What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-13 compared with 2023-08-14 · 187 added, 253 removed, 790 unchanged (36% of the section changed)

9 unchanged sentences

(In thousands, except for share data)

September 30,

(As Restated)

3 unchanged sentences

Time deposits in banks

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

Investment securities available-for-sale ("AFS"), at fair value, net of allowance for credit losses of $ 0 at both September 30, 2023 and December 31, 2022

Equity securities

2 unchanged sentences

Loans held for sale

Loans, net of allowance for credit losses of $ 19,100 at June 30, 2023 and $ 18,900 at December 31, 2022

Loans, net of allowance for credit losses of $ 19,800 at September 30, 2023 and $ 18,900 at December 31, 2022

Premises and equipment, net

16 unchanged sentences

10,000,000 shares authorized;

no shares issued and outstanding at both June 30, 2023 and December 31, 2022

no shares issued and outstanding at both September 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

11,673,830 and 12,838,462 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid in capital

8 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

(As Restated)

12 unchanged sentences

Net interest income

(Reversal of) provision for credit losses

Net interest income after (reversal of) provision for credit losses

Provision for (reversal of) credit losses

Net interest income after provision for (reversal of) credit losses

Noninterest income:

25 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

(As Restated)

12 unchanged sentences

Income/(Loss)

Three months ended June 30, 2023

Balance, April 1, 2023

(As Restated)

Three months ended September 30, 2023

Balance, July 1, 2023

Other comprehensive loss, net

Restricted stock granted

Cash dividends of $ 0.10 per share

1 unchanged sentence

Repurchase of shares

Balance, June 30, 2023

Three months ended June 30, 2022

Balance, April 1, 2022

Balance, September 30, 2023

Three months ended September 30, 2022

Balance, July 1, 2022

(As Restated)

Other comprehensive loss, net

Restricted stock forfeited

Restricted stock granted

Cash dividends of $ 0.05 per share

1 unchanged sentence

Repurchase of shares

Balance, June 30, 2022

Balance, September 30, 2022

(As Restated)

6 unchanged sentences

Income/(Loss)

Six months ended June 30, 2023

Nine months ended September 30, 2023

Balance, January 1, 2023

6 unchanged sentences

Repurchase of shares

Balance, June 30, 2023

Six months ended June 30, 2022

( 1,206,481 )

Balance, September 30, 2023

Nine months ended September 30, 2022

Balance, January 1, 2022

6 unchanged sentences

Repurchase of shares

Balance, June 30, 2022

Balance, September 30, 2022

(As Restated)

3 unchanged sentences

(In thousands)

Six months ended

Nine months ended

September 30,

(As Restated)

2 unchanged sentences

(Reversal of) provision for credit losses

(Decrease) increase in deferred tax assets

Decrease in deferred tax assets

Accretion on acquired loans

18 unchanged sentences

Proceeds from maturities of interest bearing deposits in banks

Purchase of investment securities

Proceeds from maturities, repayments and calls of investment securities

Proceeds from sales of investment securities

Purchase of investment securities AFS

Purchase of equity securities

Proceeds from maturities, repayments and calls of investment securities AFS

Proceeds from sales of investment securities AFS

Purchase of Federal Home Loan Bank stock

7 unchanged sentences

(In thousands)

Six months ended

Nine months ended

September 30,

(As Restated)

12 unchanged sentences

Income taxes paid, net

Recognition of ROU assets

Recognition of lease liability

Non-cash investing and financing activities:

5 unchanged sentences

See Notes to Condensed Consolidated Financial Statements.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Tables in thousands, except for share data and per share data)

NOTE 1 – BASIS OF PRESENTATION

22 unchanged sentences

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

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

that the securities should instead have been accounted for under ASC Topic 321 – Investments-Equity Securities .

However, as a result of subsequent research and third-party consultation, the Company determined 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.

15 unchanged sentences

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.

In accordance with 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.

2 unchanged sentences

Troubled Debt Restructurings and Vintage Disclosures .

ASU 2022-02 eliminates the recognition measurement guidance for

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

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 .

