PCB BANCORP

Previous wording

The following is management’s discussion and analysis of the major factors that influenced the Company’s results of operations and financial condition as of and for the three and nine months ended September 30, 2025. This analysis should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and with the unaudited consolidated financial statements and notes (unaudited) thereto set forth in this Quarterly Report on Form 10-Q.

Current wording

The following is management’s discussion and analysis of the major factors that influenced the Company’s results of operations and financial condition as of and for the three months ended March 31, 2026. This analysis should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 and with the unaudited consolidated financial statements and notes (unaudited) thereto set forth in this Quarterly Report on Form 10-Q.

Previous wording

Within the various economic scenarios considered as of September 30, 2025, the quantitative estimate of the ACL would increase by approximately $18.0 million under sole consideration of a more adverse downside scenario. The quoted sensitivity calculation reflects the sensitivity of the modeled ACL estimate to macroeconomic forecast data, but is absent of qualitative overlays and other qualitative adjustments that are part of the quarterly reserving process and does not necessarily reflect the nature and extent of future changes in the ACL for reasons including increases or decreases in qualitative adjustments, changes in the risk profile and size of the portfolio, changes in the severity of the macroeconomic scenario and the range of scenarios under management consideration.

Current wording

Within the various economic scenarios considered as of March 31, 2026, the quantitative estimate of the ACL would increase by approximately $20.7 million under sole consideration of a more adverse downside scenario. The quoted sensitivity calculation reflects the sensitivity of the modeled ACL estimate to macroeconomic forecast data, but is absent of qualitative overlays and other qualitative adjustments that are part of the quarterly reserving process and does not necessarily reflect the nature and extent of future changes in the ACL for reasons including increases or decreases in qualitative adjustments, changes in the risk profile and size of the portfolio, changes in the severity of the macroeconomic scenario and the range of scenarios under management consideration.

Previous wording

•Net income available for common shareholders was $11.3 million for the three months ended September 30, 2025, an increase of $3.9 million, or 51.7%, from $7.5 million for the three months ended September 30, 2024;

Current wording

•Net income available for common shareholders was $10.6 million for the three months ended March 31, 2026, an increase of $2.9 million, or 37.3%, from $7.7 million for the three months ended March 31, 2025;

Previous wording

▪Recorded a provision (reversal) for credit losses of $(381) thousand for the three months ended September 30, 2025 compared with $50 thousand for the three months ended September 30, 2024;

Current wording

▪Recorded a provision for credit losses of $467 thousand for the three months ended March 31, 2026 compared with $1.6 million for the three months ended March 31, 2025;

Previous wording

▪ACL on loans to loans held-for-investment ratio was 1.20% at September 30, 2025 compared with 1.16% at December 31, 2024;

Current wording

▪ACL on loans to loans held-for-investment ratio was 1.18% at March 31, 2026 compared with 1.18% at December 31, 2025;

Previous wording

•Net interest income was $27.0 million for the three months ended September 30, 2025 compared with $22.7 million for the three months ended September 30, 2024. Net interest margin was 3.28% for the three months ended September 30, 2025 compared with 3.25% for the three months ended September 30, 2024;

Current wording

•Net interest income was $26.8 million for the three months ended March 31, 2026 compared with $24.3 million for the three months ended March 31, 2025. Net interest margin was 3.36% for the three months ended March 31, 2026 compared with 3.28% for the three months ended March 31, 2025;

Previous wording

(1) Average balance includes both loans held-for-sale and loans held-for-investment, as well as nonaccrual loans. Net amortization of deferred loan fees of $433 thousand and $246 thousand, respectively, and net accretion of discount on loans of $563 thousand and $773 thousand, respectively, are included in the interest income for the three months ended September 30, 2025 and 2024.

Current wording

(1) Average balance includes both loans held-for-sale and loans held-for-investment, as well as nonaccrual loans. Net amortization of deferred loan fees of $353 thousand and $266 thousand, respectively, and net accretion of discount on loans of $517 thousand and $872 thousand, respectively, are included in the interest income for the three months ended March 31, 2026 and 2025.

