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What changed in OP Bancorp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of OP Bancorp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+421 added−530 removedSource: 10-K (2025-03-28) vs 10-K (2024-03-29)

Top changes in OP Bancorp's 2024 10-K

421 paragraphs added · 530 removed · 319 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

97 edited+24 added−131 removed159 unchanged
Biggest changeThe Federal Reserve has the power to order any bank holding company or its subsidiaries to terminate any activity or to terminate its ownership or control of any subsidiary when the Federal Reserve has reasonable grounds to believe that continuing such activity, ownership or control constitutes a serious risk to the financial soundness, safety or stability of any bank subsidiary of the bank holding company.
Biggest changeThe BHCA generally prohibits a bank holding company from acquiring direct or indirect ownership or control of more than 5% of the voting shares of any company that is not a bank or whose business is not “closely related to banking.” The Federal Reserve has the power to order any bank holding company or its subsidiaries to terminate any activity or to terminate its ownership or control of any subsidiary when the Federal Reserve has reasonable grounds to believe that continuing such activity, ownership or control constitutes a serious risk to a subsidiary's financial soundness, safety or stability.
Regulatory authorities routinely examine financial institutions for compliance with these obligations, and failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for the institution, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required.
Regulatory authorities routinely examine financial institutions for compliance with these obligations, and failure of a financial institution to 18 maintain and implement adequate programs to combat money laundering and terrorist financing, or to comply with all of the relevant laws or regulations, could have serious legal and reputational consequences for the institution, including causing applicable bank regulatory authorities not to approve merger or acquisition transactions when regulatory approval is required or to prohibit such transactions even if approval is not required.
We believe our comprehensive risk management system is designed to make sure that we have sound policies, procedures, and practices for the management of key risks under our risk framework (which includes market, operational, liquidity, interest rate sensitivity, credit, regulatory, legal and reputational risk) and that any exceptions to written policy are reported by senior management to our board of directors or audit committee.
We believe our comprehensive risk management system is designed to make sure that we have sound policies, procedures, and practices for the management of key risks under our risk framework (which includes market, operational, liquidity, interest rate sensitivity, credit, regulatory, legal and reputational risk) and that any exceptions to written policy are reported by senior management to 5 our board of directors or audit committee.
Although our growth has historically been organic, we are amenable to considering opportunistic strategic acquisitions to enhance our long-term growth strategy. Our Strategies Our vision is to be the leading Korean-American community-based commercial bank in the Korean-American communities we serve, to meet the financial needs of underserved small- and medium-sized businesses and individuals, and to give back to these communities.
Although our growth has historically been organic, we are amenable to considering opportunistic strategic acquisitions to enhance our long-term growth strategy. 3 Our Strategies Our vision is to be the leading Korean-American community-based commercial bank in the Korean-American communities we serve, to meet the financial needs of underserved small- and medium-sized businesses and individuals, and to give back to these communities.
Lending Activities Our lending strategy is to maintain a broadly diversified loan portfolio based on the type of customer (i.e., businesses versus individuals and across various business segments), type of loan product (e.g., commercial real estate, commercial and industrial loans, etc.), geographic location and industries in which our business customers are engaged 6 (e.g., manufacturing, retail, hospitality, etc.).
Lending Activities Our lending strategy is to maintain a broadly diversified loan portfolio based on the type of customer (i.e., businesses versus individuals and across various business segments), type of loan product (e.g., commercial real estate, commercial and industrial loans, etc.), geographic location and industries in which our business customers are engaged (e.g., manufacturing, retail, hospitality, etc.).
Commercial real estate lending typically involves higher loan principal 8 amounts and the repayment is dependent, in large part, on sufficient income from the properties securing the loans to cover operating expenses and debt service. We believe that our management team has extensive knowledge of our borrowers and the markets where we operate.
Commercial real estate lending typically involves higher loan principal amounts and the repayment is dependent, in large part, on sufficient income from the properties securing the loans to cover operating expenses and debt service. We believe that our management team has extensive knowledge of our borrowers and the markets where we operate.
A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the institution or its critical service providers fall victim to a cyber-attack. If we fail to observe the regulatory guidance, we could be subject to various regulatory sanctions, including financial penalties.
A financial institution is also expected to develop appropriate processes to enable recovery of data and business operations and address rebuilding network capabilities and restoring data if the institution or its critical service providers fall victim to 19 a cyber-attack. If we fail to observe the regulatory guidance, we could be subject to various regulatory sanctions, including financial penalties.
We actively monitor our investments on an ongoing basis to identify any material changes in the securities. At lease quarterly we also review our securities for potential other-than-temporary impairment. Limits for investment transactions are based on total transaction amount and require approval if they exceed designated thresholds.
We actively 11 monitor our investments on an ongoing basis to identify any material changes in the securities. At lease quarterly we also review our securities for potential other-than-temporary impairment. Limits for investment transactions are based on total transaction amount and require approval if they exceed designated thresholds.
If Open Bank S.A. decides to become a licensed bank in California or in any of the other Permitted Markets, depending on its business and marketing plan, there could be confusion created by the use of the name “Open Bank” which could have a material adverse impact on our ability to build its brand in the Permitted Markets.
If Open Bank S.A. decides to become a licensed bank in California or in any of the other Permitted Markets, 13 depending on its business and marketing plan, there could be confusion created by the use of the name “Open Bank” which could have a material adverse impact on our ability to build its brand in the Permitted Markets.
Affiliation with these local organizations provide our management team with knowledge of local markets and industries, as well as market developments that may impact the evolving business environment in which we operate. 5 • Strong Risk Management Practices . We place significant emphasis on risk management as an integral component of our organizational culture.
Affiliation with these local organizations provide our management team with knowledge of local markets and industries, as well as market developments that may impact the evolving business environment in which we operate. • Strong Risk Management Practices . We place significant emphasis on risk management as an integral component of our organizational culture.
The objective of our approval process is to provide a disciplined, collaborative approach to larger credits while maintaining responsiveness to client needs. Loan decisions are documented detailing the borrower’s business, purpose of the loan, evaluation of the repayment source and the associated risks, evaluation of collateral, covenants and monitoring requirements, and the risk rating rationale.
The objective of our approval process is to provide a disciplined, collaborative approach to larger credits while maintaining responsiveness to client needs. 7 Loan decisions are documented detailing the borrower’s business, purpose of the loan, evaluation of the repayment source and the associated risks, evaluation of collateral, covenants and monitoring requirements, and the risk rating rationale.
With certain limited exceptions, the maximum amount that a California bank may lend to any borrower at any one time (including the obligations to the bank of certain related entities of the borrower) may not exceed 25% (and unsecured loans may not exceed 15%) of the bank’s shareholders’ equity, allowance for credit losses, and any capital notes and debentures of the bank.
With certain limited exceptions, the maximum amount that a California bank may lend to any borrower at any one time (including the obligations to the bank of certain related entities and related persons of the borrower) may not exceed 25% (and unsecured loans may not exceed 15%) of the bank’s shareholders’ equity, allowance for credit losses, and any capital notes and debentures of the bank.
We also purchase home mortgage loans from TPO based on the review of their underwriting and file quality as opportunities arise. 10 Loans collateralized by single-family residential real estate generally are originated in amounts of no more than 70% of the appraised value.
We also purchase home mortgage loans from TPO based on the review of their underwriting and file quality as opportunities arise. Loans collateralized by single-family residential real estate generally are originated in amounts of no more than 70% of the appraised value.
We further believe that our management team takes a conservative approach to commercial real estate lending, focusing on what we believe to be high quality credits with low loan-to-value ratios, income-producing properties with strong cash flow characteristics, and strong collateral profiles.
We further believe that our management team takes a conservative approach to commercial 8 real estate lending, focusing on what we believe to be high quality credits with low loan-to-value ratios, income-producing properties with strong cash flow characteristics, and strong collateral profiles.
Our investment policy is reviewed and approved annually by ALM and ratified by our board of directors. ALM establishes risk limits and policy for conducting investment activities. ALM receives quarterly reports from management’s Asset Liability Management Committee (“ALCO”), which approves investment strategies and meets 11 monthly to review investment reports and monitor investment activities.
Our investment policy is reviewed and approved annually by ALM and ratified by our board of directors. ALM establishes risk limits and policy for conducting investment activities. ALM receives quarterly reports from management’s Asset Liability Management Committee (“ALCO”), which approves investment strategies and meets monthly to review investment reports and monitor investment activities.
In such situation, the subsidiary bank will be required by the bank’s federal regulator to take “prompt corrective action.” Any capital loans by a bank holding company to a subsidiary bank are subordinate in right of payment to deposits and to certain other indebtedness of such bank.
In such situation, the subsidiary bank will be required by the bank’s federal regulator to take “prompt corrective action.” Any capital loans by a bank holding company to its subsidiary bank are subordinate in right of payment to deposits and to certain other indebtedness of the bank.
We offer a variety of loans, including commercial real estate loans (including loans secured by owner occupied commercial properties), SBA loans, mortgage warehouse lines of credit and commercial and industrial loans to local manufacturing and industrial companies and other businesses. We also offer consumers residential mortgage loans, unsecured term loans, and unsecured lines of credit.
We offer a variety of loans, including commercial real estate loans (including loans secured by owner occupied commercial properties), SBA loans, mortgage warehouse lines of credit and commercial and industrial loans to local manufacturing and industrial companies and other businesses. We also offer consumers residential mortgage loans, 6 unsecured term loans, and unsecured lines of credit.
Under the California Financial Code, the Bank is permitted to pay a dividend in the following circumstances: (i) without the consent of either the DFPI or the Bank’s shareholders, in an amount not exceeding the lesser of (a) the retained earnings of the Bank; or (b) the net income of the Bank for its last three fiscal years, less the amount of any distributions made during the prior period; (ii) with the prior approval of the DFPI, in an amount not exceeding the greatest of: (a) the retained earnings of the Bank; (b) the net income of the Bank for its last fiscal year; or (c) the net income for the Bank for its current fiscal year; and (iii) with the prior approval of the DFPI and the Bank’s shareholders (i.e., the Company) in connection with a reduction of its contributed capital.
Under the California Financial Code, the Bank is permitted to pay a dividend in the following circumstances: (i) without the consent of either the DFPI or the Bank’s shareholders, in an amount not exceeding the lesser of (a) the retained earnings of the Bank; or (b) the net income of the Bank for its last three fiscal years, less the amount of any distributions made during the prior period; (ii) with the prior approval of the DFPI, in an amount not exceeding the greatest of: (a) the retained earnings of the Bank; (b) the net income of the Bank for its last fiscal year; or (c) the net income for the Bank for its current fiscal year; and (iii) with the prior approval of the DFPI and the Bank’s shareholders (i.e., HCC) in connection with a reduction of its contributed capital.
The CRE Concentration Guidance does not limit banks’ levels of CRE lending activities, but rather guides institutions in developing risk management practices and levels of capital that are commensurate with the level and nature of their CRE concentrations.
The guidance does not limit banks’ levels of CRE lending activities, but rather guides institutions in developing risk management practices and levels of capital that are commensurate with the level and nature of their CRE concentrations.
We 4 expect to increase our commercial lending business in our expanding branch network, where we can continue to leverage our ability to develop personal, community-based relationships and leverage our quality service model into new opportunities.
We expect to increase our commercial lending business in our expanding branch network, where we can continue to leverage our ability to develop personal, community-based relationships and leverage our quality service model into new opportunities.
Open Bank’s board of directors delegates loan authority, up to the board-approved limits, to its Loan & Credit Policy Committee, which is comprised of members of its board of directors. Our board of directors also delegates limited 7 lending authority to our internal management loan committee, which is comprised of members of our executive management team.
Open Bank’s board of directors delegates loan authority, up to the board-approved limits, to its Loan & Credit Policy Committee, which is comprised of members of its board of directors. Our board of directors also delegates limited lending authority to our internal management loan committee, which is comprised of members of our executive management team.
The Capital Rules generally measure an institution’s capital using four capital measures or ratios. The common equity Tier 1 capital ratio is the ratio of the institution’s common equity Tier 1 capital to its total risk-weighted assets. The 15 Tier 1 risk-based capital ratio is the ratio of the institution’s Tier 1 capital to its total risk-weighted assets.
The Capital Rules generally measure an institution’s capital using four capital measures or ratios. The common equity Tier 1 capital ratio is the ratio of the institution’s common equity Tier 1 capital to its total risk-weighted assets. The Tier 1 risk-based capital ratio is the ratio of the institution’s Tier 1 capital to its total risk-weighted assets.
Our experienced executive management team and senior leaders have exhibited the ability to strengthen shareholder value by consistently growing profitably. The members of our executive management team have, on average, more than 30 years’ experience working for large, billion-dollar-plus financial institutions in our markets during various economic cycles.
Our experienced executive management team and senior leaders have exhibited the ability to strengthen shareholder value by consistently growing profitably. The members of our executive management team have, on average, more than 32 years’ experience working for large, billion-dollar-plus financial institutions in our markets during various economic cycles.
In addition, if Open Bank, S.A. were to assert that we breached the Coexistence Agreement, Open Bank, S.A. could file for an injunction, seek to have the Bank change its name or seek monetary damages, all of which could have a material adverse impact on our financial condition and results of operations.
In addition, if Open Bank, S.A. were to assert that we breached the Coexistence Agreement, Open Bank, S.A. could file for an injunction, seek to have the Bank change its name or seek monetary damages, any of which could have a material adverse impact on our financial condition and results of operations.
We typically require, depending on the circumstances and the type of relationship, our borrowers to maintain deposit accounts. Approximately 58.5% of our borrowers have a deposit relationship with us. Interest rates, maturity terms, service fees and withdrawal penalties are established on a periodic basis.
We typically require, depending on the circumstances and the type of relationship, our borrowers to maintain deposit accounts. Approximately 58.3% of our borrowers have a deposit relationship with us. Interest rates, maturity terms, service fees and withdrawal penalties are established on a periodic basis.
The members of our executive team have been with Open Bank for an average of 8 years. Our executive management team has instilled a transparent and entrepreneurial culture that rewards leadership, innovation, and problem solving. • Personal Relationship-Based Customer Service .
The members of our executive team have been with Open Bank for an average of 10 years. Our executive management team has instilled a transparent and entrepreneurial culture that rewards leadership, innovation, and problem solving. • Personal Relationship-Based Customer Service .
The risks created by such concentrations have been considered by management in the determination of the adequacy of the allowance for credit losses. Management believes the allowance for credit losses is adequate to cover estimated lifetime expected losses in our loan portfolio as of December 31, 2023.
The risks created by such concentrations have been considered by management in the determination of the adequacy of the allowance for credit losses. Management believes the allowance for credit losses is adequate to cover estimated lifetime expected losses in our loan portfolio as of December 31, 2024.
The CRE Concentration Guidance provides supervisory criteria, including the following numerical indicators, to assist bank 22 examiners in identifying banks with potentially significant CRE loan concentrations that may warrant greater supervisory scrutiny: (i) CRE loans exceeding 300% of capital and increasing 50% or more in the preceding three years; or (ii) construction and land development loans exceeding 100% of capital.
Regulatory guidance provides supervisory criteria, including the following numerical indicators, to assist bank examiners in identifying banks with potentially significant CRE loan concentrations that may warrant greater supervisory scrutiny: (i) CRE loans exceeding 300% of capital and increasing 50% or more in the preceding three years; or (ii) construction and land development loans exceeding 100% of capital.
Approximately 58.5% of our borrowers also have a deposit relationship with us, providing us with visibility into their liquidity profile and contributing to our ability to manage our asset quality. • Strong Community Relationships .
Approximately 58.3% of our borrowers also have a deposit relationship with us, providing us with visibility into their liquidity profile and contributing to our ability to manage our asset quality. • Strong Community Relationships .
Federal Reserve policy historically required bank holding companies to act as a source of financial and managerial strength to their subsidiary banks. The Dodd-Frank Act codified this policy as a statutory requirement.
Source of Strength Doctrine . Federal Reserve policy historically required bank holding companies to act as a source of financial and managerial strength to their subsidiary banks. Dodd-Frank codified this policy as a statutory requirement.
We had no nonperforming commercial and industrial loans as of December 31, 2023. In general, commercial and industrial loans may involve increased credit risk and, therefore, typically yield a higher return.
We had no nonperforming commercial and industrial loans as of December 31, 2024. In general, commercial and industrial loans may involve increased credit risk and, therefore, typically yield a higher return.
Having grown our branch and loan production office network, we now operate through eleven full service branches located in the greater metropolitan area of Los Angeles, Orange, and Santa Clara Counties in California, the Dallas metropolitan area in Texas, Clark County in Nevada, and four loan production offices in the Korean-American communities in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, and Lynnwood, Washington.
Having grown our branch and loan production office network, we now operate through eleven full service branches located in the greater metropolitan area of Los Angeles, Orange, and Santa Clara Counties in California, the Dallas metropolitan area in Texas, Clark County in Nevada, and five loan production offices in the Korean-American communities in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, Lynnwood, Washington, and Fairfax, Virginia.
Well capitalized institutions are not subject to limitations on brokered deposits, while adequately capitalized institutions are able to accept, renew or roll over brokered deposits only with a waiver from the FDIC and subject to certain restrictions on the yield paid on such deposits. Undercapitalized institutions are generally not permitted to accept, renew, or roll over brokered deposits.
Well capitalized institutions are not subject to limitations on brokered deposits, while an adequately capitalized institutions is able to accept, renew or roll over brokered deposits only with a waiver from 17 the FDIC and subject to certain restrictions on the yield paid on such deposits. Undercapitalized institutions are generally not permitted to accept, renew, or roll over brokered deposits.
The Company must stand ready to use its available resources to provide adequate capital to the Bank during periods of financial stress or adversity. The Company must also maintain the financial flexibility and capital raising capacity to obtain additional resources to assist the Bank.
The Company must stand ready to use its available resources to provide adequate capital to the Bank during periods of financial stress or adversity. The Company must also maintain the financial flexibility and capital raising capacity to obtain additional resources for assisting the Bank.
During the past decade, the bank regulatory agencies have increasingly emphasized the importance of sound risk management processes and strong internal controls when evaluating the activities of the financial institutions they supervise.
Risk Management . Bank regulatory agencies have increasingly emphasized the importance of sound risk management processes and strong internal controls when evaluating the activities of the financial institutions they supervise.
The consumer protection laws applicable to us, among other things, require disclosures of the cost of credit and terms of deposit accounts, provide substantive consumer rights, prohibit discrimination in credit transactions, regulate the use of credit report information, provide financial privacy protections, prohibit unfair, deceptive and abusive acts and practices (“UDAAP”), restrict our ability to raise interest rates and subject us to substantial regulatory oversight.
The consumer protection laws applicable to us, among other things, require disclosures of the cost of credit and terms of deposit accounts, provide substantive consumer rights, prohibit discrimination in credit transactions, regulate the use of credit report information, provide financial privacy protections, prohibit UDAAP practices, restrict our ability to raise interest rates and subject us to substantial regulatory oversight.
We believe the quality of our customer base and access to stable funding from reliable deposits are key drivers of our success. We have a strong deposit base, characterized by a high level of core deposits, a high proportion of noninterest-bearing accounts and relatively low funding costs. As of December 31, 2023, deposits accounted for 92.5% of total liabilities.
We believe the quality of our customer base and access to stable funding from reliable deposits are key drivers of our success. We have a strong deposit base, characterized by a high level of core deposits, a high proportion of noninterest-bearing accounts and relatively low funding costs. As of December 31, 2024, deposits accounted for 93.8% of our total liabilities.
Our risk management practices are overseen by the chairman of our audit committee and the chairman of Open Bank’s risk and compliance committees, who have more than 35 years of combined banking experience, and our chief risk officer, who has more than 20 years of banking experience.
Our risk management practices are overseen by the chairman of our audit committee and the chairman of Open Bank’s risk and compliance committees, who have more than 21 years of combined banking experience, and our chief risk officer, who has more than 22 years of banking experience.
We strive to retain an attractive deposit mix from both large and small customers and a broad market reach, which has resulted in our top 10 customers accounting for only 6.6% of all deposits as of December 31, 2023.
