OP Bancorp (OPBK)

CIK: 0001722010. SIC: 6022 State Commercial Banks. Latest 10-K as of: 2026-03-13.

SIC breadcrumb: Finance, Insurance, And Real Estate > Depository Institutions > SIC 6022 State Commercial Banks

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1722010. Latest filing source: 0001722010-26-000002.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-13. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001722010.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-15. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001722010.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001722010-26-000014.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-15. Report date: 2026-03-31.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

32

Financial Review

33

Critical Accounting Policies and Estimates

34

Results of Operations

35

Net Interest Income

35

Provision for Credit Losses

38

Noninterest Income

38

Noninterest Expense

39

Income Taxes

39

Financial Condition

39

Investment Portfolio

39

Loans

41

Allowance for Credit Losses

42

Nonperforming Assets

43

Deposits and Other Sources of Funds

44

Liquidity and Capital Resources

45

Capital Requirements

47

OVERVIEW

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the related notes thereto contained in this Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review “Part II, Item 1A. Risk Factors” for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

OP Bancorp (referred to herein on an unconsolidated basis as "OP Bancorp" and on a consolidated basis as the "Company") is a bank holding company headquartered in Los Angeles, California. Our commercial community banking activities are operated through Open Bank ("Open Bank" or the "Bank"), our wholly owned banking subsidiary, and we do not conduct material business operations other than through the Bank. We offer commercial banking services to small and medium-sized businesses, their owners and retail customers primarily in the Korean-American communities within our primary market areas. We currently operate twelve full service branches: nine branches across Los Angeles and Orange Counties in California, as well as one branch each in Santa Clara, California; Carrollton, Texas; and Las Vegas, Nevada. As of May 2026, we operate two loan production offices, following the opening of a new office in Bellevue, Washington effective May 2026, and the closure of four other loan production offices (Pleasanton, California; Atlanta, Georgia; Aurora, Colorado; and Fairfax, Virginia) in April 2026, with the remaining office located in Lynnwood, Washington. We closed the four loan production offices due to limited market demand,

Our results of operations depend primarily on net interest income, which represents the interest we earn on loans and related products, reduced by the interest we pay on deposits and other borrowings including our senior subordinated note. In addition to net interest income, we derive earnings from fee income we receive in connection with our deposits, and from gains on sale and service of SBA loans. Our major operating expenses are salaries and related benefits we pay our management and staff, and rent we pay on our leased properties. We rely primarily on locally-generated deposits, mostly from the Korean-American market within California, to fund our loan activities.

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Current Developments

Interest Rate Environment

The Board of Governors of the Federal Reserve System ("Federal Reserve") maintained the Federal Funds Rate target range at 3.50% to 3.75% on April 29, 2026, marking the third consecutive policy pause this year. The FOMC reiterated that future rate decisions will remain data‑dependent as inflation continues to moderate unevenly and labor‑market indicators show signs of softening. Uncertainty has been heightened by ongoing geopolitical tensions in the Middle East, which have contributed to elevated oil prices and added upward pressure on inflation. The current rate environment continues to influence loan demand, deposit pricing, funding costs, and credit risk trends across the banking industry. These economic and geopolitical dynamics also increase the difficulty of forecasting interest‑rate movements and overall economic conditions, affecting the Company’s balance sheet management strategies and our ability to effectively price loans and longer‑term deposit products.

We believe we have responded effectively to the evolving dynamics of the banking environment. Our ability to navigate recent challenges is largely attributable to the continued loyalty of our customers and the dedication and expertise of our employees and management team.

FINANCIAL REVIEW

Three Months Ended March 31,

($ in thousands, except share and per share data)

2026

2025

Income Statement Data:

Interest income

$

38,537 

$

34,859 

Interest expense

18,014 

17,441 

Net interest income

20,523 

17,418 

Provision for credit losses

412 

736 

Noninterest income

4,032 

4,816 

Noninterest expense

14,233 

13,814 

Income before income taxes

9,910 

7,684 

Income tax expense

2,676 

2,124 

Net income

7,234 

5,560 

Per Share Data:

Basic EPS

$

0.49 

$

0.37 

Diluted EPS

0.48 

0.37 

Book value per common share, at period-end

15.62 

14.09 

Shares of common stock outstanding, at period-end

14,894,239 

14,914,261 

Performance Ratios:

Return on average assets ("ROAA") (1)

1.08

%

0.92

%

Return on average equity ("ROAE") (1)

12.56

10.73

Yield on average total loans (1)

6.33 

6.39

Yield on average interest-earning assets (1)

6.00 

6.04

Cost of average interest-bearing liabilities (1)

3.88 

4.31

Cost of deposits (1)

2.97 

3.23

Net interest margin (1)

3.19 

3.01

Efficiency ratio (2)

57.97 

62.13 

(1)    Annualized.

(2)    Represent noninterest expense divided by the sum of net interest income and noninterest income.

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Change

($ in thousands)

March 31, 2026

December 31, 2025

% or Basis Point

Balance Sheet Data:

Gross loans

$

2,234,259 

$

2,193,669 

2 

%

Allowance for credit losses on loans

28,406 

27,975 

2 

%

Total assets

2,698,627 

2,650,226 

2 

%

Total deposits

2,327,294 

2,280,547 

2 

%

Shareholders’ equity

232,711 

227,893 

2 

%

Asset Quality Data:

Nonperforming loans to gross loans

0.82 

%

0.64 

%

18

Allowance for credit losses on loans to nonperforming loans

155 

199 

(44)

%

Allowance for credit losses on loans to gross loans

1.27 

1.28 

(1)

Balance Sheet and Capital Ratios:

Gross loans to total deposits

96 

%

96 

%

0

Noninterest-bearing deposits to total deposits

23 

23 

0

Stockholders' equity to total assets

8.62 

8.60 

2

Tier 1 leverage capital ratio

9.07 

8.99 

8

Common equity tier 1 capital ratio

10.83 

10.93 

(10)

Tier 1 risk-based capital ratio

10.83 

10.93 

(10)

Total risk-based capital ratio

13.17 

13.31 

(14)

The Company's net income for the first quarter of 2026 was $7.2 million, up $1.7 million, or 30%, compared with $5.6 million in the same period a year ago. The year-over-year increase was primarily driven by higher net interest income. The following were notable elements of the Company's performance for the periods presented:

•Net interest income and net interest margin: First quarter 2026 net interest income increased to $20.5 million, up $3.1 million, or 18%, from the year ago quarter. First quarter 2026 net interest margin expanded 18 basis points to 3.19%.

•Profitability ratios: First quarter 2026 ROAA and ROAE of 1.08% and 12.56%, respectively, increasing 16 and 183 basis points year-over-year, respectively.

•Efficiency Ratios: First quarter 2026 efficiency ratio of 57.97% improved 416 basis points from the same period in 2025. The improvement in the efficiency ratios primarily reflected an increase in net interest income.

•Asset Growth: Total assets reached $2.70 billion as of March 31, 2026, up $48.4 million, or 2%, from December 31, 2025, primarily driven by a $40.6 million increase in gross loans.

