What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-03-09 compared with 2025-03-17 · 497 added, 322 removed, 1775 unchanged (32% of the section changed)

11 unchanged sentences

Los Angeles, California

Opinion on the Financial Statements and Internal Control over Financial Reporting

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of RBB Bancorp (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").

4 unchanged sentences

(2013) issued by COSO.

Change in Accounting Principal

As discussed in Note 2 to the financial statements, the Company changed its method for accounting for credit losses effective January 1, 2022, due to the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification No.

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

The Company adopted the new credit loss standard using the modified retrospective method provided in Accounting Standards Update No.

2016-13 such that prior period amounts are not adjusted and continue to be reported in accordance with previously applicable generally accepted accounting principles.

Basis for Opinion

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.

21 unchanged sentences

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 on Loans

As described in Notes 2 and 4 to the consolidated financial statements, the Company adopted ASU 2016-13 “Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments”, effective January 1, 2022, which requires the Company to record an estimate of expected lifetime credit losses for loans at the time of origination.

As of December 31, 2024, the Company had a gross loan portfolio of $3.05 billion and a related allowance for credit losses on loans of $47.73 million.

Allowance for Credit Losses on Loans - Qualitative Factors

As described in Notes 2 and 4 to the consolidated financial statements, the Company accounts for credit losses on loans 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.

As of December 31, 2025, the Company had gross loan portfolio of $3.31 billion and a related allowance for credit losses on loans of $43.89 million.

The Company’s discounted cash flow methodology incorporates a probability of default, loss given default and exposure at default model, as well as expectations of future economic conditions, using reasonable and supportable forecasts.

The Company uses both internal and external qualitative factors within the current expected credit losses (“CECL”) model:

lending policies, procedures, and strategies;

The Company uses both internal and external qualitative factors within the current expected credit losses model including lending policies, procedures, and strategies;

changes in nature and volume of the portfolio;

6 unchanged sentences

and economic conditions.

We identified auditing the Company’s estimate of Current Expected Credit Losses to be a critical audit matter, particularly as it pertains to auditing the application of qualitative factors, as the matter involved significant audit effort and especially subjective auditor judgment.

We identified auditing the Company’s estimate of current expected credit losses on loans to be a critical audit matter, particularly as it pertains to auditing the application of qualitative factors, as the matter involved significant audit effort and especially subjective auditor judgment.

The primary procedures performed to address the critical audit matter included:

Testing the design and operating effectiveness of controls over qualitative adjustments within the ACL model, including controls addressing:

Management’s review of the reasonableness of assumptions and judgments, including the qualitative risk factors.

Testing the design and operating effectiveness of controls over qualitative factors within the model, including controls addressing:

○ Management’s review of the reasonableness of assumptions and judgments that support the qualitative factors.

○ Management’s evaluation of the relevance and reliability of data utilized in the calculation of the qualitative factors.

Testing the relevance and reliability of the data used in the determination of qualitative factor adjustments.

Evaluating the reasonableness of management’s assumptions and judgments used in the determination of the qualitative factor adjustments and the resulting qualitative allocation to the allowance for credit losses

Testing the relevance and reliability of the data used in the determination of the qualitative factors.

Evaluating the reasonableness of management’s assumptions and judgments used in the determination of the qualitative factors and the resulting qualitative allocation to the allowance for credit losses on loans.

/s/ Crowe LLP

13 unchanged sentences

Interest-earning time deposits in other financial institutions

Available for sale

Available for sale (amortized cost of $ 426,145 and $ 449,416 at December 31, 2025 and December 31, 2024)

407,204 420,190

14 unchanged sentences

Income tax receivable

17,483 10,311

Cash surrender value of bank owned life insurance ("BOLI")

1 unchanged sentence

71,498 71,498

Servicing assets

Core deposit intangibles

Right-of-use assets - operating leases

32 unchanged sentences

Common Stock - 100,000,000 shares authorized, no par value;

17,720,416 shares issued and outstanding at December 31, 2024 and 18,609,179 shares issues and outstanding at December 31, 2023

17,057,397 shares issued and outstanding at December 31, 2025 and 17,720,416 shares issued and outstanding at December 31, 2024

250,694 259,957

14 unchanged sentences

(In thousands, except share and per share data)

Interest and dividend income:

Interest and fees on loans

Interest on interest-earning deposits

Interest on investment securities

Dividend income on FHLB stock

Interest on federal funds sold and other

Interest, fees and dividend income:

$ 193,849 $ 184,567 $ 194,264

Interest-earning deposits

7,931 15,422 10,746

Investment securities

17,081 14,331 14,028

1,312 1,314 1,125

Federal funds sold and other

953 1,027 985

Total interest and dividend income

221,126 216,661 221,148

Interest expense:

Interest on savings deposits, NOW and money market accounts

Interest on time deposits

Interest on long-term debt and subordinated debentures

Interest on FHLB advances

Savings deposits, NOW and money market accounts

19,025 19,295 12,205

Time deposits

78,074 89,086 76,837

Long-term debt and subordinated debentures

6,524 6,699 9,951

FHLB advances

5,221 2,217 2,869

Total interest expense

108,844 117,297 101,862

Net interest income before provision for credit losses

112,282 99,364 119,286

Provision for credit losses

10,358 9,857 3,362

Net interest income after provision for credit losses

101,924 89,507 115,924

Noninterest income:

Service charges and fees

Loan servicing fees, net of amortization

4,187 4,115 4,172

Loan servicing income, net of amortization

2,249 2,265 2,576

Increase in cash surrender value of BOLI

1,676 1,577 1,409

Gain on sale of loans

Gain on sale of fixed assets

1,156 1,586 374

7,605 4,776 6,354

Total noninterest income

16,873 15,335 15,018

Noninterest expense:

Salaries and employee benefits

43,056 39,395 37,795

Occupancy and equipment expenses

9,644 9,803 9,629

Data processing

6,870 5,857 5,326

Legal and professional

7,470 4,453 8,198

Office expenses

1,734 1,455 1,512

Marketing and business promotion

863 864 1,132

Insurance and regulatory assessments

2,924 3,298 3,165

Core deposit premium amortization

Other expenses

3,430 3,254 3,016

Total noninterest expense

76,663 69,163 70,696

Net income before income taxes

42,134 35,679 60,246

Income tax expense

10,186 9,014 17,781

$ 31,948 $ 26,665 $ 42,465

Net income per share

$ 1.83 $ 1.47 $ 2.24

Weighted-average common shares outstanding

17,435,027 18,121,764 18,965,346

17,500,330 18,183,319 18,985,233

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

(In thousands)

Other comprehensive (loss)/income:

Unrealized (losses)/gains on securities available for sale

$ 31,948 $ 26,665 $ 42,465

Other comprehensive income/(loss):

Unrealized gains/(losses) on securities available for sale

10,285 ( 1,117 ) 3,149

Related income tax effect

Total other comprehensive (loss)/income

( 3,349 ) 372 ( 996 )

Total other comprehensive income/(loss)

6,936 ( 745 ) 2,153

Total comprehensive income

$ 38,884 $ 25,920 $ 44,618

The accompanying notes are an integral part of these consolidated financial statements.

9 unchanged sentences

18,965,776 $ 276,912 $ 3,361 $ 225,883 $ 72 $ ( 21,665 ) $ 484,563

Cumulative effect of change in accounting principle related to ASC 326 (1)

— — — 42,465 — — 42,465

— — — 64,327 — — 64,327

Stock-based compensation, net

— — 750 — — — 750

Restricted stock cancelled

( 40,000 ) — — — — — —

Restricted stock vested

— 355 ( 355 ) — — — —

Restricted stock unit vested

6 unchanged sentences

( 396,374 ) ( 5,770 ) — ( 1,033 ) — — ( 6,803 )

Other comprehensive loss, net of taxes

Other comprehensive income, net of taxes

— — — — — 2,153 2,153

12 unchanged sentences

( 1,036,750 ) ( 15,039 ) — ( 5,637 ) — — ( 20,676 )

Other comprehensive income, net of taxes

Other comprehensive loss, net of taxes

— — — — — ( 745 ) ( 745 )

12 unchanged sentences

( 746,949 ) ( 10,862 ) — ( 3,120 ) — — ( 13,982 )

Other comprehensive loss, net of taxes

Other comprehensive income, net of taxes

— — — — — 6,936 6,936

1 unchanged sentence

17,057,397 $ 250,694 $ 3,941 $ 282,024 $ 72 $ ( 13,321 ) $ 523,410

(1) Represents the impact of the adoption of Accounting Standards Update ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) on January 1, 2022.

The accompanying notes are an integral part of these consolidated financial statements.

4 unchanged sentences

Operating activities

$ 31,948 $ 26,665 $ 42,465

Adjustments to reconcile net income to net cash from Operating activities:

Depreciation and amortization of premises and equipment

1,871 1,898 2,018

Net accretion of discount for securities, loans, deposits, and other

Unrealized gain on equity securities

( 2,913 ) ( 4,244 ) ( 5,396 )

Unrealized loss/(gain) on equity securities

74 ( 41 ) ( 24 )

Amortization of investment in affordable housing tax credits

2,097 1,336 1,127

Amortization of intangible assets

1,807 2,342 2,568

Amortization of right-of-use asset

5,126 5,011 5,042

Change in operating lease liabilities

( 5,009 ) ( 4,742 ) ( 4,730 )

Provision for credit losses

10,358 9,857 3,362

Stock-based compensation, net

1,743 1,360 750

Deferred tax (benefit)/expense

( 641 ) ( 2,918 ) 216

Gain on sale of loans

( 1,156 ) ( 1,586 ) ( 374 )

— ( 1,016 ) ( 133 )

Gain on sale of fixed assets

( 42 ) — ( 32 )

Increase in cash surrender value of BOLI

( 1,676 ) ( 1,577 ) ( 1,409 )

Loans originated and purchased for sale, net

( 7,751 ) ( 35,568 ) ( 15,058 )

Proceeds from loans sold

17,630 63,268 18,743

( 10,079 ) ( 1,550 ) 2,157

Net cash provided by operating activities

43,387 58,495 51,292

Investing activities

Securities available for sale:

( 260,984 ) ( 415,396 ) ( 694,210 )

Maturities, repayments and calls

286,465 316,151 640,993

Securities held to maturity:

Maturities, repayments and calls

Purchase of Federal Home Loan Bank stock and other equity securities, net

(Purchase) sale of other equity securities, net

( 3,216 ) 489 ( 479 )

Net increase of investment in qualified affordable housing projects

( 3,765 ) ( 2,525 ) ( 279 )

Net (increase)/decrease in loans

( 343,792 ) ( 61,254 ) 296,693

Proceeds from sales of loans originally classified as HFI

Proceeds from sales of OREO

Net cash received in connection with acquisition

7,526 2,936 711

Proceeds from sale of fixed assets

Purchases of premises and equipment

( 798 ) ( 788 ) ( 652 )

Net cash (used in)/provided by investing activities

( 260,179 ) ( 160,387 ) 243,309

Financing activities

Net increase/(decrease) in demand deposits and savings accounts

Net (decrease)/increase in time deposits

256,791 53,696 ( 241,730 )

Net increase/(decrease) in time deposits

9,667 ( 144,769 ) 438,625

Advances from Federal Home Loan Bank

170,000 50,000 80,000

Repayment of Federal Home Loan Bank borrowings

( 240,000 ) — ( 150,000 )

Cash dividends paid

( 11,264 ) ( 11,720 ) ( 12,163 )

Restricted stock units vesting

( 265 ) ( 108 ) —

Redemption of subordinated notes

— — ( 55,000 )

Common stock repurchased, net of repurchased costs

( 13,982 ) ( 20,676 ) ( 6,803 )

Exercise of stock options

Net cash (used in)/provided by financing activities

417 1,841 295

Net cash provided by/(used in) financing activities

171,364 ( 71,736 ) 53,224

Net (decrease)/increase in cash and cash equivalents

( 45,428 ) ( 173,628 ) 347,825

Cash and cash equivalents at beginning of period

257,745 431,373 83,548

Cash and cash equivalents at end of period

$ 212,317 $ 257,745 $ 431,373

Supplemental disclosure of cash flow information

1 unchanged sentence

Interest paid

$ 108,683 $ 120,917 $ 93,721

18,721 6,225 21,389

Non-cash investing and financing activities:

Transfer from loans to other real estate owned

12,666 1,920 —

Loans transferred to held for sale, net

56,883 35,453 5,254

Additions to servicing assets

Recognition of operating lease right-of-use assets

( 104 ) ( 3,256 ) ( 9,398 )

Recognition of operating lease liabilities

Assets acquired, net of cash received

Liabilities assumed

Cash receipts

104 3,256 9,398

The accompanying notes are an integral part of these consolidated financial statements.

