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 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 range of factors including, but not limitedto:

Previous wording

Our principal business objective is to enhance shareholder value and generate consistent earnings growth by expanding our commercial banking franchise through organic growth, strategic loan and deposit transactions, and strategic acqusitons. Since its founding in 2010, growth has been predominantly acquisition-driven, and we have expanded our geographic footprint through ten successful strategic acquisitions. We believe that our selective acquisition of community banks has yielded economies of scale and improved our efficiency. We have also achieved organic growth by leveraging opportunities within the metropolitan and community markets in which we operate. These markets provide 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 access to low-cost, stable core deposits in community markets that can be used to fund commercial loan growth. We strive to create an enhanced banking experience for our clients by providing a comprehensive suite of sophisticated banking products and services tailored to meet their needs, while delivering the high-quality, relationship-based client service associated with a community bank. At March 31, 2026, on a consolidated basis, the Company had approximately $2.6 billion in total assets, $2.0 billion in total loans, $2.3 billion in total deposits and $344.0 million in shareholders’ equity.

Current wording

Our principal business objective is to enhance shareholder value and generate consistent earnings growth by expanding our commercial banking franchise through organic growth, strategic loan and deposit transactions, and strategic acquisitions. Since its founding in 2010, growth has been predominantly acquisition-driven, and we have expanded our geographic footprint through ten successful acquisitions. We believe that our selective acquisition of community banks has yielded economies of scale and improved our efficiency. We have also achieved organic growth by leveraging opportunities within the metropolitan and community markets in which we operate. These markets provide 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 access to low-cost, stable core deposits in community markets that can be used to fund commercial loan growth. We strive to create an enhanced banking experience for our clients by providing a comprehensive suite of sophisticated banking products and services tailored to meet their needs, while delivering the high-quality, relationship-based client service associated with a community bank. At June 30, 2026, on a consolidated basis, the Company had approximately $2.6 billion in total assets, $2.1 billion in total loans, $2.2 billion in total deposits and $335.4 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, 2026, our$2.0 billion total loan portfolio included $204.2 million, or 10.2%, of loans acquired through business combinations (all of which were recorded to their estimated fair values at the time of acquisition), and the remaining $1.8 billion, or 89.8%, consisted of loans we originated or purchased not as part of a business combination.

Current wording

We continue to focus on growing our commercial loan portfolios through acquisitions as well as organic growth. At June 30,2026, our$2.1 billion total loan portfolio included $188.5 million, or 9.1%, of loans acquired through business combinations (all of which were recorded to their estimated fair values at the time of acquisition), and the remaining $1.9 billion, or 90.9%, 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 the rates we earn on interest earning assets or pay on interest bearing liabilities have a significant impact on our net interest spread, net interest margin and net interest income. During 2025, the Federal Open Market Committee of the Federal Reserve (“FOMC”) lowered the target range for the federal funds rate in response to continued moderation in inflation and evolving economic conditions. The FOMC reduced the target range by 75 basis points, from 4.25%–4.50% at December 31, 2024, to 3.50%–4.25% by year-end 2025, where it remained as of March 31, 2026. All reductions occurred between September and December 2025. Correspondingly, the prime rate, which generally moves in relation to the federal funds rate, was approximately 6.75% at March 31, 2026. These rate levels influenced both asset yields and funding costs during the first quarter of 2026. Net interest income increased $2.3 million, or 10.1%, to $25.2 million for the three months ended March 31, 2026, compared to the same period in 2025, driven primarily by growth in loan interest income and higher FHLB dividend income, partially offset by a decrease in interest income on investment securities and interest-bearing balances. Total interest expense decreased $412,000, or 4.2%, primarily reflecting the full redemption of the Company’s subordinated notes in the third quarter of 2025, partially offset by higher deposit interest expense and increased junior subordinated debenture expense. Additional details regarding net interest income are discussed below.

Current wording

Changes in market interest rates, the slope of the yield curve, and the rates we earn on interest earning assets or pay on interest bearing liabilities have a significant impact on our net interest spread, net interest margin and net interest income. During 2025, the Federal Open Market Committee of the Federal Reserve (“FOMC”) lowered the target range for the federal funds rate in response to continued moderation in inflation and evolving economic conditions. The FOMC reduced the target range by 75 basis points, from 4.25%–4.50% at December 31, 2024, to 3.50%–4.25% by year-end 2025, where it remained as of June 30, 2026. All reductions occurred between September and December 2025. Correspondingly,

Previous wording

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

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 cost 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 losses. 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

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.

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 to understanding our financial statements.

Previous wording

Total assets. Total assets increased $54.9 million, or 2.1%, to $2.6 billion at March 31, 2026, from December 31, 2025. The increase primarily was due to a $99.4 million, or 48.1%, increase in cash and cash equivalents and a $9.7 million, or 5.4%, increase in investment securities available-for-sale, at fair value, partially offset by a $55.1 million, or 2.7%, decrease in loans receivable, net.

Current wording

Total assets. Total assets decreased $13.6 million, or 0.5%, to $2.6 billion at June 30, 2026, from December 31, 2025. The decrease primarily was due to a $29.1 million, or 14.1%, decrease in cash and cash equivalents, partially offset by a $3.0 million, or 1.7%, increase in investment securities available-for-sale at fair value and a $7.2 million, or 0.3%, increase in loans receivable, net.

Previous wording

Cash and cash equivalents. Cash and cash equivalents increased $99.4 million, or 48.1%, to $305.9 million at March 31, 2026, from $206.5 million at December 31, 2025. The increase primarily was due to a $107.6 million increase in federal funds sold due repayments on loans outpacing loan growth and an increase in deposits.

Current wording

Cash and cash equivalents. Cash and cash equivalents decreased $29.1 million, or 14.1%, to $177.4 million at June 30, 2026, from $206.5 million at December 31, 2025. The decrease primarily was due to a $24.1 million decrease in federal funds sold resulting from an increase in loan originations and purchases, and a decrease in deposits.

Previous wording

Investment securities available-for-sale. Investment securities available-for-sale increased $9.7 million, or 5.4%, to $189.4 million at March 31, 2026 from $179.7 million at December 31, 2025. The increase was primarily attributable to purchases of investment securities, partially offset by routine maturities, principal repayments, and calls of investment securities, and to a lesser extent downward fair value adjustments related to unrealized losses on investment securities available-for-sale.

Current wording

Investment securities available-for-sale. Investment securities available-for-sale increased $3.0 million, or 1.7%, to $182.7 million at June 30, 2026, from $179.7 million at December 31, 2025. The increase was primarily attributable to purchases of investment securities, partially offset by routine maturities, principal repayments, and calls of investment securities, and to a lesser extent upward fair value adjustments related to unrealized gains on investment securities available-for-sale.

Previous wording

Equity securities. Equity securities increased $58,000, or 0.5%, to $12.6 million at March 31, 2026 from $12.6 million at December 31, 2025, primarily due to mark-to-market adjustments recorded during the three months ended March 31, 2026.

Current wording

Equity securities. Equity securities decreased $847,000, or 6.7%, to $11.7 million at June 30, 2026 from $12.6 million at December 31, 2025, primarily due tothe redemption of one equity security for $1.0 million at par in the current quarter, with no gain or loss recognized, partially offset by positive mark-to-market adjustments recorded during the six months ended June 30, 2026.

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 decreased $55.1 million, or 2.7%, to $2.0 billion at March 31, 2026 from $2.1 billion at December 31, 2025. The decrease was due to $90.5 million of loan repayments, partially offset by $34.7 million of new loan originations and $3.2 million of loan purchases. During the current quarter, the Company sold loans totaling $2.4 million, of which $919,000 were nonperforming assets.

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 $7.2 million, or 0.3%, to $2.1 billion at June 30, 2026 from $2.0 billion at December 31, 2025. The increase was due to $114.4 million of new loan originations and $66.5 million of loan purchases, which were more than offset by $160.4 million of loan repayments and $11.6 million of loans sold.

Previous wording

Acquired loans. As of March 31, 2026, our total loan portfolio included $204.2 million, or 10.2%, of loans acquired through business combinations (all of which were recorded at their estimated fair values as of the time of acquisition), of which $108.4 million had no remaining net premium or discount.

Current wording

Acquired loans. As of June 30, 2026, our total loan portfolio included $188.5 million, or 9.1%, of loans acquired through business combinations (all of which were recorded at their estimated fair values as of the time of acquisition), of which $149.1 million had a remaining net premium or discount.

Previous wording

As of March 31, 2026, acquired non-PCD loans totaled $96.6 million, with a remaining net premium of $1.3 million, compared to $121.1 million with a remaining net premium of $397,000 as of December 31, 2025. 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, 2026, acquired non-PCD loans totaled $39.4 million, with a remaining net premium of $543,000, compared to $121.1 million with a remaining net premium of $397,000 as of December 31, 2025. The decrease from December 31, 2025 was due to payoffs, paydowns, and migration to the general pool of $58.9 million of acquired loans during the current quarter, as the portfolio continued to season and such acquired loans exhibited risk characteristics indistinguishable from the Company’s originated loans with most of these loans having not been renewed or re-underwritten during the first half of 2026. 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, 2026, acquired PCD loans totaled $12.1 million, with a remaining net non-credit discount of $648,000, compared to $16.1 million with a remaining net non-credit discount of $1.2 million as of December 31, 2025.

Current wording

As of June 30, 2026, acquired PCD loans totaled $2.1 million, with a remaining net non-credit discount of $298,000, compared to $16.1 million with a remaining net non-credit discount of $1.2 million as of December 31, 2025.

Previous 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 $3.2 million to $16.7 million, or 0.83% of total loans, at March 31, 2026, compared to $13.4 million, or 0.65% of total loans, at December 31, 2025. The Company held no OREO at either date.

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. The Company held no OREO at June 30, 2026 or December 31, 2025. Nonperforming loans decreased $3.6 million to $9.8 million, or 0.47% of total loans, at June 30, 2026, compared to $13.4 million, or 0.65% of total loans, at December 31, 2025.

Previous wording

Nonperforming loans totaled $16.7 million, or 0.83% of total loans, at March 31, 2026, compared to $13.4 million, or 0.65% of total loans, at December 31, 2025. The increase from the prior quarter-end was primarily due to one $4.9 million commercial real estate loan being placed on nonaccrual during the current quarter, partially offset by payoffs of five nonaccrual loans totaling $1.6 million. The majority of nonperforming loans remain concentrated in the commercial real estate portfolio, while consumer and other commercial loans continue to exhibit low levels of delinquencies. At March 31, 2026, nonaccrual loans included $7.0 million of loans 30–89 days past due and $6.3 million of loans less than 30 days past due. The $7.0 million of loans 30-89 days past due consisted of four loans and the $6.3 million of nonaccrual loans less than 30 days past due consisted of 15 loans, all of which were placed on nonaccrual due to borrower-specific financial concerns, indicators of credit deterioration, and other credit related factors, which provided reasonable doubt about the full collectability of principal and interest, rather than delinquency. At December 31, 2025, nonaccrual loans included $562,000 of loans 30–89 days past due and $9.4 million of loans less than 30 days past due. At December 31, 2025, the $9.4 million of loans less than 30 days past due was comprised of 15 loans all of which were placed on nonaccrual due to concerns over the financial condition of the borrowers.

Current wording

The decrease in nonperforming loans was primarily due to the payoff of six nonaccrual loans totaling $2.3 million and the sale of two nonaccrual loans totaling $7.7 million, partially offset by three new nonaccrual CRE loans totaling $6.4 million. The majority of nonperforming loans remain concentrated in the CRE portfolio, while consumer and other commercial loans continue to exhibit low levels of delinquencies. At June 30, 2026, nonaccrual loans included $1.4 million of loans 30–89 days past due and $4.7 million of loans less than 30 days past due. The $1.4 million of loans 30-89 days past due consisted of one loan and the $4.7 million of nonaccrual loans less than 30 days past due consisted of 13 loans, all of which were placed on nonaccrual due to borrower-specific financial concerns and other credit-related factors that raised reasonable doubt about the full collectability of principal and interest, rather than delinquency. At December 31, 2025, nonaccrual loans included $562,000 of loans 30–89 days past due and $9.4 million of loans less than 30 days past due. At December 31, 2025, the $9.4 million of loans less than 30 days past due was comprised of 15 loans all of which were placed on nonaccrual due to concerns over the financial condition of the borrowers.

Previous wording

Of the nonperforming loans at March 31, 2026, approximately $932,000 were guaranteed by governmental agencies, compared to $1.7 million at December 31, 2025. The decrease in government-guaranteed nonaccrual loans during this period reflects the pay-off of one nonaccrual loan during the current quarter.

Current wording

Of the nonperforming loans at June 30, 2026, approximately $862,000 were guaranteed by governmental agencies, compared to $1.7 million at December 31, 2025. The decrease in government-guaranteed nonaccrual loans during this period reflected paydowns.

Previous wording

Loans may be acquired at a premium or discount to par value, in which case the premium is amortized (subtracted from) or accreted (added to) interest income over the remaining life of the loan. Generally, over time, the effects of loan discount accretion and loan premium amortization decrease as the purchased loans mature or pay off before maturity. Upon the payoff of a loan before maturity, any remaining (unaccreted) discount or (unamortized) premium is immediately taken into interest income; as loan payoffs may vary significantly from quarter to quarter, so may the impact of discount accretion and premium amortization on interest income.

Current wording

Loans may be acquired at a premium or discount to par value, in which case the premium is amortized (subtracted from) or accreted (added to) interest income over the remaining life of the loan. Generally, over time, the effects of loan discount accretion and loan premium amortization decrease as the purchased loans mature or pay off before maturity.

Previous wording

Modified loans to borrowers experiencing financial difficulty as of March 31, 2026 and December 31, 2025, totaled $1.2 million and $1.4 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 because they continue to accrue interest and demonstrate satisfactory payment performance despite their modified terms. There were no such modified loans at March 31, 2026 and December 31, 2025. At both March 31, 2026 and December 31, 2025, individually evaluated modified loans to borrowers experiencing financial difficulty had no related allowance.

Current wording

Modified loans to borrowers experiencing financial difficulty as of June 30, 2026 and December 31, 2025, totaled $2.0 million and $1.4 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 because they continue to accrue interest and demonstrate satisfactory payment performance despite their modified terms. There were no such modified loans at June 30, 2026 and December 31, 2025. At both June 30, 2026 and December 31, 2025, individually evaluated modified loans to borrowers experiencing financial difficulty had related allowances of $594,000 and none, respectively.

Previous wording

The following table provides information regarding nonperforming loans, nonperforming assets and modified loans as of the dates indicated:

Current wording

The following table provides information regarding nonperforming loans, nonperforming assets, modified loans and PCD loans as of the dates indicated:

Previous wording

Interest foregone on nonaccrual loans was approximately $200,000 and $269,000 for the three months ended March 31, 2026 and 2025, respectively. Interest income recognized on nonaccrual loans was approximately $140,000 and $35,000 for the three months ended March 31, 2026 and 2025, respectively.

Current wording

Interest income recognized on nonaccrual loans was approximately $338,000 and $478,000 for the three and six months ended June 30, 2026 and $31,000 and $66,000 for the three and six months ended June 30, 2025, respectively.

Previous wording

Allowance for credit losses for loans. The allowance for credit losses is determined by the Company on a quarterly basis, although management monitors the appropriate level of the allowance more frequently. We assess the allowance for credit losses based on three categories: (i) originated loans, (ii) acquired non-PCD loans, and (iii) acquired

Current wording

Allowance for credit losses for loans. The allowance for credit losses is determined by the Company on a quarterly basis, although management monitors the appropriate level of the allowance more frequently. 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.

Previous wording

At March 31, 2026, the Company’s allowance for credit losses for loans was $20.6 million, or 1.02% of total loans, compared to $21.2 million, or 1.03% of total loans, at December 31, 2025. Management currently believes that the allowance for credit losses at March 31, 2026 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, 2026, the Company’s allowance for credit losses for loans was $23.0 million, or 1.11% oftotal loans, compared to $21.2 million, or 1.03% of total loans, at December 31, 2025. Management currently believes that the allowance for credit losses at June 30, 2026 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

The decrease in the allowance for credit losses at March 31, 2026 compared to December 31, 2025, was primarily attributable to a decrease in the reserve for pooled loans due to lower loan balances, partially offset by changes in macroeconomic forecasts, including lower forecasted unemployment and an improved national gross domestic product outlook. In addition, there was an $82,000 decrease in the reserve for individually evaluated loans during the current quarter. Qualitative risk factor classifications remained unchanged during the current quarter.

Current wording

The increase in the allowance for credit losses at June 30, 2026 compared to December 31, 2025, was primarily attributable to a $1.5 million increase in specific reserves for individually evaluated loans, primarily due to one CRE loan, and a $256,000 increase in reserves for pooled loans due to loan growth, partially offset by changes in macroeconomic forecasts, including improvements in unemployment and gross domestic product estimates. Qualitative risk factor classifications remained unchanged during the period.

Previous wording

Net charge-offs were $15,000 for the three months ended March 31, 2026, compared to net charge-offs of $102,000 for the three months ended March 31, 2025.

Current wording

Net charge-offs were $2.8 million and $2.9 million for the three and six months ended June 30, 2026, compared to net charge-offs of $13,000 and $115,000 for the three and six months ended June 30, 2025, respectively.

Previous wording

As of March 31, 2026, the Company individually evaluated $15.1 million in loans, of which $4.4 million had a specific allowance totaling $1.3 million as of March 31, 2026. As of December 31, 2025, the Company individually evaluated $14.9 million in loans, of which $4.5 million had a specific allowance totaling $1.4 million.

Current wording

As of June 30, 2026, the Company individually evalu ated $9.9 million in loans, of which $7.8 million had a specific allowance totaling $2.9 million as of June 30, 2026. As of December 31, 2025, the Company individually evaluated $14.9 million in loans, of which $4.5 million had a specific allowance totaling $1.4 million.

Previous wording

Management considers the allowance for credit losses for loans at March 31, 2026 to be adequate to cover expected credit losses inherent in the loan portfolio based on the assessment of current portfolio performance, historical loss experience, and relevant qualitative and quantitative factors, including current economic conditions and reasonable and supportable forecasts. While management believes the estimates and assumptions used in determining the adequacy of the allowance are reasonable, actual credit losses may differ from those expected. Changes in economic conditions, borrower performance, or other factors could result in actual losses exceeding the current allowance, which could adversely affect the Company’s financial condition and results of operations. In addition, the methodology, assumptions, and judgments used in determining the allowance for credit losses is subject to review by bank regulators, as part of their routine examination process, which may result in adjustments to the provision for credit losses based upon information available to them at the time of their examination.

Current wording

Management considers the allowance for credit losses for loans at June 30, 2026 to be adequate to cover expected credit losses inherent in the loan portfolio based on the assessment of current portfolio performance, historical loss experience, and relevant qualitative and quantitative factors, including current economic conditions and reasonable and supportable forecasts. While management believes the estimates and assumptions used in determining the adequacy of the allowance are reasonable, actual credit losses may differ from those expected. Changes in economic conditions, borrower performance, or other factors could result in actual losses exceeding the current allowance, which could adversely affect the Company’s financial condition and results of operations. In addition, the methodology, assumptions, and judgments used in determining the allowance for credit losses are subject to review by bank regulators, as part of their routine examination process, which may result in adjustments to the provision for credit losses based upon information available to them at the time of their examination.

Previous wording

Total deposits increased $51.8 million, or 2.3%, to $2.3 billion at March 31, 2026, compared to December 31, 2025. At March 31, 2026, noninterest-bearing demand deposits totaled $609.2 million, or 26.9% of total deposits, compared to $578.1 million, or 26.1% of total deposits, at December 31, 2025, representing an increase of $31.2 million. From December 31, 2025 to March 31, 2026, interest-bearing deposits generally increased, with time deposits increasing $19.9 million, money market accounts increasing $13.3 million, and savings accounts increasing $905,000. By contrast, NOW accounts declined $13.6 million during the same period. Time deposits included no brokered deposits as of March 31, 2026, and December 31, 2025.

Current wording

Total deposits decreased $43.7 million, or 2.0%, to $2.2 billion at June 30, 2026, compared to December 31, 2025. At June 30, 2026, noninterest-bearing demand deposits totaled $576.5 million, or 26.6% of total deposits, compared to $578.1 million, or 26.1% of total deposits, at December 31, 2025, representing a decrease of $1.5 million. From December 31, 2025 to June 30, 2026, interest-bearing deposits generally decreased, with time deposits decreasing $106.2 million and NOW accounts decreasing $9.5 million, partially offset by money market accounts increasing $73.3 million, and savings accounts increasing $207,000. Time deposits included no brokered deposits as of June 30, 2026, and December 31, 2025.

Previous wording

The overall increase in total deposits from December 31, 2025 primarily reflects noninterest-bearing demand deposit growth, partially offset by a decline in NOW accounts. In addition, the increase in money market and time deposits was driven by growth, and to a lesser extent a shift in deposit composition reflecting continued customer migration toward interest-bearing products in response to the prevailing rate environment. Management continues to monitor deposit mix and pricing strategies in the context of funding costs, liquidity needs, and interest rate risk.

Current wording

The overall decrease in total deposits from December 31, 2025 primarily reflects declines in time deposits, partially offset by increases in money market accounts and, to a lesser extent, savings accounts. The increase in money market deposits reflects continued customer migration within the deposit portfolio in response to the prevailing rate environment. Management continues to monitor deposit mix and pricing strategies in the context of funding costs, 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 our customers the ability to place deposits in Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep (“ICS”) money market product services via the IntraFi Network, to insure deposits above FDIC insurance limits. At March 31, 2026, our average deposit account size (excluding public funds), calculated by dividing period-end deposits by the population of accounts with balances, was approximately $63,000. 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 our customers the ability to place deposits in Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep (“ICS”) money market product services via the IntraFi Network, to ensure deposits above FDIC insurance limits. At June 30, 2026, our average deposit account size (excluding public funds), calculated by dividing period-end deposits by the population of accounts with balances, was approximately $62,000. 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, 2026 and December 31, 2025, we could borrow up to $599.3 million and $580.7 million, respectively, from the FHLB of San Francisco. At both March 31, 2026 and December 31, 2025, there were no FHLB advances outstanding.

Current wording

At June 30, 2026 and December 31, 2025, we could borrow up to $531.0 million and$580.7 million, respectively, from the FHLB of San Francisco. At June 30, 2026, the Bank had $25.0 million of overnight advances outstanding from the FHLB, compared to no FHLB borrowings outstanding at December 31, 2025.

Previous wording

At March 31, 2026 and December 31, 2025, we could borrow up to $43.4 million and $49.3 million, respectively, from the FRB of San Francisco. At both March 31, 2026 and December 31, 2025, there were no FRB advances outstanding.

Current wording

At June 30, 2026 and December 31, 2025, we could borrow up to $42.8 million and$49.3 million, respectively, from the FRB of San Francisco. At both June 30, 2026 and December 31, 2025, there were no FRB advances outstanding.

Previous wording

At both March 31, 2026 and December 31, 2025, the Company had outstanding junior subordinated deferrable interest debentures, net of fair value adjustments, assumed in connection with its previous acquisitions totaling $5.9 million and $8.7 million, respectively. The decrease reflects the redemption of one debenture during the first quarter of 2026.

Current wording

At June 30, 2026 and December 31, 2025, the Company had outstanding junior subordinated deferrable interest debentures, net of fair value adjustments, assumed in connection with its previous acquisitions totaling $5.9 million and $8.7 million, respectively. The decrease reflects the redemption of one debenture during the first quarter of 2026.

Previous wording

We are required to provide collateral for certain local agency deposits. At both March 31, 2026 and December 31, 2025, the FHLB of San Francisco had issued letters of credit on behalf of the Bank totaling $42.1 million and $41.6 million, respectively, as collateral for local agency deposits.

Current wording

The Bank is required to provide collateral for certain local agency deposits. At both June 30, 2026 and December 31, 2025, the FHLB of San Francisco had issued letters of credit on behalf of the Bank totaling $42.1 million and $41.6 million, respectively, as collateral for local agency deposits.

Previous wording

Shareholders’ equity. Shareholders’ equity increased $5.4 million, to $344.0 million at March 31, 2026 from $338.6 million at December 31, 2025. The increase in shareholders’ equity primarily was due to $8.2 million of net income earned during the first quarter of 2026 and $340,000 of other comprehensive income, net of taxes, related mainly to changes in unrealized gains on available-for-sale securities. These items were partially offset by $3.3 million of accrued cash dividends. During the three months ended March 31, 2026, the Company did not repurchase any shares of common stock, compared to the repurchase of $1.3 million of common stock during the three months ended March 31, 2025. For additional information see Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds.”

Current wording

Shareholders’ equity. Shareholders’ equity decreased $3.2 million, to $335.4 million at June 30, 2026 from $338.6 million at December 31, 2025. The decrease in shareholders’ equity primarily was due to $6.5 million of cash dividends paid or accrued during the period. These decreases were partially offset by a $1.4 million increase in common stock due to stock based compensation primarily related to accelerated vesting of shares for departing executives, net income of $1.2 million earned during the first six months of 2026 and $811,000 in other comprehensive income, net of taxes, which primarily reflected changes in the unrealized gain on available-for-sale securities. During the six months ended June 30, 2026, the Company did not repurchase any shares of common stock, compared to the repurchase of $5.2 million of common stock during the six months ended June 30, 2025. For additional information see Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds.”

Previous wording

Comparison of Results of Operations for the Three months Ended March 31, 2026 and 2025

Current wording

Comparison of Results of Operations for the Three and Six months Ended June 30, 2026 and 2025

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 61.73% and 65.74% for the three months ended March 31, 2026, and 2025, respectively. The improvement in the efficiency ratio for the current quarter was primarily driven by higher net interest income.

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 107.71% and 84.04% for the three and six months ended June 30, 2026, and 63.85% and 64.79% for the three and six months ended June 30, 2025, respectively. The change in the efficiency ratio for the current quarter was primarily attributable to the significant increase in noninterest expense due to costs of the previously announced departures of three senior executives, partially offset by higher net interest income.

Previous wording

Interest income on loans, including fees, increased $2.4 million, or 8.9%, to $29.6 million for the three months ended March 31, 2026 from $27.1 million for the three months ended March 31, 2025, due to an $89.2 million increase in the average balance of loans and a 23 basis point increase in the average loan yield. The average balance of loans was $2.0 billion for the first quarter of 2026, up 4.6% compared to the first quarter of 2025. The average yield on loans was 5.87% for the first quarter of 2026, compared to 5.64% for the first quarter of 2025. The increase in the average yield on loans reflected increased rates on variable rate loans, as well as new loans being originated at higher market interest rates.

Current wording

Interest income. Interest income on loans, including fees, increased $251,000, or 0.9%, to $28.2 million for the three months ended June 30, 2026 from $28.0 million for the three months ended June 30, 2025, due to a $28.3 million increase in the average balance of loans, partially offset by a three basis point decrease in the average loan yield. The average balance of loans was $2.0 billion for the second quarter of 2026, up 1.42% compared to the second quarter of 2025. The average yield on loans was 5.60% for the second quarter of 2026, compared to 5.63% for the second quarter of 2025. The decrease in the average yield on loans reflected higher amortization of net premiums on acquired loans, partially offset by new loans being originated at higher market interest rates.

Previous wording

Interest income on investment securities decreased $322,000, or 13.1%, to $2.1 million for the three months ended March 31, 2026, compared to $2.5 million for the three months ended March 31, 2025, as a result of decreases in the average balance and average yield. The average balance of investment securities totaled $188.2 million for the three months ended March 31, 2026, compared to $210.2 million for the three months ended March 31, 2025. The average yield on investment securities was 4.59% for the three months ended March 31, 2026, compared to 4.73% for the three months ended March 31, 2025. The decreases in the average balance and the average yield from the same quarter a year ago were due to paydowns and calls on higher variable-rate securities and rate resets on variable rate securities. In addition, during the first quarter of 2026, we received $709,000 in cash dividends on our FRB and FHLB stock, including $330,000 in special dividends from the FHLB, compared to $393,000 during the first quarter of 2025. The $330,000 in special dividends received from the FHLB during the current quarter is not expected to recur at a predictable frequency. These special dividends contributed approximately five basis points to the reported net interest margin. Excluding special dividends, FHLB and FRB dividend income would have remained essentially unchanged between periods.

Current wording

Interest income on investment securities decreased $139,000, or 5.8%, to $2.3 million for the three months ended June 30, 2026, compared to $2.4 million for the three months ended June 30, 2025, as a result of decreases in the average balance and average yield. The average balance of investment securities totaled $194.7 million for the three months ended June 30, 2026, compared to $206.5 million for the three months ended June 30, 2025. The average yield on investment securities was 4.67% for the three months ended June 30, 2026, compared to 4.68% for the three months ended June 30, 2025. The decreases in the average balance and the average yield from the same quarter a year ago were due to paydowns and calls on higher variable-rate securities and rate resets on variable rate securities. In addition, during the second quarter of 2026, we received $135,000 in cash dividends on our FRB and FHLB stock, compared to $392,000 during the second quarter of 2025, with the decrease due to the FHLB lowering the dividend rate in the current quarter.

Previous wording

Interest income on federal funds sold and interest-bearing balances in banks decreased $513,000, or 19.4%, to $2.1 million for the three months ended March 31, 2026, compared to $2.6 million for the three months ended March 31, 2025, as a result of decreases in both the average yield and average balance. The average yield decreased 77 basis points to 3.70% for the three months ended March 31, 2026, compared to 4.47% for the three months ended March 31, 2025, reflecting decreases in Federal Reserve policy rates. The average balance of federal funds sold and interest-bearing balance in banks totaled $234.2 million and $240.3 million for the three months ended March 31, 2026 and 2025, respectively.

Current wording

Interest income on federal funds sold and interest-bearing balances in banks decreased $1.1 million, or 39.3%, to $1.6 million for the three months ended June 30, 2026, compared to $2.7 million for the three months ended June 30, 2025, as a result of decreases in both the average yield and average balance. The average yield decreased 75 basis points to 3.70% for the three months ended June 30, 2026, compared to 4.45% for the three months ended June 30, 2025, reflecting decreases in Federal Reserve policy rates. The average balance of federal funds sold and interest-bearing balance in banks totaled $177.3 million and $242.8 million for the three months ended June 30, 2026 and 2025, respectively.