RBB Bancorp 10-K

Item 8. Financial Statements and Supplementary Data. CONTENTS REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ( Crowe LLP Los Angeles, California PCAOB ID 173 ) 72 CONSOLIDATED FINANCIAL STATEMENTS Consolidated Balance Sheets 74 Consolidated Statements of Income 75 Consolidated Statements of Comprehensive Income 76 Consolidated Statement of Changes in Shareholders' Equity 77 Consolidated Statements of Cash Flows 78 Notes to Consolidated Financial Statements 79 71 Table of Contents Report of Independent Registered Public Accounting Firm Shareholders and the Board of Directors of RBB Bancorp Los Angeles, California 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"). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework: (2013) issued by COSO. Basis for Opinions The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. 72 Table of Contents Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Allowance for Credit Losses 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 model including lending policies, procedures, and strategies; changes in nature and volume of the portfolio; credit and lending personnel experience; changes in volume and trends in classified loans, delinquencies, and nonaccrual; concentration risk; collateral values; regulatory and business environment; loan review results; and economic conditions. 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 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 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 We have served as the Company's auditor since 2022. Los Angeles, California March 9, 2026 73 Table of Contents RBB BANCORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, (In thousands, except for share data) 2025 2024 Assets Cash and due from banks $ 27,086 $ 27,747 Interest-earning deposits in other financial institutions 185,231 229,998 Cash and cash equivalents 212,317 257,745 Interest-earning time deposits in other financial institutions 600 600 Securities: Available for sale (amortized cost of $ 426,145 and $ 449,416 at December 31, 2025 and December 31, 2024) 407,204 420,190 Held to maturity (fair value of $ 4,103 and $ 4,948 at December 31, 2025 and December 31, 2024) 4,184 5,191 Loans held for sale 2,067 11,250 Loans held for investment 3,314,301 3,053,230 Allowance for loan losses ( 43,888 ) ( 47,729 ) Loans held for investment, net of allowance for loan losses 3,270,413 3,005,501 Premises and equipment, net 23,540 24,601 Federal Home Loan Bank ("FHLB") stock 15,000 15,000 Net deferred tax assets 16,347 19,055 Income tax receivable 17,483 10,311 Cash surrender value of bank owned life insurance ("BOLI") 61,972 60,296 Goodwill 71,498 71,498 Right-of-use assets - operating leases 23,026 28,048 Accrued interest and other assets 82,643 63,191 Total assets $ 4,208,294 $ 3,992,477 Liabilities and Shareholders’ Equity Deposits: Noninterest-bearing demand $ 526,538 $ 563,012 Savings, NOW and money market accounts 956,299 663,034 Time deposits $250,000 and under 974,670 1,007,452 Time deposits over $250,000 892,891 850,291 Total deposits 3,350,398 3,083,789 Reserve for unfunded commitments 484 729 FHLB advances 130,000 200,000 Long-term debt, net of issuance costs 119,911 119,529 Subordinated debentures (net of unamortized valuation reserve of $ 2,152 and $ 2,371 at December 31, 2025 and December 31, 2024) 15,375 15,156 Lease liabilities - operating leases 24,800 29,705 Accrued interest and other liabilities 43,916 35,692 Total liabilities 3,684,884 3,484,600 Commitments and contingencies - Note 13 Shareholders' equity: Preferred Stock - 100,000,000 shares authorized, no par value; none outstanding — — Common Stock - 100,000,000 shares authorized, no par value; 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 Additional paid-in capital 3,941 3,645 Retained earnings 282,024 264,460 Non-controlling interest 72 72 Accumulated other comprehensive loss, net ( 13,321 ) ( 20,257 ) Total shareholders’ equity 523,410 507,877 Total liabilities and shareholders’ equity $ 4,208,294 $ 3,992,477 The accompanying notes are an integral part of these consolidated financial statements. 74 Table of Contents RBB BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, (In thousands, except share and per share data) 2025 2024 2023 Interest, fees and dividend income: Loans $ 193,849 $ 184,567 $ 194,264 Interest-earning deposits 7,931 15,422 10,746 Investment securities 17,081 14,331 14,028 FHLB stock 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: 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 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 1,156 1,586 374 Gain on OREO — 1,016 133 Other income 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 672 784 923 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 Net income $ 31,948 $ 26,665 $ 42,465 Net income per share Basic $ 1.83 $ 1.47 $ 2.24 Diluted $ 1.83 $ 1.47 $ 2.24 Weighted-average common shares outstanding Basic 17,435,027 18,121,764 18,965,346 Diluted 17,500,330 18,183,319 18,985,233 The accompanying notes are an integral part of these consolidated financial statements. 75 Table of Contents RBB BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, (In thousands) 2025 2024 2023 Net income $ 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 ( 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. 76 Table of Contents RBB BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2025, 2024, AND 2023 (In thousands, except share data) Common Stock Accumulated Shares Amount Additional Paid-in Capital Retained Earnings Non- Controlling Interest Other Comprehensive (Loss) Income Total Balance at January 1, 2023 18,965,776 $ 276,912 $ 3,361 $ 225,883 $ 72 $ ( 21,665 ) $ 484,563 Net income — — — 42,465 — — 42,465 Stock-based compensation, net — — 750 — — — 750 Restricted stock unit vested 20,374 391 ( 391 ) — — — — Cash dividends on common stock ($ 0.64 per share) — — — ( 12,163 ) — — ( 12,163 ) Stock options exercised 19,403 392 ( 97 ) — — — 295 Repurchase of common stock ( 396,374 ) ( 5,770 ) — ( 1,033 ) — — ( 6,803 ) Other comprehensive income, net of taxes — — — — — 2,153 2,153 Balance at December 31, 2023 18,609,179 $ 271,925 $ 3,623 $ 255,152 $ 72 $ ( 19,512 ) $ 511,260 Net income — — — 26,665 — — 26,665 Stock-based compensation, net — — 1,360 — — — 1,360 Restricted stock unit vested 35,737 672 ( 780 ) — — — ( 108 ) Cash dividends on common stock ($ 0.64 per share) — — — ( 11,720 ) — — ( 11,720 ) Stock options exercised 112,250 2,399 ( 558 ) — — — 1,841 Repurchase of common stock ( 1,036,750 ) ( 15,039 ) — ( 5,637 ) — — ( 20,676 ) Other comprehensive loss, net of taxes — — — — — ( 745 ) ( 745 ) Balance at December 31, 2024 17,720,416 $ 259,957 $ 3,645 $ 264,460 $ 72 $ ( 20,257 ) $ 507,877 Net income — — — 31,948 — — 31,948 Stock-based compensation, net — — 1,743 — — — 1,743 Restricted stock unit vested 60,430 1,033 ( 1,298 ) — — — ( 265 ) Cash dividends on common stock ($ 0.64 per share) — — — ( 11,264 ) — — ( 11,264 ) Stock options exercised 23,500 566 ( 149 ) — — — 417 Repurchase of common stock ( 746,949 ) ( 10,862 ) — ( 3,120 ) — — ( 13,982 ) Other comprehensive income, net of taxes — — — — — 6,936 6,936 Balance at December 31, 2025 17,057,397 $ 250,694 $ 3,941 $ 282,024 $ 72 $ ( 13,321 ) $ 523,410 The accompanying notes are an integral part of these consolidated financial statements. 77 Table of Contents RBB BANCORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2025, 2024, AND 2023 (In thousands) 2025 2024 2023 Operating activities Net income $ 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 ( 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 ) Gain on OREO — ( 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 Other items ( 10,079 ) ( 1,550 ) 2,157 Net cash provided by operating activities 43,387 58,495 51,292 Investing activities Securities available for sale: Purchases ( 260,984 ) ( 415,396 ) ( 694,210 ) Maturities, repayments and calls 286,465 316,151 640,993 Securities held to maturity: Maturities, repayments and calls 1,000 — 500 (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 57,343 — — Proceeds from sales of OREO 7,526 2,936 711 Proceeds from sale of fixed assets 42 — 32 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 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 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 Cash paid during the period: Interest paid $ 108,683 $ 120,917 $ 93,721 Taxes paid 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 190 433 234 Recognition of operating lease right-of-use assets ( 104 ) ( 3,256 ) ( 9,398 ) Recognition of operating lease liabilities 104 3,256 9,398 The accompanying notes are an integral part of these consolidated financial statements. 78 Table of Contents RBB BANCORP AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BUSINESS DESCRIPTION RBB Bancorp is a bank holding company registered under the Bank Holding Company Act of 1956, as amended. 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. 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 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. 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. A MDI is eligible to receive support from the FDIC and other federal regulatory agencies such as training, technical assistance and review of proposed new deposit taking and lending programs, and the adoption of applicable policies and procedures governing such programs. We intend to maintain our MDI designation, as it is expected that at least 51% of our issued and outstanding shares of capital shall remain owned by minority individuals. The MDI designation has been historically beneficial to us, and we continue to use the program for technical assistance. We generate our revenue primarily from interest received on loans and, to a lesser extent, from interest received on investment securities. We also derive income from noninterest sources, such as fees received in connection with various lending and deposit services, loan servicing, gain on sales of loans and wealth management services. 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. NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements and notes thereto of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for Form 10 -K and conform to practices within the banking industry and include all of the information and disclosures required by U.S. Generally Accepted Accounting Principles (“GAAP”) for financial reporting. Principles of Consolidation and Nature of Operations The accompanying consolidated financial statements include the accounts of RBB Bancorp and its wholly-owned subsidiaries, the Bank and RAM. All significant intercompany transactions have been eliminated. 79 Table of Contents RBB Bancorp has no significant business activity other than its investments in the Bank and in RAM. However, through our whole bank acquisition activity, we have acquired three statutory business trusts: TFC Statutory Trust, FAIC Statutory Trust I and PGB Capital Trust I. These trusts issued trust preferred securities representing undivided preferred beneficial interests in the assets of these trusts. The proceeds of these trust preferred securities were invested in certain securities issued by the entities we have acquired, with similar terms to the relevant series of securities issued by these trusts, which we refer to as subordinated debentures, and are included in Tier 2 capital. The parent company only condensed financial information on RBB Bancorp is provided in Note 23. In connection with the 2018 acquisition of First American International Corp (“FAIC”), we acquired FAIB Capital Corp. (“FAICC”), a real estate investment trust formed on August 28, 2013 as a New York State corporation, which operates as a wholly-owned subsidiary of the Bank. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. It is reasonably possible that these estimates could change as actual results could differ from those estimates. The allowance for credit losses, realization of deferred tax assets, the valuation of goodwill and other intangible assets, other derivatives, and the fair value measurement of financial instruments are particularly subject to change and such change could have a material effect on the consolidated financial statements. Summary of Significant Accounting Policies Cash and Cash Equivalents. Cash and cash equivalents include cash and due from banks and interest-earning deposits in other financial institutions with original maturities of less than 90 days. Net cash flows are reported for customer loan and deposit transactions and interest-earning deposits in other financial institutions. Cash and Due from Banks. Banking regulations require that banks maintain a percentage of their deposits as reserves in cash or on deposit with the Federal Reserve Bank. There were no reserves required to be held as of December 31, 2025 and 2024. We maintain amounts in due from bank accounts, which may exceed federally insured limits. We have not experienced any losses in such accounts. Interest-Earning Time Deposits in Other Financial Institutions. Interest-earning time deposits in other financial institutions not included in cash and cash equivalents are carried at cost and generally mature in one year or less. Investment Securities. Investment securities are classified as held to maturity (“HTM”) and carried at amortized cost when management has the positive intent and ability to hold them to maturity. Investment securities not classified as HTM are classified as available for sale (“AFS”). AFS securities are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax. Interest income includes amortization of purchase premiums or discounts. Premiums and discounts on securities are amortized on the level-yield method to the earlier of the maturity date or call date of the underlying securities. Gains and losses on sales are recorded on the trade date and determined using the specific identification method. 