opbk-ex991

LOS ANGELES, October 25, 2018 — OP Bancorp (the “Company”) (NASDAQ: OPBK), the holding company of Open Bank (the “Bank”), today reported unaudited financial results for the third quarter and first nine months of 2018. Net income for the third quarter of 2018 was $3.5 million, or $0.21 per diluted common share, compared with net income of $3.8 million, or $0.23 per diluted share for the second quarter of 2018, and net income of $2.7 million, or $0.19 per diluted share for the third quarter of 2017.

“We are happy to announce that our assets exceeded $1.0 billion for the first time in our history at September 30, 2018. During the third quarter, we experienced a strong deposit growth of 8.9% from the previous quarter in this challenging and competitive environment. Our loan growth continues to be solid while maintaining strong asset quality”, commented Min Kim, President and Chief Executive Officer of OP Bancorp and Open Bank.

Financial Highlights (unaudited)
(Dollars in thousands, except per share data)	As of or for the Three Months Ended
	September 30,			June 30,			September 30,
	2018			2018			2017
Income Statement Data:
Interest income	$	13,006		$	12,062		$	10,419
Interest expense		2,521			2,075			1,211
Net interest income		10,485			9,987			9,208
Provision for loan losses		439			33			278
Noninterest income		2,284			2,783			2,255
Noninterest expense		7,705			7,478			6,744
Income before taxes		4,625			5,259			4,441
Provision for income taxes		1,144			1,468			1,713
Net Income	$	3,481		$	3,791		$	2,728
Diluted earnings per share	$	0.21		$	0.23		$	0.19
Balance Sheet Data:
Loans held for sale	$	3,254		$	8,718		$	12,893
Gross loans, net of unearned income		850,018			826,040			736,058
Allowance for loan losses		9,551			9,723			8,909
Total assets		1,035,028			979,441			879,087
Deposits		896,891			823,373			754,533
Shareholders’ equity		124,975			121,393			89,478
Performance Ratios:
Return on average assets (annualized)		1.42	%		1.61	%		1.31	%
Return on average equity (annualized)		11.28	%		12.70	%		12.35	%
Net interest margin (annualized)		4.44	%		4.46	%		4.68	%
Efficiency ratio (1)		60.34	%		58.56	%		58.83	%
Credit Quality:
Nonperforming loans	$	1,233		$	990		$	734
Nonperforming assets		1,233			990			734
Net charge-offs to average gross loans (annualized)		0.29	%		0.01	%		-0.04	%
Nonperforming assets to gross loans plus OREO		0.15	%		0.12	%		0.10	%
ALL to nonperforming loans		775	%		982	%		1214	%
ALL to gross loans		1.12	%		1.18	%		1.21	%
Capital Ratios:
Total risk-based capital ratio		16.16	%		16.09	%		13.37	%
Tier 1 risk-based capital ratio		15.01	%		14.90	%		12.15	%
Common equity tier 1 ratio		15.01	%		14.90	%		12.15	%
Leverage ratio		12.77	%		12.91	%		10.77	%

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

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.

Net interest income before provision for loan losses for the third quarter of 2018 was $10.5 million, an increase of $498 thousand, or 5.0%, compared to $10.0 million for the second quarter of 2018, primarily due to a $944 thousand increase in interest income, partially offset by a $446 thousand increase in interest expense.

Interest income from the contractual interest rates on loans increased $788 thousand, or 7.1%, during the third quarter compared to the second quarter of 2018, reflecting a 3.5% increase in average loans, including loans held for sale, and a 13 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 increased $130 thousand during the third quarter due to an increase in SBA loan payoffs. The reported interest income on loans, net of SBA discount accretions and other components, increased $854 thousand during the quarter.

Interest expense for the third quarter of 2018 increased $446 thousand, or 21.5%, compared to the second quarter of 2018, due to an increase of $30.8 million, or 5.5% in average balance of interest-bearing liabilities and an increase of 21 basis points in average cost of interest-bearing liabilities, primarily due to the aforementioned increase in Fed funds rate.

