Business Description

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 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.…