Previous wording

Net interest income increased primarily due to a 13.6% increase in average balance of interest-earning assets and a 69 basis point decrease in average cost, partially offset by a 19.0% increase in average balance of interest-bearing liabilities and a 21 basis point decrease in average yield.

Current wording

Net interest income increased primarily due to a 7.7% increase in average balance of interest-earning assets and a 46 basis point decrease in average cost, partially offset by an 8.9% increase in average balance of interest-bearing liabilities and a 21 basis point decrease in average yield.

Previous wording

Interest and fees on loans increased primarily due to a 13.4% increase in average balance, partially offset by a 24 basis point decrease in average yield. The decrease in average yield was primarily due to decreases in market rates and net accretion of discount on loans, partially offset by an increase in net amortization of deferred loan fees.

Current wording

Interest and fees on loans increased primarily due to a 7.2% increase in average balance, partially offset by a 24 basis point decrease in average yield. The decrease in average yield was primarily due to decreases in market rates and net accretion of discount on loans, partially offset by an increase in net amortization of deferred loan fees.

Previous wording

Interest on investment securities increased primarily due to a 3.1% increase in average balance and a 12 basis point increase in average yield. The increase in average yield was primarily due to a higher yield on newly purchased investment securities. For the three months ended September 30, 2025 and 2024, the average yield on total investment securities was 3.85% and 3.73%, respectively.

Current wording

Interest on investment securities increased primarily due to a 9.7% increase in average balance and a 7 basis point increase in average yield. The increase in average yield was primarily due to a higher yield on newly purchased investment securities. For the three months ended March 31, 2026 and 2025, the average yield on total investment securities was 3.97% and 3.90%, respectively.

Previous wording

Interest income on other interest-earning assets increased primarily due to an 86.5% increase in average balance, partially offset by a 105 basis point decrease in average yield. The decrease in average yield was primarily due to a decrease in interest rate on cash held at the Federal Reserve Bank. For the three months ended September 30, 2025 and 2024, the average yield on total other interest-earning assets was 4.61% and 5.66%, respectively.

Current wording

Interest income on other interest-earning assets increased primarily due to a 12.8% increase in average balance. The decrease in interest rate on cash held at the Federal Reserve Bank was offset by an increase in dividend received on FHLB stock. For the three months ended March 31, 2026 and 2025, the average yield on total other interest-earning assets was 4.76% and 4.76%, respectively.

Previous wording

Interest expense on deposits decreased primarily due to a 76 basis point decrease in average cost of interest-bearing deposits, partially offset by a 22.9% increase in average balance of interest-bearing deposits. The decrease in average cost was primarily due to a decrease in market rates. For the three months ended September 30, 2025 and 2024, average cost on total interest-bearing deposits was 4.09% and 4.85%, respectively, and average cost on total deposits were 3.32% and 3.78%, respectively.

Current wording

Interest expense on deposits decreased primarily due to a 46 basis point decrease in average cost of interest-bearing deposits, partially offset by a 6.5% increase in average balance of interest-bearing deposits. The decrease in average cost was primarily due to a decrease in market rates. For the three months ended March 31, 2026 and 2025, average cost on total interest-bearing deposits was 3.82% and 4.28%, respectively, and average cost on total deposits were 3.10% and 3.44%, respectively.

Previous wording

Interest expense on other borrowings increased primarily due to a 172.0% increase in average balance, partially offset by a 99 basis point decrease in average cost.

Current wording

Interest expense on other borrowings increased primarily due to a $52.1 million increase in average balance, partially offset by a 71 basis point decrease in average cost.

Previous wording

Reversal for credit losses for the three months ended September 30, 2025 was primarily due to decreases in loans held-for-investment. Provision for credit losses for the nine months ended September 30, 2025 was primarily due to increases in loans held-for-investment and quantitatively measured loss reserve requirement from the worsened year-over-year change in real GDP forecast and the increased unemployment rate forecast. See further discussion in “Loans Held-For-Investment and Allowance for Credit Losses.”

Current wording

Provision for credit losses for the three months ended March 31, 2026 was primarily due to increases in loans held-for-investment and overall reserve related to qualitative adjustment factors, partially offset by decreases in quantitatively measured loss reserve requirement and reserves on individually evaluated loans. See further discussion in “Loans Held-For-Investment and Allowance for Credit Losses.”

Previous wording

Loan servicing income decreased primarily due to a decrease in servicing fee income and an increase in servicing asset amortization. Servicing asset amortization was $528 thousand and $479 thousand, respectively, for the three months ended September 30, 2025 and 2024.

Current wording

Loan servicing income increased primarily due to a decrease in servicing asset amortization, partially offset by a decrease in servicing fee income. Servicing asset amortization was $417 thousand and $549 thousand, respectively, for the three months ended March 31, 2026 and 2025.

Previous wording

Gain on sale of loans increased primarily due to an increase in sale volume, partially offset by a decrease in level of premium on SBA loans in the secondary market. The Company sold SBA loans of $29.0 million with a gain of $1.6 million during the three months ended September 30, 2025. During the three months ended September 30, 2024, the Company sold SBA loans of $13.5 million with a gain of $750 thousand and a residential mortgage loan of $676 thousand at par.

Current wording

Gain on sale of loans increased primarily due to an increase in sale volume, partially offset by a decrease in level of premium on SBA loans in the secondary market. The Company sold SBA loans of $21.8 million with a gain of $1.4 million during the three months ended March 31, 2026. During the three months ended March 31, 2025, the Company sold SBA loans of $16.6 million with a gain of $887 thousand.

Previous wording

Other income primarily included wire transfer fees of $180 thousand and $156 thousand, respectively, and debit card interchange fees of $100 thousand and $154 thousand, respectively, for the three months ended September 30, 2025 and 2024.

Current wording

Other income primarily included wire transfer fees of $169 thousand and $153 thousand, respectively, and debit card interchange fees of $102 thousand and $86 thousand, respectively, for the three months ended March 31, 2026 and 2025.

Previous wording

Salaries and employee benefits increased primarily due to increases in salaries, and bonus and vacation accruals, partially offset by a decrease in direct loan origination cost, which offsets and defers the recognition of salaries and benefits expense. The number of full-time equivalent employees was 270 at September 30, 2025 compared to 264 at September 30, 2024.

Current wording

Salaries and employee benefits increased primarily due to increases in salaries and group insurance, and a decrease in loan origination cost, which offsets and defers the recognition of salaries and benefits expense. The number of full-time equivalent employees was 264 at March 31, 2026 compared to 257 at March 31, 2025.

Previous wording

Marketing and business promotion expense increased primarily due to an increase in advertisements.

Current wording

Marketing and business promotion increased primarily due to an increase in advertising.

Previous wording

Other expenses included $140 thousand and $97 thousand in loan related expenses, $467 thousand and $625 thousand in office expense, and $191 thousand and $221 thousand in armed guard expense for the three months ended September 30, 2025 and 2024, respectively. During the three months ended September 30, 2025, the Company recognized an impairment of operating lease assets of $10 thousand for a sublease contract.

Current wording

Other expenses included $86 thousand and $92 thousand in loan related expenses, $370 thousand and $478 thousand in office expense, and $180 thousand and $183 thousand in armed guard expense for the three months ended March 31, 2026 and 2025, respectively. During the three months ended March 31, 2025, the Company recognized an impairment on operating lease assets of $146 thousand for a sublease contract and recognition of contingent liabilities for legal settlements of $183 thousand.

Previous wording

Income tax expense was $4.5 million and $2.9 million, respectively, and the effective tax rate was 28.2% and 26.9%, respectively, for the three months ended September 30, 2025 and 2024. For the nine months ended September 30, 2025 and 2024, income tax expense was $11.1 million and $7.2 million, respectively, and the effective tax rate was 28.3% and 27.7%, respectively.

Current wording

Income tax expense was $4.3 million and $3.1 million, respectively, and the effective tax rate was 28.5% and 28.3%, respectively, for the three months ended March 31, 2026 and 2025.

Previous wording

The fair value of total investment securities available-for-sale were $150.3 million at September 30, 2025, an increase of $3.9 million, or 2.7%, from $146.3 million at December 31, 2024. The increase was primarily due to purchases of $14.9 million and an increase in fair value of securities available-for-sale of $5.6 million, partially offset by principal paydowns of $16.4 million and net premium amortization of $108 thousand.

Current wording

The fair value of total investment securities available-for-sale were $170.5 million at March 31, 2026, an increase of $10.5 million, or 6.5%, from $160.0 million at December 31, 2025. The increase was primarily due to purchases of $18.7 million, partially offset by principal paydowns of $6.9 million, net premium amortization of $24 thousand, and a decrease in fair value of securities available-for-sale of $1.3 million.

Previous wording

As of September 30, 2025 and December 31, 2024, 95.3% and 95.3%, respectively, of the Company's securities available-for-sale at amortized cost basis were issued by U.S. government agency and U.S. GSEs. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell these securities before their anticipated recovery, the Company determined that these securities with unrealized losses did not warrant an ACL as of September 30, 2025 and December 31, 2024.

Current wording

As of March 31, 2026 and December 31, 2025, 95.8% and 95.5%, respectively, of the Company's securities available-for-sale at amortized cost basis were issued by U.S. government agency and U.S. GSEs. Because the decline in fair value is attributable to changes in interest rates, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell these securities before their anticipated recovery, the Company determined that these securities with unrealized losses did not warrant an ACL as of March 31, 2026 and December 31, 2025.

Previous wording

Loans held-for-sale were $9.6 million at September 30, 2025, an increase of $3.3 million, or 53.1%, from $6.3 million at December 31, 2024. The increase was primarily due to new funding of $76.2 million, partially offset by sales of $72.6 million and pay-offs and pay-downs of $248 thousand.

Current wording

Loans held-for-sale were $3.6 million at March 31, 2026, a decrease of $8.5 million, or 70.2%, from $12.1 million at December 31, 2025. The decrease was primarily due to sales of $21.8 million and pay-offs and pay-downs of $149 thousand, partially offset by new funding of $12.4 million and a nonaccrual loan transferred from loans held-for-investment of $1.1 million.

Previous wording

Loans held-for-investment were $2.75 billion at September 30, 2025, an increase of $123.1 million, or 4.7%, from $2.63 billion at December 31, 2024. The increase was primarily due to new funding of term loans of $443.1 million and net increase of lines of credit of $19.3 million, partially offset by pay-downs and pay-offs of term loans of $299.8 million and charge-offs of $927 thousand.

Current wording

Loans held-for-investment were $2.87 billion at March 31, 2026, an increase of $53.2 million, or 1.9%, from $2.82 billion at December 31, 2025. The increase was primarily due to new funding of term loans of $112.9 million and net increase of lines of credit of $20.1 million, partially offset by pay-downs and pay-offs of term loans of $78.7 million, charge-offs of $76 thousand and a nonaccrual loan transferred to loans held-for-sale of $1.1 million.

Previous wording

The increase for the nine months ended September 30, 2025 was primarily due to increases in loans held-for-investment and quantitatively measured loss reserve requirement from the worsened year-over-year change in real GDP forecast and the increased unemployment rate forecast. The increase in the quantitatively measured loss reserve requirement was primarily due to the worsened year-over-year change in real GDP forecast and the increased unemployment rate forecast. The Company utilizes these forecasts published by the Federal Open Market Committee (“FOMC”). The 2025 year-end year-over-year change in forecasted real GDP decreased to 1.6% in the September 2025 FOMC meeting from 2.1% in December 2024. The forecasted year-end national unemployment rate increased to 4.5% in September 2025 FOMC meeting from 4.3% in December 2024. Overall changes in macroeconomic projections resulted in the increases of probability of default and loss given default rates across majority of the loan segments leading to higher overall expected loss measurements.