Net interest margin for the third quarter of 2018 decreased 2 basis points to 4.44% from 4.46% for the second 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 third quarter of 2018 increased $1.3 million, or 13.9%, to $10.5 million, compared to $9.2 million for the third quarter of 2017, primarily due to a $2.6 million increase in interest income, partially offset by an increase of $1.3 million in interest expense.

The increase in interest income was primarily due to a 19.2% increase in average loans, including loans held for sale, and a 22 basis point increase in the yield on average loans to 5.79% for the third quarter of 2018 from 5.57% for the third quarter of 2017.

The increase in interest expense in the third quarter of 2018 compared to the third quarter of 2017 was due to a 24.9% increase in average interest-bearing liabilities and a 68 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.

Net interest margin for the third quarter of 2018 decreased 24 basis points to 4.44% from 4.68% for the third quarter of 2017.

Net interest income for the nine months ended September 30, 2018 increased $4.0 million, or 15.5%, to $30.0 million, compared to $26.0 million for the same period last year, primarily due to a $7.0 million increase in interest income, partially offset by an increase of $3.0 million in interest expense.

The increase in interest income for the nine months ended September 30, 2018 was primarily due to a 18.0% increase in average loans, including loans held for sale, and a 25 basis point increase in the yield on average loans to 5.67% from 5.42% for the nine months ended September 30, 2017. The increase in interest expense was due to a 22.8% increase in average interest-bearing liabilities and a 55 basis point increase in the cost of average interest-bearing liabilities to 1.48% for the nine months ended September 30, 2018 from 0.93% for the same period last year.

Net interest margin for the nine months ended September 30, 2018 decreased 9 basis points to 4.49% from 4.58% for the nine months ended September 30, 2017.

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

The provision for loan losses for the third quarter of 2018 increased $406 thousand to $439 thousand, compared to $33 thousand for the second quarter of 2018, primarily due to an increase in the loan portfolio and the change in historical loss factors (including a charge off of $566 thousand in one C&I loan relationship). The provision for loan losses for the third quarter of 2018 increased $161

thousand compared to $278 thousand for the third quarter of 2017, primarily due to an increase in the loan portfolio.

Noninterest income for the third quarter of 2018 was $2.3 million, a decrease of $499 thousand, or 17.9%, from $2.8 million for the second quarter of 2018, primarily due to a decrease of $593 thousand in gain on sale of SBA loans, partially offset by an increase of $86 thousand in service charges on deposits.

Gain on sale of SBA loans decreased $593 thousand to $1.1 million for the third quarter of 2018 from $1.7 million for the second quarter of 2018. We sold $22.8 million in SBA loans with an average premium of 6.47% in the third quarter of 2018, compared to the sale of $24.8 million in SBA loans with an average premium of 8.60% in the second quarter of 2018. The significant decrease in average premium in the secondary market was primarily due to faster prepayment speed in SBA loans as more borrowers are refinancing SBA loans to conventional loans with lower interest rates, which in turn shortens investors’ duration and reducing investment value.

Noninterest income for the third quarter of 2018 increased $29 thousand compared to $2.3 million for the third quarter of 2017, primarily due to an increase of $90 thousand in service charges on deposit accounts, partially offset by a decrease of $56 thousand in gain on sale of SBA loans. Gain on sale of SBA loans for the third quarter of 2017 was $1.2 million. We sold $15.0 million in SBA loans with an average premium of 9.97% in the third quarter of 2017.

Noninterest expense for the third quarter of 2018 was $7.7 million, an increase of $227 thousand, or 3.0%, compared to $7.5 million for the second quarter of 2018. The increase was primarily due to a $188 thousand increase in salary and employee benefits and a $128 thousand increase in professional fees, partially offset by a decrease of $88 thousand in occupancy and equipment expenses. The increase in salary and employee benefits was primarily due to an increase in employee headcount to support the continued growth of the Company. The employee headcount increased to 157 at September 30, 2018 from 138 at June 30, 2018. The increase in professional fees was due to increased expense related to other corporate matters during the quarter.

