FIVE STAR BANCORP

Previous wording

The foregoing factors could cause results or performance to materially differ from those expressed in our forward-looking statements, should not be considered exhaustive, and should be read together with other cautionary statements that are included in this report and those discussed in the section entitled “Risk Factors” of our 2025 Annual Report on Form 10-K, our Quarterly Report on Form 10-Q for the three months ended March 31, 2026, and other filings we may make with the SEC, copies of which are available from us at no charge. New risks and uncertainties may emerge from time to time, and it is not possible for us to predict their occurrence or how they will affect us. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance, or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this Quarterly Report on Form 10-Q. Therefore, we caution you not to place undue reliance on our forward-looking information and statements. We disclaim any duty to revise or update the forward-looking statements, whether written or oral, to reflect actual results or changes in the factors affecting the forward-looking statements, except as specifically required by law.

Current wording

The foregoing factors could cause results or performance to materially differ from those expressed in our forward-looking statements, should not be considered exhaustive, and should be read together with other cautionary statements that are included in this report and those discussed in the section entitled “Risk Factors” of our 2025 Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q for the three months ended March 31, 2026 and June 30, 2026, and other filings we may make with the SEC, copies of which are available from us at no charge. New risks and uncertainties may emerge from time to time, and it is not possible for us to predict their occurrence or how they will affect us. If one or more of the factors affecting our forward-looking information and statements proves incorrect, then our actual results, performance, or achievements could differ materially from those expressed in, or implied by, forward-looking information and statements contained in this Quarterly Report on Form 10-Q. Therefore, we caution you not to place undue reliance on our forward-looking information and statements. We disclaim any duty to revise or update the forward-looking statements, whether written or oral, to reflect actual results or changes in the factors affecting the forward-looking statements, except as specifically required by law.

Previous wording

Headquartered in the greater Sacramento metropolitan area of California, Five Star Bancorp is a bank holding company that operates through its wholly owned subsidiary, Five Star Bank, a California state-chartered non-member bank. We provide a broad range of banking products and services to small and medium-sized businesses, professionals, and individuals primarily in California through nine branch offices, with a tenth branch opening in Lodi in July 2026. Our mission is to strive to become the top business bank in all markets we serve through exceptional service, deep connectivity, and customer empathy. We are dedicated to serving real estate, agricultural, faith-based, and small to medium-sized enterprises. We aim to consistently deliver value that meets or exceeds the expectations of our shareholders, customers, employees, business partners, and community. We refer to our mission as “purpose-driven and integrity-centered banking.” At June 30, 2026, we had total assets of $5.4 billion, total loans held for investment of $4.5 billion, and total deposits of $4.8 billion.

Current wording

Headquartered in the greater Sacramento metropolitan area of California, Five Star Bancorp is a bank holding company that operates through its wholly owned subsidiary, Five Star Bank, a California state-chartered non-member bank. We provide a broad range of banking products and services to small and medium-sized businesses, professionals, and individuals primarily in California through ten branch offices. Our mission is to strive to become the top business bank in all markets we serve through exceptional service, deep connectivity, and customer empathy. We are dedicated to serving real estate, agricultural, faith-based, and small- to medium-sized enterprises. We aim to consistently deliver value that meets or exceeds the expectations of our shareholders, customers, employees, business partners, and community. We refer to our mission as “purpose-driven and integrity-centered banking.” At September 30, 2026, we had total assets of $5.6 billion, total loans held for investment of $4.7 billion, and total deposits of $4.8 billion.

Previous wording

Our most significant accounting policies and our critical accounting estimates are described in greater detail in Note 1, Basis of Presentation, in our audited consolidated financial statements and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates included in our 2025 Annual Report on Form 10-K. We have identified accounting policies and estimates that, due to the difficult, subjective, or complex judgments and assumptions inherent in those policies and estimates and the potential sensitivity of our unaudited consolidated financial statements to those judgments and assumptions, are critical to an understanding of our consolidated financial condition and results of operations. We believe that the judgments, estimates, and assumptions used in the preparation of our financial statements are reasonable and appropriate, based on the information available at the time they were made. However, actual results may differ from those estimates, and these differences may be material. With the exception of the changes to the allowance for credit losses described below, there have been no significant changes concerning our critical accounting estimates as described in our 2025 Annual Report on Form 10-K.

Current wording

Our most significant accounting policies and our critical accounting estimates are described in greater detail in Note 1, Basis of Presentation, in the notes to our audited consolidated financial statements and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates included in our 2025 Annual Report on Form 10-K. We have identified accounting policies and estimates that, due to the difficult, subjective, or complex judgments and assumptions inherent in those policies and estimates and the potential sensitivity of our unaudited consolidated financial statements to those judgments and assumptions, are critical to an understanding of our consolidated financial condition and results of operations. We believe that the judgments, estimates, and assumptions used in the preparation of our financial statements are reasonable and appropriate, based on the information available at the time they were made. However, actual results may differ from those estimates, and these differences may be material. There have been no significant changes concerning our critical accounting estimates as described in our 2025 Annual Report on Form 10-K.

