OP BancorpOPBK

OP Bancorp Income Taxes Disclosure

10-KFiled Mar 13, 20263 min read
Income Taxes
The following table presents the components of income taxes expense (benefit) from continuing operations for the years ended December 31, 2025, 2024 and 2023. The Company conducts operations solely in the U.S. and does not have any foreign operations; accordingly, the Company does not have pretax income or income tax expense related to foreign jurisdictions:
Year Ended December 31,
($ in thousands)202520242023
Current income tax expense:
Federal$6,712 $6,610 $6,238 
State2,899 3,000 3,332 
Total current income tax expense9,611 9,610 9,570 
Deferred income tax expense (benefit):
Federal(91)(982)217 
State172 (618)(214)
Total deferred income tax expense (benefit)81 (1,600)3 
Total income tax expense$9,692 $8,010 $9,573 
The following table presents a reconciliation of the applicable statutory U.S. federal income tax rate to the effective tax rate for the years ended December 31, 2025, 2024 and 2023:
Year Ended December 31,
2025
2024 (1)
2023 (1)
AmountPercent
Amount
Percent
Amount
Percent
Federal statutory income tax rate
$7,419 21.0 %$6,107 21.0 %$7,033 21.0 %
State and local income taxes, net of federal income tax effect (2)
2,490 7.0 2,255 7.8 2,696 8.0 
Tax credits, net of amortization (3)
(215)(0.6)(201)(0.7)(105)(0.3)
Nontaxable or nondeductible items7 0.0 54 0.2 64 0.2 
Other
(9)0.0 (205)(0.7)(115)(0.3)
Total$9,692 27.4 %$8,010 27.6 %$9,573 28.6 %
(1)Prior periods were retrospectively presented in accordance with ASU 2023-09.
(2)State tax in California made up the majority (greater than 50 percent) of the tax effect in this category.
(3)Includes impacts of affordable housing tax credit investments.
The significant components of deferred tax assets and liabilities as of December 31, 2025 and 2024 are reflected in the following table:
December 31,
($ in thousands)20252024
Deferred tax assets:
Organizational costs$13 $15 
Allowance for credit losses7,981 7,331 
Loans held for sale235 108 
Stock-based compensation103 574 
Accrued compensation295 322 
Lease liability3,188 2,323 
State taxes619 645 
Net unrealized loss on AFS debt securities3,854 6,394 
Net unrealized loss on swap241 75 
Nonaccrual loan interest income— 224 
Other177 242 
Total deferred tax assets16,706 18,253 
Deferred tax liabilities:
Loan origination costs(795)(388)
Depreciation(932)(498)
Right of use asset(2,512)(2,192)
Other(29)(282)
Total deferred tax liabilities(4,268)(3,360)
Net deferred tax asset$12,438 $14,893 
A valuation allowance for deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and tax planning strategies which will create taxable income during the periods in which those temporary differences become deductible. Management reevaluated all positive and negative evidence that existed and concluded all deferred tax assets are realizable. Therefore, no valuation allowance was necessary as of December 31, 2025 and 2024. There were no interest or penalties recognized as a component of Income tax expense in the years ended December 31, 2025 or 2024.

The Company is subject to U.S. Federal income tax as well as various state taxing jurisdictions. The Company is no longer subject to examination by Federal taxing authorities for tax years prior to 2022 and for state and local taxing authorities for tax years prior to 2021.
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Historical Timeline

Fiscal YearFiled
2025Mar 13, 2026Showing above
2024Mar 28, 2025
2022Mar 16, 2023
2021Mar 18, 2022

About Income Taxes Disclosures

The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.

Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.

Other Available Disclosures

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