4 unchanged sentences

RBB Bancorp’s principal business is to serve as the holding company for its wholly-owned banking subsidiaries, Royal Business Bank (“Bank”) and RBB Asset Management Company (“RAM”), collectively referred to herein as “the Company.” RBB Bancorp was formed in January 2011 as a bank holding company and RAM was formed in 2012 to hold and manage problem assets acquired in business combinations.

When we refer to “we”, “us”, “our”, or the “Company”, we are referring to RBB Bancorp and its consolidated subsidiaries including the Bank, collectively.

There are no problem assets at RAM or activity in this subsidiary for the years ended December 31, 2025 and 2024.

When we refer to “we”, “us”, “our”, or the “Company”, we are referring to RBB Bancorp and its consolidated subsidiaries including the Bank and RAM, collectively.

When we refer to the “parent company”, “Bancorp”, or the “holding company”, we are referring to RBB Bancorp, the parent company, on a stand-alone basis.

At December 31, 2025, the Company had total assets of $ 4.2 billion, gross consolidated loans of $ 3.3 billion, total deposits of $ 3.4 billion and total shareholders' equity of $ 523.4 million.

The Bank provides business-banking and consumer products and services predominantly to the Asian-centric communities through full service branches located in Los Angeles County, Orange County and Ventura County in California, Las Vegas (Nevada), the New York City metropolitan areas, Chicago (Illinois), Edison (New Jersey) and Honolulu (Hawaii).

The Bank provides business-banking products and services predominantly to Asian-centric communities through 24 full service branches located in Los Angeles County, Orange County and Ventura County in California, Las Vegas (Nevada), the New York City metropolitan areas, Chicago (Illinois), Edison (New Jersey) and Honolulu (Hawaii).

The products and services include commercial and investor real estate loans, business loans and lines of credit, Small Business Administration (“SBA”) 7A and 504 loans, mortgage loans, trade finance and a full range of depository accounts, including specialized services such as remote deposit, E-banking, mobile banking and treasury management services.

The Bank acquired the Honolulu, Hawaii branch (the “Hawaii Branch”) from Bank of the Orient (“BOTO”) on January 14, 2022.

Our primary source of revenue is providing loans to customers, who are predominately small and middle-market businesses and individuals.

We operate as a minority depository institution (“MDI”), which is defined by the Federal Deposit Insurance Corporation (“FDIC”) as a federally insured depository institution where 51% or more of the voting stock is owned by minority individuals or a majority of the board of directors is minority and the community that the institution serves is predominantly minority.

2 unchanged sentences

The MDI designation has been historically beneficial to us, and we continue to use the program for technical assistance.

In addition, we have been designated a community development financial institution (“CDFI”).

CDFIs are certified by the CDFI Fund at the U.S.

Department of the Treasury (“Treasury”), which provide funds to CDFIs through a variety of programs.

We have established a CDFI advisory board to assist the Bank in finding organizations to support low-to-moderate income individuals.

We operate 24 banking offices in Arcadia, Cerritos, Diamond Bar, Irvine, Los Angeles, Monterey Park, Oxnard, Rowland Heights, San Gabriel, Silver Lake, Torrance, and Westlake Village, California;

Las Vegas, Nevada;

Manhattan, Brooklyn, Flushing and Elmhurst, New York;

the Chinatown and Bridgeport neighborhoods of Chicago, Illinois;

Edison, New Jersey;

and Honolulu, Hawaii.

Our primary source of revenue is providing loans to customers, who are predominately small and middle-market businesses and individuals.

We generate our revenue primarily from interest received on loans and, to a lesser extent, from interest received on investment securities.

1 unchanged sentence

Our principal expenses include interest expense on deposits and borrowings, and operating expenses, such as salaries and employee benefits, occupancy and equipment, data processing, and income tax expense.

We completed six whole bank acquisitions and one branch acquisition from July 2011 through January 2022.

All of our acquisitions have been accounted for using the acquisition method of accounting and, accordingly, the operating results of the acquired entities have been included in the consolidated financial statements from their respective acquisition dates.

NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

47 unchanged sentences

Changes in the allowance for credit losses on AFS securities are recorded as credit loss expense (or reversal).

Losses are charged against the allowance when management believes the uncollectibility of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Losses are charged against the allowance when management believes the uncollectability of an AFS security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on AFS debt securities is excluded from the estimate of credit losses.

9 unchanged sentences

Gains or losses on the sale of these loans are recorded as noninterest income in the consolidated statements of earnings.

Loans held for sale at December 31, 2025, consisted primarily of first trust deed mortgages on single-family residential properties.

Loans held for sale at December 31, 2024, consisted primarily of nonperforming commercial real estate loans under contract for sale.

Loans held for sale at December 31, 2023 consisted primarily of first trust deed mortgages on single-family residential properties located in California and New York.

Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid principal balances reduced by any charge-offs and net of any unamortized deferred fees or costs on originated loans, or unamortized premiums or discounts on purchased loans.

31 unchanged sentences

We assess expected credit losses for individual instruments that have different risk characteristics than those that are evaluated on a collective (pooled) basis, in accordance with ASC 326.

An individual analysis will provide a specific reserve for instruments involved with fair market value of collateral or present value of future cash flow.

In such a manner, the Bank performs individual analysis on loans that are 90 or more days past due, on non-accrual status or modified loans.

An individual analysis will provide a specific reserve or charge-off for instruments involved when comparing the carrying value to the fair market value of collateral or present value of future cash flow.

The Company performs such individual analysis on loans that are 90 or more days past due or on non-accrual status.

Credit losses are not estimated for accrued interest receivable as interest that is deemed uncollectible is written off through interest income.

3 unchanged sentences

The post-modification effective interest rate is used to calculate the allowance for credit losses when the DCF method is applied.

Servicing Rights

Servicing Rights (included in “Accrued interest and other assets” in the consolidated balance sheets) .

Servicing rights are established as an intangible asset when mortgage loans and SBA loans are sold with servicing retained and they are initially recorded at fair value with the income statement effect recorded in the gain on sale of loans.

11 unchanged sentences

Control over transferred assets is deemed to be surrendered when the assets have been isolated from us, 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 we do not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

We sold $ 47.7 million, $ 34.1 million and $ 46.1 million in mortgage loans during 2024, 2023, and 2022.

In addition, we sold $ 13.8 million, $ 4.2 million and $ 12.7 million in the guaranteed portion of SBA loans during 2024, 2023, and 2022.

Gains on sale of mortgage loans totaled $ 818,000 , $ 112,000 , and $ 1.2 million, and gains on sale of SBA loans totaled $ 768,000 , $ 262,000 , and $ 696,000 in 2024, 2023, and 2022.

Premises and Equipment.

8 unchanged sentences

The lease terms include periods covered by options to extend or terminate the lease if we are reasonably certain to exercise such options.

We use our incremental borrowing rate to determine the present value of our lease liabilities, and we do not recognize ROU assets or lease liabilities for short-term leases.

We use our incremental borrowing rate to determine the present value of our lease liabilities, and we do not recognize ROU assets or lease liabilities for leases with an initial term of 12 months or less.

We determine if a contract arrangement is a lease at inception and we primarily enter into operating lease contracts for our branch locations, office space, and certain equipment.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

We did not possess any leases that have variable lease payments or residual value guarantees as of December 31, 2024.

Other Real Estate Owned

We did not have any leases with variable lease payments or residual value guarantees as of December 31, 2025.

Other Real Estate Owned (included in “Accrued interest and other assets” in the consolidated balance sheets).

Real estate acquired by foreclosure or deed in lieu of foreclosure is recorded at fair value at the date of foreclosure, establishing a new cost basis by a charge to the allowance for credit losses, if necessary.

6 unchanged sentences

Goodwill resulting from whole bank and branch acquisitions is not amortized, but tested for impairment at least annually.

ASC Topic 350 provides entities with the option to perform a qualitative assessment to determine whether it is more likely than not (i.e., a likelihood of more than 50% ) that the fair value of a reporting unit is less than its carrying amount, including goodwill (the "Step 0" analysis).

Other intangible assets (included in “Accrued interest and other assets” in the consolidated balance sheets) consist of core deposit intangible (“CDI”) assets arising from acquisitions.

Bank Owned Life Insurance.

9 unchanged sentences

We measure these equity securities at cost less impairment, plus or minus observable price changes in orderly transactions.

Equity securities totaled $ 22.9 million and $ 23.4 million as of December 31, 2024 and December 31, 2023.

There were no impairment charges in 2024 or 2023.

Stock-Based Compensation.

We currently recognize stock-based compensation based on the grant date fair value of equity awards, including stock options, restricted stock units and restricted stock, which have been granted to employees.

We recognize equity-based awards granted to employees as compensation expense.

Such expense is based on the grant date fair value of equity awards, including stock options and time-based and performance-based restricted stock units.

The expense related to equity-based awards granted to directors or other qualified non-employee awardees is recognized as other noninterest expense.

3 unchanged sentences

We estimate the expected volatility based on our historical stock prices for the period corresponding to the expected life of the stock options.

Restricted stock and restricted stock units are valued based on the closing price of our stock on the date of the grant.

Restricted stock units are generally valued based on the closing price of our stock on the date of the grant.

Restricted stock units containing a market condition are valued using a Monte Carlo model simulation to determine the fair value of such awards on the date of grant.

Stock-based compensation expense is recognized over the period which an employee is required to provide services in exchange for the award, generally defined as the vesting period.

When the options are exercised, our policy is to issue new shares of stock.

When the options are exercised or restricted stock units are vested, our policy is to issue new shares of stock.

Our accounting policy is to recognize forfeitures as they occur.

