8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 26, 2018

OP BANCORP

(Exact name of registrant as specified in its charter)

California	001-38437	81-3114676
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1000 Wilshire Blvd., Suite 500, Los Angeles, CA	90017
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (213) 892-9999

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☒

Item 2.02. Results of Operations and Financial Condition

On July 26, 2018, OP Bancorp, (the “Company”), the bank holding company of Open Bank (the “Bank”) issued a press release announcing preliminary unaudited results for the second quarter ended June 30, 2018. A copy of the press release is attached as Exhibit 99.1 to this Current Report and is incorporated herein by reference.

The information in this report set forth under this Item 2.02 shall not be treated as “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933 or the Securities Act of 1934, except as expressly stated by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits

(D)    Exhibits.

99.1 Press Release of OP Bancorp, issued July 26, 2018, entitled “OP Bancorp Earns Record Net Income of $3.8 Million in the Second Quarter of 2018”.

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release of OP Bancorp, issued July 26, 2018, entitled “OP Bancorp Earns Record Net Income of $3.8 Million in the First Quarter of 2018”.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	OP Bancorp
DATED: July 26, 2018	By:	/s/ Christine Oh
		Christine Oh
		Executive Vice President and
		Chief Financial Officer

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EX-99.1

Exhibit 99.1

OP Bancorp Earns Record Net Income of $3.8 Million in the Second Quarter of 2018

2018 Second Quarter Highlights:

• Net income totaled $3.8 million or $0.23 per diluted common share for the second quarter of 2018.

• Net interest margin was 4.46% for the second quarter of 2018.

• Total assets were $979 million at June 30, 2018, up 2.4% from $957 million at March 31, 2018, and up 17.2% from $835 million at June 30, 2017.

• Net loans receivable were $816 million at June 30, 2018, up 4.1% from $784 million at March 31, 2018 and up 17.7% from $694 million at June 30, 2017.

• Total deposits were $823 million at June 30, 2018, up 0.6% from $818 million at March 31, 2018 and up 12.3% from $733 million at June 30, 2017.

• Noninterest bearing deposits at June 30, 2018 were $270 million or 32.8% of total deposits.

• Nonperforming assets to total assets were 0.10% at June 30, 2018.

LOS ANGELES, July 26, 2018 — OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company of Open Bank (the “Bank”), today reported unaudited financial results for the second quarter and first six months of 2018.  Net income for the second quarter of 2018 was $3.8 million, or $0.23 per diluted common share, compared with net income of $3.2 million, or $0.22 per diluted share for the first quarter of 2018, and net income of $2.5 million, or $0.18 per diluted share for the second quarter of 2017.

“We are happy to announce another strong quarter, with record net income of $3.8 million for the three months ended June 30, 2018, a 53.9% increase compared to $2.5 million for the same period last year.  Our loan growth continues to be strong, growing 4.1% quarter-over-quarter and 17.6% year-over-year, while maintaining an excellent asset quality” commented Min Kim, President and Chief Executive Officer of OP Bancorp and Open Bank.

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Financial Highlights (unaudited)
(Dollars in thousands, except per share data)	As of or for the Three Months Ended
	June 30,			March 31,			June 30,
	2018			2018			2017
Income Statement Data:
Interest income	$	12,062		$	11,180		$	9,601
Interest expense		2,075			1,621			1,007
Net interest income		9,987			9,559			8,594
Provision for loan losses		33			575			170
Noninterest income		2,783			2,212			2,210
Noninterest expense		7,478			6,811			6,553
Income before taxes		5,259			4,385			4,081
Provision for income taxes		1,468			1,169			1,618
Net Income	$	3,791		$	3,216		$	2,463
Diluted earnings per share	$	0.23		$	0.22		$	0.18
Balance Sheet Data:
Loans held for sale	$	8,718		$	18,571		$	3,549
Gross loans, net of unearned income		826,040			793,751			702,413
Allowance for loan losses		9,723			9,716			8,556
Total assets		979,441			956,842			835,418
Deposits		823,373			818,280			732,940
Shareholders’ equity		121,393			117,260			86,738
Performance Ratios:
Return on average assets (annualized)		1.61	%		1.43	%		1.24	%
Return on average equity (annualized)		12.70	%		13.64	%		11.55	%
Net interest margin (annualized)		4.46	%		4.56	%		4.58	%
Efficiency ratio (1)		58.56	%		57.86	%		60.65	%
Credit Quality:
Nonperforming loans	$	991		$	592		$	781
Nonperforming assets		991			592			781
Net charge-offs to average gross loans  (annualized)		0.01	%		0.00	%		0.00	%
Nonperforming assets to gross loans plus OREO		0.12	%		0.07	%		0.11	%
ALL to nonperforming loans		981	%		1641	%		1096	%
ALL to gross loans		1.18	%		1.22	%		1.22	%
Capital Ratios:
Total risk-based capital ratio		16.09	%		16.17	%		13.60	%
Tier 1 risk-based capital ratio		14.90	%		14.93	%		12.36	%
Common equity tier 1 ratio		14.90	%		14.93	%		12.36	%
Leverage ratio		12.91	%		13.09	%		10.89	%
(1) Represents noninterest expense divided by the sum of net interest income and noninterest income.

