4 unchanged sentences
Net interest income is the difference between the amounts received by us on our interest-earning assets and the interest paid by us on our interest-bearing liabilities.
−Removed: When interest rates rise, the rate of interest we receive on our assets, such as loans, rises more quickly than the rate of interest that we pay on our interest-bearing liabilities, such as deposits, which may cause our profits to increase.
+Added: When interest rates rise, the rate of interest we receive on our assets, such as loans, may rise more quickly than the rate of interest that we pay on our interest-bearing liabilities, such as deposits, which may cause our profits to increase.
However, when interest rates decrease, the rate of interest we receive on our assets, such as loans, may decline more quickly than the rate of interest that we pay on our interest-bearing liabilities, such as deposits, which may cause our profits to decrease.
24 unchanged sentences
Because of changing economic and market conditions affecting interest rates, the financial condition of issuers of the securities and the performance of the underlying collateral, we may recognize realized and/or unrealized losses in future periods, which could have an adverse effect on our financial condition and results of operations.
−Removed: At December 31, 2024, $420.2 million of our securities were classified as AFS with an aggregate pre-tax net unrealized loss of $29.2 million.
+Added: December 31, 2025,
+Added: $407.2 million of our securities were classified as AFS with an aggregate pre-tax net unrealized loss of $18.9 million.
We increase or decrease shareholders’ equity by the amount of change from the unrealized gain or loss (the difference between the estimated fair value and the amortized cost) of our AFS securities portfolio, net of the related tax, under the category of accumulated other comprehensive income (loss).
31 unchanged sentences
To the extent such conditions exist or worsen, we could experience adverse effects on our business, financial condition, and results of operations.
−Removed: W hile customer confidence in the banking system has improved considerably since the first half of 2023, risk related to disintermediation and uninsured deposits remain, and could continue to have a material effect on our operations and/or stock price.
−Removed: Several high-profile bank failures in the first half of 2023 generated significant market volatility among publicly traded bank holding companies and, in particular, regional banks.
−Removed: The industry has stabilized since these failures and the customer confidence in the safety and soundness of smaller regional banks has improved considerably.
−Removed: Nevertheless, risks remain that customers may choose to invest in higher yielding and higher-rated short-term fixed income securities or maintain deposits with larger more systematically important financial institutions, all of which could materially and adversely impact our liquidity, loan funding capacity, net interest margin, capital, and results of operations.
−Removed: In addition, the banking operating environments and public trading prices of banking institutions can be highly correlated, in particular during times of stress, which could adversely impact the trading prices of our common stock and potentially, our results of operations.
Health crises have in the past, and could in the future, materially and adversely affect our business and our customers, counterparties, employees, and third-party service providers.
27 unchanged sentences
At December 31, 2025, we had $1.6 billion of commercial loans, consisting of $1.3 billion of CRE loans, $140.1 million of C&I loans for which real estate is not the primary source of collateral and $155.5 million of C&D loans.
−Removed: C&I loans represented 4.2% of our total loan portfolio at December 31, 2024.
Commercial loans are often larger and involve greater risks than other types of lending.
2 unchanged sentences
Unlike residential mortgage loans, which generally are made on the basis of the borrowers’ ability to make repayment from their employment and other income and which are secured by real property whose value tends to be more easily ascertainable, commercial loans typically are made on the basis of the borrowers’ ability to make repayment from the cash flow of the commercial venture.
−Removed: Our C&I loans are primarily made based on the identified cash flow of the borrower and secondarily on the collateral underlying the loans.
+Added: Our C&I loans, which represented 4.2% of our total loan portfolio at December 31, 2025, are primarily made based on the identified cash flow of the borrower and secondarily on the collateral underlying the loans.
Most often, this collateral consists of accounts receivable, inventory and equipment.
15 unchanged sentences
Our SFR loan product consists primarily of non-qualified SFR mortgage loans, which may be considered less liquid and more risky.
−Removed: As of December 31, 2024, our SFR mortgage loan portfolio amounted to $1.49 billion or 48.9% of our loans HFI portfolio.
+Added: As of December 31, 2025, our SFR mortgage loan portfolio amounted to $1.66 billion or 50.0% of our loan portfolio.
As of that dat e , 97.4% of our SFR mortgage loans consisted of non-qualified mortgage loans, which are considered to have a higher degree of risk and are less liquid than qualified mortgage loans.
−Removed: We offer two SFR mortgage products, a low loan-to-value, alternative document hybrid non-qualified SFR mortgage loan, or non-qualified SFR mortgage loan, and a qualified SFR mortgage loan.
+Added: We offer two SFR mortgage products, a low loan-to-value, alternative document hybrid non-qualified SFR mortgage loan, which we refer to as non-qualified SFR mortgage loan, and a qualified SFR mortgage loan.
As of December 31, 2025, our non-qualified SFR mortgage loans had an average loan-to-value of 54.6% and an average FICO score of 763.
2 unchanged sentences
Non-qualified SFR mortgage loans are considered less liquid than qualified SFR mortgage loans because such loans are not able to be securitized and can only be sold directly to other financial institutions.
−Removed: Such non-qualified loans may be considered more risky than qualified mortgage loans although we attempt to address this enhanced risk through our underwriting process, including requiring larger down payments and, in some cases, interest reserves.
−Removed: We also have a concentration in our SFR secondary sale market, as a substantial portion of our non-qualified mortgage loans have been historically sold to two banks;
−Removed: although, we are currently selling SFR mortgage loans to three banks.
−Removed: Although, we are taking steps to reduce our dependence on these banks by expanding the number of banks that we sell our non-qualified SFR mortgages to, we may not be successful in expanding our sales market for our non-qualified mortgage loans.
+Added: Since non-qualified loans may be considered more risky than qualified mortgage loans, we attempt to address this enhanced risk through our underwriting process, including requiring larger down payments and, in some cases, interest reserves.
+Added: We also have a concentration in our SFR secondary sale market, as a substantial portion of our non-qualified mortgage loans have been historically sold to a small number of banks.
+Added: We are taking steps to reduce our dependence on these banks by expanding the number of banks that we sell our non-qualified SFR mortgages to, but may not be successful in expanding our sales market for our non-qualified mortgage loans.
These loans also present a pricing risk as rates change, and our sale premiums cannot be guaranteed.
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Also, the profitability associated with the sale of the guaranteed portion of these loans could decline as a result of market displacements due to increases in interest rates, and could cause the premiums realized on the sale of the guaranteed portions to decline from current levels.
−Removed: As the funding and sale of the guaranteed portion of SBA 7(a) loans is a portion of our business and a part of our noninterest income, any significant changes to the funding for the SBA 7(a) loan program may have an unfavorable impact on our prospects, future performance and results of operations.
+Added: As the funding and sale of the guaranteed portion of SBA 7(a) loans is a portion of our business and a part of our noninterest income, any significant changes to the funding for the SBA 7(a) loan program and any prolonged government shutdown may have an unfavorable impact on our prospects, future performance and results of operations.
Real estate construction loans are based upon estimates of costs and values associated with the complete project.
9 unchanged sentences
Nonperforming assets take significant time to resolve and adversely affect our results of operations and financial condition, and could result in further losses in the future.
−Removed: As of December 31, 2024, our nonperforming assets totaled $81.0 million, or 2.03%, of total assets.
−Removed: Nonperforming loans totaled $81.0 million, and consisted of $11.2 million of nonaccrual loans HFS, and $69.8 million of nonaccrual loans HFI.
−Removed: Nonaccrual loans HFI were 2.29% of our loan HFI portfolio.
−Removed: In addition, we had $22.1 million in accruing loans that were 30-89 days delinquent as of December 31, 2024.