80 Table of Contents Allowance for Credit Losses - HTM securities. Management measures expected credit losses on HTM debt securities on a collective basis by major security type and accrued interest receivable on HTM debt securities is excluded from the estimate of credit losses. The estimate of expected credit losses on HTM securities considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Allowance for Credit Losses - AFS securities. For AFS debt securities in an unrealized loss position, we first assess whether we intend to sell, or it is more likely than not that we will be required to sell the security before recovery of the amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, then the security’s amortized cost basis is written down to fair value through income. For debt securities AFS that do not meet the aforementioned criteria, we evaluate whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, we consider the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, then the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, then a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income (loss). 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 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. Loans Held For Sale. Mortgage loans originated or acquired and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value, as determined by outstanding commitments from investors. Mortgage loans held for sale are generally sold with servicing rights retained. The carrying value of mortgage loans sold is determined by reducing the amount allocated to the servicing right, when applicable. Gains and losses on sales of mortgage loans are based on the difference between the selling price and the carrying value of the related loans sold. We may transfer loans from held for investment to held for sale. Upon transfer, the carrying value of the loan is adjusted to the lower of cost or estimated fair value. Any write-downs in the carrying amount of the loan at the date of transfer are recorded as charge-offs to allowance for loan losses. The unamortized balance of deferred fees and costs associated with loans held for sale is deferred until the time of sale and are included in the determination of the lower of cost or fair value adjustments and/or the gain or loss recognized at the time of sale. 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. 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. Loan origination fees and certain direct origination costs are deferred and recognized in interest income using the level-yield method without anticipating prepayments. Premiums and discounts on loans purchased are grouped by type and certain common risk characteristics and amortized or accreted as an adjustment of yield over the weighted-average remaining contractual lives of each group of loans, adjusted for prepayments when applicable, using methodologies which approximate the interest method. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. The accrual of interest on loans is discontinued when principal or interest is past due 90 days or when, in the opinion of management, there is reasonable doubt as to collectability based on the contractual terms of the loan. When loans are placed on nonaccrual status, all interest previously accrued but not collected is reversed against current period interest income. Income on nonaccrual loans is subsequently recognized only to the extent that cash is received and the loan's principal balance is deemed collectible. Interest accruals are resumed on such loans only when they are brought current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to all principal and interest. 81 Table of Contents Allowance for Credit Losses (“ACL”) - Loans. Effective January 1, 2022, upon the adoption of ASU 2016 - 13, Financial Instruments—Credit Losses (ASC 326 ), we account for credit losses on loans in accordance with ASC 326, which requires us to record an estimate of expected lifetime credit losses for loans at the time of origination. The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the loan portfolio as of the date of the consolidated balance sheets. Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts. The measurement of the ACL is performed by collectively evaluating loans with similar risk characteristics. We have elected to utilize a DCF approach for all segments except for consumer loans and loans to non-depository financial institutions, which use a remaining life approach. Our DCF 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. We use both internal and external qualitative factors within the current expected credit losses (“CECL”) model including: lending policies, procedures, and strategies; changes in nature and volume of the portfolio; credit and lending personnel experience; changes in volume and trends in classified loans, delinquencies, and nonaccrual; concentration risk; collateral values; regulatory and business environment; loan review results; and economic conditions. We determine the weighting of the qualitative factors based on management’s ability to directly control or influence the level of risk exposure. Management further estimates the allowance balance required using past loan loss experience from peers with similar portfolio sizes and geographic locations to the Company, the nature and volume of the portfolio, information about specific borrower situations and estimated collateral values, economic conditions, and other factors. Our CECL methodology utilizes a four -quarter reasonable and supportable forecast period, and a four -quarter reversion period. The Company is using the Federal Open Market Committee to obtain forecasts for the unemployment rate, while reverting to a long-run average of each considered economic factor. We record a liability for expected credit losses on off-balance-sheet credit exposure that do not fit the definition of unconditionally cancelable in accordance with ASC 326. The Company uses the loss rate and exposure at default framework to estimate a reserve for unfunded commitments. Loss rates for the expected funded balances are determined based on the associated pooled loan analysis loss rate and the exposure at default is based on an estimated utilization given default. 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 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. We adopted ASU 2022 - 02, Financial Instruments—Credit Losses (Topic 326 ), effective January 1, 2023. Upon adoption, we evaluate all receivable modifications under ASC 310 to determine whether a modification made to a borrower results in a new loan or a continuation of the existing loan. The Company no longer considers renewals, modifications, or extensions resulting from reasonably expected troubled debt restructurings (“TDRs”) when calculating the allowance for credit losses under ASC 326. The post-modification effective interest rate is used to calculate the allowance for credit losses when the DCF method is applied. 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. Fair value is based on a valuation model that calculates the present value of estimated future net servicing income. All classes of servicing assets are subsequently measured using the amortization method, which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Quarterly impairment (if any) is based upon the fair value of the rights as compared to carrying amount. Impairment is recognized through a charge to income to establish a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. 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 estimated fair value of the servicing rights is obtained through independent third party valuations based on an analysis of future cash flows, incorporating key assumptions including discount rates, prepayment speeds and interest rates. Servicing fee income, which is reported on the income statement as loan servicing fees, net of amortization , is recorded for fees earned for servicing loans. The fees are based on a contractual percentage of the outstanding principal. The amortization of the mortgage and SBA servicing rights is offset against loan servicing fee income and reported as a net amount in the consolidated income statement. Transfers of Financial Assets. Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from 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. 82 Table of Contents Premises and Equipment. Land is carried at cost. Premises, leasehold improvements and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives, which is thirty years for premises and ranges from three to ten years for leasehold improvements and equipment. Leasehold improvements are amortized using the straight-line method over the estimated useful lives of the improvements or the remaining lease term, whichever is shorter. Expenditures for improvements or major repairs are capitalized and those for ordinary repairs and maintenance are charged to operations as incurred. Operating Lease ROU Assets and Lease Liabilities. Operating lease Right-of-Use (“ROU”) assets and lease liabilities are included in other assets and other liabilities, respectively, on our consolidated balance sheet. The ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. 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 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 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. Other real estate owned is carried at the lower of our carrying value of the property or its fair value, less estimated carrying costs and costs of disposition. Fair value is based on current appraisals less estimated selling costs. Any subsequent write-downs are charged against operating expenses and recognized as a valuation allowance. Operating expenses and related income of such properties and gains and losses on their disposition are included in other operating income and expenses. Goodwill and Other Intangible Assets . Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. 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. 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. We have purchased life insurance policies on a select group of employees and directors. Bank Owned Life Insurance (“BOLI”) is recorded at the amount that can be realized under the insurance contract at the balance sheet date, which is the cash surrender value adjusted for other charges or other amounts due that are probable at settlement. Increases in the cash value of these policies, as well as insurance proceeds received, are recorded in the other noninterest income and are not subject to income tax for as long as they are held for the life of the covered employees and directors. FHLB Stock and Other Equity Securities. We are a member of the Federal Home Loan Bank (“FHLB”) system. Members are required to own a certain amount of stock based on the level of borrowings and other factors, and may invest in additional amounts. FHLB stock is carried at cost, classified as a restricted security, and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. We also own several Community Reinvestment Act (“CRA”) equity investments, other bank stock, and other equity investments without readily determinable fair values included in “Accrued interest and other assets” on the consolidated balance sheets. We measure these equity securities at cost less impairment, plus or minus observable price changes in orderly transactions. 83 Table of Contents Stock-Based Compensation. 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. Stock option compensation expense is calculated based on the fair value of the award at the grant date for those options expected to vest and is recognized as an expense over the vesting period of the grant using the straight-line method. We use the Black-Scholes option-pricing model to estimate the value of granted stock options. This model takes into account the option exercise price, the expected life, the current price of the underlying stock, the expected volatility of our stock, expected dividends on the stock and a risk-free interest rate. 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 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 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. Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets are also recognized for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in earnings in the period that includes the enactment date. The value of deferred tax assets and liabilities are based on many factors including: estimates of the timing of reversals of temporary differences, the application of federal and state income tax laws, and a determination of the differences between the tax and the financial reporting basis of assets and liabilities. Actual results could differ from the estimates and interpretations used in determining the current and deferred income tax liabilities. Under ASC 740, a valuation allowance is required to be recognized if it is “more likely than not” that all or a portion of our deferred tax assets will not be realized. Our policy is to evaluate the deferred tax assets on a quarterly basis and record a valuation allowance for our deferred tax assets if there is not sufficient positive evidence available to demonstrate utilization of our deferred tax assets. An initial setup or an increase to deferred tax asset valuation allowance would be charged to income tax expense that would negatively impact our earnings. Purchased Federal Transferable Tax Credits. 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 by the Company. 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. Retirement Plans. We established a 401 (k) plan in 2010. We contributed $ 897,000 , $ 826,000 , and $ 707,000 in 2025, 2024, and 2023. Comprehensive Income. Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes unrealized gains and losses on securities available for sale, net of taxes. Financial Instruments. In the ordinary course of business, we enter into financial commitments to meet the financing needs of its customers. These financial commitments include commitments to extend credit, unused lines of credit, commercial and similar letters of credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they are funded. See Note 13 for more information and disclosures relating to our financial instruments. Derivatives. Interest Rate Lock Commitments (“IRLCs”) are agreements under which we agree to extend credit to a borrower under certain specified terms and conditions in which the interest rate and the maximum amount of the loan are set prior to funding. Under the agreement, we commit to lend funds to a potential borrower (subject to our approval of the loan) on a fixed or adjustable rate basis, regardless of whether interest rates change in the market, or on a floating rate basis. As such, outstanding IRLCs are subject to interest rate risk and related price risk during the period from the date of issuance through the date of loan funding, cancelling or expiration. Loan commitments generally range between 30 and 90 days; however, the borrower is not obligated to obtain the loan. We are subject to fallout risk related to IRLCs, which is realized if approved borrowers choose not to close on the loans within the terms of the IRLCs. We use best efforts commitments to substantially eliminate these risks. Historical commitment-to-closing ratios are considered to estimate the quantity of mortgage loans that will fund within the terms of the IRLCs. 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 valued. Commitments to originate mortgage loans to be held for investment and other types of loans are generally not derivatives. We have elected to account for these obligations at fair value. Forward Mortgage Loan Sale Contracts (“FMLSC”) are utilized to avoid interest rate risk at the time an interest rate lock commitment is made to the buyer. We are subject to interest rate and price risk on its mortgage loans held for sale from the loan funding date until the date the loan is sold. 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 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. Mandatory commitments provide that the loan must be delivered or the commitment be “paired off.” In general, best efforts commitments provide that the loan be delivered if and when it closes. Forward commitments, also known as forward loan sales commitments, are considered derivatives under ASC Topic 815, Derivatives and Hedging, because they meet all of the following criteria: ● They have a specified underlying (the contractually specified price for the loans); ● They have a notional amount (the committed loan principal amount); ● They require little or no initial net investment; and ● They require or permit net settlement as the institution via a pair-off transaction or the payment of a pair-off fee. See Note 18 for more information and disclosures relating to our derivatives. 84 Table of Contents Earnings Per Share (“EPS”). Basic and diluted EPS are calculated using the two -class method since we have issued share-based payment awards considered participating securities because they entitle holders the rights to dividends during the vesting term. The two -class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Basic EPS excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution, utilizing the treasury method for restricted awards and stock options, that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. See Note 19 for more information and disclosures relating to our EPS. Fair Value Measurement. Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Current accounting guidance establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair values: Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date. Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level 3: Significant unobservable inputs that reflect the Company's own assumptions about the assumptions that market participants would use in pricing an asset or liability. See Note 18 for more information and disclosures relating to our fair value measurements. Operating Segments. Management has determined that since generally all of the banking products and services offered by the Company are available in each branch of the Bank, all branches are located within the same economic environment and management does not allocate resources based on the performance of different lending or transaction activities, it is appropriate to aggregate the Bank branches and report them as a single operating segment. See Note 21 for more information and disclosures relating to our operating segment. 85 Table of Contents Recent Accounting Pronouncements Recently Adopted 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 12 for more information and disclosures relating to our income taxes. Recently Issued; Not Yet Effective In October 2023, the FASB issued ASU 2023 - 06 , Disclosure Improvements. This pronouncement amends the FASB Accounting Standards Codification to reflect updates and simplifications to certain disclosure requirements referred to the FASB by the SEC in 2018, including disclosures for the statement of cash flows, earnings per share, commitments, debt and equity instruments, and certain industry information, among other things. Each amendment is effective when the related disclosure is effectively removed from Regulations S- X or S-K; early adoption is prohibited. All amendments should be applied prospectively. If the SEC has not removed the applicable requirement from Regulation S- X or Regulation S-K by June 30, 2027, the pending amendments will be removed and will not become effective for any entity. Adoption of ASU 2023 - 06 is not expected to have a material impact on the Company's consolidated financial statements. 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. 86 Table of Contents 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, 2025 and 2024, and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss): Gross Gross Amortized Unrealized Unrealized Fair December 31, 2025 Cost Gains Losses Value Available for sale (dollars in thousands) Government agency securities $ 22,850 $ 34 $ ( 179 ) $ 22,705 SBA agency securities 21,326 90 ( 236 ) 21,180 Mortgage-backed securities: residential 91,049 634 ( 4,505 ) 87,178 Mortgage-backed securities: commercial 5,010 — ( 33 ) 4,977 Collateralized mortgage obligations: residential 120,475 760 ( 8,740 ) 112,495 Collateralized mortgage obligations: commercial 102,755 183 ( 2,161 ) 100,777 Commercial paper 19,948 — — 19,948 Corporate debt securities 30,165 75 ( 1,811 ) 28,429 Municipal tax-exempt securities 12,567 — ( 3,052 ) 9,515 Total available for sale $ 426,145 $ 1,776 $ ( 20,717 ) $ 407,204 Held to maturity Municipal tax-exempt securities $ 4,184 $ — $ ( 81 ) $ 4,103 Total held to maturity $ 4,184 $ — $ ( 81 ) $ 4,103 Gross Gross Amortized Unrealized Unrealized Fair December 31, 2024 Cost Gains Losses Value Available for sale (dollars in thousands) Government agency securities $ 21,592 $ — $ ( 550 ) $ 21,042 SBA agency securities 27,231 — ( 467 ) 26,764 Mortgage-backed securities: residential 62,351 — ( 6,674 ) 55,677 Collateralized mortgage obligations: residential 117,936 178 ( 12,638 ) 105,476 Collateralized mortgage obligations: commercial 94,284 175 ( 2,803 ) 91,656 Commercial paper 78,687 1 ( 3 ) 78,685 Corporate debt securities 34,733 43 ( 2,961 ) 31,815 Municipal tax-exempt securities 12,602 — ( 3,527 ) 9,075 Total available for sale $ 449,416 $ 397 $ ( 29,623 ) $ 420,190 Held to maturity Municipal taxable securities $ 500 $ 1 $ — $ 501 Municipal tax-exempt securities 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, 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, 2025 and 2024, totaled $ 1.6 million and $ 1.6 million. 87 Table of Contents The amortized cost and fair value of the investment securities portfolio as of December 31, 2025 and 2024, are shown by expected maturity below. Mortgage-backed securities are classified in accordance with their estimated average life. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Less than One Year More than One Year to Five Years More than Five Years to Ten Years More than Ten Years Total Amortized Amortized Amortized Amortized Amortized Cost Fair Value Cost Fair Value Cost Fair Value Cost Fair Value Cost Fair Value December 31, 2025 (dollars in thousands) Government agency securities $ 65 $ 65 $ 22,785 $ 22,640 $ — $ — $ — $ — $ 22,850 $ 22,705 SBA agency securities — — 6,496 6,456 14,830 14,724 — — 21,326 21,180 Mortgage-backed securities: residential — — 26,636 26,537 64,413 60,641 — — 91,049 87,178 Mortgage-backed securities: commercial — — 5,010 4,977 — — — — 5,010 4,977 Collateralized mortgage obligations: residential 6,198 6,248 68,422 68,100 45,855 38,147 — — 120,475 112,495 Collateralized mortgage obligations: commercial 6,629 6,591 51,805 51,365 44,321 42,821 — — 102,755 100,777 Commercial paper 19,948 19,948 — — — — — — 19,948 19,948 Corporate debt securities 4,022 4,006 8,903 8,733 14,650 13,756 2,590 1,934 30,165 28,429 Municipal tax-exempt securities — — — — 1,081 921 11,486 8,594 12,567 9,515 Total available for sale $ 36,862 $ 36,858 $ 190,057 $ 188,808 $ 185,150 $ 171,010 $ 14,076 $ 10,528 $ 426,145 $ 407,204 Municipal tax-exempt securities $ — $ — $ 860 $ 857 $ 2,817 $ 2,742 $ 507 $ 504 $ 4,184 $ 4,103 Total held to maturity $ — $ — $ 860 $ 857 $ 2,817 $ 2,742 $ 507 $ 504 $ 4,184 $ 4,103 December 31, 2024 Government agency securities $ 90 $ 88 $ 11,644 $ 11,304 $ 9,858 $ 9,650 $ — $ — $ 21,592 $ 21,042 SBA agency securities — — 5,934 5,721 21,297 21,043 — — 27,231 26,764 Mortgage-backed securities: residential — — 8,892 8,099 53,459 47,578 — — 62,351 55,677 Collateralized mortgage obligations: residential 5,126 5,235 55,015 52,867 57,795 47,374 — — 117,936 105,476 Collateralized mortgage obligations: commercial 705 704 38,811 38,527 54,768 52,425 — — 94,284 91,656 Commercial paper 78,687 78,685 — — — — — — 78,687 78,685 Corporate debt securities 2,000 1,989 11,886 11,706 18,233 16,250 2,614 1,870 34,733 31,815 Municipal tax-exempt securities — — — — — — 12,602 9,075 12,602 9,075 Total available for sale $ 86,608 $ 86,701 $ 132,182 $ 128,224 $ 215,410 $ 194,320 $ 15,216 $ 10,945 $ 449,416 $ 420,190 Municipal taxable securities $ 500 $ 501 $ — $ — $ — $ — $ — $ — $ 500 $ 501 Municipal tax-exempt securities — — 360 347 2,985 2,795 1,346 1,305 4,691 4,447 Total held to maturity $ 500 $ 501 $ 360 $ 347 $ 2,985 $ 2,795 $ 1,346 $ 1,305 $ 5,191 $ 4,948 The securities that were in an unrealized loss position at December 31, 2025, and December 31, 2024, were evaluated to determine whether the decline in fair value below the amortized cost basis resulted from a credit loss or other factors. 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, 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 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. The issuers have not, to our knowledge, established any cause for default on these securities. 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, 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. 88 Table of Contents 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, 2025 and 2024: Less than Twelve Months Twelve Months or More Total Fair Value Unrealized Losses # of Issuances Fair Value Unrealized Losses # of Issuances Fair Value Unrealized Losses # of Issuances December 31, 2025 (dollars in thousands) Government agency securities $ 1,749 $ ( 6 ) 1 $ 6,572 $ ( 173 ) 3 $ 8,321 $ ( 179 ) 4 SBA agency securities 7,654 ( 93 ) 3 2,962 ( 143 ) 5 10,616 ( 236 ) 8 Mortgage-backed securities: residential 14,196 ( 91 ) 4 27,573 ( 4,414 ) 15 41,769 ( 4,505 ) 19 Mortgage-backed securities: commercial 4,977 ( 33 ) 1 — — — 4,977 ( 33 ) 1 Collateralized mortgage obligations: residential 3,130 ( 1 ) 1 53,195 ( 8,739 ) 24 56,325 ( 8,740 ) 25 Collateralized mortgage obligations: commercial 13,947 ( 31 ) 4 49,366 ( 2,130 ) 21 63,313 ( 2,161 ) 25 Corporate debt securities — — — 22,577 ( 1,811 ) 24 22,577 ( 1,811 ) 24 Municipal tax-exempt securities — — — 9,515 ( 3,052 ) 11 9,515 ( 3,052 ) 11 Total available for sale $ 45,653 $ ( 255 ) 14 $ 171,760 $ ( 20,462 ) 103 $ 217,413 $ ( 20,717 ) 117 Municipal tax-exempt securities $ — $ — — $ 3,663 $ ( 81 ) 8 $ 3,663 $ ( 81 ) 8 Total held to maturity $ — $ — — $ 3,663 $ ( 81 ) 8 $ 3,663 $ ( 81 ) 8 Less than Twelve Months Twelve Months or More Total Fair Value Unrealized Losses # of Issuances Fair Value Unrealized Losses # of Issuances Fair Value Unrealized Losses # of Issuances December 31, 2024 (dollars in thousands) Government agency securities $ 14,620 $ ( 219 ) 3 $ 6,422 $ ( 331 ) 4 $ 21,042 $ ( 550 ) 7 SBA agency securities 24,971 ( 273 ) 7 1,793 ( 194 ) 4 26,764 ( 467 ) 11 Mortgage-backed securities: residential 25,479 ( 578 ) 5 30,198 ( 6,096 ) 15 55,677 ( 6,674 ) 20 Collateralized mortgage obligations: residential 36,166 ( 649 ) 8 55,255 ( 11,989 ) 24 91,421 ( 12,638 ) 32 Collateralized mortgage obligations: commercial 35,753 ( 367 ) 7 30,114 ( 2,436 ) 18 65,867 ( 2,803 ) 25 Commercial paper 48,874 ( 3 ) 3 — — — 48,874 ( 3 ) 3 Corporate debt securities — — — 26,035 ( 2,961 ) 30 26,035 ( 2,961 ) 30 Municipal tax-exempt securities — — — 9,075 ( 3,527 ) 11 9,075 ( 3,527 ) 11 Total available for sale $ 185,863 $ ( 2,089 ) 33 $ 158,892 $ ( 27,534 ) 106 $ 344,755 $ ( 29,623 ) 139 Municipal tax-exempt securities $ — $ — — $ 4,447 $ ( 244 ) 10 $ 4,447 $ ( 244 ) 10 Total held to maturity $ — $ — — $ 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. 