What changed in this filing

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Item 1. Business

2023-03-31 compared with 2022-03-31 · 157 added, 128 removed, 635 unchanged (31% of the section changed)

The disclosures set forth in this item are qualified by “Item 1A.

Risk Factors” below and the section captioned “Special Note Regarding Forward-Looking Statements” above and other cautionary statements set forth elsewhere in this report.

Risk Factors” below and the section captioned “Special Note Regarding Forward-Looking Statements” above and other cautionary statements set forth elsewhere in this Form 10-K.

BayCom is a bank holding company headquartered in Walnut Creek, California.

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The Company’s business activities generally are limited to passive investment activities and oversight of its investment in the Bank.

Accordingly, the information set forth in this report, including consolidated financial statements and related data, relate primarily to the Bank.

Accordingly, the information set forth in this Form 10-K, including consolidated financial statements and related data, relate primarily to the Bank.

Our principal objective is to continue to increase shareholder value and generate consistent earnings growth by expanding our commercial banking franchise through both strategic acquisitions and organic growth.

Since 2010, we have expanded our geographic footprint through nine strategic acquisitions.

Since 2010, we have expanded our geographic footprint through ten strategic acquisitions.

We believe our strategy of selectively acquiring and integrating community banks has provided us with economies of scale and improved our overall franchise efficiency.

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At December 31, 2022, our $2.0 billion total loan portfolio included $527.8 million, or 26.1%, of acquired loans (all of which were recorded to their estimated fair values at the time of acquisition), and the remaining $1.5 billion, or 73.9%, consisted of loans we originated.

During the last two years the Bank participated in the U.S.

Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), a guaranteed unsecured loan program enacted under the CARES Act to provide near-term relief to help small businesses impacted by COVID-19 sustain operations.

The PPP ended on May 31, 2021.

Under this program we began processing applications for loan forgiveness in the fourth quarter of 2020.

At December 31, 2021, there were 323 PPP loans outstanding totaling $69.6 million, as compared to 1,330 PPP loans totaling $135.6 million at December 31, 2020.

The profitability of our operations depends primarily on our net interest income after provision for loan losses, which is the difference between interest earned on interest earning assets and interest paid on interest bearing liabilities less provision for loan losses.

Our net income is also affected by other factors, including the provision for credit losses on loans, noninterest income and noninterest expense.

Our net income is also affected by other factors, including noninterest income and noninterest expense.

Our History and Growth.

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We believe we have a successful track record of selectively acquiring, integrating and consolidating community banks.

Since 2010, we have completed nine acquisitions with aggregate total assets of approximately $1.8 billion and total deposits of approximately $1.5 billion.

Since 2010, we have completed 10 acquisitions with aggregate total assets of approximately $2.3 billion and total deposits of approximately $1.9 billion.

We have sought to integrate the banks we acquire into our existing operational platform and enhance shareholder value through the creation of efficiencies within the combined operations.

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At the time of acquisition, GMB had approximately $130.9 million in total assets and $118.1 million in deposits.

Recent Developments.

In February 2022, we acquired PEB, the holding company for Pacific Enterprise Bank, which had one branch location located in Irvine, California.

At the time of acquisition, PEB had approximately $441.0 million in assets, $411.6 million in loans, $375.8 million in deposits and $61.4 million in stockholders’ equity.

In February 2022, we acquired Pacific Enterprise Bancorp (“PEB”), the holding company for Pacific Enterprise Bank, which had one branch location located in Irvine, California.

At the time of acquisition, PEB had approximately $446.1 million in total assets and $376.7 million in deposits.

We target our services to small and medium-sized businesses, professional firms, real estate professionals, nonprofit businesses, labor unions and related nonprofit entities and businesses and individual consumers.

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Seattle, Washington and Central New Mexico.

We believe this diverse geographic footprint provides us with access to low cost, stable core deposits in community markets that we can use to fund commercial loan growth in our metropolitan markets.

We believe this diverse geographic footprint provides us with access to low

cost, stable core deposits in community markets that we can use to fund commercial loan growth in our metropolitan markets.

We generally lend in markets where we have a physical presence through our branch offices.

A majority of our branches are located in the San Francisco Bay Area which includes the counties of Alameda, Contra Costa, Marin, San Francisco, San Joaquin, San Mateo, Santa Clara, Solano, and Sonoma, California.

We operate primarily in the San Francisco- Oakland-Hayward, and the San Jose-Sunnyvale-Santa Clara, California Metropolitan Statistical Areas (“MSA”) with additional operations in the Los Angeles-Long Beach-Anaheim, California MSA, with borrowers or properties located in Northern California comprising 35.4% and Southern California comprising 34.8% of our loan portfolio as of December 31, 2021.

We operate primarily in the San Francisco-Oakland-Hayward, and the San Jose-Sunnyvale-Santa Clara, California Metropolitan Statistical Areas (“MSA”) with additional operations in the Los Angeles-Long Beach-Anaheim, California MSA, with borrowers or properties located in San Francisco Bay Area comprising 34.4%, Northern California comprising 25.1% and Southern California comprising 9.4% of our loan portfolio as of December 31, 2022.

In addition, deposits located in California comprised 61.8% of total deposits as of December 31, 2022.

With a population of approximately 4.7 million, the San Francisco-Oakland-Hayward MSA represents the second most populous area in California and the twelfth largest in the United States.

With a population of approximately 4.6 million, the San Francisco-Oakland-Hayward MSA represents the third most populous area in California and the thirteenth largest in the United States.

In addition to its current size, the market also demonstrates key characteristics we believe provide the opportunity for additional growth, with a median household income of $116,005 versus a national average of $69,717, and the third highest population density in the nation.

The San Jose-Sunnyvale-Santa Clara MSA also demonstrates key characteristics that provide us growth opportunities, including a population of approximately 2 million and a median household income of $139,892.

The Los Angeles-Long Beach-Anaheim, California MSA, with over $13 million residents, is the largest MSA in California, the second largest MSA in the United States, and one of the most significant business markets in the world.

It is estimated that the greater Los Angeles area has a gross domestic product of approximately $1 trillion, which would rank it as the 18 th largest economy in the world.

The Los Angeles-Long Beach-Anaheim, California MSA, with approximately 13 million residents, is the largest MSA in California, the second largest MSA in the United States, and one of the most significant business markets in the world.

The economic base of the area is heavily dependent on small and medium-sized businesses, providing us with a market rich in potential customers.

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We serve the Denver MSA and the Colorado communities in Custer, Delta, and Grand counties through eleven branch offices.

