Avidbank Holdings, Inc.
For the period ended Jun 30, 2026. Filed Aug 12, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 12, 2026
AVBH$34.40+0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-13.
0001437749-26-016715
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-12.
0001437749-26-027372
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 211 previous paragraphs and 237 current paragraphs.
147 unchanged; 63 reworded; 18 added; 1 removed; 0 previous and 9 current paragraphs rearranged.
Tables are not compared: 68 previous and 71 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
(2) A non-GAAP performance measure. We provide detailed reconciliations in the “Non-GAAP Performance and Financial Measures Reconciliation” table.
Current report
(5) Annualized for the periods presented.
Current report
The securities repositioning and repayment of short-term borrowings completed in 2025 continued to benefit earnings during 2026 through a higher-yielding investment portfolio and lower funding costs. Net interest income on a taxable equivalent basis for the three months ended June 30, 2026, was $26.7 million, an increase of $6.4 million, or 31%, compared to $20.3 million for the three months ended June 30, 2025. The increase in net interest income was primarily driven by higher average loan balances, higher yields on securities and lower average short-term borrowings.
Current report
(3) Including average allowance for credit losses on loans of $21.2 million and $19.5 million, respectively.
Current report
(6) Annualized for the periods presented.
Current report
Net interest income on a taxable equivalent basis for the six months ended June 30, 2026, was $53.2 million, an increase of $13.5 million, or 34%, compared to $39.7 million for the six months ended June 30, 2025. The increase in net interest income was primarily due to higher average loan balances, higher yields on securities and lower average short-term borrowings.
Current report
Average interest-earning assets for the six months ended June 30, 2026, increased $239.3 million compared to the same period in 2025, which included increases of $300.0 million in average total loans and $16.1 million in average balances in interest-earning deposits, partially offset by a $76.8 million decrease in average debt securities. Average interest-bearing liabilities increased $7.6 million for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to a $121.6 million increase in average money market and savings, a $63.6 million increase in average interest-bearing demand deposits, partially offset by decreases of $116.0 million in average short-term borrowings, $39.3 million in average non-reciprocal brokered deposits and $22.3 million in average time deposits. Average non-interest-bearing deposits for the six months ended June 30, 2026, increased to $543.4 million from $415.5 million for the same period in 2025.
Current report
(1) Includes $1.3 million in income related to BOLI death benefits for the three and six months ended June 30, 2026.
Current report
Income from bank-owned life insurance for the three and six months ended June 30, 2026, increased $1.4 million during both periods compared to the same periods in 2025 primarily driven by income of approximately $1.3 million on death benefit proceeds received during the second quarter of 2026.
Current report
Credit card income for the three months ended June 30, 2026, decreased $37 thousand, or 25%, due to a vendor contract payout in the second quarter of the prior year and increased $17 thousand, or 9%, for the six months ended June 30, 2026, primarily due to an increase in credit card interchange fee income.
Current report
Warrant and success fee income decreased $209 thousand, or 77%, and $206 thousand, or 75%, respectively, for the three and six months ended June 30, 2026. Refer to Note 13 —Derivative Financial Instruments for additional discussion of warrants.
Current report
For the three months ended June 30, 2026, non-interest expense increased by $3.9 million, or 31%, to $16.5 million compared to the same period in 2025.The increase was primarily driven by a charge of $2.6 million for the settlement of outstanding litigation, higher salaries and employee benefits expense, increased legal and professional fees and higher directors' fees and expenses.
Current report
Regulatory assessments totaled $515 thousand and $1.1 million for the three and six months ended June 30, 2026, an increase of $95 thousand, or 23%, and $118 thousand, or 12%, respectively, compared to the same periods in 2025 resulting from asset growth and an increase in assessment rates.
Current report
Directors' fees and expenses totaled $306 thousand and $532 thousand for the three and six months ended June 30, 2026, an increase of $124 thousand, or 68%, and $201 thousand, or 61%, respectively, compared to the same periods in 2025 resulting from the increased number of Directors compared to the same periods in 2025.
Current report
Correspondent bank charges totaled $203 thousand and $403 thousand for the three and six months ended June 30, 2026, an increase of $89 thousand, or 78%, and $119 thousand, or 42%, respectively, compared to the same periods in 2025 due to higher transaction volume.
Current report
Settlement of litigation expense totaled $2.6 million for the three and six months ended June 30, 2026. Outstanding litigation was settled during the second quarter of 2026, and the Company recognized litigation charges of $2.6 million in connection with the settlement. Additional information regarding the settlement is included in Note 9 —Commitments and Contingencies.
Current report
Non-performing loans to total loans were 0.65% as of June 30, 2026, a decrease of 49 basis points from 1.14% as of December 31, 2025. The decrease during the six months ended June 30, 2026, was primarily due to the payoff of a $3.1 million well-collateralized construction loan that was non-performing, the charge-off of two commercial and industrial loans totaling $3.2 million and the partial charge-off of one construction loan totaling $1.9 million.
Current report
During the six months ended June 30, 2026, loans risk rated as special mention increased $37.2 million. The increase is primarily due to a non-owner-occupied real estate relationship with 3 loans totaling $29.0 million with very low LTVs.
Removed paragraphs (1)
Previous report
Net interest income on a taxable equivalent basis for the three months ended March 31, 2026, was $26.5 million, an increase of $7.1 million, or 37%, compared to $19.4 million for the three months ended March 31, 2025. The increase in net interest income was primarily attributable to an increase in the balance of average loans and a decrease in interest expense. Additionally, the improvement in interest income was positively impacted by the repositioning of our available-for-sale securities portfolio during 2025.
Reworded paragraphs (63)
Previous wording
The following discussion and analysis**should be read in conjunction with our consolidated financial statements and the accompanying notes included elsewhere in this report. This discussion and analysis contains forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that we believe are reasonable but may prove to be inaccurate. Certain risks, uncertainties and other factors, including those set forth under sections entitled“Cautionary Note Regarding Forward-Looking Statements,”* “Risk Factors” and elsewhere in this report, may cause actual results to differ materially from those projected results discussed in the forward-looking statements appearing in this discussion and analysis. We assume no obligation to update any of these forward-looking statements except as required by law.*
Current wording
The following discussion and analysis**should be read in conjunction with our consolidated financial statements and the accompanying notes included elsewhere in this report, and with our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. This discussion and analysis contains forward-looking statements that are subject to certain risks and uncertainties and are based on certain assumptions that we believe are reasonable but may prove to be inaccurate. Certain risks, uncertainties and other factors, including those set forth under sections entitled“Cautionary Note Regarding Forward-Looking Statements,”* “Risk Factors” and elsewhere in this report, may cause actual results to differ materially from those projected results discussed in the forward-looking statements appearing in this discussion and analysis. We assume no obligation to update any of these forward-looking statements except as required by law.*
Previous wording
Certain statements contained in this Quarterly Report on Form 10-Q are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “strive,” “intend,” “plan” or words or phases of similar meaning. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Such forward-looking statements are based on various assumptions (some of which may be beyond our control) and are subject to risks and uncertainties, which change over time, and other factors which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include, but are not limited to:
Current wording
Certain statements contained in this Quarterly Report on Form 10-Q are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections and statements of our beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and are typically identified with words such as “may,” “could,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “aim,” “strive,” “intend,” “plan” or words or phrases of similar meaning. We caution that the forward-looking statements are based largely on our expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond our control. Such forward-looking statements are based on various assumptions (some of which may be beyond our control) and are subject to risks and uncertainties, which change over time, and other factors which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include, but are not limited to:
Previous wording
We are a bank holding company headquartered in San Jose, California that operates through our wholly owned subsidiary, Avidbank, or the Bank, a California state-chartered bank. We are registered under the Bank Holding Company Act of 1956, as amended. The Company was incorporated under the laws of the State of California in 2007 for the principal purpose of engaging in activities permitted for a bank holding company. As a bank holding company, the Company is authorized to engage in the activities permitted under the Bank Holding Company Act of 1956, as amended, and the regulations thereunder. We own 100% of the issued and outstanding common shares of our banking subsidiary, Avidbank.
Current wording
We are a bank holding company headquartered in San Jose, California that operates through our wholly owned banking subsidiary, Avidbank, or the Bank, a California state-chartered bank. We are registered under the Bank Holding Company Act of 1956, as amended. The Company was incorporated under the laws of the State of California in 2007 for the principal purpose of engaging in activities permitted for a bank holding company. As a bank holding company, the Company is authorized to engage in the activities permitted under the Bank Holding Company Act of 1956, as amended, and the regulations thereunder. We own 100% of the issued and outstanding common shares of Avidbank.
Previous wording
We specialize in commercial and industrial lending, venture lending, structured finance, asset-based lending, sponsor finance, fund finance, real estate construction and commercial real estate lending. In addition to providing products and services, the Bank emphasizes the establishment of long-standing relationships with its customers and regularly modifies the products and services it offers to meet the unique demands of its customers. Our mission is to collaborate with our customers to meet their banking needs whether individual or business. We aim to consistently deliver value that exceeds our clients’ expectations.
Current wording
We specialize in commercial and industrial lending, venture lending, structured finance, asset-based lending, sponsor finance, fund finance, real estate construction and commercial real estate lending. We recently established a Small Business Administration lending division to enhance our commercial banking suite of products and services. In addition to providing products and services, the Bank emphasizes the establishment of long-standing relationships with its customers and regularly modifies the products and services it offers to meet the unique demands of its customers. Our mission is to collaborate with our customers to meet their banking needs whether individual or business. We aim to consistently deliver value that exceeds our clients’ expectations.
Previous wording
We reported net income for the three months ended March 31, 2026 of $9.0 million, or $0.84 per diluted share, compared to net income of $5.4 million, or $0.71 per diluted share, for the same period in 2025. In August of 2025, the Company completed an initial public offering ("IPO") of its common stock, issuing an aggregate total of 3,001,500 shares of common stock at the public offering price of $23.00 per share. After deductions for underwriting fees, commissions and offering expenses, the Company's net proceeds from the IPO totaled $61.3 million. In the third and fourth quarters of 2025, we repositioned the securities portfolio and sold $274.7 million in available-for-sale securities for a loss of $62.4 million and purchased $205.4 million in available-for-sale securities with an average purchase yield of 4.57%. We paid off existing short-term borrowings at the time using proceeds from the IPO and securities sales.
Current wording
We reported net income for the three months ended June 30, 2026 of $7.6 million, or $0.71 per diluted share, compared to net income of $5.8 million, or $0.75 per diluted share, for the same period in 2025. Net income increased while earnings per share decreased primarily due to the additional 3 million shares issued in connection with the initial public offering (“IPO”) completed in August 2025. In the third and fourth quarters of 2025, we repositioned the securities portfolio and sold $274.7 million in available-for-sale securities for a loss of $62.4 million and purchased $205.4 million in available-for-sale securities with an average purchase yield of 4.57%. We paid off existing short-term borrowings at the time using proceeds from the IPO and securities sales.
Previous wording
The following provides highlights of our financial results for three months ended March 31, 2026:
Current wording
The following provides highlights of our financial results for the three and six months ended June 30, 2026:
Previous wording
Management believes that taxable equivalent net interest income and taxable equivalent net interest margin are reasonable measures to understand the Company’s core operating performance and are important to many investors in the marketplace who are interested in understanding our profitability prospects from our core operations. In addition, management reviews yields on certain asset categories and the net interest margin of the Company on a fully taxable equivalent basis. The non-GAAP taxable equivalent net interest income and net interest margin adjustments facilitate performance comparisons between taxable and tax-free assets by increasing the tax-free income by an amount equivalent to the Federal income taxes that would have been paid if this income were taxable at the Company's 21% Federal statutory rate.
Current wording
Management believes that adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average equity, adjusted efficiency ratio and taxable equivalent net interest income are reasonable measures to understand the Company’s core operating performance and are important to many investors who are interested in understanding our profitability prospects from our core operations. In addition, management reviews yields on certain asset categories and the net interest margin of the Company on a fully taxable equivalent basis. The non-GAAP taxable equivalent net interest income adjustment facilitates performance comparisons between taxable and tax-exempt assets by increasing the tax-exempt income by an amount equivalent to the Federal income taxes that would have been paid if this income were taxable at the Company's 21% Federal statutory rate.
Previous wording
(1) Non-performing loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of deferred fees / (costs) of $252 thousand and $496 thousand for the three months ended March 31, 2026 and March 31, 2025, respectively.
Current wording
(1) Non-performing loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of deferred fees / (costs) of $260 thousand and $314 thousand for the three months ended June 30, 2026 and June 30, 2025, respectively.
Previous wording
(3) Including average allowance for credit losses on loans of $21.9 million and $18.8 million, respectively.
Current wording
(3) Including average allowance for credit losses on loans of $20.5 million and $19.1 million, respectively.
Previous wording
Average interest-earning assets for the three months ended March 31, 2026 increased $226.5 million compared to the same period in 2025, which included increases of $292.0 million in average total loans and $14.5 million in average balances in interest-bearing deposits in banks, partially offset by a $79.9 million decrease in average debt securities. Average interest-bearing liabilities decreased $7.8 million for the three months ended March 31, 2026, compared to the same period in 2025, primarily due to a $144.6 million decrease in average short-term borrowings, a $73.0 million decrease in average non-reciprocal brokered deposits and a $32.7 million decrease in average time deposits, partially offset by increases of $110.5 million in average interest-bearing demand deposits and an increase of $131.9 million in average money market and savings. Average non-interest-bearing deposits for the three months ended March 31, 2026, increased to $534.0 million from $405.7 million for the same period in 2025.
Current wording
Average interest-earning assets for the three months ended June 30, 2026 increased $252.0 million compared to the same period in 2025, which included increases of $307.9 million in average total loans and $17.8 million in average balances in interest-earning deposits, partially offset by a $73.7 million decrease in average debt securities. Average interest-bearing liabilities increased $22.9 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to a $111.3 million increase in average money market and savings and a $17.2 million increase in average interest-bearing demand deposits, partially offset by decreases of $87.7 million in average short-term borrowings, $11.9 million in average time deposits and $6.0 million in average non-reciprocal brokered deposits. Average non-interest-bearing deposits for the three months ended June 30, 2026, increased to $552.7 million from $425.2 million for the same period in 2025.
Previous wording
The average rate paid for short-term borrowings for the three months ended March 31, 2026, was 3.82% compared to 4.56% for the same period in 2025. Our short-term borrowings typically consist of overnight borrowings.
Current wording
The average rate paid for short-term borrowings for the three months ended June 30, 2026, was 3.80% compared to 4.60% for the same period in 2025. Our short-term borrowings typically consist of overnight borrowings.
Previous wording
(5) Includes a special FHLB dividend totaling $241 thousand for the three months ended March 31, 2026. Yield is annualized for the periods presented.
Current wording
(5) Includes a special FHLB dividend totaling $241 thousand for the six months ended June 30, 2026.
Previous wording
Net interest margin for the three months ended March 31, 2026, was 4.38% compared to 3.52% for the same period in 2025. The increase was primarily driven by lower cost of deposits and lower rates and balances on short-term borrowings. Also contributing to the increase in net interest margin was the receipt of a special FHLB dividend totaling $241 thousand during the three months ended March 31, 2026. The FHLB dividend contributed 4 basis points to net interest margin for the three months ended March 31, 2026. Also positively impacting net interest margin in the first quarter of 2026 was the sale of low-yielding securities as part of the repositioning of our available-for-sale securities portfolio that took place during 2025.
Current wording
Net interest margin for the six months ended June 30, 2026, was 4.32% compared to 3.56% for the same period in 2025. The increase was primarily driven by higher yields on securities, lower cost of deposits and lower rates and balances on short-term borrowings. Also contributing to the increase in net interest margin was the receipt of a special FHLB dividend totaling $241 thousand during the six months ended June 30, 2026. The FHLB dividend contributed 4 basis points to net interest margin for the six months ended June 30, 2026. Also positively impacting net interest margin during the first six months of 2026 was the sale of low-yielding securities as part of the repositioning of our available-for-sale securities portfolio that took place during 2025.
Previous wording
The yield on total average loans of 6.68% for the three months ended March 31, 2026, declined 28 basis points compared to the same period in 2025, primarily driven by reductions in the prime rate. The yield on securities increased to 4.64% during the three months ended March 31, 2026, compared to 2.40% for the same period in 2025 due to the repositioning of our securities portfolio during 2025. The yield on interest-earning assets increased to 6.45% for the three months ended March 31, 2026, compared to 6.29% for the same period in 2025. The average cost of total deposits decreased to 2.24% for the three months ended March 31, 2026, from 2.76% for the same period in 2025, and total funding costs, including all deposits, short-term borrowings and subordinated debentures, decreased to 3.05% for the three months ended March 31, 2026, compared to 3.68% for the same period in 2025.
Current wording
The yield on total average loans of 6.67% for the six months ended June 30, 2026, declined 31 basis points compared to the same period in 2025, primarily driven by reductions in the Prime rate. The yield on securities increased to 4.66% during the six months ended June 30, 2026, compared to 2.37% for the same period in 2025 due to the repositioning of our securities portfolio during 2025. The yield on interest-earning assets increased to 6.41% for the six months ended June 30, 2026, compared to 6.30% for the same period in 2025.
Previous wording
The following table shows the effect of the interest differential of volume and rate changes for the three months ended March 31, 2026 compared to the same period in 2025. The change in interest due to both rate and volume has been allocated in proportion to the relationship of absolute dollar amounts of change in each.
Current wording
The following table shows the effect of the interest differential of volume and rate changes for the three and six months ended June 30, 2026 compared to the same period in 2025. The change in interest due to both rate and volume has been allocated in proportion to the relationship of absolute dollar amounts of change in each.
Previous wording
The provision for credit losses was $1.4 million for the three months ended March 31, 2026, compared to $0 for the three months ended March 31, 2025. The provision was higher in the first quarter of 2026 compared to the same period of 2025 primarily due to higher loan balances. The allowance for credit losses, including loans and unfunded commitments, as a percentage of outstanding loans was 1.07% and 1.14% at March 31, 2026 and 2025, respectively. See further discussion of the Provision for Credit Losses and Allowance for Credit Losses in “Financial Condition—Allowance for Credit Losses.”
Current wording
The provision for credit losses was $2.8 million for the three months ended June 30, 2026, compared to $925 thousand for the three months ended June 30, 2025. For the six months ended June 30, 2026, provision for credit losses was $4.2 million, an increase of $3.3 million compared to the six months ended June 30, 2025. The provision was higher in the second quarter of 2026 compared to the same period of 2025 and was higher for the first six months of 2026 compared to the six months ended June 30, 2025, primarily due to higher loan balances and a $1.9 million partial charge-off of one non-performing construction loan. The allowance for credit losses, including loans and unfunded commitments, as a percentage of outstanding loans was 1.09% and 1.15% as of June 30, 2026 and 2025, respectively. See further discussion of the Provision for Credit Losses and Allowance for Credit Losses in “Financial Condition—Allowance for Credit Losses.”
Previous wording
The following table details the components of the Company's provision for credit losses for the three months ended March 31, 2026 and 2025.
Current wording
The following table details the components of the Company's provision for credit losses for the three and six months ended June 30, 2026 and 2025.
Previous wording
Non-interest income increased $296 thousand, or 25%, for the three months ended March 31, 2026, compared to the same period of 2025. The increase was primarily attributable to higher foreign exchange income and higher other income resulting from increased credit card interchange fee income. Partially offsetting the increase was a decrease in other investment income due to fair value marks on fund investments.
Current wording
Non-interest income increased $1.5 million, or 98%, and $1.8 million, 67%, respectively, for the three and six months ended June 30, 2026, compared to the same periods of 2025. The increase was primarily driven by income of approximately $1.3 million on BOLI death benefits received during the second quarter of 2026 as well as higher foreign exchange income, higher other investment income and higher other income. Partially offsetting the increase was a decrease in warrant and success fee income.
Previous wording
The following table reflects the major components of the Company’s non-interest income for the three months ended March 31, 2026 and 2025:
Current wording
The following table reflects the major components of the Company’s non-interest income for the three and six months ended June 30, 2026 and 2025:
Previous wording
Service charges and bank fees for the three months ended March 31, 2026, increased $59 thousand, or 8%, from the same period in 2025, primarily due to an increase in the number of client relationships.
Current wording
Service charges and bank fees for the three and six months ended June 30, 2026, increased $11 thousand, or 1%, and $70 thousand, or 4%, respectively, from the same periods in 2025, primarily due to an increase in the number of client relationships.
Previous wording
During the three months ended March 31, 2026, foreign exchange income increased $143 thousand, or 65%, compared to the same period in 2025 as a result of the volume of transaction commissions. Foreign exchange income represents commissions earned on foreign exchange transactions, net of related commissions charged by our correspondent bank partners.
Current wording
During the three and six months ended June 30, 2026, foreign exchange income increased $144 thousand, or 73%, and $287 thousand, or 69%, respectively, compared to the same periods in 2025 as a result of the volume of transaction commissions. Foreign exchange income represents commissions earned on foreign exchange transactions, net of related commissions charged by our correspondent bank partners.
Previous wording
Other investment income for the three months ended March 31, 2026, decreased $69 thousand, compared to the same period in 2025 primarily due to fair value marks on fund investments.
Current wording
Other investment income for the three and six months ended June 30, 2026, increased $102 thousand and $33 thousand, respectively, compared to the same periods in 2025 primarily due to fair value marks on fund investments.
Previous wording
Other income increased $144 thousand for the three months ended March 31, 2026, compared the same period in 2025 primarily driven by an increase in credit card interchange fee income.
Current wording
Other income increased $97 thousand and $187 thousand for the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025 primarily driven by an increase in letter of credit fee income.
Previous wording
During the three months ended March 31, 2026, non-interest expense increased by $1.2 million, or 10%, to $14.1 million compared to the same period in 2025.The increase was driven by higher salaries and employee benefits expense, increased legal and professional fees and higher data processing expense, partially offset by a decrease in occupancy and equipment expense.
Current wording
During the six months ended June 30, 2026, non-interest expense increased by $5.1 million, or 20%, to $30.6 million compared to the same period in 2025. The increase was primarily driven by a charge of $2.6 million for the settlement of outstanding litigation, higher salaries and employee benefits expense, increased legal and professional fees, higher data processing expense and higher directors' fees and expenses, partially offset by a decrease in occupancy and equipment expense.
Previous wording
The following table reflects the major components of the Company’s non-interest expense for the three months ended March 31, 2026 and 2025:
Current wording
The following table reflects the major components of the Company’s non-interest expense for the three and six months ended June 30, 2026 and 2025:
Previous wording
Salaries and employee benefits expense for the three months ended March 31, 2026, was $9.6 million, an increase of $458 thousand, or 5%, compared to the three months ended March 31, 2025. The increase was primarily driven by increased investment in personnel across the entire Bank. Full-time equivalent headcount totaled 154 at March 31, 2026 compared to 143 at March 31, 2025.
Current wording
Salaries and employee benefits expense for the three and six months ended June 30, 2026, was $9.6 million, an increase of $585 thousand, or 7%, and $19.1 million, an increase of $1.0 million, or 6%, compared to the same periods in 2025. The increases were primarily driven by increased investment in personnel across the entire Bank, partially offset by higher capitalized loan origination costs. Full-time equivalent headcount totaled 162 as of June 30, 2026 compared to 149 as of June 30, 2025.
Previous wording
Legal and professional fees were $1.2 million for the three months ended March 31, 2026, an increase of $677 thousand compared to the same period in 2025. The increase was driven by higher credit-related legal and professional fees.
Current wording
Legal and professional fees were $897 thousand and $2.1 million for the three and six months ended June 30, 2026, an increase of $182 thousand, or 25%, and $860 thousand, or 70%, respectively, compared to the same periods in 2025. The increases were driven by higher credit-related legal and professional fees.
Previous wording
Data processing expense was $799 thousand, an increase of $184 thousand, or 30%, compared to the same period in 2025. The increase was due to higher transaction volume.
Current wording
Data processing expense was $787 thousand and $1.6 million for the three and six months ended June 30, 2026, an increase of $28 thousand, or 4%, and $212 thousand, or 15%, respectively, compared to the same periods in 2025. The increases were due to higher transaction volume.
Previous wording
Occupancy and equipment expense totaled $790 thousand, reflecting a decrease of $206 thousand, or 21%, from the same period in 2025 due to lower rent expense at one of our loan production offices.
Current wording
Occupancy and equipment expense totaled $777 thousand and $1.6 million for the three and six months ended June 30, 2026, reflecting an increase of $18 thousand, or 2%, from the same period in 2025. For the six months ended June 30, 2026, occupancy and equipment expense decreased $188 thousand, or 11%, compared to the same period in 2025 due to lower rent expense at one of our loan production offices.
Previous wording
Income tax expense was $3.4 million and $2.2 million for the three months ended March 31, 2026 and 2025, respectively. The effective tax rate for the three months ended March 31, 2026 and 2025 was 27.5% and 29.2%, respectively. The decrease compared to the first quarter of 2025 was primarily due to discrete tax benefits related to the vesting of equity awards.
Current wording
Income tax expense was $2.8 million and $2.5 million for the three months ended June 30, 2026 and 2025, respectively. The effective tax rate for the three months ended June 30, 2026 and 2025, was 27.0% and 30.1%, respectively. The decrease compared to the second quarter of 2025 was primarily due to the recognition of approximately $1.3 million in tax-exempt BOLI death benefit proceeds. For the six months ended June 30, 2026 and 2025, income tax expense was $6.2 million and $4.7 million, respectively. The effective tax rate for the six months ended June 30, 2026 and 2025, was 27.2% and 29.7%, respectively. The decrease compared to the same period of 2025 was primarily due to the receipt of tax-exempt income on BOLI death benefit proceeds and from state tax impacts from changes in California law requiring financial institutions to apportion business income using a single sales factor for tax years beginning on or after January 1, 2025. As a result, the second quarter of 2025 included $153 thousand in additional tax expense related to the write-down of deferred tax assets. In addition, the first quarter of 2026 included approximately $514 thousand in discrete tax benefits related to the vesting of equity awards.
Previous wording
Total assets of the Company were $2.58 billion at March 31, 2026 and $2.57 billion at December 31, 2025. Loans increased $24.4 million compared to December 31, 2025, and were partially offset by decreases in cash and cash equivalents, the securities portfolio and other assets.
Current wording
Total assets of the Company were $2.66 billion as of June 30, 2026 and $2.57 billion as of December 31, 2025. Loans, net of deferred fees increased $75.7 million compared to December 31, 2025, and debt securities increased $14.0 million over the same period. Partially offsetting the increase were decreases in the cash surrender value of BOLI policies and other assets.
Previous wording
As of March 31, 2026, loans, net of deferred fees, totaled $2.17 billion compared to $2.15 billion at December 31, 2025. The increase from December 31, 2025, was primarily due to the increase in commercial real estate loans, partially offset by a decrease in commercial and industrial loans. The loan portfolio was comprised of approximately 48% and 49% of commercial and industrial loans at March 31, 2026 and December 31, 2025, respectively. Commercial real estate loans comprised 41% of our loans at March 31, 2026 compared to 40% at December 31, 2025. The loan portfolio information presented in this section should be read in conjunction with Note 3 —Loans and Note 4 —Allowance for Credit Losses on Loans of the consolidated financial statements.
Current wording
As of June 30, 2026, loans, net of deferred fees, totaled $2.22 billion compared to $2.15 billion as of December 31, 2025. The increase from December 31, 2025, was primarily due to the increase in commercial and industrial loans and commercial real estate loans, partially offset by a decrease in construction loans. The loan portfolio was comprised of approximately 50% and 49% of commercial and industrial loans as of June 30, 2026 and December 31, 2025, respectively. Commercial real estate loans comprised 41% of our loans as of June 30, 2026 compared to 40% as of December 31, 2025. The loan portfolio information presented in this section should be read in conjunction with Note 3 —Loans and Note 4 —Allowance for Credit Losses on Loans of the consolidated financial statements.
Previous wording
As of March 31, 2026 and December 31, 2025, we had $882.8 million and $854.3 million, respectively, in commercial real estate loans representing 41% and 40% respectively, of our total loans. Our commercial real estate loans consist of commercial, multi-family and mixed-use property loans for investors and owner-users. Our commercial real estate loans are typically secured by multi-family, hotel/motel, retail, industrial, warehouse or other commercial properties. At March 31, 2026 and December 31, 2025, 21% and 20%, respectively, of our commercial real estate loans were for non-owner-occupied purposes. All commercial real estate loans were collateralized by properties in California as of March 31, 2026 and December 31, 2025.
Current wording
As of June 30, 2026 and December 31, 2025, we had $909.9 million and $854.3 million, respectively, in commercial real estate loans representing 41% and 40% respectively, of our total loans. Our commercial real estate loans consist of commercial, multi-family and mixed-use property loans for investors and owner-users. Our commercial real estate loans are typically secured by multi-family, hotel/motel, retail, industrial, warehouse or other commercial properties. As of June 30, 2026 and December 31, 2025, 19% and 20%, respectively, of our commercial real estate loans were for non-owner-occupied purposes. All commercial real estate loans were collateralized by properties in California as of June 30, 2026 and December 31, 2025.
Previous wording
Non-performing assets are comprised of loans on non-accrual status, loans 90 days or more past due and still accruing interest, and other real estate owned. We had no loans 90 days or more past due and still accruing interest and no other real estate owned at March 31, 2026 or December 31, 2025. A loan is placed on nonaccrual status if there is concern that principal and interest may not be fully collected or if the loan has been past due for a period of 90 days or more, unless the obligation is both well-secured and in process of legal collection. When loans are placed on non-accrual status, all interest previously accrued but not collected is reversed against current period interest income. Income on non-accrual loans is subsequently recognized only to the extent that cash is received, and the loan’s principal balance is deemed collectible. Loans are returned to accrual status when they are brought current with respect to principal and interest payments and future payments are reasonably assured. Additionally, assets that have been restructured due to the borrower’s financial difficulties may also be classified as non-performing if the restructuring does not restore the asset to a performing status.
Current wording
Non-performing assets are comprised of loans on non-accrual status, loans 90 days or more past due and still accruing interest, and other real estate owned. We had no loans 90 days or more past due and still accruing interest and no other real estate owned as of June 30, 2026 or December 31, 2025. A loan is placed on nonaccrual status if there is concern that principal and interest may not be fully collected or if the loan has been past due for a period of 90 days or more, unless the obligation is both well-secured and in process of legal collection. When loans are placed on non-accrual status, all interest previously accrued but not collected is reversed against current period interest income. Income on non-accrual loans is subsequently recognized only to the extent that cash is received, and the loan’s principal balance is deemed collectible. Loans are returned to accrual status when they are brought current with respect to principal and interest payments and future payments are reasonably assured. Additionally, assets that have been restructured due to the borrower’s financial difficulties may also be classified as non-performing if the restructuring does not restore the asset to a performing status.
Previous wording
The allowance for credit losses (“ACL”) represents an amount that is intended to absorb the lifetime expected credit losses that may be sustained on outstanding loans at the balance sheet date. Additional information regarding the ACL evaluation can be found in Note 4 —Allowance for Credit Losses on Loansto our consolidated financial statements for the three months ended March 31, 2026 and 2025. The decrease in the ACL compared to December 31, 2025 was primarily due to the payoff of a $3.1 million construction loan that was non-performing and the charge-off of two commercial and industrial loans totaling $3.2 million. The individual reserve on the two commercial and industrial loans prior to them being charged-off was $1.2 million each.
Current wording
The allowance for credit losses (“ACL”) represents an amount that is intended to absorb the lifetime expected credit losses that may be sustained on outstanding loans at the balance sheet date. Additional information regarding the ACL evaluation can be found in Note 4 —Allowance for Credit Losses on Loansto our consolidated financial statements for the three and six months ended June 30, 2026 and 2025. The decrease in the ACL compared to December 31, 2025 was primarily due to the payoff of a $3.1 million construction loan that was non-performing and the charge-off of two commercial and industrial loans totaling $3.2 million and the partial charge-off of one non-performing construction loan totaling $1.9 million. The individual reserve on the two commercial and industrial loans prior to them being charged-off was $1.2 million each.
Previous wording
The ACL may be adjusted by charge-offs, net of recoveries of previous losses, and may be increased or decreased by a provision for or recapture of credit losses, which is recorded in the consolidated statements of operations. Management estimates the allowance balance using various information sources, both internal and external, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience typically provides a basis for the estimation of expected credit losses. Adjustments to historical loss information may be made for differences in current loan-specific risk characteristics and changes in environmental conditions. Expected credit losses are typically estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term generally excludes expected extensions, renewals, and modifications.
Current wording
The ACL may be adjusted by charge-offs, net of recoveries of previous losses, and may be increased or decreased by a provision for or recapture of credit losses, which is recorded in the consolidated statements of operations. Management estimates the allowance balance using various information sources, both internal and external, relating to past events, current conditions, and reasonable and supportable forecasts. During 2026, Management transitioned from FOMC economic forecasts based on publicly available economic data to forecasts sourced from Moody's Analytics. The change did not materially alter the Company's ACL methodology but provides a consistent source of economic assumptions used in estimated expected credit losses. Historical credit loss experience typically provides a basis for the estimation of expected credit losses. Adjustments to historical loss information may be made for differences in current loan-specific risk characteristics and changes in environmental conditions. Expected credit losses are typically estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term generally excludes expected extensions, renewals, and modifications. Additional information regarding our ACL policy is included in the section titled “Critical Accounting Policies and Estimates”.
Previous wording
We assign a risk rating to all loans and periodically perform detailed reviews of all such loans exhibiting variances in expected payment and/or financial performance to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to examination by independent specialists engaged by us and by our regulators. During these internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which borrowers operate and the fair values of collateral securing these loans. These credit quality indicators are used to assign a risk rating to each individual loan. We individually rate loans based on internal credit risk ratings using numerous factors, including thorough analysis of historical and expected cash flows, LTV (loan-to-value) ratios, collateral, collection experience, and other internal metrics. The risk ratings can be grouped into six major categories, defined as follows:
Current wording
We assign a risk rating to all loans and periodically perform detailed reviews of all such loans exhibiting variances in expected payment and/or financial performance to identify credit risks and to assess the overall collectability of the portfolio. These risk ratings are also subject to examination by independent specialists engaged by us and by our regulators. During these internal reviews, management monitors and analyzes the financial condition of borrowers and guarantors, trends in the industries in which borrowers operate and the fair values of collateral securing these loans. These credit quality indicators are used to assign a risk rating to each individual loan. We individually rate loans based on internal credit risk ratings using numerous factors, including thorough analysis of historical and expected cash flows, loan-to-value (“LTV”) ratios, collateral, collection experience, and other internal metrics. The risk ratings can be grouped into six major categories, defined as follows:
Previous wording
Provision for credit losses on loans was $1.4 million for the three months ended March 31, 2026 compared to $0 for the three months ended March 31, 2025 due to higher loan balances in the first quarter of 2026. The following table presents the allocation of the allowance for credit losses as of the dates indicated:
Current wording
Provision for credit losses on loans was $2.5 million and $3.9 million for the three and six months ended June 30, 2026, respectively, compared to $891 thousand for both the three and six months ended June 30, 2025, primarily due to higher loan balances, the charge-off of two commercial and industrial loans totaling $3.2 million and a $1.9 million partial charge-off of one non-performing construction loan. The following table presents the allocation of the allowance for credit losses as of the dates indicated:
Previous wording
Debt securities available-for-sale totaled $210.6 million at March 31, 2026, compared to $218.2 million at December 31, 2025. Available-for-sale securities are reported at their aggregate fair value, and unrealized gains and losses are included as a component of other comprehensive income, net of deferred taxes. At March 31, 2026, debt securities available-for-sale had a net unrealized loss of $1.8 million compared to a net unrealized loss of $328 thousand at December 31, 2025. Market changes in interest rates and credit spreads will result in temporary unrealized gains or losses as the market price of securities fluctuates. Management evaluated all available-for-sale securities in an unrealized loss position at March 31, 2026 and December 31, 2025, and concluded no impairment existed at the balance sheet dates.
Current wording
Debt securities available-for-sale totaled $232.2 million as of June 30, 2026, compared to $218.2 million as of December 31, 2025. Available-for-sale securities are reported at their aggregate fair value, and unrealized gains and losses are included as a component of other comprehensive income, net of deferred taxes. As of June 30, 2026, debt securities available-for-sale had a net unrealized loss of $2.8 million compared to a net unrealized loss of $328 thousand as of December 31, 2025. Market changes in interest rates and credit spreads will result in temporary unrealized gains or losses as the market price of securities fluctuates. Management evaluated all available-for-sale securities in an unrealized loss position as of June 30, 2026 and December 31, 2025, and concluded no impairment existed at the balance sheet dates.
Previous wording
Our investments provide a source of liquidity as they can be pledged to support borrowed funds or can be liquidated to generate cash proceeds. The investment portfolio is also a resource to us in managing interest rate risk, as the maturity and interest rate characteristics of this asset class can be changed to match changes in the loan and deposit portfolios. We consider available-for-sale security interest rate sensitivity as part of total interest rate risk management. For further discussion, see sub-section entitled “—* Interest Rate Sensitivity and Market Risk*.” The majority of our available-for-sale investment portfolio is comprised of mortgage-backed securities (MBSs) that are either issued or guaranteed by U.S. government agencies or government-sponsored enterprises (GSEs).
Current wording
Our investments provide a source of liquidity as they can be pledged to support borrowed funds or can be liquidated to generate cash proceeds. The investment portfolio is also a resource to us in managing interest rate risk, as the maturity and interest rate characteristics of this asset class can be changed to match changes in the loan and deposit portfolios. We consider available-for-sale security interest rate sensitivity as part of total interest rate risk management. For further discussion, see the sub-section entitled “Interest Rate Sensitivity and Market Risk.” The majority of our available-for-sale investment portfolio is comprised of mortgage-backed securities (MBSs) that are either issued or guaranteed by U.S. government agencies or government-sponsored enterprises (GSEs).
Showing the first 40 of 63 pairs. Open the source sections for the rest.
Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
Net interest margin for the three months ended June 30, 2026, was 4.26% compared to 3.60% for the same period in 2025. The increase was primarily driven by higher yields on securities, lower cost of deposits and lower rates and balances on short-term borrowings.
Current report — wording carried from elsewhere
The yield on total average loans of 6.67% for the three months ended June 30, 2026, declined 34 basis points compared to the same period in 2025, primarily driven by reductions in the Prime rate. The yield on securities increased to 4.68% during the three months ended June 30, 2026, compared to 2.34% for the same period in 2025 due to the repositioning of our securities portfolio during 2025. The yield on interest-earning assets increased to 6.37% for the three months ended June 30, 2026, compared to 6.32% for the same period in 2025, primarily due to higher average loan balances, higher average interest-earning deposits and higher yields on our debt securities portfolio following the balance sheet restructuring.
Current report — wording carried from elsewhere
The average cost of total deposits decreased to 2.29% for the three months ended June 30, 2026, from 2.78% for the same period in 2025, and total funding costs, including all deposits, short-term borrowings and subordinated debentures, decreased to 3.12% for the three months ended June 30, 2026, compared to 3.67% for the same period in 2025, primarily driven by the reduction in the Federal Funds rate.
Current report — wording carried from elsewhere
(1) Non-performing loans are included in average loan balances. No adjustment has been made for these loans in the calculation of yields. Interest income on loans includes amortization of deferred fees / (costs) of $512 thousand and $810 thousand for the six months ended June 30, 2026 and June 30, 2025, respectively.
Current report — wording carried from elsewhere
(2) Interest income on tax-exempt securities has been increased to reflect comparable interest on taxable securities. The rate used was 21%, reflecting the statutory federal income tax rate.
Current report — wording carried from elsewhere
(4) Net interest margin is net interest income divided by total interest-earning assets.
Current report — wording carried from elsewhere
The average cost of total deposits decreased to 2.27% for the six months ended June 30, 2026, from 2.77% for the same period in 2025, and total funding costs, including all deposits, short-term borrowings and subordinated debentures, decreased to 3.09% for the six months ended June 30, 2026, compared to 3.68% for the same period in 2025.
Current report — wording carried from elsewhere
The average rate paid for short-term borrowings for the six months ended June 30, 2026, was 3.81% compared to 4.57% for the same period in 2025. Our short-term borrowings typically consist of overnight borrowings.
Current report — wording carried from elsewhere
(1) NM - Comparisons from positive to negative values or to zero values are considered not meaningful.