−Removed: There was no other real estate owned ("OREO") at December 31, 2024.
+Added: As of December 31, 2025, our nonperforming assets totaled $53.5 million, or 1.27%, of total assets, comprised of nonperforming loans of $44.6 million and other real estate owned ("OREO") of $8.8 million.
+Added: Nonaccrual loans HFI were 1.35% of our loan HFI portfolio at December 31, 2025.
Our nonperforming assets adversely affect our net income in various ways.
7 unchanged sentences
As a commercial bank, we provide services to a number of clients whose deposit levels vary considerably and have a significant amount of seasonality.
−Removed: 165 clients maintained balances (aggregating all related accounts, including multiple business entities and personal funds of business owners) in excess of $2.0 million per client at December 31, 2024.
−Removed: This amounted to $1.1 billion, or approximately 34%, of the Bank’s total deposits as of December 31, 2024.
+Added: Our deposits include $1.3 billion, or approximately 40%, of the Bank's total deposits, related to 166 client relationships who maintain balances greater than $2 million, when aggregating all related accounts, including multiple business entities and personal funds of business owners, at December 31, 2025.
In addition, our ten largest depositor relationships accounted for approximately 12.5% of our deposits at December 31, 2025.
Our largest depositor relationship accounted for approximately 2.0% of our deposits at December 31, 2025.
−Removed: These deposits can and do fluctuate substantially.
+Added: These deposits can and do fluctuate.
The loss of any combination of these depositors, or a significant decline in the deposit balances due to ordinary course fluctuations related to these customers’ businesses, would adversely affect our liquidity and require us to raise deposit rates to attract new deposits, or otherwise purchase federal funds or borrow funds on a short-term basis to replace such deposits.
3 unchanged sentences
If we do not effectively manage our credit risk, we may experience increased levels of delinquencies, nonperforming loans and charge-offs, which could require increases in our provision for credit losses.
−Removed: As of January 1, 2022, we adopted ASU 2016-13 (ASC 326), “Measurement of Credit Losses on Financial Instruments,” commonly referenced as the CECL model, which changes how we estimate credit losses and increased the required level of our ACL.
There are risks inherent in making any loan, including risks inherent in dealing with individual borrowers, risks of nonpayment, risks resulting from uncertainties as to the future value of collateral and cash flows available to service debt and risks resulting from changes in economic and market conditions.
48 unchanged sentences
Other Risks Related to Our Business
−Removed: If we fail to maintain effective internal control over financial reporting, or if we fail to remediate material weaknesses previously identified, we may not be able to report our financial results accurately and timely.
+Added: If we fail to maintain effective internal control over financial reporting, we may not be able to report our financial results accurately and timely.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on that system of internal control.
1 unchanged sentence
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.
−Removed: Following identification of the material weaknesses, we implemented a number of controls and procedures designed to improve our control environment, which we believe will be sufficient to remediate our previously identified material weakness.
Our actions to maintain effective controls and remedy any weakness or deficiency may not be sufficient to result in an effective internal control environment and any future failure to maintain effective internal control over financial reporting could impair the reliability of our financial statements, which in turn could harm our business, impair investor confidence in the accuracy and completeness of our financial reports, impair our access to the capital markets, cause the price of our common stock to decline and subject us to increased regulatory scrutiny and/or penalties, and higher risk of shareholder litigation.
We are exposed to risks related to fraud and cyber-attacks.
−Removed: We are continuously enhancing and expanding our digital products and services to meet client and business needs with desired outcomes.
−Removed: These digital products and services often include storing, transmitting, and processing confidential client, employee, monetary, and business information.
−Removed: Due to the nature of this information, and the value it has for internal and external threat actors, we, and our third-party service providers, continue to be subject to cyber-attacks and fraud activity that attempts to gain unauthorized access, misuse information and information systems, steal information, disrupt or degrade information systems, spread malicious software, and other illegal activities.
−Removed: We believe we have robust preventive, detective, and administrative safeguards and security controls to minimize the probability and magnitude of a material event.
−Removed: However, because the tactics and techniques used by threat actors to bypass safeguards and security controls change frequently, and often are not recognized until after an event has occurred, we may be unable to anticipate future tactics and techniques, or to implement adequate and timely protective measures.
−Removed: Cybersecurity, and the continued development and enhancement of controls, processes, and practices designed to protect client information, systems, computers, software, data, and networks from attack, damage, or unauthorized access remain a priority for us.
−Removed: As cybersecurity threats continue to evolve, we may be required to expend additional resources to continue to enhance, modify, and refine our protective measures against these evolving threats.
−Removed: To date, we have no knowledge of a successful cyber-attack or other material information security breach affecting our systems.
−Removed: However, our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, the continuation of a remote work environment for our employees and service providers and our plans to continue to implement and expand digital banking services, expand operations, and use third-party information systems that includes cloud-based infrastructure, platforms, and software.
−Removed: Recent instances of attacks specifically targeting financial services businesses indicate that the risk to our systems remains significant.
−Removed: If we or a critical third party vendor were to experience a cyber-attack or information security breach, we could suffer damage to our reputation, productivity losses, response costs associated with investigation and resumption of services, and incur substantial additional expenses, including remediation expenses costs associated with client notification and credit monitoring services, increased insurance premiums, regulatory penalties and fines, and costs associated civil litigation, any of which could have a materially adverse effect on our business, financial condition, and results of operations.
−Removed: In addition, our clients and vendors rely on technology and systems not managed directly by us, such as networking devices, server infrastructure, personal computers, smartphones, tablets, and other mobile devices, to contact and conduct business with us.
−Removed: If the devices of our clients or vendors become the target of a cyber-attack, or information security breach, it could result in unauthorized access to, misuse of, or loss of confidential client, employee, monetary, or business information.
−Removed: Threat actors using improperly obtained personal or financial information of consumers can attempt to obtain loans, lines of credit, or other financial products from us, or attempt to fraudulently persuade our employees, clients, or other users of our systems to disclose confidential information in order to gain improper access to our information and information systems.
−Removed: We also face additional costs when our customers become the victims of cyber-attacks.
+Added: We continue to enhance and expand our digital products and services to meet client needs and business objectives.
+Added: These digital products and services often require storing, transmitting, and processing sensitive client, employee, financial, and proprietary business information.
+Added: Because this information can be valuable to threat actors, we and our third-party service providers remain exposed to cyber-attacks, fraud attempts, and other malicious activities seeking to gain unauthorized access to systems or data, misuse or steal information, disrupt operations, or deploy malicious software.
+Added: In addition, our clients and vendors rely on technology and systems not managed by us—such as personal computers, mobile devices, networking equipment, and software—to conduct business with us.
+Added: If the technology or systems of our clients or vendors is compromised, it could result in unauthorized access to, misuse of, or loss of confidential client, employee, financial, or business information.
+Added: Threat actors using stolen personal or financial information may attempt to fraudulently obtain loans, lines of credit, or other financial products from us, or attempt to deceive our employees, clients, or other users of our systems to disclose additional information to obtain unauthorized access to our systems.
+Added: We maintain robust preventive, detective, and administrative safeguards designed to reduce the likelihood and impact of a material cybersecurity event.
+Added: However, because the tactics used by threat actors evolve rapidly and may not be identified until after an incident has occurred, we may be unable to anticipate or implement timely protections against all emerging threats.
+Added: Cybersecurity remains a priority for us, and we continue to develop and enhance controls, processes, and practices designed to protect client information, systems, computers, software, data, and networks.
+Added: As threats continue to evolve, we may be required to allocate additional resources to further strengthen our security measures.
+Added: To date, we have no knowledge of any successful cyber-attack or material information security breach affecting our systems.
+Added: However, our exposure remains heightened due to the evolving nature of the threats, the continued use of remote work arrangements by employees and service providers, our ongoing expansion of digital banking services, and our reliance on third-party information systems including cloud-based infrastructure, platforms, and software.
+Added: Recent attacks targeting financial services institutions demonstrate that the risk to our systems remains significant.
+Added: A successful cyber-attack or data breach involving us or a critical third-party vendor could result in reputational harm, productivity losses, remediation and response costs associated with investigation and resumption of services, client notification and credit monitoring expenses, increased insurance premiums, regulatory investigations or penalties, civil litigation, and other costs, any of which could have a material adverse effect on our business, financial condition, and results of operations.
+Added: We also incur costs when our customers become the victims of cyber-attacks.
For example, various retailers have reported that they have been the victims of a cyber-attack in which large amounts of their clients’ data, including debit and credit card information, is obtained.
1 unchanged sentence
In these situations, we incur costs to replace compromised cards and address fraudulent transaction activity affecting our clients.
−Removed: Both internal and external fraud and theft are risks.
−Removed: If confidential client, employee, monetary, or business information were to be mishandled or misused, we could suffer significant regulatory consequences, reputational damage, and financial loss.
−Removed: Such mishandling or misuse could include, for example, if such information were erroneously provided to parties who are not permitted to have the information, either by fault of our systems, employees, or counterparties, or if such information were to be intercepted or otherwise inappropriately taken by third parties, or if our own employees abused their access to financial systems to commit fraud against our clients and us.
−Removed: These activities can occur in connection with the origination of loans and lines of credit, ACH transactions, wire transactions, ATM transactions, and checking transactions, and result in financial losses as well as reputational damage.
−Removed: Operational errors can include information system misconfiguration, clerical or record-keeping errors, or disruptions from faulty or disabled computer or telecommunications systems.
−Removed: Because the nature of the financial services business involves a high volume of transactions, certain errors may be repeated or compounded before they are discovered and successfully rectified.
−Removed: Because of our large transaction volume and its necessary dependence upon automated systems to record and process these transactions, there is a risk that technical flaws, tampering, or manipulation of those automated systems, arising from events wholly or partially beyond its control, may give rise to disruption of service to customers and to financial loss or liability.
−Removed: We are exposed to the risk that our business continuity and data security systems prove to be inadequate.
−Removed: The occurrence of any of these risks could result in a diminished ability for us to operate our business, additional costs to correct defects, potential liability to clients, reputational intervention, any of which could adversely affect our business, financial condition and results of operations.
+Added: Both internal and external fraud and theft present significant risks.
+Added: Mishandling or misuse of confidential client, employee, financial, or business information—whether through system errors, employee actions, or third-party misconduct—could result in regulatory consequences, reputational harm, and financial loss.
+Added: Fraud can occur in connection with loan originations, lines of credit, ACH transactions, wire transfers, ATM activity, and other transactions, or could result from unauthorized access, employee misconduct, or the interception or theft of information by third parties resulting in financial losses as well as reputational damage.
+Added: Operational errors—including information system misconfiguration, clerical mistakes, or disruptions caused by technology failures—may be repeated or amplified before detection due to the high volume of transactions we process.
+Added: With these transactions, there is a risk that technical flaws, tampering, or manipulation of automated systems, arising from events wholly or partially beyond our control, may give rise to disruption of service to customers and to financial loss or liability.
+Added: We are also exposed to the risk that our business continuity and data security systems may prove inadequate under certain circumstances.
+Added: The occurrence of any of these risks could impair our ability to operate effectively, result in additional costs to remediate issues, expose us to client claims, or cause reputational harm, any of which could have a material adverse effect on our business, financial condition and results of operations.
+Added: The development and use of new technologies, including artificial intelligence ("AI"), can present risks and uncertainties that could adversely affect our business and financial condition.
