What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-10 compared with 2026-05-11 · 282 added, 197 removed, 424 unchanged (53% of the section changed)

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These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties.

Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward- looking statements as a result of a wide variety or range of factors including, but not limited to:

Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide range of factors including, but not limited to:

● adverse economic conditions in general and in California, Nevada, Colorado, New Mexico and Washington in particular, as well as other markets where the Company has lending relationships;

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

BayCom’s wholly owned banking subsidiary, United Business Bank, provides a broad range of financial services to businesses and business owners as well as individuals through its network of 34 full-service branches at March 31, 2026, with 16 locations in California, one in Nevada, one in Washington, five in New Mexico and 11 in Colorado.

BayCom’s wholly owned banking subsidiary, United Business Bank, provides a broad range of financial services to businesses and business owners as well as individuals through its network of 34 full-service branches at June 30, 2026, with 16 locations in California, one in Nevada, one in Washington, five in New Mexico and 11 in Colorado.

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

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

Our principal business objective is to enhance shareholder value and generate consistent earnings growth by expanding our commercial banking franchise through organic growth, strategic loan and deposit transactions, and strategic acqusitons.

Since its founding in 2010, growth has been predominantly acquisition-driven, and we have expanded our geographic footprint through ten successful strategic acquisitions.

Since its founding in 2010, growth has been predominantly acquisition-driven, and we have expanded our geographic footprint through ten successful acquisitions.

We believe that our selective acquisition of community banks has yielded economies of scale and improved our efficiency.

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

At March 31, 2026, on a consolidated basis, the Company had approximately $2.6 billion in total assets, $2.0 billion in total loans, $2.3 billion in total deposits and $344.0 million in shareholders’ equity.

At June 30, 2026, on a consolidated basis, the Company had approximately $2.6 billion in total assets, $2.1 billion in total loans, $2.2 billion in total deposits and $335.4 million in shareholders’ equity.

We continue to focus on growing our commercial loan portfolios through acquisitions as well as organic growth.

At March 31, 2026, our $2.0 billion total loan portfolio included $204.2 million, or 10.2 %, of loans acquired through business combinations (all of which were recorded to their estimated fair values at the time of acquisition), and the remaining $1.8 billion, or 89.8%, consisted of loans we originated or purchased not as part of a business combination.

At June 30, 2026, our $2.1 billion total loan portfolio included $188.5 million, or 9.1 %, of loans acquired through business combinations (all of which were recorded to their estimated fair values at the time of acquisition), and the remaining $1.9 billion, or 90.9%, consisted of loans we originated or purchased not as part of a business combination.

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

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During 2025, the Federal Open Market Committee of the Federal Reserve (“FOMC”) lowered the target range for the federal funds rate in response to continued moderation in inflation and evolving economic conditions.

The FOMC reduced the target range by 75 basis points, from 4.25%–4.50% at December 31, 2024, to 3.50%–4.25% by year-end 2025, where it remained as of March 31, 2026.

The FOMC reduced the target range by 75 basis points, from 4.25%–4.50% at December 31, 2024, to 3.50%–4.25% by year-end 2025, where it remained as of June 30, 2026.

All reductions occurred between September and December 2025.

Correspondingly, the prime rate, which generally moves in relation to the federal funds rate, was approximately 6.75% at March 31, 2026.

These rate levels influenced both asset yields and funding costs during the first quarter of 2026.

Net interest income increased $2.3 million, or 10.1%, to $25.2 million for the three months ended March 31, 2026, compared to the same period in 2025, driven primarily by growth in loan interest income and higher FHLB dividend income, partially offset by a decrease in interest income on investment securities and interest-bearing balances.

Total interest expense decreased $412,000, or 4.2%, primarily reflecting the full redemption of the Company’s subordinated notes in the third quarter of 2025, partially offset by higher deposit interest expense and increased junior subordinated debenture expense.

Correspondingly,

the prime rate, which generally moves in relation to the federal funds rate, was approximately 6.75% at June 30, 2026.

These rate levels influenced both asset yields and funding costs during the three and six months ended June 30, 2026.

Additional details regarding net interest income are discussed below.

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Such situations may result from either a decline in the financial condition of the issuing entity or, in the case of fixed interest rate investments, from rising interest rates.

In making this assessment, management considers the length of time and the extent to which fair value is less than amortized cost, the nature of the security, the underlying

collateral, and the financial condition and prospects of the issuer, among other factors.

In making this assessment, management considers the length of time and the extent to which fair value is less than amortized cost, the nature of the security, the underlying collateral, and the financial condition and prospects of the issuer, among other factors.

This assessment also includes a determination of whether the Company intends to sell the security, or if it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis less any current-period credit losses.

If the present value of the cash flows expected to be collected from the security is less than the amortized cost basis of the security, a credit loss exists and an allowance for credit losses for available-for-sale securities is recorded for the credit loss, limited by the amount that the fair value is less than the amortized costs basis.

Any impairment that has not been recorded through an allowance for credit losses for available-for-sale securities is recognized in other comprehensive income.

Changes in the allowance for credit losses for available-for-sale securities are recorded as provision for (or reversal of) credit loss.

Changes in the allowance for credit losses for available-for-sale securities are recorded as provision for (or reversal of) credit losses.

Losses are charged against the allowance for credit losses for available-for-sale securities, with a corresponding adjustment to the security's amortized cost basis, when management believes the uncollectibility of an available-for-sale security is confirmed or when either criteria regarding intent or requirement to sell is met.

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As this information changes, actual results could differ from the estimates, assumptions and judgments reflected in the financial statements.

In particular, management has identified several accounting policies that, due to the estimates, assumptions and judgments inherent in those policies, are critical in understanding our financial statements.

In particular, management has identified several accounting policies that, due to the estimates, assumptions and judgments inherent in those policies, are critical to understanding our financial statements.

These critical accounting policies and estimates include determining the allowance for credit losses and related provision.

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For a detailed discussion, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in the Company’s 2025 Annual Report, which was filed with the SEC on March 16, 2026.

Comparison of Financial Condition at March 31, 2026 and December 31, 2025

Comparison of Financial Condition at June 30, 2026 and December 31, 2025

Total assets.

Total assets increased $54.9 million, or 2.1%, to $2.6 billion at March 31, 2026, from December 31, 2025.

The increase primarily was due to a $99.4 million, or 48.1%, increase in cash and cash equivalents and a $9.7 million, or 5.4%, increase in investment securities available-for-sale, at fair value, partially offset by a $55.1 million, or 2.7%, decrease in loans receivable, net.

Total assets decreased $13.6 million, or 0.5%, to $2.6 billion at June 30, 2026, from December 31, 2025.

The decrease primarily was due to a $29.1 million, or 14.1%, decrease in cash and cash equivalents, partially offset by a $3.0 million, or 1.7%, increase in investment securities available-for-sale at fair value and a $7.2 million, or 0.3%, increase in loans receivable, net.

Cash and cash equivalents.

Cash and cash equivalents increased $99.4 million, or 48.1%, to $305.9 million at March 31, 2026, from $206.5 million at December 31, 2025.

The increase primarily was due to a $107.6 million increase in federal funds sold due repayments on loans outpacing loan growth and an increase in deposits.

Cash and cash equivalents decreased $29.1 million, or 14.1%, to $177.4 million at June 30, 2026, from $206.5 million at December 31, 2025.

The decrease primarily was due to a $24.1 million decrease in federal funds sold resulting from an increase in loan originations and purchases, and a decrease in deposits.

Investment securities available-for-sale.

Investment securities available-for-sale increased $9.7 million, or 5.4%, to $189.4 million at March 31, 2026 from $179.7 million at December 31, 2025.

The increase was primarily attributable to purchases of investment securities, partially offset by routine maturities, principal repayments, and calls of investment securities, and to a lesser extent downward fair value adjustments related to unrealized losses on investment securities available-for-sale.

The following table sets forth certain information regarding contractual maturities and the weighted average yields of our available for sale investment securities as of March 31, 2026.

Investment securities available-for-sale increased $3.0 million, or 1.7%, to $182.7 million at June 30, 2026, from $179.7 million at December 31, 2025.

The increase was primarily attributable to purchases of investment securities, partially offset by routine maturities, principal repayments, and calls of investment securities, and to a lesser extent upward fair value adjustments related to unrealized gains on investment securities available-for-sale.

The following table sets forth certain information regarding contractual maturities and the weighted average yields of our available-for-sale investment securities as of June 30, 2026.

Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

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Equity securities.

Equity securities increased $58,000, or 0.5%, to $12.6 million at March 31, 2026 from $12.6 million at December 31, 2025, primarily due to mark-to-market adjustments recorded during the three months ended March 31, 2026.

Equity securitie s decreased $847,000, or 6.7%, to $11.7 million at June 30, 2026 from $12.6 million at December 31, 2 025, primarily due to the redemption of one equity security for $1.0 million at par in the current quarter, with no gain or loss recognized, partially offset by positive mark-to-market adjustments recorded during the six months ended June 30, 2026.

Loans receivable, net.

We originate a wide variety of loans with a focus on commercial real estate (“CRE”) loans and commercial and industrial loans.

Total loans decreased $55.1 million, or 2.7%, to $2.0 billion at March 31, 2026 from $2.1 billion at December 31, 2025.

The decrease was due to $90.5 million of loan repayments, partially offset by $34.7 million of new loan originations and $3.2 million of loan purchases.

During the current quarter, the Company sold loans totaling $2.4 million, of which $919,000 were nonperforming assets.

Total loans increased $7.2 million, or 0.3%, to $2.1 billion at June 30, 2026 from $2.0 billion at December 31, 2025.

The increase was due to $114.4 million of new loan originations and $66.5 million of loan purchases, which were more than offset by $160.4 million of loan repayments and $11.6 million of loans sold.

The following table provides information about our loan portfolio by type of loan, with purchase credit deteriorated (“PCD”) loans presented as a separate balance, at the dates presented .

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Allowance for credit losses

The following table shows as of March 31, 2026, the geographic distribution of our loan portfolio, by type of loan, in dollar amounts and percentages:

The following table shows as of June 30, 2026, the geographic distribution of our loan portfolio, by type of loan, in dollar amounts and percentages:

San Francisco Bay

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(Dollars in thousands)

March 31, 2026

June 30, 2026

Commercial and industrial

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(1) Includes Alameda, Contra Costa, Solano, Sonoma, Marin, San Francisco, San Mateo and Santa Clara counties.

(2) Includes loans in Sacramento and Northern California counties totaling $92.2 million and loans in Los Angeles and Orange counties totaling $590.3 million at March 31, 2026.

(2) Includes loans in Sacramento and Northern California counties totaling $90.6 million and loans in Los Angeles and Orange counties totaling $606.3 million at June 30, 2026.

At December 31, 2025, loans in Sacramento and Northern California counties and loans in Los Angeles and Orange counties totaled $92.3 million and $601.5 million, respectively.

(3) Includes loans primarily in the states of Colorado, Nevada, New Mexico and Washington and other states.

At March 31, 2026, loans in Colorado, Nevada, New Mexico, Washington and other states totaled $119.4 million, $47.7 million, $72.8 million, $88.4 million and $454.6 million, respectively.

At June 30, 2026, loans in Colorado, Nevada, New Mexico, Washington and other states total ed $124.9 million, $47.3 million, $72.6 million, $88.0 million and $443.6 million, respectively .

At December 31, 2025, loans in Colorado, Nevada, New Mexico, Washington and other states totaled $132.2 million, $44.5 million, $69.6 million, $89.9 million, and $425.3 million respectively.

Acquired loans.

As of March 31, 2026, our total loan portfolio included $204.2 million, or 10.2%, of loans acquired through business combinations (all of which were recorded at their estimated fair values as of the time of acquisition), of which $108.4 million had no remaining net premium or discount.

As of March 31, 2026, acquired non-PCD loans totaled $96.6 million, with a remaining net premium of $1.3 million, compared to $121.1 million with a remaining net premium of $397,000 as of December 31, 2025.

As of June 30, 2026, our total loan portfolio included $188.5 million, or 9.1%, of loans acquired through business combinations (all of which were recorded at their estimated fair values as of the time of acquisition), of which $149.1 million had a remaining net premium or discount.

As of June 30, 2026, acquired non-PCD loans totaled $39.4 million, with a remaining net premium of $543,000, compared to $121.1 million with a remaining net premium of $397,000 as of December 31, 2025.

The decrease from December 31, 2025 was due to payoffs, paydowns, and migration to the general pool of $58.9 million of acquired loans during the current quarter, as the portfolio continued to season and such acquired loans exhibited risk characteristics indistinguishable from the Company’s originated loans with most of these loans having not been renewed or re-underwritten during the first half of 2026.

The net premium for acquired non-PCD loans includes a credit discount based on estimated losses in the acquired loans, partially offset by any premium based on market interest rates on the date of acquisition.

As of March 31, 2026, acquired PCD loans totaled $12.1 million, with a remaining net non-credit discount of $648,000, compared to $16.1 million with a remaining net non-credit discount of $1.2 million as of December 31, 2025.

As of June 30, 2026, acquired PCD loans totaled $2.1 million, with a remaining net non-credit discount of $298,000, compared to $16.1 million with a remaining net non-credit discount of $1.2 million as of December 31, 2025.

Nonperforming assets and loans.

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Nonperforming loans include nonaccrual loans and accruing loans 90 days or more past due.

Nonperforming assets increased $3.2 million to $16.7 million, or 0.83% of total loans, at March 31, 2026, compared to $13.4 million, or 0.65% of total loans, at December 31, 2025.

The Company held no OREO at either date.

Nonperforming loans totaled $16.7 million, or 0.83% of total loans, at March 31, 2026, compared to $13.4 million, or 0.65% of total loans, at December 31, 2025.

The increase from the prior quarter-end was primarily due to one $4.9 million commercial real estate loan being placed on nonaccrual during the current quarter, partially offset by payoffs of five nonaccrual loans totaling $1.6 million.

The majority of nonperforming loans remain concentrated in the commercial real estate portfolio, while consumer and other commercial loans continue to exhibit low levels of delinquencies.

At March 31, 2026, nonaccrual loans included $7.0 million of loans 30–89 days past due and $6.3 million of loans less than 30 days past due.

The $7.0 million of loans 30-89 days past due consisted of four loans and the $6.3 million of nonaccrual loans less than 30 days past due consisted of 15 loans, all of which were placed on nonaccrual due to borrower-specific financial concerns, indicators of credit deterioration, and other credit related factors, which provided reasonable doubt about the full collectability of principal and interest, rather than delinquency.

The Company held no OREO at June 30, 2026 or December 31, 2025.

Nonperforming loans decreased $3.6 million to $9.8 million, or 0.47% of total loans, at June 30, 2026, compared to $13.4 million, or 0.65% of total loans, at December 31, 2025.

The decrease in nonperforming loans was primarily due to the payoff of six nonaccrual loans totaling $2.3 million and the sale of two nonaccrual loans totaling $7.7 million, partially offset by three new nonaccrual CRE loans totaling $6.4 million.

The majority of nonperforming loans remain concentrated in the CRE portfolio, while consumer and other commercial loans continue to exhibit low levels of delinquencies.

At June 30, 2026, nonaccrual loans included $1.4 million of loans 30–89 days past due and $4.7 million of loans less than 30 days past due.

The $1.4 million of loans 30-89 days past due consisted of one loan and the $4.7 million of nonaccrual loans less than 30 days past due consisted of 13 loans, all of which were placed on nonaccrual due to borrower-specific financial concerns and other credit-related factors that raised reasonable doubt about the full collectability of principal and interest, rather than delinquency.

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.

At December 31, 2025, the $9.4 million of loans less than 30 days past due was comprised of 15 loans all of which were placed on nonaccrual due to concerns over the financial condition of the borrowers.

Of the nonperforming loans at March 31, 2026, approximately $932,000 were guaranteed by governmental agencies, compared to $1.7 million at December 31, 2025.

The decrease in government-guaranteed nonaccrual loans during this period reflects the pay-off of one nonaccrual loan during the current quarter.

Of the nonperforming loans at June 30, 2026, approximately $862,000 were guaranteed by governmental agencies, compared to $1.7 million at December 31, 2025.

The decrease in government-guaranteed nonaccrual loans during this period reflected paydowns.

In general, loans are placed on nonaccrual status after being contractually delinquent for more than 90 days, or earlier, if management believes full collection of future principal and interest on a timely basis is unlikely.

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The amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses for loans is adjusted by the same amount.

Modified loans to borrowers experiencing financial difficulty as of March 31, 2026 and December 31, 2025, totaled $1.2 million and $1.4 million, respectively.

Modified loans to borrowers experiencing financial difficulty as of June 30, 2026 and December 31, 2025, totaled $2.0 million and $1.4 million, respectively.

All such modified loans were on nonaccrual status as of each respective reporting date.

Modified loans that are accruing and performing in accordance with their modified terms are not classified as nonperforming loans because they continue to accrue interest and demonstrate satisfactory payment performance despite their modified terms.

There were no such modified loans at March 31, 2026 and December 31, 2025.

At both March 31, 2026 and December 31, 2025, individually evaluated modified loans to borrowers experiencing financial difficulty had no related allowance.

The following table provides information regarding nonperforming loans, nonperforming assets and modified loans as of the dates indicated:

There were no such modified loans at June 30, 2026 and December 31, 2025.

At both June 30, 2026 and December 31, 2025, individually evaluated modified loans to borrowers experiencing financial difficulty had related allowances of $594,000 and none, respectively.

The following table provides information regarding nonperforming loans, nonperforming assets, modified loans and PCD loans as of the dates indicated:

(Dollars in thousands)

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PCD loans are considered performing and are not included in nonperforming assets in the table above.

Interest foregone on nonaccrual loans was approximately $200,000 and $269,000 for the three months ended March 31, 2026 and 2025, respectively.

Interest income recognized on nonaccrual loans was approximately $140,000 and $35,000 for the three months ended March 31, 2026 and 2025, respectively.

Interest foregone on nonaccrual loans was approximately $223,000 and $423,000 for the three and six months ended June 30, 2026, compared to $370,000 and $639,000 for the three and six months ended June 30, 2025, respectively.

Interest income recognized on nonaccrual loans was approximately $338,000 and $478,000 for the three and six months ended June 30, 2026 and $31,000 and $66,000 for the three and six months ended June 30, 2025, respectively.

Allowance for credit losses for loans.

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We assess the allowance for credit losses based on three categories:

(i) originated loans, (ii) acquired non-PCD loans, and (iii) acquired

(i) originated loans, (ii) acquired non-PCD loans, and (iii) acquired PCD loans.

The allowance for credit losses reflects management’s estimate of current expected credit losses inherent in the loan portfolios.

The computation includes elements of judgment and high levels of subjectivity.

At March 31, 2026, the Company’s allowance for credit losses for loans was $20.6 million, or 1.02% of total loans, compared to $21.2 million, or 1.03% of total loans, at December 31, 2025.

Management currently believes that the allowance for credit losses at March 31, 2026 is adequate to absorb expected credit losses inherent in the Company’s loan portfolio.

At June 30, 2026, the Company’s allowance for credit losses for loa ns was $23.0 million, or 1.11% of total loans, compared to $21.2 million, or 1.03% of total loans, at December 31, 2025.

Management currently believes that the allowance for credit losses at June 30, 2026 is adequate to absorb expected credit losses inherent in the Company’s loan portfolio.

No assurance can be given, however, that adverse economic conditions or other circumstances will not result in increased losses in the portfolio.

The decrease in the allowance for credit losses at March 31, 2026 compared to December 31, 2025, was primarily attributable to a decrease in the reserve for pooled loans due to lower loan balances, partially offset by changes in macroeconomic forecasts, including lower forecasted unemployment and an improved national gross domestic product outlook.

In addition, there was an $82,000 decrease in the reserve for individually evaluated loans during the current quarter.

Qualitative risk factor classifications remained unchanged during the current quarter.

Net charge-offs were $15,000 for the three months ended March 31, 2026, compared to net charge-offs of $102,000 for the three months ended March 31, 2025.

The following table presents certain credit ratios at the dates and for the periods indicated and each component of the ratio’s calculations:

Three months ended March 31,

The increase in the allowance for credit losses at June 30, 2026 compared to December 31, 2025, was primarily attributable to a $1.5 million increase in specific reserves for individually evaluated loans, primarily due to one CRE loan, and a $256,000 increase in reserves for pooled loans due to loan growth, partially offset by changes in macroeconomic forecasts, including improvements in unemployment and gross domestic product estimates.

Qualitative risk factor classifications remained unchanged during the period.

Net charge-offs were $2.8 million and $2.9 million for the three and six months ended June 30, 2026, compared to net charge-offs of $13,000 and $115,000 for the three and six months ended June 30, 2025, respectively.

The following table presents certain credit ratios at the dates and for the periods indicated and each component of the ratios’ calculations:

At and for the six months ended June 30,

(Dollars in thousands)

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Commercial real estate:

Net charge-offs

Net charge-offs (recoveries)

Average loans outstanding

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Total average loans outstanding

As of March 31, 2026, the Company individually evaluated $15.1 million in loans, of which $4.4 million had a specific allowance totaling $1.3 million as of March 31, 2026.

As of June 30, 2026, the Company individually evalu ated $9.9 million in loans, of which $7.8 million had a specific allowance totaling $2.9 million as of June 30, 2026.

As of December 31, 2025, the Company individually evaluated $14.9 million in loans, of which $4.5 million had a specific allowance totaling $1.4 million.

Management considers the allowance for credit losses for loans at March 31, 2026 to be adequate to cover expected credit losses inherent in the loan portfolio based on the assessment of current portfolio performance, historical loss experience, and relevant qualitative and quantitative factors, including current economic conditions and reasonable and supportable forecasts.

Management considers the allowance for credit losses for loans at June 30, 2026 to be adequate to cover expected credit losses inherent in the loan portfolio based on the assessment of current portfolio performance, historical loss experience, and relevant qualitative and quantitative factors, including current economic conditions and reasonable and supportable forecasts.

While management believes the estimates and assumptions used in determining the adequacy of the allowance are reasonable, actual credit losses may differ from those expected.

Changes in economic conditions, borrower performance, or other factors could result in actual losses exceeding the current allowance, which could adversely affect the Company’s financial condition and results of operations.

In addition, the methodology, assumptions, and judgments used in determining the allowance for credit losses is subject to review by bank regulators, as part of their routine examination process, which may result in adjustments to the provision for credit losses based upon information available to them at the time of their examination.

In addition, the methodology, assumptions, and judgments used in determining the allowance for credit losses are subject to review by bank regulators, as part of their routine examination process, which may result in adjustments to the provision for credit losses based upon information available to them at the time of their examination.

Deposits are our primary source of funding and generally consist of core deposits from the communities served by our branch and office locations.

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Competitive products, competitive pricing and high touch client service are important to attracting and retaining these deposits.

Total deposits increased $51.8 million, or 2.3%, to $2.3 billion at March 31, 2026, compared to December 31, 2025.

At March 31, 2026, noninterest-bearing demand deposits totaled $609.2 million, or 26.9% of total deposits, compared to $578.1 million, or 26.1% of total deposits, at December 31, 2025, representing an increase of $31.2 million.

From December 31, 2025 to March 31, 2026, interest-bearing deposits generally increased, with time deposits increasing $19.9 million, money market accounts increasing $13.3 million, and savings accounts increasing $905,000.

By contrast, NOW accounts declined $13.6 million during the same period.

Time deposits included no brokered deposits as of March 31, 2026, and December 31, 2025.

The overall increase in total deposits from December 31, 2025 primarily reflects noninterest-bearing demand deposit growth, partially offset by a decline in NOW accounts.

In addition, the increase in money market and time deposits was driven by growth, and to a lesser extent a shift in deposit composition reflecting continued customer migration toward interest-bearing products in response to the prevailing rate environment.

Total deposits decreased $43.7 million, or 2.0%, to $2.2 billion at June 30, 2026, compared to December 31, 2025.

At June 30, 2026, noninterest-bearing demand deposits totaled $576.5 million, or 26.6% of total deposits, compared to $578.1 million, or 26.1% of total deposits, at December 31, 2025, representing a decrease of $1.5 million.

From December 31, 2025 to June 30, 2026, interest-bearing deposits generally decreased, with time deposits decreasing $106.2 million and NOW accounts decreasing $9.5 million, partially offset by money market accounts increasing $73.3 million, and savings accounts increasing $207,000.

Time deposits included no brokered deposits as of June 30, 2026, and December 31, 2025.

The overall decrease in total deposits from December 31, 2025 primarily reflects declines in time deposits, partially offset by increases in money market accounts and, to a lesser extent, savings accounts.

The increase in money market deposits reflects continued customer migration within the deposit portfolio in response to the prevailing rate environment.

Management continues to monitor deposit mix and pricing strategies in the context of funding costs, liquidity needs, and interest rate risk.

We consider our deposit base to be seasoned, stable and well-diversified, and we do not have any significant industry concentrations among our non-insured deposits.

We also offer our customers the ability to place deposits in Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep (“ICS”) money market product services via the IntraFi Network, to insure deposits above FDIC insurance limits.

At March 31, 2026, our average deposit account size (excluding public funds), calculated by dividing period-end deposits by the population of accounts with balances, was approximately $63,000.

At June 30, 2026, our average deposit account size (excluding public funds), calculated by dividing period-end deposits by the population of accounts with balances, was approximately $62,000.

See “Note 17 – Commitments and Contingencies” of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q for information regarding our top ten depositors.

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These advances may be made pursuant to several different credit programs, each of which has its own interest rate, range of maturities and call features.

At March 31, 2026 and December 31, 2025, we could borrow up to $599.3 million and $580.7 million, respectively, from the FHLB of San Francisco.

At both March 31, 2026 and December 31, 2025, there were no FHLB advances outstanding.

At March 31, 2026 and December 31, 2025, we could borrow up to $43.4 million and $49.3 million, respectively, from the FRB of San Francisco.

At both March 31, 2026 and December 31, 2025, there were no FRB advances outstanding.

At both March 31, 2026 and December 31, 2025, we had a total of $65.0 million in federal funds lines available from third-party correspondent banks and no balances outstanding at these dates.

At both March 31, 2026 and December 31, 2025, the Company had outstanding junior subordinated deferrable interest debentures, net of fair value adjustments, assumed in connection with its previous acquisitions totaling $5.9 million and $8.7 million, respectively.

At June 30, 2026 and December 31, 2025, we could borr ow up to $531.0 million and $580.7 million, respectively, from the FHLB of San Francisco.

At June 30, 2026, the Bank had $25.0 million of overnight advances outstanding from the FHLB, compared to no FHLB borrowings outstanding at December 31, 2025.

At June 30, 2026 and December 31, 2025, we could borro w up to $42.8 million and $49.3 million, respectively, from the FRB of San Francisco.

At both June 30, 2026 and December 31, 2025, there were no FRB advances outstanding.

At both June 30, 2026 and December 31, 2025, we had a total of $65.0 million in federal funds lines available from third-party correspondent banks and no balances outstanding at these dates.

At June 30, 2026 and December 31, 2025, the Company had outstanding junior subordinated deferrable interest debentures, net of fair value adjustments, assumed in connection with its previous acquisitions totaling $5.9 million and $8.7 million, respectively.

The decrease reflects the redemption of one debenture during the first quarter of 2026.

At both March 31, 2026 and December 31, 2025, the Company had no outstanding subordinated debt.

We are required to provide collateral for certain local agency deposits.

At both March 31, 2026 and December 31, 2025, the FHLB of San Francisco had issued letters of credit on behalf of the Bank totaling $42.1 million and $41.6 million, respectively, as collateral for local agency deposits.

The Bank is required to provide collateral for certain local agency deposits.

At both June 30, 2026 and December 31, 2025, the FHLB of San Francisco had issued letters of credit on behalf of the Bank totaling $42.1 million and $41.6 million, respectively, as collateral for local agency deposits.

Shareholders’ equity.

Shareholders’ equity increased $5.4 million, to $344.0 million at March 31, 2026 from $338.6 million at December 31, 2025.

The increase in shareholders’ equity primarily was due to $8.2 million of net income earned during the first quarter of 2026 and $340,000 of other comprehensive income, net of taxes, related mainly to changes in unrealized gains on available-for-sale securities.

These items were partially offset by $3.3 million of accrued cash dividends.

During the three months ended March 31, 2026, the Company did not repurchase any shares of common stock, compared to the repurchase of $1.3 million of common stock during the three months ended March 31, 2025.

Shareholders’ equity decreased $3.2 million, to $335.4 million at June 30, 2026 from $338.6 million at December 31, 2025.

The decrease in shareholders’ equity primarily was due to $6.5 million of cash dividends paid or accrued during the period.

These decreases were partially offset by a $1.4 million increase in common stock due to stock based compensation primarily related to accelerated vesting of shares for departing executives, net income of $1.2 million earned during the first six months of 2026 and $811,000 in other comprehensive income, net of taxes, which primarily reflected changes in the unrealized gain on available-for-sale securities.

During the six months ended June 30, 2026, the Company did not repurchase any shares of common stock, compared to the repurchase of $5.2 million of common stock during the six months ended June 30, 2025.

For additional information see Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds.”

Comparison of Results of Operations for the Three months Ended March 31, 2026 and 2025

Comparison of Results of Operations for the Three and Six months Ended June 30, 2026 and 2025

Earnings summary.

Net income was $8.2 million for the three months ended March 31, 2026, compared to $5.7 million for the three months ended March 31, 2025, an increase of $2.5 million or 43.5%.

The increase was primarily as a result of a $2.3 million increase in net interest income and a $1.3 million favorable change in the provision for credit losses, reflecting a net recovery in the current quarter compared to a $642,000 provision in the prior-year quarter, as well as a $105,000 increase in noninterest income.

These changes were partially offset by a $517,000 increase in noninterest expense and a $738,000 increase in the provision for income taxes.

Basic and diluted earnings per share were $0.75 for the three months ended March 31, 2026, compared to $0.51 for the three months ended March 31, 2025.

Our efficiency ratio, which is calculated by dividing noninterest expense by the sum of net interest income before provision for credit losses and noninterest income, was 61.73% and 65.74% for the three months ended March 31, 2026, and 2025, respectively.

The improvement in the efficiency ratio for the current quarter was primarily driven by higher net interest income.

The Company reported a net loss of $7.0 million for the three months ended June 30, 2026, compared to net income of $6.4 million for the three months ended June 30, 2025, a decrease of $13.3 million.

The decrease was primarily a result of an $11.4 million increase in noninterest expense, largely attributable to the one-time recognition of $10.5 million of severance, accelerated equity award vesting and employee benefit costs associated with the previously announced departures of three senior executives, and a $5.0 million increase in the provision for credit losses.

These changes were partially offset by a $568,000 increase in net interest income and a $2.6 million decrease in the provision for income taxes.

Basic and diluted loss per share was $(0.64) for the three months ended June 30, 2026, compared to basic and diluted earnings per share was $0.58 for the three months ended June 30, 2025.

Net income w as $1.2 million for the six months ended June 30, 2026, compared to $12.1 million for the six months ended June 30, 202 5, a decrease of $10.8 million or 89.9%.

The decrease was the result of a $11.9 million increase in noninterest expense, a $3.7 million increase in the provision for credit losses, partially offset by a $2.9 million increase in net interest income, a $1.8 million decrease in the provision for income taxes and a $78,000 increase in noninterest income.

Basic and diluted earnings per share were $0.11 for the six months ended June 30, 2026, compared to $1.09 for the six months ended June 30, 2025.

Our efficiency ratio, which is calculated by dividing noninterest expense by the sum of net interest income before provision for credit losses and noninterest income, was 107.71% and 84.04% for the three and six months ended June 30, 2026, and 63.85% and 64.79% for the three and six months ended June 30, 2025, respectively.

The change in the efficiency ratio for the current quarter was primarily attributable to the significant increase in noninterest expense due to costs of the previously announced departures of three senior executives, partially offset by higher net interest income.

Interest income.

Interest income for the three months ended March 31, 2026 was $34.6 million, compared to $32.6 million for the three months ended March 31, 2025, an increase of $1.9 million or 5.8%.

Increased yields earned on interest-earning assets, along with an increase in the average balance of loans, were the primary drivers of the increase in interest income, partially offset by decreases in the average balances of investment securities and fed funds sold and interest-bearing balances in banks.

Interest income on loans, including fees, increased $2.4 million, or 8.9%, to $29.6 million for the three months ended March 31, 2026 from $27.1 million for the three months ended March 31, 2025, due to an $89.2 million increase in the average balance of loans and a 23 basis point increase in the average loan yield.

The average balance of loans was $2.0 billion for the first quarter of 2026, up 4.6% compared to the first quarter of 2025.

The average yield on loans was 5.87% for the first quarter of 2026, compared to 5.64% for the first quarter of 2025.

The increase in the average yield on loans reflected increased rates on variable rate loans, as well as new loans being originated at higher market interest rates.

Interest income on loans for the three months ended March 31, 2026 and 2025 included $600,000 and $215,000 in accretion of the net discount on acquired loans.

During the current quarter, one $4.0 million acquired commercial real

estate loan paid off, resulting in $555,000 of discount accretion and recovery of interest of $610,000.

Accretion of the net discount and recovery of interest positively impacted the average loan yield by 11 and 12 basis points, respectively during the current quarter, compared to minimal impact during the first quarter of 2025.

Remaining net discounts on these acquired loans totaled $649,000 and $223,000 at March 31, 2026 and 2025, respectively.

The combined approximately $1.2 million of discount accretion and interest recovery recognized during the current quarter as a result of the $4.0 million single loan payoff is non-recurring in nature.

With only $649,000 of remaining net discount available for future accretion, the contribution of acquired loan accretion to loan yields and net interest margin is expected to be minimal in future periods.

Additionally, interest income on loans for the three months ended March 31, 2026 and 2025, included $17,000 and $162,000, respectively, in fees related to prepayment penalties.

Interest income on investment securities decreased $322,000, or 13.1%, to $2.1 million for the three months ended March 31, 2026, compared to $2.5 million for the three months ended March 31, 2025, as a result of decreases in the average balance and average yield.

The average balance of investment securities totaled $188.2 million for the three months ended March 31, 2026, compared to $210.2 million for the three months ended March 31, 2025.

The average yield on investment securities was 4.59% for the three months ended March 31, 2026, compared to 4.73% for the three months ended March 31, 2025.

Interest income on loans, including fees, increased $251,000, or 0.9%, to $28.2 million for the three months ended June 30, 2026 from $28.0 million for the three months ended June 30, 2025, due to a $28.3 million increase in the average balance of loans, partially offset by a three basis point decrease in the average loan yield.

The average balance of loans was $2.0 billion for the second quarter of 2026, up 1.42% compared to the second quarter of 2025.

The average yield on loans was 5.60% for the second quarter of 2026, compared to 5.63% for the second quarter of 2025.

The decrease in the average yield on loans reflected higher amortization of net premiums on acquired loans, partially offset by new loans being originated at higher market interest rates.

Interest income on loans for the three months ended June 30, 2026 included $380,000 of amortization of net premiums on acquired loans, primarily due to continued seasoning and runoff of the acquired loan portfolio, which negatively impacted the average loan yield by eight basis points.

During the three months ended June 30, 2025, $110,000 of accretion of the net discount was recognized, with minimal positive impact on the average loan yield.

Remaining net premiums on these acquired loans totaled $245,000 and $319,000 at June 30, 2026 and 2025, respectively.

Additionally, interest income on loans for the three months ended June 30, 2026 and 2025, included $110,000 and $109,000, respectively, in fees related to prepayment penalties.

Interest income on investment securities decreased $139,000, or 5.8%, to $2.3 million for the three months ended June 30, 2026, compared to $2.4 million for the three months ended June 30, 2025, as a result of decreases in the average balance and average yield.

The average balance of investment securities totaled $194.7 million for the three months ended June 30, 2026, compared to $206.5 million for the three months ended June 30, 2025.

The average yield on investment securities was 4.67% for the three months ended June 30, 2026, compared to 4.68% for the three months ended June 30, 2025.

The decreases in the average balance and the average yield from the same quarter a year ago were due to paydowns and calls on higher variable-rate securities and rate resets on variable rate securities.

In addition, during the first quarter of 2026, we received $709,000 in cash dividends on our FRB and FHLB stock, including $330,000 in special dividends from the FHLB, compared to $393,000 during the first quarter of 2025.

The $330,000 in special dividends received from the FHLB during the current quarter is not expected to recur at a predictable frequency.

These special dividends contributed approximately five basis points to the reported net interest margin.

Excluding special dividends, FHLB and FRB dividend income would have remained essentially unchanged between periods.

Interest income on federal funds sold and interest-bearing balances in banks decreased $513,000, or 19.4%, to $2.1 million for the three months ended March 31, 2026, compared to $2.6 million for the three months ended March 31, 2025, as a result of decreases in both the average yield and average balance.

The average yield decreased 77 basis points to 3.70% for the three months ended March 31, 2026, compared to 4.47% for the three months ended March 31, 2025, reflecting decreases in Federal Reserve policy rates.

The average balance of federal funds sold and interest-bearing balance in banks totaled $234.2 million and $240.3 million for the three months ended March 31, 2026 and 2025, respectively.

In addition, during the second quarter of 2026, we received $135,000 in cash dividends on our FRB and FHLB stock, compared to $392,000 during the second quarter of 2025, with the decrease due to the FHLB lowering the dividend rate in the current quarter.

Interest income on federal funds sold and interest-bearing balances in banks decreased $1.1 million, or 39.3%, to $1.6 million for the three months ended June 30, 2026, compared to $2.7 million for the three months ended June 30, 2025, as a result of decreases in both the average yield and average balance.

The average yield decreased 75 basis points to 3.70% for the three months ended June 30, 2026, compared to 4.45% for the three months ended June 30, 2025, reflecting decreases in Federal Reserve policy rates.

The average balance of federal funds sold and interest-bearing balance in banks totaled $177.3 million and $242.8 million for the three months ended June 30, 2026 and 2025, respectively.

Interest income on loans, including fees, increased $2.7 million, or 4.9%, to $57.8 million for the six months ended June 30, 2026 from $55.1 million for six months ended June 30, 2025, primarily due to a $58.6 million increase in the average balance of loans to $2.0 billion, and an 11 basis point increase in the average loan yield.

The average yield on loans was 5.74% for the six months ended June 30, 2026, compared to 5.63% for the six months ended June 30, 2025.

The increase in the average yield on loans from the same period last year was due to the impact of increased rates on variable rate loans, new loans being originated at higher market interest rates, as well as recovery of interest on one large payoff discussed below.

Interest income on loans for the six months ended June 30, 2026 and 2025 included $203,000 and $315,000 in accretion of the net discount on acquired loans and revenue from PCD loans in excess of discounts.

During the first quarter of 2026, one $4.0 million acquired CRE loan paid off, resulting in $555,000 of discount accretion and recovery of interest of $610,000.

The recovery of interest positively impacted the average loan yield by 11 basis points.

Interest income on loans for the six months ended June 30, 2026 and 2025, included $355,000 and $271,000, respectively, in fees related to prepayment penalties.

Interest income on investment securities decreased $461,000, or 9.5%, to $4.4 million for the six months ended June 30, 2026, compared to $4.9 million for the six months ended June 30, 2025.

The average yield on investment securities decreased seven basis points to 4.63% for the six months ended June 30, 2026, compared to 4.70% for the six months ended June 30, 2025.

The decrease in average yield was due to lower market interest rates on newly purchased securities.

The average balance of investment securities totaled $191.5 million for the six months ended June 30, 2026, compared to $208.3 million for the six months ended June 30, 2025.

In addition, during the six months ended June 30, 2026, we received $839,000 in cash dividends on our FRB and FHLB stock, including $330,000 in special dividends from the FHLB, up 6.7% from $786,000 received during the six months ended June 30, 2025.

The $330,000 in special dividends received from the FHLB is not expected to recur at a predictable frequency.

Interest income on federal funds sold and interest-bearing balances in banks decreased $1.6 million, or 29.4%, to $3.8 million for the six months ended June 30, 2026, compared to $5.3 million for the six months ended June 30, 2025, as a result of changes in the average yield and average balance.

The average yield decreased 76 basis points to 3.70% for the six months ended June 30, 2026, compared to 4.46% for the six months ended June 30, 2025, reflecting the Federal

Reserve’s rate reductions.

The average balance totaled $205.6 million for the six months ended June 30, 2026, compared to $241.6 million for the six months ended June 30, 2025.

Interest expense.

Interest expense decreased $412,000, or 4.2%, to $9.4 million for the three months ended March 31, 2026, compared to $9.8 million for the three months ended March 31, 2025.

The decrease was primarily due to the Company’s redemption of all outstanding subordinated debt in the first quarter of 2026, which is expected to reduce interest expense by approximately $55,000 per quarter going forward, partially offset by a one-time charge of $222,000 to write off remaining debt issuance costs in connection with the redemption of a junior subordinated debenture during the quarter.

Interest expense on deposits increased $281,000, or 3.2%, to $9.0 million for the three months ended March 31, 2026, compared to $8.7 million for the same period in 2025.

The increase was primarily due to growth in average balances of money market and time deposit accounts, partially offset by lower rates paid on those accounts.

The average rate paid on money market accounts decreased 17 basis points to 2.14% during the first quarter of 2026, compared to 2.31% in the same period of 2025, and the average rate on time deposits declined 27 basis points to 3.51%, compared to 3.78% for the prior-year period.

The average cost of all interest-bearing deposits was 2.21% for the three months ended March 31, 2026, compared to 2.32% for the three months ended March 31, 2025.

The overall average cost of deposits was 1.63% for the first quarter of 2026, compared to 1.66% for the first quarter of 2025.

The average cost of total interest-bearing liabilities was 2.29% for the first quarter of 2026, compared to 2.49% for the first quarter of 2025.

The average balance of interest-bearing deposits was $1.6 billion and $1.5 billion for the three months ended March 31, 2026 and 2025.

Total average interest-bearing liabilities increased $63.2 million, or 4.0%, to $1.7 billion for the three months ended March 31, 2026, compared to $1.6 billion for the three months ended March 31, 2025.

The average balance of interest-bearing deposits increased to $1.6 billion for the three months ended March 31, 2026, from $1.5 billion for the same period in 2025.

Within this category, the average balance of money market accounts rose $85.1 million, or 13.0%, to $739.9 million, while time deposits increased $53.9 million, or 10.3%, to $576.2 million.

In contrast, average balances for savings accounts declined over the same period.

The average balance of noninterest-bearing deposits decreased $17.2 million, or 2.9%, to $586.5 million for the three months ended March 31, 2026, compared to $603.7 million for the same period in 2025.

This shift in deposit composition from noninterest-bearing demand deposits and savings accounts to interest-bearing time, NOW, and money market accounts reflects continued customer migration toward higher-yielding products in response to prevailing market rates and competitive offerings.

Interest expense on borrowings decreased $693,000, or 64.0%, to $390,000 for the three months ended March 31, 2026, compared to $1.1 million for the three months ended March 31, 2025.

The decrease was primarily due to the Company’s redemption of all outstanding subordinated debt in the third quarter of 2025, resulting in lower interest expense.

The average cost of total borrowings increased to 19.3% for the three months ended March 31, 2026, compared to 6.1% for the three months ended March 31, 2025.

The average cost of borrowings was negatively impacted due to the Company’s redemption of one junior subordinated debenture in the current quarter, which included $222,000 of accelerated amortized debt issuance costs.

The average balance of borrowings decreased $64.2 million to $8.2 million during the three months ended March 31, 2026, compared to $72.4 million during the three months ended March 31, 2025.

Interest expense on deposits decreased $810,000, or 8.8%, to $8.4 million for the three months ended June 30, 2026, compared to $9.2 million for the same period in 2025.

The decrease was primarily due to lower rates on money market and time deposits and a decrease in average balance of time deposits, partially offset by a shift in deposit mix from noninterest-bearing to higher-cost accounts.

The average rate paid on money market accounts decreased 30 basis points to 2.10% during the second quarter of 2026, compared to 2.40% in the same period of 2025, and the average rate on time deposits declined 33 basis points to 3.45%, compared to 3.78% for the prior-year period.

The average cost of all interest-bearing deposits was 2.12% for the three months ended June 30, 2026, compared to 2.37% for the three months ended June 30, 2025.

The average balance of interest-bearing deposits was $1.6 billion both for the three months ended June 30, 2026 and 2025.

The average cost of deposits (including non-interest bearing) was 1.56% for the second quarter of 2026, compared to 1.71% for the second quarter of 2025.

The average balance of deposits totaled $2.2 billion for the three months ended June 30, 2026, compared to $2.1 billion for the same period in 2025.

Within this category, the average balance of money market accounts rose $88.0 million, or 13.3%, to $751.4 million.

In contrast, average balances for time deposits decreased $37.8 million, or 6.9%, to $510.0 million, while savings accounts also declined over the same period.

The average balance of noninterest-bearing deposits decreased $33.5 million, or 5.5%, to $571.4 million for the three months ended June 30, 2026, compared to $604.9 million for the same period in 2025.

The decrease in average noninterest-bearing deposits reflects continued customer migration to higher-yielding deposit products during the period, despite relatively stable period-end noninterest-bearing deposit balances.

Overall deposit costs benefited from lower rates paid on money market accounts and time deposits as those products repriced in response to changes in market interest rates.

Interest expense on borrowings decreased $962,000, or 88.8%, to $122,000 for the three months ended June 30, 2026, compared to $1.1 million for the three months ended June 30, 2025.

The decrease was primarily due to the Company’s redemption of all outstanding subordinated debt in the prior year and decrease in average balance of junior subordinated debentures, resulting in lower interest expense.

The average cost of total borrowings increased to 7.9% for the three months ended June 30, 2026, compared to 6.0% for the three months ended June 30, 2025.

The average balance of borrowings decreased $66.3 million to $6.2 million during the three months ended June 30, 2026, compared to $72.4 million during the three months ended June 30, 2025.

Interest expense on deposits decreased $529,000, or 3.0%, to $17.4 million for the six months ended June 30, 2026, compared to $17.9 million for the six months ended June 30, 2025.

The decrease was driven by lower rates paid on money market accounts and time deposits, partially offset by an increase in the average balance of deposits.

Specifically, the average rate paid on money market accounts decreased 24 basis points to 2.12% from 2.36%, while the average rate paid on time deposits decreased 30 basis points to 3.48% from 3.78% for the six months ended June 30, 2026, compared to the same period in 2025.

The average balance of money market accounts increased $86.6 million, or 13.1%, to $745.7 million for the six months ended June 30, 2026, compared to $659.1 million for the six months ended June 30, 2025.

The average balance of time deposits increased $7.8 million, or 1.45%, to $542.9 million for the six months ended June 30, 2026, compared to $535.2 million for the same period the prior year .

The average cost of all interest-bearing deposits decreased 19 basis points and was 2.16% and 2.35% for the six months ended June 30, 2026 and 2025, respectively.

The average balance of interest-bearing deposits was $1.6 billion and $1.5 billion for the six months ended June 30, 2026 and 2025, respectively.

The overall average cost of deposits (including non-interest deposits) for the six months ended June 30, 2026 and 2025 was 1.59% and 1.68%, respectively.

The average balance of total deposits was $2.2 billion and $2.1 billion for the six months ended June 30, 2026 and 2025, respectively.

The average balance of noninterest-bearing deposits decreased $25.4 million, or 4.2%, to $578.9 million for the six months ended June 30, 2026 compared to $604.3 million for the six months ended June 30, 2025.

Interest expense on borrowings decreased $1.7 million, or 76.4%, to $512,000 for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, due to the full redemption of the Company’s subordinated notes in the third quarter of 2025.

The average cost of total borrowings increased to 14.37% for the six months ended June 30, 2026, compared to 6.03% for the six months ended June 30, 2025.

The average cost of borrowings was negatively

impacted due to the Company’s redemption of one junior subordinated debenture in the first quarter of 2026, which included $222,000 of accelerated amortization of previously deferred debt issuance costs.

The average balance of borrowings decreased $65.3 million to $7.2 million during the six months ended June 30, 2026, compared to $72.4 million during the six months ended June 30, 2025.

Net interest income and net interest margin.

Net interest income increased $2.3 million, or 10.1%, to $25.2 million for the three months ended March 31, 2026, compared to $22.9 million for the three months ended March 31, 2025.

The increase in net interest income primarily reflects increases in interest income on loans, including fees, which rose by $2.4 million or 8.9%, due to higher average balances and yields, and FHLB dividends, and a decrease in interest expense on subordinated debt.

These changes were partially offset by decreases in interest income on fed funds sold and interest-bearing balances in banks and on investment securities, which declined by $322,000 or 13.1%.

Average interest-earning assets increased $59.9 million, or 2.4%, compared to the first quarter of 2025.

The average annualized yield on interest-earning assets was 5.64% for the three months ended March 31, 2026, representing an 18 basis point increase from 5.46% for the three months ended March 31, 2025.

This increase reflects the origination of new loans at higher rates, a special dividend received from the FHLB, accretion of net discount and recovery of interest on payoff of an acquired loan discussed above, partially offset by a lower average yield on interest-bearing balances in banks.

The average annualized cost of interest-bearing liabilities was 2.29% for the three months ended March 31, 2026, representing a 20 basis point decrease from 2.49% for the three months ended March 31, 2025.

This decrease reflects the payoff of the subordinated debt and lower rates paid on money market and time deposits, reflecting similar market-driven repricing conditions.

As a result, the annualized net interest margin increased to 4.11% for the three months ended March 31, 2026, compared to 3.83% for the same period in 2025.

The reported net interest margin of 4.11% includes the effects of the following non-recurring items:

(i) $555,000 of discount accretion and $610,000 of interest recovery on the payoff of a single acquired CRE loan, together contributing approximately 23 basis points to the net interest margin;

(ii) $330,000 of FHLB special dividends, contributing approximately five basis points to the net interest margin;

and (iii) $222,000 of accelerated debt issuance cost amortization on junior subordinated debentures, reducing net interest margin by approximately four basis points.

Net interest income increased $568,000, or 2.5%, to $23.7 million for the three months ended June 30, 2026, compared to $23.2 million for the three months ended June 30, 2025.

The increase in net interest income primarily reflects increases in interest income on loans, including fees, and decreases in interest expense on deposits, subordinated debt and junior subordinated debentures.

These changes were partially offset by decreases in interest income on federal funds sold and interest-bearing balances in banks, FHLB and FRB dividends and interest income on investment securities.

Average interest-earning assets decreased $50.6 million, or 2.1%, compared to the second quarter of 2025.

The annualized net interest margin increased to 3.95% for the three months ended June 30, 2026, compared to 3.77% for the same period in 2025.

The average annualized yield on interest-earning assets was 5.36% for the three months ended June 30, 2026, representing a nine basis point decrease from 5.45% for the three months ended June 30, 2025.

This decrease reflects lower average yields on federal funds sold and interest-bearing balances in banks, lower FHLB dividend rates and, to a lesser extent, lower average loan yields, partially offset by higher average yields on investments.

The average annualized cost of interest-bearing liabilities was 2.14% for the three months ended June 30, 2026, representing a 40 basis point decrease from 2.54% for the three months ended June 30, 2025.

This decrease reflects the payoff of the subordinated debt, payoff of one junior subordinated debenture, and lower rates paid on money market and time deposits, reflecting similar market-driven repricing conditions.

Net interest income increased $2.9 million, or 6.3%, to $48.9 million for the six months ended June 30, 2026, compared to $46.0 million for the six months ended June 30, 2025.

The increase in net interest income primarily reflects increases in interest income on loans, including fees, FHLB dividends, and decreases in interest expense on deposits, and subordinated debt.

These changes were partially offset by decrease in interest income on federal funds sold and interest-bearing balances in banks, FRB dividends and increase in the cost of junior subordinated debentures and other borrowings.

Annualized net interest margin was 4.03% for the six months ended June 30, 2026, compared to 3.80% for the six months ended June 30, 2025.

The reported net interest margin for the six months ended June 30, 2026 included the impact of several significant items that are not expected to recur at similar levels in future periods, including:

(i) $555,000 of discount accretion and $610,000 of interest recovery on the payoff of a single acquired CRE loan during the first quarter of 2026, partially offset by $380,000 of accelerated premium amortization in the second quarter of 2026, primarily related to acquired loans migrating to the originated loan pool due to seasoning and exhibiting risk characteristics indistinguishable from the Company’s originated loans, collectively contributing approximately seven basis points to the net interest margin;

(ii) $330,000 of FHLB special dividends, contributing approximately three basis points to the net interest margin;

and (iii) $222,000 of accelerated amortization of previously deferred debt issuance costs related to junior subordinated debentures, reducing net interest margin by approximately two basis points.

The average annualized yield on interest-earning assets was 5.50% for the six months ended June 30, 2026, representing a five basis point increase from 5.45% for the six months ended June 30, 2025.

This increase reflects higher average loan yields, one-time items impacting the loan yields and FHLB dividends discussed above, partially offset by lower average yields on investment securities and federal funds sold and interest bearing balances in banks.

The average annualized cost of interest-bearing liabilities was 2.22% for the six months ended June 30, 2026, representing a 29 basis point decrease from 2.51% for the six months ended June 30, 2025.

This decrease reflects the payoff of the subordinated debt and one junior subordinated debenture, partially offset by the accelerated costs discussed above, along with lower rates paid on money market and time deposits, reflecting similar market-driven repricing conditions.

Average Balances, Interest and Average Yields/Cost.

7 unchanged sentences

Loan yields include the effect of amortization or accretion of deferred loan fees/costs and purchase accounting premiums/discounts to interest and fees on loans.

Three months ended March 31,

Three months ended June 30,

(Dollars in thousands)

29 unchanged sentences

(4) Average balances are computed using average daily balances.

Six months ended June 30,

(Dollars in thousands)

Interest earning assets

Fed Funds sold and interest-bearing balances in banks

Investments securities

Total loans (1)

Total interest earning assets

Noninterest earning assets

Total average assets

Interest bearing liabilities

Time deposits

Total interest bearing deposit accounts

Subordinated debt, net

Junior subordinated debentures, net

Other borrowings

Total interest bearing liabilities

Noninterest bearing deposits

Other noninterest bearing liabilities

Noninterest bearing liabilities

Total average liabilities

Average equity

Total average liabilities and equity

Net interest income

Interest rate spread (2)

Net interest margin (3)

Ratio of average interest earning assets to average interest bearing liabilities

(1) Loan average balances are net of deferred origination fees and costs.

Nonaccrual loans are included in the average balances.

Interest income on nonaccruing loans is reflected in the period that it is collected, to the extent it is not applied to principal.

(2) Interest rate spread is calculated as the average rate earned on interest earning assets minus the average rate paid on interest-bearing liabilities.

(3) Net interest margin is calculated as net interest income divided by total average interest earning assets.

(4) Average balances are computed using average daily balances.

Rate/Volume Analysis.

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Changes applicable to both volume and rate have been allocated to volume.

Three months ended March 31,

2026 compared to three months ended March 31, 2025

Three months ended June 30,

Six months ended June 30,

2026 compared to 2025

Increase/(Decrease)

Attributable to

(Dollars in thousands)

Interest earning assets

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Junior subordinated debentures, net

Other borrowings

Total interest expense

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Provision for credit losses.

We recorded a reversal of provision for credit losses of $670,000 for the three months ended March 31, 2026, compared to provision of $642,000 for the three months ended March 31, 2025.

The reversal of provision for credit losses during the three months ended March 31, 2026, was primarily driven by a decrease in total loans outstanding and, to a lesser extent, decreasing quantitative loss rates due to favorable changes in forecasted economic conditions.

We recorded $15,000 in net charge-offs for the first quarter of 2026, compared to $102,000 in net charge-offs for the first quarter of 2025.

We recorded a provision for credit losses of $5.2 million and $4.6 million for the three and six months ended June 30, 2026, compared to provision of $203,000 and $845,000 for the three and six months ended June 30, 2025, respectively.

The provision for credit losses in the current quarter primarily reflected the impact of $2.8 million of net charge-offs during the quarter, together with loan growth and increased specific reserves on certain individually evaluated loans.

Net charge-offs totaled $2.9 million for the six months ended June 30, 2026, compared to net charge-offs of $115,000 for the six months ended June 30, 2025.

Noninterest income.

Noninterest income increased $105,000, or 7.3%, to $1.5 million for the first quarter of 2026, compared to $1.4 million for the first quarter of 2025.

The increase was primarily due to a $313,000 swing in equity securities, which went from a loss of $255,000 for the three months ended March 31, 2025 to a gain of $58,000 for the three months ended March 31, 2026, and a $194,000 increase in gain on a SBIC fund investment.

These changes were partially offset by a $204,000 decrease in service charges and other fees due to lower customer deposits placed in Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep (“ICS”) money market product services via the IntraFi Network, a $102,000 decrease in loan servicing fees and other fees primarily due to a decrease in late charges, and a $75,000 decrease in gain on sale of loans.

Noninterest income decreased $27,000, or 1.8%, to $1.5 million for the second quarter of 2026, compared to the same period in 2025.

The decrease was primarily due to a $163,000 decrease in loan servicing and other loan fees and a $38,000 decrease in service charges and other fees, partially offset by an $88,000 increase in gain on equity securities, a $35,000 increase in gain on sale of loans, and a $34,000 decrease in loss on investment in SBIC fund.

Noninterest income increased $78,000, or 2.6%, to $3.0 million for the six months ended June 30, 2026, compared to the same period in 2025.

The increase was primarily due to a $401,000 increase in gain on equity securities resulting from positive fair value adjustments due to changes in market conditions and a $228,000 decrease in loss on investment in SBIC fund, partially offset by a $265,000 decrease in loan servicing and other loan fees due to lower loan origination volumes, a $242,000 decrease in service charges and other fees and a $40,000 decrease in gain on sale of loans.

The following table presents the key components of noninterest income for the periods indicated:

Three months ended March 31,

Three months ended June 30,

(Dollars in thousands)

Gain on sale of loans

Gain on equity securities

Service charges and other fees

Loan servicing and other loan fees

Loss on investment in SBIC fund

Other income and fees

Total noninterest income

N/M - Not meaningful

Six months ended June 30,

(Dollars in thousands)

Gain on sale of loans

Gain (loss) on equity securities

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Loan servicing and other loan fees

Gain (loss) on investment in SBIC fund

Loss on investment in SBIC fund

Other income and fees

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Noninterest expense.

Noninterest expense increased $517,000, or 3.2%, to $16.5 million for the three months ended March 31, 2026, compared to $16.0 million for the three months ended March 31, 2025.

The increase was primarily due to a $914,000 increase in salaries and employee benefits, resulting from higher incentive expense, increased base wages, higher employee insurance claims, and lower deferred salary costs due to lower loan originations, as well as a $185,000 increase in data processing expense due to newly implemented services in 2026 and higher vendor data processing charges.

These changes were partially offset by a $573,000 decrease in other expense, primarily due to $450,000 of excess funds being returned to the Bank in the first quarter of 2026 from the CalCAP loss reserve account, while no unused CalCAP funds were returned in the first quarter of 2025, as well as lower legal and professional service costs and reduced deposit premium amortization.

Noninterest expense increased $11.4 million, or 72.4%, to $27.2 million for the three months ended June 30, 2026, compared to $15.8 million for the three months ended June 30, 2025.

Results for the current quarter included $10.5 million of one-time costs related to severance, accelerated equity award vesting, and employee benefit costs associated with the previously announced departures of three senior executives.

The increase in noninterest expense was primarily due to an $11.3 million increase in salaries and employee benefits related to costs associated with the departures of three senior executives, increased base wages, higher employee insurance claims, and lower deferred salary costs due to lower loan origination, as well as a $126,000 increase in data processing expense due to newly implemented services in 2026 and higher vendor data processing charges, and a $55,000 increase in other expense, partially offset by a $98,000 decrease in occupancy and equipment expense.

Noninterest expense increased $11.9 million, or 37.6%, to $43.7 million for the six months ended June 30, 2026, compared to $31.7 million for the six months ended June 30, 2025.

The increase in noninterest expense was primarily due to a $12.2 million increase in salaries and employee benefits related to costs associated with the previously announced departures of three senior executives, and increased base wages, and a $311,000 increase in data processing expense due to newly implemented services in 2026 and higher vendor data processing charges, partially offset by a $518,000 decrease in other expense due to lower CDI amortization expense and a $107,000 decrease in occupancy and equipment expense.

The following table details the components of noninterest expense for the periods indicated:

Three months ended March 31,

Three months ended June 30,

(Dollars in thousands)

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Total noninterest expense

Subsequent to March 31, 2026, the Company announced an executive leadership transition that is expected to result in material charges to noninterest expense, including cash severance, equity award acceleration, and continuation of benefits, beginning in the second quarter of 2026.

See “Note 19 — Subsequent Events” in the Notes to Condensed Consolidated Financial Statements for additional information.

N/M - Not meaningful

Six months ended June 30,

(Dollars in thousands)

Salaries and employee benefits

Occupancy and equipment

Data processing

Total noninterest expense

Income taxes.

The provision for income taxes increased $738,000, or 37.1%, to $2.7 million for the three months ended March 31, 2026, compared to $2.0 million for the three months ended March 31, 2025, due to higher taxable income.

The Company’s effective tax rate was 25.0% and 25.8% for the three months ended March 31, 2026, and 2025, respectively.

The effective tax rate decreased for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to true-up adjustments for state apportionment and other adjustments related to the filing of the Company’s 2025 tax return .

The provision for income taxes decreased $2.6 million, or 109.5%, to an income tax benefit of $223,000 for the three months ended June 30, 2026, compared to an income tax expense of $2.4 million for the three months ended June 30, 2025.

The provision for income taxes decreased $1.8 million, or 42.3%, to $2.5 million for the six months ended June 30, 2026, compared to $4.3 million for the six months ended June 30, 2025.

The decrease in provision for income taxes for both periods was due to lower pre-tax income, including a pre-tax loss for the three months ended June 30, 2026.

The Company’s effective tax rate was 3.1% and 67.3% for the three and six months ended June 30, 2026, and 27.0% and 26.5% for the three and six months ended June 30, 2025, respectively.

The effective tax rate decreased for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to the tax benefit associated with the Company’s net loss during the current quarter, partially offset by the discrete tax impact of Internal Revenue Code Section 162(m) limitations on the deductibility of executive departure severance and other compensation obligations recognized during the second quarter of 2026.

The effective tax rate for the six months ended June 30, 2026 was higher than the Company’s statutory tax rate primarily due to the impact of Section 162(m) limitations on the deductibility of executive departure severance and other compensation obligations, which were recognized during the second quarter of 2026, combined with lower pre-tax income during the period.

Liquidity and Capital Resources

Planning for our normal business liquidity needs, both expected and unexpected, is done on a daily and short-term basis through the cash management function.

Planning for our normal business liquidity needs, both expected and unexpected, is conducted on a daily and short-term basis through the cash management function.

On a longer-term basis, it is accomplished through the budget and strategic planning functions, with support from internal asset/liability management software model projections.

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Our primary sources of funds are deposits, escrow and custodial deposits, principal and interest payments on loans and proceeds from sales of loans.

During the three months ended March 31, 2026, the Bank sold $2.4 million in loan participation interests and received $90.5 million in principal loan repayments.

During the six months ended June 30, 2026, the Bank sold $2.9 million in loan participation interests and received $160.4 million in principal loan repayments.

While maturities and scheduled amortizations of loans are generally predictable sources of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and competition.

Deposits increased $51.8 million to $2.3 billion at March 31, 2026 from $2.2 billion at December 31, 2025 and liquid assets, in the form of cash and cash equivalents, increased $99.4 million to $305.9 million at March 31, 2026 from $206.5 million at December 31, 2025.

In addition, investment securities available-for-sale increased $9.7 million to $189.4 million at March 31, 2026 from $179.7 million at December 31, 2025.

Deposits decreased $43.7 million to $2.2 billion at June 30, 2026, compared to December 31, 2025, and liquid assets, in the form of cash and cash equivalents, decreased $29.1 million to $177.4 million at June 30, 2026, from $206.5 million at December 31, 2025.

In addition, investment securities available-for-sale increased $3.0 million to $182.7 million at June 30, 2026 from $179.7 million at December 31, 2025.

Management believes that our securities portfolio is of high quality and that the securities would therefore be marketable.

Securities purchased during the three months ended March 31, 2026 were $19.7 million, while securities repayments, maturities and sales during that period totaled $10.3 million.

Certificates of deposit scheduled to mature in one year or less at March 31, 2026, totaled $503.7 million.

Securities purchased during the six months ended June 30, 2026 were $24.4 million, while securities repayments, maturities and sales during that period totaled $23.3 million.

Certificates of deposit scheduled to mature in one year or less at June 30, 2026, totaled $393.8 million.

It is management’s policy to maintain deposit rates that are competitive with other local financial institutions.

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In addition to these primary sources of funds, management has several secondary sources available to meet potential funding requirements.

As of March 31, 2026, the Bank had an available borrowing capacity of $599.3 million with the FHLB of San Francisco, with no borrowings outstanding at that date or at December 31, 2025.

At March 31, 2026, we had the ability to borrow up to $43.4 million from the FRB of San Francisco, with no borrowings outstanding at that date or at December 31, 2025.

The Bank also had, as of March 31, 2026, federal funds lines with four correspondent banks, with available commitments totaling $65.0 million.

There were no amounts outstanding under these facilities at March 31, 2026 and December 31, 2025.

As of June 30, 2026, the Bank had an available borrowing capacity of $531.0 million with $25.0 million of overnight advances outstanding from the FHLB of San Francisco, compared to no overnight advances outstanding at December 31, 2025.

At June 30, 2026, we had the ability to borrow up to $42.8 million from the FRB of San Francisco, with no borrowings outstanding at that date or at December 31, 2025.

The Bank also had, as of June 30,

2026, federal funds lines with four correspondent banks, with available commitments totaling $65.0 million.

There were no amounts outstanding under these facilities at June 30, 2026 and December 31, 2025.

Subject to market conditions, we expect to utilize these borrowing facilities from time to time in the future to fund loan originations and deposit withdrawals, to satisfy other financial commitments, to repay maturing debt and to take advantage of investment opportunities to the extent feasible.

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We use our sources of funds primarily to meet our ongoing commitments, to pay maturing deposits and fund withdrawals, and to fund loan commitments.

At March 31, 2026, loan commitments and letters of credit totaled $65.4 million, including $194,000 of undisbursed construction and development loan commitments.

At June 30, 2026, loan commitments and letters of credit totaled $72.9 million, including $169,000 of undisbursed construction and development loan commitments.

For information regarding our commitments, see “Note 17 – Commitments and Contingencies” of the Notes to Condensed Consolidated Financial Statements included in “Item 1.

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cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities.

Net cash provided by operating activities for the three months ended March 31, 2026 and 2025 was $7.0 million and $9.3 million, respectively.

During the three months ended March 31, 2026, net cash provided by investing activities was $47.0 million, which consisted primarily of a $59.0 million net decrease in loans, reflecting principal repayments and loan sales, and $10.3 million in proceeds from maturities, repayments and calls of investment securities available-for-sale, partially offset by $19.7 million in purchases of investment securities and $3.2 million in loan purchases, compared to $8.6 million of net cash used in investing activities for the three months ended March 31, 2025.

Net cash provided by financing activities for the three months ended March 31, 2026 was $45.4 million, which was comprised primarily of a $31.8 million increase in noninterest and interest-bearing deposits and a $19.9 million increase in time deposits, partially offset by $3.3 million in dividend payments to shareholders and $3.1 million in repayment of a junior subordinated debenture, compared to $108.2 million of net cash used in financing activities during the three months ended March 31, 2025.

Management believes our capital sources are adequate to meet

all reasonably foreseeable short-term and long-term cash requirements.

There has not been a material change in our liquidity and capital resources since the information disclosed in our 2025 Annual Report other than set forth above.

Net cash provided by operating activities for the six months ended June 30, 2026 and 2025 was $12.1 million and $15.6 million, respectively.

During the six months ended June 30, 2026, net cash used in investing activities was $12.9 million, which consisted primarily of a $47.5 million net decrease in loans, reflecting principal repayments and loan sales exceeding loan purchases, and $23.3 million in proceeds from maturities, repayments and calls of investment securities available-for-sale, partially offset by $24.4 million in purchases of investment securities and $66.5 million in loan purchases, compared to $33.8 million of net cash used in investing activities for the six months ended June 30, 2025.

Net cash used in financing activities for the six months ended June 30, 2026 was $28.3 million, which was comprised primarily of a $62.5 million increase in noninterest and interest-bearing deposits in banks, a $25.0 million increase in other borrowings and $6.5 million in dividend payments to shareholders, partially offset by a $106.2 million decrease in time deposits and a $3.1 million repayment of junior subordinated debentures, compared to $54.2 million of net cash used in financing activities during the six months ended June 30, 2025.

Management believes our capital sources are adequate to meet all reasonably foreseeable short-term and long-term cash requirements.

There has not been a material change in our liquidity and capital resources since the information disclosed in our 2025 Annual Report, other than as described above.

We are not aware of any reasonably likely material changes in the mix and relative cost of such resources.

BayCom Corp is a separate legal entity from the Bank and must provide for its own liquidity.

At March 31, 2026, BayCom Corp had liquid assets of $1.7 million.

In addition to its operating expenses, BayCom Corp is responsible for paying to its shareholders any dividends that have been declared, funding stock repurchases, and making payments on its junior subordinated debentures.

BayCom Corp can receive dividends and other capital distributions from the Bank, although there are regulatory restrictions on the ability of the Bank to pay dividends and make other capital distributions.

At June 30, 2026, BayCom Corp had liquid assets of $3.2 million.

In addition to its operating expenses, BayCom Corp is responsible for paying dividends declared to its shareholders, funding stock repurchases, and making payments on its junior subordinated debentures.

BayCom Corp may receive dividends and other capital distributions from the Bank, although regulatory restrictions may limit the ability of the Bank to pay dividends and make other capital distributions.

BayCom Corp’s liquidity needs are primarily met through dividends received from the Bank, which management believes will be sufficient to satisfy obligations at the holding company level for the foreseeable future.

On February 19, 2026, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.30 per share on the Company’s outstanding common stock, which was paid on April 9, 2026 to shareholders of record as of the close of business on March 12, 2026.

On May 22, 2026, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.30 per share on the Company’s outstanding common stock, which was paid on July 9, 2026 to shareholders of record as of the close of business on June 11, 2026.

The Company expects to continue to pay quarterly cash dividends on its common stock, subject to the Board of Directors’ discretion to modify or terminate this practice at any time and for any reason without prior notice.

Assuming continued payment of the cash dividend at the rate of $0.30 per share, our average total dividend paid each quarter would be approximately $3.3 million based on the number of our outstanding shares at March 31, 2026.

Assuming continued payment of the cash dividend at the rate of $0.30 per share, the cash requirement for quarterly dividend payments would be approximately $3.3 million based on the number of outstanding shares at June 30, 2026.

The dividends we pay may be limited as more fully discussed under “Business – Supervision and Regulation – BayCom Corp – Dividends” and “– Regulatory Capital Requirements” contained in “Part I.

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Stock repurchases also provide us with shares of common stock necessary to satisfy obligations related to stock compensation awards.

As of March 31, 2026, 202,444 shares remained available for repurchase under the Company’s current stock repurchase program.

As of June 30, 2026, 202,444 shares remained available for repurchase under the Company’s current stock

repurchase program.

For additional information on the Company’s stock repurchases, see “Item 2.

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Consistent with our goal to operate a sound and profitable organization, our policy is for the Bank to maintain “Well Capitalized” status under the Federal Reserve regulations.

Based on capital levels at March 31, 2026 and December 31, 2025, the Bank was considered Well Capitalized at both of those dates.

Based on capital levels at June 30, 2026 and December 31, 2025, the Bank was considered Well Capitalized at both of those dates.

The table below shows the capital ratios under the Basel III capital framework as of the dates indicated:

At March 31, 2026

At June 30, 2026

At December 31, 2025

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Minimum regulatory requirement

In addition to the minimum capital ratios, the Bank must maintain a capital conservation buffer consisting of additional Common Equity Tier 1 capital greater than 2.5% above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses based on percentages of eligible retained income that could be utilized for such actions.

At March 31, 2026, the Bank’s Common Equity Tier 1 capital exceeded the required capital conservation buffer.

In addition to the minimum capital ratios, the Bank must maintain a capital conservation buffer consisting of Common Equity Tier 1 capital in excess of 2.5% above the required minimum capital ratios to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses based on the percentage of eligible retained income that may be utilized for such actions.

At June 30, 2026, the Bank’s Common Equity Tier 1 capital exceeded the required capital conservation buffer.

For a bank holding company with less than $3.0 billion in assets, the capital guidelines apply on a bank-only basis and the Federal Reserve expects the holding company’s subsidiary bank(s) to be Well Capitalized under the prompt corrective action regulations.

If the Company were subject to regulatory guidelines for bank holding companies with $3.0 billion or more in assets, at March 31, 2026, the Company would have exceeded all regulatory capital requirements.

If the Company were subject to regulatory guidelines for bank holding companies with $3.0 billion or more in assets, at June 30, 2026, the Company would have exceeded all regulatory capital requirements.

For additional information, see “Item 1.

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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-Q

Item 2. Management’s Discussion and Analysis