ASU 2022-02 eliminates the recognition measurement guidance for 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.

6 unchanged sentences

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.

17 unchanged sentences

The following table summarizes the fair value of the assets acquired and liabilities assumed at the acquisition date:

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

February 1, 2022

19 unchanged sentences

Bargain purchase gain

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

The following table presents the net assets acquired and the estimated fair value adjustments, which resulted in bargain purchase gain at the acquisition date:

13 unchanged sentences

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 operating results of the Company for the three and nine months ended September 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.

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,

Unaudited pro forma net interest income, net income and earnings per share for the three and nine months ended September 30, 2023 and 2022 are presented below:

Three Months Ended September 30,

Nine Months Ended September 30,

2022 (As Restated)

6 unchanged sentences

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

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

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:

No third-party acquisition expenses were recognized in the consolidated statements of income for the three and nine months ended September 30, 2023.

The Company recognized third-party acquisition expenses for the three and nine months ended September 30, 2022, as follows:

Three months ended

Six months ended

Nine months ended

September 30,

Severance expense

5 unchanged sentences

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:

June 30, 2023

September 30, 2023

Government Agencies

11 unchanged sentences

Corporate bonds

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.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

Amortized cost and fair values exclude accrued interest receivable of $ 1.4 million and $ 1.2 million at September 30, 2023 and December 31, 2022, respectively, which is included in interest receivable and other assets in the condensed consolidated balance sheets.

During both the three and nine months ended September 30, 2023, the Company sold no securities available-for-sale.

During the three and nine months ended September 30, 2022, the Company sold no securities available-for-sale and one security available-for-sale for a minimal realized gain, respectively.

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:

1 unchanged sentence

12 months or more

June 30, 2023

September 30, 2023

Municipal securities

11 unchanged sentences

Corporate bonds

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.

At September 30, 2023, the Company held 324 securities available-for-sale, of which 293 were in an unrealized loss position for more than twelve months and 22 were in an unrealized loss position for less than twelve months.

The securities that were in an unrealized loss position as of September 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.

As of September 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.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

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

September 30, 2023

December 31, 2022

6 unchanged sentences

Due after ten years

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.

Equity Securities – The Company recognized a net loss on equity securities of $ 274,000 and $ 2.1 million for the three and nine months ended September 30, 2023, and recognized a net loss on equity securities of $362,000 and $ 4.0 million for the three and nine months ended September 30, 2022, respectively, due to a decrease in fair value of the equity securities.

Equity securities were $ 11.6 million and $ 13.8 million as of September 30, 2023 and December 31, 2022, respectively.

NOTE 5 – LOANS

The Company’s loan portfolio at the dates indicated is summarized below:

September 30,

Commercial and industrial (1)

3 unchanged sentences

Allowance for credit losses (2)

(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.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

(1) Includes $ 4.3 million and $ 11.1 million of U.S.

Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans as of September 30, 2023 and December 31, 2022, respectively.

(2) Allowance for credit losses at September 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 $ 6.3 million and $ 6.2 million at September 30, 2023 and December 31, 2022, respectively, which is included in interest receivable and other assets in the condensed consolidated balance sheets.

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:

and industrial

June 30, 2023

September 30, 2023

Recorded investment in loans individually evaluated:

20 unchanged sentences

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.

During the three and nine months ended September 30, 2023, there were no modifications of loans to borrowers experiencing financial difficulty.

During the three and nine months ended September 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.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

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.

There were no commitments to lend additional amounts for modified loans to borrowers experiencing financial difficulty at September 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):

loans outstanding

June 30, 2023

September 30, 2023

Commercial and industrial

2 unchanged sentences

loans outstanding

June 30, 2022

September 30, 2022

Commercial and industrial

1 unchanged sentence

Commercial real estate

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.

For the three and nine months ended September 30, 2023, the Company recorded no charge-offs for modified loans to borrowers experiencing financial difficulty.

During the three and nine months ended September 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 nine months ended September 30, 2023 and 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 September 30, 2023 and December 31, 2022, individually evaluated modified loans to borrowers experiencing financial difficulty had a related allowance of $ 342,000 and $ 393,000 , respectively.

