What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-16 compared with 2025-03-14 · 247 added, 353 removed, 1419 unchanged (30% of the section changed)

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm – Moss Adams LLP (PCAOB ID 659 )

Report of Independent Registered Public Accounting Firm – Baker Tilly US, LLP (PCAOB ID 23 )

Consolidated Financial Statements

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025 , based on criteria established in Internal Control - Integrated Framework ( 2013 ) issued by COSO.

Change in Accounting Principle

As discussed in Notes 1 and 5 to the consolidated financial statements, the Company has changed its method of accounting for credit losses due to the adoption of Accounting Standards Update No.

2016-13, Financial Instruments – Credit Losses .

Basis for Opinions

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A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

(1) relates to accounts or disclosures that are material to the consolidated financial statements, and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses for Loans and Leases

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s allowance for credit losses for loans balance was $17.9 million as of December 31, 2024, and is estimated using relevant information, from both internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts.

Critical Audit Matter Description

As described in Notes 1 and 4 to the consolidated financial statements, the Company’s allowance for credit losses for loans balance was $21.2 million as of December 31, 2025, and is estimated using relevant information, from both internal and external sources, related to past events, and current conditions.

We identified the estimation of qualitative internal and external risk factors within the calculation of the allowance for credit losses as a critical audit matter.

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Auditing management’s judgements regarding the qualitative internal and external risk factors involved significant audit effort, including a high degree of subjectivity and judgment when performing the audit procedures and evaluating the results of those procedures.

How We Addressed the Matter in Our Audit

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

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Our audit procedures included the following, among others:

● Evaluating the reasonableness of the significant assumptions used by management as well as the relevance and reliability of the data used by management related to the qualitative internal and external risk factors.

● Evaluating the reasonableness of the significant assumptions used by management as well as the relevance

and reliability of the data used by management related to the qualitative internal and external risk factors.

● Tested the mathematical accuracy of the allowance for credit losses by reperforming or independently calculating significant elements of the estimate, as well as testing completeness and accuracy of the underlying data and model inputs used in the calculation.

/s/ Moss Adams LLP

/s/ Baker Tilly US, LLP

Sacramento, California

46 unchanged sentences

(In thousands, except for share and per share data)

(As Restated)

Interest income:

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Gain on sale of loans

Gain (loss) on equity securities

(Loss) gain on equity securities

Service charges and other fees

Loan servicing and other loan fees

(Loss) income on investment in Small Business Investment Company (“SBIC”) fund

Bargain purchase gain

(Loss) gain on investment in Small Business Investment Company (“SBIC”) fund

Other income and fees

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(In thousands)

(As Restated)

Other comprehensive income (loss):

Other comprehensive income:

Change in unrealized gain (loss) on AFS securities

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For the years ended December 31, 2025, 2024 and 2023

(In thousands, except for share data)

(Dollars in thousands, except per share data)

Comprehensive

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Income/(Loss)

Balance, January 1, 2022

Balance, January 1, 2023 (As Restated)

Other comprehensive loss, net

Cumulative change from adoption of ASU 2016-13, net of tax

Restricted stock granted

Forfeiture of restricted stock granted

Issuance of common shares to acquire Pacific Enterprise Bancorp

Cash dividends of $ 0.40 per share

1 unchanged sentence

Repurchase of shares

Balance, December 31, 2022 (As Restated)

Other comprehensive loss, net

Cumulative change from adoption of ASU 2016-13, net of tax

( 1,329,040 )

Balance, December 31, 2023

Other comprehensive income, net

Restricted stock granted

Forfeiture of restricted stock granted

Cash dividends of $ 0.45 per share

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Repurchase of shares

( 1,329,040 )

Balance, December 31, 2024

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(In thousands)

(As Restated)

Cash flows from operating activities:

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Provision for credit losses

Deferred tax expense (benefit)

Deferred tax (benefit) expense

Amortization (accretion) on acquired loans

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Loss on sale of OREO

Bargain purchase gain

Accretion on junior subordinated debentures

Amortization on junior subordinated debentures

Gain on repayment of subordinated debt, net

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Amortization/accretion of premiums/discounts on investment securities, net

(Gain) loss on equity securities

Loss (gain) on equity securities

Depreciation and amortization

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Net change in interest receivable and other assets

Increase (decrease) in salary continuation plan, net

Increase in salary continuation plan, net

Net change in interest payable and other liabilities

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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 FHLB stock

Purchase of FRB stock

Proceeds from sale of loans

Redemption (purchase) of FRB stock

Proceeds from sale of loans held for investment

Purchase of loans

Decrease in loans, net

(Increase) decrease in loans, net

Purchase of equipment and leasehold improvements, net

Net cash received for acquisitions

Net cash (used in) provided by investing activities

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(In thousands)

(As Restated)

Cash flows from financing activities:

Increase (decrease) in noninterest and interest bearing deposits in banks, net

Increase (decrease) in time deposits, net

Repayment of subordinated debt, net

(Decrease) increase in noninterest and interest bearing deposits in banks, net

Increase in time deposits, net

Repayment of subordinated debt

Repurchase of common stock

Dividends paid on common stock

Net cash provided by (used in) financing activities

Increase (decrease) in cash and cash equivalents

Net cash (used in) provided by financing activities

Decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

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Non-cash investing and financing activities:

Change in unrealized gain (loss) on AFS securities, net of tax

Change in unrealized gain on AFS securities, net of tax

Transfer of loans to held-for-sale

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Cash dividends declared on common stock not yet paid

Assets acquired, net of cash received

Liabilities assumed

Common stock issued

The accompanying notes are an integral part of the consolidated financial statements.

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The Bank, formerly known as Bay Commercial Bank, opened for business on July 20, 2004.

The Bank provides a broad range of financial services primarily to local small and mid-sized businesses, service professionals and individuals through its 35 full-service banking branches.

The Bank provides a broad range of financial services primarily to local small and mid-sized businesses, service professionals and individuals through its 34 full-service banking branche s.

The main office is located in Walnut Creek, California and branch offices are located in Oakland, Castro Valley, Mountain View, Stockton, Pleasanton, Livermore, San Jose, Long Beach, Sacramento, San Francisco, Buena Park, Los Angeles, Garden Grove, Waterloo and Irvine, California;

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For financial reporting purposes, the Grantor Trusts are accounted for under the equity method and are included in other assets on the consolidated balance sheets.

The junior subordinated debentures issued and guaranteed by the Company and held by the Grantor Trusts are reflected as liabilities on the Company’s consolidated balance sheets.

The junior subordinated debentures issued and guaranteed by the Company and held by the Grantor Trusts are reflected as liabilities on the Company’s consolidated balanc e sheets.

The accounting preparation of consolidated financial statements in conformity with U.S.

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The Company operates as one operating segment which is reported in a manner consistent with the internal consolidated reporting provided to the chief operating decision-maker (“CODM”).

The CODM is responsible for the allocation of resources and assessing the performance of the operating segment and has been identified as the CEO of the Company.

The CODM is responsible for the allocation of resources and assessing the performance of the operating segment and has been identified as the Chief Executive Officer of the Company.

The CODM monitors financial performance and evaluates the revenue streams of the Company’s various products, services, locations, and operations on a company-wide basis.

Accordingly, we consider all of our operations to be aggregated in one reportable operating segment.

Refer to Note 24—Segment Information of the notes to our audited Consolidated Financial Statements contained in Item 8 of this report for additional information.

Refer to Note 23—Segment Information for additional information.

Business Combinations

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Acquisition related costs are expensed as incurred unless they are directly attributable to the issuance of the Company’s common stock in a business combination .

The acquired assets and assumed liabilities, both tangible and intangible for all acquisitions were measured at estimated fair values, as required by the acquisition method of accounting for business combinations, Financial Accounting Standards Board (“FASB”) ASC 805, Business Combinations.

Management made significant estimates and exercised significant judgment in accounting for the acquisition.

On February 1, 2022 , the Company acquired all of the assets and assumed all of the liabilities of Pacific Enterprise Bancorp (“PEB”) and its wholly owned subsidiary, Pacific Enterprise Bank , under a Merger and Plan of Reorganization dated September 7, 2021 .

For additional information, see “Note 2-Acquisitions.”

Cash and Cash Equivalents

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The Company invests in time deposits with other banks.

At December 31, 2024 and 2023, the time deposits with other banks totaled $ 249,000 and $ 1.2 million, with a yield of 2.25 % and 2.64 %, respectively.

These deposits do not exceed FDIC limits and mature in one year .

At December 31, 2025, there were no time deposits with other banks, compared to $ 249,000 at December 31, 2024, which had a weighted average yield of 2.25 % .