•Loan Growth: Gross loans were $2.23 billion, up $40.6 million, or 2%, from December 31, 2025, primarily reflecting $41.1 million of CRE loan growth.

•Deposit Growth: Total deposits were $2.33 billion, up $46.7 million, or 2%, from December 31, 2025, reflecting growth across all major deposit categories.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company's significant accounting policies are described in Note 1. Significant Accounting Policies to Consolidated Financial Statements in the 2025 Annual Report on Form 10-K. Certain policies involve critical accounting estimates requiring management judgment, and actual results may differ materially under different assumptions. Allowance for credit losses is considered critical to the Company's Consolidated Financial Statements, and there have been no material changes to our critical accounting policies and estimates since those described in our 2025 Annual Report on Form 10-K.

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RESULTS OF OPERATIONS

Net Interest Income

The management of interest income and expense is fundamental to our financial performance. Net interest income, the difference between interest income and interest expense, is the largest component of our total revenue. Management closely monitors total net interest income and the net interest margin. The timing and pace of recognizing premiums and discounts on interest-earning assets as well as the reversal of interest on nonaccrual loans affect our net interest margin, as changes in prepayment speeds and loan activity influence the effective yield on these assets. We seek to maximize net interest income without exposing the Company to excessive interest rate risk through our asset and liability policies. Interest rate risk is managed by monitoring the pricing, maturity and repricing options of all classes of interest-bearing assets and liabilities.

35

The following table presents, for the periods indicated, information about: (i) weighted average balances, the total dollar amount of interest income from interest-earning assets and the resultant average yields, (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates, (iii) net interest income, (iv) the interest rate spread, and (v) the net interest margin.

Three Months Ended March 31,

2026

2025

($ in thousands)

Average

Balance

Interest Income/Expense

Average Yield/Rate(1)

Average

Balance

Interest Income/Expense

Average Yield/Rate(1)

Interest-earning assets:

Interest-bearing deposits in other banks

$

145,013 

$

1,326 

3.66 

%

$

124,069 

$

1,372 

4.42 

%

Other investments (2)

17,232 

571 

13.24 

16,469 

302 

7.33 

AFS debt securities

205,247 

1,761 

3.43 

184,649 

1,496 

3.24 

CRE

1,154,515 

17,814 

6.26 

1,000,426 

14,980 

6.07 

SBA

292,821 

5,980 

8.28 

265,953 

6,207 

9.47 

C&I

212,941 

3,552 

6.77 

212,106 

3,778 

7.22 

Home mortgage

565,185 

7,508 

5.31 

526,326 

6,718 

5.11 

Consumer

1,287 

25 

7.99 

233 

6 

9.75 

Loans (3)

2,226,749 

34,879 

6.33 

2,005,044 

31,689 

6.39 

Total interest-earning assets

2,594,241 

38,537 

6.00 

2,330,231 

34,859 

6.04 

Noninterest-earning assets

76,830 

77,823 

Total assets

$

2,671,071 

$

2,408,054 

Interest-bearing liabilities:

Money market deposits and others

$

393,242 

$

3,009 

3.10 

%

$

353,804 

$

3,085 

3.54 

%

Time deposits

1,390,491 

13,836 

4.04 

1,208,032 

13,523 

4.54 

Total interest-bearing deposits

1,783,733 

16,845 

3.83 

1,561,836 

16,608 

4.31 

Borrowings

75,834 

679 

3.63 

78,944 

833 

4.28 

Subordinated note

24,600 

490 

7.97 

— 

— 

— 

Total interest-bearing liabilities

1,884,167 

18,014 

3.88 

1,640,780 

17,441 

4.31 

Noninterest-bearing liabilities:

Noninterest-bearing deposits

516,722 

522,054 

Other noninterest-bearing liabilities

39,756 

38,014 

Total noninterest-bearing liabilities

556,478 

560,068 

Shareholders’ equity

230,426 

207,206 

Total liabilities and shareholders’ equity

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2026-03-13. Report date: 2025-12-31.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the related notes thereto contained in this Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Form 10-K, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Part II, Item 1A. Risk Factors” for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

OVERVIEW

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the related notes thereto contained in this Report, and with the general description of our holding company, our subsidiary bank, and our business set forth in Part I. Item 1. Business above. Some of the information contained in this discussion and analysis or set forth elsewhere in this Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review “Part I, Item 1A. Risk Factors” for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Our results of operations depend primarily on net interest income generated through Open Bank, which represents the interest we earn on loans and related products, reduced by the interest we pay on deposits and other borrowings. In addition to our net interest income, the Bank derives earnings from fee income we receive in connection with our deposits, and from gains on the sale and service of SBA loans. Our major operating expenses are the salaries and related benefits we pay our management and staff, and the rent we pay on our leased properties. We rely primarily on locally-generated deposits, mostly from the Korean-American market within California, to fund our loan activities although, from time to time, we may rely on brokered deposits or other source or liquidity.

Current Developments

Interest Rate Environment

The Federal Reserve maintained the federal funds rate at 3.50% to 3.75% at its January 2026 meeting, following three consecutive reductions in late 2025. The decision reflects a labor market that has softened but stabilized in recent months, reducing the urgency for additional easing. At the same time, inflation remains above the Federal Reserve’s 2% objective, and recent readings have been affected by data distortions tied to the prior government shutdown. Policymakers signaled a shift to a wait‑and‑see approach as they assess the outlook for employment and inflation. The pause also occurs against a politically sensitive backdrop, with a new Federal Reserve Chair expected later this year; however, monetary policy decisions remain committee‑driven, limiting the potential for abrupt directional changes. The current rate environment continues to influence lending activity, deposit pricing, funding costs, and overall balance‑sheet management.

We believe we have responded effectively to the evolving dynamics of the banking environment and that we are well-positioned to do so in the future. Our ability to navigate recent challenges is largely attributable to the continued loyalty of our customers and the dedication and expertise of our employees and management team.

FDIC Inflation-based Adjustments

Effective January 1, 2026, amendments to the Federal Deposit Insurance Corporation Improvement Act (“FDICIA”) increased the asset‑size threshold for institutions subject to the audit and reporting requirements under Part 363. The FDIC has affirmed that institutions falling below a particular revised threshold as of the effective date are not required to comply with Part 363 requirements for any fiscal year still open prior to January 1, 2026, including 2025. Because the Bank was below the $5 billion total assets as of January 1, 2026,

29

it is no longer required to obtain a Part 363 independent audit of internal control over financial reporting (“ICFR”) for the year ended December 31, 2025. However, as an accelerated filer, we remain subject to Section 404(b) of the Sarbanes‑Oxley Act, and therefore our ICFR continues to be subject to an annual auditor attestation under SEC rules. Management will continue to monitor our asset levels and regulatory status to assure compliance with applicable FDIC and SEC requirements.

