What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2026-03-02 compared with 2025-02-28 · 101 added, 136 removed, 693 unchanged (25% of the section changed)

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Bancorp’s common stock is listed on the NASDAQ Global Select Market under the symbol “CATY.” As of February 13, 2026, Bancorp had outstanding approximately 66,957,659 shares of common stock with approximately 1,386 holders of record.

Bancorp believes, however, that the actual number of beneficial holders of its common stock may be substantially greater than the stated number of holders of record because a substantial portion of the common stock is held in street name.

For information on Bancorp’s dividend policy and the statutory and regulatory limitations on the ability of Bancorp to pay dividends to its shareholders and on the Bank to pay dividends to Bancorp, see “Item 1.

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Issuer Purchases of Equity Securities

On May 28th, 2024, the Company announced a new stock repurchase program to buy back up to $125.0 million of the Company's common stock.

The previous $125.0 million share repurchase program announced on May 26, 2022, was completed on February 21, 2023, with the repurchase of 2,897,628 shares at an average cost of $43.14.

Through December 31, 2024, the Company repurchased 2,028,581 shares of common stock for a total of $83.9 million, at an average cost of $41.37 per share under the May 2024 buyback program.

On June 4, 2025, the Company announced a new stock repurchase program to buy back up to $150.0 million of the Company's common stock.

The previous $125.0 million shares repurchase program announced on May 28, 2024, was completed on February 28, 2025, with the repurchase of a total of 2,905,487 shares at an average cost of $43.02.

Through December 31, 2025, the Company repurchased 2,973,982 common shares for a total of $137.5 million, at an average cost of $46.24 per share under the June 2025 buyback program.

Issuer Purchases of Equity Securities

(a) Total Number of Shares (or Units) Purchased

(a) Total Number of Shares Purchased

(b) Average Price Paid per Share (or Unit)

(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs

(d) Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

October 1, 2025 - October 31, 2025

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Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to provide information to facilitate the understanding and assessment of the consolidated financial condition and results of operations of the Bancorp and its subsidiaries.

It should be read in conjunction with this Annual Report and the audited Consolidated Financial Statements and Notes appearing elsewhere in this Annual Report.

For discussion and analysis of the Company’s 2024 results, as compared to 2023, refer to Part II - Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on February 28, 2025.

The following discussion and analysis of our financial condition and results of operations contains forward-looking statements.

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For the year ended December 31, 2025, we reported net income of $315.1 million, or $4.54 per diluted share, compared to net income of $286.0 million, or $3.95 per diluted share, in 2024, and net income of $354.1 million, or $4.86 per diluted share, in 2023.

The $68.1 million decrease in net income from 2023 to 2024 was primarily the result of decreases in net-interest income, and non-interest income and increase in provision for credit losses, partially offset by decreases in non-interest expense.

The $29.1 million increase in net income from 2024 to 2025 was primarily the result of an increase in net interest income and non interest income and a decrease in non interest expense, offset by an increase in provision for credit losses.

The return on average assets in 2025 was 1.33%, compared to 1.22% in 2024, and to 1.56% in 2023.

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Total average assets increased $252.2 million to $23.62 billion in 2025.

Total loans, excluding loans held for sale, decreased $172.2 million, or 0.9%, to $19.38 billion in 2024.

Total deposits increased $360.8 million, or 1.9%, to $19.69 billion in 2024.

Total loans, excluding loans held for sale, increased $771.2 million, or 4.0%, to $20.15 billion in 2025.

Total deposits increased $1.21 billion, or 6.1%, to $20.89 billion in 2025.

Net income available to common stockholders and key financial performance ratios are presented below for the three years indicated:

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Comparison of 2025 with 2024

Net interest income decreased $67.7 million, or 9.1%, from $741.7 million in 2023 to $674.1 million in 2024.

The decrease in net interest income was due primarily to the increase in interest expense from time deposits offset by an increase in interest income from loans.

Net interest income increased $68.4 million, or 10.1%, from $674.1 million in 2024 to $742.5 million in 2025.

The increase in net interest income was due primarily to the decrease in interest expense from time deposits partially offset by a decrease in interest income from loans.

Average loans for 2025 were $19.72 billion, a $287.8 million, or a 1.5% increase from $19.43 billion in 2024.

Compared with 2023, average commercial real estate loans increased $675.2 million, or 7.3%, average residential mortgage loans increased $246.2 million, or 4.4%, average equity lines decreased $41.3 million, or 14.9% and average construction loans decreased $162.9 million, or 31.3%.

Average investment securities were $1.62 billion in 2024, an increase of $62.6 million, or 4.0%, from 2023.

Average interest-bearing cash on deposits with financial institutions decreased $43.2 million, or 3.8%, to $1.10 billion in 2024 from $1.14 billion in 2023.

Average interest-bearing deposits were $16.53 billion in 2024, an increase of $1.05 billion, or 6.8%, from $15.47 billion in 2023, primarily due to an increase of $1.17 billion, or 13.3%, in time deposits, and $81.0 million, or 7.6%, in savings accounts offset by a decreases of $201.4 million, or 8.4%, in interest bearing demand deposits.

Interest income increased $92.8 million, or 7.5%, from $1.24 billion in 2023 to $1.33 billion in 2024 primarily due to increases in loan rates:

Compared with 2024, average commercial real estate loans increased $418.0 million, or 4.2%, average residential mortgage loans decreased $68.7 million, or 1.2%, average construction loans decreased $29.1 million, or 8.2%, and average commercial loans decreased $25.2 million, or 0.8%.

