) Excludes reversal of uncollectible accrued interest receivable of $ 205 thousand and $ 438 thousand for the year ended December 31, 2022 and 2021, respectively.

The following table presents the allowance for credit losses on loans and recorded investment (not including accrued interest receivable) by portfolio segment and impairment methodology as of December 31, 2023 and 2022:

($ in thousands) Individually

for Impairment

Collateral-dependent loans are loans where repayment is expected to be provided solely by the sale 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.

In most cases, 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.

As of December 31, 2024 and 2023, there were $ 7.7 million and $ 5.2 million, respectively, of collateral-dependent loans which are primarily secured by SBA—real estate and residential real estate.

The allowance for credit losses allocated to these loans as of December 31, 2024 and 2023 was $ 1.2 million and $ 355 thousand, respectively.

The following table represents the amortized cost basis of collateral-dependent loans by class of loans as of December 31, 2024 and 2023, for which repayment is expected to be obtained through the sale of the underlying collateral.

($ in thousands) Hotel / Motel Retail Single-Family Residential Total (1)

As of December 31, 2024

Allowance for credit losses:

Commercial real estate $ 1,580 $ 363 $ — $ 1,943

SBA—real estate 3,702 2,006 — 5,708

SBA—non-real estate — 147 147

C&I — 1,215 1,215

Home mortgage — 11,045 11,045

Consumer — 14 14

Total $ 5,282 $ 2,369 $ — $ 7,651

Commercial real estate $ — $ 885,585 $ 885,585

SBA—real estate 2,923 221,772 224,695

SBA—non-real estate — 14,997 14,997

C&I — 120,970 120,970

Home mortgage 2,241 515,783 518,024

Consumer — 1,574 1,574

Total $ 5,164 $ 1,760,681 $ 1,765,845

As of December 31, 2023

Allowance for credit losses:

Commercial real estate $ — $ 6,951 $ 6,951

SBA—real estate $ 2,923 $ — $ — $ 2,923

SBA—non-real estate — 207 207

C&I 279 1,364 1,643

Home mortgage — — 2,241 2,241

Consumer — 7 7

Total $ 2,923 $ — $ 2,241 $ 5,164

Commercial real estate $ — $ 842,208 $ 842,208

SBA—real estate 423 220,917 221,340

SBA—non-real estate — 13,377 13,377

C&I 279 116,672 116,951

Home mortgage — 482,949 482,949

Consumer — 1,467 1,467

Total $ 702 $ 1,677,590 $ 1,678,292

(1) Excludes accrued interest receivables of $ 7.3 million and $ 6.4 million as of December 31, 2023 and 2022, respectively.

The following table presents the recorded investment in impaired loans and the specific allowance for loan losses as of December 31, 2022.

December 31, 2022 (1)

($ in thousands) Unpaid Principal Balance Recorded

Allowance Recorded

Allowance Related

SBA—real estate $ 423 $ 423 $ — $ —

C&I 279 — 279 279

Total $ 702 $ 423 $ 279 $ 279

(1) The difference between the unpaid principal balance (net of partial charge-offs) and the recorded investment in the loans was not considered to be material

Collateral-dependent loans are loans where repayment is expected to be provided solely by the sale 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.

In most cases, 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.

As of December 31, 2023, there were $ 5.2 million of collateral-dependent loans which are primarily secured by residential and commercial real estate, as well as equipment.

The allowance for credit losses allocated to these loans as of December 31, 2023 was $ 355 thousand.

The following table represents the amortized cost basis of collateral-dependent loans by class of loans as of December 31, 2023, for which repayment is expected to be obtained through the sale of the underlying collateral.

($ in thousands) Hotel / Motel Single-Family Residential Total

SBA—real estate $ 2,923 $ — $ 2,923

Home mortgage — 2,241 2,241

Total $ 2,923 $ 2,241 $ 5,164

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

There wa s no gu aranteed portion of SBA loans as of December 31, 2023.

