COASTAL FINANCIAL CORP

Previous wording

We are a bank holding company that operates through our wholly owned subsidiaries, Coastal Community Bank (“Bank”) and Arlington Olympic LLC. We are headquartered in Everett, Washington, which by population is the largest city in, and the county seat of, Snohomish County, which has an estimated population in 2025 of over 853,000. Our business is conducted through three reportable segments: The community bank, CCBX and treasury & administration. The community bank segment includes all community banking activities, with a primary focus on providing a wide range of banking products and services to consumers and small to medium sized businesses in the broader Puget Sound region in the state of Washington and through the Internet and our mobile banking application. We currently operate 14 full-service banking locations, 12 of which are located in Snohomish County, where we are the largest community bank by deposit market share, and two of which are located in neighboring counties (one in King County and one in Island County). The CCBX segment provides banking as a service (“BaaS”) that allows digital financial service providers, companies and brands to offer their customers banking services. The CCBX segment has 29 partners as of September 30, 2025, one of which is a broker-dealer. The treasury & administration segment includes investments, debt and other reporting items that are not specific to the community bank or CCBX segments. The Bank’s deposits are insured in whole or in part by the Federal Deposit Insurance Corporation (“FDIC”). The Bank is subject to regulation by the Federal Reserve and the Washington State Department of Financial Institutions Division of Banks. The Federal Reserve also has supervisory authority over the Company.

Current wording

We are a bank holding company that operates through our wholly owned subsidiaries, Coastal Community Bank (“Bank”) and Arlington Olympic LLC. We are headquartered in Everett, Washington, which by population is the largest city in, and the county seat of, Snohomish County. Our business is conducted through three reportable segments: The community bank, CCBX and treasury & administration. The community bank segment includes all community banking activities, with a primary focus on providing a wide range of banking products and services to consumers and small to medium sized businesses in the broader Puget Sound region in the state of Washington and through the Internet and our mobile banking application. We currently operate 14 full-service banking locations, 12 of which are located in Snohomish County, where we are the largest community bank by deposit market share, and two of which are located in neighboring counties (one in King County and one in Island County). The CCBX segment provides banking as a service (“BaaS”) that allows digital financial service providers, companies and brands to offer their customers banking services. The CCBX segment has 30 partners as of March 31, 2026. The treasury & administration segment includes investments, debt and other reporting items that are not specific to the community bank or CCBX segments. The Bank’s deposits are insured in whole or in part by the Federal Deposit Insurance Corporation (“FDIC”). The Bank is subject to regulation by the Federal Reserve and the Washington State Department of Financial Institutions Division of Banks. The Federal Reserve also has supervisory authority over the Company.

Previous wording

As of September 30, 2025, we had total assets of $4.55 billion, total loans receivable of $3.70 billion, total deposits of $3.97 billion and total shareholders’ equity of $475.3 million.

Current wording

As of March 31, 2026, we had total assets of $5.66 billion, total loans receivable of $3.86 billion, total deposits of $5.04 billion and total shareholders’ equity of $503.8 million.

Previous wording

We generate most of our community bank revenue from interest on loans and CCBX revenue from BaaS fee income and interest on loans. Our primary source of funding for our loans is commercial and retail deposits from our customer relationships and from our partner deposit relationships. We place secondary reliance on wholesale funding, primarily borrowings from the Federal Home Loan Bank (“FHLB”). Less commonly used sources of funding include borrowings from the Federal Reserve System (“Federal Reserve”) discount window, draws on established federal funds lines from unaffiliated commercial banks, brokered funds, which allows us to obtain deposits from sources that do not have a relationship with the Bank and can be obtained through certificate of deposit listing services, via the internet or through other advertising methods, or a one-way buy through an insured cash sweep (“ICS”) account, which allows us to obtain funds from other institutions that have deposited funds through ICS. Our largest expenses are provision for credit losses - loans, interest on deposits and borrowings, BaaS loan expense, and salaries and employee benefits. Our principal lending products are commercial real estate loans, consumer loans, residential real estate, commercial and industrial loans and construction, land and land development loans.

Current wording

We generate most of our community bank revenue from interest on loans and CCBX revenue from BaaS fee income and interest on loans. Our primary source of funding for our loans is commercial and retail deposits from our customer relationships and from our partner deposit relationships. We place secondary reliance on wholesale funding, primarily borrowings from the Federal Home Loan Bank (“FHLB”). Less commonly used sources of funding include borrowings from the Federal Reserve System (“Federal Reserve”) discount window, draws on established federal funds lines from unaffiliated commercial banks, brokered funds, which allows us to obtain deposits from sources that do not have a relationship with the Bank and can be obtained through certificate of deposit listing services, via the internet or through other advertising methods, or a one-way buy through an insured cash sweep (“ICS”) account, which allows us to obtain funds from other institutions that have deposited funds through ICS. Our largest expenses are provision for credit losses on loans, interest on deposits and borrowings, BaaS loan expense, and salaries and employee benefits. Our principal lending products are commercial real estate loans, consumer loans, residential real estate, commercial and industrial loans and construction, land and land development loans.

Previous wording

Net income for the three months ended September 30, 2025 was $13.6 million, or $0.88 per diluted share, compared to $13.5 million, or $0.97 per diluted share, for the three months ended September 30, 2024. The increase in net income over the comparable period in the prior year was primarily attributable to a $3.9 million increase in interest income due to an increase in average loans receivable, an increase in BaaS program income of $2.4 million and a decrease in interest expense of $1.8 million, partially offset by a $5.7 million increase in noninterest expenses combined with other less significant changes.

Current wording

Net income for the three months ended March 31, 2026 was $12.0 million, or $0.78 per diluted share, compared to $9.7 million, or $0.63 per diluted share, for the three months ended March 31, 2025. The increase in net income over the comparable period in the prior year was primarily attributable to a $6.8 million increase in interest income due to an increase in average loans receivable and interest earning deposits with other banks, an increase in BaaS program income of $4.6 million and a decrease in interest expense of $521,000, partially offset by a $11.5 million increase in noninterest expenses combined with other less significant changes.

Previous wording

Additionally, BaaS credit enhancement income decreased $14.7 million, which is directly related to and offsets the decrease in provision for credit losses of $13.7 million for the quarter ended September 30, 2025. The lower provision is due to improvement in the performance of the CCBX portfolio and our focus on originating higher quality CCBX loans resulting in lower historical loss factors. In accordance with GAAP, we recognize as revenue (1) the right to be indemnified or reimbursed for fraud losses on CCBX customer loans and deposits and (2) the right to be indemnified for credit losses by our partners for expected credit losses related to loans they originate and unfunded commitments from such loans. CCBX customer credit losses are recognized in the allowance for credit loss and fraud loss is recognized in BaaS noninterest expense. For more information on the accounting for BaaS allowance for credit losses, reserve for unfunded commitments, credit enhancements and fraud enhancements see the section titled“CCBX – BaaS Reporting Information.”

Current wording

Additionally, BaaS credit enhancement income decreased $2.9 million, which is directly related to and offsets the decrease in provision for credit losses of $4.4 million for the quarter ended March 31, 2026. The lower provision is due to improvement in the performance of the CCBX portfolio, change in loan mix, and our focus on originating higher quality CCBX loans resulting in lower historical loss factors. In accordance with GAAP, we recognize as revenue (1) the right to be indemnified or reimbursed for fraud losses on CCBX customer loans and deposits and (2) the right to be indemnified for credit losses by our partners for expected credit losses related to loans they originate and unfunded commitments from such loans. CCBX customer credit losses are recognized in the allowance for credit loss and fraud loss is recognized in BaaS noninterest expense. For more information on the accounting for BaaS allowance for credit losses, reserve for unfunded commitments, credit enhancements and fraud enhancements see the section titled“CCBX – BaaS Reporting Information.”

Previous wording

Net interest income for the three months ended September 30, 2025 was $77.9 million, compared to $72.3 million for the three months ended September 30, 2024, an increase of $5.6 million, or 7.8%. The increase in net interest income compared to the quarter ended September 30, 2024 was primarily related to an increase in interest earning deposits with other banks and growth in loans receivable. The average balance of CCBX loans were $212.5 million more for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Total average loans receivable for the three months ended September 30, 2025 was $3.64 billion, compared to $3.46 billion for the three months ended September 30, 2024. The FOMC last lowered the targeted Federal Funds rate by 0.25% on September 18, 2025; a reduction of 0.75% compared to September 30, 2024.

Current wording

Net interest income for the three months ended March 31, 2026 was $83.4 million, compared to $76.1 million for the three months ended March 31, 2025, an increase of $7.3 million, or 9.6%. The increase in net interest income compared to the quarter ended March 31, 2025 was primarily related to an increase in interest earning deposits with other banks and growth in loans receivable. The average balance of loans was $366.9 million more and average interest earning deposits with other banks was $338.1 million higher for the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Previous wording

Total interest and fees on loans were $100.4 million for the three months ended September 30, 2025 compared to $99.7 million for the three months ended September 30, 2024. The $691,000 increase in interest and fees on loans for the quarter ended September 30, 2025, compared to the quarter ended September 30, 2024, was largely due to growth in loans, primarily from CCBX. Total loans receivable was $3.70 billion at September 30, 2025, compared to $3.41 billion at September 30, 2024. CCBX average loans receivable was $1.76 billion for the quarter ended September 30, 2025, compared to $1.55 billion for the quarter ended September 30, 2024, an increase of $212.5 million, or 13.7%. Average CCBX yield of 15.65% was earned on CCBX loans for the quarter ended September 30, 2025, compared to 17.37% for the quarter ended September 30, 2024. The lower loan yield is the result of lower rates compared to the prior year period as well as a change in the loan mix. Lower rate capital call lines were $73.6 million higher compared to September 30, 2024. These loans earn a lower rate of interest, but have less credit risk due to the way the loans are structured compared to other commercial loans. Additionally, new CCBX loans tend to have lower stated interest rates compared to the prior year period as a result of our ongoing strategy to optimize the CCBX loan portfolio and strengthen our balance sheet by originating higher quality loans with enhanced credit standards. CCBX yield does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements and servicing CCBX loans. The tables later in this section illustrate the impact of BaaS loan expense on CCBX loan yield.

Current wording

Total interest and fees on loans were $102.9 million for the three months ended March 31, 2026 compared to $98.1 million for the three months ended March 31, 2025. The $4.7 million increase in interest and fees on loans for the quarter ended March 31, 2026, compared to the quarter ended March 31, 2025, was largely due to growth in loans, primarily from CCBX. Total loans receivable was $3.86 billion at March 31, 2026, compared to $3.52 billion at March 31, 2025. CCBX average loans receivable was $1.92 billion for the quarter ended March 31, 2026, compared to $1.63 billion for the quarter ended March 31, 2025, an increase of $292.5 million, or 17.9%. Average CCBX yield of 15.01% was earned on CCBX loans for the quarter ended March 31, 2026, compared to 16.88% for the quarter ended March 31, 2025. The lower loan yield is the result of lower rates compared to the prior year period as well as a change in the loan mix. The Federal Open Market Committee ("FOMC") of the Federal Reserve last lowered the targeted federal funds rate by 0.25% on December 11, 2025; a reduction of 0.75% compared to March 31, 2025. Additionally, lower rate capital call lines were $42.9 million higher compared to March 31, 2025. These loans earn a lower rate of interest, but have less credit risk due to the way the loans are structured compared to other commercial loans. CCBX yield does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements and servicing CCBX loans. The tables later in this section illustrate the impact of BaaS loan expense on CCBX loan yield.

Previous wording

Interest income from interest earning deposits with other banks was $8.0 million for the quarter ended September 30, 2025, an increase of $3.2 million, or 67.5%, primarily due to an increase in balances compared to the quarter ended September 30, 2024. The average balance of interest earning deposits invested with other banks for the three months ended September 30, 2025 was $719.2 million, compared to $350.9 million for the three months ended September 30, 2024. The yield on these interest earning deposits with other banks decreased 1.00%, which is in line with the reduction in Fed funds compared to the prior year period, to 4.42% compared to 5.42% at September 30, 2024. Interest income on investment securities decreased $59,000 to $616,000 at September 30, 2025, compared to $675,000 at September 30, 2024. Average investment securities decreased $3.9 million from $49.0 million for the three months ended September 30, 2024, to $45.1 million for the three months ended September 30, 2025, as a result of principal paydowns. Average yield on investment securities decreased to 5.42% for the three months ended September 30, 2025, compared to 5.48% for the three months ended September 30, 2024.

Current wording

Interest income from interest earning deposits with other banks was $8.1 million for the quarter ended March 31, 2026, an increase of $2.1 million, or 33.9%, primarily due to an increase in balances compared to the quarter ended March 31, 2025. The average balance of interest earning deposits invested with other banks for the three months ended March 31, 2026 was $891.5 million, compared to $553.4 million for the three months ended March 31, 2025. The yield on these interest earning deposits with other banks decreased 0.75%, which is in line with the reduction in Fed funds compared to the prior year period, to 3.70% compared to 4.45% at March 31, 2025. Interest income on investment securities decreased $28,000 to $622,000 at March 31, 2026, compared to $650,000 at March 31, 2025. Average investment securities increased $259,000 from $47.2 million for the three months ended March 31, 2025, to $47.5 million for the three months ended March 31, 2026, as a result of investments purchased for CRA purposes, partially offset by principal paydowns. Average yield on investment securities decreased to 5.32% for the three months ended March 31, 2026, compared to 5.59% for the three months ended March 31, 2025.

Previous wording

Interest expense was $31.1 million for the quarter ended September 30, 2025, a $1.8 million decrease from the quarter ended September 30, 2024. Interest expense on deposits was $30.5 million for the quarter ended September 30, 2025, compared to $32.1 million for the quarter ended September 30, 2024. The $1.6 million decrease in interest expense on deposits was largely due to lower interest rates despite an increase of $428.1 million in average interest bearing deposits compared to the quarter ended September 30, 2024. Interest on borrowed funds was $660,000 for the quarter ended September 30, 2025, compared to $809,000 for the quarter ended September 30, 2024.

Current wording

Interest expense was $28.3 million for the quarter ended March 31, 2026, a $521,000 decrease from the quarter ended March 31, 2025. Interest expense on deposits was $27.7 million for the quarter ended March 31, 2026, compared to $28.2 million for the quarter ended March 31, 2025. The $515,000 decrease in interest expense on deposits was largely due to lower interest rates despite an increase of $631.9 million in average interest bearing deposits compared to the quarter ended March 31, 2025. Interest on borrowed funds was $654,000 for the quarter ended March 31, 2026, compared to $660,000 for the quarter ended March 31, 2025.

Previous wording

Cost of funds was 3.07% for the quarter ended September 30, 2025, which is a decrease of 0.55% from the quarter ended September 30, 2024. Cost of deposits for the quarter ended September 30, 2025 was 3.04%, which was a 0.56% decrease, from 3.59% for the quarter ended September 30, 2024. These decreases were largely due to lower interest rates.

Current wording

Cost of funds was 2.59% for the quarter ended March 31, 2026, which was a decrease of 0.52% from 3.11% for the quarter ended March 31, 2025. Cost of deposits for the quarter ended March 31, 2026 was 2.56%, which was a 0.52% decrease from 3.08% for the quarter ended March 31, 2025. These decreases were largely due to lower interest rates.

Previous wording

Net interest margin was 7.00% for the three months ended September 30, 2025, compared to 7.42% for the three months ended September 30, 2024. The decrease in net interest margin compared to the three months ended September 30, 2024 was largely due to a decrease in loan yield partially offset by a decrease in cost of deposits.

Current wording

Net interest margin was 7.00% for the three months ended March 31, 2026, compared to 7.48% for the three months ended March 31, 2025. The decrease in net interest margin compared to the three months ended March 31, 2025 was largely due to a decrease in loan yield, partially offset by a decrease in cost of deposits.

Previous wording

Total yield on loans receivable for the quarter ended September 30, 2025 was 10.95%, compared to 11.44% for the quarter ended September 30, 2024. This decrease in yield on loans receivable is the result of lower rates compared to the prior year period as well as a change in the loan mix. Lower rate capital call lines were $73.6 million higher compared to September 30, 2024. The composition of the loan portfolio is shifting with CCBX average loans increasing to 48.5% of the total loan portfolio for the quarter ended September 30, 2025, compared to 44.8% for the quarter ended September 30, 2024, and the average community bank loans decreasing to 51.5% of the loan portfolio for the quarter ended September 30, 2025, compared to 55.2% for the quarter ended September 30, 2024. For the quarter ended September 30, 2025, average CCBX loans increased $212.5 million, or 13.7%, with an average CCBX yield of 15.65%, compared to 17.37% at the quarter ended September 30, 2024. CCBX yield does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements and servicing CCBX loans. The tables later in this section illustrate the impact of BaaS loan expense on CCBX loan yield. Average community bank loans decreased $40.8 million, or 2.1% due to normal balance fluctuations. Average yield on community bank loans for the three months ended September 30, 2025 was 6.51% compared to 6.64% for the three months ended September 30, 2024.

Current wording

Total yield on loans receivable for the quarter ended March 31, 2026 was 10.76%, compared to 11.33% for the quarter ended March 31, 2025. This decrease in yield on loans receivable is the result of lower rates compared to the prior year period as well as a change in the loan mix. Lower rate CCBX capital call lines were $42.9 million higher compared to March 31, 2025. The composition of the loan portfolio is shifting with CCBX average loans increasing to 49.6% of the total loan portfolio for the quarter ended March 31, 2026, compared to 46.4% for the quarter ended March 31, 2025, and the average community bank loans decreasing to 50.4% of the loan portfolio for the quarter ended March 31, 2026, compared to 53.6% for the quarter ended March 31, 2025. For the quarter ended March 31, 2026, average CCBX loans increased $292.5 million, or 17.9%, with an average CCBX yield of 15.01%, compared to 16.88% at the quarter ended March 31, 2025. CCBX yield does not include the impact of BaaS loan expense. BaaS loan expense represents the amount paid or payable to partners for credit enhancements, fraud enhancements and servicing CCBX loans. The tables later in this section illustrate the impact of BaaS loan expense on CCBX loan yield. Average community bank loans increased $74.4 million, or 4.0% due to growth and normal balance fluctuations. Average yield on community bank loans for the three months ended March 31, 2026 was 6.58% compared to 6.53% for the three months ended March 31, 2025.

Previous wording

For the three months ended September 30, 2025, net interest margin (net interest income divided by the average total interest earning assets) and net interest spread (average yield on total interest earning assets minus average cost of total interest bearing liabilities) were 7.00% and 6.21%, respectively, compared to 7.42% and 6.47%, respectively, for the three months ended September 30, 2024.