Recent Changes to SBA Program Eligibility

On February 2, 2026, the SBA announced that, effective March 1, 2026, it eliminated a longstanding rule that, subject to certain restrictions, permitted SBA lending to borrowers that included equity ownership of up to 5% by noncitizens or non U.S.-resident aliens. The Company implemented this change in its SBA lending activities as of the effective date. Given that a substantial portion of our banking activities includes SBA lending, management has assessed the impact of this rule change on our lending operations, including sold loans and loans held-for-sale, and loans held-to-maturity, and has not identified a material adverse impact on those portfolios as of the date of this report.

Management continues to monitor the effect of the rule change on future SBA loan originations and customer relationships, including borrowers that were previously eligible under SBA loan programs. To date, the Company has not experienced, and does not currently expect, a material adverse effect on its SBA lending volume, asset quality, results of operations, or financial condition as a result of this regulatory update, and will continue to monitor developments in SBA program requirements and related federal policies as part of its ongoing regulatory compliance and risk management processes.

FINANCIAL REVIEW

Our MD&A reviews the financial condition and results of operations of the Company for 2025 and 2024. Some tables may include additional periods to comply with disclosure requirements or to illustrate trends in greater depth. The page locations of specific sections and notes that we refer to are presented in the table of contents. To review our financial condition and results of operations for 2024 and a comparison between the 2024 and 2023 results, see Item 7. MD&A of our 2024 Form 10-K filed with the SEC on March 28, 2025, which discussion is incorporated herein by reference.

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Year Ended December 31,

($ in thousands, except share and per share data)

2025

2024

Income Statement Data:

Interest income

$

150,328 

$

137,620 

Interest expense

71,980 

72,012 

Net interest income

78,348 

65,608 

Provision for credit losses

3,580 

2,757 

Noninterest income

16,332 

16,427 

Noninterest expense

55,773 

50,199 

Income before income taxes

35,327 

29,079 

Income tax expense

9,692 

8,010 

Net income

25,635 

21,069 

Per Share Data:

Basic EPS

$

1.72 

$

1.39 

Diluted EPS

1.72 

1.39 

Book value per common share, at period-end

15.31 

13.83 

Shares of common stock outstanding, at period-end

14,889,540 

14,819,866 

Performance Ratios:

Return on average assets ("ROA")

1.01

%

0.92

%

Return on average equity ("ROE")

11.91

10.68

Yield on average total loans

6.49 

6.63

Yield on average interest-earning assets

6.13 

6.26

Cost of average interest-bearing liabilities

4.13 

4.74

Cost of deposits

3.13 

3.48

Net interest margin

3.19 

2.99

Efficiency ratio(1)

58.91 

61.19 

(1)     Represent noninterest expense divided by the sum of net interest income and noninterest income.

31

As of December 31,

($ in thousands)

2025

2024

Balance Sheet Data:

Gross loans

$

2,193,669 

$

1,956,852 

Allowance for credit losses on loans

27,975 

24,796 

Total assets

2,650,226 

2,366,013 

Total deposits

2,280,547 

2,027,285 

Shareholders’ equity

227,893 

204,993 

Asset Quality Data:

Nonperforming loans to gross loans

0.64 

%

0.40 

%

Allowance for credit losses on loans to nonperforming loans

199 

317 

Allowance for credit losses on loans to gross loans

1.28 

1.27 

Balance Sheet and Capital Ratios:

Gross loans to deposits

96 

%

97 

%

Noninterest-bearing deposits to deposits

23 

25 

Average equity to average total assets

8 

9 

Tier 1 leverage capital ratio

8.99 

9.27 

Common equity tier 1 capital ratio

10.93 

11.35 

Tier 1 risk-based capital ratio

10.93 

11.35 

Total risk-based capital ratio

13.31 

12.60 

The Company's net income for 2025 was $25.6 million, up $4.6 million, or 22%, from 2024 net income of $21.1 million. The increase was primarily driven by higher net interest income, partially offset by increases in noninterest expense and income tax expense. The following were notable elements of the Company's performance for 2025:

•Net interest income and net interest margin: 2025 net interest income increased to $78.3 million, up $12.7 million, or 19%, from 2024. 2025 net interest margin expanded 20 basis points to 3.19%.

•Profitability ratios: 2025 ROA and ROE of 1.01% and 11.91%, respectively, were up year-over-year. ROA and ROE of 0.92% and 10.68%, respectively.

•Efficiency Ratios: 2025 efficiency ratio of 58.91% improved 228 basis points from 2024. The improvement in the efficiency ratios primarily reflected an increase in net interest income.

•Asset Growth: Total assets increased to $2.65 billion as of December 31, 2025, representing a $284.2 million, or 12% increase from December 31, 2024, driven primarily by growth of $152.0 million in CRE loans, $64.8 million in home mortgage loans and $32.4 million in cash and cash equivalents.

•Loans Growth: Gross loans were $2.19 billion, up $236.8 million, or 12%, from December 31, 2024, primarily reflecting growth in CRE and home mortgage loans.

•Deposits Growth: Total deposits were $2.28 billion, up $253.3 million, or 12%, from December 31, 2024, reflecting growth in time deposits and money market and others.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our accounting and reporting policies conform to accounting principles generally accepted in GAAP and conform to general practices within the industry in which we operate. To prepare financial statements in conformity with GAAP, management makes estimates, assumptions and judgments based on available information. These estimates, assumptions and judgments affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions and judgments are based on information available as of the date of the financial statements and, as this information changes, actual results could differ from the estimates, assumptions and judgments reflected in the financial statement. In particular, management

32

has identified several accounting policies that, due to the estimates, assumptions and judgments inherent in those policies, are critical in understanding our financial statements.

The following is a discussion of the critical accounting policies and significant estimates that require us to make complex and subjective judgments. For further information on the Company's accounting policies, refer to Note 1. Significant Accounting Policies to the Consolidated Financial Statements in this Form 10-K.

Allowance for Credit Losses

We employ 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 Current Expected Credit Losses ("CECL"), we elected not to consider accrued interest receivable in our estimated credit losses because we write off uncollectible accrued interest receivable in a timely manner. We consider writing off accrued interest amounts once the amounts become 90 days past due to be considered within a timely manner. We have elected to write off accrued interest receivable by reversing interest income. We use transition matrices to develop the Probability of Default ("PD") and Loss Given Default ("LGD") approach, incorporating quantitative factors and qualitative considerations in the calculation of the allowance for credit losses for collectively assessed loans. The model provides forecasts of PD and LGD based on national unemployment rates using regression analysis. We incorporate future economic conditions using a weighted multiple scenario approach: baseline and adverse. We apply 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. We make critical accounting estimates, including the judgments made in the application of significant accounting policies, sensitivity to change, and the likelihood of materially different reported results if different assumptions were used.

As part of our process for determining allowance for credit losses, sensitivity analyses are performed to assess the impact of how changing certain key assumptions could impact our estimated allowance for credit losses as of December 31, 2025. We calculated alternative values for the allowance for credit losses by severely changing key assumptions, such as macroeconomic inputs from the economic forecasts, prepayment rates, historical loss factors, among others, and the calculated allowance for the quantitative component would have been between $11.0 million and $15.9 million higher than our estimate for the allowance as of December 31, 2025, depending on the forecast scenario. These sensitivity analyses provide approximations of possible outcomes under hypothetically severe conditions and assist management in making informed decisions on key assumptions. These analyses, however, are not intended to estimate changes in the overall allowance for credit losses as they do not capture all the potentially unknown variables that could arise in the forecast period, and do not represent management's view of expected credit losses as of December 31, 2025. Management believes that the estimate for the allowance for credit losses was reasonable and appropriate as of December 31, 2025.

