10-Q

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 September 30, 2024

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	☐
Non-accelerated filer	T	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 November 8, 2024, the registrant had 32,165,188 outstanding shares of common stock.

1

CALIFORNIA BANCORP

FORM 10-Q QUARTERLY REPORT

SEPTEMBER 30, 2024

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	11
	Notes to Consolidated Financial Statements	13
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	62
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	106
Item 4.	Controls and Procedures	107
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	107
Item 1A.	Risk Factors	108
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	108
Item 3.	Defaults Upon Senior Securities	108
Item 4.	Mine Safety Disclosures	108
Item 5.	Other Information	108
Item 6.	Exhibits	108
SIGNATURES		110

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, formerly known as Southern California Bancorp, and California Bank of Commerce, N.A., formerly known as Bank of Southern California, 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:

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

•challenges related to increasing 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 are the principal areas 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 reserves for credit losses and the appropriateness of our methodology for calculating such allowance for credit losses;

•the impacts of pandemics, natural disasters, including earthquakes, floods, droughts, and fires, particularly in California;

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

3

•our ability to retain deposits during the integration and conversion activities related to the Merger;

•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 completion of 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; 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, 2023, that was filed with the SEC on March 15, 2024.

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 this filing. 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 (FORMERLY SOUTHERN CALIFORNIA BANCORP) AND SUBSIDIARY

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

(Unaudited)

	September 30, 2024		December 31, 2023
ASSETS
Cash and due from banks	$	115,165	$	33,008
Federal funds and interest-bearing balances	499,258		53,785
Total cash and cash equivalents	614,423		86,793
Debt securities available-for-sale, at fair value (amortized cost of $163,384 and $136,366 at September 30, 2024 and December 31, 2023)	159,330		130,035
Debt securities held-to-maturity, at amortized cost (fair value of $49,487 and $50,432 at September 30, 2024 and December 31, 2023)	53,364		53,616
Loans held for sale, at lower of cost or fair value	33,704		7,349
Loans held for investment	3,199,714		1,957,442
Allowance for credit losses on loans	(53,552)		(22,569)
Loans held for investment, net	3,146,162		1,934,873
Restricted stock, at cost	27,394		16,055
Premises and equipment, net	13,996		13,270
Right-of-use asset	15,310		9,291
Other real estate owned, net	4,083		—
Goodwill	112,515		37,803
Core deposit intangible, net	23,031		1,195
Bank owned life insurance	66,180		38,918
Deferred taxes, net	45,644		11,137
Accrued interest receivable and other assets	47,631		19,917
Total assets	$	4,362,767	$	2,360,252
LIABILITIES
Noninterest-bearing demand	$	1,368,303	$	675,098
Interest-bearing NOW accounts	781,125		381,943
Money market and savings accounts	1,149,268		636,685
Time deposits	442,219		249,830
Total deposits	3,740,915		1,943,556
Borrowings	69,142		102,865
Operating lease liability	19,211		12,117
Accrued interest payable and other liabilities	35,435		13,562
Total liabilities	3,864,703		2,072,100
Commitments and contingencies (Note 12)
SHAREHOLDERS’ EQUITY
Preferred stock - 50,000,000 shares authorized, no par value; no shares issued and outstanding at September 30, 2024 and December 31, 2023	—		—
Common stock - 50,000,000 shares authorized, no par value; issued and outstanding 32,142,427 and 18,369,115 at September 30, 2024 and December 31, 2023	441,684		222,036
Retained earnings	59,236		70,575
Accumulated other comprehensive loss - net of taxes	(2,856)		(4,459)
Total shareholders’ equity	498,064		288,152
Total liabilities and shareholders’ equity	$	4,362,767	$	2,360,252

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

6

CALIFORNIA BANCORP (FORMERLY SOUTHERN CALIFORNIA BANCORP) AND SUBSIDIARY

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

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$	47,528	$	28,977	$	105,169	$	83,983
Interest on debt securities	1,687		942		4,129		2,506
Interest on tax-exempted debt securities	306		359		918		1,302
Interest on deposits at other financial institutions	4,101		964		5,850		2,473
Interest and dividends on other interest-earning assets	505		242		1,174		689
Total interest and dividend income	54,127		31,484		117,240		90,953
INTEREST EXPENSE
Interest on NOW, money market and savings accounts	11,073		5,922		24,882		13,555
Interest on time deposits	5,087		1,867		11,253		4,373
Interest on borrowings	1,025		434		2,662		1,446
Total interest expense	17,185		8,223		38,797		19,374
Net interest income	36,942		23,261		78,443		71,579
Provision for (reversal of) credit losses	22,963		(96)		25,525		91
Net interest income after provision for (reversal of) credit losses	13,979		23,357		52,918		71,488
NONINTEREST INCOME
Service charges and fees on deposit accounts	842		286		1,582		881
Interchange and ATM income	294		184		647		558
Gain (loss) on sale of loans	8		(54)		423		831
Income from bank owned life insurance	398		238		925		693
Servicing and related income on loans, net	82		61		150		223
Gain on sale of available-for-sale debt securities	—		—		—		34
Loss on sale and disposal of fixed assets	—		—		(19)		—
Other charges and fees	(450)		100		48		261
Total noninterest income	1,174		815		3,756		3,481
NONINTEREST EXPENSE
Salaries and employee benefits	15,385		9,736		33,771		29,651
Occupancy and equipment	2,031		1,579		4,928		4,553
Data processing and communications	1,536		1,144		3,872		3,376
Legal, audit and professional	669		598		1,742		2,050
Regulatory assessments	544		369		1,278		1,188
Director and shareholder expenses	520		215		952		642
Merger and related expenses	14,605		—		15,645		—
Core deposit intangible amortization	687		128		817		309
Other real estate owned expenses	3		—		5,026		—
Other expenses	1,700		1,012		3,635		2,638
Total noninterest expense	37,680		14,781		71,666		44,407
(Loss) income before income taxes	(22,527)		9,391		(14,992)		30,562
Income tax (benefit) expense	(6,063)		2,835		(3,653)		9,064
Net (loss) income	(16,464)		6,556		(11,339)		21,498
(Loss) earnings per share:
Basic	$	(0.59)	$	0.36	$	(0.53)	$	1.18
Diluted	$	(0.59)	$	0.35	$	(0.53)	$	1.15

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

7

CALIFORNIA BANCORP (FORMERLY SOUTHERN CALIFORNIA BANCORP) AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Net (loss) income	$	(16,464)	$	6,556	$	(11,339)	$	21,498
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities available for sale:
Change in net unrealized loss	5,155		(3,809)		2,277		(4,017)
Reclassification of gain recognized in net income	—		—		—		(34)
	5,155		(3,809)		2,277		(4,051)
Income tax expense (benefit):
Change in net unrealized loss	1,524		(1,124)		674		(1,237)
Reclassification of gain recognized in net income	—		—		—		(10)
	1,524		(1,124)		674		(1,247)
Total other comprehensive income (loss), net of tax	3,631		(2,685)		1,603		(2,804)
Total comprehensive (loss) income, net of tax	$	(12,833)	$	3,871	$	(9,736)	$	18,694

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

8

CALIFORNIA BANCORP (FORMERLY SOUTHERN 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 September 30, 2024:
Balance at June 30, 2024	18,547,352	$	224,006	$	75,700	$	(6,487)	$	293,219
Stock-based compensation	—	2,804		—		—		2,804
Issuance of common stock in business combination1	13,497,091	214,380		—		—		214,380
Restricted stock units vested2	141,263	825		—		—		825
Repurchase of shares in settlement of restricted stock units	(44,779)	(341)		—		—		(341)
Net loss	—	—		(16,464)		—		(16,464)
Other comprehensive income	—	—		—		3,631		3,631
Balance at September 30, 2024	32,142,427	$	441,684	$	59,236	$	(2,856)	$	498,064
Nine months ended September 30, 2024:
Balance at December 31, 2023	18,369,115	$	222,036	$	70,575	$	(4,459)	$	288,152
Stock-based compensation	—	4,695		—		—		4,695
Issuance of common stock in business combination1	13,497,091	214,380		—		—		214,380
Stock options exercised	82,900	716		—		—		716
Restricted stock units vested2	280,051	825		—		—		825
Repurchase of shares in settlement of restricted stock units	(86,730)	(968)		—		—		(968)
Net loss	—	—		(11,339)		—		(11,339)
Other comprehensive income	—	—		—		1,603		1,603
Balance at September 30, 2024	32,142,427	$	441,684	$	59,236	$	(2,856)	$	498,064

1 Includes $1.3 million related to replacement awards granted in connection with the business combination for the three and nine months ended September 30, 2024 (Refer to Note 2 - Business Combinations).

2 The three and nine months ended September 30, 2024 include $825 thousand related to the acceleration of 123,123 replacement awards issued in connection with the business combination for non-continuing directors, executives and employees (Refer to Note 2 - Business Combinations).

9

CALIFORNIA BANCORP (FORMERLY SOUTHERN 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 September 30, 2023:
Balance at June 30, 2023	18,296,365	$	220,702	$	59,607	$	(6,560)	$	273,749
Stock-based compensation	—	992		—		—		992
Restricted stock units vested	17,148	—		—		—		—
Repurchase of shares in settlement of restricted stock units	(4,231)	(62)		—		—		(62)
Net income	—	—		6,556		—		6,556
Other comprehensive loss	—	—		—		(2,685)		(2,685)
Balance at September 30, 2023	18,309,282	$	221,632	$	66,163	$	(9,245)	$	278,550
Nine months ended September 30, 2023:
Balance at December 31, 2022	17,940,283	$	218,280	$	48,516	$	(6,441)	$	260,355
Adoption of ASU No. 2016-13, net of tax	—	—		(3,851)		—		(3,851)
Balance at January 1, 2023 (as adjusted for change in accounting principle)	17,940,283	$	218,280	$	44,665	$	(6,441)	$	256,504
Stock-based compensation	—	3,763		—		—		3,763
Stock options exercised	10,950	93		—		—		93
Restricted stock units vested	390,320	—		—		—		—
Repurchase of shares in settlement of restricted stock units	(32,271)	(504)		—		—		(504)
Net income	—	—		21,498		—		21,498
Other comprehensive loss	—	—		—		(2,804)		(2,804)
Balance at September 30, 2023	18,309,282	$	221,632	$	66,163	$	(9,245)	$	278,550

10

CALIFORNIA BANCORP (FORMERLY SOUTHERN CALIFORNIA BANCORP) AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended September 30, 2024 and 2023
(dollars in thousands)

(Unaudited)

	Nine Months Ended September 30,
	2024		2023
OPERATING ACTIVITIES
Net (loss) income	$	(11,339)	$	21,498
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation on premises and equipment	1,216		1,171
Core deposit intangible amortization	817		309
Amortization of (discounts) premiums of debt securities	(605)		258
Gain on sale of loans	(415)		(831)
Loss on sale and disposal of fixed assets	19		—
Loans originated for sale	(5,956)		(2,954)
Proceeds from sales of and principal collected on loans held for sale	6,778		11,887
Provision for credit losses	25,525		91
Deferred income tax expense	(4,960)		1,021
Stock-based compensation	4,695		3,763
Increase in cash surrender value of bank owned life insurance	(925)		(693)
Gain on sale of available-for-sale debt securities	—		(34)
Loss on sale of other real estate owned	4,783		—
Valuation allowance on other real estate owned	614		—
Accretion of net discounts and deferred loan fees	(5,647)		(1,471)
Net decrease in other items	12,062		7,523
Net cash provided by operating activities	26,662		41,538
INVESTING ACTIVITIES
Net cash acquired in business combination	336,298		—
Proceeds from sale of debt securities available for sale	3,400		17,307
Proceeds from maturities and paydowns of debt securities available for sale	15,097		8,339
Purchases of debt securities available for sale	(2,041)		(28,736)
Net change in stock investments	(4,178)		(3,987)
Net repayment (funding) of loans	74,768		(35,427)
Proceeds from sale of loans held for investment	456		50
Proceeds from sale of other real estate owned	8,327		—
Purchases of premises and equipment	(410)		(239)
Net cash provided by (used in) investing activities	431,717		(42,693)
FINANCING ACTIVITIES
Net increase in deposits	154,503		51,927
Proceeds from Federal Home Loan Bank advances	—		15,000
Repayment of Federal Home Loan Bank advances	(85,000)		(57,000)
Proceeds from exercise of stock options	716		93
Repurchase of common shares	(968)		(504)
Net cash provided by financing activities	69,251		9,516
The accompanying notes are an integral part of these consolidated financial statements.

11

CALIFORNIA BANCORP (FORMERLY SOUTHERN CALIFORNIA BANCORP) AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

For the nine months ended September 30, 2024 and 2023
(dollars in thousands)

(Unaudited)

	Nine Months Ended September 30,
	2024		2023
Net change in cash and cash equivalents	527,630		8,361
Cash and cash equivalents at beginning of period	86,793		86,760
Cash and cash equivalents at end of period	$	614,423	$	95,121
Supplemental Disclosures of Cash Flow Information:
Interest paid	$	33,935	$	18,941
Taxes paid	4,770		—
Lease liability arising from obtaining right-of-use assets	105		3,193
Loans transferred to loans held for sale	25,900		—
Loans transferred to other real estate owned	17,701		—
Net impact of adoption of ASU 2016-13 on retained earnings	—		3,851
Liabilities assumed in business combination (Note 2):
Fair value of assets acquired	$	1,938,700	—
Fair value of stock and equity award consideration	(215,205)		—
Cash consideration	(1,433)		—
Liabilities assumed	$	1,722,062	—

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

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CALIFORNIA BANCORP (FORMERLY SOUTHERN CALIFORNIA BANCORP) AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2024

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

Nature of Operations

California BanCorp (formerly Southern 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. (formerly Bank of Southern California, 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 incorporated 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 the new 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.

On May 11, 2023, our common stock was listed on the Nasdaq Capital Market under the symbol BCAL. Prior to that date, our common stock was quoted under the same symbol on the OTC Pink Open Market.

Merger with California BanCorp

On January 30, 2024, Southern California Bancorp announced the execution of a definitive merger agreement with the former California BanCorp (“CALB”), the holding company for California Bank of Commerce, pursuant to which CALB would merge into Southern California Bancorp 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 (the “merger”). Shareholders of Southern California Bancorp also approved a change of the Company’s name from Southern California Bancorp to California BanCorp. Refer to Note 2 - Business Combinations for additional information. California BanCorp retained the banking offices of both banks, adding California Bank of Commerce’s one full-service bank branch and its four loan production offices in the Bay Area 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, 2023.

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 and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

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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.

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 factors considered in making this determination include that: 1) all of the banking products and services offered by the Company are available in each branch of the Company; 2) all branches are located within the same economic environment; 3) management does not allocate resources based on the performance of different lending or transaction activities; and 4) how information is reviewed by the chief executive officer and other key decision makers. As a result, the Company determined that all services we offer will be reported as a single operating segment.

Recently Adopted Accounting Guidance

On January 1, 2023, the Company adopted Accounting Standard Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), which replaces the incurred loss impairment methodology with a methodology that reflects current expected credit losses (“CECL”) and requires consideration of historical experience, current conditions and reasonable and supportable forecasts to estimate expected credit losses for financial assets held at the reporting date. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, including loans, held-to-maturity debt securities and off-balance sheet credit exposures. ASU 2016-13 also requires credit losses on available-for-sale debt securities be measured through an allowance for credit losses. If the measurement indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses (“ACL”) is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. In addition, ASU 2016-13 modifies the other-than-temporary impairment (“OTTI”) model for available-for-sale debt securities to require an allowance for credit impairment instead of a direct write-down, which allows for reversal of credit impairments in future periods based on improvements in credit. The Company elected to account for accrued interest receivable separately from the amortized cost of loans and investment securities. The Company elected the CECL phase-in option provided by regulatory capital rules, which delays the impact of CECL on regulatory capital over a three-year transition period.

Concurrent with the adoption of ASU 2016-13, the Company adopted ASU 2022-02, Financial Instruments—Credit Losses (Topic 326) Troubled Debt Restructurings (“TDR”) and Vintage Disclosures, which eliminated TDR accounting prospectively for all loan modifications occurring on or after January 1, 2023 and added additional disclosure requirements for current period gross charge-offs by year of origination. It also prescribes guidance for reporting modifications for certain loan refinancings and restructurings made to borrowers experiencing financial difficulty. Loans that were considered a TDR prior to the adoption of ASU 2022-02 will

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continue to be accounted for under the superseded TDR accounting guidance until the loan is paid off, liquidated, or subsequently modified.

The Company adopted ASU 2016-13 using the modified retrospective transition approach, and recorded a net decrease of $3.9 million to the beginning balance of retained earnings as of January 1, 2023 for the cumulative effect adjustment, reflecting an initial adjustment to the ACL of $5.5 million, which included a $5.0 million increase in the ACL - loans and a $439 thousand increase in reserve for unfunded commitments, net of related deferred tax assets arising from temporary differences of $1.6 million, commonly referred to as the “Day 1” adjustment. This Day 1 adjustment reflects the development of the CECL models to estimate lifetime expected credit losses on the loans held for investment and unfunded commitments primarily using a lifetime loss methodology and management’s current expectation of future economic conditions. Results for reporting periods beginning after January 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with the probable incurred loss accounting standards. As permitted under ASC 326, the Company elected to maintain the same loan segments that it previously identified prior to adoption of CECL.

At adoption of CECL and continuing through September 30, 2024, the Company did not record an ACL on available-for-sale debt securities or held-to-maturity debt securities as these investment portfolios primarily consisted of debt securities explicitly or implicitly backed by the U.S. government or state and local governments, and historically have had no credit loss experience. Refer to Note 3 – Investment Securities, for more information.

The following table presents the impact of adopting ASU 2016-13 on January 1, 2023:

(dollars in thousands)	Pre-CECL Adoption		Impact of CECL Adoption		As Reported under CECL
Assets:
Allowance for credit losses - loans
Construction and land development	$	2,301	$	881	$	3,182
Real estate - other:
1-4 family residential	972		424		1,396
Multifamily residential	1,331		(279)		1,052
Commercial real estate and other	9,388		2,838		12,226
Commercial and industrial	3,079		1,132		4,211
Consumer	28		31		59
	$	17,099	$	5,027	$	22,126
Liabilities:
Allowance for credit losses - unfunded loan commitments	$	1,310	$	439	$	1,749

On January 1, 2024, the Company adopted ASU 2023-01, Leases (Topic 842): Common Control Arrangements. This standard requires entities to amortize leasehold improvements associated with common control leases over the useful life to the common control group. The standard is effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within these fiscal years. The Company did not have any such common control leases, so adoption of this standard had no impact to the consolidated financial statements.

On January 1, 2024, the Company adopted ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, a consensus of the Emerging Issues Task Force. The amendments in this update allow the option for an entity to apply the proportional amortization method of accounting to other equity investments that are made for the primary purpose of receiving tax credits or other income tax benefits, if certain conditions are met. Prior to

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this update, the application of the proportional amortization method of accounting was only limited to low-income housing tax credit (“LIHTC”) structured investments. The proportional amortization method of accounting results in the amortization of applicable investments, as well as the related income tax credits or other income tax benefits received, being presented on a single line in the consolidated statements of operations, income tax expense. Under this update, an entity has the option to apply the proportional amortization method of accounting to applicable investments on a tax-credit-program-by-tax-credit-program basis. In addition, the amendments in this update require that all tax equity investments accounted for using the proportional amortization method use the delayed equity contribution guidance in paragraph 323-740-25-3, requiring a liability be recognized for delayed equity contributions that are unconditional and legally binding or for equity contributions that are contingent upon a future event when that contingent event becomes probable. Under this update, LIHTC structured investments for which the proportional amortization method is not applied can no longer be accounted for using the delayed equity contribution guidance. Further, this update specifies that impairment of LIHTC structure investments not accounted for using the equity method must apply the impairment guidance in Subtopic 323-10 - Investments - Equity Method and Joint Ventures - Overall. This update also clarifies that for LIHTC structure investments not accounted for under the proportional amortization method or the equity method, an entity shall account for them under Topic 321 - Investments - Equity Securities. The amendments in this update also require additional disclosures in interim and annual periods concerning investments for which the proportional amortization method is applied, including (i) the nature of tax equity investments, and (ii) the effect of tax equity investments and related income tax credits and other income tax benefits on the financial position and results of operations. The provisions of this update are effective for the Company for interim and annual periods beginning December 15, 2023. Early adoption is permitted. The adoption of this standard did not have a material impact to 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, 2023.

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 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.

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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 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.

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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 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 CALB 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

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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: 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. Prior to the adoption of ASC Topic 326, individually evaluated loans were referred to as impaired loans. 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 credit losses.

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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 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 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 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. Since adoption of ASU 2022-02 on January 1, 2023, the Company did not have any loan modifications under ASU 2022-02.

Recent Accounting Guidance Not Yet Effective

In October 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-06, Disclosure Improvements–Codification Amendments in Response to the SEC’s Disclosure Update and Simplification

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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-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 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures: In November 2023, the FASB issued 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 chief operating decision-maker ("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 Company has a single reportable segment and continues to assess ASU 2023-07 and its impact on its accounting and disclosures.

ASU No. 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures: On December 14, 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” to address 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) 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. For public business entities, this ASU is effective for annual periods beginning after December 15, 2024. For other entities, this ASU is effective for annual periods beginning after December 15, 2025. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. 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 California BanCorp (“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 Bank of Southern California, N.A. 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 the banking offices of both banks, adding California Bank of Commerce’s one full-service bank branch and its four loan production offices in the Bay Area 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 date of completion of the merger 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. As the final CALB tax return has not yet been completed, initial accounting for taxes was incomplete as of September 30, 2024. 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:

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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			6,437
Premises and equipment			1,670
Operating lease right-of-use asset			7,743
Prepaid expenses			876
Deferred taxes, net			30,221
Bank owned life insurance			26,338
Core deposit intangible			22,653
Other assets			35,040
Total assets acquired			1,863,988
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			$	141,926
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			$	74,712

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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 purchased credit-deteriorated (“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 using 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.

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Total merger-related costs, which are reflected as merger and related costs in the accompanying consolidated statements of operations, included the following total amounts for the three and nine months ended September 30, 2024:

	Three Months Ended		Nine Months Ended
(dollars in thousands)	September 30, 2024		September 30, 2024
Financial advisory fees	$	2,326	$	2,576
Legal, accounting, valuation and other professional costs	300		768
Information technology	4,466		4,729
Change in control costs/severance	6,238		6,238
Insurance	919		919
Other	356		415
	$	14,605	$	15,645

The following table presents the total revenue and net income amounts related to CALB’s operations included in the Company’s consolidated statements of operations from the acquisition date of July 31, 2024 through September 30, 2024:

	Three and Nine Months Ended September 30,
(dollars in thousands)	2024
Net interest income and noninterest income(1)	$	11,912
Net income(1)	$	3,429

(1)As the Company has integrated the operations of CALB into its consolidated operating results, the above table reflects identifiable activities attributable to assets acquired and liabilities assumed in the Merger including, but not limited to, interest income on loans and investments, interest expense on deposits and borrowings, branch-level income and expenses and other identifiable activities. The amounts above do not reflect purchase accounting adjustments and other merger-related activity.

The following supplemental pro forma information presents certain financial results for the three and nine months ended September 30, 2024 and 2023 as if the merger of CALB was effective as of January 1, 2023. The supplemental unaudited pro forma financial information included in the table below is based on various estimates and is presented for informational purposes only and does not indicate the results of operations of the combined company that would have been achieved for the periods presented had the transactions been completed as of the date indicated or that may be achieved in the future.

Supplemental unaudited pro forma financial information:	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Net interest income and noninterest income	$	35,002	$	37,359	$	128,376	$	139,682
Net (loss) income	(5,692)		15,094		6,515		17,500

Pro forma net (loss) income for the three and nine months ended September 30, 2024 were adjusted to exclude merger and related expenses approximately $17.8 million and $20.5 million, respectively. Pro forma net income for the nine months ended September 30, 2023 was adjusted to include the $20.5 million of merger and related expenses. Pro forma net (loss) income for the three and nine months ended September 30, 2024 were also adjusted to exclude the provision of credit losses approximately $21.3 million, comprised of $18.5 million for the initial ACL for non-PCD loans and $2.7 million for the initial ACL for unfunded commitments. Pro forma net income for the nine months ended September 30, 2023 was adjusted to include these amounts.

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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 September 30, 2024 and December 31, 2023 were as follows:

(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2024
Taxable municipals	$	553	$	—	$	(70)	$	483
Tax exempt bank-qualified municipals	52,811		—		(3,807)		49,004
	$	53,364	$	—	$	(3,877)	$	49,487
December 31, 2023
Taxable municipals	$	551	$	—	$	(73)	$	478
Tax exempt bank-qualified municipals	53,065		25		(3,136)		49,954
	$	53,616	$	25	$	(3,209)	$	50,432

The amortized cost of available-for-sale debt securities and their approximate fair values at September 30, 2024 and December 31, 2023 were as follows:

(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2024
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	93,445	$	1,284	$	(2,470)	$	92,259
SBA securities	5,754		12		(82)		5,684
U.S. Treasury	17,552		34		(265)		17,321
U.S. Agency	2,000		—		(257)		1,743
Collateralized mortgage obligations	42,796		180		(2,403)		40,573
Taxable municipals	1,007		1		(85)		923
Tax exempt bank-qualified municipals	830		—		(3)		827
	$	163,384	$	1,511	$	(5,565)	$	159,330
December 31, 2023
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	77,031	$	631	$	(3,228)	$	74,434
SBA securities	5,886		5		(109)		5,782
U.S. Treasury	2,760		—		(343)		2,417
U.S. Agency	2,000		—		(330)		1,670
Collateralized mortgage obligations	46,330		173		(3,002)		43,501
Taxable municipals	1,528		—		(107)		1,421
Tax exempt bank-qualified municipals	831		—		(21)		810
	$	136,366	$	809	$	(7,140)	$	130,035

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During the three and nine months ended September 30, 2024 and 2023, there were no transfers between held-to-maturity and available-for-sale debt securities.

At September 30, 2024 and December 31, 2023, 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 $1.1 million and $788 thousand at September 30, 2024 and December 31, 2023, respectively, and is included within accrued interest receivable and other assets in the consolidated balance sheets. Accrued interest receivable is excluded from the ACL.

At September 30, 2024, debt securities with an amortized cost of $56.3 million were pledged to the Federal Reserve Bank (“Federal Reserve”) as collateral for a secured line of credit of $49.7 million to secure deposits of public institutions and for other purposes as required by law or contract provisions, in addition to collateral securing borrowing bases with the Federal Reserve. There were $53.6 million debt securities pledged to the Federal Reserve as collateral for a secured line of credit of $47.3 million at December 31, 2023. See Note 8 – Borrowing Arrangements for additional information regarding the FHLB and Federal Reserve secured lines of credit. The Company also pledged $9.9 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 September 30, 2024 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
September 30, 2024
Due in one year or less	$	—	$	—	$	27,641	$	27,668
Due after one year through five years	—		—		10,246		9,367
Due after five years through ten years	22,282		20,911		17,670		16,579
Due after ten years	31,082		28,576		107,827		105,716
	$	53,364	$	49,487	$	163,384	$	159,330

Realized Gains and Losses

The following table presents gross realized gains and losses for sales and calls of available-for-sale debt securities for the three and nine months ended September 30, 2024 and 2023 follows:

	Three Months Ended				Nine Months Ended
(dollars in thousands)	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Gross gains on sales and calls	$	—	$	—	$	—	$	181
Gross losses on sales and calls	—		—		—		(147)
Gain on sale of available-for-sale debt securities	—		—		—		34

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 September 30, 2024 and December 31, 2023 are summarized as follows:

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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
September 30, 2024:
Available-for-sale debt securities:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities:	$	(51)	$	9,361	$	(2,419)	$	20,025	$	(2,470)	$	29,386
SBA securities	(1)		167		(81)		3,231		(82)		3,398
U.S. Treasury	—		—		(265)		2,456		(265)		2,456
U.S. Agency	—		—		(257)		1,743		(257)		1,743
Collateralized mortgage obligations	(84)		2,686		(2,319)		31,274		(2,403)		33,960
Taxable municipals	—		—		(85)		422		(85)		422
Tax exempt bank-qualified municipals	—		—		(3)		827		(3)		827
	$	(136)	$	12,214	$	(5,429)	$	59,978	$	(5,565)	$	72,192
December 31, 2023:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities:	$	(160)	$	23,738	$	(3,068)	$	20,951	$	(3,228)	$	44,689
SBA securities	(8)		2,193		(101)		1,790		(109)		3,983
U.S. Treasury	—		—		(343)		2,417		(343)		2,417
U.S. Agency	—		—		(330)		1,670		(330)		1,670
Collateralized mortgage obligations	(311)		15,684		(2,691)		23,360		(3,002)		39,044
Taxable municipals	—		—		(107)		921		(107)		921
Tax exempt bank-qualified municipals	—		—		(21)		810		(21)		810
	$	(479)	$	41,615	$	(6,661)	$	51,919	$	(7,140)	$	93,534

As of September 30, 2024, the Company had a total of 70 available-for-sale debt securities in a gross unrealized loss position totaling $5.6 million, consisting of 62 securities with total gross unrealized losses of $5.4 million that had been in a continual loss position for twelve months and longer. As of December 31, 2023, the Company had a total of 76 available-for-sale debt securities in a gross unrealized loss position totaling $7.1 million, consisting of 58 securities with total gross unrealized losses of $6.7 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 September 30, 2024, the Company had a net unrealized loss on available-for-sale debt securities of $4.1 million, or $2.9 million net of tax in accumulated other comprehensive loss, compared to a net unrealized loss of $6.3 million, or $4.5 million net of tax in accumulated other comprehensive loss, at December 31, 2023.

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 September 30, 2024, the total fair value of taxable municipal and tax exempt bank-qualified municipal securities was $923 thousand and $827 thousand, respectively. At September 30, 2024, all of these securities were rated AA and above. At December 31, 2023, the total fair value of taxable municipal and tax exempt bank-qualified municipal securities was $1.4 million and $810 thousand, respectively. These securities rated AA and above totaled $1.4 million and rated A+ totaled $810 thousand at December 31, 2023.

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At September 30, 2024, 61 held-to-maturity debt securities with fair values totaling $49.5 million had gross unrealized losses totaling $3.9 million, compared to 58 held-to-maturity debt securities with fair values totaling $48.3 million had gross unrealized losses totaling $3.2 million at December 31, 2023. 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 September 30, 2024 and December 31, 2023, fair values of held-to-maturity debt securities rated AA and above totaled $46.2 million and $47.0 million, respectively and rated AA- totaled $3.3 million and $3.4 million, respectively.

Management evaluates securities in an unrealized loss position at least on a quarterly basis, and determined that the unrealized losses at September 30, 2024 and 2023 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 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 and nine months ended September 30, 2024 and 2023.

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 September 30, 2024 and December 31, 2023:

(dollars in thousands)	September 30, 2024		December 31, 2023
Federal Reserve Bank	$	12,089	$	7,430
Federal Home Loan Bank	15,305		8,625
	$	27,394	$	16,055

In connection with the Merger, the Company acquired $5.9 million of FHLB stock during the three and nine months ended September 30, 2024. Additionally, during the three and nine months ended September 30, 2024, the Company purchased $4.6 million and $4.7 million, respectively, of Federal Reserve stock, and there were no purchases and $820 thousand of purchases, respectively, 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 and $351 thousand at September 30, 2024 and December 31, 2023, respectively. The Company acquired $468 thousand of these two banker’s bank stocks in connection with the Merger during the three months ended September 30, 2024. These equity securities are reported in accrued interest receivable and other assets in the consolidated balance sheets. At September 30, 2024 and December 31, 2023, the Company evaluated the carrying value of these equity securities and determined that they were not impaired. During the three and nine months ended September 30, 2024 and 2023, 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. At September 30, 2024 and December 31, 2023, the balance of these investments, which is included in accrued interest receivable and other assets in the consolidated balance sheets, was $7.8 million and $7.0 million, respectively. 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 considered return of capital are recorded as a reduction of the Company’s investment. During the three and nine months ended September 30, 2024, the Company received $1.4 million and $1.3 million, respectively, of net capital distributions

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from these equity investments. During the three and nine months ended September 30, 2023, the Company made $219 thousand and $2.3 million, respectively, of net capital contributions to these equity investments. At September 30, 2024 and December 31, 2023, the Company evaluated the carrying value of these equity investments and determined they were not impaired. During the three and nine months ended September 30, 2024 and 2023, 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 tax credit investments are reported in accrued interest receivable and other assets in the consolidated balance sheets, and are recorded net of accumulated amortization, using the proportional amortization method. At September 30, 2024, the aggregate funding commitment for these investments was $15.7 million, of which $13.1 million was acquired from the Merger. At December 31, 2023, the aggregate funding commitment for these investments was $2.0 million. The unfunded portion of these investments totaled $1.9 million and $1.5 million at September 30, 2024 and December 31, 2023, 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 and nine months ended September 30, 2024 and 2023 follows:

	Three Months Ended				Nine Months Ended
(dollars in thousands)	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Proportional amortization	$	(187)	$	—	$	(238)	$	—
Tax credits	257		—		393		—
Contributions	62		208		217		208

At September 30, 2024 and December 31, 2023, 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 its Southern and Northern California markets 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 75% and 83% of total loans at September 30, 2024 and December 31, 2023, 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.

31

The composition of the Company’s loan portfolio at September 30, 2024 and December 31, 2023 was as follows:

(dollars in thousands)	September 30, 2024		December 31, 2023
Construction and land development	$	247,934	$	243,521
Real estate - other:
1-4 family residential	152,540		143,903
Multifamily residential	252,134		221,247
Commercial real estate and other	1,755,908		1,024,243
Commercial and industrial	765,472		320,142
Consumer	25,726		4,386
Loans held for investment (1)	3,199,714		1,957,442
Allowance for credit losses	(53,552)		(22,569)
Loans held for investment, net	$	3,146,162	$	1,934,873

(1)Loans held for investment includes net unearned fees of $1.6 million and $2.3 million and net unearned discounts on acquired loans of $66.0 million and $1.4 million at September 30, 2024 and December 31, 2023, respectively. The Company recognized $4.2 million and $4.3 million, respectively, in interest accretion for acquired loans for the three and nine months ended September 30, 2024.

The Company has pledged $2.20 billion of loans with the FHLB under a blanket lien, of which an unpaid principal balance of $1.44 billion was considered as eligible collateral under this secured borrowing arrangement and loans with an unpaid principal balance totaling $466.8 million were pledged as collateral under a secured borrowing arrangement with the Federal Reserve as of September 30, 2024. See Note 8 – Borrowing Arrangements for additional information regarding the FHLB and Federal Reserve secured lines of credit.

Loans Held for Sale

At September 30, 2024, the Company had loans held for sale totaling $33.7 million, consisting of $7.8 million SBA 7(a) loans and $25.9 million C&I loans transferred from loans held for investment, compared to $7.3 million, consisting of only SBA 7(a) loans at December 31, 2023. The Company accounts for loans held for sale at the lower of carrying value or fair value. At September 30, 2024 and December 31, 2023, the fair value of loans held for sale totaled $34.5 million and $7.8 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.

32

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.

33

The risk category of loans by class of loans and origination year as of September 30, 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
September 30, 2024
Construction and land development
Pass	$	493	$	40,861	$	111,686	$	51,163	$	17,283	$	2,340	$	8,476	$	—	$	232,302
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		9,659		—		2,945		3,028		—		—		15,632
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total construction and land development	493		40,861		121,345		51,163		20,228		5,368		8,476		—		247,934
Real estate - other:
1-4 family residential
Pass	6,271		21,137		33,768		17,995		6,736		17,562		45,329		—		148,798
Special mention	—		—		—		—		—		847		—		—		847
Substandard	—		—		2,895		—		—		—		—		—		2,895
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total 1-4 family residential	6,271		21,137		36,663		17,995		6,736		18,409		45,329		—		152,540
Multifamily residential
Pass	1,625		18,808		91,437		89,992		5,287		43,506		1,479		—		252,134
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total multifamily residential	1,625		18,808		91,437		89,992		5,287		43,506		1,479		—		252,134

34

	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
September 30, 2024
Commercial real estate and other
Pass	74,938		83,188		457,671		398,356		101,050		472,661		106,386		151		1,694,401
Special mention	—		9,585		5,059		14,148		2,277		10,870		1,596		497		44,032
Substandard	—		—		—		11,573		—		5,902		—		—		17,475
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial real estate and other	74,938		92,773		462,730		424,077		103,327		489,433		107,982		648		1,755,908
Commercial and industrial
Pass	48,106		75,264		122,585		45,355		15,765		70,103		271,764		—		648,942
Special mention	383		1,251		—		7,556		285		2,099		36,995		—		48,569
Substandard	—		50		21,535		268		—		3,644		42,464		—		67,961
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial and industrial	48,489		76,565		144,120		53,179		16,050		75,846		351,223		—		765,472
Consumer
Pass	1,088		—		1,107		22,946		100		7		143		—		25,391
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		335		—		—		—		—		335
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total consumer	1,088		—		1,107		23,281		100		7		143		—		25,726
Total loans	$	132,904	$	250,144	$	857,402	$	659,687	$	151,728	$	632,569	$	514,632	$	648	$	3,199,714
Total by risk rating:
Pass	$	132,521	$	239,258	$	818,254	$	625,807	$	146,221	$	606,179	$	433,577	$	151	$	3,001,968
Special mention	383		10,836		5,059		21,704		2,562		13,816		38,591		497		93,448
Substandard	—		50		34,089		12,176		2,945		12,574		42,464		—		104,298
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total loans	$	132,904	$	250,144	$	857,402	$	659,687	$	151,728	$	632,569	$	514,632	$	648	$	3,199,714

35

The risk category of loans by class of loans and origination year as of December 31, 2023 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)	2023		2022		2021		2020		2019		Prior						Total
December 31, 2023
Construction and land development
Pass	$	25,113	$	127,496	$	71,199	$	17,022	$	2,071	$	528	$	—	$	—	$	243,429
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		92		—		—		92
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total construction and land development	25,113		127,496		71,199		17,022		2,071		620		—		—		243,521
Real estate - other:
1-4 family residential
Pass	24,928		35,670		20,207		6,887		4,884		15,582		35,645		100		143,903
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total 1-4 family residential	24,928		35,670		20,207		6,887		4,884		15,582		35,645		100		143,903
Multifamily residential
Pass	18,803		61,677		73,365		5,712		27,292		21,245		149		—		208,243
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		13,004		—		—		—		—		—		—		13,004
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total multifamily residential	18,803		74,681		73,365		5,712		27,292		21,245		149		—		221,247

36

	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)	2023		2022		2021		2020		2019		Prior						Total
Commercial real estate and other
Pass	76,434		304,524		287,245		57,736		51,992		203,976		36,543		1,626		1,020,076
Special mention	—		2,701		—		—		—		—		295		—		2,996
Substandard	—		—		—		—		—		1,171		—		—		1,171
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial real estate and other	76,434		307,225		287,245		57,736		51,992		205,147		36,838		1,626		1,024,243
Commercial and industrial
Pass	46,701		70,658		12,883		7,095		8,266		13,715		153,712		1,877		314,907
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		346		64		—		1,208		121		3,097		399		5,235
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial and industrial	46,701		71,004		12,947		7,095		9,474		13,836		156,809		2,276		320,142
Consumer
Pass	163		—		39		91		6		11		4,076		—		4,386
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total consumer	163		—		39		91		6		11		4,076		—		4,386
Total loans	$	192,142	$	616,076	$	465,002	$	94,543	$	95,719	$	256,441	$	233,517	$	4,002	$	1,957,442
Total by risk rating:
Pass	$	192,142	$	600,025	$	464,938	$	94,543	$	94,511	$	255,057	$	230,125	$	3,603	$	1,934,944
Special mention	—		2,701		—		—		—		—		295		—		2,996
Substandard	—		13,350		64		—		1,208		1,384		3,097		399		19,502
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total loans	$	192,142	$	616,076	$	465,002	$	94,543	$	95,719	$	256,441	$	233,517	$	4,002	$	1,957,442

37

A summary of gross charge-offs by class of loans and origination year for the nine months ended September 30, 2024 and 2023 follows:

	Term Loans Gross Charge-offs 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
Nine Months Ended September 30, 2024
Construction and land development	$	—	$	—	$	967	$	—	$	—	$	—	$	—	$	—	$	967
Real estate - other:
1-4 family residential	—		—		—		—		—		—		1		—		1
Multifamily residential	—		—		1,456		—		—		—		—		—		1,456
Commercial real estate and other	—		—		—		—		—		—		—		—		—
Commercial and industrial	—		37		24		—		—		—		—		—		61
Consumer	—		—		—		135		—		—		—		—		135
Total	$	—	$	37	$	2,447	$	135	$	—	$	—	$	1	$	—	$	2,620

	Term Loans Gross Charge-offs by Origination Year												Revolving Loans Amortized Cost Basis		Revolving Loans Amortized Cost Basis Converted to Term During the Period
(dollars in thousands)	2023		2022		2021		2020		2019		Prior						Total
Nine Months Ended September 30, 2023
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate - other:
1-4 family residential	—		—		—		—		—		12		—		—		12
Multifamily residential	—		—		—		—		—		—		—		—		—
Commercial real estate and other	—		—		—		—		—		—		—		—		—
Commercial and industrial	—		—		—		15		—		9		—		—		24
Consumer	—		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	15	$	—	$	21	$	—	$	—	$	36

38

Past Due Loans

A summary of past due loans as of September 30, 2024 and December 31, 2023 follows:

	Current
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Nonaccrual		Total
September 30, 2024
Construction and land development	$	—	$	—	$	—	$	—	$	238,275	$	9,659	$	247,934
Real estate - other:
1-4 family residential	—		—		—		—		149,645		2,895		152,540
Multifamily residential	—		—		—		—		252,134		—		252,134
Commercial real estate and other	18,175		—		—		18,175		1,728,628		9,105		1,755,908
Commercial and industrial	667		—		—		667		760,803		4,002		765,472
Consumer	96		172		37		305		25,421		—		25,726
	$	18,938	$	172	$	37	$	19,147	$	3,154,906	$	25,661	$	3,199,714

	Current
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Nonaccrual		Total
December 31, 2023
Construction and land development	$	—	$	—	$	—	$	—	$	243,521	$	—	$	243,521
Real estate - other:
1-4 family residential	—		—		—		—		143,903		—		143,903
Multifamily residential	—		—		—		—		208,243		13,004		221,247
Commercial real estate and other	—		—		—		—		1,024,243		—		1,024,243
Commercial and industrial	19		—		—		19		320,123		—		320,142
Consumer	—		—		—		—		4,386		—		4,386
	$	19	$	—	$	—	$	19	$	1,944,419	$	13,004	$	1,957,442

The Company had $37 thousand in consumer solar loans that were over 90 days past due that were accruing interest at September 30, 2024. There were no loans over 90 days past due loans and still accruing interest as of December 31, 2023.

39

Nonaccrual Loans

A summary of total nonaccrual loans and the amount of nonaccrual loans with no related ACL as of September 30, 2024 and December 31, 2023 follows:

	September 30, 2024				December 31, 2023
(dollars in thousands)	Total Nonaccrual Loans		Nonaccrual Loans with no ACL		Total Nonaccrual Loans		Nonaccrual Loans with no ACL
Construction and land development	$	9,659	$	9,659	$	—	$	—
Real estate - other:
1-4 family residential	2,895		2,895		—		—
Multifamily residential	—		—		13,004		13,004
Commercial real estate and other	9,105		117		—		—
Commercial and industrial	4,002		—		—		—
Consumer	—		—		—		—
	$	25,661	$	12,671	$	13,004	$	13,004

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. At September 30, 2024, a substandard nonaccrual construction loan and a 1-4 family residential loan were classified as collateral dependent loans. The construction loan was collateralized by a stalled construction project for a single family residential estate located in Los Angeles, California. Based on the Company's internal analysis, the estimated collateral value was $9.7 million, and was $967 thousand lower than the subject loan’s net carrying value resulting in a partial charge-off in the third quarter of 2024. The net estimated collateral value after accounting for selling costs for the 1-4 family residential loan was sufficient to cover the subject loan’s net carrying value resulting in no partial charge-off in the third quarter of 2024. At December 31, 2023, a $13.0 million multifamily residential loan was classified as a collateral dependent loan, and was collateralized by three investment multifamily properties. The subject loan was partially charged off by $1.3 million in the fourth quarter of 2023, foreclosed on in the first quarter of 2024 and sold in the second quarter of 2024.

40

A summary of collateral dependent loans by collateral type as of September 30, 2024 and December 31, 2023 follows:

	Type of Collateral
(dollars in thousands)	Commercial Real Estate		Residential Real Estate		Business Assets
September 30, 2024
Construction and land development	$	—	$	9,659	$	—
Real estate - other:
1-4 family residential	—		2,895		—
Commercial real estate and other	10,535		—		—
Commercial and industrial	—		271		2,301
	$	10,535	$	12,825	$	2,301
December 31, 2023
Multifamily residential	$	—	$	13,004	$	—
	$	—	$	13,004	$	—

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 and zero foreclosed assets at September 30, 2024 and December 31, 2023, respectively.

During the nine months ended September 30, 2024, the Company foreclosed on and sold $13.1 million of OREO related to a three-property multifamily OREO in Santa Monica, California, and recognized a $4.8 million pre-tax loss.

Additionally, during the nine months ended September 30, 2024, the Company foreclosed on a multifamily nonaccrual loan of $4.7 million, that was transferred to OREO. During the three and nine months ended September 30, 2024, the Company recorded a $614 thousand valuation allowance due to a decline in the fair value of the underlying property in the third quarter of 2024.

Modified Loans to Borrowers Experiencing Financial Difficulty

A summary of modified loans to borrowers experiencing financial difficulty as of September 30, 2024 follows:

(dollars in thousands)	Commercial & Industrial		Total
September 30, 2024:
Term extension:
Amortized cost basis	13,094		13,094
% of total class of loans	1.7	%	0.4	%

The modified loans to borrowers experiencing financial difficulty in the table above were all loans that were acquired in the Merger.

There were no modified loans to borrowers experiencing financial difficulty as of December 31, 2023.

41

A summary of the payment status for modified loans to borrowers experiencing financial difficulty as of September 30, 2024 follows:

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total
September 30, 2024:
Commercial and industrial	—		—		397		397		12,697		13,094
	$	—	$	—	$	397	$	397	$	12,697	$	13,094

The modified loans were acquired from the merger. The were no new modifications or refinancings (including those with borrowers that are experiencing financial difficulty) of loans representing a new non-acquired loan or a continuation of an existing non-acquired loan during the three and nine months ended September 30, 2024, and 2023.

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 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 fourth week of September 2024. 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 September 30, 2024, the Moody’s economic forecast assumes two interest rate cuts in 2024. In its September 2024 meeting, the Federal Reserve chose to lower its key overnight borrowing rate by 50 basis points to 4.75% to 5.00%, amid signals that inflation was moderating and the labor market was weakening. The underlying assumptions in the Moody’s economic forecasts supporting the baseline forecast remained consistent in the expectation that the Federal Reserve will continue to reduce the Federal Reserve’s balance sheet through quantitative tightening at its current pace.

Moody’s baseline national gross domestic product forecast was 2.6% in 2024 on an annual average basis. The forecast assumes the growth is largely based on the Bureau of Economic Analysis’ upward revision of 2Q24 GDP. Growth in the following two years is forecasted at 2.1% in 2025 and 2.0% in 2026. The Conference Board increased their September forecast from 1% to 2.4%. The upward revision is now in line with Moody’s Baseline scenario of 2.6% while the Federal Reserve members median projection for GDP growth in 2024 and 2025 remained at 2.0%.

Moody’s economic forecasts for California suggested a modest change for its September 2024 baseline forecast state unemployment rate and Gross State Product (GSP) growth rate of 5.2% and 2.04%, respectively, declining to 4.9% and 1.3%, respectively, in 2025. Moody’s downside scenario forecasted the state unemployment rate would rise in the fourth quarter of 2024 and will reach 7.86% in the third quarter of 2025 from the weakening economy. The outlook for GSP growth rate was adjusted higher at the near term in baseline and downside scenario from 1.54% and 1.05%, respectively, in the fourth quarter of 2024 to 1.60% and -0.77%, respectively, in the fourth quarter of 2025. The mix changes in these key economic forecasts for California would have a mix impact to the Company ACL.

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During the third quarter of 2024, the Company updated its historical prepayment and curtailment rates analysis, which reflected a moderate decrease from the second quarter of 2024 primarily due to lower payoffs and paydowns.

Accrued interest receivable on loans receivable, net, totaled $14.2 million and $6.4 million at September 30, 2024 and December 31, 2023, 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 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 provision for unfunded loan commitments of $3.3 million and $3.1 million, respectively, for the three and nine months ended September 30, 2024, of which $2.7 million related to the initial allowance for unfunded credit commitments acquired in the Merger. There was a $298 thousand and $509 thousand negative provision for unfunded loan commitments for the three and nine months ended September 30, 2023, respectively. The provision for unfunded loan commitments is included in provision for (reversal of) credit losses in the consolidated statements of operations. The reserve for unfunded loan commitments was $4.1 million and $933 thousand at September 30, 2024 and December 31, 2023, respectively. The reserve for unfunded loan commitments is included in accrued interest payable and other liabilities in the consolidated balance sheets.

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

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Allowance for loan losses (ALL)
Balance, beginning of period	$	23,788	$	22,502	$	22,569	$	17,099
Adoption of ASU No. 2016-13(1)	—		—		—		5,027
Initial allowance for acquired PCD loans	11,216		—		11,216		—
Provision for loan losses(2)	19,711		202		22,387		600
Charge-offs	(1,163)		—		(2,620)		(36)
Recoveries	—		1		—		15
Net (charge-offs) recoveries	(1,163)		1		(2,620)		(21)
Balance, end of period	$	53,552	$	22,705	$	53,552	$	22,705
Reserve for unfunded loan commitments
Balance, beginning of period	$	819	$	1,538	$	933	$	1,310
Adoption of ASU No. 2016-13(1)	—		—		—		439
Provision for (reversal of) credit losses for unfunded loan commitments(3)	3,252		(298)		3,138		(509)
Balance, end of period	4,071		1,240		4,071		1,240
Allowance for credit losses, end of period	$	57,623	$	23,945	$	57,623	$	23,945

(1)Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2023. As a result of adopting ASU 2016-13, the Company’s methodology to compute our ACL is based on a CECL methodology, rather than the previously applied incurred loss methodology.