As of December 31, 2021, borrowers or properties located outside of California in the states of Colorado, New Mexico and Washington represented 7.4%, 4.2% and 5.2% of our loan portfolio, respectively.

As of December 31, 2022, borrowers or properties located outside of California in the states of Colorado, New Mexico and Washington composed 4.8%, 2.5% and 4.3% of our loan portfolio, respectively.

As of December 31, 2022, deposits located outside of California in the states of Colorado, New Mexico and Washington comprised 16.2%, 8.5% and 7.9% of total deposits, respectively.

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We emphasize personalized “relationship banking,” where the relationship is predicated on ongoing client contact, client access to decision makers, and our understanding of the clients’ business, market and competition which allows us to better meet the needs of our clients.

During the year ended December 31, 2021, the Bank participated in the SBA PPP, a guaranteed unsecured loan program enacted under the CARES Act, enacted March 27, 2020, to provide near-term relief to help small businesses impacted by COVID-19 sustain operations.

The deadline for PPP loan applications to the SBA was initially August 8, 2020.

As of December 31, 2021, we had received SBA forgiveness for 1,794 PPP loans totaling $164.8 million resulting in 306 PPP loans remaining with an aggregate balance of $69.6 million.

As of December 31, 2020, we had received SBA forgiveness for 29 PPP loans totaling $5.9 million resulting in a remaining 1,330 PPP loans with an aggregate balance of $135.6 million.

At December 31, 2022, we had net loans of $2.0 billion, representing 80.4% of our total assets.

For additional information concerning our loan portfolio, see “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Comparison of Financial Condition at December 31, 2021 and 2020 — Loans”, contained in this report.

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Comparison of Financial Condition at December 31, 2022 and 2021 — Loans”, contained in this Form 10-K.

Concentrations of Credit Risk.

The largest portion of our loan portfolio represents lending conducted with businesses and individuals in the San Francisco Bay Area.

The largest portion of our loan portfolio represents lending conducted with businesses and individuals in Northern California, including the San Francisco Bay Area and Southern California.

Our loan portfolio consists primarily of commercial real estate loans (including multifamily) and construction loans, which totaled $1.7 billion and constituted 85.0% of total loans as of December 31, 2022.

Commercial and industrial loans, including PPP loans, totaled $230.2 million and constituted 13.8% of total loans as of December 31, 2021.

Commercial and industrial loans totaled $188.5 million and constituted 9.3% of total loans as of December 31, 2022.

Our commercial real estate loans are generally secured by first liens on real property.

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Each of the loans in these borrowing relationships is currently performing in accordance with the loan repayment terms as of December 31, 2022.

Loan Collateral

CRE Non-Owner

Borrower Type

Single Family

(Dollars in thousands)

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Commercial real estate investor

Loan Underwriting and Approval.

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The Bank’s lending and credit policies require management to regularly review the Bank’s loan portfolio so that the Bank can monitor the quality of its assets.

If during the ordinary course of business, management becomes aware that a borrower may not be able to meet the contractual payment obligations under a loan, then such policies require that the

loan be supervised more closely with consideration given to, among other things, placing the loan on non-accrual status, requiring additional allowance for loan losses, and (if appropriate) charging-off a part or all of the loan.

If during the ordinary course of business, management becomes aware that a borrower may not be able to meet the contractual payment obligations under a loan, then such policies require that the loan be supervised more closely with consideration given to, among other things, placing the loan on nonaccrual status, requiring additional allowance for loan losses, and (if appropriate) charging-off a part or all of the loan.

Potential problem loans are those loans that are currently accruing interest and are not considered impaired, but which we are monitoring because the financial information of the borrower causes us concern as to their ability to comply with their loan repayment terms.

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General economic factors affecting a borrower’s ability to repay include interest, inflation and unemployment rates, as well as other factors affecting a borrower’s clients, suppliers and employees.

The well- established financial institutions in our primary markets make proportionately more loans to medium-to- large-sized businesses than we originate.

The well-established financial institutions in our primary markets make proportionately more loans to medium-to-large-sized businesses than we

Many of our commercial loans are, or will likely be, made to small- to-medium-sized businesses that may be less able to withstand competitive, economic and financial pressures than larger borrowers.

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Currently, we maintain an in-house limit of $11.7 million for unsecured loans and $19.6 million for secured loans.

At December 31, 2021, there were five loans to an aggregate of five individuals or entities or related interests that exceeded these internal limits.

At December 31, 2022, there were seven loans to an aggregate of seven individuals or entities or related interests that exceeded these internal limits.

We provide a variety of loans to meet our clients’ needs.

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Preferred lender status is the highest designation awarded to lenders by the SBA, and accordingly, grants such lenders full lending authority to approve SBA loans.

The SBA 504 loan program is an economic development-financing program providing long-term, low down payment loans to businesses.

The SBA 504 loan program is an economic development-financing program providing long-term,

low down payment loans to businesses.

Typically, a SBA 504 project includes a loan secured from a private-sector lender, such as the Bank, with a senior lien, a loan secured from a CDC (funded by a 100% SBA-guaranteed debenture) with a junior lien covering up to 40% of the total cost, and a contribution of at least 10% equity from the borrower.

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At December 31, 2022, our commercial real estate loan portfolio included $107.6 million of loans originated under the SBA’s 504 loan program.

The Bank has sold, and may in the future sell, the guaranteed portion of certain of its SBA 7(a) loans in the secondary market.

The Company also offers commercial real estate loans under the SBA 7(a) loan program, which is described further under “Commercial and Industrial Loans’ below.

The Bank sells, from time to time, the guaranteed portion its SBA 7(a) loans in the secondary market.

The Bank bases its SBA 7(a) loan sales on the level of its SBA 7(a) loan originations, the premiums available in the secondary market for the sale of such loans, and general liquidity considerations of the Bank.

During 2021, the Bank originated $39.9 million in commercial real estate SBA 7(a) loans, of which $3.5 million represented the unguaranteed portion.

During 2022, the Bank originated $36.4 million in commercial real estate SBA 7(a) loans.

During 2022, the Bank sold $28.4 million of the guaranteed portion of its commercial real estate SBA 7(a) loans, for which it recognized a gain of $2.2 million.

At December 31, 2022, the Bank had $82.3 million of commercial real estate SBA 7(a) loans where the guaranteed portion totaling $61.7 million has not been sold.

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.

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The underwriting analysis also may include credit verification, reviews of appraisals, environmental hazards or reports, the borrower’s liquidity and leverage, management experience of the owners or principals, economic condition, industry trends and any guarantees, including SBA loan guarantees.

At December 31, 2021, $5.4 million of our commercial real estate loans had SBA guarantees.

We generally require personal guarantees from the principal owners of the property supported by a review by our management of the principal owners’ personal financial statements.

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The loan-to-value ratio as established by an independent appraisal typically will not exceed 80% at loan origination and is lower in most cases.

At December 31, 2021, the average loan size in our commercial real estate portfolio was approximately $1.0 million with a weighted average loan-to-value ratio of 49.3%.

At December 31, 2022, the average loan size in our commercial real estate portfolio was approximately $1.1 million with an estimated weighted average loan-to-value ratio of 45.5%.

Agriculture is a major industry in the Central Valley of California, one of our lending markets.

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The repayment is also subject to other economic and weather conditions, as well as market prices for agricultural products, which can be highly volatile.

the more common risks involved in agricultural lending, are weather conditions, disease, water availability and water distribution rights, which can be mitigated through multi-peril crop insurance.

Among the more common risks involved in agricultural lending, are weather conditions, disease, water availability and water distribution rights, which can be mitigated through multi-peril crop insurance.

Commodity prices also present a risk, which may be managed by the use of set price contracts.

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Multifamily residential

Automotive shops/car wash

Convalescent facility

Agricultural real estate

Agriculture real estate

Total commercial real estate loans

We currently target individual commercial real estate loans between $1.0 million and $5.0 million.

As of December 31, 2021, the largest commercial real estate loan had a net outstanding balance of $23.5 million and was secured by a first deed of trust on a retail strip center located in Sacramento, California.

The largest commercial real estate loan secured by multifamily property as of December 31, 2021, was a 32-unit apartment complex with a net outstanding principal balance of $11.3 million, located in Southern California.

As of December 31, 2022, the largest commercial real estate loan had a net outstanding balance of $26.8 million and was secured by a church located in San Diego, California.

The second largest commercial real estate loan had a net outstanding balance of $23.5 million and was secured by retail shopping center located in Sacramento, California.

Both of these loans were performing according to their respective loan repayment terms as of December 31, 2022.

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At December 31, 2022, we had $13.2 million in construction and land loans outstanding, representing 0.7% of total loans, with $5.3 million in undisbursed commitments.

The average loan size in our construction and land loan portfolio was approximately $147,000 at December 31, 2021, with a weighted average loan-to-value ratio of 51.4%.

The average loan size in our construction and land loan portfolio was approximately $235,000 at December 31, 2022, with an estimated weighted average loan-to-value ratio of 50.7%.

On a more limited basis, we also make land loans to developers, builders and individuals, to finance the commercial development of improved lots or unimproved land.

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Construction and land loans generally involve additional risks attributable to the fact that loan funds are advanced upon the security of a project under construction, and the project is of uncertain value prior to its completion.

Because of uncertainties inherent in estimating construction costs, the market value of the completed project and the effects of governmental regulation on real property, it can be difficult to accurately evaluate the total funds required to complete a project and the related loan-to-value ratio.

project and the related loan-to-value ratio.

As a result of these uncertainties, construction lending often involves the disbursement of substantial funds, with repayment dependent, in part, on the success of the ultimate project rather than the ability of a borrower or guarantor to repay the loan.

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At December 31, 2022, our one-to-four family loan portfolio, including home equity loans and lines of credit, totaled $110.6 million or 5.5% of total loans.

As of December 31, 2022, the one-to-family loan portfolio included one loan to a real estate investor, which had a net outstanding balance of $26.8 million, and was secured by a multi-unit residential property complex located in Atwater, California.

This loan was performing in accordance to their loan repayment terms as of December 31, 2022.

We do originate a limited amount of home equity loans and home equity lines of credit.

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We retain a valid lien on the real estate, obtain a title insurance policy that insures the property is free from encumbrances and require hazard insurance.

At December 31, 2021, home equity loans and lines of credit totaled $10.3 million, or 0.6% of total loans, of which $733,000 were secured by junior liens.

At December 31, 2022, home equity loans and lines of credit totaled $7.7 million, or 0.4% of total loans, of which $3.8 million were secured by junior liens.

Unfunded commitments on home equity lines of credit at December 31, 2022, totaled $8.7 million.

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Terms greater than five years may be appropriate in some circumstances, based upon the useful life of the underlying asset being financed or if some form of credit enhancement, such as an SBA guarantee is obtained.

The 7(a) program serves as the SBA's primary business loan program to help qualified small businesses obtain financing when they might not be eligible for business loans through normal lending channels.

The SBA 7(a) program serves as the SBA's primary business loan program to help qualified small businesses obtain financing when they might not be eligible for business loans through normal lending channels.

Loans made by the Bank under the SBA 7(a) program generally are made to small businesses to provide working capital or to provide funding for the purchase of businesses, real estate, or machinery and equipment.

These loans generally are secured by a combination of assets that may include equipment, receivables, inventory, business real property, and sometimes a lien on the personal residence of the borrower.

SBA 7(a) loans are all adjustable rate loans based upon the Wall Street Journal prime lending rate.

SBA 7(a) loans are all adjustable-rate loans based upon the Wall Street Journal

prime lending rate.

Loan proceeds under this program can be used for most business purposes including working capital, machinery and equipment, furniture and fixtures, land and building (including purchase, renovation and new construction), leasehold improvements and debt refinancing.

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During 2021, the Bank originated $14.6 million in commercial and industrial SBA 7(a) loans, of which $1.4 million represented the unguaranteed portion.

During 2021, the Bank sold $13.0 million of the guaranteed portion of its commercial and industrial SBA 7(a) loans, for which it recognized a gain of $1.3 million.

Commercial and industrial loans also include loans originated under the PPP, a specialized low-interest loan program funded by the SBA.

The Bank, as a qualified SBA lender, was authorized to originate PPP loans.

PPP loans have an interest rate of 1.0%, a two-year or five-year loan term to maturity, and principal and interest payments deferred until the lender receives the applicable forgiven amount or ten months after the end of the borrower’s loan forgiveness covered period.

During 2022, the Bank originated $17.8 million in commercial and industrial SBA 7(a) loans.

During 2022, the Bank sold $5.6 million of the guaranteed portion of its commercial and industrial SBA 7(a) loans, for which it recognized a gain of $502,000.

