California BanCorp \ CA

Previous wording

We are a relationship-focused community bank and we offer a range of financial products and services to individuals, professionals, and small- to medium-sized businesses through our 14 branch offices serving California. We keep a steady focus on our solution-driven, relationship-based approach to banking, providing clients accessibility to decision makers and enhancing the value of our services through strong client partnerships. Our lending products consist primarily of construction and land development loans, real estate loans, C&I loans and consumer loans, and we are a Preferred SBA Lender. Our deposit products consist primarily of demand deposit, money market, and certificates of deposit. In addition, we are a participant in the Certificate of Deposit Account Registry Service (“CDARS”), IntraFi Network Insured Cash Sweep (“ICS”), and Reich & Tang Deposit Solutions (“R&T”) networks. We receive an equal dollar amount of deposits (“reciprocal deposits”) from other participating banks in exchange for the deposits we place into the networks to fully qualify large customer deposits for FDIC insurance. We also provide treasury management services including online banking, cash vault, sweep accounts and lock box services.

Current wording

We are a relationship-focused community bank and we offer a range of financial products and services to individuals, professionals, and small to medium-sized businesses through our 14 branch offices serving California. We keep a steady focus on our solution-driven, relationship-based approach to banking, providing clients accessibility to decision makers and enhancing the value of our services through strong client partnerships. Our lending products consist primarily of construction and land development loans, real estate loans, C&I loans and consumer loans, and we are a Preferred SBA Lender. Our deposit products consist primarily of demand deposit, money market, and certificates of deposit. In addition, we are a participant in the Certificate of Deposit Account Registry Service (“CDARS”) and IntraFi Network Insured Cash Sweep (“ICS”) networks. We receive an equal dollar amount of deposits (“reciprocal deposits”) from other participating banks in exchange for the deposits we place into the networks to fully qualify large customer deposits for FDIC insurance. We also provide treasury management services including online banking, cash vault, sweep accounts and lock box services.

Previous wording

Under the terms of the Agreement and Plan of Merger and Reorganization, each outstanding share of CALB common stock was exchanged for the right to receive 1.590 shares of the Company’s common stock, resulting in the net issuance of approximately 13,579,454 shares, with cash (without interest) paid in lieu of fractional shares and repurchase of shares for settlement of accelerated restricted stock units. Refer to Note 2 -

Current wording

Under the terms of the Agreement and Plan of Merger and Reorganization, each outstanding share of CALB common stock was exchanged for the right to receive 1.590 shares of the Company’s common stock, resulting in the net issuance of approximately 13,579,454 shares, with cash (without interest) paid in lieu of fractional shares and repurchase of shares for settlement of accelerated restricted stock units. Refer to Note 2 -Business Combinations of the Notes to Consolidated Financial Statements included in Part I -Financial

Previous wording

Business Combinations of the Notes to Consolidated Financial Statements included in Part I -Financial Information - Item 1. Financial Statements of this filing for more information regarding business combinations and related activity.

Current wording

Information - Item 1. Financial Statements of this filing for more information regarding business combinations and related activity.

Previous wording

The recently passed One Big Beautiful Bill Act includes a broad range of tax reform provisions impacting individuals and businesses, along with substantial cuts to social programs and reduced funding for financial oversight agencies, including the Consumer Financial Protection Bureau. These changes may affect deposit customers, borrowers, and the banking industry. The full impact of the Act is still being assessed and remains uncertain at this time. Separately, California’s single sales factor apportionment bill for financial institutions does not have a material impact on our estimated income tax expense, deferred taxes, or other comprehensive income.

Current wording

The recently passed One Big Beautiful Bill Act includes a broad range of tax reform provisions impacting individuals and businesses, along with substantial cuts to social programs and reduced funding for financial oversight agencies, including the Consumer Financial Protection Bureau. These changes may affect deposit customers, borrowers, and the banking industry. The full impact of the Act is still being assessed and remains uncertain at this time. Separately, California’s single sales factor apportionment bill for financial institutions did not have a material impact on our estimated income tax expense, deferred taxes, or other comprehensive income.

Previous wording

At the July 30, 2025, Federal Open Market Committee meeting, members voted to maintain the target range for the Fed funds rate between 4.25%and 4.50%. Regarding the effects of tariffs on the economy, the Chairman observed that changes to government policies continue to evolve, and their effects on the economy remain uncertain and that higher tariffs have begun to show through more clearly in the prices of some goods, but their overall effects on economic activity and inflation remains to be seen. The Fed is being conservative by keeping rates where they are given all the uncertainty around inflation and the economy. With borrowing costs holding steady, the net interest margins may remain stable in the short term. However, anticipated rate cuts could pressure margins if long-term rates begin to decline.

Current wording

Regarding the effects of tariffs on the economy, the Chairman observed that changes to government policies continue to evolve, and their effects on the economy remain uncertain and that higher tariffs have begun to show through more clearly in the prices of some goods, but their overall effects on economic activity and inflation remains uncertain. The Fed also announced it will end quantitative tightening on December 1 2025, halting the reduction of its balance sheet and injecting additional liquidity into financial markets. The Fed acknowledged that uncertainty about the economic outlook remains elevated, especially due to the ongoing government shutdown, which has limited its access to key economic data. The Chairman pointed out that the growth of economic activity has moderated, particularly due to a slowdown in consumer spending, while business investment has picked up. GDP grew at an average annualized rate of approximately 2.3% over the first nine months of the year, down from 2.5% in 2024. The Fed also acknowledged that labor market conditions are gradually cooling, and inflation remains somewhat elevated at around 2.8%.

Previous wording

Markets have been volatile lately due to the recent changes in tariff policies and given the fluid dynamics of the situation we are reaching out to our clients to assess the potential impact of these changing policies on their businesses. We continue to monitor the effect of tariffs and trade negotiations on our clients and we do not expect to see an impact on client operations from those events. We have minimal exposure to international trade, although some of our clients do source materials from outside the country.

Current wording

Markets have been volatile lately due to the recent changes in tariff policies. Given the fluid dynamics of the situation we continue to monitor the effect of tariffs and trade negotiations on our clients and we do not currently expect to see an impact on client operations from those events. We have minimal exposure to international trade, although some of our clients do source materials from outside the country.

Previous wording

In California, Moody’s anticipates GDP growth to decelerate to 1.6% in 2025 and to continue to decrease to 1.5% in 2026. Despite this slowdown, the state retains its status as the world’s fourth-largest economy; however, California’s economy is cooling off, with slower payroll growth and downward revisions widening the gap with national trends. The tech sector is experiencing a sharp downturn, with most consumer-oriented industries under pressure. Building permits declined in 2024 and have yet to recover. With the trade war heating up, growing uncertainty is prompting businesses and investors to scale back and proceed cautiously. We have observed that some clients have expressed hesitancy in initiating projects due to the uncertain economic environment.

Current wording

In California, overall consumer prices are predicted to go up 3.8% on an annualized basis in the fourth quarter of 2025, then gradually decline to 3.6% in the first quarter of 2026 and 3.4% in the second quarter, according to the UCLA Anderson Forecast. Moody’s anticipates GDP growth in California to decelerate to 1.4% in 2025 and to continue to decrease to 1.1% in 2026. 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. Building permits declined in 2024 and have yet to show signs of recovery. With the trade war still ongoing, growing uncertainty is prompting businesses and investors to scale back and proceed cautiously. We have observed that some clients have expressed hesitancy in initiating projects due to the uncertain economic environment.

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. We have made significant progress in derisking our consolidated balance sheets by decreasing our exposure in the Sponsor Finance portfolio, reducing our reliance on brokered deposits and improving overall credit quality. The reduction in credit risk in our total loan portfolio is reflected in the reversal of provision for loan losses over three consecutive quarters, a significant decrease in our non-performing assets to total assets ratio to 0.46% at June 30, 2025 from 0.68% at December 31, 2024, as well as a significant decrease in special mention and substandard loans since year-end.

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. We are nearing the completion of derisking our consolidated balance sheets, having significantly reduced our exposure in the Sponsor Finance portfolio, decreased our reliance on brokered deposits and improved overall credit quality. The reduction in credit risk in our total loan portfolio is reflected in the reversal of provision for loan losses over three consecutive quarters, from the fourth quarter of 2024 through the second quarter of 2025. Additionally, our non-performing assets to total assets ratio of 0.38% at September 30, 2025, declined from 0.76% at December 31, 2024, along with a decrease in substandard loans since year-end.

Previous wording

Per the regulatory definition of commercial real estate, at June 30, 2025, our concentration of such loans represented 454% of our total risk-based capital. In addition, at June 30, 2025, total loans secured by commercial real estate under construction and land development represented 37% 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, 2025 were $16.4 million and there were $2.0 million charge-offs during the six months ended June 30, 2025. At June 30, 2025, there was no OREO.

Current wording

Per the regulatory definition of commercial real estate, at September 30, 2025, our concentration of such loans represented 466% of our total risk-based capital. In addition, at September 30, 2025, total loans secured by commercial real estate under construction and land development represented 35% of our total risk-based capital. The non-performing loans for these segments per the regulatory definition of commercial real estate loans at September 30, 2025 were $13.6 million and there were $1.7 million charge-offs during the nine months ended September 30, 2025. At September 30, 2025, there was no OREO.

Previous wording

Given the nature of our commercial banking business, approximately 48% of our total deposits exceeded the FDIC deposit insurance limits at June 30, 2025.

Current wording

Given the nature of our commercial banking business, approximately 49% of our total deposits exceeded the FDIC deposit insurance limits at September 30, 2025.

Previous wording

We strategically manage an investment portfolio focused on high-quality, resilient securities. At June 30, 2025, the amortized cost of our held-to-maturity debt securities was $53.1 million, or approximately 1.3% of total assets. The fair value of our available-for-sale debt securities was $188.2 million, or approximately 4.8% of total assets. The 10-Year Treasury Bond was approximately at 4.2% at the end of June 30, 2025, compared to 4.6% at December 31, 2024. The decrease in the 10-Year Treasury Bond in the in the first half of 2025, resulted in a lower net unrealized losses on our debt securities at June 30, 2025. At June 30, 2025, our accumulated other comprehensive loss, net of taxes, decreased to $3.7 million, compared to $6.6 million at December 31, 2024. 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 $7.7 million at June 30, 2025. The results of our stress testing on our debt security portfolio at June 30, 2025, illustrated that our losses, net of taxes on both held-to-maturity and available-for-sale debt securities would increase to $36.1 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 wording

We strategically manage an investment portfolio focused on high-quality, resilient securities. At September 30, 2025, the amortized cost of our held-to-maturity debt securities was $53.0 million, or approximately 1.3% of total assets. The fair value of our available-for-sale debt securities was $209.4 million, or approximately 5.1% of total assets. The 10-Year Treasury Bond was approximately at 4.2% at the end of September 30, 2025, compared to 4.6% at December 31, 2024. The decrease in the 10-Year Treasury Bond in the in the first half of 2025, resulted in a lower net unrealized losses on our debt securities at September 30, 2025. At September 30, 2025, our accumulated other comprehensive loss, net of taxes, decreased to $2.1 million, compared to $6.6 million at December 31, 2024. 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 $5.0 million at September 30, 2025. The results of our stress testing on our debt security portfolio at September 30, 2025, illustrated that our losses, net of taxes on both held-to-maturity and available-for-sale debt securities would increase to $30.7 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.

Previous wording

We have chosen accounting policies that we believe are appropriate to accurately and fairly report our operating results and financial position, and we apply those accounting policies in a consistent manner. The Significant Accounting Policies are summarized in Note 1 -Basis of Presentation and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements included in Part I -Financial Information - Item 1. Financial Statements included in the 2024 Annual Report on Form 10-K.

Current wording

Accounting Policies are summarized in Note 1 -Basis of Presentation and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements included in Part I -Financial Information - Item 1. Financial Statements included in the 2024 Annual Report on Form 10-K.

Previous wording

(1) After-tax merger and related expenses are presented using a 29.56% tax rate.

Current wording

(1) After-tax Day1 provision for non PCD loans and unfunded loan commitments and after-tax merger and related expenses are presented using a 29.56% tax rate.

Previous wording

Net income for the three months ended June 30, 2025 was $14.1 million, or $0.43 per diluted share, compared to $190 thousand, or $0.01 per diluted share for the same 2024 period. The $13.9 million increase in net income from the three months ended June 30, 2024 was primarily due to a $20.4 million increase in net interest income from higher average interest-earning assets resulting from the Merger, a $1.7 million increase in noninterest income and a $3.5 million decrease in the provision for credit losses, partially offset by a $5.8 million increase in noninterest expense. Pre-tax, pre-provision income for the three months ended June 30, 2025 was $19.4 million, an increase of $16.3 million, or 513.1% compared to pre-tax, pre-provision income of $3.2 million for the same 2024 period.

Current wording

Net income for the three months ended September 30, 2025 was $15.7 million, or $0.48 per diluted share, compared to a net loss of $16.5 million, or $0.59 per diluted share for the same 2024 period. The $32.1 million increase in net income from the three months ended September 30, 2024 was primarily due to a $5.6 million increase in net interest income from higher average interest-earning assets resulting from the Merger, a $1.5 million increase in noninterest income and a $23.0 million decrease in the provision for credit losses as the comparable 2024 period included a $21.3 million provision for credit losses on loans and unfunded commitments related to the Merger, and a $14.3 million decrease in noninterest expense as the comparable 2024 period included $14.6 million of merger related expenses. Pre-tax, pre-provision income for the three months ended September 30, 2025 was $21.8 million, an increase of $21.4 million, compared to pre-tax, pre-provision income of $436 thousand for the same 2024 period. Excluding CECL-related provision for credit losses on acquired loans and unfunded loan commitments, and merger related expenses, the Company would have reported net income (non-GAAP) of $9.1 million for the comparable 2024 period.

Previous wording

Net income for the six months ended June 30, 2025 was $31.0 million, or $0.95 per diluted share, compared to net income of $5.1 million, or $0.27 per diluted share in the prior year. The $25.8 million increase in net income from the prior year was primarily due to a $42.2 million increase in net interest income, a $7.0 million decrease in the provision for credit losses, partially offset by a $15.8 million increase in noninterest expense, and a $10.4 million increase in income taxes. Pre-tax, pre-provision income for the six months ended June 30, 2025 was $39.3 million, an increase of $29.2 million, or 289.6% compared to pre-tax, pre-provision income of $10.1 million for the six months ended June 30, 2024.

Current wording

Net income for the nine months ended September 30, 2025 was $46.6 million, or $1.42 per diluted share, compared to a net loss of $11.3 million, or $0.53 per diluted share in the prior year. The $58.0 million increase in net income from the prior year was primarily due to a $47.7 million increase in net interest income from higher average interest-earning assets resulting from the Merger, a $30.0 million decrease in the provision for credit losses as the comparable 2024 period included a $21.3 million provision for credit losses on loans and unfunded commitments related to the Merger, partially offset by a $1.5 million increase in noninterest expense, and a $22.6 million increase in income taxes. Pre-tax, pre-provision income for the nine months ended September 30, 2025 was $61.1 million, an increase of $50.6 million compared to pre-tax, pre-provision income of $10.5 million for the nine months ended September 30, 2024. Excluding CECL-related provision for credit losses on acquired loans and unfunded loan commitments, and merger related expenses, the Company would have reported net income (non-GAAP) of $15.2 million for the comparable 2024 period.

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 $5.6 million, $6.1 million and $386 thousand for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, 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 $5.2 million, $5.6 million and $4.7 million for the three months ended September 30, 2025, June 30, 2025, and September 30, 2024, respectively.

Previous wording

(3)Average noninterest-bearing deposits represent 36.21%, 37.37% and 34.05% of average total deposits for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, respectively.

Current wording

(3)Average noninterest-bearing deposits represent 34.89%, 36.21% and 33.61% of average total deposits for the three months ended September 30, 2025, June 30, 2025, and September 30, 2024, respectively.

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 $11.7 million and $990 thousand for the six months ended June 30, 2025 and 2024, 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 $16.9 million and $5.6 million for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

(3)Average noninterest-bearing deposits represent 36.80%, and 34.20% of average total deposits for the six months ended June 30, 2025 and 2024, respectively.

Current wording

(3)Average noninterest-bearing deposits represent 36.14%, and 33.94% of average total deposits for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

Net interest income for the second quarter of 2025 was $41.4 million, compared with $42.3 million in the prior quarter. The decrease in net interest income was primarily due to a $1.0 million decrease in total interest and dividend income, partially offset by a $201 thousand decrease in total interest expense in the second quarter of 2025, as compared to the prior quarter. During the second quarter of 2025, loan interest income decreased by $1.6 million, including a decrease of $496 thousand of accretion income from the net purchase accounting discounts on acquired loans, partially offset by increases of $226 thousand in total debt securities income and $341 thousand in interest and dividend income from other financial institutions. The decrease in interest income was mainly due to decreases in average total loan balances. Average total interest-earning assets decreased $78.2 million in the second quarter of 2025, the result of a $117.4 million decrease in average total loans and a $21.0 million decrease in average deposits in other financial institutions, partially offset by a $25.0 million increase in average total debt securities and a $35.2 million increase in average Fed funds sold/resale agreements. The decrease in interest expense for the second quarter of 2025 was primarily due to a $239 thousand decrease in interest expense on interest-bearing deposits, the result of a $26.4 million decrease in average interest-bearing deposits and a 4 basis point decrease in average interest-bearing deposit costs in the second quarter of 2025.

Current wording

Net interest income for the third quarter of 2025 was $42.5 million, compared with $41.4 million in the prior quarter. The increase in net interest income was primarily due to a $1.4 million increase in total interest and dividend income, partially offset by a $304 thousand increase in total interest expense in the third quarter of 2025, as compared to the prior quarter. During the third quarter of 2025, loan interest income decreased by $359 thousand, including a decrease of $713 thousand of accretion income from the net purchase accounting discounts on acquired loans, partially offset by increases of $389 thousand in total debt securities income and $1.4 million in interest and dividend income from other financial institutions. The increase in interest income was mainly due to increases in average deposits in other financial institutions of $157.0 million and average total debt securities of $27.0 million, partially offset by decreases in average total loan balances of $18.1 million and average Fed funds sold/resale agreements of $36.0 million. The increase in interest expense for the third quarter of 2025 was primarily due to a $621 thousand increase in interest expense on interest-bearing deposits, the result of a $130.1 million increase in average interest-bearing deposits, partially offset by a $317 thousand decrease in total borrowing costs mostly related to the redemption of $18.0 million of 5.50% subordinated notes in June 2025.

Previous wording

Net interest margin for the second quarter of 2025 was 4.61%, compared with 4.65% in the prior quarter. The decrease was primarily related to a 5 basis point decrease in the total interest-earning assets yield, coupled with a 1 basis point increase in the cost of funds. The yield on total average interest-earning assets in the second quarter of 2025 was 6.21%, compared with 6.26% in the prior quarter. The yield on average total loans in the second quarter of 2025 was 6.58%, a decrease of 3 basis points from 6.61% in the prior quarter. Accretion income from the net purchase accounting discounts on acquired loans was $5.2 million, increasing the yield on average total loans by 69 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 $555 thousand, the combination of which increased the net interest margin by 51 basis points in the second quarter of 2025. In the prior quarter, accretion income from the net purchase accounting discounts on acquired loans was $5.7 million, increasing the yield on average total loans by 74 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 $526 thousand, the combination of which increased the net interest margin by 57 basis points.

Current wording

Net interest margin for the third quarter of 2025 was 4.52%, compared with 4.61% in the prior quarter. The decrease was primarily related to a 13 basis point decrease in the total interest-earning assets yield, partially offset by a 4 basis point decrease in the cost of funds. The yield on total average interest-earning assets in the third quarter of 2025 was 6.08%, compared with 6.21% in the prior quarter. The yield on average total loans in the third quarter of 2025 was 6.50%, a decrease of 8 basis points from 6.58% in the prior quarter. Accretion income from the net purchase accounting discounts on acquired loans was $4.5 million, increasing the yield on average total loans by 59 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 $559 thousand, the combination of which increased the net interest margin by 41 basis points in the third quarter of 2025. In the prior quarter, accretion income from the net purchase accounting discounts on acquired loans was $5.2 million, increasing the yield on average total loans by 69 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 $555 thousand, the combination of which increased the net interest margin by 51 basis points.

Previous wording

Cost of funds for the second quarter of 2025 was 1.73%, a slight increase of 1 basis point from 1.72% in the prior quarter. The increase was primarily driven by an increase of 47 basis points in the cost of total borrowings, which was driven mostly by the decrease in average total borrowings of $2.9 million from the redemption of the $18 million subordinated notes in June 2025, coupled with higher borrowing expense related to those subordinated notes converting to a floating-rate during the second quarter of 2025 and up to redemption, partially offset by a 4 basis point decrease in the cost of average interest-bearing deposits. The amortization expense of $560 thousand from the purchase accounting discounts on acquired subordinated debt contributed 7 basis points to the cost on funds. Average noninterest-bearing demand deposits decreased $76.1 million to $1.18 billion and represented 36.2% of total average deposits for the second quarter of 2025, compared with $1.26 billion and 37.4%, respectively, in the prior quarter; average interest-bearing deposits decreased $26.4 million to $2.08 billion during the second quarter of 2025. The total cost of deposits in the second quarter of 2025 was maintained at 1.59%, the same as the prior quarter. The cost of total interest-bearing deposits decreased 4 basis points primarily due to the Company’s ongoing strategy to pay off high cost brokered deposits and listing money market deposits in the second quarter of 2025.

Current wording

Cost of funds for the third quarter of 2025 was 1.69%, a decrease of 4 basis points from 1.73% in the prior quarter. The decrease was primarily driven by a drop of 20 basis points in the cost of total borrowings, which was primarily due to the decrease in average total borrowings of $14.2 million from the redemption of the $18.0 million subordinated notes in June 2025, coupled with a 6 basis point decrease in the cost of average interest-bearing deposits. The amortization expense of $559 thousand from the purchase accounting discounts on acquired subordinated debt contributed 6 basis points to the cost of funds. Average noninterest-bearing demand deposits increased $3.5 million to $1.18 billion and represented 34.9% of total average deposits for the third quarter of 2025, compared with $1.18 billion and 36.2%, respectively, in the prior quarter; average interest-bearing deposits increased $130.1 million to $2.21 billion during the third quarter of 2025. The total cost of deposits in the third quarter of 2025 was maintained at 1.59%, the same as the prior quarter. The cost of total interest-bearing deposits decreased 6 basis points primarily due to the Company’s ongoing strategy to pay off high cost money market deposits, savings deposits and time deposits in the third quarter of 2025.

Previous wording

Net interest income for the three months ended June 30, 2025 was $41.4 million, compared with $21.0 million for the three months ended June 30, 2024. The increase in interest income primarily relates to increases in total average interest-earning assets due to the Merger during the third quarter of 2024. The

Current wording

Net interest income for the three months ended September 30, 2025 was $42.5 million, compared with $36.9 million for the three months ended September 30, 2024. The increase in interest income primarily relates to increases in total average interest-earning assets due to the Merger during the third quarter of 2024. The $5.6 million increase in net interest income was due to higher average balances, coupled with lower costs of interest-bearing liabilities, partially offset by higher average balances of interest-bearing liabilities.

Previous wording

Net interest margin for the three months ended June 30, 2025 was 4.61%, compared with 3.94% for the same 2024 period. The 67 basis point increase was primarily related to a 24 basis point increase in the total average interest-earning assets yield resulting from higher accretion income from the net purchase accounting discounts on acquired loans and a change in our average interest-earning asset mix, coupled with a 48 basis point decrease in the cost of funds. The yield on total average earning assets during the three months ended June 30, 2025 was 6.21%, compared with 5.97% for the same 2024 period. The yield on average loans during the three months ended June 30, 2025 was 6.58%, an increase of 37 basis points from 6.21% for the same 2024 period. Accretion income from the net purchase accounting discounts on acquired loans was $5.2 million, increasing the yield on average total loans by 69 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 $555 thousand, the combination of which increased the net interest margin by 51 basis points in the second quarter of 2025.

Current wording

Net interest margin for the three months ended September 30, 2025 was 4.52%, compared with 4.43% for the same 2024 period. The 9 basis point increase was primarily related to a 41 basis point decrease in the total average interest-earning assets yield resulting from higher accretion income from the net purchase accounting discounts on acquired loans and a change in our average interest-earning asset mix, coupled with a 50 basis point decrease in the cost of funds. The yield on total average earning assets during the three months ended September 30, 2025 was 6.08%, compared with 6.49% for the same 2024 period. The yield on average loans during the three months ended September 30, 2025 was 6.50%, a decrease of 29 basis points from 6.79% for the same 2024 period. Accretion income from the net purchase accounting discounts on acquired loans was $4.5 million, increasing the yield on average total loans by 59 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 $559 thousand, the combination of which increased the net interest margin by 41 basis points in the third quarter of 2025. Accretion income from the net purchase accounting discounts on acquired loans

Previous wording

During the three months ended June 30, 2025, total interest income increased $23.9 million, comprised of a $20.0 million increase in total loan interest income, of which $5.2 million was related to accretion income from the net purchase accounting discounts on acquired loans, a $520 thousand increase in total debt securities income, and a $3.4 million increase in interest and dividend income from other financial institutions and other interest-earning assets. The increase in interest income was primarily driven by the mix of interest-earning assets added by the Merger and the impact of the accretion and amortization of fair value loan marks. Average interest-earning assets increased $1.46 billion, resulting primarily from a $1.11 billion increase in average total loans, a $248.2 million increase in average deposits in other financial institutions, a $40.3 million increase in total average debt securities, a $14.6 million increase in average restricted stock investments and other bank stock, and a $46.5 million increase in average Fed funds sold/resale agreements.

Current wording

During the three months ended September 30, 2025, total interest income increased $3.1 million, comprised of a $1.2 million increase in total loan interest income, of which $4.5 million was related to accretion income from the net purchase accounting discounts on acquired loans, a $451 thousand increase in total debt securities income, and a $1.4 million increase in interest and dividend income from other financial institutions and other interest-earning assets. The increase in interest income was primarily driven by the mix of interest-earning assets added by the Merger and the impact of the accretion and amortization of fair value loan marks. Average interest-earning assets increased $417.4 million, resulting primarily from a $190.6 million increase in average total loans, a $291.0 million increase in average deposits in other financial institutions, a $42.3 million increase in total average debt securities, a $7.1 million increase in average restricted stock investments and other bank stock, offset by a $113.6 million decrease in average Fed funds sold/resale agreements.

Previous wording

During the three months ended June 30, 2025, total interest expense increased by $3.5 million to $14.4 million, comprised primarily of a $2.8 million increase in interest expense on interest-bearing liabilities primarily driven by the increase in average interest-bearing liabilities resulting from the Merger, partially offset by a decrease in the cost of interest-bearing deposits resulting from our deposit repricing strategy and the ongoing reduction of high cost brokered deposits.

Current wording

During the three months ended September 30, 2025, total interest expense decreased by $2.5 million to $14.7 million, comprised primarily of a $2.6 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 liabilities resulting from the Merger.

Previous wording

Total cost of funds for the three months ended June 30, 2025 was 1.73%, a decrease of 48 basis points from 2.21% for the same 2024 period. The decrease was primarily driven by a 71 basis point decrease in the cost of interest-bearing deposits, coupled with an increase in average noninterest-bearing deposits, partially offset by an increase of 269 basis points in the cost of total borrowings. Average noninterest-bearing demand deposits increased $521.8 million to $1.18 billion and represented 36.2% of total average deposits for the three months ended June 30, 2025, compared with $658.0 million and 34.1%, respectively, for the same 2024 period; average interest-bearing deposits increased $804.1 million to $2.08 billion during the three months ended June 30, 2025. The total cost of deposits for the three months ended June 30, 2025 was 1.59%, down 53 basis points from 2.12% for the same 2024 period.

Current wording

Total cost of funds for the three months ended September 30, 2025 was 1.69%, a decrease of 50 basis points from 2.19% for the same 2024 period. The decrease was primarily driven by a 71 basis point decrease in the average cost of interest-bearing deposits, coupled with an increase in average noninterest-bearing deposits, partially offset by an increase of 62 basis points in the cost of total borrowings. Average noninterest-bearing demand deposits increased $151.5 million to $1.18 billion and represented 34.9% of total average deposits for the three months ended September 30, 2025, compared with $1.03 billion and 33.6%, respectively, for the same 2024 period; average interest-bearing deposits increased $170.5 million to $2.21 billion during the three months ended September 30, 2025. The total cost of deposits for the three months ended September 30, 2025 was 1.59%, down 50 basis points from 2.09% for the same 2024 period.

Previous wording

Average total borrowings increased $21.9 million to $67.2 million for the three months ended June 30, 2025 resulting from an increase of $49.3 million in average subordinated debt from the $50.8 million in fair value of subordinated debt acquired in the Merger, partially offset by a $27.4 million decrease in average FHLB advances. Additionally, average total borrowings decreased in the second quarter of 2025, as a result of the redemption of the $18 million subordinated notes in June 2025. The average cost of total borrowings was 8.53% for the three months ended June 30, 2025, a 269 basis point increase from 5.84% for the same 2024 period. The increase was primarily attributable to borrowing costs associated with the acquired subordinated debt, including net amortization of purchase accounting discounts, coupled with a higher borrowing expense related to those subordinated notes converting to a floating-rate and up to redemption during the second quarter of 2025.

Current wording

Average total borrowings increased $95 thousand to $53.0 million for the three months ended September 30, 2025 resulting from an increase of $706 thousand in average subordinated debt from the $50.8 million in fair value of subordinated debt acquired in the Merger, partially offset by a $611 thousand decrease in average FHLB advances and a $17.9 million decrease as a result of the redemption of the $18 million subordinated notes in June 2025 and $20 million subordinated notes in September 2025. The average cost of total borrowings was 8.33% for the three months ended September 30, 2025, a 62 basis point increase from 7.71% for the same 2024 period. The increase was primarily attributable to borrowing costs associated with the acquired subordinated debt, including net amortization of purchase accounting discounts.

Previous wording

Net interest income for the six months ended June 30, 2025 was $83.7 million, compared to $41.5 million for the six months ended June 30, 2024. The increase was primarily due to a $49.5 million increase in total interest income, offset by a $7.3 million increase in total interest expense. The increase in interest income and interest expense primarily relates to increases in total average interest-earning assets and total average interest-bearing liabilities from the Merger during the third quarter of 2024. During the six months ended June 30, 2025, total loan interest income increased $42.1 million, of which $10.8 million was related to accretion income from the net purchase accounting discounts on acquired loans, total debt securities income increased $830 thousand, and interest and dividend income from other financial institutions and other interest-earning assets increased $6.5 million. The increase in interest income was primarily driven by the mix of interest-earning assets added by the Merger and the impact of the accretion and amortization of fair value marks. The increase in interest income was primarily due to higher average balances, due in part to the Merger, and a 36 basis point increase in yield on the total average interest-earning assets for the six months ended June 30, 2025 compared to the same 2024 period. Total average interest-earning assets increased $1.48 billion, resulting from a $1.15 billion increase in average total loans, a $26.4 million increase in total average debt securities, a $255.3 million increase in average deposits in other financial institutions, and a $33.7 million increase in average Fed funds sold/resale agreements.

Current wording

Net interest income for the nine months ended September 30, 2025 was $126.2 million, compared to $78.4 million for the nine months ended September 30, 2024. The increase was primarily due to a $52.6 million increase in total interest income, offset by a $4.8 million increase in total interest expense. The increase in interest income and interest expense primarily relates to increases in total average interest-earning assets and total average interest-bearing liabilities from the Merger during the third quarter of 2024. During the nine months ended September 30, 2025, total loan interest income increased $43.3 million, of which $15.3 million was related to accretion income from the net purchase accounting discounts on acquired loans, total debt securities income increased $1.3 million, and interest and dividend income from other financial institutions and other interest-earning assets increased $8.0 million. The increase in interest income was primarily driven by the mix of interest-earning assets added by the Merger and the impact of the accretion and amortization of fair value marks. The increase in interest income was primarily due to higher average balances, due in part to the Merger, and a 3 basis point increase in yield on the total average interest-earning assets for the nine months ended September 30, 2025 compared to the same 2024 period. Total average interest-earning assets increased $1.13 billion, resulting from a $830.9 million increase in average total loans, a $31.8 million increase in total average debt securities, a $267.5 million increase in average deposits in other financial institutions, partially offset by a $15.8 million decrease in average Fed funds sold/resale agreements.

Previous wording

During the six months ended June 30, 2025, total interest expense increased by $7.3 million to $28.9 million as compared to the same period in 2024, comprised primarily of a $6.1 million increase in interest on average interest-bearing liabilities driven by the increase in average interest-bearing liabilities from the Merger, partially offset by the decrease in the cost of interest-bearing deposits between periods.

Current wording

During the nine months ended September 30, 2025, total interest expense increased by $4.8 million to $43.6 million as compared to the same period in 2024, comprised primarily of a $3.5 million increase in interest on average interest-bearing deposits driven by the increase in average interest-bearing deposits from the Merger, partially offset by the decrease in the cost of interest-bearing deposits between periods.

Previous wording

Net interest margin for the six months ended June 30, 2025 was 4.63%, compared with 3.87% for the six months ended June 30, 2024. The increase was primarily related to a 46 basis point decrease in the cost of funds and a 36 basis point increase in the total interest-earning assets yield resulting from higher market interest rates and a change in our interest-earning asset mix. The yield on total earning assets during the six months ended June 30, 2025 was 6.24%, compared with 5.88% for the six months ended June 30, 2024. The yield on average total loans during the six months ended June 30, 2025 was 6.59%, a 48 basis point increase from 6.11% for the six months ended June 30, 2024. The cost on total interest-bearing liabilities during the six months ended June 30, 2025 was 2.70%, a 58 basis point decrease from 3.28% for the same 2024 period. 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 wording

Net interest margin for the nine months ended September 30, 2025 was 4.59%, compared with 4.12% for the nine months ended September 30, 2024. The increase was primarily related to a 48 basis point decrease in the cost of funds and a 3 basis point increase in the total interest-earning assets yield resulting from higher market interest rates and a change in our interest-earning asset mix. The yield on total earning assets during the nine months ended September 30, 2025 was 6.18%, compared with 6.15% for the nine months ended September 30, 2024. The yield on average total loans during the nine months ended September 30, 2025 was 6.56%, a 16 basis point increase from 6.40% for the nine months ended September 30, 2024. The cost on total interest-bearing liabilities during the nine months ended September 30, 2025 was 2.66%, a 61 basis point decrease from 3.27% for the same 2024 period. Accretion income from the net purchase accounting discounts on acquired loans was $15.3 million and the amortization expense impact on interest expense was $1.6 million, the combination of which increased the net interest margin by 50 basis points for the nine months ended September 30, 2025. Accretion income from the net purchase accounting discounts on acquired loans increased the yield on average total loans by 68 basis points for the nine months ended September 30, 2025. Accretion income from the net purchase accounting discounts on acquired loans was $4.1 million and the amortization expense impact on interest expense was $278 thousand, the combination of which increased the net interest margin by 20 basis points for the nine months ended September 30, 2024. Accretion income from the net purchase accounting discounts on acquired loans increased the yield on average total loans by 25 basis points for the nine months ended September 30, 2024.

Previous wording

Total cost of funds for the six months ended June 30, 2025 was 1.73%, a decrease of 46 basis points from 2.19% for the six months ended June 30, 2024. The decrease was primarily driven by a 65 basis point decrease in the cost of interest-bearing deposits, coupled with an increase in average noninterest-bearing deposits, partially offset by increases in average total borrowings and cost of total borrowings. Average noninterest-bearing demand deposits increased $558.0 million to $1.22 billion and represented 36.8% of total average deposits for the six months ended June 30, 2025, compared with $659.6 million and 34.2%, respectively, for the same 2024 period; average interest-bearing deposits increased $822.4 million to $2.09 billion during the six months ended June 30, 2025. The total cost of deposits for the six months ended June 30, 2025 was 1.59%, down 49 basis points from 2.08% for the same 2024 period.

Current wording

Total cost of funds for the nine months ended September 30, 2025 was 1.71%, a decrease of 48 basis points from 2.19% for the nine months ended September 30, 2024. The decrease was primarily driven by a 67 basis point decrease in the cost of average interest-bearing deposits, coupled with an increase in average noninterest-bearing deposits, partially offset by increases in average total borrowings and average cost of total borrowings. Average noninterest-bearing demand deposits increased $421.5 million to $1.21 billion and represented 36.1% of total average deposits for the nine months ended September 30, 2025, compared with $784.6 million and 33.9%, respectively, for the same 2024 period; average interest-bearing deposits increased $603.6 million to $2.13 billion during the nine months ended September 30, 2025. The total cost of deposits for the nine months ended September 30, 2025 was 1.59%, down 50 basis points from 2.09% for the same 2024 period.

Previous wording

Average total borrowings increased $11.7 million to $68.6 million for the six months ended June 30, 2025, resulting primarily from a $50.7 million increase in subordinated debt from the $50.8 million in fair value of subordinated debt acquired in the Merger, partially offset by a $39.0 million decrease in average FHLB advances. Additionally, average total borrowings decreased in the six months ended June 30, 2025 as a result of the redemption of the $18 million subordinated notes in June 2025. The average cost of total borrowings was 8.29% for the six months ended June 30, 2025, a 250 basis point increase from 5.79% for the same 2024 period.

Current wording

FHLB advances. Additionally, average total borrowings decreased in the nine months ended September 30, 2025 as a result of the redemption of the $18 million subordinated notes in June 2025 and $20 million subordinated notes in September 2025. The average cost of total borrowings was 8.30% for the nine months ended September 30, 2025, a 190 basis point increase from 6.40% for the same 2024 period. The increase was primarily attributable to borrowing costs associated with the acquired subordinated debt, including net amortization of purchase accounting discounts, coupled with a higher borrowing expense related to those subordinated notes converting to a floating-rate and up to redemption during the second quarter of 2025.

Previous wording

The Company recorded a reversal of credit losses of $634 thousand for the second quarter of 2025, compared to $3.8 million in the prior quarter. Total net charge-offs were $4.1 million in the second quarter of 2025, which consisted of $4.2 million of gross charge-offs, offset by $181 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 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. Total unfunded loan commitments increased $9.1 million to $901.2 million at June 30, 2025, compared to $892.1 million in unfunded loan commitments at March 31, 2025.

Current wording

We recorded a reversal of provision for credit losses of $15 thousand for the third quarter of 2025, compared to $634 thousand in the prior quarter. Total net charge-offs were $39 thousand in the third quarter of 2025, which consisted of $323 thousand of gross charge-offs, offset by $284 thousand of gross recoveries. The reversal of provision for credit losses in the third quarter of 2025 included a $236 thousand reversal of provision for credit losses for unfunded loan commitments related to the decrease in unfunded loan commitments during the third quarter of 2025, coupled with a decrease in average funding rates used to estimate the allowance for credit losses on unfunded commitments. Total unfunded loan commitments decreased $22.2 million to $879.0 million at September 30, 2025, compared to $901.2 million in unfunded loan commitments at June 30, 2025.

Previous wording

The reversal of credit losses for loans held for investment in the second quarter of 2025 was $663 thousand, a decrease of $2.5 million from a reversal of credit losses of $3.2 million in the prior quarter. The decrease 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, 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 Company’s management continues to monitor macroeconomic variables related to changes in interest rates and the concerns of an economic downturn, and believes it has appropriately provisioned for the current environment.

Current wording

The provision for credit losses for loans held for investment in the third quarter of 2025 was $221 thousand, an increase of $884 thousand from a reversal of provision for credit losses of $663 thousand in the prior quarter. The increase was driven primarily by changes in the reasonable and supportable forecast, primarily related to the economic outlook for California, and an increase in the allowance for a collateral-dependent loan, partially offset by changes in the composition of the loans held for investment portfolio, and changes in qualitative factors. The Company’s management continues to monitor macroeconomic variables related to changes in interest rates and the concerns of an economic downturn, and believes it has appropriately provisioned for the current environment.

Previous wording

We recorded a reversal of credit losses of $634 thousand for the three months ended June 30, 2025, compared to a provision for credit losses of $2.9 million for the same 2024 period. The provision for credit losses for the three months ended June 30, 2024 included a $3.0 million provision for credit losses on loans held for investment, partially offset by a $97 thousand reversal of credit provision for unfunded loan commitments primarily due to the impact of lower unfunded loan commitments.

Current wording

We recorded a reversal of provision for credit losses of $15 thousand for the three months ended September 30, 2025, compared to a provision for credit losses of $23.0 million for the same 2024 period. The provision for credit losses for the three months ended September 30, 2024 included a $19.7 million provision for credit losses on loans held for investment and a $3.3 million provision for credit losses for unfunded loan commitments, primarily due to the impact of the Merger.

Previous wording

We recorded a reversal of credit losses of $4.4 million for the six months ended June 30, 2025, compared to a provision for credit losses of $2.6 million for the same 2024 period. Total net charge-offs were $5.6 million in the six months ended June 30, 2025, which consisted of $7.4 million of gross charge-offs, offset by $1.8 million 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 reversal of credit losses in the six months ended June 30, 2025 included a $589 thousand reversal of credit losses for unfunded loan commitments primarily related 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. Total unfunded loan commitments was $371.5 million at June 30, 2024.

Current wording

We recorded a reversal of provision for credit losses of $4.4 million for the nine months ended September 30, 2025, compared to a provision for credit losses of $25.5 million for the same 2024 period. Total net charge-offs were $5.6 million in the nine months ended September 30, 2025, which consisted of $7.7 million of gross charge-offs, partially offset by $2.1 million 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 reversal of provision for credit losses in the nine months ended September 30, 2025 included a $825 thousand reversal of provision for credit losses for unfunded loan commitments primarily related to the decreases in unfunded loan commitments of $46.3 million from $925.3 million at December 31, 2024 and loss rate used to estimate the allowance for credit losses on unfunded commitments during the nine months ended September 30, 2025.

Previous wording

The reversal of credit losses for loans held for investment in the six months ended June 30, 2025 was $3.8 million, compared with a provision for credit losses of $2.7 million in the same 2024 period. The reversal of credit losses for loans held for investment 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, 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.

Current wording

The reversal of provision for credit losses for loans held for investment in the nine months ended September 30, 2025 was $3.6 million, compared with a provision for credit losses of $22.4 million in the same 2024 period. The reversal of provision for credit losses for loans held for investment 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, 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.

Previous wording

Total noninterest income during the six months ended June 30, 2025 was $5.4 million, an increase of $2.8 million compared to total noninterest income of $2.6 million for the same period in the prior year. The increase was due primarily to increases in service charges and fees on deposit accounts, bank owned life insurance income and servicing and related income on loans from the Merger. Additionally, other charges and fees increased $774 thousand due primarily to higher income from equity investments during the six months ended June 30, 2025.

Current wording

Total noninterest income during the nine months ended September 30, 2025 was $8.1 million, an increase of $4.3 million compared to total noninterest income of $3.8 million for the same period in the prior year. The increases in service charges and fees on deposit accounts, bank owned life insurance income and servicing and related income on loans were primarily attributed to a higher volume of transaction-based accounts and account balances as a result of organic growth and the Merger. Additionally, the income from bank-owned life insurance included the aforementioned $400 thousand death benefit recorded during the nine months ended September 30, 2025. Other charges and fees increased $1.8 million due primarily to higher equity investments income and lower valuation allowance on OREO during the nine months ended September 30, 2025.

Previous wording

Gain on sale of loans was $577 thousand during the six months ended June 30, 2025, compared to $415 thousand for the same 2024 period. The $162 thousand increase was primarily due to higher SBA 7(a) loan sales during the six months ended June 30, 2025. During the six months ended June 30, 2025, we sold eight SBA loans with a net carrying value of $9.0 million, resulting in a gain of $577 thousand, at an average premium of 6.44%. In the same 2024 period, we sold six SBA 7(a) loans with a net carrying value of $6.3 million, resulting in a gain on sale of $415 thousand at an average premium of 6.56%, and two non-SBA loans with a net carrying value of $455 thousand, resulting in no gain or loss.

Current wording

Gain on sale of loans was $577 thousand during the nine months ended September 30, 2025, compared to $423 thousand for the same 2024 period. The $154 thousand increase was primarily due to higher SBA 7(a) loan sales during the nine months ended September 30, 2025. During the nine months ended September 30, 2025, we sold eight SBA loans with a net carrying value of $9.0 million, resulting in a gain of $577 thousand, at an average premium of 6.44%. In the same 2024 period, we sold six SBA 7(a) loans with a net carrying value of $6.3 million, resulting in a gain on sale of $415 thousand at an average premium of 6.56%, and two non-SBA loans with a net carrying value of $455 thousand, resulting in no gain or loss.