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Financial Highlights (unaudited)
(Dollars in thousands, except per share data)	For the Six Months Ended
	June 30,			June 30,
	2018			2017
Income Statement Data:
Interest income	$	23,242		$	18,786
Interest expense		3,695			1,985
Net interest income		19,547			16,801
Provision for loan losses		609			711
Noninterest income		4,996			4,453
Noninterest expense		14,290			12,941
Income before taxes		9,644			7,602
Provision for income taxes		2,637			2,993
Net Income	$	7,007		$	4,609
Diluted earnings per share	$	0.45		$	0.33
Performance Ratios:
Return on average assets (annualized)		1.52	%		1.17	%
Return on average equity (annualized)		13.11	%		10.98	%
Net interest margin (annualized)		4.51	%		4.53	%
Efficiency ratio (1)		58.22	%		60.89	%
(1) Represents noninterest expense divided by the sum of net interest income and noninterest income.

Results of Operations

Net interest income before provision for loan losses for the second quarter of 2018 was $10.0 million, an increase of $428 thousand, or 4.5%, compared to $9.6 million for the first quarter of 2018, primarily due to an $882 thousand increase in interest income, partially offset by a $454 thousand increase in interest expense.  

Interest income from the contractual interest rates on loans increased $861 thousand, or 8.5%, during the second quarter, reflecting a 5.4% increase in average loans, including loans held for sale, and a 10 basis point increase in the average contractual interest rate from the increase in Fed funds rate in June 2018 of 25 basis points.   The amount of discount accretion on SBA loans decreased $86 thousand during the quarter due to a reduction in SBA loan payoffs during the second quarter of 2018.  The reported interest income on loans, net of SBA discount accretions and other components, increased $822 thousand during the quarter.  

The reported interest income and yield on our loan portfolio are impacted by a number of components, including changes in the average contractual interest rate earned on loans and the amount of discount accretion on SBA loans.  The following table reconciles the contractual interest income and yield on our loan portfolio to the reported interest income and yield for the periods indicated.

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	Three Months Ended
	June 30, 2018					March 31, 2018					June 30, 2017
(Dollars in thousands)	Interest & Fees		Yield			Interest & Fees		Yield			Interest & Fees		Yield
Contractual interest rate	$	11,046		5.34	%	$	10,185		5.24	%	$	8,693		5.03	%
SBA discount accretion		481		0.23	%		567		0.29	%		533		0.31	%
Amortization of net deferred fees/(costs)		98		0.05	%		51		0.03	%		51		0.03	%
Interest recognized on nonaccrual loans		9		0.00	%		20		0.01	%		48		0.03	%
Prepayment penalties and late fees		36		0.02	%		25		0.01	%		13		0.01	%
Yield on loans (as reported)	$	11,670		5.64	%	$	10,848		5.58	%	$	9,338		5.40	%

	Six Months Ended
	June 30, 2018					June 30, 2017
(Dollars in thousands)	Interest & Fees		Yield			Interest & Fees		Yield
Contractual interest rate	$	21,229		5.29	%	$	17,440		5.10	%
SBA discount accretion		1,048		0.26	%		655		0.19	%
Amortization of net deferred fees/(costs)		150		0.04	%		81		0.02	%
Interest recognized on nonaccrual loans		29		0.01	%		72		0.02	%
Prepayment penalties and late fees		61		0.02	%		18		0.01	%
Yield on loans (as reported)	$	22,517		5.61	%	$	18,266		5.34	%

Interest expense for the second quarter of 2018 increased $454 thousand compared to the first quarter of 2018, due to an increase of $26.8 million, or 5.0% in average balance of interest-bearing liabilities and an increase of 25 basis points in average cost of interest-bearing liabilities, primarily due to the aforementioned increase in Fed funds rate.  

Net interest margin for the second quarter of 2018 decreased 10 basis points to 4.46% from 4.56% for the first quarter of 2018, primarily due to the increase in the cost of interest-bearing liabilities, partially offset by the increase in the reported yield on loans.

Net interest income before provision for loan losses for the second quarter of 2018 increased $1.4 million, or 16.2%, to $10.0 million, compared to $8.6 million for the second quarter of 2017, primarily due to a $2.5 million or 25.6%, increase in interest income, partially offset by an increase of $1.1 million in interest expense.  

The increase in interest income was primarily due to a 19.7% increase in average loans, including loans held for sale, and a 24 basis point increase in the yield on average loans to 5.64% from 5.40% for the second quarter of 2017.  

The increase in interest expense was due to a 26.1% increase in average interest-bearing liabilities and a 57 basis point increase in the cost of interest-bearing liabilities.  The increases in the average yields on loans and average cost of deposits were primarily due to cumulative market rate increases by the Federal Reserve of 75 basis points through three rate hikes of 25 basis points in each of December 2017, March 2018 and June 2018.

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Net interest margin for the second quarter of 2018 decreased 12 basis points to 4.46% from 4.58% for the second quarter of 2017.