At December 31, 2022, the Bank had $19.7 million of commercial and industrial SBA 7(a) loans where the guaranteed portion totaling $14.8 million has not been sold.

Commercial and industrial loans also include loans originated under the U.S.

Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), which expired on May 31, 2021.

The Bank, as a qualified SBA lender, was authorized to originate loans under PPP to provide near-term relief to help small businesses impacted by COVID-19 sustain operations.

The SBA guarantees 100% of the PPP loans made to eligible borrowers.

The entire principal amount of the borrower's PPP loan, including any accrued interest, is eligible to be forgiven and repaid by the SBA if the borrower meets the PPP conditions.

As of December 31, 2021, we had received SBA forgiveness for 1,794 PPP loans totaling $164.8 million resulting in remaining 306 PPP loans with an aggregate balance of $69.6 million.

As of December 31, 2020, we had received SBA forgiveness for 29 PPP loans totaling $5.9 million resulting in a remaining 1,330 PPP loans with an aggregate balance of $135.6 million.

The Bank expects that the great majority of its remaining PPP borrowers will also seek full or partial forgiveness of their loan obligations.

For additional information regarding these loans, see Item 1A.

Risk Factors - “Risks Related to Our Lending - Loans originated under the SBA Paycheck Protection Program subject us to credit, forgiveness and guarantee risk.”

At December 31, 2022, there were 51 PPP loans outstanding totaling $11.1 million.

We also make agricultural operating loans, including loans to finance the purchase of machinery, equipment and breeding stock;

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As a result, the availability of funds for the repayment of agricultural operating loans may be substantially dependent on the success of the business itself and the general economic environment.

As of December 31, 2021, we had agricultural operating loans of $770,000 or 0.05% of total loans.

As of December 31, 2022, we had agricultural operating loans of $17.2 million or 1.0% of total loans.

As part of the PEB Merger, the Company acquired certain small business loans to borrowers qualified under the California Capital Access Program for Small Business, a state guaranteed loan program sponsored by the California Pollution Control Financing Authority (“CalCAP”).

PEB ceased originating loans under this loan program in 2017.

Under this loan program, the borrower, CalCAP and the participating lender contributed funds to a loss reserve account that is held in a demand deposit account at the participating lender.

The borrower contributions to the loss reserve account are attributed to the participating lender.

Losses on qualified loans are charged to this account after approval by CalCAP.

Under the program, if a loan defaults, the participating lender has immediate coverage of 100% of the loss.

The participating lender must return recoveries from the borrower, less expenses, to the loan loss reserve account.

The funds in the loss reserve account are the property of CalCAP, however, in the event that the participating lender leaves the program any excess funds, after all loans have been repaid or unenrolled from the program by the participating lender and provided there are no pending claims for reimbursement, are distributed to CalCAP and the participating lender based on their respective contributions to the loss reserve account.

Funds contributed by the participating lender to the loss reserve account are treated as a receivable from CalCAP and evaluated for impairment quarterly.

As of December 31, 2022, we had loans enrolled in this program totaling $26.3 million or 1.3% of total loans.

In addition, as successor to PEB, the Company was approved by the CalCAP, in partnership with the California Air Resources Board, to originate loans to California truckers in the On-Road Heavy-Duty Vehicle Air Quality Loan Program.

Under this loan program, CalCAP solely contributes funds to a loss reserve account that is held in a demand deposit account at the participating lender.

Losses are handled in the same manner as described above.

The funds are the property of CalCAP and are payable upon termination of the program.

When the loss reserve account balance exceeds the total associated loan balance, the excess is to be remitted to CalCAP.

As of December 31, 2022, we had loans enrolled in this program totaling $26.2 million or 1.3% of total loans.

In general, commercial and industrial loans may involve increased credit risk;

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For additional information concerning our loan portfolio, see “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Comparison of Financial Condition at December 31, 2021 and 2020 — Loans”, contained in this report.

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Comparison of Financial Condition at December 31, 2022 and 2021 — Loans and “Note 4 – Loans” in the Notes to Consolidated Financial Statements contained in “Item 8.

Financial Statements and Supplementary Data” of this Form 10-K.

Sources of Funds

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We employ client acquisition strategies to generate new account and deposit growth, such as client referral incentives, search engine optimization, targeted direct mail and email campaigns, in addition to conventional marketing initiatives and advertising.

While we do not actively solicit wholesale deposits for funding purposes and do not partner with deposit brokers, we do participate in the Certificate of Deposit Account Registry Service (“CDARS”) service via IntraFi Network (formerly known as Promontory Interfinancial Network) an as option for our clients to place funds.

Our goal is to cross-sell our deposit products to our loan clients.

While we do not actively solicit wholesale deposits for funding purposes and do not partner with deposit brokers, we do participate in the Certificate of Deposit Account Registry Service (“CDARS”) and the Insured Cash Sweep (“ICS”) money market product services via IntraFi Network (formerly known as Promontory Interfinancial Network) an as option for our clients to place funds.

Most reciprocal deposits are treated as core, non-brokered deposits up to the lesser of $5 billion or 20% of liabilities for a well-capitalized bank, such as the Bank.

We also participate in the ICS “One-Way Sell” program, pursuant to which we buy cost effective wholesale funding on customizable terms.

We also offer convenience-related services, including banking by appointment (before or after normal business hours on weekdays and on weekends), online banking services, access to a national automated teller machine network, extended drive-through hours, remote deposit capture, and courier service so that clients’ deposit and other banking needs may be served without the client having to make a trip to the branch.

Our full suite of online banking solutions including access to account balances, online transfers, online bill payment and electronic delivery of client statements, mobile banking solutions for iPhone and Android phones, including remote check deposit with mobile bill pay.

We offer debit cards with no ATM surcharges or foreign ATM fees for checking clients, plus night depository, direct deposit, cashier’s and travelers checks and letters of credit, as well as treasury management services, wire transfer services and automated clearing house (“ACH”) services.

remote deposit capture lock box, electronic bill payments wire transfers, direct deposits and automatic transfers) in addition to the traditional generation of deposit relationships performed in conjunction with our lending activities.

We offer debit cards with no ATM surcharges or foreign ATM fees for checking clients, plus night depository, direct deposit, cashier’s

and travelers checks and letters of credit, as well as treasury management services, wire transfer services and automated clearing house (“ACH”) services.

We have implemented deposit gathering strategies and tactics which have enabled us to attract and retain deposits utilizing technology to deliver high quality commercial depository (treasury management) services (e.g., remote deposit capture lock box, electronic bill payments wire transfers, direct deposits and automatic transfers) in addition to the traditional generation of deposit relationships performed in conjunction with our lending activities.