Previous wording

Net income for the three and six months ended June 30, 2026 totaled $19.4 million and $38.0 million, respectively, as compared to net income of $14.5 million and $27.6 million for the three and six months ended June 30, 2025, respectively.

Current wording

Net income for the three and nine months ended September 30, 2026 totaled $21.9 million and $59.9 million, respectively, as compared to net income of $16.3 million and $44.0 million for the three and nine months ended September 30, 2025, respectively.

Previous wording

•Deposits. Total deposits increased by $598.3 million, or 14.24%, from $4.2 billion at December 31, 2025 to $4.8 billion at June 30, 2026. Non-wholesale deposits increased by $813.3 million in the first six months of 2026 to $4.5 billion at June 30, 2026. Wholesale deposits, which the Company defines as brokered deposits and California Time Deposit Program deposits, decreased by $215.0 million in the first six months of 2026 to $250.0 million. Non-interest-bearing deposits increased by $89.9 million in the first six months of 2026 to $1.2 billion, and represented 24.47% of total deposits at June 30, 2026, as compared to 25.82% of total deposits at December 31, 2025. Our loan to deposit ratio was 94.17% at June 30, 2026, as compared to 97.00% at December 31, 2025.

Current wording

•Deposits. Total deposits increased by $623.4 million, or 14.84%, from $4.2 billion at December 31, 2025 to $4.8 billion at September 30, 2026. Non-wholesale deposits increased by $888.4 million in the first nine months of 2026 to $4.6 billion at September 30, 2026. Wholesale deposits, which the Company defines as brokered deposits and California Time Deposit Program deposits, decreased by $265.0 million in the first nine months of 2026 to $200.0 million at September 30, 2026. Non-interest-bearing deposits increased by $126.0 million in the first nine months of 2026 to $1.2 billion, and represented 25.09% of total deposits at September 30, 2026, as compared to 25.82% of total deposits at December 31, 2025. Our loan to deposit ratio was 97.51% at September 30, 2026, as compared to 97.00% at December 31, 2025.

Previous wording

•Assets. Total assets were $5.4 billion at June 30, 2026, representing a $622.2 million, or 13.09%, increase compared to $4.8 billion at December 31, 2025.

Current wording

•Assets. Total assets were $5.6 billion at September 30, 2026, representing a $804.8 million, or 16.92%, increase compared to $4.8 billion at December 31, 2025.

Previous wording

•Loans. Total loans held for investment were $4.5 billion at June 30, 2026, as compared to $4.1 billion at December 31, 2025, an increase of $444.8 million, or 10.91%. The increase was a result of $1.0 billion in loan originations and advances, partially offset by $162.1 million and $421.9 million in loan payoffs and paydowns, respectively.

Current wording

•Loans. Total loans held for investment were $4.7 billion at September 30, 2026, as compared to $4.1 billion at December 31, 2025, an increase of $629.3 million, or 15.44%. The increase was a result of $1.6 billion in loan originations and advances, partially offset by $304.5 million and $633.2 million in loan payoffs and paydowns, respectively.

Previous wording

•Credit Quality. Credit quality remains strong, with non-accrual loans representing $13.4 million, or 0.30% of total loans held for investment at June 30, 2026, as compared to $3.1 million, or 0.08% of total loans held for investment at December 31, 2025. This increase was due to a $10.3 million, or 331.20% increase in nonperforming loans due to one Community Reinvestment Act loan that was placed on non-accrual status during the period. The balance of the loan is $11.4 million as of June 30, 2026, and it was originally downgraded to substandard in 2025. This was partially offset by improvements across the remainder of the nonperforming loan portfolio. The ratio of the allowance for credit losses to total loans held for investment was 1.05% at June 30, 2026 and 1.09% at December 31, 2025.

Current wording

•Credit Quality. Credit quality remains strong, with non-accrual loans representing $13.3 million, or 0.28% of total loans held for investment at September 30, 2026, as compared to $3.1 million, or 0.08% of total loans held for investment at December 31, 2025. This increase was due to a $10.2 million, or 329.43%, increase in nonperforming loans due to one Community Reinvestment Act loan that was placed on non-accrual status during the three months ended June 30, 2026. The balance of the loan is $11.4 million as of September 30, 2026, and it was originally downgraded to substandard in 2025. This was partially offset by improvements across the remainder of the nonperforming loan portfolio. The ratio of the allowance for credit losses to total loans held for investment was 1.05% at September 30, 2026 and 1.09% at December 31, 2025.

