2024 Third Quarter Highlights compared with 2024 Second Quarter:

Financial Results:
- Net income of $5.4 million, no change compared to $5.4 million
- Diluted earnings per share of $0.36, no change compared to $0.36
- Net interest income of $16.5 million, compared to $16.2 million
- Net interest margin of 2.95%, compared to 2.96%
- Provision for credit losses of $448 thousand, compared to $617 thousand
- Total assets of $2.39 billion, a 4.2% increase compared to $2.29 billion
- Gross loans of $1.93 billion, a 3.3% increase compared to $1.87 billion
- Total deposits of $2.06 billion, a 6.4% increase compared to $1.94 billion
Credit Quality:
- Allowance for credit losses to gross loans of 1.19%, compared to 1.22%
- Net charge-offs (recoveries)⁽¹⁾ to average gross loans⁽²⁾ of 0.01%, compared to (0.00)%
- Loans past due 30-89 days to gross loans of 0.53%, compared to 0.36%
- Nonperforming loans to gross loans of 0.19%, compared to 0.23%
- Criticized loans⁽³⁾ to gross loans of 0.85%, compared to 0.88%
Capital Levels:
- Remained well-capitalized with a Common Equity Tier 1 ("CET1") ratio of 11.57%
- Book value per common share increased to $13.75, compared to $13.23
- Repurchased 4,610 shares of common stock at an average price of $10.09 per share
- Paid quarterly cash dividend of $0.12 per share for the periods

___________________________________________________________

⁽¹⁾ Annualized.

⁽²⁾ Includes loans held for sale.

⁽³⁾ Includes special mention, substandard, doubtful, and loss categories.

OP Bancorp (the "Company") (NASDAQ:OPBK), the holding company of Open Bank (the "Bank"), today reported its financial results for the third quarter of 2024. Net income remained relatively the same for both the third quarter and second quarter of 2024 at $5.4 million, or $0.36 per diluted common share, compared with $5.1 million, or $0.33 per diluted common share, for the third quarter of 2023.

Min Kim, President and Chief Executive Officer:

"We continued to grow our loans and deposits at double digit annualized rates in this quarter while maintaining ample liquidity, stable net interest margin, and strong credit quality. As the Fed's easing cycle began in the quarter, the pressure on funding cost and net interest margin is diminishing, and we believe we are well positioned to prolong our growth and performance to achieve our long term strategic goals," said Min Kim, President and Chief Executive.

SELECTED FINANCIAL HIGHLIGHTS


($ in thousands, except per share data)	As of and For the Quarter									% Change 3Q2024 vs.
($ in thousands, except per share data)	3Q2024			2Q2024			3Q2023			2Q2024		3Q2023
Selected Income Statement Data:
Net interest income	$	16,506		$	16,194		$	17,313		1.9	%	(4.7	)%
Provision for credit losses		448			617			1,359		(27.4	)	(67.0	)
Noninterest income		4,240			4,184			2,601		1.3		63.0
Noninterest expense		12,720			12,189			11,535		4.4		10.3
Income tax expense		2,142			2,136			1,899		0.3		12.8
Net income		5,436			5,436			5,121		—		6.2
Diluted earnings per share		0.36			0.36			0.33		—		9.1
Selected Balance Sheet Data:
Gross loans	$	1,931,007		$	1,870,106		$	1,759,525		3.3	%	9.7	%
Total deposits		2,064,603			1,940,821			1,825,171		6.4		13.1
Total assets		2,387,980			2,290,680			2,142,675		4.2		11.4
Average loans⁽¹⁾		1,905,952			1,843,284			1,740,188		3.4		9.5
Average deposits		1,998,633			1,970,320			1,821,361		1.4		9.7
Credit Quality:
Nonperforming loans	$	3,620		$	4,389		$	4,211		(17.5	)%	(14.0	)%
Nonperforming loans to gross loans		0.19	%		0.23	%		0.24	%	(0.04	)	(0.05	)
Criticized loans⁽²⁾ to gross loans		0.85			0.88			0.78		(0.03	)	0.07
Net charge-offs (recoveries)⁽³⁾ to average gross loans⁽¹⁾		0.01			(0.00	)		0.11		0.01		(0.10	)
Allowance for credit losses to gross loans		1.19			1.22			1.23		(0.03	)	(0.04	)
Allowance for credit losses to nonperforming loans		634			519			513		115.00		121.00
Financial Ratios:
Return on average assets⁽³⁾		0.94	%		0.95	%		0.96	%	(0.01	)%	(0.02	)%
Return on average equity⁽³⁾		10.95			11.23			11.07		(0.28	)	(0.12	)
Net interest margin⁽³⁾		2.95			2.96			3.38		(0.01	)	(0.43	)
Efficiency ratio⁽⁴⁾		61.31			59.81			57.92		1.50		3.39
Common equity tier 1 capital ratio		11.57			12.01			12.09		(0.44	)	(0.52	)
Leverage ratio		9.30			9.28			9.63		0.02		(0.33	)
Book value per common share	$	13.75		$	13.23		$	12.17		3.9		13.0

