OP Bancorp 10-K

Item 9A. Controls and Procedures. Evaluation of disclosure controls and procedures The Company’s management, including our President and Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered in this Form 10-K . Based on such evaluation, our President and Chief Executive Officer and our Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective as of that date to provide reasonable assurance that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its President and Chief Executive Officer and its Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management’s Annual Report on Internal Control over Financial Reporting The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). 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, 2025, 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; and • 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. 49 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, 2025, 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 Form 10-K , has issued an audit report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025. 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 by this Form 10-K , 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 In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Item 9B. Other Information. None of the Company's directors or Section 16 reporting officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement (in each case, as defined in Item 408 of Regulation S-K) for the repurchase or sale of the Company's securities during the quarter ended December 31, 2025. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 50 PART III Item 10. Directors, Executive Officers and Corporate Governance. Information required by this item will be set forth in the following sections of the Company's proxy statement relating to its 2026 annual meeting of shareholders (the "2026 Proxy Statement"), which will be filed with the SEC pursuant to Regulation 14A within 120 days of the Company's fiscal year ended December 31, 2025, and is incorporated herein by reference: • Proposal 1: Election of Directors • Information about Directors and Executive Officers — The Board of Directors, Board Leadership Structure, Risk Management and Oversight, Committees of the Board, and Executive Officers of the Company • Corporate Governance and Board Matters — Board of Directors, Code of Business Conduct and Business Ethics Policy, and Reporting of Complaints/Concerns Regarding Accounting or Auditing Matters • Delinquent Section 16(A) Reports Item 11. Executive Compensation. Information included under the following sections in the 2026 Proxy Statement is incorporated herein by reference: • Executive Compensation — Summary Compensation Table, Chief Executive Officer Agreement, Management Incentive Plan, Benefits and Other Perquisites, Executive Change in Control Plan, Pay Versus Performance, Equity Based Plan, Outstanding Equity Awards, and Director Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Information included under the following sections in the 2026 Proxy Statement is incorporated herein by reference: • Beneficial Ownership of Common Stock The following table summarizes our equity compensation plans as of December 31, 2025: Securities Authorized for Issuance Under Equity Compensation Plans Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) Weighted average exercise price of outstanding options, warrants and rights (b) Number of securities remaining available for future issuance under equity compensation plans excluding securities reflected in Column (a) (c) (1) Equity compensation plans approved by security holders 131,025 $ 12.51 1,062,190 Equity compensation plans not approved by security holders — — — Total 131,025 $ 12.51 1,062,190 (1) Represents future shares available under the stockholders-approved 2021 Plan effective June 24, 2021. 51 Item 13. Certain Relationships and Related Transactions, and Director Independence. Information included under the following sections in the 2026 Proxy Statement is incorporated herein by reference: • Information about Directors and Executive Officers — Policies and Procedures Regarding Related Party Transactions • Corporate Governance and Board Matters — Board of Directors Item 14. Principal Accountant Fees and Services. Information included under the following section in the 2026 Proxy Statement is incorporated herein by reference: • Proposal 4 — Ratification of Independent Registered Public Accounting Firm 52 PART IV Item 15. Exhibits and Financial Statements. Exhibit Number Description 3.1 Articles of Incorporation of OP Bancorp (incorporated herein by reference to Exhibit 3.1 to the Registrant’s Form S-1 Registration Statement (Registration No. 333-223444) filed on March 5, 2018) 3.2 Amended and Restated Bylaws of OP Bancorp (incorporated herein by reference to Exhibit 3.2 to the Registrant’s Form S-1 Registration Statement (Registration No. 333-223444) filed on March 5, 2018) 3.3 First Amendment to the Amended and Restated Bylaws of OP Bancorp (incorporated herein by reference to Exhibit 3.3 to the Registrant’s Annual Report on Form 10-K (File No. 001-38437) filed on March 15, 2021) 4.1 Specimen common stock certificate of OP Bancorp (incorporated herein by reference to Exhibit 4.1 to the Registrant’s Form S-1 Registration Statement (Registration No. 333-223444) filed on March 5, 2018) 4.2 Description of Securities Registered under Section 12 of Securities Exchange Act of 1934, as amended (incorporated herein by reference to Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K (File No. 001-38437) filed on March 16, 2020) 10.1* Employment Agreement, dated November 1, 2017, between OP Bancorp and Min J. Kim (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Form S-1 Registration Statement (Registration No. 333-223444) filed on March 5, 2018) 10.2* Employment Offer Letter, dated June 10, 2010, from First Standard Bank to Christine Oh (incorporated herein by reference to Exhibit 10.2 to the Registrant’s Form S-1 Registration Statement (Registration No. 333-223444) filed on March 5, 2018) 10.3* Employment Offer Letter, dated September 9, 2013, from First Standard Bank to Ki Won Yoon (incorporated herein by reference to Exhibit 10.4 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. 333-223444) filed on March 5, 2018) 10.9* OP Bancorp Change in Control Severance Plan (incorporated herein by reference to Exhibit 10.13 to the Registrant’s Form S-1 Registration Statement (Registration No. 333-223444) filed on March 5, 2018) 10.10* Form of Indemnification Agreement entered into with all of the directors and executive officers of OP Bancorp (incorporated herein by reference to Exhibit 10.14 to the Registrant’s Form S-1 Registration Statement (Registration No. 333-223444) filed on March 5, 2018) 10.11 Coexistence Agreement with Open Bank S.A. (incorporated herein by reference to Exhibit 10.15 to the Registrant’s Form S-1 Registration Statement (Registration No. 333-223444) filed on March 5, 2018) 10.12* Employment Offer Letter, dated September 24, 2020, from Open Bank to Sang Kyo Oh (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-38437) filed on October 1, 2020) 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 Registrant's Annual Report on Form 10-K (File No. 001-38437) filed on March 18, 2022). 10.14* Addendum to Employee Agreement, dated June 24, 2021, between OP Bancorp, Open Bank and Min J. Kim (incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-38437) filed on June 25, 2021) 10.15* 2021 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.6 to the Registrant’s Form S-8 Registration Statement (Registration No. 333-257362) filed on June 24, 2021 53 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). 10.17* Employee Agreement, dated July 1, 2025, between OP Bancorp, Open Bank, and Sang K. Oh incorporated by reference to the Current Report on Form 8-K, filed by the Registrant on May 29, 2025 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. 333-223444) filed on March 5, 2018) 23.1 Consent of Crowe, LLP, filed herewith 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. 31.2 Certification of Principal Financial 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. 32.1 Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1 OP Bancorp Incentive Compensation Recovery Policy, filed herewith. 101.INS Inline XBRL Instance Document, filed herewith. 101.SCH Inline XBRL Taxonomy Extension Schema Document, filed herewith. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document, filed herewith. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document, filed herewith. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document, filed herewith. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document, filed herewith. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101). *Denotes management contract or compensatory plan or arrangement. Item 16. Form 10-K Summary. None. 54 SIGNATURES 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 . OP Bancorp Date: March 13, 2026 By: /s/ Sang K. Oh Sang K. Oh President and Chief Executive Officer POWER OF ATTORNEY AND SIGNATURES KNOW ALL PERSONS BY THESE PRESENT, that each person whose signature appears below constitutes and appoints each of Sang K. Oh and Jaehyun Park, his or her attorney-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Signature / Name Title Date /s/ SANG K. OH President, Chief Executive Officer and Director (Principal Executive Officer) March 13, 2026 Sang K. Oh /s/ JAEHYUN PARK Executive Vice President & Chief Financial Officer (Principal Financial and Accounting Officer) March 13, 2026 Jaehyun Park /s/ MIN J. KIM Director March 13, 2026 Min J. Kim /s/ HYUNG J. KIM Director March 13, 2026 Hyung J. Kim /s/ SUNNY KWON Director March 13, 2026 Sunny Kwon /s/ YONG SIN SHIN Director March 13, 2026 Yong Sin Shin /s/ MYUNG SHIN SOHN Director March 13, 2026 Myung Shin Sohn /s/ KI WON YOON Director March 13, 2026 Ki Won Yoon 55 Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID Number 173 ). F- 1 Consolidated Balance Sheets as of December 31, 2025 and 2024. F- 4 Consolidated Statements of Income for the Years Ended December 31, 2025, 2024 and 2023. F- 5 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2025, 2024 and 2023. F- 6 Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2025, 2024 and 2023. F- 7 Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024 and 2023. F- 8 Notes to Consolidated Financial Statements. F- 10 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Shareholders and the Board of Directors of OP Bancorp Los Angeles, California 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, 2025 and 2024, 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, 2025, 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, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025 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, 2025, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO. 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. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. 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. 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, F-1 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. 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. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Allowance for Credit Losses – Loans As of December 31, 2025, the Bank had a gross loan portfolio of $2.19 billion and a related allowance for credit losses (ACL) on loans of $28.0 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. The Company’s qualitative framework is designed to quantify the credit risk impact of other trends and changes within the loan portfolio. The parameters for making adjustments are established under a credit risk matrix that provides different possible scenarios for the qualitative factor adjustments. We identified auditing the qualitative factor adjustments to the allowance for credit losses on loans to be a critical audit matter as it involved significant audit effort and especially subjective auditor judgment to evaluate the subjective judgment made by management related to the determination of qualitative factor adjustments, including the development of the qualitative framework. The primary procedures we performed to address this critical audit matter included: • 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. F-2 Crowe LLP We have served as the Company's auditor since 2016. Los Angeles, California March 13, 2026 F-3 OP BANCORP AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS December 31, ($ in thousands) 2025 2024 ASSETS Cash and due from banks $ 10,911 $ 12,267 Interest-bearing deposits with banks 156,400 122,676 Cash and cash equivalents 167,311 134,943 AFS debt securities, at fair value 192,785 185,909 Other investments 17,208 16,437 Loans held-for-sale 11,443 4,581 Net Loans (net of allowance for credit losses of $ 27,975 and $ 24,796 ) 2,165,694 1,932,056 Premises and equipment, net 5,744 5,449 Accrued interest receivable 10,482 9,188 Servicing assets 10,057 10,834 Company owned life insurance 23,616 22,912 Deferred tax assets ("DTA"), net 12,438 14,893 Other real estate owned ("OREO") — 1,237 Operating right-of-use ("ROU") assets 8,804 7,415 Other assets 24,644 20,159 Total assets $ 2,650,226 $ 2,366,013 LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities Deposits: Noninterest-bearing $ 520,865 $ 504,928 Interest-bearing: Money market and others 388,066 329,095 Time deposits greater than $250 683,956 565,813 Other time deposits 687,660 627,449 Total deposits 2,280,547 2,027,285 Federal Home Loan Bank ("FHLB") advances 75,000 95,000 Subordinated note (net of unamortized debt issuance cost of $ 414,000 ) 24,586 — Accrued interest payable 14,595 16,067 Operating lease liabilities 11,175 7,857 Other liabilities 16,430 14,811 Total liabilities 2,422,333 2,161,020 Shareholders’ equity Preferred stock no par value; 10,000,000 shares authorized; no shares issued or outstanding — — Common stock – no par value; 50,000,000 shares authorized; 14,889,540 and 14,819,866 shares issued and outstanding 73,018 73,697 Additional paid-in capital 11,849 11,928 Retained earnings 153,283 134,781 Accumulated other comprehensive loss, net of tax ( 10,257 ) ( 15,413 ) Total shareholders’ equity 227,893 204,993 Total liabilities and shareholders' equity $ 2,650,226 $ 2,366,013 See accompanying notes to consolidated financial statements F-4 OP BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, ($ in thousands, except per share data) 2025 2024 2023 INTEREST INCOME Interest and fees on loans $ 136,874 $ 124,361 $ 110,463 Interest on AFS debt securities 6,312 6,227 6,131 Other interest income 7,142 7,032 5,071 Total interest income 150,328 137,620 121,665 Interest expense Interest on deposits 68,849 68,121 49,435 Interest on borrowings 2,853 3,891 3,543 Interest on subordinated note 278 — — Total interest expense 71,980 72,012 52,978 Net interest income 78,348 65,608 68,687 Provision for credit losses 3,580 2,757 1,651 Net interest income after provision for credit losses 74,768 62,851 67,036 NONINTEREST INCOME Service charges on deposits 3,204 3,261 2,123 Loan servicing fees, net of amortization 3,281 2,898 2,449 Gains on sale of loans 7,070 8,313 7,843 Other income 2,777 1,955 1,766 Total noninterest income 16,332 16,427 14,181 NONINTEREST EXPENSE Salaries and employee benefits 35,987 31,717 29,593 Occupancy and equipment 6,760 6,673 6,490 Data processing and communication 1,456 2,245 2,109 Professional fees 1,793 1,535 1,571 FDIC insurance and regulatory assessments 1,783 1,672 1,457 Promotion and advertising 505 533 614 Directors’ fees 677 640 680 Foundation donation and other contributions 2,570 2,108 2,400 Other expenses 4,242 3,076 2,812 Total noninterest expense 55,773 50,199 47,726 INCOME BEFORE INCOME TAX EXPENSE 35,327 29,079 33,491 Income tax expense 9,692 8,010 9,573 NET INCOME $ 25,635 $ 21,069 $ 23,918 EARNINGS PER SHARE("EPS") - BASIC $ 1.72 $ 1.39 $ 1.55 EPS - DILUTED $ 1.72 $ 1.39 $ 1.55 See accompanying notes to consolidated financial statements F-5 OP BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year Ended December 31, ($ in thousands) 2025 2024 2023 Net income $ 25,635 $ 21,069 $ 23,918 Other comprehensive income, net of tax Net change in AFS debt securities 5,579 216 2,392 Net change in cash flow hedge ( 423 ) ( 178 ) — Total other comprehensive income 5,156 38 2,392 Comprehensive income $ 30,791 $ 21,107 $ 26,310 See accompanying notes to consolidated financial statements F-6 OP BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Shareholders’ Equity ($ in thousands, except per share data) Shares Outstanding Amount Balance at December 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 ) Net income — — — 23,918 — 23,918 Other comprehensive income — — — — 2,392 2,392 Stock issued under stock-based compensation plans, net of shares withheld to satisfy tax liability 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 at December 31, 2023 15,000,436 76,280 10,942 120,855 ( 15,451 ) 192,626 Net income — — — 21,069 — 21,069 Other comprehensive income — — — — 38 38 Stock issued under stock-based compensation plans, net of shares withheld to satisfy tax liability 98,058 160 ( 197 ) — — ( 37 ) Stock-based compensation, net — — 1,183 — — 1,183 Repurchase of common stock ( 278,628 ) ( 2,743 ) — — — ( 2,743 ) Cash dividends declared ($ 0.48 per share) — — — ( 7,143 ) — ( 7,143 ) Balance at December 31, 2024 14,819,866 73,697 11,928 134,781 ( 15,413 ) 204,993 Net income — — — 25,635 — 25,635 Other comprehensive income — — — — 5,156 5,156 Stock issued under stock-based compensation plans, net of shares withheld to satisfy tax liability 135,061 — ( 778 ) — — ( 778 ) Stock-based compensation, net — — 699 — — 699 Repurchase of common stock (1) ( 65,387 ) ( 679 ) — — — ( 679 ) Cash dividends declared ($ 0.48 per share) — — — ( 7,133 ) — ( 7,133 ) Balance at December 31, 2025 14,889,540 $ 73,018 $ 11,849 $ 153,283 $ ( 10,257 ) $ 227,893 (1) As of December 31, 2025, the Company had repurchased 2,364,015 shares of common stock at an aggregate cost of $ 20.9 million. Repurchased shares may be reissued in accordance with the Company's Articles of Incorporation and applicable state law. See accompanying notes to consolidated financial statements F-7 OP BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, ($ in thousands) 2025 2024 2023 Cash flows from operating activities Net income $ 25,635 $ 21,069 $ 23,918 Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: Provision for credit losses 3,580 2,757 1,651 Deferred income tax expense (benefit) 81 ( 1,600 ) 3 Depreciation, amortization and accretion, net 7,264 4,648 4,474 Gains on sale of loans ( 7,070 ) ( 8,313 ) ( 7,843 ) Stock-based compensation 699 1,183 1,297 Earnings on company owned life insurance ( 704 ) ( 679 ) ( 620 ) OREO valuation adjustment and loss on sale 56 — — Proceed from OREO sale 829 — — Origination of loans held-for-sale ( 133,023 ) ( 134,666 ) ( 107,610 ) Proceeds from sales of loans held-for-sale 130,504 137,352 154,593 Net change in: Accrued interest receivable and other assets ( 2,280 ) 10,450 ( 8,132 ) Accrued interest payable and other liabilities 590 ( 958 ) 6,026 Net cash provided by operating activities 26,161 31,243 67,757 Cash flows from investing activities Net change in loans receivable ( 211,559 ) ( 183,557 ) ( 57,932 ) Proceeds from matured, called, or paid-down AFS debt securities 30,720 27,671 24,368 Purchase of AFS debt securities ( 29,623 ) ( 19,082 ) ( 5,647 ) Purchase of loans ( 23,723 ) ( 6,421 ) ( 27,604 ) Purchase of FHLB stock ( 541 ) ( 87 ) ( 4,045 ) Purchase of premises and equipment, net ( 2,801 ) ( 1,562 ) ( 2,184 ) Net change in investments in low-income housing partnerships ( 5,485 ) ( 4,282 ) ( 2,843 ) Net cash used in investing activities ( 243,012 ) ( 187,320 ) ( 75,887 ) Cash flows from financing activities Net change in deposits 253,262 219,727 ( 78,213 ) Proceeds from stock option exercise — 160 888 Proceeds from FHLB advances 125,000 20,000 105,000 Repayment of FHLB advances ( 145,000 ) ( 30,000 ) — Proceeds from issuance of subordinated note, net of cost 24,574 — — Repurchase of common stock ( 706 ) ( 2,743 ) ( 3,934 ) Cash dividend paid on common stock ( 7,133 ) ( 7,143 ) ( 7,269 ) Payments related to tax-withholding for vested restricted stock awards ( 778 ) ( 197 ) ( 98 ) Net cash provided by financing activities 249,219 199,804 16,374 Net change in cash and cash equivalents 32,368 43,727 8,244 Cash and cash equivalents at beginning of period 134,943 91,216 82,972 Cash and cash equivalents at end of period $ 167,311 $ 134,943 $ 91,216 F-8 Supplemental cash flow information: Cash paid during the period for: Income taxes Federal $ 4,350 $ 5,000 $ 4,436 State/Local California 2,891 3,050 3,880 All other states 228 213 77 Total income taxes paid $ 7,469 $ 8,263 $ 8,393 Interest $ 73,452 $ 68,573 $ 43,121 Supplemental noncash disclosure: Initial recognition of right-of-use assets $ 3,536 $ 984 $ 1,369 New commitments to low income housing partnership investments 5,000 — 6,000 Transfer of loan to OREO — 1,237 — See accompanying notes to consolidated financial statements F-9 OP BANCORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Significant Accounting Policies Organization OP Bancorp is a California-based bank holding company for Open Bank, an FDIC-insured, state-chartered financial institution headquartered in Los Angeles. The Bank operates twelve full-service branches across California, Washington, Nevada and Texas, and five loan production offices in California, Georgia, Washington, Colorado, and Virginia. The Bank offers a full range of banking services to individuals and businesses Significant Accounting Policies Basis of Presentation and Principles of Consolidation: The accounting and reporting policies of the Company are prepared in accordance with GAAP and prevailing practices within the financial services industry. The Company's Consolidated Financial Statements include the accounts of OP Bancorp and its wholly owned bank subsidiary, Open Bank. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain items within the Consolidated Financial Statements and accompanying notes for the prior years have been reclassified to conform to the 2025 presentation. Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that have a significant impact on the amounts reported within the Consolidated Financial Statements. The Company employs processes that rely on management's significant estimates and the judgments, particularly when determining the allowance for credit losses, income taxes, as well as certain fair value measurements. As with any estimate, actual results may differ from those estimates. Segments: The Chief Executive Officer, as our Chief Operating Decision Maker (“CODM”), oversees the business as one reportable operating segment at the consolidated level. The CODM uses consolidated net income, along with net interest income, noninterest income and key noninterest expense categories such as compensation and benefits, information services, occupancy and general, administrative and other, to allocate resources and assess company performance. Cash and Cash equivalents: Cash and cash equivalents include cash, deposits with other financial institutions with original maturities less than 90 days, and federal funds sold. Debt Securities: Debt securities purchased that the Company has the positive intent and ability to hold to their maturity classified as HTM and carried at amortized cost, net of allowance for credit losses. Debt securities not classified as trading or HTM securities are classified as AFS and carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax. Interest income including amortization of premium or accretion of discount is recognized on the level-yield method without anticipating prepayments. Gains and losses on sales are recorded on the trade date and determined using the specific identification method. AFS debt securities are measured for impairment if their fair value is less than the amortized cost. For ASF debt securities in an unrealized loss position, management evaluates whether the decline in fair value has resulted in from a credit-related loss or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. Management (1) recognizes an allowance for credit losses by a charge to earnings for the credit-related component of the decline in fair value, and (2) recognizes in other comprehensive income (loss) any non-credit related components of the fair value decline. 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 amortized cost of the AFS debt securities does not include accrued interest. The Company has made an accounting policy election not to recognize an allowance for credit losses for accrued interest receivable on AFS debt securities as the Company reverses any accrued interest if F-10 an AFS debt security is impaired. For additional information on allowance for credit losses on AFS debt securities, see Note 2. Securities to the Consolidated Financial Statements in this Form 10-K. Equity Securities: The Company's investment in equity securities consist of both marketable and non-marketable equity securities: • Marketable equity securities — When equity securities have readily determinable fair value such as mutual funds, they are carried at fair value, with unrealized gains and losses included in Other income on the Consolidated Statement of Income. The Company's CRA mutual funds are included in Other investments on the Consolidated Balance Sheet. • Non-marketable equity securities — When equity securities do not have readily determinable fair value such as FHLB and PCBB stock, they are recorded at their cost minus impairment. The Company's FHLB and PCBB stock are included Other investments on the Consolidated Balance Sheet. Both cash and stock dividends are reported in Other interest income on the Consolidated Statement of Income. Loans Held-for-Sale: Loans are classified as held-for-sale when they are specifically identified as available for immediate sale and management has formally committed to a plan to sell them. These loans are recorded at the lower of cost or fair value less costs to sell. In accordance with the Company's periodic evaluation process, certain loans may be reclassified from held-for-investment to held-for-sale. Any reduction in carrying value at the time of transfer is recognized as a charge-off against the allowance for credit losses. Loan origination fees, net of certain direct origination costs, are deferred until the sale and are factored into the lower of cost or fair value assessment and/or the gain or loss recognized upon sale. If the fair value of a loan is less than its cost, a valuation allowance is established with a corresponding charge to noninterest income. Should a loan or a portion thereof, become unsalable, it is transferred back to held-for-investment portfolio at the lower of cost or fair value as of the transfer date. Loans Receivable: Loans that management has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are reported at their outstanding principal balance, net of deferred loan fees and costs, and an allowance for credit losses. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment to interest income over the loan's term using the level-yield method without anticipating prepayments. For CRE and C&I loans, the accrual of interest income is discontinued when a loan becomes 90 days past due, unless the loan is well-secured and collection is in process. Consumer loans are generally charged off no later than 120 days past due. Past due status is determined based on the contractual terms of the loan. Loans are placed on nonaccrual status or charged off earlier if collection of principal or interest is deemed doubtful. Nonaccrual loans, and loans past due 90 days still accruing include both smaller-balance homogeneous loans evaluated collectively for impairment and individually assessed loans. All interest accrued but not received on loans placed on nonaccrual status is reversed against interest income. Subsequent interest receipts on such loans are recognized on a cash-basis or cost-recovery method until the loan qualifies for return to accrual status. Loans are returned to accrual status when all contractual principal and interest amounts are current and future payments are reasonably assured. Allowance for Credit Losses on Loans: For loans that share risk characteristics, the Company employs a modeled approach that takes into account current and future economic conditions to estimate lifetime expected losses on a collective basis. With the adoption of CECL, the Company elected not to consider accrued interest receivable in its estimated credit losses as the Company writes off uncollectible accrued interest receivable in a timely manner. Generally, loans are placed on nonaccrual status when they become 90 days or more past due, and any previously accrued but unpaid interest is reversed against interest income. Accrued interest receivable on loans totaled $ 8.8 million and $ 8.1 million as of December 31, 2025 and 2024, respectively. For collectively evaluated loans, the Company uses transition matrices to develop the Probability of Default ("PD") and Loss Given Default ("LGD") approaches, incorporating quantitative factors and qualitative considerations in the calculation of the allowance. The model provides forecasts of PD and LGD based on F-11 national unemployment rates using regression analysis. The Company incorporates future economic conditions using a weighted multiple scenario approach: baseline and adverse. The Company applies a reasonable and supportable period of one year for the baseline scenario and two years for the adverse scenario, after which loss assumptions revert to historical loss information through a one-year reversion period for the baseline scenario and a two-year reversion period for the adverse scenario. The Company segments loan portfolio by major loan type using the Call Report codes and internal loan risk ratings to determine the Bank's allowance for credit losses. The methodologies described above generally rely on historical loss experience to determine the quantitative portion of the allowance for credit losses. The Company also considers other qualitative and macroeconomic variables related to current conditions and reasonable and supportable forecasts that may indicate current expected credit losses could differ from the historical information reflected in the quantitative models. Key qualitative and macroeconomic variables include GDP, unemployment rates, interest rates, asset quality ratios, loan portfolio concentration, California house price index, and CRE price index. The parameters for making adjustments are established under a Credit Risk Matrix that provides different possible scenarios for each of the factors listed below. 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 CECL: • Changes in lending policies and procedures, including changes in underwriting standards and practices for collection, charge-offs, and recoveries; • Actual and expected changes in national and local economic and business conditions and developments in which the institution operates that affect the collectivity of loans; • Changes in the nature and volume of the loan portfolio; • Changes in the experience, ability, and depth of lending management and staff; • Changes in the volume and severity of past due loans, the volume of nonaccrual loans, and the volume and severity of adversely classified loans; • Changes in the quality of the credit review function; • Changes in the value of the underlying collateral for loans that are not collateral-dependent; • The existence, growth, and effect of any concentrations of credit, and • The effect of other external factors, such as the regulatory, legal and technological environments; competition; and events such as natural disasters. For loans that do not share similar risk characteristics such as nonaccrual loans above $ 500 thousand, the Company evaluates these loans on an individual basis. Such nonaccrual loans are considered to have different risk profiles than performing loans and are therefore evaluated individually. The Company elected to collectively assess nonaccrual loans with balances below $ 500 thousand along with the performing and accrual loans, in order to reduce the operational burden of individually assessing small nonaccrual loans with immaterial balances. When a loan is individually evaluated for the allowance for credit losses, the Company uses one of two different asset valuation measurement methods: 1) the present value of future cash flows discounted at the loan’s effective interest rate; or 2) the fair value of the collateral for a collateral-dependent loan. For the collateral-dependent loans, the Company obtains a new "as-is" valuation appraisal to determine an updated fair value of collateral. To ensure that appraised values remain current, the Company obtains updated appraisals every twelve months from a qualified independent appraiser. If the fair value of the collateral is less than the amortized balance of the loan, the Company recognizes an allowance for credit losses with a corresponding charge to the provision for credit losses. The Company maintains a separate allowance for credit losses for its off-balance sheet commitments. The Company uses an estimated funding rate to allocate an allowance to undrawn exposures. This funding rate serves as a credit conversion factor, reflecting the likelihood that undrawn lines of credit may be drawn at any point. The funding rate is determined based on a look-back period of 8 quarters. Credit loss is not estimated for off-balance sheet commitments that are unconditionally cancellable by the Company. F-12 Loan Modifications : The Company follows ASC 310-20 for all loan modifications, including those for borrowers in financial difficulty. A modification is considered a new loan only if: (1) the new term are as favorable as those offered to others with similar risk; and (2) changes to the original loan terms are more than minor. If not, the modification is accounted for as a continuation of the existing loan, prospectively adjusting the effective interest rate. Modification may include rate reductions, principal forgiveness, term extensions, or payment delays, aiming to minimize loss and avoid foreclosure. The Company applies its standard credit loss methodology for all modified loans. Servicing Assets: When loans are sold with servicing retained, the Company initially recognizes servicing assets at fair value, with the resulting impact reflected in gains on sales of loans. Fair value is determined using a valuation model that estimates the present value of expected future net servicing income. This model incorporates assumptions that market participants would use, including servicing costs, the discount rates, prepayment speeds, and default and loss rates. To ensure reliability, the Company compares model inputs and results to published industry benchmarks. After initial recognition, servicing assets are subsequently measured using the amortization method. Under this approach, servicing assets are amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Servicing assets are evaluated for impairment by comparing their fair value to their carrying amount. If fair value is less than carrying amount, impairment is recognized through a valuation allowance, with changes reported in noninterest income. The fair values of servicing rights may fluctuate due to changes in estimated or actual prepayment speeds, default rates, and losses. Servicing fee income, reported as other income, represents fees earned for servicing loans and is based on a contractual percentage of the outstanding principal. These fees are recognized as income when earned. Amortization of servicing assets is netted against loan servicing fee income. Late fees and ancillary fees related to loan servicing are not material. 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 uses interest rate swaps to eliminate or reduce the variability of interest payments on floating rate liability due to changes in contractually specified interest rates. The Company records interest rate swaps on the Consolidated Balance Sheets at fair value in Other assets or Other liabilities . The net increase or decrease in interest rate swaps is included in Accrued interest receivable and other assets or A ccrued interest payable and other liabilities within the statement of cash flows. We enter into International Swaps and Derivatives Association, Inc. ("ISDA") master netting agreements with cash flow hedge counterparty. Where enforceable, these agreements allow the Company to use or liquidate collateral and offset amounts with counterparties in case of default or certain events. For balance sheet presentation, the Company does not elect to use the offsetting option permitted under ASC 210-20-45-1. Accordingly, the interest rate swaps are reported at gross fair value without offsetting assets, liabilities, or collateral, even with netting agreements. Accounting for changes in the fair value of interest rate swaps depends on whether the swaps have been designated as derivatives within a qualifying hedging relationship and whether they meet the criteria required for hedge accounting. Derivatives designated and qualifying as hedges of exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally aligns 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 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. The Company designates interest rate swaps as cash flow hedges for accounting purpose. For cash flow hedges that are designated and qualified, gains or losses are initially recorded in accumulated other comprehensive income ("AOCI"). These amounts are subsequently reclassified into interest expense during the period(s) in which the hedged transactions impact earnings. Specifically, amounts recognized in AOCI related to F-13 these derivatives are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. The Company discontinues hedge accounting when hedging relationship ceases to meet the qualifying criteria (e.g., failing effectiveness tests, instrument expiration, sale, termination, or exercise). Once hedge accounting is discontinued, any subsequent changes in fair value are recorded as non-interest income. For discontinued cash flow hedges where the forecasted cash flows or transactions are still expected to occur, gains or losses that previously accumulated in other comprehensive income are amortized into earnings over the same periods which the hedged transactions will affect earnings. Company Owned Life Insurance: The Company has purchased life insurance policies on primarily certain executives, recorded at the cash surrender value on the consolidated balance sheet, adjusted for expected charges or amounts due at settlement. Transfers of Financial Assets: Financial asset transfers are accounted for as sales when the Company no longer controls assets. Control is considered surrendered once the assets are separated from the Company, the transferee has full right to use or trade the assets without restrictions, and the Company does not retain control through any agreement to repurchase the assets before their mature. Premises and Equipment: Premises and equipment are recorded at cost minus accumulated depreciation. Equipment and furnishings are depreciated over 3 to 10 years , while