We strive to retain an attractive deposit mix from both large and small customers and a broad market reach, which has resulted in our top 10 customers accounting for only 7.4% of all deposits as of December 31, 2024.
The Company is required to act as a source of strength to the Bank and to commit capital and financial resources to support the Bank, including at times when the Company may not be in a financial position to provide it.
The Company is required to act as a source of strength to the Bank and to commit capital and financial resources to support the Bank, including at times when the Company may not be in a financial position to do so.
Our trade finance unit has a correspondent relationship with many of the largest banks in South Korea. All of our international letters of credit, SWIFT, and export advice are denominated in U.S. dollars. The total commercial and industrial loan portfolio totaled $121.0 million as of December 31, 2023.
Our trade finance unit has a correspondent relationship with many of the largest banks in South Korea. All of our international letters of credit, SWIFT, and export advice are denominated in U.S. dollars. The total commercial and industrial loan portfolio totaled $213.1 million as of December 31, 2024.
As of December 31, 2023, approximately 76.1% of the commercial real estate loan portfolio consisted of fixed rate loans. Loan amounts generally do not exceed 70% of the lesser of the appraised value or the purchase price depending on the property audits we utilize. Our total commercial real estate loan portfolio totaled $885.6 million as of December 31, 2023.
As of December 31, 2024, approximately 76.1% of the commercial real estate loan portfolio consisted of fixed rate loans. Loan amounts generally do not exceed 70% of the lesser of the appraised value or the purchase price depending on the property audits we utilize. Our total commercial real estate loan portfolio totaled $980.2 million as of December 31, 2024.
In accordance with Federal Reserve laws and regulations, the Company is required to act as a source of financial strength to the Bank and to commit resources to support the Bank in circumstances where the Company might not be in a financial position to do so.
In accordance with Federal Reserve laws and regulations, the Company is required to act as a source of financial strength to the Bank and to commit resources to support the Bank in circumstances where the Company might not otherwise do so. Permitted Activities .
These laws include the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Servicemembers Civil Relief Act, the Military Lending Act, and these laws’ respective state law counterparts, as well as state usury laws and laws regarding unfair and deceptive acts and practices.
These laws include, among others, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, the Service Members Civil Relief Act, the Military Lending Act, and these laws’ respective state law counterparts, as well as state usury laws and laws regarding unfair, deceptive or abusive acts and practices (“UDAAP”).
In addition, all of the mortgage loans in our loan portfolio contain due-on-sale clauses providing that the Bank may declare the unpaid amount due and payable upon the sale of the property securing the loan. The total home mortgage loan portfolio totaled $518.0 million as of December 31, 2023.
In addition, all of the mortgage loans in our loan portfolio contain due-on-sale clauses providing that the Bank may declare the unpaid amount due and payable upon the sale of the property securing the loan. The total home mortgage loan portfolio totaled $509.5 million as of December 31, 2024.
Federal bank regulators, state and local attorneys general and state and local consumer protection agencies may also seek to enforce consumer protection requirements and obtain additional remedies, including regulatory sanctions, customer rescission rights, and civil money penalties.
Federal bank regulators, state attorneys general, and state and local consumer protection agencies may also seek to enforce consumer protection requirements and obtain these and other remedies, including regulatory sanctions, client rescission rights, and civil money penalties.
Furthermore, the application of various federal and state laws may limit the amount which can be recovered on such loans. The total consumer loan portfolio totaled $1.6 million as of December 31, 2023. We had no nonperforming consumer loans as of December 31, 2023.
Furthermore, the application of various federal and state laws may limit the amount which can be recovered on such loans. The total consumer loan portfolio totaled $0.3 million as of December 31, 2024. We had no nonperforming consumer loans as of December 31, 2024.
Our nonperforming single-family residential real estate loans, as of December 31, 2023, were $2.5 million. Consumer Loans . We offer unsecured lines of credit and term loans to high net worth individuals. Consumer loans are underwritten based on the individual borrower’s income, current debt level, and past credit history. The terms of consumer loans are up to seven years.
There were no nonperforming single-family residential real estate loans as of December 31, 2024. Consumer Loans . We offer unsecured lines of credit and term loans to high net worth individuals. Consumer loans are underwritten based on the individual borrower’s income, current debt level, and past credit history. The terms of consumer loans are up to seven years.
We consider our core deposits, defined as all deposits except for time deposits exceeding $250,000, to be our primary and most valuable low-cost funding source for our lending business, and as of December 31, 2023, core deposits represented 76.0% of our total deposits.
We consider our core deposits, defined as all deposits except for time deposits exceeding $250,000, to be our primary and most valuable low-cost funding source for our lending business, and as of December 31, 2024, core deposits represented 72.1% of our total deposits.
Under the Coexistence Agreement, Open Bank S.A. retains the right to use and market its services in relation to its registered 13 trademark in any state or territory in the United States. We further agreed not to challenge Open Bank, S.A.’s trademark registration or any future applications by Open Bank S.A.
Under the Coexistence Agreement, Open Bank S.A. retains the right to use and market its services in relation to its registered trademark in any state or territory in the United States. We further agreed not to challenge Open Bank, S.A.’s trademark registration or any future applications by Open Bank S.A. The Coexistence Agreement has no termination date and is perpetual.
Since inception, we have donated over $15.6 million to the Foundation, aiding over 228 local non-profits. Our board and management team has strong ties and relationships within the Korean-American communities where we operate.
Since inception, we have donated over $17.5 million to the Foundation, aiding over 230 local non-profits. Our board and management team has strong ties and relationships within the Korean-American communities where we operate.
Deposit rates and terms are based primarily on current operating strategies and market interest rates, liquidity requirements and our deposit growth goals. We utilize wholesale deposits to supplement our core retail deposits for funding purposes, including brokered accounts. As of December 31, 2023, wholesale deposits totaled $335.5 million, or 18.6% of total deposits.
Deposit rates and terms are based primarily on current operating strategies and market interest rates, liquidity requirements and our deposit growth goals. We utilize wholesale deposits to supplement our core retail deposits for funding purposes, including brokered accounts. As of December 31, 2024, wholesale deposits totaled $433.3 million, or 21.4% of total deposits.
Core deposits, which we define as all deposits excluding time deposits exceeding $250,000, accounted for 76.0% of total deposits. Our cost of total deposits was 2.70% for the year ended December 31, 2023. To generate new accounts we employ conventional marketing and advertising initiatives and leverage our community commitment activities.
Core deposits, which we define as all deposits excluding time deposits exceeding $250,000, accounted for 72.1% of total deposits. Our cost of total deposits was 3.48% for the year ended December 31, 2024. To generate new accounts we employ conventional marketing and advertising initiatives and leverage our community commitment activities.
Enforcement Powers of Federal and State Banking Agencies The federal bank regulatory agencies have broad enforcement powers, including the power to terminate deposit insurance, impose substantial fines and other civil and criminal penalties, and appoint a conservator or receiver for financial institutions.
The regulations of these agencies govern most aspects of a bank’s business. The federal bank regulatory agencies have broad enforcement powers, including the power to terminate deposit insurance, impose substantial fines and other civil and criminal penalties, and appoint a conservator or receiver for financial institutions.
We had no nonperforming commercial real estate loans as of December 31, 2023. Payments on loans secured by such properties are often dependent on the successful operation (in the case of owner occupied real estate) or management (in the case of non-owner occupied real estate) of the properties.
We had nonperforming commercial real estate loans of $1.9 million, or 0.20% of total commercial real estate loans, as of December 31, 2024. Payments on loans secured by such properties are often dependent on the successful operation (in the case of owner occupied real estate) or management (in the case of non-owner occupied real estate) of the properties.
We have attained SBA Preferred Lender status nationwide. 9 As of December 31, 2023, our SBA loan portfolio totaled $239.7 million, of which $224.7 million was secured by real estate and $15.0 million was unsecured or secured by business assets. Our nonperforming SBA loans, as of December 31, 2023, were $3.6 million. Commercial and Industrial Loans .
We have attained SBA Preferred Lender status nationwide. As of December 31, 2024, our SBA loan portfolio totaled $253.7 million, of which $232.0 million was secured by real estate and $21.7 million was unsecured or secured by business assets. Our nonperforming SBA loans, as of December 31, 2024, were $5.9 million. 9 Commercial and Industrial Loans .
We have committed to contribute annually 10% of our consolidated net income after taxes to the Foundation. Since inception, we have donated over $15.6 million to the Foundation, aiding over 228 local non-profits.
We have committed to contribute annually 10% of our consolidated net income after taxes to the Foundation. Since inception, we have donated more than $17.5 million to the Foundation, aiding over 230 local non-profits.
In the event of the bank holding company’s bankruptcy, its commitment to a federal bank regulatory agency to maintain the capital of its subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment. Safe and Sound Banking Practices .
In the event of a bank holding company’s bankruptcy, its commitment to a federal bank regulatory agency to maintain the capital of its subsidiary bank will be assumed by the bankruptcy trustee and entitled to priority of payment. Dividend Payments, Stock Redemptions and Repurchases .
We believe we can leverage our personalized customer service, extensive knowledge of our local markets and high visibility community activities to attract and retain customers seeking alternatives to the larger Korean-American financial institutions. • Preserve Our Asset Quality Through Disciplined Lending Practices . Our approach to credit management uses well-defined policies and procedures, disciplined underwriting criteria and ongoing risk management.
We believe we can leverage our personalized customer service, extensive knowledge of our local markets and high visibility community activities to attract and retain customers seeking alternatives to the larger Korean-American financial institutions. 4 • Preserve Our Asset Quality Through Disciplined Lending Practices .
As a result, our growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by federal and state statutes and by the regulations and policies of various bank regulatory agencies, including the California Department of Financial Protection and Innovation (the “DFPI”), the Federal Reserve, the FDIC and the Consumer Financial Protection Bureau (the “CFPB”).
As a result, our growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by federal and state statutes and by the regulations and policies of various bank regulatory agencies.
As of December 31, 2023, the Bank was eligible to accept brokered deposits without a waiver from FDIC. Loans to One Borrower .
As of December 31, 2024, the Bank was eligible to accept brokered deposits without limitations. Loans to One Borrower .
As of December 31, 2023 and 2022, our loan portfolio consists of the following: December 31, ($ in thousands) 2023 2022 Commercial real estate $ 885,585 $ 842,208 SBA 239,692 234,717 Commercial and industrial 120,970 116,951 Home mortgage 518,024 482,949 Consumer 1,574 1,467 Gross loans receivable $ 1,765,845 $ 1,678,292 For additional information concerning our loan portfolio, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition—Loans.” Concentrations of Credit Risk .
As of December 31, 2024 and 2023, our loan portfolio consists of the following: December 31, ($ in thousands) 2024 2023 Commercial real estate $ 980,247 $ 885,585 SBA 253,710 239,692 Commercial and industrial 213,097 120,970 Home mortgage 509,524 518,024 Consumer 274 1,574 Gross loans receivable $ 1,956,852 $ 1,765,845 For additional information concerning our loan portfolio, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Financial Condition—Loans.” Concentrations of Credit Risk .
As of December 31, 2023, we have eleven branches in total, nine of which are in the greater metropolitan areas of Los Angeles, Orange, and Santa Clara Counties in California, one branch in Carrollton, Texas, and one branch in Las Vegas, Nevada.
As of December 31, 2024, we had eleven branches in total, nine of which are in the greater metropolitan areas of Los Angeles, Orange, and Santa Clara Counties in California.
As of December 31, 2023, we had $1.81 billion of deposits, and our cost of deposits was 2.70% for the year ended December 31, 2023.
As of December 31, 2024, we had $2.03 billion of deposits, and our cost of deposits was 3.48% for the year ended December 31, 2024.
As of December 31, 2023, the Bank’s legal lending limit on loans to a single borrower was $57.2 million for secured loans and $34.3 million for unsecured loans.
As of December 31, 2024, the Bank’s legal lending limit on loans to a single borrower was $60.8 million for secured loans and $36.5 million for unsecured loans.
Federal law prohibits a bank holding company, and any subsidiary banks, from engaging in certain tie in arrangements in connection with the extension of credit.
We generally do not have banking relationships that approach these limitations. Tie in Arrangements . Federal law prohibits a bank holding company and any subsidiary banks from engaging in certain tie in arrangements in connection with the extension of credit.
Non-compliance with consumer protection requirements may also result in failure to obtain any required bank regulatory approval for merger or acquisition transactions we may wish to pursue or prohibition from engaging in such transactions even if approval is not required. Mortgage and Mortgage-Related Products .
Non-compliance with consumer protection requirements may also result in our failure to obtain any required bank regulatory approval for merger or acquisition transactions we may wish to pursue or prohibition from engaging in such transactions even if approval is not required. Cybersecurity . The federal bank regulatory agencies have increased their focus on cybersecurity through guidance, examination and regulations.
Violations of applicable consumer protection laws can result in significant potential liability from litigation brought by customers, including actual and statutory damages, restitution and attorneys’ fees.
Many states and local jurisdictions have consumer protection laws analogous to those listed above. Violations of applicable consumer protection laws can result in significant potential liability from litigation brought by clients, including actual and statutory damages, restitution and attorneys’ fees.
Specifically, subject to certain exemptions, the Bank may not extend credit, lease or sell property, or furnish any services, or fix or vary the consideration for any of the foregoing on the condition that the customer must (i) obtain or provide additional credit, property or services from or to the Company or Bank, or (ii) refrain from obtaining other credit, property or services from competitors, except reasonable requirements to assure soundness of credit extended.
For example, the Bank may not extend credit, lease or sell property, furnish any services, fix or vary the consideration for any of the foregoing on the condition that: (i) the client must obtain or provide some additional credit, property or services from or to the Bank other than a loan, discount, deposit or trust services; (ii) the client must obtain or provide some additional credit, property or service from or to HCC or the Bank; or (iii) the client must not obtain some other credit, property or services from competitors, except reasonable requirements to assure soundness of credit extended.
As of December 31, 2023, our loan portfolio consists primarily of commercial real estate loans, which were $885.6 million and constituted 50.2% of our total loans, home mortgage loans, which were $518.0 million and constituted 29.3% of our total loans, SBA loans, which were $239.7 million and constituted 13.6% of our total loans, and commercial and industrial loans, including trade finance loans, which were $121.0 million and constituted 6.9% of our total loans.
As of December 31, 2024, our loan portfolio consists primarily of commercial real estate loans, which were $980.2 million and constituted 50.1% of our total loans, home mortgage loans, which were $509.5 million and constituted 26.0% of our total loans, SBA loans, which were $253.7 million and constituted 13.0% of our total loans, and commercial and industrial loans, including trade finance loans, which were $213.1 million and constituted 10.9% of our total loans.
Historically, we believe we have made sound, high quality loans while recognizing that lending money involves a degree of business risk. We have loan policies designed to assist us in managing this business risk.
The increase in 2024 was primarily attributable to additional commitments on new mortgage warehouse lines of credit. Loan Underwriting and Approval . Historically, we believe we have made sound, high quality loans while recognizing that lending money involves a degree of business risk. We have loan policies designed to assist us in managing this business risk.
Deposit Products We offer customers traditional retail deposit products through our branch network and the ability to access their accounts through online and mobile banking platforms.
The economic base of these areas is heavily dependent on small- and medium-sized businesses. Deposit Products We offer customers traditional retail deposit products through our branch network and the ability to access their accounts through online and mobile banking platforms.
We are subject to federal laws aiming to counter money laundering and terrorist financing, as well as transactions with persons, companies and foreign governments sanctioned by the United States. These laws include, among others, the USA PATRIOT Act, the Bank Secrecy Act (“BSA”), and the Anti-Money Laundering Act (“AMLA”).
Anti-Money Laundering and the Office of Foreign Assets Control Regulation . We are subject to federal laws aiming to counter money laundering and terrorist financing, as well as transactions with persons, companies and foreign governments sanctioned by the United States.
The DFPI also has broad enforcement powers over us, including the power to impose orders, remove officers and directors, impose fines and appoint supervisors and conservators. The Company General .
The DFPI also has broad enforcement powers over us, including the power to impose orders, remove officers and directors, impose fines and appoint supervisors and conservators. The following is a summary of the material elements of the supervisory and regulatory framework applicable to the Company and its subsidiary, the Bank.
Large Credit Relationships . As of December 31, 2023, the aggregate amount of loans to our 10 and 25 largest borrowers (including related entities) amounted to approximately $229.4 million, or 13.0% of total loans, and $417.5 million, or 23.6% of total loans, respectively. Loan Underwriting and Approval .
As of December 31, 2024, the aggregate amount of loans and commitments to our 10 and 25 largest borrowers (including related entities) amounted to approximately $304.9 million, or 15.6% of total loans, and $515.4 million, or 26.3% of total loans, respectively, compared to $229.4 million, or 11.7% of total loans, and $417.5 million, or 21.3% of total loans, respectively, as of December 31, 2023.
We are subject to a number of federal and state consumer protection laws that extensively govern our relationship with our customers.
Accordingly, we are subject to geographic concentration risks that are described in greater detail in “Item 1A, Risk Factors.” Consumer Protection . We are subject to a number of federal and state consumer protection laws that extensively govern our relationship with our clients.
In connection with such loans, we retain a valid lien on the real estate, obtain a title insurance policy that insures that the property is free from encumbrances and require hazard insurance.
In connection with such loans, we retain a valid lien on the real estate, obtain a title insurance policy that insures that the property is free from encumbrances and require hazard insurance. 10 Loan fees on these products, interest rates and other provisions of mortgage loans are determined by us on the basis of our own pricing criteria and competitive market conditions.
By virtue of their greater total capitalization, such banks also have substantially 12 higher lending limits (restricted to a percentage of our total shareholders’ equity, depending upon the nature of the loan transaction) than us.
By virtue of their greater total capitalization, such banks also have substantially higher lending limits (restricted to a percentage of our total shareholders’ equity, depending upon the nature of the loan transaction) than us. 12 In addition to other banks, our competitors include savings institutions, credit unions, thrift and loan companies and numerous non-banking institutions, such as finance companies, leasing companies, insurance companies, brokerage firms, and investment banking firms located in our primary market area.
As a bank holding company, the Company is subject to regulation, supervision and periodic examination by the Federal Reserve under the Bank Holding Company Act of 1956, as amended (the “BHCA”). The Company is required to file with the Federal Reserve periodic reports of its operations and such additional information as the Federal Reserve may require.
OP Bancorp is required to file with the Federal Reserve periodic reports of 16 its operations and such additional information as the Federal Reserve may require.
These laws are intended primarily for the protection of the FDIC’s Deposit Insurance Fund and bank customers rather than shareholders.
Federal and state banking laws impose a comprehensive system of supervision, regulation and enforcement on the operations of banks, their holding companies and affiliates. These laws are intended primarily for the protection of the FDIC’s Deposit Insurance Fund and bank customers rather than shareholders.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur marketing focuses primarily on the banking needs of small- and medium-sized businesses, professionals and residents in the Korean-American communities that we serve. This demographic concentration makes us more prone to circumstances that particularly affect this segment of the population.
Biggest changeWe focus on marketing our services to a limited segment of the population and any adverse change impacting such segment is likely to have an adverse impact on us. Our marketing focuses primarily on the banking needs of small- and medium-sized businesses, professionals and residents in the Korean-American communities that we serve.
As a bank, we are susceptible to fraudulent activity that may be committed against us or our customers, which may result in financial losses or increased costs to us or our customers, disclosure or misuse of our information or our customer's information, misappropriation of assets, privacy breaches against our customers, litigation or damage to our reputation.
As a bank, we are susceptible to fraudulent activity that may be committed against us or our customers, which may result in financial losses or increased costs to us or our customers, disclosure or misuse of our information or our customer's information, misappropriation of assets, privacy breaches against our customers, litigation or damage to our reputation.
Increased use of the Internet and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and operations, coupled with the increased sophistication and activities of organized crime, perpetrators of fraud, hackers, terrorists and others increases our security risks.
Increased use of the Internet and telecommunications technologies (including mobile devices) to conduct financial and other business transactions and operations, coupled with the increased sophistication and activities of organized crime, perpetrators of fraud, hackers, terrorists and others increases our security risks.