89 Table of Contents NOTE 4 - LOANS AND ALLOWANCE FOR CREDIT LOSSES - LOANS Our loan portfolio consists primarily of loans to borrowers within the Southern California metropolitan area, the New York City metropolitan area, Chicago (Illinois), Las Vegas (Nevada), Edison (New Jersey) and Honolulu (Hawaii). Although we seek to avoid concentrations of loans to a single industry or based upon a single class of collateral, real estate and real estate associated businesses are among the principal industries in our market area and, as a result, our loan and collateral portfolios are, to some degree, concentrated in those industries. The following table presents the balances in our loans held for investment (“HFI”) portfolio as of December 31, 2025, and December 31, 2024: 2025 2024 Loans HFI: (1) (dollars in thousands) Real Estate: Single-family residential mortgages $ 1,655,382 $ 1,494,022 Commercial real estate (2) 1,303,019 1,201,420 Construction and land development 155,464 173,290 Commercial: Commercial and industrial 140,061 129,585 SBA 55,978 47,263 Other 4,397 7,650 Total loans HFI (1) $ 3,314,301 $ 3,053,230 Allowance for loan losses ( 43,888 ) ( 47,729 ) Total loans HFI, net $ 3,270,413 $ 3,005,501 ( 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: 2025 2024 2023 Allowance for Loan Losses Reserve for Unfunded Loan Commitments Allowance for Credit Losses Allowance for Loan Losses Reserve for Unfunded Loan Commitments Allowance for Credit Losses Allowance for Loan Losses Reserve for Unfunded Loan Commitments Allowance for Credit Losses (dollars in thousands) Beginning balance $ 47,729 $ 729 $ 48,458 $ 41,903 $ 640 $ 42,543 $ 41,076 $ 1,156 $ 42,232 Provision/(reversal) for credit losses 10,603 ( 245 ) 10,358 9,768 89 9,857 3,878 ( 516 ) 3,362 Less loans charged-off ( 14,712 ) — ( 14,712 ) ( 4,083 ) — ( 4,083 ) ( 3,194 ) — ( 3,194 ) Recoveries on loans charged-off 268 — 268 141 — 141 143 — 143 Ending balance $ 43,888 $ 484 $ 44,372 $ 47,729 $ 729 $ 48,458 $ 41,903 $ 640 $ 42,543 The following tables present the balance and activity in the ALL by portfolio segment for the years ended December 31, 2025, 2024, and 2023: December 31, 2025 Single-Family Residential Mortgages Commercial Real Estate Construction and Land Development Commercial and Industrial SBA Other Total Allowance for loan losses: (dollars in thousands) Beginning of year $ 17,518 $ 21,879 $ 6,053 $ 1,339 $ 654 $ 286 $ 47,729 Provisions/(reversals) for credit losses 5,470 962 3,487 317 356 11 10,603 Charge-offs ( 1,403 ) ( 4,679 ) ( 8,175 ) ( 88 ) ( 187 ) ( 180 ) ( 14,712 ) Recoveries — — 137 79 1 51 268 Ending allowance balance $ 21,585 $ 18,162 $ 1,502 $ 1,647 $ 824 $ 168 $ 43,888 90 Table of Contents December 31, 2024 Single-Family Residential Mortgages Commercial Real Estate Construction and Land Development Commercial and Industrial SBA Other Total Allowance for loan losses: (dollars in thousands) Beginning of year $ 20,117 $ 17,826 $ 1,219 $ 1,348 $ 1,196 $ 197 $ 41,903 (Reversals)/provisions for credit losses ( 2,599 ) 6,637 5,982 — ( 464 ) 212 9,768 Charge-offs — ( 2,645 ) ( 1,148 ) ( 11 ) ( 78 ) ( 201 ) ( 4,083 ) Recoveries — 61 — 2 — 78 141 Ending allowance balance $ 17,518 $ 21,879 $ 6,053 $ 1,339 $ 654 $ 286 $ 47,729 December 31, 2023 Single-Family Residential Mortgages Commercial Real Estate Construction and Land Development Commercial and Industrial SBA Other Total Allowance for loan losses: (dollars in thousands) Beginning of year $ 17,640 $ 17,657 $ 2,638 $ 1,804 $ 621 $ 716 $ 41,076 Provisions/(reversals) for credit losses 2,570 2,626 ( 1,279 ) ( 458 ) 636 ( 217 ) 3,878 Charge-offs ( 93 ) ( 2,537 ) ( 140 ) — ( 62 ) ( 362 ) ( 3,194 ) Recoveries — 80 — 2 1 60 143 Ending allowance balance $ 20,117 $ 17,826 $ 1,219 $ 1,348 $ 1,196 $ 197 $ 41,903 We categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. We analyze loans individually by classifying the loans as to credit risk. This analysis typically includes larger, non-homogeneous loans such as C&D, CRE and C&I loans. This analysis is performed on an ongoing basis as new information is obtained. We use the following definitions for risk ratings: Pass - Loans classified as pass include loans not meeting the risk ratings defined below. Special Mention - Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date. Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. 91 Table of Contents The following tables summarize our loans HFI by loan portfolio segment, risk rating and vintage year as of the dates indicated. The vintage year is the year of origination, renewal or major modification. Term Loan by Vintage December 31, 2025 2025 2024 2023 2022 2021 Prior Revolving Revolving Converted to Term During the Period Total Real estate: (dollars in thousands) Single-family residential mortgages Pass $ 369,196 $ 98,047 $ 122,104 $ 501,580 $ 209,318 $ 351,536 $ 978 $ — $ 1,652,759 Special mention — — — — — — — — — Substandard — — 679 1,944 — — — — 2,623 Doubtful — — — — — — — — — Total $ 369,196 $ 98,047 $ 122,783 $ 503,524 $ 209,318 $ 351,536 $ 978 $ — $ 1,655,382 YTD gross charge-offs $ 1 $ — $ — $ 537 $ 174 $ 691 $ — $ — $ 1,403 Commercial real estate Pass $ 263,863 $ 171,328 $ 49,551 $ 395,493 $ 155,891 $ 228,915 $ — $ — $ 1,265,041 Special mention — — — 4,300 668 8,281 — — 13,249 Substandard — 668 — 1,578 10,204 12,279 — — 24,729 Doubtful — — — — — — — — — Total $ 263,863 $ 171,996 $ 49,551 $ 401,371 $ 166,763 $ 249,475 $ — $ — $ 1,303,019 YTD gross charge-offs $ — $ — $ — $ — $ 1,383 $ 3,296 $ — $ — $ 4,679 Construction and land development Pass $ 4,739 $ 28,059 $ — $ 42,440 $ 3,845 $ 45,000 $ — $ — $ 124,083 Special mention — 3,387 — — — — — — 3,387 Substandard — — — — 19,465 8,529 — — 27,994 Doubtful — — — — — — — — — Total $ 4,739 $ 31,446 $ — $ 42,440 $ 23,310 $ 53,529 $ — $ — $ 155,464 YTD gross charge-offs $ — $ — $ — $ 1,246 $ 6,929 $ — $ — $ — $ 8,175 Commercial: Commercial and industrial Pass $ 13,681 $ 55 $ 1,041 $ 892 $ 2,645 $ 5,839 $ 99,594 $ — $ 123,747 Special mention — — — — — — 2,247 — 2,247 Substandard 413 6,014 5 52 — 5,423 2,160 — 14,067 Doubtful — — — — — — — — — Total $ 14,094 $ 6,069 $ 1,046 $ 944 $ 2,645 $ 11,262 $ 104,001 $ — $ 140,061 YTD gross charge-offs $ 5 $ 6 $ — $ — $ — $ 77 $ — $ — $ 88 SBA Pass $ 14,433 $ 2,834 $ 1,283 $ 10,718 $ 9,655 $ 10,939 $ — $ — $ 49,862 Special mention — — 354 — — — — — 354 Substandard — 2,271 — — 481 3,010 — — 5,762 Doubtful — — — — — — — — — Total $ 14,433 $ 5,105 $ 1,637 $ 10,718 $ 10,136 $ 13,949 $ — $ — $ 55,978 YTD gross charge-offs $ — $ 12 $ — $ — $ — $ 175 $ — $ — $ 187 Other: Pass $ — $ — $ 86 $ 630 $ 3,583 $ 86 $ 12 $ — $ 4,397 Special mention — — — — — — — — — Substandard — — — — — — — — — Doubtful — — — — — — — — — Total $ — $ — $ 86 $ 630 $ 3,583 $ 86 $ 12 $ — $ 4,397 YTD gross charge-offs $ — $ — $ — $ — $ 175 $ 5 $ — $ — $ 180 Total by risk rating: Pass $ 665,912 $ 300,323 $ 174,065 $ 951,753 $ 384,937 $ 642,315 $ 100,584 $ — $ 3,219,889 Special mention — 3,387 354 4,300 668 8,281 2,247 — 19,237 Substandard 413 8,953 684 3,574 30,150 29,241 2,160 — 75,175 Doubtful — — — — — — — — — Total loans $ 666,325 $ 312,663 $ 175,103 $ 959,627 $ 415,755 $ 679,837 $ 104,991 $ — $ 3,314,301 Total YTD gross charge-offs $ 6 $ 18 $ — $ 1,783 $ 8,661 $ 4,244 $ — $ — $ 14,712 92 Table of Contents Term Loan by Vintage December 31, 2024 2024 2023 2022 2021 2020 Prior Revolving Revolving Converted to Term During the Period Total Real estate: (dollars in thousands) Single-family residential mortgages Pass $ 159,940 $ 137,264 $ 549,525 $ 225,877 $ 108,541 $ 299,553 $ 1,126 $ — $ 1,481,826 Special mention — — — — — — — — — Substandard — — 2,178 1,401 1,858 6,759 — — 12,196 Doubtful — — — — — — — — — Total $ 159,940 $ 137,264 $ 551,703 $ 227,278 $ 110,399 $ 306,312 $ 1,126 $ — $ 1,494,022 YTD gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ — Commercial real estate Pass $ 220,623 $ 58,597 $ 389,578 $ 158,188 $ 157,480 $ 186,619 $ — $ — $ 1,171,085 Special mention — — 936 10,251 3,040 7,060 — — 21,287 Substandard — — — — 1,188 7,860 — — 9,048 Doubtful — — — — — — — — — Total $ 220,623 $ 58,597 $ 390,514 $ 168,439 $ 161,708 $ 201,539 $ — $ — $ 1,201,420 YTD gross charge-offs $ — $ 164 $ — $ — $ 2,064 $ 417 $ — $ — $ 2,645 Construction and land development Pass $ 62,541 $ 8,945 $ — $ — $ 1,370 $ 65 $ — $ — $ 72,921 Special mention — — — — 44,042 — — — 44,042 Substandard — 8,782 — 38,101 9,444 — — — 56,327 Doubtful — — — — — — — — — Total $ 62,541 $ 17,727 $ — $ 38,101 $ 54,856 $ 65 $ — $ — $ 173,290 YTD gross charge-offs $ — $ — $ 1,148 $ — $ — $ — $ — $ — $ 1,148 Commercial: Commercial and industrial Pass $ 7,304 $ 1,126 $ 2,593 $ 3,991 $ 2,270 $ 5,242 $ 98,878 $ — $ 121,404 Special mention — — — — — — — — — Substandard — — 70 — 1,317 4,820 1,974 — 8,181 Doubtful — — — — — — — — — Total $ 7,304 $ 1,126 $ 2,663 $ 3,991 $ 3,587 $ 10,062 $ 100,852 $ — $ 129,585 YTD gross charge-offs $ 8 $ — $ 3 $ — $ — $ — $ — $ — $ 11 SBA Pass $ 6,889 $ 1,813 $ 10,855 $ 9,731 $ 400 $ 14,209 $ — $ — $ 43,897 Special mention — — — — — — — — — Substandard 65 — — 334 — 2,967 — — 3,366 Doubtful — — — — — — — — — Total $ 6,954 $ 1,813 $ 10,855 $ 10,065 $ 400 $ 17,176 $ — $ — $ 47,263 YTD gross charge-offs $ 78 $ — $ — $ — $ — $ — $ — $ — $ 78 Other: Pass $ — $ 130 $ 1,517 $ 5,718 $ 246 $ — $ 16 $ — $ 7,627 Special mention — — — — — — — — — Substandard — — — 23 — — — — 23 Doubtful — — — — — — — — — Total $ — $ 130 $ 1,517 $ 5,741 $ 246 $ — $ 16 $ — $ 7,650 YTD gross charge-offs $ — $ — $ 4 $ 191 $ 6 $ — $ — $ — $ 201 Total by risk rating: Pass $ 457,297 $ 207,875 $ 954,068 $ 403,505 $ 270,307 $ 505,688 $ 100,020 $ — $ 2,898,760 Special mention — — 936 10,251 47,082 7,060 — — 65,329 Substandard 65 8,782 2,248 39,859 13,807 22,406 1,974 — 89,141 Doubtful — — — — — — — — — Total loans $ 457,362 $ 216,657 $ 957,252 $ 453,615 $ 331,196 $ 535,154 $ 101,994 $ — $ 3,053,230 Total YTD gross charge-offs $ 86 $ 164 $ 1,155 $ 191 $ 2,070 $ 417 $ — $ — $ 4,083 93 Table of Contents 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 30-59 Days 60-89 Days 90 Days Or More Total Past Due (1) Nonaccrual Loans Current Total Loans HFI Real estate: (dollars in thousands) Single-family residential mortgages (2) $ 5,140 $ 1,321 $ — $ 6,461 $ 2,143 $ 1,646,778 $ 1,655,382 Commercial real estate 284 204 — 488 8,158 1,294,373 1,303,019 Construction and land development — — — — 27,994 127,470 155,464 Commercial: Commercial and industrial 1,277 — — 1,277 5,116 133,668 140,061 SBA — 542 — 542 1,221 54,215 55,978 Other: 13 8 — 21 — 4,376 4,397 Total $ 6,714 $ 2,075 $ — $ 8,789 $ 44,632 $ 3,260,880 $ 3,314,301 ________________ ( 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 30-59 Days 60-89 Days 90 Days Or More Total Past Due (1) Nonaccrual Loans Current Total Loans HFI Real estate: (dollars in thousands) Single-family residential mortgages (2) $ 7,173 $ 1,013 $ — $ 8,186 $ 11,524 $ 1,474,312 $ 1,494,022 Commercial real estate 505 218 — 723 7,353 1,193,344 1,201,420 Construction and land development — 11,706 — 11,706 44,621 116,963 173,290 Commercial: Commercial and industrial 51 64 — 115 4,819 124,651 129,585 SBA 315 1,041 — 1,356 1,514 44,393 47,263 Other: — — — — 12 7,638 7,650 Total $ 8,044 $ 14,042 $ — $ 22,086 $ 69,843 $ 2,961,301 $ 3,053,230 ( 1 ) Past due loans exclude nonaccrual loans. ( 2 ) Nonaccrual SFR mortgage loans include $ 4.4 million of loans in the process of foreclosure. 94 Table of Contents 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 December 31, 2024 Nonaccrual Loans Nonaccrual Loans with no with no Allowance Allowance for Loan Loss Nonaccrual Loans for Loan Loss Nonaccrual Loans Real estate: (dollars in thousands) Single-family residential mortgages $ 2,143 $ 2,143 $ 11,524 $ 11,524 Commercial real estate 4,801 8,158 346 7,353 Construction and land development 27,994 27,994 18,226 44,621 Commercial: Commercial and industrial 5,116 5,116 4,708 4,819 SBA 1,221 1,221 1,514 1,514 Other: — — — 12 Total $ 41,275 $ 44,632 $ 36,318 $ 69,843 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 Residential Real Estate Commercial Real Estate Business Assets Total Real Estate: (dollars in thousands) Single-family residential mortgages $ 2,143 $ — $ — $ 2,143 Commercial real estate — 8,158 — 8,158 Construction and land development 19,465 8,529 — 27,994 Commercial: Commercial and industrial 5,116 — — 5,116 SBA — 1,136 85 1,221 Total $ 26,724 $ 17,823 $ 85 $ 44,632 December 31, 2024 Residential Real Estate Commercial Real Estate Business Assets Total Real Estate: (dollars in thousands) Single-family residential mortgages $ 11,524 $ — $ — $ 11,524 Commercial real estate 222 7,131 — 7,353 Construction and land development 26,395 18,226 — 44,621 Commercial: Commercial and industrial 4,708 — 111 4,819 SBA 40 1,323 151 1,514 Total $ 42,889 $ 26,680 $ 262 $ 69,831 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 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 Balance % of Loan Class Balance % of Loan Class Balance % of Loan Class Balance % 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 % SBA 410 0.73 % — — % — — % 410 0.73 % Total $ 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 of Rate Reduction and Term Extension Total Loan Modifications Balance % of Loan Class Balance % of Loan Class Balance % of Loan Class Balance % 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 % Total $ 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 Loan Class Current (1) 30-89 Days Past Due 90 Days Or More Past Due Total (dollars in thousands) Commercial real estate $ 3,357 $ — $ 4,657 $ 8,014 Commercial and industrial 11,579 — — 11,579 SBA 410 — — 410 Total $ 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 Loan Class Current (1) 30-89 Days Past Due 90 Days Or More Past Due (2) Total (dollars in thousands) Commercial real estate $ 222 $ — $ 6,616 $ 6,838 Construction and land development 9,444 38,101 — 47,545 Total $ 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 The loans being serviced for others are not reported as assets in our consolidated balance sheet. The table below presents the underlying principal balances of the loans serviced for others, by class of loans, as of the dates indicated: December 31, 2025 2024 Loans serviced for others: (dollars in thousands) Mortgage loans $ 833,704 $ 922,183 SBA loans 90,364 92,678 Commercial real estate loans 2,420 3,761 Construction and land development loans 9,018 7,315 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. 95 Table of Contents When mortgage and SBA loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sale of loans. Fair value is based on a valuation model that calculates the present value of estimated future net servicing income. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount. 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 (included in “Accrued interest and other assets” in the consolidated balance sheets) for the years ended December 31, 2025, 2024, and 2023: 2025 2024 2023 Mortgage SBA Mortgage SBA Mortgage SBA Loans Loans Loans Loans Loans Loans Servicing assets: (dollars in thousands) Beginning of year $ 5,656 $ 1,329 $ 6,509 $ 1,601 $ 7,354 $ 2,167 Additions 74 116 290 143 176 58 Payoffs ( 335 ) ( 21 ) ( 443 ) ( 187 ) ( 329 ) ( 344 ) Amortization ( 634 ) ( 144 ) ( 700 ) ( 228 ) ( 692 ) ( 280 ) End of year $ 4,761 $ 1,280 $ 5,656 $ 1,329 $ 6,509 $ 1,601 Estimates of the loan servicing asset fair value are derived through a DCF analysis. Portfolio characteristics include loan delinquency rates, age of loans, note rate and geography. The assumptions embedded in the valuation are obtained from a range of metrics utilized by active buyers in the market place. The analysis accounts for recent transactions, and supply and demand within the market. The fair value of servicing assets for mortgage loans was $ 9.7 million and $ 11.4 million as of December 31, 2025 and 2024. Fair value at December 31, 2025, was determined using a discount rate of 10.09 %, average prepayment speed of 7.93 %, depending on the stratification of the specific right, and a weighted-average default rate of 0.11 %. Fair value at December 31, 2024, was determined using a discount rate of 11.16 %, average prepayment speed of 7.52 %, depending on the stratification of the specific right, and a weighted-average default rate of 0.10 %. The fair value of servicing assets for SBA loans was $ 1.8 million and $ 2.3 million as of December 31, 2025 and 2024. Fair value at December 31, 2025, was determined using a discount rate of 8.5 %, average prepayment speed of 26.99 %, depending on the stratification of the specific right, and a weighted-average default rate of 1.13 %. Fair value at December 31, 2024, was determined using a discount rate of 8.5 % and average prepayment speed of 19.46 %, depending on the stratification of the specific right, and a weighted-average default rate of 1.04 %. NOTE 6 - PREMISES AND EQUIPMENT A summary of premises and equipment as of December 31, 2025 and 2024, follows: 2025 2024 (dollars in thousands) Land $ 8,974 $ 8,974 Building and improvements 15,918 15,822 Furniture, fixtures, and equipment 8,854 8,673 Leasehold improvements 8,243 7,696 41,989 41,165 Less accumulated depreciation and amortization ( 18,578 ) ( 16,814 ) Construction in progress 129 250 Total $ 23,540 $ 24,601 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. 96 Table of Contents NOTE 7 - GOODWILL AND INTANGIBLES Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill resulting from whole bank and branch acquisitions is not amortized, but tested for impairment at least annually. We have selected October 1 as the date to perform the annual impairment test. 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. 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 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. (“PGBH”). 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: Year ended December 31, 2025 2024 2023 Core deposit intangibles (dollars in thousands) Balance, beginning of year $ 10,459 $ 10,459 $ 10,459 Balance, end of year $ 10,459 $ 10,459 $ 10,459 Accumulated amortization: Balance, beginning of year $ 8,448 $ 7,664 $ 6,741 Amortization 673 784 923 Balance, end of year $ 9,121 $ 8,448 $ 7,664 Core deposit intangibles, net $ 1,338 $ 2,011 $ 2,795 Estimated CDI amortization expense for the next 5 years is as follows: CDI Amortization Expense Year ending December 31: (dollars in thousands) 2026 $ 501 2027 417 2028 297 2029 64 2030 33 Thereafter 26 Total $ 1,338 NOTE 8 - DEPOSITS At December 31, 2025, the scheduled maturities of time deposits are as follows: $250,000 and under Greater than $250,000 Total Time Deposits Expected Maturity Date at December 31, (dollars in thousands) 2026 $ 967,896 $ 891,751 $ 1,859,647 2027 5,493 840 6,333 2028 604 300 904 2029 368 — 368 2030 309 — 309 Total $ 974,670 $ 892,891 $ 1,867,561 Time deposits include deposits acquired through both retail and wholesale channels. Wholesale channels include brokered deposits, collateralized deposits from the State of California, and deposits acquired through internet listing services. Wholesale time deposits totaled $ 225.7 million at December 31, 2025, and $ 147.5 million at December 31, 2024. Brokered time deposits were $ 145.5 million at December 31, 2025, and $ 93.2 million at December 31, 2024. Collateralized deposits from the State of California totaled $ 40.0 million at December 31, 2025, and $ 20.0 million at December 31, 2024. Time deposits acquired through internet listing services totaled $ 40.2 million at December 31, 2025, and $ 34.2 million at December 31, 2024. In addition, we offer retail deposit products where customers are able to achieve FDIC insurance for balances on deposit in excess of the $250,000 FDIC limit through the Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweeps (“ICS”) programs. Time deposits held through the CDARS program were $ 128.3 million at December 31, 2025, and $ 130.6 million at December 31, 2024. ICS deposits totaled $ 156.3 million at December 31, 2025, and $ 146.1 million at December 31, 2024. NOTE 9 - LONG-TERM DEBT 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”). The interest rate is fixed through April 1, 2026 and is scheduled to float at three -month SOFR plus 329 basis points thereafter. The Company can redeem the 2031 Subordinated Notes beginning April 1, 2026. The 2031 Subordinated Notes are considered Tier 2 capital at the Company. The table below presents the long-term debt and unamortized debt issuance costs as of the dates indicated: December 31, 2025 December 31, 2024 (dollars in thousands) Principal $ 120,000 $ 120,000 Unamortized debt issuance costs ( 89 ) ( 471 ) Long-term debt, net of issuance costs $ 119,911 $ 119,529 The following table presents interest and amortization expense on the subordinated notes for the year indicated: For the Year Ended December 31, 2025 2024 2023 Interest Expense: (dollars in thousands) Interest $ 4,800 $ 4,800 $ 7,916 Amortization 382 382 562 We were in compliance with all covenants under the long-term debt as of December 31, 2025. 97 Table of Contents NOTE 10 - SUBORDINATED DEBENTURES Subordinated debentures consist of subordinated debentures issued in connection with three separate trust preferred securities and totaled $ 15.4 million and $ 15.2 million as of December 31, 2025 and 2024. Under the terms of our subordinated debentures issued in connection with the issuance of trust preferred securities, we are not permitted to declare or pay any dividends on our capital stock if an event of default occurs under the terms of the long-term debt. In addition, we have the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years. The subordinated debentures may be included in Tier 1 capital (with certain limitations applicable) under current regulatory guidelines and interpretations. We may redeem the subordinated debentures, subject to prior approval by the Board of Governors of the Federal Reserve System at 100% of the principal amount, plus accrued and unpaid interest. The table below presents subordinated debentures at December 31, 2025: Issue Date Principal Amount Unamortized Valuation Reserve Recorded Value Stated Rate Description December 31, 2025 Effective Rate Stated Maturity Subordinated debentures (dollars in thousands) TFC Trust December 22, 2006 $ 5,155 $ 1,008 $ 4,147 Three-month CME Term SOFR plus 0.26% plus 1.65%, 5.63 % March 15, 2037 FAIC Trust I December 15, 2004 7,217 688 6,529 Three-month CME Term SOFR 0.26% plus 2.25% 6.23 % December 15, 2034 PGBH Trust I December 15, 2004 5,155 456 4,699 Three-month CME Term SOFR 0.26% plus 2.10% 6.08 % December 15, 2034 Total $ 17,527 $ 2,152 $ 15,375 In 2016, we acquired TFC Statutory Trust (the “TFC Trust”) through the acquisition of TomatoBank and its holding company, TFC Holding Company (“TFC”). TFC Trust issued 5,000 fixed-to-floating rate capital securities with an aggregate liquidation amount of $ 5.0 million to an independent investor, and all of its common securities, with an aggregate liquidation amount of $ 155,000 . TFC issued $ 5.0 million of subordinated debentures to TFC Trust in exchange for ownership of all of the common securities of TFC Trust and the proceeds of the preferred securities sold by TFC Trust. We are not considered the primary beneficiary of TFC Trust (variable interest entity), therefore TFC Trust is not consolidated in our financial statements, but rather the subordinated debentures are shown as a liability. We also purchased an investment in the common stock of TFC Trust for $ 155,000 , which is included in other assets. At the close of this acquisition, a $ 1.9 million valuation reserve was recorded to arrive at its fair market value, which is treated as a yield adjustment and amortized over the life of the security. 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 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. FAIC Trust I issued 7,000 units of 30 -year fixed-to-floating rate capital securities with an aggregate liquidation amount of $ 7.0 million to an independent investor, and all of its common securities, with an aggregate liquidation amount of $ 217,000 . We are not considered the primary beneficiary of FAIC Trust I (variable interest entity), therefore FAIC Trust I is not consolidated in our financial statements, but rather the subordinated debentures are shown as a liability. We purchased an investment in the common stock of FAIC Trust I for $ 217,000 , which is included in other assets. At the close of this acquisition, a $ 1.2 million valuation reserve was recorded to arrive at its fair market value, which is treated as a yield adjustment and amortized over the life of the security. 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 6.23 % 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. PGBH Trust I issued 5,000 units of fixed-to-floating rate capital securities with an aggregate liquidation amount of $ 5.0 million to an independent investor, and all of its common securities, with an aggregate liquidation amount of $ 155,000 . We are not considered the primary beneficiary of PGBH Trust I (variable interest entity), therefore PGBH Trust I is not consolidated in our financial statements, but rather the subordinated debentures are shown as a liability. We purchased an investment in the common stock of PGBH Trust I for $ 155,000 , which is included in other assets. At the close of this acquisition, a $ 763,000 valuation reserve was recorded to arrive at it fair market value, which is treated as a yield adjustment and amortized over the life of the security. 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 6.08 % 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. 98 Table of Contents For regulatory reporting purposes, the Federal Reserve has indicated that the capital or trust preferred securities qualify as Tier 1 capital of the Company subject to previously specified limitations (including that the asset size of the issuer did not exceed $15 billion), until further notice. 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. 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. NOTE 11 - BORROWING ARRANGEMENTS We have established secured and unsecured lines of credit. We may borrow funds from time to time on a term or overnight basis from the FHLB, the Federal Reserve Bank of San Francisco (“FRB”) and other financial institutions as indicated below. FHLB Secured Line of Credit and Advances. 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, 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: Advance Date Amount Rate Call Structure Next Call Date Final Stated Maturity Date (dollars in thousands) 5/8/2025 $ 10,000 3.69 % One time call N/A 5/10/2028 6/23/2025 10,000 3.64 % One time call N/A 6/23/2028 5/8/2025 20,000 3.49 % Quarterly call 2/10/2026 5/10/2028 8/14/2025 20,000 3.38 % Quarterly call 2/14/2026 8/14/2028 3/12/2025 20,000 3.34 % Quarterly call 3/12/2026 3/12/2029 3/14/2025 20,000 3.49 % Quarterly call 3/15/2026 3/15/2029 5/8/2025 20,000 3.52 % Quarterly call (1) 5/8/2026 5/8/2029 6/23/2025 10,000 3.55 % Quarterly call (1) 6/23/2026 6/23/2028 Total $ 130,000 3.49 % Weighted average rate ( 1 ) Call option after initial one year lock out. FRB Secured Line of Credit. At December 31, 2025, the Bank had a secured borrowing capacity with the FRB of $ 66.5 million collateralized by pledged loans with a carrying value of $ 88.9 million. Federal Funds Arrangements with Commercial Bank s. 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. NOTE 12 - INCOME TAXES The asset and liability method is used in accounting for income taxes. 