California BanCorp \ CA

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 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”).

Current wording

California BanCorp is a California corporation incorporated on October 2, 2019, and headquartered in San Diego, 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

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, including 11 commercial banking 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.

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, including 12 commercial banking offices, serving California. On October 1, 2026, we opened a new loan production office in downtown San Francisco. 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

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 wording

At its September 15, 2026 meeting, the Federal Open Market Committee (“FOMC”) increased the federal funds target range to 3.75% to 4.00%, reaffirming its objective of maintaining ample reserves in the banking system. The FOMC noted that economic activity is expanding at a solid pace and while uncertainty remains elevated due to geopolitical developments, domestic spending has been resilient, productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little, while inflation remained above the Federal Reserve’s 2% target.

Previous wording

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 wording

The Federal Reserve’s most recent guidance reflects a somewhat more cautious inflation outlook and a higher expected path for interest rates than earlier in the year. The Federal Reserve’s September 2026 Summary of Economic Projections showed median 2026 real GDP growth of 2.3%, unemployment of 4.1%, Personal Consumption Expenditures (“PCE”) inflation of 3.7%, and core PCE inflation of 3.4%. The median projected federal funds rate for year-end 2026 increased to 4.1%, up from 3.8% in June 2026 and 3.4% in March 2026, indicating that policymakers remain focused on persistent inflation pressures and expect monetary policy to remain restrictive for longer than previously anticipated.

Previous wording

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 wording

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 artificial intelligence infrastructure, technology equipment and software, while labor market conditions remain broadly balanced. The report noted that inflation remains above the Federal Reserve’s 2% target, driven primarily by elevated energy prices associated with the ongoing Middle East conflict and higher tariff-related costs. While economic growth has remained resilient, policymakers continue to view inflation risks as skewed to the upside, particularly if energy prices remain elevated for an extended period, which would push 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 report shows a 0.3% increase in PCE price index in August 2026 and 3.4% over 12 months, while core PCE inflation was 3.0% year over year, with inflation risks remaining mainly to the upside.

Previous wording

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 wording

Overall, the latest economic information supports continued caution in the outlook. Economic growth has remained resilient, supported in part by strong AI-related business investment, while California continues to face elevated energy costs and a relatively weak labor market. Inflation remains above the Federal Reserve’s 2% target, with uncertainty driven by elevated energy prices, tariffs, geopolitical developments, and other supply-related pressures. These conditions have increased uncertainty regarding the path of inflation and interest rates and could weigh on economic activity. 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.

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.

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 digital asset businesses, venture capital-backed companies, leveraged lending, subprime consumer lending, or other higher-risk or highly volatile industries, 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 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.

Current wording

Per the regulatory definition of commercial real estate, at September 30, 2026, our concentration of such loans represented 505% of our Bank’s total risk-based capital. In addition, at September 30, 2026, total loans secured by commercial real estate under construction and land development represented 32% 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, 2026 were $5.3 million and there were $118 thousand net charge-offs during the nine months ended September 30, 2026. At September 30, 2026, there was $8.6 million of OREO.

Previous wording

Given the nature of our commercial banking business, approximately 50% of our total deposits exceeded the FDIC deposit insurance limits at June 30, 2026.

Current wording

Given the nature of our commercial banking business, approximately 51% of our total deposits exceeded the FDIC deposit insurance limits at September 30, 2026.

Previous 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

Current wording

We strategically manage an investment portfolio focused on high-quality, resilient securities. At September 30, 2026, the amortized cost of our held-to-maturity debt securities was $52.7 million, or approximately 1.3% of total assets. The fair value of our available-for-sale debt securities was $318.9 million, or approximately 7.8% of total assets. The 10-Year Treasury yield was approximately 5.3% at September 30, 2026, compared to 4.2% at December 31, 2025. The increase in the 10-Year Treasury yield in 2026 resulted in higher net unrealized losses on our debt securities at September 30, 2026. At September 30, 2026, our accumulated other comprehensive loss, net of taxes, increased to $17.1 million, compared to $1.6 million at December 31, 2025. The increase also reflected $128.5 million of available-for-sale debt securities purchased during 2026, which had associated accumulated other comprehensive losses, net of tax, of $5.9 million at September 30, 2026. 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 $22.0 million at September 30, 2026. The results of our stress testing on our debt securities portfolio at September 30, 2026, illustrated that our losses, net of taxes on both held-to-maturity and available-for-sale debt securities would increase to $68.0 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. There have been no significant changes to our accounting policies since December 31, 2025. 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 2025 Annual Report on Form 10-K.

Current 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. Our 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 II – Item 8. Financial Statements and Supplementary Data included in our 2025 Annual Report on Form 10-K. There have been no significant changes to these policies during the nine months ended September 30, 2026, except for the addition of a policy for transferable tax credits, as described in Note 1 of the Notes to Consolidated Financial Statements included in Part I – Item 1, Financial Statements of this Form 10-Q.

Previous wording

(3) Average tangible common equity is computed by subtracting average goodwill and average core intangible deposits (“net average intangible assets”), from average shareholders’ equity.

Current wording

(3) Average tangible common equity is computed by subtracting average goodwill and average core intangible assets (“net average intangible assets”), from average shareholders’ equity.

Previous wording

(5) Tangible common equity and tangible assets are computed by subtracting goodwill and core deposit intangibles, net, from total shareholders’ equity and total assets, respectively.

Current wording

(5) Tangible common equity and tangible assets are computed by subtracting goodwill and core intangible assets, net, from total shareholders’ equity and total assets, respectively.

Previous 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.

Current wording

Net income for the third quarter of 2026 was $14.0 million, or $0.43 per diluted share, compared with $14.3 million, or $0.44 per diluted share in the second quarter of 2026. Pre-tax, pre-provision income for the third quarter was $21.6 million, an increase of $1.1 million from the prior quarter. The $284 thousand decrease in net income and $0.01 decrease in diluted earnings per share were largely driven by a $2.5 million increase in provision for credit losses and higher noninterest expense of $57 thousand, partially offset by a $790 thousand increase in net interest income and a $351 thousand increase in noninterest income, and a $1.1 million decrease in income taxes.

Previous 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.

Current wording

Net income for the three months ended September 30, 2026 was $14.0 million, or $0.43 per diluted share, compared with $15.7 million, or $0.48 per diluted share for the same 2025 period. Pre-tax, pre-provision income for the third quarter of 2026 was $21.6 million, a decrease of $158 thousand from the same 2025 period. The $1.7 million decrease in net income and $0.05 decrease in diluted earnings per share were primarily driven by a $3.2 million increase in the provision for credit losses, $1.0 million increase in noninterest expense and $766 thousand decrease in the noninterest income, partially offset by a $1.6 million increase in the net interest income and a $1.7 million decrease in income taxes.

Previous wording

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 wording

Net income for the nine months ended September 30, 2026 was $42.1 million, or $1.30 per diluted share, compared to $46.6 million, or $1.42 per diluted share for the same 2025 period. Pre-tax, pre-provision income for the nine months ended September 30, 2026 was $60.9 million, a decrease of $231 thousand compared to pre-tax, pre-provision income for the nine months ended September 30, 2025. The $4.5 million decrease in net income and $0.12 decrease in diluted earnings per share from the same 2025 period were primarily due to an $8.0 million increase in the provision for credit losses, a $2.5 million decrease in noninterest income and a $1.1 million increase in noninterest expense, partially offset by a $3.4 million increase in net interest income and a $3.7 million decrease in income taxes.

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, $3.9 million and $5.6 million for the three months ended June 30, 2026, March 31, 2026, and June 30, 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 $5.2 million for the three months ended September 30, 2026, June 30, 2026, and September 30, 2025, respectively.

Previous 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.

Current wording

(3)Average noninterest-bearing deposits represent 36.00%, 36.70% and 34.89% of average total deposits for the three months ended September 30, 2026, June 30, 2026, and September 30, 2025, 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 $7.9 million and $11.7 million for the six months ended June 30, 2026 and 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 $11.8 million and $16.9 million for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

(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 wording

(3)Average noninterest-bearing deposits represent 35.88%, and 36.14% of average total deposits for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

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 wording

Net interest income for the third quarter of 2026 was $44.1 million, compared with $43.4 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 $581 thousand increase in total interest expense in the third 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.

Previous 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.

Current wording

During the third quarter of 2026, total interest income increased by $1.4 million. The increase was primarily driven by a $1.2 million increase in total loan interest income, which included a decrease of $18 thousand in accretion from the net purchase accounting discounts on acquired loans and $366 thousand reversals of interest income on loans placed on nonaccrual. In addition, total debt securities income increased $113 thousand and interest income from deposits in other financial institutions increased $497 thousand. These increases were partially offset by a decrease of $353 thousand in dividend income from restricted stock investments and other bank stock and a decrease of $123 thousand in interest income from Fed funds sold/resale agreements. The increase in interest income was mainly due to the growth in average interest-earning assets, partially offset by a decline of 9 basis points in the yield on average total interest-earning assets, as a result of changes in asset mix, and reversals of interest associated with nonaccrual loans. Average interest-earning assets were positively impacted by increases in average total loans of $68.1 million, average total debt securities of $1.6 million and average deposits in other financial institutions of $51.0 million, partially offset by a decrease in average Fed funds sold/resale agreements of $12.2 million. The increase in interest expense for the third quarter of 2026 was primarily due to a $682 thousand increase in interest expense on average total interest-bearing deposits, the result of higher average total interest-bearing deposits of $95.5 million, partially offset by a $101 thousand decrease in borrowing expense resulting from the redemption of the $35 million subordinated debt on September 1, 2026.

Previous 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.

Current wording

Net interest margin for the third quarter of 2026 was 4.61%, compared with 4.71% in the prior quarter. The decrease in the net interest margin of 10 basis points was primarily driven by a decline of 9 basis points in the total interest-earning assets yield, coupled with an increase of 1 basis point in the cost of funds. The yield on total average interest-earning assets in the third quarter of 2026 was 5.88%, compared with 5.97% in the prior quarter. The yield on average total loans in the third quarter of 2026 was 6.29%, a decrease of 5 basis points from 6.34% in the prior quarter. The yield on average total loans in the third quarter of 2026 included the impact of the nonaccrual interest reversals noted above, which decreased the overall loan yield by 5 basis points. This compares to an increase of 7 basis points in overall total loan yield in the prior quarter from cash interest collection on the payoff of two nonaccrual loans, net of interest reversals on loans placed on nonaccrual. Accretion income from the net purchase accounting discounts on acquired loans was $3.3 million, increasing the yield on average total loans by 42 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 31 basis points in the third quarter of 2026. In the prior quarter, 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.

Previous 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

Current wording

Cost of funds for the third quarter of 2026 was 1.39%, an increase of 1 basis point from 1.38% in the prior quarter. The increase was a result of an increase of 1 basis point in the cost of average total interest-bearing deposits, driven primarily by changes in the Company’s deposit mix and increased competition for deposits, driving market deposit rates upward in the third quarter of 2026. The amortization expense of $389 thousand from the purchase accounting discounts on acquired subordinated debt and acquired time deposits premium contributed 4 basis points to the cost of funds. Average noninterest-bearing demand deposits increased $17.4 million to $1.24 billion and represented 36.0% of total average deposits for the third quarter of 2026, compared with $1.22 billion and 36.7%, respectively, in the prior quarter; average interest-bearing deposits increased $95.5 million to $2.21 billion during the third quarter of 2026. The total cost of deposits in the third quarter of 2026 was 1.33%, compared with 1.31% in the prior quarter.

Previous wording

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 wording

Net interest income for the three months ended September 30, 2026 was $44.1 million, compared with $42.5 million for the three months ended September 30, 2025. The increase in net interest income for the three months ended September 30, 2026 was primarily due to a $1.5 million increase in interest on debt securities, $486 thousand increase in total loan interest income and $2.5 million decrease in total interest expense, partially offset by a $2.9 million decrease in interest and dividend income from other financial institutions.

Previous wording

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 wording

Comparing to the same 2025 period, total interest income decreased by $885 thousand. The decrease was primarily driven by a $2.9 million decrease in interest and dividend income from other financial institutions, partially offset by a $486 thousand increase in loan interest income, which included a decrease of $1.1 million in accretion from the net purchase accounting discounts on acquired loans, and a $1.5 million increase in interest income on debt securities. The decrease in interest income was mainly due to a 20 basis point decrease in the yield on average total interest-earning assets, coupled with decreases in the average deposits in other financial institutions of $170.7 million and average Fed funds sold/resale agreements of $11.1 million, partially offset by increases in average total debt securities of $115.7 million and average total loans of $131.0 million. The decrease in interest expense for the three months ended September 30, 2026 was primarily due to a $2.0 million decrease in interest expense on total interest-bearing deposits, coupled with a $518 thousand decrease in interest expense on total borrowings.

Previous 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.

Current wording

Net interest margin for the three months ended September 30, 2026 was 4.61%, compared with 4.52% for the same 2025 period. The expansion of the net interest margin by 9 basis points was primarily driven by a 30 basis point decrease in the cost of funds, partially offset by the 20 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 in 2025 through mid-September 2026 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 for the three months ended September 30, 2026. In addition, the redemptions of subordinated debt in June 2025, September 2025 and September 2026, resulted in lower interest expense on total borrowings for the three months ended September 30, 2026 compared to the same 2025 period.

Previous 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.

Current wording

The yield on total average earning assets during the three months ended September 30, 2026 was 5.88%, compared with 6.08% for the same 2025 period. The yield on average loans decreased 21 basis points to 6.29% from 6.50% year over year. The yield on total debt securities increased to 4.42% from 4.09% 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 42 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 31 basis points in the third quarter of 2026. For the three months ended September 30, 2025, accretion income from the net purchase accounting discounts on acquired loans was $4.5 million and the amortization expense impact on interest expense was $559 thousand, the combination of which increased the net interest margin by 41 basis points.

Previous 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.

Current wording

During the three months ended September 30, 2026, total interest expense decreased by $2.5 million to $12.2 million, comprised primarily of a $2.0 million decrease in interest expense on average 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

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 wording

Total cost of funds for the three months ended September 30, 2026 was 1.39%, a decrease of 30 basis points from 1.69% for the same 2025 period. The decrease was primarily driven by a 36 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 171 basis points in the cost of total borrowings. Average noninterest-bearing demand deposits increased $58.1 million to $1.24 billion and represented 36.0% of total average deposits for the three months ended September 30, 2026, compared with $1.18 billion and 34.9%, respectively, for the same 2025 period; average interest-bearing deposits decreased $1.5 million to $2.21 billion during the three months ended September 30, 2026. The total cost of deposits for the three months ended September 30, 2026 was 1.33%, down 26 basis points from 1.59% for the same 2025 period.

Previous 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.

Current wording

Average total borrowings decreased $29.5 million to $23.5 million for the three months ended September 30, 2026 resulting from a decrease of $29.5 million in average subordinated debt from the redemption of $18 million and $20 million subordinated debt in the second quarter and third quarter of 2025, and $35 million subordinated debt in the third quarter of 2026. The average cost of total borrowings was 10.04% for the three months ended September 30, 2026, a 171 basis point increase from 8.33% for the same 2025 period. The increase was primarily attributable to the amortization of the remaining fair value adjustment associated with the redemption of the subordinated debt on September 1, 2026.

Previous wording

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 wording

During the nine months ended September 30, 2026, total interest income decreased by $4.8 million. The decrease was primarily driven by a $5.7 million decrease in loan interest income, which included a $5.4 million decrease in accretion income from the net purchase accounting discounts on acquired loans, coupled with a $3.6 million decrease in interest and dividends from other financial institutions. These decreases were partially offset by a $4.5 million increase in interest income on debt securities resulting from higher average taxable debt securities balance of $125.6 million and yield of 19 basis points. In addition, interest income for the nine months ended September 30, 2026 was negatively impacted by lower market interest rates due to interest rate cuts in late 2025. There was a 32 basis point decrease in yield on the total average interest-earning assets, partially offset by higher total average interest-earning assets balances for the nine months ended September 30, 2026 compared to the same 2025 period. Total average interest-earning assets increased $95.3 million, which included a $124.5 million increase in total average debt securities and a $27.3 million increase in average total loans, partially offset by a $42.7 million decrease in average deposits in other financial institutions and a $13.9 million decrease in average Fed funds sold/resale agreements.

Previous wording

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 wording

During the nine months ended September 30, 2026, total interest expense decreased by $8.2 million to $35.4 million as compared to the same period in 2025, primarily due to the 45 basis point decrease in the cost of interest-bearing deposits resulting from changes in market interest rates and lower average borrowings of $32.6 million from the redemption of $35.0 million subordinated debt in September 2026 and the redemption of subordinated debt totaling $38.0 million in 2025, partially offset by higher average interest-bearing deposits of $56.4 million between periods.

Previous wording

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 wording

The cost of total interest-bearing liabilities during the nine months ended September 30, 2026 was 2.14%, a 52 basis point decrease from 2.66% for the same 2025 period. Accretion income from the net purchase accounting discounts on acquired loans was $9.9 million and the net amortization expense from the purchase accounting discounts on acquired subordinated debt and acquired time deposits premium impact on interest expense was $1.2 million, the combination of which increased the net interest margin by 31 basis points for the nine months ended September 30, 2026. Accretion income from the net purchase accounting discounts on acquired loans increased the yield on average total loans by 43 basis points for the nine months ended September 30, 2026. Accretion income from the net purchase accounting discounts on acquired loans was $15.3 million and the net amortization expense from the purchase accounting discounts on acquired subordinated debt and acquired time deposits premium 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.

Previous 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.

Current wording

Total cost of funds for the nine months ended September 30, 2026 was 1.38%, a decrease of 33 basis points from 1.71% for the nine months ended September 30, 2025. The decrease was primarily driven by a 45 basis point decrease in the cost of average total interest-bearing deposits, partially offset by an increase in average cost of total borrowings. Average noninterest-bearing demand deposits increased $17.7 million to $1.22 billion and represented 35.9% of total average deposits for the nine months ended September 30, 2026, compared with $1.21 billion and 36.1%, respectively, for the same 2025 period; average interest-bearing deposits increased $56.4 million to $2.19 billion during the nine months ended September 30, 2026. The total cost of deposits for the nine months ended September 30, 2026 was 1.31%, down 28 basis points from 1.59% for the same 2025 period.

Previous wording

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 wording

Average total borrowings decreased $32.6 million to $30.7 million for the nine months ended September 30, 2026, resulting primarily from a $32.7 million decrease in average subordinated debt from the redemption of $35.0 million subordinated debt in September 2026 and the redemption of subordinated debt totaling $38.0 million in 2025. The average cost of total borrowings was 8.65% for the nine months ended September 30, 2026, a 35 basis point increase from 8.30% for the same 2025 period. The increase was primarily attributable to amortization of the remaining fair value adjustment associated with the redemption of the subordinated debt.

Previous 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.

Current wording

The Company recorded a provision for credit losses of $3.2 million for the third quarter of 2026, compared with $714 thousand in the prior quarter. The provision for credit losses in the third quarter of 2026 was comprised of a $3.2 million provision for credit losses on loans held for investment, partially offset by a $16 thousand reversal of provision for credit losses for unfunded loan commitments. Total unfunded loan commitments decreased by $34.5 million to $862.4 million at September 30, 2026, compared to $896.9 million in unfunded loan commitments at June 30, 2026.

Previous 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.

Current wording

The provision for credit losses for loans held for investment in the third quarter of 2026 was $3.2 million, an increase of $2.2 million from $1.1 million in the prior quarter. The increase reflected $4.6 million in net charge-offs, primarily related to the full charge-off of two commercial and industrial loans, updates to the reasonable and supportable economic forecasts for California, revised scenario weighting assumptions, continued loan growth, and changes in portfolio composition, partially offset by a decline in accruing substandard and special mention loan balances and refinements to the qualitative factors. 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 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.

Current wording

We recorded a provision for credit losses of $3.2 million for the three months ended September 30, 2026, compared to a reversal of credit losses of $15 thousand for the same 2025 period. The reversal of credit losses in the third quarter of 2025 included a $236 thousand reversal of 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 by $16.6 million to $862.4 million at September 30, 2026, compared to $879.0 million in unfunded loan commitments at September 30, 2025.

Previous 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.

Current wording

The provision for credit losses for the loans held for investments of $221 thousand for the three months ended September 30, 2025 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.