What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-05-12 compared with 2024-11-08 · 210 added, 343 removed, 853 unchanged (39% of the section changed)

3 unchanged sentences

(in thousands, except share data;

unaudited) September 30, 2024 December 31, 2023

unaudited) March 31, 2025 December 31, 2024

Cash, cash equivalents and restricted cash $ 259,924 $ 137,304

Investment securities:

Held-to-maturity, at amortized cost (net of zero allowance for credit losses at September 30, 2024 and December 31, 2023)

Held-to-maturity, at amortized cost (net of zero allowance for credit losses at March 31, 2025 and December 31, 2024)

834,640 879,199

Available-for-sale, at fair value (net of zero allowance for credit losses at September 30, 2024 and December 31, 2023)

Available-for-sale, at fair value (net of zero allowance for credit losses at March 31, 2025 and December 31, 2024)

406,009 387,534

29 unchanged sentences

Authorized - 30,000,000 shares;

issued and outstanding - 16,082,881 and 16,158,413 at September 30, 2024 and December 31, 2023, respectively

issued and outstanding - 16,202,869 and 16,089,454 at March 31, 2025 and December 31, 2024, respectively

216,263 215,511

5 unchanged sentences

BANK OF MARIN BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three months ended Nine months ended

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended

(in thousands, except per share amounts;

unaudited) September 30, 2024 June 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

unaudited) March 31, 2025 December 31, 2024 March 31, 2024

Interest income

12 unchanged sentences

Provision for credit losses on loans 75 — 350

Reversal of credit losses on unfunded loan commitments ( 233 ) — — ( 233 ) ( 342 )

Net interest income after provision for (reversal of) credit losses 24,502 17,267 24,044 64,113 77,564

Net interest income after provision for credit losses 24,871 25,230 22,344

Non-interest income

5 unchanged sentences

Merchant interchange fees, net 96 80 167

Gains (losses) on sale of investment securities 1 ( 32,542 ) 14 ( 32,541 ) 14

Other income 352 318 285

12 unchanged sentences

Charitable contributions 403 30 12

Other real estate owned — — — — 48

Other expense 2,046 1,978 2,318

Total non-interest expense 21,264 18,338 21,169

Income (loss) before provision for (benefit from) income taxes 6,973 ( 34,382 ) 6,895 ( 23,480 ) 25,644

Provision for (benefit from) income taxes 2,403 ( 12,480 ) 1,600 ( 9,070 ) 6,359

Net income (loss) $ 4,570 $ ( 21,902 ) $ 5,295 $ ( 14,410 ) $ 19,285

Net income (loss) per common share

Income before provision for income taxes 6,481 9,645 3,929

Provision for income taxes 1,605 3,644 1,007

Net income $ 4,876 $ 6,001 $ 2,922

Net income per common share

Basic $ 0.31 $ 0.38 $ 0.18

3 unchanged sentences

Diluted 16,002 15,967 16,092

Comprehensive income (loss):

Net income (loss) $ 4,570 $ ( 21,902 ) $ 5,295 $ ( 14,410 ) $ 19,285

Other comprehensive income (loss):

Comprehensive income:

Net income $ 4,876 $ 6,001 $ 2,922

Other comprehensive (loss) income:

Change in net unrealized gains or losses on available-for-sale securities 3,289 ( 6,880 ) ( 4,568 )

Reclassification adjustment for realized (gains) losses on available-for-sale securities in net income ( 1 ) 32,542 2,793 32,541 2,793

Reclassification adjustment for gains or losses on fair value hedges — 1,444 1,217

3 unchanged sentences

Other comprehensive income (loss), net of tax 2,556 ( 3,580 ) ( 2,106 )

Total comprehensive income (loss) $ 9,389 $ 1,903 $ ( 1,905 ) $ 12,108 $ 16,451

The accompanying notes are an integral part of these consolidated financial statements (unaudited).

BANK OF MARIN BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the three months ended September 30, 2024 and 2023

(in thousands, except share data;

unaudited) Common Stock Retained

Earnings Accumulated Other

Comprehensive Loss,

Net of Taxes Total

Shares Amount

Three months ended September 30, 2024

Balance at July 1, 2024 16,278,260 $ 218,773 $ 247,477 $ ( 31,307 ) $ 434,943

— — 4,570 — 4,570

Other comprehensive income, net of tax — — — 4,819 4,819

Stock issued under employee stock purchase plan 439 8 — — 8

Stock issued under employee stock ownership plan 30,000 561 — — 561

Restricted stock surrendered for tax withholdings upon vesting ( 294 ) ( 6 ) — — ( 6 )

Restricted stock forfeited / cancelled ( 21,001 ) — — — —

Stock-based compensation - stock options — 5 — — 5

Stock-based compensation - restricted stock — 103 — — 103

Cash dividends paid on common stock ($ 0.25 per share)

— — ( 4,064 ) — ( 4,064 )

Stock issued in payment of director fees 15,477 255 — — 255

Stock repurchased

( 220,000 ) ( 4,234 ) — — ( 4,234 )

Balance at September 30, 2024 16,082,881 $ 215,465 $ 247,983 $ ( 26,488 ) $ 436,960

Three months ended September 30, 2023

Balance at July 1, 2023 16,107,192 $ 216,589 $ 276,732 $ ( 69,380 ) $ 423,941

Net income — — 5,295 — 5,295

Other comprehensive loss, net of tax — — — ( 7,200 ) ( 7,200 )

Stock issued under employee stock purchase plan 879 15 — — 15

Stock issued under employee stock ownership plan 5,800 120 — — 120

Restricted stock granted 12,550 — — — —

Restricted stock forfeited / cancelled ( 850 ) — — — —

Stock-based compensation - stock options — 21 — — 21

Stock-based compensation - restricted stock — 209 — — 209

Cash dividends paid on common stock ($ 0.25 per share)

Total comprehensive income

$ 7,432 $ 2,421 $ 816

Stock issued in payment of director fees 13,750 248 — — 248

Balance at September 30, 2023 16,139,321 $ 217,202 $ 277,996 $ ( 76,580 ) $ 418,618

The accompanying notes are an integral part of these consolidated financial statements (unaudited).

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the nine months ended September 30, 2024 and 2023

For the three months ended March 31, 2025 and 2024

(in thousands, except share data;

4 unchanged sentences

Shares Amount

Nine months ended September 30, 2024

Three months ended March 31, 2025

Balance at January 1, 2025 16,089,454 $ 215,511 $ 249,964 $ ( 30,068 ) $ 435,407

Net loss — — ( 14,410 ) — ( 14,410 )

— — 4,876 — 4,876

Other comprehensive income, net of tax — — — 2,556 2,556

9 unchanged sentences

Stock issued in payment of director fees 10,835 255 — — 255

Stock repurchased

( 220,000 ) ( 4,234 ) — — ( 4,234 )

Balance at September 30, 2024

16,082,881 $ 215,465 $ 247,983 $ ( 26,488 ) $ 436,960

Nine months ended September 30, 2023

Balance at March 31, 2025 16,202,869 $ 216,263 $ 250,815 $ ( 27,512 ) $ 439,566

Three months ended March 31, 2024

Balance at January 1, 2024 16,158,413 $ 217,498 $ 274,570 $ ( 53,006 ) $ 439,062

1 unchanged sentence

Other comprehensive loss, net of tax — — — ( 2,106 ) ( 2,106 )

— — — ( 2,834 ) ( 2,834 )

Stock options exercised, net of shares surrendered for cashless exercises and tax withholdings 11,530 230 — — 230

Stock issued under employee stock purchase plan 621 10 — — 10

8 unchanged sentences

Stock issued in payment of director fees 11,810 259 — — 259

Balance at September 30, 2023

16,139,321 $ 217,202 $ 277,996 $ ( 76,580 ) $ 418,618

Balance at March 31, 2024 16,285,786 $ 218,342 $ 273,450 $ ( 55,112 ) $ 436,680

The accompanying notes are an integral part of these consolidated financial statements (unaudited).

