What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-08-08 compared with 2025-05-12 · 294 added, 183 removed, 880 unchanged (35% of the section changed)

3 unchanged sentences

(in thousands, except share data;

unaudited) March 31, 2025 December 31, 2024

unaudited) June 30, 2025 December 31, 2024

Cash, cash equivalents and restricted cash $ 228,863 $ 137,304

Investment securities:

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

Held-to-maturity, at amortized cost (net of zero allowance for credit losses at June 30, 2025 and December 31, 2024)

823,314 879,199

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

Available-for-sale, at fair value (net of zero allowance for credit losses at June 30, 2025 and December 31, 2024)

391,985 387,534

29 unchanged sentences

Authorized - 30,000,000 shares;

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

issued and outstanding - 16,116,470 and 16,089,454 at June 30, 2025 and December 31, 2024, respectively

214,713 215,511

6 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended

Three months ended Six months ended

(in thousands, except per share amounts;

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

unaudited) June 30, 2025 March 31, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Interest income

14 unchanged sentences

Non-interest income

Earnings on bank-owned life insurance, net 667 544 421 1,211 856

Wealth management and trust services 612 563 585 1,175 1,138

Service charges on deposit accounts 550 548 541 1,098 1,070

Earnings on bank-owned life insurance, net 544 432 435

Debit card interchange fees, net 410 396 444 806 852

1 unchanged sentence

Merchant interchange fees, net 90 96 10 186 177

Losses on sale of investment securities ( 18,736 ) — ( 32,542 ) ( 18,736 ) ( 32,542 )

Other income 424 352 420 776 705

3 unchanged sentences

Occupancy and equipment 2,226 2,106 2,049 4,332 4,018

Professional services 937 1,129 1,078

Data processing 1,136 1,096 1,070

Deposit network fees 1,054 932 916 1,986 1,761

Federal Deposit Insurance Corporation insurance 388 420 435

Data processing 1,041 1,136 1,005 2,177 2,075

Professional services 908 937 1,043 1,845 2,121

Information technology 563 413 448 976 850

Federal Deposit Insurance Corporation insurance 421 388 426 809 861

Depreciation and amortization 320 322 379 642 767

4 unchanged sentences

Total non-interest expense 21,490 21,264 21,894 42,754 43,063

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

(Loss) income before (benefit from) provision for income taxes ( 11,199 ) 6,481 ( 34,382 ) ( 4,718 ) ( 30,453 )

(Benefit from) provision for income taxes ( 2,663 ) 1,605 ( 12,480 ) ( 1,058 ) ( 11,473 )

Net (loss) income $ ( 8,536 ) $ 4,876 $ ( 21,902 ) $ ( 3,660 ) $ ( 18,980 )

Net (loss) income per common share

Basic $ ( 0.53 ) $ 0.31 $ ( 1.36 ) $ ( 0.23 ) $ ( 1.18 )

4 unchanged sentences

Comprehensive income:

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

Other comprehensive (loss) income:

Net (loss) income $ ( 8,536 ) $ 4,876 $ ( 21,902 ) $ ( 3,660 ) $ ( 18,980 )

Other comprehensive income:

Change in net unrealized gains or losses on available-for-sale securities ( 486 ) 3,289 559 2,803 ( 4,009 )

Reclassification adjustment for realized losses on available-for-sale securities in net loss 18,736 — 32,542 18,736 32,542

Reclassification adjustment for gains or losses on fair value hedges — — 282 — 1,499

Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity 365 340 403 705 764

Other comprehensive income (loss), before tax 3,629 ( 5,081 ) ( 2,990 )

Deferred tax expense (benefit) 1,073 ( 1,501 ) ( 884 )

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

Other comprehensive income, before tax 18,615 3,629 33,786 22,244 30,796

Deferred tax expense 5,503 1,073 9,981 6,576 9,097

Other comprehensive income, net of tax 13,112 2,556 23,805 15,668 21,699

Total comprehensive income

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the three months ended March 31, 2025 and 2024

For the three months ended June 30, 2025 and 2024

(in thousands, except share data;

4 unchanged sentences

Shares Amount

Three months ended March 31, 2025

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

Three months ended June 30, 2025

Balance at April 1, 2025 16,202,869 $ 216,263 $ 250,815 $ ( 27,512 ) $ 439,566

— — ( 8,536 ) — ( 8,536 )

5 unchanged sentences

Restricted stock forfeited / cancelled ( 14,347 ) — — — —

Stock-based compensation - restricted stock — 195 — — 195

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

— — ( 4,054 ) — ( 4,054 )

