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Item 1. Financial Statements

2025-11-06 compared with 2025-08-07 · 138 added, 134 removed, 774 unchanged (26% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts) June 30, 2025 December 31, 2024

(in thousands, except share amounts) September 30, 2025 December 31, 2024

Cash and due from financial institutions $ 44,147 $ 33,882

2 unchanged sentences

Time deposits in banks 100 4,121

Securities available-for-sale, at fair value, net of allowance for credit losses of $ 0 at June 30, 2025 and December 31, 2024 (amortized cost of $ 111,332 and $ 115,757 at June 30, 2025 and December 31, 2024, respectively)

Securities available-for-sale, at fair value, net of allowance for credit losses of $ 0 at September 30, 2025 and December 31, 2024 (amortized cost of $ 109,135 and $ 115,757 at September 30, 2025 and December 31, 2024, respectively)

95,635 98,194

Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $ 20 at June 30, 2025 and December 31, 2024 (fair value of $ 2,270 and $ 2,353 at June 30, 2025 and December 31, 2024, respectively)

Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $ 20 at September 30, 2025 and December 31, 2024 (fair value of $ 1,996 and $ 2,353 at September 30, 2025 and December 31, 2024, respectively)

Loans held for sale — 3,247

22 unchanged sentences

10,000,000 shares authorized;

zero issued and outstanding at June 30, 2025 and December 31, 2024

zero issued and outstanding at September 30, 2025 and December 31, 2024

Common stock, no par value;

100,000,000 shares authorized;

21,360,991 shares issued and outstanding at June 30, 2025;

21,367,387 shares issued and outstanding at September 30, 2025;

21,319,083 shares issued and outstanding at December 31, 2024

12 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except per share amounts) 2025 2024 2025 2024

45 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in thousands) 2025 2024 2025 2024

$ 16,344 $ 10,941 $ 43,963 $ 32,354

Unrealized gain (loss) on securities:

Net unrealized holding gain (loss) on securities available-for-sale during the period

Unrealized gain on securities:

Net unrealized holding gain on securities available-for-sale during the period

2,843 3,549 4,063 2,889

Income tax expense (benefit) related to items of other comprehensive (loss) income

Income tax expense related to items of other comprehensive income

763 1,049 1,570 854

Other comprehensive (loss) income

Other comprehensive income

2,080 2,500 2,493 2,035

4 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Three Months Ended June 30, 2025 and 2024

For the Three Months Ended September 30, 2025 and 2024

Common Stock Retained Earnings

2 unchanged sentences

(in thousands, except per share amounts) Shares Amount

Balance at March 31, 2024 17,353,251 $ 220,804 $ 84,216 $ ( 12,440 ) $ 292,580

Balance at June 30, 2024 21,319,583 $ 301,968 $ 90,734 $ ( 12,232 ) $ 380,470

Net income — — 10,941 — 10,941

Other comprehensive income — — — 2,500 2,500

Common stock issued 3,967,500 80,870 — — 80,870

Stock compensation expense — 283 — — 283

Stock forfeitures ( 1,168 ) — — — —

Cash dividends paid ($ 0.20 per share)

— — ( 4,264 ) — ( 4,264 )

Balance at September 30, 2024 21,319,583 $ 302,251 $ 97,411 $ ( 9,732 ) $ 389,930

Balance at June 30, 2025 21,360,991 $ 303,155 $ 125,545 $ ( 11,958 ) $ 416,742

Balance at March 31, 2025 21,329,235 $ 302,788 $ 115,309 $ ( 11,646 ) $ 406,451

Net income — — 16,344 — 16,344

Other comprehensive loss — — — ( 312 ) ( 312 )

Other comprehensive income — — — 2,080 2,080

Stock issued under stock award plans 7,062 — — — —

Stock compensation expense — 416 — — 416

Stock forfeitures ( 666 ) — — — —

Cash dividends paid ($ 0.20 per share)

— — ( 4,274 ) — ( 4,274 )

Balance at June 30, 2025 21,360,991 $ 303,155 $ 125,545 $ ( 11,958 ) $ 416,742

Balance at September 30, 2025 21,367,387 $ 303,571 $ 137,615 $ ( 9,878 ) $ 431,308

See accompanying notes to the unaudited consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Six Months Ended June 30, 2025 and 2024

For the Nine Months Ended September 30, 2025 and 2024

Common Stock Retained Earnings

4 unchanged sentences

Net income — — 32,354 — 32,354

Other comprehensive loss — — — ( 465 ) ( 465 )

Other comprehensive income — — — 2,035 2,035

Common stock issued 3,967,500 80,870 — — 80,870

4 unchanged sentences

— — ( 11,979 ) — ( 11,979 )

Balance at June 30, 2024 21,319,583 $ 301,968 $ 90,734 $ ( 12,232 ) $ 380,470

Balance at September 30, 2024 21,319,583 $ 302,251 $ 97,411 $ ( 9,732 ) $ 389,930

Balance at December 31, 2024 21,319,083 $ 302,531 $ 106,464 $ ( 12,371 ) $ 396,624

6 unchanged sentences

— — ( 12,812 ) — ( 12,812 )

Balance at June 30, 2025 21,360,991 $ 303,155 $ 125,545 $ ( 11,958 ) $ 416,742

Balance at September 30, 2025 21,367,387 $ 303,571 $ 137,615 $ ( 9,878 ) $ 431,308

See accompanying notes to unaudited consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands) 2025 2024

14 unchanged sentences

Gross proceeds from sale of loans 3,531 17,572

Gain on equity investment ( 399 ) ( 300 )

Gain on equity investments 845 ( 242 )

Net changes in:

5 unchanged sentences

Maturities, prepayments, and calls of securities available-for-sale 7,574 6,370

Capital call for equity investment ( 1,285 ) ( 1,269 )

Proceeds received from equity investment — 300

Purchases of securities available-for-sale ( 1,030 ) —

Capital call for equity investments ( 1,638 ) ( 2,802 )

Proceeds received from equity investments 283 530

Low income housing tax credits ( 5,381 ) ( 10,559 )

14 unchanged sentences

Cash and cash equivalents at end of period $ 580,447 $ 250,852

Nine Months Ended September 30,

(in thousands) 2025 2024

Supplemental disclosure of cash flow information:

3 unchanged sentences

Transfer from loans held for sale to loans held for investment 1,344 11,464

Unrealized gain (loss) on securities 1,220 ( 660 )

Unrealized gain on securities 4,063 2,889

Operating lease liabilities exchanged for ROUA 2,970 2,225

10 unchanged sentences

The Company’s primary loan products are commercial real estate loans, land development loans, construction loans, and operating lines of credit, and its primary deposit products are checking accounts, savings accounts, money market accounts, and term certificate accounts.

The Bank currently has eight branch offices in Roseville, Natomas, Rancho Cordova, Redding, Elk Grove, Chico, Yuba City, and San Francisco.

The Bank currently has nine branch offices in Roseville, Natomas, Rancho Cordova, Redding, Elk Grove, Chico, Yuba City, San Francisco, and Walnut Creek.

(b) Basis of Financial Statement Presentation and Consolidation

4 unchanged sentences

All significant intercompany transactions and balances are eliminated in consolidation.

The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, 2025.

The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results of operations that may be expected for any other interim period or for the year ending December 31, 2025.

The Company’s accounting and reporting policies conform to GAAP and to general practices within the banking industry.

50 unchanged sentences

ASU 2024-03 is not expected to have a significant impact on the Company’s consolidated financial statements.

(g) Reclassifications

Certain amounts reported in previous consolidated financial statements have been reclassified to conform to current period presentation.

These reclassifications did not affect previously reported amounts of net income, total assets, or total shareholders’ equity.

Fair Value of Assets and Liabilities

13 unchanged sentences

Changes in Fair Value Recorded In

June 30, 2025

September 30, 2025

Securities available-for-sale:

10 unchanged sentences

In addition, values use discounted cash flow models and may include significant management judgment and estimation.

As of June 30, 2025 and December 31, 2024, there were no Level 1 available-for-sale securities and no transfers between Level 1 and Level 2 classifications for assets or liabilities measured at fair value on a recurring basis.

As of September 30, 2025 and December 31, 2024, there were no Level 1 available-for-sale securities and no transfers between Level 1 and Level 2 classifications for assets or liabilities measured at fair value on a recurring basis.

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

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

As of June 30, 2025 and December 31, 2024, the carrying amount of assets measured at fair value on a non-recurring basis was immaterial to the Company.

As of September 30, 2025 and December 31, 2024, the carrying amount of assets measured at fair value on a non-recurring basis was immaterial to the Company.

Disclosures about Fair Value of Financial Instruments

Table 2.2 is a summary of fair value estimates for financial instruments as of June 30, 2025 and December 31, 2024.

Table 2.2 is a summary of fair value estimates for financial instruments as of September 30, 2025 and December 31, 2024.

The carrying amounts in Table 2.2 are recorded in the consolidated balance sheets under the indicated captions.

1 unchanged sentence

Fair Value Estimates for Financial Instruments

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

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

10 unchanged sentences

Subordinated notes 74,004 73,546 Level 3 73,895 73,371 Level 3

The Company used the following methods and assumptions to estimate the fair value of its financial instruments at June 30, 2025 and December 31, 2024:

The Company used the following methods and assumptions to estimate the fair value of its financial instruments at September 30, 2025 and December 31, 2024:

Cash and cash equivalents and time deposits in banks :

1 unchanged sentence

Investment securities :

See discussion above for the methods and assumptions used by the Company to estimate the fair value of investment securities.

Fair value of held-to-maturity securities is estimated by calculating the net present value of future cash flows based on observable market data, such as interest rates and yield curves (observable at commonly quoted intervals) as provided by an independent third party.

See discussion above for the methods and assumptions used by the Company to estimate the fair value of available-for-sale investment securities.

The fair value of held-to-maturity securities is estimated by calculating the net present value of future cash flows based on observable market data, such as interest rates and yield curves (observable at commonly quoted intervals) as provided by an independent third party.

Loans held for sale :

12 unchanged sentences

The Company’s subordinated notes are not registered securities and were issued through private placements, resulting in a Level 3 classification.

The notes are recorded at carrying value.

Other borrowings :

5 unchanged sentences

The Company also invests in residential and commercial mortgage-backed securities, collateralized mortgage obligations issued or guaranteed by GSEs, and corporate bonds, as reflected in Tables 3.1 and 3.2.

A summary of the amortized cost and fair value related to securities held-to-maturity as of June 30, 2025 and December 31, 2024 is presented in Table 3.1.

Securities held-to-maturity, at amortized cost, had a $ 20.0 thousand allowance for credit losses as of June 30, 2025 and December 31, 2024.

A summary of the amortized cost and fair value related to securities held-to-maturity as of September 30, 2025 and December 31, 2024 is presented in Table 3.1.

Securities held-to-maturity, at amortized cost, had a $ 20.0 thousand allowance for credit losses as of September 30, 2025 and December 31, 2024.

Securities Held-to-Maturity

1 unchanged sentence

Gains (Losses)

June 30, 2025

September 30, 2025

Obligations of states and political subdivisions $ 2,190 $ — $ ( 194 ) $ 1,996

9 unchanged sentences

and (v) whether or not such securities have credit enhancements such as guarantees, contain a defeasance clause, or are pre-refunded by the issuers.

As of June 30, 2025 and December 31, 2024, the allowance for credit losses on held-to-maturity securities, at amortized cost, was $ 20.0 thousand.

The Company did not record an allowance for credit losses on available-for-sale securities as of June 30, 2025 or December 31, 2024.

A summary of the amortized cost and fair value related to securities available-for-sale as of June 30, 2025 and December 31, 2024 is presented in Table 3.2.

Securities available-for-sale did not have an allowance for credit losses as of June 30, 2025 or December 31, 2024.

As of September 30, 2025 and December 31, 2024, the allowance for credit losses on held-to-maturity securities, at amortized cost, was $ 20.0 thousand.

The Company did not record an allowance for credit losses on available-for-sale securities as of September 30, 2025 or December 31, 2024.

A summary of the amortized cost and fair value related to securities available-for-sale as of September 30, 2025 and December 31, 2024 is presented in Table 3.2.

Securities available-for-sale did not have an allowance for credit losses as of September 30, 2025 or December 31, 2024.

Securities Available-for-Sale

1 unchanged sentence

Gains (Losses)

June 30, 2025

September 30, 2025

government agency securities $ 7,620 $ 132 $ ( 68 ) $ 7,684

11 unchanged sentences

Total available-for-sale $ 115,757 $ 159 $ ( 17,722 ) $ 98,194

The amortized cost and fair value of investment securities by contractual maturity at June 30, 2025 and December 31, 2024 are shown in Table 3.3.

The amortized cost and fair value of investment securities by contractual maturity at September 30, 2025 and December 31, 2024 are shown in Table 3.3.

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

Contractual Maturities - Investment Securities

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

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

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

10 unchanged sentences

Total $ 2,190 $ 1,996 $ 109,135 $ 95,635 $ 2,720 $ 2,353 $ 115,757 $ 98,194

There were no purchases or sales of investment securities during the three and six months ended June 30, 2025 and June 30, 2024.

During the three and nine months ended September 30, 2025, one investment security was purchased for $ 1.0 million, as compared to no securities purchased during the three and nine months ended September 30, 2024.

There were no sales of investment securities during the three and nine months ended September 30, 2025 or September 30, 2024.

Pledged Investment Securities

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

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

The State of California, securing deposits of public funds and borrowings $ 48,221 $ 49,477

1 unchanged sentence

Total pledged investment securities $ 90,619 $ 95,053

Table 3.5 details the gross unrealized losses and fair values aggregated by investment category and length of time that individual available-for-sale securities have been in a continuous unrealized loss position at June 30, 2025 and December 31, 2024.

Securities Available-for-Sale in Continuous Unrealized Loss Positions

1 unchanged sentence

Fair Value Unrealized Loss Fair Value Unrealized Loss Fair Value Unrealized Loss

June 30, 2025

September 30, 2025

government agency securities $ 4,182 $ ( 17 ) $ 2,091 $ ( 51 ) $ 6,273 $ ( 68 )

13 unchanged sentences

$ 2,316 $ ( 11 ) $ 91,330 $ ( 17,711 ) $ 93,646 $ ( 17,722 )

There were 144 and 147 available-for-sale securities in unrealized loss positions at June 30, 2025 and December 31, 2024, respectively.

As of June 30, 2025, the investment portfolio included 139 investment securities that had been in a continuous loss position for twelve months or more and five investment securities that had been in a loss position for less than twelve months.

There was one held-to-maturity security in a continuous unrealized loss position at both June 30, 2025 and December 31, 2024, which at December 31, 2024 had been in a continuous loss position for more than twelve months.

There were 149 and 147 available-for-sale securities in unrealized loss positions at September 30, 2025 and December 31, 2024, respectively.

As of September 30, 2025, the investment portfolio included 140 investment securities that had been in a continuous loss position for twelve months or more and nine investment securities that had been in a loss position for less than twelve months.

There was one held-to-maturity security in a continuous unrealized loss position at both September 30, 2025 and December 31, 2024, which at December 31, 2024 had been in a continuous loss position for more than twelve months.

Obligations issued or guaranteed by government agencies such as the GNMA and the SBA, or GSEs under conservatorship such as the FNMA and the FHLMC, are guaranteed or sponsored by agencies of the U.S.

7 unchanged sentences

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

The Company held $ 15.0 million of FHLB stock at both June 30, 2025 and December 31, 2024.

The Company held $ 15.0 million of FHLB stock at both September 30, 2025 and December 31, 2024.

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

Based on management’s analysis of the FHLB’s financial condition and certain qualitative factors, management determined that the FHLB stock was not impaired at June 30, 2025 or December 31, 2024.

Based on management’s analysis of the FHLB’s financial condition and certain qualitative factors, management determined that the FHLB stock was not impaired at September 30, 2025 or December 31, 2024.

Equity investments :

The Company is a limited partner in certain venture-backed capital funds.

The Company held $ 14.5 million and $ 10.8 million of equity investments at June 30, 2025 and December 31, 2024, respectively.

The carrying amounts of these investments are reasonable estimates of fair value because the investments reflect the Company's share of earnings and losses of each fund.

The Company held $ 11.6 million and $ 9.3 million of equity investments at September 30, 2025 and December 31, 2024, respectively, included in “Interest receivable and other assets” in the unaudited consolidated balance sheets.

Loans and Allowance for Credit Losses

3 unchanged sentences

Loans Outstanding

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

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

Commercial $ 3,144,303 $ 2,857,173

37 unchanged sentences

Farmland loans are secured by real property and are susceptible to changes in market demand for specific commodities.

This may be exacerbated by, among other things, industry changes, changes in the individual financial capacity of the business owner, general economic conditions, and changes in business cycles, as well as adverse weather conditions.

This may be exacerbated by, among other things, industry changes, changes in the individual financial capacity of the business owner, general economic conditions, changes in business cycles, and adverse weather conditions.

Commercial loans :

40 unchanged sentences

Loans by Risk Category and Vintage

Amortized Cost Basis by Origination Year as of June 30, 2025

Amortized Cost Basis by Origination Year as of September 30, 2025

(in thousands) 2025 2024 2023 2022 2021 Prior Revolving Loans Revolving Converted to Term Total

15 unchanged sentences

Pass 15,961 1,446 2,019 6,138 8,239 23,732 — — 57,535

Watch — — — — — 594 — — 594

Total 15,961 1,446 2,019 6,138 8,239 23,732 — — 57,535

58 unchanged sentences

30-59 Days 60-89 Days Greater Than 90 Days Total Past Due Current Total Loans Receivable

June 30, 2025

September 30, 2025

Commercial $ — $ — $ — $ — $ 3,141,402 $ 3,141,402

19 unchanged sentences

Total $ 1,174 $ — $ — $ 1,174 $ 3,531,512 $ 3,532,686

There were no loans greater than 90 days past due and still accruing interest income as of June 30, 2025 or December 31, 2024.

One collateral dependent loan was in process of foreclosure at June 30, 2025:

a commercial real estate loan in the amount of $ 0.8 million rated substandard.

No collateral dependent loans were in process of foreclosure at December 31, 2024.

The Company had one collateral dependent commercial real estate loan outstanding as of June 30, 2025 and December 31, 2024 in the amount of $ 1.7 million and $ 1.8 million, respectively, for which the applicable borrower was experiencing financial difficulty.

Non-accrual loans, segregated by class, as of June 30, 2025 and December 31, 2024 are shown in Table 4.4.

There were no loans greater than 90 days past due and still accruing interest income as of September 30, 2025 or December 31, 2024.

No collateral dependent loans were in process of foreclosure at September 30, 2025 or December 31, 2024.

The Company had one collateral dependent commercial real estate loan outstanding as of September 30, 2025 and December 31, 2024 in the amount of $ 1.6 million and $ 1.8 million, respectively, for which the applicable borrower was experiencing financial difficulty.

Non-accrual loans, segregated by class, as of September 30, 2025 and December 31, 2024 are shown in Table 4.4.

Non-accrual Loans

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

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

Commercial $ 1,873 $ 1,750

1 unchanged sentence

Total non-accrual loans $ 2,129 $ 1,798

No interest income was recognized on non-accrual loans in the three and six months ended June 30, 2025 or June 30, 2024.

Non-accrual real estate loans did not have an allowance for credit losses as of June 30, 2025.

No interest income was recognized on non-accrual loans in the three and nine months ended September 30, 2025 or September 30, 2024.

Non-accrual real estate loans did not have an allowance for credit losses as of September 30, 2025.

Interest income can be recognized on non-accrual loans in cases where resolution occurs through a sale or full payment is received on the non-accrual loan.

The amount of foregone interest income related to non-accrual loans was $ 35.6 thousand and $ 70.9 thousand for the three and six months ended June 30, 2025, respectively, as compared to $ 38.2 thousand and $ 77.4 thousand for the three and six months ended June 30, 2024, respectively.

The amount of foregone interest income related to non-accrual loans was $ 42.5 thousand and $ 112.6 thousand for the three and nine months ended September 30, 2025, respectively, as compared to $ 37.8 thousand and $ 115.2 thousand for the three and nine months ended September 30, 2024, respectively.

Allowance for Credit Losses

2 unchanged sentences

(in thousands) Beginning Balance Charge-offs Recoveries Provision (Benefit) Ending Balance

Three months ended June 30, 2025

Three months ended September 30, 2025

Commercial $ 27,792 $ ( 280 ) $ — $ ( 4,039 ) $ 23,473

10 unchanged sentences

(in thousands) Beginning Balance Charge-offs Recoveries Provision (Benefit) Ending Balance

Three months ended June 30, 2024

Three months ended September 30, 2024

Commercial $ 24,708 $ — $ — $ 1,509 $ 26,217

8 unchanged sentences

Total $ 35,406 $ ( 901 ) $ 128 $ 2,950 $ 37,583

Six months ended June 30, 2025

Nine months ended September 30, 2025

Commercial $ 25,864 $ ( 280 ) $ — $ ( 2,111 ) $ 23,473

8 unchanged sentences

Total $ 37,791 $ ( 3,305 ) $ 525 $ 7,050 $ 42,061

Six months ended June 30, 2024

Nine months ended September 30, 2024

Commercial $ 29,015 $ — $ — $ ( 2,798 ) $ 26,217

12 unchanged sentences

Unfunded Loan Commitment Reserves

Three months ended Six months ended

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

Three months ended Nine months ended

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

Balance at beginning of period $ 597 $ 1,147 $ 747 $ 1,247

3 unchanged sentences

Pledged Loans

The Company’s FHLB line of credit is secured under terms of a collateral agreement by a pledge of certain qualifying loans with unpaid principal balances of $ 1.9 billion at June 30, 2025 and December 31, 2024.

In addition, the Company pledges eligible tenants in common loans, which totaled $ 1.3 billion and $ 1.2 billion at June 30, 2025 and December 31, 2024, to secure its borrowing capacity with the Federal Reserve Discount Window.

The Company’s FHLB line of credit is secured under terms of a collateral agreement by a pledge of certain qualifying loans with unpaid principal balances of $ 2.1 billion and $ 1.9 billion at September 30, 2025 and December 31, 2024, respectively.

In addition, the Company pledges eligible tenants in common loans, which totaled $ 1.3 billion and $ 1.2 billion at September 30, 2025 and December 31, 2024, respectively, to secure its borrowing capacity with the Federal Reserve Discount Window.

See Note 6, Subordinated Notes and Other Borrowings, for further discussion of these borrowings.

Interest-Bearing Deposits

Table 5.1 shows the composition of interest-bearing deposits as of June 30, 2025 and December 31, 2024.

Table 5.1 shows the composition of interest-bearing deposits as of September 30, 2025 and December 31, 2024.

Interest-Bearing Deposits

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

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

Interest-bearing transaction accounts $ 309,118 $ 315,217

5 unchanged sentences

Total interest-bearing deposits $ 3,044,356 $ 2,635,365

Time deposits totaled $ 772.1 million and $ 670.2 million as of June 30, 2025 and December 31, 2024, respectively.

Scheduled maturities of time deposits as of June 30, 2025 for the next five years are shown in Table 5.2.

Time deposits totaled $ 625.6 million and $ 670.2 million as of September 30, 2025 and December 31, 2024, respectively.

Scheduled maturities of time deposits as of September 30, 2025 for the next five years are shown in Table 5.2.

Scheduled Maturities of Time Deposits

6 unchanged sentences

The Company considers the reciprocal deposits to be in-market deposits, as distinguished from traditional out-of-market brokered deposits.

There were no one-way deposits at June 30, 2025 or December 31, 2024.

The composition of network deposits as of June 30, 2025 and December 31, 2024 is shown in Table 5.3.

There were no one-way deposits at September 30, 2025 or December 31, 2024.

The composition of network deposits as of September 30, 2025 and December 31, 2024 is shown in Table 5.3.

Network Deposits

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

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

CDARS $ 22,129 $ 19,292

1 unchanged sentence

Total network deposits $ 925,483 $ 693,745

Table 5.4 presents interest expense recognized on interest-bearing deposits for the periods ended June 30, 2025 and 2024.

Table 5.4 presents interest expense recognized on interest-bearing deposits for the periods ended September 30, 2025 and 2024.

Interest Expense Recognized on Interest-Bearing Deposits

Three months ended Six months ended

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

Three months ended Nine months ended

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

Interest-bearing transaction accounts $ 1,194 $ 1,237 $ 3,350 $ 3,467

10 unchanged sentences

The subordinated notes have a maturity date of September 1, 2032 and bear interest, payable semi-annually, at the rate of 6.00 % per annum until September 1, 2027.

On that date, the interest rate will be adjusted to float at a rate equal to the three-month Term SOFR plus 329.0 basis points ( 7.50 % as of June 30, 2025) until maturity.

On that date, the interest rate will be adjusted to float at a rate equal to the three-month Term SOFR plus 329.0 basis points ( 7.61 % as of September 30, 2025) until maturity.

The notes include a right of prepayment, on or after August 17, 2027 or, in certain limited circumstances, before that date.

2 unchanged sentences

Eligible amounts will be phased out by 20% per year beginning five years before the maturity date of the notes.

Debt issuance costs incurred in conjunction with the notes were $ 1.5 million, of which $ 0.4 million has been amortized as of June 30, 2025.

Debt issuance costs incurred in conjunction with the notes were $ 1.5 million, of which $ 0.5 million has been amortized as of September 30, 2025.

The Company reflects debt issuance costs as a direct deduction from the face of the note.

The debt issuance costs are amortized into interest expense through the maturity period.

At June 30, 2025 and December 31, 2024, the carrying value of the Company’s subordinated notes outstanding was $ 74.0 million and $ 73.9 million, respectively.

At September 30, 2025 and December 31, 2024, the carrying value of the Company’s subordinated notes outstanding was $ 74.0 million and $ 73.9 million, respectively.

Other borrowings :

The Company entered into an agreement with the FHLB which granted the FHLB a blanket lien on certain loans receivable as collateral for a borrowing line.

The Company’s total financing availability is based on the dollar volume of qualifying loan collateral.

The Company’s total financing availability is based on the dollar

volume of qualifying loan collateral.

The Company’s total financing availability with the FHLB is decreased by outstanding borrowings and letters of credit (“LCs”) issued on behalf of the Company, as shown in Table 6.1.

Financing Availability with the FHLB

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

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

Total financing ability from the FHLB $ 1,420,987 $ 1,212,209

4 unchanged sentences

Available borrowing capacity with the FHLB $ 658,487 $ 510,709

As of June 30, 2025 and December 31, 2024, the Company had the ability to borrow from the Federal Reserve Discount Window.

The borrowings were available at an interest rate of 4.50 % as of June 30, 2025.

At June 30, 2025 and December 31, 2024, the borrowing capacity under this arrangement was $ 926.6 million and $ 862.1 million, respectively.

There were no amounts outstanding at June 30, 2025 or December 31, 2024.

As of September 30, 2025 and December 31, 2024, the Company had the ability to borrow from the Federal Reserve Discount Window.

The borrowings were available at an interest rate of 4.25 % as of September 30, 2025.

At September 30, 2025 and December 31, 2024, the borrowing capacity under this arrangement was $ 918.4 million and $ 862.1 million, respectively.

There were no amounts outstanding at September 30, 2025 or December 31, 2024.

The borrowing line is secured by certain liens on the Company’s loans and certain available-for-sale securities.

At June 30, 2025 the Company had five unsecured federal funds lines of credit totaling $ 185.0 million with five of its correspondent banks.

At September 30, 2025 the Company had five unsecured federal funds lines of credit totaling $ 185.0 million with five of its correspondent banks.

At December 31, 2024, the Company had five unsecured federal funds lines of credit totaling $ 175.0 million with five of its correspondent banks.

The borrowings were available at interest rates ranging from 4.50 % to 5.70 % as of June 30, 2025.

There were no amounts outstanding at June 30, 2025 or December 31, 2024.

The borrowings were available at interest rates ranging from 4.25 % to 5.45 % as of September 30, 2025.

There were no amounts outstanding at September 30, 2025 or December 31, 2024.

Shareholders’ Equity

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However, under the two-class method, the difference in EPS is not significant for these participating securities.

Three months ended Six months ended

(in thousands, except share count and earnings per common share) June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024

Three months ended Nine months ended

(in thousands, except share count and earnings per common share) September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024

Net income $ 16,344 $ 10,941 $ 43,963 $ 32,354

5 unchanged sentences

Diluted EPS $ 0.77 $ 0.52 $ 2.07 $ 1.63

The Company did not have any anti-dilutive shares at June 30, 2025 or June 30, 2024.

The Company did not have any anti-dilutive shares at September 30, 2025 or September 30, 2024.

(b) Dividends

The board of directors declared on April 17, 2025, and the Company subsequently paid, a cash dividend of $ 0.20 per share, totaling $ 4.3 million.

The board of directors declared on July 17, 2025, and the Company subsequently paid, a cash dividend of $ 0.20 per share, totaling $ 4.3 million.

The Company’s stock-based compensation consists of RSAs granted under its historical stock-based incentive arrangement (the “Historical Incentive Plan”) and RSAs issued under the Five Star Bancorp 2021 Equity Incentive Plan (the “Equity Incentive Plan”).

The Company’s stock-based compensation consists of RSAs granted under its historical stock-based incentive arrangement (the “Historical Incentive Plan”) and RSAs and performance stock awards (“PSUs”) issued under the Five Star Bancorp 2021 Equity Incentive Plan (the “Equity Incentive Plan”).

The Historical Incentive Plan consisted of RSAs for certain executive officers of the Company.

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The RSAs are considered fixed awards, as the number of shares and fair value are known at the date of grant and the fair value at the grant date is amortized over the service period.

The Company recognized $ 0.4 million and $ 0.3 million of non-cash stock compensation expense for the three months ended June 30, 2025 and June 30, 2024, respectively.

The Company recognized $ 0.6 million of non-cash stock compensation expense for both the six months ended June 30, 2025 and June 30, 2024, respectively.

As of June 30, 2025, there was approximately $ 2.9 million of unrecognized compensation expense related to the 129,448 unvested restricted shares.

Beginning in 2025, the Company granted PSUs under the Equity Incentive Plan to certain executives.

Performance is measured over a three-year period and cliff vested.

Based on the achievement of the pre-established goals, actual payouts can range from 0 % to 150 % of the target award.

As such, the PSUs are considered variable awards, as the number of shares and fair value are not known at the date of grant.

An estimate is made of the number of shares expected to vest based on the probability that the performance criteria will be achieved to determine the amount of compensation expense to be recognized.

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

The estimate of the number of shares expected to vest is also used to accrue for dividends to be paid at the end of the vesting period.

The Company recognized $ 0.4 million and $ 0.3 million of non-cash stock compensation expense for the three months ended September 30, 2025 and September 30, 2024, respectively.

The Company recognized $ 1.0 million and $ 0.9 million of non-cash stock compensation expense for the nine months ended September 30, 2025 and September 30, 2024, respectively.

As of September 30, 2025, there was approximately $ 2.5 million of unrecognized compensation expense related to the 135,844 unvested RSAs.

The holders of unvested RSAs are entitled to dividends at the same per-share ratio as holders of common stock.

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

Such tax benefits and related expense are expected to be recognized over the weighted average term remaining on the unvested restricted shares of 2.99 years as of June 30, 2025.

The impact of tax benefits for dividends paid on unvested restricted stock on the Company’s unaudited consolidated statements of income for the three and six months ended June 30, 2025 and June 30, 2024 was immaterial.

Such tax benefits and related expense are expected to be recognized over the weighted average term remaining on the unvested RSAs of 2.85 years as of September 30, 2025.

The impact of tax benefits for dividends paid on unvested RSAs on the Company’s unaudited consolidated statements of income for the three and nine months ended September 30, 2025 and September 30, 2024 was immaterial.

Table 7.2 summarizes activity related to restricted shares for the periods indicated.

Unvested Restricted Share Activity

For the three months ended June 30,

For the six months ended June 30,

For the three months ended September 30,

For the nine months ended September 30,

2025 2024 2025 2024

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Some financial instruments, such as loan commitments, credit lines, letters of credit, and overdraft protection, are issued to meet customer financing needs.

These are agreements to provide credit or to support the credit of others, as long as

conditions established in the contract are met, and usually have expiration dates.

These are agreements to provide credit or to support the credit of others, as long as conditions established in the contract are met, and usually have expiration dates.

Commitments may expire without being used.

4 unchanged sentences

Unfunded Loan Commitments and Standby Letters of Credit

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

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

Commercial lines of credit $ 259,629 $ 230,063

3 unchanged sentences

Undisbursed residential real estate loans 6,838 7,225

Undisbursed agricultural real estate loans 2 —

Other 1,800 1,973

1 unchanged sentence

The Company records an allowance for credit losses on unfunded loan commitments at the consolidated balance sheet date based on estimates of the probability that these commitments will be drawn upon according to historical utilization experience of the different types of commitments and historical loss rates determined for pooled funded loans.

The allowance for credit losses on unfunded commitments totaled $ 0.6 million as of June 30, 2025 and $ 0.7 million as of December 31, 2024, which is recorded in “Interest payable and other liabilities” in the unaudited consolidated balance sheets.

The allowance for credit losses on unfunded commitments totaled $ 0.6 million as of September 30, 2025 and $ 0.7 million as of December 31, 2024, which is recorded in “Interest payable and other liabilities” in the unaudited consolidated balance sheets.

Concentrations of credit risk :

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Although the Company has a diversified loan portfolio, a substantial portion is secured by commercial and residential real estate.

In management’s judgment, a concentration of loans exists in real estate related loans, which represented approximately 86.97 % of the Company’s loan portfolio at June 30, 2025 and 86.41 % of the Company’s loan portfolio at December 31, 2024.

In management’s judgment, a concentration of loans exists in real estate related loans, which represented approximately 86.94 % of the Company’s loan portfolio at September 30, 2025 and 86.41 % of the Company’s loan portfolio at December 31, 2024.

Although management believes such concentrations have no more than the normal risk of collectability, a substantial decline in the economy in general, or a decline in real estate values in the Company’s primary market areas in particular, could have an adverse impact on the collectability of these loans.

1 unchanged sentence

Deposit concentrations :

At June 30, 2025, the Company had 105 deposit relationships that exceeded $ 5.0 million each, totaling $ 2.3 billion, or approximately 59.91 % of total deposits.

The Company’s largest single deposit relationship at June 30, 2025 totaled $ 366.4 million, or approximately 9.41 % of total deposits.

At September 30, 2025, the Company had 120 deposit relationships that exceeded $ 5.0 million each, totaling $ 2.5 billion, or approximately 60.14 % of total deposits.

The Company’s largest single deposit relationship at September 30, 2025 totaled $ 290.0 million, or approximately 7.07 % of total deposits.

Management maintains the Company’s liquidity position and lines of credit with correspondent banks to mitigate the risk of large withdrawals by this group of large depositors.

4 unchanged sentences

The Company maintains funds on deposit with other FDIC-insured financial institutions under correspondent banking agreements.

Uninsured deposits through these agreements totaled approximately $ 47.9 million and $ 29.2 million at June 30, 2025 and December 31, 2024, respectively.

Uninsured deposits through these agreements totaled approximately $ 38.5 million and $ 29.2 million at September 30, 2025 and December 31, 2024, respectively.

Equity investments :

The Company has committed to and is invested in a limited number of venture funds.

As of June 30, 2025 and December 31, 2024, the estimated remaining commitment for these funds totaled $ 14.5 million and $ 10.8 million, respectively.

The Company is a limited partner and has committed to and is invested in a limited number of venture-backed capital funds.

As of September 30, 2025 and December 31, 2024, the balance of these investments totaled approximately $ 11.6 million and $ 9.3 million, respectively.

As of September 30, 2025 and December 31, 2024, the estimated remaining commitment for these funds totaled $ 14.2 million and $ 10.8 million, respectively.

Litigation Matters

2 unchanged sentences

Subsequent Events

On July 4, 2025, the President signed H.R.

1, the “One Big Beautiful Bill 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.

These changes were not reflected in the income tax provision for the period ended June 30, 2025, as enactment occurred after the balance sheet date.

The Company is currently evaluating the impact on future periods.

On July 17, 2025, the board of directors of the Company declared a cash dividend of $ 0.20 per common share, which the Company expects to pay on August 11, 2025 to shareholders of record as of August 4, 2025.

On October 16, 2025, the board of directors of the Company declared a cash dividend of $ 0.20 per common share, which the Company expects to pay on November 10, 2025 to shareholders of record as of November 3, 2025.

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

What changed 10-Q

Item 1. Financial Statements