Noninterest expense for the third quarter of 2018 increased $961 thousand, or 14.2%, to $7.7 million, compared to $6.7 million for the third quarter of 2017. The increase was primarily due to a $539 thousand increase in salary and employee benefits, consisted of an increase of 25 person in employee headcount from 132 at September 30,2017. Professional fees were increased of $145 thousand and other expenses were increased of $129 thousand, which were in line with the growth of the Company.

Noninterest expense for the third quarter of 2018 increased $961 thousand, or 14.2%, to $7.7 million, compared to $6.7 million for the third quarter of 2017. The increase was primarily due to a $539 thousand increase in salary and employee benefits, a $145 thousand increase in professional fees, and a $129 thousand increase in other expense, which were in line with the growth of the Company. The employee headcount increased by 25 to 157 from 132 at September 30, 2017.

Income tax provision for the third quarter of 2018 was $1.1 million, compared to $1.5 million for the second quarter of 2018 and $1.7 million for the third quarter of 2017. The effective tax rate for the third quarter of 2018 was 24.7%, compared to 27.9% for the second quarter of 2018 and 38.6% for the third quarter of 2017. The decrease in the effective tax rate in the third quarter of 2018 compared to the second quarter of 2018 was due to additional tax benefits from vesting of restricted stock units during

the quarter. The effective tax rates were 26.5% and 39.1% for the nine months ended September 30, 2018 and 2017, respectively. The significant decrease in the effective tax rate was due to the enactment the Tax Cuts and Jobs Act signed into law on December 22, 2017.

Total assets were $1.0 billion at September 30, 2018, an increase of $55.6 million, or 5.7%, from $979.4 million at June 30, 2018, and an increase of $156.0 million, or 17.7%, from $879.1 million at September 30, 2017. Gross loans, net of unearned income, were $850.0 million at September 30, 2018, an increase of $24.0 million, or 2.9%, from $826.0 million at June 30, 2018, and an increase of $114.0 million, or 15.5%, from $736.1 million at September 30, 2017.

New loan originations for the third quarter of 2018 totaled $91.1 million, including SBA loan originations of $30.3 million, compared to $92.0 million, including SBA loan originations of $29.3 million for the second quarter of 2018. New loan originations for the third quarter of 2017 were $87.5 million, including SBA loan originations of $34.6 million. Loan payoffs for the third quarter of 2018 were $29.3 million, compared to $30.1 million for the second quarter of 2018, and $28.2 million for the third quarter of 2017.

Total deposits were $896.9 million at September 30, 2018, an increase of $73.5 million, or 8.9%, from $823.4 million at June 30, 2018, and an increase of $142.4 million, or 18.9%, from $754.5 million at September 30, 2017. Noninterest bearing deposits were $286.3 million at September 30, 2018, an increase of $16.2 million, or 6.0%, from $270.1 million at June 30, 2018, and a decrease of $2.8 million, or 1.0%, from $289.2 million at September 30, 2017.

Noninterest bearing deposits accounted for 31.9% of total deposits at September 30, 2018, compared to 32.8% at June 30, 2018 and 38.3% at September 30, 2017.

The Company had no borrowings from the Federal Home Loan Bank (“FHLB”) at September 30, 2018, compared to the advances from the FHLB of $25 million at June 30, 2018 and September 30, 2017. The payoff advances from the FHLB were funded by the increase in total deposits.

The Company’s consolidated regulatory 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 September 30, 2018, as summarized in the following table.

Nonperforming loans were $1.2 million at September 30, 2018, an increase of $243 thousand from $990 thousand at June 30, 2018 and an increase of $499 thousand from $734 thousand at September 30, 2017.

Nonperforming assets were $1.2 million, or 0.12% of total assets, at September 30, 2018, $990 thousand, or 0.10% of total assets, at June 30, 2018 and $734 thousand, or 0.08% of total assets, at September 30, 2017. There was no other real estate owned (“OREO”) at September 30, 2018, June 30, 2018, or September 30, 2017.

Nonperforming loans to gross loans were 0.15% at September 30, 2018, compared to 0.12% at June 30, 2018 and 0.10% at September 30, 2017. Total classified loans were $3.0 million, or 0.35% of gross loans, at September 30, 2018, compared to $3.1 million, or 0.37% of gross loans, at June 30, 2018 and $2.1 million, or 0.29% of gross loans, at September 30, 2017.

The allowance for loan losses was $9.6 million at September 30, 2018, compared to $9.7 million at June 30, 2018 and $8.9 million at September 30, 2017. The allowance for loan losses was 1.12% of gross loans at September 30, 2018, 1.18% at June 30, 2018 and 1.21% at September 30, 2017. The allowance for loan losses was 775% of nonperforming assets at September 30, 2018, 982% at June 30, 2018 and 1,214% at September 30, 2017.

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.

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 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.

Consolidated Balance Sheet (unaudited)
(Dollars in thousands)
	9/30/2018			6/30/2018			% change			9/30/2017			% change
Assets
Cash and due from banks	$	95,787		$	61,252			56.4	%	$	53,961			77.5	%
Securities available for sale, at fair value		46,324			45,006			2.9	%		43,578			6.3	%
Other investments		7,221			7,226			-0.1	%		4,286			68.5	%
Loans held for sale		3,254			8,718			-62.7	%		12,893			-74.8	%
Real Estate Loans		489,828			465,125			5.3	%		405,453			20.8	%
SBA Loans		132,505			125,378			5.7	%		116,680			13.6	%
C & I Loans		104,301			117,353			-11.1	%		107,476			-3.0	%
Home Mortgage Loans		120,262			114,710			4.8	%		102,283			17.6	%
Consumer & Other Loans		3,122			3,474			-10.1	%		4,166			-25.1	%
Gross loans, net of unearned income		850,018			826,040			2.9	%		736,058			15.5	%
Allowance for loan losses		(9,551	)		(9,723	)		-1.8	%		(8,909	)		7.2	%
Net loans receivable		840,467			816,317			3.0	%		727,149			15.6	%
Premises and equipment, net		4,757			4,818			-1.3	%		4,442			7.1	%
Accrued interest receivable		2,783			2,598			7.1	%		2,182			27.5	%
Servicing assets		7,097			6,994			1.5	%		6,957			2.0	%
Company owned life insurance		11,321			11,243			0.7	%		11,012			2.8	%
Deferred tax assets		4,257			4,239			0.4	%		4,214			1.0	%
Other assets		11,760			11,030			6.6	%		8,413			39.8	%
Total assets	$	1,035,028		$	979,441			5.7	%	$	879,087			17.7	%

Liabilities and Shareholders' Equity
Noninterest bearing deposits	$	286,347		$	270,144			6.0	%	$	289,154			-1.0	%
Savings		3,240			3,097			4.6	%		3,809			-14.9	%
Money market and others		253,807			244,620			3.8	%		260,930			-2.7	%
Time deposits over $250,000		157,687			141,823			11.2	%		96,642			63.2	%
Other time deposits		195,810			163,689			19.6	%		103,998			88.3	%
Total deposits		896,891			823,373			8.9	%		754,533			18.9	%
Other borrowings		-			25,000			-100.0	%		25,000			-100.0	%
Accrued interest payable		1,196			873			37.0	%		377			217.2	%
Other liabilities		11,966			8,802			35.9	%		9,699			23.4	%
Total liabilities		910,053			858,048			6.1	%		789,609			15.3	%

Common stock		91,009			90,894			0.1	%		67,829			34.2	%
Additional paid-in capital		5,886			5,720			2.9	%		5,043			16.7	%
Retained earnings		29,113			25,631			13.6	%		16,724			74.1	%
Accumulated other comprehensive loss		(1,033	)		(852	)		21.2	%		(118	)		775.4	%
Total shareholders' equity		124,975			121,393			3.0	%		89,478			39.7	%

Total Liabilities and Shareholders' Equity	$	1,035,028		$	979,441			5.7	%	$	879,087			17.7	%