As of September 30, 2023 and December 31, 2022, none 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.

4 unchanged sentences

Any adverse or beneficial trends will trigger a review of the loan risk rating.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

loan is assigned a risk grade based on its characteristics.

Each 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.

27 unchanged sentences

Recoveries on loans previously charged off are credited to the allowance for credit losses.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

The following tables present the internally assigned risk grade by class of loans at the dates indicated:

1 unchanged sentence

amortized cost

June 30, 2023

September 30, 2023

Commercial and industrial:

18 unchanged sentences

YTD gross charge-offs

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

Term loans - amortized cost by origination year

17 unchanged sentences

Total loans outstanding

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

The following tables provide an aging of the Company’s loans receivable as of the dates indicated:

June 30, 2023

September 30, 2023

Commercial and industrial

5 unchanged sentences

Commercial real estate

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.

Nonaccrual loans totaled $ 14.3 million at both September 30, 2023 and December 31, 2022.

Nonaccrual loans guaranteed by a government agency, which reduces the Company’s credit exposure, were $ 801,000 at September 30, 2023 compared to $ 839,000 at December 31, 2022.

At September 30, 2023, nonaccrual loans included $ 2.3 million of loans 30-89 days past due and $ 2.6 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.

At September 30, 2023, nonaccrual loans 30-89 days past due of $ 2.3 million was comprised of six loans and the $ 2.6 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.

There were no loans that were 90 days or more past due and still accruing at September 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 $ 173,000 and $ 593,000 for the three and nine months ended September 30, 2023 compared to $ 230,000 and $ 388,000 for the three and nine months ended September 30, 2022.

Purchased Credit Deteriorated Loans

6 unchanged sentences

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.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

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:

and industrial

unfunded commitments

Three months ended June 30, 2023

Three months ended September 30, 2023

Allowance for credit losses

Beginning balance

(Reversal of) provision for credit losses

Provision for (reversal of) credit losses

Ending balance

Six months ended June 30, 2023

Nine months ended September 30, 2023

Allowance for loan losses:

1 unchanged sentence

Impact of CECL adoption

Reversal of credit losses

Provision for (reversal) of credit losses

Ending balance

June 30, 2023

Allowance for credit losses by methodology:

September 30, 2023

Allowance for credit losses:

Loans individually evaluated

Loans collectively evaluated

Loans receivable by methodology:

Loans receivable:

Individually evaluated

Collectively evaluated

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

and industrial

Three months ended June 30, 2022

Three months ended September 30, 2022

Allowance for loan losses

2 unchanged sentences

Ending balance

Six months ended June 30, 2022

Nine months ended September 30, 2022

Allowance for loan losses

2 unchanged sentences

Ending balance

June 30, 2022

Allowance for loan losses by methodology:

September 30, 2022

Allowance for loan losses:

Loans individually evaluated

Loans collectively evaluated

Loans receivable by methodology:

Loans receivable:

Individually evaluated

Collectively evaluated

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.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

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.

For the three months ended September 30, 2023, the provision for credit losses was primarily due to a $ 1.2 million increase in reserves for individually evaluated loans, which included the loan to the Trust discussed below, and an increase in qualitative reserves, partially offset by improvements in forecasted economic conditions, specifically, national gross domestic product and national unemployment, indicators utilized to estimate credit losses and, to a lesser extent, a decrease in outstanding loan balances and $ 24,000 in net charge-offs during the third quarter of 2023.

During the quarter ended September 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 $ 1.0 million as of September 30, 2023 was impaired and placed on nonaccrual 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 had an outstanding balance of $ 5.0 million 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 has initiated legal action against the Borrower, the Borrower’s related parties and the escrow agent to recover the previously escrowed collateral.

The results of the legal action and the Bank’s ability to recover the previously escrowed collateral are currently uncertain.

The loan was fully reserved for at September 30, 2023.

For the nine months ended September 30, 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 an overall increase in reserves of individually evaluated loans and replenishment of the reserve from $ 399,000 in net charge-offs for the nine months ended September 30, 2023.