Average investment securities were $1.59 billion in 2025, a decrease of $28.8 million, or 1.8%, from 2024.

Average interest-bearing cash on deposits with financial institutions increased $63.4 million, or 5.8%, to $1.16 billion in 2025 from $1.10 billion in 2024.

Average interest-bearing deposits were $16.78 billion in 2025, an increase of $253.7 million, or 1.5%, from $16.53 billion in 2024, primarily due to an increase of $352.4 million, or 11.1% in money market, $242.0 million, or 21.0%, in savings accounts, and $6.4 million, or 0.3%, in interest bearing demand deposits offset by a decreases of $347.1 million, or 3.5%, in time deposits.

Interest income decreased $25.7 million, or 1.9%, from $1.33 billion in 2024 to $1.31 billion in 2025 primarily due to decreases in loan rates:

Changes in volume:

Average interest-earning assets increased $321.0 million, or 1.4%, to $22.49 billion in 2025, compared with average interest-earning assets of $22.17 billion in 2024.

Average loans increased $671.3 million and average investment securities increased $62.6 million in 2024.

Offsetting the above increases was a decrease of $43.2 million in average interest-bearing deposits with other financial institutions.

Average loans increased $287.8 million and average interest-bearing deposits with other financial institutions increased $63.4 million in 2025.

Offsetting the above increases was a decrease in average investment securities of $28.8 million.

The changes in volume contributed to an interest income increase of $19.8 million.

Changes in rate:

The average yield of interest-bearing assets increased to 6.02% in 2024 from 5.78% in 2023.

The increase in rate on loans resulted in an increase of $45.7 million in interest income, the increase in rate on investment securities resulted in an increase of $5.5 million in interest income, and the increase in interest from FHLB resulted in an increase of $0.3 million in interest income.

The changes in rate contributed to an interest income increase of $51.6 million.

The average yield of interest-bearing assets decreased to 5.80% in 2025 from 6.02% in 2024.

The decrease in rate on loans resulted in a decrease of $28.5 million in interest income, the decrease in rate on investment securities resulted in a decrease of $6.3 million in interest income, and the decrease in deposits with other bank resulted in a decrease of $10.7 million in interest income.

The changes in rate contributed to an interest income decrease of $45.6 million.

Change in the mix of interest-earning assets:

Average gross loans, which generally have a higher yield than other types of investments, comprised 87.7% of total average interest-earning assets in 2024, an increase from 87.3% in 2023.

Average investment securities comprised 7.3% of total average interest-bearing assets in 2024, which represented no change from 7.3% in 2023.

Interest expense increased by $160.4 million, or 32.1%, to $660.9 million in 2024, compared with $500.5 million in 2023, primarily due to increased average interest-bearing deposits.

The overall increase in interest expense was primarily due to increases in rates on interest bearing deposits, and rate increases in other borrowings and long term debt as discussed below:

Average gross loans, which generally have a higher yield than other types of investments, comprised 87.7% of total average interest-earning assets for both 2025, and 2024.

Average investment securities comprised 7.1% of total average interest-bearing assets in 2025, which represented a small decrease from 7.3% in 2024.

Interest expense decreased by $94.1 million, or 14.2%, to $566.8 million in 2025, compared with $660.9 million in 2024.

The overall decrease in interest expense was primarily due to decreases in rates on interest bearing deposits, and rate decreases in other borrowings and long term debt as discussed below:

Changes in volume:

Average interest-bearing deposits increased $1.05 billion, or 6.8%, and average FHLB advances and other borrowings decreased $190.1 million, or 37.63%.

The changes in volume caused an increase in interest expense of $34.8 million.

Average interest-bearing deposits increased $253.7 million, or 1.5%, and average FHLB advances and other borrowings decreased $143.8 million, or 45.63%.

The changes in volume caused a decrease in interest expense of $5.5 million.

Changes in rate:

The average costs of interest-bearing deposits, and FHLB advances and other borrowings, combined, increased to 3.85% and 5.24% in 2024 from 3.02%, and 5.15% in 2023, respectively.

The changes in rate caused interest expense to increase by $125.6 million.

The average costs of interest-bearing deposits, and FHLB advances decreased to 3.29% and 4.03% in 2025 from 3.85%, and 5.24% in 2024, respectively.

The changes in rate caused interest expense to decrease by $88.6 million.

Change in the mix of interest-bearing liabilities:

Average interest-bearing deposits of $16.78 billion increased to 98.3% of total interest-bearing liabilities in 2025 compared to 97.4% in 2024.

Average FHLB advances and other borrowings of $315.1 million decreased to 1.9% of total interest-bearing liabilities.

Average long-term debt of $119.1 million decreased to 0.7% of total interest-bearing liabilities in 2024 compared to 0.7% in 2023.

Net interest margin, defined as net interest income to average interest-earning assets, was 3.04% in 2024 compared to 3.45% in 2023.

Comparison of 2023 with 2022

Net interest income increased $8.0 million, or 1.1%, from $733.7 million in 2022 to $741.7 million in 2023.

The increase in net interest income was due primarily to the increase in interest income from loans offset by an increase in interest expense from time deposits.

Average loans for 2023 were $18.76 billion, a $1.13 billion, or an 6.4% increase from $17.63 billion in 2022.