The following table presents the recorded investment in nonaccrual loans and loans past due 90 or more days and still accruing interest, by portfolio as of December 31, 2024 and 2023:

2 unchanged sentences

As of December 31, 2024

Commercial real estate $ 363 $ 1,580 $ 1,943 $ — $ 1,943

SBA—real estate 2,006 3,702 5,708 — 5,708

SBA—non-real estate 169 — 169 — 169

Home mortgage 249 2,241 2,490 — 2,490

Total $ 2,538 $ 5,282 $ 7,820 $ — $ 7,820

2 unchanged sentences

SBA—non-real estate 154 — 154 — 154

C&I 279 — 279

Home mortgage 249 2,241 2,490 — 2,490

Total $ 2,705 $ 3,377 $ 6,082 $ — $ 6,082

(1) Excludes guaranteed portion of SBA loans of $ 2.0 million and $ 1.0 million as of December 31, 2023 and 2022 , respectively.

(1) Excludes guaranteed portion of loans of $ 16.3 million and $ 2.0 million as of December 31, 2024 and 2023, respectively.

Nonaccrual loans and loans past due 90 or more days and still accruing interest include both homogeneous loans that are collectively and individually evaluated for impairment and individually classified impaired loans.

The following table represents the aging analysis of the recorded investment in past due loans as of December 31, 2024 and 2023:

($ in thousands) 30-59

($ in thousands) 30-59 Days

As of December 31, 2024

14 unchanged sentences

Total $ 6,098 $ 3,662 $ 4,474 $ 14,234 $ 1,751,611 $ 1,765,845

(1) Excludes guaranteed portion of SBA loans of $ 1.9 million and $ 924 thousand as of December 31, 2023 and 2022, respectively..

(1) Excludes guaranteed portion of loans of $ 8.7 million and $ 1.9 million as of December 31, 2024 and 2023, respectively.

(2) Excludes accrued interest receivables of $ 8.1 million and $ 7.3 million as of December 31, 2024 and 2023, respectively.

Loan Modifications to Borrowers Experiencing Financial Difficult:

On January 1, 2023, the Company adopted ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326):

On January 1, 2023, the Company adopted ASU No.

2022-02, “Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures” , which eliminated the accounting guidance for troubled debt restructurings (“TDRs”) while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty.

This guidance was applied on a prospective basis.

Upon adoption of this guidance, the Company no longer establishes a specific reserve for modifications to borrowers experiencing financial difficulty, unless those loans do not share the same risk characteristics with other loans in the portfolio.

Upon adoption of this guidance, the Company no

longer establishes a specific reserve for modifications to borrowers experiencing financial difficulty, unless those loans do not share the same risk characteristics with other loans in the portfolio.

Provided that is not the case, these modifications are included in their respective cohort and the allowance for credit losses is estimated on a pooled basis consistent with the other loans with similar risk characteristics.

Modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, other than insignificant payment deferrals, other than insignificant term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral.

The disclosure below provide information on loan modification to borrowers experiencing financial difficulty.

No charge-offs of previously modified loans were recorded for the year ended December 31, 2023.

The following table presents the amortized cost of modified loans and the financial effects of the modification as of December 31, 2023 by loan class and modification type:

Financial Effects of Loan Modification

($ in thousands) Payment Delay Term Extension Total Percentage to Each Loan Type Weighted-Average Payment Deferral (in years)

No charge-offs of previously modified loans were recorded for the years ended December 31, 2024 and 2023.

The following table presents the amortized cost of modified loans and the financial effects of the modification for the years ended December 31, 2024 and 2023 by loan class and modification type:

Year Ended December 31, 2024

Modification Type Percentage to Each Loan Segment

($ in thousands) Payment Delay Interest Only Term Extension Total

Commercial real estate $ 1,580 $ — $ — $ 1,580 0.16 %

SBA—real estate (1)

3,702 391 — 4,093 1.76 %

C&I — — 400 400 0.19 %

Total $ 5,282 $ 391 $ 400 $ 6,073

(1) Excludes guaranteed portion of SBA loans of $ 7.4 million.

