COASTAL FINANCIAL CORP 10-K

ck1437958-20251231 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________________________ FORM 10-K ________________________________ (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31 , 2025 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-38589 ________________________________ COASTAL FINANCIAL CORPORATION (Exact name of Registrant as specified in its Charter) ________________________________ Washington 56-2392007 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 5415 Evergreen Way , Everett , Washington 98203 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: ( 425 ) 257-9000 ________________________________ Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, no par value per share CCB Nasdaq Global Select Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No x Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes x No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company o Emerging growth company o If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. x Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). x Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, based on the closing price of the shares of common stock on The NASDAQ Stock Market on June 30, 2025, was $ 1,255,281,080 . The number of shares of Registrant’s Common Stock outstanding as of February 20, 2026 was 15,208,963 . DOCUMENTS INCORPORATED BY REFERENCE Portions of the Registrant’s Definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A for its 2026 Annual Meeting of Shareholders are incorporated by reference into Part III of this Annual Report on Form 10-K. Table of Contents INDEX Page Forward Looking Statements i Part I Item 1 Business 3 Item 1A Risk Factors 27 Item 1B Unresolved Staff Comments 50 Item 1 C Cybersecurity 50 Item 2 Properties 52 Item 3 Legal Proceedings 52 Item 4 Mine Safety Disclosures 52 Part II Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases 53 Item 6 [Reserved] 55 Item 7 Management’s Discussion and Analysis of Financial Condition and Operations 55 Item 7A Quantitative and Qualitative Disclosures About Market Risk 113 Item 8 Financial Statements and Supplementary Data (Baker Tilly LLP, Everett, WA, PCAOB ID: 23 ) 113 Consolidated Balance Sheets 117 Consolidated Statements of Income 119 Consolidated Statements of Comprehensive Income 121 Consolidated Statements of Changes in Shareholders' Equity 122 Consolidated Statements of Cash Flows 123 Notes to Consolidated Financial Statements 125 Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 187 Item 9A Controls and Procedures 187 Item 9B Other Information 189 Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 189 Part III Item 10 Directors, Executive Officers and Corporate Governance 190 Item 11 Executive Compensation 190 Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters 190 Item 13 Certain Relationships and Related Transactions, and Director Independence 191 Item 14 Principal Accountant Fees and Services 191 Part IV Item 15 Exhibits and Financial Statement Schedules 192 Item 16 Form 10-K Summary 197 Signatures 197 Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (this Report on Form 10-K) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. Any statements about our management’s expectations, beliefs, plans, predictions, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends” and similar words or phrases. Any or all of the forward-looking statements in this Annual Report on Form 10-K may turn out to be inaccurate. The inclusion of or reference to forward-looking information in this Annual Report on Form 10-K should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of several factors more fully described under the caption “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K; • changes in business and economic conditions generally and in the financial services industry, nationally and within our market area, particularly in the markets in which we operate and in which our loans are concentrated; • our expected future financial results; • the overall health of the local and national real estate market; • the credit risk associated with our loan portfolio, such as possible additional credit losses and impairment of collectability of loans, specifically with our commercial real estate loans; • changes in market interest rates and impacts of such changes on our profits and business; • our ability to generate and grow revenue through our relationships with digital financial service providers; • our ability to successfully manage liquidity risk; • our ability to implement our growth strategy and manage costs effectively; • our ability to maintain an adequate level of allowance for credit losses; • our level of nonperforming assets and the costs associated with resolving problem loans; • the composition of our senior leadership team and our ability to attract and retain key personnel; • our ability to raise additional capital to implement our business plan; • the occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents; • interruptions involving our information technology and telecommunications systems or third-party servicers, including as a result of cybersecurity-related incidents; • changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board (“FASB”), including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; • our ability to maintain our reputation; • increased competition in the financial services industry; i Table of Contents • regulatory guidance on commercial lending concentrations; • the effectiveness of our risk management framework; • the commencement and outcome of litigation and other legal proceedings and regulatory actions against us or to which we may become subject; • the soundness of other financial institutions and the impacts related to or resulting from bank failures and other economic and industry volatility, including potential increased regulatory requirements and costs and potential impacts to macroeconomic conditions; • the impact of recent and future legislative and regulatory changes and economic stimulus programs and other changes in banking, securities and tax laws and regulations, and their application by our regulators, including as a result of the current administration; • the impact on the Company’s operations due to epidemic illnesses, natural or man-made disasters, such as earthquakes, tsunamis, wildfires and flooding, the effects of regional or national civil unrest, wars and acts of terrorism, and political developments that may disrupt or increase volatility in securities or otherwise affect economic conditions; • fluctuations in the value of the securities held in our securities portfolio; • governmental monetary and fiscal policies; • changes in U.S. trade policies, including the imposition of tariffs and retaliatory tariffs; • any inability to implement and maintain effective internal control over financial reporting and/or disclosure controls or inability to remediate any material weaknesses in our internal control over financial reporting and/or disclosure controls deemed ineffective; and • our success at managing the risks involved in the foregoing items. The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this Annual Report on Form 10-K. If one or more events related to these or other risks or uncertainties materialize, and the impact of any material weakness in our internal control over financial reporting identified in connection with the Company described herein, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. You are cautioned not to place undue reliance on forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events except as required by law. ii Table of Contents PART I Item 1. Business Our Company Coastal Financial Corporation (“Company”) is a registered bank holding company, whose wholly owned subsidiaries are Coastal Community Bank (“Bank”) and Arlington Olympic LLC (“LLC”). The Company is a Washington state corporation that was organized in 2003. The Bank was incorporated and commenced operations in 1997 and is a Washington state-chartered commercial bank and Federal Reserve System (“Federal Reserve”) member bank. The LLC was formed in 2019 and owns the Company’s Arlington branch, which the Bank leases from the LLC. Our executive offices are located at 5415 Evergreen Way, Everett, Washington 98203, and our telephone number is (425) 257-9000. Our website addresses are www.coastalbank.com and www.ccbx.com. Information on our website should not be considered a part of this Annual Report on Form 10-K. We are headquartered in Everett, Washington, which by population is the largest city in, and the county seat of, Snohomish County. Our business is conducted through three reportable segments: the community bank, CCBX and treasury & administration. The primary focus of the community bank is on providing a wide range of banking products and services to consumers and small to medium sized businesses in the broader Puget Sound region in the state of Washington and through the Internet and our mobile banking application. We currently operate 14 full-service banking locations, 12 of which are located in Snohomish County, where we are the largest community bank by deposit market share, and two of which are located in neighboring counties (one in King County and one in Island County). The CCBX segment provides banking as a service (“BaaS”) that allows our digital financial service partners to offer their customers banking services. The CCBX segment had 28 partners as of December 31, 2025. The treasury & administration segment includes investments, debt and other reporting items that are not specific to the community bank or CCBX segments. The Bank’s deposits are insured in whole or in part by the Federal Deposit Insurance Corporation (“FDIC”). The Bank is subject to regulation by the Federal Reserve and the Washington State Department of Financial Institutions Division of Banks. The Federal Reserve also has supervisory authority over the Company. As of December 31, 2025, we had total assets of $4.74 billion, total loans receivable of $3.75 billion, total deposits of $4.14 billion and total shareholders’ equity of $491.0 million. Throughout this Annual Report on Form 10-K, references to “we,” “us” or “our” refer to the Company or the Bank, or both, as the context indicates. Our Markets We define our community bank market broadly as the Puget Sound region in the state of Washington, which encompasses King, Kitsap, Pierce, Snohomish, Skagit, Thurston and Island Counties. The Puget Sound region, which comprises over 62% of the population of the state of Washington, and approximately 61% of the number of businesses located therein, has a population of approximately 5.1 million, over 147,000 businesses and $155.2 billion of deposits with us and other banking institutions located in the region. Our banking operations are primarily focused on serving customers within Snohomish County and other select areas of the Puget Sound region. Our strategy emphasizes relationship-based banking and targeted growth within our core markets, where we seek to serve the needs of commercial and retail customers and attract stable core deposits to support loan growth. We believe our focus on these markets aligns with our operating model and allows us to deploy resources efficiently while maintaining a disciplined approach to growth. Our CCBX market extends throughout the United States through our digital financial services partners. Our CCBX partners make our banking products and services available to their consumers, partners and workforce through integration with our banking platform. In doing so, our addressable market expands to a broader spectrum of consumers as well as small businesses. Working with our CCBX partners allows us to provide a broader range of services for different demographics through their offerings. Developing the kind of unique offerings to specific under-served or under-banked populations would be difficult for a bank our size, but through our CCBX partnerships we are able to use our banking charter to support this effort in a much broader scope. 3 Table of Contents As of December 31, 2025, the CCBX segment had a total of 28 relationships as indicated in the chart below, at varying stages, including one signed letter of intent as of December 31, 2025. (1) Acquired GreenFi assets during the quarter ended December 31, 2025 (2) Our partner is a subsidiary of a parent entity with broker-dealer subsidiaries. Segment Reporting The Company has three reportable segments: The community bank, CCBX and treasury & administration. The community bank segment includes all community banking activities, with a primary focus on providing a wide range of banking products and services to consumers and small to medium sized businesses in the broader Puget Sound region in the state of Washington and through the Internet and our mobile banking application. The CCBX segment provides BaaS that allows our digital financial service partners to offer their customers banking services. The treasury & administration segment includes investments, debt and other reporting items that are not specific to the community bank or CCBX segments. For more information about each of the Company’s reportable segments, please refer to “ Note 21 – Segment Reporting ” of the accompanying notes to the consolidated financial statements included elsewhere in this report. Our Banking Services Lending Activities We focus primarily on commercial lending in our community bank and primarily consumer and business lending in CCBX. We offer a variety of loans to business owners, including commercial and industrial loans and commercial real estate loans secured by owner-occupied commercial properties. We also offer non-owner occupied commercial real estate loans, multi-family loans, and construction and development loans to investors and developers. We also offer residential real estate loans and to a lesser extent, consumer loans in the community bank. We offer commercial and consumer loans through CCBX. Our largest CCBX consumer and business loan categories are installment loans and credit cards. Commercial and Industrial Loans . As of December 31, 2025, we had $454.1 million of commercial and industrial loans, representing 12.1% of total loans. Included in the commercial and industrial loan balance is $224.4 million in community bank loans and $229.6 million in CCBX commercial loans. We make commercial and industrial loans, including term loans, commercial lines of credit, capital call lines, working capital loans, equipment financing, borrowing base loans, Small Business Administration (“SBA”) loans, and other loan products, that are underwritten on the basis of the 4 Table of Contents borrower’s ability to service the debt from income. We take as collateral a lien on general business assets including, among other things, available real estate, accounts receivable, inventory and equipment and generally obtain a personal guaranty from the borrower or principal. Our commercial lines of credit typically have a term of one year and have variable interest rates that adjust monthly based on the prime rate. Other commercial and industrial loans generally have fixed interest rates and terms that typically range from one to five years depending on factors such as the type and size of the loan, the financial strength of the borrower/guarantor and the age, type and value of the collateral. Terms greater than five years may be appropriate in some circumstances, based upon the useful life of the underlying asset being financed or if some form of credit enhancement, such as an SBA guarantee, is obtained. Commercial and industrial loans are often larger and involve greater risks than other types of lending. Because payments on commercial and industrial loans are often dependent on the operating cash flows of the borrower’s business, repayment of these loans is often more sensitive to adverse conditions in the general economy, which in turn increases repayment risk. We also face the risk that losses incurred on a small number of commercial loans could have an adverse impact on our financial condition and results of operations due to (a) the larger average size of commercial loans as compared with other loans, such as residential loans, as well as (b) collateral that is generally less readily marketable than collateral for consumer loans, such as residential real estate and automobiles. As of December 31, 2025, we held $210.5 million in capital call lines provided to venture capital firms through one of our CCBX partners. These loans are secured by the capital call rights and are individually underwritten to the Bank’s credit standards and the underwriting is reviewed by the Bank on every loan/line. Capital call lines represent 46.4% of total commercial and industrial loans, and are included in CCBX commercial and industrial loans. As of December 31, 2025, our total commercial SBA portfolio was $1.6 million, net of $1.3 million in loans sold, with $2.9 million guaranteed by the SBA, and included an immaterial amount of Paycheck Protection Program (“PPP”) loans. We participate in the SBA 7(a) program in order to meet the needs of our small business community. As an approved participant in the SBA Preferred Lender’s Program, we enable our clients to obtain SBA loans without being subject to the potentially lengthy SBA approval process necessary for lenders that are not SBA Preferred Lenders. The SBA’s 7(a) program provides up to a 75% guaranty for loans greater than $150,000. For loans $150,000 or less, the program provides up to an 85% guaranty. The maximum 7(a) loan amount is $5 million. The guaranty is conditional and covers a portion of the risk of payment default by the borrower, but not the risk of improper underwriting, closing and servicing by the lender. As such, prudent underwriting and closing processes are essential to effective utilization of the 7(a) program. We typically sell in the secondary market the SBA-guaranteed portion (generally 75% of the principal balance) of the SBA loans we originate. Commercial Real Estate . As of December 31, 2025, we had $1.29 billion of commercial real estate loans, representing 34.2% of total loans. We make commercial mortgage loans collateralized by owner- and non-owner-occupied real estate, as well as multi-family residential loans. Loans secured by owner-occupied real estate totaled $386.9 million and comprised 30.1% of our commercial real estate portfolio at December 31, 2025. The real estate securing our existing commercial real estate loans includes a wide variety of property types, such as manufacturing and processing facilities, business parks, warehouses, retail centers, convenience stores, hotels and motels, office buildings, mixed-use residential and commercial, and other properties. We originate both fixed- and adjustable-rate loans with terms up to 20 years. Fixed-rate loans typically amortize over a 10-to-25 year period with a final maturity and balloon payment at the end of five to ten years. Adjustable-rate loans are generally based on the prime rate and adjust with the prime rate or are based on term equivalent Federal Home Loan Bank rates. At December 31, 2025, approximately 32.1% of the commercial real estate loan portfolio consisted of fixed rate loans. Loan amounts generally do not exceed 75% of the lesser of the appraised value or the purchase price. Commercial real estate lending with respect to non-owner occupied properties typically involves higher loan principal amounts and the repayment is dependent, in large part, on sufficient income from the properties securing the loans to cover operating expenses and debt service. We require that our commercial real estate loans to investors be secured by well-managed properties with adequate margins and generally obtain a guaranty from responsible parties. As of December 31, 2025, we held $531.1 million in other non-owner occupied loans, excluding multi-family loans, representing 41.3% of our commercial real estate loans and 14.1% of total loans. Our multi-family residential loan portfolio is comprised of loans secured by apartment buildings, residential mixed-use buildings and, to a lesser extent, senior living centers. As of December 31, 2025, we had $367.9 million on multi-family residential loans, representing 28.6% of our commercial real estate loans, and 9.8% of total loans. 5 Table of Contents As of December 31, 2025, we had a total of $829,000, and serviced $908,000 in loans sold to others that are guaranteed by the SBA, in commercial real estate SBA loans. Also included in commercial real estate loans was $93.7 million, representing 7.3% of our commercial real estate loans, and 2.5% of total loans, under the SBA 504 program. Under the SBA 504 program we make loans to small businesses to provide funding for the purchase of real estate and we provide up to 90% financing of the total purchase cost, represented by two loans to the borrower. The first lien loan is generally a long-term, fully amortizing, fixed-rate loan made in the amount of 50% of the total purchase cost. The second lien loan is a short-term, interest only, adjustable rate loan made in the amount of 40% of the total purchase cost, which is generally paid off within three to six months after full receipt of loan proceeds from a certified development corporation that provides long-term financing directly to the borrower. Construction, Land and Land Development Loans . As of December 31, 2025, we had $222.1 million in construction, land and land development loans, representing 5.9% of total loans. We make loans to established builders to construct residential properties, to developers of commercial real estate investment properties and residential developments and, to a lesser extent, loans to individual clients for construction of single family homes in our market areas. We also make loans for the acquisition of undeveloped land. Construction loans are typically disbursed as construction progresses and carry either fixed or variable interest rates. Our construction and development loans typically have terms that range from six months to two years depending on factors such as the type and size of the development and the financial strength of the borrower/guarantor. Loans are typically structured with an interest only construction period and mature at the completion of construction. Construction and land development loans typically involve more risk than other types of lending products because repayment of these loans is dependent, in part, on the sale or refinance of the ultimate project rather than the ability of the borrower or guarantor to repay principal and interest. Moreover, these loans are typically based on future estimates of value and economic circumstances, which may differ from actual results or be affected by unforeseen events. If the actual circumstances differ from the estimates made at the time of approval of these loans, we face the risk of having inadequate security for the repayment of the loan. Further, if we foreclose on the loan, we may be required to fund additional amounts to complete the project and may have to hold the property for an unspecified period of time until the foreclosed property is sold. Residential Real Estate . As of December 31, 2025, we had $466.4 million in residential real estate loans, representing 12.4% of total loans. Included in the residential real estate balance is $202.3 million in community bank loans and $264.1 million in CCBX loans. Included in community bank residential real estate loans are one-to-four family loans to investors to finance their rental properties and to business owners to secure their business loans. As of December 31, 2025, residential real estate loans made to investors and business owners totaled $167.3 million, or 35.9% of our residential real estate loans. The community bank originates one-to-four family adjustable-rate mortgage (“ARM”), loans for our portfolio and operate as a mortgage broker for mortgage lenders we have agreements with for customers who want a 15-year to 30-year, fixed-rate mortgage loan. As of December 31, 2025, the balance of ARM portfolio loans was $36.5 million, or 7.8% of residential real estate loans. Our ARM loans typically do not meet the guidelines for sale in the secondary market due to characteristics of the property, the loan terms or exceptions from agency underwriting guidelines, which enables us to earn a higher interest rate. We also originate home equity lines of credit and home equity term loans for our portfolio. Home equity lines of credit have variable interest rates, while home equity term loans are fixed for up to 5-1/2 years but can be amortized up to a maximum of 180 months with a balloon payment at maturity. The community bank also purchases residential mortgages originated through other financial institutions to hold for investment with the intent to diversify our residential mortgage loan portfolio, meet certain regulatory requirements and increase our interest income. As of December 31, 2025, we held $4.4 million, representing 0.9% of our residential real estate loans, in purchased residential real estate mortgage loans. Our last purchase of residential mortgages was in 2018. These purchased loans typically have a fixed rate with a term of 15 to 30 years and are collateralized by one-to-four family residential real estate. We have a defined set of credit guidelines that we use when evaluating these loans. Although purchased loans were originated and underwritten by another institution, our mortgage, credit, and compliance departments conduct an independent review of each underlying loan that includes re-underwriting each of these loans to our credit and compliance standards. CCBX loans totaled $264.1 million, or 56.6% of residential real estate loans, as of December 31, 2025. These loans are home equity line of credits that are accessed through the use of a consumer card. These are first and second lien 6 Table of Contents residential loans and require 18 months of home ownership. Term lengths are up to 30 years and lines range from $50,000 to $400,000. These loans are made through a CCBX partner to our underwriting standards. Like our commercial real estate loans, our residential real estate loans are secured by real estate, the value of which may fluctuate significantly over a short period of time as a result of market conditions in the area in which the real estate is located. Adverse developments affecting real estate values in our market areas could therefore increase the credit risk associated with these loans, impair the value of property pledged as collateral on loans, and affect our ability to sell the collateral upon foreclosure without a loss or additional losses. Consumer and Other Loans . As of December 31, 2025, we had $1.33 billion in total consumer loans, representing 35.4% of total loans. Consumer loans are primarily originated through our CCBX partners. Consumer loans typically have shorter terms, lower balances, higher yields and higher risks of default than residential real estate mortgage loans. Consumer loan collections are dependent on the borrower’s continuing financial stability and are therefore more likely to be affected by adverse personal circumstances, such as a loss of employment, divorce, or unexpected medical costs. The community bank segment has $14.1 million in consumer loans as of December 31, 2025. We make a variety of consumer loans to individuals, mainly business owners and family of business owners, for personal and household purposes, including automobile, boat and recreational vehicle loans and secured term loans. We also offer personal lines of credit including overdraft protection. Consumer loans are underwritten based on the individual borrower’s income, current debt level, past credit history and the value of any available collateral. The terms of consumer loans vary considerably based upon the loan type, nature of collateral and size of the loan. Through our CCBX segment we had $1.31 billion in consumer and other loans as of December 31, 2025. This includes $691.7 million in other consumer loans, $132.6 million of which are purchased loans secured by consumer term loans, and $622.7 million in credit cards. Our CCBX segment includes cash secured and unsecured consumer loans, loan products designed to help consumers build credit, credit cards and overdrafts. Consumer credit cards are open-ended and have interest rates ranging from a promotional rate of 0.00% to the maximum rate allowable by state. For short-term consumer loans, both secured and unsecured options are available and typically have fully-amortizing terms ranging from two months to six years. Interest rates can be fixed or variable up to the maximum allowable rate by state. CCBX consumer loans are originated and serviced through our CCBX partners to our underwriting standards. The following chart breaks out our consumer loan portfolio by segment and type of loan as of December 31, 2025. The largest portion of our consumer portfolio is comprised of CCBX installment loans and credit card loans. These loans are further divided to show the total secured and unsecured in each of these categories. The average overall outstanding consumer loan balance is small at $809. (dollars in thousands) Outstanding Balance % of Total Outstanding Balance Consumer Loans Average Loan Balance Number of Loans CCBX consumer loans Installment loans - cash secured $ 162,072 12.2 % Installment loans - unsecured 502,767 37.8 Installment loans - total 664,839 50.0 $ 0.8 864,638 Credit cards - cash secured 56 0.1 Credit cards - unsecured 622,625 46.9 Credit cards - total 622,681 46.9 1.4 435,236 Lines of credit 10,027 0.8 0.1 89,736 Other loans 16,842 1.3 0.1 252,381 Community bank consumer loans Lines of credit 140 0.0 4.5 31 Installment loans 3,010 0.2 111.5 27 Other loans 10,922 0.8 28.6 382 Total $ 1,328,461 100.0 % $ 0.8 1,642,431 7 Table of Contents Credit Administration and Loan Review We control credit risk both through disciplined underwriting of each transaction, as well as active credit management processes and procedures to manage risk and minimize loss throughout the life of a loan for community bank and CCBX loans. We seek to maintain a broadly diversified loan portfolio in terms of type of customer, type of loan product, geographic area and industries in which our business customers are engaged. We have developed tailored underwriting criteria and credit management processes and procedures for each of the various loan product types we offer our customers. Underwriting . In evaluating each potential loan relationship, we adhere to a disciplined underwriting evaluation process that includes the following: • understanding the customer’s financial condition and ability to repay the loan; • verifying that the primary and secondary sources of repayment are adequate in relation to the amount and structure of the loan; • observing appropriate loan-to-value guidelines for collateral secured loans; • obtaining credit enhancements from CCBX partners to reduce the risk of loss; • maintaining our targeted levels of diversification for the loan portfolio, both as to type of borrower and type of collateral; and • ensuring that each loan is properly documented with perfected liens on collateral. Loan Approval Authority . Our lending activities follow written, non-discriminatory, underwriting standards and loan origination procedures established by our board of directors and management. We have established several levels of lending authority that have been delegated by the board of directors to our management credit committee, Chief Executive Officer, Chief Credit Officer and other personnel in accordance with our loan policy. Authority limits are based on the total exposure of the borrower and are conditioned on the loan conforming to the policies contained in the loan policy. Any loan policy exceptions are fully disclosed to the approving authority. CCBX loans are originated by our CCBX lending partners. Prior to implementation of a new lending product or subsequent to any changes to an existing lending product, the lending partner is required by their Program Agreement to submit all policies, scorecards, and/or lending models to us for review and approval in order to ensure the loans will meet our risk profile prior to origination. Underwriting requirements vary based on products with partners that have higher risk product lines necessitating increased credit enhancements and/or cash reserves. As of December 31, 2025, 98.8% of our CCBX loans are covered by a credit enhancement. Please refer to “ Concentrations of Credit Risk” section below for more information on CCBX credit enhancements. Ongoing Credit Risk Management. In addition to the tailored underwriting process described above, we perform ongoing risk monitoring and review processes for credit exposures. Although we grade and classify our loans internally, we engage an independent third-party professional firm to perform regular loan reviews and confirm loan classifications. We strive to identify potential problem loans early in an effort to actively seek resolution of these situations before they create a loss. We record any necessary charge-offs promptly and maintain adequate allowance levels for expected credit losses estimated in the loan portfolio. In addition to requiring prior review and approval of lending criteria on CCBX loans, we also provide ongoing oversight of the CCBX portfolio to confirm whether originated credits meet the agreed upon conditions of the loans. In general, whenever a particular loan or overall borrower relationship is downgraded from a pass grade to a watch or substandard grade based on one or more standard loan grading factors, our relationship manager (who is typically the loan officer) and credit team members engage in active evaluation of the asset to determine the appropriate resolution strategy. Management regularly reviews the status of the watch list and classified assets portfolio as well as the larger credits in the portfolio. 8 Table of Contents Concentrations of Credit Risk Most of our community bank lending activity is conducted with businesses and individuals in our market area. As of December 31, 2025, approximately 81% of the real estate loans in our community bank loan portfolio (measured by dollar amount) were secured by real estate, or made to borrowers who live or conduct business, in the Puget Sound region. A substantial portion of our loan portfolio consists of commercial and industrial loans and real estate loans secured by commercial real estate properties located in the Puget Sound region, and is dependent upon the economic environment of the Puget Sound region. We have a limited number of loans secured by properties located outside of the Puget Sound region, most of which are made to borrowers who are well-known to us. CCBX loans receivable totaled $1.81 billion, or 48.1% of total loans receivable, as of December 31, 2025. CCBX loans are originated through our partners and are consistent with our underwriting standards. Agreements with our CCBX partners provide for a credit enhancement provided by the partner which protects the Bank by indemnifying or reimbursing incurred losses. In accordance with accounting guidance, we estimate and record a provision for expected losses for these CCBX loans, unfunded commitments and negative deposit accounts. When the provision for credit losses - loans and provision for unfunded commitments is recorded, a credit enhancement asset is also recorded on the balance sheet through noninterest income (BaaS credit enhancements) in recognition of the CCBX partner legal commitment to indemnify or reimburse losses. The credit enhancement asset is relieved as credit enhancement payments and recoveries are received from the CCBX partner or taken from the partners’ cash reserve account. Agreements with our CCBX partners also provide protection to the Bank from fraud by indemnifying or reimbursing incurred fraud losses. BaaS fraud includes noncredit fraud losses on loans and deposits originated through partners. Fraud losses are recorded when incurred as losses in noninterest expense, and the enhancement received from the CCBX partner is recorded in noninterest income, resulting in a net impact of zero to the income statement. The credit enhancement asset is an amount due from CCBX partners related to losses in the loan portfolio. It is determined by the provision for credit and other losses, such as fraud, and increases due to credit loss recoveries, which is ultimately reduced by reimbursement for incurred losses by partners. Identified below is the portion of incurred losses that are pending settlement with partners as of each period indicated. The CCBX provision for credit losses and CCBX net-charge-offs include partner accounts that are not covered by credit enhancement therefore those items are included on a separate line item to reflect the exclusion from the credit enhancement asset. At December 31, 2025, the Company was responsible for credit losses on approximately 5% of a $321.3 million CCBX loan portfolio, or $22.1 million in loans. The table below shows the activity in the credit enhancement asset for the periods indicated: As of or for the Year Ended December 31, (dollars in thousands) 2025 2024 Credit enhancement at beginning of period 181,890 112,894 CCBX Provision for credit losses - loans 190,035 277,793 CCBX Provision for credit losses - unfunded commitments 2,484 1,187 Credit losses settled with partner during period (217,132) (228,537) Credit recoveries settled with partner during period 20,326 13,027 Net change in pending partner settlements (827) 5,998 Net (provision) charge-offs without credit enhancement 881 (472) Credit enhancement at end of period 177,657 181,890 9 Table of Contents Many CCBX partners also pledge a cash reserve account at the Bank as collateral for loss exposure which the Bank can collect from when losses occur that is then replenished by the partner on a regular interval. Credit losses and recoveries typically flow through the cash reserve account. These cash reserve accounts are included in total deposits on the balance sheet. Although agreements with our CCBX partners provide for credit enhancements that provide protection to the Bank from credit and fraud losses by indemnifying or reimbursing incurred credit and fraud losses, if our partner is unable to fulfill their contracted obligation then the Bank would be exposed to additional loan and deposit losses if the cash flows on the loans were not sufficient to fund the reimbursement of loan losses, largely as a result of this counterparty risk. If a CCBX partner does not replenish its cash reserve account the Bank may consider an alternative plan for funding the cash reserve, such as adjusting the funding amounts or timelines to better align with the partner's specific situation. If a mutually agreeable funding plan is not achieved then the Bank could declare the agreement in default, take over servicing and cease paying the partner for servicing the loan and providing credit enhancements. The Bank would evaluate any remaining credit enhancement asset from the CCBX partner in the event the partner failed to fulfill its obligations and would determine if a write-off is appropriate. If a write-off occurs, the Bank would retain the full yield and any fee income on the loan portfolio going forward, and our BaaS loan expense would decrease once default occurs and payments to the CCBX partner are stopped. For the period ended December 31, 2025, CCBX cash reserve accounts totaled $72.2 million, reflecting the net reserve positions across all partners that have a cash reserve account. Average balance of the cash reserve accounts are not materially different from the period end balance. Our total non-owner-occupied commercial real estate loans, including loans secured by apartment buildings, investor commercial real estate, and construction and land loans totaled $1.13 billion and represented 170.9% of the Bank’s total risk-based capital at December 31, 2025. Interagency guidance on commercial real estate concentrations describes sound risk management practices, which include board and management oversight, portfolio management, management information systems, market analysis, portfolio stress testing and sensitivity analysis, credit underwriting standards, and credit risk review functions. We believe that we have adequately implemented these practices in order to monitor concentrations in commercial real estate in our loan portfolio. Lending Limits Our lending activities are subject to a variety of lending limits imposed by state law. In general, the Bank is subject to a legal lending limit on loans to a single borrower based on the amount of the Bank’s capital and surplus. The dollar amounts of the Bank’s lending limit increases or decreases as the Bank’s capital and surplus increases or decreases. The Bank is able to sell participations in its larger loans to other financial institutions, which allows the Bank to better manage the risk and exposure involved with larger loans and to meet the lending needs of its customers requiring extensions of credit in excess of Bank or regulatory limits. The Bank’s legal lending limit as of December 31, 2025 on loans to a single borrower was $131.6 million, or 20% of capital and surplus. Our loan policies provide general guidelines for loan-to-value ratios that restrict the size of loans to a maximum percentage of the value of the collateral securing the loans, which percentage varies by the type of collateral. Our internal loan-to-value limitations also follow all limits established by applicable law. Our CCBX loan portfolio is subject to portfolio and partner maximum limits, therefore CCBX partners are limited to a maximum aggregate customer loan balance originated and held on our balance sheet. As indicated in partner agreements, we are able to sell CCBX loans back to the originating partner as one method of managing CCBX portfolio and partner limits. Deposit Products Our deposits serve as the primary funding source for lending, investing and other general banking purposes. We provide a full range of deposit products in the community bank and through our CCBX partners that have a wide range of interest rates and terms, including a variety of demand and savings accounts, time deposits, and money market accounts. We also provide a wide range of deposit services, including debit cards, remote deposit capture, online banking, mobile banking, and direct deposit services. We also offer business accounts and cash management services, including business checking and savings accounts, and treasury services. We also offer reciprocal deposits which enables us to extend FDIC insurance to customers that have balances in excess of the FDIC insurance limit. This reciprocal deposit service trades our customer’s funds in increments under the FDIC insured amount to other participating financial institutions and in exchange we receive customer deposits from participating financial institutions in a reciprocal agreement. 10 Table of Contents We solicit deposits through our relationship-driven team of dedicated and accessible bankers and through community-focused marketing. We currently operate 14 full-service banking locations, 12 of which are located in Snohomish County, where we are the largest community bank by deposit market share, and two of which are located in neighboring counties (one in King County and one in Island County). We emphasize obtaining deposit relationships at loan origination. Our focus on relationship banking combined with our robust business banking services has led to approximately 80.9% of our community bank loan customers having deposit relationships with us as of December 31, 2025. Our CCBX partners originate deposits with many of the same characteristics as our community bank and these deposits are primarily interest bearing to us. CCBX deposits are generally classified as interest bearing demand and money market accounts. CCBX deposit products allow us to offer a broader range of partner specific products, which include products designed to reach specific under-served or under-banked populations served by our CCBX partners. The CCBX partner determines the rate paid to the end consumer and we determine the rates paid to the partner as indicated in the partner agreement. As of December 31, 2025 $843.6 million in CCBX customer deposits were transferred off our balance sheet for FDIC insurance, liquidity and deposit management purposes. A portion of these deposits may, in accordance with applicable agreements, be transferred back onto our balance sheet for liquidity and funding purposes. FDIC insurance coverage is provided to the end customer account holder for deposit accounts originated through CCBX partners. CCBX segment (BaaS) Our CCBX segment provides BaaS, enabling digital financial service providers to offer their clients banking services. The “X” is indicative of the technology services that our partners provide. Our partners make our banking products and services available to their consumers, partners and workforce through integration with our banking platform. In doing so, our addressable market expands to a broader spectrum of consumers as well as small businesses. We had a total of 28 relationships, at varying stages, including one signed letter of intent as of December 31, 2025. We continue to refine the criteria for CCBX partnerships, by focusing on larger, established partners with strong management, customer bases, and finances, while also considering promising smaller partners that fit our approach and terms, and we will continue to exit partnerships where it makes sense for us to do so. Investments We are primarily holding the majority of our on-balance sheet liquidity in interest bearing bank deposits to limit our exposure to interest rate and price risk and to provide readily available funds for loan growth. As of December 31, 2025, the fair value of our investment portfolio, which represented 1.0% of assets, totaled $48.7 million and had an average effective yield of 5.38% and an estimated weighted average life of approximately 14.1 years. The primary objectives of the investment portfolio are to provide a source of liquidity and provide collateral that can be readily sold or pledged for public deposits or other business purposes. At December 31, 2025 our securities portfolio was invested in U.S. Agency collateralized mortgage and U.S. Agency residential mortgage-backed securities obligations. We regularly evaluate the composition of our investment portfolio as the interest rate yield curve changes and may sell or pledge investment securities from time to time to adjust our exposure to interest rates or to provide liquidity to meet loan demand. As of December 31, 2025, we had $2.2 million in equity investments. The equity investments are held at cost minus any impairment until the investment has a determinable value or does not qualify for the measurement election (e.g., if the investment has a readily determinable fair value). We will reassess at each reporting period whether our equity investment without a readily determinable fair value qualifies to be measured at cost minus impairment. These equity investments without a readily determined fair value include: • a $1.8 million and $2.2 million equity interest in a specialized bank technology company as of December 31, 2025 and December 31, 2024, respectively; • a $350,000 equity interest in a technology company as of the years ended December 31, 2025 and December 31, 2024; and • a $42,000 and $47,000 equity interest in a technology company as of the years ended December 31, 2025, and December 31, 2024, respectively. 