What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-11-07 compared with 2025-08-08 · 191 added, 191 removed, 983 unchanged (28% of the section changed)

3 unchanged sentences

(in thousands, except share data;

unaudited) June 30, 2025 December 31, 2024

unaudited) September 30, 2025 December 31, 2024

Cash, cash equivalents and restricted cash $ 219,333 $ 137,304

Investment securities:

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

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

811,751 879,199

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

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

543,605 387,534

29 unchanged sentences

Authorized - 30,000,000 shares;

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

issued and outstanding - 16,094,686 and 16,089,454 at September 30, 2025 and December 31, 2024, respectively

214,467 215,511

6 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended Six months ended

Three months ended Nine months ended

(in thousands, except per share amounts;

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

unaudited) September 30, 2025 June 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Interest income

1 unchanged sentence

Interest on investment securities 9,846 8,423 7,594 26,530 24,698

Interest on federal funds sold and due from banks 2,004 1,795 924 3,799 1,245

Interest on due from banks 2,969 2,004 3,242 6,768 4,487

Total interest income 39,069 36,288 36,319 110,596 104,797

8 unchanged sentences

Provision for credit losses on loans — — — 75 5,550

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

Net interest income after provision for credit losses 28,193 25,912 24,502 78,976 64,113

Non-interest income

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

Wealth management and trust services 564 612 706 1,739 1,844

Service charges on deposit accounts 547 550 543 1,645 1,613

Earnings on bank-owned life insurance, net 434 429 426 1,339 1,282

Debit card interchange fees, net 405 410 423 1,211 1,275

1 unchanged sentence

Merchant interchange fees, net 87 90 67 273 244

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

Earnings on bank-owned life insurance death benefits — 238 — 306 —

(Losses) gains on sale of investment securities — ( 18,736 ) — ( 18,736 ) ( 32,541 )

Other income 342 424 358 1,118 1,062

14 unchanged sentences

Total non-interest expense 21,328 21,490 20,417 64,082 63,480

(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

Income (loss) before provision for (benefit from) income taxes 9,610 ( 11,199 ) 6,973 4,892 ( 23,480 )

Provision for (benefit from) income taxes 2,084 ( 2,663 ) 2,403 1,026 ( 9,070 )

Net income (loss) $ 7,526 $ ( 8,536 ) $ 4,570 $ 3,866 $ ( 14,410 )

Net income (loss) per common share

Basic $ 0.47 $ ( 0.53 ) $ 0.28 $ 0.24 $ ( 0.90 )

4 unchanged sentences

Comprehensive income:

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

Net income (loss) $ 7,526 $ ( 8,536 ) $ 4,570 $ 3,866 $ ( 14,410 )

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

Change in net unrealized losses on available-for-sale securities 2,514 ( 486 ) 8,041 5,317 4,032

Reclassification adjustment for losses realized on the sale of available-for-sale securities in net loss — 18,736 ( 1 ) 18,736 32,541

Reclassification adjustment for gains on fair value hedges — — ( 1,584 ) — ( 85 )

Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity 360 365 385 1,065 1,149

7 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the three months ended June 30, 2025 and 2024

For the three months ended September 30, 2025 and 2024

(in thousands, except share data;

4 unchanged sentences

Shares Amount

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 )

Three months ended September 30, 2025

Balance at July 1, 2025 16,116,470 $ 214,713 $ 238,225 $ ( 14,400 ) $ 438,538

Net income — — 7,526 — 7,526

Other comprehensive income, net of tax — — — 2,024 2,024

2 unchanged sentences

Restricted stock granted 2,000 — — — —

Restricted stock surrendered for tax withholdings upon vesting ( 368 ) ( 8 ) — — ( 8 )

Restricted stock forfeited / cancelled ( 2,097 ) — — — —

2 unchanged sentences

— — ( 4,024 ) — ( 4,024 )

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 )

Stock issued in payment of director fees 8,928 216 — — 216

Stock repurchased, including commissions ( 50,000 ) ( 1,118 ) — — ( 1,118 )

Balance at September 30, 2025 16,094,686 $ 214,467 $ 241,727 $ ( 12,376 ) $ 443,818

