What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-02-28 · 187 added, 159 removed, 782 unchanged (31% of the section changed)

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Headquartered in the greater Sacramento metropolitan area of California, Five Star Bancorp (“Bancorp” or the “Company”) is a bank holding company that operates through its wholly owned subsidiary, Five Star Bank, a California state-chartered non-member bank.

We provide a broad range of banking products and services to small and medium-sized businesses, professionals, and individuals primarily in Northern California through eight branch offices.

We provide a broad range of banking products and services to small and medium-sized businesses, professionals, and individuals primarily in Northern California through nine branch offices.

Our mission is to strive to become the top business bank in all markets we serve through exceptional service, deep connectivity, and customer empathy.

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The Federal Open Market Committee (“FOMC”) then increased the target range eleven times throughout 2022 and 2023.

During 2024, the Federal Reserve decreased the federal funds rate three times.

As of December 31, 2024, the target range for the federal funds rate had been decreased to 4.25% to 4.50%, and the FOMC signaled that current economic data and the interest rate environment are more balanced, projecting two decreases in 2025, as part of a strategy to return inflation to normalized levels.

During 2024 and 2025, the Federal Reserve decreased the federal funds rate three times each year.

As of December 31, 2025, the target range for the federal funds rate had been decreased to 3.50% to 3.75%, and the FOMC projects one additional decrease in 2026, as part of a strategy to return inflation to normalized levels while keeping unemployment low.

We anticipate that interest rates may be lowered over the next few years.

Based on our liability sensitivity, a steepened yield curve could have a beneficial impact on our net interest income.

Additionally, a continued flat yield curve would be expected to maintain our net interest income.

Based on our sensitivity analysis, a steepened yield curve could have a slight negative impact on our net interest income over the next year.

Additionally, a continued flat yield curve would be expected to maintain our net interest income over the next year.

Factors Affecting Comparability of Financial Results

S Corporation Status

Beginning at our inception, we elected to be taxed for U.S.

federal income tax purposes as an S Corporation.

In conjunction with our IPO, we filed consents from the requisite amount of our shareholders to revoke our S Corporation election with the IRS, resulting in the commencement of our taxation as a C Corporation for U.S.

federal and California state income tax purposes in the second quarter of fiscal year 2021.

Prior to such revocation, our earnings were not subject to and we did not pay U.S.

federal income tax, and we were not required to make any provision or recognize any liability for U.S.

federal income tax in our consolidated financial statements.

While we were not subject to and did not pay U.S.

federal income tax, we were subject to and paid California S Corporation income tax at a current rate of 3.50%.

Upon the termination of our status as an S Corporation, we commenced paying U.S.

federal income tax and a higher California state income tax on our

taxable earnings for each year (including the short year beginning on the date our status as an S Corporation terminated), and our consolidated financial statements reflect a provision for U.S.

federal income tax and a higher California state income tax from that date forward.

As a result of this change, the net income and EPS data presented in our historical financial statements for periods prior to the termination of our S Corporation status and the other related financial information set forth in this filing, which (unless otherwise specified) do not include any provision for U.S.

federal income tax or the higher California state income tax rate, will not be comparable with our net income and EPS in periods after we commenced being taxed as a C Corporation.

As a C Corporation, our net income is calculated by including a provision for U.S.

federal income tax and a higher state income tax rate at a combined statutory rate of 29.11%.

The termination of our status as an S Corporation may also affect our financial condition and cash flows.

Historically, we made quarterly cash distributions to our shareholders in amounts estimated by us to be sufficient for them to pay estimated individual U.S.

federal and California state income tax liabilities resulting from our taxable income that was “passed through” to them.

However, these distributions were not consistent, as sometimes the distributions were less than or in excess of the shareholders’ estimated U.S.

federal and California state income tax liabilities resulting from their ownership of our stock.

In addition, these estimates were based on individual income tax rates, which may differ from the rates imposed on the income of C Corporations.

As a C Corporation, no income is “passed through” to any shareholders, but, as noted above, we commenced paying U.S.

federal income tax and a higher California state income tax.

However, in the event of an adjustment to our reported taxable income for periods prior to the termination of our S Corporation status, it is possible that our pre-IPO shareholders would be liable for additional income taxes for those prior periods.

Pursuant to the Tax Sharing Agreement we entered into with such shareholders, upon our filing any tax return (amended or otherwise), in the event of any restatement of our taxable income or pursuant to a determination by, or a settlement with, a taxing authority, for any period during which we were an S Corporation, depending on the nature of the adjustment, we may be required to make a payment to such shareholders, who accepted distribution of the estimated balance of our federal AAA of $31.9 million under the Tax Sharing Agreement, in an amount equal to such shareholders’ incremental tax liability (including interest and penalties).

In addition, the Tax Sharing Agreement provides that we will indemnify such shareholders with respect to unpaid income tax liabilities (including interest and penalties) to the extent that such unpaid income tax liabilities are attributable to an adjustment to our taxable income for any period after our S Corporation status terminated.

The amounts that we have historically distributed to our shareholders may not be indicative of the amount of U.S.

federal and California state income tax that we will be required to pay going forward.

Depending on our effective tax rate and our future dividend rate, our future cash flows and financial condition could be positively or adversely affected compared to our historical cash flows and financial condition.

Furthermore, deferred tax assets and liabilities were recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of our existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of the change in tax rates resulting from becoming a C Corporation was recognized in net income in the year ended December 31, 2021.

Allowance for Credit Losses ( “ ACL ” )

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Under the CECL model, the calculated allowance for credit losses was $5.3 million higher on January 1, 2023 than the allowance under the incurred loss model.

For further information, please see Note 2, Recently Issued Accounting Standards, in the notes to our audited consolidated financial statements included in this Annual Report on Form 10-K.

For further information, please see Note 2, Recently

Issued Accounting Standards, in the notes to our audited consolidated financial statements included in this Annual Report on Form 10-K.

Critical Accounting Estimates

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We have identified certain policies and estimates as critical to our business operations and the understanding of our past or present consolidated financial condition and results of operations.

These policies and estimates are considered critical because they have a material impact, or they have the potential to have a

material impact, on our consolidated financial statements and because they require us to make significant judgments, assumptions, or estimates.

These policies and estimates are considered critical because they have a material impact, or they have the potential to have a material impact, on our consolidated financial statements and because they require us to make significant judgments, assumptions, or estimates.

We believe that the judgments, estimates, and assumptions used in the preparation of our financial statements are reasonable and appropriate, based on the information available at the time they were made.

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We have elected not to opt out of the extended transition period, which means that when a standard is issued or revised and it has different application dates for public and private companies, we may adopt the standard on the application date for private companies.

However, we may early adopt certain accounting standards, as the JOBS Act does not preclude an emerging growth company from adopting a new or revised accounting standard earlier than the time that such standard applies to private companies to the extent early adoption is permitted.

We have elected to take advantage of the scaled disclosures and other relief under the JOBS Act, and we may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us under the JOBS Act, so long as we qualify as an emerging growth company.

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Pools are determined based primarily on regulatory reporting codes as the loans and investment securities within each pool share similar risk characteristics and there is sufficient historical peer loss data from the FFIEC to provide statistically meaningful support in the models developed.

Reserves for credit losses identified on a pooled basis are then adjusted for qualitative and other environmental factors to reflect current conditions.

The most significant components of qualitative and environmental factors used to estimate the allowance for credit losses are adjustments relating to prevailing economic conditions, concentrations within the loan portfolio, and external factors.

Reserves for credit losses identified on a pooled basis are then adjusted for qualitative factors to reflect current conditions.

The most significant components of qualitative factors used to estimate the allowance for credit losses are adjustments relating to prevailing economic conditions, concentrations within the loan portfolio, and external factors.

These qualitative factors are subject to significant judgment and carry a higher degree of uncertainty.

The prevailing economic conditions factor is estimated based on a range of potential economic conditions and is applied at both the portfolio and individual concentration level based on various factors.

This estimate is subject to significant judgment and could potentially add $2.4 million based on existing loan balances, if not more, to the allowance for credit losses while using severely adverse economic conditions in the estimate.

This estimate is subject to significant judgment and could potentially add $3.2 million based on existing loan balances to the allowance for credit losses while using severely adverse economic conditions in the estimate.

The concentrations within the loan portfolio factor is estimated based on concentrations at the loan pool level.

This estimate is subject to significant judgment and could potentially add $9.4 million based on existing loan balances, if not more, to the allowance for credit losses while using a severely adverse market outlook for the specifically identified concentrations.

This estimate is subject to significant judgment and could potentially add $12.0 million based on existing loan balances to the allowance for credit losses while using a severely adverse market outlook for the specifically identified concentrations.

The external factor is estimated based on current external factors, such as environmental factors, which could impact the loan portfolio.

This estimate is subject to significant judgment and could potentially add $6.9 million based on existing loan balances, if not more, to the allowance for credit losses while using severely adverse external factors in the estimate.

During the twelve months ended December 31, 2024, we refined our methodology of measuring the ACL on three pools of loans:

Multifamily, C&I SBA, and CRE Non-Owner Occupied loans.

Within the Multifamily pool, Manufactured Home Community (“MHC”) loans were segregated from traditional Multifamily as we identified a data source to provide sufficient historical peer loss data specific to MHC loans.

This segregation now adjusts for differences in the risk characteristics and performance of MHCs compared to traditional Multifamily properties.

Losses are estimated using a discounted cash flow analysis using individual probability of default and loss given default rates on a loan-by-loan basis.

Applying this adjusted loss rate led to a decrease in the ACL for the MHC pool as of June 30, 2024 of approximately $5.8 million.

During routine monitoring of charge-off activity within the C&I SBA pool, we identified an increased level of charge-offs during the first six months of 2024, reflecting a change in the credit quality of the pool.

In response to this, we increased the expected loss rates to be more in line with net charge-off rates during the first six months of 2024, as this time period reflects what is expected based on our current economic outlook for loans in the C&I SBA pool.

This adjustment reflects our estimate for future loss rates and increased the required reserves related to the C&I SBA pool by approximately

$4.6 million as of June 30, 2024.

Within the CRE Non-Owner Occupied portfolio, RV Park loans were segregated from traditional CRE Non-Owner Occupied as we identified a data source to provide sufficient historical peer loss data specific to RV Park loans.

This segregation now adjusts for differences in the risk characteristics and performance of RV Park loans compared to traditional CRE Non-Owner Occupied properties.

We used calculations of individual probability of default and loss given default on a loan-by-loan basis to derive an estimated loss rate.

Applying this adjusted loss rate led to a decrease in the ACL for the RV Park pool of approximately $3.3 million as of September 30, 2024.

This estimate is subject to significant judgment and could potentially add $9.5 million based on existing loan balances to the allowance for credit losses while using severely adverse external factors in the estimate.

Other qualitative factors within

the ACL relate to items which carry a lower degree of judgment using internally generated data.

These factors include, but are not limited to, policy exception rates, volume of loan growth, and results of internal and external audits.

Executive Summary

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In leveraging our core competencies, we intend to:

• continue our organic lending growth in our market through our “purpose-driven and integrity-centered” approach to banking;

• continue to focus on and grow each of the diverse industry clusters throughout our market areas;

• continue our organic growth in our market through our “purpose-driven and integrity-centered” approach to banking;

• continue to focus on and expand our operations in our unique lines of business throughout our geographic service areas;

• build upon the strength of our brand to deepen and broaden client relationships and grow our deposit base;

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Changes in market interest rates and competition in our market typically have the largest impact on periodic changes in our net interest margin.

Net interest income increased by $8.8 million, or 7.96%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, while our net interest margin decreased 10 basis points during the same period.

The increase in net interest income was primarily due to an increase in interest income driven by higher average balances and yields on loans, partially offset by an increase in interest expense due to higher average balances and rates on deposits.

Net interest income increased by $32.2 million, or 26.89%, for the year ended December 31, 2025, compared to the year ended December 31, 2024, while our net interest margin increased 23 basis points during the same period.

Additional detail relating to net interest margin in each period is provided below.

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Changes in net interest income/margin $ 19,182 $ 13,012 $ 32,194

Net interest income during the year ended December 31, 2024 increased $8.8 million, or 7.96%, to $119.7 million compared to $110.9 million during the year ended December 31, 2023.

Net interest margin totaled 3.32% for the year ended December 31, 2024, a decrease of 10 basis points compared to the prior year.

Net interest income during the year ended December 31, 2025 increased $32.2 million, or 26.89%, to $151.9 million, as compared to $119.7 million during the year ended December 31, 2024.

Net interest margin totaled 3.55% for the year ended December 31, 2025, an increase of 23 basis points compared to the prior year.

The increase in net interest income is primarily attributable to an additional $35.9 million in loan interest income due to a $483.3 million, or 14.72% increase in the average balance of loans and a 19 basis point improvement in the average yield on loans as compared to the prior year.

The increase in interest income was partially offset by an additional $24.5 million in deposit interest expense due to a $293.4 million, or 10.00%, increase in the average balance of deposits and a 58 basis point increase in the average cost of deposits compared to the prior year.

The increase in interest income was partially offset by an additional $10.0 million in deposit interest expense due to a $627.4 million, or 19.45% increase in the average balance of deposits during the year.

The average cost of deposits was 2.40% for the year ended December 31, 2025, a decrease of 16 basis points compared to the prior year which helped to moderate the increase in interest expense related to deposits.

Provision for Credit Losses

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We recorded a $9.7 million provision for credit losses in the year ended December 31, 2025 compared to a $7.0 million provision for credit losses for the year ended December 31, 2024.

The provision for credit losses increased $3.0 million, or 73.75%, primarily due to loan growth as loan originations in the year ended December 31, 2024 were almost double those for the year ended December 31, 2023.

The provision for credit losses increased $2.8 million, or 39.57%, primarily due to increases in loan growth and an overall increase in loss rates related to the annual CECL model refresh during the three months ended December 31, 2025, as compared to the prior year.

Non-interest Income

Non-interest income is a secondary contributor to our net income, following interest income.

Non-interest income consists of service charges on deposit accounts, net gain on sale of securities, gain on sale of loans, loan-related fees, FHLB stock dividends, earnings on BOLI, and other income.

Non-interest income consists of service charges on deposit accounts, gain on sale of loans, loan-related fees, FHLB stock dividends, earnings on BOLI, and other income.

Table 5 details the components of non-interest income for the periods indicated.

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Service charges on deposit accounts $ 755 $ 721 $ 34 4.72 %

Net gain (loss) on sale of securities

— (167) 167 (100.00) %

Gain on sale of loans 244 1,274 (1,030) (80.85) %

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Total non-interest income $ 6,535 $ 6,453 $ 82 1.27 %

Service charges on deposit accounts.

The increase resulted primarily from a $0.2 million increase in wire transfer fees recognized, partially offset by a small decrease in other fees recognized during the year ended December 31, 2024 compared to the year ended December 31, 2023.

Net gain (loss) on sale of securities.

The decrease in the net loss on sale of securities resulted from the sale of two municipal securities with a par value of approximately $0.8 million for a loss of approximately $0.2 million during the year ended December 31, 2023, with no sales occurring during the year ended December 31, 2024.

Gain on sale of loans.

The decrease related primarily to an overall decline in the volume of loans sold during the year ended December 31, 2024 compared to the year ended December 31, 2023.

During the year ended December 31, 2024, 56 SBA 7(a) loans with government guaranteed portions totaling approximately $18.3 million were sold with an effective yield of 6.96%, as compared to approximately $36.5 million of loans sold with an effective yield of 5.35% during the year ended December 31, 2023.

The decrease related primarily to an overall decline in the volume of loans sold due to a strategic, intentional reduction in originations of loans held for sale during the second half of the year ended December 31, 2025.

During the year ended December 31, 2025, approximately $3.3 million of loans were sold with an effective yield of 7.41%, as compared to approximately $18.3 million of loans sold with an effective yield of 6.96% during the year ended December 31, 2024.

Loan-related fees.

The decrease was primarily a result of a $0.2 million net decrease in income earned from the credit card program, partially offset by a small increase in loan fee income earned on various loan types and services.

FHLB stock dividends .

The increase primarily relates to a 50 basis point increase in the annualized dividend rate earned year-over-year, while the average shares outstanding remained consistent.

The increase was primarily a result of a $0.5 million increase in fees from swap referrals and a $0.2 million increase in income from credit card activity, partially offset by a $0.1 million decrease in fees from SBA 7(a) loans.

Earnings on BOLI .

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Other income .

The decrease resulted primarily from $0.5 million in income received on equity investments in venture-backed funds during the year ended December 31, 2024, as compared to $1.7 million in income received on equity investments in venture-backed funds during the year ended December 31, 2023.

The increase related primarily to an overall improvement in earnings related to equity investments in venture-backed funds during the year ended December 31, 2025 compared to the year ended December 31, 2024.

Non-interest Expense

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We constantly seek to identify ways to streamline our business and operate more efficiently in order to reduce our non-interest expense over time as a percentage of our revenue, while continuing to achieve growth in total loans and assets.

Over the past several years, we have invested significant resources in personnel, technology, and infrastructure.

As we execute initiatives based on growth, we expect non-interest expense to grow.

Over the past several years, we have continued to invest significant resources in personnel, technology, and infrastructure.

As we execute initiatives based on growth, we expect non-interest expense to continue to grow.

Non-interest expense has increased throughout the periods presented below;

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The increase was the result of:

(i) a $3.5 million increase in salaries, benefits, and bonuses, of which approximately $3.3 million related to employees hired to support expansion into the San Francisco Bay Area;

and (ii) a $1.4 million increase in commissions paid, primarily to employees in the San Francisco Bay Area.

The increase was partially offset by a $0.3 million increase in loan origination costs due to higher loan production, net of purchased consumer loans, period-over-period.

(i) a $6.5 million increase in salaries, benefits, and bonus expense, related to the 13.66% increase in employee headcount between December 31, 2024 and December 31, 2025;

and (ii) a $1.2 million increase in commissions expense due to higher loan production.

The increase was partially offset by a $1.5 million increase in deferred loan origination costs due to higher loan production period-over-period.

Occupancy and equipment .

The increase related to rent expense for the San Francisco branch office and a new office lease to support back office staff during the year ended December 31, 2024, which did not exist for the full year ended December 31, 2023.

The increase was primarily due to higher rent and property management expenses for the Walnut Creek and San Francisco branch offices period-over-period.

Data processing and software .

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and (iii) an increased number of licenses required for new users on our loan origination and documentation system.

FDIC Insurance.

The increase was primarily due to a $571.8 million increase in the assessment base period-over-period.

Professional services.

The increase was due to an increase in audit, IT support, and other consulting fees for services provided for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The increase was due to:

(i) $0.1 million in fees paid for compensation consulting services that did not occur during 2024;

(ii) a $0.2 million increase in expenses related to business development consulting services;

(iii) a $0.1 million increase in legal expenses;

and (iv) a $0.1 million increase in recruiter fees related to the 13.66% increase in employee headcount between December 31, 2024 and December 31, 2025.

Advertising and promotional.

The increase was primarily due to an additional $0.2 million in donations and $0.2 million related to sponsored events and partnerships, combined with $0.4 million of additional expenses incurred to support the expansion of the Bank’s business development teams, specifically related to client and prospective client development expenses.

Loan-related expenses.

The increase was due to an increase of $0.1 million in inspection fees and an increase of $0.1 million in loan-related legal expenses, both due to loan growth between December 31, 2024 and December 31, 2025.

Other operating expenses .

The increase is primarily related to a $0.2 million increase in IntraFi Network fees resulting from an overall increase in balances carried in the network, partially offset by a $0.1 million decrease in conference and training expenses.

The increase was due to:

(i) a $0.4 million increase in employee-related expenses, such as travel, conferences, training, and professional association memberships;

(ii) a $0.2 million increase in armored car and courier expenses;

(iii) a $0.2 million increase in administrative charges, including subscription services and bank charges;

(iv) a $0.1 million increase in IntraFi Network fees resulting from an overall increase in balances carried in the network;

(v) a $0.1 million increase in office expenses, such as check printing and supplies;

and (vi) a $0.1 million increase in regulatory assessment fees.

Provision for Income Taxes

Provision for income taxes increased by $0.2 million, or 0.89%, to $19.1 million for the year ended December 31, 2024, compared to $18.9 million for the year ended December 31, 2023.

This increase is due to a $0.6 million provision to return true-up recorded during the year ended December 31, 2024, partially offset by a decline in taxable income year-over-year.

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 December 31, 2025.

The Company evaluated the impact on future periods and the legislation is not expected to have a significant impact on the Company’s consolidated financial statements.

Provision for income taxes increased by $3.1 million, or 16.15%, to $22.1 million for the year ended December 31, 2025, as compared to $19.1 million for the year ended December 31, 2024.

This increase is primarily due to a 29.37% increase in pre-tax income recognized during the year ended December 31, 2025.

This was partially offset by:

(i) a $0.9 million benefit recorded during the quarter ended December 31, 2025 related to the purchase of transferable federal tax credits;

and (ii) a net $0.2 million reduction to the provision recorded during the quarter ended June 30, 2025.

This adjustment related to a tax law change for the state of California effective as of June 30, 2025, which requires a transition from a three-factor apportionment formula to a single-sales-factor formula for determining state income tax.

As such, the Company recorded a net benefit of approximately $0.9 million relating to the current year provision, which was partially offset by a $0.7 million expense relating to the remeasuring of the deferred tax assets and liabilities as of June 30, 2025.

The effective tax rate was 26.42% and 29.43% for the years ended December 31, 2025 and December 31, 2024, respectively.

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Total shareholders’ equity 445,832 396,624

At December 31, 2024, total assets were $4.1 billion, an increase of $460.2 million from $3.6 billion at December 31, 2023, primarily due to a $451.0 million increase in total loans held for investment and a $30.8 million increase in cash and cash equivalents, partially offset by a $10.2 million decrease in investments.

At December 31, 2025, total assets were $4.8 billion, an increase of $701.6 million from $4.1 billion at December 31, 2024, primarily due to a $542.2 million increase in total loans held for investment and a $154.5 million increase in cash and cash equivalents.

Cash and Cash Equivalents

Total cash and cash equivalents were $506.9 million at December 31, 2025, an increase of $154.5 million from $352.3 million at December 31, 2024.

The increase in cash and cash equivalents was primarily due to increases in deposits of $531.1 million, $80.9 million in net proceeds from the 2024 Public Offering (as defined below), and pre-tax income of $64.7 million, partially offset by loan originations, net of repayments, of $442.8 million and a decrease in borrowings of $170.0 million.

The increase in cash and cash equivalents was primarily due to the net increase in

cash inflows from growth in total deposits of $643.1 million and cash outflows from growth in total loans held for investment of $542.2 million.

Investment Portfolio

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We manage our investment portfolio according to written investment policies approved by our board of directors.

Our investment strategy aims to maximize earnings while maintaining liquidity in securities with minimal credit risk and interest rate risk that is reflective of the yields obtained on those securities.

Our investment strategy is designed to maximize earnings while maintaining liquidity in securities with minimal credit risk and interest rate risk that is reflective of the yields obtained on those securities.

Most of our securities are classified as available-for-sale, although we have one long-term, fixed rate municipal security classified as held-to-maturity.

Our total securities available-for-sale and held-to-maturity amounted to $96.9 million at December 31, 2025 and $100.9 million at December 31, 2024, a decrease of $4.0 million year-over-year.

The decrease was primarily due to principal paydowns and amortization of $9.0 million, partially offset by an improvement in the unrealized loss on securities of $0.9 million, primarily in our municipal securities portfolios.

The improvement in the unrealized loss was recognized as a result of interest rate decreases that occurred during the period.

The decrease was primarily due to maturities, prepayments, and calls of $9.3 million, partially offset by a purchase of a $1.0 million security and an unrealized gain on securities of $5.1 million, with the remainder of the change due to amortization of premiums.

For the year ended December 31, 2025, other comprehensive gain was $3.2 million, primarily due to rate changes and other market conditions on securities during the period.

Table 8 presents the carrying value of our securities by their stated maturities, as well as the weighted average yields for each maturity range, as of the dates shown.

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Weighted average yield for securities held-to-maturity is the stated coupon of the bond.

Yields on tax-exempt securities are not presented on a tax-equivalent basis.

Loan Portfolio

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Retail 317,536 9.61 % 668,216 6.23 % 74.23 %

Multifamily 286,064 8.65 % 618,588 7.56 % 79.21 %

Industrial 247,368 7.48 % 563,631 0.99 % 91.33 %

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Mini storage 190,252 5.76 % 381,810 14.63 % 70.00 %

Multifamily 172,592 6.04 % 371,634 14.35 % 75.00 %

Office 175,767 5.32 % 404,727 4.62 % 74.95 %

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Retail 283,394 9.92 % 569,677 6.49 % 72.80 %

Multifamily 211,598 7.88 % 427,948 13.12 % 75.00 %

Industrial 224,860 7.87 % 500,307 4.56 % 73.91 %

Faith-based 184,151 6.45 % 492,030 9.35 % 74.67 %

Mini storage 177,854 6.22 % 361,437 16.23 % 69.19 %

Industrial 173,192 6.45 % 417,439 7.48 % 83.26 %

Multifamily 172,592 6.04 % 371,634 14.35 % 75.00 %

Office 145,986 5.11 % 338,474 5.03 % 73.64 %

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We do not expect our product or geographic concentrations to materially change.

Table 11 sets forth the contractual maturities of our loan portfolio as of the dates shown.

Contractual Maturities - Gross Loans

Table 11 sets forth the contractual maturities and sensitivity to interest rate changes of our loan portfolio as of the dates shown.

Contractual Maturities and Sensitivity to Interest Rate Changes - Gross Loans

(dollars in thousands) Due in 1 year or less Due after 1 year through 5 years Due after 5 years through 15 years Due after 15 years Total

December 31, 2025

Loans with fixed interest rates:

Commercial $ 31,238 $ 275,099 $ 366,518 $ 3,571 $ 676,426

Commercial land and development

— 176 — — 176

Commercial construction — — — — —

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Consumer and other 72 17,779 257,472 — 275,323

Total $ 110,418 $ 515,529 $ 2,834,820 $ 77,086 $ 3,537,853

December 31, 2023

Total loans with fixed interest rates

34,579 341,037 669,450 3,983 1,049,049

Loans with floating or adjustable interest rates:

Commercial 29,907 274,098 2,257,847 67,435 2,629,287

Commercial land and development

602 500 74 — 1,176

Commercial construction 1,429 49,478 32,749 13,104 96,760

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Consumer and other — 152 — — 152

Total $ 148,866 $ 363,715 $ 2,509,303 $ 73,556 $ 3,095,440

Table 12 sets forth the sensitivity to interest rate changes of our loan portfolio as of the dates shown.

Sensitivity to Interest Rates - Gross Loans

(dollars in thousands) Fixed Interest Rates Floating or Adjustable Rates Total

December 31, 2024

Total loans with floating or adjustable interest rates

105,289 419,759 2,411,500 91,422 3,027,970

Commercial 61,145 549,197 2,624,365 71,006 3,305,713

Commercial land and development

602 676 74 — 1,352

Commercial construction 1,429 49,478 32,749 13,104 96,760

5 unchanged sentences

Consumer and other 72 17,931 257,472 — 275,475

Total $ 946,642 $ 2,591,211 $ 3,537,853

$ 139,868 $ 760,796 $ 3,080,950 $ 95,405 $ 4,077,019

Contractual Maturities and Sensitivity to Interest Rate Changes - Gross Loans (continued)

(dollars in thousands) Due in 1 year or less Due after 1 year through 5 years Due after 5 years through 15 years Due after 15 years Total

December 31, 2024

Loans with fixed interest rates:

Commercial $ 17,022 $ 184,493 $ 386,310 $ — $ 587,825

Commercial land and development

645 — 771 — 1,416

Commercial construction — — — — —

5 unchanged sentences

Consumer and other 161 13,838 265,459 — 279,458

Total $ 683,952 $ 2,411,488 $ 3,095,440

Total loans with fixed interest rates

20,066 238,008 688,135 433 946,642

Loans with floating or adjustable interest rates:

Commercial 18,660 177,584 1,997,345 75,759 2,269,348

Commercial land and development

1,788 438 207 — 2,433

Commercial construction 9,378 64,407 37,533 — 111,318

Residential construction 3,310 1,251 — — 4,561

Residential 324 5,749 21,720 486 28,279

Farmland — 6,632 35,736 — 42,368

Secured 54,392 16,264 54,144 408 125,208

Unsecured 2,500 5,070 — — 7,570

Consumer and other — 126 — — 126

Total loans with floating or adjustable interest rates

90,352 277,521 2,146,685 76,653 2,591,211

Commercial 35,682 362,077 2,383,655 75,759 2,857,173

Commercial land and development

2,433 438 978 — 3,849

Commercial construction 9,378 64,407 37,533 — 111,318

Residential construction 3,310 1,251 — — 4,561

Residential 324 9,486 22,045 919 32,774

Farmland — 6,632 40,609 — 47,241

Secured 56,630 46,722 70,035 408 173,795

Unsecured 2,500 10,552 14,506 — 27,558

Consumer and other 161 13,964 265,459 — 279,584

$ 110,418 $ 515,529 $ 2,834,820 $ 77,086 $ 3,537,853

Asset Quality

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We periodically employ the use of an independent consulting firm to evaluate our underwriting and risk assessment process.

Like other financial institutions, we are subject to

the risk that our loan portfolio will be exposed to increasing pressures from deteriorating borrower credit due to general economic conditions and rising interest rates.

Like other financial institutions, we are subject to the risk that our loan portfolio will be exposed to increasing pressures from deteriorating borrower credit due to general economic conditions and rising interest rates.

Nonperforming Assets

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During 2025, the Company sold 10 SBA 7(a) loans with government-guaranteed portions totaling approximately $3.3 million.

The decrease in sales from prior years is due to a strategic, intentional reduction in originations of loans held for sale.

The Company received gross proceeds of $3.5 million on the loans sold in 2025, resulting in a net gain on sale of $0.2 million.

10 unchanged sentences

Loans past due 90 days or more and still accruing:

Total loans past due 90 days or more and still accruing

Total loans past due and still accruing

Total nonperforming loans 3,096 1,798

6 unchanged sentences

Nonperforming loans plus performing LMs to loans held for investment 0.08 % 0.05 %

The ratio of nonperforming loans to loans held for investment was 0.05% at December 31, 2024, decreasing from 0.06% as of December 31, 2023.

The ratio of the allowance for credit losses to period end nonperforming loans increased from 1,752.70% as of December 31, 2023 to 2,101.78% as of December 31, 2024.

This increase was due to:

(i) a 9.76% increase in the allowance for credit losses year-over-year;

and (ii) an 8.50% decrease in nonperforming loans year-over-year.

The ratio of nonperforming loans to loans held for investment was 0.08% at December 31, 2025, increasing from 0.05% as of December 31, 2024.

The ratio of non-accrual loans to loans held for investment was also 0.08% at December 31, 2025, increasing from 0.05% as of December 31, 2024.

The ratio of the allowance for credit losses to period end nonperforming loans decreased from 2,101.78% as of December 31, 2024 to 1,434.40% as of December 31, 2025.

This decrease was due to a 72.19% increase in nonperforming loans year-over-year, partially offset by a 17.51% increase in the allowance for credit losses year-over-year.

The increase in nonperforming loans resulted mainly from the occurrence of two separate faith-based real estate loans entering nonperforming status.

Potential Problem Loans

We utilize a risk grading system for our loans to aid us in evaluating the overall credit quality of our real estate loan portfolio and assessing the adequacy of our ACL.

We utilize a risk grading system for our loans to aid us in evaluating the overall credit quality of our real estate loan portfolio and assessing the adequacy of our allowance for credit losses.

All loans are grouped into a risk category at the time of origination.

1 unchanged sentence

All loans are reevaluated for proper risk grading as new information such as payment patterns, collateral condition, and other relevant information comes to our attention.

The banking industry defines loans graded substandard or doubtful as “classified” loans.

Loans designated as “watch” are internal bank designations and are not considered adversely classified.

However, loans designated as “substandard” or “doubtful” are considered adversely classified.

Table 13 shows loans by credit quality risk rating as of the periods indicated.

25 unchanged sentences

Total $ 3,408,558 $ 123,404 $ 2,644 $ — $ 3,534,606

Loans designated as watch and substandard, which are not considered adversely classified, increased to $126.0 million at December 31, 2024 from $41.6 million at December 31, 2023.

The increase related primarily to an $83.8 million increase in loans designated as watch for loans which have indicators of deficient loan quality and potential significant issues which are expected to be temporary in nature.

Loans designated as watch decreased from $123.4 million to $101.9 million between December 31, 2024 and December 31, 2025.

Consequently, loans designated as substandard increased from $2.6 million to $22.3 million between December 31, 2024 and December 31, 2025, primarily attributable to the downgrade of one borrower experiencing financial difficulty with a special purpose commercial real estate loan and a commercial line of credit.

There were no loans with doubtful risk grades at December 31, 2025 or December 31, 2024.

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The allowance for credit losses is evaluated on a regular basis by management and is based on management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions.

Historical loss rates within the commercial secured pool are also evaluated by

management on a regular basis to estimate the allowance for credit losses.

This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available.

1 unchanged sentence

The $6.6 million increase in the allowance is due to a $9.8 million provision for credit losses, partially offset by net charge-offs of $3.1 million during the year ended December 31, 2025, mainly attributable to commercial and industrial loans, during the same period.

While the entire allowance for credit losses is available to absorb losses from any and all loans, Table 15 represents management’s allocation of our allowance for credit losses by loan category, and the balance of loans in each category as a percentage of total loans, for the periods indicated.

While the entire allowance for credit losses is available to absorb losses from any and all loans, Table 14 represents management’s allocation of our allowance for credit losses by loan category, the allocation of our allowance for credit losses as a percent of the total allowance for credit losses, and the balance of loans in each category as a percentage of total loans, for the periods indicated.

Allocation of the Allowance for Credit Losses

December 31, 2024 December 31, 2023

(dollars in thousands) Allowance for Credit Losses

% of Loans to Total Loans

Allowance for Credit Losses

% of Allowance for Credit Losses

% of Loans to Total Loans

December 31, 2025

Commercial $ 25,219 56.77 % 81.08 %

8 unchanged sentences

$ 44,409 100.00 % 100.00 %

December 31, 2024

Commercial $ 25,864 68.44 % 80.75 %

Commercial land and development 78 0.21 % 0.11 %

Commercial construction 2,268 6.00 % 3.15 %

Residential construction 64 0.17 % 0.13 %

Residential 270 0.71 % 0.93 %

Farmland 607 1.61 % 1.34 %

Secured 5,866 15.52 % 4.91 %

Unsecured 278 0.74 % 0.78 %

Consumer and other 2,496 6.60 % 7.90 %

Total $ 37,791 100.00 % 100.00 %

The ratio of allowance for credit losses to total loans held for investment was 1.09% at December 31, 2025, as compared to 1.07% at December 31, 2024.

7 unchanged sentences

Allowance for credit losses $ 37,791 $ 34,431

Effect of adoption of ASC 326 — 5,262

Net (charge-offs) recoveries:

Commercial (280) (0.01) % — — %

Secured (2,738) (0.07) % (4,042) (0.12) %

6 unchanged sentences

Allowance for credit losses to loans held for investment 1.09 % 1.07 %

The allowance for credit losses to loans held for investment decreased from 1.12% as of December 31, 2023 to 1.07% as of December 31, 2024.

Net charge-offs as a percent of average loans held for investment increased from 0.11% to 0.12% for the years ended December 31, 2023 and December 31, 2024, respectively.

The allowance for credit losses to loans held for investment increased from 1.07% as of December 31, 2024 to 1.09% as of December 31, 2025.

Net charge-offs as a percent of average loans held for investment decreased from 0.12% to 0.08% for the years ended December 31, 2024 and December 31, 2025, respectively.

During 2025, total liabilities increased by $652.4 million from $3.7 billion at December 31, 2024 to $4.3 billion at December 31, 2025.

This increase was primarily attributable to an increase in deposits of $531.1 million, partially offset by a decrease in other borrowings of $170.0 million.

The $531.1 million increase in deposits was largely due to increases in money market, time, and non-interest-bearing demand deposits of $242.9 million, $203.6 million, and $91.5 million, respectively, partially offset by decreases in interest-bearing transaction and savings deposits of $5.1 million and $1.8 million, respectively.

This increase was primarily attributable to an increase in deposits of $643.1 million.

The $643.1 million increase in deposits was largely due to increases in money market, non-interest-bearing demand, interest-bearing transaction, and savings deposits of $553.3 million, $161.9 million, $29.0 million, and $14.5 million, respectively.

These increases were partially offset by decreases in time deposits of $115.5 million, largely driven by a $95.0 million decrease in wholesale deposits.

Representing 97.49% of our total liabilities as of December 31, 2025, deposits are our primary source of funding for our business operations.

1 unchanged sentence

Deposit increases were primarily attributable to an increase in the number of new relationships, as well as normal fluctuations in our existing accounts.

Non-interest-bearing deposits increased by $91.5 million in 2024 to $922.6 million, and represented 25.93% of total deposits at December 31, 2024, compared to 27.46% of total deposits at December 31, 2023.

Non-interest-bearing deposits increased by $161.9 million in 2025 to $1.1 billion, and represented 25.82% of total deposits at December 31, 2025, compared to 25.93% of total deposits at December 31, 2024.

Our loan to deposit ratio was 97.00% at December 31, 2025, compared to 99.38% at December 31,

24 unchanged sentences

Total $ 2,008,806 $ 1,791,429

Our largest single deposit relationship at December 31, 2024 related to brokered deposits.

Our largest single deposit relationship at December 31, 2025 related to a government agency.

The balance for this customer was $290.0 million, or approximately 6.90% of total deposits as of December 31, 2025.

At December 31, 2023, our largest single deposit relationship related to a government agency and had a balance of $260.0 million, or 8.59% of total deposits as of December 31, 2023.

At December 31, 2024, our largest single deposit relationship related to brokered deposits and had a balance of $300.0 million, or 8.43% of total deposits as of December 31, 2024.

As our demand deposits fluctuate, we have purchased brokered deposits as needed to supplement liquidity.

11 unchanged sentences

From time to time, we utilize short-term collateralized FHLB borrowings to maintain adequate liquidity.

There were no borrowings outstanding as of December 31, 2024 and borrowings of $170.0 million outstanding from the FHLB as of December 31, 2023.

There were no borrowings outstanding as of December 31, 2025 and December 31, 2024, respectively.

In 2022, we issued subordinated notes of $75.0 million.

9 unchanged sentences

Shareholders’ equity totaled $445.8 million at December 31, 2025 and $396.6 million at December 31, 2024.

The increase in shareholders’ equity was primarily a result of $80.9 million of additional common stock issued and outstanding in 2024 and net income recognized of $45.7 million, partially offset by $16.2 million in cash dividends paid during the period.

The increase in shareholders’ equity was primarily net income recognized of $61.6 million, partially offset by $17.1 million in cash dividends paid during the period.

Liquidity and Capital Resources

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Because of its critical importance to the viability of the Bank, liquidity risk management is fully integrated into our risk management processes.

Critical elements of our liquidity risk management include effective corporate governance, consisting of

oversight by the board of directors and active involvement by management;

appropriate strategies, policies, procedures, and limits used to manage and mitigate liquidity risk;

Critical elements of our liquidity risk management include effective corporate governance, consisting of oversight by the board of directors and active involvement by management;

appropriate strategies, policies, procedures, and

limits used to manage and mitigate liquidity risk;

comprehensive liquidity risk measurement and monitoring systems, including stress tests, that are commensurate with the complexity of our business activities;

9 unchanged sentences

Less commonly used sources of funding include borrowings from established federal funds lines from unaffiliated commercial banks, and the issuance of debt or equity securities.

In addition, we have a shelf registration statement on file with the SEC registering $250.0 million for any combination of equity or debt securities, depository shares, warrants, purchase contracts, purchase units, subscription rights, and units in one or more offerings.

Specific information on the terms of any securities being offered, including the expected use of proceeds from the sale of such securities, are provided at the time of the offering.

We believe we have ample liquidity resources to fund future growth and meet other cash needs as necessary.

In addition, as of December 31, 2025, we had a shelf registration statement on file with the SEC registering the offer and sale by us of up to $250.0 million of any combination of equity or debt securities, depository shares, warrants, purchase contracts, purchase units, subscription rights, and units in one or more offerings.

In April 2024, we sold an aggregate of 3,967,500 shares of our common stock at a price of $21.75 per share in a public offering (the “2024 Public Offering”), for net proceeds to us, after deducting underwriting discounts and commissions and offering expenses payable by us, of approximately $80.9 million, to be used for general corporate purposes and to support continued growth, including through investments in the Bank to pursue growth opportunities, and for working capital.

The 2024 Public Offering used approximately $86.3 million of our shelf registration statement on file with the SEC, leaving approximately $163.7 million available for future offerings.

The 2024 Public Offering used approximately $86.3 million of our shelf registration statement on file with the SEC, leaving approximately $163.7 million available for future offerings as of December 31, 2025.

In February 2026, our new shelf registration statement became effective, registering the offer and sale by us of up to $300.0 million of any combination of equity or debt securities, depository shares, warrants, purchase contracts, purchase units, subscription rights, and units in one or more offerings, and replacing our prior shelf registration statement.

Specific information on the terms of any securities being offered, including the expected use of proceeds from the sale of such securities, are provided at the time of the offering.

Sources and Uses of Cash

2 unchanged sentences

As of December 31, 2025, management believes the above-mentioned sources will provide adequate liquidity during the next twelve months for the Bank to meet its operating needs.

In addition, in April 2024, the Company closed the 2024 Public Offering.

The proceeds to the Company, after deducting underwriting discounts and commissions and offering expenses payable by the Company, were approximately $80.9 million, providing additional cash to support the Company’s ongoing operating needs.

Based on our current capital allocation objectives, during 2026, we project spending $0.5 million related to continued build-out of our IT systems and processes and allocating $21.4 million of cash for dividends on our common stock.

32 unchanged sentences

Depending on market yield and our liquidity, we may purchase securities as a use of cash in our interest-earning asset portfolio.

During the year ended December 31, 2024, we had cash proceeds from sales, maturities, calls and prepayments of securities of $8.4 million.

During the year ended December 31, 2025, we had cash proceeds from sales, maturities, calls and prepayments of securities of $9.3 million and cash outflows from the purchase of a security for $1.0 million.

Additionally, at December 31, 2025, securities available-for-sale totaled $94.7 million, of which $89.7 million has been pledged as collateral for borrowings and other commitments.

1 unchanged sentence

Our estimated future obligations as of December 31, 2025 include both current and long-term obligations.

Under our operating leases as discussed in Note 15, Commitments and Contingencies, we have a current obligation of $1.6 million and a long-term obligation of $6.6 million.

We also have a current obligation of $666.9 million and a long-term obligation of $3.3 million related to time deposits, as discussed in Note 8, Interest-Bearing Deposits.

Under our operating leases as discussed in Note 15, Commitments and Contingencies, of the notes to our audited consolidated financial statements included in this Annual Report on Form 10-K, we have a current obligation of $2.0 million and a long-term obligation of $12.5 million.

We also have a current obligation of $552.9 million and a long-term obligation of $1.7 million related to time deposits, as discussed in Note 8, Interest-Bearing Deposits, of the notes to our audited consolidated financial statements included in this Annual Report on Form 10-K.

We have net subordinated notes of $74.0 million, all of which are long-term obligations.

Finally, we have one significant contract for core processing services.

While the actual obligation is unknown and dependent on certain factors, including volume and activity, when using our 2024 average monthly expense extrapolated over the remaining life of the contract, we estimate that our current obligation under this contract is $0.9 million.

We do not have a long-term obligation under this contract until it is renewed.

Finally, we have two significant contracts, one for core processing services and the other for a digital and mobile banking platform.

The actual obligations under both contracts are unknown and dependent on certain factors, including volume and activity.

Based on our average monthly expenses for 2025, and extrapolating those figures over the remaining term of the core processing services contract, we estimate our current obligation to be approximately $2.1 million, with a long-term obligation of $9.3 million.

For the digital and mobile banking platform contract, using the same methodology, our current obligation under this contract is estimated at $1.1 million.

We do not have any long-term obligation under this contract until it is renewed.

Total Liquidity

13 unchanged sentences

The Company has the ability to borrow from the Federal Reserve Discount Window when necessary.

At December 31, 2024, the Bank had no outstanding Federal Reserve Discount Window borrowings and a total financing availability of $862.1 million.

At December 31, 2025, the Bank had no outstanding Federal Reserve Discount Window borrowings and total financing availability of $957.4 million.

Correspondent Bank Lines of Credit

1 unchanged sentence

A use of liquidity for the Company is shareholder dividends.

Bancorp paid dividends to its shareholders totaling $16.2 million during the year ended December 31, 2024.

The Company paid dividends to its shareholders totaling $17.1 million during the year ended December 31, 2025.

We expect to continue our current practice of paying quarterly cash dividends with respect to our common stock, subject to our board of directors’ discretion to modify or terminate this practice at any time and for any reason without prior notice.

15 unchanged sentences

Operating Activities

Net cash provided by operating activities increased by $12.9 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to lower loans originated for sale, higher interest receivable and other assets, and a higher provision for credit losses.

These sources of cash were partially offset by lower proceeds from sale of loans.

Net cash provided by operating activities increased by $20.8 million for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to lower loans originated for sale, higher net income, higher net change in interest payable and other liabilities, and a higher provision for credit losses.

These sources of cash were partially offset by lower gross proceeds from sale of loans, lower net change in interest receivable and other assets, and lower purchase of transferable tax credits.

Cash provided by operating activities is subject to variability period-over-period as a result of timing differences, including with respect to the collection of receivables and payments of interest expense, accounts payable, and bonuses.

1 unchanged sentence

Investing Activities

Net cash used in investing activities increased by $167.5 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to higher originations of loans held for investment, net of repayments, and higher investments in low income housing tax credits.

Net cash used in investing activities increased by $97.4 million for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to higher originations of loans held for investment, net of repayments.

Financing Activities

Net cash provided by financing activities increased by $123.8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to an increase in deposits and proceeds from the 2024 Public Offering, partially offset by payments on other borrowings.

Net cash provided by financing activities increased by $200.3 million for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to an increase in deposits and lower borrowings, partially offset by proceeds from the 2024 Public Offering.

Capital Adequacy

8 unchanged sentences

Management reviews capital ratios on a regular basis to ensure that capital exceeds the prescribed regulatory minimums and is adequate to meet our anticipated future needs.

For all periods presented, the Bank’s ratios exceed the regulatory definition of “well-capitalized” under the regulatory framework for prompt corrective action, and Bancorp’s ratios exceed the minimum ratios required for it to be considered a well-capitalized bank holding company.

For all periods presented, the Bank’s ratios exceed the regulatory

definition of “well-capitalized” under the regulatory framework for prompt corrective action, and Bancorp’s ratios exceed the minimum ratios required for it to be considered a well-capitalized bank holding company.

The capital adequacy ratios as of December 31, 2025 and 2024 for Bancorp and the Bank are presented in Tables 22 and 23.

37 unchanged sentences

The most directly comparable GAAP financial measure is total shareholders’ equity to total assets.

Management believes that tangible shareholders’ equity to tangible assets is a useful financial measure because it enables management, investors, and others to assess the Company’s financial health based on tangible capital.

We had no goodwill or other intangible assets at the end of any period indicated.

2 unchanged sentences

The most directly comparable GAAP financial measure is book value per share.

Management believes that tangible book value per share is a useful financial measure because it enables management, investors, and others to assess the Company’s value and use of equity.

We had no goodwill or other intangible assets at the end of any period indicated.

6 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis