Community West Bancshares

Previous wording

We are a central California-based bank holding company for a bank subsidiary, Community West Bank (the “Bank”). We offer 26 full-service banking centers covering greater Sacramento in the north, throughout the San Joaquin Valley south to Bakersfield, and west to the Central Coast. We provide traditional commercial banking services to small and medium-sized businesses and individuals in the communities that we serve. On April 1, 2026, the Company completed its previously announced merger of United Security Bancshares pursuant to which USB merged with and into the Company, with the Company continuing as the surviving entity. Refer to Note 2 - Business Combinations for further discussion of this transaction.

Current wording

We are a central California-based bank holding company for a bank subsidiary, Community West Bank (the “Bank”). We offer 31 full-service banking centers covering greater Sacramento in the north, throughout the San Joaquin Valley south to Bakersfield, and west to the Central Coast. We provide traditional commercial banking services to small and medium-sized businesses and individuals in the communities that we serve. On April 1, 2026, the Company completed its previously announced merger of United Security Bancshares pursuant to which USB merged with and into the Company, with the Company continuing as the surviving entity. Refer to Note 2 - Business Combinations for further discussion of this transaction.

Previous wording

Goodwill and intangible assets acquired in a business combination and that are determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate the necessity for such impairment tests to be performed. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Core deposit intangible assets arising from business combinations are amortized on an accelerated basis reflecting the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up. The estimated life of the core deposit intangible is approximately 10 years.

Current wording

Goodwill and intangible assets acquired in a business combination and that are determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exist that indicate the necessity for such impairment tests to be performed. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Core deposit intangible assets arising from business combinations are amortized on an accelerated basis reflecting the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up. The estimated life of the core deposit intangible is approximately 8-10 years.

Previous wording

•On April 1, 2026, the Company completed its previously announced merger (“Merger”) with United Security Bancshares (“USB”) pursuant to which USB merged with and into the Company, with the Company continuing as the surviving entity. Following the Merger, United Security Bank, a wholly owned subsidiary of USB, merged with and into Community West Bank (the “Bank”), a wholly owned subsidiary of the Company, with the Bank continuing as the surviving bank. The financial condition and results of operation of the combined companies will begin to be reported in the 2026 second quarter results.

Current wording

•On April 1, 2026, the Company completed its previously announced merger (“Merger”) with United Security Bancshares (“USB”) pursuant to which USB merged with and into the Company, with the Company continuing as the surviving entity. Following the Merger, United Security Bank, a wholly owned subsidiary of USB, merged with and into Community West Bank, a wholly owned subsidiary of the Company, with the Bank continuing as the surviving entity.

Previous wording

•The Company recorded a provision for credit losses of $90,000 during the quarter ended March 31, 2026, as compared to a provision for credit losses of $515,000 during the trailing quarter. The current quarter provision is attributed to a provision for loan losses totaling $122,000 and a provision for unfunded commitments of $1,000, partially offset by a credit to the reserve for held-to-maturity securities of $33,000.

Current wording

•The Company recorded a provision for credit losses of $5,635,000 during the quarter ended June 30, 2026, as compared to $90,000 during the trailing quarter. The current quarter provision is attributed to a provision for loan losses totaling $5,259,000, a provision for unfunded commitments of $430,000, partially offset by a credit to the reserve for held-to-maturity securities of $54,000. The provision for loan losses during the quarter ended June 30, 2026 was primarily due to an update of the Company’s peer group based on its larger asset size following the completion of the Merger and also from organic loan growth during the quarter. Charge-offs during the quarter were associated with loans previously fully reserved or absorbed within the Day 1 allowance recorded at the time of the Merger.

Previous wording

•Total cost of deposits increased to 1.40% for the quarter ended March 31, 2026 compared to 1.39% for the quarter ended December 31, 2025.

Current wording

•Total cost of deposits decreased to 1.31% for the quarter ended June 30, 2026 compared to 1.40% for the quarter ended March 31, 2026, and decreased from 1.39% for the quarter ended December 31, 2025.

Previous wording

•Average non-interest bearing demand deposit accounts as a percentage of total average deposits was 33.32% and 34.97% for the quarters ended March 31, 2026 and December 31, 2025, respectively.

Current wording

•Average non-interest bearing demand deposits as a percentage of total average deposits totaled 34.14% and 33.32% for the quarters ended June 30, 2026 and March 31, 2026, respectively.

Previous wording

•There were $23.0 million of non-performing assets as of March 31, 2026. Net loan recoveries were $37,000 for the quarter ended March 31, 2026 and loans delinquent 30 days or more were $27.5 million as of March 31, 2026.

Current wording

•There were $27.9 million of non-performing assets as of June 30, 2026. Net loan charge offs were $5,498,000 for the quarter ended June 30, 2026 and loans delinquent 30 days or more were $34.3 million as of June 30, 2026.

Previous wording

•Capital positions remain strong at March 31, 2026 with a 9.94% Tier 1 Leverage Ratio; a 11.84% Common Equity Tier 1 Ratio; a 12.01% Tier 1 Risk-Based Capital Ratio; and a 14.24% Total Risk-Based Capital Ratio.

Current wording

•Capital positions remain strong at June 30, 2026 with a 9.79% Tier 1 Leverage Ratio; a 11.41% Common Equity Tier 1 Ratio; a 11.53% Tier 1 Risk-Based Capital Ratio; and a 13.63% Total Risk-Based Capital Ratio.

Previous wording

During the three months ended March 31, 2026, the Company reported net income of $11,489,000. Basic and diluted earnings per share for the three months ended March 31, 2026 were $0.60 compared to $0.44 for the three months ended March 31, 2025. During the three months ended March 31, 2026, the Company recorded a $90,000 provision for credit losses compared to a $41,000 credit for credit losses during the three months ended March 31, 2025.

Current wording

During the three months ended June 30, 2026, the Company reported net income of $2,695,000. Basic and diluted earnings per share for the three months ended June 30, 2026 were $0.10 compared to $0.41 for the three months ended June 30, 2025. During the three months ended June 30, 2026, the Company recorded a $5,635,000 provision for credit losses compared to a $2,613,000 provision for credit losses during the three months ended June 30, 2025. During the quarter ended June 30, 2026, the Company realized a net loss on sales and calls of securities of $5,899,000 compared to a net loss of $15,000 during the prior year quarter ended June 30, 2025 as part of a strategic repositioning of the investment portfolio. The increase in both quarter-to-date and year-to-date non-interest expense categories was driven primarily by increases in merger expenses, salary and employee benefits, and amortization of core deposit intangibles as a result of the Merger.

Previous wording

(1) Calculated on a fully tax equivalent basis, which includes Federal tax benefits relating to income earned on municipal bonds totaling $336 and $348 at March 31, 2026 and March 31, 2025, respectively.

Current wording

(1) Calculated on a fully tax equivalent basis, which includes Federal tax benefits relating to income earned on municipal bonds totaling $336 and $347 at June 30, 2026 and June 30, 2025, respectively.

Previous wording

(2) Loan interest income includes loan fees (costs) of $589 and $99 at March 31, 2026 and March 31, 2025, respectively. Loan interest income includes an accretion on loan marks of $2,253 and $3,339 at March 31, 2026 and March 31, 2025, respectively.

Current wording

(2) Loan interest income includes loan (costs) fees of $(280) and $217 at June 30, 2026 and June 30, 2025, respectively. Loan interest income includes an accretion on loan marks of $5,163 and $2,987 at June 30, 2026 and June 30, 2025, respectively.

Previous wording

The Company’s net interest margin (fully tax equivalent basis), expressed as a percentage of average earning assets, increased 26 basis points to 4.30% for the first quarter of 2026, from 4.04% for the first quarter of 2025. Average interest earning assets were $3,423,934,000 for the three months ended March 31, 2026 compared to $3,263,483,000 for the three months ended March 31, 2025. The $160,451,000 increase in average earning assets was attributed to the $202,980,000 or 8.72% increase in average loans, partially offset by a $2,497,000 decrease in interest-earning deposits and $40,032,000 decrease in investment securities. For the three months ended March 31, 2026, the effective yield on investment securities including Federal funds sold and interest-earning deposits in other banks decreased 19 basis points. The effective yield on loans increased 3 basis points. Average interest bearing liabilities increased 3.53% to $2,190,436,000 for the three months ended March 31, 2026, compared to $2,115,718,000 for the same period in 2025.

Current wording

The Company’s net interest margin (fully tax equivalent basis), expressed as a percentage of average earning assets, increased 46 basis points to 4.56% for the second quarter of 2026, from 4.10% for the second quarter of 2025. Average interest earning assets were $4,507,223,000 for the three months ended June 30, 2026 compared to $3,290,580,000 for the three months ended June 30, 2025. The $1,216,643,000 increase in average earning assets was attributed to the $1,115,945,000 or 47.20% increase in average loans, a $25,230,000 increase in interest-earning deposits and $75,468,000 increase in investment securities. For the three months ended June 30, 2026, the effective yield on investment securities including Federal funds sold and interest-earning deposits in other banks increased 10 basis points. The effective yield on loans increased 5 basis points. Average interest bearing liabilities increased 36.84% to $2,885,938,000 for the three months ended June 30, 2026, compared to $2,108,955,000 for the same period in 2025.

