What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-16 compared with 2025-03-13 · 154 added, 207 removed, 1560 unchanged (19% of the section changed)

19 unchanged sentences

(2013) issued by COSO.

Change in Accounting Principle

As discussed in Notes 1 and 4 to the financial statements, the Company has changed its method of accounting for credit losses effective January 1, 2023 due to the adoption of Financial Accounting Standards Board (FASB) Accounting Standards Codifications No.

326, Financial Instruments – Credit Losses (ASC 326).

The Company adopted the credit loss standard using the modified retrospective method such that prior period amounts are not adjusted and continue to be reported in accordance with previously applicable generally accepted accounting principles.

The application of the credit loss standard is also communicated as a critical audit matter below.

Basis for Opinions

51 unchanged sentences

Total cash and cash equivalents 207,142 198,792

Securities available-for-sale, at fair value (amortized cost of $ 159,742 and $ 156,175 , respectively, and allowance for credit losses of $ 0 and $ 0 , respectively, at at December 31, 2024 and 2023)

Securities available-for-sale, at fair value (amortized cost of $ 167,053 and $ 159,742 , respectively, and allowance for credit losses of $ 0 and $ 0 , respectively, at December 31, 2025 and 2024)

160,009 146,349

5 unchanged sentences

Federal Home Loan Bank and other restricted stock, at cost 14,978 14,042

Other real estate owned, net — 2,558

Bank-owned life insurance 32,796 31,766

13 unchanged sentences

Federal Home Loan Bank advances 34,000 —

Deferred tax liabilities, net

Operating lease liabilities 18,996 18,671

30 unchanged sentences

Provision (reversal) for credit losses 4,028 3,401 ( 132 )

Net interest income after provision (reversal) for credit losses

99,850 85,216 88,636

Net interest income after provision (reversal) for loan losses 85,216 88,636 86,030

Noninterest income:

24 unchanged sentences

Weighted-average common shares outstanding, diluted 14,279,130 14,342,361 14,417,938

(1) Provision (reversal) for credit losses for the years ended December 31, 2024 and 2023 is presented under ASC 326, while provision for credit losses for the year ended December 31, 2022 continues to be presented under legacy ASC 450 and ASC 310.

See Accompanying Notes to Consolidated Financial Statements

19 unchanged sentences

Balance at January 1, 2023 69,141 14,625,474 69,141 149,631 127,181 ( 10,511 ) 335,442

Comprehensive income (loss)

Cumulative effect adjustment upon adoption of ASC 326

— — — — ( 1,886 ) — ( 1,886 )

Adjusted balance at January 1, 2023

69,141 14,625,474 69,141 149,631 125,295 ( 10,511 ) 333,556

Comprehensive income

Net income — — — — 30,705 — 30,705

Other comprehensive loss, net of tax — — — — — ( 10,665 ) ( 10,665 )

Issuance of preferred stock 69,141 — 69,141 69,141

Other comprehensive income, net of tax

— — — — — 1,587 1,587

Issuance of restricted stock — 3,300 — — — — —

2 unchanged sentences

Repurchase of common stock — ( 512,657 ) — ( 8,828 ) — — ( 8,828 )

Stock repurchase excise tax

— — — ( 76 ) — — ( 76 )

Share-based compensation expense — — — 488 — — 488

3 unchanged sentences

Balance at December 31, 2023 69,141 14,260,440 69,141 142,563 146,092 ( 8,924 ) 348,872

Cumulative effect adjustment upon adoption of ASC 326

— — — — ( 1,886 ) — ( 1,886 )

Adjusted balance at January 1, 2023

69,141 14,625,474 69,141 149,631 125,295 ( 10,511 ) 333,556

Comprehensive income

Comprehensive income (loss)

Net income — — — — 25,810 — 25,810

Other comprehensive income, net of tax

— — — — — 1,587 1,587

Other comprehensive loss, net of tax — — — — — ( 395 ) ( 395 )

Issuance of restricted stock — 101,500 — — — — —

2 unchanged sentences

Repurchase of common stock — ( 14,947 ) — ( 222 ) — — ( 222 )

Stock repurchase excise tax

— — — ( 76 ) — — ( 76 )

Share-based compensation expense — — — 504 — — 504

Stock options exercised — 34,228 — 353 — — 353

Preferred stock dividends — — — — ( 834 ) — ( 834 )

Cash dividends declared on common stock ($ 0.72 per share)

15 unchanged sentences

Repurchase of common stock — ( 358,251 ) — ( 7,101 ) — — ( 7,101 )

Stock repurchase excise tax

— — — ( 8 ) — — ( 8 )

Share-based compensation expense — — — 973 — — 973

19 unchanged sentences

Provision (reversal) for credit losses 4,028 3,401 ( 132 )

3,401 ( 132 ) 3,602

Bank-owned life insurance income ( 1,030 ) ( 949 ) ( 753 )

26 unchanged sentences

Restricted stock surrendered due to employee tax liability ( 81 ) ( 3 ) ( 2 )

Issuance of preferred stock — — 69,141

Stock repurchase excise tax

( 8 ) ( 62 ) —

Repurchase of common stock ( 7,101 ) ( 222 ) ( 8,828 )

5 unchanged sentences

Cash and cash equivalents at end of year $ 207,142 $ 198,792 $ 242,342

See Accompanying Notes to Consolidated Financial Statements

16 unchanged sentences

Nature of Operations

PCB Bancorp is a bank holding company whose subsidiary is PCB Bank, which operates as a single operating segment.