Income Taxes.

Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities.

12 unchanged sentences

Purchased federal transferable tax credits represent qualifying federal income tax credits acquired from an unrelated third party to offset amounts that otherwise would be due and payable to the IRS.

A purchased federal transferrable tax credit is recognized as a payable to the third party seller in the year the underlying qualifying project, which is generating the tax credits, is placed in service and at the same time an income tax receivable from the IRS is established.

Such federal tax credits are purchased at a discount which is recognized as a reduction in the federal income tax expense by the purchaser.

Such federal tax credits are purchased at a discount which is recognized as a reduction in the federal income tax expense by the Company.

See Note 12 for more information and disclosures relating to purchased federal transferable tax credits.

19 unchanged sentences

ASC 815, Derivatives and Hedging, provides that IRLCs on mortgage loans that will be held for resale are derivatives and must be accounted for at fair value on the balance sheet.

ASC 820, Fair Value Measurements and Disclosures, specifies how these derivatives are to be valued.

ASC 820, Fair Value Measurements and Disclosures, specifies how these derivatives are valued.

Commitments to originate mortgage loans to be held for investment and other types of loans are generally not derivatives.

3 unchanged sentences

Best efforts commitments which fix the forward sales price that will be realized in the secondary market are used to eliminate our interest rate and price risk.

To avoid interest rate risk, we will enter into FMLSCs at the time they make an interest rate lock commitment to the buyer.

To avoid interest rate risk, we will enter into FMLSCs at the time we make an interest rate lock commitment to the buyer.

The buyer can enter into mortgage loan sales commitments on a “mandatory” or “best efforts” basis.

27 unchanged sentences

Recently Adopted

In June 2022, the FASB issued ASU 2022 - 03 , Fair Value Measurement (Topic 820 )—Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.

This pronouncement clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

ASU 2022 - 03 also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction and requires certain new disclosures for equity securities subject to contractual sale restrictions.

We adopted ASU 2022 - 03 on January 1, 2024 and the adoption did not have a material impact on our consolidated financial statements.

In March 2023, the FASB issued ASU 2023 - 02 , Investments - Equity Method and Joint Ventures (Topic 323 ).

This Update permits reporting entities to elect to account for their tax equity investments using the proportional amortization method if certain conditions are met.

It requires that a liability be recognized for delayed equity contributions that are unconditional and legally binding or for equity contributions that are contingent upon a future event when that contingent event becomes probable.

The reporting entity needs to disclose the nature of its tax equity investments and the effect of its tax equity investments on its financial position and results of operations.

We adopted ASU 2023 - 02 on January 1, 2024 and the adoption did not have a material impact on our consolidated financial statements.

In November 2023, the FASB issued ASU 2023 - 07, Segment Reporting (Topic 280 ) - Improvements to Reportable Segments.

The amendments in this Update improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis.

Amendments in this Update include:

a requirement that a public entity provide all annual disclosures about a reportable segment’s profit or loss in its interim period disclosures, disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), disclosure of amounts for other segment items by reportable segment and a description of its composition, clarification that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit or loss, a requirement that a public entity disclose the title and position of the CODM, and an explanation of how the CODM uses the reported measure(s) of segment profit or loss, and a requirement that a public entity that has a single reportable segment provide all the disclosures required by this Update as well as all existing disclosures required in Topic 280.

The amendments in this Update are effective for us beginning with our annual financial statement disclosures for the year ended December 31, 2024, and for all interim and annual periods thereafter.

In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ) - Improvements to Income Tax Disclosures.

This Update enhances the transparency and decision usefulness of income tax disclosures.

The amendments in this Update require the following:

1 ) consistent categories and greater disaggregation of information in the rate reconciliation, and 2 ) income taxes paid disaggregated by jurisdiction.

The amendments in the ASU are effective for annual periods beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

The amendments in this Update should be applied on a prospective basis.

However, retrospective application in all prior periods presented is permitted.

We adopted ASU 2023 - 09 on December 31, 2025, and the adoption did not have a material impact on our consolidated financial statements.

See Note 21 for more information and disclosures relating to our segment information.

See Note 12 for more information and disclosures relating to our income taxes.

Recently Issued;

7 unchanged sentences

Adoption of ASU 2023 - 06 is not expected to have a material impact on the Company's consolidated financial statements.

In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ) - Improvements to Income Tax Disclosures.

This Update enhances the transparency and decision usefulness of income tax disclosures.

The amendments in this Update require the following:

1 ) consistent categories and greater disaggregation of information in the rate reconciliation, and 2 ) income taxes paid disaggregated by jurisdiction.

The amendments in the ASU are effective for annual periods beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

The amendments in this Update should be applied on a prospective basis.

However, retrospective application in all prior periods presented is permitted.

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

ASU 2024 - 03 requires disaggregated disclosure of income statement expenses within the footnotes to the financial statements for any relevant expense caption presented on the face of the income statement within continuing operations into the following required natural expense categories, as applicable:

( 1 ) purchases of inventory, ( 2 ) employee compensation, ( 3 ) depreciation, ( 4 ) intangible asset amortization, and ( 5 ) depreciation, depletion and amortization recognized as part of oil- and gas-producing activities or other types of depletion services.

ASU 2024 - 03 is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The guidance should be applied prospectively with an option to apply it retrospectively for each period presented.

Adoption of ASU 2024 - 03 is not expected to have a material impact on the Company's consolidated financial statements.

In November of 2025, the FASB issued ASU 2025 - 08, Financial Instruments-Credit Losses (Topic 326 ) – Purchased Loans.

Under the guidance that currently exists in ASC Topic 326, purchased loans are initially recorded at fair value, and an allowance for expected credit losses is separately recognized in accordance with Topic 326.

If a financial asset acquired has a “more-than-insignificant” deterioration of credit quality since its origination, it is accounted for as a purchased financial asset with credit deterioration ("PCD") using a “gross-up approach.” The gross-up approach requires recognition of an ACL for the estimate of credit losses at the acquisition date.

The ACL is recorded with an offsetting gross-up adjustment to the purchase price of the acquired financial asset.

If a financial asset acquired does not have “more-than-insignificant” deterioration of credit quality since its origination ("non-PCD"), the ACL is recognized with a corresponding charge to credit loss expense.

The amendments in this ASU expand the population of acquired financial assets subject to the gross-up approach in Topic 326.

In accordance with the amendments in this ASU, loans acquired without credit deterioration and deemed “seasoned” are purchased seasoned loans and accounted for using the gross-up approach at acquisition.

All non-PCD loans that are acquired in a business combination are deemed seasoned.

Other non-PCD loans are seasoned if they were purchased at least 90 days after origination and the acquirer was not involved in the origination of the loans.

The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods.

Early adoption is permitted.

The amendments in this ASU should be applied prospectively to loans that are acquired on or after the initial application date.

The Company adopted this guidance, effective January 1, 2026.

After adoption, the Company will apply the gross-up approach to recording an allowance for credit losses for purchased seasoned loans;

however, this is not expected to have a material impact on the Company’s consolidated financial statements.

In December of 2025, the FASB issued ASU 2025 - 10, Government Grants (Topic 832 ) – Accounting for Government Grants Received by Business Entities.

ASU 2025 - 10 creates authoritative guidance for business entities for the accounting for government grants.

Prior to the issuance of this guidance, there was no specific authoritative guidance within GAAP regarding the recognition, measurement, and presentation of a government grant received by a business entity and, as a result, many entities used other sections of authoritative accounting literature by analogy to account for government grants that were received.

The new guidance requires that a government grant received by a business entity should not be recognized until:

( 1 ) it is probable that (a) a business entity will comply with the conditions attached to the grant and (b) the grant will be received;

and ( 2 ) a business entity meets the recognition guidance for a grant in ASC 832.

The new guidance also establishes classification guidance for grants in the consolidated financial statements and prescribes disclosures of grants that include the nature of the government grant received, the accounting policies used to account for the grant, and significant terms and conditions of the grant.

The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods.

Early adoption is permitted.

The amendments may be adopted using either a modified prospective, modified retrospective, or prospective approach.

The Company does not expect that adoption of the new standard will have a material impact on its consolidated financial statements.

In December of 2025, the FASB issued ASU 2025 - 11, Interim Reporting (Topic 270 ) – Narrow-Scope Improvements.

The guidance in ASU 2025 - 11 was issued to improve the guidance in ASC by clarifying the required interim disclosures and when that guidance is applicable.

The amendments add to Topic 270 a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity.

The new guidance does not change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements but rather provides clarity on the current interim reporting requirements.

The amendments in this ASU are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

The amendments in this ASU can be applied either ( 1 ) prospectively or ( 2 ) retrospectively to any or all prior periods presented in the financial statements.

Management is still evaluating the provisions of ASU 2025 - 11, however it is expected that adoption of the new guidance will not have a material impact on the Company’s interim financial reporting.

NOTE 3 - INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair value of available for sale (“AFS”) securities and held to maturity (“HTM”) securities at December 31, 2024 and 2023, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss:

The following table summarizes the amortized cost and fair value of available for sale (“AFS”) securities and held to maturity (“HTM”) securities at December 31, 2025 and 2024, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss):

Amortized Unrealized Unrealized Fair

8 unchanged sentences

91,049 634 ( 4,505 ) 87,178

Mortgage-backed securities:

5,010 — ( 33 ) 4,977

Collateralized mortgage obligations:

8 unchanged sentences

12,567 — ( 3,052 ) 9,515

Total available for sale

$ 426,145 $ 1,776 $ ( 20,717 ) $ 407,204

Held to maturity

Municipal taxable securities

$ 500 $ 1 $ — $ 501

Municipal tax-exempt securities

$ 4,184 $ — $ ( 81 ) $ 4,103

Total held to maturity

$ 4,184 $ — $ ( 81 ) $ 4,103

19 unchanged sentences

12,602 — ( 3,527 ) 9,075

Total available for sale

$ 449,416 $ 397 $ ( 29,623 ) $ 420,190

4 unchanged sentences

4,691 — ( 244 ) 4,447

Total held to maturity

$ 5,191 $ 1 $ ( 244 ) $ 4,948

There were no sales of investment securities during the years ended December 31, 2025, 2024, and 2023.

At December 31, 2024, we pledged investment securities with a fair value of $ 23.4 million for certificates of deposit from the state of California.

At December 31, 2025, and December 31, 2024, we pledged investment securities with a fair value of $ 48.7 million and $ 23.4 million for certificates of deposit from the state of California.

One security with a fair value of $ 36,000 and $ 48,000 was pledged to secure a local agency deposit at December 31, 2025 and 2024.

Accrued interest receivable for investment securities at December 31, 2024 and 2023 totaled $ 1.6 million and $ 962,000 .

Accrued interest receivable for investment securities at December 31, 2025 and 2024, totaled $ 1.6 million and $ 1.6 million.

The amortized cost and fair value of the investment securities portfolio as of December 31, 2025 and 2024, are shown by expected maturity below.