Compared with 2022, average commercial real estate loans increased $715.6 million, or 8.4%, average residential mortgage loans increased $597.3 million, or 12.1%, average equity lines decreased $97.9 million, or 26.1% and average construction loans decreased $84.1 million, or 13.9%.

Average investment securities were $1.56 billion in 2023, an increase of $237.5 million, or 18.0%, from 2022.

Average interest-bearing cash on deposits with financial institutions decreased $120.2 million, or 9.5%, to $1.14 billion in 2023 from $1.26 billion in 2022.

Average interest-bearing deposits were $15.47 billion in 2023, an increase of $1.58 billion, or 11.4%, from $13.89 billion in 2022, primarily due to an increase of $3.45 billion, or 63.9%, in time deposits offset by decreases of $1.74 billion, or 35.4% in money market accounts, $83.2 million, or 3.4%, in interest bearing demand deposits, and $48.6 million, or 4.3%, in savings accounts.

Interest income increased $390.9 million, or 45.9%, from $851.3 million in 2022 to $1.24 billion in 2023 primarily due to increases in loan rates:

Changes in volume:

Average interest-earning assets increased $1.25 billion, or 6.2%, to $21.48 billion in 2023, compared with average interest-earning assets of $20.23 billion in 2022.

Average loans increased $1.13 billion and average investment securities increased $237.5 million in 2023.

Offsetting the above increases was a decrease of $120.2 million in average interest-bearing deposits with other financial institutions.

The changes in volume contributed to interest income increase of $58.0 million.

Changes in rate:

The average yield of interest-bearing assets increased to 5.78% in 2023 from 4.21% in 2022.

The increase in rate on loans resulted in an increase of $274.0 million in interest income, the increase in rate on investment securities resulted in an increase of $17.7 million in interest income, and the increase in rate on deposits with other financial institutions resulted in an increase of $41.0 million in interest income.

The changes in rate contributed to an interest income increase of $333.0 million.

Change in the mix of interest-earning assets:

Average gross loans, which generally have a higher yield than other types of investments, comprised 87.3% of total average interest-earning assets in 2023, an increase from 87.2% in 2022.

Average investment securities comprised 7.3% of total average interest-bearing assets in 2023, an increase from 6.5% in 2022.

Interest expense increased by $382.9 million, or 325.6%, to $500.5 million in 2023, compared with $117.6 million in 2022, primarily due to increases in interest rates on average interest-bearing deposits.

The overall increase in interest expense was primarily due to increases in rates on interest-bearing deposits, and rate increases in other borrowings as discussed below:

Changes in volume:

Average interest-bearing deposits increased $1.58 billion, or 11.4%, and average FHLB advances and other borrowings increased $257.9 million, or 104.3%.

The changes in volume caused an increase in interest expense of $46.1 million.

Changes in rate:

The average costs of interest-bearing deposits, FHLB advances and other borrowings, increased to 3.02% and 5.15% in 2023 from 0.76%, and 2.73% in 2022, respectively.

The changes in rate caused interest expense to increase by $336.8 million.

Change in the mix of interest-bearing liabilities:

Average interest-bearing deposits of $15.47 billion decreased to 96.1% of total interest-bearing liabilities in 2023 compared to 97.4% in 2022.

Average FHLB advances and other borrowings of $505.2 million increased to 3.1% of total interest-bearing liabilities.

Average long-term debt of $119.1 million decreased to 0.7% of total interest-bearing liabilities in 2023 compared to 0.8% in 2022.

Average other borrowings of $171.3 million decreased to 1.0% of total interest-bearing liabilities.

Average long-term debt of $119.1 million is 0.7% of total interest-bearing liabilities in both 2025 and 2024.

Net interest margin, defined as net interest income to average interest-earning assets, was 3.30% in 2025 compared to 3.04% in 2024.

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Non-interest Income

Non-interest income decreased $12.6 million, or 18.5%, to $55.7 million for 2024, from $68.3 million in 2023, compared to $56.8 million in 2022.

Non-interest income includes depository service fees, letters of credit commissions, securities gains (losses), gains (losses) from loan sales, gains from sale of premises and equipment, gains on acquisition, and other sources of fee income.

Non-interest income increased $19.8 million, or 35.5%, to $75.4 million for 2025, from $55.7 million in 2024, compared to $68.3 million in 2023.

Non-interest income includes depository service fees, letters of credit commissions, net gains (losses) from equity securities, securities gains (losses), gains (losses) from loan sales, gains from sale of premises and equipment, and other sources of fee income.

These other fee-based services include wire transfer fees, safe deposit fees, fees on loan-related activities, fee income from our Wealth Management division, and foreign exchange fees.

Comparison of 2025 with 2024

The decrease in non-interest income from 2023 to 2024 was primarily due to a $25.8 million increase in unrealized loss on equity securities, offset, in part, by a $6.5 million increase in wealth management fees, a $4.1 million increase in securities gains, and a $1.0 million increase in derivative fees.

Comparison of 2023 with 2022

The increase in non-interest income from 2022 to 2023 was primarily due to a $17.9 million increase in unrealized gain on equity securities, and a $1.1 million increase in wealth management fees, offset, in part, by a $3.0 million increase in securities losses, a $3.2 million decrease in derivative fees and a $1.7 million decrease in BOLI death benefit.

The increase in non-interest income from 2024 to 2025 was primarily due to a $14.9 million increase in unrealized gain on equity securities, $2.8 million in gain on interest rate swaps, $1.2 million in gain on sale of loans, and $1.1 million increase in letters of credit commissions, offset, in part, by a $1.1 million decrease in securities gains.