11 Table of Contents Additionally, we have invested in technology-focused funds, including those targeting innovation and adoption within the banking industry. These equity investments are held at fair value, as reported by the funds. During the year ended December 31, 2025, the Company contributed $556,000 and recognized a net gain of $34,000, resulting in an equity interest of $1.5 million at December 31, 2025, compared to $910,000 at December 31, 2024. The Company has committed up to $1.1 million in capital for these equity funds, however, we are not obligated to fund these commitments prior to a capital call. Competition We operate in a highly competitive industry and in a highly competitive market. Our community bank commercial real estate lending in the Puget Sound region attracts keen competition from large banking institutions with national operations, as well as mid-sized regional banking institutions. We compete with other community banks, savings and loan associations, credit unions, mortgage companies, insurance companies, finance companies and other financial intermediaries. The primary factors driving competition for deposits are customer service, interest rates, fees charged, branch locations and hours, online and mobile banking functionality, and the range of products offered. The primary factors driving competition for our lending products are customer service, range of products offered, price, reputation, and quality of execution. Our CCBX segment competes against companies and financial institutions across the retail banking, financial services, transaction processing, consumer technology and financial technology services industries and may compete with others in the market who may in the future provide offerings similar to ours. Our CCBX segment competes primarily on the basis of quality of service, customer satisfaction, compliance and regulatory capabilities, brand recognition and reputation in the BaaS market space, speed and quality of innovation, reliability of system performance and security, scalability of services, and pricing. We believe the Bank is a strong competitor in our markets, however other competitors have certain advantages over us. Among them, many larger institutions have the ability to finance extensive advertising campaigns, maintain extensive branch networks and make larger technology investments and to offer services which we do not offer. The higher capitalization of the larger banking institutions permits them to have higher lending limits than those of the Bank. Some of our competitors have other advantages, such as tax exemption in the case of credit unions, and to some extent, lesser regulation in the case of mortgage companies and finance companies. Information Technology Systems We have made and continue to make significant investments in our information technology systems and staff for our banking and lending operations, treasury management activities, and CCBX. We believe this investment will support our continued growth and enable us to enhance our capabilities to offer new products and overall customer experience, and to provide scale for future growth and acquisitions. We utilize nationally recognized software vendors, and their support allows us to outsource our data processing. The majority of our systems including our electronic funds transfer, transaction processing, and our online banking services are hosted by third-party service providers. The scalability of this infrastructure will support our growth strategy. In addition, the tested capability of these vendors to automatically switch over to standby systems should allow us to recover our systems and provide business continuity quickly in case of a disaster. We continue to adopt scalable and secure cloud technologies in tandem with zero trust networking for applications, email, and data processing. These systems provide redundancy and disaster recovery capabilities. Human Capital As of December 31, 2025, we had 483 full-time equivalent employees, all were located in the United States; however, technology has allowed us to expand our reach to include a larger demographic with more remote employees working outside of our physical locations and throughout the country. We seek to attract, retain and develop the most talented employees possible by promoting a strong, positive culture, maintaining a safe and healthy workplace, emphasizing open communication with management and investing in training and education. In 2025, we had 92 internal promotions. None of our employees are parties to a collective bargaining agreement. We consider our relationship with our employees to be good and have not experienced interruptions of operations due to labor disagreements. 12 Table of Contents Culture We have always led with people, building our Bank on the wide variety of perspectives, knowledge, and experiences of our employees. Our employees utilize their strengths to set the course and are empowered to do the right things for our clients. We strive to create an inclusive workplace so we can build and maintain a high-performing culture where engaged, satisfied employees embody our core values: stay flexible, take care of each other, embrace gray thinking, be relentless, be the best and be un-bankey. We seek out talent that will be a cultural fit to our core values and have backgrounds that are as varied as the clients we serve in each of our business units. Pay Equity We believe our staff should be paid for the roles they fulfill, their experience and how they do their jobs, and our goal is to attract, retain and develop quality talent. To deliver on that commitment, we benchmark and set pay ranges based on banking market data and consider factors such as an employee’s role and experience, the location of their job, and their performance. We also regularly review our compensation practices, both in terms of our overall workforce and individual employees, to ensure our pay is fair and equitable. Health, Safety and Wellness We have taken a people-first approach to help our employees manage their work and personal responsibilities, with a strong focus on employee well-being, health and safety. Our human resource team engages the staff in an evolving wellness program designed to enhance physical, financial and mental well-being for all our employees. We encourage healthy lifestyle behaviors through regular communications, educational sessions, voluntary progress tracking of beneficial health changes and wellness challenges. Community Engagement We are committed to supporting the communities we serve through donations, sponsorships and employee volunteerism. As a community-focused bank, we have a unique opportunity to partner with organizations to support and strengthen the communities we serve. In 2025, Coastal Community Bank supported 157 non-profit organizations through donations and event sponsorships. The nonprofit organizations that provide critical services in our communities depend on support from donors. We offer employees two options to support charitable organizations through: the Employee Giving Fund and the Employee Workplace Giving Portal. This is a testament to our commitment to helping and supporting our neighbors by encouraging employees to give to their charity of choice through payroll deduction. The Employee Giving Fund is supported entirely by donations contributed by employees and directors, enabling donors to pool their donations for the greatest impact in the communities served by the Bank. Employees direct the grants from the fund by serving on the Bank’s fund advisory committee. Since its inception in 2001, the Employee Giving Fund has awarded 478 grants totaling more than $956,000 through the end of 2025. In 2025 the Employee Giving Fund awarded grants in the amount of $63,000 to seven local non-profit organizations. Volunteering and supporting our communities is an important part of community engagement. We provide 16 hours of paid volunteer hours (for full-time staff) per year to encourage and enable employees to volunteer in their communities. In 2025, employees volunteered 3,703 hours supporting 170 organizations. Community Impact Grants As part of its commitment to the Community Reinvestment Act, we are proud to support non-profit organizations working to improve our community. We focus on building long-term relationships with our community partners to make a significant impact in the markets we serve. We are particularly interested in supporting projects and organizations whose primary purpose is to improve and revitalize low- and moderate-income areas or to assist low- and moderate-income 13 Table of Contents persons and families to be better able to take part in the financial opportunities available in their community. In 2025, we awarded impact grants in the amount of $100,000 to 11 local non-profits. Financial Inclusion We recognize the need to connect our marginalized communities to financial education and safe, affordable and functional financial services. We do this a number of different ways: • Support the un-banked and under-banked in our community with Access Checking, a Bank On certified account; • Sponsor financial education resources in seven schools with high numbers of children living in low income households as well as a juvenile justice center; • Collaborate with community partners to sponsor financial education classes in Spanish; and • Provide financial education resources to non-profits in our community. Available Information The Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, proxy statements, current reports on Form 8-K, amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), and other filings with the Securities and Exchange Commission (the “SEC”) are available free of charge at https://ir.coastalbank.com/ under the heading “–Financials - SEC Filings” as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the SEC. These reports are also available for free on the SEC's website at http://www.sec.gov. The information contained on the Company's website as referenced in this Annual Report on Form 10-K should not be considered a part of this Report. Regulation and Supervision General Insured banks, their holding companies and their affiliates are extensively regulated under federal and state law. As a result, our growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by the requirements of federal and state statutes and by the regulations and policies of various bank regulatory agencies, including the Washington Department of Financial Institutions (“Washington DFI”), the Board of Governors of the Federal Reserve (“Federal Reserve”), the Federal Deposit Insurance Corporation (“FDIC”) and the Consumer Financial Protection Bureau (“CFPB”). Furthermore, tax laws administered by the Internal Revenue Service and state taxing authorities, accounting rules developed by the FASB, securities laws administered by the SEC and state securities authorities, anti-money laundering laws enforced by the U.S. Department of the Treasury (“Treasury Department”) and mortgage related rules, including with respect to loan securitization and servicing by the U.S. Department of Housing and Urban Development and entities such as Ginnie Mae and Freddie Mac, and SBA regulations with respect to small business loans, have an impact on our business. The effect of these statutes, regulations, regulatory policies and rules are significant to our operations and results, and the nature and extent of future legislative, regulatory or other changes affecting financial institutions are impossible to predict with any certainty. Federal and state banking laws impose a comprehensive system of supervision, regulation and enforcement on the operations of insured banks, their holding companies and affiliates that is intended primarily for the protection of the FDIC-insured deposits and depositors of banks, rather than their shareholders. These federal and state laws, and the regulations of the bank regulatory agencies issued under them, affect, among other things, the scope of business, the kinds and amounts of investments banks may make, reserve requirements, capital levels relative to operations, the nature and amount of collateral for loans, the establishment of branches, the ability to merge, consolidate and acquire, dealings with insiders and affiliates and the payment of dividends. This supervisory and regulatory framework subjects banks and bank holding companies to regular examination by their respective regulatory agencies, which results in examination reports and ratings that, while not publicly available, can impact the conduct and growth of their businesses. These examinations consider not only compliance with applicable laws and regulations, but also capital levels, asset quality and risk, management ability and performance, earnings, liquidity, sensitivity to market risk and various other factors. The regulatory agencies generally have broad discretion to impose 14 Table of Contents restrictions and limitations on the operations of a regulated entity where the agencies determine, among other things, that such operations are unsafe or unsound, fail to comply with applicable law or are otherwise inconsistent with laws and regulations or with the supervisory policies of these agencies. Political, economic and industry events and other factors may influence changes to the banking laws, regulations and policies by the U.S. Congress, state legislatures and federal and state regulatory agencies. In addition to laws and regulations, state and federal bank regulatory agencies may issue policy statements, interpretive letters and similar written guidance, which sometimes materially changes regulatory expectations. Any change in the statutes, regulations or regulatory policies applicable to us, including changes in their interpretation, expectations or implementation, could have a material effect on our business and operations. To this end, due to executive orders issued by the President of the United States during the current administration, certain aspects of the supervisory and regulatory environment for banks and bank holding companies continue to evolve. These executive orders require independent agencies, including the Federal Reserve and the FDIC, to submit certain proposed rules to the White House Office of Management and Budget (“OMB”) for review, establish performance standards and management objectives, and subject agency budgets to review and adjustment by the OMB, excluding the Federal Reserve’s monetary policy functions. In addition, executive orders direct agency heads to review existing regulations and enforcement actions to assess compliance with applicable law and the policy objectives of the current administration, and, in consultation with the OMB, to determine on a case-by-case basis whether to modify or terminate certain enforcement activities. As a result, the timing, focus, and approach of supervisory, regulatory, and enforcement activities by the Office of the Comptroller of the Currency (the “OCC”), the Federal Reserve, and the Federal Deposit Insurance Corporation (“FDIC”) may continue to be subject to change. The full impact of these developments on the regulatory framework applicable to banks and bank holding companies remains uncertain. The following is a summary of the material elements of the supervisory and regulatory framework applicable to us and the Bank. It does not describe all of the statutes, regulations and regulatory policies that apply, nor does it restate all of the requirements of those that are described. The descriptions are qualified in their entirety by reference to the particular statutory and regulatory provision. Our CCBX segment operates as part of the Bank, and there are no specific regulations that would apply to the operations of CCBX only. Bank Holding Company Regulation Since we own all of the capital stock of the Bank, we are a bank holding company under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). As a result, we are primarily subject to the supervision, examination and reporting requirements of the BHC Act and the regulations of the Federal Reserve. Acquisition of Banks The BHC Act requires every bank holding company to obtain the Federal Reserve’s prior approval before: • acquiring direct or indirect ownership or control of any voting shares of any bank if, after the acquisition, the bank holding company will, directly or indirectly, own or control more than 5% of the bank’s voting shares; • acquiring all or substantially all of the assets of any bank; or • merging or consolidating with any other bank holding company. Additionally, the BHC Act provides that the Federal Reserve may not approve any of the above transactions if such transaction would result in or tend to create a monopoly or substantially lessen competition or otherwise function as a restraint of trade, unless the anti-competitive effects of the proposed transaction are clearly outweighed by the public interest in meeting the convenience and needs of the community to be served. The Federal Reserve is also required to consider the financial and managerial resources and future prospects of the bank holding companies and banks concerned and the convenience and needs of the community to be served. The Federal Reserve’s consideration of financial resources includes a focus on capital adequacy, which is discussed in the section entitled “—Bank Regulation and Supervision—Capital Adequacy.” The Federal Reserve also considers the effectiveness of the institutions in combating money laundering, including a review of the anti-money laundering programs and compliance records of the parties. Finally, the 15 Table of Contents Federal Reserve takes into consideration the extent to which the proposed transaction would result in greater or more concentrated risks to the stability of the U.S. banking or financial system. Under the BHC Act, if well-capitalized and well-managed, we or any other bank holding company located in Washington may purchase a bank located outside of Washington without regard to whether such transaction is prohibited under state law. Conversely, a well-capitalized and well-managed bank holding company located outside of Washington may purchase a bank located inside Washington without regard to whether such transaction is prohibited under state law. In each case, however, restrictions may be placed under state law on the acquisition of a bank that has only been in existence for a limited amount of time or will result in concentrations of deposits exceeding limits specified by statute. For example, Washington law currently prohibits a bank holding company from acquiring control of a Washington-based financial institution until the target financial institution has been in operation for at least five years. Change in Bank Control Subject to various exceptions, the BHC Act and the Change in Bank Control Act, together with related regulations, require Federal Reserve approval prior to any person or company acquiring “control” of a bank holding company. Under a rebuttable presumption established by the Federal Reserve pursuant to the Change in Bank Control Act, the acquisition of 10% or more of a class of voting stock of a bank holding company would constitute acquisition of control of the bank holding company if no other person will own, control, or hold the power to vote a greater percentage of that class of voting stock immediately after the transaction or the bank holding company has registered securities under the Exchange Act, as we have. In addition, any company, person or group of persons acting in concert must obtain the approval or non-objection of the Federal Reserve under the BHC Act or Change in Bank Control Act before acquiring 25% or more (more than 5% in the case of an acquirer that is already a bank holding company) of the outstanding voting stock of a bank holding company, the right to control in any manner the election of a majority of the company’s directors, or otherwise obtaining control or a “controlling influence” over the bank holding company. Approval of the Washington DFI may also be required under state law before a person can acquire control over us. Permitted Activities Under the BHC Act, a bank holding company is generally permitted to engage in or acquire direct or indirect control of the voting shares of any company engaged in the following activities: • banking or managing or controlling banks; and • any activity that the Federal Reserve determines to be so closely related to banking as to be a proper incident to the business of banking. Activities that the Federal Reserve has found to be so closely related to banking as to be a proper incident to the business of banking include: • factoring accounts receivable; • making, acquiring, brokering or servicing loans and usual related activities in connection with the foregoing; • leasing personal or real property under certain conditions; • operating a non-bank depository institution, such as a savings association; • engaging in trust company functions in a manner authorized by state law; • financial and investment advisory activities; • discount securities brokerage activities; • underwriting and dealing in government obligations and money market instruments; • providing specified management consulting and counseling activities; 16 Table of Contents • performing selected data processing services and support services; • acting as an agent or broker in selling credit life insurance and other types of insurance in connection with credit transactions; and • performing selected insurance underwriting activities. The Federal Reserve may order a bank holding company or its subsidiaries to terminate any of these activities or to terminate its ownership or control of any subsidiary when it has reasonable cause to believe that the bank holding company’s continued ownership, activity or control constitutes a serious risk to the financial safety, soundness, or stability of it or any of its bank subsidiaries. In addition to the permissible bank holding company activities listed above, a bank holding company may qualify and elect to become a financial holding company, thereby permitting the bank holding company to engage in activities that are financial in nature or incidental or complementary to financial activity, which are broader activities than are otherwise permissible for bank holding companies. For us to qualify to become a financial holding company, we must be well-capitalized and well-managed. In addition, the Bank and any other depository institution subsidiary we control must be well-capitalized and well-managed and must have a Community and Reinvestment Act (“CRA”) rating of at least “Satisfactory.” Additionally, we must file an election with the Federal Reserve to become a financial holding company and must provide the Federal Reserve with 30 days written notice prior to engaging in a permitted financial activity. We have not elected to become a financial holding company at this time. Dividends The Federal Reserve has issued a policy statement on the payment of cash dividends by bank holding companies, which expresses the Federal Reserve’s view that a bank holding company should pay cash dividends only to the extent that the holding company’s net income for the past year is sufficient to cover both the cash dividends and a rate of earning retention that is consistent with the holding company’s capital needs, asset quality and overall financial condition. The Federal Reserve also has indicated that it would be inappropriate for a holding company experiencing serious financial problems to borrow funds to pay dividends. Furthermore, under the prompt corrective action regulations adopted by the Federal Reserve, the Federal Reserve may prohibit a bank holding company from paying any dividends if one or more of the holding company’s bank subsidiaries is classified as undercapitalized. Support of Subsidiary Institutions The Federal Deposit Insurance Act (“FDIA”) and a Federal Reserve regulation require a bank holding company to serve as a source of financial and managerial strength to its bank subsidiaries. In addition, where a bank holding company has more than one FDIC-insured bank or thrift subsidiary, each of the bank holding company’s subsidiary FDIC-insured depository institutions is responsible for any losses to the FDIC as a result of an affiliated depository institution’s failure. As a result of a bank holding company’s source of strength obligation, a bank holding company may be required to provide funds to a bank subsidiary in the form of subordinate capital or other instruments which qualify as capital under bank regulatory rules and at a time when the bank holding company would not otherwise be inclined to do so. Repurchase or Redemption of Securities A bank holding company that is not well capitalized or well managed, or that is subject to any unresolved supervisory issues, is required to give the Federal Reserve prior written notice of any purchase or redemption of its own then-outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10% or more of the company’s consolidated net worth. The Federal Reserve may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe and unsound practice, or would violate any law, regulation, Federal Reserve order or directive, or any condition imposed by, or written agreement with, the Federal Reserve. Additionally, under Federal Reserve guidance, a bank holding company is generally expected to consult with Federal Reserve supervisory staff prior to repurchasing or redeeming stock in a number of circumstances, including when the company is considering expansion. 17 Table of Contents Bank Regulation and Supervision The Bank is subject to extensive federal and state banking laws and regulations that impose restrictions on and provide for general regulatory oversight of the operations of the Bank. These laws and regulations are generally intended to protect the safety and soundness of the Bank and the Bank’s depositors, rather than our shareholders. The following discussion describes the material elements of the regulatory framework that applies to the Bank. Since the Bank is a commercial bank chartered under the laws of the state of Washington and is a member of the Federal Reserve System, it is primarily subject to the supervision, examination and reporting requirements of the Federal Reserve and the Washington DFI. The Federal Reserve and the Washington DFI regularly examine the Bank’s operations and have the authority to approve or disapprove mergers, the establishment of branches and similar corporate actions. Both regulatory agencies have the power to take enforcement action to prevent the development or continuance of unsafe or unsound banking practices or other violations of law. The Bank’s deposits are insured by the FDIC to the maximum extent provided by law. The Bank is also subject to numerous federal and state statutes and regulations that affect its business, activities and operations. Branching Under current Washington law, the Bank may open branch offices throughout Washington with the prior approval of the Washington DFI. In addition, with prior regulatory approval, the Bank may acquire branches of existing banks located in Washington. Under federal law, the Bank may establish branch offices with the prior approval of the Federal Reserve. Federal law allows a bank to branch into a new state by setting up a new branch if, under the laws of the state in which the branch is to be located, a state bank chartered by that state would be permitted to establish the branch, and if the bank meets certain supervisory and financial criteria. FDIC Insurance and Other Assessments The Bank’s deposits are insured by the FDIC to the maximum extent provided under the FDIA, currently $250,000 per depositor, per insured bank, for each account ownership category. The Bank pays deposit insurance assessments to the FDIC for this coverage. Under the FDIC’s risk-based deposit insurance assessment system, an insured institution’s deposit insurance premium is calculated by multiplying the institution’s assessment base by its applicable assessment rate. An institution’s assessment base generally equals its average consolidated total assets during an assessment period, minus its average tangible equity capital during the same period. For insured depository institutions with less than $10.0 billion in total consolidated assets, including the Bank, assessment rates are determined using a financial ratios method that incorporates a statistical model designed to estimate an institution’s probability of failure over a three-year horizon. This methodology considers certain financial ratios, including the leverage ratio, net income before taxes to total assets, nonperforming assets to gross assets, other real estate owned to gross assets, brokered deposit ratio, one-year asset growth, and loan mix index, as well as a weighted average of supervisory ratings components. The FDIC’s Deposit Insurance Fund (“DIF”) reserve ratio declined below the statutory minimum of 1.35% in recent years due to growth in insured deposits relative to DIF balances. In response, the FDIC adopted a restoration plan, which was subsequently amended, to restore the DIF reserve ratio to at least 1.35% by September 30, 2028. In October 2022, the FDIC adopted a final rule increasing initial base deposit insurance assessment rates for insured depository institutions by two basis points, beginning with the first quarterly assessment period of 2023. These increased assessment rates remain in effect unless and until the DIF reserve ratio reaches or exceeds 2.0%. As a result of these actions, deposit insurance assessment costs for insured depository institutions, including the Bank, have increased. The assessment rate schedules applicable to small institutions range from 2.5 basis points for institutions posing the least risk to 32 basis points for institutions posing the most risk. The FDIC may reduce assessment rates if the DIF reserve ratio reaches 2.0% or higher and may also impose special assessments from time to time, as circumstances warrant. As of September 30, 2025, which is the most recent information available, the DIF reserve ratio was 1.40%. 18 Table of Contents Termination of Deposit Insurance The FDIC may terminate its insurance of deposits of a bank if it finds that the bank has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. Community Reinvestment Act The CRA requires that, in connection with examinations of insured depository institutions within their respective jurisdictions, the federal banking agencies will evaluate the record of each financial institution in meeting the credit needs of its local community, including low- and moderate-income neighborhoods. The Federal Reserve periodically evaluates the Bank’s record of performance under the CRA, and these evaluations are publicly available. A bank’s CRA performance is considered in evaluating applications seeking approval for mergers, acquisitions, and new offices or facilities. Failure to adequately meet these criteria could result in additional requirements and limitations being imposed on the bank. Certain regulatory advantages, such as expedited processing of applications, are available only to banks with CRA ratings of Satisfactory or Outstanding. Additionally, we must publicly disclose the terms of certain CRA-related agreements. The Bank received a Satisfactory rating at its most recent evaluation dated March 7, 2022. On October 24, 2023, the FDIC, the Federal Reserve and the OCC released a final rule revising the framework that they use to evaluate banks’ records of community reinvestment under the CRA, but a federal court subsequently enjoined implementation of that rule such that it did not go into effect. Under the revised framework, banks with assets of at least $2 billion, such as the Bank, are considered large banks and will have their retail lending, retail services and products, community development financing, and community development services subject to periodic evaluation. Depending on a large bank’s geographic concentrations of lending, the evaluation of retail lending may include assessment areas in which the bank extends loans but does not operate any deposit-taking facilities, in addition to assessment areas in which the bank has deposit-taking facilities. In July 2025, the OCC, the Board of Governors of the Federal Reserve System and the FDIC issued a joint notice of proposed rulemaking to rescind the 2023 final rule and replace it with the prior CRA regulations (originally adopted in 1995), with certain technical amendments. Until any final rulemaking is completed, the agencies continue to supervise and examine institutions under the 1995 CRA framework. CRA Rule 1071, part of the Dodd-Frank Act, requires financial institutions to collect and report data on small business credit applications, particularly from women- and minority-owned businesses. This rule aims to make small business lending more accessible, especially for under-served communities. By gathering and reporting data on lending practices, financial institutions can identify disparities and ensure fair treatment for all applicants. The intersection of Section 1071, the Community Reinvestment Act (CRA), and Fair Lending regulations promotes fair access to credit and prevents discriminatory lending practices. While CRA encourages banks to meet the credit needs of their communities, Fair Lending regulations ensure that credit is extended without discrimination. Section 1071 complements these efforts by targeting data collection and reporting on small business lending practices The effective date for CRA Rule 1071 has been extended due to legal challenges. The new compliance dates are as follows: • Tier 1 institutions (highest volume lenders): July 1, 2026 • Tier 2 institutions (moderate volume lenders): January 1, 2027 • Tier 3 institutions (smallest volume lenders): October 1, 2027 Interest Rate Limitations Interest and other charges collected or contracted for by the Bank are subject to applicable state usury laws and federal laws concerning interest rates. Reserves Pursuant to regulations of the Federal Reserve, an insured depository institution must maintain reserves against its transaction accounts. Because required reserves generally must be maintained in the form of vault cash, with a pass-through correspondent bank, or in the institution’s account at a Federal Reserve Bank, the effect of the reserve requirement may be to reduce the amount of an institution’s assets available for lending or investment. In March 2020, in response to 19 Table of Contents the COVID-19 pandemic, the Federal Reserve reduced all reserve requirement ratios to zero. The Federal Reserve indicated that it may adjust reserve requirement ratios in the future if conditions warrant. Federal Laws Applicable to Consumer Credit and Deposit Transactions The Bank’s loan and deposit operations are subject to a number of federal consumer protection laws, including: • the Federal Truth in Lending Act, governing disclosures of credit terms to consumer borrowers; • the Real Estate Settlement Procedures Act, imposing requirements on the settlement and servicing of residential mortgage loans; • the Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the communities it serves; • the Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, color, religion, national origin, sex, marital status or certain other prohibited factors in all aspects of credit transactions; • the Fair Credit Reporting Act (“FCRA”), governing the use and provision of information to credit reporting agencies; • the Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected by debt collectors; • the Service Members Civil Relief Act, governing the repayment terms of, and property rights underlying, secured obligations of persons in military service; • the Truth in Savings Act, governing disclosure of account terms and costs to consumer depositors; • the Gramm-Leach-Bliley Act, governing the disclosure and safeguarding of sensitive non-public personal information of our clients; • the Right to Financial Privacy Act, imposing a duty to maintain confidentiality of consumer financial records and prescribing procedures for complying with administrative subpoenas of financial records; • the National Flood Insurance Act, as amended, to provide flood insurance for structures and contents in communities that adopt and enforce an ordinance outlining minimal floodplain management standards and to identify areas of high and low flood hazard and establish flood insurance rates for structures inside each flood hazard area; • the Electronic Funds Transfer Act governing automatic deposits to and withdrawals from deposit accounts and clients’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; and • the rules and regulations of the CFPB and various federal agencies charged with the responsibility of implementing these federal laws. Capital Adequacy The Federal Reserve has adopted risk-based and leverage capital adequacy requirements, pursuant to which they assess the adequacy of bank holding company and bank capital in examinations and in analyzing bank regulatory applications. Risk-based capital requirements determine the adequacy of capital based on credit and certain other risks inherent in various classes of assets and off-balance sheet items. The federal banking regulators have adopted regulations implementing the Basel Capital Adequacy Accord (“Basel III”), an international capital adequacy framework. The U.S. Basel III rule requires a minimum capital to risk-weighted assets requirements are a common equity Tier 1 capital ratio of 4.5%, a Tier 1 capital ratio of 6.0%, and a total capital ratio of 8.0%. The minimum leverage ratio (Tier 1 capital to total assets) is 4.0%. 20 Table of Contents In order to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, a banking organization must maintain a capital conservation buffer composed of common equity Tier 1 capital above its minimum risk-based capital requirements. The buffer is measured relative to risk-weighted assets. A banking organization with a buffer greater than 2.5% is not subject to limits on capital distributions or discretionary bonus payments; however, a banking organization with a buffer of 2.5% or less would be subject to increasingly stringent limitations as the buffer approaches zero. A banking organization also would be prohibited from making distributions or discretionary bonus payments during any quarter if its eligible retained income is zero or negative in that quarter and its capital conservation buffer ratio was 2.5% or less at the beginning of the quarter. Effectively, the Basel III framework, including the capital conservation buffer, requires the Bank to meet minimum risk-based capital ratios of (i) 7% for common equity Tier 1 capital, (ii) 8.5% Tier 1 capital, and (iii) 10.5% total capital. The eligible retained income of a banking organization is defined as the greater of (1) its net income for the four calendar quarters preceding the current calendar quarter, based on the organization’s quarterly regulatory reports, net of any distributions and associated tax effects not already reflected in net income, and (2) the average of its net income over the preceding four quarters. The minimum capital requirements plus the capital conservation buffer will exceed the prompt corrective action (“PCA”), well-capitalized thresholds for risk-based capital ratios, which are described below under “—Prompt Corrective Action.” The U.S. Basel III rule includes stringent criteria for capital instruments to qualify as Tier 1 or Tier 2 capital. For instance, the rule effectively disallows newly-issued trust preferred securities as a component of a holding company’s Tier 1 capital. However, depository institution holding companies with less than $15 billion in total assets generally may include non-qualifying instruments that were issued and included in Tier 1 or Tier 2 capital prior to May 19, 2010 in Additional Tier 1 or Tier 2 capital until they redeem such instruments or until the instruments mature. At December 31, 2025 the Company had $3.5 million of non-qualifying instruments includable in Tier 1 capital that were issued prior to May 19, 2010. The Company and the Bank are required to meet the generally applicable regulatory capital requirements of the Federal Reserve and the FDIC. Capital management consists of providing equity and other instruments that qualify as regulatory capital to support current and future operations. Banking regulators view capital levels as important indicators of an institution’s financial soundness. As a general matter, FDIC-insured depository institutions and their holding companies are required to maintain minimum capital levels relative to the amount and types of assets they hold. We are subject to regulatory capital requirements at the bank level and the Company is evaluated relative to the capital adequacy standards established by the Federal Reserve. The Economic Growth, Regulatory Relief and Consumer Protection Act (the “EGRRCPA”) requires the federal banking agencies to develop a community bank leverage ratio (the “CBLR”) (defined as the ratio of tangible equity capital to average total consolidated assets) for certain banks and holding companies with total consolidated assets of less than $10 billion. Qualifying banks that exceed the minimum CBLR are deemed to be in compliance with all other capital and leverage requirements. The CBLR is currently set at 9.0%. The Company and Bank have not adopted the CBLR. Failure to meet statutorily mandated capital guidelines or more restrictive ratios separately established for a banking institution could subject the institution to a variety of enforcement remedies available to federal regulatory authorities, including issuance of a capital directive, the termination of deposit insurance by the FDIC, a prohibition on accepting or renewing brokered deposits, limitations on the rates of interest that the institution may pay on its deposits, and other restrictions on its business. Prompt Corrective Action The Federal Deposit Insurance Corporation Improvement Act of 1991 establishes a system of “prompt corrective action” to resolve the problems of undercapitalized insured depository institutions. Under this system, the federal banking regulators have established five capital categories (well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized); all insured depository institutions fall into one of these categories. The federal banking agencies have specified by regulation the relevant capital thresholds and other qualitative requirements for each of the categories. For an insured depository institution to be “well-capitalized” under the PCA framework, it must have a common equity Tier 1 capital ratio of 6.50%, Tier 1 capital ratio of 8.00%, a total capital ratio of 10.00%, and a leverage ratio of 5.00%, and must not be subject to any written agreement, order or capital directive, or prompt corrective action directive issued by its primary federal regulator to meet and maintain a specific capital level for any capital measure. At December 31, 2025, the Bank qualified for the well-capitalized category. 21 Table of Contents Federal banking regulators are required to take various mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the three undercapitalized categories. An undercapitalized institution has a capital ratio below any one of four thresholds: a common equity Tier 1 risk-based capital ratio of 4.5%, a Tier 1 risk-based capital ratio of 6.0%, a total risk-based capital ratio of 8.0%, or a leverage ratio of 4.0%. The severity of the action depends upon the capital category in which the institution is placed. For example, institutions in all three undercapitalized categories are automatically restricted from paying distributions and management fees, whereas only an institution that is significantly undercapitalized or critically undercapitalized is restricted in its compensation paid to senior executive officers. Generally, subject to a narrow exception, the banking regulator must appoint a receiver or conservator for an institution that is critically undercapitalized. An institution that is categorized as undercapitalized, significantly undercapitalized, or critically undercapitalized is required to submit an acceptable capital restoration plan to its appropriate federal banking agency. Such a plan must include a guarantee from the institution’s bank holding company that the institution will comply with the plan until the institution has been adequately capitalized on average during each of the four consecutive calendar quarters. The holding company’s obligation to fund a capital restoration plan is limited to the lesser of (i) 5% of an undercapitalized subsidiary institution’s assets at the time it became undercapitalized and (ii) the amount required to meet regulatory capital requirements. An undercapitalized institution is also generally prohibited from increasing its average total assets, making acquisitions, establishing any branches or engaging in any new line of business, except under an accepted capital restoration plan or with Federal Reserve approval. A critically undercapitalized bank, one with a ratio of tangible equity to total assets of 2% or less, is presumptively subject to a supervisory acquisition or the appointment of a conservator or receiver. The regulations also establish procedures for downgrading an institution to a lower capital category based on supervisory factors other than capital. Liquidity Financial institutions are subject to significant regulatory scrutiny regarding their liquidity positions. Various bank regulatory publications, including Federal Reserve SR 10-6 (Funding and Liquidity Risk Management), address the identification, measurement, monitoring and control of funding and liquidity risk by financial institutions. The U.S. federal banking regulators have two standardized metrics for large banking organizations. The first metric is the “liquidity coverage ratio,” and it aims to require a financial institution to maintain sufficient high-quality liquid resources to survive an acute stress scenario that lasts for one month. The second metric is the “net stable funding ratio,” and its objective is to require a financial institution to maintain a minimum amount of stable sources relative to the liquidity profiles of the institution’s assets, as well as the potential for contingent liquidity needs arising from off-balance sheet commitments, over a one-year horizon. While the liquidity coverage ratio and the net stable funding ratio only apply to the largest banking organizations in the country, certain elements may filter down and become applicable to or expected of all insured depository institutions including the Bank. Payment of Dividends We are a legal entity separate and distinct from the Bank. Our principal source of cash flow, including cash flow to pay dividends to our shareholders, is from capital raises and dividends the Bank pays to us as the Bank’s sole shareholder. Statutory and regulatory limitations apply to the Bank’s payment of dividends to us as well as to our payment of dividends to our shareholders. A corollary to the requirement that a bank holding company serve as a source of strength to its subsidiary banks is the Federal Reserve policy that a bank holding company should not maintain a level of cash dividends to its shareholders that places undue pressure on the capital of its bank subsidiaries or that can be funded only through additional borrowings or other arrangements that may undermine the bank holding company’s ability to serve as such a source of strength. Our ability to pay dividends is also subject to the provisions of Washington corporate law that prevent distributions to shareholders if, after giving effect to the distribution, we would not be able to pay our liabilities as they become due in the usual course of business or our total assets would be less than the sum of our total liabilities plus the amount that would be needed, if we were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution. In addition, in deciding whether or not to declare a dividend of any particular size, our board of directors must consider our and the Bank’s current and prospective capital, liquidity and other needs. 