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

33

•    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.

RESULTS OF OPERATIONS

Net Interest Income

The management of interest income and expense is fundamental to our financial performance. Net interest income, the difference between interest income and interest expense, is the largest component of our total revenue. Management closely monitors both total net interest income and the net interest margin. We seek to maximize net interest income without exposing us to excessive interest rate risk through our asset and liability policies. Interest rate risk is managed by monitoring the pricing, maturity and repricing options of all classes of interest-bearing assets and liabilities. Our net interest margin is also adversely impacted by the reversal of interest on nonaccrual loans and the reinvestment of loan payoffs into lower yielding investment securities and other short-term investments.

34

The following table presents, for the periods indicated: (i) weighted average balances, the total interest income from interest-earning assets, and the resulting average yields; (ii) average balances, the total interest expense on interest-bearing liabilities, and the resulting average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin:

Year Ended December 31,

2025

2024

($ in thousands)

Average

Balance

Interest

and Fees

Yield /

Rate

Average

Balance

Interest

and Fees

Yield /

Rate

Interest-earning assets:

Interest-bearing deposits in other banks

$

135,551 

$

5,882 

4.34 

%

$

109,579 

$

5,766 

5.26 

%

Other investments(1)

16,934 

1,260 

7.44 

16,371 

1,266 

7.74 

AFS debt securities

190,798 

6,312 

3.31 

194,969 

6,227 

3.19 

CRE

1,053,827 

65,298 

6.20 

929,890 

56,883 

6.12 

SBA

279,600 

26,223 

9.38 

263,442 

27,978 

10.62 

C&I

203,997 

14,827 

7.27 

178,533 

13,765 

7.71 

Home mortgage

572,093 

30,501 

5.33 

504,030 

25,648 

5.09 

Consumer

261 

25 

9.62 

835 

87 

10.32 

Loans(2)

2,109,778 

136,874 

6.49 

1,876,730 

124,361 

6.63 

Total interest-earning assets

2,453,061 

150,328 

6.13 

2,197,649 

137,620 

6.26 

Noninterest-earning assets

81,066 

87,745 

Total assets

$

2,534,127 

$

2,285,394 

Interest-bearing liabilities:

Money market deposits and others

$

394,603 

$

13,705 

3.47 

%

$

346,104 

$

14,135 

4.08 

%

Time deposits

1,273,661 

55,144 

4.33 

1,084,107 

53,986 

4.98 

Total interest-bearing deposits

1,668,264 

68,849 

4.13 

1,430,211 

68,121 

4.76 

Borrowings

72,235 

2,853 

3.95 

88,186 

3,891 

4.41 

Subordinated note, net

3,502 

278 

7.93 

— 

— 

— 

Total interest-bearing liabilities

1,744,001 

71,980 

4.13 

1,518,397 

72,012 

4.74 

Noninterest-bearing liabilities:

Noninterest-bearing deposits

532,823 

528,877 

Other noninterest-bearing liabilities

42,152 

40,839 

Total noninterest-bearing liabilities

574,975 

569,716 

Shareholders’ equity

215,151 

197,281 

Total liabilities and shareholders’ equity

$

2,534,127 

$

2,285,394 

Net interest income / interest rate spreads

$

78,348 

2.00 

%

$

65,608 

1.52 

%

Net interest margin

3.19 

%

2.99 

%

Cost of deposits

3.13 

%

3.48 

%

Cost of funds

3.16 

%

3.52 

%

(1)Includes FHLB and PCBB stocks, CRA qualified mutual fund and interest-earning time deposits with banks.

(2)Include non-accrual loans and loans held-for-sale.

35

Changes in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates. The following tables set forth the effects of changing rates and volumes on our net interest income during the period shown. Information is provided with respect to (i) effects on interest income attributable to changes in volume (change in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). Change applicable to both volume and rate have been allocated to volume and rate ratably.

Year Ended December 31,

2025 vs 2024

Increases (Decreases) Due to Change in

($ in thousands)

Volume

Rate

Total

Interest-earning assets:

Interest-bearing deposits in other banks

$

1,247 

$

(1,131)

$

116 

Other investments

41 

(47)

(6)

AFS debt securities

(93)

178 

85 

CRE

7,630 

785 

8,415 

SBA

1,616 

(3,371)

(1,755)

Commercial and industrial

2,013 

(951)

1,062 

Home mortgage

4,241 

612 

4,853 

Consumer

(58)

(4)

(62)

Total loans

15,442 

(2,929)

12,513 

Total interest-earning assets

16,637 

(3,929)

12,708 

Interest-bearing liabilities:

Money market deposits and others

1,711 

(2,141)

(430)

Time deposits

8,840 

(7,682)

1,158 

Total interest-bearing deposits

10,551 

(9,823)

728 

Borrowings

(667)

(371)

(1,038)

Subordinated note, net

139 

139 

278 

Total interest-bearing liabilities

10,023 

(10,055)

(32)

Net interest income

$

6,614 

$

6,126 

$

12,740 

2025 Net interest income increased year-over-year, primarily driven by higher interest income on loans.

Interest income on loans increased by $12.5 million or 10%, primarily due to growth in average loan balances, partially offset by a decline in loan yields, reflecting the impact of downward repricing on adjustable-rate loans and lower rates on new originations following federal funds rate cut.

Interest expense on interest-bearing liabilities remained relatively unchanged. Lower average interest-bearing costs, reflecting the repricing of deposit products in response to the federal funds rate cut was mostly offset by an increase in average deposit balances.

As a result, net interest margin increased by 20 basis points, as a 19% increase in net interest income outpaced a 12% increase in average earning assets, primarily driven by a 48 basis point increase in net interest spread.

Provision for Credit Losses

Provision for credit losses was $3.6 million for 2025, compared with $2.8 million in the same period a year ago. The increase primarily reflects higher quantitative reserves related to risk-rating downgrades and loan growth, higher net charge-offs, and increased qualitative reserves following management's reassessment of underlying assumptions. These increases were partially offset by lower specific reserves.

36

Noninterest Income

While interest income remains the largest single component of total revenues, noninterest income is also an important component. A portion of our noninterest income is associated with SBA lending activity, consisting of gains on the sale of loans sold in the secondary market and servicing income from loans sold with servicing retained. Other sources of noninterest income include service charges on deposit.

The following table sets forth the various components of our noninterest income for the years ended December 31, 2025 and 2024:

Year Ended December 31,

($ in thousands)

2025

2024

$ Change

% Change

Noninterest income:

Service charges on deposits

$

3,204 

$

3,261 

$

(57)

(2)

%

Loan servicing fees, net of amortization

3,281 

2,898 

383 

13 

Gains on sale of loans

7,070 

8,313 

(1,243)

(15)

Other income

2,777 

1,955 

822 

42 

Total noninterest income

$

16,332 

$

16,427 

$

(95)

(1)

%

Noninterest income for 2025 remained relatively stable year-over-year.