In addition to cyber-attacks or other security breaches involving the theft of sensitive and confidential information, hackers continue to engage in attacks against large financial institutions. These attacks include denial of service attacks designed to disrupt external customer facing services, and ransomware attacks designed to deny organizations access to key internal resources or systems.
In addition to cyber-attacks or other security breaches involving the theft of sensitive and confidential information, hackers continue to engage in attacks against large financial institutions. These attacks include denial of service attacks designed to disrupt external customer facing services, and ransomware attacks designed to deny organizations access to key internal resources or systems.
Breaches of information security also may occur through intentional or unintentional acts by those having access to our systems or our customers' or counterparties' confidential information, including employees.
Breaches of information security also may occur through intentional or unintentional acts by those having access to our systems or our customers' or counterparties' confidential information, including employees.
The access by unauthorized persons to, or the improper disclosure by us of, confidential information regarding our customers or our own proprietary information, software, methodologies and business secrets, failures or disruptions in our communications, information and technology systems, or our failure to adequately address them, could negatively affect our customer relationship management, general ledger, deposit, loan or other systems.
The access by unauthorized persons to, or the improper disclosure by us of, confidential information regarding our customers or our own proprietary information, software, methodologies and business secrets, failures or disruptions in our communications, information and technology systems, or our failure to adequately address them, could negatively affect our customer relationship management, general ledger, deposit, loan or other systems.
We cannot assure that such breaches, failures or interruptions will not occur or, if they do occur, that they will be adequately addressed by us or the third parties on which we rely. Our insurance may not fully cover all types of losses.
We cannot assure that such breaches, failures or interruptions will not occur or, if they do occur, that they will be adequately addressed by us or the third parties on which we rely. Our insurance may not fully cover all types of losses.
The occurrence of any failures or interruptions of our communications, information and technology systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, financial condition or results of operations.
The occurrence of any failures or interruptions of our communications, information and technology systems could damage our reputation, result in a loss of customer business, subject us to additional regulatory scrutiny or expose us to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, financial condition or results of operations.
Risks Related to Our Business • Decline in general business and economic conditions • Adverse economic conditions in Asia, particularly South Korea • Fluctuations in interest rates • Monetary Policy and the Federal Reserve • Losses on our securities portfolio, particularly from increases in interest rates • Liquidity risks Risks Related to Our Loans • Negative changes in the economy affecting real estate values and liquidity • Commercial borrowers present risks • Small and medium business loans subject to greater risks from adverse business developments • Risks from non-qualified single family home mortgage lending business • Unreliability of loan appraisals used in real property loan decisions • Increased regulatory scrutiny of commercial real estate concentrations • Lack of seasoning of our loan portfolio due to recent growth over the last five years Risks Related to our SBA Loan Program • Dependence on U.S. federal government SBA loan program • Recognition of gains on sale of loans and servicing asset valuations subject to our assumptions we use • Credit risks from non-guaranteed portion of SBA loans we retain and do not sell • Credit risks from SBA loans we sell as a result of repurchase obligations Risks Related to Our Deposits • Concentrations of deposit relationships • Competition for deposits may increase cost of deposits negatively affecting our deposit growth Risks Related to Management • Success depends on the skills of our management and their retention • Competition for skilled and experienced senior level management employees Risks Related to Credit Quality • Our business ability to manage credit risk • Nonperforming assets demand management time to resolve and can affect our financial results • Allowance for credit losses may be insufficient to absorb potential losses in our loan portfolio Risks Related to our Growth Strategy • Inability to continue the growth of loans and deposits • Limited ability to expand because of an existing license agreement for the use of “Open Bank” • Managing risks of opening new branches • Managing risks of adding new lines of business Risks Related to Our Capital • Increased regulatory requirements • Raising new capital • Commitment to contribute 10% of our after tax income to the Open Stewardship Foundation 26 Competition Risks • Competition among financial institutions, many of whom are much larger, have greater capital, more advanced technology • Focus on marketing to the Korean-American geographic areas we serve Other Business Risks • Soundness of other financial institutions • Severe weather, natural disasters (including fire and earthquakes), wide spread disease or pandemics (including the COVID-19 pandemic), acts of war, and terrorism • Climate change could have material negative impact Risks Related to Our Reputation • Failure to maintain a favorable reputation with our customers and communities • Risks associated with cyberattacks, cybersecurity incidents, and loss or compromise of customer information • Failure of our risk management framework • Difficulties of our third-party providers, termination of their services, or their failure to comply with regulatory requirements • Employee misconduct Finance and Accounting Risks • Reliance on risk management processes and analytical and forecasting models • Realization of our deferred tax assets • Changes in accounting standards • Failure to maintain effective controls Legislative and Regulatory Risks • Legislative and regulatory actions now or in the future increase our costs, impact our business and financial results • Federal and state regulatory exams • Complaints and allegations of discriminatory lending practices • Noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations Risks Related to Our Common Stock • Small trading volume • Volatile trading price of our common stock • Equity research analysts interest in our common stock, unfavorable commentary or downgrade of our common stock • Changes in dividend policy • Potential dilution from issuance of additional equity securities • Charter documents and California law may have an anti-takeover effect limiting changes of control • Reduced regulatory and reporting requirements as a smaller reporting company Risks Related to Our Business Interruptions, cyber-attacks, fraudulent activity or other security breaches could have a material adverse effect on our business.
Risks Related to Our Business • Interruptions, cyber-attacks, fraudulent activity • Rapid technological developments • Adverse economic conditions in Asia, particularly South Korea • Monetary Policy and the Federal Reserve • Fluctuations in interest rates • Losses on our securities portfolio, particularly from increases in interest rates • Liquidity risks • Decline in general business and economic conditions Risks Related to Our Loans • Negative changes in the economy affecting real estate values and liquidity • Commercial borrowers present risks • Small and medium business loans subject to greater risks from adverse business developments 20 • Risks from non-qualified single family home mortgage lending business • Unreliability of loan appraisals used in real property loan decisions • Increased regulatory scrutiny of commercial real estate concentrations • Lack of seasoning of our loan portfolio due to recent growth over the last five years Risks Related to our SBA Loan Program • Dependence on U.S. federal government SBA loan program • Recognition of gains on sale of loans and servicing asset valuations subject to our assumptions we use • Credit risks from non-guaranteed portion of SBA loans we retain and do not sell • Credit risks from SBA loans we sell as a result of repurchase obligations Risks Related to Our Deposits • Concentrations of deposit relationships • Competition for deposits may increase cost of deposits negatively affecting our deposit growth Risks Related to Management • Success depends on the skills of our management and their retention • Competition for skilled and experienced senior level management employees Risks Related to Credit Quality • Our business ability to manage credit risk • Nonperforming assets demand management time to resolve and can affect our financial results • Allowance for credit losses may be insufficient to absorb potential losses in our loan portfolio Risks Related to our Growth Strategy • Inability to continue the growth of loans and deposits • Limited ability to expand because of an existing license agreement for the use of “Open Bank” • Managing risks of opening new branches • Managing risks of adding new lines of business Risks Related to Our Capital • Increased regulatory requirements • Raising new capital • Commitment to contribute 10% of our after tax income to the Open Stewardship Foundation Competition Risks • Competition among financial institutions, many of whom are much larger, have greater capital, more advanced technology • Focus on marketing to the Korean-American geographic areas we serve Other Business Risks • Soundness of other financial institutions • Severe weather, natural disasters (including fire and earthquakes), wide spread disease or pandemics (including the COVID-19 pandemic), acts of war, and terrorism • Climate change could have material negative impact Risks Related to Our Reputation • Failure to maintain a favorable reputation with our customers and communities • Risks associated with cyberattacks, cybersecurity incidents, and loss or compromise of customer information 21 • Failure of our risk management framework • Difficulties of our third-party providers, termination of their services, or their failure to comply with regulatory requirements • Employee misconduct Finance and Accounting Risks • Reliance on risk management processes and analytical and forecasting models • Realization of our deferred tax assets • Changes in accounting standards • Failure to maintain effective controls Legislative and Regulatory Risks • Legislative and regulatory actions now or in the future increase our costs, impact our business and financial results • Federal and state regulatory exams • Complaints and allegations of discriminatory lending practices • Noncompliance with the Bank Secrecy Act and other anti-money laundering statutes and regulations Risks Related to Our Common Stock • Small trading volume • Volatile trading price of our common stock • Equity research analysts interest in our common stock, unfavorable commentary or downgrade of our common stock • Changes in dividend policy • Potential dilution from issuance of additional equity securities • Charter documents and California law may have an anti-takeover effect limiting changes of control • Reduced regulatory and reporting requirements as a smaller reporting company Risks Related to Our Business Interruptions, cyber-attacks, fraudulent activity or other security breaches could have a material adverse effect on our business.
These businesses generally have fewer financial resources in terms of capital 31 or borrowing capacity than larger entities, frequently have smaller market shares than their competition, may be more vulnerable to economic downturns, often need significant additional capital to expand or compete and may experience substantial volatility in operating results, any of which may impair a borrower’s ability to repay a loan.
These businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities, frequently have smaller market shares than their competition, may be more vulnerable to economic downturns, often need significant additional capital to expand or compete and may experience substantial volatility in operating results, any of which may impair a borrower’s ability to repay a loan.
While we have policies and procedures designed to prevent such losses, there can be no assurance that such losses will not occur. We are not able to anticipate or implement effective preventive measures against all security breaches of these types, especially because the techniques used change frequently and because attacks can originate from a wide variety of sources.
While we have policies and procedures designed to prevent such losses, there can be no assurance that such losses will not occur. We are not able to anticipate or implement effective preventive measures against all security breaches of these types, especially because the techniques used change frequently and because attacks can 22 originate from a wide variety of sources.
We devote significant resources and management focus to ensuring the integrity of our systems, against damage from fires or other natural disasters; power or telecommunications failures; acts of terrorism or wars or other catastrophic events; breaches, physical break-ins or errors resulting in interruptions and unauthorized disclosure of 27 confidential information, through information security and business continuity programs.
We devote significant resources and management focus to ensuring the integrity of our systems, against damage from fires or other natural disasters; power or telecommunications failures; acts of terrorism or wars or other catastrophic events; breaches, physical break-ins or errors resulting in interruptions and unauthorized disclosure of confidential information, through information security and business continuity programs.
If, as a result of an examination, a banking agency were to determine that our financial condition, 45 capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, they may take a number of different remedial actions as they deem appropriate.
If, as a result of an examination, a banking agency were to determine that our financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of our operations had become unsatisfactory, or that we were in violation of any law or regulation, they may take a number of different remedial actions as they deem appropriate.
We expect that our regulators will hold us responsible for deficiencies of our third party relationships which could result in enforcement actions, including civil money penalties or other administrative or judicial penalties or fines, or customer remediation, any of which could have a material adverse effect on our business, financial condition or results of operations.
We expect that our regulators will hold us responsible for deficiencies of our third party relationships which could result in 39 enforcement actions, including civil money penalties or other administrative or judicial penalties or fines, or customer remediation, any of which could have a material adverse effect on our business, financial condition or results of operations.
In addition, we could become subject to investigations by the 44 SEC, the Board of Governors of the Federal Reserve System, the FDIC, the DFPI or other regulatory authorities, which could require additional financial and management resources. These events could have a material adverse effect on our business, financial condition and results of operations.
In addition, we could become subject to investigations by the SEC, the Board of Governors of the Federal Reserve System, the FDIC, the DFPI or other regulatory authorities, which could require additional financial and management resources. These events could have a material adverse effect on our business, financial condition and results of operations.
Notwithstanding, our facilities and systems, and those of third party service providers, are vulnerable to interruptions, external or internal security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming or human errors, force majeure events, or other similar events. We outsource certain aspects of our data processing and other operational functions to certain third-party providers.
Notwithstanding, our facilities and systems, and those of third party service providers, are vulnerable to interruptions, external or internal security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming or human errors, force majeure events, or other similar events. We outsource certain aspects of our data 38 processing and other operational functions to certain third-party providers.
Our risk management framework is comprised of various processes, systems and strategies, and is designed to manage the types of risk to which we are subject, including, among others, credit, market, liquidity, interest rate and compliance. Our framework also includes financial or other modeling methodologies that involve management 41 assumptions and judgment.
Our risk management framework is comprised of various processes, systems and strategies, and is designed to manage the types of risk to which we are subject, including, among others, credit, market, liquidity, interest rate and compliance. Our framework also includes financial or other modeling methodologies that involve management assumptions and judgment.
We are generally not restricted from issuing additional shares of our common stock, up to the 50 million shares of voting common stock and 10 million shares of preferred stock authorized in our articles of incorporation (subject to Nasdaq shareholder approval rules), which in each case could be increased by a vote of a majority of our shares.
We are generally not restricted from issuing additional shares of our common stock, up to the 50 million shares of voting common stock and 10 million shares of preferred stock authorized in our articles of incorporation (subject to Nasdaq 44 shareholder approval rules), which in each case could be increased by a vote of a majority of our shares.
These requirements, and any other new 48 regulations or capital distribution constraints, could adversely affect the ability of the Bank to pay dividends to the Company and, in turn, affect our ability to pay dividends on our common stock. We have limited the circumstances in which our directors will be liable for monetary damages.
These requirements, and any other new regulations or capital distribution constraints, could adversely affect the ability of the Bank to pay dividends to the Company and, in turn, affect our ability to pay dividends on our common stock. We have limited the circumstances in which our directors will be liable for monetary damages.
As we expand our business outside of California markets, we will encounter risks that could adversely affect us. 37 We primarily operate in California markets with a concentration of Korean-American individuals and businesses. However, one of our strategies is to expand beyond California into other domestic markets that have concentrations of Korean-American individuals and businesses.
As we expand our business outside of California markets, we will encounter risks that could adversely affect us. We primarily operate in California markets with a concentration of Korean-American individuals and businesses. However, one of our strategies is to expand beyond California into other domestic markets that have concentrations of Korean-American individuals and businesses.
We, therefore, may not be able to raise additional capital if needed or on terms acceptable to us. We are committed to contribute 10% of our consolidated after tax net income to the Open Stewardship Foundation. The Open Stewardship Foundation (“Foundation”) is our platform for our community outreach activities.
We, therefore, may not be able to raise additional capital if needed or on terms acceptable to us. 33 We are committed to contribute 10% of our consolidated after tax net income to the Open Stewardship Foundation. The Open Stewardship Foundation (“Foundation”) is our platform for our community outreach activities.
Adverse economic conditions in Asia, and in South Korea in particular, may also negatively impact asset values and the profitability and liquidity of our customers who operate in this region. Monetary policies and regulations of the Federal Reserve could adversely affect our business, financial condition and results of operations.
Adverse economic conditions in Asia, and in South Korea in particular, may also negatively impact asset values and the profitability and liquidity of our customers who operate in this region. 23 Monetary policies and regulations of the Federal Reserve could adversely affect our business, financial condition and results of operations.
An increase in interest rates that adversely affects the ability of borrowers to pay the principal or interest on loans may lead to an increase in nonperforming assets and a reduction of income recognized, which could have a material 29 adverse effect on our results of operations and cash flows.
An increase in interest rates that adversely affects the ability of borrowers to pay the principal or interest on loans may lead to an increase in nonperforming assets and a reduction of income recognized, which could have a material adverse effect on our results of operations and cash flows.
The demand for the deposit products we offer may also be reduced due to a variety of factors, such as demographic patterns, changes in customer preferences, reductions in consumers’ 34 disposable income, regulatory actions that decrease customer access to particular products, or the availability of competing products.
The demand for the deposit products we offer may also be reduced due to a variety of factors, such as demographic patterns, changes in customer preferences, reductions in consumers’ disposable income, regulatory actions that decrease customer access to particular products, or the availability of competing products.
However, our inability to keep pace with 28 technological changes, including our ability to identify and address cybersecurity risks, may significantly affect our financial position and results of operation. Adverse conditions in Asia and elsewhere could adversely affect our business.
However, our inability to keep pace with technological changes, including our ability to identify and address cybersecurity risks, may significantly affect our financial position and results of operation. Adverse conditions in Asia and elsewhere could adversely affect our business.
These losses or defaults could have a material adverse effect on our business, financial condition and results of operations. Severe weather, natural disasters, pandemics, acts of war or terrorism and other external events could significantly impact our business.
These losses or defaults could have a material adverse effect on our business, financial condition and results of operations. 35 Severe weather, natural disasters, pandemics, acts of war or terrorism and other external events could significantly impact our business.
These models 43 reflect assumptions that may not be accurate, particularly in times of market stress or other unforeseen circumstances. Even if these assumptions are accurate, the models may prove to be inadequate or inaccurate because of other flaws in their design or their implementation.
These models reflect assumptions that may not be accurate, particularly in times of market stress or other unforeseen circumstances. Even if these assumptions are accurate, the models may prove to be inadequate or inaccurate because of other flaws in their design or their implementation.
Our ability to raise additional capital depends on conditions in the capital markets, economic conditions and a number of other factors, including investor perceptions regarding the banking industry, market conditions and governmental activities, and on our financial condition 38 and performance.
Our ability to raise additional capital depends on conditions in the capital markets, economic conditions and a number of other factors, including investor perceptions regarding the banking industry, market conditions and governmental activities, and on our financial condition and performance.
The determination of these gains is based on assumptions regarding the value of unguaranteed 33 loans retained, servicing rights retained and deferred fees and costs, and net premiums paid by purchasers of the guaranteed portions of U.S. government guaranteed loans.
The determination of these gains is based on assumptions regarding the value of unguaranteed loans retained, servicing rights retained and deferred fees and costs, and net premiums paid by purchasers of the guaranteed portions of U.S. government guaranteed loans.
If delinquencies and defaults increase, we may be required to increase our provision for credit losses, which could materially and adversely affect our business, financial condition and results of operations.
If delinquencies and defaults increase, we may be required to increase our provision for credit losses, which could materially and adversely affect our business, financial 27 condition and results of operations.
For purposes 49 of this law, a person who directly or indirectly owns or controls 10% or more of our outstanding common stock would be presumed to control the Company.
For purposes of this law, a person who directly or indirectly owns or controls 10% or more of our outstanding common stock would be presumed to control the Company.
We have exposure to different industries and counterparties, and through transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, 40 and other institutional clients.
We have exposure to different industries and counterparties, and through transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, and other institutional clients.
When we take collateral in foreclosure and similar proceedings, we are required to mark the collateral to its then-fair market value, which may result in a loss. These nonperforming loans and other real estate owned also 35 increase our risk profile and the level of capital our regulators believe is appropriate for us to maintain in light of such risks.
When we take collateral in foreclosure and similar proceedings, we are required to mark the collateral 30 to its then-fair market value, which may result in a loss. These nonperforming loans and other real estate owned also increase our risk profile and the level of capital our regulators believe is appropriate for us to maintain in light of such risks.
In the course of this expansion, we will encounter significant risks and uncertainties that could have a material adverse effect on our operations.
In the 32 course of this expansion, we will encounter significant risks and uncertainties that could have a material adverse effect on our operations.
As of December 31, 2023, we repurchased an aggregate of 2,020,000 shares at an average price of 8.60% per share. However, we have no obligation to continue doing so and may change our dividend policy and/or share repurchase program at any time without notice to holders of our common stock.
As of December 31, 2024, we repurchased an aggregate of 2,020,000 shares at an average price of 8.60% per share. However, we have no obligation to continue doing so and may change our dividend policy and/or share repurchase program at any time without notice to holders of our common stock.
Processes that management uses to estimate our probable credit losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on our financial condition and results of operations, depend upon the use of analytical and forecasting models.
Processes that management uses to estimate our expected credit losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates and other market measures on our financial condition and results of operations, depend upon the use of analytical and forecasting models.
The recognition of gains on the sale of SBA loans and servicing asset valuations reflect certain assumptions. We expect that gains on the sale of U.S. government guaranteed loans will comprise a significant component of our revenue. The gain on such sales recognized for the years ended December 31, 2023 and 2022 was $7.8 million and $11.9 million, respectively.
The recognition of gains on the sale of SBA loans and servicing asset valuations reflect certain assumptions. We expect that gains on the sale of U.S. government guaranteed loans will comprise a significant component of our revenue. The gain on such sales recognized for the years ended December 31, 2024 and 2023 was $8.3 million and $7.8 million , respectively.