Previous wording

Interest and fee income from loans increased $3,480,000 or 9.06% for the three months ended March 31, 2026 compared to the same period in 2025. The yield on average loans, excluding nonaccrual loans, was 6.72% for the three months ended March 31, 2026 compared to 6.69% for the same period in 2025. The accretion from fair value marks on loans contributed 38 basis points to the loan yield for the three months ended March 31, 2026 compared to 58 basis points for the same period in 2025.

Current wording

Interest and fee income from loans increased $19,093,000 or 48.29% for the three months ended June 30, 2026 compared to the same period in 2025. The yield on average loans, excluding nonaccrual loans, was 6.76% for the three months ended June 30, 2026 compared to 6.71% for the same period in 2025. The accretion from fair value marks on loans contributed 60 basis points to the loan yield for the three months ended June 30, 2026 compared to 31 basis points for the same period in 2025.

Previous wording

Interest income from interest-earning deposits in other banks decreased $206,000 in the three months ended March 31, 2026 to $850,000 compared to $1,056,000 for the same period in 2025. The yield on average interest-earning deposits decreased 78 basis points to 3.75% for the three month period ended March 31, 2026 compared to 4.53% for the same period in 2025. Average interest-earning deposits for the three month period ended March 31, 2026 decreased $2,497,000 or 2.68% to $90,720,000 compared to $93,217,000 for the same period in 2025.

Current wording

Interest income from interest-earning deposits in other banks increased $45,000 in the three months ended June 30, 2026 to $1,099,000 compared to $1,054,000 for the same period in 2025. The yield on average interest-earning deposits decreased 77 basis points to 3.62% for the three month period ended June 30, 2026 compared to 4.39% for the same period in 2025. Average interest-earning deposits for the three month period ended June 30, 2026 increased $25,230,000 or 26.24% to $121,366,000 compared to $96,136,000 for the same period in 2025.

Previous wording

Interest income from total investment securities decreased $532,000 in the three months ended March 31, 2026 to $5,473,000 compared to $6,005,000 for the same period in 2025. The yield on average total investment securities decreased twelve basis points to 2.73% for the three month period ended March 31, 2026 compared to 2.85% for the same period in 2025. Average total investment securities for the three month period ended March 31, 2026 decreased $40,032,000 or 4.75% to $802,402,000 compared to $842,434,000 for the same period in 2025.

Current wording

Interest income from total investment securities increased $946,000 in the three months ended June 30, 2026 to $6,727,000 compared to $5,781,000 for the same period in 2025. The yield on average total investment securities increased 18 basis points to 2.97% for the three month period ended June 30, 2026 compared to 2.79% for the same period in 2025. Average total investment securities for the three month period ended June 30, 2026 increased $75,468,000 or 9.09% to $905,456,000 compared to $829,988,000 for the same period in 2025.

Previous wording

Total interest income for the three months ended March 31, 2026 increased $2,754,000 or 6.10% to $47,892,000 compared to $45,138,000 for the three months ended March 31, 2025. The yield on interest earning assets increased 6 basis points to 5.71% on a fully tax equivalent basis for the three months ended March 31, 2026 from 5.65% for the period ended March 31, 2025. The increase was the result of yield changes, increases in interest rates, and asset mix changes.

Current wording

Total interest income for the three months ended June 30, 2026 increased $20,094,000 or 43.66% to $66,119,000 compared to $46,025,000 for the three months ended June 30, 2025. The yield on interest earning assets increased 26 basis points to 5.91% on a fully tax equivalent basis for the three months ended June 30, 2026 from 5.65% for the period ended June 30, 2025. The increase was the result of yield changes, increases in interest rates, asset mix changes, and the Merger.

Previous wording

Interest expense on deposits for the three months ended March 31, 2026 and 2025 was $10,835,000 and $10,388,000, respectively. The average interest rate on interest bearing deposits decreased to 2.09% for the three months ended March 31, 2026 compared to 2.21% for the period ended March 31, 2025. Average interest-bearing deposits increased 9.93% or $189,563,000 to $2,099,119,000 for the three months ended March 31, 2026 compared to $1,909,556,000 for the period ended March 31, 2025.

Current wording

Interest expense on deposits for the three months ended June 30, 2026 and 2025 was $13,732,000 and $10,538,000, respectively. The average interest rate on interest bearing deposits decreased to 2.00% for the three months ended June 30, 2026 compared to 2.18% for the period ended June 30, 2025. Average interest-bearing deposits increased 41.96% or $814,674,000 to $2,755,993,000 for the three months ended June 30, 2026 compared to $1,941,319,000 for the period ended June 30, 2025.

Previous wording

Average other borrowed funds were $91,317,000 with an effective rate of 4.62% for the three months ended March 31, 2026 compared to $206,162,000 with an effective rate of 4.98% for the three months ended March 31, 2025. Total interest expense on other borrowed funds was $1,054,000 for the three months ended March 31, 2026 and $2,568,000 for the three months ended March 31, 2025.

Current wording

Average other borrowed funds were $129,945,000 with an effective rate of 4.54% for the three months ended June 30, 2026 compared to $167,636,000 with an effective rate of 5.15% for the three months ended June 30, 2025. Total interest expense on other borrowed funds was $1,475,000 for the three months ended June 30, 2026 and $2,183,000 for the three months ended June 30, 2025.

Previous wording

The cost of interest-bearing liabilities decreased 28 basis points to 2.20% for the three month period ended March 31, 2026 compared to 2.48% for the same period in 2025. The cost of total deposits decreased to 1.40% compared to 1.45% for the three month periods ended March 31, 2026 and 2025, respectively. The decrease in cost of deposits was due to reduction of rates paid for money market and time deposit accounts over the two time periods. Average non-interest bearing demand deposits increased 5.23% to $1,049,045,000 for the three month period ended March 31, 2026 compared to $996,921,000 for the same period in 2025. The ratio of average non-interest bearing demand deposits to average total deposits decreased to 33.32% in the three month period ended March 31, 2026 compared to 34.30% for the same period in 2025.

Current wording

The cost of interest-bearing liabilities decreased 31 basis points to 2.11% for the three month period ended June 30, 2026 compared to 2.42% for the same period in 2025. The cost of total deposits decreased to 1.31% compared to 1.43% for the three month periods ended June 30, 2026 and 2025, respectively. The decrease in cost of deposits was due to reduction of rates paid for money market and time deposit accounts over the two time periods. Average non-interest bearing demand deposits increased 39.84% to $1,428,442,000 for the three month period ended June 30, 2026 compared to $1,021,513,000 for the same period in 2025. The ratio of average non-interest bearing demand deposits to average total deposits decreased to 34.14% in the three month period ended June 30, 2026 compared to 34.48% for the same period in 2025.

Previous wording

Net interest income before the provision for credit losses for the three months ended March 31, 2026 increased by $3,821,000 or 11.87% to $36,003,000 compared to $32,182,000 for the same period in 2025. The increase was a result of increased interest income on average earnings assets and a decrease in interest expense on average interest bearing liabilities.

Current wording

Net interest income before the provision for credit losses for the three months ended June 30, 2026 increased by $17,608,000 or 52.87% to $50,912,000 compared to $33,304,000 for the same period in 2025. The increase was a result of increased interest income on average earnings assets and an increase in interest expense on average interest bearing liabilities.

Previous wording

During the first quarter of 2026, the Company recorded net loan recoveries of $37,000 compared to $125,000 for the same period in 2025. The net recovery ratio reflects annualized net recoveries to average loans of 0.01% for the quarter ended March 31, 2026, compared to annualized net recoveries of 0.02% for the quarter ended March 31, 2025. During the quarter ended March 31, 2026, non-accrual loans increased $16,042,000 to $22,997,000 compared to $6,955,000 at December 31, 2025. The increase in non-accrual loans during the quarter was due to two substandard loans that reached 90 days past due subsequent to quarter-end. Both loans are considered collateral dependent and individually evaluated for impairment. The loans are well secured and management believes that the current specific reserves are adequate as of March 31, 2026. During the quarter ended March 31, 2026, the Company recorded a $122,000 provision for loan losses, compared to $168,000 for the same period in 2025. In addition to the provision for credit losses on loans for the quarter ended March 31, 2026, the Company recorded a credit to the provision for credit losses on held-to-maturity securities of $33,000 as compared to $182,000 in the prior year quarter. The Company recorded a provision for unfunded loan commitments totaling $1,000 for the quarter ended March 31, 2026 compared to a credit to the provision of $27,000 in the prior year quarter.

Current wording

During the quarter ended June 30, 2026, the Company recorded a $5,259,000 provision for loan losses, compared to $2,640,000 for the same period in 2025. The provision for loan losses during the quarter ended June 30, 2026 was primarily due to an update of the Company’s peer group based on its larger asset size following the completion of the Merger and also from organic loan growth during the quarter. In addition to the provision for credit losses on loans for the quarter ended June 30, 2026, the Company recorded a credit to the provision for credit losses on held-to-maturity securities of $54,000 as compared to $188,000 in the prior year quarter. The Company recorded a provision for for unfunded loan commitments totaling $430,000 for the quarter ended June 30, 2026 compared to a provision for unfunded loan commitments of $161,000 in the prior year quarter.

Previous wording

The Bank currently holds $10,978,000 in stock from the Federal Home Loan Bank (“FHLB”) of San Francisco in conjunction with our borrowing capacity and generally earns quarterly dividends. We received dividends totaling $557,000 for the three months ended March 31, 2026, which included a special dividend, compared to $241,000 for the three months ended March 31, 2025.

Current wording

The Bank currently holds $17,250,000 in stock from the Federal Home Loan Bank (“FHLB”) of San Francisco in conjunction with our borrowing capacity and generally earns quarterly dividends. We received dividends totaling $773,000 for the three months ended June 30, 2026 compared to $478,000 for the three months ended June 30, 2025.

Previous wording

Non-interest expenses decreased $483,000 or 2.06% to $22,987,000 for the three months ended March 31, 2026, compared to $23,470,000 for the three months ended March 31, 2025. The net decrease for the three months ended March 31, 2026 was primarily the result of decreases in professional services of $242,000, salaries and employee benefits of $195,000, information technology of $189,000, advertising of $60,000 ATM/Debit card expenses of $46,000, and data processing expenses of $40,000. The year over year decrease in professional services was primarily driven by a decrease in audit and consulting fees.

Current wording

Non-interest expenses increased $16,847,000 or 75.56% to $39,143,000 for the three months ended June 30, 2026, compared to $22,296,000 for the three months ended June 30, 2025. The net increase for the three months ended June 30, 2026 was primarily the result of increases in salaries and employee benefits of $4,058,000, information technology of $867,000, professional services of $201,000, data processing expenses of $363,000, and ATM/Debit card expenses of $280,000, partially offset by a decrease in personnel other of $72,000 and advertising expenses of $56,000. The increase in expenses for the quarter-to-date period was primarily driven by the Merger.

Previous wording

Salaries and employee benefits decreased $195,000 or 1.50% to $12,764,000 for the first three months of 2026 compared to $22,090,000 for the three months ended March 31, 2025. The decrease in salaries and benefits was a reflection of a decrease in full-time equivalent employees, partially offset by annual merit increases The year-to-date average full time equivalent employees were 327 for the three months ended March 31, 2026, compared to 344 for the three months ended March 31, 2025.

Current wording

Salaries and employee benefits increased $3,862,000 or 15.31% to $29,081,000 for the first six months of 2026 compared to $22,090,000 for the three months ended June 30, 2025. The Company added 100 full-time equivalent employees as a result of the Merger, including temporary employees to assist with systems integrations. The year-to-date average full time equivalent employees were 418 for the three months ended June 30, 2026, compared to 342 for the three months ended June 30, 2025.

Previous wording

Our effective income tax rate was 26.89% and 27.02% for the three month periods ended March 31, 2026 and 2025.

Current wording

Our effective income tax rate was 35.28% and 27.21% for the three month periods ended June 30, 2026 and 2025. The increase in the effective tax rate was primarily driven by non-deductible expenses incurred in connection with the Merger. Our effective income tax rate was 28.64% and 27.11% for the six month periods ended June 30, 2026 and 2025.

Previous wording

The Company reported an income tax provision of $4,225,000 and $3,071,000 for the three month periods ended March 31, 2026 and 2025, respectively.

Current wording

The Company reported an income tax provision of $1,469,000 and $2,927,000 for the three month periods ended June 30, 2026 and 2025, respectively. The Company reported an income tax provision of $5,694,000 and $5,998,000 for the six month periods ended June 30, 2026 and 2025, respectively.

Previous wording

Total assets were $3,702,983,000 as of March 31, 2026, compared to $3,690,317,000 at December 31, 2025, an increase of 0.34% or $12,666,000. Total gross loans were $2,551,058,000 at March 31, 2026, compared to $2,540,857,000 at December 31, 2025, an increase of $10,201,000 or 0.40%. Total cash and cash equivalents increased 9.53% or $11,342,000 to $130,326,000 at March 31, 2026 compared to $118,984,000 at December 31, 2025. The investment portfolio decreased 1.00% or $7,620,000 to $755,704,000 at March 31, 2026 compared to $763,324,000 at December 31, 2025. Total deposits increased 1.50% or $46,319,000 to $3,141,593,000 at March 31, 2026, compared to $3,095,274,000 at December 31, 2025. Shareholders’ equity increased 2.35% or $9,615,000 to $419,203,000 at March 31, 2026, compared to $409,588,000 at December 31, 2025. Accrued interest payable and other liabilities was $39,011,000 at March 31, 2026, compared to $42,929,000 at December 31, 2025, a decrease of 9.13% or $3,918,000. The increase in shareholders’ equity was driven by the retention of earnings, and issuance of common stock, partially offset by dividends paid.

Current wording

Total assets were $5,034,240,000 as of June 30, 2026, compared to $3,690,317,000 at December 31, 2025, an increase of 36.42% or $1,343,923,000. Total gross loans were $3,543,783,000 at June 30, 2026, compared to $2,540,857,000 at December 31, 2025, an increase of $1,002,926,000 or 39.47%. Total cash and cash equivalents increased 73.84% or $87,853,000 to $206,837,000 at June 30, 2026 compared to $118,984,000 at December 31, 2025. The investment portfolio increased 12.18% or $92,944,000 to $856,268,000 at June 30, 2026 compared to $763,324,000 at December 31, 2025. Total deposits increased 33.09% or $1,024,188,000 to $4,119,462,000 at June 30, 2026, compared to $3,095,274,000 at December 31, 2025. Shareholders’ equity increased 48.40% or $198,232,000 to $607,820,000 at June 30, 2026, compared to $409,588,000 at December 31, 2025. Accrued interest payable and other liabilities was $56,667,000 at June 30, 2026, compared to $42,929,000 at December 31, 2025, an increase of 32.00% or $13,738,000. The increase in shareholders’ equity was driven by the retention of earnings, issuance of common stock, and the completion of the Merger with USB, partially offset by dividends paid. The increases in the various asset categories were all driven by the Merger.

Previous wording

Our investment portfolio consists primarily of private label mortgage, U.S. Government sponsored entities and agencies collateralized by residential mortgage backed obligations, asset backed securities (PLMABS), corporate debt securities, and obligations of states and political subdivision securities and are classified as available for sale or held to maturity. As of March 31, 2026, investment securities with a fair value of $416,048,000, or 55% of our investment securities portfolio, were held as collateral for public funds, short and long-term borrowings, treasury, tax, and for other purposes.

Current wording

Our investment portfolio consists primarily of private label mortgage, U.S. Government sponsored entities and agencies collateralized by residential mortgage backed obligations, asset backed securities (PLMABS), corporate debt securities, and obligations of states and political subdivision securities and are classified as available for sale or held to maturity. As of June 30, 2026, investment securities with a fair value of $477,894,000, or 56% of our investment securities portfolio, were held as collateral for public funds, short and long-term borrowings, treasury, tax, and for other purposes.

Previous wording

The total investment portfolio decreased $7,620,000 to $755,704,000 at March 31, 2026 compared to $763,324,000 at December 31, 2025. The fair value of the available-for-sale investment portfolio reflected a net unrealized loss of $40,734,000 at March 31, 2026, compared to net unrealized losses of $39,673,000 at December 31, 2025 and $56,466,000 at March 31, 2025.

Current wording

The total investment portfolio increased $92,944,000 to $856,268,000 at June 30, 2026 compared to $763,324,000 at December 31, 2025. The fair value of the available-for-sale investment portfolio reflected a net unrealized loss of $35,185,000 at June 30, 2026, compared to net unrealized losses of $39,673,000 at December 31, 2025 and $54,325,000 at June 30, 2025.

Previous wording

Total gross loans increased $10,201,000 or 0.40% to $2,551,058,000 as of March 31, 2026, compared to $2,540,857,000 as of December 31, 2025.

Current wording

Total gross loans increased $1,002,926,000 or 39.47% to $3,543,783,000 as of June 30, 2026, compared to $2,540,857,000 as of December 31, 2025.

Previous wording

As of March 31, 2026, in management’s judgment, a concentration of loans existed in loans commercial real estate representing approximately 56.8% of total loans. We believe that our commercial real estate loan underwriting policies and practices result in prudent extensions of credit, but recognize that our lending activities result in relatively high reported commercial real estate lending levels. Although we believe the loans within this real estate concentration have no more than the normal risk of collectability, a substantial decline in the performance of the economy in general or a decline in real estate values in our primary market areas, in particular, could have an adverse impact on collectability, increase the level of real estate-related nonperforming loans, or have other adverse effects which alone or in the aggregate could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Current wording

As of June 30, 2026, in management’s judgment, a concentration of loans existed in loans commercial real estate representing approximately 56.9% of total loans. We believe that our commercial real estate loan underwriting policies and practices result in prudent extensions of credit, but recognize that our lending activities result in relatively high reported commercial real estate lending levels. Although we believe the loans within this real estate concentration have no more than the normal risk of collectability, a substantial decline in the performance of the economy in general or a decline in real estate values in our primary market areas, in particular, could have an adverse impact on collectability, increase the level of real estate-related nonperforming loans, or have other adverse effects which alone or in the aggregate could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Previous wording

In order to mitigate these risks, the Board reviews and approves concentration limits proposed by management. Exceptions to limitations of concentrations are reported to the Board of Directors at least quarterly. Additionally, the Company maintains policy guidelines for maximum loan to value ratios to mitigate the risk of general declines in real estate values. The Company performs regular risk assessments, portfolio monitoring of loans, and stress tests as part of its risk management policies to identify any negative trends within the portfolio. Within the commercial real estate portfolio, there is diversification of collateral type and geography throughout our footprint. The Company did not engage in any sub-prime mortgage lending activities during the three months ended March 31, 2026 and 2025.

Current wording

In order to mitigate these risks, the Board reviews and approves concentration limits proposed by management. Exceptions to limitations of concentrations are reported to the Board of Directors at least quarterly. Additionally, the Company maintains policy guidelines for maximum loan to value ratios to mitigate the risk of general declines in real estate values. The Company performs regular risk assessments, portfolio monitoring of loans, and stress tests as part of its risk management policies to identify any negative trends within the portfolio. Within the commercial real estate portfolio, there is diversification of collateral type and geography throughout our footprint. The Company did not engage in any sub-prime mortgage lending activities during the three and six months ended June 30, 2026 and 2025.

Previous wording

For additional information regarding provisions to credit losses on loans, see “Provision for credit losses on loans” above. Based on the current conditions of the loan portfolio, management believes that the $30,230,000 is adequate to absorb current expected credit losses in the Company’s loan portfolio. The following table summarizes the allocation for the allowance for credit losses by loan type as of the dates indicated (in thousands):

Current wording

For additional information regarding provisions to credit losses on loans, see “Provision for credit losses on loans” above. Based on the current conditions of the loan portfolio, management believes that the $49,422,000 is adequate to absorb current expected credit losses in the Company’s loan portfolio. The following table summarizes the allocation for the allowance for credit losses by loan type as of the dates indicated (in thousands):

Previous wording

As of March 31, 2026, the balance in the allowance for credit losses (ACL) on loans was $30,230,000, or 1.18% of total gross loans, compared to $30,071,000, or 1.18% of total gross loans, as of December 31, 2025. During the three month period ended March 31, 2026, the provision for credit losses was primarily driven by limited loan growth during the quarter. There were no changes to the economic scenarios or weightings as compared to the prior quarter.

Current wording

As of June 30, 2026, the balance in the allowance for credit losses (ACL) on loans was $49,422,000, or 1.39% of total gross loans, compared to $30,071,000, or 1.18% of total gross loans, as of December 31, 2025. During the three month period ended June 30, 2026, the increase in allowance for credit losses was primarily driven by the acquisition of USB, which contributed $19.4 million in Day 1 allowance balances across all portfolio segments. As a result of the Company's early adoption of ASU 2025-08, a Day 1 allowance for credit losses was established for acquired loans at the Merger date. Excluding the impact of the Day 1 allowance, the allowance grew modestly, reflecting a provision for credit losses of $5.3 million, partially offset by net charge-offs of $5.5 million during the quarter. The provision for loan losses during the quarter ended June 30, 2026 was primarily due to an update of the Company’s peer group based on its larger asset size following the completion of the Merger and also from organic loan growth during the quarter.

Previous wording

The balance of unfunded commitments to extend credit on construction and other loans and letters of credit was $503,127,000 as of March 31, 2026, compared to $491,413,000 as of December 31, 2025. At March 31, 2026 and December 31, 2025, the balance of the reserve for unfunded commitments was $1,326,000 and $1,325,000, respectively. The reserve for unfunded commitments is calculated by management using appropriate, systematic, and consistently applied processes. While related to credit losses, this allocation is not a part of the ACL on loans and is considered separately as a liability for accounting and regulatory reporting purposes.

Current wording

The balance of unfunded commitments to extend credit on construction and other loans and letters of credit was $798,806,000 as of June 30, 2026, compared to $491,413,000 as of December 31, 2025. At June 30, 2026 and December 31, 2025, the balance of the reserve for unfunded commitments was $1,757,000 and $1,325,000, respectively. The reserve for unfunded commitments is calculated by management using appropriate, systematic, and consistently applied processes. While related to credit losses, this allocation is not a part of the ACL on loans and is considered separately as a liability for accounting and regulatory reporting purposes.

Previous wording

The balance of past due loans 30 days or more increased by $4,268,000 from $23,208,000 at December 31, 2025 to $27,476,000 as of March 31, 2026. The increase in non-accrual loans during the quarter was due to two substandard loans that reached 90 days past due subsequent to quarter-end. Both loans are considered collateral dependent and individually evaluated for impairment.

Current wording

The balance of past due loans 30 days or more increased by $11,112,000 from $23,208,000 at December 31, 2025 to $34,320,000 as of June 30, 2026.

Previous wording

Total deposits increased $46,319,000 or 1.50% to $3,141,593,000 as of March 31, 2026, compared to $3,095,274,000 as of December 31, 2025. Interest-bearing deposits increased $57,443,000 or 2.82% to $2,093,952,000 as of March 31, 2026, compared to $2,036,509,000 as of December 31, 2025. Non-interest bearing deposits decreased $11,124,000 or 1.05% to $1,047,641,000 as of March 31, 2026, compared to $1,058,765,000 as of December 31, 2025.

Current wording

Total deposits increased $1,024,188,000 or 33.09% to $4,119,462,000 as of June 30, 2026, compared to $3,095,274,000 as of December 31, 2025. Interest-bearing deposits increased $631,945,000 or 31.03% to $2,668,454,000 as of June 30, 2026, compared to $2,036,509,000 as of December 31, 2025. Non-interest bearing deposits increased $392,243,000 or 37.05% to $1,451,008,000 as of June 30, 2026, compared to $1,058,765,000 as of December 31, 2025.

Previous wording

As of March 31, 2026 there was $1,213,266,000 in uninsured deposits or 38.62% of total deposits, compared to $1,185,118,000 and 38.29% as of December 31, 2025.

Current wording

As of June 30, 2026 there was $1,526,017,000 in uninsured deposits or 37.04% of total deposits, compared to $1,185,118,000 and 38.29% as of December 31, 2025.

Previous wording

As of March 31, 2026, the Company had $34,000,000 Federal Home Loan Bank (“FHLB”) of San Francisco overnight advances outstanding. We maintain a line of credit with the FHLB collateralized by government securities and loans. Refer to the Liquidity section below for further discussion of FHLB advances.

Current wording

As of June 30, 2026, the Company had $135,000,000 Federal Home Loan Bank (“FHLB”) of San Francisco overnight advances outstanding. As of June 30, 2026, the Company had four short-term advances outstanding totaling $40,000,000 with a weighted average interest rate of 3.93%. We maintain a line of credit with the FHLB collateralized by government securities and loans. Refer to the Liquidity section below for further discussion of FHLB advances.

Previous wording

Our shareholders’ equity was $419,203,000 at March 31, 2026, compared to $409,588,000 at December 31, 2025. The increase from December 31, 2025 in shareholders’ equity is the result of an increase in retained earnings from net income of $11,489,000, stock issued under the employee purchase plan of $113,000, the effect of share-based compensation expense of $278,000, stock options exercised of $302,000 and an increase in accumulated other comprehensive loss of $211,000, partially offset by common stock cash dividends of $2,299,000

Current wording

Our shareholders’ equity was $607,820,000 at June 30, 2026, compared to $409,588,000 at December 31, 2025. The increase from December 31, 2025 in shareholders’ equity is the result of an increase in retained earnings from net income of $14,184,000, common stock issued due to the Merger of $184,586,000, stock issued under the employee purchase plan of $177,000, the effect of share-based compensation expense of $583,000, stock options exercised of $358,000 and a decrease in accumulated other comprehensive loss of $4,126,000, partially offset by common stock cash dividends of $5,555,000.