Gains on sale of loans decreased by $1.2 million, or 15%, primarily due to lower average premium rates. The Bank sold $121.7 million in SBA loans at an average premium of 7.20%, compared to sale of $127.2 million at an average premium of 7.97%.

Other income increased by $822 thousand, or 42%, primarily driven by higher credit related fees.

Noninterest Expense

The following table sets forth the various components of our noninterest expense for the years ended December 31, 2025 and 2024:

Year Ended December 31,

($ in thousands)

2025

2024

$ Change

% Change

Noninterest expense:

Salaries and employee benefits

$

35,987 

$

31,717 

$

4,270 

13 

%

Occupancy and equipment

6,760 

6,673 

87 

1 

Data processing and communication

1,456 

2,245 

(789)

(35)

Professional fees

1,793 

1,535 

258 

17 

FDIC insurance and regulatory assessments

1,783 

1,672 

111 

7 

Promotion and advertising

505 

533 

(28)

(5)

Directors' fees

677 

640 

37 

6 

Foundation donation and other contributions

2,570 

2,108 

462 

22 

Other expenses

4,242 

3,076 

1,166 

38 

Total noninterest expense

$

55,773 

$

50,199 

$

5,574 

11 

%

Noninterest expense for 2025 increased by $5.6 million, or 11%, primarily due to higher salaries and employee benefits, and other expenses, partially offset by a reduction in data processing and communication.

Salaries and employee benefits increased by $4.3 million, or 13%, primarily due to staffing growth and annual salary adjustments in 2025. Higher incentive accruals further contributed to the increase.

37

Other expenses increased by $1.2 million, or 38%, primarily due to higher credit expenses.

Data processing and communication decreased by $789 thousand or 35%, primarily due to contractual credits received upon conversion to a new core banking system in the fourth quarter of 2024. These credits have now been largely utilized. Management expects that, even after the conversion credit are fully exhausted, the overall expense will remain at a structurally lower run rate, driven by improved vendor pricing and increased operating efficiencies realized from the new core platform.

Income Tax Expense

Income tax expense increased to $9.7 million in 2025, up from $8.0 million in 2024, primarily due to higher pre-tax income. The effective tax rate remained relatively stable at 27.4% in 2025, compared to 27.6% in 2024. For additional information on income taxes, see Note 10. Income Taxes to the Consolidated Financial Statements in this Form 10-K.

FINANCIAL CONDITION

Investment Portfolio

The securities portfolio is the second largest component of our interest earning assets, and the structure and composition of this portfolio is important to an analysis of our financial condition. The portfolio serves the following purposes: (i) it provides a source of pledged assets for securing certain deposits and borrowed funds, as may be required by law or by specific agreement with a depositor or lender; (ii) it provides liquidity to cushion for cash flows from customer loan and deposit activities; (iii) it can be used as an interest rate risk management tool, because it provides a large base of assets, the maturity and interest rate characteristics of which can be changed more readily than the loan portfolio to better match changes in the deposit base and our other funding sources; and (iv) it is an alternative interest-earning use of funds when loan demand is weak or when deposits grow more rapidly than loans.

We classify our debt securities as either AFS or held-to-maturity ("HTM") at the time of purchase. Accounting guidance requires AFS debt securities to be marked to fair value with an offset to accumulated other comprehensive income (loss), a component of shareholders’ equity. Monthly adjustments are made to reflect changes in the fair value of our AFS debt securities.

38

The following table summarizes the fair value of the AFS debt securities portfolio as of the dates presented:

December 31, 2025

December 31, 2024

Ratings as of

December 31, 2025 (1)

($ in thousands)

Amortized

Cost

Fair

Value

Net

Unrealized

Loss

Amortized

Cost

Fair

Value

Net

Unrealized

Loss

AAA/AA

A

U.S. Government agencies or sponsored agency securities:

Residential mortgage-backed securities

$

35,279 

$

32,694 

$

(2,585)

$

41,521 

$

37,076 

$

(4,445)

100 

%

— 

%

Residential collateralized mortgage obligations

165,103 

154,463 

(10,640)

160,187 

143,041 

(17,146)

100 

— 

Municipal securities - tax exempt

5,913 

5,628 

(285)

5,830 

5,792 

(38)

— 

100 

Total AFS debt securities

$

206,295 

$

192,785 

$

(13,510)

$

207,538 

$

185,909 

$

(21,629)

97 

%

3 

%

(1)Credit ratings are independent assessments of the credit quality of debt securities. The Company determines the credit rating of a debt security based on the lowest rating assigned by any of the nationally recognized statistical rating organizations (“NRSROs”) that have rated the security. Investment grade debt securities are those rated BBB- or higher (as defined by NRSROs), and are generally considered by the rating agencies and market participants to represent low credit risk. Ratings percentages are presented based on fair value.

AFS debt securities increased by $6.9 million, or 4%, to $192.8 million as of December 31, 2025 from December 31, 2024. The increase was primarily due to a $29.6 million increase in purchases in residential collateralized mortgage obligations during the third quarter of 2025 and a $8.1 million reduction in unrealized losses in 2025, partially offset by $30.7 million in paydowns of residential mortgage-backed securities and collateralized mortgage obligations. For additional information on AFS debt securities and the allowance for credit losses, see Note 1. Significant Accounting Policies and Note 2. Securities to the Consolidated Financial Statements in this Form 10-K.

39

The following table sets forth certain information regarding contractual maturities and the weighted average yields of our investment securities as of the dates presented. Weighted-average yields are computed based on amortized cost balances and yields on tax-exempt securities are not presented on a tax-equivalent basis. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

December 31, 2025

Due in One Year or Less

Due after One Year Through Five Years

Due after Five Years Through Ten Years

Due after Ten Years

($ in thousands)

Amortized

Cost

Weighted Average Yield

Amortized Cost

Weighted Average Yield

Amortized Cost

Weighted Average Yield

Amortized Cost

Weighted Average Yield

U.S. Government agencies or sponsored agency securities:

Residential mortgage-backed securities

$

30 

2.25 

%

$

524 

2.18 

%

$

15,391 

2.27 

%

$

19,334 

2.12 

%

Residential collateralized mortgage obligations

— 

— 

59 

1.81 

1,478 

1.54 

163,566 

3.35 

Municipal securities - tax exempt

— 

— 

— 

— 

— 

— 

5,913 

5.69 

Total AFS debt securities

$

30 

2.25 

%

$

583 

2.15 

%

$

16,869 

2.20 

%

$

188,813 

3.30 

%

Loans

Our loans represent the largest portion of our earning assets, substantially greater than the securities portfolio or any other asset category, and the quality and diversification of the loan portfolio is an important consideration when reviewing our financial condition.

