BayCom Corp 10-Q

Item 1. Financial Statements ​ Condensed Consolidated Balance Sheets (unaudited) 3 Condensed Consolidated Statements of Income (unaudited) 4 Condensed Consolidated Statements of Comprehensive Income (unaudited) 5 Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited) 6 Condensed Consolidated Statements of Cash Flows (unaudited) 8 Notes to Condensed Consolidated Financial Statements (unaudited) 10 ​ ​ ​ 2 Table of Contents ​ BAYCOM CORP AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except for share data) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, ​ December 31, ​ 2023 2022 ​ ​ ​ ​ ​ (As Restated) ASSETS ​ ​ Cash due from banks ​ $ 36,637 ​ $ 26,980 Federal funds sold and interest-bearing balances in banks ​ 213,562 ​ 149,835 Cash and cash equivalents ​ ​ 250,199 ​ 176,815 Time deposits in banks ​ ​ 1,992 ​ 2,241 Investment securities available-for-sale ("AFS"), at fair value, net of allowance for credit losses of $ 0 at both June 30, 2023 and December 31, 2022 ​ ​ 146,506 ​ 154,004 Equity securities ​ ​ 11,912 ​ ​ 13,757 Federal Home Loan Bank ("FHLB") stock, at par ​ ​ 11,313 ​ 10,679 Federal Reserve Bank ("FRB") stock, at par ​ ​ 9,616 ​ 9,602 Loans held for sale ​ ​ — ​ 2,380 Loans, net of allowance for credit losses of $ 19,100 at June 30, 2023 and $ 18,900 at December 31, 2022 ​ ​ 1,994,207 ​ 2,002,224 Premises and equipment, net ​ ​ 13,039 ​ 13,278 Other real estate owned ("OREO") ​ ​ — ​ 21 Core deposit intangible, net ​ ​ 4,527 ​ 5,201 Cash surrender value of bank owned life insurance ("BOLI") policies, net ​ ​ 22,528 ​ 22,193 Right-of-use assets ("ROU"), net ​ ​ 15,270 ​ ​ 16,569 Goodwill ​ ​ 38,838 ​ 38,838 Interest receivable and other assets ​ ​ 47,539 ​ 45,532 Total assets ​ $ 2,567,486 ​ $ 2,513,334 LIABILITIES AND SHAREHOLDERS’ EQUITY ​ ​ ​ ​ ​ Noninterest and interest bearing deposits ​ $ 2,147,066 ​ $ 2,085,479 Junior subordinated deferrable interest debentures, net ​ 8,524 ​ 8,484 Subordinated debt, net ​ ​ 63,796 ​ ​ 63,711 Salary continuation plan ​ 4,955 ​ 4,840 Lease liabilities ​ 15,947 ​ 17,138 Interest payable and other liabilities ​ 20,184 ​ 16,533 Total liabilities ​ 2,260,472 ​ 2,196,185 Commitments and contingencies (Note 18) ​ ​ Shareholders' equity ​ ​ Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding at both June 30, 2023 and December 31, 2022 ​ — ​ — Common stock, no par value; 100,000,000 shares authorized; 11,900,022 and 12,838,462 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively ​ 187,579 ​ 204,301 Additional paid in capital ​ 287 ​ 287 Accumulated other comprehensive loss, net of tax ​ ( 16,420 ) ​ ( 11,561 ) Retained earnings ​ 135,568 ​ 124,122 Total shareholders’ equity ​ 307,014 ​ 317,149 Total liabilities and shareholders’ equity ​ $ 2,567,486 ​ $ 2,513,334 ​ ​ ​ See Notes to Condensed Consolidated Financial Statements. ​ ​ ​ 3 Table of Contents ​ BAYCOM CORP AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except for share and per share data) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ Six months ended ​ ​ ​ June 30, ​ June 30, ​ ​ 2023 2022 2023 2022 ​ ​ ​ ​ ​ ​ (As Restated) ​ ​ ​ ​ (As Restated) ​ Interest income: ​ ​ ​ ​ Loans, including fees ​ $ 26,667 ​ $ 22,984 ​ $ 52,922 ​ $ 45,911 ​ Investment securities ​ 1,693 ​ 1,531 ​ 3,333 ​ 2,928 ​ Fed funds sold and interest-bearing balances in banks ​ ​ 2,560 ​ ​ 806 ​ ​ 4,389 ​ ​ 1,017 ​ FHLB dividends ​ 196 ​ 158 ​ 384 ​ 307 ​ FRB dividends ​ 144 ​ 140 ​ 288 ​ 261 ​ Total interest and dividend income ​ 31,260 ​ 25,619 ​ 61,316 ​ 50,424 ​ Interest expense: ​ ​ ​ ​ ​ Deposits ​ 5,881 ​ 1,453 ​ 9,581 ​ 2,923 ​ Subordinated debt ​ ​ 895 ​ ​ 895 ​ ​ 1,791 ​ ​ 1,791 ​ Junior subordinated deferrable interest debentures ​ 203 ​ 104 ​ 406 ​ 190 ​ Total interest expense ​ 6,979 ​ 2,452 ​ 11,778 ​ 4,904 ​ Net interest income ​ 24,281 ​ 23,167 ​ 49,538 ​ 45,520 ​ (Reversal of) provision for credit losses ​ ( 1,260 ) ​ 2,623 ​ ( 985 ) ​ 2,630 ​ Net interest income after (reversal of) provision for credit losses ​ 25,541 ​ 20,544 ​ 50,523 ​ 42,890 ​ Noninterest income: ​ ​ ​ ​ ​ Gain on sale of loans ​ 68 ​ 299 ​ 480 ​ 1,436 ​ Loss on equity securities ​ ​ ( 917 ) ​ ​ ( 1,841 ) ​ ​ ( 1,813 ) ​ ​ ( 3,609 ) ​ Service charges and other fees ​ 882 ​ 718 ​ 1,767 ​ 1,348 ​ Loan servicing and other loan fees ​ 593 ​ 607 ​ 1,003 ​ 1,181 ​ Income on investment in Small Business Investment Company (“SBIC”) fund ​ 225 ​ 21 ​ 714 ​ 218 ​ Bargain purchase gain ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,665 ​ Other income and fees ​ 235 ​ 376 ​ 496 ​ 572 ​ Total noninterest income ​ 1,086 ​ 180 ​ 2,647 ​ 2,811 ​ Noninterest expense: ​ ​ ​ ​ ​ Salaries and employee benefits ​ 10,745 ​ 9,277 ​ 21,781 ​ 19,587 ​ Occupancy and equipment ​ 1,974 ​ 1,920 ​ 4,001 ​ 4,346 ​ Data processing ​ 1,616 ​ 1,666 ​ 3,081 ​ 3,939 ​ Other expense ​ 2,222 ​ 2,347 ​ 4,223 ​ 5,659 ​ Total noninterest expense ​ 16,557 ​ 15,210 ​ 33,086 ​ 33,531 ​ Income before provision for income taxes ​ 10,070 ​ 5,514 ​ 20,084 ​ 12,170 ​ Provision for income taxes ​ 2,864 ​ 1,607 ​ 5,687 ​ 3,034 ​ Net income ​ $ 7,206 ​ $ 3,907 ​ $ 14,397 ​ $ 9,136 ​ Earnings per common share: ​ ​ ​ ​ ​ Basic earnings per common share ​ $ 0.59 ​ $ 0.29 ​ $ 1.16 ​ $ 0.70 ​ Weighted average common shares outstanding ​ 12,228,206 ​ 13,575,995 ​ 12,462,539 ​ 13,114,054 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted earnings per common share ​ $ 0.59 ​ $ 0.29 ​ $ 1.16 ​ $ 0.70 ​ Weighted average common shares outstanding ​ 12,228,206 ​ 13,575,995 ​ 12,462,539 ​ 13,114,054 ​ ​ ​ See Notes to Condensed Consolidated Financial Statements. ​ ​ 4 Table of Contents ​ BAYCOM CORP AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ Six months ended ​ ​ ​ June 30, ​ June 30, ​ ​ 2023 2022 2023 2022 ​ ​ ​ ​ ​ (As Restated) ​ ​ ​ ​ (As Restated) ​ Net income ​ $ 7,206 ​ $ 3,907 ​ $ 14,397 ​ $ 9,136 ​ Other comprehensive loss: ​ ​ ​ ​ ​ ​ Change in unrealized loss on available-for-sale securities ​ ( 4,999 ) ​ ( 4,372 ) ​ ( 6,823 ) ​ ( 12,365 ) ​ Deferred tax benefit ​ 1,437 ​ 1,258 ​ 1,964 ​ 3,558 ​ Other comprehensive loss, net of tax ​ ( 3,562 ) ​ ( 3,114 ) ​ ( 4,859 ) ​ ( 8,807 ) ​ Total comprehensive income ​ $ 3,644 ​ $ 793 ​ $ 9,538 ​ $ 329 ​ ​ See Notes to Condensed Consolidated Financial Statements. ​ ​ ​ 5 Table of Contents ​ BAYCOM CORP AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (In thousands, except for share and per share data) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Common ​ Additional ​ Other ​ ​ ​ ​ Total ​ ​ Number of ​ Stock ​ Paid in ​ Comprehensive ​ Retained ​ Shareholders’ ​ ​ Shares ​ Amount ​ Capital ​ Income/(Loss) ​ Earnings ​ Equity Three months ended June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, April 1, 2023 (As Restated) ​ 12,443,977 ​ $ 196,485 ​ $ 287 ​ $ ( 12,858 ) ​ $ 129,558 ​ $ 313,472 Net income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7,206 ​ ​ 7,206 Other comprehensive loss, net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 3,562 ) ​ ​ ​ ​ ​ ( 3,562 ) Cash dividends of $ 0.10 per share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 1,196 ) ​ ​ ( 1,196 ) Stock based compensation ​ ​ ​ ​ 182 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 182 Repurchase of shares ​ ( 543,955 ) ​ ​ ( 9,088 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 9,088 ) Balance, June 30, 2023 ​ 11,900,022 ​ $ 187,579 ​ $ 287 ​ $ ( 16,420 ) ​ $ 135,568 ​ $ 307,014 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended June 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, April 1, 2022 (As Restated) ​ 13,677,729 ​ $ 220,294 ​ $ 287 ​ $ ( 3,527 ) ​ $ 107,600 ​ $ 324,654 Net income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3,907 ​ ​ 3,907 Other comprehensive loss, net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 3,114 ) ​ ​ ​ ​ ​ ( 3,114 ) Restricted stock forfeited ​ ( 1,322 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — Cash dividends of $ 0.05 per share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 677 ) ​ ​ ( 677 ) Stock based compensation ​ ​ ​ ​ 233 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 233 Repurchase of shares ​ ( 205,044 ) ​ ​ ( 4,448 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 4,448 ) Balance, June 30, 2022 (As Restated) ​ 13,471,363 ​ $ 216,079 ​ $ 287 ​ $ ( 6,641 ) ​ $ 110,830 ​ $ 320,555 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ See Notes to Condensed Consolidated Financial Statements. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 6 Table of Contents ​ BAYCOM CORP AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (In thousands, except for share and per share data) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ Common ​ Additional ​ Other ​ ​ ​ ​ Total ​ ​ Number of ​ Stock ​ Paid in ​ Comprehensive ​ Retained ​ Shareholders’ ​ ​ Shares ​ Amount ​ Capital ​ Income/(Loss) ​ Earnings ​ Equity Six months ended June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, January 1, 2023 (As Restated) ​ 12,838,462 ​ $ 204,301 ​ $ 287 ​ $ ( 11,561 ) ​ $ 124,122 ​ $ 317,149 Net income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 14,397 ​ ​ 14,397 Other comprehensive loss, net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 4,859 ) ​ ​ ​ ​ ​ ( 4,859 ) Cumulative change from adoption of ASU 2016-13, net of tax ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 491 ) ​ ​ ( 491 ) Restricted stock granted ​ 28,392 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — Cash dividends of $ 0.20 per share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 2,460 ) ​ ​ ( 2,460 ) Stock based compensation ​ ​ ​ ​ 432 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 432 Repurchase of shares ​ ( 966,832 ) ​ ​ ( 17,154 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 17,154 ) Balance, June 30, 2023 ​ 11,900,022 ​ $ 187,579 ​ $ 287 ​ $ ( 16,420 ) ​ $ 135,568 ​ $ 307,014 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six months ended June 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance, January 1, 2022 ​ 10,680,386 ​ $ 157,098 ​ $ 287 ​ $ 2,166 ​ $ 103,056 ​ $ 262,607 Net income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 9,136 ​ ​ 9,136 Other comprehensive loss, net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 8,807 ) ​ ​ ​ ​ ​ ( 8,807 ) Restricted stock granted ​ 22,473 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — Restricted stock forfeited ​ ( 1,854 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ — Issuance of common shares to acquire Pacific Enterprise Bancorp ​ 3,032,579 ​ ​ 64,140 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 64,140 Cash dividends of $ 0.10 per share ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 1,362 ) ​ ​ ( 1,362 ) Stock based compensation ​ ​ ​ ​ 557 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 557 Repurchase of shares ​ ( 262,221 ) ​ ​ ( 5,716 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 5,716 ) Balance, June 30, 2022 (As Restated) ​ 13,471,363 ​ $ 216,079 ​ $ 287 ​ $ ( 6,641 ) ​ $ 110,830 ​ $ 320,555 ​ See Notes to Condensed Consolidated Financial Statements. ​ ​ ​ ​ 7 Table of Contents ​ BAYCOM CORP AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six months ended ​ ​ June 30, ​ 2023 2022 ​ ​ ​ ​ ​ (As Restated) Cash flows from operating activities: ​ ​ Net income ​ $ 14,397 ​ $ 9,136 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ (Reversal of) provision for credit losses ​ ( 985 ) ​ 2,630 (Decrease) increase in deferred tax assets ​ ( 1,285 ) ​ 1,779 Accretion on acquired loans ​ ( 853 ) ​ ( 353 ) Gain on sale of loans ​ ( 480 ) ​ ( 1,436 ) Proceeds from sale of loans ​ 9,176 ​ 15,161 Loans originated for sale ​ ( 6,882 ) ​ ( 13,239 ) Loss on sale of OREO ​ 21 ​ — Bargain purchase gain ​ — ​ ( 1,665 ) Accretion on junior subordinated debentures ​ 40 ​ 40 Increase in cash surrender value of life insurance policies ​ ( 335 ) ​ ( 301 ) Amortization/accretion of premiums/discounts on investment securities, net ​ 227 ​ 291 Loss on equity securities ​ ​ 1,813 ​ ​ 3,609 Depreciation and amortization ​ 883 ​ 1,011 Core deposit intangible amortization ​ 674 ​ 1,011 Stock based compensation expense ​ 432 ​ 557 Decrease in deferred loan origination fees, net ​ ( 92 ) ​ ( 1,572 ) Net change in interest receivable and other assets ​ 1,956 ​ ( 853 ) Increase in salary continuation plan, net ​ 115 ​ 224 Net change in interest payable and other liabilities ​ 967 ​ ( 4,529 ) Net cash provided by operating activities ​ 19,789 ​ 11,501 Cash flows from investing activities: ​ ​ Proceeds from maturities of interest bearing deposits in banks ​ 249 ​ 746 Purchase of investment securities ​ ( 2,460 ) ​ ( 24,676 ) Proceeds from maturities, repayments and calls of investment securities ​ 2,943 ​ 5,487 Proceeds from sales of investment securities ​ — ​ 63 Purchase of Federal Home Loan Bank stock ​ ( 634 ) ​ — Purchase of Federal Reserve Bank stock ​ ( 14 ) ​ ( 996 ) Increase in loans, net ​ 10,513 ​ 78,116 Purchase of equipment and leasehold improvements, net ​ ( 171 ) ​ ( 340 ) Net cash received for acquisitions ​ — ​ 18,423 Net cash provided by investing activities ​ 10,426 ​ 76,823 ​ ​ 8 Table of Contents ​ BAYCOM CORP AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – (continued) (In thousands) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six months ended ​ ​ June 30, ​ 2023 2022 ​ ​ ​ ​ ​ (As Restated) Cash flows from financing activities: ​ ​ Decrease in noninterest and interest bearing deposits in banks, net ​ ( 104,187 ) ​ ( 21,705 ) Increase (decrease) in time deposits, net ​ 165,774 ​ ( 85,391 ) Repurchase of common stock ​ ( 17,154 ) ​ ( 5,716 ) Dividends paid on common stock ​ ​ ( 1,264 ) ​ ​ ( 685 ) Net cash provided by (used in) financing activities ​ 43,169 ​ ( 113,497 ) Increase (decrease) in cash and cash equivalents ​ 73,384 ​ ( 25,173 ) Cash and cash equivalents at beginning of period ​ 176,815 ​ 379,687 Cash and cash equivalents at end of period ​ $ 250,199 ​ $ 354,514 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of cash flow information: ​ ​ Cash paid during the year for: ​ ​ Interest expense ​ $ 10,576 ​ $ 4,946 Income taxes paid, net ​ ​ 7 ​ 2,825 ​ ​ ​ ​ ​ ​ ​ Non-cash investing and financing activities: ​ ​ Change in unrealized loss on available-for-sale securities, net of tax ​ $ ( 4,859 ) ​ $ ( 8,807 ) Cash dividends declared on common stock not yet paid ​ ​ ( 1,196 ) ​ ​ ( 677 ) ​ ​ ​ ​ ​ ​ ​ Acquisition: ​ ​ Assets acquired, net of cash received ​ $ — ​ $ 440,785 Liabilities assumed ​ — ​ 380,055 Common stock issued ​ — ​ 64,140 ​ See Notes to Condensed Consolidated Financial Statements. ​ ​ ​ ​ 9 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONDENSED FINANCIAL STATEMENTS (Tables in thousands, except for share data and per share data) (unaudited) ​ NOTE 1 – BASIS OF PRESENTATION BayCom Corp (the “Company”) is a bank holding company headquartered in Walnut Creek, California. United Business Bank (the “Bank”), the Company’s wholly owned banking subsidiary, is a California state-chartered bank which provides a broad range of financial services primarily to local small and mid-sized businesses, service professionals and individuals. In its 18 years of operation, the Bank has grown to 34 full-service banking branches, with 16 locations in California, two in Washington, five in New Mexico and 11 in Colorado. The condensed consolidated financial statements include the accounts of the Company and the Bank. All intercompany transactions and balances have been eliminated in consolidation. The condensed consolidated financial statements include all adjustments of a normal and recurring nature, which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations for the periods presented. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes normally included in annual financial statements prepared in conformity with accounting principles generally accepted in the United States of America. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2022. Results of operations for interim periods are not necessarily indicative of results for the full year. Certain prior year information has been reclassified to conform to the current year presentation. None of the reclassifications impacted consolidated net income, earnings per share or shareholders’ equity. On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for a public company that qualifies as an “emerging growth company,” or EGC. The Company qualifies as an EGC and will remain an EGC until December 31, 2023, the last day of the Company’s fiscal year following the fifth anniversary of the completion of the Company’s initial public offering, or sooner under certain circumstances (none of which currently apply). As an EGC, we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We have taken, and intend to continue to take, advantage of the benefits of this extended transition period. Accordingly, our condensed consolidated financial statements may not be comparable to companies that comply with such new or revised accounting standards. On February 1, 2022 , the Company completed its acquisition of Pacific Enterprise Bancorp (“PEB”) and PEB’s wholly owned subsidiary bank, Pacific Enterprise Bank, headquartered in Irvine, California (“PEB Merger”). See “Note 3 – Acquisitions” for additional information on the PEB Merger. Restatement of Previously Issued Consolidated Financial Statements ​ On July 18, 2023, the audit committee of the Company’s board of directors concluded that the Company’s previously issued unaudited interim consolidated financial statements for the period ended March 31, 2023 and the consolidated financial statements for the year ended December 31, 2022, as well as for the unaudited interim periods included in that fiscal year (collectively, “Restated Periods”), should no longer be relied upon because of errors related to the accounting for unrealized losses on preferred equity securities that resulted in material misstatements of noninterest income and accumulated other comprehensive income. ​ At the time of its purchase of the preferred equity securities for investment purposes, the Company inappropriately accounted for them as available-for-sale debt securities under Accounting Standards Codification (“ASC”) Topic 320 – Investments-Debt Securities . As such, the changes in the fair value of these securities were not recorded as part of net income but rather as a component of shareholders’ equity (in accumulated other comprehensive income, net of tax). However, as a result of subsequent research and third-party consultation, the Company determined 10 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ that the securities should instead have been accounted for under ASC Topic 321 – Investments-Equity Securities . The result of this change in classification of the preferred equity securities is that the change in the fair value of the securities each quarter should have been recorded in noninterest income on the consolidated statements of income. ​ On July 25, 2023, the Company filed amendments to its Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2023, September 30, 2022, June 30, 2022, and March 31, 2022, and its Form 10-K for the year ended December 31, 2022, (the “Original Reports”) with the Securities and Exchange Commission (“SEC”), to reflect the restatement of the Company’s consolidated financial statements for the Restated Periods (the “Amended Form 10-Qs” and the “Amended Form 10-K,” collectively, the “Amended Reports”). ​ As disclosed in the Original Reports, the Company recorded the change, net of taxes, in the fair value of preferred equity securities as part of other comprehensive loss, net of taxes, under ASC Topic 320 – Investments-Debt Securities rather than as part of non-interest income under ASC Topic 321 – Investments-Equity Securities . In addition, various footnotes in the Amended Reports reflect the effects of these restatements. ​ For additional information on the effects of the restatement, see Note 2 Restatement of Consolidated Financial Statements in the Notes to Consolidated Financial Statements contained in the Amended Form 10-K and Note 3. Restatement of the Consolidated Financial Statements in the Notes to Condensed Consolidated Financial Statements contained in each of the Amended Form 10-Qs. NOTE 2 - ACCOUNTING GUIDANCE NOT YET EFFECTIVE AND ADOPTED ACCOUNTING GUIDANCE Accounting Guidance Adopted in 2023 On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2016-13 Financial Instruments — Credit Losses (ASC 326): Measurement of Credit Losses on Financial Instruments , which replaces the incurred loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in certain leases. In addition, ASU 2016-13 made changes to the accounting for available for sale debt securities. One such change requires increases or decreases in credit losses to be presented as an allowance rather than as a write-down on available for sale debt securities, based on management's intent to sell the security or likelihood the Company will be required to sell the security, before recovery of the amortized cost basis. The Company adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. Results for the reporting periods beginning on and after January 1, 2023 are presented under ASU 2016-13 while prior period amounts continue to be reported in accordance with previously applicable generally accepted accounting principles in the United States (“GAAP”). The Company adopted ASU 2016-13 using the prospective transition approach for financial assets purchased with credit deterioration (PCD) that were previously classified as purchase credit impaired (PCI) and accounted for under ASC 310-30. In accordance with the ASU 2016-13, management did not reassess whether PCI assets met the criteria of PCD assets as of the date of adoption. The remaining noncredit discount (based on the adjusted amortized costs basis) will be accreted into interest income at the effective interest rate as of adoption. The Company recognized an increase in the allowance for credit loss on loans totaling $ 1.5 million (which included a reclassification of the net credit discounts on acquired PCI loans to the allowance for credit losses of $ 845,000 ) and an increase to the allowance for credit losses on unfunded commitments of $ 45,000 , as a cumulative effect adjustment from change in accounting policies, with a corresponding after-tax decrease to opening retained earnings of $ 491,000 . ​ On January 1, 2023, the Company adopted ASU 2022-02 Financial Instruments — Credit Losses: Troubled Debt Restructurings and Vintage Disclosures . ASU 2022-02 eliminates the recognition measurement guidance for 11 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ troubled debt restructured ("TDR") loans, and instead requires an entity to evaluate whether a modification represents a new loan or a continuation of an existing loan in accordance with ASC Topic 310-20, Receivables - Nonrefundable Fees and Other Costs . On a prospective basis, entities are subject to new disclosure requirements covering modifications of receivables to borrowers experiencing financial difficulty. In addition, ASU 2022-02 requires that an entity include in its vintage disclosures the current period-gross loan charge-offs by year of origination for financing receivables and net investment in leases within the scope of Subtopic 326-20. The Company adopted ASU 2022-02 on January 1, 2023 using a prospective transition method, and has thus far observed no material impact to deferred fees and costs and the related timing of net interest income recognition as a result of adoption. ​ See “Critical Accounting Estimates” for additional information on the Company’s allowance for credit losses methodology. ​ Recent Accounting Guidance Not Yet Effective In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2020-04, Reference Rate Reform (Topic 848) . The amendments in this ASU are elective and provide optional guidance for a limited period of time to ease the potential burden of accounting for, or recognizing the effects of, reference rate reform. The amendments in this ASU provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offer Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. The