Net interest income for the six months ended June 30, 2018 increased $2.7 million, or 16.3%, to $19.5 million, compared to $16.8 million for the same period last year, primarily due to a $4.5 million, or 23.7%, increase in interest income, partially offset by an increase of $1.7 million in interest expense.

The increase in interest income for the six months ended June 30, 2018 was primarily due to a 17.3% increase in average loans, including loans held for sale, and a 27 basis point increase in the yield on average loans to 5.61% from 5.34% for the six months ended June 30, 2017.   The increase in interest expense was due to a 21.7% increase in average interest bearing liabilities and a 47 basis point increase in the cost of average interest-bearing liabilities to 1.36% from 0.89% for the six months ended June 30, 2017.

The following table shows the asset yields, liability costs, spreads and margins.

	Three Months Ended									Percentage Change
	June 30,			March 31,			June 30,			Q2-18			Q2-18
	2018			2018			2017			vs. Q1-18			vs. Q2-17
Yield on loans		5.64	%		5.58	%		5.40	%		0.06	%		0.24	%
Yield on interest-earning assets		5.39	%		5.34	%		5.11	%		0.05	%		0.28	%
Cost of interest-bearing liabilities		1.48	%		1.23	%		0.91	%		0.25	%		0.57	%
Cost of deposits		1.02	%		0.81	%		0.57	%		0.21	%		0.45	%
Cost of funds		1.02	%		0.83	%		0.57	%		0.19	%		0.45	%
Net interest spread		3.91	%		4.11	%		4.20	%		-0.20	%		-0.29	%
Net interest margin		4.46	%		4.56	%		4.58	%		-0.10	%		-0.12	%

	Six Months Ended						Percentage Change
	June 30,			June 30,			2018 YTD
	2018			2017			vs. 2017 YTD
Yield on loans		5.61	%		5.34	%		0.27	%
Yield on interest-earning assets		5.36	%		5.06	%		0.30	%
Cost of interest-bearing liabilities		1.36	%		0.89	%		0.47	%
Cost of deposits		0.91	%		0.57	%		0.34	%
Cost of funds		0.92	%		0.57	%		0.35	%
Net interest spread		4.00	%		4.17	%		-0.17	%
Net interest margin		4.51	%		4.53	%		-0.02	%

The provision for loan losses for the second quarter of 2018 decreased $542 thousand to $33 thousand from $575 thousand for the first quarter of 2018. The provision for loan losses for the second quarter of 2018 decreased $137 thousand compared to $170 thousand for the second quarter of 2017.

Noninterest income for the second quarter of 2018 was $2.8 million, an increase of $571 thousand, or 25.8%, from $2.2 million for the first quarter of 2018, primarily due to an increase in gain on sale of SBA loans, partially offset by a decrease in service fees on deposits.  Gain on sale of SBA loans increased $739 thousand to $1.7 million for the second quarter of 2018 from $989 thousand for the first quarter of 2018.  We sold $24.8 million in SBA loans with an average premium of 8.60% in the second quarter of

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2018, compared to the sale of $13.4 million in SBA loans with an average premium of 8.66% in the first quarter of 2018.  Service charges on deposit accounts decreased $139 thousand during the quarter due to decreased activities on noninterest bearing deposit accounts.

Noninterest income for the second quarter of 2018 increased $574 thousand, or 26.0%, compared to $2.2 million for the second quarter of 2017, primarily due to $576 thousand increase in gain on sale of SBA loans from $1.2 million in the second quarter of 2017.  We sold $16.2 million in SBA loans with an average premium of 8.63% in the second quarter of 2017.

Noninterest expense for the second quarter of 2018 was $7.5 million, an increase of $667 thousand, or 9.8%, compared to $6.8 million for the first quarter of 2018.  The increase was primarily due to a $404 thousand increase in salary and employee benefits, a $94 thousand increase in other expenses, an $86 thousand increase in promotion and advertising and a $57 thousand increase in foundation donation and other contributions.  The increases in salary and employee benefits, other expenses, and promotion and advertising were primarily driven by supporting continued growth of the Company, and the increase in foundation donation and other contributions was in line with the increase in net income for the second quarter of 2018.

Noninterest expense for the second quarter of 2018 increased $926 thousand, or 14.1%, compared to $6.6 million for the second quarter of 2017.  The increase was primarily due to a $490 thousand increase in salary and employee benefits, a $138 thousand increase in other expenses and a $133 thousand increase in foundation donation and other contributions, which were in line with the growth of the Company.

Income tax provision for the second quarter of 2018 was $1.5 million, compared to $1.2 million for the first quarter of 2018 and $1.6 million for the second quarter of 2017.  The effective tax rate for the second quarter of 2018 was 27.9%, compared to 26.7% for the first quarter of 2018 and 39.6% for the second quarter of 2017.  

Balance Sheet

Total assets were $979.4 million at June 30, 2018, an increase of $22.6 million, or 2.4%, from $956.8 million at March 31, 2018, and an increase of $144.0 million, or 17.2%, from $835.4 million at June 30, 2017.  Gross loans, net of unearned income, were $826.0 million at June 30, 2018, an increase of $32.2 million, or 4.1%, from $793.8 million at March 31, 2018, and an increase of $123.6 million, or 17.6%, from $702.4 million at June 30, 2017.

New loan originations for the second quarter of 2018 totaled $92.0 million, including SBA loan originations of $29.3 million, compared to $100.9 million, including SBA loan originations of $16.4 million for the first quarter of 2018.  New loan originations for the second quarter of 2017 were $69.6 million, including SBA loan originations of $24.1 million.  Loan payoffs for the second quarter of 2018 were $30.1 million, compared to $32.2 million for the first quarter of 2018, and $32.4 million for the second quarter of 2017.

Total deposits were $823.4 million at June 30, 2018, an increase of $5.1 million, or 0.6%, from $818.3 million at March 31, 2018, and an increase of $90.4 million, or 12.3%, from $732.9 million at June 30, 2017.  Noninterest bearing deposits were $270.1 million at June 30, 2018, a decrease of $18.9

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million, or 6.5%, from $289.0 million at March 31, 2018, and a decrease of $16.8 million, or 5.8%, from $286.9 million at June 30, 2017.  

Noninterest bearing deposits accounted for 32.8% of total deposits at June 30, 2018, compared to 35.3% at March 31, 2018 and 39.1% at June 30, 2017.  

	As of
	June 30,			March 31,			June 30,
	2018			2018			2017
Noninterest bearing deposits		32.8	%		35.3	%		39.1	%
Interest bearing demand deposits		29.7	%		32.0	%		34.6	%
Savings		0.4	%		0.5	%		0.7	%
Time deposits over $250,000		17.2	%		15.2	%		11.7	%
Other time deposits		19.9	%		17.0	%		13.9	%
Total deposits		100.0	%		100.0	%		100.0	%

The Company had a $25 million advance from the Federal Home Loan Bank (“FHLB”) at June 30, 2018, which was paid off on July 2, 2018 as scheduled.  The Company had advances of $10 million at March 31, 2018 and June 30, 2017.

The Company’s consolidated capital ratios exceeded regulatory guidelines and the Bank’s capital ratios exceeded the regulatory guidelines for a well-capitalized financial institution under the Basel III regulatory requirements at June 30, 2018, as summarized in the following table.

							Financial			Basel III
							Institution			Minimal
							Basel III			Requirement (1)
							Regulatory			Effective
Capital Ratios	OP Bancorp			Open Bank			Guidelines			January 1, 2019
Total risk-based		16.09	%		16.08	%		10.00	%		10.50	%
Tier 1 risk-based		14.90	%		14.89	%		8.00	%		8.50	%
Common equity tier 1 Risk-Based		14.90	%		14.89	%		6.50	%		7.00	%
Leverage		12.91	%		12.90	%		5.00	%		4.00	%
(1) Requirements for both the Company and the Bank include a 2.5% capital conservation buffer, except the leverage ratio.

Asset Quality

Nonperforming loans were $991 thousand at June 30, 2018, an increase of $399 thousand from $592 thousand at March 31, 2018 and an increase of $210 thousand from $781 thousand at June 30, 2017.

Nonperforming assets were $991 thousand, or 0.10% of total assets, at June 30, 2018, $592 thousand, or 0.06% of total assets, at March 31, 2018 and $781 thousand, or 0.09% of total assets, at June 30, 2017.  There was no other real estate owned (“OREO”) at June 30, 2018, March 31, 2018, or June 30, 2017.

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Nonperforming loans to gross loans were 0.12% at June 30, 2018, compared to 0.07% at March 31, 2018 and 0.11% at June 30, 2017.  Total classified loans were $3.6 million, or 0.44% of gross loans, at June 30, 2018, compared to $3.4 million, or 0.43% of gross loans, at March 31, 2018 and $2.6 million, or 0.36% of gross loans, at June 30, 2017.  

The allowance for loan losses was $9.7 million at June 30, 2018 and at March 31, 2018, and $8.6 million at June 30, 2017.  The allowance for loan losses was 1.18% of gross loans at June 30, 2018 and 1.22% of gross loans at March 31, 2018 and at June 30, 2017.  The allowance for loan losses was 981% of nonperforming assets at June 30, 2018, 1,641% at March 31, 2018 and 1,096% at June 30, 2017.

About OP Bancorp

OP Bancorp, the holding company for Open Bank (the “Bank”), is a California corporation whose common stock is quoted on the Nasdaq Global Market under the ticker symbol, “OPBK.”  The Bank is engaged in the general commercial banking business in Los Angeles, Orange, and Santa Clara Counties and is focused on serving the banking needs of small- and medium-sized businesses, professionals, and residents with a particular emphasis on Korean and other ethnic minority communities. The Bank currently operates with eight full branch offices in Downtown Los Angeles, Los Angeles Fashion District, Los Angeles Koreatown, Gardena, Buena Park, and Santa Clara.  The Bank also has three loan production offices in Seattle, Washington, Dallas, Texas, and Atlanta, Georgia.  The Bank commenced its operations on June 10, 2005 as First Standard Bank and changed its name to Open Bank in October 2010.  Its headquarters is located at 1000 Wilshire Blvd., Suite 500, Los Angeles, California 90017. Phone 213.892.9999; www.myopenbank.com  Member FDIC, Equal Housing Lender.

