What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-08 compared with 2025-11-07 · 234 added, 423 removed, 751 unchanged (47% of the section changed)

3 unchanged sentences

(in thousands, except share data;

unaudited) September 30, 2025 December 31, 2024

unaudited) March 31, 2026 December 31, 2025

Cash, cash equivalents and restricted cash $ 236,644 $ 225,303

Investment securities:

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 September 30, 2025 and December 31, 2024)

Available-for-sale, at fair value (net of zero allowance for credit losses at March 31, 2026 and December 31, 2025)

1,326,191 1,327,812

20 unchanged sentences

Borrowings and other obligations 668 709

Subordinated notes, net 43,905 43,857

Operating lease liabilities 24,553 24,747

7 unchanged sentences

Authorized - 30,000,000 shares;

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

issued and outstanding - 16,189,707 and 16,102,687 at March 31, 2026 and December 31, 2025, respectively

215,648 214,910

5 unchanged sentences

BANK OF MARIN BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended Nine months ended

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three months ended

(in thousands, except per share amounts;

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

unaudited) March 31, 2026 December 31, 2025 March 31, 2025

Interest income

9 unchanged sentences

Interest on borrowings and other obligations 6 6 1

Interest on subordinated notes 808 368 —

Total interest expense 12,493 12,051 11,111

1 unchanged sentence

Provision for credit losses on loans — 300 75

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

Provision for credit losses on unfunded loan commitments — 185 —

Net interest income after provision for credit losses 30,302 29,296 24,053

Non-interest income

Dividends on Federal Home Loan Bank stock 855 372 375

Wealth management and trust services 596 573 563

1 unchanged sentence

Earnings on bank-owned life insurance, net 487 440 476

Earnings on bank-owned life insurance death benefits 479 — 68

Debit card interchange fees, net 362 401 396

Dividends on Federal Home Loan Bank stock 366 362 365 1,103 1,108

Merchant interchange fees, net 118 104 96

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

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

Losses on sale of investment securities — ( 69,466 ) —

Other income 374 385 352

Total non-interest income 2,745 ( 15,621 ) 2,888 ( 10,002 ) ( 24,113 )

Total non-interest income (loss) 3,834 ( 66,648 ) 2,874

Non-interest expense

1 unchanged sentence

Occupancy and equipment 2,099 2,098 2,106

Deposit network fees 1,158 1,054 927 3,144 2,688

Data processing 1,228 1,033 1,136

Professional services 1,093 1,341 937

Information technology 538 563 404 1,514 1,254

Federal Deposit Insurance Corporation insurance 730 539 388

Depreciation and amortization 291 320 358 933 1,125

Information technology 515 532 413

Charitable contributions 437 82 403

Directors' expense 285 283 304

Depreciation and amortization 263 331 322

Amortization of core deposit intangible 200 211 227

Charitable contributions 56 116 30 575 647

Deposit network fees 149 127 114

Other expense 2,146 2,087 2,046

9 unchanged sentences

Diluted 15,973 15,898 16,002

Comprehensive income:

Comprehensive income (loss):

Net income (loss) $ 8,510 $ ( 39,541 ) $ 4,876

Other comprehensive income:

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

Other comprehensive (loss) income:

Change in net unrealized (losses) gains on available-for-sale securities ( 7,642 ) 4,933 3,289

Reclassification adjustment for losses realized on the sale of available-for-sale securities in net loss — 69,466 —

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

Net unrealized losses on securities transferred from held-to-maturity to available-for-sale — ( 92,842 ) —

Amortization of net unrealized losses on securities transferred from available-for-sale to held-to-maturity — 9,867 340

Other comprehensive income, before tax 2,874 18,615 6,841 25,118 37,637

Deferred tax expense 850 5,503 2,022 7,426 11,119

Other comprehensive income, net of tax 2,024 13,112 4,819 17,692 26,518

Total comprehensive income

$ 9,550 $ 4,576 $ 9,389 $ 21,558 $ 12,108

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

BANK OF MARIN BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the three months ended September 30, 2025 and 2024

(in thousands, except share data;

unaudited) Common Stock Retained

Earnings Accumulated Other

Comprehensive Loss,

Net of Taxes Total

Shares Amount

Three months ended September 30, 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

Stock issued under employee stock purchase plan 385 9 — — 9

Stock issued under employee stock ownership plan 19,000 422 — — 422

Restricted stock granted 2,000 — — — —

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

Stock-based compensation - restricted stock — 225 — — 225

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

— — ( 4,024 ) — ( 4,024 )

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 )

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

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

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

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

— — ( 4,064 ) — ( 4,064 )

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

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

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

Other comprehensive (loss) income, before tax ( 7,642 ) ( 8,576 ) 3,629

Deferred tax (benefit) expense ( 2,260 ) ( 2,533 ) 1,073

Other comprehensive (loss) income, net of tax ( 5,382 ) ( 6,043 ) 2,556

Total comprehensive income (loss) $ 3,128 $ ( 45,584 ) $ 7,432

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

For the nine months ended September 30, 2025 and 2024

For the three months ended March 31, 2026 and 2025

(in thousands, except share data;

4 unchanged sentences

Shares Amount

Nine months ended September 30, 2025

Three months ended March 31, 2026

Balance at January 1, 2026 16,102,687 $ 214,910 $ 198,163 $ ( 18,419 ) $ 394,654

Net income — — 8,510 — 8,510

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

Other comprehensive loss, net of tax — — — ( 5,382 ) ( 5,382 )

Stock options exercised, net of shares surrendered for cashless exercises and tax withholdings 1,200 30 — — 30

Stock issued under employee stock purchase plan 356 9 — — 9

3 unchanged sentences

Restricted stock forfeited / cancelled ( 24,938 ) — — — —

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

Stock-based compensation - restricted stock — 274 — — 274

2 unchanged sentences

Stock issued in payment of director fees 8,325 214 — — 214

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

Balance at September 30, 2025

Balance at March 31, 2026

16,189,707 $ 215,648 $ 202,645 $ ( 23,801 ) $ 394,492

Nine months ended September 30, 2024

Three months ended March 31, 2025

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

Net loss — — ( 14,410 ) — ( 14,410 )

Net income — — 4,876 — 4,876

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

9 unchanged sentences

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

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

Balance at September 30, 2024

Balance at March 31, 2025

16,202,869 $ 216,263 $ 250,815 $ ( 27,512 ) $ 439,566

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2025 and 2024

For the three months ended March 31, 2026 and 2025

(in thousands;

4 unchanged sentences

Provision for credit losses on loans — 75

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

Noncash contribution expense to employee stock ownership plan 373 417

4 unchanged sentences

Accretion of discounts on acquired loans, net 5 45

Accretion of discount on subordinated notes 48 —

Net change in deferred loan origination costs/fees 77 ( 9 )

Loss on sale of investment securities

18,736 32,541

Depreciation and amortization 263 322

Loss on disposal of premises and equipment 11 —

Earnings on bank-owned life insurance policies ( 487 ) ( 476 )

Earnings on bank-owned life insurance death benefits ( 479 ) ( 68 )

Net changes in:

Net changes in interest receivable and other assets ( 5,117 ) 2,050

4 unchanged sentences

Purchase of available-for-sale securities ( 65,196 ) ( 33,561 )

Proceeds from sale of available-for-sale securities 167,017 292,621

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

Proceeds from paydowns/maturities of available-for-sale securities 59,213 18,316

Proceeds from sales of non-accrual loans 9,067 1,295

(Increase) decrease in loans receivable, net

( 2,233 ) 8,958

Purchase of loans

( 226 ) ( 35,874 )

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

Proceeds from bank-owned life insurance policies 1,177 504

Purchase of premises and equipment ( 164 ) ( 314 )

Proceeds from sale of premises and equipment — 21

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

Net cash provided by investing activities 1,864 39,879

1 unchanged sentence

Net increase in deposits 12,584 81,956

Repayment of short-term borrowings, net

Repayment of finance lease obligations ( 41 ) ( 38 )

Proceeds from stock options exercised 30 —

Restricted stock surrendered for tax withholdings upon vesting ( 156 ) ( 96 )

1 unchanged sentence

Stock repurchased

( 3,293 ) ( 4,234 )

Proceeds from stock issued under employee and director stock purchase plans 9 8

Net cash used in financing activities 146,991 ( 23,384 )

Net cash provided by financing activities 8,392 77,805

Net increase in cash, cash equivalents and restricted cash

23 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.

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

3 unchanged sentences

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

Three months ended Nine months ended

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

Three months ended

(in thousands) March 31, 2026 December 31, 2025 March 31, 2025

Community banking segment:

2 unchanged sentences

Non-interest income 3,238 ( 67,221 ) 2,311

2,181 2,182 ( 11,741 ) ( 25,957 )

Reconciliation of income

All other income 1

564 706 1,739 1,844

Total consolidated income

3 unchanged sentences

Provision for credit losses on unfunded loan commitments

— ( 233 ) — ( 233 )

Non-interest expense

2 unchanged sentences

Data processing 1,154 996 1,079

Deposit network fees 1,158 1,879 3,144 4,000

Professional services 938 1,146 784

Federal Deposit Insurance Corporation insurance 730 539 388

Information technology 515 532 413

Charitable contributions 437 82 403

Federal Deposit Insurance Corporation insurance 459 404 1,268 1,254

Professional services 960 103 2,501 332

Depreciation and amortization 291 582 933 1,443

Directors' expense 285 283 304

Depreciation and amortization 263 331 322

Amortization of core deposit intangible 200 211 227

Deposit network fees 149 127 114

Other expense 2,135 2,072 2,036

2 unchanged sentences

All other income 1

450 421 1,280 1,298

Income (loss) before income taxes $ 11,597 $ ( 57,375 ) $ 6,481

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 $ 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.

1 All 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 $ 450 thousand, $ 454 thousand and $ 432 thousand for the three months ended March 31, 2026, December 31, 2025 and March 31, 2025, 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 Nine months ended

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

Three months ended

(in thousands, except per share data) March 31, 2026 March 31, 2025

Weighted average basic common shares outstanding 15,925 15,977

3 unchanged sentences

Weighted average diluted common shares outstanding 15,973 16,002

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

Net income $ 8,510 $ 4,876

Basic income per common share $ 0.53 $ 0.31

Diluted income per common share

$ 0.53 $ 0.30

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

220 296 256 392

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 2026

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

We have not adopted any new accounting standards during three months ended March 31, 2026.

Accounting Standards Not Yet Adopted

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

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments require disaggregated information about the effective tax rate reconciliation and additional disclosures on reconciling items and taxes paid that meet a quantitative threshold.

The amendments are effective for annual reporting periods beginning after December 15, 2024, and may be adopted either prospectively or retrospectively.

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.

In November 2024, the FASB issued ASU No.

2 unchanged sentences

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

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

The amendments are effective for annual reporting periods beginning after December 15, 2026 (i.e., year ended December 31, 2027 Form 10-K) and interim periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

6 unchanged sentences

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.

In November 2025, the FASB issued ASU 2025-08 Financial Instruments - Credit Losses (Topic 326) related to accounting for credit losses on purchased loans.

This guidance requires the allowance established for certain loans that are acquired without credit deterioration, excluding credit cards, be offset by an increase in the basis of the acquired loans at acquisition.

ASU 2025-08 is effective for the Company's annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, and should be applied prospectively to loans that are acquired on or after the initial application date.

Early adoption is permitted, 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 December 2025, the FASB issued ASU 2025-11 Interim Reporting (Topic 270) related to interim disclosure requirements.

The amendments in this update clarify current interim disclosure requirements and provide a comprehensive list of required interim disclosures.

The update also incorporates a disclosure principle that requires entities to disclose material events that occur after the end of the last annual reporting period.

This update is effective for interim periods within annual periods beginning after December 15, 2027 and early adoption is permitted.

The Company is currently evaluating the impact that the adoption of this new standard 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.

Fair Value of Assets and Liabilities

15 unchanged sentences

Changes in Fair Value Recorded In 1

September 30, 2025

March 31, 2026

Securities available-for-sale:

2 unchanged sentences

$ 1,252,460 $ — $ 1,252,460 $ — OCI

Debentures of government sponsored agencies $ 23,561 $ — $ 23,561 $ — OCI

Obligations of state and political subdivisions $ 50,170 $ — $ 50,170 $ — OCI

6 unchanged sentences

$ 1,250,230 $ — $ 1,250,230 $ — OCI

SBA-backed securities $ 308 $ — $ 308 $ — OCI

Debentures of government sponsored agencies $ 23,694 $ — $ 23,694 $ — OCI

Treasury securities $ 10,815 $ 10,815 $ — $ — OCI

Obligations of state and political subdivisions $ 53,888 $ — $ 53,888 $ — OCI

Corporate bonds $ 5,649 $ — $ 5,649 $ — OCI

Derivative financial assets (interest rate contracts) $ 148 $ — $ 148 $ — NI

Derivative financial liabilities (interest rate contracts) $ 11 $ — $ 11 $ — NI

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

1 unchanged sentence

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 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 nine months ended September 30, 2025 or September 30, 2024.

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

As of March 31, 2026 and December 31, 2025, there were no Level 3 securities.

The Bank did not hold any held-to-maturity securities at March 31, 2026.

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

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

10 unchanged sentences

Because there is little to no counterparty risk, we did not incorporate credit adjustments from our assessment of the counterparty credit risk in determining fair value.

For further discussion on our methodology for valuing our derivative financial instruments, refer to Note 9, Derivative Financial Instruments and Hedging Activities.

For further discussion on our methodology for valuing our derivative financial instruments, refer to Note 10, Derivative Financial Instruments and Hedging Activities, to the consolidated financial statements in this Form 10-Q.

Certain financial assets may be measured at fair value on a non-recurring basis.

These assets are subject to fair value adjustments that result from the application of the lower of cost or fair value accounting or write-downs of individual assets, such as individually analyzed loans that are collateral dependent and other real estate owned ("OREO").

As of March 31, 2026 and December 31, 2025, we carried assets measured at fair value on a non-recurring basis totaling $ 8.4 million and $ 18.9 million, respectively, which were all individually analyzed loans that are collateral dependent (Level 3) net of specific allowances of $ 17 thousand and $ 7.2 million, respectively.

(in thousands) Carrying Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs

1 unchanged sentence

Disclosures about Fair Value of Financial Instruments

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 table below is a summary of fair value estimates for financial instruments as of March 31, 2026 and December 31, 2025, excluding financial instruments recorded at fair value on a recurring basis (summarized in the first table in this note).

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

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

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

September 30, 2025 December 31, 2024

Additionally, we held shares of Federal Home Loan Bank ("FHLB") of San Francisco stock at cost as of March 31, 2026 and December 31, 2025.

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, 2026 or December 31, 2025.

See further discussion on values within Note 4, Investment Securities, to the consolidated financial statements in this Form 10-Q.

March 31, 2026 December 31, 2025

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

1 unchanged sentence

Cash and cash equivalents $ 236,644 $ 236,644 Level 1 $ 225,303 $ 225,303 Level 1

Investment securities held-to-maturity 811,751 724,807 Level 2 879,199 763,535 Level 2

Loans, net of allowance for credit losses 2,092,896 2,049,126 Level 3 2,090,764 2,043,150 Level 3

2 unchanged sentences

Time deposits 180,135 180,410 Level 2 205,686 206,040 Level 2

Subordinated notes 43,905 44,436 Level 2 43,857 44,852 Level 2

Interest payable 2,275 2,275 Level 2 2,072 2,072 Level 2

2 unchanged sentences

The fair value of fixed-rate time deposits is estimated by discounting future contractual cash flows using discount rates that reflect the current observable market rates offered for time deposits of similar remaining maturities.

The fair value of the subordinated notes are estimated by an independent third-party using a discounted cash flow approach based on current interest rates for similar financial instruments adjusted for credit and liquidity spreads.

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

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

The fair value of commitment fees was not material as of March 31, 2026 or December 31, 2025.

Investment Securities

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.

government-sponsored enterprises ("GSEs"), such as the Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Farm Credit Banks Funding Corporation and FHLB, and U.S.

and foreign corporations.

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

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

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

government-sponsored enterprises ("GSEs"), such as the Federal National Mortgage Association ("FNMA"), Federal Farm Credit Banks Funding Corporation ("FFCB") and Federal Home Loan Bank ("FHLB").

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

Held-to-maturity:

1 unchanged sentence

Allowance for Credit Losses Net Carrying Amount Gross Unrealized Fair Value

(in thousands) Gains (Losses)

September 30, 2025

Securities of U.S.

government-sponsored enterprises:

CMBS issued by FHLMC, FNMA and GNMA $ 237,757 $ — $ 237,757 $ — $ ( 26,472 ) $ 211,285

CMOs issued by FHLMC, FNMA and GNMA 194,734 — 194,734 91 ( 12,490 ) 182,335

MBS pass-through securities issued by FHLMC, FNMA and GNMA 180,148 — 180,148 — ( 23,771 ) 156,377

SBA-backed securities 1,252 — 1,252 — ( 28 ) 1,224

Debentures of government-sponsored agencies 121,656 — 121,656 — ( 17,028 ) 104,628

Obligations of state and political subdivisions 61,204 — 61,204 12 ( 6,973 ) 54,243

Corporate bonds 15,000 — 15,000 — ( 285 ) 14,715

Total held-to-maturity $ 811,751 $ — $ 811,751 $ 103 $ ( 87,047 ) $ 724,807

December 31, 2024

Securities of U.S.

government-sponsored enterprises:

CMBS issued by FHLMC, FNMA and GNMA $ 242,559 $ — $ 242,559 $ — $ ( 34,449 ) $ 208,110

CMOs issued by FHLMC, FNMA and GNMA 209,748 — 209,748 — ( 18,492 ) 191,256

MBS pass-through securities issued by FHLMC, FNMA and GNMA 192,388 — 192,388 — ( 30,942 ) 161,446

SBA-backed securities 1,513 — 1,513 — ( 61 ) 1,452

Debentures of government-sponsored agencies 141,431 — 141,431 — ( 22,694 ) 118,737

Obligations of state and political subdivisions 61,560 — 61,560 — ( 8,341 ) 53,219

Corporate bonds 30,000 — 30,000 — ( 685 ) 29,315

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 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.

With regard to MBS, CMBS and CMOs issued or guaranteed by the GSEs, and SBA-backed securities, we expect to receive all the contractual principal and interest on these securities as such securities are backed by the full faith and credit of and/or guaranteed by the U.S.

Accordingly, no allowance for credit losses has been recorded for these securities.

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.

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

The following table summarizes the amortized cost of our portfolio of held-to-maturity securities issued by states and political subdivisions and corporate bonds by Moody's and/or Standard & Poor's bond ratings as of September 30, 2025 and December 31, 2024.

The Bank did not hold any HTM securities at March 31, 2026.

In the fourth quarter of 2025, the Bank completed a balance sheet repositioning and reclassified its HTM portfolio into AFS.

The Bank then sold securities with a book value of $ 593.2 million at a pre-tax loss of $ 69.5 million.

Obligations of state and political subdivisions Corporate bonds

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

Aaa / AAA $ 38,388 $ 42,161 $ — $ —

Aa1 / AA+ 22,816 19,399 — —

A2 / A — — 15,000 30,000

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 September 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 March 31, 2026 and December 31, 2025 is presented below.

Available-for-sale:

2 unchanged sentences

(in thousands) Gains (Losses)

September 30, 2025

Securities of U.S.

government-sponsored enterprises:

March 31, 2026

Securities of Government Agencies and GSEs:

CMBS issued by FHLMC 2 , FNMA 3 and GNMA 4

$ 489,267 $ 378 $ ( 13,348 ) $ — $ 476,297

CMOs issued by FHLMC, FNMA and GNMA 190,704 435 ( 1,280 ) — 189,859

MBS pass-through securities issued by FHLMC, FNMA and GNMA 591,893 275 ( 5,864 ) — 586,304

Debentures of government- sponsored enterprises 29,988 — ( 6,427 ) — 23,561

Obligations of state and political subdivisions 58,130 — ( 7,960 ) — 50,170

1 unchanged sentence

December 31, 2025

Securities of U.S.

government-sponsored enterprises:

Securities of Government Agencies and GSEs:

CMBS issued by FHLMC, FNMA and GNMA $ 470,598 $ 1,052 $ ( 12,347 ) $ — $ 459,303

1 unchanged sentence

MBS pass-through securities issued by FHLMC, FNMA and GNMA 583,409 1,639 ( 2,742 ) — 582,306

SBA-backed securities 331 — ( 23 ) — 308

Debentures of government- sponsored agencies 8,971 — ( 1,761 ) — 7,210

Treasury securities 12,020 — ( 1,205 ) 10,815

Debentures of government- sponsored enterprises 29,988 — ( 6,294 ) — 23,694

Obligations of state and political subdivisions 61,214 — ( 7,326 ) — 53,888

Corporate bonds 6,000 — ( 351 ) — 5,649

Total available-for-sale $ 1,353,961 $ 3,509 $ ( 29,658 ) $ — $ 1,327,812

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.

1 Amortized cost and fair value exclude accrued interest receivable of $ 4.6 million and $ 4.8 million at March 31, 2026 and December 31, 2025, respectively, which is included in interest receivable and other assets in the consolidated statements of condition.

2 Federal Home Loan Mortgage Corporation

3 Federal National Mortgage Association

4 Government National Mortgage Association

The amortized cost a nd fair value of investment debt securities by contractual maturity at March 31, 2026 and December 31, 2025 are shown below.

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

September 30, 2025 December 31, 2024

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

(in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value

March 31, 2026 December 31, 2025

Available-for-Sale Available-for-Sale

(in thousands) Amortized Cost Fair Value Amortized Cost Fair Value

Within one year $ 18,334 $ 18,300 $ 21,905 $ 21,884

3 unchanged sentences

Total $ 1,359,982 $ 1,326,191 $ 1,353,961 $ 1,327,812

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

Three months ended Nine months ended

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

Available-for-sale:

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

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

There were no sales of investment securities in the first quarters of 2026 or 2025.

Three months ended

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

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

(in thousands) March 31, 2026 December 31, 2025

Pledged to the State of California:

7 unchanged sentences

Total pledged investment securities $ 798,484 $ 838,202

There were 172 and 269 securities in unrealized loss positions at September 30, 2025 and December 31, 2024, respectively.

There were 181 and 114 securities in unrealized loss positions at March 31, 2026 and December 31, 2025, respectively.

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

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

March 31, 2026 < 12 continuous months ≥ 12 continuous months Total securities

in a loss position

(in thousands) Fair value Unrealized loss Fair value Unrealized loss Fair value Unrealized loss

Held-to-maturity:

CMBS issued by FHLMC, FNMA and GNMA $ — $ — $ 211,285 $ ( 26,472 ) $ 211,285 $ ( 26,472 )

CMOs issued by FHLMC, FNMA and GNMA — — 172,617 ( 12,490 ) 172,617 ( 12,490 )

MBS pass-through securities issued by FHLMC, FNMA and GNMA — — 156,094 ( 23,771 ) 156,094 ( 23,771 )

SBA-backed securities — — 1,224 ( 28 ) 1,224 ( 28 )

Debentures of government-sponsored agencies — — 104,628 ( 17,028 ) 104,628 ( 17,028 )

Obligations of state and political subdivisions — — 51,206 ( 6,973 ) 51,206 ( 6,973 )

Corporate bonds — — 14,715 ( 285 ) 14,715 ( 285 )

Total held-to-maturity — — 711,769 ( 87,047 ) 711,769 ( 87,047 )

Available-for-sale:

2 unchanged sentences

MBS pass-through securities issued by FHLMC, FNMA and GNMA 515,415 ( 3,476 ) 13,081 ( 2,388 ) 528,496 ( 5,864 )

Debentures of government- sponsored agencies — — 23,561 ( 6,427 ) 23,561 ( 6,427 )

Obligations of state and political subdivisions 6,764 ( 64 ) 43,406 ( 7,896 ) 50,170 ( 7,960 )

4 unchanged sentences

(in thousands) Fair value Unrealized loss Fair value Unrealized loss Fair value Unrealized loss

Held-to-maturity:

CMBS issued by FHLMC, FNMA and GNMA $ — $ — $ 208,110 $ ( 34,449 ) $ 208,110 $ ( 34,449 )

CMOs issued by FHLMC, FNMA and GNMA 18,451 ( 1,623 ) 172,805 ( 16,869 ) 191,256 ( 18,492 )

MBS pass-through securities issued by FHLMC, FNMA and GNMA 3,487 ( 150 ) 157,959 ( 30,792 ) 161,446 ( 30,942 )

SBA-backed securities — — 1,452 ( 61 ) 1,452 ( 61 )

Debentures of government- sponsored agencies — — 118,737 ( 22,694 ) 118,737 ( 22,694 )

Obligations of state and political subdivisions 5,558 ( 44 ) 47,661 ( 8,297 ) 53,219 ( 8,341 )

Corporate Bonds — — 29,315 ( 685 ) 29,315 ( 685 )

Total held-to-maturity 27,496 ( 1,817 ) 736,039 ( 113,847 ) 763,535 ( 115,664 )

Available-for-sale:

2 unchanged sentences

MBS pass-through securities issued by FHLMC, FNMA and GNMA 113,487 ( 386 ) 13,574 ( 2,356 ) 127,061 ( 2,742 )

SBA-backed securities — — 309 ( 23 ) 309 ( 23 )

Debentures of government- sponsored agencies — — 23,693 ( 6,294 ) 23,693 ( 6,294 )

Treasury securities — — 10,815 ( 1,205 ) 10,815 ( 1,205 )

Obligations of state and political subdivisions 247 ( 3 ) 50,616 ( 7,323 ) 50,863 ( 7,326 )

Corporate Bonds — — 5,649 ( 351 ) 5,649 ( 351 )

Total available-for-sale $ 284,341 $ ( 772 ) $ 233,026 $ ( 28,886 ) $ 517,367 $ ( 29,658 )

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

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.

As of March 31, 2026, the investment portfolio included 70 investment securities that had been in a continuous loss position for twelve months or more and 111 investment securities that had been in a loss position for less than twelve months.

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

federal government.

1 unchanged sentence

federal government while FNMA and FHLMC remain under conservatorship.

Securities issued by the SBA and GNMA have explicit credit guarantees by the U.S.

Securities issued by GNMA have explicit credit guarantees by the U.S.

federal government, which protects us from credit losses on the contractual cash flows of the securities.

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

No allowances for credit losses have been recognized on available-for-sale securities in an unrealized loss position, as management does not believe any of the securities are impaired due to credit risk factors at either September 30, 2025 or December 31, 2024.

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.

In addition, for any available-for-sale securities in an unrealized loss position at March 31, 2026 and December 31, 2025, 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.

On July 7, 2023, the Bank entered into various interest rate swap agreements with notional values totaling $ 101.8 million to hedge balance sheet interest rate sensitivity and protect selected securities in its available-for-sale

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 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.

Non-Marketable Securities Included in Other Assets

1 unchanged sentence

As a member of the FHLB, we are required to maintain a minimum investment in FHLB capital stock as determined by the Board of Directors of the FHLB.

The minimum investment requirements can increase in the event we increase our total asset size or borrowings with the FHLB.

The minimum investment requirements can increase in the event we increase our borrowings with the FHLB.

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

We held $ 16.7 million of FHLB stock included in other assets on the consolidated statements of condition at both September 30, 2025 and December 31, 2024.

On January 2, 2026 FHLB converted its legacy Class B stock into Membership-based stock ("Class B-1"), which is tied to membership asset requirements, and Activity-based stock ("Class B-2"), which is tied to borrowing activity.

We held $ 16.7 million of Class B-1 shares and no Class B-2 shares included in other assets on the consolidated statements of condition at March 31, 2026.

We held $ 16.7 million of FHLB stock at December 31, 2025.

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

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

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, 2026 and December 31, 2025.

On April 24, 2026, FHLB announced a cash dividend on their Class B-1 stock for the first quarter of 2026 at an annualized dividend rate of 4.75 % to be distributed in mid-May 2026.

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 September 30, 2025 and December 31, 2024.

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

The following table presents the amortized cost of loans by portfolio class as of March 31, 2026 and December 31, 2025.

(in thousands) March 31, 2026 December 31, 2025

Commercial and industrial $ 159,028 $ 159,898

9 unchanged sentences

Total loans, net of allowance for credit losses on loans $ 2,092,896 $ 2,090,764

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.

1 Amortized cost includes net deferred loan origination costs of $ 2.2 million and $ 2.2 million at March 31, 2026 and December 31, 2025, respectively.

Amounts are also net of unrecognized purchase discounts of $ 1.0 million and $ 1.3 million at March 31, 2026 and December 31, 2025, respectively.

Amortized cost excludes accrued interest, which totaled $ 6.9 million and $ 6.8 million at March 31, 2026 and December 31, 2025, respectively, and is included in interest receivable and other assets in the consolidated statements of condition.

Lending Risks

5 unchanged sentences

We target stable businesses with guarantors who provide additional sources of repayment and have proven to be resilient in periods of economic stress.

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

A weakened economy, and the 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.

4 unchanged sentences

In the event of a vacancy, we expect guarantors to carry the loans until they find a replacement tenant.

The owner's substantial equity investment provides a strong economic incentive to continue to support the commercial real estate projects.

As such, we have generally experienced a relatively low level of loss and delinquencies in this portfolio.

The owner's substantial equity investment provides a strong economic incentive to continue to support their commercial real estate projects.

As such, we have generally experienced a relatively low level of losses and delinquencies in this portfolio.

Construction Loans - Construction loans are generally made to developers and builders to finance construction, renovation and occasionally land acquisitions in anticipation of near-term development.

1 unchanged sentence

When a construction loan is placed on non-accrual status before the depletion of the interest reserve, we apply the interest funded by the interest reserve against the loan's principal balance.

These loans are underwritten after evaluation of the borrower's financial strength, reputation, prior track record, and independent appraisals.

These loans are underwritten after an evaluation of the borrower's financial strength, reputation, prior track record, and independent appraisals.

We monitor all construction projects to determine whether they are on schedule, completed as planned and in accordance with the approved construction budgets.

Significant events can affect the construction industry, including:

the inherent volatility of real estate markets and vulnerability to delays due to weather, change orders, inability to obtain construction permits, labor or material shortages, and price changes.

the inherent volatility of real estate markets and vulnerability to delays due

to weather, change orders, inability to obtain construction permits, labor or material shortages, and price changes.

Estimates of construction costs and value associated with the completed project may be inaccurate.

14 unchanged sentences

Negative external industry factors are generally not present.

The loan may be secured, unsecured or supported by non-real estate collateral for which the value is more difficult to determine and/or marketability is more uncertain.

The loan may be secured, unsecured, or supported by non-real estate collateral for which the value is more difficult to determine and/or whose marketability is more uncertain.

This category also includes “Watch” loans, where the primary source of repayment has been delayed.

“Watch” is intended to be a transitional grade, with either an upgrade or downgrade within a reasonable period.

The “Watch” risk rating is intended to be a transitional grade, with either an upgrade or downgrade within a reasonable period.

Special Mention - Potential weaknesses that deserve close attention.

4 unchanged sentences

Substandard assets are characterized by the distinct possibility that we will sustain some loss if such weaknesses or deficiencies are not corrected.

Well-defined weaknesses include adverse trends or developments of the borrower’s financial condition, managerial weaknesses and/or significant collateral deficiencies.

Well-defined weaknesses include adverse trends or developments in the borrower’s financial condition, managerial weaknesses and/or significant collateral deficiencies.

Doubtful - Critical weaknesses that make collection or liquidation in full improbable.

7 unchanged sentences

and refinancing.

Such loans are placed on non-accrual status and usually are collateral-dependent.

We regularly review our credits for accuracy of risk grades whenever we receive new information and at each quarterly and year-end reporting period.

Such loans are placed on non-accrual status and are usually collateral-dependent.

We regularly review our credits for the accuracy of risk grades whenever we receive new information and at each quarterly and year-end reporting period.

Borrowers are generally required to submit financial information at regular intervals.

4 unchanged sentences

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

The following tables present the loan portfolio by loan portfolio class, origination/renewal year and internal risk rating as of September 30, 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 March 31, 2026 and December 31, 2025.

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

2 unchanged sentences

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

September 30, 2025 2025 2024 2023 2022 2021 Prior Total

March 31, 2026 2026 2025 2024 2023 2022 Prior Total

Commercial and industrial:

15 unchanged sentences

Gross current period charge-offs $ — $ — $ — $ — $ — $ ( 7,192 ) $ — $ ( 7,192 )

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

September 30, 2025 2025 2024 2023 2022 2021 Prior Total

Construction:

28 unchanged sentences

Special Mention 7,275 — 367 4,092 18,153 14,461 — 44,348

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

December 31, 2025 2025 2024 2023 2022 2021 Prior Total

Substandard 1,513 — — 3,137 — 314 — 4,964

7 unchanged sentences

Pass and Watch $ 4,602 $ 10,499 $ — $ — $ — $ — $ — $ 15,101

Special Mention 7,462 — — — — — — 7,462

Total construction $ 4,602 $ 10,499 $ — $ — $ — $ — $ — $ 15,101

2 unchanged sentences

Total home equity $ 97 $ 44 $ 13 $ — $ — $ 791 $ 98,277 $ 99,222

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

December 31, 2024 2024 2023 2022 2021 2020 Prior Total

Other residential:

Pass and Watch $ 2,971 $ 15,899 $ 15,479 $ 17,745 $ 9,280 $ 49,168 $ — $ 110,542

Substandard — — 72 — — — — 72

Total other residential $ 2,971 $ 15,899 $ 15,551 $ 17,745 $ 9,280 $ 49,168 $ — $ 110,614

3 unchanged sentences

Total installment and other consumer $ 10,515 $ 13,253 $ 10,034 $ 8,057 $ 6,553 $ 9,475 $ 1,661 $ 59,548

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

Pass and Watch $ 315,005 $ 157,535 $ 106,246 $ 223,121 $ 248,456 $ 745,921 $ 174,433 $ 1,970,717

2 unchanged sentences

Totals $ 346,671 $ 160,447 $ 106,861 $ 230,350 $ 266,609 $ 824,207 $ 185,708 $ 2,120,853

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.

The following table shows the amortized cost of loans by portfolio class, payment aging and non-accrual status as of March 31, 2026 and December 31, 2025.

Loan Aging Analysis by Class

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

September 30, 2025

March 31, 2026

30-59 days past due $ 340 $ — $ — $ — $ 82 $ 257 $ — $ 679

21 unchanged sentences

Non-accrual loans with no allowance $ — $ 314 $ 8,822 $ — $ 401 $ — $ 204 $ 9,741

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.

1 There were no non-performing loans over 90 days past due and accruing interest as of March 31, 2026 or December 31, 2025 .

2 None of the non-accrual loans as of March 31, 2026 or December 31, 2025 were earning interest on a cash or accrual basis.

We reversed $ 1 thousand in accrued interest income for loans that were placed on non-accrual status during the three months ended March 31, 2026.

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

Collateral Dependent Loans

The following table presents the amortized cost basis of individually analyzed collateral-dependent loans, which were all on non-accrual status, by portfolio class at September 30, 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 March 31, 2026 and December 31, 2025.

Amortized Cost by Collateral Type

1 unchanged sentence

Allowance for Credit Losses

September 30, 2025

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

March 31, 2026

Commercial real estate, non-owner occupied $ 8,118 $ — $ — $ 8,118 $ —

3 unchanged sentences

December 31, 2025

Commercial and industrial $ 52 $ — $ — $ 52 $ 52

Commercial real estate, owner-occupied $ 314 $ — $ — $ 314 $ —

1 unchanged sentence

Home equity — 401 — 401 —

Installment and other consumer — — 222 222 15

Other residential — 72 — 72 18

Total $ 25,701 $ 473 $ — $ 26,174 $ 7,244

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.

1 There were no collateral-dependent residential real estate mortgage loans in process of foreclosure or in substance repossessed at March 31, 2026 and December 31, 2025.

The weighted average loan-to-value of real estate secured collateral dependent loans was approximately 64 % at March 31, 2026 and 106 % at December 31, 2025.

Loan Mod ifications to Borrowers Experiencing Financial Difficulty

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 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 %

Total $ 4,939 $ 4,939

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

Nine months ended September 30, 2024

Home equity 192 192 0.2 %

Total $ 192 $ 192

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 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)

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 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 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 September 30, 2025

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

Total $ 1,515 $ — $ — $ — $ 1,515 $ —

Nine months ended September 30, 2025

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

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

Total $ 4,939 $ — $ — $ — $ 4,939 $ 712

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

Nine months ended September 30, 2024

Home equity 192 — — — 192 117

Total $ 192 $ — $ — $ — $ 192 $ 117

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).

There were no modifications of loans during the three months ended March 31, 2026 or March 31, 2025 requiring disclosure.

Allocation of the Allowance for Credit Losses on Loans

The following table presents the details of the allowance for credit losses on loans segregated by loan portfolio class as of September 30, 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 March 31, 2026 and December 31, 2025 .

Allocation of the Allowance for Credit Losses on Loans

September 30, 2025

March 31, 2026

Modeled expected credit losses $ 1,401 $ 1,474 $ 8,065 $ 35 $ 684 $ 955 $ 630 $ — $ 13,244

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Three months ended September 30, 2025

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

Provision (Reversal) 286 63 ( 359 ) ( 155 ) ( 16 ) 80 110 ( 9 ) —

(Charge-offs) ( 1 ) — — — — — — — ( 1 )

Recoveries — — — — — — — — —

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

Three months ended September 30, 2024

Three months ended March 31, 2026

Beginning balance $ 2,089 $ 2,454 $ 21,477 $ 199 $ 803 $ 1,079 $ 803 $ 1,185 $ 30,089

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Ending balance $ 2,014 $ 2,452 $ 14,327 $ 204 $ 764 $ 974 $ 745 $ 1,343 $ 22,823

Nine months ended September 30, 2025

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

Provision (Reversal) 370 104 ( 127 ) ( 409 ) 83 49 89 ( 84 ) 75

(Charge-offs) ( 53 ) — ( 809 ) — — — ( 16 ) — ( 878 )

Recoveries — — — — — — — — —

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

Nine months ended September 30, 2024

Three months ended March 31, 2025

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

Provision (Reversal) 38 ( 131 ) 7,167 ( 1,172 ) 95 492 ( 41 ) ( 898 ) 5,550

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

(Charge-offs) — — ( 809 ) — — — ( 16 ) — ( 825 )

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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 $ 1.372 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.

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 $ 1.435 billion and $ 1.396 billion at March 31, 2026 and December 31, 2025, respectively.

In addition, we pledge eligible residential loans, which totaled $ 53.3 million and $ 97.2 million at March 31, 2026 and December 31, 2025, respectively, to secure our borrowing capacity with the Federal Reserve Bank ("FRB").

For additional information, see Note 6, Borrowings and Other Obligations.

Related Party Loans

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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 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.

Related party loans totaled $ 3.6 million and $ 3.6 million as of March 31, 2026 and December 31, 2025, respectively.

In addition, undisbursed commitments to related parties totaled $ 10 thousand as of both March 31, 2026 and December 31, 2025,

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 $ 326.3 million and $ 358.0 million as of September 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 $ 325.4 million and $ 344.7 million as of March 31, 2026 and December 31, 2025, respectively, secured by investment securities and residential loans.

Federal Home Loan Bank:

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.

The Bank had lines of credit with the FHLB totaling $ 976.1 million and $ 967.2 million as of March 31, 2026 and December 31, 2025, 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 September 30, 2025 and December 31, 2024.

The Bank had unsecured lines of credit with correspondent banks for overnight borrowings totaling $ 140.0 million as of both March 31, 2026 and December 31, 2025.

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

Subordinated Notes:

On November 19, 2025, the Company issued Fixed-to-Floating Subordinated Notes (“2035 Notes”) of $ 45.0 million with a final maturity date of December 1, 2035, to certain investors in a private placement.

The 2035 Notes have an initial fixed interest rate of 6.75 % per annum, payable semi-annually in arrears on June 1 and December 1 of each year, commencing on June 1, 2026.

Subordinated Notes.

Other Obligations:

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 September 30, 2025 and December 31, 2024 are summarized in the following table.

September 30, 2025 December 31, 2024

(dollars in thousands) Carrying Value

Average Rate Carrying Value

Weighted Average Rate

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

Finance lease liabilities totaling $ 668 thousand and $ 709 thousand as of March 31, 2026 and December 31, 2025, respectively, are included in borrowings and other obligations in the consolidated statements of condition.

Refer to Note 8, Commitments and Contingent Liabilities, for additional information.

The carrying values and weighted average interest rates on borrowings and other obligations as of March 31, 2026 and December 31, 2025 are summarized in the following table.

March 31, 2026 December 31, 2025

(dollars in thousands) Carrying Value Average Balance Weighted

Average Rate Carrying Value Average Balance Weighted Average Rate

FRBSF advances - Discount Window $ — $ — — % $ — $ — — %

FHLB short-term borrowings — — — % — — — %

Federal funds lines of credit — — — % — — — %

Subordinated notes 43,905 43,874 7.36 % 43,857 5,189 6.98 %

Other obligations (finance leases) 668 683 3.67 % 709 253 3.52 %

Total borrowings and other obligations $ 44,573 $ 44,557 7.31 % $ 44,566 $ 5,442 6.82 %

$ 57 4.20 % $ 154 2.23 %

Stockholders' Equity

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.

On April 23, 2026, Bancorp approved a $ 0.25 per share cash dividend to shareholders of record at the close of business on May 7, 2026.

The dividend is payable on May 14, 2026.

Share-Based Payments

The fair value of stock options as of the grant date is recorded as stock-based compensation expense in the consolidated statements of comprehensive income over the requisite service period, which is generally the vesting period, with a corresponding increase in common stock.

The fair value of stock options as of the grant date is recorded as stock-based compensation expense in the consolidated statements of comprehensive income (loss) over the requisite service period, which is generally the vesting period, with a corresponding increase in common stock.

Stock-based compensation also includes compensation expense related to the issuance of restricted stock awards.

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However, retirement eligibility does not affect the vesting of restricted stock or the exercisability of the stock options, which are based on the scheduled vesting period.

Performance-based stock awards (restricted stock) are issued to a selected group of employees.

Under the 2017 Equity Plan, performance-based stock awards (restricted stock) are issued to a selected group of employees.

Stock award vesting is contingent upon the achievement of pre-established long-term performance goals set by the Compensation Committee of the Board of Directors.

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

We record excess tax benefits (deficiencies) resulting from the exercise of non-qualified stock options, the disqualifying disposition of incentive stock options and vesting of restricted stock awards as income tax benefits (expense) in the consolidated statements of comprehensive income with a corresponding decrease (increase) to current taxes payable.

We record excess tax benefits (deficiencies) resulting from the exercise of non-qualified stock options, the disqualifying disposition of incentive stock options and vesting of restricted stock awards as income tax benefits (expense) in the consolidated statements of comprehensive income (loss) with a corresponding decrease (increase) to current taxes payable.

The holders of unvested restricted stock awards are entitled to dividends on the same per-share ratio as holders of common stock.

Tax benefits for dividends paid on unvested restricted stock awards are recorded as tax benefits in the consolidated statements of comprehensive income with a corresponding decrease to current taxes payable.

Tax benefits for dividends paid on unvested restricted stock awards are recorded as tax benefits in the consolidated statements of comprehensive income (loss) with a corresponding decrease to current taxes payable.

Dividends on forfeited awards are included in stock-based compensation expense.

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

Nine months ended

September 30, 2025 September 30, 2024

Three months ended

March 31, 2026 March 31, 2025

Number of shares withheld 5,994 3,957

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Share Repurchase Program

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.

This stock buyback program replaced the program approved in 2023 which expired July 31, 2025, under which Bancorp repurchased 320,000 shares totaling $ 6.4 million.

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

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.

There were no repurchases in the three months ended March 31, 2026 and 2025.

Bancorp will continue to assess opportunities to utilize the program.

Commitments and Contingent Liabilities

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

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

(in thousands) March 31, 2026 December 31, 2025

Commercial lines of credit $ 220,899 $ 232,758

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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 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.

The allowance for credit losses on unfunded commitments totaled $ 1.1 million at both March 31, 2026 and December 31, 2025, 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 2026 or 2025.

We lease premises under long-term non-cancelable operating leases with remaining terms of 3 months to 16 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.

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

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

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

(in thousands) March 31, 2026 December 31, 2025

Operating leases:

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

Nine months ended

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

Three months ended

(in thousands) March 31, 2026 March 31, 2025

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

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

Three months ended Nine months ended

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

Three months ended

(in thousands) March 31, 2026 March 31, 2025

Operating lease cost 1

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Amortization of right-of-use assets 2

$ 19 $ 37 $ 94 $ 111

Interest on finance lease liabilities 3

1 unchanged sentence

Total lease cost $ 1,268 $ 1,223

1 Included in occupancy and equipment expense in the consolidated statements of comprehensive income.

2 Included in depreciation and amortization in the consolidated statements of comprehensive income.

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

The following table shows the future minimum lease payments, weighted average remaining lease terms, and weighted average discount rates under operating and finance lease arrangements as of September 30, 2025.

1 Included in occupancy and equipment expense in the consolidated statements of comprehensive income (loss).

2 Included in depreciation and amortization in the consolidated statements of comprehensive income (loss).

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

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

(in thousands) September 30, 2025

(in thousands) March 31, 2026

Year Operating Leases Finance Leases

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2027 4,428 188

2028 3,992 183

2029 3,366 183

2030 3,148 15

Thereafter 9,935 —

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Litigation Matters

Bancorp may be party to legal actions that arise from time to time in the normal course of business.

Bancorp may be subject to legal actions that arise from time to time in the normal course of business.

Bancorp's management is not aware of any pending legal proceedings to which either it or the Bank may be a party or has recently been a party that will have a material adverse effect on the financial condition or results of operations of Bancorp or the Bank.

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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.

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.

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 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.

This amount settles all claims that were or could have been asserted based on the facts alleged in the operative complaint, and the as of yet unasserted individual claims by the named plaintiff, and includes attorneys' fees, costs including the cost of administration, and incentive payments.

The only amount over and above the GSA which the Bank shall pay is its share of payroll taxes on the amount of the net settlement that is allocated as wages.

There has been no finding of wrongdoing and the Bank denies all claims.

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

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

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

Subordinated Notes

The 2035 Notes have an initial fixed interest rate of 6.75 % per annum, payable semi-annually in arrears on June 1 and December 1 of each year, commencing on June 1, 2026.

From and including December 1, 2030, and thereafter, the 2035 Notes will bear interest at a floating rate.

The floating interest rate will reset quarterly and shall be equal to the then current three-month Term SOFR plus 335 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, commencing on March 1, 2031.

If the then current three-month term SOFR rate is less than zero, the three-month SOFR will be deemed to be zero.

Debt issuance cost was $ 1.2 million, paid upon issuance, and is being amortized through the December 1, 2030 call date.

The Company has the right to redeem the 2035 Notes, in whole or in part, on or after December 1, 2030.

At the time of issuance, $ 30.0 million was downstreamed as common equity to the Bank.

At March 31, 2026, the balance of the 2035 Notes included in the Company’s consolidated statements of condition net of debt issuance cost, was $ 43.9 million.

The amortization of debt issuance cost was $ 48 thousand for the three months ended March 31, 2026.

The Company was in compliance with all covenants under the terms of the 2035 Notes.

Derivative Financial Instruments and Hedging Activities

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

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

We had three interest rate swap agreements on certain loans with notional values totaling $ 6.4 million, which are equal to the notional amounts of the hedged loans and are sched uled to mature at various dates ranging from June 2031 to July 2032.

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

Converting our fixed-rate interest payments to floating-rate interest payments, generally benchmarked to the one-month U.S.

Converting fixed-rate interest payments to floating-rate interest payments, generally benchmarked to the one-month U.S.

dollar SOFR index, protects us against changes in the fair value of our loans associated with fluctuating interest rates.

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

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

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

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) September 30,

2025 December 31, 2024 September 30,

(in thousands) March 31,

2026 December 31, 2025 March 31,

2026 December 31, 2025

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

(in thousands) March 31, 2026 December 31, 2025 March 31, 2026 December 31, 2025

Loans receivable 1

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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 Nine months ended

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

Interest on investment securities 1

Increase in fair value of interest rate swaps hedging available-for-sale securities $ — $ ( 1,584 ) $ — $ ( 85 )

Hedged interest earned — 203 — 615

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

Net gain recognized in interest income on investment securities

$ — $ 203 $ — $ 615

Three months ended

(in thousands) March 31, 2026 March 31, 2025

Interest and fees on loans 1

Decrease (increase) in fair value of interest rate swaps hedging loans receivable

$ ( 23 ) $ ( 253 ) $ ( 189 ) $ ( 126 )

Increase (decrease) in fair value of interest rate swaps hedging loans receivable $ 23 $ ( 106 )

Hedged interest earned 16 30

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

27 257 202 140

(Decrease) increase in carrying value included in the hedged loans ( 19 ) 111

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

Net gain recognized in interest income on loans $ 18 $ 33

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

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

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

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Instruments Received Net Amount

September 30, 2025

March 31, 2026

Derivatives by Counterparty:

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Instruments Pledged

September 30, 2025

March 31, 2026

$ 2 $ — $ 2 $ ( 2 ) $ —

1 unchanged sentence

December 31, 2025

$ 11 $ — $ 11 $ ( 11 ) $ — $ —

Total $ 11 $ — $ 11 $ ( 11 ) $ — $ —

2 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