OP Bancorp

Loans are considered delinquent when principal or interest payments are past due 30 days or more. Delinquent loans may remain in accrual status between 30 days and 90 days past due. Typically, the accrual of interest on loans is discontinued when principal or interest payments are 90 days past due or when, in the opinion of management, there is reasonable doubts as to collectability in the normal course of business. In limited circumstances, loans may remain on accrual status beyond 90 days past due if they are well-secured and in the process of collection and management expects full repayment of principal and interest. 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. Loans are restored to accrual status when loans become well-secured, and management believes full collectability of principal and interest is probable.

Nonperforming loans include loans that are 90 days past due and still accruing, loans accounted for on a non-accrual basis, and accruing restructured loans. Nonperforming assets consist of nonperforming loans plus OREO.

Nonperforming loans increased by $3.2 million, or 23% to $17.3 million as of June 30, 2026 from December 31, 2025. The increase was primarily driven by $5.5 million of loans migrating into nonaccrual loans, partially offset by paydowns, loan sales, payoffs totaling $2.6 million.

Real estate acquired through 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 at the time of acquisition, establishing a new cost basis. Subsequent declines in fair value are recognized through valuation allowance and charged to expense. As of both June 30, 2026 and December 31, 2025, the Company had no OREO.

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.

NM — Not Meaningful

(1)Excludes guaranteed portion of SBA loans of $30.5 million and $20.9 million as of June 30, 2026 and December 31, 2025, respectively.