Three months ended September 30, 2024

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

Net income — — 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 )

4 unchanged sentences

— — ( 4,064 ) — ( 4,064 )

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

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

Stock repurchased, including commissions ( 220,000 ) ( 4,234 ) — — ( 4,234 )

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

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 six months ended June 30, 2025 and 2024

For the nine months ended September 30, 2025 and 2024

(in thousands, except share data;

4 unchanged sentences

Shares Amount

Six months ended June 30, 2025

Nine months ended September 30, 2025

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

Net loss — — ( 3,660 ) — ( 3,660 )

Net income — — 3,866 — 3,866

Other comprehensive income, net of tax — — — 17,692 17,692

9 unchanged sentences

Stock issued in payment of director fees 19,763 469 — — 469

Stock repurchased

( 100,000 ) ( 2,175 ) — — ( 2,175 )

Balance at June 30, 2025

Stock repurchased, including commissions ( 150,000 ) ( 3,293 ) — — ( 3,293 )

Balance at September 30, 2025

16,094,686 $ 214,467 $ 241,727 $ ( 12,376 ) $ 443,818

Six months ended June 30, 2024

Nine months ended September 30, 2024

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

11 unchanged sentences

Stock issued in payment of director fees 27,287 513 — — 513

Balance at June 30, 2024

Stock repurchased, including commissions ( 220,000 ) ( 4,234 ) — — ( 4,234 )

Balance at September 30, 2024

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

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the six months ended June 30, 2025 and 2024

For the nine months ended September 30, 2025 and 2024

(in thousands;

1 unchanged sentence

Cash Flows from Operating Activities:

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

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

Net income (loss) $ 3,866 $ ( 14,410 )

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

Provision for credit losses on loans 75 5,550

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

Noncash contribution expense to employee stock ownership plan 1,268 986

10 unchanged sentences

Earnings on bank-owned life insurance policies ( 1,339 ) ( 1,282 )

Earnings on bank-owned life insurance death benefits ( 306 ) —

Net changes in interest receivable and other assets 1,347 ( 10,199 )

9 unchanged sentences

( 7,398 ) 19,508

Purchase of loans

( 226 ) ( 35,874 )

Purchase of bank-owned life insurance policies — ( 1,211 )

1 unchanged sentence

Purchase of premises and equipment ( 1,692 ) ( 356 )

Proceeds from sale of premises and equipment — 21

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

1 unchanged sentence

Cash Flows from Financing Activities:

Net increase (decrease) in deposits

25,033 ( 76,298 )

Net increase in deposits 162,561 19,174

Repayment of short-term borrowings, net

3 unchanged sentences

Stock repurchased

( 3,293 ) ( 4,234 )

Proceeds from stock issued under employee and director stock purchase plans 26 30

14 unchanged sentences

The consolidated financial statements include the accounts of Bancorp, a bank holding company, and its wholly-owned bank subsidiary, Bank of Marin, a California state-chartered commercial bank.

References to “we,” “our,” “us” mean Bancorp and the Bank that are consolidated for financial reporting purposes.

References to “we,” “our,” “us” and "the Company" mean Bancorp and the Bank that are consolidated for financial reporting purposes.

The accompanying unaudited consolidated interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC").

8 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 (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.

1 unchanged sentence

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.

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

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

Three months ended Six months ended

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

Three months ended Nine months ended

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

Community banking segment:

10 unchanged sentences

Provision for credit losses on loans

— 5,200 75 5,550

Provision for credit losses on unfunded loan commitments

— ( 233 ) — ( 233 )

Non-interest expense

11 unchanged sentences

Other expense 2,035 1,711 6,349 6,103

Segment (loss) income

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

Segment income (loss) 10,060 7,394 6,172 ( 22,182 )

Reconciliation of segment income

All other loss 1

All other income 1

450 421 1,280 1,298

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

Income (loss) before income taxes $ 9,610 $ 6,973 $ 4,892 $ ( 23,480 )

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 $ 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.

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 $ 450 thousand, and $ 421 thousand for the three months ended September 30, 2025 and 2024, respectively, and $ 1.3 million and $ 1.3 million for the nine month periods ended September 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.

11 unchanged sentences

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

Three months ended Six months ended

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

Three months ended Nine months ended

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

Weighted average basic common shares outstanding 15,907 16,038 15,957 16,076

3 unchanged sentences

Weighted average diluted common shares outstanding 15,934 16,066 15,979 16,076

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

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

Diluted loss per common share 1

Net income ( loss) $ 7,526 $ 4,570 $ 3,866 $ ( 14,410 )

Basic income (loss) per common share $ 0.47 $ 0.28 $ 0.24 $ ( 0.90 )

Diluted income (loss) per common share 1

$ 0.47 $ 0.28 $ 0.24 $ ( 0.90 )

1 unchanged sentence

220 296 256 392

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.

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

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

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

Accounting Standards Not Yet Adopted

5 unchanged sentences

Early adoption is permitted.

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.

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.

37 unchanged sentences

Changes in Fair Value Recorded In 1

June 30, 2025

September 30, 2025

Securities available-for-sale:

19 unchanged sentences

When available, quoted market prices (Level 1) are used to determine the fair value of available-for-sale 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 June 30, 2025 and December 31, 2024, there were no Level 3 securities.

As of September 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 six months ended June 30, 2025 or June 30, 2024.

We did not record any credit loss expense on held-to-maturity securities during either the nine months ended September 30, 2025 or September 30, 2024.

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

16 unchanged sentences

Disclosures about Fair Value of Financial Instruments

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 table below is a summary of fair value estimates for financial instruments as of September 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 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.

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

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

June 30, 2025 December 31, 2024

September 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 June 30, 2025 or December 31, 2024.

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

Investment Securities

4 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 June 30, 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 September 30, 2025 and December 31, 2024 is presented below.

Held-to-maturity:

2 unchanged sentences

(in thousands) Gains (Losses)

June 30, 2025

September 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 $ 2.9 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.

1 Amortized cost and fair values exclude accrued interest receivable of $ 2.2 million and $ 3.4 million at September 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 June 30, 2025 and December 31, 2024.

Obligations of state and political subdivisions Corporate bonds

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

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

Aaa / AAA $ 38,388 $ 42,161 $ — $ —

2 unchanged sentences

Total $ 61,204 $ 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 June 30, 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 September 30, 2025 and December 31, 2024 is presented below.

Available-for-sale:

2 unchanged sentences

(in thousands) Gains (Losses)

June 30, 2025

September 30, 2025

Securities of U.S.

17 unchanged sentences

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

1 Amortized cost and fair value exclude accrued interest receivable of $ 1.4 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.

1 Amortized cost and fair value exclude accrued interest receivable of $ 1.8 million and $ 1.7 million at September 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 September 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.

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

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

6 unchanged sentences

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

Three months ended Nine months ended

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

Available-for-sale:

Sales proceeds $ — $ — $ 167,017 $ 292,621

Gross realized gains — — — —

Gross realized losses — — ( 18,736 ) ( 32,541 )

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

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

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

Pledged to the State of California:

7 unchanged sentences

Total pledged investment securities $ 913,169 $ 941,122

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

There were 172 and 269 securities in unrealized loss positions at September 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:

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

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

in a loss position

39 unchanged sentences

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

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.

As of September 30, 2025, the investment portfolio included 145 investment securities that had been in a continuous loss position for twelve months or more and 27 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 June 30, 2025 or December 31, 2024.

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.

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

9 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 June 30, 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 September 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 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.

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, 2025 and December 31, 2024.

On October 23, 2025, FHLB announced a cash dividend for the third quarter of 2025 at an annualized dividend rate of 8.75 % to be distributed in mid-November 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 June 30, 2025 and December 31, 2024.

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

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

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

Commercial and industrial $ 154,303 $ 152,263

9 unchanged sentences

Total loans, net of allowance for credit losses on loans $ 2,060,501 $ 2,052,600

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.

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

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

Amortized cost excludes accrued interest, which totaled $ 6.6 million and $ 6.8 million at September 30, 2025 and December 31, 2024, respectively, and is included in interest receivable and other assets in the consolidated statements of condition.

Lending Risks

64 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 June 30, 2025 and December 31, 2024.