13 unchanged sentences

— — 26,636 26,537 64,413 60,641 — — 91,049 87,178

Mortgage-backed securities:

— — 5,010 4,977 — — — — 5,010 4,977

Collateralized mortgage obligations:

10 unchanged sentences

$ 36,862 $ 36,858 $ 190,057 $ 188,808 $ 185,150 $ 171,010 $ 14,076 $ 10,528 $ 426,145 $ 407,204

Municipal taxable securities

$ 500 $ 501 $ — $ — $ — $ — $ — $ — $ 500 $ 501

Municipal tax-exempt securities

29 unchanged sentences

For a discussion of the factors and criteria the Company uses in analyzing securities for impairment related to credit losses, see Note 2 Summary of Significant Accounting Policies - Allowance for Credit Losses on Available for Sale Securities and Held to Maturity Securities.

At December 31, 2024 and 2023, there was no ACL on the HTM securities portfolio.

At December 31, 2025 and 2024, there was no ACL on the AFS or HTM securities portfolio.

We concluded that the unrealized losses were primarily attributed to yield curve movement, together with widened liquidity spreads and credit spreads.

All SBA agency securities, mortgage-backed securities, and collateralized mortgage obligations are issued by government or government sponsored entities and have the support of the U.S.

All agency securities, mortgage-backed securities, and collateralized mortgage obligations are issued by government or government sponsored entities and have the support of the U.S.

federal government.

1 unchanged sentence

We expect to recover the amortized cost basis of our securities and have no present intent to sell and will not be required to sell securities that have declined below their cost before their anticipated recovery.

As of December 31, 2024, all of our HTM securities were rated “AA-” or above.

Accordingly, no ACL was recorded as of December 31, 2024 and December 31, 2023, against HTM or AFS securities, and there was no provision for credit losses recognized for the year ended December 31, 2024 and 2023.

The following tables show the related fair value and the gross unrealized losses of the Company's investment securities, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2024, and December 31, 2023:

As of December 31, 2025 and 2024, all of our HTM securities were rated “AA-” or above.

There was no provision for credit losses recognized during the years ended December 31, 2025 and 2024.

Less than Twelve Months

14 unchanged sentences

14,196 ( 91 ) 4 27,573 ( 4,414 ) 15 41,769 ( 4,505 ) 19

Collateralized mortgage obligations:

Mortgage-backed securities:

4,977 ( 33 ) 1 — — — 4,977 ( 33 ) 1

1 unchanged sentence

3,130 ( 1 ) 1 53,195 ( 8,739 ) 24 56,325 ( 8,740 ) 25

Commercial paper

Collateralized mortgage obligations:

13,947 ( 31 ) 4 49,366 ( 2,130 ) 21 63,313 ( 2,161 ) 25

11 unchanged sentences

Twelve Months or More

Unrealized Losses

# of Issuances

Unrealized Losses

# of Issuances

Unrealized Losses

# of Issuances

December 31, 2024

22 unchanged sentences

$ — $ — — $ 4,447 $ ( 244 ) 10 $ 4,447 $ ( 244 ) 10

Equity Securities - We have several Community Reinvestment Act (“CRA”) equity investments, other bank stocks, and other equity investments.

We recorded net gain/(loss) (included in “Other income” in the consolidated statements of income) on such equity investments of $ 680,000 and ($ 109,000 ) during the years ended December 31, 2025 and 2024.

The 2025 amount includes an impairment charge of $ 390,000 .

Equity securities (included in “Accrued interest and other assets” in the consolidated balance sheets) totaled $ 26.1 million and $ 22.9 million as of December 31, 2025, and December 31, 2024.

NOTE 4 - LOANS AND ALLOWANCE FOR CREDIT LOSSES - LOANS

3 unchanged sentences

(dollars in thousands)

Construction and land development

Single-family residential mortgages

$ 1,655,382 $ 1,494,022

1 unchanged sentence

1,303,019 1,201,420

Single-family residential mortgages

Construction and land development

155,464 173,290

8 unchanged sentences

$ 3,270,413 $ 3,005,501

( 1 ) Net of premiums(discounts) on acquired loans and deferred (fees) and costs

( 2 ) Includes non-farm and non-residential real estate loans, multifamily residential and single-family residential loans for a business purpose

( 1 ) Net of premiums(discounts) on acquired loans and net deferred (fees) and costs on originated loans.

( 2 ) Includes non-farm and non-residential real estate loans, multi-family residential loans and non-owner occupied single-family residential loans.

At December 31, 2025 and 2024, loans with carrying values of $ 1.9 billion and $ 1.4 billion were pledged to secure advances from the FHLB.

At December 31, 2025 and 2024, loans with carrying values of $ 88.9 million and $ 62.5 million were pledged to the Federal Reserve Bank of San Francisco Discount Window.

We sold $ 58.1 million, $ 47.7 million and $ 34.1 million in mortgage loans during 2025, 2024, and 2023.

In addition, we sold $ 10.8 million, $ 13.8 million and $ 4.2 million in the guaranteed portion of SBA loans during 2025, 2024, and 2023.

Gains on sale of mortgage loans totaled $ 746,000 , $ 818,000 , and $ 112,000 , and gains on sale of SBA loans totaled $ 493,000 , $ 768,000 , and $ 262,000 in 2025, 2024, and 2023.

During 2025, we sold $ 4.6 million of nonperforming CRE and C&I loans and recognized a loss on sale of $ 83,000 .

There were no sales of nonperforming loans during 2024 and 2023.

A summary of the changes in the ACL for the years indicated follows:

12 unchanged sentences

$ 47,729 $ 729 $ 48,458 $ 41,903 $ 640 $ 42,543 $ 41,076 $ 1,156 $ 42,232

ASU 2016-13 transition adjustment

— — — — — — 2,135 1,045 3,180

Adjusted beginning balance

$ 41,903 $ 640 $ 42,543 $ 41,076 $ 1,156 $ 42,232 $ 35,047 $ 2,248 $ 37,295

Provision/(reversal) for credit losses

8 unchanged sentences

December 31, 2025

Construction and Land Development

Commercial Real Estate

Single-Family Residential Mortgages

Commercial Real Estate

Construction and Land Development

Commercial and Industrial

10 unchanged sentences

December 31, 2024

Construction and Land Development

Commercial Real Estate

Single-Family Residential Mortgages

Commercial Real Estate

Construction and Land Development

Commercial and Industrial

10 unchanged sentences

December 31, 2023

Construction and Land Development

Commercial Real Estate

Single-Family Residential Mortgages

Commercial Real Estate

Construction and Land Development

Commercial and Industrial

3 unchanged sentences

$ 17,640 $ 17,657 $ 2,638 $ 1,804 $ 621 $ 716 $ 41,076

ASU 2016-13 Transition Adjustment

314 ( 2,662 ) 3,960 ( 188 ) ( 416 ) 1,127 2,135

Adjusted beginning balance

$ 4,464 $ 13,941 $ 11,799 $ 2,625 $ 564 $ 1,654 $ 35,047

(Reversals)/provisions for credit losses

Provisions/(reversals) for credit losses

2,570 2,626 ( 1,279 ) ( 458 ) 636 ( 217 ) 3,878

21 unchanged sentences

(dollars in thousands)

Construction and land development

Single-family residential mortgages

$ 369,196 $ 98,047 $ 122,104 $ 501,580 $ 209,318 $ 351,536 $ 978 $ — $ 1,652,759

15 unchanged sentences

$ — $ — $ — $ — $ 1,383 $ 3,296 $ — $ — $ 4,679

Single-family residential mortgages

Construction and land development

$ 4,739 $ 28,059 $ — $ 42,440 $ 3,845 $ 45,000 $ — $ — $ 124,083

44 unchanged sentences

(dollars in thousands)

Construction and land development

Single-family residential mortgages

$ 159,940 $ 137,264 $ 549,525 $ 225,877 $ 108,541 $ 299,553 $ 1,126 $ — $ 1,481,826

15 unchanged sentences

$ — $ 164 $ — $ — $ 2,064 $ 417 $ — $ — $ 2,645

Single-family residential mortgages

Construction and land development

$ 62,541 $ 8,945 $ — $ — $ 1,370 $ 65 $ — $ — $ 72,921

40 unchanged sentences

$ 86 $ 164 $ 1,155 $ 191 $ 2,070 $ 417 $ — $ — $ 4,083

The following tables present the aging of the recorded investment in past due loans HFI as of December 31, 2024 and 2023 by loan class.

Past due loans presented in tables below also include nonaccrual loans.

The following tables present the aging of the recorded investment in past due loans HFI as of December 31, 2025 and 2024, by loan segment and class.

Accruing Loans

December 31, 2025

1 unchanged sentence

Total Past Due (1)

Total Loans HFI

Nonaccrual Loans

Total Loans HFI

(dollars in thousands)

Construction and land development

Single-family residential mortgages (2)

$ 5,140 $ 1,321 $ — $ 6,461 $ 2,143 $ 1,646,778 $ 1,655,382

1 unchanged sentence

284 204 — 488 8,158 1,294,373 1,303,019

Single-family residential mortgages (3)

Construction and land development

— — — — 27,994 127,470 155,464

5 unchanged sentences

________________

( 1 ) All loans 90 days or more past due are nonaccrual.

We had no loans that were 90 days or more past due and still accruing.

( 2 ) Included in total loans

( 3 ) Nonaccrual SFR mortgage loans include $4.4 million of loans in the process of foreclosure.

( 1 ) Past due loans exclude nonaccrual loans.

( 2 ) Nonaccrual SFR mortgage loans include $ 680,000 of loans in the process of foreclosure.

Accruing Loans

December 31, 2024

1 unchanged sentence

Total Past Due (1)

Total Loans HFI

Nonaccrual Loans

Total Loans HFI

(dollars in thousands)

Construction and land development

Single-family residential mortgages (2)

$ 7,173 $ 1,013 $ — $ 8,186 $ 11,524 $ 1,474,312 $ 1,494,022

1 unchanged sentence

505 218 — 723 7,353 1,193,344 1,201,420

Single-family residential mortgages

Construction and land development

— 11,706 — 11,706 44,621 116,963 173,290

4 unchanged sentences

$ 8,044 $ 14,042 $ — $ 22,086 $ 69,843 $ 2,961,301 $ 3,053,230

( 1 ) All 90 days or more past due are nonaccrual.

We had no loans that were 90 days or more past due and still accruing.

( 2 ) Included in total loans

The following table present the loans HFI on nonaccrual status and the balance of such loans with no ALL, by loan class, as of the dates indicated:

( 1 ) Past due loans exclude nonaccrual loans.

( 2 ) Nonaccrual SFR mortgage loans include $ 4.4 million of loans in the process of foreclosure.

The following table present the loans HFI on nonaccrual status and the balance of such loans with no ALL, by loan segment and class, as of the dates indicated:

December 31, 2025

7 unchanged sentences

(dollars in thousands)

Construction and land development

Single-family residential mortgages

$ 2,143 $ 2,143 $ 11,524 $ 11,524

1 unchanged sentence

4,801 8,158 346 7,353

Single-family residential mortgages

Construction and land development

27,994 27,994 18,226 44,621

3 unchanged sentences

$ 41,275 $ 44,632 $ 36,318 $ 69,843

( 1 ) A C&I loan of $ 4.7 million is secured by a SFR and is cross collateralized with a CRE loan with a specific reserve.