Cautionary Note Regarding Forward-Looking Statements

Certain matters set forth herein (including any exhibits hereto) constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company’s current business plans and expectations regarding future operating results. Forward-looking statements may include, but are not limited to, the use of forward-looking language, such as “likely result in,” “expects,” “anticipates,” “estimates,” “forecasts,” “projects,” “intends to,” or may include other similar words or phrases, such as “believes,” “plans,” “trend,” “objective,” “continues,” “remains,” or similar expressions, or future or conditional verbs, such as “will,” “would,” “should,” “could,” “may,” “might,” “can,” or similar verbs. These forward-looking statements are subject to risks and uncertainties that could cause actual results, performance or achievements to differ materially from those projected. These risks and uncertainties, some of which are beyond our control, include, but are not limited to: business and economic conditions, particularly those affecting the financial services industry and our primary market areas; our ability to successfully manage our credit risk and the sufficiency of our allowance for loan loss;  factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers and the success of construction projects that we finance, including any loans acquired in acquisition transactions; our ability to effectively execute our strategic plan and manage our growth;  interest rate fluctuations, which could have an adverse effect on our profitability; liquidity issues, including fluctuations in the fair value and liquidity of the securities we hold for sale and our ability to raise additional capital, if necessary;  external economic and/or market factors, such as changes in monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve, inflation or deflation, changes in the demand for loans, and fluctuations in consumer spending, borrowing and savings habits, which may have an adverse impact on our financial

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condition;  continued or increasing competition from other financial institutions, credit unions, and non-bank financial services companies, many of which are subject to different regulations than we are;  challenges arising from unsuccessful attempts to expand into new geographic markets, products, or services;  restraints on the ability of the Bank to pay dividends to us, which could limit our liquidity;  increased capital requirements imposed by banking regulators, which may require us to raise capital at a time when capital is not available on favorable terms or at all;  a failure in the internal controls we have implemented to address the risks inherent to the business of banking; inaccuracies in our assumptions about future events, which could result in material differences between our financial projections and actual financial performance; changes in our management personnel or our inability to retain motivate and hire qualified management personnel;  disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems; disruptions, security breaches, or other adverse events affecting the third-party vendors who perform several of our critical processing functions; an inability to keep pace with the rate of technological advances due to a lack of resources to invest in new technologies; risks related to potential acquisitions; incremental costs and obligations associated with operating as a public company; the impact of any claims or legal actions to which we may be subject, including any effect on our reputation;  compliance with governmental and regulatory requirements, including the Dodd-Frank Act and others relating to banking, consumer protection, securities and tax matters, and our ability to maintain licenses required in connection with commercial mortgage origination, sale and servicing operations; changes in federal tax law or policy; and our ability the manage the foregoing and other factors set forth in the Company’s public reports including its Registration Statement on Form S-1 effective as of March 27, 2018, and particularly the discussion of risk factors within that document. If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, our results could differ materially from those expressed in, implied or projected by such forward-looking statements. We assume no obligation to update such forward-looking statements.  Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise, except as required by law.

Contact

Investor Relations

OP Bancorp

Christine Oh

EVP & CFO

213.892.1192

Christine.oh@myopenbank.com

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Consolidated Balance Sheet (unaudited)
(Dollars in thousands)
	6/30/2018			3/31/2018			% change			6/30/2017			% change
Assets
Cash and due from banks	$	61,252		$	69,900			-12.4	%	$	67,533			-9.3	%
Securities available for sale, at fair value		45,006			36,938			21.8	%		32,557			38.2	%
Other investments		7,226			6,746			7.1	%		4,287			68.6	%
Loans held for sale		8,718			18,571			-53.1	%		3,549			145.6	%
Real Estate Loans		465,125			455,663			2.1	%		382,212			21.7	%
SBA Loans		125,378			113,491			10.5	%		109,659			14.3	%
C & I Loans		117,353			114,747			2.3	%		103,788			13.1	%
Home Mortgage Loans		114,710			106,187			8.0	%		102,422			12.0	%
Consumer & Other Loans		3,474			3,663			-5.2	%		4,332			-19.8	%
Gross loans, net of unearned income		826,040			793,751			4.1	%		702,413			17.6	%
Allowance for loan losses		(9,723	)		(9,716	)		0.1	%		(8,556	)		13.6	%
Net loans receivable		816,317			784,035			4.1	%		693,857			17.6	%
Premises and equipment, net		4,818			4,707			2.4	%		4,654			3.5	%
Accrued interest receivable		2,598			2,504			3.8	%		2,031			27.9	%
Servicing assets		6,994			6,725			4.0	%		6,964			0.4	%
Company owned life insurance		11,243			11,165			0.7	%		10,930			2.9	%
Deferred tax assets		4,239			4,003			5.9	%		3,534			19.9	%
Other assets		11,030			11,548			-4.5	%		5,522			99.7	%
Total assets	$	979,441		$	956,842			2.4	%	$	835,418			17.2	%
Liabilities and Shareholders' Equity
Noninterest bearing deposits	$	270,144		$	289,012			-6.5	%	$	286,900			-5.8	%
Savings		3,097			3,914			-20.9	%		5,130			-39.6	%
Money market and others		244,620			261,506			-6.5	%		253,315			-3.4	%
Time deposits over $250,000		141,823			124,637			13.8	%		85,918			65.1	%
Other time deposits		163,689			139,211			17.6	%		101,677			61.0	%
Total deposits		823,373			818,280			0.6	%		732,940			12.3	%
Other borrowings		25,000			10,000			150.0	%		10,000			150.0	%
Accrued interest payable		873			558			56.5	%		366			138.5	%
Other liabilities		8,802			10,744			-18.1	%		5,374			63.8	%
Total liabilities		858,048			839,582			2.2	%		748,680			14.6	%
Common stock		90,894			90,677			0.2	%		67,829			34.0	%
Additional paid-in capital		5,720			5,526			3.5	%		5,015			14.1	%
Retained earnings		25,631			21,840			17.4	%		13,996			83.1	%
Accumulated other comprehensive loss		(852	)		(783	)		8.8	%		(102	)		735.3	%
Total shareholders' equity		121,393			117,260			3.5	%		86,738			40.0	%
Total Liabilities and Shareholders' Equity	$	979,441		$	956,842			2.4	%	$	835,418			17.2	%