22 Table of Contents The Washington DFI and the Federal Reserve also regulate the Bank’s dividend payments. Under Washington law, a state-chartered bank may not pay a dividend in an amount greater than its retained earnings without approval of the Washington DFI. Under Federal Reserve regulations, the Bank may not declare or pay a dividend if the total of all dividends declared during the calendar year, including the proposed dividend, exceeds the sum of the Bank’s net income during the current calendar year and the retained net income of the prior two calendar years, unless the dividend has been approved by the Federal Reserve. The Bank’s payment of dividends may also be affected or limited by other factors, such as the requirement to maintain adequate capital above regulatory guidelines. The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice. Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a depository institution may not pay any dividends if payment would cause it to become undercapitalized or if it already is undercapitalized. Moreover, the federal agencies have issued policy statements providing that bank holding companies and insured banks should generally only pay dividends out of current operating earnings. Restrictions on Transactions with Affiliates and Insiders The Bank is subject to Section 23A of the Federal Reserve Act, which places limits on the amount of: • a bank’s loans or extensions of credit to affiliates; • a bank’s investment in securities issued by affiliates; • a bank’s purchase of assets from affiliates; • loans or extensions of credit made by a bank to third parties collateralized by the securities or obligations of affiliates; • a bank’s guarantee, acceptance or letter of credit issued on behalf of an affiliate; • a bank’s transactions with an affiliate involving the borrowing or lending of securities to the extent they create credit exposure to the affiliate; and • a bank’s derivative transactions with an affiliate to the extent they create credit exposure to the affiliate. Subject to various exceptions, the total amount of the above transactions is limited in amount, as to any one affiliate, to 10% of a bank’s capital and surplus and, as to all affiliates combined, to 20% of a bank’s capital and surplus. In addition to the limitation on the amount of these transactions, the above transactions also must meet specified collateral requirements and safety and soundness requirements. Under no circumstances may a bank purchase a low-quality asset from an affiliate. The Bank is also subject to Section 23B of the Federal Reserve Act, which, among other things, prohibits a bank from engaging in the above transactions with affiliates, as well as other types of transactions set forth in Section 23B, unless the transactions are on terms substantially the same, or at least as favorable to the bank, as those prevailing at the time for comparable transactions with nonaffiliated companies. The Bank is also subject to restrictions on extensions of credit to its executive officers, directors, principal shareholders and their related interests. These extensions of credit (i) must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions between the bank and third parties, and (ii) must not involve more than the normal risk of repayment or present other unfavorable features. There are also individual and aggregate limitations on loans to insiders and their related interests. The aggregate amount of insider loans generally cannot exceed the institution’s total unimpaired capital and surplus. Insiders and banks are subject to enforcement actions for knowingly entering into insider loans in violation of applicable restrictions. Brokered Deposits The FDIA prohibits insured banks from accepting brokered deposits or offering interest rates on any deposits significantly higher than the prevailing rate in the bank’s normal market area or nationally (depending upon where the 23 Table of Contents deposits are solicited) unless it is “well-capitalized,” or it is “adequately capitalized” and receives a waiver from the FDIC. A bank that is “adequately capitalized” and that accepts brokered deposits under a waiver from the FDIC may not pay an interest rate on any deposit in excess of 75 basis points over certain prevailing market rates. There are no such restrictions under the FDIA on a bank that is “well-capitalized.” Further, “undercapitalized” institutions are subject to growth limitations. FDIC rules set forth standards for determining whether a person is a “deposit broker” and whether an insured depository institution must therefore treat deposits placed by that person as brokered deposits. Among other things, these rules provides that a person can generally only be a deposit broker if the person places deposits at more than one insured depository institution. Single Borrower Credit Limits Under Washington law, total loans and extensions of credit to a borrower may not exceed 20% of the Bank’s capital and surplus. Commercial Real Estate Concentration Limits In December 2006, the federal banking regulators issued guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” to address increased concentrations in commercial real estate (“CRE”), loans. In addition, in December 2015, the federal bank agencies issued additional guidance entitled “Statement on Prudent Risk Management for Commercial Real Estate Lending.” Together, these guidelines describe the criteria the agencies will use as indicators to identify institutions potentially exposed to CRE concentration risk. An institution that has (i) experienced rapid growth in CRE lending, (ii) notable exposure to a specific type of CRE, (iii) total reported loans for construction, land development, and other land representing 100% or more of the institution’s capital, or (iv) total CRE loans representing 300% or more of the institution’s capital, and the outstanding balance of the institutions CRE portfolio has increased by 50% or more in the prior 36 months, may be identified for further supervisory analysis of the level and nature of its CRE concentration risk. The Bank’s total non-owner-occupied commercial real estate loans, including loans secured by apartment buildings, investor commercial real estate, and construction and land loans, represented 170.9% and 184.2% of its capital, at December 31, 2025 and 2024, respectively. The outstanding balance of the Bank’s CRE portfolio has decreased by 0.4% for the year ended December 31, 2025 and it increased by 5.1% for the year ended December 31, 2024. The Bank maintains enhanced underwriting and monitoring processes and procedures to manage its CRE portfolio. Privacy Financial institutions are required to disclose their policies for collecting and protecting nonpublic personal information of their clients. Clients generally may prevent financial institutions from sharing non-public personal information with nonaffiliated third parties except under certain circumstances, such as the processing of transactions requested by the consumer or when the financial institution is jointly offering a product or service with a nonaffiliated financial institution. Additionally, financial institutions generally are prohibited from disclosing consumer account numbers to any nonaffiliated third party for use in telemarketing, direct mail marketing or other marketing to consumers. Cybersecurity Federal banking agencies pay close attention to the cybersecurity practices of banks and their holding companies and affiliates. The interagency council of the agencies, the Federal Financial Institutions Examination Council (“FFIEC”), has issued several policy statements and other guidance for banks as new cybersecurity threats arise. FFIEC has recently focused on such matters as compromised customer credentials and business continuity planning. Examinations by the banking agencies now include review of an institution’s information technology and its ability to thwart cyberattacks. Federal banking agency rules require banking organizations to notify their primary federal regulator of significant security incidents within 36 hours of determining that such an incident has occurred as soon as possible and no later than within 36 hours of a significant cybersecurity incident. In addition, the SEC enacted rules, effective as of December 18, 2023, requiring public companies to disclose material cybersecurity incidents that they experience on Form 8-K within four business days of determining that a material cybersecurity incident has occurred and to disclose on annual basis material information regarding their cybersecurity risk management, strategy, and governance. For further information, see the section titled “ Cybersecurity ” in Part I, Item 1C of this Annual Report on Form 10-K. 24 Table of Contents Consumer Credit Reporting The FCRA imposes, among other things: • requirements for financial institutions to develop policies and procedures to identify potential identity theft and, upon the request of a consumer, to place a fraud alert in the consumer’s credit file stating that the consumer may be the victim of identity theft or other fraud; • requirements for entities that furnish information to consumer reporting agencies to implement procedures and policies regarding the accuracy and integrity of the furnished information and regarding the correction of previously furnished information that is later determined to be inaccurate; • requirements for mortgage lenders to disclose credit scores to consumers in certain circumstances; and • limitations on the ability of a business that receives consumer information from an affiliate to use that information for marketing purposes. Anti-Terrorism, Money Laundering Legislation and OFAC The Bank is subject to the Bank Secrecy Act and the USA Patriot Act. These statutes and related rules and regulations impose requirements and limitations on specified financial transactions and accounts and other relationships intended to guard against money laundering and terrorism financing. The principal requirements for an insured depository institution include (i) establishment of an anti-money laundering program that includes training and audit components, (ii) establishment of a “know your customer” program involving due diligence to confirm the identities of persons seeking to open accounts and to deny accounts to those persons unable to demonstrate their identities, (iii) the filing of currency transaction reports for deposits and withdrawals of large amounts of cash, (iv) additional precautions for accounts sought and managed for non-U.S. persons and (v) verification and certification of money laundering risk with respect to private banking and foreign correspondent banking relationships. For many of these tasks a bank must keep records to be made available to its primary federal regulator. Anti-money laundering rules and policies are developed by the Treasury Department, including the Financial Crimes Enforcement Network, but compliance by individual institutions is overseen by its primary federal regulator. The Bank has established appropriate anti-money laundering and customer identification programs. The Bank also maintains records of cash purchases of negotiable instruments, files reports of certain cash transactions exceeding $10,000 (daily aggregate amount), and reports suspicious activity that might signify money laundering, tax evasion, or other criminal activities pursuant to the Bank Secrecy Act. The Bank otherwise has implemented policies and procedures to comply with the foregoing requirements. The Treasury Department’s Office of Foreign Assets Control (“OFAC”), is responsible for helping to ensure that U.S. entities do not engage in transactions with certain prohibited parties, as defined by various Executive Orders and Acts of Congress. OFAC publishes lists of persons, organizations and countries suspected of aiding, harboring or engaging in terrorist acts, known as Specially Designated Nationals and Blocked Persons. If the Company or the Bank finds a name on any transaction, account or wire transfer that is on an OFAC list, the Company or the Bank must freeze or block such account or transaction, file a suspicious activity report, and notify the appropriate authorities. Sarbanes-Oxley Act The Sarbanes-Oxley Act represents a comprehensive revision of laws affecting corporate governance, accounting obligations and corporate reporting. The Sarbanes-Oxley Act is applicable to all companies with equity securities registered, or that file reports, under the Exchange Act. In particular, the act established (i) requirements for audit committees, including independence, expertise and responsibilities; (ii) responsibilities regarding financial statements for the chief executive officer and chief financial officer of the reporting company and requirements for them to certify the accuracy of periodic reports; (iii) standards for auditors and regulation of audits; (iv) disclosure and reporting obligations for the reporting company and its directors and executive officers; and (v) civil and criminal penalties for violations of the federal securities laws. The legislation also established an accounting oversight board to enforce auditing standards and restrict the scope of services that accounting firms may provide to their publicly traded company audit clients. 25 Table of Contents Overdraft Fees Federal Reserve Regulation E restricts banks’ abilities to charge overdraft fees. The rule prohibits financial institutions from charging fees for paying overdrafts on ATM and one-time debit card transactions, unless a consumer consents, or opts in, to the overdraft service for those types of transactions. The Dodd-Frank Act and the EGRRCPA The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) significantly changed the bank regulatory framework and affected the lending, deposit, investment, trading and operating activities of banks and their holding companies, including in the following ways: • The Dodd-Frank Act imposed additional requirements regarding the origination and servicing of residential mortgage loans. The law created a variety of consumer protections, including limitations, subject to exceptions, on the manner by which loan originators may be compensated and an obligation on the part of lenders to verify a borrower’s “ability to repay” a residential mortgage loan. • The Dodd-Frank Act addresses many investor protection, corporate governance and executive compensation matters that affect most U.S. publicly traded companies. The Dodd-Frank Act (i) requires publicly traded companies to give shareholders a non-binding vote on executive compensation and golden parachute payments; (ii) enhances independence requirements for compensation committee members; (iii) requires national securities exchanges to require listed companies to adopt incentive-based compensation clawback policies for executive officers; (iv) authorizes the SEC to promulgate rules that would allow shareholders to nominate their own candidates using a company’s proxy materials; and (v) directs the federal banking regulators to issue rules prohibiting incentive compensation that encourages inappropriate risks. • Other rules and regulations implementing the Dodd-Frank Act that may be relevant to us and the Bank are described or otherwise accounted for in various parts of this “-Regulation and Supervision” section. The EGRRCPA made changes to a variety of rules and regulations, including revisions to the Dodd-Frank Act. For example, the EGRRCPA exempts certain lenders from the “ability to repay” requirements. Other EGRRCPA changes are described elsewhere in this section. Current Expected Credit Losses Model The Company adopted the Current Expected Credit Losses (“CECL”) accounting standard under U.S. generally accepted accounting principles (“GAAP”) effective January 1, 2023. CECL requires banking organizations to recognize an allowance for expected credit losses over the contractual life of certain financial assets measured at amortized cost, including loans and held-to-maturity debt securities, as well as off-balance-sheet credit exposures. Compared to the prior incurred loss methodology, CECL generally results in earlier recognition of credit losses and requires management to consider historical experience, current conditions, and reasonable and supportable forecasts in estimating expected credit losses. The adoption of CECL resulted in a one-time cumulative-effect adjustment to the Company’s credit loss allowances and retained earnings as of January 1, 2023. Following adoption, the allowance for credit losses is updated each reporting period based on changes in portfolio composition, credit quality, economic conditions, and other relevant factors. The CECL framework continues to affect the level and volatility of the Company’s credit loss allowances and regulatory capital over time. Consumer Financial Protection Bureau The Dodd-Frank Act created the CFPB, an independent federal bureau within the Federal Reserve System having broad rulemaking, supervisory and enforcement powers under various federal consumer financial protection laws, including the Equal Credit Opportunity Act, Truth in Lending Act, Real Estate Settlement Procedures Act, Fair Credit Reporting Act, Fair Debt Collection Practices Act, the consumer financial privacy provisions of the Gramm-Leach-Bliley Act, Truth in Savings Act and certain other statutes. The CFPB has examination and primary enforcement authority with respect to depository institutions with more than $10.0 billion in assets. Smaller institutions, including the Bank, are subject to rules promulgated by the CFPB but continue to be examined and supervised by their primary federal banking agency for 26 Table of Contents compliance with federal consumer protection laws and regulations. The CFPB also has authority to prevent unfair, deceptive or abusive acts or practices in connection with the offering of consumer financial products. The Dodd-Frank Act permits states to adopt consumer protection laws and standards that are more stringent than those adopted at the federal level and, in certain circumstances, permits state attorneys general to enforce compliance with both the state and federal laws and regulations. The CFPB has proposed or issued a number of important rules affecting a wide range of consumer financial products. The changes resulting from the Dodd-Frank Act and CFPB rulemakings and enforcement policies may impact the profitability of our business activities, limit our ability to make, or the desirability of making, certain types of loans, require us to change our business practices, impose upon us more stringent capital, liquidity and leverage ratio requirements or otherwise adversely affect our business or profitability. The changes may also require us to dedicate significant management attention and resources to evaluate and make necessary changes to comply with the new statutory and regulatory requirements. The CFPB has issued rules related to a borrower’s ability to repay and qualified mortgage standards, mortgage servicing standards, loan originator compensation standards, requirements for high cost mortgages, appraisal and escrow standards and requirements for higher-priced mortgages. The CFPB has also issued rules establishing integrated disclosure requirements for lenders and settlement agents in connection with most closed end, real estate secured consumer loans; and rules which, among other things, expand the scope of information lenders must report in connection with mortgage and other housing-related loan applications under the Home Mortgage Disclosure Act. The CFPB’s rulemaking and enforcement activities and strategic priorities have shifted as its leadership has changed, and in the future, the CFPB may take a different approach to its implementation of consumer financial protection laws than it has taken in the recent past. The Volcker Rule On December 10, 2013, five U.S. financial regulators, including the Federal Reserve, adopted a final rule implementing the “Volcker Rule.” The Volcker Rule was created by Section 619 of the Dodd-Frank Act and generally prohibits “banking entities,” including insured depository institutions and their affiliates, from engaging in “proprietary trading” and from sponsoring or investing in private equity or hedge funds, or extending credit to or engaging in other covered transactions with private equity or hedge funds that they sponsor or advise. The EGRRCPA amended Section 619 to exempt from the Volcker Rule any insured depository institution that has $10.0 billion or less in total consolidated assets and whose total trading assets and trading liabilities are 5% or less of total consolidated assets. We are among the exempt institutions. Limitations on Incentive Compensation In April 2016, the Federal Reserve and other federal financial agencies re-proposed restrictions on incentive-based compensation pursuant to Section 956 of the Dodd-Frank Act for financial institutions with $1 billion or more in total consolidated assets. For institutions with at least $1 billion but less than $50 billion in total consolidated assets, the proposal would impose principles-based restrictions that are broadly consistent with existing interagency guidance on incentive-based compensation. Such institutions would be prohibited from entering into incentive compensation arrangements that encourage inappropriate risks by the institution (1) by providing an executive officer, employee, director, or principal shareholder with excessive compensation, fees, or benefits, or (2) that could lead to material financial loss to the institution. The proposal would also impose certain governance and recordkeeping requirements on institutions covered by the rule. Whether or when the agencies will finalize the proposal is uncertain. Item 1A. Risk Factors As a financial services organization, we are subject to a number of risks inherent in our transactions and present in the business decisions we make. Described below are the material risks and uncertainties that if realized could have an adverse effect on our business, financial condition, results of operations or cash flows, and our access to liquidity. Consideration should also be given to the other information in this Annual Report on Form 10-K, as well as in the documents incorporated by reference into this Form 10-K. However, other factors not discussed below or elsewhere in this Annual Report on Form 10-K could adversely affect our business, financial condition, results of operations or cash flows and our access to liquidity. Therefore, the risk factors below should not be considered a complete list of potential risks we may face. 27 Table of Contents Risk Factors Summary Our business is subject to numerous material risks and uncertainties, including those described in Part I Item 1A. “Risk Factors” in this Annual Report on Form 10-K. You should carefully consider these material risks and uncertainties when investing in our common stock. The principal risks and uncertainties affecting our business include the following: • The current economic condition in the market areas we serve may adversely impact our earnings and could increase the credit risk associated with our loan portfolio. • We are subject to interest rate risk, and fluctuations in interest rates may adversely affect our earnings. • Our allowance for credit losses may prove to be insufficient to absorb losses in our loan portfolio. • We originate and purchase loans through our CCBX partners, which exposes us to increased lending and compliance risks. • We derive a percentage of our deposits, total assets and income from deposit accounts generated through our BaaS relationships. • Ineffective liquidity management could adversely affect our business, financial condition and results of operations. • Strong competition within our market area could hurt our profits and slow growth. • Our banking-as-a-service (“BaaS”) strategy faces increasing competition, including from institutions and partners that may no longer require a third-party bank. • We may not be able to adequately measure and limit our credit risk, which could lead to unexpected losses. • Our business strategy includes growth, and our business, financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively. • Our agreements with BaaS partners may produce limited revenue and may expose us to liability for compliance violations by BaaS partners. • Regulation of the financial services industry is intense, and we may be adversely affected by changes in laws and regulations. • Financial institutions, such as the Bank, face a risk of noncompliance with and enforcement action under the Bank Secrecy Act and other anti-money laundering statutes and regulations. • We are subject to numerous laws designed to promote community reinvestment or protect consumers, including the CRA and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions. • We are subject to laws regarding the privacy, information security and protection of personal information and any violation of these laws or another incident involving personal, confidential or proprietary information of individuals could damage our reputation and otherwise adversely affect our business, financial condition and results of operations. • We are dependent on our information technology and telecommunications systems and third-party service providers; systems failures, interruptions, security breaches and cybersecurity threats could have an adverse effect on our business, financial condition and results of operations. • Because the nature of the financial services business involves a high volume of transactions, we face significant operational risks. • We previously identified material weaknesses in our internal control over financial reporting, and any failure to maintain effective internal controls in the future could adversely affect our business, financial condition and results of operations. • National and global economic and other conditions could adversely affect our future results of operations or market price of our stock. • Changes in U.S. trade policies, including the imposition of tariffs and retaliatory tariffs, may adversely impact our business, financial condition and results of operations. • Anti-takeover provisions in our corporate organizational documents and provisions of federal and state law may make an attempted acquisition or replacement of our board of directors or management more difficult. 28 Table of Contents Risks Related to Credit Matters We are subject to interest rate risk, and fluctuations in interest rates may adversely affect our earnings. The majority of our banking assets and liabilities are monetary in nature and subject to risk from changes in interest rates. Like most financial institutions, our earnings are significantly dependent on our net interest income, the principal component of our earnings, which is the difference between interest earned by us from our interest-earning assets, such as loans and investment securities, and interest paid by us on our interest-bearing liabilities, such as deposits and borrowings. We expect that we will periodically experience “gaps” in the interest rate sensitivities of our assets and liabilities, meaning that either our interest-bearing liabilities will be more sensitive to changes in market interest rates than our interest-earning assets, or vice versa. In either event, if market interest rates should move contrary to our position, this “gap” will negatively impact our earnings. The impact on earnings is more adverse when the slope of the yield curve flattens, that is, when short-term interest rates increase more than long-term interest rates or when long-term interest rates decrease more than short-term interest rates. Many factors impact interest rates, including governmental monetary policies, inflation, recession, changes in unemployment, the money supply and international economic weakness and disorder and instability in domestic and foreign financial markets. Loans and deposits in our CCBX segment are more sensitive to interest rate changes than our community bank segment. Over time we anticipate that this will increase sensitivity to both increasing and decreasing interest rates. Interest rates remain elevated relative to the historically low levels experienced during the COVID-19 pandemic. Although short-term interest rates declined during portions of 2024 and 2025, funding costs have remained under pressure due to competitive dynamics in the banking sector, including heightened competition for deposits. If interest rates remain elevated, increase again, or if competitive pressures require us to offer or maintain higher-cost deposit products, our cost of funds may increase more rapidly than yields on our interest-earning assets, which could compress our net interest margin. The timing, magnitude and direction of future changes in interest rates remain uncertain and depend on a variety of factors, including inflation trends, economic growth, labor market conditions, fiscal and monetary policy, and domestic and international financial market developments. While inflation has moderated from recent peaks, it remains above historical norms, and the Federal Open Market Committee (“FOMC”) continues to assess inflationary and economic risks in setting monetary policy. Future changes in interest rates or the shape of the yield curve could have adverse effects on our earnings. The FOMC began reducing the federal funds rate in September 2024, and most recently decreased the federal funds rate to 3.75% as of December 31, 2025. Interest rate increases often result in larger payment requirements for our borrowers, which increases the potential for default and could result in a decrease in the demand for loans. At the same time, the marketability of the property securing a loan may be adversely affected by any reduced demand resulting from elevated interest rates. In a declining interest rate environment, there may be an increase in prepayments on loans as borrowers refinance their loans at lower rates. In addition, in a low interest rate environment, loan customers often pursue long-term fixed rate credits, which could adversely affect our earnings and net interest margin if rates increase. Changes in interest rates also can affect the value of loans, securities and other assets. An increase in interest rates that adversely affects the ability of borrowers to pay the principal or interest on loans may lead to an increase in nonperforming assets and a reduction of income recognized, which could have an adverse effect on our results of operations and cash flows. Further, when we place a loan on nonaccrual status, we reverse any accrued but unpaid interest receivable, which decreases interest income. At the same time, we continue to have a cost to fund the loan, which is reflected as interest expense, without any interest income to offset the associated funding expense. Thus, an increase in the amount of nonperforming assets would have an adverse impact on net interest income. Our commercial real estate lending activities expose us to increased lending risks and related credit losses. At December 31, 2025, our commercial real estate loan portfolio totaled $1.29 billion, or 34.2% of our total loan portfolio. Our current business strategy is to continue our originations of commercial real estate loans. Commercial real estate loans generally expose a lender to greater risk of non-payment or late payment and loss than one-to-four family residential mortgage loans because repayment of the loans often depends on the successful operation of the properties and the income stream of the borrowers. These loans involve larger loan balances to single borrowers or groups of related borrowers compared to one-to-four family residential mortgage loans. To the extent that borrowers have more than one commercial real estate loan outstanding, an adverse development with respect to one loan or one credit relationship could expose us to a significantly greater risk of loss compared to an adverse development with respect to a one-to-four family residential real estate loan. Moreover, if loans that are collateralized by commercial real estate become troubled and the value of the real estate has been significantly impaired, then we may not be able to recover the full contractual amount of 29 Table of Contents principal and interest that we anticipated at the time we originated the loan, which could cause us to increase our provision for credit losses and would adversely affect our business, financial condition and results of operations. Furthermore, should the fundamentals of the commercial real estate market deteriorate due to macroeconomic and other factors, our business, financial condition and results of operations could be adversely affected. We may be subject to environmental liabilities in connection with the real properties we own and the foreclosure on real estate assets securing our loan portfolio. In the course of our business, we may purchase real estate in connection with our acquisition and expansion efforts, or we may foreclose on and take title to real estate or otherwise be deemed to be in control of property that serves as collateral on loans we make. As a result, we could be subject to environmental liabilities with respect to those properties. We may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation and clean-up costs incurred by these parties in connection with environmental contamination, or we may be required to investigate or clean up hazardous or toxic substances or chemical releases at a property. The costs associated with investigation or remediation activities could be substantial. In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. The cost of removal or abatement may substantially exceed the value of the affected properties or the loans secured by those properties, we may not have adequate remedies against the prior owners or other responsible parties and we may not be able to resell the affected properties either before or after completion of any such removal or abatement procedures. If material environmental problems are discovered before foreclosure, we generally will not foreclose on the related collateral or will transfer ownership of the loan to a subsidiary. It should be noted, however, that the transfer of the property or loans to a subsidiary may not protect us from environmental liability. Furthermore, despite these actions on our part, the value of the property as collateral will generally be substantially reduced or we may elect not to foreclose on the property and, as a result, we may suffer a loss upon collection of the loan. Any significant environmental liabilities could adversely affect our business, financial condition and results of operations. Our commercial business lending activities expose us to additional lending risks. As of December 31, 2025, commercial and industrial loans totaled $454.1 million and represented 12.1% of total loans. We make commercial business loans in our market area to a variety of professionals, sole proprietorships, partnerships and corporations. As compared to commercial real estate loans, which are secured by real property, the value of which tends to be more easily ascertainable, commercial business loans are of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. As a result, the availability of funds for the repayment of commercial business loans may depend substantially on the success of the business itself and the conditions in the general economy. Further, any losses incurred on a small number of commercial loans could have an adverse impact on our financial condition and results of operations due to the larger average size of commercial loans as compared with other loans and the risk that collateral securing such loans may depreciate over time, may be difficult to appraise, may fluctuate in value and may depend on the borrower’s ability to collect receivables. We have increased our focus on commercial business lending in recent years and intend to continue to focus on this type of lending in the future. Our concentration of residential mortgage loans exposes us to increased lending risks . At December 31, 2025, $466.4 million, or 12.4%, of our loan portfolio was secured by one-to-four family real estate. One-to-four family residential mortgage lending is generally sensitive to regional and local economic conditions that significantly impact the ability of borrowers to meet their loan payment obligations, making loss levels difficult to predict. Declines in real estate values could cause some of our residential mortgages to be inadequately collateralized, which would expose us to a greater risk of loss if we seek to recover on defaulted loans by selling the real estate collateral. As of December 31, 2025, $264.1 million of our residential mortgage loans were made through CCBX partners and are located in different regions across the U.S. A decline in residential real estate values across the U.S. would reduce the value of this residential real estate collateral. These home equity lines of credit are secured by residential real estate and are accessed by using a credit card. As of December 31, 2025, $202.3 million of our residential mortgage loans were made through the community bank, and 83.3% are secured by property in Washington State, and a significant majority of that is located in the Puget 30 Table of Contents Sound region. A decline in residential real estate values as a result of a downturn in the Puget Sound housing market could reduce the value of the real estate collateral securing these types of loans. As of December 31, 2025, $167.3 million of our residential mortgage loans made through the community bank were made to investors. These loans may behave more like multi-family loans than individual 1-4 family loans that are occupied by their owners. Our origination of construction loans exposes us to increased lending risks. At December 31, 2025, $222.1 million, or 5.9%, of our total loans was construction, land and land development loans. We originate commercial construction loans primarily to professional builders for the construction of one-to-four family residences, apartment buildings, and commercial real estate properties. To a lesser degree, we also originate land acquisition loans for the purpose of facilitating the ultimate construction of a home or commercial building. Our construction loans present a greater level of risk than loans secured by improved, occupied real estate due to: (1) the increased difficulty at the time the loan is made of estimating the building costs and the selling price of the property to be built; (2) the increased difficulty and costs of monitoring the loan; (3) the higher degree of sensitivity to increases in market rates of interest; and (4) the increased difficulty of working out loan problems. In addition, construction costs may exceed original estimates as a result of increased materials, labor or other costs. Construction loans also often involve the disbursement of funds with repayment dependent, in part, on the success of the project and the ability of the borrower to sell or lease the property or refinance the indebtedness. Our focus on lending to the small- to medium-sized businesses may adversely affect our business, financial condition and results of operations. We focus our business development and marketing strategy primarily on small- to medium-sized businesses. Small- to medium-sized businesses frequently have smaller market shares than larger firms, may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete and may experience substantial volatility in operating results, any of which may impair a borrower’s ability to repay a loan. In addition, the success of a small and medium-sized business often depends on the management skills, talents and efforts of a small group of people, and the death, disability or resignation of one or more of these people could have an adverse effect on the business and its ability to repay its loan. If our borrowers are unable to repay their loans, our business, financial condition and results of operations could be adversely affected. We may not be able to adequately measure and limit our credit risk, which could lead to unexpected losses. The business of lending is inherently risky, including risks that the principal or interest on any loan will not be repaid timely or at all or that the value of any collateral supporting the loan will be insufficient to cover our outstanding exposure. These risks may be affected by the strength of the borrower’s business sector and local, regional and national market and economic conditions. Many of our loans are made to small to medium-sized businesses that may be less able to withstand competitive, economic and financial pressures than larger borrowers. Our risk management practices, such as monitoring the concentration of our loans within specific industries and our credit approval practices, may not adequately reduce credit risk, and our credit administration personnel, policies and procedures may not adequately adapt to changes in economic or any other conditions affecting customers and the quality of the loan portfolio. A failure to effectively measure and limit the credit risk associated with our loan portfolio could lead to unexpected losses and adversely affect our business, financial condition and results of operations. We originate and purchase loans through our CCBX partners, which exposes us to increased lending and compliance risks. At December 31, 2025, $1.81 billion, or 48.1%, of our total loans were originated or purchased through CCBX partners. Our partners underwrite these loans in compliance with our credit standards and policies. Our CCBX partners service $1.60 billion of these loans. Our partners provide fraud and credit enhancements on many of our CCBX loans, but if they are unable to fulfill their contracted obligations, the Bank could be exposed to writing off all or a portion of the related credit enhancement asset and to additional credit losses as a result of this counterparty risk. In certain partner arrangements, the partner is required to maintain reserve, escrow or similar funding mechanisms (including replenishment obligations) intended to support servicing duties, representations and warranties, fraud losses and other credit-related obligations. These reserve or funding positions may decline below required levels or become negative due to loss activity, timing differences or other factors, and partners may be required to replenish such amounts. If a partner is unable or unwilling to fund or replenish required amounts on a timely basis, we could be exposed to higher credit losses, incur additional servicing or operational costs, accelerate loss recognition or write off all or a portion of the related credit enhancement asset. We evaluate partner funding capacity and reserve adequacy on an ongoing basis as part of our risk 31 Table of Contents management framework and may exercise contractual remedies, which may include adjusting reserve requirements, suspending originations or purchases, or transferring servicing responsibilities, if warranted. We are subject to compliance and regulatory risk if partners do not follow our servicing policies, lending laws and regulations. Our allowance for credit losses may prove to be insufficient to absorb losses in our loan portfolio. Lending money is a substantial part of our business. Every loan carries a certain risk that it will not be repaid in accordance with its terms or that any underlying collateral will not be sufficient to assure repayment. This risk is affected by, among other things: • the cash flow of the borrower, guarantors and/or the project being financed; • the changes and uncertainties as to the future value of the collateral, in the case of a collateralized loan; • the character and creditworthiness of a particular borrower or guarantor; • changes in economic and industry conditions; and • the duration of the loan. The ACL is an estimate of the expected credit losses on financial assets measured at amortized cost. The ACL is evaluated and calculated on a collective basis for those loans which share similar risk characteristics. At each reporting period, the Company evaluates whether the loans in a pool continue to exhibit similar risk characteristics as the other loans in the pool and whether it needs to evaluate the allowance on an individual basis. The Bank must estimate expected credit losses over the loans’ contractual terms, adjusted for expected prepayments. In estimating the life of the loan, the Bank cannot extend the contractual term of the loan for expected extensions, renewals, and modifications, unless the extension or renewal options are included in the contract at the reporting date and are not unconditionally cancellable by the Bank. Because expected credit losses are estimated over the contractual life adjusted for estimated prepayments, determination of the life of the loan may significantly affect the ACL. The Company has chosen to segment its portfolio consistent with the manner in which it manages the risk of the type of credit. • Community Bank Portfolio: The ACL calculation is derived for loan segments utilizing loan level information and relevant information from internal and external sources related to past events and current conditions. In addition, the Company incorporates a reasonable and supportable forecast. • CCBX Portfolio: The Bank calculates the ACL on loans on an aggregate basis based on each partner and product level, segmenting the risk inherent in the CCBX portfolio based on qualitative and quantitative trends in the portfolio. Also included in the ACL are qualitative reserves to cover losses that are expected, but in the Company’s assessment may not be adequately represented in the quantitative method. For example, factors that the Company considers include environmental business conditions, borrower’s financial condition, credit rating and the volume and severity of past due loans and nonaccrual loans. Based on this analysis, the Company records a provision for credit losses to maintain the allowance at appropriate levels. The determination of the appropriate level of the allowance for credit losses inherently involves a high degree of subjectivity and requires us to make significant estimates of current credit risks and future trends, all of which may undergo material changes. If our estimates are incorrect, the allowance for credit losses may not be sufficient to cover losses inherent in our loan portfolio, resulting in the need for increases in our allowance for credit losses through the provision for losses on loans which is charged against income. Management also recognizes that significant new growth in loan portfolios, in the community bank and/or CCBX, new loan products and the refinancing of existing loans can result in portfolios comprised of unseasoned loans that may not perform in a historical or projected manner and may increase the risk that our allowance may be insufficient to absorb losses without significant additional provisions. Many of the agreements with our CCBX partners provide for a credit enhancement which helps protect the Bank by absorbing incurred losses. CCBX credit enhancements are free-standing and are accounted for separately from the allowance for credit losses. In accordance with accounting guidance, we estimate and record a provision for probable losses for these CCBX loans, without regard to the credit enhancement. If a CCBX lending partner is unable to fulfill its 32 Table of Contents contractual obligations with the Bank, then the Bank would be exposed to additional credit losses as a result of this counterparty risk and would have to absorb any credit losses associated with any CCBX partner that cannot fulfill its contractual obligations. Deterioration in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the allowance for credit losses. If current conditions in the housing and real estate markets weaken, we expect we will experience increased delinquencies and credit losses. In addition, bank regulatory agencies periodically review our allowance for credit losses and may require an increase in the provision for credit losses or the recognition of further loan charge-offs, based on their judgments about information available to them at the time of their examination. In addition, if charge-offs in future periods exceed the allowance for credit losses, we will need additional provisions to increase the allowance for credit losses. While we believe that our allowance for credit losses was adequate at December 31, 2025, there is no assurance that it will be sufficient to cover future credit losses, especially if there is a significant deterioration in economic conditions. The current economic condition in the market areas we serve may adversely impact our earnings and could increase the credit risk associated with our loan portfolio. While there is not a single employer or industry in our market area on which a significant number of our customers are dependent, a substantial portion of our community bank loan portfolio is comprised of loans secured by property located in the Puget Sound region and substantially all of our community bank loan and deposit customers are businesses and individuals in greater Puget Sound region. A deterioration of the economy in the market areas we serve could result in the following consequences, any of which would have an adverse impact, which could be material, on our business, financial condition, and results of operations: • high short-term interest rates may cause deposits to decline and deposit costs to increase as depositors seek higher returns on their deposits; • loan delinquencies may increase; • problem assets and foreclosures may increase; • collateral for loans made may decline in value, in turn reducing customers’ borrowing power, reducing the value of assets and collateral associated with existing loans; • certain securities within our investment portfolio could become other than temporarily impaired, requiring a write-down through earnings to fair value, thereby reducing equity; • CCBX partners may experience financial difficulties or fail, our BaaS revenue may decrease, and credit losses could increase if the partner cannot fulfill its credit enhancement obligations; • low-cost or noninterest bearing deposits may decrease; and • demand for our loan and other products and services may decrease. A decline in local economic conditions may have a greater effect on our earnings and capital than on the earnings and capital of larger financial institutions whose real estate loans are geographically diverse. Many of the community bank loans in our portfolio are secured by real estate. Deterioration in the real estate markets where collateral for a mortgage loan is located could negatively affect the borrower’s ability to repay the loan and the value of the collateral securing the loan. Real estate values are affected by various other factors, including changes in general or regional economic conditions, governmental rules or policies and natural disasters such as earthquakes and flooding. Further, deterioration in local economic conditions could drive the level of credit losses beyond the level we have provided for in our allowance for credit losses, which in turn could necessitate an increase in our provision for credit losses and a resulting reduction to our earnings and capital. In addition, weakening in regional and general economic conditions such as inflation, recession, business closings, restrictions on business activity, unemployment, natural disasters, epidemic illness, or other factors beyond our control could reduce our growth rate and negatively affect demand for loans, the ability of our borrowers to repay their loans and our financial condition and results of operations. Our SBA lending program is dependent upon the U.S. federal government, and we face specific risks associated with originating SBA loans. As of December 31, 2025, the balance of owned SBA loans and SBA loans net of the sold portion was $5.2 million, which are guaranteed. As of December 31, 2025, the balance of SBA loans sold and serviced was $2.5 million, 33 Table of Contents resulting in $17,000 in servicing income for the year ended December 31, 2025. Our SBA lending program is dependent upon the U.S. federal government. As an approved participant in the SBA Preferred Lender’s Program, referred to herein as an SBA Preferred Lender, we enable our clients to obtain SBA loans without being subject to the potentially lengthy SBA approval process necessary for lenders that are not SBA Preferred Lenders. The SBA periodically reviews the lending operations of participating lenders to assess, among other things, whether the lender exhibits prudent risk management. When weaknesses are identified, the SBA may request corrective actions or impose enforcement actions, including revocation of the lender’s SBA Preferred Lender status. If we lose our status as an SBA Preferred Lender, we may lose some or all of our customers to lenders who are SBA Preferred Lenders, and as a result we could experience an adverse effect to our financial results. Any changes to the SBA program, including but not limited to changes to the level of guarantee provided by the federal government on SBA loans, changes to program specific rules impacting volume eligibility under the guaranty program, as well as changes to the program amounts authorized by Congress or exhaustion of the available funding for SBA programs may also have an adverse effect on our business, financial condition and results of operation. In addition, any default by the U.S. Government on its obligations could, among other things, impede our ability to originate SBA loans or sell such loans in the secondary market, which could adversely affect our business, financial condition and results of operations. The SBA’s 7(a) Loan Program is the SBA’s primary program for helping start-up and existing small businesses, with financing guaranteed for a variety of general business purposes. Generally, we sell the guaranteed portion of our non-PPP SBA 7(a) loans in the secondary market. These sales result in premium income for us at the time of sale and create a stream of future servicing income, as we retain the servicing rights to these loans. For the reasons described above, we may not be able to continue originating these loans or sell them in the secondary market. Furthermore, even if we are able to continue to originate and sell SBA 7(a) loans in the secondary market, we might not continue to realize premiums upon the sale of the guaranteed portion of these loans or the premiums may decline due to economic and competitive factors. When we originate SBA loans, we incur credit risk on the non-guaranteed portion of the loans, and if a customer defaults on a loan, we share any loss and recovery related to the loan pro-rata with the SBA. If the SBA establishes that a loss on an SBA guaranteed loan is attributable to significant technical deficiencies in the manner in which the loan was originated, funded or serviced by us, the SBA may seek recovery of the principal loss related to the deficiency from us. Generally, we do not maintain reserves or loss allowances for such potential claims and any such claims could adversely affect our business, financial condition and results of operations. The laws, regulations and standard operating procedures that are applicable to SBA loan products may change in the future. We cannot predict the effects of these changes on our business, financial condition and results of operation. Because government regulation greatly affects the business and financial results of all commercial banks and bank holding companies and especially our organization, changes in the laws, regulations and procedures applicable to SBA loans could adversely affect our ability to operate profitably. Economic conditions could increase our level of nonperforming loans and/or reduce demand for our products and services, which could have an adverse effect on our results of operations. Prolonged deteriorating economic conditions could significantly affect the markets in which we do business, the value of our loans and investment securities, and our ongoing operations, costs and profitability. Further, declines in real estate values and sales volumes and elevated unemployment levels may result in higher loan delinquencies, increases in our nonperforming and classified assets and a decline in demand for our products and services. These events may cause us to incur losses and may adversely affect our financial condition and results of operations. Reduction in problem assets can be slow, and the process can be exacerbated by the condition of the properties securing nonperforming loans and the lengthy foreclosure process in Washington. To the extent that we must work through the resolution of assets, economic problems may cause us to incur losses and adversely affect our capital, business, financial condition, results of operations or cash flows and our access to liquidity. Nonperforming assets take significant time and resources to resolve and adversely affect our business, financial condition and results of operations. Nonperforming assets adversely affect our net income in various ways. We generally do not record interest income on other real estate owned (“OREO”), or on nonperforming loans, thereby adversely affecting our income and increasing loan administration costs. When we take collateral in foreclosures and similar proceedings, we are required to mark the related asset to the then fair market value of the collateral, which may ultimately result in a loss. An increase in our level of nonperforming assets increases our risk profile and may impact the capital levels regulators believe are appropriate in light of the ensuing risk profile. While we seek to reduce problem assets through loan workouts, 34 Table of Contents restructurings and otherwise, decreases in the value of the underlying collateral, or in these borrowers’ performance or financial condition, whether or not due to economic and market conditions beyond our control, could adversely affect our business, financial condition and results of operations. In addition, the resolution of nonperforming assets requires significant commitments of time from management, which may adversely impact their ability to perform their other responsibilities. We may not experience future increases in the value of nonperforming assets. Risks Related to Artificial Intelligence and Emerging Technologies Our use of artificial intelligence and automated technologies may expose us to operational, compliance and governance risks. We currently use, and may in the future evaluate or implement, artificial intelligence (“AI”), automation, and similar technologies to support certain internal processes or business functions. The use of these technologies involves inherent risks, including the risk of errors, model limitations, data quality issues, system failures, or unintended outcomes. If AI-enabled tools do not operate as intended or are not properly governed, our operations, risk management processes, or compliance with applicable laws and regulations could be adversely affected. The regulatory and supervisory framework applicable to AI continues to evolve and may limit our ability to deploy or expand AI-enabled tools. Banking regulators have emphasized that the use of AI and automated decision-making technologies remains subject to existing legal and regulatory requirements, including those related to consumer protection, fair lending, data privacy, and model risk management. Regulatory expectations with respect to governance, transparency, documentation, and oversight of AI models are continuing to develop. As a result, we may be required to modify, delay, or limit our use of AI technologies, or incur additional compliance, governance, or operational costs. AI models may produce outcomes that are difficult to explain, validate or monitor. Certain AI techniques may rely on complex or opaque algorithms that can make it challenging to fully explain model outputs or identify the underlying drivers of specific results. Limitations in explainability or validation may increase model risk and complicate compliance with supervisory expectations, including those related to model risk management, internal controls, and auditability. Failure to appropriately manage these risks could result in restrictions or other actions by regulatory agencies on the use of such technologies. Our use of third-party vendors for technology solutions, including those incorporating AI, may increase operational and data risks. We rely on third-party service providers for certain technology platforms and services, some of which may incorporate AI or automated functionality. Our ability to manage the risks associated with these technologies depends, in part, on the controls and practices of such vendors. Deficiencies in vendor risk management, data security, or regulatory compliance could disrupt our operations, compromise sensitive information, or result in regulatory or contractual exposure. Increased public and regulatory scrutiny of AI could give rise to reputational risk. The use of AI in financial services has been subject to heightened public and regulatory attention. Concerns regarding transparency, fairness, privacy, or data use, whether or not well founded, could adversely affect customer confidence or result in increased regulatory scrutiny. Any perceived misuse or failure of AI-enabled tools could harm our reputation and negatively affect our customer relationships. Risks Related to Compliance and Operational Matters Imposition of limits by the bank regulators on commercial real estate lending activities could curtail our growth and adversely affect our earnings. In 2006, the federal banking regulators issued joint guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” (“CRE Guidance”). Although the CRE Guidance did not establish specific lending limits, it provides that a bank’s commercial real estate lending exposure could receive increased supervisory scrutiny where total non-owner-occupied commercial real estate loans, including loans secured by apartment buildings, 35 Table of Contents investor commercial real estate, and construction and land loans, represent 300% or more of an institution’s total risk-based capital, and the outstanding balance of the commercial real estate loan portfolio has increased by 50% or more during the preceding 36 months. Our total non-owner-occupied commercial real estate loans, including loans secured by apartment buildings, investor commercial real estate, and construction and land loans, totaled $1.13 billion and represented 170.9% and 184.2% of its capital, at December 31, 2025 and 2024, respectively. The outstanding balance of the Bank’s regulatory CRE portfolio has decreased by 0.4%, and increased by 5.1%, and 16.8%, for the years ended December 31, 2025, 2024, and 2023 respectively. In December 2015, the federal banking regulators released a statement on prudent risk management for commercial real estate lending, referred to herein as the 2015 Statement. In the 2015 Statement, the federal banking regulators, among other things, indicate their intent to “continue to pay special attention” to commercial real estate lending activities and concentrations going forward. If the Federal Reserve, our primary federal regulator, were to impose restrictions on the amount of commercial real estate loans we can hold in our portfolio, for reasons noted above or otherwise, our earnings would be adversely affected. Our business is subject to the risks of epidemic illnesses, earthquakes, tsunamis, floods, fires and other natural catastrophic events or effects of climate change. A major catastrophe, such as an epidemic illness, earthquake, tsunami, flood, fire or other natural disaster or effects of climate change could result in a prolonged interruption of our business. For example, our headquarters are located in Everett, Washington and we serve the broader Puget Sound region, a geographical region that has been and may continue to be affected by earthquake, tsunami, wildfires and flooding activity. These activities may increase as the effects of climate change increase. Because we serve individuals and businesses in the Northwest, a natural disaster, epidemic illness, significant effect of climate change or other major catastrophe in the Northwest likely would have a greater impact on our business, financial condition and results of operation than if our business were more geographically diverse. The occurrence of any of these natural disasters, epidemic illnesses, effects of climate change or other major catastrophes could negatively impact our performance by disrupting our operations or the operations of our customers, which could adversely affect our business, financial condition and results of operations. Appraisals and other valuation techniques we use in evaluating and monitoring loans secured by real property, OREO and repossessed personal property may not accurately reflect the net value of the asset. In considering whether to make a loan secured by real property, we generally require an appraisal of the property. However, an appraisal is only an estimate of the value of the property at the time the appraisal is made, and, as real estate values may change significantly in relatively short periods of time (especially in periods of heightened economic uncertainty), this estimate may not accurately describe the net value of the real property collateral after the loan is made. As a result, we may not be able to realize the full amount of any remaining indebtedness when we foreclose on and sell the relevant property. In addition, we rely on appraisals and other valuation techniques to establish the value of our OREO, and personal property that we acquire through foreclosure proceedings and to determine certain loan impairments. If any of these valuations are inaccurate, our financial statements may not reflect the correct value of our OREO, and our allowance for credit losses may not reflect accurate loan impairments. This could adversely affect our business, financial condition and results of operations. As of December 31, 2025, we did not hold any OREO or repossessed property and equipment. We derive a percentage of our deposits, total assets and income from deposit accounts generated through our BaaS relationships. Deposit accounts acquired through these relationships totaled $2.56 billion, or 61.7% of total deposits at December 31, 2025. We provide oversight over these relationships, which must meet all internal and regulatory requirements. We may exit relationships where such requirements are not met or be required by our regulators to exit such relationships. Also, our CCBX partner(s) could terminate a relationship with us for many reasons, including being able to obtain better terms from another provider or dissatisfaction with the level or quality of our services. If a relationship were to be terminated, it could materially reduce our deposits, assets and income. We cannot assure you that we could replace such relationship. If we cannot replace such relationship, we may be required to seek higher rate funding sources as compared to the existing relationship and interest expense might increase. We may also be required to sell securities or other assets to meet funding needs which would reduce revenues or potentially generate losses. 36 Table of Contents Our banking-as-a-service (“BaaS”) strategy faces increasing competition, including from institutions and partners that may no longer require a third-party bank. Our strategy of partnering with digital financial service providers to offer BaaS has been adopted by a growing number of financial institutions with which we compete. Several technology-enabled banking platforms, as well as conventional banks with digital banking programs, have implemented BaaS strategies similar to ours. As a result, we face increased competition in attracting and retaining BaaS partners, and we expect competitive pressures in this area to continue. In addition, certain current or prospective partners may seek to reduce their reliance on third-party banking relationships by obtaining their own bank charters or other regulatory approvals that would allow them to offer banking products directly. If such efforts are successful, demand for our BaaS services could decline, existing partner relationships could be reduced or terminated, and our ability to grow or maintain deposits, fee income, or other revenues associated with these relationships could be adversely affected. Competition in the BaaS market may also increase our operating and compliance costs, reduce pricing flexibility, or limit revenue growth. Any inability to compete effectively in this market could have an adverse effect on our business, financial condition, and results of operations. Our agreements with BaaS partners may produce limited revenue and may expose us to liability for compliance violations by BaaS partners. We have entered into agreements with BaaS partners, which includes digital financial service providers, pursuant to which we will provide certain banking services for the BaaS partner customers, including serving as the issuing bank for debit cards issued to their customers and establishing one or more settlement accounts for the purpose of settling customer transactions in the cash management account program. The agreements have varying terms and may be terminated by the parties under certain circumstances. If our BaaS partners are not successful in achieving customer acceptance of their programs or terminate the agreement before the end of its term, our revenue under the agreement may be limited or may cease altogether. In addition, because we will provide banking services with respect to the cash features of our BaaS partner account programs, our bank regulators may hold us responsible for their activities with respect to the marketing or administration of their programs, which may result in increased compliance costs for us or potentially compliance violations as a result of BaaS partner activities. In recent years, a significant number of banks that provide BaaS have become subject to enforcement actions relating to their partners’ activities, indicating that banking regulators have made banks’ oversight over their BaaS partners a supervisory priority and that there is an increased risk that we could similarly become subject to additional regulatory scrutiny or enforcement. Additionally, financial weaknesses at our BaaS partners could cause us to record greater expenses or losses or suffer reputational harm. Significant changes in federal government policies, priorities, and operations could cause economic disruption and adversely affect our business, results of operation, and financial condition. In recent years, the size, structure, priorities, and operations of the federal government have continued to evolve. Federal actions have included changes to agency priorities, budgetary constraints, modifications to federal programs, workforce adjustments, and an increased emphasis on efficiency initiatives and the use of advanced technologies, including AI, across both the public and private sectors. These developments, whether implemented through legislation, regulation, executive action, or administrative practice, may have economic effects that are difficult to predict. Changes in federal funding levels, program administration, or agency mandates could disrupt the delivery of government services or the distribution of federal funds and benefits. In addition, reductions or realignments in the federal workforce or government contracting activity could adversely affect regional and local economies, particularly in areas with meaningful concentrations of federal employees or contractors. Such effects could, in turn, negatively impact our customers’ financial condition, borrowing capacity, or demand for banking services. The pace and scope of ongoing changes to federal government operations and policies may contribute to broader economic uncertainty or volatility. Any resulting adverse economic conditions in the markets we serve could have a negative effect on our business, financial condition, results of operations, and cash flows. 37 Table of Contents We may be adversely affected by changes in U.S. tax laws and regulations. From time to time, the U.S. Government may introduce new tax laws and regulations, or interpretations of existing income tax laws could change, causing an adverse effect on our business, financial condition and results of operations. For example, changes in tax laws contained in the Tax Cuts and Jobs Act of 2017 (the “Tax Cuts and Jobs Act”), which was enacted in December 2017, include a number of provisions that will have an impact on the banking industry, borrowers and the market for residential real estate. Included in this legislation was a reduction of the corporate income tax rate from 35% to 21%. In addition, other changes included: (i) a lower limit on the deductibility of mortgage interest on single-family residential mortgage loans, (ii) the elimination of interest deductions for home equity loans, (iii) a limitation on the deductibility of business interest expense and (iv) a limitation on the deductibility of property taxes and state and local income taxes. We are subject to additional state and local taxes as a result of CCBX operations. We are subject to additional state and local taxes and related reporting requirements related to our CCBX operations. The added recordkeeping burden as well as additional expense that could result from the expansion of CCBX into new regions may have an adverse impact on our business, financial condition and results of operations. Changes in U.S. trade policies, including the imposition of tariffs and retaliatory tariffs, may adversely impact our business, financial condition and results of operations. U.S. trade policy continues to evolve and has included the imposition, modification, suspension, and proposed expansion of tariffs and other trade restrictions affecting imports from, and exports to, various trading partners, including Canada, Mexico, and China. Certain tariffs have been implemented, delayed, or adjusted as trade negotiations and diplomatic discussions continue, and additional changes to tariff levels or trade restrictions may occur in the future. The timing, scope, and duration of such measures remain uncertain. Tariffs and other trade restrictions may increase costs for our customers, disrupt supply chains, reduce demand for their products, or compress operating margins. These effects could adversely impact our customers’ financial performance and liquidity, increase credit risk, and reduce demand for loans and other banking services. In addition, heightened trade tensions or uncertainty regarding trade policy could contribute to broader economic volatility, reduced business confidence, or slower economic growth in the markets we serve. Further changes in trade policies, retaliatory actions by foreign governments, or modifications to international trade agreements could have adverse effects on economic conditions, financial markets, and our customers’ businesses. Any resulting deterioration in economic conditions or increase in credit or market risks could materially and adversely affect our business, financial condition, results of operations and cash flows. Because the nature of the financial services business involves a high volume of transactions, we face significant operational risks, including, but not limited to, customer, employee or third-party fraud and data processing system failures and errors. We rely on the ability of our employees and systems to process a high number of transactions. Operational risk is the risk of loss resulting from our operations, including but not limited to, the risk of fraud or other misconduct by employees or outside persons, the improper use of confidential information, the execution of unauthorized transactions by employees, errors relating to transaction processing and technology, breaches of our internal control system and compliance requirements, high volume of transactions processed for our strategic partners, and business continuation and disaster recovery. Insurance coverage may not be available for such losses, or where available, such losses may exceed insurance limits. This risk of loss also includes the potential legal actions, including claims for negligence, that could arise as a result of an operational deficiency or as a result of noncompliance with applicable regulations, adverse business decisions or their implementation, and customer attrition due to potential negative publicity. We maintain a system of internal controls to mitigate operational risks, including data processing system failures and errors and customer or employee fraud, as well as insurance coverage designed to protect us from material losses associated with these risks, including losses resulting from any associated business interruption. It is not always possible to prevent employee or third-party errors or misconduct. Any material weakness in our internal control system, a breakdown in our internal control system, improper operation of our systems or improper employee actions could result in material financial loss to us, the imposition of regulatory action, and damage to our reputation. 38 Table of Contents We are dependent on the use of data and modeling in our management’s decision-making, and faulty data or modeling approaches could negatively impact our decision-making ability or possibly subject us to regulatory scrutiny in the future. The use of statistical and quantitative models and other quantitative analyses is widespread in bank decision-making, and the employment of such analyses is becoming increasingly widespread in our operations. Liquidity stress testing, interest rate sensitivity analysis, and the identification of possible violations of anti-money laundering regulations are all examples of areas in which we are dependent on models and the data that underlies them. The use of statistical and quantitative models is also becoming more prevalent in regulatory compliance. While we are not subject to stress testing under the Dodd-Frank Act, we anticipate that model-derived testing may become more extensively implemented by regulators in the future. We anticipate data-based modeling will penetrate further into bank decision-making, particularly risk management efforts, as the capacities developed to meet rigorous stress testing requirements are able to be employed more widely and in differing applications. While we believe these quantitative techniques and approaches improve our decision-making, they also create the possibility that faulty data or flawed quantitative approaches could negatively impact our decision-making ability or, if we become subject to regulatory stress testing in the future, adverse regulatory scrutiny. Further, because of the complexity inherent in these approaches, misunderstanding or misuse of their outputs could similarly result in suboptimal decision-making. We depend on the accuracy and completeness of information provided to us by our borrowers and counterparties and any misrepresented information could adversely affect our business, financial condition and results of operations. In deciding whether to approve loans or to enter into other transactions with borrowers and counterparties, we rely on information furnished to us by, or on behalf of, borrowers and counterparties, including financial statements, credit reports and other financial information. We also rely on representations of borrowers and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. If any of this information is intentionally or negligently misrepresented and such misrepresentation is not detected prior to loan funding, the value of the loan may be significantly lower than expected and we may be subject to regulatory action. Whether a misrepresentation is made by the loan applicant, another third party, or one of our employees, we generally bear the risk of loss associated with the misrepresentation. Our controls and processes may not have detected, or may not detect all, misrepresented information in our loan originations or from our business clients. Any such misrepresented information could adversely affect our business, financial condition and results of operations. We could recognize losses on investment securities held in our securities portfolio, particularly if interest rates increase or economic and market conditions deteriorate . While we attempt to invest a significant majority of our total assets in loans (our loan-to-asset ratio was 80.6% as of December 31, 2025), we invest a percentage of our total assets (1.0% as of December 31, 2025) in investment securities with the primary objectives of providing a source of liquidity and meeting pledging requirements. As of December 31, 2025, the fair value of our available for sale investment securities portfolio was $29,000, which included a net unrealized loss of $1,000, and the fair value of our held to maturity investment securities was $48.7 million, which included a net unrealized loss of $496,000. Factors beyond our control can significantly and adversely influence the fair value of securities in our portfolio. For example, fixed-rate securities are generally subject to decreases in market value when interest rates rise. Additional factors include, but are not limited to, rating agency downgrades of the securities, defaults by the issuer or individual borrowers with respect to the underlying securities, and instability in the credit markets. Any of the foregoing factors could cause impairment in future periods and result in realized losses. The process for determining whether impairment exists usually requires difficult, subjective judgments about the future financial performance of the issuer and any collateral underlying the security in order to assess the probability of receiving all contractual principal and interest payments on the security. Although we have not recognized an impairment related to our investment portfolio as of December 31, 2025, changing economic and market conditions affecting interest rates, the financial condition of issuers of the securities and the performance of the underlying collateral, among other factors, may cause us to recognize losses in future periods, which could have an adverse effect on our business, financial condition and results of operations. 39 Table of Contents The accuracy of our financial statements and related disclosures could be affected if the judgments, assumptions or estimates used in our critical accounting policies are inaccurate. The preparation of financial statements and related disclosures in conformity with GAAP requires us to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and related notes to those financial statements. Our critical accounting policies, which are included in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Annual Report on Form 10-K, describe those significant accounting policies and methods used in the preparation of our consolidated financial statements that we consider “critical” because they require judgments, assumptions and estimates that materially affect our consolidated financial statements and related disclosures. As a result, if future events or regulatory views concerning such analysis differ significantly from the judgments, assumptions and estimates in our critical accounting policies, those events or assumptions could have a material impact on our consolidated financial statements and related disclosures, in each case resulting in our needing to revise or restate prior period financial statements, cause damage to our reputation and the price of our common stock, and adversely affect our business, financial condition and results of operations. Dependency on external security systems expose us to greater operational risk. External security systems with which we are connected, whether directly or indirectly, through the community bank or CCBX, can be sources of risk to us. We may be exposed not only to a systems failure with which we are directly connected, but also to a systems breakdown of a party to CCBX or other relationship to which we are connected. This is particularly the case where activities of customers or those parties are beyond our security and control systems, including through the use of the internet, cloud computing services and personal smart phones and other mobile devices or services. If that party experiences a breach of its own systems or misappropriates that data, this could result in a variety of negative outcomes for us and our customers, including: • losses from fraudulent transactions, as well as potential liability for losses that exceed thresholds established in consumer protection laws and regulations, • increased operational costs to remediate the consequences of the external party’s security breach, • negative impact on future revenues, and • harm to reputation arising from the perception that our systems may not be secure. We are highly dependent on the accuracy and effectiveness of our operational processes and systems and the operational processes and systems of external parties related to the community bank and CCBX. We rely comprehensively on financial, accounting, transaction execution, data processing and other operational systems to process, record, monitor and report a large number of transactions on a continuous basis, and to do so accurately, quickly and securely. In addition to the proper design, installation, maintenance and training of our own operational systems, we rely on the effective functioning of operational systems of external parties related to the community bank and CCBX. Breakdowns in these operational systems could result in: • the inability to accurately and timely settle transactions, • the possibility that funds transfers or other transactions are executed erroneously, or with unintended consequences, • financial losses incurred, or possible restitution to customers, resulting from contractual agreements with external parties related to the community bank and CCBX, • regulatory issues, • higher operational costs, associated with replacing or recovering systems that are inoperable or unavailable, • loss of confidence in our ability to protect against and withstand operational disruptions, thus impacting our ability to market and establish new relationships in the CCBX segment, and • harm to our reputation. As the speed, frequency, volume, interconnectivity and complexity of transactions within our CCBX segment continues to increase, it becomes more challenging to effectively maintain systems and mitigate risks such as: • errors made by us or external parties doing business with the community bank and CCBX, whether inadvertent or malicious, and • isolated or seemingly insignificant errors or losses, which migrate to other systems or grow in number, to become larger issues or losses. 40 Table of Contents We may be subject to potential business risk from actions by our regulators related to CCBX relationships. Our regulators could impose restrictions on the businesses served in our CCBX segment or restrict the number of different relationships the Company can hold. Regulatory restrictions placed on the parties served in the Company’s CCBX segment could result in reduced demand for services, reduced future revenue in the CCBX segment, or loss of current relationships. Regulatory restrictions that limit the number of relationships the Company can hold in its CCBX segment would result in reduced future revenue and limit the potential for growth in that segment. Risks Related to Strategic and Reputational Matters Our business strategy includes growth, and our business, financial condition and results of operations could be negatively affected if we fail to grow or fail to manage our growth effectively. Growing our operations could also cause our expenses to increase faster than our revenues. Our business strategy includes growth in assets, deposits and the scale of our operations. Achieving such growth will require us to attract customers that currently bank at other financial institutions in our market area. Our ability to successfully grow will depend on a variety of factors, including our ability to attract and retain experienced bankers, the continued availability of desirable business opportunities, competition from other financial institutions in our market area and our ability to manage our growth. Growth opportunities may not be available or we may not be able to manage our growth successfully. If we do not manage our growth effectively, our financial condition and operating results could be negatively affected. Furthermore, there can be considerable costs involved in expanding deposit and lending capacity that generally require a period of time to generate the necessary revenues to offset these costs, especially in areas in which we do not have an established presence and that require alternative delivery methods. Accordingly, any such business expansion can be expected to negatively impact our earnings for some period of time until certain economies of scale are reached. Our expenses could be further increased if we encounter delays in modernizing existing facilities, opening new branches or deploying new services. Our expansion strategy focuses on organic growth of our community bank and the expansion of our CCBX segment. We may not be able to execute on aspects of our expansion strategy, which may impair our ability to sustain our historical rate of growth or prevent us from growing at all. More specifically, we may not be able to generate sufficient new loans and deposits within acceptable risk and expense tolerances, obtain the personnel or funding necessary for additional growth or find suitable new strategic partners. The success of our strategy also depends on our ability to effectively manage growth, which is dependent upon a number of factors, including our ability to adapt our credit, operational, technology and governance infrastructure to accommodate expanded operations. If we fail to implement one or more aspects of our strategy, we may be unable to maintain our historical earnings trends, which could have an adverse effect on our business, financial condition and results of operations. Strong competition within our market area could hurt our profits and slow growth. Our profitability depends upon our continued ability to compete successfully in our market area. We face intense competition both in making loans and attracting deposits. Our competitors for commercial real estate loans include other community banks and commercial lenders, some of which are larger than us and have greater resources and lending limits than we have and offer services that we do not provide. We face stiff competition for one-to-four family residential loans from other financial service providers, including large national residential lenders and local community banks. Other competitors for one-to-four family residential loans include credit unions and mortgage brokers which keep overhead costs and mortgage rates down by selling loans and not holding or servicing them. Price competition for loans and deposits might result in us earning less on our loans and paying more on our deposits, which reduces net interest income. We expect competition to remain strong in the future. The Washington DFI has entered into a multi-state agreement with six other states that is intended to streamline the licensing process for money service businesses, which include money transmitters and payment service providers. Increasing the relative ease of obtaining a license to operate a money service business within the state of Washington may encourage financial technology, or fintech, companies to offer services in the state, thereby increasing competition for such services. 