Year Ended December 31, 2023

Modification Type Percentage to Each Loan Segment

($ in thousands) Payment Delay Term Extension Total

Commercial real estate $ — $ 625 $ 625 0.07 %

SBA—real estate (1)

2,969 — 2,969 0.57 %

SBA—non-real estate 131 — 131 0.87 %

Home mortgage 354 — 354 0.07 % 0.5

C&I 354 — 354 0.16 %

Total $ 354 $ 625 $ 4,079

(1) Excludes guaranteed portion of SBA loans of $ 2.4 million.

The Company tracks the performance of modified loans.

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 a modification during the three year ended December 31, 2023 that subsequently defaulted.

The following table presents the performance of loans that were modified as of December 31, 2023 since the adoption of ASU 2022-02 on January 1, 2023:

There were no loans that received a modification within the last 12 months at December 31, 2024 that subsequently defaulted.

The Company had no additional commitments to lend to borrowers whose loans were modified as of December 31, 2024.

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 loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table presents financial performance of such loans that have been modified in the last 12 months as of December 31, 2024 and 2023:

Payment Performance as of December 31, 2024

($ in thousands) Current 30 - 89 Days Past Due 90+ Days Past Due Total

1 unchanged sentence

SBA—real estate (1)

4,093 — — 4,093

C&I 400 — — 400

Total $ 6,073 $ — $ — $ 6,073

(1) Excludes guaranteed portion of SBA loans of $ 7.4 million.

Payment Performance as of December 31, 2023

($ in thousands) Current 30 - 89 Days Past Due 90+ Days Past Due Total

Commercial real estate $ 625 $ — $ — $ 625

SBA—real estate (1)

2,232 — 737 2,969

SBA—non-real estate 131 — — 131

1 unchanged sentence

Total $ 3,342 $ — $ 737 $ 4,079

The Company had no additional commitments to lend to borrowers whose loans were modified as of December 31, 2023.

(1) Excludes guaranteed portion of SBA loans of $ 2.4 million.

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

Financial Effect

Modification & Loan Types Description of Financial Effect Year Ended December 31, 2024

Payment Delay:

Commercial real estate Deferment of Payment by a weighted average of:

SBA—real estate Deferment of Payment by a weighted average of:

Term Extension:

C&I Extended term by a weighted average of:

Interest Only:

SBA—real estate Interest only Payment by a weighted average of:

Financial Effect

Modification & Loan Types Description of Financial Effect Year Ended December 31, 2023

Payment Delay:

SBA—real estate Deferment of Payment by a weighted average of:

SBA—non-real estate Deferment of Payment by a weighted average of:

Home mortgage Deferment of Payment by a weighted average of:

Term Extension:

Commercial real estate Extended term by a weighted average of:

Credit Quality Indicators :

8 unchanged sentences

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.

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.

1 unchanged sentence

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 table presents the loan portfolio's amortized cost by loan type, risk rating and year of origination as of December 31, 2023:

The following table presents the loan portfolio's amortized cost by loan type, risk rating and year of origination as of December 31, 2024 and 2023:

December 31, 2024

49 unchanged sentences

(1) Excludes accrued interest receivables of $ 8.1 million as of December 31, 2024.

The following table presents the loan portfolio's amortized cost by loan type and risk rating of as of December 31, 2022:

($ in thousands) Pass Special

Substandard Doubtful Total (1)

December 31, 2023

Term Loans by Origination Year Revolving Loans Revolving Loans Converted to Term Loans Total (1)

($ in thousands) 2023 2022

2021 2020 2019 Prior

Commercial real estate

Pass $ 97,114 $ 207,860 $ 154,872 $ 97,137 $ 138,908 $ 163,320 $ 21,059 $ — $ 880,270

Special mention — — — — — — — — —

Substandard — 319 — — — 4,996 — — 5,315

Doubtful — — — — — — — — —

Subtotal $ 97,114 $ 208,179 $ 154,872 $ 97,137 $ 138,908 $ 168,316 $ 21,059 $ — $ 885,585

Current period charge-offs $ — $ 457 $ 121 $ — $ 91 $ 17 $ — $ — $ 686

SBA— real estate

Pass $ 31,920 $ 44,504 $ 26,188 $ 22,732 $ 28,244 $ 64,442 $ — $ — $ 218,030

Special mention — — — — — 1,428 — — 1,428

Substandard — 1,787 1,079 1,136 — 1,235 — — 5,237

Doubtful — — — — — — — — —

Subtotal $ 31,920 $ 46,291 $ 27,267 $ 23,868 $ 28,244 $ 67,105 $ — $ — $ 224,695

Current period charge-offs $ — $ — $ 46 $ — $ — $ — $ — $ — $ 46

SBA—non-real estate

C&I 116,396 — 279 276 116,951

Pass $ 5,408 $ 2,584 $ 200 $ 1,556 $ 950 $ 3,423 $ — $ — $ 14,121

Special mention — — — — — — — — —

Substandard — 591 — — — 187 — — 778

Doubtful — — — — — 98 — — 98

Subtotal $ 5,408 $ 3,175 $ 200 $ 1,556 $ 950 $ 3,708 $ — $ — $ 14,997

Current period charge-offs $ — $ — $ — $ — $ — $ 35 $ — $ — $ 35

Pass $ 15,117 $ 17,939 $ 22,098 $ 4,695 $ 1,720 $ 1,734 $ 55,106 $ 2,561 $ 120,970

Special mention — — — — — — — — —

Substandard — — — — — — — — —

Doubtful — — — — — — — — —

Subtotal $ 15,117 $ 17,939 $ 22,098 $ 4,695 $ 1,720 $ 1,734 $ 55,106 $ 2,561 $ 120,970

Current period charge-offs $ 17 $ — $ 80 $ — $ — $ — $ — $ — $ 97

Home mortgage

Consumer 1,467 — — — 1,467

Total $ 1,674,422 $ 563 $ 3,031 $ 276 $ 1,678,292

Pass $ 72,182 $ 304,346 $ 79,585 $ 18,634 $ 8,939 $ 31,848 $ — $ — $ 515,534

Special mention — — — — — — — — —

Substandard — 2,241 249 — — — — — 2,490

Doubtful — — — — — — — — —

Subtotal $ 72,182 $ 306,587 $ 79,834 $ 18,634 $ 8,939 $ 31,848 $ — $ — $ 518,024

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —

Pass $ 4 $ — $ — $ — $ 77 $ — $ 1,493 $ — $ 1,574

Special mention — — — — — — — — —

Substandard — — — — — — — — —

Doubtful — — — — — — — — —

Subtotal $ 4 $ — $ — $ — $ 77 $ — $ 1,493 $ — $ 1,574

Current period charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —

Pass $ 221,745 $ 577,233 $ 282,943 $ 144,754 $ 178,838 $ 264,767 $ 77,658 $ 2,561 $ 1,750,499

Special mention — — — — — 1,428 — — 1,428

Substandard — 4,938 1,328 1,136 — 6,418 — — 13,820

Doubtful — — — — — 98 — — 98

Subtotal $ 221,745 $ 582,171 $ 284,271 $ 145,890 $ 178,838 $ 272,711 $ 77,658 $ 2,561 $ 1,765,845

Current period charge-offs $ 17 $ 457 $ 247 $ — $ 91 $ 52 $ — $ — $ 864

(1) Excludes accrued interest receivables of $ 7.3 million as of December 31, 2023.

24 unchanged sentences

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.

As a lessee, the Company enters into leases of buildings and our real estate leases primarily relate to bank branches and office space from nonaffiliated parties with remaining lease terms ranging from 1 to 10 years years as of December 31, 2023.

December 31, 2024.

Certain lease arrangements contain extension option which are typically around 5 years.

20 unchanged sentences

Operating lease liabilities 7,857 9,341 10,213

Weighted average remaining lease term - operating leases 5.5 years 6.3 years

Weighted average remaining lease term - operating leases 4.7 years 5.5 years 6.3 years

Weighted average discount rate - operating leases 2.45 % 2.47 % 2.44 %

14 unchanged sentences

Total $ 1,193,262

Deposits from principal officers, directors, and their affiliates as of December 31, 2023 and 2022 were $ 1.8 million and $ 810 thousand, respectively.

Deposits from principal officers, directors, and their affiliates as of December 31, 2024 and 2023 were $ 2.3 million and $ 1.8 million, respectively.