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2024 and 2023

For the three months ended March 31, 2025 and 2024

(in thousands;

1 unchanged sentence

Cash Flows from Operating Activities:

Net (loss) income $ ( 14,410 ) $ 19,285

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

$ 4,876 $ 2,922

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses on loans 75 350

Reversal of credit losses on unfunded loan commitments ( 233 ) ( 342 )

Noncash contribution expense to employee stock ownership plan 417 425

5 unchanged sentences

Net change in deferred loan origination costs/fees ( 9 ) 34

Write-down of other real estate owned — 40

Loss (gain) on sale of investment securities

32,541 ( 14 )

Depreciation and amortization 322 388

Loss on disposal of premises and equipment — 19

Earnings on bank-owned life insurance policies ( 544 ) ( 435 )

Net changes in:

Net changes in interest receivable and other assets 2,050 1,082

4 unchanged sentences

Purchase of available-for-sale securities ( 33,561 ) —

Proceeds from sale of available-for-sale securities 292,621 79,840

Proceeds from paydowns/maturities of held-to-maturity securities 44,681 10,252

Proceeds from paydowns/maturities of available-for-sale securities 18,316 10,057

Proceeds from sale of Visa Inc.

Class B restricted common stock — 2,807

Proceeds from sale of loan 1,295 —

Decrease in loans receivable, net 8,958 18,690

Purchase of loans

Purchase of bank-owned life insurance policies — ( 1,210 )

1 unchanged sentence

Purchase of premises and equipment ( 314 ) ( 161 )

Proceeds from sale of premises and equipment 21 —

Proceeds from sale of other real estate owned — 420

Cash paid for low income housing tax credit investment — ( 1 )

3 unchanged sentences

81,956 ( 5,973 )

(Repayment of) proceeds from short-term borrowings, net ( 26,000 ) 8,000

Repayment of short-term borrowings, net

Repayment of finance lease obligations ( 38 ) ( 38 )

Proceeds from stock options exercised — 230

Restricted stock surrendered for tax withholdings upon vesting ( 96 ) ( 55 )

Cash dividends paid on common stock ( 4,025 ) ( 4,042 )

Stock repurchased

Proceeds from stock issued under employee and director stock purchase plans 8 10

Net cash used in financing activities 77,805 ( 36,098 )

Net increase (decrease) in cash, cash equivalents and restricted cash 198,719 77,708

Net increase in cash, cash equivalents and restricted cash

122,620 5,855

Cash, cash equivalents and restricted cash at beginning of period 137,304 30,453

2 unchanged sentences

Interest paid on deposits and borrowings $ 10,806 $ 11,087

Income taxes paid, net of refunds $ 2,100 $ —

Supplemental disclosure of noncash investing and financing activities:

1 unchanged sentence

Amortization of net unrealized loss on available-for-sale securities transferred to held-to-maturity $ 340 $ 361

Stock issued to employee stock ownership plan $ 986 $ 967

Restricted cash 1

1 Restricted cash includes reserve requirements held with the Federal Reserve Bank of San Francisco and other cash pledged.

The Federal Reserve reduced the reserve requirement ratios to zero percent effective March 26, 2020.

The accompanying notes are an integral part of these consolidated financial statements (unaudited).

10 unchanged sentences

The results of these interim periods may not be indicative of the results for the full year or for any other period.

Segment Reporting:

Our Chief Operating Decision Maker ("CODM") is our Chief Executive Officer, who reviews our financial information on a consolidated basis for purposes of evaluating financial performance and allocating resources.

We have one operating and reportable segment, community banking, and our other operating segment, wealth management services, does not meet the quantitative threshold for separate reporting.

Our CODM reviews consolidated net income before provision for income taxes as our primary measure of profitability alongside significant expense information consistent with the expense captions presented in our Consolidated Statements of Comprehensive Income (Loss).

These metrics are used by our CODM to monitor actual results and to benchmark to our peers.

Segment assets are equal to consolidated total assets in our Consolidated Statements of Condition and all segment non-cash items are equal to those disclosed in our Consolidated Statements of Cash flows.

We derive materially all of our income from activities within the United States, and materially all of our long lived assets are physically located within the United States.

No single customer or client relationship accounts for ten percent or more of our income.

Segment revenue, profit or loss, significant segment expenses and other segment items

Three months ended

(in thousands) March 31, 2025 December 31, 2024 March 31, 2024

Community banking segment:

Interest income

$ 35,239 $ 36,476 $ 34,146

Non-interest income

2,311 2,177 2,201

Reconciliation of income

All other income 1

Total consolidated income

38,113 39,229 36,900

Total interest expense 10,293 11,246 11,452

Provision for credit losses on loans

Provision for credit losses on unfunded loan commitments

Non-interest expense

Salaries and related benefits 11,838 9,235 11,838

Occupancy and equipment 2,106 2,127 1,968

Data processing 1,079 1,030 1,070

Deposit network fees 932 838 798

Information technology 413 432 402

Charitable contributions 403 30 12

Federal Deposit Insurance Corporation insurance 388 420 435

Professional services 784 968 951

Depreciation and amortization 322 341 388

Directors' expense 304 297 317

Amortization of core deposit intangible 227 237 251

Other real estate owned — — —

Other expense 2,036 1,965 2,303

Segment income

6,913 10,063 4,365

Reconciliation of segment income

All other loss 1

Income before income taxes

$ 6,481 $ 9,645 $ 3,929

1 Other income and loss from segment below the quantitative thresholds are attributable to one operating segment of the Bank, the Wealth Management and Trust Services, which does not meet the quantitative thresholds for presenting reportable segments.

Expenses of Wealth Management and Trust Services are comprised of salary and employee benefits, professional services, data processing, occupancy and equipment and other expenses totaling $ 432 thousand, $ 418 thousand, and $ 436 thousand, for the periods presented above, respectively

2 The significant expense categories and amounts align with the segment-level information that is regularly provided to the chief operating decision maker.

Earnings Per Share:

The following table shows:

9 unchanged sentences

Under the two-class method, the difference in EPS is nominal for these participating securities.

Three months ended Nine months ended

(in thousands, except per share data) September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Three months ended

(in thousands, except per share data) March 31, 2025 March 31, 2024

Weighted average basic common shares outstanding 15,977 16,081

8 unchanged sentences

Diluted earnings (loss) per common share $ 0.30 $ 0.18

$ 0.28 $ 0.33 $ ( 0.90 ) $ 1.20

Weighted average anti-dilutive common shares not included in the calculation of diluted EPS 274 340

1 Because Bancorp was in a net loss position for the nine months ended September 30, 2024, diluted net loss per share is the same as basic net loss per share, as the inclusion of potentially dilutive common shares would have been anti-dilutive.

Recently Adopted and Issued Accounting Standards

Accounting Standards Adopted in 2025

In June 2022, the FASB issued ASU No.

2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions .

The amendment reduces diversity in practice by clarifying that a separate contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

In addition, this ASU

provided amended examples to illustrate that a restriction that is a characteristic of the equity security, which market participants would take into account when pricing them, would be considered in measuring fair value.

This ASU also introduced new disclosure requirements.

The amendments were effective prospectively for years beginning after December 15, 2023.

As discussed in Note 4, Investment Securities, in 2023 we sold our remaining shares of Visa Inc.

Class B restricted common stock.

As a result of the sale, this update had no impact on our financial condition, results of operations or disclosures.

In March 2023, the FASB issued ASU No.

2023-01, Leases (Topic 842):

Common Control Arrangements .

For public companies, the amendment requires entities to amortize leasehold improvements associated with common control lease arrangements over the useful life of the improvements to the common control group, as opposed to the shorter of the remaining lease term and the useful life of the improvements for all other operating leases.

The amendments were effective for years beginning after December 15, 2023, and may be adopted either prospectively or retrospectively.

We currently do not have common control lease arrangements, and therefore the adoption of the amendments had no impact on our financial condition, results of operations or disclosures.

In March 2023, the FASB issued ASU No.

2023-02, Investments—Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method .

Under current GAAP, an entity can only elect to apply the proportional amortization method to investments in low-income housing tax credit ("LIHTC") structures.

The proportional amortization method results in the cost of the investment being amortized in proportion to the income tax credits and other income tax benefits received, with the amortization of the investment and the income tax credits being presented net in the consolidated statements of income as a component of income tax expense (benefit).

The amendments will allow entities to elect to account for all other equity investments made primarily for the purpose of receiving income tax credits to using the proportional amortization method, regardless of the tax credit program through which the investment earns income tax credits, when certain conditions are met.

The amendments were effective for fiscal years beginning after December 15, 2023, and may be adopted either on a modified retrospective basis or retrospectively.

Other than investments in LIHTC funds, as disclosed in Note 4, Investment Securities, we currently have no other equity investments made primarily for the purpose of receiving income tax credits, and therefore the adoption of this ASU had no impact on our financial condition, results of operations or disclosures.

Accounting Standards Not Yet Effective

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

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

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

Early adoption is permitted.

Since this ASU only requires additional disclosure, adoption of this ASU will not have an impact on our financial condition, results of operations or cash flows.

In December 2023, the FASB issued ASU No.

We have not adopted any new accounting standards in the first quarter of 2025.

Accounting Standards Not Yet Adopted

In December 2023, the FASB issued Accounting Standards Update ("ASU") No.

2023-09, Income Taxes (Topic 740):

3 unchanged sentences

Early adoption is permitted.

We are currently evaluating the impact of the amendments on our financial statement disclosures upon adoption.

The Company expects this ASU to only impact its disclosure requirements (i.e.2025 Form 10-K) and does not expect the adoption of this ASU to have a material impact on its business operations or Consolidated Statements of Financial Conditio n.

In November 2024, the FASB issued ASU No.

2 unchanged sentences

The amendments are intended to improve income statement expense disclosure requirements, primarily through enhanced disclosures about certain costs and expenses included in income statement expense captions.

The amendments are effective for annual reporting periods beginning after December 15, 2026 (i.e., 2027 Form 10-K) and interim periods within fiscal years beginning after December 15, 2027.

The amendments are effective for annual reporting periods beginning after December 15, 2026 (i.e., 2027 Form 10-K) and interim periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

We are currently evaluating the impact of the amendments on our financial statement disclosures upon adoption.

The Company is currently evaluating the impact of the amendments on its financial statement disclosures, and does not expect the adoption to have a material impact on its business operations or Consolidated Statements of Financial Condition.

Fair Value of Assets and Liabilities

15 unchanged sentences

Changes in Fair Value Recorded In 1

September 30, 2024

March 31, 2025

Securities available-for-sale:

8 unchanged sentences

Derivative financial assets (interest rate contracts) $ 227 $ — $ 227 $ — NI

Derivative financial liabilities (interest rate contracts) $ 1,466 $ — $ 1,466 $ — NI

December 31, 2024

9 unchanged sentences

Derivative financial assets (interest rate contracts) $ 333 $ — $ 333 $ — NI

Derivative financial liabilities (interest rate contracts) $ 1,361 $ — $ 1,361 $ — NI

1 Other comprehensive income ("OCI") or net income ("NI").

3 unchanged sentences

Treasury securities.

If quoted market prices are not available, we obtain pricing information from a reputable third-party service provider, who may utilize valuation techniques that use current market-based or independently sourced parameters, such as bid/ask prices, dealer-quoted prices, interest rates, benchmark yield curves,

prepayment speeds, probability of default, loss severity and credit spreads (Level 2).

Level 2 securities include obligations of state and political subdivisions, U.S.

agencies or government-sponsored agencies' debt securities, mortgage-backed securities, government agency-issued securities, and corporate bonds.

As of September 30, 2024 and December 31, 2023, there were no Level 3 securities.

As of March 31, 2025 and December 31, 2024, there were no Level 3 securities.

Held-to-maturity securities may be subject to an allowance for credit losses as a result of our evaluation of expected losses due to credit quality factors.

We did not record any credit loss expense on held-to-maturity securities during the nine months ended September 30, 2024 or September 30, 2023.

We did not record any credit loss expense on held-to-maturity securities during either the three months ended March 31, 2025 or March 31, 2024.

Fair value of held-to-maturity securities is determined using the same techniques discussed above for available-for-sale securities.

5 unchanged sentences

Mid-market pricing of the inputs is used as a practical expedient in the fair value measurements.

We project spot rates at reset days specified by each swap contract to determine future cash flows, then discount to present value using OIS curves as of the measurement date.

We project spot rates at reset

days specified by each swap contract to determine future cash flows, then discount to present value using OIS curves as of the measurement date.

When the value of any collateral placed with counterparties is less than the interest rate derivative liability, a credit valuation adjustment ("CVA") is applied to reflect the credit risk we pose to counterparties.

8 unchanged sentences

Disclosures about Fair Value of Financial Instruments

The table below is a summary of fair value estimates for financial instruments as of September 30, 2024 and December 31, 2023, excluding financial instruments recorded at fair value on a recurring basis (summarized in the first table in this note).

The table below is a summary of fair value estimates for financial instruments as of March 31, 2025 and December 31, 2024, excluding financial instruments recorded at fair value on a recurring basis (summarized in the first table in this note).

The carrying amounts in the following table are recorded in the consolidated statements of condition under the indicated captions.

Further, we have not disclosed the fair value of financial instruments specifically excluded from disclosure requirements such as bank-owned life insurance policies ("BOLI"), lease obligations and non-maturity deposit liabilities.

Additionally, we held shares of Federal Home Loan Bank ("FHLB") of San Francisco stock at cost as of September 30, 2024 and December 31, 2023.

There were no impairments or changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer as of September 30, 2024 or December 31, 2023.

Additionally, we held shares of Federal Home Loan Bank ("FHLB") of San Francisco stock at cost as of March 31, 2025 and December 31, 2024.

There were no impairments or changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer as of March 31, 2025 or December 31, 2024.

See further discussion on values within Note 4, Investment Securities.

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

(in thousands) Carrying Amounts Fair Value Fair Value Hierarchy Carrying Amounts Fair Value Fair Value Hierarchy

6 unchanged sentences

Time deposits 216,426 216,860 Level 2 242,377 243,773 Level 2

FRBSF short-term borrowings under the BTFP

— — Level 2 26,000 25,998 Level 2

Interest payable 2,507 2,507 Level 2 3,019 3,019 Level 2

3 unchanged sentences

The value of off-balance-sheet financial instruments is estimated based on the fee income associated with the commitments, which in the absence of credit exposure, is considered to approximate their settlement value.

The fair value of commitment fees was not material as of September 30, 2024 or December 31, 2023.

The fair value of commitment fees was not material as of March 31, 2025 or December 31, 2024.

Investment Securities

5 unchanged sentences

We also invest in residential and commercial mortgage-backed securities (“MBS”/"CMBS") and collateralized mortgage obligations (“CMOs”) issued or guaranteed by the GSEs, as reflected in the following table.

A summary of the amortized cost, fair value and allowance for credit losses related to securities held-to-maturity as of September 30, 2024 and December 31, 2023 is presented below.

A summary of the amortized cost, fair value and allowance for credit losses related to securities held-to-maturity as of March 31, 2025 and December 31, 2024 is presented below.

Held-to-maturity:

2 unchanged sentences

(in thousands) Gains (Losses)

September 30, 2024

March 31, 2025

Securities of U.S.

19 unchanged sentences

Total held-to-maturity $ 879,199 $ — $ 879,199 $ — $ ( 115,664 ) $ 763,535

1 Amortized cost and fair values exclude accrued interest receivable of $ 2.5 million and $ 3.6 million at September 30, 2024 and December 31, 2023, respectively, which is included in interest receivable and other assets in the consolidated statements of condition.

1 Amortized cost and fair values exclude accrued interest receivable of $ 2.2 million and $ 3.4 million at March 31, 2025 and December 31, 2024, respectively, which is included in interest receivable and other assets in the consolidated statements of condition.

Management measures expected credit losses on held-to-maturity securities collectively by major security type with each type sharing similar risk characteristics and considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts.

2 unchanged sentences

With regard to securities issued by states and political subdivisions and corporate bonds, management considers:

(i) issuer and/or

guarantor credit ratings, (ii) historical probability of default and loss given default rates for given bond ratings and remaining maturity, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, (iv) internal credit review of the financial information, and (v) whether or not such securities have credit enhancements such as guarantees, contain a defeasance clause, or are pre-refunded by the issuers.

(i) issuer and/or guarantor credit ratings, (ii) historical probability of default and loss given default rates for given bond ratings and remaining maturity, (iii) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities, (iv) internal credit review of the financial information, and (v) whether or not such securities have credit enhancements such as guarantees, contain a defeasance clause, or are pre-refunded by the issuers.

Based on the comprehensive anal ysis, no cred it losses are expected.

The following table summarizes the amortized cost of our portfolio of held-to-maturity securities issued by states and political subdivisions and corporate bonds by Moody's and/or Standard & Poor's bond ratings as of September 30, 2024 and December 31, 2023.

Obligations of state and political subdivisions Corporate bonds

(in thousands) September 30, 2024 December 31, 2023 September 30, 2024 December 31, 2023

(in thousands) March 31, 2025 December 31, 2024 March 31, 2025 December 31, 2024

Aaa / AAA $ 42,056 $ 42,161 $ — $ —

2 unchanged sentences

Total $ 61,440 $ 61,560 $ 15,000 $ 30,000

A summary of the amortized cost, fair value and allowance for credit losses related to securities available-for-sale as of September 30, 2024 and December 31, 2023 is presented below.

A summary of the amortized cost, fair value and allowance for credit losses related to securities available-for-sale as of March 31, 2025 and December 31, 2024 is presented below.

Available-for-sale:

2 unchanged sentences

(in thousands) Gains (Losses)

September 30, 2024

March 31, 2025

Securities of U.S.

21 unchanged sentences

Total available-for-sale $ 419,292 $ 184 $ ( 31,942 ) $ — $ 387,534

1 Amortized cost and fair value exclude accrued interest receivable of $ 1.6 million and $ 2.3 million at September 30, 2024 and December 31, 2023, respectively, which is included in interest receivable and other assets in the consolidated statements of condition.

The amortized cost a nd fair value of investment debt securities by contractual maturity at September 30, 2024 and December 31, 2023 are shown below.

1 Amortized cost and fair value exclude accrued interest receivable of $ 1.8 million and $ 1.7 million at March 31, 2025 and December 31, 2024, respectively, which is included in interest receivable and other assets in the consolidated statements of condition.

The amortized cost a nd fair value of investment debt securities by contractual maturity at March 31, 2025 and December 31, 2024 are shown below.

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Held-to-Maturity Available-for-Sale Held-to-Maturity Available-for-Sale

5 unchanged sentences

Total $ 834,640 $ 734,824 $ 434,479 $ 406,009 $ 879,199 $ 763,535 $ 419,292 $ 387,534

Sales of investment securities and gross gains and losses are shown in the following table:

Three months ended Nine months ended

(in thousands) September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Available-for-sale:

Sales proceeds $ — $ 79,840 $ 292,621 $ 79,840

Gross realized gains — 5 — 5

Gross realized losses — ( 2,798 ) ( 32,541 ) ( 2,798 )

Sale of equity securities:

Sales proceeds — 2,807 — 2,807

Gross realized gain — 2,807 — 2,807

1 Refer to VISA Inc.

Class B Common Stock section below for more information.

There were no sales of investment securities in the first quarter of 2025 or 2024.

Three months ended Three months ended

The reported values of pledged investment securities are shown in the following table.

(in thousands) September 30, 2024 December 31, 2023

(in thousands) March 31, 2025 December 31, 2024

Pledged to the State of California:

5 unchanged sentences

Pledged to FHLB Securities-Backed Credit Program 280,652 284,148

Pledged to the Federal Reserve "BTFP" — 265,660

Pledged to the Federal Reserve Discount Window 327,455 365,759

Total pledged investment securities $ 911,559 $ 941,122

There were 254 and 313 securities in unrealized loss positions at September 30, 2024 and December 31, 2023, respectively.

There were 259 and 269 securities in unrealized loss positions at March 31, 2025 and December 31, 2024, respectively.

Those securities are summarized and classified according to the duration of the loss period in the tables below:

September 30, 2024 < 12 continuous months ≥ 12 continuous months Total securities

March 31, 2025 < 12 continuous months ≥ 12 continuous months Total securities

in a loss position

43 unchanged sentences

Total securities at loss position $ 156,905 $ ( 2,160 ) $ 961,045 $ ( 145,446 ) $ 1,117,950 $ ( 147,606 )

As of September 30, 2024, the investment portfolio included 245 investment securities that had been in a continuous loss position for twelve months or more and nine investment securities that had been in a loss position for less than twelve months.

As of March 31, 2025, the investment portfolio included 241 investment securities that had been in a continuous loss position for twelve months or more and 18 investment securities that had been in a loss position for less than twelve months.

Securities issued by government-sponsored agencies, such as FNMA and FHLMC, usually have implicit credit support from the U.S.

5 unchanged sentences

Our investments in obligations of state and political subdivision bonds are deemed creditworthy after our comprehensive analysis of the issuers' latest financial information, credit ratings by major credit agencies, and/or credit enhancements.

No allowances for credit losses have been recognized on available-for-sale securities in an unrealized loss position, as management does not believe any of the securities are impaired due to credit risk factors at either September 30, 2024 or December 31, 2023.

In addition, for any available-for-sale securities in an unrealized loss position at September 30, 2024 and December 31, 2023, the Bank assessed whether it intended to sell the securities, or if it was more likely than not that it would be required to sell the securities before recovery of its amortized cost basis, which would require a write-down to fair value through net income.

In addition, for any available-for-sale securities in an unrealized loss position at March 31, 2025 and December 31, 2024, the Bank assessed whether it intended to sell the securities, or if it was more likely than not that it would be required to sell the securities before recovery of its amortized cost basis, which would require a write-down to fair value through net income.

Because the Bank did not intend to sell those securities that were in an unrealized loss position, and it was not more-likely-than-not that the Bank would be required to sell the securities before recovery of their amortized cost bases, the Bank determined that no write-down was necessary as of the reporting date.

1 unchanged sentence

portfolio against changes in fair value related to changes in the benchmark interest rate.

Subsequent to quarter end, on November 4, 2024, the Bank terminated these contracts resulting in an immaterial loss that will be amortized over the life of the hedged securities.

In the fourth quarter of 2024, the Bank terminated these contracts resulting in an immaterial loss that will be amortized over the life of the hedged securities.

For additional details, refer to Note 9, Derivative Financial Instruments and Hedging Activities.

4 unchanged sentences

Shares cannot be purchased or sold except between the FHLB and its members at the $ 100 per share par value.

We held $ 16.7 million of FHLB stock included in other assets on the consolidated statements of condition at both September 30, 2024 and December 31, 2023.

We held $ 16.7 million of FHLB stock included in other assets on the consolidated statements of condition at both March 31, 2025 and December 31, 2024.

The carrying amounts of these investments are reasonable estimates of fair value because the securities are restricted to member banks, and they do not have a readily determinable market value.

Based on our analysis of FHLB's financial condition and certain qualitative factors, we determined that the FHLB stock w as not im paired at September 30, 2024 and December 31, 2023.

On October 24, 2024, FHLB announced a cash dividend for the third quarter of 2024 at an annualized dividend rate of 8.75 % to be distributed in mid-November 2024.

Based on our analysis of FHLB's financial condition and certain qualitative factors, we determined that the FHLB stock w as not im paired at March 31, 2025 and December 31, 2024.

On April 25, 2025, FHLB announced a cash dividend for the first quarter of 2025 at an annualized dividend rate of 8.75 % to be distributed in mid-May 2025.

Cash dividends paid on FHLB capital stock are recorded as non-interest income.

For further information, refer to Note 8, Commitments and Contingencies.

Low Income Housing Tax Credits

We invest in low-income housing tax credit funds as a limited partner, which totaled $ 1.7 million and $ 2.0 million recorded in other assets as of September 30, 2024 and December 31, 2023, respectively.

In the first nine months of 2024, we recognized $ 394 thousand of low-income housing tax credits and other tax benefits, offset by $ 328 thousand of amortization expense of low-income housing tax credit investment, as a component of income tax expense.

As of September 30, 2024, our unfunded commitments for these low-income housing tax credit funds totaled $ 342 thousand.

We did not recognize any impairment losses on these low-income housing tax credit investments during the first nine months of 2024 or 2023, as the value of the future tax benefits exceeds the carrying value of the investments.

Loans and Allowance for Credit Losses on Loans

The following table presents the amortized cost of loans by portfolio class as of September 30, 2024 and December 31, 2023.

(in thousands) September 30, 2024 December 31, 2023

The following table presents the amortized cost of loans by portfolio class as of March 31, 2025 and December 31, 2024.

(in thousands) March 31, 2025 December 31, 2024

Commercial and industrial $ 147,291 $ 152,263

9 unchanged sentences

Total loans, net of allowance for credit losses on loans $ 2,043,642 $ 2,052,600

1 Amortized cost includes net deferred loan origination costs of $ 2.5 million and $ 2.7 million at September 30, 2024 and December 31, 2023, respectively.

Amounts are also net of unrecognized purchase discounts of $ 1.1 million and $ 2.0 million at September 30, 2024 and December 31, 2023, respectively.

Amortized cost excludes accrued interest, which totaled $ 6.7 million and $ 6.6 million at September 30, 2024 and December 31, 2023, respectively, and is included in interest receivable and other assets in the consolidated statements of condition.

1 Amortized cost includes net deferred loan origination costs of $ 2.5 million and $ 2.5 million at March 31, 2025 and December 31, 2024, respectively.

Amounts are also net of unrecognized purchase discounts of $ 1.2 million and $ 1.1 million at March 31, 2025 and December 31, 2024, respectively.

Amortized cost excludes accrued interest, which totaled $ 6.6 million and $ 6.8 million at March 31, 2025 and December 31, 2024, respectively, and is included in interest receivable and other assets in the consolidated statements of condition.

Lending Risks

6 unchanged sentences

A weakened economy, and resultant decreased consumer and/or business spending, may have an effect on the credit quality of commercial loans.

Commercial Real Estate Loans - Commercial real estate loans, which include income producing investment properties and owner-occupied real estate used for business purposes, are subject to underwriting standards and processes similar to commercial loans discussed above.

processes similar to commercial loans discussed above.

We underwrite these loans to be repaid from cash flow from either the business or investment property and supported by real property collateral.

26 unchanged sentences

Loans in this category must have an identifiable and stable source of repayment and meet the Bank’s policy regarding debt-service-coverage ratios.

These borrowers are capable of sustaining normal economic, market

or operational setbacks without significant financial consequences.

These borrowers are capable of sustaining normal economic, market or operational setbacks without significant financial consequences.

Negative external industry factors are generally not present.

26 unchanged sentences

We also review loans graded “Watch” or worse, regardless of loan type, no less than quarterly.

The following tables present the loan portfolio by loan portfolio class, origination/renewal year and internal risk rating as of September 30, 2024 and December 31, 2023.

The following tables present the loan portfolio by loan portfolio class, origination/renewal year and internal risk rating as of March 31, 2025 and December 31, 2024.

The current year vintage table reflects gross charge-offs by loan portfolio class and year of origination.

2 unchanged sentences

(in thousands) Term Loans - Amortized Cost by Origination Year Revolving Loans Amortized Cost

September 30, 2024 2024 2023 2022 2021 2020 Prior Total

March 31, 2025 2025 2024 2023 2022 2021 Prior Total

Commercial and industrial:

3 unchanged sentences

Total commercial and industrial $ 2,287 $ 10,645 $ 19,391 $ 10,142 $ 1,204 $ 28,319 $ 75,303 $ 147,291

Gross current period charge-offs $ — $ — $ — $ — $ — $ — $ ( 33 ) $ ( 33 )

Commercial real estate, owner-occupied:

9 unchanged sentences

(in thousands) Term Loans - Amortized Cost by Origination Year Revolving Loans Amortized Cost

September 30, 2024 2024 2023 2022 2021 2020 Prior Total

March 31, 2025 2025 2024 2023 2022 2021 Prior Total

Gross current period charge-offs $ — $ — $ — $ — $ ( 809 ) $ — $ — $ ( 809 )

Construction:

7 unchanged sentences

Pass and Watch $ — $ 29,963 $ 17,025 $ 18,594 $ 12,215 $ 55,957 $ — $ 133,754

Substandard — — — — 206 — — 206

Total other residential $ — $ 29,963 $ 17,025 $ 18,594 $ 12,421 $ 55,957 $ — $ 133,960

16 unchanged sentences

Total commercial and industrial $ 10,549 $ 20,282 $ 10,535 $ 1,371 $ 2,655 $ 27,708 $ 79,163 $ 152,263

Gross current period charge-offs $ — $ — $ — $ — $ — $ — $ ( 41 ) $ ( 41 )

Commercial real estate, owner-occupied:

14 unchanged sentences

Substandard — — — — — 174 739 913

(in thousands) Term Loans - Amortized Cost by Origination Year Revolving Loans Amortized Cost

December 31, 2024 2024 2023 2022 2021 2020 Prior Total

Total home equity $ 94 $ 13 $ — $ — $ — $ 1,142 $ 87,076 $ 88,325

4 unchanged sentences

Pass and Watch $ 17,525 $ 15,429 $ 10,841 $ 7,798 $ 2,788 $ 10,901 $ 1,429 $ 66,711

Substandard — — — 207 — 15 — 222

Total installment and other consumer $ 17,525 $ 15,429 $ 10,841 $ 8,005 $ 2,788 $ 10,916 $ 1,429 $ 66,933

Gross current period charge-offs $ — $ ( 14 ) $ — $ ( 39 ) $ — $ ( 1 ) $ ( 4 ) $ ( 58 )

Pass and Watch $ 214,779 $ 131,283 $ 255,830 $ 263,355 $ 250,036 $ 645,628 $ 168,325 $ 1,929,236

2 unchanged sentences

Totals $ 241,182 $ 132,158 $ 263,469 $ 286,656 $ 251,574 $ 731,202 $ 177,015 $ 2,083,256

The following table shows the amortized cost of loans by portfolio class, payment aging and non-accrual status as of September 30, 2024 and December 31, 2023.

Total gross current period charge-offs $ — $ ( 14 ) $ — $ ( 39 ) $ — $ ( 1 ) $ ( 45 ) $ ( 99 )

The following table shows the amortized cost of loans by portfolio class, payment aging and non-accrual status as of March 31, 2025 and December 31, 2024.

Loan Aging Analysis by Class

(in thousands) Commercial and industrial Commercial real estate, owner-occupied Commercial real estate, non-owner occupied Construction Home equity Other residential Installment and other consumer Total

September 30, 2024

March 31, 2025

30-59 days past due $ 245 $ 1,552 $ 382 $ — $ — $ 802 $ 204 $ 3,185

21 unchanged sentences

Non-accrual loans with no allowance $ — $ 1,537 $ 497 $ — $ 752 $ — $ 207 $ 2,993

1 There were no non-performing loans over 90 days past due and accruing interest as of September 30, 2024 or December 31, 2023 .

2 None of the non-accrual loans as of September 30, 2024 or December 31, 2023 were earning interest on a cash or accrual basis.

We reversed $ 257 thousand and $ 523 thousand in accrued interest income for loans that were placed on non-accrual status during the three and nine months ended September 30, 2024, respectively.

We reversed accrued interest income of $ 131 thousand and $ 158 thousand for loans that were placed on non-accrual status during the three and nine months ended September 30, 2023, respectively.

1 There were no non-performing loans over 90 days past due and accruing interest as of March 31, 2025 or December 31, 2024 .

2 None of the non-accrual loans as of March 31, 2025 or December 31, 2024 were earning interest on a cash or accrual basis.

We reversed $ 33 thousand in accrued interest income for loans that were placed on non-accrual status during the three months ended March 31, 2025.

We reversed accrued interest income of $ 10 thousand for loans that were placed on non-accrual status during the three months ended March 31, 2024.

Collateral Dependent Loans

The following table presents the amortized cost basis of individually analyzed collateral-dependent loans, which were all on non-accrual status, by portfolio class at September 30, 2024 and December 31, 2023.

The following table presents the amortized cost basis of individually analyzed collateral-dependent loans, which were all on non-accrual status, by portfolio class at March 31, 2025 and December 31, 2024.

Amortized Cost by Collateral Type

1 unchanged sentence

Allowance for Credit Losses

September 30, 2024

March 31, 2025

Commercial real estate, owner-occupied $ 1,493 $ — $ — $ 1,493 $ —

1 unchanged sentence

Home equity — 1,353 — 1,353 —

Other residential — 206 — 206 —

Installment and other consumer — — 198 198 —

5 unchanged sentences

Home equity 752 752

Installment and other consumer — — 222 222 15

Total $ 30,114 $ 752 $ 222 $ 31,088 $ 8,000

1 There were no collateral-dependent residential real estate mortgage loans in process of foreclosure or in substance repossessed at September 30, 2024 and December 31, 2023.

The weighted average loan-to-value of real estate secured collateral dependent loans was approximately 120 % ( 84 % net of individual reserves for credit losses) at September 30, 2024 and 70 % ( 62 % net of individual reserves for credit losses) at December 31, 2023.

Loan Modifications to Borrowers Experiencing Financial Difficulty

The following table summarizes the amortized cost of loans as of September 30, 2024 that were modified during the nine months ended September 30, 2024 by portfolio class and type of modification granted.

There were no modifications of loans during the three months ended September 30, 2024 requiring disclosure.

(in thousands) Term Extension Total Modifications Percent of Portfolio Class Total

Nine months ended September 30, 2024

Home equity $ 192 $ 192 0.2 %

The following table summarizes the amortized cost of loans as of September 30, 2023 that were modified during the three and nine months ended September 30, 2023 by portfolio class and type of modification granted.

1 There were no collateral-dependent residential real estate mortgage loans in process of foreclosure or in substance repossessed at March 31, 2025 and December 31, 2024.

The weighted average loan-to-value of real estate secured collateral dependent loans was approximately 128 % at March 31, 2025 and 116 % at December 31, 2024.

Loan Mod ifications to Borrowers Experiencing Financial Difficulty

There were no modifications of loans during the three months ended March 31, 2025 requiring disclosure.

The following table summarizes the amortized cost of loans as of March 31, 2024 that were modified during the three months ended March 31, 2024 by portfolio class and type of modification granted.

(in thousands) Term Extension Total Modifications Percent of Portfolio Class Total

Three months ended September 30, 2023

Commercial and industrial $ 391 $ 391 0.2 %

Commercial owner-occupied 1,056 1,056 0.3 %

Total $ 1,447 $ 1,447

Nine months ended September 30, 2023

Three months ended March 31, 2024

Commercial and industrial $ 2,191 $ 2,191 1.5 %

Commercial owner-occupied 1,056 1,056 0.3 %

Total $ 1,447 $ 1,447

As of September 30, 2024 and September 30, 2023, there were no unfunded loan commitments for loans that were modified during the periods presented.

The following table summarizes the financial effect of loan modifications presented in the table above during the nine months ended September 30, 2024 by portfolio class.

Weighted-Average Term Extension (in years)

Nine months ended September 30, 2024

Home Equity 82 82 0.1 %

The following table summarizes the financial effect of loan modifications presented in the table above during the three and nine months ended September 30, 2023 by portfolio class.

Total $ 2,273 $ 2,273

As of March 31, 2025 and March 31, 2024, there were no unfunded loan commitments for loans that were modified during the period presented.

The following table summarizes the financial effect of loan modifications presented in the table above during the three months ended March 31, 2024 by portfolio class.

Weighted-Average Term Extension (in years)

Three months ended September 30, 2023

Commercial and industrial 2.3

Commercial owner-occupied 2.5

Nine months ended September 30, 2023

Three months ended March 31, 2024

Commercial and industrial 0.3

Commercial owner-occupied 2.5

The loan modifications did not significantly impact the determination of the allowance for credit losses on loans during the three and nine months ended September 30, 2024 or September 30, 2023.

The Bank closely monitors the performance of the modified loans to understand the effectiveness of its modification efforts.

The following table summarizes the amortized cost and payment status of loans as of September 30, 2024 that were modified during the nine months ended September 30, 2024 by portfolio class.

(in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Non-Accrual

Nine months ended September 30, 2024

Home Equity 15.0

Total $ 192 $ — $ — $ — $ 192 $ 117

The following table summarizes the amortized cost and payment status of loans as of September 30, 2023 that were modified during the three and nine months ended September 30, 2023 by portfolio class.

The loan modifications did not significantly impact the determination of the allowance for credit losses on loans during the three months ended March 31, 2024.

The Bank closely monitors the performance of the modified loans to understand the effectiveness of its modification efforts.

The following table summarizes the amortized cost and payment status of loans as of March 31, 2024 that were m odified during the three months ended March 31, 2024 by portfolio class.

(in thousands) Current 30-59 Days Past Due 60-89 Days Past Due 90 Days or More Past Due Total Non-Accrual

Three months ended September 30, 2023

Commercial and industrial $ 391 $ — $ — $ — $ 391 $ —

Commercial owner-occupied 1,056 — — — 1,056 —

Total $ 1,447 $ — $ — $ — $ 1,447 $ —

Nine months ended September 30, 2023

Three months ended March 31, 2024

Commercial and industrial $ 2,191 $ — $ — $ — $ 2,191 $ 2,191

Commercial owner-occupied 1,056 — — — 1,056 —

Home Equity 82 — — — 82 82

Total $ 2,273 $ — $ — $ — $ 2,273 $ 2,273

There were no loans that defaulted (fully or partially charged-off or became 90 days or more past due) that were modified during the three and nine months ended September 30, 2024 or September 30, 2023.

There were no loans to borrowers experiencing financial difficulty that were modified within the three months ended March 31, 2024 that had subsequently defaulted (i.e., fully or partially charged-off or became 90 days or more past due).

Allocation of the Allowance for Credit Losses on Loans

The following table presents the details of the allowance for credit losses on loans segregated by loan portfolio class as of September 30, 2024 and December 31, 2023 .

The following table presents the details of the allowance for credit losses on loans segregated by loan portfolio class as of March 31, 2025 and December 31, 2024 .

Allocation of the Allowance for Credit Losses on Loans

September 30, 2024

March 31, 2025

Modeled expected credit losses $ 792 $ 1,198 $ 7,549 $ 42 $ 636 $ 1,072 $ 621 $ — $ 11,910

11 unchanged sentences

Three months ended September 30, 2024

Beginning balance $ 1,876 $ 2,408 $ 22,165 $ 874 $ 650 $ 769 $ 910 $ 1,023 $ 30,675

(Reversal) Provision ( 158 ) ( 63 ) ( 65 ) ( 214 ) ( 3 ) 376 10 117 —

(Charge-offs) — — — — — — — — —

Recoveries — — — — — — — — —

Ending balance $ 1,718 $ 2,345 $ 22,100 $ 660 $ 647 $ 1,145 $ 920 $ 1,140 $ 30,675

Three months ended September 30, 2023

Three months ended March 31, 2025

Beginning balance $ 1,576 $ 2,361 $ 22,093 $ 638 $ 684 $ 1,141 $ 908 $ 1,255 $ 30,656

3 unchanged sentences

Ending balance $ 1,508 $ 2,319 $ 21,761 $ 416 $ 698 $ 1,074 $ 884 $ 1,246 $ 29,906

Allowance for Credit Losses on Loans Rollforward

Nine months ended September 30, 2024

Three months ended March 31, 2024

Beginning balance $ 1,712 $ 2,476 $ 14,933 $ 1,832 $ 552 $ 653 $ 976 $ 2,038 $ 25,172

3 unchanged sentences

Ending balance $ 1,727 $ 2,500 $ 15,704 $ 1,282 $ 627 $ 692 $ 920 $ 2,049 $ 25,501

Nine months ended September 30, 2023

Beginning balance $ 1,794 $ 2,487 $ 12,676 $ 1,937 $ 558 $ 595 $ 868 $ 2,068 $ 22,983

Provision 16 43 948 56 7 10 104 91 1,275

(Charge-offs) ( 7 ) — — — — — ( 22 ) — ( 29 )

Recoveries 5 — — 25 — — 1 — 31

Ending balance $ 1,808 $ 2,530 $ 13,624 $ 2,018 $ 565 $ 605 $ 951 $ 2,159 $ 24,260

Pledged Loans

Our FHLB line of credit is secured under terms of a blanket collateral agreement by a pledge of certain qualifying loans with unpaid principal balances of $ 1.324 billion and $ 1.288 billion at September 30, 2024 and December 31, 2023, respectively.

In addition, we pledge eligible residential loans, which totaled $ 109.0 million and $ 110.4 million at September 30, 2024 and December 31, 2023, respectively, to secure our borrowing capacity with the Federal Reserve Bank ("FRB").

Our FHLB line of credit is secured under terms of a blanket collateral agreement by a pledge of certain qualifying loans with unpaid principal balances of $ 1.377 billion and $ 1.351 billion at March 31, 2025 and December 31, 2024, respectively.

In addition, we pledge eligible residential loans, which totaled $ 106.3 million and $ 110.0 million at March 31, 2025 and December 31, 2024, respectively, to secure our borrowing capacity with the Federal Reserve Bank ("FRB").

For additional information, see Note 6, Borrowings.

3 unchanged sentences

Likewise, these transactions do not involve more than the normal risk of collectability or present other unfavorable features.

Related party loans totaled $ 4.3 million and $ 5.8 million as of September 30, 2024 and December 31, 2023, respectively.

In addition, undisbursed commitments to related parties totaled $ 211 thousand and $ 212 thousand as of September 30, 2024 and December 31, 2023, respectively.

Related party loans totaled $ 4.1 million as of March 31, 2025 and December 31, 2024.

In addition, undisbursed commitments to related parties totaled $ 210 thousand and $ 211 thousand as of March 31, 2025 and December 31, 2024, respectively.

Borrowings and Other Obligations

Federal Home Loan Bank:

The Bank had lines of credit with the FHLB totaling $ 923.6 million and $ 1.009 billion as of September 30, 2024 and December 31, 2023, respectively, based on eligible collateral of certain loans and investment securities.

The Bank had lines of credit with the FHLB totaling $ 925.2 million and $ 948.1 million as of March 31, 2025 and December 31, 2024, respectively, based on eligible collateral of certain loans and investment securities.

Federal Funds Lines of Credit:

The Bank had unsecured lines of credit with correspondent banks for overnight borrowings totaling $ 125.0 million and $ 135.0 million as of September 30, 2024 and December 31, 2023, respectively.

The Bank had unsecured lines of credit with correspondent banks for overnight borrowings totaling $ 125.0 million as of both March 31, 2025 and December 31, 2024.

In general, interest rates on these lines approximate the federal funds target rate.

Federal Reserve Bank:

The Bank had a line of credit through the Discount Window at the Federal Reserve Bank of San Francisco ("FRBSF") totaling $ 377.8 million as of September 30, 2024, secured by investment securities and residential loans.

As of December 31, 2023, the Bank had a line of credit through the Discount Window totaling $ 64.0 million, secured by residential loans, and a $ 270.2 million line under the Federal Reserve's temporary Bank Term Funding Program ("BTFP") based on the par values of pledged investment securities.

When the BTFP program ended on March 11, 2024, the investment securities were reallocated to our borrowing facility through the Discount Window .

The Bank had a line of credit through the Discount Window at the Federal Reserve Bank of San Francisco ("FRBSF") totaling $ 325.1 million as of March 31, 2025, secured by investment securities and residential loans.

As of December 31, 2024, the Bank had a line of credit through the Discount Window totaling $ 358.0 million secured by investment securities and residential loans .

Other Obligations:

Finance lease liabilities totaling $ 193 thousand and $ 298 thousand as of September 30, 2024 and December 31, 2023, respectively, are included in borrowings and other obligations in the consolidated statements of condition.

Finance lease liabilities totaling $ 116 thousand and $ 154 thousand as of March 31, 2025 and December 31, 2024, respectively, are included in borrowings and other obligations in the consolidated statements of condition.

Refer to Note 8, Commitments and Contingencies, for additional information.

The carrying values and weighted average interest rates on borrowings and other obligations as of September 30, 2024 and December 31, 2023 are summarized in the following table.

September 30, 2024 December 31, 2023

The carrying values and weighted average interest rates on borrowings and other obligations as of March 31, 2025 and December 31, 2024 are summarized in the following table.

March 31, 2025 December 31, 2024

(dollars in thousands) Carrying Value

9 unchanged sentences

Stockholders' Equity

On July 25, 2024, Bancorp approved a $ 0.25 per share cash dividend, paid August 15, 2024 to shareholders of record at the close of business on August 8, 2024.

Subsequent to quarter end on October 24, 2024, Bancorp approved a $ 0.25 per share cash dividend, payable on November 14, 2024 to shareholders of record at the close of business on November 7, 2024.

On January 23, 2025, Bancorp approved a $ 0.25 per share cash dividend, paid February 13, 2025 to shareholders of record at the close of business on February 6, 2025.

Subsequent to quarter end on April 24, 2025, Bancorp approved a $ 0.25 per share cash dividend, payable on May 15, 2025 to shareholders of record at the close of business on May 8, 2025.

Share-Based Payments

9 unchanged sentences

These performance-based stock awards were granted at a maximum opportunity level, and based on the achievement of the pre-established goals, the actual payouts can range from 0 % to 200 % of the target award.

For performance-based stock awards, an estimate is made of the number of shares expected to vest based on the probability that the performance criteria will be achieved to determine the amount of compensation expense to be recognized.

performance-based stock awards, an estimate is made of the number of shares expected to vest based on the probability that the performance criteria will be achieved to determine the amount of compensation expense to be recognized.

The estimate is re-evaluated quarterly, and total compensation expense is adjusted for any change in the current period.

6 unchanged sentences

The table below depicts the total number of shares, amount, and weighted average price withheld for cashless exercises for the periods presented.

Nine months ended

September 30, 2024 September 30, 2023

Three months ended

March 31, 2025 March 31, 2024

Number of shares withheld 3,957 3,338

3 unchanged sentences

On July 21, 2023, the Board of Directors approved the adoption of Bancorp's new share repurchase program for up to $ 25.0 million and expiring on July 31, 2025.

Bancorp repurchased 220,000 shares totaling $ 4.2 million at an average price of $ 19.21 per share in the three and nine months ended September 30, 2024.

There were no repurchases in 2023.

There were no repurchases in the three months ended March 31, 2025 and 2024.

Bancorp will continue to assess opportunities to utilize the program.

11 unchanged sentences

The contractual amount of unfunded loan commitments and standby letters of credit not reflected in the consolidated statements of condition are as follows:

(in thousands) September 30, 2024 December 31, 2023

(in thousands) March 31, 2025 December 31, 2024

Commercial lines of credit $ 224,633 $ 233,462

5 unchanged sentences

We record an allowance for credit losses on unfunded loan commitments at the balance sheet date based on estimates of the probability that these commitments will be drawn upon according to historical utilization experience of the different types of commitments and expected loss rates determined for pooled funded loans.

The allowance for credit losses on unfunded commitments totaled $ 894 thousand and $ 1.1 million as of September 30, 2024 and December 31, 2023, respectively, which is included in interest payable and other liabilities in the consolidated statements of condition.

There was a reversal of this allowance of $ 233 thousand in the third quarter and first nine months of 2024, compared to no provision and a reversal of $ 342 thousand in in the third quarter and first nine months of the prior year, respectively.

The reversals were due to decreases in available commitments.

The allowance for credit losses on unfunded commitments totaled $ 894 thousand at both March 31, 2025 and December 31, 2024, which is included in interest payable and other liabilities in the consolidated statements of condition.

There was no provision for credit losses on unfunded loan commitments in the first quarter of 2025 or in the first quarter of prior year.

We lease premises under long-term non-cancelable operating leases with remaining terms of 90 days to 17 years, 2 months , most of which include escalation clauses and one or more options to extend the lease term, and some of which contain lease termination clauses.

3 unchanged sentences

The following table shows the balances of operating and finance lease right-of-use assets and lease liabilities.

(in thousands) September 30, 2024 December 31, 2023

(in thousands) March 31, 2025 December 31, 2024

Operating leases:

9 unchanged sentences

The following table shows supplemental disclosures of noncash investing and financing activities for the periods presented.

Nine months ended

(in thousands) September 30, 2024 September 30, 2023

Three months ended

(in thousands) March 31, 2025 March 31, 2024

Right-of-use assets obtained in exchange for operating lease liabilities

2 unchanged sentences

The following table shows components of operating and finance lease cost.

Three months ended Nine months ended

(in thousands) September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Three months ended

(in thousands) March 31, 2025 March 31, 2024

Operating lease cost 1

2 unchanged sentences

Amortization of right-of-use assets 2

$ 37 $ 37 $ 111 $ 111

Interest on finance lease liabilities 3

4 unchanged sentences

3 Included in interest on borrowings and other obligations in the consolidated statements of comprehensive income.

The following table shows the future minimum lease payments, weighted average remaining lease terms, and weighted average discount rates under operating and finance lease arrangements as of September 30, 2024.

The discount rates used to calculate the present value of lease liabilities were based on the collateralized FHLB borrowing rates that were commensurate with lease terms and minimum payments on the lease commencement date.

(in thousands) September 30, 2024

(in thousands) March 31, 2025

Year Operating Leases Finance Leases

1 unchanged sentence

2026 3,843 40

2026 3,582 40

Thereafter 7,719 —

20 unchanged sentences

The settlement agreement still requires final court approval and notice requirements;

however, the Bank does not anticipate further costs related to this action.

however, the Bank does not anticipate further significant costs related to this action.

We are not aware of any other similar wage and hour claims at this time.

6 unchanged sentences

Collateral levels are monitored and adjusted on a regular basis for changes in interest rate swap values.

On July 7, 2023, the Bank entered into various interest rate swap agreements with notional values totaling $ 101.8 million split evenly between terms of 2.5 and 3.0 years to hedge balance sheet interest rate sensitivity and protect certain of our fixed rate available-for-sale securities against changes in fair value related to changes in the benchmark interest rate.

The interest rate swaps involve the receipt of floating rate interest from a counterparty in exchange for us making fixed-rate interest payments over the lives of the agreements, without the exchange of the underlying notional values.

The transactions were designated as partial term fair value hedges and structured such that the changes in the fair value of the interest rate swaps are expected to be perfectly effective in offsetting the changes in the fair value of the hedged items attributable to changes in the SOFR OIS swap rate, the designated benchmark interest rate.

Because the hedges met the criteria for using the shortcut method, there is no need to periodically reassess effectiveness during the term of the hedges.

For fair value designated hedges, the gains or losses on the hedging instruments as well as the offsetting loss or gain on the hedged items, are recognized in current earnings as their fair values change.

Subsequent to quarter end, on November 4, 2024, the Bank terminated these contracts resulting in an immaterial loss that will be amortized over the life of the hedged securities.

In addition, we had three interest rate swap agreements on certain loans with our customers, which are scheduled to mature at various dates ranging from June 2031 to July 2032.

In December 2023, one interest rate swap, scheduled to mature in October 2037, was terminated as the hedged loan was paid off.

We had three interest rate swap agreements on certain loans with our customers, which are scheduled to mature at various dates ranging from June 2031 to July 2032.

The loan interest rate swaps were designated as fair value hedges and allowed us to offer long-term fixed-rate loans to customers without assuming the interest rate risk of a long-term asset.

2 unchanged sentences

The notional amounts of the interest rate contracts are equal to the notional amounts of the hedged loans.

In the third quarter of 2023, the Bank entered into various interest rate swap agreements with notional values totaling $ 101.8 million to hedge balance sheet interest rate sensitivity and protect certain of our fixed rate available-for-sale securities against changes in fair value related to changes in interest rates by receiving floating rate interest from a counterparty in exchange for us making fixed-rate interest payments.

In the fourth quarter of 2024, the Bank terminated these contracts, resulting in an immaterial loss that will be amortized over the life of the hedged securities.

Information on our derivatives follows:

Asset derivatives Liability derivatives

(in thousands) September 30,

2024 December 31, 2023 September 30,

(in thousands) March 31,

2025 December 31, 2024 March 31,

2025 December 31, 2024

Available-for-sale securities:

Interest rate swaps - notional amount $ — $ — $ 101,770 $ 101,770

Interest rate swaps - fair value 1

$ — $ — $ 1,444 $ 1,359

Loans receivable:

3 unchanged sentences

1 Refer to Note 3, Fair Value of Assets and Liabilities, for valuation methodology.

The following table presents the carrying amount and associated cumulative basis adjustment related to the application of fair value hedge accounting that is included in the carrying amount of hedged assets as of September 30, 2024 and December 31, 2023.

Carrying Amounts of Hedged Assets Cumulative Amounts of Fair Value Hedging Adjustments Included in the Carrying Amounts of the Hedged Assets

(in thousands) September 30, 2024 December 31, 2023 September 30, 2024 December 31, 2023

Available-for-sale securities 1

$ 106,275 $ 107,181 $ ( 1,444 ) $ ( 1,359 )

(in thousands) March 31, 2025 December 31, 2024 March 31, 2025 December 31, 2024

Loans receivable 1

$ 7,085 $ 7,215 $ ( 287 ) $ ( 398 )

1 Carrying value equals the amortized cost basis of the securities underlying the hedge relationship, which is the book value net of the fair value hedge adjustment.

Amortized cost excludes accrued interest totaling $ 227 thousand and $ 222 thousand as of September 30, 2024 and December 31, 2023, respectively.

1 Carrying value equals the amortized cost basis of the loans underlying the hedge relationship, which is the loan balance net of deferred loan origination fees and cost and the fair value hedge adjustment.

Amortized cost excludes accrued interest, which was not material.

The following table presents the pretax net gains (losses) recognized in interest income related to our fair value hedges for the years presented.

Three months ended Nine months ended

(in thousands) September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

The following table presents the pretax net gains recognized in interest income related to our fair value hedges for the years presented.

Three months ended

(in thousands) March 31, 2025 March 31, 2024

Interest on investment securities 1

2 unchanged sentences

Decrease in carrying value included in the hedged available-for-sale securities

1,584 ( 367 ) 85 ( 367 )

Net gain (loss) recognized in interest income on investment securities

$ 203 $ 162 $ 615 $ 162

Net gain recognized in interest income on investment securities

Interest and fees on loans 1

3 unchanged sentences

Increase (decrease) in carrying value included in the hedged loans

257 ( 211 ) 140 ( 233 )

Decrease in value of yield maintenance agreement ( 2 ) ( 2 )

Net gain recognized in interest income on loans $ 33 $ 57

1 Represents the income line item in the statement of comprehensive loss in which the effects of fair value hedges are recorded.

1 Represents the income line item in the statement of comprehensive income in which the effects of fair value hedges are recorded.

Our derivative transactions with the counterparty are under an International Swaps and Derivative Association (“ISDA”) master agreement that includes “right of set-off” provisions.

9 unchanged sentences

Instruments Received Net Amount

September 30, 2024

$ 181 $ — $ 181 $ — $ — $ 181

Total $ 181 $ — $ 181 $ — $ — $ 181

December 31, 2023

Counterparty $ 287 $ — $ 287 $ — $ — $ 287

Total $ 287 $ — $ 287 $ — $ — $ 287

Offsetting of Financial Liabilities and Derivative Liabilities

Gross Amounts Net Amounts of Gross Amounts Not Offset in

Gross Amounts Offset in the Assets Presented the Statements of Condition

of Recognized Statements of in the Statements Financial Cash Collateral

(in thousands) Assets 1

Condition of Condition 1

Instruments Pledged

September 30, 2024

March 31, 2025

$ 227 $ — $ 227 $ — $ — $ 227

6 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements