BayCom Corp

Previous wording

Certain matters discussed in this Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to our financial condition, results of operations, plans, objectives, future performance or business. Forward-looking statements are not statements of historical fact, are based on certain assumptions and are generally identified by use of the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.” Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about, among other things, expectations of the business environment in which we operate, projections of future performance or financial items, perceived opportunities in the market, potential future credit experience, and statements regarding our mission and vision. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties. Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward- looking statements as a result of a wide variety or range of factors including, but not limitedto:

Current wording

Certain matters discussed in this Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to our financial condition, results of operations, plans, objectives, future performance or business. Forward-looking statements are not statements of historical fact, are based on certain assumptions and are generally identified by use of the words “believes,” “expects,” “anticipates,” “estimates,” “forecasts,” “intends,” “plans,” “targets,” “potentially,” “probably,” “projects,” “outlook” or similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would” and “could.” Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about, among other things, expectations of the business environment in which we operate, projections of future performance or financial items, perceived opportunities in the market, potential future credit experience, and statements regarding our mission and vision. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and

Previous wording

these statements as speaking only as of the date they are made and based only on information then actually known to us. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements included in this report or the reasons why actual results could differ from those contained in such statements, whether as a result of new information or to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for the remainder of 2025 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of us and could negatively affect our consolidated financial condition and results of operations as well as our stock price performance.

Current wording

In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this report might not occur, and you should not put undue reliance on any forward-looking statements. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to us. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements included in this report or the reasons why actual results could differ from those contained in such statements, whether as a result of new information or to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for the remainder of 2025 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect our consolidated financial condition and results of operations as well as our stock price performance.

Previous wording

General. BayCom is a bank holding company headquartered in Walnut Creek, California. BayCom’s wholly owned banking subsidiary, United Business Bank, provides a broad range of financial services to businesses and business owners as well as individuals through its network of 35 full-service branches, with 16 locations in California, one in Nevada, two in Washington, five in New Mexico and 11 in Colorado. BayCom’s business activities generally are limited to passive investment activities and oversight of its investment in the Bank. Accordingly, the information set forth in this report, including the consolidated financial statements and related data, relates primarily to the Bank.

Current wording

General. BayCom is a bank holding company headquartered in Walnut Creek, California. BayCom’s wholly owned banking subsidiary, United Business Bank, provides a broad range of financial services to businesses and business owners as well as individuals through its network of 34 full-service branches at June 30, 2025, with 16 locations in California, one in Nevada, one in Washington, five in New Mexico and 11 in Colorado. BayCom’s business activities generally are limited to passive investment activities and oversight of its investment in the Bank. Accordingly, the information set forth in this report, including the consolidated financial statements and related data, relates primarily to the Bank.

Previous wording

Our principal business objective is to enhance shareholder value and generate consistent earnings growth by expanding our commercial banking franchise through both strategic acquisitions and organic growth. Since 2010, we have expanded our geographic footprint through ten strategic acquisitions. We believe that our selective acquisition of community banks has yielded economies of scale and improved our efficiency. We have also grown organically by leveraging the potential within metropolitan and community markets where we operate. These markets offer significant opportunities to expand our commercial client base, increase interest-earning assets, and enhance market share. We believe our geographic footprint, which now includes the San Francisco Bay area, the metropolitan markets of Los Angeles, California; Seattle, Washington; Denver, Colorado; and Las Vegas, Nevada, and community markets including Albuquerque, New Mexico, and Custer, Delta, and Grand Counties, Colorado, provides us access to low cost, stable core deposits in community markets that we can use to fund commercial loan growth. We strive to provide an enhanced banking experience for our clients by providing them with a comprehensive suite of sophisticated banking products and services tailored to meet their needs, while delivering the high-quality, relationship-based client service of a community bank. At March 31, 2025, on a consolidated basis, the Company had approximately $2.6 billion in total assets, $1.9 billion in total loans, $2.1 billion in total deposits and $329.3 million in shareholders’ equity.

Current wording

our geographic footprint, which now includes the San Francisco Bay area, the metropolitan markets of Los Angeles, California; Seattle, Washington; Denver, Colorado; and Las Vegas, Nevada, and community markets including Albuquerque, New Mexico, and Custer, Delta, and Grand Counties, Colorado, provides us access to low cost, stable core deposits in community markets that we can use to fund commercial loan growth. We strive to provide an enhanced banking experience for our clients by providing them with a comprehensive suite of sophisticated banking products and services tailored to meet their needs, while delivering the high-quality, relationship-based client service of a community bank. At June 30, 2025, on a consolidated basis, the Company had approximately $2.6 billion in total assets, $2.0 billion in total loans, $2.2 billion in total deposits and $330.6 million in shareholders’ equity.

Previous wording

We continue to focus on growing our commercial loan portfolios through acquisitions as well as organic growth. At March 31, 2025, our$1.9 billion total loan portfolio included $279.4 million, or 14.2%, of loans acquired through business combinations (all of which were recorded to their estimated fair values at the time of acquisition), and the remaining $1.7 billion, or 85.8%, consisted of loans we originated or purchased not as part of a business combination.