Non-interest Expense

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Computer/equipment increased $3.1 million, or 15.4%.

Other real estate owned expense increased $1.9 million, or 254.7%.

Professional Services increased $0.7 million, or 2.3%.

Amortization of investments in affordable housing and alternative energy partnerships decreased $29.0 million, or 40.0%.

FDIC and State assessments decreased $2.9 million, or 20.3%.

Professional Services decreased $1.5 million, or 4.6%.

The efficiency ratio, defined as non-interest expense divided by the sum of net interest income before provision for loan losses plus non-interest income, increased to 51.35% in 2024 compared to 46.97% in 2023 due primarily to lower net interest income offset by a decrease in non-interest expense as explained above.

Comparison of 2023 with 2022

Non-interest expense totaled $380.5 million in 2023 compared to $303.4 million in 2022.

The increase of $77.1 million, or 25.4%, in non-interest expense in 2023 compared to 2022 was primarily due to a combination of the following:

Salaries and employee benefits increased $11.6 million, or 8.1%.

FDIC and State assessments increased $15.6 million, or 193.5%

Computer/equipment increased $3.9 million, or 28.5% .

Professional services increased $4.3 million, or 15.1%.

Amortization of investments in affordable housing and alternative energy partnerships increased $44.6 million, or 105.9%.

The efficiency ratio, defined as non-interest expense divided by the sum of net interest income before provision for loan losses plus non-interest income, increased to 46.97% in 2023 compared to 38.38% in 2022 due primarily to higher net interest income offset by an increase in non-interest expense as explained above.

The efficiency ratio, defined as non-interest expense divided by the sum of net interest income before provision for loan losses plus non-interest income, decreased to 43.41% in 2025 compared to 51.35% in 2024 due primarily to higher net interest income and non-interest income and lower non-interest expense as explained above.

Income Tax Expense

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Financial Condition

Total assets were $23.05 billion at December 31, 2024, a decrease of $26.9 million, or 0.1%, from $23.08 billion at December 31, 2023, primarily due to a decrease of $179.2 million in net loans, a decrease of $57.4 million in investment securities and a decrease of $26.1 million in affordable housing investments and alternative energy partnerships offset by an increase of $227.5 million in short-term investments and interest-bearing deposits.

Total assets were $24.23 billion at December 31, 2025, an increase of $1.17 billion, or 5.1%, from $23.05 billion at December 31, 2024, primarily due to an increase of $732.7 million in net loans, an increase of $395.7 million in short-term investments and interest-bearing deposits, an increase of $111.1 million in investment securities and offset by a decrease of $62.4 million in other assets.

Investment Securities

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government agency entities

government sponsored entities

Mortgage-backed securities

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Accordingly, we determined the unrealized losses were not credit-related and recognized the unrealized losses in "other comprehensive income/(loss)" in stockholders' equity.

Although we periodically sell securities for portfolio for management purposes, we do not foresee having to sell any impaired securities strictly for liquidity needs and believe that it is more likely than not we would not be required to sell any impaired securities before recovery of their amortized cost.

Although we periodically sell securities for portfolio management purposes, we do not foresee having to sell any impaired securities strictly for liquidity needs and believe that it is more likely than not we would not be required to sell any impaired securities before recovery of their amortized cost.

The tables below show the related fair value and the gross unrealized losses of the Company’s investment portfolio, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position, as of December 31, 2025, and December 31, 2024:

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Securities AFS

treasury securities

government agency entities

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government agency entities

government sponsored entities

Mortgage-backed securities (1)

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government agency entities

government sponsored entities

Mortgage-backed securities (1)

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Equity Securities

For the year ended December 31, 2024, the Company recognized a net loss of $7.5 million due to the decrease in fair value of equity investments with readily determinable fair values, compared to a net gain of $18.2 million in 2023.

The Company owns equity securities directly or through limited partnerships that hold equity securities.

For the year ended December 31, 2025, the Company recognized a net unrealized gain of $7.4 million due to the increase in fair value of equity investments, compared to a net unrealized loss of $7.5 million in 2024.

Equity securities were $51.9 million as of December 31, 2025, compared to $34.4 million as of December 31, 2024.

The net unrealized gains recognized for the year ended December 31, 2025, included our share of earnings from an equity method investment in a private investment fund.

While this investment has not had a material impact on our historical results, the fund holds concentrated positions in certain private entities.

We anticipate that a potential liquidity event or a significant third-party valuation adjustment related to these underlying holdings could have a significant impact on our future financial condition or results of operations.

However, the timing and certainty of any such event are outside of our control.

Loans represented 89.6% of average interest-earning assets during 2025, compared with 87.4% during 2024.

Gross loans decreased by $172.2 million, or 0.9%, to $19.38 billion at December 31, 2024, compared with $19.55 billion at December 31, 2023.

The decrease in gross loans was primarily attributable to the following:

Total residential mortgage loans decreased by $149.7 million, or 2.6%, to $5.69 billion at December 31, 2024, compared to $5.84 billion at December 31, 2023.

Gross loans increased by $771.2 million, or 4.0%, to $20.15 billion at December 31, 2025, compared with $19.38 billion at December 31, 2024.

The increase in gross loans was primarily attributable to the following:

Total residential mortgage loans increased by $143.0 million, or 2.5%, to $5.83 billion at December 31, 2025, compared to $5.69 billion at December 31, 2024.

Commercial real estate loans increased $530.9 million, or 5.3%, to $10.56 billion at December 31, 2025, compared to $10.03 billion at December 31, 2024.

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Commercial real estate loans consist primarily of commercial retail properties, shopping centers, owner-occupied industrial facilities, office buildings, multiple-unit apartments, hotels, and multi-tenanted industrial properties, and are typically secured by first deeds of trust on such commercial properties.

Commercial loans decreased $207.0 million, or 6.3%, to $3.10 billion at December 31, 2024, compared to $3.31 billion at December 31, 2023.

Commercial loans increased $86.6 million, or 2.8%, to $3.18 billion at December 31, 2025, compared to $3.10 billion at December 31, 2024.

Commercial loans consist primarily of short-term loans (typically with a maturity of one year or less) to support general business purposes, or to provide working capital to businesses in the form of lines of credit, trade-finance loans, loans for commercial purposes secured by cash, and SBA loans.

Real estate construction loans decreased $103.0 million, or 24.4%, to $319.6 million at December 31, 2024, compared to $422.6 million at December 31, 2023.

Real estate construction loans increased $18.0 million, or 5.6%, to $337.6 million at December 31, 2025, compared to $319.6 million at December 31, 2024.

Our lending relates predominantly to activities in the states of California, New York, Texas, Washington, Massachusetts, Illinois, New Jersey, Maryland, and Nevada.

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Total loans, net

The Bank primarily uses client deposits to fund its operations, and to a lesser extent advances from the Federal Home Loan Bank (“FHLB”), and other borrowings.

(1) Floating rate loans may include hybrid loans in their fixed period.

The Bank's primary funding sources are client deposits, supplemented by advances from the Federal Home Loan Bank (“FHLB”) and other borrowings.

The Bank’s deposits are generally obtained from the Bank’s geographic market area.

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Brokered-deposits totaled $1.59 billion, or 7.6%, of total deposits, at December 31, 2025, compared to $1.06 billion, or 5.4%, at December 31, 2024.

The Bank’s total deposits increased $360.8 million, or 1.9%, to $19.69 billion at December 31, 2024, from $19.33 billion at December 31, 2023, primarily due to a $323.0 million, or 10.6% increase in money market deposits, a $233.8 million, or 2.5%, increase in time deposits and a $213.6 million , or 20.6% increase in saving deposits offset, in part, by a $244.7 million, or 6.9%, decrease in non-interest-bearing demand deposits and a $165.0 million, or 7.0%, decrease in NOW deposits.

The Bank’s total deposits increased $1.21 billion, or 6.1%, to $20.89 billion at December 31, 2025, from $19.69 billion at December 31, 2024, primarily due to an increase of $427.7 million, or 12.7% in money market deposits, $248.1 million, or 19.8% in saving deposits, $221.3 million, or 6.7% in non-interest bearing deposit, $164.4 million, or 7.5% in NOW deposits, and $146.6 million, or 1.5%, in time deposits.

The following table displays the deposit mix balances as of the end of the past three years:

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Non-interest-bearing demand deposits

Interest bearing demand deposits

Money market deposits

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Non-interest-bearing demand deposits

Interest bearing demand deposits

Money market deposits

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In general, large banks and regional banks, and particularly those with large amounts of uninsured deposits, were the banks most vulnerable to uninsured deposit runs and benefited most from the stability provided under the systemic risk determination.

The FDIC estimates that 114 banking organizations will be subject to the special assessment, including 48 banking organizations with total assets over $50 billion and 66 banking organizations with total assets between $5 and $50 billion.

As of September 30, 2025, the FDIC estimates that 141 Insured Depository Institutions ("IDI") belonging to 110 banking organizations are subject to the special assessment.

No banking organizations with total assets under $5 billion will pay a special assessment, based on data for the December 31, 2022, reporting period.

The FDIC initial estimates of the total cost of the failures of Silicon Valley Bank and Signature Bank, were approximately $16.3 billion and was attributable to the protection of uninsured depositors.

The FDIC has subsequently updated its estimate of the DIF’s losses that are recoverable through the special assessment, which as of June 2024 totaled $19.2 billion.

These loss estimates will be periodically adjusted as assets are sold, liabilities are satisfied, and receivership expenses are incurred.

The special assessment initially would be collected at an annual rate of approximately 13.4 basis points for an anticipated total of eight quarterly assessment periods.

Given the update to the loss estimates and the increase in the aggregate special assessment base resulting from amendments to the reported amount of estimated uninsured deposits, the FDIC currently projects that the special assessment will be collected for an additional two quarters beyond the initial eight-quarter collection period, at a lower rate.

Because the estimated loss pursuant to the systemic risk determination will continue to be periodically adjusted, the FDIC retains the ability to cease collection early, impose an extended special assessment collection period after the initial eight-quarter collection period to collect the difference between losses and the amounts collected, and impose a one-time final shortfall special assessment after both receiverships terminate.

The extent to which any such additional future assessments will impact our future deposit insurance expense is currently uncertain.

The FDIC has subsequently updated its estimate of the DIF's losses that are recoverable through the special assessment, which as of September 2025 totaled $16.7 billion.

Based on the initial estimate of the special assessment we accrued $11.3 million and subsequently increased our accrual by a net additional $0.4 million for the FDIC's latest adjustments to estimated losses.

These loss estimates continue to be periodically adjusted as assets are sold, liabilities are satisfied, and receivership expenses are incurred.

In December 2025, based upon the first six quarterly collections of the special assessment and anticipated collections for the seventh quarterly special assessment, the FDIC issued an interim final rule to amend the collection of the special assessment to reduce the eighth quarterly assessment rate from 3.36 basis points to 2.97 basis points.

Because the cumulative amount collected through the initial eight quarter special assessment period is projected to equal the FDIC’s loss estimate, the additional two quarter extend assessment period was removed.

The interim final rule also requires the FDIC to provide an offset to regular quarterly deposit insurance assessments for institutions subject to the special assessment if the aggregate amount collected exceeds estimated losses following the resolution of pending litigation, and again following the termination of the receiverships.

As provided for in the special assessment rule, if losses at the termination of the receiverships exceed the amount collected, the FDIC will implement a one-time final shortfall special assessment to ensure the full amount of actual losses is recovered as required by law.

Each institution should account for the special assessment in accordance with U.S.

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Each institution should account for any shortfall special assessment in accordance with FASB ASC Topic 450 when the conditions for accrual under GAAP have been met.

As a result, the Company recorded an $11.3 million special assessment fee in the fourth quarter of 2023 and an additional $1.8 million in 2024.

As a result, the Company has recognized $11.7 million cumulatively related to the special assessment as of December 31, 2025.

Long-term Debt

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We increased the common stock dividend from $0.24 per share in the fourth quarter of 2017, to $0.31 per share in the fourth quarter of 2018, to $0.34 per share in the fourth quarter of 2021.

On February 13, 2026, the Company declared a cash dividend of $0.38 per share for the first quarter of 2026 to common shareholders of record on February26, 2026.

The amount of future dividends will depend on our earnings, financial condition, capital requirements and other factors, and will be determined by our Board of Directors.

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Such loans are placed under closer supervision with consideration given to placing the loan on non-accrual status, the need for an additional allowance for loan losses, and (if appropriate) partial or full charge-off.

Total non-performing portfolio assets increased $103.0 million, or 110.4%, to $196.3 million at December 31, 2024, compared to $93.3 million at December 31, 2023, primarily due to an increase of $102.5 million in total non-accrual loans and $3.6 million in other real estate owned, offset by decrease of $3.1 million in loans 90 days or more past due.

As a percentage of gross loans, excluding loans held for sale, plus OREO, our non-performing assets increased to 1.01% at December 31, 2024, from 0.48% at December 31, 2023.

The non-performing portfolio loan, excluding loans held for sale, coverage ratio, defined as the allowance for credit losses to non-performing loans, excluding loans held for sale, decreased to 98.98% at December 31, 2024, from 221.58% at December 31, 2023.

Total non-performing portfolio assets decreased $52.6 million, or 26.8%, to $143.7 million at December 31, 2025, compared to $196.3 million at December 31, 2024, primarily due to a decrease of $56.8 million in total non-accrual loans and $3.1 million in loans 90 days or more past due, offset by increase of $7.3 million in other real estate owned.

As a percentage of gross loans, excluding loans held for sale, plus OREO, our non-performing assets decreased to 0.71% at December 31, 2025, from 1.01% at December 31, 2024.

The non-performing portfolio loan, excluding loans held for sale, coverage ratio, defined as the allowance for credit losses to non-performing loans, excluding loans held for sale, increased to 183.79% at December 31, 2025, from 98.98% at December 31, 2024.

The following table presents the breakdown of total non-accrual, past due, and restructured loans for the past five years:

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Allowance for credit losses as a percentage of non-performing loans

(1) On January 1, 2023, the Company adopted ASU 2022-02, which eliminated the accounting guidance for TDRs and enhanced the disclosure requirements for certain loan modifications when a borrower is experiencing financial difficulty.

For a description of the Company’s accounting policies related to the accounting and reporting of TDRs, for which certain comparative period information is presented, refer to Note 1:

Summary of Significant Accounting Policies.

The effect of non-accrual loans on interest income for the past five years is presented below:

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Non-accrual Loans

Total non-accrual portfolio loans were $169.2 million at December 31, 2024, increased $102.5 million, or 153.7%, from $66.7 million at December 31, 2023.

Total non-accrual portfolio loans were $112.4 million at December 31, 2025, decreased $56.8 million, or 33.6%, from $169.2 million at December 31, 2024.

The allowance for the collateral-dependent loans is calculated based on the difference between the outstanding loan balance and the value of the collateral as determined by recent appraisals, sales contracts, or other available market price information, less cost to sell.

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The Bank generally seeks to obtain current appraisals, sales contracts, or other available market price information intended to provide updated factors in evaluating potential loss.

The allowance for loan losses to non-performing loans was 93.39% at December 31, 2024, compared to 209.33% at December 31, 2023, primarily due to an increase in non-performing loans.

The allowance for loan losses to non-performing loans was 172.82% at December 31, 2025, compared to 93.39% at December 31, 2024, primarily due to a decrease in non-accrual loans.

Non-accrual loans also include those modifications to borrowers experiencing financial difficulties that do not qualify for accrual status.

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Commercial real estate loans

Residential mortgage and equity lines

Total non-accrual loans

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Commercial loans

Construction loans

Commercial real estate loans

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As of December 31, 2025, construction loans of $225.9 million were disbursed with pre-established interest reserves of $34.0 million compared to $227.9 million of such loans disbursed with pre-established interest reserves of $31.3 million at December 31, 2024.

