What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-27 compared with 2025-02-28 · 295 added, 173 removed, 1320 unchanged (26% of the section changed)

1 unchanged sentence

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (Moss Adams LLP;

Report of Independent Registered Public Accounting Firm (Baker Tilly US LLP;

PCAOB ID# 23 )

11 unchanged sentences

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Notes 1, 2, 3 and 4 to the consolidated financial statements, the Company changed its method of accounting for the allowance for credit losses as of January 1, 2023, due to the adoption of Accounting Standards Update No.

2016-13, which established Accounting Standards Codification Topic 326, Financial Instruments - Credit Losses .

Basis for Opinion

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting in accordance with the standards of the PCAOB.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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We believe that our audits provide a reasonable basis for our opinion.

/s/ Moss Adams LLP

/s/ Baker Tilly US, LLP

Everett, Washington

19 unchanged sentences

Premises and equipment, net 2,109 1,584

Bank-owned life insurance 19,375 17,180

Bank-owned life insurance, net

23,910 19,375

Interest receivable and other assets 68,680 55,554

76 unchanged sentences

$ 61,606 $ 45,671 $ 47,734

Unrealized (loss) gain on securities:

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

Unrealized gain (loss) on securities:

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

5,067 ( 858 ) 2,228

Reclassification for net loss (gain) on sale of securities included in net income

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

Reclassification for net loss on sale of securities included in net income

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

1,839 ( 254 ) 708

Other comprehensive (loss) income

Other comprehensive income (loss)

3,228 ( 604 ) 1,687

5 unchanged sentences

Years ended December 31, 2025, 2024, and 2023

(in thousands, except share and per share amounts) Common Stock Retained Earnings Accumulated Other Comprehensive (Loss) Income

(in thousands, except share and per share amounts) Common Stock Retained Earnings Accumulated Other Comprehensive Income (Loss)

Total Shareholders’ Equity

3 unchanged sentences

Net income — — 47,734 — 47,734

Other comprehensive loss — — — ( 12,888 ) ( 12,888 )

Other comprehensive income — — — 1,687 1,687

Stock issued under stock award plans 16,978 — — — —

4 unchanged sentences

Balance at December 31, 2023 17,256,989 $ 220,505 $ 77,036 $ ( 11,767 ) $ 285,774

Cumulative effect of adoption of ASC 326 on retained earnings — — ( 4,491 ) — ( 4,491 )

Net income — — 45,671 — 45,671

Other comprehensive income — — — 1,687 1,687

Other comprehensive loss — — — ( 604 ) ( 604 )

Stock issued under stock award plans 96,380 — — — —

1 unchanged sentence

Stock forfeitures ( 1,786 ) — — — —

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

Cash dividends paid ($ 0.80 per share)

2 unchanged sentences

Net income — — 61,606 — 61,606

Other comprehensive loss — — — ( 604 ) ( 604 )

Other comprehensive income — — — 3,228 3,228

Stock issued under stock award plans 49,303 — — — —

1 unchanged sentence

Stock forfeitures ( 999 ) — — — —

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

Cash dividends paid ($ 0.80 per share)

18 unchanged sentences

Deferred tax provision ( 578 ) ( 243 ) ( 897 )

Purchase of transferable tax credits ( 6,572 ) — —

Loans originated for sale ( 1,384 ) ( 21,654 ) ( 47,922 )

2 unchanged sentences

Net loss (gain) on sale of securities available-for-sale — — 167

Extinguishment of redeemed subordinated note issuance costs — — 302

Gain on partial sale of equity investment ( 545 ) ( 1,683 ) —

Earnings on equity investments ( 821 ) ( 545 ) ( 1,683 )

Net changes in:

7 unchanged sentences

Purchases of securities available-for-sale ( 1,030 ) — ( 1,151 )

Capital call for equity investment ( 2,908 ) ( 1,407 ) —

Proceeds received from equity investment 1,056 1,915 —

Low income housing tax credits ( 10,052 ) ( 2,341 ) —

Capital call for equity investments ( 2,138 ) ( 2,908 ) ( 1,407 )

Proceeds received from equity investments 283 1,056 1,915

Capital call for low income housing tax credits ( 5,593 ) ( 10,052 ) ( 2,341 )

Net change in time deposits in banks 4,021 1,737 3,991

Loan originations, net of repayments ( 544,152 ) ( 442,843 ) ( 284,314 )

Purchase of premises and equipment ( 628 ) ( 653 ) ( 481 )

Purchase of premises and equipment, net ( 1,197 ) ( 628 ) ( 653 )

Purchase of FHLB stock — — ( 4,110 )

Purchase of BOLI ( 3,711 ) ( 1,551 ) ( 2,001 )

Other real estate sale proceeds 87 — —

Net cash used in investing activities ( 544,109 ) ( 446,744 ) ( 279,278 )

4 unchanged sentences

Cash dividends paid ( 17,085 ) ( 16,243 ) ( 12,943 )

Proceeds from subordinated note issuance — — 75,000

Subordinated note issuance costs — — ( 1,454 )

Subordinated note redemption — — ( 28,750 )

Net cash provided by financing activities 626,005 425,725 301,949

6 unchanged sentences

Income taxes paid:

US Federal 11,647

US Federal - IRC 45X Tax Credits 6,572

US State and Local

California 5,451

Other states 1,289

Total 24,959 16,884 19,969

Supplemental disclosure of noncash items:

Transfer from loans held for sale to loans held for investment 1,344 11,464 9,416

Unrealized (loss) gain on securities ( 858 ) 2,228 ( 18,291 )

Operating lease liabilities recorded in conjunction with adoption of ASC 842 — — 5,221

Unrealized gain (loss) on securities 5,067 ( 858 ) 2,228

Operating lease liabilities exchanged for ROUA 6,132 2,170 2,260

ROUA recorded in conjunction with adoption of ASC 842 — — 4,974

ROUA acquired ( 6,132 ) ( 2,170 ) ( 2,243 )

Net change in commitment for low income housing tax credits 531 ( 13,612 ) —

Cumulative effect of adoption of ASC 842 on retained earnings, net of tax — — 68

Increase (decrease) in commitment for low income housing tax credits 10,188 ( 531 ) 13,612

Cumulative effect of adoption of ASC 326 on retained earnings, net of tax — — ( 4,491 )

See accompanying notes to consolidated financial statements.

1 Income taxes are presented by significant jurisdictions beginning in 2025 as required by ASU 2023-09.

This standard has been applied on a prospective basis.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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The Company became the sole shareholder of the Bank on June 2, 2003 in a statutory merger, pursuant to which each outstanding share of the Bank’s common stock was exchanged for one share of common stock of the Company.

The Company publicly filed a Registration Statement on Form S-1 with the SEC in connection with its IPO, which was declared effective by the SEC on May 4, 2021 and closed on May 7, 2021.

In connection with the Company’s IPO, its status as a Subchapter S corporation was terminated and the Company became a taxable C Corporation as of May 5, 2021.

The Company, through the Bank, provides a broad range of banking products and services to customers who are predominately small and medium-sized businesses, professionals, and individuals primarily in the Northern California region.

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 Company terminated its status as a Subchapter S corporation as of May 5, 2021, in connection with the Company’s IPO and became a taxable C Corporation.

Prior to that date, as an S Corporation, the Company had no U.S.

federal income tax expense.

The Company publicly filed a Registration Statement on Form S-1 with the SEC in connection with its IPO, which was declared effective by the SEC on May 4, 2021.

In connection with the IPO, the Company issued 6,054,750 shares of common stock, no par value, which included 789,750 shares sold pursuant to the underwriters’ exercise of their option to purchase additional shares.

The securities were sold to the public at a price of $ 20.00 per share and began trading on the Nasdaq Global Select Market on May 5, 2021.

On May 7, 2021, the closing date of the IPO, the Company received total net proceeds of $ 111,243,000 .

The net proceeds less other related expenses, including audit fees, legal fees, listing fees, and other expenses, totaled $ 109,082,000 .

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

Basis of Financial Statement Presentation and Consolidation

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

The Company qualifies as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012, and, as such, may take advantage of specified reduced reporting requirements and deferred accounting standards adoption dates, and is relieved of other significant requirements that are otherwise generally applicable to other public companies.

The Company qualifies as an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and, as such, may take advantage of specified reduced reporting requirements and deferred accounting standards adoption dates, and is relieved of other significant requirements that are otherwise generally applicable to other public companies.

The Company has one reportable operating segment:

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The measure of segment assets is reported on the balance sheet as total consolidated assets.

In accordance with ASC 280, as amended by ASU 2023-07, the Company discloses the following significant expense categories and other items on a consolidated basis which are regularly provided to the CODM and included in the measure of consolidated profit or loss:

• Interest expense - includes interest paid on deposits, borrowings, and subordinated notes;

• Provision for credit losses - represents the amount charged to earnings to maintain the allowance for credit losses at an appropriate level;

• Salaries and employee benefits - includes wages, incentive compensation, payroll taxes, and employee benefits;

• Occupancy and equipment expense - includes rent, depreciation, utilities, and maintenance of premises and equipment;

• Data processing and software expense - includes costs related to core processing, digital banking platforms, and other technology-related services;

• Professional services - includes legal, audit, consulting, and other professional fees;

• FDIC insurance - represents deposit insurance premiums paid to the FDIC;

• Advertising and promotional expense - includes marketing, advertising, and business development costs;

• Loan-related expenses - includes costs associated with loan origination, servicing, and collection;

• Other operating expenses - includes all other expenses not separately disclosed above, such as office supplies, travel, and regulatory assessments.

Other items regularly provided to the CODM and included in the measure of consolidated profit or loss include:

• Non-interest income - such as service charges on deposit accounts, gain on sale of loans, loan-related fees, FHLB stock dividends, and earnings on BOLI;

• Income tax expense - represents the provision for federal and state income taxes.

Segment profit or loss is measured as consolidated net income, which is calculated as total revenues (net interest income and non-interest income) less total expenses (interest expense, provision for credit losses, and non-interest expenses) and income tax expense.

These financial metrics are used by the CODM to make key operating decisions, such as determination of the rate at which the Company seeks to grow, loan and deposit pricing, and the allocation of budget for non-interest expenses.

Net income is

used to monitor budget versus actual results.

Discrete financial information is not available other than on a Company-wide basis.

Net income is used to monitor budget versus actual results.

The Company does not have any other reportable segments, and discrete financial information is not available other than on a consolidated basis.

All significant operating decisions are made on a consolidated basis.

Use of Estimates

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The ACL is the most significant accounting estimate reflected in the Company’s consolidated financial statements.

Other estimates include fair value measurements, valuation of servicing assets, and deferred tax asset valuation.

Other estimates include fair value measurements and deferred tax asset valuation.

Cash and Cash Equivalents

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Unrealized credit losses are recognized through an allowance for credit losses instead of an adjustment to amortized cost basis, eliminating the other-than-temporary impairment concept.

For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of amortized cost basis.

For available-for-sale debt securities in an unrealized loss

position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of amortized cost basis.

If either criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through earnings.

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These securities are carried at cost adjusted for amortization of premium to the earliest callable call date and accretion of discount, computed by the effective interest method over the life of the related investment.

Estimated credit losses are recorded under ASU No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments and all subsequent amendments that modified ASU 2016-13 (collectively, “ASC 326”) through a credit loss expense and an allowance.

Estimated credit losses are recorded through a credit loss expense and an allowance.

Accrued interest receivable is not subject to an estimate for credit loss, as the Company has a policy to charge off accrued interest deemed uncollectible in a timely manner.

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Interest accruals are resumed on such loans only when they are brought fully current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to both principal and interest.

Allowance for Credit Losses

The ACL is a valuation account that offsets the amortized cost basis of loans receivable and certain other financial assets, including unfunded loan commitments and held-to-maturity debt securities.

Under ASC 326, amortized cost basis is the basis on which the ACL is determined.

Under ASU No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments and all subsequent amendments that modified ASU 2016-13 (collectively, “ASC 326”), amortized cost basis is the basis on which the ACL is determined.

Amortized cost basis on loans receivable is principal outstanding, net of any purchase premiums and discounts, and net of any deferred loan fees and costs.

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and (16) Municipal.

With the exception of the C&I SBA pool, the Company has determined, given its limited loss experience, that peer data and other external data to support loss history provides the best basis for its assessment of expected credit losses.

The Company believes that the use of peer loss data from March 31, 2004 through December 31, 2019 and January 31, 2022 through March 31, 2024 presents loss histories that appropriately reflect a full economic cycle, reflects asset-specific risk characteristics at each pool level identified, and includes a historical look-back period that is objective and reflective of

future expected credit losses.

The Company has determined, given its limited loss experience, that peer data and other external data to support loss history provides the best basis for its assessment of expected credit losses.

The Company believes that the use of peer loss data from March 31, 2004 through December 31, 2019 and January 31, 2022 through March 31, 2025 presents loss histories that appropriately reflect a full economic cycle, reflects asset-specific risk characteristics at each pool level identified, and includes a historical look-back period that is objective and reflective of future expected credit losses.

Loss data from 2020 and 2021 was excluded from the data set to exclude pandemic-related data from the model.

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• Quality – changes in the volume and severity of past due loans, the volume of non-accrual loans, and the volume and severity of adversely classified or graded loans;

• Loan review - changes in the quality of internal loan review processes, measured by third party audit and regulatory results;

• External – the effect of other external factors, such as competition and legal and regulatory requirements on the level of estimated credit losses in the Company’s loan portfolio.

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When a loan is placed on non-accrual status, which occurs within 90 days of a borrower becoming delinquent, interest previously accrued but not collected is reversed against current period income.

If an individual loan’s characteristics have deteriorated to below a range of the overall pool, the loan would be individually assessed.

Individually assessed loans are measured for credit loss based on one of the following methods:

If an individual loan’s characteristics have deteriorated to below a range of the overall pool, the loan would be individually evaluated.

Individually evaluated loans are measured for credit loss based on one of the following methods:

(i) present value of future expected cash flows, discounted at the loan’s effective interest rate;

3 unchanged sentences

Troubled Debt Restructurings (“TDRs”) and Other Loan Modifications

In accordance with the adoption of ASC 326, which includes ASU No.

2022-02, Financial Instruments-Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures , accounting guidance for TDRs for creditors has been eliminated.

New guidance with respect to recognition, measurement, and disclosures of loans for borrowers experiencing financial difficulties supersedes guidance on TDRs.

Under ASU No.

2022-02, the Company is required to evaluate whether a loan modification represents a new loan or a continuation of an existing loan.

The amendment enhanced existing disclosure requirements and introduced new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty under criteria of principal forgiveness, interest rate reduction, other-than-insignificant payment delay, or term extension.

The Company evaluates all loan modifications to determine whether they are made to borrowers experiencing financial difficulty, in accordance with ASC 326, as amended by ASU 2022-02.

A loan modification is considered to be to a borrower experiencing financial difficulty if the borrower is unable to meet its current contractual obligations and the Company grants a concession, such as principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension.

For such modifications, the Company assesses whether the modification should be accounted for as a new loan or as a continuation of the existing loan, based on the specific facts and circumstances.

The Company provides enhanced disclosures regarding the nature and extent of modifications made to borrowers experiencing financial difficulty, including the type of modification, the financial effect of the modification, and subsequent performance.

The Company continues to monitor the performance of these modified loans and provides the required disclosures in the notes to the consolidated financial statements.

Federal Home Loan Bank Stock

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Revenues and expenses incurred from OREO property management are recorded in non-interest income and non-interest expense, respectively.

During 2024, 2023, and 2022, the Bank did not foreclose on any loans.

During 2025, the Bank did not foreclose on any loans.

During 2024, the Bank foreclosed on one loan, and its associated OREO was sold during 2025.

During 2023, the Bank did not foreclose on any loans.

BOLI is recorded at the amount that can be realized under the insurance contract at the consolidated balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement.

18 unchanged sentences

Equity Investments

Equity investments with readily determinable fair values are carried at fair value, with changes in fair value reported in net income.

Equity investments without readily determinable fair values are carried at cost, less impairment, if any, and adjusted for changes resulting from observable price changes in orderly transactions for the identical or similar investment.

The Company records equity investments within “Interest receivable and other assets” in the consolidated balance sheets.

Equity investments are recorded under the following methods:

• Low income housing tax credit investments are accounted for under the proportional amortization method.

Under this method, the initial book value (gross commitment amount) of the investment is amortized over time in proportion to the projected tax benefits to be received.

This amortization is a component of income tax expense.

• For equity investments where the Company has significant influence, the Company applies the equity method of accounting, which adjusts the carrying value of the investment to recognize a proportionate share of the financial results of the investment entity, regardless of whether any distribution is made.

Any adjustments to the fair value of these investments are recorded in “Other non-interest income” in the consolidated statements of income.

• For certain nonmarketable equity investments where the equity method of accounting is not applicable, the Company applies the fair value method.

Any adjustments to the fair value of these investments are recorded in “Other non-interest income” in the consolidated statements of income.

Fair value is determined by reference to readily determinable market values, if applicable.

As these investments do not have readily determinable fair values, they are generally accounted for at cost minus impairment, if any, plus or minus changes resulting from observable transactions involving the same or similar investments from the same issuer.

This practice is referred to as the measurement alternative.

Loss Contingencies

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The loans held for sale are accounted for at the lower of cost or fair value, using the aggregate method.

Government-guaranteed loans held for sale totaled $ 3,247,000 and $ 11,464,000 at December 31, 2024 and 2023, respectively.

There were no government-guaranteed loans held for sale at December 31, 2025.

Government-guaranteed loans held for sale at December 31, 2024 totaled $ 3,247,000 .

Servicing rights acquired through the origination of loans, which are subsequently sold with servicing rights retained, are recognized as separate assets or liabilities.

Servicing assets and liabilities are initially recorded at fair value and are subsequently amortized in proportion to, and over the period of, the related net servicing income or expense.

Servicing assets represent the assets related to servicing loans for others, including collecting payments, maintaining escrow accounts, disbursing payments to investors, and conducting foreclosure proceedings.

The amortized assets are assessed for impairment or increased obligations at the loan level, based on the fair value on a periodic basis.

The Company serviced loans with unpaid principal balances of $ 121,515,000 and $ 159,078,000 as of December 31, 2025 and 2024, respectively, on behalf of others.

Loan Commitments and Related Financial Instruments

Financial instruments include off-balance sheet credit instruments, such as commitments to make loans, and financial standby letters of credit issued to meet customer financing needs.

The face amount for these items represents the exposure

to loss, before considering customer collateral or ability to repay.

The face amount for these items represents the exposure to loss, before considering customer collateral or ability to repay.

Such financial instruments are recorded when they are funded.

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Stock-Based Compensation

Compensation cost is recognized for stock options and RSAs issued to executives, directors, and employees, based on the fair value of these awards at the date of grant.

A Black-Scholes model is utilized to estimate the grant date fair value of stock options, while the fair value of the Company’s common stock at the date of grant is used for RSAs.

The Company issues equity grants in the form of stock options, RSAs, and PSUs under the Five Star Bancorp 2021 Equity Incentive Plan.

These grants are issued to executives, directors, and employees.

Compensation cost is recognized based on the fair value of these awards at the date of grant.

A Black-Scholes model is utilized to estimate the grant date fair value of

stock options, while the fair value of the Company’s common stock at the date of grant is used for RSAs and PSUs.

Compensation cost is recognized over the required service period, generally defined as the vesting period.

For awards with graded vesting, compensation cost is recognized on a straight-line basis over the requisite service period for the entire award.

The Company recognizes forfeitures as they occur and does not estimate forfeitures at grant.

Supplemental Executive Retirement Plan

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Net income $ 61,606 $ 45,671 $ 47,734

Weighted average basic common shares outstanding 20,154,385 17,166,592 17,128,282

Basic weighted average common shares outstanding

21,224,788 20,154,385 17,166,592

Dilutive effects of assumed vesting of restricted stock 48,764 51,055 21,377

Weighted average diluted common shares outstanding 20,205,440 17,187,969 17,165,610

Income per common share:

Total dilutive weighted average common shares outstanding

21,273,552 20,205,440 17,187,969

Earnings per common share:

Basic EPS $ 2.90 $ 2.26 $ 2.78

Diluted EPS $ 2.90 $ 2.26 $ 2.78

Anti-dilutive shares, which are excluded from the dilutive EPS calculation, were deemed to be immaterial.

The Company did not have any anti-dilutive shares at December 31, 2025 or December 31, 2024.

Subordinated Notes

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As discussed in Note 1, Basis of Presentation, the Company qualifies as an emerging growth company and as such, has elected not to opt out of the extended transition period for complying with new or revised accounting standards and is not subject to the new or revised accounting standards applicable to public companies during the extended transition period.

The accounting standards discussed below indicate effective dates for the Company as an emerging growth company using the extended transition period.

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.

Our early adoption of ASU No.

2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures (“ASU 2023-09”) was voluntary and does not represent an irrevocable election to opt out of the extended transition period for all standards.

Apart from ASU 2023-09, the accounting standards discussed below indicate effective dates for the Company as an emerging growth company using the extended transition period.

Accounting Standards Adopted

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Allowance for Credit Losses - HTM Securities — ( 20 ) ( 20 )

— ( 20 ) ( 20 )

Deferred Tax Asset (Interest receivable and other assets) 12,273 1,883 14,156

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The Company adopted ASU 2023-07 on January 1, 2024, which did not have a significant impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, which enhances the transparency and decision usefulness of income tax disclosures.

ASU 2023-09 will require disaggregated information about a reporting entity’s effective tax rate

reconciliation as well as information on income taxes paid.

Entities will also be required to disclose income/(loss) from continuing operations before income tax expense/(benefit) disaggregated between domestic and foreign operations, as well as income tax expense/(benefit) from continuing operations disaggregated by federal, state, and foreign operations.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years, for emerging growth companies that have elected not to opt out of the extended transition period.

The Company elected to early adopt ASU 2023-09 for the fiscal year ended December 31, 2025, which did not have a significant impact on the Company’s consolidated financial statements.

The Company’s early adoption of ASU 2023-09 was voluntary and does not represent an irrevocable election to opt out of the extended transition period for all standards.

The Company has updated its income tax disclosures in accordance with ASU 2023-09, which primarily enhances transparency regarding income tax expense and related items.

Accounting Standards Issued But Not Yet Adopted

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ASU 2023-06 was issued in response to the SEC’s initiative to update and simplify disclosure requirements.

The SEC identified 27 disclosure requirements that were incremental to those in the ASC and referred them to the FASB for potential incorporation into U.S.

The SEC identified 27 disclosure requirements that were incremental to those in the ASC and referred them to the FASB for potential incorporation into GAAP.

To avoid duplication, the SEC intended to eliminate those disclosure requirements from existing SEC regulations as the FASB incorporated them into the relevant ASC subtopics.

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ASU 2023-06 is not expected to have a significant impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures (“ASU 2023-09”), which enhances the transparency and decision usefulness of income tax disclosures.

ASU 2023-09 will require disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid.

Entities will also be required to disclose income/(loss) from continuing operations before income tax expense/(benefit) disaggregated between domestic and foreign, as well as income tax expense/(benefit) from continuing operations disaggregated by federal, state, and foreign.

ASU 2023-09 is effective January 1, 2026 for emerging growth companies electing not to opt out of the extended transition period and is not expected to have a significant impact on the Company’s consolidated financial statements.

In March 2024, the FASB issued ASU 2024-02, Codification Improvements - Amendments to Remove References to the Concepts Statements (“ASU 2024-02”).

ASU 2024-02 contains amendments to the ASC that remove references to various

Concepts Statements.

ASU 2024-02 contains amendments to the ASC that remove references to various Concepts Statements.

In most instances, the references are extraneous and not required to understand or apply the guidance.

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On November 4, 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (“Subtopic 220-40”) :

Disaggregation of Income Statement Expenses (“ASU 2024-03”).

Disaggregation of Income Statement Expenses (“ASU 2024-03”) and in January 2025 the FASB issued ASU 2025-01, Clarifying the Effective Date .

This standard responds to investor input by requiring public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the notes to the financial statements.

22 unchanged sentences

The Company adopted ASC 326 on January 1, 2023, which affects accounting of credit loss expense on held-to-maturity and available-for-sale securities.

As of December 31, 2024, the allowance for credit losses on held-to-maturity securities was $ 20,000 .

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

As of December 31, 2025 and 2024, the allowance for credit losses on held-to-maturity securities was $ 20,000 .

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

Refer to Note 1, Basis of Presentation, for further detail.

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in a loss position

Fair Value Unrealized (Loss)

Fair Value Unrealized (Loss) Fair Value Unrealized (Loss) Fair Value Unrealized (Loss)

government agency securities $ 1,683 $ ( 6 ) $ 2,393 $ ( 47 ) $ 4,076 $ ( 53 )

$ 2,316 $ ( 11 ) $ 4,082 $ ( 89 ) $ 6,398 $ ( 100 )

Mortgage-backed securities — — 47,090 ( 8,786 ) 47,090 ( 8,786 )

4 unchanged sentences

government agency securities $ 2,316 $ ( 11 ) $ 4,082 $ ( 89 ) $ 6,398 $ ( 100 )

$ 1,130 $ ( 14 ) $ 7,081 $ ( 135 ) $ 8,211 $ ( 149 )

Mortgage-backed securities — — 49,476 ( 11,833 ) 49,476 ( 11,833 )

3 unchanged sentences

Total temporarily impaired securities $ 2,316 $ ( 11 ) $ 91,330 $ ( 17,711 ) $ 93,646 $ ( 17,722 )

There were 147 and 149 available-for-sale securities in unrealized loss positions at December 31, 2024 and 2023, respectively.

As of December 31, 2024, the investment portfolio included 141 investment securities that had been in a continuous loss position for twelve months or more and six investment securities that had been in a loss position for less than twelve months.

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

As of December 31, 2025, the investment portfolio included 142 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 December 31, 2025 and 2024, which had been in a continuous loss position for more than twelve months.

12 unchanged sentences

For the years ended December 31, 2025, 2024, and 2023, cash dividends received on FHLB capital stock in the amount of $ 1,317,000 , $ 1,320,000 , and $ 970,000 , respectively, were recorded as non-interest income in the consolidated statements of income.

Equity investments :

The Company is a limited partner in certain venture-backed capital funds and accounts for these investments under the equity method of accounting, as its ownership is greater than 3% of each fund.

The Company held $ 12,111,000 and $ 9,328,000 of equity investments at December 31, 2025 and 2024, respectively, included in “Interest receivable and other assets” in the consolidated balance sheets.

The Company’s share of earnings from these investments was $ 821,000 , $ 545,000 , and $ 1,683,000 for the years ended December 31, 2025, 2024, and 2023, respectively, and is included in “Other non-interest income” in the consolidated statements of income.

No individual investee is material to the Company’s consolidated financial statements.

Based on management’s analysis of each fund’s financial condition and certain qualitative factors, management determined that the equity investments were not impaired at December 31, 2025 and 2024.

Loans and Allowance for Credit Losses

The Company’s loan portfolio is its largest class of earning assets and typically provides higher yields than other types of earning assets.

Associated with the higher yields is an inherent amount of credit risk which the Company attempts to mitigate through strong underwriting practices.

Associated with the higher yields is an inherent amount of credit risk which the Company attempts to

mitigate through strong underwriting practices.

Table 4.1 presents the balance of each major product type within the Company’s portfolio as of the dates indicated.

40 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 :

54 unchanged sentences

Pass 19,160 11,692 50,158 522 — — — — 81,532

Watch — 14,891 — — — — — — 14,891

Total 19,160 26,583 50,158 522 — — — — 96,423

40 unchanged sentences

Pass 1,054 2,042 7,032 11,467 6,960 17,373 — — 45,928

Watch 501 — 791 — — — — — 1,292

Total 1,555 2,042 7,823 11,467 6,960 17,373 — — 47,220

7 unchanged sentences

Pass 232,420 33,453 7,874 5,812 6 207 — — 279,772

Watch — 16 — — — — — — 16

Substandard — — 9 — — — — — 9

11 unchanged sentences

Management also reviews loans graded “watch” or worse, regardless of loan type, no less than quarterly.

Table 4.3 shows the age analysis of past due loans by class as of the dates shown.

Table 4.3 presents the Company’s gross charge-offs by origination year and class, where origination is defined as the later of origination or renewal date, as of the periods indicated.

Gross Charge-Offs by Vintage

Amortized Cost Basis by Origination Year as of December 31, 2025

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

Commercial $ — $ — $ — $ 112 $ 168 $ — $ — $ — $ 280

Secured — 405 510 453 343 1,502 — — 3,213

Unsecured — — — — 50 — — — 50

Consumer and other — — 35 179 87 — — — 301

Total $ — $ 405 $ 545 $ 744 $ 648 $ 1,502 $ — $ — $ 3,844

Amortized Cost Basis by Origination Year as of December 31, 2024

(in thousands) 2024 2023 2022 2021 2020 Prior Revolving Loans Revolving Converted to Term Total

Secured 116 1,433 1,218 323 712 935 — — 4,737

Unsecured — 36 — 5 — — — — 41

Consumer and other — 46 211 116 — — — — 373

Total $ 116 $ 1,515 $ 1,429 $ 444 $ 712 $ 935 $ — $ — $ 5,151

Table 4.4 presents the age analysis of the Company’s past due loans by class as of the periods indicated.

Age Analysis of Past Due Loans by Class

24 unchanged sentences

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

No collateral dependent loans were in process of foreclosure at December 31, 2024 and 2023.

The Company had one collateral dependent commercial real estate loan for which the borrower was experiencing financial difficulty outstanding as of December 31, 2024 and 2023 in the amounts of $ 1,750,000 and $ 1,893,000 , respectively.

Non-accrual loans, segregated by class, as of December 31, 2024 and 2023 are shown in Table 4.4.

Nonaccrual Loans

Table 4.5 presents the amortized cost basis of the Company’s collateral dependent loans by class as of the periods indicated.

These loans were individually evaluated for credit loss in accordance with the Company’s allowance for credit losses methodology.

Collateral Dependent Loans by Class

(in thousands) 2025 2024

1 unchanged sentence

Secured 17 48

$ 2,684 $ 1,797

There were no residential real estate loans in the process of foreclosure as of December 31, 2025 and 2024.

Modifications to loans for borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, forbearances, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral.

Table 4.6 presents the amortized cost basis of loans by class that were modified due to financial distress during the periods indicated.

Amortized Cost Basis of Loans Modified due to Financial Distress

(in thousands) For the twelve months ended December 31, 2025

For the twelve months ended December 31, 2024

Payment Change/Deferment

Total % of Loans Outstanding

Payment Change

Total % of Loans Outstanding

Commercial $ 1,583 0.04 % $ 1,749 0.05 %

Total $ 1,583 0.04 % $ 1,749 0.05 %

Table 4.7 presents the financial effect of loans by class that were modified due to financial distress during the periods indicated.

Financial Effect of Loans Modified due to Financial Distress

For the twelve months ended December 31,

Modification Type

Financial Effect

2025 Payment Change/Deferment

Reduced the loan payment owed by the borrower for five months and deferred the full loan payment for one month

2024 Payment Change

Reduced the loan payment owed by the borrower for twelve months

Table 4.8 presents the Company’s non-accrual loans by class as of the periods indicated.

Non-accrual Loans

(in thousands) 2025 2024

Commercial $ 2,666 $ 1,750

Secured 430 48

Total non-accrual loans

$ 3,096 $ 1,798

No interest income was recognized on non-accrual loans in the years ended December 31, 2025, 2024, and 2023.

Non-accrual real estate loans did not have an allowance for credit losses as of December 31, 2025 and 2024.

Non-accrual commercial loans carried an immaterial allowance for credit losses as of December 31, 2025 and 2024.

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.

23 unchanged sentences

Secured 3,314 — ( 4,737 ) 695 6,594 5,866

Allowance for Credit Losses (continued)

(in thousands) Beginning Balance Effect of Adoption of ASC 326 Charge-offs Recoveries Provision (Benefit) Ending Balance

Unsecured 189 — ( 41 ) — 130 278

Consumer and other 378 — ( 373 ) 366 2,125 2,496

Unallocated 45 ( 45 ) — — — —

Total $ 34,431 $ — $ ( 5,151 ) $ 1,061 $ 7,450 $ 37,791

8 unchanged sentences

Unsecured 116 37 ( 6 ) — 42 189

— — ( 21 ) 21 — —

Consumer and other 347 80 ( 1,106 ) 995 62 378

8 unchanged sentences

Effect of adoption of ASC 326 — — 1,092

Provision ( 500 ) 30 25

(Benefit) provision ( 50 ) ( 500 ) 30

Balance at December 31 $ 697 $ 747 $ 1,247

27 unchanged sentences

Equity investments 12,111 9,328

Servicing assets 1,726 2,161

Low income housing tax credits

3 unchanged sentences

$ 68,680 $ 55,554

The Company serviced loans with unpaid principal balances of $ 159,078,000 and $ 191,551,000 as of December 31, 2024 and 2023, respectively, on behalf of others.

Interest-Bearing Deposits

16 unchanged sentences

Total time deposits $ 554,611

Total deposits include deposits offered through the IntraFi Network (formerly Promontory Interfinancial Network) that are comprised of Certificate of Deposit Account Registry Service® (“CDARS”) balances included in time deposits and Insured Cash Sweep® (“ICS”) balances included in money market and interest checking deposits.

Total deposits include deposits offered through the IntraFi Network that are comprised of Certificate of Deposit Account Registry Service® (“CDARS”) balances included in time deposits and Insured Cash Sweep® (“ICS”) balances included in money market and interest-bearing transaction deposits.

Through this network, the Company offers customers access to FDIC-insured deposit products in aggregate amounts exceeding current insurance limits.

When funds are deposited through CDARS and ICS on behalf of a customer, the Company has the option of receiving matching deposits through the network’s reciprocal deposit program or placing deposits “one-way,” for which the Company receives no matching deposits.

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

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 December 31, 2025 and 2024.

46 unchanged sentences

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

At December 31, 2024 and 2023, the Company had five unsecured federal funds lines of credit totaling $ 175,000,000 with five of its correspondent banks.

The borrowings were available at interest rates ranging from 4.55 % to 5.70 % as of December 31, 2024.

At December 31, 2025, the Company had five unsecured federal funds lines of credit totaling $ 185,000,000 with five of its correspondent banks.

At December 31, 2024, the Company had five unsecured federal funds lines of credit totaling $ 175,000,000 with five of its correspondent banks.

The borrowings were available at interest rates ranging from 3.75 % to 4.95 % as of December 31, 2025 and interest rates ranging from 4.55 % to 5.70 % as of December 31, 2024.

There were no amounts outstanding at December 31, 2025 and 2024.

401(k) Benefit Plan

A 401(k) benefit plan covers substantially all employees and allows voluntary employee contributions up to the lesser of 80% of compensation or the annually adjusted IRS dollar limit.

A 401(k) benefit plan covers substantially all employees and allows voluntary employee contributions up to the lesser of 100 % of eligible compensation or the annually adjusted IRS dollar limit.

These voluntary contributions are matched equal to 100 % of the first 3 % of the employee’s compensation contributed and 50 % of contributions exceeding 3 % of eligible compensation, not to exceed 5 % of the total eligible compensation.

1 unchanged sentence

The expense related to matching employees’ contributions for 2025, 2024, and 2023 was $ 1,039,000 , $ 835,000 , and $ 787,000 , respectively.

The provision for income tax for the years ended December 31, 2024, 2023, and 2022 differs from the statutory federal rate of 21.00% due to the items shown in Table 11.1.

Difference Between Provision for Income Tax and Statutory Federal Rate

The Company accounts for income taxes in accordance with ASC 740, Income Taxes .

The provision for income taxes consists of federal and state income taxes.

The Company does not have any foreign operations or foreign income tax exposure.

Income Tax Rate Reconciliation

Table 11.1 presents a calculation of the Company’s income tax expense for the year ended December 31, 2025.

Calculation of Income Tax Expense

(in thousands) Amount

Income before provision for income taxes

Income tax expense at U.S.

federal statutory rate

17,584 21.00 %

State and local income tax, net of federal income tax effect 1

IRC 45X Tax Credits

( 900 ) ( 1.07 ) %

Other tax credits

( 139 ) ( 0.17 ) %

Nontaxable and nondeductible items

Other nontaxable and nondeductible items

( 54 ) ( 0.06 ) %

Other adjustments

( 202 ) ( 0.25 ) %

$ 22,126 26.42 %

1 State taxes in California made up the majority of the effect of the state and local tax category.

Table 11.2 presents a reconciliation of the U.S.

federal statutory income tax rate to the Company’s effective income tax rate for the years ended December 31, 2024 and 2023.

Difference Between Effective Income Tax Rate and Statutory Federal Rate

(in thousands) 2024 2023

2 unchanged sentences

Increase (decrease) resulting from:

State taxes 5,219 5,048 5,381

State taxes, net of federal impact

Other 240 ( 155 )

Provision for income taxes $ 19,050 $ 18,882 $ 18,057

Income tax expense

$ 19,050 $ 18,882

Effective tax rate

29.43 % 28.34 %

The impact of transferable tax credits purchased and utilized during the year is included in the “IRC 45X Tax Credits” line item in the Company’s reconciliation of the U.S.

federal statutory income tax rate to the effective income tax rate, as required by ASU 2023-09.

For the year ended December 31, 2025, the transferable tax credits reduced the Company’s effective tax rate by 1.07 %.

Table 11.3 shows the components of the consolidated provision for income taxes for the years indicated.

6 unchanged sentences

22,704 19,293 19,673

Deferred tax benefit:

Deferred tax expense (benefit):

Federal ( 919 ) ( 66 ) ( 741 )

3 unchanged sentences

Provision for income taxes $ 22,126 $ 19,050 $ 18,882

Deferred tax assets and liabilities were due to the items listed in Table 11.3 as of December 31, 2024, 2023, and 2022.

Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities.

Table 11.4 shows significant components of deferred tax assets and liabilities as of December 31, 2025, 2024, and 2023.

Components of Deferred Tax Assets and Liabilities

6 unchanged sentences

State tax 1,188 1,268 751

Right of use liability 1,999 1,759 1,351

Operating lease liability

3,195 1,999 1,759

Other 392 334 1,891

9 unchanged sentences

Net deferred tax asset $ 13,569 $ 14,830 $ 14,333

The Company evaluates the need for a valuation allowance against deferred tax assets based on the likelihood of realization.

No deferred tax asset valuation allowance was established during 2025, 2024, or 2023, as management believes it is more likely than not the Company will realize the benefits of these deductible differences as of December 31, 2025, 2024, and 2023.

Tax Impacts of Investments in Qualified Affordable Housing Projects

Table 11.5 details items the Company recognized as components of tax expense, taxable losses and amortization expense relating to investments in Qualified Affordable Housing Projects for the periods indicated.

6 unchanged sentences

The total capital contributed, net of amortization , for the Low Income Housing Tax Credit Funds was $ 14,312,000 as of December 31, 2025.

As of December 31, 2024, the Company has committed to make additional capital contributions to the Low Income Housing Tax Credit Funds in the amount of $ 3,029,000 and these contributions are expected to be made in 2025.

As of December 31, 2025, the Company has committed to make additional capital contributions to the Low Income Housing Tax Credit Funds in the amount of $ 8,119,000 , of which $ 3,853,000 is expected to be made in 2026.

Transferable Tax Credits

During the year ended December 31, 2025, the Company purchased IRC 45X transferable federal tax credits from a third party under the provisions of the Inflation Reduction Act of 2022, as modified by H.R.

1, the “One Big Beautiful Bill Act” in 2025, resulting in a $ 0.9 million benefit to the provision for income taxes.

These credits were acquired to offset the Company’s current year income tax liability and were fully utilized during the year.

The credits were applied in accordance with relevant tax regulations, resulting in a reduction of the Company’s income tax payable for the year ended December 31, 2025.

The benefit from the utilization of the purchased tax credits is reflected in the Company’s income tax expense for the period.

No gain or loss was recognized, as the credits were used at their carrying value.

As of December 31, 2025, there were no remaining purchased tax credits recorded on the balance sheet, as all credits acquired during the year were utilized.

The Company’s ability to utilize purchased tax credits is subject to compliance with applicable tax laws and regulations.

Management has reviewed the eligibility and documentation requirements and determined that all credits purchased and utilized during the year met the necessary criteria.

Unrecognized Tax Benefits

No unrecognized tax benefits were outstanding as of December 31, 2025, 2024, or 2023.

The Company does not anticipate significant changes in unrecognized tax benefits within the next twelve months.

Other Disclosures

The Company files tax returns in the U.S.

3 unchanged sentences

It is the Company’s policy to record such accruals in its income tax accounts.

During 2022, the Company paid approximately $ 4,953,000 on March 17, 2022 to shareholders of record as of May 3, 2021, for the final payout of the AAA under the Company’s Tax Sharing Agreement in connection with the Company’s conversion to a C Corporation as of May 5, 2021.

The AAA represents previously taxed, but undistributed, earnings.

Related Party Transactions

1 unchanged sentence

In accordance with applicable regulations and Bank policies, these loans are granted on substantially the same terms, including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with persons not related to the Company.

Likewise, these transactions do not involve more than the normal risk of collectability or present other unfavorable features.

Likewise, these

transactions do not involve more than the normal risk of collectability or present other unfavorable features.

Table 12.1 is a summary of loans to related parties in 2025, 2024, and 2023.

4 unchanged sentences

Repayments ( 634 ) ( 358 ) ( 2,070 )

Transfers out 1

Ending balance $ 13,863 $ 14,497 $ 5,455

1 As a result of a change in employment with the Company, a loan balance belonging to a previously related party was transferred out of the classification of related party loans.

The change was not the result of any disagreement with the Company or due to any matter relating to its operations, policies, or practices.

At December 31, 2025, 2024, and 2023, deposits from related parties (directors, executive officers, and principal shareholders) totaled $ 39,242,000 , $ 53,607,000 , and $ 37,201,000 , respectively.

1 unchanged sentence

Property management fees totaling $ 1,000 in 2025, 2024, and 2023 were paid to the entity that owns this property.

The Company leased a temporary administrative office from an entity affiliated with a member of our board of directors, which is further described in Note 15, Commitments and Contingencies.

No property management fees were paid to the entity that owns this property.

Equity Incentive Plan

9 unchanged sentences

Stock-Based Compensation

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 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 Equity Incentive Plan.

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

3 unchanged sentences

In connection with its IPO in May 2021, the Company granted RSAs under the Equity Incentive Plan to certain employees, officers, executives, and non-employee directors.

Shares granted to non-employee directors vested immediately upon grant,

while shares granted to certain employees, officers, and executives vest ratably over three , five , or seven years (as defined in the respective agreements).

Shares granted to non-employee directors vested immediately upon grant, while shares granted to certain employees, officers, and executives vest ratably over three , five , or seven years (as defined in the respective agreements).

Since the completion of the IPO, the Company has granted RSAs under the Equity Incentive Plan to certain executives, which vest ratably over three or five years (as defined in the respective agreements), and to directors, which vest over one year .

All RSAs were granted at the fair value of common stock at the time of the award.

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.

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.

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

Performance is measured over a three-year period and such PSUs cliff vest.

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

All PSUs were granted at the fair value of common stock at the time of the 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.

Non-cash stock compensation expense recognized for the years ended December 31, 2025, 2024, and 2023 was $ 1,459,000 , $ 1,156,000 , and $ 962,000 , respectively.

1 unchanged sentence

Tax benefits for vested restricted shares are recorded as tax benefits in the consolidated statements of income with a corresponding decrease to current taxes payable and were immaterial for the years ended December 31, 2025, 2024, and 2023.

In 2024, the Company granted as compensation to members of the board of directors a total of 16,380 shares scheduled to cliff vest as of December 31, 2024 contingent on continued service.

In 2023, the Company granted as compensation to members of the board of directors a total of 13,882 shares scheduled to cliff vest as of December 31, 2023 contingent on continued service.

In 2022, the Company granted as compensation to members of the board of directors a total of 15,156 shares scheduled to vest monthly in equal installments over one year contingent on continued service.

In 2025, the Company granted as compensation to members of the board of directors a total of 11,097 shares that were scheduled to cliff vest as of December 31, 2025 contingent on continued service.

In 2024, the Company granted as compensation to members of the board of directors a total of 16,380 shares that were scheduled to cliff vest as of December 31, 2024 contingent on continued service.

In 2023, the Company granted as compensation to members of the board of directors a total of 13,882 shares that were scheduled to cliff vest as of December 31, 2023 contingent on continued service.

As of December 31, 2025, there was approximately $ 2,216,000 of unrecognized compensation expense related to the 124,747 unvested restricted shares.

12 unchanged sentences

End of the period balance 124,747 $ 23.25 120,577 $ 21.36 69,338 $ 20.53

Table 13.2 summarizes information about unvested PSUs.

The weighted average grant date fair value is based on the fair value at the time of grant.

The vesting of PSUs is subject to achievement of specified performance targets and continued employment.

Unvested Performance Share Activity

Shares Weighted Average Grant Date Fair Value

Beginning of the period balance — $ —

Shares granted 23,110 31.15

End of the period balance 23,110 $ 31.15

Table 13.2 shows the target number of PSUs awarded.

Vesting of the PSUs is based on achievement of the Company’s three-year average return on average assets for the performance period ended December 31, 2027 relative to a peer group of publicly traded banks and bank holding companies utilizing the S&P Global Broad Market Index - Western Region.

If the Company’s performance is at the 60th percentile, 70th percentile, and 80th percentile or higher, the recipients are entitled to receive 50 %, 100 %, and 150 % of their target award grant, respectively.

Based on current performance estimates, the Company estimates that the number of shares vested could be 150 % of the target award, or 34,665 shares, with approximately $ 814,000 of related unrecognized compensation expense.

The weighted average term remaining on unvested PSUs is 2.00 years.

Shareholders’ Equity

2 unchanged sentences

During the year ended December 31, 2023, the Company declared cash dividends on its common shares totaling $ 12,943,000 .

Of those total dividends, during 2022, $ 4,953,000 was paid out for certain shareholders affected by the Company’s termination of its S corporation status.

This distribution was for the remaining balance on the Company’s federal AAA for previously taxed, but undistributed, earnings.

Commitments and Contingencies

6 unchanged sentences

The Company uses the same credit policies in making commitments to originate loans and lines of credit as it does for on-balance sheet instruments, including obtaining collateral at exercise of the commitment.

The contractual amounts of unfunded loan commitments and standby letters of credit not reflected in the consolidated balance sheets are shown in Table 15.1.

The contractual

amounts of unfunded loan commitments and standby letters of credit not reflected in the consolidated balance sheets are shown in Table 15.1.

Unfunded Loan Commitments and Standby Letters of Credit

19 unchanged sentences

The Company’s largest single deposit relationship at December 31, 2025 totaled $ 290,000,000 , or approximately 6.90 % of total deposits.

At December 31, 2024, the Company had 104 deposit relationships that exceeded $ 5,000,000 each, totaling $ 2,166,080,000 , or approximately 60.88 % of total deposits.

The Company’s largest single deposit relationship at December 31, 2024 totaled $ 300,000,000 , or approximately 8.43 % 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 has committed to and is invested in a limited number of venture funds.

As of December 31, 2025 and 2024, the balance of these investments totaled approximately $ 12,111,000 and $ 9,328,000 , respectively.

As of December 31, 2025 and 2024, the estimated remaining commitment for these funds totaled $ 13,695,000 and $ 10,833,000 , respectively.

The Company leases office space for its banking operations under non-cancelable operating leases of various terms.

The leases expire at dates through 2035 and provide for renewal options from three to five years .

The leases expire at dates through 2036 and provide for renewal options from one to five years .

In the normal course of business, it is expected that these leases will be renewed or replaced by leases on other properties.

6 unchanged sentences

Until the opening of a full service branch in San Francisco in September 2024, the Company leased a temporary administrative office in San Francisco from an entity affiliated with a member of our board of directors.

No rent expense was paid to this entity for the year ended December 31, 2025.

Rent expense paid to this entity was $ 40,000 and $ 19,000 for the years ended December 31, 2024 and 2023, respectively.

There was no rent expense paid to this entity for the year ended December 31, 2022.

As of December 31, 2025, the Company’s ROUA and lease liability were $ 10,802,000 and $ 11,872,000 , respectively.

7 unchanged sentences

Other Lease Information

(in thousands, except for average remaining lease term and discount rate)

December 31, 2024 December 31, 2023

Weighted average remaining lease term

6.33 years 5.28 years

(in thousands, except for average remaining lease term and discount rate) December 31, 2025 December 31, 2024 December 31, 2023

Weighted average remaining lease term 7.68 years 6.33 years 5.28 years

Weighted average discount rate 4.99 % 4.99 % 4.11 %

7 unchanged sentences

Discount for present value of expected cash flows ( 2,641 )

Lease liability at December 31, 2024

Operating lease liability at December 31, 2025

Litigation Matters

18 unchanged sentences

As of December 31, 2025 and 2024, the maximum amount available for dividend distribution under this restriction was approximately $ 103,758,000 and $ 94,595,000 , respectively.

If a proposed dividend exceeds the limit, the Bank may still pay a dividend to the Holding Company if it

obtains approval from the DFPI and the dividend does not exceed the greater of:

If a proposed dividend exceeds the limit, the Bank may still pay a dividend to the Holding Company if it obtains approval from the DFPI and the dividend does not exceed the greater of:

(i) the retained earnings of the Bank;

49 unchanged sentences

$ 98,194 $ — $ 98,194 $ — OCI

Derivatives – interest rate swap 10 — 10 — NI

Available-for-sale securities are recorded at fair value on a recurring basis.

9 unchanged sentences

Due to current market conditions, as well as the limited trading activity of the securities, the market value of the securities is highly sensitive to assumption changes and market volatility.

On a recurring basis, derivative financial instruments are recorded at fair value, which is based on the income approach using observable Level 2 market inputs, reflecting market expectations of future interest rates as of the measurement date.

Standard valuation techniques are used to calculate the present value of the future expected cash flows assuming an orderly transaction.

Valuation adjustments may be made to reflect both the Company’s credit risk and the counterparties’ credit

risk in determining the fair value of the derivatives.

A similar credit risk adjustment, correlated to the credit standing of the counterparty, is made when collateral posted by the counterparty does not fully cover their liability to the Company.

There was no carrying value or fair value for interest rate swaps as of December 31, 2024.

The fair value of collateral dependent impaired loans and other real estate is generally based on recent real estate appraisals.

26 unchanged sentences

Loans held for investment, net of allowance for credit losses 4,030,520 3,971,563 Level 3 3,494,895 3,412,032 Level 3

FHLB stock and other investments 23,889 N/A N/A 21,801 N/A N/A

Interest rate swap — — Level 2 10 10 Level 2

Financial liabilities:

Interest rate swap $ — $ — Level 2 $ 10 $ 10 Level 2

Time deposits 554,611 553,987 Level 2 670,154 669,078 Level 2

Subordinated notes 74,041 73,723 Level 3 73,895 73,371 Level 3

Other borrowings — — Level 2 170,000 170,000 Level 2

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

2 unchanged sentences

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 :

2 unchanged sentences

For variable rate loans that reprice frequently with no significant change in credit risk, fair values are based on carrying values.

Fair values for other loans are estimated using discounted cash flow analyses, which use interest rates being offered at each reporting date for loans with similar terms to borrowers of comparable creditworthiness without considering widening credit spreads due to market illiquidity, which approximates the exit price notion.

approximates the exit price notion.

The allowance for credit losses is considered to be a reasonable estimate of loan discount for credit quality concerns.

FHLB stock and other investments :

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.

Commitments to extend credit :

6 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 :

34 unchanged sentences

Amortization of subordinated note issuance costs 146 146 144

Extinguishment of redeemed subordinated note issuance costs — — 302

Change in other assets ( 4,178 ) ( 2,418 ) ( 2,319 )

7 unchanged sentences

Cash dividends paid ( 17,085 ) ( 16,243 ) ( 12,943 )

Proceeds from subordinated note issuance — — 75,000

Subordinated note issuance costs — — ( 1,454 )

Subordinated note redemption — — ( 28,750 )

Net cash provided by financing activities ( 17,085 ) 64,627 ( 12,943 )

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 8. Financial Statements and Supplementary Data