Stock repurchased

( 100,000 ) ( 2,175 ) — — ( 2,175 )

Balance at June 30, 2025 16,116,470 $ 214,713 $ 238,225 $ ( 14,400 ) $ 438,538

Three months ended June 30, 2024

Balance at April 1, 2024 16,285,786 $ 218,342 $ 273,450 $ ( 55,112 ) $ 436,680

Net loss — — ( 21,902 ) — ( 21,902 )

Other comprehensive income, net of tax — — — 23,805 23,805

Stock issued under employee stock purchase plan 751 12 — — 12

Restricted stock surrendered for tax withholdings upon vesting ( 166 ) ( 3 ) — — ( 3 )

Restricted stock forfeited / cancelled ( 8,111 ) — — — —

Stock-based compensation - stock options — 20 — — 20

2 unchanged sentences

— — ( 4,071 ) — ( 4,071 )

Balance at June 30, 2024 16,278,260 $ 218,773 $ 247,477 $ ( 31,307 ) $ 434,943

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 six months ended June 30, 2025 and 2024

(in thousands, except share data;

unaudited) Common Stock Retained

Earnings Accumulated Other

Comprehensive Loss,

Net of Taxes Total

Shares Amount

Six months ended June 30, 2025

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

Net loss — — ( 3,660 ) — ( 3,660 )

Other comprehensive income, net of tax — — — 15,668 15,668

Stock issued under employee stock purchase plan 803 17 — — 17

Stock issued under employee stock ownership plan 38,500 846 — — 846

Restricted stock granted 96,620 — — — —

Restricted stock surrendered for tax withholdings upon vesting ( 4,325 ) ( 104 ) — — ( 104 )

Restricted stock forfeited / cancelled ( 15,417 ) — — — —

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

Stock-based compensation - restricted stock — 358 — — 358

Cash dividends paid on common stock ($ 0.50 per share)

— — ( 8,079 ) — ( 8,079 )

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

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

Three months ended March 31, 2024

Stock repurchased

( 100,000 ) ( 2,175 ) — — ( 2,175 )

Balance at June 30, 2025

16,116,470 $ 214,713 $ 238,225 $ ( 14,400 ) $ 438,538

Six months ended June 30, 2024

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

Net income — — 2,922 — 2,922

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

Net loss — — ( 18,980 ) — ( 18,980 )

Other comprehensive income, net of tax — — — 21,699 21,699

Stock issued under employee stock purchase plan 1,372 22 — — 22

8 unchanged sentences

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

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

Balance at June 30, 2024

16,278,260 $ 218,773 $ 247,477 $ ( 31,307 ) $ 434,943

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2025 and 2024

For the six months ended June 30, 2025 and 2024

(in thousands;

2 unchanged sentences

$ ( 3,660 ) $ ( 18,980 )

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

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

Provision for credit losses on loans 75 5,550

6 unchanged sentences

Net change in deferred loan origination costs/fees ( 64 ) 185

Loss on sale of investment securities

18,736 32,542

Depreciation and amortization 642 767

1 unchanged sentence

Earnings on bank-owned life insurance policies ( 1,211 ) ( 856 )

Net changes in:

Net changes in interest receivable and other assets ( 1,396 ) ( 14,186 )

4 unchanged sentences

Purchase of available-for-sale securities ( 252,714 ) ( 18,987 )

Proceeds from sale of available-for-sale securities 167,017 292,627

Proceeds from paydowns/maturities of held-to-maturity securities 56,140 20,861

Proceeds from paydowns/maturities of available-for-sale securities 83,939 19,517

Proceeds from sale of loan 1,295 —

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

(Increase) decrease in loans receivable, net

9,062 ( 8,854 )

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

10 unchanged sentences

Cash dividends paid on common stock ( 8,079 ) ( 8,113 )

Stock repurchased

Proceeds from stock issued under employee and director stock purchase plans 17 22

6 unchanged sentences

Interest paid on deposits and borrowings $ 22,053 $ 23,487

Income taxes paid, net of refunds $ 2,930 $ 2,100

Supplemental disclosure of noncash investing and financing activities:

10 unchanged sentences

Although we believe that the disclosures are adequate and the information presented is not misleading, we suggest that these interim financial statements be read in conjunction with the annual financial statements and the notes thereto included in our 2024 Annual Report on Form 10-K.

In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, which are necessary for a fair presentation of the consolidated financial position, the results of operations, changes in comprehensive income (loss), changes in stockholders’ equity, and cash flows for the periods presented.

In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, which are necessary for a fair presentation of the consolidated financial position, the results of operations, changes in comprehensive income, changes in stockholders’ equity, and cash flows for the periods presented.

All material intercompany transactions have been eliminated.

3 unchanged sentences

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).

Our CODM reviews consolidated net income (loss) 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.

We derive materially all of our income or loss 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

Three months ended Six months ended

(in thousands) June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Community banking segment:

5 unchanged sentences

All other income 1

612 585 1,175 1,138

Total consolidated income

2 unchanged sentences

Provision for credit losses on loans

— 5,200 75 5,550

Provision for credit losses on unfunded loan commitments

11 unchanged sentences

Amortization of core deposit intangible 220 246 447 497

Other real estate owned — — —

Other expense 2,278 2,090 4,314 4,392

Segment income

Segment (loss) income

( 10,801 ) ( 33,942 ) ( 3,888 ) ( 29,576 )

1 unchanged sentence

All other loss 1

Income before income taxes

398 440 830 877

Loss before income taxes $ ( 11,199 ) $ ( 34,382 ) $ ( 4,718 ) $ ( 30,453 )

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

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 $ 398 thousand, and $ 440 thousand for the three months ended June 30, 2025 and 2024, respectively, and $ 830 thousand and $ 877 thousand for the six months ended June 30, 2025 and 2024, respectively.

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

2 unchanged sentences

1) weighted average basic shares, 2) potentially dilutive weighted average common shares related to stock options and unvested restricted stock awards, and 3) weighted average diluted shares.

Basic earnings (loss) per share (“EPS”) are calculated by dividing net income by the weighted average number of common shares outstanding during each period, excluding unvested restricted stock awards.

Basic earnings (loss) per share (“EPS”) are calculated by dividing net income (loss) by the weighted average number of common shares outstanding during each period, excluding unvested restricted stock awards.

Diluted EPS are calculated using the weighted average number of potentially dilutive common shares.

6 unchanged sentences

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

Three months ended

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

Three months ended Six months ended

(in thousands, except per share data) June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Weighted average basic common shares outstanding 15,989 16,108 15,983 16,095

3 unchanged sentences

Weighted average diluted common shares outstanding 15,989 16,108 15,983 16,095

Net income (loss)

$ ( 8,536 ) $ ( 21,902 ) $ ( 3,660 ) $ ( 18,980 )

Basic earnings (loss) per common share

Basic loss per common share $ ( 0.53 ) $ ( 1.36 ) $ ( 0.23 ) $ ( 1.18 )

Diluted loss per common share 1

$ ( 0.53 ) $ ( 1.36 ) $ ( 0.23 ) $ ( 1.18 )

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

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

Weighted average anti-dilutive common shares and unvested restricted shares not included in the calculation of diluted EPS

298 393 284 325

1 Because Bancorp was in a net loss position for the three and six months ended June 30, 2025 and 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

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

We have not adopted any new accounting standards during the six months ended June 30, 2025.

Accounting Standards Not Yet Adopted

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

In December 2023, the Financial Accounting Standards Board "FASB" issued Accounting Standards Update "ASU" No.

2023-09, Income Taxes (Topic 740):

11 unchanged sentences

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.

In May 2025, the FASB issued ASU 2025-03 , Business Combinations (Topic 805) and Consolidation (Topic 810):

Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity , which revises current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a variable interest entity that meets the definition of a business.

The amendments require that an entity consider the same factors that are currently required for determining which entity is the accounting acquirer in other acquisition transactions.

ASU 2025-03 is effective for the Company's annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted.

ASU 2025-03 is required to be applied prospectively.

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

In May 2025, the FASB issued ASU 2025-04, Compensation – Stock Compensation (Topic 718) and Revenue From Contracts With Customers (Topic 606):

Clarifications to Share-Based Consideration Payable to a Customer, to clarify guidance in Topic 606 and Topic 718 related to share-based payments made as consideration payable to a

This amendment revises the Master Glossary definition of a performance obligation to include conditions tied to a customer’s purchases or those of other parties within the distribution chain.

This revised definition applies only to share-based consideration payable to customers and cannot be analogized to awards granted to employees

or nonemployees.

Additionally, the amendment clarifies that grantors must evaluate the likelihood of vesting using Topic 718 alone and should not apply the variable consideration constraints from Topic 606.

ASU 2025-04 is effective for the Company's annual reporting periods beginning after Dec.

15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted.

Fair Value of Assets and Liabilities

15 unchanged sentences

Changes in Fair Value Recorded In 1

March 31, 2025

June 30, 2025

Securities available-for-sale:

2 unchanged sentences

$ 364,638 $ — $ 364,638 $ — OCI

SBA-backed securities $ 279 $ — $ 279 $ — OCI

Debentures of government sponsored agencies $ 7,453 $ — $ 7,453 $ — OCI

Treasury securities $ 11,026 $ 11,026 $ — $ — OCI

Obligations of state and political subdivisions $ 27,347 $ — $ 27,347 $ — OCI

Corporate bonds $ 5,696 $ — $ 5,696 $ — OCI

Derivative financial assets (interest rate contracts) $ 177 $ — $ 177 $ — NI

Derivative financial liabilities (interest rate contracts) $ 10 $ — $ 10 $ — NI

December 31, 2024

12 unchanged sentences

When available, quoted market prices (Level 1) are used to determine the fair value of available-for-sale securities.

Level 1 securities include U.S.

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).

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

As of June 30, 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 either the three months ended March 31, 2025 or March 31, 2024.

We did not record any credit loss expense on held-to-maturity securities during either the six months ended June 30, 2025 or June 30, 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 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 table below is a summary of fair value estimates for financial instruments as of June 30, 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 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.

Additionally, we held shares of Federal Home Loan Bank ("FHLB") of San Francisco stock at cost as of June 30, 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 June 30, 2025 or December 31, 2024.

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

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

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

11 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 March 31, 2025 or December 31, 2024.

The fair value of commitment fees was not material as of June 30, 2025 or December 31, 2024.

Investment Securities

Our investment securities portfolio consists of U.S.

Treasury securities, obligations of state and political subdivisions, U.S.

Our investment securities portfolio consists of obligations of state and political subdivisions, U.S.

federal government agencies, such as the Government National Mortgage Association ("GNMA") and Small Business Administration ("SBA"), and U.S.

2 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 March 31, 2025 and December 31, 2024 is presented below.

A summary of the amortized cost, fair value and allowance for credit losses related to securities held-to-maturity as of June 30, 2025 and December 31, 2024 is presented below.

Held-to-maturity:

2 unchanged sentences

(in thousands) Gains (Losses)

March 31, 2025

June 30, 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 $ 2.2 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.

1 Amortized cost and fair values exclude accrued interest receivable of $ 2.9 million and $ 3.4 million at June 30, 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 March 31, 2025 and December 31, 2024.

Obligations of state and political subdivisions Corporate bonds

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

(in thousands) June 30, 2025 December 31, 2024 June 30, 2025 December 31, 2024

Aaa / AAA $ 38,479 $ 42,161 $ — $ —

2 unchanged sentences

Total $ 61,319 $ 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 March 31, 2025 and December 31, 2024 is presented below.

A summary of the amortized cost, fair value and allowance for credit losses related to securities available-for-sale as of June 30, 2025 and December 31, 2024 is presented below.

Available-for-sale:

2 unchanged sentences

(in thousands) Gains (Losses)

March 31, 2025

June 30, 2025

Securities of U.S.

3 unchanged sentences

MBS pass-through securities issued by FHLMC, FNMA and GNMA 42,732 159 ( 2,513 ) — 40,378

SBA-backed securities 295 — ( 16 ) — 279

Debentures of government- sponsored agencies 8,971 — ( 1,518 ) — 7,453

Treasury securities 12,019 — ( 993 ) — 11,026

Obligations of state and political subdivisions 33,573 — ( 6,226 ) — 27,347

Corporate bonds 6,000 — ( 304 ) — 5,696

Total available-for-sale $ 402,205 $ 792 $ ( 11,012 ) $ — $ 391,985

11 unchanged sentences

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

1 Amortized cost and fair value exclude accrued interest receivable of $ 1.8 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.

1 Amortized cost and fair value exclude accrued interest receivable of $ 1.4 million and $ 1.7 million at June 30, 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 June 30, 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.

March 31, 2025 December 31, 2024

June 30, 2025 December 31, 2024

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

5 unchanged sentences

Total $ 823,314 $ 727,596 $ 402,205 $ 391,985 $ 879,199 $ 763,535 $ 419,292 $ 387,534

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

Three months ended Three months ended

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

Three months ended Six months ended

(in thousands) June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Available-for-sale:

Sales proceeds $ 167,017 $ 292,627 $ 167,017 $ 292,627

Gross realized gains — — — —

Gross realized losses ( 18,736 ) ( 32,542 ) ( 18,736 ) ( 32,542 )

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

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

(in thousands) June 30, 2025 December 31, 2024

Pledged to the State of California:

7 unchanged sentences

Total pledged investment securities $ 929,071 $ 941,122

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

There were 166 and 269 securities in unrealized loss positions at June 30, 2025 and December 31, 2024, respectively.

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

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

June 30, 2025 < 12 continuous months ≥ 12 continuous months Total securities

in a loss position

13 unchanged sentences

MBS pass-through securities issued by FHLMC, FNMA and GNMA — — 12,091 ( 2,513 ) 12,091 ( 2,513 )

SBA-backed securities — — 279 ( 16 ) 279 ( 16 )

Debentures of government- sponsored agencies — — 7,453 ( 1,518 ) 7,453 ( 1,518 )

Treasury securities — — 11,026 ( 993 ) 11,026 ( 993 )

Obligations of state and political subdivisions — — 27,347 ( 6,226 ) 27,347 ( 6,226 )

Corporate bonds — — 5,696 ( 304 ) 5,696 ( 304 )

Total available-for-sale 165,826 ( 1,122 ) 56,289 ( 9,890 ) 222,115 ( 11,012 )

23 unchanged sentences

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

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.

As of June 30, 2025, the investment portfolio included 144 investment securities that had been in a continuous loss position for twelve months or more and 22 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 March 31, 2025 or December 31, 2024.

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.

In addition, for any available-for-sale securities in an unrealized loss position at June 30, 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.

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.

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

In the second quarter of 2025, a total of $ 69.1 million of par value of these securities were sold.

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 March 31, 2025 and December 31, 2024.

We held $ 16.7 million of FHLB stock included in other assets on the consolidated statements of condition at both June 30, 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 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.

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 June 30, 2025 and December 31, 2024.

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

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

Loans and Allowance for Credit Losses on Loans

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

The following table presents the amortized cost of loans by portfolio class as of June 30, 2025 and December 31, 2024.

(in thousands) June 30, 2025 December 31, 2024

Commercial and industrial $ 154,576 $ 152,263

9 unchanged sentences

Total loans, net of allowance for credit losses on loans $ 2,043,784 $ 2,052,600

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.

1 Amortized cost includes net deferred loan origination costs of $ 2.6 million and $ 2.5 million at June 30, 2025 and December 31, 2024, respectively.

Amounts are also net of unrecognized purchase discounts of $ 1.0 million and $ 1.1 million at June 30, 2025 and December 31, 2024, respectively.

Amortized cost excludes accrued interest, which totaled $ 6.6 million and $ 6.8 million at June 30, 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.

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

55 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 March 31, 2025 and December 31, 2024.

The following tables present the loan portfolio by loan portfolio class, origination/renewal year and internal risk rating as of June 30, 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

March 31, 2025 2025 2024 2023 2022 2021 Prior Total

June 30, 2025 2025 2024 2023 2022 2021 Prior Total

Commercial and industrial:

3 unchanged sentences

Total commercial and industrial $ 13,121 $ 9,148 $ 18,731 $ 9,749 $ 1,013 $ 26,673 $ 76,141 $ 154,576

Gross current period charge-offs $ — $ — $ — $ — $ — $ — $ ( 52 ) $ ( 52 )

Commercial real estate, owner-occupied:

8 unchanged sentences

Total commercial real estate, non-owner occupied $ 67,822 $ 120,546 $ 64,138 $ 161,442 $ 193,971 $ 666,922 $ 10,962 $ 1,285,803

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

March 31, 2025 2025 2024 2023 2022 2021 Prior Total

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

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

June 30, 2025 2025 2024 2023 2022 2021 Prior Total

Construction:

26 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

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

(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

Other residential:

10 unchanged sentences

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

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.

The following table shows the amortized cost of loans by portfolio class, payment aging and non-accrual status as of June 30, 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

March 31, 2025

June 30, 2025

30-59 days past due $ 695 $ 1,008 $ — $ — $ 986 $ — $ 325 $ 3,014

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 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.

1 There were no non-performing loans over 90 days past due and accruing interest as of June 30, 2025 or December 31, 2024 .

2 None of the non-accrual loans as of June 30, 2025 or December 31, 2024 were earning interest on a cash or accrual basis.

We reversed $ 11 thousand and $ 44 thousand in accrued interest income for loans that were placed on non-accrual status during the three and six months ended June 30, 2025, respectively.

We reversed accrued interest income of $ 256 thousand and $ 266 thousand for loans that were placed on non-accrual status during the three and six months ended June 30, 2024, respectively.

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 March 31, 2025 and December 31, 2024.

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 June 30, 2025 and December 31, 2024.

Amortized Cost by Collateral Type

1 unchanged sentence

Allowance for Credit Losses

March 31, 2025

June 30, 2025

Commercial real estate, owner-occupied $ 1,554 $ — $ — $ 1,554 $ —

2 unchanged sentences

Other residential — 282 — 282 36

Installment and other consumer — — 198 198 —

Total $ 27,566 $ 1,738 $ — $ 29,304 $ 7,343

6 unchanged sentences

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 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.

1 There were no collateral-dependent residential real estate mortgage loans in process of foreclosure or in substance repossessed at June 30, 2025 and December 31, 2024.

The weighted average loan-to-value of real estate secured collateral dependent loans was approximately 103 % at June 30, 2025 and 115 % 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.

The following table summarizes the amortized cost of loans as of June 30, 2025 and June 30, 2024 that were modified during the three months and six months ended June 30, 2025 and during the three and six months ended June 30, 2024, by portfolio class and type of modification granted.

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

Three months ended March 31, 2024

Three months ended June 30, 2025

Commercial non-owner occupied 3,488 3,488 0.3 %

Six months ended June 30, 2025

Commercial non-owner occupied 3,488 3,488 0.3 %

Total $ 3,488 $ 3,488

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

Three months ended June 30, 2024

Home Equity 159 159 0.2 %

Total $ 159 $ 159

Six months ended June 30, 2024

Commercial and industrial $ 2,191 $ 2,191 1.3 %

1 unchanged sentence

Total $ 2,432 $ 2,432

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.

As of June 30, 2025 and June 30, 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 tables above during the three and six months ended June 30, 2025 and June 30, 2024 by portfolio class.

Weighted-Average Term Extension (in years)

Three months ended March 31, 2024

Three months ended June 30, 2025

Commercial non-owner occupied 1.2

Six months ended June 30, 2025

Commercial non-owner occupied 1.2

Weighted-Average Term Extension (in years)

Three months ended June 30, 2024

Home Equity 1.0

Six months ended June 30, 2024

Commercial and industrial 0.3

Home Equity 5.6

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 loan modifications did not significantly impact the determination of the allowance for credit losses on loans during the three and six months ended June 30, 2025 and June 30, 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.

The following table summarizes the amortized cost and payment status of loans as of June 30, 2025 and June 30, 2024 that were m odified during the three and six months ended June 30, 2025 and June 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

Three months ended March 31, 2024

Three months ended June 30, 2025

Commercial non-owner occupied 3,488 — — — 3,488 717

Total $ 3,488 $ — $ — $ — $ 3,488 $ 717

Six months ended June 30, 2025

Commercial non-owner occupied 3,488 — — — 3,488 717

Total $ 3,488 $ — $ — $ — $ 3,488 $ 717

(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 June 30, 2024

Home Equity 159 — — — 159 120

Total $ 159 $ — $ — $ — $ 159 $ 120

Six months ended June 30, 2024

Commercial and industrial $ — $ — $ 1,796 $ — $ 1,796 $ 1,796

1 unchanged sentence

Total $ 238 $ — $ 1,796 $ — $ 2,034 $ 1,995

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).

There were no loans to borrowers experiencing financial difficulty that were modified within the three and six months ended June 30, 2025 and June 30, 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 March 31, 2025 and December 31, 2024 .

The following table presents the details of the allowance for credit losses on loans segregated by loan portfolio class as of June 30, 2025 and December 31, 2024 .

Allocation of the Allowance for Credit Losses on Loans

March 31, 2025

June 30, 2025

Modeled expected credit losses $ 895 $ 1,295 $ 7,711 $ 38 $ 722 $ 1,072 $ 615 $ — $ 12,348

11 unchanged sentences

Three months ended March 31, 2025

Three months ended June 30, 2025

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

(Reversal) Provision ( 68 ) ( 42 ) 477 ( 222 ) 14 ( 67 ) ( 8 ) ( 9 ) 75

Provision (Reversal) 152 83 ( 245 ) ( 32 ) 85 36 ( 13 ) ( 66 ) —

(Charge-offs) ( 52 ) — — — — — — — ( 52 )

1 unchanged sentence

Ending balance $ 1,608 $ 2,402 $ 21,516 $ 384 $ 783 $ 1,110 $ 871 $ 1,180 $ 29,854

Three months ended March 31, 2024

Three months ended June 30, 2024

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

3 unchanged sentences

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

Six months ended June 30, 2025

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

Provision (Reversal) 84 41 232 ( 254 ) 99 ( 31 ) ( 21 ) ( 75 ) 75

(Charge-offs) ( 52 ) — ( 809 ) — — — ( 16 ) — ( 877 )

Recoveries — — — — — — — — —

Ending balance $ 1,608 $ 2,402 $ 21,516 $ 384 $ 783 $ 1,110 $ 871 $ 1,180 $ 29,854

Six months ended June 30, 2024

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

Provision (Reversal) 196 ( 68 ) 7,232 ( 958 ) 98 116 ( 51 ) ( 1,015 ) 5,550

(Charge-offs) ( 33 ) — — — — — ( 18 ) — ( 51 )

Recoveries 1 — — — — — 3 — 4

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

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 $ 1.377 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").

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 $ 1.383 billion and $ 1.351 billion at June 30, 2025 and December 31, 2024, respectively.

In addition, we pledge eligible residential loans, which totaled $ 103.4 million and $ 110.0 million at

June 30, 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 $ 4.1 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.

Related party loans totaled $ 3.7 million and $ 4.1 million as of June 30, 2025 and December 31, 2024, respectively.

In addition, undisbursed commitments to related parties totaled $ 210 thousand and $ 211 thousand as of June 30, 2025 and December 31, 2024, respectively.

Borrowings and Other Obligations

Federal Reserve Bank:

The Bank had a line of credit through the Discount Window at the Federal Reserve Bank of San Francisco ("FRBSF") totaling $ 319.8 million and $ 358.0 million as of June 30, 2025 and December 31, 2024, respectively, secured by investment securities and residential loans.

Federal Home Loan Bank:

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.

The Bank had lines of credit with the FHLB totaling $ 946.0 million and $ 948.1 million as of June 30, 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 as of both March 31, 2025 and December 31, 2024.

The Bank had unsecured lines of credit with correspondent banks for overnight borrowings totaling $ 125.0 million as of both June 30, 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 $ 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 $ 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.

Finance lease liabilities totaling $ 77 thousand and $ 154 thousand as of June 30, 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 March 31, 2025 and December 31, 2024 are summarized in the following table.

March 31, 2025 December 31, 2024

The carrying values and weighted average interest rates on borrowings and other obligations as of June 30, 2025 and December 31, 2024 are summarized in the following table.

June 30, 2025 December 31, 2024

(dollars in thousands) Carrying Value

1 unchanged sentence

Weighted Average Rate

FRBSF federal funds purchased $ — — % $ — — %

FHLB short-term borrowings — — % — — %

Federal funds lines of credit — — % — — %

FRBSF federal funds purchased — — % — — %

FRBSF short-term borrowings under the BTFP — — % — — %

Other obligations (finance leases) 77 3.78 % 154 2.23 %

2 unchanged sentences

Stockholders' Equity

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.

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

Subsequent to quarter end on July 24, 2025, Bancorp approved a $ 0.25 per share cash dividend, payable on August 14, 2025, to shareholders of record at the close of business on August 7, 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.

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.

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.

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.

Three months ended

March 31, 2025 March 31, 2024

Six months ended

June 30, 2025 June 30, 2024

Number of shares withheld 4,325 3,504

2 unchanged sentences

Share Repurchase Program

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.

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

Bancorp will continue to assess opportunities to utilize the program.

Bancorp repurchased 100,000 shares totaling $ 2.2 million at an average price of $ 21.72 per share in the six months ending June 30, 2025, under our share repurchase program that expired July 31, 2025.

On July 24, 2025, the board of directors authorized the repurchase of up to $ 25.0 million of its common stock effective July 24, 2025 through July 31, 2027.

This stock buyback program replaced the program approved in 2023 which expired July 31, 2025, under which Bancorp repurchased shares totaling $ 6.4 million.

Bancorp will continue to assess opportunities to utilize the new program.

There were no repurchases in the six months ended June 30, 2024.

Commitments and Contingent Liabilities

10 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) March 31, 2025 December 31, 2024

(in thousands) June 30, 2025 December 31, 2024

Commercial lines of credit $ 220,789 $ 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 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.

The allowance for credit losses on unfunded commitments totaled $ 894 thousand at both June 30, 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 three and six months ended June 30,2025 and 2024.

We lease premises under long-term non-cancelable operating leases with remaining terms of 4 months to 16 years, 11 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.

Lease terms may include certain renewal options that were considered reasonably certain to be exercised.

2 unchanged sentences

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

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

(in thousands) June 30, 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.

Three months ended

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

Six months ended

(in thousands) June 30, 2025 June 30, 2024

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

$ 1,387 $ 2,417

Right-of-use assets obtained in exchange for finance lease liabilities $ — $ —

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

Three months ended

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

Three months ended Six months ended

(in thousands) June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Operating lease cost 1

2 unchanged sentences

Amortization of right-of-use assets 2

$ 37 $ 37 $ 74 $ 73

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 March 31, 2025.

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) March 31, 2025

(in thousands) June 30, 2025

Year Operating Leases Finance Leases

15 unchanged sentences

Litigation is ongoing and until the court approval process is complete, there is no assurance that Visa will resolve the claims as contemplated by the amended class settlement agreement, and additional lawsuits may arise from individual merchants who opted out of the class settlement.

However, until the escrow account is fully depleted and the conversion rate of Class B to Class A common stock is reduced to zero, no future cash settlement payments are required by the member banks, such as us, on the Covered Litigation.

However, until the escrow account is fully depleted and

the conversion rate of Class B to Class A common stock is reduced to zero, no future cash settlement payments are required by the member banks, such as us, on the Covered Litigation.

Therefore, we are not required to record any contingent liabilities for the indemnification related to the Covered Litigation, as we consider the probability of losses to be remote.

In the third quarter of 2024, the Bank recorded a non-recurring accrual for a legal resolution of a Private Attorneys General Act/putative class action lawsuit of $ 615 thousand, pre-tax, involving alleged violations of wage and hour laws for all non-exempt employees covering any and all claims that were or could have been alleged in the operative complaint through the financial period of December 11, 2019 to October 12, 2024.

In the third quarter of 2024, the Bank recorded an accrual for a legal resolution of a Private Attorneys General Act/putative class action lawsuit of $ 615 thousand, pre-tax, involving alleged violations of wage and hour laws for all non-exempt employees covering any and all claims that were or could have been alleged in the operative complaint through the financial period of December 11, 2019 to October 12, 2024.

The Bank shall pay an "all in" Gross Settlement Amount ("GSA") of $ 615 thousand to settle all of the wage and hour class and PAGA claims, and the named Plaintiff's individual claims.

19 unchanged sentences

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.

In the second quarter of 2025, a total of $ 69.1 million of par value of these securities were sold.

Information on our derivatives follows:

Asset derivatives Liability derivatives

(in thousands) March 31,

2025 December 31, 2024 March 31,

(in thousands) June 30,

2025 December 31, 2024 June 30,

2025 December 31, 2024

4 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 March 31, 2025 and December 31, 2024.

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

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

(in thousands) June 30, 2025 December 31, 2024 June 30, 2025 December 31, 2024

Loans receivable 1

3 unchanged sentences

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

Three months ended Six months ended

(in thousands) June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Interest on investment securities 1

2 unchanged sentences

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

— ( 282 ) — ( 1,499 )

Net gain recognized in interest income on investment securities

$ — $ 206 $ — $ 412

Interest and fees on loans 1

3 unchanged sentences

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

64 ( 6 ) 175 ( 117 )

Decrease in value of yield maintenance agreement ( 2 ) ( 2 ) ( 4 ) ( 4 )

12 unchanged sentences

Instruments Received Net Amount

March 31, 2025

June 30, 2025

Derivatives by Counterparty:

$ 177 $ — $ 177 $ — $ — $ 177

1 unchanged sentence

December 31, 2024

Derivatives by Counterparty:

Counterparty $ 333 $ — $ 333 $ — $ — $ 333

Total $ 333 $ — $ 333 $ — $ — $ 333

Offsetting of Financial Liabilities and Derivative Liabilities

Gross Amounts Net Amounts of Gross Amounts Not Offset in

Gross Amounts Offset in the Liabilities Presented the Statements of Condition

of Recognized Statements of in the Statements Financial Cash Collateral

(in thousands) Liabilities 1

Condition of Condition 1

Instruments Pledged

June 30, 2025

10 — 10 ( 10 ) —

Total $ 10 $ — $ 10 $ ( 10 ) $ — $ —

December 31, 2024

Total $ — $ — $ — $ — $ — $ —

1 Amounts exclude accrued interest on swaps.

1 unchanged sentence

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