leasehold improvements are amortized over either the lease term or their useful life, whichever is shorter using straight-line depreciation. Repairs and maintenance are expensed as incurred. Other Real Estate Owned : OREO is property obtained through foreclosure or deed in lieu, recorded at fair value at acquisition. It is carried at the lower of its carrying value or fair value minus estimated cost to sell. Further write-downs are charged to noninterest expense. Income, expenses, and gains or losses from these properties are included in Other income or Other expenses in the Consolidated Statements of Income . Operating Lease Right of Use Assets and Lease Liabilities: Operating lease ROU assets represent the Company's right to use leased property, and operating lease liabilities represent its obligation to make lease payments. Both are measured at the present value of the future minimum lease payments over the lease term at commencement date using the Company's incremental borrowing rate. Lease terms include periods subject to extension or termination options when it is reasonably certain that such options will be exercised. Operating lease ROU assets or lease liabilities are not recognized for short-term leases. Contracts are evaluated at inception to determine if they constitute a lease. The majority of the Company's operating lease agreements relate to branch locations, office space, and certain equipment. Operating lease expense, comprising amortization of operating lease ROU assets and interest on the lease liabilities, is recognized on a straight-line basis throughout the lease term in occupancy expense. Occupancy expense also includes variable lease costs such as utilities, maintenance, property taxes, insurance, and rend adjustments tied to indices like the Consumer Price Index, which are expensed as incurred. Loan Commitments and Related Financial Instruments: Off-balance sheet credit instruments, such as loan commitments and commercial letters of credit, expose the Company to potential loss, which are recorded when funded. Low Income Housing Partnership Investments: Low income housing partnership investments are reported net of amortization using the proportional amortization method and are included in Other assets on the Consolidated Balance Sheets. Tax credits are recognized in Income tax expense on the Consolidated Statement of Income and funding commitments are included to Other liabilities on the Consolidated Balance Sheets. Stock-Based Compensation: The Company grants time-based restricted stock awards ("RSA"), which include service conditions for vesting. Stock-based compensation for these time-based RSA is based on their grant values. Compensation cost is amortized on a straight-time basis over the required service period, generally defined as the vesting period. F-14 Earnings Per Share: Basic EPS is calculated by dividing net income attributable to common shareholders by the weighted-average common shares outstanding during the period. Diluted EPS is calculated by dividing net income attributable to common shareholders by the weighted-average common shares outstanding during the period, adjusted for the dilutive effect of outstanding share-based awards using the treasury stock method. Income Taxes: The Company files consolidated federal and various state tax returns. Income tax expense includes current and deferred components. Current tax reflects taxes payable or refundable for the period. Deferred tax expense results from changes in DTA and deferred tax liabilities ("DTL") between period, and is determined using the asset and liability method. Under the balance sheet method, the net DTA or DTL is based on the tax effects of the difference between the book and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on DTA and DTL is recognized in income in the period that includes the enactment date. DTA is subject to a more-likely-than-not test to determine if the full amount should be recognized in financial statements. The Company assesses the likelihood of realization of DTA based on both positive and negative factors available, including projected future taxable income, recent performance and tax planning. If the test is not met, a valuation allowance is required for the DTA. The Company accounts for uncertainty in income taxes in accordance with ASC 740, which prescribes a two-step approach for evaluating and measuring tax positions. A tax benefit is recognized only when it is more-likely-than-not that the position will be sustained upon examination by the relevant taxing authority based solely on the technical merits of the positions. If a tax position does not meet this recognition threshold, the Company records a liability for unrecognized tax benefits. For tax positions that meet the recognition threshold, the amount of tax benefit recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. Comprehensive Income: Comprehensive income includes both net income and other comprehensive income. Other comprehensive income comprises net changes in unrealized gains and losses on AFS debt securities and cash flow hedges, net of taxes. Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Fair Value of Financial Instruments: Fair values of financial instruments are estimated using relevant market information and other assumptions, as detailed in Note 14. Fair Value of Financial Instruments. These fair value estimates require significant judgment and involve uncertainties related to interest rates, credit risk, prepayments, and other factors, particularly when active markets do not exist for certain items. As a result, changes in assumptions or market conditions could have a substantial impact on these fair value estimates. F-15 Accounting Pronouncements Adopted in 2025 Standard Description Effective Date Effect on Financial Statements ASU 2023-09, I ncome Taxes (Topic 740): Improvements to Income Tax Disclosures ASU 2023-09 amends the disclosure requirements for income taxes, including the requirement for further disaggregation of the income tax rate reconciliation and income taxes paid disclosures. December 31, 2025 The Company adopted ASU 2023-09 on December 31, 2025. The amendments have been applied retrospectively to all prior periods presented. Refer to Note 10. Income Taxes to the Consolidated Financial Statements in this Form 10-K. The following standard was adopted on January 1, 2025, but it did not have a material impact on the Company's Consolidated Financial Statements. • ASU 2024-02, Codification Improvements - Amendments to Remove Reference to the Concepts Statements Accounting Pronouncements Adopted in 2026 The following standards were adopted on January 1, 2026, but they did not have a material impact on the Company's Consolidated Financial Statements: • ASU 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments • ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Account Receivable and Contract Assets Recently Issued Accounting Pronouncements Standard Description Effective Date Effect on Financial Statements ASU 2024-03, Income Statement -Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ASU 2024-03 requires disaggregated disclosure of income statement expenses, including disaggregated information about certain costs/expenses in a table format in the note to the financial statements in both annual and interim financial statements. December 31, 2027 The Company is currently evaluating the impact of this guidance on its Consolidated Financial Statements. ASU 2025-08, Financial Instruments - Credit Losses (Topic 326): Purchased Loans ASU 2025-08 expands the population of acquired financial assets subject to the "gross-up approach" in Topic 326. Under ASU 2025-08, loans excluding credit cards that are acquired without credit deterioration and deemed "seasoned" are subject to the gross-up approach at acquisition. A purchased seasoned loan is non-purchased credit deteriorated (PCD) that are acquired in a business combination or non-PCD that are purchased at least 90 days after origination and the acquirer is not involved in the origination of the loans. January 1, 2027 The Company has evaluated ASU 2025-08 and does not expect the adoption to have a material impact on its Consolidated Financial Statements or disclosures, as the guidance primarily affects prospective acquisitions of seasoned loans. The Company will continue to monitor its activities for any transactions that may be impacted by the new guidance. F-16 Note 2 . Securities The following table summarizes the amortized cost, gross unrealized gains and losses, and fair value of AFS debt securities as of December 31, 2025 and 2024: December 31, 2025 ($ in thousands) Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value U.S. Government agencies or sponsored agency securities: Residential mortgage-backed securities $ 35,279 $ — $ ( 2,585 ) $ 32,694 Residential collateralized mortgage obligations 165,103 1,219 ( 11,859 ) 154,463 Municipal securities - tax exempt 5,913 — ( 285 ) 5,628 Total AFS debt securities $ 206,295 $ 1,219 $ ( 14,729 ) $ 192,785 December 31, 2024 ($ in thousands) Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value U.S. Government agencies or sponsored agency securities: Residential mortgage-backed securities $ 41,521 $ — $ ( 4,445 ) $ 37,076 Residential collateralized mortgage obligations 160,187 312 ( 17,458 ) 143,041 Municipal securities - tax exempt 5,830 37 ( 75 ) 5,792 Total AFS debt securities $ 207,538 $ 349 $ ( 21,978 ) $ 185,909 Expected maturities may differ from contractual maturities on certain securities as the issuers and borrowers of the underlying collateral may have the right to call or prepay obligations with or without call or prepayment penalties. The amortized cost and estimated fair value of AFS debt securities as of December 31, 2025, by contractual maturity, are shown below: ($ in thousands) Amortized Cost Fair Value Within one year $ 30 $ 30 After one year through five years 583 571 After five years through ten years 16,869 15,935 After ten years 188,813 176,249 Total AFS debt securities $ 206,295 $ 192,785 F-17 The following tables present the fair values and the associated gross unrealized losses of AFS debt securities, aggregated by length of time that the securities have been in a continuous unrealized loss position as of December 31, 2025 and 2024: December 31, 2025 Less Than 12 Months 12 Months or Longer Total ($ in thousands) Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss U.S. Government agencies or sponsored agency securities: Residential mortgage-backed securities $ — $ — $ 32,694 $ ( 2,585 ) $ 32,694 $ ( 2,585 ) Residential collateralized mortgage obligations — — 80,404 ( 11,859 ) 80,404 ( 11,859 ) Municipal securities - tax exempt 3,038 ( 57 ) 2,590 ( 228 ) 5,628 ( 285 ) Total AFS debt securities $ 3,038 $ ( 57 ) $ 115,688 $ ( 14,672 ) $ 118,726 $ ( 14,729 ) December 31, 2024 Less Than 12 Months 12 Months or Longer Total ($ in thousands) Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss Fair Value Gross Unrealized Loss U.S. Government agencies or sponsored agency securities: Residential mortgage-backed securities $ 5,442 $ ( 133 ) $ 31,634 $ ( 4,312 ) $ 37,076 $ ( 4,445 ) Residential collateralized mortgage obligations 27,614 ( 214 ) 93,236 ( 17,244 ) 120,850 ( 17,458 ) Municipal securities - tax exempt 895 ( 19 ) 1,788 ( 56 ) 2,683 ( 75 ) Total AFS debt securities $ 33,951 $ ( 366 ) $ 126,658 $ ( 21,612 ) $ 160,609 $ ( 21,978 ) As of December 31, 2025 and 2024, the number of AFS debt securities in an unrealized loss position was 78 and 84 , respectively. The Company monitors credit quality of individual AFS debt securities by evaluating a range of factors, including issuer credit ratings, changes in those ratings over time, market indicators of credit risk, and any adverse economic or sector-specific conditions that may affect the issuer's ability to meet its obligations. These evaluations inform the Company's assessment of the appropriateness of the allowance for credit losses. The gross unrealized losses presented in the preceding tables were primarily attributable to changes in interest rates rather than credit deterioration. As of December 31, 2025 and 2024, the Company's AFS debt securities portfolio was primarily composed of securities issued, guaranteed, or otherwise supported by the U.S. government. These securities were considered to have a zero credit loss assumption, and no material changes in credit ratings or adverse conditions were identified. Approximately 97 % of the portfolio consisted of residential mortgage-backed F-18 securities and collateralized mortgage obligations issued by U.S. government-sponsored agencies, including Ginnie Mae, Fannie Mae and Freddie Mac. The remaining 3 % consisted of the portfolio comprised of tax-exempt municipal securities. These securities were evaluated using similar criteria, including issuer credit ratings and financial condition. No significant deterioration in credit quality or adverse developments were noted for these securities, and there were no downgrades in credit ratings during the period. Based on this evaluation, the Company did not record an allowance for credit losses on