It also will depend, in part, upon our ability to attract deposits and grow our loan portfolio and investment opportunities and on whether we can continue to fund growth while maintaining cost controls and asset quality, as well on other factors beyond our control, such as national, regional and local economic conditions and interest rate trends. 36 There is risk related to acquisitions.
It also will depend, in part, upon our ability to attract deposits and grow our loan portfolio and investment opportunities and on whether we can continue to fund growth while maintaining cost controls and asset quality, as well on other factors beyond our control, such as national, regional and local economic conditions and interest rate trends.
Our nonperforming assets adversely affect our net income in various ways. We do not record interest income on nonaccrual loans or other real estate owned, thereby adversely affecting our net interest income, net income and returns on assets and equity, and our loan administration costs increase, which together with reduced interest income adversely affects our efficiency ratio.
We do not record interest income on nonaccrual loans or other real estate owned, thereby adversely affecting our net interest income, net income and returns on assets and equity, and our loan administration costs increase, which together with reduced interest income adversely affects our efficiency ratio.
We may also be subject to potentially adverse regulatory consequences. System failure or breaches of our network security could subject us to increased operating costs as well as litigation and other liabilities. In the normal course of business, we directly or through third parties collect, store, share, process and retain sensitive and confidential information regarding our customers.
System failure or breaches of our network security could subject us to increased operating costs as well as litigation and other liabilities. In the normal course of business, we directly or through third parties collect, store, share, process and retain sensitive and confidential information regarding our customers.
At December 31, 2023, approximately 92.2% of our loan portfolio was comprised of loans with real estate as a primary or secondary component of collateral. As a result, adverse developments affecting real estate values in our market areas could increase the credit risk associated with our real estate loan portfolio.
At December 31, 2024, approximately 88.0% of our loan portfolio was comprised of loans with real estate as a primary or secondary component of collateral. As a result, adverse developments affecting real estate values in our market areas could increase the credit risk associated with our real estate loan portfolio.
As a commercial bank, we provide services to a number of clients whose deposit levels vary considerably and have some seasonality. Our 10 largest retail depositor relationships accounted for approximately 6.6% of our deposits as of December 31, 2023. Our largest retail depositor relationship accounted for approximately 1.3% of our deposits as of December 31, 2023.
As a commercial bank, we provide services to a number of clients whose deposit levels vary considerably and have some seasonality. Our 10 largest retail depositor relationships accounted for approximately 7.4% of our deposits as of December 31, 2024. Our largest retail depositor relationship accounted for approximately 1.1% of our deposits as of December 31, 2024.
The operation of our business requires us to manage credit risk. As a lender, we are exposed to the risk that our borrowers will be unable to repay their loans according to their terms, and that the collateral securing repayment of their loans, if any, may not be sufficient to ensure repayment.
As a lender, we are exposed to the risk that our borrowers will be unable to repay their loans according to their terms, and that the collateral securing repayment of their loans, if any, may not be sufficient to ensure repayment.
We have grown our consolidated assets to $2.15 billion as of December 31, 2023 from $2.09 billion as of December 31, 2022. Our deposits have grown to $1.81 billion as of December 31, 2023 from $1.89 billion as of December 31, 2022. Our ability to continue to grow successfully will depend to a significant extent on our capital resources.
We have grown our consolidated assets to $2.37 billion as of December 31, 2024 from $2.15 billion as of December 31, 2023. Our deposits have grown to $2.03 billion as of December 31, 2024 from $1.81 billion as of December 31, 2023. Our ability to continue to grow successfully will depend to a significant extent on our capital resources.
These bank regulators possess broad authority to prevent or remedy unsafe or unsound practices or violations of law. The laws and regulations applicable to the banking industry could change at any time, and we cannot predict the effects of these changes on our business, profitability or growth strategy. Increased regulation could increase our cost of compliance and adversely affect profitability.
These bank regulators possess broad authority to prevent or remedy unsafe or unsound practices or violations of 41 law. The laws and regulations applicable to the banking industry could change at any time, and we cannot predict the effects of these changes on our business, profitability or growth strategy.
These deposits can and do fluctuate substantially. The depositors are not concentrated in any industry or business. Our largest wholesale depositor relationship accounted for approximately 8.9% of our deposits as of December 31, 2023.
These deposits can and do fluctuate substantially. The depositors are not concentrated in any industry or business. Our largest wholesale depositor relationship accounted for approximately 14.7% of our deposits as of December 31, 2024.
We sold $145.0 million of SBA loans for the year ended December 31, 2023, compared to $181.9 million for the year ended December 31, 2022, of the guaranteed portion of our SBA loans. We generally retain the non-guaranteed portions of the SBA loans that we originate.
We sold $127.2 million of SBA loans for the year ended December 31, 2024, compared to $145.0 million for the year ended December 31, 2023, of the guaranteed portion of our SBA loans. We generally retain the non-guaranteed portions of the SBA loans that we originate.
These factors include, among other things: • actual or anticipated variations in our quarterly results of operations; • recommendations by securities analysts; • operating and stock price performance of other companies that investors deem comparable to us; • news reports relating to trends, concerns and other issues in the financial services industry generally; • perceptions in the marketplace regarding us and/or our competitors; • fluctuations in the stock price and operating results of our competitors; • domestic and international economic factors unrelated to our performance; • general market conditions and, in particular, developments related to market conditions for the financial services industry; • new technology used, or services offered, by competitors; and • changes in government regulations. 47 In addition, if the market for stocks in our industry, or the stock market in general, experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition or results of operations.
These factors include, among other things: • actual or anticipated variations in our quarterly results of operations; • recommendations by securities analysts; • operating and stock price performance of other companies that investors deem comparable to us; • news reports relating to trends, concerns and other issues in the financial services industry generally; • perceptions in the marketplace regarding us and/or our competitors; • fluctuations in the stock price and operating results of our competitors; • domestic and international economic factors unrelated to our performance; • general market conditions and, in particular, developments related to market conditions for the financial services industry; • new technology used, or services offered, by competitors; and • changes in government regulations.
Risks Related to our Management We are highly dependent on our management team, and the loss of our senior executive officers or other key employees could harm our ability to implement our strategic plan, impair our relationships with customers and adversely affect our business, results of operations and growth prospects.
Risks Related to our Management We are highly dependent on our management team, and the loss of our senior executive officers or other key employees could harm our ability to implement our strategic plan, impair our relationships with customers and adversely affect our business, results of operations and growth prospects. 29 Our success depends, in large degree, on the skills of our management team and our ability to retain, recruit and motivate key officers and employees.
Commercial loans represented 70.6% of our total loan portfolio as of December 31, 2023. Commercial loans are often larger and involve greater risks than other types of lending.
Commercial loans represented 73.9% of our total loan portfolio as of December 31, 2024. Commercial loans are often larger and involve greater risks than other types of lending.
If equity research analysts do not publish research or reports about our business, or if they do publish such reports but issue unfavorable commentary or downgrade our common stock, the price and trading volume of our common stock could decline.
If equity research analysts do not publish research or reports about our business, or if they do publish such reports but issue unfavorable commentary or downgrade our common stock, the price and trading volume of our common stock could decline. 43 The trading market for our common stock could be affected by whether equity research analysts publish research or reports about us and our business.
We plan to continue to grow our business organically. However, from time to time, we may consider opportunistic strategic acquisitions that we believe support our long-term business strategy. When considering acquisition opportunities we face significant competition from numerous other financial services institutions, many of which will have greater financial resources than we do.
However, from time to time, we may consider opportunistic strategic acquisitions that we believe support our long-term business strategy. When considering acquisition opportunities we face significant competition from numerous other financial services institutions, many of which will have greater 31 financial resources than we do. Accordingly, attractive acquisition opportunities may not be available to us.
We depend to a significant extent on relationships with third party service providers. Specifically, we utilize third party core banking services and receive credit card and debit card services, branch capture services, Internet banking services and services complementary to our banking products from various third party service providers.
Specifically, we utilize third party core banking services and receive credit card and debit card services, branch capture services, Internet banking services and services complementary to our banking products from various third party service providers.
The foregoing provisions of California and federal law could make it more difficult for a third party to acquire a majority of our outstanding voting stock, by discouraging a hostile bid, or delaying, preventing or deterring a merger, acquisition or tender offer in which our shareholders could receive a premium for their shares, or effect a proxy contest for control of our company or other changes in our management.
The foregoing provisions of California and federal law could make it more difficult for a third party to acquire a majority of our outstanding voting stock, by discouraging a hostile bid, or delaying, preventing or deterring a merger, acquisition or tender offer in which our shareholders could receive a premium for their shares, or effect a proxy contest for control of our company or other changes in our management. 45 We are a smaller reporting company and the reduced regulatory and reporting requirements applicable to smaller reporting companies may make our common stock less attractive to investors.
Although we believe that our underwriting criteria is appropriate for the various kinds of loans we make, we may incur losses on loans that meet our underwriting criteria, and these losses may exceed the amounts set aside as reserves in our allowance for credit losses. 32 Lack of seasoning of our loan portfolio could increase risk of credit defaults in the future.
Although we believe that our underwriting criteria is appropriate for the various kinds of loans we make, we may incur losses on loans that meet our underwriting criteria, and these losses may exceed the amounts set aside as reserves in our allowance for credit losses.
Our business and operations are sensitive to general business and economic conditions in the United States, generally, and particularly the state of California and the Los Angeles-Long Beach-Anaheim, California Metropolitan Statistical Areas.
Our business and operations are sensitive to general business and economic conditions in the United States, generally, and particularly the state of California and the Los Angeles-Long Beach-Anaheim, California Metropolitan Statistical Areas. These areas are significantly exposed to natural disasters, particularly earthquakes, flooding, storms and wildfires.
The coronavirus pandemic has had a material adverse effect on the Asian economies. A significant deterioration of economic conditions in Asia, and in South Korea in particular, could expose us to, among other things, economic and transfer risk, and we could experience an outflow of deposits by those of our customers with connections to Asia.
A significant deterioration of economic conditions in Asia, and in South Korea in particular, could expose us to, among other things, economic and transfer risk, and we could experience an outflow of deposits by those of our customers with connections to Asia.
We originated $141.5 million of SBA loans for the year ended December 31, 2023, compared to $192.1 million of SBA loans for the year ended December 31, 2022.
We originated $159.6 million of SBA loans for the year ended December 31, 2024, compared to $141.5 million of SBA loans for the year ended December 31, 2023.
As a result of the organic growth of our loan portfolio over the past five years, a large portion of our loans and of our lending relationships are of relatively recent origin.
Lack of seasoning of our loan portfolio could increase risk of credit defaults in the future. As a result of the organic growth of our loan portfolio over the past five years, a large portion of our loans and of our lending relationships are of relatively recent origin.
As a result, our financial condition and results of operations are subject to changes in the economic conditions affecting these communities. Our success depends upon the business activity, population, income levels, deposits and real estate activity in these communities.
This demographic concentration makes us more prone to 34 circumstances that particularly affect this segment of the population. As a result, our financial condition and results of operations are subject to changes in the economic conditions affecting these communities. Our success depends upon the business activity, population, income levels, deposits and real estate activity in these communities.
Moreover, state and federal legislators and regulators in the United States are increasingly adopting or revising data privacy, information security and data protection laws that potentially could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer or employee information.
Various state and federal banking regulators and states have also enacted data security breach notification requirements with varying levels of individual, consumer, regulatory or law enforcement notification in certain circumstances in the event of a security breach. 42 Moreover, state and federal legislators and regulators in the United States are increasingly adopting or revising data privacy, information security and data protection laws that potentially could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer or employee information.
Additional risks and uncertainties not presently known to us, or that we may currently view as not material, may also adversely impact our business, financial condition, and results of operations.
Additional risks and uncertainties not presently known to us, or that we may currently view as not material, may also adversely impact our business, financial condition, and results of operations. Summary of Risk Factors The following is a summary of the most significant risks and uncertainties that we believe could adversely affect our business, financial condition and results of operations.
As of December 31, 2023, we had $1.25 billion of commercial loans, consisting of $885.6 million of commercial real estate loans, $239.7 million of SBA loans, and $121.0 million of commercial and industrial loans, including trade finance loans, for which real estate is not the primary source of collateral.
As of December 31, 2024, we had $1.45 billion of commercial loans, consisting of $980.2 million of commercial real estate loans, $253.7 million of SBA loans, and $213.1 million of commercial and industrial loans, including trade finance loans, for which real estate is not the primary source of collateral.
Acquisitions of financial institutions involve operational risks and uncertainties and acquired companies may have unforeseen liabilities, exposure to asset quality problems, key employee and customer retention problems and other problems that could negatively affect our organization.
There can be no assurance that we will be successful in identifying or completing any future acquisitions. Acquisitions of financial institutions involve operational risks and uncertainties and acquired companies may have unforeseen liabilities, exposure to asset quality problems, key employee and customer retention problems and other problems that could negatively affect our organization.
Additional factors include, but are not limited to, rating agency downgrades of the securities or our own analysis of the value of the security, defaults by the issuer or individual mortgagors with respect to the underlying securities, or instability in the credit markets. Any of the foregoing factors could cause other-than-temporary impairment in future periods and result in realized losses.
Additional factors include, but are not limited to, rating agency downgrades of the securities or our own analysis of the value of the security, defaults by the issuer or 24 individual mortgagors with respect to the underlying securities, or instability in the credit markets.
Risks Related to Our Loans Because a significant portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.
Economic pressure on consumers and uncertainty regarding continuing economic improvement may result in changes in consumer and business spending, borrowing and saving habits. 25 Risks Related to Our Loans Because a significant portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.
Moreover, certain of these regulations contain significant punitive sanctions for violations, including monetary penalties and limitations on a bank’s ability to implement components of its business plan, such as expansion through mergers and acquisitions or the opening of new branch offices. In addition, changes in regulatory requirements may add costs associated with compliance efforts.
Increased regulation could increase our cost of compliance and adversely affect profitability. Moreover, certain of these regulations contain significant punitive sanctions for violations, including monetary penalties and limitations on a bank’s ability to implement components of its business plan, such as expansion through mergers and acquisitions or the opening of new branch offices.
As of December 31, 2023, we held $241.5 million of SBA loans on our balance sheet, of which $239.7 million , or 99% , consisted of the non-guaranteed portion of SBA loans and, of which $1.8 million , or 1% , consisted of the guaranteed portion of SBA loans which we intend to sell in 2023.
As of December 31, 2024, we held $258.3 million of SBA loans on our balance sheet, of which $253.7 million , or 98% , consisted of the non-guaranteed portion of SBA loans and, of which $4.6 million , or 2% , consisted of the guaranteed portion of SBA loans which we intend to sell in 2023.
We are subject to various privacy, information security and data protection laws, including requirements concerning security breach notification, and we could be negatively impacted by these laws.
Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information. We are subject to various privacy, information security and data protection laws, including requirements concerning security breach notification, and we could be negatively impacted by these laws.
Any such failure in management’s analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations. We have significant deferred tax assets and we cannot assure that it will be fully realized.
Any such failure in management’s analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations.
Such failures could result in increased regulatory scrutiny, legal liability, a loss of confidence in the security of our systems, our payment cards, products and services, and negative effects on our brand which could have a material adverse effect on our business, financial condition and results of operations. 42 Our operations could be interrupted if our third-party service providers experience difficulty, terminate their services or fail to comply with banking regulations.
We could be required to provide notices of security breaches. Such failures could result in increased regulatory scrutiny, legal liability, a loss of confidence in the security of our systems, our payment cards, products and services, and negative effects on our brand which could have a material adverse effect on our business, financial condition and results of operations.
If general economic conditions negatively impact the markets in which we operate and our borrowers are otherwise affected by adverse business developments, our business, financial condition and results of operations may be adversely affected. Our single family residential loan product consists primarily of non-qualified single family home mortgage loans which may be considered less liquid and more risky.
If general economic conditions negatively impact the markets in which we operate and our borrowers are otherwise affected by adverse business developments, our business, financial condition and results of operations may be adversely affected.
In addition, while such valuations are subject to validation by an independent third party we believe these valuations reflect fair value, if they do not, then our business, financial condition and results of operations may be materially and adversely affected.
In addition, while such valuations are subject to validation by an independent third party we believe these valuations reflect fair value, if they do not, then our business, financial condition and results of operations may be materially and adversely affected. 28 The non-guaranteed portion of SBA loans that we retain on our balance sheet as well as the guaranteed portion of SBA loans that we sell could expose us to various credit and default risks.
The trading market for our common stock could be affected by whether equity research analysts publish research or reports about us and our business. We cannot predict at this time whether any research analysts will publish research and reports on us and our common stock.
We cannot predict at this time whether any research analysts will publish research and reports on us and our common stock.
To our knowledge, Open Bank S.A. had not undertaken any actions to engage in any business or marketing activities in the United States other than have a presence on the internet through their website.
Additionally, to our knowledge, Open Bank S.A. had not undertaken any actions to engage in any business or marketing activities in the United States other than have a presence on the internet through their website. However, the Coexistence Agreement restricts our potential geographic expansion beyond the Permitted Markets, which could affect our overall growth over the long term.
Furthermore, government policy and regulation, particularly as implemented through the Federal Reserve System, significantly affect credit conditions. Negative developments in the financial industry and the impact of new legislation and regulation in response to those developments could negatively impact our business operations and adversely impact our financial performance.
Negative developments in the financial industry and the impact of new legislation and regulation in response to those developments could negatively impact our business operations and adversely impact our financial performance.
We are a smaller reporting company and the reduced regulatory and reporting requirements applicable to smaller reporting companies may make our common stock less attractive to investors. We are permitted to comply with, and we generally elect to comply with, certain reduced reporting requirements for “smaller reporting companies” within the meaning of the rules of the SEC.
We are permitted to comply with, and we generally elect to comply with, certain reduced reporting requirements for “smaller reporting companies” within the meaning of the rules of the SEC.
Min Kim, our President and Chief Executive Officer, or other key personnel, or the inability to recruit and retain qualified personnel in the future, could have a material adverse effect on our business, financial condition and results of operations. Risks Related to our Credit Quality Our business depends on our ability to successfully manage credit risk.
Min Kim, our President and Chief Executive Officer, or other key personnel, or the inability to recruit and retain qualified personnel in the future, could have a material adverse effect on our business, financial condition and results of operations. Similarly, we recently announced and have begun to implement a leadership succession plan pursuant to which, among other things, Ms.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us.
Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us. Any of these results could have a material adverse effect on our business, financial condition and results of operations.
As of December 31, 2023, our single family home mortgage loan portfolio amounted to $518.0 million or 29.3% of our total loan portfolio. As of December 31, 2023, most of our single family home mortgage loans were non-qualified mortgage loans, and our non-qualified single family home mortgage loans had an average loan-to-value of 57% .
As of December 31, 2024, most of our single family home mortgage loans were non-qualified mortgage loans, and our non-qualified single family home mortgage loans had an average loan-to-value of 57% . We originated $44.2 million and $65.0 million of single family home mortgage loans for the years ended December 31, 2024 and 2023, respectively.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

6 edited+1 added−2 removed24 unchanged
Biggest changeOur procedures and security program are the guiding policies over our cybersecurity risk management. Additionally, our IT team uses the best currently available tools to help protect against cybercriminals. We leverage the latest encryption practices and cyber technologies on our systems, devices, and third-party connections and further review vendor encryption to ensure proper information security safeguards are maintained.
Biggest changeManaging Material Risks & Integrated Overall Risk Management We have strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity risk management. Our procedures and security program are the guiding policies over our cybersecurity risk management. Additionally, our IT team uses the best currently available tools to help protect against cybercriminals.
The BRCC reviews an annual evaluation of the company’s cybersecurity posture and the effectiveness of its risk management strategies, identifying areas for improvement and ensuring the cybersecurity efforts are integrated with the overall risk management framework. 51 Management’s Role in Managing Risk The ISO plays a pivotal role in informing the BRCC on cybersecurity risks.
The BRCC reviews an annual evaluation of the company’s cybersecurity posture and the effectiveness of its risk management strategies, identifying areas for improvement and ensuring the cybersecurity efforts are integrated with the overall risk management framework. Management’s Role in Managing Risk The ISO plays a pivotal role in informing the BRCC on cybersecurity risks.