Previous wording

•Efficiency Ratio. Efficiency ratio was 40.91% for the three months ended June 30, 2026, down from 41.03% for the corresponding period of 2025, mainly due to a $9.6 million, or 26.20%, increase in net interest income during the same period, partially offset by a $3.9 million, or 24.74%, increase in non-interest expense. Additionally, efficiency ratio was 39.77% for the six months ended June 30, 2026, down from 41.77% for the corresponding period of 2025, mainly due to a $19.0 million, or 27.02%, increase in net interest income.

Current wording

•Efficiency Ratio. Efficiency ratio was 39.13% for the three months ended September 30, 2026, down from 40.13% for the corresponding period of 2025, mainly due to a $11.6 million, or 29.42%, increase in net interest income during the same period, partially offset by a $4.0 million, or 24.19%, increase in non-interest expense. Additionally, efficiency ratio was 39.54% for the nine months ended September 30, 2026, down from 41.18% for the corresponding period of 2025, mainly due to a $30.6 million, or 27.88%, increase in net interest income, partially offset by a $10.3 million, or 21.65%, increase in non-interest expense.

Previous wording

•Capital Ratios. All capital ratios were above well-capitalized regulatory thresholds as of June 30, 2026. The total risk-based capital ratio for the Company was 12.50% at June 30, 2026, as compared to 13.33% at December 31, 2025. The Tier 1 leverage ratio was 9.21% at June 30, 2026, as compared to 9.70% at December 31, 2025. For additional information about the regulatory capital requirements applicable to the Company and the Bank, see the section entitled “—Financial Condition Summary—Capital Adequacy” below.

Current wording

•Capital Ratios. All capital ratios were above well-capitalized regulatory thresholds as of September 30, 2026 and reflect additional common stock of approximately $130.0 million issued through the public offering that closed in July 2026. The total risk-based capital ratio for the Company was 15.00% at September 30, 2026, as compared to 13.33% at December 31, 2025. The Tier 1 leverage ratio was 11.21% at September 30, 2026, as compared to 9.70% at December 31, 2025. For additional information about the regulatory capital requirements applicable to the Company and the Bank, see the section entitled “—Financial Condition Summary—Capital Adequacy” below.

Previous wording

The following discussion of our results of operations compares the three and six months ended June 30, 2026 to the three and six months ended June 30, 2025. The results of operations for the three and six months ended June 30, 2026 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2026.

Current wording

The following discussion of our results of operations compares the three and nine months ended September 30, 2026 to the three and nine months ended September 30, 2025. The results of operations for the three and nine months ended September 30, 2026 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2026.

Previous wording

Net interest income increased by $9.6 million, or 26.20%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, and our net interest margin increased by 10 basis points during the same period. The increase in net interest income is primarily due to an increase in interest income driven by loan growth and higher interest-earning deposits in banks, partially offset by an increase in interest expense driven by deposit growth, though moderated by a decrease in the average cost of deposits. Additional detail relating to net interest margin in each period is provided below.

Current wording

Net interest income increased by $11.6 million, or 29.42%, for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, and our net interest margin increased by 13 basis points during the same period. The increase primarily reflected balance sheet growth and lower deposit funding costs following three Federal Reserve rate cuts that began in September 2025, partially offset by lower yields on interest-earning assets. Additional detail relating to net interest margin in each period is provided below.

Previous wording

As compared to the three months ended June 30, 2025, net interest income during the three months ended June 30, 2026 increased by $9.6 million, or 26.20%, to $46.1 million from $36.5 million. Net interest margin totaled 3.63% for the three months ended June 30, 2026, an increase of 10 basis points compared to the same quarter of the prior year. The improvement was driven by balance sheet growth and a favorable shift in funding mix, which more than offset pressure from declining federal funds rates over the same period. The increase in net interest income is primarily attributable to an $11.7 million increase in interest income, mainly due to a $636.7 million, or 17.25%, increase in the average balance of loans and a $315.3 million, or 87.13%, increase in the average balance of interest-earning deposits in banks (deposits placed with other financial institutions to earn interest). This increase in interest income was partially offset by a $2.2 million increase in interest expense, stemming from a $914.3 million, or 24.47%, increase in the average balance of deposits during the three months ended June 30, 2026, moderated by a 30 basis point decrease in average cost of deposits compared to the same quarter of the prior year. Further supporting the decreasing average cost of deposits, the average balance of non-interest-bearing deposits increased by $207.0 million, or 21.62%, compared to the same period of the prior year.