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, 2025 2024 2023 (dollars in thousands) United States $ 42,134 $ 35,679 $ 60,246 Foreign — — — Income before income taxes 42,134 35,679 60,246 The table below presents the components of income tax expense for the years indicated: For the Year Ended December 31, 2025 2024 2023 Current: (1) (dollars in thousands) Federal $ 7,897 $ 6,539 $ 10,804 State 2,930 5,393 6,761 Total Current 10,827 11,932 17,565 Deferred: (1) Federal ( 1,146 ) ( 1,646 ) ( 288 ) State 505 ( 1,272 ) 504 Total Deferred ( 641 ) ( 2,918 ) 216 Total income tax expense (1) $ 10,186 $ 9,014 $ 17,781 ( 1 ) The Company has no foreign operations or foreign taxes for all years presented. 99 Table of Contents 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, 2025 2024 2023 Amount Rate Amount Rate Amount Rate (dollars in thousands) US federal statutory tax rate $ 8,848 21.0 % $ 7,493 21.0 % $ 12,652 21.0 % 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 credits Low income housing tax credits ( 1,725 ) ( 4.1 )% ( 1,195 ) ( 3.3 )% ( 1,017 ) ( 1.7 )% Transferrable energy tax credits ( 957 ) ( 2.3 )% ( 901 ) ( 2.5 )% — 0.0 % 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 )% Other 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. The following is a summary of the components of the net deferred tax asset accounts recognized in the accompanying balance sheets as of December 31: 2025 2024 Deferred tax assets: (dollars in thousands) Credit carryforwards $ 1,799 $ — Allowance for credit losses 13,302 14,889 Stock-based compensation 182 244 Operating loss carryforwards 4 4 Unrealized loss on AFS securities 5,678 8,980 Lease liability 7,434 9,127 State tax 540 944 Other 1,550 1,424 30,489 35,612 Deferred tax liabilities: Depreciation ( 61 ) ( 425 ) Deferred loan costs ( 3,350 ) ( 3,127 ) Acquisition accounting fair value adjustments ( 2,237 ) ( 2,536 ) Mortgage servicing rights ( 1,427 ) ( 1,738 ) Right of use asset ( 6,903 ) ( 8,618 ) Other ( 164 ) ( 113 ) ( 14,142 ) ( 16,557 ) Net deferred tax assets $ 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, 2025 2024 2023 (dollars in thousands) Federal (1) $ 14,359 $ 1,700 $ 12,954 State and local : California 1,856 2,975 5,410 New York 1,023 535 1,570 New York City 661 675 1,340 Other 822 340 115 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 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. Benefits not expected to be realized due to the limitation have been excluded from the deferred tax asset and net operating loss carryforward amounts noted above. Based on management's assessment, we concluded that no valuation allowance was necessary for the deferred tax assets as of December 31, 2025. We file income tax returns in federal and various state jurisdictions. We are subject to examinations in federal jurisdiction for the years ended after December 31, 2021. The statutes of limitations for state income tax returns remain open for tax years in accordance with each state's statutes. 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 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. 100 Table of Contents NOTE 13 - COMMITMENTS AND CONTINGENCIES In the ordinary course of business, we enter into financial commitments to meet the financing needs of our customers. These financial commitments include commitments to extend credit, unused lines of credit, commercial and similar letters of credit and standby letters of credit. Those instruments involve varying degrees of credit and interest rate risk not recognized in our financial statements. 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 consolidated financial statements. At December 31, 2025 and 2024, we had the following financial commitments whose contractual amount represents credit risk: 2025 2024 Fixed Variable Fixed Variable Rate Rate Rate Rate (dollars in thousands) Commitments to make loans $ 10,517 $ 31,118 $ 13,973 $ 70,268 Unused lines of credit 2,747 61,766 883 84,697 Commercial and similar letters of credit 135 2,254 168 2,225 Standby letters of credit 3,964 1,061 1,232 2,061 Total $ 17,363 $ 96,199 $ 16,256 $ 159,251 Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total amounts do not necessarily represent future cash requirements. We evaluate each client's creditworthiness on a case-by-case basis. We record a liability for lifetime expected losses on off-balance-sheet credit exposure that does not fit the definition of unconditionally cancelable in accordance with ASC 326. We use the loss rate and exposure at default framework to estimate a reserve for unfunded commitments. Loss rates for the expected funded balances are determined based on the associated pooled loan analysis loss rate and the exposure at default is based on an estimated utilization given default. 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 (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. In the opinion of management, the disposition of such pending litigation will not have a material effect on the Company's consolidated financial statements. 101 Table of Contents NOTE 14 - LEASES We lease several of our operating facilities under various non-cancellable operating leases expiring at various dates through 2037. We are also responsible for common area maintenance, taxes, and insurance at the various branch locations. Future minimum rent payments on our leases were as follows at December 31, 2025: For the year ended December 31,: (dollars in thousands) 2026 $ 5,382 2027 5,769 2028 4,852 2029 2,685 2030 2,396 Thereafter 5,903 Total $ 26,987 Less amount of payment representing interest ( 2,187 ) Total present value of lease payments $ 24,800 The minimum rent payments shown above are given for the existing lease obligation and are not a forecast of future rental expense. Total rental expense, recognized on a straight-line basis, was $ 5.8 million, $ 5.8 million, and $ 5.7 million for the years ended December 31, 2025, 2024, and 2023. The Company received rental income of $ 640,000 , $ 612,000 , and $ 570,000 for the years ended December 31, 2025, 2024, and 2023. The following table presents the operating lease related assets and liabilities recorded on the consolidated balance sheets, and the weighted-average remaining lease terms and discount rates as of the dates indicated : December 31, December 31, 2025 2024 Operating Leases (dollars in thousands) ROU assets $ 23,026 $ 28,048 Lease liabilities 24,800 29,705 Weighted-average remaining lease term (in years) 5.96 6.65 Weighted-average discount rate 2.97 % 2.83 % Cash paid for operating leases 5,009 4,742 102 Table of Contents NOTE 15 - RELATED PARTY TRANSACTIONS There were no loans or outstanding loan commitments to any principal officers or directors, or any of their affiliates at December 31, 2025 and 2024. Deposits from principal officers, directors, and their affiliates at December 31, 2025 and 2024, were $ 73.0 million and $ 32.5 million. Certain directors and their affiliates own $ 6.0 million of RBB subordinated debentures as of December 31, 2025 and 2024. NOTE 16 - STOCK BASED COMPENSATION Amended and Restated RBB Bancorp 2017 Omnibus Stock Incentive Plan The Amended and Restated RBB Bancorp 2017 Omnibus Stock Incentive Plan (the “Amended OSIP”) was approved by our board of directors in January 2022 and approved by our shareholders in May 2022 . The Amended OSIP was designed to ensure continued availability of equity awards that will assist us in attracting and retaining competent managerial personnel and rewarding key employees, directors and other service providers for high levels of performance. Pursuant to the Amended OSIP, our board of directors are allowed to grant awards to eligible persons in the form of qualified and non-qualified stock options, restricted stock, restricted stock units, stock appreciation rights and other incentive awards. We have reserved up to 30 % of issued and outstanding shares of common stock as of the date we adopted the Amended OSIP, or 3,848,341 shares. As of December 31, 2025, there were 878,916 shares of common stock available for issuance under the Amended OSIP. This represents 5.2 % of the issued and outstanding shares of the Company’s common stock as of December 31, 2025. Awards vest, become exercisable and contain such other terms and conditions as determined by the board of directors and set forth in individual agreements with the employees receiving the awards. The Amended OSIP enables the board of directors to set specific performance criteria that must be met before an award vests. The Amended OSIP allows for acceleration of vesting and exercise privileges of grants if a participant’s termination of employment is due to a change in control, death or total disability. If a participant’s job is terminated for cause, then all awards expire at the date of termination. 103 Table of Contents 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 Compensation expense for stock options was $ 44,000 , $ 62,000 , and $ 246,000 for the years ended December 31, 2025, 2024, and 2023. Unrecognized stock-based compensation expense related to options was $ 73,000 , $ 117,000 , and $ 179,000 as of December 31, 2025, 2024, and 2023. 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. No stock options have been granted after March 31, 2023. March 2023 Expected volatility 28.4 % Expected term (years) 8.0 Expected dividends 2.92 % Risk free rate 4.27 % Grant date fair value $ 5.49 The expected volatility was based on the historical volatility of our stock trading history. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding. The risk free rate of return reflects the grant date interest rate offered for zero coupon U.S. Treasury bonds over the expected term of the options. The table below presents a summary of our stock option awards and activity as of and for the year ended December 31, 2025: Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term in years Value Outstanding at beginning of year 174,500 $ 18.29 Exercised ( 23,500 ) 17.76 Outstanding at end of year 151,000 $ 18.37 4.67 $ 360 Options exercisable 139,000 $ 18.13 4.48 $ 360 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 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. 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. 104 Table of Contents 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”). 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. 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. The following table presents restricted stock unit activity during the twelve months ended December 31, 2025. Weighted-Average Grant Date Shares Fair Value Outstanding at beginning of year 140,475 $ 18.33 Granted 138,922 15.70 Vested ( 75,126 ) 17.65 Forfeited/cancelled ( 13,180 ) 18.74 Outstanding at end of year 191,091 16.66 105 Table of Contents NOTE 17 - REGULATORY MATTERS Holding companies (with assets over $ 3 billion at the beginning of the year) and banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory - and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Final comprehensive regulatory capital rules for U.S. banking organizations pursuant to the capital framework of the Basel Committee on Banking Supervision, generally referred to as “Basel III,” implemented a requirement for all banking organizations to maintain a capital conservation buffer of 2.5% above the minimum risk-based capital requirements. The capital conservation buffer is exclusively comprised of common equity Tier 1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio. At December 31, 2025, the Company and the Bank were in compliance with the capital conservation buffer requirements. If the capital adequacy minimum ratios plus the phased-in conservation buffer amount exceed actual risk-weighted capital ratios, then dividends, share buybacks, and discretionary bonuses to executives could be limited in amount. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total, Tier 1 and CET1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). As permitted by the regulators for financial institutions that are not deemed to be “advanced approaches” institutions, we have elected to opt out of the Basel III requirement to include accumulated other comprehensive income in risk-based capital. Management believes, at December 31, 2025, and December 31, 2024, we satisfied all capital adequacy requirements to which we were subject. As of December 31, 2025 and 2024, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action (there are no conditions or events since that notification that management believes have changed the Bank’s category). To be categorized as well capitalized, the Bank must maintain minimum ratios as set forth in the table below. 