The Company changed the Bank’s name from “Pacific City Bank” to “PCB Bank” on August 25, 2022.

As of December 31, 2024, the Bank is a single operating segment that operates 11 full-service branches in Los Angeles and Orange Counties, California, three full-service branches on the East Coast (Bayside, New York;

and Englewood Cliffs and Palisades Park, New Jersey), and two full-service branches in Texas (Carrollton and Dallas), and four LPOs in Los Angeles and Orange Counties, California;

Bellevue, Washington;

and Atlanta, Georgia.

PCB Bancorp is a bank holding company whose primary operations are through its subsidiary, PCB Bank, which operates as a single operating segment.

As of December 31, 2025, the Bank is a single operating segment that operates nine full-service branches in Los Angeles and Orange Counties, California, three full-service branches on the East Coast (Bayside, New York;

and Englewood Cliffs and Palisades Park, New Jersey), two full-service branches in Texas (Carrollton and Dallas), and one full-service branch in Georgia (Suwanee).

The Bank also has loan originators of primarily SBA loans in Washington.

The Bank offers a broad range of loans, deposits, and other products and services predominantly to small and middle market businesses and individuals.

34 unchanged sentences

If it is determined that the unrealized loss, or a portion thereof, is credit related, the Company records the amount of credit loss through a charge to provision for credit losses.

Unrealized losses deemed non-credit related are recorded, net of tax, through accumulated other comprehensive income.

Unrealized losses deemed non-credit related are recorded, net of tax, through accumulated other comprehensive income (loss).

The Company does not measure credit losses on an investment’s accrued interest receivable, but rather promptly reverses from current period earnings the amount of accrued interest that is no longer deemed collectable.

2 unchanged sentences

The Company originates SBA loans, and certain residential mortgage loans with the intention for sale in the secondary market.

The Company records the guaranteed portion of SBA loans and these residential mortgage and CRE loans held-for-sale at the lower of cost or fair value on an aggregate basis.

The Company records the guaranteed portion of SBA loans and these residential mortgage loans held-for-sale at the lower of cost or fair value on an aggregate basis.

Fair value is based on commitments on hand from investors or prevailing market prices.

86 unchanged sentences

The net difference between the worst case scenario loss rate and the current period’s quantitative reserve rate is the maximum available qualitative reserve for a given segment.

The required qualitative reserve for each segment is then determined based on the weighting of the qualitative category and the assignment of risk status rating (improvement, no risk, minor risk, moderate risk, and major risk) for each qualitative factor category.

The required qualitative reserve for each segment is then determined based on the weighting of the qualitative category and the assignment of risk status rating (improvement, no risk, very low, low, moderate, high, and very high) for each qualitative factor category.

Qualitative adjustments may be related to and include, but not limited to factors such as:

10 unchanged sentences

Subsequent recoveries, if any, are credited to the ACL.

Prior to the Company’s adoption of ASC 326 on January 1, 2023

The Company maintained an allowance for loan losses in accordance with ASC 450, Contingencies and ASC 310, Receivables, which was a valuation allowance for probable incurred credit losses.

Management estimated the allowance for loan losses using past loan loss experience, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors.

The allowance consisted of general reserves (collectively evaluated for impairment) and specific reserves (individually evaluated for impairment).

General reserves covered non-impaired loans and are based on historical loss rates over the most recent 11 years for each portfolio segment, as of December 31, 2022, adjusted for the effects of qualitative or environmental factors that were likely to cause estimated credit losses as of the evaluation date to differ from the portfolio segment’s historical loss experience.

The Company utilized a migration analysis to measure actual historical loss experience, with the resulting historical loss rate adjusted for any applicable loss emergence period factors serving as the base loss rate to estimate the amount of appropriate loss reserve.

Qualitative factors included consideration of the following:

changes in lending policies and procedures;

changes in economic conditions;

changes in the nature and volume of the portfolio;

changes in the experience, ability, and depth of lending management and other relevant staff;

changes in the volume and severity of past due, nonaccrual, and other adversely graded loans;

changes in the loan review system;

changes in the value of the underlying collateral for collateral-dependent loans;

concentrations of credit and the effect of other external factors such as competition and legal and regulatory requirements.

Specific reserves related to loans that were individually classified as impaired.

A loan was impaired when, based on current information and events, it was probable that the Company would be unable to collect all amounts due according to the contractual terms of the loan agreement.

Factors considered in determining impairment included payment status, collateral value, and the probability of collecting all amounts when due.

Measurement of impairment was based on the expected future cash flows of an impaired loan, which were to be discounted at the loan’s effective interest rate, or measured by reference to an observable market value, if one exists, or the fair value of the collateral for a collateral-dependent loan.

The Company selected the measurement method on a loan-by-loan basis, with the exception of collateral-dependent loans for which the most viable source of repayment was the continued operation of the collateral or liquidation of the collateral.

The impairment for these loans was measured at the fair value of the collateral, less estimated selling cost.

The Company applies an expected credit loss estimation methodology applied to each respective loan segment for determining the ACL on off-balance sheet credit exposures.

These assumptions are based on the Company’s own historical internal loan data.

Premises and Equipment

4 unchanged sentences

Operating Leases

The Company’s operating leases are for its headquarters’ office spaces, and retail branch and LPO locations.

The Company’s operating leases are for its headquarters’ office spaces and retail branch locations.

Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years .