Current wording

For the three months ended March 31, 2026, net interest margin (net interest income divided by the average total interest earning assets) and net interest spread (average yield on total interest earning assets minus average cost of total interest bearing liabilities) were 7.00% and 6.39%, respectively, compared to 7.48% and 6.68%, respectively, for the three months ended March 31, 2025.

Previous wording

The following table presents an analysis of the average balances of net interest income, net interest spread and net interest margin for the periods indicated. Loan fees, net of costs included in interest income totaled $2.6 million and $2.3 million for the three months ended September 30, 2025 and 2024, respectively. For the three months ended September 30, 2025 and 2024, the amount of interest income not recognized on nonaccrual loans was not material.

Current wording

The following table presents an analysis of the average balances of net interest income, net interest spread and net interest margin for the periods indicated. Loan fees, net of loan costs included in interest income totaled $2.5 million and $2.1 million for the three months ended March 31, 2026 and 2025, respectively. For the each of the three months ended March 31, 2026 and 2025, the amount of interest income not recognized on nonaccrual loans was not material.

Previous wording

The following table presents an analysis of certain average balances, interest income and expense by segment:

Current wording

The following tables present an analysis of certain average balances, interest income and expense by segment:

Previous wording

(7)Intrabank assets and liabilities are consolidated for period calculations and presented as intrabank asset, net or intrabank liability, net in the table above.

Current wording

(7)Intrabank assets and liabilities are consolidated for period calculations and presented as intrabank asset, net or intrabank liability, net in the tables above.

Previous wording

The following table presents information regarding the dollar amount of changes in interest income and interest expense for the periods indicated for each major component of interest earning assets and interest bearing liabilities and distinguishes between the changes attributable to changes in volume and changes attributable to changes in interest rates. The table illustrates the increase in loan interest income which is attributed to an $5.0 million increase in loan volume partially offset by a $4.3 million decrease in loan rates. For purposes of this table, changes attributable to both rate and volume that cannot be segregated have been allocated to volume.

Current wording

The following table presents information regarding the dollar amount of changes in interest income and interest expense for the periods indicated for each major component of interest earning assets and interest bearing liabilities and distinguishes between the changes attributable to changes in volume and changes attributable to changes in interest rates. The table illustrates the increase in loan interest income which is attributed to a $9.9 million increase in loan volume, partially offset by a $3.4 million decrease in loan rates. For purposes of this table, changes attributable to both rate and volume that cannot be segregated have been allocated to volume.

Previous wording

The provision for credit losses - loans is an expense we incur to maintain an allowance for credit losses at a level that management deems appropriate to absorb expected losses on existing loans in accordance with GAAP. For a description of the factors taken into account by our management in determining the allowance for credit losses see “—Financial Condition—Allowance for Credit Losses.”

Current wording

The provision for credit losses on loans is an expense we incur to maintain an allowance for credit losses at a level that management deems appropriate to absorb expected losses on existing loans in accordance with GAAP. For a description of the factors taken into account by our management in determining the allowance for credit losses see “—Financial Condition—Allowance for Credit Losses.”

Previous wording

The macro economic environment is continuously changing, primarily due to the pace of economic growth, inflation, changing interest rates, global trade tensions, the U.S. government shutdown, tariffs, unemployment, global unrest, the war in Ukraine, conflicts in the Middle East, political uncertainty, natural disasters, and trade issues that may impact the provision and therefore the allowance. Gross loans, excluding loans held for sale, totaled $3.70 billion at September 30, 2025. The allowance for credit losses as a percentage of loans was 4.69% at September 30, 2025, compared to 5.03% at September 30, 2024.

Current wording

The macro economic environment is continuously changing, primarily due to the pace of economic growth, inflation, changing interest rates, global trade tensions, tariffs, unemployment, global unrest, the war in Ukraine, conflicts in the Middle East, political uncertainty, natural disasters, and trade issues that may impact the provision and therefore the allowance. Gross loans, excluding loans held for sale, totaled $3.86 billion at March 31, 2026. The allowance for credit losses as a percentage of loans was 4.47% at March 31, 2026, compared to 5.21% at March 31, 2025.

Previous wording

Agreements with our CCBX partners provide for a credit enhancement provided by the partner which protects the Bank by indemnifying or reimbursing incurred losses. CCBX partners bear most of the responsibility for credit losses incurred which consequently gives them vested interests in the performance of the portfolio. We believe that this alignment of interests ensures that CCBX partners are motivated to implement robust risk management practices and maintain the overall health of the portfolio. In accordance with accounting guidance, we estimate and record a provision for expected losses for these CCBX loans, reclassified negative deposit accounts, and accrued interest receivable on CCBX loans. When the provision for credit losses - loans and provision for unfunded commitments are recorded, a credit enhancement asset is also recorded on the balance sheet through noninterest income (BaaS credit enhancements) in recognition of the CCBX partner's legal commitment to indemnify or reimburse losses that are incurred over the life of the loan. The credit enhancement asset is relieved as credit enhancement payments are received from the CCBX partner or taken from the partner's cash reserve account.

Current wording

Agreements with our CCBX partners provide for a credit enhancement provided by the partner which protects the Bank by indemnifying or reimbursing incurred losses. CCBX partners bear most of the responsibility for credit losses incurred which consequently gives them vested interests in the performance of the portfolio. We believe that this alignment of interests ensures that CCBX partners are motivated to implement robust risk management practices and maintain the overall health of the portfolio. In accordance with accounting guidance, we estimate and record a provision for expected losses for these CCBX loans and reclassified negative deposit accounts. When the provision for credit losses on loans and provision for unfunded commitments are recorded, a credit enhancement asset is also recorded on the balance sheet through noninterest income (BaaS credit enhancements) in recognition of the CCBX partner's legal commitment to indemnify or reimburse losses. The credit enhancement asset is relieved as credit enhancement payments are received from the CCBX partner or taken from the partner's cash reserve account.

Previous wording

The provision for credit losses for the three months ended September 30, 2025 was $56.6 million, compared to $70.3 million for the three months ended September 30, 2024. This includes a provision for credit losses - loans for the three months ended September 30, 2025 of $58.3 million, compared to $71.6 million for the three months ended September 30, 2024. The decrease in the Company’s provision for credit losses - loans during the quarter ended September 30, 2025, is largely related to improvement in the performance of the CCBX portfolio and our focus on originating higher quality CCBX loans resulting in lower historical loss factors. As we continue to originate higher quality loans, these higher quality loans become a greater proportion of the CCBX portfolio, resulting in an improvement in expected losses and lower provision. During the quarter ended September 30, 2025, a $58.8 million provision for credit losses - loans was recorded for CCBX partner loans. The factors used in management’s analysis for community bank credit losses indicated that a provision recapture for credit losses - loans of $583,000 was needed for the quarter ended September 30, 2025, largely due to updated prepayment speeds, partially offset by a slight increase in economic uncertainty, and loan mix of the community bank portfolio. Additionally, a provision recapture for unfunded commitments of $1.7 million was recorded for the quarter ended September 30, 2025, primarily as a result of a change in the loan mix of available balance, compared to a $1.3 million recapture for the three months ended September 30, 2024. No provision for accrued interest receivable was recorded for the quarter ended September 30, 2025 and September 30, 2024 on CCBX loans.

Current wording

The provision for credit losses for the three months ended March 31, 2026 was $51.4 million, compared to $55.8 million for the three months ended March 31, 2025. This includes a provision for credit losses on loans for the three months ended March 31, 2026 of $52.5 million, compared to $54.4 million for the three months ended March 31, 2025. The decrease in the Company’s provision for credit losses on loans during the quarter ended March 31, 2026 is largely related to improvement in the performance of the CCBX portfolio and changes in the composition of CCBX loan originations. The current mix of originations includes a greater proportion of loans with attributes that have historically demonstrated lower loss experience, which contributed to lower expected losses and a lower provision during the period. During the quarter ended March 31, 2026, a $52.6 million provision for credit losses on loans was recorded for CCBX partner loans. The factors used in management’s analysis for community bank credit losses indicated that a provision recapture for credit losses on loans of $1.4 million was needed for the quarter ended March 31, 2026, largely due to improved economic outlook, partially offset by a change in the loan mix of the community bank portfolio. Additionally, a provision recapture for unfunded commitments of $1.3 million was recorded for the quarter ended March 31, 2026, primarily as a result of a change in the loan mix of available balance, compared to a $613,000 provision for the three months ended March 31, 2025. An $11,000 provision for accrued interest receivable on CCBX loans was recorded for the quarter ended March 31, 2026, compared to $784,000 for the three months ended March 31, 2025 and a $252,000 provision for other receivables was recorded for the quarter ended March 31, 2026 and there was no such provision for the quarter ended March 31, 2025.

Previous wording

Net charge-offs for the quarter ended September 30, 2025 totaled $49.2 million, or 5.37% of total average loans, compared to $48.8 million, or 5.60% of total average loans, for the quarter ended September 30, 2024. Net charge-offs as a percent of loans were down in 2025 compared to 2024, primarily due to our on-going efforts to improve the credit quality of CCBX loans. However, in general, loans originated through CCBX partners have a higher level of expected losses than our community bank loans as reflected in the factors for allowance for credit losses. In accordance with GAAP, CCBX losses are recorded as charge-offs, but CCBX partner agreements provide for a credit enhancement that indemnifies or reimburses the Bank for net-charge-offs on CCBX loans, negative deposit accounts, and accrued interest receivable on CCBX loans except in accordance with the program agreement for one partner where the Company was responsible for credit losses on approximately 5% of a $297.4 million loan portfolio; prior to April 1, 2024, the Company was responsible for 10% of that portfolio. At September 30, 2025, our portion of this portfolio represented $20.7 million in loans. For the three months ended September 30, 2025, $49.2 million of net charge-offs were recognized for CCBX loans and $1,000 net recoveries were recognized on community bank loans. For the three months ended September 30, 2024, $48.4 million of net charge-offs were recognized on CCBX loans and $395,000 net charge-offs were recognized for community bank loans.

Current wording

Net charge-offs for the quarter ended March 31, 2026 totaled $49.6 million, or 5.18% of total average loans, compared to $48.2 million, or 5.57% of total average loans, for the quarter ended March 31, 2025. Net charge-offs as a percent of loans were down in 2026 compared to 2025, primarily due to our on-going efforts to improve the credit quality of CCBX loans. However, in general, loans originated through CCBX partners have a higher level of expected losses than our community bank loans as reflected in the factors for allowance for credit losses. In accordance with GAAP, CCBX losses are recorded as charge-offs, but CCBX partner agreements provide for a credit enhancement that indemnifies the Bank from incurred losses, and as a result CCBX partners reimburse the Bank for net-charge-offs on CCBX loans and negative deposit accounts, except in accordance with the program agreement for one partner where the Company is responsible for credit losses on approximately 5% of a $324.0 million loan portfolio. At March 31, 2026, our portion of this portfolio represented $22.0 million in loans. For the three months ended March 31, 2026, $49.6 million of net charge-offs were recognized for CCBX loans and $1,000 net recoveries were recognized on community bank loans. For the three months ended March 31, 2025, $48.2 million of net charge-offs were recognized on CCBX loans and $3,000 net recoveries were recognized for community bank loans.

Previous wording

For the three months ended September 30, 2025, noninterest income totaled $66.8 million, a decrease of $12.0 million, or 15.2%, compared to $78.8 million for the three months ended September 30, 2024. The decrease is primarily attributed to lower BaaS indemnification income which is related to lower provision for credit losses on CCBX loans based on improved credit quality, partially offset by an increase in BaaS program income.

Current wording

For the three months ended March 31, 2026, noninterest income totaled $66.1 million, an increase of $2.6 million, or 4.1%, compared to $63.5 million for the three months ended March 31, 2025. The decrease is primarily attributed to lower BaaS indemnification income which is related to lower provision for credit losses on CCBX loans based on improved credit quality, partially offset by an increase in BaaS program income.

Previous wording

Summary of significant noninterest income for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024

Current wording

Summary of significant noninterest income for the three months ended March 31, 2026 compared to the three months ended March 31, 2025

Previous wording

BaaS Income. Our CCBX segment provides BaaS offerings that enable digital financial service providers, companies and brands to provide financial services to their customers through the Bank's CCBX segment. In exchange for providing these services, we earn fixed fees, volume-based fees and reimbursement of costs depending on the program agreement. Servicing and other BaaS fees are typically higher with new partners who have minimum contractual fees. Transaction and interchange fees increase as partner activity increases and gradually replaces the minimum contractual fee charge. As a result, we generally expect servicing and other fees to decrease and transaction and interchange fees to increase as partner activity grows and contracted minimum fees are replaced with recurring fees which then exceed the minimum contractual fees. Increases in BaaS reimbursement of fees offsets increases in noninterest expense from BaaS expenses covered by CCBX partners. In accordance with GAAP, we recognize the indemnification requirement for reimbursement of noncredit fraud losses on loans and deposits originated through partners and credit enhancements related to the allowance for credit losses and reserve for unfunded commitments provided by the partner as revenue in BaaS income. CCBX credit losses are recognized in the allowance for credit losses -loans and fraud losses are expensed in noninterest expense under BaaS fraud expense. Also in accordance with GAAP, we establish a credit enhancement asset for expected future credit losses through the recognition of BaaS credit enhancement revenue at the same time we establish an allowance for those loans though a provision for credit losses - loans. For more information on the accounting for BaaS allowance for credit losses, reserve for unfunded commitments, credit enhancements and fraud enhancements see the section titled “CCBX – BaaS Reporting Information.”

Current wording

BaaS Income. Our CCBX segment provides BaaS offerings that enable our digital financial service providers to offer their customers banking services. In exchange for providing these services, we earn fixed fees, volume-based fees and reimbursement of costs depending on the program agreement. Servicing and other BaaS fees are typically higher with new partners who have minimum contractual fees. Transaction and interchange fees increase as partner activity increases. As a result, we generally expect servicing and other fees to decrease and transaction and interchange fees to increase as partner activity grows and contracted minimum fees are replaced with recurring fees which then exceed the minimum contractual fees. Increases in BaaS reimbursement of fees offsets increases in noninterest expense from BaaS expenses covered by CCBX partners. In accordance with GAAP, we recognize the reimbursement of noncredit fraud losses on loans and deposits originated through partners and credit enhancements related to the allowance for credit losses and reserve for unfunded commitments provided by the partner as revenue in BaaS income. CCBX credit losses are recognized in the allowance for credit losses on loans, and fraud losses are expensed in noninterest expense under BaaS fraud expense. Also in accordance with GAAP, we establish a credit enhancement asset for expected future credit losses through the recognition of BaaS credit enhancement revenue at the same time we establish an allowance for those loans though a provision for credit losses on loans. For more information on the accounting for BaaS allowance for credit losses, reserve for unfunded commitments, credit enhancements and fraud enhancements see the section titled “CCBX – BaaS Reporting Information.”

Previous wording

Unrealized (loss)/gain on equity securities, net. During the three and nine months ended September 30, 2025, we recognized an unrealized net gain on equity securities of $9,000 and net loss on equity securities of $414,000, respectively, compared to the three and nine months ended September 30, 2024, when there was an unrealized gain of $2,000 and $26,000, respectively, recognized. We hold $3.6 million in total equity funds and investments, $3.2 million of which is in equity securities of entities that are focused on providing products to the BaaS and financial services space.

Current wording

Unrealized gain on equity securities, net. During the three months ended March 31, 2026, we recognized an unrealized net gain on equity securities of $126,000 compared to the three months ended March 31, 2025, when there was an unrealized gain of $16,000 recognized. We hold $4.4 million in total equity funds and investments, $3.5 million of which is in equity securities of entities that are focused on providing products to the BaaS and financial services space.

Previous wording

Generally, noninterest expense is composed of all employee expenses and costs associated with operating our facilities, obtaining and retaining customer relationships and providing bank services. The largest components of noninterest expense are BaaS loan and fraud expense and salaries and employee benefits. Noninterest expense also includes operational expenses, such as legal and professional expenses, data processing and software licenses, occupancy, points of sale expense, FDIC assessment, director and staff expenses, marketing, excise taxes and other expenses.

Current wording

Generally, noninterest expense is composed of all employee expenses and costs associated with operating our facilities, obtaining and retaining customer relationships and providing bank services. The largest components of noninterest expense are BaaS loan and fraud expense combined and salaries and employee benefits. Noninterest expense also includes operational expenses, such as legal and professional expenses, data processing and software licenses, occupancy, point of sale expenses, FDIC assessments, director and staff expenses, excise taxes, marketing and other expenses.

Previous wording

The increase in noninterest expenses for the quarter ended September 30, 2025 compared to the quarter ended September 30, 2024 was largely due to a $3.1 million increase in salary and employee benefits, a $1.5 million increase in data processing and software licenses, a $680,000 increase in legal and professional expenses, and a $142,000 increase in BaaS loan expense. These increases are largely due to growth and enhancements in technology all of which are related to the growth of the Company and investments in technology and risk management.

Current wording

The $11.5 million increase in noninterest expenses for the quarter ended March 31, 2026 compared to the quarter ended March 31, 2025 was largely due to a $4.4 million increase in BaaS loan expense, a $3.4 million increase in data processing and software licenses, a $1.6 million increase in salary and employee benefits, and a $514,000 increase in legal and professional expenses. These increases are largely due to growth and enhancements in technology all of which are related to the growth of the Company and investments in technology and risk management.

Previous wording

Summary of significant noninterest expense for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024

Current wording

Summary of significant noninterest expense for the three months ended March 31, 2026 compared to the three months ended March 31, 2025

Previous wording

Salaries and Employee Benefits. Salaries and employee benefits are one of the largest components of noninterest expense and include payroll expense, incentive compensation costs, equity compensation, benefit plans, health insurance and payroll taxes. Salaries and employee benefits expense continues to increase, primarily due to hiring staff for our CCBX segment and additional staff for our ongoing growth initiatives. As our CCBX activities grow, and we invest more in technology we expect some continued growth in employees to support these lines of business but we are also working to automate our processes to reduce and/or slow future growth in hiring.

Current wording

Salaries and Employee Benefits. Salaries and employee benefits are one of the largest components of noninterest expense and include payroll expense, incentive compensation costs, equity compensation, benefit plans, health insurance and payroll taxes. Salaries and employee benefits were $23.1 million for the three months ended March 31, 2026, an increase of $1.6 million, or 7.4%, compared to $21.5 million for the three months ended March 31, 2025. Salaries and employee benefits expense continues to increase, primarily due to hiring staff for our CCBX segment and additional staff for our ongoing growth initiatives. As our CCBX activities grow and we invest more in technology, we expect some continued growth in number of employees to support these lines of business but are also working to automate our processes to reduce and/or slow future growth in hiring.

Previous wording

Data Processing and Software Licenses. Data processing ands oftware licenses includes expenses related to obtaining and maintaining software required for our various functions and includes the amortization of software development costs. Data processing costs include all of our customer transaction processing and data storage, computer processing, and network costs. Data processing costs grow as we grow and add new products, customers and branches and enhance technology. Additionally, CCBX data processing expenses and software that aids in the reporting of CCBX activities and monitoring of transactions that help automate and create current and expected future efficiencies in reporting have resulted in increased expenses in the category. These expenses are expected to increase as we invest more in automated processing and as we grow product lines and our CCBX segment.

Current wording

Data Processing and Software Licenses. Data processing and software licenses include expenses related to obtaining and maintaining software required for our various functions and additional investments in software development and the amortization of those costs. Capitalized software totaled $16.8 million as of March 31, 2026, compared to $15.7 million as of March 31, 2025. Data processing costs include all of our customer transaction processing and data storage, computer processing, and network costs. Data processing costs grow as we grow and add new products, customers and branches and enhance technology. Additionally, CCBX data processing expenses and software that aids in the reporting of CCBX activities and monitoring of transactions that helps to automate and create other efficiencies in reporting have resulted in increased expenses in the category. These expenses are expected to increase as we invest more in automated processing and as we grow product lines and our CCBX segment. Amortization of capitalized software totaled $1.3 million for the three months ended March 31, 2026, compared to $1.2 million for the three months ended March 31, 2025. Data processing costs were $7.6 million for the three months ended March 31, 2026, compared to $4.2 million for the three months ended March 31, 2025, an increase of $3.4 million, or 80.6%.

Previous wording

Legal and Professional Expenses. Legal and professional costs include legal, audit and accounting expenses, consulting fees, and fees for recruiting and hiring employees. These expenses fluctuate with the development of contracts for CCBX customers, audit and accounting needs, and are impacted by our reporting cycle and timing of legal and professional services. The expenses also reflect the costs associated with our infrastructure enhancement projects to improve our processing, automate processes, reduce compliance costs and enhance our data management.

Current wording

Legal and Professional Expenses. Legal and professional costs include legal, audit and accounting expenses, consulting fees, and fees for recruiting and hiring employees. These expenses fluctuate with the development of contracts and products for CCBX partners, audit and accounting needs, and are impacted by our reporting cycle and timing of legal and professional services. The expenses also reflect the costs associated with our infrastructure enhancement projects to improve our processing, automate processes, reduce compliance costs and enhance our data management. Legal and professional expenses were $7.0 million for the three months ended March 31, 2026 compared to $6.5 million for the three months ended March 31, 2025, an increase of $514,000, or 7.9%.

Previous wording

Occupancy. Occupancy expenses include rent, utilities, janitorial and other maintenance expenses, property insurances and taxes. Also included is depreciation on building, leasehold, furniture, fixtures and equipment. Our hybrid and remote workforce has increased, which helps keep some occupancy expenses down, however we do expect occupancy expenses to increase as we continue to grow.

Current wording

Occupancy. Occupancy expenses were $859,000 for the three months ended March 31, 2026, compared to $1.0 million for the three months ended March 31, 2025, a decrease of $175,000, or 16.9%. This category includes building, leasehold, furniture, fixtures and equipment depreciation totaling $153,000 for the three months ended March 31, 2026 and $350,000 for the three months ended March 31, 2025. Occupancy expenses include rent, utilities, janitorial and other maintenance expenses, property insurances and taxes. Also included is depreciation on building, leasehold, furniture, fixtures and equipment. Our hybrid and remote workforce has increased, which helps keep some occupancy expenses down, however we do expect occupancy expenses to increase as we continue to grow.

Previous wording

Director and Staff Expenses. Director and staff expenses includes compensation for director service, continuing education for employees and other director and staff related expenses. Expenses will fluctuate depending upon conferences and other professional events that are attended by employees as well as expenses related to employee travel, and continuing education.

Current wording

Director and Staff Expenses. Director and staff expenses includes compensation for director service, continuing education for employees and other director and staff related expenses. Expenses will fluctuate depending upon conferences and other professional events that are attended by employees as well as expenses related to employee travel and continuing education. Director and staff expenses were $668,000 for the three months ended March 31, 2026 compared to $631,000 for the three months ended March 31, 2025, an increase of $37,000, or 5.9%.

Previous wording

Marketing. Marketing and promotion costs will vary depending upon the deployment of branding and targeted advertising for the community bank and CCBX. We are using more cost-effective advertising options, but expect costs to increase as we expand our marketing plan.

Current wording

Marketing. Marketing and promotion costs were $38,000 for the three months ended March 31, 2026, compared to $50,000 for the three months ended March 31, 2025, a decrease of $12,000, or 24.0%. Marketing and promotion costs will vary depending upon the deployment of branding and targeted advertising for the community bank and CCBX. We expect costs to increase as we expand our marketing plan.

Previous wording

On July 4, 2025, the President signed H.R. 1, the “One Big Beautiful Bill Act, (the "Act") into law. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic R&D expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. The Act also made certain changes to the deductibility of the cost of meals and charitable contributions that are effective for tax years beginning after Dec. 31, 2025. The Company is taking advantage of the immediate deductibility of R&D expenditures, which has positively impacted the tax provision and resulted in a deferred tax liability as of September 30, 2025.

Current wording

On July 4, 2025, H.R. 1, the “One Big Beautiful Bill Act, (the "OBBBA") was signed into law. The OBBBA includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic R&D expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. The OBBBA also made certain changes to the deductibility of the cost of meals and charitable contributions that are effective for tax years beginning after December 31, 2025. The Company is taking advantage of the immediate deductibility of R&D expenditures, which has positively impacted the tax provision and resulted in a deferred tax liability.

Previous wording

For the three months ended September 30, 2025, income tax expense totaled $4.3 million an increase of $1.4 million compared to the three months ended September 30, 2024. The $1.4 million increase in income tax expense is the result of higher net income as well as an increase in state income tax rates. Also impacting income tax expense is the deductibility of certain equity awards. The effective tax rate was 24.1% for the three months ended September 30, 2025, compared to 17.9% for the three months ended September 30, 2024. The effective tax rate was higher for the three months ended September 30, 2025, largely due to an increase in the state income tax rate used to calculate provision for income taxes partially offset by the impact of stock equity award deductions which fluctuate based on employee driven equity award activity, vesting terms and stock price. The state rate increased in the quarter ended June 30, 2025 primarily as a result of a change in California's tax laws.

Current wording

For the three months ended March 31, 2026, income tax expense totaled $2.6 million, an increase of $526,000 compared to the three months ended March 31, 2025. The $526,000 increase in income tax expense is the result of higher net income as well as an increase in state income tax rates. Also impacting income tax expense is the deductibility of certain equity awards. The effective tax rate was 17.6% for the three months ended March 31, 2026, compared to 17.3% for the three months ended March 31, 2025. The effective tax rate was higher for the three months ended March 31, 2026, due to the impact of stock equity award deductions which fluctuate based on employee driven equity award activity, vesting terms and stock price. Additionally, the state rate increased in the quarter ended June 30, 2025 primarily as a result of a change in California's tax laws.

Previous wording

Based on the criteria of ASC 280, Segment Reporting, we have identified three segments: the community bank, CCBX and treasury & administration. The primary focus of the community bank is on providing a wide range of banking products and services to consumers and small to medium sized businesses in the broader Puget Sound region in the state of Washington and through the Internet and our mobile banking application. We currently operate 14 full-service banking locations, 12 of which are located in Snohomish County, where we are the largest community bank by deposit market share, and two of which are located in neighboring counties (one in King County and one in Island County). We also have a loan production office which is located in King county. The CCBX segment provides BaaS that enables digital financial service providers, companies and brands to provide financial services to their customers. The CCBX segment has 29 partners in various stages as of September 30, 2025. The treasury & administration segment includes treasury management, overall administration and all other aspects of the Company.

Current wording

Based on the criteria of ASC 280, Segment Reporting, we have identified three segments: the community bank, CCBX and treasury & administration. The primary focus of the community bank is on providing a wide range of banking products and services to consumers and small to medium sized businesses in the broader Puget Sound region in the state of Washington and through the Internet and our mobile banking application. We currently operate 14 full-service banking locations, 12 of which are located in Snohomish County, where we are the largest community bank by deposit market share, and two of which are located in neighboring counties (one in King County and one in Island County). We also have a loan production office which is located in King county. The CCBX segment provides BaaS that enables digital financial service providers, companies and brands to provide financial services to their customers. The CCBX segment has 30 partners in various stages as of March 31, 2026. The treasury & administration segment includes treasury management, overall administration and all other aspects of the Company.

Previous wording

The Company’s reported segments and the financial information of the reported segments are not necessarily comparable with similar information reported by other financial institutions. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the segments would perform if they operated as independent entities. Changes in management structure or allocation methodologies and procedures may result in future changes to previously reported segment financial data. The Company continues to evaluate its methodology on allocating items to the Company’s various segments to support strategic business decisions by the Company’s executive leadership. The difference in total loans receivable and total deposits in the community bank and CCBX segments is recorded on the balance sheet of each segment as an intrabank asset or intrabank liability, with the treasury & administration segment as the offset to those entries. Income and expenses that are specific to a segment are directly posted to each segment. Additionally, certain indirect expenses are allocated to each segment utilizing various metrics, such as number of employees, utilization of space, and allocations based on loan and deposit balances. In the second quarter of 2025, the Company’s business unit structure was reviewed and updated, including the addition of new business units to better capture, allocate, and present certain activities. As a result there was some movement in noninterest expenses between the segments compared to the prior year periods, however the overall expenses allocated to each segment as a percent of total noninterest expense remains consistent. Allocations are generally determined at the beginning of each year, are reviewed at least quarterly, and are updated for material changes as necessary. We have implemented a transfer pricing process that credits or charges the community bank and CCBX segments with intrabank interest income or expense for the difference in average loans and average deposits, with the treasury & administration segment as the offset for those entries. The accounting policies of the segments are the same as those described in “Note 1 – Description of Business and Summary of Significant Accounting Policies” in the accompanying notes to the consolidated financial statements included in the Company's most recently filed 10-K report.

Current wording

The Company’s reported segments and the financial information of the reported segments are not necessarily comparable with similar information reported by other financial institutions. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the segments would perform if they operated as independent entities. Changes in management structure or allocation methodologies and procedures may result in future changes to previously reported segment financial data. The Company continues to evaluate its methodology on allocating items to the Company’s various segments to support strategic business decisions by the Company’s executive leadership. The difference in total loans receivable and total deposits in the community bank and CCBX segments is recorded on the balance sheet of each segment as an intrabank asset or intrabank liability, with the treasury & administration segment as the offset to those entries. Income and expenses that are specific to a segment are directly posted to each segment. Additionally, certain indirect expenses are allocated to each segment utilizing various metrics, such as number of employees, utilization of space, and allocations based on loan and deposit balances. We have implemented a transfer pricing process that credits or charges the community bank and CCBX segments with intrabank interest income or expense for the difference in average loans and average deposits, with the treasury & administration segment as the offset for those entries. The accounting policies of the segments are the same as those described in “Note 1 – Description of Business and Summary of Significant Accounting Policies” in the accompanying notes to the consolidated financial statements included in the Company's most recently filed 10-K report.

Previous wording

Community bank total assets as of September 30, 2025 increased $19.2 million, or 1.0%, to $1.92 billion, compared to $1.90 billion as of December 31, 2024. Loans receivable net of deferred fees for the community bank segment increased $16.7 million, or 0.9%, to $1.90 billion as of September 30, 2025, compared to $1.88 billion as of December 31, 2024. The increase in community bank loans receivable is the result of loan growth and normal balance fluctuations. Total community bank deposits increased $76.4 million, or 5.02%, as of September 30, 2025, compared to $1.52 billion as of December 31, 2024. Our cost of deposits for the community bank was 1.77% for the nine months ended September 30, 2025.

Current wording

Community bank total assets as of March 31, 2026 increased $33.3 million, or 1.7%, to $1.99 billion, compared to $1.96 billion as of December 31, 2025. Loans receivable net of deferred fees for the community bank segment increased $33.3 million, or 1.7%, to $1.98 billion as of March 31, 2026, compared to $1.94 billion as of December 31, 2025. The increase in community bank loans receivable is the result of loan growth and normal balance fluctuations. Total community bank deposits decreased $13.4 million, or 0.85%, as of March 31, 2026, compared to $1.59 billion as of December 31, 2025. Our cost of deposits for the community bank was 1.46% for the three months ended March 31, 2026.