What changed in this filing

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Item 1. Business

2026-03-16 compared with 2025-03-14 · 91 added, 94 removed, 619 unchanged (23% of the section changed)

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

BayCom’s wholly owned banking subsidiary, United Business Bank, provides a broad range of financial services to businesses and business owners as well as individuals through its network of 35 full-service branches, with 16 locations in California, one in Nevada, two in Washington, five in New Mexico and 11 in Colorado.

BayCom’s wholly owned banking subsidiary, United Business Bank, provides a broad range of financial services to businesses and business owners, as well as individual consumers, through its network of 34 full-service branches, with 16 locations in California, one in Nevada, one in Washington, five in New Mexico and 11 in Colorado.

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

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

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

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

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We have also grown organically by leveraging the potential within metropolitan and community markets where we operate.

These markets offer significant opportunities to expand our commercial client base, increase interest-earning assets, and enhance market share.

These markets have offered significant opportunities to expand our commercial client base, increase interest-earning assets, and enhance market share.

We believe our geographic footprint, which now includes the San Francisco Bay area, the metropolitan markets of Los Angeles, California;

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and Las Vegas, Nevada, and community markets including Albuquerque, New Mexico, and Custer, Delta, and Grand Counties, Colorado, provides us access to low cost, stable core deposits in community markets that we can use to fund commercial loan growth.

We strive to provide an enhanced banking experience for our clients by providing them with a comprehensive suite of sophisticated banking products and services tailored to meet their needs, while delivering the high-quality, relationship-based client service of a community bank.

We strive to provide an enhanced banking experience for our clients by providing them with a comprehensive suite of sophisticated products and services tailored to meet their needs, while delivering the high-quality, relationship-based client service of a community bank.

As of December 31, 2025, we had, on a consolidated basis, assets of $2.6 billion, loans of $2.0 billion (net of allowances), deposits of $2.2 billion and shareholders’ equity of $338.6 million.

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

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

We have sought to integrate the acquired banks into our existing operational platform to create operational efficiencies within the combined operations, all geared towards enhancing shareholder value.

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

We have sought to integrate the acquired banks into our existing operational platform to create operational efficiencies within th e combined operations, all geared towards enhancing shareholder value.

Continuing our vision, in August 2023, we opened a de novo branch in Las Vegas, Nevada to expand our geographic footprint and market areas and augment our deposit and loan growth.

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This acquisition increased our deposits by approximately $428.0 million.

At the time of acquisition, United Business Bank, FSB had total assets of approximately $473.1 million, which significantly increased our total asset size and provided us with nine full-service banking offices in Long Beach, Oakland, Sacramento, San Francisco, San Jose and Glendale, California;

and Seattle, Washington and Albuquerque, New Mexico.

This acquisition significantly increased our total asset size, expanded our geographic footprint and added low cost, stable deposits associated with a strong network of relationship with labor unions.

At the time of acquisition, United Business Bank, FSB had total assets of approximately $473.1 million, which significantly increased our asset size and provided us with nine full-service banking offices in Long Beach, Oakland, Sacramento, San Francisco, San Jose and Glendale, California;

Seattle, Washington and Albuquerque, New Mexico.

This acquisition expanded our geographic footprint and added low cost, stable deposits associated with a strong network of relationship with labor unions.

In November 2017, we acquired Plaza Bank, with one branch located in Seattle, Washington.

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

We operate primarily in the San Francisco-Oakland-Hayward, and the San Jose-Sunnyvale-Santa Clara, California Metropolitan Statistical Areas (“MSA”) with additional operations in the Los Angeles-Long Beach-Anaheim, California MSA, with borrowers or properties located in San Francisco Bay Area comprising 19.7%, Northern California comprising 4.4% and Southern California comprising 27.5% of our loan portfolio as of December 31, 2024.

Deposits located in California comprised 62.7% of our total deposits as of December 31, 2024.