41 Table of Contents We rely heavily on our executive management team and other key employees, and we could be adversely affected by the unexpected loss of their services. Our success depends in large part on the performance of our executive management team and other key personnel, as well as on our ability to attract, motivate and retain highly qualified senior and middle management and other skilled employees. Competition for qualified employees is intense, and the process of locating key personnel with the combination of skills, attributes and business relationships required to execute our business plan may be lengthy. We may not be successful in retaining our key employees, and the unexpected loss of services of one or more of our key personnel could have an adverse effect on our business because of their skills, knowledge of and business relationships within our primary markets, years of industry experience and the difficulty of promptly finding qualified replacement personnel. If the services of any of our key personnel should become unavailable for any reason, we may not be able to identify and hire qualified persons on terms acceptable to us, or at all, which could have an adverse effect on our business, financial condition and results of operations. Anti-takeover provisions in our corporate organizational documents and provisions of federal and state law may make an attempted acquisition or replacement of our board of directors or management more difficult. Our second amended and restated articles of incorporation and our amended and restated bylaws, (“bylaws”), may have an anti-takeover effect and may delay, discourage or prevent an attempted acquisition or change of control or a replacement of our incumbent board of directors or management. Our governing documents include provisions that: • empower our board of directors, without shareholder approval, to issue preferred stock, the terms of which, including voting power, are to be set by our board of directors; • establish a classified board of directors, with directors of each class serving a three-year term; • provide that directors may be removed from office without cause only by vote of 80% of the outstanding shares then entitled to vote; • eliminate cumulative voting in elections of directors; • permit our board of directors to alter, amend or repeal our bylaws or to adopt new bylaws; • require the request of holders of at least one-third of the outstanding shares of our capital stock entitled to vote at a meeting to call a special shareholders’ meeting; • require shareholders that wish to bring business before annual meetings of shareholders, or to nominate candidates for election as directors at our annual meeting of shareholders, to provide timely notice of their intent in writing; • require that certain business combination transactions with a significant shareholder be approved by holders of two-thirds of the shares held by persons other than the significant shareholder; and • enable our board of directors to increase, between annual meetings, the number of persons serving as directors and to fill the vacancies created as a result of the increase by a majority vote of the directors present at a meeting of directors. In addition, certain provisions of Washington law, including a provision which restricts certain business combinations between a Washington corporation and certain affiliated shareholders, may delay, discourage or prevent an attempted acquisition or change in control. Furthermore, banking laws impose notice, approval, and ongoing regulatory requirements on any shareholder or other party that seeks to acquire direct or indirect “control” of an FDIC-insured depository institution or its holding company. These laws include the BHC Act, the Change in Bank Control Act, and comparable banking laws in the State of Washington. These laws could delay or prevent an acquisition. 42 Table of Contents We are subject to laws regarding the privacy, information security and protection of personal information and any violation of these laws or another incident involving personal, confidential or proprietary information of individuals could damage our reputation and otherwise adversely affect our business, financial condition and results of operations. Our business requires the collection and retention of large volumes of customer data, including personally identifiable information in various information systems that we maintain and in those maintained by third parties with whom we contract to provide data services to customers and partners. We also maintain important internal company data such as personally identifiable information about our employees and information relating to our operations. We are subject to complex and increasingly demanding laws and regulations governing the privacy and protection of personal information of individuals (including customers, employees, suppliers and other third parties). For example, our business is subject to the Gramm-Leach-Bliley Act which, among other things: (i) imposes certain limitations on our ability to share nonpublic personal information about our customers with nonaffiliated third parties; (ii) requires that we provide certain disclosures to customers about our information collection, sharing and security practices and afford customers the right to “opt out” of any information sharing by us with nonaffiliated third parties (with certain exceptions); and (iii) requires that we develop, implement and maintain a written comprehensive information security program containing appropriate safeguards based on our size and complexity, the nature and scope of our activities, and the sensitivity of customer information we process, as well as plans for responding to data security breaches. Various state and federal laws and regulations impose data security breach notification requirements with varying levels of individual, consumer, regulatory or law enforcement notification in certain circumstances in the event of a security breach. Ensuring that our collection, use, transfer and storage of personal information complies with all applicable laws and regulations can increase our costs. While we have implemented a vendor management program with the third-party service providers, to help ensure third party relationships are effectively managed by providing risk-focused controls and processes that are designed to monitor our vendors’ compliance with relevant laws, regulations, and industry standards, we may not be able to ensure that all of our clients, suppliers, counterparties and financial providers in CCBX, and other third parties have appropriate controls in place to protect the confidentiality of the information that they exchange with us, particularly where such information is transmitted by electronic means. If personal, confidential or proprietary information of customers or others were to be mishandled or misused (in situations where, for example, such information was erroneously provided to parties who are not permitted to have the information, or where such information was intercepted or otherwise compromised by third parties), we could be exposed to litigation or regulatory sanctions under personal information laws and regulations. Concerns regarding the effectiveness of our measures to safeguard personal information, or even the perception that such measures are inadequate, could cause us to lose customers or potential customers for our products and services and thereby reduce our revenues. Accordingly, any failure or perceived failure to comply with applicable privacy or data protection laws and regulations may subject us to inquiries, examinations and investigations that could result in requirements to modify or cease certain operations or practices or in significant liabilities, fines or penalties, and could damage our reputation and otherwise adversely affect our business, financial condition and results of operations. We are dependent on our information technology and telecommunications systems and third-party service providers; systems failures, interruptions, security breaches and cybersecurity threats could have an adverse effect on our business, financial condition and results of operations. Our business is dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems and third-party service providers. The failure of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could interrupt our operations. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. If significant, sustained or repeated, a system failure or service denial could compromise our ability to operate effectively, damage our reputation, result in a loss of customer business, and/or subject us to additional regulatory scrutiny and possible financial liability, any of which could have an adverse effect on our business, financial condition and results of operations. In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and that of our customers, suppliers and business partners, as well as personally identifiable information about our customers and employees. The processing that takes place with our strategic partners could potentially have an adverse impact on us in the event of a security breach of their systems. The secure processing, maintenance and transmission of this information is critical to our operations and business strategy. We, our customers, and other financial institutions with which we interact, are subject to increasingly frequent and continuous attempts, including ransomware and malware attacks, to penetrate key systems by individual hackers, organized criminals, and in some cases, state-sponsored 43 Table of Contents organizations, all of which are heightened as a result of advances in AI. Our systems and our third-party service providers’ systems have been, and will likely continue to be, subject to advanced computer viruses or other malicious codes, ransomware, unauthorized access attempts, denial of service attacks, phishing, social engineering, hacking and other cyberattacks. We have an Information Security Program that includes internal/external penetration testing, regular vulnerability assessments, detailed vulnerability management, data loss prevention controls, file access and integrity monitoring and reporting and threat intelligence. While we have established policies and procedures to prevent or limit the impact of cyberattacks, there can be no assurance that such events will not occur or will be adequately addressed if they do. In addition, we also outsource certain cybersecurity functions, such as penetration testing, to third-party service providers, and the failure of these service providers to adequately perform such functions could increase our exposure to security breaches and cybersecurity threats. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other malicious code and cyberattacks that could have an impact on information security. Any such breach or attacks could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such unauthorized access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, and regulatory penalties; disrupt our operations and the services we provide to customers; damage our reputation; and cause a loss of confidence in our products and services, all of which could adversely affect our business, financial condition and results of operations. Further, to the extent that the activities of our third-party service providers or the activities of our customers involve the storage and transmission of confidential information, security breaches and viruses could expose us to claims, regulatory scrutiny, litigation costs and other possible liabilities. For further information, see the section titled “Cybersecurity” in Part I, Item 1C of this Annual Report on Form 10-K. As noted above, federal banking agency rules require banking organizations to notify their primary federal regulator of significant security incidents within 36 hours of determining that such an incident has occurred as soon as possible and no later than within 36 hours of a significant cybersecurity incident. Failure to comply with these requirements in the event of such an incident could result in sanctions by regulatory agencies, civil money penalties, and/or damage to our reputation, all of which could have an adverse effect on our business, financial condition and results of operations. Additionally, the SEC enacted rules, effective as of December 18, 2023, requiring public companies to disclose material cybersecurity incidents that they experience on Form 8-K within four business days of determining that a material cybersecurity incident has occurred and to disclose on an annual basis material information regarding their cybersecurity risk management, strategy and governance. If we fail to comply with these new requirements we could incur regulatory fines in addition to other adverse consequences to our reputation, business, financial condition and results of operations. Risks Related to Our Capital and Liquidity Ineffective liquidity management could adversely affect our business, financial condition and results of operations. Effective liquidity management is essential for the operation of our business. We require sufficient liquidity to meet customer loan requests, customer deposit maturities/withdrawals, payments on our debt obligations as they come due and other cash commitments under both normal operating conditions and other unpredictable circumstances causing industry or general financial market stress. Our access to funding sources in amounts adequate to finance our activities on terms that are acceptable to us could be impaired by factors that affect us specifically or the financial services industry or economy generally. Factors that could detrimentally impact our access to liquidity sources include a downturn in the geographic markets in which our loans and operations are concentrated or difficult credit markets. Our access to deposits may also be affected by the liquidity needs of our depositors. In particular, a majority of our liabilities are checking accounts and other liquid deposits, which are payable on demand or upon several days’ notice, while by comparison, a substantial majority of our assets are loans, which cannot be called or sold in the same time frame. Although we have historically been able to replace maturing deposits and advances as necessary, we might not be able to replace such funds in the future, especially if a large number of our depositors seek to withdraw their accounts, regardless of the reason. A failure to maintain adequate liquidity could adversely affect our business, financial condition and results of operations. We may need to raise additional capital in the future, and such capital may not be available when needed or at all. We may need to raise additional capital, in the form of additional debt or equity, in the future to have sufficient capital resources and liquidity to meet our commitments and fund our business needs and future growth, particularly if the quality of our assets or earnings were to deteriorate significantly. Our ability to raise additional capital, if needed, will depend on, among other things, conditions in the capital markets at that time, which are outside of our control, and our 44 Table of Contents financial condition. Economic conditions and a loss of confidence in financial institutions may increase our cost of funding and limit access to certain customary sources of capital or make such capital only available on unfavorable terms, including interbank borrowings, repurchase agreements and borrowings from the discount window of the Federal Reserve. We may not be able to obtain capital on acceptable terms or at all. Any occurrence that may limit our access to the capital markets, such as a decline in the confidence of debt purchasers, depositors of our bank or counterparties participating in the capital markets or other disruption in capital markets, may adversely affect our capital costs and our ability to raise capital and, in turn, our liquidity. Further, if we need to raise capital in the future, we may have to do so when many other financial institutions are also seeking to raise capital and would then have to compete with those institutions for investors. An inability to raise additional capital on acceptable terms when needed could have an adverse effect on our business, financial condition and results of operations. There may be future sales or other dilution of our equity, which may adversely affect the market price of our securities. We may seek to raise additional capital in the future through equity offerings. The issuance of additional shares of common stock or the issuance of convertible securities would dilute the ownership interest of our existing common shareholders. The market price of our common stock could decline as a result of an equity offering, as well as other sales of a large block of shares of our common stock or similar securities in the market after an equity offering, or the perception that such sales could occur. Both we and our regulators perform a variety of analyses of our assets, including the preparation of stress case scenarios, and as a result of those assessments we could determine, or our regulators could require us, to raise additional capital. Risks Related to Our Industry Regulation of the financial services industry is intense, and we may be adversely affected by changes in laws and regulations, including as a result of the current administration. We are subject to extensive government regulation, supervision and examination at both the federal and state level. The Bank’s deposits are insured in whole or in part by the FDIC. The Bank is subject to regulation by the Federal Reserve and the Washington DFI. The Federal Reserve also has supervisory authority over the Company. Such regulation, supervision and examination govern the activities in which we may engage, and are intended primarily for the protection of the deposit insurance fund and the Bank’s depositors, rather than for shareholders. Compliance with applicable laws and regulations can be difficult and costly, and changes to laws and regulations can impose additional compliance costs. The Dodd-Frank Act, which imposed significant regulatory and compliance changes on financial institutions, is an example of this type of federal law. Any future legislative changes, including as a result of the current administration, could have a material impact on our profitability, the value of assets held for investment or the value of collateral for loans. Future legislative changes could also require changes to business practices and potentially expose us to additional costs, liabilities, enforcement action and reputational risk. Federal regulatory agencies have the ability to take strong supervisory actions against financial institutions that have experienced increased loan production and losses and other underwriting weaknesses or have compliance weaknesses. These actions include entering into formal or informal written agreements and cease and desist orders that place certain limitations on their operations. If we were to become subject to a regulatory action, such action could negatively impact our ability to execute our business plan, and result in operational restrictions, as well as our ability to grow, pay dividends, repurchase stock or engage in mergers and acquisitions. See “Item 1. Business—Regulation and Supervision—Bank Regulation and Supervision—Capital Adequacy” for a discussion of regulatory capital requirements. Additional increases in Federal Deposit Insurance Corporation insurance premiums could adversely affect our earnings and results of operations. The deposits of the Bank are insured by the FDIC up to legal limits and, accordingly, subject it to the payment of FDIC deposit insurance assessments. The Bank's regular assessments are determined by the level of its assessment base and its risk classification, which is based on its regulatory capital levels and the level of supervisory concern that it poses, as well as by its usage of brokered deposits. Moreover, the FDIC has the unilateral power to change deposit insurance assessment rates and the manner in which deposit insurance is calculated and also to charge special assessments to FDIC-insured institutions. The FDIC utilized all of these powers during the financial crisis for the purpose of restoring the reserve ratios of the Deposit Insurance Fund, and more recently increased assessment rates to address extraordinary growth in the amount of insured deposits resulting from the COVID-19 pandemic. 45 Table of Contents Any future special assessments, increases in assessment rates or premiums, or required prepayments in FDIC insurance premiums could reduce our profitability or limit our ability to pursue certain business opportunities, which could adversely affect our business, financial condition and results of operations. Federal banking agencies periodically conduct examinations of our business, including compliance with laws and regulations, and our failure to comply with any supervisory actions to which we are or become subject as a result of such examinations could adversely affect us. As part of the bank regulatory process, the Federal Reserve and the Washington DFI periodically conduct comprehensive examinations of our business, including compliance with laws and regulations. If, as a result of an examination, either of these banking agencies were to determine that the financial condition, capital resources, asset quality, earnings prospects, management, liquidity, asset sensitivity, risk management or other aspects of any of our operations had become unsatisfactory, or that our Company, the Bank or their respective management were in violation of any law or regulation, it may take a number of different remedial actions as it deems appropriate. The Federal Reserve may enjoin “unsafe or unsound” practices or violations of law, require affirmative actions to correct any conditions resulting from any violation or practice, issue an administrative order that can be judicially enforced, direct an increase in our capital levels, restrict our growth, assess civil monetary penalties against us, the Bank or their respective officers or directors, and remove officers and directors. The FDIC also has authority to review our financial condition, and, if the FDIC were to conclude that the Bank or its directors were engaged in unsafe or unsound practices, that the Bank was in an unsafe or unsound condition to continue operations, or the Bank or the directors violated applicable law, the FDIC could move to terminate the Bank’s deposit insurance. If we become subject to such regulatory actions, our business, financial condition, and results of operations as well as our reputation could be adversely affected. Many of our new activities and expansion plans require regulatory approvals, and failure to obtain these approvals may restrict our growth. We may complement and expand our business by growing our BaaS segment, expanding the Bank’s banking location network, or de novo branching, and pursuing strategic acquisitions of financial institutions and other complementary businesses. Generally, we must receive federal and state regulatory approval before we can acquire a depository institution or related business insured by the FDIC or before we open a de novo branch. In determining whether to approve a proposed acquisition, federal banking regulators will consider, among other factors, the effect of the acquisition on competition, our financial condition, our future prospects, and the impact of the proposal on U.S. financial stability. The regulators also review current and projected capital ratios and levels, the competence, experience and integrity of management and its record of compliance with laws and regulations, the convenience and needs of the communities to be served (including the acquiring institution’s record of compliance under the CRA) and the effectiveness of the acquiring institution in combating money laundering activities. Such regulatory approvals may not be granted on terms that are acceptable to us, or at all. Federal bank regulators have increasingly focused on the risks related to bank and fintech company partnerships, raising concerns regarding risk management, oversight, internal controls, information security, change management, compliance, and information technology operational resilience. This focus is demonstrated by recent regulatory enforcement actions against other banks that have allegedly not adequately addressed these concerns while growing their BaaS offerings. We could be subject to additional regulatory scrutiny with respect to our CCBX business that could have a material adverse effect on the business, financial condition, results of operations and growth prospects of the Company. Financial institutions, such as the Bank, face a risk of noncompliance with and enforcement action under the Bank Secrecy Act and other anti-money laundering statutes and regulations. The Bank Secrecy Act, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”), and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and file suspicious activity and currency transaction reports as appropriate. The Financial Crimes Enforcement Network, established by the Treasury Department to administer the Bank Secrecy Act, has authority to impose significant civil money penalties for violations of these requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration and the Internal Revenue Service. There is also increased scrutiny of compliance with the sanctions programs and rules administered and enforced by the Treasury Department’s Office of Foreign Assets Control. 46 Table of Contents In order to comply with regulations, guidelines and examination procedures in this area, we have dedicated significant resources to our anti-money laundering program. If our policies, procedures and systems are deemed deficient, we could be subject to liability, including fines and regulatory actions such as restrictions on our ability to pay dividends and the inability to obtain regulatory approvals to proceed with certain aspects of our business plans, including acquisitions and de novo branching. We are subject to numerous laws designed to promote community reinvestment or protect consumers, including the CRA and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions. The CRA requires the Federal Reserve to assess the Bank’s performance in meeting the credit needs of the communities it serves, including low- and moderate-income neighborhoods, and if the Bank performs unsatisfactorily, various adverse regulatory consequences may ensue, including an inability to secure regulatory approval of expansionary transactions or new branches. The regulatory framework governing CRA evaluations has been the subject of recent legal and regulatory developments. Although the federal banking agencies adopted a final CRA rule in October 2023, implementation of that rule was subsequently enjoined by a federal court and did not take effect. The agencies have since proposed to rescind the 2023 rule and continue to supervise institutions under the prior CRA regulations while further rulemaking is considered. Future changes to CRA regulations, supervisory expectations, or examination practices could increase compliance costs or make it more difficult to achieve or maintain favorable CRA ratings. In addition, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions. The federal banking agencies, the CFPB, the U.S. Department of Justice and other federal agencies are responsible for enforcing these laws and regulations. The CFPB was created under the Dodd-Frank Act to centralize responsibility for consumer financial protection with broad rulemaking authority to administer and carry out the purposes and objectives of federal consumer financial laws with respect to all financial institutions that offer financial products and services to consumers. The CFPB is also authorized to prescribe rules applicable to any covered person or service provider, identifying and prohibiting acts or practices that are “unfair, deceptive, or abusive” in connection with any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service. The broad rulemaking powers of the CFPB have potential to have a significant impact on the operations of financial institutions offering consumer financial products or services. A successful regulatory challenge to an institution’s performance under fair lending laws or regulations, or other consumer lending laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines. Private parties may also have the ability to challenge an institution’s performance under fair lending laws in private class action litigation. Such actions could have an adverse effect on our business, financial condition and results of operations. Federal, state and local consumer lending laws may restrict our ability to originate certain mortgage loans or increase our risk of liability with respect to such loans and could increase our cost of doing business. Federal, state and local laws have been adopted that are intended to eliminate certain lending practices considered “predatory.” These laws prohibit practices such as steering borrowers away from more affordable products, selling unnecessary insurance to borrowers, repeatedly refinancing loans and making loans without a reasonable expectation that the borrowers will be able to repay the loans irrespective of the value of the underlying property. It is our policy not to make predatory loans, but these laws create the potential for liability with respect to our lending activities. They increase our cost of doing business and, ultimately, may prevent us from making certain loans and cause us to reduce the average percentage rate or the points and fees on loans that we do make. The expanding body of federal, state and local regulations and/or the licensing of loan servicing, collections or other aspects of our business and our sales of loans to third parties may increase the cost of compliance and the risks of noncompliance and subject us to litigation. We service most of our own community bank loans and CCBX partners service most loans originated through them. Loan servicing is subject to extensive regulation by federal, state and local governmental authorities, as well as various laws and judicial and administrative decisions imposing requirements and restrictions on those activities. The volume of new or modified laws and regulations has increased in recent years and, in addition, some individual 47 Table of Contents municipalities have begun to enact laws that restrict loan servicing activities, including delaying or temporarily preventing foreclosures or forcing the modification of certain mortgages. If regulators impose new or more restrictive requirements, we may incur additional significant costs to comply with such requirements, which may further adversely affect us. In addition, were we to be subject to regulatory investigation or regulatory action regarding our loan modification and foreclosure practices, our business, financial condition and results of operations could be adversely affected. Our failure to comply with applicable laws and regulations could possibly lead to: civil and criminal liability; loss of licensure; damage to our reputation in the industry; fines and penalties and litigation, including class action lawsuits; and administrative enforcement actions. Any of these outcomes could adversely affect us. The Federal Reserve may require us to commit capital resources to support the Bank. The Federal Reserve requires a bank holding company to act as a source of financial and managerial strength to its subsidiary banks and to commit resources to support its subsidiary banks. Under the “source of strength” doctrine that was codified by the Dodd-Frank Act, the Federal Reserve may require a bank holding company to make capital injections into a troubled subsidiary bank at times when the bank holding company may not otherwise be inclined to do so and may charge the bank holding company with engaging in unsafe and unsound practices for failure to commit resources to such a subsidiary bank. Under the prompt corrective action regime, if the Bank were to become undercapitalized, we would be required to guarantee the Bank’s plan to restore its capital subject to certain limits. See “Item 1. Business—Regulation and Supervision—Bank Regulation and Supervision—Prompt Corrective Action.” Accordingly, we could be required to provide financial assistance to the Bank if it experiences financial distress. A capital injection may be required at a time when our resources are limited, and we may be required to borrow the funds or raise capital to make the required capital injection. Any loan by a bank holding company to its subsidiary bank is subordinate in right of payment to deposits and certain other indebtedness of such subsidiary bank. In the event of a bank holding company’s bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to a federal bank regulatory agency to maintain the capital of a subsidiary bank. Moreover, bankruptcy law provides that claims based on any such commitment will be entitled to a priority of payment over the claims of the holding company’s general unsecured creditors, including the holders of any note obligations. Thus, any borrowing by a bank holding company for the purpose of making a capital injection to a subsidiary bank often becomes more difficult and expensive relative to other corporate borrowings. We could be adversely affected by the soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks and other institutional clients. Many of these transactions expose us to credit risk in the event of a default by a counterparty or client. In addition, our credit risk may be exacerbated when our collateral cannot be foreclosed upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure due. Any such losses could adversely affect our business, financial condition and results of operations. Additionally, we may be adversely affected by the soundness of other financial institutions even when we do not have direct or indirect relationships with those institutions. For example, the failures of Silicon Valley Bank, Signature Bank and First Republic Bank in 2023 resulted in significant disruption in the financial services industry and negative media attention, which has also adversely impacted the volatility and market prices of the securities of financial institutions and resulted in outflows of deposits for many financial institutions. We could be adversely affected by the soundness of our CCBX partners. A growing portion of our revenue, deposits and loans are derived from CCBX partner activities. If our partners are not operating soundly, we may be adversely impacted through decreased revenue, increased credit losses and reduced deposits. Our CCBX partners originate their loans in compliance with our credit standards and policies. Additionally, partners provide fraud and credit enhancements on many of our CCBX loans. If any CCBX partners encounter operating difficulties, we may experience reduced revenue, increased credit losses if credit and fraud enhancement obligations are not met, and reduced deposits, which may impact liquidity. Any such losses could adversely affect our business, financial condition and results of operations. 48 Table of Contents General Risk Factors We previously identified material weaknesses in our internal control over financial reporting, and any failure to maintain effective internal controls in the future could adversely affect our business, financial condition, and results of operations. Our management is responsible for establishing and maintaining adequate internal control over financial reporting and disclosure controls and procedures, evaluating their effectiveness, and disclosing any material weaknesses identified. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis. As previously disclosed, in March 2025 we identified material errors in certain interest income, noninterest income, BaaS loan expense, and noninterest expense amounts, which resulted in the restatement of our financial statements for the year ended December 31, 2023 and for certain interim periods in 2023 and 2024. In connection with these matters, management identified material weaknesses in internal control over financial reporting related to deficiencies in the control environment and risk assessment and control activities associated with accounting and financial reporting for information provided by BaaS partners. During 2025, management, under the oversight of the Audit Committee, implemented a comprehensive remediation plan designed to address the previously identified material weaknesses. As of December 31, 2025, management concluded that these material weaknesses had been remediated and that our internal control over financial reporting and disclosure controls and procedures were effective. However, the effectiveness of internal controls can provide only reasonable assurance, and controls may be subject to breakdowns due to changes in conditions, human error, system limitations, or the circumvention or override of controls. We cannot provide assurance that we will not identify additional control deficiencies or material weaknesses in the future, particularly as our business evolves, including through changes in our BaaS activities, third-party relationships, systems, or regulatory requirements. Any failure to maintain effective internal control over financial reporting or disclosure controls and procedures could result in material misstatements in our financial statements, delays in our periodic reporting obligations, loss of investor confidence, regulatory scrutiny or enforcement actions, or adverse effects on the market price of our common stock, any of which could have a material adverse effect on our business, financial condition and results of operations. National and global economic and other conditions could adversely affect our future results of operations or market price of our stock. Our business and results of operations are influenced by a wide range of economic, political, and market factors that are beyond our control, including national and global economic conditions, monetary and fiscal policies, inflation, interest rates, government debt levels, geopolitical developments, trade policies, and financial market volatility. These factors affect consumer and business confidence, borrowing and spending behavior, asset values, credit quality, and liquidity conditions, all of which can impact our performance. The global economic environment continues to be characterized by heightened uncertainty. Although economic conditions in the United States and other major economies have shown periods of stabilization, growth has remained uneven, inflationary pressures persist in certain sectors, interest rates remain elevated relative to historical norms, and fiscal and monetary policy paths remain uncertain. Concerns regarding U.S. government debt levels, budgetary actions, and broader fiscal policy could contribute to market volatility or adverse economic conditions. Geopolitical developments, including the ongoing conflict between Russia and Ukraine, conflicts in the Middle East, heightened geopolitical tensions, and evolving trade relationships, have contributed to uncertainty in global financial markets, supply chains, and energy and commodity prices. Economic conditions in international markets, including Europe and Asia, may also affect U.S. economic performance and financial market stability. Any escalation of geopolitical tensions, expansion of conflicts, or adverse developments in global trade or capital markets could negatively affect economic activity and investor sentiment. Adverse economic conditions at the national, regional, or local level could reduce demand for loans and other financial products, increase credit losses, negatively affect collateral values, and constrain our growth and profitability. Periods of economic stress are often associated with higher levels of unemployment, increased delinquencies and defaults 49 Table of Contents on consumer and commercial loans, declines in residential and commercial real estate values, reduced transaction activity, and volatility in debt and equity markets. In addition, future public health events, epidemics, or pandemics could disrupt economic activity, labor markets, and financial markets, and could adversely affect our customers and operations. Our business is also significantly affected by monetary, regulatory, and other policy actions of the U.S. federal government, its agencies, and government-sponsored entities. Changes in these policies, which are influenced by evolving macroeconomic conditions and other factors outside our control, are difficult to predict and could have a material adverse effect on our business, financial condition, results of operations, and the market price of our common stock. We are subject to certain risks in connection with growing through mergers and acquisitions. It is possible that we could acquire other banking institutions, other financial services companies or branches of banks in the future. Acquisitions typically involve the payment of a premium over book and trading values and, therefore, may result in the dilution of our tangible book value per share and/or our earnings per share. Our ability to engage in future mergers and acquisitions depends on various factors, including: (1) our ability to identify suitable merger partners and acquisition opportunities; (2) our ability to finance and complete transactions on acceptable terms and at acceptable prices; and (3) our ability to receive the necessary regulatory and, when required, shareholder approvals. Our inability to engage in an acquisition or merger for any of these reasons could have an adverse impact on the implementation of our business strategies. Furthermore, mergers and acquisitions involve a number of risks and challenges, including our ability to achieve planned synergies and to integrate the branches and operations we acquire, and the internal controls and regulatory functions into our current operations, as well as the diversion of management’s attention from existing operations, which may adversely affect our ability to successfully conduct our business and negatively impact our financial condition and results of operations. We must keep pace with technological change to remain competitive. Financial products and services have become increasingly technology-driven. Our ability to meet the needs of our customers competitively, and in a cost-efficient manner, is dependent on the ability to keep pace with technological advances and to invest in new technology as it becomes available, as well as related essential personnel. In addition, technology has lowered barriers to entry into the financial services market and made it possible for financial technology companies and other non-bank entities to offer financial products and services traditionally provided by banks. The ability to keep pace with technological change is important, and the failure to do so, due to cost, proficiency or otherwise, could have an adverse impact on our business, financial condition and results of operations. Negative public opinion regarding our company or failure to maintain our reputation in the communities we serve could adversely affect our business, financial condition and results of operations and prevent us from growing our business. As a community bank, our reputation within the communities we serve, including the BaaS space, is critical to our success. We believe we have set ourselves apart from our competitors by building strong personal and professional relationships with our customers and being active members of the communities we serve. As such, we strive to enhance our reputation by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve and delivering superior service to our customers. If our reputation is negatively affected by the actions of our employees or otherwise, we may be less successful in attracting new talent and customers or may lose existing customers, and our business, financial condition and results of operations could be adversely affected. Further, negative public opinion can expose us to litigation and regulatory action and delay and impede our efforts to implement our expansion strategy, which could further adversely affect our business, financial condition and results of operations. Item 1B. Unresolved Staff Comments None. Item 1C. Cybersecurity Coastal recognizes the critical importance of identifying, assessing and managing material risks from information security threats. One key way that Coastal mitigates information security threats is through the Company’s information security program (the “Information Security Program”). Cybersecurity is an integral subset of information security and the 50 Table of Contents Information Security Program is designed to protect the Company from cybersecurity attacks, breaches, incidents and resulting consequences. As part of the Information Security Program, the Company has implemented preventative controls to minimize data loss, exposure and misuse. These controls are designed to be implemented before a threat event to avoid the likelihood and potential impact of inadvertent or intentional misuse, improper disclosure, damage or loss. In addition, the Information Security Program includes internal and external penetration testing, regular vulnerability assessments, detailed vulnerability management, data loss prevention controls, file access, controls, data integrity monitoring and reporting, and threat intelligence. The Information Security Program is coordinated and primarily executed by our information security, technology, and operations personnel. The IT department is responsible for the oversight of all managed systems and implements and maintains appropriate controls to protect the confidentiality, integrity and availability of computerized data and information resources. Coastal applies a layered defense strategy for protecting information systems and customer information, including the implementation of zero-trust principles, which require authenticated, authorized, and validated users and devices to access applications and data. Security logs are correlated and monitored by an internal security team as well as an augmented third-party Security Operation Center. Network vulnerability scans are conducted daily. Coastal engages third party auditors and consultants in connection with the Information Security Program, including conducting external penetration testing, independent audits and risk assessments. Coastal also utilizes third party service providers in the ordinary course of business to provide services to customers and partners. These third-party service providers may store or process confidential information and personally identifiable information related to our customers or on behalf of our partners to perform those services for which they were engaged. Coastal has implemented a vendor management program to help ensure third-party relationships are effectively managed . Under this program, we have established risk-focused controls and processes that are designed to monitor our vendors’ compliance with relevant laws, regulations, and industry standards, such as data privacy regulations and anti-corruption laws, as well as relevant contractual obligations. Executive Management is responsible for managing the Information Security Program’s operations for identifying, assessing and mitigating external and internal risks to the security, confidentiality and integrity of nonpublic information that could result in the unauthorized disclosure, misuse, alteration, destruction or other compromise of such information. Coastal’s Chief Information Security Officer (“CISO”) is designated by the Board and is responsible for implementing and monitoring the Information Security Program. The CISO is an Executive Vice President who joined Coastal in this role in May 2025 with a background in security leadership at both fintech companies and large enterprises. Furthermore, the Technology Committee is a standing committee of the Board that has general responsibility to oversee the Bank’s strategies related to technology, innovation, data privacy, information security, cybersecurity and third-party technology. The CISO provides Information Security Program updates and current Key Risk and Performance Indicator (KRI/KPI) metrics to both the Technology Committee and the Board throughout the year, as well as an Annual Information Security report pursuant to the requirements of the Gramm-Leach-Bliley Act (GLBA) and other related frameworks. The Board exercises oversight over the Information Security Program and reviews and approves the Information Security Program at least annually. Cybersecurity risk management is also incorporated into Coastal’s overall enterprise risk management framework, which is updated on an annual basis and subject to oversight by the Management Risk Committee and the Board. Although Coastal has not, as of the date of this Annual Report on Form 10-K, experienced a cybersecurity threat or incident that materially affected Coastal’s business strategy, results of operations, or financial condition, there can be no guarantee that Coastal will not experience such an incident in the future. For a discussion regarding risks from cybersecurity threats, see “Item 1A. Risk Factors,” including the risk factors titled “— We are subject to laws regarding the privacy, information security and protection of personal information and any violation of these laws or another incident involving personal, confidential or proprietary information of individuals could damage our reputation and otherwise adversely affect our business, financial condition and results of operations” and “— We are dependent on our information technology and telecommunications systems and third-party service providers; systems failures, interruptions, security breaches and cybersecurity threats could have an adverse effect on our business, financial condition and results of operations.” As noted above, we are a regulated financial institution and are subject to financial privacy laws and to oversight by federal banking agencies. For additional information on these laws and oversight, see “Item 1. Business—Regulation and Supervision.” 51 Table of Contents Item 2. Properties Our corporate headquarters is located at 5415 Evergreen Way, Everett, WA 98203. In addition to our corporate headquarters, which includes our Evergreen branch, we operated 13 other branch offices as of December 31, 2025 for our community bank and CCBX segments. Twelve of our branches are located in Snohomish County and two of our branches are located in neighboring counties (one in King County and one in Island County), and we have one loan production office in King County. We own our corporate headquarters and five of our other branch offices and lease the remainder of our branch offices. The leases, excluding renewal periods, on our branch offices expire in 2026 through 2044. We believe that these facilities and additional or alternative space available to us are adequate to meet our needs for the foreseeable future. Item 3. Legal Proceedings From time to time we are a party to various litigation matters incidental to the conduct of our business. We do not believe that any currently pending legal proceedings will have a material adverse effect on our business, financial condition or operations. Item 103 of the SEC’s Regulation S-K requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and the proceedings involve potential monetary sanctions unless we reasonably believe the monetary sanctions will not equal or exceed a threshold which we determine is reasonably designed to result in disclosure of any such proceeding that is material to our business, financial condition and results of operations. Item 4. Mine Safety Disclosures Not applicable. 52 Table of Contents PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information, Holders of Common Stock and Dividends The Company’s common stock, no par value per share, is traded on the Nasdaq Global Select Market under the symbol “CCB.” On February 20, 2026, there were 228 holders of record of the Company’s common stock. Holders of our common stock are only entitled to receive dividends when, as and if declared by our board of directors out of funds legally available for dividends. We have not historically declared or paid dividends on our common stock and we do not intend to declare or pay dividends on our common stock in the near-term. Instead, we anticipate that all of our future earnings will be retained to support our operations and to finance the growth and development of our business. Any future determination to pay dividends will be made by our board of directors and will depend on a number of factors, including: • our historic and projected financial condition, liquidity and results of operations; • our capital levels and needs; • tax considerations; • any acquisitions or potential acquisitions that we may pursue; • statutory and regulatory prohibitions and other limitations; • the terms of any credit agreements or other borrowing arrangements that restrict our ability to pay cash dividends; • general economic conditions; and • other factors that our board of directors may deem relevant. We are not obligated to pay dividends on our common stock and are subject to certain restrictions on paying dividends on our common stock. As a Washington corporation, we are subject to certain restrictions on distributions to shareholders under the Washington Business Corporation Act. Generally, a Washington corporation is prohibited from making a distribution to shareholders if, after giving effect to the distribution, the corporation would not be able to pay its liabilities as they become due in the usual course of business or the corporation’s total assets would be less than the sum of its total liabilities plus, unless its articles of incorporation provide otherwise, the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution. In addition, if required payments on our outstanding junior subordinated debentures are not made or suspended, we may be prohibited from paying dividends on our common stock. We are also subject to certain restrictions on our right to pay dividends on our capital stock in the event we have failed to make any required payment of interest or principal under the terms of our subordinated note. We are subject to certain restrictions on the payment of cash dividends as a result of banking laws, regulations and policies. Because we are a bank holding company and do not engage directly in business activities of a material nature, our ability to pay dividends on our common stock depends, in large part, upon our receipt of dividends from the Bank, which is also subject to numerous limitations on the payment of dividends under federal and state banking laws, regulations and policies. See “Item 1. Business—Regulation and Supervision—Bank Holding Company Regulation—Dividends.” The present and future dividend policy of the Bank is subject to the discretion of its board of directors. The Bank is not obligated to pay us dividends. 53 Table of Contents Securities Authorized for Issuance under Equity Compensation Plan For information regarding securities authorized for issuance under the Company’s equity compensation plans, see subparagraph (d) in Part III, Item 12 “Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters” of this Form 10-K, which is incorporated herein by reference. Performance Graph The following graph shows the five-year comparison of the total return to shareholders of the Company’s common stock as compared to the total returns of the S&P United States SmallCap Banks (Industry Group) Index and S&P 600 Small Cap during the five-year period beginning December 31, 2020 and ended December 31, 2025. Total return includes appreciation or depreciation in market value of the Company’s common stock as well as actual cash and stock dividends paid to common shareholders. The graph assumes the value of the investment in Company’s common stock and each index was $100 on December 31, 2020, and all dividends were reinvested. There can be no assurance that our future stock performance will be the same or similar to the historical stock performance shown in the graph below. We neither make nor endorse any predictions as to stock performance. 2020 2021 2022 2023 2024 2025 Coastal Financial Corporation 100.00 241.05 226.29 211.48 404.33 545.67 S&P 600 Small Cap 100.00 126.82 106.40 123.48 134.22 142.30 S&P United States SmallCap Banks (Industry Group) Index 100.00 139.21 122.74 123.35 145.82 160.37 Source: S&P Global Market Intelligence The information set forth under the heading “Performance Graph” shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that the Company specifically requests that such information to be treated as soliciting material or specifically to be incorporated by reference into a filing under the Securities Act of 1933, as amended, or the Exchange Act. Purchases of Equity Securities The Company did not purchase any shares of its common stock during the year ended December 31, 2025. 54 Table of Contents Item 6. Reserved Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview This discussion should be read in conjunction with the consolidated financial statements and the related notes that appear elsewhere in this Form 10-K. We are a bank holding company that operates through our wholly owned subsidiaries, Coastal Community Bank (“Bank”) and Arlington Olympic LLC. We are headquartered in Everett, Washington, which by population is the largest city in, and the county seat of, Snohomish County. Our business is conducted through three reportable segments: The community bank, CCBX and treasury & administration. The community bank segment includes all community banking activities, with a primary focus on providing a wide range of banking products and services to consumers and small to medium sized businesses in the broader Puget Sound region in the state of Washington and through the Internet and our mobile banking application. We currently operate 14 full-service banking locations, 12 of which are located in Snohomish County, where we are the largest community bank by deposit market share, and two of which are located in neighboring counties (one in King County and one in Island County) and have one loan production office in King County. The CCBX segment provides banking as a service (“BaaS”) that allows our digital financial service partners to offer their customers banking services. The CCBX segment had 28 partners as of December 31, 2025. The treasury & administration segment includes investments, debt and other reporting items that are not specific to the community bank or CCBX segments. The Bank’s deposits are insured in whole or in part by the Federal Deposit Insurance Corporation (“FDIC”). The Bank is subject to regulation by the Federal Reserve and the Washington State Department of Financial Institutions Division of Banks. The Federal Reserve also has supervisory authority over the Company. As of December 31, 2025, we had total assets of $4.74 billion, total loans receivable of $3.75 billion, total deposits of $4.14 billion and total shareholders’ equity of $491.0 million. The following discussion and analysis presents our financial condition and results of operations on a consolidated basis. However, because we conduct all of our material business operations through the Bank, the discussion and analysis relate to activities primarily conducted by the Bank. This discussion and analysis should be read in conjunction with the audited consolidated financial statements and the accompanying notes presented elsewhere in this Annual Report on Form 10-K. We generate most of our community bank revenue from interest on loans and CCBX revenue from BaaS fee income and interest on loans. Our primary source of funding for our loans is commercial and retail deposits from our customer relationships and from our partner deposit relationships. We place secondary reliance on wholesale funding, primarily borrowings from the Federal Home Loan Bank (“FHLB”). Less commonly used sources of funding include borrowings from the Federal Reserve System (“Federal Reserve”) discount window, draws on established federal funds lines from unaffiliated commercial banks, brokered funds, which allows us to obtain deposits from sources that do not have a relationship with the Bank and can be obtained through certificate of deposit listing services, via the internet or through other advertising methods, or a one-way buy through an insured cash sweep (“ICS”) account, which allows us to obtain funds from other institutions that have deposited funds through ICS. Our largest expenses are provision for credit losses - loans, interest on deposits and borrowings, BaaS loan expense, salaries and employee benefits, BaaS fraud expense, legal and professional expenses, data processing and software licenses and occupancy expense. Our principal lending products are commercial real estate loans, consumer loans, residential real estate, commercial and industrial loans and construction, land and land development loans. Key Factors Affecting our Business Average Balances and Interest Rates Our operating results depend primarily on our net interest income, which is the largest contributor to our net income and is the difference between the interest and fees earned on interest-earning assets (such as loans and securities) and the interest expense incurred in connection with interest-bearing liabilities (such as deposits and borrowings). Net interest income is primarily a function of the average balances of interest-earning assets and interest-bearing liabilities and the yields and costs with respect to these assets and liabilities. Average balances are influenced by internal considerations such as the types of products we offer and the amount of risk that we are willing to assume as well as external influences 55 Table of Contents such as economic conditions, competition for loans and deposits, and interest rates. The yields generated by our loans and securities are typically affected by short-term and long-term interest rates and, in the case of loans, competition for similar products in our market area. Interest rates are often impacted by the actions of the Federal Reserve. The cost of our deposits and short-term borrowings is primarily based on short-term interest rates, which are largely driven by competition and by the actions of the Federal Reserve. The level of net interest income is influenced by movements in interest rates and the pace at which such movements occur, as well as the relationship between short- and long-term interest rates. Credit Quality We have well established loan policies and underwriting practices that have resulted in low levels of charge-offs and nonperforming assets for the community bank. Through our thorough underwriting process, we strive to originate quality loans that will maintain and enhance the overall credit quality of our loan portfolio, and through our careful monitoring of our community bank loan portfolio and prompt attention to delinquencies, we seek to minimize the impact of problem loans. However, credit trends in the markets in which we operate are largely impacted by economic conditions beyond our control and can adversely impact our financial condition. We originate loans through our CCBX partners and while these loans will have higher levels of charge-offs and nonperforming assets, agreements with our CCBX partners provide for a credit enhancement which protects the Bank by absorbing incurred losses. For additional information on credit enhancements see Item 1. Business - Concentrations of Credit Risk section. If our partners are unable to fulfill their contracted obligations then the Bank would be exposed to additional credit losses as a result of this counterparty risk. Management regularly evaluates and manages this counterparty risk. Operating Efficiency The largest component of noninterest expense is BaaS loan expense and salaries and employee benefits. Other significant operating expenses include BaaS fraud expense, legal and professional expenses, data processing and software licenses and occupancy expense. Our operating efficiency, as measured by our efficiency ratio, has gradually improved primarily because the growth of our deposits and loans has enabled our net interest income and noninterest income to outpace the growth of our expenses. When we make substantial investments in our infrastructure and make investments to increase our operating capacity, our operating efficiency ratio decreases until we generate enough revenue growth to offset the increased costs however, prior to making such investments, we focus on how best and most expediently we can achieve the revenue growth necessary to offset the costs of these investments or new branches. Our efficiency ratio has been impacted by the increase in CCBX income and CCBX expense. Our efficiency ratio was 53.13% at December 31, 2025, compared to 42.38% at December 31, 2024. This ratio increased as a result of an increase in net interest income, decrease in credit enhancement income and higher noninterest expenses for the year ended December 31, 2025 compared to the year ended December 31, 2024. Economic Conditions Our business and financial performance are affected by economic conditions generally in the United States for CCBX and more directly for the community bank in the markets in the Puget Sound region where we operate. The significant economic factors that are most relevant to our business and our financial performance include, but are not limited to, real estate values, interest rates and unemployment rates. In recent years, the Puget Sound region has experienced significant population gain, fueled in large part by the region’s technology industry, low unemployment and rising real estate values, all of which positively impacted our business. The macro economic environment is continuously changing, primarily due to the pace of economic growth, inflation, changing interest rates, global trade tensions, tariffs, unemployment, global unrest, the war in Ukraine, conflicts in the Middle East, political uncertainty, natural disasters and trade issues that contribute to economic uncertainty which has caused increased market volatility and may lead to a significant decrease in consumer confidence and business generally. Critical Accounting Estimates and Significant Accounting Policies Our accounting policies are integral to understanding our results of operations. Our accounting policies are described in greater detail in Note 1 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Certain accounting policies involve significant judgments and assumptions by us that have a material impact on the carrying value of certain assets and liabilities. Our critical accounting estimates are included and discussed below. These assumptions, estimates and judgments we use can be influenced by a number of factors, including the general economic environment. Actual results could differ from these judgments and estimates under different conditions, resulting in a change that could have a material impact on the carrying values of our assets and liabilities and our results of 56 Table of Contents operations. We believe that of our accounting policies, the following accounting policies may involve a higher degree of judgment and complexity: Allowance for Credit Losses The allowance for credit losses ("ACL") is an estimate of the expected credit losses on financial assets measured at amortized cost. The ACL is evaluated and calculated on a collective basis for those loans which share similar risk characteristics. At each reporting period, the Company evaluates whether the loans in a pool continue to exhibit similar risk characteristics as the other loans in the pool and whether it needs to evaluate the allowance on an individual basis. The Company must estimate expected credit losses over the loans’ contractual terms, adjusted for expected prepayments. In estimating the life of the loan, the Company cannot extend the contractual term of the loan for expected extensions, renewals and modifications, unless the extension or renewal options are included in the contract at the reporting date and are not unconditionally cancellable by the Company. Because expected credit losses are estimated over the contractual life adjusted for estimated prepayments, determination of the life of the loan may significantly affect the ACL. The Company has chosen to segment its portfolio consistent with the manner in which it manages the risk of the type of credit. • Community bank Portfolio: The ACL calculation is derived from loan segments utilizing loan level information and relevant available information from internal and external sources related to past events and current conditions. In addition, the Company incorporates a reasonable and supportable forecast. • CCBX Portfolio: The Bank calculates the ACL on loans on an aggregate basis based on each partner and product level, segmenting the risk inherent in the CCBX portfolio based on qualitative and quantitative trends in the portfolio. Also included in the ACL are qualitative reserves to cover losses that are expected, but in the Company’s assessment may not be adequately represented in the quantitative method. For example, factors that the Company considers include environmental business conditions, borrower’s financial condition, credit rating and the volume and severity of past due loans and nonaccrual loans. Based on this analysis, the Company records a provision for credit losses to maintain the allowance at appropriate levels. Determining the amount of the allowance is considered a critical accounting estimate, as it requires significant judgment and the use of subjective measurements, including management’s assessment of overall portfolio quality. The Company maintains the allowance at an amount the Company believes is sufficient to provide for estimated losses expected to occur in the Company’s loan portfolio at each balance sheet date, and fluctuations in the provision for credit losses may result from management’s assessment of the adequacy of the allowance. Changes in these estimates and assumptions are possible and may have a material impact on the Company’s allowance, and therefore the Company’s financial position, liquidity or results of operations. The Company has elected to exclude accrued interest receivable from the amortized cost basis in its ACL calculation as accrued interest is written off in a timely manner when deemed uncollectible. The Company decreased the allowance from $177.0 million at December 31, 2024 to $169.5 million at December 31, 2025. The change is largely related to improved credit quality decreasing the provision for CCBX loans. The Company uses CCBX partner data, industry data and its own credit loss data to develop an appropriate allowance for the risk inherent in the CCBX loan portfolio. For more information and discussion related to the allowance for credit losses, see “ Note 4 - Loans and Allowance for Credit Losses” in the Consolidated Financial Statements. Revenue Recognition We record revenue from contracts with customers in accordance with ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”). Under Topic 606, the Company must identify the contract with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the Company satisfies a performance obligation. Significant revenue has not been recognized in the current reporting period that results from performance obligations satisfied in previous periods. A large portion of the Company’s revenue are derived from interest and fees earned on loans, investment securities and other financial instruments that are not within the scope of Topic 606. The Company generally fully satisfies its performance obligations on its contracts with customers as services are rendered and the transaction prices are typically fixed, charged either on a periodic basis or based on activity. Because performance obligations are satisfied as services are 57 Table of Contents rendered and the transaction prices are fixed, there is little judgment involved in applying Topic 606 that significantly affects the determination of the amount and timing of revenue from contracts with customers. The recording of BaaS income and expense is in accordance with accounting guidance, and is dependent upon the contractual agreement with each partner with certain components of BaaS income being consistent across agreements. Agreements with many of our CCBX partners provide for a credit enhancement which protects the Bank by absorbing incurred credit and fraud losses. In accordance with accounting guidance, we estimate and record a provision for probable losses for CCBX loans. When the provision for credit losses - loans and provision for unfunded commitments is recorded, a credit enhancement asset is also recorded on the balance sheet through noninterest income (BaaS credit enhancement). Incurred losses are recorded in the allowance for credit losses, and the credit enhancement asset is relieved when credit enhancement payments and recoveries are received from the CCBX partner. Many agreements with our CCBX partners also provide protection to the Bank from fraud by absorbing incurred fraud losses. Fraud losses are recorded when incurred in noninterest expense, and the recovery received from the CCBX partner is recorded in noninterest income, resulting in a net impact of zero to the income statement. Enhancements that provide protection to the Bank from credit and fraud losses are not within the scope of Topic 606. For the year ended December 31, 2025, noninterest income subject to Topic 606 increased $9.7 million to $34.3 million, compared to $24.7 million for the year ended December 31, 2024. The increase was largely due to an increase in BaaS program income resulting from increased activity and growth with active CCBX partners. For more information and discussion related to revenue recognition, see “ Note 19 – Revenue Recognition” in the Consolidated Financial Statements. Recent Pronouncements For a discussion of the expected impact of accounting pronouncements recently adopted and accounting pronouncements recently issued but not yet adopted by us as of December 31, 2025, see “ Note 2 – Recent Accounting Standards ” in the accompanying notes to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Results of Operations The following discussion is intended to assist in understanding the financial condition and results of operations of the Company as of and for the year ended December 31, 2025. The information contained in this section should be read together with the December 31, 2025 audited Consolidated Financial Statements and the accompanying Notes included in Item 8. Financial Statements and Supplementary Data of this Form 10-K. This section of this Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Net Income Year Ended December 31, 2025, Compared to Year Ended December 31, 2024 . Net income for the year ended December 31, 2025 was $47.0 million, or $3.06 per diluted share, compared to $45.2 million, or $3.26 per diluted share, for the year ended December 31, 2024. Net income is up; however, net income per diluted share is down as a result of the capital raise in December 2024 that increased the number of shares outstanding. The increase in net income over the comparable period in the prior year was primarily attributable to an increase of $37.0 million in net interest income, partially offset by an increase of $10.6 million in BaaS loan expense. The increase in interest income and BaaS loan expense is largely related to growth in CCBX loans. Also contributing to the variance is an increase in BaaS program income of $9.4 million. The increase is partially offset by a $15.8 million increase in salaries and employee benefits, a $4.7 million increase in legal and professional expenses and an $8.0 million increase in data processing and software licenses all related to growth and investments in technology. Additionally, there was an increase in the provision for income taxes of $2.2 million as a result of higher net income, an increase in effective tax rate resulting from an increase in state taxes, and the taxability of certain equity awards. 58 Table of Contents Net Interest Income Year Ended December 31, 2025, Compared to Year Ended December 31, 2024 . Net interest income for the year ended December 31, 2025, was $310.1 million, compared to $273.0 million for the year ended December 31, 2024, an increase of $37.0 million, or 13.6%. The increase in net interest income compared to the year ended December 31, 2024 was largely related to growth in CCBX loans and a decrease in interest expense as a result of lower interest rates. Interest and fees on loans totaled $397.6 million for the year ended December 31, 2025 compared to $372.0 million for the year ended December 31, 2024. The $25.6 million increase in interest and fees on loans for the year ended December 31, 2025, compared to the year ended December 31, 2024, was largely due to growth in CCBX and community bank loans. Total average loans receivable for the year ended December 31, 2025 was $3.61 billion, compared to $3.32 billion for the year ended December 31, 2024. CCBX average loans receivable grew to $1.73 billion for the year ended December 31, 2025, compared to $1.43 billion for the year ended December 31, 2024, an increase of $302.4 million, or 21.2%. Average CCBX yield of 15.87% and 17.39% was earned on CCBX loans for the years ended December 31, 2025 and December 31, 2024, respectively. This decrease in yield on loans receivable is the result of lower rates compared to the prior year period as well as a change in the loan mix. Lower rate capital call lines were $101.5 million higher compared to December 31, 2024. CCBX yield does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements and servicing CCBX loans. The tables later in this section illustrate the impact of BaaS loan expense on CCBX loan yield. Community bank average loans receivable was fairly flat at $1.88 billion for the year ended December 31, 2025, compared to $1.89 billion for the year ended December 31, 2024, representing a decrease of $8.5 million, or 0.4%. Average yield of 6.52% was earned on community bank loans for the year ended December 31, 2025, compared to 6.54% for the year ended December 31, 2024. Interest income from interest earning deposits with other banks was $29.0 million for the year ended December 31, 2025, an increase of $7.7 million largely due to an increase in balances, compared to the year ended December 31, 2024. The average balance of interest earning deposits invested with other banks for the year ended December 31, 2025 was $671.7 million, compared to $405.5 million for the year ended December 31, 2024. Interest income on investment securities decreased $529,000 to $2.5 million. Average investment securities decreased $19.2 million from $65.5 million for the year ended December 31, 2024 to $46.2 million for the year ended December 31, 2025 as a result of maturing securities and principal paydowns. Interest expense was $119.6 million for the year ended December 31, 2025, a $4.2 million decrease from the year ended December 31, 2024. Interest expense on deposits was $116.9 million for the year ended December 31, 2025, compared to $120.9 million for the year ended December 31, 2024. The $4.0 million decrease in interest expense on deposits was due to decreases in interest rates despite an increase in average interest bearing deposits of $439.2 million. Interest on borrowed funds was $2.6 million for the year ended December 31, 2025 and $2.8 million for the year ended December 31, 2024. The $179,000 decrease in interest expense on borrowed funds from the year ended December 31, 2024 is primarily the result of a decrease in interest rates on the junior subordinated debt, which decreased 1.00% to 6.77% for the year ended December 31, 2025, compared to 7.77% for the year ended December 31, 2024. Net interest margin was 7.14% for the year ended December 31, 2025, compared to 7.18% for the year ended December 31, 2024. The decrease in net interest margin compared to the year ended December 31, 2024 was largely a result of a decrease of 0.20% for yield on loans and a decrease of 0.93% on interest bearing deposits with other banks partially offset by a decrease of 0.48% for cost of deposits, despite a $439.2 million increase in average interest bearing deposits, many of which were impacted by a lower Fed Funds rate for all of 2025. Cost of funds was 3.02% for the year ended December 31, 2025, compared to 3.49% for the year ended December 31, 2024. Cost of deposits for the year ended December 31, 2025 was 2.99%, which was a 0.48% decrease, from 3.46% for the year ended December 31, 2024. These decreases were largely due to lower interest rates compared to the prior year period. Total yield on loans receivable for the year ended December 31, 2025 was 11.00%, compared to 11.20% for the year ended December 31, 2024. This decrease in yield on loans receivable is primarily attributed to lower interest rates and a change in loan mix. For the year ended December 31, 2025, average CCBX loans increased $302.4 million, or 21.2%, 59 Table of Contents with an average CCBX yield of 15.87%, compared to 17.39% for the year ended December 31, 2024. There was a decrease in average community bank loans of $8.5 million, or 0.4%, compared to the year ended December 31, 2024. Average yield on community bank loans for the year ended December 31, 2025 was 6.52%. compared to 6.54% for the year ended December 31, 2024. The following tables show the average yield on loans and cost of deposits by segment and also illustrates the impact of BaaS loan expense on CCBX yield on loans: For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 Yield on Loans Cost of Deposits Yield on Loans Cost of Deposits Yield on Loans Cost of Deposits Community Bank 6.52% 1.71% 6.54% 1.80% 6.20% 1.14% CCBX (1) 15.87% 3.84% 17.39% 4.70% 16.30% 4.55% Consolidated 11.00% 2.99% 11.20% 3.46% 10.36% 2.87% (1) CCBX yield on loans does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements and servicing CCBX loans. To determine net BaaS loan income earned from CCBX loan relationships, the Company takes BaaS loan interest income and deducts BaaS loan expense to arrive at net BaaS loan income which can be compared to interest income on the Company’s community bank loans. A reconciliation of this non-GAAP measure is set forth in the section titled “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures.” For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (dollars in thousands) Income / Expense Income / expense divided by average CCBX loans Income / Expense Income / expense divided by average CCBX loans Income / Expense Income / expense divided by average CCBX loans BaaS loan interest income $ 274,608 15.87 % $ 248,286 17.39 % $ 197,306 16.30 % Less: BaaS loan expense 129,086 7.46 % 118,536 8.30 % 79,748 6.59 % Net BaaS loan income (1) $ 145,522 8.41 % $ 129,750 9.09 % $ 117,558 9.71 % Average BaaS Loans (2) $ 1,730,016 $ 1,427,571 $ 1,210,413 (1) A reconciliation of this non-GAAP measure is set forth in the section titled “ GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures.” (2) Includes loans held for sale. For the year ended December 31, 2025, net interest margin (net interest income divided by the average total interest earning assets) and net interest spread (average yield on total interest earning assets minus average cost of total interest bearing liabilities) were 7.14% and 6.36%, respectively, compared to 7.18% and 6.25%, respectively, for the year ended December 31, 2024. The following table presents an analysis of the average balances of net interest income, net interest spread and net interest margin for the periods indicated. Loan fees, net of loan costs included in interest income, totaled $9.3 million, $8.9 million and $6.3 million for the years ended December 31, 2025, 2024 and 2023, respectively. 60 Table of Contents Average Balance Sheets For the Year Ended December 31, 2025 2024 2023 (dollars in thousands) Average Balance Interest & Dividends Yield / Cost Average Balance Interest & Dividends Yield / Cost Average Balance Interest & Dividends Yield / Cost Assets Interest earning assets: Interest earning deposits with other banks $ 671,710 $ 28,972 4.31 % $ 405,515 $ 21,265 5.24 % $ 295,808 $ 15,346 5.19 % Investment securities, available for sale (1) 33 1 3.03 16,162 350 2.17 100,260 2,158 2.15 Investment securities, held to maturity (1) 46,213 2,526 5.47 49,320 2,706 5.49 19,918 1,039 5.22 Other investments 12,534 531 4.24 10,696 435 4.07 11,512 387 3.36 Loans receivable (2) 3,614,728 397,587 11.00 3,320,582 372,021 11.20 2,936,908 304,289 10.36 Total interest earning assets 4,345,218 429,617 9.89 3,802,275 396,777 10.44 3,364,406 323,219 9.61 Noninterest earning assets: Allowance for credit losses (168,421) (140,433) (91,194) Other noninterest earning assets 296,684 257,951 198,071 Total assets $ 4,473,481 $ 3,919,793 $ 3,471,283 Liabilities and Shareholders’ Equity Interest bearing liabilities: Interest bearing deposits $ 3,344,366 $ 116,914 3.50 % $ 2,905,202 $ 120,932 4.16 % $ 2,395,012 $ 89,000 3.72 % FHLB advances and other borrowings 1 2 — 2,854 144 5.05 — — — Subordinated debt 44,364 2,393 5.39 44,216 2,394 5.41 44,066 2,373 5.39 Junior subordinated debentures 3,592 243 6.77 3,590 279 7.77 3,589 271 7.55 Total interest bearing liabilities 3,392,323 119,552 3.52 2,955,862 123,749 4.19 2,442,667 91,644 3.75 Noninterest bearing deposits 568,682 586,477 707,641 Other liabilities 50,421 56,996 49,271 Total shareholders' equity 462,055 320,458 271,704 Total liabilities and shareholders' equity $ 4,473,481 $ 3,919,793 $ 3,471,283 Net interest income $ 310,065 $ 273,028 $ 231,575 Interest rate spread 6.36 % 6.25 % 5.86 % Net interest margin (3) 7.14 % 7.18 % 6.88 % (1) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts. (2) Includes loans held for sale and nonaccrual loans. (3) Net interest margin represents net interest income divided by the average total interest earning assets. 61 Table of Contents The following table presents an analysis of certain average balances, interest income and interest expense that are specific to each segment. Items that are not directly attributed to the segment are not listed: For the Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (dollars in thousands) Average Balance Interest & Dividends Yield / Cost Average Balance Interest & Dividends Yield / Cost Average Balance Interest & Dividends Yield / Cost Community Bank Assets Interest earning assets: Loans receivable (1) $ 1,884,526 $ 122,956 6.52 % $ 1,893,011 $ 123,735 6.54 % $ 1,726,495 $ 106,983 6.20 % Total interest earning assets 1,884,526 122,956 6.52 1,893,011 123,735 6.54 1,726,495 106,983 6.20 Liabilities Interest bearing liabilities: Interest bearing deposits 1,070,866 26,805 2.50 968,206 26,897 2.78 900,516 17,354 1.93 Intrabank liability, net (6) 319,038 13,788 4.32 401,027 21,265 5.30 198,176 10,404 5.25 Total interest bearing liabilities 1,389,904 40,593 2.92 1,369,233 48,162 3.52 1,098,692 27,758 2.53 Noninterest bearing deposits 494,622 523,778 627,803 Net interest income $ 82,363 $ 75,573 $ 79,225 Net interest margin (2) 4.37 % 3.99 % 4.59 % CCBX Assets Interest earning assets: Loans receivable (1)(3) $ 1,730,016 $ 274,608 15.87 % $ 1,427,571 $ 248,286 17.39 % $ 1,210,413 $ 197,306 16.30 % Intrabank asset, net (6) 617,544 26,673 4.32 572,124 30,221 5.28 363,921 19,071 5.24 Total interest earning assets 2,347,560 301,281 12.83 1,999,695 278,507 13.93 1,574,334 216,377 13.74 Liabilities Interest bearing liabilities: Interest bearing deposits 2,273,500 90,109 3.96 1,936,996 94,035 4.85 1,494,496 71,646 4.79 Total interest bearing liabilities 2,273,500 90,109 3.96 1,936,996 94,035 4.85 1,494,496 71,646 4.79 Noninterest bearing deposits 74,060 62,699 79,838 Net interest income $ 211,172 $ 184,472 $ 144,731 Net interest margin (2) 9.00 % 9.23 % 9.19 % Net interest margin, net of BaaS loan expense (4) 3.50 % 3.30 % 4.13 % For the Year Ended 62 Table of Contents December 31, 2025 December 31, 2024 December 31, 2023 (dollars in thousands) Average Balance Interest & Dividends Yield / Cost Average Balance Interest & Dividends Yield / Cost Average Balance Interest & Dividends Yield / Cost Treasury & Administration Assets Interest earning assets: Loans receivable (1) $ 186 $ 23 12.37 % $ — $ — — % $ — $ — — % Interest earning deposits with other banks 671,710 28,972 4.31 405,515 21,265 5.24 295,808 15,346 5.19 Investment securities, available for sale (5) 33 1 3.03 16,162 350 2.17 100,260 2,158 2.15 Investment securities, held to maturity (5) 46,213 2,526 5.47 49,320 2,706 5.49 19,918 1,039 5.22 Other investments 12,534 531 4.24 10,696 435 4.07 11,512 387 3.36 Total interest earning assets 730,676 32,053 4.39 481,693 24,756 5.14 427,498 18,930 4.43 Liabilities Interest bearing liabilities: FHLB advances and borrowings 1 2 — % 2,854 144 5.05 % — — — % Subordinated debt 44,364 2,393 5.39 44,216 2,394 5.41 44,066 2,373 5.39 Junior subordinated debentures 3,592 243 6.77 3,590 279 7.77 3,589 271 7.55 Intrabank liability, net (6) 298,506 12,885 4.32 171,097 8,956 5.23 165,745 8,667 5.23 Total interest bearing liabilities 346,463 15,523 4.48 221,757 11,773 5.31 213,400 11,311 5.30 Net interest income $ 16,530 $ 12,983 $ 7,619 Net interest margin (2) 2.26 % 2.70 % 1.78 % (1) Includes loans held for sale and nonaccrual loans. (2) Net interest margin represents net interest income divided by the average total interest earning assets. (3) CCBX yield does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements and servicing CCBX loans. See the section titled “ GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures ” for a reconciliation of the impact of BaaS loan expense on CCBX loan yield. (4) Net interest margin, net of BaaS loan expense includes the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements, and servicing CCBX loans. A reconciliation of this non-GAAP measure is set forth in the section titled “ GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures. ” (5) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts. (6) Intrabank assets and liabilities are consolidated for period calculations and presented as intrabank asset, net or intrabank liability, net in the table above. 63 Table of Contents The following table presents information regarding the dollar amount of changes in interest income and interest expense for the periods indicated for each major component of interest earning assets and interest bearing liabilities and distinguishes between the changes attributable to changes in volume and changes attributable to changes in interest rates. The table illustrates the $32.4 million increase in loan interest income that is attributable to an increase in loan volume partially offset by a decrease of $6.8 million in loan interest income attributed to a decrease in loan rates. For purposes of this table, changes attributable to both rate and volume that cannot be segregated have been allocated to volume. Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Increase (Decrease) Due to Total Increase (Decrease) Increase (Decrease) Due to Total Increase (Decrease) (dollars in thousands) Volume Rate Volume Rate Interest income: Interest earning deposits $ 11,481 $ (3,774) $ 7,707 $ 5,753 $ 166 $ 5,919 Investment securities, available-for-sale (489) 140 (349) (1,821) 13 (1,808) Investment securities, held-to-maturity (170) (10) (180) 1,613 54 1,667 Other Investments 78 18 96 (33) 81 48 Loans receivable 32,353 (6,787) 25,566 42,917 24,815 67,732 Total increase in interest income 43,253 (10,413) 32,840 48,429 25,129 73,558 Interest expense: Interest bearing deposits 15,353 (19,371) (4,018) 21,208 10,724 31,932 FHLB advances (5,706) 5,564 (142) 144 — 144 Subordinated debt 8 (9) (1) 8 13 21 Junior subordinated debentures — (36) (36) — 8 8 Total increase in interest expense 9,655 (13,852) (4,197) 21,360 10,745 32,105 Increase in net interest income $ 33,598 $ 3,439 $ 37,037 $ 27,069 $ 14,384 $ 41,453 Provision for Credit Losses The provision for credit losses - loans is an expense we incur to maintain an allowance for credit losses at a level that is deemed appropriate by management to absorb expected losses on existing loans. For a description of the factors taken into account by our management in determining the allowance for credit losses see “Item 7. Management’s Discussion and Analysis of Financial Condition and Operations—Financial Condition—Allowance for Credit Losses.” The macro economic environment is continuously changing, primarily due to the pace of economic growth, inflation, changing interest rates, global trade tensions, tariffs, unemployment, global unrest, the war in Ukraine, conflicts in the Middle East, political uncertainty, natural disasters, and trade issues that may impact the provision and therefore the allowance. Gross loans, excluding loans held for sale, totaled $3.75 billion at December 31, 2025. The allowance for credit losses as a percentage of loans was 4.52% at December 31, 2025, compared to 5.08% at December 31, 2024. 64 Table of Contents Agreements with our CCBX partners provide for a credit enhancement provided by the partner which protects the Bank by indemnifying or reimbursing incurred losses. CCBX partners bear most of the responsibility for credit losses incurred which consequently gives them vested interests in the performance of the portfolio. We believe that this alignment of interests ensures that CCBX partners are motivated to implement robust risk management practices and maintain the overall health of the portfolio. In accordance with accounting guidance, we estimate and record a provision for expected losses for these CCBX loans and reclassified negative deposit accounts. When the provision for credit losses - loans and provision for unfunded commitments are recorded, a credit enhancement asset is also recorded on the balance sheet through noninterest income (BaaS credit enhancements) in recognition of the CCBX partner's legal commitment to indemnify or reimburse losses. The credit enhancement asset is relieved as credit enhancement payments are received from the CCBX partner or taken from the partner's cash reserve account. Year Ended December 31, 2025, Compared to Year Ended December 31, 2024 . The provision for credit losses - loans for the year ended December 31, 2025, was $189.4 million compared to $275.7 million for the year ended December 31, 2024. The decrease in the Company’s provision for credit losses - loans during the year ended December 31, 2025, is largely related to improvement in the performance of the CCBX portfolio and our focus on originating higher quality CCBX loans resulting in lower historical loss factors. During the year ended December 31, 2025, a $190.0 million provision for credit losses - loans was recorded for loans originated through CCBX partners based on management’s analysis. The factors used in management’s analysis for community bank credit losses indicated that a recapture of $666,000 was needed for the year ended December 31, 2025 due to a change in loan mix and updated prepayment speeds, partially offset by a slight increase in economic uncertainty. The following table shows the provision expense by segment for the periods indicated: Year Ended (dollars in thousands) December 31, 2025 December 31, 2024 December 31, 2023 Community bank $ (666) $ (2,130) $ 1,322 CCBX 190,035 277,793 182,721 Total provision expense $ 189,369 $ 275,663 $ 184,043 Net charge-offs for the year ended December 31, 2025 totaled $196.8 million, or 5.45% of total average loans, as compared to net charge-offs of $216.1 million, or 6.51% of total average loans, for the year ended December 31, 2024. Net charge-offs decreased in 2025 compared to 2024 as a result of the improvement in the performance of loans originated through CCBX partners and our focus on originating higher quality CCBX loans. In accordance with GAAP, CCBX losses are recorded as charge-offs, but CCBX partner agreements provide for a credit enhancement that indemnifies the Bank from incurred losses, and as a result CCBX partners reimburse the Bank for net-charge-offs on CCBX loans and negative deposit accounts, except in accordance with the program agreement for one partner where the Company is responsible for credit losses on approximately 5% of a $321.3 million loan portfolio. At December 31, 2025, our portion of this portfolio represented $22.1 million in loans. Provision expense on these loans was $4.9 million and $6.0 million for the years ended December 31, 2025 and 2024, respectively, with net charge-offs of $4.6 million in 2025 and $5.6 million in 2024. In 2025, $196.8 million of net-charge-offs were recognized for CCBX loans and $27,000 of net charge-offs were recognized for community bank loans. In 2024, $215.5 million of charge-offs were recognized for CCBX loans and $540,000 of net charge-offs were recognized for community bank loans. 65 Table of Contents The following table show the total charge-off activity by segment for the periods indicated: Year Ended December 31, 2025 Year Ended December 31, 2024 Year Ended December 31, 2023 (dollars in thousands) Community Bank CCBX Total Community Bank CCBX Total Community Bank CCBX Total Gross charge-offs $ 57 $ 217,132 $ 217,189 $ 554 $ 228,537 $ 229,091 $ 64 $ 151,933 $ 151,997 Gross recoveries (30) (20,326) (20,356) (14) (13,027) (13,041) (12) (7,442) (7,454) Net charge-offs $ 27 $ 196,806 $ 196,833 $ 540 $ 215,510 $ 216,050 $ 52 $ 144,491 $ 144,543 Net charge-offs to average loans 0.00 % 11.38 % 5.45 % 0.03 % 15.10 % 6.51 % 0.00 % 11.94 % 4.92 % % of CCBX net charge-offs covered by credit enhancement 97.7 % 97.4 % 97.5 % Noninterest Income Our primary sources of recurring noninterest income are BaaS indemnification income, BaaS program income and service charges and fees. Noninterest income does not include loan origination fees, which are generally recognized over the life of the related loan as an adjustment to yield using the interest or similar method. For the year ended December 31, 2025, noninterest income totaled $231.6 million, a decrease of $76.6 million, or (24.9)%, compared to $308.2 million for the year ended December 31, 2024. The decrease is largely attributed to lower BaaS indemnification income which is related to lower provision for credit losses on CCBX loans, partially offset by an increase of $9.4 million in BaaS program income. 66 Table of Contents The following table presents, for the periods indicated, the major categories of noninterest income: Year Ended December 31, 2025 compared to 2024 2024 compared to 2023 (dollars in thousands) 2025 2024 2023 Increase (Decrease) Percent Change Increase (Decrease) Percent Change Service charges and fees $ 3,558 $ 3,738 $ 3,854 $ (180) (4.8 %) $ (116) (3.0 %) Loan referral fees — 168 683 (168) (100.0) (515) (75.4) Gain on sales of loans, net — — 253 — 100.0 (253) (100.0) Unrealized gain (loss) on equity securities, net (414) 27 279 (441) (1,633.3) (252) (90.3) Other 3,306 1,524 884 1,782 116.9 640 72.4 Noninterest income, excluding BaaS program income and BaaS indemnification income 6,450 5,457 5,953 993 18.2 (496) (8.3) Servicing and other BaaS fees 5,795 4,743 3,855 1,052 22.2 888 23.0 Transaction and interchange fees 18,744 12,843 8,263 5,901 45.9 4,580 55.4 Reimbursement of expenses 4,952 2,489 1,122 2,463 99.0 1,367 121.8 BaaS program income 29,491 20,075 13,240 9,416 46.9 6,835 51.6 BaaS credit enhancements 187,653 272,839 177,764 (85,186) (31.2) 95,075 53.5 BaaS fraud enhancements 8,014 9,834 7,165 (1,820) (18.5) 2,669 37.3 BaaS indemnification income 195,667 282,673 184,929 (87,006) (30.8) 97,744 52.9 Total BaaS income $ 225,158 $ 302,748 $ 198,169 $ (77,590) (25.6) $ 104,579 52.8 Total noninterest income $ 231,608 $ 308,205 $ 204,122 $ (76,597) (24.9 %) $ 104,083 51.0 % A description of our largest noninterest income categories are below: BaaS Income . Our CCBX segment provides BaaS offerings that enable our digital financial service providers to offer their customers banking services. In exchange for providing these services, we earn fixed fees, volume-based fees and reimbursement of costs depending on the program agreement. Servicing and other BaaS fees are typically higher with new partners who have minimum contractual fees. Transaction and interchange fees increase as partner activity increases. As a result, we generally expect servicing and other fees to decrease and transaction and interchange fees to increase as partner activity grows and contracted minimum fees are replaced with recurring fees which then exceed the minimum contractual fees. Increases in BaaS reimbursement of fees offsets increases in noninterest expense from BaaS expenses covered by CCBX partners. In accordance with GAAP, we recognize the reimbursement of noncredit fraud losses on loans and deposits originated through partners and credit enhancements related to the allowance for credit losses and reserve for unfunded commitments provided by the partner as revenue in BaaS income. CCBX credit losses are recognized in the allowance for credit losses - loans, and fraud losses are expensed in noninterest expense under BaaS fraud expense. Also in accordance with GAAP, we establish a credit enhancement asset for expected future credit losses through the recognition of BaaS credit enhancement revenue at the same time we establish an allowance for those loans though a provision for credit losses - loans. For more information on the accounting for BaaS allowance for credit losses, reserve for unfunded commitments, credit enhancements and fraud enhancements see the section titled “CCBX – BaaS Reporting Information.” 67 Table of Contents For the year ended December 31, 2025, we earned $225.2 million in BaaS fees, which was a decrease of $77.6 million, or 25.6%, over the year ended December 31, 2024, when we earned $302.7 million in BaaS fees. The decrease from the year ended December 31, 2024 was primarily due to a decrease of $85.2 million in BaaS credit enhancements related to the allowance for credit losses and reserve for unfunded commitments and a decrease of $1.8 million in BaaS fraud enhancements, partially offset by an increase of $9.4 million in total BaaS fee program income, which was the result of increased partner activity. Service Charges and Fees. S ervice charges and fees include service charges on accounts, point-of-sale fees, merchant services fees and overdraft fees. Together they constitute the largest component of our noninterest income, outside of BaaS fee income. Service charges and fees were $3.6 million for the year ended December 31, 2025, a decrease of $180,000, or 4.8%, from the prior year primarily due to decreases in point-of-sale fees of $194,000 partially offset by an increase in service charges on deposit accounts of $9,000. The following table presents service charges and fees for the periods indicated: Year Ended December 31, 2025 compared to 2024 2024 compared to 2023 (dollars in thousands) 2025 2024 2023 Increase (Decrease) Percent Change Increase (Decrease) Percent Change Point of sale fees $ 1,808 $ 2,002 $ 2,176 (194) (9.7) % $ (174) (8.0 %) Service charges on accounts 596 587 500 9 1.5 87 17.4 Merchant services 495 487 498 8 1.6 (11) (2.2) ATM fees 246 259 239 (13) (5.0) 20 8.4 Overdraft and NSF fees 207 198 213 9 4.5 (15) (7.0) Cash management fees 81 78 98 3 3.8 (20) (20.5) Other 125 127 130 (2) (1.6) (3) (2.3) $ 3,558 $ 3,738 $ 3,854 $ (180) (4.8) % $ (116) (3.0 %) Loan Referral Fees . We earn loan referral fees when we originate a variable rate loan and the borrower enters into an interest rate swap agreement with a third party to fix the interest rate for an extended period, usually 20 or 25 years. We recognize the loan referral fee for arranging the interest rate swap. By facilitating interest rate swaps to our clients, we are able to provide them with a long-term, fixed interest rate without assuming the interest rate risk. Interest rate volatility, swap rates, and the timing of loan closings all impact the demand for long-term fixed rate swaps. The recognition of loan referral fees fluctuates in response to these market conditions and as a result we may recognize more or less, or may not recognize any, loan referral fees in some periods. Current market conditions are making interest rate swap agreements less attractive in the higher rate environment. Loan referral fees were $0 for the year ended December 31, 2025, a decrease of $168,000, or 100.0%, from the year ended December 31, 2024. Interest rate volatility, swap rates, and the timing of loan closings all impact the demand for long-term fixed rate swaps. Gain on Sale of Loans, net . Gain on sales of loans occurs when we sell certain CCBX loans to the originating partner, in accordance with partner agreements, however most partner loan sales are at par. Gain on sale of loans may also occur when we sell in the secondary market the guaranteed portion (generally 75% of the principal balance) of the SBA and U.S. Department of Agriculture (“USDA”) loans that we originate. This activity fluctuates based on SBA and USDA loan activity. Unrealized gain (loss) on equity securities, net. During the year ended December 31, 2025, we recognized an unrealized loss on equity securities of $414,000, compared to the year ended December 31, 2024, when we recognized a $27,000 unrealized holding gain on equity securities. We hold $3.3 million in equity securities focused on entities providing products to the BaaS and financial services space. 68 Table of Contents Other. This category includes a variety of other income-producing activities, credit card fee income, wire transfer fees, interest earned on bank owned life insurance (“BOLI”), and SBA and USDA servicing fees. Other noninterest income increased $1.8 million, or 116.9%, for the year ended December 31, 2025 compared to the year ended December 31, 2024, due in large part to the addition of sweep fee income in 2025. Noninterest Expense Generally, noninterest expense is composed of all employee expenses and costs associated with operating our facilities, obtaining and retaining customer relationships and providing bank services. The largest components of noninterest expense are BaaS loan and fraud expense combined and salaries and employee benefits. Noninterest expense also includes operational expenses, such as legal and professional expenses, data processing and software licenses, occupancy, point of sale expenses, FDIC assessments, director and staff expenses, excise taxes, marketing and other expenses. For the year ended December 31, 2025, noninterest expense totaled $287.8 million, an increase of $41.5 million, or 16.8%, compared to $246.3 million for the year ended December 31, 2024. Noninterest expense, excluding BaaS loan and BaaS fraud expense totaled $150.7 million and increased $32.8 million, or 27.8%. The $15.8 million increase in salaries and employee benefits, $4.7 million increase in legal and professional expenses and $8.0 million increase in data processing and software licenses are all related to growth and enhancements in technology all of which are related to the growth of the Company and investments in technology and risk management. The following table presents, for the periods indicated, the major categories of noninterest expense: Year Ended December 31, 2025 compared to 2024 2024 compared to 2023 (dollars in thousands) 2025 2024 2023 Increase (Decrease) Percent Change Increase (Decrease) Percent Change Salaries and employee benefits $ 85,774 $ 69,927 $ 66,461 $ 15,847 22.7 % $ 3,466 5.2 % Legal and professional expenses 20,254 15,506 14,803 4,748 30.6 703 4.7 Data processing and software licenses 23,515 15,470 9,349 8,045 52.0 6,121 65.5 Point of sale expense 350 325 481 25 7.7 (156) (32.4) Occupancy 3,992 3,936 4,172 56 1.4 (236) (5.7) FDIC assessments 3,177 2,863 2,524 314 11.0 339 13.4 Director and staff expenses 2,657 2,112 2,152 545 25.8 (40) (1.9) Excise taxes 2,855 1,154 1,976 1,701 147.4 (822) (41.6) Marketing 631 162 517 469 289.5 (355) (68.7) Other 7,492 6,484 5,224 1,008 15.5 1,260 24.1 Noninterest expense, excluding BaaS loan and BaaS fraud expense 150,697 117,939 107,659 32,758 27.8 10,280 9.5 BaaS loan expense 129,086 118,536 79,748 10,550 8.9 38,788 48.6 BaaS fraud expense 8,014 9,834 7,165 (1,820) (18.5) 2,669 37.3 BaaS loan and fraud expense 137,100 128,370 86,913 8,730 6.8 41,457 47.7 Total noninterest expense $ 287,797 $ 246,309 $ 194,572 $ 41,488 16.8 % $ 51,737 26.6 % 69 Table of Contents Salaries and Employee Benefits. Salaries and employee benefits are the largest component of noninterest expense, excluding BaaS loan expense, and include payroll expense, incentive compensation costs, benefit plans, health insurance and payroll taxes. Salaries and employee benefits were $85.8 million for the year ended December 31, 2025, an increase of $15.8 million, or 22.7%, compared to $69.9 million for the year ended December 31, 2024. Contributing to the year-over-year variance in salaries and employee benefits was $2.1 million of employee restructuring costs related to organizational changes, including severance and other termination-related expenses. These costs included approximately $2.5 million of non-recurring stock-based compensation associated with accelerated vesting and modification-date fair value adjustments of equity awards in connection with employee departures, partially offset by a $2.0 million credit to salaries and employee benefits due to the forfeiture of other equity awards. As our CCBX activities grow and we invest more in technology, we expect some continued growth in number of employees to support these lines of business but are also working to automate our processes to reduce and/or slow future growth in hiring. Legal and Professional Expenses . Legal and professional costs include legal, audit and accounting expenses, consulting fees, and fees for recruiting and hiring employees. These expenses fluctuate with the development of contracts for CCBX customers, audit and accounting needs, and are impacted by our reporting cycle and timing of legal and professional services. The expenses also reflect the costs associated with our infrastructure enhancement projects to improve our processing, automate processes, reduce compliance costs and enhance our data management. Legal and professional expenses were $20.3 million for the year ended December 31, 2025 compared to $15.5 million for the year ended December 31, 2024, which is an increase of $4.7 million, or 30.6%. Data Processing and Software Licenses. Data processing and software licenses include expenses related to obtaining and maintaining software required for our various functions and additional investments in software development and the amortization of those costs. Capitalized software totaled $17.3 million as of December 31, 2025, compared to $15.7 million as of December 31, 2024. Data processing costs include all of our customer transaction processing and data storage, computer processing, and network costs. Data processing costs grow as we grow and add new products, customers and branches and enhance technology. Additionally, CCBX data processing expenses and software that aids in the reporting of CCBX activities and monitoring of transactions that helps to automate and create other efficiencies in reporting have resulted in increased expenses in the category. These expenses are expected to increase as we invest more in automated processing and as we grow product lines and our CCBX segment. Amortization of capitalized software totaled $5.1 million for the year ended December 31, 2025, compared to $3.0 million for the year ended December 31, 2024. Data processing costs were $23.5 million for the year ended December 31, 2025, compared to $15.5 million for the year ended December 31, 2024, an increase of $8.0 million, or 52.0%. Occupancy Expenses. Occupancy expenses were $4.0 million for the year ended December 31, 2025, compared to $3.9 million for the year ended December 31, 2024, an increase of $56,000, or 1.4%. This category includes building, leasehold, furniture, fixtures and equipment depreciation totaling $1.5 million for years ended December 31, 2025 and 2024. Occupancy expenses include rent, utilities, janitorial and other maintenance expenses, property insurances and taxes. Also included is depreciation on building, leasehold, furniture, fixtures and equipment. Our hybrid and remote workforce has increased, which helps keep some occupancy expenses down, however we do expect occupancy expenses to increase as we continue to grow. Director and Staff Expenses. Director and staff expenses includes compensation for director service, continuing education for employees and other director and staff related expenses. Expenses will fluctuate depending upon conferences and other professional events that are attended by employees as well as expenses related to employee travel, and continuing education. Director and staff expenses were $2.7 million for the year ended December 31, 2025 compared to $2.1 million for the year ended December 31, 2024, an increase of $545,000, or 25.8%. Excise Taxes . Excise taxes are assessed on Washington state income and are based on gross income. Gross income is reduced by certain allowed deductions, and income attributed to other states is also removed to arrive at the taxable base. Excise taxes increased primarily as a result of increased income subject to excise taxes. CCBX income is sourced to the state where the partner does business, and the majority of partners are located outside the state of Washington. The year-over-year $1.7 million increase is largely due to a $1.2 million refund recorded during the year ended December 31, 2024, for which there was no similar entry in 2025. Excise taxes were $2.9 million for the year ended December 31, 2025, compared to $1.2 million for the year ended December 31, 2024, an increase of $1.7 million, or 147.4%. 70 Table of Contents Marketing. Marketing and promotion costs were $631,000 for the year ended December 31, 2025, compared to $162,000 for the year ended December 31, 2024, an increase of $469,000, or 289.5%. Marketing and promotion costs will vary depending upon the deployment of branding and targeted advertising for the community bank and CCBX. We expect costs to increase as we expand our marketing plan. Other. This category includes dues and memberships, office supplies, mail services, telephone, examination fees, internal loan expenses, services charges from banks, operational losses, directors and officer’s insurance, donations and other expenses. Other noninterest expense increased to $7.5 million for the year ended December 31, 2025, compared to $6.5 million for the year ended December 31, 2024, an increase of $1.0 million, or 15.5%. Contributing to the increase was the $700,000 recognition of a payable related to the settlement of an employment-related matter. BaaS loan and fraud expense. Our CCBX segment provides BaaS offerings that enable our digital financial service providers to offer their customers banking services. Included in BaaS loan and fraud expense is partner loan expense including overdraft balances and BaaS fraud expense. Partner loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements and servicing CCBX loans. BaaS fraud expense represents noncredit fraud losses on loans and deposits originated through partners. Fraud losses are recorded when incurred as losses in noninterest expense, and the reimbursement from the CCBX partner is recorded in noninterest income, resulting in a net impact of zero to the income statement. For the year ended December 31, 2025, BaaS loan and fraud expense was $137.1 million, compared to $128.4 million for the year ended December 31, 2024 as a result of increased partner activity. For more information on the accounting for BaaS loan and fraud expenses see the section titled “CCBX – BaaS Reporting Information.” The following table presents, for the periods indicated, the BaaS loan and fraud expenses: Year Ended December 31, 2025 compared to 2024 2024 compared to 2023 (dollars in thousands) 2025 2024 2023 Increase (Decrease) Increase (Decrease) BaaS loan expense $ 129,086 $ 118,536 $ 79,748 $ 10,550 $ 38,788 BaaS fraud expense 8,014 9,834 7,165 (1,820) 2,669 Total BaaS loan and fraud expense $ 137,100 $ 128,370 $ 86,913 $ 8,730 $ 41,457 Income Tax Expense The amount of income tax expense we incur is impacted by the amounts of our pre-tax income, tax-exempt income and other nondeductible expenses. Deferred tax assets and liabilities are reflected at current income tax rates in effect for the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are established when necessary to reduce our deferred tax assets to the amount expected to be realized. The Company is subject to various state taxes that are assessed as CCBX activities and employees expand into new states, which increases the overall tax rate used in calculating the provision for income taxes in the current and future periods. On July 4, 2025, the President signed H.R. 1, the “One Big Beautiful Bill Act, (the "Act") into law. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic R&D expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. The Act also made certain changes to the deductibility of the cost of meals and charitable contributions that are effective for tax years beginning after December 31, 2025. The Company is taking advantage of the immediate deductibility of R&D expenditures, which has positively impacted the tax provision and resulted in a deferred tax liability as of December 31, 2025. 71 Table of Contents Year Ended December 31, 2025, Compared to Year Ended December 31, 2024. For the year ended December 31, 2025, income tax expense totaled $14.3 million, compared to $12.1 million for the year ended December 31, 2024. Our effective tax rates for the years ended December 31, 2025, and 2024, was 23.3% and 21.1%, respectively. The $2.2 million increase in income tax expense was largely due to an increase in the state income tax rate used to calculate provision for income taxes and higher net income before income taxes. The deductibility of certain equity awards also impacts income tax expense. 72 Table of Contents Segment Information Based on the criteria of ASC 280, Segment Reporting, we have identified three segments: the community bank, CCBX and treasury & administration. The primary focus of the community bank is on providing a wide range of banking products and services to consumers and small to medium sized businesses in the broader Puget Sound region in the state of Washington and through the Internet and our mobile banking application. We currently operate 14 full-service banking locations, 12 of which are located in Snohomish County, where we are the largest community bank by deposit market share, and two of which are located in neighboring counties (one in King County and one in Island County). We also have a loan production office which is located in King county. The CCBX segment provides banking as a service (“BaaS”) that allows our digital financial service partners to offer their customers banking services. The CCBX segment had 28 relationships, at varying stages, including one signed letter of intent as of December 31, 2025. The treasury & administration segment includes treasury management, overall administration and all other aspects of the Company. The Company’s reported segments and the financial information of the reported segments are not necessarily comparable with similar information reported by other financial institutions. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the segments would perform if they operated as independent entities. Changes in management structure or allocation methodologies and procedures may result in future changes to previously reported segment financial data. The Company continues to evaluate its methodology on allocating items to the Company’s various segments to support strategic business decisions by the Company’s executive leadership. The difference in total loans receivable and total deposits in the community bank and CCBX segments is recorded on the balance sheet of each segment as an intrabank asset or intrabank liability, with the treasury & administration segment as the offset to those entries. Income and expenses that are specific to a segment are directly posted to each segment. Additionally, certain indirect expenses are allocated to each segment utilizing various metrics, such as number of employees, utilization of space, and allocations based on loan and deposit balances. We have implemented a transfer pricing process that credits or charges the community bank and CCBX segments with intrabank interest income or expense for the difference in average loans and average deposits, with the treasury & administration segment as the offset for those entries. The accounting policies of the segments are the same as those described in “ Note 1 – Description of Business and Summary of Significant Accounting Policies ” in the accompanying notes to the consolidated financial statements included in this report. 73 Table of Contents The following table presents summary financial information for each segment for the periods indicated: December 31, 2025 December 31, 2024 (dollars in thousands) Community Bank CCBX Treasury & Administration Consolidated Community Bank CCBX Treasury & Administration Consolidated Assets Cash and due from banks $ 4,243 $ 750 $ 731,977 $ 736,970 $ 4,510 $ 10,894 $ 437,109 $ 452,513 Intrabank asset $ — $ 633,600 $ (633,600) $ — $ — $ 411,768 $ (411,768) $ — Securities — — 48,247 48,247 — — 47,321 47,321 Loans held for sale — 71,216 — 71,216 — 20,600 — 20,600 Total loans receivable 1,941,979 1,807,552 — 3,749,531 1,882,988 1,603,577 — 3,486,565 Allowance for credit losses (18,231) (151,299) — (169,530) (18,924) (158,070) — (176,994) All other assets 29,809 235,137 40,057 305,003 28,272 211,039 51,892 291,203 Total assets $ 1,957,800 $ 2,596,956 $ 186,681 $ 4,741,437 $ 1,896,846 $ 2,099,808 $ 124,554 $ 4,121,208 Liabilities Total deposits $ 1,586,359 $ 2,557,840 $ — $ 4,144,199 $ 1,521,244 $ 2,064,088 $ — $ 3,585,332 Total borrowings — — 48,036 48,036 — — 47,884 47,884 Intrabank liability $ 366,216 $ — $ (366,216) $ — $ 367,540 $ — $ (367,540) $ — All other liabilities 5,225 39,116 13,902 58,243 8,062 35,720 5,506 49,288 Total liabilities $ 1,957,800 $ 2,596,956 $ (304,278) $ 4,250,478 $ 1,896,846 $ 2,099,808 $ (314,150) $ 3,682,504 Community Bank Community bank total assets as of December 31, 2025 increased $61.0 million, or 3.2%, to $1.96 billion, compared to $1.90 billion as of December 31, 2024. Loans receivable net of deferred fees for the community bank segment increased $59.0 million, or 3.1%, to $1.94 billion as of December 31, 2025, compared to $1.88 billion as of December 31, 2024. The increase in community bank loans receivable is the result of loan growth and normal balance fluctuations. Total community bank deposits increased $65.1 million, or 4.28%, as of December 31, 2025, compared to $1.52 billion as of December 31, 2024. Our cost of deposits for the community bank was 1.71% for the year ended December 31, 2025. CCBX CCBX total assets as of December 31, 2025 increased $497.1 million, or 23.7%, to $2.60 billion, compared to $2.10 billion as of December 31, 2024. During the year ended December 31, 2025, $6.69 billion in CCBX loans were transferred to loans held for sale, with $6.64 billion in loans sold and $71.2 million loans remaining in loans held for sale as of December 31, 2025 compared to $20.6 million at December 31, 2024. We continue to reposition ourselves by managing CCBX credit and concentration levels in an effort to optimize our loan portfolio earnings and generate off balance sheet fee income. We retain a portion of the fee income for our role in processing transactions on sold credit card balances. This is expected to provide an on-going and recurring revenue stream without the additional on balance sheet risk. Total CCBX loans receivable increased $204.0 million, or 12.7%, to $1.81 billion as of December 31, 2025, compared to $1.60 billion as of December 31, 2024. The increase in loans receivable is the result of increased activity with CCBX partners, net of $6.64 billion in loan sales. As a result of an increase in the difference of average 74 Table of Contents deposits compared to average loans the intrabank asset increased $221.8 million to $633.6 million as of December 31, 2025, compared to $411.8 million as of December 31, 2024. CCBX allowance for credit losses decreased to $151.3 million as of December 31, 2025, compared to $158.1 million as of December 31, 2024. The decrease in the allowance is due to an improvement in the performance of the CCBX portfolio and our focus on originating higher quality CCBX loans resulting in lower historical loss factors. As we continue to originate higher quality loans, these become a greater proportion of the CCBX portfolio, resulting in an improvement in expected losses and a reduced allowance. CCBX partner agreements provide for credit enhancements that cover $192.2 million, or 97.7%, of the charge-offs on CCBX loans for the year ended December 31, 2025. CCBX partners bear most of the responsibility for credit losses incurred which consequently gives them a vested interest in the performance of the portfolio. We believe that this alignment of interests ensures that CCBX partners are motivated to implement robust risk management practices and maintain the overall health of the portfolio. Total CCBX deposits increased $493.8 million, or 23.9%, to $2.56 billion, compared to $2.06 billion as of December 31, 2024, primarily as a result of growth within the CCBX relationships and new partnerships. This does not include an additional $843.6 million in CCBX deposits that were transferred off balance sheet to provide for increased FDIC insurance coverage to certain customers, compared to $273.2 million as of December 31, 2024. Treasury & administration total assets as of December 31, 2025 increased $62.1 million, or 49.9%, to $186.7 million, compared to $124.6 million as of December 31, 2024, primarily due to an increase in cash and due from banks. Total securities increased $926,000, or 2.0%, to $48.2 million as of December 31, 2025, compared to $47.3 million as of December 31, 2024, due to the purchase of CRA securities, partially offset by principal repayments on securities. Total borrowings were $48.0 million as of both December 31, 2025 and December 31, 2024. 75 Table of Contents The following table presents summary financial information for each segment for the periods indicated. Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (dollars in thousands) Community Bank CCBX Treasury & Admin Total Community Bank CCBX Treasury & Admin Total Community Bank CCBX Treasury & Admin Total INTEREST INCOME AND EXPENSE Interest income $ 122,956 $ 274,608 $ 32,053 $ 429,617 $ 123,735 $ 248,286 $ 24,756 $ 396,777 $ 106,983 $ 197,306 $ 18,930 $ 323,219 Interest (expense) income intrabank transfer (13,788) 26,673 (12,885) — (21,265) 30,221 (8,956) — (10,404) 19,071 (8,667) — Interest expense 26,805 90,109 2,638 119,552 26,897 94,035 2,817 123,749 17,354 71,646 2,644 91,644 Net interest income 82,363 211,172 16,530 310,065 75,573 184,472 12,983 273,028 79,225 144,731 7,619 231,575 Provision for credit losses (504) 193,135 — 192,631 (1,373) 278,980 — 277,607 1,111 182,881 — 183,992 Net interest income (expense) after provision (recapture) for credit losses 82,867 18,037 16,530 117,434 76,946 (94,508) 12,983 (4,579) 78,114 (38,150) 7,619 47,583 NONINTEREST INCOME Service charges and fees 3,494 64 — 3,558 3,691 47 — 3,738 3,810 44 — 3,854 Other income 603 1,206 1,083 2,892 751 76 892 1,719 1,165 433 501 2,099 BaaS program income — 29,491 — 29,491 — 20,075 — 20,075 — 13,240 — 13,240 BaaS indemnification income — 195,667 — 195,667 — 282,673 — 282,673 — 184,929 — 184,929 Noninterest income 4,097 226,428 1,083 231,608 4,442 302,871 892 308,205 4,975 198,646 501 204,122 76 Table of Contents Year Ended December 31, 2025 December 31, 2024 December 31, 2023 (dollars in thousands) Community Bank CCBX Treasury & Admin Total Community Bank CCBX Treasury & Admin Total Community Bank CCBX Treasury & Admin Total NONINTEREST EXPENSE Salaries and employee benefits 30,734 35,727 19,313 85,774 24,432 28,909 16,586 69,927 24,104 25,159 17,198 66,461 Occupancy 3,285 406 301 3,992 3,401 333 202 3,936 3,741 321 110 4,172 Data processing and software licenses 6,092 14,117 3,306 23,515 4,759 4,029 6,682 15,470 4,595 2,321 2,433 9,349 Legal and professional expenses 1,364 9,141 9,749 20,254 99 8,904 6,503 15,506 1,580 9,645 3,578 14,803 Other expense 6,395 6,917 3,850 17,162 3,845 4,727 4,528 13,100 3,954 3,759 5,161 12,874 BaaS loan expense — 129,086 — 129,086 — 118,536 — 118,536 — 79,748 — 79,748 BaaS fraud expense — 8,014 — 8,014 — 9,834 — 9,834 — 7,165 — 7,165 Total noninterest expense 47,870 203,408 36,519 287,797 36,536 175,272 34,501 246,309 37,974 128,118 28,480 194,572 Net income before income taxes $ 39,094 $ 41,057 $ (18,906) $ 61,245 $ 44,852 $ 33,091 $ (20,626) $ 57,317 $ 45,115 $ 32,378 $ (20,360) $ 57,133 Income taxes 7,935 10,749 (4,432) 14,252 8,870 7,999 (4,771) 12,098 9,913 7,116 (4,475) 12,554 Net income (loss) 31,159 30,308 (14,474) 46,993 35,982 25,092 (15,855) 45,219 35,202 25,262 (15,885) 44,579 Community Bank Year Ended December 31, 2025, Compared to Year Ended December 31, 2024. Net interest income for the community bank was $82.4 million for the year ended December 31, 2025, an increase of $6.8 million, or 9.0%, compared to $75.6 million for the year ended December 31, 2024. The increase in net interest income is due to lower interest expense, due largely to lower interest rates, on the intrabank transfer. As a result of the community bank having higher average loans than deposits for the year ended December 31, 2025 compared to the year ended December 31, 2024, an intrabank interest expense for the community bank of $13.8 million was recorded for the year ended December 31, 2025, compared to intrabank interest expense of $21.3 million for the year ended December 31, 2024. This was partially offset by lower interest income on loans due to a change in loan mix. There was a provision recapture for credit losses for the community bank of $504,000 for the year ended December 31, 2025, compared to a provision recapture for credit losses of $1.4 million for the year ended December 31, 2024. Net charge-offs to average loans for the community bank segment have remained consistently low and was 0.00% and 0.03% for the year ended December 31, 2025 and December 31, 2024, respectively. Noninterest income for the community bank was $4.1 million for the year ended December 31, 2025, a decrease of $345,000, or 7.8%, compared to $4.4 million for the year ended December 31, 2024. Loan referral fees decreased $168,000 for the year ended December 31, 2025 compared to the year ended December 31, 2024. The recognition of loan referral fees fluctuates in response to market conditions and as a result we may recognize more or less, or may not recognize any, loan referral fees in some periods. Noninterest expenses for the community bank increased $11.3 million, or 31.0%, to $47.9 million as of December 31, 2025, compared to $36.5 million as of December 31, 2024. The increase in noninterest expense is largely due to higher salaries and employee benefits, data processing and software licenses and legal and 77 Table of Contents professional expenses all of which are related to the growth of Company and investments in technology and risk management. We continue to invest in our infrastructure and the automation of our processes so that they are scalable. CCBX Year Ended December 31, 2025, Compared to Year Ended December 31, 2024. Net interest income for CCBX was $211.2 million for the year ended December 31, 2025, an increase of $26.7 million, or 14.5%, compared to $184.5 million for the year ended December 31, 2024. The increase in net interest income is due to loan growth from active CCBX relationships. During the year ended December 31, 2025, we sold $6.64 billion in CCBX loans as part of our strategy to optimize our CCBX portfolio, manage growth, credit quality, portfolio and partner limits. We are retaining a portion of the transaction processing fee income on sold credit card receivables which provides ongoing and recurring income without balance sheet risk. As a result of having higher average deposits than loans, but lower interest rates, for the year ended December 31, 2025 compared to the year ended December 31, 2024 intrabank interest income for CCBX was $26.7 million for the year ended December 31, 2025, compared to $30.2 million for the year ended December 31, 2024. Provision for credit losses was $193.1 million for the year ended December 31, 2025, compared to $279.0 million for the year ended December 31, 2024. The decrease in the provision is due to a change in loan mix and an improvement in the performance of the CCBX portfolio and our focus on originating higher quality CCBX loans resulting in lower historical loss factors. As we continue to originate higher quality loans, these become a greater proportion of the CCBX portfolio, resulting in an improvement in expected losses and lower provision expense. Noninterest income for CCBX was $226.4 million for the year ended December 31, 2025, a decrease of $76.4 million, or 25.2%, compared to $302.9 million for the year ended December 31, 2024, due to a decrease of $85.2 million in BaaS credit enhancements related to the allowance for credit losses and a $1.8 million decrease in BaaS fraud enhancements, partially offset by a $9.4 million increase in total BaaS program income, which was the result of increased activity with our CCBX partners. Noninterest expenses for CCBX increased $28.1 million, or 16.1%, to $203.4 million for the year ended December 31, 2025, compared to $175.3 million for the year ended December 31, 2024. The increase in noninterest expense is largely due to growth from active CCBX relationships resulting in an increase in BaaS loan expense and increased salaries and benefits, data processing and software licenses and legal and professional expenses all of which are related to the growth of Company and investments in technology and risk management, for the year ended December 31, 2025, compared to the year ended December 31, 2024. For more information on the accounting for BaaS income and expenses see the section titled “ CCBX – BaaS Reporting Information. ” Treasury & Administration Year Ended December 31, 2025, Compared to Year Ended December 31, 2024. Net interest income for treasury & administration was $16.5 million for the year ended December 31, 2025, an increase of $3.5 million, or 27.3%, compared to $13.0 million for the year ended December 31, 2024, as a result of increased balances on interest earning assets. Noninterest income increased $191,000, or 21.4%, to $1.1 million for the year ended December 31, 2025, compared to $892,000 for the year ended December 31, 2024. Noninterest expense increased $2.0 million, or 5.8%, to $36.5 million for the year ended December 31, 2025, compared to $34.5 million for the year ended December 31, 2024, largely as a result of increased salaries and employee benefits and legal and professional expenses as a result of growth of the Company and investments in risk management. Data processing and software expenses decreased $3.4 million compared to the year ended December 31, 2024 as more of these expenses have been directly expensed to the other segments. 78 Table of Contents Financial Condition Our total assets increased $620.2 million, or 15.0%, to $4.74 billion at December 31, 2025 from $4.12 billion at December 31, 2024. The increase is primarily comprised of a $263.0 million increase in loans receivable and a $286.7 million increase in interest earning deposits with other banks. Loans Held For Sale During the year ended December 31, 2025, $6.69 billion in CCBX loans were transferred to loans held for sale, with $6.64 billion in loans sold, $5.14 billion of which is new activity on previously sold credit card receivables. As of December 31, 2025 there were $71.2 million in loans held for sale and $20.6 million as of December 31, 2024. We will continue to sell loans back to the originating partner as part of our strategy to optimize our CCBX portfolio, manage growth, credit quality, portfolio and partner limits. Additionally, we retain a portion of the fee income for our role in processing new transactions on previously sold credit card receivables, which continues to grow and is expected to provide increased and on-going revenue with no on-balance sheet risk or capital requirement. Loan Portfolio Our primary source of income is derived through interest earned on loans. A substantial portion of our loan portfolio consists of commercial real estate loans and commercial and industrial loans primarily in the Puget Sound region. Our consumer and other loans also represent a significant portion of our loan portfolio with the growth of our CCBX segment. Our loan portfolio represents the highest yielding component of our earning assets. As of December 31, 2025, loans receivable totaled $3.75 billion, an increase of $263.0 million, or 7.5%, compared to December 31, 2024. Total loans receivable is net of $7.3 million in net deferred origination fees. The increase includes CCBX loan growth of $204.0 million, or 12.7%, and community bank loan growth of $59.7 million, or 3.2%. Loans as a percentage of deposits were 92.2% as of December 31, 2025, compared to 97.8% as of December 31, 2024. We remain focused on serving our communities and markets by growing loans and funding those loans with customer deposits. The following table summarizes our loan portfolio by type of loan as of the dates indicated: As of December 31, 2025 2024 (dollars in thousands) Amount Percent Amount Percent Commercial and industrial loans: Capital call lines $ 210,480 5.6 % $ 109,017 3.1 % All other commercial & industrial loans 243,605 6.5 184,356 5.3 Total commercial and industrial loans 454,085 12.1 293,373 8.4 Real estate loans: Construction, land and land development 222,075 5.9 148,198 4.2 Residential real estate 466,352 12.4 469,771 13.4 Commercial real estate 1,285,856 34.2 1,374,801 39.4 Consumer and other loans 1,328,461 35.4 1,206,876 34.6 Gross loans receivable 3,756,829 100.0 % 3,493,019 100.0 % Net deferred origination fees (7,298) (6,454) Loans receivable $ 3,749,531 $ 3,486,565 Loan Yield 11.00 % 11.20 % 79 Table of Contents The following tables detail the loans by segment which are included in the total loan portfolio table above: Community Bank As of December 31, 2025 December 31, 2024 (dollars in thousands) Balance % to Total Balance % to Total Commercial and industrial loans: Commercial and industrial loans $ 224,439 11.5 % $ 150,395 8.0 % Real estate loans: Construction, land and land development loans 222,075 11.4 148,198 7.8 Residential real estate loans 202,293 10.4 202,064 10.7 Commercial real estate loans 1,285,856 66.0 1,374,801 72.8 Consumer and other loans: Other consumer and other loans 14,072 0.7 13,542 0.7 Gross community bank loans receivable 1,948,735 100.0 % 1,889,000 100.0 % Net deferred origination fees (6,756) (6,012) Loans receivable $ 1,941,979 $ 1,882,988 Loan Yield 6.52 % 6.54 % CCBX As of December 31, 2025 December 31, 2024 (dollars in thousands) Balance % to Total Balance % to Total Commercial and industrial loans: Capital call lines $ 210,480 11.6 % $ 109,017 6.8 % All other commercial & industrial loans 19,166 1.1 33,961 2.1 Real estate loans: Residential real estate loans 264,059 14.6 267,707 16.7 Consumer and other loans: Credit cards 622,681 34.4 528,554 33.0 Other consumer and other loans 691,708 38.3 664,780 41.4 Gross CCBX loans receivable 1,808,094 100.0 % 1,604,019 100.0 % Net deferred origination fees (542) (442) Loans receivable $ 1,807,552 $ 1,603,577 Loan Yield (1) 15.87 % 17.39 % (1) CCBX yield does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements and servicing CCBX loans. To determine net BaaS loan income earned from CCBX loan relationships, the Company takes BaaS loan interest income and deducts BaaS loan expense to arrive at net BaaS loan income which can be compared to interest income on the Company’s community bank loans. Net BaaS loan income is a non-GAAP measure. See the reconciliation of non-GAAP measures set forth in the section titled “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” for the impact of BaaS loan expense on CCBX yield. Commercial and Industrial Loans . Commercial and industrial loans increased $160.7 million, or 54.8%, to $454.1 million as of December 31, 2025, from $293.4 million as of December 31, 2024. The increase in commercial and industrial loans receivable over December 31, 2024 was due to an increase of $101.5 million in capital call lines combined with a $59.2 million increase in other commercial and industrial loans. Commercial and industrial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and effectively. These loans are primarily made based on the borrower’s ability to service the debt from income. Most commercial and industrial loans are secured by the assets being financed or other business assets, such as accounts receivable, inventory or equipment, and we generally obtain personal guarantees on these loans. Commercial and 80 Table of Contents industrial loans included $92.0 million and $48.6 million in loans to financial institutions as of December 31, 2025, and December 31, 2024, respectively. Included in the commercial and industrial loan balance is $210.5 million and $109.0 million in capital call lines resulting from relationships with our CCBX partners as of December 31, 2025 and December 31, 2024, respectively, and $19.2 million and $34.0 million in CCBX other commercial loans as of December 31, 2025 and December 31, 2024, respectively. As of December 31, 2025 there was $224.4 million in community bank commercial and industrial loans compared to $150.4 million at December 31, 2024. Construction, Land and Land Development Loans . Construction, land and land development loans increased $73.9 million, or 49.9%, to $222.1 million as of December 31, 2025, from $148.2 million as of December 31, 2024. The increase is attributed to some new construction and development projects. Unfunded loan commitments for construction, land and land development loans were $98.2 million at December 31, 2025, compared to $47.8 million at December 31, 2024. Although we have seen a strong commercial and residential real estate market in the Puget Sound region in 2025, the macro economic environment is continuously changing, primarily due to the pace of economic growth, inflation, changing interest rates, global trade tensions, tariffs, unemployment, global unrest, the war in Ukraine, conflicts in the Middle East, political uncertainty, natural disasters, and trade issues that have resulted in economic uncertainty and slowing in construction lending. Construction, land and land development loans are comprised of loans to fund construction, land acquisition and land development construction. The properties securing these loans are primarily located in the Puget Sound region and are comprised of both residential and commercial properties, including owner occupied properties and investor properties. As of December 31, 2025, construction, land and land development loans included $124.9 million in commercial construction loans, $39.1 million in other construction, land and land development loans, $37.4 million in residential construction loans and $20.7 million in undeveloped land loans, compared to $83.2 million in commercial construction loans, $40.9 million in residential construction loans and $15.4 million in other construction, land and land development loans and $8.7 million in undeveloped land loans as of December 31, 2024. Residential Real Estate Loans . Our one-to-four family residential real estate loans decreased $3.4 million, or 0.7%, to $466.4 million as of December 31, 2025, from $469.8 million as of December 31, 2024 due to a decrease of $3.6 million in CCBX loans partially offset by an increase of $229,000 in community bank loans. As of December 31, 2025, there were $264.1 million in CCBX home equity loans included in residential real estate, compared to $267.7 million at December 31, 2024. These are first, second, and third lien residential loans and require 18 months of home ownership for non-owner occupied. Term lengths are up to 30 years and lines range from $5,000 to $400,000. We sold $927.1 million in CCBX residential real estate loans during the year ended December 31, 2025. In the past, we have purchased residential mortgages originated through other financial institutions to hold for investment for purposes of diversifying our residential mortgage loan portfolio, meeting certain regulatory requirements and increasing our interest income. We last purchased residential mortgage loans in 2018. As of December 31, 2025 and December 31, 2024, we held $4.4 million, in purchased residential real estate mortgage loans. These loans purchased typically have a fixed rate with a term of 15 to 30 years and are collateralized by one-to-four family residential real estate. We have a defined set of credit guidelines that we use when evaluating these loans. Although purchased loans were originated and underwritten by another institution, our mortgage, credit, and compliance departments conduct an independent review of each underlying loan that includes re-underwriting each of these loans to our credit and compliance standards. Like our commercial real estate loans, our residential real estate loans are secured by real estate, the value of which may fluctuate significantly over a short period of time as a result of market conditions in the area in which the real estate is located. Adverse developments affecting real estate values in our market areas could therefore increase the credit risk associated with these loans, impair the value of property pledged as collateral on loans, and affect our ability to sell the collateral upon foreclosure without a loss or additional losses. Commercial Real Estate Loans . Commercial real estate loans decreased $88.9 million, or 6.5%, to $1.29 billion as of December 31, 2025, from $1.37 billion as of December 31, 2024. These increases, which occurred across the various segments of our portfolio, were due to our commitment to continue growing the portfolio in the Puget Sound region. We actively seek commercial real estate loans in our markets and our lenders are experienced in competing for these loans and managing these relationships. 