The balance for construction loans with interest reserves which have been extended was $4.2 million with pre-established interest reserves of $53 thousand at December 31, 2024, compared to $6.4 million with pre-established interest reserves of $0.5 million at December 31, 2023.

There were no land loans disbursed with pre-established interest reserves at December 31, 2024, compared to $12.9 million of land loans disbursed with pre-established interest reserves of $0.4 million at December 31, 2023.

The balance for construction loans with interest reserves which have been extended was $3.3 million with pre-established interest reserves of $95 thousand at December 31, 2025, compared to $4.2 million with pre-established interest reserves of $53 thousand at December 31, 2024.

Land loans of $15.3 million were disbursed with pre-established interest reserves of $1.3 million at December 31, 2025, compared to no land loans disbursed with pre-established interest reserves at December 31, 2024.

There were no land loans with interest reserves which have been extended at December 31, 2025, and December 31, 2024.

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The Bank’s loans for construction, land development, and other land represented 14% of total risk-based capital as of December 31, 2025, and 15% as of December 31, 2024.

Total CRE loans represented 289% of total risk-based capital as of December 31, 2024, and 292% as of December 31, 2023, which were within the Bank’s internal limit of 400% of total capital.

Total CRE loans represented 287% of total risk-based capital as of December 31, 2025, and 289% as of December 31, 2024, which were within both the Bank’s internal policy limit and supervisory criteria.

See Part I — Item 1A — “Risk Factors” for a discussion of some of the factors that may affect us.

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Total CRE loans

The weighted-average loan-to-value (“LTV”) ratio of the total CREC loan portfolio was 49% and 50% as of December 31, 2024, and 2023, respectively.

The weighted-average loan-to-value (“LTV”) ratio of the total CREC loan portfolio was 49% as of December 31, 2025, and 2024.

Most of our CREC loan property types had a low weighted-average LTV ratio.

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The multifamily residential loan portfolio is largely comprised of loans secured by residential properties with five or more units.

Multifamily residential loans totaled $2.72 billion as of December 31, 2024, compared with $2.60 billion as of December 31, 2023, and accounted for 14% and 13% of total loans held-for investment as of December 31, 2024, and 2023, respectively.

Multifamily residential loans totaled $2.89 billion as of December 31, 2025, compared with $2.72 billion as of December 31, 2024, and accounted for 14% of total loans held-for investment as of December 31, 2025, and 2024.

The Company offers a variety of first lien mortgages, including fixed- and variable-rate loans.

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Construction and land loans provide financing for diversified projects by real estate property type.

Construction and land loans totaled $403.1 million as of December 31, 2024, compared with $494.5 million as of December 31, 2023, and accounted for 2% and 3% of total loans held-for-investment as of December 31, 2024, and 2023, respectively.

Construction and land loans totaled $408.0 million as of December 31, 2025, compared with $403.1 million as of December 31, 2024, and accounted for 2% of total loans held-for-investment as of December 31, 2025, and 2024.

Construction loan exposure was made up of $337.6 million in loans outstanding, plus $235.3 million in unfunded commitments as of December 31, 2025, compared with $319.6 million in loans outstanding, plus $186.5 million in unfunded commitments as of December 31, 2024.

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Financial Statements and Supplementary Data.”

In calculating our allowance for credit losses for the year ended 2024, the change in Moody’s forecast of future GDP, unemployment rates, CRE and home price indexes, did not result in a significant impact to the allowance for credit losses.

In calculating our allowance for credit losses for the year ended 2025, an increase in Special Mention-rated loans and an increase in individually evaluated loan reserves accounted for the increased allowance.

Our methodology and framework along with the 8-quarter reasonable and supportable forecast period and the 4-quarter reversion period have remained consistent since the implementation of CECL.

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We estimate the probability of default during the reasonable and supportable forecast period using separate econometric regression models developed to correlate macroeconomic variables, (GDP, unemployment, CRE prices and residential mortgage prices) to historical credit performance for each of the six loan portfolios from the fourth quarter of 2007 through the fourth quarter of 2024.

Loss given default rates are computed based on the net charge-offs recognized and then applied to the expected exposure at default of defaulted loans starting with the fourth quarter of 2007 through the fourth quarter of 2022.

Loss given default rates are estimated and then applied to the expected exposure at default of defaulted loans starting with the fourth quarter of 2007 through the fourth quarter of 2025.

The probability of default and the loss given default rates are applied to the expected amount at default at the loan level based on contractual scheduled payments and estimated prepayments.

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Generally speaking, the blended scenario approach would include the Baseline, the Alternative Scenario 1 – Upside – 10th Percentile and the Alternative Scenario 3 – Downside – 90th Percentile forecasts.

After the R&S period, the Company will revert to straight-line for the four-quarter reversion period to the long-term loss rates for each of the six portfolios of loans.

After the R&S period, the Company will revert straight-line for the four-quarter reversion period to the long-term loss rates for each of the six portfolios of loans.

The contractual term excludes renewals and modifications but includes pre-approved extensions and prepayment assumptions where applicable.

Our allowance for credit losses is sensitive to a number of inputs, including macroeconomic forecast assumptions and credit rating migrations during the period.

Our macroeconomic forecasts used in determining the December 31, 2024, allowance for credit losses consisted of three scenarios as provided by an outside forecaster.

After increasing the weighting of the downside scenario in 2022 to reflect our expectations that a recession was more likely than not we reduced the weighting of the severe scenario slightly during the third quarter of 2023, in light of the continued strength of the economy.