The loan distribution table that follows sets forth our gross loans outstanding, and the percentage distribution in each category as of the dates indicated:

December 31, 2025

December 31, 2024

Change

($ in thousands)

Amount

% of Total

Amount

% of Total

$

%

CRE

$

1,132,223 

52 

%

$

980,247 

50 

%

$

151,976 

2 

%

SBA—real estate

242,041 

11 

231,962 

12 

10,079 

(1)

SBA—non-real estate

22,482 

1 

21,748 

1 

734 

— 

C&I

221,270 

10 

213,097 

11 

8,173 

(1)

Home mortgage

574,300 

26 

509,524 

26 

64,776 

— 

Consumer

1,353 

0 

274 

0 

1,079 

— 

Gross loans receivable

2,193,669 

100 

%

1,956,852 

100 

%

236,817 

12 

%

Allowance for credit losses

(27,975)

(24,796)

(3,179)

13 

%

Loans receivable, net(1)

$

2,165,694 

$

1,932,056 

$

233,638 

12 

%

(1)     Includes net deferred loan costs (fees) and net unamortized premiums (discounts) of $(331) thousand and $(702) thousand as of December 31, 2025 and 2024, respectively.

Gross loans increased $236.8 million, or 12%, to $2.19 billion as of December 31, 2025 from December 31, 2024. The growth was primarily attributable to new loan productions in CRE and home mortgage loans, partially offset by payoffs in CRE and home mortgage loans, SBA loan sales, and paydowns in CRE loans.

Our loan portfolio is concentrated in CRE, which includes unguaranteed balances in SBA loans, home mortgage and commercial (primarily manufacturing, wholesale, and services oriented entities). We do not have any material concentrations by industry or group of industries in the loan portfolio. However, 89% of our gross loans were secured by real property as of December 31, 2025, compared to 88% as of December 31, 2024.

40

The following tables presents the contractual loan maturities by loan category and the contractual distribution of loans to changes in interest rates as of December 31, 2025:

December 31, 2025

($ in thousands)

Within one year

After one year through five years

After five years through fifteen years

After fifteen years

Total

CRE

$

161,165 

$

596,865 

$

346,170 

$

28,023 

$

1,132,223 

SBA—real estate

587 

18 

18,866 

222,570 

242,041 

SBA—non- real estate

162 

2,867 

19,453 

— 

22,482 

C&I

150,509 

37,077 

33,684 

— 

221,270 

Home mortgage

85 

— 

902 

573,313 

574,300 

Consumer

1,353 

— 

— 

— 

1,353 

Gross loans

$

313,861 

$

636,827 

$

419,075 

$

823,906 

$

2,193,669 

Distribution of loans to changes in interest rates:

Fixed rate

$

218,538 

$

272,569 

$

15,287 

$

170,346 

$

676,740 

Hybrid rate

— 

202,200 

325,852 

361,930 

889,982 

Variable rate

95,323 

162,058 

77,936 

291,630 

626,947 

Gross loans

$

313,861 

$

636,827 

$

419,075 

$

823,906 

$

2,193,669 

Loan Concentration: We have established concentration limits in our loan portfolio for CRE loans, C&I loans, and unsecured lending, among others. All loan types are within established limits. We use underwriting guidelines to assess the borrowers’ historical cash flow to determine debt service, and we further stress test the debt service under higher interest rate scenarios. Financial and performance covenants are used in commercial lending agreements to allow us to react to a borrower’s deteriorating financial condition, should that occur.

Loans — CRE: Our CRE loans include owner-occupied and non-occupied properties. We originate a mix of fixed- and adjustable-rate loans, with adjustable rate tied to the Wall Street Journal prime rate. As of December 31, 2025, our CRE loans totaled $1.13 billion, up from $980.2 million as of December 31, 2024. In 2025, we originated $269.8 million in new CRE loans. Approximately 80% of the CRE portfolio consisted of fixed/hybrid rated loans as of December 31, 2025, compared to 76% as of December 31, 2024. Our policy sets the maximum loan-to-value ("LTV") for CRE at 70%. Our weighted average LTV ratio was 49% as of December 31, 2025, compared to 54% as of December 31, 2024.

Loans — SBA: We are designated as an SBA Preferred Lender under the SBA Preferred Lender Program. We offer mostly SBA 7(a) variable-rate loans. We generally sell the 75% guaranteed portion of the SBA loans that we originate. Our SBA loans are typically made to small-sized manufacturing, wholesale, retail, hotel/motel and service businesses for working capital needs or business expansions. SBA loans have maturities up to 25 years. Typically, non-real estate secured loans mature in less than 10 years. Collateral may also include inventory, accounts receivable and equipment, and may include personal guarantees. Our unguaranteed SBA loans collateralized by real estate are monitored by collateral type and included in our CRE Concentration Guidance.

As of December 31, 2025, our SBA portfolio totaled $264.5 million, up from $253.7 million as of December 31, 2024. Of the total portfolio, $242.0 million was secured by real estate, while $22.5 million was unsecured or secured by business assets as of December 31, 2025. In comparison, as of December 31, 2024, $232.0 million was secured by real estate and $21.7 million was either unsecured or secured by business assets.

Loans — C&l: C&I loans totaled $221.3 million as of December 31, 2025, up from $213.1 million as of December 31, 2024.

Loans - Home Mortgage: We primarily originate non-qualified, alternative documentation single-family home mortgage loans through our retail branches and our correspondent lender network. Our primary loan product is a five-year or seven-year hybrid adjustable-rate mortgage, which reprices after the initial five- or

41

seven-year lock period to a selected SOFR plus applicable margin. We also purchase residential mortgage loans from third-party originators based on the underwriting quality and file review as opportunities arise.

Home mortgage loans totaled $574.3 million as of December 31, 2025, up from $509.5 million as of December 31, 2024. In 2025, we originated $136.9 million in new home mortgage loans.

Allowance for Credit Losses on Loans

The Company maintains its allowance for credit losses at a level it believes is adequate to absorb expected credit losses in accordance with GAAP. For further details on the policies, methodologies and significant judgments used in determining the allowance, refer to Item 7. MD&A. Critical Accounting Estimates and Note 1. Significant Accounting Policies and Note 3. Loans and Allowance for Credit Losses on Loans to the Consolidated Financial Statements in this Form 10-K.

The allowance for credit losses on loans was $28.0 million as of December 31, 2025, an increase of $3.2 million from $24.8 million as of December 31, 2024. The increase was primarily driven by higher quantitative reserves related to risk-rating downgrades and loan growth, higher net charge-offs, and increased qualitative reserves following management's reassessment of underlying assumptions. These increases were partially offset by lower specific reserves.

The following table presents net charge-offs and the net charge-offs to average gross loans ratios based on the loan categories as of December 31, 2025 and 2024:

December 31,

2025

2024

($ in thousands)

Net (Charge-offs) Recoveries

Average Gross Loans (1)

% of Net Charge-offs (Recoveries) to Average Gross Loans

Net (Charge-offs) Recoveries

Average Gross Loans (1)

% of Net Charge-offs (Recoveries) to Average Gross Loans

CRE

$

(49)

$

1,053,364 

0.00 

%

$

— 

$

928,583 

— 

%

SBA—real estate

(413)

240,195 

(0.17)

(66)

232,758 

(0.03)

SBA—non- real estate

(14)

22,363 

(0.06)

— 

19,440 

— 

C&I

80 

203,793 

0.04 

(44)

178,085 

(0.02)

Home mortgage

(91)

572,093 

(0.02)

— 

504,030 

— 

Consumer

— 

$

261 

— 

— 

835 

— 

Total

$

(487)

$

2,092,069 

(0.02)

%

— 

$

(110)

$

1,863,731 

(0.01)

%

Gross loans

$

2,193,669 

$

1,956,852 

Allowance for credit losses to gross loans

1.28 

%

1.27 

%

(1)Excludes loans held-for-sale.

The following table presents an allocation of the allowance for credit losses by portfolio as of December 31, 2025 and 2024:

December 31, 2025

December 31, 2024

Change

($ in thousands)

Amount

% to Total

Amount

% to Total

$

%

CRE

$

10,427 

37 

%

$

9,290 

38 

%

$

1,137 

12 

%

SBA—real estate

6,385 

23 

5,557 

22 

828 

15 

SBA—non- real estate

587 

2 

418 

2 

169 

40 

C&I

1,611 

6 

1,844 

7 

(233)

(13)

Home mortgage

8,956 

32 

7,684 

31 

1,272 

17 

Consumer

9 

0 

3 

0 

6 

200 

Total

$

27,975 

100 

%

$

24,796 

100 

%

$

3,179 

13 

%

42

Nonperforming Assets

Loans are considered delinquent when principal or interest payments are past due 30 days or more. Delinquent loans may remain on accrual status between 30 days and 90 days past due. Loans on which the accrual of interest has been discontinued are designated as non-accrual loans. Typically, the accrual of interest on loans is discontinued when principal or interest payments are 90 days past due or when, in the opinion of management, there is a reasonable doubt as to collectability in the normal course of business. When loans are placed on non-accrual status, all interest previously accrued, but not collected, is reversed against current period interest income. Income on non-accrual loans is subsequently recognized only to the extent that cash is received, and the loan’s principal balance is deemed collectible. Loans are restored to accrual status when loans become well-secured and management believes full collectability of principal and interest is probable.

Nonperforming loans include loans that are 90 days past due and still accruing, loans accounted for on a non-accrual basis, and accruing restructured loans. Nonperforming assets consist of nonperforming loans plus other real estate owned ("OREO").

Nonperforming loans increased by $6.3 million to $14.1 million as of December 31, 2025 from December 31, 2024. The increase was primarily driven by reclassifications of $5.9 million in SBA - real estate loans and $1.8 million in C&I from performing loans.

Real estate acquired through foreclosure or by deed-in-lieu of foreclosure is classified as OREO until sold, and is initially recorded at fair value less costs to sell at the time of acquisition, establishing a new cost basis. Subsequent declines in fair value are recognized through valuation allowance and charged to expense. During 2025, the Company recorded declines in the fair value of OREO, a portion of which was charged to expense, with the remaining amount representing the SBA-guaranteed portion recorded as a receivable. The OREO, which was secured by a mixed-use property in Los Angeles, and 90% guaranteed by the SBA, was sold during the fourth quarter of 2025.

The following table sets forth the allocation of our nonperforming assets among our different asset categories as of the dates indicated. Nonperforming loans include non-accrual loans, loans past due 90 days or more and still accruing interest, and loans modified under troubled debt restructurings.

Change

($ in thousands)

December 31, 2025

December 31, 2024

$

% or Basis Point

Nonaccrual loans

$

14,071 

$

7,820 

$

6,251 

80 

%

Past due loans 90 days or more and still accruing

— 

— 

— 

— 

%

Total nonperforming loans(1)

14,071 

7,820 

6,251 

80 

%

OREO

— 

1,237 

(1,237)

(100)

%

Total nonperforming assets

$

14,071 

$

9,057 

$

5,014 

55 

%

Nonperforming loans to gross loans

0.64 

%

0.40 

%

NA

24 

Nonperforming assets to total assets

0.53 

0.38 

NA

15 

Allowance for credit losses on loans to nonperforming loans

199 

317 

NA

(118)

%

(1)Excludes guaranteed portion of SBA loans of $20.9 million and $16.3 million as of December 31, 2025 and 2024, respectively.

Deposits and Other Sources of Funds

We gather deposits primarily through our branch locations. We offer a variety of deposit products including demand deposits accounts, interest-bearing products, savings accounts and certificate of deposits. We dedicate continuing effort into gathering noninterest demand deposits accounts through marketing to our existing and new loan customers, customer referrals, our marketing staff and various involvement with community networks.

43

The following table show the composition of deposits by type as of the dates presented:

December 31, 2025

December 31, 2024

Change

($ in thousands)

Amount

Percent

Amount

Percent

$

%

Noninterest-bearing demand

$

520,865 

23 

%

$

504,928 

25 

%

$

15,937 

3 

%

Interest-bearing:

Money market and others

388,066 

17 

329,095 

16 

58,971 

18 

Time deposits (greater than $250)

683,956 

30 

565,813 

28 

118,143 

21 

Time deposits ($250 or less)

687,660 

30 

627,449 

31 

60,211 

10 

Total interest-bearing

1,759,682 

77 

1,522,357 

75 

237,325 

16 

Total deposits

$

2,280,547 

100 

%

$

2,027,285 

100 

%

$

253,262 

12 

%

The following tables set forth the maturity of time deposits as of December 31, 2025:

Maturity Within:

($ in thousands)

Three

Months

Three to

Six Months

Six to Twelve

Months

After

Twelve Months

Total

Time deposits (greater than $250)

$

319,815 

$

119,285 

$

94,984 

$

149,872 

$

683,956 

Time deposits ($250 or less)

323,978 

141,651 

121,394 

100,637 

687,660 

Total time deposits

$

643,793 

$

260,936 

$

216,378 

$

250,509 

$

1,371,616 

Other than deposits, we also utilized FHLB advances as a supplementary funding source to finance our operations. The advances from the FHLB are collateralized by residential and CRE loans. As of December 31, 2025 and 2024, we had maximum borrowing capacity from the FHLB of $806.1 million and $677.0 million, respectively. We had borrowings from FHLB of $75.0 million and $95.0 million as of December 31, 2025 and 2024, respectively. We had estimated uninsured deposits of $1.09 billion, or 48% of total deposits, and $961.7 million, or 47% of total deposits, as of December 31, 2025 and 2024, respectively.

Liquidity and Capital Resources

Liquidity refers to our ability to meet the cash flow requirements of depositors and borrowers, while at the same time meeting our operating, capital and strategic cash flow needs, while also effectively balancing the related costs. We continuously monitor our liquidity position to ensure that assets and liabilities are managed in a manner that will meet all short-term and long-term cash requirements. Our primarily objective concerning liquidity is to manage our position to meet our customers' daily cash flow needs, while maintaining an appropriate balance between assets and liabilities to promote an appropriate return on invested capital. We strive to meet our short-term and long-term liquidity requirements through cash flow from operations, redeployment of prepaying and maturing balances in our loan and investment portfolios, and increases in customer deposits. We expect that other alternative sources of funds will be available to supplement these primary sources to the extent necessary to meet additional liquidity requirements on either a short-term or long-term basis.