81 Table of Contents We make commercial mortgage loans collateralized by owner-occupied and non-owner-occupied real estate, as well as multi-family residential loans. The real estate securing our existing commercial real estate loans includes a wide variety of property types, such as manufacturing and processing facilities, business parks, warehouses, retail centers, convenience stores, hotels and motels, low rise office buildings, mixed-use residential and commercial, and other properties. We originate both fixed- and adjustable-rate loans with terms up to 20 years. Fixed-rate loans typically amortize over a 10 to 25 year period with balloon payments due at the end of five to ten years. Adjustable-rate loans are generally based on the prime rate and adjust with the prime rate or are based on term equivalent FHLB rates. At December 31, 2025, approximately 32.1% of the commercial real estate loan portfolio consisted of fixed rate loans. Commercial real estate loans represented 34.2% of our loan portfolio at December 31, 2025 and are a large source of revenue. As of December 31, 2025, we held $15.5 million in purchased commercial real estate loans, compared to $20.1 million at December 31, 2024. Our credit administration team has substantial experience in underwriting, managing, monitoring and working out commercial real estate loans, and remains diligent in communicating and proactively working with borrowers to help mitigate potential credit deterioration. Consumer and Other Loans . Consumer and other loans increased $121.7 million, or 10.1%, to $1.33 billion, from $1.21 billion as of December 31, 2024, as a result of growth in CCBX loans originated through our partners. We sold $5.27 billion in CCBX credit cards loans and $281.8 million in CCBX consumer and other loans during the year ended December 31, 2025. We expect that we will continue to sell CCBX loans as part of our on-going strategy to manage the loan portfolio and credit quality. New loans are being booked with enhanced credit standards, which typically results in a lower interest rate than some of the higher risk loans that have paid off or that we have chosen to sell. CCBX consumer loans totaled $1.31 billion as of December 31, 2025, compared to $1.19 billion at December 31, 2024. CCBX consumer loans include cash secured and unsecured consumer loans, loan products designed to help consumers build credit, lines of credit, credit cards, other loans and overdrafts. Consumer credit cards are open-ended and have interest rates ranging from a promotional rate of 0.00% to the maximum rate allowable by state. For short-term consumer loans, both secured and unsecured options are available and typically have fully-amortizing terms ranging from two months to six years. Interest rates can be fixed or variable up to the maximum allowable rate by state. Our community bank consumer and other loans totaled $14.1 million as of December 31, 2025, compared to $13.5 million at December 31, 2024 and are comprised of personal lines of credit, automobile, boat, and recreational vehicle loans, and secured term loans. Contractual Maturity Ranges . The contractual maturity ranges of loans in our loan portfolio and the amount of such loans with fixed and floating interest rates in each maturity range as of date indicated are summarized in the following table: As of December 31, 2025 (dollars in thousands) Due in One Year or Less Due after One Year Through Five Years Due after Five Years Through Fifteen Years Due After Fifteen Years Gross Loans Commercial and industrial loans: Capital call lines $ 210,230 $ 250 $ — $ — $ 210,480 All other commercial and industrial loans 54,496 98,233 90,876 — 243,605 Real estate loans: Construction, land and land development loans 119,134 68,738 34,203 — 222,075 Residential real estate loans 56,648 296,836 67,258 45,610 466,352 Commercial real estate loans 97,657 431,442 681,029 75,728 1,285,856 Consumer and other loans 169,594 1,103,971 53,624 1,272 1,328,461 Total $ 707,759 $ 1,999,470 $ 926,990 $ 122,610 $ 3,756,829 82 Table of Contents The following table sets forth all loans at December 31, 2025, that are due after December 31, 2026, and have either fixed interest rates or floating or adjustable interest rates: (dollars in thousands) Fixed Rates Floating or Adjustable Rates Total Commercial and industrial loans: Capital call lines $ — $ 250 $ 250 All other commercial and industrial loans 90,399 98,710 189,109 Real estate loans: Construction, land and land development loans 13,219 89,722 102,941 Residential real estate loans 41,327 368,377 409,704 Commercial real estate loans 330,943 857,256 1,188,199 Consumer and other loans 579,540 579,327 1,158,867 Total $ 1,055,428 $ 1,993,642 $ 3,049,070 Industry Exposure and Categories of Loans We have a diversified loan portfolio, representing a wide variety of industries. Our major categories of loans are commercial real estate, consumer and other loans, residential real estate, commercial and industrial, and construction, land and land development loans. Together they represent $3.76 billion in outstanding loan balances. When combined with $2.31 billion in unused commitments the total of these categories is $6.06 billion. However, total exposure on CCBX loans is subject to portfolio and partner maximum limits and adjusted for those limits, unused commitments are limited to $560.8 million . See " Material Cash Requirements and Capital Resources " for maximum limits on CCBX loans by category. The following table summarizes our exposure by industry for our commercial real estate portfolio as of December 31, 2025: (dollars in thousands) Outstanding Balance Available Loan Commitments Total Outstanding Balance & Available Commitments % of Total Loans (Outstanding Balance & Available Commitments) Average Loan Balance Number of Loans Community bank commercial real estate loans Apartments $ 366,509 $ 5,691 $ 372,200 6.1 % $ 3,899 94 Hotel/Motel 161,105 1,454 162,559 2.7 6,713 24 Convenience Store 135,981 3,345 139,326 2.3 2,229 61 Office 85,237 3,522 88,759 1.5 991 86 Retail 100,036 851 100,887 1.7 1,031 97 Warehouse 100,956 247 101,203 1.7 1,836 55 Mixed use 87,704 6,591 94,295 1.6 1,020 86 Mini Storage 79,827 303 80,130 1.3 3,991 20 Strip Mall 43,029 — 43,029 0.7 6,147 7 Manufacturing 32,353 1,195 33,548 0.6 1,294 25 Groups < 0.60% of total 93,119 4,909 98,028 1.5 1,225 76 Total $ 1,285,856 $ 28,108 $ 1,313,964 21.7 % $ 2,038 631 83 Table of Contents As illustrated in the table below, our CCBX partners originate a large number of mostly smaller dollar loans, resulting in an average consumer loan balance of just $800. The following table summarizes our exposure by category for our consumer and other loan portfolio as of December 31, 2025: (dollars in thousands) Outstanding Balance Available Loan Commitments (1) Total Outstanding Balance & Available Commitments (1) CCBX Portfolio Maximum Limit (1) % of Total Loans (Outstanding Balance & Available Commitments) Average Loan Balance Number of Loans CCBX consumer loans Installment loans $ 664,839 $ 45,115 $ 709,954 $ 1,740,813 11.7 % $ 0.8 864,638 Credit cards 622,681 819,495 1,442,176 900,000 23.8 1.4 435,236 Lines of credit 10,027 9,635 19,662 478,598 0.3 0.1 89,736 Other loans 16,842 — 16,842 n/a 0.3 0.1 252,381 Community bank consumer loans Lines of credit 140 409 549 n/a 0.0 4.5 31 Installment loans 3,010 4 3,014 n/a 0.0 111.5 27 Other loans 10,922 13,139 24,061 n/a 0.4 28.6 382 Total $ 1,328,461 $ 887,797 $ 2,216,258 $ 3,119,411 36.5 % $ 0.8 1,642,431 (1) Total exposure on CCBX loans is subject to portfolio maximum limits. The following table summarizes our exposure by category for our residential real estate portfolio as of December 31, 2025: (dollars in thousands) Outstanding Balance Available Loan Commitments (1) Total Outstanding Balance & Available Commitments (1) CCBX Portfolio Maximum Limit (1) % of Total Loans (Outstanding Balance & Available Commitments) Average Loan Balance Number of Loans CCBX residential real estate loans Home equity lines of credit $ 264,059 $ 631,973 $ 896,032 $ 400,000 14.8 % $ 25 10,451 Community bank residential real estate loans Closed end, secured by first liens 164,351 529 164,880 n/a 2.7 293 293 Home equity lines of credit 28,294 50,302 78,596 n/a 1.3 257 257 Closed end, second liens 9,648 1,681 11,329 n/a 0.2 28 28 Total $ 466,352 $ 684,485 $ 1,150,837 $ 400,000 19.0 % $ 42 11,029 (1) Total exposure on CCBX loans is subject to portfolio maximum limits. 84 Table of Contents The following table summarizes our concentration by industry for our commercial and industrial loan portfolio as of December 31, 2025: (dollars in thousands) Outstanding Balance Available Loan Commitments (1) Total Outstanding Balance & Available Commitments (1) CCBX Portfolio Maximum Limit (1) % of Total Loans (Outstanding Balance & Available Commitments) Average Loan Balance Number of Loans CCBX C&I loans Capital call lines $ 210,480 $ 519,135 $ 729,615 $ 350,000 12.0 % $ 1,697 124 Retail and other loans 19,166 23,859 43,025 515,589 0.7 8 2,490 Community bank C&I loans Construction/Contractor services 31,196 31,728 62,924 n/a 1.1 173 180 Financial institutions 92,017 — 92,017 n/a 1.5 4,183 22 Medical / Dental / Other care 4,855 760 5,615 n/a 0.1 486 10 Manufacturing 4,435 4,113 8,548 n/a 0.1 120 37 Maintenance and repair 7,751 278 8,029 n/a 0.1 646 12 Groups < 0.10% of total 84,185 29,543 113,728 n/a 1.9 390 216 Total $ 454,085 $ 609,416 $ 1,063,501 $ 865,589 17.5 % $ 147 3,091 (1) Total exposure on CCBX loans is subject to portfolio maximum limits. The following table details our concentration by category for our construction, land and land development loan portfolio as of December 31, 2025: (dollars in thousands) Outstanding Balance Available Loan Commitments Total Outstanding Balance & Available Commitments % of Total Loans (Outstanding Balance & Available Commitments) Average Loan Balance Number of Loans Community bank construction, land and land development loans Commercial construction $ 124,894 $ 50,467 $ 175,361 2.9 % $ 8,326 15 Residential construction 37,395 39,676 77,071 1.3 1,558 24 Undeveloped land loans 20,704 — 20,704 0.4 1,380 15 Developed land loans 20,559 420 20,979 0.3 1,285 16 Land development 18,523 7,675 26,198 0.4 2,058 9 Total $ 222,075 $ 98,238 $ 320,313 5.3 % $ 2,811 79 85 Table of Contents Nonperforming Assets Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on nonaccrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by applicable regulations. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. In general, we place loans on nonaccrual status when they become 90 days past due. We also place loans on nonaccrual status if they are less than 90 days past due if the collection of principal or interest is in doubt. Installment (closed end) consumer loans and revolving (open-ended loans, such as credit cards) originated through CCBX partners continue to accrue interest until they are charged-off at 120 days past due for installment loans (primarily unsecured loans to consumers) and 180 days past due for revolving loans (primarily credit cards). These consumer loans are reported as substandard loans, 90+ days past due and still accruing. As a result of the type of loans (primarily consumer loans) originated through our CCBX partners, we anticipate that balances 90 days past due or more and still accruing will increase as those loans grow. Additionally, some CCBX partners have instituted a collection practice that places certain loans on nonaccrual status to improve collectability. As of December 31, 2025, $20.3 million in CCBX nonaccrual loans were less than 90 days past due. When loans are placed on nonaccrual status, all unpaid accrued interest is reversed from income and all interest accruals are stopped. Interest income is subsequently recognized only to the extent cash payments are received in excess of principal balance. Loans are returned to accrual status if we believe that all remaining principal and interest is fully collectible and there has been at least six months of sustained repayment performance since the loan was placed on nonaccrual status. We define nonperforming loans as loans on nonaccrual status and accruing loans 90 days or more past due. Nonperforming assets also include other real estate owned and repossessed assets. We believe our lending practices and active approach to managing nonperforming assets has resulted in sound asset quality and timely resolution of problem assets. We have procedures in place to assist us in maintaining the overall credit quality of our loan portfolio. We have established underwriting guidelines, concentration limits and we also monitor our delinquency levels for any negative or adverse trends. We actively manage problem assets to reduce our risk for loss. We had $64.1 million in nonperforming assets as of December 31, 2025, compared to $62.7 million as of December 31, 2024. This includes $33.1 million in CCBX loans more than 90 days past due and still accruing interest as of December 31, 2025, compared to $43.1 million at December 31, 2024. All of our nonperforming assets were nonperforming loans as of December 31, 2025 and December 31, 2024. Our accruing loans past due 90 days or more decreased $9.9 million and was partially offset by an increase of $5.0 million in CCBX nonaccrual loans primarily as a result of a new collection practice employed by certain CCBX partners that places specific loans on nonaccrual status to enhance collectability, $20.3 million of these loans are less than 90 days past due as of December 31, 2025. Additionally, there was an increase in community bank nonaccrual loans of $6.4 million during the year ended December 31, 2025. Our nonperforming loans to loans receivable ratio was 1.71% at December 31, 2025, compared to 1.80% at December 31, 2024. Our community bank credit quality remains strong, as demonstrated by the low level of community bank nonperforming loans to total loans receivable of 0.17% as of December 31, 2025. CCBX loans have a higher level of expected losses than our community bank loans, which is reflected in the factors for the allowance for credit losses. Agreements with our CCBX partners provide for a credit enhancement which protects the Bank by indemnifying or reimbursing incurred losses, when accruing consumer loans originated through CCBX partners are charged-off at 120 days past due for installment loans (primarily unsecured loans to consumers) and 180 days past due for revolving loans (primarily credit cards). CCBX partners bear most of the responsibility for credit losses incurred which consequently gives them a vested interest in the performance of the portfolio. We believe this alignment of interests ensures that CCBX partners are motivated to implement robust risk management practices and maintain the overall health of the portfolio. 86 Table of Contents The following table presents information regarding community bank and CCBX nonperforming assets at the dates indicated: (dollars in thousands) December 31, 2025 December 31, 2024 Nonaccrual loans: Commercial and industrial loans $ 2,278 $ 334 Real estate loans: Residential real estate 38 — Commercial real estate 4,344 — Consumer and other loans: Credit cards 21,433 10,262 Other consumer and other loans 2,875 8,967 Total nonaccrual loans 30,968 19,563 Accruing loans past due 90 days or more: Commercial & industrial loans 654 1,006 Real estate loans: Residential real estate loans 1,961 2,608 Consumer and other loans: Credit cards 22,536 34,490 Other consumer and other loans 7,993 4,989 Total accruing loans past due 90 days or more 33,144 43,093 Total nonperforming loans 64,112 62,656 Real estate owned — — Repossessed assets — — Total nonperforming assets $ 64,112 $ 62,656 Total nonaccrual loans to loans receivable 0.83 % 0.56 % Total nonperforming loans to loans receivable 1.71 % 1.80 % Total nonperforming assets to total assets 1.35 % 1.52 % 87 Table of Contents The following tables detail the community bank and CCBX nonperforming assets which are included in the total nonperforming assets table above. Community Bank As of (dollars in thousands) December 31, 2025 December 31, 2024 Nonaccrual loans: Commercial and industrial loans $ 2,151 $ 100 Real estate: Residential real estate 38 — Commercial real estate 4,344 — Total nonaccrual loans 6,533 100 Accruing loans past due 90 days or more: Total accruing loans past due 90 days or more — — Total nonperforming loans 6,533 100 Other real estate owned — — Repossessed assets — — Total nonperforming assets $ 6,533 $ 100 Total nonperforming community bank loans to total loans receivable 0.17 % — % CCBX As of (dollars in thousands) December 31, 2025 December 31, 2024 Nonaccrual loans: Commercial and industrial loans: All other commercial & industrial loans $ 127 $ 234 Consumer and other loans: Credit cards $ 21,433 $ 10,262 Other consumer and other loans 2,875 8,967 Total nonaccrual loans 24,435 19,463 Accruing loans past due 90 days or more: Commercial & industrial loans 654 1,006 Real estate loans: Residential real estate loans 1,961 2,608 Consumer and other loans: Credit cards 22,536 34,490 Other consumer and other loans 7,993 4,989 Total accruing loans past due 90 days or more 33,144 43,093 Total nonperforming loans 57,579 62,556 Other real estate owned — — Repossessed assets — — Total nonperforming assets $ 57,579 $ 62,556 Total nonperforming CCBX loans to total loans receivable 1.54 % 1.79 % As of December 31, 2025, $55.7 million of the $57.6 million in nonperforming CCBX loans were covered by CCBX partner credit enhancements. Agreements with our CCBX partners provide for a credit enhancement which protects the Bank 88 Table of Contents by indemnifying or reimbursing incurred losses. Under the agreement, the CCBX partner will indemnify or reimburse the Bank for its loss/charge-off on these loans. Allowance for Credit Losses - Loans The ACL is an estimate of the expected credit losses on financial assets measured at amortized cost. The ACL is evaluated and calculated on a collective basis for those loans which share similar risk characteristics. At each reporting period, the Company evaluates whether the loans in a pool continue to exhibit similar risk characteristics as the other loans in the pool and whether it needs to evaluate the allowance on an individual basis. The Bank must estimate expected credit losses over the loans’ contractual terms, adjusted for expected prepayments. In estimating the life of the loan, the Bank cannot extend the contractual term of the loan for expected extensions, renewals, and modifications, unless the extension or renewal options are included in the contract at the reporting date and are not unconditionally cancellable by the Bank. Because expected credit losses are estimated over the contractual life adjusted for estimated prepayments, determination of the life of the loan may significantly affect the ACL. The Company has chosen to segment its portfolio consistent with the manner in which it manages the risk of the type of credit. • Community Bank Portfolio: The ACL calculation is derived for loan segments utilizing loan level information and relevant information from internal and external sources related to past events and current conditions. In addition, the Company incorporates a reasonable and supportable forecast. • CCBX Portfolio: The Bank calculates the ACL on loans on an aggregate basis based on each partner and product level, segmenting the risk inherent in the CCBX portfolio based on qualitative and quantitative trends in the portfolio. Also included in the ACL are qualitative reserves to cover losses that are expected, but in the Company’s assessment may not be adequately represented in the quantitative method. For example, factors that the Company considers include environmental business conditions, borrower’s financial condition, credit rating and the volume and severity of past due loans and nonaccrual loans. Based on this analysis, the Company records a provision for credit losses - loans to maintain the allowance at appropriate levels. As of December 31, 2025, the allowance for credit losses totaled $169.5 million, or 4.52% of total loans. As of December 31, 2024, the allowance for credit losses totaled $177.0 million, or 5.08% of total loans. The decrease in the Company’s allowance for credit losses for the year ended December 31, 2025 compared to December 31, 2024, is largely related to improved credit quality decreasing the provision for CCBX loans. During the year ended December 31, 2025, a $193.1 million provision for credit losses was recorded for CCBX loans. The decrease in the allowance is due to a change in loan mix, an improvement in the performance of the CCBX portfolio and our focus on originating higher quality CCBX loans resulting in lower historical and future projected loss factors. As we continue to originate higher quality loans, these higher quality loans become a greater proportion of the CCBX portfolio, resulting in a decrease in expected losses and a reduced allowance. In general, CCBX loans have a higher level of expected losses than our community bank loans, which is reflected in the factors for the allowance for credit losses. The factors used in management’s analysis for community bank credit losses indicated that a provision recapture for credit losses - loans of $504,000 was needed for the year ended December 31, 2025, largely due to a change in the mix of community bank loans and updated prepayment speeds, offset by a slight increase in economic uncertainty. The macro economic environment is continuously changing, primarily due to the pace of economic growth, inflation, changing interest rates, global trade tensions, tariffs, unemployment, global unrest, the war in Ukraine, conflicts in the Middle East, political uncertainty, natural disasters, and trade issues that have resulted in economic uncertainty. As described above, CCBX loans have a higher level of expected losses than our community bank loans, which is reflected in the factors for the allowance for credit losses. 89 Table of Contents Agreements with our CCBX partners provide for a credit enhancement provided by the partner which protects the Bank by indemnifying or reimbursing incurred losses. In accordance with accounting guidance, we estimate and record a provision for expected losses for these CCBX loans, unfunded commitments and negative deposit accounts. When the provision for credit losses - loans and provision for unfunded commitments is recorded, a credit enhancement asset is also recorded on the balance sheet through noninterest income (BaaS credit enhancements) in recognition of the CCBX partner legal commitment to indemnify or reimburse losses. The credit enhancement asset is relieved as credit enhancement payments and recoveries are received from the CCBX partner or taken from the partner's cash reserve account. Agreements with our CCBX partners also provide protection to the Bank from fraud by indemnifying or reimbursing incurred fraud losses. BaaS fraud includes noncredit fraud losses on loans and deposits originated through partners. Fraud losses are recorded when incurred as losses in noninterest expense, and the enhancement received from the CCBX partner is recorded in noninterest income, resulting in a net impact of zero to the income statement. The credit enhancement asset is an amount due from CCBX partners related to losses in the loan portfolio. It is determined by the provision for credit and other losses, such as fraud, and increases due to credit loss recoveries, which is ultimately reduced as partners reimburse for incurred losses. Identified below is the portion of incurred losses that are pending settlement with partners as of each period indicated. The CCBX provision for credit losses and CCBX net-charge-offs include partner accounts that are not covered by credit enhancement, therefore those items are included on a separate line item to reflect the exclusion from the credit enhancement asset. At December 31, 2025 the Company was responsible for credit losses on approximately 5% of a $321.3 million CCBX loan portfolio and represented $22.1 million in loans. The table below shows the activity in the credit enhancement asset for the periods indicated: As of or for the Year Ended December 31, (dollars in thousands) 2025 2024 Credit enhancement at beginning of period 181,890 112,894 CECL Day 1 Adjustment — — CCBX Provision for credit losses - loans 190,035 277,793 CCBX Provision for credit losses - unfunded commitments 2,484 1,187 Credit losses settled with partner during period (217,132) (228,537) Credit recoveries settled with partner during period 20,326 13,027 Net change in pending partner settlements (827) 5,998 Net (provision) charge-offs without credit enhancement 881 (472) Credit enhancement at end of period 177,657 181,890 Many CCBX partners also pledge a cash reserve account at the Bank as collateral for loss exposure which the Bank can collect from when losses occur that is then replenished by the partner on a regular interval. Credit losses and recoveries typically flow through the cash reserve account. These cash reserve accounts are included in total deposits on the balance sheet. Although agreements with our CCBX partners provide for credit enhancements that provide protection to the Bank from credit and fraud losses by indemnifying or reimbursing incurred credit and fraud losses, if our partner is unable to fulfill their contracted obligation then the Bank would be exposed to additional loan and deposit losses if the cash flows on the loans were not sufficient to fund the reimbursement of loan losses, as a result of this counterparty risk. If a CCBX partner does not replenish their cash reserve account the Bank may consider an alternative plan for funding the cash reserve, such as adjusting the funding amounts or timelines to better align with the partner's specific situation. If a mutually agreeable funding plan is not achieved then the Bank could declare the agreement in default, take over servicing and cease paying the partner for servicing the loan and providing credit enhancements. The Bank would evaluate any remaining credit enhancement asset from the CCBX partner in the event the partner failed to fulfill its obligations and would determine if a write-off is appropriate. If a write-off occurs, the Bank would retain the full yield and any fee income on the loan portfolio going forward, and our BaaS loan expense would decrease once default occurs and payments to the CCBX partner are stopped. 90 Table of Contents The following tables present, as of and for the periods indicated, net charge-off information by segment: Year Ended December 31, 2025 December 31, 2024 (dollars in thousands) Community Bank CCBX Total Community Bank CCBX Total Gross charge-offs $ 57 $ 217,132 $ 217,189 $ 554 $ 228,537 $ 229,091 Gross recoveries (30) (20,326) (20,356) (14) (13,027) (13,041) Net charge-offs $ 27 $ 196,806 $ 196,833 $ 540 $ 215,510 $ 216,050 Net charge-offs to average loans 0.00 % 11.38 % 5.45 % 0.03 % 15.10 % 6.51 % % of CCBX net charge-offs covered by credit enhancement 97.7 % 97.4 % Year Ended December 31, 2023 (dollars in thousands) Community Bank CCBX Total Gross charge-offs $ 64 $ 151,933 $ 151,997 Gross recoveries (12) (7,442) (7,454) Net charge-offs $ 52 $ 144,491 $ 144,543 Net charge-offs to average loans 0.00 % 11.94 % 4.92 % % of CCBX net charge-offs covered by credit enhancement 97.5 % 91 Table of Contents The following tables present, as of and for the periods indicated, an analysis of the allowance for credit losses and other related data: As of or for the Year Ended December 31, (dollars in thousands) 2025 2024 2023 Allowance at beginning of period $ 176,994 $ 117,381 $ 74,029 Impact of adopting CECL (ASC 326) — — 3,852 Provision for credit losses 189,369 275,663 184,043 Charge-offs: Commercial and industrial loans 6,823 15,556 6,651 Residential real estate 4,936 5,006 4,641 Commercial real estate — 264 — Consumer and other 205,430 208,265 140,705 Total charge-offs 217,189 229,091 151,997 Recoveries: Commercial and industrial loans 992 1,108 22 Residential real estate 101 8 4 Commercial real estate 4 — — Consumer and other 19,259 11,925 7,428 Total recoveries 20,356 13,041 7,454 Net charge-offs 196,833 216,050 144,543 Allowance at end of period $ 169,530 $ 176,994 $ 117,381 Allowance for credit losses to nonaccrual loans 547.44 % 904.74 % 1604.66 % Allowance to nonperforming loans 264.43 % 282.49 % 218.02 % Allowance to loans receivable 4.52 % 5.08 % 3.88 % The allowance for credit losses to nonaccrual loans ratio decreased as of December 31, 2025, compared to December 31, 2024, primarily as a result of an increase in nonaccrual loans of $11.4 million, largely due to an increase in CCBX nonaccrual loans as a result of a new collection practice that certain CCBX partners employ that places specific loans on nonaccrual status to enhance collectability, combined with a $6.4 million increase in nonaccrual community bank loans. The allowance for credit losses decreased $7.5 million as of December 31, 2025 compared to December 31, 2024 largely due to a change in loan mix, an improvement in the performance of the CCBX portfolio and our focus on originating higher quality CCBX loans resulting in lower historical and future projected loss factors. Agreements with our CCBX partners provide for a credit enhancement which protects the Bank by indemnifying or reimbursing incurred losses. CCBX partners bear most of the responsibility for credit losses incurred which consequently gives them a vested interest in the performance of the portfolio. We believe that this alignment of interests ensures that CCBX partners are motivated to implement robust risk management practices and maintain the overall health of the portfolio. Net charge-offs on CCBX loans for the year ended December 31, 2025 that were covered by credit enhancements were $192.2 million. At December 31, 2025, the allowance for credit losses for CCBX loans totaled $151.3 million, compared to $158.1 million at December 31, 2024. 92 Table of Contents The following table presents the loans receivable and allowance for credit losses by segment for the period indicated: As of December 31, 2025 As of December 31, 2024 (dollars in thousands) Community Bank CCBX Total Community Bank CCBX Total Loans receivable $ 1,941,979 $ 1,807,552 $ 3,749,531 $ 1,882,988 $ 1,603,577 $ 3,486,565 Allowance for credit losses (18,231) (151,299) (169,530) $ (18,924) $ (158,070) (176,994) Allowance for credit losses to total loans receivable 0.94 % 8.37 % 4.52 % 1.00 % 9.86 % 5.08 % Although we believe that we have established our allowance for credit losses in accordance with GAAP and that the allowance for credit losses was adequate to provide for expected losses in the portfolio at all times shown above, future provisions for credit losses will be subject to ongoing evaluations of the risks in our loan portfolio. We continue to have a low level of community bank charge-offs and nonperforming loans, however, The macro economic environment is continuously changing, primarily due to the pace of economic growth, inflation, changing interest rates, global trade tensions, tariffs, unemployment, global unrest, the war in Ukraine, conflicts in the Middle East, political uncertainty, natural disasters, and trade issues that have resulted in economic uncertainty. If economic conditions worsen then Washington state and Puget Sound region may experience a more severe economic downturn, and our asset quality could deteriorate, which may require material additional provisions for credit losses. The following table shows the allocation of the allowance for credit losses among loan categories and certain other information as of the dates indicated. The allocation of the allowance for credit losses as shown in the table should neither be interpreted as an indication of future charge-offs, nor as an indication that charge-offs in future periods will necessarily occur in these amounts or in the indicated proportions. The total allowance is available to absorb losses from any loan category. At December 31, 2025 2024 (dollars in thousands) Allowance Allocated to Loan Portfolio Loan Category as a % of Total Loans Allowance Allocated to Loan Portfolio Loan Category as a % of Total Loans Commercial and industrial loans $ 8,757 12.1 % $ 11,051 8.4 % Real estate loans: Construction, land and land development loans 6,580 5.9 3,439 4.2 Residential real estate loans 11,100 12.4 12,250 13.4 Commercial real estate loans 5,496 34.2 8,456 39.4 Consumer and other loans 137,597 35.4 141,798 34.6 Total allowance for credit losses $ 169,530 $ 176,994 Securities We use our securities portfolio primarily as a source of liquidity and collateral that can be readily sold or pledged for public deposits, for CRA purposes or other business purposes. At December 31, 2025, our securities portfolio was invested in U.S. Agency collateralized mortgage obligations and U.S. Agency residential mortgage-backed securities for Community Reinvestment Act ("CRA") purposes. Because we target a loan-to-deposit ratio in the range of 90% to 100%, we prioritize liquidity over the earnings of our securities portfolio. At December 31, 2025, our loan-to-deposit ratio was 92.2%, due primarily to our growth in both loans and deposits. When our securities portfolio represents less than 5% of assets we focus on liquid securities. To the extent our securities represent more than 5% of assets, absent an immediate need for liquidity, we may invest excess funds to provide a higher return. 93 Table of Contents As of December 31, 2025, the amortized cost of our investment securities totaled $48.2 million, an increase of $925,000, or 2.0%, compared to $47.3 million as of December 31, 2024. The increase in the securities portfolio was due to the purchase of CRA securities partially offset by principal paydowns during the year ended December 31, 2025. Our investment portfolio consists of only $29,000 in securities classified as available-for-sale ("AFS") and $48.2 million in held-to-maturity securities for CRA purposes. The carrying values of our investment securities classified as AFS are adjusted for unrealized gain or loss, and any gain or loss is reported on an after-tax basis as a component of other comprehensive income in shareholders’ equity. As of December 31, 2025 our AFS portfolio had an unrealized loss of $1,000 compared to an unrealized loss of $2,000 as of December 31, 2024. The following table summarizes the amortized cost and estimated fair value of certain of our investment securities as of the dates shown: As of December 31, 2025 2024 (dollars in thousands) Amortized Cost Fair Value Amortized Cost Fair Value Securities available-for-sale: U.S. Agency collateralized mortgage obligations $ 30 $ 29 $ 37 $ 35 Total available-for-sale securities 30 29 37 35 Securities held-to-maturity: U.S. Agency residential mortgage-backed securities 48,218 48,713 47,286 46,705 Total held-to-maturity securities 48,218 48,713 47,286 46,705 Total investment securities $ 48,248 $ 48,742 $ 47,323 $ 46,740 All of our U.S. Agency residential mortgage-backed securities and U.S. Agency collateralized mortgage obligations are U.S. Government agency securities. As of December 31, 2025, we did not hold any Fannie Mae or Freddie Mac preferred stock, collateralized debt obligations, collateralized loan obligations, structured investment vehicles, private label collateralized mortgage obligations, subprime, or second lien elements in our investment portfolio. As of December 31, 2025 and 2024, we did not own securities of any one issuer, other than the U.S. Government and its agencies, for which aggregate adjusted cost exceeded 10.0% of consolidated shareholders’ equity. Restricted equity securities totaled $9.2 million as of December 31, 2025 and $7.3 million as of December 31, 2024 The increase was attributable to the amount of FHLB stock that we are required to hold. Federal Reserve and FHLB stock are carried at par and do not have a readily determinable fair value. Ownership of FHLB stock is restricted to the FHLB and member institutions, and can only be purchased and redeemed at par. The Company has the following equity investments which do not have a readily determinable fair value and are held at cost minus impairment if any, plus or minus observable price changes in orderly transactions for an identical or similar investment of the same issuer. This method will be applied until the investments do not qualify for the measurement election (e.g., if the investment has a readily determinable fair value). The Company will reassess at each reporting period whether the equity investments without a readily determinable fair value qualifies to be measured at cost minus impairment. • The Company had a $1.8 million and $2.2 million equity interest in a specialized bank technology company as of the quarters ended December 31, 2025, and December 31, 2024, respectively. • The Company had a $350,000 equity interest in a technology company as of the quarters ended December 31, 2025, and December 31, 2024. • The Company had a $42,000 and $47,000 equity interest in a technology company as of the quarters ended December 31, 2025, and December 31, 2024, respectively. The following table shows the activity in equity investments without a readily determinable fair value for the dates shown: 94 Table of Contents Year Ended December 31, (dollars in thousands) 2025 2024 2023 Carrying value, beginning of period $ 2,619 $ 2,622 $ 2,572 Purchases — — 50 Observable price change (448) (3) — Carrying value, end of period $ 2,171 $ 2,619 $ 2,622 Additionally, the Company has invested in technology-focused funds, including those targeting innovation and adoption within the banking industry. These equity investments are held at fair value, as reported by the funds. During the year ended December 31, 2025, the Company contributed $556,000 in these funds and recognized net gains of $34,000, resulting in an equity interest of $1.5 million at December 31, 2025. The Company has committed up to $1.1 million in capital for these equity funds, however, the Company is not obligated to fund these commitments prior to a capital call. The following table shows the activity in equity fund investments held at fair value for the dates shown: Year Ended December 31, (dollars in thousands) 2025 2024 2023 Carrying value, beginning of period $ 910 $ 809 $ 456 Purchases/capital calls/capital returns, net 556 72 75 Net change recognized in earnings 34 29 278 Carrying value, end of period $ 1,500 $ 910 $ 809 The following table sets forth the amortized cost of held to maturity securities and the fair value of available for sale securities, maturities and approximated weighted average yield based on estimated annual income divided by the average amortized cost of our securities portfolio as of the dates indicated. The contractual maturity of a mortgage-backed security is the date at which the last underlying mortgage matures. As of December 31, 2025 More than Ten Years Total (dollars in thousands) Carrying Value Weighted Average Yield Carrying Value Weighted Average Yield Securities available-for-sale: U.S. Agency collateralized mortgage obligations $ 30 3.268 % $ 30 3.268 % Total available-for-sale 30 3.268 % 30 3.091 % Securities held to maturity: U.S. Agency residential mortgage-backed securities 48,218 5.384 % 48,218 5.384 % Total held to maturity 48,218 5.384 % 48,218 5.384 % Total $ 48,248 5.383 % $ 48,248 5.383 % Other Assets Deferred tax assets, net was zero as we moved to a deferred tax liability, net largely due to the impact of the Act, which permits the immediate expense of R&D costs for tax purposes. Other assets decreased $6.6 million to $20.3 million as of December 31, 2025, compared to December 31, 2024. During the year ended December 31, 2025, the Company completed a small asset acquisition that included the purchase of certain identifiable intangible assets. The transaction was accounted for as an asset acquisition. The acquired intangible asset is finite-lived and is being amortized over its estimated useful life. The carrying amount of the intangible 95 Table of Contents asset was $4.5 million at December 31, 2025. The acquisition did not have a material impact on the Company’s consolidated financial statements. Deposits We offer a variety of deposit products that have a wide range of interest rates and terms, including demand, money market, savings, and time accounts as well as network sweep deposits. Sweep deposits enable us to provide an FDIC insured deposit option to customers that have balances in excess of the FDIC insurance limit. This service trades our customers’ funds as certificates of deposit or interest bearing demand deposits in increments under the FDIC insured amount to other participating financial institutions and in exchange we receive time deposit or interest bearing demand investments from participating financial institutions. We rely primarily on competitive pricing policies, convenient locations, electronic delivery channels (internet and mobile), and personalized service to attract new deposits and retain existing deposits. Additionally, we offer deposit products through our CCBX segment. CCBX deposits are generally classified as interest bearing demand and money market accounts. CCBX deposit products allow us to offer a broader range of partner specific products, which include products designed to reach specific under-served or under-banked populations served by our CCBX partners. Total deposits as of December 31, 2025 were $4.14 billion, an increase of $558.9 million, or 15.6%, compared to $3.59 billion as of December 31, 2024. The increase in deposits was largely due to an increase of $493.8 million in CCBX deposits. Core deposits ended the quarter at $4.13 billion compared to $3.12 billion at December 31, 2024. We define core deposits as all deposits except time deposits and brokered deposits. Our cost of deposits was 1.56% for the community bank and 3.52% for CCBX for the three months ended December 31, 2025. Additionally, as of December 31, 2025 there was $843.6 million in CCBX deposits that were transferred off balance sheet for increased FDIC insurance coverage and liquidity purposes. Included in total deposits is $2.56 billion in CCBX deposits, an increase of $493.8 million, or 23.9%, compared to $2.06 billion as of December 31, 2024. CCBX customer deposit relationships include deposits with CCBX end customers, operating and non-operating deposit accounts. The deposits from our CCBX segment are generally classified as interest bearing demand and money market accounts. Total noninterest bearing deposits as of December 31, 2025 were $579.6 million, an increase of $52.1 million, or 9.9%, compared to $527.5 million as of December 31, 2024. Noninterest bearing deposits represent 14.0% and 14.7% of total deposits for December 31, 2025 and December 31, 2024, respectively. Community bank noninterest bearing deposits totaled $493.0 million and $471.8 million at December 31, 2025 and December 31, 2024, respectively. CCBX noninterest bearing deposits totaled $86.6 million and $55.7 million at December 31, 2025 and December 31, 2024, respectively. Total interest bearing balances, excluding time deposits, as of December 31, 2025 were $3.55 billion, an increase of $512.0 million, or 16.8%, compared to $3.04 billion as of December 31, 2024. The $512.0 million increase is primarily due to $507.0 million increase in CCBX interest bearing deposits combined with an increase in community bank interest bearing deposits of $49.2 million. Included in total deposits is $460.3 million in IntraFi network interest bearing demand and money market sweep accounts as of December 31, 2025, which provides our customers with fully insured deposits through a sweep and exchange of deposits with other financial institutions. Total time deposit balances as of December 31, 2025 were $12.3 million, a decrease of $5.3 million, or 30.0%, from $17.5 million as of December 31, 2024. The decrease is largely due to our focus on core deposits and letting higher rate time deposits run off as they mature. We have seen competitors increase rates on time deposits, and have not globally matched their rates in response as we focus on growing and retaining less costly core deposits. 96 Table of Contents The following table sets forth deposit balances at the dates indicated. As of December 31, 2025 2024 (dollars in thousands) Amount Percent of Total Deposits Amount Percent of Total Deposits Demand, noninterest bearing $ 579,616 14.0 % $ 527,524 14.7 % Interest bearing demand and money market 3,450,679 83.2 2,529,084 70.5 Savings 101,616 2.5 66,826 1.9 Total core deposits 4,131,911 99.7 3,123,434 87.1 Other deposits 1 — 444,351 12.4 Time deposits less than $100,000 4,415 0.1 5,920 0.2 Time deposits $100,000 and over 7,872 0.2 11,627 0.3 Total $ 4,144,199 100.0 % $ 3,585,332 100.0 % Cost of deposits 2.99 % 3.46 % The foll