its AFS debt securities as of December 31, 2025 and 2024. For a discussion of the factors and criteria the Company uses in analyzing securities for impairment related to credit losses, see Note 1. Significant Accounting Policies to the Consolidated Financial Statements in this Form 10-K. As of December 31, 2025 and 2024, there were no pledged securities to secure public deposits, borrowing and letters of credit from the 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, 2025 and 2024: December 31, ($ in thousands) 2025 2024 FHLB stock $ 13,156 $ 12,615 Pacific Coast Bankers Bank ("PCBB") stock 190 190 Mutual fund - Community Reinvestment Act ("CRA") qualified (1) 3,757 3,532 Time deposits placed in other banks 105 100 Total other investments $ 17,208 $ 16,437 (1) The Company recorded $ 114 thousand, $( 32 ) thousand, and $ 48 thousand unrealized gains (losses) for the years ended December 31, 2025, 2024 and 2023, respectively. The unrealized gains (losses) of the mutual fund are included in O ther income in the Consolidated Statements of Income. Note 3. Loans and Allowance for Credit Losses on Loans The following table presents the composition of the loan portfolio as of December 31, 2025 and 2024: December 31, ($ in thousands) 2025 2024 CRE $ 1,132,223 $ 980,247 SBA—real estate 242,041 231,962 SBA—non-real estate 22,482 21,748 C&I 221,270 213,097 Home mortgage 574,300 509,524 Consumer 1,353 274 Gross loans 2,193,669 1,956,852 Allowance for credit losses ( 27,975 ) ( 24,796 ) Net loans (1) $ 2,165,694 $ 1,932,056 (1) Includes net deferred loan cost (fees) and net unamortized premiums (discounts) of $( 331 ) thousand and $( 702 ) thousand as of December 31, 2025 and 2024, respectively. F-19 For the Company's accounting policy on allowance for credit losses on loans and unfunded commitments, see Note 1. Significant Accounting Policies to the Consolidated Financial Statements in this Form 10-K. The following table summarizes the activity in the allowance for credit losses on loans by portfolio segment and unfunded commitments for the years ended December 31, 2025, 2024 and 2023: ($ in thousands) CRE SBA— Real Estate SBA —Non- Real Estate C&I Home Mortgage Consumer Total Balance as of December 31, 2022 $ 6,951 $ 1,607 $ 207 $ 1,643 $ 8,826 $ 7 $ 19,241 Impact of CECL adoption 875 ( 238 ) ( 142 ) ( 320 ) 1,753 ( 4 ) 1,924 Provision for (reversal of) credit losses (a) 723 321 73 ( 11 ) 466 10 1,582 Charge-offs ( 686 ) ( 46 ) ( 35 ) ( 97 ) — — ( 864 ) Recoveries 52 13 44 — — 1 110 Balance as of December 31, 2023 7,915 1,657 147 1,215 11,045 14 21,993 Provision for (reversal of) credit losses (a) 1,375 3,966 271 673 ( 3,361 ) ( 11 ) 2,913 Charge-offs — ( 66 ) ( 27 ) ( 44 ) — — ( 137 ) Recoveries — — 27 — — — 27 Balance as of December 31, 2024 9,290 5,557 418 1,844 7,684 3 24,796 Provision for (reversal of) credit losses (a) 1,186 1,241 183 ( 313 ) 1,363 6 3,666 Charge-offs ( 129 ) ( 413 ) ( 36 ) ( 198 ) ( 91 ) — ( 867 ) Recoveries 80 — 22 278 — — 380 Balance as of December 31, 2025 $ 10,427 $ 6,385 $ 587 $ 1,611 $ 8,956 $ 9 $ 27,975 Year Ended December 31, ($ in thousands) 2025 2024 2023 Unfunded commitments Allowance for credit losses on unfunded commitments, beginning of period $ 359 $ 515 $ 263 Impact of CECL adoption — — 183 (Reversal of) provision for credit losses (b) ( 86 ) ( 156 ) 69 Allowance for credit losses on unfunded commitments, end of period 273 359 515 Provision for credit losses (a) + (b) $ 3,580 $ 2,757 $ 1,651 Collateral-dependent loans are loans where repayment is expected to be provided solely by the sale or operation 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. Generally, 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. F-20 The following table represents the amortized cost basis of collateral-dependent loans by class of loans as of December 31, 2025 and 2024, for which repayment is expected to be obtained through the sale or operation of the underlying collateral. ($ in thousands) Hotel / Motel Retail Single-Family Residential Total (1)(2) As of December 31, 2025 CRE $ 2,134 $ 211 $ 1,079 $ 3,424 SBA—real estate 4,891 1,528 — 6,419 Home mortgage — — 589 589 Total $ 7,025 $ 1,739 $ 1,668 $ 10,432 As of December 31, 2024 CRE $ 1,580 $ 363 $ — $ 1,943 SBA—real estate 3,702 2,006 — 5,708 Total $ 5,282 $ 2,369 $ — $ 7,651 (1) Excludes guaranteed portion of SBA loans totaling $ 12.7 million and $ 15.2 million as of December 31, 2025 and 2024. (2) The allowance for credit losses allocated to these loans as of December 31, 2025 and 2024 was $ 1.3 million and $ 1.2 million, respectively. The following table presents the amortized cost in nonaccrual loans and loans past due 90 or more days and still accruing interest as of December 31, 2025 and 2024: ($ in thousands) Nonaccrual Loans with a Related Allowance for Credit Losses Nonaccrual Loans without a Related Allowance for Credit Losses Total Nonaccrual Loans 90 or More Days Past Due & Still Accruing Total (1) As of December 31, 2025 CRE $ 554 $ 2,870 $ 3,424 $ — $ 3,424 SBA—real estate 7,343 1,851 9,194 — 9,194 SBA—non-real estate 646 — 646 — 646 C&I 218 — 218 — 218 Home mortgage — 589 589 — 589 Total $ 8,761 $ 5,310 $ 14,071 $ — $ 14,071 As of December 31, 2024 CRE $ 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 Total $ 2,538 $ 5,282 $ 7,820 $ — $ 7,820 (1) Excludes guaranteed portion of loans of $ 20.9 million and $ 16.3 million as of December 31, 2025 and 2024, respectively. Nonaccrual loans and loans past due 90 or more include both (i) loans with similar risk characteristics that are collectively evaluated for allowance, and (ii) loans that do not share similar risk characteristics that are individually evaluated for allowance. Under the Company's policy, nonaccrual loans with outstanding balances above the $ 500 thousand threshold that lack shared risk characteristics are subject to individual evaluation for expected credit losses. F-21 The following table represents the aging analysis of the gross loans as of December 31, 2025 and 2024: Still Accruing ($ in thousands) 30-59 Days Past Due (1) 60-89 Days Past Due 90 or More Days Past Due Nonaccrual Loans (2) Current Accruing Loans Total As of December 31, 2025 CRE $ — $ — $ — $ 3,424 $ 1,128,799 $ 1,132,223 SBA—real estate 2,532 1,163 — 9,194 229,152 242,041 SBA—non-real estate 30 5 — 646 21,801 22,482 C&I — — — 218 221,052 221,270 Home mortgage 557 2,005 — 589 571,149 574,300 Consumer — — — — 1,353 1,353 Total $ 3,119 $ 3,173 $ — $ 14,071 $ 2,173,306 $ 2,193,669 As of December 31, 2024 (3) CRE $ — $ — $ — $ 1,943 $ 978,304 $ 980,247 SBA—real estate 237 74 — 5,708 225,943 231,962 SBA—non-real estate 133 137 — 169 21,309 21,748 C&I 15 — — — 213,082 213,097 Home mortgage 2,774 5,594 — — 501,156 509,524 Consumer — — — — 274 274 Total $ 3,159 $ 5,805 $ — $ 7,820 $ 1,940,068 $ 1,956,852 (1) Excludes guaranteed portion of loans totaling $ 3.2 million as of December 31, 2025, with the excluded portion classified within "Current Accruing" loans. No such guaranteed portion existed as of December 31, 2024. (2) Excludes guaranteed portion of loans totaling $ 20.9 million and $ 16.3 million as of December 31, 2025 and 2024, respectively, with the excluded portion classified within "Current Accruing" loans. (3) Revised to conform with the current presentation. Loan Modifications to Borrowers Experiencing Financial Difficulty To help borrowers facing financial difficulty, the Company may agree to modify the contractual terms of a loan as a way to mitigate loss. These modifications are handled individually, aiming to create terms that support both repayment and the borrower's financial needs. A borrower is considered as experiencing financial difficulty when there is significant uncertainty regarding the borrower's ability to meet required debt payments or secure comparable financing from another creditor at a market rate for similar debt. Modification may include, but not limited to, payment delays, interest rate reductions, term extensions, principal forgiveness, or a combination of such modifications. The following table presents the amortized cost of loans as December 31, 2025 that were modified for borrowers experiencing financial difficulty during the years ended December 31, 2025, 2024 and 2023 by loan class and modification type: Year Ended December 31, 2025 Modification Type Percentage to Each Loan Segment ($ in thousands) Payment Delay Interest Only Total CRE $ 2,635 $ 3,138 $ 5,773 0.51 % SBA—real estate (1) 3,772 — 3,772 1.56 % SBA—non-real estate (1) 46 — 46 0.21 % Total $ 6,453 $ 3,138 $ 9,591 F-22 Year Ended December 31, 2024 Modification Type Percentage to Each Loan Segment ($ in thousands) Payment Delay Interest Only Term Extension Total CRE $ 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 Year Ended December 31, 2023 Modification Type Percentage to Each Loan Segment ($ in thousands) Payment Delay Term Extension Total CRE $ — $ 625 $ 625 0.07 % SBA—real estate (1) 2,969 — 2,969 1.32 % SBA—non-real estate 131 — 131 0.87 % Home mortgage 354 — 354 0.07 % Total $ 354 $ 625 $ 4,079 (1) Excludes guaranteed portion of SBA loans totaling $ 7.8 million, $ 7.4 million and $ 2.4 million for the years ended December 31, 2025, 2024 and 2023, respectively. 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, 2025 Payment Delay: CRE Deferment of Payment by a weighted average of 0.4 years SBA—real estate Deferment of Payment by a weighted average of 0.4 years SBA—non-real estate Deferment of Payment by a weighted average of 0.5 years Interest Only: CRE Interest only Payment by a weighted average of 0.5 years Financial Effect Modification & Loan Types Description of Financial Effect Year Ended December 31, 2024 Payment Delay: CRE Deferment of Payment by a weighted average of 0.5 years SBA—real estate Deferment of Payment by a weighted average of 0.9 years Term Extension: C&I Extended term by a weighted average of 0.6 years Interest Only: SBA—real estate Interest only Payment by a weighted average of 0.5 years F-23 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 0.7 years SBA—non-real estate Deferment of Payment by a weighted average of 0.2 years Home mortgage Deferment of Payment by a weighted average of 0.5 years Term Extension: CRE Extended term by a weighted average of 1.0 year 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 modifications within the past 12 months as of December 31, 2025, 2024 and 2023, and subsequently defaulted in the years ended December 31, 2025, 2024 and 2023. For the years ended December 31, 2025 and 2024, the Company had no additional commitments to lend to borrowers whose loans were modified during the period. In comparison, 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 modified loans to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following tables present the performance of such loans that were modified during the last 12 months as of December 31, 2025, 2024 and 2023: Payment Performance as of December 31, 2025 ($ in thousands) Current 30 - 89 Days Past Due 90+ Days Past Due Total CRE $ 4,193 $ 1,580 $ — $ 5,773 SBA—real estate (1) 1,485 — 2,287 3,772 SBA—non-real estate (1) 46 — — 46 Total $ 5,724 $ 1,580 $ 2,287 $ 9,591 Payment Performance as of December 31, 2024 ($ in thousands) Current 30 - 89 Days Past Due 90+ Days Past Due Total CRE $ 1,580 $ — $ — $ 1,580 SBA—real estate (1) 4,093 — — 4,093 C&I 400 — — 400 Total $ 6,073 $ — $ — $ 6,073 Payment Performance as of December 31, 2023 ($ in thousands) Current 30 - 89 Days Past Due 90+ Days Past Due Total CRE $ 625 $ — $ — $ 625 SBA—real estate (1) 2,232 — 737 2,969 SBA—non-real estate 131 — — 131 Home mortgage 354 — — 354 Total $ 3,342 $ — $ 737 $ 4,079 (1) Excludes guaranteed portion of SBA loans totaling $ 7.8 million, $ 7.4 million, and $ 2.4 million, for the years ended December 31, 2025, 2024 and 2023, respectively. F-24 Credit Quality Indicators The Company categorizes loans into risk categories based on relevant information about borrowers' ability to service their debt including: current financial information, historical payment experience, credit documentation, public information, and current economic trends. For consumer loans, a credit grade is established at inception, and generally only adjusted based on performance. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis is performed on a quarterly basis. The Company uses the following definitions for risk ratings: Special Mention—Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date. 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. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful—Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. 