⁽¹⁾		Includes loans held for sale.
⁽²⁾		Includes special mention, substandard, doubtful, and loss categories.
⁽³⁾		Annualized.
⁽⁴⁾		Represents noninterest expense divided by the sum of net interest income and noninterest income.

INCOME STATEMENT HIGHLIGHTS

Net Interest Income and Net Interest Margin


($ in thousands)	For the Three Months Ended						% Change 3Q2024 vs.
($ in thousands)	3Q2024		2Q2024		3Q2023		2Q2024		3Q2023
Interest Income
Interest income	$	35,299	$	34,357	$	31,186	2.7	%	13.2	%
Interest expense		18,793		18,163		13,873	3.5		35.5
Net interest income	$	16,506	$	16,194	$	17,313	1.9	%	(4.7	)%


($ in thousands)	For the Three Months Ended												Yield Change 3Q2024 vs.
	3Q2024				2Q2024				3Q2023				Yield Change 3Q2024 vs.
	Interest and Fees		Yield/Rate⁽¹⁾		Interest and Fees		Yield/Rate⁽¹⁾		Interest and Fees		Yield/Rate⁽¹⁾		2Q2024		3Q2023
Interest-earning Assets:
Loans	$	31,885	6.66	%	$	30,605	6.67	%	$	28,250	6.45	%	(0.01	)%	0.21	%
Total interest-earning assets		35,299	6.30			34,357	6.29			31,186	6.08		0.01		0.22
Interest-bearing Liabilities:
Interest-bearing deposits		17,921	4.85			17,343	4.84			13,006	4.22		0.01		0.63
Total interest-bearing liabilities		18,793	4.82			18,163	4.81			13,873	4.23		0.01		0.59
Ratios:
Net interest income / interest rate spreads		16,506	1.48			16,194	1.48			17,313	1.85		—		(0.37	)
Net interest margin			2.95				2.96				3.38		(0.01	)	(0.43	)
Total deposits / cost of deposits		17,921	3.57			17,343	3.54			13,006	2.83		0.03		0.74
Total funding liabilities / cost of funds		18,793	3.60			18,163	3.57			13,873	2.90		0.03		0.70

⁽¹⁾

Annualized.


($ in thousands)	For the Three Months Ended															Yield Change 3Q2024 vs.
	3Q2024					2Q2024					3Q2023					Yield Change 3Q2024 vs.
	Interest & Fees			Yield⁽¹⁾		Interest & Fees			Yield⁽¹⁾		Interest & Fees			Yield⁽¹⁾		2Q2024		3Q2023
Loan Yield Component:
Contractual interest rate	$	31,182		6.52	%	$	29,719		6.48	%	$	27,319		6.24	%	0.04	%	0.28	%
Accretion of SBA loan discount⁽²⁾		918		0.19			1,087		0.24			1,263		0.29		(0.05	)	(0.10	)
Amortization of net deferred fees		23		—			(44	)	(0.01	)		1		—		0.01		—
Amortization of premium		(487	)	(0.10	)		(396	)	(0.09	)		(445	)	(0.10	)	(0.01	)	—
Net interest recognized on nonaccrual loans		(61	)	(0.01	)		(3	)	0.00			(26	)	(0.01	)	(0.01	)	—
Prepayment penalty income and other fees⁽³⁾		310		0.06			242		0.05			138		0.03		0.01		0.03
Yield on loans	$	31,885		6.66	%	$	30,605		6.67	%	$	28,250		6.45	%	(0.01	)%	0.21	%

⁽¹⁾		Annualized.
⁽²⁾		Includes discount accretion from SBA loan payoffs of $426 thousand, $564 thousand and $666 thousand for the three months ended September 30, 2024, June 30, 2024 and September 30, 2023, respectively.
⁽³⁾		Includes prepayment penalty income of $114 thousand and $26 thousand for the three months ended September 30, 2024 and June 30, 2024, respectively, from Commercial Real Estate ("CRE") loans.

Third Quarter 2024 vs. Second Quarter 2024

Net interest income increased $312 thousand, or 1.9%, primarily due to higher interest income on loans but partially offset by higher interest expense on interest-bearing deposits and lower interest income on interest-bearing deposits in other banks. Net interest margin was 2.95%, a decrease of 1 basis point from 2.96%.

A $1.3 million increase in interest income on loans was primarily due to a $62.7 million, or 3.4%, increase in average balance.
A $578 thousand increase in interest expense on interest-bearing deposits was primarily due to a $29.4 million, or 2.0%, increase in average balance.
A $373 thousand decrease in interest income on interest-bearing deposits in other banks was primarily due to a $27.0 million, or 19.8%, decrease in average balance.

Third Quarter 2024 vs. Third Quarter 2023

Net interest income decreased $807 thousand, or 4.7%, primarily due to higher interest expense on interest-bearing deposits, partially offset by higher interest income on loans and higher interest-bearing deposits in other banks, as our deposit costs repriced quicker than our interest-earning asset yields following the Federal Reserve's rate increases. Net interest margin was 2.95%, a decrease of 43 basis points from 3.38%.

A $4.9 million increase in interest expense on interest-bearing deposits was primarily due to a $248.4 million, or 20.3%, increase in average balance and a 63 basis point increase in average cost.
A $3.6 million increase in interest income on loans was primarily due to a $165.8 million, or 9.5%, increase in average balance and a 21 basis point increase in average yield.
A $358 thousand increase in interest income on interest-bearing deposits in other banks was primarily due to a $26.3 million, or 31.7%, increase in average balance.

Provision for Credit Losses


($ in thousands)	For the Three Months Ended
($ in thousands)	3Q2024		2Q2024			3Q2023
Provision for credit losses on loans	$	234	$	627		$	1,303
Provision for (reversal of) credit losses on off-balance sheet exposure		214		(10	)		56
Total provision for credit losses	$	448	$	617		$	1,359

Third Quarter 2024 vs. Second Quarter 2024

The Company recorded $448 thousand in total provision for credit losses, a decrease of $169 thousand, compared with $617 thousand. Provision for credit losses on loans decreased $393 thousand and provision for credit losses on off-balance sheet exposure increased $224 thousand.

Provision for credit losses on loans of $234 thousand was primarily due to a $215 thousand increase in the qualitative reserve driven by declining collateral values for collateral dependent CRE loans and weakening economic and business conditions.

Provision for credit losses on off-balance sheet exposure of $214 thousand was primarily due to increases in unfunded commitment balance and utilization of commitment.

Third Quarter 2024 vs. Third Quarter 2023

The Company recorded $448 thousand in total provision for credit losses, a decrease of $911 thousand, compared with $1.4 million.

Noninterest Income


($ in thousands)	For the Three Months Ended						% Change 3Q2024 vs.
($ in thousands)	3Q2024		2Q2024		3Q2023		2Q2024		3Q2023
Noninterest Income
Service charges on deposits	$	889	$	793	$	575	12.1	%	54.6	%
Loan servicing fees, net of amortization		693		575		468	20.5		48.1
Gain on sale of loans		2,088		2,325		1,179	(10.2	)	77.1
Other income		570		491		379	16.1		50.4
Total noninterest income	$	4,240	$	4,184	$	2,601	1.3	%	63.0	%

Third Quarter 2024 vs. Second Quarter 2024

Noninterest income increased $56 thousand, or 1.3%, primarily due to higher loan servicing fees and higher service charges on deposits, partially offset by lower gain on the sale of loans.

Loan servicing fees, net of amortization, were $693 thousand, an increase of $118 thousand from $575 thousand, primarily due to a decrease in servicing fee amortization driven by lower loan payoffs in loan servicing portfolio.
Service charges on deposits were $889 thousand, an increase of $96 thousand from $793 thousand, primarily due to an increase in deposit analysis fees from analysis accounts added in 2024.
Gain on sale of loans was $2.1 million, a decrease of $237 thousand from $2.3 million, primarily due to a lower average premium on sales. The Bank sold $35.6 million in SBA loans at an average premium rate of 7.30%, compared to the sale of $32.1 million at an average premium rate of 8.58%.

Third Quarter 2024 vs. Third Quarter 2023

Noninterest income increased $1.6 million, or 63.0%, primarily due to higher gain on sale of loans, higher service charges on deposits, and higher loan servicing fees.

Gain on sale of loans was $2.1 million, an increase of $909 thousand from $1.2 million, primarily due to a higher loan sold amount and a higher average premium rate. The Bank sold $35.6 million in SBA loans at an average premium rate of 7.30%, compared to the sale of $23.4 million at an average premium rate of 6.50%.
Service charges on deposits were $889 thousand, an increase of $314 thousand from $575 thousand, primarily due to an increase in deposit analysis fees from an increase in the number of analysis accounts.
Loan servicing fees were $693 thousand, an increase of $225 thousand from $468 thousand, primarily due to a decrease in servicing fee amortization driven by lower loan payoffs in loan servicing portfolio.

Noninterest Expense


($ in thousands)	For the Three Months Ended						% Change 3Q2024 vs.
($ in thousands)	3Q2024		2Q2024		3Q2023		2Q2024		3Q2023
Noninterest Expense
Salaries and employee benefits	$	8,031	$	7,568	$	7,014	6.1	%	14.5	%
Occupancy and equipment		1,676		1,660		1,706	1.0		(1.8	)
Data processing and communication		634		530		369	19.6		71.8
Professional fees		346		406		440	(14.8	)	(21.4	)
FDIC insurance and regulatory assessments		391		378		333	3.4		17.4
Promotion and advertising		151		151		207	—		(27.1	)
Directors' fees		154		178		164	(13.5	)	(6.1	)
Foundation donation and other contributions		549		539		529	1.9		3.8
Other expenses		788		779		773	1.2		1.9
Total noninterest expense	$	12,720	$	12,189	$	11,535	4.4	%	10.3	%

Third Quarter 2024 vs. Second Quarter 2024

Noninterest expense increased $531 thousand, or 4.4%, primarily due to higher salaries and employee benefits, and data processing and communication.

Salaries and employee benefits increased $463 thousand, primarily due to increases in employee incentive accruals and employee vacation accruals.
Data processing and communication increased $104 thousand, primarily due to accrual adjustments made to be in line with our continued growth.

Third Quarter 2024 vs. Third Quarter 2023

Noninterest expense increased $1.2 million, or 10.3%, primarily due to higher salaries and employee benefits, and data processing and communication.

Salaries and employee benefits increased $1.0 million, primarily due to increases in salaries and employee benefits to support our growth and a lower accrual on employee incentives in the third quarter of 2023.
Data processing and communication increased $265 thousand, primarily due to additional expense to support our continued growth and a lower expense in the third quarter of 2023 from a credit received on data processing fees.

Income Tax Expense

Third Quarter 2024 vs. Second Quarter 2024

Income tax expense was $2.1 million, resulting in an effective tax rate of 28.3%, compared to income tax expense of $2.1 million, resulting in an effective tax rate of 28.2%.

Third Quarter 2024 vs. Third Quarter 2023

Income tax expense was $2.1 million, resulting in an effective tax rate of 28.3%, compared to income tax expense of $1.9 million, resulting in an effective tax rate of 27.1%. The effective tax rate for the third quarter of 2023 was lower primarily due to adjustments for differences between the prior year tax provision and the final tax returns that were applied in the quarter.

BALANCE SHEET HIGHLIGHTS

Loans


($ in thousands)	As of						% Change 3Q2024 vs.
($ in thousands)	3Q2024		2Q2024		3Q2023		2Q2024		3Q2023
CRE loans	$	966,472	$	931,284	$	878,824	3.8	%	10.0	%
SBA loans		252,379		242,395		240,154	4.1		5.1
C&I loans		212,476		188,557		124,632	12.7		70.5
Home mortgage loans		499,666		506,873		515,789	(1.4	)	(3.1	)
Consumer & other loans		14		997		126	(98.6	)	(88.9	)
Gross loans	$	1,931,007	$	1,870,106	$	1,759,525	3.3	%	9.7	%

The following table presents new loan originations based on loan commitment amounts for the periods indicated:


($ in thousands)	For the Three Months Ended						% Change 3Q2024 vs.
($ in thousands)	3Q2024		2Q2024		3Q2023		2Q2024		3Q2023
CRE loans	$	68,525	$	41,990	$	33,222	63.2	%	106.3	%
SBA loans		46,302		24,142		39,079	91.8		18.5
C&I loans		27,771		21,271		14,617	30.6		90.0
Home mortgage loans		10,105		13,720		9,137	(26.3	)	10.6
Gross loans	$	152,703	$	101,123	$	96,055	51.0	%	59.0	%

The following table presents changes in gross loans by loan activity for the periods indicated:


($ in thousands)	For the Three Months Ended
($ in thousands)	3Q2024			2Q2024			3Q2023
Loan Activities:
Gross loans, beginning	$	1,870,106		$	1,804,987		$	1,716,197
New originations		152,703			101,123			96,055
Net line advances		(526	)		37,929			22,146
Purchases		862			5,559			6,732
Sales		(35,576	)		(32,102	)		(23,377	)
Paydowns		(24,798	)		(19,710	)		(22,169	)
Payoffs		(29,642	)		(36,902	)		(36,024	)
Decrease (increase) in loans held for sale		(1,674	)		9,590			—
Other		(448	)		(368	)		215
Total		60,901			65,119			43,328
Gross loans, ending	$	1,931,007		$	1,870,106		$	1,759,525

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

Gross loans were $1.93 billion as of September 30, 2024, up $60.9 million from June 30, 2024, primarily due to new loan originations, partially offset by loan sales, payoffs and paydowns. New loan originations, loan sales, and loan payoffs and paydowns were $152.7 million, $35.6 million, and $54.4 million, respectively, for the third quarter of 2024, compared with $101.1 million, $32.1 million, and $56.6 million, respectively, for the second quarter of 2024.

As of September 30, 2024 vs. September 30, 2023

Gross loans were $1.93 billion as of September 30, 2024, up $171.5 million, from September 30, 2023, primarily due to and increase in new loan originations of $472.3 million, partially offset by loan sales of $132.6 million and loan payoffs and paydowns of $214.9 million.

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

($ in thousands)

As of

3Q2024

2Q2024

3Q2023

Rate

Fixed rate

35.7

OP Bancorp Reports Net Income for 2024 Third Quarter of $5.4 Million and Diluted Earnings Per Share of $0.36