Current wording

The decrease in quantitatively measured loss reserve requirement was primarily due to an improved year-over-year change in real GDP forecast. The Company utilizes year-over-year change in real GDP and unemployment rate forecasts published by the Federal Open Market Committee (“FOMC”). The 2026 year-end year-over-year change in forecasted real GDP increased to 2.4% in the March 2026 FOMC meeting from 2.3% in December 2025. The forecasted year-end national unemployment rate was maintained at 4.4% in both March 2026 and December 2025 FOMC meetings. Overall changes in macroeconomic projections resulted in the decreases of probability of default and loss given default rates across majority of the loan segments leading to lower overall expected loss measurements.

Previous wording

Loans individually evaluated for impairment totaled $51.5 million and $52.0 million, respectively, and related reserve totaled $426 thousand and $59 thousand, respectively, at September 30, 2025 and December 31, 2024.

Current wording

Loans individually evaluated for impairment totaled $49.0 million and $53.2 million, respectively, and related reserve totaled $120 thousand and $206 thousand, respectively, at March 31, 2026 and December 31, 2025.

Previous wording

The increase in nonaccrual loans held-for-investment was primarily due to loans placed on nonaccrual status of $6.0 million, partially offset by paydowns and payoffs of $2.1 million and charge-offs of $377 thousand during the nine months ended September 30, 2025.

Current wording

The increase in nonaccrual loans held-for-investment was primarily due to a loan placed on nonaccrual status of $1.6 million, partially offset by paydowns and a loan transferred to loans held-for-sale of $1.1 million, payoffs of $173 thousand and charge-offs of $71 thousand during the three months ended March 31, 2026.

Previous wording

Loans are generally placed on nonaccrual status when they become 90 days past due, unless management believes the loan is well secured and in the process of collection. In all cases, loans are placed on nonaccrual if collection of principal or interest is considered doubtful. Past due loans may or may not be adequately collateralized, but collection efforts are continuously pursued. Loans may be restructured by management when a borrower experiences changes to their financial condition, causing an inability to meet the original repayment terms, and where management believes the borrower will eventually overcome those circumstances and repay the loan in full. Additional income of approximately $177 thousand and $509 thousand would have been recorded during the three and nine months ended September 30, 2025, respectively, had these loans been paid in accordance with their original terms throughout the periods indicated.

Current wording

Loans are generally placed on nonaccrual status when they become 90 days past due, unless management believes the loan is well secured and in the process of collection. In all cases, loans are placed on nonaccrual if collection of principal or interest is considered doubtful. Past due loans may or may not be adequately collateralized, but collection efforts are continuously pursued. Loans may be restructured by management when a borrower experiences changes to their financial condition, causing an inability to meet the original repayment terms, and where management believes the borrower will eventually overcome those circumstances and repay the loan in full. Additional income of approximately $163 thousand would have been recorded during the three months ended March 31, 2026 had these loans been paid in accordance with their original terms throughout the periods indicated.

Previous wording

The increase in retail time deposits was primarily due to new accounts of $394.8 million and renewals of the matured accounts of $845.2 million, partially offset by matured and closed accounts of $1.12 billion.

Current wording

The increase in retail time deposits was primarily due to new accounts of $116.8 million and renewals of the matured accounts of $388.8 million, partially offset by matured and closed accounts of $485.0 million.

Previous wording

As of September 30, 2025 and December 31, 2024, total deposits were comprised of 18.9% and 20.9%, respectively, of noninterest-bearing demand accounts, 23.0% and 17.9%, respectively, of savings, NOW and money market accounts, and 58.1% and 61.2%, respectively, of time deposits.

Current wording

As of March 31, 2026 and December 31, 2025, total deposits were comprised of 19.8% and 19.9%, respectively, of noninterest-bearing demand accounts, 23.6% and 24.2%, respectively, of savings, NOW and money market accounts, and 56.6% and 55.9%, respectively, of time deposits.

Previous wording

Deposits from certain officers, directors and their related interests with which they are associated held by the Company were $10.4 million and $6.0 million, respectively, at September 30, 2025 and December 31, 2024.

Current wording

Deposits from certain officers, directors and their related interests with which they are associated held by the Company were $9.6 million and $8.9 million, respectively, at March 31, 2026 and December 31, 2025.

Previous wording

Shareholders’ equity was $384.5 million at September 30, 2025, an increase of $20.7 million, or 5.7%, from $363.8 million at December 31, 2024. The increase was primarily due to net income of $28.2 million, a decrease in accumulated other comprehensive loss of $3.9 million and proceeds from stock option exercises of $1.7 million, partially offset by dividends declared on common stock of $8.6 million, repurchases of common stock of $5.0 million and preferred stock dividends of $213 thousand.

Current wording

Shareholders’ equity was $396.7 million at March 31, 2026, an increase of $6.7 million, or 1.7%, from $390.0 million at December 31, 2025. The increase was primarily due to net income of $10.7 million and proceeds from stock option exercises of $112 thousand, partially offset by dividends declared on common stock of $3.1 million, repurchases of common stock of $193 thousand, preferred stock dividends of $86 thousand and an increase in accumulated other comprehensive loss of $895 thousand.

Previous wording

To avoid restrictions on dividends, share repurchases and discretionary compensation payments to executives, the federal banking agencies require a banking organization to maintain a capital conservation buffer of 2.50% in common tier 1 capital, in addition to the minimum capital ratios adequacy requirements. The capital conservation buffer increases the minimum common equity Tier 1 capital ratio to 7%, the minimum Tier 1 capital (to risk-weighted assets) ratio to 8.5% and the minimum total capital ratio (to risk-weighted assets) to 10.5% for banking organizations seeking to avoid the limitations on dividends, share repurchases and discretionary compensation payments to executives. The Company’s and the Bank’s capital conservation buffers were 7.02% and 6.85%, respectively, as of September 30, 2025, and 6.94% and 6.92%, respectively, as of December 31, 2024.

Current wording

To avoid restrictions on dividends, share repurchases and discretionary compensation payments to executives, the federal banking agencies require a banking organization to maintain a capital conservation buffer of 2.50% in common tier 1 capital, in addition to the minimum capital ratios adequacy requirements. The capital conservation buffer increases the minimum common equity Tier 1 capital ratio to 7%, the minimum Tier 1 capital (to risk-weighted assets) ratio to 8.5% and the minimum total capital ratio (to risk-weighted assets) to 10.5% for banking organizations seeking to avoid the limitations on dividends, share repurchases and discretionary compensation payments to executives. The Company’s and the Bank’s capital conservation buffers were 6.98% and 6.69%, respectively, as of March 31, 2026, and 6.96% and 6.72%, respectively, as of December 31, 2025.

Previous wording

On May 24, 2022, the Company issued 69,141 shares of Series C Preferred Stock with a liquidation preference of $1,000 per share for the capital investment of $69.1 million from the U.S. Treasury under the ECIP. The ECIP investment qualifies as tier 1 capital for purposes of the bank regulatory capital requirements.

Current wording

On May 24, 2022, the Company issued 69,141 shares of Series C Preferred Stock with a liquidation preference of $1,000 per share for the capital investment of $69.1 million from the U.S. Treasury under the ECIP. The ECIP investment qualifies as tier 1 capital for the purposes of the bank regulatory capital requirements.

Previous wording

On January 16, 2025, the Company entered into the Option Agreement with the U.S. Treasury, which grants the Company the conditional option to repurchase the Series C Preferred Stock during the first 15 years following the Company’s issuance of the Series C Preferred Stock. The purchase price for the Preferred Stock under the Option Agreement is based on a formula equal to the present value of the Preferred Stock, calculated as set forth in the Option Agreement, together with any accrued and unpaid dividends thereon and could represent a discount from the Series C Preferred Stock’s liquidation amount.

Current wording

On January 16, 2025, the Company entered into an ECIP Securities Purchase Option Agreement (the “Option Agreement”) with the U.S. Treasury, which grants the Company the conditional option to repurchase the Series C Preferred Stock during the first 15 years following the Company’s issuance of the Series C Preferred Stock. The Option Agreement provides that if the Company meets certain conditions, the Company or the Company’s qualifying designee may repurchase the Series C Preferred Stock, potentially at a substantial discount (the “Repurchase Option”). The purchase price for the Preferred Stock under the Option Agreement is based on a formula equal to the present value of the Preferred Stock, calculated as set forth in the Option Agreement, together with any accrued and unpaid dividends thereon and could represent a discount from the Series C Preferred Stock’s liquidation amount.

Previous wording

The purchase option may not be exercised during the first 10 years following the Company’s sale of the Series C Preferred Stock (“the ECIP Period”) unless and until the Company meets at least one of the following Threshold Conditions: (1) an average of at least 60% of the Company’s loan originations qualify as “Deep Impact Lending” over any 16 consecutive quarters, (2) an average of at least 85% of the Company’s total loan originations qualify as “Qualified Lending” over any 24 quarters or (3) the Series C Preferred Stock has a dividend rate of no more than 0.5% at each of six consecutive “Reset Dates,” in each case as defined in Option Agreement and the terms of the Series C Preferred. In addition to satisfying a Threshold Condition, the Option Agreement requires that the Company meet certain other eligibility conditions in order to exercise the purchase option in the future, including compliance with the terms of the original ECIP purchase agreement and the terms of the Series C Preferred Stock, maintaining qualification as either a certified community development financial institution or a minority depository institution and satisfying other legal and regulatory criteria.

Current wording

The purchase option may not be exercised during the ECIP Period unless and until the Company meets at least one of the Threshold Conditions: (1) an average of at least 60% of the Company’s loan originations qualify as “Deep Impact Lending” over any 16 consecutive quarters, (2) an average of at least 85% of the Company’s total originations qualify as “Qualified Lending” over any 24 quarters or (3) the Series C Preferred Stock has a dividend rate of no more than 0.5% at each of six consecutive “Reset Dates,” in each case as defined in Option Agreement and the terms of the Series C Preferred. In addition to satisfying a Threshold Condition, the Option Agreement requires that the Company meet certain other eligibility conditions in order to exercise the purchase option in the future, including compliance with the terms of the original ECIP purchase agreement and the terms of the Series C Preferred Stock, maintaining qualification as either a certified community development financial institution or a minority depository institution and satisfying other legal and regulatory criteria.

Previous wording

The following table presents the estimated purchase price based on the formula set forth in the Option Agreement as if the Company meet all Threshold Conditions as of September 30, 2025:

Current wording

The following table presents the estimated purchase price based on the formula set forth in the Option Agreement as if the Company met all Threshold Conditions as of March 31, 2026:

Previous wording

The Company began paying quarterly dividends on the Series C Preferred Stock beginning in the three months ended June 30, 2024. Dividends on the Series C Preferred Stock totaled $86 thousand and $346 thousand for the three months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025 and 2024, Dividends on the Series C Preferred Stock totaled $213 thousand and $488 thousand, respectively.

Current wording

The Company began paying quarterly dividends on the Series C Preferred Stock at 2% beginning in the three months ended June 30, 2024 and the dividend rate decreased to 0.50% from the three months ended March 31, 2025. Dividends on the Series C Preferred Stock totaled $86 thousand and $40 thousand for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

During the year ended December 31, 2024, the Company repurchased and retired 14,947 shares of common stock at a weighted-average price of $14.88 per share under a stock repurchase program approved by the Board of Directors on August 2, 2023 authorizing the repurchase of up to 720,000 shares. On July 23, 2025, the Company announced that the term of the stock repurchase program would be extended to July 31, 2026.

Current wording

During the year ended December 31, 2025, the Company repurchased and retired 358,251 shares of common stock at a weighted-average price of $19.82 per share under a stock repurchase program first approved by the Board of Directors on August 2, 2023 authorizing the repurchase of up to 720,000 shares. On July 23, 2025, the Company announced that the term of the stock repurchase program would be extended to July 31, 2026.