We offer a wide array of commercial treasury management services designed to be competitive with banks of all sizes.

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We provide an avenue for large depositors to maintain full insurance coverage by the Federal Deposit Insurance Corporation (“FDIC”) for all deposits up to $50.0 million.

Under an agreement with IntraFi Network, we participate in the CDARS and the Insured Cash Sweep (“ICS”) money market product.

Under an agreement with IntraFi Network, we participate in the CDARS and the ICS money market product.

These are deposit-matching programs which distribute excess balances on deposit with us across other participating banks.

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We also participate in the ICS One-Way Sell program, which allows us to buy cost effective wholesale funding on customizable terms.

At December 31, 2021, we had $12.5 million in reciprocal CDARS and $96.1 million in one-way CDARS and ICS deposits.

The Company discontinued its escrow services in 2021.

We offered escrow services on commercial transactions and facilitate tax-deferred commercial exchanges through the Bank’s division, Business Escrow Services (“BES”).

At December 31, 2022, we had $70.3 million and $56.3 million in reciprocal CDARS and ICS deposits, respectively.

At December 31, 2022, we had $78.7 million and $53.9 million in one-way off-balance sheet CDARS and ICS deposits, respectively.

We previously offered escrow services on commercial transactions and facilitated tax-deferred commercial exchanges through the Bank’s division, Business Escrow Services (“BES”).

This afforded us a low-cost core deposit base.

These deposits fluctuated as the sellers of the real estate have up to nine months to invest in replacement real estate to defer the income tax on the property sold.

Deposits related to BES totaled $1.7 million and $4.0 million at December 31, 2021 and December 31, 2020, respectively.

The Company discontinued its escrow services in 2021.

For additional information concerning our deposits, see “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Comparison of Financial Condition at December 31, 2021 and 2020 — Deposits” contained in this report.

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Comparison of Financial Condition at December 31, 2022 and 2021 — Deposits” and “Note 11 – Deposits” in the Notes to Consolidated Financial Statements contained in “Item 8.

Financial Statements and Supplementary Data” of this Form 10-K.

While deposits are the primary source of funds for our lending and investment activities and for general business purposes, we also use borrowings to supplement our supply of lendable funds, to meet deposit withdrawal requirements and to more efficiently leverage our capital position.

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The Bank has an approved secured borrowing facility with the FHLB for up to 25% of total assets for a term not to exceed five years under a blanket lien of certain types of loans.

At December 31, 2021, there were no FHLB borrowings outstanding, and based on pledged collateral, the Bank had $483.1 million of available credit capacity with the FHLB.

In addition to the availability of liquidity from the FHLB, the Bank maintained a short-term borrowing line of credit with the Federal Reserve Bank (“FRB”) of San Francisco, with available credit capacity of $69.6 million as of December 31, 2021 based on loans that qualify as collateral for the FRB line of credit.

At December 31, 2021, there were no FRB borrowings outstanding.

The Bank also has uncommitted Federal Funds lines with three corresponding banks as of December 31, 2021 totaling $65.0 million.

There were no amounts outstanding under these facilities at December 31, 2021.

On August 6, 2020, the Company issued and sold $65.0 million aggregate principal amount of 5.25% Fixed-to-Floating Rate Subordinated Notes due 2030 (the “Notes”) at a public offering price equal to 100% of the aggregate principal amount of the Notes.

At December 31, 2022, there were no FHLB advances outstanding, and based on pledged collateral, the Bank had $473.6 million of available credit capacity with the FHLB.

In addition to the availability of liquidity from the FHLB, the Bank maintained a short-term borrowing line of credit with the Federal Reserve Bank (“FRB”) of San Francisco based on PPP loans pledged as collateral.

This line was closed during 2022, with no FRB borrowings outstanding at December 31, 2022.

The Bank also has uncommitted Federal Funds lines with four corresponding banks.

Cumulative available commitments totaled $65.0 million at December 31, 2022.

There are no amounts outstanding under these facilities at December 31, 2022.

principal amount of the Notes.

The offering of the Notes closed on August 10, 2020.

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Commencing on September 15, 2025, the interest rate on the Notes resets quarterly to the three-month Secured Overnight Financing rate (“SOFR”) plus a spread of 521 basis points (5.21%), payable quarterly in arrears.

Interest on the Notes is payable semi-annually on June 15 and September 15 of each year through September 15, 2025 and quarterly thereafter on March 15, June 15, September 15 and December 15 of each year through the maturity date or early redemption date.

Interest on the Notes is payable semi-annually on March 15 and September 15 of each year through September 15, 2025 and quarterly thereafter on March 15, June 15, September 15 and December 15 of each year through the maturity date or early redemption date.

The Company, at its option, may redeem the Notes, in whole or in part, on any interest payment date on or after September 15, 2025, without a premium.

At December 31, 2021, we had $8.4 million aggregate principal (net of mark-to-market adjustments) of junior subordinated debentures issued in connection with the sale of trust preferred securities by two statutory business trusts assumed in our prior acquisitions.

At December 31, 2022, we had outstanding subordinate debt, net of costs to issue, totaling $63.7 million.

In connection with its previous acquisitions, the Company acquired junior subordinated deferrable interest debentures issued in connection with the sale of trust preferred securities by two statutory business trusts with stated maturity terms of 30 years.

At December 31, 2022, we had outstanding junior subordinated deferrable interest debentures, net of mark-to-market adjustments, totaling $8.5 million.

For additional information concerning our borrowings, see “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Comparison of Financial Condition at December 31, 2021 and 2020 — Borrowings” contained in this report.

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Comparison of Financial Condition at December 31, 2022 and 2021 — Borrowings” and “Note 12 – Other Borrowings”, “Note 13.

Junior Subordinated Deferrable Interest Debentures” and “Note 14 Subordinated Debt” in the Notes to Consolidated Financial Statements contained in “Item 8.

Financial Statements and Supplementary Data” of this Form 10-K.

In addition to loans, we make other investments that conform to our investment policy as set by our Board of Directors.

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The investment policy is reviewed annually by the Bank’s Board of Directors and Asset/Liability Management Committee, who ensure compliance to the policy and also approve any change to the policy.

The overall objectives of the investment policy are to maintain a portfolio of high quality investments to provide liquidity when loan demand is high, to assist in maintaining earnings when loan demand is low, and to maximize earnings while satisfactorily managing risk, including credit risk, reinvestment risk, liquidity risk and interest rate risk.

All securities transactions are reported to the Board of Directors on a monthly basis.

The overall objectives of the investment policy are to maintain a portfolio of high-quality investments to provide liquidity when loan demand is high, to assist in maintaining earnings when loan demand is low, and to maximize earnings while satisfactorily managing risk, including credit risk, reinvestment risk, liquidity risk and interest rate risk.

The policy dictates the criteria for classifying securities as either available for sale or held to maturity.

The policy permits investment in various types of liquid assets permissible under applicable regulations, which include U.S.

Treasury obligations, U.S.

Government agency obligations, some certificates of deposit of insured banks, mortgage backed and mortgage related securities, corporate notes and municipal bonds.

Investment in non-investment grade bonds and stripped mortgage-backed securities is not permitted under the policy.

For additional information concerning our investments, see “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Comparison of Financial Condition at December 31, 2021 and 2020 — Securities” contained in this report.

Management’s Discussion and Analysis of Financial Condition and Results of Operations — Comparison of Financial Condition at December 31, 2022 and 2021 — Securities” contained in this Form 10-K.

Supervision and Regulation

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As a bank holding company registered with the Federal Reserve, we are subject to comprehensive regulation and supervision by the Federal Reserve under the Bank Holding Company Act of 1956, as amended, and the regulations of the Federal Reserve.

As a California chartered bank, the Bank is subject to supervision, periodic examination, and regulation by the California Department of Financial Protection and Innovation (“DFPI”), previously known as the California Department of Business Oversight, and by the Federal Reserve as its primary federal regulator.

as its primary federal regulator.

The following discussion of particular statutes and regulations affecting BayCom and United Business Bank is only a brief summary and does not purport to be complete.

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The Bank is regularly examined by the Federal Reserve and the DFPI and must file periodic reports concerning its activities and financial condition with these banking regulators.

The Bank’s relationship with depositors and borrowers also is

regulated to a great extent by both federal and state law, especially in such matters as the ownership of deposit accounts and the form and content of mortgage and other loan documents.

The Bank’s relationship with depositors and borrowers also is regulated to a great extent by both federal and state law, especially in such matters as the ownership of deposit accounts and the form and content of mortgage and other loan documents.

Federal and state banking laws and regulations govern all areas of the operation of the Bank, including reserves, loans, investments, deposits, capital, issuance of securities, payment of dividends and establishment of branches.

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No institution may pay a dividend if it is in default on its federal deposit insurance assessment.

The FDIC has authority to increase insurance assessments, and any significant increases may have an adverse effect on the operating expenses and results of operations of the Company.

The Bank paid $580,000 in FDIC assessments for the year ending December 31, 2021.

Management cannot predict what assessment rates will be in the future.

In a banking industry emergency, the FDIC may also impose a special assessment.

Extraordinary growth in insured deposits during the first and second quarters of 2020 caused the DIF reserve ratio to decline below the statutory minimum of 1.35 percent as of June 30, 2020.

In September 2020, the FDIC Board of Directors adopted a Restoration Plan to restore the reserve ratio to at least 1.35 percent within eight years, absent extraordinary circumstances, as required by the Federal Deposit Insurance Act.

The Restoration Plan maintained the assessment rate schedules in place at the time and required the FDIC to update its analysis and projections for the DIF balance and reserve ratio at least semiannually.

In the semiannual update for the Restoration Plan in June 2022, the FDIC projected that the reserve ratio was at risk of not reaching the statutory minimum of 1.35 percent by September 30, 2028,

the statutory deadline to restore the reserve ratio.

Based on this update, the FDIC Board approved an Amended Restoration Plan, and concurrently proposed an increase in initial base deposit insurance assessment rate schedules uniformly by 2 basis points, applicable to all insured depository institutions.

In October 2022, the FDIC Board finalized the increase with an effective date of January 1, 2023, applicable to the first quarterly assessment period of 2023.

The revised assessment rate schedules are intended to increase the likelihood that the reserve ratio of the DIF reaches the statutory minimum level of 1.35 percent by September 30, 2028.

Any significant increases in insurance assessments may have an adverse effect on the operating expenses and results of operations of the Company.

The Bank paid $680,000 in FDIC assessments for the year ended December 31, 2022.

The FDIC also may prohibit any insured institution from engaging in any activity determined by regulation or order to pose a serious risk to the DIF.

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The information security program must be designed to ensure the security and confidentiality of client information, protect against any unanticipated threats or hazards to the security or integrity of such information, protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any client, and ensure the proper disposal of client and consumer information.

Each insured depository institution must also develop and implement a risk-based

response program to address incidents of unauthorized access to client information in client information systems.

Each insured depository institution must also develop and implement a risk-based response program to address incidents of unauthorized access to client information in client information systems.

If the FDIC determines that an institution fails to meet any of these guidelines, it may require an institution to submit to the FDIC an acceptable plan to achieve compliance.

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Tier 1 capital generally consists of CET1 and noncumulative perpetual preferred stock.

Tier 2 capital generally consists of other preferred stock and subordinated debt, which meet certain conditions, plus an amount of the allowance for loan and lease losses up to 1.25% of assets.

Tier 2 capital generally consists of other preferred stock and subordinated debt, which meet

certain conditions, plus an amount of the allowance for loan and lease losses up to 1.25% of assets.

Total capital is the sum of Tier 1 and Tier 2 capital.

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Our management decided not to adopt the CBLR as it would reduce the Bank’s excess capital.

The Financial Accounting Standards Board (“FASB”) has adopted a new accounting standard for U.S.

Generally Accepted Accounting Principles (“U.S.

GAAP”) referred to as Current Expected Credit Loss (“CECL”) that requires FDIC-insured institutions and their holding companies (banking organizations) to recognize credit losses expected over the life of certain financial assets.

The Financial Accounting Standards Board has adopted a new accounting standard for U.S.

Generally Accepted Accounting Principles referred to as Current Expected Credit Loss (“CECL”) that requires FDIC-insured institutions and their holding companies (banking organizations) to recognize credit losses expected over the life of certain financial assets.

CECL covers a broader range of assets than the current method of recognizing credit losses and generally results in earlier recognition of credit losses.

Upon adoption of CECL, a banking organization must

record a one-time adjustment to its credit loss allowances as of the beginning of the fiscal year of adoption equal to the difference, if any, between the amount of credit loss allowances under the current methodology and the amount required under CECL.

For a banking organization, implementation of CECL is generally likely to reduce retained earnings, and to affect other items, in a manner that reduces its regulatory capital.