The following tables present the amortized cost basis of individually evaluated collateral-dependent loans, by loan segment and class and type of collateral which secures such loans as of the dates indicated:

December 31, 2025

Commercial Real Estate

Residential Real Estate

Commercial Real Estate

Business Assets

(dollars in thousands)

Construction and land development

Single-family residential mortgages

$ 2,143 $ — $ — $ 2,143

1 unchanged sentence

— 8,158 — 8,158

Single-family residential mortgages

Construction and land development

19,465 8,529 — 27,994

4 unchanged sentences

December 31, 2024

Commercial Real Estate

Residential Real Estate

Commercial Real Estate

Business Assets

(dollars in thousands)

Single-family residential mortgages

$ 11,524 $ — $ — $ 11,524

Commercial real estate

222 7,131 — 7,353

Single-family residential mortgages

Construction and land development

26,395 18,226 — 44,621

3 unchanged sentences

$ 42,889 $ 26,680 $ 262 $ 69,831

No interest income was recognized on a cash basis during the years ended December 31, 2024 and 2023.

We did not recognize any interest income on nonaccrual loans during the years ended December 31, 2024 and December 31, 2023 while the loans were in nonaccrual status.

On January 1, 2023, we adopted ASU 2022 - 02, "Financial Instruments - Credit Losses (Topic 326 ):

Troubled Debt Restructurings and Vintage Disclosures." Under this guidance, in cases where a borrower is experiencing financial difficulties, we may make certain concessionary modifications to the contractual terms.

These concessions may include principal forgiveness, an interest rate reduction, term extension, payment delay, or other actions intended to minimize potential losses.

We did not recognize any interest income on nonaccrual loans while the loans were in nonaccrual status during the years ended December 31, 2025, and December 31, 2024.

Loan Modifications to Borrowers Experiencing Financial Difficulty - In cases where a borrower is experiencing financial difficulties, we may make certain concessionary modifications to the contractual terms.

These concessions may include term extension, payment delay, principal forgiveness, an interest rate reduction, or other actions intended to minimize potential losses.

We may provide multiple types of concessions on one loan.

When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for loan losses.

Loans modified to borrowers experiencing financial difficulty totaled $ 54.4 million at December 31, 2024 and zero at December 31, 2023.

During 2024, three C&D loans and two CRE loans were modified with balances totaling $ 47.6 million and $ 6.8 million at December 31, 2024.

There were no loans modified to borrowers experiencing financial difficulty during the year ended December 31, 2023.

The modifications made during 2024 included $ 35.8 million of term extensions for C&D loans impacted by construction delays and an increase in market interest rates since origination, including a $ 26.4 million loan for a partially complete mixed-use commercial project for which we have established a specific reserve of $ 4.5 million.

We had $ 5.6 million in unfunded commitments related to these borrowers.

We closely monitor the performance of loans modified to borrowers experiencing financial difficulty to understand the effectiveness of our modification efforts.

The following table presents the type of concession, by class of loans, during the last 12 months:

Payment Delay

Loans modified to borrowers experiencing financial difficulty are individually evaluated for purposes of the allowance for loan losses.

The following tables present the carrying value of loans modified for borrowers experiencing financial difficulty during the previous twelve months, by type of modification for the periods indicated:

Year Ended December 31, 2025

Payment Deferral

Combination of Rate Reduction and Term Extension

Combination of Principal Reduction, Rate Reduction, and Term Extension

Total Loan Modifications

% of Loan Class

(dollars in thousands)

Commercial real estate

$ 4,657 0.36 % $ — — % $ 3,357 0.26 % $ 8,014 0.62 %

Commercial and industrial

6,871 4.91 % 4,708 3.36 % — — % 11,579 8.27 %

410 0.73 % — — % — — % 410 0.73 %

$ 11,938 0.36 % $ 4,708 0.14 % $ 3,357 0.10 % $ 20,003 0.60 %

Modifications for the twelve months ended December 31, 2025, included weighted average payment deferrals of 7.8 months, principal reductions of $ 3.7 million, weighted average rate reduction of 2.74 %, and weighted average term extension of 24.6 months.

Year Ended December 31, 2024

Payment Deferral

Term Extension

Combination Term Extension Interest Rate Reduction

Total Modified Loans

Modified Loans as a Percentage of Class of Loans

Weighted-Average Term Extension (in Years)

Weighted-Average Rate Reduction

Combination of Rate Reduction and Term Extension

Total Loan Modifications

% of Loan Class

(dollars in thousands)

Commercial real estate

$ 6,616 0.55 % $ — — % $ 222 0.02 % $ 6,838 0.57 %

Construction and land development

— — % 35,839 20.68 % 11,706 6.76 % 47,545 27.44 %

$ 6,616 0.22 % $ 35,839 1.17 % $ 11,928 0.39 % $ 54,383 1.78 %

At December 31, 2025 and 2024, we had no commitments to lend to borrowers experiencing financial difficulty whose loans were modified during the period.

We closely monitor the performance of loans modified to borrowers experiencing financial difficulty to understand the effectiveness of our modification efforts.

The following table provides the aging information for loans that were modified over the last 12 months by loan class as of December 31, 2025, and December 31, 2024.

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

December 31, 2025

30-89 Days Past Due

90 Days Or More Past Due

(dollars in thousands)

Commercial real estate

$ 3,357 $ — $ 4,657 $ 8,014

Commercial and industrial

11,579 — — 11,579

$ 15,346 $ — $ 4,657 $ 20,003

( 1 ) Includes CRE loans totaling $ 3.4 million and C&I loans totaling $ 4.7 million which are current in payments, however remain on nonaccrual at December 31, 2025.

None of these loans have defaulted on their modified terms in the last 12 months.

December 31, 2024

30-89 Days Past Due

90 Days Or More Past Due (2)

(dollars in thousands)

Commercial real estate

$ 222 $ — $ 6,616 $ 6,838

Construction and land development

9,444 38,101 — 47,545

$ 9,666 $ 38,101 $ 6,616 $ 54,383

( 1 ) Includes CRE loans totaling $ 222,000 and C&D loans totaling $ 9.4 million which are current in payments, however remain on nonaccrual at December 31, 2024.

None of these loans have defaulted on their modified terms in the last 12 months.

( 2 ) Includes CRE loans totaling $ 6.6 million which remain on nonaccrual and have defaulted on their modified terms in the last 12 months.

NOTE 5 - LOAN SERVICING

3 unchanged sentences

(dollars in thousands)

Single-family residential mortgages

Mortgage loans

$ 833,704 $ 922,183

90,364 92,678

Commercial real estate

Construction and land development

Loan servicing fees, net of amortization, totaled $ 2.3 million, $ 2.6 million and $ 2.2 million for the years ended December 31, 2024, 2023 and 2022.

Commercial real estate loans

Construction and land development loans

Contractually specified servicing fee income totaled $ 3.4 million, $ 3.8 million and $ 4.2 million for the years ended December 31, 2025, 2024, and 2023.

Custodial balances maintained in connection with the foregoing loan servicing (included in noninterest-bearing deposits) totaled $ 7.0 million and $ 8.3 million as of December 31, 2025 and 2024.

5 unchanged sentences

If we later determine that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income.

The following table presents the activity in servicing assets for the years ended December 31, 2024, 2023, and 2022:

The following table presents the activity in servicing assets (included in “Accrued interest and other assets” in the consolidated balance sheets) for the years ended December 31, 2025, 2024, and 2023:

Loans Loans Loans Loans Loans Loans

1 unchanged sentence

(dollars in thousands)

Beginning of period

Beginning of year

$ 5,656 $ 1,329 $ 6,509 $ 1,601 $ 7,354 $ 2,167

2 unchanged sentences

( 634 ) ( 144 ) ( 700 ) ( 228 ) ( 692 ) ( 280 )

End of period

$ 4,761 $ 1,280 $ 5,656 $ 1,329 $ 6,509 $ 1,601

22 unchanged sentences

$ 23,540 $ 24,601

Depreciation and leasehold amortization expense was $ 1.9 million, $ 2.0 million, and $ 2.0 million for 2024, 2023, and 2022.

There were no sales of fixed assets during 2024.

A $ 32,000 gain on sale of fixed assets was recorded from the sale of an automobile during 2023.

A $ 757,000 gain on sale of fixed assets was recorded from the sale of a real estate asset during 2022, which was used to house staff while traveling.

Depreciation and leasehold amortization expense was $ 1.9 million, $ 1.9 million, and $ 2.0 million for the years ended December 31, 2025, 2024, and 2023.

Gain on sale of fixed assets totaled $ 42,000 , $ 0 and $ 32,000 for the years ended December 31, 2025, 2024, and 2023.

NOTE 7 - GOODWILL AND INTANGIBLES

3 unchanged sentences

Goodwill amounted to $ 71.5 million as of December 31, 2025 and 2024, and is the only intangible asset with an indefinite life on the balance sheet.

No impairment was recognized on goodwill during 2024 and 2023.

In 2023, after evaluating the prolonged decrease in our stock price, management performed a quantitative goodwill impairment analysis as of September 30, 2023.

Management engaged a third -party valuation specialist to assist with the quantitative analysis.

The evaluation used two methods to estimate our value:

We performed a quantitative goodwill impairment analysis as of October 1, 2025, with the assistance of a third -party valuation specialist.

The evaluation used two methods to estimate the value of the Company:

the market approach and the income approach.

The market approach used pricing information available on publicly traded companies that are similar to the company to determine the value of the company.

Estimates used in the market approach included selecting a representative peer group of institutions, determining the price to tangible book value based on the results of the peer group institutions, and estimating a control premium based on the whole-bank acquisition prices for representative transactions.

The income approach was based on the discounted free cash flows of the company using projections of future results, and considering future economic forecasts and management’s plans.

Estimates used in the income approach included management’s projections of our income in future periods and an appropriate rate of return that would be required by a market participant.

Based on this quantitative analysis performed at September 30, 2023, our fair value exceeded our carrying amount with a passing amount of 9.6 %.

Also, at December 31, 2023, due to changes in our projections of income in future periods during the fourth quarter of 2023 resulting from the economic environment, management performed certain calculations and sensitivity analyses related to the quantitative goodwill impairment analysis performed at September 30, 2023 and the current information and concluded that goodwill was also not impaired at December 31, 2023.

In the fourth quarter of 2024, we performed a qualitative analysis and concluded that it is more likely than not that our fair value exceeds our carrying value and goodwill was not impaired at December 31, 2024.

Other intangible assets consist of core deposit intangible (“CDI”) assets arising from acquisitions.

The market approach uses pricing information available on publicly traded companies that are similar to the subject company to determine the value of the subject company.

Estimates used in the market approach included selecting a representative peer group of institutions, determining an appropriate price to tangible book value based on the results of the peer group institutions, and estimating a control premium based on the whole-bank acquisition prices for representative transactions.

The income approach is based on the discounted free cash flows of the subject company using projections of future results, and incorporating economic forecasts and management's plans.

Estimates used in the income approach include management's projections of the Company's free cash flows in future periods and an appropriate rate of return that would be required by a market participant.

Based on this quantitative analysis, the fair value of the Company was determined to exceed its carrying amount by 5.7 % at October 1, 2025.

As a result, management concluded that goodwill was not impaired as of October 1, 2025.

No goodwill impairment charges were recognized during the years ended December 31, 2025 and 2024.

Other intangible assets consist of core deposit intangible (“CDI”) (included in “Accrued interest and other assets” in the consolidated balance sheets) assets arising from acquisitions.

CDI assets are amortized on an accelerated method over their estimated useful life of 8 to 10 years.

CDI was recognized in the 2013 acquisition of Los Angeles National Bank, in the 2016 acquisition of TFC Holding Company, in the 2018 acquisition of FAIC and in the 2020 acquisition of PGB Holdings, Inc.

In January 2022, $ 729,000 of CDI was recognized in conjunction with the Hawaii Branch purchase from BOTO.

In January 2022, $ 729,000 of CDI was recognized in conjunction with the Hawaii Branch purchase.

The following table presents changes in the carrying amount of CDI for the periods indicated:

5 unchanged sentences

$ 10,459 $ 10,459 $ 10,459

Acquired from acquisitions

Balance, end of year

3 unchanged sentences

$ 8,448 $ 7,664 $ 6,741

784 923 1,086

Balance, end of year

10 unchanged sentences

Greater than $250,000

Time Deposits Maturities Periods:

Time Deposits Expected Maturity Date at December 31,

(dollars in thousands)

One year or less

$ 967,896 $ 891,751 $ 1,859,647

One year to three years

5,493 840 6,333

Over three years

$ 974,670 $ 892,891 $ 1,867,561

9 unchanged sentences

NOTE 9 - LONG-TERM DEBT

In November 2018, we issued $ 55.0 million of 6.18 % fixed-to-floating rate subordinated notes, with a December 1, 2028 maturity date (the “2028 Subordinated Notes”).

The interest rate was fixed through December 1, 2023 and was scheduled to float at three -month CME Term SOFR plus applicable tenor spread adjustment of 26 basis points plus 315 basis points thereafter.

On December 1, 2023, the Company redeemed the 2028 Subordinated Notes at a redemption price equal to 100 % of the principal amount plus accrued and unpaid interest.

In March 2021, we issued $ 120.0 million of 4.00 % fixed-to-floating rate subordinated notes, with an April 1, 2031 maturity date (the “2031 Subordinated Notes”).

33 unchanged sentences

December 22, 2006

$ 5,155 $ 1,099 $ 4,056 Three-month CME Term SOFR plus 0.26% (a) plus 1.65%,

$ 5,155 $ 1,008 $ 4,147 Three-month CME Term SOFR plus 0.26% plus 1.65%,

5.63 % March 15, 2037

December 15, 2004

7,217 765 6,452 Three-month CME Term SOFR 0.26% (a) plus 2.25%

7,217 688 6,529 Three-month CME Term SOFR 0.26% plus 2.25%

6.23 % December 15, 2034

December 15, 2004

5,155 507 4,648 Three-month CME Term SOFR 0.26% (a) plus 2.10%

5,155 456 4,699 Three-month CME Term SOFR 0.26% plus 2.10%

6.08 % December 15, 2034

$ 17,527 $ 2,152 $ 15,375

Represents applicable tenor spread adjustment when the original Libor index was discontinued on June 30, 2023

In 2016, we acquired TFC Statutory Trust (the “TFC Trust”) through the acquisition of TomatoBank and its holding company, TFC Holding Company (“TFC”).

5 unchanged sentences

The unamortized valuation reserve was $ 1.0 million at December 31, 2025, and $ 1.1 million at December 31, 2024.

The subordinated debentures have a variable rate of interest equal to three - month CME Term SOFR plus applicable tenor spread adjustment of 0.26 % plus 1.65 %, which was 6.27 % as of December 31, 2024, and 7.30 % at December 31, 2023.

The subordinated debentures have a variable rate of interest equal to three - month CME Term SOFR plus applicable tenor spread adjustment of 0.26 % plus 1.65 %, which was 5.63 % at December 31, 2025, and 6.27 % at December 31, 2024.

In October 2018, we acquired First American International Statutory Trust I (“FAIC Trust I”) through the acquisition of FAIC.

4 unchanged sentences

The unamortized valuation reserve was $ 688,000 at December 31, 2025, and $ 765,000 at December 31, 2024.

The subordinated debentures have a variable rate of interest equal to three - month CME Term SOFR plus applicable tenor spread adjustment of 0.26 % plus 2.25 %, which was 6.87 % as of December 31, 2024, and 7.90 % at December 31, 2023.

The subordinated debentures have a variable rate of interest equal to three - month CME Term SOFR plus applicable tenor spread adjustment of 0.26 % plus 2.25 %, which was 6.23 % at December 31, 2025, and 6.87 % at December 31, 2024.

In January 2020, we acquired PGB Capital Trust I (“PGBH Trust I”) through the acquisition of PGBH.

4 unchanged sentences

The unamortized valuation reserve was $ 456,000 at December 31, 2025, and $ 507,000 at December 31, 2024.

The subordinated debentures have a variable rate of interest equal to three - month CME Term SOFR plus applicable tenor spread adjustment of 0.26 % plus 2.10 %, which was 6.72 % as of December 31, 2024, and 7.75 % at December 31, 2023.

We recorded interest expense of $ 1.3 million in 2024, $ 1.3 million in 2023 and $ 650,000 in 2022 on the subordinated debentures.

The subordinated debentures have a variable rate of interest equal to three - month CME Term SOFR plus applicable tenor spread adjustment of 0.26 % plus 2.10 %, which was 6.08 % at December 31, 2025, and 6.72 % at December 31, 2024.

We recorded interest expense of $ 1.1 million in 2025, $ 1.3 million in 2024 and $ 1.3 million in 2023 on the three subordinated debentures.

The aggregate amount of amortization expense was $ 218,000 in each of the years ended December 31, 2025, 2024, and 2023.

1 unchanged sentence

If regulators make a determination that the capital securities can no longer be considered in regulatory capital, the securities become callable and we may redeem them.

At December 31, 2024, the Company duly and punctually paid all payments, maintained 100% ownership of the common securities, and did not incur any additional indebtedness as agreed.

As of December 31, 2025, the Company has duly and punctually paid all payments, maintained 100% ownership of the common securities, and did not incur any additional indebtedness as agreed.

The Company was in compliance with all covenants under all subordinated debentures at December 31, 2025.

4 unchanged sentences

At December 31, 2025, the Bank had a secured borrowing capacity with the FHLB of $ 1.4 billion collateralized by pledged residential and commercial loans with a carrying value of $ 1.9 billion.

At December 31, 2024, we had no overnight advances and $ 200.0 million of term advances, of which $ 150 million had an original term of five years, a maturity date in the first quarter of 2025, and an average fixed rate of 1.18 %.

A putable advance of $ 50 million was executed on September 30, 2024 with a four year final maturity with a one -time option for the FHLB to call the debt after a one -year lock out period and prepayment symmetry at a rate of 3.42 %.

At December 31, 2025, we had no overnight advances and $ 130.0 million of putable term advances, with various call dates at the option of the FHLB, and a weighted average rate of 3.49 %.

The remaining secured borrowing capacity with the FHLB was $ 1.3 billion as of December 31, 2025.

We recognized interest on FHLB advances of $ 5.2 million, $ 2.2 million, and $ 2.9 million for the years ended December 31, 2025, 2024, and 2023.

The details of the FHLB term advances outstanding at

December 31, 2025, are shown in the table below:

Call Structure

Next Call Date

Final Stated Maturity Date

(dollars in thousands)

$ 10,000 3.69 % One time call

N/A 5/10/2028

10,000 3.64 % One time call

N/A 6/23/2028

20,000 3.49 % Quarterly call

20,000 3.38 % Quarterly call

20,000 3.34 % Quarterly call

20,000 3.49 % Quarterly call

20,000 3.52 % Quarterly call (1)

10,000 3.55 % Quarterly call (1)

$ 130,000 3.49 % Weighted average rate

( 1 ) Call option after initial one year lock out.

FRB Secured Line of Credit.

1 unchanged sentence

Federal Funds Arrangements with Commercial Bank s.

At December 31, 2024, the Company may borrow on an unsecured basis, up to $ 97.0 million from other financial institutions.

At December 31, 2025, the Bank may borrow on an unsecured basis, up to $ 97.0 million from other financial institutions.

There were no amounts outstanding under any of the other borrowing arrangements above as of December 31, 2025, except the FHLB term advances totaling $ 130.0 million.

2 unchanged sentences

Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

The table below presents income before income tax expense between domestic and foreign for the years indicated:

For the Year Ended December 31,

(dollars in thousands)

United States

$ 42,134 $ 35,679 $ 60,246

Income before income taxes

42,134 35,679 60,246

The table below presents the components of income tax expense for the years indicated:

12 unchanged sentences

$ 10,186 $ 9,014 $ 17,781

The following table presents a comparison of the federal statutory income tax rates to the Company's effective income tax rates for the years indicated:

( 1 ) The Company has no foreign operations or foreign taxes for all years presented.

The following table presents a comparison of the federal statutory income tax rates to the Company's effective income tax rates for the years indicated (as reported under ASU 2023 - 09 on a retrospective basis):

For the Year Ended December 31,

1 unchanged sentence

(dollars in thousands)

Statutory federal tax

US federal statutory tax rate

$ 8,848 21.0 % $ 7,493 21.0 % $ 12,652 21.0 %

State tax, net of federal benefit

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

2,671 6.4 % 2,782 7.8 % 5,697 9.5 %

Tax-exempt income

Low income housing tax credits

( 1,725 ) ( 4.1 )% ( 1,195 ) ( 3.3 )% ( 1,017 ) ( 1.7 )%

Stock-based compensation

Transferrable energy tax credits

( 957 ) ( 2.3 )% ( 901 ) ( 2.5 )% — 0.0 %

Tax credits, net of amortization

Nondeductible and nontaxable

( 364 ) ( 0.9 )% ( 375 ) ( 1.1 )% ( 367 ) ( 0.6 )%

Other items, net

Low income housing tax credit amortization

2,097 5.0 % 1,336 3.7 % 1,128 1.9 %

Tax benefits from low income housing losses

( 436 ) ( 1.0 )% ( 218 ) ( 0.6 )% ( 173 ) ( 0.3 )%

52 0.1 % 92 0.3 % ( 139 ) ( 0.2 )%

Total income tax expense

$ 10,186 24.2 % $ 9,014 25.3 % $ 17,781 29.5 %

( 1 ) State taxes in California, New York, and New York City comprised the majority (greater than 50 percent) of the tax effect in this category.

Deferred taxes are a result of differences between income tax accounting and GAAP with respect to income and expense recognition.

2 unchanged sentences

(dollars in thousands)

Credit carryforwards

Allowance for credit losses

19 unchanged sentences

$ 16,347 $ 19,055

Income taxes paid for the years ended December 31, 2025, 2024, and 2023 were $ 18.7 million, $ 6.2 million, and $ 21.4 million.

Income taxes paid in the following jurisdictions exceed 5% of total income taxes paid for the years indicated:

For the Year Ended December 31,

(dollars in thousands)

$ 14,359 $ 1,700 $ 12,954

State and local :

1,856 2,975 5,410

1,023 535 1,570

New York City

661 675 1,340

Total state and local

4,362 4,525 8,435

Total income taxes paid

$ 18,721 $ 6,225 $ 21,389

( 1 ) Federal taxes paid in 2025 includes $ 12.6 million for the purchase of federal tax credits for assets placed in service in 2024.

At December 31, 2025, we have federal tax credit carryforwards of $ 1.8 million for federal income tax purposes.

Tax credit carryforwards, to the extent not used, will begin to expire in 2045.

At December 31, 2025, we have usable net operating loss carryforwards from acquisitions of $ 16,000 for federal and $ 6,000 for California income tax purposes.

Net operating loss carry forwards, to the extent not used, will begin to expire in 2028.

Net operating loss carryforwards, to the extent not used, will begin to expire in 2028.

The net operating loss carryforwards were generated through acquisitions, and as a result, are substantially limited by Section 382 of the Internal Revenue Code.

4 unchanged sentences

The statutes of limitations for state income tax returns remain open for tax years in accordance with each state's statutes.

The audit of our New York State tax returns for the tax period from January 1, 2018 to December 31, 2020 was completed in August 2023 and we paid additional tax and interest of $ 70,000 without penalties to settle the tax audit findings with New York State.

We recorded a $ 1.1 million liability related to uncertain tax positions at December 31, 2024.

We are currently under examination by the California Franchise Tax Board for the 2020 tax period resulting from a refund claim in the amount of $ 256,000 .

Our liability related to uncertain tax positions was $ 395,000 at December 31, 2025, and $ 1.1 million at December 31, 2024.

We recognized no material interest or penalties as part of income taxes for the years ended December 31, 2025, 2024, and 2023.

Purchased Federal Transferable Tax Credits

On September 13, 2024, we entered into a Purchase and Sale Agreement (PSA) for the purchase of approximately $ 23.2 million in federal transferable tax credits to be generated by four projects.

Two of the projects were placed in service in 2024 and generated approximately $ 12.9 million of federal transferable tax credits.

The approximate purchase price of $ 12.0 million will be paid by us to the seller, an independent third party, upon the achievement of certain benchmarks outlined in the PSA.

We utilized the purchased tax credits of $ 12.9 million to offset amounts that otherwise would be due and payable to the IRS for 2024 and potentially prior tax years.

The accounting treatment is an increase in income tax receivable from the IRS, a liability to the seller, and a reduction to income tax expense in the period the qualifying project is placed in service.

On September 13, 2024, we entered into a Purchase and Sale Agreement ("PSA") for the purchase of federal transferable tax credits to be generated by four projects to be placed in service in 2024 and 2025.

Two of the projects were placed in service in 2025 and generated approximately $ 11.3 million of federal tax credits for the year ended December 31, 2025.

The other two projects were placed in service in 2024 and generated $ 13.6 million of federal tax credits.

The discounted purchase price for the projects placed in service in 2025 will be paid by us to the seller, an independent third party, upon the achievement of certain benchmarks outlined in the PSA.

The discounted purchase price for the projects placed in service in 2024 was paid by us to the seller in 2025.

We will fully utilize the purchased tax credits to offset amounts that otherwise would be due and payable to the IRS for the years ended 2025 and 2024 and for tax years ended 2021 and 2022 through tax credit carryback filings.

The ultimate tax benefit to the Company is the difference between the amount of the tax credits purchased and the discounted purchase price.

NOTE 13 - COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

Our exposure to loss in the event of nonperformance on these financial commitments is represented by the contractual amount of those instruments.

We use the same credit policies in making commitments as we do for loans reflected in the financial statements.

We use the same credit policies in making commitments as we do for loans reflected in the consolidated financial statements.

At December 31, 2025 and 2024, we had the following financial commitments whose contractual amount represents credit risk:

17 unchanged sentences

The reserve for off-balance sheet commitments was $ 484,000 and $ 729,000 as of December 31, 2025, and December 31, 2024.

We recorded a provision for unfunded loan commitments of $ 89,000 for the year ended December 31, 2024, and a reversal of provision for unfunded loan commitments of $ 516,000 for the year ended December 31, 2023.

In addition, we invest in various affordable housing partnerships and Small Business Investment Company funds.

We recorded a (reversal of) provision for credit losses on unfunded loan commitments of ($ 245,000 ) for the year ended December 31, 2025, and $ 89,000 for the year ended December 31, 2024.

In addition, we invest in various affordable housing partnerships and Small Business Investment Company funds for CRA purposes.

Pursuant to these investments, we commit to an investment amount to be fulfilled in future periods.

Such unfunded commitments totaled $ 11.0 million as of December 31, 2025, and $ 5.7 million as of December 31, 2024.

Bancorp also has investments in fintech venture funds, with unfunded commitments of $ 675,000 a s of December 31, 2025, an d $ 1.2 million as of December 31, 2024.

We are involved in various matters of litigation which have arisen in the ordinary course of business and accruals for estimates of potential losses have been provided when necessary and appropriate under GAAP.

20 unchanged sentences

2.97 % 2.83 %

Cash paid for operating leases

NOTE 15 - RELATED PARTY TRANSACTIONS

3 unchanged sentences

NOTE 16 - STOCK BASED COMPENSATION

RBB Bancorp 2010 Stock Option Plan

Under the RBB Bancorp 2010 Stock Option Plan (the “2010 Plan”), we were permitted to grant awards to eligible persons in the form of qualified and non-qualified stock options.

We reserved up to 30 % of the issued and outstanding shares of common stock as of the date we adopted the 2010 Plan, or 3,494,478 shares, for issuance under the 2010 Plan.

Following receipt of shareholder approval of the 2017 Omnibus Stock Incentive Plan (the “OSIP”) in May 2017 , no additional grants were made under the 2010 Plan.

The 2010 Plan has been terminated and options that were granted under the 2010 Plan have become subject to the OSIP.

Awards that were granted under the 2010 Plan will remain exercisable pursuant to the terms and conditions set forth in individual award agreements, but such awards will be assumed and administered under the OSIP.

The 2010 Plan award agreements allow for acceleration of exercise privileges of grants upon occurrence of a change in control of the Company.

If a participant’s job is terminated for cause, then all unvested awards expire at the date of termination.

Amended and Restated RBB Bancorp 2017 Omnibus Stock Incentive Plan

9 unchanged sentences

If a participant’s job is terminated for cause, then all awards expire at the date of termination.

We recognized total stock-based compensation expense of $ 1.1 million, $ 750,000 , and $ 848,000 in 2024, 2023, and 2022.

The total unrecognized stock-based expense totaled $ 1.9 million, $ 517,000 , and $ 581,000 as of December 31, 2024, 2023, and 2022.

We recognized total stock-based compensation expense of $ 1.4 million, $ 1.1 million, and $ 750,000 in 2025, 2024, and 2023.

The total unrecognized stock-based expense totaled $ 2.2 million, $ 1.9 million, and $ 517,000 as of December 31, 2025, 2024, and 2023.

Stock Options

2 unchanged sentences

Unrecognized compensation expense related to stock options, as of December 31, 2025, is expected to be recognized over the next 1.4 years.

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions presented below for 2023 and 2022.

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions presented below for 2023.

No stock options have been granted after March 31, 2023.

December 2022

Expected volatility

28.4 % 28.9 % 29.5 %

Expected term (years)

Expected dividends

2.92 % 2.55 % 2.52 %

Risk free rate

4.27 % 4.00 % 2.71 %

Grant date fair value

$ 5.49 $ 6.16 $ 5.28

The expected volatility was based on the historical volatility of our stock trading history.

7 unchanged sentences

( 23,500 ) 17.76

Forfeited/cancelled

( 111,153 ) 17.75

Outstanding at end of period

Outstanding at end of year

151,000 $ 18.37 4.67 $ 360

1 unchanged sentence

139,000 $ 18.13 4.48 $ 360

The total fair value of the shares vested was $ 581,000 , $ 1.1 million, and $ 1.1 million in 2024, 2023, and 2022.

The total fair value of the shares vested was $ 193,000 , $ 581,000 , and $ 1.1 million in 2025, 2024, and 2023.

Unvested stock options totaled 12,000 , 21,333 , and 65,671 with a weighted average grant date fair value of $ 6.16 , $ 6.02 , and $ 4.99 as of December 31, 2025, 2024, and 2023.

The decrease of unvested stock options during 2024 was due to 28,337 stock options vested with a weighted average grant date stock price of $ 18.18 , and 16,001 stock options exercised with a weighted average grant date stock price of $ 19.03 .

Cash received from the exercise of 112,250 share options was $ 1.8 million for the year ended December 31, 2024.

The decrease of unvested stock options during 2025 was due to 9,333 stock options vested with a weighted average grant date fair value of $ 5.84 .

Cash received from the exercise of 23,500 share options was $ 417,000 for the year ended December 31, 2025.

Cash received from the exercise of 112,250 share options was $ 1.8 million for the year ended December 31, 2024.

The intrinsic value of options exercised was $ 429,000 , $ 90,000 , and $ 4.0 million in 2024, 2023, and 2022.

Cash received from the exercise of 19,403 share options was $ 295,000 for the year ended December 31, 2023.

The intrinsic value of options exercised was $ 21,000 , $ 429,000 , and $ 90,000 in 2025, 2024, and 2023.

Restricted Stock Units

We award time-based restricted stock units (“TRSUs”) and performance-based restricted stock units (“PRSUs”), which we also refer to collectively as restricted stock units (“RSUs”).

We granted 138,668 RSUs during the year ended December 31, 2024, with a weighted average price of $ 18.37 .

The RSUs granted during the year ended December 31, 2024 included 31,270 PRSUs with an estimated fair value as of the March 20, 2024 grant date of $ 19.13 and are subject to pre-established performance metrics with market conditions that will be measured in the future and subject to oversight and approval by the Board of Director’s Compensation Committee.

The TRSUs have original lives ranging from 1 to 4 years and PRSUs have an original life of 3 years.

We granted 138,922 RSUs during the year ended December 31, 2025, with a weighted average price of $ 15.70 .

The RSUs granted during the year ended December 31, 2025, included 28,833 PRSUs subject to pre-established performance metrics including market conditions that will be measured in the future and subject to oversight and approval by the Board of Director’s Compensation Committee.

As of December 31, 2025, there were 191,091 unvested RSUs outstanding.

The recorded compensation expense for RSUs was $ 994,000 , $ 504,000 , and $ 453,000 for the years ended December 31, 2024, 2023, and 2022.

Unrecognized stock-based compensation expense related to RSUs was $ 1.8 million and $ 338,000 as of December 31, 2024 and 2023.

We granted 138,668 RSUs during the year ended December 31, 2024, with a weighted average price of $ 18.37 .

The RSUs granted during the year ended December 31, 2024, included 31,270 PRSUs subject to pre-established performance metrics with market conditions that will be measured in the future and subject to oversight and approval by the Board of Director’s Compensation Committee.

As of December 31, 2024, there were 140,475 unvested RSUs outstanding.

The vesting date fair value of RSUs that vested during 2025, 2024, and 2023 was $ 1.3 million, $ 780,000 , and $ 375,000 .

The recorded compensation expense for RSUs was $ 1.3 million, $ 994,000 , and $ 504,000 for the years ended December 31, 2025, 2024, and 2023.