+Added: Banking and financial services technology is rapidly evolving, including the development and deployment of AI.
+Added: We and our third party vendors may develop or integrate AI or other emerging technologies into certain business products, processes, or services to increase efficiency and better serve our customers at a reduced cost.
+Added: The ability to successfully deploy and manage these emerging technologies, or to integrate them into existing systems, may adversely impact operations resulting in the disruption of service to our customers and liability or financial loss.
+Added: AI technologies may produce undesirable results such as producing false data, generating inaccurate calculations, improperly handling or leaking sensitive information, reflecting unintended bias, or otherwise failing to perform as intended.
+Added: Using third-party providers may result in limited visibility and control over these risks.
+Added: Any failures in the use of AI or related-technologies, or evolving legal and regulatory requirements governing their use, could result in regulatory consequences, reputational harm, and financial loss, and could have a material adverse effect on our business, results of operations, and financial condition.
Potential environmental liabilities associated with commercial lending could materially and adversely affect our business and financial condition.
31 unchanged sentences
In addition, California remains at the forefront of climate-related disclosure regulations, including the Climate-Related Financial Risk Act (SB 261), as amended by California Senate Bill 219.
−Removed: While these laws are currently subject to legal challenge and the extent to which these laws may be pre-empted by federal law is uncertain, in the absence of federal preemption the Climate-Related Financial Act would apply to us beginning in 2026 with disclosures based on 2025 data.
+Added: While these laws are currently subject to legal challenge and the extent to which these laws may be pre-empted by federal law is uncertain, in the absence of federal preemption the Climate-Related Financial Act would apply to us.
Related compliance costs represent hard costs beyond current regulatory costs and would also involve the cost of management and personnel resources.
67 unchanged sentences
We have paid quarterly dividends since our initial public offering in the third quarter of 2017.
−Removed: We paid total dividends of $0.56 per share in 2022, and $0.64 per share in 2023 and 2024.
+Added: We paid total dividends of $0.64 per share in 2023, 2024, and 2025.
We have no obligation to pay dividends and we may change our dividend policy at any time without notice to our shareholders.
2 unchanged sentences
We are a separate and distinct legal entity from our subsidiaries, including the Bank.
−Removed: We receive substantially all of our revenue from dividends from the Bank and RAM, which we use as the principal source of funds to pay our expenses.
+Added: We receive substantially all of our revenue from dividends from the Bank, which we use as the principal source of funds to pay our expenses.
Various federal and/or state laws and regulations limit the amount of dividends that the Bank and certain of our non-bank subsidiaries may pay us.
8 unchanged sentences
Future sales or equity issuances could result in dilution, which could cause our common stock price to decline.
−Removed: We have outstanding options to purchase 174,500 shares of our common stock as of December 31, 2024 that may be exercised and sold (assuming all vesting requirements are met), and we have the ability to issue options exercisable for up to an additional 1,004,658 shares of common stock pursuant to our 2017 Omnibus Stock Incentive Plan.
−Removed: The sale of any of such shares could cause the market price of our stock to decline, and concerns that those sales may occur could cause the trading price of our common stock to decrease or to be lower than it might otherwise be.
+Added: We have outstanding options to purchase 151,000 shares of our common stock and unvested restricted stock units of 191,091 as of December 31, 2025, that may be exercised or vest and then otherwise be sold (assuming all vesting requirements are met), and we have the ability to issue equity awards for up to an additional 878,916 shares of common stock pursuant to our 2017 Omnibus Stock Incentive Plan.
+Added: The sale of any such shares could cause the market price of our stock to decline, and concerns that those sales may occur could cause the trading price of our common stock to decrease or to be lower than it might otherwise be.
We are also generally not restricted from issuing additional shares of our common stock, up to the 100 million shares of common stock and 100 million shares of preferred stock authorized in our articles of incorporation, which in each case could be increased by a vote of a majority of our shares.
7 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.