amendments in this ASU may be elected through December 31, 2024 (as amended by ASU No. 2022-06 discussed below). An entity may elect the amendments in this update for an interim period with adoption methods varying based on transaction type. We have not elected to apply amendments at this time and will assess the applicability of this ASU to us as we continue to monitor guidance for reference rate reform from FASB and its impact on our financial condition and results of operations. The Company does not expect the adoption of ASU 2020-04 to have a material impact on its consolidated financial statements. ​ In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. The objective of the guidance in Topic 848 was to provide temporary relief during the transition period, as noted in the discussion of ASU 2020-04 above, under which the sunset provision was based on an expectation that the LIBOR would cease being published after December 31, 2021. In March 2021, the UK Financial Conduct Authority announced that the intended cessation date of certain tenors of USD LIBOR would be June 30, 2023, which was beyond the original sunset date of Topic 848. Therefore, this amendment deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. ​ NOTE 3 – ACQUISITIONS Acquisition of Pacific Enterprise Bancorp (“PEB”) On February 1, 2022, the Company completed its acquisition of PEB. As of the acquisition date, PEB merged into the Company and Pacific Enterprise Bank, PEB’s wholly owned bank subsidiary, merged into the Bank. The acquisition expanded the Company’s market share in California with one branch in Irvine. At the effective time of the PEB merger, the Company paid aggregate consideration to PEB shareholders of approximately $ 64.1 million consisting of 3,032,579 shares of the Company’s common stock and $ 275,000 in cash. Noninterest income for the three months ended March 31, 2022 included $ 1.6 million in bargain purchase gain, and included in noninterest expense for that period was $ 3.1 million of nonrecurring acquisition-related expenses. The following table summarizes the fair value of the assets acquired and liabilities assumed at the acquisition date: 12 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ ​ ​ ​ ​ ​ ​ PEB ​ ​ Acquisition ​ ​ ​ Date ​ ​ ​ February 1, 2022 ​ Fair value of assets: ​ Cash and due from banks ​ $ 5,350 ​ Total cash and cash equivalents ​ 5,350 ​ ​ ​ ​ ​ ​ Interest bearing deposits in banks ​ 13,348 ​ Investment securities available-for-sale ​ ​ 3 ​ FHLB stock, at par ​ 2,294 ​ FRB stock, at par ​ 942 ​ Loans, net ​ 412,851 ​ Premises and equipment, net ​ ​ 221 ​ Core deposit intangible ​ 756 ​ Deferred tax assets, net ​ 1,192 ​ Interest receivable and other assets ​ ​ 9,178 ​ Total assets acquired ​ 446,135 ​ Liabilities: ​ ​ Deposits ​ ​ Noninterest bearing ​ 60,006 ​ Interest bearing ​ 316,679 ​ Total Deposits ​ 376,685 ​ ​ ​ ​ ​ ​ Interest payable and other liabilities ​ ​ 3,370 ​ Total liabilities assumed ​ ​ 380,055 ​ ​ ​ ​ ​ ​ Stock consideration ​ 64,140 ​ Cash consideration ​ 275 ​ Bargain purchase gain ​ $ 1,665 ​ ​ 13 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ The following table presents the net assets acquired and the estimated fair value adjustments, which resulted in bargain purchase gain at the acquisition date: ​ ​ ​ ​ ​ ​ ​ PEB ​ ​ Acquisition ​ ​ ​ Date ​ ​ ​ February 1, 2022 ​ Book value of net assets acquired ​ $ 61,469 ​ Fair value adjustments: ​ ​ Loans, net ​ 5,840 ​ Premises and equipment, net ​ ​ 26 ​ Core deposit intangible ​ 756 ​ Time deposits ​ ​ ( 869 ) ​ Reserve for unfunded commitments ​ 283 ​ Write-up right-of-use asset ​ 439 ​ Total purchase accounting adjustments ​ 6,475 ​ ​ ​ ​ ​ ​ Tax effect of purchase accounting adjustments at 27.9 % ​ ( 1,864 ) ​ Fair value of assets acquired ​ 66,080 ​ Value of stock issued/cash paid for stock options ​ 64,415 ​ Bargain purchase gain ​ $ 1,665 ​ ​ Pro Forma Results of Operations The operating results of the Company for the three and six months ended June 30, 2023 in the condensed consolidated statements of income include the operating results of PEB, since its acquisition date. The following table represents the net interest income, net income, basic and diluted earnings per share, as if the PEB merger was effective January 1, 2022. The unaudited pro forma information in the following table is intended for informational purposes only and is not necessarily indicative of future operating results or operating results that would have occurred had the merger been completed at the beginning of the respective periods. No assumptions have been applied to the pro forma results of operation regarding possible revenue enhancements, expense efficiencies or asset dispositions. Unaudited pro forma net interest income, net income and earnings per share for the three and six months ended June 30, 2023 and 2022 are presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, ​ Six Months Ended June 30, ​ ​ 2023 ​ 2022 (As Restated) ​ 2023 ​ 2022 (As Restated) Net interest income ​ $ 24,281 ​ $ 23,167 ​ $ 49,538 ​ $ 46,372 Net income ​ 7,206 ​ 4,030 ​ 14,397 ​ 5,899 Basic earnings per share ​ $ 0.59 ​ $ 0.30 ​ $ 1.16 ​ $ 0.43 Diluted earnings per share ​ ​ 0.59 ​ ​ 0.30 ​ ​ 1.16 ​ ​ 0.43 ​ These amounts include the third-party acquisition-related expenses, accretion of the discounts on acquired loans and amortization of the fair value mark adjustments on core deposit intangible. Acquisition expenses Acquisition expenses are recognized as incurred and continue until all systems are converted and operational functions become fully integrated. No third-party acquisition expenses were recognized in the consolidated statements of 14 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ income for the three and six months ended June 30, 2023. The Company recognized third-party acquisition expenses for the three and six months ended June 30, 2022, as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ ​ ​ Three months ended ​ ​ Six months ended ​ ​ ​ June 30, ​ ​ June 30, Severance expense $ — $ 556 Occupancy expense ​ — ​ 375 Data processing ​ — ​ 1,073 Professional fees ​ ​ — ​ ​ 724 ​ Other expenses ​ — ​ 347 Total ​ $ — ​ $ 3,075 ​ ​ ​ NOTE 4 – INVESTMENT SECURITIES The amortized cost, gross unrealized gains and losses, and estimated fair values of securities available-for-sale at the dates indicated are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Gross ​ ​ ​ ​ ​ Amortized ​ unrealized ​ unrealized ​ Estimated ​ ​ cost ​ gains ​ losses ​ fair value June 30, 2023 ​ ​ ​ ​ ​ ​ U.S. Government Agencies ​ $ 1,502 ​ $ — ​ $ — ​ $ 1,502 Municipal securities ​ 20,705 ​ 3 ​ ( 1,528 ) ​ 19,180 Mortgage-backed securities ​ 34,084 ​ 18 ​ ( 4,124 ) ​ 29,978 Collateralized mortgage obligations ​ 28,994 ​ — ​ ( 2,766 ) ​ 26,228 SBA securities ​ 3,913 ​ 14 ​ ( 92 ) ​ 3,835 Corporate bonds ​ 80,364 ​ — ​ ( 14,581 ) ​ 65,783 Total ​ $ 169,562 ​ $ 35 ​ $ ( 23,091 ) ​ $ 146,506 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross Gross ​ ​ ​ ​ ​ Amortized ​ unrealized ​ unrealized ​ Estimated ​ ​ cost ​ gains ​ losses ​ fair value December 31, 2022 (As Restated) ​ ​ ​ ​ ​ ​ U.S. Government Agencies ​ $ 1,505 ​ $ — ​ $ — ​ $ 1,505 Municipal securities ​ 21,099 ​ 2 ​ ( 1,544 ) ​ 19,557 Mortgage-backed securities ​ 37,199 ​ 23 ​ ( 4,212 ) ​ 33,010 Collateralized mortgage obligations ​ 28,153 ​ — ​ ( 2,729 ) ​ 25,424 SBA securities ​ 4,381 ​ 19 ​ ( 95 ) ​ 4,305 Corporate bonds ​ 77,900 ​ 156 ​ ( 7,853 ) ​ 70,203 Total ​ $ 170,237 ​ $ 200 ​ $ ( 16,433 ) ​ $ 154,004 ​ Amortized cost and fair values exclude accrued interest receivable of $ 1.3 million and $ 1.2 million at June 30, 2023 and December 31, 2022, respectively, which is included in interest receivable and other assets in the condensed consolidated balance sheets. ​ During the three and six months ended June 30, 2023, the Company sold no securities available-for-sale. During the three and six months ended June 30, 2022, the Company sold no securities available-for-sale and one security available-for-sale for a minimal realized gain, respectively. 15 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ The estimated fair value and gross unrealized losses for securities available-for-sale aggregated by the length of time that individual securities have been in a continuous unrealized loss position at the dates indicated are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than 12 months ​ 12 months or more ​ Total ​ Estimated Unrealized Estimated Unrealized Estimated Unrealized ​ ​ fair value ​ loss ​ fair value ​ loss ​ fair value ​ loss June 30, 2023 ​ ​ ​ ​ ​ ​ ​ Municipal securities ​ $ 1,460 ​ $ ( 11 ) ​ $ 17,720 ​ $ ( 1,517 ) ​ $ 19,180 ​ $ ( 1,528 ) Mortgage-backed securities ​ ​ 11 ​ ​ — ​ ​ 29,965 ​ ​ ( 4,124 ) ​ ​ 29,976 ​ ​ ( 4,124 ) Collateralized mortgage obligations ​ 5,022 ​ ​ ( 55 ) ​ ​ 21,206 ​ ​ ( 2,711 ) ​ 26,228 ​ ( 2,766 ) SBA securities ​ — ​ ​ — ​ ​ 3,835 ​ ​ ( 92 ) ​ 3,835 ​ ( 92 ) Corporate bonds ​ 962 ​ ​ ( 2 ) ​ ​ 64,821 ​ ​ ( 14,579 ) ​ 65,783 ​ ( 14,581 ) Total ​ $ 7,455 ​ $ ( 68 ) ​ $ 137,547 ​ $ ( 23,023 ) ​ $ 145,002 ​ $ ( 23,091 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less than 12 months ​ 12 months or more ​ Total ​ Estimated Unrealized Estimated Unrealized Estimated Unrealized ​ ​ fair value ​ loss ​ fair value ​ loss ​ fair value ​ loss December 31, 2022 (As Restated) ​ ​ ​ ​ ​ ​ ​ Municipal securities ​ $ 1,147 ​ $ ( 8 ) ​ $ 16,843 ​ $ ( 1,536 ) ​ $ 17,990 ​ $ ( 1,544 ) Mortgage-backed securities ​ 23 ​ — ​ 31,291 ​ ( 4,212 ) ​ 31,314 ​ ( 4,212 ) Collateralized mortgage obligations ​ 2,284 ​ ( 26 ) ​ 23,140 ​ ( 2,703 ) ​ 25,424 ​ ( 2,729 ) SBA securities ​ — ​ — ​ 1,416 ​ ( 95 ) ​ 1,416 ​ ( 95 ) Corporate bonds ​ — ​ — ​ 64,797 ​ ( 7,853 ) ​ 64,797 ​ ( 7,853 ) Total ​ $ 3,454 ​ $ ( 34 ) ​ $ 137,487 ​ $ ( 16,399 ) ​ $ 140,941 ​ $ ( 16,433 ) ​ At June 30, 2023, the Company held 322 securities available-for-sale, of which 297 were in an unrealized loss position for more than twelve months and 17 were in an unrealized loss position for less than twelve months. The securities that were in an unrealized loss position as of June 30, 2023, were evaluated to determine whether the decline in fair value below the amortized cost basis resulted from a credit loss or other factors. In making this assessment, management considers the length of time and the extent to which fair value is less than amortized cost, the nature of the security, the underlying collateral, and the financial condition and prospects of the issuer, among other factors. This assessment also includes a determination of whether the Company intends to sell the security, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis less any current-period credit losses. ​ As of June 30, 2023, the Company expects to recover the amortized cost basis of its securities, has no present intent to sell any investment securities with unrealized losses, it is more likely than not that we will not be required to sell securities with unrealized losses before recovery of their amortized cost and the decline in fair value is largely attributed to changes in interest rates and other market conditions. The issuers of these securities continue to make timely principal and interest payments. No allowances for credit losses have been recognized on investment securities available-for-sale in an unrealized loss position, as management does not believe any of the securities are impaired due to reasons of credit quality at June 30, 2023. ​ ​ 16 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ The amortized cost and estimated fair value of securities available-for-sale at the dates indicated by contractual maturity are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 ​ December 31, 2022 ​ Amortized Estimated Amortized Estimated ​ ​ cost ​ fair value ​ cost ​ fair value ​ ​ ​ ​ ​ ​ ​ ​ (As Restated) ​ (As Restated) Available-for-sale ​ ​ ​ ​ Due in one year or less ​ $ 9,026 ​ $ 8,958 ​ $ 4,994 ​ $ 4,960 Due after one through five years ​ 15,214 ​ 14,027 ​ 18,892 ​ 17,925 Due after five years through ten years ​ 100,054 ​ 83,598 ​ 95,071 ​ 85,482 Due after ten years ​ 45,268 ​ 39,923 ​ 51,280 ​ 45,637 Total ​ $ 169,562 ​ $ 146,506 ​ $ 170,237 ​ $ 154,004 ​ ​ ​ ​ ​ Equity Securities – The Company recognized a net loss on equity securities of $ 917,000 and $ 1.8 million for the three and six months ended June 30, 2023, and recognized a net loss on equity securities of $ 1.8 million and $ 3.6 million for the three and six months ended June 30, 2022, respectively, due to a decrease in fair value of the equity securities. Equity securities were $ 11.9 million and $ 13.8 million as of June 30, 2023 and December 31, 2022, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NOTE 5 – LOANS The Company’s loan portfolio at the dates indicated is summarized below: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2023 ​ 2022 Commercial and industrial (1) ​ $ 180,852 ​ $ 188,538 Construction and land ​ 9,999 ​ 13,163 Commercial real estate ​ 1,731,515 ​ 1,704,716 Residential ​ 90,015 ​ 110,606 Consumer ​ 916 ​ 4,183 Total loans ​ 2,013,297 ​ 2,021,206 Net deferred loan costs (fees) ​ 10 ​ ( 82 ) Allowance for credit losses (2) ​ ( 19,100 ) ​ ( 18,900 ) Net loans ​ $ 1,994,207 ​ $ 2,002,224 ​ (1) During the first quarter of 2023, the Bank continued its participation in the U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”), by processing applications for PPP loan forgiveness. Total loans include $ 4.9 million and $ 11.1 million of PPP loans as of June 30, 2023 and December 31, 2022, respectively. (2) Allowance for credit losses at June 30, 2023 is estimated under CECL whereas at December 31, 2022, the allowance for loan losses is estimated under the incurred loss methodology. ​ Net loans exclude accrued interest receivable of $ 6.1 million and $ 6.2 million at June 30, 2023 and December 31, 2022, respectively, which is included in interest receivable and other assets in the condensed consolidated balance sheets. ​ 17 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ ​ The Company’s total individually evaluated loans, including nonaccrual loans, modified loans to borrowers experiencing financial difficulty, and accreting purchase credit deteriorated (“PCD”) loans that have experienced post-acquisition declines in cash flows expected to be collected are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial Construction Commercial ​ ​ ​ ​ ​ and industrial ​ and land ​ real estate ​ Residential ​ Consumer ​ Total June 30, 2023 ​ ​ ​ ​ ​ ​ ​ Recorded investment in loans individually evaluated: ​ ​ ​ ​ ​ ​ With no specific allowance recorded ​ $ — ​ $ — ​ $ 10,866 ​ $ 1,538 ​ $ — ​ $ 12,404 With a specific allowance recorded ​ 656 ​ — ​ 385 ​ 160 ​ — ​ 1,201 Total recorded investment in loans individually evaluated ​ $ 656 ​ $ — ​ $ 11,251 ​ $ 1,698 ​ $ — ​ $ 13,605 Specific allowance on loans individually evaluated ​ $ 433 ​ $ — ​ $ 259 ​ $ 2 ​ $ — ​ $ 694 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ ​ ​ ​ ​ Recorded investment in loans individually evaluated: ​ ​ ​ ​ ​ ​ With no specific allowance recorded ​ $ 89 ​ $ — ​ $ 11,706 ​ $ 1,991 ​ $ — ​ $ 13,786 With a specific allowance recorded ​ 789 ​ — ​ 259 ​ 214 ​ — ​ 1,262 Total recorded investment in loans individually evaluated ​ $ 878 ​ $ — ​ $ 11,965 ​ $ 2,205 ​ $ — ​ $ 15,048 Specific allowance on loans individually evaluated ​ $ 687 ​ $ — ​ $ 259 ​ $ 222 ​ $ — ​ $ 1,168 ​ From time to time, the Company may extend, restructure, or otherwise modify the terms of existing loans, on a case-by-case basis, to remain competitive and retain certain customers, as well as assist other customers who may be experiencing financial difficulties. Prior to 2023, a modified loan was classified as a troubled debt restructuring (TDR) if the borrower was experiencing financial difficulties and a concession was made at the time of the modification. TDR loans were generally placed on nonaccrual status at the time of restructuring. These loans were returned to accrual status after the borrower demonstrated performance with the modified terms for a sustained period of time (generally six months ) and the capacity to continue to perform in accordance with the modified terms of the restructured debt. Effective January 1, 2023, the Company adopted ASU No. 2022-02, which eliminated the accounting guidance for TDR loans while enhancing disclosure requirements for certain loan modifications by creditors when a borrower is experiencing financial difficulty. The Company adopted ASU No. 2022-02 using the prospective transition method. At the date of adoption, the Company was no longer required to utilize a loan-level discounted cash flow approach for determining the allowance for certain modified loans previously classified as TDR loans. The ACL on a modified loan to a borrower experiencing financial difficulty is measured using the same method as individually evaluated loans. There was no material impact upon adopting this standard as the Company elected to not change how it measured credit losses on TDRs. During the three and six months ended June 30, 2023, there were no modifications of loans to borrowers experiencing financial difficulty. During the three and six months ended June 30, 2022, there were no loans and four total modifications of loans to borrowers experiencing financial difficulty, consisting of two commercial real estate loans, one residential real estate loan, and one commercial and industrial loan, respectively. The type of modification for the two commercial real estate loans and the one residential real estate loan was a term extension, with no change to the pre-modification and post modification amortized cost balance, which for these three loans totaled $ 4.1 million. The type of modification for the commercial and industrial loan was a suspension of interest payments with principal payments designated payments-in-kind, with no change to the pre-modification and post modification amortized cost balance of $ 4.9 million. 18 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ ​ The Company closely monitors the performance of modified loans to borrowers experiencing financial difficulty to understand the effectiveness of modification efforts. There were no commitments to lend additional amounts for modified loans to borrowers experiencing financial difficulty at June 30, 2023. ​ A summary of modified loans to borrowers experiencing financial difficulty by type of concession and type of loan, as of the dates indicated, is set forth below (number of loans not in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of Rate Term Rate & term ​ ​ ​ % of Total ​ ​ loans ​ modification ​ modification ​ modification ​ Total ​ loans outstanding June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial 3 ​ $ — ​ $ 149 ​ $ — ​ $ 149 ​ ​ 0.08 % Construction and land — ​ — ​ — ​ — ​ — ​ — ​ Commercial real estate 6 ​ — ​ 5,074 ​ — ​ 5,074 ​ 0.29 ​ Residential 1 ​ — ​ ​ 814 ​ — ​ 814 ​ 0.90 ​ Consumer — ​ — ​ — ​ — ​ — ​ — ​ Total 10 ​ $ — ​ $ 6,037 ​ $ — ​ $ 6,037 ​ ​ 0.30 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of Rate Term Rate & term ​ ​ ​ % of Total ​ ​ loans ​ modification ​ modification ​ modification ​ Total ​ loans outstanding June 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial 3 ​ $ — ​ $ 2,450 ​ $ — ​ $ 2,450 ​ ​ 1.30 % Construction and land — ​ — ​ — ​ — ​ — ​ — ​ Commercial real estate 4 ​ — ​ 2,155 ​ — ​ 2,155 ​ 0.13 ​ Residential 1 ​ — ​ 125 ​ — ​ 125 ​ 0.11 ​ Consumer — ​ — ​ — ​ — ​ — ​ — ​ Total 8 ​ $ — ​ $ 4,730 ​ $ — ​ $ 4,730 ​ ​ 0.23 % ​ For the three and six months ended June 30, 2023, the Company recorded no charge-offs for modified loans to borrowers experiencing financial difficulty. During the three and six months ended June 30, 2022, the Company recorded a $ 2.4 million charge-off related to one modified loan to a borrower experiencing financial difficulty and no charge-offs related to modified loans to borrowers experiencing financial difficulty, respectively. During the three and six months ended June 30, 2023, there were no modified loans to borrowers experiencing financial difficulty for which there was a payment default within the first 12 months of the modification. During the three and six months ended June 30, 2022, there were no modified loans to borrowers experiencing financial difficulty for which there was a payment default within the first 12 months of the modification. ​ As of June 30, 2023 and December 31, 2022, individually evaluated modified loans to borrowers experiencing financial difficulty had a related allowance of $ 296,000 and $ 393,000 , respectively. As of June 30, 2023 and December 31, 2022, $ 774,000 and $ 759,000 of modified loans to borrowers experiencing financial difficulty were performing in accordance with their modified terms, respectively. Accruing modified loans to borrowers experiencing financial difficulty are included in the loans individually evaluated as part of the calculation of the allowance for credit losses for loans. ​ Risk Rating System The Company evaluates and assigns a risk grade to each loan based on certain criteria to assess the credit quality of the loan. The assignment of a risk rating is done for each individual loan. Loans are graded from inception and on a continuing basis until the debt is repaid. Any adverse or beneficial trends will trigger a review of the loan risk rating. Each 19 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ loan is assigned a risk grade based on its characteristics. Loans with low to average credit risk are assigned a lower risk grade than those with higher credit risk as determined by the individual loan characteristics. The Company’s Pass loans include loans with acceptable business or individual credit risk where the borrower’s operations, cash flow or financial condition provides evidence of low to average levels of risk. Loans that are assigned higher risk grades are loans that exhibit the following characteristics: Special Mention loans have potential weaknesses that deserve close attention. If left uncorrected, these potential weaknesses may result in a deterioration of the repayment prospects for the loan or in the Company’s credit position at some future date. Special Mention loans are not adversely classified and do not expose the Company to sufficient risk to warrant adverse classification. A Special Mention rating is a temporary rating, pending the occurrence of an event that would cause the risk rating either to improve or to be downgraded. Loans in this category would be characterized by any of the following situations: ● Credit that is currently protected but is potentially a weak asset; ● Credit that is difficult to manage because of an inadequate loan agreement, the condition of and/or control over collateral, failure to obtain proper documentation, or any other deviation from product lending practices; and ● Adverse financial trends. Substandard loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged. Loans classified substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Substandard loans are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. The potential loss does not have to be recognizable in an individual credit for that credit to be risk rated Substandard. A loan can be fully and adequately secured and still be considered Substandard. Some characteristics of Substandard loans are: ● Inability to service debt from ordinary and recurring cash flow; ● Chronic delinquency; ● Reliance upon alternative sources of repayment; ● Term loans that are granted on liberal terms because the borrower cannot service normal payments for that type of debt; ● Repayment dependent upon the liquidation of collateral; ● Inability to perform as agreed, but adequately protected by collateral; ● Necessity to renegotiate payments to a non-standard level to ensure performance; and ● The borrower is bankrupt, or for any other reason, future repayment is dependent on court action. Doubtful loans have all the weaknesses inherent in loans classified as Substandard with the added characteristic that the weaknesses make collection or liquidation in full, based on currently existing facts, conditions, and value, highly questionable and improbable. Doubtful loans have a high probability of loss, yet certain important and reasonably specific pending factors may work toward the strengthening of the credit. Losses are recognized as charges to the allowance when the loan or portion of the loan is considered uncollectible or at the time of foreclosure. Recoveries on loans previously charged off are credited to the allowance for credit losses. 20 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ The following tables present the internally assigned risk grade by class of loans at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving ​ ​ ​ ​ ​ Term loans - amortized cost by origination year ​ loans ​ ​ ​ ​ 2023 ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ Prior ​ amortized cost ​ Total June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 18,248 ​ $ 28,341 ​ $ 23,701 ​ $ 30,550 ​ $ 29,050 ​ $ 23,918 ​ $ 20,952 ​ $ 174,760 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,034 ​ ​ 2,671 ​ ​ 1,300 ​ ​ 5,005 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ 38 ​ ​ 191 ​ ​ 852 ​ ​ 6 ​ ​ 1,087 Total commercial and industrial ​ $ 18,248 ​ $ 28,341 ​ $ 23,701 ​ $ 30,588 ​ $ 30,275 ​ $ 27,441 ​ $ 22,258 ​ $ 180,852 YTD gross charge-offs ​ $ — ​ $ — ​ $ 1 ​ $ — ​ $ — ​ $ 282 ​ $ — ​ $ 283 Construction and land: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ — ​ $ 4,216 ​ $ — ​ $ 1,575 ​ $ 152 ​ $ 3,999 ​ $ — ​ $ 9,942 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 57 ​ ​ — ​ ​ 57 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total construction and land ​ $ — ​ $ 4,216 ​ $ — ​ $ 1,575 ​ $ 152 ​ $ 4,056 ​ $ — ​ $ 9,999 Commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 70,801 ​ $ 414,327 ​ $ 386,375 ​ $ 152,561 ​ $ 190,842 ​ $ 434,963 ​ $ 2,925 ​ $ 1,652,794 Special mention ​ ​ — ​ ​ — ​ ​ 276 ​ ​ 8,646 ​ ​ 17,024 ​ ​ 34,064 ​ ​ — ​ ​ 60,010 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 5,184 ​ ​ 13,527 ​ ​ — ​ ​ 18,711 Total commercial real estate ​ $ 70,801 ​ $ 414,327 ​ $ 386,651 ​ $ 161,207 ​ $ 213,050 ​ $ 482,554 ​ $ 2,925 ​ $ 1,731,515 Residential: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ — ​ $ — ​ $ 2,469 ​ $ 4,419 ​ $ 8,649 ​ $ 40,467 ​ $ 32,275 ​ $ 88,279 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 16 ​ ​ — ​ ​ 16 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,720 ​ ​ — ​ ​ 1,720 Total residential ​ $ — ​ $ — ​ $ 2,469 ​ $ 4,419 ​ $ 8,649 ​ $ 42,203 ​ $ 32,275 ​ $ 90,015 YTD gross charge-offs ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 172 ​ $ 3 ​ $ 175 Consumer: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 156 ​ $ 83 ​ $ — ​ $ 12 ​ $ 43 ​ $ 89 ​ $ 513 ​ $ 896 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 20 ​ ​ — ​ ​ — ​ ​ 20 Total consumer ​ $ 156 ​ $ 83 ​ $ — ​ $ 12 ​ $ 63 ​ $ 89 ​ $ 513 ​ $ 916 YTD gross charge-offs ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 3 ​ $ 3 Total loans outstanding ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk ratings ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 89,205 ​ $ 446,967 ​ $ 412,545 ​ $ 189,117 ​ $ 228,736 ​ $ 503,436 ​ $ 56,665 ​ $ 1,926,671 Special mention ​ ​ — ​ ​ — ​ ​ 276 ​ ​ 8,646 ​ ​ 18,058 ​ ​ 36,808 ​ ​ 1,300 ​ ​ 65,088 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ 38 ​ ​ 5,395 ​ ​ 16,099 ​ ​ 6 ​ ​ 21,538 Doubtful ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total loans outstanding ​ $ 89,205 ​ $ 446,967 ​ $ 412,821 ​ $ 197,801 ​ $ 252,189 ​ $ 556,343 ​ $ 57,971 ​ $ 2,013,297 YTD gross charge-offs ​ $ — ​ $ — ​ $ 1 ​ $ — ​ $ — ​ $ 454 ​ $ 6 ​ $ 461 ​ ​ 21 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revolving ​ ​ ​ ​ ​ Term loans - amortized cost by origination year ​ loans ​ ​ ​ ​ 2022 ​ 2021 ​ 2020 ​ 2019 ​ 2018 ​ Prior ​ amortized cost ​ Total December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 31,599 ​ $ 34,584 ​ $ 35,173 ​ $ 30,632 ​ $ 4,731 ​ $ 25,147 ​ $ 19,962 ​ $ 181,828 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ 863 ​ ​ 1,149 ​ ​ 1,866 ​ ​ 1,467 ​ ​ 5,345 Substandard ​ ​ — ​ ​ — ​ ​ 40 ​ ​ 166 ​ ​ 388 ​ ​ 762 ​ ​ 9 ​ ​ 1,365 Total commercial and industrial ​ $ 31,599 ​ $ 34,584 ​ $ 35,213 ​ $ 31,661 ​ $ 6,268 ​ $ 27,775 ​ $ 21,438 ​ $ 188,538 Construction and land: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 1,381 ​ $ 533 ​ $ 1,586 ​ $ 557 ​ $ 4,363 ​ $ 4,681 ​ $ — ​ $ 13,101 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 62 ​ ​ — ​ ​ — ​ ​ 62 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total construction and land ​ $ 1,381 ​ $ 533 ​ $ 1,586 ​ $ 557 ​ $ 4,425 ​ $ 4,681 ​ $ — ​ $ 13,163 Commercial real estate: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 409,014 ​ $ 392,449 ​ $ 159,744 ​ $ 201,561 ​ $ 110,143 ​ $ 355,795 ​ $ 992 ​ $ 1,629,698 Special mention ​ ​ — ​ ​ — ​ ​ 3,591 ​ ​ 17,210 ​ ​ 7,919 ​ ​ 29,561 ​ ​ — ​ ​ 58,281 Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ 5,184 ​ ​ 241 ​ ​ 11,312 ​ ​ — ​ ​ 16,737 Total commercial real estate ​ $ 409,014 ​ $ 392,449 ​ $ 163,335 ​ $ 223,955 ​ $ 118,303 ​ $ 396,668 ​ $ 992 ​ $ 1,704,716 Residential: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 423 ​ $ 4,536 ​ $ 6,343 ​ $ 10,229 ​ $ 14,537 ​ $ 37,170 ​ $ 34,889 ​ $ 108,127 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ 244 ​ ​ — ​ ​ — ​ ​ 3 ​ ​ 247 Substandard ​ ​ — ​ ​ — ​ ​ 203 ​ ​ — ​ ​ 1,184 ​ ​ 845 ​ ​ — ​ ​ 2,232 Total residential ​ $ 423 ​ $ 4,536 ​ $ 6,546 ​ $ 10,473 ​ $ 15,721 ​ $ 38,015 ​ $ 34,892 ​ $ 110,606 Consumer: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 539 ​ $ 10 ​ $ 1,691 ​ $ 61 ​ $ 40 ​ $ 131 ​ $ 1,690 ​ $ 4,162 Special mention ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Substandard ​ ​ — ​ ​ — ​ ​ — ​ ​ 21 ​ ​ — ​ ​ — ​ ​ — ​ ​ 21 Total consumer ​ $ 539 ​ $ 10 ​ $ 1,691 ​ $ 82 ​ $ 40 ​ $ 131 ​ $ 1,690 ​ $ 4,183 Total loans outstanding ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Risk ratings ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pass ​ $ 442,956 ​ $ 432,112 ​ $ 204,536 ​ $ 243,040 ​ $ 133,816 ​ $ 422,924 ​ $ 57,532 ​ $ 1,936,916 Special mention ​ ​ — ​ ​ — ​ ​ 3,590 ​ ​ 18,317 ​ ​ 9,130 ​ ​ 31,428 ​ ​ 1,470 ​ ​ 63,935 Substandard ​ ​ — ​ ​ — ​ ​ 243 ​ ​ 5,371 ​ ​ 1,814 ​ ​ 12,918 ​ ​ 9 ​ ​ 20,355 Doubtful ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total loans outstanding ​ $ 442,956 ​ $ 432,112 ​ $ 208,369 ​ $ 266,728 ​ $ 144,760 ​ $ 467,270 ​ $ 59,011 ​ $ 2,021,206 ​ 22 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ The following tables provide an aging of the Company’s loans receivable as of the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recorded ​ ​ ​ ​ ​ 90 Days ​ ​ ​ ​ ​ ​ ​ ​ investment > ​ ​ 30–59 Days ​ 60–89 Days ​ or more ​ Total ​ ​ ​ ​ ​ ​ ​ Total loans ​ 90 days and ​ ​ past due ​ past due ​ past due ​ past due ​ Current ​ PCD loans ​ receivable ​ Accruing June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 459 ​ $ 4 ​ $ 517 ​ $ 980 ​ $ 179,653 ​ $ 219 ​ $ 180,852 ​ $ — Construction and land ​ — ​ — ​ — ​ — ​ 9,999 ​ — ​ 9,999 ​ — Commercial real estate ​ 839 ​ 1,250 ​ 8,020 ​ 10,109 ​ 1,694,214 ​ 27,192 ​ 1,731,515 ​ — Residential ​ 16 ​ 164 ​ ​ 412 ​ 592 ​ 88,873 ​ 550 ​ 90,015 ​ — Consumer ​ — ​ — ​ — ​ — ​ 916 ​ — ​ 916 ​ — Total ​ $ 1,314 ​ $ 1,418 ​ $ 8,949 ​ $ 11,681 ​ $ 1,973,655 ​ $ 27,961 ​ $ 2,013,297 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Recorded ​ ​ ​ ​ ​ 90 Days ​ ​ ​ ​ ​ ​ ​ ​ investment > ​ ​ 30–59 Days ​ 60–89 Days ​ or more ​ Total ​ ​ ​ ​ ​ ​ ​ Total loans ​ 90 days and ​ ​ past due ​ past due ​ past due ​ past due ​ Current ​ PCD loans ​ receivable ​ accruing December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial ​ $ 471 ​ $ 81 ​ $ 858 ​ $ 1,410 ​ $ 183,111 ​ $ 4,017 ​ $ 188,538 ​ $ — Construction and land ​ — ​ — ​ — ​ — ​ 9,109 ​ 4,054 ​ 13,163 ​ — Commercial real estate ​ 1,064 ​ 2,213 ​ 7,075 ​ 10,352 ​ 1,674,327 ​ 20,037 ​ 1,704,716 ​ 934 Residential ​ 101 ​ 3 ​ 847 ​ 951 ​ 108,976 ​ 679 ​ 110,606 ​ — Consumer ​ — ​ — ​ — ​ — ​ 4,183 ​ — ​ 4,183 ​ — Total ​ $ 1,636 ​ $ 2,297 ​ $ 8,780 ​ $ 12,713 ​ $ 1,979,706 ​ $ 28,787 ​ $ 2,021,206 ​ $ 934 ​ Nonaccrual loans totaled $ 12.8 million at June 30, 2023 and $ 14.3 million at December 31, 2022. Nonaccrual loans guaranteed by a government agency, which reduces the Company’s credit exposure, were $ 801,000 at June 30, 2023 compared to $ 839,000 at December 31, 2022. At June 30, 2023, nonaccrual loans included $ 1.1 million of loans 30-89 days past due and $ 2.8 million of loans less than 30 days past due. At December 31, 2022, nonaccrual loans included $ 2.5 million of loans 30-89 days past due and $ 4.0 million of loans less than 30 days past due. At June 30, 2023, nonaccrual loans 30-89 days past due of $ 1.1 million was comprised of two loans and the $ 2.8 million of loans less than 30 days past due was comprised of 15 loans. All these loans were placed on nonaccrual due to concerns over the financial condition of the borrowers. There were no loans that were 90 days or more past due and still accruing at June 30, 2023 compared to one such loan at December 31, 2022, which had a balance of $ 934,000 as of that date. Interest foregone on nonaccrual loans was approximately $ 185,000 and $ 420,000 for the three and six months ended June 30, 2023 compared to $ 72,700 and $ 157,000 for the three and six months ended June 30, 2022. ​ Purchased Credit Deteriorated Loans In connection with the Company's acquisitions, the contractual amount and timing of undiscounted principal and interest payments and the estimated amount and timing of undiscounted expected principal and interest payments were used to estimate the fair value of PCD loans at the acquisition date. The difference between these two amounts represented the nonaccretable difference. On the acquisition date, the amount by which the undiscounted expected cash flows exceed the estimated fair value of the acquired loans is the “accretable yield”. The accretable yield is then measured at each financial reporting date and represented the difference between the remaining undiscounted expected cash flows and the current carrying value of the loans. For PCD loans the accretable yield is accreted into interest income over the life of the estimated remaining cash flows. At each financial reporting date, the carrying value of each PCD loan is compared to an updated estimate of expected principal payment or recovery on each loan. To the extent that the loan carrying amount exceeds the updated expected principal payment or recovery, a provision for credit loss would be recorded as a charge to income and an allowance for credit losses for loans established. ​ ​ 23 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ ​ NOTE 6 – ALLOWANCE FOR CREDIT LOSSES FOR LOANS The following tables summarize the Company’s allowance for credit losses for loans, reserve for unfunded commitments, and loan balances individually and collectively evaluated by type of loan as of or for the three and six months ended June 30, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ Construction ​ Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reserve for ​ and industrial and land real estate Residential Consumer Total unfunded commitments Three months ended June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for credit losses ​ ​ ​ ​ ​ ​ ​ Beginning balance ​ $ 4,470 ​ $ 314 ​ $ 14,530 ​ $ 1,066 ​ $ 20 ​ $ 20,400 ​ $ 320 Charge-offs ​ ( 125 ) ​ — ​ ​ — ​ — ​ ​ ( 2 ) ​ ( 127 ) ​ — Recoveries ​ 64 ​ — ​ 2 ​ — ​ 1 ​ 67 ​ — (Reversal of) provision for credit losses ​ ( 762 ) ​ 3 ​ ( 365 ) ​ ( 107 ) ​ ( 9 ) ​ ( 1,240 ) ​ ( 20 ) Ending balance ​ $ 3,647 ​ $ 317 ​ $ 14,167 ​ $ 959 ​ $ 10 ​ $ 19,100 ​ $ 300 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six months ended June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for loan losses: ​ ​ ​ ​ ​ ​ ​ Beginning balance ​ $ 2,885 ​ $ 68 ​ $ 14,185 ​ $ 1,742 ​ $ 20 ​ $ 18,900 ​ $ 315 Impact of CECL adoption ​ ​ 1,366 ​ ​ 402 ​ ​ 2 ​ ​ ( 302 ) ​ ​ 32 ​ ​ 1,500 ​ ​ 45 Charge-offs ​ ( 283 ) ​ — ​ — ​ ( 175 ) ​ ( 3 ) ​ ( 461 ) ​ — Recoveries ​ 80 ​ — ​ 2 ​ ​ — ​ 4 ​ 86 ​ — Reversal