10

Consolidated Statements of Income (unaudited)
(Dollars in thousands, except per share data)	Three Months Ended
	6/30/2018		3/31/2018		% change			6/30/2017		% change
Interest income
Interest and fees on loans	$	11,670	$	10,848		7.6	%	$	9,338		25.0	%
Interest on securities available for sale		208		188		10.6	%		147		41.5	%
Other interest income		184		144		27.8	%		116		58.6	%
Total interest income		12,062		11,180		7.9	%		9,601		25.6	%
Interest expense
Interest on deposits		2,060		1,534		34.3	%		1,001		105.8	%
Interest on borrowed funds		15		87		-82.8	%		6		150.0	%
Total interest expense		2,075		1,621		28.0	%		1,007		106.1	%
Net interest income		9,987		9,559		4.5	%		8,594		16.2	%
Provision for loan losses		33		575		-94.3	%		170		-80.6	%
Net interest income after provision for loan losses		9,954		8,984		10.8	%		8,424		18.2	%
Noninterest income
Service charges on deposits		398		537		-25.9	%		388		2.6	%
Loan servicing fees, net of amortization		372		324		14.8	%		374		-0.5	%
Gain on sale of loans		1,728		989		74.7	%		1,152		50.0	%
Other income		285		362		-21.3	%		295		-3.4	%
Total noninterest income		2,783		2,212		25.8	%		2,209		26.0	%
Noninterest expense
Salaries and employee benefits		4,615		4,211		9.6	%		4,125		11.9	%
Occupancy and equipment		1,064		1,026		3.7	%		969		9.8	%
Data processing and communication		297		331		-10.3	%		335		-11.3	%
Professional fees		166		152		9.2	%		146		13.7	%
FDIC insurance and regulatory assessments		104		96		8.3	%		100		4.0	%
Promotion and advertising		231		145		59.3	%		155		49.0	%
Directors’ fees		209		209		0.0	%		201		4.0	%
Foundation donation and other contributions		386		329		17.3	%		253		52.6	%
Other expenses		406		312		30.1	%		268		51.5	%
Total noninterest expense		7,478		6,811		9.8	%		6,552		14.1	%
Income before income taxes		5,259		4,385		19.9	%		4,081		28.9	%
Provision for income taxes		1,468		1,169		25.6	%		1,618		-9.3	%
Net income (loss)	$	3,791	$	3,216		17.9	%	$	2,463		53.9	%
Book value per share	$	7.77	$	7.55		2.9	%	$	6.65		16.8	%
Basic EPS	$	0.24	$	0.23		4.3	%	$	0.18		33.3	%
Diluted EPS	$	0.23	$	0.22		4.5	%	$	0.18		27.8	%
Shares of common stock outstanding		15,629,215		15,530,527		0.6	%		13,045,833		19.8	%
Weighted Average Shares:
- Basic		15,577,775		13,292,083		17.2	%		13,008,985		19.7	%
- Diluted		16,110,460		13,826,956		16.5	%		13,409,230		20.1	%

11

Key Ratios
(Dollars in thousands, except ratios)	Three Months Ended
	6/30/2018			3/31/2018			% change			6/30/2017			% change
Return on average assets  (ROA)*		1.61	%		1.43	%		0.18	%		1.24	%		0.37	%
Return on average equity (ROE) *		12.70	%		13.64	%		-0.94	%		11.55	%		1.15	%
Net interest margin *		4.46	%		4.56	%		-0.10	%		4.58	%		-0.12	%
Efficiency ratio		58.56	%		57.86	%		0.70	%		60.65	%		-2.09	%
Total Risk Based Capital Ratio		16.09	%		16.17	%		-0.08	%		13.60	%		2.49	%
Tier 1 Capital Ratio		14.90	%		14.93	%		-0.03	%		12.36	%		2.54	%
Common Equity Tier 1 Ratio		14.90	%		14.93	%		-0.03	%		12.36	%		2.54	%
Tier 1 Leverage Ratio		12.91	%		13.09	%		-0.18	%		10.89	%		2.02	%
*  Annualized