39 unchanged sentences

The recorded investment amount is included in Other Assets and unfunded commitment is included in Accrued Interest Payable and Other Liabilities on the Consolidated Statements of Financial Condition.

As components of Income Tax Expense on the Consolidated Statement of Income , the Company recognized $ 572 thousand, $ 451 thousand and $ 343 thousand in amortization expense, respectively, partially offset by federal tax credits and other benefits of $ 757 thousand, $ 674 thousand and $ 336 thousand, respectively, for the years ended December 31, 2024, 2023 and 2022.

As components of Income Tax Expense on the Consolidated Statement of Income , the Company recognized $ 1.0 million, $ 572 thousand and $ 451 thousand in amortization expense, respectively, partially offset by federal tax credits and other benefits of $ 1.0 million, $ 757 thousand and $ 674 thousand, respectively, for the years ended December 31, 2025, 2024 and 2023.

The Company determined that there were no events or changes in circumstances indicating that it is more likely than not that the carrying amount of the investment will not be realized.

71 unchanged sentences

Adopted Accounting Pronouncements

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07 Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires enhanced segment reporting disclosures.

This ASU requires that interim disclosures align to the annual disclosure requirements and introduces additional disclosures intended to provide more insight into segment operations.

This ASU is effective for fiscal years beginning after December 14, 2023, and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted this ASU effective December 31, 2024.

The adoption of this ASU did not have an impact on the Company’s Consolidated Financial Statements, but did result in additional disclosures.

See Note 19 for additional information.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures”.

This ASU requires public business entities to disclose in the rate reconciliation table additional categories of information about federal, state, and foreign income taxes and to provide more details about the reconciling items in some categories if items meet a quantitative threshold.

Improvements to Income Tax Disclosures.” This ASU requires public business entities to disclose in the rate reconciliation table additional categories of information about federal, state, and foreign income taxes and to provide more details about the reconciling items in some categories if items meet a quantitative threshold.

It also requires all entities to disclose income taxes paid, net of refunds, disaggregated by federal, state, and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold.

This ASU is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted for periods for which financial statements have not yet been issued.

This ASU is not expected to have a significant impact on the Company’s Consolidated Financial Statements.

For public business entities, this ASU is effective for fiscal years beginning after December 15, 2024.

The Company adopted this ASU and presented retrospectively in Note 14.

Adoption of this ASU did not have a significant impact on the Company’s Consolidated Financial Statements.

Recent Accounting Pronouncements Not Yet Adopted

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

4 unchanged sentences

This ASU is effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods within fiscal years beginning after December 15, 2027.

The guidance can be applied prospectively with an option for retrospective application and early adoption is permitted.

This ASU can be applied prospectively with an option for retrospective application and early adoption is permitted.

This ASU is not expected to have a significant impact on the Company’s Consolidated Financial Statements.

In November 2025, the FASB issued ASU 2025‑08, “Financial Instruments - Credit Losses (Topic 326):

Purchased Loans.” This ASU expands the scope of the “gross‑up” method, formerly applicable only to purchased credit‑deteriorated ("PCD") assets, to include acquired non‑PCD loans that meet certain criteria, now referred to as “purchased seasoned loans (PSLs).” Under this model, an allowance for expected credit losses is recognized at acquisition, offsetting the loan’s amortized cost basis, thereby eliminating the day-one credit‑loss expense previously required for non‑PCD assets.

PSLs are defined as non‑PCD loans acquired either (i) through a business combination, or (ii) purchased more than 90 days after origination when the acquirer was not involved in origination.

This ASU will be effective for interim and annual reporting periods beginning after December 15, 2027 and early adoption is permitted.

This ASU is not expected to have a significant impact on the Company’s Consolidated Financial Statements.

In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270):

Narrow-Scope Improvements.” This ASU clarifies and enhances guidance under ASC 270 on interim financial reporting by (i) clarifying the scope of ASC 270 such that it now explicitly applies only to entities that issue complete interim financial statements and related notes under U.S.

GAAP, (ii) establishing clear guidance on the form of interim statements and notes, incorporating a comprehensive list of required interim disclosures drawn from across the ASC, and (iii) introducing a requirement to disclose material events and changes occurring after the end of the last annual period that could impact interim results.

This ASU is effective for interim reporting periods within fiscal years beginning after December 15, 2027 and early adoption is permitted.

Aside from complying with the new disclosure requirements, this ASU is not expected to have a significant impact on the Company’s Consolidated Financial Statements.

Fair Value Measurements

108 unchanged sentences

Business property

$ 425 Pending sales agreement NM NM

$ 994 Fair value of collateral Selling cost 6 %

For assets measured at fair value, the following table presents the total net gains (losses), which include charge-offs, recoveries, individual reserves, impairment on servicing assets, gain (loss) on sale of OREO, and OREO valuation write-downs recorded for the periods indicated:

2 unchanged sentences

Loans individually evaluated:

Commercial and industrial $ ( 47 ) $ 1,074 $ ( 1,074 )

Business property

200 ( 264 ) N/A

Multifamily ( 20 ) — N/A

Other real estate owned

$ ( 135 ) $ 200 $ ( 264 )

Multifamily — ( 20 ) —

Commercial and industrial ( 37 ) ( 47 ) 1,074

Net gains (losses) recognized $ ( 172 ) $ 133 $ 810

40 unchanged sentences

Deposits $ 2,795,412 $ 2,805,598 $ — $ — $ 2,805,598

Other short-term borrowings 15,000 15,000 15,000 —

FHLB advances 34,000 34,000 — 34,000 —

Accrued interest payable 25,228 25,228 — 4 25,224

9 unchanged sentences

Deposits $ 2,615,791 $ 2,620,750 $ — $ — $ 2,620,750

FHLB advances 39,000 39,013 — 39,013 —

Other short-term borrowings 15,000 15,000 — 15,000 —

Accrued interest payable 24,407 24,407 — 2 24,405

34 unchanged sentences

Securities Available-For-Sale

($ in thousands) Amortized Cost Fair Value

($ in thousands) Amortized Cost

Within one year

12 unchanged sentences

Proceeds from sales and calls of securities available-for-sale

$ — $ — $ 1,040

Tax expense on sales and calls of securities available-for-sale

59 unchanged sentences

In the ordinary course of business, the Company may grant loans to certain officers and directors, and the companies with which they are associated.

As of December 31, 2024 and 2023 , the Company had $ 0 and $ 111 thousand of such loans outstanding, respectively.

During the year ended December 31, 2024, the Company reclassed business property loans of $ 6.5 million to commercial property loans due to the changes in owner occupancy and primary source of income for repayment, and a commercial and industrial loan of $ 38.9 million to multifamily loans due to the change in purpose of note from note purchase to property ownership.

As of December 31, 2025 and 2024 , the Company had $ 0 and $ 0 of such loans outstanding, respectively.

During the year ended December 31, 2025, the Company reclassed business property loans of $ 4.8 million to commercial property loans due to the changes in owner occupancy and primary source of income for repayment .

Allowance for Credit Losses on Loans

3 unchanged sentences

Provision for credit losses on loans $ 3,675 $ 3,488 $ 497

Reversal for credit losses on off-balance sheet credit exposures ( 87 ) ( 629 )

Provision (reversal) for credit losses on off-balance sheet credit exposures

353 ( 87 ) ( 629 )

Total provision (reversal) for credit losses $ 4,028 $ 3,401 $ ( 132 )

11 unchanged sentences

Balance at December 31, 2024 12,923 3,967 2,371 81 8,713 2,506 67 30,628

The increase in overall ACL for the year ended December 31, 2024 was primarily due to an increase in loans held-for-investment, partially offset by decreases in quantitative reserves from improvements in the economic forecasts.

Charge-offs — ( 307 ) — — ( 919 ) — ( 82 ) ( 1,308 )

Recoveries — 4 — — 377 — 5 386

Provision (reversal) for credit losses on loans ( 3,575 ) 683 ( 1,089 ) 42 7,186 365 63 3,675

Balance at December 31, 2025 $ 9,348 $ 4,347 $ 1,282 $ 123 $ 15,357 $ 2,871 $ 53 $ 33,381

The increase in overall ACL for the year ended December 31, 2025 was primarily due to increases in loans held-for-investment, quantitatively measured loss reserves and reserves on individually evaluated loans, partially offset by a decrease in overall reserve related to qualitative adjustment factors.

Credit Quality Indicators

10 unchanged sentences

Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or repayment in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The following table summarize the Company’s loans held-for-investment by loan segment, internal risk ratings and vintage year as of December 31, 2024 and gross write offs for the year ended December 31, 2024.

The following table summarizes the Company’s loans held-for-investment by loan segment, internal risk ratings and vintage year as of December 31, 2025 and gross write offs for the year ended December 31, 2025.

The vintage year is the year of origination, renewal or major modification.

1 unchanged sentence

Term Loans by Origination Year Revolving Loans Revolving Loans Converted to Term

($ in thousands) 2024

2023 2022 2021 2020 Prior Total

($ in thousands) 2025 2024 2023 2022 2021 Prior Total

December 31, 2025

31 unchanged sentences

Term Loans by Origination Year Revolving Loans Revolving Loans Converted to Term

($ in thousands) 2024

2023 2022 2021 2020 Prior Total

($ in thousands) 2025 2024 2023 2022 2021 Prior Total

December 31, 2025 (Continued)

104 unchanged sentences

Nonaccrual Loans

The following table presents the loans on nonaccrual status by loan segments as of the date indicated:

The following table presents loans on nonaccrual status by loan segments as of the date indicated:

($ in thousands) Total Nonaccrual Loans Nonaccrual Loans with ACL ACL on Nonaccrual Loans Collateral Dependent Nonaccrual Loans ACL on Collateral Dependent Nonaccrual Loans

16 unchanged sentences

Commercial and industrial 79 8 8 79 8

Residential mortgage 403 — — 403 —

Other consumer 24 24 — — —

9 unchanged sentences

The following table presents the collateral dependent loans by loan segments as of the date indicated:

($ in thousands) Hotel / Motel Warehouse Car Wash Retail Single Family Residential Other

($ in thousands) Hotel / Motel Restaurants Car Wash Retail Single Family Residential Other

December 31, 2025

13 unchanged sentences

Commercial and industrial 11 — 8 — 60 — 79

Residential mortgage — — — — 403 — 403

Total consumer — — — — 403 — 403

Total $ 1,862 $ — $ 1,703 $ 606 $ 463 $ 35 $ 4,669

32 unchanged sentences

December 31, 2025

Commercial and industrial $ 49 $ 49 0.1 %

Total $ 49 $ 49 0.1 %

December 31, 2024

Commercial real estate:

3 unchanged sentences

Total $ 2,603 $ 2,603 0.1 %

December 31, 2023

Total $ — $ — — %

The Company had no commitments to lend to the borrowers included in the above table.