This accounting standards is applicable to us effective January 1, 2023.

As of the implementation date, following sensitivity analyses and considering changes in economic conditions, credit quality of the loan portfolio and changes in interest rates, management estimates that our adoption of the CECL model will result in a $1 million to $3 million increase to our allowance for credit losses for loans.

Once finalized, the impact as a result of the adoption of this guidance will be recorded as a cumulative-effect, net of tax, adjustment to retained earnings effective January 1, 2023.

The magnitude of the change in the Company’s allowance for credit losses at the adoption date will depend upon the nature and characteristics of the portfolio at the adoption date, as well as macroeconomic conditions and forecasts at that time, other management judgements , and continued refinement and validation of the model and methodologies.

The federal banking regulators, including the Federal Reserve and FDIC, have adopted a rule that gives a banking organization the option to phase in over a three-year period the day-one adverse effects of CECL on its regulatory capital.

For additional information, see “Note 1 — Organization and Summary of Significant Accounting Policies – Recent Accounting Guidance Not Yet Effective” in the Notes to the Consolidated Financial Statements contained in “Item 8.

Financial Statements and Supplementary Data” of this Form 10-K.

Prompt Corrective Action.

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An institution that is not well capitalized is subject to certain restrictions on brokered deposits, including restrictions on the rates it can offer on its deposits generally.

To be considered adequately capitalized, an institution must have the minimum capital ratios described above.

considered adequately capitalized, an institution must have the minimum capital ratios described above.

Any institution which is neither well capitalized nor adequately capitalized is considered undercapitalized.

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The Bank believes that the guidelines are applicable to it, as it has a relatively high concentration in commercial real estate loans.

The Bank and its Board of Directors

have discussed the guidelines and believe that the Bank’s underwriting policies, management information systems, independent credit administration process, and monitoring of real estate loan concentrations are sufficient to address the guidelines.

The Bank and its Board of Directors have discussed the guidelines and believe that the Bank’s underwriting policies, management information systems, independent credit administration process, and monitoring of real estate loan concentrations are sufficient to address the guidelines.

Activities and Investments of Insured State-Chartered Financial Institutions.

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Federal law generally limits the activities and FDIC-insured equity investments of state-chartered banks to those that are permissible for national banks.

An insured state bank is not prohibited from, among other things, (1) acquiring or retaining a majority interest in a subsidiary, (2) investing as a limited partner in a partnership the sole purpose of which is direct or indirect investment in the acquisition, rehabilitation or new construction of a qualified housing project, provided that such limited partnership investments may not exceed 2% of the bank’s total assets, (3) acquiring up to 10% of the voting stock of a company that solely provides or re-insures directors’, trustees’ and officers’ liability insurance coverage or bankers’ blanket bond group insurance coverage for insured depository institutions, and (4) acquiring or retaining the voting shares of a depository institution if certain requirements are met.

depository institutions, and (4) acquiring or retaining the voting shares of a depository institution if certain requirements are met.

In addition, the FDIC is authorized to permit a state bank to engage in state-authorized activities or investments not permissible for national banks (other than non-subsidiary equity investments) if it meets all applicable capital requirements and it is determined that such activities or investments do not pose a significant risk to the DIF.

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Federal law further provides that no insured depository institution may make any capital distribution (which includes a cash dividend) if, after making the distribution, the institution would be “undercapitalized,” as defined in the prompt corrective action regulations.

In addition, under federal law, a Federal Reserve member bank, such as the Bank, may not declare or pay a dividend if the total of all dividends declared during the calendar year, including a proposed dividend, exceeds the sum of the Bank’s net income during the calendar year and the retained net income of the prior two calendar years, unless the dividend has been approved by the Federal Reserve.

In addition, under federal law, a Federal Reserve member bank, such as the Bank, may not declare or pay a

dividend if the total of all dividends declared during the calendar year, including a proposed dividend, exceeds the sum of the Bank’s net income during the calendar year and the retained net income of the prior two calendar years, unless the dividend has been approved by the Federal Reserve.

Moreover, the federal bank regulatory agencies also have the general authority to limit the dividends paid by insured banks if such payments should be deemed to constitute an unsafe and unsound practice and failure to meet the capital conservation buffer requirement will result in restrictions on dividends.

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Service providers are required under the rule to notify affected banking organization clients as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect the banking organization’s clients for four or more hours.

Compliance with the new rule is required by May 1, 2022.

Compliance with the new rule was required by May 1, 2022.

Further, state cybersecurity and data privacy laws and regulations may expose the Bank to risk and result in certain risk management costs.

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In November 2020, voters in the State of California approved the California Privacy Rights Act (“CPRA”), a ballot measure that amends and supplements the CCPA by creating the California Privacy Protection Agency, a watchdog privacy agency to be appointed shortly after the CPRA’s enactment.

The CPRA also modifies the CCPA by expanding both the scope of businesses

covered by the law and certain rights relating to personal information and its use, collection, and disclosure by covered businesses.

The CPRA also modifies the CCPA by expanding both the scope of businesses covered by the law and certain rights relating to personal information and its use, collection, and disclosure by covered businesses.

Compliance with the CCPA, the CPRA and other state statutes or regulations designed to protect consumer personal data could potentially require us to implement substantive technology infrastructure and process changes.

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A bank holding company’s failure to meet its obligation to serve as a source of strength to its subsidiary banks will generally be considered by the Federal Reserve to be an unsafe and unsound banking practice or a violation of the Federal Reserve’s regulations, or both.

No regulations have yet been proposed by the Federal Reserve to implement the source of strength provisions of the Dodd-Frank Act.

The Company and any subsidiaries that it may control are considered “affiliates” of the Bank within the meaning of the Federal Reserve Act, and transactions between the Bank and affiliates are subject to numerous restrictions.

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Regulatory Capital Requirements.

As discussed above, pursuant to the “Small Bank Holding Company” exception, effective August 30, 2018, bank holding companies with less than $3 billion in consolidated assets were generally no longer subject to the Federal Reserve’s capital regulations, which are generally the same as the capital regulations applicable to 1st Security Bank of Washington.

At the time of this change, BayCom Corp.

was considered “well capitalized” (as defined for a bank holding company), and was not subject to an individualized order, directive or agreement under which the Federal Reserve requires it to maintain a specific capital level.

At the time of this change, BayCom was considered “Well Capitalized” (as defined for a bank holding company), and was not subject to an individualized order, directive or agreement under which the Federal Reserve requires it to maintain a specific capital level.

Federal Securities Laws.

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(iii) provide disclosure in annual proxy materials concerning the relationship between the executive compensation paid and the financial performance of the issuer;

and (iv) disclose the ratio of the Chief Executive Officer’s annual total compensation to the

median annual total compensation of all other employees.

and (iv) disclose the ratio of the Chief Executive Officer’s annual total compensation to the median annual total compensation of all other employees.

The company as an “emerging growth company,” unlike other public companies that are not emerging growth companies under the JOBS Act, will not be required to comply with the foregoing disclosure requirements for as long as it maintains its emerging growth company status.

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The regulations to implement the provisions of Section 619 of the Dodd-Frank Act, commonly referred to as the Volcker Rule, contain prohibitions and restrictions on the ability of financial institutions holding companies and their affiliates to engage in proprietary trading and to hold certain interests in, or to have certain relationships with, various types of investment funds, including hedge funds and private equity funds.

The Company is continuously reviewing its investment portfolio to determine if changes in its investment strategies are in compliance with the various provisions of the Volcker Rule regulations.

The Company is continuously reviewing its

investment portfolio to determine if changes in its investment strategies are in compliance with the various provisions of the Volcker Rule regulations.

Interstate Banking and Branching.

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The Federal Reserve may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe or unsound practice, or violate any law or regulation, Federal Reserve order, or any condition imposed by or written agreement with, the Federal Reserve.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Stock Repurchases” contained in this report.

COVID-19 Legislation.

In response to the COVID-19 pandemic, Congress, through the enactment of the CARES Act and CAA 2021, and the federal banking agencies, though rulemaking, interpretive guidance and modifications to agency policies and procedures, have taken a series of actions to provide national emergency economic relief measures including, among others, the CARES Act and CAA 2021.

As the on-going COVID-19 pandemic evolves, federal and state regulatory authorities continue to issue additional guidance with respect to COVID-19.

In addition, it is possible that Congress will enact additional COVID-19 response legislation.

We will continue to assess the impact of the CARES Act, CAA 2021 and other statues, regulations and supervisory guidance related to the COVID-19 pandemic.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Stock Repurchases” contained in this Form 10-K.

The Company maintains its commitment to supporting its community and clients during the COVID-19 pandemic and remains focused on keeping its employees safe and the Bank running effectively to serve its clients.

As of December 31, 2022, all Bank branches were open with normal hours.

The Bank will continue to monitor branch access and occupancy levels in relation to cases and close contact scenarios and follow governmental restrictions and public health authority guidelines.

The financial services industry is highly competitive as we compete for loans, deposits and client relationships in our market.

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(1) Includes employees self-disclosed as Asian, Black, Native Hawaiian or Other Pacific Islander, or Two or More Races.

During the year ended December 31, 2021, the Board of Directors had three of its eleven directors who identified as female and two directors who identified as members of an underrepresented community (including one who identified as a member of two or more races).

An “underrepresented community” is defined under California law to include any individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian or Alaska Native, or who self identifies as gay, lesbian, bisexual or transgender.

None of our employees are represented by any collective bargaining unit or is a party to a collective bargaining agreement, and management considers its relationship with employees to be good.

At December 31, 2022, three of BayCom’s nine Board members identified as female and two directors, one male and one female, identified as underrepresented minorities (including one who identified as a member of two or more races).

Under the Nasdaq rules, an “underrepresented minority” is an individual who self-identifies in one or more of the following groups:

Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander or Two or More Races or Ethnicities.

None of our employees are represented by any collective bargaining unit or are a party to a collective bargaining agreement, and management considers its relationship with employees to be good.

We believe our ability to attract and retain employees is a key to the Bank’s success.

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and that offer choice where possible so they can customize their benefits to meet their needs and the needs of their families.

In response to the COVID-19 pandemic, we implemented significant operating environment changes that we determined were in the best interest of our employees, as well as the communities in which we operate, and which comply with government regulations.

A core tenet of our talent system is to both develop talent from within and supplement with external hires.

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King was employed by Circle Bank in Novato, California from 1999 – 2004 where she served as the Chief Branch Administrative Officer and was a member of the executive management team.

She was responsible for all aspects of operations, including Branch Development, Human Resources, Information Technology and Compliance.

She was responsible for all aspects of operations, including Branch Development, Human Resources, Information Technology

and Compliance.

Prior to this, Ms.

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degree from Bethany University, Scotts Valley and earned a graduate certificate from the Pacific Coast Banking School at University of Washington, Seattle.

Zhu, age 43, joined the Bank as Chief Risk Officer and a member of the executive management team in September 2013.

Zhu is responsible for enabling effective and efficient risk governance with forward looking enterprise risk management approaches as the Bank pursues growth strategies while maintaining safety and soundness.

Izabella Zhu Mitchell:

Mitchell, age 44, joined the Bank as Chief Risk Officer and a member of the executive management team in September 2013.

Mitchell is responsible for enabling effective and efficient risk governance with forward looking enterprise risk management approaches as the Bank pursues growth strategies while maintaining safety and soundness.

She also oversees regulatory relations, internal audit, and community development.

Prior to joining the Bank, Ms.

Zhu was a Senior Financial Institutions Examiner and a founding and inaugural member of the Examiner Council at the California Department of Business Oversight.

Mitchell was a Senior Financial Institutions Examiner and a founding and inaugural member of the Examiner Council at the California Department of Business Oversight.

She has served as Examiner-in-Charge of various large banks, troubled financial institutions, and trust departments.

Prior to that, Ms.

Zhu was a financial advisor at Morgan Stanley.

Zhu earned a Master’s degree in Public Administration in International Development from the Kennedy School at Harvard University and a Bachelor’s degree in International Economics from Peking University.

Zhu is also a Certified Fiduciary Investment Risk Specialist, and certified in Risk and Information Systems Control by ISACA.

Mitchell was a financial advisor at Morgan Stanley.

Mitchell earned a Master’s degree in Public Administration in International Development from the Kennedy School at Harvard University and a Bachelor’s degree in International Economics from Peking University.

Mitchell is also a Certified Fiduciary Investment Risk Specialist, and certified in Risk and Information Systems Control by ISACA.

Corporate Information

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Other than an investor’s own internet access charges, we make available, free of charge, through our website our Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after we have electronically filed such material with, or furnished such material to, the SEC.

The Securities and Exchange Commission maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at (http://www.sec.gov).

The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at (http://www.sec.gov).

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business