Current wording

Wecontinue to focus on growing our commercial loan portfolios through acquisitions as well as organic growth. At June 30, 2025, our$2.0 billion total loan portfolio included $261.5 million, or 13.1%, of loans acquired through business combinations (all of which were recorded to their estimated fair values at the time of acquisition), and the remaining $1.7 billion, or 86.9%, consisted of loans we originated or purchased not as part of a business combination.

Previous wording

Changes in market interest rates, the slope of the yield curve, and interest we earn on interest earning assets or pay on interest bearing liabilities, as well as the volume and types of interest earning assets, interest bearing and noninterest bearing liabilities and shareholders’ equity, usually have the largest impact on changes in our net interest spread, net interest margin and net interest income during a reporting period. In 2024, the Federal Open Market Committee (“FOMC”) of the Federal Reserve lowered the target range for the federal funds rate three times, resulting in a target range of 4.25% to 4.50% at March 31, 2025.

Current wording

Changes in market interest rates, the slope of the yield curve, and interest we earn on interest earning assets or pay on interest bearing liabilities, as well as the volume and composition of interest earning assets, interest bearing and noninterest bearing liabilities, and shareholders’ equity, usually have the most significant impact on our net interest spread, net interest margin and net interest income during a reporting period. During the second half of 2024, the Federal Open Market Committee (“FOMC”) of the Federal Reserve lowered the target range for the federal funds rate three times, resulting in a target range of 4.25% to 4.50%, which is where it remained at June 30, 2025.

Previous wording

For investments, the Company evaluates available-for-sale debt securities in an unrealized loss position to determine whether the decline in the fair value below the amortized cost basis is due to credit-related factors or noncredit-related factors. Such situations may result from either a decline in the financial condition of the issuing entity or, in the case of fixed interest rate investments, from rising interest rates. In making this assessment, management considers the length of time and the extent to which fair value is less than amortized cost, the nature of the security, the underlying collateral, and the financial condition and prospects of the issuer, among other factors. This assessment also includes a determination of whether the Company intends to sell the security, or if it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis less any current-period credit losses. If the present value of the cash flows expected to be collected from the security is less than the amortized cost basis of the security, a credit loss exists and an allowance for credit losses for available-for-sale securities is recorded for the credit loss, limited by the amount that the fair value is less than the amortized costs basis. Any impairment that has not been recorded through an allowance for credit losses for available-for-sale securities is recognized in other comprehensive income. Changes in the allowance for credit losses for available-for-sale securities are recorded as provision for (or reversal of) credit loss. Losses are charged against the allowance for credit losses for available-for-sale securities, with a corresponding adjustment to the security's amortized cost basis, when management believes the uncollectibility of an available-for-sale security is confirmed or when either criteria regarding intent or requirement to sell is met.

Current wording

length of time and the extent to which fair value is less than amortized cost, the nature of the security, the underlying collateral, and the financial condition and prospects of the issuer, among other factors. This assessment also includes a determination of whether the Company intends to sell the security, or if it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis less any current-period credit losses. If the present value of the cash flows expected to be collected from the security is less than the amortized cost basis of the security, a credit loss exists and an allowance for credit losses for available-for-sale securities is recorded for the credit loss, limited by the amount that the fair value is less than the amortized costs basis. Any impairment that has not been recorded through an allowance for credit losses for available-for-sale securities is recognized in other comprehensive income. Changes in the allowance for credit losses for available-for-sale securities are recorded as provision for (or reversal of) credit loss. Losses are charged against the allowance for credit losses for available-for-sale securities, with a corresponding adjustment to the security's amortized cost basis, when management believes the uncollectibility of an available-for-sale security is confirmed or when either criteria regarding intent or requirement to sell is met.

Previous wording

financial statements in conformity with GAAP, management makes estimates, assumptions and judgments based on available information. These estimates, assumptions and judgments affect the amounts reported in the financial statements and accompanying notes and are based on information available as of the dates of the financial statements. As this information changes, actual results could differ from the estimates, assumptions and judgments reflected in the financial statements. In particular, management has identified several accounting policies that, due to the estimates, assumptions and judgments inherent in those policies, are critical in understanding our financial statements.

Current wording

Our accounting and reporting policies conform to accounting principles generally accepted in the United States of America (“GAAP”) and to general practices within the banking industry. To prepare financial statements and interim financial statements in conformity with GAAP, management makes estimates, assumptions and judgments based on available information. These estimates, assumptions and judgments affect the amounts reported in the financial statements and accompanying notes and are based on information available as of the dates of the financial statements. As this information changes, actual results could differ from the estimates, assumptions and judgments reflected in the financial statements. In particular, management has identified several accounting policies that, due to the estimates, assumptions and judgments inherent in those policies, are critical in understanding our financial statements.

Previous wording

Total assets. Total assets decreased $100.7 million, or 3.8%, to $2.6 billion at March 31, 2025, from December 31, 2024. The decrease primarily was due to a $107.5 million, or 29.5%, decline in cash and cash equivalents and a $2.0 million, or 87.5%, decline in loans held for sale, partially offset by a $13.2 million, or 0.7%, increase in loans receivable, net.

Current wording

Total assets. Total assets decreased $42.1 million, or 1.6%, to $2.6 billion at June 30, 2025, from December 31, 2024. The decrease primarily was due to a $72.4 million, or 19.9%, decline in cash and cash equivalents and a $2.2 million, or 100%, decline in loans held for sale, partially offset by a $47.4 million, or 2.4%, increase in loans receivable, net.

Previous wording

Cash and cash equivalents. Cash and cash equivalents decreased $107.5 million, or 29.5%, to $256.5 million, at March 31, 2025, from $364.0 million at December 31, 2024. The decrease primarily was due to a $105.4 million decrease in federal funds sold and interest bearing balances in banks, as excess funds were used to fund loan growth.

Current wording

Cash and cash equivalents. Cash and cash equivalents decreased $72.4 million, or 19.9%, to $291.6 million at June 30, 2025, from $364.0 million at December 31, 2024. The decrease primarily was due to a $71.0 million decrease in federal funds sold and interest bearing balances in banks, as excess funds were used to fund loan growth and deposit withdrawals.

Previous wording

Investment securities available-for-sale. Investment securities available-for-sale decreased $928,000, or 0.5%, to $192.4 million at March 31, 2025 from $193.3 million at December 31, 2024. The decrease was primarily attributable to routine maturities, principal repayments, and calls of investment securities. These reductions were partially offset by an upward fair value adjustment related to unrealized gains on investment securities available-for-sale. There were no purchases of investment securities during the three months ended March 31, 2025.

Current wording

Investment securities available-for-sale. Investment securities available-for-sale decreased $8.6 million, or 4.5%, to $184.7 million at June 30, 2025 from $193.3 million at December 31, 2024. The decrease was primarily attributable to routine maturities, principal repayments, and calls of investment securities, partially offset by purchases of investment securities and an upward fair value adjustment related to unrealized gains on investment securities available-for-sale.

Previous wording

Equity securities. Equity securities decreased $255,000, or 1.9%, to $12.9 million at March 31, 2025 from $13.1 million at December 31, 2024, primarily due to mark-to-market downward adjustments recorded during the three months ended March 31, 2025.

Current wording

Equity securities. Equity securities decreased $255,000, or 1.9%, to $12.9 million at June 30, 2025 from $13.1 million at December 31, 2024, primarily due to mark-to-market downward adjustments recorded during the six months ended June 30, 2025.

Previous wording

Loans receivable, net. We originate a wide variety of loans with a focus on commercial real estate (“CRE”) loans and commercial and industrial loans. Total loans increased $13.2 million, or 0.7%, to $1.9 billion at March 31, 2025 from $1.9 billion at December 31, 2024. The increase was due to $72.1 million of new loan originations and $7.6 million of loan purchases, partially offset by $65.4 million of loan repayments and $2.8 million of loans sold.

Current wording

Loans receivable, net. We originate a wide variety of loans with a focus on commercial real estate (“CRE”) loans and commercial and industrial loans. Total loans increased $47.4 million, or 2.4%, to $2.0 billion at June 30, 2025 from $1.9 billion at December 31, 2024. The increase was due to $227.2 million of new loan originations and $20.6 million of loan purchases, partially offset by $199.8 million of loan repayments and $3.4 million of loans sold.

Previous wording

Acquired loans. As of March 31, 2025, our total loan portfolio included $279.4 million, or 14.2%, of loans acquired through business combinations (all of which were recorded at their estimated fair values as of time of acquisition), of which $128.3 million had no remaining net premium or discount.

Current wording

Acquired loans. As of June 30, 2025, our total loan portfolio included $261.5 million, or 13.1%, of loans acquired through business combinations (all of which were recorded at their estimated fair values as of the time of acquisition), of which $128.3 million had no remaining net premium or discount.

Previous wording

As of March 31, 2025, acquired non-PCD loans totaled $129.7 million, with a remaining net premium of $1.6 million, compared to $140.6 million with a remaining net premium of $1.8 million as of December 31, 2024. The net premium for acquired non-PCD loans includes a credit discount based on estimated losses in the acquired loans, partially offset by any premium based on market interest rates on the date of acquisition.

Current wording

As of June 30, 2025, acquired non-PCD loans totaled $123.5 million, with a remaining net premium of $1.6 million, compared to $140.6 million with a remaining net premium of $1.8 million as of December 31, 2024. The net premium for acquired non-PCD loans includes a credit discount based on estimated losses in the acquired loans, partially offset by any premium based on market interest rates on the date of acquisition.

Previous wording

As of March 31, 2025, acquired PCD loans totaled $21.4 million, with a remaining net non-credit discount of $1.4 million, compared to $24.0 million with a remaining net non-credit discount of $1.5 million as of December 31, 2024.

Current wording

As of June 30, 2025, acquired PCD loans totaled $18.0 million, with a remaining net non-credit discount of $1.3 million, compared to $24.0 million with a remaining net non-credit discount of $1.5 million as of December 31, 2024.

Previous wording

Nonperforming assets and loans. Nonperforming assets generally consist of nonperforming loans and other real estate owned (“OREO”). Nonperforming loans generally consist of nonaccrual loans and accruing loans 90 days or more past due. Nonperforming assets increased $517,000 to $10.0 million, or 0.51% of total loans, at March 31, 2025 compared to $9.5 million, or 0.48% of total loans, at December 31, 2024. There was no OREO at March 31, 2025 and December 31, 2024.

Current wording

Nonperforming assets and loans. Nonperforming assets generally consist of nonperforming loans and other real estate owned (“OREO”). Nonperforming loans include nonaccrual loans and accruing loans 90 days or more past due. Nonperforming assets increased $6.9 million to $16.4 million, or 0.82% of total loans, at June 30, 2025, compared to $9.5 million, or 0.48% of total loans, at December 31, 2024. The Company also held no OREO at either date.

Previous wording

At March 31, 2025 and December 31, 2024, nonaccrual loans included $610,000 and $643,000 of loans 30-89 days past due, respectively, and $4.4 million of loans less than 30 days past due at both March 31, 2025 and December 31, 2024. At March 31, 2025, the $4.4 million of nonaccrual loans less than 30 days past due was comprised of 19 loans, all of which were placed on nonaccrual due to concerns over the financial condition of the borrowers.

Current wording

Nonperforming loans totaled $16.4 million, or 0.82% of total loans, at June 30, 2025, compared to $9.5 million, or 0.48% of total loans, at December 31, 2024. The increase in nonperforming loans was primarily due to seven new commercial real estate loans (secured by various types of real estate) totaling $5.2 million being placed on nonaccrual status during the six months ended June 30, 2025, and a $2.8 million increase in loans 90 days or more past due and still accruing, which were in the process of collection. These increases were partially offset by payoffs of four nonaccrual loans totaling $1.9 million and one fully charged off nonaccrual loan of $105,000. The rise in nonperforming loans reflects elevated credit risk primarily within the commercial and industrial and commercial real estate portfolios. At June 30, 2025, nonaccrual loans included $599,000 of loans 30–89 days past due and $5.3 million of loans less than 30 days past due. The $5.3 million of nonaccrual loans less than 30 days past due consisted of 16 loans, all of which were placed on nonaccrual due to borrower-specific financial concerns rather than delinquency. At December 31, 2024, nonaccrual loans included $643,000 of loans 30–89 days past due and no loans less than 30 days past due.

Previous wording

Loan modifications to borrowers experiencing financial difficulty as of both March 31, 2025 and December 31, 2024, totaled $2.7 million. All such modified loans were on nonaccrual status as of each respective reporting date. Modified loans that are accruing and performing in accordance with their modified terms are not classified as nonperforming loans, as they continue to accrue interest and demonstrate satisfactory payment performance despite their modified terms. The related allowance for credit losses on individually evaluated modified loans totaled $22,000 and $24,000 at March 31, 2025 and December 31, 2024, respectively.

Current wording

Modified loans to borrowers experiencing financial difficulty as of June 30, 2025 and December 31, 2024, totaled $2.4 million and $2.7 million, respectively. All such modified loans were on nonaccrual status as of each respective reporting date. Modified loans that are accruing and performing in accordance with their modified terms are not classified as nonperforming loans, as they continue to accrue interest and demonstrate satisfactory payment performance despite their modified terms. There were no such modified loans at June 30, 2025 and December 31, 2024. The related allowance for credit losses on individually evaluated modified loans was none and $24,000 at June 30, 2025 and December 31, 2024, respectively.

Previous wording

Interest foregone on nonaccrual loans was approximately $269,000 and $483,000 for the three months ended March 31, 2025 and 2024. Interest income recognized on nonaccrual loans was approximately $35,000 and $7,200 for the three months ended March 31, 2025 and 2024.

Current wording

Interest foregone on nonaccrual loans was approximately $370,000 and $639,000 for the three and six months ended June 30, 2025, compared to $226,000 and $709,000 for the three and six months ended June 30, 2024. Interest income recognized on nonaccrual loans was approximately $31,000 and $66,000 for the three and six months ended June 30, 2025, and $79,000 and $86,000 for the three and six months ended June 30, 2024, respectively.

Previous wording

Allowance for credit losses for loans. The allowance for credit losses is determined by us on a quarterly basis, although we are engaged in monitoring the appropriate level of the allowance on a more frequent basis. We assess the allowance for credit losses based on three categories: (i) originated loans, (ii) acquired non-PCD loans, and (iii) acquired PCD loans. The allowance for credit losses reflects management’s estimate of current expected credit losses inherent in the loan portfolios. The computation includes elements of judgment and high levels of subjectivity.

Current wording

losses based on three categories: (i) originated loans, (ii) acquired non-PCD loans, and (iii) acquired PCD loans. The allowance for credit losses reflects management’s estimate of current expected credit losses inherent in the loan portfolios. The computation includes elements of judgment and high levels of subjectivity.

Previous wording

At March 31, 2025, the Company’s allowance for credit losses for loans was $18.5 million, or 0.94% of total loans, compared to $17.9 million, or 0.92% of total loans, at December 31, 2024. Management currently believes that the $18.5 million allowance for credit losses at March 31, 2025 is adequate to absorb expected credit losses inherent in the Company’s loan portfolio. No assurance can be given, however, that adverse economic conditions or other circumstances will not result in increased losses in the portfolio.

Current wording

At June 30, 2025, the Company’s allowance for credit losses for loans was $18.7 million, or 0.94% of total loans, compared to $17.9 million, or 0.92% of total loans, at December 31, 2024. Management currently believes that the $18.7 million allowance for credit losses at June 30, 2025 is adequate to absorb expected credit losses inherent in the Company’s loan portfolio. No assurance can be given, however, that adverse economic conditions or other circumstances will not result in increased losses in the portfolio.

Previous wording

of which are key economic indicators used in the estimation of expected credit losses under the current expected credit loss, or CECL model.

Current wording

The increase in the allowance for credit losses at June 30, 2025 as compared to December 31, 2024, was primarily attributable to growth in the loan portfolio, an increase in the reserve for pooled loans, an increase in the reserve for individually evaluated loans, and the replenishment of the allowance during the period. The increase in the reserve for pooled loans reflected changes in portfolio mix, including growth in higher-risk loan categories, changes in the risk level of one qualitative factor, as well as updated historical loss rates and modest changes in forecasted economic conditions. Specifically, the Company incorporated an increase in forecasted national unemployment, partially offset by improvement in projected national gross domestic product (“GDP”) at June 30, 2025, as compared to December 31, 2024. Both of these are key economic indicators used in estimating expected credit losses under the current expected credit loss, or CECL, model.

Previous wording

As of March 31, 2025, the Company individually evaluated $18.0 million in loans, inclusive of the $9.8 million of nonperforming loans as of that date. Of these individually evaluated loans, $3.3 million had a specific allowance totaling $1.3 million as of March 31, 2025. As of December 31, 2024, the Company individually evaluated $17.4 million in loans, inclusive of the $9.2 million of nonperforming loans as of that date. Of these individually evaluated loans, $2.7 million had a specific allowance totaling $392,000 as of December 31, 2024.

Current wording

As of June 30, 2025, the Company individually evaluated $18.2 million in loans, inclusive of the $13.5 million of nonperforming loans as of that date. Of these individually evaluated loans, $2.3 million had a specific allowance totaling $839,000 million as of June 30, 2025. As of December 31, 2024, the Company individually evaluated $17.4 million in loans, inclusive of the $9.2 million of nonperforming loans as of that date. Of these individually evaluated loans, $2.7 million had a specific allowance totaling $392,000 as of December 31, 2024.

Previous wording

Total deposits decreased $105.2 million, or 4.7%, to $2.1 billion at March 31, 2025 compared to $2.2 billion at December 31, 2024. At March 31, 2025, noninterest bearing demand deposits totaled $589.5 million, or 27.7% of total deposits, compared to $689.0 million, or 30.8% of total deposits, at December 31, 2024, a decrease of $99.5 million. Additionally, demand deposits and time deposits decreased $99.5 million and $31.0 million, respectively, while higher-costing money market and lower-costing NOW accounts increased $27.2 million and $1.1 million, respectively, from December 31, 2024 to March 31, 2025. During the first quarter of 2025, the overall deposit mix shifted, in part, due to interest rate sensitive clients moving a portion of their non-operating deposit balances from lower costing deposits, including noninterest bearing deposits, into higher costing money market accounts and time deposits.

Current wording

Total deposits decreased $47.4 million, or 2.1%, to $2.2 billion at June 30, 2025, compared to $2.2 billion at December 31, 2024. At June 30, 2025, noninterest-bearing demand deposits totaled $616.1 million, or 28.2% of total deposits, compared to $689.0 million, or 30.8% of total deposits, at December 31, 2024, representing a decrease of $72.9 million. Time deposits increased $432,000, while higher-costing money market accounts and lower-costing NOW and savings accounts increased $13.5 million and $11.6 million, respectively, from December 31, 2024 to June 30, 2025. Time deposits included no brokered deposits as of June 30, 2025, compared to $35.5 million of brokered deposits at December 31, 2024. The decline in total deposits compared to December 31, 2024, primarily reflects a reduction in noninterest-bearing demand deposits, partially offset by growth in interest-bearing NOW and money market accounts. The shift in deposit composition reflects continued customer migration toward interest-bearing products in response to the prevailing rate environment. The decrease in brokered time deposits also contributed to the overall decline in deposit balances. Management continues to monitor deposit mix and pricing strategies in the context of funding cost, liquidity needs, and interest rate risk.

Previous wording

We consider our deposit base to be seasoned, stable and well-diversified, and we do not have any significant industry concentrations among our non-insured deposits. We also offer an insured cash sweep product (ICS) that allows customers to insure deposits above FDIC insurance limits. At March 31, 2025, our average deposit account size (excluding public funds), calculated by dividing period-end deposits by the population of accounts with balances, was approximately $60,000. See “Note 17 – Commitments and Contingencies” of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q for information regarding our top ten depositors.

Current wording

We consider our deposit base to be seasoned, stable and well-diversified, and we do not have any significant industry concentrations among our non-insured deposits. We also offer an insured cash sweep product (ICS) that allows customers to insure deposits above FDIC insurance limits. At June 30, 2025, our average deposit account size (excluding public funds), calculated by dividing period-end deposits by the population of accounts with balances, was approximately $61,000. See “Note 17 – Commitments and Contingencies” of the Notes to Condensed Consolidated Financial Statements in this Form 10-Q for information regarding our top ten depositors.

Previous wording

At March 31, 2025 and December 31, 2024, we had the ability to borrow up to $535.0 million and $540.2 million, respectively, from the FHLB of San Francisco. At both March 31, 2025 and December 31, 2024, there were no FHLB advances outstanding.

Current wording

At June 30, 2025 and December 31, 2024, we had the ability to borrow up to $581.6 million and $540.2 million, respectively, from the FHLB of San Francisco. At both June 30, 2025 and December 31, 2024, there were no FHLB advances outstanding.

Previous wording

The Bank has been approved for discount window advances from the FRB of San Francisco secured by certain types of loans. At March 31, 2025 and December 31, 2024, we had the ability to borrow up to $41.5 million and $41.9 million, respectively, from the FRB of San Francisco. At both March 31, 2025 and December 31, 2024, we hadno FRB of San Francisco advances outstanding.

Current wording

The Bank has been approved for discount window advances from the FRB of San Francisco secured by certain types of loans. At June 30, 2025 and December 31, 2024, we had the ability to borrow up to $440.3 million and $41.9 million, respectively, from the FRB of San Francisco. At both June 30, 2025 and December 31, 2024, we hadno FRB of San Francisco advances outstanding.

Previous wording

Shareholders’ equity. Shareholders’ equity increased $5.0 million, to $329.3 million at March 31, 2025 from $324.4 million at December 31, 2024. The increase in shareholders’ equity primarily was due to $5.7 million of net income earned and a $2.1 million decrease in accumulated other comprehensive loss, net of taxes, partially offset by the repurchase of $1.3 million of Company common stock and cash dividends paid or accrued and payable totaling $1.7 million, during the first three months of 2025. During the three months ended March 31, 2025, the Company repurchased a total of 50,793 shares of its common stock at a total cost of $1.3 million and an average price of $25.82 per share, leaving 413,305 shares available for future purchases under the current stock repurchase plan. For additional information see Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds.”

Current wording

Shareholders’ equity. Shareholders’ equity increased $6.2 million, to $330.6 million at June 30, 2025 from $324.4 million at December 31,2024. The increase in shareholders’ equity primarily was due to $12.1 million of net income earned during the first six months of 2025 and $2.9 million in other comprehensive income, net of taxes, which primarily reflected changs in the unrealized gain on available-for-sale securities. These increases were partially offset by the repurchase of $5.2 million of Company common stock and $3.9 million of cash dividends paid or accrued during the period. During the six months ended June 30, 2025, the Company repurchased a total of 199,243 shares of its common stock at a total cost of $5.2 million and an average price of $25.06 per share, leaving 264,855 shares available for future

Previous wording

Comparison of Results of Operations for the Three Months Ended March 31, 2025 and 2024

Current wording

Comparison of Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024

Previous wording

Earnings summary. Net income was $5.7 million for the three months ended March 31, 2025, compared to $5.9 million for the three months ended March 31, 2024, a decrease of $175,000 or 3.0%. The decrease was the result of a $622,000 decrease in noninterest income and $390,000 increase in provision for credit losses, partially offset by a $473,000 increase in net interest income, $282,000 decrease in provision for income taxes and $82,000 decrease in noninterest expense. Basic and diluted earnings per share were $0.51 for both the three months ended March 31, 2025 and 2024.

Current wording

Earnings summary. Net income was $6.4 million for the three months ended June 30, 2025, compared to $5.6 million for the three months ended June 30, 2024, an increase of $764,000 or 13.6%. The increase was the result of a $865,000 increase in net interest income, a $258,000 decrease in noninterest expense, and a $30,000 increase in noninterest income, partially offset by a $357,000 increase in provision for income taxes and a $32,000 increase in provision for credit losses. Basic and diluted earnings per share were $0.58 for the three months ended June 30, 2025, compared to $0.50 for the three months ended June 30, 2024.

Previous wording

Our efficiency ratio, which is calculated by dividing noninterest expense by the sum of net interest income before provision for credit losses and noninterest income, was 65.74% and 65.68% for the three months ended March 31, 2025 and 2024, respectively. The deterioration in the efficiency ratio during the three months ended March 31, 2025 as compared to the same period in 2024 was primarily due to lower overall revenues, partially offset by lower noninterest expenses.

Current wording

Our efficiency ratio, which is calculated by dividing noninterest expense by the sum of net interest income before provision for credit losses and noninterest income, was 63.85% and 64.79% for the three and six months ended June 30, 2025, compared to 67.34% and 66.49% for the three and six months ended June 30, 2024, respectively. The improvement in the efficiency ratio for the three-month period was primarily driven by higher net interest income and a modest reduction in noninterest expense. For the six-month period, the improvement was due to a decrease in noninterest expense and a slight increase in total revenue, as higher net interest income more than offset a decline in noninterest income.

Previous wording

Interest income. Interest income for the three months ended March 31, 2025 was $32.6 million, compared to $31.7 million for the three months ended March 31, 2024, an increase of $902,000 or 2.8%. Increased yields earned on interest-earning assets, along with an increase in the average balances of investment securities and loans, were the primary drivers of the increase in interest income, partially offset by a decrease in the average balance of and yield on fed funds sold and interest bearing balances in banks.

Current wording

Interest income. Interest income for the three months ended June 30, 2025 was $33.5 million, compared to $32.4 million for the three months ended June 30, 2024, an increase of $1.1 million or 3.2%. Increased yields earned on interest-earning assets, along with an increase in the average balances of investment securities and loans, were the primary drivers of the increase in interest income, partially offset by a decrease in the average balance of and yield on fed funds sold and interest bearing balances in banks.

Previous wording

Interest income on loans, including fees, increased $1.9 million, or 7.5%, to $27.1 million for the three months ended March 31, 2025 from $25.3 million for the three months ended March 31, 2024, due to a $41.9 million increase in the average balance of loans and a 32 basis point increase in the average loan yield. The average balance of loans was $2.0 billion for the first quarter of 2025, compared to $1.9 billion for first quarter of 2024. The average yield on loans was 5.64% for the three months ended March 31, 2025, compared to 5.32% for the first quarter of 2024. The increase in the average yield on loans during the current quarter, compared to the first quarter of 2024 was due to the impact of increased rates on variable rate loans, as well as new loans being originated at higher market interest rates.

Current wording

Interest income on loans, including fees, increased $2.9 million, or 11.8%, to $28.0 million for the three months ended June 30, 2025 from $25.0 million for the three months ended June 30, 2024, due to a $133.4 million increase in the average balance of loans and a 22 basis point increase in the average loan yield. The average balance of loans was $2.0 billion for the second quarter of 2025, compared to $1.9 billion for second quarter of 2024. The average yield on loans was 5.63% for the three months ended June 30, 2025, compared to 5.41% for the second quarter of 2024. The increase in the average yield on loans during the current quarter, compared to the second quarter of 2024 was due to the impact of increased rates on variable rate loans, as well as new loans being originated at higher market interest rates.

Previous wording

Interest income on loans for the three months ended March 31, 2025 and 2024 included $215,000 and $98,000 in accretion of the net discount on acquired loans and revenue from PCD loans in excess of discounts. The balance of the remaining net discounts on these acquired loans totaled $223,000 and $392,000 at March 31, 2025 and 2024, respectively. Interest income on loans for the three months ended March 31, 2025 and 2024, included $162,000 and $176,000, respectively, in fees related to prepayment penalties.

Current wording

Interest income on loans for the three months ended June 30, 2025 and 2024 included $110,000 and $124,000 in accretion of the net discount on acquired loans and revenue from PCD loans in excess of discounts. Remaining net discounts on these acquired loans totaled $319,000 and $540,000 at June 30, 2025 and 2024, respectively. Interest income on loans for the three months ended June 30, 2025 and 2024, included $109,000 and $70,000, respectively, in fees related to prepayment penalties.

Previous wording

Interest income on investment securities increased $498,000, or 25.5%, to $2.5 million for the three months ended March 31, 2025, compared to $2.0 million for the three months ended March 31, 2024, as a result of increases in the average yield and average balance. The average yield on investment securities increased 49 basis points to 4.73% for the three months ended March 31, 2025, compared to 4.24% for the three months ended March 31, 2024. The increase in average yield was due to higher market interest rates on newly purchased securities and rate resets on variable rate investment securities. The average balance of investment securities totaled $210.2 million for the three months ended March 31, 2025, compared to $185.7 million for the three months ended March 31, 2024. In addition, during the first quarter of 2025, we received $393,000 in cash dividends on our FRB and FHLB stock, compared to $416,000 in the first quarter of 2024.

Current wording

Interest income on investment securities increased $225,000, or 10.3%, to $2.4 million for the three months ended June 30, 2025, compared to $2.2 million for the three months ended June 30, 2024, as a result of increases in the average yield and average balance. The average yield on investment securities increased 18 basis points to 4.68% for the three months ended June 30, 2025, compared to 4.50% for the three months ended June 30, 2024. The increase in average yield was due to higher market interest rates on newly purchased securities and rate resets on variable rate investment securities. The average balance of investment securities totaled $206.5 million for the three months ended June 30, 2025, compared to $195.1 million for the three months ended June 30, 2024. In addition, during the second quarter of 2025, we received $392,000 in cash dividends on our FRB and FHLB stock, unchanged from the second quarter of 2024.

Previous wording

Interest income on federal funds sold and interest-bearing balances in banks decreased $1.5 million, or 35.6%, to $2.6 million for the three months ended March 31, 2025, compared to $4.1 million for the three months ended March 31, 2024, as a result of changes in the average yield and average balance. The average yield decreased 101 basis points to 4.79% for the three months ended March 31, 2025, compared to 5.48% for the three months ended March 31, 2024, reflecting a lowering of the Federal Reserve rates. The average balance of federal funds sold and interest-bearing balance in banks totaled $240.3 million and $302.1 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Interest income on federal funds sold and interest-bearing balances in banks decreased $2.1 million, or 44.1%, to $2.7 million for the three months ended June 30, 2025, compared to $4.8 million for the three months ended June 30, 2024, as a result of changes in the average yield and average balance. The average yield decreased 102 basis points to 4.45% for the three months ended June 30, 2025, compared to 5.47% for the three months ended June 30, 2024, reflecting the Federal Reserve’s rate reductions during the second half of 2024. The average balance of federal funds sold and interest-bearing balance in banks totaled $242.8 million and $354.3 million for the three months ended June 30, 2025 and 2024, respectively.

Previous wording

Interest expense. Interest expense increased $429,000, or 4.6%, to $9.8 million for the three months ended March 31, 2025, compared to $9.3 million for the three months ended March 31, 2024. The increase was primarily driven by higher average balances of money market accounts and time deposits, as well as an increase in rates paid on money market accounts, partially offset by a lower rate on time deposits. The average cost of interest-bearing liabilities for the first quarter

Current wording

Interest expense. Interest expense increased $611,000, or 3.1%, to $10.3 million for the three months ended June 30, 2025, compared to $10.1 million for the three months ended June 30, 2024. The increase was primarily due to higher rates paid on money market deposits, as well as an increase in the average balances of money market and time deposit accounts.

Previous wording

Interest expense on borrowings decreased $27,000, or 2.40%, to $1.1 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024. The average cost of total borrowings increased to 6.07% for the three months ended March 31, 2025, compared to 6.18% for the three months ended March 31, 2024. The average balance of borrowings increased $118,000 to $72.4 million during the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Current wording

Interest expense on borrowings decreased $25,000, or 2.2%, to $1.1 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024. The average cost of total borrowings decreased to 6.00% for the three months ended June 30, 2025, compared to 6.18% for the three months ended June 30, 2024. The average balance of borrowings increased $251,000 to $72.4 million during the three months ended June 30, 2025, compared to $72.3 million during the three months ended June 30, 2024.

Previous wording

Interest expense on deposits increased $456,000, or 5.5%, to $8.7 million for the three months ended March 31, 2025, compared to $8.2 million for the same period in 2024. The increase was primarily driven by higher rates paid on money market accounts and, to a lesser extent, by increases in the average balances of both money market accounts and time deposits. These increases were partially offset by a decline in rates paid on time deposits. The average rate paid on money market accounts rose by 11 basis points during the first quarter of 2025 compared to the same period in 2024, while the average rate on time deposits declined by 12 basis points over the same period. The average balance of money market accounts increased $33.3 million, or 5.4%, to $654.8 million, compared to $621.5 million for the three months ended March 31, 2024. The average balance of time deposits increased $33.6 million, or 6.9%, to $522.4 million during the first quarter of 2025, compared to $488.7 million for the same period in the prior year.

Current wording

Interest expense on deposits increased $663,000, or 3.8%, to $17.9 million for the six months ended June 30, 2025, compared to $17.2 million for the six months ended June 30, 2024. The increasewas driven by higher rates paid on money market accounts and, to a lesser extent, an increase in the average balance of time deposits and money market accounts, partially offset by a decrease in the rate paid on time deposits. Specifically, rates on money market accounts increased nine basis points during the six months ended June 30, 2025, compared to the same period in 2024, while rates on time deposits decreased 18 basis points. The average balance of money market accounts increased $28.1 million, or 4.45%, to $659.1 million for the six months ended June 30, 2025, compared to $631.0 million for the six months ended June 30, 2024. The average balance of time deposits increased $31.8 million, or 6.3%, to $535.2 million for the six months ended June 30, 2025, compared to $503.4 million for the same period the prior year.