Risk Management Personnel Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with the ISO, who has extensive cybersecurity program management experience working in various information security roles, including teaching as an information security instructor at a University.
Risk Management Personnel 47 Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with the ISO, who has extensive cybersecurity program management experience working in various information security roles, including teaching as an information security instructor at a University.
This ensures that the highest levels of management are kept informed of our cybersecurity and the potential risks we face. In the event of certain cybersecurity matters which present increasing concern, our policies require escalating these cybersecurity and risk management decisions to the full Board. 52
This ensures that the highest levels of management are kept informed of our cybersecurity and the potential risks we face. In the event of certain cybersecurity matters which present increasing concern, our policies require escalating these cybersecurity and risk management decisions to the full Board.
Our Board of Directors has ultimate responsibility for providing oversight for third-party risk management and holding management accountable. The Board provides clear guidance to regarding strategic goals and acceptable risk appetite with respect to third-party relationships. The Board reviews this policy on at least an annual basis to assure that we implement procedures and practices have been established by management.
Our Board of Directors has ultimate responsibility for providing oversight for third-party risk management and holding management accountable. The Board provides clear guidance to regarding strategic goals and acceptable risk appetite with respect to third-party relationships.
Our employees are responsible for complying with our cybersecurity standards and complete training to understand the behaviors and technical requirements necessary to keep information secure.
We leverage the latest encryption practices and cyber technologies on our systems, devices, and third-party connections and further review vendor encryption to ensure proper information security safeguards are maintained. Our employees are responsible for complying with our cybersecurity standards and complete training to understand the behaviors and technical requirements necessary to keep information secure.
Removed
Although the SEC’s new cybersecurity reporting requirements do not require us to file a Form 8-K announcing the occurrence of material cybersecurity incidents, that obligation will apply to the Company with respect to material incidents discovered after June 15, 2024, and we are adapting our disclosure procedures to assure the timely compliance with the Company’s obligations under Item 1.05 of Form 8-K once that requirement becomes applicable to the Company.
Added
The Board reviews this policy on at least an annual basis to assure that we implement 46 procedures and practices have been established by management.
Removed
In the meantime, we continue to evaluate and monitor cybersecurity risks to assess whether any detected incident would be material to investors and, in such an event, we would make a timely report of a material incident under Item 7.01 or Item 8.01 of Form 8-K. 50 Managing Material Risks & Integrated Overall Risk Management We have strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-wide culture of cybersecurity risk management.

Item 2. Properties

Properties — owned and leased real estate

11 edited+0 added−1 removed7 unchanged
Biggest changeThe monthly rent is fixed at $10,000 until December 2024 and is subject to annual increases of 3.0% until the lease expires in December 2032. We have reserved the right to extend the term of the lease for two additional periods of five years each.
Biggest changeIn December 2022, we leased approximately 2,650 square feet on the corner space of a building located in a newly-built commercial shopping center. The monthly rent is fixed at $10,000 until December 2024 and is subject to annual increases of 3.0% until the lease expires in December 2032.
The current monthly rent is $8,960 and is subject to annual increases equal to the Consumer Price Index (CPI), not to exceed 3.0%, until the lease expires. We have reserved the right to extend the term of the lease for an additional period of five years. 53 Olympic Office .
The current monthly rent is $8,960 and is subject to annual increases equal to the Consumer Price Index (CPI), not to exceed 3.0%, until the lease expires. We have reserved the right to extend the term of the lease for an additional period of five years. Olympic Office .
The current monthly rent payment is $5,479 and is subject to 3.0% annual increases until the lease expires. Buena Park Office . The Buena Park Office is located on a Class-A shopping strip building. The office consists of approximately 3,047 square feet and is subject to a lease which expires on March 2028.
The office consists of approximately 1,520 square feet and is subject to a lease which expires on August, 2027. The current monthly rent payment is $5,479 and is subject to 3.0% annual increases until the lease expires. Buena Park Office . The Buena Park Office is located on a Class-A shopping strip building.
The current monthly rent is $10,790 and is subject to annual increases of 3.0% until the lease expires in August 2027. We have reserved the right to extend the term of the lease for two additional periods of five years each. Carrollton Office . In September 2018, we leased approximately 5,532 square feet in a commercial shopping center.
In August 2017, we leased approximately 2,678 square feet in a building. The current monthly rent is $10,790 and is subject to annual increases of 3.0% until the lease expires in August 2027. We have reserved the right to extend the term of the lease for two additional periods of five years each. Carrollton Office .
Branch Offices Office Location Wilshire Office 1000 Wilshire Blvd., Suite 100 Los Angeles, CA 90017 Fashion District Office 747 East 10th Street, Suite 310 Los Angeles, CA 90021 Aroma Office 3680 Wilshire Blvd., Suite 101 Los Angeles, CA 90010 Olympic Office 3030 West Olympic Blvd., Suite 110 Los Angeles, CA 90006 Western Office 550 South Western Avenue Los Angeles, CA 90020 Gardena Office 15435 South Western Avenue, Suite 100-D Gardena, CA 90249 Buena Park Office 5141 Beach Blvd., Building 2 Suite E Buena Park, CA 90621 Santa Clara Office 2998 East El Camino Real Santa Clara, CA 95051 Carrollton Office 2540 Old Denton Road, Suite 314 Carrollton, TX 75006 Cerritos Office 11811 South Street Cerritos, CA 90703 Spring Mountain Office 5599 Spring Mountain Road, Suite 100 Las Vegas, Nevada 89146 Wilshire Office .
The current monthly rent for the fifth floor is $42,720 and is subject to 3.1% annual increases until the lease expires. 48 Branch Offices Office Location Wilshire Office 1000 Wilshire Blvd., Suite 100 Los Angeles, CA 90017 Fashion District Office 747 East 10th Street, Suite 310 Los Angeles, CA 90021 Aroma Office 3680 Wilshire Blvd., Suite 101 Los Angeles, CA 90010 Olympic Office 3030 West Olympic Blvd., Suite 110 Los Angeles, CA 90006 Western Office 550 South Western Avenue Los Angeles, CA 90020 Gardena Office 15435 South Western Avenue, Suite 100-D Gardena, CA 90249 Buena Park Office 5141 Beach Blvd., Building 2 Suite E Buena Park, CA 90621 Santa Clara Office 2998 East El Camino Real Santa Clara, CA 95051 Carrollton Office 2540 Old Denton Road, Suite 314 Carrollton, TX 75006 Cerritos Office 11811 South Street Cerritos, CA 90703 Spring Mountain Office 5599 Spring Mountain Road, Suite 100 Las Vegas, Nevada 89146 Wilshire Office .
The office utilizes approximately 4,000 square feet, and the remaining space, including the common area, is being used by two other departments. Gardena Office . The Gardena Office is located on the first floor in a two-story multi-tenant, multi-use, stand-alone building. The office consists of approximately 1,520 square feet and is subject to a lease which expires on August, 2027.
The office utilizes approximately 4,000 square feet, and the remaining space, including the common area, is being used by two other departments. 49 Gardena Office . The Gardena Office is located on the first floor in a two-story multi-tenant, multi-use, stand-alone building.
The current monthly rent is $13,358 and is subject to annual CPI adjustments until the lease expires. We have reserved the right to extend the term of the lease for an additional period of five years. Santa Clara Office . In August 2017, we leased approximately 2,678 square feet in a building.
The office consists of approximately 3,047 square feet and is subject to a lease which expires on March 2028. The current monthly rent is $13,358 and is subject to annual CPI adjustments until the lease expires. We have reserved the right to extend the term of the lease for an additional period of five years. Santa Clara Office .
The monthly rent is fixed at $16,135 until April 2024 and is subject to increase to $18,440 per month thereafter for the next five years until the lease expires in April 2029. We have reserved the right to extend the term of the lease for two additional periods of five years each. Cerritos Office .
The monthly rent is fixed at $6,875 until October 2026 and is subject to increase to $7,563 per month thereafter until the lease expires in October 2031. We have reserved the right to extend the term of the lease for two additional periods of five years each. Spring Mountain Office .
We have reserved the right to extend the term of the lease for two additional periods of five years each. Spring Mountain Office . In December 2022, we leased approximately 2,650 square feet on the corner space of a building located in a newly-built commercial shopping center.
We have reserved the right to extend the term of the lease for two additional periods of five years each. Cerritos Office . In September 2021, we leased approximately 2,750 square feet on the ground floor in a commercial shopping center.
In September 2021, we leased approximately 2,750 square feet on the ground floor in a commercial shopping center. The monthly rent is fixed at $6,875 until October 2026 and is subject to increase to $7,563 per month thereafter until the lease expires in October 2031.
In September 2018, we leased approximately 5,532 square feet in a commercial shopping center. The monthly rent is fixed at $16,135 until April 2024 and is subject to increase to $18,440 per month thereafter for the next five years until the lease expires in April 2029.
Loan Production Offices We maintain loan production offices in Pleasanton, California; Atlanta, Georgia; Aurora, Colorado; and Lynnwood, Washington.
We have reserved the right to extend the term of the lease for two additional periods of five years each. Loan Production Offices We maintain loan production offices in Pleasanton, California; Atlanta, Georgia; Aurora, Colorado; Lynnwood, Washington; and Fairfax, Virginia.
Removed
The current monthly rent for the fifth floor is $42,720 and is subject to 3.1% annual increases until the lease expires.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. In the normal course of business, we are subject to legal proceedings or claims. Management has reviewed all legal claims against us and possible loss contingencies, and does not expect the amounts to be material to any of the consolidated financial statements. Item 4. Mine Safety Disclosures. Not applicable. 54 PART II
Biggest changeItem 3. Legal Proceedings. In the normal course of business, we are subject to legal proceedings or claims. Management has reviewed all legal claims against us and possible loss contingencies, and does not expect the amounts to be material to any of the consolidated financial statements. Item 4. Mine Safety Disclosures. Not applicable. 50 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−2 removed6 unchanged
Biggest changeSecurity Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters — Securities Authorized for Issuance Under Equity Compensation Plans.” Recent Sales of Unregistered Securities None.
Biggest changeSecurity Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters — Securities Authorized for Issuance Under Equity Compensation Plans.” Recent Sales of Unregistered Securities None. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Item 6. [Reserved] 51
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is traded on The Nasdaq Global Market under the symbol “OPBK.” As of March 1, 2024, we had 163 record holders of our common stock, not including beneficial owners whose shares are held in record names of brokers or other nominees.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is traded on The Nasdaq Global Market under the symbol “OPBK.” As of March 21, 2025, we had 159 record holders of our common stock, not including beneficial owners whose shares are held in record names of brokers or other nominees.
Consistent with this policy, on July 28, 2022, the Company increased a quarterly cash dividend from $0.10 per share to $0.12 per share ($0.48 per share on an annualized basis and an annual yield of 4.4% based on a common share price of $10.95 per share as of December 31, 2023).
Consistent with this policy, on July 28, 2022, the Company increased a quarterly cash dividend from $0.10 per share to $0.12 per share ($0.48 per share on an annualized basis and an annual yield of 3.0% based on a common share price of $15.81 per share as of December 31, 2024).
Removed
Purchases of Equity Securities by the Issuer and Affiliated Purchasers On August 24, 2023, our Board of Directors approved a new stock repurchase program authorizing the Company to repurchase up to 750,000 shares of its common stock, which is approximately 5% of its outstanding shares.
Removed
The following table summarizes share repurchase activities of the stock repurchase program during the quarter ended December 31, 2023. 55 Purchase date Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Publicly Announced Program Approximate Number of Shares that May Yet Be Purchased Under the Program October 1, 2023 - October 31, 2023 150,000 $ 8.72 150,000 600,000 November 1, 2023 - November 30, 2023 — — — 600,000 December 1, 2023 - December 31, 2023 — — — 600,000 150,000 $ 8.72 150,000 600,000 Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

106 edited+25 added−44 removed44 unchanged
Biggest changeYear Ended December 31, 2023 vs 2022 Increases (Decreases) Due to Change in ($ in thousands) Volume Rate Total Interest-earning assets: Interest-bearing deposits in other banks $ (28) $ 2,669 $ 2,641 Federal funds sold and other investments 238 195 433 Available-for-sale debt securities 803 1,977 2,780 Total investments 1,013 4,841 5,854 Commercial real estate loans 4,167 6,284 10,451 SBA loans (5,493) 9,934 4,441 Commercial and industrial loans (1,716) 3,688 1,972 Home mortgage loans 7,937 2,787 10,724 Consumer & other loans (5) 16 11 Total loans 4,890 22,709 27,599 Total interest-earning assets 5,903 27,550 33,453 Interest-bearing liabilities: Money market deposits and others (1,527) 10,052 8,525 Time deposits 11,914 17,786 29,700 Total interest-bearing deposits 10,387 27,838 38,225 Borrowings 3,349 103 3,452 Total interest-bearing liabilities 13,736 27,941 41,677 Net interest income $ (7,833) $ (391) $ (8,224) 64 Year Ended December 31, 2022 vs 2021 Increases (Decreases) Due to Change in ($ in thousands) Volume Rate Total Interest-earning assets: Interest-bearing deposits in other banks $ (497) $ 1,726 $ 1,229 Federal funds sold and other investments 78 65 143 Available-for-sale debt securities 923 1,343 2,266 Total investments 504 3,134 3,638 Commercial real estate loans 4,983 2,233 7,216 SBA loans (3,276) 5,589 2,313 Commercial and industrial loans 734 2,020 2,754 Home mortgage loans 8,602 (462) 8,140 Consumer & other loans (1) (6) (7) Total loans 11,042 9,374 20,416 Total interest-earning assets 11,546 12,508 24,054 Interest-bearing liabilities: Money market deposits and others 1,159 3,012 4,171 Time deposits 669 3,238 3,907 Total interest-bearing deposits 1,828 6,250 8,078 Borrowings 2 89 91 Total interest-bearing liabilities 1,830 6,339 8,169 Net interest income $ 9,716 $ 6,169 $ 15,885 2023 Compared to 2022 Net interest income decreased $8.2 million, or 10.7%, to $68.7 million for the year ended December 31, 2023 from $76.9 million for the same period of 2022, primarily due to higher interest expense on deposits, partially offset by higher interest income on loans and investments.
Biggest changeChange applicable to both volume and rate have been allocated to volume and rate ratably. 59 Year Ended December 31, 2024 vs 2023 Increases (Decreases) Due to Change in ($ in thousands) Volume Rate Total Interest-earning assets: Interest-bearing deposits in other banks $ 1,607 $ 119 $ 1,726 Federal funds sold and other investments 112 123 235 Available-for-sale debt securities (167) 263 96 Commercial real estate loans 4,232 4,339 8,571 SBA loans 423 (959) (536) Commercial and industrial loans 4,704 (128) 4,576 Home mortgage loans 3 1,261 1,264 Consumer & other loans (12) 35 23 Total loans 9,350 4,548 13,898 Total interest-earning assets 10,902 5,053 15,955 Interest-bearing liabilities: Money market deposits and others (2,098) 2,403 305 Time deposits 11,283 7,098 18,381 Total interest-bearing deposits 9,185 9,501 18,686 Borrowings 499 (151) 348 Total interest-bearing liabilities 9,684 9,350 19,034 Net interest income $ 1,218 $ (4,297) $ (3,079) Year Ended December 31, 2023 vs 2022 Increases (Decreases) Due to Change in ($ in thousands) Volume Rate Total Interest-earning assets: Interest-bearing deposits in other banks $ (28) $ 2,669 $ 2,641 Federal funds sold and other investments 238 195 433 Available-for-sale debt securities 803 1,977 2,780 Commercial real estate loans 4,167 6,284 10,451 SBA loans (5,493) 9,934 4,441 Commercial and industrial loans (1,716) 3,688 1,972 Home mortgage loans 7,937 2,787 10,724 Consumer & other loans (5) 16 11 Total loans 4,890 22,709 27,599 Total interest-earning assets 5,903 27,550 33,453 Interest-bearing liabilities: Money market deposits and others (1,527) 10,052 8,525 Time deposits 11,914 17,786 29,700 Total interest-bearing deposits 10,387 27,838 38,225 Borrowings 3,349 103 3,452 Total interest-bearing liabilities 13,736 27,941 41,677 Net interest income $ (7,833) $ (391) $ (8,224) 60 2024 Compared to 2023 Net interest income decreased $3.1 million, or 4.5%, to $65.6 million for the year ended December 31, 2024 from $68.7 million for the same period of 2023, primarily due to higher interest expense on interest-bearing deposits, partially offset by higher interest income on loans and higher interest income on interest-bearing deposits in other banks as our deposit costs repriced quicker than our interest-earning asset yields following the Federal Reserve’s rate increases.
We drive our income from interest received on our loan portfolio and the fee income we receive in connection with our deposits, and the sale and service of SBA loans.
We drive our income from interest received on our loan portfolio, the fee income we receive in connection with our deposits, and the sale and service of SBA loans.
Income Tax Expense Income tax expense was $9.6 million for the year ended December 31, 2023, compared to $13.4 million for the same period of 2022, primarily due to a $13.2 million or 28.3% decrease in income before income tax to $33.5 million in 2023 from $46.7 million for 2022.
Income tax expense was $9.6 million for the year ended December 31, 2023, compared to $13.4 million for the same period of 2022, primarily due to a $13.2 million or 28.3% decrease in income before income tax to $33.5 million in 2023 from $46.7 million for 2022.
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 77 recognized only to the extent that cash is received, and the loan’s principal balance is deemed collectible.
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.
The determination of the realizability of the deferred tax assets is highly subjective and dependent upon judgment concerning management’s evaluation of both positive and negative evidence, including forecasts of future income, cumulative losses, applicable tax planning strategies, and assessments of current and future economic and business conditions.
The determination of the realizability of the deferred tax assets is highly subjective and dependent upon judgment concerning management’s evaluation of both positive and negative evidence, including forecasts 65 of future income, cumulative losses, applicable tax planning strategies, and assessments of current and future economic and business conditions.
Qualitative measures established by regulation to ensure capital adequacy required us to maintain minimum amounts and various ratios of CET1 capital, Tier 1 capital and total capital to risk-weighted assets and of Tier 1 capital to average consolidated assets, referred to as the “leverage ratio.” The table below also summarizes the capital requirements applicable to us and the Bank in order to be considered “well-capitalized” from a regulatory perspective, as well as our and the Bank’s capital ratios as of December 31, 2023 and 2022.
Qualitative measures established by regulation to ensure capital adequacy required us to maintain minimum amounts and various ratios of CET1 capital, Tier 1 capital and total capital to risk-weighted assets and of Tier 1 capital to average consolidated assets, referred to as the “leverage ratio.” The table below also summarizes the capital requirements applicable to us and the Bank in order to be considered “well-capitalized” from a regulatory perspective, as well as our and the Bank’s capital ratios as of December 31, 2024 and 2023.
No issuer of the available-for-sale securities, other than U.S. Government and its agencies, comprised more than ten percent of our shareholders’ equity as of December 31, 2023 and 2022. Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. The unrealized losses were primarily attributable to interest rate movement, not credit quality.
No issuer of the available-for-sale securities, other than U.S. Government and its agencies, comprised more than ten percent of our shareholders’ equity as of December 31, 2024 and 2023. Certain securities have fair values less than amortized cost and, therefore, contain unrealized losses. The unrealized losses were primarily attributable to interest rate movement, not credit quality.
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 December 31, 2023 and 2022.
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 $100.0 million of unsecured federal funds lines with no amounts advanced as of December 31, 2024 and 2023.
Year Ended December 31, 2023 2022 ($ 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 $ 78,676 $ 4,040 5.14 % $ 79,482 $ 1,399 1.76 % Federal funds sold and other investments (1) 14,963 1,031 6.89 11,810 598 5.06 Available-for-sale debt securities 202,167 6,131 3.03 170,479 3,351 1.97 Total investments 295,806 11,202 3.79 261,771 5,348 2.04 Commercial real estate loans 857,124 48,312 5.64 777,776 37,861 4.87 SBA loans 260,507 28,514 10.95 321,757 24,073 7.48 Commercial and industrial loans 119,135 9,189 7.71 142,630 7,217 5.06 Home mortgage loans 507,125 24,384 4.81 334,984 13,660 4.08 Consumer & other loans 987 64 6.51 1,071 53 4.95 Loans (2) 1,744,878 110,463 6.33 1,578,218 82,864 5.25 Total interest-earning assets 2,040,684 121,665 5.96 1,839,989 88,212 4.79 Noninterest-earning assets 84,757 76,883 Total assets $ 2,125,441 $ 1,916,872 Interest-bearing liabilities: Money market deposits and others $ 374,116 $ 13,830 3.70 % $ 475,414 $ 5,305 1.12 % Time deposits 841,804 35,605 4.23 445,169 5,905 1.33 Total interest-bearing deposits 1,215,920 49,435 4.07 920,583 11,210 1.22 Borrowings 77,114 3,543 4.59 2,089 91 4.36 Total interest-bearing liabilities 1,293,034 52,978 4.10 922,672 11,301 1.22 Noninterest-bearing liabilities: Noninterest-bearing deposits 613,797 796,175 Other noninterest-bearing liabilities 35,377 27,829 Total noninterest-bearing liabilities 649,174 824,004 Shareholders’ equity 183,233 170,196 Total liabilities and shareholders’ equity $ 2,125,441 $ 1,916,872 Net interest income / interest rate spreads $ 68,687 1.86 % $ 76,911 3.57 % Net interest margin 3.37 % 4.18 % Cost of deposits 2.70 % 0.65 % Cost of funds 2.78 % 0.66 % (1) Includes income and average balances for Federal Home Loan Bank (“FHLB”) and Pacific Coast Bankers Bank stock, CRA qualified mutual fund, term federal funds, interest-earning time deposits and other miscellaneous interest-earning assets.
(2) Average loan balances include non-accrual loans and loans held for sale. 58 Year Ended December 31, 2023 2022 ($ 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 $ 78,676 $ 4,040 5.14 % $ 79,482 $ 1,399 1.76 % Federal funds sold and other investments (1) 14,963 1,031 6.89 11,810 598 5.06 Available-for-sale debt securities 202,167 6,131 3.03 170,479 3,351 1.97 Commercial real estate loans 857,124 48,312 5.64 777,776 37,861 4.87 SBA loans 260,507 28,514 10.95 321,757 24,073 7.48 Commercial and industrial loans 119,135 9,189 7.71 142,630 7,217 5.06 Home mortgage loans 507,125 24,384 4.81 334,984 13,660 4.08 Consumer & other loans 987 64 6.51 1,071 53 4.95 Loans (2) 1,744,878 110,463 6.33 1,578,218 82,864 5.25 Total interest-earning assets 2,040,684 121,665 5.96 1,839,989 88,212 4.79 Noninterest-earning assets 84,757 76,883 Total assets $ 2,125,441 $ 1,916,872 Interest-bearing liabilities: Money market deposits and others $ 374,116 $ 13,830 3.70 % $ 475,414 $ 5,305 1.12 % Time deposits 841,804 35,605 4.23 445,169 5,905 1.33 Total interest-bearing deposits 1,215,920 49,435 4.07 920,583 11,210 1.22 Borrowings 77,114 3,543 4.59 2,089 91 4.36 Total interest-bearing liabilities 1,293,034 52,978 4.10 922,672 11,301 1.22 Noninterest-bearing liabilities: Noninterest-bearing deposits 613,797 796,175 Other noninterest-bearing liabilities 35,377 27,829 Total noninterest-bearing liabilities 649,174 824,004 Shareholders’ equity 183,233 170,196 Total liabilities and shareholders’ equity $ 2,125,441 $ 1,916,872 Net interest income / interest rate spreads $ 68,687 1.86 % $ 76,911 3.57 % Net interest margin 3.37 % 4.18 % Cost of deposits 2.70 % 0.65 % Cost of funds 2.78 % 0.66 % (1) Includes income and average balances for Federal Home Loan Bank (“FHLB”) and Pacific Coast Bankers Bank stock, CRA qualified mutual fund, term federal funds, interest-earning time deposits and other miscellaneous interest-earning assets.
The combination of these factors has exerted downward pressure on our fee income, the volume of our interest-earning assets and our net interest income.
The combination of these factors also has exerted downward pressure on our fee income, the volume of our interest-earning assets and our net interest income.
The Bank exceeded all regulatory capital requirements under the Basel III Capital Rules and were considered to be “well-capitalized” as of the dates reflected in the table below. As of December 31, 2023, the FDIC categorized us as well-capitalized under the prompt corrective action framework.
The Bank exceeded all regulatory capital requirements under the Basel III Capital Rules and were considered to be “well-capitalized” as of the dates reflected in the table below. As of December 31, 2024, the FDIC categorized us as well-capitalized under the prompt corrective action framework.
Our major operating expenses are the interest we pay on deposits, 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.
Our major operating expenses are the interest we pay on deposits and other borrowings, 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.
With the adoption of CECL, we elected not to consider accrued interest receivable in its 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.
With the adoption of 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 seek to maximize net interest income without exposing us to an excessive level of 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.
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.
RESULTS OF OPERATIONS Net Income We reported net income for the year ended December 31, 2023 of $23.9 million, a decrease of $9.4 million, or 28.2%, compared to net income of $33.3 million for the same period of 2022.
We reported net income for the year ended December 31, 2023 of $23.9 million, a decrease of $9.4 million, or 28.2%, compared to net income of $33.3 million for the same period of 2022.
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 historical financial statements and the related notes thereto contained in this Report.
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 Report.
We recognized net deferred tax assets of $13.3 million and $14.3 million as of December 31, 2023 and 2022, respectively. After consideration of the matters in the preceding paragraph, we have determined that it is more likely than not that net deferred tax assets as of December 31, 2023 will be fully realized in future years.
We recognized net deferred tax assets of $14.9 million and $13.3 million as of December 31, 2024 and 2023, respectively. After consideration of the matters in the preceding paragraph, we have determined that it is more likely than not that net deferred tax assets as of December 31, 2024 will be fully realized in future years.
The following table summarizes the fair value of the available-for-sale securities portfolio as of the dates presented: December 31, 2023 December 31, 2022 ($ in thousands) Amortized Cost Fair Value Unrealized Loss Amortized Cost Fair Value Unrealized Loss U.S.
The following table summarizes the fair value of the available-for-sale securities portfolio as of the dates presented: December 31, 2024 December 31, 2023 ($ in thousands) Amortized Cost Fair Value Unrealized Loss Amortized Cost Fair Value Unrealized Loss U.S.
All securities in our investment portfolio were classified as available-for-sale as of December 31, 2023. There were no held-to-maturity or trading securities in our investment portfolio as of December 31, 2023. All available-for-sale 70 securities are carried at fair value and consist of U.S. government agencies or sponsored agency securities and tax-exempt municipal securities.
All securities in our investment portfolio were classified as available-for-sale as of December 31, 2024. There were no held-to-maturity or trading securities in our investment portfolio as of December 31, 2024. All available-for-sale securities are carried at fair value and consist of U.S. government agencies or sponsored agency securities and tax-exempt municipal securities.
Loans — Commercial Real Estate: We have established concentration limits in the loan portfolio for commercial real estate loans, commercial and industrial loans, and unsecured lending, among others. All loan types are within established limits.
Loans — Commercial Real Estate: We have established concentration limits in our loan portfolio for commercial real estate loans, commercial and industrial loans, and unsecured lending, among others. All loan types are within established limits.
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 the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Item 1A.
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 the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Part II, Item 1A.
December 31, 2023 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.
December 31, 2024 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.
Commercial real estate loans include owner-occupied and non-occupied commercial real estate. We originate both fixed and adjustable rate loans. Adjustable rate loans are based on the Wall Street Journal prime rate. Our commercial real estate loan portfolio totaled $885.6 million as of December 31, 2023 compared to $842.2 million as of December 31, 2022.
Commercial real estate loans include owner-occupied and non-occupied commercial real estate. We originate both fixed and adjustable rate loans. Adjustable rate loans are based on the Wall Street Journal prime rate. Our commercial real estate loan portfolio totaled $980.2 million as of December 31, 2024 compared to $885.6 million as of December 31, 2023.
(2) Average loan balances include non-accrual loans and loans held for sale. 63 Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates.
(2) Average loan balances include non-accrual loans and loans held for sale. Changes in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in average interest rates.
There have been no conditions or events since December 31, 2023 that management believes would change this classification.
There have been no conditions or events since December 31, 2024 that management believes would change this classification.
As of December 31, 2023, our average loan to value for commercial real estate loans was 50.7%. Loans — SBA : We are designated as an SBA Preferred Lender under the SBA Preferred Lender Program. We offer mostly SBA 7(a) variable-rate loans. We generally sell the 75% guaranteed portion of the SBA loans that we originate.
As of December 31, 2024, our average loan to value for commercial real estate loans was 54.0%. Loans — SBA : We are designated as an SBA Preferred Lender under the SBA Preferred Lender Program. We offer mostly SBA 7(a) variable-rate loans. We generally sell the 75% guaranteed portion of the SBA loans that we originate.
Noninterest Expense 2023 Compared 2022 The following table sets forth the major components of our noninterest expense for the years ended December 31, 2023 and 2022: Year Ended December 31, ($ in thousands) 2023 2022 $ Change % Change Noninterest expense: Salaries and employee benefits $ 29,593 $ 27,189 $ 2,404 8.8 % Occupancy and equipment 6,490 5,964 526 8.8 Data processing and communication 2,109 2,085 24 1.2 Professional fees 1,571 1,620 (49) (3.0) FDIC insurance and regulatory assessments 1,457 813 644 79.2 Promotion and advertising 614 543 71 13.1 Directors' fees 680 682 (2) (0.3) Foundation donation and other contributions 2,400 3,393 (993) (29.3) Other expenses 2,812 2,541 271 10.7 Total noninterest expense $ 47,726 $ 44,830 $ 2,896 6.5 % Noninterest expense for the year ended December 31, 2023 was $47.7 million, compared with $44.8 million for the same period of 2022, an increase of $2.9 million or 6.5%. 68 Salaries and employee benefits for the year ended December 31, 2023 was $29.6 million, compared to $27.2 million for the same period of 2022, an increase of $2.4 million, or 8.8%.
The decrease was primarily due to lower donation accruals for Open Stewardship Foundation as a result of lower net income. 2023 Compared 2022 The following table sets forth the major components of our noninterest expense for the years ended December 31, 2023 and 2022: 64 Year Ended December 31, ($ in thousands) 2023 2022 $ Change % Change Noninterest expense: Salaries and employee benefits $ 29,593 $ 27,189 $ 2,404 8.8 % Occupancy and equipment 6,490 5,964 526 8.8 Data processing and communication 2,109 2,085 24 1.2 Professional fees 1,571 1,620 (49) (3.0) FDIC insurance and regulatory assessments 1,457 813 644 79.2 Promotion and advertising 614 543 71 13.1 Directors' fees 680 682 (2) (0.3) Foundation donation and other contributions 2,400 3,393 (993) (29.3) Other expenses 2,812 2,541 271 10.7 Total noninterest expense $ 47,726 $ 44,830 $ 2,896 6.5 % Noninterest expense for the year ended December 31, 2023 was $47.7 million, compared with $44.8 million for the same period of 2022, an increase of $2.9 million or 6.5%.
We do not have any material concentrations by industry or group of industries in the loan portfolio. However, 92.2% of our gross loans were secured by real property as of December 31, 2023, compared to 92.1% as of December 31, 2022.
We do not have any material concentrations by industry or group of industries in the loan portfolio. However, 88.0% of our gross loans were secured by real property as of December 31, 2024, compared to 92.2% as of December 31, 2023.
The Company applies 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 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 establish an allowance for credit losses both on loans and off-balance sheet commitments through charges to earnings, which are shown in the statements of operations as the provision for credit losses. Specifically identifiable and quantifiable known losses are promptly charged off against the allowance.
Provision for Credit Losses Credit risk is inherent in the business of making loans. We establish an allowance for credit losses both on loans and off-balance sheet commitments through charges to earnings, which are shown in the statements of operations as the 61 provision for credit losses. Specifically identifiable and quantifiable known losses are promptly charged off against the allowance.
During the year ended December 31, 2023, we originated $103.3 million of commercial real estate loans. As of December 31, 2023, approximately 76.1% of the commercial real estate portfolio consisted of fixed-rate loans. Our policy maximum loan-to-value, or LTV, is 70% for commercial real estate loans.
During the year ended December 31, 2024, we originated $219.9 million of commercial real estate loans. As of December 31, 2024, approximately 76.1% of the commercial real estate portfolio consisted of fixed-rate loans. Our policy maximum loan-to-value, or LTV, is 70% for commercial real estate loans.
We did not have any borrowings outstanding with the Federal Reserve as of December 31, 2023 or December 31, 2022, and our borrowing capacity is limited only by eligible collateral. 79 Based on the values of loans pledged as collateral, we had $363.6 million of additional borrowing availability with the FHLB as of December 31, 2023.
We did not have any borrowings outstanding with the Federal Reserve as of December 31, 2024 or 2023, and our borrowing capacity is limited only by eligible collateral. Based on the values of loans pledged as collateral, we had $401.9 million of additional borrowing availability with the FHLB as of December 31, 2024.
Accordingly, for available-for-sale debt securities, we did not record an allowance for credit losses on January 1, 2023 and does not have allowance for credit losses as of December 31, 2023. The following table sets forth certain information regarding contractual maturities and the weighted average yields of our investment securities as of the dates presented.
Accordingly, for available-for-sale debt securities, we did not have allowance for credit losses as of December 31, 2024 and 2023. The following table sets forth certain information regarding contractual maturities and the weighted average yields of our investment securities as of the dates presented.
As a result, we expects full collection of the carrying amount of these securities, does not intend to sell the securities in an unrealized loss position, and it was more-likely-than-not we will not have to sell these securities prior to recovery of amortized cost.
As a result, we expect full collection of the carrying amount of these securities, do not intend to sell the securities in an unrealized loss position, and believe it is more-likely-than-not we will not have to sell these securities prior to recovery of amortized cost.
We also maintain relationships in the capital markets with brokers to issue certificates of deposit and money market accounts. We maintain ample access to liquidity, including highly liquid assets on our balance sheet and available unused borrowings from other financial institutions.
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 advances from the FHLB are collateralized by residential and commercial real estate loans. As of December 31, 2023 and 2022, we had maximum borrowing capacity from the FHLB of $655.9 million and $582.8 million, respectively. We had $105.0 million borrowings from FHLB as of December 31, 2023 and no borrowing from FHLB as of December 31, 2022.
The advances from the FHLB are collateralized by residential and commercial real estate loans. As of December 31, 2024 and 2023, we had maximum borrowing capacity from the FHLB of $677.0 million and $655.9 million, respectively. We had borrowings from FHLB of $95.0 million and $105.0 million as of December 31, 2024 and 2023, respectively.
The increases in market interest rates also were reflected in loan pricing, which had multiple effects, including a reduction in borrowing (and thus a reduction in interest paid to banks) by customers that had the ability to avoid or defer additional indebtedness, a decline in the origination of new loans, and an increase in credit risk as borrowers who faced rising interest rates found it more difficult to comply with their loan obligations.
The fluctuations in market interest rates also affected loan pricing, which had multiple effects, including a reduction in borrowing (and thus a reduction in interest paid to banks) as rates increased and remain elevated, by customers that have the ability to avoid or defer additional indebtedness, a decline in the origination of new loans, and an increase in credit risk as borrowers who faced rising interest rates, especially on variable-rate loans, found it more difficult to comply with their loan obligations.
Other sources of noninterest income include service charges on deposit. 2023 Compared to 2022 The following table sets forth the various components of our noninterest income for the years ended December 31, 2023 and 2022: Year Ended December 31, ($ in thousands) 2023 2022 $ Change % Change Noninterest income: Service charges on deposit $ 2,123 $ 1,675 $ 448 26.7 % Loan servicing fees, net of amortization 2,449 2,416 33 1.4 Gain on sale of loans 7,843 12,285 (4,442) (36.2) Other income 1,766 1,243 523 42.1 Total noninterest income $ 14,181 $ 17,619 $ (3,438) (19.5) % Noninterest income for the year ended December 31, 2023 was $14.2 million, a decrease of $3.4 million, or 19.5%, compared to $17.6 million for the same period of 2022, primarily due to a decrease in gain on sale of loans.
Loan servicing fees was $2.9 million for the year ended December 31, 2024, compared to $2.4 million for the same period of 2023, an increase of $449 thousand, or 18.3%, primarily due to a decrease in servicing fee amortization driven by lower loan payoffs in loan servicing portfolio. 2023 Compared to 2022 The following table sets forth the various components of our noninterest income for the years ended December 31, 2023 and 2022: Year Ended December 31, ($ in thousands) 2023 2022 $ Change % Change Noninterest income: Service charges on deposits $ 2,123 $ 1,675 $ 448 26.7 % Loan servicing fees, net of amortization 2,449 2,416 33 1.4 Gain on sale of loans 7,843 12,285 (4,442) (36.2) Other income 1,766 1,243 523 42.1 Total noninterest income $ 14,181 $ 17,619 $ (3,438) (19.5) % Noninterest income for the year ended December 31, 2023 was $14.2 million, a decrease of $3.4 million, or 19.5%, compared to $17.6 million for the same period of 2022, primarily due to a decrease in gain on sale of loans, partially offset by increased in other income and service charges on deposits.
Our unguaranteed SBA loans collateralized by real estate are monitored by collateral type and included in our commercial real estate Concentration Guidance. As of December 31, 2023, our SBA portfolio totaled $239.7 million, compared to $234.7 million as of December 31, 2022. We originated $141.5 million for the year ended December 31, 2023.
Our unguaranteed SBA loans collateralized by real estate are monitored by collateral type and included in our commercial real estate Concentration Guidance. 68 As of December 31, 2024, our SBA portfolio totaled $253.7 million, compared to $239.7 million as of December 31, 2023. We originated $159.6 million for the year ended December 31, 2024.
The following table presents the loan and deposit balances, the loans-to-deposit ratios, and deposits as a percentage of total liabilities as of December 31, 2023 and 2022: December 31, ($ in thousands) 2023 2022 Deposits $ 1,807,558 $ 1,885,771 Deposits as a % of total liabilities 92.5 % 98.3 % Loans, net $ 1,743,852 $ 1,659,051 Loans-to-deposits ratio 96.5 % 88.0 % 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.
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, 2024 and 2023: ($ in thousands) December 31, 2024 December 31, 2023 Deposits $ 2,027,285 $ 1,807,558 Deposits as a % of total liabilities 93.8 % 92.5 % Loans, net $ 1,932,056 $ 1,743,852 Loans-to-deposits ratio 95.3 % 96.5 % 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.
Failure to meet regulatory capital requirements may result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our financial statements.
These standards are, however, applicable to the Bank, and failure to meet regulatory capital requirements may result in certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our consolidated financial statements.
Activity for loan servicing rights was as follows: Year Ended December 31 ($ in thousands) 2023 2022 2021 Beginning balance $ 12,759 $ 12,720 $ 7,360 Additions from loans sold with servicing retained 3,400 4,424 2,799 Additions from purchase of servicing rights — — 6,097 Amortized to expense (4,418) (4,385) (3,536) Ending balance $ 11,741 $ 12,759 $ 12,720 Loan servicing rights are reported on our Consolidated Balance Sheets and reported net of amortization.
Activity for loan servicing rights was as follows: Year Ended December 31, ($ in thousands) 2024 2023 2022 Beginning balance $ 11,741 $ 12,759 $ 12,720 Additions from loans sold with servicing retained 2,841 3,400 4,424 Amortized to expense (3,748) (4,418) (4,385) Ending balance $ 10,834 $ 11,741 $ 12,759 Loan servicing rights are reported on our Consolidated Balance Sheets and reported net of amortization.
In addition, on such dates we had lines of credit from the Federal Reserve discount window of $183.0 million and $175.6 million, respectively. The Federal Reserve discount window lines were collateralized by a pool of commercial real estate loans and commercial and industrial loans totaling $251.0 million and $254.7 million as of December 31, 2023 and 2022, respectively.
In addition, on such dates we had lines of credit from the Federal Reserve discount window of $215.1 million and $183.0 million, respectively. The Federal Reserve discount window lines were collateralized by a pool of commercial real estate loans and commercial and industrial loans totaling $278.9 million and $251.0 million as of December 31, 2024 and 2023, respectively.
Information is provided with respect to (i) effects on interest income attributable to changes in volume (change in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). Change applicable to both volume and rate have been allocated to volume and rate ratably.
Information is provided with respect to (i) effects on interest income attributable to changes in volume (change in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume).
Analysis of the Allowance for Credit Losses The following table provides an analysis of the allowance for credit losses, provision for credit losses and net charge-offs, by category, for the year ended December 31, 2023, 2022 and 2021: As of and for the Year Ended December 31, 2023 ($ in thousands) Beginning Impact of CECL Adoption Provision (Reversal) Net (Charge-offs) Recoveries Ending Commercial real estate $ 6,951 $ 875 $ 723 $ (634) $ 7,915 SBA—real estate 1,607 (238) 321 (33) 1,657 SBA—non- real estate 207 (142) 73 9 147 Commercial and industrial 1,643 (320) (11) (97) 1,215 Home mortgage 8,826 1,753 466 — 11,045 Consumer 7 (4) 10 1 14 Total $ 19,241 $ 1,924 $ 1,582 $ (754) $ 21,993 Gross loans (1) $ 1,765,845 Allowance for credit losses to gross loans 1.25 % Average loans (1) $ 1,744,878 Net (charge-offs) recoveries to average gross loans (2) (0.04) % 76 As of and for the Year Ended December 31, 2022 ($ in thousands) Beginning Provision (Reversal) Net (Charge-offs) Recoveries Ending Commercial real estate $ 8,150 $ (1,199) $ — $ 6,951 SBA—real estate 2,022 (409) (6) 1,607 SBA—non- real estate 199 66 (58) 207 Commercial and industrial 2,848 (1,205) — 1,643 Home mortgage 2,891 5,935 — 8,826 Consumer 13 (7) 1 7 Total $ 16,123 $ 3,181 $ (63) $ 19,241 Gross loans (1) $ 1,678,292 Allowance for loan losses to gross loans 1.15 % Average loans (1) $ 1,509,067 Net (charge-offs) recoveries to average gross loans (2) 0.00 % As of and for the Year Ended December 31, 2021 ($ in thousands) Beginning Provision (Reversal) Net (Charge-offs) Recoveries Ending Commercial real estate $ 8,505 $ (355) $ — $ 8,150 SBA—real estate 1,802 279 (59) 2,022 SBA—non- real estate 278 54 (133) 199 Commercial and industrial 2,563 285 — 2,848 Home mortgage 2,185 706 — 2,891 Consumer 19 (10) 4 13 Total $ 15,352 $ 959 $ (188) $ 16,123 Gross loans (1) $ 1,314,019 Allowance for loan losses to gross loans 1.23 % Average loans (1) $ 1,200,367 Net (charge-offs) recoveries to average gross loans (2) (0.02) % (1) Excludes loans held for sale.
As of and for the Year Ended December 31, 2023 ($ in thousands) Beginning Impact of CECL Adoption Provision (Reversal) Net (Charge-offs) Recoveries Ending Commercial real estate $ 6,951 $ 875 $ 723 $ (634) $ 7,915 SBA—real estate 1,607 (238) 321 (33) 1,657 SBA—non- real estate 207 (142) 73 9 147 Commercial and industrial 1,643 (320) (11) (97) 1,215 Home mortgage 8,826 1,753 466 — 11,045 Consumer 7 $ (4) 10 1 14 Total $ 19,241 $ 1,924 $ 1,582 $ (754) $ 21,993 Gross loans (1) $ 1,765,845 Allowance for loan losses to gross loans 1.25 % Average loans (1) $ 1,744,878 Net (charge-off) recoveries to average gross loans (0.04) % (1) Excludes loans held for sale. 70 As of and for the Year Ended December 31, 2022 ($ in thousands) Beginning Provision (Reversal) Net (Charge-offs) Recoveries Ending Commercial real estate $ 8,150 $ (1,199) $ — $ 6,951 SBA—real estate 2,022 (409) (6) 1,607 SBA—non- real estate 199 66 (58) 207 Commercial and industrial 2,848 (1,205) — 1,643 Home mortgage 2,891 5,935 — 8,826 Consumer 13 $ (7) 1 7 Total $ 16,123 $ 3,181 $ (63) $ 19,241 Gross loans (1) $ 1,678,292 Allowance for loan losses to gross loans 1.15 % Average loans (1) $ 1,509,067 Net (charge-off) recoveries to average gross loans — % (1) Excludes loans held for sale.
The following table presents an allocation of the allowance for credit losses by portfolio as of December 31, 2023 and 2022: December 31, 2023 December 31, 2022 ($ in thousands) Amount % to Total Amount % to Total Commercial real estate $ 7,915 36.0 % $ 6,951 36.1 % SBA—real estate 1,657 7.5 1,607 8.4 SBA—non- real estate 147 0.7 207 1.1 Commercial and industrial 1,215 5.5 1,643 8.5 Home mortgage 11,045 50.2 8,826 45.9 Consumer 14 0.1 7 — Total $ 21,993 100.0 % $ 19,241 100.0 % Nonperforming Assets Loans are considered delinquent when principal or interest payments are past due 30 days or more.
The following table presents an allocation of the allowance for credit losses by portfolio as of December 31, 2024 and 2023: December 31, 2024 December 31, 2023 ($ in thousands) Amount % to Total Amount % to Total Commercial real estate $ 9,290 37.5 % $ 7,915 36.0 % SBA—real estate 5,557 22.4 1,657 7.5 SBA—non- real estate 418 1.7 147 0.7 Commercial and industrial 1,844 7.4 1,215 5.5 Home mortgage 7,684 31.0 11,045 50.2 Consumer 3 — 14 0.1 Total $ 24,796 100.0 % $ 21,993 100.0 % Nonperforming Assets Loans are considered delinquent when principal or interest payments are past due 30 days or more.
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 the future cash requirements of us.
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 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.
Liquidity and Capital Resources Liquidity refers to the measure of 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, all at a reasonable cost.
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 effectively balancing the related costs.
For the year ended December 31, 2023 compared to 2022 • Net interest income decreased to $68.7 million, a decrease of $8.2 million, or 10.7%, from $76.9 million. • Net income was $23.9 million or $1.55 per diluted common share, a decrease of $9.4 million, or 28.2%, from $33.3 million or $2.14 per diluted common share.
For the year ended December 31, 2024 compared to 2023 • Net interest income decreased to $65.6 million, a decrease of $3.1 million, or 4.5%, from $68.7 million. • Net income was $21.1 million or $1.39 per diluted common share, a decrease of $2.8 million, or 11.9%, from $23.9 million or $1.55 per diluted common share.
We sold SBA loans of $145.0 million with a 6.65% average premium during year ended December 31, 2023. From our total SBA loan portfolio, $224.7 million is secured by real estate and $15.0 million is unsecured or secured by business assets as of December 31, 2023.
We sold SBA loans of $127.2 million with a 7.97% average premium during the year ended December 31, 2024. From our total SBA loan portfolio, $232.0 million is secured by real estate and $21.7 million is unsecured or secured by business assets as of December 31, 2024.
We also purchase residential mortgage loans from third party mortgage originators based on the review of their underwriting and file quality as opportunities arise. 73 Home mortgage loans totaled $518.0 million as of December 31, 2023, compared to $482.9 million as of December 31, 2022.
We also purchase residential mortgage loans from third party mortgage originators based on the review of their underwriting and file quality as opportunities arise. Home mortgage loans totaled $509.5 million as of December 31, 2024, compared to $518.0 million as of December 31, 2023. For the year ended December 31, 2024, we originated $44.2 million of home mortgage loans.
The provision for credit losses and level of allowance for each period are dependent upon many factors, including loan growth, net charge-offs, changes in the composition of the loan portfolio, delinquencies, management’s assessment of the quality of the loan portfolio, the valuation of problem loans and the general economic conditions in our market area. 2023 Compared to 2022 The provision for credit losses was $1.7 million for the year ended December 31, 2023, compared to $3.0 million for the same period of 2022.
The provision for credit losses and level of allowance for each period are dependent upon many factors, including loan growth, net charge-offs, changes in the composition of the loan portfolio, delinquencies, management’s assessment of the quality of the loan portfolio, the valuation of problem loans and the general economic conditions in our market area. 2024 Compared to 2023 The provision for credit losses was $2.8 million for the year ended December 31, 2024, an increase of $1.1 million, compared to $1.7 million for the same period of 2023, reflecting an ongoing period of relatively elevated interest rates and the related impacts on our customers and on the values of the collateral securing our loans.
Foundation donations and other contributions for the year ended December 31, 2023 was $2.4 million, compared to $3.4 million, a decrease of $993 thousand, or 29.3%.
Foundation donations and other contributions for the year ended December 31, 2023 was $2.4 million, compared to $3.4 million, a decrease of $993 thousand, or 29.3%. The decrease was primarily due to lower donation accruals for Open Stewardship Foundation as a result of lower net income.
For the year ended December 31, 2022 compared to 2021 • Net interest income increased to $76.9 million, an increase of $15.9 million, or 26.0%, from $61.0 million. • Net income was $33.3 million or $2.14 per diluted common share, an increase of $4.5 million, or 15.5%, from $28.8 million or $1.88 per diluted common share. 57 SELECTED FINANCIAL DATA Year Ended December 31, ($ in thousands, except share and per share data) 2023 2022 2021 Income Statement Data: Interest income $ 121,665 $ 88,212 $ 64,158 Interest expense 52,978 11,301 3,132 Net interest income 68,687 76,911 61,026 Provision for credit losses 1,651 2,976 522 Noninterest income 14,181 17,619 16,017 Noninterest expense 47,726 44,830 35,865 Income before income taxes 33,491 46,724 40,656 Income tax expense 9,573 13,414 11,816 Net income 23,918 33,310 28,840 Per Share Data: Basic income per share $ 1.55 $ 2.15 $ 1.89 Diluted income per share 1.55 2.14 1.88 Book value per share 12.84 11.59 10.92 Shares of common stock outstanding 15,000,436 15,270,344 15,137,808 Performance Ratios: Return on average assets 1.13 % 1.74 % 1.83 % Return on average equity 13.05 19.57 18.90 Yield on total loans 6.33 5.25 4.94 Yield on average earning assets 5.96 4.79 4.23 Cost of average interest-bearing liabilities 4.10 1.22 0.42 Cost of deposits 2.70 0.65 0.22 Net interest margin 3.37 4.18 4.02 Efficiency ratio (1) 57.59 47.42 46.55 (1) Represent noninterest expense divided by the sum of net interest income and noninterest income. 58 As of December 31, ($ in thousands) 2023 2022 Balance Sheet Data: Gross loans $ 1,765,845 $ 1,678,292 Loans held for sale 1,795 44,335 Allowance for credit losses 21,993 19,241 Total assets 2,147,730 2,094,497 Total deposits 1,807,558 1,885,771 Shareholders’ equity 192,626 176,916 Asset Quality Data: Nonperforming loans to gross loans 0.34 % 0.18 % Allowance for credit losses to nonperforming loans 362 625 Allowance for credit losses to gross loans 1.25 1.15 Balance Sheet and Capital Ratios: Gross loans to deposits 97.69 % 89.00 % Noninterest-bearing deposits to deposits 28.92 37.20 Average equity to average total assets 8.62 8.88 Leverage ratio 9.57 9.38 Common equity tier 1 ratio 12.52 11.87 Tier 1 risk-based capital ratio 12.52 11.87 Total risk-based capital ratio 13.77 13.06 Critical Accounting Policies and Estimates Our accounting and reporting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) and conform to general practices within the industry in which we operate.
For the year ended December 31, 2023 compared to 2022 • Net interest income decreased to $68.7 million, a decrease of $8.2 million, or 10.7%, from $76.9 million. • Net income was $23.9 million or $1.55 per diluted common share, a decrease of $9.4 million, or 28.2%, from $33.3 million or $2.14 per diluted common share. 53 SELECTED FINANCIAL DATA Year Ended December 31, ($ in thousands, except share and per share data) 2024 2023 2022 Income Statement Data: Interest income $ 137,620 $ 121,665 $ 88,212 Interest expense 72,012 52,978 11,301 Net interest income 65,608 68,687 76,911 Provision for credit losses 2,757 1,651 2,976 Noninterest income 16,427 14,181 17,619 Noninterest expense 50,199 47,726 44,830 Income before income taxes 29,079 33,491 46,724 Income tax expense 8,010 9,573 13,414 Net income 21,069 23,918 33,310 Per Share Data: Basic income per share $ 1.39 $ 1.55 $ 2.15 Diluted income per share 1.39 1.55 2.14 Book value per share 13.83 12.84 11.59 Shares of common stock outstanding 14,819,866 15,000,436 15,270,344 Performance Ratios: Return on average assets 0.92 % 1.13 % 1.74 % Return on average equity 10.68 13.05 19.57 Yield on total loans 6.63 6.33 5.25 Yield on average interest-earning assets 6.26 5.96 4.79 Cost of average interest-bearing liabilities 4.74 4.10 1.22 Cost of deposits 3.48 2.70 0.65 Net interest margin 2.99 3.37 4.18 Efficiency ratio (1) 61.19 57.59 47.42 (1) Represent noninterest expense divided by the sum of net interest income and noninterest income. 54 As of December 31, ($ in thousands) 2024 2023 Balance Sheet Data: Gross loans $ 1,956,852 $ 1,765,845 Loans held for sale 4,581 1,795 Allowance for credit losses 24,796 21,993 Total assets 2,366,013 2,147,730 Total deposits 2,027,285 1,807,558 Shareholders’ equity 204,993 192,626 Asset Quality Data: Nonperforming loans to gross loans 0.40 % 0.34 % Allowance for credit losses to nonperforming loans 317 362 Allowance for credit losses to gross loans 1.27 1.25 Balance Sheet and Capital Ratios: Gross loans to deposits 96.53 % 97.69 % Noninterest-bearing deposits to deposits 24.91 28.92 Average equity to average total assets 8.63 8.62 Leverage ratio 9.27 9.57 Common equity tier 1 ratio 11.35 12.52 Tier 1 risk-based capital ratio 11.35 12.52 Total risk-based capital ratio 12.60 13.77 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.
Loans — Commercial and Industrial: Commercial and industrial loans totaled $121.0 million as of December 31, 2023, compared to $117.0 million as of December 31, 2022. We originated $63.3 million for the year ended December 31, 2023.
Loans — Commercial and Industrial: Commercial and industrial loans totaled $213.1 million as of December 31, 2024, compared to $121.0 million as of December 31, 2023. We originated $78.9 million for the year ended December 31, 2024.
We currently operate eight branches in Los Angeles and Orange Counties in California, one branch in Santa Clara, California, one branch in Carrollton, Texas and one branch in Las Vegas, Nevada. We have four loan production offices in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, and Lynnwood, Washington.
We currently operate eight branches in Los Angeles and Orange Counties in California, one branch in Santa Clara, California, one branch in Carrollton, Texas and one branch near Las Vegas, Nevada. We have five loan production offices in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, Lynnwood, Washington, and Fairfax, Virginia. Our results of operations depend primarily on our net interest income.
Financial institutions and markets promptly followed these adjustments, significantly increasing interest rate pricing on loans and deposits. While such adjustments are commonplace and tend to affect the banking industry as a whole, the pace and degree of these adjustments were nearly unprecedented, resulting in banks, including the Bank, experiencing substantial pressure on multiple fronts.
While such adjustments are commonplace and tend to affect the banking industry as a whole, the pace and degree of these adjustments have been nearly unprecedented, resulting in banks, including the Bank, experiencing substantial pressure on multiple fronts.
Interest income on loans increased $27.6 million to $110.5 million for the year 2023 compared with $82.9 million for the year 2022, primarily due to a $167 million increase in average balance of loans and a 108 basis point increase in average yield on loans. 65 Net interest margin was 3.37% for the year ended December 31, 2023, a 81 basis point decrease from 4.18% for the same period of 2022, primarily due to a 171 basis point decrease in net interest spread from the higher increase in average cost of interest-bearing deposits compared to the increase in average yield on loans and investments. 2022 Compared to 2021 Net interest income increased $15.9 million, or 26.0%, to $76.9 million for the year ended December 31, 2022 from $61.0 million for the same period of 2021, primarily due to higher interest income on loans.
Net interest margin was 3.37% for the year ended December 31, 2023, a 81 basis point decrease from 4.18% for the same period of 2022, primarily due to a 171 basis point decrease in net interest spread from the higher increase in average cost of interest-bearing deposits compared to the increase in average yield on loans and investments.
Real estate we acquire as a result of 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 when acquired, establishing a new cost basis. We had no OREO as of December 31, 2023 and 2022.
Nonperforming loans excluded the guaranteed portion of SBA loans of $16.3 million and $2.0 million as of December 31, 2024 and 2023, respectively. 71 Real estate we acquire as a result of foreclosure or by deed-in-lieu of foreclosure is classified as OREO until being sold, and is initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.
December 31, ($ in thousands) 2023 2022 Nonaccrual loans $ 6,082 $ 2,033 Past due loans 90 days or more and still accruing — — Total nonperforming loans (1) 6,082 2,033 OREO — — Total nonperforming assets $ 6,082 $ 2,033 Nonperforming loans to gross loans 0.34 % 0.12 % Nonperforming assets to total assets 0.28 % 0.10 % Allowance for credit losses to nonperforming loans 362 % 946 % (1) Excludes guaranteed portion of SBA loans of $2.0 million and $1.0 million as of December 31, 2023 and 2022, respectively.
($ in thousands) December 31, 2024 December 31, 2023 Nonaccrual loans $ 7,820 $ 6,082 Past due loans 90 days or more and still accruing — — Total nonperforming loans (1) 7,820 6,082 Other real estate owned 1,237 — Total nonperforming assets $ 9,057 $ 6,082 Nonperforming loans to gross loans 0.40 % 0.34 % Nonperforming assets to total assets 0.38 0.28 Allowance for credit losses to nonperforming loans 317 362 (1) Excludes guaranteed portion of SBA loans of $16.3 million and $2.0 million as of December 31, 2024 and 2023, respectively.
The loan distribution table that follows sets forth our gross loans outstanding, and the percentage distribution in each category as of the dates indicated: December 31, 2023 December 31, 2022 ($ in thousands) Amount % of Total Amount % of Total Commercial real estate $ 885,585 50.2 % $ 842,208 50.1 % SBA—real estate 224,695 12.7 221,340 13.2 SBA—non-real estate 14,997 0.8 13,377 0.8 Commercial and industrial 120,970 6.9 116,951 7.0 Home mortgage 518,024 29.3 482,949 28.8 Consumer 1,574 0.1 1,467 0.1 Gross loans receivable 1,765,845 100.0 % 1,678,292 100.0 % Allowance for credit losses (21,993) (19,241) Loans receivable, net (1) $ 1,743,852 $ 1,659,051 (1) Includes net deferred loan costs and unamortized premiums of $140 thousand and $160 thousand as of December 31, 2023 and 2022, respectively.
The loan distribution table that follows sets forth our gross loans outstanding, and the percentage distribution in each category as of the dates indicated: December 31, 2024 December 31, 2023 ($ in thousands) Amount % of Total Amount % of Total Commercial real estate $ 980,247 50.1 % $ 885,585 50.2 % SBA—real estate 231,962 11.9 224,695 12.7 SBA—non-real estate 21,748 1.1 14,997 0.8 Commercial and industrial 213,097 10.9 120,970 6.9 Home mortgage 509,524 26.0 518,024 29.3 Consumer 274 — 1,574 0.1 Gross loans receivable 1,956,852 100.0 % 1,765,845 100.0 % Allowance for credit losses (24,796) (21,993) Loans receivable, net (1) $ 1,932,056 $ 1,743,852 (1) Includes net deferred loan costs (fees) and unamortized premiums (unaccreted discounts) of $(702) thousand and $140 thousand as of December 31, 2024 and 2023, respectively.
These securities (Fannie Mae, Ginnie Mae, and Freddie Mac) are guaranteed or sponsored by agencies of the U.S. government, and the issuers of the securities are of high credit quality. We believe that the net unrealized losses presented in the previous tables are temporary and no credit losses are expected.
These securities (Fannie Mae, Ginnie Mae, and Freddie Mac) are guaranteed or sponsored by agencies of the U.S. government, and the issuers of the securities are of high credit quality.
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.
Management believes that the estimate for the allowance for credit losses was reasonable and appropriate as of December 31, 2024. 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.
Under capital adequacy guidelines and the regulatory framework for “prompt corrective action”, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting policies. The capital amounts and classifications are subject to qualitative judgments by the federal banking regulators regarding components, risk weightings and other factors.
Under capital adequacy guidelines and the regulatory framework for “prompt corrective action”, the Bank must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting policies.
Government agencies or sponsored agency securities: Residential mortgage-backed securities $ 48,318 $ 43,877 $ (4,441) $ 55,189 $ 49,764 $ (5,425) Residential collateralized mortgage obligations 162,142 144,459 (17,683) 179,953 160,045 (19,908) Municipal securities - tax exempt 5,726 5,914 188 — — — Total available-for-sale debt securities $ 216,186 $ 194,250 $ (21,936) $ 235,142 $ 209,809 $ (25,333) Available-for-sale debt securities decreased $15.6 million, or 7.4%, to $194.3 million as of December 31, 2023 from $209.8 million as of December 31, 2022, primarily due to 24.4 million in principal paydowns, partially offset by purchases of $5.6 million in tax exempt municipal securities for the year ended December 31, 2023.
Government agencies or sponsored agency securities: Residential mortgage-backed securities $ 41,521 $ 37,076 $ (4,445) $ 48,318 $ 43,877 $ (4,441) Residential collateralized mortgage obligations 160,187 143,041 (17,146) 162,142 144,459 (17,683) Municipal securities - tax exempt 5,830 5,792 (38) 5,726 5,914 188 Total available-for-sale debt securities $ 207,538 $ 185,909 $ (21,629) $ 216,186 $ 194,250 $ (21,936) Available-for-sale debt securities decreased $8.3 million, or 4.3%, to $185.9 million as of December 31, 2024 from $194.3 million as of December 31, 2023, primarily due to principal paydowns and maturity of $27.7 million, partially offset by security purchases of $19.1 million for the year ended December 31, 2024.
As of December 31, 2023 Actual (1) Regulatory Capital Ratio Requirements Minimum to be Considered "Well Capitalized" Regulatory Capital Ratio Requirements, including fully phased in Capital Conservation Buffer ($ in thousands) Amount Ratio Amount Ratio Amount Ratio Amount Ratio Total capital (to risk-weighted assets) Consolidated $ 229,544 13.77 % N/A N/A N/A N/A N/A N/A Bank 227,773 13.66 $ 133,353 8.00 % $ 166,691 10.00 % $ 175,025 10.50 % Tier 1 capital (to risk-weighted assets) Consolidated 208,707 12.52 N/A N/A N/A N/A N/A N/A Bank 206,936 12.41 100,014 6.00 133,353 8.00 141,687 8.50 CET1 capital (to risk-weighted assets) Consolidated 208,707 12.52 N/A N/A N/A N/A N/A N/A Bank 206,936 12.41 75,011 4.50 108,349 6.50 116,684 7.00 Tier 1 leverage (to average assets) Consolidated 208,707 9.57 N/A N/A N/A N/A N/A N/A Bank 206,936 9.49 87,207 4.00 109,008 5.00 87,207 4.00 (1) The capital requirements are only applicable to the Bank, and our ratios are included for comparison purpose. 81 As of December 31, 2022 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 $ 213,862 13.06 % N/A N/A N/A N/A N/A N/A Bank 211,981 12.94 $ 131,020 8.00 % $ 163,775 10.00 % $ 171,964 10.50 % Tier 1 capital (to risk-weighted assets) Consolidated 194,358 11.87 N/A N/A N/A N/A N/A N/A Bank 192,477 11.75 98,265 6.00 131,020 8.00 139,209 8.50 CET1 capital (to risk-weighted assets) Consolidated 194,358 11.87 N/A N/A N/A N/A N/A N/A Bank 192,477 11.75 73,699 4.50 106,454 6.50 114,642 7.00 Tier 1 leverage (to average assets) Consolidated 194,358 9.38 N/A N/A N/A N/A N/A N/A Bank 192,477 9.29 82,836 4.00 103,545 5.00 82,836 4.00 (1) The capital requirements are only applicable to the Bank, and our ratios are included for comparison purpose.
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. 75 As of December 31, 2023 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 $ 229,544 13.77 % N/A N/A N/A N/A N/A N/A Bank 227,773 13.66 $ 133,353 8.00 % $ 166,691 10.00 % $ 175,025 10.50 % Tier 1 capital (to risk-weighted assets) Consolidated 208,707 12.52 N/A N/A N/A N/A N/A N/A Bank 206,936 12.41 100,014 6.00 133,353 8.00 141,687 8.50 CET1 capital (to risk-weighted assets) Consolidated 208,707 12.52 N/A N/A N/A N/A N/A N/A Bank 206,936 12.41 75,011 4.50 108,349 6.50 116,684 7.00 Tier 1 leverage (to average assets) Consolidated 208,707 9.57 N/A N/A N/A N/A N/A N/A Bank 206,936 9.49 87,207 4.00 109,008 5.00 87,207 4.00 (1) The capital requirements are only applicable to the Bank, and our ratios are included for comparison purpose.
The following table presents our liquid assets and available borrowings as of December 31, 2023 and 2022: ($ in thousands) December 31, 2023 December 31, 2022 % Change Liquid assets: Cash and cash equivalents $ 91,216 $ 82,972 9.9 % AFS debt securities 194,250 209,809 (7.4) Liquid assets $ 285,466 $ 292,781 (2.5) % Liquid assets to total deposits 15.8 % 15.5 % Available borrowings: FHLB $ 363,615 $ 440,358 (17.4) % Federal Reserve Bank 182,989 175,605 4.2 Pacific Coast Bankers Bank 50,000 50,000 — Zions Bank 25,000 25,000 — First Horizon Bank 25,000 24,950 0.2 Total available borrowings $ 646,604 $ 715,913 (9.7) % Total available borrowings to total deposits 35.8 % 38.0 % Liquid assets and available borrowings to total deposits 51.6 % 53.5 % The following tables summarizes short- and long-term material cash requirements as of December 31, 2023, which we believe that we will be able to fund these obligations through cash generated from our operations and available alternative sources of funds: Material Cash Requirements ($ in thousands) Within One Year One to Three Years Three to Five Years After Five Years Indeterminable maturity (1) Total Deposits (1) $ 841,257 $ 43,952 $ 580 $ — $ 921,769 $ 1,807,558 Operating lease commitments 2,586 3,809 3,605 1,925 — 11,925 Advances from FHLB (2) 30,000 75,000 — — — 105,000 Commitments to fund investment for Low Income Housing Tax Credit 6,564 4,465 318 558 — 11,905 Total contractual obligations $ 880,407 $ 127,226 $ 4,503 $ 2,483 $ 921,769 $ 1,936,388 (1) Includes deposits with no defined maturity, such as noninterest-bearing demand, savings and money market.
The following table presents our liquid assets and available borrowings as of December 31, 2024 and 2023: 73 ($ in thousands) December 31, 2024 December 31, 2023 % Change Liquid assets: Cash and cash equivalents $ 134,943 $ 91,216 47.9 % AFS debt securities 185,909 194,250 (4.3) Liquid assets $ 320,852 $ 285,466 12.4 % Liquid assets to total deposits 15.8 % 15.8 % Available borrowings: FHLB $ 401,900 $ 363,615 10.5 % Federal Reserve Bank 215,115 182,989 17.6 Pacific Coast Bankers Bank 50,000 50,000 — Zions Bank 25,000 25,000 — First Horizon Bank 25,000 25,000 — Total available borrowings $ 717,015 $ 646,604 10.9 % Total available borrowings to total deposits 35.4 % 35.8 % (0.4) % Liquid assets and available borrowings to total deposits 51.2 % 51.6 % (0.4) % The following tables summarizes short- and long-term material cash requirements as of December 31, 2024, which we believe that we will be able to fund these obligations through cash generated from our operations and available alternative sources of funds: Material Cash Requirements ($ in thousands) Within One Year One to Three Years Three to Five Years After Five Years Indeterminable maturity (1) Total Deposits (1) $ 1,173,240 $ 19,501 $ 521 $ — $ 834,023 $ 2,027,285 Operating lease commitments 1,999 4,569 3,233 546 — 10,347 Advances from FHLB (2) 95,000 — — — — 95,000 Commitments to fund investment for Low Income Housing Tax Credit 5,568 1,590 104 360 — 7,622 Total contractual obligations $ 1,275,807 $ 25,660 $ 3,858 $ 906 $ 834,023 $ 2,140,254 (1) Includes deposits with no defined maturity, such as noninterest-bearing demand, savings and money market.
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. 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.
We make critical accounting estimates, including the 55 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.
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. We manage our liquidity position to meet the daily cash flow needs of customers, while maintaining an appropriate balance between assets and liabilities to meet the return on investment objectives of our shareholders.
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 commercial community banking activities are operated through Open Bank, our banking subsidiary. We offer commercial banking services to small and medium-sized businesses, their owners and retail customers primarily in the Korean-American community. Our results of operations depend primarily on our net interest income.
Substantially all of our business activities consist of commercial community banking activities, which are conducted through Open Bank, our wholly owned banking subsidiary. 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.
The increase was primarily due to higher sales volume partially offset by lower average premium on loan sales. We sold $181.9 million of SBA loans with an average premium of 7.45% for the year ended December 31, 2022, compared to a sale of $110.3 million of SBA loans with an average premium of 11.04% in the same period of 2021.
Gain on sale of loans was $8.3 million for the year ended December 31, 2024, compared to $7.8 million for the same period of 2023, an increase of $470 thousand, or 6.0%. The increase was primarily due to a higher average sales premium rate, primarily offset by a lower sold amount in SBA loans.
Year Ended December 31, Change 2023 vs. 2022 Change 2022 vs. 2021 ($ in thousands) 2023 2022 2021 Interest income $ 121,665 $ 88,212 $ 64,158 $ 33,453 $ 24,054 Interest expense 52,978 11,301 3,132 41,677 8,169 Net interest income 68,687 76,911 61,026 (8,224) 15,885 Provision for credit losses 1,651 2,976 522 (1,325) 2,454 Noninterest income 14,181 17,619 16,017 (3,438) 1,602 Noninterest expense 47,726 44,830 35,865 2,896 8,965 Income before income tax expense 33,491 46,724 40,656 (13,233) 6,068 Income tax expense 9,573 13,414 11,816 (3,841) 1,598 Net income $ 23,918 $ 33,310 $ 28,840 $ (9,392) $ 4,470 Net Interest Income The management of interest income and expense is fundamental to our financial performance.
The decrease was primarily due to a $8.2 million decrease in net interest income, a $3.4 million decrease in noninterest income and a $2.9 million increase in noninterest expense, offset by a $3.8 million decrease income tax expense and a $1.3 million decrease in provision for credit losses. 56 Year Ended December 31, ($ in thousands) 2024 2023 2022 $ Change 2024 vs. 2023 $ Change 2023 vs. 2022 Interest income $ 137,620 $ 121,665 $ 88,212 $ 15,955 $ 33,453 Interest expense 72,012 52,978 11,301 19,034 41,677 Net interest income 65,608 68,687 76,911 (3,079) (8,224) Provision for credit losses 2,757 1,651 2,976 1,106 (1,325) Noninterest income 16,427 14,181 17,619 2,246 (3,438) Noninterest expense 50,199 47,726 44,830 2,473 2,896 Income before income tax expense 29,079 33,491 46,724 (4,412) (13,233) Income tax expense 8,010 9,573 13,414 (1,563) (3,841) Net income $ 21,069 $ 23,918 $ 33,310 $ (2,849) $ (9,392) Net Interest Income The management of interest income and expense is fundamental to our financial performance.
Occupancy and equipment expense for the year ended December 31, 2022 was $6.0 million, compared to $5.2 million for the same period of 2021, an increase of $751 thousand, or 14.4%.
Salaries and employee benefits for the year ended December 31, 2023 was $29.6 million, compared to $27.2 million for the same period of 2022, an increase of $2.4 million, or 8.8%.
For the year ended December 31, 2023, we originated $65.0 million of home mortgage loans and purchased $11.2 million of home mortgage loans from third party mortgage originators. Loan Servicing As of December 31, 2023 and 2022, we serviced $707.4 and $702.1 million, respectively, of SBA loans for others.
There was no home mortgage loan purchase from third party mortgage originators for the same period. Loan Servicing As of December 31, 2024 and 2023, we serviced $700.9 million and $707.4 million, respectively, of SBA loans for others.
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.
Nonperforming loans include non-accrual loans, loans past due 90 days or more and still accruing interest, and loans modified under troubled debt restructurings.
The decrease was primarily due to a $8.2 million decrease in net interest income, a $3.4 million decrease in noninterest income and a $2.9 million increase in noninterest expense, offset by a $3.8 million decrease income tax expense and a $1.3 million decrease in provision for credit losses.
The decrease, driven primarily by the ongoing economic uncertainties and the related unpredictability of market interest rates, was primarily due to a $3.1 million decrease in net interest income and a $2.5 million increase in noninterest expense, offset by a $2.2 million increase in noninterest income and a $1.6 million decrease in income tax expense.
Our short-term and long-term liquidity requirements are primarily met through cash flow from operations, redeployment of prepaying and maturing balances in our loan and investment portfolios, and increases in customer deposits. Other alternative sources of funds will supplement these primary sources to the extent necessary to meet additional liquidity requirements on either a short-term or long-term basis.
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.
Banking Economy and Recent Developments Beginning in late 2021, the Federal Reserve Board Open Markets Committee, which strives to manage benchmark interest rates in the United States, began a series of upward adjustments to the “discount rate” for short-term borrowings in response to perceived increases in inflationary pressures.
Banking Economy and Recent Developments In recent periods, our earnings have been affected by a series of fluctuations in the “discount rate” for short-term borrowings updated by the Federal Reserve Board Open Markets Committee in response to perceived inflationary pressures.
Service charges on deposit was $2.1 million for the year ended December 31, 2023, compared to $1.7 million for the same period of 2022, an increase of $448 thousand or 26.7%, primarily due to an increase in deposit analysis fees from an increase in the number of analysis accounts. 67 2022 Compared to 2021 The following table sets forth the various components of our noninterest income for the years ended December 31, 2022 and 2021: Year Ended December 31, ($ in thousands) 2022 2021 $ Change % Change Noninterest income: Service charges on deposit $ 1,675 $ 1,562 $ 113 7.2 % Loan servicing fees, net of amortization 2,416 1,953 463 23.7 Gain on sale of loans 12,285 11,313 972 8.6 Other income 1,243 1,189 54 4.5 Total noninterest income $ 17,619 $ 16,017 $ 1,602 10.0 % Noninterest income for the year ended December 31, 2022 was $17.6 million, an increase of $1.6 million, or 10.0%, compared to $16.0 million for the same period of 2021.
Other sources of noninterest income include service charges on deposit. 2024 Compared to 2023 The following table sets forth the various components of our noninterest income for the years ended December 31, 2024 and 2023: Year Ended December 31, ($ in thousands) 2024 2023 $ Change % Change Noninterest income: Service charges on deposits $ 3,261 $ 2,123 $ 1,138 53.6 % Loan servicing fees, net of amortization 2,898 2,449 449 18.3 Gain on sale of loans 8,313 7,843 470 6.0 Other income 1,955 1,766 189 10.7 Total noninterest income $ 16,427 $ 14,181 $ 2,246 15.8 % 62 Noninterest income for the year ended December 31, 2024 was $16.4 million, an increase of $2.2 million, or 15.8%, compared to $14.2 million for the same period of 2023, primarily due to increases in service charge on deposits, gain on sale of loans and loan servicing fees.
The following table show the composition of deposits by type as of the dates presented: December 31, 2023 December 31, 2022 ($ in thousands) Amount Percent Amount Percent Noninterest-bearing demand $ 522,751 28.9 % $ 701,584 37.2 % Interest-bearing: Money market and others 399,018 22.1 526,321 27.9 Time deposits (more than $250) 433,892 24.0 356,197 18.9 Time deposits ($250 or less) 451,897 25.0 301,669 16.0 Total interest-bearing 1,284,807 71.1 1,184,187 62.8 Total deposits $ 1,807,558 100.0 % $ 1,885,771 100.0 % 78 The following tables set forth the maturity of time deposits as of December 31, 2023: Maturity Within: ($ in thousands) Three Months Three to Six Months Six to 12 Months After 12 Months Total Time deposits (more than $250) $ 177,329 $ 75,343 $ 178,953 $ 2,267 $ 433,892 Time deposits ($250 or less) 94,692 131,152 183,788 42,265 451,897 Total time deposits $ 272,021 $ 206,495 $ 362,741 $ 44,532 $ 885,789 Other than deposits, we also utilized FHLB advances as a supplementary funding source to finance our operations.
The following table show the composition of deposits by type as of the dates presented: December 31, 2024 December 31, 2023 ($ in thousands) Amount Percent Amount Percent Noninterest-bearing demand $ 504,928 24.9 % $ 522,751 28.9 % Interest-bearing: Money market and others 329,095 16.2 399,018 22.1 Time deposits (greater than $250) 565,813 27.9 433,892 24.0 Time deposits ($250 or less) 627,449 31.0 451,897 25.0 Total interest-bearing 1,522,357 75.1 1,284,807 71.1 Total deposits $ 2,027,285 100.0 % $ 1,807,558 100.0 % The following tables set forth the maturity of time deposits as of December 31, 2024: Maturity Within: ($ in thousands) Three Months Three to Six Months Six to Twelve Months After Twelve Months Total Time deposits (greater than $250) $ 206,324 $ 149,639 $ 209,399 $ 451 $ 565,813 Time deposits ($250 or less) 202,931 123,639 281,308 19,571 627,449 Total time deposits $ 409,255 $ 273,278 $ 490,707 $ 20,022 $ 1,193,262 72 Other than deposits, we also utilized FHLB advances as a supplementary funding source to finance our operations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−1 removed14 unchanged
Biggest changeNet Interest Sensitivity Economic Value of Equity Sensitivity December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 +300 basis points 1.57 % 0.12 % (41.40) % (42.72) % +200 basis points 2.39 1.13 (18.75) (23.29) +100 basis points 1.54 0.97 (6.32) (9.11) -100 basis points (0.97) (0.94) 5.58 (1.78) -200 basis points (0.14) (0.70) 3.41 (7.31) -300 basis points 1.77 (3.24) (3.47) (18.42) Item 8.
Biggest changeNet Interest Sensitivity Economic Value of Equity Sensitivity December 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 +300 basis points 7.10 % 1.57 % (21.91) % (41.40) % +200 basis points 5.28 2.39 (11.24) (18.75) +100 basis points 2.80 1.54 (3.95) (6.32) -100 basis points (2.04) (0.97) 3.43 5.58 -200 basis points (2.29) (0.14) 1.76 3.41 -300 basis points (1.05) 1.77 (3.20) (3.47)
Conversely, a liability sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate 82 lower net interest income, as rates paid on our interest-bearing liabilities would reprice upward more quickly than rates earned on our interest-earning assets, thus compressing our net interest margin.
Conversely, a liability sensitive position refers to a balance sheet position in which an increase in short-term interest rates is expected to generate 76 lower net interest income, as rates paid on our interest-bearing liabilities would reprice upward more quickly than rates earned on our interest-earning assets, thus compressing our net interest margin.
Potential changes to our net interest income in hypothetical rising and declining rate scenarios calculated as of December 31, 2023 and 2022 are presented in the following table.
Potential changes to our net interest income in hypothetical rising and declining rate scenarios calculated as of December 31, 2024 and 2023 are presented in the following table.
Removed
Financial Statements and Supplementary Data. The Financial Statements required by this Item 8 is contained on pages F-1 through F-39 of this 10-K and are incorporated herein by reference. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.

Other OPBK 10-K year-over-year comparisons