The reserve for individually evaluated loans increased during the nine months ended September 30, 2023 primarily due to a $ 1.0 million reserve for the individually evaluated loan to the Trust discussed above, partially offset by a decrease in the specific reserve due to nine nonaccrual loans that were fully reserved for and charged-off during the nine months ended September 30, 2023.

The following table summarizes the amortized cost basis of individually evaluated collateral-dependent nonaccrual loans by loan and collateral type at September 30, 2023 and December 31, 2022.

Allowance for

Credit/Loan Losses

June 30, 2023

September 30, 2023

Commercial and industrial

5 unchanged sentences

Commercial real estate

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

The following table shows the amortized cost and allowance for credit losses for loans on nonaccrual status as of September 30, 2023 and the amortized cost and allowance for loan losses for loans on nonaccrual status as of December 31, 2022.

As of September 30, 2023

As of December 31, 2022

10 unchanged sentences

Commercial real estate

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.

Interest income recognized on nonaccrual loans was $ 39,000 and $ 120,000 for the three and nine months ended September 30, 2023, and $ 52,000 and $ 84,000 for the three and nine months ended September 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”).

7 unchanged sentences

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

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

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.

As of September 30, 2023, the Company had $ 23.2 million of loans enrolled in this loan program.

The Company had a loss reserve account of $ 13.7 million as of September 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.

3 unchanged sentences

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.

The Company originated $ 4.2 million of loans under this program during the nine months ended September 30, 2023.

As of September 30, 2023, the Company had $ 20.3 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:

September 30,

Premises owned

3 unchanged sentences

Total premises and equipment, net

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.

Depreciation and amortization included in occupancy and equipment expense totaled $ 390,000 and $ 1.3 million for the three and nine months ended September 30, 2023 and $ 489,000 and $ 1.5 million for the three and nine months ended September 30, 2022, respectively.

NOTE 8 – LEASES

The Company leased 19 branches under noncancelable operating leases as of June 30, 2023.

The Company leased 20 branches under noncancelable operating leases as of September 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

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability.

If at lease inception, the Company considers the

exercising of a 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:

The below maturity schedule represents the undiscounted lease payments for the five-year period and thereafter as of September 30, 2023:

For remainder of 2023

2 unchanged sentences

The following table presents the weighted average lease term and discount rate at the dates indicated:

June 30, 2023

June 30, 2022

September 30, 2023

September 30, 2022

Weighted-average remaining lease term

Weighted-average discount rate

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.

Rental expense included in occupancy and equipment expense totaled $ 1.0 million and $ 3.0 million for the three and nine months ended September 30, 2023 and $ 934,000 and $ 3.2 million for the three and nine months ended September 30, 2022, respectively.

NOTE 9 – GOODWILL AND INTANGIBLE ASSETS

5 unchanged sentences

Impairment exists when a reporting unit’s fair value is less than its carrying amount, including goodwill.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

Changes in the Company's goodwill during the six months ended June 30, 2023 and year ended December 31, 2022 were as follows:

Changes in the Company's goodwill during the nine months ended September 30, 2023 and year ended December 31, 2022 were as follows:

At and for the

six months ended

June 30, 2023

nine months ended

September 30, 2023

December 31, 2022

3 unchanged sentences

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:

Changes in the Company’s core deposit intangible during the nine months ended September 30, 2023 and year ended December 31, 2022 were as follows:

At and for the

six months ended

June 30, 2023

nine months ended

September 30, 2023

December 31, 2022

2 unchanged sentences

Balance at end of period

Estimated annual amortization expense at June 30, 2023 was as follows:

Estimated annual amortization expense at September 30, 2023 was as follows:

For remainder of 2023

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

NOTE 10 – INTEREST RECEIVABLE AND OTHER ASSETS

The Company’s interest receivable and other assets at the dates indicated consisted of the following:

September 30,

Tax assets, net

9 unchanged sentences

The Company’s deposits consisted of the following at the dates indicated:

September 30,

Demand deposits

1 unchanged sentence

Time deposits

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.

Included in time deposits are certificates of deposit over $ 250 thousand totaling $ 68.6 million and $ 57.8 million at September 30, 2023 and December 31, 2022, respectively.

At September 30, 2023, uninsured deposits totaled $ 991.6 million, compared to $ 1.1 billion at December 31, 2022.

The uninsured amounts are estimates based on the methodologies and assumptions used for United Business Bank’s regulatory reporting requirements.

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.

At both September 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 .

Cumulative available commitments totaled $ 65.0 million at both September 30, 2023 and December 31, 2022.

There were no amounts outstanding under these facilities at both September 30, 2023 and 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 8.25 % at September 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.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

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.

3 unchanged sentences

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.

At September 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:

September 30,

Accrued expenses

6 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

Professional fees

5 unchanged sentences

Loan default related expense

Director fees

Director fees and expenses

Bank service charges

1 unchanged sentence

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.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

Advertising expense included in marketing and promotions totaled $ 15,000 and $ 36,000 for the three and nine months ended September 30, 2023, and $ 12,000 and $ 54,000 for the three and nine months ended September 30, 2022, respectively.

NOTE 15 – EQUITY INCENTIVE PLANS

5 unchanged sentences

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.

Generally, awards 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 2017 Plan provides for 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.

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.

As of September 30, 2023, a total of 44,236 shares were available for future issuance under the 2017 Plan.

2014 Omnibus Equity Incentive Plan

4 unchanged sentences

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.

Total compensation expense for unvested restricted stock awards under these plans was $ 153,000 and $ 585,000 for the three and nine months ended September 30, 2023 and $ 232,000 and $ 789,000 for the three and nine months ended September 30, 2022, respectively.

As of September 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 .

3 unchanged sentences

Under the two-class method, the difference in earnings per share is not significant for these participating securities.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

The following table provides the restricted stock grant activity for the periods indicated:

At and for the three and six months ended June 30,

At and for the three and nine months ended September 30,

Weighted-average

3 unchanged sentences

Non-Vested, at June 30,

Non-Vested, at September 30,

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.

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:

11 unchanged sentences

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.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

There were no transfers between levels during the three and nine months ended September 30, 2023 and 2022.

The following assets are measured at fair value on a recurring basis as of the dates indicated:

1 unchanged sentence

Fair Value Measurements

June 30, 2023

September 30, 2023

Government Agencies

18 unchanged sentences

Fair Value Measurements

June 30, 2023

Individually evaluated

September 30, 2023

Individually evaluated loans (1)

Total Estimated

3 unchanged sentences

Nonperforming impaired loans

(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.

(1) For each quarter the loan was outstanding in 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

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

contractual terms of the loan agreement are typically individually evaluated.

Loans for which it is probable that payment of interest and principal will not be made in accordance with the original 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.

6 unchanged sentences

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%.

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.

2 unchanged sentences

Fair value measurements

June 30, 2023

September 30, 2023

Financial assets:

4 unchanged sentences

Investment in FHLB and FRB Stock

Loans held for sale

Accrued interest receivable

5 unchanged sentences

Undisbursed loan commitments, lines of credit, standby letters of credit

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

Fair value measurements

23 unchanged sentences

The Company also issues standby letter of credit commitments, primarily for the third-party performance obligations of clients.

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

The following table presents a summary of commitments described above as of the dates indicated:

September 30,

Commitments to extend credit

5 unchanged sentences

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.

The reserve associated with these commitments included in interest payable and other liabilities on the consolidated balance sheets was $ 250,000 at September 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.

At September 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.

1 unchanged sentence

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 September 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.

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.

At September 30, 2023, approximately $ 227.6 million, or 10.5 %, 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 September 30, 2023 and December 31, 2022, approximately $ 991.6 million, or 45.9 % 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.

2 unchanged sentences

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.

At September 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

BAYCOM CORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (continued)

(Tables in thousands, except for share and per share data)

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.

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.

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.

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 condensed consolidated financial statements.

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

What changed 10-Q

Item 1. Financial Statements