Consolidated Statements of Income (unaudited)
(Dollars in thousands, except per share data)	Three Months Ended
	9/30/2018		6/30/2018		% change			9/30/2017		% change
Interest income
Interest and fees on loans	$	12,524	$	11,670		7.3	%	$	10,111		23.9	%
Interest on securities available for sale		249		208		19.7	%		186		33.9	%
Other interest income		233		184		26.6	%		122		91.0	%
Total interest income		13,006		12,062		7.8	%		10,419		24.8	%
Interest expense
Interest on deposits		2,477		2,060		20.2	%		1,154		114.6	%
Interest on borrowed funds		44		15		193.3	%		57		-22.8	%
Total interest expense		2,521		2,075		21.5	%		1,211		108.2	%
Net interest income		10,485		9,987		5.0	%		9,208		13.9	%
Provision for loan losses		439		33		1230.3	%		278		57.9	%
Net interest income after provision for loan losses		10,046		9,954		0.9	%		8,930		12.5	%
Noninterest income
Service charges on deposits		484		398		21.6	%		394		22.8	%
Loan servicing fees, net of amortization		310		372		-16.7	%		318		-2.5	%
Gain on sale of loans		1,135		1,728		-34.3	%		1,192		-4.8	%
Other income		355		285		24.6	%		351		1.1	%
Total noninterest income		2,284		2,783		-17.9	%		2,255		1.3	%
Noninterest expense
Salaries and employee benefits		4,803		4,615		4.1	%		4,264		12.6	%
Occupancy and equipment		976		1,064		-8.3	%		986		-1.0	%
Data processing and communication		320		297		7.7	%		331		-3.3	%
Professional fees		294		166		77.1	%		149		97.3	%
FDIC insurance and regulatory assessments		106		104		1.9	%		101		5.0	%
Promotion and advertising		222		231		-3.9	%		157		41.4	%
Directors’ fees		216		209		3.3	%		202		6.9	%
Foundation donation and other contributions		369		386		-4.4	%		284		29.9	%
Other expenses		399		406		-1.7	%		270		47.8	%
Total noninterest expense		7,705		7,478		3.0	%		6,744		14.2	%
Income before income taxes		4,625		5,259		-12.1	%		4,441		4.1	%
Provision for income taxes		1,144		1,468		-22.1	%		1,713		-33.2	%
Net income (loss)	$	3,481	$	3,791		-8.2	%	$	2,728		27.6	%

Book value per share	$	7.92	$	7.77		1.9	%	$	6.80		16.5	%
Basic EPS	$	0.22	$	0.24		-8.3	%	$	0.20		10.0	%
Diluted EPS	$	0.21	$	0.23		-8.7	%	$	0.19		10.5	%

Shares of common stock outstanding		15,770,576		15,629,215		0.9	%		13,162,732		19.8	%
Weighted Average Shares:
- Basic		15,714,226		15,577,772		0.9	%		13,132,237		19.7	%
- Diluted		16,234,926		16,110,457		0.8	%		13,560,140		19.7	%

Consolidated Statements of Income (unaudited)
(Dollars in thousands, except per share data)	Nine Months Ended
	9/30/2018		9/30/2017		% change
Interest income
Interest and fees on loans	$	35,042	$	28,378		23.5	%
Interest on securities available for sale		645		476		35.5	%
Other interest income		561		351		59.8	%
Total interest income		36,248		29,205		24.1	%
Interest expense
Interest on deposits		6,071		3,126		94.2	%
Interest on borrowed funds		146		71		105.6	%
Total interest expense		6,217		3,197		94.5	%
Net interest income		30,031		26,008		15.5	%
Provision for loan losses		1,047		989		5.9	%
Net interest income after provision for loan losses		28,984		25,019		15.8	%
Noninterest income
Service charges on deposits		1,419		1,201		18.2	%
Loan servicing fees, net of amortization		1,006		1,058		-4.9	%
Gain on sale of loans		3,852		3,537		8.9	%
Other income		1,002		912		9.9	%
Total noninterest income		7,279		6,708		8.5	%
Noninterest expense
Salaries and employee benefits		13,629		12,412		9.8	%
Occupancy and equipment		3,065		2,919		5.0	%
Data processing and communication		948		997		-4.9	%
Professional fees		612		435		40.7	%
FDIC insurance and regulatory assessments		306		301		1.7	%
Promotion and advertising		598		458		30.6	%
Directors’ fees		633		598		5.9	%
Foundation donation and other contributions		1,084		752		44.1	%
Other expenses		1,118		813		37.5	%
Total noninterest expense		21,993		19,685		11.7	%
Income before income taxes		14,270		12,042		18.5	%
Provision for income taxes		3,781		4,706		-19.7	%
Net income (loss)	$	10,489	$	7,336		43.0	%

Book value per share	$	7.92	$	6.80		16.5	%
Basic EPS	$	0.68	$	0.54		25.9	%
Diluted EPS	$	0.66	$	0.52		26.9	%

Shares of common stock outstanding		15,770,576		13,162,732		19.8	%
Weighted Average Shares:
- Basic		14,870,232		13,023,145		14.2	%
- Diluted		15,376,982		13,432,746		14.5	%

Asset Quality
(Dollars in thousands, except ratios)	Three Months Ended
	9/30/2018			6/30/2018			3/31/2018			12/31/2017			9/30/2017
Nonaccrual Loans	$	888		$	642		$	241		$	683		$	377
Loans 90 days or more past due, accruing		-			-			-			-			-
Accruing restructured loans		345			348			351			354			357
Nonperforming loans		1,233			990			592			1,037			734
Other real estate loans (OREO)		-			-			-			-			-
Nonperforming assets		1,233			990			592			1,037			734

Classified loans		2,965			3,065			3,356			2,088			2,138

Nonperforming assets/total assets		0.12	%		0.10	%		0.06	%		0.12	%		0.08	%
Nonperforming assets/gross loans plus OREO		0.15	%		0.12	%		0.07	%		0.14	%		0.10	%
Nonperforming loans/gross loans		0.15	%		0.12	%		0.07	%		0.14	%		0.10	%
Allowance for loan losses/nonperforming loans		775	%		982	%		1641	%		881	%		1214	%
Allowance for loan losses/nonperforming assets		775	%		982	%		1641	%		881	%		1214	%
Allowance for loan losses/gross loans		1.12	%		1.18	%		1.22	%		1.22	%		1.21	%
Classified loans/gross loans		0.35	%		0.37	%		0.43	%		0.28	%		0.29	%

Net charge-offs	$	611		$	26		$	(2	)	$	92		$	(75	)
Net charge-offs to average gross loans *		0.29	%		0.01	%		0.00	%		0.05	%		-0.04	%

* Annualized

Average Balance Sheet, Interest and Yield/Rate Analysis
(Dollars in thousands)	Three Months Ended
	September 30, 2018							June 30, 2018							September 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	$	34,216	$	233		2.68	%	$	26,857	$	184		2.72	%	$	21,119	$	122		2.30	%
Securities available for sale		44,441		249		2.24			40,372		208		2.06			39,647		186		1.87
Total investments		78,657		482		2.43			67,229		392		2.33			60,766		308		2.02
Real estate		483,625		6,472		5.31			464,899		6,008		5.18			391,832		4,873		4.93
SBA		146,259		2,978		8.08			143,604		2,714		7.58			126,818		2,429		7.60
C & I		106,654		1,510		5.62			107,546		1,473		5.49			96,016		1,394		5.76
Home Mortgage		119,346		1,515		5.08			110,476		1,425		5.16			102,002		1,325		5.20
Consumer		3,373		49		5.75			3,608		50		5.56			4,212		90		8.46
Loans (1)		859,257		12,524		5.79			830,133		11,670		5.64			720,880		10,111		5.57
Total earning assets		937,914		13,006		5.51			897,362		12,062		5.39			781,646		10,419		5.29
Noninterest-earning assets		45,913							46,970							48,245
Total assets	$	983,827						$	944,332						$	829,891

Interest-bearing liabilities:
NOW and savings deposits	$	5,929		4		0.25	%	$	6,615		4		0.24	%	$	6,617		4		0.25	%
Money market deposits		254,510		948		1.48			253,162		804		1.27			256,205		599		0.93
Time deposits		323,512		1,525		1.87			298,535		1,252		1.68			192,173		551		1.14
Total interest-bearing deposits		583,951		2,477		1.68			558,312		2,060		1.48			454,995		1,154		1.01
Borrowings		8,300		44		2.09			3,132		15		1.92			19,359		57		1.17
Total interest-bearing liabilities		592,251		2,521		1.69			561,444		2,075		1.48			474,354		1,211		1.01

Noninterest-bearing liabilities:
Noninterest-bearing deposits		258,252							254,700							260,863
Other noninterest-bearing liabilities		9,817							8,814							6,301
Total noninterest-bearing liabilities		268,069							263,514							267,164
Shareholders’ equity		123,507							119,374							88,373
Total liabilities and shareholders’ equity	$	983,827						$	944,332						$	829,891

Net interest income / interest rate spreads			$	10,485		3.82	%			$	9,987		3.91	%			$	9,208		4.28	%

Net interest margin						4.44	%						4.46	%						4.68	%

Cost of deposits & cost of funds:
Total deposits / cost of deposits	$	842,203	$	2,477		1.17	%	$	813,012	$	2,060		1.02	%	$	715,858	$	1,154		0.64	%
Total funding liabilities / cost of funds	$	850,503	$	2,521		1.18	%	$	816,144	$	2,075		1.02	%	$	735,217	$	1,211		0.65	%

(1) Includes loans held for sale.

Average Balance Sheet, Interest and Yield/Rate Analysis
(Dollars in thousands)	Nine Months Ended
	September 30, 2018							September 30, 2017
	Average Balance		Interest and Fees		Yield/ Rate			Average Balance		Interest and Fees		Yield/ Rate
Earning assets:
Federal funds sold and other investments	$	27,699	$	561		2.69	%	$	23,088	$	351		2.02	%
Securities available for sale		41,030		645		2.10			35,889		476		1.77
Total investments		68,729		1,206		2.33			58,977		827		1.87
Real estate		464,394		18,016		5.19			373,425		13,511		4.84
SBA		141,641		8,242		7.78			120,029		6,623		7.38
C & I		104,819		4,348		5.55			98,572		4,006		5.43
Home Mortgage		111,414		4,286		5.13			103,415		4,023		5.19
Consumer		3,536		150		5.67			4,504		215		6.40
Loans (1)		825,804		35,042		5.67			699,945		28,378		5.42
Total earning assets		894,533		36,248		5.41			758,922		29,205		5.14
Noninterest-earning assets		48,300							42,847
Total assets	$	942,833						$	801,769

Interest-bearing liabilities:
NOW and savings deposits	$	6,314		12		0.24	%	$	6,013		11		0.25	%
Money market deposits		256,171		2,460		1.28			254,764		1,689		0.89
Time deposits		288,841		3,599		1.67			188,911		1,426		1.01
Total interest-bearing deposits		551,326		6,071		1.47			449,688		3,126		0.93
Borrowings		11,680		146		1.67			8,854		71		1.07
Total interest-bearing liabilities		563,006		6,217		1.48			458,542		3,197		0.93

Noninterest-bearing liabilities:
Noninterest-bearing deposits		257,717							252,080
Other noninterest-bearing liabilities		9,603							5,699
Total noninterest-bearing liabilities		267,320							257,779
Shareholders’ equity		112,507							85,448
Total liabilities and shareholders’ equity	$	942,833						$	801,769

Net interest income / interest rate spreads			$	30,031		3.93	%			$	26,008		4.21	%

Net interest margin						4.49	%						4.58	%

Cost of deposits & cost of funds:
Total deposits / cost of deposits	$	809,043	$	6,071		1.00	%	$	701,768	$	3,126		0.60	%
Total funding liabilities / cost of funds	$	820,723	$	6,217		1.01	%	$	710,622	$	3,197		0.60	%

(1) Includes loans held for sale.

	Nine Months Ended
	September 30, 2018					September 30, 2017
(Dollars in thousands)	Interest & Fees		Yield			Interest & Fees		Yield
Contractual interest rate	$	33,016		5.34	%	$	26,299		5.02	%
SBA discount accretion		1,660		0.27	%		1,648		0.31	%
Amortization of net deferred fees/(costs)		215		0.03	%		178		0.03	%
Interest recognized on nonaccrual loans		21		0.00	%		185		0.04	%
Prepayment penalties and late fees		130		0.02	%		68		0.01	%
Yield on loans (as reported)	$	35,042		5.67	%	$	28,378		5.42	%

							Well-capitalized			Fully Phased-in
							Financial			Basel III
							Institution			Minimal
							Basel III			Requirements (1)
							Regulatory			Effective
Capital Ratios	OP Bancorp			Open Bank			Guidelines			January 1, 2019
Total risk-based		16.16	%		16.15	%		10.00	%		10.50	%
Tier 1 risk-based		15.01	%		15.00	%		8.00	%		8.50	%
Common equity tier 1 Risk-Based		15.01	%		15.00	%		6.50	%		7.00	%
Leverage		12.77	%		12.76	%		5.00	%		4.00	%

(1) Fully phased in Basel III requirement for both OP Bancorp and Open Bank. Includes a 2.5% capital conservation buffer, except the leverage ratio.

Key Ratios
(Dollars in thousands, except ratios)	Nine Months Ended
	9/30/2018			9/30/2017			% change
Return on average assets (ROA)*		1.48	%		1.22	%		0.26	%
Return on average equity (ROE) *		12.43	%		11.45	%		0.98	%
Net interest margin *		4.49	%		4.58	%		-0.09	%
Efficiency ratio		58.95	%		60.17	%		-1.22	%

Total Risk Based Capital Ratio		16.16	%		13.37	%		2.79	%
Tier 1 Capital Ratio		15.01	%		12.15	%		2.86	%
Common Equity Tier 1 Ratio		15.01	%		12.15	%		2.86	%
Tier 1 Leverage Ratio		12.77	%		10.77	%		2.00	%

* Annualized

Financial Highlights (unaudited)
(Dollars in thousands, except per share data)	For the Nine Months Ended
	September 30,			September 30,
	2018			2017
Income Statement Data:
Interest income	$	36,248		$	29,205
Interest expense		6,217			3,197
Net interest income		30,031			26,008
Provision for loan losses		1,047			989
Noninterest income		7,279			6,708
Noninterest expense		21,993			19,685
Income before taxes		14,270			12,042
Provision for income taxes		3,781			4,706
Net Income	$	10,489		$	7,336
Diluted earnings per share	$	0.66		$	0.52
Performance Ratios:
Return on average assets (annualized)		1.48	%		1.22	%
Return on average equity (annualized)		12.43	%		11.45	%
Net interest margin (annualized)		4.49	%		4.58	%
Efficiency ratio (1)		58.94	%		60.17	%

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

	Three Months Ended									Percentage Change
	September 30,			June 30,			September 30,			Q3-18			Q3-18
	2018			2018			2017			vs. Q2-18			vs. Q3-17
Yield on loans		5.79	%		5.64	%		5.57	%		0.15	%		0.22	%
Yield on interest-earning assets		5.51	%		5.39	%		5.29	%		0.12	%		0.22	%
Cost of interest-bearing liabilities		1.69	%		1.48	%		1.01	%		0.21	%		0.68	%
Cost of deposits		1.17	%		1.02	%		0.64	%		0.15	%		0.53	%
Cost of funds		1.18	%		1.02	%		0.65	%		0.16	%		0.53	%
Net interest spread		3.82	%		3.91	%		4.28	%		-0.09	%		-0.46	%
Net interest margin		4.44	%		4.46	%		4.68	%		-0.02	%		-0.24	%

	As of
	September 30,			June 30,			September 30,
	2018			2018			2017
Noninterest bearing deposits		31.9	%		32.8	%		38.3	%
Interest bearing demand deposits		28.3	%		29.7	%		34.6	%
Savings		0.4	%		0.4	%		0.5	%
Time deposits over $250,000		17.6	%		17.2	%		12.8	%
Other time deposits		21.8	%		19.9	%		13.8	%
Total deposits		100.0	%		100.0	%		100.0	%