These deposits did not exceed FDIC limits and matured within one year .

Investment Debt Securities Available-for-Sale

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Allowance for Credit Losses for Investment Debt Securities Available-For-Sale

Prior to the adoption of ASU 2016-13, declines in the fair value of securities below their cost deemed to be other-than-temporary impairment ("OTTI") were reflected in operations as realized losses.

Prior to the adoption of Accounting Standards Update (“ASU”) 2016-13, declines in the fair value of securities below their cost deemed to be other-than-temporary impairment ("OTTI") were reflected in operations as realized losses.

Upon adoption of ASU 2016-13 , for investment debt securities AFS in a loss position, the Company evaluates whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or noncredit-related factors.

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Changes in the allowance for AFS securities are recorded as provision for (or reversal of) credit loss.

However, if the uncollectibility of an AFS security is confirmed or if the Company intends to sell an impaired AFS debt security or more likely than not

will be required to sell such a security before recovering its amortized cost basis, the entire impairment amount is recognized in earnings with a corresponding adjustment to the security's amortized cost basis.

However, if the uncollectibility of an AFS security is confirmed or if the Company intends to sell an impaired AFS debt security or more likely than not will be required to sell such a security before recovering its amortized cost basis, the entire impairment amount is recognized in earnings with a corresponding adjustment to the security's amortized cost basis.

Investment Equity Securities

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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.

An allowance for credit losses is established as

of the acquisition date or upon the adoption of CECL for loans previously classified as acquired impaired, as PCD loans are no longer recorded net of a credit-related acquisition adjustment.

An allowance for credit losses is established as of the acquisition date or upon the adoption of CECL for loans previously classified as acquired impaired, as PCD loans are no longer recorded net of a credit-related acquisition adjustment.

Acquired PCD loans

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Other loan fees and charges which represent income from delinquent payment charges, and miscellaneous loan or letter of credit services, are recognized as noninterest income when collected.

Salaries, employee benefits and other expenses totaling $ 1.3 million, $ 663,000 and $ 2.2 million were deferred as loan origination costs for the years ended December 31, 2024, 2023 and 2022, respectively.

Salaries, employee benefits and other expenses totalin g $ 2.1 million, $ 1.3 million and $ 663,000 were deferred as loan origination costs for the years ended December 31, 2025, 2024 and 2023, respectively.

Allowance for Credit Losses on Loans

Since January 1, 2023, the Company has measured credit losses under ASU 2016-03 Financial Instruments — Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, which replaced the incurred loss methodology, and is referred to as the current expected credit loss, or CECL, methodology.

The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables.

The allowance for credit losses is the combination of the allowance for credit losses for loans and the reserve for unfunded loan commitments.

The allowance for credit losses represents management’s estimate of current expected credit losses over the life of a financial asset carried at amortized cost.

The Company’s method for assessing the appropriateness of the allowance for credit losses includes specific allowances for individually analyzed loans, a pooled loans component incorporating both quantitative and qualitative factors, and a reserve for unfunded loan commitments.

The allowance for credit losses for loans is reported as a reduction of the amortized cost basis of loans, while the reserve for unfunded loan commitments is included within "Interest payable and other liabilities" on the consolidated balance sheets.

The amortized cost basis of loans does not include accrued interest receivable, which is included in "Interest receivable and other assets" on the consolidated balance sheets.

The "Provision

for credit losses" on the consolidated statements of income is a combination of the provision for credit losses for loans, unfunded loan commitments, and investment securities AFS.

The "Provision for credit losses" on the consolidated statements of income comprises the provision for credit losses for loans, unfunded loan commitments, and investment securities AFS.

The allowance for credit losses on loans is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on the loans.

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The reserve for unfunded commitments is based on evaluations of the collectability and prior loss experience of unfunded commitments.

The evaluations take into consideration such factors as changes in the nature and size of the loan portfolio, overall loan portfolio quality, loan concentrations, specific problem loans and related unfunded commitments, and current economic conditions that may affect the borrower’s or depositor’s ability to pay.

The evaluations take into consideration such factors as changes in the nature and size of the

loan portfolio, overall loan portfolio quality, loan concentrations, specific problem loans and related unfunded commitments, and current economic conditions that may affect the borrower’s or depositor’s ability to pay.

Modifications for Financial Difficulty

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The cost of maintenance and repairs is charged to expense as incurred.

Annually at the end of each year, the Company evaluates premises and equipment for impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable.

At the end of each year, the Company evaluates premises and equipment for impairment to the extent events or changes in circumstances indicate that the carrying amount of such assets may not be fully recoverable.

Operating Lease Right of Use Assets and Liabilities

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Bank Owned Life Insurance

BOLI policies are maintained on certain key current officers.

BOLI policies are maintained on certain key current and former officers.

BOLI is recorded on the consolidated balance sheets at the amount that can be realized based on cash surrender value.

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Gain or loss on sale of loans is included in noninterest income.

Loans serviced for others totaled $ 164.8 million and $ 216.6 million as of December 31, 2024 and 2023, respectively.

Servicing assets, included in interest receivable and other assets in the consolidated statements of financial condition, totaled $ 673,000 and $ 1.3 million as of December 31, 2024 and 2023, respectively.

Loans serviced for others tota led $ 136.1 million and $ 164.8 million as of December 31, 2025 and 2024, respectively.

Servicing assets, included in interest receivable and other assets in the consolidated statements of financial condition, totaled $ 388,000 and $ 673,000 as of December 31, 2025 and 2024, respectively.

There were no servicing liabilities included in interest payable and other liabilities on the consolidated balance sheets at both December 31, 2025 and December 31, 2024.

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The portions of the SBA loans that are guaranteed by the SBA are classified by management as loans held for sale since the Company intends to sell these loans.

Loans held for sale are recorded at their lower aggregate cost or estimated fair value.

Loans held for sale are recorded at the lower of their aggregate cost or estimated fair value.

During 2025, the Compa ny sold $ 5.1 million of SBA loans (guaranteed portion) in the secondary market, all of which settled by end of year 2025.

During 2024, the Company sold $ 3.6 million of SBA loans (guaranteed portion) in the secondary market, all of which settled by end of year 2024.

During 2023, the Company sold $ 7.2 million of SBA loans (guaranteed portion) the secondary market, all of which settled by end of year 2023.

The fair value of SBA loans held for sale is based primarily on prices that secondary markets are currently offering for loans with similar characteristics.

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Consideration is often received immediately or shortly after the Company satisfies its performance obligation and revenue is recognized.

The Company does not typically enter into long-term revenue contracts with clients, and therefore, does not experience significant contract balances.

The Company does not typically enter into long-term revenue contracts with clients and therefore has not experienced significant contract balances.

As of December 31, 2025 and December 31, 2024, the Company did not have any significant contract balances.

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The performance obligation is satisfied and the fees are earned when the cost of the transaction is charged to the cardholder’s debit card.

Certain expenses directly associated with the credit and debit card are recorded on a net basis with the interchange income.

Certain expenses directly associated with the debit card are recorded on a net basis with the interchange income.

Merchant fee income

8 unchanged sentences

Gain/loss on other real estate owned, net

The Company records a gain or loss from the sale of other real estate owned when control of the property transfers to the buyer, which generally occurs at the time of an executed deed of trust.

The Company records a gain or loss from the sale of other real estate owned when control of the property transfers to the buyer, which generally occurs at the time of execution of a deed of trust.

When the Company finances the sale of other real estate owned to the buyer, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable.

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Repurchase of Common Stock

In May 2024, the Company’s Board of Directors approved a stock repurchase program authorizing the repurchase of up to 560,000 shares, or approximately 5.0 % , of the Company’s outstanding common stock over a one year period.

Under the repurchase program, the Company is authorized to repurchase its common stock through open market purchases,

privately-negotiated transactions, or pursuant to any trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and in compliance with Rule 10b-18 of the Exchange Act.

Under the repurchase program, the Company is authorized to repurchase its common stock through open market purchases, privately-negotiated transactions, or pursuant to any trading plan adopted in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and in compliance with Rule 10b-18 under the Exchange Act.

The repurchase program does not obligate the Company to acquire any specific number of shares in any period, and may be expanded, extended, modified or discontinued at any time.

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Recent Accounting Guidance Adopted

On January 1, 2023, the Company adopted Accounting Standards Update (“ASU”) 2016-13 Financial Instruments — Credit Losses (ASC 326):

Measurement of Credit Losses on Financial Instruments , which replaces the incurred loss methodology with the current expected credit loss (“CECL”) methodology.

The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities.

It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in certain leases.

In addition, ASU 2016-13 made changes to the accounting for AFS debt securities.

One such change requires increases or decreases in credit losses to be presented as an allowance rather than as a write-down on AFS debt securities, based on management's intent to sell the security or likelihood the Company will be required to sell the security, before recovery of the amortized cost basis.

The Company adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures.

Results for the reporting periods beginning on and after January 1, 2023 are presented under ASU 2016-13 while prior period amounts continue to be reported in accordance with the previously applicable standard.

The Company adopted ASU 2016-13 using the prospective transition approach for financial assets PCD that were previously classified as purchase credit impaired (“PCI”) and accounted for under ASC 310-30.

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.

The Company recognized an increase in the allowance for credit loss on loans totaling $ 1.5 million (which included a reclassification of the net credit discounts on acquired PCI loans to the allowance for credit losses of $ 845,000 ) and an increase to the allowance for credit losses on unfunded commitments of $ 45,000 , as a cumulative effect adjustment from change in accounting policies, with a corresponding after-tax decrease to opening retained earnings of $ 491,000 .

On January 1, 2023, the Company adopted ASU 2022-02 Financial Instruments — Credit Losses:

Troubled Debt Restructurings and Vintage Disclosures .

ASU 2022-02 eliminates the recognition measurement guidance for troubled debt restructured ("TDR") loans, and instead requires an entity to evaluate whether a modification represents a new loan or a continuation of an existing loan in accordance with ASC Topic 310-20, Receivables - Nonrefundable Fees and Other Costs .

On a prospective basis, entities are subject to new disclosure requirements covering modifications of receivables to borrowers experiencing financial difficulty.

In addition, ASU 2022-02 requires that an entity include in its vintage disclosures the current period-gross loan charge-offs by year of origination for financing receivables and net investment in leases within the scope of Subtopic 326-20.

The Company adopted ASU 2022-02 on January 1, 2023 using a prospective transition method, and has thus far observed no material impact to deferred fees and costs and the related timing of net interest income recognition as a result of adoption.

Fair Value Measurement (Topic 820) - In June 2022, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.

The guidance in the ASU clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account on the equity security and, therefore, is not considered in measuring fair value.

The ASU also requires additional disclosures about the restriction.

The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

The adoption of ASU 2022-03 did not have a material impact on the Company's consolidated financial statements and related disclosures.

Segment Reporting – Improvements to Reportable Segment Disclosures (Topic 280) – In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The amendments are intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, enhanced interim disclosure requirements, clarifying circumstances in which an entity can disclose multiple segment measures of profit or loss, providing new segment disclosure requirements for entities with a single reportable segment, and requiring other disclosures.

The amendments are effective for annual reporting periods beginning after December 15, 2023 (i.e., 2024 Form 10-K) and interim periods within fiscal years beginning after December 31, 2024, and must be applied retrospectively to all prior periods presented in the financial statements.

Early adoption is permitted.

The disclosure requirements of this update did not have a material effect on the Company’s consolidated financial statements.

See Note 24—Segment Information.

Recent Accounting Guidance Not Yet Effective

Business Combinations (Topic 805) - In August 2023, the FASB issued ASU 2023-05, Business Combinations—Joint Venture (JV) Formations:

Recognition and Initial Measurement.

The guidance requires newly-formed JVs to apply a new basis of accounting to all of its contributed net assets, which results in the JV initially measuring its contributed net assets under ASC 805-20, Business Combinations.

The new guidance would be applied prospectively and is effective for all newly-formed joint venture entities with a formation date on or after January 1, 2025, with early adoption permitted.

The Company is evaluating the accounting and disclosure requirements of this update and does not expect them to have a material effect on the Company’s consolidated financial statements.

Income Taxes – Improvements to Income Tax Disclosures (Topic 740) – In December 2023, the FASB issued ASU 2023-09 to provide additional transparency into an entity’s income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

2 unchanged sentences

1) income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes and 2) the income taxes paid (net of refunds received) disaggregated by individual jurisdictions exceeding 5% of total income taxes paid (net of refunds received).

The amendments are effective for public business entities for annual periods beginning after December 15, 2024.

The Company is evaluating the accounting and disclosure requirements of this update and does not expect them to have a material effect on the Company’s consolidated financial statements.

Reference Rate Reform (Topic 848) - In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2020-04, Reference Rate Reform (Topic 848).

The amendments in this ASU are elective and provide optional guidance for a limited period of time to ease the potential burden of accounting for, or recognizing the effects of, reference rate reform.

The amendments in this ASU provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offer Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.

The amendments in this ASU may be elected through December 31, 2024 (as amended by ASU No.

2022-06 discussed below).

An entity may elect the amendments in this update for an interim period with adoption methods varying based on transaction type.

We have not elected to apply amendments at this time and will assess the applicability of this ASU to us as we continue to monitor guidance for reference rate reform from FASB and its impact on our financial condition and results of operations.

The Company does not expect the adoption of ASU 2020-04 to have a material impact on its consolidated financial statements.

In December 2022, the FASB issued ASU No.

2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848.

The objective of the guidance in Topic 848 was to provide temporary relief during the transition

period, as noted in the discussion of ASU 2020-04 above, under which the sunset provision was based on an expectation that the LIBOR would cease being published after December 31, 2021.

In March 2021, the UK Financial Conduct Authority announced that the intended cessation date of certain tenors of USD LIBOR would be June 30, 2023, which is beyond the current sunset date of Topic 848.

Therefore, this amendment deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024.

The amendments are effective for public business entities for annual periods beginning after December 15, 2024 and must be applied prospectively to all prior periods presented in the financial statements.

The disclosure requirements of this update did not have a material effect on the Company’s consolidated financial statements and related disclosures.

See Note 14 – Income Taxes.

Recent Accounting Guidance Not Yet Effective

In November 2024, the FASB issued ASU 2024-03, Income Statement (Topic 220) – Reporting Comprehensive Income – Expense Disaggregation Disclosures, to address investor requests for more detailed information about certain

expense types.

The new standard requires public business entities to disclose disaggregated information about specific natural expense categories underlying relevant expense captions presented on the face of the income statement within continuing operations, such as employee compensation, depreciation, and intangible asset amortization.

The amendments are effective for public business entities for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Entities are required to adopt the amendments prospectively.

In January 2025, the FASB issued ASU 2025-01, Income Statement (Topic 220) – Reporting Comprehensive Income – Expense Disaggregation Disclosures:

Clarifying the Effective Date, to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual periods beginning after December 15, 2027.

The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

In July 2025, the FASB issued ASU 2025-05 to simplify the estimation of expected credit losses for current accounts receivable and contract assets arising from revenue transaction within the scope of Topic 606, Revenue from Contracts with Customers.

The amendments introduce a practical expedient that allows entities to assume that conditions existing as of the balance sheet date remain unchanged over the remaining life of the asset, and for entities other than public business entities, permit the use of subsequent cash collections when estimating credit losses.

The amendments are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those annual periods.

Early adoption is permitted.

The amendments should be applied prospectively.

The Company is currently evaluating the accounting and disclosure requirements of this update and does not expect the adoption of this standard to have a material effect on its consolidated financial statements.

The amendments are effective for public business entities for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Entities are required to adopt the amendments prospectively.

In January 2025, the FASB issued ASU 2025-01, Income Statement (Topic 220) – Reporting Comprehensive Income – Expense Disaggregation Disclosures:

The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.

The amendments are effective for annual reporting periods beginning after December 15, 2025, including interim periods within those annual periods.

Early adoption is permitted.

The amendments should be applied prospectively.

Purchased Loans – Financial Instruments Credit losses (Topic 326) – In November 2025, the FASB issued ASU 2025-08 to improve the accounting for certain acquired loans, specifically purchased seasoned loans (“PSLs”).

The amendments expand the application of the gross-up approach to qualifying purchased loans acquired without significant credit deterioration.

Under the amendments, and allowance for credit losses is recorded at acquisition with a corresponding adjustment to the loan’s amortized cost basis, eliminating the recognition of a Day 1 credit loss expense for such loans.

The amendments are effective for annual reporting periods beginning after December 15, 2026, including interim reporting periods within those annual periods, with early adoption permitted.

The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

Interim Reporting (Topic 270) – In December 2025, the FASB issued ASU 2025-11 to clarify interim disclosure requirements by providing a comprehensive list of disclosures that are required in interim reporting periods.

The amendments also introduce a disclosure principle requiring entities to disclose events and changes that occur after the end of most recent annual reporting period that have a material impact on the entity.

The amended guidance is effective for the Company on January 1, 2028, with early adoption permitted.

The amendments may be applied on either a prospective or retrospective basis.

The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

Subsequent Events

3 unchanged sentences

None of the reclassifications impact net income or earnings per common share.

Restatement of Previously Issued Consolidated Financial Statements

On July 18, 2023, the audit committee of the Company’s board of directors concluded that the Company’s previously issued unaudited interim consolidated financial statements for the period ended March 31, 2023 and the consolidated financial statements for the year ended December 31, 2022, as well as for the unaudited interim periods included in that fiscal year (collectively, “Restated Periods”), should no longer be relied upon because of errors related to the accounting for unrealized losses on preferred equity securities that resulted in material misstatements of noninterest income and accumulated other comprehensive income.

At the time of its purchase of the preferred equity securities for investment purposes, the Company inappropriately accounted for them as AFS debt securities under Accounting Standards Codification (“ASC”) Topic 320 – Investments-Debt Securities .

As such, the changes in the fair value of these securities were not recorded as part of net income but rather as a component of shareholders’ equity (in accumulated other comprehensive income, net of tax).

However, as a result of subsequent research and third-party consultation, the Company determined that the securities should instead have been accounted for under ASC Topic 321 – Investments-Equity Securities .

The result of this change in classification of the preferred equity securities is that the change in the fair value of the securities each quarter should have been recorded in noninterest income on the consolidated statements of income.

On July 25, 2023, the Company filed amendments to its Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2023, September 30, 2022, June 30, 2022, and March 31, 2022, and its Form 10-K for the year ended December 31, 2022, (the “Original Reports”) with the Securities and Exchange Commission (“SEC”), to reflect the restatement of the Company’s consolidated financial statements for the Restated Periods (the “Amended Form 10-Qs” and the “Amended Form 10-K,” collectively, the “Amended Reports”).

As disclosed in the Original Reports, the Company recorded the change, net of taxes, in the fair value of preferred equity securities as part of other comprehensive loss, net of taxes, under ASC Topic 320 – Investments-Debt Securities rather than as part of non-interest income under ASC Topic 321 – Investments-Equity Securities .

In addition, various footnotes in the Amended Reports reflect the effects of these restatements.

For additional information on the effects of the restatement, see Note 2 Restatement of Consolidated Financial Statements in the Notes to Consolidated Financial Statements contained in the Amended Form 10-K and Note 3.

Restatement of the Consolidated Financial Statements in the Notes to Condensed Consolidated Financial Statements contained in each of the Amended Form 10-Qs.

On February 1, 2022, the Company completed its acquisition of PEB.

As of the acquisition date, PEB merged into the Company and Pacific Enterprise Bank, PEB’s wholly owned bank subsidiary, merged into the Bank.

The acquisition expanded the Company’s market share in California with one branch in Irvine.

At the effective time of the PEB merger, the Company paid aggregate consideration to PEB shareholders of approximately $ 64.1 million, consisting of 3,032,579 shares of Company common stock and $ 275,000 in cash.

Noninterest income for the year ended December 31, 2022 included $ 1.7 million in bargain purchase gain, and included in noninterest expense was $ 3.1 million of nonrecurring acquisition-related expenses, related to the Company’s acquisition of PEB.

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

February 1, 2022

Fair value of assets:

Cash and due from banks

Total cash and cash equivalents

Interest bearing deposits in banks

Investment securities AFS

FHLB stock, at par

FRB stock, at par

Premises and equipment, net

Core deposit intangible

Deferred tax assets, net

Interest receivable and other assets

Total assets acquired

Noninterest bearing

Interest bearing

Total Deposits

Interest payable and other liabilities

Total liabilities assumed

Stock consideration

Cash consideration

Bargain purchase gain

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

February 1, 2022

Book value of net assets acquired

Fair value adjustments:

Premises and equipment, net

Core deposit intangible

Time deposits

Reserve for unfunded commitments

Write-up right-of-use asset

Total purchase accounting adjustments

Tax effect of purchase accounting adjustments at 27.9 %

Fair value of assets acquired

Value of stock issued/cash paid for stock options

Bargain purchase gain

Pro Forma Results of Operations (Unaudited)

The operating results of the Company in the consolidated statements of income include the operating results of PEB since its acquisition date.

The following table presents the net interest income, net income, basic and diluted earnings per share as if the merger with PEB was effective January 1, 2022, for the year in which the acquisition was closed.

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 PEB merger been completed at the beginning of the year.

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 are presented below:

2022 (As Restated)

Net interest income

Basic earnings per share

Diluted earnings per share

These amounts include the acquisition-related third party expenses, accretion of the discounts on acquired loans and amortization of the fair value mark adjustments on core deposit intangible.

Acquisition Expenses

Acquisition expenses are recognized as incurred and continue until all systems are converted and operational functions become fully integrated.

No acquisition expenses were incurred in 2024 and 2023.

The Company incurred third-party acquisition expenses in the consolidated statements of income for the year ended December 31, 2022, as follows:

December 31, 2022

Severance expense

Occupancy expense

Data processing

Professional fees

Other expenses

INVESTMENT SECURITIES

1 unchanged sentence

December 31, 2025

Government Agencies

Municipal securities

2 unchanged sentences

SBA securities

ABS securities

Corporate bonds

December 31, 2024

Government Agencies

Municipal securities

3 unchanged sentences

Corporate bonds

Amortized cost and fair values exclude accrued interest receivable of $ 1.3 million and $ 1.2 million at December 31, 2024 and 2023, respectively, which is included in interest receivable and other assets in the consolidated balance sheets.

Amortized cost and fair values exclude accrued interest receivable of $ 1.3 million at both December 31, 2025 and 2024, which is included in interest receivable and other assets in the consolidated balance sheets.

For the years ended December 31, 2025, 2024 and 2023, the Company sold no securities AFS.

For the year ended December 31, 2022, the Company sold one security AFS for a minimal net realized gain.

The amortized cost and estimated fair value of securities AFS at the dates indicated by contractual maturity are shown below.

7 unchanged sentences

Due after ten years

At December 31, 2024 and 2023, there were no securities pledged.

At both December 31, 2025 and 2024, there were no securities pledged .

The estimated fair value and gross unrealized losses for securities AFS aggregated by the length of time that individual securities have been in a continuous unrealized loss position at the dates indicated are as follows :

2 unchanged sentences

December 31, 2025

Government Agencies

Municipal securities

2 unchanged sentences

SBA securities

ABS securities

Corporate bonds

2 unchanged sentences

December 31, 2024

Government Agencies

Municipal securities

10 unchanged sentences

In making this assessment, management considers the nature of the security and any related government guarantees, any changes to the rating of the security by a rating agency, creditworthiness of the issuers/guarantors, the underlying collateral, the financial conditions and prospects of the issuer, and any adverse conditions specifically related to the security, among other factors.

As of December 31, 2024, the Company expected to recover the amortized cost basis of its securities, had no intent to sell any investment securities with unrealized losses, it was 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 was largely attributed to changes in interest rates and other market conditions.

The issuers of these securities continue to make timely principal and interest payments.

As of December 31, 2025, the Company expected to recover the amortized cost of its securities, had no intent to sell any investment securities with unrealized losses, it was more likely than not that the Company would not be required to sell such securities before recovery of their amortized cost and the decline in fair value was largely attributed to changes in interest rates and other market conditions.

As of December 31, 2025, the issuers of these securities were continuing to make timely principal and interest payments.

No allowances for credit losses have been recognized on investment debt securities AFS in an unrealized loss position, as management does not believe any of the securities were impaired due to reasons of credit quality at December 31, 2025.

Equity Securities

The Company recognized a net gain on equity securities of $ 463,000 for the year ended December 31, 2024, due to an increase in the fair value of equity securities , and recognized a net loss on equity securities of $ 1.1 million and $ 4.6 million for the years ended December 31, 2023 and 2022, respectively, due to a decrease in fair value of the equity securities.

The Company recognized a net loss on equity securities of $ 230,000 for the year ended December 31, 2025, due to an decrease in the fair value of equity securities , and recognized a net gain on equity securities of $ 463,000 and a net loss on equity securities of $ 1.1 million for the years ended December 31, 2024 and 2023, respectively, due to a change in fair value of the equity securities.

Equity securities were $ 12.6 million and $ 13.1 million as of December 31, 2025 and 2024, respectively .

5 unchanged sentences

Allowance for credit losses

Net loans exclude accrued interest receivable of $ 6.7 million at both December 31, 2024 and December 31, 2023, respectively, which is included in interest receivable and other assets in the consolidated balance sheets.

For the years ended December 31, 2024 and 2023, the recorded investment in individually evaluated loans on nonaccrual were $ 9.2 million and $ 13.0 million, respectively.

Interest foregone on nonaccrual loans was approximately $ 1.3 million and $ 871,000 for the years ended December 31, 2024 and 2023, respectively.

Net loans exclude accrued interest receivable of $ 6.6 million and $ 6.7 million at December 31, 2025 and December 31, 2024, respectively, which is included in interest receivable and other assets in the consolidated balance sheets.

At both December 31, 2025 and 2024, the Company had floating or variable rate loans totaling $ 1.4 billion and $ 1.3 billion, respectively.

As of December 31, 2024, a total of $ 992.5 million of these loans had interest rate floors, of which $ 713.3 million were at their floors.

As of December 31, 2025, a total of $ 1.0 billion of these loans had interest rate floors, of which $ 674.2 million were at their floors.

As of December 31, 2024, a total of $ 992.5 million of the loans had interest rate floors, of which $ 713.3 million were at their floors.

As of December 31, 2025 and 2024, purchased loans outstanding totaled $ 131.0 million and $ 186.6 million respectively.

At December 31, 2024, $ 521,000 in purchase premiums remained on the purchased loans, compared to no purchase premium at December 31, 2023.

At December 31, 2025, $ 419,000 in purchase premiums remained on the purchased loans, compared to

$ 521,000 in purchase premiums at December 31, 2024.

As of both December 31, 2025 and 2024, none of the purchased loans were past due 30 days or more.

15 unchanged sentences

Specific allowance on loans individually evaluated

For the years ended December 31, 2025 and 2024, the recorded investment in individually evaluated loans on nonaccrual were $ 13.4 million and $ 9.2 million, respectively.

The Company may modify the contractual terms of a loan to a borrower experiencing financial difficulty as a part of ongoing loss mitigation strategies.

4 unchanged sentences

During the years ended December 31, 2025 and 2024, there were no modifications of loans to borrowers experiencing financial difficulty.

During the year ended December 31, 2022, there were four 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, which totaled $ 6.5 million.

The type of modification for the four loans were a term extension, with no change to the pre-modification and post modification amortized cost balances.

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):

9 unchanged sentences

Commercial real estate

For the years ended December 31, 2024 and 2023, the Company recorded $ 1.3 million of charge-offs and no charge-offs for modified loans to borrowers experiencing financial difficulty, respectively.

As of December 31, 2024, 2023 and 2022, individually evaluated modified loans to borrowers experiencing financial difficulty had a related allowance of $ 24,000 , $ 1.3 million and $ 393,000 , respectively.

As of both December 31, 2024 and 2023, none of modified loans to borrowers experiencing financial difficulty were performing in accordance with their modified terms, compared to $ 759,000 of modified loans to borrowers experiencing financial difficulty were performing in accordance with their modified terms as of December 31, 2022.

For the years ended December 31, 2025 and 2024, the Company recorded no charge-offs and $ 1.3 million of charge-offs for modified loans to borrowers experiencing financial difficulty, respectively.

As of December 31, 2025 and 2024, individually evaluated modified loans to borrowers experiencing financial difficulty had no related allowance and a related allowance of $ 24,000 , respectively.

As of both December 31, 2025 and 2024, none of the modified loans to borrowers experiencing financial difficulty were performing in accordance with their modified terms.

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.

36 unchanged sentences

Revolving loans that are converted to term loans are treated as new originations in the tables below and are presented by year of initial origination.

During the years ended December 31, 2024, and 2023, $ 867,000 and $ 7.1 million of revolving loans were converted to term loans, respectively.

The following tables present a summary of loans by type, internally assigned risk grade, year of origination and current period gross charge-offs at the years indicated:

During the year ended December 31, 2025 and 2024, none and $ 867,000 , respectively, of the Company’s revolving loans were converted to term loans.

The following tables present a summary of loans by type, internally assigned risk grade, year of origination and current period gross charge-offs at the dates indicated:

Term loans - amortized cost by origination year

48 unchanged sentences

YTD gross charge-offs

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

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

90 days or more past due

11 unchanged sentences

Nonaccrual loans totaled $ 13.4 million and $ 9.2 million at December 31, 2025 and 2024, respectively.

Nonaccrual loans guaranteed by a government agency, which reduces the Company’s credit exposure, were $ 2.0 million at December 31, 2024 and $ 740,000 at December 31, 2023.

At December 31, 2024, nonaccrual loans included $ 643,000 of loans 30-89 days past due and no loans less than 30 days past due.

Nonaccrual loans guaranteed by a government agency, which reduces the Company’s credit exposure, were $1.7 million at December 31, 2025 and $ 2.0 million at December 31, 2024.

At December 31, 2025, nonaccrual loans included $ 562,000 of loans 30-89 days past due and $ 9.4 million of loans less than 30 days past due.

The $ 643,000 in nonaccrual loans past due 30-89 days at December 31, 2024, was comprised of three loans, all of which were placed on nonaccrual due to concerns over the borrowers’ financial condition.

Additionally, at December 31, 2024, there was one loan that was 90 days or more past due and still accruing, with a balance of $ 220,000 .

This compares to no loans that were 90 days or more past due and still accruing as of December 31, 2023.

Interest foregone on nonaccrual loans was approximately $ 1.3 million for the year ended December 31, 2024 compared to $ 871,000 for the year ended December 31, 2023.

At December 31, 2024, nonaccrual loans included $ 643,000 of loans 30-89 days past due and the $ 4.4 million of loans less than 30 days past due.

At December 31, 2025, the $ 562,000 in nonaccrual loans past due 30-89 days was comprised of three loans, and the $ 9.4 million of loans less than 30 days past due was comprised of 15 loans.

All of these loans were placed on nonaccrual due to concerns over the borrowers’ financial condition.

At December 31, 2025, there were no loans 90 days or more past due and still accruing.

At December 31, 2024, there were two such loans, totaling $ 220,000 .

Interest foregone on nonaccrual loans was approximately $ 1.1 million for the year ended December 31, 2025 compared to $ 1.3 million for the year ended December 31, 2024.

Interest income recognized on nonaccrual loans was $ 424,000 , $ 19,000 and $ 208,000 for the years ended December 31, 2025, 2024 and 2023, respectively.

Purchased Credit Deteriorated Loans

2 unchanged sentences

December 31, 2024

Commercial and industrial

Construction and land

24 unchanged sentences

Beginning balance

Impact of CECL adoption

Provision for (reversal of) credit losses

7 unchanged sentences

Collectively evaluated

and industrial

Year ended December 31, 2022

Allowance for loan losses

Beginning balance

Provision for (reversal of) credit losses

Ending balance

For the year ended December 31, 2024, the $ 1.3 million provision for credit losses was primarily due to the replenishment of the allowance due to charge-offs and an increase in provision for credit losses for unfunded commitments.

Net charge-offs totaled $ 5.0 million for the year ended December 31, 2024, of which $ 3.2 million had been specifically reserved for.

The quantitative reserve was impacted by declines in forecasted economic conditions for national gross domestic product and increasing forecasted national unemployment, both key indicators used to estimate credit losses.

The reserve for individually evaluated loans decreased during the year primarily due to $ 3.2 million in charge-offs, as the associated collateral shortfalls were deemed uncollectable.

No changes were made to the qualitative risk factor conclusions during the year ended December 31, 2024.

The increase in the provision for credit loss for unfunded commitments of $ 375,000 for the year ended December 31, 2024 was primarily due to a new $ 9.5 million construction commitment and increased quantitative loss rates.

The following table summarizes the amortized cost basis of individually evaluated collateral-dependent nonaccrual loans by loan and collateral type at December 31, 2024 and December 31, 2023.

For the year ended December 31, 2025, the $ 4.3 million provision for credit losses on loans was primarily driven by loan growth, charge-offs during the current year, and increased reserves on both pooled loans and individually evaluated loans.

The decrease in the provision for credit loss for unfunded commitments of $ 190,000 for the year ended December 31, 2025 was primarily due to a reduction in construction commitments being funded, partially offset by increased loss rates.

Net charge-offs totaled $ 948,000 for the year ended December 31, 2025 compared to $ 5.0 million for the year ended December 31, 2024.

Charge-offs in 2024 included a $ 3.2 million charge-off related to a loan for which a specific reserve had been established as of December 31, 2023.

The increase in the allowance for credit losses on pooled loans primarily reflected higher quantitative reserves resulting from the Company’s annual update to its CECL model methodology.

The update incorporated more recent economic data and revised segment-specific peer group comparisons, which together contributed to a higher modeled reserve level.

To a lesser extent, the increase also reflected updated economic forecasts, including a higher projected national unemployment rate and a weaker outlook for national gross domestic product compared to the assumptions used as of December 31, 2024.

In addition, loan growth during the year and changes in the risk level associated with certain qualitative factors contributed to the increase.

The allowance for credit losses on individually evaluated loans increased during the year primarily due to three commercial real estate loans placed on nonaccrual status for which updated appraisals indicated collateral shortfalls.

The following table summarizes the amortized cost basis of individually evaluated collateral-dependent loans by loan and collateral type at December 31, 2025 and December 31, 2024.

December 31, 2025

Commercial and industrial

Construction and land

Commercial real estate

1 unchanged sentence

Commercial and industrial

Construction and land

Commercial real estate

11 unchanged sentences

Commercial and industrial

Construction and land

Commercial real estate

Interest income recognized on nonaccrual loans was $ 19,000 , $ 208,000 and $ 149,000 for the years ended December 31, 2024, 2023 and 2022, respectively.

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

PEB ceased originating loans under this loan program in 2017.

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.

22 unchanged sentences

Total premises and equipment, net

Depreciation and amortization included in occupancy and equipment expense totaled $ 2.0 million, $ 1.7 million and $ 2.0 million for years ended December 31, 2024, 2023 and 2022, respectively.

The Company owned 15 of its banking branches and leased the remaining 20 branches under noncancelable operating leases as of December 31, 2024.

Depreciation and amortization included in occupancy and equipment expense totaled $ 2.0 million for both the year ended December 31, 2025 and the year ended December 31, 2024, compared to $ 1.7 million for year ended December 31, 2023.

The Company leased 19 branches under noncancelable operating leases as of December 31, 2025.

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 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 not readily determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

Many of these lease agreements include one or more renewal options, exercisable at the Company’s discretion.

When the Company determines at lease commencement that it is reasonably certain to exercise a renewal option, the extended lease term is included in the measurement of the ROU asset and corresponding lease liability.

The Company uses the discount rate implicit in the lease when it is readily determinable.

In instances where the implicit rate is not available, which is typically the case, the Company applies its incremental borrowing rate, determined on a collateralized basis and over a term comparable to the lease term, as of the lease commencement date.

The below maturity schedule represents the undiscounted lease payments for the five-year period and thereafter as of December 31, 2025:

10 unchanged sentences

Short-term lease cost

Variable lease cost

Sublease income

2 unchanged sentences

The Company had no other real estate owned as of December 31, 2025 and 2024.

As both of December 31, 2024 and 2023, there were no residential mortgage loans in the process of foreclosure.

At both of December 31, 2025 and 2024, there were no residential mortgage loans in the process of foreclosure.

GOODWILL AND INTANGIBLE ASSETS

27 unchanged sentences

(1) Noninterest bearing.

Included in time deposits above are brokered deposits of $ 35.5 million and $ 43.6 million as of December 31, 2024 and 2023, respectively.

Included in time deposits above were no brokered deposits as of December 31, 2025, compared to $ 35.5 million of brokered deposits as of December 31, 2024.

At December 31, 2025, aggregate annual maturities of time deposits were as follows:

6 unchanged sentences

At both December 31, 2025 and December 31, 2024, the Company had no FHLB advances outstanding.

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.

At December 31, 2024, we had the ability to borrow up to $ 41.9 million from the FRB of San Francisco, with no FRB of San Francisco advances outstanding at that date.

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 and December 31, 2024, we had the ability to borrow up to $ 49.3 million and $ 41.9 million, respectively, from the FRB of San Francisco.

At both December 31, 2025 and December 31, 2024, we had no FRB of San Francisco advances outstanding.

The Company has Federal Funds lines with four correspondent banks.

7 unchanged sentences

The subordinated debentures have a variable interest rate based on the three months SOFR plus 2.75 %, with quarterly repricing.

The debentures are redeemable by the Company subject to prior approval from the Federal Reserve on March 15, June 15, September 15, or December 15.

The redemption price is par plus accrued and unpaid interest, except in the case of redemption under special event which is defined in the terms of the debentures.

The BFC Trust Preferred Securities are subject to mandatory redemption to the extent of any early redemption of the subordinated debentures or upon its maturity on June 17, 2034.

The debentures are redeemable by the Company subject to prior approval from the Federal Reserve on any March 15, June 15, September 15, or December 15.

The redemption price is par plus accrued and unpaid interest, except in the case of redemption under a special event, which is defined in the terms of the debentures.

The BFC Trust Preferred Securities are subject to mandatory redemption to the extent of any early redemption of the subordinated debentures or upon the maturity of the subordinated debentures on June 17, 2034.

The Company acquired the FULB Trust in the acquisition of FULB.

4 unchanged sentences

The debentures are redeemable by the Company subject to prior approval from the Federal Reserve, on any March 15, June 15, September 15, or December 15.

The redemption price is par plus accrued and unpaid interest, except in the case of redemption under special event which is defined in the terms of the debentures.

The FULB Trust Preferred Securities are subject to mandatory redemption to the extent of any early redemption of the subordinated debentures or upon its maturity on September 15, 2034.

The redemption price is par plus accrued and unpaid interest, except in the case of redemption under a special event, which is defined in the terms of the debentures.

The FULB Trust Preferred Securities are subject to mandatory redemption to the extent of any early redemption of the subordinated debentures or upon the maturity of the subordinated debentures on September 15, 2034.

Holders of the trust preferred securities issued by the Grantor Trusts are entitled to a cumulative cash distribution on the liquidation amount of $ 1,000 per security.

18 unchanged sentences

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

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

Commencing on September 15, 2025, the interest rate on the Notes resets quarterly to the three-month Secured Overnight Financing rate (“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 and 2023, the Company had outstanding subordinated debt evidenced by the Notes, net of costs to issue, totaling $ 63.7 million and $ 63.9 million, respectively.

Income tax expense for the dates indicated consisted of the following:

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 subordinated debt evidenced by the Notes, net of issuance costs, compared to $ 63.7 million, net of issuance costs, as of December 31, 2024.

Income tax expense for the years indicated consisted of the following:

Year Ended December 31,

(As Restated)

Current income tax expense:

3 unchanged sentences

Total income tax expense

Income tax expense results in effective tax rates that differ from the statutory federal income tax rate for the years indicated as follows:

Income tax expense resulted in effective tax rates that differed from the statutory federal income tax rate for the years indicated as follows (as reported under ASU 2023-09 on a prospective basis):

December 31, 2025

Tax computed at the statutory federal rate

State income taxes, net of federal benefit (a)

Low income housing credits (b)

Nontaxable or nondeductible items

Tax exempt interest, net

Other adjustments

Total income tax expense

(a) State taxes in California make up the majority (greater than 50%) of the tax effect in this category.

(b) Tax credits are net of associated investment impacts, such as proportional amortization and tax benefits of flow through losses.

Income tax expense resulted in effective tax rates that differed from the statutory federal income tax rate for the years indicated as follows (before adoption of ASU 2023-09):

December 31, 2024

December 31, 2023

(As Restated)

Federal statutory tax rate

1 unchanged sentence

Tax exempt interest

Acquisition expenses

Total income tax expense

The Company is subject to US federal income tax as well as state income tax in multiple states, most notably in California, Colorado and New Mexico.

The Company is subject to U.S.

federal income tax as well as state income tax in multiple states, most notably in California, Colorado and New Mexico.

Federal income tax returns for the years ended on or after December 31, 2022 are open to audit by the federal authorities and, with limited exception, state income tax returns for the years ended on or after December 31, 2021 are open to audit by state authorities.

Deferred tax assets at the dates indicated, included as a component of interest receivable and other assets in the consolidated balance sheets consisted of the following:

Deferred tax assets included as a component of interest receivable and other assets in the consolidated balance sheets consisted of the following at the dates indicated:

Deferred tax assets

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The utilization of the net operating losses (“NOLs”) is subject to an annual limit pursuant to Section 382 of the Internal Revenue Code.

The annual limitations for Federal and California Franchise Tax purpose is $ 1.1 million and if not fully utilized, the NOLs will begin to expire in 2028.

The annual limitation for Federal and California Franchise Tax purposes is $ 1.1 million and if not fully utilized, the NOLs will begin to expire in 2028.

Based upon the level of historical taxable income and projections for future taxable income over the periods during which the deferred tax assets are expected to be deductible, management believes it is more likely than not that we will realize the benefit of the remaining deferred tax assets.

Accordingly, no valuation allowance has been established as of December 31, 2024 or 2023.

Accordingly, no valuation allowance was established as of December 31, 2025 or 2024.

At December 31, 2025, Federal, California and Colorado NOLs included in the deferred tax asset totaled $ 6.8 million, $ 9.6 million and $ 1.9 million, respectively.

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The Company had no unrecognized tax benefits as of December 31, 2025 and 2024.

Cash paid for income taxes, net of refunds, were as follows:

December 31, 2025

State subtotal

Total income taxes paid, net of refunds received

COMMITMENTS AND CONTINGENCIES

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In the normal course of business, the Company enters into various commitments to extend credit which are not reflected in the financial statements.

These commitments consist of the undisbursed balance on personal and commercial lines, including commercial real estate secured lines of credit, and of the undisbursed funds on construction and development loans.

These commitments consist of the undisbursed balance on personal and commercial lines of credit, including commercial real estate secured lines of credit, and of the undisbursed funds on construction and development loans.

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

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Commitments generally have fixed expiration dates or other termination clauses.

The actual liquidity needs or the credit risk that the Company will experience will be lower than the contractual amount of commitments to extend credit because a significant portion of these commitments are expected to expire without being drawn upon.

The commitments are generally variable rate and include unfunded home equity lines of credit, commercial real estate construction where disbursement is made over the course of construction, commercial revolving lines of credit, and unsecured personal lines of credit.

The actual liquidity needs or credit risk that the Company will experience will be lower than the contractual amount of commitments to extend credit because a significant portion of these commitments are expected to expire without being drawn upon.

The commitments are generally variable rate and include unfunded home equity lines of credit, commercial real estate construction loans whereby disbursement is made over the course of construction, commercial revolving lines of credit, and unsecured personal lines of credit.

The Company’s outstanding loan commitments are made using the same underwriting standards as comparable outstanding loans.

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At December 31, 2024, the remaining commitment to the LIHTC partnerships and SBIC fund were $ 4.9 million and $ 122,000 , respectively.

At December 31, 2024, approximately $ 304.5 million, or 13.6 %, of the Company’s deposits are derived from the top ten depositors.

At December 31, 2023, approximately $ 246.0 million, or 11.5 %, of the Company’s deposits are derived from the top ten depositors.

At December 31, 2025, approximately $ 235.8 million, or 11.7 %, of the Company’s deposits were derived from its top ten depositors.

At December 31, 2024, approximately $ 304.5 million, or 13.6 % of the Company’s deposits were derived from the top ten depositors.

Local Agency Deposits

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These benefits are substantially equivalent to those available under insurance policies purchased by the Company on the lives of the executives.

At December 31, 2024 and 2023, approximately $ 830,000 and $ 1.0 million, respectively, of the salary continuation plan was related to plans assumed through the Company’s acquisitions.

There are no further requirements to fund these plans.

In 2024 and 2023, the Company did no t recognize any expense related to the aforementioned salary continuation plan in salaries and benefits in the consolidated statements of income, as the performance metrics were not met.

This compares to $ 648,000 in expenses recognized for the year ended December 31, 2022.

At December 31, 2025 and 2024, approximately $ 715,000 and $ 830,000 , respectively, of the plan obligations related to plans acquired through prior acquisitions.

The Company is not required to make any additional contributions to fund these acquired plans, as they are fully covered.

In 2025, Company recognized $ 489,000 of contribution expense related to the salary continuation plan in salaries and benefits in the consolidated statements of income, compared to no expense recognized in 2024 and 2023, as the applicable performance metrics were not met in those years.

EQUITY INCENTIVE PLANS

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(i) aggregate grants of stock options or stock appreciation rights to any one participant are subject to an annual limit of the lesser of 100,000 shares or $ 2.0 million in fair market value as of the date of grant;

(ii) aggregate grants of restricted stock or restricted stock units to any one participant are subject to an annual limit of the lesser of 50,000 shares or $ 2.0 million in fair market value as of the date of grant;

(ii) aggregate grants of restricted stock or restricted stock units to any one participant are subject to an

annual limit of the lesser of 50,000 shares or $ 2.0 million in fair market value as of the date of grant;

and (iii) aggregate grants of performance shares or performance units to any one participant are subject to an annual limit of the lesser of 50,000 shares or $ 2.0 million in fair market value as of the date of grant.

In addition, subject to adjustment as provided in the 2024 Plan, the maximum aggregate number of shares that may be covered by awards granted under the 2024 Plan

to any non-employee director in any one calendar year is 25,000 shares.

In addition, subject to adjustment as provided in the 2024 Plan, the maximum aggregate number of shares that may be covered by awards granted under the 2024 Plan to any non-employee director in any one calendar year is 25,000 shares.

As of December 31, 2025, a total of 464,178 shares were available for future issuance under the 2024 Plan.

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An equity incentive award under the 2017 Plan may be an option, stock appreciation right, restricted stock units, stock award, other stock-based award or performance award.

Factors considered by the Board in awarding equity incentives to officers and employees include the performance of the Company, the employee’s or officer’s job performance, the importance of his or her position, and his or her contribution to the organization’s goals for the award period.

Generally, awards 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 annual restricted stock grant limits to officers, employees and directors.

The annual stock grant limit per person for officers and employees is the lesser of 50,000 shares or a value of $ 2.0 million, and per person for directors , the maximum is 25,000 shares.

All unvested restricted shares outstanding vest in the event of a change in control of the Company.

Awarded shares of restricted stock vest over (i) a one-year period following the date of grant, in the case of the non-employee directors, and (ii) a three-year or five-year period following the date of grant, with the initial vesting occurring on the one-year anniversary of the date of grant, in the case of the executive officers.

As of December 31, 2024, no shares were available for future issuance under the 2017 Plan because the 2024 Plan provides that no further awards may be made under the 2017 Plan upon the approval by the Company’s shareholders of the 2024 Plan .

Factors considered by the Board in awarding equity incentives to employees include the performance of the Company, the employee’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 have a vesting period of one to five years .

Subject to adjustment as provided in the 2017 Plan, a maximum of 450,000 shares of common stock may be delivered pursuant to awards granted under the plan.

The 2017 Plan establishes annual restricted stock grant limits of 50,000 shares or a value of $ 2.0 million per officer or employee, and 25,000 shares per director.

All unvested restricted stock awards vest in the event of a change in control of the Company.

Restricted stock awards granted to non-employee directors generally vest one year from the date of grant.

Awards granted to executive officers typically vest over three - or five-year periods, with initial vesting on the one-year anniversary of the grant date.

As of December 31, 2025, no shares remained available for issuance under the 2017 Plan, as the approval of the 2024 Plan by shareholders terminated the ability to grant further awards under the 2017 Plan.

The Company recognizes compensation expense for the restricted stock awards based on the fair value of the shares at the award date.

For the years ended December 31, 2024, 2023 and 2022, total compensation expense for these plans was $ 588,000 , $ 726,000 and $ 1.0 million, respectively.

For the years ended December 31, 2025, 2024 and 2023, total compensation expense for these plans was $ 653,000 , $ 588,000 and $ 726,000 , respectively.

As of December 31, 2025, there was $ 1.1 million 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 four years .

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

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

Weighted-average

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REGULATORY MATTERS

The Company’s ability to pay cash dividends is dependent on dividends or other capital distributions paid to it by the Bank, and is also limited by state corporation law.

The Company’s ability to pay cash dividends is dependent on dividends or other capital distributions paid to it by the Bank and is limited by state corporation law.

Generally, under California law, a California corporation may pay dividends to its shareholders if the corporation’s retained earnings equal at least the amount of the proposed distribution plus the preferential dividend arrears amount (if any) of the corporation, or if immediately after the distribution, the value of the corporation’s assets would equal or exceed its total liabilities plus the preferential dividend arrears amount (if any).

Dividends from the Bank to the Company are restricted under California law to the lesser of the Bank’s retained earnings or the Bank’s net income for the latest three fiscal years, less dividends previously declared during that period or, with the approval of the DFPI, to the greater of the retained earnings of the Bank, the net income of the Bank for its last fiscal year, or the net income of the Bank for its current fiscal year.

During the years ended December 31, 2024 and 2023 the Bank paid $ 15.0 million and $ 40.0 million of dividends to the Company, respectively.

During both the year ended December 31, 2025 and the year ended December 31, 2024 the Bank paid $ 15.0 million of dividends to the Company.

Regulatory Capital

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In the ordinary course of business, the Company may enter into transactions with related parties, including directors, shareholders, officers and their associates.

These transactions are on substantially the same terms, including rates and collateral, as loans to unrelated parties and do not involve more than normal risk of collection.

The following is a summary of the aggregate loan activity involving related party borrowers for the dates indicated:

These transactions are on substantially the same terms, including interest rates and collateral, as loans to unrelated parties and do not involve more than normal risk of collection.

The following is a summary of the aggregate loan activity involving related party borrowers for the dates and years indicated:

Beginning of the year

Disbursements

Amounts paid (1)

Undisbursed commitments to related parties

(1) The 2023 amount includes $ 8.5 million of outstanding loans to former directors who retired in 2023.

As of December 31, 2023, the Bank no longer considers these individuals as related parties.

At December 31, 2025 and 2024, the Company had depositor relationships with directors, officers and their associates which totaled approximately $ 8.9 million and $ 13.8 million, respectively.

OTHER EXPENSES

For the dates indicated, other expenses consisted of the following:

For the years ended December 31, 2025, 2024 and 2023, other expenses consisted of the following:

Professional fees

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Communication and postage

Loan default related expense

Loan default related (recoveries) expense

Director fees and expenses

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December 31, 2025

Government Agencies

Municipal securities

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SBA securities

ABS securities

Corporate bonds

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December 31, 2024

Government Agencies

Municipal securities

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

December 31, 2025

Total Estimated

Fair Value Measurements

December 31, 2024

Individually evaluated loans

Commercial real estate

December 31, 2024

Total Estimated

Fair Value Measurements

December 31, 2023

Individually evaluated loans

(1) For each quarter the loan was outstanding in 2023, one performing modified loan to a borrower experiencing financial difficulty was individually evaluated in determining the estimated allowance for credit losses.

Commercial real estate

The Company does not record loans at fair value on a recurring basis.

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When an appraised value is not available or management determines the fair value of the collateral is below the appraised value or the appraised value contains a significant assumption and there is no observable market price, the Company records the individually evaluated loan as nonrecurring Level 3.

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 10 % .

Such adjustments and assumptions are typically significant and result in a Level 3 classification of the inputs for determining fair valu e.

The Company records OREO at fair value on a nonrecurring basis based on the collateral value of the property.

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Management also incorporates assumptions regarding market trends or other relevant factors and selling and commission costs ranging from 5 % to 10 % .

Such adjustments and assumptions are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Such adjustments and assumptions are typically significant and result in a Level 3 classification of the inputs for determining fair valu e.

FAIR VALUE OF FINANCIAL INSTRUMENTS

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Investment securities — The fair values of securities AFS are based on quoted market prices, where available.

If quoted market prices are not available, fair values are estimated using quoted market prices for similar securities and indications of value provides by brokers.

If quoted market prices are not available, fair values are estimated using quoted market prices for similar securities and indications of value provided by brokers.

Equity securities — The fair values of equity securities are based on quoted market prices, where available.

If quoted market prices are not available, fair values are estimated using quoted market prices for similar securities and indications of value provides by brokers.

If quoted market prices are not available, fair values are estimated using quoted market prices for similar securities and indications of value provided by brokers.

Investment in FHLB and FRB Stock — The carrying value of the FHLB and FRB stock approximates the fair value because the stock is redeemable at par.

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The discount rate is equal to the market rate of currently offered similar products.

This is an adjustable rate borrowing and adjusts to market on a quarterly basis.

Junior Subordinated Deferrable Interest Debentures — The fair value of junior subordinated deferrable interest debentures is determined based on rates and/or discounted cash flow analysis using interest rates offered in inactive markets for instruments of a similar maturity and structure resulting in a Level 3 classification.

The debentures are carried at the current carrying value because the debentures regularly adjust to market rates.

Subordinated Debt — The fair value of subordinated debt is determined based on rates and/or discounted cash flow analysis using interest rates offered in inactive markets for instruments of a similar maturity and structure resulting in a Level 2 classification.

Undisbursed loan commitments and standby letters of credit — The fair value of the off-balance sheet items is based on discounted cash flows of expected funding.

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Cash and cash equivalents

Time deposits in banks

Investment securities AFS

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Junior subordinated deferrable interest debentures, net

Subordinated debt, net

Accrued interest payable

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Loan products generate a significant portion of interest and fee income, while deposit products provide fee and service charge income.

The Company also earns interest income from securities and generates net gains from the sale of loans to third parties.

The Company also ear ns interest income from securities and generates net gains from the sale of loans to third parties.

Interest expense, provisions for credit losses, salaries and employee benefits, data processing, and occupancy expense typically represent the significant expenses in banking operations.

These expenses align with those reported in the Company’s Consolidated Statements of Income and Cash Flows.

These expenses align with those reported in the Company’s Consolidated

Statements of Income and Cash Flows.

Additionally, noncash items such as depreciation and amortization are reflected in the Consolidated Statements of Income and Cash Flows.

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Information reported internally for performance assessment by the CODM is identical to that shown in the Consolidated Statements of Income.

The following table presents the Company’s one operating segment for the periods indicated:

The following table presents the Company’s one operating segment for the periods indica ted:

For the Year Ended December 31,

(As Restated)

Interest and dividend income

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Total consolidated assets

SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the filing of its Annual Report on Form 10-K for the year ended December 31, 2025, and determined that no events have occurred that would require adjustments to the Company’s disclosures in the condensed consolidated financial statements.

PARENT COMPANY ONLY

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For the years ended December 31, 2025, 2024 and 2023

(As Restated)

Interest income

Gain (loss) on equity securities

(Loss) gain on equity securities

Earnings from bank subsidiary

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For the years ended December 31, 2025, 2024 and 2023

(As Restated)

Cash flows from operating activities:

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Income tax benefit

Accretion of premiums/discounts on investment securities

(Gain) loss on equity securities

Accretion of premiums/discounts on equity securities

Loss (gain) on equity securities

Accretion/amortization on junior subordinated debentures

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Stock-based compensation expense

(Decrease) increase in deferred tax asset

(Decrease) increase in interest receivable and other assets

(Decrease) increase in interest payable and other liabilities

Increase (decrease) in deferred tax asset

Net change in interest receivable and other assets

Net change in interest payable and other liabilities

Net cash provided by operating activities

Cash flows from investing activities:

Capital contribution to subsidiary

Net cash received for acquisitions

Net cash used in investing activities

Capital redemption (contribution) to subsidiary

Proceeds from the maturities, repayments, and calls of investment securities

Net cash provided by (used in) investing activities

Cash flows from financing activities:

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Cash dividends declared on common stock not yet paid

Common stock issued

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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(a) Evaluation of Disclosure Controls and Procedures:

An evaluation of the Company’s disclosure controls and procedures, as defined in Rule 13a 15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), was conducted as of December 31, 2024 under the supervision and with the participation of the Company’s Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and several other members of the Company’s senior management.

An evaluation of the Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), was conducted as of December 31, 2025 under the supervision and with the participation of the Company’s Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and several other members of the Company’s senior management.

In designing and evaluating the Company’s disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.

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Based on this assessment, management determined that the Company maintained effective internal control over financial reporting as of December 31, 2025.

Moss Adams LLP, the independent registered public accounting firm that audited the Company’s Consolidated Financial Statements included in this Annual Report on Form 10-K, has also issued an audit report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024.

Baker Tilly US, LLP, the independent registered public accounting firm that audited the Company’s Consolidated Financial Statements included in this Annual Report on Form 10-K, has also issued an audit report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025.

The report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025, is included in the “Report of Independent Registered Public Accounting Firm” contained under “Item 8 – Financial Statements and Supplementary Data” of this Form 10-K.

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Information concerning the Company’s directors and executive officers is incorporated herein by reference from the Proxy Statement, a copy of which will be filed with the SEC not later than 120 days after the close of the fiscal year.

Delinquent Section 16(a) Reports

Information concerning the Company’s delinquent section 16(a) Reports is incorporated herein by reference from the Proxy Statement, a copy of which will be filed with the SEC not later than 120 days after the close of the fiscal year.

Code of Ethics

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The Audit Committee operates under a formal written charter adopted by the Board of Directors.

The members of that committee currently consist of Directors Kendall, Chaudhary (Chair), Davis, Laverne and Magid, each of whom was considered independent under Nasdaq listing standards.

The members of that committee currently consist of Directors Kendall, Chaudhary (Chair), Guida, Laverne and Magid, each of whom was considered independent under Nasdaq listing standards.

The Board of Directors has determined that Mr.

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Subsidiaries of the Registrant (12)

Consent of Moss Adams LLP

Consent of Baker Tilly US, LLP

Power of Attorney (set forth on signature page).

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(12) Incorporated herein by reference to Exhibit 21 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 (File No.

(13) Incorporated herein by reference to Exhibit 97 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2023 (File No.

Form 10-K Summary

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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 8. Financial Statements and Supplementary Data