There were no loans that were both experiencing financial difficulty and modified during the year ended December 31, 2023.

There were no loans that had a payment default during the years ended December 31, 2025 and 2024 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty.

The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty for the period indicates:

Year Ended December 31, 2024

Combination of Other-Than-Insignificant Payment Delay and Term Extension

Commercial property

6 -month fixed payment and 6 -month term extension

Business property

6 -month fixed payment and 6 -month term extension

December 31, 2025

Commercial and industrial 6 -month interest-only payment and 6 -month term extension

December 31, 2024

Commercial property 6 -month fixed payment and 6 -month term extension

Business property 6 -month fixed payment and 6 -month term extension

The following table presents the performance of such loans that have been modified in the last 12 months:

2 unchanged sentences

December 31, 2025

Total $ — $ — $ — $ —

December 31, 2024

Commercial real estate:

31 unchanged sentences

Certain loans are transferred to held-for-sale with write-downs to ACL on loans.

Prior to Adoption of ASC 326

Allowance for Loan Losses

The following table presents the activities in allowance for loan losses by legacy loan segments for the periods indicated:

($ in thousands) Real Estate Commercial and Industrial Consumer Total

Balance at January 1, 2022 $ 16,797 $ 5,310 $ 274 $ 22,381

— ( 1,095 ) ( 104 ) ( 1,199 )

Recoveries on loans previously charged off

Provision (reversal) for loan losses 2,430 1,226 ( 54 ) 3,602

Balance at December 31, 2022 $ 19,227 $ 5,502 $ 213 $ 24,942

Impaired Loans

The following table presents information on the recorded investment in impaired loans by legacy loan segments for the periods indicated:

Year Ended December 31, 2022

($ in thousands) Average Recorded Investment Interest Income

Real estate loans:

Commercial property $ 1,540 $ 21

Residential property 379 —

SBA property 862 15

Commercial and industrial loans:

Commercial lines of credit 1,635 —

SBA commercial term 126 —

Total $ 4,542 $ 36

The following table presents a summary of interest foregone on impaired loans for the periods indicated:

($ in thousands) Year Ended December 31, 2022

Interest income that would have been recognized had impaired loans performed in accordance with their original terms

interest income recognized on impaired loans on a cash basis

Interest income foregone on impaired loans $ 261

Purchases, Sales, and Transfers

The following table presents a summary of loans held-for-investment transferred to loans held-for-sale for the periods indicated:

($ in thousands) Year Ended December 31, 2022

Real estate loans:

Residential property $ 458

Commercial and industrial loans:

Commercial lines of credit 4,000

Total $ 4,458

The Company had no loans that were transferred from loans held-for-sale to loans held-for investment during the year ended December 31, 2022.

The Company had no purchases of loans held-for-investment during the year ended December 31, 2022.

The Company had no sales of loans held-for-investment during the year ended December 31, 2022.

When the Company changed its intent to hold loans for investment, the loans are transferred to held-for-sale.

Premises and Equipment

22 unchanged sentences

2,958 973 15,317

Right-of-use assets impairment (2)

(1) Included in Occupancy and Equipment on the Consolidated Statements of Income.

(2) Included in Other Expense on the Consolidated Statements of Income.

The Company used the incremental borrowing rate based on the information available in determining the present value of lease payment.

19 unchanged sentences

— ( 3,024 ) —

( 3,024 ) — ( 808 )

Net change in valuation allowance

13 unchanged sentences

Total $ — $ ( 2 ) $ —

The Company did no t provide loans to finance the sale of its OREO properties during the years ended December 31, 2024, 2023 or 2022.

The Company did not provide loans to finance the sale of its OREO properties during the years ended December 31, 2025, 2024 or 2023.

Servicing Assets

18 unchanged sentences

$ 7,550 $ 425,876 $ 68,982 $ 502,408 $ 9,072 $ 445,601 $ 70,909 $ 525,582

The Company maintained custodial escrow accounts of $ 1.8 million and $ 148 thousand, respectively, at December 31, 2024 and 2023 for the above sold loans being serviced.

The Company maintained custodial escrow accounts of $ 144 thousand and $ 1.8 million, respectively, at December 31, 2025 and 2024 for the above sold loans being serviced.

The following table presents activity in servicing assets for the periods indicated:

12 unchanged sentences

The aggregate amount of deposits reclassified as loans, such as overdrafts, was $ 262 thousand and $ 346 thousand at December 31, 2025 and 2024, respectively.

Total deposits not covered by deposit insurance were $ 1.04 billion and $ 954.6 million, respectively, and total time deposits not covered by deposit insurance were $ 459.8 million and $ 408.6 million, respectively, at December 31, 2024 and 2023.

The Company had California State Treasurer’s deposits of $ 60.0 million and $ 60.0 million in time deposits of more than $250,000 at December 31, 2025 and 2024, respectively.

12 unchanged sentences

FHLB Advances

The Company had FHLB advances of $ 0 and $ 39.0 million at December 31, 2024 and 2023, respectively.

FHLB advances as of December 31, 2023 consisted of a term borrowing with a maturity date of February 21, 2024 (term of 92 days).

The Company had an overnight FHLB advance of $ 34.0 million at December 31, 2025.

At December 31, 2024, the Company had no FHLB advances.

The following table presents financial data of FHLB advances as of the dates or for the periods indicated:

12 unchanged sentences

Advances paid early are subject to a prepayment penalty.

At December 31, 2024 and 2023, loans pledged to secure FHLB advances were $ 977.6 million and $ 1.04 billion, respectively.

At December 31, 2025 and 2024, loans pledged to secure FHLB advances were $ 1.12 billion and $ 977.6 million, respectively.

The Company’s investment in capital stock of the FHLB of San Francisco totaled $ 14.8 million and $ 13.9 million, respectively, at December 31, 2025 and 2024.

1 unchanged sentence

Federal Reserve Discount Window

The Company had $ 586.5 million of unused borrowing capacity from the Federal Reserve Discount Window, to which the Company pledged loans with a carrying value of $ 724.0 million with no outstanding borrowings at December 31, 2024.

The Company had $ 841.6 million of unused borrowing capacity from the Federal Reserve Discount Window, to which the Company pledged loans with a carrying value of $ 1.05 billion with no outstanding borrowings at December 31, 2025.

At December 31, 2024, the Company had $ 586.5 million of unused borrowing capacity from the Federal Reserve Discount Window, to which the Company pledged loans with a carrying value of $ 724.0 million with no outstanding borrowings.

1 unchanged sentence

The Company maintains overnight federal funds lines with correspondent financial institutions.

The Company had an overnight

borrowing of $ 15.0 million with an interest rate of 4.65 % and unused borrowing capacity of $ 50.0 million at December 31, 2024.

At December 31, 2023, the Company maintained available borrowing capacity of $ 65.0 million with no overnight borrowing.

The Company had no borrowings and unused borrowing capacity of $ 65.0 million at December 31, 2025.

At December 31, 2024, the Company an overnight borrowing of $ 15.0 million with an interest rate of 4.65 % and unused borrowing capacity of $ 50.0 million .

Shareholders’ Equity

1 unchanged sentence

Series C, Senior Non-Cumulative Perpetual Preferred Stock

On May 24, 2022, the Company issued 69,141 shares of Senior Non-Cumulative Perpetual Preferred Stock, Series C, liquidation preference of $ 1,000 per share for the capital investment of $ 69.1 million from the U.S.

On May 24, 2022, the Company issued 69,141 shares of Series C Preferred Stock with a liquidation preference of $ 1,000 per share for the capital investment of $ 69.1 million from the U.S.

Treasury under the ECIP.

ECIP investment is treated as tier 1 capital for the regulatory capital treatment.

The Series C Preferred Stock bears no dividend for the first 24 months following the investment date.

Beginning on May 24, 2024, holders of the Series C Preferred Stock are entitled to quarterly non-cumulative cash dividends as declared by the Company’s Board of Directors.

The Series C Preferred Stock dividend rate adjusts annually based on the lending growth criteria listed in the terms of the ECIP investment with the annual dividend rate up to 2 %.

After the tenth anniversary of the investment date, the dividend rate will be fixed based on average annual amount of lending in years 2 through 10.

Dividends will be payable quarterly in arrears on March 15, June 15, September 15, and December 15.

The terms of the Series C Preferred Stock prohibit the Company from paying dividends on or repurchasing shares of its common stock unless it has paid or contemporaneously pays the full Series C Preferred Stock dividend with respect to the preceding quarterly dividend period.

The ECIP investment qualifies as tier 1 capital for the purposes of the bank regulatory capital requirements.

The Series C Preferred Stock accrued no dividend for the first 24 months following the investment date.

Thereafter, the dividend rate is adjusted based on the qualified lending growth criteria listed in the terms of the ECIP investment with the annual dividend rate up to 2 %.

After the tenth anniversary of the investment date, the dividend rate will be fixed based on the average annual amount of lending in years 2 through 10.

Dividends are payable quarterly in arrears on March 15, June 15, September 15, and December 15.

Established by the Consolidated Appropriations Act, 2021, the ECIP was created to encourage low- and moderate-income community financial institutions and minority depository institutions to provide loans, grants, and forbearance for small businesses, minority-owned businesses, and consumers, especially low-income and underserved communities, including persistent poverty counties, that may be disproportionately impacted by the economic effect of the COVID-19 pandemic by providing direct and indirect capital investments in low- and moderate-income community financial institutions.

The Series C Preferred Stock may be redeemed at the option of the Company on or after the fifth anniversary of issuance (or earlier in the event of loss of regulatory capital treatment), subject to the approval of the appropriate federal banking regulator and in accordance with the federal banking agencies’ regulatory capital regulations.

On January 16, 2025, the Company entered into an Option Agreement with the U.S.

Treasury, which grants the Company the option to repurchase the Series C Preferred Stock during the first 15 years following the Company’s issuance of the Series C Preferred Stock.

On January 16, 2025, the Company entered into the Option Agreement with the U.S.

Treasury, which grants the Company the conditional option to repurchase the Series C Preferred Stock during the first 15 years following the Company’s issuance of the Series C Preferred Stock.

The Option Agreement provides that if the Company meets certain conditions, the Company or the Company’s qualifying designee may repurchase the Series C Preferred Stock, potentially at a substantial discount (the “Repurchase Option”).

The purchase price for the Preferred Stock under the Option Agreement is based on a formula equal to the present value of the Preferred Stock, calculated as set forth in the Option Agreement, together with any accrued and unpaid dividends thereon and could represent a discount from the Series C Preferred Stock’s liquidation amount.

The purchase option may not be exercised during the ECIP Period unless and until the Company meets at least one of the Threshold Conditions:

The purchase option may not be exercised during the ECIP Period unless and until the Company meets at least one of the following Threshold Conditions:

(1) an average of at least 60 % of the Company’s loan originations qualify as “Deep Impact Lending” over any 16 consecutive quarters, (2) an average of at least 85 % of the Company’s “total originations qualify as “Qualified Lending” over any 24 quarters or (3) the Series C Preferred Stock has a dividend rate of no more than 0.5 % at each of six consecutive “Reset Dates,” in each case as defined in Option Agreement and the terms of the Series C Preferred.

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The earliest possible date by which a Threshold Condition may be met is June 30, 2026.

However, the Company does not currently meet any of the Threshold Conditions necessary to exercise the purchase option, and there can be no assurance if and when the Threshold Conditions will be met.

However, the Company does not currently meet any of the Threshold Conditions necessary to exercise the purchase option, and there can be no assurance whether and when the Threshold Conditions will be met.

The following table presents the estimated purchase price based on the formula set forth in the Option Agreement as if the Company met all Threshold Conditions as of December 31, 2025:

Dividend Rate at the Reset Date Immediately Preceding the Purchase Date

($ in thousands) 0.50 % 1.25 % 2.00 %

Purchase price $ 4,742 $ 11,855 $ 18,969

Discount 64,399 57,286 50,172

The Company began paying quarterly dividends on the Series C Preferred Stock at 2 % beginning in the three months ended June 30, 2024.

Dividends on the Series C Preferred Stock totaled $ 834 thousand for the year ended December 31, 2024.

Dividends on the Series C Preferred Stock totaled $ 300 thousand and $ 834 thousand for the years ended December 31, 2025 and 2024, respectively.

Stock Repurchases

During the year ended December 31, 2024, the Company repurchased and retired 14,947 shares of common stock at a weighted-average price of $ 14.88 per share.

On July 25, 2024, the Company announced the amendment of the 2023 stock repurchase program, which extended the program expiration from August 2, 2024 to August 1, 2025.

During the year ended December 31, 2025, the Company repurchased and retired 358,251 shares of common stock at a weighted-average price of $ 19.82 per share under a stock repurchase program first approved by the Board of Directors on August 2, 2023 authorizing the repurchase of up to 720,000 shares.

On July 23, 2025, the Company announced that the term of the stock repurchase program would be extended to July 31, 2026.

As of December 31, 2025, the Company was authorized to purchase 219,526 additional shares under the stock repurchase program.

During the year ended December 31, 2023, the Company repurchased and retired 512,657 shares of common stock at a weighted-average price of $ 17.22 per share under a stock repurchase program approved by the Board of Directors on August 2, 2023 and a legacy stock repurchase program approved on July 28, 2022.

During the year ended December 31, 2024, the Company repurchased and retired 14,947 shares of common stock at a weighted-average price of $ 14.88 per share.

During the year ended December 31, 2023, the Company repurchased and retired 512,657 shares of common stock at a weighted-average price of $ 17.22 per share.

Share-Based Compensation

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The option holder of non-qualified stock option recognizes taxable income based on the closing market price immediately before the exercise date less the exercise price stated in the grant agreement.

The following table presents the weighted-average assumptions used to determine the fair value of options granted for the periods indicated:

The following table represents stock option activity as of and for the period indicated:

Year Ended December 31, 2025

($ in thousands except per share data)

Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Contractual Term Aggregated Intrinsic Value

Outstanding at beginning of year

576,412 $ 14.20 5.01 years $ 3,481

( 206,732 ) $ 11.02 1.08 years

Balance at end of year 369,680 $ 15.98 5.73 years $ 2,097

Exercisable at end of year 271,361 $ 15.91 5.08 years $ 1,558

The following table represents information regarding unvested stock options for the period indicated:

Year Ended December 31, 2025

Number of Shares Weighted-Average Exercise Price Per Share

Outstanding at beginning of year

179,659 $ 15.93

( 81,340 ) $ 15.66

Balance at end of year 98,319 $ 16.16

The following table presents the weighted-average assumptions used to determine the fair value of options granted for the periods indicated:

Year Ended December 31,

Risk-free interest rate

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Expected term

6.80 years 6.04 years 6.50 years

6.80 years 6.04 years

Expected stock price volatility

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$ — $ 4.15 $ 3.14

The following table represents stock option activity as of and for the period indicated:

Year Ended December 31, 2024

($ in thousands except per share data)

Number of Shares Weighted-Average Exercise Price Per Share Weighted-Average Contractual Term Aggregated Intrinsic Value

Outstanding at beginning of year

614,715 $ 13.90 5.68 years $ 2,788

5,000 $ 18.25 10.00 years

( 34,228 ) $ 10.33 0.82 years

( 9,075 ) $ 10.33 1.08 years

Balance at end of year 576,412 $ 14.20 5.01 years $ 3,481

Exercisable at end of year 396,753 $ 13.42 3.44 years $ 2,708

The following table represents information regarding unvested stock options for the period indicated:

Year Ended December 31, 2024

Number of Shares Weighted-Average Exercise Price Per Share

Outstanding at beginning of year

271,000 $ 15.85

5,000 $ 18.25

( 96,341 ) $ 15.81

Balance at end of year 179,659 $ 15.93

Restricted Stock Awards

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The Company’s contribution to the plan was $ 1.3 million, $ 1.3 million and $ 1.2 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The following table presents the components of income tax expense for the periods indicated:

The following table presents the components of income tax expense from continuing operations for the periods indicated:

Year Ended December 31,

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$ 15,035 $ 10,476 $ 12,557

The following table presents a reconciliation of the recorded income tax expense to the amount of taxes computed by applying the applicable statutory Federal income tax rate for the periods indicated:

The following table presents a summary of income taxes paid, net of refunds received for the periods indicated:

Year Ended December 31,

($ in thousands) 2025 2024 2023

$ 15,120 $ 3,800 $ 2,600

Statutory federal tax rate

State and local

7,115 2,400 1,460

All other states

Total state and local

7,935 2,566 1,684

$ 23,055 $ 6,366 $ 4,284

Year Ended December 31,

2025 2024 2023

($ in thousands) Amount Rate Amount Rate Amount Rate

Federal statutory income tax

$ 11,023 21.00 % $ 7,621 21.00 % $ 9,085 21.00 %

State and local income taxes, net of federal tax benefit (1)

Provision-to-return adjustment 0.76 % 0.10 % ( 0.01 ) %

Nondeductible meals and parking 0.25 % 0.23 % 0.13 %

Section 162(m) of the Internal Revenue Code 0.20 % 0.11 % 0.05 %

Share-based compensation

4,007 7.63 % 2,775 7.65 % 3,604 8.33 %

Bank-owned life insurance ( 0.55 ) % ( 0.36 ) % ( 0.30 ) %

Qualified affordable housing projects ( 0.51 ) % ( 0.41 ) % 0.06 %

Other items, net

Qualified affordable housing projects tax credit ( 798 ) ( 1.52 ) % ( 527 ) ( 1.45 ) % ( 492 ) ( 1.14 ) %

Nontaxable or nondeductible items

( 31 ) ( 0.06 ) % ( 10 ) ( 0.03 ) % 21 0.05 %

Effective income tax rate

Other reconciling items:

Qualified affordable housing projects amortization 1,027 1.96 % 572 1.58 % 451 1.04 %

Other ( 193 ) ( 0.37 ) % 45 0.12 % ( 112 ) ( 0.25 ) %

$ 15,035 28.64 % $ 10,476 28.87 % $ 12,557 29.03 %

(1) State taxes in California made up the majority (greater than 50%) of state and local income taxes, net of federal tax benefit for the years ended December 31, 2025, 2024 and 2023.

The following table presents the components of the net deferred tax assets recognized in the accompanying consolidated balance sheets as of the dates indicated:

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Deferred tax assets:

$ 8,987 $ 8,105

Allowance for credit losses on loans $ 9,685 $ 8,987

Allowance for credit losses on off-balance sheet credit exposures

Share-based compensation 174 204

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Total deferred tax liabilities 10,806 13,626

Deferred tax assets (liabilities), net

Deferred tax assets, net

$ 9,210 $ 7,249

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Based upon the level of historical taxable income and projections for future taxable income over the periods in which the temporary differences become deductible, management believes it is more likely than not that the Company will realize the benefits of these deferred tax assets, and a valuation allowance was not necessary as of December 31, 2025 and 2024.

At December 31, 2024 and 2023, the Company had no unrecognized tax benefits or related accrued interest.

In the event the Company is assessed interest and/or penalties by federal or state tax authorities, such amounts will be classified in the consolidated financial statements as income taxes.

The Company does not expect the total amount of unrecognized tax benefit to significantly increase or decrease in the next twelve months.

The Company and the Bank are subject to U.S.

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5,705 1,625 5,279 1,516

Commercial letters of credit

Total $ 18,368 $ 357,044 $ 18,202 $ 389,168

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These assumptions are based on the Company’s own historical internal loan data.

As a part of adoption of ASC 326 on January 1, 2023, the Company recorded an initial adjustment to the ACL on off-balance sheet credit exposures of $ 1.6 million.

As of December 31, 2025 and 2024, the Company maintained an ACL on off-balance sheet credit exposures of $ 1.5 million and $ 1.2 million in Accrued Interest Payable and Other Liabilities in the Consolidated Balance Sheets, respectively.

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The CODM reviews revenue to evaluate product pricing and net income, including significant expenses, to assess performance and profitability.

In conjunction with these measures, the CODM utilizes profitability ratios, EPS, net interest margin, loan and deposit growth, credit quality, capital adequacy, and liquidity as these measure provide additional insight of the Bank's business activities.

In conjunction with these measures, the CODM utilizes profitability ratios, EPS, net interest margin, loan and deposit growth, credit quality, capital adequacy, and liquidity as these measures provide additional insight of the Bank's business activities.

The CODM also considers non-financial factors such as the Bank’s reputation, regulatory compliance and human resources.

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Other income 7,219 7,341 7,113

Total revenue 99,710 99,187 104,131

Total revenue, net of interest expense 115,714 99,710 99,187

Provision (reversal) for credit losses 4,028 3,401 ( 132 )

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Change in other assets ( 9 ) 5 5

Change in other liabilities 8 — —

Net cash provided by operating activities 19,467 12,483 18,136

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— ( 1,000 ) —

Capital contribution to subsidiary — — ( 69,141 )

Net cash used in investing activities — ( 1,000 ) —

Cash flows from financing activities:

Issuance of preferred stock — — 69,141

Stock options exercised 2,278 353 1,350

2 unchanged sentences

Stock repurchase excise tax

( 8 ) ( 62 ) —

Preferred stock dividends ( 346 ) ( 772 ) —

10 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