We operate primarily in the San Francisco-Oakland-Hayward, and the San Jose-Sunnyvale-Santa Clara, California Metropolitan Statistical Areas (“MSA”) with additional operations in the Los Angeles-Long Beach-Anaheim, California MSA, with borrowers or properties located in San Francisco Bay Area comprisin g 19.5%, Northern California comprising 4.5% and Southern California comprising 29.1% of our loan portfolio as of December 31, 2025.

Depositors located in California comprised 51.5% of our total deposits as of December 31, 2025.

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

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

We believe the market’s median household income of $91,960, large concentration of small and medium-sized businesses, and its highest population density in the nation position the area as an attractive market in which to expand operations.

We serve the Seattle-Tacoma-Bellevue MSA, which includes King County (which includes the city of Seattle), through two branch offices.

We believe the area’s median household income of $96,405, large concentration of small and medium-sized businesses, and population density, which is the highest in the nation, make the area an attractive market in which to expand operations.

We serve the Seattle-Tacoma-Bellevue MSA, which includes King County (which includes the city of Seattle), through one branch office.

In Central New Mexico, we serve the Albuquerque MSA, the most populous city in the state of New Mexico, through five branch offices we acquired from FULB and BFC, in 2017 and 2018, respectively.

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In August 2023, we opened a branch in Las Vegas, Nevada to expand our geographic footprint and augment our deposit and loan growth.

As of December 31, 2024, borrowers or properties located in the states of Colorado, New Mexico and Washington comprised 6.9%, 3.2% and 4.3% of our loan portfolio, respectively.

As of December 31, 2024, deposits located in the states of Colorado, New Mexico and Washington comprised 15.7%, 10.1% and 5.9% of our total deposits, respectively.

We provide a comprehensive suite of financial solutions that competes with large, national competitors, but with the personalized attention and nimbleness of a relationship-focused community bank.

As of December 31, 2025, borrowers or properties located in the states of Colorado, New Mexico, Washington and Nevada comprised 6.4%, 3.4%, 4.4% and 2.2% of our loan portfolio, respectively.

As of December 31, 2025, depositors located in the states of Colorado, New Mexico, Washington and Nevada comprised 13.6%, 9.1%, 5.2% and 0.8% of our total deposits, respectively.

We provide a comprehensive suite of financial solutions that competes with large, national institutions, but with the personalized attention and nimbleness of a relationship-focused community bank.

We provide our commercial clients with a diverse array of cash management services.

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We are a preferred lender under the SBA loan program.

We periodically purchase whole loans and loan participation interests and participate in syndicates originating new loans, including shared national credits, primarily during periods of reduced loan demand in our primary market areas

and at times to support our Community Reinvestment Act lending activities.

Any such purchases or loan participations are made generally consistent with our underwriting standards;

however, the loans may be located outside of our normal lending areas.

During the years ended December 31, 2024 and 2023, we purchased $86.1 million and $137.9 million, respectively, of loans and loan participation interests, principally commercial and industrial loans and multifamily real estate loans.

During the years ended December 31, 2025 and 2024, we purchased $31.0 million and $86.1 million, respectively, of loans and loan participation interests, principally commercial and industrial loans, multifamily real estate loans, and single-family residential loans.

We are a business-focused community bank, serving small and medium-sized businesses, trade unions and their related businesses, entrepreneurs and professionals located in our markets.

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Large Credit Relationships.

As of December 31, 2024, the aggregate amount of loans to our 10 and 25 largest borrowers (including related entities) amounted to approximately $184.4 million, or 9.4% of total loans, and $319.3 million, or 16.4% of total loans, respectively.

As of December 31, 2025, the aggregate amount of loans to our ten and 25 largest borrowers (including related entities) amounted to approximately $266.9 million, or 12.9% of total loans, and $470.5 million, or 22.8% of total loans, respectively.

The table below shows our five largest borrowing relationships as of December 31, 2025 in descending order.

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These policies prescribe underwriting guidelines and procedures for all loan categories to establish risk tolerances and parameters that are communicated throughout the Bank to ensure consistent and uniform lending practices.

The underwriting guidelines include, among other things, approval limitation and hierarchy, documentation standards, loan-to-value limits, debt coverage ratio, overall credit-worthiness of the borrower, guarantor support, etc.

The underwriting guidelines include, among other things, approval limitation and hierarchy, documentation standards, loan-to-value limits, debt coverage ratio, overall creditworthiness of the borrower, guarantor support, etc.

Loan originations are obtained through a variety of sources, including existing clients, walk-in clients, referrals from brokers or existing clients, and advertising.

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Lending Limits.

Our lending activities are subject to a variety of lending limits imposed by federal and state law.

Our lending activities are subject to a variety of limits imposed by federal and state law.

In general, we are subject to a limit on loans to a single borrower based on the Bank’s capital level.

The dollar amounts of our lending limit increase or decrease as the Bank’s capital increases or decreases.

The dollar amounts of our lending limits increase or decrease as the Bank’s capital increases or decreases.

We can sell participations in larger loans to other financial institutions, which allows us to manage the risk involved in these loans and to meet the lending needs of our clients’ requiring extensions of credit in excess of these limits.

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Currently, we maintain an in-house limit of $10.3 million for unsecured loans and $17.2 million for secured loans.

At December 31, 2024, there were four loans to a total of four individuals, entities, or their related interests that exceeded internal limits, all of which were approved by the Board’s Loan Committee.

At December 31, 2025, there were seven loans to a total of four individuals, entities, or their related interests that exceeded internal limits, all of which were approved by the Board’s Loan Committee.

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

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construction and land loans;

and mortgages and revolving lines of credit secured by equity in residential properties.

and mortgage loans and revolving lines of credit secured by equity in residential properties.

At December 31, 2025, we held $2.0 billion in loans secured by real estate, representing 97.8% of total loans receivable, and had a total of $49.9 million in undisbursed real estate related loan commitments.

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Our commercial real estate loans generally are collateralized by first liens on real estate, have interest rates which may be fixed for three to five years, or adjust annually.

Commercial real estate loan terms generally are limited to 15 years or less, although payments may be structured on a longer amortization basis of up to 20 years, with balloon payments or rate adjustments due at the end of three to seven years.

Commercial real estate loan terms generally are limited to 15 years or less, although payments may be structured on a amortization basis of up to 20 years, with balloon payments or rate adjustments due at the end of three to seven years.

We generally charge the borrower an origination fee.

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

As of December 31, 2024, our largest commercial real estate loan had a net outstanding balance of $26.6 million and was secured by a church located in San Diego, California.

As of December 31, 2025, our largest commercial real estate loan had a net outstanding ba lance of $26.0 million and was secured by a church located in San Diego, California.

Our second largest commercial real estate loan had a net outstanding balance of $22.1 million as of December 31, 2025, and was secured by retail shopping center located in Sacramento, California.

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

Home equity loans and home equity lines of credit generally have a loan-to-value ratio of up 80% at the time origination when combined with the first mortgage.

Home equity loans and home equity lines of credit generally have a loan-to-value ratio of up 80% at the time of origination when combined with the first mortgage.

The majority of these loans are secured by a first or second mortgage on residential property.

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As of December 31, 2025, we had agricultural operating loans of $265,000, or $0.01% of total loans.

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

PEB ceased originating loans under this loan program in 2017.

As part of its acquisition of Pacific Enterprise Bancorp (“PEB”) in 2022, the Company acquired certain small business loans to borrowers qualified under The California Capital Access Program (“CalCAP”) for Small Business, a state loan loss reserve program, funded by the federal State Small Business Credit Initiative, and administered by the California Pollution Control Financing Authority.

PEB ceased originating loans under this loan program in 2017, and the Company does not currently originate any loans under the program.

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.

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The increased risk in commercial and industrial loans derives from the expectation that such loans generally are serviced principally from the operations of the business, and those operations might not be successful.

Any interruption or discontinuance of operating cash flows from the business, which may be influenced by events not under the control of the borrower such as economic events and changes in governmental regulations, could materially affect the ability of the borrower to repay the loan.

In addition, the collateral securing commercial and industrial loans generally includes moveable property such as equipment and inventory, which may decline in value more rapidly than we anticipate, exposing

us to increased credit risk.

borrower to repay the loan.

As a result of these additional complexities, variables and risks, commercial and industrial loans require extensive underwriting and servicing.

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The terms of consumer loans vary considerably based upon the loan type, nature of collateral and size of the loan.

Consumer loans entail greater risk than do residential real estate loans because they may be unsecured or, if secured, the value of the collateral, such as an automobile or boat, may be more difficult to assess and more likely to decrease in value than real estate.

Consumer loans entail greater risk than residential real estate loans because they may be unsecured or, if secured, the value of the collateral, such as an automobile or boat, may be more difficult to assess and more likely to decrease in value than real estate.

In such cases, any repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the outstanding loan balance.

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At December 31, 2025, we had $261.2 million and $119.9 million in reciprocal CDARS and ICS deposits, respectively.

At December 31, 2023, we had $210.8 million and $124.2 million in in reciprocal CDARS and ICS deposits, respectively.

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

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At December 31, 2025, there were no FHLB advances outstanding, and the Bank had $580.7 million of available credit capacity with the FHLB based on pledged collateral.

During the first quarter of 2024, the Bank was approved for discount window advances with the FRB of San Francisco secured by certain types of loans.

The Bank has been approved for discount window advances from the FRB of San Francisco secured by certain types of loans.

At December 31, 2025, we had the ability to borrow up to $49.3 million from the FRB of San Francisco, with no FRB of San Francisco advances outstanding at that date.

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There were no amounts outstanding under these facilities at December 31, 2025.

The Bank did not participate in the Federal Reserve Bank of San Francisco Bank Term Funding Program.

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

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

The Notes initially bears 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 (“SOFR”) 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 early redemption date.

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

At December 31, 2024, we had outstanding subordinate debt, net of costs to issue, totaling $63.7 million.

The Notes initially bore a fixed interest rate of 5.25% per year.

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

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

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

During the third quarter of 2025, the Company redeemed all outstanding Notes.

As of December 31, 2025, the Company had no outstanding Notes, compared to $63.7 million, net of issuance costs, as of December 31, 2024.

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

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Our investment policy, established by the Board of Directors, is reviewed annually by both the Board of Directors and the Asset/Liability Management Committee.

This review is intended to ensure ongoing compliance with the policy and allow for necessary updates.

This review ensures ongoing compliance with the policy and allows for any necessary updates.

Additionally, all securities transactions are reported to the Board of Directors on a monthly basis.

The primary objectives of our investment policy are to maintain a high-quality portfolio, provide liquidity during periods of high loan demand, support earnings when loan demand is low, and maximize returns while managing various risks, including credit, reinvestment, liquidity, and interest rate risk.

The primary objectives of our investment policy are to maintain a high-quality portfolio, provide liquidity during periods of strong loan demand, support earnings when loan demand is low, and maximize returns while managing risks, including credit, reinvestment, liquidity, and interest rate risk.

The policy also defines criteria for classifying securities as either available for sale or held to maturity.

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Our debt securities portfolio primarily consists of obligations issued by U.S.

government agencies and sponsored enterprises, including mortgage-backed securities, collateralized mortgage obligations, municipal securities, SBA securities, and corporate bonds.

government agencies and government-sponsored enterprises, including mortgage-backed securities, collateralized mortgage obligations, municipal securities, SBA securities, and corporate bonds.

As of December 31, 2025, our total investment in debt securities was $179.7 million, with an average yield of 4.1% and an estimated duration of 5.9 years.

We also invest in equity securities to enhance portfolio diversification, generate capital appreciation, and manage market exposure.

Our equity portfolio currently consists of marketable preferred stock, which is carried at fair value, with unrealized holding gains and losses recognized as non-interest income in the consolidated statement of income.

Our equity portfolio consists of marketable preferred stock, which is carried at fair value, with unrealized gains and losses recognized as non-interest income in the consolidated statement of income.

Gains and losses from sales are determined using the specific identification method.

Premium amortization and discount accretion are recorded as adjustments to interest income over the securities’ maturity period.

Premium amortization and discount accretion are recorded as adjustments to interest income over the securities’ remaining maturity period.

As of December 31, 2025, our investment in equity securities totaled $12.6 million, with holding periods determined by market conditions and strategic asset allocation.

This investment policy serves as a guideline to ensure prudent investment decisions that align with the Bank’s overall financial objectives and risk management principles.

This investment policy serves as a guideline to promote prudent investment decisions aligned with the Bank’s overall financial objectives and risk management principles.

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

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

As a California chartered bank that is a member of the Federal Reserve System, the Bank is subject to supervision, periodic examination, and regulation by the

California Department of Financial Protection and Innovation (“DFPI”), previously known as the California Department of Business Oversight, and by the Federal Reserve as its primary federal regulator.

As a California chartered bank that is a member of the Federal Reserve System, the Bank is subject to supervision, periodic examination, and regulation by the California Department of Financial Protection and Innovation (“DFPI”), and by the Federal Reserve as its primary federal

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

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In October 2022, the FDIC adopted a final rule to increase initial base deposit insurance assessment rates by two basis points beginning with the first quarterly assessment period of 2023.

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

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

The Bank paid $1.1 million in FDIC assessments for both the year ended December 31, 2025 and the year ended December 31, 2024.

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Subordinated Notes, such as the ones the Company issued in 2020, are also included in Tier 2 Capital.

In addition to the minimum CET1, Tier 1, leverage ratio and total capital ratios, the capital regulations require a capital conservation buffer consisting of additional CET1 capital greater than 2.5% of risk-weighted assets above the required minimum risk-based capital levels to avoid limitations on paying dividends, repurchasing shares, and paying discretionary bonuses.

required minimum risk-based capital levels to avoid limitations on paying dividends, repurchasing shares, and paying discretionary bonuses.

To be considered “well capitalized,” a depository institution must have a Tier 1 risk-based capital ratio of at least 8%, a total risk-based capital ratio of at least 10%, a CET1 capital ratio of at least 6.5% and a leverage ratio of at least 5%, and not be subject to an individualized order, directive or agreement under which its primary federal banking regulator requires it to maintain a specific capital level.

As of December 31, 2025, the Bank met the requirements to be “well capitalized” and met the fully phased-in capital conservation buffer requirement.

The Economic Growth, Regulatory Relief and Consumer Protection Act (“EGRRCPA”), enacted in May 2018, required the federal banking agencies to establish for institutions with assets of less than $10 billion a “community bank leverage ratio” of between 8 to 10%.

In September 2019, the federal banking agencies adopted a final rule, effective January 1, 2020, creating a community bank leverage ratio ("CBLR") for institutions with total consolidated assets of less than $10 billion, and that meet other qualifying criteria related to off-balance sheet exposures and trading assets and liabilities.

The CBLR provides for a simplified measure of capital adequacy for qualifying institutions.

A bank that elects to use the Community Bank Leverage Ratio will generally be considered Well Capitalized and to have met the risk-based and leverage capital requirements of the capital regulations if it has a leverage ratio greater than 9.0%.

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

The Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (“EGRRCPA”) directed the federal banking agencies to establish a Community Bank Leverage Ratio (“CBLR”) framework for qualifying banking organizations with less than $10 billion in total consolidated assets.

The federal banking agencies adopted a final rule implementing the CBLR framework, effective January 1, 2020.

Under this framework, a qualifying banking organization that elects to use the CBLR and maintains a leverage ratio above the applicable threshold is generally considered to have satisfied the regulatory capital requirements and to be “well capitalized.” The CBLR was initially set at 9.0%.

In November 2025, the federal banking agencies proposed reducing the CBLR requirement to 8.0% and eliminating certain temporary relief provisions adopted during the COVID-19 pandemic.

The Bank has not elected to use the CBLR framework and continues to calculate and report regulatory capital under the generally applicable risk-based capital rules.

Prompt Corrective Action.

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● Total commercial real estate loans (as defined in the guidance) represent 300% or more of the bank’s total regulatory capital, and the outstanding balance of the bank’s commercial real estate loan portfolio has increased by 50% or more during the prior 36 months.

The guidance provides that the strength of an institution’s lending and risk management practices with respect to such concentrations will be taken into account in supervisory guidance on evaluation of capital adequacy.

As of December 31, 2025, the Bank’s aggregate recorded loan balances for construction, land development and land loans were 2.0% of total regulatory capital.

In addition, at December 31, 2025, the Bank’s commercial real estate loans as calculated in accordance with regulatory guidance were 411.1% of total regulatory capital.

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

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

Accordingly, the Bank exceeds the supervisory screening level for commercial real estate concentration risk and may be subject to increased supervisory scrutiny.

Activities and Investments of Insured State-Chartered Financial Institutions.

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Community Reinvestment Act.

The Bank is subject to the provisions of the Community Reinvestment Act of 1977 (“CRA”), which requires the appropriate federal bank regulatory agency to assess a bank’s performance under the CRA in meeting the credit needs of the community serviced by the bank, including low- and moderate-income neighborhoods.

The regulatory agency’s assessment of the bank’s record is made available to the public.

Further, a bank’s CRA performance rating must be considered in connection with a bank’s application to, among other things, to establish a new branch office that will accept deposits, relocate an existing office or merge or consolidate with, or acquire the assets or assume the liabilities of, a federally regulated financial institution.

An unsatisfactory rating may be the basis for denial of certain applications.

The Bank received a “satisfactory” rating during its most recently completed CRA examination.

On October 24, 2023, the federal banking agencies, including the Federal Reserve issued a final rule designed to strengthen and modernize the regulations implementing the CRA.

The changes are designed to encourage banks to expand access to credit, investment and banking services in low- and moderate-income communities, adapt to changes in the banking industry, including mobile and internet banking, provide greater clarity and consistency in the application of the CRA regulations and tailor CRA evaluations and data collection to bank size and type.

The Bank cannot predict the impact the changes to the CRA regulations will have on its operations.

The applicability date for the majority of the changes is January 1, 2026, with additional requirements becoming applicable on January 1, 2027.

The Bank is subject to the Community Reinvestment Act of 1977 (“CRA”), which requires the Bank’s primary federal regulator to evaluate the Bank’s record of meeting the credit needs of its communities, including low- and moderate-income neighborhoods.

The regulator’s assessment is made public.

A bank’s CRA rating is considered in connection with certain applications, including establishing or relocating branches and engaging in mergers or acquisitions.

A less than satisfactory rating may adversely affect the approval of such applications.

The Bank received a “Satisfactory” rating in its most recently completed CRA examination.

On October 24, 2023, the federal banking agencies, including the Federal Reserve , issued a final rule intended to modernize the CRA regulatory framework.

The rule was designed to expand access to credit, investment , and banking services in low- and moderate-income communities, address changes in the banking industry, and tailor CRA evaluations and data collection requirements based on bank size and activities.

Although the rule was published with an April 1, 2024 effective date and staggered compliance dates, its implementation was stayed by a preliminary injunction.

In 2025, the federal banking agencies issued a joint notice of proposed rulemaking to rescind the 2023 final rule and reinstate the prior CRA regulations.

Accordingly, the Bank continues to be evaluated under the pre-2023 CRA regulatory framework .

Dividends from the Bank constitute the major source of funds available for dividends which may be paid to the Company’s shareholders.

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These guidelines, along with related regulatory materials, increasingly focus on risk management and processes related to information technology and the use of third parties in the provision of financial services.

These regulations require the Bank to disclose its privacy policy, including informing consumers of its information sharing practices and informing consumers of their rights to opt out of

certain practices.

In addition, on November 18, 2021, the federal banking agencies announced the adoption of a final rule providing for new notification requirements for banking organizations and their service providers for significant cybersecurity incidents.

These regulations require the Bank to disclose its privacy policy, including informing consumers of its information sharing practices and informing consumers of their rights to opt out of certain practices.

cybersecurity incidents.

Specifically, the new rule requires a banking organization to notify its primary federal regulator as soon as possible, and no later than 36 hours after, the banking organization determines that a “computer-security incident” rising to the level of a “notification incident” has occurred.

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Other Consumer Protection Laws and Regulations.

The Dodd-Frank Act established the CFPB and empowered it to exercise broad regulatory, supervisory and enforcement authority with respect to both new and existing consumer financial protection laws.

Banks are subject to consumer protection regulations issued by the CFPB, but as a financial institution with assets of less than $10 billion, the Bank is generally subject to supervision and enforcement by the Federal

Reserve and the DFPI with respect to our compliance with consumer financial protection laws and CFPB regulations.

As of now, the CFPB’s future remains uncertain, with ongoing discussions about potential restructuring or replacement by other regulatory frameworks.

The Dodd-Frank Act established the CFPB and granted it broad authority to issue regulations and, in certain circumstances, to supervise and enforce federal consumer financial protection laws.

Banks are subject to consumer protection regulations issued by the CFPB;

however, as a financial institution with assets of less than $10 billion, the Bank is generally examined for compliance with applicable consumer financial protection laws and CFPB regulations by the Federal Reserve and the DFPI, rather than directly by the CFPB.

In early 2025, the CFPB announced changes to its supervisory, rulemaking, and enforcement priorities, including pausing

certain enforcement activities and revisiting previously issued guidance.

Although federal consumer protection statutes and implementing regulations remain in effect, changes in regulatory priorities and resource allocations at the CFPB may affect the scope and pace of supervisory and enforcement activities.

The Bank is subject to a broad array of federal and state consumer protection laws and regulations that govern almost every aspect of its business relationships with consumers.

While the list set forth below is not exhaustive, these include the Truth-in-Lending Act, Truth in Savings Act, Electronic Fund Transfers Act, Expedited Funds Availability Act, Equal Credit Opportunity Act, Fair Housing Act, Real Estate Settlement Procedures Act, Home Mortgage Disclosure Act, Fair Credit Reporting Act, Right to Financial Privacy Act, Home Ownership and Equity Protection Act, Fair Credit Billing Act, Homeowners Protection Act, Check Clearing for the 21st Century Act, laws governing flood insurance, laws governing consumer protections in connection with the sale of insurance, federal and state laws prohibiting unfair and deceptive business practices, and various regulations that implement some or all of the foregoing.

While the list set forth below is not exhaustive, these include the Truth-in-Lending Act, Truth in Savings Act, Electronic Fund Transfers Act, Expedited Funds Availability Act, Equal Credit Opportunity Act, Fair Housing Act, Real Estate Settlement Procedures Act, Home Mortgage Disclosure Act, Fair Credit Reporting Act, Right to Financial Privacy Act, Home Ownership and Equity Protection Act, Fair Credit Billing Act, Homeowners Protection Act, Check Clearing for the 21st Century Act, laws governing flood insurance, laws governing consumer protections in connection with the sale of insurance, federal and state laws prohibiting unfair and deceptiv e business practices, and various regulations that implement some or all of the foregoing.

These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must deal with clients when taking deposits, making loans, collecting loans, and providing other services.

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Incentive Compensation .

The Dodd-Frank Act required federal bank regulators and the SEC to establish joint regulations or guidelines prohibiting incentive-based payment arrangements that encourage inappropriate risks by providing an executive officer, employee, director or principal stockholder with excessive compensation, fees, or benefits or that could lead to material financial loss to the entity.

These regulations apply to institutions having at least $1 billion in total assets.

In addition, regulators must establish regulations or guidelines requiring enhanced disclosure to regulators of incentive-based compensation arrangements.

The agencies have not finalized regulations proposed in April 2016.

If adopted, the proposed regulations could place limits on the manner in which we structure our executive compensation.

The Federal Reserve reviews, as part of the regular, risk-focused examination process, the incentive compensation arrangements of banking organizations.

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Acquisitions.

An acquisition of the Company or the Bank, an acquisition of control of either, or an acquisition by either of another bank holding company or depository institution or control of such a company or institution is generally subject to prior approval by applicable federal and state banking regulators, as are certain acquisitions by the Company or the Bank of other types of entities, as discussed below.

the Bank of other types of entities, as discussed below.

“Control” is defined in various ways for this purpose, including but not limited to control of 10% of outstanding voting stock of an entity.

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Interstate Banking and Branching.

The Federal Reserve must approve an application of a bank holding company to acquire control of, or acquire all or substantially all of the assets of, a bank located in a state other than the holding company’s home state, without regard to whether the transaction is prohibited by the laws of any state.

The Federal Reserve must approve an application of a bank holding company to acquire control, or acquire all or substantially all of the assets, of a bank located in a state other than the holding company’s home state, without regard to whether the transaction is prohibited by the laws of any state.

The Federal Reserve may not approve the acquisition of a bank that has not been in existence for the minimum time period (not exceeding five years) specified by the statutory law of the host state.

Nor may the Federal Reserve approve an application if the applicant (and its depository institution affiliates) controls or would control more than 10.0% of the insured deposits in the United States or 30% or more of the deposits in the target bank’s home state or any state in which the target bank maintains a branch.

maintains a branch.

Federal law does not affect the authority of states to limit the percentage of total insured deposits in the state which may be held or controlled by a bank holding company to the extent such limitation does not discriminate against out-of-state banks or bank holding companies.

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Except for certain “Well Capitalized” and highly rated bank holding companies, a bank holding company is required to give the Federal Reserve prior written notice of any purchase or redemption of its outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding twelve months, is equal to 10% or more of its consolidated net worth.

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

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

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

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Many of our competitors enjoy competitive advantages, including greater financial resources, a wider geographic presence, more accessible branch office locations, the ability to offer additional services, more favorable pricing alternatives, and lower origination and operating costs.

Some of our competitors have been in business for a long time and have an established client base and name recognition.

Some of our competitors have been in business for a long time an d have an established client base and name recognition.

Despite these challenges, we believe that our competitive pricing, emphasis on personalized service, and active community involvement enable us to effectively compete in the communities in which we operate.

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As of December 31, 2025, we had approximately 327 full-time equivalent employees, with approximately 70% identifying as female and 30% as male, and women holding 66% of the Company’s management roles.

The average tenure of employees was 6.1 years as of December 31, 2024, signifying a stable and experienced team.

The ethnicity of our workforce was 35% White, 31% Asian, 26% Hispanic/Latino, 3% Black, 2% Two or More Races, and 3% Other.

The average tenure of employees was 6.3 years as of December 31, 2025, which we believe reflects a stable and experienced workforce.

The ethnicity of our workforce as of December 31, 2025, based on voluntary self-identification, was 34% White, 31% Asian, 26% Hispanic/Latino, 4% Black, 2% Two or More Races, and 3% Other.

The following chart depicts the percentage of self-identified females and minorities in our workforce at December 31, 2025, by job classification as defined by the Equal Employment Opportunity Commission (“EEOC”):

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

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

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

Reflecting our commitment, our compensation philosophy includes

market-competitive total rewards programs.

None of our employees are represented by any collective bargaining unit or are a party to a collective bargaining agreement , and management believes its employee relations are good.

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

Our compensation philosophy includes market-competitive total rewards programs.

Alongside competitive base wages, these programs encompass annual bonus opportunities, a Company-matched 401(k) plan, comprehensive healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, and employee assistance programs.

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Central to our talent strategy is a dual approach—developing talent internally while supplementing with external hires.

This strategy fosters loyalty and commitment within our existing employee base, contributing to business growth, product innovation, and enhanced client relationships.

This strategy fosters loyalty and commitment within our existing employee base, contributing to business g rowth, product innovation, and enhanced client relationships.

Simultaneously, incorporating external perspectives supports a continuous improvement mindset, ensuring our workforce remains dynamic and innovative.

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

What changed 10-K

Item 1. Business