PCB BANCORP 10-K

Item 8. Financial Statements PCB Bancorp and Subsidiary Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID 173 ) 70 Consolidated Balance Sheets as of December 31, 202 5 and 202 4 72 Consolidated Statements of Income for the Years Ended December 31, 202 5 , 202 4 and 202 3 73 Consolidated Statements of Comprehensive Income for the Years Ended December 31, 202 5 , 202 4 and 202 3 74 Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 202 5 , 202 4 and 202 3 75 Consolidated Statements of Cash Flows for the Years Ended December 31, 202 5 , 202 4 and 202 3 76 Notes to Consolidated Financial Statements 78 69 Report of Independent Registered Public Accounting Firm Shareholders and the Board of Directors of PCB Bancorp Los Angeles, California Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of PCB Bancorp and Subsidiary (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO. Basis for Opinions The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 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 financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 70 Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Allowance for Credit Losses – Qualitative Factors As described in Notes 1 and 4 to the financial statements, the Company estimates expected credit losses for its financial assets carried at amortized cost utilizing the current expected credit loss methodology. The allowance for credit losses on loans (“ACL”) was a significant estimate recorded within the Company’s consolidated financial statements with a reported balance of $33.4 million as of December 31, 2025. Loans that share similar risk characteristics are collectively evaluated utilizing a discounted cash flow methodology, which incorporates a probability of default and loss given default modeling approach. The modeled or quantitative component of the ACL requires the Company to use relevant forward-looking information, including the use of reasonable and supportable forecasts, as well as historical loss rates. The Company adjusts the modeled ACL with internal and external qualitative factors not inherently considered in the quantitative component of the methodology. For each segment of loans collectively evaluated, a hypothetical worst-case scenario loss rate is calculated which is then used as the high watermark for the qualitative factors. 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 reserve for each segment is then determined based on the weighting of the qualitative category and the assignment of risk status rating for each qualitative category. We identified auditing the qualitative factors used to develop the ACL to be a critical audit matter as it involved significant audit effort and especially subjective auditor judgment. The primary procedures we performed to address this critical audit matter included: • Testing the design and operating effectiveness of controls over management’s qualitative factors, including controls addressing: ◦ The appropriateness of management’s qualitative factor methodology; ◦ The reasonableness of management's judgments over qualitative factors and allocations; and ◦ The relevance and reliability of data used in the qualitative factors. • Substantively testing management’s process, including evaluating their judgments and assumptions, for qualitative factors, including: ◦ Evaluating the appropriateness of the qualitative factor methodology; ◦ Evaluating the reasonableness of management’s judgments over qualitative factors and allocations; and ◦ Evaluating the relevance and reliability of data used in the qualitative factors. /s/ Crowe LLP We have served as the Company’s auditor since 2016. Los Angeles, California March 13, 2026 71 PCB Bancorp and Subsidiary Consolidated Balance Sheets (in thousands, except share data) December 31, 2025 2024 Assets Cash and due from banks $ 25,319 $ 27,100 Interest-bearing deposits in other financial institutions 181,823 171,692 Total cash and cash equivalents 207,142 198,792 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 Loans held-for-sale 12,077 6,292 Loans held-for-investment, net of deferred loan costs (fees) 2,820,400 2,629,387 Allowance for credit losses on loans ( 33,381 ) ( 30,628 ) Net loans held-for-investment 2,787,019 2,598,759 Premises and equipment, net 8,194 8,280 Federal Home Loan Bank and other restricted stock, at cost 14,978 14,042 Bank-owned life insurance 32,796 31,766 Deferred tax assets, net 9,210 7,249 Servicing assets 5,627 5,837 Operating lease assets 17,158 17,254 Accrued interest receivable 10,669 10,466 Other assets 16,892 18,885 Total assets $ 3,281,771 $ 3,063,971 Liabilities and Shareholders’ Equity Deposits: Noninterest-bearing demand $ 555,645 $ 547,853 Savings, NOW and money market accounts 676,075 466,887 Time deposits of $250,000 or less 855,059 935,927 Time deposits of more than $250,000 708,633 665,124 Total deposits 2,795,412 2,615,791 Other short-term borrowings — 15,000 Federal Home Loan Bank advances 34,000 — Operating lease liabilities 18,996 18,671 Accrued interest payable and other liabilities 43,337 50,695 Total liabilities 2,891,745 2,700,157 Commitments and contingent liabilities Preferred stock, 10,000,000 shares authorized, no par value: Series C, senior non-cumulative perpetual, $ 1,000 per share liquidation preference, 69,141 and 69,141 shares issued and outstanding at December 31, 2025 and 2024, respectively 69,141 69,141 Common stock, 60,000,000 shares authorized, no par value; issued and outstanding 14,230,428 and 14,380,651 shares, respectively, and included 90,850 and 119,100 shares of unvested restricted stock, respectively, at December 31, 2025 and 2024 139,256 143,195 Retained earnings 186,485 160,797 Accumulated other comprehensive loss, net ( 4,856 ) ( 9,319 ) Total shareholders’ equity 390,026 363,814 Total liabilities and shareholders’ equity $ 3,281,771 $ 3,063,971 See Accompanying Notes to Consolidated Financial Statements 72 PCB Bancorp and Subsidiary Consolidated Statements of Income (in thousands, except share and per share data) Year Ended December 31, 2025 2024 2023 Interest and dividend income: Loans, including fees $ 180,345 $ 164,301 $ 136,029 Tax-exempt investment securities 87 102 126 Taxable investment securities 5,773 5,226 4,553 Other interest-earning assets 11,331 11,188 10,469 Total interest income 197,536 180,817 151,177 Interest expense: Deposits 92,261 90,487 62,165 Other borrowings 1,397 1,713 508 Total interest expense 93,658 92,200 62,673 Net interest income 103,878 88,617 88,504 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 Noninterest income: Service charges and fees on deposits 1,540 1,545 1,475 Loan servicing income 2,945 3,365 3,330 Bank-owned life insurance income 1,030 949 753 Gain on sale of loans 4,617 3,752 3,570 Other income 1,704 1,482 1,555 Total noninterest income 11,836 11,093 10,683 Noninterest expense: Salaries and employee benefits 36,551 35,661 34,572 Occupancy and equipment 9,242 9,117 7,924 Professional fees 2,808 3,408 3,087 Marketing and business promotion 2,116 1,886 2,327 Data processing 1,334 1,499 1,552 Director fees and expenses 898 906 756 Regulatory assessments 1,464 1,256 1,103 Other expenses 4,785 6,290 4,736 Total noninterest expense 59,198 60,023 56,057 Income before income taxes 52,488 36,286 43,262 Income tax expense 15,035 10,476 12,557 Net income 37,453 25,810 30,705 Preferred stock dividends 300 834 — Net income available to common shareholders $ 37,153 $ 24,976 $ 30,705 Earnings per common share, basic $ 2.59 $ 1.75 $ 2.14 Earnings per common share, diluted $ 2.58 $ 1.74 $ 2.12 Weighted-average common shares outstanding, basic 14,204,468 14,242,057 14,301,691 Weighted-average common shares outstanding, diluted 14,279,130 14,342,361 14,417,938 See Accompanying Notes to Consolidated Financial Statements 73 PCB Bancorp and Subsidiary Consolidated Statements of Comprehensive Income (in thousands) Year Ended December 31, 2025 2024 2023 Net income $ 37,453 $ 25,810 $ 30,705 Other comprehensive income (loss): Unrealized gain (loss) on securities available-for-sale arising during the year 6,348 ( 541 ) 2,263 Income tax benefit (expense) related to items of other comprehensive income (loss) ( 1,885 ) 146 ( 676 ) Total other comprehensive income (loss), net of tax 4,463 ( 395 ) 1,587 Total comprehensive income $ 41,916 $ 25,415 $ 32,292 See Accompanying Notes to Consolidated Financial Statements 74 PCB Bancorp and Subsidiary Consolidated Statements of Changes in Shareholders’ Equity (in thousands, except share data) Shares Outstanding Shareholders’ Equity Preferred Stock Common Stock Preferred Stock Common Stock Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Balance at January 1, 2023 69,141 14,625,474 69,141 149,631 127,181 ( 10,511 ) 335,442 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 income, net of tax — — — — — 1,587 1,587 Issuance of restricted stock — 3,300 — — — — — Forfeiture of restricted stock — ( 500 ) — — — — — Restricted stock surrendered due to employee tax liability — ( 99 ) — ( 2 ) — — ( 2 ) Repurchase of common stock — ( 512,657 ) — ( 8,828 ) — — ( 8,828 ) Stock repurchase excise tax — — — ( 76 ) — — ( 76 ) Share-based compensation expense — — — 488 — — 488 Stock options exercised — 144,922 — 1,350 — — 1,350 Cash dividends declared on common stock ($ 0.69 per share) — — — — ( 9,908 ) — ( 9,908 ) Balance at December 31, 2023 69,141 14,260,440 69,141 142,563 146,092 ( 8,924 ) 348,872 Comprehensive income (loss) Net income — — — — 25,810 — 25,810 Other comprehensive loss, net of tax — — — — — ( 395 ) ( 395 ) Issuance of restricted stock — 101,500 — — — — — Forfeiture of restricted stock — ( 420 ) — — — — — Restricted stock surrendered due to employee tax liability — ( 150 ) — ( 3 ) — — ( 3 ) Repurchase of common stock — ( 14,947 ) — ( 222 ) — — ( 222 ) 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) — — — — ( 10,271 ) — ( 10,271 ) Balance at December 31, 2024 69,141 14,380,651 $ 69,141 $ 143,195 $ 160,797 $ ( 9,319 ) $ 363,814 PCB Bancorp and Subsidiary Consolidated Statements of Changes in Shareholders’ Equity (Continued) (in thousands, except share data) Shares Outstanding Shareholders’ Equity Preferred Stock Common Stock Preferred Stock Common Stock Retained Earnings Accumulated Other Comprehensive Income (Loss) Total (Continued) Comprehensive income Net income — — — — 37,453 — 37,453 Other comprehensive income, net of tax — — — — — 4,463 4,463 Issuance of restricted stock — 6,200 — — — — — Forfeiture of restricted stock — ( 1,500 ) — — — — — Restricted stock surrendered due to employee tax liability — ( 3,404 ) — ( 81 ) — — ( 81 ) Repurchase of common stock — ( 358,251 ) — ( 7,101 ) — — ( 7,101 ) Stock repurchase excise tax — — — ( 8 ) — — ( 8 ) Share-based compensation expense — — — 973 — — 973 Stock options exercised — 206,732 — 2,278 — — 2,278 Preferred stock dividends — — — — ( 300 ) — ( 300 ) Cash dividends declared on common stock ($ 0.80 per share) — — — — ( 11,465 ) — ( 11,465 ) Balance at December 31, 2025 69,141 14,230,428 $ 69,141 $ 139,256 $ 186,485 $ ( 4,856 ) $ 390,026 See Accompanying Notes to Consolidated Financial Statements 75 PCB Bancorp and Subsidiary Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2025 2024 2023 Cash flows from operating activities Net income $ 37,453 $ 25,810 $ 30,705 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of premises and equipment 2,213 2,252 2,184 Net amortization of premiums on securities 146 159 209 Net accretion of discounts on loans ( 2,791 ) ( 2,782 ) ( 2,197 ) Net accretion of deferred loan fees ( 1,368 ) ( 1,214 ) ( 1,097 ) Amortization of servicing assets 2,080 1,764 1,883 Provision (reversal) for credit losses 4,028 3,401 ( 132 ) Bank-owned life insurance income ( 1,030 ) ( 949 ) ( 753 ) Deferred tax expense (benefit) ( 3,847 ) ( 7,979 ) 4,103 Share-based compensation 973 504 488 Gain on sale of loans ( 4,617 ) ( 3,752 ) ( 3,570 ) Originations of loans held-for-sale ( 92,198 ) ( 73,975 ) ( 69,040 ) Proceeds from sales of and principal collected on loans held-for-sale 90,935 77,878 87,422 Change in accrued interest receivable and other assets 2,180 ( 3,717 ) ( 934 ) Change in accrued interest payable and other liabilities ( 7,568 ) 21,585 14,072 Net cash provided by operating activities 26,589 38,985 63,343 Cash flows from investing activities: Purchase of securities available-for-sale ( 31,655 ) ( 23,484 ) ( 17,271 ) Proceeds from maturities, calls, and paydowns of securities available-for-sale 24,198 19,758 17,865 Proceeds from sales of and principal collected on loans held-for-sale previously classified as held-for-investment — 676 5,074 Net increase in loans held-for-investment ( 189,551 ) ( 305,325 ) ( 261,352 ) Purchase of loans held-for-investment — — ( 15,741 ) Purchase of Federal Home Loan Bank and other restricted stock ( 936 ) ( 1,326 ) ( 2,533 ) Proceeds from sale of other real estate owned — 3,039 — Purchases of premises and equipment ( 2,193 ) ( 4,075 ) ( 1,315 ) Investment in private equity — ( 1,000 ) — Net cash used in investing activities ( 200,137 ) ( 311,737 ) ( 275,273 ) Cash flows from financing activities: Net increase in deposits 179,621 264,179 305,629 Net change in short-term Federal Home Loan Bank advances and other borrowings 19,000 15,000 ( 20,000 ) Proceeds from long-term Federal Home Loan Bank advances — 50,000 39,000 Repayment of long-term Federal Home Loan Bank advances — ( 89,000 ) — Stock options exercised 2,278 353 1,350 Restricted stock surrendered due to employee tax liability ( 81 ) ( 3 ) ( 2 ) Stock repurchase excise tax ( 8 ) ( 62 ) — Repurchase of common stock ( 7,101 ) ( 222 ) ( 8,828 ) Cash dividends paid on preferred stock ( 346 ) ( 772 ) — Cash dividends paid on common stock ( 11,465 ) ( 10,271 ) ( 9,908 ) Net cash provided by financing activities 181,898 229,202 307,241 Net increase (decrease) in cash and cash equivalents 8,350 ( 43,550 ) 95,311 Cash and cash equivalents at beginning of year 198,792 242,342 147,031 Cash and cash equivalents at end of year $ 207,142 $ 198,792 $ 242,342 See Accompanying Notes to Consolidated Financial Statements 76 PCB Bancorp and Subsidiary Consolidated Statements of Cash Flows (Continued) (in thousands) Year Ended December 31, 2025 2024 2023 Supplemental disclosures of cash flow information: Interest paid $ 92,837 $ 85,845 $ 47,780 Income taxes paid 23,055 6,366 4,284 Supplemental disclosures of non-cash investment activities: Loans transferred to loans held-for-sale $ — $ 676 $ — Loans transferred to other real estate owned — 94 593 Right-of-use assets obtained in exchange for lease obligations 2,958 973 15,317 See Accompanying Notes to Consolidated Financial Statements 77 PCB Bancorp and Subsidiary Notes to Consolidated Financial Statements Note 1. Basis of Presentation and Significant Accounting Policies Nature of Operations 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. Basis of Presentation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary as of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023. Significant inter-company accounts and transactions have been eliminated in consolidation. Unless the context requires otherwise, all references to the Company include its wholly owned subsidiaries. The accounting and reporting polices of the Company are based upon GAAP and conform to predominant practices within the financial services industry. Significant accounting policies followed by the Company are presented below. Certain prior period amounts have been reclassified to conform to the current year’s presentation. These reclassifications had no impact on the Company’s consolidated statements of financial condition or operations. Use of Estimates in the Preparation of Financial Statements The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. These estimates are subject to change and such change could have a material effect on the consolidated financial statements. Actual results may differ from those estimates. Significant Accounting Policies Cash and Cash Equivalents Cash and cash equivalents include cash on hand, cash items in transit, cash due from the Federal Reserve Bank and other financial institutions, and federal funds sold with original maturities less than 90 days. On March 26, 2020, the Federal Reserve reduced reserve requirement ratios to 0%, eliminating the reserve requirement for all depository institutions. There was no reserve and clearing requirement balance at December 31, 2025 and 2024. Investment Securities Investment securities are classified as held-to-maturity or available-for-sale at the time of purchase based upon the intent of management, liquidity and capital requirements, regulatory limitations and other relevant factors. Debt securities are classified as held-to-maturity when management has the positive intent and ability to hold to maturity. Debt securities are classified as available-for-sale when they might be sold before maturity. Securities held-to-maturity are carried at amortized cost and securities available-for-sale are carried at fair value with unrealized gains and losses, net of taxes, recorded in other comprehensive income. As of December 31, 2025 and 2024, all of the investment securities held by the Company were securities available-for-sale. Gains and losses on sales of securities are determined using the specific identification method. Net realized gains or losses on available-for-sale securities are included in noninterest income and, when applicable, are reported as a reclassification adjustment, net of tax, in other comprehensive income. Amortization of premiums and accretion of discounts are included in interest income using the effective interest method. 78 Allowance for Credit Losses on Investment Securities Effective January 1, 2023, ACL on securities available-for-sale is determined in accordance with ASC 326. The Company performs a quarterly evaluation for securities in an unrealized loss position to determine if, for those investments in an unrealized loss position, the decline in fair value is credit related or non-credit related. In determining whether a security’s decline in fair value is credit related, the Company considers a number of factors including, but not limited to: (i) the extent to which the fair value of the investment is less than its amortized cost; (ii) the financial condition and near-term prospects of the issuer; (iii) downgrades in credit ratings; (iv) payment structure of the security, (v) the ability of the issuer of the security to make scheduled principal and interest payments, and (vi) general market conditions which reflect prospects for the economy as a whole, including interest rates and sector credit spreads. 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 (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. Accrued interest receivable for investment securities is included in accrued interest receivable in the consolidated statements of financial condition. Loans Held-For-Sale 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 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. A valuation allowance is established if the fair value of such loans is lower than their cost, with a corresponding charge to noninterest income. When the Company changes its intent to hold loans for investment, the loans are transferred to held-for-sale at lower of cost or fair value at the time of transfer, as determined on an individual loan level with charges made to ACL on loans when the fair value is lower than the cost. Deferred fees and cost on transferred loans are included in the determination of gains or losses on sale of the related loans. Subsequent decreases in fair value, if any, are recognized through a valuation allowance with charges made to noninterest income. If a determination is made that a loan held-for-sale cannot be sold in the foreseeable future, it is transferred to loans held-for-investment at lower of cost or fair value on the transfer date with a charge made to noninterest income when the fair value is lower than the cost. Realized gains and losses from sales of loans are included in noninterest income. For sales of guaranteed portion of SBA and certain residential mortgage loans, the loan servicing rights are retained. Loans Held-For-Investment Loans held-for-investment that management has the intent and ability to hold for the foreseeable future are reported at their outstanding unpaid principal balances, net of any charge-offs, deferred fees or costs on originated loans, or unamortized premiums or discounts on purchased loans. Loan origination fees and certain direct origination costs are deferred and recognized in interest income using the effective interest method over the life of the loan. Interest is accrued and credited to income as earned only if deemed collectible. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. Accrual of interest on loans is discontinued when principal or interest payment is 90 days past due based on the contractual terms of the loan or when, in the opinion of management, there is reasonable doubt as to collectability. When loans are placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period interest income. Past-due status is based on the contractual terms of the loan. Interest payments that are subsequently received are applied as a reduction to the remaining principal balance as long as concern exists as to the collectability of the principal. Interest accruals are resumed on such loans only when the loans are brought current with respect to interest and principal and when, in the judgment of management, all principal and interest on the loans are expected to be fully collectable. Loan portfolio segments identified by the Company include: commercial real estate (commercial property, business property, multifamily and construction), commercial and industrial, and consumer loans (residential mortgage and other consumer). 79 Each loan segment bears varying degrees of risk based on, among other things, the type of loan and collateral, and the sensitivity of the borrower or industry to changes in external factors such as economic conditions and interest rate changes. The loan segments are as follows: Commercial Real Estate Loans: • Commercial property loans – Commercial property loans include loans for which the Company holds real property as collateral, but where the borrower does not occupy the underlying property. The primary risks associated with investor property loans include the borrower’s inability to pay, material decreases in the value of the real estate that is being held as collateral, significant increases in interest rates, changes in market rents, and vacancy and conditions of the underlying property, any of which may make the real estate property unprofitable to the borrower. Real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. • Business property loans – Business property loans include loans for which the Company holds real property as collateral and where the underlying property is occupied by the borrower, such as with a place of business. These loans are primarily underwritten based on the cash flows of the business and secondarily on the real estate. The primary risks associated with business property loans include the borrower’s inability to pay, material decreases in the value of the real estate that is being held as collateral, and significant increases in interest rates, which reduce the cash flows of the underlying business. Real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. • Multifamily loans: Multifamily loans are secured by multi-tenant (5 or more units) residential real properties. Payments on multifamily loans are dependent on the successful operation or management of the properties, and repayment of these loans may be subject to adverse conditions in the real estate market or the economy. • Construction loans: Construction loans are considered to have higher risks due to construction completion and timing risk, and the ultimate repayment being sensitive to interest rate changes, government regulation of real property, and the availability of long-term financing. Additionally, economic conditions may impact the Company’s ability to recover its investment in construction loans, as adverse economic conditions may negatively impact the real estate market, which could affect the borrower’s ability to complete and sell the project. The fair value of the underlying collateral may fluctuate as market conditions change. The primary risks include the borrower’s inability to pay and the inability of the Company to recover its investment due to a decline in the fair value of the underlying collateral. Commercial and Industrial Loans: • Commercial and industrial loans – The C&I loan category includes commercial term loans and commercial lines of credit. Commercial term loans are typically extended to finance business acquisitions, permanent working capital needs, and/or equipment purchases. Commercial lines of credit are generally provided to finance short-term working capital needs and warehouse lending credit facilities. Warehouse lending is a line of credit given to a loan originator, the funds from which are used to finance a residential mortgage or CRE loan that a borrower uses to purchase property or refinance an existing loan. The primary risk associated with C&I loans is the difference between expected and actual cash flows of the borrowers. In addition, the recoverability of the Company’s investment in these loans is also dependent on other factors primarily dictated by the type of collateral securing these loans, and occasionally upon other borrower assets and guarantor assets. Consumer Loans: • Residential mortgage loans – The primary risks of residential mortgage loans include the borrower’s inability to pay, material decreases in the value of the real estate that is being held as collateral, and significant increases in interest rates, which may reduce the borrower’s capacity to pay. • Other consumer loans – Other consumer loans primarily include automobile loans, as well as unsecured lines of credit and term loans to high net worth individuals. Automobile loans have relatively higher LTV ratios on average and carry higher interest rates to offset for the inherently higher default risks. Unsecured lines of credit and term consumer loans are underwritten primarily based on the individual borrower’s income, current debt level, and past credit history. Repayment of these loans is dependent on the borrower’s ability to pay, and the fair value of the underlying collateral for automobile loans. The Company classifies loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans in regards to credit risk. This analysis typically includes non-homogeneous loans, such as commercial real estate and commercial and industrial loans, and is performed on an ongoing basis as new information is obtained. 80 The Company uses the following definitions for risk ratings: • Pass - Loans classified as pass include non-homogeneous loans not meeting the risk ratings defined below and smaller, homogeneous loans not assessed on an individual basis. • Special Mention - Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of repayment prospects for the loan or of the institution’s credit position at some future date. • Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. • 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 Company’s loan portfolio is primarily collateralized by various forms of real estate and business assets located primarily in California. The Company’s loan portfolio contains concentrations of credit in commercial real estate loans and commercial and industrial loans. The Company maintains policies that address these concentrations, as well as residential mortgage loans, and diversifies its loan portfolio through loan originations, purchases, and sales to meet approved concentration levels. Allowance for Credit Losses on Loans and Off-Balance Sheet Credit Exposures Effective January 1, 2023, ACL on loans is determined in accordance with ASC 326, which requires the Company to record an estimate of expected lifetime credit losses for loans at the time of origination or acquisition. The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated statements of financial condition. Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts. The measurement of the ACL is performed by collectively evaluating loans with similar risk characteristics. The Company’s discounted cash flow methodology incorporates a PD and LGD model, as well as expectations of future economic conditions, using reasonable and supportable forecasts. The Company leverages its peer group information to estimate PD and LGD. Peer group is selected from institutions in California with total assets between $ 1 billion and $ 10 billion. The Company analyzes and compares each loan segment’s volume as a percentage of total loans, recent charge-off rates, and charge-off rate during recession of the peer group against those of the Bank for inclusion in the peer group population. PD and LGD are forecasted over a one-year time horizon using economic forecast scenarios, which the Company believes is a reasonable and supportable period. Beyond the 1-year forecast time horizon, the Company’s ACL model reverts to historical long-term average loss rates over a 1-year period. The use of reasonable and supportable forecasts requires significant judgment, such as selecting forecast scenarios, as well as determining the appropriate length of the forecast horizon. Management leverages economic projections from a reputable and independent third party to inform and provide its reasonable and supportable economic forecasts. Other internal and external indicators of economic forecasts may also be considered by management when developing the forecast metrics. The Company’s ACL model reverts to long-term average loss rates for purposes of estimating expected cash flows beyond a period deemed reasonable and supportable. The Company forecasts economic conditions and expected credit losses over a one-year time horizon. Beyond the one-year forecast time horizon, the Company’s ACL model reverts to historical long-term average loss rates over one-year period. Management utilizes the economic forecasts provided by the FOMC to forecast the first 4 quarters of the credit loss estimate. The FOMC projects national unemployment rate and the projected change in the year-over-year national GDP growth rates over the forward-looking 4 quarters are used in determining the PD rates over the forecasted periods. Changes in economic forecasts, in conjunction with changes in loan specific attributes, impact a loan’s PD and LGD, which can drive changes in the determination of the ACL. A portion of the collectively evaluated ACL on loans also includes qualitative adjustments for risk factors not reflected or captured by the quantitative modeled ACL but are relevant in estimating future expected credit losses. For each segment of the collectively evaluated loans, a hypothetical worst case scenario loss rate is calculated which is then used as the high watermark for the qualitative adjustment factors. 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, very low, low, moderate, high, and very high) for each qualitative factor category. 81 Qualitative adjustments may be related to and include, but not limited to factors such as: (i) management’s assessment of economic forecasts used in the model and how those forecasts align with management’s overall evaluation of current and expected economic conditions, (ii) organization-specific risks such as credit concentrations, collateral specific risks, regulatory risks, and external factors that may ultimately impact credit quality, (iii) potential model limitations such as limitations identified through back-testing, and other limitations associated with factors such as underwriting changes, acquisition of new portfolios and changes in portfolio segmentation, and (iv) management’s overall assessment of the adequacy of the ACL, including an assessment of ACL model data inputs. Problem loans are typically substandard or have a worse internal risk grade, and may consist of loans on nonaccrual status where the likelihood of foreclosure on underlying collateral has increased, collateral dependent loans and other loans where concern or doubt over the ultimate collectability of all contractual amounts due has become elevated. These problem loans, in the opinion of management, no longer possess risk characteristics similar to other loans in the loan segment, and as such may require individual evaluation for appropriate ACL for the loan. For performing loans individually evaluated, the Company measures the expected credit loss based on a discounted cash flow approach or fair value of collateral, less costs to sell. Collateral dependent loans are loans to borrowers with financial difficulty where the repayment of the loan is expected from the operation of and/or eventual liquidation of the underlying collateral. Although management uses the best information reasonably available to derive estimates necessary to measure an appropriate level of the ACL, future adjustments to the ACL may be necessary due to economic, operating, regulatory and other conditions that may extend beyond the Company’s control. Generally, loans are charged off immediately when it is determined that advances to the borrower are in excess of the calculated current fair value of the collateral and if a borrower is deemed incapable of repayment of unsecured debt, there is little or no prospect for near term improvement and no realized strengthening action of significance pending. Other consumer loans are charged off based on delinquency, typically 120 days for closed loans and 180 days for open-end loans, or earlier when it is determined that the loan is uncollectible due to a triggering event, such as bankruptcy, fraud, or death. This methodology for determining charge-offs is consistently applied to each segment. Charge-offs are recorded to the ACL. Subsequent recoveries, if any, are credited to the ACL. Premises and Equipment Premises and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives, which ranges from three to seven years for furniture and equipment. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the improvements or the remaining lease term, whichever is shorter. Expenditures for betterments or major repairs are capitalized and those for ordinary repairs and maintenance are charged to operations as part of occupancy and equipment expense as incurred. Operating Leases 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 . The exercise of a lease renewal option is at the Company’s sole discretion. Certain leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expenses for these leases are recognized on a straight-line basis over the lease term. None of the Company’s lease agreements contain any material residual value guarantees or material restrictive covenants. The Company also leases certain equipment, such as copy machines and scanners, but they are determined to be immaterial. Federal Home Loan Bank and Other Restricted Stock The Bank is a member of the FHLB and Pacific Coast Bankers’ Bancshares (“PCBB”) system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB and PCBB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on the ultimate recovery of par value. Both cash and stock dividends are reported as income. Other Real Estate Owned OREO represents properties acquired through foreclosure or other proceedings. The Company initially records OREO at fair value at the time of foreclosure. Thereafter, OREO is recorded at the lower of cost or fair value based on their subsequent changes in fair value. The fair value of OREO is generally based on recent real estate appraisals adjusted for estimated selling costs. Any write-down to fair value at the time of transfer to OREO is charged to ACL on loans. Property is evaluated regularly to ensure the recorded amount is supported by its current fair value and valuation allowances to reduce the carrying amounts to fair value less estimated costs to dispose are recorded as necessary. Additions to or reductions from valuation allowances are recorded in noninterest expense. 82 Servicing Assets Servicing assets are recognized when servicing rights are retained from the sale of loans, such as sales of the guaranteed portion of SBA and certain residential mortgage loans, and are initially recorded at fair value. Fair value is calculated as the present value of estimated future cash flows from the servicing rights based on current market sources, such as the cost to service, discount rates, and prepayment speeds. Servicing assets are amortized into noninterest income over the expected life of the underlying loans. Servicing assets are evaluated for impairment based on the fair value of the servicing rights as compared to the carrying amount. Impairment is determined by stratifying servicing rights into groupings based on predominant risk characteristics, such as collateral type. For purposes of measuring impairment, the Company has identified each servicing asset with the underlying loan being serviced. A valuation allowance is recorded when the fair value is below the carrying amount of the asset. If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the valuation allowance may be recorded as an increase to income. The fair values of servicing assets are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and changes in discount rates. Servicing income as reported on the income statement consists of fees earned for servicing loans, net of the amortization of servicing assets and changes in the valuation allowance. The servicing fees are based on a contractual percentage of the outstanding principal and recorded as income when earned. Bank-owned Life Insurance The Company purchases life insurance policies on certain officers and directors. The Bank and named beneficiaries of various current covered officers are the beneficiaries under each policy. In the event of the death of a covered officer, the Bank and named beneficiaries of the covered officer will receive the specified insurance benefit from the insurance carrier. Bank-owned life insurance is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due, if any, that are probable at settlement. Investment in Qualified Affordable Housing Projects The Company has invested in a limited partnership that operates qualified affordable housing projects for lower income tenants in California. The Company accounts for this investment under the proportional amortization method and the amortization expense is presented as a component of current tax expense. Return of this investment is generated primarily through allocated federal tax credits and other tax benefits. The recorded investment amount was $ 7.2 million and $ 8.3 million, respectively, and unfunded commitments were $ 3.2 million and $ 5.8 million, respectively, at December 31, 2025 and 2024. 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 $ 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. Therefore, no impairment was recorded for the years ended December 31, 2025 and 2024. Investment in Private Equity The Company has invested $ 1.0 million in a limited partnership that operates as a private investment partnership, which invests primarily in companies in the financial services industry, predominantly in U.S. publicly-traded securities of bank holding companies, banks, thrifts, and, to a lesser extent, other financial services companies, including, but not limited to, asset managers, finance companies, mortgage companies, insurance companies and credit. The Company does not have significant influence over its operation. The Company accounts for this investment using the cost method and recorded the investment in Other Assets on the Consolidated Balance Sheet. 83 Earnings Per Common Share Earnings per share (“EPS”) is computed under the two-class method. Net income allocated to common stock is computed by subtracting income allocated to unvested restricted stock from net income available to common shareholders. Income allocated to unvested restricted stock includes cash dividends paid and undistributed income available to holders of unvested restricted stock, if any. Basic EPS is computed by dividing net income allocated to common stock by the weighted-average common shares outstanding excluding the weighted-average unvested restricted stock. Diluted EPS is computed by dividing net income allocated to common stock by the weighted-average common stock outstanding, excluding the weighted-average unvested restricted stock, adjusted for the dilutive effect of stock options. Diluted EPS reflects the potential dilution that could occur if options or other contracts to issue common stock were exercised or converted into common stock, or resulted in the issuance of common stock that then shared in the earnings of the entity. Transfer of Financial Assets Transfers of financial assets are accounted for sales, when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. Share-Based Compensation The Company recognizes the cost of employee services received in exchange for stock options and restricted stock awards (“RSAs”), based on the grant date fair value of those awards. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company's common stock at the date of grant is used for RSAs. This cost is recognized in income over the period which an employee is required to provide services in exchange for the award, generally the vesting period. See Note 12 for additional information on the Company’s stock option plan. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Interest and penalties related to unrecognized tax benefits are recorded as part of income tax expense. A valuation allowance is established to reduce the deferred tax asset to the level at which it is more likely than not that the tax benefits will be realized. Realization of tax benefits of deductible temporary differences and carryforwards depends on having sufficient taxable income of an appropriate character and in the appropriate periods. Comprehensive Income (Loss) Comprehensive income consists of net income and other comprehensive income (loss). Other comprehensive income (loss) includes the changes in unrealized gains and losses on securities available-for-sale, net of tax. Commitments and Contingencies In the ordinary course of business, the Company enters into off-balance sheet financial instruments consisting of commitments to extend credit, commercial letters of credit, and standby letters of credit as described in Note 16. Such financial instruments are recorded in the consolidated financial statements when they are funded or related fees are incurred or received. 84 Revenue Recognition Topic 606, “Revenue from Contracts with Customers,” does not apply to revenue associated with financial instruments, including revenue from loans and securities. In addition, certain noninterest income streams such as gain or loss associated with mortgage servicing assets and financial guarantees are also not within the scope. Topic 606 is applicable to noninterest income such as deposit related fees, interchange fees, and merchant related income. Noninterest income considered to be within the scope of Topic 606 is discussed below. Service charges and fees on deposits : Deposit account service charges consist of monthly service fees, account analysis fees, non-sufficient funds (“NSF”) charges and other deposit related fees. The Company’s performance obligation for account analysis fees and monthly service fees is generally satisfied, and the related revenue recognized, over the period in which the service is provided. NSF charges, and other deposit account service charges are largely transactional based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time as incurred. Debit card fees : When customers use their debit cards to pay merchants for goods or services, the Company retains a fee from the funds collected from the related deposit account and transfers the remaining funds to the payment network for remittance to the merchant. The performance obligation to the merchant is satisfied and the fee is recognized at the point in time when the funds are collected and transferred to the payment network. Gain (loss) on sale of other real estate owned : The Company’s performance obligation for sale of OREO is the transfer of title and ownership rights of the OREO to the buyer, which occurs at the settlement date when the sale proceeds are received and income is recognized. Wire transfer fees and other service charges : Wire transfer fees and other service charges are transaction based, and therefore, the Company’s performance obligation is satisfied, and related revenue recognized, at a point in time as incurred. Fair Value Measurement Fair value is the exchange price that would be received for an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Current accounting guidance establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to measure fair value: • Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. • Level 2: Significant observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. See Note 2 for more information and disclosures relating to the Company’s fair value measurements. Operating Segment While the Chief Operating Decision Maker (“CODM”) monitors the revenue streams of the various products and services, operations are managed, and financial performance is evaluated on a Company-wide basis. The CODM evaluates the company's performance and allocates resources on a consolidated basis. The CODM reviews financial performance across all products and geographies as part of the integrated operations. The Bank disaggregates financial information into meaningful categories to provide additional insights into its operations while maintaining alignment with its single operating segment structure. Accordingly, all of the operations are considered by management to be aggregated in one reportable operating segment. See Note 19 for additional information on the Company’s operating segment. 85 Adopted Accounting Pronouncements 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. 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. 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): Disaggregation of Income Statement Expenses.” This ASU requires disaggregated disclosure of income statement expenses for public business entities. This ASU requires new financial statement disclosures in tabular format, disaggregating information about prescribed categories underlying any relevant income statement expense caption. The prescribed categories include, among other things, employee compensation, depreciation, and intangible asset amortization. Additionally, entities must disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. 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. 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. 86 Note 2. Fair Value Measurements ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value including a three-level valuation hierarchy, and expands disclosures about fair value measurements. Fair value is the exchange price that would be received for an asset or paid to transfer a liability (i.e. an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The three-level fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs that may be used to measure fair value are defined as follows: • Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. • Level 2: Significant observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. • Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. Fair value is measured on a recurring basis for certain assets and liabilities in which fair value is the primary basis of accounting. Additionally, fair value is used on a non-recurring basis to evaluate certain assets or liabilities for impairment or for disclosure purposes. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company records securities available-for-sale at fair value on a recurring basis. Certain other assets, such as loans held-for-sale, individually evaluated loans, servicing assets and OREO are recorded at fair value on a non-recurring basis. Non-recurring fair value measurements typically involve assets that are periodically evaluated for impairment and for which any impairment is recorded in the period in which the re-measurement is performed. The following is a description of valuation methodologies used for assets and liabilities recorded at fair value: Investment securities : The fair values of securities available-for-sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1) or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2). Management reviews the valuation techniques and assumptions used by the provider and determines that the provider uses widely accepted valuation techniques based on observable market inputs appropriate for the type of security being measured. Loans held-for-sale : The Company records SBA loans held-for-sale, residential mortgage loans held-for-sale and certain non-residential real estate loans held-for-sale at the lower of cost or fair value, on an aggregate basis. The Company obtains fair values from a third-party independent valuation service provider. Loans held-for-sale accounted for at the lower of cost or fair value are considered to be recognized at fair value when they are recorded at below cost, on an aggregate basis, and are classified as Level 2. Individually evaluated loans : The Company records fair value adjustments on certain loans that reflect (i) partial write-downs, through charge-offs or individual reserve allowances, that are based on the current appraised or market-quoted value of the underlying collateral or (ii) the full charge-off of the loan carrying value. In some cases, the properties for which market quotes or appraised values have been obtained are located in areas where comparable sales data is limited, outdated, or unavailable. Fair value estimates for collateral-dependent individually evaluated loans are obtained from real estate brokers or other third-party consultants, and are classified as Level 3. Other real estate owned : The Company initially records OREO at fair value at the time of foreclosure. Thereafter, OREO is recorded at the lower of cost or fair value based on their subsequent changes in fair value. The fair value of OREO is generally based on recent real estate appraisals adjusted for estimated selling costs. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments may be significant and result in a Level 3 classification due to the unobservable inputs used for determining fair value. Only OREO with a valuation allowance are considered to be carried at fair value. Servicing Assets: Servicing assets represent the value of servicing rights associated with servicing loans that have been sold. The fair value for servicing assets is determined through discounted cash flow analysis and utilizes discount rates and prepayment speed assumptions as inputs. All of these assumptions require a significant degree of management estimation and judgment. The fair market valuation is performed on a quarterly basis for servicing assets. Servicing assets are accounted for at the lower of cost or market value and considered to be recognized at fair value when they are recorded at below cost and are classified as Level 3. 87 Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of the dates indicated: Fair Value Measurement Level ($ in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total December 31, 2025 Securities available-for-sale: U.S. government agency and U.S. government sponsored enterprise securities: Mortgage-backed securities $ — $ 129,822 $ — $ 129,822 Collateralized mortgage obligations — 18,762 — 18,762 SBA loan pool securities — 4,193 — 4,193 Municipal bonds — 2,484 — 2,484 Corporate bonds — 4,748 — 4,748 Total securities available-for-sale — 160,009 — 160,009 Total assets measured at fair value on a recurring basis $ — $ 160,009 $ — $ 160,009 Total liabilities measured at fair value on a recurring basis $ — $ — $ — $ — December 31, 2024 Securities available-for-sale: U.S. government agency and U.S. government sponsored enterprise securities: Mortgage-backed securities $ — $ 112,439 $ — $ 112,439 Collateralized mortgage obligations — 21,237 — 21,237 SBA loan pool securities — 6,008 — 6,008 Municipal bonds — 2,420 — 2,420 Corporate bonds — 4,245 — 4,245 Total securities available-for-sale — 146,349 — 146,349 Total assets measured at fair value on a recurring basis $ — $ 146,349 $ — $ 146,349 Total liabilities measured at fair value on a recurring basis $ — $ — $ — $ — 88 Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis The following table presents the Company’s assets and liabilities measured at fair value on a non-recurring basis as of the dates indicated: Fair Value Measurement Level ($ in thousands) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total December 31, 2025 Loans individually evaluated: Business property — — 507 507 Total loans individually evaluated — — 507 507 Total assets measured at fair value on a non-recurring basis $ — $ — $ 507 $ 507 Total liabilities measured at fair value on a non-recurring basis $ — $ — $ — $ — December 31, 2024 Loans individually evaluated: Business property $ — $ — $ 994 $ 994 Total loans individually evaluated — — 994 994 Total assets measured at fair value on a non-recurring basis $ — $ — $ 994 $ 994 Total liabilities measured at fair value on a non-recurring basis $ — $ — $ — $ — The following table presents quantitative information about level 3 fair value measurements for assets measured at fair value on a non-recurring basis as of the dates indicated: ($ in thousands) Fair Value Valuation Technique(s) Unobservable Input(s) Range (Weighted-Average) December 31, 2025 Loans individually evaluated: Business property $ 507 Fair value of collateral Selling cost 6 % December 31, 2024 Loans individually evaluated: Business property $ 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: Year Ended December 31, ($ in thousands) 2025 2024 2023 Loans individually evaluated: Business property $ ( 135 ) $ 200 $ ( 264 ) Multifamily — ( 20 ) — Commercial and industrial ( 37 ) ( 47 ) 1,074 Net gains (losses) recognized $ ( 172 ) $ 133 $ 810 89 Fair Value of Financial Instruments The fair value of a financial instrument is the amount at which the asset or obligation could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument. Because no market value exists for a significant portion of the financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature, involve uncertainties and matters of judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on financial instruments both on and off the consolidated balance sheet without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Additionally, tax consequences related to the realization of the unrealized gains and losses can have a potential effect on fair value estimates and have not been considered in many of the estimates. The following methods and assumptions were used to estimate the fair value of significant financial instruments. Financial assets : The carrying amounts of interest-bearing deposits with other financial institutions and accrued interest receivable are considered to approximate fair value. The fair values of investment securities are generally based on matrix pricing (Level 2). The fair value of loans is estimated based on a discounted cash flow approach under an exit price notion. The fair value reflects the estimated yield that would be negotiated with a willing market participant. Because sale transactions of such loans are not readily observable, as many of the loans have unique risk characteristics, the valuation is based on significant unobservable inputs (Level 3). It is not practical to determine the fair value of FHLB and other restricted stock due to restrictions placed on its transferability. Financial liabilities : The carrying amounts of accrued interest payable are considered to approximate fair value. The fair value of deposits is estimated based on discounted cash flows. The discount rate is derived from the interest rates currently being offered for similar remaining maturities. Non-maturity deposits are estimated based on their historical decaying experiences (Level 3). The fair value of FHLB advances is estimated based on discounted cash flows. The discount rate is derived from the current market rates for borrowings with similar remaining maturities (Level 2). Off-balance-sheet financial instruments : The fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently charged to enter into similar agreements. The fair value of these financial instruments is not material and is excluded from the table below. 90 The following table presents the carrying value and estimated fair values of financial assets and liabilities as of the dates indicated: Carrying Value Fair Value Fair Value Measurements ($ in thousands) Level 1 Level 2 Level 3 December 31, 2025 Financial assets: Interest-bearing deposits in other financial institutions $ 181,823 $ 181,823 $ 181,823 $ — $ — Securities available-for-sale 160,009 160,009 — 160,009 — Loans held-for-sale 12,077 12,815 — 12,815 — Net loans held-for-investment 2,787,019 2,783,879 — — 2,783,879 FHLB and other restricted stock 14,978 N/A N/A N/A N/A Accrued interest receivable 10,669 10,669 126 599 9,944 Financial liabilities: Deposits $ 2,795,412 $ 2,805,598 $ — $ — $ 2,805,598 FHLB advances 34,000 34,000 — 34,000 — Accrued interest payable 25,228 25,228 — 4 25,224 December 31, 2024 Financial assets: Interest-bearing deposits in other financial institutions $ 171,692 $ 171,692 $ 171,692 $ — $ — Securities available-for-sale 146,349 146,349 — 146,349 — Loans held-for-sale 6,292 6,783 — 6,783 — Net loans held-for-investment 2,598,759 2,593,839 — — 2,593,839 FHLB and other restricted stock 14,042 N/A N/A N/A N/A Accrued interest receivable 10,466 10,466 139 548 9,779 Financial liabilities: Deposits $ 2,615,791 $ 2,620,750 $ — $ — $ 2,620,750 Other short-term borrowings 15,000 15,000 — 15,000 — Accrued interest payable 24,407 24,407 — 2 24,405 91 Note 3. Investment Securities The following table presents the amortized cost and fair value of the investment securities as of the dates indicated: ($ in thousands) Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value December 31, 2025 Securities available-for-sale: U.S. government agency and U.S. government sponsored enterprise securities: Mortgage-backed securities $ 135,728 $ 1,063 $ ( 6,969 ) $ 129,822 Collateralized mortgage obligations 19,499 65 ( 802 ) 18,762 SBA loan pool securities 4,363 1 ( 171 ) 4,193 Municipal bonds 2,463 22 ( 1 ) 2,484 Corporate bonds 5,000 — ( 252 ) 4,748 Total securities available-for-sale $ 167,053 $ 1,151 $ ( 8,195 ) $ 160,009 December 31, 2024 Securities available-for-sale: U.S. government agency and U.S. government sponsored enterprise securities: Mortgage-backed securities $ 123,209 $ 168 $ ( 10,938 ) $ 112,439 Collateralized mortgage obligations 22,753 1 ( 1,517 ) 21,237 SBA loan pool securities 6,328 — ( 320 ) 6,008 Municipal bonds 2,452 — ( 32 ) 2,420 Corporate bonds 5,000 — ( 755 ) 4,245 Total securities available-for-sale $ 159,742 $ 169 $ ( 13,562 ) $ 146,349 As of December 31, 2025 and 2024, pledged securities were $ 75.7 million and $ 72.5 million, respectively. These securities were pledged for the State Deposit from the California State Treasurer. The Company elected to exclude accrued interest receivable from the amortized cost of its securities available-for-sale. Accrued interest receivable on securities available-for-sale totaled $ 599 thousand and $ 548 thousand at December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, there were no holdings of securities available-for-sale of any one issuer, other than the U.S. government agency and U.S. GSEs, in an amount greater than 10% of shareholder’s equity. 92 The following table presents the amortized cost and fair value of the investment securities by contractual maturity as of December 31, 2025. Expected maturities may differ from contractual maturities, if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately. Securities Available-For-Sale ($ in thousands) Amortized Cost Fair Value Within one year $ — $ — One to five years 83 83 Five to ten years 6,503 6,266 Greater than ten years 877 883 Mortgage-backed securities, collateralized mortgage obligations and SBA loan pool securities 159,590 152,777 Total $ 167,053 $ 160,009 The following table presents proceeds from sales and calls of securities available-for-sale and the associated gross gains and losses realized through earnings upon the sales and calls of securities available-for-sale for the periods indicated: Year Ended December 31, ($ in thousands) 2025 2024 2023 Gross realized gains on sales and calls of securities available-for-sale $ — $ — $ — Gross realized losses on sales and calls of securities available-for-sale — — — Net realized gains on sales and calls of securities available-for-sale $ — $ — $ — Proceeds from sales and calls of securities available-for-sale $ — $ — $ — Tax expense on sales and calls of securities available-for-sale $ — $ — $ — 93 The following table summarizes the investment securities with unrealized losses by security type and length of time in a continuous unrealized loss position for which an allowance for credit losses has not been recorded as of the dates indicated: Length of Time That Individual Securities Have Been In a Continuous Unrealized Loss Position Less Than 12 Months 12 Months or Longer Total ($ in thousands) Fair Value Gross Unrealized Losses Number of Securities Fair Value Gross Unrealized Losses Number of Securities Fair Value Gross Unrealized Losses Number of Securities December 31, 2025 Securities available-for-sale: U.S. government agency and U.S. government sponsored enterprise securities: Mortgage-backed securities $ 6,795 $ ( 15 ) 3 $ 61,977 $ ( 6,954 ) 111 $ 68,772 $ ( 6,969 ) 114 Collateralized mortgage obligations 3,114 ( 7 ) 3 12,181 ( 795 ) 34 15,295 ( 802 ) 37 SBA loan pool securities — — — 4,152 ( 171 ) 15 4,152 ( 171 ) 15 Municipal bonds 83 ( 1 ) 1 — — — 83 ( 1 ) 1 Corporate bonds — — — 4,748 ( 252 ) 1 4,748 ( 252 ) 1 Total securities available-for-sale $ 9,992 $ ( 23 ) 7 $ 83,058 $ ( 8,172 ) 161 $ 93,050 $ ( 8,195 ) 168 December 31, 2024 Securities available-for-sale: U.S. government agency and U.S. government sponsored enterprise securities: Mortgage-backed securities $ 26,250 $ ( 392 ) 17 $ 67,640 $ ( 10,546 ) 109 $ 93,890 $ ( 10,938 ) 126 Collateralized mortgage obligations 4,963 ( 26 ) 3 13,375 ( 1,491 ) 36 18,338 ( 1,517 ) 39 SBA loan pool securities 396 ( 1 ) 3 5,316 ( 319 ) 13 5,712 ( 320 ) 16 Municipal bonds 2,050 ( 32 ) 6 — — — 2,050 ( 32 ) 6 Corporate bonds — — — 4,245 ( 755 ) 1 4,245 ( 755 ) 1 Total securities available-for-sale $ 33,659 $ ( 451 ) 29 $ 90,576 $ ( 13,111 ) 159 $ 124,235 $ ( 13,562 ) 188 As of December 31, 2025 and 2024, 95.5 % and 95.3 %, respectively, of the Company's securities available-for-sale at amortized cost basis were issued by U.S. government agency and U.S. GSEs. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell these securities before their anticipated recovery, the Company determined that these securities with unrealized losses did not warrant an ACL as of December 31, 2025 and 2024. Municipal and corporate bonds had an investment grade rating upon purchase. The issuers of these securities have not established any cause for default on these securities and various rating agencies have reaffirmed their long-term investment grade status as of December 31, 2025 and 2024. These securities have fluctuated in value since their purchase dates as market interest rates fluctuated. Additionally, the Company continues to receive contractual principal and interest payments in a timely manner. The Company does not intend to sell these securities and it is more likely than not that the Company will not be required to sell before the recovery of its amortized cost basis. The Company therefore determined that the investment securities with unrealized losses did not warrant an ACL as of December 31, 2025 and 2024. As of December 31, 2025 and 2024, the Company recorded no ACL on securities available-for-sale. 94 Note 4. Loans and Allowance for Credit Losses On January 1, 2023, the Company adopted ASU 2016-13 using the modified retrospective method through a cumulative-effect adjustment to retained earnings. Balance sheet information and results for reporting periods beginning with January 1, 2023 are presented under ASC 326, while prior period comparisons continue to be presented under legacy ASC 450 and ASC 310. Loans Held-For-Investment The following table presents the composition of the Company’s loans held-for-investment as of the dates indicated. December 31, ($ in thousands) 2025 2024 Commercial real estate: Commercial property $ 1,071,396 $ 940,931 Business property 638,063 595,547 Multifamily 175,579 194,220 Construction 18,561 21,854 Total commercial real estate 1,903,599 1,752,552 Commercial and industrial 508,662 472,763 Consumer: Residential mortgage 401,337 392,456 Other consumer 6,802 11,616 Total consumer 408,139 404,072 Loans held-for-investment 2,820,400 2,629,387 Allowance for credit losses on loans ( 33,381 ) ( 30,628 ) Net loans held-for-investment $ 2,787,019 $ 2,598,759 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, 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 The following table presents a composition of provision (reversal) for credit losses for the periods indicated: Year Ended December 31, ($ in thousands) 2025 2024 2023 Provision for credit losses on loans $ 3,675 $ 3,488 $ 497 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 ) 95 The following table presents the activities in ACL on loans for the periods indicated: ($ in thousands) Commercial Property Business Property Multifamily Construction Commercial and Industrial Residential Mortgage Other Consumer Total Balance at January 1, 2023 $ 8,502 $ 5,749 $ 1,134 $ 151 $ 5,502 $ 3,691 $ 213 $ 24,942 Impact of ASC 326 adoption ( 1,762 ) 896 256 — 4,344 ( 2,534 ) ( 133 ) 1,067 Charge-offs — ( 4 ) — — ( 45 ) — ( 83 ) ( 132 ) Recoveries — 9 — — 1,107 — 43 1,159 Provision (reversal) for credit losses on loans 5,925 ( 1,911 ) 51 ( 16 ) ( 4,663 ) 1,069 42 497 Balance at December 31, 2023 12,665 4,739 1,441 135 6,245 2,226 82 27,533 Charge-offs — ( 104 ) ( 20 ) — ( 524 ) — ( 43 ) ( 691 ) Recoveries — 4 — — 126 — 168 298 Provision (reversal) for credit losses on loans 258 ( 672 ) 950 ( 54 ) 2,866 280 ( 140 ) 3,488 Balance at December 31, 2024 12,923 3,967 2,371 81 8,713 2,506 67 30,628 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 The Company classifies loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans in regards to credit risk. This analysis typically includes non-homogeneous loans, such as commercial real estate and commercial and industrial loans, and is performed on an ongoing basis as new information is obtained. The Company uses the following definitions for risk ratings: Pass - Loans classified as pass include non-homogeneous loans not meeting the risk ratings defined below and smaller, homogeneous loans not assessed on an individual basis. Special Mention - Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of repayment prospects for the loan or of the institution’s credit position at some future date. Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. 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. 96 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. Revolving loans that are converted to term loans presented in the table below are excluded from term loans by vintage year columns. Term Loans by Origination Year Revolving Loans Revolving Loans Converted to Term ($ in thousands) 2025 2024 2023 2022 2021 Prior Total December 31, 2025 Commercial Real Estate: Commercial property Pass $ 312,704 $ 176,824 $ 138,914 $ 203,311 $ 118,797 $ 96,119 $ 14,306 $ 7,563 $ 1,068,538 Special mention — — — 923 — — — — 923 Substandard — — 116 357 229 1,233 — — 1,935 Doubtful — — — — — — — — — Total $ 312,704 $ 176,824 $ 139,030 $ 204,591 $ 119,026 $ 97,352 $ 14,306 $ 7,563 $ 1,071,396 Year-to-date period gross write offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Business property Pass $ 172,213 $ 89,840 $ 94,519 $ 77,382 $ 116,412 $ 71,607 $ 5,530 $ 3,640 $ 631,143 Special mention — — — — 5,512 — — — 5,512 Substandard — — — 442 377 589 — — 1,408 Doubtful — — — — — — — — — Total $ 172,213 $ 89,840 $ 94,519 $ 77,824 $ 122,301 $ 72,196 $ 5,530 $ 3,640 $ 638,063 Year-to-date period gross write offs $ — $ — $ — $ 307 $ — $ — $ — $ — $ 307 Multifamily Pass $ 38,551 $ 30,423 $ 13,793 $ 38,482 $ 37,071 $ 16,259 $ 1,000 $ — $ 175,579 Special mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Total $ 38,551 $ 30,423 $ 13,793 $ 38,482 $ 37,071 $ 16,259 $ 1,000 $ — $ 175,579 Year-to-date period gross write offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Construction Pass $ — $ 503 $ — $ 18,058 $ — $ — $ — $ — $ 18,561 Special mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Total $ — $ 503 $ — $ 18,058 $ — $ — $ — $ — $ 18,561 Year-to-date period gross write offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 97 Term Loans by Origination Year Revolving Loans Revolving Loans Converted to Term ($ in thousands) 2025 2024 2023 2022 2021 Prior Total December 31, 2025 (Continued) Commercial and Industrial Pass $ 30,047 $ 35,290 $ 28,031 $ 15,873 $ 4,753 $ 6,413 $ 336,748 $ 51,099 $ 508,254 Special mention — — — — — — — — — Substandard — — — 247 — 161 — — 408 Doubtful — — — — — — — — — Total $ 30,047 $ 35,290 $ 28,031 $ 16,120 $ 4,753 $ 6,574 $ 336,748 $ 51,099 $ 508,662 Year-to-date period gross write offs $ 247 $ 202 $ 125 $ — $ 149 $ 196 $ — $ — $ 919 Consumer Residential mortgage Pass $ 62,595 $ 29,032 $ 52,641 $ 137,472 $ 67,078 $ 47,116 $ — $ — $ 395,934 Special mention — — — — — — — — — Substandard — — 4,689 — — 714 — — 5,403 Doubtful — — — — — — — — — Total $ 62,595 $ 29,032 $ 57,330 $ 137,472 $ 67,078 $ 47,830 $ — $ — $ 401,337 Year-to-date period gross write offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Other consumer Pass $ 262 $ — $ 1,788 $ 1,932 $ 429 $ 39 $ 2,347 $ — $ 6,797 Special mention — — — — — — — — — Substandard — — — 5 — — — — 5 Doubtful — — — — — — — — — Total $ 262 $ — $ 1,788 $ 1,937 $ 429 $ 39 $ 2,347 $ — $ 6,802 Year-to-date period gross write offs $ — $ 77 $ 1 $ — $ 4 $ — $ — $ — $ 82 Total loans held-for-investment Pass $ 616,372 $ 361,912 $ 329,686 $ 492,510 $ 344,540 $ 237,553 $ 359,931 $ 62,302 $ 2,804,806 Special mention — — — 923 5,512 — — — 6,435 Substandard — — 4,805 1,051 606 2,697 — — 9,159 Doubtful — — — — — — — — — Total $ 616,372 $ 361,912 $ 334,491 $ 494,484 $ 350,658 $ 240,250 $ 359,931 $ 62,302 $ 2,820,400 Year-to-date period gross write offs $ 247 $ 279 $ 126 $ 307 $ 153 $ 196 $ — $ — $ 1,308 98 The following table summarizes the Company’s loans held-for-investment by loan segment, internal risk ratings and vintage year as of December 31, 2024. The vintage year is the year of origination, renewal or major modification. Revolving loans that are converted to term loans presented in the table below are excluded from term loans by vintage year columns. Term Loans by Origination Year Revolving Loans Revolving Loans Converted to Term ($ in thousands) 2024 2023 2022 2021 2020 Prior Total December 31, 2024 Commercial Real Estate: Commercial property Pass $ 196,454 $ 142,455 $ 259,222 $ 138,837 $ 76,462 $ 102,666 $ 21,031 $ 385 $ 937,512 Special mention — — — — — — — — — Substandard — 131 399 258 — 2,631 — — 3,419 Doubtful — — — — — — — — — Total $ 196,454 $ 142,586 $ 259,621 $ 139,095 $ 76,462 $ 105,297 $ 21,031 $ 385 $ 940,931 Year-to-date period gross write offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Business property Pass $ 93,973 $ 100,337 $ 95,024 $ 148,382 $ 44,239 $ 95,372 $ 6,431 $ 3,750 $ 587,508 Special mention — — 5,034 — — — — — 5,034 Substandard — — 447 859 — 1,699 — — 3,005 Doubtful — — — — — — — — — Total $ 93,973 $ 100,337 $ 100,505 $ 149,241 $ 44,239 $ 97,071 $ 6,431 $ 3,750 $ 595,547 Year-to-date period gross write offs $ — $ — $ 77 $ — $ — $ 27 $ — $ — $ 104 Multifamily Pass $ 34,104 $ 53,020 $ 39,870 $ 38,104 $ 25,751 $ 2,370 $ 1,001 $ — $ 194,220 Special mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Total $ 34,104 $ 53,020 $ 39,870 $ 38,104 $ 25,751 $ 2,370 $ 1,001 $ — $ 194,220 Year-to-date period gross write offs $ — $ — $ — $ 20 $ — $ — $ — $ — $ 20 Construction Pass $ 886 $ 7,589 $ 13,379 $ — $ — $ — $ — $ — $ 21,854 Special mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Total $ 886 $ 7,589 $ 13,379 $ — $ — $ — $ — $ — $ 21,854 Year-to-date period gross write offs $ — $ — $ — $ — $ — $ — $ — $ — $ — 99 Term Loans by Origination Year Revolving Loans Revolving Loans Converted to Term ($ in thousands) 2024 2023 2022 2021 2020 Prior Total December 31, 2024 (Continued) Commercial and Industrial Pass $ 46,644 $ 34,737 $ 21,700 $ 7,312 $ 3,125 $ 8,044 $ 347,605 $ 3,517 $ 472,684 Special mention — — — — — — — — — Substandard — — — 8 — 71 — — 79 Doubtful — — — — — — — — — Total $ 46,644 $ 34,737 $ 21,700 $ 7,320 $ 3,125 $ 8,115 $ 347,605 $ 3,517 $ 472,763 Year-to-date period gross write offs $ — $ — $ — $ — $ — $ 126 $ 248 $ 150 $ 524 Consumer Residential mortgage Pass $ 37,548 $ 73,833 $ 151,922 $ 73,183 $ 10,840 $ 44,727 $ — $ — $ 392,053 Special mention — — — — — — — — — Substandard — — — — — 403 — — 403 Doubtful — — — — — — — — — Total $ 37,548 $ 73,833 $ 151,922 $ 73,183 $ 10,840 $ 45,130 $ — $ — $ 392,456 Year-to-date period gross write offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Other consumer Pass $ 346 $ 2,914 $ 4,243 $ 1,530 $ 394 $ 8 $ 2,157 $ — $ 11,592 Special mention — — — — — — — — — Substandard — — 23 — 1 — — — 24 Doubtful — — — — — — — — — Total $ 346 $ 2,914 $ 4,266 $ 1,530 $ 395 $ 8 $ 2,157 $ — $ 11,616 Year-to-date period gross write offs $ — $ 18 $ 15 $ — $ 10 $ — $ — $ — $ 43 Total loans held-for-investment Pass $ 409,955 $ 414,885 $ 585,360 $ 407,348 $ 160,811 $ 253,187 $ 378,225 $ 7,652 $ 2,617,423 Special mention — — 5,034 — — — — — 5,034 Substandard — 131 869 1,125 1 4,804 — — 6,930 Doubtful — — — — — — — — — Total $ 409,955 $ 415,016 $ 591,263 $ 408,473 $ 160,812 $ 257,991 $ 378,225 $ 7,652 $ 2,629,387 Year-to-date period gross write offs $ — $ 18 $ 92 $ 20 $ 10 $ 153 $ 248 $ 150 $ 691 100 Nonaccrual Loans 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 December 31, 2025 Commercial real estate: Commercial property $ 1,403 $ — $ — $ 1,403 $ — Business property 938 642 134 938 134 Total commercial real estate 2,341 642 134 2,341 134 Commercial and industrial 161 71 72 161 72 Consumer: Residential mortgage 5,403 — — 5,403 — Other consumer 5 5 — — — Total consumer 5,408 5 — 5,403 — Total $ 7,910 $ 718 $ 206 $ 7,905 $ 206 December 31, 2024 Commercial real estate: Commercial property $ 1,851 $ — $ — $ 1,851 $ — Business property 2,336 1,032 38 2,336 38 Total commercial real estate 4,187 1,032 38 4,187 38 Commercial and industrial 79 8 8 79 8 Consumer: Residential mortgage 403 — — 403 — Other consumer 24 24 — — — Total consumer 427 24 — 403 — Total $ 4,693 $ 1,064 $ 46 $ 4,669 $ 46 There were no nonaccrual loans guaranteed by a U.S. government agency at December 31, 2025 and 2024. 101 Collateral Dependent Loans Loans that have been classified as collateral dependent are loans where substantially all repayment of the loan is expected to come from the operation of or eventual liquidation of the collateral. Collateral dependent loans are evaluated individually for purposes of determining the ACL, which is determined based on the estimated fair value of the collateral. Estimates for costs to sell are included in the determination of the ACL when liquidation of the collateral is anticipated. In cases where the loan is well secured and the estimated value of the collateral exceeds the amortized cost of the loan, no ACL is recorded. The following table presents the collateral dependent loans by loan segments as of the date indicated: ($ in thousands) Hotel / Motel Restaurants Car Wash Retail Single Family Residential Other Total December 31, 2025 Commercial real estate: Commercial property $ 1,403 $ — $ — $ — $ — $ — $ 1,403 Business property — 377 — 529 — 32 938 Total commercial real estate 1,403 377 — 529 — 32 2,341 Commercial and industrial 8 — — — 82 71 161 Consumer: Residential mortgage — — — — 5,403 — 5,403 Total consumer — — — — 5,403 — 5,403 Total $ 1,411 $ 377 $ — $ 529 $ 5,485 $ 103 $ 7,905 December 31, 2024 Commercial real estate: Commercial property $ 1,851 $ — $ — $ — $ — $ — $ 1,851 Business property — — 1,695 606 — 35 2,336 Total commercial real estate 1,851 — 1,695 606 — 35 4,187 Commercial and industrial 11 — 8 — 60 — 79 Consumer: Residential mortgage — — — — 403 — 403 Total consumer — — — — 403 — 403 Total $ 1,862 $ — $ 1,703 $ 606 $ 463 $ 35 $ 4,669 102 Past Due Loans The following table presents the aging of past due in accruing loans and nonaccrual loans by loan segments as of date indicated: Still Accruing Nonaccrual ($ in thousands) 30 to 59 Days Past Due 60 to 89 Days Past Due 90 or More Days Past Due Total 30 to 59 Days Past Due 60 to 89 Days Past Due 90 or More Days Past Due Total Total Loans Past Due December 31, 2025 Commercial real estate: Commercial property $ — $ — $ — $ — $ — $ — $ 524 $ 524 $ 524 Business property 140 — — 140 86 178 230 494 634 Total commercial real estate 140 — — 140 86 178 754 1,018 1,158 Commercial and industrial 21 5 — 26 — — 78 78 104 Consumer: Residential mortgage 674 — — 674 2,269 273 2,862 5,404 6,078 Other consumer 108 7 — 115 — — — — 115 Total consumer 782 7 — 789 2,269 273 2,862 5,404 6,193 Total $ 943 $ 12 $ — $ 955 $ 2,355 $ 451 $ 3,694 $ 6,500 $ 7,455 December 31, 2024 Commercial real estate: Commercial property $ 433 $ — $ — $ 433 $ — $ 984 $ 269 $ 1,253 $ 1,686 Business property 333 — — 333 508 — 698 1,206 1,539 Total commercial real estate 766 — — 766 508 984 967 2,459 3,225 Commercial and industrial — — — — — 71 — 71 71 Consumer: Residential mortgage 3,679 303 — 3,982 — 403 — 403 4,385 Other consumer 154 — — 154 — — 24 24 178 Total consumer 3,833 303 — 4,136 — 403 24 427 4,563 Total $ 4,599 $ 303 $ — $ 4,902 $ 508 $ 1,458 $ 991 $ 2,957 $ 7,859 103 Loan Modifications Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extension, an other-than-insignificant payment delay, interest rate reduction or combination of the above mentioned modifications. When principal forgiveness is provided, the amount of forgiveness is charged-off against the ACL. When principal forgiveness is provided, the amount of forgiveness is charged-off against the ACL. These loans are placed on nonaccrual status at the time of such modification. The following tables present loans that the borrowers were both experiencing financial difficulty and modified during the periods indicated by loan segments and modification type: Year Ended ($ in thousands) Combination of Other-Than-Insignificant Payment Delay and Term Extension Total Percentage to Each Loan Segment December 31, 2025 Commercial and industrial $ 49 $ 49 0.1 % Total $ 49 $ 49 0.1 % December 31, 2024 Commercial real estate: Commercial property $ 399 $ 399 0.1 % Business property 2,204 2,204 0.2 % Total commercial real estate 2,603 2,603 0.1 % 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 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 Combination of Other-Than-Insignificant Payment Delay and 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: ($ in thousands) 30 to 59 Days Past Due 60 to 89 Days Past Due 90 or More Days Past Due Total Past Due December 31, 2025 Total $ — $ — $ — $ — December 31, 2024 Commercial real estate: Business property $ 508 $ — $ 664 $ 1,172 Total commercial real estate 508 — 664 1,172 Total $ 508 $ — $ 664 $ 1,172 104 Purchases, Sales, and Transfers The following table presents a summary of loans that were transferred from loans held-for-investment to loans held-for-sale for the periods indicated: Year Ended December 31, ($ in thousands) 2025 2024 2023 Consumer: Residential mortgage $ — $ 676 $ — Total consumer — 676 — Total $ — $ 676 $ — The Company had no loans that were transferred from loans held-for-sale to loans held-for investment during the years ended December 31, 2025 and 2024. The following table presents a summary of purchases of loans held-for-investment for the periods indicated: Year Ended December 31, ($ in thousands) 2025 2024 2023 Consumer: Residential mortgage $ — $ — $ 15,741 Total consumer — — 15,741 Total $ — $ — $ 15,741 The Company had no sales of loans held-for-investment during the year ended December 31, 2025, 2024 and 2023. When the Company changes its intent to hold loans for investment, the loans are transferred to held-for-sale. Loans Held-For-Sale The following table presents a composition of loans held-for-sale as of the dates indicated: December 31, ($ in thousands) 2025 2024 Commercial real estate: Commercial property $ 3,750 $ 3,307 Business property 2,734 713 Total commercial real estate 6,484 4,020 Commercial and industrial 5,593 2,272 Total $ 12,077 $ 6,292 Loans held-for-sale are carried at the lower of cost or fair value. When a determination is made at the time of commitment to originate as held-for-investment, it is the Company’s intent to hold these loans to maturity or for the “foreseeable future,” subject to periodic reviews under the Company’s management evaluation processes, including asset/liability management and credit risk management. When the Company subsequently changes its intent to hold certain loans, the loans are transferred to held-for-sale at the lower of cost or fair value. Certain loans are transferred to held-for-sale with write-downs to ACL on loans. 105 Note 5. Premises and Equipment The following table presents a composition of premises and equipment as of the dates indicated: December 31, ($ in thousands) 2025 2024 Leasehold improvements $ 14,265 $ 13,131 Furniture, fixtures and equipment 4,366 4,553 Computer equipment 3,368 3,456 Computer software 1,485 1,947 Construction in process 8 463 Total premises and equipment 23,492 23,550 Less: accumulated depreciation ( 15,298 ) ( 15,270 ) Premises and equipment, net $ 8,194 $ 8,280 The Company recognized depreciation expense of $ 2.2 million, $ 2.3 million and $ 2.2 million for the years ended December 31, 2025, 2024 and 2023, respectively. Note 6. Operating Leases The following table presents operating lease cost and supplemental cash flow information related to leases for the periods indicated: Year Ended December 31, ($ in thousands) 2025 2024 2023 Operating lease cost (1) $ 3,780 $ 3,625 $ 3,143 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 3,694 3,439 3,297 Right-of-use assets obtained in exchange for lease obligations 2,958 973 15,317 Right-of-use assets impairment (2) 238 — — (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. The following table presents supplemental balance sheet information related to leases as of the dates indicated: December 31, ($ in thousands) 2025 2024 Operating leases: Operating lease assets $ 17,158 $ 17,254 Operating lease liabilities 18,996 18,671 Weighted-average remaining lease term 7.1 years 7.8 years Weighted-average discount rate 4.78 % 4.72 % The following table presents maturities of operating lease liabilities as of the date indicated: ($ in thousands) December 31, 2025 Maturities: 2026 $ 3,562 2027 3,192 2028 3,085 2029 2,930 2030 2,778 After 2030 7,585 Total lease payment 23,132 Imputed interest ( 4,136 ) Present value of operating lease liabilities $ 18,996 106 Note 7. Other Real Estate Owned The following table presents activity in OREO for the periods indicated: Year Ended December 31, ($ in thousands) 2025 2024 2023 Balance at beginning of year $ — $ 2,558 $ — Additions — 466 2,558 Sales — ( 3,024 ) — Net change in valuation allowance — — — Balance at end of year $ — $ — $ 2,558 The following table presents activity in OREO valuation allowance for the periods indicated: Year Ended December 31, ($ in thousands) 2025 2024 2023 Balance at beginning of year $ — $ — $ — Additions — — — Net direct write-downs and removal from sale — — — Balance at end of year $ — $ — $ — The following table presents expenses related to OREO for the periods indicated: Year Ended December 31, ($ in thousands) 2025 2024 2023 Net (gain) loss on sales $ — $ ( 15 ) $ — Operating expenses, net of rental income — 13 — Total $ — $ ( 2 ) $ — The Company did not provide loans to finance the sale of its OREO properties during the years ended December 31, 2025, 2024 or 2023. 107 Note 8. Servicing Assets The Company sells SBA and certain residential mortgage loans with servicing retained. SBA loans are included in commercial real estate loans and commercial and industrial loans. The Company sold loans of $ 85.8 million, $ 71.1 million and $ 82.3 million, respectively, with the servicing rights retained and recognized a net gain on sale of $ 4.6 million, $ 3.8 million and $ 3.6 million, respectively, during the years ended December 31, 2025, 2024 and 2023. Loan servicing income was $ 2.9 million, $ 3.4 million and $ 3.3 million for the years ended December 31, 2025, 2024 and 2023, respectively. The following table presents the composition of servicing assets with key assumptions used to estimate the fair value as of the dates indicated: December 31, 2025 2024 ($ in thousands) Residential Mortgage CRE SBA C&I SBA Total Residential Mortgage CRE SBA C&I SBA Total Carrying amount $ 34 $ 4,900 $ 693 $ 5,627 $ 42 $ 5,226 $ 569 $ 5,837 Fair value $ 80 $ 8,906 $ 1,101 $ 10,087 $ 84 $ 7,750 $ 894 $ 8,728 Discount rates 7.85 % 12.75 % 12.75 % 7.85 % 12.14 % 15.85 % Prepayment speeds 12.52 % 16.67 % 16.17 % 13.93 % 17.82 % 13.02 % Weighted average remaining life 17.7 years 19.9 years 7.4 years 23.8 years 20.7 years 7.4 years Underlying loans being serviced $ 7,550 $ 425,876 $ 68,982 $ 502,408 $ 9,072 $ 445,601 $ 70,909 $ 525,582 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: ($ in thousands) Residential Mortgage CRE SBA C&I SBA Total Balance at January 1, 2023 $ 64 $ 6,831 $ 452 $ 7,347 Additions — 983 219 1,202 Amortization ( 15 ) ( 1,679 ) ( 189 ) ( 1,883 ) Balance at December 31, 2023 49 6,135 482 6,666 Additions — 648 287 935 Amortization ( 7 ) ( 1,557 ) ( 200 ) ( 1,764 ) Balance at December 31, 2024 42 5,226 569 5,837 Additions — 1,425 445 1,870 Amortization ( 8 ) ( 1,751 ) ( 321 ) ( 2,080 ) Balance at December 31, 2025 $ 34 $ 4,900 $ 693 $ 5,627 108 Note 9. Deposits At December 31, 2025 and 2024, total deposits were $ 2.80 billion and $ 2.62 billion, respectively, and total interest-bearing deposits were $ 2.24 billion and $ 2.07 billion, respectively. The aggregate amount of deposits reclassified as loans, such as overdrafts, was $ 262 thousand and $ 346 thousand at December 31, 2025 and 2024, respectively. 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. The California State Treasurer’s deposits are subject to withdrawal based on the State’s periodic evaluations. At December 31, 2025 and 2024, the Company pledged securities with amortized cost of $ 75.7 million and $ 72.5 million, respectively, for the California State Treasurer’s deposits. At December 31, 2025 and 2024, the Company had brokered deposits of $ 280.5 million and $ 442.3 million, respectively. Deposits from certain officers, directors and their related interests with which they are associated held by the Company were $ 8.9 million and $ 6.0 million at December 31, 2025 and 2024, respectively. The following table presents scheduled maturities of time deposits as of the date indicated: December 31, ($ in thousands) 2026 2027 2028 2029 2030 Thereafter Total Time deposits of $250,000 or less $ 853,535 $ 1,108 $ 293 $ 78 $ 45 $ — $ 855,059 Time deposits of more than $250,000 705,741 2,892 — — — — 708,633 Total time deposits $ 1,559,276 $ 4,000 $ 293 $ 78 $ 45 $ — $ 1,563,692 Note 10. Federal Home Loan Bank Advances and Other Borrowings FHLB Advances 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: As of or For the Year Ended December 31, ($ in thousands) 2025 2024 2023 Weighted-average interest rate at end of year 4.02 % — % 5.63 % Average interest rate during the year 4.56 % 5.69 % 5.51 % Average balance $ 29,762 $ 27,746 $ 8,189 Maximum amount outstanding at any month-end $ 96,000 $ 50,000 $ 39,000 Balance at end of year $ 34,000 $ — $ 39,000 Advances paid early are subject to a prepayment penalty. 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. The Company had additional borrowing capacity of $ 840.6 million and $ 722.4 million, respectively, from the FHLB as of December 31, 2025 and 2024. Federal Reserve Discount Window 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. Overnight Federal Funds Lines The Company maintains overnight federal funds lines with correspondent financial institutions. 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 . 109 Note 11. Shareholders’ Equity Preferred Stock Series C, Senior Non-Cumulative Perpetual Preferred Stock 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. 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 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 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. In addition to satisfying a Threshold Condition, the Option Agreement requires that the Company meet certain other eligibility conditions in order to exercise the purchase option in the future, including compliance with the terms of the original ECIP purchase agreement and the terms of the Series C Preferred Stock, maintaining qualification as either a certified community development financial institution or a minority depository institution and satisfying other legal and regulatory criteria. 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 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 $ 300 thousand and $ 834 thousand for the years ended December 31, 2025 and 2024, respectively. 110 Common Stock Stock Repurchases 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, 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. 111 Note 12. Share-Based Compensation On May 25, 2023, the Company adopted the 2023 Equity Based Compensation Plan (“2023 EBC Plan”) approved by its shareholders to replace the 2013 Equity Based Stock Compensation Plan. The 2023 EBC Plan provides 700,000 shares of common stock for equity-based compensation awards including incentive and non-qualified stock options and RSAs. As of December 31, 2025, there were 378,100 shares available for future grants. Share-Based Compensation Expense The following table presents share-based compensation expense and the related tax benefits for the periods indicated: Year Ended December 31, ($ in thousands) 2025 2024 2023 Share-based compensation expense related to: Stock options $ 294 $ 283 $ 143 Restricted stock awards 679 221 345 Total share-based compensation expense $ 973 $ 504 $ 488 Related tax benefits $ 254 $ 119 $ 112 The following table presents unrecognized share-based compensation expense as of the date indicated: December 31, 2025 ($ in thousands) Unrecognized Expense Weighted-Average Remaining Expected Recognition Period Unrecognized share-based compensation expense related to: Stock options $ 246 1.1 years Restricted stock awards 1,718 2.8 years Total unrecognized share-based compensation expense $ 1,964 2.6 years Stock Options The Company has issued stock options to certain employees, officers and directors. Stock options are issued at the exercise price of the closing market price on the grant date, and generally have a three -to five-year vesting period and contractual terms of ten years . The Company recognizes an income tax deduction upon exercise of the non-qualified stock option by the option holder in an amount equal to the taxable income reported by the option holders. 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 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 Exercised ( 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 $ 1,558 112 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 Vested ( 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, 2024 2023 Risk-free interest rate 3.89 % 4.92 % Expected term 6.80 years 6.04 years Expected stock price volatility 29.45 % 28.76 % Dividend yield 3.95 % 4.79 % The following table presents information related to the stock option plan for the periods indicated: Year Ended December 31, ($ in thousands, except per share data) 2025 2024 2023 Intrinsic value of options exercised $ 1,865 $ 247 $ 883 Cash received from options exercised $ 2,278 $ 353 $ 1,350 Tax benefit from options exercised $ 89 $ 14 $ 103 Weighted-average estimated fair value per share of options granted $ — $ 4.15 $ 3.14 Restricted Stock Awards The Company also has granted RSAs to certain employees and officers. The RSAs are valued at the closing market price of the Company's stock on the grant date and generally have a three -to five-year vesting period. The Company recognizes an income tax deduction in an amount equal to the taxable income reported by the holders of the restricted stock, when vested. The following table represents RSAs activity for the year ended December 31, 2025: Year Ended December 31, 2025 Number of Shares Weighted-Average Grant Date Fair Value Per Share Outstanding at beginning of period 119,100 $ 20.40 Granted 6,200 $ 21.91 Vested ( 32,950 ) $ 20.36 Forfeited ( 1,500 ) $ 20.65 Outstanding at end of period 90,850 $ 20.52 Note 13. Employee Benefit Plans The Company has adopted a defined contribution 401(k) plan for the benefit of its employees. The Company matches 75 % of an employee’s contribution up to 8 % of the employee’s salary each year. The Board of Directors may make a discretionary contribution to the plan annually. 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. 113 Note 14. Income Taxes The following table presents the components of income tax expense from continuing operations for the periods indicated: Year Ended December 31, ($ in thousands) 2025 2024 2023 Current: Federal $ 12,431 $ 12,213 $ 5,506 State 6,451 6,242 2,948 Foreign — — — Total current income tax expense 18,882 18,455 8,454 Deferred: Federal ( 2,469 ) ( 5,250 ) 2,489 State ( 1,378 ) ( 2,729 ) 1,614 Foreign — — — Total deferred income tax expense (benefit) ( 3,847 ) ( 7,979 ) 4,103 Total $ 15,035 $ 10,476 $ 12,557 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 Federal $ 15,120 $ 3,800 $ 2,600 State and local California 7,115 2,400 1,460 All other states 820 166 224 Total state and local 7,935 2,566 1,684 Foreign — — — Total $ 23,055 $ 6,366 $ 4,284 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 (as reported under ASU 2023-09, on a retrospective basis): 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 % Effect of: State and local income taxes, net of federal tax benefit (1) 4,007 7.63 % 2,775 7.65 % 3,604 8.33 % Tax credits: 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 % 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 ) % Total $ 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. 114 The following table presents the components of the net deferred tax assets recognized in the accompanying consolidated balance sheets as of the dates indicated: December 31, ($ in thousands) 2025 2024 Deferred tax assets: Allowance for credit losses on loans $ 9,685 $ 8,987 Allowance for credit losses on off-balance sheet credit exposures 448 349 Share-based compensation 174 204 Unrealized loss on investment securities 2,044 3,930 Operating lease liabilities 5,511 5,478 State tax benefit 1,350 1,329 Other 804 598 Total deferred tax assets 20,016 20,875 Deferred tax liabilities: Depreciation on premises and equipment 1,220 1,030 Market adjustment on loans per Section 475 of the Internal Revenue Code 3,801 6,806 Deferred loan origination costs 724 636 Operating lease assets 4,978 5,063 Other 83 91 Total deferred tax liabilities 10,806 13,626 Deferred tax assets, net $ 9,210 $ 7,249 The Company had no valuation allowance for deferred tax assets as of December 31, 2025 and 2024. 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. The Company and the Bank are subject to U.S. federal and various state jurisdictions income tax examinations. As of December 31, 2025, the Company is no longer subject to examination by taxing authorities for tax years before 2022 for federal taxes and before 2021 for various state jurisdictions. The statute of limitations vary by state, and state taxes other than California have been immaterial to the Company’s financial results. 115 N o te 15. Earnings Per Share The following is a reconciliation of net income and shares outstanding to the income and number of shares used to compute EPS for the periods indicated: Year Ended December 31, ($ in thousands, except per share) 2025 2024 2023 Basic earnings per share: Net income available to common shareholders $ 37,153 $ 24,976 $ 30,705 Less: income allocated to unvested restricted stock ( 296 ) ( 47 ) ( 95 ) Net income allocated to common stock $ 36,857 $ 24,929 $ 30,610 Weighted-average total common shares outstanding 14,318,428 14,269,017 14,345,860 Less: weighted-average unvested restricted stock ( 113,960 ) ( 26,960 ) ( 44,169 ) Weighted-average common shares outstanding, basic 14,204,468 14,242,057 14,301,691 Basic earnings per share $ 2.59 $ 1.75 $ 2.14 Diluted earnings per share: Net income allocated to common stock $ 36,857 $ 24,929 $ 30,610 Weighted-average commons shares outstanding 14,204,468 14,242,057 14,301,691 Diluted effect of stock options 74,662 100,304 116,247 Diluted weighted-average common shares outstanding 14,279,130 14,342,361 14,417,938 Diluted earnings per share $ 2.58 $ 1.74 $ 2.12 There were 55,000 , 268,000 , and 286,700 stock options excluded in computing diluted EPS because they were anti-dilutive for years ended December 31, 2025, 2024, and 2023, respectively. 