Deposits are the primary funding source for the Bank. Deposits provide a stable source of funding and reduce our reliance on the wholesale funding markets. The following table presents the loan and deposit balances, the loans-to-deposit ratios, and deposits as a percentage of total liabilities as of December 31, 2025 and 2024:

44

Change

($ in thousands)

December 31, 2025

December 31, 2024

$

%

Deposits

$

2,280,547 

$

2,027,285 

$

253,262 

12 

%

Deposits as a % of total liabilities

94 

%

94 

%

NA

— 

%

Loans, net

$

2,165,694 

$

1,932,056 

$

233,638 

12 

%

Loans-to-deposits ratio

95 

%

95 

%

NA

— 

%

In addition to deposits, we have access to various sources of wholesale funding, as well as borrowing capacity at the FHLB, Federal Reserve, and correspondent banks to sustain an adequate liquid asset portfolio, meet daily cash demands and allow management flexibility to execute the business strategy. Economic conditions and the stability of capital markets impact the access to and the cost of wholesale funding. The access to capital markets is also affected by the ratings received from various credit rating agencies.

We had $100.0 million of unsecured federal funds lines with no amounts advanced as of both December 31, 2025 and 2024. In addition, on such dates we had lines of credit from the Federal Reserve discount window of $208.9 million and $215.1 million, respectively. The Federal Reserve discount window lines were collateralized by a pool of CRE loans and commercial and industrial loans totaling $290.7 million and $278.9 million as of December 31, 2025 and 2024, respectively. We had no borrowings outstanding with the Federal Reserve as of December 31, 2025 or 2024. Our borrowing capacity on these lines of credits is based upon our eligible collateral and thus may fluctuate from time to time.

Based on the values of loans pledged as collateral, we had $443.6 million of additional borrowing availability with the FHLB as of December 31, 2025. We also maintain relationships in the capital markets with brokers to issue certificates of deposit and money market accounts.

We maintain access to additional liquidity that we believe is more than adequate, including highly liquid assets on our balance sheet and available unused borrowings from other financial institutions. The following table presents our liquid assets and available borrowings as of December 31, 2025 and 2024:

Change

($ in thousands)

December 31, 2025

December 31, 2024

$

%

Liquid assets:

Cash and cash equivalents

$

167,311 

$

134,943 

$

32,368 

24 

%

AFS debt securities

192,785 

185,909 

6,876 

4 

Liquid assets

$

360,096 

$

320,852 

$

39,244 

12 

%

Liquid assets to total assets

14 

%

14 

%

Available borrowings:

FHLB

$

443,629 

$

401,900 

$

41,729 

10 

%

Federal Reserve Bank

208,859 

215,115 

(6,256)

(3)

Pacific Coast Bankers Bank

50,000 

50,000 

— 

— 

Zions Bank

25,000 

25,000 

— 

— 

First Horizon Bank

25,000 

25,000 

— 

— 

Total available borrowings

$

752,488 

$

717,015 

$

35,473 

5 

%

Total available borrowings to total assets

28 

%

30 

%

(2)

%

Liquid assets and available borrowings to total deposits

49 

%

51 

%

(2)

%

In addition to contractual obligations, other commitments of us impact liquidity. These include unused commitments to extend credit, standby letters of credit and commercial letters of credit. Since many of these commitments expire without being drawn upon, and each customer must continue to meet the conditions established in the contract, the total amount of these commercial commitments does not necessarily represent

45

the future cash requirements of us. Our liquidity sources have been, and are expected to be, sufficient to meet the cash requirements of our lending activities. Information about our loan commitments, standby letters of credit and commercial letters of credit is provided in Note 11. Commitments and Contingencies to the Consolidated Financial Statements in this Form 10-K.

Capital Requirements

We are subject to regulatory capital requirements administered by federal and state banking regulators; however, as a “smaller bank holding company,” most of these standards apply only at the Bank level. The Bank, must meet capital guidelines under the Basel III framework and the prompt corrective action regulations, which include quantitative measures of capital based on risk-weighted assets and the leverage ratio. These capital amounts and classifications are subject to qualitative judgments by the federal banking regulators regarding classifications also involve qualitative judgments by regulators regarding risk-weighting and other factors.

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.

46

The table below presents the regulatory “well-capitalized” requirements and the Company's and the Bank's capital ratios as of December 31, 2025 and 2024:

As of December 31, 2025

Actual(1)

Regulatory Capital Ratio Requirements

Minimum to be Considered "Well Capitalized"

Regulatory Capital Ratio Requirements, including fully phased in Capital Conservation Buffer

($ in thousands)

Amount

Ratio

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

N/A

N/A

Bank

289,464 

13.30 

$

174,139 

8.00 

%

$

217,673 

10.00 

%

$

228,557 

10.50 

%

Tier 1 capital (to risk-weighted assets)

Consolidated

237,791 

10.93 

 N/A

N/A

 N/A

N/A

N/A

N/A

Bank

262,255 

12.05 

130,604 

6.00 

174,139 

8.00 

185,022 

8.50 

CET1 capital (to risk-weighted assets)

Consolidated

237,791 

10.93 

 N/A

N/A

 N/A

N/A

N/A

N/A

Bank

262,255 

12.05 

97,953 

4.50 

141,488 

6.50 

152,371 

7.00 

Tier 1 leverage (to average assets)

Consolidated

237,791 

8.99 

 N/A

N/A

 N/A

N/A

N/A

N/A

Bank

262,255 

9.91 

105,826 

4.00 

132,282 

5.00 

105,826 

4.00 

As of December 31, 2024

Actual(1)

Regulatory Capital Ratio Requirements

Minimum to be Considered "Well Capitalized"

Regulatory Capital Ratio Requirements, including fully phased in Capital Conservation Buffer

($ in thousands)

Amount

Ratio

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

N/A

N/A

Bank

242,966 

12.50 

$

155,463 

8.00 

%

$

194,328 

10.00 

%

$

204,053 

10.50 

%

Tier 1 capital (to risk-weighted assets)

Consolidated

220,390 

11.35 

N/A

N/A

N/A

N/A

N/A

N/A

Bank

218,675 

11.25 

116,597 

6.00 

155,463 

8.00 

165,186 

8.50 

CET1 capital (to risk-weighted assets)

Consolidated

220,390 

11.35 

N/A

N/A

N/A

N/A

N/A

N/A

Bank

218,675 

11.25 

87,448 

4.50 

126,313 

6.50 

136,035 

7.00 

Tier 1 leverage (to average assets)

Consolidated

220,390 

9.27 

N/A

N/A

N/A

N/A

N/A

N/A

Bank

218,675 

9.20 

95,055 

4.00 

118,819 

5.00 

95,055 

4.00 

(1)    The capital requirements are only applicable to the Bank, and our ratios are included for comparison purpose.