Borrowing Arrangements

As of December 31, 2023, the Company had $ 105.0 million advances from FHLB with a weighted average interest rate of 4.65 % and a weighted average remaining term of 0.9 years, compared to no borrowings as of December 31, 2022.

The Company has a letter of credit with the FHLB in the amount of $ 67.0 million to secure a public deposit as of both December 31, 2023 and 2022.

As of December 31, 2024, the Company had $ 95.0 million advances from FHLB with a weighted average interest rate of 4.34 % and a weighted average remaining term of 0.2 years, compared to $ 105.0 million advances with a weighted average interest rate of 4.65 % and a weighted average remaining term of 0.9 years as of December 31, 2023.

The Company has a letter of credit with the FHLB in the amount of $ 100.0 million and $ 67.0 million to secure a public deposit as of December 31, 2024 and 2023, respectively.

The Company had available borrowing capacity from the following institutions as of December 31, 2024:

9 unchanged sentences

Year Ended December 31,

($ in thousands) Year Ended 2023 2022 2021

($ in thousands) 2024 2023 2022

Current income tax expense:

17 unchanged sentences

Stock option expense and related excess tax benefits

( 0.1 ) 0.1 —

Company owned life insurance ( 0.5 ) ( 0.4 ) ( 0.2 )

1 unchanged sentence

Effective tax rate 27.6 % 28.6 % 28.7 %

The significant components of deferred tax assets and liabilities are reflected in the following table:

The significant components of deferred tax assets and liabilities as of December 31, 2024 and 2023 are reflected in the following table:

($ in thousands) 2024 2023

8 unchanged sentences

Net unrealized loss on AFS debt securities 6,394 6,485

Net unrealized loss on swap 75 —

Nonaccrual loan interest income 224 224

Other 242 279

Total deferred tax assets 18,253 17,756

16 unchanged sentences

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 (“SBLC”s).

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 risk limitation reviews as those instruments recorded on the Consolidated Balance Sheets.

5 unchanged sentences

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 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.

16 unchanged sentences

Under the proportional amortization method, the Company amortizes the initial cost of the investment in proportion to the tax credit and other benefits received and recognizes the amortization in income tax expense on the Consolidated Statements of Income.

The Company recognized amortization expense of $ 1.3 million, $ 697 thousand and $ 522 thousand for the years ended December 31, 2023, 2022 and 2021, respectively.

Additionally, the Company recognized tax credits and other benefits from the investments in low-income housing partnerships of $ 1.7 million, $ 926 thousand and $ 651 thousand for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company recognized amortization expense of $ 1.7 million, $ 1.3 million and $ 697 thousand for the years ended December 31, 2024, 2023 and 2022, respectively.

Additionally, the Company recognized tax credits and other benefits from the investments in low-income housing partnerships of $ 2.5 million, $ 1.7 million and $ 926 thousand for the years ended December 31, 2024, 2023 and 2022, respectively.

Stock-Based Compensation

The Company has three stock-based compensation plans currently in effect as of December 31, 2023, as described further below.

Total compensation cost that has been charged against earnings for these plans for the years ended December 31, 2023, 2022 and 2021 was $ 1.3 million, $ 1.2 million and $ 558 thousand, respectively.

In 2005, the Board of Directors and shareholders of the Bank approved a stock option plan for the benefit of directors and employees of the Bank (the “2005 Plan”).

The 2005 Plan was assumed by the Company in 2016 at the time of the bank holding company reorganization.

Under the 2005 Plan, the Bank was authorized to grant options to purchase up to 770,000 shares of the Company’s common stock.

The exercise prices of the options may not be less than 100 % of the fair value of the Company’s common stock at the date of grant.

The options, when granted, vest either immediately or ratably over five years from the date of the grant and expire after ten years if not exercised.

The 2005 Plan expired in 2015, and no future grants can be made under the 2005 Plan.