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

The following tables present the loan portfolio by loan portfolio class, origination/renewal year and internal risk rating as of September 30, 2025 and December 31, 2024.

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

Generally, existing term loans that were re-underwritten are reflected in the table in the year of renewal.

1 unchanged sentence

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

June 30, 2025 2025 2024 2023 2022 2021 Prior Total

September 30, 2025 2025 2024 2023 2022 2021 Prior Total

Commercial and industrial:

16 unchanged sentences

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

June 30, 2025 2025 2024 2023 2022 2021 Prior Total

September 30, 2025 2025 2024 2023 2022 2021 Prior Total

Construction:

Pass and Watch $ 4,896 $ 10,973 $ — $ — $ — $ — $ — $ 15,869

Special Mention 6,708 — — — — — — 6,708

Total construction $ 4,896 $ 10,973 $ — $ — $ — $ — $ — $ 15,869

54 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 June 30, 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 September 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

June 30, 2025

September 30, 2025

30-59 days past due $ 248 $ — $ 9,556 $ — $ 407 $ — $ 272 $ 10,483

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 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.

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

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

We reversed $ 5 thousand and $ 49 thousand in accrued interest income for loans that were placed on non-accrual status during the three and nine months ended September 30, 2025, respectively.

We reversed accrued interest income of $ 257 thousand and $ 523 thousand for loans that were placed on non-accrual status during the three and nine months ended September 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 June 30, 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 September 30, 2025 and December 31, 2024.

Amortized Cost by Collateral Type

1 unchanged sentence

Allowance for Credit Losses

June 30, 2025

September 30, 2025

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

10 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 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.

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

The weighted average loan-to-value of real estate secured collateral dependent loans was approximately 104 % at September 30, 2025 and 115 % at December 31, 2024.

Loan Mod ifications to Borrowers Experiencing Financial Difficulty

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.

The following table summarizes the amortized cost of loans as of September 30, 2025 and September 30, 2024 that were modified during the three months and nine months ended September 30, 2025 and 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

Three months ended June 30, 2025

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

Six months ended June 30, 2025

Three months ended September 30, 2025

Commercial owner-occupied 1,515 1,515 0.5 %

Total $ 1,515 $ 1,515

Nine months ended September 30, 2025

Commercial owner-occupied 1,515 1,515 0.5 %

Commercial non-owner occupied 3,424 3,424 0.3 %

1 unchanged sentence

(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 %

Nine months ended September 30, 2024

Home equity 192 192 0.2 %

Total $ 192 $ 192

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.

As of September 30, 2025 and September 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 nine months ended September 30, 2025 and September 30, 2024 by portfolio class.

Weighted-Average Term Extension (in years)

Three months ended June 30, 2025

Commercial non-owner occupied 1.2

Six months ended June 30, 2025

Three months ended September 30, 2025

Commercial owner-occupied 0.5

Nine months ended September 30, 2025

Commercial owner-occupied 0.5

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

Nine months ended September 30, 2024

Home Equity 6.5

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 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, 2025 and September 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 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.

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

Three months ended June 30, 2025

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

Three months ended September 30, 2025

Commercial owner occupied 1,515 — — — 1,515 —

Total $ 1,515 $ — $ — $ — $ 1,515 $ —

Six months ended June 30, 2025

Nine months ended September 30, 2025

Commercial owner-occupied 1,515 — — — 1,515 —

Commercial non-owner occupied 3,424 — — — 3,424 712

1 unchanged sentence

(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

Nine months ended September 30, 2024

Home equity 192 — — — 192 117

Total $ 192 $ — $ — $ — $ 192 $ 117

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).

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

Allocation of the Allowance for Credit Losses on Loans

June 30, 2025

September 30, 2025

Modeled expected credit losses $ 1,307 $ 1,599 $ 7,916 $ 39 $ 701 $ 1,168 $ 754 $ — $ 13,484

11 unchanged sentences

Three months ended June 30, 2025

Three months ended September 30, 2025

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

3 unchanged sentences

Ending balance $ 1,893 $ 2,465 $ 21,157 $ 229 $ 767 $ 1,190 $ 981 $ 1,171 $ 29,853

Three months ended June 30, 2024

Three months ended September 30, 2024

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

Provision (Reversal) 177 ( 92 ) 6,461 ( 408 ) 23 77 ( 12 ) ( 1,026 ) 5,200

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

(Charge-offs) — — — — — — — — —

1 unchanged sentence

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

Six months ended June 30, 2025

Nine months ended September 30, 2025

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

3 unchanged sentences

Ending balance $ 1,893 $ 2,465 $ 21,157 $ 229 $ 767 $ 1,190 $ 981 $ 1,171 $ 29,853

Six months ended June 30, 2024

Nine months ended September 30, 2024

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

4 unchanged sentences

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 $ 1.383 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").

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 $ 1.372 billion and $ 1.351 billion at September 30, 2025 and December 31, 2024, respectively.

In addition, we pledge eligible residential loans, which totaled $ 101.1 million and $ 110.0 million

at September 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 $ 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.

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

In addition, undisbursed commitments to related parties totaled $ 10 thousand and $ 211 thousand as of September 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.

The Bank had a line of credit through the Discount Window at the Federal Reserve Bank of San Francisco ("FRBSF") totaling $ 326.3 million and $ 358.0 million as of September 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 $ 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.

The Bank had lines of credit with the FHLB totaling $ 931.4 million and $ 948.1 million as of September 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 June 30, 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 September 30, 2025 and December 31, 2024.

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

Other Obligations:

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.

Finance lease liabilities totaling $ 57 thousand and $ 154 thousand as of September 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 June 30, 2025 and December 31, 2024 are summarized in the following table.

June 30, 2025 December 31, 2024

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

September 30, 2025 December 31, 2024

(dollars in thousands) Carrying Value

8 unchanged sentences

Stockholders' Equity

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.

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

Subsequent to quarter end on October 23, 2025, Bancorp approved a $ 0.25 per share cash dividend, payable on November 13, 2025, to shareholders of record at the close of business on November 6, 2025.

Share-Based Payments

18 unchanged sentences

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

Six months ended

June 30, 2025 June 30, 2024

Nine months ended

September 30, 2025 September 30, 2024

Number of shares withheld 4,325 3,798

2 unchanged sentences

Share Repurchase 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.

Bancorp repurchased 150,000 shares totaling $ 3.3 million at an average price of $ 21.93 per share in the nine months ending September 30, 2025, under our share repurchase program.

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.

1 unchanged sentence

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

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

Bancorp repurchased 220,000 shares totaling $ 4.2 million at an average price of $ 19.21 per share in the nine months ended September 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) June 30, 2025 December 31, 2024

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

Commercial lines of credit $ 214,834 $ 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 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.

The allowance for credit losses on unfunded commitments totaled $ 894 thousand at both September 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 third quarter and first nine months of 2025, compared to a reversal of $ 233 thousand in the third quarter and first nine months of 2024, respectively.

We lease premises under long-term non-cancelable operating leases with remaining terms of 31 days to 16 years, 8 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) June 30, 2025 December 31, 2024

(in thousands) September 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.

Six months ended

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

Nine months ended

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

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

$ 1,321 $ 2,737

Right-of-use assets obtained in exchange for finance lease liabilities $ — $ 8

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

Three months ended Six months ended

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

Three months ended Nine months ended

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

Operating lease cost 1

9 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 June 30, 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) June 30, 2025

(in thousands) September 30, 2025

Year Operating Leases Finance Leases

14 unchanged sentences

Visa established an escrow account for the Covered Litigation that it periodically funds, which is expected to cover the settlement payment obligations.

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.

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.

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.

24 unchanged sentences

Asset derivatives Liability derivatives

(in thousands) June 30,

2025 December 31, 2024 June 30,

(in thousands) September 30,

2025 December 31, 2024 September 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 June 30, 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) June 30, 2025 December 31, 2024 June 30, 2025 December 31, 2024

(in thousands) September 30, 2025 December 31, 2024 September 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 Six months ended

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

Three months ended Nine months ended

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

20 unchanged sentences

Instruments Received Net Amount

June 30, 2025

September 30, 2025

Derivatives by Counterparty:

12 unchanged sentences

Instruments Pledged

June 30, 2025

September 30, 2025

12 — 12 ( 12 ) —

5 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