116 Note 16. Commitments and Contingencies In the ordinary course of business, the Company enters into financial commitments to meet the financing needs of its customers. These financial commitments include commitments to extend credit and letters of credit. Those instruments involve to varying degrees, elements of credit, and interest rate risk not recognized in the Company’s consolidated financial statements. The following table presents outstanding financial commitments whose contractual amount represents credit risk as of the dates indicated: December 31, 2025 2024 ($ in thousands) Fixed Rate Variable Rate Fixed Rate Variable Rate Unused lines of credit $ 12,663 $ 348,287 $ 12,923 $ 370,313 Unfunded loan commitments — 7,132 — 17,339 Standby letters of credit 5,705 1,625 5,279 1,516 Total $ 18,368 $ 357,044 $ 18,202 $ 389,168 Unfunded loan commitments are generally made for periods of 90 days or less, except for SBA loans that are generally made for periods of 180 days or less. 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. The loss estimation process includes assumptions for utilization at default. These assumptions are based on the Company’s own historical internal loan data. 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. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total amounts do not necessarily represent future cash requirements. The Company evaluates each client’s credit worthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company is based on management’s credit evaluation of the customer. Litigation The Company is involved in various matters of litigation, which have arisen in the ordinary course of business. In the opinion of management, the disposition of pending matters of litigation will not have a material effect on the Company’s consolidated financial statements. 117 Note 17. Regulatory Matters Under the Basel III Capital Rules, the Company and Bank must hold a capital conservation buffer of 2.50% above the adequately capitalized risk-based capital ratios to avoid restrictions on dividends, stock repurchase, discretionary bonuses and other payments. Management believes as of December 31, 2025 and 2024, the Company and the Bank met all capital adequacy requirements to which they are subject. Historically, the Company has operated under the Federal Reserve’s Small Bank Holding Company Policy Statement, which exempts bank holding companies with total consolidated assets of less than $3.0 billion from the Federal Reserve's risk-based- and leverage consolidated capital requirements. Because the Company's total consolidated assets exceeded $3.0 billion as of December 31, 2024, the Company is now subject to the Federal Reserve's consolidated capital requirements separate and in addition to those of the Bank. The Company and the Bank’s capital conservation buffer was 6.96 % and 6.72 %, respectively, as of December 31, 2025, and 6.94 % and 6.92 %, respectively, as of December 31, 2024. Unrealized gain or loss on securities available-for-sale is not included in computing regulatory capital. The following table presents the regulatory capital amounts and ratios for the Company and the Bank as of the dates indicated: Actual Minimum Capital Requirement To Be Well Capitalized Under Prompt Corrective Provisions ($ in thousands) Amount Ratio Amount Ratio Amount Ratio December 31, 2025 PCB Bancorp Common tier 1 capital (to risk-weighted assets) $ 325,048 11.46 % $ 127,663 4.5 % N/A N/A Total capital (to risk-weighted assets) 429,113 15.13 % 226,956 8.0 % N/A N/A Tier 1 capital (to risk-weighted assets) 394,189 13.89 % 170,217 6.0 % N/A N/A Tier 1 capital (to average assets) 394,189 11.89 % 132,582 4.0 % N/A N/A PCB Bank Common tier 1 capital (to risk-weighted assets) $ 382,620 13.49 % $ 127,616 4.5 % $ 184,334 6.5 % Total capital (to risk-weighted assets) 417,545 14.72 % 226,873 8.0 % 283,591 10.0 % Tier 1 capital (to risk-weighted assets) 382,620 13.49 % 170,154 6.0 % 226,873 8.0 % Tier 1 capital (to average assets) 382,620 11.55 % 132,540 4.0 % 165,675 5.0 % December 31, 2024 PCB Bancorp Common tier 1 capital (to risk-weighted assets) $ 303,423 11.44 % $ 119,387 4.5 % N/A N/A Total capital (to risk-weighted assets) 404,383 15.24 % 212,243 8.0 % N/A N/A Tier 1 capital (to risk-weighted assets) 372,564 14.04 % 159,182 6.0 % N/A N/A Tier 1 capital (to average assets) 372,564 12.45 % 119,666 4.0 % N/A N/A PCB Bank Common tier 1 capital (to risk-weighted assets) $ 363,786 13.72 % $ 119,340 4.5 % $ 172,380 6.5 % Total capital (to risk-weighted assets) 395,606 14.92 % 212,160 8.0 % 265,200 10.0 % Tier 1 capital (to risk-weighted assets) 363,786 13.72 % 159,120 6.0 % 212,160 8.0 % Tier 1 capital (to average assets) 363,786 12.16 % 119,636 4.0 % 149,545 5.0 % The California Financial Code provides that a bank generally may not make a cash distribution to its shareholders in excess of the lesser of the bank’s undivided profits or the bank’s net income for its last three fiscal years less the amount of any distribution made to the bank’s shareholders during the same period. This law limits the distributions the Bank is permitted to make to the Company. As a California corporation, the Company is subject to the limitations of the California Corporations Code, which allows a corporation to distribute cash or property to shareholders, including a dividend or repurchase or redemption of shares, if the corporation meets either a retained earnings test or a balance sheet test. Under the retained earnings test, the Company may make a distribution from retained earnings to the extent that its retained earnings exceed the sum of (a) the amount of the distribution plus (b) the amount, if any, of dividends in arrears on shares with preferential dividend rights. Under the balance sheet test, the Company may also make a distribution if, immediately after the distribution, the value of its assets equals or exceeds the sum of (a) its total liabilities plus (b) the liquidation preference of any shares which have a preference upon dissolution over the rights of shareholders receiving the distribution. Indebtedness is not considered a liability if the terms of such indebtedness provide that payment of principal and interest thereon are to be made only if, and to the extent that, a distribution to shareholders could be made under the balance sheet test. 118 The Federal Reserve, the FDIC and the CDFPI periodically examine the Company, the Bank and their businesses, including for compliance with laws and regulations. If, as a result of an examination, a banking agency were to determine that the Company’s or the Bank’s financial condition, capital resources, asset quality, earnings prospects, management, liquidity or other aspects of any of their operations had become unsatisfactory, or that the Company or the Bank was in violation of any law or regulation, they may take a number of different remedial actions as they deem appropriate. These actions include the power to enjoin “unsafe or unsound” practices, to require affirmative action to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in the Company’s or the Bank’s capital, to restrict growth, to assess civil money penalties, to fine or remove officers and directors and, if it is concluded that such conditions cannot be corrected or there is an imminent risk of loss to depositors, to terminate the Bank’s deposit insurance and place the Bank into receivership or conservatorship. Note 18. Revenue Recognition The following table presents revenue from contracts with customers within the scope of ASC 606 for the periods indicated: Year Ended December 31, ($ in thousands) 2025 2024 2023 Noninterest income in-scope of Topic 606 Service charges and fees on deposits: Monthly service fees $ 120 $ 108 $ 107 Account analysis fees 889 949 951 Non-sufficient funds charges 428 385 328 Other deposit related fees 103 103 89 Total service charges and fees on deposits 1,540 1,545 1,475 Debit card fees 396 340 339 Gain (loss) on sale of other real estate owned — 15 — Wire transfer fees 699 626 625 Other service charges 264 248 211 Total $ 2,899 $ 2,774 $ 2,650 119 Note 19. Segment Information The Company operates as a single operating segment, the banking segment or the Bank, providing financial services within the U.S. The Bank provides a full range of deposit products, and commercial and residential loans, primarily to individuals, small businesses and commercial clients. All operations are domestic. The CODM, the Chief Executive Officer, evaluates the performance and allocates resources to the Bank as a whole. The CODM relies on the Executive Management Team, which includes the Chief Financial Officer, Chief Risk Officer, Chief Banking Officer, Chief Credit Officer and others, to provide detailed financial and operational reports. These reports help the CODM assess the performance of the Bank and determine the appropriate allocation of resources. Although the Bank management team provides valuable insights into various functional areas, all significant decisions related to performance evaluation and resource allocation are ultimately made by the CODM in the context of the Bank as a single operating segment. The CODM evaluates the performance of the Bank based on both financial and non-financial measures. 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 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. The following table presents financial measures the CODM reviews to allocate recourses to the Bank as of the dates or for the periods indicated: As of or For the Year Ended December 31, ($ in thousands) 2025 2024 2023 Revenue Interest income $ 197,536 $ 180,817 $ 151,177 Interest expense 93,658 92,200 62,673 Net interest income 103,878 88,617 88,504 Gain on sale of loans 4,617 3,752 3,570 Other income 7,219 7,341 7,113 Total revenue, net of interest expense 115,714 99,710 99,187 Expenses Provision (reversal) for credit losses 4,028 3,401 ( 132 ) Salaries and employee benefits 36,551 35,661 34,572 Premises expense 7,029 6,865 5,740 Depreciation expense 2,213 2,252 2,184 Other expense 13,405 15,245 13,561 Total expense 63,226 63,424 55,925 Income before income taxes 52,488 36,286 43,262 Income taxes 15,035 10,476 12,557 Net income $ 37,453 $ 25,810 $ 30,705 Earnings per share, diluted $ 2.58 $ 1.74 $ 2.12 Return on average assets 1.15 % 0.90 % 1.20 % Return on average shareholders' equity 9.93 % 7.26 % 9.02 % Net interest margin 3.29 % 3.17 % 3.57 % Loans held-for-investment growth percentage 7.3 % 13.2 % 13.6 % Total deposits growth percentage 6.9 % 11.2 % 14.9 % Tier 1 leverage ratio (consolidated) 11.89 % 12.45 % 13.43 % ACL on loans to loans held-for-investment 1.18 % 1.16 % 1.19 % 120 Note 20. Condensed Financial Statements for Parent Company The parent company’s condensed statements of financial condition as of December 31, 2025 and 2024, and the related condensed statements of income and comprehensive income, and condensed statements of cash flows for the years ended December 31, 2025, 2024, and 2023 are presented below: Condensed Balance Sheets December 31, ($ in thousands) 2025 2024 Assets Cash $ 10,547 $ 7,803 Investment in subsidiary 378,457 355,036 Other assets 1,060 1,051 Total assets $ 390,064 $ 363,890 Liabilities and Shareholders’ Equity Other liabilities $ 38 $ 76 Total liabilities 38 76 Total shareholders’ equity 390,026 363,814 Total liabilities and shareholders’ equity $ 390,064 $ 363,890 Condensed Statements of Income and Comprehensive Income Year Ended December 31, ($ in thousands) 2025 2024 2023 Income: Dividends from subsidiary $ 20,393 $ 13,275 $ 18,846 Other income — — 6 Total income 20,393 13,275 18,852 Expense: Other expense 1,238 1,068 1,014 Total expense 1,238 1,068 1,014 Income before taxes and equity in undistributed subsidiary income 19,155 12,207 17,838 Income tax benefit ( 313 ) ( 271 ) ( 293 ) Income before equity in undistributed subsidiary income 19,468 12,478 18,131 Equity in undistributed subsidiary income 17,985 13,332 12,574 Net income 37,453 25,810 30,705 Preferred stock dividends 300 834 — Net income available to common shareholders $ 37,153 $ 24,976 $ 30,705 Net income $ 37,453 $ 25,810 $ 30,705 Other comprehensive income (loss), net of tax 4,463 ( 395 ) 1,587 Comprehensive income $ 41,916 $ 25,415 $ 32,292 121 Condensed Statements of Cash Flows Year Ended December 31, ($ in thousands) 2025 2024 2023 Cash flows from operating activities Net income $ 37,453 $ 25,810 $ 30,705 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed subsidiary income ( 17,985 ) ( 13,332 ) ( 12,574 ) Change in other assets ( 9 ) 5 5 Change in other liabilities 8 — — Net cash provided by operating activities 19,467 12,483 18,136 Cash flows from investing activities: Investment in private equity — ( 1,000 ) — Net cash used in investing activities — ( 1,000 ) — Cash flows from financing activities: Stock options exercised 2,278 353 1,350 Restricted stock surrendered due to employee tax liability ( 81 ) ( 3 ) ( 2 ) Repurchase of common stock ( 7,101 ) ( 222 ) ( 8,828 ) Stock repurchase excise tax ( 8 ) ( 62 ) — Preferred stock dividends ( 346 ) ( 772 ) — Cash dividends paid on common stock ( 11,465 ) ( 10,271 ) ( 9,908 ) Net cash used in financing activities ( 16,723 ) ( 10,977 ) ( 17,388 ) Net increase in cash and cash equivalents 2,744 506 748 Cash and cash equivalents at beginning of year 7,803 7,297 6,549 Cash and cash equivalents at end of year $ 10,547 $ 7,803 $ 7,297 Note 21. Subsequent Events Dividend Declared on Common Stock. On January 28, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.22 per common share for the first quarter of 2026. The dividend was paid on February 20, 2026, to shareholders of record as of the close of business on February 13, 2026. 122 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None.