12

Consolidated Statements of Income (unaudited)
(Dollars in thousands, except per share data)	Six Months Ended
	6/30/2018		6/30/2017		% change
Interest income
Interest and fees on loans	$	22,517	$	18,267		23.3	%
Interest on securities available for sale		396		290		36.6	%
Other interest income		329		229		43.7	%
Total interest income		23,242		18,786		23.7	%
Interest expense
Interest on deposits		3,593		1,972		82.2	%
Interest on borrowed funds		102		13		684.6	%
Total interest expense		3,695		1,985		86.1	%
Net interest income		19,547		16,801		16.3	%
Provision for loan losses		609		711		-14.3	%
Net interest income after provision for loan losses		18,938		16,090		17.7	%
Noninterest income
Service charges on deposits		935		807		15.9	%
Loan servicing fees, net of amortization		696		740		-5.9	%
Gain on sale of loans		2,717		2,345		15.9	%
Other income		648		561		15.5	%
Total noninterest income		4,996		4,453		12.2	%
Noninterest expense
Salaries and employee benefits		8,826		8,148		8.3	%
Occupancy and equipment		2,089		1,933		8.1	%
Data processing and communication		627		666		-5.9	%
Professional fees		318		286		11.2	%
FDIC insurance and regulatory assessments		200		200		0.0	%
Promotion and advertising		377		300		25.7	%
Directors’ fees		418		396		5.6	%
Foundation donation and other contributions		715		468		52.8	%
Other expenses		720		544		32.4	%
Total noninterest expense		14,290		12,941		10.4	%
Income before income taxes		9,644		7,602		26.9	%
Provision for income taxes		2,637		2,993		-11.9	%
Net income (loss)	$	7,007	$	4,609		52.0	%
Book value per share	$	7.77	$	6.65		16.8	%
Basic EPS	$	0.47	$	0.34		38.2	%
Diluted EPS	$	0.45	$	0.33		36.4	%
Shares of common stock outstanding		15,629,215		13,045,833		19.8	%
Weighted Average Shares:
- Basic		14,441,241		12,967,695		11.4	%
- Diluted		14,951,581		13,365,453		11.9	%

13

Key Ratios
(Dollars in thousands, except ratios)	Six Months Ended
	6/30/2018			6/30/2017			% change
Return on average assets  (ROA)*		1.52	%		1.17	%		0.35	%
Return on average equity (ROE) *		13.11	%		10.98	%		2.13	%
Net interest margin *		4.51	%		4.53	%		-0.02	%
Efficiency ratio		58.22	%		60.89	%		-2.67	%
Total Risk Based Capital Ratio		16.09	%		13.60	%		2.49	%
Tier 1 Capital Ratio		14.90	%		12.36	%		2.54	%
Common Equity Tier 1 Ratio		14.90	%		12.36	%		2.54	%
Tier 1 Leverage Ratio		12.91	%		10.89	%		2.02	%
*  Annualized

Asset Quality
(Dollars in thousands, except ratios)	Three Months Ended
	6/30/2018			3/31/2018			12/31/2017			9/30/2017			6/30/2017
Nonaccrual Loans	$	642		$	241		$	683		$	377		$	421
Loans 90 days or more past due, accruing		-			-			-			-			-
Accruing restructured loans		349			351			354			357			360
Nonperforming loans		991			592			1,037			734			781
Other real estate loans (OREO)		-			-			-			-			-
Nonperforming assets		991			592			1,037			734			781
Classified loans		3,606			3,356			2,088			2,138			2,561
Nonperforming assets/total assets		0.10	%		0.06	%		0.12	%		0.08	%		0.09	%
Nonperforming assets/gross loans plus OREO		0.12	%		0.07	%		0.14	%		0.10	%		0.11	%
Nonperforming loans/gross loans		0.12	%		0.07	%		0.14	%		0.10	%		0.11	%
Allowance for loan losses/nonperforming loans		981	%		1641	%		881	%		1214	%		1096	%
Allowance for loan losses/nonperforming assets		981	%		1641	%		881	%		1214	%		1096	%
Allowance for loan losses/gross loans		1.18	%		1.22	%		1.22	%		1.21	%		1.22	%
Classified loans/gross loans		0.44	%		0.43	%		0.28	%		0.29	%		0.36	%
Net charge-offs	$	26		$	(2	)	$	92		$	(75	)	$	(6	)
Net charge-offs to average gross loans *		0.01	%		0.00	%		0.05	%		-0.04	%		0.00	%
*  Annualized

14

Average Balance Sheet, Interest and Yield/Rate Analysis
(Dollars in thousands)	Three Months Ended
	June 30, 2018							March 31, 2018							June 30, 2017
	Average Balance		Interest and Fees		Yield/ Rate			Average Balance		Interest and Fees		Yield/ Rate			Average Balance		Interest and Fees		Yield/ Rate
Earning assets:
Federal funds sold and other investments	$	26,857	$	184		2.72	%	$	21,887	$	144		2.64	%	$	25,988	$	116		1.78	%
Securities available for sale		40,372		208		2.06			38,211		188		1.97			33,216		147		1.77
Total investments		67,229		392		2.33			60,098		332		2.21			59,204		263		1.77
Real estate		464,899		6,008		5.18			444,224		5,535		5.05			366,033		4,393		4.81
SBA		143,604		2,714		7.58			134,935		2,550		7.67			118,438		2,171		7.35
C & I		107,546		1,473		5.49			100,187		1,366		5.53			101,290		1,382		5.47
Home Mortgage		110,476		1,425		5.16			104,254		1,345		5.16			103,213		1,331		5.16
Consumer		3,608		50		5.56			3,630		52		5.68			4,492		61		5.45
Loans (1)		830,133		11,670		5.64			787,230		10,848		5.58			693,466		9,338		5.40
Total earning assets		897,362		12,062		5.39			847,328		11,180		5.34			752,670		9,601		5.11
Noninterest-earning assets		46,970							52,084							42,296
Total assets	$	944,332						$	899,412						$	794,966
Interest-bearing liabilities:
NOW and savings deposits	$	6,615		4		0.24	%	$	6,404		4		0.25	%	$	5,951		4		0.27	%
Money market deposits		253,162		804		1.27			260,912		708		1.10			249,679		547		0.88
Time deposits		298,535		1,252		1.68			243,597		822		1.37			186,896		450		0.97
Total interest-bearing deposits		558,312		2,060		1.48			510,913		1,534		1.22			442,526		1,001		0.91
Borrowings		3,132		15		1.92			23,779		87		1.49			2,804		6		0.86
Total interest-bearing liabilities		561,444		2,075		1.48			534,692		1,621		1.23			445,330		1,007		0.91
Noninterest-bearing liabilities:
Noninterest-bearing deposits		254,700							260,221							258,912
Other noninterest-bearing liabilities		8,814							10,180							5,400
Total noninterest-bearing liabilities		263,514							270,401							264,312
Shareholders’ equity		119,374							94,319							85,324
Total liabilities and shareholders’ equity	$	944,332						$	899,412						$	794,966
Net interest income / interest rate spreads			$	9,987		3.91	%			$	9,559		4.11	%			$	8,594		4.20	%
Net interest margin						4.46	%						4.56	%						4.58	%
Cost of deposits & cost of funds:
Total deposits / cost of deposits	$	813,012	$	2,060		1.02	%	$	771,134	$	1,534		0.81	%	$	701,438	$	1,001		0.57	%
Total funding liabilities / cost of funds	$	816,144	$	2,075		1.02	%	$	794,913	$	1,622		0.83	%	$	704,242	$	1,007		0.57	%
(1) Includes loans held for sale.

15

Average Balance Sheet, Interest and Yield/Rate Analysis
(Dollars in thousands)	Six Months Ended
	June 30, 2018							June 30, 2017
	Average Balance		Interest and Fees		Yield/ Rate			Average Balance		Interest and Fees		Yield/ Rate
Earning assets:
Federal funds sold and other investments	$	24,386	$	327		2.67	%	$	24,088	$	228		1.89	%
Securities available for sale		39,297		397		2.02			33,979		291		1.71
Total investments		63,683		724		2.26			58,067		519		1.79
Real estate		454,619		11,543		5.12			364,069		8,637		4.78
SBA		139,293		5,264		7.62			116,579		4,193		7.25
C & I		103,887		2,839		5.51			99,871		2,612		5.27
Home Mortgage		107,382		2,770		5.16			104,132		2,698		5.18
Consumer		3,619		101		5.63			4,652		126		5.46
Loans (1)		808,800		22,517		5.61			689,303		18,266		5.34
Total earning assets		872,483		23,241		5.36			747,370		18,785		5.06
Noninterest-earning assets		49,512							40,104
Total assets	$	921,995						$	787,474
Interest-bearing liabilities:
NOW and savings deposits	$	6,511		7		0.22	%	$	5,706		7		0.25	%
Money market deposits		257,015		1,512		1.19			254,032		1,090		0.87
Time deposits		271,218		2,074		1.54			187,254		874		0.94
Total interest-bearing deposits		534,744		3,593		1.35			446,992		1,971		0.89
Borrowings		13,398		102		1.54			3,515		13		0.75
Total interest-bearing liabilities		548,142		3,695		1.36			450,507		1,984		0.89
Noninterest-bearing liabilities:
Noninterest-bearing deposits		257,445							247,615
Other noninterest-bearing liabilities		9,493							5,391
Total noninterest-bearing liabilities		266,938							253,006
Shareholders’ equity		106,915							83,961
Total liabilities and shareholders’ equity	$	921,995						$	787,474
Net interest income / interest rate spreads			$	19,546		4.00	%			$	16,801		4.17	%
Net interest margin						4.51	%						4.53	%
Cost of deposits & cost of funds:
Total deposits / cost of deposits	$	792,189	$	3,593		0.91	%	$	694,607	$	1,971		0.57	%
Total funding liabilities / cost of funds	$	805,587	$	3,695		0.92	%	$	698,122	$	1,984		0.57	%
(1) Includes loans held for sale.

16