Current wording

As compared to the three months ended September 30, 2025, net interest income during the three months ended September 30, 2026 increased by $11.6 million, or 29.42%, to $50.9 million from $39.3 million. Net interest margin totaled 3.69% for the three months ended September 30, 2026, an increase of 13 basis points compared to the same quarter of the prior year. The increase primarily reflected balance sheet growth and lower deposit funding costs following three Federal Reserve rate cuts that began in September 2025, partially offset by lower yields on interest-earning assets. The increase in net interest income is primarily attributable to a $14.3 million increase in interest income, mainly due to a $780.8 million, or 20.38%, increase in the average balance of loans and a $321.4 million, or 71.17%, increase in the average balance of interest-earning deposits in banks. The benefit from higher average earning assets was partially offset by a 13-basis-point decrease in the yield on interest-earning assets to 5.74%. The average loan yield remained stable at 6.14%, as the effect of lower rates on repricing loans was offset by loan growth and changes in portfolio mix. This increase in interest income was partially offset by a $2.8 million increase in interest expense, stemming from a $946.6 million, or 23.89%, increase in the average balance of deposits during the three months ended September 30, 2026, moderated by a 25-basis-point decrease in the average cost of deposits compared to the same quarter of the prior year, reflecting deposit repricing following the three Federal Reserve rate cuts that began in September 2025 and an improved funding mix. Further supporting the decreasing average cost of deposits, the average balance of non-interest-bearing deposits increased by $195.5 million, or 19.23%, and brokered deposits decreased from $216.4 million to zero compared to the same period of the prior year.

Previous wording

Net interest income increased by $19.0 million, or 27.02%, for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, and our net interest margin increased by 17 basis points when compared to the same period in 2025. The increase in net interest income is primarily attributable to an increase in interest income driven by loan growth, partially offset by an increase in interest expense driven by deposit growth. Additional detail relating to net interest margin in each period is provided below.

Current wording

Net interest income increased by $30.6 million, or 27.88%, for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025, and our net interest margin increased by 15 basis points when compared to the same period in 2025. The increase primarily reflected balance sheet growth and lower deposit funding costs following three Federal Reserve rate cuts that began in September 2025, partially offset by lower yields on interest-earning assets. Additional detail relating to net interest margin in each period is provided below.

Previous wording

As compared to the six months ended June 30, 2025, net interest income during the six months ended June 30, 2026 increased by $19.0 million, or 27.02%, to $89.5 million from $70.5 million. Net interest margin totaled 3.66% for the six months ended June 30, 2026, an increase of 17 basis points compared to the same period of the prior year. The improvement was driven by balance sheet growth and a favorable shift in funding mix, which more than offset pressure from declining federal funds rates over the same period. The increase in net interest income is primarily attributable to a $22.0 million increase in interest income, mainly due to a $609.7 million, or 16.80%, increase in the average balance of loans and a $249.9 million, or 72.36%, increase in the average balance of interest-earning deposits in banks. This increase in interest income was partially offset by a $3.0 million increase in interest expense, stemming from a $615.9 million, or 22.58%, increase in the average balance of interest-bearing deposits during the six months ended June 30, 2026, moderated by a 44 basis point decrease in the cost of interest-bearing deposits compared to the same period of the prior year. Further supporting the decreasing average cost of funds, the average balance of non-interest-bearing deposits increased by $209.0 million, or 22.38%, compared to the same period of the prior year.

Current wording

As compared to the nine months ended September 30, 2025, net interest income during the nine months ended September 30, 2026 increased by $30.6 million, or 27.88%, to $140.5 million from $109.8 million. Net interest margin totaled 3.67% for the nine months ended September 30, 2026, an increase of 15 basis points compared to the same period of the prior year. The increase primarily reflected balance sheet growth and lower deposit funding costs following three Federal Reserve rate cuts that began in September 2025, partially offset by lower yields on interest-earning assets. The increase in net interest income is primarily attributable to a $36.3 million increase in interest income, mainly due to a $667.4 million, or 18.05%, increase in the average balance of loans and a $274.0 million, or 71.89%, increase in the average balance of interest-earning deposits in banks. The benefit from higher average earning assets was partially offset by a 12-basis-point decrease in the yield on interest-earning assets to 5.72%. The average loan yield increased by two basis points to 6.10%, as loan growth and changes in portfolio mix offset the effect of lower rates on repricing loans. This increase in interest income was partially offset by a $5.7 million increase in interest expense, stemming from a $865.9 million, or 23.01%, increase in the average balance of deposits during the nine months ended September 30, 2026, moderated by a 30-basis-point decrease in the cost of deposits to 2.16% compared to the same period of the prior year, reflecting deposit repricing following the three Federal Reserve rate cuts that began in September 2025 and an improved funding mix. Further supporting the decreasing average cost of deposits, the average balance of non-interest-bearing deposits increased by $204.5 million, or 21.26%, as compared to the same period of the prior year, and the average balance of brokered deposits decreased from $293.3 million to $72.4 million, a $221.0 million, or 75.33%, decrease from the same period of the prior year.

Previous wording

We recorded a $2.3 million provision for credit losses in the second quarter of 2026, compared to a $2.5 million provision for credit losses for the same period of 2025. The decrease in the provision for credit losses in the second quarter of 2026 is mainly due to lower net charge-offs in the three months ended June 30, 2026 compared to the three months ended June 30, 2025.

Current wording

We recorded a $2.5 million provision for credit losses in the third quarter of 2026, as compared to a $2.5 million provision for credit losses for the same period of 2025. The lack of change in the provision for credit losses in the third quarter of 2026 reflects loan growth and changes resulting from the annual CECL model refresh, offset by a decrease in the provision for unfunded commitments in the three months ended September 30, 2026 compared to the three months ended September 30, 2025.

Previous wording

We recorded a $4.9 million provision for credit losses in the first six months of 2026, as compared to a $4.4 million provision for credit losses for the same period of 2025. The increase in the provision for credit losses recorded during the first six months of 2026 is mainly due to increases in loan growth and an overall increase in loss rates, partially offset by lower charge-offs.

Current wording

We recorded a $7.4 million provision for credit losses in the first nine months of 2026, as compared to a $6.9 million provision for credit losses for the same period of 2025. The increase in the provision for credit losses recorded during the first nine months of 2026 is mainly due to loan growth and changes resulting from the annual CECL model refresh, partially offset by lower charge-offs.

Previous wording

Loan-related fees. The increase resulted primarily from an increase of $0.1 million in loan referral income, combined with an increase of $0.1 million in fees from swap referrals during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025.

Current wording

Loan-related fees. The decrease resulted primarily from a decrease of $0.1 million in fees from swap referrals during the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, combined with $0.1 million in rate lock fees and good faith deposits that were forfeited during the three months ended September 30, 2025 and did not reoccur during the three months ended September 30, 2026.

Previous wording

Other. The increase related primarily to an overall improvement in earnings related to investments in venture-backed funds during the three months ended June 30, 2026 compared to the three months ended June 30, 2025.

Current wording

Other income. The decrease related primarily to an overall decline in earnings related to investments in venture-backed funds during the three months ended September 30, 2026, as compared to the three months ended September 30, 2025.

Previous wording

Service charges on deposit accounts. The decrease related primarily to a $0.2 million decrease in service charges assessed on analyzed deposit accounts.

Current wording

Service charges on deposit accounts. The decrease related primarily to a $0.2 million decrease in net service charges assessed on analyzed deposit accounts.

Previous wording

Gain on sale of loans. The decrease related primarily to an overall decline in the volume of SBA loans sold due to a strategic, intentional reduction in originations of loans held for sale. During the six months ended June 30, 2026, no SBA loans were sold, as compared to approximately $3.3 million of SBA loans sold with an effective yield of 7.41% during the six months ended June 30, 2025.

Current wording

Gain on sale of loans. The decrease related primarily to an overall decline in the volume of SBA loans sold due to a strategic, intentional reduction in originations of loans held for sale. During the nine months ended September 30, 2026, no SBA loans were sold, as compared to approximately $3.3 million of SBA loans sold with an effective yield of 7.41% during the nine months ended September 30, 2025.

Previous wording

Loan-related fees. The increase related primarily to a $0.9 million increase in fees from swap referrals and a $0.1 million increase in loan referral income.

Current wording

Loan-related fees. The increase related primarily to a $0.8 million increase in fees from swap referrals, a $0.1 million increase in credit card-related income, and a $0.1 million increase in loan referral income, partially offset by a $0.2 million decrease in miscellaneous loan income from more rate lock fees and good faith deposits forfeited, during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2026.

Previous wording

FHLB stock dividends. The increase related primarily to a $0.4 million special cash dividend from the FHLB during the six months ended June 30, 2026, partially offset by a decrease in dividends related to the FHLB’s transition to a tier-based dividend structure, which lowered the Bank’s effective dividend rate received.

Current wording

FHLB stock dividends. The increase related primarily to $0.7 million in special cash dividends from the FHLB during the nine months ended September 30, 2026, as compared to no special cash dividends from the FHLB during the nine months ended September 30, 2025. This was partially offset by a $0.3 million decrease in regular dividends related to the FHLB’s transition to a tier-based dividend structure, which lowered the Bank’s effective dividend rate received.

Previous wording

Other. The decrease related primarily to an overall loss in earnings related to equity investments in venture-backed funds during the six months ended June 30, 2026 compared to the six months ended June 30, 2025.

Current wording

Other. The decrease related primarily to an overall decline in earnings related to equity investments in venture-backed funds during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.

Previous wording

Salaries and employee benefits. The increase related primarily to: (i) a $2.8 million increase in salaries, benefits, and bonus expense, mainly related to a 13.30% increase in headcount between June 30, 2025 and June 30, 2026; and (ii) a $0.7 million increase in commissions primarily due to higher loan originations period-over-period. This increase was partially offset by a $0.9 million increase in deferred loan origination costs due to higher loan originations period-over-period.

Current wording

Salaries and employee benefits. The increase related primarily to: (i) a $2.5 million increase in salaries, benefits, and bonus expense, mainly related to a 16.29% increase in headcount between September 30, 2025 and September 30, 2026; and (ii) a $0.5 million increase in commissions primarily due to higher loan originations period-over-period. This increase was partially offset by a $0.4 million increase in deferred loan origination costs due to higher loan originations period-over-period.

Previous wording

Data processing and software. The increase was primarily due to: (i) increased usage of our digital banking platform; (ii) higher transaction volumes related to the increased number of loan and deposit accounts; and (iii) an increased number of licenses required for new users on our loan origination and documentation system.

Current wording

Data processing and software. The increase was primarily due to: (i) increased usage of our digital banking platform; (ii) higher transaction volumes related to the increased number of loan and deposit accounts; (iii) an increased number of licenses required for new users on our loan origination and documentation system; and (iv) the implementation of enhanced commercial real estate lending analytics and risk assessment software.

Previous wording

Other operating expenses. The increase related primarily to: (i) a $0.3 million increase in employee-related expenses such as travel and professional association memberships; (ii) a $0.2 million increase in bank charges; (iii) a $0.1 million increase in operational losses; (iv) a $0.1 million increase in IntraFi Network fees resulting from an overall increase in balances carried in the network; and (v) a $0.1 million increase in armored car and courier services.

Current wording

Other operating expenses. The increase related primarily to: (i) a $0.1 million increase in bank charges; (ii) a $0.1 million increase in reciprocal deposit network fees resulting from an overall increase in balances carried in the network; (iii) a $0.1 million increase in armored car and courier services; and (iv) a $0.1 million increase in employee-related expenses such as travel. This increase was partially offset by a $0.1 million decrease in operational losses.

Previous wording

Salaries and employee benefits. The increase was primarily a result of: (i) a $5.1 million increase in salaries, benefits, and bonus expense, mainly related to a 13.30% increase in headcount between June 30, 2025 and June 30, 2026; and (ii) a $1.2 million increase in commissions primarily due to higher loan originations period-over-period. This increase was partially offset by a $1.5 million increase in deferred loan origination costs due to greater loan originations period-over-period.

Current wording

Salaries and employee benefits. The increase was primarily a result of: (i) a $7.6 million increase in salaries, benefits, and bonus expense, mainly related to a 16.29% increase in headcount between September 30, 2025 and September 30, 2026; and (ii) a $1.7 million increase in commissions primarily due to higher loan originations period-over-period. This increase was partially offset by a $1.8 million increase in deferred loan origination costs due to higher loan originations period-over-period.

Previous wording

Occupancy and equipment. The increase was primarily due to expenses for the Walnut Creek branch office and Newport Beach non-depository office during the three months ended June 30, 2026, which did not exist for the three months ended June 30, 2025.

Current wording

Occupancy and equipment. The increase was primarily due to expenses for the Lodi branch office and the Calabasas non-depository office, both of which opened subsequent to the nine months ended September 30, 2025. Additional increases stemmed from the Walnut Creek branch office and the Newport Beach non-depository office, which were only open for a portion of the prior-year period, and the San Francisco branch office, where an expansion project completed in the fourth quarter of 2025 has resulted in elevated ongoing expenses.

Previous wording

Data processing and software. The increase was primarily due to: (i) increased usage of our digital banking platform; (ii) higher transaction volumes related to the increased number of loan and deposit accounts; and (iii) an increased number of licenses required for new users on our loan origination and documentation system.

Current wording

Data processing and software. The increase was primarily due to: (i) increased usage of our digital banking platform; (ii) higher transaction volumes related to the increased number of loan and deposit accounts; (iii) an increased number of licenses required for new users on our loan origination and documentation system; and (iv) the implementation of enhanced commercial real estate lending analytics and risk assessment software.

Previous wording

Advertising and promotional. The increase was primarily due to additional expenses incurred to support the expansion of the Bank’s business development teams, including $0.2 million related to business development expenses and $0.1 million related to advertising and marketing expenses.

Current wording

Advertising and promotional. The increase was primarily due to additional expenses incurred to support the expansion of the Bank’s business development teams, including a $0.3 million increase related to business development expenses and a $0.1 million increase related to advertising and marketing expenses. This increase was partially offset by a $0.1 million decrease in event expenses for one-time events during the nine months ended September 30, 2026 that did not occur during the nine months ended September 30, 2025.

Previous wording

Loan-related expenses. The decrease was primarily related to a $0.1 million decrease in loan legal fees, combined with individually immaterial decreases in other expenses including credit report costs, inspection costs, and environmental report costs.

Current wording

Loan-related expenses. The decrease was primarily related to a $0.1 million decrease in loan legal fees and a $0.1 million decrease in credit report costs.

Previous wording

Other operating expenses. The increase was primarily due to: (i) a $0.5 million increase in employee-related expenses such as travel; (ii) a $0.3 million increase in administrative charges, including bank charges; (iii) a $0.2 million increase in IntraFi Network fees resulting from an overall increase in balances carried in the network; (iv) a $0.2 million increase in armored car and courier services; and (v) a $0.1 million increase in operational losses, partially offset by the release of a $1.0 million loss contingency on an SBA loan during the six months ended June 30, 2026. No such release occurred during the six months ended June 30, 2025.

Current wording

Other operating expenses. The increase was primarily due to: (i) a $0.5 million increase in employee travel expenses; (ii) a $0.4 million increase in bank charges; (iii) a $0.3 million increase in reciprocal deposit network fees resulting from an overall increase in balances carried in the network; (iv) a $0.2 million increase in armored car and courier services; and (v) a $0.1 million increase in operational losses. The increase was partially offset by the release of a $1.0 million loss contingency on an SBA loan during the nine months ended September 30, 2026. No such release occurred during the nine months ended September 30, 2025.

Previous wording

The provision for income taxes was $6.7 million for the three months ended June 30, 2026, a $1.1 million increase from the three months ended June 30, 2025. This increase was primarily driven by an increase in taxable income, partially offset by a $0.2 million benefit recorded during the three months ended June 30, 2026 related to the purchase of transferable tax credits that did not occur during the three months ended June 30, 2025. The effective tax rates were 25.64% and 27.82% for the three months ended June 30, 2026 and June 30, 2025, respectively.

Current wording

The provision for income taxes was $7.6 million for the three months ended September 30, 2026, a $1.7 million increase from the three months ended September 30, 2025. This increase was primarily driven by an increase in taxable income, partially offset by a $0.2 million benefit recorded during the three months ended September 30, 2026 related to the purchase of transferable tax credits that did not occur during the three months ended September 30, 2025. The effective tax rates were 25.81% and 26.49% for the three months ended September 30, 2026 and September 30, 2025, respectively.

Previous wording

The provision for income taxes was $13.1 million for the six months ended June 30, 2026, as compared to $10.9 million for the six months ended June 30, 2025. The increase was primarily due to an overall increase in taxable income period-over-period. This increase was partially offset by a $0.5 million benefit recorded during the six months ended June 30, 2026 related to the purchase of transferable tax credits that did not occur during the six months ended June 30, 2025, as well as a net $0.2 million reduction to the provision recorded during the six months ended June 30, 2025. This adjustment related to a tax law change for the state of California effective as of June 30, 2025, which required a transition from a three-factor apportionment formula to a single-sales-factor formula for determining state income tax. As such, the Company recorded a net benefit of approximately $0.9 million relating to the current year provision, which was partially offset by a $0.7 million expense relating to the remeasurement of the deferred tax assets and liabilities as of June 30, 2025. No such adjustment was recorded during the six months ended June 30, 2026. The effective tax rates for the six months ended June 30, 2026 and 2025 were 25.63% and 28.24%, respectively.

Current wording

The provision for income taxes was $20.7 million for the nine months ended September 30, 2026, as compared to $16.8 million for the nine months ended September 30, 2025. The increase was primarily due to an overall increase in taxable income period-over-period, as well as a net $0.2 million reduction to the provision recorded during the six months ended June 30, 2025. This adjustment related to a tax law change for the state of California effective as of June 30, 2025, which required a transition from a three-factor apportionment formula to a single-sales-factor formula for determining state income tax. As such, the Company recorded a net benefit of approximately $0.9 million relating to the current year provision, which was partially offset by a $0.7 million expense relating to the remeasurement of the deferred tax assets and liabilities as of June 30, 2025. No such adjustment was recorded during the nine months ended September 30, 2026. This increase was partially offset by a $0.7 million benefit recorded during the nine months ended September 30, 2026 related to the purchase of transferable tax credits that did not occur during the nine months ended September 30, 2025. The effective tax rates for the nine months ended September 30, 2026 and 2025 were 25.69% and 27.60%, respectively.

Previous wording

At June 30, 2026, total assets were $5.4 billion, an increase of $622.2 million from $4.8 billion at December 31, 2025. The increase was primarily comprised of a $444.8 million increase in total loans held for investment and a $178.2 million increase in cash and cash equivalents. The $444.8 million increase in total loans held for investment between December 31, 2025 and June 30, 2026 was a result of $1.0 billion in loan originations and advances, partially offset by $162.1 million and $421.9 million in loan payoffs and paydowns, respectively. The $444.8 million increase in total loans held for investment included $145.0 million in purchased loans within the consumer section of the loan portfolio.

Current wording

At September 30, 2026, total assets were $5.6 billion, an increase of $804.8 million from $4.8 billion at December 31, 2025. The increase was primarily comprised of a $629.3 million increase in total loans held for investment and a $172.6 million increase in cash and cash equivalents. The $629.3 million increase in total loans held for investment between December 31, 2025 and September 30, 2026 was a result of $1.6 billion in loan originations and advances, partially offset by $304.5 million and $633.2 million in loan payoffs and paydowns, respectively. The $629.3 million increase in total loans held for investment included $230.7 million in purchased loans within the consumer section of the loan portfolio.

Previous wording

Total cash and cash equivalents were $685.1 million at June 30, 2026, an increase of $178.2 million from $506.9 million at December 31, 2025. The increase in cash and cash equivalents was primarily due to the net increase in cash inflows from growth in total deposits of $598.3 million and cash outflows from growth in total loans held for investment of $444.8 million.

Current wording

Total cash and cash equivalents were $679.5 million at September 30, 2026, an increase of $172.6 million from $506.9 million at December 31, 2025. The increase in cash and cash equivalents primarily resulted from $130.0 million in net proceeds from the underwritten public offering (after deducting underwriting discounts and commissions of $7.3 million, and offering expenses of approximately $0.6 million), $59.9 million in net income, and $623.4 million in deposit growth, partially offset by $629.3 million in cash outflows to fund growth in total loans held for investment.

Previous wording

Our total securities available-for-sale and held-to-maturity amounted to $92.7 million at June 30, 2026 and $96.9 million at December 31, 2025, representing a decrease of $4.2 million during the same period. The decrease to available-for-sale securities was primarily due to maturities, prepayments, and calls of $3.6 million, and an unrealized loss on securities of $0.2 million, with the remainder of the change due to amortization of premiums. For the six months ended June 30, 2026, other comprehensive loss was $0.3 million, primarily due to market conditions on securities during that period.

Current wording

Our total securities available-for-sale and held-to-maturity amounted to $84.2 million at September 30, 2026 and $96.9 million at December 31, 2025, representing a decrease of $12.7 million during the same period. The decrease to available-for-sale securities was primarily due to maturities, prepayments, and calls of $7.9 million, and an unrealized loss on securities of $4.3 million, with the remainder of the change due to amortization of premiums. For the nine months ended September 30, 2026, other comprehensive loss was $3.2 million, primarily due to market conditions on securities during that period.

Previous wording

Our loan portfolio is our largest class of interest-earning assets and typically provides higher yields than other types of interest-earning assets. Associated with the higher yields is an inherent amount of credit risk, which we attempt to mitigate with strong underwriting standards. As of June 30, 2026 and December 31, 2025, our total loans amounted to $4.5 billion and $4.1 billion, respectively. Table 14 presents the balance and associated percentage of each major product type within our portfolio as of the dates indicated.

Current wording

Our loan portfolio is our largest class of interest-earning assets and typically provides higher yields than other types of interest-earning assets. Associated with the higher yields is an inherent amount of credit risk, which we attempt to mitigate with strong underwriting standards. As of September 30, 2026 and December 31, 2025, our total loans amounted to $4.7 billion and $4.1 billion, respectively. Table 14 presents the balance and associated percentage of each major product type within our portfolio as of the dates indicated.

Previous wording

Over the past several years, we have experienced significant growth in our loan portfolio, although the relative composition of the portfolio has not changed materially. Our primary focus remains commercial real estate lending (including commercial, commercial land and development, and commercial construction), which constitutes 82.36% of loans held for investment at June 30, 2026. Commercial secured lending represents 5.72% of loans held for investment at June 30, 2026. We sell the guaranteed portion of all SBA 7(a) loans in the secondary market and will continue to do so as long as market conditions continue to be favorable.

Current wording

Over the past several years, we have experienced significant growth in our loan portfolio, although the relative composition of the portfolio has not changed materially. Our primary focus remains commercial real estate lending (including commercial, commercial land and development, and commercial construction), which constitutes 80.84% of loans held for investment at September 30, 2026. Commercial secured lending represents 6.66% of loans held for investment at September 30, 2026.