UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

T QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

or

£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission file number 001-41684

CALIFORNIA BANCORP

(Exact name of registrant as specified in its charter)

California	84-3288397
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
12265 El Camino Real, Suite 210 San Diego, California	92130
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (844) 265-7622

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, no par value per share	BCAL	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                 T Yes £ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).                             T Yes £ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	T
Non-accelerated filer	☐	Smaller reporting company	T
		Emerging growth company	T

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. T

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). £ Yes T No

As of May 7, 2025, the registrant had 32,412,937 outstanding shares of common stock.

1

CALIFORNIA BANCORP

FORM 10-Q QUARTERLY REPORT

MARCH 31, 2025

TABLE OF CONTENTS

		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	6
	Consolidated Balance Sheets	6
	Consolidated Statements of Operations	7
	Consolidated Statements of Comprehensive Income (Loss)	8
	Consolidated Statements of Changes in Shareholders' Equity	9
	Consolidated Statements of Cash Flows	10
	Notes to Consolidated Financial Statements	12
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	58
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	94
Item 4.	Controls and Procedures	96
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	96
Item 1A.	Risk Factors	96
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	96
Item 3.	Defaults Upon Senior Securities	97
Item 4.	Mine Safety Disclosures	97
Item 5.	Other Information	97
Item 6.	Exhibits	97
SIGNATURES		99

2

Cautionary Note Regarding Forward-Looking Statements

In this quarterly report on Form 10-Q, the words “we,” “us,” “our,” “BCAL,” or the “Company” refer to California BanCorp and California Bank of Commerce, N.A., collectively and on a consolidated basis. The words “California BanCorp,” or the “holding company” refer to California BanCorp on a stand-alone basis. References to the “Bank” refer to California Bank of Commerce, N.A.

The statements in this quarterly report include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and other matters that are not historical facts. Examples of forward-looking statements include, among others, statements made about the Company’s prospects and results following the merger of the former California BanCorp (“CALB”) into the Company and the merger of the former California Bank of Commerce into the Bank on July 31, 2024 (collectively, the “Merger”), as well as forecasts relating to financial and operating results or other measures of economic performance. Forward-looking statements reflect management’s current view about future events and involve risks and uncertainties that may cause actual results to differ from those expressed in the forward-looking statement or historical results. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and often include the words or phrases such as “aim,” “can,” “may,” “could,” “predict,” “should,” “will,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “hope,” “intend,” “plan,” “potential,” “project,” “will likely result,” “continue,” “seek,” “shall,” “possible,” “projection,” “optimistic,” and “outlook,” and variations of these words and similar expressions.

We have made the forward-looking statements in this quarterly report based on assumptions and estimates that we believe to be reasonable in light of the information available to us at this time. However, these forward-looking statements are subject to significant risks and uncertainties, and could be affected by many factors. Factors that could have a material adverse effect on our business, consolidated financial condition, consolidated results of operations and future growth prospects include, but are not limited to, the following:

•volatility and uncertainty facing the banking industry following the failures of several financial institutions;

•challenges related to changes in interest rates and the impact on our consolidated financial condition and consolidated results of operations;

•our ability to manage our liquidity;

•business and economic conditions nationally, regionally and in our target markets, particularly in California, which is the principal area in which we operate;

•the lack of soundness of other financial institutions;

•disruptions to the credit and financial markets, either nationally, regionally or locally;

•our dependence on the Bank for dividends;

•concentration of our loan portfolio in commercial loans, which loans may be dependent on the borrower’s cash flows for repayment and, to some extent, the local and regional economy;

•concentration of our loan portfolio in loans secured by real estate and changes in the prices, values and sales volumes of commercial and residential real estate;

•risks related to construction and land development lending, which involves estimates that may prove to be inaccurate and collateral that may be difficult to sell following foreclosure;

•risks related to Small Business Administration (“SBA”) lending, including the risk that we could lose our designation as an SBA Preferred Lender;

•concentration of our business activities within the geographic area of California;

•credit risks in our loan portfolio, the adequacy of our allowance for credit losses (“ACL”) and the appropriateness of our methodology for calculating such ACL;

•severe weather, natural disasters, including earthquakes, floods, droughts, and fires, particularly in California, including direct and indirect costs and impacts on our clients, the Company and its employees from the January 2025 Los Angeles county wildfires;

•our ability to manage a contracting balance sheet or revenue consideration;

3

•the possibility that the anticipated benefits of the Merger will not be realized when expected or at all, including as a result of costs being greater than anticipated or cost savings being less than anticipated;    

•    potential adverse reactions or changes to business or employee relationships, including those resulting from the Merger;

•    economic forecast variables that are either materially worse or better than end of quarter projections and deterioration in the economy that exceeds current consensus estimates;

•    our ability to effectively manage problem credits;

•risks related to any future acquisitions, including transaction expenses, the potential distraction of management resources and the possibility that we will not realize anticipated benefits from any future acquisitions;

•interest rate shifts and its impact on our consolidated financial condition and consolidated results of operation;

•disruptions to the credit and financial markets, either nationally or globally;

•competition in the banking industry, nationally, regionally or locally;

•failure to maintain adequate liquidity and regulatory capital and comply with evolving federal and state banking regulations;

•inability of our risk management framework to effectively mitigate credit risk, interest rate risk, liquidity risk, price risk, compliance risk, technology risk, operational risk, strategic risk and reputational risk;

•our dependence on our management and our ability to attract and retain experienced and talented bankers;

•failure to keep pace with technological change or difficulties when implementing new technologies;

•system failures, data security breaches, including as a result of cyber-attacks, or failures to prevent breaches of our network security;

•our reliance on communications and information systems to conduct business and reliance on third parties and their affiliates to provide key components of business structure, any disruptions of which could interrupt operations or increase the costs of doing business;

•fraudulent and negligent acts by our customers, employees or vendors;

•our ability to prevent or detect all errors or fraud with our financial reporting controls and procedures;

•increased loan losses or impairment of goodwill and other intangibles;

•an inability to raise necessary capital to fund our growth strategy, operations, or to meet increased minimum regulatory capital levels;

•the sufficiency of our capital, including sources of such capital and the extent to which capital may be used or required;

•the institution and outcome of litigation and other legal proceedings to which we become subject;

•the impact of recent and future legislative and regulatory changes;

•examinations by our regulatory authorities, including the possibility that the regulatory authorities may, among other things, require us to increase our allowance for credit losses, slow the growth of our commercial real estate loans or write-down assets, or otherwise impose restrictions or conditions on our operations, including, but not limited to, our ability to acquire or be acquired;

•our status as an emerging growth company and a smaller reporting company, which reduces our disclosure obligations under the federal securities laws compared to other publicly traded companies;

•the impact of current and future governmental monetary and fiscal policies, such as the implementation of tariffs and counter-tariffs; and

•other factors and risks described in this quarterly report and from time to time in other documents that we

file or furnish with the Securities and Exchange Commission (“SEC”), including, without limitation, the risks described under Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024, that was filed with the SEC on April 1, 2025.

4

Because of these risks and other uncertainties, our actual results, performance or achievement, or industry results, may be materially different from the anticipated or estimated results discussed in the forward-looking statements in this quarterly report. Our past results of operations are not necessarily indicative of our future results. You should not rely on any forward-looking statements, which represent our beliefs, assumptions and estimates only as of the dates on which they were made, as predictions of future events. We undertake no obligation to update these forward-looking statements, even though circumstances may change in the future, except as required under federal securities law. We qualify all of our forward-looking statements by these cautionary statements.

5

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

CALIFORNIA BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)

(Unaudited)

	March 31, 2025		December 31, 2024
ASSETS
Cash and due from banks	$	80,441	$	60,471
Federal funds and interest-bearing balances	358,800		327,691
Total cash and cash equivalents	439,241		388,162
Debt securities available-for-sale, at fair value (amortized cost of $137,855 and $151,429 at March 31, 2025 and December 31, 2024)	131,593		142,001
Debt securities held-to-maturity, at amortized cost (fair value of $47,329 and $47,823 at March 31, 2025 and December 31, 2024)	53,194		53,280
Loans held for sale, at lower of cost or fair value	4,625		17,180
Loans held for investment	3,068,774		3,139,165
Allowance for credit losses on loans	(45,839)		(50,540)
Loans held for investment, net	3,022,935		3,088,625
Restricted stock, at cost	30,845		30,829
Premises and equipment, net	13,154		13,595
Right-of-use asset	13,384		14,350
Other real estate owned, net	4,083		4,083
Goodwill	111,780		111,787
Intangible assets, net	21,323		22,271
Bank owned life insurance	66,867		66,636
Deferred taxes, net	36,473		43,127
Accrued interest receivable and other assets	33,593		35,728
Total assets	$	3,983,090	$	4,031,654
LIABILITIES
Noninterest-bearing demand	$	1,292,689	$	1,257,007
Interest-bearing NOW accounts	674,460		673,589
Money market and savings accounts	1,192,960		1,182,927
Time deposits	182,394		285,237
Total deposits	3,342,503		3,398,760
Borrowings	70,308		69,725
Operating lease liability	17,142		18,310
Accrued interest payable and other liabilities	21,753		33,023
Total liabilities	3,451,706		3,519,818
Commitments and contingencies (Note 12)
SHAREHOLDERS’ EQUITY
Preferred stock - 50,000,000 shares authorized, no par value; no shares issued and outstanding at March 31, 2025 and December 31, 2024	—		—
Common stock - 50,000,000 shares authorized, no par value; issued and outstanding 32,402,140 and 32,265,935 at March 31, 2025 and December 31, 2024	442,934		442,469
Retained earnings	92,861		76,008
Accumulated other comprehensive loss - net of taxes	(4,411)		(6,641)
Total shareholders’ equity	531,384		511,836
Total liabilities and shareholders’ equity	$	3,983,090	$	4,031,654

The accompanying notes are an integral part of these consolidated financial statements.

6

CALIFORNIA BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended
	March 31, 2025		March 31, 2024
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	50,686	$	28,584
Interest on debt securities	1,524		1,213
Interest on tax-exempted debt securities	305		306
Interest on deposits at other financial institutions	3,803		850
Interest and dividends on other interest-earning assets	507		311
Total interest and dividend income	56,825		31,264
INTEREST EXPENSE
Interest on NOW, money market and savings accounts	11,116		6,770
Interest on time deposits	2,063		3,021
Interest on borrowings	1,391		979
Total interest expense	14,570		10,770
Net interest income	42,255		20,494
Reversal of credit losses	(3,776)		(331)
Net interest income after reversal of credit losses	46,031		20,825
NONINTEREST INCOME
Service charges and fees on deposit accounts	776		362
Interchange and ATM income	410		163
Gain on sale of loans	577		415
Income from bank owned life insurance	463		261
Servicing and related income on loans, net	142		73
Loss on sale and disposal of fixed assets	(1)		—
Other charges and fees	199		139
Total noninterest income	2,566		1,413
NONINTEREST EXPENSE
Salaries and employee benefits	15,864		9,610
Occupancy and equipment	2,152		1,452
Data processing and communications	1,935		1,150
Legal, audit and professional	859		516
Regulatory assessments	722		387
Director and shareholder expenses	404		203
Merger and related expenses	—		549
Intangible asset amortization	948		65
Other real estate owned expenses	68		88
Other expenses	1,968		961
Total noninterest expense	24,920		14,981
Income before income taxes	23,677		7,257
Income tax expense	6,824		2,322
Net income	16,853		4,935
Earnings per share:
Basic	$	0.52	$	0.27
Diluted	$	0.52	$	0.26

The accompanying notes are an integral part of these consolidated financial statements.

7

CALIFORNIA BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(dollars in thousands)

(Unaudited)

	Three Months Ended
	March 31, 2025		March 31, 2024
Net income	$	16,853	$	4,935
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities available for sale:
Change in net unrealized loss	3,166		(2,385)
Income tax expense (benefit):
Change in net unrealized loss	936		(705)
Total other comprehensive income (loss), net of tax	2,230		(1,680)
Total comprehensive income (loss), net of tax	$	19,083	$	3,255

The accompanying notes are an integral part of these consolidated financial statements.

8

CALIFORNIA BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(dollars in thousands, except share data)

(Unaudited)

	Common Stock			Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders’ Equity
	Shares	Amount
Three months ended March 31, 2025:
Balance at December 31, 2024	32,265,935	$	442,469	$	76,008	$	(6,641)	$	511,836
Stock-based compensation	—	1,480		—		—		1,480
Stock options exercised	5,138	40		—		—		40
Restricted stock units vested	197,948	—		—		—		—
Repurchase of shares in settlement of restricted stock units	(66,881)	(1,055)		—		—		(1,055)
Net income	—	—		16,853		—		16,853
Other comprehensive income	—	—		—		2,230		2,230
Balance at March 31, 2025	32,402,140	$	442,934	$	92,861	$	(4,411)	$	531,384
Three months ended March 31, 2024:
Balance at December 31, 2023	18,369,115	$	222,036	$	70,575	$	(4,459)	$	288,152
Stock-based compensation	—	895		—		—		895
Stock options exercised	81,400	706		—		—		706
Restricted stock units vested	110,084	—		—		—		—
Repurchase of shares in settlement of restricted stock units	(33,421)	(509)		—		—		(509)
Net income	—	—		4,935		—		4,935
Other comprehensive loss	—	—		—		(1,680)		(1,680)
Balance at March 31, 2024	18,527,178	$	223,128	$	75,510	$	(6,139)	$	292,499

9

CALIFORNIA BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2025 and 2024
(dollars in thousands)

(Unaudited)

	Three Months Ended March 31,
	2025		2024
OPERATING ACTIVITIES
Net income	$	16,853	$	4,935
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation on premises and equipment	546		370
Intangible asset amortization	948		65
Amortization of (discounts) premiums of debt securities	(218)		(127)
Gain on sale of loans	(577)		(415)
Loss on sale and disposal of fixed assets	1		—
Loans originated for sale	(8,955)		(1,777)
Proceeds from sales of and principal collected on loans held for sale	9,569		6,778
Reversal of credit losses	(3,776)		(331)
Deferred income tax expense	5,566		1,638
Stock-based compensation	1,480		895
Increase in cash surrender value of bank owned life insurance	(231)		(261)
Accretion of net discounts and deferred loan fees	(6,120)		(603)
Net decrease in other items	(8,103)		(3,114)
Net cash provided by operating activities	6,983		8,053
INVESTING ACTIVITIES
Proceeds from maturities and paydowns of debt securities available for sale	13,878		2,941
Purchases of debt securities available for sale	—		(2,041)
Net change in stock investments	241		96
Net repayment (funding) of loans	87,321		61,609
Purchases of premises and equipment	(105)		(89)
Net cash provided by investing activities	101,335		62,516
FINANCING ACTIVITIES
Net decrease in deposits	(56,224)		(13,017)
Repayment of Federal Home Loan Bank advances	—		(58,000)
Proceeds from exercise of stock options	40		706
Repurchase of common shares	(1,055)		(509)
Net cash used in financing activities	(57,239)		(70,820)
The accompanying notes are an integral part of these consolidated financial statements.

10

CALIFORNIA BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

For the three months ended March 31, 2025 and 2024
(dollars in thousands)

(Unaudited)

	Three Months Ended March 31,
	2025		2024
Net change in cash and cash equivalents	51,079		(251)
Cash and cash equivalents at beginning of period	388,162		86,793
Cash and cash equivalents at end of period	$	439,241	$	86,542
Supplemental Disclosures of Cash Flow Information:
Interest paid	$	16,965	$	9,593
Taxes paid	—		—
Lease liability arising from obtaining right-of-use assets	—		—
Loans transferred to loans held for sale	—		—
Loans transferred to other real estate owned	—		13,004

The accompanying notes are an integral part of these consolidated financial statements.

11

CALIFORNIA BANCORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

California BanCorp is a California corporation incorporated on October 2, 2019 and is registered with the Board of Governors of the Federal Reserve System as a bank holding company for California Bank of Commerce, N.A. under the Bank Holding Company Act of 1956, as amended. On May 15, 2020, the Company completed a reorganization whereby the Bank became a wholly-owned subsidiary of the Company. California Bank of Commerce, N.A. began business operations in December 2001 under the name Ramona National Bank. The Bank changed its name to First Business Bank, N.A. in 2006, to Bank of Southern California, N.A. in 2010, and to California Bank of Commerce, N.A. on July 31, 2024. The Bank 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. The Bank operates under a federal charter and its primary regulator is the Office of the Comptroller of the Currency (“OCC”). The words “we,” “us,” “our,” or the “Company” refer to California BanCorp and California Bank of Commerce, N.A. collectively and on a consolidated basis. References herein to “California BanCorp,” or the “holding company” refer to California BanCorp on a stand-alone basis. References to the “Bank” refer to California Bank of Commerce, N.A.

As a relationship-focused community bank, the Bank offers a range of financial products and services to individuals, professionals, and small- to medium-sized businesses through its 14 branch offices serving California. Many of the banking offices have been acquired through a number of acquisitions. The Company's common stock trades on the Nasdaq Capital Market under the symbol "BCAL".

Merger with California BanCorp

On January 30, 2024, the Company announced the execution of a definitive merger agreement with the CALB, the holding company for California Bank of Commerce, pursuant to which CALB would merge into the Company in an all-stock merger. The Merger received all required regulatory approvals on May 13, 2024, shareholder approvals on July 17, 2024 and closed on July 31, 2024. Refer to Note 2 - Business Combinations for additional information. The Company retained the banking offices of both banks, adding CALB’s one full-service bank branch and its four loan production offices in Northern California to the Bank’s 13 full-service bank branches located throughout the Southern California region.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared pursuant to Article 10 of SEC Regulation S-X and other SEC rules and regulations for reporting on the Quarterly Report on Form 10-Q. Accordingly, certain disclosures required by U.S. generally accepted accounting principles (“GAAP”) are not included herein. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

In the opinion of management of the Company, the accompanying unaudited interim consolidated financial statements reflect all of the adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the consolidated financial condition and consolidated results of operations as of the dates and for the periods presented. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, including its wholly owned subsidiary, the Bank and the Bank’s wholly-owned subsidiary, BCAL OREO1, LLC. All significant intercompany balances and transactions have been eliminated in consolidation.

12

Use of Estimates in the Preparation of Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and

expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change are the determination of the allowance for credit losses, the fair value of assets and liabilities acquired in business combinations and related purchase price allocation, the valuation of acquired loans, the valuation of goodwill and separately identifiable intangible assets associated with mergers and acquisitions, loan sales and servicing of financial assets and deferred tax assets and liabilities.

Operating Segments

We operate one reportable segment — commercial banking. The Company has one reporting unit, one operating segment and, consequently, a single reportable segment. The Company’s chief operating decision maker (“CODM”) is a role shared by four executive officers, the Executive Chairman, Chief Executive Officer, President, and Chief Financial Officer. The Company’s CODM monitors revenue streams and other information regarding the products and services offered through the Company’s banking operations. The information provided to the CODM is presented on an aggregated single segment level basis, which is consistent with the accompanying consolidated financial statements presented in this Quarterly Report on Form 10-Q. The CODM evaluates the financial performance of the Company’s business by evaluating revenue streams, significant expenses, and comparing budgeted to actual results in assessing operating results and in allocating resources, with profitability only determined at a single segment level. The CODM uses revenue streams to evaluate product pricing and significant expenses to assess performance and evaluate return on assets. The CODM uses consolidated net income to benchmark the Company against its competitors. The benchmarking analysis, coupled with the monitoring of budgeted to actual results, is used in assessing performance and allocating resources. Loans, investments, and deposits provide the revenues from the Company's operations. Interest expense, provisions for credit losses, salaries and benefits, and occupancy expenses represent the significant expenses in the Company's operations. All of the Company's income and expenses are included in the accompanying consolidated statements of income presented in this Quarterly Report on Form 10-Q. All of the Company’s operations are domestic. The Company’s assets are reflected in the accompanying consolidated balance sheet as “total assets.”

Recently Adopted Accounting Guidance

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures to require, among other things, that a public entity that has a single reportable segment provide enhanced disclosures about significant segment expenses. Significant expense categories are derived from expenses that are (1) regularly reported to an entity’s CODM, and (2) included in a segment’s reported measure of profit or loss. The disclosures should include an amount for "other segment items," reflecting the difference between (1) segment revenue less significant segment expenses, and (2) the reportable segment’s profit or loss measures. It requires that a public entity disclose the title and position of the CODM and how the CODM uses the reported measure of profit or loss to assess segment performance and to allocate resources. Further it clarifies that entities with a single reportable segment must disclose both new and existing segment reporting requirements. The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. A public entity should apply the amendments retrospectively to all periods presented in the financial statements. The adoption of ASU 2023-07 did not have a significant impact on the consolidated financial statements.

On January 1, 2025, the Company adopted ASU No. 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures. This standard addresses requests for improved income tax disclosures from investors, lenders, creditors and other allocators of capital that use the financial statements to make capital allocation decisions. This ASU is intended to improve the transparency of tax disclosures by requiring (1)

13

consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction, in addition to certain other amendments intended to improve the effectiveness of income tax disclosures. The adoption of ASU 2023-09 did not have a material impact on the consolidated financial statements.

Significant Accounting Policies

The accounting and reporting policies of the Company are based upon GAAP and conform to predominant practices within the banking industry. We have not made any changes in our significant accounting policies from those disclosed in Item 8. Financial Statements and Supplementary Data of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Allowance for Credit Losses — Held-to-Maturity Debt Securities

An ACL is established for losses on held-to-maturity debt securities at the time of purchase or designation and is updated each period to reflect management’s expectations of current expected credit losses (“CECL”) as of the date of the consolidated balance sheets. The ACL is estimated collectively for groups of debt securities with similar risk characteristics, and is determined at the individual security level when the Company deems a security to no longer possess shared risk characteristics. Accrued interest receivable on held-to-maturity debt securities is excluded from the estimate of credit losses. For debt securities where the Company has reason to believe the credit loss exposure is remote, a zero credit loss assumption is applied. Such debt securities were municipal securities, and historically have had limited credit loss experience. The Company does not anticipate any credit related losses in this investment portfolio. Changes in the ACL on held-to-maturity debt securities are recorded as a component of the provision for (reversal of) credit losses in the consolidated statements of operations. Losses are charged against the ACL when management believes the uncollectibility of a held-to-maturity debt security is confirmed.

Allowance for Credit Losses — Available-for-Sale Debt Securities

For available-for-sale debt securities, the Company evaluates, on an individual basis, whether a decline in fair value below the amortized cost basis has resulted from a credit loss or other factors. The portion of the decline attributable to credit losses is recognized through an ACL, and changes in the ACL on available-for-sale debt securities are recorded as a component of the provision for (reversal of) credit losses in the consolidated statements of operations. The portion of decline in fair value below the amortized cost basis not attributable to credit is recognized through other comprehensive income (loss), net of applicable taxes.

Allowance for Credit Losses — Acquired Debt Securities

The Company has acquired debt securities through merger or acquisitions. To the extent acquired debt securities have more than insignificant credit deterioration since origination, they are designated as purchased credit-deteriorated (“PCD”) securities. An ACL is determined using the same methodology as with other debt securities. The sum of a PCD security’s fair value and associated ACL becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the debt security is a noncredit discount or premium, which is amortized into interest income over the life of the security. Subsequent changes to the ACL are recorded through provision for credit losses.

Allowance for Credit Losses — Loans

An ACL is the Company’s estimate of expected lifetime credit losses for its loans held for investment at the time of origination or acquisition and is maintained at a level deemed appropriate by management to provide for expected lifetime credit losses in the portfolio. The ACL consists of: (i) a specific allowance established for current expected credit losses on loans individually evaluated, (ii) a quantitative allowance for current expected credit losses based on the portfolio and expected economic conditions over a reasonable and supportable forecast period that reverts back to long-term trends to cover the expected life of the loan, (iii) a qualitative allowance including management judgment to capture factors and trends that are not adequately reflected in the quantitative

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allowance, and (iv) the ACL for off-balance sheet credit exposure for unfunded loan commitments (described in Allowance for Credit Losses - Off-Balance Sheet Credit Exposure).

The ACL on loans held for investment represents the portion of the loans’ amortized cost basis that the Company does not expect to collect due to anticipated credit losses over the loans’ contractual life. Amortized cost does not include accrued interest, which management elected to exclude from the estimate of expected credit losses. Provision for credit losses for loans held for investment is included in provision for (reversal of) credit losses in the consolidated statements of operations. Loan charge-offs are recognized when management believes the collectability of the principal balance outstanding is unlikely. Subsequent recoveries, if any, are credited to the ACL. Credit losses are not estimated for accrued interest receivable as interest that is deemed uncollectible is written off through interest income.

Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts. Pools of loans with similar risk characteristics are collectively evaluated while loans that no longer share risk characteristics with loan pools are evaluated individually. The Company measures the ACL using a discounted cash flow methodology, which utilizes pool-level assumptions and cash flow projections on an individual loan basis, which is then aggregated at the portfolio segment level and supplemented by a qualitative reserve that is applied to each portfolio segment level.

The Company’s loan portfolio consists of the following segments, based on regulatory call codes and related risk ratings:

Construction and land development loans are typically adjustable rate residential and commercial construction loans to builders, developers and consumers, with terms generally limited to 12 to 36 months. These loans generally require payment in full upon the sale or refinance of the property. Construction and development loans generally carry a higher degree of risk because repayment depends on the ultimate completion of the project and usually on the subsequent sale or refinance of the property, unless the project is user-owned which would then convert to a conventional term loan. Specific material risks may include (i) unforeseen delays in the building of the project, (ii) cost overruns or inadequate contingency reserves, (iii) poor management of construction process, (iv) inferior or improper construction techniques, (v) changes in the economic environment during the construction period, (vi) a downturn in the real estate market, (vii) rising interest rates which may impact the sale of the property and its price, and (viii) failure to sell or stabilize completed projects in a timely manner. The Company attempts to reduce risks associated with construction and land development loans by obtaining personal guarantees and by keeping the maximum loan-to-value (“LTV”) ratio at or below 75%, depending on the project type. Many of the construction and land development loans include interest reserves built into the loan commitment. For owner-occupied commercial construction loans, periodic cash payments for interest are required from the borrower’s cash flow.

Real estate loans are secured by single family residential properties (one to four units), multifamily residential properties (five or more units), owner-occupied commercial real estate (“CRE”), and non-owner occupied CRE. Real estate loans are subject to the same general risks as other loans and may also be impacted by changing demographics, collateral maintenance, and product supply and demand. Rising interest rates, as well as other factors arising after a loan has been made, could negatively affect not only property values but also a borrower’s cash flow, creditworthiness, and ability to repay the loan. Increasing interest rates can impact real estate values as rising rates generally cause a similar movement in capitalization rates which can cause real estate collateral values to decline. The Company usually obtains a security interest in real estate, in addition to any other available collateral, in order to increase the likelihood of the ultimate repayment of the loan. The Company does not underwrite closed-end term consumer loans secured by a borrower’s residence. Junior liens may be considered in connection with a consumer home equity line of credit (“HELOC”), or as additional collateral support for SBA and other business loans.

The Company’s commercial and industrial (“C&I”) loans are generally made to businesses located in the Southern and Northern California regions and surrounding communities. These loans are made to finance operations, to provide working capital, or for specific purposes such as to finance the purchase of assets or equipment or to finance accounts receivable and inventory. The Company’s C&I loans may be secured (other than

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by real estate) or unsecured. They may take the form of single payment, installment, or lines of credit. These are generally based on the financial strength and integrity of the borrower and guarantor(s) and generally (with some exceptions) are collateralized by short-term assets such as accounts receivable, inventory, equipment, or a borrower’s other business assets. Commercial term loans are typically made to provide working capital to finance the acquisition of fixed assets, refinance short-term debt originally used to purchase fixed assets or, in rare cases, to finance the purchase of businesses.

Consumer loans consist of loans to individuals for personal and household purposes, including secured and unsecured installment loans and revolving lines of credit. The Company acquired consumer solar loans from the Merger. These loans were originated and serviced by unaffiliated third parties. The remaining average term ranges from 6 to 23 years. Consumer loans are underwritten based on the borrower’s income, current debt level, past credit history, and the availability and value of collateral. Consumer rates are both fixed and variable, with negotiable terms. The Company’s installment loans typically amortize over periods up to 5 years. Although the Company typically requires monthly payments of interest and a portion of the principal on its loan products, the Company will offer consumer loans with a single maturity date when a specific source of repayment is available. Consumer loans are generally considered to have greater risk than first or second mortgages on real estate because they may be unsecured, or, if they are secured, the value of the collateral may be difficult to assess and more likely to decrease in value than real estate.

The Company’s ACL model incorporates assumptions for prepayment/curtailment rates, probability of default (“PD”), and loss given default (“LGD”) to project each loan’s cash flow throughout its entire life cycle. An initial reserve amount is determined based on the difference between the amortized cost basis of each loan and the present value of all future cash flows. The initial reserve amount is then aggregated at the loan segment level to derive the segment level quantitative loss rates. For prepayment and curtailment rates, the Company utilized Abrigo’s benchmark since the adoption on January 1, 2023 through the second quarter of 2023 and switched to the Company’s own historical prepayment and curtailment experience beginning in the third quarter of 2023. Quarterly PD is forecasted using a regression model that incorporates certain economic variables as inputs. The LGD is derived from PD using the Frye-Jacobs index provided by the Company’s third-party model provider. Reasonable and supportable forecasts are used to predict current and future economic conditions. Management elected to use a four quarter reasonable and supportable forecast period followed by an eight quarter straight-line reversion period. After twelve quarters of forecast plus reversion period, the PD is assumed to remain unchanged for the remaining life of the loan.

The Company uses numerous key macroeconomic variables within the economic forecast scenarios from Moody’s Analytics. These economic forecast scenarios are based on past events, current conditions, and the likelihood of future events occurring. These scenarios include a baseline forecast which represents their best estimate of future economic activity. Moody’s Analytics also provides nine alternative scenarios, including five direct variations of the baseline scenario and four more extensive departures from their baseline forecast, including a slower growth, a stagflation, a next cycle recession and a low oil price scenario. Management recognizes the non-linearity of credit losses relative to economic performance and believes the use of multiple probability-weighted economic scenarios is appropriate in estimating credit losses over the forecast period. This approach is based on certain assumptions. The first assumption is that no single forecast of the economy, however detailed or complex, is completely accurate over a reasonable forecast timeframe and is subject to revisions over time. By considering multiple scenarios, management believes some of the uncertainty associated with a single scenario approach can be mitigated. Management periodically evaluates economic scenarios, determines whether to utilize multiple probability-weighted scenarios in the Company’s ACL model, and, if multiple scenarios are utilized, evaluates and determines the weighting for each scenario used in the Company’s ACL model, and thus the scenarios and weightings of each scenario may change in future periods. Economic scenarios as well as assumptions within those scenarios can vary based on changes in current and expected economic conditions.

The ACL process involves subjective and complex judgments and is reflective of significant uncertainties that could potentially result in materially different results under different assumptions and conditions. In addition to the aforementioned quantitative model, management periodically considers the need for qualitative adjustments to the ACL. Such qualitative adjustments may be related to and include, but are not limited to factors such as:

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differences in segment-specific risk characteristics, periods wherein current conditions and reasonable and supportable forecasts of economic conditions differ from the conditions that existed at the time of the estimated loss calculation, model limitations and management’s overall assessment of the adequacy of the ACL. Qualitative risk factors are periodically evaluated by management.

Generally, the measurement of the ACL is performed by collectively evaluating loans with similar risk characteristics. Loans that do not share similar risk characteristics are evaluated individually for credit loss and are not included in the evaluation process discussed above. Expected credit losses on all individually evaluated loans are measured, primarily through the evaluation of estimated cash flows expected to be collected, or collateral values measured by reference to an observable market value, if one exists, or the fair value of the collateral for a collateral-dependent loan. The Company selects the measurement method on a loan-by-loan basis except that collateral-dependent loans for which foreclosure is probable are measured at the net realizable value of the collateral. Cash receipts on individually evaluated loans for which the accrual of interest has been discontinued are applied first to principal and then to interest income. Amounts are charged-off when available information confirms that specific loans or portions thereof, are uncollectible. This methodology for determining charge-offs is consistently applied to each loan segment.

Loans with terms that have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are evaluated for an ACL utilizing one of the methodologies above.

Allowance for Credit Losses — Acquired Loans

In accordance with ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), loans purchased or acquired in connection with a business combination are recorded at their acquisition date fair value. Any resulting discount or premium recorded on acquired loans is accreted or amortized into interest income over the remaining life of the loans using the interest method. The ACL related to the acquired loan portfolio is not carried over from the acquiree. Acquired loans are classified into two categories based on the credit risk characteristics of the underlying borrowers as either purchased credit deteriorated (“PCD”) loans, or loans with no evidence of credit deterioration (“non-PCD”).

PCD loans are those loans or pool of loans that have experienced more-than-insignificant credit deterioration since the origination date. For PCD loans, an initial allowance is established on the acquisition date using the same methodology as other loans held for investment and combined with the fair value of the loan to arrive at acquisition date amortized cost. Accordingly, no provision for credit losses is recognized on PCD loans at the acquisition date. Subsequent to the acquisition date, changes to the allowance are recognized in the provision for (reversal of) credit losses.

Non-PCD loans are those loans for which there was no evidence of a more-than-insignificant credit deterioration at their acquisition date. Acquired non‑PCD loans, together with originated loans held for investment that share similar risk characteristics, are pooled into segments together. Upon the purchase or acquisition of non-PCD loans, the Company measures and records an ACL based on the Company’s methodology for determining the ACL for its originated loans held for investment. The ACL for non-PCD loans is recorded through a charge to the provision for (reversal of) credit losses in the period in which the loans were purchased or acquired.

Allowance for Credit Losses — Off-Balance Sheet Credit Exposures

The Company also maintains a separate allowance for off-balance sheet commitments. Beginning January 1, 2023, management estimates anticipated losses using expected loss factors consistent with those used for the ACL methodology for loans described above, and utilization assumptions based on historical experience. Provision for credit losses for off-balance sheet commitments is included in provision for (reversal of) credit

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losses in the consolidated statements of operations and added to the allowance for off-balance sheet commitments, which is included in accrued interest payable and other liabilities in the consolidated balance sheets.

Loan Modifications, Refinancings and Restructurings

Prior to the adoption of ASU 2022-02, a loan was classified as a troubled debt restructuring (“TDR”) when the Company granted a concession to a borrower experiencing financial difficulties that it otherwise would not consider under its normal lending policies under ASC Subtopic 310-40, Troubled Debt Restructurings by Creditors. Upon the adoption of ASU 2022-02, the Company applies the general loan modification guidance provided in ASC 310-20 to all loan modifications, including modifications made for borrowers experiencing financial difficulty. The Company considers some of the indicators that a borrower is experiencing financial difficulty to be: currently in payment default on any of their debt, declaring bankruptcy, having issues continuing as a going concern, insufficient cash flow to service all debt service requirements, inability to obtain funds from other sources at a market rate for similar debt to non-troubled borrowers, and currently classified as substandard loans that are categorized as having well-defined weaknesses.

Under the general loan modification guidance, a modification is treated as a new loan only if the following two conditions are met: (1) the terms of the new loan are at least as favorable to the Company as the terms for comparable loans to other customers with similar collection risks; and (2) modifications to the terms of the original loan are more than minor. If either condition is not met, the modification is accounted for as the continuation of the existing loan with any effect of the modification treated as a prospective adjustment to the loan’s effective interest rate. If the refinancing or restructuring is deemed to be a new loan, unamortized net fees or costs from the original loan and any prepayment penalties are recognized in interest income when the new loan is granted. In addition, a new effective interest rate will be determined. If the refinancing or restructuring is deemed to be a modification, the investment in the new loan is comprised of the remaining net investment in the original loan, any additional funds advanced to the borrower, any fees received, and direct loan origination costs associated with the refinancing or restructuring. The effective interest rate of the loan is recalculated based upon the amortized cost basis of the new loan and its revised contractual cash flows.

A modification may vary by program and by borrower-specific characteristics, that may include interest rate reductions, principal forgiveness, term extensions, payment delays and any combination of the above. It is intended to minimize the Company’s economic loss and to avoid foreclosure or repossession of collateral. The Company applies the same credit loss methodology it uses for similar loans that were not modified.

GAAP requires that certain types of modifications be reported, which consist of (1) principal forgiveness; (2) interest rate reduction; (3) other-than-insignificant payment delay; (4) term extension; and any combination of the above.

Recent Accounting Guidance Not Yet Effective

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements–Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”). The amendments in this update modify the disclosure or presentation requirements for a variety of topics in the codification. Certain amendments represent clarifications to or technical corrections of the current requirements. The following is a summary of the topics included in the update and which pertain to the Company: 1. Statement of cash flows (Topic 230): Requires an accounting policy disclosure in annual periods of where cash flows associated with derivative instruments and their related gains and losses are presented in the statement of cash flows; 2. Accounting changes and error corrections (Topic 250): Requires that when there has been a change in the reporting entity, the entity disclose any material prior-period adjustment and the effect of the adjustment on retained earnings in interim financial statements; 3. Earnings per share (Topic 260): Requires disclosure of the methods used in the diluted earnings-per-share computation for each dilutive security and clarifies that certain disclosures should be made during interim periods, and amends illustrative guidance to illustrate disclosure of the methods used in the diluted earnings per share computation; 4. Commitments (Topic 440): Requires disclosure of assets mortgaged, pledged, or otherwise subject to lien and the obligations collateralized; and 5. Debt (Topic 470): Requires disclosure of amounts and terms of unused lines of credit and unfunded commitments and the weighted-

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average interest rate on outstanding short-term borrowings. For public business entities, the amendments in ASU 2023-06 are effective on the date which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation and S-X or Regulation S-K, the pending content of the related amendment will be removed from the codification and will not become effective for any entity. Early adoption is not permitted and the amendments are required to be applied on a prospective basis. The Company expects the adoption of this standard will not have a material impact on its consolidated financial statements.

ASU No. 2024-03, Income Statement– Reporting Comprehensive Income-Expense Disaggregation Disclosures. In November 2024, the FASB issued ASU 2024-03 which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income– Expense Disaggregation Disclosures– Clarifying the Effective Date, which amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. The Company expects the adoption of this standard will not have a material impact on its consolidated financial statements.

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NOTE 2 – BUSINESS COMBINATIONS

California BanCorp Merger

On July 31, 2024 (the “Merger Date”), the Company completed its merger with CALB on the terms set forth in the Agreement and Plan of Merger and Reorganization, dated January 30, 2024, by and between the Company and CALB. Immediately following the merger of CALB with and into the Company, California Bank of Commerce, a California state-chartered bank and wholly-owned subsidiary of CALB, merged with and into the Bank. Effective with these mergers, the corporate names of Southern California Bancorp and Bank of Southern California, N.A. were changed to California BanCorp and California Bank of Commerce, N.A., respectively. The merger expanded the Company’s footprint into Northern California and provides an opportunity for building scale and increasing market share through complementary business models with a strong deposit base. The combined company retained the banking offices of both banks, adding CALB’s one full-service bank branch and its four loan production offices in the Northern California to the Bank’s 13 full-service bank branches located throughout the Southern California region.

The Merger was an all-stock transaction valued at approximately $216.6 million based on a closing price of the Company’s common stock of $15.79 on July 31, 2024. 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 13,497,091 shares, with cash (without interest) paid in lieu of fractional shares. An additional 82,364 net shares were issued to CALB’s non-continuing directors, officers and employees where the Company had granted and fully accelerated replacement restricted stock units totaling 123,123 shares with a fair value of $1.9 million, of which $825 thousand related to pre-combination vesting and was included in purchase consideration and $1.1 million related to post-combination vesting and was recognized in expense of the combined company at merger closing. The Company also granted replacement awards for 295,512 unvested restricted stock units, with a fair value of $4.7 million, to CALB’s continuing directors, officers and employees. Of this amount, $1.3 million related to pre-combination vesting and was included in purchase consideration and $3.4 million related to post-combination vesting and will be recognized in expense of the combined company over the remaining vesting period. In addition, the Company settled for cash all in-the-money CALB stock options immediately prior to the merger in the amount of $1.7 million.

The Company accounted for the Merger using the acquisition method of accounting in accordance with ASC 805, Business Combinations and accordingly, the acquired assets and assumed liabilities of CALB were recorded at their respective fair values on the the Merger Date with certain exceptions. In many cases, the determination of fair value required management to make estimates about discount rates, expected future cash flows, market conditions and other future events that are highly subjective in nature and subject to change. While the Company believes that the information available on the Merger Date provided a reasonable basis for estimating fair value, additional information may be obtained during the measurement period that would result in changes to the estimated fair value amounts. The measurement period ends on the earlier of one year after the Merger Date or the date the Company concludes that all necessary information about the facts and circumstances that existed as of the Merger Date have been obtained. The valuation of acquired loans, may also change as additional information for certain loans is obtained subsequent to acquisition. These changes could differ materially from what is presented below.

The following table represents the allocation of the purchase consideration to the preliminary fair value of assets acquired and liabilities assumed of CALB, subject to finalization, as of July 31, 2024, as adjusted:

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(dollars in thousands)			Fair Value
Assets acquired:
Cash and cash equivalents			$	336,298
Debt securities, available-for-sale			42,560
Loans held for investment			1,359,040
Allowance for credit losses - PCD loans			(11,216)
Restricted stock			6,328
Other equity securities			6,278
Premises and equipment			1,670
Operating lease right-of-use asset			7,743
Prepaid expenses			876
Deferred taxes, net			30,656
Bank owned life insurance			26,338
Trade name			300
Core deposit intangible			22,653
Other assets			35,199
Total assets acquired			1,864,723
Liabilities assumed:
Deposits			1,642,938
Borrowings			50,832
Operating lease liabilities			9,033
Other liabilities			19,259
Total liabilities assumed			1,722,062
Net assets acquired			$	142,661
Purchase consideration:
Outstanding shares of CALB, July 31, 2024	8,488,829
Restricted stock units vested fully at merger closing(1)	77,436
Shares of CALB common stock exchanged	8,566,265
Exchange ratio	1.590
Shares of BCAL common stock issued to CALB shareholders at closing, before fractional shares	13,620,361
Less: fractional shares	(147)
Shares of BCAL common stock issued to CBC shareholders at closing	13,620,214
BCAL closing price per share, July 31, 2024	$	15.79
Fair value of common shares issued and exchanged			$	215,063
Less: fair value of accelerated restricted stock units attributable to post-combination vesting(2)(3)			(1,119)
Fair value of common shares issued and exchanged attributable to purchase consideration			213,944
Cash paid for outstanding stock options(4)			1,431
Cash paid for fractional shares			2
Restricted stock consideration(5)			1,261
Total purchase consideration			216,638
Goodwill recognized			$	73,977

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(1)Represents 5,596 unvested restricted stock units of non-continuing CALB directors that were automatically fully vested and converted under the merger agreement and 71,840 of unvested restricted shares (replacement awards) for non-continuing executives and employees that were accelerated and fully vested. The portion of the fair value of these awards attributable to pre-combination vesting is included as a component of purchase consideration. The portion of the fair value of these awards attributable to post-combination vesting (See #2 below) was reflected in expense of the combined company upon merger closing.

(2)Represents the fair value of the 77,436 CALB restricted stock units (replacement awards) that were accelerated for non-continuing directors, executives and employees that was attributable to post-combination vesting. Upon acceleration, 51,801 net CALB shares were then converted into the right to receive the Company’s common stock after 25,635 of CALB shares were surrendered by certain executives and employees to pay for taxes. The portion of the fair value of these awards attributable to post-combination vesting was recognized as an expense of the combined company upon merger closing.

(3)Included in this amount is $472 thousand related to 31,355 restricted stock units that fully vested due to change in control agreements (double trigger) held by four executives that are no longer employed by the Company upon closing of the Merger.

(4)Represents the payment of (a) $1.3 million for 283,641 vested stock options at a weighted average exercise price of $18.22 and (b) $82 thousand for 92,685 unvested stock options at a weighted average price of $19.03 attributable to pre-combination vesting based on the $22.98 Option Cashout Price. An additional $284 thousand was paid for the portion of unvested stock options attributable to post-combination vesting and was recognized as an expense of the combined company upon merger closing. There were 65,785 unvested stock options at a weighted average price of $23.81 that were out-of-the-money at July 31, 2024 and excluded from stock option consideration as they were cancelled under the terms of the merger agreement.

(5)Represents the fair value of 185,878 unvested restricted stock units (replacement awards) for continuing executives and employees attributable to pre-combination vesting. A forfeiture rate of 3% was applied in determining share-based awards expected to vest.

Goodwill represents the excess of the purchase consideration over the fair value of the net assets acquired and was primarily attributable to the expected synergies and the expansions of economies of scale and new territory from combining the operations of the Company and CALB. Goodwill is not deductible for U.S. income tax purposes and is not amortized. Rather, goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired, by comparing its carrying value to the reporting unit’s fair value.

The following methods and assumptions were used to estimate the fair value of significant financial instruments:

Cash and cash equivalents. The carrying amounts of cash and cash equivalents approximates fair value due to the short-term nature and liquidity of these instruments.

Debt securities available for sale. The fair values of debt securities was determined by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.

Loans held for investment. The Company utilized an independent third-party to assist in valuing loans held for investment. The fair value of the acquired loan portfolio was determined by segregating the portfolio into three groups: PCD loans, non-accruing PCD loans and all other loans (“non-PCD loans”). These three categories were further segmented by loan type. For non-PCD loans, the fair value for each individual loan segment consisted of the principal balance adjusted for both an interest component and credit component, which was calculated on a pool basis using a discounted cash flow approach. The discount rates utilized for this approach were based on a weighted average cost of capital, considering the cost of equity and cost of debt and other factors. Expected loan cash flows incorporated default, loss, and prepayment rates based on industry standards.

PCD loans are defined as loans that as of the date of acquisition have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by an acquirer's assessment. The initial amortized cost basis for PCD loans represents the fair value of the loans plus an allowance for credit losses at the date of acquisition. The fair value for PCD loans incorporated market-based loss rates used to estimate

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expected life of loan credit losses. The noncredit discount resulting from the acquired PCD loans was allocated to each individual asset. At the acquisition date, the initial allowance for credit losses was determined on a collective basis and was allocated to the individual PCD loans. The initial allowance for credit losses for PCD loans includes expected recoveries of amounts previously charged off and expected to be charged off by the Company. The non-credit discount, after the adjustment for the allowance for credit losses, is accreted to interest income using the interest method based on the effective interest rate at acquisition date.

The following table presents the composition of PCD loans as of the acquisition date:

(dollars in thousands)	Amount
Unpaid principal balance	$	111,720
Allowance for credit losses - PCD loans	(11,216)
Non-credit discount amount	(5,107)
Loans previously charged-off by CALB	(10,171)
PCD loans acquired	$	85,226

Bank owned life insurance. The carrying amount of bank owned life insurance approximates fair value given the liquidity of these instruments.

Deferred tax assets, net. The fair value of acquired deferred tax assets and liabilities represents the estimated amount of tax benefits for acquired assets and assumed liabilities that the Company expects to be recognized on it tax returns. The Company utilized an effective tax rate of 29.56% in determining the fair value on deferred taxes, net.

Core deposit intangible. The fair value of the core deposit intangible was determined by evaluating the underlying characteristics of the deposit relationships, including estimated customer attrition, projected deposit interest rates, net maintenance cost of the deposit base, and costs of alternative funding. The value of the after-tax savings on cost of funds is the present value over an estimated fifty-year horizon, using the discount rate applicable to the asset. The core deposit intangible will be amortized over the expected account retention period, which was originally estimated at approximately 10 years or 120 months. The core deposit intangible will be evaluated periodically to determine the reasonableness of the projected amortization period by comparing actual deposit retention to projected retention.

Deposits. The fair values of demand and savings deposits represent the amount payable on demand at acquisition date. The fair value of time deposits was determined using a discounted cash flow approach, which involved determining the present value of the required contractual payments over the remaining life of the time deposits using market-based interest rates.

Borrowings. The fair value of subordinated notes was determined using a discounted cash flow approach, which involved determining the present value of required contractual payments over the estimated life of the notes, factoring in expected redemption dates, discounted at a rate that incorporated market-based interest rates, inclusive of a credit spread and liquidity premium.

NOTE 3 - INVESTMENT SECURITIES

Debt Securities

Debt securities have been classified as either held-to-maturity or available-for-sale in the consolidated balance sheets according to management’s intent. The amortized cost of held-to-maturity debt securities and their approximate fair values at March 31, 2025 and December 31, 2024 were as follows:

(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
March 31, 2025
Taxable municipals	$	553	$	—	$	(76)	$	477

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(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Tax exempt bank-qualified municipals	52,641		—		(5,789)		46,852
	$	53,194	$	—	$	(5,865)	$	47,329
December 31, 2024
Taxable municipals	$	553	$	—	$	(90)	$	463
Tax exempt bank-qualified municipals	52,727		—		(5,367)		47,360
	$	53,280	$	—	$	(5,457)	$	47,823

The amortized cost of available-for-sale debt securities and their approximate fair values at March 31, 2025 and December 31, 2024 were as follows:

(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
March 31, 2025
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	81,019	$	300	$	(3,421)	$	77,898
SBA securities	4,689		6		(80)		4,615
U.S. Treasury	7,677		3		(261)		7,419
U.S. Agency	2,000		—		(272)		1,728
Collateralized mortgage obligations	40,633		135		(2,581)		38,187
Taxable municipals	1,007		—		(89)		918
Tax exempt bank-qualified municipals	830		—		(2)		828
	$	137,855	$	444	$	(6,706)	$	131,593
December 31, 2024
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	87,930	$	109	$	(4,765)	$	83,274
SBA securities	5,423		7		(97)		5,333
U.S. Treasury	12,624		17		(315)		12,326
U.S. Agency	2,000		—		(330)		1,670
Collateralized mortgage obligations	41,615		11		(3,963)		37,663
Taxable municipals	1,007		—		(98)		909
Tax exempt bank-qualified municipals	830		—		(4)		826
	$	151,429	$	144	$	(9,572)	$	142,001

During the three months ended March 31, 2025 and 2024, there were no transfers between held-to-maturity and available-for-sale debt securities.

At March 31, 2025 and December 31, 2024, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of our shareholders’ equity.

Accrued interest receivable on held-to-maturity and available-for-sale debt securities totaled $914 thousand and $879 thousand at March 31, 2025 and December 31, 2024, respectively, and is included within accrued interest receivable and other assets in the consolidated balance sheets. Accrued interest receivable is excluded from the ACL.

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At March 31, 2025, available-for-sale debt securities with an amortized cost of $3.0 million were pledged to the Federal Reserve Bank (“Federal Reserve”) as collateral for a secured public deposits and for other purposes as required by law or contract provisions, in addition to held-to-maturity debt securities with an amortized cost of $53.2 million were pledged as collateral for a secured line of credit with the Federal Reserve. See Note 8 – Borrowing Arrangements for additional information regarding the FHLB and Federal Reserve secured lines of credit. The Company also pledged $10.4 million available-for-sale debt securities to another financial institution to support the collateralization requirement against certain customers’ standby lines of credit.

Contractual Maturities

The amortized cost and estimated fair value of all held-to-maturity and available-for-sale debt securities as of March 31, 2025 by contractual maturities are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Held-to-Maturity				Available-for-Sale
(dollars in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
March 31, 2025
Due in one year or less	$	—	$	—	$	8,668	$	8,645
Due after one year through five years	—		—		12,583		11,700
Due after five years through ten years	28,023		25,426		14,006		12,791
Due after ten years	25,171		21,903		102,598		98,457
	$	53,194	$	47,329	$	137,855	$	131,593

Realized Gains and Losses

There were no gross realized gains and losses for sales and calls of available-for-sale debt securities during the three months ended March 31, 2025 and 2024.

Unrealized Gains and Losses

The gross unrealized losses and related estimated fair values of all available-for-sale debt securities aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2025 and December 31, 2024 are summarized as follows:

	Less than 12 Months				12 Months or Longer				Total
(dollars in thousands)	Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value
March 31, 2025:
Available-for-sale debt securities:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	(811)	$	45,262	$	(2,610)	$	20,793	$	(3,421)	$	66,055
SBA securities	(2)		572		(78)		2,773		(80)		3,345
U.S. Treasury	—		—		(261)		2,434		(261)		2,434
U.S. Agency	—		—		(272)		1,728		(272)		1,728
Collateralized mortgage obligations	(54)		2,650		(2,527)		29,328		(2,581)		31,978
Taxable municipals	—		—		(89)		418		(89)		418
Tax exempt bank-qualified municipals	—		—		(2)		828		(2)		828
	$	(867)	$	48,484	$	(5,839)	$	58,302	$	(6,706)	$	106,786

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	Less than 12 Months				12 Months or Longer				Total
(dollars in thousands)	Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value
December 31, 2024:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	(1,659)	$	47,792	$	(3,106)	$	20,692	$	(4,765)	$	68,484
SBA securities	(2)		924		(95)		3,011		(97)		3,935
U.S. Treasury	—		—		(315)		2,392		(315)		2,392
U.S. Agency	—		—		(330)		1,670		(330)		1,670
Collateralized mortgage obligations	(279)		7,922		(3,684)		28,985		(3,963)		36,907
Taxable municipals	—		—		(98)		409		(98)		409
Tax exempt bank-qualified municipals	—		—		(4)		826		(4)		826
	$	(1,940)	$	56,638	$	(7,632)	$	57,985	$	(9,572)	$	114,623

As of March 31, 2025, the Company had a total of 84 available-for-sale debt securities in a gross unrealized loss position totaling $6.7 million, including 64 securities with total gross unrealized losses of $5.8 million that had been in a continual loss position for twelve months and longer. As of December 31, 2024, the Company had a total of 89 available-for-sale debt securities in a gross unrealized loss position totaling $9.6 million, including 64 securities with total gross unrealized losses of $7.6 million that had been in a continual loss position for twelve months and longer. Such unrealized losses on these investment securities have not been recognized into income.

Unrealized losses on available-for-sale debt securities are recognized in shareholders’ equity as accumulated other comprehensive loss. At March 31, 2025, the Company had a net unrealized loss on available-for-sale debt securities of $6.3 million, or $4.4 million net of tax in accumulated other comprehensive loss, compared to a net unrealized loss of $9.4 million, or $6.6 million net of tax in accumulated other comprehensive loss, at December 31, 2024.

Allowance for Credit Losses on Debt Securities

For available-for-sale debt securities with unrealized losses, management considered the financial condition of the issuer and the Company’s intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value. The Company’s available-for-sale debt securities consisted of U.S. Treasury, U.S. government and agency and government sponsored enterprise securities, and municipals, which historically have had limited credit loss experience. In addition, the Company reviewed the credit rating of the municipal securities. At March 31, 2025, the total fair value of taxable municipal and tax exempt bank-qualified municipal securities was $918 thousand and $828 thousand, respectively. At March 31, 2025, all of these securities were rated AA and above. At December 31, 2024, the total fair value of taxable municipal and tax exempt bank-qualified municipal securities was $909 thousand and $826 thousand, respectively. At December 31, 2024, all of these securities were rated AA and above.

At March 31, 2025, 61 held-to-maturity debt securities with fair values totaling $47.3 million had gross unrealized losses totaling $5.9 million, compared to 61 held-to-maturity debt securities with fair values totaling $47.8 million had gross unrealized losses totaling $5.5 million at December 31, 2024. The Company has the intent and ability to hold the securities classified as held-to-maturity until they mature, at which time the Company will receive full value for the securities. At March 31, 2025 and December 31, 2024, fair values of held-to-maturity debt securities rated AA and above totaled $44.2 million and $44.7 million, respectively and those rated AA- totaled $3.1 million and $3.2 million, respectively.

Management evaluates securities in an unrealized loss position at least on a quarterly basis, and determined that the unrealized losses at March 31, 2025 and 2024 related to each investment were primarily attributable to factors other than credit related, including changes in interest rates driven by the Federal Reserve’s policy to fight against inflation and general volatility in market conditions. As such, the Company applied a zero

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credit loss assumption for these securities and no provision for credit losses was recorded for held-to-maturity or available-for-sale debt securities during the three months ended March 31, 2025 and 2024.

Restricted Stock

As a member of the Federal Reserve System, the Company must hold stock of the Federal Reserve in an amount equal to 3% of the Company’s common stock and additional paid-in capital. In addition, as a member of the Federal Home Loan Bank (“FHLB”) of San Francisco, the Company is required to own stock of the FHLB based on the Company’s outstanding mortgage assets and outstanding advances from the FHLB.

The table below summarizes the Company’s restricted stock investments at March 31, 2025 and December 31, 2024:

(dollars in thousands)	March 31, 2025		December 31, 2024
Federal Reserve Bank	$	15,540	$	15,524
Federal Home Loan Bank	15,305		15,305
	$	30,845	$	30,829

During the three months ended March 31, 2025, the Company purchased $16.0 thousand of Federal Reserve stock, and there were no purchases of FHLB stock.

Other Equity Securities Without A Readily Determinable Fair Value

The Company also has equity securities in the form of capital stock invested in two different banker’s bank stocks which totaled $819 thousand at both March 31, 2025 and December 31, 2024. These equity securities are reported in accrued interest receivable and other assets in the consolidated balance sheets. At March 31, 2025 and December 31, 2024, the Company evaluated the carrying value of these equity securities and determined that they were not impaired. During the three months ended March 31, 2025 and 2024, there were no losses related to changes in the fair value of these equity securities.

The Company has other equity investments and investments in a technology venture capital fund focused on the intersection of fintech and community banking. These equity investments represent variable interest entities (“VIEs”), however the Company is not the primary beneficiary. The Company’s maximum exposure to loss related to its investments in these unconsolidated VIEs is limited to the carrying value of each of the investments plus any unfunded capital commitments. At March 31, 2025 and December 31, 2024, the balance of these investments, which is included in accrued interest receivable and other assets in the consolidated balance sheets, was $7.1 million and $7.1 million, respectively. Total unfunded capital commitments for these investments were $4.0 million at March 31, 2025. These equity securities are measured using the equity method of accounting when the Company’s ownership interest in such investments exceeds 5%, or carried at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer. Cash distributions that are considered a return of capital are recorded as a reduction of the Company’s investment. During the three months ended March 31, 2025, the Company received $68 thousand of net capital distributions from these equity investments. During the three months ended March 31, 2024, the Company received $73 thousand of net capital distributions related to these equity investments. At March 31, 2025 and December 31, 2024, the Company evaluated the carrying value of these equity investments and determined they were not impaired. During the three months ended March 31, 2025 and 2024, there were no losses recognized related to changes in the fair value.

The Company has also invested in and acquired limited partnerships that operate affordable housing projects that qualify for and have received an allocation of federal and/or state low-income housing tax credits. These investments represent VIEs, however the Company is not the primary beneficiary. The Company’s maximum exposure to loss related to its investments in these unconsolidated VIEs is limited to the carrying amount of the investment and previously recorded tax credits which remain subject to recapture by taxing authorities based on compliance features required to be met at the project level. At March 31, 2025 and December 31, 2024, the net amortized balance of these investments was $5.6 million and $5.7 million, respectively, and is included in accrued interest and other assets in the consolidated balance sheets. The unfunded

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portion of these investments totaled $1.7 million and $1.8 million at March 31, 2025 and December 31, 2024, respectively, and is included in accrued interest payable and other liabilities in the consolidated balance sheets.

The following table presents activity in qualifying low income housing projects for the three months ended March 31, 2025 and 2024 follows:

	Three Months Ended
(dollars in thousands)	March 31, 2025		March 31, 2024
Proportional amortization	$	306	$	36
Tax credits	253		49
Contributions	114		—

At March 31, 2025 and December 31, 2024, the Company evaluated the carrying value of these tax credit equity investments and determined they were not impaired, and no loss was recognized related to changes in the fair value.

NOTE 4 - LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans Held for Investment

The Company’s loan portfolio consists primarily of loans to borrowers within the California market effective July 31, 2024. Although the Company seeks to avoid concentrations of loans to a single industry or based upon a single class of collateral, real estate and real estate associated businesses are among the principal industries in the Company’s market area. The Company’s loan portfolio in real estate secured credit represented 77% and 77% of total loans at March 31, 2025 and December 31, 2024, respectively. The Company also originates SBA loans either for sale to institutional investors or for retention in the loan portfolio. Loans identified as held for sale are carried at the lower of cost or market value and separately designated as such in the consolidated financial statements. A portion of the Company’s revenues are from origination of loans guaranteed by the SBA under its various programs and sale of the guaranteed portions of the loans. Funding for these loans depends on annual appropriations by the U.S. Congress.

The composition of the Company’s loan portfolio at March 31, 2025 and December 31, 2024 was as follows:

(dollars in thousands)	March 31, 2025		December 31, 2024
Construction and land development	$	221,437	$	227,325
Real estate - other:
1-4 family residential	157,442		164,401
Multifamily residential	237,896		243,993
Commercial real estate and other	1,755,962		1,767,727
Commercial and industrial	672,468		710,970
Consumer	23,569		24,749
Loans held for investment (1)	3,068,774		3,139,165
Allowance for credit losses	(45,839)		(50,540)
Loans held for investment, net	$	3,022,935	$	3,088,625

(1)Loans held for investment includes net unearned fees of $1.7 million and $1.8 million and net unearned discounts on acquired loans of $51.3 million and $58.5 million at March 31, 2025 and December 31, 2024, respectively. The Company recognized $5.7 million and $61 thousand in interest accretion for acquired loans for the three months ended March 31, 2025 and 2024, respectively.

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The Company has pledged $2.18 billion of loans with the FHLB under a blanket lien, of which an unpaid principal balance of $1.33 billion was considered as eligible collateral under this secured borrowing arrangement and loans with an unpaid principal balance totaling $363.0 million were pledged as collateral under a secured borrowing arrangement with the Federal Reserve as of March 31, 2025. See Note 8 – Borrowing Arrangements for additional information regarding the FHLB and Federal Reserve secured lines of credit.

Loans Held for Sale

At March 31, 2025, the Company had loans held for sale totaling $4.6 million, consisting of SBA 7(a) loans. At December 31, 2024, loans held for sale totaled $17.2 million, consisting of $10.3 million SBA 7(a) loans and $6.9 million C&I loans transferred from loans held for investment. The Company accounts for loans held for sale at the lower of carrying value or fair value. At March 31, 2025 and December 31, 2024, the fair value of loans held for sale totaled $4.9 million and $17.9 million, respectively.

Credit Quality Indicators

The Company categorizes loans using risk ratings based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. Larger, non-homogeneous loans such as CRE and C&I loans are analyzed individually for risk rating assessment. For purposes of risk classification, 1-4 Family Residential loans for investment purposes are evaluated with CRE loans. This analysis is performed on an ongoing basis as new information is obtained. The Company uses the following definitions for risk ratings:

Pass - Loans classified as pass include loans not meeting the risk ratings defined below.

Special Mention - Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss - Loans classified as loss are considered uncollectible and of such little value that their continuance as bankable assets is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather that it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future.

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The risk category of loans by class of loans and origination year as of March 31, 2025 follows:

	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving Loans Amortized Cost Basis Converted to Term During the Period
(dollars in thousands)	2025		2024		2023		2022		2021		Prior						Total
March 31, 2025
Construction and land development
Pass	$	27	$	35,329	$	31,371	$	72,500	$	39,617	$	2,668	$	9,858	$	—	$	191,370
Special mention	—		—		—		—		—		13,660		—		—		13,660
Substandard	—		—		—		14,659		—		1,748		—		—		16,407
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total construction and land development	27		35,329		31,371		87,159		39,617		18,076		9,858		—		221,437
YTD gross charge-offs	—		—		—		—		—		—		—		—		—
Real estate - other:
1-4 family residential
Pass	—		19,045		15,527		33,535		17,805		23,898		41,896		3,023		154,729
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		2,713		—		—		—		—		2,713
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total 1-4 family residential	—		19,045		15,527		36,248		17,805		23,898		41,896		3,023		157,442
YTD gross charge-offs	—		—		—		—		—		—		—		—		—
Multifamily residential
Pass	5,478		15,997		11,073		71,793		88,747		41,795		—		—		234,883
Special mention	—		—		—		—		—		3,013		—		—		3,013
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—

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	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving Loans Amortized Cost Basis Converted to Term During the Period
(dollars in thousands)	2025		2024		2023		2022		2021		Prior						Total
March 31, 2025
Loss	—		—		—		—		—		—		—		—		—
Total multifamily residential	5,478		15,997		11,073		71,793		88,747		44,808		—		—		237,896
YTD gross charge-offs	—		—		—		—		—		—		—		—		—
Commercial real estate and other
Pass	15,256		119,152		85,876		435,705		394,847		542,084		79,472		15,868		1,688,260
Special mention	—		—		175		15,283		11,222		8,925		6,199		—		41,804
Substandard	—		701		7,385		194		4,441		13,177		—		—		25,898
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial real estate and other	15,256		119,853		93,436		451,182		410,510		564,186		85,671		15,868		1,755,962
YTD gross charge-offs	—		—		—		—		1,654		—		—		—		1,654
Commercial and industrial
Pass	30,780		52,284		36,036		69,156		24,375		72,781		303,841		809		590,062
Special mention	—		222		43		—		24		1,173		9,510		4,972		15,944
Substandard	—		116		1,133		21,675		2,730		2,652		38,156		—		66,462
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial and industrial	30,780		52,622		37,212		90,831		27,129		76,606		351,507		5,781		672,468
YTD gross charge-offs	—		—		91		—		—		1,141		—		—		1,232
Consumer
Pass	152		371		—		929		21,654		67		90		—		23,263
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		306		—		—		—		306
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total consumer	152		371		—		929		21,960		67		90		—		23,569
YTD gross charge-offs	$	—	$	—	$	—	$	—	$	273	$	—	$	—	$	—	$	273
Total by risk rating:
Pass	$	51,693	$	242,178	$	179,883	$	683,618	$	587,045	$	683,293	$	435,157	$	19,700	$	2,882,567

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	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving Loans Amortized Cost Basis Converted to Term During the Period
(dollars in thousands)	2025		2024		2023		2022		2021		Prior						Total
March 31, 2025
Special mention	—		222		218		15,283		11,246		26,771		15,709		4,972		74,421
Substandard	—		817		8,518		39,241		7,477		17,577		38,156		—		111,786
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total loans	$	51,693	$	243,217	$	188,619	$	738,142	$	605,768	$	727,641	$	489,022	$	24,672	$	3,068,774
YTD gross charge-offs	$	—	$	—	$	91	$	—	$	1,927	$	1,141	$	—	$	—	$	3,159

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The risk category of loans by class of loans and origination year as of December 31, 2024 follows:

	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving Loans Amortized Cost Basis Converted to Term During the Period
(dollars in thousands)	2024		2023		2022		2021		2020		Prior						Total
December 31, 2024
Construction and land development
Pass	$	25,812	$	25,857	$	84,638	$	47,687	$	7,297	$	2,328	$	9,865	$	—	$	203,484
Special mention	—		—		—		—		12,431		—		—		—		12,431
Substandard	—		—		9,659		—		1,669		82		—		—		11,410
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total construction and land development	25,812		25,857		94,297		47,687		21,397		2,410		9,865		—		227,325
YTD gross charge-offs	—		—		967		—		—		—		—		—		967
Real estate - other:
1-4 family residential
Pass	20,297		15,581		33,660		17,902		6,683		18,628		44,286		—		157,037
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		2,895		—		—		—		4,469		—		7,364
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total 1-4 family residential	20,297		15,581		36,555		17,902		6,683		18,628		48,755		—		164,401
YTD gross charge-offs	—		—		—		—		—		—		1		—		1
Multifamily residential
Pass	15,998		11,087		85,834		84,671		5,107		37,510		—		—		240,207
Special mention	—		—		—		—		—		3,786		—		—		3,786
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total multifamily residential	15,998		11,087		85,834		84,671		5,107		41,296		—		—		243,993
YTD gross charge-offs	—		—		1,456		—		—		—		—		—		1,456
Commercial real estate and other
Pass	111,911		86,261		454,470		399,393		100,110		453,301		104,456		148		1,710,050

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	Term Loans Amortized Cost Basis by Origination Year												Revolving Loans Amortized Cost Basis		Revolving Loans Amortized Cost Basis Converted to Term During the Period
(dollars in thousands)	2024		2023		2022		2021		2020		Prior						Total
Special mention	—		9,568		2,583		11,268		2,264		9,848		—		495		36,026
Substandard	—		—		—		11,551		—		10,100		—		—		21,651
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial real estate and other	111,911		95,829		457,053		422,212		102,374		473,249		104,456		643		1,767,727
YTD gross charge-offs	—		—		51		—		—		—		—		—		51
Commercial and industrial
Pass	55,350		39,484		91,049		38,303		14,663		63,973		314,284		—		617,106
Special mention	307		46		1,403		1,322		230		1,920		11,868		—		17,096
Substandard	120		1,286		20,859		2,890		—		3,543		48,070		—		76,768
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial and industrial	55,777		40,816		113,311		42,515		14,893		69,436		374,222		—		710,970
YTD gross charge-offs	—		37		24		—		—		—		—		—		61
Consumer
Pass	692		—		1,019		22,340		81		6		206		—		24,344
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		405		—		—		—		—		405
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total consumer	692		—		1,019		22,745		81		6		206		—		24,749
YTD gross charge-offs	$	—	$	—	$	—	$	238	$	—	$	—	$	—	$	—	$	238
Total by risk rating:
Pass	$	230,060	$	178,270	$	750,670	$	610,296	$	133,941	$	575,746	$	473,097	$	148	$	2,952,228
Special mention	307		9,614		3,986		12,590		14,925		15,554		11,868		495		69,339
Substandard	120		1,286		33,413		14,846		1,669		13,725		52,539		—		117,598
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total loans	$	230,487	$	189,170	$	788,069	$	637,732	$	150,535	$	605,025	$	537,504	$	643	$	3,139,165
YTD gross charge-offs	$	—	$	37	$	2,498	$	238	$	—	$	—	$	1	$	—	$	2,774

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Past Due and Nonaccrual Loans

A summary of past due loans as of March 31, 2025 and December 31, 2024 follows:

	Accruing Loans
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Nonaccrual		Current		Total
March 31, 2025
Construction and land development	$	—	$	—	$	—	$	—	$	14,659	$	206,778	$	221,437
Real estate - other:
1-4 family residential	—		—		—		—		—		157,442		157,442
Multifamily residential	—		—		—		—		—		237,896		237,896
Commercial real estate and other	4,569		—		—		4,569		1,763		1,749,630		1,755,962
Commercial and industrial	309		—		—		309		6,358		665,801		672,468
Consumer	41		184		45		270		—		23,299		23,569
	$	4,919	$	184	$	45	$	5,148	$	22,780	$	3,040,846	$	3,068,774

	Accruing Loans
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Nonaccrual		Current		Total
December 31, 2024
Construction and land development	$	4,104	$	—	$	—	$	4,104	$	9,659	$	213,562	$	227,325
Real estate - other:
1-4 family residential	40		4,469		—		4,509		2,895		156,997		164,401
Multifamily residential	—		—		—		—		—		243,993		243,993
Commercial real estate and other	195		—		—		195		8,915		1,758,617		1,767,727
Commercial and industrial	1,866		1,113		—		2,979		4,917		703,074		710,970
Consumer	69		226		150		445		—		24,304		24,749
	$	6,274	$	5,808	$	150	$	12,232	$	26,386	$	3,100,547	$	3,139,165

The Company had $45 thousand and $150 thousand in consumer solar loans that were over 90 days past due that were accruing interest at March 31, 2025 and December 31, 2024, respectively.

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Nonaccrual Loans

A summary of total nonaccrual loans and the amount of nonaccrual loans with no related ACL as of March 31, 2025 and December 31, 2024 follows:

	Nonaccrual Loans
	Collateral Dependent Loans				Non-Collateral Dependent Loans
(dollars in thousands)	Balance		ACL		Balance		ACL		Total Nonaccrual Loans		Nonaccrual Loans with no ACL
March 31, 2025
Construction and land development	$	14,659	$	—	$	—	$	—	$	14,659	$	14,659
Real estate - other:
1-4 family residential	—		—		—		—		—		—
Multifamily residential	—		—		—		—		—		—
Commercial real estate and other	1,763		170		—		—		1,763		83
Commercial and industrial	4,685		769		1,673		659		6,358		348
Consumer	—		—		—		—		—		—
Total	$	21,107	$	939	$	1,673	$	659	$	22,780	$	15,090

	Nonaccrual Loans
	Collateral Dependent Loans				Non-Collateral Dependent Loans
(dollars in thousands)	Balance		ACL		Balance		ACL		Total Nonaccrual Loans		Nonaccrual Loans with no ACL
December 31, 2024
Construction and land development	$	9,659	$	—	$	—	$	—	$	9,659	$	9,659
Real estate - other:
1-4 family residential	2,895		—		—		—		2,895		2,895
Multifamily residential	—		—		—		—		—		—
Commercial real estate and other	8,915		820		—		—		8,915		—
Commercial and industrial	4,809		675		108		—		4,917		108
Consumer	—		—		—		—		—		—
Total	$	26,278	$	1,495	$	108	$	—	$	26,386	$	12,662

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Modified Loans to Borrowers Experiencing Financial Difficulty

The following table presents the period-end amortized cost basis of modified loans to borrowers experiencing financial difficulty during the three months ended March 31, 2025. There were no loans that were modified during the three months ended March 31, 2024.

	Three Months Ended 03/31/2025
(dollars in thousands)	Term Extension		Total		Total as a % of Loan Class
Construction and land development	$	1,669	$	1,669	0.8	%
Commercial and industrial	348		348		0.1	%
Total	$	2,017	$	2,017	0.1	%

The following tables present the financial effect of loans to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2025. There were no loans that were modified during the three months ended March 31, 2024.

	Three Months Ended 03/31/2025
(dollars in thousands)	Weighted-Average Term Extension  (in Months)
Construction and land development	6
Commercial and industrial	9

The following tables present a payment aging analysis of the period-end amortized cost of loans to borrowers experiencing financial difficulty that were modified during the twelve month period ended March 31, 2025. There were no loans that were modified during the twelve month period ended March 31, 2024.

	Accruing Loans
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Nonaccrual		Current		Total
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	1,669	$	1,669
Commercial and industrial	—		—		—		—		3,743		14,514		18,257
	$	—	$	—	$	—	$	—	$	3,743	$	16,183	$	19,926

During the three months ended March 31, 2025, defaults of loans that had been modified within the last 12 months were $358 thousand. During the three months ended March 31, 2024, there were no defaults of loans that had been modified within the last 12 months.

Collateral Dependent Loans

Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. Estimates for costs to sell are included in the determination of the ACL when liquidation of the collateral is anticipated. In cases where the loan is well secured and the estimated value of the collateral exceeds the amortized cost of the loan, no ACL is recorded.

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A summary of collateral dependent loans by collateral type as of March 31, 2025 and December 31, 2024 follows:

	Type of Collateral
(dollars in thousands)	Commercial Real Estate		Residential Real Estate		Business Assets
March 31, 2025
Construction and land development	$	—	$	14,659	$	—
Real estate - other:
1-4 family residential	—		—		—
Commercial real estate and other	—		1,763		—
Commercial and industrial	1,391		—		3,294
	$	1,391	$	16,422	$	3,294
December 31, 2024
Construction and land development	$	—	$	9,659	$	—
Real estate - other:
1-4 family residential	—		2,895		—
Commercial real estate and other	8,915		—		—
Commercial and industrial	1,402				3,407
	$	10,317	$	12,554	$	3,407

Allowance for Credit Losses - Loans

The ACL consists of: (i) a specific allowance established for CECL on loans individually evaluated, (ii) a quantitative allowance for current expected loan losses based on the portfolio and expected economic conditions over a reasonable and supportable forecast period that reverts back to long-term trends to cover the expected life of the loan, (iii) a qualitative allowance including management judgment to capture factors and trends that are not adequately reflected in the quantitative allowance, and (iv) the ACL for off-balance sheet credit exposure for unfunded loan commitments.

For prepayment and curtailment rates, the Company used its own historical quarterly prepayment and curtailment experience covering the period starting February 2021 through February 2025 to estimate the ACL. The Company used the probability-weighted two-scenario forecasts, representing a base-case scenario and one downside scenario, to estimate the ACL. The Company utilized economic forecasts released by Moody’s Analytics during the second week of March 2025. Other sources of economic forecasts and meeting minutes of the Federal Open Market Committee meeting were also considered by the Company when determining the scenario weighting. At March 31, 2025, modest adjustments were made to the Moody’s March 2025 U.S. baseline forecast based on a reassessment of policy actions, new data and market movements. Real GDP growth is expected to weaken starting in the second quarter of 2025 through first quarter of 2026 and slowly rebounded starting in the second quarter of 2026. Moody’s economic forecast assumed a 25 basis point interest rate cut in both September and December of 2025. The underlying assumptions in the Moody’s baseline economic forecasts remained consistent in the expectation that the Federal Reserve is expected to gradually reduce the policy rate to its neutral level of 3% by late 2026.

Moody's updated its baseline forecast, decreasing the real GDP projection from the previous quarter's estimate, bringing it to an annual average of 1.9% for 2025. Growth in 2025 was revised downward by 0.3% from 2.2%. For 2026, the national GDP was forecasted to be slightly higher at 1.7%. The Conference Board’s forecast for 2025 GDP is now 2.0%, down from 2.7% previously and in line with Moody’s Baseline scenario of 1.9%. The Conference Board’s 2026 GDP forecast of 1.6% compares to Moody’s 2026 Baseline forecast of 1.7%. The upward revision is now in line with Moody’s Baseline scenario while the Federal Reserve members median projection for GDP growth was 1.7% and 1.8% for 2025 and 2026, respectively.

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Moody’s economic forecasts for California suggested California gross state product (“GSP”) growth of 1.6% in 2025, and rebounding to 1.8% in 2026. The report forecasts 2025 unemployment at 4.9%, and falling to 4.8% in 2026. Beacon Economics also forecasted the California unemployment rate falling to 5.1% from the second quarter of 2025 to the first quarter of 2026.

Moody’s downside scenario forecasted the economy to fall into a mild recession starting in the second quarter of 2025. The decline lasts for three quarters, and the peak-to-trough decline in real GDP is 1.0%. Despite the recession in the second quarter of 2025, rising inflation causes the Fed to raise the fed funds rate. It resumes easing in the third quarter of 2025 as the recession persists, and the Fed funds rate falls below the baseline at that point. The weakening in the economy causes the unemployment rate to rise in the first quarter of 2025. Moody’s downside scenario forecasted for California suggested the state unemployment rate would reach 7.91% in the first quarter of 2026 from the weakening economy. The outlook for GSP growth rate was adjusted lower at the near term in baseline and downside scenario. The other economic forecasts used in the ACL calculation were revised higher in the near term in baseline and downside scenario. These varied changes in key economic forecasts for California are expected to have a mixed impact on the Company's ACL.

Based on the above reviews and analyses, the Company decided to keep using the two probability-weighted scenario forecasts. The recommended weightings are based on the Federal Open Market Committee (“FOMC”) lowering the Fed funds rate by 100 basis points since its September 2024 meeting, inflation trending lower, strong recent jobs reports and increasing GDP forecasts suggesting more positive growth in the coming quarters. The Company opts to utilize solely the base-case scenario for the ACL model; however, given recent heightened domestic and geopolitical uncertainty and an inflation level that is still considerably above the Fed’s 2.0% target rate, it is prudent to assign a weighting to a downside scenario (S2) that considered the potential for rising inflation. Inflation is the most difficult economic variable to predict, as it is subject to a variety of factors and there are limited tools to control it.. A new presidential administration promised a change in U.S. economic policy, the effects of which are unknown and may potentially lead to higher inflation, as could other domestic and geopolitical developments. Incorporating the S2 scenario in our ACL model would expect to provide a hedge against the potential for increasing inflation in an uncertain economic environment.

During the first quarter of 2025, the Company updated its historical prepayment and curtailment rates analysis, which reflected a slight increase in prepayment rates and slight decrease in curtailment rates from the fourth quarter of 2024 primarily due to higher payoffs and lower paydowns.

Accrued interest receivable on loans, totaled $10.1 million and $11.7 million at March 31, 2025 and December 31, 2024, respectively, and is included within accrued interest receivable and other assets in the accompanying consolidated balance sheets. Accrued interest receivable is excluded from the ACL.

Allowance for Credit Losses - Unfunded Loan Commitments

The allowance for credit losses on unfunded credit commitments is maintained at a level that management believes to be sufficient to absorb estimated expected credit losses related to unfunded credit facilities. The Company evaluates the loss exposure for unfunded loan commitments to extend credit following the same principles used for the ACL, with consideration for experienced utilization rates on client credit lines and the inherently lower risk of unfunded loan commitments relative to disbursed commitments. The Company recognized a reversal of credit losses for unfunded loan commitments of $618 thousand for the three months ended March 31, 2025. There was a $17 thousand reversal of credit losses for unfunded loan commitments for the three months ended March 31, 2024. The reversal of credit losses for unfunded loan commitments is included in reversal of credit losses in the consolidated statements of operations. The reserve for unfunded loan commitments was $2.5 million and $3.1 million at March 31, 2025 and December 31, 2024, respectively. The reserve for unfunded loan commitments is included in accrued interest payable and other liabilities in the consolidated balance sheets.

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A summary of the changes in the ACL for loans and unfunded commitments for the periods indicated follows:

	Three Months Ended March 31,
(dollars in thousands)	2025		2024
Allowance for loan losses (ALL)
Balance, beginning of period	$	50,540	$	22,569
Reversal of loan losses	(3,158)		(314)
Charge-offs	(3,159)		(1)
Recoveries	1,616		—
Net charge-offs	(1,543)		(1)
Balance, end of period	$	45,839	$	22,254
Reserve for unfunded loan commitments
Balance, beginning of period	$	3,103	$	933
Reversal of credit losses for unfunded loan commitments	(618)		(17)
Balance, end of period	2,485		916
Allowance for credit losses, end of period	$	48,324	$	23,170

A summary of changes in the ALL by loan portfolio segment for the periods indicated follows:

(dollars in thousands)	Construction and Land Development		Real Estate - Other		Commercial & Industrial		Consumer		Total
Three Months Ended March 31, 2025
Beginning of period	$	1,953	$	29,398	$	18,056	$	1,133	$	50,540
(Reversal of) provision for loan losses	(249)		(818)		(2,273)		182		(3,158)
Charge-offs	—		(1,654)		(1,232)		(273)		(3,159)
Recoveries	—		3		1,613		—		1,616
Net charge-offs	—		(1,651)		381		(273)		(1,543)
End of period	$	1,704	$	26,929	$	16,164	$	1,042	$	45,839
Three Months Ended March 31, 2024
Beginning of period	$	2,032	$	16,280	$	4,242	$	15	$	22,569
Provision for (reversal of) loan losses	101		293		(704)		(4)		(314)
Charge-offs	—		(1)		—		—		(1)
Recoveries	—		—		—		—		—
Net charge-offs	—		(1)		—		—		(1)
End of period	$	2,133	$	16,572	$	3,538	$	11	$	22,254

Other Real Estate Owned (“OREO”), Net

Real estate acquired by foreclosure or deed in lieu of foreclosure is recorded at fair value less costs to sell at the date of foreclosure, establishing a new cost basis by a charge to the ACL, if necessary. The Company had $4.1 million of foreclosed assets at March 31, 2025 and December 31, 2024.

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NOTE 5 - TRANSFERS AND SERVICING OF FINANCIAL ASSETS

The Company has originated loans that are serviced for others, including loans partially guaranteed by the SBA, some of which have been sold in the secondary market, as well as CRE loans and C&I loans participated with various other financial institutions and special purpose vehicle (“SPV”) participations for the Main Street loans. Loans sold and serviced for others are accounted for as sales and are therefore not included in the accompanying consolidated balance sheets. Loans serviced for others totaled $145.5 million and $138.0 million at March 31, 2025 and December 31, 2024, respectively. This includes SBA loans serviced for others of $38.9 million and $33.2 million at March 31, 2025, and December 31, 2024, for which there was a related servicing asset of $452 thousand and $344 thousand, respectively.

Consideration for each SBA loan sale includes the cash received and a related servicing asset. The Company receives servicing fees ranging from 0.25% to 1.00% for the services provided over the life of the loan. The servicing asset is based on the estimated fair value of these future cash flows to be collected. The risks inherent in SBA servicing assets primarily relates to accelerated prepayment of loans in excess of what was originally modeled driven by changes in interest rates and a reduction in the estimated future cash flows.

The servicing asset activity includes additions from loan sales with servicing retained, and reductions from amortization as the serviced loans are repaid and servicing fees are earned. The SBA servicing asset is reported in accrued interest receivable and other assets in the consolidated balance sheets.

A summary of changes in the SBA servicing asset for the three months ended March 31, 2025 and 2024 follows:

	Three Months Ended March 31,
(dollars in thousands)	2025		2024
Balance, beginning of period	$	344	$	546
Additions	164		109
Amortization (1)	(56)		(31)
Balance, end of period	$	452	$	624

(1) Amortization included accelerated amortization of $29 thousand and $10 thousand for the three months ended March 31, 2025 and 2024, respectively.

SBA 7(a) loans sold during the three months ended March 31, 2025 totaled $9.0 million resulting in total gains on sale of SBA loans of $577 thousand. SBA 7(a) loans sold during the three months ended March 31, 2024 totaled $6.3 million resulting in total gains on sale of SBA loans of $415 thousand.

The fair value of the servicing asset approximated the carrying value at March 31, 2025 and December 31, 2024. The significant assumptions used in the valuation of the SBA servicing asset at March 31, 2025 and December 31, 2024 included:

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(dollars in thousands)	March 31, 2025	December 31, 2024
Discount rate:
Range	5.8% – 21.0%	5.8% – 23.3%
Weighted average	12.7%	14.3%
Prepayment speed:
Range	13.5% – 38.4%	12.9% – 40.2%
Weighted average	19.6%	20.5%

The following table presents the components of net servicing fees, included in servicing and related income on loans, net in the consolidated statements of operations, for the three months ended March 31, 2025 and 2024:

	Three Months Ended March 31,
(dollars in thousands)	2025		2024
Contractually specified fees	$	90	$	92
Amortization	(56)		(31)
Net servicing fees	$	34	$	61

NOTE 6 - GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill, the excess purchase price over the fair value of all identifiable assets and liabilities acquired, totaled $111.8 million at March 31, 2025 and December 31, 2024. Goodwill is reviewed for impairment at least annually during the fourth quarter of each fiscal year. On an ongoing basis, we qualitatively assess if current events or circumstances warrant the need for an interim quantitative assessment of goodwill impairment. We also monitor fluctuations in our stock price.

The Company performed a qualitative assessment for the annual impairment review at December 31, 2024, and as a result of that assessment had determined that there has been no impairment to goodwill. There were no triggering events during the first quarter of 2025 that caused management to evaluate goodwill for a quantitative impairment analysis as of March 31, 2025.

The following table presents changes in the carrying amount of goodwill for the three months ended March 31, 2025 and 2024:

	Three Months Ended March 31,
(dollars in thousands)	2025		2024
Balance, beginning of period	$	111,787	$	37,803
Adjustments to goodwill(1)	(7)		—
Balance, end of period	$	111,780	$	37,803

(1)During the three months ended March 31, 2025, the goodwill adjustments were related to a true-up of the low-income housing tax credit investments acquired from the CALB merger, offset by CALB state net operating losses that cannot be utilized post-merger.

Core deposit intangibles are amortized over remaining periods of 3.8 to 9.3 years. Trade name is amortized over a remaining period of 1.3 years. As of March 31, 2025, the weighted-average remaining amortization period for intangible assets was approximately 9.1 years.

The Company performs the annual impairment analysis for the intangibles assets at least annually during the second half of each fiscal year. The Company evaluated current conditions and concluded there had been no significant changes in the economic environment or future projections since the annual intangible assets impairment test performed at November 30, 2024 and therefore, believes that there was no impairment as of

42

March 31, 2025. Management will continue to evaluate the economic conditions at future reporting periods for applicable changes. The following table presents the changes in intangible assets for the three months ended March 31, 2025 and 2024.

	Three Months Ended March 31,
(dollars in thousands)	2025		2024
Gross balance, beginning of period	$	27,138	$	4,185
Additions	—		—
Gross balance, end of period	$	27,138	$	4,185
Accumulated amortization:
Balance, beginning of period	$	(4,867)	$	(2,990)
Amortization	(948)		(65)
Balance, end of period	(5,815)		(3,055)
Intangible assets, net, end of period	$	21,323	$	1,130

Future estimated amortization expense is as follows:

(dollars in thousands)	Amount
Remainder of 2025	$	2,844
2026	3,138
2027	2,761
2028	2,465
2029	2,160
Thereafter	7,955
	$	21,323

NOTE 7 - DEPOSITS

The Company is a participant in the Certificate of Deposit Account Registry Service (“CDARS”), IntraFi Network Insured Cash Sweep (“ICS”), and Reich & Tang Deposit Solutions (“R&T”) network. The Company receives 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. These reciprocal deposits are not required to be treated as brokered deposits up to the lesser of 20% of the Bank’s total liabilities or $5 billion.

As of March 31, 2025, reciprocal deposits increased to $763.6 million, representing 22.8% of total deposits and 22.6% of Bank’s total liabilities, compared to $754.4 million, or 22.2% of total deposits at December 31, 2024. The excess over 20% increased the Bank’s wholesale funding to total assets ratio and net non-core funding dependence ratio. These two ratios were still within the Bank's internal policy limit. In connection with the Merger, the Company acquired $442.7 million in fair value of reciprocal deposits, of which $98.4 million was in ICS, $306.6 million in R&T and $37.7 million in CDARS.

Time deposits that exceeded the FDIC insurance limit of $250,000 amounted to $83.0 million and $80.6 million as of March 31, 2025 and December 31, 2024, respectively. Brokered time deposits totaled $13.8 million and $121.1 million as of March 31, 2025 and December 31, 2024, respectively.

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The Company participates in a state public deposits program that allows it to receive deposits from the state or from political subdivisions within the state in amounts that would not be covered by the FDIC. This program provides a stable source of funding to the Company. As of March 31, 2025 and December 31, 2024, total collateralized deposits, including the deposits of State of California and their public agencies, were $27.1 million and $25.1 million, respectively, and were collateralized by letters of credit issued by the FHLB under the Company’s secured line of credit with the FHLB. See Note 8 – Borrowing Arrangements for additional information regarding the FHLB secured line of credit.

At March 31, 2025, the scheduled maturities of time deposits were as follows:

(dollars in thousands)	Amount
Remainder of 2025	$	164,804
2026	17,217
2027	112
2028	135
2029 and thereafter	126
	$	182,394

NOTE 8 - BORROWING ARRANGEMENTS

A summary of outstanding borrowings as of March 31, 2025 and December 31, 2024 follows:

(dollars in thousands)	March 31, 2025		December 31, 2024
FHLB advances	$	—	$	—
Subordinated notes	70,308		69,725
Total borrowings	$	70,308	$	69,725

Federal Home Loan Bank Secured Line of Credit

At March 31, 2025, the Company had a secured line of credit of $734.8 million from the FHLB, of which $687.8 million was available. This secured borrowing arrangement is collateralized under a blanket lien on qualifying real estate loans and is subject to the Company providing adequate collateral and continued compliance with the Advances and Security Agreement and other eligibility requirements established by the FHLB. At March 31, 2025, the Company had pledged $2.18 billion of qualifying loans with the FHLB under a blanket lien, of which an unpaid principal balance of $1.33 billion was considered as eligible collateral under this secured borrowing arrangement. In addition, at March 31, 2025, the Company used $47.0 million of its secured FHLB borrowing capacity by having the FHLB issue letters of credit to meet collateral requirements for deposits from the State of California and other public agencies.

There were no borrowings at March 31, 2025 and December 31, 2024.

Federal Reserve Bank Secured Line of Credit

At March 31, 2025, the Company had credit availability of $353.0 million at the Federal Reserve discount window to the extent of collateral pledged. At March 31, 2025, the Company had pledged held-to-maturity debt securities with an amortized cost of $53.2 million as collateral, and qualifying loans with an unpaid principal balance of $363.0 million as collateral through the Borrower-in-Custody (“BIC”) program. The Company also pledged available-for-sale debt securities with an amortized cost of $3.0 million as collateral for secured public deposits and for other purposes as required by law or contract provisions. The Company had no discount window borrowings at March 31, 2025 and December 31, 2024.

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Federal Funds Unsecured Lines of Credit

At March 31, 2025, the Company had four overnight unsecured credit lines from correspondent banks totaling $90.5 million. The lines are subject to annual review. There were no outstanding borrowings under these lines at March 31, 2025 and December 31, 2024.

Fixed-to-Floating Rate Subordinated Notes

On May 28, 2020, the Company issued $18 million of 5.50% Fixed-to-Floating Rate Subordinated Notes Due 2030 (the “Notes”). The Notes mature March 25, 2030 and accrue interest at a fixed rate of 5.50% through the fixed-rate period to March 26, 2025, after which interest accrues at a floating rate of 90-day Secured Overnight Financing Rate (“SOFR”) plus 3.50%, until maturity, unless redeemed early, at the Company’s option, after the end of the fixed-rate period. Issuance costs of $475 thousand were incurred and are being amortized over the first 5-year fixed term of the Notes; unamortized issuance costs at March 31, 2025 and December 31, 2024, were $16 thousand and $40 thousand, respectively. The net unamortized issuance costs are netted against the balance and recorded in borrowings in the consolidated balance sheets. The amortization expense is recorded in interest expense in the consolidated statements of operations. At March 31, 2025, the Company was in compliance with all covenants and terms of the Notes.

In connection with the Merger, the Company assumed $20 million in subordinated debt, with a fixed interest rate of 5.00% and a stated maturity of September 30, 2030. Beginning September 30, 2025, the interest rate changes to a quarterly variable rate equal to the then current 90-day SOFR plus 4.88%, until maturity, unless redeemed early, at the Company’s option, after the end of the fixed-rate period. The subordinated debt was initially recognized with a fair value discount of $794 thousand. At March 31, 2025 and December 31, 2024, the net unamortized fair value discount was $340 thousand and $509 thousand, respectively, The net unamortized fair value discount is netted against the balance and recorded in borrowings in the consolidated balance sheets. The amortization of the fair value discount is recorded in interest expense in the consolidated statements of operations. At March 31, 2025, the Company was in compliance with all covenants and terms of these notes.

In addition and in connection with the Merger, the Company assumed an additional $35 million in subordinated debt, with a fixed interest rate of 3.50% and a stated maturity of September 1, 2031. Beginning August 17, 2026, the interest rate changes to a quarterly variable rate equal to the then current 90-day SOFR plus 2.86%, until maturity, unless redeemed early, at the Company’s option, after the end of the fixed-rate period. The subordinated debt was initially recognized with a fair value discount of $3.4 million. At March 31, 2025 and December 31, 2024, the net unamortized fair value discount was $2.3 million and $2.7 million, respectively. The net unamortized fair value discount is netted against the balance and recorded in borrowings in the consolidated balance sheets. The amortization of the fair value discount is recorded in interest expense in the consolidated statements of operations. At March 31, 2025, the Company was in compliance with all covenants and terms of these notes.

NOTE 9 - SHAREHOLDERS’ EQUITY

Common Stock Repurchase Plan

On June 14, 2023, the Company announced an authorized share repurchase plan, providing for the repurchase of up to 550,000 shares of the Company’s outstanding common stock, or approximately 3% of its then outstanding shares. On May 1, 2025 the Company announced an increase in the number of shares authorized for repurchase to 1,600,000 shares. Repurchases under the program may occur from time to time in open market transactions, in privately negotiated transactions, or by other means in accordance with federal securities laws and other restrictions. The Company intends to fund its repurchases from available working capital and cash provided by operating activities. The timing of repurchases, as well as the number of shares repurchased, will depend on a variety of factors, including price; trading volume; business, economic and general market conditions; and the terms of any Rule 10b5-1 plan adopted by the Company. The repurchase program has no expiration date and may be suspended, modified, or terminated at any time without prior notice.

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There were no shares repurchased under this share repurchase plan during the three months ended March 31, 2025.

During the third quarter of 2024, the Company issued 13,579,454 shares of common stock, including net shares for the settlement of accelerated restricted stock units, in connection with the Merger (refer to Note 2 - Business Combinations for additional information)

NOTE 10 - EARNINGS PER SHARE (“EPS”)

The following is a reconciliation of net income and shares outstanding to the income and number of shares used to compute EPS for the three months ended March 31, 2025 and 2024:

	Three Months Ended March 31,
(dollars in thousands, except share and per share data)	2025		2024
Net income	$	16,853	$	4,935
Weighted average common shares outstanding - basic	32,318,809		18,426,848
Dilutive effect of outstanding:
Stock options and unvested stock grants	379,418		374,868
Weighted average common shares outstanding - diluted	32,698,227		18,801,716
Earnings per common share - basic	$	0.52	$	0.27
Earnings per common share - diluted	$	0.52	$	0.26

For the three months ended March 31, 2025 and 2024, there were 60,266 and 1,191, respectively, restricted stock units that were not included in the computation of diluted earnings per share, because they were anti-dilutive.

NOTE 11 - RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Bank has made loans to certain directors, their related interests with which they are associated, and beneficial owners with more than 5% of any class of the Company’s voting securities. The balance of these loans outstanding and activity in related party loans for the three months ended March 31, 2025 and 2024 follows:

	Three Months Ended March 31,
(dollars in thousands)	2025		2024
Balance, beginning of period	$	27,734	$	5,928
New credit granted	—		—
Repayments	(967)		(615)
Balance, end of period	$	26,767	$	5,313

Directors and related interests deposits at March 31, 2025 and December 31, 2024, amounted to approximately $64.7 million and $62.9 million, respectively.

The Company leases its Ramona branch office from a beneficial owner who holds more than 5% of the Company’s voting securities and is a former member of the Company’s Board of Directors under an operating lease expiring in 2027 on terms considered to be prevailing in the market at the time of the lease. Total lease expense for the three months ended March 31, 2025 and 2024 was $11 thousand and $11 thousand, respectively,

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and future minimum lease payments under the lease were $96 thousand and $107 thousand, respectively as of March 31, 2025 and December 31, 2024.

In April 2022, the holding company entered into an investment commitment of $2.0 million with the Castle Creek Launchpad Fund I (“Launchpad”). A director of the Company is a member of the Investment Committee for Launchpad. At March 31, 2025 and December 31, 2024, total capital contributions made to this investment were $1.2 million and $1.2 million, respectively.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, the Company enters into financial commitments to meet the financing needs of its customers. These financial commitments include commitments to extend credit and standby letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk not recognized in the Company’s financial statements.

Commitments to extend credit are agreements to lend to a client as long as there is no violation of any condition established in the contract. Since many of the commitments are expected to expire without being drawn upon, the total amounts do not necessarily represent future cash requirements. The Company evaluates each client’s credit worthiness on a case-by-case basis. Collateral may or may not be required based on management’s credit evaluation of the customer. The majority of the Company’s commitments to extend credit and standby letters of credit are secured by real estate.

The Company’s exposure to loan loss in the event of nonperformance on commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for loans reflected in the consolidated financial statements.

The Company had the following outstanding financial commitments whose contractual amount represents potential credit risk at March 31, 2025 and December 31, 2024:

(dollars in thousands)	March 31, 2025		December 31, 2024
Commitments to extend credit	$	886,049	$	925,076
Letters of credit issued to customers	21,453		16,147
Commitments to contribute capital to other equity investments	5,721		5,914
	$	913,223	$	947,137

The Company entered into Supplemental Executive Retirement Plan (“SERP”) agreements to provide a 10-year benefit to certain key officers upon their retirement. Under these agreements, the annual benefits range from $20 thousand to $75 thousand. In connection with the Merger, the Company assumed all SERP agreements from CALB, under the same terms and conditions, with the exception of the Chief Executive Officer whose maximum “targeted benefit amount” increased to 30% of the average of his three highest calendar years of base salary as part of his employment agreement with the Company. The estimated present value of future benefits to be paid is being accrued over the period from the effective date of the agreements until the expected retirement dates of the participants. The expense incurred for these agreements for the three months ended March 31, 2025 and 2024 was $247 thousand and $81 thousand, respectively. The Company is a beneficiary of life insurance policies that have been purchased as a method of financing the obligated benefits under these agreements.

In the normal course of business, the Company is named or threatened to be named as a defendant in various legal actions. The ultimate outcome with respect to these legal matters and claims cannot be determined. At this time, the Company believes that liability, if any, is not likely to be material to the consolidated balance sheets or consolidated statements of operations.

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NOTE 13 - STOCK-BASED COMPENSATION PLAN

In contemplation of the holding company reorganization, in November 2019 the Company’s Board of Directors adopted the Southern California Bancorp 2019 Omnibus Equity Incentive Plan (the “2019 Plan”). The 2019 Plan was approved by shareholders in April 2020 with a maximum number of shares of common stock that may be issued or paid out under the plan of 2,200,000. In addition, upon the completion of the bank holding company reorganization in 2020, the Bank’s 2001 Stock Option Plan and 2011 Omnibus Equity Incentive Plan were terminated and all outstanding and unexpired stock options and all shares of restricted stock outstanding under the terminated plans became equivalent awards of the Company under the 2019 Plan.

At March 31, 2025, the maximum number of shares under the 2019 Plan was 3,400,000.

In addition, the 2019 Plan permits the Company to grant additional stock options and restricted share units. The Plan provides for the granting to eligible participants such incentive awards as the Board of Directors or a committee established by the Board, in its sole discretion, to administer the Plan. The Board has the power to determine the terms of the awards, including the exercise price, the number of shares subject to each award, the vesting and exercisability of the awards and the form of consideration payable upon exercise. Stock options expire no later than ten years from the date of the grant. The 2019 Plan provides for accelerated vesting if there is a change of control, as defined in the Plan. Restricted stock units generally vest over a period of one to five years.

Future levels of compensation cost recognized related to stock-based compensation awards may be impacted by new awards and/or modifications, repurchases and cancellations of existing awards.Under the terms of the 2019 Plan, vested options generally expire ninety days after the director or employee terminates their service affiliation with the Company.

In connection with the Merger, each of the 185,878 outstanding, unvested restricted stock units granted to the continuing directors, executives and employees under CALB’s Amended and Restated 2017 Equity Incentive Plan were converted into 295,512 unvested restricted stock units of the Company. Each such converted restricted stock unit award continues to be subject to the same terms and conditions as were applicable to the corresponding CALB restricted stock unit award immediately prior to the Merger. The weighted average remaining term on these assumed restricted stock units was 4.0 years, ranging from two months to 5.0 years. All outstanding unvested CALB restricted stock units of 77,436 shares in aggregate that were held by employees who are not continuing directors, executives and employees were accelerated and became fully vested and converted automatically into the right to receive approximately 82,364 shares of the Company’s common stock after 25,635 of CALB shares were surrendered by certain executives and employees to pay for taxes at the effective time of the Merger.

For the three months ended March 31, 2025, total stock-based compensation cost related to stock options and restricted stock units was $1.5 million. For the three months ended March 31, 2024, total stock-based compensation cost related to stock options and restricted stock units was $895 thousand.

Stock Options

As of March 31, 2025, there was $17 thousand of total unrecognized compensation cost related to the outstanding stock options. There were 5,138 stock options exercised with the intrinsic value of $40 thousand during the three months ended March 31, 2025, and 81,400 stock options exercised with the intrinsic value of $558 thousand during the three months ended March 31, 2024. There were no related tax expense for non-qualified stock option exercised for the three months ended March 31, 2025. Related tax expense for non-qualified stock option exercised were approximately $26 thousand for the three months ended March 31, 2024.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. There were no options granted during the three months ended March 31, 2025 and 2024.

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A summary of changes in outstanding stock options during the three months ended March 31, 2025 and 2024 are presented below:

	Three Months Ended
	March 31, 2025
(dollars in thousands, except share data)	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at beginning of period	136,888	$	9.64
Granted	—	$	—
Exercised	(5,138)	$	7.81
Expired	—	$	—
Forfeited	—	$	—
Outstanding at end of period	131,750	$	9.71	2.6	$	609
Options exercisable	128,650	$	9.68	2.5	$	599

	Three Months Ended
	March 31, 2024
(dollars in thousands, except share data)	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at beginning of period	272,813	$	9.30
Granted	—	$	—
Exercised	(81,400)	$	8.68
Forfeited	(15,300)	$	10.75
Outstanding at end of period	175,363	$	9.48	3.3	$	953
Options exercisable	169,163	$	9.43	3.2	$	926

Restricted Stock Units

A summary of the changes in outstanding unvested restricted stock units during the three months ended March 31, 2025 and 2024 is presented below:

	Three Months Ended
	March 31, 2025
	Restricted Shares	Weighted Average Grant Date Fair Value
Unvested at beginning of period	1,048,899	$	14.73
Granted	131,263	$	15.94
Vested	(197,948)	$	15.79
Forfeited	(5,166)	$	15.81
Unvested at end of period	977,048	$	14.65

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	Three Months Ended
	March 31, 2024
	Restricted Shares	Weighted Average Grant Date Fair Value
Unvested at beginning of period	637,899	$	13.11
Granted	168,035	$	15.25
Vested	(110,084)	$	16.14
Forfeited	(4,839)	$	15.50
Unvested at end of period	691,011	$	13.13

As of March 31, 2025, the Company did not have any outstanding unvested restricted stock units subject to various financial performance conditions.

As of March 31, 2025, there was $11.3 million of total unrecognized compensation expense related to the outstanding restricted stock units that will be recognized over the weighted-average period of 3.0 years. The total unrecognized compensation expense included $1.7 million related to the fair value of outstanding restricted stock units that was assumed from the Merger which will be recognized over the weighted-average vesting period of 3.3 years. The total grant date fair value of restricted stock units vested was $3.1 million for the three months ended March 31, 2025, and $1.8 million for the three months ended March 31, 2024. Related tax expenses were approximately $5 thousand for the three months ended March 31, 2025, and approximately $53 thousand for the three months ended March 31, 2024.

NOTE 14 - REGULATORY MATTERS

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Prior to the merger with CALB during the third quarter of 2024, the Company qualified for treatment under the Small Bank Holding Company Policy Statement (Regulation Y, Appendix C) and, therefore, was not subject to consolidated capital rules at the bank holding company level. Beginning in the third quarter of 2024, the Company became subject to the consolidated capital rules at the bank holding company level.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Bank must meet specific capital guidelines that involve quantitative measures of their respective assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. These capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. The Company and Bank also elected to exclude the effects of credit loss accounting under CECL from common equity Tier 1 capital ratio for a three-year transitional period.

A bank holding company and bank considered to be “adequately capitalized” is required to maintain a minimum total capital ratio of 8.0%, a minimum Tier 1 capital ratio of 6.0%, a minimum common equity Tier 1 capital ratio of 4.5%, and a minimum leverage ratio of 4.0%. A holding company and bank considered to be “well capitalized” must maintain a minimum total capital ratio of 10.0%, a minimum Tier 1 capital ratio of 8.0%, a minimum common equity Tier 1 capital ratio of 6.5%, and a minimum leverage ratio of 5.0%. As of March 31, 2025 and December 31, 2024, the Company and the Bank exceeded the minimums necessary to qualify as “well capitalized” under the regulatory framework for prompt corrective action (“PCA”). Management believes, as of March 31, 2025 and December 31, 2024, that the Company and the Bank met all capital adequacy requirements to which we are subject.

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Basel III, the comprehensive regulatory capital rules for U.S. banking organizations, requires all banking organizations to maintain a capital conservation buffer above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer is exclusively comprised of common equity Tier 1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio. Effective January 1, 2019, the capital conservation buffer increased by 0.625% to its fully phased-in 2.5%, such that the common equity Tier 1, Tier 1 and total capital ratio minimums inclusive of the capital conservation buffers were 7.0%, 8.5%, and 10.5%, respectively, at March 31, 2025. At March 31, 2025, the Company and the Bank were in compliance with the capital conservation buffer requirements. To be categorized as well capitalized, the Company and the Bank must maintain minimum ratios as set forth in the table below.

The following table also sets forth the Company’s actual capital amounts and ratios:

					Amount of Capital Required
					To be				To be Well-
					Adequately				Capitalized under
	Actual				Capitalized				PCA Provisions
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of March 31, 2025:
California BanCorp:
Total Capital (to Risk-Weighted Assets)	$	514,076	14.53	%	$	283,126	8.0	%	N/A		N/A
Tier 1 Capital (to Risk-Weighted Assets)	403,726		11.41	%	212,345		6.0	%	N/A		N/A
CET1 Capital (to Risk-Weighted Assets)	403,726		11.41	%	159,258		4.5	%	N/A		N/A
Tier 1 Capital (to Average Assets)	403,726		10.44	%	154,745		4.0	%	N/A		N/A
California Bank of Commerce, N.A.:
Total Capital (to Risk-Weighted Assets)	$	510,028	14.42	%	$	282,949	8.0	%	$	353,686	10.0	%
Tier 1 Capital (to Risk-Weighted Assets)	469,986		13.29	%	212,212		6.0	%	282,949		8.0	%
CET1 Capital (to Risk-Weighted Assets)	469,986		13.29	%	159,159		4.5	%	229,896		6.5	%
Tier 1 Capital (to Average Assets)	469,986		12.15	%	154,698		4.0	%	193,372		5.0	%
As of December 31, 2024:
California BanCorp:
Total Capital (to Risk-Weighted Assets)	$	496,912	13.67	%	$	290,897	8.0	%	N/A		N/A
Tier 1 Capital (to Risk-Weighted Assets)	$	385,354	10.60	%	$	218,173	6.0	%	N/A		N/A
CET1 Capital (to Risk-Weighted Assets)	$	385,354	10.60	%	$	163,630	4.5	%	N/A		N/A
Tier 1 Capital (to Average Assets)	$	385,354	9.53	%	$	161,710	4.0	%	N/A		N/A
California Bank of Commerce, N.A.:
Total Capital (to Risk-Weighted Assets)	$	492,433	13.55	%	$	290,753	8.0	%	$	363,441	10.0	%
Tier 1 Capital (to Risk-Weighted Assets)	450,600		12.40	%	218,065		6.0	%	290,753		8.0	%
CET1 Capital (to Risk-Weighted Assets)	450,600		12.40	%	163,548		4.5	%	236,237		6.5	%
Tier 1 Capital (to Average Assets)	450,600		11.15	%	161,689		4.0	%	202,111		5.0	%

The primary source of funds for the Company is dividends from the Bank. Under federal law, the Bank may not declare a dividend in excess of its undivided profits and, absent the approval of the OCC, the Bank’s primary banking regulator, if the total amount of dividends declared by the Bank in any calendar year exceeds the total of the Bank’s retained net income of that current period, year to date, combined with its retained net income for the preceding two years. The Bank is also prohibited from declaring or paying any dividend if, after making

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the dividend, the Bank would be considered “undercapitalized” (as defined by reference to other OCC regulations). Federal bank regulatory agencies have authority to prohibit banking institutions from paying dividends if those agencies determine that, based on the financial condition of the bank, such payment will constitute an unsafe or unsound practice.

The Federal Reserve limits the amount of dividends that bank holding companies may pay on common stock to income available over the past year, and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. It is also the Federal Reserve’s policy that bank holding companies should not maintain dividend levels that undermine their ability to be a source of strength to its banking subsidiaries. Additionally, in consideration of the current financial and economic environment, the Federal Reserve has indicated that bank holding companies should carefully review their dividend policies.

NOTE 15 - FAIR VALUE

The fair value of a financial instrument is the amount at which the asset or obligation could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the entire holdings of a particular financial instrument. Because no market value exists for a significant portion of the financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature, involve uncertainties and matters of judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

ASC Topic 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

Fair value of financial instruments

Fair value estimates are based on financial instruments both on and off the balance sheet without attempting to estimate the value of anticipated future business, and the value of assets and liabilities that are not considered financial instruments. Additionally, tax consequences related to the realization of the unrealized gains and losses can have a potential effect on fair value estimates and have not been considered in many of the estimates. The following methods and assumptions were used to estimate the fair value of significant financial instruments:

Cash and Due from Banks: The carrying amounts of cash and short-term instruments approximate fair values because of the liquidity of these instruments.

Federal Funds Sold and Interest-Bearing Balances: The carrying amount is assumed to be the fair value given the short-term nature of these deposits.

Debt Securities Held to Maturity and Available for Sale: The fair values of securities held to maturity and available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.

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Loans Held for Sale: The fair value of loans held-for-sale is based on commitments outstanding from investors as well as what secondary market investors are currently offering for portfolios with similar characteristics.

Loans Held for Investment, net: The fair value of loans, which is based on an exit price notion, is generally determined using an income based approach based on discounted cash flow analysis. This approach utilizes the contractual maturity of the loans and market indications of interest rates, prepayment speeds, defaults and credit risk in determining fair value. The fair value for PCD loans incorporated market-based loss rates used to estimate the expected life of loan credit losses. The noncredit discount resulting from the acquired PCD loans was allocated to each individual asset. If an individually evaluated loan has had a charge-off or if the fair value of the collateral is less than the recorded investment in the loan, we establish a specific reserve and report the loan as nonrecurring Level 3. Loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. For the fair value of collateral-dependent individually evaluated loans, an asset-based approach is applied to determine the estimated fair values of the underlying collateral based on recent real estate appraisals, less costs to sell. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. New appraisals are conducted in certain circumstances, including when there has been significant deterioration in the condition of the collateral, if the foreclosure process has begun, or if the existing valuation is deemed to be outdated. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Restricted Stock Investments: Investments in FHLB and Federal Reserve stocks are recorded at cost and measured for impairment. Ownership of FHLB and Federal Reserve stocks are restricted to member banks and the securities do not have a readily determinable market value. Purchases and sales of these securities are at par value with the issuer. The fair value of investments in FHLB and Federal Reserve stock is equal to the carrying amount.

Other Equity Securities: The fair value of equity securities is based on quoted prices in active markets for identical assets to determine the fair value. If quoted prices are not available to determine fair value, the Company estimates the fair values by using independent pricing models, quoted prices of securities with similar characteristics, or discounted cash flows.

Other Real Estate Owned (“OREO”): Nonrecurring adjustments to certain commercial and residential real estate properties classified as OREO are measured at the lower of the carrying amount or fair value, less costs to sell. The fair value of OREO is generally based on recent real estate appraisals or broker opinions, obtained from independent third parties, which are frequently adjusted by management to reflect current conditions and estimated selling costs.

Accrued Interest Receivable: The fair value of accrued interest receivable approximates their carrying amounts.

Deposits: The fair values disclosed for demand deposits, including interest and non-interest demand accounts, savings, and certain types of money market accounts are by definition based on carrying value. Fair value for fixed-rate certificates of deposit is estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregate expected monthly maturities on time deposits. Early withdrawal of fixed-rate certificates of deposit is not expected to be significant.

Borrowings: The fair values of the Company’s overnight borrowings from the Federal Home Loan Bank approximates their carrying value as the advances were recently borrowed at market rate. The fair value of fixed-rated term borrowings is estimated using a discounted cash flow through the remaining maturity dates based on the current borrowing rates for similar types of borrowing arrangements. The fair values of subordinated debt are based on rates currently available to the Company for debt with similar terms and remaining maturities.

Accrued Interest Payable: The fair value of accrued interest payable approximates their carrying amounts.

Off-Balance Sheet Financial Instruments: The fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently charged to enter into similar agreements. The fair value of these financial instruments is not material.

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The estimated fair value hierarchy level and estimated fair value of financial instruments at March 31, 2025 and December 31, 2024, is summarized as follows:

		March 31, 2025				December 31, 2024
				Estimated				Estimated
	Fair Value	Carrying		Fair		Carrying		Fair
(dollars in thousands)	Hierarchy	Value		Value		Value		Value
Financial assets:
Cash and due from banks	Level 1	$	80,441	$	80,441	$	60,471	$	60,471
Fed funds and interest-bearing balances	Level 1	358,800		358,800		327,691		327,691
Debt securities available for sale	Level 1/2	131,593		131,593		142,001		142,001
Debt securities held to maturity	Level 2	53,194		47,329		53,280		47,823
Loans held for sale	Level 2	4,625		4,898		17,180		17,855
Loans held for investment, net	Level 3	3,022,935		3,010,316		3,088,625		3,080,175
Restricted stock, at cost	Level 2	30,845		30,845		30,829		30,829
Other equity securities	Level 2	7,870		7,870		13,691		13,691
Accrued interest receivable	Level 2	11,390		11,390		12,824		12,824
Financial liabilities:
Deposits	Level 2	3,342,503		3,342,202		3,398,760		3,398,447
Borrowings	Level 2	70,308		71,699		69,725		69,876
Accrued interest payable	Level 2	1,397		1,397		4,342		4,342

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Recurring fair value measurements

The following table provides the hierarchy and fair value for each major category of assets and liabilities measured at fair value on a recurring basis at the periods indicated:

	Recurring Fair Value Measurements
(dollars in thousands)	Level 1		Level 2		Level 3		Total
March 31, 2025
Securities available for sale:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	—	$	77,898	$	—	$	77,898
SBA securities	—		4,615		—		4,615
U.S. Treasury	7,419		—		—		7,419
U.S. Agency	—		1,728		—		1,728
Collateralized mortgage obligations	—		38,187		—		38,187
Taxable municipals	—		918		—		918
Tax exempt bank-qualified municipals	—		828		—		828
	$	7,419	$	124,174	$	—	$	131,593
December 31, 2024
Securities available for sale:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	—	$	83,274	$	—	$	83,274
SBA securities	—		5,333		—		5,333
U.S. Treasury	12,326		—		—		12,326
U.S. Agency	—		1,670		—		1,670
Collateralized mortgage obligations	—		37,663		—		37,663
Taxable municipals	—		909		—		909
Tax exempt bank-qualified municipals	—		826		—		826
	$	12,326	$	129,675	$	—	$	142,001

Nonrecurring fair value measurements

The Company may also be required, from time to time, to measure certain other assets and liabilities on a nonrecurring basis in accordance with generally accepted accounting principles.

Collateral-dependent loans. For the valuation of the collateral-dependent loans, the Company relies primarily on third-party valuation information from certified appraisers and values are generally based upon recent appraisals of the underlying collateral, brokers’ opinions based upon recent sales of comparable properties, estimated equipment auction or liquidation values, income capitalization, or a combination of income capitalization and comparable sales. Depending on the type of underlying collateral, valuations may be adjusted by management for qualitative factors such as economic factors and estimated liquidation expenses. The range of these possible adjustments may vary. At March 31, 2025, the Company’s individual evaluated collateral-dependent loans were evaluated based on the estimated fair value of the underlying collateral from the Company’s internal reviews, including reviews of the most recent appraisals and the current sale market condition. There were no partial charge-offs on certain individually evaluated loans based on recent real estate or property appraisals and no related specific reserves were recorded the during the three months ended March 31, 2025.

Other real estate owned, net (“OREO”). Subsequent to foreclosure, it may be necessary to record nonrecurring fair value adjustments for declines in fair value of OREO. Fair value, when recorded, is determined

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based on appraisals by qualified licensed appraisers and adjusted for management’s estimates of costs to sell. Accordingly, values for OREO are classified as Level 3.

The following tables summarize the fair value of assets and liabilities measured at fair value on a nonrecurring basis as of March 31, 2025 and December 31, 2024. OREO is presented net of an allowance of $614 thousand as of March 31, 2025 and December 31, 2024. Only individually evaluated collateral-dependent loans with a related specific ACL or a partial charge off are included in the following table for purposes of fair value disclosures.

			Fair Value Measurement Level
			Quoted Prices in
			Active Markets for		Significant Other		Significant
	Fair		Identical Assets		Observable Inputs		Unobservable Inputs
(dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
March 31, 2025
Collateral dependent loans (1):
Construction and Land	$	9,708	$	—	$	—	$	9,708
Total collateral dependent loans	$	9,708	$	—	$	—	$	9,708
Foreclosed assets:
Other real estate owned, net	$	4,083	$	—	$	—	$	4,083
December 31, 2024
Collateral dependent loans (1):
Construction and Land	$	9,708	$	—	$	—	$	9,708
1-4 Family Residential	4,191		—		—		4,191
Commercial real estate and other	14,316		—		—		14,316
Commercial and industrial	6,476		—		—		6,476
	$	34,691	$	—	$	—	$	34,691
Foreclosed assets:
Other real estate owned, net	$	4,083	$	—	$	—	$	4,083

(1) Collateral-dependent loans whose fair value is based upon appraisals.

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Quantitative information about Level 3 fair value measurements measured on a non-recurring basis are summarized below as of March 31, 2025 and December 31, 2024.

	Asset Fair		Valuation	Unobservable	Range %
(dollars in thousands)	Value		Technique	Input	(Weighted Average)
March 31, 2025
Collateral dependent loans
Construction and Land	$	9,708	Fair value of property	Cost to sell	7.50% - 7.50% (7.50%)
Total collateral dependent loans	$	9,708
Other real estate owned, net	$	4,083	Market approach	Cost to sell	7.50% – 7.50% (7.50%)
December 31, 2024
Collateral dependent loans
Construction and Land	$	9,708	Fair value of property	Cost to sell	7.50% – 7.50% (7.50%)
1-4 Family Residential	4,191		Fair value of property	Cost to sell	7.50% – 7.50% (7.50%)
Commercial real estate and other	14,316		Fair value of property	Discount to appraised values	18.13% – 30.00% (19.70%)
				Costs to sell	7.50% – 7.50% (7.50%)
	14,316
Commercial and industrial	5,582		Fair value of collateral	Discount to appraised values	20.00% – 80.00% (54.04%)
				Costs to sell	7.50% - 7.50% (7.50%)
	894		Fair value of property	Costs to sell	8.00% – 10.00% (8.62%)
	6,476
Total collateral dependent loans	$	34,691
Other real estate owned, net	$	4,083	Market approach	Cost to sell	7.50% – 7.50% (7.50%)

NOTE 16 - SUBSEQUENT EVENTS

On May 1, 2025, the Company announced an increase in the number of shares that may be repurchased pursuant to its previously announced share repurchase program. As a result of this authorization, the Company is authorized to repurchase up to 1,600,000 shares of its common stock pursuant to the share repurchase program (up from the prior authorization of 550,000 shares). Repurchases under the program may occur from time to time in open market transactions, in privately negotiated transactions, or by other means in accordance with federal securities laws and other restrictions. The Company intends to fund its repurchases from available working capital and cash provided by operating activities. The timing of repurchases, as well as the number of shares repurchased, will depend on a variety of factors, including price; trading volume; business, economic and general market conditions; and the terms of any Rule 10b5-1 plan adopted by the Company. The repurchase program has no expiration date and may be suspended, modified, or terminated at any time without prior notice.

The Company also announced that it has elected to redeem the $18 million of 5.50% Fixed-to-Floating Subordinated Notes due 2030, that it issued on May 28, 2020.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our consolidated financial condition and consolidated results of operations should be read in conjunction with our consolidated financial statements and related notes. Historical consolidated results of operations and the percentage relationships among any amounts included, and any trends that may appear, may not indicate trends in operations or consolidated results of operations for any future periods. We are a bank holding company and we conduct all of our material business operations through the Bank. As a result, the discussion and analysis below primarily relate to activities conducted at the Bank level.

Overview

California BanCorp is a California corporation incorporated on October 2, 2019, and headquartered in Del Mar, California. On May 15, 2020, we completed a reorganization whereby California Bank of Commerce, N.A. became the wholly owned subsidiary of the Company. California Bank of Commerce, N.A. has a wholly-owned subsidiary, BCAL OREO1, LLC, which was incorporated on February 14, 2024. BCAL OREO1, LLC is used for holding other real estate owned and other assets acquired by foreclosure. We are regulated as a bank holding company by the Board of Governors of the Federal Reserve System (“Federal Reserve”). The Bank operates under a national charter and is regulated by the Office of Comptroller of the Currency (“OCC”).

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.

Recent Developments

Merger with California BanCorp (“CALB”)

On July 31, 2024, the Company completed its all-stock merger with CALB on the terms set forth in the Agreement and Plan of Merger and Reorganization, dated January 30, 2024, by and between the Company and CALB. At July 31, 2024, CALB had total loans of $1.43 billion , total assets of $1.91 billion, and total deposits of $1.64 billion. Immediately following the merger of CALB with and into the Company, California Bank of Commerce, a California state-chartered bank and wholly-owned subsidiary of CALB, merged with and into the Bank. Effective with these mergers, the corporate names of Southern California Bancorp and Bank of Southern California, N.A. were changed to California BanCorp and California Bank of Commerce, N.A., respectively. The merger expands the Company’s footprint into Northern California and provides an opportunity for building scale and increasing market share through complementary business models with a strong deposit base. The combined company retained all banking offices of both banks, adding CALB’s one full-service bank branch and its four loan production offices in Northern California to the Bank’s 13 full-service bank branches located throughout the Southern California region for a total of 14 Bank branches.

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

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

Southern California Wildfires

Early in the first quarter of 2025, several neighborhoods adjacent to Los Angeles were engulfed by wildfires fed by unusually strong Santa Ana winds. The Palisades and Eaton fires were the most damaging of these wildfires, destroying an estimated 12,000 structures between them. We are working with all our constituents to provide assistance during this difficult period, supporting clients and employees affected by the fires, as well as donating money to relief funds and providing volunteer assistance to them. The fires are expected to have a minimal impact on our loan portfolio.

Impact of Changes in Federal Fund Interest Rate on the Economy and Banking Industry

Between March 2022 and September 2023, the Federal Reserve raised interest rates 11 times by an aggregate of 525 basis points, to a range between 5.25% and 5.50%, the highest level in 22 years, in response to an increase in inflation that saw the Consumer Price Index rise to 9.1% in July 2022, which has since moderated to 2.4% in March 2025. At its September 2024 meeting, the Federal Reserve reduced the federal funds interest rate by 50 basis points, followed by two additional 25 basis point reductions in November and December 2024, for a total decrease of 100 basis points in 2024, ending the year in a range of 4.25% to 4.50%.

Concerns regarding a potential recession have moderated with the full year 2024 U.S. GDP reported at 2.8%, slowing to 2.4% in the fourth quarter of 2024, with Moody’s full-year baseline 2025 GDP growth forecast estimate at 1.3%. California’s 2025 GDP is forecast by Moody’s to decrease to 1.6% in 2025. Despite the anticipated slowdown in California, it is still considered to have the fourth largest economy in the world; however, higher interest rates and broader economic headwinds have put a damper on investment, particularly in the near term for the tech industry, which employs 8% of the state’s workforce, as tech payrolls have trended lower over the past year and further layoffs are expected. The U.S. Bureau of Labor Statistics reports California’s March 2025 unemployment rate at 5.3%; it has been in a range between 5.0% and 5.5% since September 2023.

In remarks delivered at the March 2025 U.S. Monetary Policy Forum in New York City Fed Chairman Jerome Powell said that the U.S. economy remains in a good place. However, policymakers are holding steady as they wait for greater clarity on the effects of the Trump administration’s numerous policy changes on the economy; officials are carefully monitoring the effects of the new administration’s policy changes in regard to trade, immigration, fiscal policy, and regulation. Uncertainty around such changes and their likely economic impacts remains high, especially since April 2, 2025, when the Trump administration unveiled a new tariff structure, which drove a correction in the equity markets. Chairman Powell believes that the Fed doesn’t need to move quickly to adjust policy in response yet, but noted the impact of the tariffs may lead to higher inflation and slower growth in the economy. They may also impact financial institutions.

Markets have been volatile lately with 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 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.

Per the regulatory definition of commercial real estate, at March 31, 2025, our concentration of such loans represented 439% of our total risk-based capital. In addition, at March 31, 2025, total loans secured by commercial real estate under construction and land development represented 43% of our total risk-based capital.

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The non-performing loans for these segments per the regulatory definition of commercial real estate loans at March 31, 2025 were $16.4 million and there were $1.7 million charge-offs during the three months ended March 31, 2025. At March 31, 2025, our only OREO, carried at $4.1 million, was from a multifamily nonaccrual loan we foreclosed on in the third quarter of 2024.

Given the nature of our commercial banking business, approximately 47% of our total deposits exceeded the FDIC deposit insurance limits at March 31, 2025.

We have a small investment portfolio of high-quality securities. At March 31, 2025, the amortized cost of our held-to-maturity debt securities was $53.2 million, or approximately 1.3% of total assets. The fair value of our available-for-sale debt securities was $131.6 million, or approximately 3.3% of total assets. The 10-Year Treasury Bond was approximately 4.2% at the end of March 31, 2025. The decreases in the 10-Year Treasury Bond in the first quarter, resulted in a lower net unrealized losses on our debt securities at March 31, 2025. At March 31, 2025, our accumulated other comprehensive loss, net of taxes, decreased to $4.4 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 $8.5 million at March 31, 2025. The results of our stress testing on our debt security portfolio at March 31, 2025, illustrated that our losses, net of taxes on both held-to-maturity and available-for-sale debt securities would increase to $27.5 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.

We continue to monitor macroeconomic variables related to changes in interest rates, inflation, and concerns regarding an economic downturn, and its potential effects on our business, customers, employees, communities and markets. The following challenges could have an impact on our business, consolidated financial condition or near- or longer-term consolidated results of operations:

•Slower loan growth and declining deposits;

•Difficulty retaining and attracting deposit relationships;

•Credit quality deterioration of our loan portfolio resulting in additional provision for credit losses and impairment charges;

•Margin pressure in response to changes in interest rates;

•Merger cost savings being less than anticipated;

•Liquidity stresses to maintain sufficient levels of high-quality liquid assets and access to borrowing lines; and

•Potential negative effects of current and future governmental, monetary and fiscal policies, such as the implementation of tariffs and counter-tariffs on future business conditions.

Critical Accounting Policies and Estimates

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.

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Financial Highlights

The following table sets forth certain of our financial highlights as of and for each of the periods presented. This data should be read in conjunction with our consolidated financial statements and related notes included herein at Part I - Financial Information, Item 1 - Financial Statements of this filing.

	Three Months Ended
($ in thousands except share and per share data)	March 31, 2025			December 31, 2024			March 31, 2024
EARNINGS
Net interest income	$	42,255		$	44,541		$	20,494
Reversal of credit losses	$	(3,776)		$	(3,835)		$	(331)
Noninterest income	$	2,566		$	1,004		$	1,413
Noninterest expense	$	24,920		$	26,125		$	14,981
Income tax expense	$	6,824		$	6,483		$	2,322
Net income	$	16,853		$	16,772		$	4,935
Pre-tax pre-provision income(1)	$	19,901		$	19,420		$	6,926
Adjusted pre-tax pre-provision income(1)	$	19,901		$	20,063		$	7,475
Diluted earnings per share	$	0.52		$	0.51		$	0.26
Ending shares outstanding	32,402,140			32,265,935			18,527,178
PERFORMANCE RATIOS
Return on average assets	1.71		%	1.60		%	0.86		%
Adjusted return on average assets(1)	1.71		%	1.64		%	0.95		%
Return on average common equity	13.18		%	13.21		%	6.85		%
Adjusted return on average common equity(1)	13.18		%	13.57		%	7.61		%
Yield on loans	6.61		%	6.84		%	6.02		%
Yield on earning assets	6.26		%	6.48		%	5.79		%
Cost of deposits	1.59		%	1.87		%	2.05		%
Cost of funds	1.72		%	1.99		%	2.17		%
Net interest margin	4.65		%	4.61		%	3.80		%
Efficiency ratio(1)	55.60		%	57.36		%	68.38		%
Adjusted efficiency ratio(1)	55.60		%	55.95		%	65.88		%
Net charge-offs to average loans held-for-investment	(0.20)		%	(0.02)		%	0.00		%

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	March 31, 2025			December 31, 2024
CAPITAL
Tangible equity to tangible assets(1)	10.34		%	9.69		%
Book value (BV) per common share	$	16.40		$	15.86
Tangible BV per common share(1)	$	12.29		$	11.71
ASSET QUALITY
Allowance for loan losses (ALL)	$	45,839		$	50,540
Reserve for unfunded loan commitments	2,485			3,103
Allowance for credit losses (ACL)	$	48,324		$	53,643
Allowance for loan losses to nonperforming loans	201		%	190		%
ALL to total loans	1.49		%	1.61		%
ACL to total loans	1.57		%	1.71		%
Net charge-offs to average loans held-for-investment	(0.20)		%	(0.09)		%
30-89 days past due, excluding nonaccrual loans	$	5,103		$	12,082
Over 90 days past due, excluding nonaccrual loans	$	45		$	150
Special mention loans	$	74,421		$	69,339
Special mention loans to total loans held for investment	2.43		%	2.21		%
Substandard loans	$	111,786		$	117,598
Substandard loans to total loans held for investment	3.64		%	3.75		%
Nonperforming loans	$	22,825		$	26,536
Nonperforming loans to total loans held for investment	0.74		%	0.85		%
Other real estate owned	$	4,083		$	4,083
Nonperforming assets	$	26,908		$	30,619
Nonperforming assets to total assets	0.68		%	0.76		%
END OF PERIOD BALANCES
Total loans, including loans held for sale	$	3,073,399		$	3,156,345
Total assets	$	3,983,090		$	4,031,654
Deposits	$	3,342,503		$	3,398,760
Loans to deposits	91.9		%	92.9		%
Shareholders' equity	$	531,384		$	511,836

(1) Refer to Non-GAAP Financial Measures in the Management's Discussion and Analysis of Financial Condition and Results of Operations of this filing.

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Non-GAAP Financial Measures

This filing contains certain non-GAAP financial measures in addition to results presented in accordance with GAAP. We believe the presentation of certain non-GAAP financial measures provides information useful to assess our consolidated financial condition and consolidated results of operations and to assist investors in evaluating our consolidated financial results relative to our peers. These non-GAAP financial measures complement our GAAP reporting and are presented below to provide investors and others with information that we use to manage the business each period. Because not all companies use identical calculations, the presentation of these non-GAAP financial measures may not be comparable to other similarly titled measures used by other companies. These non-GAAP measures should be taken together with the corresponding GAAP measures and should not be considered a substitute of the GAAP measures.

(1) Efficiency ratio is computed by dividing noninterest expense by total net interest income and noninterest income. We measure our success and the productivity of our operations through monitoring of the efficiency ratio. Adjusted noninterest expense is computed by adjusting noninterest expense for merger related expense for the period indicated. Adjusted efficiency ratio is computed by dividing adjusted noninterest expense by total net interest income and noninterest income.

(2) Pre-tax pre-provision income is computed by adding net interest income and noninterest income and subtracting noninterest expense. This non–GAAP financial measure provides a greater understanding of pre–tax profitability before giving effect to credit loss expense. Adjusted pre-tax pre-provision income is computed by adding net interest income and noninterest income and subtracting adjusted noninterest expense.

(3) Adjusted net income is computed by adjusting net income for the tax-effected merger related expense adjustments for the periods indicated.

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

(5) Adjusted return on average assets is computed by dividing annualized adjusted net income by average assets. Adjusted return on average equity is computed by dividing annualized adjusted net income by average shareholders’ equity.

(6) Return on average tangible common equity is computed by dividing net income by average tangible common equity. Adjusted return on average tangible common equity is computed by dividing adjusted net income by average tangible common equity.

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

(8) Tangible common equity to tangible assets ratio is computed by dividing tangible common equity by tangible assets.

(9) Tangible book value per share is computed by dividing tangible common equity by total common shares outstanding. We consider tangible book value per share a meaningful measure because it suggests what our common shareholders can expect to receive if we are in financial distress and are forced to liquidate our assets at the book value price. Intangible assets like goodwill are not a part of the process since they cannot be sold for cash during liquidation.

We consider average tangible common equity, tangible common equity, and the tangible common equity to tangible asset ratio as useful additional methods to evaluate our capital utilization and adequacy to withstand unexpected market conditions. These ratios differ from the regulatory capital ratios principally in that the numerator excludes goodwill and other intangible assets.

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The following tables present a reconciliation of non-GAAP financial measures to GAAP measures for the periods indicated:

	Three Months Ended
(dollars in thousands)	March 31, 2025			December 31, 2024			March 31, 2024
Efficiency Ratio
Noninterest expense	$	24,920		$	26,125		$	14,981
Less: Merger and related expenses	—			643			549
Adjusted noninterest expense	$	24,920		$	25,482		$	14,432
Net interest income	42,255			44,541			20,494
Noninterest income	2,566			1,004			1,413
Total net interest income and noninterest income	$	44,821		$	45,545		$	21,907
(1) Efficiency ratio (non-GAAP)	55.6		%	57.4		%	68.4		%
(1) Adjusted efficiency ratio (non-GAAP)	55.6		%	55.9		%	65.9		%
Pre-tax Pre-provision Income
Net interest income	$	42,255		$	44,541		$	20,494
Noninterest income	2,566			1,004			1,413
Total net interest income and noninterest income	44,821			45,545			21,907
Less: Noninterest expense	24,920			26,125			14,981
(2) Pre-tax pre-provision income (non-GAAP)	$	19,901		$	19,420		$	6,926
Add: Merger and related expenses	—			643			549
(2) Adjusted pre-tax pre-provision income (non-GAAP)	$	19,901		$	20,063		$	7,475
Return on Average Assets, Equity, and Tangible Equity
Net income	$	16,853		$	16,772		$	4,935
Add: After-tax merger and related expenses (1)	—			453			547
(3) Adjusted net income (non-GAAP)	$	16,853		$	17,225		$	5,482
Average assets	$	3,999,509		$	4,168,747		$	2,309,827
Average shareholders’ equity	518,543			504,909			289,763
Less: Average intangible assets	133,567			135,064			38,964
(4) Average tangible common equity (non-GAAP)	$	384,976		$	369,845		$	250,799
Return on average assets	1.71		%	1.60		%	0.86		%
(5) Adjusted return on average assets (non-GAAP)	1.71		%	1.64		%	0.95		%
Return on average equity	13.18		%	13.21		%	6.85		%
(5) Adjusted return on average equity (non-GAAP)	13.18		%	13.57		%	7.61		%
(6) Return on average tangible common equity (non-GAAP)	17.75		%	18.04		%	7.91		%
(6) Adjusted return on average tangible common equity (non-GAAP)	17.75		%	18.53		%	8.79		%

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

(dollars in thousands, except per share amounts)	March 31, 2025		December 31, 2024
Tangible Common Equity Ratio/Tangible Book Value Per Share
Shareholders’ equity	$	531,384	$	511,836
Less: Intangible assets	133,103		134,058
(7) Tangible common equity (non-GAAP)	$	398,281	$	377,778

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(dollars in thousands, except per share amounts)	March 31, 2025			December 31, 2024
Total assets	$	3,983,090		$	4,031,654
Less: Intangible assets	133,103			134,058
(7) Tangible assets (non-GAAP)	$	3,849,987		$	3,897,596
Equity to asset ratio	13.34		%	12.70		%
(8) Tangible common equity to tangible asset ratio (non-GAAP)	10.34		%	9.69		%
Book value per share	$	16.40		$	15.86
(9) Tangible book value per share (non-GAAP)	$	12.29		$	11.71
Shares outstanding	32,402,140			32,265,935

Impact of Merger on Earnings

The comparability of our financial information is affected by the merger with CALB. We completed this Merger on July 31, 2024. This merger has been accounted for using the acquisition method of accounting and, accordingly, CALB’s operating results have been included in the consolidated financial statements for periods beginning after July 31, 2024. Refer to Note 2 - 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.

Results of Operations

Net Income

Three Months Ended March 31, 2025 Compared to Three Months Ended December 31, 2024

Net income for the three months ended March 31, 2025 was $16.9 million, or $0.52 per diluted share, compared to $16.8 million or $0.51 per diluted share in the prior quarter. The $81 thousand increase in net income from the prior quarter was primarily due to a $1.6 million increase in noninterest income, coupled with a $1.2 million decrease in noninterest expense, partially offset by a $2.3 million decrease in net interest income. Pre-tax, pre-provision income for the three months ended March 31, 2025 was $19.9 million, an increase of $481 thousand, or 2.5% compared to pre-tax, pre-provision income of $19.4 million for the three months ended December 31, 2024.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Net income for the three months ended March 31, 2025 was $16.9 million, or $0.52 per diluted share, compared to $4.9 million, or $0.26 per diluted share for the same 2024 period. The $11.9 million increase in net income from the three months ended March 31, 2024 was primarily due to a $21.8 million increase in net interest income from higher average interest-earning assets resulting from the CALB merger, a $1.2 million increase in noninterest income and a $3.4 million increase in reversal of credit losses, partially offset by a $9.9 million increase in noninterest expense. Pre-tax, pre-provision income for the three months ended March 31, 2025 was $19.9 million, an increase of $13.0 million, or 187.3% compared to pre-tax, pre-provision income of $6.9 million for the same 2024 period.

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Net Interest Income and Margin

Net interest income is our primary source of revenue, which is the difference between interest income on loans, debt securities and other investments (collectively, “interest-earning assets”) and interest expense on deposits and borrowings (collectively, “interest-bearing liabilities”). Net interest margin represents net interest income expressed as a percentage of interest-earning assets. Net interest income is affected by changes in volume, mix, and rates of interest-earning assets and interest-bearing liabilities, as well as days in a period. We closely monitor both total net interest income and the net interest margin and seek to maximize net interest income without exposing us to an excessive level of interest rate risk through our asset and liability management policies. The following table presents interest income, average interest-earning assets, interest expense, average interest-bearing liabilities, and their corresponding yields and costs for the periods indicated:

	Three Months Ended
	March 31, 2025						December 31, 2024						March 31, 2024
	Average Balance		Income/Expense		Yield/Cost		Average Balance		Income/Expense		Yield/Cost		Average Balance		Income/Expense		Yield/Cost
Assets	($ in thousands)
Interest-earning assets:
Total loans(1)	$3,109,722		$50,686		6.61	%	$3,184,918		$54,791		6.84	%	$1,909,271		$28,584		6.02	%
Taxable debt securities	139,481		1,524		4.43	%	147,895		1,698		4.57	%	126,803		1,213		3.85	%
Tax-exempt debt securities (2)	53,522		305		2.93	%	53,607		305		2.87	%	53,842		306		2.89	%
Deposits in other financial institutions	316,582		3,468		4.44	%	422,032		5,123		4.83	%	54,056		716		5.33	%
Fed funds sold/resale agreements	30,413		335		4.47	%	3,353		38		4.51	%	9,771		134		5.52	%
Restricted stock investments and other bank stock	31,657		507		6.50	%	30,341		603		7.91	%	16,412		311		7.62	%
Total interest-earning assets	3,681,377		56,825		6.26	%	3,842,146		62,558		6.48	%	2,170,155		31,264		5.79	%
Total noninterest-earning assets	318,132						326,601						139,672
Total assets	$	3,999,509					$	4,168,747					$	2,309,827
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing NOW accounts	$	735,209	$	3,366	1.86	%	$	704,017	$	3,784	2.14	%	$	359,784	$	2,045	2.29	%
Money market and savings accounts	1,161,960		7,750		2.70	%	1,192,692		8,663		2.89	%	648,640		4,725		2.93	%
Time deposits	207,519		2,063		4.03	%	359,111		4,179		4.63	%	255,474		3,021		4.76	%
Total interest-bearing deposits	2,104,688		13,179		2.54	%	2,255,820		16,626		2.93	%	1,263,898		9,791		3.12	%
Borrowings:
FHLB advances	—		—		—	%	—		—		—	%	50,593		708		5.63	%
Subordinated debt	70,027		1,391		8.06	%	69,420		1,391		7.97	%	17,878		271		6.10	%
Total borrowings	70,027		1,391		8.06	%	69,420		1,391		7.97	%	68,471		979		5.75	%
Total interest-bearing liabilities	2,174,715		14,570		2.72	%	2,325,240		18,017		3.08	%	1,332,369		10,770		3.25	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits (3)	1,255,883						1,283,591						661,265
Other liabilities	50,368						55,007						26,430
Shareholders’ equity	518,543						504,909						289,763
Total Liabilities and Shareholders’ Equity	$	3,999,509					$	4,168,747					$	2,309,827
Net interest spread					3.54	%					3.40	%					2.54	%
Net interest income and margin(4)			$	42,255	4.65	%			$	44,541	4.61	%			$	20,494	3.80	%
Cost of deposits(5)	$3,360,571		$13,179		1.59	%	$3,539,411		$16,626		1.87	%	$1,925,163		$9,791		2.05	%
Cost of funds(6)	$3,430,598		$14,570		1.72	%	$3,608,831		$18,017		1.99	%	$1,993,634		$10,770		2.17	%

(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 $6.1 million, $6.7 million and $604 thousand for the three months ended March 31, 2025, December 31, 2024, and March 31, 2024, respectively.

(2)Tax-exempt debt securities yields are presented on a tax equivalent basis using a 21% tax rate.

(3)Average noninterest-bearing deposits represent 37.37%, 36.27% and 34.35% of average total deposits for the three months ended March 31, 2025, December 31, 2024, and March 31, 2024, respectively.

(4)Annualized net interest income divided by average interest-earning assets.

(5)Total deposits is the sum of interest-bearing deposits and noninterest-bearing deposits. The cost of deposits is calculated as annualized total interest expense on deposits divided by average total deposits.

(6)Total funding is the sum of total interest-bearing liabilities and noninterest-bearing deposits. The cost of total funding is calculated as annualized total interest expense divided by average total funding.

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Rate/Volume Analysis

The following table presents the changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. Information is provided on changes attributable to (i) changes in volume multiplied by the prior rate and (ii) changes in rate multiplied by the prior volume. Changes attributable to both rate and volume which cannot be segregated have been allocated proportionately to the change due to volume and the change due to rate.

	Three Months Ended March 31, 2025 vs. December 31, 2024						Three Months Ended March 31, 2025 vs. March 31, 2024
	Increase (Decrease) Due to						Increase (Decrease) Due to
	Volume		Rate		Net		Volume		Rate		Net
Interest-earning assets:	($ in thousands)
Total loans	$	(2,294)	$	(1,811)	$	(4,105)	$	19,106	$	2,996	$	22,102
Taxable debt securities	(125)		(49)		(174)		117		194		311
Tax-exempt debt securities	(8)		8		—		(5)		4		(1)
Deposits in other financial institutions	(1,282)		(373)		(1,655)		2,889		(137)		2,752
Fed fund sold/resale agreements	305		(8)		297		231		(30)		201
Restricted stock investments and other bank stock	13		(109)		(96)		247		(51)		196
Total interest-earning assets	(3,391)		(2,342)		(5,733)		22,585		2,976		25,561
Interest-bearing liabilities:
Interest-bearing NOW accounts	87		(505)		(418)		1,763		(442)		1,321
Money market and savings accounts	(380)		(533)		(913)		3,410		(385)		3,025
Time deposits	(1,771)		(345)		(2,116)		(592)		(366)		(958)
Total interest-bearing deposits	(2,064)		(1,383)		(3,447)		4,581		(1,193)		3,388
Borrowings:
FHLB advances	—		—		—		(357)		(351)		(708)
Subordinated debt	(15)		15		—		1,009		111		1,120
Total borrowings	(15)		15		—		652		(240)		412
Total interest-bearing liabilities	(2,079)		(1,368)		(3,447)		5,233		(1,433)		3,800
Net interest income	$	(1,312)	$	(974)	$	(2,286)	$	17,352	$	4,409	$	21,761

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Three Months Ended March 31, 2025 Compared to Three Months Ended December 31, 2024

Net interest income for the first quarter of 2025 was $42.3 million, compared with $44.5 million in the prior quarter. The decrease in net interest income was primarily due to a $5.7 million decrease in total interest and dividend income, partially offset by a $3.4 million decrease in total interest expense in the first quarter of 2025, as compared to the prior quarter. During the first quarter of 2025, loan interest income decreased by $4.1 million, including a decrease of $421 thousand of accretion income from the net purchase accounting discounts on acquired loans, total debt securities income decreased $174 thousand, and interest and dividend income from other financial institutions decreased $1.5 million. The decrease in interest income was mainly due to decreases in average loan balances and average deposits in other financial institutions. Average total interest-earning assets decreased $160.8 million in the first quarter of 2025, the result of a $75.2 million decrease in average total loans, an $8.5 million decrease in average total debt securities, a $105.5 million decrease in average deposits in other financial institutions, partially offset by a $27.1 million increase in average Fed funds sold/resale agreements and a $1.3 million increase in average restricted stock investments and other bank stock. The decrease in interest expense for the first quarter of 2025 was primarily due to a $3.4 million decrease in interest expense on interest-bearing deposits, the result of a $151.1 million decrease in average interest-bearing deposits and a 39 basis point decrease in average interest-bearing deposit costs in the first quarter of 2025.

Net interest margin for the first quarter of 2025 was 4.65%, compared with 4.61% in the prior quarter. The increase was primarily related to a 27 basis point decrease in the cost of funds, partially offset by a 22 basis point decrease in the total interest-earning assets yield. The yield on total average interest-earning assets in the first quarter of 2025 was 6.26%, compared with 6.48% in the prior quarter. The yield on average total loans in the first quarter of 2025 was 6.61%, a decrease of 23 basis points from 6.84% 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 62 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 in the first quarter of 2025. In the prior quarter, accretion income from the net purchase accounting discounts on acquired loans was $6.1 million, increasing the yield on average total loans by 76 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 $467 thousand, the combination of which increased the net interest margin by 58 basis points.

Cost of funds for the first quarter of 2025 was 1.72%, a decrease of 27 basis points from 1.99% in the prior quarter. The decrease was primarily driven by a 39 basis point decrease in the cost of average interest-bearing deposits, partially offset by an increase of 9 basis points in the cost of total borrowings, which was driven primarily by the amortization expense of $559 thousand from the purchase accounting discounts on acquired subordinated debt which increased the cost on total borrowings by 7 basis points. Average noninterest-bearing demand deposits decreased $27.7 million to $1.26 billion and represented 37.4% of total average deposits for the first quarter of 2025, compared with $1.28 billion and 36.3%, respectively, in the prior quarter; average interest-bearing deposits decreased $151.1 million to $2.10 billion during the first quarter of 2025. The total cost of deposits in the first quarter of 2025 was 1.59%, a decrease of 28 basis points from 1.87% in the prior quarter. The cost of total interest-bearing deposits decreased primarily due to the Company’s deposit repricing strategy and the ongoing pay off of high cost brokered deposits in the first quarter of 2025.

Average total borrowings increased $607 thousand to $70.0 million in the first quarter of 2025, primarily due to the amortization related to the purchase accounting discounts on acquired subordinated debt. The average cost of total borrowings was 8.06% for the first quarter of 2025, up from 7.97% in the prior quarter.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Net interest income for the three months ended March 31, 2025 was $42.3 million, compared to $20.5 million for the three months ended March 31, 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 $21.8 million increase in net interest income was due to higher average balances and yields on interest-earning assets, partially offset by higher average balances and costs of interest-bearing liabilities.

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Net interest margin for the three months ended March 31, 2025 was 4.65%, compared with 3.80% for the same 2024 period. The 85 basis point increase was primarily related to a 47 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 45 basis point decrease in the cost of funds. The yield on total average earning assets during the three months ended March 31, 2025 was 6.26%, compared with 5.79% for the same 2024 period. The yield on average loans during the three months ended March 31, 2025 was 6.61%, an increase of 59 basis points from 6.02% for the same 2024 period. Accretion income from the net purchase accounting discounts on acquired loans was $5.7 million and the amortization expense impact on interest expense was $526 thousand, the combination of which increased the net interest margin by 57 basis points in the first quarter of 2025.

During the three months ended March 31, 2025, total interest income increased $25.6 million, comprised of a $22.1 million increase in total loan interest income, of which $5.7 million was related to accretion income from the net purchase accounting discounts on acquired loans, a $310 thousand increase in total debt securities income, and a $3.1 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 $1.51 billion, resulting primarily from a $1.20 billion increase in average total loans, a $262.5 million increase in average deposits in other financial institutions, a $12.4 million increase in total average debt securities, a $15.2 million increase in average restricted stock investments and other bank stock, and a $20.6 million increase in average Fed fund sold/resale agreements.

During the three months ended March 31, 2025, total interest expense increased by $3.8 million to $14.6 million, comprised primarily of a $3.4 million increase in interest expense on interest-bearing deposits due primarily to an 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 pay off of high cost brokered deposits.

Total cost of funds for the three months ended March 31, 2025 was 1.72%, a decrease of 45 basis points from 2.17% for the same 2024 period. The decrease was primarily driven by a 58 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 231 basis points in the cost of total borrowings. Average noninterest-bearing demand deposits increased $594.6 million to $1.26 billion and represented 37.4% of total average deposits for the three months ended March 31, 2025, compared with $661.3 million and 34.3%, respectively, for the same 2024 period; average interest-bearing deposits increased $840.8 million to $2.10 billion during the three months ended March 31, 2025. The total cost of deposits for the three months ended March 31, 2025 was 1.59%, down 46 basis points from 2.05% for the same 2024 period.

Average total borrowings increased $1.6 million to $70.0 million for the three months ended March 31, 2025 resulting from an increase of $52.1 million in average subordinated debt from the $50.8 million in fair value of subordinated debt acquired in the Merger, partially offset by a $50.6 million decrease in average FHLB advances. The average cost of total borrowings was 8.06% for the three months ended March 31, 2025, a 231 basis point increase from 5.75% for the same 2024 period.

Reversal of Credit Losses

Three Months Ended March 31, 2025 Compared to Three Months Ended December 31, 2024

The Company recorded a reversal of credit losses of $3.8 million in both the first quarter of 2025 and the prior quarter. Total net charge-offs were $1.5 million in the first quarter of 2025, which included $273 thousand from an acquired consumer solar loan portfolio, $1.2 million from commercial and industrial dental loans acquired from the Merger and $1.7 million from a purchase credit deteriorated (“PCD”) commercial real-estate loan, partially offset by a $1.6 million recovery from a PCD commercial and industrial loan. The reversal of credit losses in the first quarter of 2025 included a $618 thousand reversal of credit losses for unfunded loan commitments related to the decrease in unfunded loan commitments during the first quarter of 2025, coupled with lower loss rates used to estimate the allowance for credit losses on unfunded commitments. Total unfunded loan

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commitments decreased $33.2 million to $892.1 million at March 31, 2025, compared to $925.3 million in unfunded loan commitments at December 31, 2024.

The reversal of credit losses for loans held for investment in the first quarter of 2025 was $3.2 million, an increase of $291 thousand from a reversal of credit losses of $2.9 million in the prior quarter. The increase was driven primarily by changes in the composition of the loans held for investment portfolio, coupled with changes in qualitative factors and the reasonable and supportable forecast, primarily related to the economic outlook for California. 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.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

We recorded a reversal of credit losses of $3.8 million for the three months ended March 31, 2025, compared to a reversal of credit losses of $331 thousand for the same 2024 period. The reversal of provision for credit losses for the three months ended March 31, 2024 included a $17 thousand negative provision for unfunded loan commitments primarily due to the impact of lower unfunded loan commitments. The reversal of credit losses for the loans held for investments for the three months ended March 31, 2024 was $314 thousand, The decrease was driven primarily by decreases in net charge-offs, loans held for investment and substandard accruing loans, coupled with changes in the portfolio mix, and a change in our reasonable and supportable forecast, primarily related to the economic outlook for California and a change in historical prepayment and curtailment rates analysis, partially offset by an increase in special mention loans.

Noninterest Income

The following table sets forth the various components of our noninterest income for the periods indicated:

	Three months ended
(dollars in thousands)	March 31, 2025		December 31, 2024		March 31, 2024
Service charges and fees on deposit accounts	$	776	$	524	$	362
Interchange and ATM income	410		387		163
Gain (loss) on sale of loans	577		(1,095)		415
Income from bank-owned life insurance	463		823		261
Servicing and related income on loans, net	142		157		73
Loss on sale and disposal of fixed assets	(1)		—		—
Other charges and fees	199		208		139
Total noninterest income	$	2,566	$	1,004	$	1,413

Three Months Ended March 31, 2025 Compared to Three Months Ended December 31, 2024

The Company recorded noninterest income of $2.6 million in the first quarter of 2025, an increase of $1.6 million compared to $1.0 million in the fourth quarter of 2024. The Company reported a gain on sale of loans of $577 thousand from SBA 7A loan sales, in the first quarter of 2025, compared to a loss on sale of loans of $1.1 million related to the sale of certain Sponsor Finance loans in the prior quarter. Service charges and fees on deposit accounts of $1.2 million in the first quarter of 2025 increased $275 thousand from the prior quarter, related to the one-time waiver of analysis charges for certain deposit accounts in light of the core system conversion in the prior quarter. Bank owned life insurance income of $463 thousand in the first quarter of 2025 decreased $360 thousand from the prior quarter, primarily related to a $368 thousand death benefit income recorded in the prior quarter. No comparable death benefit income was recorded in the first quarter of 2025.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Total noninterest income during the three months ended March 31, 2025 was $2.6 million, an increase of $1.2 million compared to total noninterest income of $1.4 million for the same 2024 period. The increase was due

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primarily to the impact of the Merger, which resulted in increases in service charges and fees on deposit accounts, interchange and ATM income, bank owned life insurance income, and servicing and related income on loans.

Gain on sale of loans during the three months ended March 31, 2025 was $577 thousand, compared to $415 thousand for the same 2024 period. There were eight SBA 7(a) loans sold, totaling $9.0 million, at an average premium of 6.44% during the three months ended March 31, 2025 and six loans sold, totaling $6.3 million, at an average premium of 6.56% during the same 2024 period.

Noninterest Expense

The following table sets forth the various components of our noninterest expense for the periods indicated:

	Three months ended
(dollars in thousands)	March 31, 2025		December 31, 2024		March 31, 2024
Salaries and employee benefits	$	15,864	$	16,074	$	9,610
Occupancy and equipment	2,152		2,314		1,452
Data processing and communications	1,935		1,960		1,150
Legal, audit and professional	859		817		516
Regulatory assessments	722		436		387
Director and shareholder expenses	404		458		203
Merger and related expenses	—		643		549
Intangible assets amortization	948		1,060		65
Other real estate owned expenses	68		220		88
Other expenses	1,968		2,143		961
Total noninterest expense	$	24,920	$	26,125	$	14,981

Three Months Ended March 31, 2025 Compared to Three Months Ended December 31, 2024

Total noninterest expense for the first quarter of 2025 was $24.9 million, a decrease of $1.2 million from total noninterest expense of $26.1 million in the prior quarter, which was largely due to the decrease in merger related expenses.

Salaries and employee benefits decreased $210 thousand during the quarter to $15.9 million. The decrease in salaries and employee benefits was primarily related to the decrease in average headcount.

There were no merger related expenses in the first quarter of 2025, compared to $643 thousand in the prior quarter.

Regulatory assessments of $722 thousand increased $286 thousand due to an increase in the FDIC assessment rates.

Other real estate owned expense of $68 thousand in the first quarter of 2025 decreased by $152 thousand, due primarily to lower receivership expenses and property tax.

Other expenses of $2.0 million in the first quarter of 2025 decreased by $175 thousand, due primarily to lower loan related expenses, customer service related expenses, travel expenses and insurance expenses.

Efficiency ratio (non-GAAP1) for the first quarter of 2025 was 55.6%, compared to 57.4% in the prior quarter. Excluding the merger and related expenses of zero and $643 thousand, the efficiency ratio (non-GAAP1) for the first quarter of 2025 and fourth quarter of 2024 would have been 55.6% and 55.9%, respectively.

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Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Total noninterest expense during the three months ended March 31, 2025 was $24.9 million, an increase of $9.9 million compared with total noninterest expense of $15.0 million for the same 2024 period. The increase was largely due to increases related to the Merger, including increases in salaries and employee benefits, occupancy and equipment, data processing and communications, core deposit intangible amortization, and other expenses, partially offset by lower merger and related expenses.

Salaries and employee benefits were $15.9 million during the three months ended March 31, 2025, compared to $9.6 million during the prior year. The $6.3 million increase in salaries and benefits was driven primarily by higher headcount as a result of the Merger. The average FTE employees for the three months ended March 31, 2025 was 290 compared to 200 FTE employees for the same 2024 period.

There were no merger and related expenses during the three months ended March 31, 2025, compared to $549 thousand for the same 2024 period.

Intangible assets amortization increased $883 thousand during the three months ended March 31, 2025. The increase in amortization was primarily driven by the additional amortization from the $22.7 million of intangible assets, consisting primarily of core deposit intangible, acquired in the Merger.

Other expenses were $2.0 million during the three months ended March 31, 2025, compared to $1.0 million for the same 2024 period. The $1.0 million increase was due primarily to the increases in loan related expenses, customer service related expenses, travel expenses and insurance expenses primarily as a result of the Merger.

Our efficiency ratio (non-GAAP) for the three months ended March 31, 2025 and 2024 was 55.6% and 68.4%, respectively. For the three months ended March 31, 2024, excluding the merger and related expenses of $549 thousand, the efficiency ratio (non-GAAP1) would have been 65.9%.

Income Taxes

Three Months Ended March 31, 2025 Compared to Three Months Ended December 31, 2024

In the first quarter of 2025, the Company’s income tax expense was $6.8 million, compared with $6.5 million in the fourth quarter of 2024. The effective rate was 28.8% for the first quarter of 2025 and 27.9% for the fourth quarter of 2024. The increase in the effective tax rate for the first quarter of 2025 was primarily attributable to the impact of the non-tax deductible portion of the merger expenses and the vesting and exercise of equity awards combined with changes in the Company's stock price over time, partially offset by the impact of the tax on excess executive compensation.

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Income tax expense for the three months ended March 31, 2025 was $6.8 million, compared to income tax expense of $2.3 million for the same 2024 period. The effective rate was 28.8% during the three months ended March 31, 2025, compared to 32.0% for the same 2024 period. The decrease in the effective tax rate between periods was primarily due to the impact of the non-tax deductible portion of the merger expenses and the vesting and exercise of equity awards combined with changes in the Company's stock price over time.

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Financial Condition

Summary

Total assets at March 31, 2025 were $3.98 billion, a decrease of $48.6 million or 1.2% from December 31, 2024. The decrease in total assets from the prior quarter was primarily related to a decrease in loans, including loans held for sale, of $82.9 million, partially offset by an increase in cash and cash equivalents of $51.1 million as compared to the prior quarter. The decrease in assets primarily relates to the decreases in wholesale funding sources and loan sales and payoffs.

Total liabilities were $3.45 billion at March 31, 2025, a decrease of $68.1 million from $3.52 billion at December 31, 2024. The decrease in total liabilities primarily related to a $56.3 million decrease in total deposits and a $11.3 million decrease in accrued interest payable and other liabilities.

Shareholders’ equity was $531.4 million at March 31, 2025, an increase of $19.5 million from $511.8 million at December 31, 2024. The increase in shareholders’ equity was primarily driven by $16.9 million of net income, $1.5 million related to stock-based compensation activity, and a $2.2 million decrease in net of tax unrealized losses on available-for-sale debt securities during the three months ended March 31, 2025.

Debt Securities

Our debt securities portfolio consists of both held-to-maturity and available-for-sale securities aggregating $184.8 million and $195.3 million at March 31, 2025 and December 31, 2024, respectively. The $10.5 million decrease in debt securities was primarily related to paydowns, maturities and calls. Our held-to-maturity debt securities and available-for-sale debt securities represented 1.34% and 3.30%, respectively, of total assets at March 31, 2025, compared to 1.32% and 3.52%, respectively, at December 31, 2024.

During the three months ended March 31, 2025, there were no transfers between held-to-maturity and available-for-sale debt securities.

At March 31, 2025 and December 31, 2024, available-for-sale debt securities with an amortized cost of $3.0 million for both periods were pledged to the Federal Reserve Bank (“Federal Reserve”) as collateral for a secured public deposits and for other purposes as required by law or contract provisions, in addition to held-to-maturity debt securities with an amortized cost of $53.2 million for both periods were pledged as collateral for a secured line of credit with the Federal Reserve.

Held-to-Maturity Debt Securities

The amortized cost of held-to-maturity debt securities and their approximate fair values at March 31, 2025 and December 31, 2024 were as follows:

(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
March 31, 2025
Taxable municipals	$	553	$	—	$	(76)	$	477
Tax exempt bank-qualified municipals	52,641		—		(5,789)		46,852
	$	53,194	$	—	$	(5,865)	$	47,329
December 31, 2024
Taxable municipals	$	553	$	—	$	(90)	$	463
Tax exempt bank-qualified municipals	52,727		—		(5,367)		47,360
	$	53,280	$	—	$	(5,457)	$	47,823

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At March 31, 2025, we had 61 held-to-maturity debt securities in a gross unrealized loss position with an amortized cost basis of $53.2 million with pre-tax unrealized losses of $5.9 million, compared to 61 held-to-maturity debt securities with an amortized cost basis of $53.3 million with pre-tax unrealized losses of $5.5 million at December 31, 2024. The effective duration of the held-to-maturity debt securities was 6.43 years and 6.52 years at March 31, 2025 and December 31, 2024, respectively. We have the intent and ability to hold the securities classified as held to maturity until they mature, at which time we will receive full value for the securities.

All held-to-maturity debt securities were municipal securities, and historically have had limited credit loss experience. At March 31, 2025 and December 31, 2024, the total fair value of taxable municipal and tax exempt bank-qualified municipal securities were $477 thousand and $463 thousand, respectively, and $46.9 million and $47.4 million, respectively. At March 31, 2025 and December 31, 2024, the total held-to-maturity debt securities rated AA and above was $44.2 million and $44.7 million, respectively, and rated AA- was $3.1 million and $3.2 million, respectively. Accordingly, we applied a zero credit loss assumption for these securities and no allowance for credit loss was recorded as of March 31, 2025 and December 31, 2024.

Available-for-Sale Debt Securities

The amortized cost of available-for-sale debt securities and their approximate fair values at March 31, 2025 and December 31, 2024 were as follows:

(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
March 31, 2025
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	81,019	$	300	$	(3,421)	$	77,898
SBA securities	4,689		6		(80)		4,615
U.S. Treasury	7,677		3		(261)		7,419
U.S. Agency	2,000		—		(272)		1,728
Collateralized mortgage obligations	40,633		135		(2,581)		38,187
Taxable municipal	1,007		—		(89)		918
Tax exempt bank-qualified municipals	830		—		(2)		828
	$	137,855	$	444	$	(6,706)	$	131,593
December 31, 2024
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	87,930	$	109	$	(4,765)	$	83,274
SBA securities	5,423		7		(97)		5,333
U.S. Treasury	12,624		17		(315)		12,326
U.S. Agency	2,000		—		(330)		1,670
Collateralized mortgage obligations	41,615		11		(3,963)		37,663
Taxable municipals	1,007		—		(98)		909
Tax exempt bank-qualified municipals	830		—		(4)		826
	$	151,429	$	144	$	(9,572)	$	142,001

The estimated fair value of available-for-sale debt securities was $131.6 million at March 31, 2025, a decrease of $10.4 million, from $142.0 million at December 31, 2024. The decrease was primarily due to

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maturities of $5.0 million, and principal reductions and amortization of discounts and premiums aggregating to $8.6 million, partially offset by an increase in fair value market adjustments of $3.2 million,

At March 31, 2025, we had 84 available-for-sale debt securities in a gross unrealized loss position with an amortized cost basis and fair value of $113.5 million and $106.8 million, respectively, with pre-tax unrealized losses of $6.7 million, compared to 89 available-for-sale debt securities with an amortized cost basis and fair value of $124.2 million and $114.6 million, respectively with pre-tax unrealized holding losses of $9.6 million at December 31, 2024. The net of tax unrealized loss on available-for-sale debt securities is reflected in accumulated other comprehensive loss. The effective duration of this portfolio was 4.73 years and 4.60 years at March 31, 2025 and December 31, 2024, respectively. We do not have the current intent to sell these available-for-sale debt securities with a fair value below amortized cost, and it is more likely than not that we will not be required to sell such securities prior to the recovery of their amortized cost basis. The issuers of these securities have not, to our knowledge, established any cause for default on these securities. As a result, we expect to recover the entire amortized cost basis of these securities.

When market interest rates decrease, bond prices tend to increase and, consequently, the fair value of our securities may also increase. The 10-Year Treasury Bond was approximately 4.2% at the end of March 31, 2025. The decreases in the 10-Year Treasury Bond in the first quarter, resulted in a lower net unrealized losses on our debt securities at March 31, 2025. The changes in the net unrealized losses on our available-for-sale debt securities would affect our total and tangible shareholders’ equity.

We determined that the unrealized losses related to each available-for-sale debt security at March 31, 2025 was primarily attributable to factors other than credit related, including general volatility in market conditions. Our available-for-sale debt securities consisted of U.S. Treasury, U.S. government and agency and government sponsored enterprise securities, and municipals which are issued, guaranteed, or supported by the U.S. government, and historically have had limited credit loss experience. In addition, we reviewed the credit rating of the municipal securities. At March 31, 2025, the total fair value of taxable municipal and tax exempt bank-qualified municipal securities was $918 thousand and $828 thousand, respectively. All of these available-for-sale municipal debt securities rated AA and above totaled $1.7 million. At December 31, 2024, the total fair value of taxable municipal and tax exempt bank-qualified municipal securities was $909 thousand and $826 thousand, respectively. All of these available-for-sale municipal debt securities rated AA and above totaled $1.7 million at December 31, 2024. Accordingly, we applied a zero credit loss assumption for these securities and no ACL was recorded as of March 31, 2025 and December 31, 2024.

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The following table presents the amortized cost and weighted average yields using amortized cost of held-to-maturity debt securities as of March 31, 2025, based on the contractual maturity dates:

	One Year or Less				More than One Year through Five Years				More than Five Years through Ten Years				More than Ten Years				Total
	Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield
Held-to-maturity:
Taxable municipals	$	—	—	%	$	—	—	%	$	553	2.30	%	$	—	—	%	$	553	2.30	%
Tax exempt bank-qualified municipals	—		—	%	—		—	%	27,470		2.18	%	25,171		2.38	%	52,641		2.28	%
Total	$	—	—	%	$	—	—	%	$	28,023	2.18	%	$	25,171	2.38	%	$	53,194	2.28	%

The following table presents the fair value and weighted average yields using amortized cost of available-for-sale debt securities as of March 31, 2025, based on the contractual maturity dates:

	One Year of Less				More than One Year through Five Years				More than Five Years through Ten Years				More than Ten Years				Total
	Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield		Fair Value		Weighted Average Yield
Available-for-sale:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	2,831	7.42	%	$	5,728	1.85	%	$	7,916	2.76	%	$	61,423	4.16	%	$	77,898	3.97	%
SBA securities	—		—	%	3,039		5.28	%	847		2.97	%	729		3.95	%	4,615		—	%
U.S. Treasury	4,986		4.94	%	2,433		0.95	%	—		—	%	—		—	%	7,419		—	%
U.S. Agency	—		—	%	—		—	%	1,728		2.05	%	—		—	%	1,728		—	%
Collateralized mortgage obligations	—		—	%	—		—	%	1,882		3.94	%	36,305		3.60	%	38,187		—	%
Taxable municipals	—		—	%	500		5.24	%	418		1.72	%	—		—	%	918		—	%
Tax exempt bank-qualified municipals	828		2.50	%	—		—	%	—		—	%	—		—	%	828		—	%
Total	$	8,645	5.52	%	$	11,700	2.63	%	$	12,791	2.79	%	$	98,457	3.94	%	$	131,593	3.38	%

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Loans Held for Sale

At March 31, 2025, loans held for sale totaled $4.6 million, consisting of only SBA 7(a) loans. At December 31, 2024, loans held for sale totaled $17.2 million, consisting of $10.3 million SBA 7(a) loans and $6.9 million of C&I loans transferred from loans held for investment.

Loans Held for Investment

The composition of our loans held for investment at March 31, 2025 and December 31, 2024 was as follows:

(dollars in thousands)	March 31, 2025		% of Total Loans		December 31, 2024		% of Total Loans
Construction and land development	$	221,437	7.2	%	$	227,325	7.2	%
Real estate - other:
1-4 family residential	157,442		5.1	%	164,401		5.2	%
Multifamily residential	237,896		7.8	%	243,993		7.8	%
Commercial real estate and other	1,755,962		57.2	%	1,767,727		56.3	%
Commercial and industrial	672,468		21.9	%	710,970		22.7	%
Consumer	23,569		0.8	%	24,749		0.8	%
Loans(1)	3,068,774		100.0	%	3,139,165		100.0	%
Allowance for loan losses	(45,839)				(50,540)
Net loans	$	3,022,935			$	3,088,625

(1) Loans held for investment includes net unearned fees of $1.7 million and $1.8 million and net unearned discounts of $51.3 million and $58.5 million at March 31, 2025 and December 31, 2024, respectively. We recognized $5.7 million and $61 thousand in interest accretion for acquired loans for the three months ended March 31, 2025 and 2024, respectively.

Total loans held for investment were $3.07 billion, or 77.0% of total assets, at March 31, 2025, a decrease of $70.4 million from $3.14 billion, or 77.9% of total assets, at December 31, 2024. The change during the three months ended March 31, 2025, was due primarily to originations of $69.4 million, offset by net paydowns of $21.5 million, charge-offs of $3.2 million and payoffs and sales of $115.1 million during the three months ended March 31, 2025.

Loans secured by real estate, defined as construction and land development loans and real estate - other loans, decreased by $30.7 million to $2.37 billion at March 31, 2025. The decrease in loans secured by real estate was primarily driven by a $5.9 million decrease in construction and land development loans, a $6.1 million decrease in multifamily residential loans, a $7.0 million decrease in 1-4 family residential loans, and an $11.8 million decrease in commercial real estate and other loans.

Commercial and industrial loans were $672.5 million at March 31, 2025, a decrease of $38.5 million from $711.0 million at December 31, 2024. The decrease in commercial and industrial loans during the three months ended March 31, 2025 was primarily attributable to originations of $42.0 million, partially offset by charge-offs of $ 1.2 million, net paydowns of $18.6 million and payoffs of $60.7 million.

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Loan Maturities

The following table sets forth the amounts of gross loans, by maturity at March 31, 2025:

(dollars in thousands)	Due in One Year or Less		Due after One Year through Five Years		Due after Five Years through Fifteen Years		Due after Fifteen Years		Total
Construction and land development	$	179,990	$	38,880	$	2,567	$	—	$	221,437
Real estate - other:
1-4 family residential	24,707		42,299		56,332		34,104		157,442
Multifamily residential	26,413		101,302		91,371		18,810		237,896
Commercial real estate and other	159,436		763,515		753,240		79,771		1,755,962
Commercial and industrial	332,767		247,178		92,518		5		672,468
Consumer	634		989		—		21,946		23,569
	$	723,947	$	1,194,163	$	996,028	$	154,636	$	3,068,774

The following table sets forth the amounts of gross loans, due after one year, presented by fixed or floating interest rates at March 31, 2025:

(dollars in thousands)	Fixed Rate		Floating Rate		Total
Construction and land development	$	20,574	$	20,873	$	41,447
Real estate - other:
1-4 family residential	33,332		99,403		132,735
Multifamily residential	138,226		73,257		211,483
Commercial real estate and other	747,845		848,681		1,596,526
Commercial and industrial	186,200		153,501		339,701
Consumer	22,879		56		22,935
	$	1,149,056	$	1,195,771	$	2,344,827

Loan Concentrations

Commercial real estate loans are generally viewed as having more risk of default than residential real estate loans. They are also typically larger than most residential real estate loans and consumer loans and depend on cash flows from the owner’s business or the property to service the debt. Because our loan portfolio, including loans held for sale, contains a number of CRE loans with relatively large balances, the deterioration of one or a few of these loans could cause a significant increase in our levels of nonperforming assets. Approximately 57.0% of our total loan portfolio, including loans held for sale, was comprised of commercial real estate loans as of March 31, 2025 as presented below:

(dollars in thousands)	March 31, 2025		Percentage of CRE Portfolio		Average Loan Size		Weighted Average LTV (2)
Commercial real estate loans (1):
Industrial	$	522,200	29.8	%	$	1,913	47	%
Office	275,800		15.7	%	1,999		52	%
Retail	290,100		16.5	%	1,679		43	%
Hotel	133,700		7.6	%	9,552		44	%
Special purpose	115,600		6.6	%	1,994		39	%
Self storage	87,900		5.0	%	6,759		46	%

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(dollars in thousands)	March 31, 2025		Percentage of CRE Portfolio		Average Loan Size		Weighted Average LTV (2)
Other (3)	173,600		9.9	%	2,226		47	%
Medical/dental office	110,400		6.3	%	1,023		50	%
Restaurant	43,600		2.5	%	1,322		45	%
Total	$	1,752,900	100.0	%	$	1,975	46	%

(1)CRE loans include owner-occupied CRE and non-owner occupied CRE loans, but exclude farmland loans. Balance includes loans held for sale and loans held for investment.

(2)Weighted average loan-to-value (“LTV”) is based on current loan balance as of March 31, 2025, and collateral value at origination or renewal.

(3)Other includes gas station, mixed use and retirement properties.

The following table presents the percentages of our commercial real estate loans broken out by occupancy as of March 31, 2025:

	March 31, 2025
	Owner Occupied				Non-owner Occupied
(dollars in thousands)	Balance		% of Total		Balance		% of Total
Commercial real estate loans (1):
Industrial	$	302,500	48.4	%	$	219,700	19.5	%
Special purpose	73,800		11.8	%	41,800		3.7	%
Office	59,500		9.5	%	216,300		19.2	%
Retail	42,000		6.7	%	248,100		22.0	%
Medical/dental office	65,400		10.5	%	45,000		4.0	%
Other	71,800		11.6	%	101,800		9.0	%
Restaurant	9,500		1.5	%	34,100		3.0	%
Self storage	—		—	%	87,900		7.8	%
Hotel	—		—	%	133,700		11.8	%
Total	$	624,500	100.0	%	$	1,128,400	100.0	%

(1)CRE loans include owner-occupied CRE and non-owner occupied CRE loans, but exclude farmland loans. Balance includes loans held for sale and loans held for investment.

With the increases in remote work over the last few years, rising interest rates and increasing vacancy rates nationwide, commercial real estate loans collateralized by office properties have unique credit risks. We attempt to reduce our credit risk within this portfolio by emphasizing loan-to-value ratios and debt service ratios. The following table presents a summary of the balances and weighted average loan-to-values of office loans and medical/dental office loans within our commercial real estate loan portfolio as of March 31, 2025:

(dollars in thousands)	March 31, 2025		Weighted Average LTV 1
Office loans:
Up to $500	$	23,100	45	%
More than $500 through $2,000	96,600		47	%
More than $2,000 through $5,000	89,800		56	%
More than $5,000 through $10,000	69,800		54	%
More than $10,000 through $20,000	62,100		48	%
Greater than $20,000	44,800		58	%
Total	$	386,200	52	%

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(1)Weighted average LTV is based on current loan balance as of March 31, 2025, and collateral value at origination or renewal.

Delinquent Loans

There were $5.1 million of past due loans still accruing at March 31, 2025, representing 0.17% of total loans held for investment, compared to 0.39% at December 31, 2024. Early stage delinquencies (accruing loans 30-89 days past due) of $5.1 million at March 31, 2025 decreased $7.0 million from December 31, 2024. The decrease included a $1.1 million C&I loan that was fully charged-off, a $4.5 million 1-4 family residential loan that was sold at par, and $5.9 million of loans that were brought current, partially offset by two commercial real estate loans totaling $4.4 million that became delinquent during the first quarter of 2025. The remaining early stage delinquencies were driven by seasonality and a few isolated loans. We had $45 thousand in consumer solar loans that were over 90 days past due that were accruing interest at March 31, 2025, compared to $150 thousand as of December 31, 2024.

A summary of past due loans, loans still accruing and nonaccrual loans as of March 31, 2025 and December 31, 2024 follows:

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Nonaccrual
March 31, 2025
Construction and land development	$	—	$	—	$	—	$	—	$	14,659
Real estate - other:
1-4 family residential	—		—		—		—		—
Multifamily residential	—		—		—		—		—
Commercial real estate and other	4,569		—		—		4,569		1,763
Commercial and industrial	309		—		—		309		6,358
Consumer	41		184		45		270		—
	$	4,919	$	184	$	45	$	5,148	$	22,780

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Nonaccrual
December 31, 2024
Construction and land development	$	4,104	$	—	$	—	$	4,104	$	9,659
Real estate - other:
1-4 family residential	40		4,469		—		4,509		2,895
Multifamily residential	—		—		—		—		—
Commercial real estate and other	195		—		—		195		8,915
Commercial and industrial	1,866		1,113		—		2,979		4,917
Consumer	69		226		150		445		—
	$	6,274	$	5,808	$	150	$	12,232	$	26,386

Total nonaccrual loans decreased $3.6 million during the three months ended March 31, 2025 to $22.8 million. There were four loans totaling $6.8 million downgraded to nonaccrual, partially offset by one 1-4 family residential loan of $2.9 million upgraded to accrual status and one commercial real estate loan of $7.2 million sold with an additional charge-off of $1.7 million during the first quarter of 2025.

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The following table presents the risk categories for total loans by class of loans as of March 31, 2025 and December 31, 2024:

(dollars in thousands)	Pass		Special Mention		Substandard		Total
March 31, 2025
Construction and land development	$	191,370	$	13,660	$	16,407	$	221,437
Real estate - other:
1-4 family residential	154,729		—		2,713		157,442
Multifamily residential	234,883		3,013		—		237,896
Commercial real estate and other	1,688,260		41,804		25,898		1,755,962
Commercial and industrial	590,062		15,944		66,462		672,468
Consumer	23,263		—		306		23,569
	$	2,882,567	$	74,421	$	111,786	$	3,068,774

(dollars in thousands)	Pass		Special Mention		Substandard		Total
December 31, 2024
Construction and land development	$	203,484	$	12,431	$	11,410	$	227,325
Real estate - other:
1-4 family residential	157,037		—		7,364		164,401
Multifamily residential	240,207		3,786		—		243,993
Commercial real estate and other	1,710,050		36,026		21,651		1,767,727
Commercial and industrial	617,106		17,096		76,768		710,970
Consumer	24,344		—		405		24,749
	$	2,952,228	$	69,339	$	117,598	$	3,139,165

Special mention loans increased by $5.1 million during the three months ended March 31, 2025 to $74.4 million at March 31, 2025. The increase in the special mention loans was due mostly to $18.9 million in downgrades from Pass loans and $8.6 million in net advances, partially offset by $15.9 million in downgrades to substandard loans, $2.1 million upgrades to Pass loans, and $4.5 million in payoffs.

Substandard loans decreased by $5.8 million during the three months ended March 31, 2025 to $111.8 million. The decrease in the substandard loans was due primarily to a 1-4 family residential loan and a commercial real estate nonaccrual PCD loan totaling $11.6 million that were both sold, $16.0 million in paydowns and payoffs, and $1.2 million in net charge-offs, partially offset by $7.2 million in downgrades from pass loans, and $15.9 million in downgrades from special mention loans during the three months ended March 31, 2025.

There were no loans classified as doubtful or loss loans at March 31, 2025 and December 31, 2024.

Loan Modifications

We had seven loan modifications with borrowers that are experiencing financial difficulty that were modified during the last twelve months ended March 31, 2025 totaling $19.9 million. These loans included five PCD loans, one non-PCD loan and one non-acquired loan. During the three months ended March 31, 2025, there was one PCD Construction and land loan and one PCD C&I loan modification that was classified as modifications with borrowers that are experiencing financial difficulty. During the three months ended March 31, 2024, There were no loan modifications or refinancings (including those with borrowers that are experiencing financial difficulty).

At December 31, 2024, we had six loan modifications with borrowers that are experiencing financial difficulty totaling $24.1 million, of which $2.0 million were past due. These loans included four PCD loans, one

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non-PCD loan and one non-acquired loan. Refer to Note 4 - Loans and Allowances for Credit Losses - Modified Loans to Borrowers Experiencing Financial Difficulty of the Notes to Consolidated Financial Statements included in Part I - Financial Information - Item 1. Financial Statements of this filing for more information regarding loan modifications.

Non-performing Assets

Nonperforming assets consist of loans on which we have ceased accruing interest (nonaccrual loans), OREO, and other repossessed assets owned. Nonaccrual loans consist of all loans 90 days or more past due and on loans where, in the opinion of management, there is reasonable doubt as to the collection of principal and interest.

The following table presents a summary of nonperforming assets, along with corresponding nonperforming asset ratios, as of March 31, 2025 and December 31, 2024:

(dollars in thousands)	March 31, 2025			December 31, 2024
Nonaccrual loans:
Construction and land development	$	14,659		$	9,659
Real estate - other:
1-4 family residential	—			2,895
Multifamily residential	—			—
Commercial real estate and other	1,763			8,915
Commercial and industrial	6,358			4,917
Consumer	—			—
Total nonaccrual loans	22,780			26,386
Loans past due over 90 days or more and still on accrual	45			150
Total nonperforming loans	22,825			26,536
Other real estate owned	4,083			4,083
Total nonperforming assets	$	26,908		$	30,619
Allowance for loan losses to total loans	1.49		%	1.61		%
Nonaccrual loans to total loans	0.74		%	0.84		%
Allowance for loan losses to nonaccrual loans	201.2		%	191.5		%
Allowance for loan losses to nonperforming loans	200.8		%	190.5		%
Nonperforming assets to total assets	0.68		%	0.76		%

At March 31, 2025, nonaccrual and nonperforming loans were $22.8 million and $22.8 million, respectively, compared to $26.4 million and $26.5 million, respectively, at December 31, 2024. The decrease in nonaccrual loans from December 31, 2024 was due primarily to four loans totaling $6.8 million downgraded to nonaccrual, offset by one 1-4 family residential loan of $2.9 million upgraded to accrual status and one commercial real estate loan of $7.2 million sold with an additional charge-off of $1.7 million during the first quarter of 2025.

Allowance for Credit Losses

Our ACL is an estimate of expected lifetime credit losses for loans held for investment at the time of origination or acquisition and is maintained at a level deemed appropriate by management to provide for expected lifetime credit losses in the portfolio. The ACL consists of: (i) a specific allowance established for CECL on loans individually evaluated, (ii) a quantitative allowance for current expected loan losses based on the portfolio and expected economic conditions over a reasonable and supportable forecast period that reverts back to long-term trends to cover the expected life of the loan, (iii) a qualitative allowance including management judgment to capture factors and trends that are not adequately reflected in the quantitative allowance, and (iv) the ACL for off-

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balance sheet credit exposure for unfunded loan commitments. Estimating expected credit losses requires management to use relevant forward-looking information, including the use of reasonable and supportable forecasts. We measure the ACL using a discounted cash flow methodology, which utilizes pool-level assumptions and cash flow projections on individual loan basis, which then aggregated at the portfolio segment level and supplemented by a qualitative reserve that is applied to each portfolio segment level. Our ACL model incorporates assumptions for our own historical quarterly prepayment and curtailment experience covering the period starting from February 2021 to estimate the ACL, probability of default (“PD”), and loss given default (“LGD”) to project each loan’s cash flow throughout its entire life cycle.

Accrued interest receivable on loans receivable, net, totaled $10.1 million and $11.7 million at March 31, 2025 and December 31, 2024, respectively, and is included within accrued interest receivable and other assets in the accompanying consolidated balance sheets. Accrued interest receivable is excluded from the ACL.

The following tables present a summary of the changes in the ACL for the periods indicated:

	Three Months Ended March 31, 2025						Three Months Ended March 31, 2024
(dollars in thousands)	Allowance for Loan Losses (“ALL”)		Reserve for Unfunded Loan Commitments		Total Allowance for Credit Losses		Allowance for Loan Losses (“ALL”)		Reserve for Unfunded Loan Commitments		Total Allowance for Credit Losses
Balance, beginning of period	$	50,540	$	3,103	$	53,643	$	22,569	$	933	$	23,502
Reversal of credit losses	(3,158)		(618)		(3,776)		(314)		(17)		(331)
Charge-offs	(3,159)		—		(3,159)		(1)		—		(1)
Recoveries	1,616		—		1,616		—		—		—
Net charge-offs	(1,543)		—		(1,543)		(1)		—		(1)
Balance, end of period	$	45,839	$	2,485	$	48,324	$	22,254	$	916	$	23,170

The following table presents a summary of the ALL by portfolio segment, along with the corresponding percentage of each segment to total loans as of periods indicated:

	March 31, 2025				December 31, 2024
(dollars in thousands)	Amount		Percent of loans in each category to total loans		Amount		Percent of loans in each category to total loans
Construction and land development	$	1,704	7.2	%	$	1,953	7.2	%
Real estate - other:
1-4 family residential	1,090		5.1	%	2,375		5.2	%
Multifamily residential	1,460		7.8	%	1,560		7.8	%
Commercial real estate and other	24,379		57.2	%	25,464		56.3	%
Commercial and industrial	16,164		21.9	%	18,056		22.7	%
Consumer	1,042		0.8	%	1,132		0.8	%
	$	45,839	100.0	%	$	50,540	100.0	%

Since we first adopted CECL in January 2023, and through June 2024, the economic environment has experienced volatility, which has made forecasting future economic outcomes challenging. Among these challenges were the highest levels of inflation seen since the 1970s, a very aggressive rate hiking policy by the Fed and other central banks to combat inflation, turmoil in the banking sector that resulted in several large bank failures early in 2023 and distress at New York Community Bank in early 2024, and significant global geopolitical risks, as well as domestic political risks. On a quarterly basis, we evaluated numerous key macroeconomic variables within the economic forecast scenarios from Moody’s Analytics and determined that it was best to use a combination of these scenarios that would reflect the range of possible outcomes given the volatile economic environment. We also reviewed the underlying assumptions supporting each scenario along with other sources of economic forecasts and meeting minutes of the Federal Open Market Committee (“FOMC”)

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when determining the scenario weighting. We reduced the probability-weighted forecast from a three-scenario forecast to a two-scenario forecast in September 2023. At March 31, 2025, we used a probability-weighted two-scenario forecast, representing a base-case scenario and one downside scenario, to estimate the ACL. We also updated the scenario weightings and assigned 80% to the base-case scenario and 20% to the downside scenario based on the FOMC lowering the Fed funds rate by 100 basis points during 2024, inflation trending lower, strong recent jobs reports and increasing GDP forecasts suggesting more positive growth in the coming quarters. The use of two weighted scenarios is consistent with the methodology used in our ACL model at March 31, 2025 and December 31, 2024.

We used economic forecasts released by Moody’s Analytics in the fourth week of March 2025 to update our ACL calculations for March 31, 2025. We updated our historical prepayment and curtailment rates analysis, and qualitative risk factors based on our judgment of the market area, industry or business specific data, changes in underlying loan composition of specific portfolios, trends relating to credit quality, delinquency, non-performing and adversely rated loans, model imprecision and reasonable and supportable forecasts of economic conditions that were not captured in the quantitative analysis. We continue to monitor macroeconomic variables related to changes in interest rates, inflation and the concerns of an economic downturn, and believe it is appropriately provisioned for the current environment.

The ALL was $45.8 million at March 31, 2025, compared to $50.5 million at December 31, 2024. The $4.7 million decrease in the ALL during the three months ended March 31, 2025 was driven by a number of factors, including net charge-offs of $1.5 million primarily from two C&I loans totaling $1.2 million that were fully charged-off, coupled with a $273 thousand charge-off from consumer solar loans. Other factors that decreased the ALL included changes in qualitative risk factors that decreased the ALL by $1.0 million, partially offset by an increase in specific reserve of $659 thousand. Changes related to classified loans decreased the ALL by $2.9 million, which primarily related to the decreases in PCD loans and substandard loans, offset by an increase in special mention loans. Changes in the loans held for investment volume and mix decreased the ALL by $872 thousand. Changes in the reasonable and supportable forecast, primarily related to the economic outlook, the scenario weightings, and the historical prepayment and curtailment rates analysis decreased the ALL by $522 thousand.

At March 31, 2025, our ratio of ALL to total loans held for investment was 1.49%, a decrease from 1.61% at December 31, 2024.

The ACL process involves subjective and complex judgments and is reflective of significant uncertainties that could potentially result in materially different results under different assumptions and conditions. We review the level of the allowance at least quarterly and perform a sensitivity analysis on the significant assumptions utilized in estimating the ACL for collectively evaluated loans. Applying a 100% probability weighting to the downside scenario rather than using the probability-weighted two scenario approach would result in an increase in ACL by approximately $6.9 million, or an additional 22 basis points to the ALL to total loans held for investment ratio. This sensitivity analysis and related impact on the ACL is a hypothetical analysis and is not intended to represent management’s judgments or assumptions of qualitative loss factors that were utilized at March 31, 2025.

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The following table presents net charge-offs, average loans and net charge-offs as a percentage of average loans for the periods indicated:

	Three Months Ended March 31, 2025						Three Months Ended March 31, 2024
(dollars in thousands)	Net (Charge-off) Recovery		Average Loans		Net (Charge-off) Recovery Ratio		Net (Charge-off) Recovery		Average Loans		Net (Charge-off) Recovery Ratio
Construction and land development	$	—	$	230,574	—	%	$	—	$	240,693	—	%
Real estate - other:
1-4 family residential	—		160,228		—	%	(1)		141,394		—	%
Multifamily residential	—		243,216		—	%	—		217,560		—	%
Commercial real estate and other	(1,651)		1,757,115		(0.38)	%	—		1,017,551		—	%
Commercial and industrial	381		694,871		0.22	%	—		289,574		—	%
Consumer	(273)		23,718		(4.60)	%	—		2,499		—	%
	$	(1,543)	$	3,109,722	(0.20)	%	$	(1)	$	1,909,271	—	%

Allowance for Credit Losses on Off-Balance Sheet Commitments

We also maintain a separate allowance for off-balance sheet commitments, which is included in accrued interest payable and other liabilities in our consolidated balance sheets. Management evaluates the loss exposure for off-balance sheet commitments to extend credit following the same principles used for the ACL, with consideration for experienced utilization rates on client credit lines and the inherently lower risk of unfunded loan commitments relative to disbursed commitments. The allowance for off-balance sheet commitments totaled $2.5 million and $3.1 million at March 31, 2025 and December 31, 2024, respectively. The change in the allowance for off-balance sheet commitments between periods was the result of a $618 thousand reversal of credit losses on unfunded loan commitments from lower unfunded loan commitment balances at March 31, 2025, coupled with lower loss rates used to estimate the allowance for credit losses on unfunded commitments. Total unfunded loan commitments decreased $33.2 million to $892.1 million at March 31, 2025, from $925.3 million at December 31, 2024.

Servicing Asset and Loan Servicing Portfolio

We sell loans in the secondary market and, for certain loans, retain the servicing responsibility. The loans serviced for others were accounted for as sales and are therefore not included in the accompanying consolidated balance sheets. We receive servicing fees ranging from 0.25% to 1.00% for the services provided over the life of the loan; the servicing asset is initially recognized at fair value based on the present value of the estimated future net servicing income, incorporating assumptions that market participants would use in their estimates of fair value. The risks inherent in the SBA servicing asset relates primarily to changes in prepayments that result from shifts in interest rates and a reduction in the estimated future cash flows. The servicing asset activity includes additions from loan sales with servicing retained and acquired servicing rights and reductions from amortization as the serviced loans are repaid and servicing fees are earned. Loans serviced for others totaled $145.5 million and $138.0 million at March 31, 2025 and December 31, 2024, respectively. This includes SBA loans serviced for others of $38.9 million at March 31, 2025 and $33.2 million at December 31, 2024 for which there was a related servicing asset of $452 thousand and $344 thousand, respectively. The fair value of the servicing asset approximated its carrying value at March 31, 2025 and December 31, 2024. Consideration for each SBA loan sale includes the cash received and the fair value of the related servicing asset. The significant assumptions used in the valuation of the SBA servicing asset at March 31, 2025 included a weighted average discount rate of 12.7% and a weighted average prepayment speed assumption of 19.6%. The significant assumptions used in the valuation of the SBA servicing asset at December 31, 2024 included a weighted average discount rate of 14.3% and a weighted average prepayment speed assumption of 20.5%.

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Goodwill and Intangibles Assets, Net

Goodwill totaled $111.8 million at March 31, 2025 and December 31, 2024, respectively. On an ongoing basis, we qualitatively assess if current events or circumstances warrant the need for an interim quantitative assessment of goodwill impairment. We also monitor fluctuations in our stock price. At March 31, 2025, we determined that it is not likely that the fair value of the reporting unit is less than its carrying amount.

Intangible assets totaled $21.3 million and $22.3 million at March 31, 2025 and December 31, 2024, respectively, and was comprised of the following:

(dollars in thousands)	March 31, 2025		December 31, 2024
Core deposit intangible	$	21,123	$	22,033
Trade name	200		238
Intangible assets, net	$	21,323	$	22,271

The $948 thousand decrease in the intangible assets between periods was the result of amortization during the period. At March 31, 2025, the intangible assets had a weighted average remaining amortization period of 9.1 years.

Refer to Note 2 - Business Combinations and Note 6 - Goodwill and Other Intangible Assets 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.

Deposits

The following table presents the composition of deposits, related percentage of total deposits, and spot rates, as of March 31, 2025 and December 31, 2024:

	March 31, 2025						December 31, 2024
(dollars in thousands)	Amount		Percentage of Total Deposits		Spot Rate (1)		Amount		Percentage of Total Deposits		Spot Rate (1)
Noninterest-bearing demand (2)	$	1,292,689	38.7	%	0.0	%	$	1,257,007	37.0	%	0.0	%
Interest-bearing NOW accounts (3)	674,460		20.2	%	1.8	%	673,589		19.8	%	1.9	%
Money market and savings accounts (4)	1,192,960		35.7	%	2.7	%	1,182,927		34.8	%	2.7	%
Time deposits (5)	168,635		5.0	%	3.9	%	164,101		4.8	%	4.0	%
Broker time deposits	13,759		0.4	%	4.0	%	121,136		3.6	%	4.9	%
Total deposits	$	3,342,503	100.0	%	1.5	%	$	3,398,760	100.0	%	1.7	%

(1) Weighted average interest rates at March 31, 2025 and December 31, 2024.

(2) Included reciprocal deposit products of $94.4 million and $76.6 million at March 31, 2025 and December 31, 2024, respectively.

(3) Included reciprocal deposit products of $528.4 million and $536.0 million at March 31, 2025 and December 31, 2024, respectively.

(4) Included reciprocal deposit products of $73.2 million and $76.5 million at March 31, 2025 and December 31, 2024, respectively.

(5) Included CDARS deposits of $67.6 million and $65.4 million at March 31, 2025 and December 31, 2024, respectively.

We offer our depositors access to 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. These reciprocal deposits are not required to be treated as brokered deposits up to the lesser of 20% of the Bank’s total liabilities or $5 billion.

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Our total reciprocal deposits increased to $763.6 million, or 22.8% of total deposits and 22.6% of Bank’s total liabilities at March 31, 2025, compared to $754.4 million, or 22.2% of total deposits at December 31, 2024. The excess over 20% increased our wholesale funding to total assets ratio and net non-core funding dependence ratio. These two ratios were still within the Bank's internal policy limit.

Total deposits were $3.34 billion at March 31, 2025, a decrease of $56.3 million from $3.40 billion at December 31, 2024. During the three months ended March 31, 2025, there was a $107.4 million decrease in brokered time deposits, partially offset by a $8.4 million increase in interest-bearing NOW accounts, excluding reciprocal deposits, a $9.2 million increase in reciprocal deposits, a $17.9 million increase in noninterest-bearing demand deposits, excluding reciprocal deposits, a $13.3 million increase in money market and savings accounts, excluding reciprocal deposits, and a $2.3 million increase in non-brokered time deposits, excluding CDARS.

At March 31, 2025, noninterest-bearing demand deposits totaled $1.29 billion and represented 38.7% of total deposits, compared to $1.26 billion or 37.0% at December 31, 2024. At March 31, 2025 and December 31, 2024, total deposits exceeding FDIC deposit insured limits were $1.58 billion, or 47% of total deposits and $1.56 billion, or 46% of total deposits, respectively.

The following table sets forth the average balance of deposit accounts and the weighted average rates paid for the periods indicated:

	For the Three Months Ended March 31,
	2025				2024
(dollars in thousands)	Average Balance		Average Rate Paid		Average Balance		Average Rate Paid
Noninterest-bearing demand	$	1,255,883	—	%	$	661,265	—	%
Interest-bearing NOW accounts	735,209		1.86	%	359,784		2.29	%
Money market and savings accounts	1,161,960		2.70	%	648,640		2.93	%
Time deposits	207,519		4.03	%	255,474		4.76	%
Total deposits	$	3,360,571	1.59	%	$	1,925,163	2.05	%

The decrease in the weighted average rate on deposits was primarily due to repricing deposits in the lower interest rate environment and peer bank deposit competition during the three months ended March 31, 2025. Beginning in March 2022 through September 2023, the Federal Reserve’s FOMC raised the target Fed funds rate by 525 basis points. Beginning in September 2024 through December 2024, the FOMC reduced the target Fed funds rate by 100 basis points.

The following table sets forth the maturities of time deposits at March 31, 2025:

(dollars in thousands)	Three Months of Less		Over Three Months through Six Months		Over Six Months through Twelve Months		Over Twelve Months		Total
Time deposits in amounts of $250,000 or less(1)	$	76,165	$	6,146	$	16,127	$	967	$	99,405
Time deposits in amounts over $250,000(1)	42,328		19,782		20,879		—		82,989
Total time deposits	$	118,493	$	25,928	$	37,006	$	967	$	182,394

(1)Amounts exclude fair value adjustments for acquired time deposits.

Borrowings

Total borrowings increased $583 thousand to $70.3 million at March 31, 2025 from $69.7 million at December 31, 2024. The increase was attributable to amortization of issuance costs during the period (Refer to Note 8 - Borrowing Arrangements of the Notes to Consolidated Financial Statements included in Part I - Financial Information, Part 1. Financial Statements of this filing).

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A summary of outstanding borrowings, and related information, as of March 31, 2025 and December 31, 2024 follows:

(dollars in thousands)	March 31, 2025			December 31, 2024
FHLB Advances
Outstanding balance	$	—		$	—
Weighted average interest rate, end of period	—		%	—		%
Average balance outstanding, end of period(2)	$	—		$	19,543
Weighted average interest rate, end of period(3)	—		%	5.64		%
Maximum amount outstanding at any month-end during the period	$	—		$	70,000
Subordinated Notes
Outstanding balance	$	73,000		$	73,000
Carrying value(1)	$	70,308		$	69,725
Weighted average interest rate, end of period	4.40		%	4.40		%
Average balance outstanding, end of period(2)	$	70,027		$	39,479
Weighted average interest rate, end of period(3)	8.06		%	7.47		%
Maximum amount outstanding at any month-end during the period	$	73,000		$	73,000

(1)Amount includes net unamortized issuance costs and fair value adjustments.

(2)Average balance outstanding includes average net unamortized issuance costs and average fair value adjustments at the end of the periods presented.

(3)Weighted average interest rate includes issuance costs and fair value adjustments at the end of the periods presented.

Shareholders’ Equity

Total shareholders’ equity was $531.4 million at March 31, 2025, compared to $511.8 million at December 31, 2024. The $19.5 million increase between periods was primarily due to net income of $16.9 million, a decrease in net of tax of unrealized losses on debt securities available-for-sale of $2.2 million, stock-based compensation expense of $1.5 million, and stock options exercised of $40 thousand, partially offset by the repurchase of shares in settlement of restricted stock units of $1.1 million.

On June 14, 2023, we announced an authorized share repurchase plan, providing for the repurchase of up to 550,000 shares of our outstanding common stock, or approximately 3% of our then outstanding shares. On May 1, 2025, we announced an increase in the number of shares authorized for repurchase to 1,600,000 shares. Repurchases under the program may occur from time to time in open market transactions, in privately negotiated transactions, or by other means in accordance with federal securities laws and other restrictions. We intend to fund its repurchases from available working capital and cash provided by operating activities. The timing of repurchases, as well as the number of shares repurchased, will depend on a variety of factors, including price; trading volume; business, economic and general market conditions; and the terms of any Rule 10b5-1 plan adopted by us. The repurchase program has no expiration date and may be suspended, modified, or terminated at any time without prior notice.

There were no shares repurchased under this share repurchase plan during the three months ended March 31, 2025.

Tangible book value per common share at March 31, 2025 was $12.29, compared with $11.71 at December 31, 2024. The $0.58 increase in tangible book value per common share during the three months ended March 31, 2025 was primarily the result of the net income during the period, other comprehensive income related to changes in unrealized losses, net of taxes on available-for-sale, and the impact of share-based compensation expense. Tangible book value per common share is also impacted by certain other items, including amortization of intangibles, and share changes resulting from share-based compensation results.

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Prior to the Merger, the holding company qualified for treatment under the Small Bank Holding Company Policy Statement (Regulation Y, Appendix C) and, therefore, was not subject to consolidated capital rules at the bank holding company level. Beginning in the third quarter of 2024, the holding company became subject to the consolidated capital rules at the bank holding company level. The Company’s leverage capital ratio and total risk-based capital ratio were 10.44% and 14.53%, respectively, at March 31, 2025. The Bank’s leverage capital ratio and total risk-based capital ratio were 12.15% and 14.42%, respectively, at March 31, 2025.

Liquidity and Market Risk Management

Liquidity

Liquidity is a measure of our ability to meet our cash flow requirements, including inflows and outflows of cash for depositors and borrowers, while at the same time meeting our operating, capital and strategic cash flow needs. Several factors influence our liquidity needs, including depositor and borrower activity, interest rate trends, changes in the economy, maturities, re-pricing and interest rate sensitivity of our debt securities, loan portfolio and deposits. We attempt to maintain a total liquidity ratio (liquid assets, including cash and due from banks, federal funds sold, fully disbursed loans held for sale, investments maturing one year or less, and available-for-sale debt securities not pledged as collateral expressed as a percentage of total deposits and short term debt) above approximately 10.0%. Our total liquidity ratios were 16.8% at March 31, 2025 and 15.7% at December 31, 2024.

For additional information regarding our operating, investing, and financing cash flows, see “Consolidated Statements of Cash Flows” in our consolidated financial statements contained in Item I. Financial Information, Part 1. Financial Statements of this filing.

California Bank of Commerce, N.A.

The Bank’s primary sources of liquidity are derived from deposits from customers, principal and interest payments on loans and debt securities, FHLB advances and other borrowings. The Bank’s primary uses of liquidity include customer withdrawals of deposits, extensions of credit to borrowers, operating expenses, and repayment of FHLB advances and other borrowings. While maturities and scheduled amortization of loans and debt securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by market interest rates, economic conditions, and competition.

At March 31, 2025, we had a secured line of credit of $734.8 million from the FHLB, of which $687.8 million was available. This secured borrowing arrangement is collateralized under a blanket lien on qualifying real estate loans and is subject to us providing adequate collateral and continued compliance with the Advances and Security Agreement and other eligibility requirements established by the FHLB. At March 31, 2025, we had pledged qualifying loans with an unpaid principal balance of $1.33 billion for this line. In addition, at March 31, 2025, we used $47.0 million of our secured FHLB borrowing capacity to have the FHLB issue letters of credit to meet collateral requirements for deposits from the State of California and other public agencies. There were no overnight borrowings at March 31, 2025.

At March 31, 2025, we had credit availability of $353.0 million at the Federal Reserve discount window to the extent of collateral pledged. At March 31, 2025, we had pledged our held-to-maturity debt securities with an amortized cost of $53.2 million, and qualifying loans with an unpaid principal balance of $363.0 million as collateral through the BIC program. We had no discount window borrowings at March 31, 2025 and December 31, 2024.

We have four overnight unsecured credit lines from correspondent banks totaling $90.5 million. The lines are subject to annual review. There were no outstanding borrowings under these lines at March 31, 2025 and December 31, 2024.

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California BanCorp

The primary sources of liquidity of the Company, on a stand-alone holding company basis, are derived from dividends from the Bank, borrowings, and its ability to issue debt and raise capital. The Company’s primary uses of liquidity are operating expenses and payments of interest and principal on borrowings. At March 31, 2025 and December 31, 2024, the cash and due from banks was $2.8 million and $4.1 million, respectively.

On May 28, 2020, we issued $18 million of 5.50% Fixed-to-Floating Rate Subordinated Notes Due 2030 (the “Notes”). The Notes which mature March 25, 2030 accrue interest at a fixed rate of 5.50% through the fixed rate period to March 26, 2025, after which interest accrues at a floating rate of 90-day SOFR plus 3.50% until maturity, unless redeemed early, at our option, after the end of the fixed rate period. Issuance costs of $475 thousand were incurred and are being amortized over the first 5-year fixed term of the Notes; unamortized issuance costs at March 31, 2025 and December 31, 2024, were $16 thousand and $40 thousand, respectively. The net unamortized issuance costs are netted against the balance and recorded in the borrowings in the consolidated balance sheets. The amortization expenses are recorded in interest expense on the consolidated statements of operations. At March 31, 2025, we were in compliance with all covenants and terms of the Notes.

In connection with the Merger, the Company assumed $20 million in subordinated debt, with a fixed interest rate of 5.00% and a stated maturity of September 30, 2030. Beginning September 30, 2025, the interest rate changes to a quarterly variable rate equal to the then current 90-day SOFR plus 4.88%, until maturity, unless redeemed early, at the Company’s option, after the end of the fixed-rate period. The subordinated debt was initially recognized with a fair value discount of $794 thousand. At March 31, 2025 and December 31, 2024, the net unamortized fair value discount was $340 thousand and $509 thousand, respectively. The net unamortized fair value discount is netted against the balance and recorded in borrowings in the consolidated balance sheets. The amortization of the fair value discount is recorded in interest expense in the consolidated statements of operations. At March 31, 2025, the Company was in compliance with all covenants and terms of these notes.

The Company also assumed in the Merger an additional $35 million in subordinated debt, with a fixed interest rate of 3.50% and a stated maturity of September 1, 2031. Beginning August 17, 2026, the interest rate changes to a quarterly variable rate equal to the then current 90-day SOFR plus 2.86%, until maturity, unless redeemed early, at the Company’s option, after the end of the fixed-rate period. The subordinated debt was initially recognized with a fair value discount of $3.4 million. At March 31, 2025 and December 31, 2024, the net unamortized fair value discount was $2.3 million and $2.7 million, respectively. The net unamortized fair value discount is netted against the balance and recorded in borrowings in the consolidated balance sheets. The amortization of the fair value discount is recorded in interest expense in the consolidated statements of operations. At March 31, 2025, the Company was in compliance with all covenants and terms of these notes.

At March 31, 2025, consolidated cash and cash equivalents totaled $439.2 million, an increase of $51.1 million from $388.2 million at December 31, 2024. The increase in cash and cash equivalents is the result of $7.0 million in net cash provided by operating cash flows, $101.3 million net cash provided by investing cash flows, partially offset by $57.2 million of net cash flows used in financing cash flows.

Our operating cash flows are comprised of net income, adjusted for certain non-cash transactions, including but not limited to, depreciation and amortization, provision for credit losses, loans originated for sale and related gains and proceeds from sales, stock-based compensation, and amortization of net deferred loan costs and premiums. Net cash flows from operating cash flows were $7.0 million for the three months ended March 31, 2025, compared to $8.1 million for the same 2024 period. The $1.1 million decrease was primarily due to a $5.5 million decrease in accretion of net discount and deferred loan fees, a $4.4 million decrease in net cash provided by sales of loans held for sale, net of originations, a $5.0 million decrease in in other items, net, and a $3.4 million increase in reversal of credit losses, partially offset by a higher net income generated during the three months ended March 31, 2025 and a $3.9 million increase in deferred income taxes.

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Our investing cash flows are primarily comprised of cash inflows and outflows from our debt securities and loan portfolios, net cash acquired in business combinations, as applicable, and to a lesser extent, purchases of stock investments, purchases and proceeds from bank-owned life insurance, and capital expenditures. Net cash provided by investing activities was $101.3 million for the year ended March 31, 2025, compared to $62.5 million for the same 2024 period. The $38.8 million increase in cash provided by investing activities was primarily due to an increase in net loan repayments of $25.7 million and an increase in net investment securities paydowns and purchases of $13.1 million.

Our financing cash flows are primarily comprised of inflows and outflows of deposits, borrowing activity, proceeds from the issuance of common shares, and to a lesser extent, repurchases of common shares and cash flows from share-based compensation arrangements. Net cash used in financing activities was $57.2 million for the three months ended March 31, 2025, compared to $70.8 million for the same 2024 period. The $13.6 million increase in financing cash flows was primarily due to a $43.2 million net decrease in deposit cash flows, offset by a $58.0 million decrease in net repayment activity on overnight FHLB advances.

We believe that our liquidity sources are stable and are adequate to meet our day-to-day cash flow requirements as of March 31, 2025.

Commitments and Contractual Obligations

The following table presents information regarding our outstanding commitments and contractual obligations as of March 31, 2025:

(Dollars in thousands)	One Year or Less		Over One Year to Three Years		Over Three Years to Five Years		More than Five Years		Total
Commitments to extend credit	$	571,862	$	240,815	$	23,542	$	49,830	$	886,049
Letters of credit issued to customers	20,352		240		861		—		21,453
Total commitments	$	592,214	$	241,055	$	24,403	$	49,830	$	907,502
Subordinated notes(1)	—		—		18,000		55,000		73,000
Certificates of deposit	181,428		830		136		—		182,394
Lease obligations	4,131		7,229		3,929		1,853		17,142
Total contractual obligations	$	185,559	$	8,059	$	22,065	$	56,853	$	272,536

(1)Amounts exclude net unamortized issuance costs and fair value adjustments.

At March 31, 2025 and December 31, 2024, we also had unfunded commitments of $5.7 million and $5.9 million, respectively, for investments in other equity investments.

Capital Resources

Maintaining adequate capital is always an important objective of the Company. Abundant and high quality capital helps weather economic downturns and market volatility, protect depositors’ funds, and support growth, such as expanding the operations or making acquisitions. Capital is also a source of funds for loan demand and enables the Company to effectively manage its assets and liabilities. We are authorized to issue 50,000,000 shares of common stock of which 32,402,140 have been issued as of March 31, 2025. We are also authorized to issue 50,000,000 shares of preferred stock, of which none have been issued as of March 31, 2025.

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements.

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Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the holding company and the Bank must meet specific capital guidelines that involve quantitative measures of their respective assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. These capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. The holding company and Bank also elected to exclude the effects of credit loss accounting under CECL from common equity Tier 1 capital ratio for a three-year transitional period.

A holding company and bank considered to be “adequately capitalized” is required to maintain a minimum total capital ratio of 8.0%, a minimum Tier 1 capital ratio of 6.0%, a minimum common equity Tier 1 capital ratio of 4.5%, and a minimum leverage ratio of 4.0%. Banks considered to be “well capitalized” must maintain a minimum total capital ratio of 10.0%, a minimum Tier 1 capital ratio of 8.0%, a minimum common equity Tier 1 capital ratio of 6.5%, and a minimum leverage ratio of 5.0%.

Basel III, the comprehensive regulatory capital rules for U.S. banking organizations, requires all banking organizations to maintain a capital conservation buffer above the minimum risk-based capital requirements in order to avoid certain limitations on capital distributions, stock repurchases and discretionary bonus payments to executive officers. The capital conservation buffer is exclusively comprised of common equity Tier 1 capital, and it applies to each of the three risk-based capital ratios but not to the leverage ratio. Effective January 1, 2019, the capital conservation buffer increased by 0.625% to its fully phased-in 2.5%, such that the common equity Tier 1, Tier 1 and total capital ratio minimums inclusive of the capital conservation buffers were 7.0%, 8.5%, and 10.5% at June 30, 2024. At March 31, 2025, the Company and the Bank were in compliance with the capital conservation buffer requirements. To be categorized as well capitalized, the Company and the Bank must maintain minimum ratios as set forth in the table below.

As of March 31, 2025, the Company’s and the Bank’s regulatory capital ratios exceeded the regulatory capital requirements to be considered to be “well capitalized” under the regulatory framework for prompt corrective action (“PCA”). Management believes, as of March 31, 2025 and December 31, 2024, that the Company and the Bank met all capital adequacy requirements to which each is subject.

To be categorized as well-capitalized, the Company and the Bank must maintain minimum ratios as set forth in the table below. The following table also sets forth the Bank’s actual capital amounts and ratios:

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					Amount of Capital Required
					To be				To be Well-
					Adequately				Capitalized under
	Actual				Capitalized				PCA Provisions
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of March 31, 2025:
California BanCorp:
Total Capital (to Risk-Weighted Assets)	$	514,076	14.53	%	$	283,126	8.0	%	N/A		N/A
Tier 1 Capital (to Risk-Weighted Assets)	403,726		11.41	%	212,345		6.0	%	N/A		N/A
CET1 Capital (to Risk-Weighted Assets)	403,726		11.41	%	159,258		4.5	%	N/A		N/A
Tier 1 Capital (to Average Assets)	403,726		10.44	%	154,745		4.0	%	N/A		N/A
California Bank of Commerce, N.A.:
Total Capital (to Risk-Weighted Assets)	$	510,028	14.42	%	$	282,949	8.0	%	$	353,686	10.0	%
Tier 1 Capital (to Risk-Weighted Assets)	469,986		13.29	%	212,212		6.0	%	282,949		8.0	%
CET1 Capital (to Risk-Weighted Assets)	469,986		13.29	%	159,159		4.5	%	229,896		6.5	%
Tier 1 Capital (to Average Assets)	469,986		12.15	%	154,698		4.0	%	193,372		5.0	%
As of December 31, 2024:
California BanCorp:
Total Capital (to Risk-Weighted Assets)	$	496,912	13.67	%	$	290,897	8.0	%	N/A		N/A
Tier 1 Capital (to Risk-Weighted Assets)	385,354		10.60	%	218,173		6.0	%	N/A		N/A
CET1 Capital (to Risk-Weighted Assets)	385,354		10.60	%	163,630		4.5	%	N/A		N/A
Tier 1 Capital (to Average Assets)	385,354		9.53	%	161,710		4.0	%	N/A		N/A
California Bank of Commerce, N.A.:
Total Capital (to Risk-Weighted Assets)	$	492,433	13.55	%	$	290,753	8.0	%	$	363,441	10.0	%
Tier 1 Capital (to Risk-Weighted Assets)	450,600		12.40	%	218,065		6.0	%	290,753		8.0	%
CET1 Capital (to Risk-Weighted Assets)	450,600		12.40	%	163,548		4.5	%	236,237		6.5	%
Tier 1 Capital (to Average Assets)	450,600		11.15	%	161,689		4.0	%	202,111		5.0	%

Dividend Restrictions

The primary source of funds for the Company is dividends from the Bank. Under federal law, the Bank may not declare a dividend in excess of its undivided profits and, absent the approval of the OCC, the Bank’s primary banking regulator, if the total amount of dividends declared by the Bank in any calendar year exceeds the total of the Bank’s retained net income of that current period, year to date, combined with its retained net income for the preceding two years. The Bank also is prohibited from declaring or paying any dividend if, after making the dividend, the Bank would be considered “undercapitalized” (as defined by reference to other OCC regulations). Federal bank regulatory agencies have authority to prohibit banking institutions from paying dividends if those agencies determine that, based on the financial condition of the bank, such payment will constitute an unsafe or unsound practice.

The Bank did not pay dividends to the Company during the three months ended March 31, 2025 and 2024.

The Federal Reserve limits the amount of dividends that bank holding companies may pay on common stock to income available over the past year, and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. It is also the Federal Reserve’s policy that bank

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holding companies should not maintain dividend levels that undermine their ability to be a source of strength to its banking subsidiaries. Additionally, in consideration of the current financial and economic environment, the Federal Reserve has indicated that bank holding companies should carefully review their dividend policies.

During the three months ended March 31, 2025 and 2024, there were no dividends declared to shareholders by the Company.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk Management

Market risk represents the risk of loss due to changes in market values of assets and liabilities. We incur market risk in the normal course of business through exposures to market interest rates, equity prices, and credit spreads. Our primary market risk is interest rate risk, which is the risk of loss of net interest income or net interest margin resulting from changes in market interest rates.

Interest Rate Risk

Interest rate risk results from the following risks:

•Repricing risk — timing differences in the repricing and maturity of interest-earning assets and interest-bearing liabilities;

•Option risk — changes in the expected maturities of assets and liabilities, such as borrowers’ ability to prepay loans at any time and depositors’ ability to redeem certificates of deposit before maturity;

•Yield curve risk — changes in the yield curve where interest rates increase or decrease in a nonparallel fashion; and

•Basis risk — changes in spread relationships between different yield curves, such as U.S. Treasuries, U.S. Prime Rate, Constant Maturity Treasury Rates (“CMT”).

Because our earnings are primarily dependent on our ability to generate net interest income, we focus on actively monitoring and managing the effects of adverse changes in interest rates on our net interest income. Our interest rate risk is overseen by our management Asset Liability Committee (“ALCO”). ALCO monitors our compliance with regulatory guidance in the formulation and implementation of our interest rate risk program. ALCO reviews the results of our interest rate risk modeling quarterly to assess whether we have appropriately measured our interest rate risk, mitigated our exposures appropriately and any residual risk is acceptable. In addition to our annual review of this policy, our Board of Directors explicitly reviews the interest rate risk policy limits at least annually.

Interest rate risk management is an active process that encompasses monitoring loan and deposit flows complemented by investment and funding activities. Effective management of interest rate risk begins with understanding the dynamic characteristics of assets and liabilities and determining the appropriate interest rate risk posture given business forecasts, management objectives, market expectations, and policy constraints. Changes in interest rates may result in interest-earning assets and interest-bearing liabilities maturing or repricing at different times, on a different basis or in unequal amounts. In addition, it is not uncommon for rates on certain assets or liabilities to lag behind changes in the market rates of interest. Additionally, prepayments of loans and early withdrawals of certificates of deposit could cause interest sensitivities to vary.

Our interest rate risk exposure is measured and monitored through various risk management tools, including a simulation model that performs interest rate sensitivity analysis under multiple scenarios. The

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simulation model is based on the actual maturities and re-pricing characteristics of the Bank’s interest-rate sensitive assets and liabilities. The simulated interest rate scenarios include an instantaneous parallel shift in the yield curve. In order to model and evaluate interest rate risk, we use two approaches: Net Interest Income at Risk (“NII at Risk”), and Economic Value of Equity (“EVE”). Under NII at Risk, the impact on net interest income from changes in interest rates on interest-earning assets and interest-bearing liabilities is modeled over the

next 12 months from immediate and sustained changes in interest rates utilizing various assumptions for assets and liabilities. EVE measures the period end market value of assets minus the market value of liabilities and the change in this value as rates change. EVE is a period end measurement.

The following table presents the projected changes in NII at Risk and EVE that would occur upon an immediate change in interest rates based on independent analysis, but without giving effect to any steps that management might take to counteract that change at March 31, 2025 and December 31, 2024:

	Change in Interest Rates in Basis Points (bps)
	Market Value of Equity						Net Interest Income (NII)
(Dollars in thousands)	Amount		Change ($)		Change (%)		Amount		Change ($)	Change (%)
March 31, 2025
+300bps	$	663.7	$	58.4	9.6	%	$	177.8	5.6	3.3	%
+200bps	651.1		45.8		7.6	%	176.3		4.1	2.4	%
+100bps	632.5		27.2		4.5	%	174.4		2.2	1.3	%
Base case	605.3						172.2
-100bps	568.7		(36.6)		(6.0)	%	167.9		(4.3)	(2.5)	%
-200bps	520.0		(85.3)		(14.1)	%	162.8		(9.4)	(5.5)	%
-300bps	458.4		(146.9)		(24.3)	%	156.7		(15.5)	(9.0)	%
December 31, 2024
+300bps	$	635.2	$	40.3	6.8	%	$	179.8	3.5	2.0	%
+200bps	627.6		32.7		5.5	%	178.9		2.6	1.5	%
+100bps	615.0		20.1		3.4	%	177.7		1.5	0.8	%
Base case	594.9						176.2
-100bps	566.6		(28.3)		(4.8)	%	172.7		(3.5)	(2.0)	%
-200bps	527.0		(67.9)		(11.4)	%	168.6		(7.6)	(4.3)	%
-300bps	475.2		(119.7)		(20.1)	%	163.4		(12.8)	(7.3)	%

The modeled NII results at March 31, 2025 and December 31, 2024 indicate we would sustain a decrease in NII if interest rates declined due primarily to adjustable-rate loans repricing lower and at a faster pace than the decline in deposit rates. In the current rate environment at March 31, 2025 and December 31, 2024, our NII results indicated there would be a modest increase in the net interest income in all rates-up scenarios. The changes in NII in a rising rate environment are attributed to the adjustable-rate loans repricing higher, offset by the higher costs associated with increasing deposit costs.

The modeled EVE results at March 31, 2025 and December 31, 2024 indicate we would benefit from an increase in interest rates and would be adversely impacted by a decrease in interest rates. The results of these analyses do not contemplate all of the actions that we may undertake in response to changes in interest rates. In response to actual or anticipated changes in interest rates, we have various alternatives for managing and reducing exposure such as using FHLB Advances and/or certain derivatives such as swaps to align maturities and repricing terms, managing the percentage of fixed rate loans in our portfolio, managing the level of investments and duration of investment securities and managing our deposit relationships.

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The projected changes are forecasts based on estimates of historical behavior and assumptions that are susceptible to change over time and actual results may differ from projections. Factors affecting our estimates and assumptions include, but are not limited to, competitor behavior, economic conditions both locally and nationally, actions taken by the Federal Reserve, customer behavior and our management’s responses. Changes that vary significantly from our assumptions and estimates significantly affect our earnings and EVE profiles.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out by our management with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective at a reasonable assurance level as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) during the Company’s quarter ended March 31, 2025, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

The Company and its subsidiaries are parties to various claims and lawsuits arising in the course of their normal business activities. Although the ultimate outcome of these suits cannot be ascertained at this time, it is the opinion of management that none of these matters, even if it resolved adversely to the Company, will have a material adverse effect on the Company’s consolidated financial position.

Item 1A. Risk Factors

There were no material changes to the Company’s risk factors described under Item 1A. “Risk Factors” disclosed in Company's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on April 1, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On June 14, 2023, we announced an authorized share repurchase plan, providing for the repurchase of up to 550,000 shares of our outstanding common stock, or approximately 3% of our then outstanding shares. On May 1, 2025, we announced an increase in the number of shares authorized for repurchase to 1,600,000 shares. The repurchase program has no expiration date and may be suspended, modified, or terminated at any time

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without prior notice. There were no shares repurchased under this share repurchase plan during the three months ended March 31, 2025.

The following table presents information with respect to purchases made by or on behalf of us or any “affiliated purchases” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock during the periods indicated:

	(a)	(b)		(c)	(d)
Period	Total number of shares (or units) purchased	Average price paid per share (or unit)		Total number of shares (or units) purchased as part of publicly announced plans or programs	Maximum number of shares (or units) that may yet be purchased under the plans or programs
January 1 - 31, 2025	—	$	—	—	550,000
February 1 - 28, 2025	—	$	—	—	550,000
March 1 - 31, 2025	—	$	—	—	550,000
Total	—	$	—	—

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5.    Other Information

None of our directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the quarter ended March 31, 2025.

Item 6.    Exhibits

Exhibit No.	Description
2.1	Agreement and Plan of Merger and Reorganization, dated as of January 30, 2024 by and between Southern California Bancorp and California BanCorp (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed on January 30, 2024)
3.1	Restated Articles of Incorporation of California BanCorp (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q, filed on November 14, 2024)
3.2	Bylaws of California BanCorp (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on July 31, 2024)
31.1	Rule 13a-14(a) Certification (Principal Executive Officer)
31.2	Rule 13a-14(a) Certification (Principal Financial Officer)
32	Rule 13a-14(b) and 18 U.S.C. 1350 Certification

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The following financial statements and footnotes from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025 formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Changes in Shareholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) the Notes to Consolidated Financial Statements. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CALIFORNIA BANCORP
Date: May 9, 2025	/s/ Steven E. Shelton
	Steven E. Shelton
	Chief Executive Officer
	(Principal Executive Officer)
Date: May 9, 2025	/s/ Thomas Dolan
	Thomas Dolan
	Chief Financial Officer
	(Principal Financial Officer)

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