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 tables present the loan portfolio's amortized cost and current year-to-date gross write-offs by loan type, risk rating and year of origination as of December 31, 2025 and 2024: December 31, 2025 Term Loans by Origination Year Revolving Loans Revolving Loans Converted to Term Loans Total (1) ($ in thousands) 2025 2024 2023 2022 2021 Prior CRE Pass $ 341,466 $ 243,845 $ 87,232 $ 222,690 $ 158,119 $ 57,954 $ 10,553 $ — $ 1,121,859 Special mention — 592 — — 2,179 — — — 2,771 Substandard — — 1,580 5,802 — 211 — — 7,593 Doubtful — — — — — — — — — Subtotal $ 341,466 $ 244,437 $ 88,812 $ 228,492 $ 160,298 $ 58,165 $ 10,553 $ — $ 1,132,223 Year-to-date charge-offs $ — $ — $ — $ — $ — $ 129 $ — $ — $ 129 SBA— real estate Pass $ 45,147 $ 26,310 $ 25,059 $ 47,886 $ 11,362 $ 68,727 $ — $ — $ 224,491 Special mention — 1,989 — 3,409 457 1,246 — — 7,101 Substandard — 593 1,190 4,542 345 3,779 — — 10,449 Doubtful — — — — — — — — — Subtotal $ 45,147 $ 28,892 $ 26,249 $ 55,837 $ 12,164 $ 73,752 $ — $ — $ 242,041 Year-to-date charge-offs $ — $ — $ — $ — $ — $ 413 $ — $ — $ 413 SBA—non-real estate Pass $ 5,838 $ 7,538 $ 3,697 $ 1,695 $ 79 $ 2,967 $ — $ — $ 21,814 Special mention 13 — — — — — — — 13 Substandard — 183 89 169 — 214 — — 655 Doubtful — — — — — — — — — Subtotal $ 5,851 $ 7,721 $ 3,786 $ 1,864 $ 79 $ 3,181 $ — $ — $ 22,482 Year-to-date charge-offs $ — $ — $ 3 $ — $ — $ 33 $ — $ — $ 36 C&I Pass $ 7,942 $ 19,098 $ 8,737 $ 10,379 $ 11,799 $ 1,364 $ 159,857 $ 756 $ 219,932 Special mention — — — — — — 1,000 — 1,000 F-25 Substandard — — — — 218 — 120 — 338 Doubtful — — — — — — — — — Subtotal $ 7,942 $ 19,098 $ 8,737 $ 10,379 $ 12,017 $ 1,364 $ 160,977 $ 756 $ 221,270 Year-to-date charge-offs $ — $ — $ 41 $ 157 $ — $ — $ — $ — $ 198 Home mortgage Pass $ 136,984 $ 33,996 $ 50,255 $ 244,188 $ 64,949 $ 41,788 $ — $ — $ 572,160 Special mention — — — — — — — — — Substandard — — — 2,140 — — — — 2,140 Doubtful — — — — — — — — — Subtotal $ 136,984 $ 33,996 $ 50,255 $ 246,328 $ 64,949 $ 41,788 $ — $ — $ 574,300 Year-to-date charge-offs $ — $ — $ — $ 77 $ — $ 14 $ — $ — $ 91 Consumer Pass $ — $ — $ — $ — $ — $ — $ 1,353 $ — $ 1,353 Special mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Subtotal $ — $ — $ — $ — $ — $ — $ 1,353 $ — $ 1,353 Year-to-date charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Total loans Pass $ 537,377 $ 330,787 $ 174,980 $ 526,838 $ 246,308 $ 172,800 $ 171,763 $ 756 $ 2,161,609 Special mention 13 2,581 — 3,409 2,636 1,246 1,000 — 10,885 Substandard — 776 2,859 12,653 563 4,204 120 — 21,175 Doubtful — — — — — — — — — Subtotal $ 537,390 $ 334,144 $ 177,839 $ 542,900 $ 249,507 $ 178,250 $ 172,883 $ 756 $ 2,193,669 Year-to-date charge-offs $ — $ — $ 44 $ 234 $ — $ 589 $ — $ — $ 867 December 31, 2024 Term Loans by Origination Year Revolving Loans Revolving Loans Converted to Term Loans Total (1) ($ in thousands) 2024 2023 2022 2021 2020 Prior CRE Pass (1) $ 201,141 $ 85,056 $ 191,287 $ 137,425 $ 88,993 $ 250,291 $ 17,012 $ — $ 971,205 Special mention — — 579 2,246 — — — — 2,825 Substandard (1) — 1,580 — — — 4,637 — — 6,217 Doubtful — — — — — — — — — Subtotal $ 201,141 $ 86,636 $ 191,866 $ 139,671 $ 88,993 $ 254,928 $ 17,012 $ — $ 980,247 Year-to-date charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — SBA— real estate Pass (1) $ 31,441 $ 26,508 $ 48,821 $ 21,396 $ 16,166 $ 77,671 $ — $ — $ 222,003 Special mention — — 2,345 — — 739 — — 3,084 Substandard (1) — 1,182 2,520 291 — 2,882 — — 6,875 Doubtful — — — — — — — — — Subtotal $ 31,441 $ 27,690 $ 53,686 $ 21,687 $ 16,166 $ 81,292 $ — $ — $ 231,962 Year-to-date charge-offs $ — $ — $ — $ 66 $ — $ — $ — $ — $ 66 SBA—non-real estate Pass (1) $ 10,443 $ 4,498 $ 2,198 $ 154 $ 1,421 $ 2,865 $ — $ — $ 21,579 Special mention — — — — — — — — — Substandard (1) — — 121 — 39 9 — — 169 Doubtful — — — — — — — — — Subtotal $ 10,443 $ 4,498 $ 2,319 $ 154 $ 1,460 $ 2,874 $ — $ — $ 21,748 Year-to-date charge-offs $ — $ — $ — $ — $ — $ 27 $ — $ — $ 27 C&I Pass $ 19,712 $ 11,525 $ 14,016 $ 18,122 $ 3,356 $ 2,664 $ 140,278 $ 3,024 $ 212,697 F-26 Special mention — — — — — — 400 — 400 Substandard — — — — — — — — — Doubtful — — — — — — — — — Subtotal $ 19,712 $ 11,525 $ 14,016 $ 18,122 $ 3,356 $ 2,664 $ 140,678 $ 3,024 $ 213,097 Year-to-date charge-offs $ — $ 44 $ — $ — $ — $ — $ — $ — $ 44 Home mortgage Pass $ 42,112 $ 63,000 $ 284,208 $ 70,326 $ 17,749 $ 32,129 $ — $ — $ 509,524 Special mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Subtotal $ 42,112 $ 63,000 $ 284,208 $ 70,326 $ 17,749 $ 32,129 $ — $ — $ 509,524 Year-to-date charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Consumer Pass $ 27 $ — $ — $ — $ — $ — $ 247 $ — $ 274 Special mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Subtotal $ 27 $ — $ — $ — $ — $ — $ 247 $ — $ 274 Year-to-date charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Total loans Pass (1) $ 304,876 $ 190,587 $ 540,530 $ 247,423 $ 127,685 $ 365,620 $ 157,537 $ 3,024 $ 1,937,282 Special mention — — 2,924 2,246 — 739 400 — 6,309 Substandard (1) — 2,762 2,641 291 39 7,528 — — 13,261 Doubtful — — — — — — — — — Subtotal $ 304,876 $ 193,349 $ 546,095 $ 249,960 $ 127,724 $ 373,887 $ 157,937 $ 3,024 $ 1,956,852 Year-to-date charge-offs $ — $ 44 $ — $ 66 $ — $ 27 $ — $ — $ 137 (1) As of December 31, 2025 and 2024, $ 27.3 million and $ 16.3 million, respectively, of criticized loans with payments guaranteed by government agencies were classified as "Pass" rated. Note 4. Premises and Equipment The following table presents information regarding the premises and equipment as of December 31, 2025 and 2024: December 31, ($ in thousands) 2025 2024 Leasehold improvements $ 11,009 $ 10,019 Furniture and fixtures 5,480 4,902 Equipment and others 4,000 3,831 Total premises and equipment 20,489 18,752 Accumulated depreciation ( 14,745 ) ( 13,303 ) Total premises and equipment, net $ 5,744 $ 5,449 Total depreciation expense included in Occupancy and equipment in the Consolidated Statements of Income was $ 1.4 million for both the years ended December 31, 2025 and 2024 and $ 1.3 million for the year ended December 31, 2023. Note 5. Servicing Assets The Company recognizes the rights to service SBA loans for others as servicing assets when the benefit of servicing is expected to more than adequately compensation the Company for performing the servicing. Servicing assets are initially recorded at fair value and subsequently amortized in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. As of December 31, 2025 F-27 and 2024, the Company serviced SBA loans for others with principal balances of $ 682.9 million and $ 700.9 million, respectively. The Company periodically stratifies its servicing assets into groupings based on risk characteristics and evaluates each group for impairment based on the fair value. Based on the impairment test as of December 31, 2025 and 2024, there was no valuation allowance for impairment. The following table presents the activity in the servicing assets for the years ended December 31, 2025, 2024 and 2023: Year Ended December 31, ($ in thousands) 2025 2024 2023 Beginning balance $ 10,834 $ 11,741 $ 12,759 Additions from loans sold with servicing retained 2,727 2,841 3,400 Amortized to expense ( 3,504 ) ( 3,748 ) ( 4,418 ) Ending balance $ 10,057 $ 10,834 $ 11,741 The fair value of the servicing assets was $ 14.8 million as of December 31, 2025, which was determined using discount rates ranging from 4.97 % to 11.77 % and prepayment speeds ranging from 12.90 % to 13.60 %, depending on the stratification of the specific assets. The fair value of the servicing assets was $ 16.2 million as of December 31, 2024, which was determined using discount rates ranging from 4.07 % to 11.29 % and prepayment speeds ranging from 12.90 % to 13.60 % depending on the stratification of the specific assets. The fair value of the servicing assets was $ 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. Note 6. Leases The Company leases buildings mainly for bank branches and office space from nonaffiliated parties with lease terms of 1 to 10 years as of December 31, 2025. Certain lease arrangements have optional extensions of about 5 years, but these are not included in the lease term unless reasonably certain. The table below summarizes total lease cost for the periods indicated : Year Ended December 31, ($ in thousands) 2025 2024 2023 Operating lease cost $ 2,479 $ 2,352 $ 2,280 Variable lease cost 638 985 844 Total lease cost $ 3,117 $ 3,337 $ 3,124 F-28 The tables below summarize other information related to the Company’s operating leases as of the associated period: As of and For Year Ended December 31, ($ in thousands) 2025 2024 2023 Operating right-of-use assets $ 8,804 $ 7,415 $ 8,497 Operating lease liabilities 11,175 7,857 9,341 Weighted average remaining lease term - operating leases 4.5 years 4.7 years 5.5 years Weighted average discount rate - operating leases 2.97 % 2.45 % 2.47 % Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 560 $ 2,751 $ 2,511 Rent expense was $ 3.1 million, $ 3.3 million and $ 3.1 million for the years ended December 31, 2025 and 2024 and 2023, respectively. The table below summarizes the remaining contractually obligated lease payments and a reconciliation to the lease liability reported on the Consolidated Balance Sheets as of December 31, 2025: ($ in thousands) Amount 2026 $ 3,038 2027 2,930 2028 2,510 2029 2,169 2030 640 Thereafter 819 Total lease payments 12,106 Discount to present value ( 931 ) Total lease liability $ 11,175 Note 7. Deposits Time deposits that exceed the FDIC insurance limit of $250 thousand as of December 31, 2025 and 2024 were $ 684.0 million and $ 565.8 million, respectively. The following table presents the scheduled contractual maturities of time deposits as of December 31, 2025: ($ in thousands) Amount 2026 $ 1,368,947 2027 1,626 2028 945 2029 68 2030 and thereafter 30 Total $ 1,371,616 F-29 Note 8. Borrowing Arrangements As of December 31, 2025, the Company had $ 75.0 million advances from FHLB with a weighted average interest rate of 3.55 % and a weighted average remaining term of 2.1 years, compared to $ 95.0 million advances with a weighted average interest rate of 4.34 % and a weighted average remaining term of 0.2 years as of December 31, 2024. The Company has a letter of credit with the FHLB in the amount of $ 135.0 million and $ 100.0 million to secure public deposits as of December 31, 2025 and 2024, respectively. The Company had available borrowing capacity from the following institutions as of December 31, 2025: ($ in thousands) Amount FHLB $ 443,629 Federal Reserve Bank 208,859 Pacific Coast Bankers Bank 50,000 Zions Bank 25,000 First Horizon Bank 25,000 Total $ 752,488 The Company has pledged approximately $ 1.64 billion and $ 1.41 billion of loans as collateral for these lines of credit as of December 31, 2025 and 2024, respectively. Note 9. Subordinated Note On November 7, 2025, OP Bancorp issued in a private placement a $ 25.0 million principal amount of fixed-to-floating rate note due 2035 (the "2035 Note"). The 2035 Note will mature on November 15, 2035, From the original issue date to, but excluding, November 15, 2030, the 2035 Note will bear interest at a fixed rate of 7.50 % per annum and payable semi-annually in arrears on May 15 and November 15 of each year, beginning May 15, 2026. Thereafter, until maturity or earlier redemption, the 2035 Note will bear interest a floating rate, reset quarterly, equal to the three-month term Secured Overnight Financing Rate ("SOFR") plus 411 basis points and payable in arrears on February 15, May 15, August 15, and November 15 of each year. The Company may, at its option, redeem the 2035 Note, in whole or part, at any time after the fifth anniversary of issuance, subject to any required regulatory approvals. The 2035 Note is qualified as tier 2 capital under current regulatory guidelines and interpretations. Debt issuance costs incurred in connection with the issuance of the 2035 Note totaled $ 426 thousand and were capitalized in accordance with ASC 835-30. These costs are presented as a direct deduction from the carrying amount of the subordinated note on the Consolidated Balance Sheet and are amortized into interest expense over the contractual term of the note using the straight-line method. As of December 31, 2025, the balance of the 2035 Note, net of unamortized debt issuance cost was $ 24.6 million. The amortization of debt issuance cost was $ 12 thousand for the year ended December 31, 2025. F-30 Note 10. Income Taxes The following table presents the components of income taxes expense (benefit) from continuing operations for the years ended December 31, 2025, 2024 and 2023. The Company conducts operations solely in the U.S. and does not have any foreign operations; accordingly, the Company does not have pretax income or income tax expense related to foreign jurisdictions: Year Ended December 31, ($ in thousands) 2025 2024 2023 Current income tax expense: Federal $ 6,712 $ 6,610 $ 6,238 State 2,899 3,000 3,332 Total current income tax expense 9,611 9,610 9,570 Deferred income tax expense (benefit): Federal ( 91 ) ( 982 ) 217 State 172 ( 618 ) ( 214 ) Total deferred income tax expense (benefit) 81 ( 1,600 ) 3 Total income tax expense $ 9,692 $ 8,010 $ 9,573 The following table presents a reconciliation of the applicable statutory U.S. federal income tax rate to the effective tax rate for the years ended December 31, 2025, 2024 and 2023: Year Ended December 31, 2025 2024 (1) 2023 (1) Amount Percent Amount Percent Amount Percent Federal statutory income tax rate $ 7,419 21.0 % $ 6,107 21.0 % $ 7,033 21.0 % State and local income taxes, net of federal income tax effect (2) 2,490 7.0 2,255 7.8 2,696 8.0 Tax credits, net of amortization (3) ( 215 ) ( 0.6 ) ( 201 ) ( 0.7 ) ( 105 ) ( 0.3 ) Nontaxable or nondeductible items 7 0.0 54 0.2 64 0.2 Other ( 9 ) 0.0 ( 205 ) ( 0.7 ) ( 115 ) ( 0.3 ) Total $ 9,692 27.4 % $ 8,010 27.6 % $ 9,573 28.6 % (1) Prior periods were retrospectively presented in accordance with ASU 2023-09. (2) State tax in California made up the majority (greater than 50 percent) of the tax effect in this category. (3) Includes impacts of affordable housing tax credit investments. F-31 The significant components of deferred tax assets and liabilities as of December 31, 2025 and 2024 are reflected in the following table: December 31, ($ in thousands) 2025 2024 Deferred tax assets: Organizational costs $ 13 $ 15 Allowance for credit losses 7,981 7,331 Loans held for sale 235 108 Stock-based compensation 103 574 Accrued compensation 295 322 Lease liability 3,188 2,323 State taxes 619 645 Net unrealized loss on AFS debt securities 3,854 6,394 Net unrealized loss on swap 241 75 Nonaccrual loan interest income — 224 Other 177 242 Total deferred tax assets 16,706 18,253 Deferred tax liabilities: Loan origination costs ( 795 ) ( 388 ) Depreciation ( 932 ) ( 498 ) Right of use asset ( 2,512 ) ( 2,192 ) Other ( 29 ) ( 282 ) Total deferred tax liabilities ( 4,268 ) ( 3,360 ) Net deferred tax asset $ 12,438 $ 14,893 A valuation allowance for deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and tax planning strategies which will create taxable income during the periods in which those temporary differences become deductible. Management reevaluated all positive and negative evidence that existed and concluded all deferred tax assets are realizable. Therefore, no valuation allowance was necessary as of December 31, 2025 and 2024. There were no interest or penalties recognized as a component of Income tax expense in the years ended December 31, 2025 or 2024 . The Company is subject to U.S. Federal income tax as well as various state taxing jurisdictions. The Company is no longer subject to examination by Federal taxing authorities for tax years prior to 2022 and for state and local taxing authorities for tax years prior to 2021. Note 11. Commitments and Contingencies 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. These commitments expose the Company to varying degrees of credit and market risk and are subject to the same credit and market reviews as those instruments recorded on the Consolidated Balance Sheets. Loan commitments represent arrangements to lend funds or provide liquidity subject to specified contractual conditions. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. These commitments generally have fixed expiration dates or contain termination clauses in the event the customer’s credit quality deteriorates. Since many of the commitments are expected to expire without being drawn upon, the commitment amounts do not necessarily represent future funding requirements. F-32 The Company applies the same credit underwriting criteria to extend loans and commitments to customers. 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 include securities, accounts receivable, inventory, property, plant and equipment, and income producing commercial or other properties. The majority of these off-balance sheet commitments have a variable interest rate. Management does not anticipate any material losses as a result of these transactions. The following table presents the distribution of undisbursed credit-related commitments as of December 31, 2025 and 2024: December 31, ($ in thousands) 2025 2024 Loan commitments $ 325,072 $ 261,446 Standby letter of credit 23,389 21,059 Commercial letter of credit 63 49 Total undisbursed credit related commitments $ 348,524 $ 282,554 Investments in low-income housing partnership The Company invests in qualified affordable housing partnerships. The following table shows the investments and unfunded commitments of the Company's low-income housing partnerships as of December 31, 2025 and 2024: December 31, ($ in thousands) 2025 2024 Investments in low-income housing partnerships (1) $ 18,155 $ 15,191 Unfunded commitments to fund investments for low-income housing partnerships (1) 7,137 7,622 (1) These balances are reflected in Other assets and Other liabilities on the Consolidated Balance Sheets. The Company expects to finish fulfilling these commitments during the year ending 2042 . 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 $ 2.0 million, $ 1.7 million and $ 1.3 million for the years ended December 31, 2025, 2024 and 2023, respectively. In addition, the Company recognized tax credits and other benefits of $ 2.9 million, $ 2.5 million and $ 1.7 million for the years ended December 31, 2025, 2024 and 2023, respectively. Legal Proceedings From time to time the Company or the Bank are parties to legal proceedings in the ordinary course of business. In accordance with ASC 450, Contingencies, the Company accrues reserves for outstanding lawsuits, claims and proceedings when a loss is probable and its amount can be reasonably estimated with specificity or within a given range. Management estimates the likelihood and the amount of a possible loss using current available information from legal proceedings, advice from legal counsel, and available insurance coverage. Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to the Company from any legal proceedings. The Company is not presently subject to any legal action for which an accrual is required and, accordingly, no accrual has been recorded; however, actual exposure and ultimate losses may differ from current expectations. While it is impossible to ascertain the ultimate resolution or range of financial liability, based on information known to management as of December 31, 2025, management does not believe there are any pending legal proceedings to which the Company or the Bank is a party that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the Company’s financial condition or results of operations. F-33 Note 12. Stock-Based Compensation The Company has one stock-based compensation plan, the OP Bancorp 2021 Equity Incentive Plan ("2021 Plan") as of December 31, 2025. The Board of Directors approved the 2021 Plan, an equity incentive plan for granting stock options and restricted stock awards to key employees, officers, and non-employee directors of the Company. An aggregate of 1,500,000 shares of the Company’s common stock were authorized under the 2021 Plan. The exercise prices of stock options granted under the plan may not be less than 100 % of the fair value of the Company’s stock at the date of grant. There are no stock options granted under the 2021 Plan as of December 31, 2025 and 2024. Restricted stock awards issued under the 2021 Plan may or may not be subject to vesting provisions. These awards do not confer voting rights or receive dividend entitlements until the shares have vested. The following table presents a summary of the activity in the Company’s restricted stock awards under the 2021 Plan for the year ended December 31, 2025: ($ in thousands, except share data) Shares Issued Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Outstanding (unvested), as of January 1, 2025 250,088 $ 11.78 $ 3,954 Awards granted 96,423 13.04 Awards vested ( 193,138 ) 11.96 Awards forfeited ( 22,348 ) 11.18 Outstanding (unvested), as of December 31, 2025 131,025 $ 12.51 $ 1,850 The following table presents compensation cost and the related tax benefit for the restricted stock awards under the 2021 Plan for the periods indicated: Year Ended December 31, ($ in thousands) 2025 2024 2023 Stock compensation cost $ 699 $ 1,165 $ 1,286 Tax benefit (provision) realized from awards vested 61 ( 3 ) ( 34 ) There were 1,062,190 shares available for future grants of either stock options or restricted stock awards under the 2021 Plan as of December 31, 2025. The Company had approximately $ 1.3 million of unrecognized compensation cost related to unvested restricted stock awards under the 2021 Plan as of December 31, 2025. The Company expects to recognize these costs over a weighted average period of 3.1 years. Note 13. Employee Benefit Plan The Company sponsors a defined contribution plan, the 401(k) profit sharing plan (the “401(k) Plan”), which provides retirement benefits funded by participant contributions and, at the Company's discretion, employer contributions. Employees are eligible to participate in the 401(k) Plan on the first day of the calendar month following completion of three months of service and attainment of age 18 . Participants may contribute up to the maximum amount permitted under applicable IRS Code limitations. Each year, the Company may elect to make matching contributions to the 401(k) Plan. Employer contributions totaled $ 1.2 million, $ 1.1 million and $ 986 thousand for the years ended December 31, 2025, 2024 and 2023, respectively. F-34 Note 14. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or the price that would be paid to transfer a liability on the measurement date and is determined using an exit price in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Assets and liabilities recorded at fair value on a recurring basis, such as AFS securities and equity investments. Additionally, from time to time, the Company records fair value adjustments on a nonrecurring basis. These nonrecurring adjustments typically involve application of lower of cost or fair value accounting and write-downs of individual assets. The Company classifies its assets and liabilities recorded at fair value as one of the following three categories and a financial instrument’s level within the fair value hierarchy is based on the lowest level of input significant to the fair value measurement: Level 1 — Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2 — Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. Level 3 — Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. Assets and Liabilities Measured at Fair Value on a Recurring Basis Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy. AFS Debt Securities — The fair values of investment securities are determined by matrix pricing, which is a mathematical technique used to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2). Management obtains the fair values of investment securities on a monthly basis from a third-party pricing service. Equity Investments — The Company has an equity investment with readily determinable fair value. 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. Derivatives — The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2). F-35 Assets and liabilities measured at fair value on a recurring basis as of December 31, 2025 and 2024 are summarized below: Fair Value Measure on a Recurring Basis ($ in thousands) Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2025 Assets: U.S. Government agencies or sponsored agency securities: Residential mortgage-backed securities $ 32,694 $ — $ 32,694 $ — Residential collateralized mortgage obligations 154,463 — 154,463 — Municipal securities - tax exempt 5,628 — 5,628 — Equity Investments: Mutual fund - CRA qualified 3,757 3,757 — — Liabilities: Derivative financial instruments $ 888 $ — $ 888 $ — December 31, 2024 Assets: U.S. Government agencies or sponsored agency securities: Residential mortgage-backed securities $ 37,076 $ — $ 37,076 $ — Residential collateralized mortgage obligations 143,041 — 143,041 — Municipal securities - tax exempt 5,792 — 5,792 — Equity Investments: Mutual fund - CRA qualified 3,532 3,532 — — Derivative financial instruments 368 — 368 — Liabilities: Derivative financial instruments $ 579 $ — $ 579 $ — Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from application of lower of cost or fair value and write-downs of individual assets. Collateral-dependent loans — Collateral-dependent loans are loans where repayment is expected to be provided solely by the sale or operation of the underlying collateral and there are no other available and reliable sources of repayment. 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. The value of real estate collateral is determined based on an appraisal by qualified licensed appraisers hired by the Company. The value of business equipment is based on an appraisal by qualified licensed appraisers hired by the Company if significant, or the equipment’s net book value on the business’ financial statements. Inventory and accounts receivable collateral are valued based on independent field examiner review or aging reports. Appraisals may utilize a single valuation approach or a combination or approaches including comparable sales and the income approach. 