of credit losses ​ ( 401 ) ​ ​ ( 153 ) ​ ​ ( 22 ) ​ ​ ( 306 ) ​ ​ ( 43 ) ​ ( 925 ) ​ ​ ( 60 ) Ending balance ​ $ 3,647 ​ $ 317 ​ $ 14,167 ​ $ 959 ​ $ 10 ​ $ 19,100 ​ $ 300 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for credit losses by methodology: ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans individually evaluated ​ $ 433 ​ $ — ​ $ 259 ​ $ 2 ​ $ — ​ $ 694 ​ ​ ​ Loans collectively evaluated ​ 3,212 ​ 317 ​ 13,293 ​ 948 ​ 10 ​ 17,780 ​ ​ ​ PCD loans ​ 2 ​ — ​ 615 ​ 9 ​ — ​ 626 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans receivable by methodology: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Individually evaluated ​ $ 656 ​ $ — ​ $ 11,251 ​ $ 1,698 ​ $ — ​ $ 13,605 ​ ​ ​ Collectively evaluated ​ 179,977 ​ 9,999 ​ 1,693,072 ​ 87,767 ​ 916 ​ 1,971,731 ​ ​ ​ PCD loans ​ 219 ​ — ​ 27,192 ​ 550 ​ — ​ 27,961 ​ ​ ​ Total loans ​ $ 180,852 ​ $ 9,999 ​ $ 1,731,515 ​ $ 90,015 ​ $ 916 ​ $ 2,013,297 ​ ​ ​ ​ ​ 24 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial ​ Construction ​ Commercial ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ and industrial and land real estate Residential Consumer ​ Total Three months ended June 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for loan losses ​ ​ ​ ​ ​ ​ ​ Beginning balance ​ $ 3,499 ​ $ 138 ​ $ 12,972 ​ $ 1,073 ​ $ 18 ​ $ 17,700 Charge-offs ​ ( 2,524 ) ​ — ​ — ​ — ​ ( 3 ) ​ ( 2,527 ) Recoveries ​ 4 ​ — ​ — ​ — ​ — ​ 4 Provision for (reversal of) loan losses ​ 1,892 ​ ( 64 ) ​ 858 ​ ( 66 ) ​ 3 ​ 2,623 Ending balance ​ $ 2,871 ​ $ 74 ​ $ 13,830 ​ $ 1,007 ​ $ 18 ​ $ 17,800 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six months ended June 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for loan losses ​ ​ ​ ​ ​ ​ ​ Beginning balance ​ $ 3,261 ​ $ 175 ​ $ 12,709 ​ $ 1,536 ​ $ 19 ​ $ 17,700 Charge-offs ​ ( 2,524 ) ​ — ​ ( 1 ) ​ ( 6 ) ​ ( 6 ) ​ ( 2,537 ) Recoveries ​ 7 ​ — ​ — ​ — ​ — ​ 7 Provision for (reversal of) loan losses ​ 2,127 ​ ​ ( 101 ) ​ ​ 1,122 ​ ​ ( 523 ) ​ ​ 5 ​ 2,630 Ending balance ​ $ 2,871 ​ $ 74 ​ $ 13,830 ​ $ 1,007 ​ $ 18 ​ $ 17,800 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for loan losses by methodology: ​ ​ ​ ​ ​ ​ Loans individually evaluated ​ $ 666 ​ $ — ​ $ 259 ​ $ 11 ​ $ — ​ $ 936 Loans collectively evaluated ​ 2,205 ​ 74 ​ 13,571 ​ 996 ​ 18 ​ 16,864 PCD loans ​ — ​ — ​ — ​ — ​ — ​ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans receivable by methodology: ​ ​ ​ ​ ​ ​ Individually evaluated ​ $ 3,213 ​ $ — ​ $ 6,109 ​ $ 1,870 ​ $ — ​ $ 11,192 Collectively evaluated ​ 253,093 ​ 11,928 ​ 1,604,909 ​ 90,002 ​ 3,741 ​ 1,963,673 PCD loans ​ 4,358 ​ 4,089 ​ 20,663 ​ 1,360 ​ — ​ 30,470 Total loans ​ $ 260,664 ​ $ 16,017 ​ $ 1,631,681 ​ $ 93,232 ​ $ 3,741 ​ $ 2,005,335 ​ ​ ​ For the three months ended June 20, 2023, the reversal of the allowance for credit losses was due to a decrease in the quantitative reserve primarily due to improvements in forecasted economic conditions, specifically, national gross domestic product and national unemployment indicators utilized to estimate credit losses over the next four quarters, and to a lesser extent, a decrease in outstanding loan balances, and $ 60,000 in net charge-offs for the three months ended June 30, 2023. There was no change in the determined risk level for any of the qualitative factors during the three months ended June 30, 2023. The reserve for individually evaluated loans decreased during the three months ended June 30, 2023 as one non-accrual loan, which was fully reserved for, was charged-off during the period. ​ For the six months ended June 20, 2023, the reversal of the allowance for credit losses was due to a decrease in the quantitative reserve primarily due to improvements in forecasted economic conditions, specifically, national gross domestic product and national unemployment indicators utilized to estimate credit losses over the next four quarters, as compared to those used in estimating the allowance for credit losses on loans at adoption, and to a lesser extent, a decrease in outstanding loan balances, partially offset by replenishment of the reserve from $ 375,000 in net charge-offs for the six months ended June 30, 2023. There was no change in the determined risk level for each of the qualitative factors during the six months ended June 30, 2023. The reserve for individually evaluated loans decreased during the six months ended June 30, 2023 as six non-accrual loans, which were fully reserved for, were charged-off during the period. ​ ​ ​ ​ ​ ​ 25 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ The following table summarizes the amortized cost basis of individually evaluated collateral-dependent nonaccrual loans by loan and collateral type at June 30, 2023 and December 31, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Convalescent ​ ​ ​ ​ ​ A/R and ​ ​ ​ Allowance for ​ Office Multifamily facility Other ​ SFR 1-4 Equipment Total Credit/Loan Losses June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 658 ​ $ 658 ​ $ 433 Construction and land ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Commercial real estate ​ ​ 251 ​ 5,327 ​ 2,573 ​ 2,327 ​ — ​ — ​ 10,478 ​ 259 Residential ​ — ​ — ​ ​ — ​ ​ — ​ ​ 1,695 ​ — ​ ​ 1,695 ​ 2 Consumer ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ — Total ​ $ 251 ​ $ 5,327 ​ $ 2,573 ​ $ 2,327 ​ $ 1,695 ​ $ 658 ​ $ 12,831 ​ $ 694 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial and industrial $ — ​ $ — ​ $ — ​ $ — ​ $ — ​ $ 878 ​ $ 878 ​ $ 687 Construction and land ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Commercial real estate ​ ​ 389 ​ 5,351 ​ 3,577 ​ 1,889 ​ — ​ — ​ 11,206 ​ 259 Residential ​ — ​ — ​ ​ — ​ ​ — ​ ​ 2,205 ​ — ​ ​ 2,205 ​ 222 Consumer ​ — ​ — ​ — ​ — ​ — ​ — ​ — ​ — Total ​ $ 389 ​ $ 5,351 ​ $ 3,577 ​ $ 1,889 ​ $ 2,205 ​ $ 878 ​ $ 14,289 ​ $ 1,168 ​ The following table shows the amortized cost and allowance for credit losses for loans on nonaccrual status as of June 30, 2023 and the amortized cost and allowance for loan losses for loans on nonaccrual status as of December 31, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, 2023 ​ As of December 31, 2022 ​ ​ Non-accrual ​ Non-accrual ​ ​ ​ Non-accrual ​ Non-accrual ​ ​ ​ ​ with no allowance ​ with allowance ​ Total ​ with no allowance ​ with allowance ​ Total ​ for credit losses for credit losses nonaccrual for loan losses for loan losses nonaccrual Commercial and industrial $ — ​ $ 658 ​ $ 658 ​ $ — ​ $ 878 ​ $ 878 Construction and land ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Commercial real estate ​ ​ 10,093 ​ 385 ​ ​ 10,478 ​ 10,734 ​ 472 ​ 11,206 Residential ​ 1,535 ​ 160 ​ ​ 1,695 ​ ​ 1,991 ​ ​ 214 ​ 2,205 Consumer ​ — ​ — ​ ​ — ​ — ​ — ​ — Total ​ $ 11,628 ​ $ 1,203 ​ $ 12,831 ​ $ 12,725 ​ $ 1,564 ​ $ 14,289 ​ Interest income recognized on nonaccrual loans was $ 16,000 and $ 81,000 for the three and six months ended June 30, 2023, and $ 18,000 and $ 33,000 for the three and six months ended June 30, 2022, respectively. ​ As part of the acquisition of PEB, 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 credit 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 26 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ participating lender and provided there are no pending claims for reimbursement, the remaining excess funds 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 June 30, 2023, the Company had $ 25.6 million of loans enrolled in this loan program. The Company had a loss reserve account of $ 13.7 million as of June 30, 2023. ​ In addition, as successor to PEB, the Company was approved by 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. The Company originated $ 2.5 million of loans under this program during the six months ended June 30, 2023. As of June 30, 2023, the Company had $ 21.7 million of loans enrolled in this program and a loss reserve account of $ 6.2 million. ​ ​ ​ ​ ​ ​ ​ ​ NOTE 7 – PREMISES AND EQUIPMENT Premises and equipment consisted of the following at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2023 ​ 2022 Premises owned ​ $ 11,154 ​ $ 11,120 Leasehold improvements ​ 2,266 ​ 2,259 Furniture, fixtures and equipment ​ 7,355 ​ 6,760 Less accumulated depreciation and amortization ​ ( 7,736 ) ​ ( 6,861 ) Total premises and equipment, net ​ $ 13,039 ​ $ 13,278 ​ Depreciation and amortization included in occupancy and equipment expense totaled $ 430,000 and $ 883,000 for the three and six months ended June 30, 2023, and $ 503,000 and $ 1.0 million for the three and six months ended June 30, 2022, respectively. ​ NOTE 8 – LEASES The Company leased 19 branches under noncancelable operating leases as of June 30, 2023. These leases expire on various dates through 2030. The Company’s leases often have an option to renew one or more times, at the Company’s discretion, following the expiration of the initial term. If at lease inception, the Company considers the exercising of a 27 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. ​ The Company uses the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. ​ The below maturity schedule represents the undiscounted lease payments for the five-year period and thereafter as of June 30, 2023: ​ ​ ​ ​ ​ For remainder of 2023 ​ $ 1,935 2024 ​ ​ 3,997 2025 ​ 3,175 2026 ​ 2,423 2027 ​ ​ 1,936 Thereafter ​ 3,649 Total undiscounted cash flows ​ ​ 17,115 Less: interest ​ ​ ( 1,168 ) Present value of lease payments ​ $ 15,947 ​ The following table presents the weighted average lease term and discount rate at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2023 ​ June 30, 2022 Weighted-average remaining lease term 5.0 years ​ 4.9 years Weighted-average discount rate 3.2 % ​ 2.4 % ​ Rental expense included in occupancy and equipment expense totaled $ 1.0 million and $ 2.0 million for the three and six months ended June 30, 2023, and $ 893,000 and $ 2.2 million for the three and six months ended June 30, 2022, respectively. ​ ​ NOTE 9 – GOODWILL AND INTANGIBLE ASSETS Goodwill is determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and the liabilities assumed as of the acquisition date. Goodwill and other intangible assets are assessed for impairment annually or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Core deposit intangible represents the estimated future benefit of deposits related to an acquisition and is booked separately from the related deposits and amortized over an estimated useful life of seven to ten years . Goodwill The Company’s policy is to assess goodwill for impairment at the reporting unit level on an annual basis or between annual assessments if a triggering event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Impairment exists when a reporting unit’s fair value is less than its carrying amount, including goodwill. 28 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ Changes in the Company's goodwill during the six months ended June 30, 2023 and year ended December 31, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ At and for the At and for the ​ ​ six months ended ​ year ended ​ ​ June 30, 2023 ​ December 31, 2022 Balance at beginning of period ​ $ 38,838 ​ $ 38,838 Acquired goodwill ​ — ​ — Impairment ​ — ​ — Balance at end of period ​ $ 38,838 ​ $ 38,838 ​ Core Deposit Intangible Changes in the Company’s core deposit intangible during the six months ended June 30, 2023 and year ended December 31, 2022 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ At and for the At and for the ​ ​ six months ended ​ year ended ​ ​ June 30, 2023 ​ December 31, 2022 Balance at beginning of period ​ $ 5,201 ​ $ 6,489 Additions ​ — ​ 756 Less amortization ​ ( 674 ) ​ ( 2,044 ) Balance at end of period ​ $ 4,527 ​ $ 5,201 ​ Estimated annual amortization expense at June 30, 2023 was as follows: ​ ​ ​ ​ ​ For remainder of 2023 ​ $ 612 2024 ​ ​ 1,222 2025 ​ 948 2026 ​ 455 2027 ​ ​ 455 Thereafter ​ 835 Total ​ $ 4,527 ​ ​ ​ 29 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ NOTE 10 – INTEREST RECEIVABLE AND OTHER ASSETS The Company’s interest receivable and other assets at the dates indicated consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2023 ​ 2022 Tax assets, net ​ $ 19,442 ​ $ 18,762 Accrued interest receivable ​ 7,560 ​ 7,659 Investment in SBIC fund ​ 4,936 ​ 4,389 Investment in Community Reinvestment Act fund ​ ​ 2,000 ​ ​ 2,000 Prepaid assets ​ 2,284 ​ 1,568 Servicing assets ​ 1,717 ​ 2,092 Investment in Low Income Housing Tax Credit ("LIHTC") partnerships, net ​ 3,004 ​ 2,675 Investment in statutory trusts ​ 501 ​ 493 CalCAP reserve receivable ​ ​ 4,023 ​ ​ 4,023 Other assets ​ 2,072 ​ 1,871 Total ​ $ 47,539 ​ $ 45,532 ​ ​ ​ ​ NOTE 11 – DEPOSITS The Company’s deposits consisted of the following at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2023 ​ 2022 Demand deposits ​ $ 664,096 ​ $ 773,274 NOW accounts and savings ​ 404,146 ​ 441,064 Money market ​ 619,701 ​ 577,792 Time deposits ​ 459,123 ​ 293,349 Total ​ $ 2,147,066 ​ $ 2,085,479 ​ Included in time deposits are certificates of deposit over $ 250 thousand totaling $ 71.5 million and $ 57.8 million at June 30, 2023 and December 31, 2022, respectively. ​ ​ NOTE 12 – BORROWINGS Other borrowings – The Bank has an approved secured borrowing facility with the Federal Home Loan Bank of San Francisco (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 both June 30, 2023 and December 31, 2022, the Company had no FHLB advances outstanding. The Bank has Federal Funds lines with four corresponding banks. Cumulative available commitments totaled $ 65.0 million at both June 30, 2023 and December 31, 2022. There were no amounts outstanding under these facilities at June 30, 2023 or December 31, 2022. Junior subordinated deferrable interest debentures – In connection with its previous acquisitions, the Company assumed junior subordinated deferrable interest debentures, totaling $ 8.5 million, net of fair value adjustments, with a weighted average interest rate of 8.12 % at June 30, 2023, compared to $ 8.5 million, net of fair value adjustments, with a weighted average rate of 7.34 % at December 31, 2022 . The junior subordinated deferrable interest debentures mature in 2034, subject to earlier redemption by the Company. 30 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ Subordinated debt – On August 10, 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. The Notes initially bear a fixed interest rate of 5.25 % per year. Commencing on September 15, 2025, the interest rate on the Notes resets quarterly to the three-month Secured Overnight Financing rate plus a spread of 521 basis points ( 5.21 %), payable quarterly in arrears. 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 earlier 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 June 30, 2023 and December 31, 2022, the Company had outstanding Notes, net of cost to issue, totaling $ 63.8 million and $ 63.7 million, respectively. ​ NOTE 13 – INTEREST PAYABLE AND OTHER LIABILITIES The Company’s interest payable and other liabilities at the dates indicated consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2023 ​ 2022 Accrued expenses ​ $ 7,233 ​ $ 8,598 Accounts payable ​ 709 ​ 452 Reserve for unfunded commitments ​ 300 ​ 315 Accrued interest payable ​ 2,686 ​ 1,413 Other liabilities ​ 9,256 ​ 5,755 Total ​ $ 20,184 ​ $ 16,533 ​ ​ ​ NOTE 14 – OTHER EXPENSES The Company’s other expenses for the periods indicated consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ Six months ended ​ June 30, June 30, ​ ​ 2023 ​ 2022 ​ 2023 ​ 2022 Professional fees ​ $ 445 ​ $ 576 ​ $ 892 ​ $ 1,882 Core deposit premium amortization ​ 305 ​ 516 ​ 674 ​ 1,011 Marketing and promotions ​ 253 ​ 237 ​ 400 ​ 533 Stationery and supplies ​ 85 ​ 84 ​ 172 ​ 176 Insurance (including FDIC premiums) ​ 433 ​ 238 ​ 634 ​ 469 Communication and postage ​ 221 ​ 234 ​ 450 ​ 458 Loan default related expense ​ 86 ​ 98 ​ 152 ​ 137 Director fees ​ 84 ​ 115 ​ 165 ​ 199 Bank service charges ​ 16 ​ 58 ​ 32 ​ 124 Courier expense ​ 189 ​ 190 ​ 371 ​ 365 Other ​ 105 ​ 1 ​ 281 ​ 305 Total ​ $ 2,222 ​ $ 2,347 ​ $ 4,223 ​ $ 5,659 ​ The Company expenses marketing and promotion costs as they are incurred. Advertising expense included in marketing and promotions totaled $ 15,000 and $ 21,000 for the three and six months ended June 30, 2023, and $ 21,000 and $ 42,000 for the three and six months ended June 30, 2022, respectively. ​ ​ 31 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ NOTE 15 – EQUITY INCENTIVE PLANS Equity Incentive Plans 2017 Omnibus Equity Incentive Plan The Company’s shareholders approved the Company’s 2017 Omnibus Equity Incentive Plan (“2017 Plan”) in November 2017. The 2017 Plan provides for the awarding by the Company’s Board of Directors of equity incentive awards to employees and non-employee directors. An equity incentive award under the 2017 Plan may be an option, stock appreciation right, restricted stock units, stock award, other stock-based award or performance award. Factors considered by the Board in awarding equity incentives to officers and employees include the performance of the Company, the employee’s or officer’s job performance, the importance of his or her position, and his or her contribution to the organization’s goals for the award period. Generally, awards are restricted and have a vesting period of no longer than ten years. Subject to adjustment as provided in the 2017 Plan, the maximum number of shares of common stock that may be delivered pursuant to awards granted under the 2017 Plan is 450,000 . The 2017 Plan provides for an annual restricted stock grant limits to officers, employees and directors. The annual stock grant limit per person for officers and employees is the lesser of 50,000 shares or a value of $ 2.0 million, and per person for directors, the maximum is 25,000 shares. All unvested restricted shares outstanding vest in the event of a change in control of the Company. Awarded shares of restricted stock vest over (i) a one-year period following the date of grant, in the case of the non-employee directors, and (ii) a three-year or five-year period following the date of grant, with the initial vesting occurring on the one-year anniversary of the date of grant, in the case of the executive officers. As of June 30, 2023, a total of 57,693 shares were available for future issuance under the 2017 Plan. 2014 Omnibus Equity Incentive Plan In 2014, the Company’s shareholders approved the Company’s 2014 Equity Incentive Plan (the “2014 Plan”). A total of 148,962 equity incentive awards were granted under the 2014 Plan. The awards are shares of restricted stock and have a vesting period of one to five years . No future equity awards will be made from the 2014 Plan. The Company recognizes compensation expense for the restricted stock awards based on the fair value of the shares at the award date. Total compensation expense for these plans was $ 182,000 and $ 432,000 for the three and six months ended June 30, 2023 and $ 233,000 and $ 557,000 for the three and six months ended June 30, 2022, respectively. As of June 30, 2023, there was $ 996,000 of total unrecognized compensation cost related to non-vested shares granted as restricted stock awards. The cost is expected to be recognized over the remaining weighted-average vesting period of approximately three years . The Company has two forms of outstanding common stock: fully vested common stock and unvested restricted stock awards. Holders of restricted stock awards receive non-forfeitable dividends at the same rate as common stockholders and they both share equally in undistributed earnings. Under the two-class method, the difference in earnings per share is not significant for these participating securities. ​ 32 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ The following table provides the restricted stock grant activity for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At and for the three and six months ended June 30, ​ ​ ​ 2023 ​ 2022 ​ ​ ​ Weighted-average ​ Weighted-average ​ ​ ​ ​ grant date ​ ​ ​ grant date ​ ​ Shares ​ fair value ​ Shares ​ fair value Non-vested at January 1, 97,877 ​ $ 16.80 ​ 139,275 ​ $ 16.29 ​ Granted 28,392 ​ 18.98 ​ 22,473 ​ 18.79 ​ Vested ( 16,979 ) ​ 19.06 ​ ( 15,560 ) ​ 18.34 ​ Forfeited ​ — ​ ​ — ​ ( 532 ) ​ ​ 18.79 ​ Non-Vested, at March 31, 109,290 ​ ​ 17.01 ​ 145,656 ​ ​ 16.45 ​ Vested ( 30,764 ) ​ ​ 12.18 ​ ( 45,997 ) ​ ​ 16.29 ​ Forfeited ​ — ​ ​ — ​ ( 1,322 ) ​ ​ 18.16 ​ Non-Vested, at June 30, 78,526 ​ $ 18.91 ​ 98,337 ​ $ 16.50 ​ ​ ​ NOTE 16 – FAIR VALUE MEASUREMENT ASC Topic 820, “Fair Value Measurement,” defines fair value, establishes a framework for measuring fair value including a three-level valuation hierarchy, and expands disclosures about fair value measurements. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date reflecting assumptions that a market participant would use when pricing an asset or liability. The hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows: Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the reporting entity has the ability to access at the measurement date. Level 2 – Observable prices in active markets for similar assets and liabilities; prices for identical or similar assets or liabilities in markets that are not active; directly observable market inputs for substantially the full term of the asset and liability; market inputs that are not directly observable but are derived from or corroborated by observable market data. Level 3 – Unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. We use fair value to measure certain assets and liabilities on a recurring basis, primarily securities available-for-sale. For assets measured at the lower of cost or fair value, the fair value measurement criteria may or may not be met during a reporting period and such measurements are therefore considered “nonrecurring” for purposes of disclosing our fair value measurements. Fair value is used on a nonrecurring basis to adjust carrying values for individually evaluated loans and other real estate owned and to record impairment on certain assets, such as goodwill, core deposit intangible, and other long-lived assets. In certain cases, the inputs used to measure fair value may fall into different levels of the hierarchy. In such cases, the lowest level of inputs that is significant to the measurement is used to determine the hierarchy for the entire asset or liability. Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstances that caused the transfer, which generally coincides with our quarterly valuation process. There were no transfers between levels during the three and six months ended June 30, 2023 and 2022. 33 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ The following assets are measured at fair value on a recurring basis as of the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Estimated Fair Value Measurements ​ ​ Fair Value ​ Level 1 ​ Level 2 ​ Level 3 June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. Government Agencies ​ $ 1,502 ​ $ — ​ $ 1,502 ​ $ — Municipal securities ​ 19,180 ​ — ​ 19,180 ​ — Mortgage-backed securities ​ 29,976 ​ — ​ 29,976 ​ — Collateralized mortgage obligations ​ 26,228 ​ — ​ 26,228 ​ — SBA securities ​ 3,835 ​ — ​ 3,835 ​ — Corporate bonds ​ 65,785 ​ — ​ 65,785 ​ — Equity securities ​ ​ 11,912 ​ ​ 11,912 ​ ​ — ​ ​ — Total ​ $ 158,418 ​ $ 11,912 ​ $ 146,506 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Estimated Fair Value Measurements ​ ​ Fair Value ​ Level 1 ​ Level 2 ​ Level 3 December 31, 2022 ​ ​ ​ ​ U.S. Government Agencies ​ $ 1,505 ​ $ — ​ $ 1,505 ​ $ — Municipal securities ​ 19,557 ​ — ​ 19,557 ​ — Mortgage-backed securities ​ 33,010 ​ — ​ 33,010 ​ — Collateralized mortgage obligations ​ 25,424 ​ — ​ 25,424 ​ — SBA securities ​ 4,305 ​ — ​ 4,305 ​ — Corporate bonds ​ 70,203 ​ — ​ 70,203 ​ — Equity securities ​ ​ 13,757 ​ ​ 13,757 ​ ​ — ​ ​ — Total ​ $ 167,761 ​ $ 13,757 ​ $ 154,004 ​ $ — ​ The following assets are measured at fair value on a nonrecurring basis as of the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Estimated Fair Value Measurements ​ ​ Fair Value ​ Level 1 ​ Level 2 ​ Level 3 June 30, 2023 ​ ​ ​ ​ Individually evaluated ​ $ 13,605 ​ — ​ — ​ $ 13,605 OREO ​ — ​ — ​ — ​ — Total ​ $ 13,605 ​ $ — ​ $ — ​ $ 13,605 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Estimated Fair Value Measurements ​ ​ Fair Value ​ Level 1 ​ Level 2 ​ Level 3 December 31, 2022 ​ ​ ​ ​ Performing impaired loans (1) ​ $ 759 ​ $ — ​ $ — ​ $ 759 Nonperforming impaired loans ​ 15,223 ​ — ​ — ​ 15,223 OREO ​ 21 ​ — ​ — ​ 21 Total ​ $ 16,003 ​ $ — ​ $ — ​ $ 16,003 ​ (1) At June, 30, 2023, with the adoption of CECL, one performing modified loan to a borrower experiencing financial difficulty was individually evaluated in determining the estimated allowance for credit losses. The Company does not record loans at fair value on a recurring basis. However, from time to time, certain loans have individual risk characteristics not consistent with a pool of loans and are individually evaluated for credit reserves. Loans for which it is probable that payment of interest and principal will not be made in accordance with the original 34 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ contractual terms of the loan agreement are typically individually evaluated. The fair value of individually evaluated loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise and liquidation value and discounted cash flows. Those individually evaluated loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. When the fair value of the collateral is based on an observable market price or a current appraised value which uses substantially observable data, the Company records the individually evaluated loan as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is less than the appraised value or the appraised value contains a significant assumption and there is no observable market price, the Company records the individually evaluated loan as nonrecurring Level 3. The Company records foreclosed assets, or OREO, at fair value on a nonrecurring basis based on the collateral value of the property. When the fair value of the collateral is based on an observable market price or a current appraised value which uses substantially observable data, the Company records the OREO as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is less than the appraised value or the appraised value contains a significant assumption, and there is no observable market price, the Company records the OREO as nonrecurring Level 3. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Management also incorporates assumptions regarding market trends or other relevant factors and selling and commission costs ranging from 5% to 7%. Such adjustments and assumptions are typically significant and result in a Level 3 classification of the inputs for determining fair value. ​ NOTE 17 – FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts and fair values of the Company’s financial instruments at the dates indicated are presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Carrying ​ Fair ​ Fair value measurements ​ amount value Level 1 Level 2 Level 3 June 30, 2023 ​ ​ ​ ​ ​ Financial assets: ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 250,199 ​ $ 250,199 ​ $ 250,199 ​ $ — ​ $ — Time deposits in banks ​ 1,992 ​ 1,992 ​ 1,992 ​ — ​ — Investment securities available-for-sale ​ 146,506 ​ 146,506 ​ — ​ 146,506 ​ — Equity securities ​ ​ 11,912 ​ ​ 11,912 ​ ​ 11,912 ​ ​ — ​ ​ — Investment in FHLB and FRB Stock ​ 20,929 ​ 20,929 ​ — ​ 20,929 ​ — Loans, net ​ 1,994,207 ​ 1,918,577 ​ — ​ — ​ 1,918,577 Accrued interest receivable ​ 7,560 ​ 7,560 ​ — ​ 7,560 ​ — Financial liabilities: ​ ​ ​ ​ ​ Deposits ​ 2,147,066 ​ 2,149,738 ​ — ​ 2,149,738 ​ — Junior subordinated deferrable interest debentures, net ​ ​ 8,524 ​ ​ 8,515 ​ ​ — ​ ​ — ​ ​ 8,515 Subordinated debt, net ​ ​ 63,796 ​ 63,796 ​ — ​ ​ 63,796 ​ ​ — Accrued interest payable ​ 2,686 ​ 2,686 ​ — ​ 2,686 ​ — Off-balance sheet liabilities: ​ ​ ​ ​ ​ ​ Undisbursed loan commitments, lines of credit, standby letters of credit ​ 87,108 ​ 86,808 ​ — ​ — ​ 86,808 ​ ​ ​ ​ ​ 35 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Carrying ​ Fair ​ Fair value measurements ​ amount value Level 1 Level 2 Level 3 December 31, 2022 ​ ​ ​ ​ ​ Financial assets: ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 176,815 ​ $ 176,815 ​ $ 176,815 ​ $ — ​ $ — Time deposits in banks ​ 2,241 ​ 2,241 ​ 2,241 ​ — ​ — Investment securities available-for-sale ​ 154,004 ​ 154,004 ​ — ​ 154,004 ​ — Equity securities ​ ​ 13,757 ​ ​ 13,757 ​ ​ 13,757 ​ ​ — ​ ​ — Investment in FHLB and FRB Stock ​ 20,281 ​ 20,281 ​ — ​ 20,281 ​ — Loans held for sale ​ 2,380 ​ 2,380 ​ — ​ 2,380 ​ — Loans, net ​ 2,002,224 ​ 1,940,480 ​ — ​ — ​ 1,940,480 Accrued interest receivable ​ 7,659 ​ 7,659 ​ — ​ 7,659 ​ — Financial liabilities: ​ ​ ​ ​ ​ Deposits ​ 2,085,479 ​ 2,087,265 ​ — ​ 2,087,265 ​ — Junior subordinated deferrable interest debentures, net ​ 8,484 ​ 7,739 ​ — ​ — ​ 7,739 Subordinated debt, net ​ 63,711 ​ 63,711 ​ — ​ 63,711 ​ — Accrued interest payable ​ 1,413 ​ 1,413 ​ — ​ 1,413 ​ — Off-balance sheet liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Undisbursed loan commitments, lines of credit, standby letters of credit ​ 97,542 ​ 97,227 ​ — ​ — ​ 97,227 ​ ​ ​ NOTE 18 – COMMITMENTS AND CONTINGENCIES Lending and Letter of Credit Commitments We operate in a highly regulated environment. From time to time, we are a party to various claims and litigation matters incidental to the conduct of our business. We are not presently party to any legal proceedings where we believe the resolution would have a material adverse effect on our business, financial condition, or results of operations. Nevertheless, given the nature, scope and complexity of the extensive legal and regulatory landscape applicable to our business (including laws and regulations governing consumer protection, fair lending, fair labor, privacy, information security and anti-money laundering and anti-terrorism laws), we, like all banking organizations, are subject to heightened legal and regulatory compliance and litigation risk. In the normal course of business, the Company enters into various commitments to extend credit which are not reflected in the financial statements. These commitments consist of the undisbursed balance on home equity and unsecured personal lines of credit, commercial lines of credit, including commercial real estate secured lines of credit, and of undisbursed funds on construction and development loans. The Company also issues standby letter of credit commitments, primarily for the third-party performance obligations of clients. 36 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ The following table presents a summary of commitments described above as of the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2023 ​ 2022 Commitments to extend credit ​ $ 86,187 ​ $ 96,774 Standby letters of credit ​ 921 ​ 768 Total commitments ​ $ 87,108 ​ $ 97,542 ​ Commitments generally have fixed expiration dates or other termination clauses. The actual liquidity needs or the credit risk that the Company will experience will likely be lower than the contractual amount of commitments to extend credit because a significant portion of these commitments are expected to expire without being drawn upon. The commitments are generally variable rate and include unfunded home equity lines of credit, commercial real estate construction loans where disbursement is made over the course of construction, commercial revolving lines of credit, and unsecured personal lines of credit. The Company’s outstanding loan commitments are made using the same underwriting standards as comparable outstanding loans. The reserve associated with these commitments included in interest payable and other liabilities on the consolidated balance sheets was $ 300,000 at June 30, 2023 and $ 315,000 at December 31, 2022. Commercial Real Estate Concentrations At June 30, 2023 and December 31, 2022, in management’s judgment, a concentration of loans existed in commercial real estate related loans. The Company’s commercial real estate loans are secured by owner-occupied and non-owner occupied commercial real estate and multifamily properties. Although management believes that loans within these concentrations have no more than the normal risk of collectability, a decline in the performance of the economy in general, or a decline in real estate values in the Company’s primary market areas in particular, could have an adverse impact on collectability . Other Assets The Company has commitments to fund investments in LIHTC partnerships and an SBIC fund. At June 30, 2023, the remaining commitments to the LIHTC partnerships and the SBIC fund were approximately $ 1.5 million and $ 122,000 , respectively. At December 31, 2022, the remaining commitments to the LIHTC partnerships and the SBIC fund were approximately $ 2.1 million and $ 122,000 , respectively. Deposits At June 30, 2023, approximately $ 186.7 million, or 8.66 %, of the Company's deposits were derived from its top ten depositors. At December 31, 2022, approximately $ 215.1 million, or 11.0 %, of the Company's deposits were derived from its top ten depositors. As of June 30, 2023 and December 31, 2022, approximately $ 992.2 million, or 46.2 % and $ 1.1 billion, or 53.3 %, of our total deposits were uninsured, respectively. The uninsured amounts are estimates based on the methodologies and assumptions used for United Business Bank’s regulatory reporting requirements. Local Agency Deposits and Other Advances In the normal course of business, the Company accepts deposits from local agencies. The Company is required to provide collateral for certain local agency deposits in the states of California, Colorado, New Mexico and Washington. At June 30, 2023 and December 31, 2022, the FHLB issued letters of credit on behalf of the Company totaling $ 42.6 million and $ 40.6 million, respectively, as collateral for local agency deposits. ​ NOTE 19 – SUBSEQUENT EVENTS The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there have been no events that have occurred that would require adjustments to our disclosures in the 37 Table of Contents BAYCOM CORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued) (Tables in thousands, except for share and per share data) (unaudited) ​ consolidated financial statements except for the matter described below, which constitutes a non-recognized (Type II) subsequent event. ​ Subsequent to June 30, 2023, the Company determined that a certificate of deposit-secured line of credit loan made to a revocable living trust (the “Trust” or the “Borrower”) with an outstanding balance of approximately $ 5.0 million as of June 30, 2023 was impaired as a result of the sole trustee and beneficiary of the Trust filing for personal bankruptcy in July 2023. At June 30, 2023, the loan was performing in accordance with its payment terms and was secured by a $ 4.0 million certificate of deposit held at the Bank. An additional $ 1.0 million in cash collateral securing the loan had previously been released by the Bank into a third-party escrow account at the request of the Borrower to be used as a refundable retainer in connection with a separate transaction by the Borrower. The loan matured on July 16, 2023. and the Bank received notification that the sole trustee and beneficiary of the Trust filed for personal bankruptcy on July 18, 2023. After receiving this notification, the Bank used the $ 4.0 million certificate of deposit held at the Bank to offset amounts owed on the loan and contacted the third-party escrow agent for the return of the additional $ 1.0 million of collateral. The Bank was advised by the escrow agent that the previously escrowed funds had been released by the escrow agent, which was done without the Bank’s consent and contrary to the written escrow instructions. The Bank plans to initiate legal action against the Borrower, the Borrower’s related parties and the escrow agent to recover the previously escrowed collateral. As the results of the planned legal action and the Bank’s ability to recover the previously escrowed collateral are uncertain, the Company expects to record a $ 1.0 million reserve for the unsecured portion of the loan during the third quarter of 2023. ​ ​ ​ ​ ​ ​ 38 Table of Contents ​