With the economy continuing to expand at a solid pace, the downside scenario weighting was once again reduced while giving greater weight to the baseline scenario.

The baseline scenario reflects modest ongoing GDP growth and a steady decline in the unemployment rate starting from 4.15% in the first quarter of 2025 to 4.09% by the end of the R&S period.

The upside scenario reflects higher GDP growth and lower unemployment rates with the stronger economy resulting in inflation, and interest rates a bit higher than in the baseline scenario, though the Federal Reserve is projected to continue to cut the fed funds rate in the first quarter of 2025.

The downside scenario contemplates a recession and rising inflation prompts the Federal Reserve to initially raise the fed funds rate before lowering again below the baseline in the third quarter of 2025, resulting in negative GDP growth for three quarters peaking at 3.9% in the third quarter of 2025, rising unemployment that peaks at 8.3% in the first quarter of 2026, a decline in CRE prices of 18.9% and a decline in residential home prices of 11.3% during the forecast period.

As of December 31, 2024, we slightly decreased the weighting on our downside scenario while placing greater weight on the base scenario, with a small weighting on the upside scenario.

Our macroeconomic forecasts used in determining the December 31, 2025, allowance for credit losses consisted of three scenarios as provided by a reputable third-party economic forecaster.

This quarter the scenario weighting remains the same from the previous quarter, with the greatest weight placed on the baseline scenario and more weight placed on the downside scenario than the upside scenario, as the macroeconomic forecasts project weak growth in the near term, avoiding recession but still capturing several of the challenges facing the economy.

The baseline scenario reflects moderate GDP growth in spite of a slight rise in the unemployment rate, starting from 4.5% in the first quarter of 2026, peaking at 4.8% by the fourth quarter of 2026, and decreasing back down to 4.6% by the end of the R&S period.

The upside scenario assumes the impacts of tariffs and deportations on the economy are less than expected and reflects higher GDP growth and lower unemployment rates with the stronger economy resulting in inflation and interest rates a bit higher than in the baseline scenario.

The downside scenario assumes the economy falls into recession as the impacts of tariffs, deportations and political tensions are worse than expected and rising inflation prompts the Federal Reserve to lower the fed funds rate during the first quarter of 2026.

This results in negative GDP growth for three quarters peaking at 3.8% in the third quarter of 2026, rising unemployment that peaks at 8.4% in the first quarter of 2027, a decline in CRE prices of 21% and a decline in residential home prices of 12.3% during the forecast period.

Keeping all other factors constant, we estimate that if we had applied 100% weighting to the downside scenario, the allowance for credit losses as of December 31, 2025, would have been approximately $97.4 million higher.

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Average loans outstanding during the year (1)

Ratio of net charge-offs/(recoveries) to average loans outstanding during the year (1)

Ratio of net charge-offs to average loans outstanding during the year (1)

Provision/(reversal) for credit losses to average loans outstanding during the year (1)

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The allowance allocated to commercial loans was $39.1 million at December 31, 2025, compared to $57.8 million at December 31, 2024.

The increase was primarily due to an increase in non-accrual loans.

The decrease was primarily due to a decrease in non-accrual loans.

The allowance allocated to residential mortgage loans and equity lines was $24.6 million at December 31, 2025, compared to $16.2 million at December 31, 2024.

The decrease was primarily due to a decrease in residential mortgage loans.

The increase was primarily due to an increase in residential mortgage loans and an increase in non-accrual loans.

The allowance allocated to commercial real estate loans was $125.7 million at December 31, 2025, compared to $79.6 million at December 31, 2024.

The increase is due primarily to an increase in commercial real estate loans.

The allowance allocated for construction loans remained the same of $8.2 million at December 31, 2024, and December 31, 2023.

The increase is due primarily to an increase in commercial real estate loans and an increase in reserve rates.

The allowance allocated for construction loans was $6.5 million at December 31, 2025, compared to $8.2 million at December 31, 2024.

The decrease was primarily due to a decrease in average construction loans.

Please also see Part I — Item 1A — “Risk Factors” for additional factors that could cause actual results to differ materially from forward-looking statements or historical performance.

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At December 31, 2025, the Bank had an approved credit line with the FHLB of San Francisco totaling $8.85 billion.

Total advances from the FHLB of San Francisco were $60.0 million and standby letter of credits issued by FHLB on the Company’s behalf were $915.0 million as of December 31, 2024.

There were no total advances from the FHLB of San Francisco and standby letter of credits issued by FHLB on the Company’s behalf were $953.5 million as of December 31, 2025.

These borrowings bear fixed rates and are secured by loans.

See Note 9 to the Consolidated Financial Statements.

At December 31, 2024, the Bank pledged $474.8 million of its commercial loans to the Federal Reserve Bank’s Discount Window under the Borrower-in-Custody program.

The Bank had borrowing capacity of $395.1 million from the Federal Reserve Bank Discount Window at December 31, 2024.

At December 31, 2025, the Bank pledged $1.42 billion of its commercial loans to the Federal Reserve Bank’s Discount Window under the Borrower-in-Custody program.

The Bank had borrowing capacity of $1.28 billion from the Federal Reserve Bank Discount Window at December 31, 2025.

Liquidity can also be provided through the sale of liquid assets, which consist of federal funds sold, securities purchased under agreements to resell, securities available-for-sale ("AFS").

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

What changed 10-K

Item 5. Market for Registrant’s Common Equity