A summary of the transactions under the 2005 Plan for the year ended December 31, 2023 is as follows:

($ in thousands, except share data) Number of

Outstanding Weighted

Price Aggregate

Outstanding, as of January 1, 2023 30,000 $ 6.18 $ 149

Options granted — —

Options exercised ( 30,000 ) 6.18

Options forfeited — —

Options expired — —

Outstanding, as of December 31, 2023 — $ — $ —

Fully vested and expected to vest — $ — $ —

Vested — $ — $ —

Information related to stock options exercised under the 2005 Plan for the periods indicated follows:

Year Ended December 31,

($ in thousands) 2023 2022 2021

Intrinsic value of options exercised $ 86 $ 113 $ 231

Cash received from option exercises 128 128 64

Tax benefit realized from option exercised 2 2 27

The Company has two stock-based compensation plans currently in effect as of December 31, 2024, as described further below.

Total compensation cost that has been charged against earnings for these plans was $ 1.2 million, $ 1.3 million and $ 558 thousand for the years ended December 31, 2024, 2023 and 2022, respectively.

In 2010, the Board of Directors of the Bank approved a new equity incentive plan for granting stock options and restricted stock awards to key employees, officers, and non-employee directors of the Bank (the “2010 Plan”).

5 unchanged sentences

Restricted stock awards issued under the 2010 Plan may or may not be subject to vesting provisions.

Owners of the restricted stock awards shall have all of the rights of a shareholder including the right to vote the shares and to all

dividends (cash or stock).

Owners of the restricted stock awards shall have all of the rights of a shareholder including the right to vote the shares and to all dividends (cash or stock).

Compensation expense related to restricted stock awards will be recognized over the vesting period of the awards based on the fair value of the Company’s common stock at the issue date.

A summary of the stock options outstanding under the 2010 Plan for the year ended December 31, 2024 is as follows:

($ in thousands, except share data) Number of

Outstanding Weighted

Price Aggregate

($ in thousands, except share data) Number of Options Outstanding Weighted Average Exercise Price Aggregate Intrinsic Value

Outstanding, as of January 1, 2024 60,000 $ 8.00 $ 177

12 unchanged sentences

Tax provision realized from option exercised 24 ( 3 ) —

The weighted average remaining contractual term of stock options outstanding as of December 31, 2023 was 0.3 years.

The weighted average remaining contractual term of stock options that were exercisable as of December 31, 2023 was 0.3 years.

A summary of the changes in the Company's non-vested restricted stock awards under the 2010 Plan for the year ended December 31, 2024 is as follows:

($ in thousands, except share data) Shares Issued Weighted Average Grant Date Fair Value Aggregate

($ in thousands, except share data) Shares Issued Weighted Average Grant Date Fair Value Aggregate Intrinsic Value

Non-vested, as of January 1, 2024 10,000 $ 9.69 $ 110

4 unchanged sentences

Information related to vested restricted stock awards under the 2010 Plan for the periods indicated follows:

Information related to vested restricted stock under the 2010 Plan for the periods indicated follows:

Year Ended December 31,

2023 2022 2021

($ in thousands) 2024 2023 2022

Tax benefit (provision) realized from awards vested $ 19 $ 4 $ —

As of December 31, 2023, the Company had approximately $ 18 thousand of unrecognized compensation cost related to unvested restricted stock awards under the 2010 Plan.

The Company expects to recognize these costs over a weighted average period of 0.9 years.

In 2021, the Board of Directors of the Company approved a new equity incentive plan for granting stock options and restricted stock awards to key employees, officers, and non-employee directors of the Company and the Bank (the “2021 Plan”).

7 unchanged sentences

A summary of the changes in the Company’s non-vested restricted stock awards under the 2021 Plan for the year ended December 31, 2024 is as follows:

($ in thousands, except share data) Shares

Fair Value Aggregate

($ in thousands, except share data) Shares Issued

Weighted Average Grant Date Fair Value Aggregate Intrinsic Value

Non-vested, as of January 1, 2024 278,851 $ 11.45 $ 3,053

6 unchanged sentences

($ in thousands) 2024 2023 2022

Tax benefit (provision) realized from awards vested $ ( 34 ) $ 12 $ —

Tax provision realized from awards vested $ ( 3 ) $ ( 34 ) $ 12

There were 1,078,188 shares available for future grants of either stock options or restricted stock awards under the 2021 Plan as of December 31, 2024.