Unrecognized stock-based compensation expense related to RSUs was $ 2.1 million and $ 1.8 million as of December 31, 2025 and 2024.

As of December 31, 2025, unrecognized stock-based compensation expense related to RSUs is expected to be recognized over the next 2.3 years.

5 unchanged sentences

( 75,126 ) 17.65

Outstanding at end of period

Forfeited/cancelled

( 13,180 ) 18.74

Outstanding at end of year

191,091 16.66

NOTE 17 - REGULATORY MATTERS

83 unchanged sentences

Other Real Estate Owned (“OREO”) :

(included in “Accrued interest and other assets” in the consolidated balance sheets)

OREO is initially recorded at fair value less estimated selling costs at the date of transfer.

1 unchanged sentence

Fair values are generally based on third party appraisals of the property and discounted by management to reflect estimated selling costs (Level 3 ).

The following table provides the hierarchy and fair value for each major category of assets and liabilities measured at fair value as of the dates indicated:

Appraisals for OREO and collateral-dependent loans are performed by state licensed appraisers (for commercial properties) or state certified appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by us.

We review the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison to independent data sources such as recent market data or industry wide statistics for residential appraisals.

We also consider the actual selling price of collateral that has been sold in recent periods to determine what additional adjustments, if any, should be made to the appraisal values to arrive at fair value.

In determining the net realizable value of the underlying collateral for individually evaluated loans and OREO, we discount the valuation to cover both market price fluctuations and selling costs, typically ranging from 6 % to 10 % of the collateral value, that may be incurred in the event of foreclosure.

Generally, if the existing appraisal is older than twelve months for OREO or collateral-dependent loans, a new appraisal report is ordered.

The following table presents our financial assets and liabilities measured at fair value on a recurring basis or on a non-recurring basis as of the dates indicated:

Fair Value Measurements Using:

18 unchanged sentences

— 9,515 — 9,515

Forward Mortgage Loan Sale Contracts (1)

$ — $ 407,204 $ 11 $ 407,215

1 unchanged sentence

Collateral dependent individually evaluated loans:

Commercial real estate loans

$ — $ — $ 3,071 $ 3,071

Construction and land development loans

— — 19,465 19,465

Commercial real estate loans (1)

Commercial and industrial loans

— — 4,708 4,708

Other real estate owned (1)

— — 8,830 8,830

Collateral includes CRE and a SFR.

$ — $ — $ 36,074 $ 36,074

( 1 ) Included in “Accrued interest and other assets” on the consolidated balance sheets.

December 31, 2024

17 unchanged sentences

— 9,075 — 9,075

Interest Rate Lock Contracts

Forward Mortgage Loan Sale Contracts

$ — $ 420,190 $ — $ 420,190

3 unchanged sentences

$ — $ — $ 4,751 $ 4,751

Construction and land development loans

— — 30,676 30,676

$ — $ — $ 35,493 $ 35,493

The individually evaluated loan balances shown in the table above as measured on a non-recurring basis represent those defaulted loans for which expected credit loss was recognized during the years ended December 31, 2024 and 2023.

The credit loss includes any charge-offs and specific reserves recognized during each period.

During the year ended December 31, 2024, there were partial charge-offs of $ 1.6 million and specific reserves of $ 6.8 million for collateral-dependent individually evaluated loans with an aggregate fair value of $ 42.2 million as of December 31, 2024.

The fair value is based on third party appraisals, including adjustments to comparable market data as summarized in the table below.

The fair value of assets evaluated on a non-recurring basis is based on third party appraisals, including adjustments to comparable market data as summarized in the table below.

December 31, 2025

3 unchanged sentences

Collateral dependent loans:

Commercial real estate loans

$ 3,071 Market approach

Adjustments (1)

Construction and land development loans

1 unchanged sentence

Adjustments (1)

Commercial real estate loans (1)

Commercial and industrial loans

4,708 Market approach

Adjustments (1)

Other real estate owned (2)

8,830 Market approach

Adjustments (1)

Collateral includes CRE and a SFR.

( 1 ) Represents the minimum and maximum range of adjustments made by appraisers for differences in comparable sales.

During the year ended December 31, 2023, there were partial charge-offs of $ 521,000 on collateral-dependent individually evaluated loans with an aggregate fair value of $ 11.4 million as of December 31, 2023.

The fair value is based on third party appraisals, including adjustments to comparable market data as summarized in the table below.

( 2 ) Included in “Accrued interest and other assets” on the consolidated balance sheets.

December 31, 2024

6 unchanged sentences

Adjustments (1)

Construction and land development loans

30,676 Market approach

Adjustments (1)

66 Market approach

Adjustments (1)

( 1 ) Represents the minimum and maximum range of adjustments made by appraisers for differences in comparable sales.

There was no OREO as of December 31, 2024 or December 31, 2023.

There was $ 8.8 million of OREO as of December 31, 2025, and no OREO as of December 31, 2024.

During 2024, we foreclosed on and sold three properties, and recognized a total gain on OREO of $ 1.0 million.

81 unchanged sentences

Derivative assets:

Interest Rate Lock Contracts (1)

$ — $ — $ 1,255 $ 32

Forward Mortgage Loan Sale Contracts (1)

$ 515 $ 11 $ — $ —

Financial Liabilities:

9 unchanged sentences

( 1 ) Included in “Accrued interest and other assets” on the consolidated balance sheets.

( 2 ) Included in “Accrued interest and other liabilities” on the consolidated balance sheets.

NOTE 19 - EARNINGS PER SHARE

4 unchanged sentences

$ 31,948 $ 26,665 $ 42,465

Earnings allocated to participating securities

Shares outstanding

7 unchanged sentences

7,526 20,883 15,322

Restricted Stock Unit

Restricted Stock Units

41,966 35,788 4,565

Performance Stock Unit

Performance Stock Units

15,811 4,884 —

Used in dilutive EPS

4 unchanged sentences

$ 1.83 $ 1.47 $ 2.24

Options to purchase 18,000 , 332,500 , and zero shares of common stock were excluded from the calculation of diluted earnings per share for December 31, 2024, 2023, and 2022, because their effect would have been anti-dilutive.

There were zero, 6,012 , and zero antidilutive unvested RSUs outstanding for December 31, 2024, 2023, and 2022.

Options to purchase 34,000 , 18,000 , and 332,500 shares of common stock were excluded from the calculation of diluted earnings per share for the years ended December 31, 2025, 2024, and 2023, because their effect would have been anti-dilutive.

There were 2,300 , zero , and 6,012 antidilutive unvested RSUs outstanding for the years ended December 31, 2025, 2024, and 2023.

NOTE 20 – REVENUE FROM CONTRACTS WITH CUSTOMERS

2 unchanged sentences

2025 2024 2023

Non-interest income, in scope

Noninterest income, in scope

(dollars in thousands)

5 unchanged sentences

Gain on sale of OREO and fixed assets

Total in-scope non-interest income

Total in-scope noninterest income

5,167 5,293 5,322

Non-interest income, not in scope (3)

Noninterest income, not in scope (3)

11,706 10,042 9,696

Total non-interest income

Total noninterest income

$ 16,873 $ 15,335 $ 15,018

1 unchanged sentence

Other income consists of safe deposit box rental income, wire transfer fees, security brokerage fees, annuity sales, insurance activity, and OREO income.

Primarily represents:

Net loan servicing income, letter of credit commissions, import/export commissions, recoveries on purchased loans, BOLI income, gains (losses) on sales of loans, income from equity investments, gain on transfer to OREO, and CDFI Equitable Recovery Program and Bank Enterprise Award.

Noninterest income outside the scope of ASC 606 primarily represents:

net loan servicing income, letter of credit commissions, import/export commissions, BOLI income, gains (losses) on sales of loans, income from equity investments, gain on transfer to OREO, recoveries on loans acquired in a business combination, CDFI Equitable Recovery Program and Bank Enterprise Award, and the ERC.

Fees and Services Charges on Deposit Accounts

58 unchanged sentences

The Company expects to fulfill these commitments between 2026 and 2041.

During the years ended December 31, 2024, 2023 and 2022, we recognized tax credits from these investments totaling $ 1.2 million, $ 1.0 million and $ 991,000 .

During the years ended December 31, 2025, 2024, and 2023, we recognized tax credits from these investments totaling $ 1.8 million, $ 1.2 million and $ 1.0 million.

We had no impairment losses during the years ended December 31, 2025, 2024, and 2023.

26 unchanged sentences

Non-controlling interest

Accumulated other comprehensive loss

Accumulated other comprehensive loss, net

( 13,321 ) ( 20,257 )

12 unchanged sentences

6,524 6,699 9,951

Noninterest income

Noninterest expense

1,268 1,126 1,897

Income/(loss) before equity in undistributed income of subsidiaries

Income before equity in undistributed income of subsidiaries

37,369 12,193 73,111

Undistributed income/(distributed income in excess of earnings) of:

(Distributed income in excess of earnings)/undistributed income of:

( 7,779 ) 12,075 ( 34,477 )

4 unchanged sentences

31,948 26,665 42,465

Other comprehensive (loss)/income

Other comprehensive income/(loss), net

6,936 ( 745 ) 2,153

13 unchanged sentences

Change in other assets and liabilities

Net cash provided by/(used in) operating activities

( 949 ) 570 113

Net cash provided by operating activities

39,379 15,742 77,568

Cash flows from investment activities:

Purchase of other equity securities, net

Change in other equity securities, net

257 ( 103 ) ( 490 )

Net cash used in investing activities

Net cash provided by/(used in) investing activities

257 ( 103 ) ( 490 )

5 unchanged sentences

Restricted stock units vesting

( 265 ) ( 108 ) —

Common stock repurchased, net of repurchased costs

4 unchanged sentences

( 25,094 ) ( 30,663 ) ( 73,671 )

(Decrease)/increase in cash and cash equivalents

Increase/(decrease) in cash and cash equivalents

14,542 ( 15,024 ) 3,407

4 unchanged sentences

NOTE 24 – REPURCHASE OF COMMON STOCK

On May 29, 2025, the Board of Directors authorized the repurchase of up to $ 18.0 million of common stock through June 30, 2026, of which $ 4.1 million was available as of December 31, 2025.

We repurchased 746,949 shares of common stock for a total of $ 14.0 million at a weighted average share price of $ 18.55 during 2025.

On February 29, 2024, the Board of Directors authorized a stock repurchase plan providing for the repurchase of up to 1,000,000 shares of our common stock through March 31, 2026, which was completed by December 31, 2024.

We repurchased 1,036,750 shares of common stock for a total of $ 20.7 million at a weighted average share price of $ 19.77 during 2024.

On April 22, 2021, March 16, 2022 and June 14, 2022, the Board of Directors approved a stock repurchase program to buy back up to an aggregate of 500,000 shares of our common stock for each authorization date.

In 2023, we repurchased 396,374 shares of common stock for a total of $ 6.8 million at a weighted average share price of $ 17.02 .

In 2022, we repurchased 902,526 shares of common stock for a total of $ 19.8 million at a weighted average share price of $ 21.96 .

NOTE 25 – SUBSEQUENT EVENTS

2 unchanged sentences

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data