106 Table of Contents The following table sets forth Bancorp’s consolidated and the Bank’s actual capital amounts and ratios and related regulatory requirements as of the dates indicated: Amount of Capital Required To Be Well Capitalized Minimum Required for Under Prompt Corrective Actual Capital Adequacy Purposes Provisions Amount Ratio Amount Ratio (1) Amount Ratio As of December 31, 2025: (dollars in thousands) Tier 1 Leverage Ratio Consolidated $ 479,047 11.60 % $ 165,193 4.0 % $ 206,491 5.0 % Bank 544,296 13.20 % 164,965 4.0 % 206,206 5.0 % Common Equity Tier 1 Risk-Based Capital Ratio Consolidated $ 464,133 17.49 % $ 119,388 4.5 % $ 172,450 6.5 % Bank 544,296 20.57 % 119,075 4.5 % 171,998 6.5 % Tier 1 Risk-Based Capital Ratio Consolidated $ 479,047 18.06 % $ 159,184 6.0 % $ 212,246 8.0 % Bank 544,296 20.57 % 158,767 6.0 % 211,690 8.0 % Total Risk-Based Capital Ratio Consolidated $ 632,260 23.83 % $ 212,246 8.0 % $ 265,307 10.0 % Bank 577,512 21.82 % 211,690 8.0 % 264,612 10.0 % ( 1 ) These ratios are exclusive of the 2.5 % capital conservation buffer. Amount of Capital Required To Be Well Capitalized Minimum Required for Under Prompt Corrective Actual Capital Adequacy Purposes Provisions Amount Ratio Amount Ratio (1) Amount Ratio As of December 31, 2024: (dollars in thousands) Tier 1 Leverage Ratio Consolidated $ 469,785 11.92 % $ 157,660 4.0 % $ 197,075 5.0 % Bank 549,889 13.96 % 157,529 4.0 % 196,912 5.0 % Common Equity Tier 1 Risk Based Capital Ratio Consolidated $ 455,084 17.94 % $ 114,133 4.5 % $ 164,859 6.5 % Bank 549,889 21.74 % 113,843 4.5 % 164,440 6.5 % Tier 1 Risk-Based Capital Ratio Consolidated $ 469,785 18.52 % $ 152,178 6.0 % $ 202,903 8.0 % Bank 549,889 21.74 % 151,791 6.0 % 202,388 8.0 % Total Risk-Based Capital Ratio Consolidated $ 621,225 24.49 % $ 202,903 8.0 % $ 253,629 10.0 % Bank 581,720 22.99 % 202,388 8.0 % 252,985 10.0 % ( 1 ) These ratios are exclusive of the 2.5 % capital conservation buffer. The California Financial Code generally acts to prohibit banks from making a cash distribution to its shareholders in excess of the lesser of the bank’s undivided profits or the bank's net income for its last three fiscal years less the amount of any distribution made by the bank’s shareholders during the same period. The California General Corporation Law generally acts to prohibit companies from paying dividends on common stock unless retained earnings, immediately prior to the dividend payment, equals or exceeds the amount of the dividend. If a company fails this test, then it may still pay dividends if after giving effect to the dividend the company’s assets are at least 125 % of its liabilities. Additionally, the Federal Reserve has issued guidance, which requires that they be consulted before payment of a dividend if a bank holding company does not have earnings over the prior four quarters of at least equal to the dividend to be paid, plus other holding company obligations. 107 Table of Contents NOTE 18 - FAIR VALUE MEASUREMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS In accordance with accounting guidance, we group financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described as follows: Fair Value Hierarchy Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2 - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, prepayment speeds, volatilities, etc.) or model-based valuation techniques where all significant assumptions are observable, either directly or indirectly, in the market. Level 3 - Valuation is generated from model-based techniques where one or more significant inputs are not observable, either directly or indirectly, in the market. These unobservable assumptions reflect the Company’s own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques may include use of matrix pricing, DCF models, and similar techniques. Assets and Liabilities Measured at Fair Value on a Recurring Basis Securities: The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 ) or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for specific securities but rather by relying on the securities' relationship to other benchmark quoted securities (Level 2 ). Interest Rate Lock Contracts and Forward Mortgage Loan Sale Contracts: The fair values of interest rate lock contracts and forward mortgage loan sale contracts are determined by loan lock-in rate, loan funded rate, market interest rate, fees to be collected from the borrower, fees and costs associated with the origination of the loan, expiration timing, sale price, and the value of the retained servicing. We classified these derivatives as level 3 due to management’s estimate of market rate, cost and expiration timing on these contracts. Assets and Liabilities Measured on a Non-Recurring Basis Collateral-dependent individually evaluated loans : Collateral-dependent individually evaluated loans are carried at fair value when it is probable that we will be unable to collect all amounts due according to the contractual terms of the original loan agreement and the loan has been written down to the fair value of its underlying collateral, net of expected selling costs. The fair value of collateral-dependent individually evaluated loans is based on third party appraisals of the property, less management’s estimate of selling costs. Third party appraisals generally use a sales comparison or income capitalization approach to derive the appraised value based on market transactions involving similar or comparable properties. Adjustments are routinely made by the third party appraisers to adjust for differences between the comparable sales and income data used in the appraisal. Adjustments may also result from the consideration of relevant economic and demographic factors which may affect property values. Positive adjustments in the appraisal represent increases to the sales comparisons and negative adjustments represent decreases. 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. This amount becomes the property's new basis. Fair values are generally based on third party appraisals of the property and discounted by management to reflect estimated selling costs (Level 3 ). 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. 108 Table of Contents 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: December 31, 2025 Level 1 Level 2 Level 3 Total Assets measured at fair value: (dollars in thousands) On a recurring basis: Securities available for sale Government agency securities $ — $ 22,705 $ — $ 22,705 SBA agency securities — 21,180 — 21,180 Mortgage-backed securities — 92,155 — 92,155 Collateralized mortgage obligations — 213,272 — 213,272 Commercial paper — 19,948 — 19,948 Corporate debt securities — 28,429 — 28,429 Municipal securities — 9,515 — 9,515 Forward Mortgage Loan Sale Contracts (1) — — 11 11 $ — $ 407,204 $ 11 $ 407,215 On a non-recurring basis: Collateral dependent individually evaluated loans: Commercial real estate loans $ — $ — $ 3,071 $ 3,071 Construction and land development loans — — 19,465 19,465 Commercial and industrial loans — — 4,708 4,708 Other real estate owned (1) — — 8,830 8,830 $ — $ — $ 36,074 $ 36,074 ( 1 ) Included in “Accrued interest and other assets” on the consolidated balance sheets. December 31, 2024 Level 1 Level 2 Level 3 Total Assets measured at fair value: (dollars in thousands) On a recurring basis: Securities available for sale Government agency securities $ — $ 21,042 $ — $ 21,042 SBA agency securities — 26,764 — 26,764 Mortgage-backed securities — 55,677 — 55,677 Collateralized mortgage obligations — 197,132 — 197,132 Commercial paper — 78,685 — 78,685 Corporate debt securities — 31,815 — 31,815 Municipal securities — 9,075 — 9,075 $ — $ 420,190 $ — $ 420,190 On a non-recurring basis: Collateral dependent individually evaluated loans: Commercial real estate loans $ — $ — $ 4,751 $ 4,751 Construction and land development loans — — 30,676 30,676 SBA loans — — 66 66 $ — $ — $ 35,493 $ 35,493 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 Fair Value Valuation Techniques Unobservable Input(s) Range (dollars in thousands) Collateral dependent loans: Commercial real estate loans $ 3,071 Market approach Adjustments (1) (41%) to 4% Construction and land development loans 19,465 Market approach Adjustments (1) 9% to 23% Commercial and industrial loans 4,708 Market approach Adjustments (1) (20%) to 20% Other real estate owned (2) 8,830 Market approach Adjustments (1) (10%) to 21% Total $ 36,074 ( 1 ) Represents the minimum and maximum range of adjustments made by appraisers for differences in comparable sales. ( 2 ) Included in “Accrued interest and other assets” on the consolidated balance sheets. December 31, 2024 Fair Value Valuation Techniques Unobservable Input(s) Range (dollars in thousands) Collateral dependent loans: Commercial real estate loans $ 4,751 Market approach Adjustments (1) (41%) to 4% Construction and land development loans 30,676 Market approach Adjustments (1) (19%) to 5% SBA loans 66 Market approach Adjustments (1) (4%) to 11% Total $ 35,493 ( 1 ) Represents the minimum and maximum range of adjustments made by appraisers for differences in comparable sales. 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. The fair value of a financial instrument is the amount at which the asset or obligation could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument. Because no market value exists for a significant portion of the financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature, involve uncertainties and matters of judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. 109 Table of Contents Fair value estimates are based on financial instruments both on and off the balance sheet without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Additionally, tax consequences related to the realization of the unrealized gains and losses can have a potential effect on fair value estimates and have not been considered in many of the estimates. Because no market exists for a significant portion of our financial instruments, fair value estimates are based on judgments regarding current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature, and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the fair values presented. Management uses its best judgment in estimating the fair value of our financial instruments; however, there are inherent limitations in any estimation technique. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Management maximizes the use of observable inputs and attempts to minimize the use of unobservable inputs when determining fair value measurements. Estimated fair values are disclosed for financial instruments for which it is practicable to estimate fair value. These estimates are made at a specific point in time based on relevant market data and information about the financial instruments. These estimates do not reflect any premium or discount that could result from offering our entire holdings of a particular financial instrument for sale at one time, nor do they attempt to estimate the value of anticipated future business related to the instruments. In addition, the tax ramifications related to the realization of unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of these estimates. The following methods and assumptions were used to estimate the fair value of significant financial instruments not previously presented: Cash and Due From Banks -- The carrying amounts of cash and short-term instruments approximate fair values, a Level 1 measurement. Time Deposits in Other Banks -- Fair values for time deposits with other banks are estimated using DCF analyses, using interest rates currently being offered with similar terms, a Level 1 measurement. Investment securities available for sale and held to maturity -- Fair values are measured by using quoted market prices for similar securities or dealer quotes, a Level 2 measurement. Loans Held for Sale -- Fair value is based on quotes or bids from third party investors, recent sale prices, or third party appraisals, a Level 2 measurement. Loans -- For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying amounts. The fair values for all other loans are estimated using DCF analyses, using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality. The fair value of loans as of December 31, 2025 and 2024, was measured using an exit price notion, a Level 3 measurement. Individually evaluated loans -- Defaulted loans are reviewed individually for expected credit loss, if any, and are recorded at fair value on a non-recurring basis. These defaulted loans are excluded from the loan pools used within the collective evaluation of estimated credit losses. When a defaulted loan is collateral dependent, we measure expected credit loss based on the estimated fair value of the underlying collateral. The fair value of each loan’s collateral is based on third party appraisals, adjusted for estimated selling costs; a Level 2 measurement. When adjustments are made to an appraised value to reflect various factors such as the age of the appraisal or known changes in the market or the collateral, such valuation inputs are considered unobservable and the fair value measurement is categorized as a Level 3 measurement. Equity Securities -- The fair values of equity securities are measured based on unobservable inputs at the reporting date, a Level 3 measurement. Equity securities are comprised primarily of affordable housing investment funds, CRA investments, other bank stocks and investments in limited partnerships with less than 3% ownership. Investment in FHLB Stock -- Investments in FHLB stock are recorded at cost and measured for impairment quarterly. Ownership of FHLB stock is restricted to member banks and does not have a readily determinable market value. Purchases and sales of these securities are at par value with the issuer. The fair value of investments in FHLB stock is equal to the carrying amount and is categorized as a Level 2 measurement. Servicing Rights -- Mortgage and SBA servicing rights are calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk inherent in the loan, a Level 3 measurement. Accrued Interest Receivable -- Accrued interest receivable includes accrued interest on investment securities (Level 2 ), accrued interest on loans (Level 3 ), accrued interest on due from banks (Level 1 ), and accrued interest on equity securities (Level 3 ). Off-Balance Sheet Financial Instruments -- The fair value of commitments to extend credit and standby letters of credit, interest rate lock commitments and forward mortgage loan sales contracts is estimated using the fees currently charged to enter into similar agreements. Unobservable inputs that reflect the Company's own assumptions about the assumptions that market participants would use in pricing an asset or liability result in a Level 3 measurement. Deposits -- The fair values disclosed for demand deposits, including interest and noninterest demand accounts, savings, and certain types of money market accounts are, by definition based on carrying value. Fair value for fixed-rate certificates of deposit is estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregate expected monthly maturities on time deposits, a Level 2 measurement. Early withdrawal of fixed-rate certificates of deposit is not expected to be significant. FHLB Advances -- The fair values of the Company’s FHLB Advances are calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk, a Level 3 measurement. Long-Term Debt -- The fair values of the Company’s long-term borrowings are calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk, a Level 3 measurement. Subordinated Debentures -- The fair values of the Company’s subordinated debentures are calculated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect the credit and interest rate risk, a Level 3 measurement. Accrued Interest Payable -- Accrued interest payable includes accrued interest on deposits (Level 2 ), accrued interest on FHLB advances (Level 3 ), accrued interest on long-term debt (Level 3 ), and accrued interest on subordinated debentures (Level 3 ). Fair value is estimated in accordance with ASC Topic 825 . Fair value estimates are made at specific points in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time our entire holdings of a particular financial instrument. Because no market exists for a significant portion of our financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. 