25 unchanged sentences

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.

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, 2024 and 2023 are summarized below:

12 unchanged sentences

Mutual fund - CRA qualified 3,532 3,532 — —

Derivative financial instruments 368 — 368 —

Derivative financial instruments $ 579 $ — $ 579 $ —

December 31, 2023

2 unchanged sentences

Residential collateralized mortgage obligations 144,459 — 144,459 —

Municipal securities - tax exempt 5,914 — 5,914 —

Other investments:

6 unchanged sentences

Collateral-dependent loans are loans where repayment is expected to be provided solely by the sale of the underlying collateral and there are no other available and reliable sources of repayment.

Prior to the adoption of ASU 2016-13, impaired loans were evaluated and valued at the time the loan was identified as impaired, at the lower of cost or fair value.

Fair value for both collateral-dependent and impaired 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.

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.

4 unchanged sentences

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.

Appraised values are

reviewed by management using historical knowledge, market considerations, and knowledge of the client and client’s business.

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, 2024 and 2023:

7 unchanged sentences

Collateral-dependent loans:

Commercial real estate $ 173 $ — $ — $ 173

SBA—real estate 952 — — 952

OREO 1,237 — — 1,237

Total $ 2,362 $ — $ — $ 2,362

December 31, 2023

Impaired loans:

Collateral-dependent loans:

SBA—real estate $ 1,432 $ — $ — $ 1,432

14 unchanged sentences

Collateral-dependent loans:

Commercial real estate $ 173 Income approach - income capitalization

Capitalization rate 5.5 % to 7.3 %

SBA—real estate 539 Income approach - income capitalization

Capitalization rate 5.5 % to 7.3 %

SBA—real estate 413 Sales comparison Market data / purchase price n/a n/a

OREO $ 1,237 Sales comparison approach Market data comparison ( 3.7 )% to 2.2 %

December 31, 2023

Impaired loans:

SBA—real estate $ 423 Income approach - income capitalization Capitalization rate 11.5 % 11.5 %

Collateral-dependent loans:

SBA—real estate $ 1,432 Income approach - income capitalization Capitalization rate 9.3 % to 11.0 %

(1) Weighted-average of inputs is based on the relative fair value of the respective assets as of December 31, 2024 and 2023.

7 unchanged sentences

Cash and cash equivalents $ 134,943 $ 134,943 $ — $ — $ 134,943

Loans held for sale 4,581 — 4,946 — 4,946

Loans receivable, net 1,932,056 — — 1,986,813 1,986,813

3 unchanged sentences

Time deposits placed 100 — 100 — 100

Servicing assets 11,741 — — 17,218 17,218

Financial liabilities:

7 unchanged sentences

Cash and cash equivalents $ 91,216 $ 91,216 $ — $ — $ 91,216

Loans held for sale 44,335 — 47,217 — 47,217

Loans receivable, net 1,743,852 — — 1,793,258 1,793,258

3 unchanged sentences

Time deposits placed 95 — 95 — 95

Servicing assets 12,759 — — 16,845 16,845

Financial liabilities:

Deposits 1,807,558 — 1,808,444 — 1,808,444

FHLB advances 105,000 — 104,231 — 104,231

Accrued interest payable 12,628 — 12,628 — 12,628

Derivative Financial Instruments

Risk Management Objective of Using 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 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.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements.

To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy.

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

During 2024, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

The Company had no fair value hedges nor derivatives not designated as hedges as of December 31, 2024.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income ("OCI") and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings.

Amounts reported in accumulated OCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt.

During the next 12 months, the Company estimates that an additional $ 47 thousand will be reclassified as a reduction to interest expense.

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, 2024:

Derivative Assets Derivative Liabilities

($ in thousands) Notional Amount Balance Sheet Location Fair Value Notional Amount Balance Sheet Location Fair Value

As of December 31, 2024

Derivatives designated as hedging instruments:

Interest rate products $ 25,000 Other assets $ 368 $ 50,000 Other liabilities $ 579

Total derivatives designated as hedging instruments $ 368 $ 579

As of December 31, 2023, the Company had no derivative financial instruments.

