OP Bancorp Boosts Dividend on Strong Q1 Growth Amid CRE Scrutiny

LOS ANGELES, CA – April 23, 2026 – OP Bancorp (NASDAQ: OPBK), the parent company of Open Bank, announced robust first-quarter earnings for 2026, delivering a 30% year-over-year increase in net income and rewarding shareholders with a significant dividend hike. The results paint a picture of a resilient institution successfully expanding its balance sheet, though they also reflect the nuanced challenges facing the regional banking sector, particularly within commercial real estate.

The Los Angeles-based bank reported a net income of $7.2 million, or $0.48 per diluted share, for the quarter ending March 31. This marks a 3% increase from the previous quarter and a substantial leap from the $5.56 million, or $0.37 per share, recorded in the same period last year. Underscoring this performance, the company's board declared a quarterly cash dividend of $0.14 per share, a 17% increase from the prior quarter, signaling strong confidence in its financial footing and future earnings power.

“We continued to deliver strong results that highlight the strength and resilience of our Company,” said Sang K. Oh, President and Chief Executive Officer, in the earnings release. “Revenue grew steadily, supported by continued loan and deposit growth, along with higher noninterest income from increased gains on loan sales. Our disciplined expense management further enhanced performance, and overall credit quality remained sound and manageable with low net charge-offs.”

Navigating a Complex Economic Landscape

OP Bancorp's performance comes against a backdrop of a complex and bifurcated economy across its key operating regions in California, Texas, and Nevada. While the Dallas metropolitan area shows continued resilience, particularly in its industrial real estate sector, economic forecasts for California and Nevada project a more mixed environment. California's economy, for instance, is seeing a split between a booming tech sector and struggling traditional industries, while Nevada's tourism-dependent economy faces a potential slowdown.

Within this environment, Open Bank achieved steady growth. Average loans grew 1% to $2.23 billion and average deposits increased 2% to $2.3 billion compared to the fourth quarter of 2025. Year-over-year, total deposits were up a solid 6% to $2.33 billion. This growth demonstrates the bank's ability to attract and retain customers through its community-focused model, which serves small- to medium-sized businesses with a particular emphasis on Korean and other Asian communities.

However, the bank was not immune to broader interest rate pressures. Net interest income, while up 18% from the prior year to $20.5 million, saw a slight 2% dip from the previous quarter. This led to a net interest margin (NIM) contraction of 6 basis points to 3.19% compared to Q4 2025. The decline was primarily attributed to lower yields on new and repriced loans following federal funds rate cuts in 2025, a trend affecting many financial institutions. This pressure was partially offset by a corresponding 14-basis-point reduction in the cost of interest-bearing deposits, showcasing proactive liability management.

A Closer Look at Credit and Commercial Real Estate

While the bank's overall credit quality was described as manageable, the report highlighted an uptick in nonperforming assets that warrants closer inspection. Nonperforming loans increased by 30% from the prior quarter to $18.3 million, representing 0.82% of gross loans, up from 0.64% at the end of 2025.

The company attributed the bulk of this increase to a single, isolated $4.1 million Commercial Real Estate (CRE) relationship that migrated to nonaccrual status during the quarter. According to the report, this loan is in active resolution and is expected to be fully paid off by the second quarter of 2026. This specific context is crucial, as it suggests the issue is contained rather than indicative of a systemic portfolio-wide problem.

Nonetheless, the development occurs as the broader CRE market navigates a period of stabilization and uncertainty. The market is experiencing a distinct “flight to quality,” where premium Class A properties retain value while lower-tier assets face pressure. The April 2026 Federal Reserve Beige Book noted that while CRE markets showed some improvement, nonresidential construction had receded slightly, and some banks reported a slight increase in nonperforming loans. OP Bancorp's allowance for credit losses on loans remained stable at 1.27% of gross loans, a reserve level management deems adequate to absorb potential future losses.

Noninterest Income and Niche Strategy Shine

A standout component of OP Bancorp's successful quarter was its noninterest income, which surged 18% from the previous quarter to $4.0 million. The primary driver was a 30% increase in gains on the sale of loans, which reached $2.05 million. This was fueled by robust activity in the Small Business Administration (SBA) loan market, where the bank sold $32.2 million in loans at an attractive average premium of 8.27%.

This performance highlights the strength of Open Bank's niche strategy. Its deep ties within small business communities across its footprint in California, Texas, and Nevada position it well to originate and service SBA loans. This capability provides a valuable, high-margin revenue stream that diversifies its earnings away from sole reliance on net interest income.

While this is a current strength, the sustainability of such gains is a key consideration for investors, as premiums on SBA loan sales can fluctuate based on secondary market demand and changes in government policy. The year-over-year comparison shows a more tempered view, with total noninterest income down 16% from Q1 2025, mainly due to lower service charges on deposits following the closure of certain currency exchange-related accounts in 2025.

Capital Strength and Shareholder Confidence

The most direct signal of the board's confidence was the 17% increase in the quarterly dividend. This move suggests a belief in the sustainability of the bank's earnings and its strong capital position. The bank's regulatory capital ratios remain robust, with a Common Equity Tier 1 (CET1) capital ratio of 10.82%, well above the levels required to be considered well-capitalized.

The company did not repurchase any shares during the first quarter under its existing buyback program. This decision, paired with the dividend hike, points to a deliberate capital allocation strategy. By prioritizing a higher, consistent cash return to shareholders while preserving capital, management may be positioning the bank to fund future organic growth or to maintain a formidable buffer against any economic headwinds.

With total assets growing 7% year-over-year to nearly $2.7 billion, OP Bancorp continues to demonstrate a clear growth trajectory. The bank’s ability to expand its loan and deposit base while improving efficiency and rewarding shareholders speaks to the effectiveness of its community-centric business model, even as it carefully monitors the evolving credit landscape.