110 Table of Contents The fair value hierarchy level and estimated fair value of significant financial instruments at December 31, 2025 and 2024, are summarized as follows: December 31, 2025 December 31, 2024 Fair Value Carrying Fair Carrying Fair Hierarchy Value Value Value Value Financial Assets: (dollars in thousands) Cash and due from banks Level 1 $ 212,317 $ 212,317 $ 257,745 $ 257,745 Interest-earning deposits in other financial institutions Level 1 600 600 600 600 Investment securities - AFS Level 2 407,204 407,204 420,190 420,190 Investment securities - HTM Level 2 4,184 4,103 5,191 4,948 Loans held for sale Level 2 2,067 2,067 11,250 11,250 Loans, net Level 3 3,270,413 3,221,797 3,005,501 2,942,026 Equity securities (1) Level 3 26,086 26,086 22,944 22,944 Investment in FHLB stock Level 2 15,000 15,000 15,000 15,000 Servicing assets (1) Level 3 6,041 11,521 6,985 13,761 Accrued interest receivable (1) Level 1/2/3 16,230 16,230 14,582 14,582 Notional Fair Notional Fair Derivative assets: Value Value Value Value Forward Mortgage Loan Sale Contracts (1) Level 3 $ 515 $ 11 $ — $ — Carrying Fair Carrying Fair Financial Liabilities: Value Value Value Value Deposits Level 2 $ 3,350,398 $ 3,350,982 $ 3,083,789 $ 3,078,409 FHLB advances Level 3 130,000 129,198 200,000 198,783 Long-term debt Level 3 119,911 114,691 119,529 109,463 Subordinated debentures Level 3 15,375 15,227 15,156 14,975 Accrued interest payable (2) Level 2/3 7,960 7,960 7,950 7,950 ( 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 The following is a reconciliation of net income and shares outstanding to the net income and number of shares used to compute earnings per share (“EPS”): 2025 2024 2023 Income Shares Income Shares Income Shares (dollars in thousands, except shares and per share data) Net income as reported $ 31,948 $ 26,665 $ 42,465 Shares outstanding 17,057,397 17,720,416 18,609,179 Impact of weighting shares 377,630 401,348 356,167 Used in basic EPS 31,948 17,435,027 26,665 18,121,764 42,465 18,965,346 Dilutive effect of outstanding Stock options 7,526 20,883 15,322 Restricted Stock Units 41,966 35,788 4,565 Performance Stock Units 15,811 4,884 — Used in dilutive EPS $ 31,948 17,500,330 $ 26,665 18,183,319 $ 42,465 18,985,233 Basic earnings per common share $ 1.83 $ 1.47 $ 2.24 Diluted earnings per common share $ 1.83 $ 1.47 $ 2.24 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. 111 Table of Contents NOTE 20 – REVENUE FROM CONTRACTS WITH CUSTOMERS The following is a summary of revenue from contracts with customers that are in-scope and not in-scope under Topic 606 for the periods indicated: For the Year Ended December 31, 2025 2024 2023 Noninterest income, in scope (dollars in thousands) Fees and service charges on deposit accounts $ 1,923 $ 1,898 $ 2,014 Other fees (1) 938 722 984 Other income (2) 2,264 2,217 2,158 Gain on sale of OREO and fixed assets 42 456 166 Total in-scope noninterest income 5,167 5,293 5,322 Noninterest income, not in scope (3) 11,706 10,042 9,696 Total noninterest income $ 16,873 $ 15,335 $ 15,018 ( 1 ) Other fees consist of wealth management fees, miscellaneous loan fees and postage/courier fees. ( 2 ) Other income consists of safe deposit box rental income, wire transfer fees, security brokerage fees, annuity sales, insurance activity, and OREO income. ( 3 ) 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 Fees and service charges on deposit accounts include charges for analysis, overdraft, cashier's check fees, ATM, and safe deposit activities executed by our deposit clients, as well as interchange income earned through card payment networks for the acceptance of card based transactions. Fees earned from our deposit clients are governed by contracts that provide for overall custody and access to deposited funds and other related services, and can be terminated at will by either party; this includes fees from money service businesses ("MSBs"). Fees received from deposit clients for the various deposit activities are recognized as revenue once the performance obligations are met. Periodic service charges are generally collected monthly directly from the customer’s deposit account, and at the end of a statement cycle, while transaction based service charges are typically collected at the time of or soon after the service is performed. Wealth Management Fees In our wealth management division, revenue is primarily generated from ( 1 ) securities brokerage accounts, ( 2 ) investment advisor accounts, ( 3 ) full service brokerage implementation fees, and ( 4 ) life insurance and annuity products. We employ financial consultants to provide investment planning services for customers including wealth management services, asset allocation strategies, portfolio analysis and monitoring, investment strategies, and risk management strategies. The commission fees we earn are variable and are generally received monthly. We recognize revenue for the services performed based on actual transaction details received from the broker dealer that we engage. 112 Table of Contents Gain (loss) on Sales of Other Real Estate Owned and Fixed Assets We record a gain or loss from the sale of OREO and fixed assets, when control of the property or asset transfers to the buyer, which generally occurs at the time of an executed deed or sales agreement. When we finance the sale of OREO to a buyer, we assess whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon transfer of control of the property to the buyer. In determining the gain or loss on the sale, we adjust the transaction price and related gain or loss on sale if a significant financing component is present. NOTE 21 – SEGMENT INFORMATION Our reportable segments are determined by the Chief Executive Officer and Chief Financial Officer, who are the designated chief operating decision makers ("CODM"), based upon information provided by our products and services offered, primarily banking operations. The segments are also distinguished by the level of information provided to the CODM, who uses such information to review performance of various components of the business, which are aggregated if operating performance, products/services, and customers are similar. The CODM will evaluate the financial performance of our business components such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing our segment and in the determination of allocating resources. The CODM uses consolidated net income, total assets, total loans, and total deposits to benchmark us against our competitors. The benchmarking analysis coupled with monitoring of budget to actual results are used in assessment performance and in establishing compensation. Loans, investments, and deposits provide the revenues in the banking operation. Interest expense, provisions for credit losses and payroll provide the significant expenses in the banking operation. All operations are domestic. Accounting policies for segments are the same as those described in Note 2 — Summary of Significant Accounting Policies . Segment performance is evaluated using consolidated net income, total assets, total loans, and total deposits. Information reported internally for performance assessment by the CODM follows: For the Year Ended December 31, 2025 2024 Banking Segment (dollars in thousands) Interest and dividend income $ 221,126 $ 216,661 Reconciliation of revenue Other revenues 16,873 15,335 Total consolidated revenues $ 237,999 $ 231,996 Less: Interest expense 108,844 117,297 Segment net interest income and noninterest income $ 129,155 $ 114,699 Less: Provision for credit losses 10,358 9,857 Salaries and benefits expense 43,056 39,395 Other segment items (1) 33,607 29,768 Income tax expense 10,186 9,014 Consolidated net income $ 31,948 $ 26,665 Total Assets $ 4,208,294 $ 3,992,477 Total Loans $ 3,316,368 $ 3,064,480 Total Deposits $ 3,350,398 $ 3,083,789 ( 1 ) Other segment items include expenses for occupancy and equipment, data processing, legal and professional, office, marketing and business promotion, insurance and regulatory assessments, core deposit premium amortization and other expenses. NOTE 22 – QUALIFIED AFFORDABLE HOUSING PROJECT INVESTMENTS At December 31, 2025, and December 31, 2024, investments in qualified affordable housing projects totaled $ 17.0 million and $ 10.1 million. This balance is reflected in accrued interest and other assets on the consolidated balance sheets. Total unfunded commitments related to the investments in qualified affordable housing projects totaled $ 10.0 million at December 31, 2025, and $ 4.8 million at December 31, 2024. The Company expects to fulfill these commitments between 2026 and 2041. 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. The amortization of these investments was also included within income tax expense as an offset to such tax credits. During the years ended December 31, 2025, 2024, and 2023, we recognized amortization expense of $ 2.1 million, $ 1.3 million, and $ 1.1 million. NOTE 23 - PARENT ONLY CONDENSED FINANCIAL INFORMATION The parent company only condensed balance sheet as of December 31, 2025 and 2024, and the related condensed statements of income and condensed statements of cash flows for the years ended December 31, 2025, 2024, and 2023 are presented below: Condensed Balance Sheets As of December 31, 2025 2024 ASSETS (dollars in thousands) Cash and cash equivalents $ 46,643 $ 32,101 Investment in Bank 603,573 602,681 Investment in RAM 3,244 3,244 Other assets 6,790 6,096 Total assets $ 660,250 $ 644,122 LIABILITIES AND SHAREHOLDERS' EQUITY Long term debt $ 119,911 $ 119,529 Subordinated debentures 15,375 15,156 Other liabilities 1,554 1,560 Total liabilities 136,840 136,245 Shareholders' equity: Common stock 250,694 259,957 Additional paid-in capital 3,941 3,645 Retained earnings 282,024 264,460 Non-controlling interest 72 72 Accumulated other comprehensive loss, net ( 13,321 ) ( 20,257 ) Total shareholders' equity 523,410 507,877 Total liabilities and shareholders' equity $ 660,250 $ 644,122 113 Table of Contents Condensed Statements of Income For the Year Ended December 31, 2025 2024 2023 (dollars in thousands) Dividend from subsidiaries $ 45,000 $ 20,000 $ 85,000 Interest income/(reversal) 12 18 ( 41 ) Interest expense 6,524 6,699 9,951 Noninterest income 149 — — Noninterest expense 1,268 1,126 1,897 Income before equity in undistributed income of subsidiaries 37,369 12,193 73,111 (Distributed income in excess of earnings)/undistributed income of: Bank ( 7,779 ) 12,075 ( 34,477 ) RAM — — 195 Income before income taxes 29,590 24,268 38,829 Income tax benefit 2,358 2,397 3,636 Net income 31,948 26,665 42,465 Other comprehensive income/(loss), net 6,936 ( 745 ) 2,153 Total comprehensive income $ 38,884 $ 25,920 $ 44,618 Condensed Statements of Cash Flows For the Year Ended December 31, 2025 2024 2023 Cash flows from operating activities: (dollars in thousands) Net income $ 31,948 $ 26,665 $ 42,465 Net amortization of other 601 600 780 Provision for deferred income taxes — ( 18 ) ( 72 ) Distributed income in excess of earnings/(undistributed income) of subsidiaries 7,779 ( 12,075 ) 34,282 Change in other assets and liabilities ( 949 ) 570 113 Net cash provided by operating activities 39,379 15,742 77,568 Cash flows from investment activities: Change in other equity securities, net 257 ( 103 ) ( 490 ) Net cash provided by/(used in) investing activities 257 ( 103 ) ( 490 ) Cash flows from financing activities: Redemptions of subordinated debentures — — ( 55,000 ) Dividends paid ( 11,264 ) ( 11,720 ) ( 12,163 ) Restricted stock units vesting ( 265 ) ( 108 ) — Common stock repurchased, net of repurchased costs ( 13,982 ) ( 20,676 ) ( 6,803 ) Stock options exercised 417 1,841 295 Net cash used in financing activities ( 25,094 ) ( 30,663 ) ( 73,671 ) Increase/(decrease) in cash and cash equivalents 14,542 ( 15,024 ) 3,407 Cash and cash equivalents beginning of year 32,101 47,125 43,718 Cash and cash equivalents end of year $ 46,643 $ 32,101 $ 47,125 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. 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 . NOTE 25 – SUBSEQUENT EVENTS On January 26, 2026 , the Company announced the Board of Directors had declared a common stock cash dividend of $ 0.16 per share, payable on February 13, 2026 to common shareholders of record as of January 30, 2026 . 114 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.