California BanCorp \ CA
For the period ended Jun 30, 2026. Filed Aug 7, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 7, 2026
BCAL$21.79+0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-08.
0001795815-26-000015
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-07.
0001795815-26-000018
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 219 previous paragraphs and 248 current paragraphs.
112 unchanged; 93 reworded; 34 added; 13 removed; 1 previous and 9 current paragraphs rearranged.
Tables are not compared: 36 previous and 39 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (34)
Current report
At its June 17, 2026 meeting, the Federal Open Market Committee (“FOMC”) maintained the federal funds target range at 3.50% to 3.75%, reaffirming its objective of maintaining ample reserves in the banking system. The FOMC noted that economic activity continued to expand at a solid pace despite elevated uncertainty, including uncertainty related to the conflict in the Middle East, while inflation remained above the Federal Reserve’s 2% target, partly reflecting supply shocks affecting certain sectors, including energy.
Current report
The Federal Reserve’s July 2026 Monetary Policy Report reflected a more cautious inflation outlook compared with March 2026. The June 2026 Summary of Economic Projections showed median 2026 real GDP growth of 2.2%, unemployment of 4.3%, PCE inflation of 3.6%, and core PCE inflation of 3.3%. The median projected federal funds rate for year-end 2026 increased to 3.8%, compared with the March 2026 projection of 3.4%, indicating that policymakers no longer appear positioned for near-term easing and are instead focused on persistent inflation risk.
Current report
Recent economic commentary from the Federal Reserve Bank of San Francisco noted that the U.S. economy continues to expand at a solid pace, supported by strong business investment in technology equipment and software, while consumer spending has moderated. The same report noted that elevated energy prices have pushed inflation further above the Federal Reserve’s 2% goal, although they have had limited impact on overall economic activity to date. The most recent PCE inflation data cited in that report showed headline PCE inflation at 4.1% in May 2026, with inflation risks remaining mainly to the upside.
Current report
In California, the UCLA Anderson Forecast released in March 2026 indicated that the state’s economic output continued to outpace the national economy, supported by high-productivity sectors such as artificial intelligence and aerospace. However, the forecast also noted ongoing employment weakness, with unemployment remaining above 5% and payroll growth lagging output growth, reflecting a bifurcated state economy. The forecast projected California unemployment to average 5.6% in 2026, decline to 4.8% in 2027, and improve further to 4.4% in 2028, while total employment growth was expected to strengthen from 0.9% in 2026 to 1.8% in 2027 and 2.1% in 2028.
Current report
Overall, the latest market information supports continued caution in the economic outlook. While economic growth remains resilient and California output has continued to outperform the national economy, inflation and interest-rate uncertainty have increased since the March 2026 forecast, driven primarily by energy-price volatility, tariff and supply-chain developments, and geopolitical risks. Management has not observed a material impact on client operations from these events to date, but continues to monitor evolving conditions, including their potential effects on borrower cash flows, collateral values, interest-rate sensitivity, and broader credit risk.
Current report
Net income for the six months ended June 30, 2026 was $28.1 million, or $0.86 per diluted share, compared to $31.0 million, or $0.95 per diluted share in the prior year. Pre-tax, pre-provision income for the six months ended June 30, 2026 was $39.3 million, a decrease of $73 thousand compared to pre-tax, pre-provision income for the six months ended June 30, 2025. The $2.9 million decrease in net income and $0.08 decrease in diluted earnings per share from the prior year was primarily due to a $4.7 million increase in the provision for credit losses, a $1.7 million decrease in noninterest income and a $105 thousand increase in noninterest expense, partially offset by a $1.8 million increase in net interest income and a $2.0 million decrease in income taxes, and a lower weighted-average diluted share count from the share repurchase program.
Current report
(3)Average noninterest-bearing deposits represent 35.81%, and 36.80% of average total deposits for the six months ended June 30, 2026 and 2025, respectively.
Current report
Net interest income for the second quarter of 2026 was $43.4 million, compared with $42.1 million in the prior quarter. The increase in net interest income was primarily due to a $1.1 million increase in total interest and dividend income, coupled with a $123 thousand decrease in total interest expense in the second quarter of 2026, as compared with the prior quarter. The increase in net interest income was also impacted by one additional day in the current quarter than the prior quarter.
Current report
Company’s deposit mix and overall competition for deposits driving market deposit rates upward in the second quarter of 2026.
Current report
Net interest income for the three months ended June 30, 2026 was $43.4 million, compared with $41.4 million for the three months ended June 30, 2025. The increase in net interest income for the three months ended June 30, 2026 was primarily due to a $1.8 million increase in interest on debt securities and $2.8 million decrease in total interest expense, partially offset by a $1.1 million decrease in total loan interest income and $1.5 million decrease in interest and dividend income from other financial institutions.
Current report
Comparing to the same 2025 period, total interest income decreased by $854 thousand. The decrease was primarily driven by a $1.1 million decrease in loan interest income, which included a decrease of $1.8 million in accretion from the net purchase accounting discounts on acquired loans, coupled with a decrease of $1.5 million in interest and dividend income from other financial institutions. These decreases were partially offset by an increase of $1.8 million in interest income on debt securities. The decrease in interest income was mainly due to a 24 basis point decrease in the yield on average total interest-earning assets, coupled with decreases in the average deposits in other financial institutions of $64.7 million and average Fed funds sold/resale agreements of $34.9 million, partially offset by increases in average total debt securities of $141.1 million and average total loans of $44.7 million. The decrease in interest expense for the three months ended June 30, 2026 was primarily due to a $2.1 million decrease in interest expense on total interest-bearing deposits, coupled with a $734 thousand decrease in interest expense on total borrowings.
Current report
Total cost of funds for the three months ended June 30, 2026 was 1.38%, a decrease of 35 basis points from 1.73% for the same 2025 period. The decrease was primarily driven by a 43 basis point decrease in the average cost of interest-bearing deposits and a decrease of 43 basis points in the cost of total borrowings, coupled with an increase in average noninterest-bearing deposits. Average noninterest-bearing demand deposits increased $44.2 million to $1.22 billion and represented 36.7% of total average deposits for the three months ended June 30, 2026, compared with $1.18 billion and 36.2%, respectively, for the same 2025 period; average interest-bearing deposits increased $33.1 million to $2.11 billion during the three months ended June 30, 2026. The total cost of deposits for the three months ended June 30, 2026 was 1.31%, down 28 basis points from 1.59% for the same 2025 period.
Current report
Net interest income for the six months ended June 30, 2026 was $85.4 million, compared to $83.7 million for the six months ended June 30, 2025. The increase in net interest income was primarily due to a $5.7 million decrease in total interest expense, partially offset by a $3.9 million decrease in total interest income.
Current report
During the six months ended June 30, 2026, total interest income decreased by $3.9 million. The decrease was primarily driven by a $6.2 million decrease in loan interest income, which included a $4.3 million decrease in accretion income from the net purchase accounting discounts on acquired loans, and higher cash interest collections from the payoffs of nonaccrual loans, net of higher reversals of interest income on loans placed on nonaccrual, coupled with a $743 thousand decrease in interest and dividends from other financial institutions. These decreases were partially offset by a $3.0 million increase in interest on debt securities. The decrease in interest income was primarily driven by lower accretion income coupled with lower market interest rates and a decrease in average total loans, partially offset by the higher average debt securities balances. There was a 40 basis point decrease in yield on the total average interest-earning assets, partially offset by higher total average interest-earning assets balances for the six months ended June 30, 2026 compared to the same 2025 period. Total average interest-earning assets increased $110.6 million, which included a $129.0 million increase in total average debt securities, a $22.3 million increase in average deposits in other financial institutions, partially offset by a $25.4 million decrease in average total loans and a $15.3 million decrease in average Fed funds sold/resale agreements.
Current report
During the six months ended June 30, 2026, total interest expense decreased by $5.7 million to $23.3 million as compared to the same period in 2025, primarily due to the 49 basis point decrease in the cost of interest-bearing deposits from changes in market interest rates and lower average borrowings of $34.2 million from the redemption of subordinated debt in 2025, partially offset by higher average interest-bearing deposits of $85.8 million between periods.
Current report
Net interest margin for the six months ended June 30, 2026 was 4.59%, compared with 4.63% for the six months ended June 30, 2025. The decrease was primarily related to a 40 basis point decrease in the total interest-earning assets yield resulting from lower market interest rates and a change in our interest-earning asset mix, partially offset by a 36 basis point decrease in the cost of funds. The yield on total earning assets during the six months ended June 30, 2026 was 5.84%, compared with 6.24% for the six months ended June 30, 2025. The yield on average total loans during the six months ended June 30, 2026 was 6.24%, a 35 basis point decrease from 6.59% for the six months ended June 30, 2025. The cost on total interest-bearing liabilities during the six months ended June 30, 2026 was 2.12%, a 58 basis point decrease from 2.70% for the same 2025 period. Accretion income from the net purchase accounting discounts on acquired loans was $6.6 million and the amortization expense impact on interest expense was $777 thousand, the combination of which increased the net interest margin by 31 basis points for the six months ended June 30, 2026. Accretion income from the net purchase accounting discounts on acquired loans increased the yield on average total loans by 44 basis points for the six months ended June 30, 2026. Accretion income from the net purchase accounting discounts on acquired loans was $10.8 million and the amortization expense impact on interest expense was $1.1 million, the combination of which increased the net interest margin by 54 basis points for the six months ended June 30, 2025. Accretion income from the net purchase accounting discounts on acquired loans increased the yield on average total loans by 72 basis points for the six months ended June 30, 2025.
Current report
Average total borrowings decreased $34.2 million to $34.4 million for the six months ended June 30, 2026, resulting primarily from a $34.4 million decrease in subordinated debt from the redemption of $18 million of subordinated debt in June 2025 and $20 million of subordinated debt in September 2025. The average cost of total borrowings was 8.17% for the six months ended June 30, 2026, a 12 basis point decrease from 8.29% for the same 2025 period. The decrease was primarily attributable to lower borrowing costs associated with the redemption of the higher yielding subordinated debt during 2025.
Current report
Provision for Credit Losses
Current report
Total unfunded loan commitments decreasing modestly by $4.3 million to $896.9 million at June 30, 2026, compared to $901.2 million in unfunded loan commitments at June 30, 2025.
Current report
We recorded a provision for credit losses of $333 thousand for the six months ended June 30, 2026, compared to a reversal of provision for credit losses of $4.4 million for the same 2025 period. Total net charge-offs were $157 thousand in the six months ended June 30, 2026, which consisted of $193 thousand of gross charge-offs, partially offset by $36 thousand of gross recoveries. The net charge-offs resulted from the Company’s continuing strategy to derisk the consolidated balance sheet by reducing our exposure to criticized loans. The provision for credit losses in the six months ended June 30, 2026 included a $336 thousand reversal of provision for credit losses for unfunded loan commitments primarily related to the decreases in the loss rate used to estimate the allowance for credit losses on unfunded commitments during the six months ended June 30, 2026, partially offset by the increase in unfunded loan commitments of $10.5 million to $896.9 million at June 30, 2026 from $886.4 million at December 31, 2025.
Current report
The provision for credit losses for loans held for investment in the six months ended June 30, 2026 was $669 thousand, compared with a reversal of provision for credit losses of $3.8 million in the same 2025 period. The increase reflected updates to the reasonable and supportable economic forecasts for California, continued loan growth, changes in portfolio composition, and higher substandard accruing loan balances, partially offset by refinements to the qualitative factors and scenario weighting.
Current report
We recorded a reversal of credit losses of $4.4 million for the six months ended June 30, 2025. The reversal of credit losses for the six months ended June 30, 2025 included a $3.8 million reversal of credit losses on loans held for investment and a $589 thousand reversal credit losses for unfunded loan commitments. The reversal of provision for credit losses on loans held for investment for the six months ended June 30, 2025 was primarily due a decrease in the balance of loans held for investment, changes in the composition of the loans held for investment portfolio, and changes in qualitative factors, partially offset by the net charge-offs and changes in the reasonable and supportable forecast, primarily related to the economic outlook for California. The reversal of credit losses on unfunded loan commitments for the six months ended June 30, 2025 was primarily due to the decreases in unfunded loan commitments and loss rate used to estimate the allowance for credit losses on unfunded commitments during the six months ended June 30, 2025.
Current report
Total noninterest income during the six months ended June 30, 2026 was $3.7 million, a decrease of $1.7 million compared to total noninterest income of $5.4 million for the same period in the prior year. The decrease was primarily the result of decreases of $923 thousand in other charges and fees due to lower income from equity investments, and $577 thousand in gain on sale of loans in 2025. We recorded a $70 thousand loss from our equity investments for the six months ended June 30, 2026, compared to $918 thousand of income from our equity investments for the same 2025 period.
Current report
There was no gain on sale of loans during the six months ended June 30, 2026, compared to $577 thousand for the same 2025 period. In the same 2025 period, we sold eight SBA 7(a) loans with a net carrying value of $9.0 million, resulting in a gain on sale of $577 thousand at an average premium of 6.44%.
Current report
Total noninterest expense during the three months ended June 30, 2026 was $24.3 million, a decrease of $487 thousand compared with total noninterest expense of $24.8 million for the same 2025 period. The decrease was primarily due to lower occupancy and equipment, legal, audit and professional fees, intangible asset amortization and other real estate owned expense, partially offset by increases in salaries and benefits, data processing and communications and other expenses.
Current report
Other real estate owned expense was $201 thousand during the three months ended June 30, 2026, compared to $862 thousand for the same 2025 period. The $661 thousand decrease relates to the 2025 period including a $862 thousand loss from the sale of OREO, compared to no sales of OREO during the second quarter of 2026.
Current report
Salaries and employee benefits were $32.1 million during the six months ended June 30, 2026, compared to $31.2 million during the prior year. The $937 thousand increase in salaries and benefits was driven primarily by higher headcount and related costs, partially offset by an increase in loan origination costs deferred based on increased loan origination activity. The average FTE employees for the six months ended June 30, 2026 was 297 compared to 290 FTE employees for the same 2025 period.
Current report
Other real estate expenses were $305 thousand during the six months ended June 30, 2026, compared to $930 thousand for the same 2025 period. The $625 thousand decrease primarily relates to the 2025 period including a $862 thousand loss from the sale of OREO, compared to no sales of OREO, partially offset by higher OREO holding costs during the six months ended June 30, 2026.
Current report
Our efficiency ratio for the six months ended June 30, 2026 and 2025 was 55.9% and 55.8%, respectively.
Current report
The Company recorded zero and $266 thousand in valuation write-downs related to its consumer solar loans during the three and six months ended June 30, 2026. There were no comparable valuation write-downs for the three and six months ended June 30, 2025.
Current report
Total LHFI nonaccrual loans decreased $7.2 million during the six months ended June 30, 2026 to $8.9 million. The decrease was primarily driven by the transfer of an $8.6 million construction loan secured by a property for a single-family residence to OREO, net following foreclosure in the first quarter of 2026, $1.2 million of paydowns on existing LHFI nonaccrual loans, partially offset by the downgrade of a 1-4 family residential investment loan with a net carrying value of $2.7 million to nonaccrual status during the second quarter of 2026.
Current report
Three nonaccrual commercial real estate loans from two borrower relationships that were downgraded to nonaccrual status during the first quarter of 2026 were resolved in the second quarter of 2026. The resolutions included the full repayment of two loans with a combined net carrying value of $17.8 million and the discounted note sale of a $5.7 million loan, which resulted in a $127 thousand charge-off.
Current report
The Company intends to redeem all $35.0 million of its 3.50% fixed-to-floating rate subordinated debt due September 1, 2031, at par value during the third quarter of 2026. Starting in September 2026, the interest rate on that subordinated debt is scheduled to transition from a fixed rate to a quarterly variable rate equal to the then current 90-day SOFR plus 2.86%, through the contractual maturity date of September 1, 2031.
Current report
Operating activities provided $23.4 million and $20.4 million for the six months ended June 30, 2026 and 2025. The primary sources of funds were net income from operations and adjustments to net income, such as other intangible amortization resulting from the prior merger, deferred income taxes, stock-based compensation, the accretion of net discount and deferred loan fees, and provision for (reversal of) credit losses.
Removed paragraphs (13)
Previous report
At its March 18, 2026, meeting, the Federal Open Market Committee maintained the federal funds rate in a target range of 3.50% to 3.75% amid uncertainty related to geopolitical developments in the Middle East, lagged inflation data following recent energy price increases, and mixed labor market indicators. The Fed indicated they still expect to cut their key rate once in 2026, the same projection as in December 2025. By keeping their forecast for a rate cut in 2026 and 2027, policymakers appear to expect that the spike in energy prices from the US-Iran conflict will have a transitory effect on inflation and the economy. The Fed released updated economic projections, indicating slightly higher inflation this year compared to its December 2025 forecast. Officials now project inflation to reach 2.7% by the end of 2026, up from the prior estimate of 2.4%. At the press conference, Chairman Powell noted that the economy has sailed through recent headwinds with resilience, and added that he believes the economy is "doing pretty well," despite the uncertainty around inflation, the US-Iran conflict and the job market.
Previous report
The Fed also announced it will increase the System Open Market Account holdings of securities through purchases of Treasury bills and, if needed, other Treasury securities with remaining maturities of three years or less to maintain an ample level of reserves. Such purchase program is meant to ensure stability in financial markets.
Previous report
Since mid‑2025, U.S. trade policy has continued to evolve, including the termination of certain emergency tariffs, the implementation of temporary broad‑based tariffs, and adjustments to sector‑specific duties. In addition, ongoing geopolitical tensions in the Middle East have increased energy price volatility and may contribute to inflationary pressures, interest rate uncertainty, and indirect credit risks. While tariff levels remain elevated in certain categories and energy prices have added uncertainty to the economic environment, we have not observed a material impact on client operations from those events and continue to monitor evolving conditions.
Previous report
In California, overall consumer prices are predicted to peak around 3.5% to 3.6% in early 2026 with annual average unemployment remaining above 5% and peak at 5.6% in 2026 then fall to 4.8% in 2027, according to the UCLA Anderson Forecast released on March 4, 2026. The forecast estimated California’s fourth-quarter GDP growth at 3.8% annualized, well above the initial 1.4% U.S. GDP estimate. The state has now grown faster than the nation for four consecutive quarters.
Previous report
(4) Return on average assets is computed by dividing annualized net income by average assets. Return on average equity is computed by dividing net income by average shareholders’ equity.
Previous report
Net interest income for the three months ended March 31, 2026 was $42.1 million, compared with $42.3 million for the three months ended March 31, 2025. The decrease in net interest income for the three months ended March 31, 2026 was primarily due to a $5.1 million decrease in total loan interest income, partially offset by a $2.9 million decrease in total interest expense, a $1.2 million increase in interest on debt securities and $771 thousand increase in interest and dividend income from other financial institutions. Comparing to the same 2025 period, loan interest income decreased by $5.1 million, including a decrease of $2.4 million in accretion from the net purchase accounting discounts on acquired loans and a lower reversal of nonaccrual loans’ interest income of $336 thousand, partially offset by an increase of $1.2 million in total debt securities income, an increase of $375 thousand in interest income from deposits in other financial institutions, and an increase of $431 thousand in dividend income from restricted stock investments and other bank stock. The decrease in interest expense for the three months ended March 31, 2026 was primarily due to a $2.2 million decrease in interest expense on total interest-bearing deposits, coupled with a $692 thousand decrease in interest expense on total borrowings.
Previous report
Occupancy and equipment expenses were $2.0 million during the three months ended March 31, 2026, compared to $2.2 million for the same 2025 period. The $163 thousand decrease was due primarily to lower depreciation costs.
Previous report
Legal, audit and professional were $709 thousand during the three months ended March 31, 2026,
Previous report
compared to $859 thousand for the same 2025 period. The $150 thousand decrease was driven primarily by lower
Previous report
legal expenses, lower consulting expenses associated with compliance and special assets projects, and internal audit expenses.
Previous report
Total LHFI nonaccrual loans increased $14.5 million during the three months ended March 31, 2026 to $30.6 million. The increase was primarily due to the addition of two borrower relationships that transitioned from substandard accrual to nonaccrual. The first of these relationships consists of two commercial real estate loans with a combined net carrying value of $17.8 million at March 31, 2026. These loans are secured by a 123-acre property operated as an event venue in the Los Angeles area and were originated in 2022, with a combined 50% loan to value at origination. These two loans are classified as individually evaluated, collateral-dependent loans and no allowance was recorded at March 31, 2026. We were subsequently notified that the cash sale of the property was completed on May 4, 2026, and both loans are fully repaid. The other relationship, which was reclassified as substandard nonaccrual, is a commercial real estate loan with a net carrying value at March 31,
Previous report
2026, of $5.8 million. The collateral for this loan is located in Dana Point California; the loan was originated in 2022 with an original loan to value of 56%. This loan is classified as an individually evaluated, collateral dependent loan and no allowance was recorded at March 31, 2026, as a full repayment is anticipated.
Previous report
Our operating cash flows are comprised of net income, adjusted for certain non-cash transactions, including but not limited to, depreciation and amortization, provision for credit losses, loans originated for sale and related gains and proceeds from sales, stock-based compensation, and amortization of net deferred loan costs and premiums. Net cash flows from operating cash flows were $8.5 million for the three months ended March 31, 2026, compared to $7.0 million for the same 2025 period. The $1.6 million increase was primarily due to a $2.2 million decrease in accretion of net discount and deferred loan fees, a $3.4 million decrease in reversal of provision of credit losses and a $1.5 million increase in other items, net, a $266 thousand increase in valuation allowance on loans held for sale, and a $577 thousand increase in gain on sale of loans, partially offset by a lower net income generated during the three months ended March 31, 2026, a $1.8 million decrease in deferred income taxes, a $148 thousand decrease in other intangible amortization resulting from the Merger, a $119 thousand decrease in stock-based compensation, a $614 thousand decrease in net cash provided by sales of loans held for sale, net of originations and a $348 thousand decrease in amortization of discounts of debt securities.
Reworded paragraphs (93)
Previous wording
California BanCorp is a California corporation incorporated on October 2, 2019, and headquartered in Del Mar, California. On May 15, 2020, we completed a reorganization whereby California Bank of Commerce, N.A. became the wholly owned subsidiary of the Company. California Bank of Commerce, N.A. has a wholly owned subsidiary, BCAL OREO1, LLC, which was incorporated on February 14, 2024. BCAL OREO1, LLC is used for holding other real estate owned and other assets acquired by foreclosure. We are regulated as a bank holding company by the Board of Governors of the Federal Reserve System (“Federal Reserve”). The Bank operates under a national charter and is regulated by the Office of Comptroller of the Currency (“OCC”).
Current wording
California BanCorp is a California corporation incorporated on October 2, 2019, and headquartered in Del Mar, California. On May 15, 2020, we completed a reorganization whereby California Bank of Commerce, N.A. became the wholly owned subsidiary of the Company. California Bank of Commerce, N.A. has a wholly owned subsidiary, BCAL OREO1, LLC, which was formed on February 14, 2024. BCAL OREO1, LLC is used for holding other real estate owned and other assets acquired by foreclosure. We are regulated as a bank holding company by the Board of Governors of the Federal Reserve System (“Federal Reserve”). The Bank operates under a national charter and is regulated by the Office of Comptroller of the Currency (“OCC”).
Previous wording
Moody’s anticipates GDP growth in California to grow to 2.3% in 2026 and to have a slight decrease to 1.5% in 2027. The state has shifted to the position of the world’s fifth-largest economy, following a decline from its previous fourth-place ranking. California’s economy is cooling off, with slower payroll growth and downward revisions widening the gap with national trends. Challenges in the tech sector are expected to persist amid ongoing uncertainty. Ongoing trade‑related uncertainty and heightened geopolitical tensions have contributed to a more cautious business and investment environment. We have observed that some clients are delaying or reassessing the timing of certain projects amid continued economic uncertainty.
Current wording
Moody’s anticipates GDP growth in California to grow to 1.88% in 2026 and to have a slight decrease to 1.64% in 2027. The state has moved back up to the position of the world’s fourth-largest economy, following a decline from its previous fifth-place ranking. California’s economy is cooling off, with slower payroll growth and downward revisions widening the gap with national trends. Challenges in the tech sector are expected to persist amid ongoing uncertainty. Ongoing trade‑related uncertainty and heightened geopolitical tensions have contributed to a more cautious business and investment environment. We have observed that some clients are delaying or reassessing the timing of certain projects amid continued economic uncertainty.
Previous wording
We have a strong consolidated balance sheet with diversified deposit and loan portfolios, with very little sector or individual customer concentration, other than our CRE concentration. Our relationship-based business banking model is founded on strong, ongoing relationships with our commercial clients, which represent a broad variety of industries. We have no meaningful exposure to cryptocurrency or venture capital business models, our accumulated other comprehensive loss on our available-for-sale debt securities is manageable, and our capital position is strong. In 2025 and in the first quarter of 2026, we made significant progress in derisking our consolidated balance sheets, reducing our exposure in the Sponsor Finance portfolio, eliminating our reliance on brokered deposits and improving overall credit quality.
Current wording
We have a strong consolidated balance sheet with diversified deposit and loan portfolios, with very little sector or individual customer concentration, other than our CRE concentration. Our relationship-based business banking model is founded on strong, ongoing relationships with our commercial clients, which represent a broad variety of industries. We have no meaningful exposure to cryptocurrency or venture capital business models, our accumulated other comprehensive loss on our available-for-sale debt securities is manageable, and our capital position is strong.
Previous wording
Per the regulatory definition of commercial real estate, at March 31, 2026, our concentration of such loans represented 450% of our total risk-based capital. In addition, at March 31, 2026, total loans secured by commercial real estate under construction and land development represented 27% of our total risk-based capital. The non-performing loans for these segments per the regulatory definition of commercial real estate loans at March 31, 2026 were $28.7 million and there were $5 thousand net recoveries during the three months ended March 31, 2026. At March 31, 2026, there was $8.6 million of OREO.
Current wording
Per the regulatory definition of commercial real estate, at June 30, 2026, our concentration of such loans represented 449% of our total risk-based capital. In addition, at June 30, 2026, total loans secured by commercial real estate under construction and land development represented 25% of our total risk-based capital. The non-performing loans for these segments per the regulatory definition of commercial real estate loans at June 30, 2026 were $5.1 million and there were $122 thousand net charge-offs during the six months ended June 30, 2026. At June 30, 2026, there was $8.6 million of OREO.
Previous wording
We strategically manage an investment portfolio focused on high-quality, resilient securities. At March 31, 2026, the amortized cost of our held-to-maturity debt securities was $52.8 million, or approximately 1.3% of total assets. The fair value of our available-for-sale debt securities was $298.6 million, or approximately 7.4% of total assets. The 10-Year Treasury Bond was approximately 4.3% at March 31, 2026, compared to 4.2% at December 31, 2025. The increase in the 10-Year Treasury Bond in 2026, resulted in higher net unrealized losses on our debt securities at March 31, 2026. At March 31, 2026, our accumulated other comprehensive loss, net of taxes, increased to $3.8 million, compared to $1.6 million at December 31, 2025. If we realized all of our unrealized losses on both held-to-maturity and available-for-sale debt securities, our losses, net of taxes would be $6.9 million at March 31, 2026. The results of our stress testing on our debt security portfolio at March 31, 2026, illustrated that our losses, net of taxes on both held-to-maturity and available-for-sale debt securities would increase to $49.3 million in a 300 basis point rate increase shock scenario. If we realized all of these unrealized losses, the Bank would continue to exceed all regulatory capital requirements necessary to be considered well capitalized.
Current wording
We strategically manage an investment portfolio focused on high-quality, resilient securities. At June 30, 2026, the amortized cost of our held-to-maturity debt securities was $52.8 million, or approximately 1.3% of total assets. The fair value of our available-for-sale debt securities was $308.8 million, or approximately 7.7% of total assets. The 10-Year Treasury Bond was approximately 4.4% at June 30, 2026, compared to 4.2% at December 31, 2025. The increase in the 10-Year Treasury Bond in 2026, resulted in higher net unrealized losses on our debt securities at June 30, 2026. At June 30, 2026, our accumulated other comprehensive loss, net of taxes, increased to $5.3 million, compared to $1.6 million at December 31, 2025. If we realized all of our unrealized losses on both held-to-maturity and available-for-sale debt securities, our losses, net of taxes would be $7.9 million at
Previous wording
Net income for the first quarter of 2026 was $13.8 million, or $0.42 per diluted share, compared with $16.4 million, or $0.50 per diluted share in the fourth quarter of 2025. Pre-tax, pre-provision income (non-GAAP) for the first quarter was $18.7 million, an increase of $717 thousand from the prior quarter. The $2.6 million decrease in net income and $0.08 decrease in diluted earnings per share were largely driven by a $4.0 million decrease in reversal of provision for credit losses, an $821 thousand decrease in net interest income and $858 thousand decrease in the noninterest income, partially offset by a lower noninterest expense of $2.4 million.
Current wording
Net income for the second quarter of 2026 was $14.3 million, or $0.44 per diluted share, compared with $13.8 million, or $0.42 per diluted share in the first quarter of 2026. Pre-tax, pre-provision income (non-GAAP) for the second quarter was $20.6 million, an increase of $1.9 million from the prior quarter. The $509 thousand increase in net income and $0.02 increase in diluted earnings per share were largely driven by a $1.3 million increase in net interest income and lower noninterest expense of $1.2 million, partially offset by a $1.1 million increase in provision for credit losses and a $586 thousand decrease in noninterest income.
Previous wording
Net income for the three months ended March 31, 2026 was $13.8 million, or $0.42 per diluted share, compared with $16.9 million, or $0.52 per diluted share for the same 2025 period. Pre-tax, pre-provision income (non-GAAP) for the first quarter was $18.7 million, a decrease of $1.2 million from the same 2025 period. The $3.1 million decrease in net income and $0.10 decrease in diluted earnings per share were primarily driven by a $3.4 million decrease in the reversal of provision for credit losses, a $171 thousand decrease in the net interest income and $429 thousand decrease in the noninterest income, coupled with a $592 thousand increase in noninterest expense.
Current wording
Net income for the three months ended June 30, 2026 was $14.3 million, or $0.44 per diluted share, compared with $14.1 million, or $0.43 per diluted share for the same 2025 period. Pre-tax, pre-provision income (non-GAAP) for the second quarter of 2026 was $20.6 million, an increase of $1.1 million from the same 2025 period. The $201 thousand increase in net income and $0.01 increase in diluted earnings per share were primarily driven by a $1.9 million increase in the net interest income and $487 thousand decrease in noninterest expense, and a lower weighted-average diluted share count from the share repurchase program, partially offset by a $1.3 million increase in the provision for credit losses and a $1.3 million decrease in the noninterest income.
Previous wording
(1)Total loans are net of deferred loan origination fees/costs and discounts/premiums, and include average balances of loans held for sale and nonperforming loans. Interest income includes accretion of net deferred loan fees and net discounts on acquired loans of $3.9 million, $4.4 million and $6.1 million for the three months ended March 31, 2026, December 31, 2025, and March 31, 2025, respectively.
Current wording
(1)Total loans are net of deferred loan origination fees/costs and discounts/premiums, and include average balances of loans held for sale and nonperforming loans. Interest income includes accretion of net deferred loan fees and net discounts on acquired loans of $3.9 million, $3.9 million and $5.6 million for the three months ended June 30, 2026, March 31, 2026, and June 30, 2025, respectively.
Previous wording
(3)Average noninterest-bearing deposits represent 34.95%, 35.39% and 37.37% of average total deposits for the three months ended March 31, 2026, December 31, 2025, and March 31, 2025, respectively.
Current wording
(3)Average noninterest-bearing deposits represent 36.70%, 34.95% and 36.21% of average total deposits for the three months ended June 30, 2026, March 31, 2026, and June 30, 2025, respectively.
Previous wording
Net interest income for the first quarter of 2026 was $42.1 million, compared with $42.9 million in the prior quarter. The decrease in net interest income was primarily due to a $2.4 million decrease in total interest and dividend income, partially offset by a $1.6 million decrease in total interest expense in the first quarter of 2026, as compared with the prior quarter. The decrease in net interest income was also impacted by two fewer days in the current quarter than the prior quarter. During the first quarter of 2026, loan interest income decreased by $1.8 million, including a decrease of $575 thousand in accretion from the net purchase accounting discounts on acquired loans and a reversal of nonaccrual loans’ interest income of $479 thousand, coupled with a decrease of $1.4 million in interest income from deposits in other financial institutions, partially offset by an increase of $375 thousand in total debt securities income and an increase of $367 thousand in dividend income from restricted stock investments and other bank stock. The decrease in interest income was mainly due to a ten basis point decrease in the yield on interest-earning assets and a decrease in average deposits in other financial institutions of $88.9 million, partially offset by increases in average total loans of $32.3 million, average total debt securities of $35.3 million and average Fed funds sold/resale agreements of $8.0 million. The decrease in interest expense for the first quarter of 2026 was primarily due to a $1.6 million decrease in interest expense on total interest-bearing deposits, the result of a 23 basis point decrease in the cost of average total interest-bearing deposits, coupled with a $7.4 million decrease in average total interest-bearing deposits.
Current wording
During the second quarter of 2026, total interest income increased by $1.1 million. The increase was primarily driven by a $2.3 million increase in loan interest income, which included an increase of $98 thousand in accretion from the net purchase accounting discounts on acquired loans and $600 thousand in cash interest collections from the payoff of two nonaccrual loans, net of $56 thousand in reversals of interest income on loans placed on nonaccrual, coupled with an increase of $749 thousand in total debt securities income. These increases were partially offset by a decrease of $1.7 million in interest income from deposits in other financial institutions and a decrease of $225 thousand in dividend income from restricted stock investments and other bank stock. The increase in interest income was mainly due to a 25 basis point increase in the yield on average total interest-earning assets, including increases in average total loans of $23.6 million, and average total debt securities of $49.4 million, offset by decreases in average deposits in other financial institutions of $195.9 million and average Fed funds sold/resale agreements of $4.1 million. The decrease in interest expense for the second quarter of 2026 was primarily due to a $119 thousand decrease in interest expense on average total interest-bearing deposits, the result of lower average total interest-bearing deposits of $132.4 million, partially offset by an 8 basis point increase in the cost of average total interest-bearing deposits.
Previous wording
Net interest margin for the first quarter of 2026 was 4.47%, compared with 4.44% in the prior quarter. The increase was primarily related to the 14 basis point decrease in the cost of funds outpacing the ten basis point decrease in the total interest-earning assets yield. The yield on total average interest-earning assets in the first quarter of 2026 was 5.72%, compared with 5.82% in the prior quarter. The yield on average total loans in the first quarter of 2026 was 6.14%, a decrease of 17 basis points from 6.31% in the prior quarter. The yield on average total loans in the first quarter of 2026 included the impact of the reversal of nonaccrual loan interest noted above, which decreased the overall loan yield by six basis points. There was no significant reversal of interest income in the prior quarter. Accretion income from the net purchase accounting discounts on acquired loans was $3.2 million, increasing the yield on average total loans by 44 basis points; the net amortization expense from the purchase accounting discounts on acquired subordinated debt and acquired time deposits premium increased the interest expense by $388 thousand, the combination of which increased the net interest margin by 30 basis points in the first quarter of 2026. In the prior quarter, accretion income from the net purchase accounting discounts on acquired loans was $3.8 million, increasing the yield on average total loans by 51 basis points; the net amortization expense from the purchase accounting discounts on acquired subordinated debt and acquired time deposits premium increased the interest expense by $389 thousand, the combination of which increased the net interest margin by 36 basis points.
Current wording
Net interest margin for the second quarter of 2026 was 4.71%, compared with 4.47% in the prior quarter. The expansion of the net interest margin by 24 basis points was primarily driven by higher loan yields, a 6 basis point increase from the resolution of certain nonaccrual loans, and continued benefit from purchase accounting accretion. Total interest-earning assets yield increased by 25 basis points, partially offset by a 2 basis point increase in the cost of funds. The yield on total average interest-earning assets in the second quarter of 2026 was 5.97%, compared with 5.72% in the prior quarter. The yield on average total loans in the second quarter of 2026 was 6.34%, an increase of 20 basis points from 6.14% in the prior quarter. The yield on average total loans in the second quarter of 2026 included the impact of the cash interest collection from the payoff of two nonaccrual loan interest, net of reversals of interest income on loans placed on nonaccrual noted above, which increased the overall loan yield by 7 basis points. There was a $479 thousand reversal of interest income in the prior quarter which negatively impacted the net interest margin by 6 basis points. Accretion income from the net purchase accounting discounts on acquired loans was $3.3 million, increasing the yield on average total loans by 44 basis points; the net amortization expense from the purchase accounting discounts on acquired subordinated debt and acquired time deposits premium increased interest expense by $389 thousand, the combination of which increased the net interest margin by 32 basis points in the second quarter of 2026. In the prior quarter, accretion income from the net purchase accounting discounts on acquired loans was $3.2 million, increasing the yield on average total loans by 44 basis points; the net amortization expense from the purchase accounting discounts on acquired subordinated debt and acquired time deposits premium increased the interest expense by $388 thousand, the combination of which increased the net interest margin by 30 basis points.
Previous wording
Cost of funds for the first quarter of 2026 was 1.36%, a decrease of 14 basis points from 1.50% in the prior quarter. The decrease was primarily driven by 23 basis point decrease in the cost of average total interest-bearing deposits. The amortization expense of $389 thousand from the purchase accounting discounts on acquired subordinated debt contributed five basis points to the cost of funds. Average noninterest-bearing demand deposits decreased $27.4 million to $1.21 billion and represented 34.9% of total average deposits for the first quarter of 2026, compared with $1.23 billion and 35.4%, respectively, in the prior quarter; average interest-bearing deposits decreased $7.4 million to $2.24 billion during the first quarter of 2026. The total cost of deposits in the first quarter of 2026 was 1.29%, compared with 1.43% in the prior quarter. The cost of total interest-bearing deposits decreased 23 basis points, driven primarily by the Company’s ongoing deposit pricing and mix strategy in the first quarter of 2026.
Current wording
Cost of funds for the second quarter of 2026 was 1.38%, an increase of 2 basis points from 1.36% in the prior quarter. The increase was primarily driven by an 8 basis point increase in the cost of average total interest-bearing deposits. The amortization expense of $389 thousand from the purchase accounting discounts on acquired subordinated debt and acquired time deposits premium contributed five basis points to the cost of funds. Average noninterest-bearing demand deposits increased $18.6 million to $1.22 billion and represented 36.7% of total average deposits for the second quarter of 2026, compared with $1.21 billion and 34.9%, respectively, in the prior quarter; average interest-bearing deposits decreased $132.4 million to $2.11 billion during the second quarter of 2026. The total cost of deposits in the second quarter of 2026 was 1.31%, compared with 1.29% in the prior quarter. The cost of total interest-bearing deposits increased 8 basis points, driven primarily by changes in the
Previous wording
Average total borrowings increased $674 thousand to $34.4 million in the first quarter of 2026, primarily due to a $304 thousand increase in average Federal Home Loan Bank (“FHLB”) advances and $370 thousand increase in average subordinated debt due to accretion of discounts. The average cost of total borrowings was 8.25% for the first quarter of 2026, up from 8.19% in the prior quarter.
Current wording
Average total borrowings increased $51 thousand to $34.4 million in the second quarter of 2026, primarily due to a $384 thousand increase in average subordinated debt due to accretion of discounts, partially offset by a $333 thousand decrease in average Federal Home Loan Bank (“FHLB”) advances from an overnight advance. The average cost of total borrowings was 8.10% for the second quarter of 2026, down from 8.25% in the prior quarter.
Previous wording
Net interest margin for the three months ended March 31, 2026 was 4.47%, compared with 4.65% for the same 2025 period. The 18 basis point decrease was primarily related to the 54 basis point decrease in the total average interest-earning assets yield resulting from lower accretion income from the net purchase accounting discounts on acquired loans, lower market interest rates and a change in our average interest-earning asset mix, offset by a 36 basis point decrease in the cost of funds. The Federal Reserve’s reductions to the federal funds target rate by 75 basis points in the second half of 2025 resulted in lower interest income earned on deposits in other financial institutions, Fed fund sold/resale agreements, and loans, coupled with the decline in the accretion income from the net purchase accounting discounts on acquired loans, partially offset by the downward repricing of interest-bearing deposits consistent with market rates, resulting in lower interest expense on interest-bearing deposits and the redemptions of subordinated debts in June and September 2025, resulting in lower interest expense on total borrowings for the three months ended March 31, 2026.
Current wording
Net interest margin for the three months ended June 30, 2026 was 4.71%, compared with 4.61% for the same 2025 period. The expansion of the net interest margin by 10 basis point was primarily driven by a 35 basis point decrease in the cost of funds, partially offset by the 24 basis points decrease in the total average interest-earning assets yield resulting from lower accretion income from the net purchase accounting discounts on acquired loans, lower market interest rates and a change in our average interest-earning asset mix. The Federal Reserve’s reductions to the federal funds target rate by 75 basis points in the second half of 2025 resulted in lower interest income earned on deposits in other financial institutions, Fed fund sold/resale agreements, and loans, coupled with the decline in the accretion income from the net purchase accounting discounts on acquired loans, partially offset by the downward repricing of interest-bearing deposits consistent with market rates, resulting in lower interest expense on interest-bearing deposits and the redemptions of subordinated debt in June 2025 and September 2025, resulting in lower interest expense on total borrowings for the three months ended June 30, 2026 compared to the same 2025 period.
Previous wording
Average interest-earning assets increased $135.1 million, resulting primarily from a $110.2 million increase in average deposits in other financial institutions, a $116.7 million increase in total average debt securities, and a $4.4 million increase in average Fed funds sold/resale agreements, partially offset by a $96.3 million decrease in average total loans. The yield on total average earning assets during the three months ended March 31, 2026 was 5.72%, compared with 6.26% for the same 2025 period. The yield on average loans decreased 47 basis points to 6.14% from 6.61% year over year. The yield on total debt securities increased to 4.13% from 4.01% for the same 2025 period. Accretion income from the net purchase accounting discounts on acquired loans was $3.2 million, increasing the yield on average total loans by 44 basis point; the net amortization expense from the purchase accounting discounts on acquired subordinated debt and acquired time deposits premium increased the interest expense by $388 thousand, the combination of which increased the net interest margin by 30 basis points in the first quarter of 2026. For the three months ended March 31, 2025, accretion income from the net purchase accounting discounts on acquired loans was $5.7 million and the amortization expense impact on interest expense was $526 thousand, the combination of which increased the net interest margin by 57 basis points.
Current wording
The yield on total average earning assets during the three months ended June 30, 2026 was 5.97%, compared with 6.21% for the same 2025 period. The yield on average loans decreased 24 basis points to 6.34% from 6.58% year over year. The yield on total debt securities increased to 4.36% from 3.93% for the same 2025 period. Accretion income from the net purchase accounting discounts on acquired loans was $3.3 million, increasing the yield on average total loans by 44 basis points; the net amortization expense from the purchase accounting discounts on acquired subordinated debt and acquired time deposits premium increased the interest expense by $389 thousand, the combination of which increased the net interest margin by 32 basis points in the second quarter of 2026. For the three months ended June 30, 2025, accretion income from the net purchase accounting discounts on acquired loans was $5.2 million and the amortization expense impact on interest expense was $554 thousand, the combination of which increased the net interest margin by 51 basis points.
Previous wording
During the three months ended March 31, 2026, total interest expense decreased by $2.9 million to $11.7 million, comprised primarily of a $2.2 million decrease in interest expense on interest-bearing deposits primarily due to a decrease in the cost of interest-bearing deposits resulting from our deposit repricing strategy and the ongoing reduction of high cost brokered deposits, partially offset by the increase in average interest-bearing deposits between periods.
Current wording
During the three months ended June 30, 2026, total interest expense decreased by $2.8 million to $11.6 million, comprised primarily of a $2.1 million decrease in interest expense on interest-bearing deposits primarily due to a decrease in the cost of interest-bearing deposits resulting from our deposit repricing strategy and the ongoing reduction of high cost brokered deposits, partially offset by the increase in average interest-bearing deposits between periods.
Previous wording
Average total borrowings decreased $35.7 million to $34.4 million for the three months ended March 31, 2026 resulting from a decrease of $36.0 million in average subordinated debt from the redemption of the $18 million subordinated debts in June 2025 and $20 million subordinated notes in September 2025, partially offset by a $333 thousand increase in average FHLB advances. The average cost of total borrowings was 8.25% for the three months ended March 31, 2026, a 19 basis point increase from 8.06% for the same 2025 period. The increase was primarily attributable to amortization of purchase accounting discounts associated with the acquired subordinated debt.
Current wording
Average total borrowings decreased $32.7 million to $34.4 million for the three months ended June 30, 2026 resulting from a decrease of $32.7 million in average subordinated debt from the redemption of $18 million of subordinated debt in June 2025 and $20 million of subordinated debt in September 2025. The average cost of total borrowings was 8.10% for the three months ended June 30, 2026, a 43 basis point decrease from 8.53% for the same 2025 period. The decrease was primarily attributable to the redemption of higher yielding subordinated debt.
Previous wording
Total cost of funds for the three months ended March 31, 2026 was 1.36%, a decrease of 36 basis points from 1.72% for the same 2025 period. The decrease was primarily driven by a 55 basis point decrease in the average cost of interest-bearing deposits, partially offset by a decrease in average noninterest-bearing deposits and by an increase of 19 basis points in the cost of total borrowings. Average noninterest-bearing demand deposits decreased $50.4 million to $1.21 billion and represented 34.95% of total average deposits for the three months ended March 31, 2026, compared with $1.26 billion and 37.37%, respectively, for the same 2025 period; average interest-bearing deposits increased $139.1 million to $2.24 billion during the three months ended March 31, 2026. The total cost of deposits for the three months ended March 31, 2026 was 1.29%, down 30 basis points from 1.59% for the same 2025 period.
Current wording
Total cost of funds for the six months ended June 30, 2026 was 1.37%, a decrease of 36 basis points from 1.73% for the six months ended June 30, 2025. The decrease was primarily driven by a 49 basis point decrease in the cost of average total interest-bearing deposits, offset by decreases in average noninterest-bearing deposits, average total borrowings and average cost of total borrowings. Average noninterest-bearing demand deposits decreased $2.8 million to $1.21 billion and represented 35.8% of total average deposits for the six months ended June 30, 2026, compared with $1.22 billion and 36.8%, respectively, for the same 2025 period; average interest-bearing deposits increased $85.8 million to $2.18 billion during the six months ended June 30, 2026. The total cost of deposits for the six months ended June 30, 2026 was 1.30%, down 29 basis points from 1.59% for the same 2025 period.
Previous wording
The Company recorded a reversal of provision for credit losses of $381 thousand for the first quarter of 2026, compared with $4.4 million in the prior quarter. The reversal of provision for credit losses in the first quarter of 2026 was related to the ALL. There was no reversal of provision for credit losses for unfunded loan commitments during the first quarter of 2026. Total unfunded loan commitments increased modestly by $38.7 million to $925.1 million at March 31, 2026, compared to $886.4 million in unfunded loan commitments at December 31, 2025.
Current wording
The Company recorded a provision for credit losses of $714 thousand for the second quarter of 2026, compared with a reversal of provision for credit losses of $381 thousand in the prior quarter. The provision for credit losses in the second quarter of 2026 was comprised of a $1.1 million provision for credit losses on loans held for investment, partially offset by a $336 thousand reversal of provision for credit losses for unfunded loan commitments during the second quarter of 2026. Total unfunded loan commitments decreased by $28.2 million to $896.9 million at June 30, 2026, compared to $925.1 million in unfunded loan commitments at March 31, 2026.
Previous wording
The provision for credit losses for loans held for investment in the first quarter of 2026 was a reversal of $381 thousand, a decrease of $3.8 million from a reversal of provision for credit losses of $4.2 million in the prior quarter. The decrease was driven primarily by the changes in the reasonable and supportable forecast, primarily related to the economic outlook for California, coupled with a decrease in loan balances, changes in the portfolio mix, and changes in the qualitative factors, partially offset by an increase in the criticized loan loss rates, which are updated annually in the model, despite a decline in criticized loan balances. The Company’s management continues to monitor macroeconomic variables including changes in interest rates, uncertainty in the current economic environment, and elevated geopolitical risks related to ongoing conflicts in the Middle East. Management believes it has appropriately provisioned for the current environment.
Current wording
The provision for credit losses for loans held for investment in the second quarter of 2026 was $1.1 million, an increase of $1.4 million from a reversal of provision for credit losses of $381 thousand in the prior quarter. The increase reflected updates to the reasonable and supportable economic forecasts for California, continued loan growth, changes in portfolio composition, and higher substandard accruing loan balances, partially offset by refinements to the qualitative factors and scenario weighting. The Company’s management continues to monitor macroeconomic variables including changes in interest rates, uncertainty in the current economic environment, and elevated geopolitical risks related to ongoing conflicts in the Middle East. Management believes it has appropriately provisioned for the current environment.
Previous wording
We recorded a reversal of provision for credit losses of $381 thousand for the three months ended March 31, 2026, compared to $3.8 million for the same 2025 period. The reversal of provision for credit losses for the three months ended March 31, 2025 included a $3.2 million reversal of provision for credit losses on loans held for investment and a $618 thousand reversal of provision for credit losses for unfunded loan commitments, primarily due to the decrease in unfunded loan commitments during the first quarter of 2025, coupled with lower loss rates and funding rates used to estimate the allowance for credit losses on unfunded commitments, despite total unfunded loan commitments increasing modestly by $33.1 million to $925.1 million at March 31, 2026, compared to $892.1 million in unfunded loan commitments at March 31, 2025.
Current wording
We recorded a provision for credit losses of $714 thousand for the three months ended June 30, 2026, compared to a reversal of credit losses of $634 thousand for the same 2025 period. The reversal of credit losses in the second quarter of 2025 included a $29 thousand provision for credit losses for unfunded loan commitments related to the increase in unfunded loan commitments during the second quarter of 2025, partially offset by a decrease in average funding rates used to estimate the allowance for credit losses on unfunded commitments.
Previous wording
The reversal of provision for credit losses for the loans held for investments for the three months ended March 31, 2025 was driven primarily by changes in the composition of the loans held for investment portfolio, coupled with changes in qualitative factors and the reasonable and supportable forecast, primarily related to the economic outlook for California.
Current wording
The reversal of provision for credit losses for the loans held for investments for the three months ended June 30, 2025 was driven primarily by the decrease in the balance of loans held for investment, changes in the composition of the loans held for investment portfolio, coupled with changes in qualitative factors, partially offset by net charge-offs and changes in the reasonable and supportable forecast, primarily related to the economic outlook for California.
Previous wording
Total noninterest income was $2.1 million in the first quarter of 2026, a decrease of $858 thousand compared with $3.0 million in the fourth quarter of 2025. Other charges and fees decreased $820 thousand in the first quarter due primarily to lower income from equity investments of $181 thousand in the first quarter compared to $948 thousand in the prior quarter
Current wording
Total noninterest income was $1.6 million in the second quarter of 2026, a decrease of $586 thousand compared with $2.1 million in the first quarter of 2026. Other charges and fees decreased $534 thousand in the second quarter due primarily to a loss from equity investments of $251 thousand in the second quarter of 2026, compared to income of $181 thousand in the prior quarter.
Previous wording
Total noninterest income was $2.1 million in the first quarter of 2026, a decrease of $429 thousand compared with $2.6 million in the first quarter of 2025. The decrease was due primarily to there being no gain on sale of loans compared to $577 thousand in the comparable quarter in 2025, partially offset by a $243 thousand increase in other charges and fees due primarily to a higher income from equity investments and higher miscellaneous income.
Current wording
Total noninterest income was $1.6 million in the second quarter of 2026, a decrease of $1.3 million compared with $2.9 million in the second quarter of 2025. The decrease was due primarily to a $1.2 million decrease in other charges and fees due primarily to lower income from equity investments of $1.2 million and lower interchange and ATM income between periods.
Previous wording
Total noninterest expense for the first quarter of 2026 was $25.5 million, a decrease of $2.4 million from total noninterest expense of $27.9 million in the prior quarter. Salaries and employee benefits increased $136 thousand during the first quarter of 2026 to $16.6 million primarily as a result of increases in payroll taxes typically occurring in the first quarter each year, partially offset by a decrease in severance costs compared to the prior quarter. There were no similar severance costs in the current quarter. Additionally, the decrease in litigation settlements of $2.0 million in the first quarter was primarily due to the recording of non-recurring litigation settlements of $2.0 million in the prior quarter.
Current wording
Total noninterest expense for the second quarter of 2026 was $24.3 million, a decrease of $1.2 million from total noninterest expense of $25.5 million in the prior quarter. Salaries and employee benefits decreased $1.0 million during the second quarter of 2026 to $15.5 million primarily as a result of the previous quarter including increases in payroll taxes typically occurring in the first quarter each year, coupled with the increase in loan origination costs deferred based on increased loan origination activity. The decrease in other expenses of $424 thousand was due primarily to the decreases in loan related expenses and valuation write-downs on loans held for sale. There were no valuation write-downs on loans held for sale in the second quarter of 2026, compared with $266 thousand in the prior quarter.
Previous wording
Efficiency ratio (non-GAAP) for the first quarter of 2026 was 57.69%, compared with 60.80% in the prior quarter.
Current wording
Efficiency ratio (non-GAAP) for the second quarter of 2026 was 54.22%, compared with 57.69% in the prior quarter.
Previous wording
Salaries and employee benefits were $16.6 million during the three months ended March 31, 2026, compared to $15.9 million for the same 2025 period. The $686 thousand increase in salaries and benefits was driven primarily by higher salaries and incentive compensation.
Current wording
Salaries and employee benefits were $15.5 million during the three months ended June 30, 2026, compared to $15.3 million for the same 2025 period. The $251 thousand increase in salaries and benefits was driven primarily by higher salaries and incentive compensation.
Previous wording
Core deposit intangible amortization decreased $148 thousand during the three months ended March 31, 2026. The decrease in core deposit intangible amortization was primarily driven by lower amortization costs as acquired core deposit intangible are amortized on an accelerated basis.
Current wording
Core deposit intangible amortization decreased $148 thousand during the three months ended June 30, 2026. The decrease in core deposit intangible amortization was primarily driven by lower amortization costs as acquired core deposit intangibles are amortized on an accelerated basis.
Previous wording
Our efficiency ratio for the three months ended March 31, 2026 was 57.69%, compared to 55.60% for the three months ended March 31, 2025.
Current wording
Our efficiency ratio for the three months ended June 30, 2026 was 54.2%, compared to 56.1% for the three months ended June 30, 2025.
Previous wording
Total noninterest expense during the three months ended March 31, 2026 was $25.5 million, an increase of $592 thousand compared with total noninterest expense of $24.9 million for the same 2025 period. The increase was primarily due to higher salaries and employee benefits and other expenses, partially offset by generally lower expenses across several categories.
Current wording
Total noninterest expense during the six months ended June 30, 2026 was $49.9 million, an increase of $105 thousand compared with total noninterest expense of $49.8 million for the same 2025 period. The increase was due to increases in salaries and benefits, data processing and communications and other expenses, partially offset by decreases in various overhead expense categories and lower OREO expenses.
Previous wording
Other expenses were $2.5 million during the three months ended March 31, 2026, compared to $2.0 million for the same 2025 period. The $488 thousand increase was due primarily to the increases in loan related expenses, customer service related expenses, travel expenses, marketing expenses, and valuation allowances on loans held for sale.
Current wording
Other expenses were $4.5 million during the six months ended June 30, 2026, compared to $3.9 million for the same 2025 period. The $627 thousand increase was due primarily to the increases in customer service related expenses, travel and training expenses, valuation allowance on loans held for sale of $266 thousand and other expenses, partially offset by lower loan related expenses.
Previous wording
In the first quarter of 2026, the Company’s income tax expense was $5.3 million, compared with $6.0 million for the fourth quarter of 2025. The effective rate was 27.8% for the first quarter of 2026 and 26.7% for the fourth quarter of 2025. The increase in the effective tax rate for the first quarter of 2026 was primarily attributable to a lower benefit from low-income housing tax credit investments as well as lower pre-tax income paired with minimal change in other permanently non-deductible expenses.
Current wording
In the second quarter of 2026, the Company’s income tax expense was $5.5 million, compared with $5.3 million for the first quarter of 2026. The effective rate was 27.9% for the second quarter of 2026 and 27.8% for the first quarter of 2026. The rate remained relatively stable, reflecting minimal changes in permanent tax differences.
Previous wording
Income tax expense for the three months ended March 31, 2026 was $5.3 million, compared to $6.8 million for the same 2025 period. The effective rate was 27.8% during the three months ended March 31, 2026, compared to 28.8% for the same 2025 period. The decrease in the effective tax rate between periods was primarily attributable to the impact of favorable book-to-tax differences relative to lower pre-tax income.
Current wording
Income tax expense for the three months ended June 30, 2026 was $5.5 million, compared to $6.0 million for the same 2025 period. The effective rate was 27.9% during the three months ended June 30, 2026, compared to 29.8% for the same 2025 period. The decrease in the effective tax rate between periods was primarily attributable to the impact of favorable book-to-tax differences relative to slightly lower pre-tax income.
Previous wording
Total assets at March 31, 2026 were $4.05 billion, an increase of $15.3 million or 0.4% from December 31, 2025. The increase in total assets from December 31, 2025 was primarily related to increases in cash and cash equivalents of $11.2 million and in available-for-sale debt securities of $63.7 million, partially offset by a decrease in loans, including loans held for sale, of $62.1 million, as compared to year-end.
Current wording
Total assets at June 30, 2026 were $4.03 billion, a decrease of $8.1 million or 0.2% from December 31, 2025. The decrease in total assets from December 31, 2025 was primarily related to a decrease in cash and cash equivalents of $135.0 million, partially offset by increases in available-for-sale debt securities of $73.9 million and loans, including loans held for sale, of $51.6 million as compared to year-end.
Previous wording
Total liabilities were $3.47 billion at March 31, 2026, an increase of $14.1 million from $3.46 billion at December 31, 2025. The increase in total liabilities primarily related to a $22.9 million increase in total deposits, partially offset by a $9.4 million decrease in accrued interest and other liabilities primarily due to the settlement of accrued expenses.
Current wording
Total liabilities were $3.44 billion at June 30, 2026, a decrease of $18.2 million from $3.46 billion at December 31, 2025. The decrease in total liabilities primarily related to an $11.5 million decrease in total deposits and a $6.9 million decrease in accrued interest and other liabilities primarily due to the settlement of accrued expenses.
Previous wording
Shareholders’ equity was $577.8 million at March 31, 2026, an increase of $1.2 million from $576.6 million at December 31, 2025. The increase in shareholders’ equity was primarily driven by $13.8 million of net income, $1.4 million related to stock-based compensation activity, partially offset by a $2.1 million increase in net of tax unrealized losses on available-for-sale debt securities, the repurchase of common stock in settlement of restricted stock units of $1.3 million, common stock dividends of $3.2 million and the repurchase of common stock under the Company’s share repurchase program of $7.4 million during the three months ended March 31, 2026.
Current wording
Shareholders’ equity was $586.6 million at June 30, 2026, an increase of $10.1 million from $576.6 million at December 31, 2025. The increase in shareholders’ equity was primarily driven by $28.1 million of net income, $2.7 million related to stock-based compensation activity, partially offset by a $3.7 million increase in net of tax unrealized losses on available-for-sale debt securities, the repurchase of common stock in settlement of restricted stock units of $1.5 million, common stock dividends of $6.5 million and the repurchase of common stock under the Company’s share repurchase program of $9.4 million during the six months ended June 30, 2026.
Previous wording
Our debt securities portfolio consists of both held-to-maturity and available-for-sale debt securities aggregating $351.5 million and $287.8 million at March 31, 2026 and December 31, 2025, respectively. The $63.6 million increase in debt securities was primarily related to purchases of available-for-sale securities, partially offset by increases in net unrealized losses, and paydowns. There were no maturities or calls of debt securities during the three months ended March 31, 2026. Our held-to-maturity debt securities and available-for-sale debt securities represented 1.31% and 7.38%, respectively, of total assets at March 31, 2026, compared to 1.31% and 5.82%, respectively, at December 31, 2025.
Current wording
Our debt securities portfolio consists of both held-to-maturity and available-for-sale debt securities aggregating $361.6 million and $287.8 million at June 30, 2026 and December 31, 2025, respectively. The $73.7 million increase in debt securities was primarily related to purchases of available-for-sale securities, partially offset by increases in net unrealized losses, and paydowns. There were no maturities or calls of debt securities during the six months ended ended June 30, 2026. Our held-to-maturity debt securities and available-for-sale debt securities represented 1.31% and 7.67%, respectively, of total assets at June 30, 2026, compared to 1.31% and 5.82%, respectively, at December 31, 2025.
Previous wording
During the three months ended March 31, 2026, there were no transfers between held-to-maturity and available-for-sale debt securities.
Current wording
During the six months ended June 30, 2026, there were no transfers between held-to-maturity and available-for-sale debt securities.
Previous wording
At March 31, 2026 and December 31, 2025, available-for-sale debt securities with an amortized cost of $87.8 million and $27.6 million, respectively, were pledged to the Federal Reserve Bank (“Federal Reserve”) as collateral for a secured public deposits and for other purposes as required by law or contract provisions, in addition to held-to-maturity debt securities with an amortized cost of $52.8 million and $52.9 million, respectively, pledged as collateral for a secured line of credit with the Federal Reserve. The Company also pledged $14.7 million available-for-sale debt securities to another financial institution to support the collateralization requirement against certain customers’ standby lines of credit.
Current wording
At June 30, 2026 and December 31, 2025, available-for-sale debt securities with an amortized cost of $85.7 million and $27.6 million, respectively, were pledged to the Federal Reserve Bank (“Federal Reserve”) as collateral for a secured public deposits and for other purposes as required by law or contract provisions, in addition to held-to-maturity debt securities with an amortized cost of $52.8 million and $52.9 million, respectively, pledged as collateral for a secured line of credit with the Federal Reserve. At June 30, 2026, we also pledged $14.3 million available-for-sale debt securities to another financial institution to support the collateralization requirement against certain customers’ standby lines of credit.
Previous wording
At March 31, 2026, we had 61 held-to-maturity debt securities in a gross unrecognized loss position with an amortized cost basis of $52.8 million with pre-tax unrecognized losses of $4.4 million, compared to 61 held-to-maturity debt securities with an amortized cost basis of $52.9 million with pre-tax unrecognized losses of $3.6 million at December 31, 2025. The effective duration of the held-to-maturity debt securities was 6.07 years and 5.94 years at March 31, 2026 and December 31, 2025, respectively. We have the intent and ability to hold the securities classified as held to maturity until they mature, at which time we will receive full value for the securities.
Current wording
At June 30, 2026, we had 61 held-to-maturity debt securities in a gross unrecognized loss position with an amortized cost basis of $52.8 million with pre-tax unrecognized losses of $3.7 million, compared to 61 held-to-maturity debt securities with an amortized cost basis of $52.9 million with pre-tax unrecognized losses of $3.6 million at December 31, 2025. The effective duration of the held-to-maturity debt securities was 5.71 years and 5.94 years at June 30, 2026 and December 31, 2025, respectively. We have the intent and ability to hold the securities classified as held to maturity until they mature, at which time we will receive full value for the securities.
Showing the first 40 of 93 pairs. Open the source sections for the rest.
Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
June 30, 2026. The results of our stress testing on our debt security portfolio at June 30, 2026, illustrated that our losses, net of taxes on both held-to-maturity and available-for-sale debt securities would increase to $51.1 million in a 300 basis point rate increase shock scenario. If we realized all of these unrealized losses, the Bank would continue to exceed all regulatory capital requirements necessary to be considered well capitalized.
Current report — wording carried from elsewhere
(1)Total loans are net of deferred loan origination fees/costs and discounts/premiums, and include average balances of loans held for sale and nonperforming loans. Interest income includes accretion of net deferred loan fees and net discounts on acquired loans of $7.9 million and $11.7 million for the six months ended June 30, 2026 and 2025, respectively.
Current report — wording carried from elsewhere
(2)Tax-exempt debt securities yields are presented on a tax equivalent basis using a 21% tax rate.
Current report — wording carried from elsewhere
(4)Annualized net interest income divided by average interest-earning assets.
Current report — wording carried from elsewhere
(5)Total deposits is the sum of interest-bearing deposits and noninterest-bearing deposits. The cost of deposits is calculated as annualized total interest expense on deposits divided by average total deposits.
Current report — wording carried from elsewhere
(6)Total funding is the sum of total interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.
Current report — wording carried from elsewhere
Intangible assets amortization decreased $296 thousand during the six months ended June 30, 2026. The decrease in amortization was primarily driven by lower amortization costs as acquired core deposit intangible are amortized on an accelerated basis.
Current report — wording carried from elsewhere
Income tax expense for the six months ended June 30, 2026 was $10.8 million, compared to income tax expense of $12.8 million for the same 2025 period. The effective rate was 27.9% during the six months ended June 30, 2026, compared to 29.3% for the same 2025 period. The decrease in effective tax rate between periods was primarily due to the impact of favorable book-to-tax differences relative to lower pre-tax income.
Current report — wording carried from elsewhere
At June 30, 2026, noninterest-bearing demand deposits totaled $1.26 billion and represented 37.4% of total deposits, compared to $1.18 billion or 35.0% at December 31, 2025. At June 30, 2026 and December 31,
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Reversal of Provision for Credit Losses