(2)Includes an initial provision for credit losses for non-PCD loans acquired in the Merger of $18.5 million for the three and nine months ended September 30, 2024. There was no similar activity in the comparable 2023 period.

(3)Includes an initial provision for credit losses for unfunded commitments acquired in the Merger of $2.7 million for the three and nine months ended September 30, 2024. There was no similar activity in the comparable 2023 period.

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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 September 30, 2024
Beginning of period	$	2,942	$	17,048	$	3,795	$	3	$	23,788
Initial allowance for acquired PCD loans	328		2,392		8,355		141		11,216
(Reversal of) provision for loan losses(1)	(219)		10,020		8,769		1,141		19,711
Charge-offs	(967)		—		(61)		(135)		(1,163)
Recoveries	—		—		—		—		—
Net charge-offs	(967)		—		(61)		(135)		(1,163)
End of period	$	2,084	$	29,460	$	20,858	$	1,150	$	53,552
Three Months Ended September 30, 2023
Beginning of period	$	3,556	$	15,097	$	3,808	$	41	$	22,502
(Reversal of) provision for loan losses	(1,021)		1,318		(70)		(25)		202
Charge-offs	—		—		—		—		—
Recoveries	—		—		1		—		1
Net recoveries	—		—		1		—		1
End of period	$	2,535	$	16,415	$	3,739	$	16	$	22,705

(1)Includes an initial provision for credit losses for non-PCD loans acquired in the Merger of $18.5 million for the three months ended September 30, 2024. There was no similar activity in the comparable 2023 period.

(dollars in thousands)	Construction and Land Development		Real Estate - Other		Commercial & Industrial		Consumer		Total
Nine Months Ended September 30, 2024
Beginning of period	$	2,032	$	16,280	$	4,242	$	15	$	22,569
Initial allowance for acquired PCD loans	328		2,392		8,355		141		11,216
Provision for loan losses(1)	691		12,245		8,322		1,129		22,387
Charge-offs	(967)		(1,457)		(61)		(135)		(2,620)
Recoveries	—		—		—		—		—
Net charge-offs	$	(967)	$	(1,457)	$	(61)	$	(135)	$	(2,620)
End of period	$	2,084	$	29,460	$	20,858	$	1,150	$	53,552
Nine Months Ended September 30, 2023
Beginning of period	$	2,301	$	11,691	$	3,079	$	28	$	17,099
Adoption of ASU No. 2016-13(2)	881		2,983		1,132		31		5,027
(Reversal of) provision for loan losses	(647)		1,753		(463)		(43)		600
Charge-offs	—		(12)		(24)		—		(36)
Recoveries	—		—		15		—		15
Net charge-offs	$	—	$	(12)	$	(9)	$	—	$	(21)
End of period	$	2,535	$	16,415	$	3,739	$	16	$	22,705

(1)Includes an initial provision for credit losses for non-PCD loans acquired in the Merger of $18.5 million for the nine months ended September 30, 2024. There was no similar activity in the comparable 2023 period.

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(2)Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2023. As a result of adopting ASU 2016-13, the Company’s methodology to compute our ACL is based on a CECL methodology, rather than the previously applied incurred loss methodology.

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 $150.2 million and $58.8 million at September 30, 2024 and December 31, 2023, respectively. This includes SBA loans serviced for others of $36.3 million and $35.4 million at September 30, 2024, and December 31, 2023, for which there was a related servicing asset of $415 thousand and $546 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 and nine months ended September 30, 2024 and 2023 follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Balance, beginning of period	$	521	$	683	$	546	$	514
Additions	—		—		109		216
Amortization (1)	(106)		(54)		(240)		(101)
Balance, end of period	$	415	$	629	$	415	$	629

(1) Amortization included accelerated amortization of $84 thousand and $29 thousand for the three months ended September 30, 2024 and 2023, respectively, and $174 thousand and $32 thousand for the nine months ended September 30, 2024 and 2023, respectively.

There were no SBA 7(a) loan sales during the three months ended September 30, 2024 and 2023.

SBA 7(a) loans sold during the nine months ended September 30, 2024 totaled $6.3 million resulting in total gains on sale of SBA loans of $415 thousand. SBA 7(a) loans sold during the nine months ended September 30, 2023 totaled $10.9 million resulting in total gains on sale of SBA loans of $874 thousand.

The fair value of the servicing asset approximated the carrying value at September 30, 2024 and December 31, 2023. The significant assumptions used in the valuation of the SBA servicing asset at September 30, 2024 and December 31, 2023 included:

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(dollars in thousands)	September 30, 2024	December 31, 2023
Discount rate:
Range	6.5% – 25.4%	10.5% – 26.2%
Weighted average	14.3%	16.1%
Prepayment speed:
Range	12.4% – 38.7%	11.2% – 48.1%
Weighted average	20.1%	19.0%

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 and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Contractually specified fees	$	114	$	113	297		309
Amortization	(106)		(54)		(240)		(101)
Net servicing fees	$	8	$	59	$	57	$	208

NOTE 6 - GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill, the excess purchase price over the fair value of all identifiable assets and liabilities acquired, totaled $112.5 million at September 30, 2024 and $37.8 million at December 31, 2023. 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 prices. During the third quarter of 2024, our stock price and market capitalization decreased due primarily to market volatility related to economic uncertainty and rising political tensions prior to the Presidential election. We also noted the trends in our recent financial results were primarily driven by the impact of the Merger and the loss for the quarter was primarily due to merger related expenses. In early November, our stock price and market capitalization recovered and after assessing the totality of these events and circumstances, we determined it is not likely that the fair value of a reporting unit is less than its carrying amount at September 30, 2024. Management will continue to evaluate the economic conditions at future reporting periods for applicable changes.

The Company performed a qualitative assessment for the annual impairment review at December 31, 2023, and as a result of that assessment had determined that there has been no impairment to the goodwill.

The following table presents changes in the carrying amount of goodwill for the three and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Balance, beginning of period	$	37,803	$	37,803	$	37,803	$	37,803
Goodwill from CALB merger	74,712		—		74,712		—
Balance, end of period	$	112,515	$	37,803	$	112,515	$	37,803

Core deposit intangibles are amortized over remaining periods of 4.3 to 9.8 years. As of September 30, 2024, the weighted-average remaining amortization period for core deposit intangibles was approximately 9.6 years. The Company performs the annual impairment analysis for the core deposit intangibles at least annually during the fourth quarter of each fiscal year. The Company evaluated current conditions and concluded there had

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been no significant changes in the economic environment or future projections since the annual core deposit intangibles impairment test performed at September 30, 2023 and therefore, believes that there was no impairment as of September 30, 2024. Management will continue to evaluate the economic conditions at future reporting periods for applicable changes. The following table presents the changes in core deposit intangibles for the three and nine months ended September 30, 2024 and 2023.

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Gross balance, beginning of period	$	4,185	$	4,185	$	4,185	$	4,185
Additions from CALB merger	22,653		—		22,653		—
Gross balance, end of period	$	26,838	$	4,185	$	26,838	$	4,185
Accumulated amortization:
Balance, beginning of period	$	(3,120)	$	(2,782)	$	(2,990)	$	(2,601)
Amortization	(687)		(128)		(817)		(309)
Balance, end of period	(3,807)		(2,910)		(3,807)		(2,910)
Net core deposit intangible, end of period	$	23,031	$	1,275	$	23,031	$	1,275

Future estimated amortization expense is as follows:

(dollars in thousands)	Amount
Remainder of 2024	$	998
2025	3,641
2026	3,051
2027	2,761
2028	2,465
Thereafter	10,115
	$	23,031

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 September 30, 2024, reciprocal deposits increased to $839.7 million, representing 22.4% of total deposits and 22.1% of Bank’s total liabilities, compared to $274.1 million, or 14.1% of total deposits at December 31, 2023. 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 $162.0 million and $122.6 million as of September 30, 2024 and December 31, 2023, respectively. Brokered time deposits totaled $222.6 million and $107.8 million as of September 30, 2024 and December 31, 2023, 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 September 30, 2024 and December 31, 2023, total collateralized deposits, including the deposits of State of California and their public agencies, were $104.9 million and $72.7 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 September 30, 2024, the scheduled maturities of time deposits are as follows:

(dollars in thousands)	Amount
Remainder of 2024	$	265,493
2025	171,637
2026	4,765
2027	74
2028 and thereafter	250
	$	442,219

NOTE 8 - BORROWING ARRANGEMENTS

A summary of outstanding borrowings as of September 30, 2024 and December 31, 2023 follows:

(dollars in thousands)	September 30, 2024		December 31, 2023
FHLB advances	$	—	$	85,000
Subordinated notes	69,142		17,865
Total borrowings	$	69,142	$	102,865

Federal Home Loan Bank Secured Line of Credit

At September 30, 2024, the Company had a secured line of credit of $786.1 million from the FHLB, of which $663.6 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 September 30, 2024, the Company had pledged $2.20 billion of qualifying loans with the FHLB under a blanket lien, of which an unpaid principal balance of $1.44 billion was considered as eligible collateral under this secured borrowing arrangement. In addition, at September 30, 2024, the Company used $122.5 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 overnight borrowings at September 30, 2024. The Company had overnight borrowings of $85.0 million with an interest of 5.70% at December 31, 2023, respectively.

Federal Reserve Bank Secured Line of Credit

At September 30, 2024, the Company had credit availability of $446.4 million at the Federal Reserve discount window to the extent of collateral pledged. At September 30, 2024, the Company had pledged debt securities with an amortized cost of $56.3 million as collateral, and qualifying loans with an unpaid principal balance of $466.8 million as collateral through the Borrower-in-Custody (“BIC”) program. The Company had no discount window borrowings at September 30, 2024 and December 31, 2023.

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Federal Funds Unsecured Lines of Credit

At September 30, 2024, the Company had six overnight unsecured credit lines from correspondent banks totaling $110.5 million. The lines are subject to annual review. There were no outstanding borrowings under these lines at September 30, 2024 and December 31, 2023.

Revolving Line of Credit

The Company assumed a senior revolving line of credit from CALB in connection with the Merger with a commitment of $3.0 million. This facility is secured by 100% of the common stock of the Bank. This revolving line of credit bears interest, due quarterly, at a rate of Prime plus 0.40% and matures in November 2024. The revolving line of credit contains certain financial covenants, including but not limited to, minimum capital, classified asset, nonperforming asset, primary and secondary liquidity, and debt service coverage ratios. At September 30, 2024, the Company was in compliance with all covenants under the revolving line of credit. There were no borrowings under this revolving line of credit at September 30, 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 September 30, 2024 and December 31, 2023, were $63 thousand and $135 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 September 30, 2024, 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 September 30, 2024, the net unamortized fair value discount was $688 thousand, 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 September 30, 2024, 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 September 30, 2024, the net unamortized fair value discount was $3.1 million. 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 September 30, 2024, 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. Repurchases under the program may occur from time to time in open market transactions, in

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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.

There were no shares repurchased under this share repurchase plan during the three and nine months ended September 30, 2024.

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 - (LOSS) EARNINGS PER SHARE (“EPS”)

The following is a reconciliation of net (loss) income and shares outstanding to the (loss) income and number of shares used to compute EPS for the three and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands, except share and per share data)	2024		2023		2024		2023
Net (loss) income	$	(16,464)	$	6,556	$	(11,339)	$	21,498
Weighted average common shares outstanding - basic	27,705,844		18,304,023		21,579,175		18,216,546
Dilutive effect of outstanding:
Stock options and unvested stock grants	—		368,109		—		416,344
Weighted average common shares outstanding - diluted1	27,705,844		18,672,132		21,579,175		18,632,890
(Loss) earnings per common share - basic	$	(0.59)	$	0.36	$	(0.53)	$	1.18
(Loss) earnings per common share - diluted1	$	(0.59)	$	0.35	$	(0.53)	$	1.15

(1)Weighted average diluted shares for GAAP diluted EPS are the same as shares for calculating basis EPS due to the antidilutive effect of the diluted shares when considering the GAAP loss for the three and nine months ended September 30, 2024.

The Company’s only performance based restricted stock grants were vested when the performance conditions had been met on March 1, 2023. A total of 275,171 performance based restricted stock grants were vested and included in the computation of basic EPS for the three and nine months ended September 30, 2023 because the performance conditions had been met. For the three months ended September 30, 2024 and 2023, there were 538,726 and 14,750 restricted stock units and 58,785 and 12,750 stock options, respectively, that were not included in the computation of diluted earnings per share, because they were anti-dilutive. For the nine months ended September 30, 2024 and 2023, there were 392,424 and 91,080 restricted stock units and 71,066 and 8,637 stock options, respectively, 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 Company has granted 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 and nine months ended September 30, 2024 and 2023 follows:

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	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Balance, beginning of period	$	5,295	$	7,732	$	5,928	$	8,073
Assumed in the Merger	22,523		—		22,523		—
New credit granted	—		—		—		—
Repayments	(18)		(1,136)		(651)		(1,477)
Balance, end of period	$	27,800	$	6,596	$	27,800	$	6,596

Directors and related interests deposits at September 30, 2024 and December 31, 2023, amounted to approximately $30.4 million and $16.4 million, respectively.

The Company leases its Ramona branch office from a beneficial owner who holds more than 5% of any class of the Company’s voting securities and is 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 and nine months ended September 30, 2024 and 2023 was $11 thousand and $33 thousand, respectively, and future minimum lease payments under the lease were $118 thousand and $151 thousand, respectively as of September 30, 2024 and December 31, 2023.

On 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 September 30, 2024 and December 31, 2023, total capital contributions made to this investment were $1.1 million and $910 thousand, 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 September 30, 2024 and December 31, 2023:

(dollars in thousands)	September 30, 2024		December 31, 2023
Commitments to extend credit	$	1,033,055	$	405,854
Letters of credit issued to customers	17,978		4,939
Commitments to contribute capital to other equity investments	7,278		3,170
	$	1,058,311	$	413,963

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

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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 and nine months ended September 30, 2024 was $161 thousand and $323 thousand, respectively, and for the three and nine months ended September 30, 2023 was $83 thousand and $240 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.

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.

In October 2020, the maximum number of shares under the 2019 Plan was increased by 300,000 to 2,500,000. In June 2021, the maximum number of shares under the 2019 Plan was increased by 900,000 to 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.

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 and nine months ended September 30, 2024, total stock-based compensation cost related to stock options and restricted shares units was $2.8 million and $4.7 million, respectively. Included in these amounts was $1.1 million related to the acceleration of vesting for replacement awards issued in connection with the Merger to non-continuing directors, executives and employees. For the three and nine months ended September 30, 2023, total stock-based compensation cost related to stock options and restricted shares units was $1.0 million and $3.8 million, respectively. For the three and nine months ended September 30, 2024, the

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Company did not record any accelerated stock-based compensation expense for the performance-based restricted stock units. For three and nine months ended September 30, 2023, the Company recorded $632 thousand for an accelerated stock-based compensation expense for the performance-based restricted stock units.

Stock Options

As of September 30, 2024, there was $25 thousand of total unrecognized compensation cost related to the outstanding stock options. There were 1,500 stock options exercised with the intrinsic value of $12 thousand during the three months ended September 30, 2024, and no stock options exercised during the three months ended September 30, 2023.

There were 82,900 and 10,950 stock options exercised during the nine months ended September 30, 2024 and 2023, respectively. The intrinsic value of stock options exercised was approximately $570 thousand and $78 thousand for the nine months ended September 30, 2024 and 2023, respectively.

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 and nine months ended September 30, 2024 and 2023.

A summary of changes in outstanding stock options during the three and nine months ended September 30, 2024 and 2023 are presented below:

	Three Months Ended			Nine Months Ended
	September 30, 2024			September 30, 2024
(dollars in thousands, except share data)	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at beginning of period	175,363	$	9.47	272,813	$	9.30
Granted	—	$	—	—	$	—
Exercised	(1,500)	$	6.61	(82,900)	$	8.64
Expired	—	$	—	(750)	$	5.93
Forfeited	—	$	—	(15,300)	$	10.75
Outstanding at end of period	173,863	$	9.50	173,863	$	9.50	2.8	$	920
Options exercisable	167,663	$	9.46	167,663	$	9.46	2.7	$	894

	Three Months Ended			Nine Months Ended
	September 30, 2023			September 30, 2023
(dollars in thousands, except share data)	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at beginning of period	288,338	$	9.26	326,868	$	9.53
Granted	—	$	—	—	$	—
Exercised	—	$	—	(10,950)	$	8.53
Forfeited	(200)	$	10.99	(27,780)	$	12.78
Outstanding at end of period	288,138	$	9.26	288,138	$	9.26	3.4	$	1,369
Options exercisable	260,638	$	8.97	260,638	$	8.97	3.1	$	1,312

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Restricted Stock Units

A summary of the changes in outstanding unvested restricted stock units during the three and nine months ended September 30, 2024 and 2023 is presented below:

	Three Months Ended			Nine Months Ended
	September 30, 2024			September 30, 2024
	Restricted Shares	Weighted Average Grant Date Fair Value		Restricted Shares	Weighted Average Grant Date Fair Value
Unvested at beginning of period	661,116	$	13.06	637,899	$	13.11
Granted(1)	769,002	$	15.50	937,037	$	15.45
Vested(2)	(141,262)	$	15.75	(280,050)	$	15.79
Forfeited	(77,808)	$	15.67	(83,838)	$	15.67
Unvested at end of period	1,211,048	$	13.06	1,211,048	$	13.06

(1)Includes 418,634 shares granted as replacement awards to continuing and non-continuing directors, executives and employees in connection with the Merger for the three and nine months ended September 30, 2024. The fair value of these replacement awards attributable to post-combination vesting a) will be recognized over the remaining vesting period for continuing directors, executives and employees and b) was immediately recognized for non-continuing directors, executives and employees as components of compensation expense.

(2)Includes the discretionary vesting of 123,123 replacement awards issued in connection with the Merger for non-continuing directors, executives and employees for the three and nine months ended September 30, 2024.

	Three Months Ended			Nine Months Ended
	September 30, 2023			September 30, 2023
	Restricted Shares	Weighted Average Grant Date Fair Value		Restricted Shares	Weighted Average Grant Date Fair Value
Unvested at beginning of period	774,067	$	13.17	959,337	$	11.55
Granted	16,329	$	14.76	204,231	$	16.58
Vested (1)	(17,148)	$	15.11	(390,320)	$	10.99
Forfeited	—	$	—	—	$	—
Unvested at end of period	773,248	$	13.16	773,248	$	13.16

(1)Included the vesting of performance-based awards totaling 275,171 shares, with a weighted average grant date fair value of $9.29 for the nine months ended September 30, 2023.

On March 1, 2023, the Board confirmed that all performance conditions for the performance-based restricted stock units totaling 275,171 shares had been satisfied and accelerated vesting in full. As of September 30, 2024, the Company did not have any outstanding unvested restricted stock units subject to various financial performance conditions. For the nine months ended September 30, 2023, the Company recorded accelerated stock-based compensation totaling $632 thousand.

As of September 30, 2024, there was $12.4 million of total unrecognized compensation expense related to the outstanding restricted stock units that will be recognized over the weighted-average period of 3.2 years. The total unrecognized compensation expense included $2.5 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 3.8 years. The total grant date fair value of restricted stock units vested was $2.2 million and $4.4 million for the three and nine months ended September 30, 2024, and $259 thousand and $4.3 million for the three and nine months ended September 30, 2023. Related tax expenses were approximately $4 thousand and $89 thousand for the three months ended September 30, 2024, respectively. Related tax expenses were approximately $2 thousand

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for the three months ended September 30, 2023 and related tax benefits were $642 thousand for the nine months ended September 30, 2023.

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.

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 September 30, 2024, the Company and the Bank exceeded the minimums necessary to qualify as “well capitalized” under the regulatory framework for prompt corrective action (“PCA”). As of December 31, 2023, the Bank exceeded the minimums necessary to qualify as “well capitalized” under the regulatory framework for PCA. Management believes, as of September 30, 2024 and December 31, 2023, that the Company and the Bank met all capital adequacy requirements to which we are subject.

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 September 30, 2024. At September 30, 2024, 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.

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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 September 30, 2024:
California BanCorp:
Total Capital (to Risk-Weighted Assets)	$	478,321	12.65	%	$	302,513	8.0	%	N/A		N/A
Tier 1 Capital (to Risk-Weighted Assets)	365,382		9.66	%	226,885		6.0	%	N/A		N/A
CET1 Capital (to Risk-Weighted Assets)	365,382		9.66	%	170,163		4.5	%	N/A		N/A
Tier 1 Capital (to Average Assets)	365,382		10.55	%	138,588		4.0	%	N/A		N/A
California Bank of Commerce, N.A.:
Total Capital (to Risk-Weighted Assets)	$	473,738	12.53	%	$	302,427	8.0	%	$	378,033	10.0	%
Tier 1 Capital (to Risk-Weighted Assets)	429,941		11.37	%	226,820		6.0	%	302,427		8.0	%
CET1 Capital (to Risk-Weighted Assets)	429,941		11.37	%	170,115		4.5	%	245,722		6.5	%
Tier 1 Capital (to Average Assets)	429,941		12.41	%	138,572		4.0	%	173,215		5.0	%
As of December 31, 2023:
California Bank of Commerce, N.A.:
Total Capital (to Risk-Weighted Assets)	$	289,743	13.51	%	$	171,575	8.0	%	$	214,469	10.0	%
Tier 1 Capital (to Risk-Weighted Assets)	270,341		12.61	%	128,681		6.0	%	171,575		8.0	%
CET1 Capital (to Risk-Weighted Assets)	270,341		12.61	%	96,511		4.5	%	139,405		6.5	%
Tier 1 Capital (to Average Assets)	270,341		11.65	%	92,818		4.0	%	116,022		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 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

56

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.

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 estimated 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 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

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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 September 30, 2024 and December 31, 2023, is summarized as follows:

		September 30, 2024				December 31, 2023
				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	$	115,165	$	115,165	$	33,008	$	33,008
Fed funds and interest-bearing balances	Level 1	499,258		499,258		53,785		53,785
Debt securities available for sale	Level 1/2	159,330		159,330		130,035		130,035
Debt securities held to maturity	Level 2	53,364		49,487		53,616		50,432
Loans held for sale	Level 2	33,704		34,508		7,349		7,834
Loans held for investment, net	Level 3	3,146,162		3,144,451		1,934,873		1,883,154
Restricted stock, at cost	Level 2	27,394		27,394		16,055		16,055
Other equity securities	Level 2	14,712		14,712		9,187		9,187
Accrued interest receivable	Level 2	15,632		15,632		7,301		7,301
Financial liabilities:
Deposits	Level 2	3,740,915		3,740,963		1,943,556		1,943,007
Borrowings	Level 2	69,142		69,053		102,865		102,447
Accrued interest payable	Level 2	4,976		4,976		477		477

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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
September 30, 2024
Securities available for sale:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	—	$	92,259	$	—	$	92,259
SBA securities	—		5,684		—		5,684
U.S. Treasury	17,321		—		—		17,321
U.S. Agency	—		1,743		—		1,743
Collateralized mortgage obligations	—		40,573		—		40,573
Taxable municipals	—		923		—		923
Tax exempt bank-qualified municipals	—		827		—		827
	$	17,321	$	142,009	$	—	$	159,330
December 31, 2023
Securities available for sale:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	—	$	74,434	$	—	$	74,434
SBA securities	—		5,782		—		5,782
U.S. Treasury	2,417		—		—		2,417
U.S. Agency	—		1,670		—		1,670
Collateralized mortgage obligations	—		43,501		—		43,501
Taxable municipals	—		1,421		—		1,421
Tax exempt bank-qualified municipals	—		810		—		810
	$	2,417	$	127,618	$	—	$	130,035

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 September 30, 2024, 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. These reviews resulted in a partial charge off of $967 thousand on the individually evaluated loans in the third quarter of 2024.

At December 31, 2023, the Company took a partial charge-off of $1.3 million on an individually evaluated collateral-dependent loan based on its recent property appraisals during the year ended December 31, 2023.

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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 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.

During the three and nine months ended September 30, 2024, the Company recorded a $614 thousand valuation allowance due to a decline in the fair value of the underlying property in the third quarter of 2024. This amount is included within other charges and fees in the accompanying consolidated statements of operations.

The following tables summarize the fair value of assets and liabilities measured at fair value on a nonrecurring basis as of September 30, 2024 and December 31, 2023.

			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)
September 30, 2024
Collateral dependent loans (1):
Construction and Land	$	10,000	$	—	$	—	$	10,000
1-4 Family Residential	4,600		—		—		4,600
Foreclosed assets:
Other real estate owned, net	$	4,083	$	—	$	—	$	4,083
December 31, 2023
Collateral dependent loans (1):
Multifamily Residential	$	13,000	$	—	$	—	$	13,000

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

Quantitative information about Level 3 fair value measurements measured on a non-recurring basis are summarized below as of September 30, 2024 and December 31, 2023.

	Asset Fair		Valuation	Unobservable	% or Range %
(dollars in thousands)	Value		Technique	Input	(Weighted Average)
September 30, 2024
Construction and Land	$	10,000	Market approach	Land value	N/A
1-4 Family Residential	4,600		Market approach	Cost to sell	7.50%-7.50% (7.50%)
Other real estate owned, net	$	4,083	Market approach	Cost to sell	5.75%-5.75% (5.75%)
December 31, 2023
Multifamily Residential	$	13,000	Income approach	Capitalization rate	3.84%-4.94% (4.50%)

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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, formerly known as Southern 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., formerly known as Bank of Southern California, 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 Southern and Northern 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. 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 California Bank of Commerce’s one full-service bank branch and its four loan production offices in the Bay Area to the Bank’s 13 full-service bank branches located throughout the Southern California region.

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

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

Impact of Federal Reserve Rapid Rate Hiking Cycle on the Economy and Banking Industry

Between March 2022 and September 2023, the Federal Reserve raised interest rates eleven times by an aggregate of 525 basis points, to a range between 5.25% and 5.50%, the highest level in 22 years. The rapid rate hiking cycle was in response to an increase in inflation, as measured by the Consumer Price Index, from 1.2% in November 2020 to 9.1% in July 2022, which has since moderated to 2.4% in September 2024. In its September 2024 meeting, the Federal Reserve reduced federal funds interest rates by 50 basis points to a target rate between 4.75% and 5.0%. In the statement issued after the meeting, the Federal Reserve noted it “has gained greater confidence that inflation is moving sustainably toward 2%, and judges that the risks to achieving its employment and inflation goals are roughly in balance.”

Concerns regarding a potential recession have moderated with full year U.S. 2023 GDP reported at 2.5%, slowing to 1.3% in the first quarter of 2024 and rebounding to 3.0% and 2.8% in the second and third quarters of 2024, respectively, with Moody’s full-year 2024 GDP growth forecast at 2.7%. California’s 2023 GDP increased by 2.1% from 2022 and it is forecast by Moody’s to decrease by 2.0% in 2024 and 1.3% in 2025. Despite the anticipated slowdown in California, it is still considered to have the fifth largest economy in the world. 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. The U.S. Bureau of Labor Statistics reports California’s September 2024 unemployment rate at 5.3%; it has been a range between 5.0% and 5.3% since September 2023.

The rapid rise in interest rates between 2022 and 2023 resulted in an industry-wide reduction in the fair value of many banks’ securities portfolios, pressuring their liquidity. The subsequent bank runs led to the failure of several financial institutions beginning in March of 2023 and the distress at New York Community Bank in early 2024, fostering a state of volatility and uncertainty with respect to the health of the U.S. banking system, particularly around liquidity, uninsured deposits and customer concentrations. The situation has stabilized due to strong actions taken by federal regulators in attempts to calm the markets, coupled with the Federal Reserve’s initiation of reductions to the federal funds interest rate.

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 banking model is founded on strong, ongoing relationships with our commercial clients, which represent a broad variety of industries. The recent uncertainty in the banking industry has provided us with an opportunity to attract new clients that have concerns about the banks they have been doing business with, based on the above events. We have no meaningful exposure to cryptocurrency or venture capital business models, our accumulated other comprehensive loss on our available-for-sale debt securities is manageable, and our capital position is strong. We also have elected to vigorously defend our deposit base in the face of increasing competition and deposit costs by adjusting the rates we pay on interest-bearing deposits.

We have a highly skilled and experienced lending production team and credit administration team. Given our concentration in commercial real estate secured loans, we mitigate that risk through comprehensive underwriting policies, semi-annual loan level reviews, close monitoring of self-established industry and geographical and collateral type limits, periodic stress testing and continuous portfolio risk management reporting. Per the regulatory definition of commercial real estate, at September 30, 2024, our concentration of such loans represented 479% of our total risk-based capital. In addition, at September 30, 2024, total loans secured by commercial real estate under construction and land development represented 51% of our total risk-based capital. The non-performing loans for these segments per the regulatory definition of commercial real estate loans at September 30, 2024 were $18.8 million and there were $2.4 million charge-offs during the nine months ended September 30, 2024. At September 30, 2024, our only OREO, carried at $4.1 million, was from a multifamily nonaccrual loan we foreclosed on in the third quarter of 2024.

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Given the nature of our commercial banking business, approximately 44% of our total deposits exceeded the FDIC deposit insurance limits at September 30, 2024. However, we offer our deposit customers 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 allow us to divide customers’ deposits that exceed the FDIC insurance limits into smaller amounts, below the FDIC insurance limits, and place those deposits in other participating FDIC insured institutions with the convenience of managing all deposit accounts through our Bank. 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. Our total reciprocal deposits increased to $839.7 million, representing 22% of total deposits and 22% of Bank’s total liabilities at September 30, 2024, compared to $274.1 million, or 14% of total deposits at December 31, 2023. 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. In connection with the Merger, the Company acquired $442.7 million in fair value of reciprocal deposits, of which included $98.4 million in ICS, $306.6 million in R&T and $37.7 in CDARS.

We have a small investment portfolio of high-quality securities. In 2022, we deployed our excess cash by purchasing held-to-maturity debt securities that are not marked to market, which means there is no unrealized loss recorded through the accumulated other comprehensive loss if their market value is impacted by changes in interest rates. We continue to reposition our debt securities mix to protect us from an unpredictable interest rate environment. In connection with the Merger, our investment portfolio increased by $42.6 million, consisting primarily of treasury and mortgage-backed securities. At September 30, 2024, the amortized cost of our held-to-maturity debt securities was $53.4 million, or approximately 1.2% of total assets. The fair value of our available-for-sale debt securities was $159.3 million, or approximately 3.7% of total assets. The decreases in the 10-Year Treasury Bond to below 4% in the third quarter, resulted in a lower net unrealized losses on our debt securities at September 30, 2024. The 10-Year Treasury Bond was approximately 3.8% at the end of September 2024. At September 30, 2024, our accumulated other comprehensive loss, net of taxes, decreased to $2.9 million, compared to $4.5 million at December 31, 2023. If we realized all of our unrealized losses on both held-to-maturity and available-for-sale debt securities, our losses, net of taxes would be $5.6 million at September 30, 2024. The results of our stress testing on our debt security portfolio at September 30, 2024, illustrated that our losses, net of taxes on both held-to-maturity and available-for-sale debt securities would increase to $24.8 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.

At September 30, 2024, our liquidity position remained strong, with the following financial balances (unaudited), compared to December 31, 2023:

•Total cash and cash equivalents of approximately $614.4 million, compared to $86.8 million.

•Total liquidity ratio of approximately 21.0%, compared to 11.1%.

•Unpledged, liquid securities at fair value were approximately $146.7 million, compared to $130.0 million.

•Available borrowing capacity from the Federal Home Loan Bank (“FHLB”) secured lines of credit of approximately $663.6 million, compared to $339.2 million. At September 30, 2024, there were no overnight FHLB borrowings.

•Available borrowing capacity from the Federal Reserve Discount Window program was approximately $446.4 million, compared to $141.6 million. There were no outstanding borrowings under this program at September 30, 2024.

•Available borrowing capacity from seven unsecured credit lines from correspondent banks totaling $113.5 million at both period ends. There were no outstanding borrowings on these lines at September 30, 2024.

•Total available borrowing capacity was approximately $1.22 billion at September 30, 2024, compared to $555.8 million.

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•Total available liquidity was approximately $1.98 billion at September 30, 2024.

We continue to monitor macroeconomic variables related to increasing 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 as we increase deposit rates in response to potential further rate increases by our competitors;

•Merger and related costs being higher than anticipated;

•Merger cost savings being less than anticipated;

•Increases in other comprehensive loss from the unrealized losses on available-for-sale debt securities; and

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

Critical Accounting Policies and Estimates

We have chosen accounting policies that it believes are appropriate to accurately and fairly report its 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 2023 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									Nine Months Ended September 30,
($ in thousands except share and per share data)	September 30, 2024			June 30, 2024			September 30, 2023			2024			2023
EARNINGS
Net interest income	$	36,942		$	21,007		$	23,261		$	78,443		$	71,579
Provision for (reversal of) credit losses	$	22,963		$	2,893		$	(96)		$	25,525		$	91
Noninterest income	$	1,174		$	1,169		$	815		$	3,756		$	3,481
Noninterest expense	$	37,680		$	19,005		$	14,781		$	71,666		$	44,407
Income tax (benefit) expense	$	(6,063)		$	88		$	2,835		$	(3,653)		$	9,064
Net (loss) income	$	(16,464)		$	190		$	6,556		$	(11,339)		$	21,498
Pre-tax pre-provision income(1)	$	436		$	3,171		$	9,295		$	10,533		$	30,653
Adjusted pre-tax pre-provision income(1)	$	15,041		$	3,662		$	9,295		$	26,178		$	30,653
Diluted (loss) earnings per share	$	(0.59)		$	0.01		$	0.35		$	(0.53)		$	1.15
Ending shares outstanding	32,142,427			18,547,352			18,309,282			32,142,427			18,309,282
PERFORMANCE RATIOS
Return on average assets	(1.82)		%	0.03		%	1.12		%	(0.55)		%	1.25		%
Adjusted return on average assets(1)	1.01		%	0.11		%	1.12		%	0.74		%	1.25		%
Return on average common equity	(15.28)		%	0.26		%	9.38		%	(4.48)		%	10.63		%
Adjusted return on average common equity(1)	8.44		%	0.82		%	9.38		%	6.00		%	10.63		%
Yield on loans	6.79		%	6.21		%	5.97		%	6.40		%	5.89		%
Yield on earning assets	6.49		%	5.97		%	5.72		%	6.15		%	5.63		%
Cost of deposits	2.09		%	2.12		%	1.56		%	2.09		%	1.22		%
Cost of funds	2.19		%	2.21		%	1.62		%	2.19		%	1.30		%
Net interest margin	4.43		%	3.94		%	4.23		%	4.12		%	4.43		%
Efficiency ratio(1)	98.9		%	85.7		%	61.4		%	87.2		%	59.2		%
Adjusted efficiency ratio(1)	60.5		%	83.5		%	61.4		%	68.2		%	59.2		%
Net charge-offs to average loans held-for-investment	(0.17)		%	(0.31)		%	0.00		%	(0.16)		%	0.00		%

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	September 30, 2024			December 31, 2023
CAPITAL
Tangible equity to tangible assets(1)	8.58		%	10.73		%
Book value (BV) per common share	$	15.50		$	15.69
Tangible BV per common share(1)	$	11.28		$	13.56
ASSET QUALITY
Allowance for loan losses (ALL)	$	53,552		$	22,569
Reserve for unfunded loan commitments	4,071			933
Allowance for credit losses (ACL)	$	57,623		$	23,502
Allowance for loan losses to nonperforming loans	209		%	174		%
ALL to total loans	1.67		%	1.15		%
ACL to total loans	1.80		%	1.20		%
Net charge-offs to average loans held-for-investment	(0.16)		%	(0.07)		%
30-89 days past due, excluding nonaccrual loans	$	19,110		$	19
Over 90 days past due, excluding nonaccrual loans	$	37		$	—
Special mention loans	$	93,448		$	2,996
Special mention loans to total loans held for investment	2.92		%	0.15		%
Substandard loans	$	104,298		$	19,502
Substandard loans to total loans held for investment	3.26		%	1.00		%
Nonperforming loans	$	25,698		$	13,004
Nonperforming loans to total loans held for investment	0.80		%	0.66		%
Other real estate owned	$	4,083		$	—
Nonperforming assets	$	29,781		$	13,004
Nonperforming assets to total assets	0.68		%	0.55		%
END OF PERIOD BALANCES
Total loans, including loans held for sale	$	3,233,418		$	1,964,791
Total assets	$	4,362,767		$	2,360,252
Deposits	$	3,740,915		$	1,943,556
Loans to deposits	86.4		%	101.1		%
Shareholders' equity	$	498,064		$	288,152

(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 (loss) income is computed by adjusting net (loss) income for the tax-effected one-time initial provision for credit losses related to non-purchased credit deteriorated (“non-PCD”) loans and unfunded loan commitments and 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 (loss) 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									Nine Months Ended September 30,
(dollars in thousands)	September 30, 2024			June 30, 2024			September 30, 2023			2024			2023
Efficiency Ratio
Noninterest expense	$	37,680		$	19,005		$	14,781		$	71,666		$	44,407
Less: Merger and related expenses	14,605			491			—			15,645			—
Adjusted noninterest expense	$	23,075		$	18,514		$	14,781		$	56,021		$	44,407
Net interest income	36,942			21,007			23,261			78,443			71,579
Noninterest income	1,174			1,169			815			3,756			3,481
Total net interest income and noninterest income	$	38,116		$	22,176		$	24,076		$	82,199		$	75,060
(1) Efficiency ratio (non-GAAP)	98.9		%	85.7		%	61.4		%	87.2		%	59.2		%
(1) Adjusted efficiency ratio (non-GAAP)	60.5		%	83.5		%	61.4		%	68.2		%	59.2		%
Pre-tax Pre-provision Income
Net interest income	$	36,942		$	21,007		$	23,261		$	78,443		$	71,579
Noninterest income	1,174			1,169			815			3,756			3,481
Total net interest income and noninterest income	38,116			22,176			24,076			82,199			75,060
Less: Noninterest expense	37,680			19,005			14,781			71,666			44,407
(2) Pre-tax pre-provision income (non-GAAP)	$	436		$	3,171		$	9,295		$	10,533		$	30,653
Add: Merger and related expenses	14,605			491			—			15,645			—
(2) Adjusted pre-tax pre-provision income (non-GAAP)	$	15,041		$	3,662		$	9,295		$	26,178		$	30,653
Return on Average Assets, Equity, and Tangible Equity
Net (loss) income	$	(16,464)		$	190		$	6,556		$	(11,339)		$	21,498
Add: After-tax Day1 provision for non PCD loans and unfunded loan commitments (1)	14,978			—			—			14,978			—
Add: After-tax merger and related expenses (1)	10,576			412			—			11,535			—
(3) Adjusted net income (non-GAAP)	$	9,090		$	602		$	6,556		$	15,174		$	21,498
Average assets	$	3,593,157		$	2,294,678		$	2,313,941		$	2,735,695		$	2,293,060
Average shareholders’ equity	428,558			294,121			277,442			337,813			270,405
Less: Average intangible assets	104,409			38,900			39,158			60,917			39,249
(4) Average tangible common equity (non-GAAP)	$	324,149		$	255,221		$	238,284		$	276,896		$	231,156
Return on average assets	(1.82		%)	0.03		%	1.12		%	(0.55		%)	1.25		%
(5) Adjusted return on average assets (non-GAAP)	1.01		%	0.11		%	1.12		%	0.74		%	1.25		%
Return on average equity	(15.28		%)	0.26		%	9.38		%	(4.48		%)	10.63		%
(5) Adjusted return on average equity (non-GAAP)	8.44		%	0.82		%	9.38		%	6.00		%	10.63		%

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	Three Months Ended						Nine Months Ended September 30,
(dollars in thousands)	September 30, 2024		June 30, 2024		September 30, 2023		2024		2023
(6) Return on average tangible common equity (non-GAAP)	(20.21	%)	0.30	%	10.92	%	(5.47	%)	12.43	%
(6) Adjusted return on average tangible common equity (non-GAAP)	11.16	%	0.95	%	10.92	%	7.32	%	12.43	%

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

(dollars in thousands, except per share amounts)	September 30, 2024			December 31, 2023
Tangible Common Equity Ratio/Tangible Book Value Per Share
Shareholders’ equity	$	498,064		$	288,152
Less: Intangible assets	135,546			38,998
(7) Tangible common equity (non-GAAP)	$	362,518		$	249,154
Total assets	$	4,362,767		$	2,360,252
Less: Intangible assets	135,546			38,998
(7) Tangible assets (non-GAAP)	$	4,227,221		$	2,321,254
Equity to asset ratio	11.42		%	12.21		%
(8) Tangible common equity to tangible asset ratio (non-GAAP)	8.58		%	10.73		%
Book value per share	$	15.50		$	15.69
(9) Tangible book value per share (non-GAAP)	$	11.28		$	13.56
Shares outstanding	32,142,427			18,369,115

Impact of Merger on Earnings

The comparability of our financial information is affected by the merger with CALB. We completed this Merger on July31, 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 (Loss) Income

Three Months Ended September 30, 2024 Compared to Three Months Ended June 30, 2024

Net loss for the three months ended September 30, 2024 was $16.5 million, or $0.59 per diluted share, compared to net income of $190 thousand or $0.01 per diluted share in the prior quarter. The $16.7 million decrease in net income from the prior quarter was primarily due to a $18.7 million increase in noninterest expense and a $20.1 million increase in the provision for credit losses, partially offset by a $15.9 million increase in net interest income and a $6.2 million decrease in income taxes. Results during the three months ended September 30, 2024 were negatively impacted by $15.0 million of after-tax CECL-related provisions for credit losses on loans and unfunded commitments related to the Merger and $10.6 million of after-tax merger expenses. Excluding one-time CECL-related provision for credit losses on acquired loans and unfunded loan commitments, and merger related expenses, the Company would have reported net income (non-GAAP) of $9.1 million, or $0.33 per diluted

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share, for the third quarter of 2024. Pre-tax, pre-provision income for the three months ended September 30, 2024 was $436 thousand, a decrease of $2.7 million, or 86.3% compared to pre-tax, pre-provision income of $3.2 million for the three months ended June 30, 2024.

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Net loss for the three months ended September 30, 2024 was $16.5 million, or $0.59 per diluted share, compared to net income of $6.6 million, or $0.35 per diluted share for the same 2023 period. The $23.0 million decrease in net income from the three months ended September 30, 2023 was primarily due to a $22.9 million increase in noninterest expense, a $23.1 million increase in provision for credit losses, partially offset by a $13.7 million increase in net interest income and an $8.9 million decrease in income taxes. The increase in losses primarily related to the Merger as previously described above. Pre-tax, pre-provision income for the three months ended September 30, 2024 was $436 thousand, a decrease of $8.9 million, or 95.3% compared to pre-tax, pre-provision income of $9.3 million for the same 2023 period.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Net loss for the nine months ended September 30, 2024 was $11.3 million, or $0.53 per diluted share, compared to net income of $21.5 million, or $1.15 per diluted share in the prior year. The $32.8 million decrease in net income from the prior year was primarily due to a $25.4 million increase in the provision for credit losses, and a $27.3 million increase in noninterest expense, partially offset by a $6.9 million increase in net interest income and a $12.7 million decrease in income taxes. Excluding one-time CECL-related provision for credit losses on acquired loans and unfunded loan commitments, and merger related expenses, the Company would have reported net income (non-GAAP) of $15.2 million, or $0.70 per diluted share, for the nine months ended September 30, 2024. Pre-tax, pre-provision income for the nine months ended September 30, 2024 was $10.5 million, a decrease of $20.1 million, or 65.6% compared to pre-tax, pre-provision income of $30.7 million for the nine months ended September 30, 2023.

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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
	September 30, 2024						June 30, 2024						September 30, 2023
	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)	$2,783,581		$47,528		6.79	%	$1,882,845		$29,057		6.21	%	$1,924,384		$28,977		5.97	%
Taxable debt securities	149,080		1,687		4.50	%	123,906		1,229		3.99	%	111,254		942		3.36	%
Tax-exempt debt securities (2)	53,682		306		2.87	%	53,754		306		2.90	%	59,630		359		3.02	%
Deposits in other financial institutions	161,616		2,215		5.45	%	47,417		638		5.41	%	50,367		681		5.36	%
Fed funds sold/resale agreements	143,140		1,886		5.24	%	19,062		261		5.51	%	20,653		283		5.44	%
Restricted stock investments and other bank stock	24,587		505		8.17	%	17,091		358		8.42	%	16,365		242		5.87	%
Total interest-earning assets	3,315,686		54,127		6.49	%	2,144,075		31,849		5.97	%	2,182,653		31,484		5.72	%
Total noninterest-earning assets	277,471						150,603						131,288
Total assets	$	3,593,157					$	2,294,678					$	2,313,941
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing NOW accounts	$	617,373	$	2,681	1.73	%	$	361,244	$	2,134	2.38	%	$	353,714	$	1,706	1.91	%
Money market and savings accounts	999,322		8,392		3.34	%	653,244		4,905		3.02	%	675,609		4,216		2.48	%
Time deposits	421,241		5,087		4.80	%	259,722		3,145		4.87	%	183,745		1,867		4.03	%
Total interest-bearing deposits	2,037,936		16,160		3.15	%	1,274,210		10,184		3.21	%	1,213,068		7,789		2.55	%
Borrowings:
FHLB advances	611		9		5.86	%	27,391		387		5.68	%	11,731		163		5.51	%
Subordinated debt	52,246		1,016		7.74	%	17,901		271		6.09	%	17,830		271		6.03	%
Total borrowings	52,857		1,025		7.71	%	45,292		658		5.84	%	29,561		434		5.82	%
Total interest-bearing liabilities	2,090,793		17,185		3.27	%	1,319,502		10,842		3.30	%	1,242,629		8,223		2.63	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits (3)	1,031,844						658,001						768,148
Other liabilities	41,962						23,054						25,722
Shareholders’ equity	428,558						294,121						277,442
Total Liabilities and Shareholders’ Equity	$	3,593,157					$	2,294,678					$	2,313,941
Net interest spread					3.22	%					2.67	%					3.09	%
Net interest income and margin(4)			$	36,942	4.43	%			$	21,007	3.94	%			$	23,261	4.23	%
Cost of deposits(5)	$3,069,780		$16,160		2.09	%	$1,932,211		$10,184		2.12	%	$1,981,216		$7,789		1.56	%
Cost of funds(6)	$3,122,637		$17,185		2.19	%	$1,977,503		$10,842		2.21	%	$2,010,777		$8,223		1.62	%

(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 $4.7 million, $386 thousand and $550 thousand for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, 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 33.61%, 34.05% and 38.77% of average total deposits for the three months ended September 30, 2024, June 30, 2024, and September 30, 2023, 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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	Nine Months Ended
	September 30, 2024						September 30, 2023
	Average Balance		Income/Expense		Yield/Cost		Average Balance		Income/Expense		Yield/Cost
Assets	($ in thousands)
Interest-earning assets:
Total loans(1)	$	2,194,059	$	105,169	6.40	%	$	1,906,327	$	83,983	5.89	%
Taxable debt securities	133,321		4,129		4.14	%	104,881		2,506		3.19	%
Tax-exempt debt securities (2)	53,759		918		2.89	%	68,043		1,302		3.24	%
Deposits in other financial institutions	87,966		3,569		5.42	%	43,629		1,675		5.13	%
Fed funds sold/resale agreements	57,634		2,281		5.29	%	21,182		798		5.04	%
Restricted stock investments and other bank stock	19,383		1,174		8.09	%	15,774		689		5.84	%
Total interest-earning assets	2,546,122		117,240		6.15	%	2,159,836		90,953		5.63	%
Total noninterest-earning assets	189,573						133,224
Total assets	$	2,735,695					$	2,293,060
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing NOW accounts	$	446,759	$	6,860	2.05	%	$	290,326	$	3,301	1.52	%
Money market and savings accounts	767,916		18,022		3.13	%	674,452		10,254		2.03	%
Time deposits	312,544		11,253		4.81	%	170,620		4,373		3.43	%
Total interest-bearing deposits	1,527,219		36,135		3.16	%	1,135,398		17,928		2.11	%
Borrowings:
FHLB advances	26,105		1,103		5.64	%	16,282		632		5.19	%
Subordinated debt	29,425		1,559		7.08	%	17,807		814		6.11	%
Total borrowings	55,530		2,662		6.40	%	34,089		1,446		5.67	%
Total interest-bearing liabilities	1,582,749		38,797		3.27	%	1,169,487		19,374		2.21	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits (3)	784,609						829,082
Other liabilities	30,524						24,086
Shareholders’ equity	337,813						270,405
Total Liabilities and Shareholders’ Equity	$	2,735,695					$	2,293,060
Net interest spread					2.88	%					3.42	%
Net interest income and margin (4)			$	78,443	4.12	%			$	71,579	4.43	%
Cost of deposits (5)	$2,311,828		$36,135		2.09	%	$1,964,480		$17,928		1.22	%
Cost of funds (6)	$2,367,358		$38,797		2.19	%	$1,998,569		$19,374		1.30	%

(1)Total loans are net of deferred loan origination fees/costs and discounts/premiums, and include average balances of loans held for sale and nonperforming loans. Interest income includes accretion of net deferred loan fees and net discounts on acquired loans of $5.6 million and $1.5 million for the nine months ended September 30, 2024 and 2023, 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 33.94%, and 42.20% of average total deposits for the nine months ended September 30, 2024 and 2023, 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 September 30, 2024 vs. June 30, 2024						Three Months Ended September 30, 2024 vs. September 30, 2023						Nine Months Ended September 30, 2024 vs. 2023
	Increase (Decrease) Due to						Increase (Decrease) Due to						Increase (Decrease) Due to
	Volume		Rate		Net		Volume		Rate		Net		Volume		Rate		Net
Interest-earning assets:	($ in thousands)
Total loans	$	15,487	$	2,984	$	18,471	$	14,183	$	4,368	$	18,551	$	13,526	$	7,660	$	21,186
Taxable debt securities	286		172		458		371		374		745		779		844		1,623
Tax-exempt debt securities	4		(4)		—		(31)		(22)		(53)		(218)		(166)		(384)
Deposits in other financial institutions	1,572		5		1,577		1,523		11		1,534		1,795		99		1,894
Fed fund sold/resale agreements	1,639		(14)		1,625		1,614		(11)		1,603		1,441		42		1,483
Restricted stock investments and other bank stock	158		(11)		147		147		116		263		181		304		485
Total interest-earning assets	19,146		3,132		22,278		17,807		4,836		22,643		17,504		8,783		26,287
Interest-bearing liabilities:
Interest-bearing NOW accounts	1,252		(705)		547		1,155		(180)		975		2,161		1,398		3,559
Money market and savings accounts	2,913		574		3,487		2,410		1,766		4,176		1,589		6,179		7,768
Time deposits	2,012		(70)		1,942		2,814		406		3,220		4,660		2,220		6,880
Total interest-bearing deposits	6,177		(201)		5,976		6,379		1,992		8,371		8,410		9,797		18,207
Borrowings:
FHLB advances	(378)		—		(378)		(159)		5		(154)		411		60		471
Subordinated debt	653		92		745		650		95		745		600		145		745
Total borrowings	275		92		367		491		100		591		1,011		205		1,216
Total interest-bearing liabilities	6,452		(109)		6,343		6,870		2,092		8,962		9,421		10,002		19,423
Net interest income	$	12,694	$	3,241	$	15,935	$	10,937	$	2,744	$	13,681	$	8,083	$	(1,219)	$	6,864

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Three Months Ended September 30, 2024 Compared to Three Months Ended June 30, 2024

Net interest income for the third quarter of 2024 was $36.9 million, compared with $21.0 million in the prior quarter. The increase in net interest income was primarily due to a $22.3 million increase in total interest and dividend income, partially offset by a $6.3 million increase in total interest expense in the third quarter of 2024 as compared to the prior quarter. The increase in interest income and interest expense primarily relates to increases in total average interest-earning assets and total interest-bearing liabilities from the Merger during the quarter. During the third quarter of 2024, loan interest income increased $18.5 million, of which $4.1 million was related to accretion income from the net purchase accounting discounts on acquired loans, total debt securities income increased $458 thousand, and interest and dividend income from other financial institutions decreased $3.3 million. The increase in interest income was primarily driven by the mix of interest-earning assets added by the Merger and the impact of the accretion and amortization of fair value marks. Average total interest-earning assets increased $1.17 billion, the result of a $900.7 million increase in average total loans, a $114.2 million increase in average deposits in other financial institutions, a $25.1 million increase in average total debt securities, a $124.1 million increase in average Fed funds sold/resale agreements and a $7.5 million increase in average restricted stock investments and other bank stock. The increase in interest expense for the third quarter of 2024 was primarily due to a $6.0 million increase in interest expense on interest-bearing deposits, the result of a $763.7 million increase in average interest-bearing deposits, coupled with a $34.3 million increase in average subordinated debt, partially offset by a 6 basis point decrease in average interest-bearing deposit costs and a $378 thousand decrease in interest expense on Federal Home Loan Bank (“FHLB”) borrowings, the result of a $26.8 million decrease in average FHLB borrowings in the third quarter of 2024.

Net interest margin for the third quarter of 2024 was 4.43%, compared with 3.94% in the prior quarter. The increase was primarily related to a 52 basis point increase in the total interest-earning assets yield, coupled with a 2 basis point decrease in the cost of funds. The yield on total average earning assets in the third quarter of 2024 was 6.49%, compared with 5.97% in the prior quarter. The yield on average total loans in the third quarter of 2024 was 6.79%, an increase of 58 basis points from 6.21% in the prior quarter. Accretion income from the net purchase accounting discounts on acquired CALB loans was $4.1 million and the related amortization expense impact on interest expense was $278 thousand, which increased the net interest margin by 46 basis points in the third quarter of 2024. Accretion income from the net purchase accounting discounts on acquired CALB loans increased the yield on average total loans by 59 basis points in the third quarter of 2024.

Cost of funds for the third quarter of 2024 was 2.19%, a decrease of 2 basis points from 2.21% in the prior quarter. The decrease was primarily driven by a 6 basis point decrease in the cost of average interest-bearing deposits, and an increase in average noninterest-bearing deposits, partially offset by an increase of 187 basis points in the cost of total borrowings, which was driven primarily by the amortization expense of $373 thousand, or 281 basis points from the purchase accounting discounts on acquired subordinated debt. Average noninterest-bearing demand deposits increased $373.8 million to $1.03 billion and represented 33.6% of total average deposits for the third quarter of 2024, compared with $658.0 million and 34.1%, respectively, in the prior quarter; average interest-bearing deposits increased $763.7 million to $2.04 billion during the third quarter of 2024. The total cost of deposits in the third quarter of 2024 was 2.09%, a decrease of 3 basis points from 2.12% in the prior quarter. The cost of total interest-bearing deposits decreased primarily due to the Company’s deposit repricing strategy and paying off high cost brokered deposits in the third quarter of 2024.

Average total borrowings increased $7.6 million to $52.9 million for the third quarter of 2024, primarily due to an increase of $34.3 million in average subordinated debt from the $50.8 million in fair value of subordinated debt acquired in the Merger, partially offset by a decrease of $26.8 million in average FHLB borrowings during the third quarter of 2024. The average cost of total borrowings was 7.71% for the third quarter of 2024, up from 5.84% in the prior quarter.

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Net interest income for the three months ended September 30, 2024 was $36.9 million, compared to $23.3 million for the three months ended September 30, 2023. The increase in interest income primarily relates to

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increases in total average interest-earning assets due to the Merger during the quarter. The $13.7 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.

Net interest margin for the three months ended September 30, 2024 was 4.43%, compared with 4.23% for the same 2023 period. The 20 basis point increase was primarily related to a 77 basis point increase in the total average interest-earning assets yield resulting from higher market interest rates, accretion income from the net purchase accounting discounts on acquired loans and a change in our average interest-earning asset mix, partially offset by a 57 basis point increase in the cost of funds. The yield on total average earning assets during the three months ended September 30, 2024 was 6.49%, compared with 5.72% for the same 2023 period. The yield on average loans during the three months ended September 30, 2024 was 6.79%, an increase of 82 basis points from 5.97% for the same 2023 period. Accretion income from the net purchase accounting discounts on acquired loans was $4.1 million and the amortization expense impact on interest expense was $278 thousand, which increased the net interest margin by 46 basis points in the third quarter of 2024.

During the three months ended September 30, 2024, total interest income increased $22.6 million, comprised of a $18.6 million increase in total loan interest income, of which $4.1 million was related to accretion income from the net purchase accounting discounts on acquired loans, a $692 thousand increase in total debt securities income, and a $3.4 million increase 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 $1.13 billion, resulting primarily from a $859.2 million increase in average total loans, a $111.2 million increase in average deposits in other financial institutions, a $31.9 million increase in total average debt securities, a $8.2 million increase in average restricted stock investments and other bank stock, and a $122.5 million increase in average Fed fund sold/resale agreements.

During the three months ended September 30, 2024, total interest expense increased by $9.0 million to $17.2 million, comprised primarily of a $8.4 million increase in interest on interest-bearing deposits due primarily to an increase in average interest-bearing liabilities resulting from the Merger, coupled with repricing deposits due to peer bank deposit competition.

Total cost of funds for the three months ended September 30, 2024 was 2.19%, an increase of 57 basis points from 1.62% for the same 2023 period. The increase was primarily driven by a 60 basis point increase in the cost of interest-bearing deposits, coupled with an increase in average interest-bearing and noninterest-bearing deposits, and an increase of 1.89% basis points in the cost of total borrowings, which was driven primarily by the amortization expense of $373 thousand, or 281 basis points from the purchase accounting discounts on acquired subordinated debts from the Merger. Average noninterest-bearing demand deposits increased $263.7 million to $1.03 billion and represented 33.6% of total average deposits for the three months ended September 30, 2024, compared with $768.1 million and 38.8%, respectively, for the same 2023 period; average interest-bearing deposits increased $824.9 million to $2.04 billion during the three months ended September 30, 2024. The total cost of deposits for the three months ended September 30, 2024 was 2.09%, up 53 basis points from 1.56% for the same 2023 period.

Average total borrowings increased $23.3 million to $52.9 million for the three months ended September 30, 2024 resulting from an increase of $34.4 million in average subordinated debt from the $50.8 million in fair value of subordinated debt acquired in the Merger, partially offset by a $11.1 million decrease in average FHLB advances. The average cost of total borrowings was 7.71% for the three months ended September 30, 2024, a 189 basis point increase from 5.82% for the same 2023 period.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Net interest income for the nine months ended September 30, 2024 was $78.4 million, compared to $71.6 million for the nine months ended September 30, 2023. The increase was primarily due to a $26.3 million increase in total interest income, offset by a $19.4 million increase in total interest expense. The increase in interest income and interest expense primarily relates to increases in total average interest-earning assets and total average interest-bearing liabilities from the Merger during the third quarter of 2024. During the nine months ended September 30, 2024, total loan interest income increased $21.2 million, of which $4.1 million was related

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to accretion income from the net purchase accounting discounts on acquired loans, total debt securities income increased $1.2 million, and interest and dividend income from other financial institutions and other interest-earning assets increased $3.9 million. The increase in interest income was primarily driven by the mix of interest-earning assets added by the Merger and the impact of the accretion and amortization of fair value marks. The increase in interest income was primarily due to higher average balances, due in part to the Merger, and a 52 basis point increase in yield on the interest-earning assets for the nine months ended September 30, 2024 compared to the same 2023 period. Average interest-earning assets increased $386.3 million, resulting from a $287.7 million increase in average total loans, a $14.2 million increase in total average debt securities, a $44.3 million increase in average deposits in other financial institutions, and a $36.5 million increase in average Fed funds sold/resale agreements.

During the nine months ended September 30, 2024, total interest expense increased by $19.4 million to $38.8 million, comprised primarily of a $18.2 million increase in interest on average interest-bearing deposits due to increases related to interest-bearing deposits from the Merger, increases in target Fed fund rates, coupled with the increase in other average interest-bearing liabilities balances between periods.

Net interest margin for the nine months ended September 30, 2024 was 4.12%, compared with 4.43% for the nine months ended September 30, 2023. The decrease was primarily related to an 89 basis point increase in the cost of funds, partially offset by a 52 basis point increase in the total interest-earning assets yield resulting from higher market interest rates and a change in our interest-earning asset mix. The yield on total earning assets during the nine months ended September 30, 2024 was 6.15%, compared with 5.63% for the nine months ended September 30, 2023. The yield on average total loans during the nine months ended September 30, 2024 was 6.40%, a 51 basis point increase from 5.89% for the nine months ended September 30, 2023. The cost on total interest-bearing liabilities during the nine months ended September 30, 2024 was 3.27%, a 106 basis point increase from 2.21% for the same 2023 period. Accretion income from the net purchase accounting discounts on acquired loans was $4.1 million and the amortization expense impact on interest expense was $278 thousand, which increased the net interest margin by 20 basis points for the nine months ended September 30, 2024. Accretion income from the net purchase accounting discounts on acquired loans increased the yield on average total loans by 25 basis points for the nine months ended September 30, 2024.

Total cost of funds for the nine months ended September 30, 2024 was 2.19%, an increase of 89 basis points from 1.30% for the nine months ended September 30, 2023. The increase was primarily driven by a 105 basis point increase in the cost of interest-bearing deposits, coupled with an increase in average interest-bearing deposits, and a decrease in average noninterest-bearing deposits. Average noninterest-bearing demand deposits decreased $44.5 million to $784.6 million and represented 33.9% of total average deposits for the nine months ended September 30, 2024, compared with $829.1 million and 42.2%, respectively, for the same 2023 period; average interest-bearing deposits increased $391.8 million to $1.53 billion during the nine months ended September 30, 2024. The total cost of deposits for the nine months ended September 30, 2024 was 2.09%, up 87 basis points from 1.22% for the same 2023 period.

Average total borrowings increased $21.4 million to $55.5 million for the nine months ended September 30, 2024, resulting primarily from a $9.8 million increase in average FHLB advances and an $11.6 million increase in subordinated debt from the $50.8 million in fair value of subordinated debt acquired in the Merger. The average cost of total borrowings was 6.40% for the nine months ended September 30, 2024, a 73 basis point increase from 5.67% for the same 2023 period.

Provision for Credit Losses

Three Months Ended September 30, 2024 Compared to Three Months Ended June 30, 2024

We recorded a provision for credit losses of $23.0 million for the three months ended September 30, 2024, compared to $2.9 million in the prior quarter. The increase was largely related to the Merger, and the resulting one-time initial provision for credit losses on acquired non-PCD loans of $18.5 million and unfunded

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loan commitments of $2.7 million. Total net charge-offs were $1.2 million, which included $967 thousand from a construction loan and $135 thousand from the consumer solar loan portfolio. The provision for credit losses for the three months ended September 30, 2024 included a $3.3 million provision for unfunded loan commitments, of which $2.7 million was related to the one-time initial provision for credit losses on acquired unfunded loan commitments, and $511 thousand related to the increase in unfunded loan commitments during the third quarter of 2024, coupled with higher loss rates and average funding rates used to estimate the ACL. Total unfunded loan commitments increased $662.4 million to $1.03 billion at September 30, 2024, including $574.3 million in unfunded loan commitments related to the Merger, compared to $371.5 million in unfunded loan commitments at June 30, 2024. The provision for credit losses for loans held for investment in the three months ended September 30, 2024 was $19.7 million, an increase of $16.7 million from $3.0 million in the prior quarter. The increase was driven primarily by the one-time initial provision for credit losses on acquired non-PCD loans and increases in special mention loans and loans held for investment. Additionally, qualitative factors, coupled with changes in the portfolio mix and in net charge-offs, and in the reasonable and supportable forecast, primarily related to the economic outlook for California which were partially offset by decreases in legacy substandard accruing loans, were factors related to the increase in the provision for credit losses. We continue to monitor macroeconomic variables related to increasing interest rates, inflation and the concerns of an economic downturn, and believe it is appropriately provisioned for the current environment.

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

We recorded a provision for credit losses of $23.0 million for the three months ended September 30, 2024, compared to a reversal of credit losses of $96 thousand for the same 2023 period. The increase was largely related to the Merger, and the resulting one-time initial provision for credit losses on acquired non-PCD loans of $18.5 million and unfunded commitments of $2.7 million.

The provision for credit losses for loans held for investment in the three months ended September 30, 2024 was $19.7 million an increase of $19.5 million from $202 thousand in the same 2023 period. The increase was driven primarily by the one-time initial provision for credit losses on acquired non-PCD loans and increases in special mention loans and loans held for investment. Additionally, qualitative factors, coupled with changes in the portfolio mix and in net charge-offs, and in the reasonable and supportable forecast, primarily related to the economic outlook for California which were partially offset by decreases in legacy substandard accruing loans, were factors related to the increase in the provision for credit losses. We continue to monitor macroeconomic variables related to increasing interest rates, inflation and the concerns of an economic downturn, and believe it is appropriately provisioned for the current environment.

The provision for credit losses for the three months ended September 30, 2023 included a $202 thousand provision for credit losses on loans held for investment, partially offset by a $298 thousand reversal of credit provision for unfunded loan commitments primarily due to the impact of lower unfunded loan commitments.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

We recorded a provision for credit losses of $25.5 million for the nine months ended September 30, 2024, compared to a provision for credit losses of $91 thousand for the same 2023 period. The increase was largely related to the Merger, and the resulting one-time initial provision for credit losses on acquired non-PCD loans of $18.5 million and unfunded commitments of $2.7 million. The provision for credit losses for the nine months ended September 30, 2024 included a $22.4 million provision for credit losses on loans held for investment largely due to the one-time initial provision for credit losses on acquired non-PCD loans, and a $3.1 million provision for credit losses on unfunded loan commitments primarily due to the initial provision for credit losses on unfunded commitments acquired in the Merger and the impact of higher unfunded loan commitments. The provision for credit losses for the nine months ended September 30, 2023 included a $600 thousand provision for credit losses on loans held for investment, partially offset by a $509 thousand reversal of credit provision for unfunded loan commitments.

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Noninterest Income

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

	Three months ended						Nine Months Ended
(dollars in thousands)	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Service charges and fees on deposit accounts	$	842	$	378	$	286	$	1,582	$	881
Interchange and ATM income	294		190		184		647		558
Gain (loss) on sale of loans	8		—		(54)		423		831
Income from bank-owned life insurance	398		266		238		925		693
Servicing and related income (expense) on loans, net	82		(5)		61		150		223
Gain on sale of debt securities	—		—		—		—		34
Loss on sale and disposal of fixed assets	—		(19)		—		(19)		—
Other charges and fees	(450)		359		100		48		261
Total noninterest income	$	1,174	$	1,169	$	815	$	3,756	$	3,481

Three Months Ended September 30, 2024 Compared to Three Months Ended June 30, 2024

Total noninterest income during the three months ended September 30, 2024 was $1.2 million, an increase of $5 thousand compared to total noninterest income of $1.2 million in the prior quarter. Noninterest income was impacted by the Merger through increases in service charges and fees on deposit accounts, bank owned life insurance income, and servicing and related income on loans; offset by a $613 thousand valuation allowance on other real estate owned (“OREO”) due to a decline in the fair value of the underlying property in the third quarter of 2024, which is included in other charges and fees in the accompanying consolidated statements of operations.

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Total noninterest income during the three months ended September 30, 2024 was $1.2 million, an increase of $359 thousand compared to total noninterest income of $815 thousand for the same 2023 period. The increase was due primarily to the impact of the Merger, which resulted in increases in service charges and fees on deposit accounts, bank owned life insurance income, and servicing and related income on loans; offset by the $613 thousand valuation allowance on OREO.

Gain on sale of loans during the three months ended September 30, 2024 was $8 thousand, compared to a loss of $54 thousand for the same 2023 period. There were no SBA 7(a) loan sales during the three months ended September 30, 2024 and 2023. The amounts in both periods related to a guaranty activity from the U.S. Small Business Administration for previous SBA 7A loan sales.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Total noninterest income during the nine months ended September 30, 2024 was $3.8 million, an increase of $275 thousand compared to total noninterest income of $3.5 million for the same period in the prior year. The increase was due primarily to increases in service charges and fees on deposit accounts, and bank owned life insurance income from the Merger, offset by lower servicing and related income on loans, and the $613 thousand valuation allowance on OREO and lower gains on sale of loans for the nine months ended September 30, 2024.

Gain on sale of loans was $423 thousand during the nine months ended September 30, 2024, compared to $831 thousand for the same 2023 period. The $408 thousand decrease was primarily due to fewer SBA 7(a) loan sales during the nine months ended September 30, 2024. During the nine months ended September 30, 2024, loan

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sales related to six SBA loans with a net carrying value of $6.3 million, resulting in a gain of $415 thousand, at an average premium of 6.56% and two non-SBA loans with a net carrying value of $455 thousand, resulting in no gain or loss. In the same 2023 period, we sold nine SBA 7(a) loans with a net carrying value of $10.9 million, resulting in a gain on sale of $874 thousand at an average premium of 8.01%, and one non-SBA loan with a net carrying value of $39 thousand, resulting in a gain of $11 thousand.

Noninterest Expense

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

	Three months ended						Nine Months Ended
(dollars in thousands)	September 30, 2024		June 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Salaries and employee benefits	$	15,385	$	8,776	$	9,736	$	33,771	$	29,651
Occupancy and equipment	2,031		1,445		1,579		4,928		4,553
Data processing and communications	1,536		1,186		1,144		3,872		3,376
Legal, audit and professional	669		557		598		1,742		2,050
Regulatory assessments	544		347		369		1,278		1,188
Director and shareholder expenses	520		229		215		952		642
Merger and related expenses	14,605		491		—		15,645		—
Core deposit intangible amortization	687		65		128		817		309
Other real estate owned expenses	3		4,935		—		5,026		—
Other expenses	1,700		974		1,012		3,635		2,638
Total noninterest expense	$	37,680	$	19,005	$	14,781	$	71,666	$	44,407

Three Months Ended September 30, 2024 Compared to Three Months Ended June 30, 2024

Total noninterest expense during the three months ended September 30, 2024 was $37.7 million, an increase of $18.7 million compared with total noninterest expense of $19.0 million in the prior quarter. The increase was largely due to increases related to the Merger, including an increase of $14.1 million in merger and related expenses, partially offset by a $4.9 million decrease in OREO expenses.

Salaries and employee benefits increased $6.6 million during the quarter to $15.4 million. The increase in salaries and employee benefits was primarily due to the growth in headcount from CALB employees retained subsequent to the Merger. The average full-time equivalent (“FTE”) employees for three months ended September 30, 2024 was 256 compared to 191 FTE employees for the prior quarter. The three months ended September 30, 2024 salaries and employee benefits also included a $1.3 million one-time stock-based compensation costs associated with non-continuing CALB executives and employees.

Occupancy and equipment expenses increased $586 thousand during the quarter to $2.0 million. The increase in occupancy and equipment expenses was primarily driven by the additional leased offices related expenses acquired from the Merger.

Merger and related expenses were $14.6 million during the three months ended September 30, 2024 and related to the recently completed merger with CALB, and primarily included severance and change in control costs of $6.2 million, financial advisory fees of $2.3 million, information technology expenses of $4.5 million, insurance costs of $919 thousand and legal and other professional costs of $305 thousand. There were $491 thousand in merger and related expenses in the prior quarter.

Core deposit intangible amortization increased $622 thousand during the three months ended September 30, 2024. The increase in core deposit intangible amortization was primarily driven by the additional amortization from the $22.7 million core deposit intangible acquired in the Merger.

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OREO expenses decreased $4.9 million during the three months ended September 30, 2024. The Company sold OREO and recognized a $4.8 million loss in the second quarter of 2024. There was no comparable transaction in the third quarter of 2024.

Our efficiency ratio (non-GAAP) for the three months ended September 30, 2024 was 98.9%, compared to 85.7% for the three months ended June 30, 2024. Excluding the merger and related expenses of $14.6 million, the efficiency ratio (non-GAAP) for the three months ended September 30, 2024 would have been 60.5%.

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Total noninterest expense during the three months ended September 30, 2024 was $37.7 million, an increase of $22.9 million compared with total noninterest expense of $14.8 million for the same 2023 period. The increase was primarily due to higher costs as a result of the Merger, including increases in merger and related expenses and core deposit amortization.

Salaries and employee benefits were $15.4 million during the three months ended September 30, 2024, compared to $9.7 million for the same 2023 period. The $5.6 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 September 30, 2024 was 256 compared to 207 FTE employees for the same 2023 period. The three months ended September 30, 2024 salaries and employee benefits also included a $1.3 million one-time stock-based compensation costs associated with non-continuing CALB executives and employees.

Data processing and communications were $1.5 million during the three months ended September 30, 2024, compared to $1.2 million for the same 2023 period. The $392 thousand increase in data processing and communications was primarily related to increases in transaction volume from both organic growth and the Merger.

Merger and related expenses were $14.6 million during the three months ended September 30, 2024 and related to the recently completed merger with CALB, and primarily included severance and change in control costs of $6.2 million, financial advisory fees of $2.6 million, information technology expenses of $4.7 million, insurance costs of $919 thousand, and legal and other professional costs of $768 thousand. There were no comparable expenses for the same 2023 period.

Core deposit intangible amortization increased $559 thousand during the three months ended September 30, 2024. The increase in core deposit intangible amortization was primarily driven by the additional amortization from the $22.7 million core deposit intangible acquired in the Merger.

Other expenses were $1.7 million during the three months ended September 30, 2024, compared to $1.0 million for the same 2023 period. The $688 thousand increase was due primarily to the increases in loan related expenses, customer service related expenses, travel expenses and insurance expenses as a result of completing the Merger.

Our efficiency ratio for the three months ended September 30, 2024 was 98.9%, compared to 61.4% for the three months ended September 30, 2023. Excluding the merger and related expenses of $14.6 million, the efficiency ratio (non-GAAP) for the three months ended September 30, 2024 would have been 60.5%.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Total noninterest expense during the nine months ended September 30, 2024 was $71.7 million, an increase of $27.3 million compared with total noninterest expense of $44.4 million for the same 2023 period. The increase was largely due to increases for the Merger, including increases in merger and related expenses, salaries and employee benefits, other real estate owned expenses, core deposit intangible amortization, and other expenses.

Salaries and employee benefits were $33.8 million during the nine months ended September 30, 2024, compared to $29.7 million during the prior year. The $4.1 million increase in salaries and benefits was driven primarily by higher headcount as a result of the Merger. The average FTE employees for the nine months ended September 30, 2024 was 236 compared to 207 FTE employees for the same 2023 period. The three months ended

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September 30, 2024 salaries and employee benefits also included the aforementioned one-time stock-based compensation costs associated with non-continuing CALB executives and employees.

During the nine months ended September 30, 2024, the Company sold OREO and recognized a $4.8 million loss. There was no comparable transaction in the same 2023 period.

Merger and related expenses were $15.6 million during the nine months ended September 30, 2024 and primarily included severance and change in control costs of $6.2 million, financial advisory fees of $5.1 million, information technology expenses of $4.5 million, and legal and other professional costs of $4.5 million. There were no comparable expenses for the same 2023 period.

Core deposit intangible amortization increased $508 thousand during the nine months ended September 30, 2024. The increase in core deposit intangible amortization was primarily driven by the additional amortization from the $22.7 million core deposit intangible acquired in the Merger.

Other expenses were $3.6 million during the nine months ended September 30, 2024, compared to $2.6 million for the same 2023 period. The $997 thousand 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 nine months ended September 30, 2024 and 2023 was 87.2% and 59.2%, respectively. Excluding the loss on sale of OREO, the efficiency ratio (non-GAAP) for the nine months ended September 30, 2024 would have been 81.4%. Excluding the merger and related expenses of $15.6 million, the efficiency ratio (non-GAAP) for the nine months ended September 30, 2024 would have been 68.2%.

Income Taxes

Three Months Ended September 30, 2024 Compared to Three Months Ended June 30, 2024

Income tax benefit during the three months ended September 30, 2024 was $6.1 million, compared to income tax expense of $88 thousand in the prior quarter. The effective rate was 26.9% during the three months ended September 30, 2024, compared to 31.7% for the prior quarter. 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.

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Income tax benefit for the three months ended September 30, 2024 was $6.1 million, compared to income tax expense of $2.8 million for the same 2023 period. The effective rate was 26.9% during the three months ended September 30, 2024, compared to 30.2% for the same 2023 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, partially offset by the impact of excess executive compensation.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Income tax benefit for the nine months ended September 30, 2024 was $3.7 million, compared to income tax expense of $9.1 million for the same 2023 period. The effective rate was 24.4% during the nine months ended September 30, 2024, compared to 29.7% for the same 2023 period. The decrease in 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, partially offset by the impact of excess executive compensation.

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Financial Condition

Summary

Total assets at September 30, 2024 were $4.36 billion, an increase of $2.00 billion from $2.36 billion at December 31, 2023. The increase in total assets was primarily related to the $1.86 billion in fair value of total assets acquired in the Merger, which included increases of $1.36 billion in loans held for investment, $42.6 million in debt securities, and $336.3 million in cash and cash equivalents. In addition, the Company recorded preliminary goodwill of $74.7 million related to the Merger in the third quarter of 2024.

Total liabilities were $3.86 billion at September 30, 2024, an increase of $1.79 billion from $2.07 billion at December 31, 2023. The increase in total liabilities was driven by the $1.72 billion in fair value of total liabilities acquired in the Merger, which included $1.64 billion of deposits and $50.8 million of borrowings.

Shareholders’ equity was $498.1 million at September 30, 2024, an increase of $209.9 million from $288.2 million at December 31, 2023. The increase in shareholders’ equity was primarily driven by $214.4 million shares issued in connection with closing the Merger, $4.7 million related to share-based compensation activity, a $1.6 million decrease in net of tax unrealized losses on available-for-sale debt securities during the period, partially offset by $11.3 million of net loss during the nine months ended September 30, 2024.

Debt Securities

Our debt securities portfolio consists of both held-to-maturity and available-for-sale securities aggregating $212.7 million and $183.7 million at September 30, 2024 and December 31, 2023, respectively. The $29.0 million increase in debt securities was primarily related to the $42.6 million in debt securities acquired in the Merger, partially offset by paydowns, sales, maturities and calls. Our held-to-maturity debt securities and available-for-sale debt securities represented 1.22% and 3.65%, respectively, of total assets at September 30, 2024, compared to 2.27% and 5.51%, respectively, at December 31, 2023.

During the three and nine months ended September 30, 2024, there were no transfers between held-to-maturity and available-for-sale debt securities.

At September 30, 2024 and December 31, 2023, debt securities with an amortized cost of $56.3 million and $53.6 million, respectively, were pledged to the Federal Reserve as collateral for a secured line of credit of $49.7 million and $47.3 million, respectively.

Held-to-Maturity Debt Securities

The amortized cost of held-to-maturity debt securities and their approximate fair values at September 30, 2024 and December 31, 2023 were as follows:

(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2024
Taxable municipals	$	553	$	—	$	(70)	$	483
Tax exempt bank-qualified municipals	52,811		—		(3,807)		49,004
	$	53,364	$	—	$	(3,877)	$	49,487
December 31, 2023
Taxable municipals	$	551	$	—	$	(73)	$	478
Tax exempt bank-qualified municipals	53,065		25		(3,136)		49,954
	$	53,616	$	25	$	(3,209)	$	50,432

At September 30, 2024, we had 61 held-to-maturity debt securities in a gross unrealized loss position with an amortized cost basis of $53.4 million with pre-tax unrealized losses of $3.9 million, compared to 58 held-to-

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maturity debt securities with an amortized cost basis of $51.5 million with pre-tax unrealized losses of $3.2 million at December 31, 2023. The effective duration of the held-to-maturity debt securities was 6.22 years and 5.58 years at September 30, 2024 and December 31, 2023, 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 September 30, 2024 and December 31, 2023, the total fair value of taxable municipal and tax exempt bank-qualified municipal securities were $483 thousand and $478 thousand, respectively, and $49.0 million and $50.0 million, respectively. At September 30, 2024 and December 31, 2023, the total held-to-maturity debt securities rated AA and above was $46.2 million and $47.0 million, respectively, and rated AA- was $3.3 million and $3.4 million, respectively. Accordingly, we applied a zero credit loss assumption for these securities and no allowance for credit loss was recorded as of September 30, 2024 and December 31, 2023.

Available-for-Sale Debt Securities

The amortized cost of available-for-sale debt securities and their approximate fair values at September 30, 2024 and December 31, 2023 were as follows:

(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2024
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	93,445	$	1,284	$	(2,470)	$	92,259
SBA securities	5,754		12		(82)		5,684
U.S. Treasury	17,552		34		(265)		17,321
U.S. Agency	2,000		—		(257)		1,743
Collateralized mortgage obligations	42,796		180		(2,403)		40,573
Taxable municipal	1,007		1		(85)		923
Tax exempt bank-qualified municipals	830		—		(3)		827
	$	163,384	$	1,511	$	(5,565)	$	159,330
December 31, 2023
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	77,031	$	631	$	(3,228)	$	74,434
SBA securities	5,886		5		(109)		5,782
U.S. Treasury	2,760		—		(343)		2,417
U.S. Agency	2,000		—		(330)		1,670
Collateralized mortgage obligations	46,330		173		(3,002)		43,501
Taxable municipals	1,528		—		(107)		1,421
Tax exempt bank-qualified municipals	831		—		(21)		810
	$	136,366	$	809	$	(7,140)	$	130,035

The estimated fair value of available-for-sale debt securities was $159.3 million at September 30, 2024, an increase of $29.3 million, from $130.0 million at December 31, 2023. The increase was primarily due to $42.6 million in debt securities acquired in the Merger, purchases of $2.0 million, and fair value market adjustments of

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$2.3 million, partially offset by sales of $3.4 million, maturities of $5.5 million, and principal reductions and amortization of discounts and premiums aggregating to $8.7 million.

At September 30, 2024, we had 70 available-for-sale debt securities in a gross unrealized loss position with an amortized cost basis and fair value of $77.8 million and $72.2 million, respectively, with pre-tax unrealized losses of $5.6 million, compared to 76 available-for-sale debt securities with an amortized cost basis and fair value of $100.7 million and $93.5 million, respectively with pre-tax unrealized holding losses of $7.1 million at December 31, 2023. 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 4.14 years and 5.13 years at September 30, 2024 and December 31, 2023, 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 increase, bond prices tend to fall and, consequently, the fair value of our securities may also decrease. Increases in longer-term market interest rates during 2023 and into 2024 have resulted in higher net unrealized losses in our debt securities. There may be further net unrealized losses on our debt securities classified as available–for-sale, which would negatively affect our total and tangible shareholders’ equity.

We determined that the increase in unrealized losses related to each available-for-sale debt security at September 30, 2024 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 September 30, 2024, the total fair value of taxable municipal and tax exempt bank-qualified municipal securities was $923 thousand and $827 thousand, respectively. All of these available-for-sale municipal debt securities rated AA and above totaled $1.8 million. At December 31, 2023, the total fair value of taxable municipal and tax exempt bank-qualified municipal securities was $1.4 million and $810 thousand, respectively. These available-for-sale debt securities rated AA and above totaled $1.4 million and rated AA+ totaled $810 thousand at December 31, 2023. Accordingly, we applied a zero credit loss assumption for these securities and no ACL was recorded as of September 30, 2024 and December 31, 2023.

The amortized cost, estimated fair value and weighted average yield of held-to-maturity and available-for-sale debt securities as of September 30, 2024 are presented below by contractual maturities. 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		Weighted Average Yield (1)		Amortized Cost		Estimated Fair Value		Weighted Average  Yield (1)
Due in one year or less	$	—	$	—	—	%	$	27,641	$	27,668	7.69	%
Due after one year through five years	—		—		—	%	10,246		9,367		2.17	%
Due after five years through ten years	22,282		20,911		2.22	%	17,670		16,579		3.42	%
Due after ten years	31,082		28,576		2.32	%	107,827		105,716		4.12	%
	$	53,364	$	49,487	2.28	%	$	163,384	$	159,330	4.53	%

(1)Weighted average yields are computed based on the amortized cost of the individual underlying securities.

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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 September 30, 2024, 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
	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	—		—	%	—		—	%	21,729		2.22	%	31,082		2.32	%	52,811		2.28	%
Total	$	—	—	%	$	—	—	%	$	22,282	2.22	%	$	31,082	2.32	%	$	53,364	2.28	%

The following table presents the fair value and weighted average yields using amortized cost of available-for-sale debt securities as of September 30, 2024, 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	$	11,976	11.36	%	$	5,957	2.15	%	$	8,130	2.90	%	$	66,196	4.21	%	$	92,259	4.89	%
SBA securities	—		—	%	453		6.23	%	4,272		5.53	%	959		5.27	%	5,684		5.55	%
U.S. Treasury	14,865		5.02	%	2,456		0.94	%	—		—	%	—		—	%	17,321		4.39	%
U.S. Agency	—		—	%	—		—	%	1,743		2.05	%	—		—	%	1,743		2.05	%
Collateralized mortgage obligations	—		—	%	—		—	%	2,012		2.98	%	38,561		3.93	%	40,573		3.89	%
Taxable municipals	—		—	%	501		5.24	%	422		—	%	—		1.72	%	923		3.47	%
Tax exempt bank-qualified municipals	827		2.50	%	—		—	%	—		—	%	—		—	%	827		2.50	%
Total	$	27,668	7.69	%	$	9,367	2.17	%	$	16,579	3.42	%	$	105,716	4.12	%	$	159,330	4.53	%

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Loans Held for Sale

At September 30, 2024, loans held for sale totaled $33.7 million, consisting of $7.8 million SBA 7(a) loans and $25.9 million C&I loans transferred from loans held for investment, compared to $7.3 million loans held for sale, consisting of only SBA 7(a) loans, at December 31, 2023.

Loans Held for Investment

The composition of our loans held for investment at September 30, 2024 and December 31, 2023 was as follows:

(dollars in thousands)	September 30, 2024		% of Total Loans		December 31, 2023		% of Total Loans
Construction and land development	$	247,934	7.7	%	$	243,521	12.4	%
Real estate - other:
1-4 family residential	152,540		4.8	%	143,903		7.4	%
Multifamily residential	252,134		7.9	%	221,247		11.3	%
Commercial real estate and other	1,755,908		54.9	%	1,024,243		52.3	%
Commercial and industrial	765,472		23.9	%	320,142		16.4	%
Consumer	25,726		0.8	%	4,386		0.2	%
Loans(1)	3,199,714		100.0	%	1,957,442		100.0	%
Allowance for loan losses	(53,552)				(22,569)
Net loans	$	3,146,162			$	1,934,873

(1) Loans held for investment includes net unearned fees of $1.6 million and $2.3 million and net unearned discounts of $66.0 million and $1.4 million at September 30, 2024 and December 31, 2023, respectively. We recognized $4.2 million and $4.3 million, respectively, in interest accretion for acquired loans for the three and nine months ended September 30, 2024.

Total loans held for investment were $3.20 billion, or 73.3% of total assets, at September 30, 2024, an increase of $1.24 billion from $1.96 billion, or 82.9% of total assets, at December 31, 2023. The change during the nine months ended September 30, 2024, was due primarily to the Merger, which increased loans by $1.36 billion. Additionally, there were originations of $142.2 million and net advances of $46.4 million, offset by transfer to OREO of $17.7 million, partial loan charge-offs of $2.6 million and payoffs of $239.8 million during the nine months ended September 30, 2024.

Loans secured by real estate, defined as construction and land development loans and real estate - other loans, increased by $775.6 million to $2.41 billion at September 30, 2024 primarily due to the Merger. The increase in loans secured by real estate was primarily driven by a $4.4 million increase in construction and land development loans, and a $30.9 million increase in multifamily residential loans, a $8.6 million increase in 1-4 family residential loans, and $731.7 million increase in commercial real estate and other loans.

Commercial and industrial loans were $765.5 million at September 30, 2024, an increase of $445.3 million from $320.1 million at December 31, 2023. The increase in commercial and industrial loans during the nine months ended September 30, 2024 was primarily attributable to acquired loans of $495.4 million and originations of $52.2 million, partially offset by net paydowns of $15.7 million and payoffs of $86.6 million.

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Loan Maturities

The following table sets forth the amounts of gross loans, by maturity, at September 30, 2024:

(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	$	222,146	$	23,259	$	2,529	$	—	$	247,934
Real estate - other:
1-4 family residential	23,178		39,388		60,325		29,649		152,540
Multifamily residential	34,392		102,054		96,129		19,559		252,134
Commercial real estate and other	131,303		753,388		790,216		81,001		1,755,908
Commercial and industrial	279,180		362,597		123,692		3		765,472
Consumer	1,007		1,462		—		23,257		25,726
	$	691,206	$	1,282,148	$	1,072,891	$	153,469	$	3,199,714

The following table sets forth the amounts of gross loans, due after one year, presented by fixed or floating interest rates at September 30, 2024:

(dollars in thousands)	Fixed Rate		Floating Rate		Total
Construction and land development	$	2,766	$	23,022	$	25,788
Real estate - other:
1-4 family residential	31,421		97,941		129,362
Multifamily residential	125,790		91,952		217,742
Commercial real estate and other	766,695		857,910		1,624,605
Commercial and industrial	187,500		298,792		486,292
Consumer	24,497		222		24,719
	$	1,138,669	$	1,369,839	$	2,508,508

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 54.3% of our total loan portfolio, including loans held for sale, is comprised of commercial real estate loans as of September 30, 2024 as presented below:

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(dollars in thousands)	September 30, 2024		Percentage of CRE Portfolio		Average Loan Size		Weighted Average LTV 2
Commercial real estate loans (1):
Industrial	$	515,700	29.4	%	$	1,855	49	%
Office	255,700		14.6	%	1,788		50	%
Retail	296,600		16.9	%	1,707		46	%
Hotel	134,700		7.7	%	9,624		46	%
Special purpose	116,000		6.6	%	2,071		38	%
Self storage	90,800		5.2	%	6,489		45	%
Other	190,800		10.9	%	2,097		47	%
Medical/dental office	115,100		6.6	%	1,046		52	%
Restaurant	39,800		2.3	%	1,245		45	%
Total	$	1,755,200	100.0	%	$	1,959	49	%

(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 September 30, 2024, and collateral value at origination or renewal.

The following table presents the percentages of our commercial real estate loans broken out by occupancy as of September 30, 2024:

	September 30, 2024
	Owner Occupied				Non-owner Occupied
(dollars in thousands)	Balance		% of Total		Balance		% of Total
Commercial real estate loans (1):
Industrial	$	292,300	47.3	%	$	223,400	19.6	%
Special purpose	68,500		11.1	%	47,500		4.2	%
Office	63,800		10.3	%	191,900		16.9	%
Retail	33,900		5.5	%	262,700		23.1	%
Medical/dental office	67,000		10.8	%	48,100		4.2	%
Other	82,600		13.4	%	108,200		9.6	%
Restaurant	9,700		1.6	%	30,100		2.6	%
Self storage	—		—	%	90,800		8.0	%
Hotel	—		—	%	134,700		11.8	%
Total	$	617,800	100.0	%	$	1,137,400	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 September 30, 2024:

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(dollars in thousands)	September 30, 2024		Weighted Average LTV 1
Office loans:
Up to $500	$	26,700	45	%
More than $500 through $2,000	102,300		49	%
More than $2,000 through $5,000	82,200		55	%
More than $5,000 through $10,000	61,500		55	%
More than $10,000 through $20,000	73,200		44	%
Greater than $20,000	24,900		55	%
Total	$	370,800	50	%

(1)Weighted average LTV is based on current loan balance as of September 30, 2024, and collateral value at origination or renewal.

Delinquent Loans

A summary of past due loans, loans still accruing and nonaccrual loans as of September 30, 2024 and December 31, 2023 follows:

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Nonaccrual
September 30, 2024
Construction and land development	$	—	$	—	$	—	$	—	$	9,659
Real estate - other:
1-4 family residential	—		—		—		—		2,895
Multifamily residential	—		—		—		—		—
Commercial real estate and other	18,175		—		—		18,175		9,105
Commercial and industrial	667		—		—		667		4,002
Consumer	96		172		37		305		—
	$	18,938	$	172	$	37	$	19,147	$	25,661

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Nonaccrual
December 31, 2023
Construction and land development	$	—	$	—	$	—	$	—	$	—
Real estate - other:
1-4 family residential	—		—		—		—		—
Multifamily residential	—		—		—		—		13,004
Commercial real estate and other	—		—		—		—		—
Commercial and industrial	19		—		—		19		—
Consumer	—		—		—		—		—
	$	19	$	—	$	—	$	19	$	13,004

There were $19.1 million of past due loans still accruing at September 30, 2024, representing 0.60% of total loans held for investment, compared to 0.00% at December 31, 2023. The increase in delinquent loans during the nine months ended September 30, 2024 was primarily due to increases in CRE non owner-occupied, C&I and consumer solar loans.

Total nonaccrual loans increased during the nine months ended September 30, 2024 to $25.7 million, which included $13.0 million of nonaccrual PCD loans. The decreases in the non-acquired loan portfolio were

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primarily due to the downgrades of a construction loan and a 1-4 family residential loan from one relationship and a C&I loan that totaled $12.7 million, partially offset by the transfer of a nonaccrual multifamily loan collateralized by three multifamily properties in Santa Monica, California with a net carrying value of $13.0 million to OREO that was subsequently sold with a $4.8 million loss in the second quarter of 2024. The loans downgraded to nonaccrual during the nine months ended September 30, 2024 were net of total charge-offs of $2.6 million, which included partial charge-offs of $1.5 million for a substandard nonaccrual multifamily loan, $967 thousand for a substandard nonaccrual construction loan, and $134 thousand for consumer solar loans that were delinquent 120 or more days. The multifamily loan was charged-off during the second quarter of 2024 and was transferred to OREO with a net carrying value after charge-off of $4.7 million in July of 2024. The construction loan was collateralized by a stalled construction project in Los Angeles, California. Based on the Company's internal analysis, which included the review of an updated appraisal, the estimated net collateral value was $9.7 million, which was $967 thousand lower than the subject loan's net carrying value resulting in a partial charge-off in the third quarter of 2024.

The following table presents the risk categories for total loans by class of loans as of September 30, 2024 and December 31, 2023:

(dollars in thousands)	Pass		Special Mention		Substandard		Total
September 30, 2024
Construction and land development	$	232,302	$	—	$	15,632	$	247,934
Real estate - other:
1-4 family residential	148,798		847		2,895		152,540
Multifamily residential	252,134		—		—		252,134
Commercial real estate and other	1,694,401		44,032		17,475		1,755,908
Commercial and industrial	648,942		48,569		67,961		765,472
Consumer	25,391		—		335		25,726
	$	3,001,968	$	93,448	$	104,298	$	3,199,714

(dollars in thousands)	Pass		Special Mention		Substandard		Total
December 31, 2023
Construction and land development	$	243,429	$	—	$	92	$	243,521
Real estate - other:
1-4 family residential	143,903		—		—		143,903
Multifamily residential	208,243		—		13,004		221,247
Commercial real estate and other	1,020,076		2,996		1,171		1,024,243
Commercial and industrial	314,907		—		5,235		320,142
Consumer	4,386		—		—		4,386
	$	1,934,944	$	2,996	$	19,502	$	1,957,442

Special mention loans increased by $90.5 million during the nine months ended September 30, 2024 to $93.4 million at September 30, 2024. The increases included $41.0 million of non-PCD loans and $10.1 million of PCD loans acquired in the Merger. The increases in the non-acquired portfolio were due mostly to an $11.8 million increase in special mention commercial real estate loans, a $26.7 million increase in special mention commercial and industrial loans and an $847 thousand increase in special mention 1-4 family residential loans.

Substandard loans increased by $84.8 million during the nine months ended September 30, 2024 to $104.3 million. The increases included $73.3 million of accruing PCD loans and $13.0 million of nonaccrual PCD loans acquired in the Merger. The decreases in the non-acquired portfolio was due mostly to the aforementioned nonaccrual multifamily loan of $13.0 million transferred to OREO during the first quarter of 2024 that was sold in the second quarter of 2024. Two CRE loans with a combined net carrying value of $1.2 million were updated to

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pass risk rating, and the decrease of $706 thousand in commercial and industrial loans was due primarily to paydowns and payoffs, partially offset by increases in construction and land loans of $9.7 million and 1-4 family residential loans of $2.9 million due to downgrades during the nine months ended September 30, 2024.

There were no loans classified as doubtful or loss loans at September 30, 2024 and December 31, 2023.

Loan Modifications

The were no modifications or refinancings (including those with borrowers that are experiencing financial difficulty) of loans representing a new non-acquired loan or a continuation of an existing non-acquired loan during the three and nine months ended September 30, 2024, and 2023.

At September 30, 2024, all loan modifications with borrowers that are experiencing financial difficulty were loans that were acquired in the Merger and totaled $13.1 million, of which $397 thousand were past due. Refer to Note 4 - Loans and Allowances for Credit Losses - Modified Loans to Borrowers Experiencing Financial Difficulty 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 September 30, 2024 and December 31, 2023:

(dollars in thousands)	September 30, 2024			December 31, 2023
Nonaccrual loans:
Construction and land development	$	9,659		$	—
Real estate - other:
1-4 family residential	2,895			—
Multifamily residential	—			13,004
Commercial real estate and other	9,105			—
Commercial and industrial	4,002			—
Consumer	—			—
Total nonaccrual loans	25,661			13,004
Loans past due over 90 days or more and still on accrual	37			—
Total nonperforming loans	25,698			13,004
Other real estate owned	4,083			—
Total nonperforming assets	$	29,781		$	13,004
Allowance for loan losses to total loans	1.67		%	1.15		%
Nonaccrual loans to total loans	0.80		%	0.66		%
Allowance for loan losses to nonaccrual loans	209		%	174		%
Nonperforming assets to total assets	0.68		%	0.55		%

At September 30, 2024, nonaccrual and nonperforming loans were $25.7 million, compared to $13.0 million at December 31, 2023. The increase from December 31, 2023 was due primarily to the downgrades of a construction loan and a 1-4 family residential loan from one relationship and a C&I loan that totaled $12.7 million and $13.0 million of nonaccrual PCD loans acquired in the Merger, offset by the aforementioned

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nonaccrual multifamily loan of $13.0 million that was transferred to OREO during the first quarter of 2024, and sold with a $4.8 million pre-tax loss in the second quarter of 2024. and the addition of the aforementioned multifamily loan with a carrying value of $4.7 million, net of a $1.5 million partial charge-off during the nine months ended September 30, 2024. We foreclosed on the nonaccrual multifamily loan with a carrying value of $4.7 million in the second quarter of 2024. The loan was transferred to OREO in July of 2024 and we recorded a $614 thousand valuation allowance on this OREO due to a decline in the fair value of the underlying property in the third quarter of 2024.

Allowance for Credit Losses

We adopted CECL effective January 1, 2023 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. The transition adjustment of the CECL adoption included an increase in the allowance for credit losses of $5.5 million, which included $439 thousand to establish a reserve for unfunded commitments and a $3.9 million decrease to retained earnings to reflect the cumulative effect of adoption of CECL, with the $1.6 million tax impact portion being recorded as part of the deferred tax asset on our Consolidated Balance Sheet.

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-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 $14.2 million and $6.4 million at September 30, 2024 and December 31, 2023, 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 September 30, 2024						Three Months Ended September 30, 2023
(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	$	23,788	$	819	$	24,607	$	22,502	$	1,538	$	24,040
Initial allowance for acquired PCD loans	11,216		—		11,216		—		—		—
Provision for (reversal of) credit losses (1)(2)	19,711		3,252		22,963		202		(298)		(96)
Charge-offs	(1,163)		—		(1,163)		—		—		—
Recoveries	—		—		—		1		—		1
Net (charge-offs) recoveries	(1,163)		—		(1,163)		1		—		1
Balance, end of period	$	53,552	$	4,071	$	57,623	$	22,705	$	1,240	$	23,945

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(1)Includes an initial provision for credit losses for non-PCD loans acquired in the Merger of $18.5 million for the three and nine months ended September 30, 2024. There was no similar activity in the comparable 2023 period.

(2)Includes an initial provision for credit losses for unfunded commitments acquired in the Merger of $2.7 million for the three and nine months ended September 30, 2024. There was no similar activity in the comparable 2023 period.

	Nine Months Ended September 30, 2024						Nine Months Ended September 30, 2023
(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	$	22,569	$	933	$	23,502	$	17,099	$	1,310	$	18,409
Adoption of ASU No. 2016-13 (1)	—		—		—		5,027		439		5,466
Initial allowance for acquired PCD loans	11,216		—		11,216		—		—		—
Provision for (reversal of) credit losses (2)(3)	22,387		3,138		25,525		600		(509)		91
Charge-offs	(2,620)		—		(2,620)		(36)		—		(36)
Recoveries	—		—		—		15		—		15
Net (charge-offs) recoveries	(2,620)		—		(2,620)		(21)		—		(21)
Balance, end of period	$	53,552	$	4,071	$	57,623	$	22,705	$	1,240	$	23,945

(1)Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2023. As a result of adopting ASU 2016-13, our methodology to compute our ACL is based on a CECL methodology, rather than the previously applied incurred loss methodology.

(2)Includes an initial provision for credit losses for non-PCD loans acquired in the Merger of $18.5 million for the nine months ended September 30, 2024. There was no similar activity in the comparable 2023 period.

(3)Includes an initial provision for credit losses for unfunded commitments acquired in the Merger of $2.7 million for the nine months ended September 30, 2024. There was no similar activity in the comparable 2023 period.

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:

	September 30, 2024				June 30, 2024				December 31, 2023
(dollars in thousands)	Amount		Percent of loans in each category to total loans		Amount		Percent of loans in each category to total loans		Amount		Percent of loans in each category to total loans
Construction and land development	$	2,084	7.7	%	$	2,942	10.9	%	$	2,032	12.4	%
Real estate - other:
1-4 family residential	1,045		4.8	%	1,472		8.4	%	1,195		7.4	%
Multifamily residential	1,636		7.9	%	1,239		10.0	%	1,449		11.3	%
Commercial real estate and other	26,779		54.9	%	14,337		55.6	%	13,636		52.3	%
Commercial and industrial	20,858		23.9	%	3,795		15.1	%	4,242		16.4	%
Consumer	1,150		0.8	%	3		—	%	15		0.2	%
	$	53,552	100.0	%	$	23,788	100.0	%	$	22,569	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 September 30, 2024, we used the probability-weighted two-scenario forecasts, 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 50 basis points at its September meeting, 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 June 30, 2024 and December 31, 2023.

We used economic forecasts released by Moody’s Analytics in the fourth week of September to update its ACL calculations for September 30, 2024. 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 $53.6 million at September 30, 2024, compared to $23.8 million at June 30, 2024. The $29.8 million increase in the ALL during the three months ended September 30, 2024 was driven by a number of factors, including an increase of $11.2 million related to the initial allowance for credit losses on acquired PCD loans, and $18.5 million related to the initial provision for credit losses on acquired non-PCD loans, which were partially offset by net charge-offs of $1.2 million from the individually evaluated loans downgraded during the third quarter. Other factors that increased the ALL included changes in qualitative risk factors primarily related to the Merger that increased the ALL by $1.2 million, partially offset by a decrease in non-acquired substandard accruing loans of $1.3 million. Changes in the loans held for investment volume and mix decreased the ALL by $204 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 $151 thousand.

At September 30, 2024, our ratio of ALL to total loans held for investment was 1.67%, an increase from 1.27% at June 30, 2024.

The ALL was $53.6 million at September 30, 2024, compared to $22.6 million at December 31, 2023. The $31.0 million change in the ALL during the nine months ended September 30, 2024 was driven by a number of factors, including an increase of $11.2 million related to the initial allowance for credit losses on acquired PCD loans, $18.5 million related to the initial provision for credit losses on acquired non-PCD loans, partially offset by net charge-offs of $2.6 million. Changes in Moody’s economic forecasts for California at September 30, 2024 as compared to December 31, 2023 were mixed. California unemployment rate and California GSP forecasts were revised downward. California GSP for the construction section and Home Price Index forecasts were both revised upward to reflect the recent price trends. Our updated historical prepayment and curtailment rates analysis reflected a decrease from December 31, 2023 due primarily to lower payoffs and paydowns. Changes in the reasonable and supportable forecast, primarily related to the economic outlook for California, coupled with changes in scenario weightings and historical prepayment and curtailment rates analysis increased the ALL by $259 thousand. Changes in the loans held for investment volume and mix decreased the ALL by $825 thousand. Changes in qualitative risk factors primarily related to the merger increased the ALL by $992 thousand.

At September 30, 2024, our ratio of ALL to total loans held for investment was 1.67%, an increase from 1.15% at December 31, 2023.

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 $7.6 million, or an additional 24 basis points to the ALL to total loans held for investment

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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 September 30, 2024.

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 September 30, 2024						Three Months Ended September 30, 2023
(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	$	(967)	$	226,986	(0.57)	%	$	—	$	217,794	—	%
Real estate - other:
1-4 family residential	—		151,257		—	%	—		140,632		—	%
Multifamily residential	—		191,503		—	%	—		229,685		—	%
Commercial real estate and other	—		1,549,472		—	%	—		1,019,729		—	%
Commercial and industrial	(61)		647,139		(0.01)	%	1		313,803		—	%
Consumer	(135)		17,224		(1.05)	%	—		2,741		—	%
	$	(1,163)	$	2,783,581	(0.06)	%	$	1	$	1,924,384	—	%

	Nine Months Ended September 30, 2024						Nine Months Ended September 30, 2023
(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	$	(967)	$	235,364	(0.55)	%	$	—	$	229,261	—	%
Real estate - other:
1-4 family residential	—		146,178		—	%	(12)		143,512		(0.01)	%
Multifamily residential	(1,457)		213,025		(0.91)	%	—		226,665		—	%
Commercial real estate and other	—		1,180,581		—	%	—		988,974		—	%
Commercial and industrial	(61)		412,096		(0.02)	%	(9)		315,088		—	%
Consumer	(135)		6,815		(2.64)	%	—		2,827		—	%
	$	(2,620)	$	2,194,059	(0.16)	%	$	(21)	$	1,906,327	—	%

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 $4.1 million and $933 thousand at September 30, 2024 and December 31, 2023, respectively. The change in the allowance for off-balance sheet commitments between periods was the result of a $3.1 million provision for credit losses on unfunded loan commitments, which included $2.7 million related to unfunded loan commitments acquired in the Merger, and from higher unfunded loan commitment balances at September 30, 2024. Total unfunded loan commitments increased $623.2 million to $1.03 billion at September 30, 2024, from $410.8 million at December 31, 2023.

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

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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 $150.2 million and $58.8 million at September 30, 2024 and December 31, 2023, respectively. This includes SBA loans serviced for others of $36.3 million at September 30, 2024 and $35.4 million at December 31, 2023 for which there was a related servicing asset of $415 thousand and $546 thousand, respectively. The fair value of the servicing asset approximated its carrying value at September 30, 2024 and December 31, 2023. 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 September 30, 2024 included a weighted average discount rate of 14.3% and a weighted average prepayment speed assumption of 20.1%. The significant assumptions used in the valuation of the SBA servicing asset at December 31, 2023 included a weighted average discount rate of 16.1% and a weighted average prepayment speed assumption of 19.0%.

Goodwill and Core Deposit Intangibles

Goodwill totaled $112.5 million and $37.8 million at September 30, 2024 and December 31, 2023, respectively. The $74.7 million increase was due to the goodwill recognized upon completion of the Merger during the third quarter of 2024. 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 prices. During the third quarter of 2024, our stock price and market capitalization decreased due primarily to market volatility related to economic uncertainty and rising political tensions prior to the presidential election. We also noted that the trends in our recent financial results were primarily driven by the impact of the Merger and the loss for the quarter was primarily due to merger related expenses. In early November, our stock price and market capitalization recovered and after assessing these events and circumstances, we determined that it is not likely that the fair value of the reporting unit is less than its carrying amount at September 30, 2024. Management will continue to evaluate the economic conditions at future reporting periods for applicable changes.

Core deposit intangibles totaled $23.0 million and $1.2 million at September 30, 2024 and December 31, 2023, respectively. The $21.8 million increase in the core deposit intangibles between periods was the result of the $22.7 million core deposit intangible acquired in the Merger, partially offset by amortization during the period. At September 30, 2024, the core deposit intangibles had a weighted average remaining amortization period of 9.6 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.

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Deposits

The following table presents the composition of deposits, related percentage of total deposits, and spot rates, as of September 30, 2024 and December 31, 2023:

	September 30, 2024						December 31, 2023
(dollars in thousands)	Amount		Percentage of Total Deposits		Spot Rate (1)		Amount		Percentage of Total Deposits		Spot Rate (1)
Noninterest-bearing demand (2)	$	1,368,303	36.6	%	0.0	%	$	675,098	34.7	%	0.0	%
Interest-bearing NOW accounts (3)	781,125		20.9	%	2.0	%	381,943		19.7	%	2.1	%
Money market and savings accounts (4)	1,149,268		30.7	%	2.9	%	636,685		32.8	%	2.9	%
Time deposits (5)	219,597		5.9	%	4.7	%	142,005		7.3	%	4.5	%
Broker time deposits	$	222,622	5.9	%	5.0	%	$	107,825	5.5	%	4.6	%
Total deposits	$	3,740,915	100.0	%	1.9	%	$	1,943,556	100.0	%	1.9	%

(1) Weighted average interest rates at September 30, 2024 and December 31, 2023.

(2) Included reciprocal deposit products of $102.5 million at September 30, 2024. There were no reciprocal deposits at December 31, 2023.

(3) Included reciprocal deposit products of $630.6 million and $265.8 million at September 30, 2024 and December 31, 2023, respectively.

(4) Included reciprocal deposit products of $69.0 million and $8.3 million at September 30, 2024 and December 31, 2023, respectively.

(5) Included CDARS deposits of $37.6 million at September 30, 2024. There were no CDARS deposits at December 31, 2023.

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.

As a result of the Merger, the Company acquired the fair value of $37.7 million in CDARS deposits and $306.6 million in R&T deposits. Our total reciprocal deposits increased to $839.7 million, or 22.4% of total deposits and 22.1% of Bank’s total liabilities at September 30, 2024, compared to $274.1 million, or 14.1% of total deposits at December 31, 2023. 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 $3.74 billion at September 30, 2024, an increase of $1.80 billion from $1.94 billion at December 31, 2023. The increase in total deposits was primarily driven by the $1.64 billion in fair value of deposits acquired in the Merger. During the nine months ended September 30, 2024, there was a $565.6 million increase in reciprocal deposits, a $590.7 million increase in noninterest-bearing demand deposits, excluding reciprocal deposits, a $114.8 million increase in brokered time deposits, a $452.0 million increase in money market and savings accounts, excluding reciprocal deposits, a $34.3 million increase in interest-bearing NOW accounts, excluding reciprocal deposits, and a $77.6 million increase in time deposits. The Company used excess cash acquired from the Merger to pay off high cost callable and noncallable brokered time deposits totaling $131.9 million during the third quarter 2024.

At September 30, 2024, noninterest-bearing demand deposits totaled $1.37 billion and represented 36.6% of total deposits, compared to $675.1 million or 34.7% at December 31, 2023. At September 30, 2024 and December 31, 2023, total deposits exceeding FDIC deposit insured limits were $1.65 billion, or 44% of total deposits and $816.6 million, or 42% of total deposits, respectively.

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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 September 30,
	2024				2023
(dollars in thousands)	Average Balance		Average Rate Paid		Average Balance		Average Rate Paid
Noninterest-bearing demand	$	1,031,844	—	%	$	768,148	—	%
Interest-bearing NOW accounts	617,373		1.73	%	353,714		1.91	%
Money market and savings accounts	999,322		3.34	%	675,609		2.48	%
Time deposits	421,241		4.80	%	183,745		4.03	%
Total deposits	$	3,069,780	2.09	%	$	1,981,216	1.56	%

	For the Nine Months Ended September 30,
	2024				2023
(dollars in thousands)	Average Balance		Average Rate Paid		Average Balance		Average Rate Paid
Noninterest-bearing demand	$	784,609	—	%	$	829,082	—	%
Interest-bearing NOW accounts	446,759		2.05	%	290,326		1.52	%
Money market and savings accounts	767,916		3.13	%	674,452		2.03	%
Time deposits	312,544		4.81	%	170,620		3.43	%
Total deposits	$	2,311,828	2.09	%	$	1,964,480	1.22	%

The increase in the weighted average rate on deposits was primarily due to repricing deposits in the higher interest rate environment and peer bank deposit competition during the nine months ended September 30, 2024. Beginning in March 2022 through September 2023, the Federal Reserve’s FOMC raised the target Fed funds rate by 525 basis points. In its September 2024 meeting, the FOMC reduced the target Fed funds rate by 50 basis points.

The following table sets forth the maturities of time deposits at September 30, 2024:

(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)	$	146,446	$	111,620	$	17,052	$	5,139	$	280,257
Time deposits in amounts over $250,000(1)	119,047		21,567		20,457		891		161,962
Total time deposits	$	265,493	$	133,187	$	37,509	$	6,030	$	442,219

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

Borrowings

Total borrowings decreased $33.7 million to $69.1 million at September 30, 2024 from $102.9 million at December 31, 2023. The decrease was attributable to an $85.0 million decrease in FHLB overnight borrowings, offset by $50.8 million in fair value of borrowing acquired in the Merger. (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).

A summary of outstanding borrowings, and related information, as of September 30, 2024 and December 31, 2023 follows:

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(dollars in thousands)	September 30, 2024			December 31, 2023
FHLB Advances
Outstanding balance	$	—		$	85,000
Weighted average interest rate, end of period	—		%	5.70		%
Average balance outstanding during the period	$	26,105		$	26,390
Weighted average interest rate during the period	5.64		%	5.43		%
Maximum amount outstanding at any month-end during the period	$	70,000		$	85,000
Subordinated Notes
Outstanding balance	$	73,000		$	18,000
Carrying value(1)	$	69,142		$	17,865
Weighted average interest rate, end of period	4.40		%	5.50		%
Average balance outstanding during the period(2)	$	29,425		$	17,818
Weighted average interest rate during the period(3)	7.08		%	6.09		%
Maximum amount outstanding at any month-end during the period	$	73,000		$	18,000

(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 for the periods presented.

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

Shareholders’ Equity

Total shareholders’ equity was $498.1 million at September 30, 2024, compared to $288.2 million at December 31, 2023. The $209.9 million increase between periods was primarily due to the fair value of common stock issued in the Merger of $214.4 million and $825 thousand related to the acceleration of replacement awards issued for non-continuing CALB directors, executives and employees, a decrease in net of tax of unrealized losses on debt securities available-for-sale of $1.6 million, stock-based compensation expense of $4.7 million, and stock options exercised of $716 thousand, partially offset by net loss of $11.3 million and the repurchase of shares in settlement of restricted stock units of $968 thousand.

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. 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 and nine months ended September 30, 2024.

Tangible book value per common share at September 30, 2024 was $11.28, compared with $13.56 at December 31, 2023. The $2.28 decrease in tangible book value per common share during the nine months ended September 30, 2024 was primarily the result of the increase in shares outstanding as a result of the Merger, the net loss during the year, 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.

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

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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 10.55% and 12.65%, respectively, at September 30, 2024. The Bank’s leverage capital ratio and total risk-based capital ratio were 12.41% and 12.53%, respectively, at September 30, 2024.

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 21.0% at September 30, 2024 and 11.1% at December 31, 2023. During the nine months ended September 30, 2024, we deployed our excess liquidity to repay high cost FHLB overnight advances of $85.0 million and callable and noncallable brokered time deposits totaling $131.9 million during the third quarter of 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. (formerly Bank of Southern California, 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 September 30, 2024, we had a secured line of credit of $786.1 million from the FHLB, of which $663.6 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 September 30, 2024, we had pledged qualifying loans with an unpaid principal balance of $1.44 billion for this line. In addition, at September 30, 2024, we used $122.5 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 September 30, 2024.

At September 30, 2024, we had credit availability of $446.4 million at the Federal Reserve discount window to the extent of collateral pledged. At September 30, 2024, we had pledged our debt securities with an amortized cost of $56.3 million, and qualifying loans with an unpaid principal balance of $466.8 million as collateral through the Borrower-in-Custody (“BIC”) program. We had no discount window borrowings at September 30, 2024 and December 31, 2023.

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We have six overnight unsecured credit lines from correspondent banks totaling $110.5 million. The lines are subject to annual review. There were no outstanding borrowings under these lines at September 30, 2024 and December 31, 2023.

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 September 30, 2024 and December 31, 2023, the cash and due from banks was $4.6 million and $3.6 million, respectively.

The Company maintains a revolving line of credit with a commitment of $3.0 million, This revolving line of credit bears interest, due quarterly, at a rate of Prime plus 0.40% and has a one-year term that matures in November 2024. This facility is secured by 100% of the common stock of the Bank. The revolving line of credit contains certain financial covenants, including but not limited to, minimum capital, classified asset, nonperforming asset, primary and secondary liquidity, and debt service coverage ratios. At September 30, 2024, the Company was in compliance with all covenants under the revolving line of credit. There were no borrowings under this revolving line of credit at September 30, 2024.

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 September 30, 2024 and December 31, 2023, were $63 thousand and $135 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 September 30, 2024, 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 September 30, 2024, the net unamortized fair value discount was $688 thousand. 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 September 30, 2024, 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 September 30, 2024, the net unamortized fair value discount was $3.1 million. 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 September 30, 2024, the Company was in compliance with all covenants and terms of these notes.

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At September 30, 2024, consolidated cash and cash equivalents totaled $614.4 million, an increase of $527.6 million from $86.8 million at December 31, 2023. The increase in cash and cash equivalents is the result of $26.7 million in net cash provided by operating cash flows, $431.7 million net cash provided by investing cash flows, partially offset by $69.3 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 $26.7 million for the nine months ended September 30, 2024, compared to $41.5 million for the same 2023 period. The $14.9 million decrease was primarily due to a decrease in net income generated during the nine months ended September 30, 2024, and a $8.1 million decrease in net cash provided by sales of loans held for sale, net of originations, partially offset by a $4.8 million increase in loss on sale of OREO and a $25.4 million increase in provision of credit losses primarily related to the initial allowance for credit losses on acquired loans and unfunded commitments from the Merger.

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 $431.7 million for the year ended September 30, 2024, compared to net cash used in investing activities of $42.7 million for the same 2023 period. The $474.4 million decrease in cash provided by investing activities was primarily due to the impact of the Merger and resulting cash acquired of $336.3 million, a decrease in net loan fundings of $110.6 million and a decrease in net investment securities purchased of $19.4 million, partially offset by proceeds from the sale of other real estate owned of $8.3 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 $69.3 million for the nine months ended September 30, 2024, compared to net cash provided by financing activities of $9.5 million for the same 2023 period. The $59.7 million increase in financing cash flows was primarily due to a $102.6 million net increase in deposit cash flows, offset by a $43.0 million increase 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 September 30, 2024.

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Commitments and Contractual Obligations

The following table presents information regarding our outstanding commitments and contractual obligations as of September 30, 2024:

(Dollars in thousands)	One Year of Less		Over One Year to Three Years		Over Three Years to Five Years		More than Five Years		Total
Commitments to extend credit	$	693,463	$	228,027	$	51,669	$	59,896	$	1,033,055
Letters of credit issued to customers	17,738		240		—		—		17,978
Total commitments	$	711,201	$	228,267	$	51,669	$	59,896	$	1,051,033
FHLB advances	$	—	$	—	$	—	$	—	$	—
Subordinated notes(1)	—		—		—		73,000		73,000
Certificates of deposit	436,189		5,779		251		—		442,219
Lease obligations	4,058		7,825		4,737		2,591		19,211
Total contractual obligations	$	440,247	$	13,604	$	4,988	$	75,591	$	534,430

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

At September 30, 2024 and December 31, 2023, we also had unfunded commitments of $7.3 million and $3.2 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 32,142,427 have been issued as of September 30, 2024. We are also authorized to issue 50,000,000 shares of preferred stock, of which none have been issued as of September 30, 2024. 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.

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. Prior to the Merger with CALB during the third quarter of 2024, 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 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 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

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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 September 30, 2024, 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 September 30, 2024, the Company’s and the Bank’s regulatory capital ratios exceeded the regulatory capital requirements and the Bank is considered to be “well capitalized” under the regulatory framework for prompt corrective action (“PCA”). As of December 31, 2023, the Bank’s regulatory capital ratios exceeded the regulatory capital requirements and the Bank is considered to be “well capitalized” under the regulatory framework for PCA. Management believes, as of September 30, 2024 and December 31, 2023, that the Company and the Bank met all capital adequacy requirements to which each is subject.

To be categorized as well-capitalized, 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:

					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 September 30, 2024:
California BanCorp:
Total Capital (to Risk-Weighted Assets)	$	478,321	12.65	%	$	302,513	8.0	%	N/A		N/A
Tier 1 Capital (to Risk-Weighted Assets)	$	365,382	9.66	%	$	226,885	6.0	%	N/A		N/A
CET1 Capital (to Risk-Weighted Assets)	$	365,382	9.66	%	$	170,163	4.5	%	N/A		N/A
Tier 1 Capital (to Average Assets)	$	365,382	10.55	%	$	138,588	4.0	%	N/A		N/A
California Bank of Commerce, N.A.:
Total Capital (to Risk-Weighted Assets)	$	473,738	12.53	%	$	302,427	8.0	%	$	378,033	10.0	%
Tier 1 Capital (to Risk-Weighted Assets)	429,941		11.37	%	226,820		6.0	%	302,427		8.0	%
CET1 Capital (to Risk-Weighted Assets)	429,941		11.37	%	170,115		4.5	%	245,722		6.5	%
Tier 1 Capital (to Average Assets)	429,941		12.41	%	138,572		4.0	%	173,215		5.0	%
As of December 31, 2023:
California Bank of Commerce, N.A.:
Total Capital (to Risk-Weighted Assets)	$	289,743	13.51	%	$	171,575	8.0	%	$	214,469	10.0	%
Tier 1 Capital (to Risk-Weighted Assets)	270,341		12.61	%	128,681		6.0	%	171,575		8.0	%
CET1 Capital (to Risk-Weighted Assets)	270,341		12.61	%	96,511		4.5	%	139,405		6.5	%
Tier 1 Capital (to Average Assets)	270,341		11.65	%	92,818		4.0	%	116,022		5.0	%

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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 and nine months ended September 30, 2024 and 2023.

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.

During the three and nine months ended September 30, 2024 and 2023, 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

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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 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.

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 September 30, 2024, 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.

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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, 2023, filed with the SEC on March 15, 2024.

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. 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 September 30, 2024.

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
July 1 - 31, 2024	—	$	—	—	550,000
August 1 - 31, 2024	—	$	—	—	550,000
September 1 - 30, 2024	—	$	—	—	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 September 30, 2024.

Item 6.    Exhibits

Exhibit No. Description

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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
3.2	Agreement of Merger dated as of July 31, 2024 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on July 31, 2024)
3.3	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)
10.1	Executive Supplemental Compensation Agreement by and between California Bank of Commerce and Steven E. Shelton* (incorporated by reference to the Exhibit 10.14 to CBC’s Form 10 filed with the SEC on March 4, 2020)
10.2	Amendment to Executive Supplemental Compensation Agreement by and between California Bank of Commerce, N.A. and Steven E. Shelton dated as of July 31, 2024* (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed on July 31, 2024)
10.3	Second Amended and Restated Split-Dollar Agreement effective January 13, 2019 by and between California Bank of Commerce and Steven E. Shelton* (incorporated by reference to Exhibit 10.18 to CBC’s Form 10 filed with the SEC on March 4, 2020)
10.4	Executive Supplemental Compensation Agreement by and between California Bank of Commerce and Thomas A. Sa* (incorporated by reference to Exhibit 10.15 to CBC’s Form 10 filed with the SEC on March 4, 2020)
10.5	California Bank of Commerce Split-Dollar Agreement dated January 14, 2020 by and between California Bank of Commerce and Thomas A. Sa* (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K, filed on July 31, 2024)
10.6	Separation and Release Agreement dated as of September 20, 2024, by and among Thomas A. Sa, California BanCorp and California Bank of Commerce, N.A.
10.7	California Bancorp 2017 Amended and Restated Equity Incentive Plan* (incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K, filed on July 31, 2024)
10.8	Form of Restricted Stock Unit Award Agreement under the Amended and Restated California BanCorp 2017 Equity Incentive Plan* (incorporated by reference to Exhibit 10.11 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
101	The following financial statements and footnotes from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 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.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)
*	Indicates a management contract or compensatory plan.

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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: November 14, 2024	/s/ Steven E. Shelton
	Steven E. Shelton
	Chief Executive Officer
	(Principal Executive Officer)
Date: November 14, 2024	/s/ Thomas Dolan
	Thomas Dolan
	Chief Financial Officer
	(Principal Financial Officer)

110

EX-3.1

EX-10.6

Exhibit 10.6

SEPARATION AND RELEASE AGREEMENT

California BanCorp and California Bank of Commerce, N.A. (“Bank”) and Thomas A. Sa (“Employee”) hereby enter into this Separation and Release Agreement (the “Agreement”). The parties agree as follows:

1.Consideration for Release. On September 20, 2024 (“Separation Date”) Employee’s employment with the Bank and all of its affiliates terminated and Employee hereby resigns as of the Separation Date from officer and director position with such entities. Reference is made to the Employee's Termination and Waiver Agreement, dated January 30, 2024 (“Termination Agreement”), and Offer Letter and Employment Agreement, as such terms are defined in the Termination Agreement (such agreements, “Employment Documents”). In consideration for the releases and covenants contained in this Agreement, Bank shall pay to Employee the sums described in paragraph 18, except as noted below in 1(a), of the Employment Agreement and such sums shall be subject to paragraph 24 of the Employment Agreement. For clarity, Base Salary is defined as $365,554.

1(a). Employee agrees that in lieu of the acceleration of the vesting of all outstanding and unvested equity awards previously granted to Employee as stated in paragraph 18 of the Employment Agreement, Employee will receive $101,112, which is the cash equivalent of all such outstanding and unvested equity awards that Employee received prior to 2024. Employee further agrees that any equity awards received in 2024 and all other unvested equity awards, including on March 25, 2024 under the California BanCorp 2017 Equity Incentive Plan, as amended and on August 2, 2024, under the 2019 Southern California Bancorp Omnibus Equity Incentive Plan, as amended, are hereby forfeited as of the Separation Date.

Employee acknowledges that the payment of such sums provides good, sufficient and valuable consideration for Employee's covenants, waivers, and releases contained in this Agreement. Employee understands that Bank’s willingness to pay such sums is contingent upon Employee's fulfillment of his obligations contained herein. If Employee revokes this Agreement as described in Section 5 below, Bank shall be released from its obligations under this Agreement and paragraph 18 of the Employment Agreement.

2.General Mutual Release. In exchange for the consideration described in this Agreement the adequacy of which is hereby acknowledged, each party hereto, on behalf of himself or itself and his or its heirs, successors and assigns, hereby fully releases and forever discharges the other party hereto, including each of their officers, directors, agents, employees, attorneys, parent company, affiliates and/or subsidiaries and successor and predecessor of such entities, from any and all claims, actions and liabilities of any kind or character whatsoever, arising at law or in equity, known or unknown, suspected or unsuspected, that such party has ever had, now has or may now have against the other party, including, without limitation, all claims directly or indirectly related to or arising out of Employee's employment by Bank, the performance of his duties during that employment, and/or the termination of or his resignation from that employment. This waiver and release specifically includes, but is not limited to, all claims, if any, whether arising in tort or in contract, related to Employee's employment, including any and all claims for wrongful discharge or wrongful termination; claims for alleged

Exhibit 10.6

violation of public policy or breach of implied covenant of good faith and fair dealing; claims for breach of fiduciary duty; claims for negligent or intentional infliction of emotional distress; claims arising in connection with Employee's compensation, benefits, warrants and/or stock options; claims for breach of express or implied contract or for further monetary compensation by way of additional salary or bonus allegedly due Employee by reason of his employment with Bank; and all other claims, based on common law or federal or state statute, including claims for discrimination based on age arising under state statute or the federal Age Discrimination in Employment Act, the Older Workers' Benefits Protection Act, or any similar federal or state law prohibiting age discrimination. Notwithstanding the foregoing, the claims released by the Bank and its officers, directors, agents, employees, attorneys, parent company, affiliates and/or subsidiaries and successor and predecessor of such entities (including all of its successors and predecessors) in this Section do not include (i) any intentional acts by Employee that are outside the course and scope of Employee's employment with Bank or its predecessors, (ii) any claim for fraud, willful misconduct or actions taken by Executive in bad faith; and (iii) any claims not waivable by under applicable law. This Agreement will not affect Employee's entitlement to benefits described in the Employment Agreement (including Employee's right to continued healthcare under the Employment Agreement and/or COBRA), or any non-waivable benefits under California's unemployment or worker's compensation laws. If there is a good faith dispute between the parties as to whether Employee is owed any additional payments, including but not

limited to wages, commissions, bonuses, PTO, vacation, sick leave, holidays, reimbursements, benefits, and/or penalties, except for the compensation and benefits explicitly stated in Section 1 above, and Employee is willing to compromise and resolve all such claims by accepting such payments and under the terms of this Agreement.

3.Waiver of Unknown Claims or Rights. Employee has reviewed and hereby expressly waives the provisions of Section 1542 of the California Civil Code, which provides as follows: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”This Agreement extends to all claims or causes of action, of every nature and kind whatsoever, known or unknown, enumerated in this Agreement or otherwise. Employee may hereafter discover presently unknown facts or claims different from or in addition to those that Employee now knows as to the matters released herein. Nevertheless, it is Employee's intention, through this Agreement, to fully release all such matters and all claims related thereto, which do now exist, may exist or heretofore have existed.

4.Knowing and Voluntary Agreement. Employee acknowledges he is freely and voluntarily entering into this Agreement based on his own judgment and not as a result of any representations or promises made by Bank, other than those contained in this Agreement. Employee also acknowledges that he has been given a full opportunity to review this Agreement with an attorney, and has signed it only after full reflection and analysis of its prov1s10ns.

5.Review Period, Acceptance, ADEA Waiver. Waiting and Revocation Period. Employee acknowledges and understands that the release of claims under the Age

Exhibit 10.6

Discrimination in Employment Act (“ADEA”), 29 U.S.C. Sections 621-634, is subject to special waiver protections under 29 U.S.C. Section 626(f). In accordance with the ADEA and the Older Workers benefits Protection Act (“OWBPA”), Employee specifically agrees that he is knowingly and voluntarily releasing and waiving any rights or claims of age discrimination under the ADEA. In particular he acknowledges that he understands that:

(i)he is not waiving any claims for age discrimination under the ADEA that may arise after the date he signs this Agreement and he is not waiving vested benefits if any;

(ii)he is waiving rights or claims for age discrimination under the ADEA in exchange for payments described above, which are in addition to anything of value to which he is already entitled; and

(iii)this Section 5 and this Agreement are written in a manner which Employee fully understands and he is hereby advised in writing to consult with and has had an opportunity to consult with an attorney before signing this Agreement.

Employee understands and agrees that he has up to 21 days to review this Agreement. This Agreement is revocable by Employee for seven days following his signing of this Agreement (“Revocation Period”). This Agreement automatically becomes enforceable and effective on the eighth (8th) day after the Agreement is signed by Employee, provided there has been no timely revocation.

6.Non-Execution or Revocation of Agreement. In the event that Employee does not execute this Agreement or revokes it within the time provided, he shall not be entitled to receive the payment described in Section 1 of this Agreement.

7.Warranties. Employee warrants and represents that there are no liens or claims of lien or assignments in law or equity or otherwise on or against any potential claims or causes of action released herein, and, further, that Employee is fully entitled and duly authorized to give this complete and final general release and discharge. Employee warrants that he has not filed any lawsuits or administrative claims against Bank, and he is not aware of any claims, filed by him against Bank in any forum, that are pending.

8.Other. Within 3 days of executing this Agreement, Employee must return to Employer all Employer's property, records, documents, electronically stored information, and tangible embodiments of such, in Employee's possession, including but not limited to Bank's trade secrets, confidential information and proprietary information, vehicles, pagers, keys, key cards, cellular phones, credit cards, personal and laptop computers, and any other electronic equipment. Employee hereby confirms that all of the covenants to which Employee is subject under “Confidentiality of Customer Information” and “Confidentiality of Information Regarding the Bank” sections of the Offer Letter, under Bank's Proprietary Information and Trade Secrets Agreement, as such document is referred to in the Offer Letter and under any other agreement by and between Employee and the Bank (or any of its affiliates) (collectively, the “Restrictive Covenants”) will remain in full force and effect according to their terms prior to and following the Separation Agreement. Upon any breach by Employee of the Restrictive Covenants, Employee shall forfeit Employee's right to receive payments and benefits set forth in Section 1

Exhibit 10.6

hereof, other than $1,000, and such forfeiture shall not limit, restrict, or otherwise affect Employee's continuing obligations under the Restrictive Covenants. Notwithstanding anything in this Agreement to the contrary, (i) Employee will not be prohibited from reporting possible violations of federal or state law or regulation to any governmental agency or entity or making other disclosures that are protected under the whistleblower provisions of federal or state law or regulation, nor is Employee required to notify the Bank regarding any such reporting, disclosure or cooperation with the government; and (ii) no provision contained in this Agreement or any other agreement is intended to conflict with Section 1833(b) of the Defend Trade Secrets Act of 2016 or create liability for disclosures of trade secrets that are expressly allowed by such Section.

9.Right to Consult Legal Counsel. Bank hereby advises Employee to seek the advice of legal counsel of Employee's choosing prior to signing this Agreement, and by signing this Agreement and the general release herein, Employee affirms that Employee fully understands Employee's right to seek the advice of legal counsel. Employee acknowledges that Employee has been informed of Employee's right to consult an attorney, that Employee has been given a reasonable time of at least five business days to do so, and that if Employee signs and accepts the terms of this Agreement before the end of five business days, Employee does so knowingly and voluntarily and not as a result of any improper inducement by the Bank.

The parties have read and understand the terms of this Agreement, have had an opportunity to consult with an attorney, and hereby voluntarily and knowingly agree to its terms.

/s/ Thomas A. Sa	Date:	9/20/24
Thomas A. Sa
CALIFORNIA BANCORP
By: /s/ David I. Ranier	Date:	9/20/24
Its: Chaiman of the Board
CALIFORNIA BANK OF COMMERCE, N.A.
By: /s/ Steven E. Shelton	Date:	9/20/24
Its: Chief Executive Officer

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Steven E. Shelton, certify that:

1.I have reviewed this quarterly report on Form 10-Q of California BanCorp;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2024	/s/ Steven E. Shelton
	Steven E. Shelton
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Thomas Dolan, certify that:

1.I have reviewed this quarterly report on Form 10-Q of California BanCorp;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 14, 2024	/s/ Thomas Dolan
	Thomas Dolan
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.0

Exhibit 32.0

SECTION 1350 CERTIFICATION

Each of the undersigned hereby certifies in his capacity as an officer of California BanCorp (the “Company”) that this Quarterly Report of the Company on Form 10-Q for the quarter ended September 30, 2024 fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in such report.

Date: November 14, 2024	/s/ Steven E. Shelton
	Steven E. Shelton
	Chief Executive Officer
	(Principal Executive Officer)
Date: November 14, 2024	/s/ Thomas Dolan
	Thomas Dolan
	Chief Financial Officer
	(Principal Financial Officer)

XML

COVER - shares	9 Months Ended
	Sep. 30, 2024	Nov. 08, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Entity File Number	001-41684
Entity Registrant Name	California BanCorp \ CA
Entity Incorporation, State or Country Code	CA
Entity Tax Identification Number	84-3288397
Entity Address, Address Line One	12265 El Camino Real
Entity Address, Address Line Two	Suite 210
Entity Address, City or Town	San Diego
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92130
City Area Code	844
Local Phone Number	265-7622
Title of 12(b) Security	Common Stock, no par value per share
Trading Symbol	BCAL
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		32,165,188
Amendment Flag	false
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001795815
Current Fiscal Year End Date	--12-31

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
ASSETS
Cash and due from banks	$ 115,165	$ 33,008
Federal funds and interest-bearing balances	499,258	53,785
Total cash and cash equivalents	614,423	86,793
Debt securities available-for-sale, at fair value (amortized cost of $163,384 and $136,366 at September 30, 2024 and December 31, 2023)	159,330	130,035
Debt securities held-to-maturity, at amortized cost (fair value of $49,487 and $50,432 at September 30, 2024 and December 31, 2023)	53,364	53,616
Loans held for sale, at lower of cost or fair value	33,704	7,349
Loans held for investment	3,199,714	1,957,442
Allowance for credit losses on loans	(53,552)	(22,569)
Loans held for investment, net	3,146,162	1,934,873
Restricted stock, at cost	27,394	16,055
Premises and equipment, net	13,996	13,270
Right-of-use asset	15,310	9,291
Other real estate owned, net	4,083	0
Goodwill	112,515	37,803
Core deposit intangible, net	23,031	1,195
Bank owned life insurance	66,180	38,918
Deferred taxes, net	45,644	11,137
Accrued interest receivable and other assets	47,631	19,917
Total assets	4,362,767	2,360,252
LIABILITIES
Noninterest-bearing demand	1,368,303	675,098
Interest-bearing NOW accounts	781,125	381,943
Money market and savings accounts	1,149,268	636,685
Time deposits	442,219	249,830
Total deposits	3,740,915	1,943,556
Borrowings	69,142	102,865
Operating lease liability	19,211	12,117
Accrued interest payable and other liabilities	35,435	13,562
Total liabilities	3,864,703	2,072,100
Commitments and contingencies (Note 12)
SHAREHOLDERS’ EQUITY
Preferred stock - 50,000,000 shares authorized, no par value; no shares issued and outstanding at September 30, 2024 and December 31, 2023	0	0
Common stock - 50,000,000 shares authorized, no par value; issued and outstanding 32,142,427 and 18,369,115 at September 30, 2024 and December 31, 2023	441,684	222,036
Retained earnings	59,236	70,575
Accumulated other comprehensive loss - net of taxes	(2,856)	(4,459)
Total shareholders’ equity	498,064	288,152
Total liabilities and shareholders’ equity	$ 4,362,767	$ 2,360,252

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Debt securities available-for-sale, at fair value, amortized cost	$ 163,384	$ 136,366
Debt securities held-to-maturity, at amortized cost, fair value	$ 49,487	$ 50,432
Preferred stock authorized (in shares)	50,000,000	50,000,000
Preferred stock issued (in shares)	0	0
Preferred stock outstanding (in shares)	0	0
Common stock authorized (in shares)	50,000,000	50,000,000
Common stock issued (in shares)	32,142,427	18,369,115
Common stock outstanding (in shares)	32,142,427	18,369,115

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
INTEREST AND DIVIDEND INCOME
Interest and fees on loans	$ 47,528	$ 28,977	$ 105,169	$ 83,983
Interest on debt securities	1,687	942	4,129	2,506
Interest on tax-exempted debt securities	306	359	918	1,302
Interest on deposits at other financial institutions	4,101	964	5,850	2,473
Interest and dividends on other interest-earning assets	505	242	1,174	689
Total interest and dividend income	54,127	31,484	117,240	90,953
INTEREST EXPENSE
Interest on NOW, money market and savings accounts	11,073	5,922	24,882	13,555
Interest on time deposits	5,087	1,867	11,253	4,373
Interest on borrowings	1,025	434	2,662	1,446
Total interest expense	17,185	8,223	38,797	19,374
Net interest income	36,942	23,261	78,443	71,579
Provision for (reversal of) credit losses	22,963	(96)	25,525	91
Net interest income after provision for (reversal of) credit losses	13,979	23,357	52,918	71,488
NONINTEREST INCOME
Gain (loss) on sale of loans	8	(54)	423	831
Income from bank owned life insurance	398	238	925	693
Servicing and related income on loans, net	82	61	150	223
Gain on sale of available-for-sale debt securities	0	0	0	34
Loss on sale and disposal of fixed assets	0	0	(19)	0
Other charges and fees	(450)	100	48	261
Total noninterest income	1,174	815	3,756	3,481
NONINTEREST EXPENSE
Salaries and employee benefits	15,385	9,736	33,771	29,651
Occupancy and equipment	2,031	1,579	4,928	4,553
Data processing and communications	1,536	1,144	3,872	3,376
Legal, audit and professional	669	598	1,742	2,050
Regulatory assessments	544	369	1,278	1,188
Director and shareholder expenses	520	215	952	642
Merger and related expenses	14,605	0	15,645	0
Core deposit intangible amortization	687	128	817	309
Other real estate owned expenses	3	0	5,026	0
Other expenses	1,700	1,012	3,635	2,638
Total noninterest expense	37,680	14,781	71,666	44,407
(Loss) income before income taxes	(22,527)	9,391	(14,992)	30,562
Income tax (benefit) expense	(6,063)	2,835	(3,653)	9,064
Net (loss) income	$ (16,464)	$ 6,556	$ (11,339)	$ 21,498
(Loss) earnings per share:
Basic (in dollars per share)	$ (0.59)	$ 0.36	$ (0.53)	$ 1.18
Diluted (in dollars per share)	$ (0.59)	$ 0.35	$ (0.53)	$ 1.15
Service charges and fees on deposit accounts
NONINTEREST INCOME
Revenue	$ 842	$ 286	$ 1,582	$ 881
Interchange and ATM income
NONINTEREST INCOME
Revenue	$ 294	$ 184	$ 647	$ 558

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Statement of Comprehensive Income [Abstract]
Net (loss) income	$ (16,464)	$ 6,556	$ (11,339)	$ 21,498
Unrealized gain (loss) on securities available for sale:
Change in net unrealized loss	5,155	(3,809)	2,277	(4,017)
Reclassification of gain recognized in net income	0	0	0	(34)
Unrealized loss on securities available for sale	5,155	(3,809)	2,277	(4,051)
Income tax expense (benefit):
Change in net unrealized loss	1,524	(1,124)	674	(1,237)
Reclassification of gain recognized in net income	0	0	0	(10)
Income tax expense (benefit)	1,524	(1,124)	674	(1,247)
Total other comprehensive income (loss), net of tax	3,631	(2,685)	1,603	(2,804)
Total comprehensive (loss) income, net of tax	$ (12,833)	$ 3,871	$ (9,736)	$ 18,694

XML

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY - USD ($) $ in Thousands		Total	Adoption of ASU 2016-13	As Reported under CECL	Common Stock		Common Stock As Reported under CECL	Retained Earnings	Retained Earnings Adoption of ASU 2016-13	Retained Earnings As Reported under CECL	Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss As Reported under CECL
Beginning balance (in shares) at Dec. 31, 2022					17,940,283		17,940,283
Beginning balance at Dec. 31, 2022		$ 260,355	$ (3,851)	$ 256,504	$ 218,280		$ 218,280	$ 48,516	$ (3,851)	$ 44,665	$ (6,441)	$ (6,441)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		$ 3,763			$ 3,763
Stock options exercised (in shares)		10,950			10,950
Stock options exercised		$ 93			$ 93
Restricted stock units vested (in shares)					390,320
Repurchase of shares in settlement of restricted stock units (in shares)					(32,271)
Repurchase of shares in settlement of restricted stock units		(504)			$ (504)
Net (loss) income		21,498						21,498
Other comprehensive income (loss)		(2,804)									(2,804)
Ending balance (in shares) at Sep. 30, 2023					18,309,282
Ending balance at Sep. 30, 2023		278,550			$ 221,632			66,163			(9,245)
Beginning balance (in shares) at Jun. 30, 2023					18,296,365
Beginning balance at Jun. 30, 2023		273,749			$ 220,702			59,607			(6,560)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		$ 992			$ 992
Stock options exercised (in shares)		0
Restricted stock units vested (in shares)					17,148
Repurchase of shares in settlement of restricted stock units (in shares)					(4,231)
Repurchase of shares in settlement of restricted stock units		$ (62)			$ (62)
Net (loss) income		6,556						6,556
Other comprehensive income (loss)		(2,685)									(2,685)
Ending balance (in shares) at Sep. 30, 2023					18,309,282
Ending balance at Sep. 30, 2023		$ 278,550			$ 221,632			66,163			(9,245)
Beginning balance (in shares) at Dec. 31, 2023		18,369,115			18,369,115
Beginning balance at Dec. 31, 2023		$ 288,152			$ 222,036			70,575			(4,459)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		4,695			$ 4,695
Issuance of common stock in business combination (in shares)	[1]				13,497,091
Issuance of common stock in business combination	[1]	$ 214,380			$ 214,380
Stock options exercised (in shares)		82,900			82,900
Stock options exercised		$ 716			$ 716
Restricted stock units vested (in shares)	[2]				280,051
Restricted stock units vested	[2]	825			$ 825
Repurchase of shares in settlement of restricted stock units (in shares)					(86,730)
Repurchase of shares in settlement of restricted stock units		(968)			$ (968)
Net (loss) income		(11,339)						(11,339)
Other comprehensive income (loss)		$ 1,603									1,603
Ending balance (in shares) at Sep. 30, 2024		32,142,427			32,142,427
Ending balance at Sep. 30, 2024		$ 498,064			$ 441,684			59,236			(2,856)
Beginning balance (in shares) at Jun. 30, 2024					18,547,352
Beginning balance at Jun. 30, 2024		293,219			$ 224,006			75,700			(6,487)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation		$ 2,804			$ 2,804
Issuance of common stock in business combination (in shares)		13,579,454			13,497,091	[1]
Issuance of common stock in business combination	[1]	$ 214,380			$ 214,380
Stock options exercised (in shares)		1,500
Restricted stock units vested (in shares)	[2]				141,263
Restricted stock units vested	[2]	$ 825			$ 825
Repurchase of shares in settlement of restricted stock units (in shares)					(44,779)
Repurchase of shares in settlement of restricted stock units		(341)			$ (341)
Net (loss) income		(16,464)						(16,464)
Other comprehensive income (loss)		$ 3,631									3,631
Ending balance (in shares) at Sep. 30, 2024		32,142,427			32,142,427
Ending balance at Sep. 30, 2024		$ 498,064			$ 441,684			$ 59,236			$ (2,856)

[1] Includes $1.3 million related to replacement awards granted in connection with the business combination for the three and nine months ended September 30, 2024 (Refer to Note 2 - Business Combinations).

[2] The three and nine months ended September 30, 2024 include $825 thousand related to the acceleration of 123,123 replacement awards issued in connection with the business combination for non-continuing directors, executives and employees (Refer to Note 2 - Business Combinations).

XML

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Parenthetical) $ in Thousands	12 Months Ended
	Dec. 31, 2022
Accounting Standards Update [Extensible Enumeration]	Accounting Standards Update 2016-13 [Member]

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
OPERATING ACTIVITIES
Net (loss) income	$ (11,339)	$ 21,498
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation on premises and equipment	1,216	1,171
Core deposit intangible amortization	817	309
Amortization of (discounts) premiums of debt securities	(605)	258
Gain on sale of loans	(415)	(831)
Loss on sale and disposal of fixed assets	19	0
Loans originated for sale	(5,956)	(2,954)
Proceeds from sales of and principal collected on loans held for sale	6,778	11,887
Provision for credit losses	25,525	91
Deferred income tax expense	(4,960)	1,021
Stock-based compensation	4,695	3,763
Increase in cash surrender value of bank owned life insurance	(925)	(693)
Gain on sale of available-for-sale debt securities	0	(34)
Loss on sale of other real estate owned	4,783	0
Valuation allowance on other real estate owned	614	0
Accretion of net discounts and deferred loan fees	(5,647)	(1,471)
Net decrease in other items	12,062	7,523
Net cash provided by operating activities	26,662	41,538
INVESTING ACTIVITIES
Net cash acquired in business combination	336,298	0
Proceeds from sale of debt securities available for sale	3,400	17,307
Proceeds from maturities and paydowns of debt securities available for sale	15,097	8,339
Purchases of debt securities available for sale	(2,041)	(28,736)
Net change in stock investments	(4,178)	(3,987)
Net repayment (funding) of loans	74,768	(35,427)
Proceeds from sale of loans held for investment	456	50
Proceeds from sale of other real estate owned	8,327	0
Purchases of premises and equipment	(410)	(239)
Net cash provided by (used in) investing activities	431,717	(42,693)
FINANCING ACTIVITIES
Net increase in deposits	154,503	51,927
Proceeds from Federal Home Loan Bank advances	0	15,000
Repayment of Federal Home Loan Bank advances	(85,000)	(57,000)
Proceeds from exercise of stock options	716	93
Repurchase of common shares	(968)	(504)
Net cash provided by financing activities	69,251	9,516
Net change in cash and cash equivalents	527,630	8,361
Cash and cash equivalents at beginning of period	86,793	86,760
Cash and cash equivalents at end of period	614,423	95,121
Supplemental Disclosures of Cash Flow Information:
Interest paid	33,935	18,941
Taxes paid	4,770	0
Lease liability arising from obtaining right-of-use assets	105	3,193
Loans transferred to loans held for sale	25,900	0
Loans transferred to other real estate owned	17,701	0
Net impact of adoption of ASU 2016-13 on retained earnings	0	3,851
Liabilities assumed in business combination (Note 2):
Fair value of assets acquired	1,938,700	0
Fair value of stock and equity award consideration	(215,205)	0
Cash consideration	(1,433)	0
Liabilities assumed	$ 1,722,062	$ 0

XML

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

California BanCorp (formerly Southern 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. (formerly Bank of Southern California, 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 incorporated 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 the new 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.

On May 11, 2023, our common stock was listed on the Nasdaq Capital Market under the symbol BCAL. Prior to that date, our common stock was quoted under the same symbol on the OTC Pink Open Market.

Merger with California BanCorp

On January 30, 2024, Southern California Bancorp announced the execution of a definitive merger agreement with the former California BanCorp (“CALB”), the holding company for California Bank of Commerce, pursuant to which CALB would merge into Southern California Bancorp 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 (the “merger”). Shareholders of Southern California Bancorp also approved a change of the Company’s name from Southern California Bancorp to California BanCorp. Refer to Note 2 - Business Combinations for additional information. California BanCorp retained the banking offices of both banks, adding California Bank of Commerce’s one full-service bank branch and its four loan production offices in the Bay Area 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, 2023.

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 and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

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.

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 factors considered in making this determination include that: 1) all of the banking products and services offered by the Company are available in each branch of the Company; 2) all branches are located within the same economic environment; 3) management does not allocate resources based on the performance of different lending or transaction activities; and 4) how information is reviewed by the chief executive officer and other key decision makers. As a result, the Company determined that all services we offer will be reported as a single operating segment.

Recently Adopted Accounting Guidance

On January 1, 2023, the Company adopted Accounting Standard Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), which replaces the incurred loss impairment methodology with a methodology that reflects current expected credit losses (“CECL”) and requires consideration of historical experience, current conditions and reasonable and supportable forecasts to estimate expected credit losses for financial assets held at the reporting date. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, including loans, held-to-maturity debt securities and off-balance sheet credit exposures. ASU 2016-13 also requires credit losses on available-for-sale debt securities be measured through an allowance for credit losses. If the measurement indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses (“ACL”) is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. In addition, ASU 2016-13 modifies the other-than-temporary impairment (“OTTI”) model for available-for-sale debt securities to require an allowance for credit impairment instead of a direct write-down, which allows for reversal of credit impairments in future periods based on improvements in credit. The Company elected to account for accrued interest receivable separately from the amortized cost of loans and investment securities. The Company elected the CECL phase-in option provided by regulatory capital rules, which delays the impact of CECL on regulatory capital over a three-year transition period.

Concurrent with the adoption of ASU 2016-13, the Company adopted ASU 2022-02, Financial Instruments—Credit Losses (Topic 326) Troubled Debt Restructurings (“TDR”) and Vintage Disclosures, which eliminated TDR accounting prospectively for all loan modifications occurring on or after January 1, 2023 and added additional disclosure requirements for current period gross charge-offs by year of origination. It also prescribes guidance for reporting modifications for certain loan refinancings and restructurings made to borrowers experiencing financial difficulty. Loans that were considered a TDR prior to the adoption of ASU 2022-02 will

continue to be accounted for under the superseded TDR accounting guidance until the loan is paid off, liquidated, or subsequently modified.

The Company adopted ASU 2016-13 using the modified retrospective transition approach, and recorded a net decrease of $3.9 million to the beginning balance of retained earnings as of January 1, 2023 for the cumulative effect adjustment, reflecting an initial adjustment to the ACL of $5.5 million, which included a $5.0 million increase in the ACL - loans and a $439 thousand increase in reserve for unfunded commitments, net of related deferred tax assets arising from temporary differences of $1.6 million, commonly referred to as the “Day 1” adjustment. This Day 1 adjustment reflects the development of the CECL models to estimate lifetime expected credit losses on the loans held for investment and unfunded commitments primarily using a lifetime loss methodology and management’s current expectation of future economic conditions. Results for reporting periods beginning after January 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with the probable incurred loss accounting standards. As permitted under ASC 326, the Company elected to maintain the same loan segments that it previously identified prior to adoption of CECL.

At adoption of CECL and continuing through September 30, 2024, the Company did not record an ACL on available-for-sale debt securities or held-to-maturity debt securities as these investment portfolios primarily consisted of debt securities explicitly or implicitly backed by the U.S. government or state and local governments, and historically have had no credit loss experience. Refer to Note 3 – Investment Securities, for more information.

The following table presents the impact of adopting ASU 2016-13 on January 1, 2023:

(dollars in thousands)	Pre-CECL Adoption		Impact of CECL Adoption		As Reported under CECL
Assets:
Allowance for credit losses - loans
Construction and land development	$	2,301	$	881	$	3,182
Real estate - other:
1-4 family residential	972		424		1,396
Multifamily residential	1,331		(279)		1,052
Commercial real estate and other	9,388		2,838		12,226
Commercial and industrial	3,079		1,132		4,211
Consumer	28		31		59
	$	17,099	$	5,027	$	22,126
Liabilities:
Allowance for credit losses - unfunded loan commitments	$	1,310	$	439	$	1,749

On January 1, 2024, the Company adopted ASU 2023-01, Leases (Topic 842): Common Control Arrangements. This standard requires entities to amortize leasehold improvements associated with common control leases over the useful life to the common control group. The standard is effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within these fiscal years. The Company did not have any such common control leases, so adoption of this standard had no impact to the consolidated financial statements.

On January 1, 2024, the Company adopted ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, a consensus of the Emerging Issues Task Force. The amendments in this update allow the option for an entity to apply the proportional amortization method of accounting to other equity investments that are made for the primary purpose of receiving tax credits or other income tax benefits, if certain conditions are met. Prior to

this update, the application of the proportional amortization method of accounting was only limited to low-income housing tax credit (“LIHTC”) structured investments. The proportional amortization method of accounting results in the amortization of applicable investments, as well as the related income tax credits or other income tax benefits received, being presented on a single line in the consolidated statements of operations, income tax expense. Under this update, an entity has the option to apply the proportional amortization method of accounting to applicable investments on a tax-credit-program-by-tax-credit-program basis. In addition, the amendments in this update require that all tax equity investments accounted for using the proportional amortization method use the delayed equity contribution guidance in paragraph 323-740-25-3, requiring a liability be recognized for delayed equity contributions that are unconditional and legally binding or for equity contributions that are contingent upon a future event when that contingent event becomes probable. Under this update, LIHTC structured investments for which the proportional amortization method is not applied can no longer be accounted for using the delayed equity contribution guidance. Further, this update specifies that impairment of LIHTC structure investments not accounted for using the equity method must apply the impairment guidance in Subtopic 323-10 - Investments - Equity Method and Joint Ventures - Overall. This update also clarifies that for LIHTC structure investments not accounted for under the proportional amortization method or the equity method, an entity shall account for them under Topic 321 - Investments - Equity Securities. The amendments in this update also require additional disclosures in interim and annual periods concerning investments for which the proportional amortization method is applied, including (i) the nature of tax equity investments, and (ii) the effect of tax equity investments and related income tax credits and other income tax benefits on the financial position and results of operations. The provisions of this update are effective for the Company for interim and annual periods beginning December 15, 2023. Early adoption is permitted. The adoption of this standard did not have a material impact to 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, 2023.

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 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 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 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 CALB 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: 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. Prior to the adoption of ASC Topic 326, individually evaluated loans were referred to as impaired loans. 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 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 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 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 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. Since adoption of ASU 2022-02 on January 1, 2023, the Company did not have any loan modifications under ASU 2022-02.

Recent Accounting Guidance Not Yet Effective

In October 2023, the Financial Accounting Standards Board (“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-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 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures: In November 2023, the FASB issued 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 chief operating decision-maker ("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 Company has a single reportable segment and continues to assess ASU 2023-07 and its impact on its accounting and disclosures.

ASU No. 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures: On December 14, 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” to address 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) 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. For public business entities, this ASU is effective for annual periods beginning after December 15, 2024. For other entities, this ASU is effective for annual periods beginning after December 15, 2025. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company expects the adoption of this standard will not have a material impact on its consolidated financial statements.

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BUSINESS COMBINATIONS

9 Months Ended

Sep. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS

California BanCorp Merger

On July 31, 2024 (the “Merger Date”), the Company completed its merger with California BanCorp (“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 Bank of Southern California, N.A. 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 the banking offices of both banks, adding California Bank of Commerce’s one full-service bank branch and its four loan production offices in the Bay Area 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 date of completion of the merger 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. As the final CALB tax return has not yet been completed, initial accounting for taxes was incomplete as of September 30, 2024. 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:

(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			6,437
Premises and equipment			1,670
Operating lease right-of-use asset			7,743
Prepaid expenses			876
Deferred taxes, net			30,221
Bank owned life insurance			26,338
Core deposit intangible			22,653
Other assets			35,040
Total assets acquired			1,863,988
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			$	141,926
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			$	74,712

(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

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 purchased credit-deteriorated (“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 using 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.

Total merger-related costs, which are reflected as merger and related costs in the accompanying consolidated statements of operations, included the following total amounts for the three and nine months ended September 30, 2024:

	Three Months Ended		Nine Months Ended
(dollars in thousands)	September 30, 2024		September 30, 2024
Financial advisory fees	$	2,326	$	2,576
Legal, accounting, valuation and other professional costs	300		768
Information technology	4,466		4,729
Change in control costs/severance	6,238		6,238
Insurance	919		919
Other	356		415
	$	14,605	$	15,645

The following table presents the total revenue and net income amounts related to CALB’s operations included in the Company’s consolidated statements of operations from the acquisition date of July 31, 2024 through September 30, 2024:

	Three and Nine Months Ended September 30,
(dollars in thousands)	2024
Net interest income and noninterest income(1)	$	11,912
Net income(1)	$	3,429

(1)As the Company has integrated the operations of CALB into its consolidated operating results, the above table reflects identifiable activities attributable to assets acquired and liabilities assumed in the Merger including, but not limited to, interest income on loans and investments, interest expense on deposits and borrowings, branch-level income and expenses and other identifiable activities. The amounts above do not reflect purchase accounting adjustments and other merger-related activity.

The following supplemental pro forma information presents certain financial results for the three and nine months ended September 30, 2024 and 2023 as if the merger of CALB was effective as of January 1, 2023. The supplemental unaudited pro forma financial information included in the table below is based on various estimates and is presented for informational purposes only and does not indicate the results of operations of the combined company that would have been achieved for the periods presented had the transactions been completed as of the date indicated or that may be achieved in the future.

Supplemental unaudited pro forma financial information:	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Net interest income and noninterest income	$	35,002	$	37,359	$	128,376	$	139,682
Net (loss) income	(5,692)		15,094		6,515		17,500

Pro forma net (loss) income for the three and nine months ended September 30, 2024 were adjusted to exclude merger and related expenses approximately $17.8 million and $20.5 million, respectively. Pro forma net income for the nine months ended September 30, 2023 was adjusted to include the $20.5 million of merger and related expenses. Pro forma net (loss) income for the three and nine months ended September 30, 2024 were also adjusted to exclude the provision of credit losses approximately $21.3 million, comprised of $18.5 million for the initial ACL for non-PCD loans and $2.7 million for the initial ACL for unfunded commitments. Pro forma net income for the nine months ended September 30, 2023 was adjusted to include these amounts.

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INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2024

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

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 September 30, 2024 and December 31, 2023 were as follows:

(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2024
Taxable municipals	$	553	$	—	$	(70)	$	483
Tax exempt bank-qualified municipals	52,811		—		(3,807)		49,004
	$	53,364	$	—	$	(3,877)	$	49,487
December 31, 2023
Taxable municipals	$	551	$	—	$	(73)	$	478
Tax exempt bank-qualified municipals	53,065		25		(3,136)		49,954
	$	53,616	$	25	$	(3,209)	$	50,432

The amortized cost of available-for-sale debt securities and their approximate fair values at September 30, 2024 and December 31, 2023 were as follows:

(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2024
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	93,445	$	1,284	$	(2,470)	$	92,259
SBA securities	5,754		12		(82)		5,684
U.S. Treasury	17,552		34		(265)		17,321
U.S. Agency	2,000		—		(257)		1,743
Collateralized mortgage obligations	42,796		180		(2,403)		40,573
Taxable municipals	1,007		1		(85)		923
Tax exempt bank-qualified municipals	830		—		(3)		827
	$	163,384	$	1,511	$	(5,565)	$	159,330
December 31, 2023
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	77,031	$	631	$	(3,228)	$	74,434
SBA securities	5,886		5		(109)		5,782
U.S. Treasury	2,760		—		(343)		2,417
U.S. Agency	2,000		—		(330)		1,670
Collateralized mortgage obligations	46,330		173		(3,002)		43,501
Taxable municipals	1,528		—		(107)		1,421
Tax exempt bank-qualified municipals	831		—		(21)		810
	$	136,366	$	809	$	(7,140)	$	130,035

During the three and nine months ended September 30, 2024 and 2023, there were no transfers between held-to-maturity and available-for-sale debt securities.

At September 30, 2024 and December 31, 2023, 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 $1.1 million and $788 thousand at September 30, 2024 and December 31, 2023, respectively, and is included within accrued interest receivable and other assets in the consolidated balance sheets. Accrued interest receivable is excluded from the ACL.

At September 30, 2024, debt securities with an amortized cost of $56.3 million were pledged to the Federal Reserve Bank (“Federal Reserve”) as collateral for a secured line of credit of $49.7 million to secure deposits of public institutions and for other purposes as required by law or contract provisions, in addition to collateral securing borrowing bases with the Federal Reserve. There were $53.6 million debt securities pledged to the Federal Reserve as collateral for a secured line of credit of $47.3 million at December 31, 2023. See Note 8 – Borrowing Arrangements for additional information regarding the FHLB and Federal Reserve secured lines of credit. The Company also pledged $9.9 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 September 30, 2024 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
September 30, 2024
Due in one year or less	$	—	$	—	$	27,641	$	27,668
Due after one year through five years	—		—		10,246		9,367
Due after five years through ten years	22,282		20,911		17,670		16,579
Due after ten years	31,082		28,576		107,827		105,716
	$	53,364	$	49,487	$	163,384	$	159,330

Realized Gains and Losses

The following table presents gross realized gains and losses for sales and calls of available-for-sale debt securities for the three and nine months ended September 30, 2024 and 2023 follows:

	Three Months Ended				Nine Months Ended
(dollars in thousands)	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Gross gains on sales and calls	$	—	$	—	$	—	$	181
Gross losses on sales and calls	—		—		—		(147)
Gain on sale of available-for-sale debt securities	—		—		—		34

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 September 30, 2024 and December 31, 2023 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
September 30, 2024:
Available-for-sale debt securities:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities:	$	(51)	$	9,361	$	(2,419)	$	20,025	$	(2,470)	$	29,386
SBA securities	(1)		167		(81)		3,231		(82)		3,398
U.S. Treasury	—		—		(265)		2,456		(265)		2,456
U.S. Agency	—		—		(257)		1,743		(257)		1,743
Collateralized mortgage obligations	(84)		2,686		(2,319)		31,274		(2,403)		33,960
Taxable municipals	—		—		(85)		422		(85)		422
Tax exempt bank-qualified municipals	—		—		(3)		827		(3)		827
	$	(136)	$	12,214	$	(5,429)	$	59,978	$	(5,565)	$	72,192
December 31, 2023:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities:	$	(160)	$	23,738	$	(3,068)	$	20,951	$	(3,228)	$	44,689
SBA securities	(8)		2,193		(101)		1,790		(109)		3,983
U.S. Treasury	—		—		(343)		2,417		(343)		2,417
U.S. Agency	—		—		(330)		1,670		(330)		1,670
Collateralized mortgage obligations	(311)		15,684		(2,691)		23,360		(3,002)		39,044
Taxable municipals	—		—		(107)		921		(107)		921
Tax exempt bank-qualified municipals	—		—		(21)		810		(21)		810
	$	(479)	$	41,615	$	(6,661)	$	51,919	$	(7,140)	$	93,534

As of September 30, 2024, the Company had a total of 70 available-for-sale debt securities in a gross unrealized loss position totaling $5.6 million, consisting of 62 securities with total gross unrealized losses of $5.4 million that had been in a continual loss position for twelve months and longer. As of December 31, 2023, the Company had a total of 76 available-for-sale debt securities in a gross unrealized loss position totaling $7.1 million, consisting of 58 securities with total gross unrealized losses of $6.7 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 September 30, 2024, the Company had a net unrealized loss on available-for-sale debt securities of $4.1 million, or $2.9 million net of tax in accumulated other comprehensive loss, compared to a net unrealized loss of $6.3 million, or $4.5 million net of tax in accumulated other comprehensive loss, at December 31, 2023.

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 September 30, 2024, the total fair value of taxable municipal and tax exempt bank-qualified municipal securities was $923 thousand and $827 thousand, respectively. At September 30, 2024, all of these securities were rated AA and above. At December 31, 2023, the total fair value of taxable municipal and tax exempt bank-qualified municipal securities was $1.4 million and $810 thousand, respectively. These securities rated AA and above totaled $1.4 million and rated A+ totaled $810 thousand at December 31, 2023.

At September 30, 2024, 61 held-to-maturity debt securities with fair values totaling $49.5 million had gross unrealized losses totaling $3.9 million, compared to 58 held-to-maturity debt securities with fair values totaling $48.3 million had gross unrealized losses totaling $3.2 million at December 31, 2023. 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 September 30, 2024 and December 31, 2023, fair values of held-to-maturity debt securities rated AA and above totaled $46.2 million and $47.0 million, respectively and rated AA- totaled $3.3 million and $3.4 million, respectively.

Management evaluates securities in an unrealized loss position at least on a quarterly basis, and determined that the unrealized losses at September 30, 2024 and 2023 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 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 and nine months ended September 30, 2024 and 2023.

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 September 30, 2024 and December 31, 2023:

(dollars in thousands)	September 30, 2024		December 31, 2023
Federal Reserve Bank	$	12,089	$	7,430
Federal Home Loan Bank	15,305		8,625
	$	27,394	$	16,055

In connection with the Merger, the Company acquired $5.9 million of FHLB stock during the three and nine months ended September 30, 2024. Additionally, during the three and nine months ended September 30, 2024, the Company purchased $4.6 million and $4.7 million, respectively, of Federal Reserve stock, and there were no purchases and $820 thousand of purchases, respectively, 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 and $351 thousand at September 30, 2024 and December 31, 2023, respectively. The Company acquired $468 thousand of these two banker’s bank stocks in connection with the Merger during the three months ended September 30, 2024. These equity securities are reported in accrued interest receivable and other assets in the consolidated balance sheets. At September 30, 2024 and December 31, 2023, the Company evaluated the carrying value of these equity securities and determined that they were not impaired. During the three and nine months ended September 30, 2024 and 2023, 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. At September 30, 2024 and December 31, 2023, the balance of these investments, which is included in accrued interest receivable and other assets in the consolidated balance sheets, was $7.8 million and $7.0 million, respectively. 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 considered return of capital are recorded as a reduction of the Company’s investment. During the three and nine months ended September 30, 2024, the Company received $1.4 million and $1.3 million, respectively, of net capital distributions

from these equity investments. During the three and nine months ended September 30, 2023, the Company made $219 thousand and $2.3 million, respectively, of net capital contributions to these equity investments. At September 30, 2024 and December 31, 2023, the Company evaluated the carrying value of these equity investments and determined they were not impaired. During the three and nine months ended September 30, 2024 and 2023, 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 tax credit investments are reported in accrued interest receivable and other assets in the consolidated balance sheets, and are recorded net of accumulated amortization, using the proportional amortization method. At September 30, 2024, the aggregate funding commitment for these investments was $15.7 million, of which $13.1 million was acquired from the Merger. At December 31, 2023, the aggregate funding commitment for these investments was $2.0 million. The unfunded portion of these investments totaled $1.9 million and $1.5 million at September 30, 2024 and December 31, 2023, 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 and nine months ended September 30, 2024 and 2023 follows:

	Three Months Ended				Nine Months Ended
(dollars in thousands)	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Proportional amortization	$	(187)	$	—	$	(238)	$	—
Tax credits	257		—		393		—
Contributions	62		208		217		208

At September 30, 2024 and December 31, 2023, 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.

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LOANS AND ALLOWANCE FOR CREDIT LOSSES

9 Months Ended

Sep. 30, 2024

Receivables [Abstract]

LOANS AND ALLOWANCE FOR CREDIT LOSSES

LOANS AND ALLOWANCE FOR CREDIT LOSSES

Loans Held for Investment

The Company’s loan portfolio consists primarily of loans to borrowers within its Southern and Northern California markets 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 75% and 83% of total loans at September 30, 2024 and December 31, 2023, 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 September 30, 2024 and December 31, 2023 was as follows:

(dollars in thousands)	September 30, 2024		December 31, 2023
Construction and land development	$	247,934	$	243,521
Real estate - other:
1-4 family residential	152,540		143,903
Multifamily residential	252,134		221,247
Commercial real estate and other	1,755,908		1,024,243
Commercial and industrial	765,472		320,142
Consumer	25,726		4,386
Loans held for investment (1)	3,199,714		1,957,442
Allowance for credit losses	(53,552)		(22,569)
Loans held for investment, net	$	3,146,162	$	1,934,873

(1)Loans held for investment includes net unearned fees of $1.6 million and $2.3 million and net unearned discounts on acquired loans of $66.0 million and $1.4 million at September 30, 2024 and December 31, 2023, respectively. The Company recognized $4.2 million and $4.3 million, respectively, in interest accretion for acquired loans for the three and nine months ended September 30, 2024.

The Company has pledged $2.20 billion of loans with the FHLB under a blanket lien, of which an unpaid principal balance of $1.44 billion was considered as eligible collateral under this secured borrowing arrangement and loans with an unpaid principal balance totaling $466.8 million were pledged as collateral under a secured borrowing arrangement with the Federal Reserve as of September 30, 2024. See Note 8 – Borrowing Arrangements for additional information regarding the FHLB and Federal Reserve secured lines of credit.

Loans Held for Sale

At September 30, 2024, the Company had loans held for sale totaling $33.7 million, consisting of $7.8 million SBA 7(a) loans and $25.9 million C&I loans transferred from loans held for investment, compared to $7.3 million, consisting of only SBA 7(a) loans at December 31, 2023. The Company accounts for loans held for sale at the lower of carrying value or fair value. At September 30, 2024 and December 31, 2023, the fair value of loans held for sale totaled $34.5 million and $7.8 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.

The risk category of loans by class of loans and origination year as of September 30, 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
September 30, 2024
Construction and land development
Pass	$	493	$	40,861	$	111,686	$	51,163	$	17,283	$	2,340	$	8,476	$	—	$	232,302
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		9,659		—		2,945		3,028		—		—		15,632
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total construction and land development	493		40,861		121,345		51,163		20,228		5,368		8,476		—		247,934
Real estate - other:
1-4 family residential
Pass	6,271		21,137		33,768		17,995		6,736		17,562		45,329		—		148,798
Special mention	—		—		—		—		—		847		—		—		847
Substandard	—		—		2,895		—		—		—		—		—		2,895
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total 1-4 family residential	6,271		21,137		36,663		17,995		6,736		18,409		45,329		—		152,540
Multifamily residential
Pass	1,625		18,808		91,437		89,992		5,287		43,506		1,479		—		252,134
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total multifamily residential	1,625		18,808		91,437		89,992		5,287		43,506		1,479		—		252,134

	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
September 30, 2024
Commercial real estate and other
Pass	74,938		83,188		457,671		398,356		101,050		472,661		106,386		151		1,694,401
Special mention	—		9,585		5,059		14,148		2,277		10,870		1,596		497		44,032
Substandard	—		—		—		11,573		—		5,902		—		—		17,475
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial real estate and other	74,938		92,773		462,730		424,077		103,327		489,433		107,982		648		1,755,908
Commercial and industrial
Pass	48,106		75,264		122,585		45,355		15,765		70,103		271,764		—		648,942
Special mention	383		1,251		—		7,556		285		2,099		36,995		—		48,569
Substandard	—		50		21,535		268		—		3,644		42,464		—		67,961
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial and industrial	48,489		76,565		144,120		53,179		16,050		75,846		351,223		—		765,472
Consumer
Pass	1,088		—		1,107		22,946		100		7		143		—		25,391
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		335		—		—		—		—		335
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total consumer	1,088		—		1,107		23,281		100		7		143		—		25,726
Total loans	$	132,904	$	250,144	$	857,402	$	659,687	$	151,728	$	632,569	$	514,632	$	648	$	3,199,714
Total by risk rating:
Pass	$	132,521	$	239,258	$	818,254	$	625,807	$	146,221	$	606,179	$	433,577	$	151	$	3,001,968
Special mention	383		10,836		5,059		21,704		2,562		13,816		38,591		497		93,448
Substandard	—		50		34,089		12,176		2,945		12,574		42,464		—		104,298
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total loans	$	132,904	$	250,144	$	857,402	$	659,687	$	151,728	$	632,569	$	514,632	$	648	$	3,199,714

The risk category of loans by class of loans and origination year as of December 31, 2023 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)	2023		2022		2021		2020		2019		Prior						Total
December 31, 2023
Construction and land development
Pass	$	25,113	$	127,496	$	71,199	$	17,022	$	2,071	$	528	$	—	$	—	$	243,429
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		92		—		—		92
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total construction and land development	25,113		127,496		71,199		17,022		2,071		620		—		—		243,521
Real estate - other:
1-4 family residential
Pass	24,928		35,670		20,207		6,887		4,884		15,582		35,645		100		143,903
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total 1-4 family residential	24,928		35,670		20,207		6,887		4,884		15,582		35,645		100		143,903
Multifamily residential
Pass	18,803		61,677		73,365		5,712		27,292		21,245		149		—		208,243
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		13,004		—		—		—		—		—		—		13,004
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total multifamily residential	18,803		74,681		73,365		5,712		27,292		21,245		149		—		221,247

	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)	2023		2022		2021		2020		2019		Prior						Total
Commercial real estate and other
Pass	76,434		304,524		287,245		57,736		51,992		203,976		36,543		1,626		1,020,076
Special mention	—		2,701		—		—		—		—		295		—		2,996
Substandard	—		—		—		—		—		1,171		—		—		1,171
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial real estate and other	76,434		307,225		287,245		57,736		51,992		205,147		36,838		1,626		1,024,243
Commercial and industrial
Pass	46,701		70,658		12,883		7,095		8,266		13,715		153,712		1,877		314,907
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		346		64		—		1,208		121		3,097		399		5,235
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial and industrial	46,701		71,004		12,947		7,095		9,474		13,836		156,809		2,276		320,142
Consumer
Pass	163		—		39		91		6		11		4,076		—		4,386
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total consumer	163		—		39		91		6		11		4,076		—		4,386
Total loans	$	192,142	$	616,076	$	465,002	$	94,543	$	95,719	$	256,441	$	233,517	$	4,002	$	1,957,442
Total by risk rating:
Pass	$	192,142	$	600,025	$	464,938	$	94,543	$	94,511	$	255,057	$	230,125	$	3,603	$	1,934,944
Special mention	—		2,701		—		—		—		—		295		—		2,996
Substandard	—		13,350		64		—		1,208		1,384		3,097		399		19,502
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total loans	$	192,142	$	616,076	$	465,002	$	94,543	$	95,719	$	256,441	$	233,517	$	4,002	$	1,957,442

A summary of gross charge-offs by class of loans and origination year for the nine months ended September 30, 2024 and 2023 follows:

	Term Loans Gross Charge-offs 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
Nine Months Ended September 30, 2024
Construction and land development	$	—	$	—	$	967	$	—	$	—	$	—	$	—	$	—	$	967
Real estate - other:
1-4 family residential	—		—		—		—		—		—		1		—		1
Multifamily residential	—		—		1,456		—		—		—		—		—		1,456
Commercial real estate and other	—		—		—		—		—		—		—		—		—
Commercial and industrial	—		37		24		—		—		—		—		—		61
Consumer	—		—		—		135		—		—		—		—		135
Total	$	—	$	37	$	2,447	$	135	$	—	$	—	$	1	$	—	$	2,620

	Term Loans Gross Charge-offs by Origination Year												Revolving Loans Amortized Cost Basis		Revolving Loans Amortized Cost Basis Converted to Term During the Period
(dollars in thousands)	2023		2022		2021		2020		2019		Prior						Total
Nine Months Ended September 30, 2023
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate - other:
1-4 family residential	—		—		—		—		—		12		—		—		12
Multifamily residential	—		—		—		—		—		—		—		—		—
Commercial real estate and other	—		—		—		—		—		—		—		—		—
Commercial and industrial	—		—		—		15		—		9		—		—		24
Consumer	—		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	15	$	—	$	21	$	—	$	—	$	36

Past Due Loans

A summary of past due loans as of September 30, 2024 and December 31, 2023 follows:

	Current
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Nonaccrual		Total
September 30, 2024
Construction and land development	$	—	$	—	$	—	$	—	$	238,275	$	9,659	$	247,934
Real estate - other:
1-4 family residential	—		—		—		—		149,645		2,895		152,540
Multifamily residential	—		—		—		—		252,134		—		252,134
Commercial real estate and other	18,175		—		—		18,175		1,728,628		9,105		1,755,908
Commercial and industrial	667		—		—		667		760,803		4,002		765,472
Consumer	96		172		37		305		25,421		—		25,726
	$	18,938	$	172	$	37	$	19,147	$	3,154,906	$	25,661	$	3,199,714

	Current
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Nonaccrual		Total
December 31, 2023
Construction and land development	$	—	$	—	$	—	$	—	$	243,521	$	—	$	243,521
Real estate - other:
1-4 family residential	—		—		—		—		143,903		—		143,903
Multifamily residential	—		—		—		—		208,243		13,004		221,247
Commercial real estate and other	—		—		—		—		1,024,243		—		1,024,243
Commercial and industrial	19		—		—		19		320,123		—		320,142
Consumer	—		—		—		—		4,386		—		4,386
	$	19	$	—	$	—	$	19	$	1,944,419	$	13,004	$	1,957,442

The Company had $37 thousand in consumer solar loans that were over 90 days past due that were accruing interest at September 30, 2024. There were no loans over 90 days past due loans and still accruing interest as of December 31, 2023.

Nonaccrual Loans

A summary of total nonaccrual loans and the amount of nonaccrual loans with no related ACL as of September 30, 2024 and December 31, 2023 follows:

	September 30, 2024				December 31, 2023
(dollars in thousands)	Total Nonaccrual Loans		Nonaccrual Loans with no ACL		Total Nonaccrual Loans		Nonaccrual Loans with no ACL
Construction and land development	$	9,659	$	9,659	$	—	$	—
Real estate - other:
1-4 family residential	2,895		2,895		—		—
Multifamily residential	—		—		13,004		13,004
Commercial real estate and other	9,105		117		—		—
Commercial and industrial	4,002		—		—		—
Consumer	—		—		—		—
	$	25,661	$	12,671	$	13,004	$	13,004

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. At September 30, 2024, a substandard nonaccrual construction loan and a 1-4 family residential loan were classified as collateral dependent loans. The construction loan was collateralized by a stalled construction project for a single family residential estate located in Los Angeles, California. Based on the Company's internal analysis, the estimated collateral value was $9.7 million, and was $967 thousand lower than the subject loan’s net carrying value resulting in a partial charge-off in the third quarter of 2024. The net estimated collateral value after accounting for selling costs for the 1-4 family residential loan was sufficient to cover the subject loan’s net carrying value resulting in no partial charge-off in the third quarter of 2024. At December 31, 2023, a $13.0 million multifamily residential loan was classified as a collateral dependent loan, and was collateralized by three investment multifamily properties. The subject loan was partially charged off by $1.3 million in the fourth quarter of 2023, foreclosed on in the first quarter of 2024 and sold in the second quarter of 2024.

A summary of collateral dependent loans by collateral type as of September 30, 2024 and December 31, 2023 follows:

	Type of Collateral
(dollars in thousands)	Commercial Real Estate		Residential Real Estate		Business Assets
September 30, 2024
Construction and land development	$	—	$	9,659	$	—
Real estate - other:
1-4 family residential	—		2,895		—
Commercial real estate and other	10,535		—		—
Commercial and industrial	—		271		2,301
	$	10,535	$	12,825	$	2,301
December 31, 2023
Multifamily residential	$	—	$	13,004	$	—
	$	—	$	13,004	$	—

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 and zero foreclosed assets at September 30, 2024 and December 31, 2023, respectively.

During the nine months ended September 30, 2024, the Company foreclosed on and sold $13.1 million of OREO related to a three-property multifamily OREO in Santa Monica, California, and recognized a $4.8 million pre-tax loss.

Additionally, during the nine months ended September 30, 2024, the Company foreclosed on a multifamily nonaccrual loan of $4.7 million, that was transferred to OREO. During the three and nine months ended September 30, 2024, the Company recorded a $614 thousand valuation allowance due to a decline in the fair value of the underlying property in the third quarter of 2024.

Modified Loans to Borrowers Experiencing Financial Difficulty

A summary of modified loans to borrowers experiencing financial difficulty as of September 30, 2024 follows:

(dollars in thousands)	Commercial & Industrial		Total
September 30, 2024:
Term extension:
Amortized cost basis	13,094		13,094
% of total class of loans	1.7	%	0.4	%

The modified loans to borrowers experiencing financial difficulty in the table above were all loans that were acquired in the Merger.

There were no modified loans to borrowers experiencing financial difficulty as of December 31, 2023.

A summary of the payment status for modified loans to borrowers experiencing financial difficulty as of September 30, 2024 follows:

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total
September 30, 2024:
Commercial and industrial	—		—		397		397		12,697		13,094
	$	—	$	—	$	397	$	397	$	12,697	$	13,094

The modified loans were acquired from the merger. The were no new modifications or refinancings (including those with borrowers that are experiencing financial difficulty) of loans representing a new non-acquired loan or a continuation of an existing non-acquired loan during the three and nine months ended September 30, 2024, and 2023.

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 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 fourth week of September 2024. 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 September 30, 2024, the Moody’s economic forecast assumes two interest rate cuts in 2024. In its September 2024 meeting, the Federal Reserve chose to lower its key overnight borrowing rate by 50 basis points to 4.75% to 5.00%, amid signals that inflation was moderating and the labor market was weakening. The underlying assumptions in the Moody’s economic forecasts supporting the baseline forecast remained consistent in the expectation that the Federal Reserve will continue to reduce the Federal Reserve’s balance sheet through quantitative tightening at its current pace.

Moody’s baseline national gross domestic product forecast was 2.6% in 2024 on an annual average basis. The forecast assumes the growth is largely based on the Bureau of Economic Analysis’ upward revision of 2Q24 GDP. Growth in the following two years is forecasted at 2.1% in 2025 and 2.0% in 2026. The Conference Board increased their September forecast from 1% to 2.4%. The upward revision is now in line with Moody’s Baseline scenario of 2.6% while the Federal Reserve members median projection for GDP growth in 2024 and 2025 remained at 2.0%.

Moody’s economic forecasts for California suggested a modest change for its September 2024 baseline forecast state unemployment rate and Gross State Product (GSP) growth rate of 5.2% and 2.04%, respectively, declining to 4.9% and 1.3%, respectively, in 2025. Moody’s downside scenario forecasted the state unemployment rate would rise in the fourth quarter of 2024 and will reach 7.86% in the third quarter of 2025 from the weakening economy. The outlook for GSP growth rate was adjusted higher at the near term in baseline and downside scenario from 1.54% and 1.05%, respectively, in the fourth quarter of 2024 to 1.60% and -0.77%, respectively, in the fourth quarter of 2025. The mix changes in these key economic forecasts for California would have a mix impact to the Company ACL.

During the third quarter of 2024, the Company updated its historical prepayment and curtailment rates analysis, which reflected a moderate decrease from the second quarter of 2024 primarily due to lower payoffs and paydowns.

Accrued interest receivable on loans receivable, net, totaled $14.2 million and $6.4 million at September 30, 2024 and December 31, 2023, 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 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 provision for unfunded loan commitments of $3.3 million and $3.1 million, respectively, for the three and nine months ended September 30, 2024, of which $2.7 million related to the initial allowance for unfunded credit commitments acquired in the Merger. There was a $298 thousand and $509 thousand negative provision for unfunded loan commitments for the three and nine months ended September 30, 2023, respectively. The provision for unfunded loan commitments is included in provision for (reversal of) credit losses in the consolidated statements of operations. The reserve for unfunded loan commitments was $4.1 million and $933 thousand at September 30, 2024 and December 31, 2023, respectively. The reserve for unfunded loan commitments is included in accrued interest payable and other liabilities in the consolidated balance sheets.

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

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Allowance for loan losses (ALL)
Balance, beginning of period	$	23,788	$	22,502	$	22,569	$	17,099
Adoption of ASU No. 2016-13(1)	—		—		—		5,027
Initial allowance for acquired PCD loans	11,216		—		11,216		—
Provision for loan losses(2)	19,711		202		22,387		600
Charge-offs	(1,163)		—		(2,620)		(36)
Recoveries	—		1		—		15
Net (charge-offs) recoveries	(1,163)		1		(2,620)		(21)
Balance, end of period	$	53,552	$	22,705	$	53,552	$	22,705
Reserve for unfunded loan commitments
Balance, beginning of period	$	819	$	1,538	$	933	$	1,310
Adoption of ASU No. 2016-13(1)	—		—		—		439
Provision for (reversal of) credit losses for unfunded loan commitments(3)	3,252		(298)		3,138		(509)
Balance, end of period	4,071		1,240		4,071		1,240
Allowance for credit losses, end of period	$	57,623	$	23,945	$	57,623	$	23,945

(1)Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2023. As a result of adopting ASU 2016-13, the Company’s methodology to compute our ACL is based on a CECL methodology, rather than the previously applied incurred loss methodology.

(2)Includes an initial provision for credit losses for non-PCD loans acquired in the Merger of $18.5 million for the three and nine months ended September 30, 2024. There was no similar activity in the comparable 2023 period.

(3)Includes an initial provision for credit losses for unfunded commitments acquired in the Merger of $2.7 million for the three and nine months ended September 30, 2024. There was no similar activity in the comparable 2023 period.

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 September 30, 2024
Beginning of period	$	2,942	$	17,048	$	3,795	$	3	$	23,788
Initial allowance for acquired PCD loans	328		2,392		8,355		141		11,216
(Reversal of) provision for loan losses(1)	(219)		10,020		8,769		1,141		19,711
Charge-offs	(967)		—		(61)		(135)		(1,163)
Recoveries	—		—		—		—		—
Net charge-offs	(967)		—		(61)		(135)		(1,163)
End of period	$	2,084	$	29,460	$	20,858	$	1,150	$	53,552
Three Months Ended September 30, 2023
Beginning of period	$	3,556	$	15,097	$	3,808	$	41	$	22,502
(Reversal of) provision for loan losses	(1,021)		1,318		(70)		(25)		202
Charge-offs	—		—		—		—		—
Recoveries	—		—		1		—		1
Net recoveries	—		—		1		—		1
End of period	$	2,535	$	16,415	$	3,739	$	16	$	22,705

(1)Includes an initial provision for credit losses for non-PCD loans acquired in the Merger of $18.5 million for the three months ended September 30, 2024. There was no similar activity in the comparable 2023 period.

(dollars in thousands)	Construction and Land Development		Real Estate - Other		Commercial & Industrial		Consumer		Total
Nine Months Ended September 30, 2024
Beginning of period	$	2,032	$	16,280	$	4,242	$	15	$	22,569
Initial allowance for acquired PCD loans	328		2,392		8,355		141		11,216
Provision for loan losses(1)	691		12,245		8,322		1,129		22,387
Charge-offs	(967)		(1,457)		(61)		(135)		(2,620)
Recoveries	—		—		—		—		—
Net charge-offs	$	(967)	$	(1,457)	$	(61)	$	(135)	$	(2,620)
End of period	$	2,084	$	29,460	$	20,858	$	1,150	$	53,552
Nine Months Ended September 30, 2023
Beginning of period	$	2,301	$	11,691	$	3,079	$	28	$	17,099
Adoption of ASU No. 2016-13(2)	881		2,983		1,132		31		5,027
(Reversal of) provision for loan losses	(647)		1,753		(463)		(43)		600
Charge-offs	—		(12)		(24)		—		(36)
Recoveries	—		—		15		—		15
Net charge-offs	$	—	$	(12)	$	(9)	$	—	$	(21)
End of period	$	2,535	$	16,415	$	3,739	$	16	$	22,705

(1)Includes an initial provision for credit losses for non-PCD loans acquired in the Merger of $18.5 million for the nine months ended September 30, 2024. There was no similar activity in the comparable 2023 period.

(2)Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2023. As a result of adopting ASU 2016-13, the Company’s methodology to compute our ACL is based on a CECL methodology, rather than the previously applied incurred loss methodology.

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TRANSFERS AND SERVICING OF FINANCIAL ASSETS

9 Months Ended

Sep. 30, 2024

Transfers and Servicing [Abstract]

TRANSFERS AND SERVICING OF FINANCIAL ASSETS

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 $150.2 million and $58.8 million at September 30, 2024 and December 31, 2023, respectively. This includes SBA loans serviced for others of $36.3 million and $35.4 million at September 30, 2024, and December 31, 2023, for which there was a related servicing asset of $415 thousand and $546 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 and nine months ended September 30, 2024 and 2023 follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Balance, beginning of period	$	521	$	683	$	546	$	514
Additions	—		—		109		216
Amortization (1)	(106)		(54)		(240)		(101)
Balance, end of period	$	415	$	629	$	415	$	629

(1) Amortization included accelerated amortization of $84 thousand and $29 thousand for the three months ended September 30, 2024 and 2023, respectively, and $174 thousand and $32 thousand for the nine months ended September 30, 2024 and 2023, respectively.

There were no SBA 7(a) loan sales during the three months ended September 30, 2024 and 2023.

SBA 7(a) loans sold during the nine months ended September 30, 2024 totaled $6.3 million resulting in total gains on sale of SBA loans of $415 thousand. SBA 7(a) loans sold during the nine months ended September 30, 2023 totaled $10.9 million resulting in total gains on sale of SBA loans of $874 thousand.

The fair value of the servicing asset approximated the carrying value at September 30, 2024 and December 31, 2023. The significant assumptions used in the valuation of the SBA servicing asset at September 30, 2024 and December 31, 2023 included:

(dollars in thousands)	September 30, 2024	December 31, 2023
Discount rate:
Range	6.5% – 25.4%	10.5% – 26.2%
Weighted average	14.3%	16.1%
Prepayment speed:
Range	12.4% – 38.7%	11.2% – 48.1%
Weighted average	20.1%	19.0%

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 and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Contractually specified fees	$	114	$	113	297		309
Amortization	(106)		(54)		(240)		(101)
Net servicing fees	$	8	$	59	$	57	$	208

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GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill, the excess purchase price over the fair value of all identifiable assets and liabilities acquired, totaled $112.5 million at September 30, 2024 and $37.8 million at December 31, 2023. 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 prices. During the third quarter of 2024, our stock price and market capitalization decreased due primarily to market volatility related to economic uncertainty and rising political tensions prior to the Presidential election. We also noted the trends in our recent financial results were primarily driven by the impact of the Merger and the loss for the quarter was primarily due to merger related expenses. In early November, our stock price and market capitalization recovered and after assessing the totality of these events and circumstances, we determined it is not likely that the fair value of a reporting unit is less than its carrying amount at September 30, 2024. Management will continue to evaluate the economic conditions at future reporting periods for applicable changes.

The Company performed a qualitative assessment for the annual impairment review at December 31, 2023, and as a result of that assessment had determined that there has been no impairment to the goodwill.

The following table presents changes in the carrying amount of goodwill for the three and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Balance, beginning of period	$	37,803	$	37,803	$	37,803	$	37,803
Goodwill from CALB merger	74,712		—		74,712		—
Balance, end of period	$	112,515	$	37,803	$	112,515	$	37,803

Core deposit intangibles are amortized over remaining periods of 4.3 to 9.8 years. As of September 30, 2024, the weighted-average remaining amortization period for core deposit intangibles was approximately 9.6 years. The Company performs the annual impairment analysis for the core deposit intangibles at least annually during the fourth quarter 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 core deposit intangibles impairment test performed at September 30, 2023 and therefore, believes that there was no impairment as of September 30, 2024. Management will continue to evaluate the economic conditions at future reporting periods for applicable changes. The following table presents the changes in core deposit intangibles for the three and nine months ended September 30, 2024 and 2023.

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Gross balance, beginning of period	$	4,185	$	4,185	$	4,185	$	4,185
Additions from CALB merger	22,653		—		22,653		—
Gross balance, end of period	$	26,838	$	4,185	$	26,838	$	4,185
Accumulated amortization:
Balance, beginning of period	$	(3,120)	$	(2,782)	$	(2,990)	$	(2,601)
Amortization	(687)		(128)		(817)		(309)
Balance, end of period	(3,807)		(2,910)		(3,807)		(2,910)
Net core deposit intangible, end of period	$	23,031	$	1,275	$	23,031	$	1,275

Future estimated amortization expense is as follows:

(dollars in thousands)	Amount
Remainder of 2024	$	998
2025	3,641
2026	3,051
2027	2,761
2028	2,465
Thereafter	10,115
	$	23,031

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DEPOSITS

9 Months Ended

Sep. 30, 2024

Deposits [Abstract]

DEPOSITS

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 September 30, 2024, reciprocal deposits increased to $839.7 million, representing 22.4% of total deposits and 22.1% of Bank’s total liabilities, compared to $274.1 million, or 14.1% of total deposits at December 31, 2023. 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 $162.0 million and $122.6 million as of September 30, 2024 and December 31, 2023, respectively. Brokered time deposits totaled $222.6 million and $107.8 million as of September 30, 2024 and December 31, 2023, respectively.

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 September 30, 2024 and December 31, 2023, total collateralized deposits, including the deposits of State of California and their public agencies, were $104.9 million and $72.7 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 September 30, 2024, the scheduled maturities of time deposits are as follows:

(dollars in thousands)	Amount
Remainder of 2024	$	265,493
2025	171,637
2026	4,765
2027	74
2028 and thereafter	250
	$	442,219

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BORROWING ARRANGEMENTS

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

BORROWING ARRANGEMENTS

BORROWING ARRANGEMENTS

A summary of outstanding borrowings as of September 30, 2024 and December 31, 2023 follows:

(dollars in thousands)	September 30, 2024		December 31, 2023
FHLB advances	$	—	$	85,000
Subordinated notes	69,142		17,865
Total borrowings	$	69,142	$	102,865

Federal Home Loan Bank Secured Line of Credit

At September 30, 2024, the Company had a secured line of credit of $786.1 million from the FHLB, of which $663.6 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 September 30, 2024, the Company had pledged $2.20 billion of qualifying loans with the FHLB under a blanket lien, of which an unpaid principal balance of $1.44 billion was considered as eligible collateral under this secured borrowing arrangement. In addition, at September 30, 2024, the Company used $122.5 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 overnight borrowings at September 30, 2024. The Company had overnight borrowings of $85.0 million with an interest of 5.70% at December 31, 2023, respectively.

Federal Reserve Bank Secured Line of Credit

At September 30, 2024, the Company had credit availability of $446.4 million at the Federal Reserve discount window to the extent of collateral pledged. At September 30, 2024, the Company had pledged debt securities with an amortized cost of $56.3 million as collateral, and qualifying loans with an unpaid principal balance of $466.8 million as collateral through the Borrower-in-Custody (“BIC”) program. The Company had no discount window borrowings at September 30, 2024 and December 31, 2023.

Federal Funds Unsecured Lines of Credit

At September 30, 2024, the Company had six overnight unsecured credit lines from correspondent banks totaling $110.5 million. The lines are subject to annual review. There were no outstanding borrowings under these lines at September 30, 2024 and December 31, 2023.

Revolving Line of Credit

The Company assumed a senior revolving line of credit from CALB in connection with the Merger with a commitment of $3.0 million. This facility is secured by 100% of the common stock of the Bank. This revolving line of credit bears interest, due quarterly, at a rate of Prime plus 0.40% and matures in November 2024. The revolving line of credit contains certain financial covenants, including but not limited to, minimum capital, classified asset, nonperforming asset, primary and secondary liquidity, and debt service coverage ratios. At September 30, 2024, the Company was in compliance with all covenants under the revolving line of credit. There were no borrowings under this revolving line of credit at September 30, 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 September 30, 2024 and December 31, 2023, were $63 thousand and $135 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 September 30, 2024, 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 September 30, 2024, the net unamortized fair value discount was $688 thousand, 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 September 30, 2024, 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 September 30, 2024, the net unamortized fair value discount was $3.1 million. 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 September 30, 2024, the Company was in compliance with all covenants and terms of these notes.

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SHAREHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2024

Equity [Abstract]

SHAREHOLDERS' EQUITY

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. 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.

There were no shares repurchased under this share repurchase plan during the three and nine months ended September 30, 2024.

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)

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(LOSS) EARNINGS PER SHARE (“EPS”)

9 Months Ended

Sep. 30, 2024

Earnings Per Share [Abstract]

(LOSS) EARNINGS PER SHARE (“EPS”)

(LOSS) EARNINGS PER SHARE (“EPS”)

The following is a reconciliation of net (loss) income and shares outstanding to the (loss) income and number of shares used to compute EPS for the three and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands, except share and per share data)	2024		2023		2024		2023
Net (loss) income	$	(16,464)	$	6,556	$	(11,339)	$	21,498
Weighted average common shares outstanding - basic	27,705,844		18,304,023		21,579,175		18,216,546
Dilutive effect of outstanding:
Stock options and unvested stock grants	—		368,109		—		416,344
Weighted average common shares outstanding - diluted1	27,705,844		18,672,132		21,579,175		18,632,890
(Loss) earnings per common share - basic	$	(0.59)	$	0.36	$	(0.53)	$	1.18
(Loss) earnings per common share - diluted1	$	(0.59)	$	0.35	$	(0.53)	$	1.15

(1)Weighted average diluted shares for GAAP diluted EPS are the same as shares for calculating basis EPS due to the antidilutive effect of the diluted shares when considering the GAAP loss for the three and nine months ended September 30, 2024.

The Company’s only performance based restricted stock grants were vested when the performance conditions had been met on March 1, 2023. A total of 275,171 performance based restricted stock grants were vested and included in the computation of basic EPS for the three and nine months ended September 30, 2023 because the performance conditions had been met. For the three months ended September 30, 2024 and 2023, there were 538,726 and 14,750 restricted stock units and 58,785 and 12,750 stock options, respectively, that were not included in the computation of diluted earnings per share, because they were anti-dilutive. For the nine months ended September 30, 2024 and 2023, there were 392,424 and 91,080 restricted stock units and 71,066 and 8,637 stock options, respectively, that were not included in the computation of diluted earnings per share, because they were anti-dilutive.

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2024

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

In the ordinary course of business, the Company has granted 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 and nine months ended September 30, 2024 and 2023 follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Balance, beginning of period	$	5,295	$	7,732	$	5,928	$	8,073
Assumed in the Merger	22,523		—		22,523		—
New credit granted	—		—		—		—
Repayments	(18)		(1,136)		(651)		(1,477)
Balance, end of period	$	27,800	$	6,596	$	27,800	$	6,596

Directors and related interests deposits at September 30, 2024 and December 31, 2023, amounted to approximately $30.4 million and $16.4 million, respectively.

The Company leases its Ramona branch office from a beneficial owner who holds more than 5% of any class of the Company’s voting securities and is 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 and nine months ended September 30, 2024 and 2023 was $11 thousand and $33 thousand, respectively, and future minimum lease payments under the lease were $118 thousand and $151 thousand, respectively as of September 30, 2024 and December 31, 2023.

On 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 September 30, 2024 and December 31, 2023, total capital contributions made to this investment were $1.1 million and $910 thousand, respectively.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

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 September 30, 2024 and December 31, 2023:

(dollars in thousands)	September 30, 2024		December 31, 2023
Commitments to extend credit	$	1,033,055	$	405,854
Letters of credit issued to customers	17,978		4,939
Commitments to contribute capital to other equity investments	7,278		3,170
	$	1,058,311	$	413,963

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 and nine months ended September 30, 2024 was $161 thousand and $323 thousand, respectively, and for the three and nine months ended September 30, 2023 was $83 thousand and $240 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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STOCK-BASED COMPENSATION PLAN

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION PLAN

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.

In October 2020, the maximum number of shares under the 2019 Plan was increased by 300,000 to 2,500,000. In June 2021, the maximum number of shares under the 2019 Plan was increased by 900,000 to 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.

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 and nine months ended September 30, 2024, total stock-based compensation cost related to stock options and restricted shares units was $2.8 million and $4.7 million, respectively. Included in these amounts was $1.1 million related to the acceleration of vesting for replacement awards issued in connection with the Merger to non-continuing directors, executives and employees. For the three and nine months ended September 30, 2023, total stock-based compensation cost related to stock options and restricted shares units was $1.0 million and $3.8 million, respectively. For the three and nine months ended September 30, 2024, the

Company did not record any accelerated stock-based compensation expense for the performance-based restricted stock units. For three and nine months ended September 30, 2023, the Company recorded $632 thousand for an accelerated stock-based compensation expense for the performance-based restricted stock units.

Stock Options

As of September 30, 2024, there was $25 thousand of total unrecognized compensation cost related to the outstanding stock options. There were 1,500 stock options exercised with the intrinsic value of $12 thousand during the three months ended September 30, 2024, and no stock options exercised during the three months ended September 30, 2023.

There were 82,900 and 10,950 stock options exercised during the nine months ended September 30, 2024 and 2023, respectively. The intrinsic value of stock options exercised was approximately $570 thousand and $78 thousand for the nine months ended September 30, 2024 and 2023, respectively.

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 and nine months ended September 30, 2024 and 2023.

A summary of changes in outstanding stock options during the three and nine months ended September 30, 2024 and 2023 are presented below:

	Three Months Ended			Nine Months Ended
	September 30, 2024			September 30, 2024
(dollars in thousands, except share data)	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at beginning of period	175,363	$	9.47	272,813	$	9.30
Granted	—	$	—	—	$	—
Exercised	(1,500)	$	6.61	(82,900)	$	8.64
Expired	—	$	—	(750)	$	5.93
Forfeited	—	$	—	(15,300)	$	10.75
Outstanding at end of period	173,863	$	9.50	173,863	$	9.50	2.8	$	920
Options exercisable	167,663	$	9.46	167,663	$	9.46	2.7	$	894

	Three Months Ended			Nine Months Ended
	September 30, 2023			September 30, 2023
(dollars in thousands, except share data)	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at beginning of period	288,338	$	9.26	326,868	$	9.53
Granted	—	$	—	—	$	—
Exercised	—	$	—	(10,950)	$	8.53
Forfeited	(200)	$	10.99	(27,780)	$	12.78
Outstanding at end of period	288,138	$	9.26	288,138	$	9.26	3.4	$	1,369
Options exercisable	260,638	$	8.97	260,638	$	8.97	3.1	$	1,312

Restricted Stock Units

A summary of the changes in outstanding unvested restricted stock units during the three and nine months ended September 30, 2024 and 2023 is presented below:

	Three Months Ended			Nine Months Ended
	September 30, 2024			September 30, 2024
	Restricted Shares	Weighted Average Grant Date Fair Value		Restricted Shares	Weighted Average Grant Date Fair Value
Unvested at beginning of period	661,116	$	13.06	637,899	$	13.11
Granted(1)	769,002	$	15.50	937,037	$	15.45
Vested(2)	(141,262)	$	15.75	(280,050)	$	15.79
Forfeited	(77,808)	$	15.67	(83,838)	$	15.67
Unvested at end of period	1,211,048	$	13.06	1,211,048	$	13.06

(1)Includes 418,634 shares granted as replacement awards to continuing and non-continuing directors, executives and employees in connection with the Merger for the three and nine months ended September 30, 2024. The fair value of these replacement awards attributable to post-combination vesting a) will be recognized over the remaining vesting period for continuing directors, executives and employees and b) was immediately recognized for non-continuing directors, executives and employees as components of compensation expense.

(2)Includes the discretionary vesting of 123,123 replacement awards issued in connection with the Merger for non-continuing directors, executives and employees for the three and nine months ended September 30, 2024.

	Three Months Ended			Nine Months Ended
	September 30, 2023			September 30, 2023
	Restricted Shares	Weighted Average Grant Date Fair Value		Restricted Shares	Weighted Average Grant Date Fair Value
Unvested at beginning of period	774,067	$	13.17	959,337	$	11.55
Granted	16,329	$	14.76	204,231	$	16.58
Vested (1)	(17,148)	$	15.11	(390,320)	$	10.99
Forfeited	—	$	—	—	$	—
Unvested at end of period	773,248	$	13.16	773,248	$	13.16

(1)Included the vesting of performance-based awards totaling 275,171 shares, with a weighted average grant date fair value of $9.29 for the nine months ended September 30, 2023.

On March 1, 2023, the Board confirmed that all performance conditions for the performance-based restricted stock units totaling 275,171 shares had been satisfied and accelerated vesting in full. As of September 30, 2024, the Company did not have any outstanding unvested restricted stock units subject to various financial performance conditions. For the nine months ended September 30, 2023, the Company recorded accelerated stock-based compensation totaling $632 thousand.

As of September 30, 2024, there was $12.4 million of total unrecognized compensation expense related to the outstanding restricted stock units that will be recognized over the weighted-average period of 3.2 years. The total unrecognized compensation expense included $2.5 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 3.8 years. The total grant date fair value of restricted stock units vested was $2.2 million and $4.4 million for the three and nine months ended September 30, 2024, and $259 thousand and $4.3 million for the three and nine months ended September 30, 2023. Related tax expenses were approximately $4 thousand and $89 thousand for the three months ended September 30, 2024, respectively. Related tax expenses were approximately $2 thousand

for the three months ended September 30, 2023 and related tax benefits were $642 thousand for the nine months ended September 30, 2023.

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.

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REGULATORY MATTERS

9 Months Ended

Sep. 30, 2024

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]

REGULATORY MATTERS

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 September 30, 2024, the Company and the Bank exceeded the minimums necessary to qualify as “well capitalized” under the regulatory framework for prompt corrective action (“PCA”). As of December 31, 2023, the Bank exceeded the minimums necessary to qualify as “well capitalized” under the regulatory framework for PCA. Management believes, as of September 30, 2024 and December 31, 2023, that the Company and the Bank met all capital adequacy requirements to which we are subject.

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 September 30, 2024. At September 30, 2024, 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 September 30, 2024:
California BanCorp:
Total Capital (to Risk-Weighted Assets)	$	478,321	12.65	%	$	302,513	8.0	%	N/A		N/A
Tier 1 Capital (to Risk-Weighted Assets)	365,382		9.66	%	226,885		6.0	%	N/A		N/A
CET1 Capital (to Risk-Weighted Assets)	365,382		9.66	%	170,163		4.5	%	N/A		N/A
Tier 1 Capital (to Average Assets)	365,382		10.55	%	138,588		4.0	%	N/A		N/A
California Bank of Commerce, N.A.:
Total Capital (to Risk-Weighted Assets)	$	473,738	12.53	%	$	302,427	8.0	%	$	378,033	10.0	%
Tier 1 Capital (to Risk-Weighted Assets)	429,941		11.37	%	226,820		6.0	%	302,427		8.0	%
CET1 Capital (to Risk-Weighted Assets)	429,941		11.37	%	170,115		4.5	%	245,722		6.5	%
Tier 1 Capital (to Average Assets)	429,941		12.41	%	138,572		4.0	%	173,215		5.0	%
As of December 31, 2023:
California Bank of Commerce, N.A.:
Total Capital (to Risk-Weighted Assets)	$	289,743	13.51	%	$	171,575	8.0	%	$	214,469	10.0	%
Tier 1 Capital (to Risk-Weighted Assets)	270,341		12.61	%	128,681		6.0	%	171,575		8.0	%
CET1 Capital (to Risk-Weighted Assets)	270,341		12.61	%	96,511		4.5	%	139,405		6.5	%
Tier 1 Capital (to Average Assets)	270,341		11.65	%	92,818		4.0	%	116,022		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 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.

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FAIR VALUE

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

FAIR VALUE

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.

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 estimated 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 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.

The estimated fair value hierarchy level and estimated fair value of financial instruments at September 30, 2024 and December 31, 2023, is summarized as follows:

		September 30, 2024				December 31, 2023
				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	$	115,165	$	115,165	$	33,008	$	33,008
Fed funds and interest-bearing balances	Level 1	499,258		499,258		53,785		53,785
Debt securities available for sale	Level 1/2	159,330		159,330		130,035		130,035
Debt securities held to maturity	Level 2	53,364		49,487		53,616		50,432
Loans held for sale	Level 2	33,704		34,508		7,349		7,834
Loans held for investment, net	Level 3	3,146,162		3,144,451		1,934,873		1,883,154
Restricted stock, at cost	Level 2	27,394		27,394		16,055		16,055
Other equity securities	Level 2	14,712		14,712		9,187		9,187
Accrued interest receivable	Level 2	15,632		15,632		7,301		7,301
Financial liabilities:
Deposits	Level 2	3,740,915		3,740,963		1,943,556		1,943,007
Borrowings	Level 2	69,142		69,053		102,865		102,447
Accrued interest payable	Level 2	4,976		4,976		477		477

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
September 30, 2024
Securities available for sale:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	—	$	92,259	$	—	$	92,259
SBA securities	—		5,684		—		5,684
U.S. Treasury	17,321		—		—		17,321
U.S. Agency	—		1,743		—		1,743
Collateralized mortgage obligations	—		40,573		—		40,573
Taxable municipals	—		923		—		923
Tax exempt bank-qualified municipals	—		827		—		827
	$	17,321	$	142,009	$	—	$	159,330
December 31, 2023
Securities available for sale:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	—	$	74,434	$	—	$	74,434
SBA securities	—		5,782		—		5,782
U.S. Treasury	2,417		—		—		2,417
U.S. Agency	—		1,670		—		1,670
Collateralized mortgage obligations	—		43,501		—		43,501
Taxable municipals	—		1,421		—		1,421
Tax exempt bank-qualified municipals	—		810		—		810
	$	2,417	$	127,618	$	—	$	130,035

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 September 30, 2024, 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. These reviews resulted in a partial charge off of $967 thousand on the individually evaluated loans in the third quarter of 2024.

At December 31, 2023, the Company took a partial charge-off of $1.3 million on an individually evaluated collateral-dependent loan based on its recent property appraisals during the year ended December 31, 2023.

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 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.

During the three and nine months ended September 30, 2024, the Company recorded a $614 thousand valuation allowance due to a decline in the fair value of the underlying property in the third quarter of 2024. This amount is included within other charges and fees in the accompanying consolidated statements of operations.

The following tables summarize the fair value of assets and liabilities measured at fair value on a nonrecurring basis as of September 30, 2024 and December 31, 2023.

			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)
September 30, 2024
Collateral dependent loans (1):
Construction and Land	$	10,000	$	—	$	—	$	10,000
1-4 Family Residential	4,600		—		—		4,600
Foreclosed assets:
Other real estate owned, net	$	4,083	$	—	$	—	$	4,083
December 31, 2023
Collateral dependent loans (1):
Multifamily Residential	$	13,000	$	—	$	—	$	13,000

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

Quantitative information about Level 3 fair value measurements measured on a non-recurring basis are summarized below as of September 30, 2024 and December 31, 2023.

	Asset Fair		Valuation	Unobservable	% or Range %
(dollars in thousands)	Value		Technique	Input	(Weighted Average)
September 30, 2024
Construction and Land	$	10,000	Market approach	Land value	N/A
1-4 Family Residential	4,600		Market approach	Cost to sell	7.50%-7.50% (7.50%)
Other real estate owned, net	$	4,083	Market approach	Cost to sell	5.75%-5.75% (5.75%)
December 31, 2023
Multifamily Residential	$	13,000	Income approach	Capitalization rate	3.84%-4.94% (4.50%)

XML

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net (loss) income	$ (16,464)	$ 6,556	$ (11,339)	$ 21,498

XML

Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

XML

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

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, 2023.

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 and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

Principles of Consolidation

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.

Use of Estimates in the Preparation of Consolidated Financial Statements

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

Operating Segments

We operate one reportable segment — commercial banking. The factors considered in making this determination include that: 1) all of the banking products and services offered by the Company are available in each branch of the Company; 2) all branches are located within the same economic environment; 3) management does not allocate resources based on the performance of different lending or transaction activities; and 4) how information is reviewed by the chief executive officer and other key decision makers. As a result, the Company determined that all services we offer will be reported as a single operating segment.

Recently Adopted Accounting Guidance and Recent Accounting Guidance Not Yet Effective

Recently Adopted Accounting Guidance

On January 1, 2023, the Company adopted Accounting Standard Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326), which replaces the incurred loss impairment methodology with a methodology that reflects current expected credit losses (“CECL”) and requires consideration of historical experience, current conditions and reasonable and supportable forecasts to estimate expected credit losses for financial assets held at the reporting date. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, including loans, held-to-maturity debt securities and off-balance sheet credit exposures. ASU 2016-13 also requires credit losses on available-for-sale debt securities be measured through an allowance for credit losses. If the measurement indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses (“ACL”) is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. In addition, ASU 2016-13 modifies the other-than-temporary impairment (“OTTI”) model for available-for-sale debt securities to require an allowance for credit impairment instead of a direct write-down, which allows for reversal of credit impairments in future periods based on improvements in credit. The Company elected to account for accrued interest receivable separately from the amortized cost of loans and investment securities. The Company elected the CECL phase-in option provided by regulatory capital rules, which delays the impact of CECL on regulatory capital over a three-year transition period.

Concurrent with the adoption of ASU 2016-13, the Company adopted ASU 2022-02, Financial Instruments—Credit Losses (Topic 326) Troubled Debt Restructurings (“TDR”) and Vintage Disclosures, which eliminated TDR accounting prospectively for all loan modifications occurring on or after January 1, 2023 and added additional disclosure requirements for current period gross charge-offs by year of origination. It also prescribes guidance for reporting modifications for certain loan refinancings and restructurings made to borrowers experiencing financial difficulty. Loans that were considered a TDR prior to the adoption of ASU 2022-02 will

continue to be accounted for under the superseded TDR accounting guidance until the loan is paid off, liquidated, or subsequently modified.

The Company adopted ASU 2016-13 using the modified retrospective transition approach, and recorded a net decrease of $3.9 million to the beginning balance of retained earnings as of January 1, 2023 for the cumulative effect adjustment, reflecting an initial adjustment to the ACL of $5.5 million, which included a $5.0 million increase in the ACL - loans and a $439 thousand increase in reserve for unfunded commitments, net of related deferred tax assets arising from temporary differences of $1.6 million, commonly referred to as the “Day 1” adjustment. This Day 1 adjustment reflects the development of the CECL models to estimate lifetime expected credit losses on the loans held for investment and unfunded commitments primarily using a lifetime loss methodology and management’s current expectation of future economic conditions. Results for reporting periods beginning after January 1, 2023 are presented under CECL while prior period amounts continue to be reported in accordance with the probable incurred loss accounting standards. As permitted under ASC 326, the Company elected to maintain the same loan segments that it previously identified prior to adoption of CECL.

At adoption of CECL and continuing through September 30, 2024, the Company did not record an ACL on available-for-sale debt securities or held-to-maturity debt securities as these investment portfolios primarily consisted of debt securities explicitly or implicitly backed by the U.S. government or state and local governments, and historically have had no credit loss experience. Refer to Note 3 – Investment Securities, for more information.

The following table presents the impact of adopting ASU 2016-13 on January 1, 2023:

(dollars in thousands)	Pre-CECL Adoption		Impact of CECL Adoption		As Reported under CECL
Assets:
Allowance for credit losses - loans
Construction and land development	$	2,301	$	881	$	3,182
Real estate - other:
1-4 family residential	972		424		1,396
Multifamily residential	1,331		(279)		1,052
Commercial real estate and other	9,388		2,838		12,226
Commercial and industrial	3,079		1,132		4,211
Consumer	28		31		59
	$	17,099	$	5,027	$	22,126
Liabilities:
Allowance for credit losses - unfunded loan commitments	$	1,310	$	439	$	1,749

On January 1, 2024, the Company adopted ASU 2023-01, Leases (Topic 842): Common Control Arrangements. This standard requires entities to amortize leasehold improvements associated with common control leases over the useful life to the common control group. The standard is effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within these fiscal years. The Company did not have any such common control leases, so adoption of this standard had no impact to the consolidated financial statements.

On January 1, 2024, the Company adopted ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, a consensus of the Emerging Issues Task Force. The amendments in this update allow the option for an entity to apply the proportional amortization method of accounting to other equity investments that are made for the primary purpose of receiving tax credits or other income tax benefits, if certain conditions are met. Prior to

this update, the application of the proportional amortization method of accounting was only limited to low-income housing tax credit (“LIHTC”) structured investments. The proportional amortization method of accounting results in the amortization of applicable investments, as well as the related income tax credits or other income tax benefits received, being presented on a single line in the consolidated statements of operations, income tax expense. Under this update, an entity has the option to apply the proportional amortization method of accounting to applicable investments on a tax-credit-program-by-tax-credit-program basis. In addition, the amendments in this update require that all tax equity investments accounted for using the proportional amortization method use the delayed equity contribution guidance in paragraph 323-740-25-3, requiring a liability be recognized for delayed equity contributions that are unconditional and legally binding or for equity contributions that are contingent upon a future event when that contingent event becomes probable. Under this update, LIHTC structured investments for which the proportional amortization method is not applied can no longer be accounted for using the delayed equity contribution guidance. Further, this update specifies that impairment of LIHTC structure investments not accounted for using the equity method must apply the impairment guidance in Subtopic 323-10 - Investments - Equity Method and Joint Ventures - Overall. This update also clarifies that for LIHTC structure investments not accounted for under the proportional amortization method or the equity method, an entity shall account for them under Topic 321 - Investments - Equity Securities. The amendments in this update also require additional disclosures in interim and annual periods concerning investments for which the proportional amortization method is applied, including (i) the nature of tax equity investments, and (ii) the effect of tax equity investments and related income tax credits and other income tax benefits on the financial position and results of operations. The provisions of this update are effective for the Company for interim and annual periods beginning December 15, 2023. Early adoption is permitted. The adoption of this standard did not have a material impact to the consolidated financial statements.

Recent Accounting Guidance Not Yet Effective

In October 2023, the Financial Accounting Standards Board (“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-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 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures: In November 2023, the FASB issued 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 chief operating decision-maker ("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 Company has a single reportable segment and continues to assess ASU 2023-07 and its impact on its accounting and disclosures.

ASU No. 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures: On December 14, 2023, the FASB issued ASU 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” to address 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) 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. For public business entities, this ASU is effective for annual periods beginning after December 15, 2024. For other entities, this ASU is effective for annual periods beginning after December 15, 2025. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company expects the adoption of this standard will not have a material impact on its consolidated financial statements.

Allowance for Credit Losses

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 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 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 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 CALB 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: 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. Prior to the adoption of ASC Topic 326, individually evaluated loans were referred to as impaired loans. 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 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 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 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

Loan Modifications, Refinancings and Restructurings

Prior to the adoption of ASU 2022-02, a loan was classified as a 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. Since adoption of ASU 2022-02 on January 1, 2023, the Company did not have any loan modifications under ASU 2022-02.

Fair Value of Financial Instruments

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.

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 estimated 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 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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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Impact of Adopting ASU 2016-13

The following table presents the impact of adopting ASU 2016-13 on January 1, 2023:

(dollars in thousands)	Pre-CECL Adoption		Impact of CECL Adoption		As Reported under CECL
Assets:
Allowance for credit losses - loans
Construction and land development	$	2,301	$	881	$	3,182
Real estate - other:
1-4 family residential	972		424		1,396
Multifamily residential	1,331		(279)		1,052
Commercial real estate and other	9,388		2,838		12,226
Commercial and industrial	3,079		1,132		4,211
Consumer	28		31		59
	$	17,099	$	5,027	$	22,126
Liabilities:
Allowance for credit losses - unfunded loan commitments	$	1,310	$	439	$	1,749

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BUSINESS COMBINATIONS (Tables)

9 Months Ended

Sep. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Schedule of Preliminary Fair Value of Assets Acquired and Liabilities and Merger Related Costs

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:

(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			6,437
Premises and equipment			1,670
Operating lease right-of-use asset			7,743
Prepaid expenses			876
Deferred taxes, net			30,221
Bank owned life insurance			26,338
Core deposit intangible			22,653
Other assets			35,040
Total assets acquired			1,863,988
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			$	141,926
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			$	74,712

(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.

Total merger-related costs, which are reflected as merger and related costs in the accompanying consolidated statements of operations, included the following total amounts for the three and nine months ended September 30, 2024:

	Three Months Ended		Nine Months Ended
(dollars in thousands)	September 30, 2024		September 30, 2024
Financial advisory fees	$	2,326	$	2,576
Legal, accounting, valuation and other professional costs	300		768
Information technology	4,466		4,729
Change in control costs/severance	6,238		6,238
Insurance	919		919
Other	356		415
	$	14,605	$	15,645

Schedule of Final Fair Value of Assets Acquired and Liabilities

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:

(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			6,437
Premises and equipment			1,670
Operating lease right-of-use asset			7,743
Prepaid expenses			876
Deferred taxes, net			30,221
Bank owned life insurance			26,338
Core deposit intangible			22,653
Other assets			35,040
Total assets acquired			1,863,988
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			$	141,926
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			$	74,712

(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.

Schedule of Purchased Credit Deteriorated Loans

The following table presents the composition of purchased credit-deteriorated (“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

Schedule of Business Acquisition, Pro Forma Information

The following table presents the total revenue and net income amounts related to CALB’s operations included in the Company’s consolidated statements of operations from the acquisition date of July 31, 2024 through September 30, 2024:

	Three and Nine Months Ended September 30,
(dollars in thousands)	2024
Net interest income and noninterest income(1)	$	11,912
Net income(1)	$	3,429

(1)As the Company has integrated the operations of CALB into its consolidated operating results, the above table reflects identifiable activities attributable to assets acquired and liabilities assumed in the Merger including, but not limited to, interest income on loans and investments, interest expense on deposits and borrowings, branch-level income and expenses and other identifiable activities. The amounts above do not reflect purchase accounting adjustments and other merger-related activity.

The following supplemental pro forma information presents certain financial results for the three and nine months ended September 30, 2024 and 2023 as if the merger of CALB was effective as of January 1, 2023. The supplemental unaudited pro forma financial information included in the table below is based on various estimates and is presented for informational purposes only and does not indicate the results of operations of the combined company that would have been achieved for the periods presented had the transactions been completed as of the date indicated or that may be achieved in the future.

Supplemental unaudited pro forma financial information:	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Net interest income and noninterest income	$	35,002	$	37,359	$	128,376	$	139,682
Net (loss) income	(5,692)		15,094		6,515		17,500

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INVESTMENT SECURITIES (Tables)

9 Months Ended

Sep. 30, 2024

Investments, Debt and Equity Securities [Abstract]

Schedule of Amortized Cost and Fair Value of Held-to-Maturity Debt Securities

The amortized cost of held-to-maturity debt securities and their approximate fair values at September 30, 2024 and December 31, 2023 were as follows:

(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2024
Taxable municipals	$	553	$	—	$	(70)	$	483
Tax exempt bank-qualified municipals	52,811		—		(3,807)		49,004
	$	53,364	$	—	$	(3,877)	$	49,487
December 31, 2023
Taxable municipals	$	551	$	—	$	(73)	$	478
Tax exempt bank-qualified municipals	53,065		25		(3,136)		49,954
	$	53,616	$	25	$	(3,209)	$	50,432

Schedule of Amortized Cost and Fair Value of Available-for-Sale Debt Securities

The amortized cost of available-for-sale debt securities and their approximate fair values at September 30, 2024 and December 31, 2023 were as follows:

(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
September 30, 2024
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	93,445	$	1,284	$	(2,470)	$	92,259
SBA securities	5,754		12		(82)		5,684
U.S. Treasury	17,552		34		(265)		17,321
U.S. Agency	2,000		—		(257)		1,743
Collateralized mortgage obligations	42,796		180		(2,403)		40,573
Taxable municipals	1,007		1		(85)		923
Tax exempt bank-qualified municipals	830		—		(3)		827
	$	163,384	$	1,511	$	(5,565)	$	159,330
December 31, 2023
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	77,031	$	631	$	(3,228)	$	74,434
SBA securities	5,886		5		(109)		5,782
U.S. Treasury	2,760		—		(343)		2,417
U.S. Agency	2,000		—		(330)		1,670
Collateralized mortgage obligations	46,330		173		(3,002)		43,501
Taxable municipals	1,528		—		(107)		1,421
Tax exempt bank-qualified municipals	831		—		(21)		810
	$	136,366	$	809	$	(7,140)	$	130,035

Schedule of Debt Securities Classified by Contractual Maturities

The amortized cost and estimated fair value of all held-to-maturity and available-for-sale debt securities as of September 30, 2024 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
September 30, 2024
Due in one year or less	$	—	$	—	$	27,641	$	27,668
Due after one year through five years	—		—		10,246		9,367
Due after five years through ten years	22,282		20,911		17,670		16,579
Due after ten years	31,082		28,576		107,827		105,716
	$	53,364	$	49,487	$	163,384	$	159,330

Schedule of Gross Realized Gains (Losses) of Available-for-Sale Debt Securities

The following table presents gross realized gains and losses for sales and calls of available-for-sale debt securities for the three and nine months ended September 30, 2024 and 2023 follows:

	Three Months Ended				Nine Months Ended
(dollars in thousands)	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Gross gains on sales and calls	$	—	$	—	$	—	$	181
Gross losses on sales and calls	—		—		—		(147)
Gain on sale of available-for-sale debt securities	—		—		—		34

Schedule of Gross Unrealized Losses and Estimated Fair Values of Available-for-Sale Debt Securities

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 September 30, 2024 and December 31, 2023 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
September 30, 2024:
Available-for-sale debt securities:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities:	$	(51)	$	9,361	$	(2,419)	$	20,025	$	(2,470)	$	29,386
SBA securities	(1)		167		(81)		3,231		(82)		3,398
U.S. Treasury	—		—		(265)		2,456		(265)		2,456
U.S. Agency	—		—		(257)		1,743		(257)		1,743
Collateralized mortgage obligations	(84)		2,686		(2,319)		31,274		(2,403)		33,960
Taxable municipals	—		—		(85)		422		(85)		422
Tax exempt bank-qualified municipals	—		—		(3)		827		(3)		827
	$	(136)	$	12,214	$	(5,429)	$	59,978	$	(5,565)	$	72,192
December 31, 2023:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities:	$	(160)	$	23,738	$	(3,068)	$	20,951	$	(3,228)	$	44,689
SBA securities	(8)		2,193		(101)		1,790		(109)		3,983
U.S. Treasury	—		—		(343)		2,417		(343)		2,417
U.S. Agency	—		—		(330)		1,670		(330)		1,670
Collateralized mortgage obligations	(311)		15,684		(2,691)		23,360		(3,002)		39,044
Taxable municipals	—		—		(107)		921		(107)		921
Tax exempt bank-qualified municipals	—		—		(21)		810		(21)		810
	$	(479)	$	41,615	$	(6,661)	$	51,919	$	(7,140)	$	93,534

Schedule of Restricted Stock Investments

The table below summarizes the Company’s restricted stock investments at September 30, 2024 and December 31, 2023:

(dollars in thousands)	September 30, 2024		December 31, 2023
Federal Reserve Bank	$	12,089	$	7,430
Federal Home Loan Bank	15,305		8,625
	$	27,394	$	16,055

Schedule of Activity in Qualifying Low Income Housing Projects

The following table presents activity in qualifying low income housing projects for the three and nine months ended September 30, 2024 and 2023 follows:

	Three Months Ended				Nine Months Ended
(dollars in thousands)	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Proportional amortization	$	(187)	$	—	$	(238)	$	—
Tax credits	257		—		393		—
Contributions	62		208		217		208

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LOANS AND ALLOWANCE FOR CREDIT LOSSES (Tables)

9 Months Ended

Sep. 30, 2024

Receivables [Abstract]

Schedule of Loan Portfolio

The composition of the Company’s loan portfolio at September 30, 2024 and December 31, 2023 was as follows:

(dollars in thousands)	September 30, 2024		December 31, 2023
Construction and land development	$	247,934	$	243,521
Real estate - other:
1-4 family residential	152,540		143,903
Multifamily residential	252,134		221,247
Commercial real estate and other	1,755,908		1,024,243
Commercial and industrial	765,472		320,142
Consumer	25,726		4,386
Loans held for investment (1)	3,199,714		1,957,442
Allowance for credit losses	(53,552)		(22,569)
Loans held for investment, net	$	3,146,162	$	1,934,873

(1)Loans held for investment includes net unearned fees of $1.6 million and $2.3 million and net unearned discounts on acquired loans of $66.0 million and $1.4 million at September 30, 2024 and December 31, 2023, respectively. The Company recognized $4.2 million and $4.3 million, respectively, in interest accretion for acquired loans for the three and nine months ended September 30, 2024.

Schedule of Risk Category of Loans by Class and Origination Year

The risk category of loans by class of loans and origination year as of September 30, 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
September 30, 2024
Construction and land development
Pass	$	493	$	40,861	$	111,686	$	51,163	$	17,283	$	2,340	$	8,476	$	—	$	232,302
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		9,659		—		2,945		3,028		—		—		15,632
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total construction and land development	493		40,861		121,345		51,163		20,228		5,368		8,476		—		247,934
Real estate - other:
1-4 family residential
Pass	6,271		21,137		33,768		17,995		6,736		17,562		45,329		—		148,798
Special mention	—		—		—		—		—		847		—		—		847
Substandard	—		—		2,895		—		—		—		—		—		2,895
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total 1-4 family residential	6,271		21,137		36,663		17,995		6,736		18,409		45,329		—		152,540
Multifamily residential
Pass	1,625		18,808		91,437		89,992		5,287		43,506		1,479		—		252,134
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total multifamily residential	1,625		18,808		91,437		89,992		5,287		43,506		1,479		—		252,134

	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
September 30, 2024
Commercial real estate and other
Pass	74,938		83,188		457,671		398,356		101,050		472,661		106,386		151		1,694,401
Special mention	—		9,585		5,059		14,148		2,277		10,870		1,596		497		44,032
Substandard	—		—		—		11,573		—		5,902		—		—		17,475
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial real estate and other	74,938		92,773		462,730		424,077		103,327		489,433		107,982		648		1,755,908
Commercial and industrial
Pass	48,106		75,264		122,585		45,355		15,765		70,103		271,764		—		648,942
Special mention	383		1,251		—		7,556		285		2,099		36,995		—		48,569
Substandard	—		50		21,535		268		—		3,644		42,464		—		67,961
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial and industrial	48,489		76,565		144,120		53,179		16,050		75,846		351,223		—		765,472
Consumer
Pass	1,088		—		1,107		22,946		100		7		143		—		25,391
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		335		—		—		—		—		335
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total consumer	1,088		—		1,107		23,281		100		7		143		—		25,726
Total loans	$	132,904	$	250,144	$	857,402	$	659,687	$	151,728	$	632,569	$	514,632	$	648	$	3,199,714
Total by risk rating:
Pass	$	132,521	$	239,258	$	818,254	$	625,807	$	146,221	$	606,179	$	433,577	$	151	$	3,001,968
Special mention	383		10,836		5,059		21,704		2,562		13,816		38,591		497		93,448
Substandard	—		50		34,089		12,176		2,945		12,574		42,464		—		104,298
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total loans	$	132,904	$	250,144	$	857,402	$	659,687	$	151,728	$	632,569	$	514,632	$	648	$	3,199,714

The risk category of loans by class of loans and origination year as of December 31, 2023 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)	2023		2022		2021		2020		2019		Prior						Total
December 31, 2023
Construction and land development
Pass	$	25,113	$	127,496	$	71,199	$	17,022	$	2,071	$	528	$	—	$	—	$	243,429
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		92		—		—		92
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total construction and land development	25,113		127,496		71,199		17,022		2,071		620		—		—		243,521
Real estate - other:
1-4 family residential
Pass	24,928		35,670		20,207		6,887		4,884		15,582		35,645		100		143,903
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total 1-4 family residential	24,928		35,670		20,207		6,887		4,884		15,582		35,645		100		143,903
Multifamily residential
Pass	18,803		61,677		73,365		5,712		27,292		21,245		149		—		208,243
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		13,004		—		—		—		—		—		—		13,004
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total multifamily residential	18,803		74,681		73,365		5,712		27,292		21,245		149		—		221,247

	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)	2023		2022		2021		2020		2019		Prior						Total
Commercial real estate and other
Pass	76,434		304,524		287,245		57,736		51,992		203,976		36,543		1,626		1,020,076
Special mention	—		2,701		—		—		—		—		295		—		2,996
Substandard	—		—		—		—		—		1,171		—		—		1,171
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial real estate and other	76,434		307,225		287,245		57,736		51,992		205,147		36,838		1,626		1,024,243
Commercial and industrial
Pass	46,701		70,658		12,883		7,095		8,266		13,715		153,712		1,877		314,907
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		346		64		—		1,208		121		3,097		399		5,235
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total commercial and industrial	46,701		71,004		12,947		7,095		9,474		13,836		156,809		2,276		320,142
Consumer
Pass	163		—		39		91		6		11		4,076		—		4,386
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total consumer	163		—		39		91		6		11		4,076		—		4,386
Total loans	$	192,142	$	616,076	$	465,002	$	94,543	$	95,719	$	256,441	$	233,517	$	4,002	$	1,957,442
Total by risk rating:
Pass	$	192,142	$	600,025	$	464,938	$	94,543	$	94,511	$	255,057	$	230,125	$	3,603	$	1,934,944
Special mention	—		2,701		—		—		—		—		295		—		2,996
Substandard	—		13,350		64		—		1,208		1,384		3,097		399		19,502
Doubtful	—		—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—		—
Total loans	$	192,142	$	616,076	$	465,002	$	94,543	$	95,719	$	256,441	$	233,517	$	4,002	$	1,957,442

A summary of gross charge-offs by class of loans and origination year for the nine months ended September 30, 2024 and 2023 follows:

	Term Loans Gross Charge-offs 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
Nine Months Ended September 30, 2024
Construction and land development	$	—	$	—	$	967	$	—	$	—	$	—	$	—	$	—	$	967
Real estate - other:
1-4 family residential	—		—		—		—		—		—		1		—		1
Multifamily residential	—		—		1,456		—		—		—		—		—		1,456
Commercial real estate and other	—		—		—		—		—		—		—		—		—
Commercial and industrial	—		37		24		—		—		—		—		—		61
Consumer	—		—		—		135		—		—		—		—		135
Total	$	—	$	37	$	2,447	$	135	$	—	$	—	$	1	$	—	$	2,620

	Term Loans Gross Charge-offs by Origination Year												Revolving Loans Amortized Cost Basis		Revolving Loans Amortized Cost Basis Converted to Term During the Period
(dollars in thousands)	2023		2022		2021		2020		2019		Prior						Total
Nine Months Ended September 30, 2023
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate - other:
1-4 family residential	—		—		—		—		—		12		—		—		12
Multifamily residential	—		—		—		—		—		—		—		—		—
Commercial real estate and other	—		—		—		—		—		—		—		—		—
Commercial and industrial	—		—		—		15		—		9		—		—		24
Consumer	—		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	15	$	—	$	21	$	—	$	—	$	36

Schedule of Past Due Loans and Collateral Dependent Loans

A summary of past due loans as of September 30, 2024 and December 31, 2023 follows:

	Current
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Nonaccrual		Total
September 30, 2024
Construction and land development	$	—	$	—	$	—	$	—	$	238,275	$	9,659	$	247,934
Real estate - other:
1-4 family residential	—		—		—		—		149,645		2,895		152,540
Multifamily residential	—		—		—		—		252,134		—		252,134
Commercial real estate and other	18,175		—		—		18,175		1,728,628		9,105		1,755,908
Commercial and industrial	667		—		—		667		760,803		4,002		765,472
Consumer	96		172		37		305		25,421		—		25,726
	$	18,938	$	172	$	37	$	19,147	$	3,154,906	$	25,661	$	3,199,714

	Current
(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Nonaccrual		Total
December 31, 2023
Construction and land development	$	—	$	—	$	—	$	—	$	243,521	$	—	$	243,521
Real estate - other:
1-4 family residential	—		—		—		—		143,903		—		143,903
Multifamily residential	—		—		—		—		208,243		13,004		221,247
Commercial real estate and other	—		—		—		—		1,024,243		—		1,024,243
Commercial and industrial	19		—		—		19		320,123		—		320,142
Consumer	—		—		—		—		4,386		—		4,386
	$	19	$	—	$	—	$	19	$	1,944,419	$	13,004	$	1,957,442

A summary of collateral dependent loans by collateral type as of September 30, 2024 and December 31, 2023 follows:

	Type of Collateral
(dollars in thousands)	Commercial Real Estate		Residential Real Estate		Business Assets
September 30, 2024
Construction and land development	$	—	$	9,659	$	—
Real estate - other:
1-4 family residential	—		2,895		—
Commercial real estate and other	10,535		—		—
Commercial and industrial	—		271		2,301
	$	10,535	$	12,825	$	2,301
December 31, 2023
Multifamily residential	$	—	$	13,004	$	—
	$	—	$	13,004	$	—

Schedule of Nonaccrual Loans

A summary of total nonaccrual loans and the amount of nonaccrual loans with no related ACL as of September 30, 2024 and December 31, 2023 follows:

	September 30, 2024				December 31, 2023
(dollars in thousands)	Total Nonaccrual Loans		Nonaccrual Loans with no ACL		Total Nonaccrual Loans		Nonaccrual Loans with no ACL
Construction and land development	$	9,659	$	9,659	$	—	$	—
Real estate - other:
1-4 family residential	2,895		2,895		—		—
Multifamily residential	—		—		13,004		13,004
Commercial real estate and other	9,105		117		—		—
Commercial and industrial	4,002		—		—		—
Consumer	—		—		—		—
	$	25,661	$	12,671	$	13,004	$	13,004

Schedule of Modified Loans to Borrowers

A summary of modified loans to borrowers experiencing financial difficulty as of September 30, 2024 follows:

(dollars in thousands)	Commercial & Industrial		Total
September 30, 2024:
Term extension:
Amortized cost basis	13,094		13,094
% of total class of loans	1.7	%	0.4	%

Schedule of Modified Financing Receivable, Modified, Past Due

A summary of the payment status for modified loans to borrowers experiencing financial difficulty as of September 30, 2024 follows:

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Current		Total
September 30, 2024:
Commercial and industrial	—		—		397		397		12,697		13,094
	$	—	$	—	$	397	$	397	$	12,697	$	13,094

Schedule of Changes in Allowance for Credit Losses

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

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Allowance for loan losses (ALL)
Balance, beginning of period	$	23,788	$	22,502	$	22,569	$	17,099
Adoption of ASU No. 2016-13(1)	—		—		—		5,027
Initial allowance for acquired PCD loans	11,216		—		11,216		—
Provision for loan losses(2)	19,711		202		22,387		600
Charge-offs	(1,163)		—		(2,620)		(36)
Recoveries	—		1		—		15
Net (charge-offs) recoveries	(1,163)		1		(2,620)		(21)
Balance, end of period	$	53,552	$	22,705	$	53,552	$	22,705
Reserve for unfunded loan commitments
Balance, beginning of period	$	819	$	1,538	$	933	$	1,310
Adoption of ASU No. 2016-13(1)	—		—		—		439
Provision for (reversal of) credit losses for unfunded loan commitments(3)	3,252		(298)		3,138		(509)
Balance, end of period	4,071		1,240		4,071		1,240
Allowance for credit losses, end of period	$	57,623	$	23,945	$	57,623	$	23,945

(1)Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2023. As a result of adopting ASU 2016-13, the Company’s methodology to compute our ACL is based on a CECL methodology, rather than the previously applied incurred loss methodology.

(2)Includes an initial provision for credit losses for non-PCD loans acquired in the Merger of $18.5 million for the three and nine months ended September 30, 2024. There was no similar activity in the comparable 2023 period.

(3)Includes an initial provision for credit losses for unfunded commitments acquired in the Merger of $2.7 million for the three and nine months ended September 30, 2024. There was no similar activity in the comparable 2023 period.

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 September 30, 2024
Beginning of period	$	2,942	$	17,048	$	3,795	$	3	$	23,788
Initial allowance for acquired PCD loans	328		2,392		8,355		141		11,216
(Reversal of) provision for loan losses(1)	(219)		10,020		8,769		1,141		19,711
Charge-offs	(967)		—		(61)		(135)		(1,163)
Recoveries	—		—		—		—		—
Net charge-offs	(967)		—		(61)		(135)		(1,163)
End of period	$	2,084	$	29,460	$	20,858	$	1,150	$	53,552
Three Months Ended September 30, 2023
Beginning of period	$	3,556	$	15,097	$	3,808	$	41	$	22,502
(Reversal of) provision for loan losses	(1,021)		1,318		(70)		(25)		202
Charge-offs	—		—		—		—		—
Recoveries	—		—		1		—		1
Net recoveries	—		—		1		—		1
End of period	$	2,535	$	16,415	$	3,739	$	16	$	22,705

(1)Includes an initial provision for credit losses for non-PCD loans acquired in the Merger of $18.5 million for the three months ended September 30, 2024. There was no similar activity in the comparable 2023 period.

(dollars in thousands)	Construction and Land Development		Real Estate - Other		Commercial & Industrial		Consumer		Total
Nine Months Ended September 30, 2024
Beginning of period	$	2,032	$	16,280	$	4,242	$	15	$	22,569
Initial allowance for acquired PCD loans	328		2,392		8,355		141		11,216
Provision for loan losses(1)	691		12,245		8,322		1,129		22,387
Charge-offs	(967)		(1,457)		(61)		(135)		(2,620)
Recoveries	—		—		—		—		—
Net charge-offs	$	(967)	$	(1,457)	$	(61)	$	(135)	$	(2,620)
End of period	$	2,084	$	29,460	$	20,858	$	1,150	$	53,552
Nine Months Ended September 30, 2023
Beginning of period	$	2,301	$	11,691	$	3,079	$	28	$	17,099
Adoption of ASU No. 2016-13(2)	881		2,983		1,132		31		5,027
(Reversal of) provision for loan losses	(647)		1,753		(463)		(43)		600
Charge-offs	—		(12)		(24)		—		(36)
Recoveries	—		—		15		—		15
Net charge-offs	$	—	$	(12)	$	(9)	$	—	$	(21)
End of period	$	2,535	$	16,415	$	3,739	$	16	$	22,705

(1)Includes an initial provision for credit losses for non-PCD loans acquired in the Merger of $18.5 million for the nine months ended September 30, 2024. There was no similar activity in the comparable 2023 period.

(2)Represents the impact of adopting ASU 2016-13, Financial Instruments - Credit Losses on January 1, 2023. As a result of adopting ASU 2016-13, the Company’s methodology to compute our ACL is based on a CECL methodology, rather than the previously applied incurred loss methodology.

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TRANSFERS AND SERVICING OF FINANCIAL ASSETS (Tables)

9 Months Ended

Sep. 30, 2024

Transfers and Servicing [Abstract]

Schedule of Change in SBA Servicing Asset

A summary of changes in the SBA servicing asset for the three and nine months ended September 30, 2024 and 2023 follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Balance, beginning of period	$	521	$	683	$	546	$	514
Additions	—		—		109		216
Amortization (1)	(106)		(54)		(240)		(101)
Balance, end of period	$	415	$	629	$	415	$	629

(1) Amortization included accelerated amortization of $84 thousand and $29 thousand for the three months ended September 30, 2024 and 2023, respectively, and $174 thousand and $32 thousand for the nine months ended September 30, 2024 and 2023, respectively.

Schedule of Significant Valuation Assumptions for the SBA Servicing Asset

The significant assumptions used in the valuation of the SBA servicing asset at September 30, 2024 and December 31, 2023 included:

(dollars in thousands)	September 30, 2024	December 31, 2023
Discount rate:
Range	6.5% – 25.4%	10.5% – 26.2%
Weighted average	14.3%	16.1%
Prepayment speed:
Range	12.4% – 38.7%	11.2% – 48.1%
Weighted average	20.1%	19.0%

Schedule of Components of Net Servicing Fees Included in Noninterest Income

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 and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Contractually specified fees	$	114	$	113	297		309
Amortization	(106)		(54)		(240)		(101)
Net servicing fees	$	8	$	59	$	57	$	208

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GOODWILL AND OTHER INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Changes in the Carrying Amount of Goodwill

The following table presents changes in the carrying amount of goodwill for the three and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Balance, beginning of period	$	37,803	$	37,803	$	37,803	$	37,803
Goodwill from CALB merger	74,712		—		74,712		—
Balance, end of period	$	112,515	$	37,803	$	112,515	$	37,803

Schedule of Changes in Core Deposit Intangibles

The following table presents the changes in core deposit intangibles for the three and nine months ended September 30, 2024 and 2023.

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Gross balance, beginning of period	$	4,185	$	4,185	$	4,185	$	4,185
Additions from CALB merger	22,653		—		22,653		—
Gross balance, end of period	$	26,838	$	4,185	$	26,838	$	4,185
Accumulated amortization:
Balance, beginning of period	$	(3,120)	$	(2,782)	$	(2,990)	$	(2,601)
Amortization	(687)		(128)		(817)		(309)
Balance, end of period	(3,807)		(2,910)		(3,807)		(2,910)
Net core deposit intangible, end of period	$	23,031	$	1,275	$	23,031	$	1,275

Schedule of Future Estimated Amortization Expense

Future estimated amortization expense is as follows:

(dollars in thousands)	Amount
Remainder of 2024	$	998
2025	3,641
2026	3,051
2027	2,761
2028	2,465
Thereafter	10,115
	$	23,031

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DEPOSITS (Tables)

9 Months Ended

Sep. 30, 2024

Deposits [Abstract]

Schedule of Maturities of Time Deposits

At September 30, 2024, the scheduled maturities of time deposits are as follows:

(dollars in thousands)	Amount
Remainder of 2024	$	265,493
2025	171,637
2026	4,765
2027	74
2028 and thereafter	250
	$	442,219

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BORROWING ARRANGEMENTS (Tables)

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Schedule of Outstanding Borrowings

A summary of outstanding borrowings as of September 30, 2024 and December 31, 2023 follows:

(dollars in thousands)	September 30, 2024		December 31, 2023
FHLB advances	$	—	$	85,000
Subordinated notes	69,142		17,865
Total borrowings	$	69,142	$	102,865

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(LOSS) EARNINGS PER SHARE (“EPS”) (Tables)

9 Months Ended

Sep. 30, 2024

Earnings Per Share [Abstract]

Schedule of Reconciliation of Net Income and Shares Outstanding to Compute EPS

The following is a reconciliation of net (loss) income and shares outstanding to the (loss) income and number of shares used to compute EPS for the three and nine months ended September 30, 2024 and 2023:

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands, except share and per share data)	2024		2023		2024		2023
Net (loss) income	$	(16,464)	$	6,556	$	(11,339)	$	21,498
Weighted average common shares outstanding - basic	27,705,844		18,304,023		21,579,175		18,216,546
Dilutive effect of outstanding:
Stock options and unvested stock grants	—		368,109		—		416,344
Weighted average common shares outstanding - diluted1	27,705,844		18,672,132		21,579,175		18,632,890
(Loss) earnings per common share - basic	$	(0.59)	$	0.36	$	(0.53)	$	1.18
(Loss) earnings per common share - diluted1	$	(0.59)	$	0.35	$	(0.53)	$	1.15

(1)Weighted average diluted shares for GAAP diluted EPS are the same as shares for calculating basis EPS due to the antidilutive effect of the diluted shares when considering the GAAP loss for the three and nine months ended September 30, 2024.

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RELATED PARTY TRANSACTIONS (Tables)

9 Months Ended

Sep. 30, 2024

Related Party Transactions [Abstract]

Schedule of Related Party Loans Outstanding

The balance of these loans outstanding and activity in related party loans for the three and nine months ended September 30, 2024 and 2023 follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	2024		2023		2024		2023
Balance, beginning of period	$	5,295	$	7,732	$	5,928	$	8,073
Assumed in the Merger	22,523		—		22,523		—
New credit granted	—		—		—		—
Repayments	(18)		(1,136)		(651)		(1,477)
Balance, end of period	$	27,800	$	6,596	$	27,800	$	6,596

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COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Schedule of Outstanding Financial Commitments Representing Potential Credit Risk

The Company had the following outstanding financial commitments whose contractual amount represents potential credit risk at September 30, 2024 and December 31, 2023:

(dollars in thousands)	September 30, 2024		December 31, 2023
Commitments to extend credit	$	1,033,055	$	405,854
Letters of credit issued to customers	17,978		4,939
Commitments to contribute capital to other equity investments	7,278		3,170
	$	1,058,311	$	413,963

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STOCK-BASED COMPENSATION PLAN (Tables)

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of Changes in Outstanding Stock Options

A summary of changes in outstanding stock options during the three and nine months ended September 30, 2024 and 2023 are presented below:

	Three Months Ended			Nine Months Ended
	September 30, 2024			September 30, 2024
(dollars in thousands, except share data)	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at beginning of period	175,363	$	9.47	272,813	$	9.30
Granted	—	$	—	—	$	—
Exercised	(1,500)	$	6.61	(82,900)	$	8.64
Expired	—	$	—	(750)	$	5.93
Forfeited	—	$	—	(15,300)	$	10.75
Outstanding at end of period	173,863	$	9.50	173,863	$	9.50	2.8	$	920
Options exercisable	167,663	$	9.46	167,663	$	9.46	2.7	$	894

	Three Months Ended			Nine Months Ended
	September 30, 2023			September 30, 2023
(dollars in thousands, except share data)	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at beginning of period	288,338	$	9.26	326,868	$	9.53
Granted	—	$	—	—	$	—
Exercised	—	$	—	(10,950)	$	8.53
Forfeited	(200)	$	10.99	(27,780)	$	12.78
Outstanding at end of period	288,138	$	9.26	288,138	$	9.26	3.4	$	1,369
Options exercisable	260,638	$	8.97	260,638	$	8.97	3.1	$	1,312

Schedule of Changes in Outstanding Unvested Restricted Stock Units

A summary of the changes in outstanding unvested restricted stock units during the three and nine months ended September 30, 2024 and 2023 is presented below:

	Three Months Ended			Nine Months Ended
	September 30, 2024			September 30, 2024
	Restricted Shares	Weighted Average Grant Date Fair Value		Restricted Shares	Weighted Average Grant Date Fair Value
Unvested at beginning of period	661,116	$	13.06	637,899	$	13.11
Granted(1)	769,002	$	15.50	937,037	$	15.45
Vested(2)	(141,262)	$	15.75	(280,050)	$	15.79
Forfeited	(77,808)	$	15.67	(83,838)	$	15.67
Unvested at end of period	1,211,048	$	13.06	1,211,048	$	13.06

(1)Includes 418,634 shares granted as replacement awards to continuing and non-continuing directors, executives and employees in connection with the Merger for the three and nine months ended September 30, 2024. The fair value of these replacement awards attributable to post-combination vesting a) will be recognized over the remaining vesting period for continuing directors, executives and employees and b) was immediately recognized for non-continuing directors, executives and employees as components of compensation expense.

(2)Includes the discretionary vesting of 123,123 replacement awards issued in connection with the Merger for non-continuing directors, executives and employees for the three and nine months ended September 30, 2024.

	Three Months Ended			Nine Months Ended
	September 30, 2023			September 30, 2023
	Restricted Shares	Weighted Average Grant Date Fair Value		Restricted Shares	Weighted Average Grant Date Fair Value
Unvested at beginning of period	774,067	$	13.17	959,337	$	11.55
Granted	16,329	$	14.76	204,231	$	16.58
Vested (1)	(17,148)	$	15.11	(390,320)	$	10.99
Forfeited	—	$	—	—	$	—
Unvested at end of period	773,248	$	13.16	773,248	$	13.16

(1)Included the vesting of performance-based awards totaling 275,171 shares, with a weighted average grant date fair value of $9.29 for the nine months ended September 30, 2023.

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REGULATORY MATTERS (Tables)

9 Months Ended

Sep. 30, 2024

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]

Schedule of Capital Amounts and Ratios

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 September 30, 2024:
California BanCorp:
Total Capital (to Risk-Weighted Assets)	$	478,321	12.65	%	$	302,513	8.0	%	N/A		N/A
Tier 1 Capital (to Risk-Weighted Assets)	365,382		9.66	%	226,885		6.0	%	N/A		N/A
CET1 Capital (to Risk-Weighted Assets)	365,382		9.66	%	170,163		4.5	%	N/A		N/A
Tier 1 Capital (to Average Assets)	365,382		10.55	%	138,588		4.0	%	N/A		N/A
California Bank of Commerce, N.A.:
Total Capital (to Risk-Weighted Assets)	$	473,738	12.53	%	$	302,427	8.0	%	$	378,033	10.0	%
Tier 1 Capital (to Risk-Weighted Assets)	429,941		11.37	%	226,820		6.0	%	302,427		8.0	%
CET1 Capital (to Risk-Weighted Assets)	429,941		11.37	%	170,115		4.5	%	245,722		6.5	%
Tier 1 Capital (to Average Assets)	429,941		12.41	%	138,572		4.0	%	173,215		5.0	%
As of December 31, 2023:
California Bank of Commerce, N.A.:
Total Capital (to Risk-Weighted Assets)	$	289,743	13.51	%	$	171,575	8.0	%	$	214,469	10.0	%
Tier 1 Capital (to Risk-Weighted Assets)	270,341		12.61	%	128,681		6.0	%	171,575		8.0	%
CET1 Capital (to Risk-Weighted Assets)	270,341		12.61	%	96,511		4.5	%	139,405		6.5	%
Tier 1 Capital (to Average Assets)	270,341		11.65	%	92,818		4.0	%	116,022		5.0	%

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FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

Schedule of Fair Value Hierarchy and Fair Value of Financial Instruments

The estimated fair value hierarchy level and estimated fair value of financial instruments at September 30, 2024 and December 31, 2023, is summarized as follows:

		September 30, 2024				December 31, 2023
				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	$	115,165	$	115,165	$	33,008	$	33,008
Fed funds and interest-bearing balances	Level 1	499,258		499,258		53,785		53,785
Debt securities available for sale	Level 1/2	159,330		159,330		130,035		130,035
Debt securities held to maturity	Level 2	53,364		49,487		53,616		50,432
Loans held for sale	Level 2	33,704		34,508		7,349		7,834
Loans held for investment, net	Level 3	3,146,162		3,144,451		1,934,873		1,883,154
Restricted stock, at cost	Level 2	27,394		27,394		16,055		16,055
Other equity securities	Level 2	14,712		14,712		9,187		9,187
Accrued interest receivable	Level 2	15,632		15,632		7,301		7,301
Financial liabilities:
Deposits	Level 2	3,740,915		3,740,963		1,943,556		1,943,007
Borrowings	Level 2	69,142		69,053		102,865		102,447
Accrued interest payable	Level 2	4,976		4,976		477		477

Schedule of Fair Value of Assets and Liabilities Measured on Recurring Basis

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
September 30, 2024
Securities available for sale:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	—	$	92,259	$	—	$	92,259
SBA securities	—		5,684		—		5,684
U.S. Treasury	17,321		—		—		17,321
U.S. Agency	—		1,743		—		1,743
Collateralized mortgage obligations	—		40,573		—		40,573
Taxable municipals	—		923		—		923
Tax exempt bank-qualified municipals	—		827		—		827
	$	17,321	$	142,009	$	—	$	159,330
December 31, 2023
Securities available for sale:
U.S. government and agency and government sponsored enterprise securities:
Mortgage-backed securities	$	—	$	74,434	$	—	$	74,434
SBA securities	—		5,782		—		5,782
U.S. Treasury	2,417		—		—		2,417
U.S. Agency	—		1,670		—		1,670
Collateralized mortgage obligations	—		43,501		—		43,501
Taxable municipals	—		1,421		—		1,421
Tax exempt bank-qualified municipals	—		810		—		810
	$	2,417	$	127,618	$	—	$	130,035

Schedule of Fair Value Measurements, Nonrecurring

The following tables summarize the fair value of assets and liabilities measured at fair value on a nonrecurring basis as of September 30, 2024 and December 31, 2023.

			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)
September 30, 2024
Collateral dependent loans (1):
Construction and Land	$	10,000	$	—	$	—	$	10,000
1-4 Family Residential	4,600		—		—		4,600
Foreclosed assets:
Other real estate owned, net	$	4,083	$	—	$	—	$	4,083
December 31, 2023
Collateral dependent loans (1):
Multifamily Residential	$	13,000	$	—	$	—	$	13,000

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

Schedule of Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques

Quantitative information about Level 3 fair value measurements measured on a non-recurring basis are summarized below as of September 30, 2024 and December 31, 2023.

	Asset Fair		Valuation	Unobservable	% or Range %
(dollars in thousands)	Value		Technique	Input	(Weighted Average)
September 30, 2024
Construction and Land	$	10,000	Market approach	Land value	N/A
1-4 Family Residential	4,600		Market approach	Cost to sell	7.50%-7.50% (7.50%)
Other real estate owned, net	$	4,083	Market approach	Cost to sell	5.75%-5.75% (5.75%)
December 31, 2023
Multifamily Residential	$	13,000	Income approach	Capitalization rate	3.84%-4.94% (4.50%)

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) $ in Thousands		9 Months Ended
	Jan. 01, 2023 USD ($)	Sep. 30, 2024 USD ($) office segment	Jul. 31, 2024 full_service_bank_branch	Jul. 31, 2024 loan_production_office	Jun. 30, 2024 USD ($)	Dec. 31, 2023 USD ($)	Sep. 30, 2023 USD ($)	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of branch offices | office		14
Number of reportable segments | segment		1
Decrease in retained earnings		$ (498,064)			$ (293,219)	$ (288,152)	$ (278,550)	$ (273,749)	$ (260,355)
Allowance for credit losses - loans	$ 17,099	53,552			23,788	22,569	22,705	22,502	17,099
Allowance for credit losses - unfunded loan commitments	1,310	4,071			819	933	1,240	1,538	1,310
Deferred taxes, net		45,644				11,137
Construction and Land Development
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans	2,301	$ 2,084			2,942	2,032	2,535	3,556	2,301
Maximum LTV ratio		75.00%
Consumer
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans	28	$ 1,150			3	15	16	41	28
Consumer | Installment Loan
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loan term		5 years
Minimum | Construction and Land Development
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loan term		12 months
Maximum | Construction and Land Development
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loan term		36 months
Retained Earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Decrease in retained earnings		$ (59,236)			$ (75,700)	$ (70,575)	$ (66,163)	$ (59,607)	(48,516)
Adoption of ASU 2016-13
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Decrease in retained earnings									3,851
Adjustment to allowance for credit losses	5,500
Allowance for credit losses - loans	5,027								5,027
Allowance for credit losses - unfunded loan commitments	439								439
Deferred taxes, net	1,600
Adoption of ASU 2016-13 | Construction and Land Development
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans	881								881
Adoption of ASU 2016-13 | Consumer
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans	31								31
Adoption of ASU 2016-13 | Retained Earnings
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Decrease in retained earnings	$ 3,900								$ 3,851
California BanCorp | Minimum | Consumer | Solar Loan
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loan term		6 years
California BanCorp | Maximum | Consumer | Solar Loan
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Loan term		23 years
Bay Area | California BanCorp
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of properties acquired			1	4
Southern California Region | California BanCorp
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Number of properties acquired | full_service_bank_branch			13

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Impact of Adopting ASU 2016-13 (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Jun. 30, 2024	Dec. 31, 2023	Sep. 30, 2023	Jun. 30, 2023	Jan. 01, 2023	Dec. 31, 2022
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans	$ 53,552	$ 23,788	$ 22,569	$ 22,705	$ 22,502	$ 17,099	$ 17,099
Allowance for credit losses - unfunded loan commitments	4,071	819	933	1,240	1,538	1,310	1,310
Impact of CECL Adoption
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						5,027	5,027
Allowance for credit losses - unfunded loan commitments						439	439
As Reported under CECL
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						22,126
Allowance for credit losses - unfunded loan commitments						1,749
Construction and Land Development
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans	2,084	2,942	2,032	2,535	3,556	2,301	2,301
Construction and Land Development | Impact of CECL Adoption
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						881	881
Construction and Land Development | As Reported under CECL
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						3,182
Real Estate - Other
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans	29,460	17,048	16,280	16,415	15,097		11,691
Real Estate - Other | 1-4 family residential
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						972
Real Estate - Other | Multifamily residential
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						1,331
Real Estate - Other | Commercial real estate and other
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						9,388
Real Estate - Other | Impact of CECL Adoption
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans							2,983
Real Estate - Other | Impact of CECL Adoption | 1-4 family residential
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						424
Real Estate - Other | Impact of CECL Adoption | Multifamily residential
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						(279)
Real Estate - Other | Impact of CECL Adoption | Commercial real estate and other
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						2,838
Real Estate - Other | As Reported under CECL | 1-4 family residential
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						1,396
Real Estate - Other | As Reported under CECL | Multifamily residential
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						1,052
Real Estate - Other | As Reported under CECL | Commercial real estate and other
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						12,226
Commercial & Industrial
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans	20,858	3,795	4,242	3,739	3,808	3,079	3,079
Commercial & Industrial | Impact of CECL Adoption
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						1,132	1,132
Commercial & Industrial | As Reported under CECL
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						4,211
Consumer
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans	$ 1,150	$ 3	$ 15	$ 16	$ 41	28	28
Consumer | Impact of CECL Adoption
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						31	$ 31
Consumer | As Reported under CECL
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Allowance for credit losses - loans						$ 59

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BUSINESS COMBINATIONS - Narrative (Details) $ / shares in Units, $ in Thousands				3 Months Ended		9 Months Ended
		Jul. 31, 2024 USD ($) shares	Jul. 30, 2024 USD ($)	Sep. 30, 2024 USD ($) shares	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) shares	Sep. 30, 2023 USD ($)	Jul. 31, 2024 full_service_bank_branch	Jul. 31, 2024 loan_production_office	Jul. 31, 2024	Jul. 31, 2024 $ / shares
Business Acquisition [Line Items]
Share price (usd per share) | $ / shares											$ 15.79
Issuance of common stock in business combination (in shares) | shares				13,579,454
Merger and related expenses				$ 14,605	$ 0	$ 15,645	$ 0
Restricted Stock Units
Business Acquisition [Line Items]
Stock-based compensation cost				$ 4		$ 89
Common Stock
Business Acquisition [Line Items]
Issuance of common stock in business combination (in shares) | shares	[1]			13,497,091		13,497,091
California BanCorp
Business Acquisition [Line Items]
Total purchase consideration		$ 216,638
Acquired company, common stock exchange ratio										1.590
Business combination, consideration transferred, equity interests issued and issuable		$ 213,944
Payment of in-the-money stock options			$ 1,700
Effective income tax rate reconciliation, percent		29.56%
Merger and related expenses				$ 14,605		$ 15,645
Adjustments made to exclude from proforma net (loss) income				(5,692)	$ 15,094	6,515	17,500
California BanCorp | Former Non-continuing Directors, Officers And Employees
Business Acquisition [Line Items]
Number of shares issued (in shares) | shares		82,364
California BanCorp | Acquisition-related Costs
Business Acquisition [Line Items]
Adjustments made to exclude from proforma net (loss) income				17,800		20,500	$ (20,500)
California BanCorp | Allowance For Credit Losses, Non-Purchased Credit Deterioration Loans And Unfunded Commitments
Business Acquisition [Line Items]
Adjustments made to exclude from proforma net (loss) income				21,300		21,300
California BanCorp | Allowance For Credit Losses, Non-Purchased Credit Deterioration Loans
Business Acquisition [Line Items]
Adjustments made to exclude from proforma net (loss) income				18,500		18,500
California BanCorp | Allowance For Credit Losses, Unfunded Commitments
Business Acquisition [Line Items]
Adjustments made to exclude from proforma net (loss) income				$ 2,700		$ 2,700
California BanCorp | Core Deposits
Business Acquisition [Line Items]
Core deposit intangibles, amortization period		10 years
California BanCorp | Restricted Stock Units
Business Acquisition [Line Items]
Stock-based compensation cost		$ 1,100
California BanCorp | Restricted Stock Units | Former Non-continuing Directors, Officers And Employees
Business Acquisition [Line Items]
Number of shares issued (in shares) | shares		123,123
Business combination, consideration transferred, equity interests issued and issuable		$ 825	1,900
California BanCorp | Restricted Stock Units | Former Continuing Directors, Officers And Employees
Business Acquisition [Line Items]
Number of shares issued (in shares) | shares		295,512
Business combination, consideration transferred, equity interests issued and issuable		$ 4,700	$ 1,300
Stock-based compensation cost		$ 3,400
Bay Area | California BanCorp
Business Acquisition [Line Items]
Number of properties acquired								1	4
Southern California Region | California BanCorp
Business Acquisition [Line Items]
Number of properties acquired | full_service_bank_branch								13

[1] Includes $1.3 million related to replacement awards granted in connection with the business combination for the three and nine months ended September 30, 2024 (Refer to Note 2 - Business Combinations).

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BUSINESS COMBINATIONS- Schedule of Final Fair Value of Assets Acquired and Liabilities (Details) $ / shares in Units, $ in Thousands		3 Months Ended	9 Months Ended
	Jul. 31, 2024 USD ($) $ / shares shares	Sep. 30, 2024 USD ($) $ / shares shares	Sep. 30, 2024 USD ($) $ / shares shares	Sep. 30, 2023 USD ($) $ / shares	Jun. 30, 2024 USD ($) $ / shares	Dec. 31, 2023 USD ($) $ / shares shares	Jun. 30, 2023 USD ($) $ / shares	Dec. 31, 2022 USD ($) $ / shares
Assets acquired:
Other equity securities	$ 6,437
Prepaid expenses	$ 876
Purchase consideration:
Common stock outstanding (in shares) | shares		32,142,427	32,142,427			18,369,115
Shares of BCAL common stock issued to CBC shareholders at closing (in shares) | shares	13,620,214
BCAL closing price per share, July 31, 2024 (in USD per share) | $ / shares	$ 15.79
Cash paid for outstanding stock options, fractional shares, restricted stock consideration			$ 1,433	$ 0
Goodwill		$ 112,515	$ 112,515	$ 37,803	$ 37,803	$ 37,803	$ 37,803	$ 37,803
Weighted average exercise price (in dollars per share) | $ / shares		$ 9.50	$ 9.50	$ 9.26	$ 9.47	$ 9.30	$ 9.26	$ 9.53
California BanCorp
Purchase consideration:
Common stock outstanding (in shares) | shares	8,488,829
Shares of CALB common stock exchanged (in shares) | shares	8,566,265
Restricted Stock Units | California BanCorp
Purchase consideration:
Restricted stock units vested fully at merger closing (in shares) | shares	77,436
Accelerated vesting of awards (in shares) | shares	77,436
Number of shares withheld for taxes (in shares) | shares	25,635
Restricted Stock Units | Non-continuing Directors | California BanCorp
Purchase consideration:
Restricted stock units vested fully at merger closing (in shares) | shares	5,596
Restricted Stock Units | Non-continuing Executives and Employees | California BanCorp
Purchase consideration:
Restricted stock units vested fully at merger closing (in shares) | shares	71,840
California BanCorp
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
Premises and equipment	1,670
Operating lease right-of-use asset	7,743
Deferred taxes, net	30,221
Bank owned life insurance	26,338
Core deposit intangible	22,653
Other assets	35,040
Total assets acquired	1,863,988
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	$ 141,926
Purchase consideration:
Exchange ratio	1.590
Shares of BCAL common stock issued to CALB shareholders at closing, before fractional shares (in shares) | shares	13,620,361
Less: fractional shares (in shares) | shares	(147)
Fair value of common shares issued and exchanged	$ 215,063
Less: fair value of accelerated restricted stock units attributable to post-combination vesting	(1,119)
Fair value of common shares issued and exchanged attributable to purchase consideration	213,944
Total purchase consideration	216,638
Goodwill	74,712
Fair value of accelerated restricted stock units attributable to post-combination vesting	$ 1,119
California BanCorp | $18.22
Purchase consideration:
Vested stock options (in shares) | shares	283,641
California BanCorp | Restricted Stock Units
Purchase consideration:
Cash paid for outstanding stock options, fractional shares, restricted stock consideration		$ 1,300	$ 1,300
Number of awards issued. before shares are withheld for taxes (in shares) | shares	51,801
California BanCorp | Restricted Stock Units | Executive Officer
Purchase consideration:
Less: fair value of accelerated restricted stock units attributable to post-combination vesting	$ (472)
Accelerated vesting of awards (in shares) | shares	31,355
Fair value of accelerated restricted stock units attributable to post-combination vesting	$ 472
California BanCorp | Restricted Stock Units | Former Continuing Directors, Officers And Employees
Purchase consideration:
Business combination, forfeiture rate	3.00%
California BanCorp | Stock Options
Purchase consideration:
Cash paid for outstanding stock options, fractional shares, restricted stock consideration	$ 1,431
Business acquisition, unvested option cashout price (in USD per share) | $ / shares	$ 22.98
Share-based compensation arrangement by share-based payment award, options, nonvested options cancelled, number of shares (in shares) | shares	65,785
Share-based compensation arrangements by share-based payment award, options, cancelled in period, exercise price (in USD per share) | $ / shares	$ 23.81
California BanCorp | Stock Options | $18.22
Purchase consideration:
Cash paid for outstanding stock options, fractional shares, restricted stock consideration	$ 1,300
Weighted average exercise price (in dollars per share) | $ / shares	$ 18.22
California BanCorp | Stock Options | $19.03
Purchase consideration:
Cash paid for outstanding stock options, fractional shares, restricted stock consideration	$ 82
Unvested stock option (in shares) | shares	92,685
Weighted average exercise price, options, nonvested (in USD per share) | $ / shares	$ 19.03
California BanCorp | Post-Combination Stock Option
Purchase consideration:
Cash paid for outstanding stock options, fractional shares, restricted stock consideration	$ 284
California BanCorp | Fractional Shares
Purchase consideration:
Cash paid for outstanding stock options, fractional shares, restricted stock consideration	2
California BanCorp | Restricted Stock
Purchase consideration:
Cash paid for outstanding stock options, fractional shares, restricted stock consideration	$ 1,261

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BUSINESS COMBINATIONS - Schedule of Purchased Credit Deteriorated Loans (Details) - California BanCorp $ in Thousands	Jul. 31, 2024 USD ($)
Business Acquisition [Line Items]
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

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BUSINESS COMBINATIONS - Schedule of Acquisition-Related Costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Business Acquisition [Line Items]
Total acquisition-related costs	$ 14,605	$ 0	$ 15,645	$ 0
California BanCorp
Business Acquisition [Line Items]
Financial advisory fees	2,326		2,576
Legal, accounting, valuation and other professional costs	300		768
Information technology	4,466		4,729
Change in control costs/severance	6,238		6,238
Insurance	919		919
Other	356		415
Total acquisition-related costs	$ 14,605		$ 15,645

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BUSINESS COMBINATIONS - Schedule of Pro Forma Information (Details) - California BanCorp $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Business Acquisition [Line Items]
Net interest income and noninterest income	$ 11,912
Net income	$ 3,429

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BUSINESS COMBINATIONS - Schedule of Supplemental Pro Forma Information (Details) - California BanCorp - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Business Acquisition [Line Items]
Net interest income and noninterest income	$ 35,002	$ 37,359	$ 128,376	$ 139,682
Net (loss) income	$ (5,692)	$ 15,094	$ 6,515	$ 17,500

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INVESTMENT SECURITIES - Schedule of Amortized Cost and Fair Value of Held-to-Maturity Debt Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Schedule of Held-to-Maturity Securities [Line Items]
Amortized Cost	$ 53,364	$ 53,616
Gross Unrealized Gains	0	25
Gross Unrealized Losses	(3,877)	(3,209)
Estimated Fair Value	49,487	50,432
Taxable municipals
Schedule of Held-to-Maturity Securities [Line Items]
Amortized Cost	553	551
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(70)	(73)
Estimated Fair Value	483	478
Tax exempt bank-qualified municipals
Schedule of Held-to-Maturity Securities [Line Items]
Amortized Cost	52,811	53,065
Gross Unrealized Gains	0	25
Gross Unrealized Losses	(3,807)	(3,136)
Estimated Fair Value	$ 49,004	$ 49,954

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INVESTMENT SECURITIES - Schedule of Amortized Cost and Fair Value of Available-for-Sale Debt Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	$ 163,384	$ 136,366
Gross Unrealized Gains	1,511	809
Gross Unrealized Losses	(5,565)	(7,140)
Estimated Fair Value	159,330	130,035
Mortgage-backed securities
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	93,445	77,031
Gross Unrealized Gains	1,284	631
Gross Unrealized Losses	(2,470)	(3,228)
Estimated Fair Value	92,259	74,434
SBA securities
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	5,754	5,886
Gross Unrealized Gains	12	5
Gross Unrealized Losses	(82)	(109)
Estimated Fair Value	5,684	5,782
U.S. Treasury
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	17,552	2,760
Gross Unrealized Gains	34	0
Gross Unrealized Losses	(265)	(343)
Estimated Fair Value	17,321	2,417
U.S. Agency
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	2,000	2,000
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(257)	(330)
Estimated Fair Value	1,743	1,670
Collateralized mortgage obligations
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	42,796	46,330
Gross Unrealized Gains	180	173
Gross Unrealized Losses	(2,403)	(3,002)
Estimated Fair Value	40,573	43,501
Taxable municipals
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	1,007	1,528
Gross Unrealized Gains	1	0
Gross Unrealized Losses	(85)	(107)
Estimated Fair Value	923	1,421
Tax exempt bank-qualified municipals
Debt Securities, Available-for-Sale [Line Items]
Amortized Cost	830	831
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(3)	(21)
Estimated Fair Value	$ 827	$ 810

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INVESTMENT SECURITIES - Narrative (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2024 USD ($) security investment	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) security investment	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($) security investment	Jul. 31, 2024 USD ($)
Debt Securities, Available-for-Sale [Line Items]
Accrued interest receivable on debt securities	$ 1,100,000		$ 1,100,000		$ 788,000
Debt securities available-for-sale, at fair value, amortized cost	$ 163,384,000		$ 163,384,000		$ 136,366,000
Number of available-for-sale debt securities in a gross unrealized loss position | security	70		70		76
Available-for-sale debt securities in a gross unrealized loss position	$ 5,565,000		$ 5,565,000		$ 7,140,000
Number of available-for-sale debt securities with total unrealized losses in a continual loss position for 12 months or longer | security	62		62		58
Unrealized losses in a continual loss position for 12 months or longer	$ 5,429,000		$ 5,429,000		$ 6,661,000
Net unrealized loss on available-for-sale debt securities			4,100,000		6,300,000
Net unrealized loss on available-for-sale debt securities, net of tax	2,900,000		2,900,000		4,500,000
Debt securities available for sale	$ 159,330,000		$ 159,330,000		$ 130,035,000
Number of held-to-maturity debt securities | security	61		61		58
Debt securities held to maturity	$ 49,487,000		$ 49,487,000		$ 50,432,000
Unrealized losses on held-to-maturity debt securities	3,877,000		3,877,000		3,209,000
Debt securities held-to-maturity, unrealized loss position, fair value					$ 48,300,000
Provision for credit losses on held-to-maturity debt securities	0	$ 0	0	$ 0
Provision for credit losses on available-for-sale debt securities	0	0	0	0
Federal Reserve Bank stock purchased	4,600,000		4,700,000
FHLB stock purchased	$ 0		$ 820,000
Number of banker's ban stocks invested in | investment	2		2		2
California BanCorp
Debt Securities, Available-for-Sale [Line Items]
FHLB stock purchased	$ 5,900,000		$ 5,900,000
Standard & Poor's, AA Rating And Above
Debt Securities, Available-for-Sale [Line Items]
Debt securities available for sale					$ 1,400,000
Held-to-maturity debt securities	46,200,000		46,200,000		47,000,000.0
Standard & Poor's, A+ Rating
Debt Securities, Available-for-Sale [Line Items]
Debt securities available for sale					810,000
Standard & Poor's, AA- Rating
Debt Securities, Available-for-Sale [Line Items]
Held-to-maturity debt securities	3,300,000		3,300,000		3,400,000
Taxable municipals
Debt Securities, Available-for-Sale [Line Items]
Debt securities available-for-sale, at fair value, amortized cost	1,007,000		1,007,000		1,528,000
Available-for-sale debt securities in a gross unrealized loss position	85,000		85,000		107,000
Unrealized losses in a continual loss position for 12 months or longer	85,000		85,000		107,000
Debt securities available for sale	923,000		923,000		1,421,000
Debt securities held to maturity	483,000		483,000		478,000
Unrealized losses on held-to-maturity debt securities	70,000		70,000		73,000
Tax exempt bank-qualified municipals
Debt Securities, Available-for-Sale [Line Items]
Debt securities available-for-sale, at fair value, amortized cost	830,000		830,000		831,000
Available-for-sale debt securities in a gross unrealized loss position	3,000		3,000		21,000
Unrealized losses in a continual loss position for 12 months or longer	3,000		3,000		21,000
Debt securities available for sale	827,000		827,000		810,000
Debt securities held to maturity	49,004,000		49,004,000		49,954,000
Unrealized losses on held-to-maturity debt securities	3,807,000		3,807,000		3,136,000
Other Bank Stock
Debt Securities, Available-for-Sale [Line Items]
Equity securities without readily determinable fair values	819,000		819,000		351,000
Impairment loss from change in fair value of other equity securities	0	0	0	0
Other Bank Stock | California BanCorp
Debt Securities, Available-for-Sale [Line Items]
Equity securities without readily determinable fair values						$ 468,000
Other Equity Investments
Debt Securities, Available-for-Sale [Line Items]
Equity securities without readily determinable fair values	7,800,000		7,800,000		7,000,000.0
Impairment loss from change in fair value of other equity securities	0	0	0	0
Amounts received from equity method investments	1,400,000		1,300,000
Net capital contributions made to equity investments		$ 219,000		$ 2,300,000
Limited Partnership
Debt Securities, Available-for-Sale [Line Items]
Affordable housing projects, aggregate funding commitment	15,700,000		15,700,000		2,000,000.0
Affordable housing projects, unfunded portion of commitment	1,900,000		1,900,000		1,500,000
Impairment loss from change in fair value of affordable housing project investment			0		0
Limited Partnership | California BanCorp
Debt Securities, Available-for-Sale [Line Items]
Affordable housing projects, aggregate funding commitment	13,100,000		13,100,000
Asset Pledged as Collateral | Federal Reserve Bank Advances
Debt Securities, Available-for-Sale [Line Items]
Debt securities	56,300,000		56,300,000		53,600,000
Asset Pledged as Collateral | Letter of Credit
Debt Securities, Available-for-Sale [Line Items]
Debt securities available-for-sale, at fair value, amortized cost	9,900,000		9,900,000
Collateralized Line of Credit | Federal Reserve Bank | Line of Credit
Debt Securities, Available-for-Sale [Line Items]
Collateralized line of credit	$ 49,700,000		$ 49,700,000		$ 47,300,000

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INVESTMENT SECURITIES - Schedule of Debt Securities Classified by Contractual Maturities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Held-to-Maturity, Amortized Cost
Due in one year or less	$ 0
Due after one year through five years	0
Due after five years through ten years	22,282
Due after ten years	31,082
Amortized Cost	53,364	$ 53,616
Held-to-Maturity, Estimated Fair Value
Due in one year or less	0
Due after one year through five years	0
Due after five years through ten years	20,911
Due after ten years	28,576
Held-to-Maturity, Estimated Fair Value	49,487	50,432
Available-for-Sale, Amortized Cost
Due in one year or less	27,641
Due after one year through five years	10,246
Due after five years through ten years	17,670
Due after ten years	107,827
Amortized Cost	163,384	136,366
Available-for-Sale, Estimated Fair Value
Due in one year or less	27,668
Due after one year through five years	9,367
Due after five years through ten years	16,579
Due after ten years	105,716
Available-for-Sale, Estimated Fair Value	$ 159,330	$ 130,035

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INVESTMENT SECURITIES - Schedule of Gross Realized Gains (Losses) of Available-for-Sale Debt Securities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Investments, Debt and Equity Securities [Abstract]
Gross gains on sales and calls	$ 0	$ 0	$ 0	$ 181
Gross losses on sales and calls	0	0	0	(147)
Gain on sale of available-for-sale debt securities	$ 0	$ 0	$ 0	$ 34

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INVESTMENT SECURITIES - Schedule of Gross Unrealized Losses and Estimated Fair Values of Available-for-Sale Debt Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Available-for-sale debt securities:
Less than 12 months, unrealized losses	$ (136)	$ (479)
Less than 12 months, estimated fair value	12,214	41,615
12 months or longer, unrealized losses	(5,429)	(6,661)
12 months or longer, estimated fair value	59,978	51,919
Total, unrealized losses	(5,565)	(7,140)
Total, estimated fair value	72,192	93,534
Mortgage-backed securities
Available-for-sale debt securities:
Less than 12 months, unrealized losses	(51)	(160)
Less than 12 months, estimated fair value	9,361	23,738
12 months or longer, unrealized losses	(2,419)	(3,068)
12 months or longer, estimated fair value	20,025	20,951
Total, unrealized losses	(2,470)	(3,228)
Total, estimated fair value	29,386	44,689
SBA securities
Available-for-sale debt securities:
Less than 12 months, unrealized losses	(1)	(8)
Less than 12 months, estimated fair value	167	2,193
12 months or longer, unrealized losses	(81)	(101)
12 months or longer, estimated fair value	3,231	1,790
Total, unrealized losses	(82)	(109)
Total, estimated fair value	3,398	3,983
U.S. Treasury
Available-for-sale debt securities:
Less than 12 months, unrealized losses	0	0
Less than 12 months, estimated fair value	0	0
12 months or longer, unrealized losses	(265)	(343)
12 months or longer, estimated fair value	2,456	2,417
Total, unrealized losses	(265)	(343)
Total, estimated fair value	2,456	2,417
U.S. Agency
Available-for-sale debt securities:
Less than 12 months, unrealized losses	0	0
Less than 12 months, estimated fair value	0	0
12 months or longer, unrealized losses	(257)	(330)
12 months or longer, estimated fair value	1,743	1,670
Total, unrealized losses	(257)	(330)
Total, estimated fair value	1,743	1,670
Collateralized mortgage obligations
Available-for-sale debt securities:
Less than 12 months, unrealized losses	(84)	(311)
Less than 12 months, estimated fair value	2,686	15,684
12 months or longer, unrealized losses	(2,319)	(2,691)
12 months or longer, estimated fair value	31,274	23,360
Total, unrealized losses	(2,403)	(3,002)
Total, estimated fair value	33,960	39,044
Taxable municipals
Available-for-sale debt securities:
Less than 12 months, unrealized losses	0	0
Less than 12 months, estimated fair value	0	0
12 months or longer, unrealized losses	(85)	(107)
12 months or longer, estimated fair value	422	921
Total, unrealized losses	(85)	(107)
Total, estimated fair value	422	921
Tax exempt bank-qualified municipals
Available-for-sale debt securities:
Less than 12 months, unrealized losses	0	0
Less than 12 months, estimated fair value	0	0
12 months or longer, unrealized losses	(3)	(21)
12 months or longer, estimated fair value	827	810
Total, unrealized losses	(3)	(21)
Total, estimated fair value	$ 827	$ 810

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INVESTMENT SECURITIES - Schedule of Restricted Stock Investments (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Investments, Debt and Equity Securities [Abstract]
Federal Reserve Bank	$ 12,089	$ 7,430
Federal Home Loan Bank	15,305	8,625
Restricted stock investments	$ 27,394	$ 16,055

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INVESTMENT SECURITIES - Schedule of Activity in Qualifying Low Income Housing Projects (Details) - Limited Partnership - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Investment Program, Proportional Amortization Method, Elected [Table]
Proportional amortization	$ (187)	$ 0	$ (238)	$ 0
Tax credits	257	0	393	0
Contributions	$ 62	$ 208	$ 217	$ 208

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LOANS AND ALLOWANCE FOR CREDIT LOSSES - Narrative (Details) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($) property	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Jan. 01, 2023 USD ($)	Dec. 31, 2022 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accretion of net discounts and deferred loan fees			$ (5,647)	$ (1,471)
Loans pledge with FHLB under blanket lien	$ 2,200,000		2,200,000
Loans held for investment	3,199,714		3,199,714		$ 1,957,442
Loans held for sale, at lower of cost or fair value	33,704		33,704		7,349
Loans over 90 days past due and still accruing interest	37		37		0
Loans held for sale	34,500		34,500		7,800
Collateral dependent loan, collateral value					13,000
Foreclosed assets	4,083		4,083		0
Other real estate owned sold during the period			13,100
Loss on sale of other real estate owned			4,783	0
Loans transferred to other real estate owned			17,701	0
Valuation allowance on other real estate owned	614		614	0
Accrued interest receivable on loans receivable, net	14,200		14,200		6,400
Provision (reversal) for unfunded commitment losses	3,252	$ (298)	3,138	(509)
Allowance for credit losses - unfunded loan commitments	4,071	1,240	4,071	1,240	933	$ 819	$ 1,538	$ 1,310	$ 1,310
California BanCorp
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net (loss) income	(5,692)	$ 15,094	6,515	$ 17,500
California BanCorp | Allowance For Credit Losses, Unfunded Commitments
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net (loss) income	2,700		2,700
Over 90 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment	37		37		0
Small Business Administration (SBA) 7 Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for sale, at lower of cost or fair value	7,800		7,800
Asset Pledged as Collateral | Federal Home Loan Bank Advances
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment	1,440,000		1,440,000
Asset Pledged as Collateral | Federal Reserve Bank Advances
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment	466,800		466,800
Real Estate - Other | Multifamily residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment	252,134		252,134		221,247
Collateral dependent loan, collateral value	9,700		9,700
Collateral dependent loan, lower that collateral value	967		967
Charge-off from impairment of collateral dependent loan					1,300
Loans transferred to other real estate owned			4,700
Real Estate - Other | Multifamily residential | Over 90 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment	0		0		$ 0
Real Estate - Other | Asset Pledged as Collateral | Multifamily residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of properties | property					3
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment	25,726		25,726		$ 4,386
Consumer | Over 90 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment	37		37		0
Commercial & Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment	765,472		765,472		320,142
Loans held for sale, at lower of cost or fair value	25,900		25,900
Commercial & Industrial | Over 90 Days Past Due
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment	$ 0		$ 0		$ 0
Financing Receivable | Credit Concentration Risk | Real Estate - Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Percent of total loans			75.00%		83.00%

XML

LOANS AND ALLOWANCE FOR CREDIT LOSSES - Schedule of Loan Portfolio (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2024	Jun. 30, 2024	Dec. 31, 2023	Sep. 30, 2023	Jun. 30, 2023	Jan. 01, 2023	Dec. 31, 2022
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment	$ 3,199,714	$ 3,199,714		$ 1,957,442
Allowance for credit losses	(53,552)	(53,552)	$ (23,788)	(22,569)	$ (22,705)	$ (22,502)	$ (17,099)	$ (17,099)
Loans held for investment, net	3,146,162	3,146,162		1,934,873
Net unearned fees	1,600	1,600		2,300
Net unearned discount	66,000	66,000		1,400
Interest accretion	4,200	4,300
Construction and Land Development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment	247,934	247,934		243,521
Allowance for credit losses	(2,084)	(2,084)	(2,942)	(2,032)	(2,535)	(3,556)	(2,301)	(2,301)
Real Estate - Other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for credit losses	(29,460)	(29,460)	(17,048)	(16,280)	(16,415)	(15,097)		(11,691)
Real Estate - Other | 1-4 family residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment	152,540	152,540		143,903
Allowance for credit losses							(972)
Real Estate - Other | Multifamily residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment	252,134	252,134		221,247
Allowance for credit losses							(1,331)
Real Estate - Other | Commercial real estate and other
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment	1,755,908	1,755,908		1,024,243
Allowance for credit losses							(9,388)
Commercial & Industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment	765,472	765,472		320,142
Allowance for credit losses	(20,858)	(20,858)	(3,795)	(4,242)	(3,739)	(3,808)	(3,079)	(3,079)
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans held for investment	25,726	25,726		4,386
Allowance for credit losses	$ (1,150)	$ (1,150)	$ (3)	$ (15)	$ (16)	$ (41)	$ (28)	$ (28)

XML

LOANS AND ALLOWANCE FOR CREDIT LOSSES - Schedule of Risk Category of Loans by Class and Origination Year (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Term Loans Amortized Cost Basis by Origination Year
Current year	$ 132,904		$ 132,904		$ 192,142
One year before current year	250,144		250,144		616,076
Two years before current year	857,402		857,402		465,002
Three years before current year	659,687		659,687		94,543
Four years before current year	151,728		151,728		95,719
Prior	632,569		632,569		256,441
Revolving Loans Amortized Cost Basis	514,632		514,632		233,517
Revolving Loans Amortized Cost Basis Converted to Term During the Period	648		648		4,002
Loans held for investment	3,199,714		3,199,714		1,957,442
Term Loans Gross Charge-offs by Origination Year
Current year			0	$ 0
One year before current year			37	0
Two years before current year			2,447	0
Three years before current year			135	15
Four years before current year			0	0
Prior			0	21
Revolving Loans Amortized Cost Basis			1	0
Revolving Loans Amortized Cost Basis Converted to Term During the Period			0	0
Total	1,163	$ 0	2,620	36
Construction and Land Development
Term Loans Amortized Cost Basis by Origination Year
Current year	493		493		25,113
One year before current year	40,861		40,861		127,496
Two years before current year	121,345		121,345		71,199
Three years before current year	51,163		51,163		17,022
Four years before current year	20,228		20,228		2,071
Prior	5,368		5,368		620
Revolving Loans Amortized Cost Basis	8,476		8,476		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	247,934		247,934		243,521
Term Loans Gross Charge-offs by Origination Year
Current year			0	0
One year before current year			0	0
Two years before current year			967	0
Three years before current year			0	0
Four years before current year			0	0
Prior			0	0
Revolving Loans Amortized Cost Basis			0	0
Revolving Loans Amortized Cost Basis Converted to Term During the Period			0	0
Total	967	0	967	0
Real Estate - Other
Term Loans Gross Charge-offs by Origination Year
Total	0	0	1,457	12
Real Estate - Other | 1-4 family residential
Term Loans Amortized Cost Basis by Origination Year
Current year	6,271		6,271		24,928
One year before current year	21,137		21,137		35,670
Two years before current year	36,663		36,663		20,207
Three years before current year	17,995		17,995		6,887
Four years before current year	6,736		6,736		4,884
Prior	18,409		18,409		15,582
Revolving Loans Amortized Cost Basis	45,329		45,329		35,645
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		100
Loans held for investment	152,540		152,540		143,903
Term Loans Gross Charge-offs by Origination Year
Current year			0	0
One year before current year			0	0
Two years before current year			0	0
Three years before current year			0	0
Four years before current year			0	0
Prior			0	12
Revolving Loans Amortized Cost Basis			1	0
Revolving Loans Amortized Cost Basis Converted to Term During the Period			0	0
Total			1	12
Real Estate - Other | Multifamily residential
Term Loans Amortized Cost Basis by Origination Year
Current year	1,625		1,625		18,803
One year before current year	18,808		18,808		74,681
Two years before current year	91,437		91,437		73,365
Three years before current year	89,992		89,992		5,712
Four years before current year	5,287		5,287		27,292
Prior	43,506		43,506		21,245
Revolving Loans Amortized Cost Basis	1,479		1,479		149
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	252,134		252,134		221,247
Term Loans Gross Charge-offs by Origination Year
Current year			0	0
One year before current year			0	0
Two years before current year			1,456	0
Three years before current year			0	0
Four years before current year			0	0
Prior			0	0
Revolving Loans Amortized Cost Basis			0	0
Revolving Loans Amortized Cost Basis Converted to Term During the Period			0	0
Total			1,456	0
Real Estate - Other | Commercial real estate and other
Term Loans Amortized Cost Basis by Origination Year
Current year	74,938		74,938		76,434
One year before current year	92,773		92,773		307,225
Two years before current year	462,730		462,730		287,245
Three years before current year	424,077		424,077		57,736
Four years before current year	103,327		103,327		51,992
Prior	489,433		489,433		205,147
Revolving Loans Amortized Cost Basis	107,982		107,982		36,838
Revolving Loans Amortized Cost Basis Converted to Term During the Period	648		648		1,626
Loans held for investment	1,755,908		1,755,908		1,024,243
Term Loans Gross Charge-offs by Origination Year
Current year			0	0
One year before current year			0	0
Two years before current year			0	0
Three years before current year			0	0
Four years before current year			0	0
Prior			0	0
Revolving Loans Amortized Cost Basis			0	0
Revolving Loans Amortized Cost Basis Converted to Term During the Period			0	0
Total			0	0
Commercial & Industrial
Term Loans Amortized Cost Basis by Origination Year
Current year	48,489		48,489		46,701
One year before current year	76,565		76,565		71,004
Two years before current year	144,120		144,120		12,947
Three years before current year	53,179		53,179		7,095
Four years before current year	16,050		16,050		9,474
Prior	75,846		75,846		13,836
Revolving Loans Amortized Cost Basis	351,223		351,223		156,809
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		2,276
Loans held for investment	765,472		765,472		320,142
Term Loans Gross Charge-offs by Origination Year
Current year			0	0
One year before current year			37	0
Two years before current year			24	0
Three years before current year			0	15
Four years before current year			0	0
Prior			0	9
Revolving Loans Amortized Cost Basis			0	0
Revolving Loans Amortized Cost Basis Converted to Term During the Period			0	0
Total	61	0	61	24
Consumer
Term Loans Amortized Cost Basis by Origination Year
Current year	1,088		1,088		163
One year before current year	0		0		0
Two years before current year	1,107		1,107		39
Three years before current year	23,281		23,281		91
Four years before current year	100		100		6
Prior	7		7		11
Revolving Loans Amortized Cost Basis	143		143		4,076
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	25,726		25,726		4,386
Term Loans Gross Charge-offs by Origination Year
Current year			0	0
One year before current year			0	0
Two years before current year			0	0
Three years before current year			135	0
Four years before current year			0	0
Prior			0	0
Revolving Loans Amortized Cost Basis			0	0
Revolving Loans Amortized Cost Basis Converted to Term During the Period			0	0
Total	135	$ 0	135	$ 0
Pass
Term Loans Amortized Cost Basis by Origination Year
Current year	132,521		132,521		192,142
One year before current year	239,258		239,258		600,025
Two years before current year	818,254		818,254		464,938
Three years before current year	625,807		625,807		94,543
Four years before current year	146,221		146,221		94,511
Prior	606,179		606,179		255,057
Revolving Loans Amortized Cost Basis	433,577		433,577		230,125
Revolving Loans Amortized Cost Basis Converted to Term During the Period	151		151		3,603
Loans held for investment	3,001,968		3,001,968		1,934,944
Pass | Construction and Land Development
Term Loans Amortized Cost Basis by Origination Year
Current year	493		493		25,113
One year before current year	40,861		40,861		127,496
Two years before current year	111,686		111,686		71,199
Three years before current year	51,163		51,163		17,022
Four years before current year	17,283		17,283		2,071
Prior	2,340		2,340		528
Revolving Loans Amortized Cost Basis	8,476		8,476		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	232,302		232,302		243,429
Pass | Real Estate - Other | 1-4 family residential
Term Loans Amortized Cost Basis by Origination Year
Current year	6,271		6,271		24,928
One year before current year	21,137		21,137		35,670
Two years before current year	33,768		33,768		20,207
Three years before current year	17,995		17,995		6,887
Four years before current year	6,736		6,736		4,884
Prior	17,562		17,562		15,582
Revolving Loans Amortized Cost Basis	45,329		45,329		35,645
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		100
Loans held for investment	148,798		148,798		143,903
Pass | Real Estate - Other | Multifamily residential
Term Loans Amortized Cost Basis by Origination Year
Current year	1,625		1,625		18,803
One year before current year	18,808		18,808		61,677
Two years before current year	91,437		91,437		73,365
Three years before current year	89,992		89,992		5,712
Four years before current year	5,287		5,287		27,292
Prior	43,506		43,506		21,245
Revolving Loans Amortized Cost Basis	1,479		1,479		149
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	252,134		252,134		208,243
Pass | Real Estate - Other | Commercial real estate and other
Term Loans Amortized Cost Basis by Origination Year
Current year	74,938		74,938		76,434
One year before current year	83,188		83,188		304,524
Two years before current year	457,671		457,671		287,245
Three years before current year	398,356		398,356		57,736
Four years before current year	101,050		101,050		51,992
Prior	472,661		472,661		203,976
Revolving Loans Amortized Cost Basis	106,386		106,386		36,543
Revolving Loans Amortized Cost Basis Converted to Term During the Period	151		151		1,626
Loans held for investment	1,694,401		1,694,401		1,020,076
Pass | Commercial & Industrial
Term Loans Amortized Cost Basis by Origination Year
Current year	48,106		48,106		46,701
One year before current year	75,264		75,264		70,658
Two years before current year	122,585		122,585		12,883
Three years before current year	45,355		45,355		7,095
Four years before current year	15,765		15,765		8,266
Prior	70,103		70,103		13,715
Revolving Loans Amortized Cost Basis	271,764		271,764		153,712
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		1,877
Loans held for investment	648,942		648,942		314,907
Pass | Consumer
Term Loans Amortized Cost Basis by Origination Year
Current year	1,088		1,088		163
One year before current year	0		0		0
Two years before current year	1,107		1,107		39
Three years before current year	22,946		22,946		91
Four years before current year	100		100		6
Prior	7		7		11
Revolving Loans Amortized Cost Basis	143		143		4,076
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	25,391		25,391		4,386
Special mention
Term Loans Amortized Cost Basis by Origination Year
Current year	383		383		0
One year before current year	10,836		10,836		2,701
Two years before current year	5,059		5,059		0
Three years before current year	21,704		21,704		0
Four years before current year	2,562		2,562		0
Prior	13,816		13,816		0
Revolving Loans Amortized Cost Basis	38,591		38,591		295
Revolving Loans Amortized Cost Basis Converted to Term During the Period	497		497		0
Loans held for investment	93,448		93,448		2,996
Special mention | Construction and Land Development
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		0
Special mention | Real Estate - Other | 1-4 family residential
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	847		847		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	847		847		0
Special mention | Real Estate - Other | Multifamily residential
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		0
Special mention | Real Estate - Other | Commercial real estate and other
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	9,585		9,585		2,701
Two years before current year	5,059		5,059		0
Three years before current year	14,148		14,148		0
Four years before current year	2,277		2,277		0
Prior	10,870		10,870		0
Revolving Loans Amortized Cost Basis	1,596		1,596		295
Revolving Loans Amortized Cost Basis Converted to Term During the Period	497		497		0
Loans held for investment	44,032		44,032		2,996
Special mention | Commercial & Industrial
Term Loans Amortized Cost Basis by Origination Year
Current year	383		383		0
One year before current year	1,251		1,251		0
Two years before current year	0		0		0
Three years before current year	7,556		7,556		0
Four years before current year	285		285		0
Prior	2,099		2,099		0
Revolving Loans Amortized Cost Basis	36,995		36,995		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	48,569		48,569		0
Special mention | Consumer
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		0
Substandard
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	50		50		13,350
Two years before current year	34,089		34,089		64
Three years before current year	12,176		12,176		0
Four years before current year	2,945		2,945		1,208
Prior	12,574		12,574		1,384
Revolving Loans Amortized Cost Basis	42,464		42,464		3,097
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		399
Loans held for investment	104,298		104,298		19,502
Substandard | Construction and Land Development
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	9,659		9,659		0
Three years before current year	0		0		0
Four years before current year	2,945		2,945		0
Prior	3,028		3,028		92
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	15,632		15,632		92
Substandard | Real Estate - Other | 1-4 family residential
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	2,895		2,895		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	2,895		2,895		0
Substandard | Real Estate - Other | Multifamily residential
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		13,004
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		13,004
Substandard | Real Estate - Other | Commercial real estate and other
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	11,573		11,573		0
Four years before current year	0		0		0
Prior	5,902		5,902		1,171
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	17,475		17,475		1,171
Substandard | Commercial & Industrial
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	50		50		346
Two years before current year	21,535		21,535		64
Three years before current year	268		268		0
Four years before current year	0		0		1,208
Prior	3,644		3,644		121
Revolving Loans Amortized Cost Basis	42,464		42,464		3,097
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		399
Loans held for investment	67,961		67,961		5,235
Substandard | Consumer
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	335		335		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	335		335		0
Doubtful
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		0
Doubtful | Construction and Land Development
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		0
Doubtful | Real Estate - Other | 1-4 family residential
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		0
Doubtful | Real Estate - Other | Multifamily residential
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		0
Doubtful | Real Estate - Other | Commercial real estate and other
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		0
Doubtful | Commercial & Industrial
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		0
Doubtful | Consumer
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		0
Loss
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		0
Loss | Construction and Land Development
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		0
Loss | Real Estate - Other | 1-4 family residential
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		0
Loss | Real Estate - Other | Multifamily residential
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		0
Loss | Real Estate - Other | Commercial real estate and other
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		0
Loss | Commercial & Industrial
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	0		0		0
Loss | Consumer
Term Loans Amortized Cost Basis by Origination Year
Current year	0		0		0
One year before current year	0		0		0
Two years before current year	0		0		0
Three years before current year	0		0		0
Four years before current year	0		0		0
Prior	0		0		0
Revolving Loans Amortized Cost Basis	0		0		0
Revolving Loans Amortized Cost Basis Converted to Term During the Period	0		0		0
Loans held for investment	$ 0		$ 0		$ 0

XML

LOANS AND ALLOWANCE FOR CREDIT LOSSES - Schedule of Past Due Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Financing Receivable, Past Due [Line Items]
Loans	$ 3,199,714	$ 1,957,442
Nonaccrual	25,661	13,004
30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	18,938	19
60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	172	0
Over 90 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	37	0
Total Past Due
Financing Receivable, Past Due [Line Items]
Loans	19,147	19
Current
Financing Receivable, Past Due [Line Items]
Loans	3,154,906	1,944,419
Construction and Land Development
Financing Receivable, Past Due [Line Items]
Loans	247,934	243,521
Nonaccrual	9,659	0
Construction and Land Development | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Construction and Land Development | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Construction and Land Development | Over 90 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Construction and Land Development | Total Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Construction and Land Development | Current
Financing Receivable, Past Due [Line Items]
Loans	238,275	243,521
Real Estate - Other | 1-4 family residential
Financing Receivable, Past Due [Line Items]
Loans	152,540	143,903
Nonaccrual	2,895	0
Real Estate - Other | 1-4 family residential | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Real Estate - Other | 1-4 family residential | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Real Estate - Other | 1-4 family residential | Over 90 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Real Estate - Other | 1-4 family residential | Total Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Real Estate - Other | 1-4 family residential | Current
Financing Receivable, Past Due [Line Items]
Loans	149,645	143,903
Real Estate - Other | Multifamily residential
Financing Receivable, Past Due [Line Items]
Loans	252,134	221,247
Nonaccrual	0	13,004
Real Estate - Other | Multifamily residential | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Real Estate - Other | Multifamily residential | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Real Estate - Other | Multifamily residential | Over 90 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Real Estate - Other | Multifamily residential | Total Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Real Estate - Other | Multifamily residential | Current
Financing Receivable, Past Due [Line Items]
Loans	252,134	208,243
Real Estate - Other | Commercial real estate and other
Financing Receivable, Past Due [Line Items]
Loans	1,755,908	1,024,243
Nonaccrual	9,105	0
Real Estate - Other | Commercial real estate and other | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	18,175	0
Real Estate - Other | Commercial real estate and other | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Real Estate - Other | Commercial real estate and other | Over 90 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Real Estate - Other | Commercial real estate and other | Total Past Due
Financing Receivable, Past Due [Line Items]
Loans	18,175	0
Real Estate - Other | Commercial real estate and other | Current
Financing Receivable, Past Due [Line Items]
Loans	1,728,628	1,024,243
Commercial & Industrial
Financing Receivable, Past Due [Line Items]
Loans	765,472	320,142
Nonaccrual	4,002	0
Commercial & Industrial | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	667	19
Commercial & Industrial | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Commercial & Industrial | Over 90 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	0	0
Commercial & Industrial | Total Past Due
Financing Receivable, Past Due [Line Items]
Loans	667	19
Commercial & Industrial | Current
Financing Receivable, Past Due [Line Items]
Loans	760,803	320,123
Consumer
Financing Receivable, Past Due [Line Items]
Loans	25,726	4,386
Nonaccrual	0	0
Consumer | 30-59 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	96	0
Consumer | 60-89 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	172	0
Consumer | Over 90 Days Past Due
Financing Receivable, Past Due [Line Items]
Loans	37	0
Consumer | Total Past Due
Financing Receivable, Past Due [Line Items]
Loans	305	0
Consumer | Current
Financing Receivable, Past Due [Line Items]
Loans	$ 25,421	$ 4,386

XML

LOANS AND ALLOWANCE FOR CREDIT LOSSES - Schedule of Nonaccrual Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Financing Receivable, Nonaccrual [Line Items]
Total Nonaccrual Loans	$ 25,661	$ 13,004
Nonaccrual Loans with no ACL	12,671	13,004
Construction and Land Development
Financing Receivable, Nonaccrual [Line Items]
Total Nonaccrual Loans	9,659	0
Nonaccrual Loans with no ACL	9,659	0
Real Estate - Other | 1-4 family residential
Financing Receivable, Nonaccrual [Line Items]
Total Nonaccrual Loans	2,895	0
Nonaccrual Loans with no ACL	2,895	0
Real Estate - Other | Multifamily residential
Financing Receivable, Nonaccrual [Line Items]
Total Nonaccrual Loans	0	13,004
Nonaccrual Loans with no ACL	0	13,004
Real Estate - Other | Commercial real estate and other
Financing Receivable, Nonaccrual [Line Items]
Total Nonaccrual Loans	9,105	0
Nonaccrual Loans with no ACL	117	0
Commercial & Industrial
Financing Receivable, Nonaccrual [Line Items]
Total Nonaccrual Loans	4,002	0
Nonaccrual Loans with no ACL	0	0
Consumer
Financing Receivable, Nonaccrual [Line Items]
Total Nonaccrual Loans	0	0
Nonaccrual Loans with no ACL	$ 0	$ 0

XML

LOANS AND ALLOWANCE FOR CREDIT LOSSES - Schedule of Collateral Dependent Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Commercial Real Estate
Financing Receivable, Past Due [Line Items]
Collateral dependent loan	$ 10,535	$ 0
Residential Real Estate
Financing Receivable, Past Due [Line Items]
Collateral dependent loan	12,825	13,004
Business Assets
Financing Receivable, Past Due [Line Items]
Collateral dependent loan	2,301	0
Construction and Land Development | Commercial Real Estate
Financing Receivable, Past Due [Line Items]
Collateral dependent loan	0
Construction and Land Development | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Collateral dependent loan	9,659
Construction and Land Development | Business Assets
Financing Receivable, Past Due [Line Items]
Collateral dependent loan	0
Real Estate - Other | 1-4 family residential | Commercial Real Estate
Financing Receivable, Past Due [Line Items]
Collateral dependent loan	0
Real Estate - Other | 1-4 family residential | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Collateral dependent loan	2,895
Real Estate - Other | 1-4 family residential | Business Assets
Financing Receivable, Past Due [Line Items]
Collateral dependent loan	0
Real Estate - Other | Commercial real estate and other | Commercial Real Estate
Financing Receivable, Past Due [Line Items]
Collateral dependent loan	10,535
Real Estate - Other | Commercial real estate and other | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Collateral dependent loan	0
Real Estate - Other | Commercial real estate and other | Business Assets
Financing Receivable, Past Due [Line Items]
Collateral dependent loan	0
Real Estate - Other | Multifamily residential | Commercial Real Estate
Financing Receivable, Past Due [Line Items]
Collateral dependent loan		0
Real Estate - Other | Multifamily residential | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Collateral dependent loan		13,004
Real Estate - Other | Multifamily residential | Business Assets
Financing Receivable, Past Due [Line Items]
Collateral dependent loan		$ 0
Commercial & Industrial | Commercial Real Estate
Financing Receivable, Past Due [Line Items]
Collateral dependent loan	0
Commercial & Industrial | Residential Real Estate
Financing Receivable, Past Due [Line Items]
Collateral dependent loan	271
Commercial & Industrial | Business Assets
Financing Receivable, Past Due [Line Items]
Collateral dependent loan	$ 2,301

XML

LOANS AND ALLOWANCE FOR CREDIT LOSSES - Schedule of Modified Loans to Borrowers (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Financing Receivable, Modified [Line Items]
Amortized cost basis	$ 13,094
Term Extension
Financing Receivable, Modified [Line Items]
Amortized cost basis	$ 13,094
% of total class of loans	0.40%
Commercial & Industrial
Financing Receivable, Modified [Line Items]
Amortized cost basis	$ 13,094
Commercial & Industrial | Term Extension
Financing Receivable, Modified [Line Items]
Amortized cost basis	$ 13,094
% of total class of loans	1.70%

XML

LOANS AND ALLOWANCE FOR CREDIT LOSSES - Schedule of Modified Financing Receivable, Modified, Past Due (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Financing Receivable, Modified [Line Items]
Amortized cost basis	$ 13,094
30-59 Days Past Due
Financing Receivable, Modified [Line Items]
Amortized cost basis	0
60-89 Days Past Due
Financing Receivable, Modified [Line Items]
Amortized cost basis	0
Over 90 Days Past Due
Financing Receivable, Modified [Line Items]
Amortized cost basis	397
Total Past Due
Financing Receivable, Modified [Line Items]
Amortized cost basis	397
Current
Financing Receivable, Modified [Line Items]
Amortized cost basis	12,697
Commercial & Industrial
Financing Receivable, Modified [Line Items]
Amortized cost basis	13,094
Commercial & Industrial | 30-59 Days Past Due
Financing Receivable, Modified [Line Items]
Amortized cost basis	0
Commercial & Industrial | 60-89 Days Past Due
Financing Receivable, Modified [Line Items]
Amortized cost basis	0
Commercial & Industrial | Over 90 Days Past Due
Financing Receivable, Modified [Line Items]
Amortized cost basis	397
Commercial & Industrial | Total Past Due
Financing Receivable, Modified [Line Items]
Amortized cost basis	397
Commercial & Industrial | Current
Financing Receivable, Modified [Line Items]
Amortized cost basis	$ 12,697

XML

LOANS AND ALLOWANCE FOR CREDIT LOSSES - Schedule of Changes in Allowance for Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Allowance for loan losses (ALL)
Balance, beginning of period	$ 23,788	$ 22,502	$ 22,569	$ 17,099
Initial allowance for acquired PCD loans	11,216	0	11,216	0
(Reversal of) provision for loan losses	19,711	202	22,387	600
Charge-offs	(1,163)	0	(2,620)	(36)
Recoveries	0	1	0	15
Net charge-offs	(1,163)	1	(2,620)	(21)
Balance, end of period	53,552	22,705	53,552	22,705
Reserve for unfunded loan commitments
Balance, beginning of period	819	1,538	933	1,310
Provision (reversal) for unfunded commitment losses	3,252	(298)	3,138	(509)
Balance, end of period	4,071	1,240	4,071	1,240
Allowance for credit losses, end of period	57,623	23,945	57,623	23,945
California BanCorp
Reserve for unfunded loan commitments
Net (loss) income	(5,692)	15,094	6,515	17,500
California BanCorp | Allowance For Credit Losses, Non-Purchased Credit Deterioration Loans
Reserve for unfunded loan commitments
Net (loss) income	18,500		18,500
California BanCorp | Allowance For Credit Losses, Unfunded Commitments
Reserve for unfunded loan commitments
Net (loss) income	2,700		2,700
Construction and Land Development
Allowance for loan losses (ALL)
Balance, beginning of period	2,942	3,556	2,032	2,301
Initial allowance for acquired PCD loans	328		328
(Reversal of) provision for loan losses	(219)	(1,021)	691	(647)
Charge-offs	(967)	0	(967)	0
Recoveries	0	0	0	0
Net charge-offs	(967)	0	(967)	0
Balance, end of period	2,084	2,535	2,084	2,535
Real Estate - Other
Allowance for loan losses (ALL)
Balance, beginning of period	17,048	15,097	16,280	11,691
Initial allowance for acquired PCD loans	2,392		2,392
(Reversal of) provision for loan losses	10,020	1,318	12,245	1,753
Charge-offs	0	0	(1,457)	(12)
Recoveries	0	0	0	0
Net charge-offs	0	0	(1,457)	(12)
Balance, end of period	29,460	16,415	29,460	16,415
Commercial & Industrial
Allowance for loan losses (ALL)
Balance, beginning of period	3,795	3,808	4,242	3,079
Initial allowance for acquired PCD loans	8,355		8,355
(Reversal of) provision for loan losses	8,769	(70)	8,322	(463)
Charge-offs	(61)	0	(61)	(24)
Recoveries	0	1	0	15
Net charge-offs	(61)	1	(61)	(9)
Balance, end of period	20,858	3,739	20,858	3,739
Consumer
Allowance for loan losses (ALL)
Balance, beginning of period	3	41	15	28
Initial allowance for acquired PCD loans	141		141
(Reversal of) provision for loan losses	1,141	(25)	1,129	(43)
Charge-offs	(135)	0	(135)	0
Recoveries	0	0	0	0
Net charge-offs	(135)	0	(135)	0
Balance, end of period	$ 1,150	$ 16	$ 1,150	16
Adoption of ASU 2016-13
Allowance for loan losses (ALL)
Balance, beginning of period				5,027
Reserve for unfunded loan commitments
Balance, beginning of period				439
Adoption of ASU 2016-13 | Construction and Land Development
Allowance for loan losses (ALL)
Balance, beginning of period				881
Adoption of ASU 2016-13 | Real Estate - Other
Allowance for loan losses (ALL)
Balance, beginning of period				2,983
Adoption of ASU 2016-13 | Commercial & Industrial
Allowance for loan losses (ALL)
Balance, beginning of period				1,132
Adoption of ASU 2016-13 | Consumer
Allowance for loan losses (ALL)
Balance, beginning of period				$ 31

XML

TRANSFERS AND SERVICING OF FINANCIAL ASSETS - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Jun. 30, 2024	Dec. 31, 2023	Jun. 30, 2023	Dec. 31, 2022
Servicing Assets at Fair Value [Line Items]
Loans serviced	$ 150,200		$ 150,200			$ 58,800
Loans serviced with related servicing asset	36,300		36,300			35,400
Servicing asset	415	$ 629	415	$ 629	$ 521	$ 546	$ 683	$ 514
Loans sold	$ 0	$ 0	6,300	10,900
Gain on sale of loans			$ 415	$ 874
Minimum
Servicing Assets at Fair Value [Line Items]
Servicing fees, percent			0.25%
Maximum
Servicing Assets at Fair Value [Line Items]
Servicing fees, percent			1.00%

XML

TRANSFERS AND SERVICING OF FINANCIAL ASSETS - Schedule of Change in SBA Servicing Asset (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Balance, beginning of period	$ 521	$ 683	$ 546	$ 514
Additions	0	0	109	216
Amortization	(106)	(54)	(240)	(101)
Balance, end of period	415	629	415	629
Accelerated amortization	$ 84	$ 29	$ 174	$ 32

XML

TRANSFERS AND SERVICING OF FINANCIAL ASSETS - Schedule of Significant Valuation Assumptions for the SBA Servicing Asset (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Minimum
Servicing Assets at Fair Value [Line Items]
Discount rate (percent)	6.50%	10.50%
Prepayment speed (percent)	12.40%	11.20%
Maximum
Servicing Assets at Fair Value [Line Items]
Discount rate (percent)	25.40%	26.20%
Prepayment speed (percent)	38.70%	48.10%
Weighted average
Servicing Assets at Fair Value [Line Items]
Discount rate (percent)	14.30%	16.10%
Prepayment speed (percent)	20.10%	19.00%

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TRANSFERS AND SERVICING OF FINANCIAL ASSETS - Schedule of Components of Net Servicing Fees Included in Noninterest Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Transfers and Servicing [Abstract]
Contractually specified fees	$ 114	$ 113	$ 297	$ 309
Amortization	(106)	(54)	(240)	(101)
Net servicing fees	$ 8	$ 59	$ 57	$ 208

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GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Sep. 30, 2024	Jun. 30, 2024	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Goodwill	$ 37,803,000	$ 112,515,000	$ 37,803,000	$ 37,803,000	$ 37,803,000	$ 37,803,000
Goodwill impairment	$ 0
Weighted-average remaining amortization period for core deposit intangibles		9 years 7 months 6 days
Minimum
Finite-Lived Intangible Assets [Line Items]
Core deposit intangibles, amortization period		4 years 3 months 18 days
Maximum
Finite-Lived Intangible Assets [Line Items]
Core deposit intangibles, amortization period		9 years 9 months 18 days

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GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Changes in the Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Goodwill [Roll Forward]
Balance, beginning of period	$ 37,803	$ 37,803	$ 37,803	$ 37,803
Goodwill from CALB merger	74,712	0	74,712	0
Balance, end of period	$ 112,515	$ 37,803	$ 112,515	$ 37,803

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GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Changes in Core Deposit Intangibles (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Finite-Lived Intangible Assets [Roll Forward]
Gross balance, beginning of period	$ 4,185	$ 4,185	$ 4,185	$ 4,185
Additions from CALB merger	22,653	0	22,653	0
Gross balance, end of period	26,838	4,185	26,838	4,185
Accumulated amortization:
Balance, beginning of period	(3,120)	(2,782)	(2,990)	(2,601)
Amortization	(687)	(128)	(817)	(309)
Balance, end of period	(3,807)	(2,910)	(3,807)	(2,910)
Future estimated amortization expense	$ 23,031	$ 1,275	$ 23,031	$ 1,275

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GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Future Estimated Amortization Expense (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2024	$ 998
2025	3,641
2026	3,051
2027	2,761
2028	2,465
Thereafter	10,115
Future estimated amortization expense	$ 23,031	$ 1,275

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DEPOSITS - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2024	Jul. 31, 2024	Dec. 31, 2023
Deposit Liability [Line Items]
Deposit contracts, liabilities	$ 5,000.0
Reciprocal deposits	$ 839.7	$ 442.7	$ 274.1
Percent of total deposits	22.40%		14.10%
Percentage of bank liabilities	0.221
Time deposits exceeding FDIC insurance limit	$ 162.0		$ 122.6
Brokered time deposits	222.6		107.8
IntraFi Network Insured Cash Sweep ICS
Deposit Liability [Line Items]
Reciprocal deposits		98.4
Reich & Tang Deposit Solutions R&T Network
Deposit Liability [Line Items]
Reciprocal deposits		306.6
Certificate of Deposit Account Registry Service CDARS
Deposit Liability [Line Items]
Reciprocal deposits		$ 37.7
Asset Pledged as Collateral | Letter of Credit
Deposit Liability [Line Items]
Collateralized deposits	$ 104.9		$ 72.7

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DEPOSITS - Schedule of Maturities of Time Deposits (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Deposits [Abstract]
Remainder of 2024	$ 265,493
2025	171,637
2026	4,765
2027	74
2028 and thereafter	250
Time deposits	$ 442,219	$ 249,830

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BORROWING ARRANGEMENTS - Schedule of Outstanding Borrowings (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Debt Disclosure [Abstract]
FHLB advances	$ 0	$ 85,000
Subordinated notes	69,142	17,865
Total borrowings	$ 69,142	$ 102,865

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BORROWING ARRANGEMENTS - Narrative (Details)	Jul. 31, 2024 USD ($)	May 28, 2020 USD ($)	Sep. 30, 2024 USD ($) lineOfCredit	Dec. 31, 2023 USD ($)
Debt Instrument [Line Items]
FHLB secured line of credit			$ 786,100,000
FHLB secured line of credit, amount available			663,600,000
Loans pledge with FHLB under blanket lien			2,200,000,000
Loans			3,199,714,000	$ 1,957,442,000
FHLB advances			0	$ 85,000,000
FHLB advances, interest rate				5.70%
Federal Reserve secured line of credit			446,400,000
Discount window borrowings			0	$ 0
Subordinated Debt | Subordinated Debt, 3.50% Maturing In September 2031
Debt Instrument [Line Items]
Basis spread on variable interest rate	2.86%
Debt instrument face amount	$ 35,000,000
Interest rate	3.50%
Debt instrument, unamortized discount	$ 3,400,000		3,100,000
Subordinated Debt | California BanCorp | Subordinated Debt, 5.00% Maturing In September 2030
Debt Instrument [Line Items]
Basis spread on variable interest rate	4.88%
Debt instrument face amount	$ 20,000,000
Interest rate	5.00%
Debt instrument, unamortized discount	$ 794,000		688,000
Fixed-to-Floating Rate Subordinated Notes Due 2030
Debt Instrument [Line Items]
Basis spread on variable interest rate		3.50%
Debt instrument face amount		$ 18,000,000
Fixed amortization term		5 years
Subordinated notes interest rate		5.50%
Issuance costs		$ 475,000	$ 63,000	135,000
Overnight Unsecured Line of Credit | Line of Credit
Debt Instrument [Line Items]
Number of overnight unsecured credit lines | lineOfCredit			6
Line of credit borrowing capacity			$ 110,500,000
Overnight unsecured credit lines, outstanding borrowings			0	0
Revolving Credit Facility | Line of Credit
Debt Instrument [Line Items]
Long-term line of credit			0
Revolving Credit Facility | Line of Credit | California BanCorp
Debt Instrument [Line Items]
Line of credit borrowing capacity	$ 3,000,000.0
Percentage of the facility secured by common stock	100.00%
Basis spread on variable interest rate	0.40%
Asset Pledged as Collateral | Federal Home Loan Bank Advances
Debt Instrument [Line Items]
FHLB secured line of credit, amount available			122,500,000
Loans			1,440,000,000
Asset Pledged as Collateral | Federal Reserve Bank Advances
Debt Instrument [Line Items]
Loans			466,800,000
Debt securities			$ 56,300,000	$ 53,600,000

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SHAREHOLDERS' EQUITY (Details) - shares	3 Months Ended	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2024	Jun. 14, 2023
Equity [Abstract]
Share repurchase plan, shares authorized (in shares)			550,000
Share repurchase plan, percent of outstanding shares authorized			3.00%
Shares repurchase plan, repurchased (in shares)	0	0
Issuance of common stock in business combination (in shares)	13,579,454

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(LOSS) EARNINGS PER SHARE (“EPS”) - Schedule of Reconciliation of Net Income and Shares Outstanding to Compute EPS (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Earnings Per Share [Abstract]
Net (loss) income	$ (16,464)	$ 6,556	$ (11,339)	$ 21,498
Weighted average common shares outstanding - basic (in shares)	27,705,844	18,304,023	21,579,175	18,216,546
Dilutive effect of outstanding:
Stock options and unvested stock grants (in shares)	0	368,109	0	416,344
Weighted average common shares outstanding - diluted (in shares)	27,705,844	18,672,132	21,579,175	18,632,890
(Loss) earnings per common share - basic (in dollars per share)	$ (0.59)	$ 0.36	$ (0.53)	$ 1.18
(Loss) earnings per common share - diluted (in dollars per share)	$ (0.59)	$ 0.35	$ (0.53)	$ 1.15

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(LOSS) EARNINGS PER SHARE (“EPS”) - Narrative (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Performance-Based Restricted Stock Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share (in shares)		275,171		275,171
Restricted Stock Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share (in shares)	538,726	14,750	392,424	91,080
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share (in shares)	58,785	12,750	71,066	8,637

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RELATED PARTY TRANSACTIONS - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Related Party Transaction [Line Items]
Federal funds and interest-bearing balances	$ 499,258		$ 499,258		$ 53,785
Beneficial Owner
Related Party Transaction [Line Items]
Percentage of voting securities (more than)	5.00%		5.00%
Director
Related Party Transaction [Line Items]
Federal funds and interest-bearing balances	$ 30,400		$ 30,400		16,400
Director | Launchpad
Related Party Transaction [Line Items]
Committed investment			2,000
Capital contributions			1,100		910
Related Party
Related Party Transaction [Line Items]
Lease expense	11	$ 11	33	$ 33
Future minimum lease payments	$ 118		$ 118		$ 151

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RELATED PARTY TRANSACTIONS - Schedule of Related Party Loans Outstanding (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Roll Forward]
Balance, beginning of period			$ 1,957,442
Balance, end of period	$ 3,199,714		3,199,714
Related Party
Financing Receivable, Excluding Accrued Interest, before Allowance for Credit Loss [Roll Forward]
Balance, beginning of period	5,295	$ 7,732	5,928	$ 8,073
Assumed in the Merger	22,523	0	22,523	0
New credit granted	0	0	0	0
Repayments	(18)	(1,136)	(651)	(1,477)
Balance, end of period	$ 27,800	$ 6,596	$ 27,800	$ 6,596

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COMMITMENTS AND CONTINGENCIES - Schedule of Outstanding Financial Commitments Representing Potential Credit Risk (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments to extend credit	$ 1,033,055	$ 405,854
Letters of credit issued to customers	17,978	4,939
Commitments to contribute capital to other equity investments	7,278	3,170
Outstanding financial commitments	$ 1,058,311	$ 413,963

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COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Other Commitments [Line Items]
Deferred compensation agreement, benefit term			10 years
Targeted benefit amount as a percentage of the average of his three highest calendar years of base salaries			30.00%
Deferred compensation agreement, expense	$ 161	$ 83	$ 323	$ 240
Minimum
Other Commitments [Line Items]
Deferred compensation agreement, annual benefit	20		20
Maximum
Other Commitments [Line Items]
Deferred compensation agreement, annual benefit	$ 75		$ 75

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STOCK-BASED COMPENSATION PLAN - Narrative (Details) - USD ($) $ in Thousands			1 Months Ended		3 Months Ended		9 Months Ended
	Jul. 31, 2024	Mar. 01, 2023	Jun. 30, 2021	Oct. 31, 2020	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Jun. 30, 2024	Dec. 31, 2023	Jun. 30, 2023	Dec. 31, 2022	Apr. 30, 2020
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Unrecognized compensation cost					$ 25		$ 25
Stock options exercised (in shares)					1,500	0	82,900	10,950
Intrinsic value of stock options exercised					$ 12		$ 570	$ 78
Options granted (in shares)					0	0	0	0
California BanCorp
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Fair value of accelerated restricted stock units attributable to post-combination vesting	$ (1,119)
California BanCorp | Former Non-continuing Directors, Officers And Employees
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares issued (in shares)	82,364
Stock Options and Restricted Stock Units
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock-based compensation cost					$ 2,800	$ 1,000	$ 4,700	$ 3,800
Restricted Stock Units
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Outstanding unvested units (in shares)					1,211,048	773,248	1,211,048	773,248	661,116	637,899	774,067	959,337
Stock-based compensation cost					$ 4		$ 89
Unrecognized compensation expense					12,400		$ 12,400
Weighted-average period for recognition of unrecognized compensation cost							3 years 2 months 12 days
Grant date fair value of vested units					2,200	$ 259	$ 4,400	$ 4,300
Tax (expense) benefit						$ (2)		642
Restricted Stock Units | California BanCorp
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares withheld for taxes (in shares)	25,635
Restricted Stock Units | California BanCorp
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock-based compensation cost	$ 1,100
Unrecognized compensation expense					$ 2,500		$ 2,500
Weighted-average period for recognition of unrecognized compensation cost	3 years 9 months 18 days
Restricted Stock Units | California BanCorp | Former Non-continuing Directors, Officers And Employees
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares issued (in shares)	123,123
Restricted Stock Units | California BanCorp | Former Continuing Directors, Officers And Employees
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Business combination, consideration transferred, attributable to post-combination replacement awards, number of shares (in shares)	185,878
Number of shares issued (in shares)	295,512
Stock-based compensation cost	$ 3,400
Performance-Based Restricted Stock Units
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Outstanding unvested units (in shares)					0		0
Accelerated stock-based compensation					$ 0		$ 0	$ 632
Accelerated vesting (in shares)		275,171
Restricted Stock | California BanCorp
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Weighted average remaining term	4 years
Restricted Stock | California BanCorp | Former Non-continuing Directors, Officers And Employees
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Outstanding unvested units (in shares)	77,436
Restricted Stock | California BanCorp | Former Continuing Directors, Officers And Employees
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares issued (in shares)	295,512
Restricted Stock | Minimum | California BanCorp
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Weighted average remaining term	2 months
Restricted Stock | Maximum | California BanCorp
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Weighted average remaining term	5 years
2019 Plan
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Maximum shares approved for issuance (in shares)			3,400,000	2,500,000									2,200,000
Increase in maximum shares approved for issuance (in shares)			900,000	300,000
2019 Plan | Stock Options
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Stock option expiration period							10 years
Expiration period of vested options following termination of service affiliation							90 days
2019 Plan | Restricted Stock Units | Minimum
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Restricted stock vesting period							1 year
2019 Plan | Restricted Stock Units | Maximum
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Restricted stock vesting period							5 years

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STOCK-BASED COMPENSATION PLAN - Schedule of Changes in Outstanding Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Shares
Outstanding at beginning of period (in shares)	175,363	288,338	272,813	326,868
Granted (in shares)	0	0	0	0
Exercised (in shares)	(1,500)	0	(82,900)	(10,950)
Expired (in shares)	0		(750)
Forfeited (in shares)	0	(200)	(15,300)	(27,780)
Outstanding at end of period (in shares)	173,863	288,138	173,863	288,138
Options exercisable (in shares)	167,663	260,638	167,663	260,638
Weighted Average Exercise Price
Outstanding at beginning of period (in dollars per share)	$ 9.47	$ 9.26	$ 9.30	$ 9.53
Granted (in dollars per share)	0	0	0	0
Exercised (in dollars per share)	6.61	0	8.64	8.53
Expired (in dollars per share)	0		5.93
Forfeited (in dollars per share)	0	10.99	10.75	12.78
Outstanding at end of period (in dollars per share)	9.50	9.26	9.50	9.26
Options exercisable (in dollars per share)	$ 9.46	$ 8.97	$ 9.46	$ 8.97
Weighted Average Remaining Contractual Term (Years)
Outstanding at end of period (years)			2 years 9 months 18 days	3 years 4 months 24 days
Options exercisable (years)			2 years 8 months 12 days	3 years 1 month 6 days
Aggregate Intrinsic Value
Outstanding at end of period	$ 920	$ 1,369	$ 920	$ 1,369
Options exercisable	$ 894	$ 1,312	$ 894	$ 1,312

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STOCK-BASED COMPENSATION PLAN - Schedule of Changes in Outstanding Unvested Restricted Stock Units (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Restricted Stock Units
Restricted Shares
Unvested at beginning of period (in shares)	661,116	774,067	637,899	959,337
Granted (in shares)	769,002	16,329	937,037	204,231
Vested (in shares)	(141,262)	(17,148)	(280,050)	(390,320)
Forfeited (in shares)	(77,808)	0	(83,838)	0
Unvested at end of period (in shares)	1,211,048	773,248	1,211,048	773,248
Weighted Average Grant Date Fair Value
Unvested at beginning of period (in dollars per share)	$ 13.06	$ 13.17	$ 13.11	$ 11.55
Granted (in dollars per share)	15.50	14.76	15.45	16.58
Vested (in dollars per share)	(15.75)	(15.11)	(15.79)	(10.99)
Forfeited (in dollars per share)	15.67	0	15.67	0
Unvested at end of period (in dollars per share)	13.06	13.16	13.06	13.16
Vested (in dollars per share)	$ 15.75	$ 15.11	$ 15.79	$ 10.99
Restricted Stock Units | California BanCorp
Restricted Shares
Granted (in shares)	418,634		418,634
Performance-Based Restricted Stock Units
Restricted Shares
Vested (in shares)				(275,171)
Unvested at end of period (in shares)	0		0
Weighted Average Grant Date Fair Value
Vested (in dollars per share)				$ (9.29)
Vested (in dollars per share)				$ 9.29

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REGULATORY MATTERS - Narrative (Details) - Subsidiaries	Sep. 30, 2024	Dec. 31, 2023
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tier 1 Capital (to Average Assets), Amount of Capital Required To be Well-Capitalized under PCA Provisions, Ratio	0.050	0.050
Total Capital (to Risk-Weighted Assets), Amount of Capital Required To be Adequately Capitalized, Ratio	0.080	0.080
Tier 1 Capital (To Risk-weighted Assets), Amount Of Capital Required To Be Adequately Capitalized, Ratio	0.060	0.060
CET1 Capital (to Risk-Weighted Assets), Amount of Capital Required To be Adequately Capitalized, Ratio	0.045	0.045
Tier 1 Capital (to Average Assets), Amount of Capital Required To be Adequately Capitalized, Ratio	0.040	0.040
Total Capital (to Risk-Weighted Assets), Amount of Capital Required To be Well-Capitalized under PCA Provisions, Ratio	0.100	0.100
Tier 1 Capital (to Risk-Weighted Assets), Amount of Capital Required To be Well-Capitalized under PCA Provisions, Ratio	0.080	0.080
CET1 Capital (to Risk-Weighted Assets), Amount of Capital Required To be Well-Capitalized under PCA Provisions, Ratio	0.065	0.065

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REGULATORY MATTERS - Schedule of Capital Amounts and Ratios (Details) $ in Thousands	Sep. 30, 2024 USD ($)	Dec. 31, 2023 USD ($)
Parent Company
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital (to Risk-Weighted Assets), Actual Amount	$ 478,321
Total Capital (to Risk-Weighted Assets), Actual Ratio	0.1265
Total Capital (to Risk-Weighted Assets), Amount of Capital Required To be Adequately Capitalized	$ 302,513
Total Capital (to Risk-Weighted Assets), Amount of Capital Required To be Adequately Capitalized, Ratio	0.080
Tier 1 Capital (to Risk-Weighted Assets), Actual Amount	$ 365,382
Tier 1 Capital (to Risk-Weighted Assets), Actual Ratio	0.0966
Tier 1 Capital (to Risk-Weighted Assets), Amount of Capital Required To be Adequately Capitalized	$ 226,885
Tier 1 Capital (To Risk-weighted Assets), Amount Of Capital Required To Be Adequately Capitalized, Ratio	0.060
CET1 Capital (to Risk-Weighted Assets), Actual Amount	$ 365,382
CET1 Capital (to Risk-Weighted Assets), Actual Ratio	0.0966
CET1 Capital (to Risk-Weighted Assets), Amount of Capital Required To be Adequately Capitalized	$ 170,163
CET1 Capital (to Risk-Weighted Assets), Amount of Capital Required To be Adequately Capitalized, Ratio	0.045
Tier 1 Capital (to Average Assets), Actual Amount	$ 365,382
Tier 1 Capital (to Average Assets), Actual Ratio	0.1055
Tier 1 Capital (to Average Assets), Amount of Capital Required To be Adequately Capitalized	$ 138,588
Tier 1 Capital (to Average Assets), Amount of Capital Required To be Adequately Capitalized, Ratio	0.040
Subsidiaries
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total Capital (to Risk-Weighted Assets), Actual Amount	$ 473,738	$ 289,743
Total Capital (to Risk-Weighted Assets), Actual Ratio	0.1253	0.1351
Total Capital (to Risk-Weighted Assets), Amount of Capital Required To be Adequately Capitalized	$ 302,427	$ 171,575
Total Capital (to Risk-Weighted Assets), Amount of Capital Required To be Adequately Capitalized, Ratio	0.080	0.080
Total Capital (to Risk-Weighted Assets), Amount of Capital Required To be Well-Capitalized under PCA Provisions	$ 378,033	$ 214,469
Total Capital (to Risk-Weighted Assets), Amount of Capital Required To be Well-Capitalized under PCA Provisions, Ratio	0.100	0.100
Tier 1 Capital (to Risk-Weighted Assets), Actual Amount	$ 429,941	$ 270,341
Tier 1 Capital (to Risk-Weighted Assets), Actual Ratio	0.1137	0.1261
Tier 1 Capital (to Risk-Weighted Assets), Amount of Capital Required To be Adequately Capitalized	$ 226,820	$ 128,681
Tier 1 Capital (To Risk-weighted Assets), Amount Of Capital Required To Be Adequately Capitalized, Ratio	0.060	0.060
Tier 1 Capital (to Risk-Weighted Assets), Amount of Capital Required To be Well-Capitalized under PCA Provisions	$ 302,427	$ 171,575
Tier 1 Capital (to Risk-Weighted Assets), Amount of Capital Required To be Well-Capitalized under PCA Provisions, Ratio	0.080	0.080
CET1 Capital (to Risk-Weighted Assets), Actual Amount	$ 429,941	$ 270,341
CET1 Capital (to Risk-Weighted Assets), Actual Ratio	0.1137	0.1261
CET1 Capital (to Risk-Weighted Assets), Amount of Capital Required To be Adequately Capitalized	$ 170,115	$ 96,511
CET1 Capital (to Risk-Weighted Assets), Amount of Capital Required To be Adequately Capitalized, Ratio	0.045	0.045
CET1 Capital (to Risk-Weighted Assets), Amount of Capital Required To be Well-Capitalized under PCA Provisions	$ 245,722	$ 139,405
CET1 Capital (to Risk-Weighted Assets), Amount of Capital Required To be Well-Capitalized under PCA Provisions, Ratio	0.065	0.065
Tier 1 Capital (to Average Assets), Actual Amount	$ 429,941	$ 270,341
Tier 1 Capital (to Average Assets), Actual Ratio	0.1241	0.1165
Tier 1 Capital (to Average Assets), Amount of Capital Required To be Adequately Capitalized	$ 138,572	$ 92,818
Tier 1 Capital (to Average Assets), Amount of Capital Required To be Adequately Capitalized, Ratio	0.040	0.040
Tier 1 Capital (to Average Assets), Amount of Capital Required To be Well-Capitalized under PCA Provisions	$ 173,215	$ 116,022
Tier 1 Capital (to Average Assets), Amount of Capital Required To be Well-Capitalized under PCA Provisions, Ratio	0.050	0.050

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FAIR VALUE - Schedule of Fair Value Hierarchy and Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Financial assets:
Debt securities available for sale	$ 159,330	$ 130,035
Debt securities held to maturity	49,487	50,432
Loans held for sale	34,500	7,800
Accrued interest receivable	14,200	6,400
Carrying Value | Level 1
Financial assets:
Cash and due from banks	115,165	33,008
Fed funds and interest-bearing balances	499,258	53,785
Carrying Value | Level 2
Financial assets:
Debt securities available for sale	159,330	130,035
Debt securities held to maturity	53,364	53,616
Loans held for sale	33,704	7,349
Restricted stock, at cost	27,394	16,055
Other equity securities	14,712	9,187
Accrued interest receivable	15,632	7,301
Financial liabilities:
Deposits	3,740,915	1,943,556
Borrowings	69,142	102,865
Accrued interest payable	4,976	477
Carrying Value | Level 3
Financial assets:
Loans held for investment, net	3,146,162	1,934,873
Estimated Fair Value | Level 1
Financial assets:
Cash and due from banks	115,165	33,008
Fed funds and interest-bearing balances	499,258	53,785
Estimated Fair Value | Level 2
Financial assets:
Debt securities available for sale	159,330	130,035
Debt securities held to maturity	49,487	50,432
Loans held for sale	34,508	7,834
Restricted stock, at cost	27,394	16,055
Other equity securities	14,712	9,187
Accrued interest receivable	15,632	7,301
Financial liabilities:
Deposits	3,740,963	1,943,007
Borrowings	69,053	102,447
Accrued interest payable	4,976	477
Estimated Fair Value | Level 3
Financial assets:
Loans held for investment, net	$ 3,144,451	$ 1,883,154

XML

FAIR VALUE - Schedule of Fair Value of Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	$ 159,330	$ 130,035
Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	92,259	74,434
SBA securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	5,684	5,782
U.S. Treasury
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	17,321	2,417
U.S. Agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	1,743	1,670
Collateralized mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	40,573	43,501
Taxable municipals
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	923	1,421
Tax exempt bank-qualified municipals
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	827	810
Recurring Fair Value Measurements
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	159,330	130,035
Recurring Fair Value Measurements | Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	92,259	74,434
Recurring Fair Value Measurements | SBA securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	5,684	5,782
Recurring Fair Value Measurements | U.S. Treasury
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	17,321	2,417
Recurring Fair Value Measurements | U.S. Agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	1,743	1,670
Recurring Fair Value Measurements | Collateralized mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	40,573	43,501
Recurring Fair Value Measurements | Taxable municipals
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	923	1,421
Recurring Fair Value Measurements | Tax exempt bank-qualified municipals
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	827	810
Recurring Fair Value Measurements | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	17,321	2,417
Recurring Fair Value Measurements | Level 1 | Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Recurring Fair Value Measurements | Level 1 | SBA securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Recurring Fair Value Measurements | Level 1 | U.S. Treasury
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	17,321	2,417
Recurring Fair Value Measurements | Level 1 | U.S. Agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Recurring Fair Value Measurements | Level 1 | Collateralized mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Recurring Fair Value Measurements | Level 1 | Taxable municipals
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Recurring Fair Value Measurements | Level 1 | Tax exempt bank-qualified municipals
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Recurring Fair Value Measurements | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	142,009	127,618
Recurring Fair Value Measurements | Level 2 | Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	92,259	74,434
Recurring Fair Value Measurements | Level 2 | SBA securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	5,684	5,782
Recurring Fair Value Measurements | Level 2 | U.S. Treasury
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Recurring Fair Value Measurements | Level 2 | U.S. Agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	1,743	1,670
Recurring Fair Value Measurements | Level 2 | Collateralized mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	40,573	43,501
Recurring Fair Value Measurements | Level 2 | Taxable municipals
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	923	1,421
Recurring Fair Value Measurements | Level 2 | Tax exempt bank-qualified municipals
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	827	810
Recurring Fair Value Measurements | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Recurring Fair Value Measurements | Level 3 | Mortgage-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Recurring Fair Value Measurements | Level 3 | SBA securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Recurring Fair Value Measurements | Level 3 | U.S. Treasury
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Recurring Fair Value Measurements | Level 3 | U.S. Agency
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Recurring Fair Value Measurements | Level 3 | Collateralized mortgage obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Recurring Fair Value Measurements | Level 3 | Taxable municipals
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	0	0
Recurring Fair Value Measurements | Level 3 | Tax exempt bank-qualified municipals
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt securities available for sale	$ 0	$ 0

XML

FAIR VALUE - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2024	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Valuation allowance on other real estate owned	$ 614	$ 614	$ 0
Fair Value, Nonrecurring | Real Estate - Other
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Partial charge-off on loan	$ 967			$ 1,300

XML

FAIR VALUE - Schedule of Fair Value of Assets and Liabilities Measured on Nonrecurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate owned, net	$ 4,083	$ 0
Fair Value, Nonrecurring | Estimated Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate owned, net	4,083
Fair Value, Nonrecurring | Construction and Land Development | Estimated Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loan	10,000
Fair Value, Nonrecurring | Real Estate - Other | 1-4 family residential | Estimated Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loan	4,600
Fair Value, Nonrecurring | Real Estate - Other | Multifamily residential | Estimated Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loan		13,000
Fair Value, Nonrecurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate owned, net	0
Fair Value, Nonrecurring | Level 1 | Construction and Land Development
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loan	0
Fair Value, Nonrecurring | Level 1 | Real Estate - Other | 1-4 family residential
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loan	0
Fair Value, Nonrecurring | Level 1 | Real Estate - Other | Multifamily residential
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loan		0
Fair Value, Nonrecurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate owned, net	0
Fair Value, Nonrecurring | Level 2 | Construction and Land Development
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loan	0
Fair Value, Nonrecurring | Level 2 | Real Estate - Other | 1-4 family residential
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loan	0
Fair Value, Nonrecurring | Level 2 | Real Estate - Other | Multifamily residential
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loan		0
Fair Value, Nonrecurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate owned, net	4,083
Fair Value, Nonrecurring | Level 3 | Estimated Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other real estate owned, net	4,083
Fair Value, Nonrecurring | Level 3 | Construction and Land Development
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loan	10,000
Fair Value, Nonrecurring | Level 3 | Real Estate - Other | 1-4 family residential
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loan	$ 4,600
Fair Value, Nonrecurring | Level 3 | Real Estate - Other | Multifamily residential
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loan		13,000
Fair Value, Nonrecurring | Level 3 | Real Estate - Other | Multifamily residential | Estimated Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent loan		$ 13,000

XML

FAIR VALUE - Schedule of Quantitative Information About Fair Value Measurements Measured on Nonrecurring Basis (Details) $ in Thousands	Sep. 30, 2024 USD ($)	Dec. 31, 2023 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Other real estate owned, net	$ 4,083	$ 0
Fair Value, Nonrecurring | Estimated Fair Value
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Other real estate owned, net	4,083
Fair Value, Nonrecurring | Construction and Land Development | Estimated Fair Value
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loan	10,000
Fair Value, Nonrecurring | Real Estate - Other | 1-4 family residential | Estimated Fair Value
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loan	4,600
Fair Value, Nonrecurring | Real Estate - Other | Multifamily residential | Estimated Fair Value
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loan		13,000
Fair Value, Nonrecurring | Level 3
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Other real estate owned, net	4,083
Fair Value, Nonrecurring | Level 3 | Estimated Fair Value
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Other real estate owned, net	4,083
Fair Value, Nonrecurring | Level 3 | Construction and Land Development
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loan	10,000
Fair Value, Nonrecurring | Level 3 | Real Estate - Other | 1-4 family residential
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loan	$ 4,600
Fair Value, Nonrecurring | Level 3 | Real Estate - Other | Multifamily residential
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loan		13,000
Fair Value, Nonrecurring | Level 3 | Real Estate - Other | Multifamily residential | Estimated Fair Value
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loan		$ 13,000
Fair Value, Nonrecurring | Level 3 | Minimum | Cost to sell
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Other real estate owned, net, range % (weighted average)	0.0575
Fair Value, Nonrecurring | Level 3 | Minimum | Real Estate - Other | 1-4 family residential | Cost to sell
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loans, range % (weighted average)	0.0750
Fair Value, Nonrecurring | Level 3 | Minimum | Real Estate - Other | Multifamily residential | Capitalization rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loans, range % (weighted average)		0.0384
Fair Value, Nonrecurring | Level 3 | Maximum | Cost to sell
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Other real estate owned, net, range % (weighted average)	0.0575
Fair Value, Nonrecurring | Level 3 | Maximum | Real Estate - Other | 1-4 family residential | Cost to sell
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loans, range % (weighted average)	0.0750
Fair Value, Nonrecurring | Level 3 | Maximum | Real Estate - Other | Multifamily residential | Capitalization rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loans, range % (weighted average)		0.0494
Fair Value, Nonrecurring | Level 3 | Weighted average | Cost to sell
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Other real estate owned, net, range % (weighted average)	0.0575
Fair Value, Nonrecurring | Level 3 | Weighted average | Real Estate - Other | 1-4 family residential | Cost to sell
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loans, range % (weighted average)	0.0750
Fair Value, Nonrecurring | Level 3 | Weighted average | Real Estate - Other | Multifamily residential | Capitalization rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Collateral dependent loans, range % (weighted average)		0.0450