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 F-36 such loans. Appraised values are reviewed by management using historical knowledge, market considerations, and knowledge of the client and client’s business. Other Real Estate Owned — 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, 2025 and 2024: Fair Value Measure on a Nonrecurring Basis ($ in thousands) Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) December 31, 2025 Collateral-dependent loans: CRE $ 450 $ — $ — $ 450 SBA—real estate 3,330 — — 3,330 Total $ 3,780 $ — $ — $ 3,780 December 31, 2024 Collateral-dependent loans: CRE $ 173 $ — $ — $ 173 SBA—real estate 952 — — 952 OREO (1) 1,237 — — 1,237 Total $ 2,362 $ — $ — $ 2,362 (1) Represents the carrying value of OREO property that was written down subsequent to its initial classification as OREO. The following table presents the increase (decrease) in value of certain assets held at the end of the reporting periods presented for which a nonrecurring fair value adjustment was recognized during the respective periods: Year Ended December 31, ($ in thousands) 2025 2024 2023 Collateral-dependent loans: SBA—real estate $ 27 $ — $ — Total $ 27 $ — $ — F-37 The following table presents information about significant unobservable inputs utilized in the Company’s nonrecurring Level 3 fair value measurements as of December 31, 2025 and 2024: ($ in thousands) Fair Value Measurements (Level 3) Valuation Techniques Unobservable Inputs Range of Inputs Weighted- Average of Inputs (1) December 31, 2025 Collateral-dependent loans: CRE $ 450 Income approach - income capitalization Capitalization rate 7.9 % to 11.0 % 8.3 % SBA—real estate 3,145 Income approach - income capitalization Capitalization rate 6.0 % to 12.4 % 8.9 % SBA—real estate 185 Sales comparison Market data comparison ( 13.0 )% to 13.0 % 1.5 % December 31, 2024 Collateral-dependent loans: CRE $ 173 Income approach - income capitalization Capitalization rate 5.5 % to 7.3 % 6.0 % SBA—real estate $ 539 Income approach - income capitalization Capitalization rate 5.5 % to 7.3 % 10.4 % SBA—real estate $ 413 Sales comparison approach Market data / purchase price n/a n/a OREO $ 1,237 Sales comparison approach Market data comparison ( 3.7 )% to 2.2 % ( 0.5 )% (1) Weighted-average of inputs is based on the relative fair value of the respective assets as of December 31, 2025 and 2024. F-38 Financial Instruments The carrying amounts and estimated fair values of financial instruments that are not carried at fair value on a recurring basis as of December 31, 2025 and 2024 are as follows. These financial assets and liabilities are measured at amortized cost basis on the Company’s Consolidated Balance Sheets: December 31, 2025 ($ in thousands) Carrying Amount Level 1 Level 2 Level 3 Fair Value Financial assets: Cash and cash equivalents $ 167,311 $ 167,311 $ — $ — $ 167,311 Loans held-for-sale 11,443 — 12,267 — 12,267 Loans receivable, net 2,165,694 — — 2,243,772 2,243,772 Accrued interest receivable, net 10,482 7 1,708 8,767 10,482 Other investments: FHLB and PCBB stock 13,346 N/A N/A N/A N/A Time deposits placed 105 — 105 — 105 Servicing assets 10,057 — — 14,846 14,846 Financial liabilities: Deposits 2,280,547 — 2,283,339 — 2,283,339 FHLB advances 75,000 — 75,792 — 75,792 Subordinated note, net 24,586 — 24,845 — 24,845 Accrued interest payable 14,595 — 14,595 — 14,595 December 31, 2024 ($ in thousands) Carrying Amount Level 1 Level 2 Level 3 Fair Value Financial assets: 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 Accrued interest receivable, net 9,188 181 888 8,119 9,188 Other investments: FHLB and PCBB stock 12,805 N/A N/A N/A N/A Time deposits placed 100 — 100 — 100 Servicing assets 10,834 — — 16,159 16,159 Financial liabilities: Deposits 2,027,285 — 2,026,092 — 2,026,092 FHLB advances 95,000 — 94,986 — 94,986 Accrued interest payable 16,067 — 16,067 — 16,067 F-39 Note 15. Derivative Financial Instruments 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. As of December 31, 2025, the Company anticipates reclassifying an estimated $ 580 thousand of pre-tax of deferred net gains from AOCI into earnings during the next 12 months. For the Company's accounting policy on derivatives, see Note 1. Significant Accounting Policies to the Consolidated Financial Statements in this Form 10-K. 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, 2025 and 2024: Derivative Assets Derivative Liabilities ($ in thousands) Notional Amount Balance Sheet Location Fair Value Notional Amount Balance Sheet Location Fair Value December 31, 2025 Derivatives designated as hedging instruments: Cash flow hedges: Interest rate contracts $ — Other assets $ — $ 75,000 Other liabilities $ 888 Total derivatives designated as hedging instruments $ — $ 888 December 31, 2024 Derivatives designated as hedging instruments: Cash flow hedges: Interest rate contracts $ 25,000 Other assets $ 368 $ 50,000 Other liabilities $ 579 Total derivatives designated as hedging instruments $ 368 $ 579 The following table presents the pre-tax changes in AOCI from cash flow hedges for the years ended December 31, 2025 and 2024: ($ in thousands) (Losses) gains Recognized in AOCI Location of Gains (Losses) Reclassified from AOCI into Earnings Gains (Losses) Reclassified from AOCI into Earnings Year Ended December 31, 2025 Interest rate contracts $ ( 531 ) Interest expense on deposits $ 57 Total $ ( 531 ) $ 57 Year Ended December 31, 2024 Interest rate contracts $ 75 Interest expense on deposits $ 328 Total $ 75 $ 328 F-40 The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of December 31, 2025. 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: 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 December 31, 2025 Derivatives assets $ — $ — $ — $ — $ — $ — Total $ — $ — $ — $ — $ — $ — December 31, 2024 Derivatives assets $ 368 $ — $ 368 $ — $ 368 $ — Total $ 368 $ — $ 368 $ — $ 368 $ — 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 December 31, 2025 Derivatives liabilities $ 888 $ — $ 888 $ — $ 888 $ — Total $ 888 $ — $ 888 $ — $ 888 $ — December 31, 2024 Derivatives liabilities $ 579 $ — $ 579 $ — $ 579 $ — Total $ 579 $ — $ 579 $ — $ 579 $ — Note 16. Regulatory Capital Matters The Bank is subject to certain risk-based capital and leverage ratio requirements under the U.S. Basel III capital rules administered by the federal and state banking agencies. Failure to be well-capitalized or to meet minimum capital requirements could result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have an adverse material effect on the Company's operations or financial condition. The Basel III capital rules also require the Bank to maintain a capital conservation buffer of 2.50 % above the minimum risk-based capital ratios in order to absorb losses during periods of economic stress. Banking institutions with a ratio of common equity tier 1 capital to risk-weighted assets above the minimum but below the capital conservation buffer will face constraints on dividends. equity repurchases and compensation based on the amount of the shortfall. As of both December 31, 2025 and 2024, the Bank met all capital adequacy requirements. On November 7, 2025, the Company issued a $ 25.0 million subordinated note. This qualified as Tier 2 capital at the consolidated level and Tier 1 capital at the Bank level under current regulatory guidelines and interpretations. F-41 The following tables present the regulatory capital amounts and ratios for the Company and the Bank as of dates indicated: December 31, 2025 Actual (1) Required for Capital Adequacy Purposes Minimum To be Considered "Well Capitalized" ($ in thousands) Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) Consolidated $ 289,562 13.31 % N/A N/A N/A N/A Bank 289,464 13.30 $ 174,139 8.00 % $ 217,673 10.00 % Tier 1 capital (to risk-weighted assets) Consolidated 237,791 10.93 N/A N/A N/A N/A Bank 262,255 12.05 130,604 6.00 174,139 8.00 Common equity Tier 1 capital (to risk-weighted assets) Consolidated 237,791 10.93 N/A N/A N/A N/A Bank 262,255 12.05 97,953 4.50 141,488 6.50 Tier 1 capital (to average assets) Consolidated 237,791 8.99 N/A N/A N/A N/A Bank 262,255 9.91 105,826 4.00 132,282 5.00 December 31, 2024 Actual (1) Required for Capital Adequacy Purposes Minimum To be Considered "Well Capitalized" ($ in thousands) Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) Consolidated $ 244,659 12.60 % N/A N/A N/A N/A Bank 242,966 12.50 $ 155,463 8.00 % $ 194,328 10.00 % Tier 1 capital (to risk-weighted assets) Consolidated 220,390 11.35 N/A N/A N/A N/A Bank 218,675 11.25 116,597 6.00 155,463 8.00 Common equity Tier 1 capital (to risk-weighted assets) Consolidated 220,390 11.35 N/A N/A N/A N/A Bank 218,675 11.25 87,448 4.50 126,313 6.50 Tier 1 capital (to average assets) Consolidated 220,390 9.27 N/A N/A N/A N/A Bank 218,675 9.20 95,055 4.00 118,819 5.00 (1) The capital requirements are only applicable to the Bank, and the Company's ratios are included for comparison purpose. F-42 Note 17. Earnings Per Share The following table presents the calculation of the basic and diluted EPS for the years ended December 31, 2025, 2024 and 2023. For more information on the calculation of EPS, see Note 1. Significant Accounting Policies to the Consolidated Financial Statements in this Form 10-K: Year Ended December 31, ($ in thousands, except share and per share data) 2025 2024 2023 Basic Net income $ 25,635 $ 21,069 $ 23,918 Distributed and undistributed earnings allocated to participating securities — ( 375 ) ( 476 ) Net income allocated to common shares $ 25,635 $ 20,694 $ 23,442 Weighted average common shares outstanding 14,872,429 14,871,876 15,149,597 Basic EPS $ 1.72 $ 1.39 $ 1.55 Diluted Net income allocated to common shares $ 25,635 $ 20,694 $ 23,442 Weighted average common shares outstanding for basic earnings per common share 14,872,429 14,871,876 15,149,597 Add: Dilutive effects of assumed exercises of stock options (1) 33,625 — 9,260 Average shares and dilutive potential common shares 14,906,054 14,871,876 15,158,857 Diluted EPS $ 1.72 $ 1.39 $ 1.55 (1) Approximately 16 thousand weighted-average shares of anti-dilutive restricted stock awards were excluded from the diluted EPS computation for the year ended December 31, 2025. no shares of common stock was antidilutive for the years of December 31, 2024 and 2023. Note 18. Related-Party Transactions During the years ended December 31, 2025, 2024 and 2023, the Company made charitable contributions totaling $ 2.6 million , $ 2.1 million, and $ 2.4 million, respectively, to the Open Stewardship Foundation. The Foundation's Board of Directors and Executive Officers are comprised primarily of the Company's insiders, all of whom serve on a voluntary basis and receive no compensation for their service. The Company's bylaws require an annual donation to the Foundation equal to 10 % of consolidated after-tax net income, subject to legal and regulatory restrictions. The transaction was reviewed and approved in accordance with the Company's related-party transaction policy. The Company had no other material related-party transactions requiring disclosure. F-43 Note 19. Parent Company Condensed Financial Statements The following tables present the Parent Company-only condensed financial statements: Condensed Balance Sheets December 31, ($ in thousands) 2025 2024 Assets Cash and cash equivalents $ 973 $ 1,463 Investment in bank subsidiary 252,356 203,278 Other assets 190 390 Total assets $ 253,519 $ 205,131 Liabilities and shareholders' equity Subordinated note (net of unamortized debt issuance cost of $ 414,000 ) $ 24,586 $ — Other liabilities 1,040 138 Shareholders’ equity 227,893 204,993 Total liabilities and shareholders' equity $ 253,519 $ 205,131 Condensed Statements of Income and Comprehensive Income Year Ended December 31, ($ in thousands) 2025 2024 2023 Income Dividends from bank subsidiary $ 7,686 $ 10,560 $ 11,789 Expense Interest expense on subordinated note 278 — — Salaries and employee benefits 264 238 227 Occupancy and equipment 255 268 260 Directors’ fees 205 219 228 Other expense 304 300 234 Total expense 1,306 1,025 949 Income before income tax benefit and equity in undistributed income of bank subsidiary 6,380 9,535 10,840 Income tax benefit 254 295 252 Equity in undistributed income of bank subsidiary 19,001 11,239 12,826 Net income 25,635 21,069 23,918 Other comprehensive income, net of tax 5,156 38 2,392 Comprehensive income $ 30,791 $ 21,107 $ 26,310 F-44 Condensed Statements of Cash Flows Year Ended December 31, ($ in thousands) 2025 2024 2023 Cash flows from operating activities Net income $ 25,635 $ 21,069 $ 23,918 Adjustments to reconcile net income to net cash provided by operating activities Equity in undistributed income of bank subsidiary ( 19,001 ) ( 11,239 ) ( 12,826 ) Other, net 790 37 ( 789 ) Net change in: Other assets 200 ( 213 ) 145 Other liabilities 929 79 59 Net cash provided by operating activities 8,553 9,733 10,507 Cash flows from investing activities Payments for investments in bank subsidiary ( 25,000 ) — — Net cash used in investing activities ( 25,000 ) — — Cash flows from financing activities Proceeds from issuance of subordinated note, net of cost 24,574 — — Common stock: Issuance of stock pursuant to various stock plans — 160 888 Repurchase ( 706 ) ( 2,743 ) ( 3,934 ) Cash dividends paid ( 7,133 ) ( 7,143 ) ( 7,269 ) Payments related to tax-withholding for vested restricted stock awards ( 778 ) ( 197 ) ( 98 ) Net cash provided by (used in) financing activities 15,957 ( 9,923 ) ( 10,413 ) Net change in cash and cash equivalents ( 490 ) ( 190 ) 94 Cash and cash equivalents at beginning of year 1,463 1,653 1,559 Cash and cash equivalents at end of year $ 973 $ 1,463 $ 1,653 F-45