The table below presents the effect of cash flow hedge accounting on accumulated OCI for the and year ended December 31, 2024:

Derivatives in Subtopic 815-20 Hedging Relationships

($ in thousands)

Amount of Gain (Loss) Recognized in OCI on Derivative Amount of Gain (Loss) Recognized in OCI Included Component Amount of Gain (Loss) Recognized in OCI Excluded Component Location of Gain (Loss) Recognized from Accumulated OCI into Income Amount of Gain (Loss) Reclassified from Accumulated OCI into Income Amount of Gain (Loss) Reclassified from Accumulated OCI into Income Included Component Amount of Gain (Loss) Reclassified from Accumulated OCI into Income Excluded Component

Derivatives in cash flow hedging relationships:

Interest rate products $ 75 $ 75 $ — Interest expense $ 328 $ 328 $ —

Total $ 75 $ 75 $ — $ 328 $ 328 $ —

The Company had no derivative instruments that affect accumulated OCI for the years ended December 31, 2023 and 2022.

The table below presents the effect of the Company’s derivative financial instruments on the Statement of Income for the year ended December 31, 2024:

Year Ended December 31, 2024

($ in thousands) Interest Expense

Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded $ 328

The effects of cash flow hedging:

Gain (loss) on cash flow hedging relationships in Subtopic 815-20

Interest contracts

Amount of loss reclassified from accumulated OCI into income $ 328

Amount of gain (loss) reclassified from accumulated OCI into income as a result that a forecasted transaction is no longer probable of occurring —

Amount of loss reclassified from accumulated OCI into income - included component 328

Amount of gain (loss) reclassified from accumulated OCI into income - excluded component —

The Company had no derivative instruments that affect statement of income for the years ended December 31, 2023 and 2022.

The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of December 31, 2024.

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:

Offsetting of Derivative Assets

Gross Amounts of Recognized Assets Gross Amounts Offset in the Balance Sheet Net Amounts of Assets presented in the Balance Sheet Gross Amounts Not Offset in the Balance Sheet

($ in thousands) Financial Instruments Cash Collateral Received Net Amount

As of December 31, 2024

Derivatives $ 368 $ — $ 368 $ — $ 368 $ —

Total $ 368 $ — $ 368 $ — $ 368 $ —

Offsetting of Derivative Liabilities

Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Liabilities presented in the Balance Sheet Gross Amounts Not Offset in the Balance Sheet

($ in thousands) Financial Instruments Cash Collateral Posted Net Amount

As of December 31, 2024

Derivatives $ 579 $ — $ 579 $ — $ 579 $ —

Total $ 579 $ — $ 579 $ — $ 579 $ —

As of December 31, 2023, the Company had no derivative financial instruments.

Regulatory Capital Matters

10 unchanged sentences

December 31, 2024

Capital Adequacy

Purposes Minimum

To be Considered

"Well Capitalized"

Required for Capital Adequacy Purposes Minimum To be Considered "Well Capitalized"

($ in thousands) Amount Ratio Amount Ratio Amount Ratio

13 unchanged sentences

December 31, 2023

Capital Adequacy

Purposes Minimum

To be Considered

"Well Capitalized"

Required for Capital Adequacy Purposes Minimum To be Considered "Well Capitalized"

($ in thousands) Amount Ratio Amount Ratio Amount Ratio

16 unchanged sentences

The Company grants restricted stock awards, which entitle recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to dividends paid to holders of the Company's common stock.

These restricted stock awards meet the definition of participating

securities based on their respective rights to receive nonforfeitable dividends, and they are treated as a separate class of securities in computing basic EPS.

These restricted stock awards meet the definition of participating securities based on their respective rights to receive nonforfeitable dividends, and they are treated as a separate class of securities in computing basic EPS.

Participating securities are not included as incremental shares in computing diluted EPS.

23 unchanged sentences

Investment in bank subsidiary 203,278 190,855

Deferred tax assets — 21

Other assets 390 177

10 unchanged sentences

Occupancy and equipment 56 49 49

FDIC insurance and regulatory assessments — — 8

Directors’ fees 219 228 214

27 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures