OP Bancorp operates as the bank holding company for Open Bank that provides commercial banking services to small and medium-sized businesses, their owners and retail customers with a focus on the Korean-American community.
The company operates through 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 loan production offices in the Korean-American commun...
OP Bancorp operates as the bank holding company for Open Bank that provides commercial banking services to small and medium-sized businesses, their owners and retail customers with a focus on the Korean-American community.
The company operates through 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 loan production offices in the Korean-American communities in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, and Lynnwood, Washington.
The company’s lending activities are diversified and include commercial real estate, commercial and industrial, SBA, home mortgage, and consumer loans. The company generally lends in markets where it has a physical presence through its branch and loan production offices. The company attracts retail deposits through its branch network which offers a wide range of deposit products for business and consumer banking customers. The company offers a multitude of other products and services to its customers to complement its lending and deposit business. The company heavily invests in its Korean-American communities through its annual contributions to the Open Stewardship Foundation.
Strategies
The key elements of the company’s strategy are to leverage its franchise in the Korean-American communities it serve; focus on organic growth; intend to continue its strategy of opening and developing de novo branches particularly into Korean-American populated areas; expand and diversify its commercial lending; and preserve its asset quality through disciplined lending practices. o
Market Area
The company has branch in the downtown Los Angeles financial district, branch in the nearby fashion district, and branches in the Koreatown neighborhood. The company also operates branches in Gardena and Cerritos, located in Los Angeles County, California, a branch in Buena Park, located in Orange County, California, and a branch in northern California in Santa Clara. In addition, the company operates branch in Carrollton, Texas and one recently-opened branch in Las Vegas, Nevada. The economic base of these areas is heavily dependent on small- and medium-sized businesses. The company also operates loan production offices in Pleasanton, California, Atlanta, Georgia, Aurora, Colorado, and Lynnwood, Washington to support its SBA lending efforts.
Deposit Products
The company offers customers traditional retail deposit products through its branch network and the ability to access their accounts through online and mobile banking platforms. The company offers a variety of deposit accounts with a wide range of interest rates and terms, such as demand, savings, money market and time deposits, with the goal of attracting a wide variety of customers, including small- to medium-sized businesses. The company considers its core deposits, defined as all deposits except for time deposits exceeding $250,000, to be its primary and most valuable unding source for its lending business, and as of December 31, 2023, core deposits represented 76.0% of its total deposits. The company strives to retain an attractive deposit mix from both large and small customers and a broad market reach, which has resulted in its top 10 customers accounting for only 6.6% of all deposits as of December 31, 2023. The company typically requires, depending on the circumstances and the type of relationship, its borrowers to maintain deposit accounts. Approximately 58.5% of the company’s borrowers have a deposit relationship with it. The company utilizes wholesale deposits to supplement its core retail deposits for funding purposes, including brokered accounts.
Lending Activities
The company’s 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 its business customers are engaged (e.g., manufacturing, retail, hospitality, etc.). The company principally focuses its lending activities on loans that it originates from borrowers located in its market areas. The company serves the credit needs of high-quality business and individual borrowers in the communities that it serves.
The company offers 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. The company also offers consumers residential mortgage loans, unsecured term loans, and unsecured lines of credit. Lending activities originate from the relationships and efforts of its bankers, with an emphasis on providing banking solutions tailored to meet its customers’ needs while maintaining its underwriting standards.
The company provides a variety of loans to meet its customers’ needs.
Commercial Real Estate Loans: The company offers commercial real estate loans collateralized by real estate, which may be owner occupied or non-owner occupied real estate. 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.
The company requires its commercial real estate loans to be secured. The company generally obtains a personal guarantee from responsible parties. The company’s commercial real estate loans are secured by professional office buildings, shopping centers, manufacturing facilities, and special purpose properties, such as restaurants, retail operations and service stations. The company originates both fixed- and adjustable-rate loans with terms up to 25 years. Fixed-rate loans have provisions that allow the company to call the loan after five to seven years.
SBA Loans: The company offers SBA loans for qualifying businesses for loan amounts up to $5 million. The bank primarily extends SBA loans known as SBA 7(a) loans and SBA 504 loans. SBA 7(a) loans are typically extended for working capital needs, purchase of inventory, purchase of machinery and equipment, debt refinance, business acquisitions, start-up financing or to purchase or construct owner-occupied commercial property. SBA 7(a) loans are typically term loans with maturities up to 10 years for loans not secured by real estate and up to 25 years for real estate secured loans. SBA loans are fully amortizing with monthly payments of principal and interest. SBA 7(a) loans are typically floating rate loans that are secured by business assets and/or real estate.
The company is generally able to sell the guaranteed portion of the SBA 7(a) loans in the secondary market at a premium, while earning servicing fee income on the sold portion over the remaining life of the loan. The company originates SBA loans through its branch staff, loan production officers, marketing officers and SBA brokers.
All of its SBA loans are originated through the company’s SBA Loan Department. The SBA Loan Department is staffed by loan officers who provide assistance to qualified businesses. The bank has been designated as an SBA Preferred Lender, which is the highest designation awarded by the SBA. This designation generally facilitates a more efficient marketing and approval process for SBA loans. The company has attained SBA Preferred Lender status nationwide.
Commercial and Industrial Loans: The company has significant expertise in the small- to medium-sized commercial and industrial lending market, including trade finance loans. The company provides a mix of variable and fixed rate commercial and industrial loans. The loans are typically made to small- and medium-sized manufacturing, wholesale, retail and service businesses for various needs, including working capital needs, business expansions and for international trade financing. The company extends commercial business loans on an unsecured and secured basis working capital, accounts receivable and inventory financing, machinery and equipment purchases, and other business purposes.
The company’s trade finance unit supplies financial needs to many of its commercial and industrial loan customers. The unit provides, international letters of credit, SWIFT, and export advice. The company’s trade finance unit has a correspondent relationship with many of the largest banks in South Korea. All of the company’s international letters of credit, SWIFT, and export advice are denominated in U.S. dollars.
Mortgage Warehouse Lines of Credits: The company offers mortgage warehouse lines of credit (WHLOC) for financing mortgage loans to non-bank third party mortgage originators (TPO). These loans are intended to finance 1 to 4-unit residential properties. Each advance against the WHLOC is collateralized by an executed mortgage note. TPO sells mortgage notes on the secondary market to investors that may include banks, correspondents, aggregators or Government Sponsored Enterprise (GSE), with the proceeds of those secondary market sales flowing directly to Open Bank to repay that specific loan advance. Typically, the mortgage notes are sold to an investor within a short period of time and are subject to various curtailment schedules.
Home Mortgage Loans: The company originates residential real estate loans collateralized by owner occupied and non-owner occupied properties located in its market areas enabling borrowers to purchase or refinance existing homes. The company offers adjustable-rate mortgage loans with the interest rate fixed for the first five years, followed by rate adjustments each year with terms up to 30 years. The company originates home loans directly through its retail branch network and through its correspondent lender network. The company also purchases 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. In connection with such loans, the company retains 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.
While home mortgage loans are normally originated with up to 30-year terms, such loans typically remain outstanding for substantially shorter periods of time because borrowers often prepay their loans in full either upon sale of the underlying property pledged as security or upon refinancing the original loan. In addition, all of the mortgage loans in the company’s 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.
Consumer Loans: The company offers 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. Consumer loans entail greater risk than do residential real estate loans because they are unsecured. Consumer loan collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be adversely affected by job loss, divorce, illness or personal bankruptcy. Furthermore, the application of various federal and state laws may limit the amount which can be recovered on such loans.
Investment Activities
AS of December 31, 2023, the company’s investment portfolio included U.S. Government agencies or sponsored agency securities, such as residential mortgage-backed securities and residential collateralized mortgage obligations; and municipal securities - tax exempt.
Other Products and Services
The company offers banking products and services that are competitively priced with a focus on convenience and accessibility. The company offers a full suite of online banking solutions, including access to account balances, online transfers, online bill payment and electronic delivery of customer statements, mobile banking solutions for iPhone and Android phones, including remote check deposit with mobile bill pay. The company offers ATMs and banking by telephone, mail and personal appointment. The company offers debit cards with no ATM surcharges or foreign ATM fees for checking customers. The company also offers direct deposit, cashier’s checks, person to person payments, wire transfer services and automated clearing house (ACH) services.
The company offers a full array of commercial cash management services designed to be competitive with banks of all sizes. Cash management services include balance reporting (including current day and previous day activity), transfers between accounts, wire transfer initiation, ACH origination and stop payments. Cash management deposit products consist of remote deposit capture, positive pay, zero balance accounts and sweep accounts.
Supervision and Regulation
Tax laws administered by the Internal Revenue Service and state taxing authorities, accounting rules developed by the Financial Accounting Standards Board (FASB), securities laws administered by the SEC and state securities authorities, anti-money laundering laws enforced by the U.S. Department of the Treasury, or Treasury, and mortgage related rules, including with respect to loan securitization and servicing by the U.S. Department of Housing and Urban Development and agencies, such as Fannie Mae and Freddie Mac, also impact its business.
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 also a bank holding company within the meaning of Section 1280 of the California Financial Code. Consequently, the company is subject to examination by, and may be required to file reports with, the California Department of Financial Protection and Innovation (DFPI).
If the company elects to become a financial holding company, the company and the bank must be well-capitalized, well-managed, and have a satisfactory CRA rating.
The bank’s deposit accounts are insured by the FDIC’s Deposit Insurance Fund (DIF) to the maximum extent provided under federal law and FDIC regulations.
As an FDIC-insured institution, the bank is required to pay deposit insurance premium assessments to the FDIC.
The authority of the bank to extend credit to its directors, executive officers and principal shareholders, including their immediate family members and corporations and other entities that they control, is subject to substantial restrictions and requirements under the Federal Reserve’s Regulation O, as well as the Sarbanes-Oxley Act.
The bank had a CRA (the Community Reinvestment Act of 1977, as amended) rating of ‘satisfactory’ as of its most recent regulatory examination.
The company is 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).
The company is subject to a number of federal and state consumer protection laws that extensively govern its relationship with its customers. 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.
History
OP Bancorp was founded in 2005.
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